Executive Summary

Victorian Renovations (VR) is a start-up company that is being formed to meet the growing need for unique restored vintage homes in downtown Portland, Oregon. The company is initially focused on one building, located on Fifth and Pearl, which it is in the process of purchasing. The house will be renovated by the two owners of the business, Doug Machen and Sarah Renner, both of whom are experienced in house renovation and both of whom have graduated from the MBA program at the University of Portland. External contractors will also be used for the larger jobs, but most of the work will be completed by Doug and Sarah. After completion, the house will be rented out, and the income stream will be used to pay the mortgage on the house and to finance the purchase of another property in downtown Portland. Due to the rising demand of unique homes in this area, it is believed that the property at Fifth and Pearl will be rented out for a high price and will produce substantial cash flow to finance future projects.

1.1 Mission
The mission of VR is to develop rundown houses in the Portland area, to improve the look and financial viability of downtown Portland, and rent those properties out to provide a stream of income for future investments. The company will develop unique homes targeting the discriminating renter who is willing to pay more for a top quality home. VR seeks to be viewed as a highly visible company in the property development market.

1.2 Objectives
The following are the main objectives for VR:

To obtain investor funding to purchase and renovate a four bedroom residence on Pearl and Fifth in the Hawthorne District of Portland, Oregon. To complete renovations on the four bedroom victorian residence, to convert it into two 2-bedroom units by October 2001. To rent out that residence to provide an income stream enough to pay the mortgage and provide additional income for future projects. To purchase another residence for renovation immediately thereafter.

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1.3 Keys to Success

The keys to success for this project will be:

To complete the renovation work within the scheduled time and within the budgeted amount. To find rental occupants for the building before renovations are completed or as soon as possible after completion. To maintain an average 80% occupancy rate each year.

Company Summary
Victorian Renovations is a vintage house renovator based in Portland, OR. We purchase dilapidated buildings at low cost and renovate them in vintage Victorian style, they are then rented to young families and couples. We are a privately-owned Oregon corporation. We are relatively small, but have a good understanding of the market, a background in this industry, and a great passion for our work.

2.1 Start-up Summary

The company was started when these two business colleagues realized the number of old dilapidated homes in Portland in need of repair and correspondingly the growth in popularity of older restored homes. They have recently located the house on Pearl and Fifth and are in the process of obtaining a loan. Each partner will contribute investment which will be used to cover the down payment of 20%, the mortgage payments for the first six months while the house is being renovated, and the materials and labor to develop the building. Much of the work will be done by Doug and Sarah, since they are both owners of older homes and have completed much of the renovation and repair to those homes themselves.

Other costs associated with start-up are the legal costs of incorporating the business and building insurance.

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Start-up Requirements Start-up Expenses Legal Insurance Total Start-up Expenses Start-up Assets Cash Required Other Current Assets Long-term Assets Total Assets Total Requirements $500 $250 $750 $74,500 $750 $144,000 $219,250 $220,000

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Start-up Funding Start-up Expenses to Fund Start-up Assets to Fund Total Funding Required Assets Non-cash Assets from Start-up Cash Requirements from Start-up Additional Cash Raised Cash Balance on Starting Date

$750 $219,250 $220,000 $144,750 $74,500 $0 $74,500

Total Assets Liabilities and Capital Liabilities Current Borrowing Long-term Liabilities

$219,250

$0 $160,000

Accounts Payable (Outstanding Bills) $0 Other Current Liabilities (interest$0 free) Total Liabilities $160,000 Capital Planned Investment Sarah Renner Doug Machen Other Additional Investment Requirement Total Planned Investment Loss at Start-up (Start-up Expenses) Total Capital Total Capital and Liabilities Total Funding

$30,000 $30,000 $0 $0 $60,000 ($750) $59,250 $219,250 $220,000

2.2 Company Ownership

Victorian Renovations is a privately-held Oregon corporation. It is jointly owned by friends and business partners, Sarah Renner and Doug Machen.

