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 Liquid Culture
Table of Content

Y
Executive Summary.......................................................................................................................1
Chart: Highlights........................................................................................................................1
Keys to Success...............................................................................................................................2
Mission............................................................................................................................................2
Company Summary.......................................................................................................................2
Company Ownership.......................................................................................................................2
Start-up Summary............................................................................................................................2
Table: Start-up............................................................................................................................3
Table: Start-up Funding..............................................................................................................5
Products..........................................................................................................................................7

Market Analysis Summary...........................................................................................................7

Market Segmentation.......................................................................................................................7
Table: Market Analysis...............................................................................................................8
Chart: Market Analysis (Pie)......................................................................................................9
Strategy and Implementation Summary.....................................................................................9
Competitive Edge............................................................................................................................9
Marketing Strategy........................................................................................................................10
Pricing Strategy.........................................................................................................................10
Sales Strategy.................................................................................................................................10
Sales Forecast...........................................................................................................................11
Management Summary...............................................................................................................14
Personnel Plan...............................................................................................................................14
Table: Personnel.......................................................................................................................14
Financial Plan...............................................................................................................................15
Projected Cash Flow......................................................................................................................15
Table: Cash Flow......................................................................................................................15
Chart: Cash...............................................................................................................................16
Break-even Analysis......................................................................................................................17
Table: Break-even Analysis.......................................................................................................17

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 Liquid Culture
Chart: Break-even Analysis.......................................................................................................18
Projected Profit and Loss...............................................................................................................19
Table: Profit and Loss...............................................................................................................19
Chart: Profit Monthly................................................................................................................20
Chart: Profit Yearly...................................................................................................................21
Chart: Gross Margin Monthly..................................................................................................22
Chart: Gross Margin Yearly.....................................................................................................23
Projected Balance Sheet................................................................................................................24
Table: Balance Sheet.................................................................................................................24
Business Ratios..............................................................................................................................25
Table: Ratios.............................................................................................................................25
Table: Sales Forecast......................................................................................................................i

Table: Personnel............................................................................................................................ii

Table: General Assumptions.......................................................................................................iii

Table: Profit and Loss..................................................................................................................iv

Table: Cash Flow..........................................................................................................................vi

Table: Balance Sheet..................................................................................................................viii

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Liquid Culture

Executive Summary
The Year 1 season will be a great one for women looking for distinctive outdoor clothing online.
Liquid Culture will eliminate the middle man and offer creative outdoor clothing that is both
functional and beautiful. The savings are passed on to our customers who will be paying a
fraction of what they normally do for current retreated fashion in stores.

Liquid Culture's Year 1 line consists of the best fabric, designs and styling on the market. Larry
Wilson and Maggie Granger, co-owners of Liquid Culture, have fifteen years of experience
between them in the outdoor garment industry. Maggie has been a senior clothing designer for
Manic Woman Clothing for the past seven years.  Larry has been the website administrator for
South Face the past eight years.

Another strength of Liquid Culture is that it will not maintain any clothing inventory. Liquid
Culture has contracted with Magic Clothing Company, located in Los Angeles, California,
to produce and ship all Liquid Culture clothing.  Our design team will work closely with the
Magic's Indonesian-based manufacturing facilities. The Magic Clothing Company will maintain
the inventory and will produce sufficient product to meet the planned demand.

Chart: Highlights

Highlights

$4,000,000

$3,600,000

$3,200,000

$2,800,000 Sales
$2,400,000 Gross Margin
$2,000,000
Net Profit
$1,600,000

$1,200,000

$800,000

$400,000

$0
Year 1 Year 2 Year 3

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Liquid Culture

Keys to Success
 Accessible website that is entertaining to surf. Like a trip to your favorite store where you
always find something new that you want.
 Establishing a strong advertising campaign in a traditional media vehicle; i.e. magazines.
 Excellent vendor relationship that will facilitate quality manufacturing of Liquid
Culture's clothing and quick shipment of orders.

 Acquiring an excellent design staff.

