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Royal's Software

Executive Summary

Royal’s Software has embarked on an ambitious plan to create a new software product, Royal’s Inventory Basic–a scalable inventory software product. The new product is scheduled to be released in May and will be sold by Pursuit Solutions.

Pursuit Solutions, a $50 million company hardware integration reseller, will distribute Royal’s Inventory Basic to over 1,100 Valued Added Resellers (VARs). The product will sell for $2,499. Royal’s Software will receive $1,250 on each unit sold. It is projected that Pursuit Solutions will sell 250 units by month six. It is projected that Royal’s Software will gross $313,000 from sales the first year.

A critical component of software sales will be tech support and product modifications. Royal’s Software projects $63,200 in product modification by the end of six months.

In addition, Royal’s Software has entered into a business agreement with Pursuit Solutions and Johnson and Roe (CPA firm) to create a MAS 90 portable data collection interface that will be sold to accounting firms. The software product has been in development over the past ten months.

John Royal and Dan Whiteaker have been an integral part of the product development. MAS 90 is not a packaged product, rather it is bundled with software customization services ($2,000-$3,000) that will be performed by Royal’s Software. This software product will sell for $2,500.

Royal’s Software will receive 1/3 of gross sales ($833). It is projected that Royal’s Software will gross $500,500 by May of next year from product sales and customization services.

The two co-owners of Royal’s Software, John Royal and Dan Whiteaker, will each invest $50,000. In addition, the company will obtain a $100,000 short-term loan.

Inventory control software business plan, executive summary chart image

1.1 Objectives

The objectives of Royal’s Software are as follows:

  • Establish the company as a leader in inventory software products.
  • Increase sales by 20% each year.
  • Develop one new inventory product per year.

1.2 Mission

The mission of Royal’s Software is to create inexpensive inventory software that will be scalable, so customer modification can be easily added.

1.3 Keys to Success

The ability to produce products on time and on budget, that meet the user’s needs and specifications.

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Company Summary

Royal’s Software creates scalable inventory software products that can be customized to meet customer’s needs. Royal’s Software is unique in that it sells a product that can be used in any inventory environment. The engineers can then add enhancement to the product that will tailor the product features to the customer’s specific needs.

2.1 Company Ownership

Royal’s Software is owned by John Royal and Dan Whiteaker. The company will be set up as a C Corporation. It is expected that this form of incorporation will allow room for growth and an exit strategy of selling the business in five to seven years.

  • John Royal has ten years of experience as an application software developer for Rogue Wave Software. John was the Lead Developer for New Products for the last four years. He was the principal designer of Rogue Wave’s Ace Software Suite.
  • Dan Whiteaker has seven years of programming experience with Rogue Wave Software. Dan assisted the Ace Software Suite Development Group. He lead the Customer Modifications Group for the past two years.

2.2 Start-up Summary

The following is the start-up summary for Royal’s Software. As is typical for software companies the largest portion of start-up funds will go towards product development.

Inventory control software business plan, company summary chart image

Start-up Funding
Start-up Expenses to Fund $115,500
Start-up Assets to Fund $184,500
Total Funding Required $300,000
Assets
Non-cash Assets from Start-up $10,000
Cash Requirements from Start-up $174,500
Additional Cash Raised $0
Cash Balance on Starting Date $174,500
Total Assets $184,500
Liabilities and Capital
Liabilities
Current Borrowing $0
Long-term Liabilities $100,000
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $100,000
Capital
Planned Investment
John Royal $50,000
Dan Whiteaker $50,000
Investor $100,000
Additional Investment Requirement $0
Total Planned Investment $200,000
Loss at Start-up (Start-up Expenses) ($115,500)
Total Capital $84,500
Total Capital and Liabilities $184,500
Total Funding $300,000
Start-up
Requirements
Start-up Expenses
Legal $1,000
Stationery etc. $500
Insurance $1,000
Rent $1,000
Research and Development $100,000
Expensed Equipment $12,000
Total Start-up Expenses $115,500
Start-up Assets
Cash Required $174,500
Other Current Assets $10,000
Long-term Assets $0
Total Assets $184,500
Total Requirements $300,000

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Services

Royal’s Software products and services include the following:

  • Royal’s Inventory Basic.
  • MAS 90 portable data collection interface.
  • Custom Modification Royal’s Inventory Basic.

