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 Table of Contents

1.0 Executive Summary.....................................................................................................................1

1.1 Objectives....................................................................................................................................1
Chart: Highlights...........................................................................................................................2
1.2 Mission...........................................................................................................................................2
1.3 Keys to Success.........................................................................................................................2
2.0 Company Summary......................................................................................................................2
2.1 Company Ownership................................................................................................................2
2.2 Start-up Summary....................................................................................................................3
Table: Start-up..............................................................................................................................3
Table: Start-up Funding.............................................................................................................4
Chart: Start-up..............................................................................................................................5
3.0 Services.............................................................................................................................................5
4.0 Market Analysis Summary.........................................................................................................6
4.1 Market Segmentation..............................................................................................................6
Table: Market Analysis................................................................................................................7
Chart: Market Analysis (Pie).....................................................................................................7
4.2 Target Market Segment Strategy.......................................................................................7
4.3 Service Business Analysis......................................................................................................8
4.3.1 Competition and Buying Patterns...............................................................................8
5.0 Strategy and Implementation Summary.............................................................................9
5.1 Competitive Edge......................................................................................................................9
5.2 Marketing Strategy...................................................................................................................9
5.3 Sales Strategy..........................................................................................................................10
5.3.1 Sales Forecast..................................................................................................................10
Chart: Sales by Year..............................................................................................................11
Table: Sales Forecast............................................................................................................11
Chart: Sales Monthly.............................................................................................................12
5.4 Milestones..................................................................................................................................12
Table: Milestones........................................................................................................................12
Chart: Milestones........................................................................................................................13
6.0 Management Summary.............................................................................................................13
6.1 Personnel Plan..........................................................................................................................14
Table: Personnel..........................................................................................................................14
7.0 Financial Plan................................................................................................................................14
7.1 Important Assumptions........................................................................................................15
Table: General Assumptions...................................................................................................15
7.2 Break-even Analysis...............................................................................................................15
Chart: Break-even Analysis....................................................................................................16
Table: Break-even Analysis....................................................................................................16
7.3 Projected Profit and Loss.....................................................................................................16
Chart: Gross Margin Monthly.................................................................................................17
Chart: Gross Margin Yearly.....................................................................................................17
Table: Profit and Loss................................................................................................................17
Chart: Profit Monthly.................................................................................................................18

Page
 Table of Contents

Chart: Profit Yearly.....................................................................................................................19

7.4 Projected Cash Flow...............................................................................................................19
Chart: Cash...................................................................................................................................19
Table: Cash Flow.........................................................................................................................20
7.5 Business Ratios........................................................................................................................20
Table: Ratios.................................................................................................................................20
7.6 Projected Balance Sheet......................................................................................................22
7.6 Projected Balance Sheet......................................................................................................22
Table: Balance Sheet.................................................................................................................22
Table: Sales Forecast..........................................................................................................................1
Table: Personnel....................................................................................................................................2
Table: Personnel....................................................................................................................................2
Table: General Assumptions.............................................................................................................3
Table: General Assumptions.............................................................................................................3
Table: Profit and Loss..........................................................................................................................4
Table: Profit and Loss..........................................................................................................................4
Table: Cash Flow...................................................................................................................................5
Table: Cash Flow...................................................................................................................................5
Table: Balance Sheet...........................................................................................................................7
Table: Balance Sheet...........................................................................................................................7

Page
 PC Repair

1.0 Executive Summary

PC Repair will provide computer and technical consulting (repairs, training, networking and

upgrade service) to local small businesses as well as home PC users. The company will focus on
marketing, responsiveness, quality, and creating and retaining customer relations.

PC Repair was initially formed as a sole proprietorship, but was reconfigured as an S

Corporation in December of 2004. PC Repair will at first be a home office start-up, utilizing one
studio room in the owner's home and serving customers in the local Ramsford-on-
Bitstream area. In the third month of our plan, we will move into a leased office space and hire
a second technician. As sales increase, we will hire additional personnel.

The Market
The very nature of the computing industry, with its extraordinary rate of technological
development, creates a constant need for businesses skilled in updating and advising customers
on computer-related issues. In town, the majority of potential customers are dissatisfied with
existing options, creating an attractive niche for an innovative start-up. Small business PC users
will provide the majority of our business revenue. Business Week expects the computing
industry to grow at a rate of 12% and the processor speeds to continue to expand for years to
come, providing a rich resource for sales.

PC Repair has decided to focus mainly on the small business market, as these customers
typically don't have a full-time IT person, but have full-time IT needs. PC Repair will offer an
affordable, on-demand service for these customers. We can also offer maintenance agreements
that generate additional monthly income. For our residential customers, we will offer a very
affordable and helpful service with a very flexible schedule to meet their needs. Our target
market will focus on Ramsford-on-Bitstream and the surrounding areas. Market research
indicates there is an abundance of business for a small company such as PC Repair.

Start-up Funding and Financials

To get PC Repair started the owner is providing cash and assets. We are also seeking a short-
term loan, to be secured with the owner's home equity, and repaid within three years. Our
conservative sales forecasts, based on industry research within the local area, project hefty
sales in year one, steadily increasing through year three. To reach these goals, we will use an
aggressive advertising campaign to exploit our competitors' weaknesses. With good cost
control, we will see a modest, yet comfortable, net profit the first year, even after moving into
a leased space and hiring additional technicians.

1.1 Objectives

1. To provide the best service available to the community at an affordable price.

2. To generate substantial market share so that PC Repair is a common name.
3. Constant growth in sales from start up through year three.
4. To generate customer satisfaction so that at least 40% of our customer base is repeat
business.

Page 1
 PC Repair

Chart: Highlights

Highlights
$330,000

$300,000

$270,000

$240,000

$210,000 Sales
$180,000
Gross Margin
$150,000
Net Profit
$120,000

$90,000

$60,000

$30,000

$0
Year 1 Year 2 Year 3

1.2 Mission

Our goal is to set the standard for on-site computer solutions through fast, on-site service and
response. Our customers will always receive one-on-one personal attention at a very affordable
price. Our customers will receive the highest quality of customer service available. Our
employees will receive extensive training, a great place to work, fair pay and benefits, and
incentives to use their own good judgement to solve customers' problems.

1.3 Keys to Success

 Establishing a brand identity and generating brand recognition through marketing. 

 Responsiveness: being an on-call computer paramedic with fast response time.
 Quality: getting the job done right the first time, offering 100% guarantee.
 Relationships: developing loyal repeat customers--retainers.

