Thanks for downloading a sample plan

from Bplans.com

A sample plan is a great way to get started, but you can’t just print
this plan out and turn it into the bank. You’re still going to have to put
in all your own information and do all of your own financial forecasts.

With LivePlan, you can easily use this sample as inspiration and create
your own plan, complete with financial tables and graphs. You’ll also
be able to:

• Save time with linked financial tables (the formulas are built in,
so you don’t have to do the calculations!)
• Benefit from tons of help, advice, and resources.
• Present your plan with confidence, with automatic charts and
graphs corresponding to your financial data.
• Work on your plan anywhere, on any computer.

“For 20 dollars I ended up getting a quarter of a million dollars of

funding. That’s worth it!” – Todd C. Tablegate

Click here to save 50% off the first month of LivePlan!

Cover Page

This sample business plan has been made available to users of Business Plan Pro®, business
planning software published by Palo Alto Software, Inc. Names, locations and numbers may have
been changed, and substantial portions of the original plan text may have been omitted to preserve
confidentiality and proprietary information.

You are welcome to use this plan as a starting point to create your own, but you do not have
permission to resell, reproduce, publish, distribute or even copy this plan as it exists here.

Requests for reprints, academic use, and other dissemination of this sample plan should be emailed
to the marketing department of Palo Alto Software at marketing@paloalto.com. For product
information visit our website: www.paloalto.com or call: 1-800-229-7526.

Copyright © Palo Alto Software, Inc., 1995-2009  All rights reserved.

Legal Page

Confidentiality Agreement

The undersigned reader acknowledges that the information provided by _______________ in this
business plan is confidential; therefore, reader agrees not to disclose it without the express written
permission of _______________.

It is acknowledged by reader that information to be furnished in this business plan is in all respects
confidential in nature, other than information which is in the public domain through other means
and that any disclosure or use of same by reader, may cause serious harm or damage to
_______________.

Upon request, this document is to be immediately returned to _______________.

___________________
Signature

___________________
Name (typed or printed)

___________________
Date

This is a business plan. It does not imply an offering of securities.

 Table of Contents

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

Chart: Highlights...........................................................................................................................1
1.1 Objectives....................................................................................................................................1
1.2 Mission...........................................................................................................................................1
1.3 Keys to Success.........................................................................................................................2
2.0 Company Summary......................................................................................................................2
2.1 Company Ownership................................................................................................................2
2.2 Start-up Summary....................................................................................................................2
Table: Start-up..............................................................................................................................2
Chart: Start-up..............................................................................................................................3
Table: Start-up Funding.............................................................................................................4
3.0 Products............................................................................................................................................4
4.0 Market Analysis Summary.........................................................................................................5
4.1 Market Segmentation..............................................................................................................5
Table: Market Analysis................................................................................................................5
Chart: Market Analysis (Pie).....................................................................................................6
5.0 Strategy and Implementation Summary.............................................................................6
5.1 Competitive Edge......................................................................................................................6
5.2 Marketing Strategy...................................................................................................................6
5.2.1 Promotion Strategy..........................................................................................................6
5.2.2 Distribution Strategy.......................................................................................................7
5.3 Strategic Alliances....................................................................................................................7
5.4 Sales Strategy............................................................................................................................7
5.4.1 Sales Forecast....................................................................................................................8
Table: Sales Forecast..............................................................................................................8
Chart: Sales Monthly...............................................................................................................8
5.5 Milestones....................................................................................................................................8
Table: Milestones..........................................................................................................................9
6.0 Management Summary...............................................................................................................9
7.0 Financial Plan..................................................................................................................................9
7.1 Important Assumptions..........................................................................................................9
Table: General Assumptions.....................................................................................................9
7.2 Break-even Analysis...............................................................................................................10
7.2 Break-even Analysis...............................................................................................................10
Chart: Break-even Analysis....................................................................................................10
Table: Break-even Analysis....................................................................................................10
7.3 Projected Profit and Loss.....................................................................................................11
7.3 Projected Profit and Loss.....................................................................................................11
Chart: Profit Monthly.................................................................................................................11
Table: Profit and Loss................................................................................................................11
7.4 Projected Cash Flow...............................................................................................................12
7.4 Projected Cash Flow...............................................................................................................12
Chart: Cash...................................................................................................................................13
Table: Cash Flow.........................................................................................................................12

