NaviTag Technologies, LLC
Financial Plan
Our financial plan is based on raising substantial seed capital by way of private equity to create the electronic tag, develop the central database, and establish the customer base.
We will achieve profitability in just over two years and due to the nature of the exponential growth of access charges, we will realize a respectable net profit on sales by year three.
[Confidential and proprietary information has, in some text and tables, been omitted or disguised in this sample plan.]
7.1 Important Assumptions
The table below presents the assumptions used in the financial calculations of this business plan.
General Assumptions | |||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
Plan Month | 1 | 2 | 3 | 4 | 5 |
Current Interest Rate | 7.00% | 7.00% | 7.00% | 7.00% | 7.00% |
Long-term Interest Rate | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% |
Tax Rate | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
Other | 0 | 0 | 0 | 0 | 0 |
7.2 Break-even Analysis
NaviTag Technologies revenues are generated from NaviTag unit sales (a one time expense) and access charges (a monthly recurring fee). Given this, the break-even formula must be adjusted to reflect both one time and recurring revenue activities. Using the sales forecast as a guide, and based on estimates made for fixed cost, average revenue per NaviTag unit and access charges, variable cost for unit manufacturing and service fees, the break-even volume was established to be 700 units per month with a subscription base of 6,800. We anticipate achieving break even at month 24 as detailed in the graph below.

Table: Break-even Analysis
Break-even Analysis: |
|
Monthly NaviTag Units Break-even |
700 |
Monthly Access Charges Break-even |
6,800 |
Monthly Sales Break-even |
$480,432 |
Assumptions: |
|
Average Per NaviTag Unit Revenue |
$395.00 |
Average Per NaviTag Unit Cost |
$296.25 |
Average Per Access Charge Revenue |
$29.99 |
Average Per Access Charge Cost |
$12.20 |
Estimated Monthly Fixed Cost |
$150,000.00 |
7.3 Projected Profit and Loss
Based on the realistic sales projections and efficient cost control measures in place, NaviTag Technologies will achieve profitability in just over two years. Company profits in subsequent years will increase to the first million in 2005, and a five-fold increase in 2007 due largely to the exponential growth of the access charges. Gross margins reveal dramatic growth, again because of the growth in revenues from access charges.
[Confidential and proprietary information has, in some text and tables, been omitted or disguised in this sample plan.]




Pro Forma Profit and Loss | |||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
Sales | $498,974 | $4,082,552 | $9,966,045 | $16,161,144 | $21,919,704 |
Direct Cost of Sales | $353,970 | $2,712,810 | $6,340,725 | $9,895,320 | $13,092,120 |
Other Production Expenses | $0 | $0 | $0 | $0 | $0 |
Total Cost of Sales | $353,970 | $2,712,810 | $6,340,725 | $9,895,320 | $13,092,120 |
Gross Margin | $145,004 | $1,369,742 | $3,625,320 | $6,265,824 | $8,827,584 |
Gross Margin % | 29.06% | 33.55% | 36.38% | 38.77% | 40.27% |
Expenses | |||||
Payroll | $479,665 | $596,000 | $613,110 | $643,765 | $675,954 |
Sales Collateral | $45,000 | $30,000 | $30,000 | $30,000 | $30,000 |
Depreciation | $0 | $0 | $0 | $0 | $0 |
Payroll Taxes | $0 | $0 | $0 | $0 | $0 |
