Ibrio's financials summarize the following areas:
- Important Assumptions.
- Key Financial Indicators.
- Break-even Analysis.
- Projected Profit and Loss.
- Projected Cash Flow.
- Projected Balance Sheet.
- Business Ratios.
7.1 Important Assumptions
Our financial assumptions are based on a steady economy and standard numbers for a business in our industry.
| General Assumptions |
| Plan Month |
1 |
2 |
3 |
| Current Interest Rate |
10.00% |
10.00% |
10.00% |
| Long-term Interest Rate |
13.00% |
13.00% |
13.00% |
| Tax Rate |
25.42% |
25.00% |
25.42% |
| Other |
0 |
0 |
0 |
7.2 Key Financial Indicators
The following chart indicates our key financial indicators over the next three years.
7.3 Break-even Analysis
The following table and chart summarize our break-even analysis. With two developers and two salesmen we plan on developing eight sites in November and once the two new hires are fully trained doubling the number to 16 sites a month. (We don't plan on that happening until March 2001).
The average variable cost is an aggregate measure for all the types of services which will be offered.
| Break-even Analysis |
|
|
| Monthly Revenue Break-even |
$4,649 |
|
|
| Average Percent Variable Cost |
9% |
| Estimated Monthly Fixed Cost |
$4,210 |
7.4 Projected Profit and Loss
Our projected profit and loss is shown on the following table. Some highlights are the Gross Margin at 67% for our first year and steadily increasing. Our Net Profit/Sales starting at 26% and increasing by approximately 10% the following two years to reach 45% by our third year.

| Pro Forma Profit and Loss |
| Direct Cost of Sales |
$15,550 |
$50,000 |
$127,600 |
| Production Payroll |
$38,492 |
$90,000 |
$137,000 |
| Other |
$0 |
$0 |
$0 |
| Total Cost of Sales |
$54,042 |
$140,000 |
$264,600 |
|
|
|
|
| Gross Margin |
$110,478 |
$374,900 |
$929,900 |
| Gross Margin % |
67.15% |
72.81% |
77.85% |
|
|
|
|
|
|
|
|
| Sales and Marketing Payroll |
$30,000 |
$69,000 |
$108,000 |
| Advertising/Promotion |
$2,790 |
$3,500 |
$10,000 |
| Travel |
$1,020 |
$3,000 |
$7,000 |
| Miscellaneous |
$0 |
$1,000 |
$2,500 |
| Total Sales and Marketing Expenses |
$33,810 |
$76,500 |
$127,500 |
| Sales and Marketing % |
20.55% |
14.86% |
10.67% |
|
|
|
|
| General and Administrative Payroll |
$0 |
$0 |
$0 |
| Sales and Marketing and Other Expenses |
$0 |
$0 |
$0 |
| Depreciation |
$3,180 |
$5,000 |
$12,000 |
| Rent |
$4,500 |
$12,000 |
$24,000 |
| Depreciation |
$0 |
$2,000 |
$4,000 |
| Leased Equipment |
$0 |
$0 |
$0 |
| Utilities |
$805 |
$2,000 |
$5,000 |
| Insurance |
$0 |
$2,500 |
$5,000 |
| Payroll Taxes |
$8,219 |
$19,080 |
$29,400 |
| Other General and Administrative Expenses |
$0 |
$0 |
$0 |
| Total General and Administrative Expenses |
$16,704 |
$42,580 |
$79,400 |
| General and Administrative % |
10.15% |
8.27% |
6.65% |
|
|
|
|
| Other Payroll |
$0 |
$0 |
$0 |
| Consultants |
$0 |
$0 |
$0 |
| Contract/Consultants |
$0 |
$0 |
$0 |
| Total Other Expenses |
$0 |
$0 |
$0 |
| Other % |
0.00% |
0.00% |
0.00% |
|
|
|
|
|
|
|
|
| Profit Before Interest and Taxes |
$59,964 |
$255,820 |
$723,000 |
| EBITDA |
$63,144 |
$260,820 |
$735,000 |
| Interest Expense |
$2,600 |
$2,302 |
$1,664 |
| Taxes Incurred |
$14,330 |
$63,380 |
$183,340 |
|
|
|
|
| Net Profit/Sales |
26.16% |
36.93% |
45.04% |
7.5 Projected Cash Flow
Cash flow projections for the first half of the year are slightly declining and in May they begin to raise sufficiently. We may need to borrow against our accounts receivables but are projecting that the initial capital raised should cover us until our cash becomes fluid.

