Cover Page Business Plan Version 3.2 Contact: Dean Birmingham (305) 331-6072 [email_address] Shaun Wilson (727) 510-8933 [email_address]
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1.0 Executive Summary <ul><li>Party Patrol Productions Inc produces Bad Girls on Film to feed the insatiable hunger of adult reality fans with original content filmed at the wildest parties across North America featuring girls of all sorts being naughty in so many ways. We will seek out and find the hottest girls doing the craziest things and deliver it to our customers around the world for their viewing pleasure in the form of nicely packaged DVDs. Each month we will deliver sexy, original footage in new releases to our subscription members. Our desire to entertain the masses with our brand of adult reality has us always seeking to broaden our horizons and expose some of our wildest behavior. </li></ul><ul><li>The Objectives of Party Patrol Productions: </li></ul><ul><li>Launch Bad Girls On Film DVD series and subscription program with TV ad campaign as soon as possible. </li></ul><ul><li>Run late night TV ads on ten targeted markets in the first month, adding additional markets each month thereafter. </li></ul><ul><li>Reach a gross sales totaling of over ($US) 9.3 million in the first full year of operation. </li></ul><ul><li>Build compounding subscription base of monthly DVD consumers. </li></ul><ul><li>Build brand recognition by producing popular reality spots, securing sponsors, and marketing apparel. </li></ul><ul><li> </li></ul>
1.1 Objectives <ul><li>The Objectives of Party Patrol Productions: </li></ul><ul><li>Launch Bad Girls On Film DVD series and subscription program with TV ad campaign in November of 2008. </li></ul><ul><li>Run late night TV ads on ten targeted markets in the first month, adding additional markets each month thereafter. </li></ul><ul><li>Reach a gross sales totaling of over ($USD) 9.4 million in the first full year of operation. </li></ul><ul><li>Build compounding subscription base of monthly DVD consumers. </li></ul><ul><li>Build brand recognition by producing popular reality spots, securing sponsors, and marketing apparel. </li></ul>
1.2 Mission Party Patrol Productions Inc produces Bad Girls on Film to feed the insatiable hunger of adult reality fans with original content filmed at the wildest parties across North America featuring girls of all sorts being naughty in so many ways. We will seek out and find the hottest girls doing the craziest things and deliver it to our customers around the world for their viewing pleasure in the form of nicely packaged DVDs. Each month we will deliver sexy, original footage in new releases to our subscription members. Our desire to entertain the masses with our brand of adult reality has us always seeking to broaden our horizons and expose some of our wildest behavior.
1.3 Keys to Success <ul><li>The keys to success for Bad Girls On Film are: </li></ul><ul><li>Reaching our target audience by flooding late night television with our advertisements. </li></ul><ul><li>Attracting customers with provocative ad campaigns that are entertaining to watch. </li></ul><ul><li>Build a solid subscription customer base by providing quality DVD releases. </li></ul><ul><li>Keep legal costs low by following strict protocol in the process of gathering content. </li></ul>
2.0 Company Summary "Bad Girls On Film" (BGOF) films at major party events across North America and produces an adult reality DVD series with the footage. DVD's run about 40 to 60 minutes with edited content of adults doing the wildest things. The DVD's are sold through late night TV commercials and online ads. Special promotions are offered to encourage our customers to be become subscription members thereby receiving a new DVD product every month. BGOF films at popular events through out the year to provide new content each month.
2.1 Company Ownership Party Patrol Products Inc dba Bad Girls On Film is a private company filming, packaging, advertising, and distributing adult theme DVD's. It is owned and operated by Dean Birmingham and Shaun Wilson.
2.2 Start-up Summary The following table and chart illustrates initial start-up costs for the company including cash on hand to cover expenses for the company in it's first 3 months regardless of projected profits. Current assets include 7 completed DVD's releases and camera equipment.
