For more information, please contact:
Sports Ventures International, LLC
Korky Nelson Phone: 408.892.8185
Mark Alexander 925.915.9500
_____________________________________________________ Company Overview: Sports Ventures International, LLC (“SV”, the Management Team: “Company”) is a sports intellectual property marketing and licensing company Kirk (Korky) Nelson – Founder and Exec currently focused on initially branding ‘legends’ of the National Basketball VP, Business Development, Drafted by the Association (“NBA”), and then ‘legends’ of other sports (e.g. tennis, golf, NBA Phoenix Suns in 1979. Played professionally 13 seasons in Europe and soccer, and Olympic sports) which are popular in the Peoples Republic of Israel. Active member and participant in China’s (“PRC”). National Basketball Retired Players SV will generate income by: (1) first securing the rights to license publicity for Association (NBRPA) and worldwide NBA US sports legends in the PRC - initially former stars of the National Basketball community goodwill projects Association, and subsequently retired ‘legends’ of other pro sports; and (2) using Mark Alexander – Cofounder and COO, with these intellectual property rights and strategic relationships to enter into 25+ years’ operations and finance executive international licensing, marketing and distribution agreements with the Li Ning management experience in retail, specialty Company (“LNC”), the PRC’s largest sports apparel company ($US637M in apparel and technology to over 50 ventures revenues in 2007, over 6,000 retail outlets covering over 90% of the PRC) including Polycom and Sweet Factory. which is expanding worldwide. LNC was founded by the 1984 Olympic Gold Currently an advisory board member of Sitka Medal Gymnast Li Ning, a national hero who was recently honored by lighting Gear, a specialty outdoor apparel company the Olympic torch during opening ceremonies at the 2008 Beijing Olympics. Bruce O’Neil – Advisor and Director, Business Development – Asia, Founder/CEO Sports Ventures is a team of sports and business professionals with the depth of US Basketball Academy. Instrumental in and experience to execute this plan. The founders have developed many assisting China in the modernization of its strategic relationships at the Boardroom level which they intend to exploit. professional basketball system. Has trained These relationships include the National Basketball Retired Players Association PRC players (e.g. Yao Ming), coaches and (“NBRPA”), the NBA, China Basketball Association (“CBA”), the China referees, as well as supplied the CBA with University BB Association (“CUBA”) and other international basketball and foreign players and US coaches. Has very sports community relationships. close relationships with the Li Ning Co. China’s population of 1.3B (302M aged 15-29 and 270M children under 14) is Rick Barry – Advisor and NBA “Legend”, passionate about its sports branded products, pro athletes, and basketball in Member, All-Time Fifty NBA Greatest, general. There is extremely strong Chinese interest in the legends of the NBA, board member of NBRPA, sports media as well as other sport ‘legends’. Subsequently, SV hopes to leverage the LNC announcer, host, analyst, and promoter. His four oldest sons have all played professional agreement and success in the PRC to initiate similar agreements in the US and basketball in the NBA and Europe. Canada, the Middle East, Asia, Australia, Europe and South America. Industry: The Company intends to finalize the LNC business relationship during the next Sports marketing, licensing, media, 90-120 days. Upon completion of the licensing agreement, SV will enter the entertainment PRC market using a trusted manufacturer with extensive distribution and General Counsel: retailing partners, greatly minimizing SV’s financial and operational risks and Reed Smith LLP reducing the traditional barriers of entry that other, less connected companies, would normally experience. CPA: Jerome A. Bellotti & Associates
Locations: Los Gatos, CA and Las Vegas, NV Years in Operation: Since 2008 Pro Forma Performance Year 1: $0.700M Revenues, $0.055M EBITDA
Pro Forma Performance Year 3: $11.500M Revenues, $5.175M EBITDA
Funding for Operations Required: $250,000 initial capital required with followon $1,500,000 required after contract completion with Li Ning Company
Use of Funds: Secure licensing, marketing and distribution agreements with the Li Ning Company, a $US700mm, publicly traded, international sports apparel and footwear enterprise.
