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Table of Contents

1.0 Executive Summary .................................................................................................................... 1 Chart: Highlights .......................................................................................................................... 3 1.1 Objectives.................................................................................................................................... 3 1.2 Mission .......................................................................................................................................... 3 1.3 Keys to Success ........................................................................................................................ 3 2.0 Company Summary ..................................................................................................................... 4 2.1 Company Ownership ............................................................................................................... 4 2.2 Start-up Summary ................................................................................................................... 4 Table: Start-up.............................................................................................................................. 4 Chart: Start-up ............................................................................................................................. 5 3.0 Services ............................................................................................................................................ 5 4.0 Market Analysis Summary ........................................................................................................ 6 4.1 Market Segmentation ............................................................................................................. 6 Table: Market Analysis ............................................................................................................... 7 Chart: Market Analysis (Pie) .................................................................................................... 7 4.2 Target Market Segment Strategy ...................................................................................... 8 4.3 Service Business Analysis ..................................................................................................... 8 4.3.1 Competition and Buying Patterns .............................................................................. 8 5.0 Strategy and Implementation Summary ............................................................................ 8 5.1 SWOT Analysis .......................................................................................................................... 9 5.1.1 Strengths ............................................................................................................................. 9 5.1.2 Weaknesses ...................................................................................................................... 10 5.1.3 Opportunities ................................................................................................................... 10 5.1.4 Threats ............................................................................................................................... 10 5.2 Competitive Edge ................................................................................................................... 10 5.3 Marketing Strategy ................................................................................................................ 11 5.4 Sales Strategy ......................................................................................................................... 11 5.4.1 Sales Forecast.................................................................................................................. 12 Table: Sales Forecast ........................................................................................................... 12 Chart: Sales Monthly ............................................................................................................ 13 Chart: Sales by Year ............................................................................................................. 14 5.5 Milestones.................................................................................................................................. 14 Table: Milestones ....................................................................................................................... 14 Page 1

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Chart: Milestones ....................................................................................................................... 15 6.0 Management Summary ............................................................................................................ 15 6.1 Personnel Plan ......................................................................................................................... 16 Table: Personnel ......................................................................................................................... 16 7.0 Financial Plan ............................................................................................................................... 16 7.1 Start-up Funding .................................................................................................................... 16 Table: Start-up Funding .......................................................................................................... 17 7.2 Important Assumptions ....................................................................................................... 17 7.3 Break-even Analysis .............................................................................................................. 17 Table: Break-even Analysis.................................................................................................... 18 Chart: Break-even Analysis ................................................................................................... 18 7.4 Projected Profit and Loss ..................................................................................................... 18 Table: Profit and Loss ............................................................................................................... 19 Chart: Profit Monthly ................................................................................................................ 20 Chart: Profit Yearly .................................................................................................................... 20 Chart: Gross Margin Monthly................................................................................................. 21 Chart: Gross Margin Yearly .................................................................................................... 21 7.5 Projected Cash Flow .............................................................................................................. 21 Table: Cash Flow ........................................................................................................................ 22 Chart: Cash .................................................................................................................................. 23 7.6 Projected Balance Sheet ...................................................................................................... 23 Table: Balance Sheet ................................................................................................................ 23 7.7 Business Ratios ....................................................................................................................... 24 Table: Ratios ................................................................................................................................ 24 7.8 Long-term Plan ........................................................................................................................ 25 Table: Sales Forecast ......................................................................................................................... 1 Table: Personnel ................................................................................................................................... 2 Table: Personnel ................................................................................................................................... 2 Table: Profit and Loss ......................................................................................................................... 3 Table: Profit and Loss ......................................................................................................................... 3 Table: Cash Flow .................................................................................................................................. 5 Table: Cash Flow .................................................................................................................................. 5 Table: Balance Sheet .......................................................................................................................... 7 Page 2

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Table: Balance Sheet .......................................................................................................................... 7

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1.0 Executive Summary Introduction Cutting Edge Drapery is a well established decorators' workroom. The company is engaged in the production of draperies, slip covers, and other textile products in accordance with the designs and concepts of interior designers. Cutting Edge Drapery has recently expanded its production facilities and is well-positioned to market its workroom production beyond its present client base. The company is dedicated to providing the highest quality workmanship, meeting the agreed delivery dates, and executing the custom work exactly in accordance with the designer's concept. The focus of this business plan is to identify its future target clients, explain its marketing strategy, and to improve its internal procedures so it can substantially increase profitability. The Company Cutting Edge Drapery is located in Loudon, New Hampshire. Soft window treatments represent the major share of the company's production. The total market for soft window treatments in the communities which the company targets is approximately $2.7 million. The share of this market channeled through designers and decorators is directly proportional to disposable income and real estate valuations. The company is a sole proprietorship and has been operating for nearly 25 years. The owner worked out of her home as a seamstress and tailor until her business volume caused her to move her operation into rented space in Loudon. This expanded space allowed her to concentrate more on draperies and window treatments. The office is comprised of 2,200 square feet where seven people are employed full-time. Recently an assistant has been hired to take on the administrative burden and to help improve the company's internal procedures. A new outside accountant has been engaged who is steamlining the computerized accounts. The Products Cutting Edge Drapery provides sewing services in the creation of high quality soft window treatment products such as; draperies, swags, jabots, slip covers, etc. Although the company could be considered a company making products, because clients furnish the fabric for each custom crafted unit, it actually only provides the sewing and installation services to its customers. There are relatively few sourcing costs because the company does not have to directly provide for fabric, which is the most expensive input in the production process. The Market The population of the 17 communities in close proximity to Cutting Edge Drapery is estimated at 277,253. Roughly, this would mean that this area comprises a total soft window treatment market in excess of $2.7 million annually. All of these treatments must be produced in decorator workrooms. The company's share of this nearby market is approximately 7.5%. The company is in the process of shifting from its current target market of interior decorator clients to the more higher end interior designer market. A change to this target market will improve profitability levels since the designer segment is much less price sensitive and provides greater margins. The designer's clients include the high income homeowners that demand

