ABC Company Business Plan

Transcription

1 ABC Company Business Plan Web Site: Main Office: 123 North Somewhere Street Anywhere, Michigan USA Phone: Fax:

2 Confidentiality Agreement The undersigned reader acknowledges that the information provided by Jane Doe in this business plan is confidential; therefore, reader agrees not to disclose it without the express written permission of Jan Doe. 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 Jane Doe. Upon request, this document is to be immediately returned to Jane Doe. Signature Name (typed or printed) Date 54

3 Table of Contents 1. Executive Summary Objectives Mission Keys to Success Company Summary Company Ownership Start-up Summary Services Market Analysis Summary Market Segmentation Target Market Segment Strategy Service Business Analysis Strategy and Implementation Summary Marketing Strategy Sales Strategy Sales Forecast Web Plan Summary Management Summary Personnel Plan Financial Plan Start-up Funding Break-even Analysis Projected Profit and Loss Projected Cash Flow Projected Balance Sheet

4 4 1. Executive Summary Highlights 1.1. Objectives The objectives for ABC Company over the next three years are to: Achieve annual gross revenues of approximately $350,000 by year three. Obtain two global 500 companies as clients Obtain twenty-five small to medium size companies as clients. Hire 1-3 people to allow further growth Mission ABC Company's sole purpose is to establish a profitable and well managed company while bringing increased revenues and highly technical jobs to the local community. 56

5 Keys to Success We believe that our main keys to success include: Excellence in fulfilling the promise--completely confidential, reliable, trustworthy expertise and services. Developing nationwide visibility to generate new business leads. Leveraging from a single pool of expertise into multiple revenue generation opportunities: fixed price and hourly intellectual property legal work, technical authoring, and technical consulting. The use of state-of-the-art technology that hi-tech clients have come to expect but that few law firms actually provide. We believe that we can minimize certain risk factors by: Initial capitalization of the company to sustain operations through the first two years. Strong customer base through aggressive marketing and existing clients of owner. Strong community ties and involvement. 2. Company Summary ABC Company is a new company solely owned and operated initially by Jane Doe. As a registered United States patent attorney, Jane Doe can provide intellectual property legal services across the United States. As a respected authority on technology topics, Ms. Doe can also provide technical services to companies across the globe. Thus, ABC Company will focus initially on the following services: 1. Provide clients across the United States with intellectual property legal services, including patents, copyrights, trademarks, trade secrets, licensing, domain name disputes, and litigation. 2. Provide technical services to clients across the globe, including authoring, expert witness services, consulting, and guest speaking. Jane Doe has been providing these servies separately for the past several years, both as an attorney employed with a law firm, and separately as an independent technology consulant. These services will now be combined into a single company - ABC Company. As ABC Company grows, it will hire additional people, including paralegals, as well as engineers for technical writing and consulting positions (preferably from the pool of available engineers in the local community) Company Ownership ABC Company will start out as a Sub-Chapter S corporation, owned and operated by Jane Doe. 57

6 Start-up Summary Office equipment and office locations have already been established previously through the personal funds and credit of the owner. So the start-up costs are limited to minor costs plus cash on hand for reserves. It is estimated that the start-up costs will be $2,500 (including business cards, letterhead, legal malpractice insurance, etc.). An additional amount of $50,000 in initial cash is needed to handle the first few months of operations as sales and accounts receivable play through the cash flow. Start-up Requirements Start-up Expenses Business Cards, Letterhead, etc. $500 Malpractice Insurance $1,500 Other $500 Total Start-up Expenses $2,500 Start-up Assets Cash Required $50,000 Other Current Assets $0 Long-term Assets $0 Total Assets $50,000 Total Requirements $52,500 58

7 7 Start-up 3. Services ABC Company offers the legal and technical expertise a company needs to fully exploit the value out of its intellectual assets and operate successfully in today's hi-tech world. Services can be performed on an hourly basis or on a fixed-fee basis. As a registered United States patent attorney, Jane Doe can provide intellectual property legal services across the United States. As a respected authority worldwide on technology topics, Ms. Doe can also provide technical services to companies across the globe. Thus, ABC Company will focus initially on the following services: 1. Provide clients across the United States with intellectual property legal services: Patents - obtain United States and foreign patents for clients and advise clients on validity of patents of third parties. Copyrights- obtain copyrights for clients and advise clients on coyprights of third parties. Trademarks - obtain United States and foreign trademarks for clients and advise clients on validity of trademarks of third parties. Trade Secrets - educate clients on how they can protect their trade secrets. Licensing - draft and negotiate licensing agreements for computer technology and/or intellectual property. Domain Name Disputes - assist clients with domain name disputes to recover domains from a third party Litigation - litigate intellectual property related matters for clients. 59