Page 1
 Table of Contents

7.5 Projected Balance Sheet......................................................................................................14

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

Page 2
 HeavyMetal Praise

1.0 Executive Summary

Youth will be served!  For the past 10 years, Christian music has made strong inroads in every
area of popular music except for the vital and chaotic world of Heavy Metal music. Heavy Metal
Praise Records will focus only on recording Christian Heavy Metal performers, promoting their
success in the popular mainstream of Punk and Ska music.

Chart: Highlights

Highlights

$700,000

$600,000

$500,000
Sales
$400,000
Gross Margin

$300,000 Net Profit

$200,000

$100,000

$0
Year 1 Year 2 Year 3

1.1 Objectives

1. Sign and record two new Heavy Metal bands in the first year.
2. Release the first CD of each group in the first year.
3. Establish a strong distribution network that will facilitate CD sales.
4. Establish the necessary strategic alliances to assure the widest possible distribution of our
music.

1.2 Mission

The idea of Heavy Metal Praise Records is the brainchild of a group of dedicated Christians who
created the Skate Ministry over three years ago. The Skate Ministry is a group of 10 adult
skateboarders who spread the word of God to young skateboarders during the weekend at
various skate parks throughout the area. Most of these young skateboarders are boys between
the ages of 12 to 18. The predominant music in the skateboard culture is Heavy Metal and is
played at every skatepark in the area. From the beginning the group realized that the music
itself was creating negative actions on the part of young skateboarders and was facilitating a
culture of selfishness and violence.

Page 1
 HeavyMetal Praise

Heavy Metal Praise's mission is to introduce Christian Heavy Metal bands to the target audience
that gives the same musical intensity of popular Heavy Metal bands but with a more positive,
constructive message that will move young people to a closer relationship with God.

1.3 Keys to Success

 Delivering Heavy Metal groups that the target audience will find irresistible.
 Access the music and distribution network that feeds Heavy Metal artists to the skate
culture.
 Access the traditional Christian music and distribution network that will provide a ready-
made group of customers for Heavy Metal Praise Records artists.

2.0 Company Summary

Heavy Metal Praise Records is a recording business that will focus exclusively on Christian
Heavy Metal music groups.

2.1 Company Ownership

The sole founder and owner of Heavy Metal Praise Records is Johnny Young. Johnny is also a
founding member of the Skate Ministry and a skateboarder for the last 20 years. 

2.2 Start-up Summary

Heavy Metal Praise Records has the following start-up expenses and the purchase of
equipment:

 Computer system with three workstations, a printer, CD-RW, Microsoft Office, and Microsoft
Access.
 Legal fees regarding business formation and generating and reviewing contracts.
 Copier, fax, and a phone line.
Various office supplies.

Table: Start-up

Start-up

Requirements

Start-up Expenses
Legal $1,000
Stationery etc. $100
Rent $0
Other $0
Total Start-up Expenses $1,100

Start-up Assets
Cash Required $83,900
Start-up Inventory $0
Other Current Assets $15,000
Long-term Assets $0
Total Assets $98,900

Total Requirements $100,000

Page 2
 HeavyMetal Praise

Chart: Start-up

Start-up

$100,000

$90,000

$80,000

$70,000

$60,000

$50,000

$40,000

$30,000

$20,000

$10,000

$0
Expenses Assets Investment Loans

Page 3
 HeavyMetal Praise

Table: Start-up Funding

Start-up Funding
Start-up Expenses to Fund $1,100
Start-up Assets to Fund $98,900
Total Funding Required $100,000

Assets
Non-cash Assets from Start-up $15,000
Cash Requirements from Start-up $83,900
Additional Cash Raised $0
Cash Balance on Starting Date $83,900
Total Assets $98,900

Liabilities and Capital

Liabilities
Current Borrowing $0
Long-term Liabilities $0
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $0

Capital

Planned Investment
Johnny $100,000
Investor 2 $0
Other $0
Additional Investment Requirement $0
Total Planned Investment $100,000

Loss at Start-up (Start-up Expenses) ($1,100)

Total Capital $98,900

Total Capital and Liabilities $98,900

Total Funding $100,000

3.0 Products

Heavy Metal Praise Records, as the name implies, produces CDs of Heavy Metal Christian music
groups.