Mission
Liquid Culture's mission is to present consumers with designs, styling and clothes that energizes
any outdoor activity. Whether it be snowboarding, running along the beach, or drifting down a
river, Liquid Culture has comfortable, durable clothing that will look and feel wonderful.

Company Summary
Liquid Culture will offer creative women's outdoor clothing, online, that is both functional and
beautiful. Larry Wilson and Maggie Granger, co-owners of Liquid Culture, will create a cost-
effective operation that will eliminate the cost of inventory by having a third-party, Magic
Clothing Company, handle all manufacturing and shipping of clothing to the customer. Liquid
Culture will process the order and collect the payment online. The order will then be sent to
Magic Clothing Company to be filled and shipped. Liquid Culture will focus on clothing design
and marketing of its products.

Company Ownership
Liquid Culture is owned by Larry Wilson and Maggie Granger.

Start-up Summary
Liquid Culture's start-up costs consists mostly of design and marketing. Liquid Culture has
$260,000 in investments and $200,000 in a short-term loan.

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Liquid Culture

Table: Start-up

Start-up

Requirements

Start-up Expenses
Legal $1,000
Stationery etc. $500
Brochures $0
Consultants $5,000
Insurance $0
Rent $2,000
Leased Office Equipment $10,000
Computer Equipment/Software $30,000
Website $10,000
Other $0
Total Start-up Expenses $58,500

Start-up Assets
Cash Required $401,500
Start-up Inventory $0
Other Current Assets $0
Long-term Assets $0
Total Assets $401,500

Total Requirements $460,000

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Table: Start-up Funding

Start-up Funding
Start-up Expenses to Fund $58,500
Start-up Assets to Fund $401,500
Total Funding Required $460,000

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Liquid Culture

Assets
Non-cash Assets from Start-up $0
Cash Requirements from Start-up $401,500
Additional Cash Raised $0
Cash Balance on Starting Date $401,500
Total Assets $401,500

Liabilities and Capital

Liabilities
Current Borrowing $0
Long-term Liabilities $200,000
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $200,000

Capital

Planned Investment
Investor 1 $130,000
Investor 2 $130,000
Other $0
Additional Investment Requirement $0
Total Planned Investment $260,000

Loss at Start-up (Start-up Expenses) ($58,500)

Total Capital $201,500

Total Capital and Liabilities $401,500

Total Funding $460,000

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Liquid Culture

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Liquid Culture

Products
Liquid Culture will sell women's outdoor clothing online. We will offer outdoor clothing  for almost
every type of active use. We will focus on the seasonal clothing demands of our customers including the
following:

 Fleece outerwear.
 Rain gear, waterproof breathables, as well as coated nylon.
 Synthetic clothing for outdoor activities.
 Hats.
 Shorts.
 Pants.
 Shirts.

Market Analysis Summary

In the past 15 years, women's outdoor wear has grown into a billion dollar niche in the clothing industry.
The popularity of the Internet has launched a number of online stores for women's outdoor wear but no
company is exclusively selling their products online.  There are a number of reasons for this but the
strongest is that the concept is new and untested.  Will customers buy something that they wear that can
only be seen online?  We believe they will, if the process is fun and the products are great and cheap. 

The key is marketing our target customers in the traditional advertising medium for fashion, i.e. women
fitness magazines.

The ads will focused on the eliminating the middle man in your clothing budget and stepping up to the
distinctive style of Liquid Culture. The company logo will also be an important marketing tool in
bringing customers to our website.

Market Segmentation
Liquid Culture will be focusing on two distinct groups of women that purchase outdoor clothing:

 Women 17-25 years of age: Youth drives the market so this is the important group to attract to
the website.  They have less money than the older group so we must give them what they want
for less.  The key is to have inexpensive selections in each clothing group that have the popular
cut. The company's logo attractiveness to this group can not be stressed strongly enough. The
initial small purchases will grow larger over time.

 Women 26-40 years of age: They are the core group that will drive Liquid Culture's success. 
This target group is responsible for the growth of outdoor women's wear.  They will be harder to
pull into the website. Once there, the key will be promoting the quality, attractiveness
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Liquid Culture

and savings.  In addition, we will have to assure that the purchase will fit the way the customer
wants it to.  It will be crucial that the return policy is hassle-free and speedy.

