The industry (specialty retail focusing on comic books, collectibles and graphic novels) is fractionated with the bulk of retail operators in the $200k to $400k annual revenue range. The company plans to roll up existing outlets in Southeast Florida to Central Florida first, then regional Southeast USA and enter major cities, then go national and franchise the distribution system. It is how the company operates as a distribution system, not simply as a retail concern that gives Zaldiva its advantages. The company has over $1million in hidden assets (real estate equity/fully owned property), no debt and consistent revenue growth.

At this point, Zaldiva enjoys 35-55% profit margins on comic books and graphic novels alone. Major publishers such as DC and Marvel Comics increase forward discounts once a retail organization has two or more locations. This means that the larger the distribution network (the more sales point locations), the greater the profits and other benefits that will accrue to Zaldiva. What this means to bottom line is that each small acquisition will, after dilution, bring Zaldiva approximately $.015 net profit per share on comic book sales. Anticipating ten to fifteen of these smaller acquisitions can net the company $.15 per share on one product line. The company has identified three larger ($1-2 million in revenues) targets, which, simply with economies of scale should equal or exceed the net per share enhancements of the smaller purchases. With additional locations, the increase in forward discounts themselves, at full capacity can drop $.01 per share just on the main site on Commercial Blvd. Concurrently, advertising and marketing expenditures will also increase in effectiveness.

Historical Precedence for Business Strategy

Historically, roll-up strategies have been extremely successful. A good example is Amedisys (AMED), a leading multi-regional provider of home health care nursing services including skilled nursing, aides, PT, OT, ST, MSW and specialized nursing. The company began with nothing more than a dream in the head of William F. Borne (at the time one of the first male nurses in the Baton Rouge area of Louisiana) and a plan to grow by first; establishing his company and model, and then acquiring small and medium sized home health care and skilled nursing care companies. The company went from a start up to revenues exceeding $1.2 billion.

Summary

Zaldiva is a distribution system unique to the specialty retail industry. The company combines a highly visible brick and mortar location in Ft. Lauderdale, Florida with an e-commerce website and portal which operates in conjunction with a series of ancillary websites and online auctions. This system is the foundation of the company's business and marketing plan as well as its vision and mission statements. Zaldiva focuses its product orientation on the comics and collectibles genre of the specialty retail industry. This not only plays to the management's expertise, but allows the company to operate in an economic subset that is recession averse and not subject to seasonal or market trends. Products that flow through the company's distribution nodes include, but are not limited to comic books, statues and figurines, DVDs, posters, dolls, action figures, T-shirts, die cast vehicles and automobiles.

2007 was the transition year from formation to business operations. For the first quarter (fiscal) 2008 ending in December 31, 2007, the company's revenues increased almost threefold from $27,635 to $79,353, with sales a gross profit of $35,840. Based upon the existing model and property structure, Zaldiva can, and expects to increase revenues within 12-18 months to $240 to $300k per quarter. While the company did show an after tax and expense loss of $.02 per share for fiscal 2007, cash increased from $26,827 from the end of fiscal first quarter 2007 to the end of fiscal first quarter 2008 to $62,944. In 2006 the company incurred significant expenses for infrastructure, real estate acquisition and other business building activities. Much of the staff salaries were taken in stock, which for accounting purposes were expensed against income. Much of the current expenses are fixed and while cash flow is positive in terms of EBITDA (earnings before income taxes, depreciation and amortization), the company expects positive earnings per share after taxes, interest, depreciation and amortization in the foreseeable future. As the company does anticipate incurring non-cash and non-income related expenses with its planned acquisitions, this may affect the date where that will occur. However, no acquisition will be made that does not positively affect cash flow and the business plan and structure of the company and/or shareholder equity.

Market

The primary or core business focus of Zaldiva is the comic book and ancillary collectibles market. In order to comprehend the opportunity the company has, it is imperative that we understand the dynamics of the market itself.  Today's comic book industry is quite unlike that of prior decades. The days of children buying 12 to 30 cent paperback stories are long gone. What we have now is a multi-stage dynamic that includes movies, DVDs, affiliated merchandise (action figures/posters/t-shirts), graphic novels and more. The comic book industry is not just for kids anymore. A good example of this is the evolution of a television series called "Buffy the Vampire Slayer.  "The popular television epic ran for seven highly successful years. However,  a rabid fan base clamored for more. Writers of the series gave them more in the form of an illustrated novel series or comic book called "Season 8."  This not only allowed the writer to continue to work, it satisfied the needs of the consumer. Once the series reaches five to six editions they are compiled to form a more complete story in what is known as a "Graphic Novel."  Graphic depicts illustration, not necessarily violence, gory detail or vulgarities. Of course, this also allows for the continued sales of "Buffy" action figure collectibles and ancillary products.

What others are saying

Action Figures & Accessories, exceeding $1.3 billion in sales in 2005 and has been growing steadily. According to analysts at the NPD Group, "...The power of entertainment in driving sales can be seen through the incredible success of franchises such as Star Wars and Dora the Explorer."  Another article from the Columbus Dispatch stated, "...collectibles are always in demand, making it a practically recession-proof industry. While statistics on the comic book market are harder to decipher, it is estimated that the publishing portion of the industry generated $300 million in 2003; that figure skyrockets to about $2.6 billion when licensed categories are figured in. Marvel and DC Comics control the comic category with 33 percent and 30 percent share of the market, respectively. Rounding out the playing field are strong smaller players such as Dark Horse Comics, Tokyopop Inc., and Image Comics.

The bottom line is that Zaldiva represents a unique ground floor investment opportunity for those who can afford the risk and hold onto their position while the business plan unfolds.