EXHIBIT 10.23
Retail Kiosk Delivery Solution - Letter of Intent
Letter of Intent
Date: Monday November 21, 2000
Power Photo Kiosk Inc Terry Cooke
181 Whitehall Drive President and CEO
Markharn Ontario Canada
L3R 9T1
Playtime Entertainment Inc. Mike Evans
2992 E. Wyecliff Way
Highlands Ranch, CO
80126
KRI Canada Ltd. David Berger
3972 Chesswood Drive
Toronto, Ontario Canada
M3J 2W6
Gentlemen,
It is the intent of the parties identified above to proceed with a Pilot project
to develop, deploy and operate a kiosk network of 5 to 10 units for a period of
3 months, starting December 15, 2000. The purpose of the pilot project is to
prove the functional and financial viability of kiosks as a channel within the
Common Public Space within Shopping Mall Environments and as an alternative
advertising and marketing medium.
Power Photo Kiosks Inc. will develop, deploy and service all kiosks and
equipment for the Pilot project at no cost to Playtime and KRI Canada.
Upon completion of the pilot project and a review of the success factors, Power
Photo and Playtime and KRI will enter into a long-term agreement for the placing
of various machines in Shopping Centers throughout Canada and the USA.
We anticipate the following Phases for a Project with the aforementioned
parties.
Phase One: Deployment of 5 to 10 Kiosks in High Traffic (A Plus) Shopping
Malls located in the Common Public Space of the Mall.
Phase Two: Deployment of 200 Kiosks in various malls throughout USA and
Canada
Phase Three: Deployment of 1500 to 2000 Kiosks in Shopping Malls where local
population can sustain the revenue stream necessary to support
the Kiosk. The kiosks are to be located in the Common Public
Space within each mall. Again the locations of these Shopping
Malls are within Canada and USA.
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Retail Kiosk Delivery Solution - Letter of Intent
In support of this endeavor, the parties agree to the following:
o Identify the success criteria for the pilot project~ See attached
appendix A.
o Playtime and KRI agree to support the efforts to insure the project's
success. These efforts are not limited to: advertising sales within
each of the pilot locations for both Video and Static poster
Advertising, collection of monies and photo paper changes, weekly
cleaning of the outside of the Kiosk. Payment of all rent for location
including Telephone line charges.
o Identify the Revenue Share Model for pilot and production rollout. See
attached Appendix B.
o Power Photo agrees that Playtime and KRI will be given the exclusive
channel for placing the PPK Photo Kiosk in Common Spaces within
Shopping Malls for the duration of the pilot program.
o Power Photo's intent, should the success criteria, revenue models and
quality of units placed be maintained by Playtime and KRI, we would
agree to offer an extension of the exclusive arrangement to place
kiosks in the Common Spaces within Shopping Malls in US and Canada. In
the event that Playtime and/or KRI Canada cannot obtain the retail
locations or do not abide by the terms of the agreement, Power Photo
would seek such locations and agreements with other companies. The
exclusive agreement does not restrict Power Photo from placing Kiosk's
within Retailers stores located in those same Shopping Malls.
o Based on the successful completion of the Pilot Project the intent for
the parties is to proceed with the Production Rollout as per the
guidelines on the attached page and enter into a long-term agreement
to install Kiosk's in Common Public Space within Shopping Centers.
Confidential 2
Retail Kiosk Delivery Solution - Letter of Intent
Agreed:
Power Photo,
/s/Terry Cooke
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Terry Cooke
President,
Power Photo Kiosks Inc.
Playtime Entertainment Inc,
/s/ Mike Evans
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By:
President
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Its:
KRI Canada Ltd,
/s/ David Berger
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By:
President
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Its:
Confidential 3
Retail Kiosk Delivery Solution - Letter of Intent
Appendix A
Project Success Factors:
What are the Success Factors?
These are the measurements that will be used to evaluate whether the project has
been successful and therefore, if we will proceed to the Phase 2 of the project.
The individual Success Factors and Evaluation Measurements are identified in the
table below:
Item Success Factor Evaluation Measurement
1 Have picture taken and printed at kiosk The ability to display licensed
image selections on the kiosk
screen during the pilot period.
2 Add/Change/Delete Images and Data to/ The ability to Add/Change/Delete
kiosks Images data to/from Kiosks
demonstrated during the pilot
period.
3 Deployment of On-Screen Advertising The ability to deploy (Add/Change/
Delete) advertisements to Kiosks
from a Central location.
Demonstrate changing sequence of
Advertising Loop as warranted.
