Heavy Lifting, Inc.
Financial Plan
The business is expected to grow annually at 100-200%. The growth is self-funding after the initial period gaining Government approval by FAA US. The growth rate is restricted by the need to maintain quality of product.
7.1 Valuation
For an initial investment of $1,000,000, an outside investor will receive 20% of the initial shares of Heaving Lifting, Inc., substantial dividends by 2010, and a buy-out option when the company goes public (in 2010 or 2011). We project a sales-based valuation of the company over $480,000,000 in 2010. This number could be substantially higher if the consumer demand for mandatory weigh bridges on all commercial flights in Asia and Europe matches the likely demand in the U.S. With an ending valuation on the initial outside investment of $96.1 Million, this represents an IRR of 91%.
Investment Analysis | ||||||
Start | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
Initial Investment | ||||||
Investment | $1,000,000 | $0 | $0 | $0 | $0 | $0 |
Dividends | $0 | $0 | $0 | $7,000,000 | $15,000,000 | $25,000,000 |
Ending Valuation | $0 | $0 | $0 | $0 | $0 | $96,160,000 |
Combination as Income Stream | ($1,000,000) | $0 | $0 | $7,000,000 | $15,000,000 | $121,160,000 |
Percent Equity Acquired | 20% | |||||
Net Present Value (NPV) | $3,872,003 | |||||
Internal Rate of Return (IRR) | 91% | |||||
Assumptions | ||||||
Discount Rate | 10.00% | |||||
Valuation Earnings Multiple | 10 | 10 | 10 | 10 | 10 | |
Valuation Sales Multiple | 2 | 2 | 2 | 2 | 2 | |
Investment (calculated) | $2,000,000 | $0 | $0 | $0 | $0 | $0 |
Dividends | $0 | $0 | $7,000,000 | $15,000,000 | $25,000,000 | |
Calculated Earnings-based Valuation | $880,000 | $57,020,000 | $122,240,000 | $248,520,000 | $480,800,000 | |
Calculated Sales-based Valuation | $8,010,000 | $94,100,000 | $128,140,000 | $252,260,000 | $480,500,000 | |
Calculated Average Valuation | $4,445,000 | $75,560,000 | $125,190,000 | $250,390,000 | $480,650,000 |
7.2 Important Assumptions
The financial plan depends on important assumptions, most of which are shown in the following table. They key underlying assumptions are:
- Growth of 100-200% per annum.
- Marketing coup by product uniqueness and speed of entry.
- Limited initial competition.
- Stable costs.
General Assumptions | |||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
Plan Month | 1 | 2 | 3 | 4 | 5 |
Current Interest Rate | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% |
Long-term Interest Rate | 9.17% | 0.00% | 10.00% | 10.00% | 10.00% |
Tax Rate | 33.00% | 33.00% | 33.00% | 33.00% | 33.00% |
Sales Tax | 9 | 0 | 0 | 0 | 9 |
7.3 Break-even Analysis
In the start-up period we will build up to two (2) Heavy Lifting weigh bridges. The first two (2) units, in CA and Dublin will be used for trial as well as operational purposes. The Heavy Lifting systems will be at:
- San Diego International Airport (1)
- Dublin, Ireland (1)
These two, along with two Heavy Lifting outside-manufactured weigh bridges, will be sold in the first year. The Break-even table, below, reflects the fact that we do not expect to be profitable until the second year.

Break-even Analysis | |
Monthly Revenue Break-even | $236,541 |
Assumptions: | |
Average Percent Variable Cost | 65% |
Estimated Monthly Fixed Cost | $82,866 |
7.4 Projected Profit and Loss
Profits are expected to be in line with sales forecasts, per annum, after the first year of operations (2 years from start-up). This profit level relies on an expanding market and increasing sales. We are confident that we will meet these high sales goals after the first year, as publicity about our first weigh bridges brings us new customers and initiates a public safety (and international security) debate about aircraft weight laws and enforcement.
Overhead costs for the first year of operations consists of:
- Office space based on current property leasing rates. Office space sufficient for CEO office, Office manager office, Board room, Communications and printing room, Project manager office space, and tea and coffee making facilities.
- CEO salary package including executive health insurance, term life insurance ($250,000) and comprehensive world travel insurance $200,000 plus travel (Flight and rental car), accommodation (Marriott/Hyatt or equivalent hotels and food expenses. Estimate based on two business class flights to San Diego per month, accommodation for up to 10 days per month and food at $100 per day. Domestic travel (Flight and rental car), accommodation Marriott Hotels or equivalent) and food ($100 per day).
