January, 2001

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Table of Contents
1.0

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1
Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2
Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

2.0

Company Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1
Company Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2
Start-up Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

3.0

Product/Service Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

4.0

Market Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.1
Market Segmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.2
Target Market Segment Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.3
Market Needs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.4
Service Business Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.5
Competition and Buying Patterns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

5.0

Strategy and Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

5.1
Competitive Edge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.2
Sales Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

6.0

Management Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.1
Personnel Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

7.0

Financial Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.1
Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.2
Projected Profit and Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.3
Projected Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.4
Projected Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.5
Business Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10
10
11
12
14
15

Curriculum Companion Suites

1.0 Executive Summary
Introduction
Curriculum Companion Suites (CSS) is a medium-sized software development and consulting
firm focused on making the educational process more efficient and effective for K-12 schools.
CCS software serves as a virtual teaching assistant for the educational process. Students can
follow along with curriculum electronically through a central computer terminal at the front of
the classroom.
The Company
CCS keys to success are the company's commitment to market awarness and future potential
direction of the educational process, and CCS' relationships with a large number of educational
institutions and districts.
Curriculum Companion Suites is a start-up company comprised of six executives and seventysix employees. The executives represent all functional areas, with 70 years of combined
experience in the software development industry. Two majority shareholders, Andrew
Christiansen and David Fields, own 80% of the company. Other investors own a minority
stake. At the moment, the company does not have plans for going public, as most of the
financing is raised internally. CSS is incorporated in the state of Oregon by the two majority
shareholders.
Products
CCS offers a suite of educational software for each grade level, from kindergarten through
12th grade. These suites are developed in collaboration with major curriculum publishers with
whom CCS has established strategic partnerships.
CCS provides full installation, initial and ongoing consulting support. These services are
provided as part of each software package purchase.
The Market
The competitive marketplace includes only a handful of direct competitors within the learning
information systems vendors segment, providing software products and installation and
systems integration services to kindergarten through senior high (K-12) schools in the United
States. CCS competes primarily against more traditional methods of education, training and
testing, including pencil and paper testing. In addition, CCS competes with other companies
offering educational software products to schools, such as International Business Machines
Corporation, Apple Computer, Inc., and Mattel, Inc.
Educational institutions and school districts have not been active in searching out technical
enhancements to the educational process. Rather, companies such as CCS have often utilized
a more "push" type of marketing strategy. The educational community has had to be
"educated" themselves on the opportunities of utilizing technical infrastructures to enhance
learning processes.
Since only a handful of other companies are competing directly with CCS in this market, the
company plans to develop a healthy level of market share, with a goal of 10% at the end of
three years.
The target market for CCS is the urban/metropolitan educational market, as this market
presents the highest level of opportunity in terms of revenues. Additionally, software
installations and customizations in this market are much more feasible in terms of technical
logistics and efficiencies. Thus, profitability is by far more likely in this market.
Relationships have been established with a large number of educational institutions and school
districts across the U.S. Significant investments have been made by CCS to research and
understand the specific needs and potential enhancements to the current educational process.
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Curriculum Companion Suites

Financial Considerations
CCS expects to raise $178,000 as its own capital, and borrow $150,000 guaranteed by the
SBA as a 10-year loan. This provides the bulk of the current financing required.
CCS intends to deliver sales of approximately $10.2 million in the first year, $11.7 million in
the second year, and $13.4 million in the third year of the plan.

Highlights

$14,000,000
$12,000,000
$10,000,000

Sales

$8,000,000

Gross Margin
$6,000,000

Net Profit

$4,000,000
$2,000,000
$0
2001

2002

2003

1.1 Mission
Curriculum Companion Suites aims to offer software curriculum suites to K-12 schools within
the U.S. market. CCS will focus on providing solutions to enhance the educational capabilities
of schools.

1.2 Keys to Success

CCS keys to success include:

1.
2.

The company's commitment to being keenly alert to the current educational

environment and future potential direction of the educational process.
CCS' relationships with a large number of educational institutions and districts.

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Curriculum Companion Suites

2.0 Company Summary
Curriculum Companion Suites is a start-up comprised of six executives. These executives
represent all functional areas, with 70 years of combined experience in the software
development industry. Two majority shareholders, Andrew Christiansen and David Fields, own
80% of the company. The bulk of outside financing will come from a 10-year Small Business
Administration (SBA) loan.

2.1 Company Ownership

CSS is incorporated in the state of Oregon by Andrew Christiansen and David Fields. Other
investors own a minority stake. At the moment, the company does not have plans for going
public, as most of the financing is raised internally.
CSS is a start-up company that was registered in the year 2000.

2.2 Start-up Summary

Out of the total $24,000 of the start-up expenses, $20,000 has been spent on software
licenses. Estimated start-up cash requirements of $180,000 should be sufficient to cover
ongoing expenses in the first months of operation. Christiansen and Fields have each invested
$60,000, with the rest of investment coming from minority shareholders. The company has
also secured a 10-year SBA loan in the amount of $150,000 and a one-year, $50,000 loan
from its bank. Following is a chart and table summarizing projected initial start-up costs.

