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 Table of Contents

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

Chart: Highlights...........................................................................................................................2
1.1 Objectives....................................................................................................................................2
1.2 Keys to Success.........................................................................................................................2
2.0 Company Summary......................................................................................................................2
2.1 Company Ownership................................................................................................................3
2.2 Start-up Summary....................................................................................................................3
Chart: Start-up..............................................................................................................................3
Table: Start-up..............................................................................................................................4
3.0 Products............................................................................................................................................5
4.0 Market Analysis Summary.........................................................................................................6
4.1 Market Segmentation..............................................................................................................6
Table: Market Analysis................................................................................................................6
Chart: Market Analysis (Pie).....................................................................................................7
5.0 Strategy and Implementation Summary.............................................................................7
5.1 Competitive Edge......................................................................................................................7
5.2 Sales Strategy............................................................................................................................8
5.2.1 Sales Forecast....................................................................................................................8
Table: Sales Forecast..............................................................................................................8
Chart: Sales Monthly...............................................................................................................9
Chart: Sales by Year................................................................................................................9
6.0 Management Summary.............................................................................................................10
6.1 Personnel Plan..........................................................................................................................10
Table: Personnel..........................................................................................................................10
7.0 Financial Plan................................................................................................................................11
7.1 Break-even Analysis...............................................................................................................11
Chart: Break-even Analysis....................................................................................................11
Table: Break-even Analysis.....................................................................................................11
7.2 Projected Profit and Loss.....................................................................................................12
Chart: Profit Monthly.................................................................................................................12
Chart: Profit Yearly.....................................................................................................................12
Chart: Gross Margin Monthly.................................................................................................13
Chart: Gross Margin Yearly.....................................................................................................13
Table: Profit and Loss................................................................................................................14
7.3 Projected Cash Flow...............................................................................................................15
Table: Cash Flow.........................................................................................................................15
Chart: Cash...................................................................................................................................16
7.4 Projected Balance Sheet......................................................................................................17
Table: Balance Sheet.................................................................................................................17
7.5 Business Ratios........................................................................................................................18
Table: Ratios.................................................................................................................................18
Table: Sales Forecast..........................................................................................................................1
Table: Personnel....................................................................................................................................2
Table: General Assumptions.............................................................................................................3

Page 1
 Table of Contents

Table: Profit and Loss..........................................................................................................................4

Table: Cash Flow...................................................................................................................................5
Table: Balance Sheet...........................................................................................................................6

Page 2
 Crest Systems

1.0 Executive Summary

Crest Systems is a new Value Added Reseller (VAR). The company is focused on marketing
speciality inventory software products to over 1,200 VARs that sell in vertical markets. Each
market is distinct and serves a particular speciality industry. In addition to the software, Crest
will sell the inventory data collection hardware that will operate the software. Traditionally,
VARs who sell to these vertical markets focus solely on the industry's unique product line or
service. Though their customers have inventory controls needs, these VARs have not had a
product they could offer until now.

Critical to the product's success is the ability to sell the customer an inventory management
solution that costs less than $5,000. Crest Systems has signed a strategic alliance agreement
with Promerit Engineering to sell its software products through these VARs. The first product is
Promerit Inventory Basic and will be released in May. Crest Systems projects sales of 20,000
units in 36 months. The product will sell for $850.

The VAR will receive $400 from the sale. Crest Systems will receive $250 on the sale of each
unit. Crest Systems will also sell hardware that will use the software. Crest Systems will sell
portable data collection units from Symbol and PSC. The cost of the hardware will be between
$2,000 to $3,200 per unit. Crest Systems receives between $600 - $900 on each unit. The total
package of software and hardware will be less than $5,000.

Though the company is focused on the vertical markets, VARs who sell warehouse are also
interested in a low-end data collection solution. Crest Systems will assemble 1,000 plus
warehouse management VARs to sell Promerit Inventory Basic.

