Agriculture Fruit Farm Business Plan

Executive Summary
Introduction Farmers Group is being formed from the acquisition of two successful vegetable farms, Green Acres Vegetable Farm and Mobile Farmers Vegetable Farm. The latter has long-researched horticultural and agronomic techniques, as well as compost and soil blending technology now being promoted by the DEO, the USDA, the EPA, and other government agencies. The company is a combination of cutting edge, highest quality, and efficient food technology and production. It is committed to the improvement of food taste and nutritional quality. It is being founded to build upon an extensive array of biological and horticultural education, experience, and the research of its founders. This is further coupled with the experience of James Jackson, the current manager of Mobile Farmers Vegetable Farm, and consultation with the present owner of Green Acres Vegetable Farm, Errol Grynthum. The Company Farmers Group is an Alabama-based company, located in Calhoun county, whose mission is to provide high quality, nutritional, and flavorful vegetables and strawberries for consumption in both near and remote regions of the United States. Additionally the company will provide high quality planting materials for use nationwide. Farmers Group is the buyout and merger of two successful vegetable farms. The idea behind the business is to provide healthy and delicious vegetables and fruit to the public. In addition to vegetables and fruits, the company plans to produce and market manure compost garden amendment products. Farmers Group's management team is led by Mr. James Jackson as Business Manager, who has extensive knowledge of the industry. The company expects to employ five temporary employees during the equipment relocation phase, four employees on a permanent basis, and three part-time employees. Products Farmers Group's plans to concentrate on vegetables as its primary product. This includes growing carrots, romaine lettuce, leeks, red onions, summer squash, spinach, pumpkins, winter squash, globe beets, and winter greens. The company's farm, will have a capacity sufficient to produce in excess of 200,000 lbs. of vegetables per year. The company plans to utilize traditional and more advanced plant technologies to produce new cultivars of strawberries and lima beans with locally-adapted superior characteristics for the Gulf-South growing area. This strategy will allow Farmers Group to produce crops during most of the year and will allow double cultivation of the greenhouses with almost no additional heating necessary in the winter months. The Market Over the past decade the market for organic food has grown by 15% to 20% and every year 40% of U.S. consumers occasionally reach for something labeled organic. Sales for organic foods are expected to top $11 billion this year. Sales by farmers' markets have increased by 79% since 1994, to 3,137 markets in all 50 states, and the number of farmers who sell at them has more than tripled to 67,000. About three million Americans a week now get their fresh food directly from the farmers who grew it. This makes for an excellent environment for a industry participant such as Farmers Group that is willing to compete in a niche market and be first to the market with new products. Financial Considerations The company is seeking $830,000 in both short-term and long-term loans to finance the purchase of Farmers Group's new farm, upgrade the facilities, and cover start-up expenses and first year losses. It is estimated that the company will begin to make a profit in Year 2 of operations. The company does not expect to have any cash flow problems during the first four years of operations.

nutritional. vegetable ($50. Additionally the company will provide high quality planting materials for use nationwide. Additionally the company estimates that once fully operational.1.1 Start-up Summary Projected revenues for Year 1 to Year 5 are $-40.000 $250. per annum would be as follows. Company Summary Farmers Group is the buyout and merger of two successful vegetable farms.000 $50.600 $245.500.000 $300.000 $250.000) and horticulture ($10. $8. The idea behind the business is to provide healthy and delicious vegetables and fruit to the public. the company plans to produce and market manure compost garden amendment products.500 respectively.000).400 $150.000 $25. In addition to vegetables and fruits.000 $684.800 and $82.000 $600 $5. whose mission is to provide high quality. and flavorful vegetables and strawberries for consumption in both near and remote regions of the United States.000. $70.000. 2.000 $10.000 .1 Mission Farmers Group is an Alabama-based company. income per product.000 $25. Start-up Requirements Start-up Expenses Legal Facilities modification Seed Organic Herbicides/Pesticides Consultants Insurance Research and development Expensed equipment Other Total Start-up Expenses Start-up Assets Cash Required Start-up Inventory Other Current Assets $19. $50.000) manure ($20.

The company plans to supply the region's nursery outlets with a topquality. Research has shown that the superior flavor of a fruit or vegetable is closely related to vitamin content and folic acid content in green vegetables. Products While at Mobile Farmers Vegetable Farm James Jackson.145. fall . red onions. of vegetables per year. production will center on pumpkins. and spinach. Local and regional dairy operations have trouble with manure accumulations. steadily used and experimented with compost and fertilized with manure of different kinds. A properly composted manure product has no seeds that will germinate and proliferate in it. Outdoor vegetable facilities. winter squash.5 miles outside of Jasper. disease resistance. romaine lettuce.400 $1. and o Eliminate weight loss from shock.000 lbs. and the federal government's new organic labeling policy. The most important things with manure usage is to eliminate the viable weed seed drawback by thoroughly composting the manure. Horticultural greenhouse.830.000 $1. premium garden and soil amendment product for area horticulture. Flavor. Farmers Group will then turn this into a saleable product. Enzymes are critical for producing a truly nutritious and superior flavored product. Backwash facilities. The operation will utilize: y y y y y y One large greenhouse. Business office building. leeks. An additional portion of the operation will be the manure composting facility. Strawberries The company's more technical horticultural aspects include efforts to utilize traditional and more advanced plant technologies to produce new cultivars of crops such as strawberries and lima beans with locally-adapted superior characteristics for the Gulf-South growing area. The state-of-the-art vegetable equipment starting up in the new location utilizes revolutionary harvest designs that: y y y Allow faster.000 2. Farmers Group will focus its produce on the intermediate organic label.2 Company Locations and Facilities The farm is located in Calhoun county approximately 4. longer growth Cut the harvest labor by over 80% Cut the harvest time and by so doing: o Decrease loss in weight gain. With the growth of the popular organic food niche. water treatment devices. During the summer months Farmers Group will be growing carrots. to add enough cellulose on product to bring it to the proper ratio and to bring its water content to proper levels. In the fall. a properly composted manure product has something a chemically formulated synthetic fertilizer does not have: enzymes. Additionally.1 Product Description Vegetables Farmers Group's first line of production will be the green vegetable and red vegetable. 3. globe beets and winter greens.Long-term Assets Total Assets Total Requirements $500. Filters. This means that approximately 70% of the food production process will be organic and all foods produced by Farmers Group will be eligible for the "contains organic ingredients" label. summer squash. adaptability to green-house culture. and the company hopes to enter into contracts in removing the manure. The company's farm will have a capacity sufficient to produce in excess of 200. enclosing the vegetable area.

