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Candlelight Cichlid Breeders

Executive Summary

The Company
Candlelight Cichlid Breeders (CCB) will provide hard to find tropical fish to aquarists who do not have access to these fish through local pet stores.  CCB will ship live fish to its customers’ doors anywhere in the continental United States within one to two days.  CCB will also provide fish to tropical fish retailers within the local area.  CCB will provide convenience and variety not found in the traditional tropical fish selling industry.

Candlelight Cichlid Breeders’ assets will consist of livestock watering troughs and aquariums.  The tanks and troughs will be enclosed within an insulated steel building.

CCB will be a sole proprietorship, owned by the founder, Shawn Halsey.  Mr. Halsey plans to operate the business completely by himself for the first two years.  As sales increase, he will bring on a general assistant to help with all aspects of operations.

The Product
Candlelight Cichlid Breeders will provide rare tropical fish from the family Cichlidae.  These fish are known for their colorful appearance and interesting and agressive behavior.  Up to 30 separate cichlid species will be bred by CCB, in addition CCB will import fish that do not readily breed in captivity.

As CCB grows we plan to offer live plants, more types of unusual cichlids, newly discovered species of South American catfish, and possibly some of the more common cichlid species.  We do not plan to offer sales outside of the U.S.

The Market
Research has shown that fish keeping is the second most popular hobby (behind photography) in the U.S.  We conservatively estimate that by the end of this year there will be approximately seven million Internet users who live in the continental U.S.  and own an aquarium.  We estimate that 5% (350,000) of these users will view our site in one year’s time and that 2.5% (8,750) of those potential customers will actually buy fish. 

What creates such an opportunity for CCB is that most people do not have access to retail fish shops that regularly carry a large number of different cichlid species.  Some of the most beautiful and interesting cichlids cannot be found in these shops at all.  Furthermore, the current online fish sellers do not have any background and care requirements information for the fish that they sell.  CCB will offer both information on the species we carry and the ability to order the researched fish without having to go to another website.  CCB will be operating in a niche market where established customer loyalty provides significant competitive advantage.  By providing a comprehensive site, CCB expects to create a one-stop experience that will encourage the customer loyalty the company needs.

The company will target two market segments within the fish hobbyist industry.  These are direct online sales to tropical fish collectors and fish retailers in the company’s local area.  CCB’s largest market segment will be Internet users who live in the continental U.S.  and own an aquarium.

Financial Projections
Our start-up costs include expenses for the building and for equipment.  The start-up costs will be financed by an investor, a bank loan and a small owner investment of initial inventory and equipment.

We expect to achieve our ultimate sales goal by the first few months of 2005 when our breeding stock reaches maximum maturity.  We expect a high degree of profitability from this venture due to high margins and inventory turnover inherent to the industry.

Fish breeder business plan, executive summary chart image

1.1 Objectives

The CCB’s most important objectives are:

  1. Find a fast, reliable shipping service.
  2. Sales of $10,000 per month.
  3. Maintain an inventory turnover ratio of six.

1.2 Mission

Candlelight Cichlid Breeders (CCB) will provide hard to find tropical fish from the scientific family Cichlidae to aquarists who do not have access to these fish through local pet stores.  Up to 30 separate cichlid species will be bred by CCB, in addition CCB will import fish that do not readily breed in captivity.  CCB will ship live fish to its customers’ doors anywhere in the continental United States within one to two days.  CCB will also provide fish to tropical fish retailers located within 100 miles of the breeding center.  CCB will provide convenience and variety not found in the traditional tropical fish selling industry.

1.3 Keys to Success

  1. Efficiently breed several species of tropical fish.
  2. Quickly and reliably deliver the fish to customers.
  3. Develop a strong reputation within the fish keeping community.
  4. Ensure that all large search engines link to our site.
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Company Summary

Candlelight Cichlid Breeders will be a privately-owned tropical fish breeding business.  We will offer rare cichlid species to customers throughout the country.  Our customers do not have access to the species we offer through their local fish shops.

Candlelight Cichlid Breeders will consist of eighty 150 gallon livestock watering troughs and forty 40 gallon aquariums; totaling 13,600 gallons of water.  The tanks and troughs will be enclosed by a insulated steel building built on a concrete slab.  Breeding stock will be housed in the 150 gallon troughs, fertilized eggs will be moved from the troughs to the 40 gallon aquariums prior to hatching in most cases.  The location of the business is undetermined.