- Technical director expenses. Travel (Flight and rental car costs), accommodation (Marriott or equivalent) and food expenses as required. Estimate based on one business class flight between Gold Coast City and San Diego per month, accommodation for up to 10 days per month and food at $100 per day. Domestic business class travel (Flight cost), accommodation costs (Marriott Hotel or equivalent) and food costs (100 per day) in San Diego estimated at up to 5 days per month.
- Project director fees charged on a consultant basis at cost plus expenses.
- Legal services director fees charged on an advisory basis at cost plus expenses.
- Research & Development costs for software development.
- Office staff consisting of Office manager based on current salaries in Gold Coast City, $75,000 plus benefits: Medi bank private; parking and pension plan (Over ten years service).
- Software engineer at $100,000/year.
- Office equipment consisting of furniture and furnishings, computer equipment, office equipment including, scanner, copier, printer, facsimile phone system and office computer network.
- Office cubicle space for project management, technical management and software engineer.
- Tea and coffee making facilities.
- Stationery and office supplies sufficient for annual production of reports, letters, papers, power point presentations, regulations library (Digital), technical data library (Digital) and online conferences and presentations.
- Heavy Lifting database server and mass storage equipment including secure backup and power loss system.
- Office security system (Response alarm).




Pro Forma Profit and Loss | |||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
Sales | $4,006,000 | $47,050,000 | $64,070,000 | $126,130,000 | $240,250,000 |
Direct Cost of Sales | $2,602,600 | $35,250,000 | $41,645,500 | $81,900,000 | $156,000,000 |
Manufacturing costs | $192,000 | $2,256,000 | $3,072,000 | $6,040,000 | $11,400,000 |
Total Cost of Sales | $2,794,600 | $37,506,000 | $44,717,500 | $87,940,000 | $167,400,000 |
Gross Margin | $1,211,400 | $9,544,000 | $19,352,500 | $38,190,000 | $72,850,000 |
Gross Margin % | 30.24% | 20.28% | 30.21% | 30.28% | 30.32% |
Expenses | |||||
Payroll | $922,488 | $955,000 | $955,000 | $955,000 | $955,000 |
Sales and Marketing and Other Expenses | $20,400 | $20,000 | $20,000 | $20,000 | $20,000 |
Depreciation | $36,000 | $36,000 | $36,000 | $36,000 | $36,000 |
Leased Equipment | $5,004 | $5,000 | $5,000 | $5,000 | $5,000 |
Rent and Utilities | $10,500 | $18,000 | $18,000 | $18,000 | $18,000 |
Payroll Taxes | $0 | $0 | $0 | $0 | $0 |
Other | $0 | $0 | $0 | $0 | $0 |
Total Operating Expenses | $994,392 | $1,034,000 | $1,034,000 | $1,034,000 | $1,034,000 |
Profit Before Interest and Taxes | $217,008 | $8,510,000 | $18,318,500 | $37,156,000 | $71,816,000 |
EBITDA | $253,008 | $8,546,000 | $18,354,500 | $37,192,000 | $71,852,000 |
Interest Expense | $86,263 | $0 | $74,155 | $64,155 | $54,155 |
Taxes Incurred | $43,146 | $2,808,300 | $6,020,634 | $12,240,309 | $23,681,409 |
Net Profit | $87,599 | $5,701,700 | $12,223,711 | $24,851,536 | $48,080,436 |
Net Profit/Sales | 2.19% | 12.12% | 19.08% | 19.70% | 20.01% |
7.5 Projected Cash Flow
This business plan cash flows positively due to the fact that customers pay 50% of the price in advance. The balance is payable on completion, net 30 days.
As the contractors are paid progress payments for work completed, the cash flow will always remain positive without the need for borrowing.
For those sales subject to finance, a separate business plan is required.

