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Taxi Business Plan

City Taxi

Plan Outline
• 1.0 Executive Summary

• 2.0 Company Summary

• 3.0 Services

• 4.0 Market Analysis Summary

• 5.0 Strategy and Implementation Summary

• 6.0 Management Summary

• 7.0 Financial Plan

• Appendix

Executive Summary
City Taxi is a San Francisco, CA based company, whose mission is to provide reliable, timely, and safe cab services
by using complete, in-car credit and debit card access, along with computer-aided dispatch. The company will
establish its presence in the industry by acquiring an existing taxi cab association, Mighty Cab, a family-owned
business that was formed 12 years ago.

City Taxi will provide complete taxi cab services using the latest equipment and technology to facilitate the travel of
individuals in and around the San Francisco area. The company's products and services show that we are an
innovative, forward thinking company that recognizes the need to move with ever-changing customer needs. At City
Taxi, our philosophy is one that emphasizes service, and a realization that effective communication is a key
component in our business. The company also realizes that, in a competitive environment, flexibility and
professionalism maintain that leading edge.

The company has drivers and employees that are helpful, courteous, and fully trained on the use of the computer
dispatch system. As an added safety measure for both drivers and passengers, City Taxi cabs are fitted with Global
Positioning Systems (GPS), which enable the cabs to be tracked or located in an emergency. All City Taxi cabs will be
clean, well maintained, and inspected regularly for safety and comfort.

The company's strategy is to build reputation and market share by establishing our business offering as a viable
alternative to existing taxi cab services in the area. The company's goal in the next year is pursue an aggressive
marketing campaign and from that, penetrate at least 65% of the market share. The company's long-term goal is be
the top rated ground transportation company in San Francisco.

The company's emphasis is on the dispatch, mobile data, and credit/debit card markets of the taxi industry. In
aggregate, these markets are believed to represent potential sales in excess of $119 million as of March 1999.
Within these markets, City Taxi will focus on the more lucrative credit card/debit card segment. This segment, when
introduced into any area, has started out slow but over a three-year period has increased by 20% each year in
Maryland and Virginia, and by 25-35% in New York each year.

Companies with whom City Taxi competes are Transportation, Inc., Capital Cab, Yellow Cab, and Diamond Cab.
Their weaknesses are that they do not have the credit/debit card payment option, and some still use the radio
dispatch system. The company has a competitive advantage, however, because our technology is unique to the taxi
industry in San Francisco. The GPS will enable the company to provide timely service by giving an accurate
estimated time of arrival (ETA). The credit/debit card feature will give customers convenience and privacy during the
transaction period.

Reliable communications are essential under all circumstances in this business. As such, City Taxi will use the KDT
5000 system. The KDT 5000 system design provides multiple levels of reliability to assure communications will be
maintained under the most rigorous condition. The company will also run a state of the art call center that will be
established by Rockwell International.

The company is seeking $2.5 million of financing to fund the acquisition of Mighty Cab Association and its initial
operations. This funding will cover the purchase of Mighty Cab, marketing, purchase of extra vehicles, software, and
hardware. Projected revenues for 1999 to 2001 are $200,000, $1.5 million, and $2.2 million, respectively.

1.1 Objectives
The company's goal in the next year is to pursue an aggressive marketing campaign and from that, penetrate at least
65% of the market share. The company's goal in the next two to five years is be the top rated ground transportation
company in the San Francisco Metro Area by continuously monitoring, evaluating, and following up on customer call-
ins.

Key components of City Taxi's initial strategy can be summarized as follows.

Establish Relationship with Rockwell International. The company is currently working to establish and develop a
working relationship with Rockwell International. This will enable City Taxi to lock into the many services that they
offer including, but not limited to:

• Managerial

• Call center and customer service efficiency

• Management consulting

• Technology consulting

• Product management

• Continuous improvement
1.2 Mission
The mission of City Taxi is to provide reliable, timely, and safe cab services by using complete in-car credit/debit card
access, along with computer aided dispatch.

1.3 Highlights
Highlights of City Taxi

• Technology. City Taxi has a unique Global Positioning System (GPS) that pinpoints the nearest driver, thus
allowing the driver to give an accurate ETA.

• Credit/debit card system. This system is the first of its kind in San Francisco and is convenient for both the
passenger and driver because approval is given instantly. The swipe machine is located in the back seat, giving
the passenger privacy.

• Trademarks. The company is in the process of registering the name Patriot as a trademark.

• Advertising. City Taxi is already in advanced discussions with TCI Media Services to provide advertising
services and market research.

• Seasoned management. The company's management is highly experienced and qualified and has extensive
experience in the industry.

• Strategic relationships. The company has, and will continue to establish, relationships with organizations that
will enhance professional growth. These alliances are valuable to City Taxi because they allow us to get
updates on technology, added tech support, and a strong presence in the market.

• Exclusive rights to software. City Taxi has the exclusive rights to the latest taxi cab software in San
Francisco.

Company Summary
Legal Business Description:

City Taxi was founded in 1997 in San Francisco, California, by Mr. Johnson Taylor. The company is a California C-
Corporation under the name Patriot, Inc. d.b.a. City Taxi.

2.1 Company Strategy


The City Taxi's strategy is to saturate the market with television ads depicting the company as a premier taxi service.
The company will leverage the newest in car technology to dominate the credit card segment of the market. City Taxi
will dominate the market because no other company has this unique feature.

The company's strategy is to build reputation and market share in our target market by establishing our business
offering as a viable alternative to existing taxi cab services. City Taxi intends to get the confidence of customers and
establish itself as a company that provides superior customer service by using up to date technology to provide timely
and reliable services.