Start-up

$400,000
$350,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
$0
Expenses

Assets

Investment

Loans

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Curriculum Companion Suites

Table: Start-up
Start-up
Requirements
Start-up Expenses
Legal
Software Licenses
Other
Total Start-up Expenses

$3,000
$20,000
$1,000
$24,000

Start-up Assets Needed

Cash Balance on Starting Date
Other Current Assets
Total Current Assets

$180,000
$75,000
$255,000

Long-term Assets
Total Assets
Total Requirements

$100,000
$355,000
$379,000

Funding
Investment
Andrew Christiansen
David Fields
Other
Total Investment
Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities
Current Liabilities

$60,000
$60,000
$58,000
$178,000
$1,000
$50,000
$0
$51,000

Long-term Liabilities
Total Liabilities

$150,000
$201,000

Loss at Start-up
Total Capital
Total Capital and Liabilities

($24,000)
$154,000
$355,000

3.0 Product/Service Description

CCS offers a suite of educational software for each grade level, from Kindergarten through
12th grade. These suites are developed in collaboration with major curriculum publishers with
whom CCS has established strategic partnerships.
CCS provides full installation, initial, and ongoing consulting support. These services are
provided as part of each software package purchase.

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Curriculum Companion Suites

4.0 Market Analysis
CCS has a focus on K-12 schools within the U.S. market, especially schools who:
already own educational packages from large curriculum publishers who are CCS
strategic partners
owns software that has been recently developed by CSS.
The following chart and table summarize the total market potential for CSS products.

Market Analysis (Pie)

Urban K-12 Schools

Rural K-12 Schools

Table: Market Analysis

Market Analysis
Potential Customers
Urban K-12 Schools
Rural K-12 Schools
Total

Growth
5%
5%
5.01%

2001
2,500
1,500
4,000

2002
2,625
1,575
4,200

2003
2,756
1,654
4,410

2004
2,894
1,737
4,631

2005
3,039
1,824
4,863

CAGR
5.00%
5.01%
5.01%

4.1 Market Segmentation

Metropolitan Schools
Metropolitan schools often have larger student populations, with more classes, requiring more
extensive and comprehensive software packages. The installations are consequently more
extensive in nature.
Rural Schools
Rural schools often have relatively smaller student populations, and fewer classes. Additional
customization during installations is usually necessary, as the infrastructure for computer
networks is either substandard or nonexistent.

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Curriculum Companion Suites

4.2 Target Market Segment Strategy
The target market for CCS is the urban/metropolitan educational market, as this market
presents the highest level of opportunity in terms of revenues. Additionally, software
installations and customizations in this market are much more feasible in terms of technical
logistics and efficiencies. Thus, profitability is by far more likely in this market.
Relationships have been established with a large number of educational institutions and school
districts across the U.S. Significant investments have been made by CCS to research and
understand the specific needs and potential enhancements to the current educational process.
By working closely with educational administrators in efforts to optimize the educational
process, strong relationships have been established and a high sales closing rate has resulted.

4.3 Market Needs

CCS's research has found that educators, as well as parents of K-12 children believe that the
educational process is in need of significant improvements. Children, for the most part, have
been found to strongly prefer an educational environment where they can learn "hands on"
using the computer in conjunction with teacher facilitation, as opposed to teacher facilitation
only.

4.4 Service Business Analysis

Major competition to CSS comes not from other software developers but from traditional book
publishers. In fact, one of the goals of the company is to educate its clientele about the
possibilities and features of the specially-designed software that assists in the educational
process. The tool CSS provides teachers with will help them become more effective and
efficient in classrooms. The company believes that the novelty and added value its products
provide to educators will be key buying decision criteria for the customers.

4.5 Competition and Buying Patterns

Only a handful of other companies are competing directly with CCS in this market. CCS plans
to develop a healthy level of market share, with a goal of 10% at the end of three years. With
the exponential increase in computer and Internet usage among the public in the last five
years, this is a relatively new market. CCS has taken a lead primarily due to its intense efforts
both in research and development, as well as in establishing relationships in the educational
community.
Educational institutions and school districts have not been active in searching out technical
enhancements to the educational process. Rather, companies such as CCS have often utilized
a more "push" type of marketing strategy. The educational community has had to be
"educated" themselves on the opportunities of utilizing technical infrastructures to enhance
learning processes.
The competitive marketplace includes only a handful of direct competitors within the learning
information systems vendors segment, providing software products and installation and
systems integration services to kindergarten through senior high (K-12) schools in the United
States. Typical learning information systems consist of computer software and related training
designed to improve student academic performance by increasing the quality, quantity, and
timeliness of performance data available to educators and by facilitating increased student
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Curriculum Companion Suites

practice of essential skills.
There are a number of competing products covering a wide range of educational requirements.
These include:
Accelerated reading products--software for motivating and monitoring increased
literature-based reading practice.
Accelerated math--software aimed to increase a student's competency across this
discipline utilizing the latest techniques.
Professional development training for educators.
Test-generation software.
Software products offered by competitors also aim to improve student academic performance
by intensifying skills practice and increasing the quality, quantity and timeliness of information
available to educators.
CCS competes primarily against more traditional methods of education, training and testing,
including pencil and paper testing. In addition, CCS competes with other companies offering
educational software products to schools, such as International Business Machines
Corporation, Apple Computer, Inc., and Mattel, Inc. Many other companies, including Microsoft
Corporation and Walt Disney Company, provide educational software products.

