astek foodimports

December 2001

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Table of Contents

Page 1

1.0 Executive Summary.............................................................................................................................11.1 Objectives ...................................................................................................................................11.2 Mission ........................................................................................................................................11.3 Keys to Success ........................................................................................................................1

2.0 Company Summary.............................................................................................................................22.1 Company Ownership .................................................................................................................22.2 Start-up Summary ......................................................................................................................32.3 Company Locations and Facilities ..........................................................................................4

3.0 Products ...............................................................................................................................................54.0 Market Analysis Summary ..................................................................................................................5

4.1 Market Segmentation ................................................................................................................54.2 Target Market Segment Strategy .............................................................................................64.3 Main Competitors ......................................................................................................................7

5.0 Strategy and Implementation Summary ............................................................................................75.1 Competitive Edge ......................................................................................................................75.2 Sales Strategy ............................................................................................................................75.2.1 Sales Forecast........................................................................................................................7

6.0 Management Summary.......................................................................................................................96.1 Personnel Plan ...........................................................................................................................9

7.0 Financial Plan ......................................................................................................................................97.1 Break-even Analysis................................................................................................................107.2 Projected Profit and Loss .......................................................................................................117.3 Projected Cash Flow ...............................................................................................................147.4 Projected Balance Sheet ........................................................................................................167.5 Business Ratios .......................................................................................................................16

Aztec Food Imports

Page 1

1.0 Executive Summary

Aztec Food Imports (Aztec) will offer food product imports from Mexico to meet increased demand for these product by the city's growing Hispanic/Latino community in the greater Richmond area. Over the last five years, this community has grown by 70%, and represents half of the Richmond Metro population (250,000). Aztec has been successful over the competition in supplying imported mexican food products to the area's two PriceRight supermarkets. From this base, Aztec will build a successful business serving the area's large and small markets.

1.1 Objectives

• Establish Aztec Food Imports as the number one importer of mexican food products in Richmond.

• Increase the number of mexican food products being carried in local markets by 20% over the next two years.

• Build solid working relationships with the purchasing agents of the local stores serving Richmond's growing Hispanic/Latino population.

1.2 Mission

Aztec's mission is to supply Mexican food imports to Richmond stores which are currently being poorly served by importers located over 150 miles away. Raymond Garcia, co-owner of Aztec, will utilize his importing background, his experience in the food retail market, as well as his contacts in Mexico to bring in products that area customers demand.

1.3 Keys to Success

The keys to success in Aztec's business are:

1. Offering items of a high quality-value relationship which are not available everywhere. This is essential for maintaining the niche market sectors mentioned in the mission statement.

2. Reliable and timely deliveries. Aztec must make good on its delivery promises. Because of the nature of doing business in Mexico, this requires long-range planning in scheduling orders, taking into account Mexican business practices.

3. A reliable administration that is ready to serve customers, prepare accurate billing, follow-up on orders and other documentation, and maintain a close watch on expenses and collection of accounts receivable.

Aztec Food Imports

Page 2

2.0 Company Summary

Aztec Food Imports will import Mexican food products to the local markets of the Richmond Metro area.

2.1 Company Ownership

Aztec's ownership is shared equally between Raymond Garcia and Jose Arroyo. Raymond has eight years of importing experience. Jose Arroya has 10 years experience in managing imports from Mexico and shipping to the U.S. market. Raymond Garcia is responsible for the daily management, sales, and store deliveries. Jose Arroya is responsible for the quality control and shipping of the goods from Mexico to the U.S.

Aztec Food Imports

Page 3

2.2 Start-up Summary

The start-up cost of Aztec Food Imports will consist primarily of inventory. Raymond Garcia and Jose Arroya will each invest $50,000. They will also secure a $100,000 SBA loan.