Start-up Start-up Requirements Start-up Expenses Legal $4,000 Editing $1,800 Website $1,200 Advertising $27,000 PR $5,000 DVD Printing/Packaging $9,500 Other $6,000 Total Start-up Expenses $54,500 Start-up Assets Cash Required $100,000 Other Current Assets $84,000 Long-term Assets $6,600 Total Assets $190,600 Total Requirements $245,100
3.0 Products Party Patrol Productions sells a DVD series Bad Girls On Film. DVD content is compiled footage from major party events across North America. DVD releases are advertised on TV and Internet with emphasis on our subscription program. Orders are taken on the phone by a contracted call center and then DVD's are shipped by a third party to the customer. Subscription members automatically receive new product month after month until they cancel.
4.0 Market Analysis Summary Revenue for adult DVD sales and rentals totaled over 3.6 billion dollars in 2006. Reality shows have become the most popular form of entertainment on television today. The adult reality genre has very few producers and only one true mass distributor in today's market, Girls Gone Wild (GGW). In 2007, Girls Gone Wild grossed nearly 100 million dollars in revenue primarily from DVD sales achieved through late night TV commercials in various markets across the U.S.. Consumers of this product love the mainstream appeal of it's packaging and reputation. Besides it's being a fixture in modern pop culture, this product provides a form of sensual adult entertainment without the adult taboo. With over 18 million direct web searches for 'Girls Gone Wild' last year alone, it's obvious their method of branding is very effective and this also reflects the markets hunger for such a product. With GGW only able to produce a limited amount of new titles each year, there is a huge demand for additional products along this line.
4.1 Market Segmentation <ul><li>The potential customer groups for Bad Girls on Film are: </li></ul><ul><li>Customers of Girls Gone Wild: Our research reveals that GGW sells over 8,000,000 DVDs in the U.S. annually and continues to grow with practically no current competition. GGW has only recently established distribution deals in other countries and will no doubt grow it's consumer base substantially. </li></ul><ul><li>Audiences in markets untapped by GGW where we plan to make new inroads such as minority groups in the U.S. </li></ul><ul><li>Subscribers to new emerging mobile media technologies (pod casts, iMovies, etc) that is currently untouched by anyone else in our specific genre of entertainment. </li></ul><ul><li>World wide consumers via distribution in strictly digital downloadable formats. </li></ul>
Market Analysis Market Analysis Year 1 Year 2 Year 3 Year 4 Year 5 Potential Customers Growth CAGR US DVD Sales 25% 1,080,000 1,350,000 1,687,500 2,109,375 2,636,719 25.00% Canada, Aus Sales 10% 0 60,000 66,000 72,600 79,860 0.00% Other Markets 10% 0 0 45,000 49,500 54,450 0.00% Total 26.56% 1,080,000 1,410,000 1,798,500 2,231,475 2,771,029 26.56%
4.2 Target Market Segment Strategy BGOF primarily focuses on it's target market, the current customers of Girls Gone Wild and other fans of reality TV, through the blitzing of popular late night TV networks with our ads and infomercials. The audience we focus on reaching are men ages 18 to 35 with a credit card. The ad campaigns will continuously promote our subscription program by offering discount sale prices to all who subscribe and pay with their credit card.
4.3 Industry Analysis Adult Entertainment is the most profitable media in today's market and "adult reality" is at the forefront of today's hottest trends. Very few companies have been as successful as Girls Gone Wild (GGW) due to it's unique approach to gathering and distributing content. Although GGW faced many legal challenges for it's methods of filming over the years they has moved forward in becoming one of the biggest players in this genre. GGW's distribution method is quite similar to the Time Life Music subscription program but their strategy of repetitious late night TV ads and brand name promotion have no equal.... Until now! Party Patrol Productions has been filming for the past couple of years at the wildest events across North America and is ready to release our series of DVD's titled "Bad Girls on Film" (BGOF). The market has very few products to consume in this unique media platform. While competitors such as 'Wild Party Girls' have been forced to abandon the GGW format and morph into a porn company due to their inability to generate new reality content at events, GGW continues to grow and expand it's consumer base globally and is currently making almost $100 million dollars a year in revenue. With consumers in the U.S. always spending money on adult entertainment and giant foreign markets opening for business in this genre, the market has unlimited potential and ever expanding profit margins. Taking the legal lessons learned form GGW's challenges, our proven ability to produce a great product, and combining it with this red hot market, Bad Girls On Film is ready to launch!