5.0 Strategy and Implementation

CCS intends to succeed by offering K-12 schools a technological tool to assist teachers in
making the educational process more efficient and effective.

5.1 Competitive Edge

CCS' competitive edge is its new ideas and first to market technologies.

5.2 Sales Strategy

As the table shows, CCS intends to deliver sales of approximately $10.2 million in the first
year, $11.7 million in the second year, and $13.4 million in the third year of the plan.

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Curriculum Companion Suites

Sales Monthly

$900,000
$800,000
$700,000
$600,000
$500,000

Software Systems

$400,000

Installation & Customization

$300,000

Other Consulting

$200,000
$100,000
$0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Table: Sales Forecast

Sales Forecast
Unit Sales
Software Systems
Installation & Customization
Other Consulting
Total Unit Sales

2001
240
240
120
600

2002
276
276
138
690

2003
317
317
159
794

Unit Prices
Software Systems
Installation & Customization
Other Consulting

2001
$25,000.00
$15,000.00
$5,000.00

2002
$25,000.00
$15,000.00
$5,000.00

2003
$25,000.00
$15,000.00
$5,000.00

Sales
Software Systems
Installation & Customization
Other Consulting
Total Sales

$6,000,000
$3,600,000
$600,000
$10,200,000

$6,900,000
$4,140,000
$690,000
$11,730,000

$7,935,000
$4,761,000
$793,500
$13,489,500

Direct Unit Costs

Software Systems
Installation & Customization
Other Consulting

2001
$2,000.00
$10,000.00
$2,000.00

2002
$2,000.00
$10,000.00
$2,000.00

2003
$2,000.00
$10,000.00
$2,000.00

Direct Cost of Sales

Software Systems
Installation & Customization
Other Consulting
Subtotal Direct Cost of Sales

2001
$480,000
$2,400,000
$240,000
$3,120,000

2002
$552,000
$2,760,000
$276,000
$3,588,000

2003
$634,800
$3,174,000
$317,400
$4,126,200

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Curriculum Companion Suites

6.0 Management Summary
Andrew B. Christiansen has extensive experience in business planning and finance, including
tenures as chief financial officer with ABC Conglomerate and DEF International. David E. Fields
brings in experience in the area of marketing, advertising, and communications.

6.1 Personnel Plan

CSS will focus on strong product development and marketing. These are the areas where most
of the investments and training will go. The table below outlines the company's personnel plan
for the next years.

Table: Personnel
Personnel Plan
Product Development
Installation Technicians
Administrative
Sales & Marketing
Other
Total People
Total Payroll

2001
$900,000
$875,000
$595,000
$900,000
$0
82
$3,270,000

2002
$945,000
$918,750
$624,750
$945,000

2003
$992,250
$964,688
$655,988
$992,250

86
$3,433,500

90
$3,605,175

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Curriculum Companion Suites

7.0 Financial Plan
CCS expects to raise $178,000 as its own capital, and to borrow $150,000 guaranteed by the
SBA as a 10-year loan. This provides the bulk of the current financing required.

7.1 Break-even Analysis

CCS's Break-even Analysis is based on the average of the first-year figures for total sales by
units, and by operating expenses. These are presented as per-unit revenue, per-unit cost, and
fixed costs. These conservative assumptions make for a more accurate estimate of real risk.

Break-even Analysis
$400,000
$300,000
$200,000
$100,000
$0
($100,000)
($200,000)
($300,000)
($400,000)
0

10

20

30

40

50

Monthly break-even point

Break-even point = where line intersects with 0

Table: Break-even Analysis

Break-even Analysis:
Monthly Units Break-even
Monthly Revenue Break-even
Assumptions:
Average Per-Unit Revenue
Average Per-Unit Variable Cost
Estimated Monthly Fixed Cost

27
$466,023
$17,000.00
$5,200.00
$323,475

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Curriculum Companion Suites

7.2 Projected Profit and Loss
The projected Profit and Loss for CCS is presented in the accompanying table. The three yearly
totals are shown here, with year one monthlies in the appendices.

