Sample Business Plan LGT Tech

LGT Communications, Inc. 70 S. Val Vista Drive Suite A3, PMB 139 Gilbert, AZ 85296 602-363-2226 1.0 Executive Summary Introduction: There is great demand for high-speed (256kbps or greater) broadband Internet access for business and residential customers. Until recently, the only way to bridge this "digital divide" and obtain high-speed broadband Internet access was via DSL or Cable modem technology. Problems that plague these technologies are the high cost to run copper and fiber including the long wait associated with availability. The cost of laying fiber optic cable is as much as $150,000 per mile. The alternative, highcapacity broadband wireless can quickly and cost-effectively deliver greater bandwidth to customers. The advantage of high-capacity wireless deployment is that the systems can provide greater bandwidth transmissions in areas where infrastructure does not exist. LGT Communications will implement high-speed Internet access via "Spread Spectrum" technology (wireless broadband). "Spread Spectrum" allows LGT Communications to use the unlicensed frequencies and existing cell tower infrastructure to provide a low-cost yet reliable solution to eliminate the "Last Mile" barrier. Customers who sign up for wireless broadband will be able to surf the Internet at the same speeds (or greater) than DSL/Cable modem. LGT has developed a proprietary patent pending process and technology to enable a Six Sigma Quality of Service (SSQoS). This technology enables us to have a competitive advantage over other service providers since our technology enable us to be proactive instead of reactive, giving us a 99.9996% uptime. The main difference is they can have it today since the technology can be rapidly deployed. The time, cost savings and flexibility that high-capacity broadband wireless offers, makes it a significant driving force in today's competitive market, helping to resolve the biggest challenges of the communications revolution accessibility and affordability. Business Model: LGT Communications, Inc. is a wireless broadband infrastructure provider, offering various connectivity solutions. The business model that makes the most sense is to partner with a major Internet Service Provider (ISP) that will be responsible for customer service, billing, and marketing of our infrastructure. This allows the ISP to focus on the areas which they do best. LGT Communications adds value to the business model via the management and maintenance of the broadband infrastructure which allows us to focus on our areas of expertise. LGT Communications gains the marketing and built in customer base of the ISP. Through our strategic alliances with the leading vendors of "Spread Spectrum" technology, LGT Communications is positioning itself to be a leading infrastructure provider by choosing the leaders of service and hardware. This will give LGT Communications a strong position in the broadband wireless market with the expertise to deploy and support it effectively and efficiently. Market: According to Milpitas-based audience measurement service, Nielsen/NetRatings, nearly 12 million home Web users accessed the Internet with a high-speed connection in December 2000, compared to five million during the same period last year. That's an increase of 148% among home users, who demand access to streaming media, increased accessibility and "World Class" customer service in the high-speed markets. Worldwide revenues from broadband wireless will reach $42 billion in five years, according to a study by ARC Group. The study, "Broadband Access: Opportunities in Fixed Wireless," found that the fixed wireless access market will quickly expand beyond Europe and the US to all regions of the world. By 2005, Europe will account for approximately $11 billion, the US for $9 billion, and the rest of the world $22 billion. We conservatively estimate a 3-4% market share, even though surveys have indicated a much higher acceptance rate of 7-9%. Successful implementation will dictate further rollout to additional lucrative markets, both nationally, as well as internationally. Marketing Plan: What is required by LGT Communications, is to penetrate those market which currently only have access via dial-up. Competition outside of the major market areas is minimal, and we will differentiate ourselves from these competitors by being able to offer access to the Internet at a reasonable competitive price. LGT Communications will benefit by the ISPs marketing resources and expertise. Promotions will be focused on, but not limited to, web based media outlets, press releases, and advertising in national magazines as well as local newspapers. Customers will come from three different areas: - Existing ISP customers - New customers - Customers from other ISP's Business Plan Highlights $4,000,000 [ $3,500,000 $3,000,000 $2,500,000 $,0,0 20000 $1,500,000 $1,000,000 Sales Gross Net $500,000 $0 FY2002 FY2003 FY2004 1.1 Objectives 1. Growth - To grow the business at a rate that is both challenging and manageable, leading the market with innovation and adaptability. (175 new residential and 8 new business users per month) 2. Profit - To generate sufficient profit to finance future growth and to provide the resources needed to achieve the other objectives of the company and its owners. (Profitability achieved by March, 2002). 1.2 Mission LGT Communications, Inc. mission is as follows: Vision - To be the customer's first choice for wireless communications and information infrastructure in every suburban, metropolitan and rural community. Mission - To provide complete, quality internet solutions to our customers, by incorporating sensible and cost effective technologies. These products will be supported by a team of customer oriented quality conscience staff whose overriding priority is to provide professional service to our clients resulting in complete customer satisfaction. Complete customer satisfaction will allow us to provide the highest Six Sigma Quality of Service (SSQoS) and become the leader in the wireless community. 1.3 Keys to Success The keys to success for LGT Communications, Inc. are: Partnership relationships with key strategic vendors and service providers. Provide Six Sigma quality of service (SSQoS) to our customers. Penetration and dominance of untapped markets. Ability to provide new and existing technologies at a lower cost. 2.0 Company Summary LGT Communications, Inc. is a wireless communications infrastructure service provider, offering various connectivity solutions. Those solutions include, but are not limited to: - Fixed wireless broadband internet access - In network telephony - Out of network telephony - Broadcast video - Business to business wireless consulting In order to provide a "Six Sigma Quality of Service" (SSQoS) we will add additional staff to maintain the infrastructure. 2.1 Company Ownership LGT Communications, Inc. is a privately owned Nevada "C" corporation. Stephen R. Ziegler and Dolf W. Hannert are the principal shareholders currently, each holding 50% of the 1,000,000 common shares of stock outstanding. 2.2 Startup Summary Other than minor equipment and travel expenses, start up expenses are nominal. In order to begin rollout of the infrastructure, beginning in Q3 2001, and until profitability is achieved by March, 2002, $155,000 in funding is required. Initial equipment expenses will be $35,000, which do not include the cost of CPEs. For details on the specifics of these expenses, as well as an estimate on revenues, please refer to Appendix A. 2.3 Company Locations and Facilities LGT Communications, Inc. has its headquarters in Gilbert, Arizona. Since this is the home of both of its founders, along with the proximity to major universities, favorable climate, low cost of living, it is the ideal location for the headquarters. LGT will have satellite offices in key areas to allow us to maintain the required SSQoS. The appropriate office space(s) will be obtained based upon the growth requirements of the company. The current official address is located at: 70 S. Val Vista Drive Suite A3, PMB 139 Gilbert, AZ 85296 3.0 Services LGT Communications, Inc. provides high speed wireless broadband infrastructure to internet service providers, along with telephony access, broadcast video, and specialty consulting. Our focus is both on the home user as well as the business user. 3.1 Service Description LGT Communications provides various levels of service to both the home based, as well as the business customer. • • 256 Kbps - 3 Mbps for home based internet connectivity. Prices range from $29.95 to $159.95 per month. 256 Kbps - 3 Mbps for business based internet connectivity. Prices range from $69.95 to $699.95 per month. 155 Mbps for point to point business Metropolitan Area Network. • • Telephony capability offered as part of the service. DSS/Cable quality broadcast video. Please refer to Appendix A for a more detailed overview of the cost/pricing structure. 3.2 Competitive Comparison LGT Communications, Inc. sets itself apart from other competitors by adding value through the primary focus on the management and maintenance of the infrastructure. By partnering with an ISP which provides an existing customer base that is willing to switch to high speed broadband internet connectivity, along with being able to provide 24/7/365 world class customer support, as well as the marketing skills and expertise, LGT Communications differentiates itself from all of the other competitors which include: • • Small local ISPs which only offer dialup connectivity. Satellite based broadband connectivity, which has greater costs associated with setup and maintenance, along with poor performance (upload and download speeds as well as latency). DSL (digital subscriber line) or cable modem technology, which is limited in availability, especially to more remote and suburban areas, due to the high cost of deployment. By combining the customer service and the marketing expertise of the ISP, along with the experience of wireless broadband equipment deployment, LGT Communications is able to capture a large portion of the yet untapped wireless fixed broadband market. 3.3 Fulfillment The company has established strategic relationships with several "best in class" equipment vendors. Appendix B shows what the total cost per user per month is, based upon the fixed and variable costs associated with the services provided. Note that the cost rapidly decreases after 2001, eventually dropping below $40 by 2005. This focus on total cost per user is crucial, since maintaining strong profit margins, as well as competing against other types of services, will be driven by decreasing overall costs to the end customer. These numbers are EXTREMELY conservative, and do not take into account an increasing user base as more towers are deployed. This will further drop the Cost Per User, since it will entail a much larger area coverage, and thus a greater number than 175 new users per month, by which the current numbers are derived. 