Preschool Business Plan

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

Table of Contents

1.0 Executive Summary............................................................................................1Chart: Highlights.................................................................................................1

1.1 Objectives........................................................................................................11.2 Mission.............................................................................................................21.3 Keys to Success...............................................................................................2

2.0 Company Summary.............................................................................................22.1 Company Ownership........................................................................................22.2 Start-up Summary............................................................................................2

Table: Start-up....................................................................................................3Chart: Start-up....................................................................................................3

3.0 Products and Services...........................................................................................4.0 Market Analysis Summary....................................................................................

4.1 Market Segmentation.........................................................................................Table: Market Analysis..........................................................................................

4.2 Target Market Segment Strategy.......................................................................5.0 Web Plan Summary...............................................................................................

5.1 Website Marketing Strategy...............................................................................5.2 Development Requirements..............................................................................

6.0 Strategy and Implementation Summary...............................................................6.1 SWOT Analysis...................................................................................................

6.1.1 Strengths.....................................................................................................6.1.2 Weaknesses.................................................................................................6.1.3 Opportunities...............................................................................................6.1.4 Threats.........................................................................................................

6.2 Competitive Edge...............................................................................................6.3 Marketing Strategy............................................................................................6.4 Sales Strategy....................................................................................................

6.4.1 Sales Forecast..............................................................................................Table: Sales Forecast.......................................................................................4Chart: Sales Monthly........................................................................................5Chart: Sales by Year........................................................................................5

6.5 Milestones........................................................................................................5Table: Milestones................................................................................................6Chart: Milestones................................................................................................6

8.0 Management Summary.......................................................................................6Page 1

Table of Contents

8.1 Personnel Plan....................................................................................................Table: Personnel...................................................................................................

8.0 Financial Plan........................................................................................................8.1 Start-up Funding................................................................................................

Table: Start-up Funding........................................................................................8.2 Important Assumptions......................................................................................8.3 Break-even Analysis...........................................................................................

Table: Break-even Analysis...................................................................................Chart: Break-even Analysis...................................................................................

8.4 Projected Profit and Loss....................................................................................Table: Profit and Loss..........................................................................................8Chart: Profit Monthly...........................................................................................9Chart: Profit Yearly..............................................................................................9Chart: Gross Margin Monthly............................................................................10Chart: Gross Margin Yearly...............................................................................10

8.5 Projected Cash Flow.......................................................................................11Table: Cash Flow...............................................................................................11Chart: Cash.......................................................................................................12

8.6 Projected Balance Sheet................................................................................12Table: Balance Sheet........................................................................................12

8.7 Business Ratios..............................................................................................13Table: Ratios.....................................................................................................13

8.8 Long-term Plan...............................................................................................14Table: Sales Forecast................................................................................................1Table: Personnel........................................................................................................2Table: Profit and Loss................................................................................................3Table: Cash Flow.......................................................................................................4Table: Balance Sheet.................................................................................................6

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IPC SAMPLE BUSINESS PLAN © 2011

1.0 Executive Summary

IPC INTERNATIONAL PRESCHOOL OF ISTANBUL is a limited liability company (“Company”) established and operated under Turkish Laws, working in child care and education industry. During its first 5 years of operation, the Company will focus on care and education of children from 0 to under 6 years (preschool). The key for the Company’s growth (as shown is the Chart below) will be its value for money concept allowing a quick expansion of franchising system. The Company will make its initial public offering (IPO) and start expanding its business to other activities from 6th year.

Chart: Highlights

Sales

Gross Margin

Net Profit

$0

$300,000

$600,000

$900,000

$1,200,000

$1,500,000

$1,800,000

$2,100,000

$2,400,000

$2,700,000

$3,000,000

2012 2013 2014 2015 2016

Highlights

1.1 Objectives

There are nine major objectives, the first four of which are immediate to short term. Medium and long term objectives have also been highlighted in order to provide a longer term set of goals.

Short term objectives (1-12 months)

Launch the first 2 IPC schools within 12 months of operation; Achieve a 100% capacity for both schools within 6 months of operation; Offering paid training courses to 100 teachers and sort out 20 of them for the first 2 schools

within 12 months of operation; 50 software copies to be sold within 12 months of operation.

