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Table of Contents
1.0 Executive Summary.............................................................................................................................1
Chart: Highlights ......................................................................................................................1
1.1 Mission........................................................................................................................................1
1.2 Keys to Success ........................................................................................................................2
1.3 Objectives ...................................................................................................................................2
2.0 Company Summary.............................................................................................................................2
2.1 Company Ownership .................................................................................................................2
2.2 Start-up Summary ......................................................................................................................2
Table: Start-up .........................................................................................................................3
Table: Start-up Funding ..........................................................................................................4
Chart: Start-up .........................................................................................................................5
2.3 Company Locations and Facilities ..........................................................................................5
3.0 Services................................................................................................................................................5
3.1 Service Description ...................................................................................................................5
4.0 Market Analysis Summary..................................................................................................................5
4.1 Market Segmentation ................................................................................................................6
Chart: Market Analysis (Pie) ..................................................................................................6
Table: Market Analysis ...........................................................................................................6
4.2 Service Business Analysis........................................................................................................6
5.0 Strategy and Implementation Summary ............................................................................................7
5.1 Sales Strategy............................................................................................................................7
Chart: Sales Monthly...............................................................................................................7
5.1.1 Sales Forecast ..............................................................................................................7
Table: Sales Forecast ...................................................................................................8
Chart: Sales by Year......................................................................................................8
5.2 Competitive Edge ......................................................................................................................8
6.0 Management Summary.......................................................................................................................8
6.1 Personnel Plan ...........................................................................................................................9
Table: Personnel .....................................................................................................................9
7.0 Financial Plan ......................................................................................................................................9
7.1 Important Assumptions ..............................................................................................................9
Table: General Assumptions .................................................................................................9
7.2 Key Financial Indicators ..........................................................................................................10
Chart: Benchmarks ...............................................................................................................10
7.3 Break-even Analysis................................................................................................................11
Chart: Break-even Analysis .................................................................................................11
Table: Break-even Analysis .................................................................................................11
7.4 Projected Profit and Loss .......................................................................................................12
Table: Profit and Loss ..........................................................................................................12
7.5 Projected Cash Flow...............................................................................................................13
Chart: Cash ...........................................................................................................................13
Table: Cash Flow..................................................................................................................14
7.6 Projected Balance Sheet ........................................................................................................15
Table: Balance Sheet ...........................................................................................................15
7.7 Business Ratios .......................................................................................................................16
Table: Ratios .........................................................................................................................17
Table: Sales Forecast ...............................................................................................................................1
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Table of Contents
Table: Personnel ........................................................................................................................................2
Table: General Assumptions ....................................................................................................................3
Table: Profit and Loss ...............................................................................................................................4
Table: Cash Flow .......................................................................................................................................5
Table: Balance Sheet ................................................................................................................................6

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

1.1 Mission
NW Architecture offers a new type of digital interac tive media for both the client and the builder.
This media will clearly show the client and the builder exac tly what the design will look like and
the method of construction.
With this new form of media the client doesn't have to know anything about architectural
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NW Architecture
graphics or terminology (floor plans, sections, elevations & construction documents) to have a
clear understanding of what the end result will look like. This is possible through the use of
computer-rendered images and interac tive video.
This media will be taken one step further by using it in the construction documents as well.
The builder will be provided with an interac tive video rendering of the entire building containing
both visual photographic quality images and construction specs. Every last detail will be
worked out in three dimensions in such a way that anyone who knows how to use a computer
will be able to ac cess and understand this new means of architectural presentation.

1.2 Keys to Success

1.
2.
3.

Provide a service that is technologically superior to the competition's.

Utilizing a diverse staff of architects to provide a wide variety of product styles.
A large array of global connections.

1.3 Objectives
1.
2.
3.

Sales of $500,000 in Year 3 and $700,000 by Year 4.

Market expansion of 20% per year via the Internet.
Creating new niche in market by Year 4 of three dimensional construction documents
and interac tive digital presentation to clients.