Table: Start-up Funding

Start-up Funding

Start-up Expenses to Fund $15,300

Start-up Assets to Fund $184,700

Total Funding Required $200,000

Assets

Non-cash Assets from Start-up $80,000

Cash Requirements from Start-up $104,700

Additional Cash Raised $0

Cash Balance on Starting Date $104,700

Total Assets $184,700

Liabilities and Capital

Liabilities

Current Borrowing $0

Long-term Liabil ities $100,000

Accounts Payable (Outstanding Bills) $0

Other Current Liabil ities (interest-free) $0

Total Liabil ities $100,000

Capital

Planned Investment

Raymond Garcia $50,000

IJose Arroya $50,000

Other $0

Additional Investment Requirement $0

Total Planned Investment $100,000

Loss at Start-up (Start-up Expenses) ($15,300)

Total Capital $84,700

Total Capital and Liabil ities $184,700

Total Funding $200,000

Aztec Food Imports

Page 4

Table: Start-up

Start-up

Requirements

Start-up Expenses

Legal $5,000

Stationery etc. $800

Brochures $2,000

Consultants $0

Insurance $0

Rent $3,000

Expensed Equipment $4,000

Util ities $500

Other $0

Total Start-up Expenses $15,300

Start-up Assets

Cash Required $104,700

Start-up Inventory $60,000

Other Current Assets $0

Long-term Assets $20,000

Total Assets $184,700

Total Requirements $200,000

2.3 Company Locations and Facilities

Aztec Food Imports will have warehouse space located in the Fillmore industrial district.

Aztec Food Imports

Page 5

3.0 Products

Aztec's product line is rather extensive amounting to over 200 items:

• Beverages.• Canned foods.• Chile peppers.• Desserts.• Packaged foods.• Salsas.• Snacks.• Spices and herbs.

Aztec also carries the popular brands:

• Ducal.• Herdez.• Juanita's.• La Costeña.• La Joya.• La Lechonera.• La Sierra.• Pico Pica.

4.0 Market Analysis Summary

The Hispanic/Latino population in the Richmond Metro area has grown by 10% over the past five years. The current population stands at over 100,000. It is projected that the population will continue its growth pattern for the next five years and will eventually reach over 160,000. A majority of these inner-city residents live in family groups of six or more members. The average household income for the area is $32,000.

There are four major supermarkets that operate in the area and over 50 smaller food stores that serve the metro communities. Last year, the four major supermarkets grossed over $150,000,000 in sales. There are plans to build additional supermarkets in the Richmond Metro area in 2003 and 2004. Two of the current supermarkets in the Richmond Metro area are part the local PriceRight chain. PriceRight is planning a new store in the area in 2004.

Though it is difficult to know the exact sales figures for the small markets in the area, traditionally, the community residents have been supportive of the smaller store if their prices are competitive. Last year, Wilson Foods Imports grossed $1.5 million in sales with smaller markets in the Richmond Metro area.

4.1 Market Segmentation

Aztec Food Imports will serve all retail food outlets in the Richmond Metro area. These include neighborhood markets and supermarkets.

Aztec Food Imports

Page 6

Table: Market Analysis

Market Analysis

2002 2003 2004 2005 2006

Potential Customers Growth CAGR

Supermarkets 20% 4 5 6 7 8 18.92%

Neighborhood Markets 20% 50 60 72 86 103 19.80%

Other 0% 0 0 0 0 0 0.00%

Total 19.74% 54 65 78 93 111 19.74%

4.2 Target Market Segment Strategy

Aztec Food Imports will have two distinct marketing approaches:

• For Neighborhood Markets: Raymond will promote a small group of popular mexican food products that are likely to move fast in smaller stores. These products will be priced to be attractive to the small store owner. Once successful, Raymond will expand the product group.

• For Supermarkets: Raymond will promote the complete line of products that Aztec can provide. Aztec prices will reflect a stronger import connection in Mexico that will results in lower prices and more product.

Aztec Food Imports

Page 7

4.3 Main Competitors

Currently, Acme Food Importers located in Wilsonville supplies the Richmond area food stores with imported mexican food products. Wilsonville is 150 miles north of Richmond. Only in the past two years has the demand for these products grown sufficiently to impact Acme's ability to satisfy demand. Besides the distance, Acme is plagued with weak import connections in Mexico. These factors contribute to the high wholesale price of Acme's imported products.