Market Analysis Summary

Housing exploded into the 21st century on a high note, breaking records for home sales, home ownership rates, and the value of residential construction. Buoyed by the longest economic expansion in history, these residential real estate indicators all set records in 1999. While Portland is occasionally an enigma when stacked next to national trends--mostly because its urban growth boundary demands greater infill development--a report released this summer is nonetheless likely to raise some eyebrows. "The State of the Nation's Housing: 2000," prepared by Harvard University's Joint Center for Housing Studies and funded by the Ford Foundation, found that Portland's housing prices leaped 44% over the past decade--and even rivaled its neighboring peers, Seattle and San Francisco, by substantial percentage points. This summer, metropolitan Portland's median sales price for homes rose above the $170,000 mark--and the Lake Oswego/West Linn market soared above the $290,000 mark--according to the Residential Multiple Listing Service's Market Action.

Crunching numbers adjusted for inflation and factoring out rises in home size and quality, the Harvard University report concluded that Portland had the third-largest leap in housing prices out of 35 U.S. cities. The heftiest increases were tallied by Salt Lake City, with 60%, and Denver, with 49%. One of the largest dips in housing prices affected another West Coast neighbor, Los Angeles, which saw prices slump 18%. Metro Councilor Rod Park attributes much of Portland's home-pricing increases to the influx of out-of-state workers. Intel Corporation, for instance, recently announced plans to expand facilities in Hillsboro's high-tech Sunset Corridor. Park said the global chip maker plans to fill many new jobs with out-of-state employees. The trend with Intel snagging local tax breaks and then bringing in workers from elsewhere ought to raise the eyebrows of local officials, and especially local colleges and universities, he added. "What we view up here as expensive has a lot to do with people with more earning potential coming in and bidding the prices up," Park said. According to an affordability index prepared by the National Association of Home Builders, Portland recently ranked as the 25th least affordable of 192 major U.S. cities. (Source: The Portland Business Journal, Brian J. Back Business Journal Staff Writer.)

4.1 Market Segmentation

Victorian Renovations will be targeting upper income couples to rent its properties. Currently, although the labor market is buoyant in Portland, there is some uncertainty ahead, meaning that there are many people moving into the area who are unsure whether they will be staying for more than a couple of years. In addition, there are a large number of people moving to Portland from out of state who do not know the city as yet, so would rather rent a home than commit to a purchase. The largest population group in Portland is 20-44 year olds and VR will be targeting the 25 to 30 year olds within this group. They have been out of college for a few years and have established careers, but may not be ready to settle down yet with a home purchase. In addition, many of them are earning high wages with high tech companies. It is estimated that this group makes up 5% of all people in the 20-44 year old age group in Portland. Portland Community Age Groups 1970 29,779 94,079 114,472 90,607 56,682 1980 23,883 68,259 150,431 67,881 55,929 1990 30,314 76,792 193,287 73,269 63,657

Under 5 years 5-19 years 20-44 years 45-64 years 65+ years

Median Age

32

31

34

(Source: US Census. Median value is the middle value, not an average.)

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Market Analysis Year 1 Potential Customers Growth 20 - 44 year olds Other Total 14% 0% 11,050 0 12,597 0 12,597 14,361 0 14,361 16,372 0 16,372 18,664 0 18,664 Year 2 Year 3 Year 4 Year 5 CAGR 14.00% 0.00% 14.00%

14.00% 11,050

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4.2 Service Business Analysis

Below are the most recent figures we are able to find on the Portland housing market. If trends in the housing market have remained similar, the vacancy rate of 5.59% looks very promising for VR, since the target is to have the building occupied 80% of the year. City of Portland 1990 Housing Breakout: Vacancy Rate: Owner Occupied: Renter Occupied: (Source: US Census.) 5.59% 99,244 87,980

4.2.1 Competition and Buying Patterns

Competition comes in a number of forms in the portion of the housing market which VR will target. There are a large number of housing options in the Portland market, however we believe that there are very few houses that have been renovated in a unique Victorian style that are for rent. For this reason, although this house will be converted into two 2-bedroom apartments, we will be able to charge a premium price for rental. Where the average price for a 2-bedroom apartment in downtown Portland is $850, we will charge $900 per unit. We believe that there is room in the market for this vintage and quality of building in the rental market.

Strategy and Implementation Summary

Our strategy is based on the fact that there is a large portion of people in the Portland area who value comfortable, vintage living with all the modern conveniences. The homes that we develop will be targeted towards people who are in the market for a rental property and are willing to spend more on their homes to have authentic, classic surroundings. These people are willing to pay more for this unique property.