Page 1


Medium and long-term objectives:

Profitable and self-sufficient by the end of FY2; Achieve the annual growth rate of 20% in terms of profit; Achieve the net profit margin of at least 20% for every school; Launch a school within 3 months from the signing of every franchise agreement; Launch 5 IPC schools with 300 students across Turkey.

1.2 Mission

IPC International Preschool of Istanbul Ltd will be dedicated to:

providing exceptional tender loving care and qualified bilingual education at an affordable price to 0-6 year old children of the middle class;

raising early childhood education standards in Turkey through world class quality consultancy practices and training courses offered to teachers, managers and parents.

1.3 Keys to Success

There are four generally accepted keys to success in the early childhood education sector: 1. Identify and quantify the market;2. Distinguish a brand, product & service;3. Recruit and maintain a trained staff complement;4. Establish a reputation for quality

2.0 Company Summary

IPC International Preschool of Istanbul Ltd is incorporated as a limited liability company in Turkey and is headquartered in Istanbul.

2.1 Company Ownership

IPC IPI Ltd is owned by its founder and director Samantha Smith and its investment partners.

2.2 Start-up Summary

The start-up table takes into account median rent for 6 months, furniture, equipment which includes canteen equipment and computing costs. The cash required row makes the employment cost assumptions at gross salary for 6 months. This is summarized in the table below. All figures include costs for both a single IPC IPI Ltd preschool and the IPC IPI Ltd Headquarters office.

Salary expectations reflect the low end of the salary spectrum.

Table: Start-up

Page 2


Start-up

Requirements

Start-up Expenses

Legal $1,200 Stationery etc. $750 Insurance $1,050 Rent $16,000 Other $5,000 Advertising &PR $1,250 Licenses (IPC) $45,000 IPC Consultancy $6,000 Renovations $11,000 Total Start-up Expenses $87,250

Start-up Assets

Cash Required $129,900 Other Current Assets $17,858 Long-term Assets $10,000 Total Assets $157,758

Total Requirements $245,008

Chart: Start-up

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

Expenses Assets Investment Loans

Start-up

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Table: Sales Forecast

Sales Forecast

2012 2013 2014 2015 2016

Sales

IPC Schools $96,800 $434,400 $866,400 $1,395,200 $1,782,400 IPC Software/Curriculum $2,000 $50,000 $100,000 $175,000 $250,000 IPC Franchises $7,500 $17,500 $52,500 $92,500 $112,500 5 day Manager/Teacher Training $324,000 $356,400 $392,040 $450,846 $541,015 Consultancy Services $120,000 $120,000 $132,000 $151,800 $182,160 Total Sales $550,300 $978,300 $1,542,940 $2,265,346 $2,868,075

Direct Cost of Sales 2012 2013 2014 2015 2016Franchise Fees $21,500 $23,500 $0 $0 $0 Teacher Training $3,600 $3,960 $4,320 $4,752 $5,464 Curriculum & Software $3,850 $3,000 $3,000 $3,000 $3,000 Consulting License $6,000 $6,000 $6,000 $6,000 $6,000 IPC Onsite Training $60,000 $60,000 $60,000 $60,000 $60,000 Other $17,592 $18,556 $17,133 $18,156 $19,306 Local Consultants/Trainers $81,000 $89,100 $98,010 $107,811 $118,592

Subtotal Direct Cost of Sales $193,542 $204,116 $188,463 $199,719 $212,362

Chart: Sales Monthly

KOOLKID IPC Schools

KOOLKID/IPC Software/Curriculum

IPC Franchises

5 day Manager/Teacher Training

Consultancy Services

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Sales Monthly

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Chart: Sales by Year

KOOLKID IPC Schools

KOOLKID/IPC Software/Curriculum

IPC Franchises

5 day Manager/Teacher Training

Consultancy Services

$0

$300,000

$600,000

$900,000

$1,200,000

$1,500,000

$1,800,000

$2,100,000

$2,400,000

$2,700,000

$3,000,000

2012 2013 2014 2015 2016

Sales by Year

6.5 Milestones

The Milestones Table reflects marketing milestones proposed by IPC IPI Ltd and its strategic partner, IPC. All IPC related expenses are covered by the IPC.