In addition to selling software, the company will provide extensive customization services to meet the unique needs of its business customers.

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Market Analysis Summary

Software products for inventory management are a $1 billion dollar industry. The lions share of the sales are with the largest companies with billions of dollars of inventory. This is where there is the greatest competition between inventory software products.

This category of the industry also faces competition from the enterprise resource planning software vendors. At the low end, with small and emerging businesses, there is very little competition.

Usually, the smaller businesses will spend no more than $5,000 on an inventory solution which will include software and hardware. Royal’s Software believes this a tremendous opportunity for a software product with a $2,500 price tag.

Another opportunity area is the growing demand for software interfaces that improve the portability of data. The interface improves the ability of businesses to move data between systems. In an age where new management products are introduced each year, a company’s ability to move its data quickly and efficiently is becoming essential to a successful business.

MAS 90 portable data collection interface is designed to be used by accounting firms to improve the portability of data the firms stores for customers.

4.1 Market Segmentation

Royal’s Software is targeting small- and medium-sized businesses. Specifically it will focus on these two target groups:

  • Smaller businesses that will spend no more than $5,000 on an inventory solution, including software and hardware.
  • Accounting firms demanding MAS 90 portable data collection interface.
Inventory control software business plan, market analysis summary chart image

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Smaller Businesses 10% 5,000 5,500 6,050 6,655 7,321 10.00%
Accounting Firms 15% 150 173 199 229 263 15.07%
Total 10.16% 5,150 5,673 6,249 6,884 7,584 10.16%

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Strategy and Implementation Summary

During the first two months of operation, the company will focus on completing and testing beta copies of Royal’s Inventory Basic and the MAS 90 portable data collection interface. Sales will begin in May and grow steadily for the next 10 months.

5.1 Sales Strategy

Royal’s Software will not do any direct selling, instead it will work closely with Pursuit Solutions’ VARs to sell and service Royal’s Inventory Basic. The two owners have existing relationships with a number of VARs through their existing positions, and since this product is unique in its price range, it is not expected that it will be difficult to find VARs to represent it.

MAS 90 customers will be developed by the CPA firm, Johnson and Roe. It is projected that the MAS 90 product will have over a 100 customers by June of 2003. A large number of small- to medium-sized businesses use MAS 90 in their dealings with Johnson and Roe, and it is expected that sales will be healthy through this channel.

5.1.1 Sales Forecast

The following is the sales forecast for the next three years.

Inventory control software business plan, strategy and implementation summary chart image

Inventory control software business plan, strategy and implementation summary chart image

Sales Forecast
Year 1 Year 2 Year 3
Sales
MAS-90 $194,000 $230,000 $280,000
Royal’s Inventory Basic $179,000 $220,000 $270,000
Custom Consultation/Adptation $151,000 $200,000 $230,000
Total Sales $524,000 $650,000 $780,000
Direct Cost of Sales Year 1 Year 2 Year 3
MAS-90 $5,820 $6,900 $8,400
Royal’s Inventory Basic $5,370 $6,600 $8,100
Custom Consultation/Adptation $0 $0 $0
Subtotal Direct Cost of Sales $11,190 $13,500 $16,500

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Personnel Plan

The current staff of Royal’s Software are the two co-owners of the company. The owners have been working on developing the product on their own time over the past year, are beta testing the product and now feel that they are only a couple of months away from having a final product. It is envisioned that Royal’s will need to ramp up significantly as sales take off and they are pulled away from product development and support in order to run the company. Three new hires are planned in March to meet the anticipated demands of software sales. The following positions will be filled:

  • Application Engineer (1)
  • Support Engineer (1)
  • Technical Support Staff (1)

To keep fixed costs to a minium and to keep existing technical staff committed to the development of new products, much of the customization will be done by outside consultants. This expense is illustrated in the profit and loss table.