Table: Profit and Loss

Pro Forma Profit and Loss
Sales
Direct Cost of Sales
Other
Total Cost of Sales
Gross Margin
Gross Margin %
Expenses:
Payroll
Sales and Marketing and Other Expenses
Depreciation
Utilities
Payroll Taxes
Other

2001
$10,200,000
$3,120,000
$0
-----------$3,120,000
$7,080,000
69.41%

2002
$11,730,000
$3,588,000
$0
-----------$3,588,000
$8,142,000
69.41%

2003
$13,489,500
$4,126,200
$0
-----------$4,126,200
$9,363,300
69.41%

$3,270,000
$96,000
$24,000
$1,200
$490,500
$0
-----------$3,881,700
$3,198,300
$20,000
$794,575
$2,383,725
23.37%
TRUE

$3,433,500
$150,000
$27,600
$1,500
$515,025
$0
-----------$4,127,625
$4,014,375
$19,660
$998,679
$2,996,036
25.54%
TRUE

$3,605,175
$265,000
$31,740
$1,700
$540,776
$0
-----------$4,444,391
$4,918,909
$18,945
$1,224,991
$3,674,973
27.24%
TRUE

Total Operating Expenses

Profit Before Interest and Taxes
Interest Expense
Taxes Incurred
Net Profit
Net Profit/Sales
Include Negative Taxes

Profit Monthly
$200,000
$180,000
$160,000
$140,000
$120,000
$100,000
$80,000
$60,000
$40,000
$20,000
$0
Jan Feb Mar Apr May Jun

Jul Aug Sep Oct Nov Dec

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Curriculum Companion Suites

7.3 Projected Cash Flow
The cash flow projection shows that provisions for ongoing expenses are adequate to meet
CCS's needs as the business generates cash flow sufficient to support operations.

Cash
$2,000,000

$1,500,000

$1,000,000

Net Cash Flow

Cash Balance

$500,000

$0

($500,000)
Jan Feb Mar Apr May Jun

Jul Aug Sep Oct Nov Dec

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Curriculum Companion Suites

Table: Cash Flow
Pro Forma Cash Flow

2001

2002

2003

Cash Received
Cash from Operations:
Cash Sales
Cash from Receivables
Subtotal Cash from Operations

$3,468,000
$5,909,200
$9,377,200

$3,988,200
$7,618,380
$11,606,580

$4,586,430
$8,761,137
$13,347,567

Additional Cash Received

Non Operating (Other) Income
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

$0
$0
$0
$0
$0
$0
$0
$0
$9,377,200

$0
$0
$0
$0
$0
$0
$0
$0
$11,606,580

$0
$0
$0
$0
$0
$0
$0
$0
$13,347,567

Expenditures
Expenditures from Operations:
Cash Spending
Payment of Accounts Payable
Subtotal Spent on Operations

2001

2002

2003

$416,678
$7,071,244
$7,487,921

$498,284
$8,148,276
$8,646,560

$593,184
$9,120,058
$9,713,242

Additional Cash Spent

Non Operating (Other) Expense
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

$0
$0
$0
$0
$0
$0
$135,000
$0
$7,622,921

$0
$0
$0
$0
$6,800
$0
$225,000
$0
$8,878,360

$0
$0
$0
$0
$7,500
$0
$295,000
$0
$10,015,742

Net Cash Flow

Cash Balance

$1,754,279
$1,934,279

$2,728,220
$4,662,499

$3,331,825
$7,994,324

Page 13

Curriculum Companion Suites

7.4 Projected Balance Sheet
Following is the projected Balance Sheet for CCS.

Table: Balance Sheet

Pro Forma Balance Sheet
Assets
Current Assets
Cash
Accounts Receivable
Other Current Assets
Total Current Assets
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets

2001
$1,934,279
$822,800
$75,000
$2,832,079

2002
$4,662,499
$946,220
$75,000
$5,683,719

2003
$7,994,324
$1,088,153
$75,000
$9,157,477

$235,000
$24,000
$211,000
$3,043,079

$460,000
$51,600
$408,400
$6,092,119

$755,000
$83,340
$671,660
$9,829,137

Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities

2001
$305,354
$50,000
$0
$355,354

2002
$365,157
$50,000
$0
$415,157

2003
$434,703
$50,000
$0
$484,703

Long-term Liabilities
Total Liabilities

$150,000
$505,354

$143,200
$558,357

$135,700
$620,403

$178,000
($24,000)
$2,383,725
$2,537,725
$3,043,079
$2,537,725

$178,000
$2,359,725
$2,996,036
$5,533,761
$6,092,119
$5,533,761

$178,000
$5,355,761
$3,674,973
$9,208,734
$9,829,137
$9,208,734

Liabilities and Capital

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

Page 14

Curriculum Companion Suites

7.5 Business Ratios
The following table represents business ratios for the educational support software industry.
These numbers are determined by the Standard Industry Classification (SIC) Index code 7372.

