Kid's Business Start-up Financing Program

Kids' Red Herring

Seed Capital Funding

Draft For Discussion   O

This is our kid's  financing program to help kids raise money for  "Phase 1 Kid's Business Set-up" in www.kidse-marketplace.com. The program is an unique financing program as it raises money for kids' businesses and provides kids with the opportunity to act like investors in the seed financing of www.kidse-marketplace.com.  

We help kids raise the $20.00 financing to set-up a business in our marketplace and create a financing learning experience as their funds are used to seed (initial financing) the development of www.kidse-marketplace.com.

[Kids-As-Angel-Investors Program]     [Kids Seed Capital Financing Program]
  [Press Release]  [The Kids' Business Launch]

This is not a preliminary prospectus for the issuing of shares. We are not attempting to sell  shares and would not  proceed before a registration is approved by the SEC. Our Kids' Red Herring is a preliminary circular for a seed financing program for kidse-marketplace.com We use the term investment in the context of providing kids with a business experience . We advise kids to review this document with a parent or financial advisor.

Table of Contents

Kid's Overview

Adult Overview

Information Circular

Background Information

Type of Financing Program - Seed Capital

Use of Proceeds

Expected Returns

Projected Cash Flows

Risks

opportunities

Comfort Letter

Seed Capital Fund Payment

Kid's Overview

We are trying to help you financing your business start-up. 

We have created this program for kids to obtain seed capital for  their kid's business in  www.kidse-marketplace.com

Our goal is to help kids learn about "Angel Investing" and experience a seed round of business financing. The learning occurs from the sourcing of  seed capital (investee - receiving the money) and participating in a seed capital deal as an "Angel Investor" (investor- you provide the money) to www.kidse-marketplace.com in the form of a seed capital fee or SCF.

 We will help you to  set-up your KidsE-Marketplace.com business, "KEMB",  as you in turn help us set-up  www.kidse-marketplace.com . Jointly, we set-up our businesses and develop our businesses together. 

We are using the SCF (Seed Capital Fund) to fund the development of the marketplace to provide you with the services to; set-up your business and launch your Kid's Online Digital Information Product, KODIP

 You will want to raise about $50.00 u.s. which you will need to raise from your "Angel Investor".   Of the proceeds (money)  you raise, you will require $20.00  to set-up your business in www.kidse-marketplace.com  - seed capital to us. We will provide you with; services, educational returns,  the set-up of your business into our marketplace.

Our entrepreneurship program will help you to prepare yourself as an entrepreneur and will help you prepare your executive summary to approach your perspective "Angel Investor". Our business basics program will also help you get started in business.

We have written a very lengthy information circular below, to try and give you the experience of reviewing similar information that "Angel Investors" review and to give you enough information for you and your "Angel Investor" to make a decision. This document is a draft for you to review. It will change frequently as we work to complete it shortly.

If you and your "Angel Investor" are interested in setting up a business in kidse-marketplace.com, then please contact us at : info@teachingkidsbusiness.com  
(if you are under 13 years of age see our contact page)

Adult Overview

You assume the role of "Angel Investor" to provide seed capital for  your child's KEM (kidse-marketplace)  business, "KEMB,  and act as a business advisor in the set-up of their  KEMB  in KidsE-Marketplace.com.

You are effectively launching your/a child into business. This is a very exciting time, probably a first-time experience and  an opportunity to share some quality time with your child.

We have created a low risk business situation to minimize financial risk in a business set-up and are dealing with internet privacy issues to ensure a safe and protected experience. 

Please minimize the pressure that you put on your child to succeed in their KEM business and treat this experience more like an educational game in which they have some fun and a positive learning experience. Our goal is to create a positive business learning experience which is  independent of how the business does.  Our parent information page gives you some additional ideas on your role.

We are embarking on this program to create opportunities for kids in business, to provide business related experiences which will  help prepare kids for business and their future careers. Please take the time to examine www.teachingkidsbusiness.com and www.kidse-marketplace.com to understand our approach, commitment and the business development opportunities for kids.

The information you are about to read and discuss with your child is an excellent opportunity to begin many healthy discussions about business.

Information Circular

Our "Kids' Red Herring" is an information circular to help kids understand how to become an Angel Investor, in a financial way,   to provide financial help to develop www.teachingkidsbusiness.com and www.kidse-marketplace.com

The use of the term "Angel Investor", in a financial context,  refers to wealthy individuals who invest in private businesses to help them get started.  Kids-As-Angel-Investors is something we have created to allow kids to become Angel Investors  in business financing.  Kids are often referred to as "little angels" and therefore we decided to develop this program of "Kids-As-Angel-Investors" with the concept of kids providing financial assistance to a business venture. 

