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Third Degree I.D.

Appendix

Sales Forecast
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales
New Curriculum & Content Development 0% $10,000 $20,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $40,000 $40,000 $40,000
Reuse, Re-licensure and Maintenance 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Learning Object Development 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Training 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Consulting 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Services 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Sales $10,000 $20,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $40,000 $40,000 $40,000
Direct Cost of Sales Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Software packaging 5% $500 $1,000 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $2,000 $2,000 $2,000
Other Services $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Direct Cost of Sales $500 $1,000 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $2,000 $2,000 $2,000
Personnel Plan
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Susan Hines (CEO) 0% $6,250 $6,250 $6,250 $6,250 $6,250 $6,250 $6,250 $6,250 $6,250 $6,250 $6,250 $6,250
Mona Meyer (CLO) 0% $6,250 $6,250 $6,250 $6,250 $6,250 $6,250 $6,250 $6,250 $6,250 $6,250 $6,250 $6,250
Danny Stanford (CCO) 0% $6,250 $6,250 $6,250 $6,250 $6,250 $6,250 $6,250 $6,250 $6,250 $6,250 $6,250 $6,250
Instructional Designer 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Production Assistant 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Director of Technology 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total People 3 3 3 3 3 3 3 3 3 3 3 3
Total Payroll $18,750 $18,750 $18,750 $18,750 $18,750 $18,750 $18,750 $18,750 $18,750 $18,750 $18,750 $18,750

General Assumptions
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Plan Month 1 2 3 4 5 6 7 8 9 10 11 12
Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%
Other 0 0 0 0 0 0 0 0 0 0 0 0

Pro Forma Profit and Loss
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales $10,000 $20,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $40,000 $40,000 $40,000
Direct Cost of Sales $500 $1,000 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $2,000 $2,000 $2,000
Other Costs of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $500 $1,000 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $2,000 $2,000 $2,000
Gross Margin $9,500 $19,000 $28,500 $28,500 $28,500 $28,500 $28,500 $28,500 $28,500 $38,000 $38,000 $38,000
Gross Margin % 95.00% 95.00% 95.00% 95.00% 95.00% 95.00% 95.00% 95.00% 95.00% 95.00% 95.00% 95.00%
Expenses
Payroll $18,750 $18,750 $18,750 $18,750 $18,750 $18,750 $18,750 $18,750 $18,750 $18,750 $18,750 $18,750
Sales and Marketing and Other Expenses $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500
Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Rent $200 $200 $200 $200 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Utilities $50 $50 $50 $50 $100 $100 $100 $100 $100 $100 $100 $100
Insurance $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300
Payroll Taxes 15% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Consultants $6,250 $6,250 $6,250 $6,250 $6,250 $6,250 $6,250 $6,250 $6,250 $6,250 $6,250 $6,250
Telecommunications $150 $150 $150 $150 $250 $250 $250 $250 $250 $250 $250 $250
Business Travel $250 $250 $250 $250 $500 $500 $500 $500 $500 $500 $500 $500
Moving Expenses/Redecorating 15% $0 $0 $0 $1,000 $0 $0 $0 $0 $0 $0 $0 $0
Other $200 $200 $200 $200 $500 $500 $500 $500 $500 $500 $500 $500
Total Operating Expenses $26,650 $26,650 $26,650 $27,650 $28,150 $28,150 $28,150 $28,150 $28,150 $28,150 $28,150 $28,150
Profit Before Interest and Taxes ($17,150) ($7,650) $1,850 $850 $350 $350 $350 $350 $350 $9,850 $9,850 $9,850
EBITDA ($17,150) ($7,650) $1,850 $850 $350 $350 $350 $350 $350 $9,850 $9,850 $9,850
Interest Expense $240 $229 $219 $208 $198 $188 $177 $167 $156 $146 $135 $125
Taxes Incurred ($5,217) ($2,364) $489 $192 $46 $49 $52 $55 $58 $2,911 $2,914 $2,918
Net Profit ($12,173) ($5,515) $1,142 $449 $106 $114 $121 $128 $136 $6,793 $6,800 $6,808
Net Profit/Sales -121.73% -27.58% 3.81% 1.50% 0.35% 0.38% 0.40% 0.43% 0.45% 16.98% 17.00% 17.02%