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unique products and a high degree of customer service. This, in turn, requires a high contact service environment between the designers and workrooms that can best ne served by a company such as Cutting Edge Drapery. To penetrate the interior designer-controlled share of the window treatment market ("Designer" being the key word here rather than "decorator"). Within the next twelve months it is the objective of the company to market the 15 targeted designer members of the American Society of Interior Designers (ASID) who are located in close proximity to its Loudon facilities, and to establish a business relationship with at least three of them. This will grow to five in the second year and seven in the third year. The company faces significant competition from existing workrooms within the local area. Cutting Edge Drapery's strategy is to lift its image, through advertising in prestigious trade publications, joining and net-working ASID membership, and actively marketing its selected target market. Financial Considerations The marketing research and tailored marketing strategy described in this business plan will result in after-tax profits of $43,000 in 1998, increasing to nearly $75,000 in after-tax profits within three years. It is estimated that by year 2000, revenues will reflect an 11% market share of the local soft window treatment market. Monthly break-even stands at 35 units. The company must keep stitchers busy producing a mixed quota of 35 units per month to break even. Total production at the time of this writing was approximately 98 units, which will increase to 115 by the end of the year 2000. Beak-even is at 30% of capacity initially. Because it is the policy of the company's clients to provide the fabric for the soft window treatment products, the company has a very low cost of goods sold account and therefore a high gross margin. Furthermore, the custom nature of the business means that there is no inventory cost to speak of or accounts payable. Finally, the company does not posess any debt or long term capital assets that would affect the cash flow. With the ability to generate so much cash flow, it is assumed that the company will seek to use this asset to expand its markets and production capacity in the near future.

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Chart: Highlights

1.1 Objectives 1. To penetrate the interior designer-controlled share of the window treatment market ("Designer" being the key word here rather than "decorator"). Within the next twelve months it is the objective of the company to market the 15 targeted designer members of the American Society of Interior Designers (ASID) who are located in close proximity to its Loudon facilities, and to establish a business relationship with at least three of them. This will grow to five in the second year and seven in the third year. 2. To substantially increase profitability. We will encourage price-sensitive jobs to go elsewhere by formalizing the pricing mechanics. This will allow for attention to a more highend custom work to be performed for the less price-sensitive designer market sector. This pricing will insure a minimum of $65,000 in pre-tax profits during the first year. 3. To improve the administrative machinery of the operation. This will allow a reduction in the owner's involvement in simple administrative tasks from 50% of her time to 20%, thereby allowing her more time for sales and marketing tasks. 1.2 Mission Cutting Edge Drapery is best suited to serving the interior designer share of the textile treatment market because clients of interior designers can afford expensive materials and custom solutions. The company is unable to compete with large workrooms geared to mass production runs, nor can its pricing compete with the many "mom and pop" home workrooms. The company is dedicated to providing the highest quality workmanship, meeting the agreed delivery dates, and executing the custom work exactly in accordance with the designer's concept. 1.3 Keys to Success There are a few key factors that spell success or failure for professional workrooms--most of which stem from the importance of reputation to an interior designer:

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1. The professional workroom must not have private clients. Interior designers are often paranoid that one of his clients will discover he could have saved thousands of dollars by dealing directly with the workroom. If private clients contact the company, they should be referred to a designer who works closely with the company. 2. Clients who can afford interior designers tend to be very demanding; designers are under a lot of pressure. The interior designer needs to feel that his workroom considers that designer the most important person in the world. Any action that might indicate that the workroom might be busy with other designers' work, such as failing to return phone calls promptly, must be avoided. 3. The workroom must be true to its word. The work must be executed exactly according to plan, when it was promised, and at the agreed price. The ability of the workroom to communicate effectively with the designer is key. 4. The quality of the production supervisor is key. The production supervisor must insure that jobs quoted at 15 hours do not take 20 or more. Profit goals can not be reached if individual production stitchers do not work efficiently or are left idle. 2.0 Company Summary Cutting Edge Drapery is a decorators' workroom located in Loudon, New Hampshire. The company is engaged in the production of draperies, slip covers, and other textile products in accordance with the designs and concepts of interior designers. Soft window treatments represent the major share of the production. The total market for soft window treatments in the communities which the company targets is approximately $2.7 million. The share of this market channeled through designers and decorators is directly proportional to disposable income and real estate valuations. 2.1 Company Ownership The company, Cutting Edge Drapery, is a sole proprietorship registered DBA by the owner. Some thought has been given to incorporating Cutting Edge Drapery, but a decision has not yet been reached. 2.2 Start-up Summary The company founders, Ms. Child and Ms. Freelander, will handle day-to-day operations of the business and will work collaboratively to ensure that this business venture is a success. It is estimated that the start-up costs will be $3,000 (including legal costs, advertising, and related expenses). An additional amount of $67,000 will be required as start-up assets. The start-up costs are to be financed in equal portions by the owners' personal funds and by a $30,000 5-year loan. Table: Start-up

Start-up Requirements Start-up Expenses Legal Stationery etc. Insurance $10 $10 $10

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Rent Computer Other Total Start-up Expenses Start-up Assets Cash Required Other Current Assets Long-term Assets Total Assets Total Requirements

$10 $10 $10 $60

$20 $0 $25 $45 $105

Chart: Start-up

3.0 Services Cutting Edge Drapery provides sewing services in the creation of high quality soft window treatment products such as: Draperies Swags Jabots Balloon Shades Slip Covers Roman Shades