Pro Forma Cash Flow | |||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
Cash Received | |||||
Cash from Operations | |||||
Cash Sales | $3,000,000 | $47,000,000 | $64,000,000 | $126,000,000 | $240,000,000 |
Cash from Receivables | $1,004,000 | $51,901 | $69,961 | $129,880 | $249,762 |
Subtotal Cash from Operations | $4,004,000 | $47,051,901 | $64,069,960 | $126,129,881 | $240,249,761 |
Additional Cash Received | |||||
Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 | $0 | $0 |
New Current Borrowing | $0 | $0 | $0 | $0 | $0 |
New Other Liabilities (interest-free) | $0 | $0 | $0 | $0 | $0 |
New Long-term Liabilities | $0 | $0 | $0 | $0 | $0 |
Sales of Other Current Assets | $0 | $0 | $0 | $0 | $0 |
Sales of Long-term Assets | $0 | $0 | $0 | $0 | $0 |
New Investment Received | $0 | $0 | $0 | $0 | $0 |
Subtotal Cash Received | $4,004,000 | $47,051,901 | $64,069,960 | $126,129,881 | $240,249,761 |
Expenditures | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
Expenditures from Operations | |||||
Cash Spending | $922,488 | $955,000 | $955,000 | $955,000 | $955,000 |
Bill Payments | $2,937,634 | $37,087,541 | $49,992,440 | $96,224,545 | $183,708,062 |
Subtotal Spent on Operations | $3,860,122 | $38,042,541 | $50,947,440 | $97,179,545 | $184,663,062 |
Additional Cash Spent | |||||
Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 | $0 | $0 |
Principal Repayment of Current Borrowing | $0 | $0 | $0 | $0 | $0 |
Other Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 |
Long-term Liabilities Principal Repayment | $99,000 | $100,000 | $100,000 | $100,000 | $100,000 |
Purchase Other Current Assets | $0 | $0 | $0 | $0 | $0 |
Purchase Long-term Assets | $0 | $0 | $0 | $0 | $0 |
Dividends | $0 | $0 | $7,000,000 | $15,000,000 | $25,000,000 |
Subtotal Cash Spent | $3,959,122 | $38,142,541 | $58,047,440 | $112,279,545 | $209,763,062 |
Net Cash Flow | $44,878 | $8,909,360 | $6,022,520 | $13,850,335 | $30,486,699 |
Cash Balance | $2,344,878 | $11,254,238 | $17,276,758 | $31,127,093 | $61,613,792 |
7.6 Projected Balance Sheet
The table below presents the balance sheet for Heavy Lifting, Inc. This table reflects a positive cash position throughout the period of this financial plan and dramatic growth in net worth.
Pro Forma Balance Sheet | |||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
Assets | |||||
Current Assets | |||||
Cash | $2,344,878 | $11,254,238 | $17,276,758 | $31,127,093 | $61,613,792 |
Accounts Receivable | $2,000 | $99 | $139 | $259 | $497 |
Other Current Assets | $250,000 | $250,000 | $250,000 | $250,000 | $250,000 |
Total Current Assets | $2,596,878 | $11,504,338 | $17,526,897 | $31,377,352 | $61,864,289 |
Long-term Assets | |||||
Long-term Assets | $400,000 | $400,000 | $400,000 | $400,000 | $400,000 |
Accumulated Depreciation | $36,000 | $72,000 | $108,000 | $144,000 | $180,000 |
Total Long-term Assets | $364,000 | $328,000 | $292,000 | $256,000 | $220,000 |
Total Assets | $2,960,878 | $11,832,338 | $17,818,897 | $31,633,352 | $62,084,289 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
Current Liabilities | |||||
Accounts Payable | $47,279 | $3,317,038 | $4,179,887 | $8,242,805 | $15,713,307 |
Current Borrowing | $0 | $0 | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 | $0 | $0 |
Subtotal Current Liabilities | $47,279 | $3,317,038 | $4,179,887 | $8,242,805 | $15,713,307 |
Long-term Liabilities | $891,550 | $791,550 | $691,550 | $591,550 | $491,550 |
Total Liabilities | $938,829 | $4,108,588 | $4,871,437 | $8,834,355 | $16,204,857 |
Paid-in Capital | $2,000,000 | $2,000,000 | $2,000,000 | $2,000,000 | $2,000,000 |
Retained Earnings | ($65,550) | $22,049 | ($1,276,251) | ($4,052,540) | ($4,201,003) |
Earnings | $87,599 | $5,701,700 | $12,223,711 | $24,851,536 | $48,080,436 |
Total Capital | $2,022,049 | $7,723,749 | $12,947,460 | $22,798,997 | $45,879,433 |
Total Liabilities and Capital | $2,960,878 | $11,832,338 | $17,818,897 | $31,633,352 | $62,084,289 |
Net Worth | $2,022,049 | $7,723,749 | $12,947,460 | $22,798,997 | $45,879,433 |
7.7 Business Ratios
The following table outlines some of the more important ratios from the Other Airport Operations industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the NAICS Industry Classification code, 488119.