Table: Milestones

Milestones

Milestone Start Date End Date Budget Manager DepartmentIPC IPI Branding 7/21/2011 9/1/2011 $1,120 IPC MarketingWebsite & IPC Microsite 9/1/2011 9/12/2011 $3,500 IPC MarketingPR campaign 9/1/2011 1/1/2013 $2,750 IPC MarketingLocal Advertisements 4/2/2012 9/1/2012 $1,000 IPI Ltd MarketingSocial Media Creation & Promotion 12/1/2011 4/2/2012 $250 IPI Ltd Marketing

Totals $8,620

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Chart: Milestones

Q3 `11 Q4 Q1 `12 Q2 Q3 Q4

Social Media Creation & Promotion

Local Advertisments

PR campaign

Website & IPC Microsite

KOOLKID Branding

Milestones

7.0 Operational Plan

The following section will review the operational requirements in order to establish the two major IPC IPI projects. This section will look at the physical requirements, layout options and equipment for the IPC IPI preschool and the IPI/IPC office.

7.1 IPC IPI Preschools

7.11 Location and Facility Type

IPC IPI will identify locations that demographically represent the business intentions of IPC IPI Ltd’s objectives. Therefore, IPC IPI will focus on densely populated residential neighborhoods of Istanbul to establish the first preschool. KOOLKID will identify a space of at least 2,500 sq. ft of indoor space and about 3,000 sq.ft of playground space.

7.12 Facility Layout

The IPC provides 3D rendering layout suggestions based on the floor plan of an identified site. Once IPC IPI has chosen a suitable site, IPC will provide a layout suggestion.

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Table: Profit and Loss

Pro Forma Profit and Loss

2012 2013 2014 2015 2016

Sales $550,300 $978,300 $1,542,940 $2,265,346 $2,868,075 Direct Cost of Sales $193,542 $204,116 $188,463 $199,719 $212,362 Other Costs of Sales $0 $0 $0 $0 $0 Total Cost of Sales $193,542 $204,116 $188,463 $199,719 $212,362

Gross Margin $356,758 $774,184 $1,354,477 $2,065,627 $2,655,713 Gross Margin % 64.83% 79.14% 87.79% 91.18% 92.60%

Expenses

Payroll $261,300 $328,500 $390,600 $452,700 $452,700 Marketing/Promotion $1,200 $5,500 $8,500 $12,000 $18,000 Depreciation $1,500 $6,000 $10,500 $16,500 $22,500 Rent $48,000 $138,000 $228,000 $348,000 $468,000

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Utilities $3,000 $9,000 $18,000 $30,000 $42,000 Insurance $1,056 $4,224 $7,392 $11,616 $15,840 Payroll Taxes $39,195 $49,275 $58,590 $67,905 $67,905

Total Operating Expenses $355,251 $540,499 $721,582 $938,721 $1,086,945

Profit Before Interest and Taxes $1,508 $233,685 $632,895 $1,126,906 $1,568,768 EBITDA $3,008 $239,685 $643,395 $1,143,406 $1,591,268 Interest Expense $24,500 $24,500 $24,500 $24,500 $24,500 Taxes Incurred $0 $73,215 $212,938 $385,842 $540,494

Net Profit ($22,993) $135,970 $395,457 $716,564 $1,003,774

Net Profit/Sales -4.18% 13.90% 25.63% 31.63% 35.00%

Chart: Profit Monthly

$0

$10,000

$20,000

$30,000

($10,000)

($20,000)

($30,000)

($40,000)

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Profit Monthly

Page 8


Chart: Profit Yearly

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

2012 2013 2014 2015 2016

Profit Yearly

Chart: Gross Margin Monthly

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

($10,000)


