FINANCIAL PROJECTIONS: "Exotic Meat Company" A Startup to provide Kingly Food.

Transcription

1 FINANCIAL PROJECTIONS: "" A Startup to provide Kingly Food. By Omer Erenturk (Mr.) Website: omer.erenturk@exoticmeatcompany.com Phone:

2 Table of Contents 1.3 Objectives Start-up Summary... 2 Table: Start-up... 2 Chart: Start-up Sales Forecast... 3 Chart: Sales Monthly... 3 Table: Sales Forecast... 4 Chart: Sales by Year Monthly Sales Forecast Financial Projections Start-up Funding... 5 Table: Start-up Funding Break-even Analysis... 6 Table: Payback Period Projected Profit and Loss... 8 Table: Profit and Loss... 8 Chart: Profit Monthly... 9 Chart: Profit Yearly Projected Balance Sheet Table: Projected Balance Sheet Projected Cash Flow Table: Cash Flow Chart: Cash Business Ratios Table: Ratios Table: Monthly Required Funding Table: Monthly Sales Forecast Table: Profit and Loss (Year 1) Table: Cash Flow Statement (Year 1) Table: Balance Sheet (Year 1)... 18

3 Chart: Highlights 1.3 Objectives 1. Dominate Exotic Meat Market all around the world with developing a strong brand that specializes on unique, exotic, prestigious and high quality meat. 2. Receive $32,9 million USD net profit at the end of our second year, target $40,3 million USD at the end of third year. 3. At the second half of year 2, we start to use our capacity at maximum. Year 3 sales will be the peak with using maximum potential of the first invested capacity. We take aim at growing our capacity for further profits in the current market and others on the following years. 4. Sales exceed $70,6 million in the second year. Sales grow up to $79,9 Million in the third year. 5. The project pay-backs in 2,12 years with 8% required return, 58,42% internal rate of return (IRR) and with a downsized sales forecast. By considering a worst environment (cheaper products, downsized sales forecast) the project paybacks in 2,86 years, 8% required return and 43,99% IRR. Return on Investment (ROI) at the end of 5 th Year is 393,1%. 6. Sales forecast is selling 1 kg meat per day to 14% of total number of supermarkets in Turkey. Or in better words: Selling 1000 tons of pheasant, partridge, rabbit, 120 tons of venison, 72 tons of quail to selected supermarket chains (14% of all supermarkets) in year 3, and a little bit less in year 2 due to growing production capacity in first stages. 7. Expand into Gulf Countries and Europe in Year Being Exotic Delicacies Provider rather than only producing. We will produce where we can t buy and sell exotic good meat easily if there is no substantial producer to buy from, we will produce if it is feasible and profitable. 9. Continuously looking to include new, exotic or wild animals always according to their profitability and tastes. Page 1

4 2.2 Start-up Summary Below is the Startup Table that shows Required Funding to set up and own this business. Table: Start-up Requirements: Start-up Expenses Marketing $ Training $ Miscellaneous $ Office Expenses $ Permits and Licenses $ R&D $ Rent $4.238 Telephone $ Travel $8.211 Utilities Not Calculated Logistics Not Calculated Vehicle Expenses $ Retail Expenses $ Insurance Not Calculated Wages $ Payroll $ Tax Tax to be Paid at the End of 2nd Year Total Start-up Expenses $ Start-up Assets Cash Required $ Start-up Inventory (COGS) $ Other Current Assets $,0 Long-term Assets $ ,71 Total Assets $ Total Requirements $ Please check Business Plan for further details on each cost items. Also there is a more detailed list of All Cost Items that focuses deep into every Expense and Asset item, where to buy them, what are their costs, who to buy cheap and high quality. If asked, I will share. Additionally, High USD/TRY is an advantage to establish facilities roughly 3 times cheaper in Turkey in the first year. Same size and quality of facilities would cost much higher in US because of the strong currency. Also labor and production costs are relatively lower than most European countries as well in the long term. Still, our current Profit values in our Income Statement and our Payback Period are satisfactory with current FX rates without necessitating appreciating TRY against USD. Page 2