2.2 Company History


As can be seen in the chart and table below, the company performed well its first year, but sales have not been fully
actualized. That is the intent of this plan: to increase sales by utilizing our competitive advantages and by the
acquisition of a rival taxi company.
Past Performance
1996 1997 1998

Sales $0 $0 $100,000

Gross Margin $0 $0 $60,000

Gross Margin % 0.00% 0.00% 60.00%

Operating Expenses $0 $0 $20,000

Balance Sheet

1996 1997 1998

Current Assets

Cash $0 $0 $45,000

Other Current Assets $0 $0 $13,400

Total Current Assets $0 $0 $58,400

Long-term Assets

Long-term Assets $0 $0 $75,000

Accumulated Depreciation $0 $0 $10,000

Total Long-term Assets $0 $0 $65,000

Total Assets $0 $0 $123,400

Current Liabilities
Accounts Payable $0 $0 $23,600

Current Borrowing $0 $0 $10,000

Other Current Liabilities (interest free) $0 $0 $25,400

Total Current Liabilities $0 $0 $59,000

Long-term Liabilities $0 $0 $25,000

Total Liabilities $0 $0 $84,000

Paid-in Capital $0 $0 $37,000

Retained Earnings $0 $0 $2,400

Earnings $0 $0 $0

Total Capital $0 $0 $39,400

Total Capital and Liabilities $0 $0 $123,400

Other Inputs

Payment Days 0 0 30

2.3 Risks
The company recognizes that it is subject to both market and technological risks. The company's view of its risks, as
well as how each is being addressed, is as follows:

• Lock out in industry for new cab companies. City Taxi is aware that this is an extremely difficult industry to
get into. To mitigate this risk, City Taxi has established an alliance with the leading cab company in the San
Francisco area, Transportation, Inc. The alliance will allow City Taxi to run under their color scheme. Another
way in which the company plans to mitigate this risk is by acquiring an existing cab company, Mighty Cab.

• Acquiring insurance. City Taxi will have to acquire extensive insurance to cover all aspects of operations, but
will be faced with high rates. To lessen this risk, City Taxi plans to use the relationship with Transportation, Inc.
to run under their insurance companies, First Insurance of San Francisco and Columbia Insurance.
Alternatively, the company plans to purchase insurance from Newark Insurance and Amalgamated Insurance,
which offer lower rates. This will also bring leverage in negotiating with Transportation, Inc.

• Adequate facility. City Taxi realizes that it is difficult to locate a facility with the space required for all
operations. City Taxi has found a facility with ample space for all operations. There is enough room to set up
repair facilities, and there is adjacent space to store vehicles.
2.4 Value Proposition
City Taxi's products and services offer the following advantages to customers:

• Convenience. City Taxi's products and services provide the driver and the customer with the convenience of a
credit/debit card system that gives instant approval.

• State-of-the-art Call Center. City Taxi's call center allows us to provide a timely service by picking up the
closest vehicle when a call comes in. When a call comes in, it is put into the system, the system sends a
message to dispatcher, the system then tags the closest vehicle in the zone, neighboring zone, on the way to
the zone, or the dispatcher can call.

Services
City Taxi provides taxi services utilizing computer dispatch to help with timely pick up and quality customer care. The
software and hardware systems used by City Taxi give customers convenience by allowing them to use credit and
debit cards in the taxi.

3.1 Service Description


Taxi Cab Services

The taxi driver is often the first contact that a visitor has with San Francisco and as such, City Taxi realizes the
importance of first impressions and customer care. The company's customer-oriented philosophy and its commitment
to service are reflected in the careful selection of drivers and the comprehensive training program. Customers can
expect the following high standards when they travel with City Taxi:

• Clean and tidy taxis

• Friendly and polite drivers

• Careful driving

• Most practical route taken

Maintenance/Repair Services

This division of City Taxi deals with the pure maintenance of vehicles. Drivers will be charged at discounted rates for
tune-ups, wheel alignments, and other repairs.

3.2 Technology
GLOBAL POSITIONING SYSTEMS. City Taxi has a unique Global Positioning System (GPS) that pinpoints the
nearing driver thus allowing the driver to give an accurate estimated time of arrival.

RADIO SYSTEM. Reliable communications are essential under all circumstances. City Taxi will use the KDT 5000
system design because it provides multiple levels of reliability to assure communications will be maintained under the
most rigorous condition.

CREDIT/DEBIT CARD SYSTEM. City Taxi will use the in-car credit/debit card system, which is a new market
segment for the taxi industry in San Francisco. This involves customers using their debit cards in any City Taxi cab
with approval being given instantly, eliminating the need to dial in to head office for approval numbers. By using this
system, the company will be addressing the need for convenience and reliability. City Taxi also features a computer-
aided dispatch system which will be represented under the Patriot name. The company is currently in the process of
making Patriot a trademark. The company has also applied for a license to run a 490 narrow band frequency and
voice data transmission. From the perspective of customers, the advantage of City Taxi's products and services is the
high level of technology, which leads to superior customer service. In contrast to competitors, City Taxi's products and
services offer convenience. The key pad and swipe machine are built into the back seat, thus giving the customer
privacy. Whereas competitors have to call in a credit/debit card transaction for approval, our customers will be able to
get on-the-spot approval before the driver even pulls over.

3.3 Future Services


City Taxi plans to respond to market needs by following up with taxi plus (wheelchair accessible taxi vans with credit
card access inside) with the next 5 years. City Taxi believes it can capture this niche and a gain in overall market
share. Additional plans for next generation products and services include rent to own options for our drivers.
Introduction of the company's next generation product and services is expected to be within 12 months.