3.4 Technology High-capacity broadband wireless can quickly and cost-effectively deliver more bandwidth to customers. The advantage of high-capacity wireless deployment is that the systems can provide high bandwidth transmission quality without depending on existing infrastructure. The installation of a wireless system takes a few hours, and can be relocated as network demands change. The time, cost savings and flexibility that high-capacity broadband wireless offers are making it a significant driving force in today's competitive market, helping to resolve the biggest challenges of the communications revolution - access and affordability. LGT has developed a proprietary patent pending process and technology to enable a Six Sigma Quality of Service (SSQoS). This technology enables us to have a competitive advantage over other service providers since our technology enable us to be proactive instead of reactive, giving us a 99.9996% uptime. 3.5 Future Services In the future, we will offer an even broader range of service to our customers, including but not limited to: Roaming wireless internet access Broadcast video Video conferencing Telemedicine Other third generation (3G+) and beyond applications for wireless PDA/Cell Phone, etc. • • Once the infrastructure is in place, adding new applications and services is much more rapidly deployed. 4.0 Strategy and Implementation Summary 4.1 Value Proposition We offer a scalable, relatively risk-free, fixed cost alternative to the old-fashioned way of accessing the internet via dial-up. This is a good value to the customer because they will receive quicker and more dependable service at a fraction of the costs of other connectivity solutions that may or may-not exist. 4.2 Competitive Edge We start with a critical competitive edge: there are competitors we know of that do not have the same business model to solve the problems and take advantage of the opportunities available in rolling out wireless technologies in the non-metropolitan U.S. markets. Once deployed, our positioning on this point will be very hard to match, but only if we maintain this focus in our strategy, deployment and continue to provide SSQoS to the customer. The more effective our pricing structure is at providing a lowcost solution while maintaining a high SSQoS, the harder it will be for our competitors to gain market share. 4.3 Marketing Strategy Marketing of our wireless broadband services will primarily be the responsibility of the ISP with LGT providing strategic direction. There are 3 levels of marketing which the ISP will need to focus on: Marketing high speed broadband services to existing dial-up modem customers. Through the use of mailing campaigns, as well as direct contact via email, telephone, etc., these existing customers will be informed that a new high speed service is now available to them. Marketing to other dial-up customers which are using another ISP, informing them that high speed connectivity is now available to them, simply by switching over to our service. Direct mail campaigns, along with broad advertising via newspapers, radio, television, and word of mouth will enable these potential customers to sign up to our services. Marketing to new customers who currently do not use the internet. For various reasons, such as not being able to connect to the internet without incurring long distance phone charges, etc., many potential customers who have a computer, and want to connect to the internet, do not. The marketing strategy mentioned above can also be successful with this group of customers. 4.3.1 Positioning Statement For Small Office Home Office (SOHO) users who want to connect to the internet at high speed, LOT Communications, Inc., in conjunction with our strategic partnerships with an ISP, offers wireless high speed broadband internet connectivity. Unlike other broadband services, our services will be available now, at a competitive price, to any customer who demands it, in the areas where we have our infrastructure deployed. By offering the SOHO other services like telephone and video conferencing they will be able to perform the same job function via telecommuting. 4.3.2 Pricing Strategy LGT Communications will be competitively priced which allows for rapid acceleration of growth for our services, while at the same time maintaining favorable margins. The following prices will be paid to LGT by the ISP, on a per seat, per month basis. • • 256 Kbps - 3 Mbps Residential Service: $26 - $115 per customer 256 Kbps - 3Mbps Business Service: $45 - $555 per customer 155 Mbps ATM Service - TBD Approximately 60% of all customers will be signing up for the 256 Kbps service. The other services are targeted towards the business customers and the small office home office businesses. 4.4 Sales Strategy Sales in our business is determined by the demand for our service, as well as the marketing effectiveness of the ISP. Our sales structure is competitively placed to allow us and our strategic partner to maintain high margins on the resale of our wireless services. Sales in this business are repeat monthly subscribers, and we charge the ISP a per seat price depending upon which level of service the end user chooses. 4.4.1 Sales Forecast Our sales forecast is based upon a steady linear expansion of new sales of 175 new residential and 8 new business customers per month. This is based upon a 3% penetration of the initial market, and would require 12 months to achieve this. This estimate is also very conservative, since there will most likely be an initial surge in demand for service, and then a steady tapering off of the initial market area as demand is satiated. Other studies have indicated a much higher penetration rate than the 3% we use to derive our sales figures. Sales Forecast Sales Residential Business Other Total Sales Direct Cost of sales Residential Business Other Subtotal Cost of Sales FY2002 $544,118 $184,129 $0 $728,247 FY2002 $340,020 SO FY2003 $1,796,243 $582,370 $0 $2,378,613 FY2003 $1,275,900 $0 $0 $1,275,900 FY2004 $2,797,943 $903,985 $0 $3,701,928 FY2004 $2,049,260 $0 $0 $2,049,260 $0 $340,020 Total Sales by Month in Year 1 Sales 4.5 Strategic Alliances We have strategic alliances with several wireless equipment manufactures, as well as routine maintenance of the remote transmitter antennas. In addition, we will have strategic alliances with major ISPs to provide customer service and marketing of wireless broadband connectivity LGT Communications is offering. 5.0 Management Summary The management team and directors consist of the following people: - The founders of the company - Microsoft technical consultant and published author - General Manager of a major communication infrastructure company (Midwest region) - Executive member of AOL/Netscape - Human resources and organizational development consultant As we grow, we will take on additional consulting help, technical expertise, sales, and marketing. 5.1 Organizational Structure In order to maintain a high level of profitability, the company will maintain a relatively flat organization structure, primarily focused on the operations and finance functions. Reporting to the Vice President of Operations, will be 3 managers. One manager will be responsible for Network Engineering, with eventually a staff of 6 RF Engineers reporting to that manager. This group will be responsible for maintenance and repair, as well as coordinating any of those activities with our hardware strategic partners. In the operations department, there will also be a Manager of Network Operations. This group will be responsible for the NOC, or Network Operations Center. With an eventual staff of 8, the NOC will continuously monitor the network, 24/7/365, and detect problems, and inform the Network Engineering group to fix those problems early on, before they are noticeable by the ISP, let alone the end user. This group will also be responsible for problem and change management, problem escalation procedures, and maintenance of system performance metrics. The third manager in the Operations department will be a Project manager of Implementation. As the infrastructure is being deployed, this person will ensure that all critical dates are met, that any outsourced activities and tasks are completed on time, and that the deployment stays on time and on budget. The Finance department will report directly to the Chief Financial Officer. There will be two groups, consisting of a procurement group, and an accounting group. These groups will eventually consist of a manager, and two associates for each group. The procurement group will be responsible for purchases, lease agreements, between LGT Communications and it's equipment vendors. The accounting department will be responsible for all bookkeeping activities, accounts payable, and accounts receivable. The Human Resources function will be outsourced to an independent consultant, which will assist LOT Communications in all of it's HR needs, since this function will not require a full time person. Please refer to Appendix C for an organizational chart of the company. 5.2 Management Team The founders of LGT Communications bring a wide array of essential talents. Stephen R. Ziegler, the President and Chief Executive Officer, has over 22 years experience working in computer technologies ranging from manufacturing to IT. He has worked at Fortune 100 and Fortune 50 companies with responsibilities that encompass electronic commerce, electronic communications as well as project management. During his tenure with these companies he has demonstrated his outstanding leadership qualities, team building concepts, motivational skills and the ability to successfully implement enterprise wide solutions, because of these attributes, he is very well respected amongst his peers and in the industry. Dolf W. Hannert, the Chief Financial Officer, is an MBA who has worked at a Fortune 50 company as a Six Sigma / Business Process Re-engineering specialist. Using "The Six Sigma" methodology he has managed, mentored and trained over 40 successful projects and project teams saving over $4.3 million. He has over 11 years of financial experience in the equities markets, including fixed assets, government securities and derivatives. In addition to his financial background he has 22 years experience working with various facets within the computer industry, including software programming, communications and infrastructure and enterprise wide mainframe operations. Stephen Barnard, the Vice President of Operations, has also worked at Fortune 100 and Fortune 50 companies within the infrastructure and operations functions. He has exceptional leadership skills pertaining to organizational effectiveness and quality management. Implemented many successful projects including enterprise wide electronic communications and network infrastructure. Received the highest award possible within the organization for his outstanding customer service, quality and excellence. He is also a published author of a Microsoft Press book. This book is about the "Enterprise Operations Function" within an organization. The Board of Directors currently consists of two member in advisory roles that brings us various expertise. They are considered leaders in their industries and bring a heightened degree of competency and experience to the business. 