ISP Business Plan

Web Solutions, Inc.

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Financials

7.0 Financials

This section presents our financial projections for the term of the plan.

7.1 Untitled

The sales forecast chart and table are presented below. Final sales forecasts are based on predictions mentioned in the Executive Summary.

Sales Monthly



7.2 Funding Uses and General Assumptions

The company is raising $1.5 million for the purpose of growth and operations. This funding will cover operating expenses and product development during this period. The following is a breakdown of how the funds will be used.

Expenses:	Costs:
Advertising	$50,000
Legal Fees	$10,000
Office	$40,000
Working Capital	$100,000
Miscellaneous	$50,000
Sub-total	$250,000
Product Development:	$1,250,000
Total	$1,500,000

Significant Assumptions

1. Nature and Limitation of Projections. This financial projection is based on sales volume at the levels described in the revenue section and presents, to the best of management's knowledge and belief, the company's expected assets, liabilities, capital, revenues, and expenses. The projections reflect management's judgement of the expected conditions and its expected course of action, given the hypothetical assumptions.
2. Revenues. The company's revenue is derived primarily from subscriptions. Revenue projections are based on the 1999 sales in the comparable market nationwide, based on industry average. The exact numbers can be found in the Sales Forecast table and chart section.
3. Expenses. The company's expenses are primarily those of salaries, sales commissions, and administrative costs. Other expenses are based on management's estimates and industry averages.

The table below outlines the general assumptions of Web Solutions.

General Assumptions

General Assumptions
	2000	2001	2002
Plan Month	1	2	3
Current Interest Rate	10.00%	10.00%	10.00%
Long-term Interest Rate	10.00%	10.00%	10.00%
Tax Rate	25.42%	25.00%	25.42%
Sales on Credit %	15.00%	15.00%	15.00%
Other	0	0	0

7.3 Untitled-2

The following table and chart reflect the company's break-even estimates. These are based on fixed and variable cost estimates derived from past income statement data. Given that Web Solutions has little in the way of marginal costs, the break even analysis reflects the industry's high gross margins. Unless one of the potential future risks seriously impacts profitability, or the company loses its ability to rapidly adjust to changing market conditions, the company does not see this as a serious issue.

Break-even Analysis

Break-even Analysis:
Monthly Units Break-even	41,368
Monthly Revenue Break-even	$41,368
Assumptions:
Average Per-Unit Revenue	$1.00
Average Per-Unit Variable Cost	$0.05
Estimated Monthly Fixed Cost	$39,228

7.4 Projected Profit and Loss

Web Solutions is in the early stage of development, thus initial projections have only been made on accounts that are believed to most drive the income statement. The following table provides Web Solution's projected income statements for 2000-2002.

Profit and Loss

Pro Forma Profit and Loss
	2000	2001	2002
Sales	$1,500,000	$4,500,000	$7,500,000
Direct Cost of Sales	$77,596	$84,296	$88,796
Other	$0	$0	$0
	------------	------------	------------
Total Cost of Sales	$77,596	$84,296	$88,796
Gross Margin	$1,422,404	$4,415,704	$7,411,204
Gross Margin %	94.83%	98.13%	98.82%
Expenses:
Payroll	$307,800	$342,400	$392,400
Sales and Marketing and Other Expenses	$41,468	$41,468	$41,468
Depreciation	$0	$0	$0
Legal Fees	$300	$300	$300
Utilities	$3,600	$3,600	$3,600
Insurance	$4,200	$4,200	$4,200
Mortgage	$67,200	$67,200	$67,200
Payroll Taxes	$46,170	$51,360	$58,860
Other	$0	$0	$0
	------------	------------	------------
Total Operating Expenses	$470,738	$510,528	$568,028
Profit Before Interest and Taxes	$951,666	$3,905,176	$6,843,176
Interest Expense	$65,506	$51,131	$36,131
Taxes Incurred	$225,583	$963,511	$1,730,124
Net Profit	$660,577	$2,890,534	$5,076,921
Net Profit/Sales	44.04%	64.23%	67.69%

7.5 Projected Cash Flow

This chart and table show our cash flow and cash balance projections.

Cash



Cash Flow

Pro Forma Cash Flow
	2000	2001	2002
Cash Received
Cash from Operations:
Cash Sales	$1,275,000	$3,825,000	$6,375,000
Cash from Receivables	$220,905	$619,810	$1,069,810
Subtotal Cash from Operations	$1,495,905	$4,444,810	$7,444,810
Additional Cash Received
Sales Tax, VAT, HST/GST Received	$0	$0	$0
New Current Borrowing	$0	$0	$0
New Other Liabilities (interest-free)	$0	$0	$0
New Long-term Liabilities	$0	$0	$0
Sales of Other Current Assets	$0	$0	$0
Sales of Long-term Assets	$0	$0	$0
New Investment Received	$0	$0	$0
Subtotal Cash Received	$1,495,905	$4,444,810	$7,444,810
Expenditures	2000	2001	2002
Expenditures from Operations:
Cash Spending	$48,141	$121,571	$194,346
Payment of Accounts Payable	$829,560	$1,438,462	$2,179,741
Subtotal Spent on Operations	$877,701	$1,560,033	$2,374,086
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out	$0	$0	$0
Principal Repayment of Current Borrowing	$0	$0	$0
Other Liabilities Principal Repayment	$0	$0	$0
Long-term Liabilities Principal Repayment	$150,000	$150,000	$150,000
Purchase Other Current Assets	$0	$0	$0
Purchase Long-term Assets	$0	$0	$0
Dividends	$0	$0	$0
Subtotal Cash Spent	$1,027,701	$1,710,033	$2,524,086
Net Cash Flow	$468,204	$2,734,777	$4,920,724
Cash Balance	$580,816	$3,315,593	$8,236,316