5.0 Strategy and Implementation Summary

Aztec Food Imports will focus on becoming the leading provider of wholesale imported mexican food product in the Richmond Metro area.

5.1 Competitive Edge

Raymond Garcia and Jose Arroyo are the competitive edge of Aztec Food Imports. Raymond has worked for both Acme Food Imports and Wilson Food Imports over the past eight years. In his last position with Wilson, Raymond imported mexican food products to numerous markets in the southwest. He generated sales in excess of $2 million annually. His strength is his customer relations and he has been successful in expanding the range of imported mexican food purchased by the markets in his sales region.

Jose has been a shipping agent for M. Zegarra Exporting located in Mexico City for the past ten years. The company exported $20 million of products to the U.S last year. Jose's responsibility was to eliminate the shipping obstacles and oversee the timely delivery of product to the U.S.

5.2 Sales Strategy

Aztec Food Imports will have two distinct sales approaches:

• For Neighborhood Markets: Raymond will promote a small group of popular mexican food products that are likely to move fast in smaller stores. These items will be packaged as a group at an attractive price. Raymond will make frequent visits to these stores to build a strong working relationship that will lead to more purchases.

• For Supermarkets: Raymond will promote the complete line of products that Aztec can provide. Aztec prices will reflect a stronger import connection in Mexico that will results in lower prices and more product. Raymond will promote new seasonal products and provide assistance on marketing the products to the Hispanic/Latino community.

5.2.1 Sales Forecast

The following is the sales forecast for three years.

Aztec Food Imports

Page 8

Table: Sales Forecast

Sales Forecast

2002 2003 2004

Sales

Supermarkets $209,500 $260,000 $310,000

Neighborhood Markets $124,000 $160,000 $200,000

Total Sales $333,500 $420,000 $510,000

Direct Cost of Sales 2002 2003 2004

Supermarkets $85,900 $110,000 $130,000

Neighborhood Markets $18,300 $23,000 $24,000

Subtotal Direct Cost of Sales $104,200 $133,000 $154,000

Aztec Food Imports

Page 9

6.0 Management Summary

The two owners will co-manage the business. Raymond Garcia is responsible for the daily management, sales, and store deliveries. Jose Arroyo is responsible for the quality control and shipping of the goods from Mexico to the U.S.

6.1 Personnel Plan

Aztec Food Imports will have two additional delivery employees and an office manager supervised by Raymond.

Table: Personnel

Personnel Plan

2002 2003 2004

Raymond Garcia $36,000 $45,000 $50,000

Jose Arroyo $36,000 $45,000 $50,000

Delivery Persons $48,000 $54,000 $60,000

Office Manager $31,200 $34,000 $38,000

Other $0 $0 $0

Total People 5 5 5

Total Payroll $151,200 $178,000 $198,000

7.0 Financial Plan

The following sections outline conservative estimates of the financial performance of Aztec Food Imports.

Aztec Food Imports

Page 10

7.1 Break-even Analysis

The monthly break-even point is $26,514.

Table: Break-even Analysis

Break-even Analysis

Monthly Revenue Break-even $26,514

Assumptions:

Average Percent Variable Cost 31%

Estimated Monthly Fixed Cost $18,230

Aztec Food Imports

Page 11

7.2 Projected Profit and Loss

The following table and charts will highlight the next three years.