5 Chart: Start-up Sales Forecast Side profits are not included to our sales forecast, such as: Pelt of rabbits (1 pelt for the specific rabbit breed we choose for meat has a value of USD in the market, we will be producing at least 142k Rabbit in every 3,5 months for instance), Pelt and antler of deers (the pelt of deer is 125 Euros, we will be selling around 1000 deers in a year) But we only focused to show forecast of meat sales which is our direct industry. Chart: Monthly Sales on Year 2. Page 3

6 The increased Pheasant, Partridge, Rabbit sales after their initial sales are due to Production Maximization. The explanation of every sale item are given in detail in the Detailed Version. Table: Sales Forecast Sales Forecast Year 1 Year 2 Year 3 Year 4 Year 5 Sales Partridge $0 $ $ $ $ Pheasant $0 $ $ $ $ Quail $0 $ $ $ $ Venison $0 $ $ $ $ Rabbit $0 $ $ $ $ Total Sales $0 $ $ $ $ Direct Cost of Sales Year 1 Year 2 Year 3 Year 4 Year 5 Stud Animal Costs (One Time Only) $ $,0 $,0 $,0 $,0 Imported Deers $ $796459,0 $796459,0 $ ,60 $ ,20 Quail Supply $ $631933,710 $631933,710 $884707,20 $ ,70 Medicine and Additional $ $ $ $ $ Maintenance Costs Packaging Costs $ $ $ $ $ Feed Consumption $ $ $ $ $ Subtotal Direct Cost of Sales $ $ $ $ $ It is forecasted we reach to our maximum capacity in Year 3, we grow our production 40% more in Year 4, and 80% in Year 5. These are small growth rates if we find similar markets like Turkey, we may need to multiply our capacity and sales at least a few times more if we expand successfully. Chart: Sales by Year Page 4

7 Monthly Sales Forecast: The table of Monthly Sales Forecast in Appendix is showing cycles of production and sales in detail. 7.0 Financial Plan Calculations are made with considering Foreign Exchange (FX) rate of 2,8484 USD/TRY when it was most stable at around this number during writing the business plan. Also a business plan gets old as soon as we finish writing it. For this reason please consider FX Spot and Future Rates when calculating updated costs and profits by yourself. 7.1 Start-up Funding Total required Funding to create this business is $34,5 Million USD. Table: Start-up Funding Start-up Expenses to Fund $ Start-up Assets to Fund $ Total Funding Required $ Assets Non-cash Assets from Start-up $ Cash Requirements from Start-up $ Additional Cash Raised $0 Cash Balance on Starting Date $ Total Assets $ Liabilities and Capital Liabilities Current Borrowing $,0 Long-term Liabilities $,0 Accounts Payable (Outstanding Bills) $,0 Other Current Liabilities (interest-free) $,0 Total Liabilities $0 Capital Planned Investment Owner $,0 Investor $ ,0 Additional Investment Requirement $0 Total Planned Investment $ Loss at Start-up (Start-up Expenses) ($ ) Total Capital $ Total Capital and Liabilities $ Total Funding $ On a Monthly-Basis need of Funding is explained in detail on the Table of Monthly Required Funding on Section There is a more detailed version with all the cost items listed, it will be sent to the investors separately before the investment if asked. Page 5