5.1 Competitive Edge

The company's competitive edge is the expertise of the two owners in renovating and restoring older homes. Both currently own vintage homs and have done much of the renovation themselves, only bringing contractors in to do very large jobs. In addition, both have strong business backgrounds, one in marketing and one in finance and accounting.

5.2 Marketing Strategy

The marketing for VR will be limited, since the company simply needs to rent out two apartments for one year leases. A full color leaflet will be developed that will be posted outside the property near the end of the restoring process. In addition, newspaper advertisements will be placed in local newspapers and on rental websites.

5.3 Sales Strategy

Because these apartments will be high quality, VR will be choosy about who they will accept as tenants. References and proof of employment or ability to pay the rent will be needed. Also, one month's rent will be requested as a deposit on signing of the lease.

5.3.1 Sales Forecast

The following is the sales forecast for VR's first apartment building on Fifth and Pearl.

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Sales Forecast Year 1 Sales Rental Revenue Other Total Sales Direct Cost of Sales Rental Costs Other Subtotal Direct Cost of Sales $21,600 $0 $21,600 Year 2 $23,760 $0 $23,760 Year 3 $26,136 $0 $26,136

Year 1 Year 2 Year 3 $2,160 $2,376 $2,614 $0 $0 $0 $2,160 $2,376 $2,614

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5.4 Milestones
The following Milestones table illustrate the key steps that Victorian Renovations must achieve in order to ensure the success of this venture.

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Milestones Milestone Complete Sale on House Wall repairs Plumbing Repairs Floor Refinishing Start Date End Date Budget 6/1/2001 6/15/2001 $2,000 6/15/2001 6/15/2001 6/30/2001 6/30/2001 6/30/2001 7/10/2001 8/30/2001 9/15/2001 $3,000 $2,000 $3,000 $5,000 $200 $15,200 Manager Doug Machen Contractor Doug Machen Renner/Machen Renner/Machen Sarah Renner Department Owner Admin Owner Owners Owners Owner

Decorating 7/12/2001 Advertise the House for Rent 8/25/2001 Totals

Management Summary
Victorian Renovations will be wholly owned and managed by Doug Machen and Sarah Renner. Both have MBA degrees from the University of Portland and both are experienced home owners and renovators. Victorian Renovations will be a side business for them, since they currently work time. They will be working on renovating the building on Fifth and Pearl at night and on weekends. Doug works for an accounting firm and deals with many real estate transactions for his clients. This experience makes him perfect to negotiate the sales price and mortgage on the house.

Sarah works as a marketing specialist for an interior design firm that focuses on high end reproductions of antique era household items, such a victorian style sinks, taps, wall paper, tiles, and furniture. Most of the products are sourced from overseas, so the company works on big margins. As a result, employees can get good discounts on products from the company. Sarah will be purchasing most products for the house renovation directly from her work.

6.1 Personnel Plan

The owners will be working on this project alone, though they will be bringing in contractors to do some of the heavier renovation work. For the first couple of years, neither will be taking a salary. Instead, they will be plowing profits back into the business, with the aim of buying other properties.

Financial Plan
The following financial information shows the assumptions and outcomes of the purchase, renovation, and rental of the first property on Fifth and Pearl. No attempt has been made to discuss the implications of purchasing other buildings, since these will happen on a more ad hoc basis.

7.1 Important Assumptions

The following are conservative assumptions that will influence our financial projections.

General Assumptions Plan Month Current Interest Rate Year 1 Year 2 Year 3 1 2 3 9.00% 9.00% 9.00% 6.75% 30.00% 0 6.75% 30.00% 0

Long-term Interest Rate 6.75% Tax Rate 30.00% Other 0

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7.2 Break-even Analysis

The regular Break-even Analysis is not appropriate for this project, but the following text explains the Break-even chart. Investors will receive 66% of the rental income from the property. It is estimated that this property will produce $2400 per month of rental. At maximum occupancy, the payout to investors will be fixed monthly cost of $1,600. The remaining $800 per month will be kept in a savings account to pay for general upkeep of the building and any unexpected repairs. It is estimated that routine bills and maintenance will be no more than $400 per month.