The typical Heavy Metal Praise Records buyer is in the 13-22 year old age bracket--and is a
direct result of the attitudes expressed by the label's bands. The spirit of youth is the driving
force of the label, offering proof that the energy of Heavy Metal Praise music exists beyond
constraints and categorizations.

While Heavy Metal Praise Records hates to pigeonhole any of its artists' musical sounds, it can
be generalized that all the bands convey an in-your-face sound Christian music. This sound,
when coupled with each band's own creativity and inspiration, allows for the artists to maintain
their identity while sharing the same energy, focus and often fan base with their label mates.
Heavy Metal Praise Records is an artist-friendly label, priding itself on giving its bands complete
artistic and creative freedom.
Page 4
 HeavyMetal Praise

4.0 Market Analysis Summary

Heavy Metal music is the music of preference among boys and young men, ages 12-22, who
are part of the skateboarding culture. Heavy Metal music generated $180 million dollars in sales
last year.

Skateboarding has grown into an enormously popular recreational sport that generated 1/2
billion dollars in sales last year. Each year the base of skateboarder grows even larger. The
sport is still enjoyed by young men in their thirties. In many cases, these older skateboarders
still enjoy Heavy Metal music. This represents a huge market opportunity for Christian music.

Heavy Metal Praise Records will focus on two customer groups:

 Early teen skateboarder.

 Late teen skateboarder.

4.1 Market Segmentation

 Early Teen Skateboarders: This group has limited mobility to attend most Heavy Metal
group performances. Yet they represent the largest consumer group of Heavy Metal music.
Generally, this target group hears the music from friends, at skateboard parks and at
skateboard shops.

 Late Teen Skateboarders: This group represents the strong fan base that comes out for live
performances at local clubs. They are also exposed to the music at skateboard parks and
skateboard shops. It is critical to build a secure fan base with this group in order to
generate sales among the younger skate boarders.

Table: Market Analysis

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Early Teen Skateboarders 10% 3,000,000 3,300,000 3,630,000 3,993,000 4,392,300 10.00%
Late Teen Skateboarders 10% 4,000,000 4,400,000 4,840,000 5,324,000 5,856,400 10.00%
Other 0% 0 0 0 0 0 0.00%
Total 10.00% 7,000,000 7,700,000 8,470,000 9,317,000 10,248,700 10.00%

Page 5
 HeavyMetal Praise

Chart: Market Analysis (Pie)

Market Analysis (Pie)

Early Teen Skateboarders

Late Teen Skateboarders

Other

5.0 Strategy and Implementation Summary

Heavy Metal Praise Records will use their competitive advantages in a new musical area of
Christian music to steadily gain market share. The first advantage is based on Johnny's
extensive inside knowledge of the recording industry. The second advantage is an already
established network of contacts within the industry.

5.1 Competitive Edge

Presently, there are few Christian Heavy Metal bands with CDs in the marketplace. The only
real competition is the acceptance of the skateboard culture. Can a Heavy Metal group with a
christian message gain a fan base? The success of a Heavy Metal band is dependent on its fan
base and its live performances. If the energy is there, the fan base will grow and CD sales will
follow.

Heavy Metal Praise Records understands that their bands must have the energy before the
message will be heard.

5.2 Marketing Strategy

Heavy Metal Praise Records has established the following Promotion and Distribution strategies.

5.2.1 Promotion Strategy

 Early Teens: Heavy Metal Praise recording artists will be marketed at the weekly sponsored
skateboarding events by the Skate Ministry. A band will play at each event during the
summer months. In addition, Heavy Metal Praise recording artists will perform as part of the
concert series sponsored by Rally Skateboards. At these events, free CD samplers will be
given out of Heavy Metal Praise recording artists.

