MyHaystack.com

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Electronic Filing Storage Business Plan

Financial Plan

MyHaystack.com generates revenue through a combination of market communications and market intelligence services. These services are sold to MyHaystack.com clients in a business-to-business transaction. Complete financial statements are presented in Appendix A of this business plan.

This financial projection assumes a conservative scenario where early partnerships are not directly resulting in shared users. Adverse market conditions or a failure to execute on the MyHaystack.com business plan could limit the number of client subscriptions, effectively reducing the forecasted revenue. Alternatively, better than anticipated market reception of the MyHaystack.com service, along with a rapid consumer adoption rate, could substantially increase annual revenue.

Revenue is driven by a combination of MyHaystack.com services that include Individual Filings, Dynamic Posting, Online Research Subscriptions, and Market Research Report Subscriptions. This analysis does not include the potential for additional revenue based on third party licensing agreements, commission generated through the sale of products and services to consumers, or other revenue that is not a core focus of the MyHaystack.com business model.

**Appendices not available for this sample plan.

7.1 Important Assumptions

The following table shows some of our important financial assumptions.

General Assumptions
Year 1 Year 2 Year 3
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%
Other 0 0 0

7.2 Break-even Analysis

Preliminary financial forecasts project a break-even point beyond year 3 of operations, the limit of the detailed financial forecast. Assuming consistent growth, break-even will occur during Q3 of year 4 of operations. However, market fluctuations, changes in the competitive environment, or a failure to effectively execute on the MyHaystack.com business strategy could further delay the break-even point.

An alternative, and more likely, scenario is that rapid expansion of the industry and rapid growth of MyHaystack.com will drive additional expenditures on customer acquisition, marketing, and product development. While these expenditures have the potential to substantially increase revenue and solidify MyHaystack.com as a leader in the online market research industry, they may also serve to further delay the break-even point.

Break-even Analysis
Monthly Revenue Break-even $359,608
Assumptions:
Average Percent Variable Cost 70%
Estimated Monthly Fixed Cost $107,882

7.3 Business Ratios

The following table contains important business ratios. The Industry Profile column presents ratios as described by the Standard Industry Classification (SIC) Index code 8732, Marketing Research and Public Opinion Polling.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 6580.14% 515.86% 8.26%
Percent of Total Assets
Accounts Receivable 0.14% 2.56% 5.01% 23.16%
Other Current Assets 0.36% 0.10% 0.03% 50.04%
Total Current Assets 96.91% 98.56% 99.57% 76.51%
Long-term Assets 3.09% 1.44% 0.43% 23.49%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 4.75% 1.42% 1.29% 36.68%
Long-term Liabilities 0.00% 0.00% 0.00% 20.02%
Total Liabilities 4.75% 1.42% 1.29% 56.70%
Net Worth 95.25% 98.58% 98.71% 43.30%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 30.00% 45.21% 55.57% 100.00%
Selling, General & Administrative Expenses 9059.77% 477.51% 125.12% 76.67%
Advertising Expenses 3706.18% 297.17% 75.76% 1.56%
Profit Before Interest and Taxes -6853.18% -106.97% 23.77% 1.30%
Main Ratios
Current 20.41 69.29 77.22 1.48
Quick 20.41 69.29 77.22 1.13
Total Debt to Total Assets 4.75% 1.42% 1.29% 63.55%
Pre-tax Return on Net Worth -48.20% -13.53% 5.88% 3.70%
Pre-tax Return on Assets -45.91% -13.34% 5.80% 10.14%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -6853.18% -106.97% 17.73% n.a
Return on Equity -48.20% -13.53% 4.38% n.a
Activity Ratios
Accounts Receivable Turnover 4.87 4.87 4.87 n.a
Collection Days 57 38 44 n.a
Accounts Payable Turnover 6.83 12.17 12.17 n.a
Payment Days 27 29 20 n.a
Total Asset Turnover 0.01 0.12 0.24 n.a
Debt Ratios
Debt to Net Worth 0.05 0.01 0.01 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $2,587,443 $9,784,986 $31,166,841 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 149.26 8.02 4.10 n.a
Current Debt/Total Assets 5% 1% 1% n.a
Acid Test 20.38 67.49 73.33 n.a
Sales/Net Worth 0.01 0.13 0.25 n.a
Dividend Payout 0.00 0.00 0.00 n.a

