Financial Projections Model v6.8.4[2]

Financial Projections Model For Business Plans Frank Moyes and Stephen Lawrence Deming Center for Entrepreneurship Leeds College of Business University of Colorado Boulder, Colorado Copyright © 2003 by the Regents of the University of Colorado Instructions Financial Projections Model v6.8.3 This financial model is designed to enable entrepreneurs and students project the financial results of their ventures for a five-year period. As with all models there are certain simplifying assumptions that have been made. Each of the assumption spreadsheets has an accompanying Comments box (denoted by a cell with small red triangle in the upper right corner) that provides suggestions on how to complete the spreadsheet and the underlying assumptions to the model. You will notice that the cells in the spreadsheet are color-coded. This has been done to assist you in entering data, creating or changing formulae, or deleting data, formulae and links. Enter data and information in Green shaded cells only. Blue shaded cells calculate results within a spreadsheet. Data in Yellow shaded cells is transferred to other worksheets. Purple shaded cells bring in data from other spreadsheets. In the Green and Blue shaded cells, data and formulas may changed, moved or deleted. The current calculations are for illustration only -- you will need to tailor these spreadsheets to fit your plan. In the Yellow shaded cells data and formulas may be changed, but not deleted. DO NOT delete the Purple shaded cells -- they link one spreadsheet with others. There are 7 principal spreadsheet outputs of this model: INCOME: Income Statement BALANCE: Balance Sheet CASHFLOW: Cash Flow Statement BREAKEVEN: Break-even analysis SUMMARY: Analysis of key measures INCOME-MOS: Income Statements by months for Years 1 to 5 CASHFLOW-MOS: Cash flow Statements by months for Years 1 and 2, and by quarters for Years 3 to 5 VAL-1 & VAL-2: Venture capital method for valuing companies All other spreadsheets are to be used for calculating the underlying assumptions of the 7 principal spreadsheets: COMPS: Comparison of financial measures to peer companies REVENUE: Revenue Projections COST OF REV: Cost of Goods Sold OPER EXPEN: Operating Expenses PROP & EQUIP: Capital Expenditures, Depreciation, and Net Fixed Assets SALARIES: Salary Personnel EXTRA: Extraordinary Income and Expense TAXES: Tax calculation WORKCAP: Working Capital FUNDING: Equity, Debt, Interest Expense, Interest Income, Dividends and Retained Earnings These assumption spreadsheets are linked to each other and to the 7 principal spreadsheets. When you make a change in one of the spreadsheets, the impact is automatically recalculated for all other spreadsheets. When doing financial projections, it is easy to get lost in the trees and lose the sense of what is reality. Most errors can be identified if you continuously ask yourself “Does this result make sense?” The COMPS spreadsheet, where you look at peer companies, can be particularly helpful as a reality test. There is an example in the model with which you can experiment. When you are ready to start your own projections, clear all the numbers in the green shaded cells, and then you can begin to enter new numbers. Enter the name of your company in the first cell of the COMPS spreadsheet. Before you begin, make a copy of the model on a separate disk. This original version of the model has been used since the mid-1980’s. It has undergone numerous revisions over that period. Since 1998, students in the Business Plan Preparation course at the University of Colorado have used it to prepare their business plans. We have appreciated their suggestions for improvements and would encourage all users to send us comments and suggestions. Created by Frank Moyes and Stephen Lawrence Deming Center for Entrepreneurship Leeds School of Business University of Colorado Boulder, Colorado Copyright © 2001 by the Regents of the University of Colorado 8/11/2008 12:20 AM XYZ Company Peer Company Comparisons Select Best Comparison Notes Company A Ratios Accounts Receivable % of Rev Inventory % of Rev Accounts Payable % of Rev Working Capital % of Rev Net Fixed Assets % of Rev Current Ratio Debt to Capital (LT Debt + Equity) Profitability Gross Profit % of Rev Sales & Marketing % of Rev Research & Development % of Rev General & Administration % of Rev Operating Expenses % of Rev Earnings from Operations % of Rev EBIT % of Rev Depreciation % of Rev EBITDA % of Rev Net Earnings % of Rev Returns Return on Assets Return on Equity Return on Capital (LT Debt + Equity) Growth Revenue Growth Rate - CAGR: Net Earnings Growth Rate - CAGR: 10.0% 15.0% 8.0% 16.0% 9.0% 2.3 1.2 Company B Company C Projections Year 1 10.0% 15.0% 8.0% 16.0% 9.0% 2.3 1.2 8.3% 8.3% 8.7% 7.9% 23.7% 4.2 0.00 Year 2 8.3% 8.3% 8.7% 7.9% 11.5% 2.0 0.32 Year 3 8.3% 6.7% 8.7% 6.3% 9.3% 2.0 0.18 Year 4 8.3% 6.7% 8.7% 6.3% 7.3% 1.9 0.10 Year 5 8.3% 6.7% 8.7% 6.3% 5.5% 2.1 0.04 30.0% 30.0% 30.0% 30.0% 40.0% 12.0% 12.0% 3.0% 14.0% 5.0% 30.0% 17.0% 12.0% 12.0% 3.0% 14.0% 5.0% -11.7% 22.9% 14.9% 17.2% 55.0% -66.7% -71.2% 4.3% -66.9% -71.2% 32.7% 19.0% 7.9% 8.9% 35.7% -3.0% -3.0% 2.5% -0.5% -4.2% 41.5% 18.5% 7.2% 8.1% 33.8% 7.7% 7.7% 2.5% 10.2% 7.2% 42.5% 17.9% 7.6% 7.3% 32.9% 9.6% 9.6% 2.3% 11.9% 6.2% 46.0% 18.0% 6.7% 6.8% 31.5% 14.5% 14.5% 2.0% 16.5% 8.7% 12.0% 15.0% 15.0% 12.0% 15.0% 15.0% -74.1% -90.4% -90.4% -9.5% -20.4% -13.9% 21.7% 39.7% 32.4% 20.0% 36.1% 32.6% 27.2% 45.2% 43.5% 15.0% 12.0% 15.0% 12.0% 425.0% Negative 85.7% Negative 66.7% 42.3% 60.0% 124.6% XYZ Company Revenue Projections Years 1 to 5 ($) Year 1 Product A Number of Units Price per unit Total Service B Number of Customers Fee per Customer Total 20,000 50 1,000,000 8/11/2008 12:20 AM Year 2 75,000 50 3,750,000 50,000 30 1,500,000 Year 3 150,000 45 6,750,000 100,000 30 3,000,000 Year 4 250,000 45 11,250,000 200,000 25 5,000,000 Year 5 400,000 40 16,000,000 500,000 20 10,000,000 0 Net Revenue 1,000,000 5,250,000 9,750,000 16,250,000 26,000,000 Months Month 1 Month 2 