The business venture is two fold; first a  kid's business in KEM and the kidse-marketplace.com which provides the marketplace for the kids' businesses.  The "Kids-As-Angel-Investors" Program is creating  opportunities for kids to  approach investors for seed capital financing and to invest in their own businesses by helping provide seed finance to set-up the www.kidse-marketplace.com 

We are not selling securities and have not approached or been given approval by the appropriate  security commissions (SEC). We are researching and in discussions with securities commissions to insure that we proceed in a proper way.  It is our hopes that we will progress to an initial public offering  (IPO) when KidsE-Marketplace.com  has reached a level of business that will give you, underwriters and other investors the comfort level to participate in the purchase of stock .  This will be when the investment community (Wall Street and Bay Street) takes us seriously as the first kid's IPO.

This is a document that you should read over several times and ask for advise from a parent or a trusted adult.  You should also take the time to review www.teachingkidsbusiness.com and www.kidse-marketplace.com to understand what we are trying to do and how we are going about it. Our information section at www.teachingkidsbusiness.com/InfoCenter.htm  gives lots of background information that will help you determine  if TeachingKidsBusiness.com,Inc. and KidsE-Marketplace.com are organizations that you should be involved in.       

Background Information

Our Kids-As-Angel-Investors Program is all about giving kids a positive business experience and in a way that is consistent with the philosophies of www.teachingkidsbusiness.com   We  are trying to do this in a very responsible way, as we realize that internet related business dealings are more commonly frauds.  This is an issue that is difficult to overcome, but one that we hope we can impact with a positive and successful experience for kids.

Over the past several years, we feel we have demonstrated our ability to provide you with a valuable resource.  We hope that this will create a situation in which you will have the necessary trust and respect for what we are doing and what we are planning to do in the future.

All the programming in www.teachingkidsbusiness.com  is free.  We feel good about providing this resource to many kids and would like to further develop the programming.  We see the site as a framework of many great things that can be developed with additional financial resources. 

We have chosen not to accept advertising on the site or other revenue opportunities that exploit kids.  Instead, we have devised a strategy in which the commercialization (money making) is done by  kids and in a way that is a natural extension to their business preparation in www.teachingkidsbusiness.com 

The commercialization occurs in www.kidse-marketplace.com where kids pay to set-up a business that sells kid's online digit information products, KODIPs. Kids become business operators in a low risk and protected environment.  Kid's products are advertised and sold through kidse-marketplace.com with the kids being protected from financial dealings and contact from customers. 

We recognize that traditional financing alternatives are difficult to arrange for an internet based business that is reliant on the success of kids as business operators. We believe that this business model does not exist and this venture category does not appear in any venture capitalist investment criteria. The fact that kids are active in the management team makes it less attractive to venture capitalists.

A key underlying philosophy to this program is that kids participate. We believe that by participating in situations, it becomes a better learning experience.  It is the though of kids participating in business that helped formulate the idea of kids becoming the financiers.  We though it would  be of interest to kids to participate in  financing a business experience, business opportunities for other kids and philanthropic assistance to www.teachingkidsbusiness.com

Proceeds  from the marketplace will be used to further develop www.teachinkidsbusiness.com which reinforces our "kids helping kids" strategy.

We hope you will take the time to do the appropriate due diligence (check it out thoroughly) for this opportunity.

This is a very exciting idea that we would like many kids to be part of!

Type of Financing Program -  Seed Capital Fund, SCF

We have chosen to provide a marketplace funding program based on  a "Seed Capital Fund", or SCF.  We would like you to pay to begin the business set-up process in  www.kidse-marketplace.com.  The concept is that you obtain seed capital for your business, in our kids seed capital financing program, to be able to participate in setting up your business in   www.kidse-marketplace.com . You will use your seed capital to provide us with start-up capital to develop the marketplace.  For your funding  you will; start your own business set-up, receive information services on the set-up process and information updates on the development of  marketplace. 

Many websites are becoming subscription based or charging a fee for services. We are similarly offering a business set-up  service and an exciting future service for kids participating in kidse-marketplace.com. Our current service is learning experiences in setting up a business and financing a business, while our future services are providing kids with the opportunity to launch their businesses in our kidse-marketplace.com 

Our goal is to engage kids to get involved in preparing a business for KidsE-Marketplace.com.  As kids prepare for business and begin to promote their business ventures, we will jointly succeed with our  marketplace. Kids have amazing potential in creating kids' phenomena.  As kids are empowered to effectively promote their businesses, their products and their marketplace; this concept has  great potential. We will create the opportunity for kids and then nurture and facilitate the business successes of many kids.