Break-even Analysis Monthly Revenue Break-even $1,417 Assumptions: Average Percent Variable Cost Estimated Monthly Fixed Cost 10% $1,275

7.3 Projected Profit and Loss

The following Profit and Loss table illustrates that VR will lose money in the first year, but in the second year, on this single property, the company will make a healthy return of 10% in 2002 and 15% in 2003.

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Pro Forma Profit and Loss Year 1 Sales Direct Cost of Sales Other Production Expenses Total Cost of Sales Gross Margin Gross Margin % Expenses $21,600 $2,160 $18,000 $20,160 $1,440 6.67% $23,760 $2,376 $0 $2,376 $21,384 90.00% $0 $1,300 $4,800 $0 $1,200 $300 $0 $0 $0 $7,600 $13,784 $18,584 $10,380 $1,021 $2,383 10.03% Year 2 $26,136 $2,614 $0 $2,614 $23,522 90.00% $0 $1,400 $4,800 $0 $1,300 $350 $0 $0 $0 $7,850 $15,672 $20,472 $10,061 $1,684 $3,928 15.03% Year 3

Payroll $0 Sales and Marketing and Other Expenses $9,500 Depreciation Leased Equipment Utilities Insurance Rent Payroll Taxes Other Total Operating Expenses Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred Net Profit Net Profit/Sales $3,200 $0 $2,300 $300 $0 $0 $0 $15,300 ($13,860) ($10,660) $10,668 $0 ($24,528) -113.56%

7.4 Projected Cash Flow

The following Balance Sheet shows healthy cash flow that will enable VR to maintain the existing location at Fifth and Pearl and allow Doug and Sarah to purchase a second property in Portland in year two of the operation.

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Pro Forma Cash Flow Year 1 Cash Received Cash from Operations Cash Sales Subtotal Cash from Operations Additional Cash Received Sales Tax, VAT, HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received Expenditures Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends $21,600 $21,600 $0 $0 $0 $0 $0 $0 $0 $23,760 $23,760 $0 $0 $0 $0 $0 $0 $0 $26,136 $26,136 $0 $0 $0 $0 $0 $0 $0 Year 2 Year 3

$21,600 $23,760 $26,136 Year 1 Year 2 Year 3 $0 $41,654 $41,654 $0 $0 $0 $3,938 $0 $0 $0 $0 $16,489 $16,489 $0 $0 $0 $4,572 $0 $0 $0 $0 $17,339 $17,339 $0 $0 $0 $4,891 $0 $0 $0

Subtotal Cash Spent Net Cash Flow Cash Balance

$45,592 ($23,992) $50,508

$21,061 $2,699 $53,207

$22,231 $3,905 $57,112

7.5 Projected Balance Sheet

The Balance Sheet shows a healthy company with a positive net worth that will ensure future financial stability and the ability to grow through investment in other properties in the future.

Pro Forma Balance Sheet Year 1 Assets Current Assets Cash Other Current Assets Total Current Assets Long-term Assets Long-term Assets Year 2 Year 3

$50,508 $750 $51,258 $144,000

$53,207 $750 $53,957 $144,000 $8,000 $136,000

$57,112 $750 $57,862 $144,000 $12,800 $131,200

Accumulated Depreciation $3,200 Total Long-term Assets $140,800 Total Assets Liabilities and Capital Current Liabilities Accounts Payable Current Borrowing

$192,058 $189,957 $189,062 Year 1 Year 2 Year 3 $1,274 $0 $1,363 $0 $0 $1,363 $151,490 $152,853 $1,431 $0 $0 $1,431 $146,599 $148,030

Other Current Liabilities $0 Subtotal Current Liabilities $1,274 Long-term Liabilities Total Liabilities Paid-in Capital Retained Earnings Earnings Total Capital $156,062 $157,336 $60,000 ($750)

$60,000 $60,000 ($25,278) ($22,895) $3,928 $41,033 $189,062 $41,033

($24,528) $2,383 $34,722 $37,105 $189,957 $37,105

Total Liabilities and Capital $192,058 Net Worth $34,722

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7.6 Business Ratios

The following table contains important ratios for the Single-family housing construction industry, as determined by the Standard Industry Classification (SIC) Index Number 1521.