2.0 Company Summary

PC Repair is an S Corporation located in Ramsford-on-Bitstream, owned by Jack Hacker. With a

small 3-year loan, PC Repair will grow in one year from a  one-man, home-office based repair
shop to a profitable, 3-person business in a leased location. We will build the necessary
infrastructure to quickly and efficiently respond to customers' computer needs, guaranteeing
speedy, friendly, competent, and cost-effective technical support.

2.1 Company Ownership

PC Repair was initially envisioned as a sole proprietorship in the owner's home. However, recent
feedback from our marketing outreach has suggested a much higher sales potential than
originally imagined, and PC Repair has been reformed as an S Corporation. This change will
provide additional legal protection for the owner, and will also streamline the financial

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 PC Repair

operations of the company as we expand the personnel to 5 within the next three years, lease a
separate space for offices, and purchase company vehicles and cell phones.

The owner, Jack Hacker, has 10 years of experience in the fields of technical support,
networking, and computer training and repair. Jack has also spent the last three years as the
manager of a custom computer building and repair store, and understands the computer needs
of small businesses.

2.2 Start-up Summary

Total start-up expenses include initial expenses for establishing our website, setting up the
business, and doing our pre-opening advertising. Exact allocations are shown in the table.

The bulk of our start-up requirements are asset needs: we need diagnostic and repair
equipment, half of which will be contributed to the business by the owner from his own
materials. We are treating this equipment as assets because we expect it to last at least three
years, and to have some resale value when we are through with it; we will buy additional
expensed equipment in years two and three. We also need start-up inventory which includes
RAM, spare hard drives, cables, and cases. Although we will keep expenses to a minimum for
the first three months, before we move, we will also need cash at start-up, to see us through
the next several months with a positive cash balance.

We plan to fund our total start-up requirements direct owner investment (including the
contributed assets), and a three-year loan secured with the owner's collateral (his home
equity). We should be able to easily repay this loan within three years, even with a much lower
sales revenue than projected. (See the Cash Flow table for projected repayment.)

Table: Start-up

Start-up

Requirements

Start-up Expenses
Legal $650
Website $350
Business Cards $100
Insurance $150
Uniforms $300
CPA $275
Advertisement $1,200
Total Start-up Expenses $3,025

Start-up Assets
Cash Required $28,000
Start-up Inventory $1,200
Other Current Assets $10,000
Long-term Assets $0
Total Assets $39,200

Total Requirements $42,225

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 PC Repair

Table: Start-up Funding

Start-up Funding
Start-up Expenses to Fund $3,025
Start-up Assets to Fund $39,200
Total Funding Required $42,225

Assets
Non-cash Assets from Start-up $11,200
Cash Requirements from Start-up $28,000
Additional Cash Raised $0
Cash Balance on Starting Date $28,000
Total Assets $39,200

Liabilities and Capital

Liabilities
Current Borrowing $19,225
Long-term Liabilities $0
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $19,225

Capital

Planned Investment
Owner $23,000
Investor $0
Additional Investment Requirement $0
Total Planned Investment $23,000

Loss at Start-up (Start-up Expenses) ($3,025)

Total Capital $19,975

Total Capital and Liabilities $39,200

Total Funding $42,225

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 PC Repair

Chart: Start-up

Start-up

$40,000

$36,000

$32,000

$28,000

$24,000

$20,000

$16,000

$12,000

$8,000

$4,000

$0
Expenses Assets Investment Loans

3.0 Services

PC Repair will offer computer repairs, training, networking and upgrade service to clients in two
major categories: home PC users and small business users. As PC Repair and the client
demands grow, we will offer software development to our business clients. 

From the very first day, we will offer on-site repair and consulting services, so that our clients
don't need to take time out of their busy days to haul a computer in to our workshop. This is
the single biggest frustration Jack has seen among small business owners needing computer
help. Much of our diagnostic equipment is portable, and we will remove a PC to our workshop
only when the problem requires more detailed diagnosis or repair. We will also offer free pick-
up and delivery of PCs needing repair. To meet the growing demand for this service, we will
purchase a company vehicle in the third month.

We will also offer extended maintenance contracts, so that business clients can deal with
technical support and repair needs as a single line-item expense, rather than having to plan for
unexpected crashes and problems with a rainy-day fund they may never use. Maintenance
contracts yield a high gross margin for us, and provide peace of mind for the customer.

We will offer limited software support (installation and compatibility issues), and focus on
hardware and networking support - this is a vital distinction, since software is evolving much
more rapidly than hardware, and our clients will have such diverse software needs that we
couldn't possibly keep up with all of them. We will encourage clients to register their software
and use the software's own support options to their full potential. We will, however, keep up to
date with multiple operating systems and networking developments, working with clients to
make sure they have the most appropriate combinations of hardware, OS, networking, backup
systems, and software. Backup and security are becoming higher priorities for all our potential
customers, as internet usage (and its pitfalls) becomes more common, and as more and more
daily records are stored electronically.

Page 5
 PC Repair

4.0 Market Analysis Summary

PC Repair will provide computer support in both a consulting and technical capacity to small
business owners as well as home PC users. Since PC Repair is currently a one man operation,
its growth in the first three months will be limited by the owner's capacity to complete work.
However, these first three months are critical for establishing our credibility and a reputation
for getting the job done quickly and well. We will focus on delivering excellent service, and
using the good word of mouth from this initial period to network with other potential clients. 

Personal market research by the owner indicates an attractive market niche for our services, of
which PC Repair will take full advantage. The very nature of the computing industry, with its
extraordinary rate of technological development, creates a constant need for businesses skilled
in updating and advising customers on computer-related issues. 

National chains, such as "Geeks on Call," and Best Buy's "Geek Squad" have seen rapid growth
in demand for these services in the last few years. Customers are seeking skilled help with
everything from installation of software and hardware components, to networking, to
transferring files from an old computer to a new one. Those who can often enlist their tech-
savvy children's help, but others are not so fortunate, and small-business owners need reliable
and quick help with all their computer needs, since every hour down may mean an hour or
more of lost revenue, especially for any business with a website or those doing e-commerce.

4.1 Market Segmentation

The existing computer service market is so extensive that categorizing it is rather difficult. We
have broken our potential market down into two groups, based on their needs: home PC users
and small business clients.