8 7.3 Break-even Analysis According to Payback Period Table on the below, the startup break-evens in 2,37 years (2 years and 4 months) with 8% Discount Rate, present value of funding cashflows are appreciated while earnings are depreciated with 8% discount rate on the Present Value column. Year 0 is: The time funding is received. As we can receive our Required Funding of $ USD in a monthly basis structure, to calculate Payback Period easier table, Year 0 value consists of purchase of Assets, all establishment and related expenses that is $ Year 0,5: The time (6 th month) for funding production (cost of goods sold) and other operational expenses which constitutes $ Sum of Year 0 and 0,5 are equal to Total Required Funding. Year 1 is: End of First Year. Sales are not incurred (they will be incurred next month, at the start of next year), but Production of first animals are finished, sales started. Year 2: At the end of Second Year, sales received during year, it shows all the performance. Year 3: At the end of Third Year, it has maximum production&sales performance with current production capacity if we don t reinvest for further capacities. On the table, Year 2 s Net Profit is used on the following years in order to get sure if company has lower performance, still if our business are getting satisfying Payback Period or not. Table: Payback Period Year Cash Flow Discount Present Cumulative Discounted Fraction Factor Value Cash Flows calculations 0 $ ,00 $ $ ,5 $ ,96 $ $ n/m 1 zero 0,93 zero $ n/m 2 $ ,86 $ $ n/m 3 $ ,79 $ $ ,12 4 $ ,74 $ $ ,95 5 $ ,68 $ $ ,10 6 $ ,63 $ $ ,35 7 $ ,58 $ $ ,70 NPV: $ Discount Rate: 8% The above table is calculated by 8% Discount Rate IRR: 58,42% which the Payback Period is in 2,12 years (2 years and Payback 2 months). 2,1240 period Below is the table showing IRR calculation: Year Cash Flow Discount Factor Present Value Cumulative Discounted Cash Flows Fraction calculations 0 $ ,00 $ $ ,5 $ ,79 $ $ n/m 1 zero 0,63 zero $ n/m 2 $ ,40 $ $ n/m Page 6

9 3 $ ,25 $ $ n/m 4 $ ,16 $ $ n/m 5 $ ,10 $ $ n/m 6 $ ,06 $ $ n/m 7 $ ,04 $ $0 1,00 NPV: $0,00 IRR rate of the table is: 58, % which is calculated manually (IRR function of Excel doesn t look trustworthy). The above Payback Period is calculated with considering sales prices per animal: Partridge: $22,82; Pheasant: $28,09; Quail: $14,04; Venison: $31,60; Rabbit: $15,80 USD per kg. These are at least half price of their current market rates. Except Quail which has seen similar price tags like our assumption but that bird meat never received any marketing contribution before; also the Rabbit which is not experimented in Turkish markets yet. But these two animal meat can be sold in harmony with the brand with good price tags on them. These sales prices contribute to 2 nd Year s Net Profit which is used on the calculation of above table. If we lower the sales prices to following sales prices even further: Partridge: $14,04; Pheasant: $21,06; Quail: $12,29; Venison: $21,06; Rabbit: $12,29 USD per kg., our Payback Period becomes 2,86 years with 8% Discount rate, while IRR rate is: 43,99%. On this alternative calculation, 2 nd Year net Profit is $ , 3 rd Year Net Profit is: $ But we do not plan to lower our sale prices, but sell at premium price for premium brand. We don t think the sales price will be ever main concern of high status people. On the above Payback tables, Depreciation ($3,6 M) didn t affect the Profit numbers, because the depreciated assets can be used until we replace them at least 5-10 years later, then if we need, we replace those assets again with our reinvested profit at that future year. Still, If we include depreciation, Year-2 Net Profit becomes $ and Payback will occur in 2,2555 years that means our Startup will pay-back in 2 years and 3 months later with 8% Discount Rate. IRR rate is 53,79% with depreciation added. Page 7

