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Table of Contents

1.0 Executive Summary...............................................................................................................................1


Chart: Highlights..................................................................................................................................1
1.1 Mission...............................................................................................................................................2
1.2 Keys to Success..................................................................................................................................2
1.3 Objectives..........................................................................................................................................2
2.0 Company Summary...............................................................................................................................2
2.1 Company Ownership.........................................................................................................................2
2.2 Start-up Summary..............................................................................................................................3
Table: Start-up.....................................................................................................................................3
Table: Start-up Funding.......................................................................................................................4
Chart: Start-up......................................................................................................................................5
2.3 Company Locations and Facilities.....................................................................................................5
3.0 Services..................................................................................................................................................5
3.1 Service Description............................................................................................................................5
4.0 Market Analysis Summary....................................................................................................................5
4.1 Market Segmentation.........................................................................................................................6
Chart: Market Analysis (Pie)...............................................................................................................6
Table: Market Analysis........................................................................................................................6
..................................................................................................................................................................6
5.0 Strategy and Implementation Summary.................................................................................................7
5.1 Sales Strategy.....................................................................................................................................7
Chart: Sales Monthly...........................................................................................................................7
5.1.1 Sales Forecast..............................................................................................................................8
Table: Sales Forecast.......................................................................................................................8
Chart: Sales by Year........................................................................................................................8
5.2 Competitive Edge...............................................................................................................................9
6.0 Management Summary..........................................................................................................................9
6.1 Personnel Plan....................................................................................................................................9
Table: Personnel...................................................................................................................................9
7.0 Financial Plan.........................................................................................................................................9
7.1 Important Assumptions......................................................................................................................9
Table: General Assumptions................................................................................................................9
................................................................................................................................................................10
7.2 Key Financial Indicators..................................................................................................................11
Chart: Benchmarks.............................................................................................................................11
7.3 Break-even Analysis........................................................................................................................12
Chart: Break-even Analysis...............................................................................................................12
Table: Break-even Analysis...............................................................................................................12
................................................................................................................................................................12
7.4 Projected Profit and Loss.................................................................................................................13
Table: Profit and Loss........................................................................................................................13
Page 1

Table of Contents

................................................................................................................................................................13
7.5 Projected Cash Flow........................................................................................................................14
Chart: Cash.........................................................................................................................................14
Table: Cash Flow...............................................................................................................................15
................................................................................................................................................................15
7.6 Projected Balance Sheet...................................................................................................................16
Table: Balance Sheet..........................................................................................................................16
7.7 Business Ratios................................................................................................................................16
Table: Ratios......................................................................................................................................17
Table: Sales Forecast...................................................................................................................................1
......................................................................................................................................................................1
Table: Personnel...........................................................................................................................................2
......................................................................................................................................................................2
Table: General Assumptions........................................................................................................................3
......................................................................................................................................................................3
Table: Profit and Loss..................................................................................................................................4
......................................................................................................................................................................4
Table: Cash Flow.........................................................................................................................................5
Table: Balance Sheet....................................................................................................................................6

Page 2

NW Architecture

1.0 Executive Summary


NW Architecture will be an architectural firm specializing in residential, commercial and
industrial architecture in domestic and international markets based out of the Bay Area near
San Francisco, California. The firm will provide architectural services using technologically
superior processes, providing greater value for clients and enhanced design and construction.
The target client is segmented into four categories; home owners, developers, government, and
contractors. NW Architecture's competitive edge will be the knowledge of digital-based design
resources. Superior customer service will also be a point of firm differentiation.
First year sales are expected to reach $102,000 and increase to $500,000 by the third year of
operation. We will be profitable within three years of starting.
The most significant challenges ahead include securing a suitable location, establishing the
initial client base, and ultimately positioning the firm to be able to have a presence in a larger,
global market.
This business plan outlines the objective, focus, and implementation of this start-up firm.