5.3 Management Team Gaps We have the right management team in place for our successful startup requirements. Additional personal will be added as needed or recommended. 5.4 Personnel Plan Personnel Plan Personnel Chief Executive Officer Chief Financial Officer V.P. of Operations Staff Assistant 1 Staff Assistant 2 Manager Implementation Manager Network Operations Net Ops 1 Net Ops 2 Net Ops 3 Net Ops 4 Net Ops 5 Net Ops 6 Net Ops 7 Net Ops 8 Manager Network Engineering RF Engineer 1 RF Engineer 2 RF Engineer 3 RF Engineer 4 RF Engineer 5 RF Engineer 6 Manager Procurement Procurement Staff 1 Procurement Staff 2 Manager Accounting Accounting Staff 1 Accounting Staff 2 Other Total Payroll Total Headcount Payroll Burden Total Payroll Expenditures FY2002 $75,000 $75,000 $36,000 $29,250 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $215,250 4 $43,050 $258,300 FY2003 $126,000 $126,000 $126,000 $40,950 $0 $0 $0 $49,620 $0 $0 $0 $0 $0 $0 $0 $0 $49,620 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $518,190 6 $103,638 $621,828 FY2004 $132,000 $132,000 $132,000 $43,000 $0 $0 $0 $52,100 $0 $0 $0 $0 $0 $0 $0 $0 $52,100 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $543,200 6 $108,640 $651,840 6.0 Financial Plan 6.1 Important Assumptions General Assumptions Short-term Interest Rate % Long-term Interest Rate % Payment Days Estimator Tax Rate % Expenses in Cash % Personnel Burden % FY2002 10.00% 10.00% 30 25.00% 10.00% 20.00% FY2003 10.00% 10.00% 30 25.00% 10.00% 20.00% FY2004 10.00% 10.00% 30 25.00% 10.00% 20.00% 6.2 Key Financial Indicators Benchmark Comparison FY2002 FY2003 FY2004 Sales Gross OpEx 6.3 Breakeven Analysis Break-even analysis assumes the following: The average revenue is $53 per customer per month. This takes into account the 3 different levels of service (256kbps, 640 Kbps, and 1 Mbps). This figure is an average of the various service levels, including both residential and business. The assumption is a variable cost of 33% of revenues. This is a conservative assumption, since most of the variable costs per customer will be negligible, since the majority of the infrastructure has fixed costs associated with it. Break Even Analysis: Monthly Units Break-even Monthly Sales Break-even Assumptions: Average Per-Unit Revenue Average Per-Unit Variable Cost Estimated Monthly Fixed Cost 759 $40,149 $52.93 $17.73 $26,700 Brea keve n A na ly s is $20,000 $10,000 $0 -$10,000 -$20,000 -$30,000 O CO 05 S o i O f - i o " - i - - C N f - r M c o ' - ' - C M C M O O O O ^ ' ^ l ' l O l O 6.4 Projected Profit and Loss Profit and Loss (Income Statement) Sales Direct Cost of Sales Other Total Cost of Sales Gross Margin Gross Margin % Operating expenses: Advertising/Promotion Travel Miscellaneous Payroll Expense Payroll Burden Depreciation Leased Equipment Utilities Insurance Rent Contract/Consultants Total Operating Expenses Profit Before Interest and Taxes Interest Expense Short-term Interest Expense Long-term Taxes Incurred Net Profit Net Profit/Sales FY2002 $728,247 $340,020 FY2003 $2,378,613 $1,275,900 FY2004 $3,701,928 $2,049,260 $0 $340,020 $388,227 53.31% $8,990 $46,800 $14,250 $215,250 $43,050 $0 $1,275,900 $1,102,713 46.36% $9,900 $59,400 $16,500 $518,190 $103,638 $0 $2,049,260 $1,652,668 44.64% $10,890 $65,340 $18,150 $543,200 $108,640 $0 $0 $1,800 $0 $5,400 $3,000 $338,540 $49,687 $0 $0 $2,640 $0 $7,920 $0 $718,188 $384,525 $0 $0 $2,950 $0 $8,712 $0 $757,882 $894,786 $0 $15,500 $8,547 $25,640 3.52% $0 $15,500 $92,256 $276,769 11.64% $0 $15,500 $219,822 $659,465 17.81% 6.5 Projected Cash Flow Pro-Forma Cash Flow Net Profit Plus: Depreciation Change in Accounts Payable Current Borrowing (repayment) Increase (decrease) Other Liabilities Long-term Borrowing FY2002 $25,640 $0 $56,259 $0 $0 $0 FY2003 $276,769 $0 $131,145 $0 $0 $0 FY2004 $659,465 $0 $115,304 $0 $0 $0 (repayment) Capital Input Subtotal Less: Change in Other Short-term Assets Capital Expenditure Dividends Subtotal Net Cash Flow Cash Balance $0 $81,900 FY2002 $0 $0 $0 $0 $81,900 $201,900 $0 $407,913 FY2003 $0 $0 $0 $0 $407,913 $609,813 $0 $774,768 FY2004 $0 $0 $0 $0 $774,768 $1,384,581 6.6 Projected Balance Sheet Pro-forma Balance Sheet Assets Starting Balances Short-term Assets Cash Other Short-term Assets Total Short-term Assets Long-term Assets Capital Assets Accumulated Depreciation Total Long-term Assets Total Assets Liabilities and Capital Accounts Payable Short-term Notes Other Short-term Liabilities Subtotal Short-term Liabilities Long-term Liabilities Total Liabilities Paid in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital Net Worth $120,000 FY2002 $201,900 FY2003 $609,813 FY2004 $1,384,581 $0 $120,000 $35,000 $0 $201,900 $35,000 $0 $609,813 $35,000 $0 $1,384,581 $35,000 $0 $35,000 $155,000 $0 $35,000 $236,900 FY2002 $56,259 $0 $35,000 $644,813 FY2003 $187,404 $0 $35,000 $1,419,581 FY2004 $302,708 $0 $0 $0 $0 $155,000 $155,000 $0 $0 $56,259 $155,000 $211,259 $0 $0 $187,404 $155,000 $4,0 3244 $0 $0 $302,708 $155,000 $457,708 $0 $0 $0 $0 $155,000 $0 $0 $25,640 $25,640 $236,900 $25,640 $0 $25,640 $276,769 $302,409 $644,813 $302,409 $0 $302,409 $659,465 $961,874 $1,419,581 $961,874 $0 6.7 Business Ratios Ratio Analysis Profitability Ratios: Gross Margin Net Profit Margin Return on Assets Return on Equity Activity Ratios AR Turnover Collection Days Inventory Turnover Accts Payable Turnover Total Asset Turnover Debt Ratios Debt to Net Worth Short-term Liab. to Liab. Liquidity Ratios Current Ratio Quick Ratio Net Working Capital Interest Coverage Additional Ratios Assets to Sales Debt/Assets Current Debt/Total Assets Acid Test Asset Turnover Sales/Net Worth FY2002 53.31% 3.52% 10.82% 100.00% FY2002 0.00 FY2003 46.36% 11.64% 42.92% 91.52% FY2003 0.00 FY2004 44.64% 17.81% 46.45% 68.56% FY2004 0.00 RMA 0 0 0 0 RMA 0 0 0 0 0 RMA 0 0 RMA 0 0 0 0 RMA 0 0 0 0 0 0 0 0.00 7.11 3.07 FY2002 8.24 0.27 FY2002 3.59 3.59 $145,640 3.21 FY2002 0.33 0 0.00 7.11 3.69 FY2003 1.13 0.55 FY2003 3.25 3.25 $422,409 24.81 FY2003 0.27 0 0.00 7.11 2.61 FY2004 0.48 0.66 FY2004 4.57 4.57 $1,081,874 57.73 FY2004 0.38 89% 24% 3.59 3.07 28.40 53% 29% 3.25 3.69 7.87 32% 21% 4.57 2.61 3.85 LGT Communications Cash Flow Analysis SUMMARY Net Sales Residential 256K 640K 1 MB 3MB Total Residential Business TOTAL 2001 TOTAL 2002 TOTAL 2003 TOTAL 2004 TOTAL 2005 TOTAL 2006 TOTAL 2007 $18,509 $10,427 $10,912 $2,399 $42,248 $490 $2,239 $4,899 $1,500 $7,000 $16,128 $58,375 $352,392 $797,688 $1,242,985 $1,688,282 $2,133,578 $199,071 $702,441 $450,756 $954,126 $1,205,811 $209,011 $473,422 $737,833 $1,002,244 $1,266,655 $74,377 $34,069 $114,684 $154,992 $195,299 $794,543 $1,796,243 $2,797,943 $3,799,643 $4,801,343 $11,054 $45,746 $100,086 $50,995 $55,996 $263,876 $1,058,418 $2,578,875 $1,457,496 $1,531,066 $235,606 $5,803,043 256K 640K 1 MB 2MB 3MB Total Business TOTAL NET REVENUE Cumulative Towers Cost of Goods Sold One time costs Radio Equipment T1 Installation Radio Installation Cost Monitoring Servers Consulting Fees TOTAL ONE TIME Recurring Costs T1 Connectivity Tower Rental Space ISP Payment Residential 256K 640K 1 MB 3MB Total Residential Business 256K 640K 1 MB $25,605 $104,767 $229,217 $121,988 $100,793 $582,370 $2,378,613 $83,672 $54,639 $69,051 $340,534 $222,650 $281,672 $745,044 $487,130 $616,262 $260,474 $326,967 $398,960 $197,386 $293,979 $249,882 $903,985 $1,222,279 $1,543,834 $1,862,188 $3,701,927 $5,021,922 $6,345,176 $7,665,231 $40,087 $163,629 $357,999 $188,981 $153,289 1 2 7 12 17 22 27 $15,000 $3,000 $3,000 $10,000 $3,000 $34,000 $9,000 $7,500 $16,000 $6,000 $3,000 $0 $0 $25,000 $93,000 $37,500 $80,000 $15,000 $15,000 $0 $0 $110,000 $294,000 $185,000 $80,000 $15,000 $15,000 $0 $0 $110,000 $474,000 $335,000 $80,000 $15,000 $15,000 $0 $0 $110,000 $654,000 $485,000 $80,000 $15,000 $15,000 $0 $0 $110,000 $810,000 $615,000 $80,000 $15,000 $15,000 $0 $0 $110,000 $906,000 $695,000 $6,180 $3,915 $3,120 $675 $13,890 $117,660 $74,745 $59,760 $9,585 $261,750 $266,340 $169,245 $135,360 $20,925 $591,870 $415,020 $263,745 $210,960 $32,265 $921,990 $563,700 $358,245 $286,560 $43,605 $1,252,110 $712,380 $452,745 $362,160 $54,945 $1,582,230 $861,060 $547,245 $437,760 $66,285 $1,912,350 $175 $770 $1,750 $3,950 $15,730 $35,750 $9,150 $36,025 $81,875 $14,325 $56,265 $127,875 $19,525 $76,560 $174,000 $24,675 $96,855 $220,125 $29,900 $117,095 $266,125 2MB 3MB Total Business ISP Payment $525 $,5 240 $5,670 $19,560 $17,850 $19,600 $92,880 $354,630 $42,700 $520 3,8 $205,030 $796,900 $66,150 $53,655 $318,270 $1,240,260 $91,175 $900 6,9 $430,350 $1,682,460 $114,450 $745 8,6 $543,570 $2,125,800 $139,650 $102,900 $655,670 $2,568,020 SG&E Salary Travel Office Space Total SG&E $37,500 $9,000 $,0 450 $51,000 $322,000 $51,300 $18,000 $391,300 $528,000 $59,000 $18,000 $605,000 $624,000 $66,000 $30,000 $720,000 $2,0 7000 $72,000 $000 3,0 $822,000 $960,000 $600 9,0 $800 4,0 $1,104,000 $1,200,000 $120,000 $200 7,0 $1,392,000 Interest on Financing Miscellaneous TOTAL EXPENSES CASH FLOW $,0 960 $3,000 $133,660 ($75,285) $38,400 $14,400 $954,230 $104,188 $38,400 $400 2,0 $2,053,300 $325,313 $38,400 $30,000 $2,947,660 $754,267 $840 3,0 $36,000 $3,827,860 $1,194,062 $38,400 $60,000 $4,863,200 $1,481,976 $840 3,0 $72,000 $5,781,420 $1,883,811 Major Assumptions 70,000 population within reach of area covered 3 % penetration rate = 2,100 customers capture rate of customers is evenly distributed, or 175 new customers per month 100 business customers in the area Levels of service: Residential 256K Down 128 K Up = $29.95 per month = 59% of all customers sign up for this 640K Down 128 K Up = $49.95 per month = 25% of all customers sign up for this 1 MB Down 128 K Up = $69.95 per month = 15% of all customers sign up for this 3 MB Down 128 K Up = $159.95 per month = 1% of all customers sign up for this Business 256K Down 256 K Up = $69.95 per month = 18% of all business customers sign up for this 640K Down 640 K Up = $159.95 per month = 32% of all business customers sign up for this 1 MB Down 1 MB Up = $349.95 per month • 32% of all business customers sign up for this 2 MB Down 2 MB Up = $499.95 per month : 12% of all business customers sign up for this 3 MB Down 3 MB Up = $699.95 per month •• 6% of all business customers sign up for this Business distribution is normal bell shaped curve 35% payment to local ISP for business customers 30% payment to local ISP for residential customers ISP Covers cost of installation (labor) CPE Cost distributed among ISP, Customer, Govt LGT Communications Cash Plow Analysis Net Sales Residential 256K 640K 1 MB 3MB Total Residential Business 256K 640K 1 MB 2MB 3MB Total Business TOTAL NET REVENUE Cumulative Towers Cost of Goods Sold One time costs Radio Equipment T1 Installation Radio Installation Cost Monitoring Servers Consulting Fees TOTAL ONE TIME Recurring Costs T1 Connectivity Tower Rental Space ISP Payment Residential 256K 640K 1 MB 3MB Total Residential Business 256K 640K 1 MB October-01 November-01 December-01 TOTAL 2001 103 43 26 3 175 $,8.5 3048 $1,717.85 $1,818.70 $7.5 498 $7,101.25 ' 206 $6,169.70 ' 87 $3,475.65 52 $3,637.40 ., 5 $9.5 797 350 $14,082.50 '• 2 5 5 1 3 16 $139.92 $799.75 $1,749.75 $499.95 $2,099.85 $5,289.22 $19,371.72 309 131 78 7 525 $9,254.55 $,3.5 5234 $5,456,10 $1,119.65 $21,063.75 --. ,'; -* '' ,' $18,509.10 $0469 1,2.5 $10,912.20 $2,399.25 $2275 4,4.0 $69.96 $319.90 $699.90 $0.00 $2,099.85 $3,189.61 $10,290.86 4 7 7 2 4 24 $279.84 ;:,, $1,119.65 ,?' $ , 4 . 