Home PC User
Our home PC user market includes non-tech-savvy residents of the local area (15 mile radius),
generally between the ages of 30 and 70, with at least one home computer. We are not
expecting income from users below 30, who tend to be more comfortable with technology and
willing to attempt repairs and upgrades on their own, without seeking professional assistance.
Such home users generally own a computer to do email, play games, write letters, scan and
print photos, and occasionally to do bookkeeping or taxes. Home PC users with more
sophisticated applications generally have enough tech savvy, from tech experience at work, to
do their own repairs and upgrades. Their hardware needs will include the computer itself,
monitors, keyboards, mouse, printer, and scanner.

This group is growing slightly faster than the overall population growth in our area, in part due
to the increasing demand for computers among retired people and young families, about 7% a
year.

Small Business Users

Small business users will provide the majority of our business revenue. The small business
market will be defined as customers within a 15 mile radius, with 2 or more computers or a
network which they use for business purposes at least 25% of the time. Their business use may
include minor usage, such as updating a business website for a brick-and-mortar store, keeping
the books, designing graphics or ad campaigns, and writing copy for press releases. It may also
be more extensive, incorporating inventory tracking, POS systems, customer databases, online
product/service delivery, or product development. The more intensive their computer usage for
business, the more critical it is to them that their technology work well and reliably, and that

Page 6
 PC Repair

quality repairs and support are available in a crisis. Their hardware needs will include the same
items as home users, plus servers, backup systems, data storage, and wireless networking.

The portion of the small business market we are targeting is growing at around 2% a year.

Table: Market Analysis

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Home PC Users 7% 25,000 26,750 28,623 30,626 32,770 7.00%
Small Business Users 2% 10,000 10,100 10,201 10,303 10,406 1.00%
Other 0% 0 0 0 0 0 0.00%
Total 5.39% 35,000 36,850 38,824 40,929 43,176 5.39%

Chart: Market Analysis (Pie)

Market Analysis (Pie)

Home PC Users

Small Business Users

Other

4.2 Target Market Segment Strategy

Although there are more potential customers among home PC users, we expect the majority of
our revenue to come from small business clients, since their need for our services is more
urgent, and they are willing to invest in technology as part of their business plan. The majority
of our marketing efforts will thus be focused on small business owners. These customers
typically don't have a full-time IT person, but have full-time IT needs. Home PCs are often used
by multiple people, and serve multiple purposes. Our home PC users need help with managing
their settings to integrate the different needs of all household members as much as they need
technical assistance.

ComputingNet magazine recently reported on the substantial need for timely and cost-effective
computer upgrades and repairs in this region; Jack Hacker has seen this market need in
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 PC Repair

person, as frustrated clients waited for days or weeks for their critical components to be
returned to full capacity, with no inexpensive alternative to the existing computer repair shops.
All of our clients need technical assistance, but we are also selling peace of mind: our clients
will know that friendly, efficient help is just a phone call away. As more and more companies
switch their support services to automated call centers or touch-tone menus, the simple
reassurance of hearing another human voice on the phone within a few rings is immeasurable.
Even better is knowing that within a few hours, someone will show up and take care of their
problem.

Both the software and hardware side of the computer industry continue to turn out new and
revised computer components at alarming rates. For PC Repair this means job security well into
the future. As reported by the Wall Street Journal, there seems to be no end to the
development of the computer market. Business Week expects the computing industry to grow
at a rate of 12% and the processor speeds to continue to expand for years to come.

4.3 Service Business Analysis

Secondary market research shows computer service customers tend to be very loyal to
providers that do good work and satisfy their needs. An analysis of PC Repair's main
competitors shows no overwhelming strengths that would be significant barriers to entry into
the market, as our local competitors have serious weaknesses.

The computer maintenance and repair industry is fragmented, with a few large, national players
and hundreds of small, local stores. While most computers are actually repaired in-store, near
the customer, parts for the repair come from major manufacturers and distributors; delays in
receiving necessary parts can significantly slow down the repair process. Large chains have
solved this problem by keeping vast amounts of inventory in stock at all times, while local
stores offer customers the trade-off of personal interaction and trust that may make up for
some delay.

PC Repair has established a relationship with a local distributor to do rapid special-ordering;

although this capability is more expensive than normal channels, it will enable us to quickly
establish a reputation as efficient and responsive to customer needs, particularly for our small
business users. We will leverage this customer loyalty into great word of mouth marketing and
steady growth.

4.3.1 Competition and Buying Patterns

Customers choose computer repair and assistance services based on reputation, previous
experience, and price. They may choose to return to a mediocre provider with whom they're
familiar, rather than try out a new unknown company about whom they've heard nothing. Large
stores, especially the service departments of national chains, have a great advantage simply in
their affiliation with an established brand. Establishing our brand identity and a great reputation
in the first few months is critical to our success. Once we have broken in to the local market,
our great service will turn new clients into permanent clients.

Our services will be second to no one and our prices will be very reasonable for the high quality
service we offer. By providing superior service, word of mouth alone will bring in many new
clients. The satisfaction our consumers find will keep them coming back. There are two main
competitors for the computer upgrade and repair business in this area:

Page 8
 PC Repair

1. Competitor A. They are a well established provider of computer upgrades and services,
and do quick work. However, they have a high staff turnover, a young and inexperienced
staff, and are more interested in selling new components than in maintaining existing
machines or finding custom solutions. They do not offer any kind of pick-up and drop-off
service, and do not offer on-site help. They really only offer hardware support.

2. Competitor B. Smaller and less known then A, B provides many services for residents
living in east and south parts of town. They are more willing to spend time with a client,
figuring out exactly what his or her needs are, and suggesting new options than competitor
A. However, they have an inefficient ordering system and an unkempt shop, which deters
potential customers and can turn existing customers to the competition. They also do not
offer on-site services, although they are considering instituting a trial pick-up/drop-off
service. They are in the best position to copy our innovations and steal customers, but their
management is complacent and may not respond to competition.

Both of these companies charge rates in excess of PC Repair; we will be able to attract the
price-sensitive market without much work. 

5.0 Strategy and Implementation Summary

Our Strategy and Implementation turn on three points:

1. A value proposition of timely and practical solutions, at a reasonable rate, coupled with a
100% guarantee.

2. Exploiting our competitors weaknesses: a competitive edge based on quick, effective, and
sympathetic customer service, which meets the customer where his needs are, rather than
trying to fit him into an existing box. 

3. Quickly establishing a brand identity and developing a great reputation among local
customers to generate word of mouth advertising.