. cheaper bedding and agronomic soil mixtures that are more effective than the standard used in the industry in Alabama (Pine bark mulch-composted). a farm economist at the University of California at Davis and the author of three books on the subject.99 pint berry market of the fall and winter. the government is paying up to $19 billion a year to subsidize commodity crops in a glutted global market. to 3. These and other available species and systems will be constantly tracked. Federal officials say that nearly 40% of all farm income now comes directly from government subsidies. the Agriculture Department has reported.* With no subsidies and no middle men. Farmers Group believes this to be a high revenue venture with retail prices running in excess of $15. allowing for a reduction in marginal costs for all products and creation of real economies of scale that would provide Farmers Group with a competitive advantage. Farmers Group is conducting research to test certain clay-sand-manure mixture levels to obtain better. and the number of farmers who sell at them has more than tripled to 67. The company also believes that if crayfish production is successful then it could become the number one endeavor of Farmers Group. "Right now. Barely 3% of the nation's two million farmers sell some of what they grow directly to consumers. there are two market niches that are growing at an amazing rate.2 Technology The company is currently seeking contact with Alabama universities in order to learn about and acquire new hybrids of strawberries and vegetables that are hardier and grow faster in our local microclimates. Sales for organic foods are expected to top $11 billion this year. the company would like to explore the possibilities of crayfish production. the company is seeking contacts at Universities in Italy and Germany that are involved in greens." said Dr. the organic market and the simple farmers' market. Purchase of this facility would allow Farmers Group to begin production and to capitalize on this higher margin product.00 per pound in most places. represent a very thin slice of the big pie of national food. The organic market provides less than 2% of the nation's food supply and takes up less than 1% of its cropland. Farmers Group's strategy is a combination of the two technologies during the cool winter months which will allow the utilization of normally wasted space in the greenhouses for the high price winter greens production. However.S. Conglomerates as big as Heinz and General Mills are now launching or buying organic lines and selling them in mainstream supermarkets. Currently there is a defunct fish farming production facility with all the necessary capital equipment approximately two miles from the current farm.3 Future Products In the meantime.and winter season production are factors being combined in greens cultivation to tap into the $2. 3. consumers occasionally reach for something labeled organic. About three million Americans a week now get their fresh food directly from the farmers who grew it. Over the past decade the market for organic food has grown by 15 to 20% and every year 40% of U. This will allow double cultivation of the greenhouses with almost no additional heating necessary in this climate. Currently. and firm fall and winter strawberries. In addition to the above. and the farm bill signed by President Bush this year will pay $190 billion over 10 years.137 markets in all 50 states. 3. But organic farms are flourishing as never before. and will continue the quest for the best flavored. Market Analysis Summary At a time when eating has become a political statement. large. which includes $83 billion in new spending. What makes this most attractive is the two ventures have significant joint cost potential. compared with more than $200 billion in overall farm revenue. Farmers' markets reported about $1 billion in sales last year. These numbers. farmers' markets have increased by 79% since 1994. of course. Steven Blank. green markets are growing faster than anything in agriculture.000.

Organics-To-You farm. when 10 major grocery chains control the purchase of 50% of fresh food. none of the others focus on a niche market and depend heavily on federal subsidies. Fall and winter greens market. 4. **Source: Farmers Markets Booming Across US Timothy Egan New York Times.3 Target Market Segment Strategy . People approaching the farm. 2000. Nursery outlets selling composted manure. y Bulk customers. and large scale buyers are more consolidated than the farmers themselves. This creates an intensely competitive environment with a large number of industry participants. However. 2000. giving more consumers an option and allowing many small farmers to stay in business. Farmers Group has an established list of present customers of Errol Grynthum's vegetable farm. September 29. The company plans to use the Internet as one of its marketing channels in the future.** With these trends in mind. Direct competition in the individual buyers market segment comes from three farms in the immediate area including the Anniston farm. *Source: Certified Organic Geoffrey Cowley NEWSWEEK September 30. In its greens production the company will target virtually all main food outlets. vegetable processors. Farmers Groups will concentrate on: y y y y Wholesale live vegetable markets nationwide that sell organic produce. The company's target customers will be as follows: Vegetables: y Oriental vegetable markets demanding organic and semi-organic vegetables. and the Terrance Livingston vegetable farm. Alabama vegetable producers. Product-Bagged Manure: y Nursery and Garden Centers. overall margins are small and rivalries for wholesaler contracts are strong. 4. Alabama National Guard. Each of these competitors has produce stands as well as selling to local farmers' markets. which is a major asset to the sales of the company. the proliferation of open-air markets has come out of nowhere. with the exception of Organics-To-You Farm. and private individual buyers through direct selling and farmers markets. Competitive threats come from three main segments: y y y Imported vegetables of lower quality. Roadside stands and farmers' markets.1 Market Segmentation The target customers include oriental vegetable markets demanding organic and semi-organic green vegetables. Since almost all of the produce is considered to be commodities.> Mississippi pound raised vegetables.But in an era of big-box food stores. y Private customers approaching facility. The company will continue to service the existing customers of the purchased vegetable farms.2 Industry Analysis Alabama is one of the premier farming areas of the eastern United States. Fresh farmers' markets. 4. Vegetable processors. y y y y The company will also take over customers from the previous owner of the vegetable facility.