Although the company could be considered a company making products, because clients furnish the fabric for each custom crafted unit, it actually only provides the sewing and installation services to its customers. Because Cutting Edge Drapery produces for the higher end segments, the two most important aspects of production are quality and scheduling. The company's clients have a tremendous buying power as they represent the reputation of the workroom to the final

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consumer. Therefore if the company does not produce the necessary items with the required specifications when needed, the loss of future revenue from a client can be significant. There are relatively few sourcing costs because the company does not have to directly provide for fabric, which is the most expensive input in the production process. The company does not foresee any new service development in the near future. 4.0 Market Analysis Summary According to the U.S. Department of Commerce, the entire window treatment category reached $7.8 billion in 1996. The Paint and Decorating Retailers Association states that 30%, or $2.34 billion, was made up of soft window treatments. The population of the 17 communities in close proximity to Cutting Edge Drapery is estimated at 277,253. Roughly, this would mean that this area comprises a total soft window treatment market in excess of $2.7 million annually. All of these treatments must be produced in decorator workrooms. There are various levels of workrooms which are discussed in more detail in this chapter. The company's share of this nearby market is approximately 7.5%. Cutting Edge Drapery has not, in the past, invested in advertising or promotion. The client base and volume has grown steadily to nearly $200,000 annually. The market, as explained more fully in Section 4.1, is segmented. Work generated via the higher echelons of interior designers requires a higher level of quality and expanded skills to achieve it. This work is also less pricesensitive. The capability of the company to produce high-quality textile treatments is on par with workrooms who have established high images, and who often have a clientele located far afield from Boston. By increasing Cutting Edge Drapery's image through advertising and networking within ASID membership and elsewhere, the potential market will expand from its present localized boundaries. This strategy should also result in improved margins as more and more higher-tiered, less price-sensitive, designers bring their work to Cutting Edge Drapery. 4.1 Market Segmentation The market for soft window treatments reflects the buyer's income bracket and standard of living in much the same way that the furniture market is segmented. Below are listed market segments based on size of pocketbook and quality of production: 1. Material Outlets. At the bottom of the pyramid are outlets such where drapery material could be chosen and purchased. The person would have to buy rodding at the hardware store and install it all himself. Quality is the lowest. 2. Drapery Specialists. Here you would be waited on and shown fabric samples. A salesperson with some feel for color and decor will assist you and perhaps suggest a few alternatives. They would come and measure at your home and would install it once the curtains were ready. The product itself would probably be done by their own in-house workshop or sent to a low-bidding outside workroom. Some drapery specialists, knowing the price-sensitivity of their clients, have arrangements with large production workrooms in other states to which this customer's drapes as well as several others will be shipped in one consignment. 3. Hobby Decorators. These will advertise in local newspapers in the "services" section of the classified. They do the same thing as a drapery specialist, but give a bit more special attention to the client and make the client feel that they are dealing with a professional. The results are often better, sometimes worse, but the price tag is higher. These decorators have customers who still have a close eye on their pocketbooks. 4. Interior Decorators. In this category would be decorators of average quality--some quite good and others who are unimaginative. The common factor is that they have not yet "arrived" in their profession. They do not attract the clients with deep pockets. These

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decorators still expect quality from their workrooms, but are willing to compromise a bit on quality. Neither of these workrooms work exclusively for the decorator/designer trade. These workrooms are for the most part "mom and pop" operations where the wife produces the drapery and the husband installs it. These decorators have more ordinary, straightforward work than Category Five (below), and are more cost-conscious. These would include most of the present clients of Cutting Edge Drapery with the exception of perhaps three or four. 5. Interior Designers. This is the category of decorator who has "arrived." He or she is likely to have "ASID" after their name, which means they have successfully passed testing by the American Society of Interior Designers. They sign contracts with clients on a regular basis amounting to tens of thousands of dollars. Several thousand dollars for one window treatment is not unusual. These individuals covet their reputation, and they would not consider using a "mom and pop" workshop or dealing with a workroom that also deals directly with clients. These individuals are demanding in their insistence on quality, and usually have jobs that involve creative solutions. Prices charged by the workrooms these designers work with are several times higher. When surveying these designers as to the features important to them in choosing a workroom, price is the last feature mentioned. Table: Market Analysis

Market Analysis 2013 Potential Customers Segment Name Segment Name Other Total Growth 5% 2% 1% 2.57% 20 25 30 75 21 26 30 77 22 27 30 79 23 28 30 81 24 29 30 83 2014 2015 2016 2017 CAGR 4.66% 3.78% 0.00% 2.57%

Chart: Market Analysis (Pie)

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4.2 Target Market Segment Strategy Currently, Cutting Edge Drapery serves the interior decorator market segment. However, the company has recognized that its skills and quality capability, together with its small size, allow it to be perfectly positioned to compete in the higher end interior designer segment. A shift to this target market will improve profitability levels since the designer segment is much less price sensitive and provides greater margins. Furthermore, since the segment is relatively small and well connected, establishing a reputation among such clients will strengthen the existing word of mouth marketing strategy that the company has pursued in the past. An analysis of marketing survey data provided indicates that the designers needs of quality, reliable delivery, and high customer service are not always being met by the competition due to the sub-standard, job shop industry environment. In such an environment, it is difficult to provide consistent service. This creates a significant opportunity for Cutting Edge Drapery. The company has already sought to build the infrastructure to create such service through its database of previous work, scheduling, and communication procedures. 4.3 Service Business Analysis In setting a foundation on which to build a suitable market strategy for Cutting Edge Drapery, players were contacted by phone. These players are located in the greater Boston area. A summary of this investigation follows: * * All names have been omitted for confidentiality purposes. 4.3.1 Competition and Buying Patterns Cutting Edge Drapery exists in a purely competitive market in which there is potentially unlimited competition and easy entry/exit in the market. This situation is mitigated by the fact that almost all competitors are small companies that have very restricted geographic reach. One of the factors influencing choice of workrooms is the professional credentials and reputation of the company's proprietor. Interior designers and decorators seek to establish long-term relationships with their suppliers to ensure that their client's strict demands are met. Therefore, the process of choosing a workroom requires a lengthy evaluation period and the establishment of close ties among principals, both of which may not be possible with larger workrooms. Oftentimes word of mouth marketing provides more business than advertising, although advertising in certain areas (such as trade journals) creates awareness of the company's existence and skill level. The industry is geographically oriented with most of the clients working on a local basis. Very few designers and decorators carry on business beyond a local or state level. Price is often not a major issue when dealing in the interior designer segment since the quality and uniqueness of the product is the overall driver of business for the clients. There exists three major competitors in the area that compete in the interior designer segment. The market research described in the following section seems to indicate that there may be a deficit in supply and customer service in this segment. 5.0 Strategy and Implementation Summary Image is a key factor in making in-roads into the higher echelons of interior designers. Their work is desirable because it is less price-sensitive. Cutting Edge Drapery's strategy is to lift its

