Cash flow Statement for a fictitious record label

Garden of Eden Entertainment

Garden of Eden Entertainment is a independent record label that produces many diverse styles of music. The company strives to not only create mainstream music but music that speaks to everyone in a special way. We want people to listen to our companies music over and over again without getting tired of the music being played. Garden of Eden Entertainment is formed under an LLC which is also known as a Limited Liabiltiy company.

The owners of an LLC are primarly reffred to as members. Forming a business under a LLC gives many advantages. One adavantage is that Members of the LLC are protected from personal liability for business decisions or actions of the LLC. In other words if the LLC is sued or in a substantial amount of debt members personal assests are typically exempt from being taken. Also it is much easier to keep records, and profit sharing has fewer restrictions under an LLC than other formations depending on what state your business is registered in.

As an Independent record label the way our company operates is a bit complex but is very effciant under the contractual agreement we have with our atrist. Opposed to Major record labels we have total control over our contractual agreements with our artist. We have taken many of the complex regulations out of the contract. For example our contract will be with one artist . Under this agreement we require the artists excluse recordings for up to three albums that our company will release. The term of the contract will be refred to as how long our company will own the album which will be 35 years with option to renew the term for another set period in the contract. There will be a clause in the contract as, well stating that Garden of Eden entertainment has the right to sell in the U.S but can seek licensing and distribution deals in other territories and countres as well. With the inheritence of $500,000 we will give out artist an advance of $50,000 which is recoupible once the album is on sale. Similar to how other contracts are structured the artist will not make money until our company has recouped all of the money spent on the album and other services of course with the excepetion of mechinacal royalties in which our company is required by copyright law to pay out which is 10 cents per song per album sold.

In our contract there will also be a clause stating that we will constult with our artist after spending $200,000 as this will be our spending cap. Of that $200,000 Garden of Eden entertainment will pay for Radio, Travel, Tour support, Recording, Production, Videos, Promotions, Publicist, Internet support and Advertising. Any net income after our company recoups all money will be divided on a percentage basis of 60/40 in which 60% of profits will go to Garden of Eden Entertainment and 40% of profits will go to the artist. We will also have a clause in all contractual agreements with any artist that we sign stating that they have the right to audit our companies books strictly relating the there album release, this audit will only be held annually.

In the event in which our company decides to license the album in another country,territory or through the use of meida the licensing fee will also be divided 60/40. 60% of the fee going too our company and 40% going to the artist. The last clause of the contractual agreement with artist signed to our compmany will be an acceptance and delivary clause. The acceptance and delivary clause is mostly used in major label contracts but is very important to us. This clause will state that our company does not have to release a record that differentiates from the type of music our company thought we would receive. Also in the clause we will state that the record has to be recorded in the proper format that can be played on radio. Our company will have many other goals and structures of operation that should be brought up as well.

Once the album our label is selling becomes popular in the U.S. We will look to license the album to another label in a different country. For example the if our company were to come to a lisensing deal with a record label in england the label would pay a fee to licesnse the album and pay royalties to our company. As well as a liscening deal we would look for a distribution deal in the U.S. This distribution deal would help our album get into shops and distributed around the U.S .