Market Analysis Summary


The company's emphasis is on the dispatch, mobile data, and credit/debit card markets of the taxi industry. In
aggregate, these markets are believed to represent potential sales in excess of $119 million as of March 1999. Within
these markets, City Taxi will focus on the more lucrative credit/debit card segment. This segment, when introduced
into any area has started out slow, but over a three-year period has increased by 20% each year in Maryland and
Virginia, and by 25-35% in New York each year.

The company believes that the major future trend in the industry will be complete credit card access for consumers.
The International Taxi Livery Association (ITLA) forecasts a very steady growth for the taxi industry in the next four
years.

Market Size Statistics:


Estimated number of U.S. establishments 6,431

Number of people employed in this industry 49,005

Total annual sales in this industry $1.34 million

Average employees per establishment 12

Average sales per establishment $.3 million

4.1 Market Segmentation


Customers and Target Markets

City Taxi's focus will be on the credit card market with target customers in the low to mid income range in the
Metropolitan San Francisco area. The target customers are motivated to use our services over that of competitors
because of the convenience and quality associated with our services.

Customer Buying Criteria

We believe our customers choose our cab service based on the following criteria:

• Performance. We work with one goal in mind: to get customers where they want to go, when they want to go,
promptly, efficiently, comfortably, and safely.

• Superior Service. Timely pick up, private usage, and customer care.

• Quality. This involves providing courteous service in clean, well-maintained cars.

• Convenience. This involves the credit/debit card feature.


Market Analysis
1999 2000 2001 2002 2003

Potential Customers Growth CAGR

Credit Card Market 25% 200,000 250,000 312,500 390,625 488,281 25.00%

Cash Customers 10% 100,000 110,000 121,000 133,100 146,410 10.00%

Other 0% 0 0 0 0 0 0.00%

Total 20.60% 300,000 360,000 433,500 523,725 634,691 20.60%

4.2 Service Business Analysis


Market 1-Taxi Cabs

This category covers establishments engaged primarily in furnishing passenger transportation by automobiles not
operated on regular schedules or between fixed terminals. Taxi cab fleet owners and organizations are included,
regardless of whether drivers are hired, rent their cabs, or are otherwise compensated.

Industry Snapshot

In 1990, U.S. consumers spent an estimated $3.17 billion on taxis. That year, approximately 32,600 were employed
in the industry as owners, managers, drivers, dispatchers, or mechanics. Since the mid- 1970's, when a trend toward
independent contracting among drivers developed, three out of every four drivers became independent contractors
licensed through, and renting their vehicles from, the taxi companies. Overall, the U.S. taxi industry consisted of
205,300 vehicles in 1993. Of these, 170,800 were licensed taxis and 16,600 were hired cars, also referred to as
executive sedans or liveries. The remainder was minibuses or vans, many of which were wheelchair-accessible for
transporting the elderly and disabled.

Organization and Structure

Most taxi companies followed a similar organizational pattern. Managers, sometimes the company owners' ran the
business, hired drivers, and performed other administrative duties. Dispatchers took calls and assigned cabs to
passenger locations. The position of dispatcher once represented a promotion awarded to experienced cab drivers,
whose familiarity with the city best qualified them for the job. However, the increase in computer-based dispatching in
the early 1990's prompted cab companies to favor computer skills over specialized knowledge of local geography
when filing the dispatcher position.
Regulation of the U.S. taxi industry varied from city to city. While almost all cities had some form of licensing
requirements, larger urban areas had the strictest regulations. San Francisco regulations focused on fares charged to
customers, with rates assigned to designated zones of the city.

Current Conditions

In 1998, 6,342 taxi fleets, consisting of 144,000 cars, were operating in the United States. On a national level, in the
early 1990's, taxi's made approximately 2 billion passenger trips a year. Most taxi fleets were small, family-owned
businesses or individual partnerships; only 5% were corporations. Almost all operated within a single municipality,
and more than half of all taxi companies had fewer than 10 vehicles. In rural areas, companies tended to be
extremely small, with 1 to 3 cars available for customers. In cities of 100,000 people, the average fleet size was 20
cars. In urban centers of 200,000 or more people, cab companies retained hundreds of cars and carried more
passengers than the multitude of smaller companies combined.

Research and Technology

Although the taxi cab industry was not regarded as demanding in a high degree of technology, several innovations
have changed the way businesses operate. Computerized dispatching--in which cabs were tracked by computer and
dispatch instructions appeared only to the cab assigned to a call--allowed more efficient assignment of cabs to
passengers. Computerization also helped remedy the problem of "fare stealing," in which one driver intercepts a
message meant for another and picks up the first driver's fare.

Another development likely to change the industry's focus involved its use of certain radio frequencies. In the late
1980's and early 1990's, with investment in cellular and digital communications skyrocketing, taxi cab companies
found themselves in possession of a valuable asset in the form of the broadcast frequencies granted them by the
Federal Communications Commission. During this time, the FCC, allowing them only two frequencies in any one
area, heavily restricted the cellular telephone industry's use of the airwaves. By the mid-1990's, some cab-related
services, such as New Jersey's dispatcher Fleet Call, were in a strong position to become players in the burgeoning
telecommunications industry.

Industry Leaders

Due to increasing decentralization in the industry, few national taxi corporations were in operation in the early 1990's.
A few companies, however, many of which were owned by larger holding corporations, had operations that reached
beyond the local. Figure 1 shows the industry leaders in the San Francisco area and their share of the market.

Figure 1 Breakdown of Market Share in San Francisco.