8 8 2. Provide technical services to clients across the globe, including: Expert Witness Services - provide expert witness consulting in intellectual property and other legal related cases that require an expert to analyze computer technology and provide an opinion on a certain situation. Consulting - advise clients on how to use technology in their organization to solve a particular problem, review proposals of third parties and advise clients on validity of third party proposals. Guest Speaking / Teaching- speak at technical conferences on technology related topics 4. Market Analysis Summary ABC Company will be focusing on high-technology manufacturers of computer software and hardware, services, and networking. These are mostly larger companies, and occasionally individuals and small and medium-sized companies. For our legal services, our most important group of potential customers are in-house legal counsel in larger corporations. In-house counsel typically are responsible for hiring and managing intellectual property counsel. For smaller to medium-sized companies, the most important group of potential customers are the company owners or business managers. For our technical services, our most important group of potential customers depend on the service: Expert Witness Services - Litigation attorneys who need to hire a technology expert are the most important group of potential customers for this service. Technology Consulting - Information Technology (IT) Managers within companies are the most important group of potential customers for this service. Guest Speaking - Event coordinators are the most important group of potential customers for this services Market Segmentation Large software or hardware manufacturer corporations: Our most important market segment is the large manufacturer of high-technology products, such as Microsoft, Hewlett-Packard, or Sony. These companies will have a large volume of intellectual property legal projects that need handled by outside counsel. Individuals and Small to Medium-sized growth companies: particularly in computer software, hardware, and some related high-growth fields: ABC Company will offer legal and technical services to allow these companies to gain the attention and momentum they need to attract market share and investors. 60

9 9 Market Analysis Potential Customers Growth CAGR Large Technology 5% % Corporations Individuals / Small to 5% % Medium Businesses Total 5.03% % Market Analysis (Pie) 4.2. Target Market Segment Strategy As indicated by the previous table and Illustration, we must focus on a few hundred well-chosen potential customers in the United States. These few hundred technology companies are the key customers for ABC Company Service Business Analysis The intellectual property legal industry has hundreds of law firms providing outside counsel services for large technology corporations. The prices charged by these law firms depend on their location within the United States and the size of the firm. Firms with more attorneys have higher overhead and charge higher prices. Law firms located within the mid-west, such as in Michigan, are able to provide the same patent and intellectual property services for much lower prices than the east and west coast firms. As the stock market has declined, corporatations are being pressured to drastically reduce legal costs more than ever before. This has opened the 61

10 10 doors for many smaller law firms and/or law firms located in the mid-west to perform legal work for the larger corporations located on the east and west coasts. The technology industry has thousands of independent consultants and consulting companies providing technical consulting services. The prices charged by these companies depend on their location within the United States and the type of technical work being requested. 5. Strategy and Implementation Summary ABC Company will follow a differentiation strategy to achieve a competitive advantage in the intellectual property legal services market. By providing hi-tech legal services for a lower price than what larger corporations typically spend, ABC Company will be able to compete with larger firms on the coasts. The fact that Jane Doe is a respected technology expert globally will also differentiate ABC Company from other law firms who really do not have intellectual property attorneys with equivalent technical expertise Marketing Strategy ABC Company will position itself as a quality provider of high-tech legal and technical services for extremely competitive mid-west prices. ABC Company will use advertising as its main source of promotion. Ads placed in the appropriate local and national publications, such as the Local Business Journal, In-House Counsel Magazine, Entrepreneur Magazine, etc. will help build customer awareness on a national scale. Ads will also be placed with search engines on the Internet. Accompanying the print and electronic ads will be an offer for a free whitepaper about a topic of interest to that market segment and an offer for a free consultation. It is important to the marketing strategy of ABC Company to develop an attractive image to the trade. This can be done in a number of ways: 1. Print Advertising. Print advertising is very expensive and must be done carefully. ABC Company will establish an in-house advertising agency so 15% discounts will be available. This agency is easy to setup, and require nothing more than letterhead and a checking account. Appropriate local and national publications will be chosen for the target market based on availability of remnant space. Remnant space can be purchased for a fraction of the cost - such as $1,000 for an ad that would typically cost $10,000. Once some national exposure has been achieved in a major magazine such as Entrepreneur Magazine or In-House Counsel Magazine, ABC Company will be able to advertise "You Probably Saw Us In Entrepreneur" or similar slogans and include reprints of the ad as part of the marketing package to give to prospective clients. Only a few appearances in such national publications will be necessary to provide extensive leverage and credibility. 2. Online Advertising. Online advertising can be one of the most effective ways to get prospective clients to our web site. ABC Company will pay to advertise on search engines such as Google and MSN so that people searching for the particular services offered by ABC Company will see our web site in the top 5 listings. Such advertisements typically cost from several cents to a few dollars per visit. For example, it might cost $2 to show our web site advertisement in one of the top few spots on google.com when someone searches for "software patent attorney". Budgets will be established with the search engine so the price does not exceed a certain amount that we are willing to spend. 62