Chart: Highlights

Page 1

NW Architecture

1.1 Mission
NW Architecture offers a new type of digital interactive media for both the client and the
builder. This media will clearly show the client and the builder exactly what the design will look
like and the method of construction.
With this new form of media the client doesn't have to know anything about architectural
graphics or terminology (floor plans, sections, elevations & construction documents) to have a
clear understanding of what the end result will look like. This is possible through the use of
computer-rendered images and interactive video.
This media will be taken one step further by using it in the construction documents as well. The
builder will be provided with an interactive video rendering of the entire building containing
both visual photographic quality images and construction specs. Every last detail will be worked
out in three dimensions in such a way that anyone who knows how to use a computer will be
able to access and understand this new means of architectural presentation.
1.2 Keys to Success
1. Provide a service that is technologically superior to the competition's.
2. Utilizing a diverse staff of architects to provide a wide variety of product styles.
3. A large array of global connections.
1.3 Objectives
1. Sales of $500,000 in Year 3 and $700,000 by Year 4.
2. Market expansion of 20% per year via the Internet.
3. Creating new niche in market by Year 4 of three dimensional construction documents and
interactive digital presentation to clients.
2.0 Company Summary
NW Architecture will provide a service of architectural design via digital media to the limits of
technology. This approach will offer optimal efficiency to the firm and superior value, design
processes, and construction methods to the client.
2.1 Company Ownership
NW Architecture will be created as a California corporation based in the Bay Area near San
Francisco. It will be owned by its principal investor and operator, Nathan Sawyer.

Page 2

NW Architecture

2.2 Start-up Summary


NW Architecture's start-up costs total $36,540. The most significant purchases needed are a
blueprint machine, plotter, and drafting supplies. Nineteen thousand dollars is needed in cash
to sustain the business for the first year to cover rent and wages until a profit is made.
Table: Start-up

Start-up
Requirements
Start-up Expenses
Legal
Stationery etc.
Brochures
Consultants
Insurance
Rent
Expensed Equipment
Total Start-up Expenses

$1,000
$3,000
$1,000
$2,000
$500
$1,040
$9,000
$17,540

Start-up Assets
Cash Required
Start-up Inventory
Other Current Assets
Long-term Assets
Total Assets

$19,000
$0
$0
$0
$19,000

Total Requirements

$36,540

Page 3

NW Architecture

Table: Start-up Funding

Start-up Funding
Start-up Expenses to Fund
Start-up Assets to Fund
Total Funding Required

$17,540
$19,000
$36,540

Assets
Non-cash Assets from Start-up
Cash Requirements from Start-up
Additional Cash Raised
Cash Balance on Starting Date
Total Assets

$0
$19,000
$0
$19,000
$19,000

Liabilities and Capital


Liabilities
Current Borrowing
Long-term Liabilities
Accounts Payable (Outstanding Bills)
Other Current Liabilities (interest-free)
Total Liabilities

$17,540
$0
$0
$0
$17,540

Capital
Planned Investment
Investor 1
Other
Additional Investment Requirement
Total Planned Investment
Loss at Start-up (Start-up Expenses)
Total Capital

$19,000
$0
$0
$19,000
($17,540)
$1,460

Total Capital and Liabilities

$19,000

Total Funding

$36,540

Page 4

NW Architecture

Chart: Start-up

2.3 Company Locations and Facilities


The interim office of NW Architecture will be located in Walnut Creek, California until dedicated
office space is secured.
3.0 Services
NW Architecture will provide many levels of service to cater to large and small corporations,
along with making it affordable for middle and upper socioeconomic classes.
3.1 Service Description
In order for NW Architecture to provide this new innovative service of digital media, the
company will use high speed computers running programs such as AutoCad and Form-Z. To
keep up with changes in technology, NW Architecture will investigate all up and coming
software related to digital 3-D design to stay at the forefront of the market. Again, this is a key
strategic component to differentiate the firm and to optimize productivity and efficiency.
4.0 Market Analysis Summary
NW Architecture will provide it's service to home owners who are looking to remodel, as well
as developers, contractors and government agencies in the domestic and international markets.
Although we are going to cater to a relatively broad scope of customers, the company will
decide what the target market is based on sales and trends experienced in the initial months of
operation.

Page 5

NW Architecture

4.1 Market Segmentation


Potential clients for NW Architecture's market is broken down into four categories: home
owners, developers, government, and contractors. Home owners are the largest group based
on shear population and this will be emphasized in all of the firm's marketing and promotional
efforts. Targeting the remaining three groups will be dependant upon establishing meaningful
relationships, and responding and qualifying for request for proposals.