Company Market Share

Transportation, Inc. 38%

Capital Cab 23%

Yellow Cab 13%

Diamond Cab 8%

Others 18%

Total 100%

Market 2- Taxi top Display

Taxi top display is a market from which City Taxi can gain a substantial amount of revenue. This has been shown to
be a viable means of advertising for a number of companies and it is used widely. Figure 2 shows the growth in the
taxi top display market segment from 1993.
1994 1995 1996 1997 3/1998

600 1,670 2,000 3,500 5,000


4.2.1 Competition and Buying Patterns
Competitive threats come from existing taxi cab companies in the San Francisco area. Their weaknesses are,
however, that they do not have the credit/debit card payment option, and some still use the radio dispatch system.
Transportation, Inc. has computer-aided dispatch but no credit card processing capabilities. Capital Cab, Yellow Cab,
and Diamond Cab all have radio dispatch with selected drivers accepting credit cards. However, these drivers do not
offer in-car processing, approval must be given at the home office.

Taxi Cabs. City Taxi's competitors include existing taxi cab companies that have been operating in the San Francisco
area. Specifically, competitors include:

• Transportation, Inc. is a family owned company that has been in business for 20 years. The company, run by
Mr. John Brown, is considered an industry leader in the field of taxi cab services. The company also owns a real
estate agency, and 2 insurance companies which work hand in hand with the taxi business. They lease facilities
to other cab companies as well. The company has a fleet of 1,200 cars, with half under the driver-owner
program and the other half company owned.

• Yellow Cab was founded 25 years ago, its president is Mr. Michael White. Yellow Cab has a fleet of 2,200 cabs,
most of which are driver-owned. The company still uses the radio dispatch system and one third of their fleet is
equipped with the credit/debit card feature. The drawback to their system is that approval for any transaction
takes place in their home office.
• Diamond Cab is owned and operated by Mr. Jay Newman. The company uses the radio dispatch system and
has a fleet of approximately 800 cabs.
• Town Cab is an organization run by Mr. Pete Whitehead. The company uses the radio dispatch system and has
a fleet of 800 cabs.

City Taxi's competitive advantage is our cutting edge technology which is unique to the taxi industry in San Francisco.
The GPS will enable City Taxi to provide timely service by giving an accurate ETA. The credit/debit card feature will
give our customers convenience and privacy during the transaction period.

Maintenance and Repair Services. City Taxi's competitors include the above mentioned companies and general
maintenance and repair shops in the area. Some of these operations do not have the capacity to handle a large
amount of vehicles. While others may have the capacity, their operations are run in a primitive manner, and City Taxi
intends to capitalize on that.

City Taxi's competitive advantages include the availability of space, operations management, and skilled employees.

Strategy and Implementation Summary


Sales Strategy

At City Taxi, the sales process is the same for each of City Taxi's two areas: taxi cab services and maintenance and
repair services. The company intends to establish its presence online by developing a website from which sales will
be generated. The District of Columbia Cab Commission regulates pricing for taxi cab services.
Sales Forecast
1999 2000 2001

Sales

All services $200,000 $1,500,000 $2,200,000

Other $0 $0 $0

Total Sales $200,000 $1,500,000 $2,200,000

Direct Cost of Sales 1999 2000 2001

All services $65,000 $125,000 $100,000

Other $0 $0 $0

Subtotal Direct Cost of Sales $65,000 $125,000 $100,000

5.1 Marketing Strategy


Marketing Strategy

City Taxi markets its products and services as solutions to transportation needs in the city of San Francisco. Other
target markets include customers in the low to mid income range. Direct mailings and television advertising will be the
company's main marketing channels. These channels ensure that target customers are reached repeatedly and
effectively. The company will monitor its market position through constant tracking by Value Pack and TCI Media, Inc.

TCI Media Services - The proposed advertising package, titled "The Championship," will yield:

• One commercial in every regular season NBA game on TNT for the 1999-2000 season

• One commercial in 2000; 1999-2000 regular season Wizard games on HTS

• 900 6 a.m. - 12 a.m. commercials on a minimum of 4 networks

• Ads on the TV guide channel


5.1.1 Marketing Programs
City Taxi plans to communicate through direct mail and television advertising to generate sales. TCI MEDIA Services
and Val-Pak Direct Marketing will spearhead the marketing campaign. The key message associated with our products
and services is cleaner, efficient, flexible, and convenient taxi cabs.

Additional Plans--The company also has additional promotional plans which are diverse and include a range of
marketing communications described below:

• Trade shows: company representatives will attend and participate in several trade shows to keep up with
changes in the industry.

• Print advertising and article publishing : the company's print advertising program will include advertisements
in local newspapers and local journal publications like the San Francisco Magazine. City Taxi will feature articles
on services provided in the above mentioned publications.

• Val-Pak Direct Marketing: the challenge of any direct marketer is to take a massive amount of amorphous data
and create tailored messages to targeted market segments. Perhaps no company is more familiar with that
challenge than Florida-based Val-Pak Direct Marketing, a leader in local, cooperative direct mail advertising.
More than 53 million households in the United States receive Val-Pak coupons in their mailbox. In 1997, Val-
Pak designed, printed and distributed more than 11 billion incentive coupons promoting various products and
services. Val-Pak targets as few as 10,000 households or as many as 53 million with any given mailing.
5.2 Strategic Alliances
The company has strategic alliances with King Communications, Surfside Systems, and Commercial Electronic
Services. These alliances are valuable to City Taxi because they allow the company to get updates on technology
and added tech support, and they are valuable to the ally firms because City Taxi is a growing customer. All
agreements come with a stipulation that if new technology becomes available, City Taxi will be notified and provided
with the technology to expand on current technology, helping us maintain a competitive edge. Details of the strategic
relationships that City Taxi has are given below.

• International Taxi cab and Livery Association (ITLA). ITLA is a non-profit association that represents the
private, for-profit ground transpiration industry. City Taxi will use the resources made available by ITLA to get
the latest industry trends and trade show information. ITLA conducts a variety of research projects on industry
issues and the results of these studies are summarized in ITLA publications and made available to association
members at a reduced fee.

