IWA Championship Wrestling

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Wrestling Entertainment Business Plan

Financial Plan

Based on detailed financial projections from our Balance Sheet, if the company receives the sought after approximately $500,000 in funding, it will operate profitably..

7.1 Break-even Analysis

The following table and chart show our projected Break-even Analysis.

Break-even Analysis
Monthly Revenue Break-even $281,711
Assumptions:
Average Percent Variable Cost 23%
Estimated Monthly Fixed Cost $216,650

7.2 Projected Profit and Loss

The table below contains the projected profit and loss information for IWA.

The IWA formula for success is based on consistent revenues generated from specific sponsorship packages and advertising revenues created by our television programming.

Within each weekly program there are 14 minutes of commercial advertising time broken down into either 60-second, 30-second, or 20-second spots. We are entitled to keep up to 10 minutes of that commercial time for re-sale.

Also, within the format of our television programming there are 5 basic "segments" plus an open and a close. It is our intent to find major sponsors to host at least 4 of these segments wherein each sponsor will contribute $250,000 annually to be the exclusive or "official" presentor of that segment of the show each week.

TV advertising revenue projections are based on the IWA selling 28 30-second spots per show, at a cost of $1,500, each adding up to $43,000 per show, or $504,000 in gross annual advertising sales. Less ad agency commissions (15%), this nets out to $428,000 in annual advertising revenue to the IWA.

Our pay-per-view income projections are based on our share (40%) of quarterly events with a 0.2% buy rate at $19.95 per household. This nets out to $3.8 million in annual pay-per-view revenues to the IWA.

Attendance revenue is modestly based on 1,500 tickets sold per month/event @ $10 each over the 12 shows per year. Site fees are based on a minimum of $20,000 per TV taping plus travel, rooms, and food. This nets out to $180,000 in annual gate attendance or site fees revenues to the IWA.

Merchandise projections at events are conservatively based on each of the 1,500 in attendance spending $1 each per show over the 12 shows per year. This nets out to $18,000 in annual live event merchandise revenues to the IWA.

Food and beverage revenues at live events ate based on each of the 1,500 in attendance spending $2 each per show over the 12 shows per year. This nets out to $ 36,000 in annual food and beverage revenues to the IWA.

All financial projects herein are conservative and within reason by industry standards.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $5,538,000 $14,398,800 $35,277,060
Direct Cost of Sales $1,279,000 $3,837,000 $11,511,000
Other $0 $0 $0
Total Cost of Sales $1,279,000 $3,837,000 $11,511,000
Gross Margin $4,259,000 $10,561,800 $23,766,060
Gross Margin % 76.91% 73.35% 67.37%
Expenses
Payroll $2,131,996 $4,263,992 $9,807,181
Sales and Marketing and Other Expenses $98,000 $283,000 $840,500
Depreciation $20,000 $20,000 $20,000
Leased Equipment $4,800 $9,600 $19,200
Utilities $4,800 $9,600 $19,200
Insurance $6,000 $12,000 $24,000
Rent $14,400 $28,800 $57,600
Payroll Taxes $319,799 $639,599 $1,471,077
Other $0 $0 $0
Total Operating Expenses $2,599,795 $5,266,591 $12,258,759
Profit Before Interest and Taxes $1,659,205 $5,295,209 $11,507,301
EBITDA $1,679,205 $5,315,209 $11,527,301
Interest Expense $30,313 $21,156 $13,997
Taxes Incurred $415,522 $1,318,513 $2,921,215
Net Profit $1,213,370 $3,955,540 $8,572,089
Net Profit/Sales 21.91% 27.47% 24.30%

7.3 Projected Cash Flow

The following table and chart show our projected cash flow.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $1,384,500 $3,599,700 $8,819,265
Cash from Receivables $3,464,181 $9,696,190 $23,859,063
Subtotal Cash from Operations $4,848,681 $13,295,890 $32,678,328
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $172,000 $0 $0
Subtotal Cash Received $5,020,681 $13,295,890 $32,678,328
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $2,131,996 $4,263,992 $9,807,181
Bill Payments $2,113,296 $6,044,818 $16,661,720
Subtotal Spent on Operations $4,245,292 $10,308,810 $26,468,901
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $72,000 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $60,589 $61,589 $81,589
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $1,000,000 $2,000,000 $2,000,000
Dividends $0 $0 $0
Subtotal Cash Spent $5,377,881 $12,370,399 $28,550,490
Net Cash Flow ($357,199) $925,491 $4,127,838
Cash Balance $92,801 $1,018,292 $5,146,130