Ratio Analysis Year 1 Sales Growth Percent of Total Assets Other Current Assets Total Current Assets Long-term Assets Total Assets Current Liabilities Long-term Liabilities Total Liabilities Net Worth Percent of Sales Sales Gross Margin 0.00% 0.39% 26.69% 73.31% 100.00% 0.66% 81.26% 81.92% 18.08% 100.00% 6.67% 10.00% 0.39% 28.40% 71.60% 100.00% 0.72% 79.75% 80.47% 19.53% 100.00% 90.00% 79.97% 0.00% 58.01% 39.60 39.60 80.47% 9.17% 1.79% Year 2 10.00% 0.40% 30.60% 69.40% 100.00% 0.76% 77.54% 78.30% 21.70% 100.00% 90.00% 74.97% 0.00% 59.96% 40.44 40.44 78.30% 13.68% 2.97% Year 3 Industry Profile 7.20% 30.60% 80.40% 19.60% 100.00% 44.20% 11.50% 55.70% 44.30% 100.00% 18.10% 7.00% 0.20% 3.50% 1.83 0.86 55.70% 5.40% 12.20% n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a

Selling, General & Administrative Expenses 120.22% Advertising Expenses 1.39% Profit Before Interest and Taxes -64.17% Main Ratios Current Quick Total Debt to Total Assets Pre-tax Return on Net Worth Pre-tax Return on Assets Additional Ratios Net Profit Margin Return on Equity Activity Ratios Accounts Payable Turnover Payment Days Total Asset Turnover Debt Ratios Debt to Net Worth Current Liab. to Liab. Liquidity Ratios Net Working Capital Interest Coverage Additional Ratios Assets to Sales Current Debt/Total Assets Acid Test Sales/Net Worth Dividend Payout 40.24 40.24 81.92% -70.64% -12.77%

Year 1 Year 2 Year 3 -113.56% 10.03% 15.03% -70.64% 6.42% 9.57% 33.70 27 0.11 4.53 0.01 $49,984 -1.30 8.89 1% 40.24 0.62 0.00 12.17 29 0.13 4.12 0.01 $52,595 1.33 7.99 1% 39.60 0.64 0.00 12.17 29 0.14 3.61 0.01 $56,432 1.56 7.23 1% 40.44 0.64 0.00

Appendix

Sales Forecast Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Sales Rental Revenue Other Total Sales Direct Cost of Sales Rental Costs Other Subtotal Direct Cost of Sales 0% 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $4,800 $0 $4,800 $2,400 $0 $2,400 $2,400 $0 $2,400 $2,400 $0 $2,400 $2,400 $0 $2,400 $2,400 $0 $2,400 Month 10 $240 $0 $240 $0 $240 $2,400 $0 $2,400 Month 11 $240 $0 $240 $2,400 $0 $2,400 Month 12 $240 Month 10 Month 11 Month 12

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $480 $0 $480 $240 $0 $240 $240 $0 $240 $240 $0 $240 $240 $0 $240

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General Assumptions Month 1 Plan Month Current Interest Rate Tax Rate Other 9.00% 30.00% 0 Long-term Interest Rate 6.75% 1 9.00% 6.75% 30.00% 0 Month 2 2 9.00% 6.75% 30.00% 0 Month 3 3 9.00% 6.75% 30.00% 0 Month 4 4 9.00% 6.75% 30.00% 0 Month 5 5 9.00% 6.75% 30.00% 0 Month 6 6 9.00% 6.75% 30.00% 0 Month 7 7 9.00% 6.75% 30.00% 0 Month 8 8 9.00% 6.75% 30.00% 0 Month 9 9 9.00% 6.75% 30.00% 0 Month 10 10 9.00% 6.75% 30.00% 0 Month 11 11 9.00% 6.75% 30.00% 0 Month 12 12