Direct Mail | $60,000 | $30,000 | $30,000 | $30,000 | $30,000 |
Stationery | $1,000 | $2,000 | $2,000 | $2,000 | $2,000 |
Travel | $60,000 | $60,000 | $60,000 | $60,000 | $60,000 |
Trade Shows | $30,000 | $30,000 | $30,000 | $30,000 | $30,000 |
Advertising | $80,000 | $70,000 | $70,000 | $80,000 | $80,000 |
New York – Rent | $48,750 | $45,000 | $45,000 | $45,000 | $45,000 |
New York – Telephone System | $5,500 | $1,000 | $1,000 | $1,000 | $1,000 |
New York – Telephone Charges | $3,550 | $4,800 | $4,800 | $4,800 | $4,800 |
New York – Utilities | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 |
New York – Furniture | $7,500 | $1,000 | $1,000 | $1,000 | $1,000 |
New York – Office Equipment/Networking | $13,000 | $1,000 | $1,000 | $1,000 | $1,000 |
New York – Internet Access | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 |
New York – Misc./Office Supplies | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 |
Outsourced Development – Discovery | $85,000 | $0 | $0 | $0 | $0 |
Outsourced Development – Inception | $53,000 | $0 | $0 | $0 | $0 |
Outsourced Development – Elaboration | $69,000 | $0 | $0 | $0 | $0 |
Outsourced Development – Construction | $370,000 | $0 | $0 | $0 | $0 |
Outsourced Development – Production | $43,000 | $0 | $0 | $0 | $0 |
Outsourced Services – Accounting | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 |
Outsourced Services – Legal | $35,000 | $30,000 | $30,000 | $30,000 | $30,000 |
Laptop Computers | $13,000 | $5,000 | $5,000 | $15,000 | $5,000 |
Desktop Computers | $7,000 | $2,000 | $2,000 | $10,000 | $2,000 |
Development/Staging | $30,000 | $4,000 | $4,000 | $8,000 | $4,000 |
Software Licenses/Tools | $10,000 | $1,000 | $1,000 | $2,000 | $2,000 |
Production Hosting | $68,500 | $84,000 | $84,000 | $108,000 | $108,000 |
Maintenance/Support | $15,000 | $15,000 | $15,000 | $15,000 | $15,000 |
Monitoring Services | $6,750 | $10,000 | $10,000 | $10,000 | $10,000 |
Boston – Rent | $27,080 | $25,000 | $25,000 | $25,000 | $25,000 |
Boston – Telephone System | $4,000 | $500 | $500 | $500 | $500 |
Boston – Telephone Charges | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 |
Boston – Utilities | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 |
Boston – Furniture | $5,000 | $1,000 | $1,000 | $1,000 | $1,000 |
Boston – Office Equipment/Networking | $6,000 | $1,000 | $1,000 | $1,000 | $1,000 |
Boston – Internet Access | $1,000 | $1,000 | $1,000 | $1,000 | $1,000 |
Boston – Misc./Office Supplies | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 |
Other | $0 | $0 | $0 | $0 | $0 |
Total Operating Expenses | $1,720,295 | $1,088,300 | $1,105,410 | $1,193,065 | $1,203,254 |
Profit Before Interest and Taxes | ($1,575,291) | $281,442 | $2,519,910 | $5,072,759 | $7,624,330 |
EBITDA | ($1,575,291) | $281,442 | $2,519,910 | $5,072,759 | $7,624,330 |
Interest Expense | $0 | $0 | $0 | $0 | $0 |
Taxes Incurred | $0 | $0 | $0 | $0 | $0 |
Net Profit | ($1,575,291) | $281,442 | $2,519,910 | $5,072,759 | $7,624,330 |
Net Profit/Sales | -315.71% | 6.89% | 25.28% | 31.39% | 34.78% |
7.4 Projected Cash Flow
Cash flow is projected to decline for the first two years of operation based on the reasonable assumption of 45-day credit collections. NaviTag Technologies has calculated its financial plan so that it will have enough cash from investors and debt to survive until a positive cash flow is realized in 2005.