Month 3 Total 1st Quarter Month 4 Month 5 Month 6 Total 2nd Quarter Month 7 Month 8 Month 9 Total 3rd Quarter Month 10 Month 11 Month 12 Total 4th Quarter Total for year Average Revenue by Month by Quarter Revenues by Months & Quarters ($) Year 1 Year 2 Year 3 0 0 0 0 50,000 80,000 100,000 230,000 100,000 120,000 150,000 370,000 120,000 130,000 150,000 400,000 1,000,000 262,500 262,500 367,500 892,500 315,000 367,500 367,500 1,050,000 420,000 525,000 525,000 1,470,000 577,500 630,000 630,000 1,837,500 5,250,000 Year 4 Year 5 2,000,000 3,000,000 5,000,000 2,500,000 4,000,000 6,000,000 2,500,000 4,500,000 7,000,000 2,750,000 9,750,000 4,750,000 16,250,000 8,000,000 26,000,000 83,333 250,000 437,500 1,312,500 812,500 2,437,500 1,354,167 4,062,500 2,166,667 6,500,000 XYZ Company Cost of Revenues Years 1 to 5 ($) Year 1 Revenue Cost of Revenue Product A Material Costs per Unit Subcontact Costs per Unit Total Direct Costs per Unit Unit Sales Total Direct Costs Labor Costs Total Direct Costs Service B Service Personnel Costs Other Expenses Salary Expenses Depreciation Facility costs (rent, energy) System Costs 1,000,000 8/11/2008 12:20 AM Year 2 5,250,000 Year 3 9,750,000 Year 4 16,250,000 Year 5 26,000,000 15.00 10.00 25.00 20,000 500,000 69,000 569,000 14.00 10.00 24.00 75,000 1,800,000 227,700 2,027,700 11.00 7.00 18.00 150,000 2,700,000 552,000 3,252,000 10.00 6.50 16.50 250,000 4,125,000 864,000 4,989,000 9.00 6.00 15.00 400,000 6,000,000 1,200,000 7,200,000 120,750 212,750 480,000 1,500,000 2,750,000 276,000 36,714 50,000 25,000 690,000 91,714 200,000 100,000 990,000 137,429 300,000 150,000 1,410,000 190,286 300,000 300,000 2,000,000 243,143 450,000 350,000 All other costs % of Revenue Total Cost of Revenues % of Revenue 4% 40,000 1,117,464 111.7% 210,000 3,532,164 67.3% 390,000 5,699,429 58.5% 650,000 9,339,286 57.5% 1,040,000 14,033,143 54.0% Allocation of Cost of Revenue between: Variable Fixed Total 729,750 387,714 1,117,464 2,450,450 1,081,714 3,532,164 4,122,000 1,577,429 5,699,429 7,139,000 2,200,286 9,339,286 10,990,000 3,043,143 14,033,143 Cost of Revenues by Months & Quarters ($) Year 1 Year 2 Year 3 Year 4 Month 1 Month 2 Month 3 Total 1st Quarter Month 4 Month 5 Month 6 Total 2nd Quarter Month 7 Month 8 Month 9 Total 3rd Quarter Month 10 Month 11 Month 12 Total 4th Quarter Total for year 0 0 0 0 55,873 89,397 111,746 257,017 111,746 134,096 167,620 413,462 134,096 145,270 167,620 446,986 1,117,464 176,608 176,608 247,252 600,468 211,930 247,252 247,252 706,433 282,573 353,216 353,216 989,006 388,538 423,860 423,860 1,236,258 3,532,164 0 0 0 1,169,114 0 0 0 1,461,392 0 0 0 1,461,392 0 0 0 1,607,531 5,699,429 0 0 0 1,724,176 0 0 0 2,298,901 0 0 0 2,586,264 0 0 0 2,729,945 9,339,286 Year 5 0 0 0 2,698,681 0 0 0 3,238,418 0 0 0 3,778,154 0 0 0 4,317,890 14,033,143 XYZ Company Operating Expenses Years 1 to 5 ($) Year 1 Net Revenues Sales & Marketing Drivers Salaries and Benefits Commissions % of Revenue Direct Mail Campaign All other expenses % of Revenue Total Sales and Marketing % of Revenue Research & Development Drivers Salaries and Benefits Testing All other expenses % of Revenue Total Reaserch & Development % of Revenue General & Administration Drivers Salaries and Benefits Depreciation Rent and Utilities 3% 1,000,000 8/11/2008 12:20 AM Year 2 5,250,000 Year 3 9,750,000 Year 4 16,250,000 Year 5 26,000,000 5% 69,000 50,000 50,000 60,000 229,000 22.9% 270,250 262,500 150,000 315,000 997,750 19.0% 432,900 487,500 300,000 585,000 1,805,400 18.5% 624,000 812,500 500,000 975,000 2,911,500 17.9% 816,000 1,300,000 1,000,000 1,560,000 4,676,000 18.0% 6% 69,000 50,000 30,000 149,000 14.9% 195,500 60,000 157,500 413,000 7.9% 310,050 100,000 292,500 702,550 7.2% 504,000 250,000 487,500 1,241,500 7.6% 672,000 300,000 780,000 1,752,000 6.7% 125,000 6,667 20,000 300,150 40,000 20,000 388,440 106,667 100,000 573,600 183,333 110,000 784,800 266,667 200,000 All other expenses % of Revenue Total General & Administration % of Revenue Total Operating Expenses % of Revenue 2% 20,000 171,667 17.2% 549,667 55.0% 105,000 465,150 8.9% 1,875,900 35.7% 195,000 790,107 8.1% 3,298,057 33.8% 325,000 1,191,933 7.3% 5,344,933 32.9% 520,000 1,771,467 6.8% 8,199,467 31.5% Allocation of Operating Expenses between: Vaiable Fixed Total 160,000 389,667 549,667 840,000 1,035,900 1,875,900 1,560,000 1,738,057 3,298,057 2,600,000 2,744,933 5,344,933 4,160,000 4,039,467 8,199,467 Sales & Marketing by Months & Quarters ($) Year 1 Year 2 Year 3 Year 4 Month 1 Month 2 Month 3 Total 1st Quarter Month 4 Month 5 Month 6 Total 2nd Quarter Month 7 Month 8 Month 9 Total 3rd Quarter Month 10 Month 11 Month 12 Total 4th Quarter Total for year 0 0 0 0 11,450 18,320 22,900 52,670 22,900 27,480 34,350 84,730 27,480 29,770 34,350 91,600 229,000 49,888 49,888 69,843 169,618 59,865 69,843 69,843 199,550 79,820 99,775 99,775 279,370 109,753 119,730 119,730 349,213 997,750 0 0 0 370,338 0 0 0 462,923 0 0 0 462,923 0 0 0 509,215 1,805,400 0 0 0 537,508 0 0 0 716,677 0 0 0 806,262 0 0 0 851,054 2,911,500 8/11/2008 12:20 AM Year 5 0 0 0 899,231 0 0 0 1,079,077 0 0 0 1,258,923 0 0 0 1,438,769 4,676,000 Research & Development by Months & Quarters ($) Year 1 Year 2 Year 3 Year 4 Month 1 Month 2 Month 3 Total 1st Quarter Month 4 Month 5 Month 6 Total 2nd Quarter Month 7 Month 8 Month 9 Total 3rd Quarter Month 10 Month 11 Month 12 Total 4th Quarter Total for year 0 0 0 0 7,450 11,920 14,900 34,270 14,900 17,880 22,350 55,130 17,880 19,370 22,350 59,600 149,000 20,650 20,650 28,910 70,210 24,780 28,910 28,910 82,600 33,040 41,300 41,300 115,640 45,430 49,560 49,560 144,550 413,000 0 0 0 144,113 0 0 0 180,141 0 0 0 180,141 0 0 0 198,155 702,550 0 0 0 229,200 0 0 0 305,600 0 0 0 343,800 0 0 0 362,900 1,241,500 Year 5 0 0 0 336,923 0 0 0 404,308 0 0 0 471,692 0 0 0 539,077 1,752,000 General & Administrative by Months & Quarters ($) Year 1 Year 2 Year 3 Year 4 Month 1 Month 2 Month 3 Total 1st Quarter Month 4 Month 5 Month 6 Total 2nd Quarter Month 7 Month 8 Month 9 Total 3rd Quarter Month 10 0 0 0 0 8,583 13,733 