7.4 Projected Profit and Loss

MyHaystack.com is positioned as an early entrant into the rapidly growing market for online consumer research. As such, MyHaystack.com expects to enjoy significant first-mover advantages. However, the company expects to incur substantive losses during the first three years of operations. These losses reflect the initial investment necessary to establish a strong market position. This market position will serve as a strategic advantage and a potential barrier to entry as the industry expands. Once the industry matures, the company has the ability to garner additional revenue from the MyHaystack.com client base.

The following table shows our projected Profit and Loss for the next three years.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $18,808 $1,256,400 $7,737,661
Direct Cost of Sales $13,166 $688,349 $3,437,650
Other $0 $0 $0
Total Cost of Sales $13,166 $688,349 $3,437,650
Gross Margin $5,642 $568,051 $4,300,011
Gross Margin % 30.00% 45.21% 55.57%
Expenses
Payroll $385,476 $798,508 $1,288,210
Marketing/Promotion $855,223 $1,000,000 $1,000,000
Depreciation $11,889 $58,542 $102,667
Utilities $6,000 $10,000 $15,000
Insurance $18,000 $20,000 $25,000
Rent $18,000 $25,000 $30,000
Payroll Taxes $0 $0 $0
Other $0 $0 $0
Total Operating Expenses $1,294,588 $1,912,050 $2,460,877
Profit Before Interest and Taxes ($1,288,946) ($1,343,999) $1,839,134
EBITDA ($1,277,057) ($1,285,457) $1,941,801
Interest Expense $0 $0 $0
Taxes Incurred $0 $0 $467,447
Net Profit ($1,288,946) ($1,343,999) $1,371,687
Net Profit/Sales -6853.18% -106.97% 17.73%

7.5 Cash Flow

The following chart and table outline anticipated cash flow for MyHaystack.com. The table contains yearly projections; for a monthly analysis, please see table appendix at the end of this plan.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $0 $0 $0
Cash from Receivables $14,944 $1,002,122 $6,406,007
Subtotal Cash from Operations $14,944 $1,002,122 $6,406,007
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 $3,500,000 $8,600,000 $20,000,000
Subtotal Cash Received $3,514,944 $9,602,122 $26,406,007
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $385,476 $798,508 $1,288,210
Bill Payments $777,073 $1,733,376 $4,709,473
Subtotal Spent on Operations $1,162,549 $2,531,884 $5,997,683
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 $0 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $98,500 $117,000 $92,500
Dividends $0 $0 $0
Subtotal Cash Spent $1,261,049 $2,648,884 $6,090,183
Net Cash Flow $2,253,895 $6,953,238 $20,315,823
Cash Balance $2,706,895 $9,660,133 $29,975,956

7.6 Balance Sheet

The following table presents the Balance Sheet for MyHaystack.com.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $2,706,895 $9,660,133 $29,975,956
Accounts Receivable $3,864 $258,143 $1,589,797
Other Current Assets $10,000 $10,000 $10,000
Total Current Assets $2,720,759 $9,928,275 $31,575,753
Long-term Assets
Long-term Assets $98,500 $215,500 $308,000
Accumulated Depreciation $11,889 $70,431 $173,098
Total Long-term Assets $86,611 $145,069 $134,902
Total Assets $2,807,370 $10,073,344 $31,710,655
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $133,316 $143,289 $408,912
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $133,316 $143,289 $408,912
Long-term Liabilities $0 $0 $0
Total Liabilities $133,316 $143,289 $408,912
Paid-in Capital $4,000,000 $12,600,000 $32,600,000
Retained Earnings ($37,000) ($1,325,946) ($2,669,945)
Earnings ($1,288,946) ($1,343,999) $1,371,687
Total Capital $2,674,054 $9,930,055 $31,301,743
Total Liabilities and Capital $2,807,370 $10,073,344 $31,710,655
Net Worth $2,674,054 $9,930,055 $31,301,743