2.1 Start-up Summary

Our start-up costs include expenses for the building purchase and for expensed equipment.  The start-up costs will be financed by an angel investor, a bank loan and a small owner investment of initial inventory and equipment.  The assumptions are shown in the following table.

Fish breeder business plan, company summary chart image

Start-up
Requirements
Start-up Expenses
Legal $500
Stationery etc. $50
Insurance $500
Expensed equipment $25,000
Other $0
Total Start-up Expenses $26,050
Start-up Assets
Cash Required $40,000
Start-up Inventory $900
Other Current Assets $0
Long-term Assets $35,000
Total Assets $75,900
Total Requirements $101,950
Start-up Funding
Start-up Expenses to Fund $26,050
Start-up Assets to Fund $75,900
Total Funding Required $101,950
Assets
Non-cash Assets from Start-up $35,900
Cash Requirements from Start-up $40,000
Additional Cash Raised $0
Cash Balance on Starting Date $40,000
Total Assets $75,900
Liabilities and Capital
Liabilities
Current Borrowing $0
Long-term Liabilities $42,360
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $42,360
Capital
Planned Investment
Owner $9,590
Angel Investor $50,000
Additional Investment Requirement $0
Total Planned Investment $59,590
Loss at Start-up (Start-up Expenses) ($26,050)
Total Capital $33,540
Total Capital and Liabilities $75,900
Total Funding $101,950

2.2 Company Ownership

CCB will be a sole proprietorship, owned by Shawn Halsey.

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Products

Candlelight Cichlid Breeders will provide rare tropical fish from the family cichlidae.  These fish are known for their colorful appearence and interesting and aggressive behavior.  The fish will be sold as juveniles, ranging in length from one to four inches.  As adults some of these species can grow to almost two feet in length, the average adult will be around eight to ten inches long.  The shipping of adult sized cichlids is impractical due to their size.

3.1 Competitive Comparison

There are other businesses online that offer tropical fish and some common cichlids.  The important difference between those businesses and CCB is that we will have the less common cichlids that the other sites do not offer.

The current online fish sellers do not have any background and care requirements information for the fish that they sell.  If a customer is looking to purchase a particular fish online, they may have to go to one site to read up on the care and behavior of the fish that they are interested in purchasing, and then go to a different site to actually purchase the fish.  CCB will offer both information on the species we carry and the ability to order the researched fish without having to go to another website.

3.2 Future Products

As CCB grows we may offer live plants, more types of unusual cichlids, newly discovered species of South American catfish, and possibly some of the more common cichlid species.

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Market Analysis Summary

CCB’s largest market segment will be Internet users who live in the continental U.S. and own an aquarium.  Other potential customers include tropical fish retailers and walk-in customers.  Fish keeping is the second most popular hobby (behind photography) in the U.S.

We estimate that by the year 2003 there will be approximately seven million Internet users who live in the continental U.S. and own an aquarium.  This is a very conservative estimate.  We estimate that 5% (350,000) of these users will view our site in one year’s time and that 2.5% (8,750) of those potential customers will actually buy fish.

4.1 Market Segmentation

  • Internet customers: the majority of our customers will be Internet users.  Research estimates that this segment consists of seven million Internet users.
  • Tropical fish retailers: these customers consist of six tropical fish shops within 100 miles our business.  While these customers are few they will buy considerably more fish per order than Internet customers.

4.2 Market Needs

  • Tropical fish enthusiasts are on the Internet looking for information on particular species and places to obtain them.  Most people do not have access to retail fish shops that regularly carry a large number of different cichlid species.  Some of the most beautiful and interesting cichlids cannot be found in these shops at all.  CCB will provide these hard-to-find species to hobbyists.
  • Retail fish shops do not have access to the species that customers may ask for and CCB provides.  CCB will sell our fish to retail shops within 100 miles of the breeding center.  The fish will be sold to the shops at wholesale prices.

4.3 Competition and Buying Patterns

Competition in the online fish-selling industry is based on customer satisfaction.  If the ordered fish arrives as advertised and in good health the customer is satisfied.  If a business can consistently provide customer satisfaction through quality product and quick service the consumer will become loyal and regard product price as secondary in importance.