Chart: Market Analysis (Pie)

Table: Market Analysis

Market Analysis
Potential Customers
Home Owners/Remodels
Developers
Government
Contractors
Total

Year 1

Year 2

Year 3

Year 4

Year 5

200,000
5,000
30,000
5,000
240,000

230,000
6,500
30,300
7,000
273,800

264,500
8,450
30,603
9,800
313,353

304,175
10,985
30,909
13,720
359,789

349,801
14,281
31,218
19,208
414,508

Growth
15%
30%
1%
40%
14.64%

CAGR
15.00%
30.00%
1.00%
40.00%
14.64%

Page 6

NW Architecture

4.2 Service Business Analysis


The architecture business across the country is primarily made up of small- to mid-sized firms
specializing in a particular architectural type. But there are also a few large firms that have
almost dominated the design of large commercial and industrial facilities. NW Architecture's
main competitors will be the larger firms. The reason for this is that the larger firms have more
capital to work with, which enables them to keep up with technological changes much quicker
than a small firm.
5.0 Strategy and Implementation Summary
In the first year of business, NW Architecture will focus on the bay area in California. As the
firm grows, sales will expand throughout California and across the country, eventually
spreading worldwide.
5.1 Sales Strategy
"Sales" in this business is a direct result of exceptional client service. It is based on the
firm's image and the referrals that result. The more clients this company pleases, the more
referrals are given. We will work to provide a positive experience in all cases so our clients will
refer and return to us for future work as well.

Chart: Sales Monthly

Page 7

NW Architecture

5.1.1 Sales Forecast


Sales are broken down into three categories: design, production, and construction. These three
categories put together make up one architecture project. The totals for each project are based
on a 10% cut from the total construction costs of each job. The following table and chart
provides an overview of our forecast sales. Actual sales could vary depending on the project
size and budget.
Table: Sales Forecast

Sales Forecast
Year 1

Year 2

Year 3

$42,000
$26,000
$34,000
$102,000

$90,000
$50,000
$70,000
$210,000

$250,000
$85,000
$165,000
$500,000

Year 1
$500
$250
$500
$1,250

Year 2
$500
$250
$500
$1,250

Year 3
$1,000
$500
$1,000
$2,500

Sales
Design
Production
Construction Documents
Total Sales
Direct Cost of Sales
Design
Production
Construction Documents
Subtotal Direct Cost of Sales

Chart: Sales by Year

Page 8

NW Architecture

5.2 Competitive Edge


This company will have a competitive edge over both the larger and smaller firms because it
will be composed of the new generation of architects which are fluent in the digital world. Many
firms today employ an older generation of architects which find the computer a mystery, and
those that do use the computer only have the ability to design in 2-D.
6.0 Management Summary
This company will start with one AutoCAD/Form-Z architect and the founder. In August of 2007,
a clerical position will be added. By 2010, Other CAD/Form-Z architects will be hired to
compensate the increased work load.
6.1 Personnel Plan
The following table summarizes our personnel expenditures for the first three years of
operation.
Table: Personnel

Personnel Plan
Year 1

Year 2

Year 3

Nathan Sawyer
Clerical
CAD/Form-Z Designers
Total People

$18,000
$12,000
$40,000
4

$35,000
$25,200
$60,000
5

$50,000
$26,000
$210,000
7

Total Payroll

$70,000

$120,200

$286,000

7.0 Financial Plan


NW Architecture will increase growth and technology with cash flow as it increases through the
years. Further money will be set aside to pay for further consulting as needed.
7.1 Important Assumptions
The annual assumptions made in the following table are based on a stable economy. We will
adjust these assumptions as changes occur in the now tumultuous ecomony the Bay Area is
experiencing.
Table: General Assumptions

General Assumptions
Plan Month
Current Interest Rate
Long-term Interest Rate
Tax Rate
Other

Year 1

Year 2

Year 3

1
10.00%
10.00%
25.42%
0

2
10.00%
10.00%
25.00%
0

3
10.00%
10.00%
25.42%
0

Page 9

NW Architecture

Page 10

NW Architecture

7.2 Key Financial Indicators


The following benchmark chart indicates our key financial indicators for the first three years.

Chart: Benchmarks

Page 11

NW Architecture

7.3 Break-even Analysis


The following chart and table summarize our break-even analysis.