In addition, we will not have large sales and marketing costs, because VARS will take on this role on our behalf, and their large commissions shall reflect this.

Personnel Plan
Year 1 Year 2 Year 3
CEO $0 $100,000 $150,000
John Royal $65,000 $68,000 $71,000
Dan Whiteaker $65,000 $68,000 $71,000
Application Engineer $60,000 $63,000 $66,000
Support Engineer $50,000 $52,000 $54,000
Tech Support Staff $30,000 $32,000 $34,000
Total People 6 6 6
Total Payroll $270,000 $383,000 $446,000

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Financial Plan

The following is the financial plan for Royal’s Software. The plan includes:

  • Break-even point;
  • Projected profit and loss;
  • Projected cash flow;
  • Projected balance sheet.

7.1 Break-even Analysis

The estimated monthly fixed cost and monthly break-even point are shown below.

Inventory control software business plan, financial plan chart image

Break-even Analysis
Monthly Revenue Break-even $37,152
Assumptions:
Average Percent Variable Cost 2%
Estimated Monthly Fixed Cost $36,358

7.2 Projected Profit and Loss

The following table and charts highlight the projected profit and loss for the next three years.

Inventory control software business plan, financial plan chart image

Inventory control software business plan, financial plan chart image

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $524,000 $650,000 $780,000
Direct Cost of Sales $11,190 $13,500 $16,500
Other Production Expenses $0 $0 $0
Total Cost of Sales $11,190 $13,500 $16,500
Gross Margin $512,810 $636,500 $763,500
Gross Margin % 97.86% 97.92% 97.88%
Expenses
Payroll $270,000 $383,000 $446,000
Sales and Marketing and Other Expenses $101,600 $146,000 $174,000
Depreciation $0 $0 $0
Leased Equipment $5,000 $0 $0
Utilities $4,800 $4,800 $4,800
Insurance $2,400 $2,400 $2,400
Rent $12,000 $12,000 $12,000
Payroll Taxes $40,500 $57,450 $66,900
Other $0 $0 $0
Total Operating Expenses $436,300 $605,650 $706,100
Profit Before Interest and Taxes $76,510 $30,850 $57,400
EBITDA $76,510 $30,850 $57,400
Interest Expense $8,917 $7,001 $5,002
Taxes Incurred $20,278 $7,155 $15,719
Net Profit $47,315 $16,694 $36,679
Net Profit/Sales 9.03% 2.57% 4.70%

7.3 Projected Cash Flow

The following table and chart highlight the projected cash flow for the next three years.

Inventory control software business plan, financial plan chart image

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $131,000 $162,500 $195,000
Cash from Receivables $307,375 $466,911 $563,757
Subtotal Cash from Operations $438,375 $629,411 $758,757
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 $438,375 $629,411 $758,757
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $270,000 $383,000 $446,000
Bill Payments $177,952 $258,466 $293,457
Subtotal Spent on Operations $447,952 $641,466 $739,457
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 $19,992 $19,992 $19,992
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $467,944 $661,458 $759,449
Net Cash Flow ($29,569) ($32,047) ($692)
Cash Balance $144,931 $112,884 $112,192