17,167 39,483 17,167 20,600 25,750 63,517 20,600 23,258 23,258 32,561 79,076 27,909 32,561 32,561 93,030 37,212 46,515 46,515 130,242 51,167 0 0 0 162,073 0 0 0 202,591 0 0 0 202,591 0 0 0 0 220,049 0 0 0 293,399 0 0 0 330,074 0 Year 5 0 0 0 340,667 0 0 0 408,800 0 0 0 476,933 0 Month 11 Month 12 Total 4th Quarter Total for year 22,317 25,750 68,667 171,667 55,818 55,818 162,803 465,150 0 0 222,851 790,107 0 0 348,411 1,191,933 8/11/2008 0 12:20 AM 0 545,067 1,771,467 XYZ Company Personnel Years 1 to 5 ($) Year 1 Net Revenues Sales & Marketing Sales Manager Marketing Manager Customer service Tech support (other…) (other…) (other…) Total Salary Benefits Percent (%) Total benefit costs Total S & M Compensation % of Revenue Research and Development R & D Manager Engineers Technicians Subcontract (other…) (other…) Total Salary Benefits Percent (%) Total benefit costs Total R & D Compensation % of Revenue General & Administration Chief Executive Officer Chief Financial Officer Accounting Secretarial Clerks and admin personnel (other…) (other…) Total Salary Benefits Percent (%) Total benefit costs Total G & A Compensation % of Revenue 1,000,000 8/11/2008 12:20 AM Year 2 5,250,000 Year 3 9,750,000 Year 4 16,250,000 Year 5 26,000,000 60,000 80,000 80,000 40,000 35,000 100,000 100,000 120,000 50,000 125,000 125,000 200,000 70,000 150,000 150,000 250,000 130,000 60,000 15% 9,000 69,000 6.9% 235,000 15% 35,250 270,250 5.1% 370,000 17% 62,900 432,900 4.4% 520,000 20% 104,000 624,000 3.8% 680,000 20% 136,000 816,000 3.1% 60,000 80,000 60,000 30,000 100,000 130,000 35,000 125,000 230,000 65,000 150,000 300,000 110,000 60,000 15% 9,000 69,000 6.9% 170,000 15% 25,500 195,500 3.7% 265,000 17% 45,050 310,050 3.2% 420,000 20% 84,000 504,000 3.1% 560,000 20% 112,000 672,000 2.6% 60,000 40,000 25,000 80,000 50,000 45,000 26,000 60,000 100,000 60,000 25,000 27,000 120,000 125,000 75,000 50,000 28,000 200,000 150,000 100,000 75,000 29,000 300,000 125,000 15% 0 125,000 12.5% 261,000 15% 39,150 300,150 5.7% 332,000 17% 56,440 388,440 4.0% 478,000 20% 95,600 573,600 3.5% 654,000 20% 130,800 784,800 3.0% Cost of Revenue Manufacturing Personnel Operations Manager Quality Assurance Materials and Logistics Engineering Other personnel (other...) Total Salary Benefits Percent (%) Total benefit costs Total Salary Costs Hourly Personnel Number of employees Average wages per employee Total wages Benefits Percent (%) Total benefit costs Total W age Costs Ser vic e Per s o n n el Number of employees Salary per employee Total salaries Benefits Percent (%) Total benefit costs Total Salary Costs 8/11/2008 12:20 AM 100,000 50,000 40,000 50,000 240,000 15% 36,000 276,000 3 20,000 60,000 15% 9,000 69,000 125,000 100,000 150,000 75,000 150,000 600,000 15% 90,000 690,000 9 22,000 198,000 15% 29,700 227,700 150,000 150,000 200,000 125,000 200,000 825,000 20% 165,000 990,000 20 23,000 460,000 20% 92,000 552,000 175,000 300,000 300,000 150,000 250,000 1,175,000 20% 235,000 1,410,000 30 24,000 720,000 20% 144,000 864,000 200,000 350,000 450,000 300,000 300,000 1,600,000 25% 400,000 2,000,000 40 24,000 960,000 25% 240,000 1,200,000 3 35,000 105,000 15% 15,750 120,750 5 37,000 185,000 15% 27,750 212,750 10 40,000 400,000 20% 80,000 480,000 25 50,000 1,250,000 20% 250,000 1,500,000 40 55,000 2,200,000 25% 550,000 2,750,000 Total COR's Compensation % of Revenue Total Salary & Wages Total Benefits Total Compensation % of Revenue 465,750 46.6% 545,000 63,000 728,750 72.9% 1,130,450 21.5% 1,464,000 219,600 1,896,350 36.1% 2,022,000 20.7% 2,252,000 421,390 3,153,390 32.3% 3,774,000 23.2% 3,313,000 662,600 5,475,600 33.7% 5,950,000 22.9% 4,454,000 1,018,800 8,222,800 31.6% XYZ Company Extraordinary Income & Expense Years 1 to 5 ($) Year 1 Income (Item…) (Item…) (Item…) Total Start-up expenses Legal Relocation (Item…) Total Total Extraordinary Income/(Expense) 8/11/2008 12:20 AM Year 2 Year 3 Year 4 Year 5 0 0 25,000 20,000 45,000 (45,000) 0 0 0 0 0 0 0 0 0 0 0 0 Extraordinary Income and Expense by Months & Quarters ($) Year 1 Year 2 Year 3 Year 4 Year 5 Month 1 Month 2 Month 3 Total 1st Quarter Month 4 Month 5 Month 6 Total 2nd Quarter Month 7 Month 8 Month 9 Total 3rd Quarter Month 10 Month 11 Month 12 Total 4th Quarter Total for year (25,000) (20,000) (45,000) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 (45,000) 0 0 0 0 0 0 0 0 XYZ Company Taxes Years 1 to 5 ($) Year 1 Net Revenues Income Tax (Rate Federal & State) Net Earnings Before Taxes Cumulative Taxes Percent of Revenues 1,000,000 0.40 (712,131) (712,131) 0 0.0% 8/11/2008 12:20 AM Year 2 5,250,000 0.40 (218,064) (930,195) 0 0.0% Year 3 9,750,000 0.40 704,515 (225,681) 0 0.0% Year 4 16,250,000 0.40 1,520,781 1,295,100 (518,040) -3.2% Year 5 26,000,000 0.40 3,753,390 5,048,491 (1,501,356) -5.8% XYZ Company Property and Equipment Years 1 to 5 ($) Year 0 Net Revenues Capital Expenditures Computers, Software & Office Equipment Plant & Equipment Other Total Capital Expenditures % of Revenue Purchased Assets 8/11/2008 12:20 AM Year 1 1,000,000 Year 2 5,250,000 Year 3 9,750,000 Year 4 16,250,000 Year 5 26,000,000 0 20,000 250,000 10,000 280,000 28.0% 100,000 350,000 50,000 500,000 9.5% 200,000 250,000 100,000 550,000 5.6% 250,000 300,000 100,000 650,000 4.0% 350,000 300,000 100,000 750,000 2.9% Depreciation Computers, Sofware & Office Equipment (allocated to General & Administrative Expenses) Depreciation Rate: Years 1 3 3 3 3 Year 0 0 0 0 0 Year 1 6,667 6,667 6,667 0 Year 2 33,333 33,333 33,333 Year 3 66,667 66,667 Year 4 83,333 Year 5 Total Depreciation 6,667 40,000 106,667 183,333 Depreciation on Plant and Equipment (allocated to Cost of Revenue) Depreciation Rate: Years 1 7 Year 0 0 Year 1 35,714 Year 2 Year 3 Year 4 Year 5 Total Depreciation 35,714 Depreciation Other (allocated to Cost of Revenue) Depreciation Rate: Years 1 Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Total Depreciation 3 0 0 0 66,667 83,333 116,667 266,667 7 0 35,714 50,000 7 0 35,714 50,000 35,714 7 0 35,714 50,000 35,714 42,857 164,286 85,714 121,429 7 0 35,714 50,000 