Sunapto
Financial Plan
Sunapto desires to finance growth through a combination of equity investment and internally generated cash flow. Because of the cost of initial product development and marketing costs of establishing a market presence, the business will be financed primarily by investment in the early stages and is expected to burn cash.
The company intends to raise an amount of seed capital before launch and an secure additional outside investment after prototype development.
8.1 Important Assumptions
The financial plan depends on important assumptions, most of which are shown in the following table. The important underlying assumptions are:
- A recovering economy.
- No changes in technology to make products immediately obsolete.
- Access to equity capital and financing sufficient to maintain Sunapto’s financial plan as shown in the tables.
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 | 34.58% | 35.00% | 34.58% |
Other | 0 | 0 | 0 |
8.2 Break-even Analysis
Sunapto’s break-even analysis assumes approximate running costs per month based o the average of Year 2 and Year 3 expenses, which includes their full payroll, rent, utilities, and an estimation of other running costs.
Margins are harder to assume. Sunapto’s overall average is based on projected total sales in Year 2 and Year 3.
The chart shows what Sunapto needs to sell per month to break-even, according to these assumptions.

Break-even Analysis | |
Monthly Units Break-even | 624 |
Monthly Revenue Break-even | $412,750 |
Assumptions: | |
Average Per-Unit Revenue | $661.00 |
Average Per-Unit Variable Cost | $384.00 |
Estimated Monthly Fixed Cost | $172,968 |
8.3 Projected Profit and Loss
Barring any unforeseen circumstances, Sunapto is anticipated to break-even by Year 2 of operations. Profits for the company in subsequent years will accelerate with the increase in anticipated sales volume, yielding good net profit in Year 2 and better in Year 3.




Pro Forma Profit and Loss | |||
Year 1 | Year 2 | Year 3 | |
Sales | $0 | $7,987,523 | $9,862,072 |
Direct Cost of Sales | $0 | $4,675,726 | $5,682,932 |
Production Payroll | $192,665 | $276,572 | $284,869 |
Research and Development | $175,000 | $180,250 | $185,658 |
Other Production Expenses | $0 | $0 | $0 |
Total Cost of Sales | $367,665 | $5,132,548 | $6,153,459 |
Gross Margin | ($367,665) | $2,854,975 | $3,708,613 |
Gross Margin % | 0.00% | 35.74% | 37.60% |
Operating Expenses | |||
Sales and Marketing Expenses | |||
Sales and Marketing Payroll | $85,920 | $88,498 | $91,153 |
Contract Sales Organization | $50,000 | $273,000 | $312,000 |
Advertising/Promotions | $143,775 | $177,517 | $216,284 |
Travel | $6,000 | $7,800 | $10,140 |
Sales Commissions | $0 | $116,309 | $140,900 |
Legal | $12,000 | $12,360 | $12,731 |
Miscellaneous | $2,400 | $2,472 | $2,546 |
Total Sales and Marketing Expenses | $300,095 | $677,955 | $785,753 |
Sales and Marketing % | 0.00% | 8.49% | 7.97% |
General and Administrative Expenses | |||
General and Administrative Payroll | $212,936 | $275,943 | $308,646 |
Sales and Marketing and Other Expenses | $0 | $0 | $0 |
Depreciation | $0 | $0 | $0 |
Leased Equipment | $0 | $0 | $0 |
Utilities | $36,000 | $37,080 | $38,192 |
Insurance | $12,000 | $12,360 | $12,731 |
Office Equipment | $30,000 | $9,000 | $9,000 |
Office Supplies | $6,000 | $6,180 | $6,365 |
Rent | $60,000 | $61,800 | $63,654 |
Payroll Taxes | $154,287 | $238,105 | $280,063 |
Other General and Administrative Expenses | $0 | $0 | $0 |
Total General and Administrative Expenses | $511,223 | $640,468 | $718,652 |
General and Administrative % | 0.00% | 8.02% | 7.29% |
Other Expenses: | |||
Other Payroll | $22,770 | $152,671 | $248,876 |
Consultants | $0 | $0 | $0 |
Contract/Consultants | $0 | $0 | $0 |
Total Other Expenses | $22,770 | $152,671 | $248,876 |
Other % | 0.00% | 1.91% | 2.52% |
Total Operating Expenses | $834,089 | $1,471,094 | $1,753,281 |
Profit Before Interest and Taxes | ($1,201,754) | $1,383,881 | $1,955,332 |
EBITDA | ($1,201,754) | $1,383,881 | $1,955,332 |
Interest Expense | $0 | $0 | $0 |
Taxes Incurred | $0 | $484,358 | $676,219 |
Net Profit | ($1,201,754) | $899,523 | $1,279,113 |
Net Profit/Sales | 0.00% | 11.26% | 12.97% |
8.4 Projected Cash Flow
It should be noted that the company’s cash flow will be steadily declining for the first year of operations. This is expected due to large capital investments and no sales. Sunapto anticipates having negative net cash flows throughout Year 1 as they incur expenses for prototype development during the first half and as they get ready for production by their contract manufacturer during the second half. Two infusions of capital will get Sunapto through the cash flow drain as they build up for production and sales to begin in Year 2. A monthly breakdown of Year 1 cash flow may be found in the appendix.