Chart: Break-even Analysis

Table: Break-even Analysis

Break-even Analysis
Monthly Revenue Break-even

$8,348

Assumptions:
Average Percent Variable Cost
Estimated Monthly Fixed Cost

1%
$8,246

Page 12

NW Architecture

7.4 Projected Profit and Loss


Net profit is virtually nonexistent for the first two years of operation, with respectable increases
after that time. Our projected profit and loss is shown on the following table, with sales starting
at $102,000 for the first year and climbing to $500,000 the third year.
Table: Profit and Loss

Pro Forma Profit and Loss


Year 1

Year 2

Year 3

Sales
Direct Cost of Sales
Other
Total Cost of Sales

$102,000
$1,250
$0
$1,250

$210,000
$1,250
$0
$1,250

$500,000
$2,500
$0
$2,500

Gross Margin
Gross Margin %

$100,750
98.77%

$208,750
99.40%

$497,500
99.50%

Payroll
Sales and Marketing and Other Expenses
Depreciation
Leased Equipment
Utilities
Insurance
Rent
Payroll Taxes
Other

$70,000
$8,200
$0
$1,440
$480
$1,800
$17,030
$0
$0

$120,200
$12,800
$0
$1,680
$620
$2,800
$23,400
$0
$0

$286,000
$34,500
$0
$1,920
$650
$3,500
$23,400
$0
$0

Total Operating Expenses

$98,950

$161,500

$349,970

Profit Before Interest and Taxes


EBITDA
Interest Expense
Taxes Incurred

$1,800
$1,800
$1,517
$374

$47,250
$47,250
$1,097
$11,538

$147,530
$147,530
$659
$37,330

Net Profit
Net Profit/Sales

($90)
-0.09%

$34,615
16.48%

$109,541
21.91%

Expenses

Page 13

NW Architecture

7.5 Projected Cash Flow


Cash flow is vital to the well being of this company because of the duration of payment. The
following chart and table below show cash flow projections.

Chart: Cash

Page 14

NW Architecture

Table: Cash Flow

Pro Forma Cash Flow


Year 1

Year 2

Year 3

$0
$88,100
$88,100

$0
$195,282
$195,282

$0
$460,480
$460,480

$0
$0
$0
$0
$0
$0
$6,000
$94,100

$0
$0
$0
$0
$0
$0
$0
$195,282

$0
$0
$0
$0
$0
$0
$0
$460,480

Year 1

Year 2

Year 3

$70,000
$29,684
$99,684

$120,200
$53,775
$173,975

$286,000
$102,379
$388,379

$0
$4,380
$0
$0
$0
$0
$0
$104,064

$0
$4,380
$0
$0
$0
$0
$0
$178,355

$0
$4,380
$0
$0
$0
$0
$0
$392,759

($9,964)
$9,036

$16,928
$25,963

$67,721
$93,684

Cash Received
Cash from Operations
Cash Sales
Cash from Receivables
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
Subtotal Cash Spent
Net Cash Flow
Cash Balance

Page 15

NW Architecture

7.6 Projected Balance Sheet


The following table shows our projected Balance Sheet and net worth over the next three years.
Table: Balance Sheet

Pro Forma Balance Sheet


Year 1

Year 2

Year 3

$9,036
$13,900
$750
$0
$23,686

$25,963
$28,618
$717
$0
$55,297

$93,684
$68,137
$2,867
$0
$164,688

$0
$0
$0
$23,686

$0
$0
$0
$55,297

$0
$0
$0
$164,688

Year 1

Year 2

Year 3

Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities

$3,156
$13,160
$0
$16,316

$4,533
$8,780
$0
$13,313

$8,762
$4,400
$0
$13,162

Long-term Liabilities
Total Liabilities

$0
$16,316

$0
$13,313

$0
$13,162

$25,000
($17,540)
($90)
$7,370
$23,686

$25,000
($17,630)
$34,615
$41,984
$55,297

$25,000
$16,984
$109,541
$151,526
$164,688

$7,370

$41,984

$151,526

Assets
Current Assets
Cash
Accounts Receivable
Inventory
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

Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital
Net Worth

7.7 Business Ratios


Business ratios for the years of this plan are shown below. Industry profile ratios based on the
Standard Industrial Classification (SIC) code 7383, Independent Artists (including Architects),
are shown for comparison.

Page 16

NW Architecture

Table: Ratios

Ratio Analysis
Year 1

Year 2

Year 3

Industry Profile

n.a.