68% Strategy and Implementation Summary The Farmers Group strategy is to profitably and efficiently utilize present and future agricultural technology in the production of vegetables.000 25.652 396.000 330. whereas the number of individual buyers represents the estimated annual number of individuals that will be driving by the farm.288 378.503 330.510 Year 5 5. The company.68% 5. The company's long-term plan is to phase out whichever products are least lucrative and replace them with products that are practical and cost efficient. Relocate and expand Green Acres vegetable system and get it operational. Additional application and utilization of horticultural technology in the production of strawberries will allow double utilization of the climate controled portion of the overhead.1 Competitive Edge Farmers Group's main competitive advantages are: y Efficient production utilizing greenhouses. The number of Oriental markets and vegetable processors represent national estimates of industry participants. will gain a significant industry advantage.628 26.305 25. Have the composting system in full production by early spring of the second year.150 25. Farmers Group hopes to consolidate considerable goodwill already created by exercising the option of not adding another high-production facility to the present supply-demand scenario.296 CAGR 3. .016 364. 5.00% 1.758 347.000 300. Integrate greens culture into the system.250 315. Market Analysis Year 1 Potential Customers Vegetable processors Oriental vegetable markets Individual buyers Total Growth 3% 1% 5% 4.750 361.00% 5.400 Year 3 5.558 Year 4 5.00% 4.000 345. The company's goals in the first year are to: y y y y Prepare the future site.The Market Analysis Pie shown below reflects the total number of potential customers for Farmers Group.000 Year 2 5. by acquiring an existing profitable vegetable farm with all the necessary custom-innovated equipment.464 25.

and health-friendly production techniques. Direct sales contacts of vegetable markets by delivery personnel.Horticultural Inspection Charles Newton . 5. 5.y Reduced overhead by fully realizing crop output potential and economies of scale through joint costs. Farmers Group's pricing for strawberries will exceed the average market price for the following reasons: y y y Taste sampling at outlets will be encouraged. live shipments will be delivered by contract carriers in special oxygenated tanks carrying 8. Farmers Group plans to shorten this cycle.1 Pricing Strategy The company sets its pricing based on market rates as far as vegetable products are concerned. 5. Farmers Group's bagged manure products will be delivered and unloaded in sizable wholesale quantities by the pallet. ozone. environment. Smaller.000 vegetables or more. .4 Strategic Alliances The company has strategic alliances with: y y y y y y y Alabama State University Horticulture Department Southeastern Alabama State University Biology Department Dr.Wildlife Alabama Wildlife Mobile Nursery Center Sales Forecast The following table and charts show our projected sales. The company's average sales cycle from first contact to closing of the sale is approximately 3 to 12 days for vegetable products.2. more local orders will significantly increase the overall sales when the 300-450 live vegetables carrying tank system is put into service late in 2000 or early in 2001. Unparalleled flavor superiority will addict greens tasters. Composted products sale cycle should run from 3 to 12 days. As in the past. and will be continued as demanded. will also be employed.2 Marketing Strategy Farmers Group will initially market and supply its products to target customers. 5. and also engaging prominent chefs to help promote this fledgling industry. Promotion of pesticide-free. Michael Smith . fumigant-free cultural techniques of soil.3 Sales Strategy At Farmers Group. These strategies include the promotion of products through the sponsoring of spots on cooking shows and exhibitions. the company estimates that from first contact to sale conclusion. in that both products will be mainly sold through wholesale marketing. the cycle for fresh strawberries will run 3 days or less.Vegetable Specialist James Edwards . The company will utilize aggressive advertising strategies to further market its products. y Knowledge due to research since 1988. as well as cold calling by telephone of potential market outlets. the company would like to set up a website to market its products. Furthermore. the sales process is primarily the same for vegetables as it is for composting products. The company is further exploring marketing opportunities on the Internet. To this extent.

000 $0 $575.000 $0 $700.850 Year 4 $889.000 $0 $850.032 $0 $601.032 Year 5 $927. .100 Year 4 $601.803 $0 $627.331 $0 $927.850 $0 $578. James Jackson.100 $0 $478.000 Year 1 $391.100 $0 $889.000 Year 3 $578.331 Year 5 $627.000 $0 $391. Business Manager.100 Year 3 $850.Sales Forecast Year 1 Sales Sales Other Total Sales Direct Cost of Sales Sales Other Subtotal Direct Cost of Sales $575. and the current manager of Mobile Farmers Vegetable Farm. who has extensive knowledge of the industry and has been tracking vegetable trends for 30 years.000 Year 2 $478.803 Management Summary Farmers Group's management team is led by Mr.000 Year 2 $700.