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image, through advertising in prestigious trade publications, joining and net-working ASID membership, and actively marketing a selected group of 15 interior designers located in close proximity to the company's target market area. 5.1 SWOT Analysis

The SWOT analysis provides us with an opportunity to examine the internal strengths and weaknesses JavaNet must address. It also allows us to examine the opportunities presented to JavaNet as well as potential threats. JavaNet has a valuable inventory of strengths that will help it succeed. These strengths include: a knowledgeable and friendly staff, state-of-the-art computer hardware, and a clear vision of the market need. Strengths are valuable, but it is also important to realize the weaknesses JavaNet must address. These weaknesses include: a dependence on quickly changing technology, and the cost factor associated with keeping state-of-the art computer hardware. JavaNet's strengths will help it capitalize on emerging opportunities. These opportunities include, but are not limited to, a growing population of daily Internet users, and the growing social bonds fostered by the new Internet communities. Threats that JavaNet should be aware of include, the rapidly falling cost of Internet access, and emerging local competitors.
5.1.1 Strengths

Knowledgeable and friendly staff. We've gone to great lengths at JavaNet to find people with a passion for teaching and sharing their Internet experiences. Our staff is both knowledgeable and eager to please. 2. State-of-the art equipment. Part of the JavaNet experience includes access to state-of-the-art computer equipment. Our customers enjoy beautiful flat-screen displays, fast machines, and high-quality printers. 3. Up-scale ambiance. When you walk into JavaNet, you'll feel the technology. High backed mahogany booths with flat-screen monitors inset into the walls provide a cozy hideaway for meetings and small friendly gatherings. Large round tables with displays viewable from above provide a forum for larger gatherings and friendly "how-to" classes on the Internet. Aluminum track lighting and art from local artists sets the mood. Last, but not least, quality cappuccino machines and a glass pastry display case provide enticing refreshments. 4. Clear vision of the market need. JavaNet knows what it takes to build an upscale cyber cafe. We know the customers, we know the technology, and we know how to build the service that will bring the two together.
1.

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5.1.2 Weaknesses

A dependence on quickly changing technology. JavaNet is a place for people to experience the technology of the Internet. The technology that is the Internet changes rapidly. Product lifecycles are measured in weeks, not months. JavaNet needs to keep up with the technology because a lot of the JavaNet experience is technology. 2. Cost factor associated with keeping state-of-the-art hardware. Keeping up with the technology of the Internet is an expensive undertaking. JavaNet needs to balance technology needs with the other needs of the business. One aspect of the business can't be sacrificed for the other.
1. 5.1.3 Opportunities

Growing population of daily Internet users. The importance of the Internet almost equals that of the telephone. As the population of daily Internet users increases, so will the need for the services JavaNet offers. 2. Social bonds fostered by the new Internet communities. The Internet is bringing people from across the world together unlike any other communication medium. JavaNet will capitalize on this social trend by providing a place for smaller and local Internet communities to meet in person. JavaNet will grow some of these communities on its own by establishing chat areas and community programs. These programs will be designed to build customer loyalty.
1. 5.1.4 Threats

Rapidly falling cost of Internet access. The cost of access to the Internet for home users is dropping rapidly. Internet access may become so cheap and affordable that nobody will be willing to pay for access to it. JavaNet is aware of this threat and will closely monitor pricing. 2. Emerging local competitors. Currently, JavaNet is enjoying a first-mover advantage in the local cyber-cafe market. However, additional competitors are on the horizon, and we need to be prepared for their entry into the market. Many of our programs will be designed to build customer loyalty, and it is our hope that our quality service and up-scale ambiance won't be easily duplicated.
1. 5.2 Competitive Edge The company seeks to establish a competitive edge in its new target market segment by increasing the level of customer contact and service that other competitors seem to oftentimes lack. Additionally, Cutting Edge Drapery possesses the necessary skills to produce the high quality products that are needed in this field. The establishment of the previously mentioned work processes that will ensure greater service will strengthen the contacts that promote word of mouth marketing and networking.