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Strategy and Implementation Summary

CCB will market to tropical fish hobbyists who are looking for hard to find cichlid species.  We will sell our product primarily over the Internet to customers within the continental U.S.  These customers are looking for interesting and colorful examples of cichlid species that are not available in their local fish shop.

Our strategy is to offer one-stop shopping for rare and unusual cichlids via the Internet.  Customers will be able to look through pages of information on a particular cichlid species and then purchase the fish.

5.1 Competitive Edge

Our competitive edge will be our site design, on-site product supply, and wide variety within the cichlid family.

5.2 Sales Forecast

Our sales forecast assumes no change in costs or prices, which is a reasonable assumption for the last few years.

We expect a jump in sales in 2005 due to increased maturity of our breeding stock.  We expect our sales to increase moderately in 2006.

Our sales will level off in the latter part of the first year due to our sales reaching maximum breeding capacity.  Capacity will increase with time.

We expect the product line to change with our customers needs and desires.

Fish breeder business plan, strategy and implementation summary chart image

Fish breeder business plan, strategy and implementation summary chart image

Sales Forecast
Year 1 Year 2 Year 3
Unit Sales
Internet Sales 14,700 35,000 40,250
Retailers 3,900 4,800 6,000
Other 0 0 0
Total Unit Sales 18,600 39,800 46,250
Unit Prices Year 1 Year 2 Year 3
Internet Sales $6.00 $6.00 $6.00
Retailers $1.90 $2.00 $2.00
Other $0.00 $0.00 $0.00
Sales
Internet Sales $88,200 $210,000 $241,500
Retailers $7,400 $9,600 $12,000
Other $0 $0 $0
Total Sales $95,600 $219,600 $253,500
Direct Unit Costs Year 1 Year 2 Year 3
Internet Sales $0.50 $0.50 $0.50
Retailers $0.50 $0.50 $0.50
Other $0.00 $0.00 $0.00
Direct Cost of Sales
Internet Sales $7,350 $17,500 $20,125
Retailers $1,950 $2,400 $3,000
Other $0 $0 $0
Subtotal Direct Cost of Sales $9,300 $19,900 $23,125

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Management Summary

CCB will be a small business owned by Shawn Halsey.  He will be involved in all aspects of the business until it grows beyond his ability to manage.  Our one employee will have important responsibilities and will be paid accordingly.  The atmosphere of the business will encourage free thinking and teamwork.

Personnel Plan
Year 1 Year 2 Year 3
Production Personnel
General assistant $18,000 $18,000 $24,000
Second general assistant $0 $0 $18,000
Other $0 $0 $0
Subtotal $18,000 $18,000 $42,000
Sales and Marketing Personnel
Name or title $0 $0 $0
Other $0 $0 $0
Subtotal $0 $0 $0
General and Administrative Personnel
Owner $36,000 $48,000 $60,000
Other $0 $0 $0
Subtotal $36,000 $48,000 $60,000
Other Personnel
Name or title $0 $0 $0
Name or title $0 $0 $0
Name or title $0 $0 $0
Other $0 $0 $0
Subtotal $0 $0 $0
Total People 2 2 3
Total Payroll $54,000 $66,000 $102,000

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Financial Plan

The following topics outline the financial plan for Candlelight Cichlid Breeders.

7.1 Important Assumptions

The following table shows the general 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 Key Financial Indicators

The following chart illustrates the key financial indicators.

Fish breeder business plan, financial plan chart image

7.3 Break-even Analysis

Our break-even analysis is a calculation of costs required to keep the business running.  Payroll, mortgage payments, utilities, marketing, Internet costs, accounting expenses, and expenses involved with aquarium water conditioning factor into our break-even analysis.  We estimate a total monthly fixed costs as shown below.

Fish breeder business plan, financial plan chart image

Break-even Analysis
Monthly Units Break-even 1,110
Monthly Revenue Break-even $5,705
Assumptions:
Average Per-Unit Revenue $5.14
Average Per-Unit Variable Cost $0.50
Estimated Monthly Fixed Cost $5,150

7.4 Projected Profit and Loss

We expect a high degree of profitability from this venture do to high margins and inventory turnover inherent to the industry.  Profit in the first year (2004)  will be lower than projected potential due to the immaturity of two-thirds of the breeding stock and low name recognition within the industry.  By September, 2005 all of the breeding stock will have matured and 100% of the projected profit potential will be realized.