10 7.4 Projected Profit and Loss Table: Profit and Loss Pro Forma Profit and Loss Year 1 Year 2 Year 3 Year 4 Year 5 Sales $0 $ $ $ $ Direct Cost of Sales $ $ $ $ $ Other Costs of Sales $ $,0 $,0 $,0 $,0 Total Cost of Sales $ $ $ $ $ Gross Margin ($ ) $ $ $ $ Gross Margin % 0,00% 67,63% 71,38% 66,15% 67,96% Expenses Payroll $0 $0 $0 $0 $0 Marketing/Promotion $ $ $ ,0 $ ,0 $ ,0 Depreciation $ $ $ ,533 $ ,533 $ ,533 Training $ $ $92.809,719 $92.809,719 $92.809,719 Miscellaneous $ $ $ ,554 $ ,554 $ ,554 Office Expenses $ $ $15.849,696 $15.849,696 $15.849,696 Permits and Licenses $ $3.094 $3.093,657 $3.093,657 $3.093,657 R&D $ $ $10.123,840 $10.123,840 $10.123,840 Rent $4.236 $,0 $,0 $,0 $,0 Telephone $ $ $19.070,490 $19.070,490 $19.070,490 Travel $8.211 $8.211 $8.210,905 $8.210,905 $8.210,905 Utilities $0 $,0 $,0 $,0 $,0 Logistics $0 $,0 $,0 $,0 $,0 Vehicle Expenses $ $ $50981,777 $50.981,777 $50.981,777 Insurance $0 $,0 $,0 $,0 $,0 Wages $ $ $ ,0 $ ,0 $ ,0 Payroll Taxes $ $ $ ,991 $ ,991 $ ,991 Total Operating Expenses $ $ $ $ $ Profit Before Interest and Taxes ($ ) $ $ $ $ EBITDA ($ ) $ $ $ $ Interest Expense $0 $0 $0 $0 $0 Taxes Incurred $0 $ $ $ $ Net Profit ($ ) $ $ $ $ Net Profit/Sales 0,00% 46,63% 50,50% 47,34% 50,26% Page 8

11 Chart: Profit (Loss) Monthly on First Year Chart: Profit Yearly (Depreciation included) Page 9

12 7.5 Projected Balance Sheet Table: Balance Sheet Pro Forma Balance Sheet Year 1 Year 2 Year 3 Year 4 Year 5 Assets Current Assets Cash $ ($ ) $ $ $ Accounts Receivable $0 $0 $0 $0 $0 Inventory $ $ $ $ $ Other Current Assets $0 $0 $0 $0 $0 Total Current Assets $ $ $ $ $ Long-term Assets Long-term Assets $ $ $ $ $ Accumulated Depreciation $ $ $ $ $ Total Long-term Assets $ $ $ $ $ Total Assets $ $ $ $ $ Liabilities and Capital Year 1 Year 2 Year 3 Year 4 Year 5 Current Liabilities Accounts Payable $ $ $ $ $ Current Borrowing $0 $0 $0 $0 $0 Other Current Liabilities $0 ($ ) ($ ) ($ ) ($ ) Subtotal Current Liabilities $ $ ($ ) $ $ Long-term Liabilities $0 $0 $0 $0 $0 Total Liabilities $ $ ($ ) $ $ Paid-in Capital $ $ $ $ $ Retained Earnings ($ ) ($ ) $ $ $ Earnings ($ ) $ $ $ $ Total Capital $ $ $ $ $ Total Liabilities and Capital $ $ $ $ $ Net Worth $ $ $ $ $ On the Balance Sheet, First Year s Negative Earnings consist of: Direct Cost of Goods Sold: $ Operational Expenses: $ Depreciation of Assets: $ Total: ($ ) Direct COGS is used to produce goods which their sales will incur at the start of second year. Page 10

13 7.6 Projected Cash Flow Table: Cash Flow Pro Forma Cash Flow Year 1 Year 2 Year 3 Year 4 Year 5 Cash Received Cash from Operations Cash Sales $0 $ $ $ $ Cash from Receivables $0 $ $ $ $ Subtotal Cash from Operations $0 $ $ $ $ Additional Cash Received Sales Tax, VAT, HST/GST Received $0 $,0 $,0 $,0 $,0 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 $0 $ $ $ $ Expenditures Year 1 Year 2 Year 3 Year 4 Year 5 Expenditures from Operations Cash Spending $0 $0 $0 $0 $0 Bill Payments $ $ $ $ $ Subtotal Spent on Operations $ $ $ $ $ Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out $0 $716192,668 $533275,580 $533275,580 $533275,580 Principal Repayment of Current Borrowing $0 $,0 $,0 $,0 $,0 Other Liabilities Principal Repayment $0 $,0 $,0 $,0 $,0 Long-term Liabilities Principal Repayment $0 $,0 $,0 $,0 $,0 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 $ $ $ $ $ Net Cash Flow ($ ) ($ ) $ $ $ Cash Balance $ ($ ) $ $ $ Page 11