2.0 Company Summary

NW Architecture will provide a service of architectural design via digital media to the limits of
technology. This approach will offer optimal efficiency to the firm and superior value, design
proc esses, and construction methods to the client.

2.1 Company Ownership

NW Architecture will be created as a California corporation based in the Bay Area near San
Francisc o. It will be owned by its principal investor and operator, Nathan Sawyer.

2.2 Start-up Summary

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

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NW Architecture
Table: Start-up
Start-up
Requirements
Start-up Expenses
Legal
Stationery etc.
Brochures
Consultants
Insurance

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

Rent
Expensed Equipment
Total Start-up Expenses

$1,040
$9,000
$17,540

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

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

Total Requirements

$36,540

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NW Architecture
Table: Start-up Funding
Start-up Funding
Start-up Expenses to Fund
Start-up Assets to Fund
Total Funding Required

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

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

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

Total Assets

$19,000

Liabilities and Capital

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

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

Capital
Planned Investment
Investor 1
Other
Additional Investment Requirement

$19,000
$0
$0

Total Planned Investment

$19,000

Loss at Start-up (Start-up Expenses)

Total Capital

($17,540)
$1,460

Total Capital and Liabilities

$19,000

Total Funding

$36,540

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NW Architecture

2.3 Company Locations and Facilities

The interim office of NW Architecture will be loc ated in Walnut Creek, California until dedicated
office space is secured.

3.0 Services
NW Architecture will provide many levels of service to cater to large and small corporations,
along with making it affordable for middle and upper socioeconomic classes.

3.1 Service Description

In order for NW Architecture to provide this new innovative service of digital media, the company
will use high speed computers running programs such as AutoCad and Form-Z. To keep up with
changes in technology, NW Architecture will investigate all up and coming software related to
digital 3-D design to stay at the forefront of the market. Again, this is a key strategic
component to differentiate the firm and to optimize productivity and efficiency.

4.0 Market Analysis Summary

NW Architecture will provide it's service to home owners who are looking to remodel, as well
as developers, contrac tors and government agencies in the domestic and international
markets. Although we are going to cater to a relatively broad scope of customers, the
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NW Architecture
company will dec ide what the target market is based on sales and trends experienced in the
initial months of operation.

4.1 Market Segmentation

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

Table: Market Analysis

Market Analysis
Year 1

Year 2

Year 3

Year 4

Year 5

Potential Customers
Home Owners/Remodels
Developers

Growth
15%
30%

200,000
5,000

230,000
6,500

264,500
8,450

304,175
10,985

349,801
14,281

CAGR
15.00%
30.00%

Government
Contractors
Total

1%
40%
14.64%

30,000
5,000
240,000

30,300
7,000
273,800

30,603
9,800
313,353

30,909
13,720
359,789

31,218
19,208
414,508

1.00%
40.00%
14.64%

4.2 Service Business Analysis

The architecture business ac ross the country is primarily made up of small- to mid-sized firms
specializing in a particular architectural type. But there are also a few large firms that have
almost dominated the design of large commercial and industrial fac ilities. NW Architecture's main
competitors will be the larger firms. The reason for this is that the larger firms have more capital
Page 6

NW Architecture
to work with, which enables them to keep up with technological changes much quicker than a
small firm.

5.0 Strategy and Implementation Summary

In the first year of business, NW Architecture will foc us on the bay area in California. As the
firm grows, sales will expand throughout California and ac ross the country, eventually
spreading worldwide.

5.1 Sales Strategy

"Sales" in this business is a direct result of exceptional client service. It is based on the
firm's image and the referrals that result. The more clients this company pleases, the more
referrals are given. We will work to provide a positive experience in all cases so our clients will
refer and return to us for future work as well.