• Rockwell International. Rockwell International has been brought in to help develop the call center and aid with
the development of superior customer service techniques. City Taxi will work with Rockwell International in the
setup of a cost efficient but productive call center.

• TCI Media, Inc. Currently, City Taxi is under a verbal agreement with TCI Media, Inc. to market its product and
services through various cable networks.

• Surfside Systems. Surfside Systems will be the company's supplier of dispatch software and CAD software.

• King Communications. King Communications will be the company's supplier of mobile data and in-car
credit/debit card processing equipment hardware. King Communications has made a commitment and
guarantee that they will provide interface to Surfside Systems.

• Transportation, Inc. This alliance is a business relationship between Jerry Schafer (Transportation, Inc.) and
Johnson Taylor (City Taxi). Transportation, Inc. is a competitor, but the relationship allows City Taxi to learn from
their 20-year experience in the business and to overcome the shortfalls they have experienced.

• Barwood, Inc. Barwood will be the company's source of used taxis when the need to add to our fleet arises.
• Val-Pak Direct Marketing. Val-Pak is a full-service marketing company that offers a simple, cost-effective way
of increasing business. Val-Pak pioneered local cooperative direct mail in 1968, and has been the industry
leader for over 30 years. The relationship gives us access to their powerful, cost effective variety of advertising
formats allowing us to develop a direct mail program that is right for our business.

• Commercial Electronics Services (CES). CES is a supplier of advanced technology systems used in taxi
cabs. The relationship will allow City Taxi to get the latest technology and the benefit of their excellent tech
support. All systems are connected to their offices and given a serial number, that way, they are able to locate
the system, evaluate the problem, and fix it right away.

• Mighty Cab Body Shop. The owner of Mighty Cab also owns a body shop. City Taxi will seek to establish a
relationship with it for body work and towing services.

Management Summary
Organization

The company's management philosophy is based on responsibility and mutual respect. City Taxi has an environment
and structure that encourages productivity and respect for customers and fellow employees.

The City Taxi team is organized into two groups:

1. Taxi Cabs. The taxi cabs division will consist of the fleet of taxis, driver owned and company owned, the call
center, and administration. Overall, City Taxi will have approximately 20 employees in this division. The
management of all daily operations within City Taxi will be handled in this division. Mr. Taylor, the CEO, will be
responsible for the purchase of vehicles and dealing with vendors and suppliers. There will be 10 to 20
employees in the call center, three supervisors, three dispatchers, an office manager, a data entry clerk, and an
employee responsible for accounts receivables/payables.

2. Maintenance and Repair Services. This division will deal with the maintenance of vehicles. Drivers will be
charged at discounted rates for tune-ups, wheel alignments, and other repairs. This division will be staffed with
seven employees to begin with.

Officers and Key Employees

City Taxi's management is highly experienced and qualified. Key members of City Taxi's management teams, their
backgrounds, and responsibilities are as follows.

• Mr. Johnson Taylor, President and CEO.

• Mr. Peter Jackson, Senior Vice President - Operations.

• Ms. Glenda Jones, Call Center Supervisor.

Personnel Plan
1999 2000 2001

Taxi Cabs & Administrative $108,696 $365,217 $395,652

Maintenance & Repair $108,695 $156,522 $169,565

Total People 8 17 20

Total Payroll $217,391 $521,739 $565,217

Financial Plan
The company is seeking $2.5 million of financing to fund the acquisition of Mighty Cab Association and its initial
operations. This funding will cover the purchase of Mighty Cab, marketing, purchase of extra vehicles, software, and
hardware.

7.1 Important Assumptions


The table below shows the key assumptions for City Taxi.

General Assumptions
1999 2000 2001

Plan Month 1 2 3

Current Interest Rate 10.00% 10.00% 10.00%

Long-term Interest Rate 10.00% 10.00% 10.00%

Tax Rate 25.42% 25.00% 25.42%

Other 0 0 0

7.2 Break-even Analysis


City Taxi's Break-even Analysis indicates that the firm has a strong balance of costs and sales. The company
estimates a monthly break-even sales volume of approximately $43,000, which will be reached by Fiscal Year (FY)
2000.

Break-even Analysis

Monthly Revenue Break-even $43,333

Assumptions:
Average Percent Variable Cost 32%

Estimated Monthly Fixed Cost $29,250

7.3 Projected Profit and Loss


City Taxi is in the early stage of development, thus initial projections have only been made on accounts that are
believed to most drive the income statement.

Pro Forma Profit and Loss


1999 2000 2001

Sales $200,000 $1,500,000 $2,200,000

Direct Cost of Sales $65,000 $125,000 $100,000

Other $5,000 $10,000 $15,000

Total Cost of Sales $70,000 $135,000 $115,000

Gross Margin $130,000 $1,365,000 $2,085,000

Gross Margin % 65.00% 91.00% 94.77%

Expenses

Payroll $217,391 $521,739 $565,217

Sales and Marketing and Other Expenses $64,000 $164,000 $214,000

Depreciation $14,997 $17,500 $17,500

Research & Development $15,000 $25,000 $40,000

Utilities $2,000 $2,000 $2,000

Insurance $5,000 $5,000 $5,000

Payroll Taxes $32,609 $78,261 $84,783

Other $0 $0 $0

Total Operating Expenses $350,997 $813,500 $928,500

Profit Before Interest and Taxes ($220,997) $551,500 $1,156,500

EBITDA ($206,000) $569,000 $1,174,000

Interest Expense $3,337 $2,841 $2,084

Taxes Incurred $0 $137,165 $293,414

Net Profit ($224,334) $411,494 $861,002

Net Profit/Sales -112.17% 27.43% 39.14%


7.4 Projected Cash Flow
The table below outlines the company's cash flows for FY 1999-2001. The required $2.5 million will be spent to
acquire Mighty Cab's operations ($1.25 million), as well as to purchase additional property ($250,000) and equipment
($200,000). An additional $500,000 will be spent on other short-term assets.

