The statements incorporate two rounds of venture capital investments of $2.6 million total, plus access to additional $1.4 million for cash flow purposes. The statements do not include any funds raised during the proposed IPO. Any revenues from advertising, affinity, consulting, and partnership programs were omitted. Year-end is December 31.
10.1 Projected Cash Flow
The following chart shows monthly cash balance and cash flow. The table shows the expected cash flow for the first twelve months of operation, with yearly estimates thereafter. Capital expenditures include computer equipment and technology & software investment:
- Computer Equipment: represents 20% of the current fixed corporate costs. In 2000, it represents $80,000 from the fixed corporate costs.
- Technology & Software Investment: represents 50% of the current fixed technology costs. In 2000, it represents the $1.3 million of the fixed technology costs.
10.2 Break-even Analysis
The following table shows our estimated monthly break-even point to be approximately $222,000
10.3 Important Assumptions
The table below contains assumptions important to the financial success of the company.
10.4 Projected Profit and Loss
The table below shows the profit and loss statement for NoHassleReturn.com. The itemized costs for fixed technology, corporate and advertising are reflected in the sales and marketing row in the table:
- Fixed Technology Costs: represents a percentage of revenues allocation for all fixed computer and Internet-related developments and charges. In 2000, $800,000 is allocated for the proprietary software development, $300,000 for the website design, and $200,000 for systems integration.
- Fixed Corporate Costs: represent a percentage of revenues allocation for all fixed corporate cost associated with office related charges. In 2000, $200,000 is allocated for initial sales force hire, $50,000 is allocated for hiring and training expenses, and another $150,000 is allocated for the office setup and purchase/lease of necessary computer equipment and infrastructure.
- Advertising: represents a percentage of revenues allocation for advertising in all media. In 2000, $250,000 is allocated for the industrial marketing campaign. In the subsequent years, the much larger budgets include allocations for TV advertising.
- Sales & Marketing: represents a percentage of revenues allocation for marketing and selling activities, including commissions paid on sales. In 2000, $200,000 is allocated for the initial sales and marketing related activities.
- Research and Development: represents a percentage of revenues allocation for R&D activities. In 2000, $200,000 is allocated for testing and fine-tuning of the computer systems and programs.
- General & Administrative: represents a percentage of revenues allocation for expenses associated with running a corporation. In 2000, $20,000 is expensed against the initial set-up, legal and accounting fees, etc.
- Depreciation: represents a depreciation on all capital investment; straight-line depreciation over 20 years.
10.5 Projected Balance Sheet
The Balance Sheet shows solid growth in both sales and net worth.
10.6 Business Ratios
The following table presents important business ratios for the business services industry, as determined by the Standard Industry Classification (SIC) Index code 7389, Business Services, nec (not elsewhere classified).