Pro Forma Cash Flow | |||
Year 1 | Year 2 | Year 3 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $0 | $0 | $0 |
Subtotal Cash from Operations | $290,554 | $2,585,701 | $7,508,526 |
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 | $290,554 | $2,585,701 | $7,508,526 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $479,665 | $596,000 | $613,110 |
Bill Payments | $1,386,014 | $3,018,545 | $6,385,748 |
Subtotal Spent on Operations | $1,865,679 | $3,614,545 | $6,998,858 |
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 | $1,865,679 | $3,614,545 | $6,998,858 |
Net Cash Flow | ($1,575,126) | ($1,028,844) | $509,668 |
Cash Balance | $1,401,874 | $373,031 | $882,699 |
7.5 Projected Balance Sheet
The table below presents the balance sheet for NaviTag Technologies. This table reflects a positive cash position throughout the period of this financial plan and dramatic growth in net worth in 2007.
Pro Forma Balance Sheet | |||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
Assets | |||||
Current Assets | |||||
Cash | $1,401,874 | $373,031 | $882,699 | $3,813,048 | $9,423,457 |
Accounts Receivable | $208,420 | $1,705,271 | $4,162,790 | $6,750,465 | $9,155,800 |
Other Current Assets | $0 | $0 | $0 | $0 | $0 |
Total Current Assets | $1,610,295 | $2,078,302 | $5,045,489 | $10,563,513 | $18,579,257 |
Long-term Assets | |||||
Long-term Assets | $0 | $0 | $0 | $0 | $0 |
Accumulated Depreciation | $0 | $0 | $0 | $0 | $0 |
Total Long-term Assets | $0 | $0 | $0 | $0 | $0 |
Total Assets | $1,610,295 | $2,078,302 | $5,045,489 | $10,563,513 | $18,579,257 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
Current Liabilities | |||||
Accounts Payable | $208,586 | $395,151 | $842,428 | $1,287,693 | $1,679,107 |
Current Borrowing | $0 | $0 | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 | $0 | $0 |
Subtotal Current Liabilities | $208,586 | $395,151 | $842,428 | $1,287,693 | $1,679,107 |
Long-term Liabilities | $0 | $0 | $0 | $0 | $0 |
Total Liabilities | $208,586 | $395,151 | $842,428 | $1,287,693 | $1,679,107 |
Paid-in Capital | $3,010,000 | $3,010,000 | $3,010,000 | $3,010,000 | $3,010,000 |
Retained Earnings | ($33,000) | ($1,608,291) | ($1,326,849) | $1,193,061 | $6,265,820 |
Earnings | ($1,575,291) | $281,442 | $2,519,910 | $5,072,759 | $7,624,330 |
Total Capital | $1,401,709 | $1,683,151 | $4,203,061 | $9,275,820 | $16,900,150 |
Total Liabilities and Capital | $1,610,295 | $2,078,302 | $5,045,489 | $10,563,513 | $18,579,257 |
Net Worth | $1,401,709 | $1,683,151 | $4,203,061 | $9,275,820 | $16,900,150 |
7.6 Business Ratios
The table below presents common business ratios as a reference. Since the business of “cargo tracking” does not fall underneath any predefined Industry dataset, for Industry Profile comparisons in this table we chose, NAICS 488390 Other Support Activities for Water Transportation (SIC 3731), as the closest option.