Pro Forma Cash Flow


1999 2000 2001

Cash Received

Cash from Operations

Cash Sales $200,000 $1,500,000 $2,200,000

Subtotal Cash from Operations $200,000 $1,500,000 $2,200,000

Additional Cash Received

Sales Tax, VAT, HST/GST Received $0 $0 $0

New Current Borrowing $0 $0 $0

New Other Liabilities (interest-free) $0 $0 $0

New Long-term Liabilities $0 $0 $0

Sales of Other Current Assets $0 $0 $0

Sales of Long-term Assets $0 $0 $0

New Investment Received $2,500,000 $0 $0

Subtotal Cash Received $2,700,000 $1,500,000 $2,200,000


Expenditures 1999 2000 2001

Expenditures from Operations

Cash Spending $217,391 $521,739 $565,217

Bill Payments $200,095 $519,573 $739,266

Subtotal Spent on Operations $417,486 $1,041,312 $1,304,483

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0

Principal Repayment of Current Borrowing $3,000 $3,000 $3,000

Other Liabilities Principal Repayment $0 $0 $0

Long-term Liabilities Principal Repayment $0 $4,181 $4,951

Purchase Other Current Assets $500,000 $0 $0

Purchase Long-term Assets $1,700,000 $0 $0

Dividends $0 $0 $0

Subtotal Cash Spent $2,620,486 $1,048,493 $1,312,434

Net Cash Flow $79,514 $451,507 $887,566

Cash Balance $124,514 $576,021 $1,463,587

7.5 Projected Balance Sheet


The table below provides City Taxi's actual and projected balance sheets for 1999-2001.

Pro Forma Balance Sheet


1999 2000 2001

Assets

Current Assets

Cash $124,514 $576,021 $1,463,587

Other Current Assets $513,400 $513,400 $513,400

Total Current Assets $637,914 $1,089,421 $1,976,987

Long-term Assets

Long-term Assets $1,775,000 $1,775,000 $1,775,000

Accumulated Depreciation $24,997 $42,497 $59,997

Total Long-term Assets $1,750,003 $1,732,503 $1,715,003

Total Assets $2,387,917 $2,821,924 $3,691,990


Liabilities and Capital 1999 2000 2001

Current Liabilities

Accounts Payable $15,451 $45,145 $62,160

Current Borrowing $7,000 $4,000 $1,000

Other Current Liabilities $25,400 $25,400 $25,400

Subtotal Current Liabilities $47,851 $74,545 $88,560

Long-term Liabilities $25,000 $20,819 $15,868

Total Liabilities $72,851 $95,364 $104,428

Paid-in Capital $2,537,000 $2,537,000 $2,537,000

Retained Earnings $2,400 ($221,934) $189,560

Earnings ($224,334) $411,494 $861,002

Total Capital $2,315,066 $2,726,560 $3,587,562

Total Liabilities and Capital $2,387,917 $2,821,924 $3,691,990

Net Worth $2,315,066 $2,726,560 $3,587,562

7.6 Business Ratios


The following table contains important business ratios from the taxi cab industry, as determined by the Standard
Industry Classification (SIC) Index #4121, Taxi Cabs.

Ratio Analysis
1999 2000 2001 Industry Profile

Sales Growth 100.00% 650.00% 46.67% 0.50%

Percent of Total Assets

Other Current Assets 21.50% 18.19% 13.91% 45.90%

Total Current Assets 26.71% 38.61% 53.55% 63.00%

Long-term Assets 73.29% 61.39% 46.45% 37.00%

Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 2.00% 2.64% 2.40% 29.10%

Long-term Liabilities 1.05% 0.74% 0.43% 27.00%

Total Liabilities 3.05% 3.38% 2.83% 56.10%


Net Worth 96.95% 96.62% 97.17% 43.90%

Percent of Sales

Sales 100.00% 100.00% 100.00% 100.00%

Gross Margin 65.00% 91.00% 94.77% 82.50%

Selling, General & Administrative Expenses 177.25% 63.59% 55.44% 58.00%

Advertising Expenses 25.00% 10.00% 9.09% 1.00%

Profit Before Interest and Taxes -110.50% 36.77% 52.57% 2.60%

Main Ratios

Current 13.33 14.61 22.32 1.58

Quick 13.33 14.61 22.32 1.22

Total Debt to Total Assets 3.05% 3.38% 2.83% 56.10%

Pre-tax Return on Net Worth -9.69% 20.12% 32.18% 3.60%

Pre-tax Return on Assets -9.39% 19.44% 31.27% 8.10%

Additional Ratios 1999 2000 2001

Net Profit Margin -112.17% 27.43% 39.14% n.a

Return on Equity -9.69% 15.09% 24.00% n.a

Activity Ratios

Accounts Payable Turnover 12.42 12.17 12.17 n.a

Payment Days 31 20 26 n.a

Total Asset Turnover 0.08 0.53 0.60 n.a

Debt Ratios

Debt to Net Worth 0.03 0.03 0.03 n.a

Current Liab. to Liab. 0.66 0.78 0.85 n.a

Liquidity Ratios

Net Working Capital $590,063 $1,014,876 $1,888,427 n.a

Interest Coverage -66.22 194.13 554.85 n.a

Additional Ratios

Assets to Sales 11.94 1.88 1.68 n.a

Current Debt/Total Assets 2% 3% 2% n.a


Acid Test 13.33 14.61 22.32 n.a

Sales/Net Worth 0.09 0.55 0.61 n.a

Dividend Payout 0.00 0.00 0.00 n.a

Appendix

Sales Forecast

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Sales

All services 0% $16,667 $16,667 $16,667 $16,667 $16,667 $16,667 $16,667 $16,667 $16,667 $16,667 $16,667 $16,667