Aztec Food Imports

Page 12

Aztec Food Imports

Page 13

Table: Profit and Loss

Pro Forma Profit and Loss

2002 2003 2004

Sales $333,500 $420,000 $510,000

Direct Cost of Sales $104,200 $133,000 $154,000

Other Production Expenses $0 $0 $0

Total Cost of Sales $104,200 $133,000 $154,000

Gross Margin $229,300 $287,000 $356,000

Gross Margin % 68.76% 68.33% 69.80%

Expenses

Payroll $151,200 $178,000 $198,000

Sales and Marketing and Other Expenses $0 $0 $0

Depreciation $2,880 $2,880 $2,880

Leased Equipment $0 $0 $0

Util ities $6,000 $6,000 $6,000

Insurance $0 $0 $0

Rent $36,000 $36,000 $36,000

Payroll Taxes $22,680 $26,700 $29,700

Other $0 $0 $0

Total Operating Expenses $218,760 $249,580 $272,580

Profit Before Interest and Taxes $10,540 $37,420 $83,420

EBITDA $13,420 $40,300 $86,300

Interest Expense $9,233 $7,876 $6,460

Taxes Incurred $392 $8,863 $23,088

Net Profit $915 $20,681 $53,872

Net Profit/Sales 0.27% 4.92% 10.56%

Aztec Food Imports

Page 14

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

2002 2003 2004

Cash Received

Cash from Operations

Cash Sales $83,375 $105,000 $127,500

Cash from Receivables $194,775 $300,644 $367,563

Subtotal Cash from Operations $278,150 $405,644 $495,063

Additional Cash Received

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

New Current Borrowing $0 $0 $0

New Other Liabil ities (interest-free) $0 $0 $0

New Long-term Liabil ities $0 $0 $0

Sales of Other Current Assets $0 $0 $0

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

New Investment Received $0 $0 $0

Subtotal Cash Received $278,150 $405,644 $495,063

Expenditures 2002 2003 2004

Expenditures from Operations

Cash Spending $151,200 $178,000 $198,000

Bill Payments $110,267 $228,719 $255,535

Subtotal Spent on Operations $261,467 $406,719 $453,535

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 Liabil ities Principal Repayment $14,160 $14,160 $14,160

Purchase Other Current Assets $0 $0 $0

Purchase Long-term Assets $0 $0 $0

Dividends $0 $0 $0

Subtotal Cash Spent $275,627 $420,879 $467,695

Net Cash Flow $2,523 ($15,235) $27,368

Cash Balance $107,223 $91,987 $119,355

Aztec Food Imports

Page 15

Aztec Food Imports

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7.4 Projected Balance Sheet

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

Table: Balance Sheet

Pro Forma Balance Sheet

2002 2003 2004

Assets

Current Assets

Cash $107,223 $91,987 $119,355

Accounts Receivable $55,350 $69,706 $84,643

Inventory $15,950 $20,358 $23,573

Other Current Assets $0 $0 $0

Total Current Assets $178,523 $182,052 $227,571

Long-term Assets

Long-term Assets $20,000 $20,000 $20,000

Accumulated Depreciation $2,880 $5,760 $8,640

Total Long-term Assets $17,120 $14,240 $11,360

Total Assets $195,643 $196,292 $238,931

Liabilities and Capital 2002 2003 2004

Current Liabil ities

Accounts Payable $24,188 $18,316 $21,243

Current Borrowing $0 $0 $0

Other Current Liabil ities $0 $0 $0

Subtotal Current Liabil ities $24,188 $18,316 $21,243

Long-term Liabil ities $85,840 $71,680 $57,520

Total Liabil ities $110,028 $89,996 $78,763

Paid-in Capital $100,000 $100,000 $100,000

Retained Earnings ($15,300) ($14,385) $6,296

Earnings $915 $20,681 $53,872

Total Capital $85,615 $106,296 $160,168

Total Liabil ities and Capital $195,643 $196,292 $238,931

Net Worth $85,615 $106,296 $160,168

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 5149, Groceries and Related Products, are shown for comparison.