5.1.1 Sales Forecast

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

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NW Architecture
Table: Sales Forecast
Sales Forecast
Year 1

Year 2

Year 3

$42,000

$90,000

$250,000

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

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

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

Direct Cost of Sales

Design

Year 1
$500

Year 2
$500

Year 3
$1,000

Production
Construction Documents
Subtotal Direct Cost of Sales

$250
$500
$1,250

$250
$500
$1,250

$500
$1,000
$2,500

Sales
Design
Production
Construction Documents
Total Sales

5.2 Competitive Edge

This company will have a competitive edge over both the larger and smaller firms bec ause it
will be composed of the new generation of architects which are fluent in the digital world. Many
firms today employ an older generation of architects which find the computer a mystery, and
those that do use the computer only have the ability to design in 2-D.

6.0 Management Summary

This company will start with one AutoCAD/Form-Z architect and the founder. In August of
2007, a clerical position will be added. By 2010, Other CAD/Form-Z architects will be hired to

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NW Architecture
compensate the increased work load.

6.1 Personnel Plan

The following table summarizes our personnel expenditures for the first three years of operation.

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

Year 1
$18,000
$12,000
$40,000
4

Year 2
$35,000
$25,200
$60,000
5

Year 3
$50,000
$26,000
$210,000
7

Total Payroll

$70,000

$120,200

$286,000

7.0 Financial Plan

NW Architecture will increase growth and technology with c ash flow as it increases through
the years. Further money will be set aside to pay for further consulting as needed.

7.1 Important Assumptions

The annual assumptions made in the following table are based on a stable economy. We will
adjust these assumptions as changes oc cur in the now tumultuous ecomony the Bay Area is
experiencing.

Table: General Assumptions

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

Year 1
1
10.00%
10.00%
25.42%
0

Year 2
2
10.00%
10.00%
25.00%
0

Year 3
3
10.00%
10.00%
25.42%
0

Page 9

NW Architecture
7.2 Key Financial Indicators
The following benchmark chart indicates our key financial indicators for the first three years.

Page 10

NW Architecture
7.3 Break-even Analysis
The following chart and table summarize our break-even analysis.

Table: Break-even Analysis

Break-even Analysis
Monthly Revenue Break-even

$8,348

Assumptions:
Average Percent Variable Cost
Estimated Monthly Fixed Cost

1%
$8,246

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

Table: Profit and Loss

Pro Forma Profit and Loss
Sales
Direct Cost of Sales
Other
Total Cost of Sales

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

Year 2
$210,000
$1,250
$0
$1,250

Year 3
$500,000
$2,500
$0
$2,500

Gross Margin
Gross Margin %

$100,750
98.77%

$208,750
99.40%

$497,500
99.50%

$70,000

$120,200

$286,000

$8,200
$0
$1,440

$12,800
$0
$1,680

$34,500
$0
$1,920

Utilities
Insurance
Rent
Payroll Taxes
Other

$480
$1,800
$17,030
$0
$0

$620
$2,800
$23,400
$0
$0

$650
$3,500
$23,400
$0
$0

Total Operating Expenses

$98,950

$161,500

$349,970

Profit Before Interest and Taxes

$1,800

$47,250

$147,530

EBITDA
Interest Expense
Taxes Incurred

$1,800
$1,517
$374

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

$147,530
$659
$37,330

Net Profit
Net Profit/Sales

($90)
-0.09%

$34,615
16.48%

$109,541
21.91%

Expenses
Payroll
Sales and Marketing and Other Expenses
Depreciation
Leased Equipment

Page 12

NW Architecture
7.5 Projected Cash Flow
Cash flow is vital to the well being of this company bec ause of the duration of payment. The
following chart and table below show cash flow projections.