Table: Market Analysis

Market
Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Growth CAGR
Customers
Women 20% 6,000,000 7,200,000 8,640,000 10,368,000 12,441,600 20.00%
Ages 16-25
Women 15% 5,000,000 5,750,000 6,612,500 7,604,375 8,745,031 15.00%
Ages 26-40
Other 0% 0 0 0 0 0 0.00%
Total 17.81% 11,000,000 12,950,000 15,252,500 17,972,375 21,186,631 17.81%

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Chart: Market Analysis (Pie)

Market Analysis (Pie)

Women Ages 16-25

Women Ages 26-40

Other

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Liquid Culture

Strategy and Implementation Summary

Liquid Culture will win market share in the women's outdoor clothing niche by aggressively pursuing
visibility with its target customers.

Competitive Edge
Liquid Culture's competitive edge is its focus on the process than on product.  The website is just the
endpoint of an entire marketing program to drive customers' interest in Liquid Culture.  Though we have
confidence in the quality and attractiveness of our products, we know that building the road to the
website is our most important job. 

Larry Wilson's experience with South Face is pivotal to the success of Liquid Culture's website.  South
Face's website averaged five million hits a year and is considered one of the most accessible and
attractive websites in the clothing industry.  His experience is invaluable in assuring customers'
satisfaction with the shopping experience online.

Larry will introduce a new clothing measurement feature that is fun to use and will reduce customers
confusion on how the clothing will fit.  This will increase customer satisfaction and reduce returns.

Maggie Granger will be in charge of the clothing design team. As senior clothing designer for
Manic Woman Clothing, she watched the Manic Woman's sales grow by 20% for the past five years. 
Her clothing designs have been praised in the industry and have spawned many imitators.  With Liquid
Culture, Maggie is ready to change how quality women's outdoor clothing is sold. 

Liquid Culture's agreement with Magic Clothing Company is another strong competitive advantage. 
Our design team will work closely with the Magic's Indonesian-based manufacturing facilities. The
Magic Clothing Company will maintain the inventory and will produce sufficient product to meet the
planned demand. This will keep production costs low for products and put a cap on Liquid Culture's
overhead.

Marketing Strategy
Liquid Culture's marketing strategy is a simple one.  In women's fitness magazines like Self, Shape and
Strive, Liquid Culture will introduce customers to their products and website. We will also advertise in
CosmoGirl and Ellegirl magazines.

For the first two months, Liquid Culture will offer 10% off for all purchases under $100 and 15% off all
purchases over $100. We will offer the same discount strategy three more times during the year when
new seasonal clothing is introduced.

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Pricing Strategy
Liquid Culture's pricing strategy is to pass on most of the store mark-up to the consumer in reduced
price for clothing.  This advantage has no negative impact on our sales profit and will also absorb some
of the initial cost of offering discounts during our first three months of operation.

Sales Strategy
Liquid Culture will launch a $245,000 ad campaign targeted at our core customer groups. The focus of
the ads will be to "keep the money you give to the middleman" and use it to get outdoors and enjoy life. 
Liquid Culture's attractive logo will be heavily displayed in these ads. We estimate it will take most of
the year to build our sales to the point where we begin to show a profit. 

Liquid Culture will offer discounts at various times of the year to even out seasonality and build initial
awareness of the website.

Sales Forecast

Sales Forecast
Year 1 Year 2 Year 3
Sales
Clothing $2,170,000 $3,000,000 $4,300,000
Other $0 $0 $0
Total Sales $2,170,000 $3,000,000 $4,300,000

Direct Cost of Sales Year 1 Year 2 Year 3

Clothing $1,249,000 $1,800,000 $2,580,000
Other $0 $0 $0
Subtotal Direct Cost of Sales $1,249,000 $1,800,000 $2,580,000