14 Chart: Cash 7.7 Business Ratios Table: Ratios Ratio Analysis Year 1 Year 2 Year 3 Year 4 Year 5 Industry Profile Profitability Ratios Sales Growth n.a. n.a. 13,10% 18,38% 35,84% 1,35% Operating Profit Margin n.a 67,63% 71,38% 66,15% 67,96% n.a Net Profit Margin 0,00% 46,63% 50,50% 47,34% 50,26% n.a Return on Equity -61,74% 62,43% 43,33% 32,47% 31,90% n.a Return on Capital Employed (ROCE) -31,14% 90,55% 61,26% 45,38% 43,13% n.a Return on Investment (Yearly): -135,4% -4,7% 16,8% 29,6% 86,9% n.a Return on Investment (Accumulated in 5 years): -135,4% -40,1% 76,7% 206,3% 393,1% n.a Simple Annualized ROI (%): 78,6% 78,6% 78,6% 78,6% 78,6% n.a Main Ratios Current 1,00 6,07-464,15 89,34 63,93 1,051,13 Quick 0,40-2,61-234,70 66,78 51,52,826,88 Pre-tax Return on Net Worth -61,74% 78,04% 54,17% 40,59% 39,87% -465,85% Pre-tax Return on Assets -60,41% 68,66% 54,27% 40,17% 39,26% -26,02% Activity Ratios Inventory Turnover 1,36 0,73 0,45 0,88 1,15 n.a Accounts Payable Turnover 6,34 12,17 12,17 12,17 12,17 n.a Payment Days n.a Total Asset Turnover 0,00 1,05 0,80 0,65 0,60 n.a Net Operating Asset Turnover 0,00% 117,80% 85,98% 67,88% 62,49% n.a Page 12

15 Debt Ratios Debt to Net Worth 0,02 0,14-0,00 0,01 0,02 n.a Current Liab. to Liab. 1,00 1,00 0,00 1,00 1,00 n.a Liquidity Ratios Net Working Capital ($1.104) $ $ $ $ n.a Percent of Total Assets Inventory 0,96% 93,40% 39,72% 22,49% 18,28% 11,42% Other Current Assets 0,00% 0,00% 0,00% 0,00% 0,00% 30,41% Total Current Assets 1,59% 65,31% 80,35% 89,04% 94,15% 62,10% Long-term Assets 98,41% 34,69% 19,65% 10,96% 5,85% 37,90% Total Assets 100,00% 100,00% 100,00% 100,00% 100,00% 100,00% Net Worth 98,40% 89,24% 100,17% 99,00% 98,53% 5,58% Percent of Sales Sales 100,00% 100,00% 100,00% 100,00% 100,00% 100,00% Gross Margin 0,00% 67,63% 71,38% 66,15% 67,96% 45,79% Selling, General & Administrative Expenses 0,00% 21,00% 20,88% 18,81% 17,70% 23,24% Advertising Expenses 0,00% 1,25% 1,11% 0,93% 0,69% 1,11% Profit Before Interest and Taxes 0,00% 58,29% 63,12% 59,18% 62,83% -5,78% Additional Ratios Assets to Sales n.a. 0,85 1,16 1,47 1,60 n.a Current Debt/Total Assets 2% 12% 0% 1% 2% n.a Acid Test 0,40-2,61 0,00 66,78 51,52 n.a Sales/Net Worth 0,00 1,34 0,86 0,69 0,63 n.a Dividend Payout 0,00 0,00 0,00 0,00 0,00 n.a The reason why ROCE, Net Operating Asset Turnover etc. are getting smaller percentage as Years move further after Year 2 is because these Ratios are containing Total Assets in their denominator. Total Assets are increasing rapidly while Long-term Assets stay same. This is because in the tables it is assumed we don t use the Cash gained as Net Profit, we don t reinvest or distribute dividends, this multiplies Current Assets, therefore ROCE=(Operating Profit/(Total Assets-Current Liabilities)) becomes smaller in Year 3 than Year 2. Return on Investment is calculated both yearly and also accumulating the previous Returns by the end of each year. For instance, project s total Return on Investment (ROI) is 393,1% at the end of Year 5. The reason why Year 1 ROI is negative, because: (Expense of Year1-Investment)/Investment, but other years: (Net Profit-Investment)/Investment Page 13