Page 13

NW Architecture
Table: Cash Flow
Pro Forma Cash Flow
Year 1

Year 2

Year 3

Cash from Operations

Cash Sales
Cash from Receivables
Subtotal Cash from Operations

$0
$88,100
$88,100

$0
$195,282
$195,282

$0
$460,480
$460,480

Additional Cash Received

Sales Tax, VAT, HST/GST Received
New Current Borrowing
New Other Liabilities (interest-free)
New Long-term Liabilities
Sales of Other Current Assets
Sales of Long-term Assets
New Investment Received
Subtotal Cash Received

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

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

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

Year 1

Year 2

Year 3

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

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

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

$0
$4,380
$0
$0

$0
$4,380
$0
$0

$0
$4,380
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$104,064

$178,355

$392,759

($9,964)
$9,036

$16,928
$25,963

$67,721
$93,684

Cash Received

Expenditures
Expenditures from Operations
Cash Spending
Bill Payments
Subtotal Spent on Operations
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out
Principal Repayment of Current Borrowing
Other Liabilities Principal Repayment
Long-term Liabilities Principal Repayment
Purchase Other Current Assets
Purchase Long-term Assets
Dividends
Subtotal Cash Spent
Net Cash Flow
Cash Balance

Page 14

NW Architecture
7.6 Projected Balance Sheet
The following table shows our projected Balance Sheet and net worth over the next three years.

Table: Balance Sheet

Pro Forma Balance Sheet
Year 1

Year 2

Year 3

Current Assets
Cash
Accounts Receivable

$9,036
$13,900

$25,963
$28,618

$93,684
$68,137

Inventory
Other Current Assets
Total Current Assets

$750
$0
$23,686

$717
$0
$55,297

$2,867
$0
$164,688

Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets

$0
$0
$0
$23,686

$0
$0
$0
$55,297

$0
$0
$0
$164,688

Year 1

Year 2

Year 3

Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities

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

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

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

Long-term Liabilities
Total Liabilities

$0
$16,316

$0
$13,313

$0
$13,162

$25,000
($17,540)
($90)

$25,000
($17,630)
$34,615

$25,000
$16,984
$109,541

$7,370
$23,686

$41,984
$55,297

$151,526
$164,688

$7,370

$41,984

$151,526

Assets

Liabilities and Capital

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

Page 15

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

Page 16

NW Architecture
Table: Ratios
Ratio Analysis
Year 1
n.a.

Year 2
105.88%

Year 3
138.10%

Industry Profile
11.74%

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

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

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

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

68.89%
0.00%
68.89%
31.11%

24.08%
0.00%
24.08%
75.92%

7.99%
0.00%
7.99%
92.01%

35.02%
21.48%
56.50%
43.50%

Percent of Sales
Sales

100.00%

100.00%

100.00%

100.00%

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

98.77%
101.81%
0.00%
1.76%

99.40%
95.72%
0.95%
22.50%

99.50%
79.60%
4.00%
29.51%

100.00%
75.67%
2.64%
1.56%

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

1.45
1.41
68.89%
3.84%
1.20%

4.15
4.10
24.08%
109.93%
83.46%

12.51
12.29
7.99%
96.93%
89.18%

1.67
1.32
62.06%
4.93%
12.99%

Additional Ratios
Net Profit Margin
Return on Equity

Year 1
-0.09%
-1.23%

Year 2
16.48%
82.45%

Year 3
21.91%
72.29%

n.a
n.a

7.34
57
1.74
10.41

7.34
37
1.70
12.17

7.34
35
1.40
12.17

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

Payment Days
Total Asset Turnover

27
4.31

25
3.80

23
3.04

n.a
n.a

Debt Ratios
Debt to Net Worth
Current Liab. to Liab.