4.3.1 Competition and Buying Patterns The purchase decision for our customer is based upon their curiosity and natural voyeuristic tendencies combined with our advertised sale price: 2 DVD's for only $9.99 plus shipping and handling. Besides harnessing the popularity of Girls Gone Wild, Bad Girls On Film will attract subscribers with our more realistic content. Our customers will be willing to pick up the phone and subscribe to our product for the simple fact of it being a really great deal. Our subscribers will continue to pay for monthly DVD releases for two reasons: It's a value considering the amount of entertainment, and it's a hassle to cancel the subscription as all cancellations must be in mailed to us in writing. This formula is the basis of success with GGW and others such as Time Life Music.
5.0 Web Plan Summary Bad Girls On Film's website will be a dynamic marketing tool for the company that generates sales, recruits promotional partners, solicits content, and advertises our events worldwide. The company site will be the point of sale used by both our call center and our direct online customers. The purchasing format for our direct online customers will be geared towards selling subscriptions to our DVD series similar to the call center focus. BadGirlsOnfilm.com will list our upcoming filming schedule and promote the events we will attend to gather content. The site will also offer exclusive BGOF merchandise for sale adding to our earning and marketing potential. Contests geared towards creating brand awareness and gathering new content will be advertised on the site as well. As the company grows, its recruiting needs can be addressed by posting career opportunities and FAQs about the company. The goal will be to implement a functional and professionally designed website that can be adapted to meet the company's growing needs.
5.1 Website Marketing Strategy <ul><li>The company website will maintain a two-way link with our DVD and merchandise suppliers. In addition to using the page as a sales tool, BadGirlsOnFilm.com will attract our potential customers in many ways: </li></ul><ul><li>Banner and pop-up advertising on similar sites </li></ul><ul><li>Targeted online advertising buys in niche web sites, buying targeted key word searches </li></ul><ul><li>Posting on video share sites such as Youtube, PornTube, etc, to generate word-of-mouth buzz and brand awareness </li></ul><ul><li>Leveraging the Internet news media and online reviewers for exposure with concepts such as "Hometown Naughties" </li></ul><ul><li>Advertise through online PR events, Internet trade shows, and through affiliate programs such as PR Web </li></ul><ul><li>Advanced digital marketing via systems such as TNS Media Intelligence, Williams Worldwide Television, Script to Screen, Spotrunner, Double Click, Fetch Back, Rev Cube, Gorilla Nation, Crazy Egg, etc.. </li></ul>
5.2 Development Requirements BadGirlsOnFilm.com's initial redesign will be outsourced to Blue Design. Maintenance and creation of future versions of the website will be outsourced to Tamara Stewart, a professional graphics designer with years of experience. The contractor will work with the marketing department to conceptualize the sites image and overall design. It will be maintained in-house and major site redesigning will be made through a contractor.
6.0 Strategy and Implementation Summary Bad Girls On Film's strategy is to enter markets which have proven to hold the largest consumer bases for our product. The branding of our name and logo through late night TV advertisements and internet marketing is key to creating an interest in our product. In addition, promotions and visible presence the events we film at are part of our marketing strategy.