11 11 3. Direct Marketing. It is essential to market directly to the selected target clients. Marketing to these prime prospects must be carried out in a thoughtful, organized way. A portfolio will be created to market directly to these prospects. 4. Participation/Attendance at Trade Shows. Another image-building marketing ploy is participating in technology trade shows. These trade shows typically showcase the most innovative technical products on the market by various companies. However, these technology trade shows could also benefit from a hi-tech legal exhibit with a catchy free gift to peak the curiosity of those in attendance. Comdex is one example of such a technology trade show when an exhibit would be very valuable to growing new clients. Even if having an exhibit at such trade shows would be too expensive, attendance at the trade show would be very valuable to meet new potential clients. 5. Authoring. Authoring technical magazine articles and whitepapers will provide additional credibility to prospective clients and will help gain exposure to prospective clients. 6. Networking. It is important to remain active in local and national legal and technical trade associations as well as community associations in order to meet new people who may need the services of ABC Company. Examples include the State Bar Association, Computer Law Association,.NET Developer's Association, and community/charitable organizations. 7. Guest Speaking. Guest speaking at legal and/or technical conference for hire or for free are great ways to gain additional exposure and credibility. Examples include speaking at universities about legal topics, speaking at technology conferences about technical conferences Sales Strategy The sales forecast is based on the existing client base of Jane Doe and her ability to generate new sales based on her contacts. By bringing together Ms. Doe's intellectual property legal experience and her technology consulting experience, the company will be able to generate sales in both areas. Furthermore, the company's growing marketing program will generate the growth the company needs to survive Sales Forecast The intellectual property legal services are the primary focus of ABC Company. The technology consulting is intended to keep Ms. Doe sharp in technology, maintain her reputation as a technology expert, and to provide extensive credibility to legal clients. These numbers are conservative estimates that are based on the historical performance of Jane Doe through her employment with the former law firm and through her own independent consulting technology efforts. The historical data used in these sales forecasts include: An average of $325,000 per year in gross annual legal revenue generated by Jane Doe through the former law firm in the prior three years. $20,000-$30,000 per year in annual technology consulting revenue generated by Jane Doe through her technology consulting in the prior three years. 63

12 12 These numbers are also based on estimates of the amount of work likely to be requested by existing clients of Jane Doe. To account for the startup period, the estimates used for the first year are based on just 65% of gross revenues from prior years. However, if history repeats itself, Ms. Doe will earn more in gross revenues than these conservative estimates show. Sales Forecast FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 Sales Intellectual Property Legal $220,000 $275,000 $325,000 $375,000 $425,000 Services Technical $3,000 $15,000 $15,000 $20,000 $20,000 Consulting/Teaching/Speaking Book Authoring/Technical $12,000 $15,000 $15,000 $15,000 $15,000 Reviewing Total Sales $235,000 $305,000 $355,000 $410,000 $460,000 Direct Cost of Sales FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Subtotal Direct Cost of Sales $0 $0 $0 $0 $0 Sales Monthly 64