Gross Margin Monthly

Page 9


Chart: Gross Margin Yearly

$0

$300,000

$600,000

$900,000

$1,200,000

$1,500,000

$1,800,000

$2,100,000

$2,400,000

$2,700,000

2012 2013 2014 2015 2016

Gross Margin Yearly

8.5 Projected Cash Flow

Table: Cash Flow

Pro Forma Cash Flow

2012 2013 2014 2015 2016

Cash Received

Cash from Operations

Cash Sales $550,300 $978,300 $1,542,940 $2,265,346 $2,868,075 Subtotal Cash from Operations $550,300 $978,300 $1,542,940 $2,265,346 $2,868,075

Additional Cash Received

Subtotal Cash Received $550,300 $978,300 $1,542,940 $2,265,346 $2,868,075

Expenditures 2012 2013 2014 2015 2016

Expenditures from Operations

Cash Spending $261,300 $328,500 $390,600 $452,700 $452,700 Bill Payments $286,591 $489,992 $726,776 $1,052,196 $1,363,661 Subtotal Spent on Operations $547,891 $818,492 $1,117,376 $1,504,896 $1,816,361

Additional Cash Spent

Subtotal Cash Spent $547,891 $818,492 $1,117,376 $1,504,896 $1,816,361

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Net Cash Flow $2,409 $159,808 $425,564 $760,450 $1,051,714

Cash Balance $132,309 $292,117 $717,681 $1,478,131 $2,529,845

Chart: Cash

Net Cash Flow

Cash Balance

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

($20,000)

($40,000)Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Cash

8.6 Projected Balance Sheet

Table: Balance Sheet

Pro Forma Balance Sheet

2012 2013 2014 2015 2016

Assets

Current Assets

Cash $132,309 $292,117 $717,681 $1,478,131 $2,529,845 Other Current Assets $17,858 $17,858 $17,858 $17,858 $17,858 Total Current Assets $150,167 $309,975 $735,539 $1,495,989 $2,547,703

Long-term Assets

Long-term Assets $10,000 $10,000 $10,000 $10,000 $10,000 Accumulated Depreciation $1,500 $7,500 $18,000 $34,500 $57,000 Total Long-term Assets $8,500 $2,500 ($8,000) ($24,500) ($47,000)Total Assets $158,667 $312,475 $727,539 $1,471,489 $2,500,703

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Liabilities and Capital 2012 2013 2014 2015 2016

Current Liabilities

Accounts Payable $23,901 $41,739 $61,347 $88,733 $114,173 Current Borrowing $122,500 $122,500 $122,500 $122,500 $122,500 Other Current Liabilities $0 $0 $0 $0 $0 Subtotal Current Liabilities $146,401 $164,239 $183,847 $211,233 $236,673

Long-term Liabilities $0 $0 $0 $0 $0 Total Liabilities $146,401 $164,239 $183,847 $211,233 $236,673

Paid-in Capital $122,508 $122,508 $122,508 $122,508 $122,508 Retained Earnings ($87,250) ($110,243) $25,728 $421,184 $1,137,748 Earnings ($22,993) $135,970 $395,457 $716,564 $1,003,774 Total Capital $12,265 $148,236 $543,693 $1,260,256 $2,264,031 Total Liabilities and Capital $158,667 $312,475 $727,539 $1,471,489 $2,500,703

Net Worth $12,265 $148,236 $543,693 $1,260,256 $2,264,031

8.7 Business Ratios

Table: Ratios

Ratio Analysis

2012 2013 2014 2015 2016

Sales Growth n.a. 77.78% 57.72% 46.82% 26.61%

Percent of Total Assets

Other Current Assets 11.26% 5.72% 2.45% 1.21% 0.71%

Total Current Assets 94.64% 99.20% 101.10% 101.66% 101.88%

Long-term Assets 5.36% 0.80% -1.10% -1.66% -1.88%

Total Assets 100.00% 100.00% 100.00% 100.00% 100.00%

Current Liabilities 92.27% 52.56% 25.27% 14.36% 9.46%

Long-term Liabilities 0.00% 0.00% 0.00% 0.00% 0.00%

Total Liabilities 92.27% 52.56% 25.27% 14.36% 9.46%

Net Worth 7.73% 47.44% 74.73% 85.64% 90.54%

Percent of Sales

Sales 100.00% 100.00% 100.00% 100.00% 100.00%

Gross Margin 64.83% 79.14% 87.79% 91.18% 92.60%

Selling, General & Administrative Expenses 69.01% 65.24% 62.16% 59.55% 57.60%

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Advertising Expenses 0.22% 0.56% 0.55% 0.53% 0.63%