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Liquid Culture

Chart: Sales Monthly

Sales Monthly

$400,000

$360,000

$320,000

$280,000

$240,000 Clothing
$200,000 Other
$160,000

$120,000

$80,000

$40,000

$0
Month 1 Month 3 Month 5 Month 7 Month 9 Month 11
Month 2 Month 4 Month 6 Month 8 Month 10 Month 12

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Chart: Sales by Year

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Sales by Year

$4,000,000

$3,500,000

$3,000,000
Clothing
$2,500,000
Other
$2,000,000

$1,500,000

$1,000,000

$500,000

$0
Year 1 Year 2 Year 3

Management Summary
Larry Wilson will manage the marketing team, as well as the development and administration of Liquid
Culture's website.  Maggie Granger will be in charge of the clothing design team. She will also manage
the production of the designs by Magic Clothing Company.

Personnel Plan
Besides Larry and Maggie, Liquid Culture will have a staff of eight:

 Three member clothing design team.

 Web administrator.
 Two member marketing team.
 Office manager.
 Accountant.

Table: Personnel

Personnel Plan
Year 1 Year 2 Year 3
Marketing/Website Director $84,000 $90,000 $95,000
Design Director $84,000 $90,000 $95,000
Designers $144,000 $156,000 $166,000
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Web Administrator $48,000 $52,000 $56,000

Office Manager $36,000 $39,000 $42,000
Marketing Staff $96,000 $104,000 $112,000
Accountant $39,600 $44,000 $48,000
Other $0 $0 $0
Total People 8 8 8

Total Payroll $531,600 $575,000 $614,000

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Financial Plan
The following is the financial plan for Liquid Culture.

Projected Cash Flow

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

Table: Cash Flow

Pro Forma Cash Flow

Year 1 Year 2 Year 3
Cash Received

Cash from Operations

Cash Sales $2,170,000 $3,000,000 $4,300,000
Subtotal Cash from Operations $2,170,000 $3,000,000 $4,300,000

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 $2,170,000 $3,000,000 $4,300,000

Expenditures Year 1 Year 2 Year 3

Expenditures from Operations

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 12
Liquid Culture

10 Month
9 Month 11
Cash Spending $531,600 $575,000 $614,000

8 Month
Bill Payments $1,590,840 $2,410,513 $3,317,830

Month
Subtotal Spent on Operations $2,122,440 $2,985,513 $3,931,830

Month
Additional Cash Spent

7
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0

Month
Principal Repayment of Current Borrowing $0 $0 $0

6
Other Liabilities Principal Repayment $0 $0 $0

Month
Long-term Liabilities Principal Repayment $44,796 $44,796 $44,796

5
Purchase Other Current Assets $0 $0 $0

Month
Purchase Long-term Assets $0 $0 $0

Month 4
Dividends $0 $0 $0
Subtotal Cash Spent $2,167,236 $3,030,309 $3,976,626

Month
2 3
Net Cash Flow $2,764 ($30,309) $323,374

MonthMonth
Cash Balance $404,264 $373,956 $697,330

1
Chart: Cash
Cash

$400,000

$350,000

$300,000

$250,000
Net Cash Flow
$200,000

$150,000 Cash Balance

$100,000

$50,000

$0

($50,000)

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Break-even Analysis
Our break-even analysis is based on running costs, the costs we incur to keep the business running, not
on theoretical fixed costs that would be relevant only if we were closing. Fixed costs include payroll,
rent, utilities, and marketing costs.

Table: Break-even Analysis

Break-even Analysis

Monthly Revenue Break-even $177,248

Assumptions:
Average Percent Variable Cost 58%
Estimated Monthly Fixed Cost $75,228

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Chart: Break-even Analysis

Break-even Analysis

$60,000

$40,000

$20,000

$0

($20,000)

($40,000)

($60,000)

$0 $60,000 $120,000 $180,000 $240,000 $300,000

$30,000 $90,000 $150,000 $210,000 $270,000 $330,000

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Projected Profit and Loss

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

Table: Profit and Loss

Pro Forma Profit and Loss

Year 1 Year 2 Year 3
Sales $2,170,000 $3,000,000 $4,300,000
Direct Cost of Sales $1,249,000 $1,800,000 $2,580,000
Other Production Expenses $0 $0 $0
Total Cost of Sales $1,249,000 $1,800,000 $2,580,000