Page 6
 HeavyMetal Praise

 Late Teens: Heavy Metal Praise recording artists will be booked to play extensively during
the summer of 2002. A Heavy Metal Praise band will be part of the "Split Cross" tour in the
region. Split Cross is a Christian music website and a strategic partner of Heavy Metal Praise
recording. At these events, free CD samplers will be given out of Heavy Metal Praise
recording artists.

5.2.2 Distribution Strategy

Heavy Metal Praise Records have made strategic alliances with both the Coalition of
Independent Music Stores (CIMS) and Straight Arrow, the number one Christian Music Website
in the country. Heavy Metal Praise Records CDs will be distributed through CIMS to stores
regionally and with greater visibility of the bands, the distribution will expand nationally.
Straight Arrow will sell the CDs online as part of their campaign to widen the range of artists
they offer. Last year, Straight Arrow sales topped $50 million.

5.3 Strategic Alliances

The strategic alliance with the Coalition of Independent Music Stores (CIMS) and Straight Arrow
holds great potential.

 Straight Arrow is a distribution system for Christian artists who want to buck the system
and do it without major label backing. The amazing thing is: it truly works. Some of the
most sincere, yet cutting edge artists existing today are available to purchase at the
Straight Arrow website. They will focus on building sales in the field of Heavy Metal music
starting with Heavy Metal Praise artists.

 Coalition of Independent Music Stores represents a distribution system of 10,000 stores

nationally. CIMS creates its own sales programs that focus on independent artists. They
have committed to packaging Heavy Metal Praise Recording artists to its regional members.
With the bands' success, they plan to distribute the CDs nationally.

5.4 Sales Strategy

Our combined sales strategy of distributing our product online and in stores will result in the
following first year sales goals:

 5,000 CDs sold online.

 10,000 CDs sold in stores.

The sales totals represent only six months of sales activity. The first six months will be focused
on signing the bands and producing the recording.

Page 7
 HeavyMetal Praise

5.4.1 Sales Forecast

The following table and chart presents specific sales forecasts by month, over the first year of
development. Years two and three are cumulative totals only.

Table: Sales Forecast

Sales Forecast
Year 1 Year 2 Year 3
Sales
Online $84,000 $160,000 $200,000
In Store $154,000 $380,000 $500,000
Total Sales $238,000 $540,000 $700,000

Direct Cost of Sales Year 1 Year 2 Year 3

Online $4,200 $8,000 $10,000
In Store $7,700 $19,000 $25,000
Subtotal Direct Cost of Sales $11,900 $27,000 $35,000

Chart: Sales Monthly

Sales Monthly

$80,000

$70,000

$60,000

$50,000
Online
$40,000 In Store

$30,000

$20,000

$10,000

$0
Month 1 Month 3 Month 5 Month 7 Month 9 Month 11
Month 2 Month 4 Month 6 Month 8 Month 10 Month 12

5.5 Milestones

Heavy Metal Praise Records will have several milestones:

 Sign two Heavy Metal Christian bands.

 Produce two new recordings during the first six months of operation.
 Release recordings in six months.

Page 8
 HeavyMetal Praise

Table: Milestones

Milestones

Milestone Start Date End Date Budget Manager Department

Signing of Bands 1/1/2001 3/1/2001 $10,000 JY Owner
Recording 3/31/2001 6/30/2001 $65,000 JY Owner
CD Release 6/30/2001 9/30/2001 $40,000 JY Owner
Totals $115,000

6.0 Management Summary

Heavy Metal Praise Records is solely operated by Johnny Young. Johnny is a Christian music
industry veteran with over 13 years of music ministry experience with extensive connections
with producers and distributors. Johnny toured the USA with the CCM group "Seeds of Change"
between 1991 and 1998. It was during this time that Johnny felt God calling him into a ministry
that would usher in Heavy Metal music that was so powerful, so fresh...that people would sense
the spirit of God and come to a realization that God desired each and every one of His creations
to know Him intimately.

This will be a one person business for a while. Johnny's planned salary is shown in the
Personnel table below.