Other 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Sales $16,667 $16,667 $16,667 $16,667 $16,667 $16,667 $16,667 $16,667 $16,667 $16,667 $16,667 $16,667

Direct Cost of Sales Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

All services $5,417 $5,417 $5,417 $5,417 $5,417 $5,417 $5,417 $5,417 $5,417 $5,417 $5,417 $5,417

Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Direct Cost of


$5,417 $5,417 $5,417 $5,417 $5,417 $5,417 $5,417 $5,417 $5,417 $5,417 $5,417 $5,417
Sales

Personnel Plan

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Taxi Cabs &


0% $9,058 $9,058 $9,058 $9,058 $9,058 $9,058 $9,058 $9,058 $9,058 $9,058 $9,058 $9,058
Administrative

Maintenance & Repair 0% $9,057 $9,058 $9,058 $9,058 $9,058 $9,058 $9,058 $9,058 $9,058 $9,058 $9,058 $9,058

Total People 8 8 8 8 8 8 8 8 8 8 8 8

Total Payroll $18,115 $18,116 $18,116 $18,116 $18,116 $18,116 $18,116 $18,116 $18,116 $18,116 $18,116 $18,116

General Assumptions

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Plan Month 1 2 3 4 5 6 7 8 9 10 11 12

Current Interest
10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Rate

Long-term
10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Interest Rate

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%

Other 0 0 0 0 0 0 0 0 0 0 0 0
Pro Forma Profit and Loss

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Sales $16,667 $16,667 $16,667 $16,667 $16,667 $16,667 $16,667 $16,667 $16,667 $16,667 $16,667 $16,667

Direct Cost
$5,417 $5,417 $5,417 $5,417 $5,417 $5,417 $5,417 $5,417 $5,417 $5,417 $5,417 $5,417
of Sales

Other $417 $417 $417 $417 $417 $417 $417 $417 $417 $417 $417 $417

Total Cost of
$5,833 $5,833 $5,833 $5,833 $5,833 $5,833 $5,833 $5,833 $5,833 $5,833 $5,833 $5,833
Sales
Gross Margin $10,833 $10,833 $10,833 $10,833 $10,833 $10,833 $10,833 $10,833 $10,833 $10,833 $10,833 $10,833

Gross Margin
65.00% 65.00% 65.00% 65.00% 65.00% 65.00% 65.00% 65.00% 65.00% 65.00% 65.00% 65.00%
%

Expenses

Payroll $18,115 $18,116 $18,116 $18,116 $18,116 $18,116 $18,116 $18,116 $18,116 $18,116 $18,116 $18,116

Sales and
Marketing
$5,333 $5,333 $5,333 $5,333 $5,333 $5,333 $5,333 $5,333 $5,333 $5,333 $5,333 $5,333
and Other
Expenses

Depreciation $625 $625 $625 $1,458 $1,458 $1,458 $1,458 $1,458 $1,458 $1,458 $1,458 $1,458

Research &
$1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250
Development

Utilities $167 $167 $167 $167 $167 $167 $167 $167 $167 $167 $167 $167

Insurance $417 $417 $417 $417 $417 $417 $417 $417 $417 $417 $417 $417

Payroll Taxes 15% $2,717 $2,717 $2,717 $2,717 $2,717 $2,717 $2,717 $2,717 $2,717 $2,717 $2,717 $2,717

Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total
Operating $28,624 $28,625 $28,625 $29,458 $29,458 $29,458 $29,458 $29,458 $29,458 $29,458 $29,458 $29,458
Expenses

Profit Before
Interest and ($17,791) ($17,792) ($17,792) ($18,625) ($18,625) ($18,625) ($18,625) ($18,625) ($18,625) ($18,625) ($18,625) ($18,625)
Taxes

EBITDA ($17,166) ($17,167) ($17,167) ($17,167) ($17,167) ($17,167) ($17,167) ($17,167) ($17,167) ($17,167) ($17,167) ($17,167)

Interest
$290 $288 $285 $283 $281 $279 $277 $275 $273 $271 $269 $267
Expense

Taxes
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Incurred

Net Profit ($18,080) ($18,079) ($18,077) ($18,908) ($18,906) ($18,904) ($18,902) ($18,900) ($18,898) ($18,896) ($18,893) ($18,891)

Net
-108.48% -108.48% -108.46% -113.45% -113.44% -113.42% -113.41% -113.40% -113.39% -113.37% -113.36% -113.35%
Profit/Sales

Pro Forma Cash Flow

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Cash
Received

Cash from
Operations
Cash Sales $16,667 $16,667 $16,667 $16,667 $16,667 $16,667 $16,667 $16,667 $16,667 $16,667 $16,667 $16,667

Subtotal
Cash from $16,667 $16,667 $16,667 $16,667 $16,667 $16,667 $16,667 $16,667 $16,667 $16,667 $16,667 $16,667
Operations

Additional
Cash
Received

Sales Tax,
VAT,
0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
HST/GST
Received

New Current
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Borrowing

New Other
Liabilities
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
(interest-
free)

New Long-
term $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Liabilities

Sales of
Other
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Current
Assets

Sales of
Long-term $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Assets

New
Investment $0 $0 $2,500,000 $0 $0 $0 $0 $0 $0 $0 $0 $0
Received

Subtotal
Cash $16,667 $16,667 $2,516,667 $16,667 $16,667 $16,667 $16,667 $16,667 $16,667 $16,667 $16,667 $16,667
Received

Expenditures Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Expenditures
from
Operations