35,714 42,857 42,857 207,143 10 0 1,000 10 0 1,000 5,000 10 0 1,000 5,000 10,000 10 0 1,000 5,000 10,000 10,000 26,000 1,000 6,000 16,000 10 0 1,000 5,000 10,000 10,000 10,000 36,000 Total Depreciation % of Revenue Property & Equipment Gross Asset Value Accumulated Depreciation Net Property and Equipment % of Revenue 43,381 4.3% 131,714 2.5% 244,095 2.5% 373,619 2.3% 509,810 2.0% 0 0 280,000 43,381 236,619 23.7% 780,000 175,095 604,905 11.5% 1,330,000 419,190 910,810 9.3% 1,980,000 792,810 1,187,190 7.3% 2,730,000 1,302,619 1,427,381 5.5% Capital Expenditures by Months & Quarters ($) Year 1 Year 2 Year 3 Year 4 Month 1 Month 2 Month 3 Total 1st Quarter Month 4 Month 5 Month 6 Total 2nd Quarter Month 7 Month 8 Month 9 Total 3rd Quarter Month 10 Month 11 Month 12 Total 4th Quarter Total for year 50,000 100,000 50,000 200,000 40,000 100,000 100,000 200,000 100,000 200,000 Year 5 200,000 40,000 40,000 100,000 100,000 200,000 200,000 200,000 40,000 100,000 100,000 100,000 100,000 200,000 0 280,000 100,000 100,000 500,000 150,000 550,000 150,000 650,000 150,000 750,000 XYZ Company Working Capital Years 1 to 5 ($) Net Revenues 8/11/2008 12:20 AM Year 1 Year 2 1,000,000 5,250,000 Year 3 9,750,000 Year 4 Year 5 16,250,000 26,000,000 Accounts Receivable % of Revenue Days Outstanding Accounts Receivable (Increase)/Decrease from Prev. Period Inventory % of Revenue Inventory Turns Inventory Days Inventory (Increase)/Decrease from Prev. Period Other Current Assets % of Revenue Days Other CA Value (Increase)/Decrease from Prev. Period Accounts Payable & Accrued Expenses % of Revenue Days AP & Accrued Value Increase/(Decrease) from Prev. Period Other Current Liabilites % of Revenue Days Other Current Liabilities Increase/(Decrease) from Prev. Period 8.3% 30 149,400 (149,400) 8.3% 30 627,480 (478,080) 8.3% 30 913,000 (285,520) 8.3% 30 1,577,000 (664,000) 8.3% 30 2,656,000 (1,079,000) 8.3% 12 30 149,400 (149,400) 8.3% 12 30 627,480 (478,080) 6.7% 15 24 737,000 (109,520) 6.7% 15 24 1,273,000 (536,000) 6.7% 15 24 2,144,000 (871,000) 1.0% 4 18,000 (18,000) 1.0% 4 75,600 (57,600) 1.0% 4 110,000 (34,400) 1.0% 4 190,000 (80,000) 1.0% 4 320,000 (130,000) 8.7% 31 155,720 155,720 8.7% 31 657,720 502,000 8.7% 31 957,000 299,280 8.7% 31 1,653,000 696,000 8.7% 31 2,784,000 1,131,000 1.0% 4 18,000 18,000 1.0% 4 75,600 57,600 1.0% 4 110,000 34,400 1.0% 4 190,000 80,000 1.0% 4 320,000 130,000 Revenues by Months & Quarters Year 1 Month 1 Month 2 Month 3 Total 1st Quarter Month 4 Month 5 Month 6 Total 2nd Quarter Month 7 Month 8 Month 9 Total 3rd Quarter Month 10 Month 11 Month 12 Total 4th Quarter Total for year 0 0 0 0 50,000 80,000 100,000 230,000 100,000 120,000 150,000 370,000 120,000 130,000 150,000 400,000 1,000,000 ($) Year 2 262,500 262,500 367,500 892,500 315,000 367,500 367,500 1,050,000 420,000 525,000 525,000 1,470,000 577,500 630,000 630,000 1,837,500 5,250,000 Year 3 0 0 0 2,000,000 0 0 0 2,500,000 0 0 0 2,500,000 0 0 0 2,750,000 9,750,000 Year 4 0 0 0 3,000,000 0 0 0 4,000,000 0 0 0 4,500,000 0 0 0 4,750,000 16,250,000 Year 5 0 0 0 5,000,000 0 0 0 6,000,000 0 0 0 7,000,000 0 0 0 8,000,000 26,000,000 Accounts Receivable by Months & Quarters ($) Year 1 Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 49,800 79,680 99,600 99,600 119,520 149,400 119,520 129,480 149,400 Year 2 261,450 261,450 366,030 313,740 366,030 366,030 418,320 522,900 522,900 575,190 627,480 627,480 Year 3 664,000 Year 4 996,000 8/11/2008 Year 5 12:20 AM 1,660,000 830,000 1,328,000 1,992,000 830,000 1,494,000 2,324,000 913,000 1,577,000 2,656,000 Inventory by Months & Quarters Year 1 Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 49,800 79,680 99,600 99,600 119,520 149,400 119,520 129,480 149,400 ($) Year 2 261,450 261,450 366,030 313,740 366,030 366,030 418,320 522,900 522,900 575,190 627,480 627,480 Year 3 536,000 Year 4 804,000 Year 5 1,340,000 670,000 1,072,000 1,608,000 670,000 1,206,000 1,876,000 737,000 1,273,000 2,144,000 Other Current Assets by Months & Quarters Year 1 Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 6,000 9,600 12,000 12,000 14,400 18,000 14,400 15,600 18,000 ($) Year 2 31,500 31,500 44,100 37,800 44,100 44,100 50,400 63,000 63,000 69,300 75,600 75,600 Year 3 80,000 Year 4 120,000 Year 5 200,000 100,000 160,000 240,000 100,000 180,000 280,000 110,000 190,000 320,000 Accounts Payble & Accrued Expenses by Months & Quarters ($) Year 1 Year 2 Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 0 31 50,000 82,200 103,520 104,400 124,400 155,280 126,600 135,280 155,720 6,600 0 31 331,170 381,360 383,670 436,170 543,480 548,100 600,600 655,410 657,720 8/11/2008 12:20 AM Year 3 696,000 Year 4 1,044,000 Year 5 1,740,000 870,000 1,392,000 2,088,000 870,000 1,566,000 2,436,000 957,000 1,653,000 2,784,000 Other Current Liabilities by Months & Quarters Year 1 Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 6,000 9,600 12,000 12,000 14,400 18,000 14,400 15,600 18,000 ($) Year 2 31,500 31,500 44,100 37,800 44,100 44,100 50,400 63,000 63,000 69,300 75,600 75,600 Year 3 80,000 Year 4 120,000 Year 5 200,000 100,000 160,000 240,000 100,000 180,000 280,000 110,000 190,000 320,000 XYZ Company Funding Projections Years 1 to 5 ($) Begin Beginning Cash Equity Common Increase / (Decrease) Previous Period Preferred A Round B Round Total Preferred Increase / (Decrease) Previous Period Total Equity Debt Short Term Debt Increase / (Decrease) Previous Period Long Term Debt Current Portion Long Term Portion Total Long Term Debt Increase / (Decrease) Previous Period Current Portion Long Term Protion Total Long Term Debt Total Equity & Debt Interest Interest Rate Short Term Debt Long Term Debt Interest Expense Short Term Debt Long Term Debt Total Interest Interest Income Interest Rate Interest Income Retained Earnings Net Income Dividends Increase / (Decrease) Retained Earnings Beginning Retained Earnings Ending Retained Earnings 1,500,000 1,500,000 500,000 500,000 0 1,000,000 1,000,000 0 1,500,000 500,000 0 1,000,000 500,000 1,500,000 500,000 2,000,000 500,000 0 1,000,000 500,000 