13 13 Sales by Year 6. Web Plan Summary Our web site ( is an opportunity to offer information on our services as well as to provide free information that is useful to visitors whether or not they want to hire us. As a few examples, the ABC Company web site will provide: Information about the legal and technical services provided by ABC Company. Recent news about Jane Doe and ABC Company. Useful articles and other whitepapers that visitors can download about protecting their intellectual property assets and using technology to its fullest in their organization. A feature to allow clients to log in to a secure area of the site so they can access their files electronically. A feature to allow visitors to sign up for electronic newsletters about legal and/or technical topics. The web site will be promoted on all of marketing materials. We will also promote our web site in all print and online advertisements, as well as on various search engines. We also plan to pay for advertising on Google and other popular search engines for certain key words related to our services so readers looking for our services will find our site more easily. Since Jane Doe is a technology guru, all web site creation and maintenance will be performed in-house for no cost. 65

14 14 7. Management Summary ABC Company will be owned and operated by Ms. Jane Doe. Initially, ABC Company will have no employees. Existing clients of Jane Doe will be brought to the company. The experience and reputation of Jane Doe as an attorney and technology expert will also be used to attract new clients Personnel Plan Jane Doe will draw a salary from the company in order to allow her to meet her current financial obligations, and to obtain the tax benefits. In the future, additional employees may be hired to support the company's growth as required. The following table shows the minimum withdrawals that Ms. Doe plans to take. Since this is an S-Corporation, additional distributions will also be taken as business performance allows. Personnel Plan FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 Jane Doe, Owner $108,000 $120,000 $120,000 $120,000 $120,000 $0 $0 $0 $0 $0 Total People Total Payroll $108,000 $120,000 $120,000 $120,000 $120, Financial Plan ABC Company has a solid financial plan to carry it through even if times are tougher than expected Start-up Funding The start-up costs are to be financed by the owners' personal cash on hand and home equity line of credit, and possibly by a $50,000 bank line of credit. By having access to $100,000-$150,000, ABC Company will be able to make it through any cash flow delays and start-up hurdles for a couple of years. 66

15 15 Start-up Funding Start-up Expenses to Fund $2,500 Start-up Assets to Fund $50,000 Total Funding Required $52,500 Assets Non-cash Assets from Start-up $0 Cash Requirements from Start-up $50,000 Additional Cash Raised $97,500 Cash Balance on Starting Date $147,500 Total Assets $147,500 Liabilities and Capital Liabilities Current Borrowing $100,000 Long-term Liabilities $0 Accounts Payable (Outstanding Bills) $0 Other Current Liabilities $0 Total Liabilities $100,000 Capital Planned Investment Owner $50,000 Bank Additional Investment Requirement $0 Total Planned Investment $50,000 Loss at Start-up (Start-up Expenses) ($2,500) Total Capital $47,500 Total Capital and Liabilities $147,500 Total Funding $150, Break-even Analysis Important notice concerning Break-even Analysis The following chart shows that we need to produce $12,275 from sales per month to break-even. This amount includes paying the owner a salary that will allow her to meet all of her current living expenses without tapping into any of the lines of credit or cash reserves available. We believe that we will achieve a higher monthly gross sales volume than required by this breakeven chart, given the present representations being made by existing clients of their expected level of work in the upcoming two years, and given prior history. 67

16 16 Break-even Analysis Monthly Revenue Break-even $12,275 Assumptions: Average Percent Variable Cost 0% Estimated Monthly Fixed Cost $12,275 Break-even Analysis 8.3. Projected Profit and Loss Outlined below, and in the table and chart, are some of the intrinsic facets of the projected profit and loss for ABC Company. The amount for cost of sales is listed as zero because the minimum salary distributions and business expenses are separately itemized. Minimum withdrawals are shown for the salary of Jane Doe at the minimum level to allow her to maintain her current standard of living. Since this is a S-Corporation, additional profits can be paid to her over and above this salary when cash flow warrants it. The various expenses for office space and utilities are projected based on present actual expenses. The expenses for technology subscriptions are based on actual costs of the services that will need to be obtained from third parties to operate the law practice. For example, the third party system for managing legal cases costs $250 per month. Legal research subscriptions and virtual telephone services are also included in this cost. 68