5 f¥2496 $9.0 V 999 $ , 9 . 0 «?-. 2798 $ , 4 . 4 -V,' 7688 $28,712.59 1 $8.2 497 $2,239.30 $,9.0 4893 $1,499.85 $,9.0 6995 $16,127.67 $58,375.17 1 $15,000.00 $3,000.00 $3,000.00 $10,000.00 $3,000.00 $34,000.00 $3,000.00 $2,500.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $3,000.00 $2,500.00 , $0.00 „; $0.00 '' ' $0.00 ,, $0.00 $3,000.00 $2,500.00 $0.00 ' , $0.00 •' - $15,000.00 $3,000.00 $3,000.00 $10,000.00 $3,000.00 $34,000.00 $9,000.00 $7,500.00 103 43 26 3 175 $1,030.00 ' :, $645.00 / ' $520.00 "• $135.00 " $2,330.00 206 87 52 5 350 $2,060.00 ..,_ $1,305.00 :<-. $1,040.00 '• $225.00 -" $4,630.00 '-' 309 131 78 7 525 $3,090.00 $1,965.00 $1,560.00 $315.00 $6,930.00 -'^ '„• "'\, -y \ $6,180.00 $3,915.00 $3,120.00 $675.00 $13,890.00 1 2 2 $25.00 $110.00 $250.00 2 5 5 $50.00 $275.00 $625.00 ' '" 4 7 7 $175.00 $100.00 : * $770.00 $385.00 /.$1,750.00 $875.00 2MB 3MB Total Business ISP Payment $0.00 $735.00 $1,120.00 $3,450.00 1 3 16 $175.00 $735.00 $1,860.00 2 4 $350.00 $980.00 .-,; $525.00 $2,450.00 24 $6,490.00 $12,500.00 $3,000.00 $1,500.00 $17,000.00 " $2,690.00 '-"- ; $9,620.00 £ $12,500.00 • $3,000.00 "$1,500.00 -,-,< $17,000.00 ' $5,670.00 $19,560.00 $37,500.00 $9,000.00 $4,500.00 $51,000.00 SG&E Salary Travel Office Space Total SG&E $12,500.00 $3,000.00 $1,500.00 $17,000.00 Interest on Financing Miscellaneous TOTAL EXPENSES CASH FLOW $3,200.00 $1,000.00 $64,150.00 ($53,859.14) $3,200.00 $1,000.00 $33,190.00 ($13,818.28) $3,200.00 $1,000.00 $36,320.00 ($7,607.41) ' -" $9,600.00 $3,000.00 $133,660.00 ($75,284.83) Major Assumptions 70,000 population within reach of area covered 3 % penetration rate = 2,100 customers capture rate of customers is evenly distributed, or 1 75 nans; customers per month 100 business customers in the area Levels of service: Residential 256K Down 128 K Up = $29.95 per month = 59% of alt Customers sign up for this 640K Down 128 K Up = $49.95 per month = 25% of al|,^istomers sign up for this 1 MB Down 128 K Up = $69.95 per month = 15% of alt Customers sign up for this 3 MB Down 128 K Up = $159.95 per month = 1% of a»^stomers sign up for this Business 256K Down 256 K Up = $69.95 per month = 18% of aiypsmess customers sign up 640K Down 640 K Up = $159.95 per month = 32% of aBusiness customers sign u 1 MB Down 1 MB Up = $349.95 per month 32% of atfousmess customers sign up 2 MB Down 2 MB Up = $499.95 per month = 12% of a^Jnismess customers sign u 3 MB Down 3 MB Up = $699.95 per month 6% of all fcgjsiness customers sign u Business distribution is normal bell shaped curve 35% payment to local ISP for business customers 30% payment to local ISP for residential customers ISP Covers cost of installation (labor) CPE Cost distributed among ISP, Customer, Govt 29.95 .39.95 . 69.95 f' 159.95't 69.96 -, 159.95%: 349.95;?499.95'""!699.95 * 0.59 0.25 0.15 0.01 0.18 0.32 0.32 0.12 0.6 LOT Communications Cashflow Analysis Net Sales Residential 256K 640K 1 MB 3MB Total Residential Business 256K 640K 1 MB 2 MB 3 MB Total Business TOTAL NET REVENUE Cumulative Towers Cost of Goods Sold One time costs Radio Equipment T1 Installation Radio Installation Cost Monitoring Servers Consulting Fees TOTAL ONE TIME Recurring Costs T1 Connectivity Tower Rental Space ISP Payment Residential 256K 640K 1 MB 3MB Total Residential Business 256K 640K 1 MB 2MB 3MB January-02 February-02 March-02 April-02 May-02 June-02 413 $12,369.35 " 175 105 7 700 516 218 $6,991.25 $ , 4 . 5 | - 131 7347 10 $1,119.65 •"• 875 $27,825.00 $15,454.20 $8,709.10 $9,163.45 „' $1,599.50 'T, 619 262 157 12 $18,539.05 " $10,466.90 $10,982.15 $1,919.40 722 306 $21,623.90 : $12,224.70 - 826 350 $4787 2,3.0 $13,982.50 183 14 $12,800.85 '' $2,239.30 $34,926.25 ' >! 1050 $41,907.50 ,' 1225 $48,888.75 210 $14,689.50 14 $2,239.30 1400 $55,650.00 $6.6 795 11 20 $3,199.00 ,' 20 $6,999.00 • 3496 7 $,9.5 • 6 $4,199.70 ,-. 64 $18,666.91 $74,316.91 929 393 236 17 1575 $27,823.55 $15,700.35 " $16,508.20 '1 , $2,719.15 , J $62,751.25 5 10 10 3 4 32 $4.0 398 $1,599.50 $3,499.50 ' . $1 , 9 . 5 498 $,9.0 2798 $ , 4 . 5 •• 9784 $8.2 497 7 12 $1,919.40 12 $4,199.40 4 $1,999.80 5 $3,499.75 40 $12,108.07 $47,034.32 $559.68 ', 8 $2,399.25 ' 15 $5,249.25 , ' 15 2497 5 $,9.5 $,9.5 3497 5 48 $14,207.68 $56,115.18 $9.0 696 10 17 $2,719.15 ' 17 $5,949.15 2997 6 $,9.0 . 6 $4,199.70 56 $16,567.30 $65,456.05 $3.2 895 12 23 $3,678.85 •' 8088 23 $ , 4 . 5 3996 8 $,9.0 6 $4,199.70 72 $20,766.52 $83,517.77 1 ;_ $0.00 $0.00 - t * so.oo - : $0.00 ', $0.00 ,- $0.00 • $3,000.00 $2,500.00 $0.00 $3,000.00 $0.00 $0.00 $0.00 $3,000.00 $6,000.00 $2,500.00 .- : " : , ". -y' ",-; $0.00 ' , $0.00 $0.00 $0.00 $0.00 $0.00 $6,000.00 :. $2,500.00 . $0.00 1$0.00 '. $0.00 ~, $0.00 ." $0.00 $0.00 $6,000.00 $2,500.00 -' $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 >s *'- , ;. ' ". • $0.00 f $0.00 * f$0.00 $0.00 $0.00 $0.00 /ft ' $6,000.00 •. $2,500.00 -', $6,000.00 .' $2,500.00 _, 413 175 105 7 700 $4,130.00 ' . $2,625.00 ' ' $2,100.00 $315.00 $9,170.00 516 218 131 10 875 $5,160.00 $3,270.00 $2,620.00 $450.00 $11,500.00 619 262 157 12 1050 $6,190.00 $3,930.00 $3,140.00 $540.00 $13,800.00 ' 722 306 183 14 1225 $7,220.00 $4,590.00 '„ $3,660.00 $630.00 $16,100.00 • 826 350 210 14 1400 $8,260.00 , '•:• $5,250.00 > $4,200.00 .'•' $630.00 • $18,340.00 - " 929 393 236 17 1575 $9,290.00 $5,895.00 $4,720.00 $765.00 $20,670.00 r"f 5 10 10 3 4 $125.00 $550.00 . : $1,250.00 ' $525.00 ; $980.00 •" , 7 12 12 4 5 $175.00 $660.00 $1,500.00 $700.00 $1,225.00 • " 6 15 15 5 5 $200.00 $825.00 ' $1,875.00 $875.00 $1,225.00 10 17 17 6 6 $250.00 $935.00 "'" $2,125.00 "; $1,050.00 $1,470.00 ' 11 20 20 7 6 $275.00 f $1,100.00 '\ $2,500.00 f $1,225.00 ,"/ $1,470.00 •': 12 23 23 8 6 $300.00 $1,265.00 $2,875.00 $1,400.00 $1,470.00 " if Total Business ISP Payment SG&E Salary Travel Office Space Total SG&E 32 $3,430.00 $12,600.00 40 $4,260.00 $15,760.00 48 $5,000.00 $18,800.00 56 $5,830.00 $21,930.00 64 $6,570.00 $24,910.00 72 $7,310.00 -.' $27,980.00 "i1 $15,600.00 $3,600.00 $1,500.00 $20,700.00 $15,600.00 $3,600.00 $1,500.00 $20,700.00 $15,600.00 $3,600.00 $1,500.00 $20,700.00 $21,600.00 $4,500.00 $1,500.00 $27,600.00 $21,600.00 $4,500.00 $1,500.00 $27,600.00 $28,000.00 $4,500.00 $1,500.00 $34,000.00 '* £" ;".' '"'., Interest on Financing Miscellaneous TOTAL EXPENSES CASH FLOW $3,200.00 $1,200.00 $43,200.00 ' $3,200.00 $1,200.00 $52,360.00 ($5,325.68)' $3,200.00 $1,200.00 $52,400.00 $3,715.18 $3,200.00 $1,200.00 $62,430.00 $3,026.05 $3,200.00 $1,200.00 >.„ $65,410.00 $8,906.91 ' $3,200.00 / $1,200.00 ," $74,880.00 jj" $8,637.77 ($5,626.55) '. Major Assumptions 70,000 population within reach of area covered " 3 % penetration rate = 2,100 customers capture rate of customers is evenly distributed, or 175 OWM customers per month 100 business customers in the area •* Levels of service: Residential 256K Down 128 K Up = $29.95 per month = 59% of »tf,customers sign up for this " 640K Down 128 K Up = $49.95 per month = 25% of {("customers sign up for this 1 MB Down 128 K Up = $69.95 per month = 15% of ^.customers sign up for this 3 MB Down 128 K Up = $159.95 per month = 1% of_*(customers sign up for this -i Business 256K Down 256 K Up = $69.95 per month = 18% of ^business customers sign up for this 640K Down 640 K Up = $159.95 per month = 32% oft} business customers sign up for this 1 MB Down 1 MB Up = $349.95 per month = 32% of l|8 business customers sign ufifor this 2 MB Down 2 MB Up = $499.95 per month = 12% of gli business customers sign ypfor this 3 MB Down 3 MB Up = $699.95 per month = 6% of ^business customers sign upfpr this Business distribution is normal bell shaped curve 35% payment to local ISP for business customers 30% payment to local ISP for residential customers 29.95 39.95 69.95 , 159.95 69.96 159.95349.95' 0,59 0.25 0.15 0.01 499.95 699.95 0.18 0.32 0.32 0.12 0.6 July-02 August-02 -• # September-02 October-02 November-02" December-02 ; TOTAL 2002 1342 568 341 24 2275 $40,192.90 .• $22,691.60 $23,852.95 ';*• $3,838.80 \v $ 0 5 6 2 '" 9,7.5 1445 612 367 26 2450 $43,277.75 $24,449.40 $25,671.65 V; $4,158.70 . ' $7575 r 9,5.0 1548 $ 6 3 2 6 4,6.0 656 $26,207.20 393 $ 7 4 0 3 2,9.5 28 $,7.0 4486 2625 $ 0 , 3 . 5 14587 21 38 38 14 9 120 ,t $352,391.70 ,» $199,070.85 ! "; $ 0 , 1 . 0 29006 $34,069.35 ?l $ 9 , 4 . 0 74525 $11,053.68 $5757 4,4.0 $100,085.70 $0949 5,9.0 $55,996.00 14 25 25 9 7 80 $979.44 $3,998.75 $8,748.75 $4,499.55 $4,899.65 $23,126.14 $92,858.64 15 $1,049.40 • -f. -,, '• •' "" 28 $ , 7 . 0 4486 28 $9,798.60 10 $,9.0 4995 7 $4,899.65 88 $ 5 2 5 7 2,2.5 $101,939.50 17 30 30 11 8 96 $1,189.32 $,9.0 4785 $10,498.50 $,9.5 5494 $5,599.60 $7553 2,8.7 $111,060.37 18 33 33 12 8 104 $1,259.28 . $,7.5 5283 $11,548.35 $,9.0 ' ' 5994 $5,599.60 '. $9649 - * 2,8.8 $120,261.23 20 35 35 13 9 112 $1,399.20 $,9.5 5582 $12,248.25 $,9.5 6493 $6,299.55 $2046 3,4.0 $129,602.10 'i "', ;. ", $1,469.16 $6,078.10 $13,298.10 $,9.0 6993 $6,299.55 •i$34,144.21 $263,875.98 $138,682.96 ' $1,058,418.48 2 2 2 2 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $6,000.00 $2,500.00 $.0 00 $3,000.00 $.0 00 $0.00 $.0 00 $3,000.00 $9,000.00 $2,500.00 $,0.0 8000 $0.00 $.0 00 $0.00 $.0 00 $8,000.00 $9,000.00 $2,500.00 $,0.0 8000 $0.00 $,0.0 3000 $0.00 $.0 00 $11,000.00 , $12,000.00 '-," $5,000.00 "- , $.0 00 $0.00 $0.00 $0.00 - $0.00 $0.00 $12,000.00 '„;< $.0 00 $0.00 $0.00 $0.00 $0.00 $16,000.00 $6,000.00 $3,000.00 $0.00 $0.00 $25,000.00 $3000 9,0.0 $0.00 •'. $12,000.00 v $5,000.00 -*; f" $5,000.00 1548 656 393 28 2625 21 38 38 14 9 $15,480.00 $,4.0 9800 $,6.0 7800 $1,260.00 $4400 3,4.0 $37,500.00 "•t $117,660.00 , '* $74,745.00 ' *> $59,760.00 ' -"• $9,585.00 | $261,750.00 1032 $10,320.00 437 $6,555.00 262 $5,240.00 19 $855.00 1750 $22,970.00 1135 $11,350.00 481 $7,215.00 288 $5,760.00 '• 21 $945.00 * ' 1925 $25,270.00 "., 1239 525 315 21 2100 $12,390.00 $7,875.00 $6,300.00 $945.00 $27,510.00 1342 $13,420.00 J 568 341 24 2275 $8,520.00 I-;'/ $6,820.00 '•'$1,080.00 *"s $ 9 8 0 0 •" ' 2,4.0 1445 612 367 26 2450 20 35 35 13 9 $14,450.00 "5 $9,180.00 '. $7,340.00 ; . k j' $1,170.00 '*i $32,140.00 - 14 25 25 9 7 $350.00 $1,375.00 $3,125.00 $1,575.00 $1,715.00 15 28 28 10 7 $375.00 $1,540.00 $3,500.00 $1,750.00 $1,715.00 17 30 30 11 8 $425.00 $1,650.00 $3,750.00 $1,925.00 $1,960.00 18 33 33 12 8 $450.00 $1,815.00 ' $4,125.00 . $2,100.00 $1,960.00 $500.00 $1 , 2 . 