Pro Forma Profit and Loss Month 1 Sales Direct Cost of Sales Other Production Expenses Total Cost of Sales Gross Margin Gross Margin % Expenses Payroll Sales and Marketing and Other Expenses Depreciation Leased Equipment Utilities Insurance Rent Payroll Taxes Other Total Operating Expenses Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred Net Profit Net Profit/Sales 15% $0 $2,100 $0 $0 $400 $300 $0 $0 $0 $2,800 ($5,800) ($5,800) $900 $0 ($6,700) 0.00% $0 $2,100 $0 $0 $400 $0 $0 $0 $0 $2,500 ($7,500) ($7,500) $898 $0 ($8,398) 0.00% $0 $2,100 $0 $0 $400 $0 $0 $0 $0 $2,500 ($7,500) ($7,500) $896 $0 ($8,396) 0.00% $0 $2,300 $0 $0 $300 $0 $0 $0 $0 $2,600 ($7,600) ($7,600) $894 $0 ($8,494) 0.00% $0 $200 $400 $0 $100 $0 $0 $0 $0 $700 $3,620 $4,020 $892 $0 $2,728 56.83% $0 $100 $400 $0 $100 $0 $0 $0 $0 $600 $1,560 $1,960 $890 $0 $670 27.91% $0 $100 $400 $0 $100 $0 $0 $0 $0 $600 $1,560 $1,960 $888 $0 $672 28.00% $0 $100 $400 $0 $100 $0 $0 $0 $0 $600 $1,560 $1,960 $886 $0 $674 28.08% $0 $100 $400 $0 $100 $0 $0 $0 $0 $600 $1,560 $1,960 $884 $0 $676 28.17% $0 $100 $400 $0 $100 $0 $0 $0 $0 $600 $1,560 $1,960 $882 $0 $678 28.25% $0 $100 $400 $0 $100 $0 $0 $0 $0 $600 $1,560 $1,960 $880 $0 $680 28.34% $0 $100 $400 $0 $100 $0 $0 $0 $0 $600 $1,560 $1,960 $878 $0 $682 28.42% $0 $0 $3,000 $3,000 ($3,000) 0.00% $0 $0 $5,000 $5,000 ($5,000) 0.00% Month 2 $0 $0 $5,000 $5,000 ($5,000) 0.00% Month 3 $0 $0 $5,000 $5,000 ($5,000) 0.00% Month 4 Month 5 $4,800 $480 $0 $480 $4,320 90.00% Month 6 $2,400 $240 $0 $240 $2,160 90.00% Month 7 $2,400 $240 $0 $240 $2,160 90.00% Month 8 $2,400 $240 $0 $240 $2,160 90.00% Month 9 $2,400 $240 $0 $240 $2,160 90.00% Month 10 $2,400 $240 $0 $240 $2,160 90.00% Month 11 $2,400 $240 $0 $240 $2,160 90.00% Month 12 $2,400 $240 $0 $240 $2,160 90.00%

Pro Forma Cash Flow

Month 1 Cash Received Cash from Operations Cash Sales Subtotal Cash from Operations Additional Cash Received Sales Tax, VAT, HST/GST Received 0.00% New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received Expenditures Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent Net Cash Flow Cash Balance $0 $0 $0 $0 $0 $0 $0 $223 ($223) $74,277 $0 $0 $0 $0 $223 $223 $0 $0 $0 $0 $0 $0 $0 $0 $0 Month 1 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Month 2 $0 $8,398 $8,398 $0 $0 $0 $350 $0 $0 $0 $8,748 ($8,748) $58,424 Month 3

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Month 4 $0 $8,399 $8,399 $0 $0 $0 $352 $0 $0 $0 $8,751 ($8,751) $49,673

$4,800 $4,800 $0 $0 $0 $0 $0 $0 $0 $4,800 Month 5 $0 $8,267 $8,267 $0 $0 $0 $354 $0 $0 $0 $8,621 ($3,821) $45,852

$2,400 $2,400 $0 $0 $0 $0 $0 $0 $0 $2,400 Month 6 $0 $1,661 $1,661 $0 $0 $0 $356 $0 $0 $0 $2,017 $383 $46,236

$2,400 $2,400 $0 $0 $0 $0 $0 $0 $0 $2,400 Month 7 $0 $1,330 $1,330 $0 $0 $0 $358 $0 $0 $0 $1,688 $712 $46,948

$2,400 $2,400 $0 $0 $0 $0 $0 $0 $0 $2,400 Month 8 $0 $1,328 $1,328 $0 $0 $0 $360 $0 $0 $0 $1,688 $712 $47,660