Fish breeder business plan, financial plan chart image

Fish breeder business plan, financial plan chart image

Fish breeder business plan, financial plan chart image

Fish breeder business plan, financial plan chart image

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $95,600 $219,600 $253,500
Direct Cost of Sales $9,300 $19,900 $23,125
Production Payroll $18,000 $18,000 $42,000
Other $0 $0 $0
Total Cost of Sales $27,300 $37,900 $65,125
Gross Margin $68,300 $181,700 $188,375
Gross Margin % 71.44% 82.74% 74.31%
Operating Expenses
Sales and Marketing Expenses
Sales and Marketing Payroll $0 $0 $0
Advertising/Promotion $1,440 $2,880 $4,320
Travel $1,200 $1,800 $2,400
Miscellaneous $1,800 $1,800 $1,800
Total Sales and Marketing Expenses $4,440 $6,480 $8,520
Sales and Marketing % 4.64% 2.95% 3.36%
General and Administrative Expenses
General and Administrative Payroll $36,000 $48,000 $60,000
Sales and Marketing and Other Expenses $0 $0 $0
Depreciation $12,000 $12,000 $12,000
Leased Equipment $0 $0 $0
Utilities $1,260 $1,300 $1,400
Rent $0 $0 $0
Payroll Taxes $8,100 $9,900 $15,300
Other General and Administrative Expenses $0 $0 $0
Total General and Administrative Expenses $57,360 $71,200 $88,700
General and Administrative % 60.00% 32.42% 34.99%
Other Expenses:
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%
Total Operating Expenses $61,800 $77,680 $97,220
Profit Before Interest and Taxes $6,500 $104,020 $91,155
EBITDA $18,500 $116,020 $103,155
Interest Expense $3,873 $3,230 $2,559
Taxes Incurred $412 $25,198 $22,518
Net Profit $2,215 $75,593 $66,078
Net Profit/Sales 2.32% 34.42% 26.07%

7.5 Projected Cash Flow

As our breeding stock mature and our reputation becomes known the business will experience increased cash flows.  We may expand at this time with the construction of another building adjacent to the original structure.

Fish breeder business plan, financial plan chart image

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $57,360 $131,760 $152,100
Cash from Receivables $29,351 $76,310 $98,248
Subtotal Cash from Operations $86,711 $208,070 $250,348
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 $0 $0 $0
Subtotal Cash Received $86,711 $208,070 $250,348
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $54,000 $66,000 $102,000
Bill Payments $24,437 $65,049 $73,300
Subtotal Spent on Operations $78,437 $131,049 $175,300
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 $6,708 $6,708 $6,708
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $85,145 $137,757 $182,008
Net Cash Flow $1,566 $70,313 $68,340
Cash Balance $41,566 $111,878 $180,218

7.6 Projected Balance Sheet

The following table shows the projected balance sheet for Candlelight Cichlid Breeders.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $41,566 $111,878 $180,218
Accounts Receivable $8,889 $20,419 $23,572
Inventory $1,183 $2,530 $2,940
Other Current Assets $0 $0 $0
Total Current Assets $51,638 $134,828 $206,730
Long-term Assets
Long-term Assets $35,000 $35,000 $35,000
Accumulated Depreciation $12,000 $24,000 $36,000
Total Long-term Assets $23,000 $11,000 ($1,000)
Total Assets $74,638 $145,828 $205,730
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $3,230 $5,536 $6,068
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $3,230 $5,536 $6,068
Long-term Liabilities $35,652 $28,944 $22,236
Total Liabilities $38,882 $34,480 $28,304
Paid-in Capital $59,590 $59,590 $59,590
Retained Earnings ($26,050) ($23,835) $51,758
Earnings $2,215 $75,593 $66,078
Total Capital $35,755 $111,348 $177,426
Total Liabilities and Capital $74,638 $145,828 $205,730
Net Worth $35,755 $111,348 $177,426