0 950 $4,375.00 ,. $2,275.00 '• $2,205.00 $525.00 $,9.0 2000 $4,750.00 $2,450.00 $2,205.00 '* $3,950.00 $15,730.00 $35,750.00 $17,850.00 $19,600.00 so $8,140.00 , ;-, $31,110.00 ': 88 $8,880.00 -I, $34,150.00 *,; 96 $9,710.00 $37,220.00 104 $10,450.00 $40,290.00 112 $11,280.00 $43,420.00 ' , 120 $12,020.00 $46,460.00 $92,880.00 , "' ' $354,630.00 $34,000.00 $4,500.00 $1,500.00 $40,000.00 .: $34,000.00 . $4,500.00 ~ $1,500.00 $40,000.00 , $34,000.00 $4,500.00 : -j- $1,500.00 $40,000.00 $34,000.00 $4,500.00 $1,500.00 . $40,000.00 • $34,000.00 ' $4,500.00 >$1,500.00 , i $40,000.00 ": $34,000.00 .,. $4,500.00 "'' $1,500.00 $40,000.00 -, $322,000.00 $51,300.00 $18,000.00 $391,300.00 $3,200.00 $1,200.00 $84,010.00 $8,848.64 ', $3,200.00 ',, $1,200.00 ' $93,050.00 ' $8,889.50 ,,, $3,200.00 $1,200.00 $101,120.00 $9,940.37 - $3,200.00 $1,200.00 $112,690.00 $7,571.23 $3,200.00 $1,200.00 ^ $104,820.00 $24,782.10 ; $3,200.00 $1,200.00 , $107,860.00 $30,822.96 , $38,400.00 $14,400.00 $954,230.00 $104,188.48 0.59 0.25 0.15 0.01 0.18 0.32 0.32 0.12 0.6 LGT Communications Cashflow Analysis: Net Sales Residential 256K 640K 1 MB 3MB ¥ January-03" "• 1652 $49,477.40 February-03 < 1755 $52,562.25 743 $29,682.85 ! 446 $31,197.70 I 31 $4,958.45 ! March-03, " April-03 May-03 June-031 2168 $ 4 9 1 6 ! 6,3.0 Total Residential Business 256K 640K 1 MB 2MB 3MB 700 $27.965.00 420 $29,379.00 28 $4,478.60 2800 $111,300.00 1858 $55,647.10 787 $31,440.65 472 $33,016.40 33 $5,278.35 3150 $125,382.50 M ^| I *, 1961 $58,731.95 831 $33,198.45 498 $34,835.10 35 $5,598.25 3325 $132,363.75 2065 $61,846.75, 875 $34,956.25 525 $36,723.75 35 $5,598.25 3500 $139,125.00 : 918 $36,674.10 551 $38,542.45 ! 38 $6,078.10 3675 $146,226.25 } 30 $2,098.80 $8,477.35 53 53 $18,547.35 | $9,999.00 20 12 $8,399.40 168 $47,521.90 : Total Business TOTAL NET REVENUE Cumulative Towers Cost of Goods Sold One time costs Radio Equipment T1 Installation Radio Installation Cost Monitoring Servers Consulting Fees TOTAL ONE TIME Recurring Costs T1 Connectivity Tower Rental Space ISP Payment Residential 256K 640K 1 MB 3MB 23 $1,609.08 3J 40 $6,398.00 40 $13,998.00 ! 15 $7,499.25 ; 10 $6,999.50 ; 128 $36,503.83 $147,803.83 | i 2? 24 $1,679.04 43 $6,877.85 : 43 $15,047.85 j 16 $7,999.20 i 10 $6,999.50 | 136 $38,603.44 j $ 25 46 46 17 10 144 $1,749.00 $7,357.70 $16,097.70 $8,499.15 $6,999.50 $40,703.05 $166,085.55 , 27 $1,888.92 48 $7,677.60 I 48 $16,797.60 . 18 $8,999.10 g 11 $7,699.45 152 $43,062.67 ; $175,426.42 ' 28 $1,958.88 51 $8,157.45 ! 51 $17,847.45 19 $9,499.05 i 11 $7,699.45 | 160 $45,162.28 j i $157,004.69 , * $184,287.28 j $193,748.15 | 3* $0.00 j ? * $0.00 :<* $ . 0 I* 00 $0.00 :,% $0.00 A $18,000.00 $10,000.00 1652 $16,520.00 700 $10,500.00 420 $8,400.00 28 $1,260.00 $16,000.00 ' $3,000.00 $,0.0 , 3000 $0.00 [ $22,000.00 j $21,000.00 $12,500.00 $0.00; $0.00 "I $0.00 $0.00 $.0 00 $0.00 $0.00 $0.00 $21,000.00 $12,500.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $21,000.00 $12,500.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $21,000.00 $12,500.00 2065 875 525 35 $16,000.00 i $3,000.00 ! $3,000.00; $0.00 $0.00 $22,000.00 $24,000.00 i $15,000.00 i Total Residential Business 256K 640K 1 MB 2MB 3MB 2800 $36,680.00 23 40 40 15 10 $575.00 $,0.0 2200 $5,000.00 $ , 2 . 0. 2650 $2,450.00 1755 $17,550.00 743 $11,145.00 446 $8,920.00 ' 31 $1,395.00, 2975 $39,010.00 1858 $18,580.00 787 $11,805.00 472 $9,440.00 33 $1,485.00 3150 $41,310.00 1961 $19,610.00 831 $12,465.00 498 $9,960.00 35 $1,575.00 3325 $43,610.00 27 48 48 18 11 $675.00 $2,640.00 $6,000.00 $3,150.00 $2,695.00 3500 $20,650.00 i » $13,125.00 ; $10,500.00 * $1,575.00 J $45,850.00 * r M •S> : ; 2168 $21,680.00 $13,770.00 551 $11,020.00 38 $1,710.00 3675 $48,180.00 918 24 43 43 16 10 $600.00 $,6.0 } 2350 $5,375.00 i $,0.0 ' 2800 $2,450.00 I 25 46 46 17 10 $625.00 $,3.0 2500 $5,750.00 $2,975.00 $2,450.00 28 51 51 19 11 $700.00 $2,805.00 $6,375.00 $3,325.00 $2,695.00 * if jjl B| {ft i p 30 53 53 20 12 $750.00 $2,915.00 $6,625.00 $3,500.00 $2,940.00 Total Business ISP Payment SG&E Salary Travel Office Space Total SG&E 128 $12,850.00 $49,530.00 | $34,000.00 $4,500.00 I $1,500.00 136 $13,590.00 j $52,600.00 $4000 3,0.0 $4,500.00 I $1,500.00 '' 144 $14,330.00 $5600 5,4.0 152 $15,160.00 $8700 5,7.0 160 $15,900.00 $61,750.00 168 $16,730.00 : $64,910.00 ' $40,000.00 $3,200.00 $2,000.00 j $122,730.00 ] j $40,000.00 ' $3,200 00 M $2,000 00 JIJ $153,300 00 JH $3,704 69 V $46,000.00 $5,000.00 : $1,500.00 ; $2500 5,0.0 $6000 : 4,0.0 $5,000.00 $1,500.00 $2500 I 5,0.0 $6000 4,0.0 $,0.0' 5000 $1,500.00 ! $2500 j 5,0.0 $6000 4,0.0 $ , 0 . 0i 5000 $1,500.00 ! $2500 5,0.0 Interest on Financing Miscellaneous TOTAL EXPENSES CASH FLOW $3,200.00 $2,000.00 ; $146,840.00 j $19,245.55 *| $3,200.00 $2,000.00 , $149,970.00 I $25,456.42 S $3,200.00 i $2,000.00 i $152,950.00 ! $31,337.28 $3,200.00 $2,000.00 : $183,610.00 i I $10,138.15 j $25,073.83 I Major Assumptions 70,000 population within reach of area covered 3 % penetration rate = 2,100 customers capture rate of customers is evenly distributed, or 175; 100 business customers in the area Levels of service: Residential 256K Down 128 K Up = $29.95 per month = 59% 640K Down 128 K Up = $49.95 per month = 25% 1 MB Down 128 K Up = $69.95 per month = 15% 3 MB Down 128 K Up = $159.95 per month = 1% / customers per month o| o| of o| § customers sign up for thiif| I customers sign up for thi^H I customers sign up for thiajj I customers sign up for thi JU 29.95 *f 39.95 69.95 < 159.95| 0.59 0.25 0.15 0.01 Business 256K Down 256 K Up = $69.95 per month = 18% ofj 640K Down 640 K Up = $159.95 per month = 32% <' 1 MB Down 1 MB Up = $349.95 per month = 32% < 2 MB Down 2 MB Up = $499.95 per month = 12%( 3 MB Down 3 MB Up = $699.95 per month = 6% ofj Business distribution is normal bell shaped curve 35% payment to local ISP for business customers 30% payment to local ISP for residential customers {business customers sign |J|*for this |ll business customers siglfip for this | business customers sigfffl for this | business customers sigrlS for this usiness customers sign jHfor this 69.96 •. 159.95J^» 349.95 J 499.95* 699.95 j 0.18 0.32 0.32 0.12 0.6 July-03 2271 August-03! September-031 October-OS*' 2581 $77,300.95 : 1093 $3653 i 4,6.5 656 $45,887.20 45 $7,197.75 i 4375 $174,051.25 2684 1137 November-031 $80,385.80 ' $45,423.15, December-03 M TOTAL 2003 $68,016.45 962 $38,431.90 577 $40,361.15 40 $6,398.00 3850 $153,207.50 2374 $71,101.30: 1006 $40,189.70 ', 603 $42,179.85 ' 42 $6,717.90 4025 $160,188.75 2478 1050 630 42 $74,216.10 ' $41,947.50 j $44,068.50 I $6,717.90 '. 682 47 $47,705.90 $,1.5 7576 4200 $166,950.00 34 61 61 23 13 192 $2,378.64 $9,756.95 $21,346.95 $11,498.85 $9,099.35 $54,080.74 $221,030.74 4550 $181,032.50, 37 66 66 24 15 208 $2,588.52 $10,556.70 $23,096.70 $11,998.80 $10,499.25 $58,739.97 $239,772.47 2787 $83,470.65 i 1181 $47,180.95' 708 $49,524.60 Q 49 $,3.5 7875 4725 $188,013.75 $797,688.30 $5,5.5 40758 $473,421.60 $4367 7,7.5 $1,796,242.50 31 56 56 21 12 176 $2,168.76 | $8,957.20 . $19,597.20 f $10,498.95 _ $8,399.40 ' $49,621.51 $202,829.01 ^ «|h 33 58 58 22 13 184 $2,308.68 $9,277.10 ' $20,297.10 $10,998.90 $9,099.35 $51,981.13 $212,169.88 36 $2,518.56 * 64 64 24 12 200 $10,236.80 $22,396.80 jp $11,998.80 , J $8,399.40 * $55,550.36 '^ $229,601.61 **» ft 38 69 69 25 15 216 $2,658.48 ; $11,036.55**! $24,146.55! $12,498.75 ; $10,499.25! $60,839.58 I $248,853.33 , $25,605.36 $104,767.25 $229,217.25 $121,987.80 $100,792.80 $582,370.46 " $2,378,612.96 4.", 7": 7 $.0 % 00 $0.00 4- $0.00 i $0.00 «£ $0.00 1 ; } $0.00 * $0.00 $0.00 $0.00 $0.00 | $0.00 I $0.00 § $24,000.00 $15,000.00 $16,000.00 : $3,000.00 '. $3,000.00 i $0.00 ' $0.00 $22,000.00 j $27,000.00 ' $17,500.00! $16,000.00 ; $3,000.00 $3,000.00 $0.00 ? $0.00 $22,000.00 $30,000.00 $20,000.00 i $.0 ' 00 $0.00 : $0.00 $0.00 $.0 00 $0.00 $30,000.00 $0000 i 2,0.0 $6000 i 1,0.0 $3,000.00 i $,0.0 3000 $0.00 $.0 00! $22,000.00 | $33,000.00 $2500 I 2,0.0 $0000 8,0.0 $15,000.00 $15,000.00 $0.00 $.0 00 $110,000.00 $294,000.00 $185,000.00 \ $24,000.00 1 $15,000.00 I 'i 2271 962 577 40 3850 $22,710.00 " $14,430.00 % $11,540.00 $1,800.00 Sf $50,480.00 ^ 2374 1006 603 42 4025 $23,740.00 ' $15,090.00 3 $12,060.00 $1,890.00 ! $52,780.00 2478 1050 630 42 4200 $24,780.00 | $15,750.00 j $12,600.00 : $1,890.00 I $55,020.00 ! 2581 1093 656 $25,810.00 : $16,395.00 ; $13,120.00 45 4375 $,2.0' 2050 $57,350.00 2684 1137 682 47 4550 $26,840.00 $17,055.00 '. $13,640.00 ' $2,115.00 $59,650.00 2787 1181 708 49 4725 $27,870.00 j $17,715.00 i $14,160.00 $,0.0 ; 2250 $61,950.00 : $266,340.00 $169,245.00 $135,360.00 $0950 2,2.0 $591,870.00 31 56 56 21 12 $775.00 $3,080.00 $7,000.00 $3,675.00 $2,940.00 p *• * | ' 33 58 58 22 13 $825.00 $3,190.00 $7,250.00 $3,850.00 $3,185.00 >g m Jft « I S 34 61 61 23 13 $850.00 $3,355.00 $7,625.00 $4,025.00 $3,185.00 tj -J| si 2k * 36 64 64 24 12 $900.00 $3,520.00 $8,000.00 $4,200.00 $2,940.00 J\ \ \, "*f 37 66 66 24 15 $925.00* $3,630.00 M $8,250.00 1 , 5 $4,200.00 1 * $3,675.00 * 38 69 69 25 15 $950.00 $3,795.00 $8,625.00 $4,375.00 $3,675.00 aS 9 11 M * $9,150.00 $36,025.00 $81,875.00 $42,700.00 $35,280.00 176 $17,470.00 ," $67,950.00 S $46,000.00 $5,000.00 $1,500.00 $52,500.00 ,", r I 'I 184 $18,300.00 $71,080.00 , $46,000.00 $5,000.00 $1,500.00 $52,500.00 $3,200.00 $2,000.00 $167,780.00 $44,389.88 192 $19,040.00 $74,060.00 $46,000.00 $5,000.00 $1,500.00 $52,500.00 $3,200.00 $2,000.00 $198,260.00 $22,770.74 200 $19,560.00 j $76,910.00 $46,000.00 $5,000.00 $1,500.00 $52,500.00 $3,200.00 $2,000.00 $206,610.00 $22,991.61 * 208 $20,680.00 $80,330.00 $46,000.00 $5,000.00 $1,500.00 $52,500.00 $3,200.00 $2,000.00 $188,030.00 $51,742.47 216 $21,420.00 I $83,370.00 ' $46,000.00 , $5,000.00 $1,500.00 $52,500.00 $3,200.00 $2,000.00 $218,570.00 $30,283.33 $205,030.00 $796,900.00 $528,000.00 $59,000.00 $18,000.00 $605,000.00 $38,400.00 $24,000.00 $2,053,300.00 $325,312.96 $3,200.00 * $2,000.00 * $164,650.00 $38,179.01 * 0.59 0.25 0.15 0.01 0.18 0.32 0.32 0.12 0.6 it, 4 LGT Communications Cash Flow Analysis Net Sales Residential 256K 640K 1 MB 3MB Total Residential Business 256K 640K January-04 February-04 March-04 April-04 May-04 June-04 2891 $86,585.45 1225 $48,938.75 735 $51,413.25 49 $7,837.55 4900 $194,775.00 3200 $ 5 8 0 0 9,4.0 1356 $54,172.20 . 813 $ 6 8 9 3 "" 5,6.5 56 $ , 5 . 0 *' 8972 5425 $215,838.75 -'" 3304 $ 8 9 4 8 9,5.0 1400 $ 5 9 0 0 5,3.0 80 $8780 4 5,5.0 56 $,5.0 8972 5600 $ 2 , 0 . 0 22600 3407 $102,039.65 , 1443 $ 7 6 7 8 5,4.5 " 86 $0567 6 6,7.0 59 $ , 3 . 5 'l 9470 5775 $229,701.25 ->», "* r? *•* '.?, -^ j 1 MB 2MB 3MB Total Business TOTAL NET REVENUE Cumulative Towers Cost of Goods Sold One time costs Radio Equipment T1 Installation Radio Installation Cost Monitoring Servers Consulting Fees TOTAL ONE TIME Recurring Costs T1 Connectivity Tower Rental Space ISP Payment Residential 256K 640K 1 MB 3 MB Total Residential Business 256K 640K 1 MB 2 MB 3MB 40 $,9.0 2784 71 $11,356.45 71 $ 4 8 6 4 2,4.5 26 $12,998.70 16 $11,199.20 224 $63,199.20 44 $3,078.24 79 $12,636.05 79 $27,646.05 29 $14,498.55 17 $11,899.15 248 $69,758.04 $285,596.79 Jy ' '•">~ ' , J - 46 81 81 30 18 256 $3,218.16 $12,955.95 $28,345.95 $14,998.50 $12,599.10 $72,117.66 $294,717.66 47 $3,288.12 84 $13,435.80 84 $29,395.80 -.31 $15,498.45 18 $12,599.10 264 $74,217.27 * E> $257,974.20 $303,918.52 p' $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $33,000.00 $22,500.00 ' ... '' ,' $16,000.00 $3,000.00 $3,000.00 $0.00 $0.00 $22,000.00 $36,000.00 $25,000.