Gross Margin $921,000 $1,200,000 $1,720,000

Gross Margin % 42.44% 40.00% 40.00%

Expenses
Payroll $531,600 $575,000 $614,000
Sales and Marketing and Other $265,000 $340,000 $440,000
Expenses
Depreciation $0 $0 $0
Leased Equipment $0 $0 $0
Utilities $2,400 $2,400 $2,400
Insurance $0 $0 $0
Rent $24,000 $24,000 $24,000
Payroll Taxes $79,740 $86,250 $92,100
Other $0 $0 $0

Total Operating Expenses $902,740 $1,027,650 $1,172,500

Profit Before Interest and Taxes $18,260 $172,350 $547,500

EBITDA $18,260 $172,350 $547,500
Interest Expense $17,574 $13,281 $8,801
Taxes Incurred $206 $47,721 $161,610

Net Profit $481 $111,349 $377,089

Net Profit/Sales 0.02% 3.71% 8.77%

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Chart: Profit Monthly

Profit Monthly

$60,000

$40,000

$20,000

$0

($20,000)

($40,000)
Month 1 Month 3 Month 5 Month 7 Month 9 Month 11
Month 2 Month 4 Month 6 Month 8 Month 10 Month 12

Chart: Profit Yearly

Profit Yearly

$400,000

$360,000

$320,000
$280,000

$240,000

$200,000

$160,000

$120,000
$80,000

$40,000

$0
Year 1 Year 2 Year 3

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Chart: Gross Margin Monthly

Gross Margin Monthly

$160,000

$140,000

$120,000

$100,000

$80,000

$60,000

$40,000

$20,000

$0
Month 1 Month 3 Month 5 Month 7 Month 9 Month 11
Month 2 Month 4 Month 6 Month 8 Month 10 Month 12

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Chart: Gross Margin Yearly

Gross Margin Yearly

$1,800,000

$1,600,000

$1,400,000

$1,200,000

$1,000,000

$800,000

$600,000

$400,000

$200,000

$0
Year 1 Year 2 Year 3

Projected Balance Sheet

The following is the projected balance sheet for three years.

Table: Balance Sheet

Pro Forma Balance Sheet

Year 1 Year 2 Year 3
Assets

Current Assets
Cash $404,264 $373,956 $697,330
Inventory $264,000 $237,790 $338,983
Other Current Assets $0 $0 $0
Total Current Assets $668,264 $611,746 $1,036,313

Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $668,264 $611,746 $1,036,313

Liabilities and Capital Year 1 Year 2 Year 3

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Current Liabilities
Accounts Payable $311,080 $188,009 $280,283
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $311,080 $188,009 $280,283

Long-term Liabilities $155,204 $110,408 $65,612

Total Liabilities $466,284 $298,417 $345,895

Paid-in Capital $260,000 $260,000 $260,000

Retained Earnings ($58,500) ($58,019) $53,329
Earnings $481 $111,349 $377,089
Total Capital $201,981 $313,329 $690,418
Total Liabilities and Capital $668,264 $611,746 $1,036,313

Net Worth $201,981 $313,329 $690,418

Business Ratios
The following table shows the projected businesses ratios. We expect to maintain healthy ratios for
profitability, risk, and return. These ratios have been determined by the 5137 industry, Women's and
Children's Clothing, as found in the Standard Industry Code (SIC) Index.