7.6 Balance Sheets - Projected

The following table outlines Web Solution's projected balance sheets for fiscal years 2000-2002.

Balance Sheet

Pro Forma Balance Sheet
Assets
Current Assets	2000	2001	2002
Cash	$580,816	$3,315,593	$8,236,316
Accounts Receivable	$27,595	$82,785	$137,975
Other Current Assets	$34,650	$34,650	$34,650
Total Current Assets	$643,061	$3,433,028	$8,408,941
Long-term Assets
Long-term Assets	$331,650	$331,650	$331,650
Accumulated Depreciation	$0	$0	$0
Total Long-term Assets	$331,650	$331,650	$331,650
Total Assets	$974,711	$3,764,678	$8,740,591
Liabilities and Capital
Current Liabilities	2000	2001	2002
Accounts Payable	$32,409	$81,842	$130,835
Current Borrowing	$90,338	$90,338	$90,338
Other Current Liabilities	$90,338	$90,338	$90,338
Subtotal Current Liabilities	$213,084	$262,517	$311,510
Long-term Liabilities	$495,975	$345,975	$195,975
Total Liabilities	$709,059	$608,492	$507,485
Paid-in Capital	$0	$0	$0
Retained Earnings	($394,925)	$265,652	$3,156,186
Earnings	$660,577	$2,890,534	$5,076,921
Total Capital	$265,652	$3,156,186	$8,233,107
Total Liabilities and Capital	$974,711	$3,764,678	$8,740,591
Net Worth	$265,652	$3,156,186	$8,233,107

7.7 Business Ratios

Standard business ratios are shown in this table. Industy Profile ratios are based on Standard Industrial Classification (SIC) Index code 7375.

Ratios

Ratio Analysis
	2000	2001	2002	Industry Profile
Sales Growth	21.21%	200.00%	66.67%	9.70%
Percent of Total Assets
Accounts Receivable	2.83%	2.20%	1.58%	25.00%
Inventory	0.00%	0.00%	0.00%	5.30%
Other Current Assets	3.55%	0.92%	0.40%	46.30%
Total Current Assets	65.97%	91.19%	96.21%	76.60%
Long-term Assets	34.03%	8.81%	3.79%	23.40%
Total Assets	100.00%	100.00%	100.00%	100.00%
Current Liabilities	21.86%	6.97%	3.56%	49.40%
Long-term Liabilities	50.88%	9.19%	2.24%	21.20%
Total Liabilities	72.75%	16.16%	5.81%	70.60%
Net Worth	27.25%	83.84%	94.19%	29.40%
Percent of Sales
Sales	100.00%	100.00%	100.00%	100.00%
Gross Margin	94.83%	98.13%	98.82%	0.00%
Selling, General & Administrative Expenses	50.52%	33.89%	30.75%	78.10%
Advertising Expenses	1.67%	0.56%	0.33%	0.90%
Profit Before Interest and Taxes	63.44%	86.78%	91.24%	1.90%
Main Ratios
Current	3.02	13.08	26.99	1.57
Quick	3.02	13.08	26.99	1.19
Total Debt to Total Assets	72.75%	16.16%	5.81%	70.60%
Pre-tax Return on Net Worth	333.58%	122.11%	82.68%	4.10%
Pre-tax Return on Assets	90.92%	102.37%	77.88%	13.80%
Additional Ratios	2000	2001	2002
Net Profit Margin	44.04%	64.23%	67.69%	n.a
Return on Equity	248.66%	91.58%	61.66%	n.a
Activity Ratios
Accounts Receivable Turnover	8.15	8.15	8.15	n.a
Collection Days	48	30	36	n.a
Inventory Turnover	0.00	0.00	0.00	n.a
Accounts Payable Turnover	24.42	18.18	17.03	n.a
Payment Days	17	14	17	n.a
Total Asset Turnover	1.54	1.20	0.86	n.a
Debt Ratios
Debt to Net Worth	2.67	0.19	0.06	n.a
Current Liab. to Liab.	0.30	0.43	0.61	n.a
Liquidity Ratios
Net Working Capital	$429,977	$3,170,511	$8,097,432	n.a
Interest Coverage	14.53	76.38	189.40	n.a
Additional Ratios
Assets to Sales	0.65	0.84	1.17	n.a
Current Debt/Total Assets	22%	7%	4%	n.a
Acid Test	2.89	12.76	26.55	n.a
Sales/Net Worth	5.65	1.43	0.91	n.a
Dividend Payout	0.00	0.00	0.00	n.a