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5.3 Marketing Strategy As mentioned in the previous section, it is important to the marketing strategy to develop an attractive image to the trade. This can be done in a number of ways: 1. Advertising. Most designers interviewed suggested Design Times as the best place to advertise. Draperies & Window Coverings and Interiors and Sources are others. A quarter page ad in the regional edition runs $1,080 for Draperies and Window Coverings, and the same for Interiors and Sources runs $700 for black and white. These two latter publications have directories. There is no charge for inclusion in the directories. In Design Times, a color 1/4 page ad would run $3,634 for three insertions if signed by December 1, 1997, which provides a 15% discount. This averages out to $1,211 per insertion, even less for black and white. 2. Join ASID. The image of Cutting Edge Drapery would be elevated by joining ASID. This would cost only $285 for the first year. Advertising in the ASID directory is worth considering. The present directory which comes out once per year has a full page color ad for Paul Brown and a full page black and white for Outside Inlook, both of whom are mentioned in the competitive analysis section of this plan. A small black and white ad by The Drapery Man can also to be found. 3. Advertising. Development of a top quality logo and photography which can be used in ads, brochures, name cards, etc. Not counting printing costs, which relate to quantity and quality of paper chosen, the design costs for this would run about $1,500. A day's photography would be an additional $850-1,600. 4. Participation in Showhouses. Another image-building marketing ploy is participating in showhouses. These showhouses are usually for the benefit of some charity event. This would require time and effort, but not much in the way of money. This should be coordinated with the company's favorite designer to insure satisfaction with the design concept when doing a showhouse room. In addition to the above-mentioned activity designed to elevate the company's image, it is essential to market directly the selected 15 target clients who are all members of ASID. Most of them are associate members while some are professional members. Success in making in-roads into these names would set the stage for entry into the more prestigious Boston designers. Marketing these prime prospects must be carried out in a thoughtful organized way. Color literature including the newly designed logo should be completed as a first step. When marketing these prospects it will be important to present a portfolio of Cutting Edge Drapery's most innovative work. A relaxed face-to-face meeting, resulting in good communication between designer and the owner, should be all that's needed to generate a first order. Networking is also very useful. It is important, once the logo and artwork materials have been completed, for the owner to make a point of introducing herself to important players in the design world surrounding Boston. A good example is major upholstery businesses, custom carpets, suppliers of tile, etc. who often need to color-coordinate or fabric-coordinate with workrooms. 5.4 Sales Strategy The marketing strategy discussed previously in this business plan will generate the desired sales. These sales will begin with a phone call to Cutting Edge Drapery. It is a stated objective to transfer the administrative burden away from the owner, freeing up her time to meet with

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clients, to network at ASID and Design Center functions, and to market the list of 15 prospective clients. This means that someone else will be answering the incoming calls. This person must be carefully trained to recognize who must be called back immediately by the owner. The interior designer needs--and expects--close contact with the workroom principal. The designer is under pressure to get a quotation together, for example, and being told that "she isn't here right now" is not going to foster sales. The owner must be armed with a cell phone and a pager. The important caller should be told that the owner will "call right back." The more successful the marketing strategy is in making in-roads into the designer share of the workroom market, the more important this communication response will become. In respect to the prospect list of clients, it is essential that a "salesman's" approach be adopted to insure an organized, orderly approach to each prospect. Notes need to be kept on each client. Follow-up and persistence will pay off. The marketing strategy discussed previously in this business plan will generate the desired sales. These sales will begin with a phone call to Cutting Edge Drapery. It is a stated objective to transfer the administrative burden away from the owner, freeing up her time to meet with clients, to network at ASID and Design Center functions, and to market the list of 15 prospective clients. This means that someone else will be answering the incoming calls. This person must be carefully trained to recognize who must be called back immediately by the owner. The interior designer needs--and expects--close contact with the workroom principal. The designer is under pressure to get a quotation together, for example, and being told that "she isn't here right now" is not going to foster sales. The owner must be armed with a cell phone and a pager. The important caller should be told that the owner will "call right back." The more successful the marketing strategy is in making in-roads into the designer share of the workroom market, the more important this communication response will become. In respect to the prospect list of clients, it is essential that a "salesman's" approach be adopted to insure an organized, orderly approach to each prospect. Notes need to be kept on each client. Follow-up and persistence will pay off. 5.4.1 Sales Forecast The Sales Forecast is divided up into the major categories of sewing products the workroom creates. Unit sales includes the yearly forecast of each unit per category, based on an average of 10-15 labor hours per item and forecasted capacity given the personnel changes mentioned in the Personnel Section. The unit prices reflect the average cost per item, based on past pricing strategies. Since the company deals with providing custom services, this can vary wildly between items. Due to target market shift, estimated increase in unit prices is reflected in years 1999 and 2000. Direct unit costs reflect direct costs in producing the items but does not including labor and fabric. It is estimated that by year 2000, revenues will reflect an 11% market share of the local soft window treatment market. Table: Sales Forecast

Sales Forecast 2013 Sales A B $514,985 $772,478 $772,478 $1,158,717 $1,158,717 $1,738,076 $1,738,076 $2,607,113 $2,607,113 $3,910,670 2014 2015 2016 2017

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C Total Sales Direct Cost of Sales A B C Subtotal Direct Cost of Sales

$1,029,971 $2,317,434 2013 $154,496 $231,743 $308,991 $695,230

$1,544,956 $3,476,151 2014 $231,743 $347,615 $463,487 $1,042,845

$2,317,434 $5,214,227 2015 $347,615 $521,423 $695,230 $1,564,268

$3,476,151 $7,821,340 2016 $521,423 $782,134 $1,042,845 $2,346,402

$5,214,227 $11,732,010 2017 $782,134 $1,173,201 $1,564,268 $3,519,603

Chart: Sales Monthly

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Chart: Sales by Year

5.5 Milestones Cutting Edge Drapery has a big year forthcoming. In order to achieve the sales and marketing goals that have been outline in this business plan, the company has deadlines to meet and ideas to implement. Some of these are outlined below: December 1, 1997 is the date mentioned by Design Times as being the deadline after which a 15% discount is no longer offered for ads to be placed in 1998. Budgeted are 1/4 page four color ads (price $1,425 assuming 3 insertions). Total = $4,275. After 15% discount = $3,634. January 29, 1998 is the deadline given by Design Times to submit final films for ads to appear in the April/May edition of Design Times. Joining ASID is key to the marketing/networking effort. Should be effective immediately after submitting application and membership fee. Participating in a showhouse is mentioned as important to desired image-building for MRS. Expenses are difficult to predict. The workroom does not get paid for its work. What about fabric? Budget $2,000. By March 1, 1998 plans should be fixed up for participation in at least one showhouse during 1998. Networking materials. Printing costs are involved in printing brochures, name cards, and in putting together portfolios of work. This can't be done until after the photo/logo design work (costing $2,700) has been completed. An additional $3,000 is available from the total marketing budget for 1998. These funds have not yet been earmarked.