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $36,000.00 $25,000.00 $0.00 $0.00 $0.00 $0.00 $0.00 - $0.00 ;' $36,000.00 $25,000.00 ": '; $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $36,000.00 $25,000.00 1 $16,000.00 $3,000.00 $3,000.00 $0.00 $0.00 $22,000.00 $39,000.00 $27,500.00 "., 2891 1225 735 49 4900 $28,910.00 $18,375.00 $14,700.00 $2,205.00 $64,190.00 "".-' .-; • 2994 1268 761 52 5075 $29,940.00 $19,020.00 $15,220.00 , $2,340.00 $66,520.00 " 3097 1312 787 54 5250 $30,970.00 . $19,680.00 $15,740.00 $2,430.00 $68,820.00 , 3200 1356 813 56 5425 $32,000.00 $20,340.00 $16,260.00 a $2,520.00 $71,120.00 _ ; 3304 1400 840 56 5600 $33,040.00 $21,000.00 -f $16,800.00 . $2,520.00 , • $73,360.00 - 3407 1443 866 59 5775 $34,070.00 $21,645.00 $17,320.00 $2,655.00 $75,690.00 40 71 71 26 16 $1,000.00 $3,905.00 $8,875.00 , $4,550.00 $3,920.00 , - 41 74 74 27 16 $1,025.00 $4,070.00 $9,250.00 $4,725.00 $3,920.00 „ ' ' ' 43 76 76 28 17 $1,075.00 'V $4,180.00 $9,500.00 ' $4,900.00 $4,165.00 44 79 79 29 17 $1,100.00 $4,345.00 $9,875.00 $5,075.00 $4,165.00 \ -,' \ ' ". 46 81 81 30 18 $1,150.00 "*5 $4,455.00 $10,125.00 y $5,250.00 ' $4,410.00 - 47 84 84 31 18 $1,175.00 $4,620.00 $10,500.00 $5,425.00 $4,410.00 Total Business ISP Payment SG&E Salary Travel Office Space Total SG&E 224 $22,250.00 $86,440.00 $52,000.00 $5,500.00 $2,500.00 $60,000.00 $3,200.00 $2,500.00 $207,640.00 $50,334.20 232 $22,990.00 $89,510.00 $52,000.00 ' $5,500.00 , $2,500.00 $60,000.00 , $3,200.00 $2,500.00 ' $238,210.00 , $28,965.06 • - 240 $23,820.00 $92,640.00 $52,000.00 $5,500.00 $2,500.00 $60,000.00 $3,200.00 $2,500.00 $219,340.00 $57,175.93 248 $24,560.00 $95,680.00 256 $25,390.00 $98,750.00 $52,000.00 t* $5,500.00 $2,500.00 Jf. $60,000.00 I' $3,200.00 $2,500.00 $225,450.00 $69,267.66 ' „ 264 $26,130.00 % $101,820.00 ',» $52,000.00 $5,500.00 $2,500.00 $60,000.00 > ,-, ,** •'?•* $52,000.00 $5,500.00 $2,500.00 $60,000.00 $3,200.00 $2,500.00 $222,380.00 $63,216.79 Interest on Financing Miscellaneous $3,200.00 j. $2,500.00 . ; $256,020.00 $47,898.52 "fs TOTAL EXPENSES CASH FLOW Major Assumptions 70,000 population within reach of area covered 3 % penetration rate = 2,100 customers capture rate of customers is evenly distributed, or 175 new customers per month 100 business customers in the area Levels of service: Residential 256K Down 128 K Up = $29.95 per month = 59% of ^customers sign up for this ,_ 640K Down 128 K Up = $49.95 per month = 25% of ^customers sign up for this 1 MB Down 128 K Up = $69.95 per month = 15% of ^customers sign up for this ;., 3 MB Down 128 K Up = $159.95 per month = 1% of QJ! customers sign up for this "\ Business 256K Down 256 K Up = $69.95 per month = 18% of f|[business customers sign U$|pr this 640K Down 640 K Up = $159.95 per month = 32% of jgl business customers sign us for this 1 MB Down 1 MB Up = $349.95 per month = 32% o|pj business customers sign Ijjfejor this 2 MB Down 2 MB Up = $499.95 per month = 12% off| business customers sign S8y(or this 3 MB Down 3 MB Up = $699.95 per month = 6% of Business customers sign ujflpr this Business distribution is normal bell shaped curve 35% payment to local ISP for business customers 30% payment to local ISP for residential customers 29.95 39.95 69.95 159.95 69.96 ;: 159.95-" 349.95 499.95 699.95 !i 0.59 0.25 0.15 0.01 0.18 0.32 0.32 0.12 0.6 July-04 August-04 September-04 . October-04 November-04 December-04 TOTAL 2004 3510 1487 892 61 5950 48 87 87 32 18 272 $105,124.50 $59,405.65 $62,395.40 $9,756.95 $236,682.50 $3,358.08 $13,915.65 ' $30,445.65 $15,998.40 A $12,599.10 ; $76,316.88 ' $312,999.38 '' 3613 $108,209.35 1531 918 63 6125 $61,163.45 $64,214.10 $10,076.85 $243,663.75 $3,498.00 \ $14,235.55 , 1 , $31,145.55 " $16,498.35 ••' $13,299.05 • ; $78,676.50 "' $322,340.25 "; 5, 3717 $111,324.15 1575 $62,921.25 945 $66,102.75 63 $10,076.85 6300 $250,425.00 $3,567.96 $14,715.40 $32,195.40 $16,998.30 $13,299.05 $80,776.11 3820 $114,409.00 1618 $64,639.10 971 $67,921.45 66 $10,556.70 6475 $257,526.25 $3,707.88 . $15,035.30 ' $32,895.30 $17,498.25 - . $13,999.00 $83,135.73 •, $340,661.98 3923 $117,493.85 1662 $66,396.90 997 $69,740.15 68 $10,876.60 6650 $264,507.50 $3,777.84 $15,515.15 • $33,945.15 ,J $17,998.20 v~ $13,999.00 i $85,235.34 "' $349,742.84 4026 $120,578.70 1706 $68,154.70 1023 $71,558.85 70 $11,196.50 $1,242,984.90 $702,440.85 . $737,832.60 $114,684.15 6825 $271,488.75 • j. $2,797,942.50 56 99 99 37 21 312 $3,917.76 $15,835.05 ,, $34,645.05 ' $18,498.15 ", $14,698.95 ,:" . $87,594.96 $359,083.71 $40,087.08 $163,628.85 $357,998.85 $188,981.10 $153,289.05 $903,984.93 50 89 89 33 19 280 51 92 92 34 19 288 ,' . " ," :'• 53 94 94 35 20 296 54 97 97 36 20 304 $331,201.11 10- « $3,701,927.43 9- : 9, j. 11 ' 11 12 12 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $39,000.00 $27,500.00 $35,100.00 $22,305.00 $17,840.00 $2,745.00 $77,990.00 3613 1531 918 63 6125 $0.00 * $0.00 $0.00 $0.00 $0.00 $39,000.00 $27,500.00 ' $36,130.00 '$22,965.00 $18,360.00 $2,835.00 $80,290.00 • $0.00;, $16,000.00 $3,000.00 $3,000.00 $0.00 $0.00 $22,000.00 $42,000.00 $30,000.00 3717 1575 945 63 6300 $37,170.00 $23,625.00 ' $18,900.00 ' $2,835.00 $82,530.00 ' $1,275.00 $5,060.00 $11,500.00 $5,950.00 $4,655.00 ' 3820 1618 971 66 6475 53 94 94 35 20 $16,000.00 $3,000.00 $3,000.00 $0.00 $0.00 $22,000.00 $45,000.00 $32,500.00 $38,200.00 * $24,270.00 . $19,420.00 ' $2,970.00 $84,860.00 " , 3923 1662 997 68 6650 54 97 97 36 20 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $45,000.00 $32,500.00 $39,230.00 ' $24,930.00 $19,940.00 •.' $3,060.00 $87,160.00 $1,350.00 $5,335.00 $12,125.00 . $6,300.00 ' $4,900.00 4026 1706 1023 70 6825 56 99 99 37 21 $16,000.00 $3,000.00 $3,000.00 $0.00 $.0 00 $22,000.00 $48,000.00 $35,000.00 $40,260.00 $25,590.00 $20,460.00 $3,150.00 $89,460.00 ,, «f * • -^ i ' " $80,000.00 $15,000.00 $15,000.00 $0.00 $0.00 $110,000.00 $7,0.0 44000 $335,000.00 $415,020.00 $6,4.0 23750 $210,960.00 $32,265.00 $921,990.00 I 3510 1487 892 61 5950 '-' ," * ;• , 48 $1 ,200.00 87 $4,785.00 87 $10,875.00 32 $5,600.00 $4,410.00 18 $4,410.00 : 50 $1,250.00 - 89 $4,895.00 -. 89 $11,125.00 > 33 $5,775.00 '-¥ 19 $4,655.00 -- 51 92 92 34 19 $1,325.00 $5,170.00 $11,750.00 $6,125.00 $4,900.00 , " $14,325.00 $1,400.00 $56,265.00 $5,445.00 $127,875.00 $12,375.00 * $6,475.00 ; $66,150.00 $53,655.00 $5,145.00 ,"' 272 $26,870.00 $104,860.00 $52,000.00 $5,500.00 $2,500.00 $60,000.00 $3,200.00 ' $2,500.00 $3,6.0 ' ' 27000 $75,939.38 ' 280 $ 7 7 0 0 ' 2,0.0 $107,990.00 $52,000.00 $5,500.00 $2,500.00 $60,000.00 $3,200.00 " „ $2,500.00 ' , $4,9.0 / 20100 $82,150.25 288 $8400 2,4.0 $110,970.00 $52,000.00 $5,500.00 $2,500.00 $60,000.00 $3,200.00 * $2,500.00 ,$ 7 , 7 . 0 ;/ 20600 $60,531.11 '.. 296 $29,270.00 $114,130.00 $52,000.00 $5,500.00 $2,500.00 $60,000.00 $3,200.00 $2,500.00 304 $30,010.00 $117,170.00 . $52,000.00 $5,500.00 , $2,500.00 ,_-. $60,000.00 '.. :' 312 $0800 3,4.0 $120,300.00 $1,7.0 38200 ( $1,240,260.00 . $52,000.00 $5,500.00 ; $2,500.00 $60,000.00 /• ,' $624,000.00 $66,000.00 $30,000.00 $720,000.00 $38,400.00 $30,000.00 , $3,200.00 $2,500.00 , !. V $3,200.00 $2,500.00 ';<: $ 7 , 3 . 0 :• ' 29300 $61,331.98 $260,370.00 "' : $89,372.84 ,""' $291,000.00 , $ , 4 , 6 . 0 f 297600 $68,083.71 -f* $754,267.43 0.59 0.25 0.15 0.01 0.18 0.32 0.32 0.12 0.6 LGT Communications Cash flow Analysis Net Sales Residential 256K 640K 1 MB 3MB Total Residential Business 256K 640K 1 MB 2MB 3MB Total Business TOTAL NET REVENUE Cumulative Towers Cost of Goods Sold One time costs Radio Equipment T1 Installation Radio Installation Cost Monitoring Servers Consulting Fees TOTAL ONE TIME Recurring Costs T1 Connectivity Tower Rental Space ISP Payment Residential 256K 640K 1 MB 3MB Total Residential Business 256K 640K 1 MB 2MB 3MB January-05 _ February-05 •$• March-05 ",_ i April-05 May-OS ~ June-05 € $123,693.50 $69,912.50 $73,447.50 70 $11,196.50 7000 $278,250.00 4130 1750 1050 j" '."" '* ' 4233 $126,778.35 %£* $71,630.35 S* 1793 $75,266.20 1076 73 $11,676.35 7175 $285,351.25 4336 $129,863.20 :*5 1837 $73,388.15 ' ' . 1102 $77,084.90 75 $11,996.25 7350 $292,332.50 4439 $132,948.05 1881 $75,145.95 1128 $78,903.60 77 $12,316.15 7525 $299,313.75 4543 $136,062.85 • " * 1925 $ 6 9 3 7 ' 7,0.5 3 1155 $80,792.25 '77 $12,316.15 '7700 $ 0 , 7 . 0 , 36050 44 66 1968 1181 8 0 7875 $139,147.70 $78,621.60 "-, $82,610.95 < $12,796.00 ' . $313,176.25 ' 57 102 102 38 21 320 $3,987.72 $16,314.90 • $35,694.90 ' $18,998.10 ,_' $14,698.95 $89,694.57 $367,944.57 12 59 104 104 39 22 328 $4,127.64 $16,634.80 $36,394.80 ''-. $19,498.05 ',! $15,398.90 $92,054.19 $377,405.44 * 60 107 107 40 22 336 $4,197.60 $17,114.65 $37,444.65 $19,998.00 -*; $15,398.90 ' $94,153.80 $386,486.30 13 61 110 41 22 344 $,6.6 4275 $17,594.50 $0479 2,9.5 $15,398.90 $96,253.41 $395,567.16 110 $38,494.50 63 112 ,112 42 $,0.8 4474 $17,914.40 $39,194.40 $0979 2,9.0 '. ' * 23 $16,098.85 ;v 352 $98,613.03 ,$0,8.3 | 44680 64 $,7.4 4474 115 $18,394.25 115 $ 0 2 4 2 4,4.5 43 $21,497.85 23 $16,098.85 360 $ 0 , 1 . 4 10726 " r «" • •„, $1,8.9 , ' 43888 14 ,' 13 ' 13 13 *. $0.00 $0.00 $0.00 $0.00 •'-' $0.00 ' $0.00 $48,000.00 $35,000.00 ' , $22,000.00 ;•• $51,000.00 $37,500.00 , $16,000.00 $3,000.00 $3,000.00 V $0.00 V $0.00 •-- $0.00 $0.00 $0.00 4 $0.00 , $0.00 »., $0.00 $51,000.00 , $37,500.00 ' $.0 00 $.0 00 $.0 00 $0.00 $.0 00 $0.00 $51,000.00 $7500 3,0.0 $.0 , 00 $6000 « 1,0.0 $0.00 $.0 00 $.0 00 $.0 00 $.0 00 fi *'-* „"' • $3,000.00 $,0.0 " 3000 $0.00 $.0 . 00 $2000 ' 2,0.0 $4000 5,0.0 $0000 » 4,0.0 **« $51 , 0 . 0 000 $ 7 5 0 0 '" 3 , 0 . 0 ;' 4130 1750 1050 70 7000 $41,300.00 ., $26,250.00 ''.$21,000.00 , $3,150.00 .-' $91,700.00 '-,_ 4233 1793 1076 73 7175 $42,330.00 $26,895.00 $21,520.00 $3,285.00 $94,030.00 •',;• £ ,-,.' "-', ""• 4336 1837 1102 75 7350 $43,360.00 $27,555.00 -., $22,040.00 ", $3,375.00 :-,. $96,330.00 4439 $ 4 3 0 0 4,9.0 1881 $ 8 2 5 0 2,1.0 1128 $22,560.00 7 7 $,6.0 3450 4543 $ 5 4 0 0 , "• 4,3.0 1925 $ 8 8 5 0 "f 2,7.0 1155 $23,100.00 '•-' 77 $ , 6 . 0 ;3450 7525 $98,630.00 61 110 110 41 22 $,2.0 1550 $,5.0 6000 $3700 1,5.0 $7,175.00 $,9.0 5300 7700 $100,870.00 '" ^ 4646 $ 6 4 0 0 4,6.0 1968 $ 9 5 0 0 2,2.0 1181 $ 3 6 0 0 2,2.0 8 0 $,0.0 3600 7875 $103,200.00 ", jjcustomers sign up for this W. j ({customers sign up for this '*£ ['customers sign up for this fj of I 29.95 -."/ 39.95 •;'•69.95" " 159.95 " '< 6.6 99 159.95 ' 349.95 " 499 ' 9.5 699.95 0.59 0.25 0.15 0.01 0.18 0.32 0.32 0.12 0.6 Business 256K Down 256 K Up = $69.95 per month = 18% of ^business customers sign upjterthis 640K Down 640 K Up = $159.95 per month = 32% oljjfl business customers sign | j for this | 1 MB Down 1 MB Up = $349.95 per month = 32% of48 business customers sign Ujj» W this 2 MB Down 2 MB Up = $499.95 per month = 12% of|$l business customers sign ypfor this 3 MB Down 3 MB Up = $699.95 per month = 6% of aj business customers sign up.fj}r this •}' Business distribution is normal bell shaped curve 35% payment to local ISP for business customers 30% payment to local ISP for residential customers * July-05 August-05 September-05 October-05 November-05 . December-05 , TOTAL 2005 4852 $145,317.40 •• 2056 1233 84 8225 $82,137.20 . $86,248.35 $13,435.80 $327,138.75 4956 $148,432.20 2100 $83,895.00 1260 $88,137.00 ', 84 $13,435.80 ' 80 $3,0.0 40 33900 $ , 2 . 