7.7 Business Ratios

The following table outlines some of the more important ratios from the Breeding of Pets industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the NAICS code, 112990.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 129.71% 15.44% 3.52%
Percent of Total Assets
Accounts Receivable 11.91% 14.00% 11.46% 8.54%
Inventory 1.58% 1.74% 1.43% 11.36%
Other Current Assets 0.00% 0.00% 0.00% 30.17%
Total Current Assets 69.18% 92.46% 100.49% 50.07%
Long-term Assets 30.82% 7.54% -0.49% 49.93%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 4.33% 3.80% 2.95% 24.29%
Long-term Liabilities 47.77% 19.85% 10.81% 29.26%
Total Liabilities 52.09% 23.64% 13.76% 53.55%
Net Worth 47.91% 76.36% 86.24% 46.45%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 71.44% 82.74% 74.31% 59.45%
Selling, General & Administrative Expenses 74.41% 48.60% 48.18% 37.30%
Advertising Expenses 1.51% 0.11% 0.14% 0.42%
Profit Before Interest and Taxes 6.80% 47.37% 35.96% 2.80%
Main Ratios
Current 15.99 24.35 34.07 1.31
Quick 15.62 23.90 33.58 0.63
Total Debt to Total Assets 52.09% 23.64% 13.76% 65.25%
Pre-tax Return on Net Worth 7.35% 90.52% 49.93% 3.14%
Pre-tax Return on Assets 3.52% 69.12% 43.06% 9.04%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 2.32% 34.42% 26.07% n.a
Return on Equity 6.20% 67.89% 37.24% n.a
Activity Ratios
Accounts Receivable Turnover 4.30 4.30 4.30 n.a
Collection Days 56 61 79 n.a
Inventory Turnover 8.36 10.72 8.45 n.a
Accounts Payable Turnover 8.57 12.17 12.17 n.a
Payment Days 27 24 29 n.a
Total Asset Turnover 1.28 1.51 1.23 n.a
Debt Ratios
Debt to Net Worth 1.09 0.31 0.16 n.a
Current Liab. to Liab. 0.08 0.16 0.21 n.a
Liquidity Ratios
Net Working Capital $48,407 $129,292 $200,662 n.a
Interest Coverage 1.68 32.21 35.62 n.a
Additional Ratios
Assets to Sales 0.78 0.66 0.81 n.a
Current Debt/Total Assets 4% 4% 3% n.a
Acid Test 12.87 20.21 29.70 n.a
Sales/Net Worth 2.67 1.97 1.43 n.a
Dividend Payout 0.00 0.00 0.00 n.a

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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
Unit Sales
Internet Sales 0% 400 500 650 800 1,000 1,200 1,500 1,650 1,750 1,750 1,750 1,750
Retailers 0% 200 200 200 300 300 300 400 400 400 400 400 400
Other 0% 0 0 0 0 0 0 0 0 0 0 0 0
Total Unit Sales 600 700 850 1,100 1,300 1,500 1,900 2,050 2,150 2,150 2,150 2,150
Unit Prices Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Internet Sales $6.00 $6.00 $6.00 $6.00 $6.00 $6.00 $6.00 $6.00 $6.00 $6.00 $6.00 $6.00
Retailers $0.00 $2.00 $2.00 $2.00 $2.00 $2.00 $2.00 $2.00 $2.00 $2.00 $2.00 $2.00
Other $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Sales
Internet Sales $2,400 $3,000 $3,900 $4,800 $6,000 $7,200 $9,000 $9,900 $10,500 $10,500 $10,500 $10,500
Retailers $0 $400 $400 $600 $600 $600 $800 $800 $800 $800 $800 $800
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Sales $2,400 $3,400 $4,300 $5,400 $6,600 $7,800 $9,800 $10,700 $11,300 $11,300 $11,300 $11,300
Direct Unit Costs Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Internet Sales 0.00% $0.50 $0.50 $0.50 $0.50 $0.50 $0.50 $0.50 $0.50 $0.50 $0.50 $0.50 $0.50
Retailers 0.00% $0.50 $0.50 $0.50 $0.50 $0.50 $0.50 $0.50 $0.50 $0.50 $0.50 $0.50 $0.50
Other 0.00% $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Direct Cost of Sales
Internet Sales $200 $250 $325 $400 $500 $600 $750 $825 $875 $875 $875 $875
Retailers $100 $100 $100 $150 $150 $150 $200 $200 $200 $200 $200 $200
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Direct Cost of Sales $300 $350 $425 $550 $650 $750 $950 $1,025 $1,075 $1,075 $1,075 $1,075
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
Production Personnel
General assistant $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500
Second general assistant $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500
Sales and Marketing Personnel
Name or title $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
General and Administrative Personnel
Owner $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Other Personnel
Name or title $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Name or title $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Name or title $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total People 2 2 2 2 2 2 2 2 2 2 2 2
Total Payroll $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500