5.1 Competitive Edge

 Quick response: PC Repair will provide same day and after hours service. 

 A flat rate policy: This undermines the competition, who charge by the hour. The pricing
has been set to reflect the average amount of time it takes to perform the task. With this
strategy we can undercut most competitors and gain local market power.

 On-site and pick-up/drop-off services: This will minimize the time and effort a
customer needs to put into dealing with his computer problem.

 Suprisingly, our small size is an advantage: customers will recognize me (and future
employees), and will know they will get the same great service every time they call.

5.2 Marketing Strategy

Our marketing strategy will aggressively exploit our competitors' weaknesses. During the start-
up phase, we will run large ads in the business section of the local newspaper, asking, "Are you
fed up with poor customer service for your computer needs?" These ads will focus on
our advantages, including on-site service, competitive rates, and quick response and turn-
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 PC Repair

around times. They will announce our opening date, and include a coupon for free diagnostic
service for the first 20 customers.

We will follow up on these opening ads with a smaller direct-marketing campaign to small
business owners, with lists drawn from the local Chamber of Commerce. Jack will use his
contacts with business customers from his years as a manager to create a "buzz" about this
new business.

We will continue periodic advertisements, including several promotions (discounts, free

diagnosis, etc.) throughout the first year. We expect a small but steady response from home PC
users who see our ads elsewhere, but will also run monthly ads in sections other than the
business one.

We will offer a promotion during the first 90 days of business to generate business traffic and
word of mouth. Our promo is Spyware removal on any desktop PC for $70 including tax and
software. Spyware is a huge problem for a lot of residential and small business customers, and
the offer should draw a lot of interest.

5.3 Sales Strategy

Our marketing strategy will generate customer inquiries. We will close the deals by offering an
outstanding service and a very reasonable price. Happy customers generate repeat business
and word of mouth. Our toll free number is operational 24 hours a day, seven days a week, and
from 8am to 9pm, I will be available to answer calls. At other times, or when I am on the
phone, an answering service we have hired will catch callers and give them an estimated wait
time for a call-back; this is another step towards delivering a complete solution to our
customers.

Sales forecast figures are based on industry figures for the typical growth of a start-up and
reflect repeat business generated through meeting customer needs.

5.3.1 Sales Forecast

The sales strategy is a prediction of controllable growth for the first year. PC Repair will focus
on quality and attention to detail to avoid some potential pitfalls encountered by many new
businesses. The predicted growth is moderate in the home PC market and in the small business
arena. However, with aggressive advertising and word of mouth, this will increase. Our
agressive TV advertising will increase our residential and small business customer base as well
as word of mouth within the first year. Within a few months we will have the need for additional
employees to handle the work load. At that time, we will move into a leased space with
additional square footage, and buy a company vehicle to help with the on-site calls. 

Our competitors average 75+ calls a month. Given that our advertising will be aggressive, we
expect the same results. The sales forecast is conservative, which gives us a chance to gauge
our experience and adjust the plan accordingly.

We will service all of Ramsford-on-Bitstream, and the surrounding area. We expect that the
majority of our jobs will be performed in the immediate town area. A service technician can
perform an average of 3 jobs per day. Our sales forecast predictions are less than that. With
our agressive advertising campaign we expect nominal growth. We predict it will take a few
weeks for the marketing to settle in with customers. However, we are going to offer a promo
for our services which should generate some substantial results.

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 PC Repair

The one element of sales not represented in the table below is direct costs for our maintenance
contracts. We estimate these costs at 12% of sales revenue, but expect a delayed occurrence -
that is, we will sell maintenance contracts starting in February, but do not expect to actually
perform maintenance on computers guaranteed under them for the first few months. We will
incur more and more costs from these as time goes on, and the computers age - most of the
service in a maintenance contract is performed within the last quarter of the specified period.
Projections for the direct costs for these contracts can be found in the Profit and Loss Table, as
other costs of sales.

Table: Sales Forecast

Sales Forecast
Year 1 Year 2 Year 3
Unit Sales
Home PC Unit 166 200 225
Small Business Unit 264 300 350
Promo 235 0 0
Maintenance Contracts 32 60 85
Total Unit Sales 697 560 660

Unit Prices Year 1 Year 2 Year 3

Home PC Unit $280.00 $300.00 $300.00
Small Business Unit $500.00 $600.00 $600.00
Promo $50.00 $0.00 $0.00
Maintenance Contracts $400.00 $600.00 $600.00

Sales
Home PC Unit $46,480 $60,000 $67,500
Small Business Unit $132,000 $180,000 $210,000
Promo $11,750 $0 $0
Maintenance Contracts $12,800 $36,000 $51,000
Total Sales $203,030 $276,000 $328,500

Direct Unit Costs Year 1 Year 2 Year 3

Home PC Unit $84.00 $90.00 $90.00
Small Business Unit $105.00 $126.00 $126.00
Promo $4.00 $0.00 $0.00
Maintenance Contracts $0.00 $0.00 $0.00

Direct Cost of Sales

Home PC Unit $13,944 $18,000 $20,250
Small Business Unit $27,720 $37,800 $44,100
Promo $940 $0 $0
Maintenance Contracts $0 $0 $0
Subtotal Direct Cost of Sales $42,604 $55,800 $64,350

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 PC Repair

Chart: Sales by Year

Sales by Year

11 12
10 Month
$330,000

9 Month
$300,000

8 Month
$270,000

7 Month
$240,000 Home PC Unit
$210,000

6 Month
Small Business Unit
$180,000

5 Month
Promo
$150,000

4 Month
$120,000 Maintenance Contracts

3 Month
$90,000
2 Month
$60,000
$30,000
1 Month

$0
MonthMonth

Year 1 Year 2 Year 3

Chart: Sales Monthly

Sales Monthly

$32,000

$28,000

$24,000 Home PC Unit

$20,000 Small Business Unit

$16,000 Promo
$12,000
Maintenance Contracts
$8,000

$4,000

$0

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 PC Repair

5.4 Milestones

Our milestones, listed in the table below, outline the major events that will promote, as well as
insure the success of PC Repair and keep it a going concern well into the future. We will
measure our success in meeting these milestones every month, and adjust the plan to keep up
with our objectives. Name recognition, in particular, is very important to breaking into this
market - we will conduct a survey by calling 200 randomly selected small businesses from the
Chamber of Commerce listings on the specified dates and asking them whether they have
heard of PC Repair, and if so, what their impression is of our service. If any of the respondents
have actually used our services, we will elicit feedback on their experience with us, and
suggestions for improvement. We will also ask if they would recommend us to a colleague.