Table: Milestones

Milestones Milestone Start Date End Date Budget Manager Department

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Name me Name me Name me Name me Name me Name me Name me Name me Name me Name me Totals

5/30/2012 5/30/2012 5/30/2012 5/30/2012 5/30/2012 5/30/2012 5/30/2012 5/30/2012 5/30/2012 5/30/2012

6/29/2012 6/29/2012 6/29/2012 6/29/2012 6/29/2012 6/29/2012 6/29/2012 6/29/2012 6/29/2012 6/29/2012

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

ABC ABC ABC ABC ABC ABC ABC ABC ABC ABC

Department Department Department Department Department Department Department Department Department Department

Chart: Milestones

6.0 Management Summary Cutting Edge Drapery is presently made up of six employees and the principal. Outside installers are used. Four stitchers and one production supervisor are kept busy nearly full-time. Two of the stitchers are putting in 30 hour weeks and two are working full 40 hour weeks. As work volume increases, a fifth stitcher will need to be hired and longer hours will need to be worked by those now working only 30 hours/week. There is sufficient room in the production facilities to add a sixth stitcher if volume dictates. It is planned that some less-critical work may need to be farmed out to subcontractors. An administrative assistant has been hired and is presently being trained in. It is planned that this assistant will take substantial paperwork and mundane computer work away from the owner as well as much of the non-production related work now being handled by the production supervisor. This would include recording receipts, maintaining the accounts receivable files, customer files, scheduling of installations, etc. At present, nearly 50% of the owner's time is taken up with administrative matters. It is hoped that these matters will occupy less than 20% of her time.

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A new outside accountant has been engaged who is steamlining the computerized accounts. 6.1 Personnel Plan All work is, at the moment, produced by four production staff and one production supervisor. Two of these stitchers are kept busy 30 hours/week and the other two are putting in full 40hour weeks. Additional stitchers will be added where necessary and in line with success in penetrating the plan's targeted new business. By the end of March 1998, it is assumed that increased business volume will require two stitchers to put in a full 40-hour week. By the end of June 1998, increased volume will require hiring a new stitcher working a 30-hour/week, and increasing to 40 hour/week by end of September. In 1999, Cutting Edge Drapery will have five stitchers working full-time, with an increasing amount of less sensitive work being farmed out to subcontractors. It is assumed that a sixth stitcher will be added in either year 1999 or 2000, depending on demand volume. The hourly wage includes basic wage plus 7.65% social security, 2% unemployment tax, and 3% workers compensation. The owner's income is calculated at $60,000 per year. Table: Personnel

Personnel Plan 2013 Mr A Mrs B Mr C Total People Total Payroll $3,060 $4,140 $1,476 3 $8,676 2014 $3,091 $4,181 $1,491 3 $8,763 2015 $3,122 $4,223 $1,506 3 $8,850 2016 $3,153 $4,265 $1,521 3 $8,939 2017 $3,184 $4,308 $1,536 3 $9,028

7.0 Financial Plan The business of Cutting Edge Drapery does not require substantial outlays for inventory and virtually all sales are on a cash basis, so increases in sales will not be accompanied by initial cash-flow deficits. 7.1 Start-up Funding The start-up costs of Hisarlik Hardware will consist primarily of inventory, equipment and fixtures. Hector Priamson will invest $50,000 in cash, benefits and labor to the start up. Investors will contribute approximately $125,000. The company will secure an SBA 7(a) loan in the amount of $625,000 to be paid back on a 7-year amortization. There is an amount budgeted for leasehold improvements. The $7,500 amount is intended to make minor modifications to the proposed site to prepare it for opening. These improvements include replacing missing ceiling tiles and cleaning, polishing, or redoing the floor tile. It is anticipated that the new floor tile can be laid over the existing tile at a substantial savings with no loss in quality or durability.

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Table: Start-up Funding

Start-up Funding Start-up Expenses to Fund Start-up Assets to Fund Total Funding Required Assets Non-cash Assets from Start-up Cash Requirements from Start-up Additional Cash Raised Cash Balance on Starting Date Total Assets $25 $20 $412 $432 $457 $60 $45 $105

Liabilities and Capital Liabilities Current Borrowing Long-term Liabilities Accounts Payable (Outstanding Bills) Other Current Liabilities (interest-free) Total Liabilities Capital Planned Investment Owner Investor Additional Investment Requirement Total Planned Investment Loss at Start-up (Start-up Expenses) Total Capital $300 $145 $0 $445 ($60) $385 $25 $10 $24 $13 $72

Total Capital and Liabilities Total Funding

$457 $517

7.2 Important Assumptions Table 7.1 summarizes key financial assumptions, including 45-day average collection days, sales entirely on invoice basis, expenses mainly on net 30 basis, 35 days on average for payment of invoices, and present-day interest rates. 7.3 Break-even Analysis Average per-unit revenue and variable costs are weighted averages based on sales/costs of each category of "products." It is assumed that each unit is a 15-hour job involving 2.5 installation hours. Total fixed costs are a total of all other costs not including production wages. Monthly break-even stands at 35 units. The company must keep stitchers busy producing a mixed quota of 35 units per month to break even. Total production at the time of this writing

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was approximately 98 units, which will increase to 115 by the end of the year 2000. Beak-even is at 30% of capacity initially. Table: Break-even Analysis

Break-even Analysis Monthly Revenue Break-even Assumptions: Average Percent Variable Cost Estimated Monthly Fixed Cost 30% $831 $1,188

Chart: Break-even Analysis

7.4 Projected Profit and Loss Outlined below, and in the following table and chart, are some of the intrinsic facets of the projected profit and loss for Cutting Edge Drapery. Cost of sales reflects direct materials needed to carry out the sewing services, such as thread, sewing supplies, etc. Miscellaneous operating expenses are projected to remain flat at approximately $3,800 annually, based on historical numbers. All sales and marketing is performed by the principal. Salary is not paid to her, as this is a sole proprietorship. 1998 will require a substantial outlay in advertising and promotion. In 1999 and 2000 this can be cut back a bit.