7.4 Projected Balance Sheet

The following table highlights the projected balance sheet for the next three years.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $144,931 $112,884 $112,192
Accounts Receivable $85,625 $106,214 $127,457
Other Current Assets $10,000 $10,000 $10,000
Total Current Assets $240,556 $229,098 $249,649
Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $240,556 $229,098 $249,649
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $28,733 $20,573 $24,437
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $28,733 $20,573 $24,437
Long-term Liabilities $80,008 $60,016 $40,024
Total Liabilities $108,741 $80,589 $64,461
Paid-in Capital $200,000 $200,000 $200,000
Retained Earnings ($115,500) ($68,185) ($51,491)
Earnings $47,315 $16,694 $36,679
Total Capital $131,815 $148,509 $185,188
Total Liabilities and Capital $240,556 $229,098 $249,649
Net Worth $131,815 $148,509 $185,188

7.5 Business Ratios

Industry profile ratios based on the Standard Industrial Classification (SIC) code 7372, Prepackaged Software, are shown for comparison.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 24.05% 20.00% 9.70%
Percent of Total Assets
Accounts Receivable 35.59% 46.36% 51.05% 21.50%
Other Current Assets 4.16% 4.36% 4.01% 45.70%
Total Current Assets 100.00% 100.00% 100.00% 70.20%
Long-term Assets 0.00% 0.00% 0.00% 29.80%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 11.94% 8.98% 9.79% 42.40%
Long-term Liabilities 33.26% 26.20% 16.03% 19.20%
Total Liabilities 45.20% 35.18% 25.82% 61.60%
Net Worth 54.80% 64.82% 74.18% 38.40%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 97.86% 97.92% 97.88% 100.00%
Selling, General & Administrative Expenses 88.83% 95.35% 93.18% 79.40%
Advertising Expenses 10.00% 10.00% 10.00% 1.30%
Profit Before Interest and Taxes 14.60% 4.75% 7.36% 2.20%
Main Ratios
Current 8.37 11.14 10.22 1.51
Quick 8.37 11.14 10.22 1.16
Total Debt to Total Assets 45.20% 35.18% 25.82% 61.60%
Pre-tax Return on Net Worth 51.28% 16.06% 28.29% 3.50%
Pre-tax Return on Assets 28.10% 10.41% 20.99% 9.20%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 9.03% 2.57% 4.70% n.a
Return on Equity 35.90% 11.24% 19.81% n.a
Activity Ratios
Accounts Receivable Turnover 4.59 4.59 4.59 n.a
Collection Days 56 72 73 n.a
Accounts Payable Turnover 7.19 12.17 12.17 n.a
Payment Days 31 36 28 n.a
Total Asset Turnover 2.18 2.84 3.12 n.a
Debt Ratios
Debt to Net Worth 0.82 0.54 0.35 n.a
Current Liab. to Liab. 0.26 0.26 0.38 n.a
Liquidity Ratios
Net Working Capital $211,823 $208,525 $225,212 n.a
Interest Coverage 8.58 4.41 11.48 n.a
Additional Ratios
Assets to Sales 0.46 0.35 0.32 n.a
Current Debt/Total Assets 12% 9% 10% n.a
Acid Test 5.39 5.97 5.00 n.a
Sales/Net Worth 3.98 4.38 4.21 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
Sales
MAS-90 0% $0 $0 $12,000 $15,000 $18,000 $20,000 $20,000 $22,000 $24,000 $20,000 $21,000 $22,000
Royal’s Inventory Basic 0% $0 $0 $12,000 $15,000 $18,000 $21,000 $20,000 $21,000 $20,000 $15,000 $17,000 $20,000
Custom Consultation/Adptation 0% $0 $0 $6,000 $9,000 $12,000 $18,000 $20,000 $18,000 $14,000 $18,000 $17,000 $19,000
Total Sales $0 $0 $30,000 $39,000 $48,000 $59,000 $60,000 $61,000 $58,000 $53,000 $55,000 $61,000
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
MAS-90 $0 $0 $360 $450 $540 $600 $600 $660 $720 $600 $630 $660
Royal’s Inventory Basic $0 $0 $360 $450 $540 $630 $600 $630 $600 $450 $510 $600
Custom Consultation/Adptation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Direct Cost of Sales $0 $0 $720 $900 $1,080 $1,230 $1,200 $1,290 $1,320 $1,050 $1,140 $1,260
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
CEO 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
John Royal 0% $5,000 $5,000 $7,500 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $7,500 $5,000 $5,000
Dan Whiteaker 0% $5,000 $5,000 $7,500 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $7,500 $5,000 $5,000
Application Engineer 0% $4,615 $4,615 $6,922 $4,615 $4,615 $4,615 $4,615 $4,617 $4,616 $6,924 $4,616 $4,615
Support Engineer 0% $3,842 $3,842 $5,769 $3,848 $3,850 $3,842 $3,842 $3,850 $3,850 $5,769 $3,850 $3,846
Tech Support Staff 0% $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500
Total People 6 6 6 6 6 6 6 6 6 6 6 6
Total Payroll $20,957 $20,957 $30,191 $20,963 $20,965 $20,957 $20,957 $20,967 $20,966 $30,193 $20,966 $20,961