17 17 Pro Forma Profit and Loss FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 Sales $235,000 $305,000 $355,000 $410,000 $460,000 Direct Cost of Sales $0 $0 $0 $0 $0 Other Costs of Sales $0 $0 $0 $0 $ Total Cost of Sales $0 $0 $0 $0 $0 Gross Margin $235,000 $305,000 $355,000 $410,000 $460,000 Gross Margin % % % % % % Expenses Payroll $108,000 $120,000 $120,000 $120,000 $120,000 Marketing/Promotion $12,000 $24,000 $24,000 $24,000 $24,000 Depreciation $0 $0 $0 $0 $0 Office Mortgage $10,500 $10,800 $11,000 $11,300 $11,600 Utilities $6,000 $6,000 $6,000 $6,000 $6,000 Taxes and Insurance $2,400 $2,400 $2,400 $2,400 $2,400 Subscription Fees (Web-Based $6,000 $6,000 $6,000 $6,000 $6,000 Case Management, Legal Research, Virtual Phone Number) Other $2,400 $2,400 $2,400 $2,400 $2, Total Operating Expenses $147,300 $171,600 $171,800 $172,100 $172,400 Profit Before Interest and Taxes $87,700 $133,400 $183,200 $237,900 $287,600 Interest Expense $10,000 $10,000 $10,000 $10,000 $10,000 Taxes Incurred $23,310 $37,020 $51,960 $68,370 $83,280 Net Profit $54,390 $86,380 $121,240 $159,530 $194,320 Net Profit/Sales 23.14% 28.32% 34.15% 38.91% 42.24% 69

18 18 Profit Monthly Profit Yearly 70

19 19 Gross Margin Monthly Gross Margin Yearly 71

20 Projected Cash Flow As can be seen from the Cash Flow chart and table below, ABC Company will have enough cash and credit available to carry it through some rough periods. As an S-Corporation with no employees, the company has very few mandatory expenses other than the salary requirements of the owner and the office mortgage and utilities. Cash 72

21 21 Pro Forma Cash Flow Cash Received FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 Cash from Operations Cash Sales $117,500 $152,500 $177,500 $205,000 $230,000 Cash from Receivables $97,833 $146,642 $173,316 $200,397 $225,816 Subtotal Cash from Operations $215,333 $299,142 $350,816 $405,397 $455,816 Additional Cash Received Sales Tax, VAT, HST/GST $0 $0 $0 $0 $0 Received New Current Borrowing $0 $0 $0 $0 $0 New Other Liabilities (interestfree) $0 $0 $0 $0 $0 New Long-term Liabilities $0 $0 $0 $0 $0 Sales of Other Current Assets $0 $0 $0 $0 $0 Sales of Long-term Assets $0 $0 $0 $0 $0 New Investment Received $0 $0 $0 $0 $0 Subtotal Cash Received $215,333 $299,142 $350,816 $405,397 $455,816 Expenditures FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 Expenditures from Operations Cash spending $108,000 $120,000 $120,000 $120,000 $120,000 Bill Payments $66,623 $96,475 $112,512 $129,092 $144,426 Subtotal Spent on Operations $174,623 $216,475 $232,512 $249,092 $264,426 Additional Cash Spent Sales Tax, VAT, HST/GST Paid $0 $0 $0 $0 $0 Out Principal Repayment of Current $0 $0 $0 $0 $0 Borrowing Other Liabilities Principal $0 $0 $0 $0 $0 Repayment Long-term Liabilities Principal $0 $0 $0 $0 $0 Repayment Purchase Other Current Assets $0 $0 $0 $0 $0 Purchase Long-term Assets $0 $0 $0 $0 $0 Dividends $0 $0 $0 $0 $0 Subtotal Cash Spent $174,623 $216,475 $232,512 $249,092 $264,426 Net Cash Flow $40,710 $82,666 $118,304 $156,305 $191,390 Cash Balance $188,210 $270,877 $389,181 $545,486 $736,875 73