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Car expenses of $560 monthly consist of insurance ($1,000 annually), depreciation and maintenance, taxes and inspection, etc.($3,000 annually) and fuel ($2,800 annually). The various General and Administrative expenses are projected based on present actual expenses. The salary of the administrative assistant includes social security (7.65%) unemployment (2%) and workers compensation (3%).

Table: Profit and Loss

Pro Forma Profit and Loss 2013 Sales Direct Cost of Sales Other Costs of Sales Total Cost of Sales Gross Margin Gross Margin % $2,317,434 $695,230 $51,499 $746,729 $1,570,705 67.78% 2014 $3,476,151 $1,042,845 $1,042,845 $2,085,691 $1,390,460 40.00% 2015 $5,214,227 $1,564,268 $1,564,268 $3,128,536 $2,085,691 40.00% 2016 $7,821,340 $2,346,402 $0 $2,346,402 $5,474,938 70.00% 2017 $11,732,010 $3,519,603 $0 $3,519,603 $8,212,407 70.00%

Expenses Payroll Marketing/Promotion Depreciation Rent Utilities Insurance Payroll Taxes Other Total Operating Expenses Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred Other Income Other Income Account Name Other Income Account Name Total Other Income Other Expense Other Expense Account Name Other Expense Account Name Total Other Expense Net Other Income Net Profit Net Profit/Sales $0 $0 $0 $0 $1,092,507 47.14% $0 $0 $0 $0 $966,266 27.80% $0 $0 $0 $0 $1,452,856 27.86% $0 $0 $0 $0 $3,825,258 48.91% $0 $0 $0 $0 $5,741,415 48.94% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $8,676 $0 $0 $0 $0 $0 $1,301 $0 $9,977 $1,560,728 $1,560,728 $3 $468,217 $8,763 $0 $0 $0 $0 $0 $1,314 $0 $10,077 $1,380,383 $1,380,383 $4 $414,114 $8,850 $0 $0 $0 $0 $0 $1,328 $0 $10,178 $2,075,513 $2,075,513 $4 $622,653 $8,939 $0 $0 $0 $0 $0 $1,341 $0 $10,280 $5,464,658 $5,464,658 $4 $1,639,396 $9,028 $0 $0 $0 $0 $0 $1,354 $0 $10,383 $8,202,025 $8,202,025 $4 $2,460,606

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Chart: Profit Monthly

Chart: Profit Yearly

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Chart: Gross Margin Monthly

Chart: Gross Margin Yearly

7.5 Projected Cash Flow As can be seen from the Cash Flow chart and table below, Cutting Edge Drapery has a number of advantages that provide for a large amount of growth in the company's cash account. Because it is the policy of the company's clients to provide the fabric for the soft window

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treatment products, the company has a very low cost of goods sold account and therefore a high gross margin. Furthermore, the custom nature of the business means that there is no inventory cost to speak of or accounts payable. Finally, the company does not posess any debt or long term capital assets that would affect the cash flow. With the ability to generate so much cash flow, it is assumed that the company will seek to use this asset to expand its markets and production capacity in the near future. Table: Cash Flow

Pro Forma Cash Flow 2013 Cash Received Cash from Operations Cash Sales Subtotal Cash from Operations Additional Cash Received Non Operating (Other) Income Sales Tax, VAT, HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received Expenditures Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations Additional Cash Spent Non Operating (Other) Expense Sales Tax, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent Net Cash Flow Cash Balance $0 $0 $0 $0 $0 $0 $0 $0 $829,591 $1,487,843 $1,488,275 $0 $0 $0 $0 $0 $0 $0 $0 $2,699,673 $776,478 $2,264,753 $0 $0 $0 $0 $0 $0 $0 $0 $3,658,516 $1,555,711 $3,820,464 $0 $0 $0 $0 $0 $0 $0 $0 $3,976,798 $3,844,542 $7,665,006 $0 $0 $0 $0 $0 $0 $0 $0 $5,826,670 $5,905,340 $13,570,346 $8,676 $820,915 $829,591 $8,763 $2,690,910 $2,699,673 $8,850 $3,649,665 $3,658,516 $8,939 $3,967,859 $3,976,798 $9,028 $5,817,642 $5,826,670 $0 $0 $0 $0 $0 $0 $0 $0 $2,317,434 2013 $0 $0 $0 $0 $0 $0 $0 $0 $3,476,151 2014 $0 $0 $0 $0 $0 $0 $0 $0 $5,214,227 2015 $0 $0 $0 $0 $0 $0 $0 $0 $7,821,340 2016 $0 $0 $0 $0 $0 $0 $0 $0 $11,732,010 2017 $2,317,434 $2,317,434 $3,476,151 $3,476,151 $5,214,227 $5,214,227 $7,821,340 $7,821,340 $11,732,010 $11,732,010 2014 2015 2016 2017

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Chart: Cash

7.6 Projected Balance Sheet The following table presents the Balance Sheet for Safe Kids Child Care. Table: Balance Sheet