Ideally we would like to have done a stock offering, but we realize that it is to early in the development of our business to try to sell stock and it is very difficult to sell stock to kids.  To sell stock directly to people,  they must be "accredited investors" which means people who have high incomes, high net worth and are knowledgeable about stocks - which at this stage excludes most kids.  Stock offerings are much easier to do once a company has demonstrated that it can make money.  It is our goal to be on the "Big Board" - New York Stock Exchange, at some point in the future. This program will help us get closer to our goal of taking KidsE-Marketplace.com public through an IPO (initial public offering - selling stocks or ownership in the company).

In addition, we want to keep control of this venture and protect the marketplace from outside influences that may compromise the underlying philosophies that have been developed to date. We want kids to play a very active role in the development of the marketplace as if they were the venture capitalists backing this venture.

This is one of several financing programs we are pursuing to provide money to develop kidse-marketplace.com. The success of  this program will help attract other more conventional financing programs.

Use of Proceeds

We are running this program to raise money to develop Phase 1 of KidsE-Marketplace.com.  Phase 1 is the start-up phase. We have gone through the seed stage as we have tested the concept, developed the product and now are going to open the marketplace for kids to get set-up in business.

  •  We are planning to raise $200,000.00 (10,000 x $20.00) to create the necessary data bases, e-commerce, website development and marketing. 

  • 5% of the proceeds will go to the development of www.teachingkidsbusiness.com, (our charity approach)

  • 5% will go to the administration of the program. (cost to run this program)

  • 90% of the  funding will be used to develop www.kidse-marketplace.com .

Phase 1 is the business set-up stage. The marketplace is developed to allow kids to set-up their businesses.   Kids will establish their businesses, launch and display their product and product advertising.  Phase 1 of the marketplace is also Phase 1 for the kid's businesses.  This is the stage where  kids get their businesses organized and make their product available for trial by other kids.

Seed capital financing stage , will help you raise the money for your business.

Examples of  businesses are set-up @ [Businesses]

Sample advertisements (better search and viewing are planned) are set-up  @[Advertisements]

Kid's products, KODIPS, are set-up by name @ [Products]

Our strategy is to have  kids experience the financing and development stages of the marketplace as they also experience similar stages with their businesses. We will provide e-workshops at each stage and a host of other helpful tools and services.

Phase 1 is the set-up of the marketplace such that kids can go in and reserve a business to prepare for the launch of their business and products in Phase 2.

Phase 2 will be the commercialization of the kids' businesses - when the KODIPs are sold through the marketplace with the owners of the kid's businesses actually generating revenues.

There are several phases to the marketplace and the timing of each phase will depend on the participation of kids at each phase.

Expected Returns on your SCF, Seed Capital Fund

This program is about giving you an education and an experience in a grassroots business case. At this stage, it is not to make you rich.  We feel that by participating in the early stage financing of kidse-marketplace.com you will gain an invaluable experience. We are trying to create a situation in which there are no losers in this program.

We have defined new returns on the investment you are about to consider. Returns that make sense to kids.  Usually returns relate to how much interest or how much more the stock is worth, but in this case we are introducing  "educational return on investment - EROI" and "business experience return on investment - BEROI." 

The EROI(educational return on investment) that you can expect is a very high yield. By being involved in the financing of a business you will quickly learn  invaluable lessons and  new business terms.

The BEROI (business experience return on investment) is also very high. As a kid  you realize that there are limited experiences in business.  We want to put you in  a situation in which you feel you are making the business decisions relating to  kidse-marketplace.com.  The business experience you gain from the information shared by kidse-marketplace.com will be very helpful to you as you enter business. You will learn new terms, strategies and participate in management decisions.   We expect these experiences to help you understand business and give you the added confidence and self-esteem to further pursue business opportunities.

We realize that EROI and BEROI are attractive returns, but money is still a key component to any serious returns. Therefore, as you launch your business in the marketplace and begin to sell your KODIPs you will have the opportunity to earn excellent returns on your money.

We expect you to leave your SCF in the marketplace for the period of a year after the completion of Phase 1.  At this point,  if you do not decide to continue on to Phase 2, we will return  a portion of your money to you.  During this period we will continue to distribute EROI and BEROI monthly.