7.4 Projected Balance Sheet

The Balance Sheet below contains important cash flow information, as well as assets, liabilities, and capital expectations.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $92,801 $1,018,292 $5,146,130
Accounts Receivable $689,319 $1,792,229 $4,390,960
Inventory $117,242 $351,725 $1,055,175
Other Current Assets $0 $0 $0
Total Current Assets $899,361 $3,162,246 $10,592,265
Long-term Assets
Long-term Assets $1,000,000 $3,000,000 $5,000,000
Accumulated Depreciation $20,000 $40,000 $60,000
Total Long-term Assets $980,000 $2,960,000 $4,940,000
Total Assets $1,879,361 $6,122,246 $15,532,265
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $176,580 $525,514 $1,445,033
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $176,580 $525,514 $1,445,033
Long-term Liabilities $242,356 $180,767 $99,178
Total Liabilities $418,936 $706,281 $1,544,211
Paid-in Capital $329,505 $329,505 $329,505
Retained Earnings ($82,450) $1,130,920 $5,086,460
Earnings $1,213,370 $3,955,540 $8,572,089
Total Capital $1,460,425 $5,415,965 $13,988,054
Total Liabilities and Capital $1,879,361 $6,122,246 $15,532,265
Net Worth $1,460,425 $5,415,965 $13,988,054

7.5 Business Ratios

The following table contains information from the entertainment industry, as determined by the Standard Industry Classification (SIC) Index code 7999, Amusement and Recreation, Not Elsewhere Classified.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 160.00% 145.00% 15.20%
Percent of Total Assets
Accounts Receivable 36.68% 29.27% 28.27% 5.00%
Inventory 6.24% 5.75% 6.79% 3.50%
Other Current Assets 0.00% 0.00% 0.00% 34.40%
Total Current Assets 47.85% 51.65% 68.20% 42.90%
Long-term Assets 52.15% 48.35% 31.80% 57.10%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 9.40% 8.58% 9.30% 36.40%
Long-term Liabilities 12.90% 2.95% 0.64% 23.30%
Total Liabilities 22.29% 11.54% 9.94% 59.70%
Net Worth 77.71% 88.46% 90.06% 40.30%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 76.91% 73.35% 67.37% 0.00%
Selling, General & Administrative Expenses 54.85% 45.88% 42.93% 76.60%
Advertising Expenses 0.22% 0.29% 0.42% 2.60%
Profit Before Interest and Taxes 29.96% 36.78% 32.62% 2.00%
Main Ratios
Current 5.09 6.02 7.33 1.17
Quick 4.43 5.35 6.60 0.75
Total Debt to Total Assets 22.29% 11.54% 9.94% 59.70%
Pre-tax Return on Net Worth 111.54% 97.38% 82.17% 2.40%
Pre-tax Return on Assets 86.67% 86.15% 74.00% 6.00%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 21.91% 27.47% 24.30% n.a
Return on Equity 83.08% 73.03% 61.28% n.a
Activity Ratios
Accounts Receivable Turnover 6.03 6.03 6.03 n.a
Collection Days 57 42 43 n.a
Inventory Turnover 10.91 16.36 16.36 n.a
Accounts Payable Turnover 12.97 12.17 12.17 n.a
Payment Days 27 20 20 n.a
Total Asset Turnover 2.95 2.35 2.27 n.a
Debt Ratios
Debt to Net Worth 0.29 0.13 0.11 n.a
Current Liab. to Liab. 0.42 0.74 0.94 n.a
Liquidity Ratios
Net Working Capital $722,781 $2,636,732 $9,147,232 n.a
Interest Coverage 54.74 250.29 822.11 n.a
Additional Ratios
Assets to Sales 0.34 0.43 0.44 n.a
Current Debt/Total Assets 9% 9% 9% n.a
Acid Test 0.53 1.94 3.56 n.a
Sales/Net Worth 3.79 2.66 2.52 n.a
Dividend Payout 0.00 0.00 0.00 n.a