6.1 SWOT Analysis Bad Girls on Film has a valuable cache of strengths that will insure our success. These strengths include: a rare ability to get valuable unscripted content, an exciting new image to provide it at a great value, and the ability to evolve with technological trends in the industry. This ability to be on the cutting edge will address our weakness of being in a market that is moving towards digital deliveries instead of posted hard copies. Our success translates into profits which are reinvested in producing DVD releases that include fresh content and quality performances by attractive performers. Our strengths in being a new player on the scene with new content will capitalize on the opportunities such a hungry market provides there-by catapulting our brand throughout the market. These opportunities include, but are not limited to, a success as great as our competition, the possibility of becoming a household name, and the future of venturing into mainstream media with a reality show and our own cable network. The key to being as profitable as possible is avoiding threats such as legal issues by maintaining and implementing strict protocol in obtaining and distributing our content.
6.1.1 Strengths <ul><li>The ability to secure new content. We are the best in the field when it comes to gathering new content which is the heart of this product. We have been able to continuously out-perform our competition in this regard at literally every event we film at, and all without a name recognition. </li></ul><ul><li>A new name on the scene. The excitement and curiosity generated from a new brand in the game will generate immediate attention and hype. Hype sells. </li></ul><ul><li>More reality, less fiction. The content of our DVD's contain more 'real' content and less staged material because we are able to have our cameras get in the middle of the wild events we attend and our persuasion skills our second to none. The reality fans of today know a fake when they see one and we are the real deal. </li></ul><ul><li>Lower prices. Initially, we will be offering our subscription customers new releases for half the price of our competition. All DVD's to shipped month after month will cost $9.99 plus S&H instead of the $19.99 plus S&H that Girls Gone Wild charges. </li></ul><ul><li>Clear vision of industry trends. Bad Girls On Film is constantly monitoring the newest trends affecting our genre's transition to digital and mobile platforms and is ready to provide our products on that platform when the market demands. </li></ul>
6.1.2 Weaknesses <ul><li>Market trend towards digital platforms. More and more consumers are choosing to download their entertainment material directly. Our Profit margins are partially reliant on the shipping and handling fees we charge. We also need to take more precautions to safe guard our copy rights with digital media versions. </li></ul><ul><li>Lack of professional performances in content. What is a strength is also a drawback in the sense that our competitors have more models performing 'juicy scenes' in their productions. This problem is easily solved with financial investment in staged filming. </li></ul>
6.1.3 Opportunities <ul><li>Open market that is hungry for more content. The inability of anyone to really duplicate Girls Gone Wild's success has left the door wide open for us to do it, and do it better! Their triumphs and failures are our road map to a very profitable outcome with less pitfalls. </li></ul><ul><li>Harness the popularity of the "Bad Girl' image. It's no doubt that today's pop culture through TV, music, and celebrity behavior has main streamed the bad girl persona into must see entertainment. </li></ul><ul><li>Ride the reality train to other productions. With new reality shows emerging every season, Bad Girls On Film is the perfect candidate for it's own reality show for mainstream audiences on cable networks. With new content constantly being collected and compiled, having our own network on cable access is a star on the horizon rapidly approaching. </li></ul>
6.1.4 Threats <ul><li>Legal costs associated with this genre. The cost of doing business in this business is the cost of defending ourselves against civil suits from those seeking to cash in on our success. Lessons well learned from Girls Gone Wild's experience. We must continue to abide by strict protocol in obtaining content and be conscious of all legalities involved. </li></ul><ul><li>Government legislation restricting our operations in certain States. State Legislators in a few states have tabled bills to outlaw distribution of products similar to ours. No such motions have come close to passing but we will continue to monitor this threat as weak as it may be. </li></ul>
6.2 Competitive Edge Bad Girls On Film's competitive edge comes from us being the new guys on the scene with crazier, more realistic content, provided at a better price. We have been able to get more out of the events we have filmed even with our extremely popular competitors present. What we lack in staged content temporarily, we more than make up in alternative entertainment from the events. From girl fights, to police beat downs, we have much more than just girls flashing, kissing, and showering together. There's no doubt, that with enough investment to add scripted performances to our productions and heavily advertise our product, we can easily approach the success Girls Gone Wild has attained.