Table: Ratios
Ratio Analysis
2001
0.00%

2002
15.00%

2003
15.00%

Industry Profile
9.70%

27.04%
0.00%
2.46%
93.07%
6.93%
100.00%

15.53%
0.00%
1.23%
93.30%
6.70%
100.00%

11.07%
0.00%
0.76%
93.17%
6.83%
100.00%

21.50%
3.00%
45.70%
70.20%
29.80%
100.00%

11.68%
4.93%
16.61%
83.39%

6.81%
2.35%
9.17%
90.83%

4.93%
1.38%
6.31%
93.69%

42.40%
19.20%
61.60%
38.40%

Percent of Sales
Sales
Gross Margin
Selling, General & Administrative Expenses
Advertising Expenses
Profit Before Interest and Taxes

100.00%
69.41%
46.04%
0.59%
31.36%

100.00%
69.41%
43.87%
0.85%
34.22%

100.00%
69.41%
42.17%
1.48%
36.46%

100.00%
100.00%
79.40%
1.30%
2.20%

Main Ratios
Current
Quick
Total Debt to Total Assets
Pre-tax Return on Net Worth
Pre-tax Return on Assets

7.97
7.97
16.61%
125.24%
104.44%

13.69
13.69
9.17%
72.19%
65.57%

18.89
18.89
6.31%
53.21%
49.85%

1.51
1.16
61.60%
3.50%
9.20%

2001
$124,390

2002
$136,395

2003
$149,883

Industry
$0
0.00%

2001
23.37%
93.93%

2002
25.54%
54.14%

2003
27.24%
39.91%

n.a
n.a

8.18
43
0.00
24.15
14
3.35

8.18
42
0.00
22.48
15
1.93

8.18
42
0.00
21.14
16
1.37

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

0.20
0.70

0.10
0.74

0.07
0.78

n.a
n.a

$2,476,725
159.92

$5,268,561
204.19

$8,672,774
259.64

n.a
n.a

0.30
12%
5.65
4.02
0.00

0.52
7%
11.41
2.12
0.00

0.73
5%
16.65
1.46
0.00

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

Sales Growth
Percent of Total Assets
Accounts Receivable
Inventory
Other Current Assets
Total Current Assets
Long-term Assets
Total Assets
Current Liabilities
Long-term Liabilities
Total Liabilities
Net Worth

Business Vitality Profile

Sales per Employee
Survival Rate
Additional Ratios
Net Profit Margin
Return on Equity
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 15

Appendix
Appendix Table: Sales Forecast
Sales Forecast
Unit Sales
Software Systems
Installation & Customization
Other Consulting
Total Unit Sales