8. Executive Director. Farmers Group has an environment and structure that encourages productivity and respect for customers and fellow employees.000 $6.000 $18.000 $0 7 $111.000 $18.000 $18.000 $6.1 Personnel Plan Overall. Management Trainee. Full Time Colin Henry.000 $0 7 $111.The company's management philosophy is based on responsibility and mutual respect.000 Year 5 $30.000 $30. Another $1. 1/2 Time Contract Personnel They will be utilized initially for the moving and setting up of the vegetable farm. Personnel Plan Business Manager Executive Director Manager Trainee Manager Trainee Logistic engineer Heavy equipment Welder Contract workers Total People Total Payroll Year 1 $25.000 $18.000 Year 4 $30.000 $6.000 $30. The company expects to employ 5 temporary employees during the equipment re-location phase. and funding operating expenses. 7. The following is a breakdown of how the funds will be used: . greenhouses. Full Time Financial Plan Summary The following topics and tables outline our financial plan.000 $18.000 y y y Henry Jones.000 7 $117. equipment. Heavy Equipment.000 $3.500 Year 2 $30.000 for the purpose of financing the acquisition of the Green Acres Vegetable Farm and Mobile Farmers Vegetable Farm. Full Time Kevin Perry.000 Year 3 $30. Management consists of: James Jackson.000 $6.500 $15.000 $25. and the building of the manure composting facility. Welder.000 $18. Business Manager. 1/4 Time Daily Maintenance y y y y This group will consist of the following: Michael Owen. Full Time Terry Howard.000 will be invested in the company by its four co-owners. 3/4 Time Victor Green.000 $6.000 $6. Farmers Group will have 12 personnel.000 $4.000 $3. Logistical Engineer. 4 employees on a permanent basis. and 3 part-time employee.000 $3.000 $0 7 $111.000 $9.000 $3.1 Start-up Funding Funding Requirements and Uses The company is seeking to raise of $830.000 $18. The Farmers Group team is organized into three groups: Management Management will be responsible for supervising and participating in the daily operations of the facility.000 $6.000 $30.000 $0 7 $111.000 $30. Management Trainee.000 $18.000 $6. facilities modifications.000 $18.000 $3.000 $18.000.

000 $10.400 $0 $245.600 $1.000 $80.000 $245.000 $684.000 8.000 $400.600) $315.000 $400.145.400 $1.830.000 $0 $830.400 $1.000 $30.000 $1.700.145.400 $1.300.000 $400.000 $100.000 $250.400 $1.000 $250.000 $0 $0 $1.830.000 $250.000 ($684.000.800.Breakdown of Use of Funds Acquisition: Property Equipment System Sub-total Operating Expenses: Salaries Marketing and promotion Other operating expenses Sub-total Total Start-up Funding Start-up Expenses to Fund Start-up Assets to Fund Total Funding Required Assets Non-cash Assets from Start-up Cash Requirements from Start-up Additional Cash Raised Cash Balance on Starting Date Total Assets Liabilities and Capital Liabilities Current Borrowing Long-term Liabilities Accounts Payable (Outstanding Bills) Other Current Liabilities (interest-free) Total Liabilities Capital Planned Investment Investor 1 Investor 2 Investor 3 Investor 4 Other Additional Investment Requirement Total Planned Investment Loss at Start-up (Start-up Expenses) Total Capital Total Capital and Liabilities Total Funding $250.2 Important Assumptions Nature and Limitation of Projections .145.000 $900.000 $10.400 $1.000 $1.

and bagged composted manure products.974 68% $11. Nature of Operations The company is in the business of vegetable farming. and insurance costs.00% 7. Expenses The company's expenses are primarily those of salaries. greens cultivation. capital.00% 0 Year 3 3 7.00% 20.00% 20. utilities.83% 0 8. General Assumptions Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Other Year 1 1 7. the company's expected assets. liabilities.00% 7.00% 0 Year 5 5 7. The company expects to be operating in 2000. strawberries. Other expenses are based on management's estimates and industry averages.00% 20. The projections reflect management's judgement of the expected conditions and its expected course of action given the hypothetical assumptions. and composting.3 Break-even Analysis The company's break-even analysis is given below.832 . to the best of management's knowledge.00% 7.This financial projection is based on sales volume at the levels described in the sales forecast section and presents.00% 20.00% 20.83% 0 Year 2 2 7. Revenues The company's revenue is derived primarily from the sale of vegetables.83% 0 Year 4 4 7. Break-even Analysis Monthly Revenue Break-even Assumptions: Average Percent Variable Cost Estimated Monthly Fixed Cost $36. and revenues and expenses.00% 7.00% 7.

.8. Farmers Group expects a steady growth in profitability over the next few years.4 Projected Profit and Loss As the profit and loss table shows.