7.0 Financial Plan

The following sections will outline the general financial assumptions, break-even analysis, profit
and loss, cash flow, balance sheet and business ratios.

7.1 Important Assumptions

The following table shows some of the basic financial assumptions used in this business plan.

Table: General Assumptions

General Assumptions
Year 1 Year 2 Year 3
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 30.00% 30.00% 30.00%
Other 0 0 0

Page 9
 HeavyMetal Praise

7.2 Break-even Analysis

The Break-even Analysis indicates approximately $1,700 is needed in monthly revenue to break
even. The Estimated Monthly Fixed Cost varies over the course of the first year, as seen in the
P & L appendix table, and this figure is an average based on the first-year totals.

Chart: Break-even Analysis

Break-even Analysis

$15,000

$12,000

$9,000

$6,000

$3,000

$0

($3,000)

($6,000)

($9,000)

($12,000)

($15,000)
$0 $6,000 $12,000 $18,000 $24,000 $30,000
$3,000 $9,000 $15,000 $21,000 $27,000 $33,000

Table: Break-even Analysis

Break-even Analysis

Monthly Revenue Break-even $17,022

Assumptions:
Average Percent Variable Cost 5%
Estimated Monthly Fixed Cost $16,171

Page 10
 HeavyMetal Praise

7.3 Projected Profit and Loss

Chart: Profit Monthly

Profit Monthly

$30,000

$20,000

$10,000

$0

($10,000)

($20,000)

($30,000)

Month 1 Month 3 Month 5 Month 7 Month 9 Month 11

Month 2 Month 4 Month 6 Month 8 Month 10 Month 12

Table: Profit and Loss

Pro Forma Profit and Loss

Year 1 Year 2 Year 3
Sales $238,000 $540,000 $700,000
Direct Cost of Sales $11,900 $27,000 $35,000
Other Production Expenses $0 $0 $0
Total Cost of Sales $11,900 $27,000 $35,000

Gross Margin $226,100 $513,000 $665,000

Gross Margin % 95.00% 95.00% 95.00%

Expenses
Payroll $27,000 $35,000 $42,000
Sales and Marketing and Other Expenses $142,000 $190,000 $350,000
Depreciation $3,000 $3,000 $3,000
Leased Equipment $0 $0 $0
Utilities $0 $0 $0
Insurance $6,000 $8,000 $10,000
Rent $12,000 $15,000 $18,000
Payroll Taxes $4,050 $5,250 $6,300
Other $0 $0 $0

Total Operating Expenses $194,050 $256,250 $429,300

Profit Before Interest and Taxes $32,050 $256,750 $235,700

EBITDA $35,050 $259,750 $238,700
Interest Expense $0 $0 $0
Taxes Incurred $9,615 $77,025 $70,710

Net Profit $22,435 $179,725 $164,990

Net Profit/Sales 9.43% 33.28% 23.57%

Page 11
 HeavyMetal Praise

7.4 Projected Cash Flow

Heavy Metal Praise will begin with adequate investment to cover the beginning months of
negative cash flow and, as shown below, have an overall increase in cash balance by the end of
the first plan year.

Table: Cash Flow

Pro Forma Cash Flow

Year 1 Year 2 Year 3
Cash Received

Cash from Operations

Cash Sales $166,600 $378,000 $490,000
Cash from Receivables $31,740 $111,675 $183,338
Subtotal Cash from Operations $198,340 $489,675 $673,338

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 $0 $0 $0
Subtotal Cash Received $198,340 $489,675 $673,338

Expenditures Year 1 Year 2 Year 3

Expenditures from Operations

Cash Spending $27,000 $35,000 $42,000
Bill Payments $140,307 $346,840 $474,939
Subtotal Spent on Operations $167,307 $381,840 $516,939

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $167,307 $381,840 $516,939

Net Cash Flow $31,033 $107,836 $156,399

Cash Balance $114,933 $222,768 $379,167

Page 12
 Month
3
HeavyMetal Praise

MonthMonth
1 Month
2
Chart: Cash

Cash
$120,000

$100,000

$80,000

$60,000 Net Cash Flow

$40,000 Cash Balance

$20,000

$0

($20,000)

Page 13
 HeavyMetal Praise

7.5 Projected Balance Sheet

The following chart and table indicates balance sheet.