2.21
1.00

0.32
1.00

0.09
1.00

n.a
n.a

$7,370

$41,984

$151,526

n.a

1.19

43.07

223.87

n.a

0.23
69%
0.55
13.84

0.26
24%
1.95
5.00

0.33
8%
7.12
3.30

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

Main Ratios

Activity Ratios
Accounts Receivable Turnover
Collection Days
Inventory Turnover
Accounts Payable Turnover

Liquidity Ratios
Net Working Capital
Interest Coverage
Additional Ratios
Assets to Sales
Current Debt/Total Assets
Acid Test
Sales/Net Worth

Page 17

NW Architecture
Dividend Payout

0.00

0.00

0.00

n.a

Page 18

Appendix
Table: Sales Forecast
Sales Forecast
Month 1
Sales
Design

0%

Production

0%

Construction Documents
Total Sales

0%

Direct Cost of Sales

Design
Production
Construction Documents
Subtotal Direct Cost of Sales

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

$8,000

$0

$0

$5,000

$0
$8,000

Month 10

Month 11

Month 12

$5,000

$0

$10,000

$0

$2,000

$0

$5,000

$0

$14,000

$0

$7,000

$2,000

$0

$0

$0

$0

$0

$10,000

$0

$0
$5,000

$7,000
$12,000

$0
$2,000

$4,000
$14,000

$0
$5,000

$0
$7,000

$0

$0
$16,000

$9,000
$9,000

$0
$10,000

$3,000
$3,000

$11,000
$11,000

Month 1
$100

Month 2
$0

Month 3
$100

Month 4
$0

Month 5
$100

Month 6
$100

Month 7
$0

Month 8
$100

Month 9
$0

Month 10
$0

Month 11
$0

Month 12
$0

$0
$0

$50
$0

$0
$100

$50
$0

$0
$100

$0
$0

$50
$0

$50
$0

$0
$100

$50
$0

$0
$100

$0
$100

$100

$50

$200

$50

$200

$100

$50

$150

$100

$50

$100

$100

Page 1

Appendix
Table: Personnel
Personnel Plan
Month 1
$0
$0
$0

Month 2
$0
$0
$2,500

Month 3
$0
$0
$2,500

Month 4
$2,000
$0
$2,500

Month 5
$2,000
$0
$2,500

Month 6
$2,000
$0
$2,500

Month 7
$2,000
$2,000
$2,500

Month 8
$2,000
$2,000
$5,000

Month 9
$2,000
$2,000
$5,000

Month 10
$2,000
$2,000
$5,000

Month 11
$2,000
$2,000
$5,000

Month 12
$2,000
$2,000
$5,000

Total People

Total Payroll

$0

$2,500

$2,500

$4,500

$4,500

$4,500

$6,500

$9,000

$9,000

$9,000

$9,000

$9,000

Nathan Sawyer
Clerical
CAD/Form-Z Designers

0%
0%
0%

Page 2

Appendix
Table: General Assumptions
General Assumptions
Plan Month
Current Interest Rate