Table: Ratios

Ratio Analysis
Year 1 Year 2 Year 3 Industry
Profile
Sales Growth n.a. 38.25% 43.33% 10.40%

Percent of Total Assets

Inventory 39.51% 38.87% 32.71% 34.10%
Other Current Assets 0.00% 0.00% 0.00% 25.70%
Total Current Assets 100.00% 100.00% 100.00% 89.40%
Long-term Assets 0.00% 0.00% 0.00% 10.60%
Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 46.55% 30.73% 27.05% 40.70%

Long-term Liabilities 23.22% 18.05% 6.33% 9.00%
Total Liabilities 69.78% 48.78% 33.38% 49.70%
Net Worth 30.22% 51.22% 66.62% 50.30%

Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 42.44% 40.00% 40.00% 24.80%

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Selling, General & Administrative 42.42% 36.29% 31.23% 14.80%

Expenses
Advertising Expenses 11.29% 10.00% 9.30% 0.90%
Profit Before Interest and Taxes 0.84% 5.75% 12.73% 2.00%

Main Ratios
Current 2.15 3.25 3.70 2.36
Quick 1.30 1.99 2.49 1.09
Total Debt to Total Assets 69.78% 48.78% 33.38% 49.70%
Pre-tax Return on Net Worth 0.34% 50.77% 78.03% 4.90%
Pre-tax Return on Assets 0.10% 26.00% 51.98% 9.70%

Additional Ratios Year 1 Year 2 Year 3

Net Profit Margin 0.02% 3.71% 8.77% n.a
Return on Equity 0.24% 35.54% 54.62% n.a

Activity Ratios
Inventory Turnover 10.91 7.17 8.95 n.a
Accounts Payable Turnover 6.11 12.17 12.17 n.a
Payment Days 27 40 25 n.a
Total Asset Turnover 3.25 4.90 4.15 n.a

Debt Ratios
Debt to Net Worth 2.31 0.95 0.50 n.a
Current Liab. to Liab. 0.67 0.63 0.81 n.a

Liquidity Ratios
Net Working Capital $357,185 $423,737 $756,030 n.a
Interest Coverage 1.04 12.98 62.21 n.a

Additional Ratios
Assets to Sales 0.31 0.20 0.24 n.a
Current Debt/Total Assets 47% 31% 27% n.a
Acid Test 1.30 1.99 2.49 n.a
Sales/Net Worth 10.74 9.57 6.23 n.a
Dividend Payout 0.00 0.00 0.00 n.a

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Table: Sales Forecast

Sales
Forecast
Month Month Month Month Month 5 Month 6 Month 7 Month 8 Month 9 Month Month Month
1 2 3 4 10 11 12
Sales
Clothing 0% $40,000 $40,000 $60,000 $80,000 $110,000 $140,000 $180,000 $220,00 $250,000 $300,000 $350,000 $400,000
0
Other 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Sales $40,000 $40,000 $60,000 $80,000 $110,000 $140,000 $180,000 $220,00 $250,000 $300,000 $350,000 $400,000
0

Direct Cost Month Month Month Month Month 5 Month 6 Month 7 Month 8 Month 9 Month Month Month
of Sales 1 2 3 4 10 11 12
Clothing $20,000 $20,000 $31,000 $42,000 $58,000 $78,000 $100,000 $120,00 $150,000 $180,000 $210,000 $240,000
0
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal $20,000 $20,000 $31,000 $42,000 $58,000 $78,000 $100,000 $120,00 $150,000 $180,000 $210,000 $240,000
Direct Cost 0
of Sales

Table: Personnel

Personnel Plan
Month Month Month Month Month Month Month Month Month Month Month Month
1 2 3 4 5 6 7 8 9 10 11 12

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Marketing/Website Director 0% $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000
Design Director 0% $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000
Designers 0% $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000
Web Administrator 0% $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000
Office Manager 0% $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Marketing Staff 0% $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000
Accountant 0% $3,300 $3,300 $3,300 $3,300 $3,300 $3,300 $3,300 $3,300 $3,300 $3,300 $3,300 $3,300
Other 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total People 8 8 8 8 8 8 8 8 8 8 8 8

Total Payroll $44,300 $44,300 $44,300 $44,300 $44,300 $44,300 $44,300 $44,300 $44,300 $44,300 $44,300 $44,300

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Table: General Assumptions

General
Assumptions
Month Month Month Month Month Month Month Month Month Month Month Month
1 2 3 4 5 6 7 8 9 10 11 12
Plan Month 1 2 3 4 5 6 7 8 9 10 11 12
Current Interest 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Rate
Long-term 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Interest Rate
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