Table: Balance Sheet

Pro Forma Balance Sheet

Year 1 Year 2 Year 3
Assets

Current Assets
Cash $114,933 $222,768 $379,167
Accounts Receivable $39,660 $89,985 $116,647
Inventory $4,400 $5,920 $4,385
Other Current Assets $15,000 $15,000 $15,000
Total Current Assets $173,993 $333,673 $515,199

Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $3,000 $6,000 $9,000
Total Long-term Assets ($3,000) ($6,000) ($9,000)
Total Assets $170,993 $327,673 $506,199

Liabilities and Capital Year 1 Year 2 Year 3

Current Liabilities
Accounts Payable $49,658 $26,613 $40,149
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $49,658 $26,613 $40,149

Long-term Liabilities $0 $0 $0
Total Liabilities $49,658 $26,613 $40,149

Paid-in Capital $100,000 $100,000 $100,000

Retained Earnings ($1,100) $21,335 $201,060
Earnings $22,435 $179,725 $164,990
Total Capital $121,335 $301,060 $466,050
Total Liabilities and Capital $170,993 $327,673 $506,199

Net Worth $121,335 $301,060 $466,050

Page 14
 HeavyMetal Praise

7.6 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the
Standard Industrial Classification (SIC) code 7929, Musical Groups and Artists, are shown for
comparison.

Table: Ratios

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth n.a. 126.89% 29.63% 15.20%

Percent of Total Assets

Accounts Receivable 23.19% 27.46% 23.04% 6.80%
Inventory 2.57% 1.81% 0.87% 3.10%
Other Current Assets 8.77% 4.58% 2.96% 33.90%
Total Current Assets 101.75% 101.83% 101.78% 43.80%
Long-term Assets -1.75% -1.83% -1.78% 56.20%
Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 29.04% 8.12% 7.93% 38.30%

Long-term Liabilities 0.00% 0.00% 0.00% 23.30%
Total Liabilities 29.04% 8.12% 7.93% 61.60%
Net Worth 70.96% 91.88% 92.07% 38.40%

Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 95.00% 95.00% 95.00% 0.00%
Selling, General & Administrative Expenses 84.69% 61.33% 71.13% 75.30%
Advertising Expenses 13.45% 7.41% 7.14% 2.90%
Profit Before Interest and Taxes 13.47% 47.55% 33.67% 2.90%

Main Ratios
Current 3.50 12.54 12.83 1.22
Quick 3.42 12.32 12.72 0.82
Total Debt to Total Assets 29.04% 8.12% 7.93% 61.60%
Pre-tax Return on Net Worth 26.41% 85.28% 50.57% 2.90%
Pre-tax Return on Assets 18.74% 78.36% 46.56% 7.40%

Additional Ratios Year 1 Year 2 Year 3

Net Profit Margin 9.43% 33.28% 23.57% n.a
Return on Equity 18.49% 59.70% 35.40% n.a

Activity Ratios
Accounts Receivable Turnover 1.80 1.80 1.80 n.a
Collection Days 50 146 180 n.a
Inventory Turnover 10.35 5.23 6.79 n.a
Accounts Payable Turnover 3.83 12.17 12.17 n.a
Payment Days 27 43 25 n.a
Total Asset Turnover 1.39 1.65 1.38 n.a

Debt Ratios
Debt to Net Worth 0.41 0.09 0.09 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a

Liquidity Ratios
Net Working Capital $124,335 $307,060 $475,050 n.a
Interest Coverage 0.00 0.00 0.00 n.a

Additional Ratios
Assets to Sales 0.72 0.61 0.72 n.a
Current Debt/Total Assets 29% 8% 8% n.a
Acid Test 2.62 8.93 9.82 n.a
Sales/Net Worth 1.96 1.79 1.50 n.a
Dividend Payout 0.00 0.00 0.00 n.a