Jan
20
20
10
50

Feb
20
20
10
50

Mar
20
20
10
50

Apr
20
20
10
50

May
20
20
10
50

Jun
20
20
10
50

Jul
20
20
10
50

Aug
20
20
10
50

Sep
20
20
10
50

Oct
20
20
10
50

Nov
20
20
10
50

Dec
20
20
10
50

Unit Prices
Software Systems
Installation & Customization
Other Consulting

Jan
$25,000.00
$15,000.00
$5,000.00

Feb
$25,000.00
$15,000.00
$5,000.00

Mar
$25,000.00
$15,000.00
$5,000.00

Apr
$25,000.00
$15,000.00
$5,000.00

May
$25,000.00
$15,000.00
$5,000.00

Jun
$25,000.00
$15,000.00
$5,000.00

Jul
$25,000.00
$15,000.00
$5,000.00

Aug
$25,000.00
$15,000.00
$5,000.00

Sep
$25,000.00
$15,000.00
$5,000.00

Oct
$25,000.00
$15,000.00
$5,000.00

Nov
$25,000.00
$15,000.00
$5,000.00

Dec
$25,000.00
$15,000.00
$5,000.00

Sales
Software Systems
Installation & Customization
Other Consulting
Total Sales

$500,000
$300,000
$50,000
$850,000

$500,000
$300,000
$50,000
$850,000

$500,000
$300,000
$50,000
$850,000

$500,000
$300,000
$50,000
$850,000

$500,000
$300,000
$50,000
$850,000

$500,000
$300,000
$50,000
$850,000

$500,000
$300,000
$50,000
$850,000

$500,000
$300,000
$50,000
$850,000

$500,000
$300,000
$50,000
$850,000

$500,000
$300,000
$50,000
$850,000

$500,000
$300,000
$50,000
$850,000

$500,000
$300,000
$50,000
$850,000

Jan
$2,000.00
$10,000.00
$2,000.00

Feb
$2,000.00
$10,000.00
$2,000.00

Mar
$2,000.00
$10,000.00
$2,000.00

Apr
$2,000.00
$10,000.00
$2,000.00

May
$2,000.00
$10,000.00
$2,000.00

Jun
$2,000.00
$10,000.00
$2,000.00

Jul
$2,000.00
$10,000.00
$2,000.00

Aug
$2,000.00
$10,000.00
$2,000.00

Sep
$2,000.00
$10,000.00
$2,000.00

Oct
$2,000.00
$10,000.00
$2,000.00

Nov
$2,000.00
$10,000.00
$2,000.00

Dec
$2,000.00
$10,000.00
$2,000.00

Jan
$40,000
$200,000
$20,000
$260,000

Feb
$40,000
$200,000
$20,000
$260,000

Mar
$40,000
$200,000
$20,000
$260,000

Apr
$40,000
$200,000
$20,000
$260,000

May
$40,000
$200,000
$20,000
$260,000

Jun
$40,000
$200,000
$20,000
$260,000

Jul
$40,000
$200,000
$20,000
$260,000

Aug
$40,000
$200,000
$20,000
$260,000

Sep
$40,000
$200,000
$20,000
$260,000

Oct
$40,000
$200,000
$20,000
$260,000

Nov
$40,000
$200,000
$20,000
$260,000

Dec
$40,000
$200,000
$20,000
$260,000

Direct Unit Costs

Software Systems
Installation & Customization
Other Consulting
Direct Cost of Sales
Software Systems
Installation & Customization
Other Consulting
Subtotal Direct Cost of Sales

0.00%
0.00%
0.00%

Page 1

Appendix
Appendix Table: Personnel
Personnel Plan
Product Development
Installation Technicians
Administrative
Sales & Marketing
Other
Total People
Total Payroll

Jan
$75,000
$72,917
$49,583
$75,000

Feb
$75,000
$72,917
$49,583
$75,000

Mar
$75,000
$72,917
$49,583
$75,000

Apr
$75,000
$72,917
$49,583
$75,000

May
$75,000
$72,917
$49,583
$75,000

Jun
$75,000
$72,917
$49,583
$75,000

Jul
$75,000
$72,917
$49,583
$75,000

Aug
$75,000
$72,917
$49,583
$75,000

Sep
$75,000
$72,917
$49,583
$75,000

Oct
$75,000
$72,917
$49,583
$75,000

Nov
$75,000
$72,917
$49,583
$75,000

Dec
$75,000
$72,917
$49,583
$75,000

82
$272,500

82
$272,500

82
$272,500

82
$272,500

82
$272,500

82
$272,500

82
$272,500

82
$272,500

82
$272,500

82
$272,500

82
$272,500

82
$272,500

Page 2

Appendix
Appendix Table: General Assumptions
General Assumptions
Plan Month
Current Interest Rate
Long-term Interest Rate
Tax Rate
Sales on Credit %
Other
Calculated Totals
Payroll Expense
Sales on Credit
New Accounts Payable

Jan
1
10.00%
10.00%
25.00%
66.00%
0.00%

Feb
2
10.00%
10.00%
25.00%
66.00%
0.00%

Mar
3
10.00%
10.00%
25.00%
66.00%
0.00%

Apr
4
10.00%
10.00%
25.00%
66.00%
0.00%

May
5
10.00%
10.00%
25.00%
66.00%
0.00%

Jun
6
10.00%
10.00%
25.00%
66.00%
0.00%

Jul
7
10.00%
10.00%
25.00%
66.00%
0.00%

Aug
8
10.00%
10.00%
25.00%
66.00%
0.00%

Sep
9
10.00%
10.00%
25.00%
66.00%
0.00%

Oct
10
10.00%
10.00%
25.00%
66.00%
0.00%

Nov
11
10.00%
10.00%
25.00%
66.00%
0.00%

Dec
12
10.00%
10.00%
25.00%
66.00%
0.00%

$272,500
$561,000
$615,758

$272,500
$561,000
$615,758

$272,500
$561,000
$615,758

$272,500
$561,000
$614,258

$272,500
$561,000
$614,258

$272,500
$561,000
$614,258

$272,500
$561,000
$614,258

$272,500
$561,000
$614,258

$272,500
$561,000
$614,258

$272,500
$561,000
$614,258

$272,500
$561,000
$614,258

$272,500
$561,000
$614,258

Page 3

Appendix
Appendix Table: Profit and Loss
Pro Forma Profit and Loss
Sales
Direct Cost of Sales
Other
Total Cost of Sales
Gross Margin
Gross Margin %
Expenses:
Payroll
Sales and Marketing and Other Expenses
Depreciation
Utilities
Payroll Taxes
Other
Total Operating Expenses
Profit Before Interest and Taxes
Interest Expense
Taxes Incurred
Net Profit
Net Profit/Sales
Include Negative Taxes

15%

Jan
$850,000
$260,000
$0
-----------$260,000
$590,000
69.41%

Feb
$850,000
$260,000
$0
-----------$260,000
$590,000
69.41%

Mar
$850,000
$260,000
$0
-----------$260,000
$590,000
69.41%

Apr
$850,000
$260,000
$0
-----------$260,000
$590,000
69.41%

May
$850,000
$260,000
$0
-----------$260,000
$590,000
69.41%

Jun
$850,000
$260,000
$0
-----------$260,000
$590,000
69.41%

Jul
$850,000
$260,000
$0
-----------$260,000
$590,000
69.41%

Aug
$850,000
$260,000
$0
-----------$260,000
$590,000
69.41%

Sep
$850,000
$260,000
$0
-----------$260,000
$590,000
69.41%

Oct
$850,000
$260,000
$0
-----------$260,000
$590,000
69.41%

Nov
$850,000
$260,000
$0
-----------$260,000
$590,000
69.41%

Dec
$850,000
$260,000
$0
-----------$260,000
$590,000
69.41%

$272,500
$8,000
$2,000
$100
$40,875
$0
-----------$323,475
$266,525
$1,667
$66,215
$198,644
23.37%