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Table: Profit and Loss

Pro Forma Profit

and Loss
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month Month Month 12
10 11
Sales $40,000 $40,000 $60,000 $80,000 $110,000 $140,000 $180,000 $220,000 $250,000 $300,000 $350,000 $400,000
Direct Cost of Sales $20,000 $20,000 $31,000 $42,000 $58,000 $78,000 $100,000 $120,000 $150,000 $180,000 $210,000 $240,000
Other Production $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Expenses
Total Cost of Sales $20,000 $20,000 $31,000 $42,000 $58,000 $78,000 $100,000 $120,000 $150,000 $180,000 $210,000 $240,000

Gross Margin $20,000 $20,000 $29,000 $38,000 $52,000 $62,000 $80,000 $100,000 $100,000 $120,000 $140,000 $160,000
Gross Margin % 50.00% 50.00% 48.33% 47.50% 47.27% 44.29% 44.44% 45.45% 40.00% 40.00% 40.00% 40.00%

Expenses
Payroll $44,300 $44,300 $44,300 $44,300 $44,300 $44,300 $44,300 $44,300 $44,300 $44,300 $44,300 $44,300
Sales and Marketing $30,000 $20,000 $10,000 $40,000 $15,000 $45,000 $15,000 $15,000 $25,000 $10,000 $30,000 $10,000
and Other Expenses
Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Leased Equipment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Utilities $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200
Insurance $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Rent $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
Payroll Taxes 15% $6,645 $6,645 $6,645 $6,645 $6,645 $6,645 $6,645 $6,645 $6,645 $6,645 $6,645 $6,645
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Operating $83,145 $73,145 $63,145 $93,145 $68,145 $98,145 $68,145 $68,145 $78,145 $63,145 $83,145 $63,145
Expenses

Profit Before ($63,145) ($53,145) ($34,145) ($55,145) ($16,145) ($36,145) $11,855 $31,855 $21,855 $56,855 $56,855 $96,855
Interest and Taxes
EBITDA ($63,145) ($53,145) ($34,145) ($55,145) ($16,145) ($36,145) $11,855 $31,855 $21,855 $56,855 $56,855 $96,855
Interest Expense $1,636 $1,604 $1,573 $1,542 $1,511 $1,480 $1,449 $1,418 $1,387 $1,356 $1,324 $1,293
Taxes Incurred ($19,434) ($16,425) ($10,716) ($17,006) ($5,297) ($11,288) $3,122 $9,131 $6,140 $16,650 $16,659 $28,668

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Net Profit ($45,346) ($38,325) ($25,003) ($39,681) ($12,359) ($26,338) $7,284 $21,306 $14,328 $38,850 $38,871 $66,893
Net Profit/Sales -113.37% -95.81% -41.67% -49.60% -11.24% -18.81% 4.05% 9.68% 5.73% 12.95% 11.11% 16.72%

Table: Cash Flow

Pro Forma Cash Flow

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month Month Month
10 11 12
Cash Received

Cash from Operations

Cash Sales $40,000 $40,000 $60,000 $80,000 $110,000 $140,000 $180,000 $220,000 $250,000 $300,000 $350,000 $400,000
Subtotal Cash from $40,000 $40,000 $60,000 $80,000 $110,000 $140,000 $180,000 $220,000 $250,000 $300,000 $350,000 $400,000
Operations

Additional Cash Received

Sales Tax, VAT, HST/GST 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Received
New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Other Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
(interest-free)
New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Other Current $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Assets
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 $40,000 $40,000 $60,000 $80,000 $110,000 $140,000 $180,000 $220,000 $250,000 $300,000 $350,000 $400,000

Expenditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month Month Month
10 11 12

Expenditures from
Operations

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Cash Spending $44,300 $44,300 $44,300 $44,300 $44,300 $44,300 $44,300 $44,300 $44,300 $44,300 $44,300 $44,300
Bill Payments $2,102 $62,079 $34,651 $53,959 $87,754 $97,272 $144,323 $153,408 $177,993 $225,221 $251,516 $300,561
Subtotal Spent on $46,402 $106,379 $78,951 $98,259 $132,054 $141,572 $188,623 $197,708 $222,293 $269,521 $295,816 $344,861
Operations