Page 15
 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
Sales
Online 0% $0 $0 $0 $0 $0 $3,000 $4,000 $6,000 $10,000 $13,000 $18,000 $30,000
In Store 0% $0 $0 $0 $0 $0 $3,000 $10,000 $12,000 $18,000 $25,000 $36,000 $50,000
Total Sales $0 $0 $0 $0 $0 $6,000 $14,000 $18,000 $28,000 $38,000 $54,000 $80,000

Direct 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
Online $0 $0 $0 $0 $0 $150 $200 $300 $500 $650 $900 $1,500
In Store $0 $0 $0 $0 $0 $150 $500 $600 $900 $1,250 $1,800 $2,500
Subtotal Direct Cost of Sales $0 $0 $0 $0 $0 $300 $700 $900 $1,400 $1,900 $2,700 $4,000

Page 1
 Appendix

Table: Personnel

Personnel Plan
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Owner 0% $0 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $3,000 $3,000 $3,000 $3,000 $3,000
Other 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total People 0 0 0 0 0 0 0 0 0 0 0 0

Total Payroll $0 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $3,000 $3,000 $3,000 $3,000 $3,000

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 Month 12
Plan Month 1 2 3 4 5 6 7 8 9 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% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%
Other 0 0 0 0 0 0 0 0 0 0 0 0

Page 3
 Appendix

Table: Profit and Loss

Pro Forma Profit and Loss

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales $0 $0 $0 $0 $0 $6,000 $14,000 $18,000 $28,000 $38,000 $54,000 $80,000
Direct Cost of Sales $0 $0 $0 $0 $0 $300 $700 $900 $1,400 $1,900 $2,700 $4,000
Other Production Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $0 $0 $0 $0 $0 $300 $700 $900 $1,400 $1,900 $2,700 $4,000

Gross Margin $0 $0 $0 $0 $0 $5,700 $13,300 $17,100 $26,600 $36,100 $51,300 $76,000

Gross Margin % 0.00% 0.00% 0.00% 0.00% 0.00% 95.00% 95.00% 95.00% 95.00% 95.00% 95.00% 95.00%

Expenses
Payroll $0 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $3,000 $3,000 $3,000 $3,000 $3,000
Sales and Marketing and Other $5,000 $5,000 $5,000 $5,000 $45,000 $22,000 $7,000 $7,000 $4,000 $3,000 $2,000 $32,000
Expenses
Depreciation $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250
Leased Equipment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Utilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Insurance $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500
Rent $0 $0 $0 $0 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500
Payroll Taxes 15% $0 $300 $300 $300 $300 $300 $300 $450 $450 $450 $450 $450
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Operating Expenses $5,750 $8,050 $8,050 $8,050 $49,550 $26,550 $11,550 $12,700 $9,700 $8,700 $7,700 $37,700

Profit Before Interest and Taxes ($5,750) ($8,050) ($8,050) ($8,050) ($49,550) ($20,850) $1,750 $4,400 $16,900 $27,400 $43,600 $38,300
EBITDA ($5,500) ($7,800) ($7,800) ($7,800) ($49,300) ($20,600) $2,000 $4,650 $17,150 $27,650 $43,850 $38,550
Interest Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Taxes Incurred ($1,725) ($2,415) ($2,415) ($2,415) ($14,865) ($6,255) $525 $1,320 $5,070 $8,220 $13,080 $11,490

Net Profit ($4,025) ($5,635) ($5,635) ($5,635) ($34,685) ($14,595) $1,225 $3,080 $11,830 $19,180 $30,520 $26,810
Net Profit/Sales 0.00% 0.00% 0.00% 0.00% 0.00% -243.25% 8.75% 17.11% 42.25% 50.47% 56.52% 33.51%

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 $4,200 $9,800 $12,600 $19,600 $26,600 $37,800 $56,000
Cash from Receivables $0 $0 $0 $0 $0 $0 $60 $1,880 $4,240 $5,500 $8,500 $11,560
Subtotal Cash from Operations $0 $0 $0 $0 $0 $4,200 $9,860 $14,480 $23,840 $32,100 $46,300 $67,560