Crest Systems will also develop specialty software modules that can be integrated with Promerit
Inventory Basic software. These modules will sell for $800 to $1,000. Crest Systems plans to
solidify a strong business relationship with its VARs customers that will lead to providing
additional software and hardware products.

Richard Torres, owner of Crest System, has over twelve years of experience selling to vertical
markets. Last year, he was Cycon Systems top salesperson with over $3 million in sales.

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 Crest Systems

Chart: Highlights

1.1 Objectives

The objectives of Crest Systems are to:

 Sell 8,000 units during the first year.

 Establish strong relationships with the VARs critical to sales.
 Build the software module business by 15% each year.
 Maintain effective communication with Promerit Systems in order to improve product quality
and customer satisfaction.

1.2 Keys to Success

The keys to success in Crest Systems are:

1. Offering inexpensive inventory control solutions that cost less than $5,000 to implement.
2. Reliable and timely response to VARs' questions and requests.
3. A reliable administration that is ready to serve VARs, prepare accurate billing, follow-up on
orders and other documentation, and maintain a close watch on expenses and collection of
accounts receivable.

2.0 Company Summary

Crest Systems is a Value Added Reseller (VAR) that is focused on selling low-end inventory
software and hardware products. The company markets Promerit Engineering software products
to over 1,200 VARs that sell products in vertical markets. In addition, Crest Systems will
market the software product to warehouse systems VARs who are looking for a low-end
inventory software product.

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 Crest Systems

2.1 Company Ownership

Richard Torres is the owner of Crest Systems. The company will be set up as a C Corporation. It
is expected that this form of incorporation will allow room for growth and be an effective vehicle
for acquiring additional capital in five to seven years.

2.2 Start-up Summary

The start-up cost of Crest Systems will consist primarily establishing an account receivable
system and communication system for salespeople. Richard Torres will invest $50,000. He will
also secure a $100,000 loan.

Chart: Start-up

Page 3
 Crest Systems

Table: Start-up

Start-up

Requirements

Start-up Expenses
Legal $1,000
Stationery etc. $300
Brochures $2,000
Office Equipment $6,000
Insurance $3,000
Rent $2,000
Phone System $2,000
Total Start-up Expenses $16,300

Start-up Assets
Cash Required $133,700
Other Current Assets $0
Long-term Assets $0
Total Assets $133,700

Total Requirements $150,000

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 Crest Systems

Table: Start-up Funding

Start-up Funding
Start-up Expenses to Fund $16,300
Start-up Assets to Fund $133,700
Total Funding Required $150,000

Assets
Non-cash Assets from Start-up $0
Cash Requirements from Start-up $133,700
Additional Cash Raised $0
Cash Balance on Starting Date $133,700
Total Assets $133,700

Liabilities and Capital

Liabilities
Current Borrowing $0
Long-term Liabilities $100,000
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $100,000

Capital

Planned Investment
Investor 1 $50,000
Other $0
Additional Investment Requirement $0
Total Planned Investment $50,000

Loss at Start-up (Start-up Expenses) ($16,300)

Total Capital $33,700

Total Capital and Liabilities $133,700

Total Funding $150,000

3.0 Products

Crest Systems' products are as follows:

 Promerit Inventory Basic.

 Software modules that integrate Promerit Inventory Basic.
 Data Collection Hardware.

We have a team of experienced and proven salespeople in marketing a company's products to

VARs that serve vertical markets.

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 Crest Systems

4.0 Market Analysis Summary

There are thousands of small businesses that are dissatisfied with the choice of inventory
control products that are available to them. Most of these businesses exist below the water line
for software companies. Selling to a market that can only spend $5,000 on an inventory control
solution is considered too small a return for the sales activity.

If a salesperson can spend a day winning a $50,000 contract rather than a $5,000 contact, she
will disregard the smaller opportunity. Many sales organizations have overlooked this
opportunity. If a cost effective method can be established to attack this market, the sales can
be enormous.