1,500,000 0 2,000,000 500,000 0 1,000,000 500,000 1,500,000 0 2,000,000 8/11/2008 12:20 AM Year 1 Year 2 Year 3 Year 4 Year 5 500,000 0 1,000,000 500,000 1,500,000 0 2,000,000 1,000,000 1,000,000 1,500,000 0 0 0 100,000 100,000 (100,000) 0 100,000 400,000 500,000 100,000 300,000 400,000 100,000 200,000 300,000 100,000 100,000 200,000 0 0 0 1,500,000 100,000 400,000 500,000 2,500,000 0 (100,000) (100,000) 2,400,000 0 (100,000) (100,000) 2,400,000 0 (100,000) (100,000) 2,200,000 9.0% 12.0% 9.0% 12.0% 9.0% 12.0% 9.0% 12.0% 9.0% 12.0% 0 0 0 0 60,000 60,000 0 48,000 48,000 9,000 36,000 45,000 0 24,000 24,000 4.0% 0 4.0% 0 4.0% 0 4.0% 0 4.0% 10,000 (712,131) (712,131) 0 (712,131) (218,064) (218,064) (712,131) (930,195) 704,515 704,515 (930,195) (225,681) 1,002,741 1,002,741 (225,681) 777,060 2,252,034 50,000 2,202,034 777,060 2,979,094 XYZ Company Income Statement Years 1 to 5 ($) Year 1 NET REVENUES COST OF REVENUE % of Revenues GROSS PROFIT % of Revenues OPERATING EXPENSES Sales & Marketing Research & Development General and Administration Total Operating Expenses % of Revenues EARNINGS FROM OPERATIONS EXTRAORDINARY INCOME / (EXPENSE) EARNINGS BEFORE INTEREST & TAXES INTEREST INCOME / (EXPENSE) NET EARNINGS BEFORE TAXES TAXES NET EARNINGS % of Revenues 1,000,000 1,117,464 111.7% (117,464) -11.7% 8/11/2008 12:20 AM Year 2 5,250,000 3,532,164 67.3% 1,717,836 32.7% Year 3 9,750,000 5,699,429 58.5% 4,050,571 41.5% Year 4 16,250,000 9,339,286 57.5% 6,910,714 42.5% Year 5 26,000,000 14,033,143 54.0% 11,966,857 46.0% 229,000 149,000 171,667 549,667 55% (667,131) (45,000) (712,131) 0 (712,131) 0 (712,131) -71.2% 997,750 413,000 465,150 1,875,900 36% (158,064) 0 (158,064) (60,000) (218,064) 0 (218,064) -4.2% 1,805,400 702,550 790,107 3,298,057 34% 752,515 0 752,515 (48,000) 704,515 0 704,515 7.2% 2,911,500 1,241,500 1,191,933 5,344,933 33% 1,565,781 0 1,565,781 (45,000) 1,520,781 (518,040) 1,002,741 6.2% 4,676,000 1,752,000 1,771,467 8,199,467 32% 3,767,390 0 3,767,390 (14,000) 3,753,390 (1,501,356) 2,252,034 8.7% XYZ Company Balance Sheet Years 1 to 5 ($) Begin ASSETS CURRENT ASSETS Cash Accounts Receivable Inventories Other Current Assets Total Current Assets PROPERTY & EQUIPMENT TOTAL ASSETS LIABILITIES & SHAREHOLDERS' EQUITY CURRENT LIABILITIES Short Term Debt Accounts Payable & Accrued Expen Other Current Liab Current portion of long term debt Total Current Liabilities LONG TERM DEBT (less current portion) STOCKHOLDERS' EQUITY CommonStock Preferred Stock Retained Earnings Total Equity TOTAL LIABILITIES & EQUITY 8/11/2008 12:20 AM Year 1 Year 2 Year 3 Year 4 Year 5 1,500,000 1,500,000 0 1,500,000 408,170 149,400 149,400 18,000 724,970 236,619 961,589 367,660 627,480 627,480 75,600 1,698,220 604,905 2,303,125 570,510 913,000 737,000 110,000 2,330,510 910,810 3,241,319 792,870 1,577,000 1,273,000 190,000 3,832,870 1,187,190 5,020,060 1,735,714 2,656,000 2,144,000 320,000 6,855,714 1,427,381 8,283,094 0 0 0 0 0 155,720 18,000 0 173,720 0 0 657,720 75,600 100,000 833,320 400,000 0 957,000 110,000 100,000 1,167,000 300,000 100,000 1,653,000 190,000 100,000 2,043,000 200,000 0 2,784,000 320,000 100,000 3,204,000 100,000 500,000 1,000,000 1,500,000 1,500,000 500,000 1,000,000 (712,131) 787,869 961,589 500,000 1,500,000 (930,195) 1,069,805 2,303,125 500,000 1,500,000 (225,681) 1,774,319 3,241,319 500,000 1,500,000 777,060 2,777,060 5,020,060 500,000 1,500,000 2,979,094 4,979,094 8,283,094 XYZ Company Cash Flow Statememt Years 1 to 5 ($) Year 1 OPERATING ACTIVITIES Net Earnings Depreciation Working Capital Changes (Increase)/Decrease Accounts Receivable (Increase)/Decrease Inventories (Increase)/Decrease Other Current Assets Increase/(Decrease) Accts Pay & Accrd Expenses Increase/(Decrease) Other Current Liab Net Cash Provided/(Used) by Operating Activities INVESTING ACTIVITIES Property & Equipment Other Net Cash Used in Investing Activities FINANCING ACTIVITIES Increase/(Decrease) Short Term Debt Increase/(Decrease) Curr. Portion LTD Increase/(Decrease) Long Term Debt Increase/(Decrease) Common Stock Increase/(Decrease) Preferred Stock Dividends Declared Net Cash Provided / (Used) by Financing INCREASE/(DECREASE) IN CASH CASH AT BEGINNING OF YEAR CASH AT END OF YEAR (712,131) 43,381 (149,400) (149,400) (18,000) 155,720 18,000 (811,830) 8/11/2008 12:20 AM Year 2 (218,064) 131,714 (478,080) (478,080) (57,600) 502,000 57,600 (540,510) Year 3 704,515 244,095 (285,520) (109,520) (34,400) 299,280 34,400 852,850 Year 4 1,002,741 373,619 (664,000) (536,000) (80,000) 696,000 80,000 872,360 Year 5 2,252,034 509,810 (1,079,000) (871,000) (130,000) 1,131,000 130,000 1,942,844 (280,000) (280,000) (500,000) (500,000) (550,000) (550,000) (650,000) (650,000) (750,000) (750,000) 0 0 0 0 0 0 0 (1,091,830) 1,500,000 408,170 0 100,000 400,000 0 500,000 0 1,000,000 (40,510) 408,170 367,660 0 0 (100,000) 0 0 0 (100,000) 202,850 367,660 570,510 100,000 0 (100,000) 0 0 0 0 222,360 570,510 792,870 (100,000) 0 (100,000) 0 0 (50,000) (250,000) 942,844 792,870 1,735,714 1,500,000 8/11/2008 12:20 AM XYZ Company Break-Even Analysis Years 1 to 5 ($) Year 1 Revenue Cost of Revenue Variable Fixed Total Operating Expenses Variable Fixed Total Total Costs & Expenses Variable Fixed Total Variable Costs/Revenue Ratio Break-Even Point Revenues 1,000,000 Year 2 5,250,000 Year 3 9,750,000 Year 4 16,250,000 Year 5 26,000,000 729,750 387,714 1,117,464 2,450,450 1,081,714 3,532,164 4,122,000 1,577,429 5,699,429 7,139,000 2,200,286 9,339,286 10,990,000 3,043,143 14,033,143 160,000 389,667 549,667 840,000 1,035,900 1,875,900 1,560,000 1,738,057 3,298,057 2,600,000 2,744,933 5,344,933 4,160,000 4,039,467 8,199,467 889,750 777,381 1,667,131 0.89 7,051,076 3,290,450 2,117,614 5,408,064 0.63 5,673,484 5,682,000 3,315,485 8,997,485 0.58 7,946,406 9,739,000 4,945,219 14,684,219 0.60 12,342,161 15,150,000 7,082,610 22,232,610 0.58 16,972,152 XYZ Company Income Statement Year 1 by Months Month 1 NET REVENUES COST OF REVENUE GROSS PROFIT OPERATING EXPENSES Sales & Marketing Research & Development General and Administration