$272,500
$8,000
$2,000
$100
$40,875
$0
-----------$323,475
$266,525
$1,667
$66,215
$198,644
23.37%

$272,500
$8,000
$2,000
$100
$40,875
$0
-----------$323,475
$266,525
$1,667
$66,215
$198,644
23.37%

$272,500
$8,000
$2,000
$100
$40,875
$0
-----------$323,475
$266,525
$1,667
$66,215
$198,644
23.37%

$272,500
$8,000
$2,000
$100
$40,875
$0
-----------$323,475
$266,525
$1,667
$66,215
$198,644
23.37%

$272,500
$8,000
$2,000
$100
$40,875
$0
-----------$323,475
$266,525
$1,667
$66,215
$198,644
23.37%

$272,500
$8,000
$2,000
$100
$40,875
$0
-----------$323,475
$266,525
$1,667
$66,215
$198,644
23.37%

$272,500
$8,000
$2,000
$100
$40,875
$0
-----------$323,475
$266,525
$1,667
$66,215
$198,644
23.37%

$272,500
$8,000
$2,000
$100
$40,875
$0
-----------$323,475
$266,525
$1,667
$66,215
$198,644
23.37%

$272,500
$8,000
$2,000
$100
$40,875
$0
-----------$323,475
$266,525
$1,667
$66,215
$198,644
23.37%

$272,500
$8,000
$2,000
$100
$40,875
$0
-----------$323,475
$266,525
$1,667
$66,215
$198,644
23.37%

$272,500
$8,000
$2,000
$100
$40,875
$0
-----------$323,475
$266,525
$1,667
$66,215
$198,644
23.37%

Page 4

Appendix
Appendix Table: Cash Flow
Pro Forma Cash Flow
Cash Received
Cash from Operations:
Cash Sales
Cash from Receivables
Subtotal Cash from Operations
Additional Cash Received
Non Operating (Other) Income
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

0.00%

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

$289,000
$0
$289,000

$289,000
$299,200
$588,200

$289,000
$561,000
$850,000

$289,000
$561,000
$850,000

$289,000
$561,000
$850,000

$289,000
$561,000
$850,000

$289,000
$561,000
$850,000

$289,000
$561,000
$850,000

$289,000
$561,000
$850,000

$289,000
$561,000
$850,000

$289,000
$561,000
$850,000

$289,000
$561,000
$850,000

$0
$0
$0
$0
$0
$0
$0
$0
$289,000

$0
$0
$0
$0
$0
$0
$0
$0
$588,200

$0
$0
$0
$0
$0
$0
$0
$0
$850,000

$0
$0
$0
$0
$0
$0
$0
$0
$850,000

$0
$0
$0
$0
$0
$0
$0
$0
$850,000

$0
$0
$0
$0
$0
$0
$0
$0
$850,000

$0
$0
$0
$0
$0
$0
$0
$0
$850,000

$0
$0
$0
$0
$0
$0
$0
$0
$850,000

$0
$0
$0
$0
$0
$0
$0
$0
$850,000

$0
$0
$0
$0
$0
$0
$0
$0
$850,000

$0
$0
$0
$0
$0
$0
$0
$0
$850,000

$0
$0
$0
$0
$0
$0
$0
$0
$850,000

Expenditures
Expenditures from Operations:
Cash Spending
Payment of Accounts Payable
Subtotal Spent on Operations

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

$33,598
$324,454
$358,053

$33,598
$615,758
$649,356

$33,598
$615,758
$649,356

$35,098
$601,208
$636,306

$35,098
$614,258
$649,356

$35,098
$614,258
$649,356

$35,098
$614,258
$649,356

$35,098
$614,258
$649,356

$35,098
$614,258
$649,356

$35,098
$614,258
$649,356

$35,098
$614,258
$649,356

$35,098
$614,258
$649,356

Additional Cash Spent

Non Operating (Other) Expense
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