000 $578.26% $117.000 $391.000 $611.22% $111.100 $601.100 Year 4 $889.28% $111.000 $6.980 $32.331 $627.068 31.550 $0 $3.803 $10.850 $10.040 $6.72% $111.150 30.100 $10.500 $0 $0 $140.600 $75.500 $11.000 $478.900 30.528 31.050 $119.000 $6.000 $6.550 $0 $3.000 $5.032 $278.050 $146.000 $637.268 Year 5 $927.300 $0 $3.000 $588.000 $5.040 $0 $0 $141.27% $111.478 .000 $401.400 $0 $2.800 $137.100 $211.850 $261.500 $0 $0 $136.500 $0 $0 $143.000 $174.000 $17.100 $0 $3.000 $6.000 $11.020 Year 2 $700.000 $488.803 $289.032 $10.300 Year 3 $850.000 $5.000 30.000 $5.Pro Forma Profit and Loss Sales Direct Cost of Sales Other Total Cost of Sales Gross Margin Gross Margin % Expenses Payroll Sales and Marketing and Other Expenses Depreciation Gas and Oil Utilities Insurance Payroll Taxes Other Total Operating Expenses Profit Before Interest and Year 1 $575.000 $10.000 $16.500 $0 $0 $142.000 $5.000 $15.

250 $575.987 10.275 $666.000 $694. HST/GST Paid Out Principal Repayment of Current $143.000 $0 $100.498 $927.000 Year 2 $111. Pro Forma Cash Flow Year 1 Cash Received Cash from Operations Cash Sales Cash from Receivables Subtotal Cash from Operations Additional Cash Received Sales Tax.94% $75.46% $146.495 $24.100 $0 $0 $0 $0 $0 $0 $0 $889.927 $779.000 Year 3 $111.803 $609.095 $16.000 $947.331 $0 $0 $0 $0 $0 $0 $0 $927.139 9.100 $39.000 .920 $526.Taxes EBITDA Interest Expense Taxes Incurred Net Profit Net Profit/Sales $32.845 $5.668 $63.803 $212.825 $889.000 $720.268 $32.331 Year 5 $111.420 $175.996 $94.095 $21.750 $431. HST/GST Received New Current Borrowing New Other Liabilities (interestfree) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received Expenditures Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations Additional Cash Spent Sales Tax.500 $637.927 $222.644) -3.000 $498.435 Year 2 Year 3 Year 4 Year 5 $0 $54.337 7.000 $0 $0 $0 $0 $0 $0 $0 $700.833 $695.000 $0 $100.000 $0 $35.491 $21.000 $0 $0 $0 $0 $0 $0 $97.000 $0 $25.000 Year 1 $117.964 3.140 $231.000 $668.14% $119.000 $0 $0 $0 $0 $0 $0 $0 $575.140 $805.300 $47.020 $54.100 Year 4 $111. VAT.035 $84.000 $700. VAT.5 Projected Cash Flow The chart and table below contain the cash flow assumptions and projections for Farmers Group during the first five years of plan implementation.500 $408.435 $831.45% $137.24% 8.000 $525.478 $26.664 $0 ($22. Year 1 monthlies are presented in the appendix.500 $850.

763 Year 2 $44.399 Year 2 Year 3 Year 4 Year 5 $1.000 $0 $10.000 $924.106 8.150 $300.000 $946.740 $954.760 $250.000 $0 $0 $25.000 $954.000 $0 $201.000.000 $0 $178. Farmers Group is a start-up venture.182 $1.7 Business Ratios The business ratios given below are contrasted to industry standards for SIC code 0161 which covers vegetable and melon growers. product life cycle.000 $454.803) $180. and therefore has a more heavy debt to equity ratio than most existing farms.000 $759.980 $0 $25.182 8.000 $982.756 $289.250 $0 $29.000 $752.804) ($22.000 $0 $290.073 $202.943) ($602.000 $984.017 Year 3 $55.984 $400.057 $504.043 $202.644) $21.000 $982.984 $180.000 $1. . the company is expected to spend more on advertising than its competitors.581 $292.196 $589.435 ($1.040) ($19.000 $1.097.803 ($59. due to its move into a niche market.987 $292.000 $0 $352.767 $250.000 $20.756 $289.250 $0 $50.984 $346.000 $0 $500.600) ($732.097.420) $239.6 Projected Balance Sheet We project solid cash balance and net worth over the years of the plan.140 $0 $50.139 $94.763 $500.136 $250.000 $0 $0 $10.000 $0 $500.964 $63.000.150 $182.000 $482.337 $84.720 $430.581 Year 5 $59. and capital resources.960 $146.Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent Net Cash Flow Cash Balance $0 $0 $0 $0 $0 $580.177 $0 $24.000 $478.000 $1.980 $0 $55.000 $665. Pro Forma Balance Sheet Year 1 Assets Current Assets Cash Accounts Receivable Inventory Other Current Assets Total Current Assets Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets Liabilities and Capital Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities Long-term Liabilities Total Liabilities Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital Net Worth $239.740 $500.177 $0 $25.346 $500.720 $430.000 $0 $500.057 $504.399 $250.000 $1.000 $482.017 $982.000 $1. Furthermore.000 $395.104) $201.000 $551.150 $121.043 $246.000 $545.106 $0 $32.927 $22.045.000 $0 $500.017 $500.586 $250. research has shown that there can be significant deviations from industry standards due to farm size.960 $350.763 $982.000 ($684.210 $182.346 $984.000 $890.000 $484.399 $86.000 $0 $145.000 $0 $500.196 $589.420 ($5.210 $0 $31.740 Year 1 $6.475 $270.244) ($730.045. The first two years of operations are expected also to have a higher growth rate than average as it gains market share.346 Year 4 $57.280) ($676.043 $375.097.000 $0 $0 $20.581 $500.960 $201. Within this category.