Pro Forma Cash Flow | |||
Year 1 | Year 2 | Year 3 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $0 | $7,188,771 | $8,875,865 |
Subtotal Cash from Operations | $0 | $7,987,523 | $9,862,072 |
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 | $710,000 | $0 | $0 |
Subtotal Cash Received | $710,000 | $7,987,523 | $9,862,072 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $514,291 | $793,684 | $933,544 |
Bill Payments | $637,885 | $5,826,554 | $7,538,037 |
Subtotal Spent on Operations | $1,152,176 | $6,620,237 | $8,471,581 |
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 | $0 | $0 | $0 |
Purchase Other Current Assets | $0 | $0 | $0 |
Purchase Long-term Assets | $0 | $0 | $0 |
Dividends | $0 | $0 | $0 |
Subtotal Cash Spent | $1,152,176 | $6,620,237 | $8,471,581 |
Net Cash Flow | ($442,176) | $1,367,286 | $1,390,491 |
Cash Balance | $27,824 | $1,395,110 | $2,785,601 |
8.5 Projected Balance Sheet
The table below presents the Balance Sheet for Sunapto.
Pro Forma Balance Sheet | |||
Year 1 | Year 2 | Year 3 | |
Assets | |||
Current Assets | |||
Cash | $27,824 | $1,395,110 | $2,785,601 |
Accounts Receivable | $0 | $0 | $0 |
Inventory | $0 | $0 | $0 |
Other Current Assets | $0 | $0 | $0 |
Total Current Assets | $27,824 | $1,395,110 | $2,785,601 |
Long-term Assets | |||
Long-term Assets | $0 | $0 | $0 |
Accumulated Depreciation | $0 | $0 | $0 |
Total Long-term Assets | $0 | $0 | $0 |
Total Assets | $27,824 | $1,395,110 | $2,785,601 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 |
Current Liabilities | |||
Accounts Payable | $49,578 | $517,341 | $628,719 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $49,578 | $517,341 | $628,719 |
Long-term Liabilities | $0 | $0 | $0 |
Total Liabilities | $49,578 | $517,341 | $628,719 |
Paid-in Capital | $1,182,713 | $1,182,713 | $1,182,713 |
Retained Earnings | ($2,713) | ($1,204,467) | ($304,944) |
Earnings | ($1,201,754) | $899,523 | $1,279,113 |
Total Capital | ($21,754) | $877,769 | $2,156,882 |
Total Liabilities and Capital | $27,824 | $1,395,110 | $2,785,601 |
Net Worth | ($21,754) | $877,769 | $2,156,882 |
8.6 Business Ratios
The table follows with Sunapto’s main business ratios. The Industry figures come from the Standard Industry Classification (SIC) Index Code 3845, Electromedical Equipment.
Ratio Analysis | ||||
Year 1 | Year 2 | Year 3 | Industry Profile | |
Sales Growth | 0.00% | 0.00% | 23.47% | 2.30% |
Percent of Total Assets | ||||
Accounts Receivable | 0.00% | 0.00% | 0.00% | 26.40% |
Inventory | 0.00% | 0.00% | 0.00% | 13.10% |
Other Current Assets | 0.00% | 0.00% | 0.00% | 47.70% |
Total Current Assets | 100.00% | 100.00% | 100.00% | 87.20% |
Long-term Assets | 0.00% | 0.00% | 0.00% | 12.80% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 178.18% | 37.08% | 22.57% | 38.10% |
Long-term Liabilities | 0.00% | 0.00% | 0.00% | 18.70% |
Total Liabilities | 178.18% | 37.08% | 22.57% | 56.80% |
Net Worth | -78.18% | 62.92% | 77.43% | 43.20% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 0.00% | 35.74% | 37.60% | 53.30% |
Selling, General & Administrative Expenses | 0.00% | 23.43% | 22.90% | 34.50% |
Advertising Expenses | 0.00% | 3.42% | 3.16% | 1.80% |
Profit Before Interest and Taxes | 0.00% | 17.33% | 19.83% | 4.70% |
Main Ratios | ||||
Current | 0.56 | 2.70 | 4.43 | 1.97 |
Quick | 0.56 | 2.70 | 4.43 | 1.34 |
Total Debt to Total Assets | 178.18% | 37.08% | 22.57% | 56.80% |
Pre-tax Return on Net Worth | 5524.36% | 157.66% | 90.66% | 4.10% |
Pre-tax Return on Assets | -4319.14% | 99.20% | 70.19% | 9.40% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | 0.00% | 11.26% | 12.97% | n.a |
Return on Equity | 0.00% | 102.48% | 59.30% | n.a |
Activity Ratios | ||||
Accounts Receivable Turnover | 0.00 | 0.00 | 0.00 | n.a |
Collection Days | 0 | 0 | 0 | n.a |
Inventory Turnover | 0.00 | 0.00 | 0.00 | n.a |
Accounts Payable Turnover | 13.87 | 12.17 | 12.17 | n.a |
Payment Days | 27 | 16 | 27 | n.a |
Total Asset Turnover | 0.00 | 5.73 | 3.54 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 0.00 | 0.59 | 0.29 | n.a |
Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | n.a |
Liquidity Ratios | ||||
Net Working Capital | ($21,754) | $877,769 | $2,156,882 | n.a |
Interest Coverage | 0.00 | 0.00 | 0.00 | n.a |
Additional Ratios | ||||
Assets to Sales | n.a. | 0.17 | 0.28 | n.a |
Current Debt/Total Assets | 178% | 37% | 23% | n.a |
Acid Test | 0.56 | 2.70 | 4.43 | n.a |
Sales/Net Worth | 0.00 | 9.10 | 4.57 | n.a |
Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
8.7 Exit Strategy
Sunapto is in business to earn a higher than normal return for its business partners. They intend to seek a fair, yet aggressive profit, which will allow the company to be financially healthy for the long term as well as provide compensation to both owners and investors for their money and risk. Sunapto’s founders intend to be part of the ownership and management of Sunapto. Sunapto recognizes that all of its investors will eventually want to reap the rewards of their investments. The following exit strategies are possible ways that Sunapto may choose to reward its early round investors.
- An IPO.
- A sale to a strategic buyer.
- A leveraged recapitalization.
- A new round of financing.