Additional Cash Spent

Sales Tax, VAT, HST/GST $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Paid Out
Principal Repayment of $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Current Borrowing
Other Liabilities Principal $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Repayment
Long-term Liabilities $3,733 $3,733 $3,733 $3,733 $3,733 $3,733 $3,733 $3,733 $3,733 $3,733 $3,733 $3,733
Principal Repayment
Purchase Other Current $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Assets
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 $50,135 $110,112 $82,684 $101,992 $135,787 $145,305 $192,356 $201,441 $226,026 $273,254 $299,549 $348,594

Net Cash Flow ($10,135 ($70,112) ($22,684 ($21,992 ($25,787 ($5,305) ($12,356 $18,559 $23,974 $26,746 $50,451 $51,406
) ) ) ) )
Cash Balance $391,365 $321,253 $298,570 $276,578 $250,791 $245,487 $233,130 $251,689 $275,663 $302,408 $352,859 $404,264

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Table: Balance Sheet

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 Month

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11 12
Assets Starting
Balances

Current
Assets
Cash $401,500 $391,365 $321,253 $298,570 $276,578 $250,791 $245,487 $233,130 $251,689 $275,663 $302,408 $352,859 $404,264
Inventory $0 $22,000 $22,000 $34,100 $46,200 $63,800 $85,800 $110,000 $132,000 $165,000 $198,000 $231,000 $264,000
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Current
Assets
Total $401,500 $413,365 $343,253 $332,670 $322,778 $314,591 $331,287 $343,130 $383,689 $440,663 $500,408 $583,859 $668,264
Current
Assets

Long-term
Assets
Long-term $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Assets
Accumulated $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Depreciation
Total Long- $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
term Assets
Total Assets $401,500 $413,365 $343,253 $332,670 $322,778 $314,591 $331,287 $343,130 $383,689 $440,663 $500,408 $583,859 $668,264

Liabilities Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month Month
and Capital 11 12

Current
Liabilities
Accounts $0 $60,945 $32,890 $51,043 $84,565 $92,471 $139,236 $147,529 $170,514 $216,893 $241,522 $289,834 $311,080
Payable
Current $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Borrowing
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Current

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Liabilities
Subtotal $0 $60,945 $32,890 $51,043 $84,565 $92,471 $139,236 $147,529 $170,514 $216,893 $241,522 $289,834 $311,080
Current
Liabilities

Long-term $200,000 $196,267 $192,534 $188,801 $185,068 $181,335 $177,602 $173,869 $170,136 $166,403 $162,670 $158,937 $155,204
Liabilities
Total $200,000 $257,212 $225,424 $239,844 $269,633 $273,806 $316,838 $321,398 $340,650 $383,296 $404,192 $448,771 $466,284
Liabilities

Paid-in $260,000 $260,000 $260,000 $260,000 $260,000 $260,000 $260,000 $260,000 $260,000 $260,000 $260,000 $260,000 $260,000
Capital
Retained ($58,500) ($58,500 ($58,500 ($58,500) ($58,500) ($58,500) ($58,500) ($58,500) ($58,500) ($58,500) ($58,500) ($58,500) ($58,500)
Earnings ) )
Earnings $0 ($45,346 ($83,671 ($108,674) ($148,355) ($160,714) ($187,052) ($179,767) ($158,461) ($144,134) ($105,284) ($66,413) $481
) )
Total Capital $201,500 $156,154 $117,829 $92,826 $53,145 $40,786 $14,448 $21,733 $43,039 $57,366 $96,216 $135,087 $201,981
Total $401,500 $413,365 $343,253 $332,670 $322,778 $314,591 $331,287 $343,130 $383,689 $440,663 $500,408 $583,859 $668,264
Liabilities
and Capital

Net Worth $201,500 $156,154 $117,829 $92,826 $53,145 $40,786 $14,448 $21,733 $43,039 $57,366 $96,216 $135,087 $201,981

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