4 .4872 69 122 $19,513.90 T" 122 $42,693.90 tvf 46 $22,997.70 25 $ 7 4 8 7 ", 1,9.5 384 $107,531.49 $441,431.49 15 * 70 $4,897.20 ' 125 $19,993.75 125 $43,743.75 47 $23,497.65 : 25 $17,498.75 , 392 $109,631.10 $450,632.35 66 117 117 44 24 368 $4,617.36 $18,714.15 $40,944.15 $21,997.80 $16,798.80 $103,072.26 $423,229.76 14 67 120 120 45 24 376 $4,687.32 $19,194.00 $41,994.00 $22,497.75 $6788 1,9.0 $105,171.87 H s'-'.jj •' / '••., -, ' 72 $5,037.12 128 $20,473.60 '^ 128 $44,793.60 f' 48 $23,997.60 "t 24 $ 6 7 8 8 .:' 1,9.0 400 $111,100.72 ' $459,083.22 •. 16 ."' $5,107.08 73 130 $20,793.50 130 $45,493.50 48 $23,997.60 1,9.5 27 $ 8 8 8 6 408 $114,290.33 $469,254.08 $54,638.76 $222,650.40 $487,130.40 $260,473.95 $9,8.0 17359 $1,222,279.41 ,'$5,021,921.91 "5 $432,310.62 , : 14 i! 16 17 i 17 $0.00 $.0 00 $0.00 $0.00 $0.00 $0.00 $54,000.00 $0000 4,0.0 4749 2012 1207 82 8050 66 117 117 44 24 $0.00 , ' $ . 0 '00 $0.00 • ; $0.00 -'', $0.00 $0.00 " $16,000.00 , $,0.0 3000 $3,000.00 $0.00 $.0 ' 00 $22,000.00 $57,000.00 $2500 4,0.0 5059 2143 1286 87 8575 $16,000.00 $3,000.00 $3,000.00 $0.00 $0.00 $22,000.00 $60,000.00 $45,000.00 $0.00 $0.00 $0.00 $0.00 $0.00 $.0 00 $60,000.00 $5000 4,0.0 $16,000.00 $3,000.00 ^ $3,000.00 " $0.00 $0.00 ," $63,000.00 "' $7500 « 4,0.0 $0000 8,0.0 $15,000.00 $15,000.00 $0.00 $.0 00 $654,000.00 $8,0.0 45000 $563,700.00 $22,000.00 « $110,000.00 $54,000.00 $40,000.00 ;„> 4852 2056 1233 84 8225 $48,520.00 r $30,840.00 ' $24,660.00 -" $3,780.00 $107,800.00 $47,490.00 $30,180.00 $24,140.00 $3,690.00 $105,500.00 $1,650.00 $6,435.00 $14,625.00 $7,700.00 $5,880.00 4956 $49,560.00 2100 $31,500.00 1260 $25,200.00 84 $3,780.00 8 0 $110,040.00 40 $50,590.00 $32,145.00 $25,720.00 $3,915.00 $112,370.00 5162 $51,620.00 2187 $32,805.00 1312 $26,240.00 89 $4,005.00 8750 $114,670.00 5265 $52,650.00 2231 $33,465.00 1338 $26,760.00 $4,095.00 91 8925 $116,970.00 73 130 130 48 27 •{ '. ' ' $358,245.00 $286,560.00 . $43,605.00 "-, $1,252,110.00 • *? Y ;*? ' > $19,525.00 $76,560.00 $174,000.00 $91,175.00 $9000 6,9.0 j; 67 120 $1,675.00 ', $6,600.00 T, 120 $15,000.00 ; 45 $7,875.00 ,,f 24 $,8.0 « 5800 69 122 122 46 25 $1,725.00 ; $6,710.00 . $15,250.00 • -' $8,050.00 ; % $6,125.00 V " 70 125 125 47 25 $1,750.00 $6,875.00 $15,625.00 $8,225.00 $6,125.00 72 128 128 48 24 $1,800.00 $7,040.00 $16,000.00 $8,400.00 $5,880.00 . ,s \-' | . '« $1,825.00 $7,150.00 $16,250.00 $,0.0 8400 $,1.0 6650 368 536,290.00 $141,790.00 $60,000.00 $6,000.00 $2,500.00 $68,500.00 $3,200.00 ,.$3,000.00 !, $310,490.00 $112,739.76 376 $37,030.00 $144,830.00 $60,000.00 ' $6,000.00 . $2,500.00 ,« 384 $37,860.00 $147,900.00 $60,000.00 ., $6,000.00 *•' ' $2,500.00 J« 392 $38,600.00 $150,970.00 400 $39,120.00 $153,790.00 $60,000.00 $6,000.00 $2,500.00 J% $68,500.00 '< *> $68,500.00 * $3,200.00 „'•< $3,000.00 ;', K, $60,000.00 $6,000.00 $2,500.00 $68,500.00 $3,200.00 $3,000.00 $352,670.00 $97,962.35 " •,,, V-"; $60,000.00 ' • $68,500.00 !J $720,000.00 $2,0.0 82000 $38,400.00 $36,000.00 $3,827,860.00 $1,194,061.91 $6,000.00 ; ; $72,000.00 $2,500.00 w $30,000.00 $3,200.00 $3,000.00 $364,410.00 $104,844.08 $344,100.00 " " $97,331.49 $333,490.00 $125,593.22 . $118,780.62 •'- 0.59 0.25 0.15 0.01 0.18 0.32 0.32 0.12 0.6 LGT Communications Cash flow Analysis Net Sales Residential January-06' February-06, March-06 April-06 May-06 June-06 256K 640K 1 MB 3MB Total Residential Business 256K 640K 5678 2406 1443 98 9625 74 133 133 49 27 416 $5,177.04 $21,273.35 $46,543.35 $24,497.55 $18,898.65 $116,389.94 $478,114.94 17 $170,056.10 $96,119.70 $100,937.85 ' $15,675.10 ' • $8,8.5 32787 $5,526.84 $22,393.00 , $48,993.00 $ 5 9 7 4 -' 2,9.0 $20,298.55v~ $123,208.79 ',' f1 5782 2450 1470 98 9800 80 $173,170.90 $97,877.50 $102,826.50 •'. $15,675.10 $8,5.0 39500 $5,596.80 5885 2493 1496 101 9975 82 $176,255.75 $99,595.35 "f $0,4.0 ' 14652 $16,154.95 ; $396,651.25 $5,736.72 "' 1 MB 2MB 3MB Total Business TOTAL NET REVENUE Cumulative Towers Cost of Goods Sold One time costs Radio Equipment T1 Installation Radio Installation Cost Monitoring Servers Consulting Fees TOTAL ONE TIME Recurring Costs T1 Connectivity Tower Rental Space ISP Payment Residential 256K 640K 1 MB 3MB Total Residential Business 256K 640K 1 MB 2MB 3MB 76 135 135 50 28 424 $5,316.96 " $21,593.25 ' $47,243.25 $4975 " 2,9.0 $19,598.60 ", $118,749.56 $ 8 , 7 . 1 '' 47558 18- 77 138 138 51 $5,386.92 $22,073.10 $48,293.10 $25,497.45 28 $19,598.60 $9,5.7 46666 18 432 $120,849.17 79 140 140 52 29 440 143 $ 2 8 2 8 > 2,7.5 143 $50,042.85 • 53 $ 6 4 7 3 2,9.5 29 $20,298.55 # 448 $125,308.40 «, $514,858.40 t» 145 $23,192.75 • 145 $50,742.75 . " 54 $ 6 9 7 3 'i 2,9.0 30 $20,998.50 , • 4 6 $127,668.02 / 5 ' $524,319.27 { 19 $505,997.54 ., I 18 ' 18 " $0.00 *' $0.00 •;, $0.00 $63,000.00 ' • $47,500.00 5369 2275 1365 91 9100 74 133 $0.00 $0.00 , $0.00 -, $16,000.00 $3,000.00 $,0.0 3000 $0.00 $0.00 $22,000.00 $66,000.00 $0000 > 5,0.0 5472 2318 1391 94 9275 $54,720.00 $34,770.00 $27,820.00 $4,230.00 $121,540.00 $.0 00 $0.00 $0.00 $0.00 $0.00 $0.00 $66,000.00 $0000 5,0.0 5575 $55,750.00 2362 $35,430.00 1417 $28,340.00 96 $4,320.00 9450 $123,840.00 77 $1,925.00 138 $7,590.00 138 $17,250.00 51 $8,925.00 28 $6,860.00 5678 2406 1443 98 9625 $0.00 $0.00 $ . 0: 00 $0.00 $.0 00 $0.00 r $66,000.00 ,_, $ 0 0 0 0 •' 5,0.0 $56,780.00 $36,090.00 • " $28,860.00.-; $4,410.00 f$126,140.00 $.0 „ " 00 $0.00 '*: $ . 0 ** 00 $16,000.00 % • $3,000.00 y. $ . 0 -r' 00 $0.00 l " $0.00 ' $66,000.00 "< $ , 0 . 0 ~f 3000 $0.00 $ . 0 "' 00 , $22,000.00 ff $69,000.00 ; $52,500.00 if 5885 $58,850.00 2493 $37,395.00 • $ 0 0 0 0 '> 5,0.0 5782 $57,820.00 • 2450 $36,750.00 ,., ' 1470 $29,400.00 » 98 $4,410.00 f ' $53,690.00 $34,125.00 $27,300.00 $4,095.00 $119,210.00 $1,850.00 $7,315.00 1496 $29,920.00 101 $,4.0 > 4550 9975 $130,710.00 ,•' & 9800 $128,380.00 80 $2,000.00 133 $16,625.00 49 $8,575.00 27 $6,615.00 76 $1,900.00 135 $7,425.00 135 $16,875.00 50 $8,750.00 28 $6,860.00 79 $1,975.00 140 $7,700.00 140 $17,500.00 52 $9,100.00 I29 $7,105.00 143 $7,865.00 ,* 143 $17,875.00 ' 53 $9,275.00 % 29 $7,105.00 *' 82 $2,050.00 * 145 $7,975.00 ,~ 145 $18,125.00 W 54 $9,450.00 ""'• 30 $7,350.00 ,'i Total Business ISP Payment SG&E Salary Travel Office Space Total SG&E 416 $40,980.00 $160,190.00 424 $41,810.00 $163,350.00 432 $42,550.00 $166,390.00 440 $43,380.00 $169,520.00 448 $44,120.00 $172,500.00 •• 456 $44,950.00 ,',. $175,660.00 -'/ $80,000.00 $8,000.00 $4,000.00 $92,000.00 $80,000.00 $8,000.00 $4,000.00 $92,000.00 $80,000.00 $8,000.00 $4,000.00 $92,000.00 $80,000.00 $8,000.00 $4,000.00 $92,000.00 $80,000.00 • $8,000.00 , $4,000.00 „;'• $92,000.00 -S. $80,000.00 ', $8,000.00 -,", $4,000.00 ,' ' $92,000.00 ** Interest on Financing Miscellaneous $3,200.00 $5,000.00 $370,890.00 $107,224.94 $3,200.00 $,0.0 5000 $401,550.00 _ $86,025.81 ;' °'% ''' ~" $3,200.00 $5,000.00 $382,590.00 $114,066.67 $3,200.00 $,0.0 5000 $8,2.0 35700 $120,277.54 $3,200.00 $,0.0 5000 $8,0.0 38700 $126,158.40 $3,200.00 $5,000.00 $419,360.00 $104,959.27 TOTAL EXPENSES CASH FLOW Major Assumptions ' ,' 70,000 population within reach of area covered ' 3 % penetration rate = 2,100 customers capture rate of customers is evenly distributed, or 175 ney customers per month 100 business customers in the area Levels of service: ; Residential 256K Down 128 K Up = $29.95 per month = 59% of all customers sign up for this,640K Down 128 K Up = $49.95 per month = 25% of pcustomers sign up for this, 1 MB Down 128 K Up = $69.95 per month = 15% of ell customers sign up for this 3 MB Down 128 K Up = $159.95 per month = 1% of (0 customers sign up for this' ' Business 256K Down 256 K Up = $69.95 per month = 18% of fllbusiness customers sign Uflfor this 640K Down 640 K Up = $159.95 per month = 32% qf Jf business customers sign suffer this 1 MB Down 1 MB Up = $349.95 per month = 32% of |{P business customers sign Mg.for this 2 MB Down 2 MB Up = $499.95 per month = 12% of atf business customers sign tkj|for this 3 MB Down 3 MB Up = $699.95 per month = 6% of all business customers sign upfer this Business distribution is normal bell shaped curve 35% payment to local ISP for business customers 30% payment to local ISP for residential customers - ,. 29.95 39.95 69.95 159.95 0.59 0.25 0.15 0.01 69.96 159.95 349.95 499.95 699.95 0.18 0.32 0.32 0.12 0.6 July-06 September-06 October-06 November-06 December-06 ,, TOTAL 2006 5988 2537 1522 103 10150 $179,340.60 $101,353.15 $106,463.90 $16,474.85 $403,632.50 6091 2581 1548 105 10325 84 151 151 56 30 472 $182,425.45 lit $103,110.95 * • ;& $ 0 , 8 . 0 .?; 1 8 2 2 6 §; $16,794.75 , | gf $410,613.75 '"is 6195 2625 1575 105 10500 $185,540.25 $104,868.75 $110,171.25 f", $16,794.75 ,'. $417,375.00 '(' 6298 2668 1601 108 10675 $188,625.10 $106,586.60 ' $111,989.95 *," $17,274.60 '- ' $424,476.25 •; 6401 2712 1627 110 10850 $191,709.95 $108,344.40 $113,808.65 $17,594.50 $431,457.50 -, , ',H"~ .\ 6504 2756 1653 112 11025 , $2,133,578.10 ' $1,205,810.85 ^ 26646 *? $1 , 6 , 5 . 0 g $195,298.95 $438,438.75 "; $4,801,342.50 $194,794.80 $110,102.20 $115,627.35 $17,914.40 $5,806.68 $23,672.60 $51,792.60 $27,497.25 $20,998.50 464 $129.767.63 83 148 148 55 30 a $5,876.64 »3 ^ ' <;»;.. $24,152.45 ;•*? $52,842.45 J-'"s $27,997.20 y ' , $20,998.50 ¥f* $131,867.24 , V $542,480.99 ';-.i $6,016.56 . ' 86 153 $24,472.35 153 $53,542.35 57 $28,497.15 $21,698.45 31 480 $134,226.86 $551,601.86 20 87 $6,086.52 " 156 $24,952.20 156 $54,592.20 58 $28,997.10 $21,698.45 31 488 $136,326.47 $6,226.44 89 158 $25,272.10 . 158 $55,292.10 " ' 2,9.5 59 $ 9 4 7 0 32 $22,398.40 • 496 $138,686.09 $570,143.59 s 21 ". $69,050.52 $6,296.40 90 161 $25,751.95 '*„ $281,671.95 $56,341.95 , $616,261.95 161 36973 2,9.0 60 $ 9 9 7 0 v_ $ 2 , 6 . 0 32 $22,398.40 - $249,882.15 $1 ,543,833.87 504 $140,785.70 $579,224.45 %. $6,345,176.37 22 22 $533,400.13 $560,802.72 21 19 19'S; $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $ . 0 0 0 ; S i $0.00 " " !• $0.00 ' $0.00 •'! $0.00 •;, $0.00 -i $16,000.00 $3,000.00 $3,000.00 , $0.00 $0.00 $22,000.00 $69,000.00 ' $2500 5,0.0 6195 $61,950.00 2625 $39,375.00 1575 $31,500.00 $4,725.00 105 10500 $137,550.00 -„ *" ,! ,. Oi-. i $16,000.00 $3,000.00 $3,000.00 $0.00 $0.00 ' $22,000.00 $69,000.00 -$2500 5,0.0 6298 $62,980.00 , "' 4,2.0 2668 $ 0 0 0 0 ,„' $32,020.00 \; 1601 $,6.0• 4800 108 .; 10675 $139,880.00 " ' 87 156 156 58 31 $0.00 $0.00 $0.00 $16,000.00 $3,000.00 $3,000.00 $0.00 " $0.00 $0.00 $9000 , 6,0.0 $2500 5,0.0 6401 $64,010.00 4,8.0 2712 $ 0 6 0 0 1627 $32,540.00 $4,950.00 110 10850 $142,180.00 "l'. >>, •" " •". : $0.00 $0.00 $22,000.00 $69,000.00 l. $2500 5,0.0 $0000 8,0.0 $15,000.00 $15,000.00 $0.00 $0.00 $110,000.00 $810,000.00 $615,000.00 $69,000.00 $52,500.00 5988 $59,880.00 2537 $38,055.00 1522 $30,440.00 103 $4,635.00 10150 $133,010.00 $69,000.00 ;,». $ 2 5 0 0 "': 5 , 0 . 