6.3 Marketing Strategy Party Patrol Production's marketing strategy for Bad Girls on Film focuses on late night TV ads in targeted markets where research has shown large qualified consumer bases for our product. The networks we advertise on are chosen based upon the demographics they attract during the time slots we advertise in. Our marketing strategy includes creating a far reaching online presence based on several direct endeavors to: advertise to our likely consumers via banners and pop ups, create deep links throughout the web to increase our search result presence through blogging, video sharing, link exchanges, etc, and the purchasing of adword optimization. We will also continuously create a brand name 'buzz' by maintaining a positive high profile presence at the many events we film at across North America.
6.4 Sales Strategy Bad Girls On Films strategy focuses on first targeting our top ten television markets for advertising our initial release of two DVD's. These markets have been researched and deemed to have a great consumer base for our product. The networks we advertise our late night ads on include Spike TV, Comedy Central and the Cartoon Network (Adult Swim) among others and are all very popular with our target audiences. Our repetitious ads offer the great deal of 2 feature length DVD's with brand new content for a great price as part of a subscription program. Call centers with well scripted representatives are trained to turn each call into a subscription. As our subscription customer base compounds, we will continue to release new material each month and have new advertising campaigns with new themes each season thereby always generating new interest in our series. We will continue to add to our target markets each month until we have a broad presences over the entire US market. Distribution deals abroad will soon follow.
6.4.1 Sales Forecast The following chart and table show our present sales forecast. We project new customer DVD sales to grow approximately 33% and subscription DVD sales to grow approximately 75% in our first year due to the compounding effect the subscription program facilitates.
Sales Forecast Sales Forecast Year 1 Year 2 Year 3 Unit Sales New Customer DVD Sales 191,520 254,722 338,780 Subscription DVD Sales 355,804 622,657 1,089,649 Single Non-subscription Sales 10,080 13,406 17,830 Total Unit Sales 557,404 890,785 1,446,259 Unit Prices Year 1 Year 2 Year 3 New Customer DVD Sales $16.90 $16.90 $16.90 Subscription DVD Sales $16.90 $16.90 $16.90 Single Non-subscription Sales $16.90 $16.90 $16.90 Sales New Customer DVD Sales $3,236,688 $4,304,802 $5,725,382 Subscription DVD Sales $6,013,088 $10,522,903 $18,415,068 Single Non-subscription Sales $170,352 $226,561 $301,327 Total Sales $9,420,128 $15,054,266 $24,441,777 Direct Unit Costs Year 1 Year 2 Year 3 New Customer DVD Sales $10.05 $10.05 $10.05 Subscription DVD Sales $6.02 $6.02 $6.02 Single Non-subscription Sales $6.02 $6.02 $6.02 Direct Cost of Sales New Customer DVD Sales $1,924,776 $2,559,956 $3,404,739 Subscription DVD Sales $2,141,940 $3,748,395 $6,559,687 Single Non-subscription Sales $60,682 $80,704 $107,337 Subtotal Direct Cost of Sales $4,127,398 $6,389,055 $10,071,763
6.5 Milestones The accompanying table shows specific milestones, with responsibilities assigned, dates, and budgets. The milestones represented in this plan are those which we have determined to be the most important. Budgets demands can be met over time based upon their.