Total Operating Expenses EARNINGS FROM OPERATIONS EXTRAORDINARY INCOME / (EXPENSE) EARNINGS BEFORE INTEREST & TAXES INTEREST INCOME / (EXPENSE) NET EARNINGS BEFORE TAXES TAXES NET EARNINGS 0 0 0 8/11/2008 12:20 AM Month 2 0 0 0 Month 3 0 0 0 Month 4 50,000 55,873 (5,873) Month 5 80,000 89,397 (9,397) Month 6 100,000 111,746 (11,746) Month 7 100,000 111,746 (11,746) Month 8 120,000 134,096 (14,096) Month 9 150,000 167,620 (17,620) Month 10 120,000 134,096 (14,096) Year 1 Total Annual Month 11 Month 12 12 Months Projection 130,000 145,270 (15,270) 150,000 167,620 (17,620) 1,000,000 1,117,464 (117,464) 1,000,000 1,117,464 (117,464) 0 0 0 0 0 (25,000) (25,000) 0 (25,000) 0 (25,000) 0 0 0 0 0 (20,000) (20,000) 0 (20,000) 0 (20,000) 0 0 0 0 0 0 0 0 0 0 0 11,450 7,450 8,583 27,483 (33,357) 0 (33,357) 0 (33,357) 0 (33,357) 18,320 11,920 13,733 43,973 (53,370) 0 (53,370) 0 (53,370) 0 (53,370) 22,900 14,900 17,167 54,967 (66,713) 0 (66,713) 0 (66,713) 0 (66,713) 22,900 14,900 17,167 54,967 (66,713) 0 (66,713) 0 (66,713) 0 (66,713) 27,480 17,880 20,600 65,960 (80,056) 0 (80,056) 0 (80,056) 0 (80,056) 34,350 22,350 25,750 82,450 (100,070) 0 (100,070) 0 (100,070) 0 (100,070) 27,480 17,880 20,600 65,960 (80,056) 0 (80,056) 0 (80,056) 0 (80,056) 29,770 19,370 22,317 71,457 (86,727) 0 (86,727) 0 (86,727) 0 (86,727) 34,350 22,350 25,750 82,450 (100,070) 0 (100,070) 0 (100,070) 0 (100,070) 229,000 149,000 171,667 549,667 (667,131) (45,000) (712,131) 0 (712,131) 0 (712,131) 229,000 149,000 171,667 549,667 (667,131) (45,000) (712,131) 0 (712,131) 0 (712,131) XYZ Company Income Statement Year 2 by Months Month 1 NET REVENUES COST OF REVENUE GROSS PROFIT OPERATING EXPENSES Sales & Marketing Research & Development General and Administration Total Operating Expenses EARNINGS FROM OPERATIONS EXTRAORDINARY INCOME / (EXPENSE) EARNINGS BEFORE INTEREST & TAXES INTEREST INCOME / (EXPENSE) NET EARNINGS BEFORE TAXES TAXES NET EARNINGS 262,500 176,608 85,892 Month 2 262,500 176,608 85,892 Month 3 367,500 247,252 120,249 Month 4 315,000 211,930 103,070 Month 5 367,500 247,252 120,249 Month 6 367,500 247,252 120,249 Month 7 420,000 282,573 137,427 Month 8 525,000 353,216 171,784 Month 9 525,000 353,216 171,784 Month 10 577,500 388,538 188,962 Year 2 Total Annual Month 11 Month 12 12 Months Projection 630,000 423,860 206,140 630,000 423,860 206,140 5,250,000 3,532,164 1,717,836 5,250,000 3,532,164 1,717,836 49,888 20,650 23,258 93,795 (7,903) 0 (7,903) (5,000) (12,903) 0 (12,903) 49,888 20,650 23,258 93,795 (7,903) 0 (7,903) (5,000) (12,903) 0 (12,903) 69,843 28,910 32,561 131,313 (11,065) 0 (11,065) (5,000) (16,065) 0 (16,065) 59,865 24,780 27,909 112,554 (9,484) 0 (9,484) (5,000) (14,484) 0 (14,484) 69,843 28,910 32,561 131,313 (11,065) 0 (11,065) (5,000) (16,065) 0 (16,065) 69,843 28,910 32,561 131,313 (11,065) 0 (11,065) (5,000) (16,065) 0 (16,065) 79,820 33,040 37,212 150,072 (12,645) 0 (12,645) (5,000) (17,645) 0 (17,645) 99,775 41,300 46,515 187,590 (15,806) 0 (15,806) (5,000) (20,806) 0 (20,806) 99,775 41,300 46,515 187,590 (15,806) 0 (15,806) (5,000) (20,806) 0 (20,806) 109,753 45,430 51,167 206,349 (17,387) 0 (17,387) (5,000) (22,387) 0 (22,387) 119,730 49,560 55,818 225,108 (18,968) 0 (18,968) (5,000) (23,968) 0 (23,968) 119,730 49,560 55,818 225,108 (18,968) 0 (18,968) (5,000) (23,968) 0 (23,968) 997,750 413,000 465,150 1,875,900 (158,064) 0 (158,064) (60,000) (218,064) 0 (218,064) 997,750 413,000 465,150 1,875,900 (158,064) 0 (158,064) (60,000) (218,064) 0 (218,064) XYZ Company Income Statement Years 3, 4 & 5 by Quarters Year 3 1st Qtr NET REVENUES COST OF REVENUE GROSS PROFIT OPERATING EXPENSES Sales & Marketing Research & Development General and Administration Total Operating Expenses EARNINGS FROM OPERATIONS EXTRAORDINARY INCOME / (EXPENSE) EARNINGS BEFORE INTEREST & TAXES INTEREST INCOME / (EXPENSE) NET EARNINGS BEFORE TAXES TAXES NET EARNINGS 2,000,000 1,169,114 830,886 2nd Qrtr 2,500,000 1,461,392 1,038,608 3rd Qrtr 2,500,000 1,461,392 1,038,608 4th Qrtr 2,750,000 1,607,531 1,142,469 Total 9,750,000 5,699,429 4,050,571 1st Qtr 3,000,000 1,724,176 1,275,824 2nd Qtr 4,000,000 2,298,901 1,701,099 8/11/2008 12:20 AM Year 4 3rd Qtr 4,500,000 2,586,264 1,913,736 4th Qtr 4,750,000 2,729,945 2,020,055 Total 16,250,000 9,339,286 6,910,714 Year 5 1st Qtr 5,000,000 2,698,681 2,301,319 2nd Qtr 6,000,000 3,238,418 2,761,582 3rd Qtr 7,000,000 3,778,154 3,221,846 4th Qtr 8,000,000 4,317,890 3,682,110 Total 26,000,000 14,033,143 11,966,857 Year 3 Annual Projection 9,750,000 0 5,699,429 4,050,571 Year 4 Annual Projection 16,250,000 0 9,339,286 6,910,714 Year 5 Annual Projection 26,000,000 0 14,033,143 11,966,857 370,338 144,113 162,073 676,524 154,362 0 462,923 180,141 202,591 845,656 192,953 0 462,923 180,141 202,591 845,656 192,953 0 509,215 198,155 222,851 930,221 212,248 0 1,805,400 702,550 790,107 3,298,057 752,515 0 537,508 229,200 220,049 986,757 289,067 0 716,677 305,600 293,399 1,315,676 385,423 0 806,262 343,800 330,074 1,480,135 433,601 0 851,054 362,900 348,411 1,562,365 457,690 0 2,911,500 1,241,500 1,191,933 5,344,933 1,565,781 0 899,231 336,923 340,667 1,576,821 724,498 0 1,079,077 404,308 408,800 1,892,185 869,398 0 1,258,923 471,692 476,933 2,207,549 1,014,297 0 1,438,769 539,077 545,067 2,522,913 1,159,197 0 4,676,000 1,752,000 1,771,467 8,199,467 3,767,390 0 1,805,400 702,550 790,107 3,298,057 752,515 0 752,515 (48,000) 704,515 0 704,515 2,911,500 1,241,500 1,191,933 5,344,933 1,565,781 0 1,565,781 (45,000) 1,520,781 (518,040) 1,002,741 4,676,000 1,752,000 1,771,467 8,199,467 3,767,390 0 3,767,390 (14,000) 3,753,390 (1,501,356) 2,252,034 154,362 (12,000) 142,362 0 142,362 192,953 (12,000) 180,953 0 180,953 192,953 (12,000) 180,953 0 180,953 212,248 (12,000) 200,248 0 200,248 752,515 (48,000) 704,515 0 704,515 289,067 (11,250) 277,817 (94,636) 183,181 385,423 (11,250) 374,173 (127,459) 246,714 433,601 (11,250) 422,351 (143,870) 278,481 457,690 (11,250) 446,440 (152,076) 294,364 1,565,781 (45,000) 1,520,781 (518,040) 1,002,741 724,498 (3,500) 720,998 (288,399) 