a n.14% 30.11 Appendix .70% 1.20% 15.57 0.67 0.57 1.14 1.17% 3.54% 48.a n.53 1.74 12.82 34% 1.11 40.60% 12.00% 0.28 5.58% 0.30 0.19% 47.00 0 11.a n.21% 18.92% 50.00% 100.44 24.20% 1.31% 1.a n.30% 23.00 1.86% 10.90% 50.28 0.00% 100.00 0 21.24 1.39 72.a n.00% 0.71% Year 4 9.47 29.00% Year 2 21.20% 43.00% 100.12% 0.01% 2.55 1.a 0.57% 1.28% 69.48% 2.37 $192.04% 0.32 1.17 17 0.36 30% 1.81% 52.65 0.45% 14.71% 10.17 29 0.46% 16.17 30 0.53 1.00% 100.78% 100.00% 33.34% 20.30 12.10% 49.a n.50% 51.66% 9.66% 30.50% n.23% 15.33% 14.48 69.87 1. to Liab.72% 31.88 51.a n.00 60 3.75% 38.74% Year 3 21.37 22.00% 100.76 0.17 27 0.11 1.a n.44% 2.196 $339.42 1.22% 37.00% 0.88% Year 2 3.36% 12.00% 100.53 48.00% -7.80% 100.16 21% 2.83% 5.a n.43% Year 4 4.39 1.22% 47.58% 3.95 0.21% 43.28% 31.03% 3.69% 0.15% Year 3 7.720 $280.00% 100.93 55.38% 39.a n.05 4.67% 51.90% 56.182 0.Ratio Analysis Year 1 Sales Growth Percent of Total Assets Accounts Receivable Inventory Other Current Assets Total Current Assets Long-term Assets Total Assets Current Liabilities Long-term Liabilities Total Liabilities Net Worth Percent of Sales Sales Gross Margin Selling.26% 0.30% Industry Profile -4.77% 25.00% 5.10 18% 2.25 29 0.00% 30.17% Year 1 -3.10% 20.94% -7.00 0 19.73 2.00% 20.14% 7.25% 72.00 0 19.84% 100.48 2.76% 1.91 0.00% 31.40% 100.71 2.39% 40.98 0.a n.90% 14.60% Year 5 4.18% 25.60% 8.756 $164.19% Year 5 10.a n. General & Administrative Expenses Advertising Expenses Profit Before Interest and Taxes Main Ratios Current Quick Total Debt to Total Assets Pre-tax Return on Net Worth Pre-tax Return on Assets Additional Ratios Net Profit Margin Return on Equity Activity Ratios Accounts Receivable Turnover Collection Days Inventory Turnover Accounts Payable Turnover Payment Days Total Asset Turnover Debt Ratios Debt to Net Worth Current Liab.00% 100.73% 0.a n.74 12.37% 50.00% 32.70% 0.57 3. Liquidity Ratios Net Working Capital Interest Coverage Additional Ratios Assets to Sales Current Debt/Total Assets Acid Test Sales/Net Worth Dividend Payout 0.57% 35.90 12.a n.08% 49.64% 56.33 3.27% 30.60% 48.a n.91% 26.12 1.16% 59.73% 0.26% 30.39 2.45% 27.60% 2.20% 4.55 2.00% 30.57 0.76% 1.67% 20.16% 20.00% 28.46% 25.23% 14.59 1.73% -2.33% 2.42% 52.96 0.24 56.40% 28.24% 16.37 23.94 0.a n.79% 18.06 15% 3.00% 0.80% 3.63% 49.057 $304.31% 1.