16 Appendix Table: Monthly Required Funding Funding Requirement Month by Month $ $ $ $ $ $ Investment Cash Flow - Expenses Investment Cash Flow - Assets Investment Cash Flow (All Required Funds): Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Year 1 (Total) Expenses $ $ $ $ $ $ $ $ $ $ $ $ $ Assets $ $ $ $ $0 $ $ $ $ $0 $0 $0 $ All Required Funds: $ $ $ $ $ $ $ $ $ $ $ $ $ Page 14

17 Appendix Table: Monthly Sales Forecast Partridge Pheasant Quail Deer Rabbit Year 2: 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 Year 2 $ $ $ $ $ $ $ $ $ $ $ $ =$ Page 47 $ $ $ $ =$ $ $ =$ $ $ $ $ $ $ =$ $ $ $ $ $ $ $ $ $ $ $ $ =$ $ $ $ $ =$ Year 3: 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 Year 3 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Year 4: Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Year 4 +40% $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Year 5: Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Year 5 +80% $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Note: It is assumed that sales are incurred 1 month later after every periodical production finishes for each animal or when their meats get ready. Partridge Pheasant Quail Deer Rabbit Page 15

18 Appendix Table: Profit and Loss, Year 1. Pro Forma Profit and Loss Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Direct Cost of Sales $0 $0 $0 $0 $0 $0 $0 $ $ $ $ $ Other Costs of Sales $,0 $,0 $,0 $,0 $,0 $,0 $35.107,429 $,0 $,0 $,0 $,0 $,0 Total Cost of Sales $0 $0 $0 $0 $0 $0 $ $ $ $ $ $ Expenses Payroll $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Marketing/Promotion $9321,0 $9321,0 $9321,0 $9321,0 $9321,0 $9321,0 $9321,0 $9321,0 $9321,0 $9321,0 $781033,0 $9321,0 Depreciation $300049,0 $300049,0 $300049,0 $300049,0 $300049,0 $300049,0 $300049,0 $300049,0 $300049,0 $300049,0 $300049,0 $300049,0 Training $,0 $,0 $19158,0 $1500,0 $1500,0 $3619,0 $1500,0 $1500,0 $1500,0 $4678,0 $1500,0 $1500,0 Miscellaneous $4549,0 $3490,0 $3490,0 $3490,0 $3490,0 $6357,0 $7663,0 $7663,0 $7663,0 $8511,0 $8511,0 $8511,0 Office Expenses $990,0 $990,0 $990,0 $990,0 $990,0 $990,0 $1256,0 $1256,0 $1849,0 $1849,0 $1849,0 $1849,0 Permits and Licenses $258,0 $258,0 $258,0 $258,0 $258,0 $258,0 $258,0 $258,0 $258,0 $258,0 $35574,0 $258,0 R&D $5886,0 $5886,0 $7652,0 $7652,0 $7652,0 $7652,0 $7652,0 $7652,0 $7652,0 $7652,0 $7652,0 $7652,0 Rent $706,0 $706,0 $706,0 $706,0 $706,0 $706,0 $,0 $,0 $,0 $,0 $,0 $,0 Telephone $684,0 $760,0 $844,0 $938,0 $1042,0 $1158,0 $1287,0 $1430,0 $1589,0 $1668,0 $1751,0 $1839,0 Travel $,0 $,0 $,0 $,0 $2737,0 $2737,0 $2737,0 $,0 $,0 $,0 $,0 $,0 Utilities $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 Logistics $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 Vehicle Expenses $2926,0 $2926,0 $2926,0 $2926,0 $4248,0 $4248,0 $4248,0 $4248,0 $5570,0 $5570,0 $5570,0 $5570,0 Insurance $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 Wages $50197,0 $50197,0 $55849,0 $55849,0 $55849,0 $55849,0 $55849,0 $75371,0 $75371,0 $104220,0 $104220,0 $104220,0 Payroll Taxes $24783,0 $24783,0 $27646,0 $27646,0 $27646,0 $27646,0 $27646,0 $36174,0 $36174,0 $48980,0 $48980,0 $48980,0 Total Operating Expenses $ $ $ $ $ $ $ $ $ $ $ $ Profit Before Interest and Taxes ($ ) ($ ) ($ ) ($ ) ($ ) ($ ) ($ ) ($ ) ($ ) ($ ) ($ ) ($ ) EBITDA ($ ) ($99.317) ($ ) ($ ) ($ ) ($ ) ($ ) ($ ) ($ ) ($ ) ($ ) ($ ) Interest Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Taxes Incurred $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Net Profit (Loss) ($ ) ($ ) ($ ) ($ ) ($ ) ($ ) ($ ) ($ ) ($ ) ($ ) ($ ) ($ ) Net Profit/Sales 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% Page 16