It is Crest Systems plan to sell to the VARs that serve the vertical markets as well as the VARs
that sell warehouse products and services. Crest Systems will sell the hardware directly to
customers when the software is purchased by the vertical VARs' customer. The company will
use this opportunity to build purchasing relationships with businesses with growing inventories.

4.1 Market Segmentation

Crest Systems will focus on two customer groups:

 Warehouse Products and Services VARs: These VARs offer warehouse management
hardware and software. Though their primary focus is on larger contracts, an inexpensive
product focused on the low end of the market will be attractive if the payoff is large enough.
The VARs retain $500 on each product sold. There is no other software product that is
focused on our target customers that rewards better for the sale.
 Vertical Market VARs: These VARs traditional don't sell inventory management products to
their customers. Inventory control products are not their focus, rather it is whatever item or
product particular to that industry that is used in manufacturing or assembly of their final
product. Yet they have thousands of customers. If the payoff is large enough, their access
to the market would lead to enormous sales. Like the warehouse product VARs, the vertical
market VARs would retain $500 on each product sold.

Table: Market Analysis

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Warehouse Products VARs 15% 1,400 1,610 1,852 2,130 2,450 15.02%
Vertical Market VARs 15% 1,100 1,265 1,455 1,673 1,924 15.00%
Total 15.01% 2,500 2,875 3,307 3,803 4,374 15.01%

Page 6
 Crest Systems

Chart: Market Analysis (Pie)

5.0 Strategy and Implementation Summary

Crest Systems will aggressively market Promerit Inventory Basic to VARs. It is our belief that
the payoff to the VARs on each sale will make the product attractive. We will train their
salespeople so that they will be successful in demonstrating the products to customers. This will
be especially important with vertical market VARs that will not normally offer software products
to their customers.

5.1 Competitive Edge

Richard Torres is the competitive edge of Crest Systems. Richard has worked for Cycon
Systems for the past ten years. He served as the company's manager of sales to vertical
market VARs.

During the past five years Richard was responsible for over $15 million dollars worth of sales to
vertical market VARs. His strength is his customer relation skills and he has been successful in
expanding the number of vertical market VARs that bought Cycon System products.

Another competitive edge for Crest Systems is the ability to create specialized software
modules for customers that will customize the software. he company believes that one fourth of
all software customers will request a customized module to be added to the software after
purchase.

Page 7
 Crest Systems

5.2 Sales Strategy

Crest Systems' sales strategy is to take the first 60 days of operation to train VARs and put the
resources in place to facilitate sales. We anticipate that sales will begin during our third month
of operation.

5.2.1 Sales Forecast

The following is the sales forecast for the next three years.

Table: Sales Forecast

Sales Forecast
Year 1 Year 2 Year 3
Sales
Promerit Inventory Basic $1,450,000 $1,700,000 $2,000,000
Hardware $909,000 $1,200,000 $1,500,000
Software Modules $129,000 $180,000 $220,000
Other $0 $0 $0
Total Sales $2,488,000 $3,080,000 $3,720,000

Direct Cost of Sales Year 1 Year 2 Year 3

Promerit Inventory Basic $1,087,000 $1,200,000 $1,400,000
Hardware $580,000 $770,000 $930,000
Software Modules $0 $0 $0
Other $0 $0 $0
Subtotal Direct Cost of Sales $1,667,000 $1,970,000 $2,330,000

Page 8
 Crest Systems

Chart: Sales Monthly

Chart: Sales by Year

Page 9
 Crest Systems

6.0 Management Summary

Richard Torres will manage the day to day operations of Crest Systems.

6.1 Personnel Plan

The personnel plan for Crest Systems is as follows:

 Manager;
 Accounts Manager;
 Sales Staff (3);
 Software Engineer (1).

Crest Systems anticipates that another software engineer will be hired in September of this
year.