432,599 869,398 (3,500) 865,898 (346,359) 519,539 1,014,297 (3,500) 1,010,797 (404,319) 606,478 1,159,197 (3,500) 1,155,697 (462,279) 693,418 3,767,390 (14,000) 3,753,390 (1,501,356) 2,252,034 XYZ Company Cash Flow Statement Year 1 by Months Month 1 OPERATING ACTIVITIES Net Earnings Depreciation Working Capital Changes (Increase)/Decrease Accounts Receivable (Increase)/Decrease Inventories (Increase)/Decrease Other Current Assets Increase/(Decrease) Accts Pay & Accrd Expenses Increase/(Decrease) Other Current Liab Net Cash Provided/(Used) by Operating Activities INVESTING ACTIVITIES Property & Equipment Other Net Cash Used in Investing Activities FINANCING ACTIVITIES Increase/(Decrease) Short Term Debt Increase/(Decrease) Curr. Portion LTD Increase/(Decrease) Long Term Debt Increase/(Decrease) Common Stock Increase/(Decrease) Preferred Stock Dividends Declared Net Cash Provided / (Used) by Financing INCREASE/(DECREASE) IN CASH CASH AT BEGINNING OF PERIOD CASH AT END OF PERIOD (25,000) 3,615 0 0 0 0 0 (21,385) 8/11/2008 12:20 AM Month 2 (20,000) 3,615 0 0 0 0 0 (16,385) Month 3 0 3,615 0 0 0 31 0 3,646 Month 4 (33,357) 3,615 (49,800) (49,800) (6,000) 49,969 6,000 (79,373) Month 5 (53,370) 3,615 (29,880) (29,880) (3,600) 32,200 3,600 (77,315) Month 6 (66,713) 3,615 (19,920) (19,920) (2,400) 21,320 2,400 (81,618) Month 7 (66,713) 3,615 0 0 0 880 0 (62,218) Month 8 (80,056) 3,615 (19,920) (19,920) (2,400) 20,000 2,400 (96,281) Month 9 (100,070) 3,615 (29,880) (29,880) (3,600) 30,880 3,600 (125,335) Month 10 (80,056) 3,615 29,880 29,880 3,600 (28,680) (3,600) (45,361) Month 11 (86,727) 3,615 (9,960) (9,960) (1,200) 8,680 1,200 (94,352) Month 12 (100,070) 3,615 (19,920) (19,920) (2,400) 20,440 2,400 (115,855) Estimated Year 1 (712,131) 43,381 (149,400) (149,400) (18,000) 155,720 18,000 (811,830) Year 1 Annual Projection (712,131) 43,381 (149,400) (149,400) (18,000) 155,720 18,000 (811,830) (50,000) (50,000) (100,000) (100,000) (50,000) (50,000) (40,000) (40,000) 0 0 0 0 (40,000) (40,000) 0 0 0 0 0 0 0 0 0 0 (280,000) 0 (280,000) (280,000) 0 (280,000) 0 0 0 0 0 0 (71,385) 1,500,000 1,428,615 0 (116,385) 1,428,615 1,312,230 0 (46,354) 1,312,230 1,265,877 0 (119,373) 1,265,877 1,146,504 0 (77,315) 1,146,504 1,069,188 0 (81,618) 1,069,188 987,570 0 (102,218) 987,570 885,352 0 (96,281) 885,352 789,072 0 (125,335) 789,072 663,737 0 (45,361) 663,737 618,376 0 (94,352) 618,376 524,024 0 0 0 0 0 0 0 (115,855) 524,024 408,170 0 0 0 0 0 0 0 (1,091,830) 0 0 0 0 0 0 0 (1,091,830) 1,500,000 408,170 XYZ Company Cash Flow Statement Year 2 by Months Month 1 OPERATING ACTIVITIES Net Earnings Depreciation Working Capital Changes (Increase)/Decrease Accounts Receivable (Increase)/Decrease Inventories (Increase)/Decrease Other Current Assets Increase/(Decrease) Accts Pay & Accrd Expenses Increase/(Decrease) Other Current Liab Net Cash Provided/(Used) by Operating Activities INVESTING ACTIVITIES Property & Equipment Other Net Cash Used in Investing Activities FINANCING ACTIVITIES Increase/(Decrease) Short Term Debt Increase/(Decrease) Curr. Portion LTD Increase/(Decrease) Long Term Debt Increase/(Decrease) Common Stock Increase/(Decrease) Preferred Stock Dividends Declared Net Cash Provided / (Used) by Financing INCREASE/(DECREASE) IN CASH CASH AT BEGINNING OF PERIOD CASH AT END OF PERIOD (12,903) 10,976 (112,050) (112,050) (13,500) (149,120) 13,500 (375,147) Month 2 (12,903) 10,976 0 0 0 (6,600) 0 (8,527) Month 3 (16,065) 10,976 (104,580) (104,580) (12,600) 31 12,600 (214,217) Month 4 (14,484) 10,976 52,290 52,290 6,300 331,139 (6,300) 432,211 Month 5 (16,065) 10,976 (52,290) (52,290) (6,300) 50,190 6,300 (59,478) Month 6 (16,065) 10,976 0 0 0 2,310 0 (2,778) Month 7 (17,645) 10,976 (52,290) (52,290) (6,300) 52,500 6,300 (58,749) Month 8 (20,806) 10,976 (104,580) (104,580) (12,600) 107,310 12,600 (111,680) Month 9 (20,806) 10,976 0 0 0 4,620 0 (5,210) Month 10 (22,387) 10,976 (52,290) (52,290) (6,300) 52,500 6,300 (63,491) Month 11 (23,968) 10,976 (52,290) (52,290) (6,300) 54,810 6,300 (62,762) Month 12 (23,968) 10,976 0 0 0 2,310 0 (10,682) Estimated Year 2 (218,064) 131,714 (478,080) (478,080) (57,600) 502,000 57,600 (540,510) Year 2 Annual Projection (218,064) 131,714 0 (478,080) (478,080) (57,600) 502,000 57,600 (540,510) 0 0 (500,000) 0 (500,000) 0 0 0 100,000 400,000 0 500,000 0 1,000,000 0 (40,510) 408,170 367,660 (100,000) (100,000) (100,000) (100,000) 0 0 0 0 0 0 (100,000) (100,000) 0 0 0 0 (100,000) (100,000) 0 0 0 0 (100,000) (100,000) (500,000) 0 (500,000) 0 100,000 400,000 0 500,000 1,000,000 524,853 408,170 933,023 0 (108,527) 933,023 824,496 0 (214,217) 824,496 610,279 0 432,211 610,279 1,042,490 0 (59,478) 1,042,490 983,012 0 (102,778) 983,012 880,233 0 (58,749) 880,233 821,484 0 (111,680) 821,484 709,804 0 (105,210) 709,804 604,594 0 (63,491) 604,594 541,103 0 (62,762) 541,103 478,341 0 0 0 0 0 0 0 (110,682) 478,341 367,660 0 100,000 400,000 0 500,000 0 1,000,000 (40,510) XYZ Company Cash Flow Statement Years 3, 4 & 5 by Quarters Year 3 1st Qtr OPERATING ACTIVITIES Net Earnings 142,362 Depreciation 61,024 Working Capital Changes (Increase)/Decrease Accounts Receivable (36,520) (Increase)/Decrease Inventories 91,480 (Increase)/Decrease Other Current Assets (4,400) Increase/(Decrease) Accts Pay & Accrd Expenses 38,280 Increase/(Decrease) Other Current Liab 4,400 Net Cash Provided/(Used) by Operating Activities 296,626 INVESTING ACTIVITIES Property & Equipment Other Net Cash Used in Investing Activities FINANCING ACTIVITIES Increase/(Decrease) Short Term Debt Increase/(Decrease) Curr. Portion LTD Increase/(Decrease) Long Term Debt Increase/(Decrease) Common Stock Increase/(Decrease) Preferred Stock Dividends Declared Net Cash Provided / (Used) by Financing INCREASE/(DECREASE) IN CASH CASH AT BEGINNING OF PERIOD CASH AT END OF PERIOD 2nd Qrtr 180,953 61,024 8/11/2008 12:20 AM Year 4 4th Qrtr 200,248 61,024 Year 5 4th Qtr 294,364 93,405 Year 3 Annual Projection 4th Qtr 693,418 127,452 Year 4 Annual Projection Year 5 Annual Projection 3rd Qrtr 180,953 61,024 Total 704,515 