Aztec Food Imports

Page 17

Table: Ratios

Ratio Analysis

2002 2003 2004 Industry Profile

Sales Growth 0.00% 25.94% 21.43% 4.60%

Percent of Total Assets

Accounts Receivable 28.29% 35.51% 35.43% 33.30%

Inventory 8.15% 10.37% 9.87% 26.00%

Other Current Assets 0.00% 0.00% 0.00% 20.90%

Total Current Assets 91.25% 92.75% 95.25% 80.20%

Long-term Assets 8.75% 7.25% 4.75% 19.80%

Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabil ities 12.36% 9.33% 8.89% 45.20%

Long-term Liabil ities 43.88% 36.52% 24.07% 10.00%

Total Liabilities 56.24% 45.85% 32.96% 55.20%

Net Worth 43.76% 54.15% 67.04% 44.80%

Percent of Sales

Sales 100.00% 100.00% 100.00% 100.00%

Gross Margin 68.76% 68.33% 69.80% 44.10%

Selling, General & Administrative Expenses 68.48% 63.41% 59.24% 26.70%

Advertising Expenses 0.00% 0.00% 0.00% 0.70%

Profit Before Interest and Taxes 3.16% 8.91% 16.36% 0.80%

Main Ratios

Current 7.38 9.94 10.71 1.69

Quick 6.72 8.83 9.60 1.01

Total Debt to Total Assets 56.24% 45.85% 32.96% 55.20%

Pre-tax Return on Net Worth 1.53% 27.79% 48.05% 3.60%

Pre-tax Return on Assets 0.67% 15.05% 32.21% 8.00%

Additional Ratios 2002 2003 2004

Net Profit Margin 0.27% 4.92% 10.56% n.a

Return on Equity 1.07% 19.46% 33.63% n.a

Activity Ratios

Accounts Receivable Turnover 4.52 4.52 4.52 n.a

Collection Days 56 72 74 n.a

Inventory Turnover 3.83 7.33 7.01 n.a

Accounts Payable Turnover 5.56 12.17 12.17 n.a

Payment Days 27 35 28 n.a

Total Asset Turnover 1.70 2.14 2.13 n.a

Debt Ratios

Debt to Net Worth 1.29 0.85 0.49 n.a

Current Liab. to Liab. 0.22 0.20 0.27 n.a

Liquidity Ratios

Net Working Capital $154,335 $163,736 $206,328 n.a

Interest Coverage 1.14 4.75 12.91 n.a

Additional Ratios

Assets to Sales 0.59 0.47 0.47 n.a

Current Debt/Total Assets 12% 9% 9% n.a

Acid Test 4.43 5.02 5.62 n.a

Sales/Net Worth 3.90 3.95 3.18 n.a

Aztec Food Imports

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Dividend Payout 0.00 0.00 0.00 n.a

Appendix

Page 1

Table: Sales Forecast

Sales Forecast

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

Sales

Supermarkets 0% $14,000 $14,000 $14,000 $16,000 $16,000 $17,500 $18,000 $18,000 $20,000 $20,000 $20,000 $22,000

Neighborhood Markets 0% $5,000 $5,000 $6,000 $6,000 $8,000 $10,000 $12,000 $12,000 $13,000 $14,000 $16,000 $17,000

Total Sales $19,000 $19,000 $20,000 $22,000 $24,000 $27,500 $30,000 $30,000 $33,000 $34,000 $36,000 $39,000

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

Supermarkets $4,000 $4,000 $4,000 $4,400 $6,000 $6,300 $8,000 $8,200 $9,000 $10,000 $10,000 $12,000

Neighborhood Markets $1,000 $1,000 $1,000 $1,080 $1,200 $1,280 $1,700 $1,740 $1,800 $2,000 $2,000 $2,500

Subtotal Direct Cost of Sales $5,000 $5,000 $5,000 $5,480 $7,200 $7,580 $9,700 $9,940 $10,800 $12,000 $12,000 $14,500

Appendix

Page 2

Table: Personnel

Personnel Plan


Raymond Garcia 0% $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000

Jose Arroyo 0% $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000

Delivery Persons 0% $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000

Office Manager 0% $2,600 $2,600 $2,600 $2,600 $2,600 $2,600 $2,600 $2,600 $2,600 $2,600 $2,600 $2,600

Other 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total People 5 5 5 5 5 5 5 5 5 5 5 5