0 .* 6091 2581 1548 105 10325 $60,910.00 $38,715.00 $0900 3,6.0 $4,725.00 $135,310.00 ;t | ,| S -V,'f':' 'T£ 6,4.0 6504 $ 5 0 0 0 >','.*, $712,380.00 42750 2756 $41,340.00 -V $ 5 , 4 . 0 1653 $33,060.00 :1 $362,160.00 5,4.0 112 $ , 4 . 0 H. $ 4 9 5 0 5000 11025 $144,480.00 /,,, $1,582,230.00 90 161 161 60 32 83 148 $2,075.00 $8,140.00 148 55 30 $18,500.00 $9,625.00 $7,350.00 84 $2,100.00 V $8,305.00 .." .: 151 151 $18,875.00 "... 56 $9,800.00 *"? 30 $7,350.00 >"> 86 153 153 57 31 $2,150.00 $8,415.00 ; $19,125.00 $9,975.00 " " $7,595.00 ' $2,175.00 $8,580.00 ;'"•' $19,500.00 ' $10,150.00 $7,595.00 , ' 89 158 158 59 32 $2,225.00 . $8,690.00 , $19,750.00 ,, $10,325.00 $7,840.00 $2,250.00 $8,855.00 $20,125.00 $10,500.00 $,4.0 7800 $24,675.00 $ $96,855.00 f' -. $220,125.00 " $114,450.00 ' - $87,465.00 464 $45,690.00 , $178,700.00 $80,000.00 $8,000.00 $4,000.00 $92,000.00 $3,200.00 $5,000.00 $400,400.00 $133,000.13 '• 472 $46,430.00 *£• $181,740.00 __. 480 °S $47,260.00 ' $184,810.00 :-; ..I $80,000.00 ' ' $,0.0 ' 8000 $4,000.00 ', $92,000.00 $3,200.00 $5,000.00 488 $48,000.00 $187,880.00 ; I* 496 $48,830.00 $191,010.00 •• $80,000.00 ' , $8,000.00 & $ , 0 . 0 >« 4000 504 $49,570.00 ,, $543,570.00 $194,050.00 "p $2,125,800.00 1 $80,000.00 $8,000.00 $4,000.00 $92,000.00 ,"„' $ 6 , 0 . 0 90000 , 1* $6000 9,0.0 ,j ' $8000 4,0.0 c • $1,104,000.00 k IV $80,000.00 ?< $8,000.00 , $,0.0 4000 $92,000.00 $3,200.00 $5,000.00 $403,440.00 $139,040.99 '• $80,000.00 $8,000.00 $,0.0 4000 $92,000.00 ' ' + '~. -" $92,000.00 ;•'" $3,200.00 $5,000.00 $412,710.00 $157,433.59 : $3,200.00 $5,000.00 . $431,580.00 $129,222.72 $3,200.00 $5,000.00 $437,750.00 $141,474.45 $38,400.00 $60,000.00 V $4,863,200.00 $1,481,976.37 $428,510.00 ,}, $123,091.86 0.59 0.25 0.15 0.01 0.18 0.32 0.32 0.12 0.6 LGT Communications Cash Flow Analysis Net Sales Residential 256K 640K January-07 February-07 March-07 April-07 May-07 June-07' 1 MB 3MB Total Residential 7021 2975 1785 119 11900 $210,278.95 . , $118,851.25 ' $124,860.75 '$19,034.05 -. $473,025.00 , "y->v 7124 3018 1811 122 12075 $213,363.80 -* $120,569.10 $126,679.45 $19,513.90 $480,126.25 j Business 256K 640K 1 MB 2MB 3MB Total Business TOTAL NET REVENUE Cumulative Towers Cost of Goods Sold One time costs Radio Equipment T1 Installation Radio Installation Cost Monitoring Servers Consulting Fees TOTAL ONE TIME Recurring Costs T1 Connectivity Tower Rental Space ISP Payment Residential 256K 640K 1 MB 3MB Total Residential Business 256K 640K 1 MB 2MB 3MB 92 $6,436.32 163 $26,071.85 163 $57,041.85 61 $30,496.95 33 $23,098.35 512 $143,145.32 $588,345.32 93 166 166 62 33 520 $6,506.28 $26,551.70 : $58,091.70 ;' $30,996.90 $23,098.35 " $145,244.93 .,-, $597,546.18 J* 95 $,4.0 6662 168 $26,871.60 168 $58,791.60 63 $31,496.85 34 $23,798.30 528 $147,604.55 *. $606,887.05 96 $6,716.16 171 $27,351.45 171 $59,841.45 "-, 64 $31,996.80 ft 34 $23,798.30 '-"'' 536 $149,704.16 ( $615,967.91 . 97 174 174 65 34 544 $6,786.12 $27,831.30 '" $60,891.30 \, $ 2 4 6 7 C3,9.5 $23,798.30 M $151,803.77 *„ 99 176 176 66 35 552 $6,926.04 ' $28,151.20 / $61,591.20 jf $2967 w 3,9.0 $ 4 4 8 2 -1* 2,9.5 $154,163.39 ^5 $ 3 , 8 . 4 ',!„ 64296 $624,828.77 'i 23 A 22 23 , 23 23 \ 24 ": f $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $69,000.00 $52,500.00 $16,000.00 $3,000.00 $3,000.00 $0.00 $0.00 $22,000.00 $72,000.00 $55,000.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $72,000.00 $55,000.00 6917 $69,170.00 2931 $43,965.00 1758 $35,160.00 119 $5,355.00 11725 $153,650.00 $2,400.00 $9,405.00 $21,375.00 $11,200.00 $8,330.00 $0.00 $0.00 $0.00 $0.00 $.0 " 00 $0.00 $72,000.00 $55,000.00 $16,000.00 ,J $3,000.00 !$3,000.00 ',' $.0 00 $0.00 ... $22,000.00 $75,000.00 $57,500.00 $72,000.00 $55,000.00 6814 $68,140.00 2887 $43,305.00 1732 $34,640.00 117 $5,265.00 11550 $151,350.00 $2,375.00 $9,240.00 $21,000.00 $11,025.00 $8,330.00 6608 $66,080.00 2800 $42,000.00 1680 $33,600.00 112 $5,040.00 11200 $146,720.00 6711 $67,110.00 2843 $42,645.00 1706 $34,120.00 115 $5,175.00 11375 $149,050.00 7021 2975 1785 119 11900 $70,210.00 $ 4 6 5 0 >'"' 4,2.0 $35,700.00 - $5,355.00 ." . $155,890.00 7124 3018 1811 122 12075 $71,240.00 3,2.0 • $,9.0 5400 $158,220.00 „• , 92 $2,300.00 163 $8,965.00 163 $20,375.00 61 $10,675.00 33 $8,085.00 93 $2,325.00 166 $9,130.00 166 $20,750.00 62 $10,850.00 33 $8,085.00 95 168 168 63 34 96 171 171 64 34 97 $2,425.00 . 174 $9,570.00 ',. 174 $21,750.00 I 65 $11,375.00 34 $ , 3 . 0 8300 99 $ , 7 . 0 • 2450 176 $9,680.00 176 $ 2 0 0 0 ". 2,0.0 66 $11,550.00 4& 35 $8,575.00 ' Total Business ISP Payment SG&E Salary 512 $50,400.00 $197,120.00 $100,000.00 $10,000.00 $6,000.00 $116,000.00 , $3,200.00 ", $6,000.00 -f. $443,820.00 'A $144,525.32 520 $51,140.00 $200,190.00 , $100,000.00 $10,000.00 • $6,000.00 r $116,000.00 " $3,200.00 " $6,000.00 ^ $474,390.00 ," $123,156.18 - 528 $51,970.00 $203,320.00 ','$100,000.00 $10,000.00 $6,000.00 $116,000.00 $3,200.00 $6,000.00 $455,520.00 $151,367.05 536 $52,710.00 $206,360.00 $100,000.00 544 $53,450.00 $209,340.00 $100,000.00 $10,000.00 $6,000.00 $116,000.00 552 $54,280.00 $212,500.00 $100,000.00 $10,00000 $6,000.00 $116,00000 $3,20000 $6,000.00 $492,20000 $142,089 64 ,T ,i _ •* Travel Office Space Total SG&E $10,000.00 ;, $6,000.00 • " , $116,000.00 \ $3,200.00 $6,000.00 *' '". f., Interest on Financing Miscellaneous TOTAL EXPENSES CASH FLOW $3,200.00 -$6,000.00 '•_ $461,540.00 «?' $163,288.77 ^ $458,560.00 ''' :* $157,407.91 * . Major Assumptions 70,000 population within reach of area covered 3 % penetration rate = 2,100 customers capture rate of customers is evenly distributed, or 175 r^W customers per month 100 business customers in the area '"' Levels of service: Residential 256K Down 128 K Up = $29.95 per month = 59% of all customers sign 640K Down 128 K Up = $49.95 per month = 25% of ^customers sign 1 MB Down 128 K Up = $69.95 per month = 15% of ^customers sign 3 MB Down 128 K Up = $159.95 per month = 1% of ^customers sign up for this up for this up for this up for this " 29.95 39.95 69.95 , 159.95 69.96 159.95 349.95, 499.95 699.95 0.59 0.25 0.15 0.01 0.18 0.32 0.32 0.12 0.6 Business 256K Down 256 K Up = $69.95 per month = 18% of ^.business customers sign up for this 640K Down 640 K Up = $159.95 per month = 32% cf|i business customers sign |jjfor this 1 MB Down 1 MB Up = $349.95 per month 32% of alt business customers sign up for this 2 MB Down 2 MB Up = $499.95 per month 12% of 8tt business customers sign up for this 3 MB Down 3 MB Up = $699.95 per month 6% of a| business customers sign upjor this Business distribution is normal bell shaped curve 35% payment to local ISP for business customers 30% payment to local ISP for residential customers July-07 August-07 September-07 , 7434 $222,648.30 3150 $125,842.50 October-07 November-07 •; December-07 ' TOTAL 2007 7227 3062 1837 124 12250 $216,448.65 $122,326.90 $128,498.15 $19,833.80 $487,107.50 7330 3106 1863 126 12425 $219,533.50 • $124,084.70 $130,316.85 ' '.' $20,153.70 ! $494,088.75 ' 7537 $225,733.15 1890 $132,205.50 126 $20,153.70 12600 $500,850.00 103 184 184 69 36 576 3193 $127,560.35 1916 $134,024.20 129 $20,633.55 12775 $507,951.25 105 $7,345.80 186 $29,750.70 186 $65,090.70 70 $34,996.50 37 $25,898.15 584 $163,081.85 7640 3237 1942 131 12950 , • ' - $228,818.00 $129,318.15 $135,842.90 $20,953.45 $514,932.50 -' ',f: '" ' 7743 $231,902.85 3281 $131,075.95 1968 $137,661.60 133 $21,273.35 13125 $521,913.75 108 192 192 72 36 600 $2,578,874.70 $1,457,495.85 ' $1,531,065.60 $235,606.35 $5,803,042.50 1 100 179 179 67 35 560 $6,996.00 $28,631.05 $62,641.05 $33,496.65 $24,498.25 $156,263.00 $643,370.50 24 ' 102 $7,135.92 ' 181 $28,950.95 ' 181 $63,340.95 ' 68 $33,996.60 36 $25,198.20 568 $158,622.62 $7,205.88 $29,430.80 $64,390.80 • $34,496.55 ' $25,198.20 ' ' $160,722.23 $661,572.23 25 $7,415.76 ' 106 189 $30,230.55 ' 189 $66,140.55 : 71 $35,496.45 ' 37 $25,898.15 , , 592 $165,181.46 ',. $680,113.96 26 - $7,555.68 ,, $83,672.16 $30,710.40 • $340,533.55 $67,190.40 $745,043.55 $35,996.40 • $398,960.10 $25,198.20 $293,979.00 $166,651.08 ',] $1,862,188.36 $688,564.83 27 $652,711.37 - $671,033.10 26 '.„ $7,665,230.86 27 24 " $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $75,000.00 $57,500.00 7227 3062 1837 124 12250 $72,270.00 $45,930.00 $36,740.00 $5,580.00 $160,520.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $75,000.00 $57,500.00 7330 $73,300.00 3106 $ 6 5 0 0 4,9.0 1863 $37,260.00 126 $,7.0 5600 12425 $162,820.00 '' 102 $ , 5 . 0 2500 181 $9,955.00 181 $ 2 6 5 0 2,2.0 68 $11,900.00 36 $,2.0 8800 $16,000.00 $3,000.00 $3,000.00 $0.00 $0.00 $22,000.00 ., •' -i. p}'• ^"\ $16,000.00 $3,000.00 $3,000.00 -*: $0.00;/, $78,000.00 i $0000 ' 6,0.0 7434 $74,340.00 ', 3150 $ 7 2 0 0 4,5.0 1890 $37,800.00 126 $,7.0 ' 5600 12600 $165,060.00 103 184 184 69 36 $2,575.00 $10,120.00 $3000 2,0.0 $12,075.00 $,2.0 8800 $ . 0 .? 00 ' $22,000.00 ' t " a *^ fe; $81,000.00 $2500 ' 6,0.0 7537 $75,370.00 3193 $7850 4,9.0 1916 $38,320.00 129 $,0.0 5850 12775 $167,390.00 $0.00 - •;" *? $81,000.00 •„< $62,500.00 «'" 7640 $76,400.00 , 3237 $8550 4,5.0 1942 $38,840.00 131 $ , 9 . 0 -' 5850 12950 $169,690.00 106 189 189 71 37 $,5.0 2600 $10,395.00 $3650 2,2.0 $12,425.00 $,6.0 9050 $0.00 $0.00 $0.00 $0.00 $0.00 ' ,' •;'• '> ;. "S? $16,000.00 $3,000.00 ' $3,000.00 * $0.00 : $22,000.00 *'r $80,000.00 $15,000.00 $15,000.00 $0.00 $0.00 $0.00 A $110,000.00 $906,000.00 $695,000.00 $861,060.00 $4,4.0 57250 $437,760.00 $6250 6,8.0 $1,912,350.00 $84,000.00 ,* $65,000.00 7743 $77,430.00 3281 $49,215.00 1968 $39,360.00 133 $,8.0 5950 13125 $171,990.00 108 192 192 72 36 $,0.0 2700 $10,560.00 $4000 2,0.0 $12,600.00 $,2.0 8800 r '*i ' " 100 $2,500.00 179 $9,845.00 179 $22,375.00 67 $11,725.00 35 $8,575.00 105 186 186 70 37 $2,625.00 $10,230.00 $23,250.00 $12,250.00 $,6.0 9050 \ $9900 2,0.0 "i $117,095.00 'i $266,125.00 i- $139,650.00 ' $102,900.00 560 $55,020.00 $215,540.00 568 $55,850.00 $218,670.00 576 $56,590.00 . $221 ,650.00 584 $57,420.00 $224,810.00 592 $58,160.00 $227,850.00 ,' 600 $58,680.00 $230,670.00 • $655,670.00 $2,568,020.00 $100,000.00 $10,000.00 • $6,000.00 $116,000.00 $3,200.00 $6,000.00 $473,240.00 $170,130.50 • ' - $100,000.00 ( K $10,000.00 "( $6,000.00 f $116,000.00 '" $3,200.00 • $6,000.00 $476,370.00 $176,341.37 '• , $100,000.00 '; $10,000.00 $6,000.00 , $116,000.00 $3,200.00 $6,000.00 $506,850.00 ' $154,722.23 $100,000.00 ' . $10,000.00 •" $6,000.00 s $116,000.00 $3,200.00 $6,000.00 $515,510.00 $155,523.10 $100,000.00 '*! $10,000.00 ?-$6,000.00 •$116,000.00 *\ $0,0.0 10000 $10,000.00 $6,000.00 $116,000.00 '- $ , 0 , 0 . 0 120000 C $120,000.00 ~\ $72,000.00 '; $1,392,000.00 ' 1- $3,200.00 $6,000.00 $9,5.0 46500 $183,563.96 f $3,200.00 -y $8400 3,0.0 $6,000.00 ' ' $72,000.00 $526,870.00 $161,694.83 JN $5,781,420.00 ; $1,883,810.86 , 1 5 =' ? * i<£ ! % ": J. "i* ^1 05 .9 0.25 0.15 °0 '1 o.18 0.32 0.32 0.12 0.6 4 .' , : f S Appendix B Average Monthly Cost Per User per Year $180.00 $160.00 $0.00 LOT Communications Organizational Chart Sr. Vice President Chief Financial Officer