Ratio Analysis | ||||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Industry Profile | |
Sales Growth | 0.00% | 1074.49% | 36.17% | 96.86% | 90.48% | 11.53% |
Percent of Total Assets | ||||||
Accounts Receivable | 0.07% | 0.00% | 0.00% | 0.00% | 0.00% | 20.03% |
Other Current Assets | 8.44% | 2.11% | 1.40% | 0.79% | 0.40% | 28.06% |
Total Current Assets | 87.71% | 97.23% | 98.36% | 99.19% | 99.65% | 52.69% |
Long-term Assets | 12.29% | 2.77% | 1.64% | 0.81% | 0.35% | 47.31% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 1.60% | 28.03% | 23.46% | 26.06% | 25.31% | 27.08% |
Long-term Liabilities | 30.11% | 6.69% | 3.88% | 1.87% | 0.79% | 21.42% |
Total Liabilities | 31.71% | 34.72% | 27.34% | 27.93% | 26.10% | 48.50% |
Net Worth | 68.29% | 65.28% | 72.66% | 72.07% | 73.90% | 51.50% |
Percent of Sales | ||||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 30.24% | 20.28% | 30.21% | 30.28% | 30.32% | 44.67% |
Selling, General & Administrative Expenses | 0.00% | 85.78% | 76.98% | 0.00% | 0.00% | 24.70% |
Advertising Expenses | 0.00% | 62.07% | 52.09% | 0.00% | 0.00% | 0.44% |
Profit Before Interest and Taxes | 5.42% | 18.09% | 28.59% | 29.46% | 29.89% | 0.57% |
Main Ratios | ||||||
Current | 54.93 | 3.47 | 4.19 | 3.81 | 3.94 | 1.65 |
Quick | 54.93 | 3.47 | 4.19 | 3.81 | 3.94 | 1.32 |
Total Debt to Total Assets | 31.71% | 34.72% | 27.34% | 27.93% | 26.10% | 65.98% |
Pre-tax Return on Net Worth | 6.47% | 110.18% | 140.91% | 162.69% | 156.41% | 0.78% |
Pre-tax Return on Assets | 4.42% | 71.92% | 102.39% | 117.26% | 115.59% | 2.29% |
Additional Ratios | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
Net Profit Margin | 2.19% | 12.12% | 19.08% | 19.70% | 20.01% | n.a |
Return on Equity | 4.33% | 73.82% | 94.41% | 109.00% | 104.80% | n.a |
Activity Ratios | ||||||
Accounts Receivable Turnover | 502.88 | 502.88 | 502.88 | 502.88 | 502.88 | n.a |
Collection Days | 60 | 8 | 1 | 1 | 1 | n.a |
Accounts Payable Turnover | 62.61 | 12.17 | 12.17 | 12.17 | 12.17 | n.a |
Payment Days | 31 | 15 | 27 | 23 | 23 | n.a |
Total Asset Turnover | 1.35 | 3.98 | 3.60 | 3.99 | 3.87 | n.a |
Debt Ratios | ||||||
Debt to Net Worth | 0.46 | 0.53 | 0.38 | 0.39 | 0.35 | n.a |
Current Liab. to Liab. | 0.05 | 0.81 | 0.86 | 0.93 | 0.97 | n.a |
Liquidity Ratios | ||||||
Net Working Capital | $2,549,599 | $8,187,299 | $13,347,010 | $23,134,547 | $46,150,983 | n.a |
Interest Coverage | 2.52 | 0.00 | 247.03 | 579.16 | 1,326.12 | n.a |
Additional Ratios | ||||||
Assets to Sales | 0.74 | 0.25 | 0.28 | 0.25 | 0.26 | n.a |
Current Debt/Total Assets | 2% | 28% | 23% | 26% | 25% | n.a |
Acid Test | 54.88 | 3.47 | 4.19 | 3.81 | 3.94 | n.a |
Sales/Net Worth | 1.98 | 6.09 | 4.95 | 5.53 | 5.24 | n.a |
Dividend Payout | 0.00 | 0.00 | 0.57 | 0.60 | 0.52 | n.a |