| Pro Forma Cash Flow |
|
|
|
|
| Cash from Operations |
|
|
|
| Cash Sales |
$54,292 |
$169,917 |
$394,185 |
| Cash from Receivables |
$70,969 |
$261,372 |
$638,141 |
| Subtotal Cash from Operations |
$125,260 |
$431,289 |
$1,032,326 |
|
|
|
|
| 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 |
$10,700 |
$0 |
$0 |
| Subtotal Cash Received |
$135,960 |
$431,289 |
$1,032,326 |
|
|
|
|
|
|
|
|
| Expenditures from Operations |
|
|
|
| Cash Spending |
$68,492 |
$159,000 |
$245,000 |
| Bill Payments |
$40,764 |
$156,598 |
$379,881 |
| Subtotal Spent on Operations |
$109,256 |
$315,598 |
$624,881 |
|
|
|
|
| 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 |
$4,589 |
$5,222 |
| Purchase Other Current Assets |
$0 |
$0 |
$0 |
| Purchase Long-term Assets |
$0 |
$20,000 |
$20,000 |
| Dividends |
$0 |
$0 |
$0 |
| Subtotal Cash Spent |
$109,256 |
$340,187 |
$650,103 |
|
|
|
|
| Cash Balance |
$43,704 |
$134,806 |
$517,029 |
7.6 Projected Balance Sheet
The balance sheet in the following table shows managed but sufficient growth of net worth, and a sufficiently healthy financial position. The monthly estimates are included in the appendix.
| Pro Forma Balance Sheet |
|
|
|
|
| Current Assets |
|
|
|
| Cash |
$43,704 |
$134,806 |
$517,029 |
| Accounts Receivable |
$39,260 |
$122,871 |
$285,045 |
| Other Current Assets |
$7,650 |
$7,650 |
$7,650 |
| Total Current Assets |
$90,614 |
$265,327 |
$809,724 |
|
|
|
|
| Long-term Assets |
|
|
|
| Long-term Assets |
$0 |
$20,000 |
$40,000 |
| Accumulated Depreciation |
$3,180 |
$8,180 |
$20,180 |
| Total Long-term Assets |
($3,180) |
$11,820 |
$19,820 |
| Total Assets |
$87,434 |
$277,147 |
$829,544 |
|
|
|
|
|
|
|
|
| Current Liabilities |
|
|
|
| Accounts Payable |
$9,050 |
$13,213 |
$32,836 |
| Current Borrowing |
$0 |
$0 |
$0 |
| Other Current Liabilities |
$0 |
$0 |
$0 |
| Subtotal Current Liabilities |
$9,050 |
$13,213 |
$32,836 |
|
|
|
|
| Long-term Liabilities |
$20,000 |
$15,411 |
$10,189 |
| Total Liabilities |
$29,050 |
$28,624 |
$43,025 |
|
|
|
|
| Paid-in Capital |
$18,000 |
$18,000 |
$18,000 |
| Retained Earnings |
($2,650) |
$40,384 |
$230,523 |
| Earnings |
$43,034 |
$190,139 |
$537,996 |
| Total Capital |
$58,384 |
$248,523 |
$786,519 |
| Total Liabilities and Capital |
$87,434 |
$277,147 |
$829,544 |
|
|
|
|
| Net Worth |
$58,384 |
$248,523 |
$786,519 |
7.7 Business Ratios
The following table shows the projected businesses ratios. We expect to maintain healthy ratios for profitability, risk, and return. The Industry Profile ratios, shown for comparison, are based on Standard Industrial Classification (SIC) code 7375, Information Retrieval Services.

| Ratio Analysis |
| Sales Growth |
0.00% |
212.97% |
131.99% |
9.70% |
|
|
|
|
|
| Accounts Receivable |
44.90% |
44.33% |
34.36% |
25.00% |
| Other Current Assets |
8.75% |
2.76% |
0.92% |
46.30% |
| Total Current Assets |
103.64% |
95.74% |
97.61% |
76.60% |
| Long-term Assets |
-3.64% |
4.26% |
2.39% |
23.40% |
| Total Assets |
100.00% |
100.00% |
100.00% |
100.00% |
|
|
|
|
|
| Current Liabilities |
10.35% |
4.77% |
3.96% |
49.40% |
| Long-term Liabilities |
22.87% |
5.56% |
1.23% |
21.20% |
| Total Liabilities |
33.23% |
10.33% |
5.19% |
70.60% |
| Net Worth |
66.77% |
89.67% |
94.81% |
29.40% |
|
|
|
|
|
| Sales |
100.00% |
100.00% |
100.00% |
100.00% |
| Gross Margin |
67.15% |
72.81% |
77.85% |
0.00% |
| Selling, General & Administrative Expenses |
41.00% |
35.88% |
32.56% |
78.10% |
| Advertising Expenses |
1.70% |
0.68% |
0.84% |
0.90% |
| Profit Before Interest and Taxes |
36.45% |
49.68% |
60.53% |
1.90% |
|
|
|
|
|
| Current |
10.01 |
20.08 |
24.66 |
1.57 |
| Quick |
10.01 |
20.08 |
24.66 |
1.19 |
| Total Debt to Total Assets |
33.23% |
10.33% |
5.19% |
70.60% |
| Pre-tax Return on Net Worth |
98.25% |
102.01% |
91.71% |
4.10% |
| Pre-tax Return on Assets |
65.61% |
91.47% |
86.96% |
13.80% |
|
|
|
|
|
| Net Profit Margin |
26.16% |
36.93% |
45.04% |
n.a |
| Return on Equity |
73.71% |
76.51% |
68.40% |
n.a |
|
|
|
|
|
| Accounts Receivable Turnover |
2.81 |
2.81 |
2.81 |
n.a |
| Collection Days |
54 |
86 |
93 |
n.a |
| Accounts Payable Turnover |
5.50 |
12.17 |
12.17 |
n.a |
| Payment Days |
27 |
25 |
21 |
n.a |
| Total Asset Turnover |
1.88 |
1.86 |
1.44 |
n.a |
|
|
|
|
|
| Debt to Net Worth |
0.50 |
0.12 |
0.05 |
n.a |
| Current Liab. to Liab. |
0.31 |
0.46 |
0.76 |
n.a |
|
|
|
|
|
| Net Working Capital |
$81,564 |
$252,114 |
$776,888 |
n.a |
| Interest Coverage |
23.06 |
111.14 |
434.50 |
n.a |
|
|
|
|
|
| Assets to Sales |
0.53 |
0.54 |
0.69 |
n.a |
| Current Debt/Total Assets |
10% |
5% |
4% |
n.a |
| Acid Test |
5.67 |
10.78 |
15.98 |
n.a |
| Sales/Net Worth |
2.82 |
2.07 |
1.52 |
n.a |
| Dividend Payout |
0.00 |
0.00 |
0.00 |
n.a |