261 $158.980 $0 $55.000 $30.750 $130.000 $1.984 $400.875 $106.000 $0 $500.012 $188.375 $0 $88.260 $7.225 $17.740 Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 $1.000 $7.859 $221.875 $13.875 $74.000 $40.000 $7.105) $176.082 $1.000 $500.573 $15.650 $1.000.394 $17.000.265 $400.000 $500.000.000 $0 $0 $0 $0 $0 $47.000 $25.400 $203.055.980 $11.525 $239.599 $124.000 $783.00% 7.129 $19.000 $1.00% 0 0 0 0 0 0 0 0 0 0 0 0 Pro Forma Cash Flow Month 1 Cash Received Cash from Operations Cash Sales Cash from Receivables Subtotal Cash from Operations Additional Cash Received Sales Tax.856 $221.00% 20.000 $0 $407.000 $603.176 $85.260 $395.230 ($15.500 $0 $2.00% 20.875 Month 9 $0 $0 $0 $0 $0 $0 $0 $142.000 $7.650 $0 $150.500 $10.261 $1.984 $500.00% 20.000 $178.200 $250.137) $95.000 $0 $352.250 Month 11 $0 $0 $0 $0 $0 $0 $0 $36.647 $176.084.725 $18.000 $55.334 $1.000 $0 $422.740 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 $500.800 $17.000 $120.000.265 $7.00% 5 7.875 $12.750) $203.00% 7.000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $6.000 $250.000 $119.365 $48.000 $802.000 $0 $500.417 $46.00% 20.875 $25.000 $1.145.500 $129.153 $6.062.900 $250.000 $100.00% 2 7. VAT.000 $126.000 $27.334 $160.250 $36.500 $7.125 $99.012 ($81.871 $1.00% 7.321 $400.261.000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $10.875 $17.153 $400.000 $0 $402.511 $57.00% 7.061 $0 $5.236 $0 $0 $0 $0 $0 $0 $0 $57.000 $1.232 $70.984 $346.000 $500.000 $500.000 $0 $407.131.000 $1.153 $376.000 $500.069.859 $1.153 $176.375 $55.000.000 $0 $0 $0 $0 $0 $19.000 $752.000.750 $11.000 $500.082 $191.000 $500.800 $250.000 $0 $0 $0 $0 $0 $23.000 $555.000 $562.875 Month 5 $0 $0 $0 $0 $0 $0 $0 $32.600 $250.500 $46.009) $168.000 $500.647 $400.000.500 $7.000 $807.250 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Pro Forma Balance Sheet Month 1 Assets Current Assets Cash Accounts Receivable Inventory Other Current Assets Total Current Assets Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets Liabilities and Capital Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities Long-term Liabilities Total Liabilities Paid-in Capital $30.256 $400.00% 20.00% 20.000 $50.375 $43.011 $10.400 $68.647 $376.643 $0 $0 $0 $0 $0 $0 $0 $18.000 $0 $500.176 $400.500 $6.508 $17.000 $545.073 $7.000 $631.000 $0 $461.000 $1.153 $1.00% 7.250 $55.634 $0 $0 $0 $0 $0 $0 $0 $15.000 $175.000 $500.000 $1.250 $41.00% 8 7.000 Month 9 Month 10 $81.000 $787.000 $50.000 $0 $407.00% Month Month 11 12 11 12 7.000 $0 $500.000 $0 $500.110.00% 20.000 $541.246 $191.478 $0 $0 $0 $0 $0 $0 $0 $101.250 $61.455 $0 $0 $0 $0 $0 $0 $0 $17.007 $11.375 Month 7 $0 $0 $0 $0 $0 $0 $0 $86.129 $9.011 $85.250 Month 12 $0 $0 $0 $0 $0 $0 $2.000 $27.000 $0 $500.200 $250.400 $68.394 $10.696) $158.000 $563.007 ($19.000 $55.041.00% 20.507 $19.000 $0 $352.129 $32.573) $160.250 $88.012 $10.000 $0 $500.800 $17.000 $500.000 $1.750 ($41.375 Month 10 $0 $0 $0 $0 $0 $0 $0 $88.000 $0 $383.000 $500.730 $101.000 $807.500 $30.417 $400.000 $569.045.000 $807.000 Month Month Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 1 2 $0 $0 $6.984 $6.000 $100.00% 3 7.063.000 $40.000 General Assumptions Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Other 1 7.00% 7.643 $0 $150.417 $376.200 $37.000 $250.571 $14.571 ($1.509 $18.230 $10.760 $250.490 $159.00% 4 7.375 $86.760 $250.00% 30.176 $380.599 $0 $30.984 $400.000 $0 $387.236 $216.000 $7.000 $0 $500.000 $645.000 $7.125 $32.725 0.365 $0 $15.00% 7.465 $1.00% 20.000.00% $0 $0 $0 $0 $0 $0 $0 $0 Month 1 $0 $0 $0 $0 $0 $0 $0 $0 Month 2 $0 $0 $0 $0 $0 $0 $0 $2.00% 7.250 $250 $6.000 $0 $0 $0 $0 $0 $32.00% 6 7.478 $114.634 $7.000 $0 $430.000 $1.00% 20.256 $400.500 $7.125 Month 8 $0 $0 $0 $0 $0 $0 $0 $106.321 $400.760 $250.984 $346.500 $143.509 $7.000 $830.400 $0 $150.000 $752.256 $7.00% 7.000 $822.00% 7 7.000 $10.643 $168.000 $1.061 $26.000 $0 $552.00% 7.455 $36.000 $807.000 $0 $407.000.650 $184.321 $400.875 $142.750 $19.000 $500.00% Month 10 10 7.000.000 $1.000 $250.400 $1.000 $76.000 $761.321 $7.321 $7.000 $400.256 $400.000.394 $40.000 . VAT.000 $0 $500. HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent Net Cash Flow Cash Balance $0 $0 $0 $0 $0 $0 $0 $41.000 $175.007) $184.571 $9.000 $651.500 Month 3 $0 $0 $0 $0 $0 $0 $0 $6.760 $250.256 $400.151.000 $0 $500.00% 20.871 $180.643 $1.200 $37.000 $584.000 $120.103.650 $0 $0 $0 $0 $0 $0 $0 $19.509 ($16.373 $0 $0 $0 $0 $0 $0 $0 $188.256 $7. HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received Expenditures Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations Additional Cash Spent Sales Tax.465 $239.000 $1.00% 7.000 $0 $0 $81.000 $861.490 $1.500 $7.00% 7.000.232 $0 $4.265 $376.600 $34.073 ($8.000 $0 $500.750 $42.373 $203.875 Month 6 $0 $0 $0 $0 $0 $0 $0 $55.500 $55.000 $250.250 $0 $36.500 Month 4 $0 $0 $0 $0 $0 $0 $0 $17.600 $34.321 $400.023 $1.Sales Forecast Month Month Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 1 2 Sales Sales Other Total Sales Direct Cost of Sales Sales Other Subtotal Direct Cost of Sales 0% 0% $0 $0 $0 Month 9 Month 10 Month 11 $0 $0 $0 Month 11 $0 $0 $0 Month 12 $0 $0 $0 Month 12 $0 $0 $0 $0 $10.008 $867 $159.000.000 $0 $500.260 $400.875 $89.000 $610.000 $119.000 $1.00% 7.008 $9.000 $25.00% 9 7.023 $95.000 $400.000 $0 Starting Balances $245.500 $91.364 $180.000 $952.125 $30.