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% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00%
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 $2,400 $3,400 $4,300 $5,400 $6,600 $7,800 $9,800 $10,700 $11,300 $11,300 $11,300 $11,300
Direct Cost of Sales $300 $350 $425 $550 $650 $750 $950 $1,025 $1,075 $1,075 $1,075 $1,075
Production Payroll $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $1,800 $1,850 $1,925 $2,050 $2,150 $2,250 $2,450 $2,525 $2,575 $2,575 $2,575 $2,575
Gross Margin $600 $1,550 $2,375 $3,350 $4,450 $5,550 $7,350 $8,175 $8,725 $8,725 $8,725 $8,725
Gross Margin % 25.00% 45.59% 55.23% 62.04% 67.42% 71.15% 75.00% 76.40% 77.21% 77.21% 77.21% 77.21%
Operating Expenses
Sales and Marketing Expenses
Sales and Marketing Payroll $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Advertising/Promotion $120 $120 $120 $120 $120 $120 $120 $120 $120 $120 $120 $120
Travel $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100
Miscellaneous $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150
Total Sales and Marketing Expenses $370 $370 $370 $370 $370 $370 $370 $370 $370 $370 $370 $370
Sales and Marketing % 15.42% 10.88% 8.60% 6.85% 5.61% 4.74% 3.78% 3.46% 3.27% 3.27% 3.27% 3.27%
General and Administrative Expenses
General and Administrative Payroll $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Sales and Marketing and Other Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Depreciation $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Leased Equipment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Utilities $105 $105 $105 $105 $105 $105 $105 $105 $105 $105 $105 $105
Rent $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Payroll Taxes 15% $675 $675 $675 $675 $675 $675 $675 $675 $675 $675 $675 $675
Other General and Administrative Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total General and Administrative Expenses $4,780 $4,780 $4,780 $4,780 $4,780 $4,780 $4,780 $4,780 $4,780 $4,780 $4,780 $4,780
General and Administrative % 199.17% 140.59% 111.16% 88.52% 72.42% 61.28% 48.78% 44.67% 42.30% 42.30% 42.30% 42.30%
Other Expenses:
Other Payroll $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Consultants $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Contract/Consultants $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Other Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other % 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Total Operating Expenses $5,150 $5,150 $5,150 $5,150 $5,150 $5,150 $5,150 $5,150 $5,150 $5,150 $5,150 $5,150
Profit Before Interest and Taxes ($4,550) ($3,600) ($2,775) ($1,800) ($700) $400 $2,200 $3,025 $3,575 $3,575 $3,575 $3,575
EBITDA ($3,550) ($2,600) ($1,775) ($800) $300 $1,400 $3,200 $4,025 $4,575 $4,575 $4,575 $4,575
Interest Expense $348 $344 $339 $334 $330 $325 $320 $316 $311 $306 $302 $297
Taxes Incurred ($1,470) ($986) ($779) ($534) ($257) $19 $470 $677 $816 $817 $818 $819
Net Profit ($3,429) ($2,958) ($2,336) ($1,601) ($772) $56 $1,410 $2,032 $2,448 $2,451 $2,455 $2,458
Net Profit/Sales -142.87% -86.99% -54.31% -29.64% -11.70% 0.72% 14.38% 18.99% 21.66% 21.69% 21.73% 21.76%