22 Projected Balance Sheet The balance sheet is quite solid. We do not project any real trouble meeting our debt obligations-- as long as we can achieve our specific objectives. Pro Forma Balance Sheet Assets FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 Current Assets Cash $188,210 $270,877 $389,181 $545,486 $736,875 Accounts Receivable $19,667 $25,525 $29,709 $34,312 $38,496 Other Current Assets $0 $0 $0 $0 $0 Total Current Assets $207,877 $296,401 $418,890 $579,798 $775,372 Long-term Assets Long-term Assets $0 $0 $0 $0 $0 Accumulated Depreciation $0 $0 $0 $0 $0 Total Long-term Assets $0 $0 $0 $0 $0 Total Assets $207,877 $296,401 $418,890 $579,798 $775,372 Liabilities and Capital FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 Current Liabilities Accounts Payable $5,987 $8,131 $9,380 $10,758 $12,012 Current Borrowing $100,000 $100,000 $100,000 $100,000 $100,000 Other Current Liabilities $0 $0 $0 $0 $0 Subtotal Current Liabilities $105,987 $108,131 $109,380 $110,758 $112,012 Long-term Liabilities $0 $0 $0 $0 $0 Total Liabilities $105,987 $108,131 $109,380 $110,758 $112,012 Paid-in Capital $50,000 $50,000 $50,000 $50,000 $50,000 Retained Earnings ($2,500) $51,890 $138,270 $259,510 $419,040 Earnings $54,390 $86,380 $121,240 $159,530 $194,320 Total Capital $101,890 $188,270 $309,510 $469,040 $663,360 Total Liabilities and Capital $207,877 $296,401 $418,890 $579,798 $775,372 Net Worth $101,890 $188,270 $309,510 $469,040 $663,360 74

23 Direct Cost of Sales Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Subtotal Direct Cost of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Sales Forecast Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Sales Intellectual Property Legal 0% $15,000 $15,000 $15,000 $15,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 Services Technical 0% $0 $0 $0 $1,000 $0 $0 $1,000 $0 $0 $1,000 $0 $0 Consulting/Teaching/Speaking Book Authoring/Technical 0% $6,000 $0 $0 $0 $6,000 $0 $0 $0 $0 $0 $0 $0 Reviewing Total Sales $21,000 $15,000 $15,000 $16,000 $26,000 $20,000 $21,000 $20,000 $20,000 $21,000 $20,000 $20,

24 24 Personnel Plan Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Jane Doe, Owner 0% $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total People Total Payroll $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 76

25 Net Profit $5,542 $1,342 $1,342 $2,042 $9,042 $4,842 $5,507 $4,807 $4,807 $5,507 $4,80 Net Profit/Sales 26.39% 8.94% 8.94% 12.76% 34.78% 24.21% 26.22% 24.03% 24.03% 26.22% 24.03% Profit Before Interest $8,750 $2,750 $2,750 $3,750 $13,750 $7,750 $8,700 $7,700 $7,700 $8,700 $7,70 and Taxes Interest Expense $833 $833 $833 $833 $833 $833 $833 $833 $833 $833 $83 Taxes Incurred $2,375 $575 $575 $875 $3,875 $2,075 $2,360 $2,060 $2,060 $2,360 $2,06 Total Operating Expenses $12,250 $12,250 $12,250 $12,250 $12,250 $12,250 $12,300 $12,300 $12,300 $12,300 $12,30 Other $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $ Subscription Fees (Web-Based Case Management, Legal Research, Virtual Phone Number) 15% $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $50 Expenses Payroll $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,00 Marketing/Promotion $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,00 Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $ Office Mortgage $850 $850 $850 $850 $850 $850 $900 $900 $900 $900 $90 Utilities $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $50 Taxes and Insurance $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $20 Gross Margin $21,000 $15,000 $15,000 $16,000 $26,000 $20,000 $21,000 $20,000 $20,000 $21,000 $20,00 Gross Margin % % % % % % % % % % % % Sales $21,000 $15,000 $15,000 $16,000 $26,000 $20,000 $21,000 $20,000 $20,000 $21,000 $20,00 Direct Cost of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $ Other Costs of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $ Total Cost of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $ Nov Dec Jan Feb Mar Apr May Jun Jul Aug Se Pro Forma Profit and Loss 25 77