Milestones Milestones Milestone Start Date End Date Budget Manager Department Secure investment capital 8/17/2009 10/17/2009 $200 D. Birmingham ??? Sign 1 month TV ad deal 9/17/2009 10/25/2009 $27,000 D. Birmingham Spot Runner Sign call center deal 9/17/2009 10/18/2009 $16,900 S. Wilson 24/7 Intouch Sign printing/distribution deal 9/17/2009 10/25/2009 $9,500 D. Birmingham Duplium Re-Launch BadGirlsonFilm.com 10/31/2009 11/7/2009 $4,000 S. Wilson Blue Design Air Commercials in 10 markets 11/15/2009 12/15/2009 $0 S. Wilson Spot Runner Add 2 TV markets monthly 12/15/2009 8/15/2010 $415,800 S. Wilson Spot Runner Film at Mardi Gras 2009 2/12/2010 2/25/2010 $11,000 D. Birmingham Contracted Crew Film Spring Break Mexico 3/7/2010 3/21/2010 $18,000 D. Birmingham Contracted Crew Film Spring Break Gulf Coast 3/20/2010 3/28/2010 $9,000 S. Wilson Contracted Crew Film Spring Break Florida 3/22/2010 3/29/2010 $8,000 D. Birmingham Contracted Crew Totals $519,400
7.0 Management Summary Party Patrol Productions Inc. consists of four full time employees. Additional assistance is acquired on a contracted part-time basis and/or through the use of consultants, specifically during the filming at events and for legal matters. Detailed descriptions are found in the following section.
7.1 Personnel Plan The personnel plan requires that we keep the only the essential employees on the monthly payroll. All other manpower such as film crews, promoters, talent, etc, will be hired on contract basis per event.
Personnel Personnel Plan Year 1 Year 2 Year 3 Shaun Wilson - President $177,501 $600,000 $900,000 Dean Birmingham - CEO $177,501 $600,000 $900,000 Tamara Stewart - Webmaster $20,000 $18,000 $18,000 Ryan Dufrene - Chief Editor $20,000 $21,600 $21,600 Total People 4 4 4 Total Payroll $395,002 $1,239,600 $1,839,600
8.0 Financial Plan We want to finance growth through a combination of short term debt and cash flow. Purchase of the more commercial air time will be covered by sales profits with-in the first 3 to 4 months. Additional advertising in new markets will be financed with cash-flow.
8.1 Start-up Funding The start-up costs of Bad Girls on Film will consist primarily of commercial air time and the printing of DVD's. Dean Birmingham and Shaun Wilson will invest 'sweat equity', benefits and labor to the start up. Investors will contribute approximately $250,000 (USD). The requirment of extra cash on hand is to ensure business expenses are covered for the first 3 months from start-up.
Start-up Funding Start-up Funding Start-up Expenses to Fund $54,500 Start-up Assets to Fund $190,600 Total Funding Required $245,100 Assets Non-cash Assets from Start-up $90,600 Cash Requirements from Start-up $100,000 Additional Cash Raised $11,400 Cash Balance on Starting Date $111,400 Total Assets $202,000 Liabilities and Capital Liabilities Current Borrowing $0 Long-term Liabilities $0 Accounts Payable (Outstanding Bills) $6,500 Other Current Liabilities (interest-free) $0 Total Liabilities $6,500 Capital Planned Investment Owner $50,000 Investor $200,000 Additional Investment Requirement $0 Total Planned Investment $250,000 Loss at Start-up (Start-up Expenses) ($54,500) Total Capital $195,500 Total Capital and Liabilities $202,000 Total Funding $256,500
8.2 Important Assumptions Important assumptions for this plan are found in the following table. These assumptions largely determine the financial plan and require that we secure additional financing.
8.3 Break-even Analysis The break-even analysis shows that Bad Girls On Film has sufficient sales strength to remain viable and become highly profitable Our break-even point is close to 10,274 units per month and calculated costs only increase with a steady approach to adding new markets. Projections are detailed in the following table.
Break-even Analysis Break-even Analysis Monthly Units Break-even 10,274 Monthly Revenue Break-even $173,630 Assumptions: Average Per-Unit Revenue $16.90 Average Per-Unit Variable Cost $7.40 Estimated Monthly Fixed Cost $97,554
8.4 Projected Profit and Loss The profits projected are very conservative based on a formula of making an average of securing only 3 sales for every one minute commercial we air in our targeted markets resulting in $2,885,008 net profit in our first year by adding two markets each month. With primary costs always being the investment in TV commercials, we project that by increasing ad time spending at an average of $415,800 per year, we expect to earn a minimum net profit of $3,949,704 in year two, and $7,169,006 in year three.