Total Payroll $12,600 $12,600 $12,600 $12,600 $12,600 $12,600 $12,600 $12,600 $12,600 $12,600 $12,600 $12,600

Appendix

Page 3

Table: General Assumptions

General Assumptions


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

Appendix

Page 4

Table: Profit and Loss

Pro Forma Profit and Loss


Sales $19,000 $19,000 $20,000 $22,000 $24,000 $27,500 $30,000 $30,000 $33,000 $34,000 $36,000 $39,000

Direct Cost of Sales $5,000 $5,000 $5,000 $5,480 $7,200 $7,580 $9,700 $9,940 $10,800 $12,000 $12,000 $14,500

Other Production Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Cost of Sales $5,000 $5,000 $5,000 $5,480 $7,200 $7,580 $9,700 $9,940 $10,800 $12,000 $12,000 $14,500

Gross Margin $14,000 $14,000 $15,000 $16,520 $16,800 $19,920 $20,300 $20,060 $22,200 $22,000 $24,000 $24,500

Gross Margin % 73.68% 73.68% 75.00% 75.09% 70.00% 72.44% 67.67% 66.87% 67.27% 64.71% 66.67% 62.82%

Expenses

Payroll $12,600 $12,600 $12,600 $12,600 $12,600 $12,600 $12,600 $12,600 $12,600 $12,600 $12,600 $12,600

Sales and Marketing and Other

Expenses

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Depreciation $240 $240 $240 $240 $240 $240 $240 $240 $240 $240 $240 $240

Leased Equipment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Utilities $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500

Insurance $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Rent $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000

Payroll Taxes 15% $1,890 $1,890 $1,890 $1,890 $1,890 $1,890 $1,890 $1,890 $1,890 $1,890 $1,890 $1,890

Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Operating Expenses $18,230 $18,230 $18,230 $18,230 $18,230 $18,230 $18,230 $18,230 $18,230 $18,230 $18,230 $18,230

Profit Before Interest and Taxes ($4,230) ($4,230) ($3,230) ($1,710) ($1,430) $1,690 $2,070 $1,830 $3,970 $3,770 $5,770 $6,270

EBITDA ($3,990) ($3,990) ($2,990) ($1,470) ($1,190) $1,930 $2,310 $2,070 $4,210 $4,010 $6,010 $6,510

Interest Expense $824 $814 $804 $794 $784 $774 $765 $755 $745 $735 $725 $715

Taxes Incurred ($1,516) ($1,513) ($1,210) ($751) ($664) $275 $392 $323 $968 $911 $1,513 $1,666

Net Profit ($3,537) ($3,531) ($2,824) ($1,753) ($1,550) $641 $914 $753 $2,258 $2,125 $3,531 $3,888

Net Profit/Sales -18.62% -18.58% -14.12% -7.97% -6.46% 2.33% 3.05% 2.51% 6.84% 6.25% 9.81% 9.97%

Appendix

Page 5

Table: Cash Flow

Pro Forma Cash Flow


Cash Received

Cash from Operations

Cash Sales $4,750 $4,750 $5,000 $5,500 $6,000 $6,875 $7,500 $7,500 $8,250 $8,500 $9,000 $9,750

Cash from Receivables $0 $475 $14,250 $14,275 $15,050 $16,550 $18,088 $20,688 $22,500 $22,575 $24,775 $25,550

Subtotal Cash from Operations $4,750 $5,225 $19,250 $19,775 $21,050 $23,425 $25,588 $28,188 $30,750 $31,075 $33,775 $35,300

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 $4,750 $5,225 $19,250 $19,775 $21,050 $23,425 $25,588 $28,188 $30,750 $31,075 $33,775 $35,300

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

Expenditures from Operations

Cash Spending $12,600 $12,600 $12,600 $12,600 $12,600 $12,600 $12,600 $12,600 $12,600 $12,600 $12,600 $12,600

Bill Payments $157 $4,697 $4,700 $4,999 $5,435 $5,541 $6,443 $6,738 $12,520 $18,899 $20,331 $19,808