4 No impact to in store operations staff The ability to service, repair,
relocate and diagnose all issues
arising from the operation of the
kiosk's hardware and software with
minimal utilization of Mall Staff
or Playtime's Staff. (i.e. staff to
unplug/plug in Kiosk, collection
of Money, and Paper Changes).
5 Minimal down time during business No more than 5% down time (kiosks
hours not fully functional) during store
hours.
6 Add/Change Advertising panels on The ability to display a static
sides of Kiosk poster ad and to Add/Change display
ad during pilot.
7 Generate Revenues from Advertisers The ability to attract 5 Local
Advertisers to spend $135/mth/kiosk
to feature a 15 to 30 second
commercial on the pilot kiosk
network.
8 Generate Revenue from Picture Sales at The ability to demonstrate that the
Kiosk kiosks will average 10 pictures per
day per kiosk.
9 Generate Revenue from Static Poster The ability to attract 3
Advertisements on Side Panels of Kiosk advertisers to spend $81/mth/kiosk/
ad to feature their product or
service in a 22"x 22" static poster
advertisement.
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Retail Kiosk Delivery Solution - Letter of Intent
What functions will the system solution provide?
o The standard functionality of the Power Photo Imaging Kiosk
o The ability to add/ change/ delete images and advertisements to from
the application screens from a central location
What functions will not be supported in the Pilot Project?
o Email of captured images
o Implementation of a Server to support storing of Images taken at Kiosk
o Changes to application software for other functionality (e.g. data
collection, customer loyalty programs, e-commerce)
Confidential 5
Retail Kiosk Delivery Solution - Letter of Intent
Appendix B
Playtime Entertainment Ltd and KRI Canada Ltd
Attachment to Letter of Intent
Power Photo Kiosk Inc _ Estimated Project Cost's and Targeted
Revenues
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Pilot Project Production Rollout
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Number of Kiosks 5 200
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Time Period 3 Months 12 months Min.
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Kiosk Operating Software $10,000 $200,000
$2,000 per kiosk $1,000 per kiosk
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Touch Screen Application $25,000 $300,000
Software Costs $5,000 per kiosk $1,500 per kiosk
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Hardware Costs $75,000 $2,000,000
$15,000 per kiosk $10,000 per kiosk
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Total Cost $110,000 $2,500,000
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Minimum Target Net Advertising Revenue to $236.25 $567
PPK (Per kiosk per month)
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Minimum Target Net Revenue to PPK from $85.50 $226.80
Static Poster Advertising (per Kiosk per
month)
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Minimum Target Net Revenue to PPK from $975 $975
Picture Revenue including Media Cost (per
Kiosk per month)
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Retail Kiosk Delivery Solution - Letter of Intent
The Net Revenue to PPK for picture revenue is calculated as follows:
300 pictures per month times $5.00 /picture less $1.50/picture for media costs
to Power Photo, equals $3.50 net which is divided 50-50 with Playtime or KRI
Canada.
The Net Revenue to PPK for Advertising Revenue is calculated as follows:
Pilot Project Phase (starting after 30 days of deployment of kiosk); 5
advertisers agree to pay $135 per 30-second advertisement per kiosks per month,
depending on known traffic in specific location, 30% commission paid to Playtime
or KRI Canada, balance is divided 50-50 with Power Photo and Playtime or KRI
Canada.
Production Rollout Phase, 10 advertisers agree to pay minimum of $162 per
30-second advertisement per kiosk per month, depending on known traffic in
specific location, 30% commission paid to Playtime or KRI Canada if they sell
the advertisement, balance split 50-50 with Power Photo and Playtime or KRI
Canada.
Cost of Advertising does not include production cost of video or QuickTime video
Advertisement. Power Photo does agree to convert customers VHF videotape to AVI
files to run on Kiosks at no costs.
The Net Revenue to PPK from Static Poster Advertising Revenue is calculated as
follows:
Pilot Project Phase (starting after 30 days of deployment of kiosk); 3
advertisers agree to pay $81 per ad per kiosk per month, depending on known
traffic in specific location, 30% commission paid to Playtime or KRI Canada if
they sell advertisement, balance is split 50-50 with Power Photo and Playtime or
KRI Canada.
Production Phase Rot/out; 6 advertisers agree to pay a minimum of $108 per ad
per month per kiosk, depending on known traffic in specific location, 30%
commission paid to Playtime or KRI Canada, balance is split 50-50 with Power
Photo and Playtime or KRI Canada.
Cost of print and cost of production of ad are not included in above- mentioned
revenue streams. Details of specification of Ad requirements for Kiosk will be
included in PPK Manual.
Rates apply weather in US Funds or Canadian Funds depending on location 0/Kiosk.
Confidential 7