527 $0 $39.062.000 $100.667 $0 $4.000 $1.007) ($38.540 $43.500 $1.756 $1.500 $1.767 28.206 $12.540 $11.540 $7.00% $0 $0 $800 $800 ($800) 0.919) ($22.465 $1.500 $1.000 12 Month Month 5 Month 6 Month 7 Month 8 Month 9 4 $1.000 $950 $0 $170 $500 $420 $0 $0 $11.000 $1.500 $1.31% 30.033 $38.33% $7.500 .00% Personnel Plan Month 1 Month 2 Month 3 Business Manager Executive Director Manager Trainee Manager Trainee Logistic engineer Heavy equipment Welder Contract workers Total People Total Payroll 0% 0% 0% 0% 0% 0% 0% 0% $1.23% $12.500 $1.000 $0 $0 $0 $0 $0 $1.Retained Earnings Earnings Total Capital Total Liabilities and Capital Net Worth ($684.387 $262.000 $27.600 $34.373) ($7.013 $254.500 $2.540 $11.833 $31.261 $1.000 $950 $0 $170 $500 $420 $0 $0 $12.110.500 $2.000 12 $1.127 $20.000 $175.53% 29.756 Pro Forma Profit and Loss Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Sales Direct Cost of Sales Other Total Cost of Sales Gross Margin Gross Margin % Expenses Payroll Sales and Marketing and Other Expenses Depreciation Gas and Oil Utilities Insurance Payroll Taxes Other Total Operating Expenses Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred Net Profit Net Profit/Sales $0 $0 $800 $800 ($800) 0.927 $4.60% $9.500 $9.627 ($12.600) ($684.000 $1.725) 17.606 $329.500 $0 $0 $1.627 $4.500 $1.550 $0 $677 1.000 $1.500 $950 $0 $170 $500 $420 $0 $0 $9.040 $10.500 $10.667 $0 $4.650 $1.225) ($17.500 $1.500 $0 $0 $1.606 $327.867 $28.407) $4.073) ($1.490 $1.000 $1.481 $292.00% Month Month 11 Month 12 10 $10.706 $310.229 $253.167 31.527 $4.600) ($684.600) ($684.540 15% $9.500 $10.007) ($15.041.500 $950 $0 $170 $500 $420 $0 $0 $12.000 $9.500 $950 $0 $170 $500 $420 $0 $0 $11.500 $0 $0 $1.393 $277.261.707) ($2.000 12 $1.500 $500 $0 $500 $0 $500 $0 $0 $0 $0 $0 $0 $0 7 7 7 7 7 7 $7.740 $315.500 $11.494) ($45.171) ($61.00% -153.000 Month 10 $2.73% -28.967 $16.500 $1.055.600) ($684.500 $500 $0 7 Month 11 $2.000 $50.92% 30.145.040 $11.131.711) 0.527 $25.127 $4.000 $10.540 $2.500 $2.133 $11.000 $1.333 23.000 $1.000 ($1.000 $950 $0 $170 $500 $420 $0 $0 $13.334 $1.906 $269.433 $34.000 $55.227 $5.000 $40.100 22.540 $25.627 $43.500 $500 $0 7 $11.643 $1.460) ($62.306 ($4.500 $1.600) ($684.000 $833 $833 $81.084.400 $296.506 $308.407) ($14.373) $4.500 $2.667 $0 $4.600) ($684.500 $2.500 $1.007) ($19.063.000 $0 $0 $6.000 $120.600) ($684.069.80% 0.940 $253.500 $0 $5.340) ($10.340) ($14.29% -4.229 $253.500 $2.567 $15.500 $1.794) $14.340) ($14.00% $0 $833 $833 ($833) 0.644) $315.500 $1.707) ($2.082 $1.500 $1.600) ($684.400 $1.500 $2.000 $1.527 $0 $15.34% $10.500 $1.500 $950 $0 $170 $500 $420 $0 $0 $9.52% $82.627 ($12.013) ($53.393 $277.500 $500 $5.340) ($10.500 $1.040 $20.48% $68.373) $2.000 $7.600) ($684.940 $253.667 $0 $2.600) ($684.000 $1.500 $950 $0 $170 $500 $420 $0 $0 $950 $0 $170 $500 $420 $0 $0 $10.00% 0.833 $119.833 $37.500 $2.506 $308.352 $0 ($19.023 $1.17% $55.500 $1.500 $1.000 $1.500 $950 $0 $170 $500 $420 $0 $0 $13.500 $1.00% 0.500 $1.873) ($13.153 $1.000 $10.500 $1.500 $2.906 $269.600) $0 ($19.013 $254.233 $2.28% $21.667 $17.000 $119.500 $500 $5.500 $1.481 $292.151.706 $310.200 $37.500 $9.500 $2.352 $0 $4.040 $12.000 $25.500 $1.894) ($6.638 $0 $5.600) ($684.227 $4.871 $1.500 $950 $0 $170 $500 $420 $0 $0 $13.500 $1.500 $1.387 $262.500 $1.00% $7.500 $0 $0 7 Month 12 $2.33% $11.000 $833 $833 $0 $833 $833 ($833) 0.859 $1.000 $1.606 $327.900) ($17.045.040 $7.800 $17.50% -3.167 31.400 $867 $867 $833 $833 $68.000 $1.167 31.927 $2.103.873) ($13.500 $2.387) ($60.500 $11.500 $1.000 $10.500 $1.606 $329.600) ($684.600 15.400 $296.527 $0 $4.527 $0 ($14.000 $950 $0 $170 $500 $420 $0 $0 $9.

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