Cash
$18,115 $18,116 $18,116 $18,116 $18,116 $18,116 $18,116 $18,116 $18,116 $18,116 $18,116 $18,116
Spending

Bill
$24,134 $16,007 $16,005 $16,003 $16,001 $15,999 $15,996 $15,994 $15,992 $15,990 $15,988 $15,986
Payments

Subtotal
Spent on $42,249 $34,123 $34,121 $34,119 $34,117 $34,115 $34,112 $34,110 $34,108 $34,106 $34,104 $34,102
Operations

Additional
Cash Spent

Sales Tax, $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
VAT,
HST/GST
Paid Out

Principal
Repayment
$250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250
of Current
Borrowing

Other
Liabilities
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal
Repayment

Long-term
Liabilities
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal
Repayment

Purchase
Other
$0 $0 $500,000 $0 $0 $0 $0 $0 $0 $0 $0 $0
Current
Assets

Purchase
Long-term $0 $0 $1,700,000 $0 $0 $0 $0 $0 $0 $0 $0 $0
Assets

Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal
$42,499 $34,373 $2,234,371 $34,369 $34,367 $34,365 $34,362 $34,360 $34,358 $34,356 $34,354 $34,352
Cash Spent

Net Cash
($25,832) ($17,706) $282,296 ($17,702) ($17,700) ($17,698) ($17,696) ($17,694) ($17,692) ($17,690) ($17,687) ($17,685)
Flow

Cash
$19,168 $1,462 $283,758 $266,056 $248,356 $230,658 $212,962 $195,268 $177,577 $159,887 $142,200 $124,514
Balance

Pro Forma Balance Sheet

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Starting
Assets Balance
s

Current
Assets

Cash $45,000 $19,168 $1,462 $283,758 $266,056 $248,356 $230,658 $212,962 $195,268 $177,577 $159,887 $142,200 $124,514

Other
Current $13,400 $13,400 $13,400 $513,400 $513,400 $513,400 $513,400 $513,400 $513,400 $513,400 $513,400 $513,400 $513,400
Assets

Total
Current $58,400 $32,568 $14,862 $797,158 $779,456 $761,756 $744,058 $726,362 $708,668 $690,977 $673,287 $655,600 $637,914
Assets

Long-term
Assets

Long-term $1,775,00 $1,775,00 $1,775,00 $1,775,00 $1,775,00 $1,775,00 $1,775,00 $1,775,00 $1,775,00 $1,775,00
$75,000 $75,000 $75,000
Assets 0 0 0 0 0 0 0 0 0 0
Accumulate
d
$10,000 $10,625 $11,250 $11,875 $13,333 $14,791 $16,249 $17,707 $19,165 $20,623 $22,081 $23,539 $24,997
Depreciatio
n

Total Long- $1,763,12 $1,761,66 $1,760,20 $1,758,75 $1,757,29 $1,755,83 $1,754,37 $1,752,91 $1,751,46 $1,750,00
$65,000 $64,375 $63,750
term Assets 5 7 9 1 3 5 7 9 1 3

$123,40 $2,560,28 $2,541,12 $2,521,96 $2,502,80 $2,483,65 $2,464,50 $2,445,35 $2,426,20 $2,407,06 $2,387,91
Total Assets $96,943 $78,612
0 3 3 5 9 5 3 4 6 1 7

Liabilities
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
and Capital

Current
Liabilities

Accounts
$23,600 $15,473 $15,471 $15,469 $15,467 $15,465 $15,463 $15,461 $15,459 $15,457 $15,455 $15,453 $15,451
Payable

Current
$10,000 $9,750 $9,500 $9,250 $9,000 $8,750 $8,500 $8,250 $8,000 $7,750 $7,500 $7,250 $7,000
Borrowing

Other
Current $25,400 $25,400 $25,400 $25,400 $25,400 $25,400 $25,400 $25,400 $25,400 $25,400 $25,400 $25,400 $25,400
Liabilities

Subtotal
Current $59,000 $50,623 $50,371 $50,119 $49,867 $49,615 $49,363 $49,111 $48,859 $48,607 $48,355 $48,103 $47,851
Liabilities

Long-term
$25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000
Liabilities

Total
$84,000 $75,623 $75,371 $75,119 $74,867 $74,615 $74,363 $74,111 $73,859 $73,607 $73,355 $73,103 $72,851
Liabilities

Paid-in $2,537,00 $2,537,00 $2,537,00 $2,537,00 $2,537,00 $2,537,00 $2,537,00 $2,537,00 $2,537,00 $2,537,00
$37,000 $37,000 $37,000
Capital 0 0 0 0 0 0 0 0 0 0

Retained
$2,400 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400
Earnings

($18,08 ($36,15 ($110,954 ($129,856 ($148,756 ($167,654 ($186,549 ($205,443 ($224,334


Earnings $0 ($54,237) ($73,145) ($92,051)
0) 9) ) ) ) ) ) ) )

Total $2,485,16 $2,466,25 $2,447,34 $2,428,44 $2,409,54 $2,390,64 $2,371,74 $2,352,85 $2,333,95 $2,315,06
$39,400 $21,320 $3,241
Capital 3 5 9 6 4 4 6 1 7 6

Total
$123,40 $2,560,28 $2,541,12 $2,521,96 $2,502,80 $2,483,65 $2,464,50 $2,445,35 $2,426,20 $2,407,06 $2,387,91
Liabilities $96,943 $78,612
0 3 3 5 9 5 3 4 6 1 7
and Capital

$2,485,16 $2,466,25 $2,447,34 $2,428,44 $2,409,54 $2,390,64 $2,371,74 $2,352,85 $2,333,95 $2,315,06
Net Worth $39,400 $21,320 $3,241
3 5 9 6 4 4 6 1 7 6