105.88%

138.10%

11.74%

Accounts Receivable
Inventory
Other Current Assets
Total Current Assets
Long-term Assets
Total Assets

58.69%
3.17%
0.00%
100.00%
0.00%
100.00%

51.75%
1.30%
0.00%
100.00%
0.00%
100.00%

41.37%
1.74%
0.00%
100.00%
0.00%
100.00%

26.18%
3.42%
50.14%
79.74%
20.26%
100.00%

Current Liabilities
Long-term Liabilities
Total Liabilities
Net Worth

68.89%
0.00%
68.89%
31.11%

24.08%
0.00%
24.08%
75.92%

7.99%
0.00%
7.99%
92.01%

35.02%
21.48%
56.50%
43.50%

100.00%
98.77%
101.81%
0.00%
1.76%

100.00%
99.40%
95.72%
0.95%
22.50%

100.00%
99.50%
79.60%
4.00%
29.51%

100.00%
100.00%
75.67%
2.64%
1.56%

1.45
1.41
68.89%
3.84%
1.20%

4.15
4.10
24.08%
109.93%
83.46%

12.51
12.29
7.99%
96.93%
89.18%

1.67
1.32
62.06%
4.93%
12.99%

Sales Growth
Percent of Total Assets

Percent of Sales
Sales
Gross Margin
Selling, General & Administrative Expenses
Advertising Expenses
Profit Before Interest and Taxes
Main Ratios
Current
Quick
Total Debt to Total Assets
Pre-tax Return on Net Worth
Pre-tax Return on Assets
Additional Ratios

Year 1

Year 2

Year 3

Net Profit Margin


Return on Equity

-0.09%
-1.23%

16.48%
82.45%

21.91%
72.29%

n.a
n.a

7.34
57
1.74
10.41
27
4.31

7.34
37
1.70
12.17
25
3.80

7.34
35
1.40
12.17
23
3.04

n.a
n.a
n.a
n.a
n.a
n.a

2.21
1.00

0.32
1.00

0.09
1.00

n.a
n.a

$7,370
1.19

$41,984
43.07

$151,526
223.87

n.a
n.a

0.23
69%
0.55
13.84
0.00

0.26
24%
1.95
5.00
0.00

0.33
8%
7.12
3.30
0.00

n.a
n.a
n.a
n.a
n.a

Activity Ratios
Accounts Receivable Turnover
Collection Days
Inventory Turnover
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

Page 17

Appendix
Table: Sales Forecast

Sales Forecast
Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$8,000
$0
$0
$8,000

$0
$5,000
$0
$5,000

$5,000
$0
$7,000
$12,000

$0
$2,000
$0
$2,000

$10,000
$0
$4,000
$14,000

$5,000
$0
$0
$5,000

$0
$7,000
$0
$7,000

$14,000
$2,000
$0
$16,000

$0
$0
$9,000
$9,000

$0
$10,000
$0
$10,000

$0
$0
$3,000
$3,000

$0
$0
$11,000
$11,000

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$100

$0

$100

$0

$100

$100

$0

$100

$0

$0

$0

$0

$0

$50

$0

$50

$0

$0

$50

$50

$0

$50

$0

$0

$0

$0

$100

$0

$100

$0

$0

$0

$100

$0

$100

$100

$100

$50

$200

$50

$200

$100

$50

$150

$100

$50

$100

$100

Sales
Design
Production
Construction Documents
Total Sales
Direct Cost of Sales
Design
Production
Construction Documents
Subtotal Direct Cost of Sales

0%
0%
0%

Page 1

Appendix
Table: Personnel

Personnel Plan
Nathan Sawyer
Clerical
CAD/Form-Z Designers
Total People
Total Payroll