Profit and Loss Pro Forma Profit and Loss Year 1 Year 2 Year 3 Sales $9,420,128 $15,054,266 $24,441,777 Direct Cost of Sales $4,127,398 $6,389,055 $10,071,763 Other Costs of Sales $0 $0 $0 Total Cost of Sales $4,127,398 $6,389,055 $10,071,763 Gross Margin $5,292,730 $8,665,211 $14,370,015 Gross Margin % 56.19% 57.56% 58.79% Expenses Payroll $395,002 $1,239,600 $1,839,600 TV AD Marketing/Web Promotion $716,400 $1,596,600 $2,012,400 Depreciation $0 $0 $0 Rent $0 $0 $0 Utilities $0 $0 $0 Insurance $0 $0 $0 Payroll Taxes $59,250 $185,940 $275,940 Other $0 $0 $0 Total Operating Expenses $1,170,652 $3,022,140 $4,127,940 Profit Before Interest and Taxes $4,122,078 $5,643,071 $10,242,075 EBITDA $4,122,078 $5,643,071 $10,242,075 Interest Expense $637 $637 $637 Taxes Incurred $1,236,432 $1,692,730 $3,072,431 Net Profit $2,885,008 $3,949,704 $7,169,006 Net Profit/Sales 30.63% 26.24% 29.33%
8.5 Projected Cash Flow Bad Girls On Film expects to manage the cash flow over the next three years with assistance of a loan from investors of ($USD) 250,000 for initial start-up costs. This financing is required to provide the working capital to meet the costs of buying advertising slots in targeted markets and for the costs of printing a stock of DVD's, and related expenses.
Cash Flow Pro Forma Cash Flow Year 1 Year 2 Year 3 Cash Received Cash from Operations Cash Sales $9,420,128 $15,054,266 $24,441,777 Subtotal Cash from Operations $9,420,128 $15,054,266 $24,441,777 Additional Cash Received Sales Tax, VAT, HST/GST Received $777,161 $1,241,977 $2,016,447 New Current Borrowing $6,500 $0 $0 New Other Liabilities (interest-free) $50,000 $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 $0 $0 $0 Subtotal Cash Received $10,253,788 $16,296,243 $26,458,224 Expenditures Year 1 Year 2 Year 3 Expenditures from Operations Cash Spending $395,002 $1,239,600 $1,839,600 Bill Payments $5,091,551 $10,109,210 $14,975,510 Subtotal Spent on Operations $5,486,553 $11,348,810 $16,815,110 Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out $777,161 $1,241,977 $2,016,447 Principal Repayment of Current Borrowing $0 $0 $0 Other Liabilities Principal Repayment $0 $0 $0 Long-term Liabilities Principal Repayment $0 $0 $0 Purchase Other Current Assets $0 $0 $0 Purchase Long-term Assets $0 $0 $0 Dividends $0 $0 $0 Subtotal Cash Spent $6,263,714 $12,590,787 $18,831,557 Net Cash Flow $3,990,074 $3,705,456 $7,626,667 Cash Balance $4,101,474 $7,806,931 $15,433,598
8.6 Projected Balance Sheet As shown in the balance sheet in the following table, our net worth will grow from approximately ($USD) 3,080,508 in first fiscal year to more than ($USD) 14,199,219 by the end of our 3rd year. The monthly projections are in the appendix.