244,095 (285,520) (109,520) (34,400) 299,280 34,400 852,850 1st Qtr 183,181 93,405 2nd Qtr 246,714 93,405 3rd Qtr 278,481 93,405 Total 1,002,741 373,619 (664,000) (536,000) (80,000) 696,000 80,000 872,360 1st Qtr 432,599 127,452 2nd Qtr 519,539 127,452 3rd Qtr 606,478 127,452 Total 2,252,034 509,810 (1,079,000) (871,000) (130,000) 1,131,000 130,000 1,942,844 704,515 244,095 (285,520) (109,520) (34,400) 299,280 34,400 852,850 1,002,741 373,619 (664,000) (536,000) (80,000) 696,000 80,000 872,360 2,252,034 509,810 (1,079,000) (871,000) (130,000) 1,131,000 130,000 1,942,844 (166,000) (134,000) (20,000) 174,000 20,000 115,976 0 0 0 0 0 241,976 (83,000) (67,000) (10,000) 87,000 10,000 198,272 (83,000) (67,000) (10,000) 87,000 10,000 213,586 (332,000) (268,000) (40,000) 348,000 40,000 88,119 (166,000) (134,000) (20,000) 174,000 20,000 245,886 (83,000) (67,000) (10,000) 87,000 10,000 324,769 (83,000) (67,000) (10,000) 87,000 10,000 497,051 (332,000) (268,000) (40,000) 348,000 40,000 394,991 (332,000) (268,000) (40,000) 348,000 40,000 481,931 (332,000) (268,000) (40,000) 348,000 40,000 568,871 (100,000) (100,000) (200,000) (200,000) (100,000) (100,000) (150,000) (150,000) (550,000) 0 (550,000) (200,000) (200,000) (200,000) (200,000) (100,000) (100,000) (150,000) (150,000) (650,000) 0 (650,000) (200,000) (200,000) (200,000) (200,000) (200,000) (200,000) (150,000) (150,000) (750,000) (750,000) (550,000) 0 (550,000) (650,000) 0 (650,000) (750,000) 0 (750,000) 0 0 0 0 0 0 196,626 367,660 564,286 0 (84,024) 564,286 480,262 0 141,976 480,262 622,238 0 0 (100,000) 0 0 0 (100,000) (51,728) 622,238 570,510 0 0 (100,000) 0 0 0 (100,000) 202,850 100,000 0 0 0 0 100,000 113,586 570,510 684,096 0 (111,881) 684,096 572,215 0 145,886 572,215 718,101 0 0 (100,000) 0 0 0 (100,000) 74,769 718,101 792,870 100,000 0 (100,000) 0 0 0 0 222,360 0 0 0 0 0 0 297,051 792,870 1,089,921 0 194,991 1,089,921 1,284,912 0 281,931 1,284,912 1,566,843 (100,000) 0 (100,000) 0 0 (50,000) (250,000) 168,871 1,566,843 1,735,714 (100,000) 0 (100,000) 0 0 (50,000) (250,000) 942,844 0 0 (100,000) 0 0 0 (100,000) 202,850 367,660 570,510 100,000 0 (100,000) 0 0 0 0 222,360 570,510 792,870 (100,000) 0 (100,000) 0 0 (50,000) (250,000) 942,844 792,870 1,735,714 XYZ Company Summary Years 1 to 5 Year 1 Summary Financials ($) Revenue Gross Profit EBIT EBITDA Net Earnings Net Cash from Operating Activities Capital Expenditures Interest Income/(Expense) Dividends Cash Total Equity Total Debt Growth Revenue Growth Rate - CAGR: Net Earnings Growth Rate - CAGR: Ratios Current Ratio Debt to Capital (LT Debt + Equity) Profitability Gross Profit % Operating Expenses % Net Earnings % Returns Return on Assets Return on Equity Return on Capital (LT Debt + Equity) 1,000,000 (117,464) (712,131) (668,750) (712,131) (811,830) 280,000 0 0 408,170 (212,131) 0 8/11/2008 12:20 AM Year 2 5,250,000 1,717,836 (158,064) (26,350) (218,064) (540,510) 500,000 (60,000) 0 367,660 (430,195) 500,000 Year 3 9,750,000 4,050,571 752,515 996,610 704,515 852,850 550,000 (48,000) 0 570,510 274,319 400,000 Year 4 16,250,000 6,910,714 1,565,781 1,939,400 1,002,741 872,360 650,000 (45,000) 0 792,870 1,277,060 300,000 Year 5 26,000,000 11,966,857 3,767,390 4,277,200 2,252,034 1,942,844 750,000 (14,000) 50,000 1,735,714 3,479,094 200,000 425% Nil 86% Nil 67% 42.3% 60% 124.6% 4.2 0.0 2.0 0.3 2.0 0.2 1.9 0.1 2.1 0.0 -11.7% 55.0% -71.2% 32.7% 35.7% -4.2% 41.5% 33.8% 7.2% 42.5% 32.9% 6.2% 46.0% 31.5% 8.7% -74.1% -90.4% -90.4% -9.5% -20.4% -13.9% 21.7% 39.7% 32.4% 20.0% 36.1% 32.6% 27.2% 45.2% 43.5% 8/11/2008 12:20 AM XYZ Company Valuation Venture Capital Method Years 1 to 5 Assumptions: Investor required IRR P/E ratio at IPO or acquisition Initial investment REF Valuation Calculation Calculation Liquidity Event in Year 1 Liquidity Event in Year 2 Liquidity Event in Year 3 Liquidity Event in Year 4 Liquidity Event in Year 5 60% 15 $1,500,000 D Year 1 2 3 4 5 REF A B C E Net Income Income Stmt (712,131) (218,064) 704,515 1,002,741 2,252,034 F Market Capitalization B*E ($10,681,967) ($3,270,964) $10,567,721 $15,041,112 $33,780,514 Notes FV(A,C) G Required Future Value (Investor) FV(F,D) $2,400,000 $3,840,000 $6,144,000 $9,830,400 $15,728,640 G/F H Investor's Share C/G 100.0% 100.0% 58.1% 65.4% 46.6% I Investor's Return F*H $0 $0 $6,144,000 $9,830,400 $15,728,640 J Investor's ROI I/C 0% 0% 410% 655% 1049% IRR(D,G) K Investor's IRR IRR(I,C,D) #N/A #N/A 60% 60% 60% IRR Calculation Workspace Start Year 1 ($1,500,000) $0 ($1,500,000) $0 ($1,500,000) $0 ($1,500,000) $0 ($1,500,000) $0 Year 2 $0 $0 $0 $0 Year 3 Year 4 Year 5 $6,144,000 $0 $0 $9,830,400 $0 $15,728,640 Year 1 2 3 4 5 Negotiation Workspace Investor's Investor's Share Return 25.0% $0 25.0% $0 25.0% $2,641,930 25.0% $3,760,278 40.0% $13,512,206 Investor's ROI 0% 0% 176% 251% 901% Investor's IRR #N/A #N/A 21% 26% 55% ($1,500,000) ($1,500,000) ($1,500,000) ($1,500,000) ($1,500,000) $0 $0 $0 $0 $0 $0 $0 $0 $0 $2,641,930 $0 $0 $3,760,278 $0 $13,512,206 8/11/2008 12:20 AM XYZ Company Valuation Venture Capital Method Years 1 to 5 Multiple Rounds Assumptions Month of IPO Forecast annualized earnings at IPO P/E ratio at IPO Investment Round Month of Investment Investor required IRR Amount of Investment Required Monthly IRR Duration of Investment Calculations Market Capitalization at IPO Ref A B C Second 24 50% $500,000 4.17% 36 Third C D E F G Calculation 60 $2,252,034 15 First 0 60% $1,500,000 5.00% 60 0.00% 60 D/12 A-C $33,780,514 First $15,728,640 46.6% 1049% 60% 46.6% 53.4% Second $1,687,500 5.0% 338% 50% 51.6% 48.4% Third $0 0.0% #DIV/0! #DIV/0! 51.6% 48.4% H B*C Required FV for Investor at IPO Individual Investor's Share Individual Investor's ROI Individual Investor's IRR Cumulative Investors' Share Cumulative Founders' Share I J K L M N E*(1+F)^G I/H I/E (I/E)^(12/G)-1 sum(J) 1-M Negotiations Round Individual Investor's Share FV for Investor at IPO Individual Investor's ROI Individual Investor's IRR First 15.0% $5,067,077 338% 28% Second 5.0% $1,689,026 338% 50% Third 3.0% $1,013,415 #DIV/0! #DIV/0!