0%
0%
0%

Month 1

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
1

$0
$0
$2,500
2

$0
$0
$2,500
2

$2,000
$0
$2,500
2

$2,000
$0
$2,500
2

$2,000
$0
$2,500
2

$2,000
$2,000
$2,500
3

$2,000
$2,000
$5,000
4

$2,000
$2,000
$5,000
4

$2,000
$2,000
$5,000
4

$2,000
$2,000
$5,000
4

$2,000
$2,000
$5,000
4

$0

$2,500

$2,500

$4,500

$4,500

$4,500

$6,500

$9,000

$9,000

$9,000

$9,000

$9,000

Page 2

Appendix
Table: General Assumptions

General Assumptions
Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

10

11

12

Current Interest Rate

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

Long-term Interest Rate

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

Tax Rate

30.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

Plan Month

Other

Month 12

Page 3

Appendix
Table: Profit and Loss

Pro Forma Profit and Loss


Sales
Direct Cost of Sales
Other
Total Cost of Sales

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$8,000

$5,000

$12,000

$2,000

$14,000

$5,000

$7,000

$16,000

$9,000

$10,000

$3,000

$11,000

$100

$50

$200

$50

$200

$100

$50

$150

$100

$50

$100

$100

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$100

$50

$200

$50

$200

$100

$50

$150

$100

$50

$100

$100

Gross Margin

$7,900

$4,950

$11,800

$1,950

$13,800

$4,900

$6,950

$15,850

$8,900

$9,950

$2,900

$10,900

Gross Margin %

98.75%

99.00%

98.33%

97.50%

98.57%

98.00%

99.29%

99.06%

98.89%

99.50%

96.67%

99.09%

Expenses
Payroll

$0

$2,500

$2,500

$4,500

$4,500

$4,500

$6,500

$9,000

$9,000

$9,000

$9,000

$9,000

Sales and Marketing and Other


Expenses
Depreciation

$350

$350

$1,350

$350

$350

$1,350

$350

$350

$1,350

$350

$350

$1,350

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Leased Equipment

$120

$120

$120

$120

$120

$120

$120

$120

$120

$120

$120

$120

Utilities

$40

$40

$40

$40

$40

$40

$40

$40

$40

$40

$40

$40

$150

$150

$150

$150

$150

$150

$150

$150

$150

$150

$150

$150

$1,040

$1,040

$1,040

$1,040

$1,040

$1,040

$1,040

$1,950

$1,950

$1,950

$1,950

$1,950

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

Total Operating Expenses

$1,700

$4,200

$5,200

$6,200

$6,200

$7,200

$8,200

$11,610

$12,610

$11,610

$11,610

$12,610

Profit Before Interest and Taxes

$6,200

$750

$6,600

($4,250)

$7,600

($2,300)

($1,250)

$4,240

($3,710)

($1,660)

($8,710)

($1,710)

EBITDA

$6,200

$750

$6,600

($4,250)

$7,600

($2,300)

($1,250)

$4,240

($3,710)

($1,660)

($8,710)

($1,710)

$143

$140

$137

$134

$131

$128

$125

$122

$119

$116

$113

$110

$1,817

$152

$1,616

($1,096)

$1,867

($607)

($344)

$1,030

($957)

($444)

($2,206)

($455)

Insurance
Rent
Payroll Taxes
Other

Interest Expense
Taxes Incurred

15%

Net Profit

$4,240

$457

$4,847

($3,288)

$5,602

($1,821)

($1,031)

$3,089

($2,872)

($1,332)

($6,617)

($1,365)

Net Profit/Sales

53.00%

9.15%

40.39%

-164.40%

40.01%

-36.42%

-14.73%

19.30%

-31.91%

-13.32%

-220.57%

-12.41%

Page 4

Appendix
Table: Cash Flow

Pro Forma Cash Flow


Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Cash Received
Cash from Operations
Cash Sales

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Cash from Receivables

$0

$267

$7,900

$5,233

$11,667

$2,400

$13,700

$5,067

$7,300

$15,767

$9,033

$9,767

Subtotal Cash from Operations

$0

$267

$7,900

$5,233

$11,667

$2,400

$13,700

$5,067

$7,300

$15,767

$9,033

$9,767

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

New Other Liabilities (interest-free)

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

New Long-term Liabilities

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Sales of Other Current Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Sales of Long-term Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

New Investment Received

$0

$0

$0

$6,000

$0

$0

$0

$0

$0

$0

$0

$0

Subtotal Cash Received

$0

$267

$7,900

$11,233

$11,667

$2,400

$13,700

$5,067

$7,300

$15,767

$9,033

$9,767

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$9,000

Additional Cash Received


Sales Tax, VAT, HST/GST Received
New Current Borrowing

Expenditures

0.00%

Expenditures from Operations


Cash Spending

$0

$2,500

$2,500

$4,500

$4,500

$4,500

$6,500

$9,000

$9,000

$9,000

$9,000

Bill Payments

$155

$4,571

$2,075

$4,329

$837

$3,649

$2,196

$1,590

$4,695

$2,755

$2,223

$609

Subtotal Spent on Operations

$155

$7,071

$4,575

$8,829

$5,337

$8,149

$8,696

$10,590

$13,695

$11,755

$11,223

$9,609

Additional Cash Spent


Sales Tax, VAT, HST/GST Paid Out

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$365

$365

$365

$365

$365

$365

$365

$365

$365

$365

$365

$365

Other Liabilities Principal Repayment

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Long-term Liabilities Principal Repayment