Table: Personnel

Personnel Plan
Year 1 Year 2 Year 3
Manager $60,000 $70,000 $80,000
Accounting Manager $42,000 $44,000 $46,000
Sales Staff $180,000 $200,000 $230,000
Software Engineers $85,000 $100,000 $104,000
Other $0 $0 $0
Total People 0 0 0

Total Payroll $367,000 $414,000 $460,000

Page 10
 Crest Systems

7.0 Financial Plan

The following is the financial plan for Crest Systems.

7.1 Break-even Analysis

The monthly break-even point is shown below.

Chart: Break-even Analysis

Table: Break-even Analysis

Break-even Analysis

Monthly Revenue Break-even $143,373

Assumptions:
Average Percent Variable Cost 67%
Estimated Monthly Fixed Cost $47,311

Page 11
 Crest Systems

7.2 Projected Profit and Loss

The following table and charts will highlight projected profit and loss for the next three years.

Chart: Profit Monthly

Page 12
 Crest Systems

Chart: Profit Yearly

Chart: Gross Margin Monthly

Page 13
 Crest Systems

Chart: Gross Margin Yearly

Page 14
 Crest Systems

Table: Profit and Loss

Pro Forma Profit and Loss

Year 1 Year 2 Year 3
Sales $2,488,000 $3,080,000 $3,720,000
Direct Cost of Sales $1,667,000 $1,970,000 $2,330,000
Other Production Expenses $0 $0 $0
Total Cost of Sales $1,667,000 $1,970,000 $2,330,000

Gross Margin $821,000 $1,110,000 $1,390,000

Gross Margin % 33.00% 36.04% 37.37%

Expenses
Payroll $367,000 $414,000 $460,000
Sales and Marketing and Other Expenses $120,000 $160,000 $200,000
Depreciation $0 $0 $0
Leased Equipment $0 $0 $0
Utilities $1,680 $1,680 $1,680
Insurance $0 $0 $0
Rent $24,000 $24,000 $24,000
Payroll Taxes $55,050 $62,100 $69,000
Other $0 $0 $0

Total Operating Expenses $567,730 $661,780 $754,680

Profit Before Interest and Taxes $253,270 $448,220 $635,320

EBITDA $253,270 $448,220 $635,320
Interest Expense $8,903 $6,962 $4,936
Taxes Incurred $73,310 $132,378 $189,115

Net Profit $171,057 $308,881 $441,269

Net Profit/Sales 6.88% 10.03% 11.86%

Page 15
 Crest Systems

7.3 Projected Cash Flow

The following table and chart highlight the projected cash flow for three years.

Table: Cash Flow

Pro Forma Cash Flow

Year 1 Year 2 Year 3
Cash Received

Cash from Operations

Cash Sales $622,000 $770,000 $930,000
Cash from Receivables $1,330,125 $2,182,493 $2,652,154
Subtotal Cash from Operations $1,952,125 $2,952,493 $3,582,154

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 $66,000 $0 $0
Subtotal Cash Received $2,018,125 $2,952,493 $3,582,154

Expenditures Year 1 Year 2 Year 3

Expenditures from Operations

Cash Spending $367,000 $414,000 $460,000
Bill Payments $1,632,460 $2,480,866 $2,780,790
Subtotal Spent on Operations $1,999,460 $2,894,866 $3,240,790

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 $20,256 $20,256 $20,256
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $2,019,716 $2,915,122 $3,261,046

Net Cash Flow ($1,591) $37,370 $321,108

Cash Balance $132,109 $169,480 $490,587

Page 16
 Crest Systems

Chart: Cash

Page 17
 Crest Systems

7.4 Projected Balance Sheet

The following table highlights the projected balance sheet for three years.