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 $0 $0 $30,000 $39,000 $48,000 $59,000 $60,000 $61,000 $58,000 $53,000 $55,000 $61,000
Direct Cost of Sales $0 $0 $720 $900 $1,080 $1,230 $1,200 $1,290 $1,320 $1,050 $1,140 $1,260
Other Production Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $0 $0 $720 $900 $1,080 $1,230 $1,200 $1,290 $1,320 $1,050 $1,140 $1,260
Gross Margin $0 $0 $29,280 $38,100 $46,920 $57,770 $58,800 $59,710 $56,680 $51,950 $53,860 $59,740
Gross Margin % 0.00% 0.00% 97.60% 97.69% 97.75% 97.92% 98.00% 97.89% 97.72% 98.02% 97.93% 97.93%
Expenses
Payroll $20,957 $20,957 $30,191 $20,963 $20,965 $20,957 $20,957 $20,967 $20,966 $30,193 $20,966 $20,961
Sales and Marketing and Other Expenses $0 $0 $6,000 $6,900 $8,300 $9,800 $10,000 $10,200 $9,600 $12,200 $13,400 $15,200
Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Leased Equipment $5,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Utilities $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400
Insurance $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200
Rent $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Payroll Taxes 15% $3,144 $3,144 $4,529 $3,144 $3,145 $3,144 $3,144 $3,145 $3,145 $4,529 $3,145 $3,144
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Operating Expenses $30,701 $25,701 $42,320 $32,607 $34,010 $35,501 $35,701 $35,912 $35,311 $48,522 $39,111 $40,905
Profit Before Interest and Taxes ($30,701) ($25,701) ($13,040) $5,493 $12,910 $22,269 $23,099 $23,798 $21,369 $3,428 $14,749 $18,835
EBITDA ($30,701) ($25,701) ($13,040) $5,493 $12,910 $22,269 $23,099 $23,798 $21,369 $3,428 $14,749 $18,835
Interest Expense $819 $806 $792 $778 $764 $750 $736 $722 $708 $695 $681 $667
Taxes Incurred ($9,456) ($7,952) ($4,149) $1,414 $3,644 $6,456 $6,709 $6,923 $6,198 $820 $4,221 $5,450
Net Profit ($22,064) ($18,554) ($9,682) $3,300 $8,502 $15,064 $15,654 $16,153 $14,463 $1,913 $9,848 $12,718
Net Profit/Sales 0.00% 0.00% -32.27% 8.46% 17.71% 25.53% 26.09% 26.48% 24.94% 3.61% 17.91% 20.85%