Table: Milestones

Milestones

Milestone Start Date End Date Budget Manager Department

Procurement of materials for 12/1/2004 2/1/2005 $1,200 JMH Department
opening
Start-up Ad Campaign 12/15/2004 2/6/2005 $1,200 JMH Department
Get Loan Approved 1/1/2005 1/17/2005 $0 JMH Department
Open Business 2/7/2005 2/8/2005 $0 JMH Department
Name Recognition by 5% of 2/28/2005 2/28/2005 $0 JMH Department
potential market
Meet with Leasing Agent 3/1/2005 3/10/2005 $0 JMH Department
Interview potential Techs 3/1/2005 4/25/2005 $0 JMH Department
Move into Leased Space 4/1/2005 4/10/2005 $2,000 JMH Department
Sign on Leased Vehicle 4/15/2005 4/20/2005 $6,000 JMH Department
Targeted Ads Begin 4/15/2005 5/15/2005 $4,000 JMH Department
1st Tech Starts 5/1/2005 5/1/2005 $0 JMH Department
2nd Round Tech Interviews 7/1/2005 7/31/2005 $0 JMH Department
Direct marketing to Small 7/1/2005 9/30/2005 $8,000 JMH Department
Businesses
Increase Name Recognition to 8/1/2005 8/2/2005 $0 JMH Department
20%
2nd Tech Starts 8/1/2005 8/7/2005 $0 JMH Department
Totals $22,400

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 PC Repair

Chart: Milestones

Milestones

Start-up Ad Campaign

Open Business

Meet with Leasing Agent

Move into Leased Space

Targeted Ads Begin

2nd Round Tech Interviews

Increase Name Recognition to 20%

Dec `04
Jan `05Feb Mar Apr May Jun Jul Aug Sep

6.0 Management Summary

PC Repair will be owned and managed by Jack Hacker. Jack has 10 years of experience in the
fields of technical support, networking, and computer training and repair. Jack has also spent
the last three years as the manager of a custom computer building and repair store, and
understands the computer needs of small businesses. Jack is adept at managing his time, and
at quickly responding to multiple customer calls and needs.

For the first three months, Jack will be in charge of all aspects of the business. In the third
month, when another tech is hired, Jack will shift some of his energy from directly responding
to customer needs, to training and managing others to do this work effectively. Jack will
maintain direct control over inventory ordering and bookkeeping, and will try to do as many of
the on-site calls as possible himself. Part of our brand recognition strategy is to identify PC
Repair with Jack's efficiency, friendliness, and technical expertise. The easiest way to associate
the two is for Jack to be a major part of many customers' experiences with us. He will delegate
technical repairs later in the year to the techs working in the leased office space, and will also
train them in his method of direct phone support.

Jack has worked extensively with computer technicians and support staff in the past, and
knows that they work best when given free rein within a set of mutually-agreed-upon
guidelines. The first week of each tech's employment will be dedicated to helping them
understand PC Repair's guidelines:

 the customer needs help, and we're here to help them;

 the customer is frustrated, upset, or confused - but that doesn't make the customer a
problem;
 the customer needs reassurance as well as solutions.

Within this framework, the techs can solve the customer's problem the best way they see fit -
Jack is not a micro manager.
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 PC Repair

6.1 Personnel Plan

Jack Hacker will be the only employee for the first few months; his salary is directly related to
the success of the business, and will never exceed 18% of sales revenue. In the third month,
we will move to a leased office space and hire a second employee, with a third hire planned for
August, if projections are on target. We plan to hire additional part-time employees in the
second year, to better handle the increasing sales.

Our employees will be skilled professionals, with equally strong technical and people skills. It is
very important to Jack that they be paid salaries commensurate with their abilities and
dedication- happy tech support people make for happy customers. To that end, our full-time
employees will receive health benefits (premiums split between the employee and PC Repair),
paid holidays, and sick time. Those benefits are included in the payroll totals listed below.

Table: Personnel

Personnel Plan
Year 1 Year 2 Year 3
Owner $33,000 $38,000 $40,000
Tech1 $21,600 $30,000 $30,000
Tech2 $14,400 $30,000 $30,000
Part Time $0 $12,000 $15,000
Total People 3 5 5

Total Payroll $69,000 $110,000 $115,000

7.0 Financial Plan

The following sections include the annual estimates for the standard set of financial tables.
Detailed monthly pro-forma tables are included in the appendix.

Our financial plan calls for limited growth in the first three months, followed by much higher
sales when we move and hire additional employees. These projections are based on sound
market research and ratios for comparable businesses. As we grow, we will keep our operating
expenses down, and maintain a positive cash balance as we repay our three-year loan.

7.1 Important Assumptions

PC Repair's customer base would fluctuate if there was a recess in the economy or other
extenuating circumstances that pertain directly to consumer or industry behavior. However,
given the steady increase in computer users despite the recent recession, we assume that sales
forecasts are unlikely to be dramatically altered by economic events. The table below shows
some of our other assumptions.

Table: General Assumptions

General Assumptions
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 7.00% 70.00% 70.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 30.00% 30.00% 30.00%

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 PC Repair

Other 0 0 0

7.2 Break-even Analysis

Fixed costs are projected at a monthly average for the first year. This includes payroll, moving
expenses and rent, purchase of a company vehicle, and other necessities like cell phones and
the answering service. Variable costs (inventory used in repairing or servicing computers) are
projected as well. At these levels, what we need to bring in per month to break even is shown
in the table and chart below. We will reach our break-even point mid-year, although we expect
sales in November and December to dip below this level because of holidays.

Chart: Break-even Analysis

Break-even Analysis
$12,000

$9,000

$6,000

$3,000

$0

($3,000)

($6,000)

($9,000)

0 10 20 30 40 50 60 70 80 90 100 110

Table: Break-even Analysis

Break-even Analysis

Monthly Units Break-even 52

Monthly Revenue Break-even $15,110

Assumptions:
Average Per-Unit Revenue $291.29
Average Per-Unit Variable Cost $70.00
Estimated Monthly Fixed Cost $11,479

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 PC Repair

7.3 Projected Profit and Loss

The table below shows our projected profit and loss. There are two lines for direct cost of sales
- the second line shows projected inventory costs of fulfilling our maintenance contracts. The
marketing/promotion line shows our planned advertising program expenses. Although these are
aggressive, we must spend heavily in the first year in order to establish the brand recognition
that will help us break in to the local market.