Profit Before Interest and Taxes 0.27% 23.89% 41.02% 49.75% 54.70%

Main Ratios

Current 1.03 1.89 4.00 7.08 10.76

Quick 1.03 1.89 4.00 7.08 10.76

Total Debt to Total Assets 92.27% 52.56% 25.27% 14.36% 9.46%

Pre-tax Return on Net Worth -187.46% 141.12% 111.90% 87.47% 68.21%

Pre-tax Return on Assets -14.49% 66.94% 83.62% 74.92% 61.75%

Additional Ratios 2012 2013 2014 2015 2016

Net Profit Margin -4.18% 13.90% 25.63% 31.63% 35.00%

Return on Equity -187.46% 91.73% 72.74% 56.86% 44.34%

Activity Ratios

Accounts Payable Turnover 12.99 12.17 12.17 12.17 12.17

Payment Days 27 24 25 25 27

Total Asset Turnover 3.47 3.13 2.12 1.54 1.15

Debt Ratios

Debt to Net Worth 11.94 1.11 0.34 0.17 0.10

Current Liab. to Liab. 1.00 1.00 1.00 1.00 1.00

Liquidity Ratios

Net Working Capital $3,765 $145,736 $551,693 $1,284,756 $2,311,031

Interest Coverage 0.06 9.54 25.83 46.00 64.03

Additional Ratios

Assets to Sales 0.29 0.32 0.47 0.65 0.87

Current Debt/Total Assets 92% 53% 25% 14% 9%

Acid Test 1.03 1.89 4.00 7.08 10.76

Sales/Net Worth 44.87 6.60 2.84 1.80 1.27

Dividend Payout 0.00 0.00 0.00 0.00 0.00

8.8 Long-term Plan

IPC IPI Ltd anticipates exponential growth over the next five years which takes into account wider brand recognition in FY3 onwards.

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Appendix

Table: Sales Forecast

Sales Forecast


Sales

IPC Schools $2,000 $2,200 $2,600 $4,000 $6,000 $8,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000

Software/Curriculum $0 $100 $100 $100 $100 $200 $200 $200 $200 $300 $200 $300

IPC Franchises $0 $0 $0 $0 $0 $5,000 $0 $0 $0 $0 $0 $2,500

5 day Manager/Teacher Training $7,500 $7,500 $15,000 $20,000 $27,000 $27,000 $27,000 $40,000 $35,000 $35,000 $41,500 $41,500

Consultancy Services $2,500 $3,500 $5,000 $8,000 $10,000 $10,000 $10,000 $10,000 $12,500 $15,250 $15,250 $18,000

Total Sales $12,000 $13,300 $22,700 $32,100 $43,100 $50,200 $49,200 $62,200 $59,700 $62,550 $68,950 $74,300

Direct Cost of Sales Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Franchise Fees $3,500 $0 $0 $9,000 $0 $0 $0 $9,000 $0 $0 $0 $0

Teacher Training $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300

Curriculum & Software $1,000 $0 $0 $0 $1,350 $0 $0 $0 $0 $0 $0 $1,500

Consulting License $6,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

IPC Onsite Training $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000

Other $1,466 $1,466 $1,466 $1,466 $1,466 $1,466 $1,466 $1,466 $1,466 $1,466 $1,466 $1,466

Local Consultants/Trainers $6,750 $6,750 $6,750 $6,750 $6,750 $6,750 $6,750 $6,750 $6,750 $6,750 $6,750 $6,750

Subtotal Direct Cost of Sales $24,016 $13,516 $13,516 $22,516 $14,866 $13,516 $13,516 $22,516 $13,516 $13,516 $13,516 $15,016

Page 1

Appendix

Table: Personnel

Personnel Plan


Vietnamese Teachers $900 $900 $900 $1,200 $1,500 $2,100 $2,100 $2,100 $2,100 $2,100 $2,100 $2,100

