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Overture

Financial Plan

Forecast

Key Assumptions

  • We leave an unrealistically high projected cash balance in the fourth and fifth year as a buffer. That’s not going to happen. If things were to go that well, we’d be reinvesting in higher growth instead of leaving that much cash.
  • We have placeholders for major expenses in the further-out years. We don’t know the details but we do know we can’t have both high growth and high profits, so we choose growth. We cannot be profitable and grow at the rate we want. That’s why we intend to bring in almost $2 million in investment — to finance the deficits.

Financial Highlights by Year

Revenue by Year

Net Profit (or Loss) by Year

Financing

Use of Funds

Use of funds is available in detail in monthly projections in the appendices. It’s essentially financing deficit spending in product development salaries and marketing expenses as we push growth way beyond the levels that revenue alone could support.

Sources of Funds

Sources and funding

  • Founders: Founders expect to put in a total of $240K including $200K in the first year and another $40K to get through some thin months during the second year.
  • Angel round: A combination of $750K from two regional angel groups.
  • Series A VC:  Projected $1.5 million.

Ongoing valuation

By the time we get the angel group funding we plan a valuation of $8 million based on a successful launch, testimonials, funds already raised, traction, and buzz in the market.

For the $1.5 million second angel round we will go for a valuation of $20 million. That will be based on all of the above plus demonstrable traction and pull.

Statements

Projected Profit & Loss

 

2020 2021 2022 2023 2024
Revenue $50,683 $1,492,955 $5,190,137 $10,978,578 $19,085,024
Direct Costs $5,068 $149,296 $519,013 $1,097,858 $1,908,503
Gross Margin $45,615 $1,343,659 $4,671,123 $9,880,720 $17,176,522
Gross Margin % 90% 90% 90% 90% 90%
Operating Expenses
Salaries & Wages $570,150 $1,466,900 $2,482,784 $4,051,100 $6,266,240
Employee Related Expenses $114,030 $293,380 $496,557 $810,220 $1,253,248
Web Marketing $71,000 $225,000 $1,200,000 $2,200,000 $3,200,000
Other Marketing $24,000 $36,000 $600,000 $2,400,000
Rent $36,000 $72,000 $96,000 $120,000 $140,000
Sales Commission $1,520 $44,789 $155,704 $329,358 $572,550
Burden on Commissions $253 $7,465 $25,951 $54,893 $95,425
Office equipment $30,000 $60,000 $60,000 $90,000 $120,000
Other Expenses $7,000 $43,700 $147,300 $1,500,000 $2,500,000
Total Operating Expenses $829,954 $2,237,233 $4,700,296 $9,755,570 $16,547,464
Operating Income ($784,339) ($893,574) ($29,173) $125,150 $629,059
Interest Incurred $5,812 $5,667 $4,200 $2,688
Depreciation and Amortization $7,306 $16,111 $29,444 $36,722 $53,611
Gain or Loss from Sale of Assets
Income Taxes $0 $0 $0 $0 $0
Total Expenses $842,328 $2,408,452 $5,254,421 $10,894,350 $18,512,265
Net Profit ($791,645) ($915,497) ($64,284) $84,228 $572,759
Net Profit / Sales (1,562%) (61%) (1%) 1% 3%

 

Projected Balance Sheet

 

2020 2021 2022 2023 2024
Revenue $50,683 $1,492,955 $5,190,137 $10,978,578 $19,085,024
Direct Costs $5,068 $149,296 $519,013 $1,097,858 $1,908,503
Gross Margin $45,615 $1,343,659 $4,671,123 $9,880,720 $17,176,522
Gross Margin % 90% 90% 90% 90% 90%
Operating Expenses
Salaries & Wages $570,150 $1,466,900 $2,482,784 $4,051,100 $6,266,240
Employee Related Expenses $114,030 $293,380 $496,557 $810,220 $1,253,248
Web Marketing $71,000 $225,000 $1,200,000 $2,200,000 $3,200,000
Other Marketing $24,000 $36,000 $600,000 $2,400,000
Rent $36,000 $72,000 $96,000 $120,000 $140,000
Sales Commission $1,520 $44,789 $155,704 $329,358 $572,550
Burden on Commissions $253 $7,465 $25,951 $54,893 $95,425
Office equipment $30,000 $60,000 $60,000 $90,000 $120,000
Other Expenses $7,000 $43,700 $147,300 $1,500,000 $2,500,000
Total Operating Expenses $829,954 $2,237,233 $4,700,296 $9,755,570 $16,547,464
Operating Income ($784,339) ($893,574) ($29,173) $125,150 $629,059
Interest Incurred $5,812 $5,667 $4,200 $2,688
Depreciation and Amortization $7,306 $16,111 $29,444 $36,722 $53,611
Gain or Loss from Sale of Assets
Income Taxes $0 $0 $0 $0 $0
Total Expenses $842,328 $2,408,452 $5,254,421 $10,894,350 $18,512,265
Net Profit ($791,645) ($915,497) ($64,284) $84,228 $572,759
Net Profit / Sales (1,562%) (61%) (1%) 1% 3%

 

Projected Cash Flow Statement

 

2020 2021 2022 2023 2024
Net Cash Flow from Operations
Net Profit ($791,645) ($915,497) ($64,284) $84,228 $572,759
Depreciation & Amortization $7,306 $16,111 $29,444 $36,722 $53,611
Change in Accounts Receivable $0 $0 $0 $0 $0
Change in Inventory
Change in Accounts Payable $28,964 $73,738 $205,784 $483,718 $624,266
Change in Income Tax Payable $0 $0 $0 $0 $0
Change in Sales Tax Payable $3,188 $48,169 $77,916 $135,279 $168,614
Change in Prepaid Revenue $0 $0 $0 $0 $0
Net Cash Flow from Operations ($752,187) ($777,479) $248,861 $739,947 $1,419,250
Investing & Financing
Assets Purchased or Sold ($25,000) ($40,000) ($40,000) ($50,000) ($100,000)
Net Cash from Investing ($25,000) ($40,000) ($40,000) ($50,000) ($100,000)
Investments Received $990,000 $1,500,000
Dividends & Distributions
Change in Short-Term Debt $48,237 $1,467 $1,512 $1,558
Change in Long-Term Debt $162,655 ($49,704) ($51,216) ($52,774)
Net Cash from Financing $990,000 $1,710,892 ($48,237) ($49,704) ($51,216)
Cash at Beginning of Period $0 $212,813 $1,106,226 $1,266,850 $1,907,093
Net Change in Cash $212,813 $893,413 $160,624 $640,243 $1,268,034
Cash at End of Period $212,813 $1,106,226 $1,266,850 $1,907,093 $3,175,127