Month 1
1
10.00%

Month 2
2
10.00%

Month 3
3
10.00%

Month 4
4
10.00%

Month 5
5
10.00%

Month 6
6
10.00%

Month 7
7
10.00%

Month 8
8
10.00%

Month 9
9
10.00%

Month 10
10
10.00%

Month 11
11
10.00%

Month 12
12
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
Other

30.00%
0

25.00%
0

25.00%
0

25.00%
0

25.00%
0

25.00%
0

25.00%
0

25.00%
0

25.00%
0

25.00%
0

25.00%
0

25.00%
0

Page 3

Appendix
Table: Profit and Loss
Pro Forma Profit and Loss
Month 1
$8,000
$100

Sales
Direct Cost of Sales
Other
Total Cost of Sales
Gross Margin
Gross Margin %

Month 2
$5,000
$50

Month 3
$12,000
$200

Month 4
$2,000
$50

Month 5
$14,000
$200

Month 6
$5,000
$100

Month 7
$7,000
$50

Month 8
$16,000
$150

Month 9
$9,000
$100

Month 10
$10,000
$50

Month 11
$3,000
$100

Month 12
$11,000
$100

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$100

$50

$200

$50

$200

$100

$50

$150

$100

$50

$100

$100

$7,900
98.75%

$4,950
99.00%

$11,800
98.33%

$1,950
97.50%

$13,800
98.57%

$4,900
98.00%

$6,950
99.29%

$15,850
99.06%

$8,900
98.89%

$9,950
99.50%

$2,900
96.67%

$10,900
99.09%

Expenses
Payroll

$0

$2,500

$2,500

$4,500

$4,500

$4,500

$6,500

$9,000

$9,000

$9,000

$9,000

$9,000

$350

$350

$1,350

$350

$350

$1,350

$350

$350

$1,350

$350

$350

$1,350

$0
$120

$0
$120

$0
$120

$0
$120

$0
$120

$0
$120

$0
$120

$0
$120

$0
$120

$0
$120

$0
$120

$0
$120

$40
$150
$1,040

$40
$150
$1,040

$40
$150
$1,040

$40
$150
$1,040

$40
$150
$1,040

$40
$150
$1,040

$40
$150
$1,040

$40
$150
$1,950

$40
$150
$1,950

$40
$150
$1,950

$40
$150
$1,950

$40
$150
$1,950

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Total Operating Expenses

$1,700

$4,200

$5,200

$6,200

$6,200

$7,200

$8,200

$11,610

$12,610

$11,610

$11,610

$12,610

Profit Before Interest and Taxes

$6,200

$750

$6,600

($4,250)

$7,600

($2,300)

($1,250)

$4,240

($3,710)

($1,660)

($8,710)

($1,710)

EBITDA
Interest Expense

$6,200
$143

$750
$140

$6,600
$137

($4,250)
$134

$7,600
$131

($2,300)
$128

($1,250)
$125

$4,240
$122

($3,710)
$119

($1,660)
$116

($8,710)
$113

($1,710)
$110

Taxes Incurred

$1,817

$152

$1,616

($1,096)

$1,867

($607)

($344)

$1,030

($957)

($444)

($2,206)

($455)

$4,240
53.00%

$457
9.15%

$4,847
40.39%

($3,288)
-164.40%

$5,602
40.01%

($1,821)
-36.42%

($1,031)
-14.73%

$3,089
19.30%

($2,872)
-31.91%

($1,332)
-13.32%

($6,617)
-220.57%

($1,365)
-12.41%

Sales and Marketing and Other

Expenses
Depreciation
Leased Equipment
Utilities
Insurance
Rent
Payroll Taxes
Other

Net Profit
Net Profit/Sales

15%

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 from Operations

Cash Sales
Cash from Receivables

$0
$0

$0
$267

$0
$7,900

$0
$5,233

$0
$11,667

$0
$2,400

$0
$13,700

$0
$5,067

$0
$7,300

$0
$15,767

$0
$9,033

$0
$9,767

Subtotal Cash from Operations

$0

$267

$7,900

$5,233

$11,667

$2,400

$13,700

$5,067

$7,300

$15,767

$9,033

$9,767

Cash Received

Additional Cash Received

Sales Tax, VAT, HST/GST Received

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

New Current Borrowing

New Other Liabilities (interest-free)

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

New Long-term Liabilities

Sales of Other Current Assets

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$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

Subtotal Cash Received

$0
$0

$0
$267

$0
$7,900

$6,000
$11,233

$0
$11,667

$0
$2,400

$0
$13,700

$0
$5,067

$0
$7,300

$0
$15,767

$0
$9,033

$0
$9,767

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Cash Spending
Bill Payments

$0
$155

$2,500
$4,571

$2,500
$2,075

$4,500
$4,329

$4,500
$837

$4,500
$3,649

$6,500
$2,196

$9,000
$1,590

$9,000
$4,695

$9,000
$2,755

$9,000
$2,223

$9,000
$609

Subtotal Spent on Operations

$155

$7,071

$4,575

$8,829

$5,337

$8,149

$8,696

$10,590

$13,695

$11,755

$11,223

$9,609

Expenditures

0.00%

Expenditures from Operations

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

Other Liabilities Principal Repayment

$365
$0

$365
$0

$365
$0

$365
$0

$365
$0

$365
$0

$365
$0

$365
$0

$365
$0

$365
$0

$365
$0

$365
$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

Dividends

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$520

$7,436

$4,940

$9,194

$5,702

$8,514

$9,061

$10,955

$14,060

$12,120

$11,588

$9,974

Net Cash Flow

($520)