Table: Balance Sheet

Pro Forma Balance Sheet

Year 1 Year 2 Year 3
Assets

Current Assets
Cash $132,109 $169,480 $490,587
Accounts Receivable $535,875 $663,382 $801,228
Other Current Assets $0 $0 $0
Total Current Assets $667,984 $832,862 $1,291,815

Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $667,984 $832,862 $1,291,815

Liabilities and Capital Year 1 Year 2 Year 3

Current Liabilities
Accounts Payable $317,483 $193,736 $231,677
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $317,483 $193,736 $231,677

Long-term Liabilities $79,744 $59,488 $39,232

Total Liabilities $397,227 $253,224 $270,909

Paid-in Capital $116,000 $116,000 $116,000

Retained Earnings ($16,300) $154,757 $463,638
Earnings $171,057 $308,881 $441,269
Total Capital $270,757 $579,638 $1,020,907
Total Liabilities and Capital $667,984 $832,862 $1,291,815

Net Worth $270,757 $579,638 $1,020,907

Page 18
 Crest Systems

7.5 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the
Standard Industrial Classification (SIC) code 5045, Computers, peripherals and software, are
shown for comparison.

Table: Ratios
Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth n.a. 23.79% 20.78% 5.80%

Percent of Total Assets

Accounts Receivable 80.22% 79.65% 62.02% 29.30%
Other Current Assets 0.00% 0.00% 0.00% 21.50%
Total Current Assets 100.00% 100.00% 100.00% 86.80%
Long-term Assets 0.00% 0.00% 0.00% 13.20%
Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 47.53% 23.26% 17.93% 43.70%

Long-term Liabilities 11.94% 7.14% 3.04% 11.20%
Total Liabilities 59.47% 30.40% 20.97% 54.90%
Net Worth 40.53% 69.60% 79.03% 45.10%

Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 33.00% 36.04% 37.37% 24.80%
Selling, General & Administrative Expenses 26.12% 26.01% 25.50% 15.60%
Advertising Expenses 2.41% 2.60% 2.69% 0.50%
Profit Before Interest and Taxes 10.18% 14.55% 17.08% 2.70%

Main Ratios
Current 2.10 4.30 5.58 1.93
Quick 2.10 4.30 5.58 0.92
Total Debt to Total Assets 59.47% 30.40% 20.97% 54.90%
Pre-tax Return on Net Worth 90.25% 76.13% 61.75% 5.50%
Pre-tax Return on Assets 36.58% 52.98% 48.80% 12.20%

Additional Ratios Year 1 Year 2 Year 3

Net Profit Margin 6.88% 10.03% 11.86% n.a
Return on Equity 63.18% 53.29% 43.22% n.a

Activity Ratios
Accounts Receivable Turnover 3.48 3.48 3.48 n.a
Collection Days 55 95 96 n.a
Accounts Payable Turnover 6.14 12.17 12.17 n.a
Payment Days 27 40 28 n.a
Total Asset Turnover 3.72 3.70 2.88 n.a

Debt Ratios
Debt to Net Worth 1.47 0.44 0.27 n.a
Current Liab. to Liab. 0.80 0.77 0.86 n.a

Liquidity Ratios
Net Working Capital $350,501 $639,126 $1,060,139 n.a
Interest Coverage 28.45 64.38 128.71 n.a

Additional Ratios
Assets to Sales 0.27 0.27 0.35 n.a
Current Debt/Total Assets 48% 23% 18% n.a
Acid Test 0.42 0.87 2.12 n.a
Sales/Net Worth 9.19 5.31 3.64 n.a

Page 19
 Crest Systems

Dividend Payout 0.00 0.00 0.00 n.a

Page 20
 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
Promerit Inventory Basic 0% $0 $0 $70,000 $80,000 $120,000 $120,000 $160,000 $160,000 $160,000 $140,000 $200,000 $240,000
Hardware 0% $0 $0 $54,000 $60,000 $75,000 $75,000 $105,000 $105,000 $105,000 $80,000 $100,000 $150,000
Software Modules 0% $0 $0 $0 $11,000 $13,000 $15,000 $15,000 $15,000 $15,000 $10,000 $15,000 $20,000
Other 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Sales $0 $0 $124,000 $151,000 $208,000 $210,000 $280,000 $280,000 $280,000 $230,000 $315,000 $410,000