$0
$0
$0
$0
$0
$0
$0
$0
$358,053

$0
$0
$0
$0
$0
$0
$0
$0
$649,356

$0
$0
$0
$0
$0
$0
$0
$0
$649,356

$0
$0
$0
$0
$0
$0
$15,000
$0
$651,306

$0
$0
$0
$0
$0
$0
$15,000
$0
$664,356

$0
$0
$0
$0
$0
$0
$15,000
$0
$664,356

$0
$0
$0
$0
$0
$0
$15,000
$0
$664,356

$0
$0
$0
$0
$0
$0
$15,000
$0
$664,356

$0
$0
$0
$0
$0
$0
$15,000
$0
$664,356

$0
$0
$0
$0
$0
$0
$15,000
$0
$664,356

$0
$0
$0
$0
$0
$0
$15,000
$0
$664,356

$0
$0
$0
$0
$0
$0
$15,000
$0
$664,356

Net Cash Flow

Cash Balance

($69,053)
$110,947

($61,156)
$49,791

$200,644
$250,435

$198,694
$449,129

$185,644
$634,772

$185,644
$820,416

$185,644
$1,006,060

$185,644
$1,191,704

$185,644
$1,377,347

$185,644
$1,562,991

$185,644
$1,748,635

$185,644
$1,934,279

Page 5

Appendix
Appendix Table: Balance Sheet
Pro Forma Balance Sheet
Assets
Current Assets
Cash
Accounts Receivable
Other Current Assets
Total Current Assets
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets

Starting Balances
$180,000
$0
$75,000
$255,000

Jan
$110,947
$561,000
$75,000
$746,947

Feb
$49,791
$822,800
$75,000
$947,591

Mar
$250,435
$822,800
$75,000
$1,148,235

Apr
$449,129
$822,800
$75,000
$1,346,929

May
$634,772
$822,800
$75,000
$1,532,572

Jun
$820,416
$822,800
$75,000
$1,718,216

Jul
$1,006,060
$822,800
$75,000
$1,903,860

Aug
$1,191,704
$822,800
$75,000
$2,089,504

Sep
$1,377,347
$822,800
$75,000
$2,275,147

Oct
$1,562,991
$822,800
$75,000
$2,460,791

Nov
$1,748,635
$822,800
$75,000
$2,646,435

Dec
$1,934,279
$822,800
$75,000
$2,832,079

$100,000
$0
$100,000
$355,000

$100,000
$2,000
$98,000
$844,947

$100,000
$4,000
$96,000
$1,043,591

$100,000
$6,000
$94,000
$1,242,235

$115,000
$8,000
$107,000
$1,453,929

$130,000
$10,000
$120,000
$1,652,572

$145,000
$12,000
$133,000
$1,851,216

$160,000
$14,000
$146,000
$2,049,860

$175,000
$16,000
$159,000
$2,248,504

$190,000
$18,000
$172,000
$2,447,147

$205,000
$20,000
$185,000
$2,645,791

$220,000
$22,000
$198,000
$2,844,435

$235,000
$24,000
$211,000
$3,043,079

$1,000
$50,000
$0
$51,000

Jan
$292,304
$50,000
$0
$342,304

Feb
$292,304
$50,000
$0
$342,304

Mar
$292,304
$50,000
$0
$342,304

Apr
$305,354
$50,000
$0
$355,354

May
$305,354
$50,000
$0
$355,354

Jun
$305,354
$50,000
$0
$355,354

Jul
$305,354
$50,000
$0
$355,354

Aug
$305,354
$50,000
$0
$355,354

Sep
$305,354
$50,000
$0
$355,354

Oct
$305,354
$50,000
$0
$355,354

Nov
$305,354
$50,000
$0
$355,354

Dec
$305,354
$50,000
$0
$355,354

Long-term Liabilities
Total Liabilities

$150,000
$201,000

$150,000
$492,304

$150,000
$492,304

$150,000
$492,304

$150,000
$505,354

$150,000
$505,354

$150,000
$505,354

$150,000
$505,354

$150,000
$505,354

$150,000
$505,354

$150,000
$505,354

$150,000
$505,354

$150,000
$505,354

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

$178,000
($24,000)
$0
$154,000
$355,000
$154,000

$178,000
($24,000)
$198,644
$352,644
$844,947
$352,644

$178,000
($24,000)
$397,288
$551,288
$1,043,591
$551,288

$178,000
($24,000)
$595,931
$749,931
$1,242,235
$749,931

$178,000
($24,000)
$794,575
$948,575
$1,453,929
$948,575

$178,000
($24,000)
$993,219
$1,147,219
$1,652,572
$1,147,219

$178,000
($24,000)
$1,191,863
$1,345,863
$1,851,216
$1,345,863

$178,000
($24,000)
$1,390,506
$1,544,506
$2,049,860
$1,544,506

$178,000
($24,000)
$1,589,150
$1,743,150
$2,248,504
$1,743,150

$178,000
($24,000)
$1,787,794
$1,941,794
$2,447,147
$1,941,794

$178,000
($24,000)
$1,986,438
$2,140,438
$2,645,791
$2,140,438

$178,000
($24,000)
$2,185,081
$2,339,081
$2,844,435
$2,339,081

$178,000
($24,000)
$2,383,725
$2,537,725
$3,043,079
$2,537,725

Liabilities and Capital

Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities

Page 6