Foreign Teacher/Manager $2,700 $2,700 $2,700 $2,700 $2,700 $2,700 $2,700 $2,700 $2,700 $2,700 $2,700 $2,700

Administrative Manager $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600

Cook $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200

Director $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000

Manager $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000

CFO $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000

Consultants $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000

Sales/Marketing $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500

HR/Admin $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600

Accounts $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500

Production $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000

Total People 23 23 23 24 25 27 27 27 27 27 27 27

Total Payroll $21,000 $21,000 $21,000 $21,300 $21,600 $22,200 $22,200 $22,200 $22,200 $22,200 $22,200 $22,200

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Appendix

Table: Profit and Loss

Pro Forma Profit and Loss


Sales $12,000 $13,300 $22,700 $32,100 $43,100 $50,200 $49,200 $62,200 $59,700 $62,550 $68,950 $74,300

Direct Cost of Sales $24,016 $13,516 $13,516 $22,516 $14,866 $13,516 $13,516 $22,516 $13,516 $13,516 $13,516 $15,016

Other Costs of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Cost of Sales $24,016 $13,516 $13,516 $22,516 $14,866 $13,516 $13,516 $22,516 $13,516 $13,516 $13,516 $15,016

Gross Margin ($12,016) ($216) $9,184 $9,584 $28,234 $36,684 $35,684 $39,684 $46,184 $49,034 $55,434 $59,284

Gross Margin % -100.13% -1.62% 40.46% 29.86% 65.51% 73.08% 72.53% 63.80% 77.36% 78.39% 80.40% 79.79%

Expenses

Payroll $21,000 $21,000 $21,000 $21,300 $21,600 $22,200 $22,200 $22,200 $22,200 $22,200 $22,200 $22,200

Marketing/Promotion $1,200 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Depreciation $125 $125 $125 $125 $125 $125 $125 $125 $125 $125 $125 $125

Rent $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000

Utilities $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250

Insurance 15% $88 $88 $88 $88 $88 $88 $88 $88 $88 $88 $88 $88 Payroll Taxes 15% $3,150 $3,150 $3,150 $3,195 $3,240 $3,330 $3,330 $3,330 $3,330 $3,330 $3,330 $3,330

Total Operating Expenses $29,813 $28,613 $28,613 $28,958 $29,303 $29,993 $29,993 $29,993 $29,993 $29,993 $29,993 $29,993

Profit Before Interest and Taxes ($41,829) ($28,829) ($19,429) ($19,374) ($1,069) $6,691 $5,691 $9,691 $16,191 $19,041 $25,441 $29,291

EBITDA ($41,704) ($28,704) ($19,304) ($19,249) ($944) $6,816 $5,816 $9,816 $16,316 $19,166 $25,566 $29,416

Interest Expense $2,042 $2,042 $2,042 $2,042 $2,042 $2,042 $2,042 $2,042 $2,042 $2,042 $2,042 $2,042

Taxes Incurred $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Net Profit ($43,870) ($30,871) ($21,471) ($21,416) ($3,111) $4,649 $3,649 $7,649 $14,149 $16,999 $23,399 $27,249

Net Profit/Sales -365.58% -232.11% -94.58% -66.72% -7.22% 9.26% 7.42% 12.30% 23.70% 27.18% 33.94% 36.67%

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Appendix

Page 4

Appendix

Table: Cash Flow

Pro Forma Cash Flow


Cash Received

Cash from Operations

Cash Sales $12,000 $13,300 $22,700 $32,100 $43,100 $50,200 $49,200 $62,200 $59,700 $62,550 $68,950 $74,300

Subtotal Cash from Operations $12,000 $13,300 $22,700 $32,100 $43,100 $50,200 $49,200 $62,200 $59,700 $62,550 $68,950 $74,300

Additional Cash Received

Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Cash Received $12,000 $13,300 $22,700 $32,100 $43,100 $50,200 $49,200 $62,200 $59,700 $62,550 $68,950 $74,300

Expenditures Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Expenditures from Operations

Cash Spending $21,000 $21,000 $21,000 $21,300 $21,600 $22,200 $22,200 $22,200 $22,200 $22,200 $22,200 $22,200