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
Promerit Inventory Basic $0 $0 $57,000 $60,000 $90,000 $90,000 $120,000 $120,000 $120,000 $90,000 $150,000 $190,000
Hardware $0 $0 $36,000 $40,000 $50,000 $50,000 $63,000 $63,000 $63,000 $50,000 $65,000 $100,000
Software Modules $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Direct Cost of Sales $0 $0 $93,000 $100,000 $140,000 $140,000 $183,000 $183,000 $183,000 $140,000 $215,000 $290,000

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
Manager 0% $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000
Accounting Manager 0% $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500
Sales Staff 0% $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000
Software Engineers 0% $5,000 $5,000 $5,000 $5,000 $5,000 $0 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000
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 $28,500 $28,500 $28,500 $28,500 $28,500 $23,500 $33,500 $33,500 $33,500 $33,500 $33,500 $33,500

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 $124,000 $151,000 $208,000 $210,000 $280,000 $280,000 $280,000 $230,000 $315,000 $410,000
Direct Cost of Sales $0 $0 $93,000 $100,000 $140,000 $140,000 $183,000 $183,000 $183,000 $140,000 $215,000 $290,000
Other Production Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $0 $0 $93,000 $100,000 $140,000 $140,000 $183,000 $183,000 $183,000 $140,000 $215,000 $290,000

Gross Margin $0 $0 $31,000 $51,000 $68,000 $70,000 $97,000 $97,000 $97,000 $90,000 $100,000 $120,000
Gross Margin % 0.00% 0.00% 25.00% 33.77% 32.69% 33.33% 34.64% 34.64% 34.64% 39.13% 31.75% 29.27%

Expenses
Payroll $28,500 $28,500 $28,500 $28,500 $28,500 $23,500 $33,500 $33,500 $33,500 $33,500 $33,500 $33,500
Sales and Marketing and Other $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000
Expenses
Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Leased Equipment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Utilities $140 $140 $140 $140 $140 $140 $140 $140 $140 $140 $140 $140
Insurance $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Rent $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
Payroll Taxes 15% $4,275 $4,275 $4,275 $4,275 $4,275 $3,525 $5,025 $5,025 $5,025 $5,025 $5,025 $5,025
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Operating Expenses $44,915 $44,915 $44,915 $44,915 $44,915 $39,165 $50,665 $50,665 $50,665 $50,665 $50,665 $50,665

Profit Before Interest and Taxes ($44,915) ($44,915) ($13,915) $6,085 $23,085 $30,835 $46,335 $46,335 $46,335 $39,335 $49,335 $69,335
EBITDA ($44,915) ($44,915) ($13,915) $6,085 $23,085 $30,835 $46,335 $46,335 $46,335 $39,335 $49,335 $69,335
Interest Expense $819 $805 $791 $777 $763 $749 $735 $721 $707 $693 $679 $665
Taxes Incurred ($13,720) ($13,716) ($4,412) $1,592 $6,697 $9,026 $13,680 $13,684 $13,688 $11,593 $14,597 $20,601

Net Profit ($32,014) ($32,004) ($10,294) $3,716 $15,625 $21,060 $31,920 $31,930 $31,940 $27,050 $34,059 $48,069
Net Profit/Sales 0.00% 0.00% -8.30% 2.46% 7.51% 10.03% 11.40% 11.40% 11.41% 11.76% 10.81% 11.72%

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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 $31,000 $37,750 $52,000 $52,500 $70,000 $70,000 $70,000 $57,500 $78,750 $102,500
Cash from Receivables $0 $0 $0 $3,100 $93,675 $114,675 $156,050 $159,250 $210,000 $210,000 $208,750 $174,625
Subtotal Cash from Operations $0 $0 $31,000 $40,850 $145,675 $167,175 $226,050 $229,250 $280,000 $267,500 $287,500 $277,125