Balance Sheet Pro Forma Balance Sheet Year 1 Year 2 Year 3 Assets Current Assets Cash $4,101,474 $7,806,931 $15,433,598 Other Current Assets $84,000 $84,000 $84,000 Total Current Assets $4,185,474 $7,890,931 $15,517,598 Long-term Assets Long-term Assets $6,600 $6,600 $6,600 Accumulated Depreciation $0 $0 $0 Total Long-term Assets $6,600 $6,600 $6,600 Total Assets $4,192,074 $7,897,531 $15,524,198 Liabilities and Capital Year 1 Year 2 Year 3 Current Liabilities Accounts Payable $1,055,067 $810,819 $1,268,480 Current Borrowing $6,500 $6,500 $6,500 Other Current Liabilities $50,000 $50,000 $49,999 Subtotal Current Liabilities $1,111,566 $867,318 $1,324,979 Long-term Liabilities $0 $0 $0 Total Liabilities $1,111,566 $867,318 $1,324,979 Paid-in Capital $250,000 $250,000 $250,000 Retained Earnings ($54,500) $2,830,508 $6,780,212 Earnings $2,885,008 $3,949,704 $7,169,006 Total Capital $3,080,508 $7,030,212 $14,199,219 Total Liabilities and Capital $4,192,074 $7,897,531 $15,524,198 Net Worth $3,080,508 $7,030,212 $14,199,219
8.7 Business Ratios Standard business ratios are included in the following table. The ratios show an aggressive plan for growth in order to reach as many markets as possible within three years. Return on investment increases by larger margins each year as our subscription base grows. Projections are conservatively based on achieving less than 10% of Girl's Gone Wild's success.
Ratios Ratio Analysis Year 1 Year 2 Year 3 Industry Profile Sales Growth n.a. 59.81% 62.36% 0.00% Percent of Total Assets Other Current Assets 2.00% 1.06% 0.54% 100.00% Total Current Assets 99.84% 99.92% 99.96% 100.00% Long-term Assets 0.16% 0.08% 0.04% 0.00% Total Assets 100.00% 100.00% 100.00% 100.00% Current Liabilities 26.52% 10.98% 8.53% 0.00% Long-term Liabilities 0.00% 0.00% 0.00% 0.00% Total Liabilities 26.52% 10.98% 8.53% 0.00% Net Worth 73.48% 89.02% 91.47% 100.00% Percent of Sales Sales 100.00% 100.00% 100.00% 100.00% Gross Margin 56.19% 57.56% 58.79% 0.00% Selling, General & Administrative Expenses 25.56% 31.32% 29.46% 0.00% Advertising Expenses 7.60% 10.61% 8.23% 0.00% Profit Before Interest and Taxes 43.76% 37.48% 41.90% 0.00% Main Ratios Current 3.77 9.10 11.71 0.00 Quick 3.77 9.10 11.71 0.00 Total Debt to Total Assets 26.52% 10.98% 8.53% 0.00% Pre-tax Return on Net Worth 133.79% 80.26% 72.13% 0.00% Pre-tax Return on Assets 98.32% 71.45% 65.97% 0.00% Additional Ratios Year 1 Year 2 Year 3 Net Profit Margin 30.63% 26.24% 29.33% n.a Return on Equity 93.65% 56.18% 50.49% n.a Activity Ratios Accounts Payable Turnover 5.82 12.17 12.17 n.a Payment Days 36 35 25 n.a Total Asset Turnover 2.25 1.91 1.57 n.a Debt Ratios Debt to Net Worth 0.36 0.12 0.09 n.a Current Liab. to Liab. 1.00 1.00 1.00 n.a Liquidity Ratios Net Working Capital $3,073,908 $7,023,612 $14,192,619 n.a Interest Coverage 6,471.08 8,858.82 16,078.61 n.a Additional Ratios Assets to Sales 0.45 0.52 0.64 n.a Current Debt/Total Assets 27% 11% 9% n.a Acid Test 3.77 9.10 11.71 n.a Sales/Net Worth 3.06 2.14 1.72 n.a Dividend Payout 0.00 0.00 0.00 n.a