This table also shows our projected expense increases as we hire more employees and move
into a larger rented space. Before the move, the owner will absorb expenses related to utilities.
In years two and three, we have budgeted for additional expensed equipment to expand our
diagnostic and repair capabilities to keep up with orders.

We are seeking a modest net profit in the first year. As our reputation grows, we will see higher
revenues and net profit over the next three years.

Chart: Gross Margin Monthly

Gross Margin Monthly

$27,000

$24,000

$21,000

$18,000

$15,000

$12,000

$9,000

$6,000

$3,000

$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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 PC Repair

Chart: Gross Margin Yearly

Gross Margin Yearly

$240,000

$210,000

$180,000

$150,000

$120,000

$90,000

$60,000

$30,000

$0
Year 1 Year 2 Year 3

Table: Profit and Loss

Pro Forma Profit and Loss

Year 1 Year 2 Year 3
Sales $203,030 $276,000 $328,500
Direct Cost of Sales $42,604 $55,800 $64,350
Costs of Fulfilling Maintenance Contracts $1,488 $4,320 $6,120
Total Cost of Sales $44,092 $60,120 $70,470

Gross Margin $158,938 $215,880 $258,030

Gross Margin % 78.28% 78.22% 78.55%

Expenses
Payroll $69,000 $110,000 $115,000
Marketing/Promotion $28,000 $6,000 $12,000
Depreciation $0 $0 $0
Lease $10,000 $12,000 $12,000
Expensed Equipment $0 $10,000 $12,000
Insurance $3,150 $1,200 $1,200
Website $2,080 $480 $480
Answering Service $200 $2,400 $2,400
Mileage $2,660 $5,400 $5,400
Vehicles $13,200 $15,000 $17,000
Cell Phones $1,260 $1,260 $1,260
Utilities $5,000 $6,000 $7,000
Internet $1,200 $1,200 $1,200
Moving Expenses $2,000 $0 $0

Total Operating Expenses $137,750 $170,940 $186,940

Profit Before Interest and Taxes $21,188 $44,940 $71,090

EBITDA $21,188 $44,940 $71,090
Interest Expense $1,097 $6,570 $2,139
Taxes Incurred $6,027 $11,511 $20,685

Net Profit $14,064 $26,859 $48,266

Net Profit/Sales 6.93% 9.73% 14.69%

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 PC Repair

Chart: Profit Monthly

Profit Monthly
$10,000

$8,000

$6,000

$4,000

$2,000

$0

($2,000)

($4,000)

($6,000)

($8,000)

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

$50,000

$45,000

$40,000
$35,000

$30,000

$25,000

$20,000

$15,000
$10,000

$5,000

$0
Year 1 Year 2 Year 3

Page 19
 Mont
7
PC Repair

MonthMonth
5 Month
6
7.4 Projected Cash Flow

Month 4
The Cash Flow chart, below, shows our projected cash position for the first year; the table

Month 3
following it shows highlights for the first three years. With the requested start-up funding, we

2
will maintain a positive cash balance throughout, and repay the loan within three years.

MonthMonth
1
Chart: Cash

Cash
$50,000

$40,000

$30,000
Net Cash Flow
$20,000
Cash Balance
$10,000

$0

($10,000)

Page 20
 PC Repair

Table: Cash Flow

Pro Forma Cash Flow

Year 1 Year 2 Year 3
Cash Received

Cash from Operations

Cash Sales $203,030 $276,000 $328,500
Subtotal Cash from Operations $203,030 $276,000 $328,500

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 $203,030 $276,000 $328,500

Expenditures Year 1 Year 2 Year 3

Expenditures from Operations

Cash Spending $69,000 $110,000 $115,000
Bill Payments $110,873 $142,543 $163,375
Subtotal Spent on Operations $179,873 $252,543 $278,375

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $6,564 $6,550 $6,111
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 $186,437 $259,093 $284,486

Net Cash Flow $16,593 $16,907 $44,014

Cash Balance $44,593 $61,500 $105,514

7.5 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the
Standard Industrial Classification (SIC) code 7379, Computer Related Services, (NAICS
811212) are shown for comparison.

Our projected growth is much higher than the industry average; in part, this is because we are
a start-up, growing sales steadily in these first three years. We are sure that our sales forecast
is conservative, given the dissatisfaction among local computer users with existing options, and
our planned aggressive marketing campaign.

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 PC Repair

Table: Ratios

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth n.a. 35.94% 19.02% 5.23%

Percent of Total Assets

Inventory 8.22% 9.07% 5.90% 2.79%
Other Current Assets 16.81% 12.72% 8.15% 51.19%
Total Current Assets 100.00% 100.00% 100.00% 75.09%
Long-term Assets 0.00% 0.00% 0.00% 24.91%
Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 42.77% 22.55% 11.07% 31.75%

Long-term Liabilities 0.00% 0.00% 0.00% 18.48%
Total Liabilities 42.77% 22.55% 11.07% 50.23%
Net Worth 57.23% 77.45% 88.93% 49.77%

Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 78.28% 78.22% 78.55% 100.00%
Selling, General & Administrative Expenses 38.70% 65.72% 64.96% 80.06%
Advertising Expenses 0.00% 0.00% 0.00% 1.23%
Profit Before Interest and Taxes 10.44% 16.28% 21.64% 1.95%

Main Ratios
Current 2.34 4.43 9.03 1.53
Quick 2.15 4.03 8.50 1.24
Total Debt to Total Assets 42.77% 22.55% 11.07% 57.27%
Pre-tax Return on Net Worth 59.02% 63.01% 63.16% 2.73%
Pre-tax Return on Assets 33.78% 48.80% 56.17% 6.39%

Additional Ratios Year 1 Year 2 Year 3

Net Profit Margin 6.93% 9.73% 14.69% n.a
Return on Equity 41.32% 44.10% 44.21% n.a

Activity Ratios
Inventory Turnover 10.25 9.29 8.96 n.a
Accounts Payable Turnover 9.67 12.17 12.17 n.a
Payment Days 27 32 28 n.a
Total Asset Turnover 3.41 3.51 2.68 n.a

Debt Ratios
Debt to Net Worth 0.75 0.29 0.12 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a

Liquidity Ratios
Net Working Capital $34,039 $60,898 $109,163 n.a
Interest Coverage 19.32 6.84 33.24 n.a

Additional Ratios
Assets to Sales 0.29 0.28 0.37 n.a
Current Debt/Total Assets 43% 23% 11% n.a
Acid Test 2.15 4.03 8.50 n.a
Sales/Net Worth 5.96 4.53 3.01 n.a
Dividend Payout 0.00 0.00 0.00 n.a

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 PC Repair

7.6 Projected Balance Sheet

The Balance Sheet shows a steadily increasing net worth over the next three years. Since we
are planning to rent, and because computer technology changes so rapidly, we will have only
short-term assets, such as computer equipment and furniture. This will make our net worth
much more liquid than many similar businesses. 