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 $66,000 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Received $0 $0 $31,000 $106,850 $145,675 $167,175 $226,050 $229,250 $280,000 $267,500 $287,500 $277,125

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 $28,500 $28,500 $28,500 $28,500 $28,500 $23,500 $33,500 $33,500 $33,500 $33,500 $33,500 $33,500
Bill Payments $117 $3,514 $6,914 $106,227 $120,287 $163,927 $167,078 $214,580 $214,570 $213,057 $172,050 $250,140
Subtotal Spent on Operations $28,617 $32,014 $35,414 $134,727 $148,787 $187,427 $200,578 $248,080 $248,070 $246,557 $205,550 $283,640

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 $1,688 $1,688 $1,688 $1,688 $1,688 $1,688 $1,688 $1,688 $1,688 $1,688 $1,688 $1,688
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 $30,305 $33,702 $37,102 $136,415 $150,475 $189,115 $202,266 $249,768 $249,758 $248,245 $207,238 $285,328

Net Cash Flow ($30,305) ($33,702) ($6,102) ($29,565) ($4,800) ($21,940) $23,784 ($20,518) $30,242 $19,255 $80,262 ($8,203)

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Cash Balance $103,395 $69,693 $63,591 $34,026 $29,226 $7,286 $31,070 $10,553 $40,795 $60,050 $140,312 $132,109

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 $133,700 $103,395 $69,693 $63,591 $34,026 $29,226 $7,286 $31,070 $10,553 $40,795 $60,050 $140,312 $132,109
Accounts Receivable $0 $0 $0 $93,000 $203,150 $265,475 $308,300 $362,250 $413,000 $413,000 $375,500 $403,000 $535,875
Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Current Assets $133,700 $103,395 $69,693 $156,591 $237,176 $294,701 $315,586 $393,320 $423,553 $453,795 $435,550 $543,312 $667,984

Long-term Assets
Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Accumulated Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Assets $133,700 $103,395 $69,693 $156,591 $237,176 $294,701 $315,586 $393,320 $423,553 $453,795 $435,550 $543,312 $667,984

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 $3,397 $3,387 $102,268 $114,825 $158,412 $159,925 $207,427 $207,418 $207,408 $163,802 $239,193 $317,483
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 $3,397 $3,387 $102,268 $114,825 $158,412 $159,925 $207,427 $207,418 $207,408 $163,802 $239,193 $317,483

Long-term Liabilities $100,000 $98,312 $96,624 $94,936 $93,248 $91,560 $89,872 $88,184 $86,496 $84,808 $83,120 $81,432 $79,744
Total Liabilities $100,000 $101,709 $100,011 $197,204 $208,073 $249,972 $249,797 $295,611 $293,914 $292,216 $246,922 $320,625 $397,227

Paid-in Capital $50,000 $50,000 $50,000 $50,000 $116,000 $116,000 $116,000 $116,000 $116,000 $116,000 $116,000 $116,000 $116,000
Retained Earnings ($16,300) ($16,300) ($16,300) ($16,300) ($16,300) ($16,300) ($16,300) ($16,300) ($16,300) ($16,300) ($16,300) ($16,300) ($16,300)
Earnings $0 ($32,014) ($64,018) ($74,312) ($70,597) ($54,971) ($33,911) ($1,991) $29,939 $61,879 $88,928 $122,988 $171,057
Total Capital $33,700 $1,686 ($30,318) ($40,612) $29,103 $44,729 $65,789 $97,709 $129,639 $161,579 $188,628 $222,688 $270,757
Total Liabilities and Capital $133,700 $103,395 $69,693 $156,591 $237,176 $294,701 $315,586 $393,320 $423,553 $453,795 $435,550 $543,312 $667,984

Net Worth $33,700 $1,686 ($30,318) ($40,612) $29,103 $44,729 $65,789 $97,709 $129,639 $161,579 $188,628 $222,688 $270,757

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