Ratio Analysis | ||||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Industry Profile | |
Sales Growth | 0.00% | 718.19% | 144.11% | 62.16% | 35.63% | 9.27% |
Percent of Total Assets | ||||||
Accounts Receivable | 12.94% | 82.05% | 82.51% | 63.90% | 49.28% | 18.72% |
Other Current Assets | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 36.72% |
Total Current Assets | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 92.30% |
Long-term Assets | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 7.70% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 12.95% | 19.01% | 16.70% | 12.19% | 9.04% | 42.56% |
Long-term Liabilities | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 17.03% |
Total Liabilities | 12.95% | 19.01% | 16.70% | 12.19% | 9.04% | 59.59% |
Net Worth | 87.05% | 80.99% | 83.30% | 87.81% | 90.96% | 40.41% |
Percent of Sales | ||||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 29.06% | 33.55% | 36.38% | 38.77% | 40.27% | 18.16% |
Selling, General & Administrative Expenses | 383.83% | 32.27% | 13.48% | 16.39% | 15.08% | 4.91% |
Advertising Expenses | 9.02% | 0.73% | 0.30% | 0.19% | 0.14% | 0.41% |
Profit Before Interest and Taxes | -315.71% | 6.89% | 25.28% | 31.39% | 34.78% | 3.42% |
Main Ratios | ||||||
Current | 7.72 | 5.26 | 5.99 | 8.20 | 11.06 | 1.71 |
Quick | 7.72 | 5.26 | 5.99 | 8.20 | 11.06 | 0.68 |
Total Debt to Total Assets | 12.95% | 19.01% | 16.70% | 12.19% | 9.04% | 67.28% |
Pre-tax Return on Net Worth | -112.38% | 16.72% | 59.95% | 54.69% | 45.11% | 6.22% |
Pre-tax Return on Assets | -97.83% | 13.54% | 49.94% | 48.02% | 41.04% | 19.01% |
Additional Ratios | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
Net Profit Margin | -315.71% | 6.89% | 25.28% | 31.39% | 34.78% | n.a |
Return on Equity | -112.38% | 16.72% | 59.95% | 54.69% | 45.11% | n.a |
Activity Ratios | ||||||
Accounts Receivable Turnover | 2.39 | 2.39 | 2.39 | 2.39 | 2.39 | n.a |
Collection Days | 40 | 86 | 107 | 123 | 132 | n.a |
Accounts Payable Turnover | 7.64 | 8.11 | 8.11 | 8.11 | 8.11 | n.a |
Payment Days | 40 | 34 | 33 | 37 | 40 | n.a |
Total Asset Turnover | 0.31 | 1.96 | 1.98 | 1.53 | 1.18 | n.a |
Debt Ratios | ||||||
Debt to Net Worth | 0.15 | 0.23 | 0.20 | 0.14 | 0.10 | n.a |
Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | n.a |
Liquidity Ratios | ||||||
Net Working Capital | $1,401,709 | $1,683,151 | $4,203,061 | $9,275,820 | $16,900,150 | n.a |
Interest Coverage | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | n.a |
Additional Ratios | ||||||
Assets to Sales | 3.23 | 0.51 | 0.51 | 0.65 | 0.85 | n.a |
Current Debt/Total Assets | 13% | 19% | 17% | 12% | 9% | n.a |
Acid Test | 6.72 | 0.94 | 1.05 | 2.96 | 5.61 | n.a |
Sales/Net Worth | 0.36 | 2.43 | 2.37 | 1.74 | 1.30 | n.a |
Dividend Payout | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | n.a |
7.7 Long-term Plan
We anticipate that the percentage of ocean cargo deemed time sensitive, of high value, or of a hazardous nature will continue to increase faster than the average increase in cargo in general. Further, we believe that the concerns over ship, port, and national security risks will balloon. With only 2% of the imports being inspected today, the concern of dangerous cargoes compromising the port operations has created opportunities for a cargo tracking/security alert device such as ours.
Our cargo tracking efforts will be focused on those shippers with high value, time sensitive, or hazardous cargo. Our security focus will be directed to those government agencies seeking to improve security of the U.S. ports involved in processing the 600,000 containers entering weekly.
We will achieve profitability in just over two years and due to the nature of the exponential growth of access charges, we will realize a respectable net profit on sales by year three. The success of our implementation and sales efforts will have a strong affect on our year three through year five operations and fiscal position. If slower than planned, we risk a negative cash balance, even though we might have already reached profitability. Additional rounds of investment may be needed, or acquiring long-term business loans.
Ironically, a faster than planned industry acceptance of NaviTag could push us into a period of risky increased expansion, which would also drain our operating capital reserve, again requiring us to seek another round of investment or loans.
Alternatively, early-on proof-of-concept and feasibility analyses, could spark high demand from governmental agencies and/or the military establishment could lead to substantial financial and operational grants, subsidies, contracts, etc.