Table: Balance Sheet

Pro Forma Balance Sheet

Year 1 Year 2 Year 3
Assets

Current Assets
Cash $44,593 $61,500 $105,514
Inventory $4,890 $7,129 $7,239
Other Current Assets $10,000 $10,000 $10,000
Total Current Assets $59,482 $78,629 $122,753

Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $59,482 $78,629 $122,753

Liabilities and Capital Year 1 Year 2 Year 3

Current Liabilities
Accounts Payable $12,783 $11,620 $13,590
Current Borrowing $12,661 $6,111 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $25,444 $17,731 $13,590

Long-term Liabilities $0 $0 $0
Total Liabilities $25,444 $17,731 $13,590

Paid-in Capital $23,000 $23,000 $23,000

Retained Earnings ($3,025) $11,039 $37,898
Earnings $14,064 $26,859 $48,266
Total Capital $34,039 $60,898 $109,163
Total Liabilities and Capital $59,482 $78,629 $122,753

Net Worth $34,039 $60,898 $109,163

Page 23
 Appendix

Table: Sales Forecast

Sales Forecast
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Unit Sales
Home PC Unit 3 5 3 15 18 20 20 20 17 15 10 20
Small Business Unit 3 3 3 10 25 35 40 45 50 15 10 25
Promo 0 0 10 30 40 0 40 40 40 0 0 35
Maintenance Contracts 0 1 1 2 3 3 3 4 4 3 4 4
Total Unit Sales 6 9 17 57 86 58 103 109 111 33 24 84

Unit Prices Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Home PC Unit $280.00 $280.00 $280.00 $280.00 $280.00 $280.00 $280.00 $280.00 $280.00 $280.00 $280.00 $280.00
Small Business Unit $500.00 $500.00 $500.00 $500.00 $500.00 $500.00 $500.00 $500.00 $500.00 $500.00 $500.00 $500.00
Promo $50.00 $50.00 $50.00 $50.00 $50.00 $50.00 $50.00 $50.00 $50.00 $50.00 $50.00 $50.00
Maintenance Contracts $400.00 $400.00 $400.00 $400.00 $400.00 $400.00 $400.00 $400.00 $400.00 $400.00 $400.00 $400.00

Sales
Home PC Unit $840 $1,400 $840 $4,200 $5,040 $5,600 $5,600 $5,600 $4,760 $4,200 $2,800 $5,600
Small Business Unit $1,500 $1,500 $1,500 $5,000 $12,500 $17,500 $20,000 $22,500 $25,000 $7,500 $5,000 $12,500
Promo $0 $0 $500 $1,500 $2,000 $0 $2,000 $2,000 $2,000 $0 $0 $1,750
Maintenance Contracts $0 $400 $400 $800 $1,200 $1,200 $1,200 $1,600 $1,600 $1,200 $1,600 $1,600
Total Sales $2,340 $3,300 $3,240 $11,500 $20,740 $24,300 $28,800 $31,700 $33,360 $12,900 $9,400 $21,450

Direct Unit Costs Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Home PC Unit 30.00% $84.00 $84.00 $84.00 $84.00 $84.00 $84.00 $84.00 $84.00 $84.00 $84.00 $84.00 $84.00
Small Business Unit 21.00% $105.00 $105.00 $105.00 $105.00 $105.00 $105.00 $105.00 $105.00 $105.00 $105.00 $105.00 $105.00
Promo 8.00% $4.00 $4.00 $4.00 $4.00 $4.00 $4.00 $4.00 $4.00 $4.00 $4.00 $4.00 $4.00
Maintenance Contracts 12.00% $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

Direct Cost of Sales

Home PC Unit $252 $420 $252 $1,260 $1,512 $1,680 $1,680 $1,680 $1,428 $1,260 $840 $1,680
Small Business Unit $315 $315 $315 $1,050 $2,625 $3,675 $4,200 $4,725 $5,250 $1,575 $1,050 $2,625
Promo $0 $0 $40 $120 $160 $0 $160 $160 $160 $0 $0 $140
Maintenance Contracts $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Direct Cost of Sales $567 $735 $607 $2,430 $4,297 $5,355 $6,040 $6,565 $6,838 $2,835 $1,890 $4,445

Page 1
 Appendix

Table: Personnel

Personnel Plan
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Owner 0% $2,000 $2,000 $2,500 $2,500 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Tech1 0% $0 $0 $0 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400
Tech2 0% $0 $0 $0 $0 $0 $0 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400
Part Time 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total People 1 1 1 2 2 2 3 3 3 3 3 3

Total Payroll $2,000 $2,000 $2,500 $4,900 $5,400 $5,400 $7,800 $7,800 $7,800 $7,800 $7,800 $7,800

Page 2
 Appendix

Table: General Assumptions

General Assumptions
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Plan Month 1 2 3 4 5 6 7 8 9 10 11 12
Current Interest Rate 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00%
Long-term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
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

Page 3
 Appendix

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 10 Month 11 Month 12
Sales $2,340 $3,300 $3,240 $11,500 $20,740 $24,300 $28,800 $31,700 $33,360 $12,900 $9,400 $21,450
Direct Cost of Sales $567 $735 $607 $2,430 $4,297 $5,355 $6,040 $6,565 $6,838 $2,835 $1,890 $4,445
Costs of Fulfilling Maintenance $0 $0 $48 $96 $144 $144 $144 $192 $192 $144 $192 $192
Contracts
Total Cost of Sales $567 $735 $655 $2,526 $4,441 $5,499 $6,184 $6,757 $7,030 $2,979 $2,082 $4,637

Gross Margin $1,773 $2,565 $2,585 $8,974 $16,299 $18,801 $22,616 $24,943 $26,330 $9,921 $7,318 $16,813
Gross Margin % 75.77% 77.73% 79.78% 78.03% 78.59% 77.37% 78.53% 78.68% 78.93% 76.91% 77.85% 78.38%