19 Table: Cash Flow, Year 1. Appendix Pro Forma Cash Flow Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Cash Received Cash from Operations Cash Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Cash from Receivables $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Subtotal Cash from Operations $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Additional Cash Received Sales Tax, VAT, HST/GST Received $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 New Current Borrowing $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 New Other Liabilities (interest-free) $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 New Long-term Liabilities $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 Sales of Other Current Assets $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 Sales of Long-term Assets $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 New Investment Received $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 Subtotal Cash Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Expenditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Expenditures from Operations Cash Spending $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Bill Payments $3.343 $ $ $ $ $ $ $ $ $ $ $ Subtotal Spent on Operations $3.343 $ $ $ $ $ $ $ $ $ $ $ Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 Principal Repayment of Current Borrowing $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 Other Liabilities Principal Repayment $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 Long-term Liabilities Principal Repayment $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 Purchase Other Current Assets $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 Purchase Long-term Assets $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 Dividends $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 $,0 Subtotal Cash Spent $3.343 $ $ $ $ $ $ $ $ $ $ $ Net Cash Flow ($3.343) ($ ) ($ ) ($ ) ($ ) ($ ) ($ ) ($ ) ($ ) ($ ) ($ ) ($ ) Cash Balance $ $ $ $ $ $ $ $ $ $ $ $ Page 17

20 Table: Balance Sheet, Year 1. Appendix Pro Forma Balance Starting Sheet Balances 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 Current Assets Cash $ $ $ $ $ $ $ $ $ $ $ $ $ Accounts Receivable $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Inventory $ $ $ $ $ $ $ $ $ $ $ $ $ Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Current Assets $ $ $ $ $ $ $ $ $ $ $ $ $ Long-term Assets Long-term Assets $ $ $ $ $ $ $ $ $ $ $ $ $ Accumulated Depreciation $0 $ $ $ $ $ $ $ $ $ $ $ $ Total Long-term Assets $ $ $ $ $ $ $ $ $ $ $ $ $ Total Assets $ $ $ $ $ $ $ $ $ $ $ $ $ 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 $ $ $ $ $ $ $ $ $ $ $ $ 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 $ $ $ $ $ $ $ $ $ $ $ $ Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Liabilities $0 $ $ $ $ $ $ $ $ $ $ $ $ Paid-in Capital $ $ $ $ $ $ $ $ $ $ $ $ $ Retained Earnings ($ ) ($ ) ($ ) ($ ) ($ ) ($ ) ($ ) ($ ) ($ ) ($ ) ($ ) ($ ) ($ ) Earnings $0 ($ ) ($ ) ($ ) ($ ) ($ ) ($ ) ($ ) ($ ) ($ ) ($ ) ($ ) ($ ) Total Capital $ $ $ $ $ $ $ $ $ $ $ $ $ Total Liabilities and Capital $ $ $ $ $ $ $ $ $ $ $ $ $ Net Worth $ $ $ $ $ $ $ $ $ $ $ $ $ Page 18