($7,170)

$2,960

$2,039

$5,965

($6,114)

$4,639

($5,889)

($6,760)

$3,646

($2,555)

($207)

Cash Balance

$18,480

$11,310

$14,270

$16,310

$22,275

$16,161

$20,800

$14,911

$8,151

$11,797

$9,242

$9,036

Subtotal Cash Spent

Page 5

Appendix
Table: Balance Sheet
Pro Forma Balance Sheet
Assets

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Starting Balances

Current Assets
Cash
Accounts Receivable

$19,000
$0

$18,480
$8,000

$11,310
$12,733

$14,270
$16,833

$16,310
$13,600

$22,275
$15,933

$16,161
$18,533

$20,800
$11,833

$14,911
$22,767

$8,151
$24,467

$11,797
$18,700

$9,242
$12,667

$9,036
$13,900

Inventory
Other Current Assets
Total Current Assets

$0
$0
$19,000

$900
$0
$27,380

$850
$0
$24,893

$650
$0
$31,754

$600
$0
$30,510

$400
$0
$38,608

$300
$0
$34,994

$250
$0
$32,883

$1,100
$0
$38,777

$1,000
$0
$33,617

$950
$0
$31,447

$850
$0
$22,759

$750
$0
$23,686

Long-term Assets
Long-term Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Accumulated Depreciation
Total Long-term Assets

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$19,000

$27,380

$24,893

$31,754

$30,510

$38,608

$34,994

$32,883

$38,777

$33,617

$31,447

$22,759

$23,686

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Total Assets
Liabilities and Capital
Current Liabilities
Accounts Payable
Current Borrowing

$0
$17,540

$4,505
$17,175

$1,926
$16,810

$4,304
$16,445

$713
$16,080

$3,575
$15,715

$2,147
$15,350

$1,432
$14,985

$4,603
$14,620

$2,679
$14,255

$2,206
$13,890

$500
$13,525

$3,156
$13,160

Other Current Liabilities

Subtotal Current Liabilities

$0
$17,540

$0
$21,680

$0
$18,736

$0
$20,749

$0
$16,793

$0
$19,290

$0
$17,497

$0
$16,417

$0
$19,223

$0
$16,934

$0
$16,096

$0
$14,025

$0
$16,316

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

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$17,540

$21,680

$18,736

$20,749

$16,793

$19,290

$17,497

$16,417

$19,223

$16,934

$16,096

$14,025

$16,316

$19,000
($17,540)

$19,000
($17,540)

$19,000
($17,540)

$19,000
($17,540)

$25,000
($17,540)

$25,000
($17,540)

$25,000
($17,540)

$25,000
($17,540)

$25,000
($17,540)

$25,000
($17,540)

$25,000
($17,540)

$25,000
($17,540)

$25,000
($17,540)

$0

$4,240

$4,697

$9,544

$6,256

$11,858

$10,037

$9,006

$12,095

$9,223

$7,891

$1,274

($90)

$1,460

$5,700

$6,157

$11,004

$13,716

$19,318

$17,497

$16,466

$19,555

$16,683

$15,351

$8,734

$7,370

$19,000

$27,380

$24,893

$31,754

$30,510

$38,608

$34,994

$32,883

$38,777

$33,617

$31,447

$22,759

$23,686

$1,460

$5,700

$6,157

$11,004

$13,716

$19,318

$17,497

$16,466

$19,555

$16,683

$15,351

$8,734

$7,370

Page 6