Expenses
Payroll $2,000 $2,000 $2,500 $4,900 $5,400 $5,400 $7,800 $7,800 $7,800 $7,800 $7,800 $7,800
Marketing/Promotion $4,000 $1,000 $3,000 $2,000 $2,000 $3,000 $3,000 $2,000 $2,000 $2,000 $2,000 $2,000
Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Lease $0 $0 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Expensed Equipment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Insurance $150 $0 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300
Website $40 $40 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200
Answering Service $200 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Mileage $80 $85 $95 $100 $200 $300 $300 $300 $300 $300 $300 $300
Vehicles $0 $0 $6,000 $800 $800 $800 $800 $800 $800 $800 $800 $800
Cell Phones $0 $60 $120 $120 $120 $120 $120 $120 $120 $120 $120 $120
Utilities $0 $0 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500
Internet 15% $0 $0 $120 $120 $120 $120 $120 $120 $120 $120 $120 $120
Moving Expenses $0 $0 $2,000 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Operating Expenses $6,470 $3,185 $15,835 $10,040 $10,640 $11,740 $14,140 $13,140 $13,140 $13,140 $13,140 $13,140

Profit Before Interest and Taxes ($4,697) ($620) ($13,250) ($1,066) $5,659 $7,061 $8,476 $11,803 $13,190 ($3,219) ($5,822) $3,673
EBITDA ($4,697) ($620) ($13,250) ($1,066) $5,659 $7,061 $8,476 $11,803 $13,190 ($3,219) ($5,822) $3,673
Interest Expense $109 $106 $103 $99 $96 $93 $90 $87 $83 $80 $77 $74
Taxes Incurred ($1,442) ($218) ($4,006) ($350) $1,669 $2,090 $2,516 $3,515 $3,932 ($990) ($1,770) $1,080

Net Profit ($3,364) ($508) ($9,347) ($816) $3,894 $4,878 $5,870 $8,201 $9,175 ($2,309) ($4,129) $2,519

Page 4
 Appendix
Net Profit/Sales -143.77% -15.39% -288.48% -7.09% 18.78% 20.07% 20.38% 25.87% 27.50% -17.90% -43.93% 11.75%

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 10 Month 11 Month 12
Cash Received

Cash from Operations

Cash Sales $2,340 $3,300 $3,240 $11,500 $20,740 $24,300 $28,800 $31,700 $33,360 $12,900 $9,400 $21,450
Subtotal Cash from Operations $2,340 $3,300 $3,240 $11,500 $20,740 $24,300 $28,800 $31,700 $33,360 $12,900 $9,400 $21,450

Additional Cash Received

Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
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 $2,340 $3,300 $3,240 $11,500 $20,740 $24,300 $28,800 $31,700 $33,360 $12,900 $9,400 $21,450

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

Expenditures from Operations

Cash Spending $2,000 $2,000 $2,500 $4,900 $5,400 $5,400 $7,800 $7,800 $7,800 $7,800 $7,800 $7,800
Bill Payments $105 $3,102 $2,353 $10,424 $8,954 $13,556 $15,209 $15,896 $16,290 $16,282 $4,550 $4,152
Subtotal Spent on Operations $2,105 $5,102 $4,853 $15,324 $14,354 $18,956 $23,009 $23,696 $24,090 $24,082 $12,350 $11,952

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal Repayment of Current Borrowing $547 $547 $547 $547 $547 $547 $547 $547 $547 $547 $547 $547
Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
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 $2,652 $5,649 $5,400 $15,871 $14,901 $19,503 $23,556 $24,243 $24,637 $24,629 $12,897 $12,499

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Net Cash Flow ($312) ($2,349) ($2,160) ($4,371) $5,839 $4,797 $5,244 $7,457 $8,723 ($11,729) ($3,497) $8,951
Cash Balance $27,688 $25,340 $23,179 $18,809 $24,647 $29,444 $34,688 $42,145 $50,868 $39,139 $35,642 $44,593

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 11 Month 12
Assets Starting Balances

Current Assets
Cash $28,000 $27,688 $25,340 $23,179 $18,809 $24,647 $29,444 $34,688 $42,145 $50,868 $39,139 $35,642 $44,593
Inventory $1,200 $633 $898 $1,291 $2,673 $4,727 $5,891 $6,644 $7,222 $7,522 $4,687 $2,797 $4,890
Other Current Assets $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000
Total Current Assets $39,200 $38,321 $36,238 $34,470 $31,482 $39,374 $45,335 $51,332 $59,366 $68,390 $53,826 $48,439 $59,482

Long-term Assets
Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Accumulated Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Assets $39,200 $38,321 $36,238 $34,470 $31,482 $39,374 $45,335 $51,332 $59,366 $68,390 $53,826 $48,439 $59,482

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

Current Liabilities
Accounts Payable $0 $3,033 $2,004 $10,130 $8,505 $13,050 $14,680 $15,354 $15,733 $16,130 $4,422 $3,711 $12,783
Current Borrowing $19,225 $18,678 $18,131 $17,584 $17,037 $16,490 $15,943 $15,396 $14,849 $14,302 $13,755 $13,208 $12,661
Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Current Liabilities $19,225 $21,711 $20,135 $27,714 $25,542 $29,540 $30,623 $30,750 $30,582 $30,432 $18,177 $16,919 $25,444

Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Liabilities $19,225 $21,711 $20,135 $27,714 $25,542 $29,540 $30,623 $30,750 $30,582 $30,432 $18,177 $16,919 $25,444

Paid-in Capital $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000
Retained Earnings ($3,025) ($3,025) ($3,025) ($3,025) ($3,025) ($3,025) ($3,025) ($3,025) ($3,025) ($3,025) ($3,025) ($3,025) ($3,025)
Earnings $0 ($3,364) ($3,872) ($13,219) ($14,035) ($10,141) ($5,263) $607 $8,809 $17,983 $15,674 $11,544 $14,064
Total Capital $19,975 $16,611 $16,103 $6,756 $5,940 $9,834 $14,712 $20,582 $28,784 $37,958 $35,649 $31,519 $34,039
Total Liabilities and Capital $39,200 $38,321 $36,238 $34,470 $31,482 $39,374 $45,335 $51,332 $59,366 $68,390 $53,826 $48,439 $59,482

Net Worth $19,975 $16,611 $16,103 $6,756 $5,940 $9,834 $14,712 $20,582 $28,784 $37,958 $35,649 $31,519 $34,039

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