For example only;

If you were to pay a SCF (Seed Capital Fund) of  $20.00, this is how it would be used;

From You:  $20.00

  1.  $20.00 less 5%  or $1.00 would go to support the development of TeachingKidsBusiness.com . This would go to improve the site and expand the programming.

  2. less 5% or $1.00 to administer the program - cover costs of keeping you updated on our progress. This would help us fund the tracking of this program and  the communications of what and how we are doing.

  3. You receive the EROI ™ (Educational Return on Investment) - learn about financing your business and our business and how our proceeds are used.

  4. You receive the BEROI (Business Experience Return on Investment) - participate in surveys and receive update e-mails (minimum of one per month on progress of the marketplace -issues and decisions). This will continue until the kids' business launch.

  5. Founding Business Member Certificate
    You will receive a certificate by  e-mail to indicate that you are a "Kidse-marketplace.com Founding Member" who has participated in this program. You will be a founding Angel/member of www.kidse-marketplace.com .

  6. You will  have a preferred status as the venture goes forward with some interesting options we are working on. 

As you continue on to Phase 2 and launch your business  to sell KODIPs, you will have the opportunity to earn excellent returns on your money.

Please note that the completion of Phase 1 will be communicated on the website and to all SCF participants via e-mail contacts on file.  

Projected Cash Flows

Projections exclude the SCFs from this program.  Based on the level of SCF funding;  the timing of the start-ups and the level of growth could change dramatically.

 
The cash flow projections are the amount of money we expect kidse-marketplace.com to generate each year. Please note that these numbers are projections only  and are based on assumptions that are very likely to change in a positive or negative way (up or down).

                       Cash Flow     # of Business         #of Product Sales
                                                  Start-ups                       (KODIPs)

Phase 1

SCF                   $200,000.00

Phase 2:

Year 1                          $65,000.00                 5,000                                    162,500

 Year 2                      $334, 000.00               10,000                                     768,750

 Year 3                       $794,000.00               15,000                                  2,075,000

 Year 4                     $1,519,000.00              25,000                                  3,825,000

Year 5                      $1,960,000.00              25,000                                   5,575,000

NPV $3,693,000.00

What these numbers should tell you is that if kids around the world start-up at least 5,000 businesses a year in the marketplace and sell KODIPs, that the marketplace should make money. If we get more and more kids launching businesses, then more money will be made and if we don't get kids participating in the marketplace, we will not succeed.

NPV $3,693,000.00  (net present value - what the projected worth of the company is. This number excludes the SCF program and assumes that financing will be put in place through another financing method to fund the refunds on the SCF program).

Please note that Phase I is the current period (seed stage and start-up stage) in which we are operating the SCF program. The cash flow is $200,000.00 from the SCF program with funding being directed to; 5% to TeachingKidsBusiness.com and 5% for the administration of the program.  

 The period of time prior to year 1 Phase 2  is the time used to complete the SCF program and prepare the marketplace for Year 1 business commercialization.  We will announce the start date of this one year period in our "Kids-As-Angel-Investors Program Communications". We hope the period of time prior to Year 1 will be less then six months. The SCF program will reserve business set-up positions for the eventual launch of businesses in Phase 2. 

Please note that "Year 1" is the first year of Phase 2 in which the marketplace is operating and the kid's business are selling KODIPs. 

We have assumed that 10,000 kids will participate in the SCF program but only 50% or 5,000 will continue on to Phase 2, to the start-up stage in the marketplace during the first year of Phase 2.  We believe that half or 50% of the remaining kids will participate in the launch in Year 2 . We feel confident that we can exceed this goal and attract many other business set-ups that did not participate in the SCF program. 

In the event that 5,000 do not proceed on, the funding to be returned to the kids in the amount of ($30.00 x 2,500 = $75,000.00) will be funded from second round financing and is excluded from  cash flow projections. (The set-up stage is getting the business organized with name and owner while the start-up stage is entering the marketplace and getting the product and advertising ready. The launch is the commercialization of the business in that it is ready to sell products).

Please note that the plan is to create a marketplace for kids to have the opportunity to recover their SCF  through the earnings from  their own businesses.  As kids launch their businesses in Phase II, they will have the opportunity to recover their SCF from KODIP revenues.

The exciting thing about the potential cash flows from kidse-marketplace.com is that kids will drive the success. Kids operate the businesses in the marketplace and other kids buy kid's products.  The potential is phenomenal based on the ability of kids to understand what other kids will be interested in buying and the potential of internet and other promotional abilities of kids.