$2,400 $2,400 $0 $0 $0 $0 $0 $0 $0 $2,400 Month 9 $0 $1,326 $1,326 $0 $0 $0 $362 $0 $0 $0 $1,688 $712 $48,372

$2,400 $2,400 $0 $0 $0 $0 $0 $0 $0 $2,400 Month 10 $0 $1,324 $1,324 $0 $0 $0 $364 $0 $0 $0 $1,688 $712 $49,084

$2,400 $2,400 $0 $0 $0 $0 $0 $0 $0 $2,400 Month 11 $0 $1,322 $1,322 $0 $0 $0 $366 $0 $0 $0 $1,688 $712 $49,796

$2,400 $2,400 $0 $0 $0 $0 $0 $0 $0 $2,400 Month 12 $0 $1,320 $1,320 $0 $0 $0 $368 $0 $0 $0 $1,688 $712 $50,508

$6,757 $6,757

$348 $0 $0 $0 $7,105 ($7,105) $67,172

Pro Forma Balance Sheet Month 1 Assets Current Assets Cash Other Current Assets Total Current Assets Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets Liabilities and Capital Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities Long-term Liabilities Total Liabilities Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital Net Worth $0 $0 $0 $0 $160,000 $160,000 $60,000 ($750) $0 $59,250 $219,250 $59,250 $6,477 $0 $0 $6,477 $160,000 $166,477 $60,000 ($750) ($6,700) $52,550 $219,027 $52,550 $8,118 $0 $0 $8,118 $159,652 $167,770 $60,000 ($750) ($15,098) $44,152 $211,922 $44,152 $8,116 $0 $0 $8,116 $159,302 $167,418 $60,000 ($750) ($23,494) $35,756 $203,174 $35,756 $8,211 $0 $0 $8,211 $158,950 $167,161 $60,000 ($750) ($31,988) $27,262 $194,423 $27,262 $1,616 $0 $0 $1,616 $158,596 $160,213 $60,000 ($750) ($29,260) $29,990 $190,202 $29,990 $1,286 $0 $0 $1,286 $158,240 $159,526 $60,000 ($750) ($28,590) $30,660 $190,186 $30,660 $1,284 $0 $0 $1,284 $157,883 $159,166 $60,000 ($750) ($27,919) $31,331 $190,498 $31,331 $1,282 $0 $0 $1,282 $157,523 $158,804 $60,000 ($750) ($27,245) $32,005 $190,810 $32,005 $1,280 $0 $0 $1,280 $157,161 $158,440 $60,000 ($750) ($26,569) $32,681 $191,122 $32,681 $1,278 $0 $0 $1,278 $156,797 $158,074 $60,000 ($750) ($25,891) $33,359 $191,434 $33,359 $1,276 $0 $0 $1,276 $156,431 $157,706 $60,000 ($750) ($25,211) $34,039 $191,746 $34,039 $1,274 $0 $0 $1,274 $156,062 $157,336 $60,000 ($750) ($24,528) $34,722 $192,058 $34,722 $144,000 $0 $144,000 $219,250 $144,000 $0 $144,000 $219,027 Month 1 $144,000 $0 $144,000 $211,922 Month 2 $144,000 $0 $144,000 $203,174 Month 3 $144,000 $0 $144,000 $194,423 Month 4 $144,000 $400 $143,600 $190,202 Month 5 $144,000 $800 $143,200 $190,186 Month 6 $144,000 $1,200 $142,800 $190,498 Month 7 $144,000 $1,600 $142,400 $190,810 Month 8 $144,000 $2,000 $142,000 $191,122 Month 9 $144,000 $2,400 $141,600 $191,434 Month 10 $144,000 $2,800 $141,200 $191,746 Month 11 $144,000 $3,200 $140,800 $192,058 Month 12 $74,500 $750 $75,250 $74,277 $750 $75,027 $67,172 $750 $67,922 $58,424 $750 $59,174 $49,673 $750 $50,423 $45,852 $750 $46,602 $46,236 $750 $46,986 $46,948 $750 $47,698 $47,660 $750 $48,410 $48,372 $750 $49,122 $49,084 $750 $49,834 $49,796 $750 $50,546 $50,508 $750 $51,258 Starting Balances Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12