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 $1,440 $2,040 $2,580 $3,240 $3,960 $4,680 $5,880 $6,420 $6,780 $6,780 $6,780 $6,780
Cash from Receivables $0 $32 $973 $1,372 $1,735 $2,176 $2,656 $3,147 $3,932 $4,288 $4,520 $4,520
Subtotal Cash from Operations $1,440 $2,072 $3,553 $4,612 $5,695 $6,856 $8,536 $9,567 $10,712 $11,068 $11,300 $11,300
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 $1,440 $2,072 $3,553 $4,612 $5,695 $6,856 $8,536 $9,567 $10,712 $11,068 $11,300 $11,300
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 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500
Bill Payments $1 $78 $1,481 $752 $1,960 $2,198 $1,546 $3,067 $3,256 $3,405 $3,348 $3,345
Subtotal Spent on Operations $4,501 $4,578 $5,981 $5,252 $6,460 $6,698 $6,046 $7,567 $7,756 $7,905 $7,848 $7,845
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 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment $559 $559 $559 $559 $559 $559 $559 $559 $559 $559 $559 $559
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 $5,060 $5,137 $6,540 $5,811 $7,019 $7,257 $6,605 $8,126 $8,315 $8,464 $8,407 $8,404
Net Cash Flow ($3,620) ($3,065) ($2,987) ($1,199) ($1,324) ($401) $1,931 $1,441 $2,397 $2,604 $2,893 $2,896
Cash Balance $36,380 $33,315 $30,328 $29,129 $27,805 $27,404 $29,335 $30,776 $33,173 $35,777 $38,670 $41,566
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 $40,000 $36,380 $33,315 $30,328 $29,129 $27,805 $27,404 $29,335 $30,776 $33,173 $35,777 $38,670 $41,566
Accounts Receivable $0 $960 $2,288 $3,035 $3,823 $4,728 $5,672 $6,936 $8,069 $8,657 $8,889 $8,889 $8,889
Inventory $900 $600 $1,250 $825 $1,275 $1,625 $875 $1,045 $1,128 $1,183 $1,183 $1,183 $1,183
Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Current Assets $40,900 $37,940 $36,853 $34,188 $34,227 $34,158 $33,951 $37,316 $39,973 $43,013 $45,849 $48,742 $51,638
Long-term Assets
Long-term Assets $35,000 $35,000 $35,000 $35,000 $35,000 $35,000 $35,000 $35,000 $35,000 $35,000 $35,000 $35,000 $35,000
Accumulated Depreciation $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 $10,000 $11,000 $12,000
Total Long-term Assets $35,000 $34,000 $33,000 $32,000 $31,000 $30,000 $29,000 $28,000 $27,000 $26,000 $25,000 $24,000 $23,000
Total Assets $75,900 $71,940 $69,853 $66,188 $65,227 $64,158 $62,951 $65,316 $66,973 $69,013 $70,849 $72,742 $74,638
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 $28 $1,458 $687 $1,886 $2,148 $1,444 $2,958 $3,142 $3,293 $3,237 $3,234 $3,230
Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Current Liabilities $0 $28 $1,458 $687 $1,886 $2,148 $1,444 $2,958 $3,142 $3,293 $3,237 $3,234 $3,230
Long-term Liabilities $42,360 $41,801 $41,242 $40,683 $40,124 $39,565 $39,006 $38,447 $37,888 $37,329 $36,770 $36,211 $35,652
Total Liabilities $42,360 $41,829 $42,700 $41,370 $42,010 $41,713 $40,450 $41,405 $41,030 $40,622 $40,007 $39,445 $38,882
Paid-in Capital $59,590 $59,590 $59,590 $59,590 $59,590 $59,590 $59,590 $59,590 $59,590 $59,590 $59,590 $59,590 $59,590
Retained Earnings ($26,050) ($26,050) ($26,050) ($26,050) ($26,050) ($26,050) ($26,050) ($26,050) ($26,050) ($26,050) ($26,050) ($26,050) ($26,050)
Earnings $0 ($3,429) ($6,387) ($8,722) ($10,323) ($11,095) ($11,039) ($9,629) ($7,597) ($5,149) ($2,698) ($243) $2,215
Total Capital $33,540 $30,111 $27,153 $24,818 $23,217 $22,445 $22,501 $23,911 $25,943 $28,391 $30,842 $33,297 $35,755
Total Liabilities and Capital $75,900 $71,940 $69,853 $66,188 $65,227 $64,158 $62,951 $65,316 $66,973 $69,013 $70,849 $72,742 $74,638
Net Worth $33,540 $30,111 $27,153 $24,818 $23,217 $22,445 $22,501 $23,911 $25,943 $28,391 $30,842 $33,297 $35,755

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