Bill Payments $1,158 $34,355 $23,046 $23,347 $31,837 $24,444 $23,226 $23,526 $31,926 $23,226 $23,226 $23,276

Subtotal Spent on Operations $22,158 $55,355 $44,046 $44,647 $53,437 $46,644 $45,426 $45,726 $54,126 $45,426 $45,426 $45,476

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

Page 5

Appendix

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 $22,158 $55,355 $44,046 $44,647 $53,437 $46,644 $45,426 $45,726 $54,126 $45,426 $45,426 $45,476

Net Cash Flow ($10,158) ($42,055) ($21,346) ($12,547) ($10,337) $3,556 $3,774 $16,474 $5,574 $17,124 $23,524 $28,824

Cash Balance $119,742 $77,687 $56,341 $43,794 $33,457 $37,013 $40,787 $57,262 $62,836 $79,960 $103,485 $132,309

Page 6

Appendix

Table: Balance Sheet

Pro Forma Balance Sheet


Assets Starting Balances

Current Assets

Cash $129,900 $119,742 $77,687 $56,341 $43,794 $33,457 $37,013 $40,787 $57,262 $62,836 $79,960 $103,485 $132,309 Other Current Assets $17,858 $17,858 $17,858 $17,858 $17,858 $17,858 $17,858 $17,858 $17,858 $17,858 $17,858 $17,858 $17,858 Total Current Assets $147,758 $137,600 $95,545 $74,199 $61,652 $51,315 $54,871 $58,645 $75,120 $80,694 $97,818 $121,343 $150,167

Long-term Assets

Long-term Assets $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 Accumulated Depreciation $0 $125 $250 $375 $500 $625 $750 $875 $1,000 $1,125 $1,250 $1,375 $1,500 Total Long-term Assets $10,000 $9,875 $9,750 $9,625 $9,500 $9,375 $9,250 $9,125 $9,000 $8,875 $8,750 $8,625 $8,500 Total Assets $157,758 $147,475 $105,295 $83,824 $71,152 $60,690 $64,121 $67,770 $84,120 $89,569 $106,568 $129,968 $158,667

Liabilities and Capital Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Current Liabilities

Accounts Payable $0 $33,587 $22,277 $22,277 $31,021 $23,669 $22,451 $22,451 $31,151 $22,451 $22,451 $22,451 $23,901 Current Borrowing $122,500 $122,500 $122,500 $122,500 $122,500 $122,500 $122,500 $122,500 $122,500 $122,500 $122,500 $122,500 $122,500 Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Subtotal Current Liabilities $122,500 $156,087 $144,777 $144,777 $153,521 $146,169 $144,951 $144,951 $153,651 $144,951 $144,951 $144,951 $146,401

Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Liabilities $122,500 $156,087 $144,777 $144,777 $153,521 $146,169 $144,951 $144,951 $153,651 $144,951 $144,951 $144,951 $146,401

Paid-in Capital $122,508 $122,508 $122,508 $122,508 $122,508 $122,508 $122,508 $122,508 $122,508 $122,508 $122,508 $122,508 $122,508 Retained Earnings ($87,250) ($87,250) ($87,250) ($87,250) ($87,250) ($87,250) ($87,250) ($87,250) ($87,250) ($87,250) ($87,250) ($87,250) ($87,250)Earnings $0 ($43,870) ($74,741) ($96,212) ($117,627) ($120,738) ($116,089) ($112,439) ($104,790) ($90,641) ($73,641) ($50,242) ($22,993)Total Capital $35,258 ($8,612) ($39,483) ($60,954) ($82,369) ($85,480) ($80,831) ($77,181) ($69,532) ($55,383) ($38,383) ($14,984) $12,265 Total Liabilities and Capital $157,758 $147,475 $105,295 $83,824 $71,152 $60,690 $64,121 $67,770 $84,120 $89,569 $106,568 $129,968 $158,667

Net Worth $35,258 ($8,612) ($39,483) ($60,954) ($82,369) ($85,480) ($80,831) ($77,181) ($69,532) ($55,383) ($38,383) ($14,984) $12,265

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