Additional Cash Received

Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Current Borrowing $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 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Received $0 $0 $0 $0 $0 $4,200 $9,860 $14,480 $23,840 $32,100 $46,300 $67,560

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

Expenditures from Operations

Cash Spending $0 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $3,000 $3,000 $3,000 $3,000 $3,000
Bill Payments $126 $3,762 $3,385 $3,385 $4,353 $31,989 $18,771 $10,857 $11,823 $13,452 $16,286 $22,119
Subtotal Spent on Operations $126 $5,762 $5,385 $5,385 $6,353 $33,989 $20,771 $13,857 $14,823 $16,452 $19,286 $25,119

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
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
Subtotal Cash Spent $126 $5,762 $5,385 $5,385 $6,353 $33,989 $20,771 $13,857 $14,823 $16,452 $19,286 $25,119

Net Cash Flow ($126) ($5,762) ($5,385) ($5,385) ($6,353) ($29,789) ($10,911) $624 $9,017 $15,648 $27,014 $42,441
Cash Balance $83,774 $78,012 $72,627 $67,242 $60,889 $31,100 $20,189 $20,813 $29,830 $45,478 $72,491 $114,933

Page 5
 Appendix

Table: Balance Sheet

Pro Forma Balance Sheet

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Assets Starting Balances

Current Assets
Cash $83,900 $83,774 $78,012 $72,627 $67,242 $60,889 $31,100 $20,189 $20,813 $29,830 $45,478 $72,491 $114,933
Accounts Receivable $0 $0 $0 $0 $0 $0 $1,800 $5,940 $9,460 $13,620 $19,520 $27,220 $39,660
Inventory $0 $0 $0 $0 $0 $0 $700 $1,000 $1,100 $1,540 $2,090 $2,970 $4,400
Other Current Assets $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000
Total Current Assets $98,900 $98,774 $93,012 $87,627 $82,242 $75,889 $48,600 $42,129 $46,373 $59,990 $82,088 $117,681 $173,993

Long-term Assets
Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Accumulated Depreciation $0 $250 $500 $750 $1,000 $1,250 $1,500 $1,750 $2,000 $2,250 $2,500 $2,750 $3,000
Total Long-term Assets $0 ($250) ($500) ($750) ($1,000) ($1,250) ($1,500) ($1,750) ($2,000) ($2,250) ($2,500) ($2,750) ($3,000)
Total Assets $98,900 $98,524 $92,512 $86,877 $81,242 $74,639 $47,100 $40,379 $44,373 $57,740 $79,588 $114,931 $170,993

Liabilities and Capital Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Current Liabilities
Accounts Payable $0 $3,649 $3,272 $3,272 $3,272 $31,354 $18,410 $10,464 $11,378 $12,915 $15,583 $20,406 $49,658
Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Current Liabilities $0 $3,649 $3,272 $3,272 $3,272 $31,354 $18,410 $10,464 $11,378 $12,915 $15,583 $20,406 $49,658

Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Liabilities $0 $3,649 $3,272 $3,272 $3,272 $31,354 $18,410 $10,464 $11,378 $12,915 $15,583 $20,406 $49,658

Paid-in Capital $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
Retained Earnings ($1,100) ($1,100) ($1,100) ($1,100) ($1,100) ($1,100) ($1,100) ($1,100) ($1,100) ($1,100) ($1,100) ($1,100) ($1,100)
Earnings $0 ($4,025) ($9,660) ($15,295) ($20,930) ($55,615) ($70,210) ($68,985) ($65,905) ($54,075) ($34,895) ($4,375) $22,435
Total Capital $98,900 $94,875 $89,240 $83,605 $77,970 $43,285 $28,690 $29,915 $32,995 $44,825 $64,005 $94,525 $121,335
Total Liabilities and Capital $98,900 $98,524 $92,512 $86,877 $81,242 $74,639 $47,100 $40,379 $44,373 $57,740 $79,588 $114,931 $170,993

Net Worth $98,900 $94,875 $89,240 $83,605 $77,970 $43,285 $28,690 $29,915 $32,995 $44,825 $64,005 $94,525 $121,335

Page 6