In addition, as other kids participate as stakeholders in our Kids-As-Angel-Investors Program™ they will be very motivated to promote kidse-marketplace.com to see it succeed and for them to recover their money.

Risks

There are always risks in business. I am sure you have heard on the news or heard people talk about Enron and WorldCom and the many dotcoms that have not succeeded for many reasons. 

Anytime you take your own money and let someone else use it, there are risks of losing it. 

Yes ,there is a chance that kidse-marketplace.com may not succeed and that we will not be able to create a successful marketplace. You could lose the money you provide to  Kidse-marketplace.com. 

There is a risk that the business you set-up in the marketplace will not succeed and that you will not earn enough money to repay your SCF.

There is the risk that a high number of kids will not like the marketplace or be interested in learning about business or setting-up a business.

There is a risk that the management team that runs the marketplace will make mistakes that could risk the success of the marketplace.

There is a risk of competitors copying the concept and developing a marketplace that is more successful then kidse-marketplace.com.

There is a risk that the internet will not grow in use as planned.

There is a risk that kids will not be allowed to use the internet at the level that they are currently using it.

There is a risk that e-commerce by kids will be restricted by government and industry regulations.

There is a risk that the projections  (cash flows) that management is providing do not actually happen.

There is a risk that the SCF or other financing plans will not raise enough funding to develop the marketplace well enough to succeed.

Opportunities

This program has been developed to give kids an opportunity to participate in the start-up funding of a business. If you ever try and go into business you will need money to get yourself started. We hope that  if we can walk you through the process to raise the needed money and that you will gain tremendous experience. You will need to raise the money for your SCF just as we need to raise the money to start-up kidse-marketplace.com.  As you succeed in raising your money, we succeed.

The interesting thing about this opportunity is that it is just a starting point. As you help start-up the kidse-marketplace.com you also create an opportunity for yourself and many other kids to go into business.

As you evolve your involvement in kidse-marketplace.com into a business operator, KEMBO, you will start to realize the great opportunities available for you and the marketplace.

To succeed in business it is critical to understand how to obtain the funding you need to develop the potential of your business. As you participate in this financing round, you will gain valuable experience.

Comfort Letter 

A comfort letter is commonly used in project financing to give the lenders  some sense of why you should provide the money - why you should feel comfortable advancing us the money.

If you view the extensive programming in www.teachinkidsbusiness.com you will realize that we are committed to teaching kids business. As in any business or organization, we need funding to do the things we want to do. We have chosen not to sell advertising on the website or to sell unrelated products to kids.  Instead we have created the business of www.kidse-marketplace.com as a source of funding for www.teachingkidsbusiness.com and as a business opportunity for kids.  

KidsE-Marketplace.com will charge kids to set-up their businesses, advertise and sell their digital products or their KODIPs (kids online digital information products).  

We would like to raise money, Seed Capital Fund  financing (SCF), to develop Phase I of the marketplace.  The necessary work has been done to identify what the programmers have to do to further develop the site. We need to raise the money to do it.

The intent of this comfort letter is  to communicate to you that we will work very hard to use your money wisely in developing kidse-marketplace.com and to do our best to make it succeed. 

As a part of the proceeds will go to TeachingKidsBusiness.com, it will enhance our efforts in further developing the site to benefit many other kids. This is consistent with our "kids-helping-kids" philosophy.

Our proposal to you is very unique and  to some adult investors it may seem very questionable.  We are really trying to pioneer our approach to kids in business and we really don't have any examples to draw from. Unfortunately ,most companies sell to kids and really don't partner with kids.  We are  asking kids to help us make something that kids will benefit from  and in which kids will do the selling to kids.

I believe, I have  demonstrated my commitment to teaching kids business over the past several years.  I  feel very confident that what we have built,  will only grow to be better and benefit greatly from your assistance .

As we partner with kids and kids partner with other kids; I know that as a team, we will succeed in unimaginable ways.

Business,  a game kids can play.!

Jeff M. Brown

President & CEO 

TeachingKidsBusiness.com

SCF (Seed Capital Fund) Payment

At this stage we have set-up an account with PayPal to process the Seed Capital Fund Payment. On receipt of payment from PayPal, you become a "TeachingKidsBusiness.com Angel" . We will contact you to welcome you and begin to share information with you.

Feedback

We would appreciate your comments on additional information required and what the amount the SCF from individual kids should be. Please respond to contact@teachingkidsbusiness.com 

If you are interested in obtaining more information about our Kids-As-Angels Program please contact us at mail to: contact@teachingkidsbusiness.com