26 26 Pro Forma Cash Flow Cash Received Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Cash from Operations Cash Sales $10,500 $7,500 $7,500 $8,000 $13,000 $10,000 $10,500 $10,000 $10,000 $10,500 $10,000 $10,000 Cash from Receivables Subtotal Cash from Operations $0 $350 $10,400 $7,500 $7,517 $8,167 $12,900 $10,017 $10,483 $10,000 $10,017 $10,483 $10,500 $7,850 $17,900 $15,500 $20,517 $18,167 $23,400 $20,017 $20,483 $20,500 $20,017 $20,483 Additional Cash Received Sales Tax, VAT, HST/GST Received New Current Borrowing New Other Liabilities (interestfree) New Longterm Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received 0.00% $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 $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 $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 $0 $0 $0 $0 $0 $0 $10,500 $7,850 $17,900 $15,500 $20,517 $18,167 $23,400 $20,017 $20,483 $20,500 $20,017 $20,483 Expenditures Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Expenditures 78

27 27 from Operations Cash spending Bill Payments Subtotal Spent on Operations $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $215 $6,398 $4,658 $4,668 $5,058 $7,898 $6,170 $6,483 $6,193 $6,203 $6,483 $6,193 $9,215 $15,398 $13,658 $13,668 $14,058 $16,898 $15,170 $15,483 $15,193 $15,203 $15,483 $15,193 Additional Cash Spent Sales Tax, VAT, HST/GST $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Paid Out Principal $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Repayment of Current Borrowing Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Liabilities Principal Repayment Long-term $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Liabilities Principal Repayment Purchase $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Other Current Assets Purchase $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Long-term Assets Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Subtotal $9,215 $15,398 $13,658 $13,668 $14,058 $16,898 $15,170 $15,483 $15,193 $15,203 $15,483 $15,193 Cash Spent Net Cash Flow Cash Balance $1,285 ($7,548) $4,242 $1,832 $6,458 $1,268 $8,231 $4,533 $5,290 $5,297 $4,533 $5,290 $148,785 $141,236 $145,478 $147,310 $153,768 $155,036 $163,267 $167,800 $173,090 $178,387 $182,920 $188,210 79

28 Long-term Liabilities Total Liabilities $100,000 $106,243 $104,503 $104,503 $104,793 $107,693 $105,953 $106,277 $105,987 $105,987 $106,277 $105,987 $105, $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities $100,000 $106,243 $104,503 $104,503 $104,793 $107,693 $105,953 $106,277 $105,987 $105,987 $106,277 $105,987 $105,987 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $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 Current Liabilities Accounts $0 $6,243 $4,503 $4,503 $4,793 $7,693 $5,953 $6,277 $5,987 $5,987 $6,277 $5,987 $5,987 Liabilities and Capital Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Long-term Assets Long-term $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Assets Accumulated $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Depreciation Total Longterm Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Assets $147,500 $159,285 $158,886 $160,228 $162,560 $174,501 $177,603 $183,434 $187,950 $192,757 $198,554 $203,070 $207,877 Accounts Receivable Other Current Assets Total Current Assets $147,500 $159,285 $158,886 $160,228 $162,560 $174,501 $177,603 $183,434 $187,950 $192,757 $198,554 $203,070 $207,877 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $10,500 $17,650 $14,750 $15,250 $20,733 $22,567 $20,167 $20,150 $19,667 $20,167 $20,150 $19,667 Current Assets Cash $147,500 $148,785 $141,236 $145,478 $147,310 $153,768 $155,036 $163,267 $167,800 $173,090 $178,387 $182,920 $188,210 Assets Starting Balances Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Pro Forma Balance Sheet 28

29 Net Worth $47,500 $53,042 $54,383 $55,725 $57,767 $66,808 $71,650 $77,157 $81,963 $86,770 $92,277 $97,083 $101,890 Paid-in $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 Capital Retained ($2,500) ($2,500) ($2,500) ($2,500) ($2,500) ($2,500) ($2,500) ($2,500) ($2,500) ($2,500) ($2,500) ($2,500) ($2,500) Earnings Earnings $0 $5,542 $6,883 $8,225 $10,267 $19,308 $24,150 $29,657 $34,463 $39,270 $44,777 $49,583 $54,390 Total Capital $47,500 $53,042 $54,383 $55,725 $57,767 $66,808 $71,650 $77,157 $81,963 $86,770 $92,277 $97,083 $101,890 Total $147,500 $159,285 $158,886 $160,228 $162,560 $174,501 $177,603 $183,434 $187,950 $192,757 $198,554 $203,070 $207,877 Liabilities and Capital 29 81