Pro Forma Cash Flow
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Cash Received
Cash from Operations
Cash Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Cash from Receivables $0 $333 $10,333 $20,333 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,333 $40,000
Subtotal Cash from Operations $0 $333 $10,333 $20,333 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,333 $40,000
Additional Cash Received
Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Received $0 $333 $10,333 $20,333 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,333 $40,000
Expenditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Expenditures from Operations
Cash Spending $18,750 $18,750 $18,750 $18,750 $18,750 $18,750 $18,750 $18,750 $18,750 $18,750 $18,750 $18,750
Bill Payments $114 $3,534 $6,877 $10,131 $10,812 $11,143 $11,136 $11,129 $11,121 $11,226 $14,457 $14,450
Subtotal Spent on Operations $18,864 $22,284 $25,627 $28,881 $29,562 $29,893 $29,886 $29,879 $29,871 $29,976 $33,207 $33,200
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal Repayment of Current Borrowing $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250
Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Spent $20,114 $23,534 $26,877 $30,131 $30,812 $31,143 $31,136 $31,129 $31,121 $31,226 $34,457 $34,450
Net Cash Flow ($20,114) ($23,201) ($16,544) ($9,798) ($812) ($1,143) ($1,136) ($1,129) ($1,121) ($1,226) ($4,124) $5,550
Cash Balance $95,962 $72,761 $56,218 $46,420 $45,607 $44,464 $43,328 $42,199 $41,078 $39,852 $35,729 $41,279
Pro Forma Balance Sheet
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Assets Starting Balances
Current Assets
Cash $116,076 $95,962 $72,761 $56,218 $46,420 $45,607 $44,464 $43,328 $42,199 $41,078 $39,852 $35,729 $41,279
Accounts Receivable $0 $10,000 $29,667 $49,333 $59,000 $59,000 $59,000 $59,000 $59,000 $59,000 $69,000 $78,667 $78,667
Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Current Assets $116,076 $105,962 $102,428 $105,551 $105,420 $104,607 $103,464 $102,328 $101,199 $100,078 $108,852 $114,395 $119,946
Long-term Assets
Long-term Assets $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000
Accumulated Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Long-term Assets $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000
Total Assets $129,076 $118,962 $115,428 $118,551 $118,420 $117,607 $116,464 $115,328 $114,199 $113,078 $121,852 $127,395 $132,946
Liabilities and Capital Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Current Liabilities
Accounts Payable $0 $3,309 $6,540 $9,771 $10,441 $10,772 $10,765 $10,758 $10,751 $10,744 $13,975 $13,968 $13,961
Current Borrowing $30,000 $28,750 $27,500 $26,250 $25,000 $23,750 $22,500 $21,250 $20,000 $18,750 $17,500 $16,250 $15,000
Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Current Liabilities $30,000 $32,059 $34,040 $36,021 $35,441 $34,522 $33,265 $32,008 $30,751 $29,494 $31,475 $30,218 $28,961
Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Liabilities $30,000 $32,059 $34,040 $36,021 $35,441 $34,522 $33,265 $32,008 $30,751 $29,494 $31,475 $30,218 $28,961
Paid-in Capital $105,000 $105,000 $105,000 $105,000 $105,000 $105,000 $105,000 $105,000 $105,000 $105,000 $105,000 $105,000 $105,000
Retained Earnings ($5,924) ($5,924) ($5,924) ($5,924) ($5,924) ($5,924) ($5,924) ($5,924) ($5,924) ($5,924) ($5,924) ($5,924) ($5,924)
Earnings $0 ($12,173) ($17,688) ($16,546) ($16,097) ($15,991) ($15,877) ($15,756) ($15,628) ($15,492) ($8,699) ($1,899) $4,909
Total Capital $99,076 $86,903 $81,388 $82,530 $82,979 $83,085 $83,199 $83,320 $83,449 $83,584 $90,377 $97,177 $103,985
Total Liabilities and Capital $129,076 $118,962 $115,428 $118,551 $118,420 $117,607 $116,464 $115,328 $114,199 $113,078 $121,852 $127,395 $132,946
Net Worth $99,076 $86,903 $81,388 $82,530 $82,979 $83,085 $83,199 $83,320 $83,448 $83,584 $90,377 $97,177 $103,985