Subtotal Spent on Operations $12,757 $17,297 $17,300 $17,599 $18,035 $18,141 $19,043 $19,338 $25,120 $31,499 $32,931 $32,408

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 $1,180 $1,180 $1,180 $1,180 $1,180 $1,180 $1,180 $1,180 $1,180 $1,180 $1,180 $1,180

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 $13,937 $18,477 $18,480 $18,779 $19,215 $19,321 $20,223 $20,518 $26,300 $32,679 $34,111 $33,588

Net Cash Flow ($9,187) ($13,252) $770 $996 $1,835 $4,104 $5,365 $7,670 $4,450 ($1,604) ($336) $1,712

Cash Balance $95,513 $82,261 $83,031 $84,027 $85,862 $89,966 $95,331 $103,000 $107,451 $105,847 $105,511 $107,223

Appendix

Page 6

Table: Balance Sheet

Pro Forma Balance Sheet


Assets Starting Balances

Current Assets

Cash $104,700 $95,513 $82,261 $83,031 $84,027 $85,862 $89,966 $95,331 $103,000 $107,451 $105,847 $105,511 $107,223

Accounts Receivable $0 $14,250 $28,025 $28,775 $31,000 $33,950 $38,025 $42,438 $44,250 $46,500 $49,425 $51,650 $55,350

Inventory $60,000 $55,000 $50,000 $45,000 $39,520 $32,320 $24,740 $15,040 $10,934 $11,880 $13,200 $13,200 $15,950

Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Current Assets $164,700 $164,763 $160,286 $156,806 $154,547 $152,132 $152,731 $152,808 $158,184 $165,831 $168,472 $170,361 $178,523

Long-term Assets

Long-term Assets $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000

Accumulated Depreciation $0 $240 $480 $720 $960 $1,200 $1,440 $1,680 $1,920 $2,160 $2,400 $2,640 $2,880

Total Long-term Assets $20,000 $19,760 $19,520 $19,280 $19,040 $18,800 $18,560 $18,320 $18,080 $17,840 $17,600 $17,360 $17,120

Total Assets $184,700 $184,523 $179,806 $176,086 $173,587 $170,932 $171,291 $171,128 $176,264 $183,671 $186,072 $187,721 $195,643

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

Current Liabilities

Accounts Payable $0 $4,541 $4,534 $4,818 $5,252 $5,326 $6,224 $6,328 $11,891 $18,220 $19,677 $18,974 $24,188

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 $4,541 $4,534 $4,818 $5,252 $5,326 $6,224 $6,328 $11,891 $18,220 $19,677 $18,974 $24,188

Long-term Liabilities $100,000 $98,820 $97,640 $96,460 $95,280 $94,100 $92,920 $91,740 $90,560 $89,380 $88,200 $87,020 $85,840

Total Liabilities $100,000 $103,361 $102,174 $101,278 $100,532 $99,426 $99,144 $98,068 $102,451 $107,600 $107,877 $105,994 $110,028

Paid-in Capital $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

Retained Earnings ($15,300) ($15,300) ($15,300) ($15,300) ($15,300) ($15,300) ($15,300) ($15,300) ($15,300) ($15,300) ($15,300) ($15,300) ($15,300)

Earnings $0 ($3,537) ($7,068) ($9,892) ($11,645) ($13,194) ($12,553) ($11,640) ($10,887) ($8,629) ($6,505) ($2,973) $915

Total Capital $84,700 $81,163 $77,632 $74,808 $73,056 $71,506 $72,147 $73,060 $73,813 $76,071 $78,195 $81,727 $85,615

Total Liabilities and Capital $184,700 $184,523 $179,806 $176,086 $173,587 $170,932 $171,291 $171,128 $176,264 $183,671 $186,072 $187,721 $195,643

Net Worth $84,700 $81,163 $77,632 $74,808 $73,056 $71,506 $72,147 $73,060 $73,813 $76,071 $78,195 $81,727 $85,615