Exit Strategy: Merger or Acquisition
Market: According to the NBA, the branded sports apparel market in China is expected to grow 20 percent annually to $2.5 billion in 2010, and already about 20,000 Chinese stores carry NBA merchandise. Nike recently announced an Asia-centric marketing drive using current sports heroes (e.g. Ronaldo and Tiger Woods) to directly compete with LNC. SV believes that a strategic partnership with LNC can benefit both companies in the PRC and globally by increasing market penetration using a highly underutilized asset – sports ‘legends’. Competitive Advantage: The first advantage is the ability to execute a low cost agreement with the Li Ning Co., the largest and most powerful manufacturer and distributor of sports apparel in the PRC by leveraging SV founders’ existing business and personal relationships in China. This allows entry into one of the largest consumer markets in the world, and saves thousands of dollars and many months of prep time to be able to quickly capitalize upon the opportunities provided there. The second competitive advantage is SV’s ability to leverage the LNC relationship to provide ‘home turf’ protection of its value – that is, partnering with the largest ‘player’ in the PRC will help using ‘home court’ advantage to compete successfully with Nike, Adidas and Reebok. The third advantage is the speed with which SV can execute and monetize, utilizing its success in the PRC to launch internationally. Product Offering: The product line will initially consist of branding basketball clothing, shoes and related gear (e.g. sunglasses, accessories, memorabilia, and collectables) and ultimately will involve branding similar lines for other sports legends popular in the PRC and globally.
For more information, please contact: Korky Nelson
Sports Ventures International, LLC
Phone: 408.892.8185
Mark Alexander 925.915.9500
_____________________________________________________ Financial Projections: the following table summarizes the Company’s projected income and expenses over the next three years, assuming the successful completion of the licensing, marketing and distribution agreements with the Li Ning Company. Management believes that such results are achievable when analyzed in the context of prevailing factors. Year 1 Projected
Year 2 Projected
Year 3 Projected
Revenues – Basketball Sales PRC 1) Sales US 2) Sales International 3)
500,000 100,000 100,000
3,000,000 750,000 1,000,000
5,000,000 1,250,000 1,500,000
-
2,000,000 750,000 1,000,000
700,000
300,000 100,000 100,000 0 5,250,000
11,500,000
GROSS MARGIN
245,000 455,000
1,837,500 3,412,500
4,025,000 7,475,000
Expenses G&A/Professional 6) Total Expenses
400,000 400,000
1,050,000 1,050,000
2,300,000 2,300,000
EBITDA
55,000
2,362,500
5,175,000
Depreciation & Amortization Interest / Other Taxes 7)
15,400
661,500
1,449,000
NET INCOME
39,600
1,701,000
3,726,000
Revenues – Other Sports
4)
Sales PRC 1) Sales US 2) Sales International 3)
Total Revenue Cost of Sales Cost of Sales 5)
1)
Revenues from Royalties Year1 Revenues from Internet Sales Only, Years 2-3 Revenues from Internet and retail sales 3) Year1 Revenues from Internet Sales Only, Years 2-3 Revenues from Internet and retail sales. Projected initial markets include Canada, Australia, Europe, Eastern Europe, Russia, Asia, South America and Israel 4) Revenues from other sports (tennis, golf, soccer, American football, and Olympic Games-related) 5) Includes royalty and endorsement fees, travel expenses for players @ 35% Revenue 6) Operating expenses Year 1 estimated actual, Years 2-3 @ 20% Revenue 7) Taxes @ 28% EBITDA 2)
Capital Requirements: Sports Legends is seeking $250,000 in order to conclude the agreements with the Li Ning Company in China in the next 90-120 days, and a follow-on $1,500,000 upon LNC agreement completion to: a) begin contract performance in the PRC; b) to initiate similar licensing agreements in N. America, Israel, Europe, Asia and South America; and c) to seek additional capital appropriate to scaling the SV operation. The uses of capital for the initial $250,000 are as follows: Start-up costs (Licensing and Legal expense) Travel (Domestic and China Trips) Marketing Operations (Advisory fees/Office Expenses) -
$80,000 35,000 25,000 110,000
Value Proposition: As illustrated in the income and expense projections above, management believes the Company can potentially achieve reasonable growth over the next three years, approaching annual revenues of $11.5 million and EBITDA of $5.175 million by Year 3. By way of an exit strategy, the Company has identified a number of potential acquisition candidates and believes that if such financial milestones are reached, SV will become a prime acquisition target by a larger player in the Sports Entertainment or Sports Apparel industries. Applying a combination of both private equity acquisition and public trading multiples to the projections above, Sports Ventures may have the potential to be sold for $19 - $30 million; potentially delivering a very favorable internal rate of return on capital.