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 $7,500 $9,750 $12,000 $14,750 $15,000 $15,250 $14,500 $13,250 $13,750 $15,250
Cash from Receivables $0 $0 $0 $750 $22,725 $29,475 $36,275 $44,275 $45,025 $45,675 $43,375 $39,800
Subtotal Cash from Operations $0 $0 $7,500 $10,500 $34,725 $44,225 $51,275 $59,525 $59,525 $58,925 $57,125 $55,050
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 $0 $7,500 $10,500 $34,725 $44,225 $51,275 $59,525 $59,525 $58,925 $57,125 $55,050
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 $20,957 $20,957 $30,191 $20,963 $20,965 $20,957 $20,957 $20,967 $20,966 $30,193 $20,966 $20,961
Bill Payments $37 ($1,333) ($2,006) $9,666 $14,863 $18,681 $22,993 $23,405 $23,836 $22,516 $21,003 $24,291
Subtotal Spent on Operations $20,994 $19,624 $28,185 $30,629 $35,828 $39,638 $43,950 $44,372 $44,802 $52,709 $41,969 $45,252
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 $1,666 $1,666 $1,666 $1,666 $1,666 $1,666 $1,666 $1,666 $1,666 $1,666 $1,666 $1,666
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 $22,660 $21,290 $29,851 $32,295 $37,494 $41,304 $45,616 $46,038 $46,468 $54,375 $43,635 $46,918
Net Cash Flow ($22,660) ($21,290) ($22,351) ($21,795) ($2,769) $2,921 $5,659 $13,487 $13,057 $4,550 $13,490 $8,132
Cash Balance $151,840 $130,550 $108,199 $86,404 $83,635 $86,556 $92,215 $105,702 $118,759 $123,309 $136,799 $144,931
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 $174,500 $151,840 $130,550 $108,199 $86,404 $83,635 $86,556 $92,215 $105,702 $118,759 $123,309 $136,799 $144,931
Accounts Receivable $0 $0 $0 $22,500 $51,000 $64,275 $79,050 $87,775 $89,250 $87,725 $81,800 $79,675 $85,625
Other Current Assets $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000
Total Current Assets $184,500 $161,840 $140,550 $140,699 $147,404 $157,910 $175,606 $189,990 $204,952 $216,484 $215,109 $226,474 $240,556
Long-term Assets
Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Accumulated Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Assets $184,500 $161,840 $140,550 $140,699 $147,404 $157,910 $175,606 $189,990 $204,952 $216,484 $215,109 $226,474 $240,556
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 $1,070 $0 $11,497 $16,568 $20,237 $24,536 $24,932 $25,407 $24,142 $22,520 $25,702 $28,733
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 $1,070 $0 $11,497 $16,568 $20,237 $24,536 $24,932 $25,407 $24,142 $22,520 $25,702 $28,733
Long-term Liabilities $100,000 $98,334 $96,668 $95,002 $93,336 $91,670 $90,004 $88,338 $86,672 $85,006 $83,340 $81,674 $80,008
Total Liabilities $100,000 $99,404 $96,668 $106,499 $109,904 $111,907 $114,540 $113,270 $112,079 $109,148 $105,860 $107,376 $108,741
Paid-in Capital $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000
Retained Earnings ($115,500) ($115,500) ($115,500) ($115,500) ($115,500) ($115,500) ($115,500) ($115,500) ($115,500) ($115,500) ($115,500) ($115,500) ($115,500)
Earnings $0 ($22,064) ($40,618) ($50,300) ($47,000) ($38,497) ($23,434) ($7,780) $8,373 $22,836 $24,749 $34,597 $47,315
Total Capital $84,500 $62,436 $43,882 $34,200 $37,500 $46,003 $61,066 $76,720 $92,873 $107,336 $109,249 $119,097 $131,815
Total Liabilities and Capital $184,500 $161,840 $140,550 $140,699 $147,404 $157,910 $175,606 $189,990 $204,952 $216,484 $215,109 $226,474 $240,556
Net Worth $84,500 $62,436 $43,882 $34,200 $37,500 $46,003 $61,066 $76,720 $92,873 $107,336 $109,249 $119,097 $131,815

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