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Purchase Other Current Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Purchase Long-term Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Dividends

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$520

$7,436

$4,940

$9,194

$5,702

$8,514

$9,061

$10,955

$14,060

$12,120

$11,588

$9,974

($520)

($7,170)

$2,960

$2,039

$5,965

($6,114)

$4,639

($5,889)

($6,760)

$3,646

($2,555)

($207)

Principal Repayment of Current Borrowing

Subtotal Cash Spent


Net Cash Flow

Page 5

Appendix
Cash Balance

$18,480

$11,310

$14,270

$16,310

$22,275

$16,161

$20,800

$14,911

$8,151

$11,797

$9,242

$9,036

Table: Balance Sheet

Pro Forma Balance Sheet


Assets

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$19,000
$0
$0
$0
$19,000

$18,480
$8,000
$900
$0
$27,380

$11,310
$12,733
$850
$0
$24,893

$14,270
$16,833
$650
$0
$31,754

$16,310
$13,600
$600
$0
$30,510

$22,275
$15,933
$400
$0
$38,608

$16,161
$18,533
$300
$0
$34,994

$20,800
$11,833
$250
$0
$32,883

$14,911
$22,767
$1,100
$0
$38,777

$8,151
$24,467
$1,000
$0
$33,617

$11,797
$18,700
$950
$0
$31,447

$9,242
$12,667
$850
$0
$22,759

$9,036
$13,900
$750
$0
$23,686

$0
$0
$0
$19,000

$0
$0
$0
$27,380

$0
$0
$0
$24,893

$0
$0
$0
$31,754

$0
$0
$0
$30,510

$0
$0
$0
$38,608

$0
$0
$0
$34,994

$0
$0
$0
$32,883

$0
$0
$0
$38,777

$0
$0
$0
$33,617

$0
$0
$0
$31,447

$0
$0
$0
$22,759

$0
$0
$0
$23,686

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Starting Balances

Current Assets
Cash
Accounts Receivable
Inventory
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

$0
$17,540
$0
$17,540

$4,505
$17,175
$0
$21,680

$1,926
$16,810
$0
$18,736

$4,304
$16,445
$0
$20,749

$713
$16,080
$0
$16,793

$3,575
$15,715
$0
$19,290

$2,147
$15,350
$0
$17,497

$1,432
$14,985
$0
$16,417

$4,603
$14,620
$0
$19,223

$2,679
$14,255
$0
$16,934

$2,206
$13,890
$0
$16,096

$500
$13,525
$0
$14,025

$3,156
$13,160
$0
$16,316

Long-term Liabilities
Total Liabilities

$0
$17,540

$0
$21,680

$0
$18,736

$0
$20,749

$0
$16,793

$0
$19,290

$0
$17,497

$0
$16,417

$0
$19,223

$0
$16,934

$0
$16,096

$0
$14,025

$0
$16,316

$19,000
($17,540)
$0
$1,460
$19,000

$19,000
($17,540)
$4,240
$5,700
$27,380

$19,000
($17,540)
$4,697
$6,157
$24,893

$19,000
($17,540)
$9,544
$11,004
$31,754

$25,000
($17,540)
$6,256
$13,716
$30,510

$25,000
($17,540)
$11,858
$19,318
$38,608

$25,000
($17,540)
$10,037
$17,497
$34,994

$25,000
($17,540)
$9,006
$16,466
$32,883

$25,000
($17,540)
$12,095
$19,555
$38,777

$25,000
($17,540)
$9,223
$16,683
$33,617

$25,000
($17,540)
$7,891
$15,351
$31,447

$25,000
($17,540)
$1,274
$8,734
$22,759

$25,000
($17,540)
($90)
$7,370
$23,686

$1,460

$5,700

$6,157

$11,004

$13,716

$19,318

$17,497

$16,466

$19,555

$16,683

$15,351

$8,734

$7,370

Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital
Net Worth

Page 6