VeriType Financial Projections Income Statement Year One Year Two Year Three Sales (a) Software -3,262,500 12,112,500 Support -435,000 1,610,000 Education -326,250 1,207,500 Maintenance & Licensing --489,375 Total Sales -4,023,750 15,419,375 Cost of Goods Sold (b) -30,015 101,430 Gross Profit -3,995,040 15,322,775 Operating Expenses Wages (c) 287,083 499,500 572,350 Research & Development (c) 375,000 460,000 485,000 Business Partner Fees -1,609,500 6,167,750 Marketing Support (d) 126,000 382,000 430,000 Rent (e) 72,000 72,000 72,000 Payroll Tax Expense 185,383 139,860 160,258 Total Operating Expenses 1,045,467 3,162,860 7,887,358 Other Expenses Interest Expense (f) 24,232 20,040 15,268 Depreciation Expense (g) 16,217 25,849 28,886 Other SG&A (e) 205,900 425,005 989,155 Total Other Expenses 246,350 470,894 1,033,309 Net Income (1,291,816) 361,286 6,402,108 Referring Schedules a) Sales Forecast and Schedule of Revenues b) Sales Forecast and COGS c) Personnel d) Marketing e) Admin f) Debt g) Depreciation ** VeriType is an LLC, therefore income taxes will flow through to the company investors. Balance Sheet Year One Year Two Year Three Assets: Current Assets Cash 418,102 946,707 6,731,605 Accounts Receivable (a) -530,164 1,100,896 Inventory (b) -7,178 31,403 Total current assets: 418,102 1,484,048 7,863,903 Property, Plant and Equipment (c) 77,200 113,725 129,500 Less: Accumulated depreciation 16,217 42,067 69,119 Net property, plant and equipment 60,983 71,658 60,381 Total assets: 479,085 1,555,706 7,924,284 Liabilities and Stockholders' Equity Current liabilities Notes payable (d) 34,568 39,339 44,769 Accounts payable (e) 1,276 1,179 1,195 Total current liabilities 35,844 40,519 46,964 Long-term liabilities 135,057 95,718 50,949 Total liabilities: 170,901 136,237 96,913 Stockholders' equity Partners Capital (f) 1,600,000 2,350,000 2,350,000 Accumulated Capital (1,291,816) (930,530) 5,477,371 Partners' Retained Capital 308,184 1,419,470 7,827,371 Total liabilities and stockholders' equity 479,085 1,555,706 7,924,284 Notes and Referring Schedules a) Assumes 30/60/90 day collections of 40%/40%/20% and includes bad debt writeoff of 3% b) COGS c) Property d) Debt e) Assumes 30/60/90 day payments of 33%/33%/33% f) Capital Statement of Cash Flows Cash Flows From Operations Year One Year Two Year Three Net income (1,291,816) 361,286 6,402,108 Adjustments to reconcile net income to Cash Provided by Operations Depreciation 16,217 25,849 28,886 Decrease (increase) in Operating Assets Accounts receivable -(530,164) (570,732) Inventory -(7,178) (24,225) Total Cash Flows From Operations (1,275,599) (150,206) 5,836,037 Cash Flows From Investing Activities Purchase of equipment (75,924) (36,622) (15,759) Total Cash Flows From Investing Activities (75,924) (36,622) (15,759) Cash Flows From Financing Activities Borrowing of long-term debt 200,000 Repayment of long-term debt (30,375) (34,568) (39,339) Sales of stock 1,600,000 750,000 Total Cash Flows From Financing Activities 1,769,625 715,432 (39,339) Net Cash Flows 418,102 528,605 5,780,939 Cash, End of Period 418,102 946,707 6,731,605