Pro Forma Balance Sheet 2013 Assets Current Assets Cash Other Current Assets Total Current Assets Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets Liabilities and Capital Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities Long-term Liabilities Total Liabilities Paid-in Capital Retained Earnings $395,360 $25 $13 $395,398 $10 $395,408 $445 ($60) $205,572 $25 $13 $205,610 $10 $205,620 $445 $1,092,447 $308,426 $25 $13 $308,464 $10 $308,474 $445 $2,058,713 $327,710 $25 $13 $327,748 $10 $327,758 $445 $3,511,569 $491,636 $25 $13 $491,674 $10 $491,684 $445 $7,336,828 $25 $0 $25 $1,488,300 2013 $25 $0 $25 $2,264,778 2014 $25 $0 $25 $3,820,489 2015 $25 $0 $25 $7,665,031 2016 $25 $0 $25 $13,570,371 2017 $1,488,275 $0 $1,488,275 $2,264,753 $0 $2,264,753 $3,820,464 $0 $3,820,464 $7,665,006 $0 $7,665,006 $13,570,346 $0 $13,570,346 2014 2015 2016 2017

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Earnings Total Capital Total Liabilities and Capital Net Worth

$1,092,507 $1,092,892 $1,488,300 $1,092,892

$966,266 $2,059,158 $2,264,778 $2,059,158

$1,452,856 $3,512,014 $3,820,489 $3,512,014

$3,825,258 $7,337,273 $7,665,031 $7,337,273

$5,741,415 $13,078,687 $13,570,371 $13,078,687

7.7 Business Ratios Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 8351, Child Day Care Services, are shown for comparison. Table: Ratios

Ratio Analysis 2013 Sales Growth Percent of Total Assets Other Current Assets Total Current Assets Long-term Assets Total Assets Current Liabilities Long-term Liabilities Total Liabilities Net Worth Percent of Sales Sales Gross Margin Selling, General & Administrative Expenses Advertising Expenses Profit Before Interest and Taxes Main Ratios Current Quick Total Debt to Total Assets Pre-tax Return on Net Worth Pre-tax Return on Assets Additional Ratios Net Profit Margin Return on Equity Activity Ratios Accounts Payable Turnover Payment Days Total Asset Turnover Debt Ratios Debt to Net Worth Current Liab. to Liab. Liquidity Ratios Net Working Capital Interest Coverage $1,092,877 445,922.26 $2,059,143 394,395.22 $3,511,999 593,003.64 $7,337,258 1,561,330.94 $13,078,672 2,343,435.57 n.a n.a 0.36 1.00 0.10 1.00 0.09 1.00 0.04 1.00 0.04 1.00 n.a n.a 3.08 27 1.56 12.17 44 1.53 12.17 25 1.36 12.17 29 1.02 12.17 25 0.86 n.a n.a n.a 3.76 3.76 26.57% 142.81% 104.87% 2013 47.14% 99.96% 11.01 11.01 9.08% 67.04% 60.95% 2014 27.80% 46.93% 12.39 12.39 8.07% 59.10% 54.33% 2015 27.86% 41.37% 23.39 23.39 4.28% 74.48% 71.29% 2016 48.91% 52.13% 27.60 27.60 3.62% 62.71% 60.44% 2017 48.94% 43.90% n.a n.a 0.00 0.00 0.00% 0.00% 0.00% 100.00% 67.78% 20.63% 0.00% 67.35% 100.00% 40.00% 12.20% 0.00% 39.71% 100.00% 40.00% 12.14% 0.00% 39.80% 100.00% 70.00% 21.09% 0.00% 69.87% 100.00% 70.00% 21.06% 0.00% 69.91% 100.00% 0.00% 0.00% 0.00% 0.00% 0.00% 100.00% 0.00% 100.00% 26.57% 0.00% 26.57% 73.43% 0.00% 100.00% 0.00% 100.00% 9.08% 0.00% 9.08% 90.92% 0.00% 100.00% 0.00% 100.00% 8.07% 0.00% 8.07% 91.93% 0.00% 100.00% 0.00% 100.00% 4.28% 0.00% 4.28% 95.72% 0.00% 100.00% 0.00% 100.00% 3.62% 0.00% 3.62% 96.38% 100.00% 100.00% 0.00% 100.00% 0.00% 0.00% 0.00% 100.00% n.a. 2014 50.00% 2015 50.00% 2016 50.00% 2017 50.00% Industry Profile 0.00%

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Additional Ratios Assets to Sales Current Debt/Total Assets Acid Test Sales/Net Worth Dividend Payout 0.64 27% 3.76 2.12 0.00 0.65 9% 11.01 1.69 0.00 0.73 8% 12.39 1.48 0.00 0.98 4% 23.39 1.07 0.00 1.16 4% 27.60 0.90 0.00 n.a n.a n.a n.a n.a

7.8 Long-term Plan Our long term plan is to continue to maintain a cash flow of 19-20% while increasing sales annually, thereby increasing actual dollars earned by our investors, principals and staff.

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Appendix
Table: Sales Forecast

Sales Forecast Jan Sales A B C Total Sales Direct Cost of Sales A B C Subtotal Direct Cost of Sales $2,000 $3,000 $4,000 $9,000 Jan $600 $900 $1,200 $2,700 $3,000 $4,500 $6,000 $13,500 Feb $900 $1,350 $1,800 $4,050 $4,500 $6,750 $9,000 $20,250 Mar $1,350 $2,025 $2,700 $6,075 $6,750 $10,125 $13,500 $30,375 Apr $2,025 $3,038 $4,050 $9,113 $10,125 $15,188 $20,250 $45,563 May $3,038 $4,556 $6,075 $13,669 $15,188 $22,781 $30,375 $68,344 Jun $4,556 $6,834 $9,113 $20,503 $22,781 $34,172 $45,563 $102,516 Jul $6,834 $10,252 $13,669 $30,755 $34,172 $51,258 $68,344 $153,773 Aug $10,252 $15,377 $20,503 $46,132 $51,258 $76,887 $102,516 $230,660 Sep $15,377 $23,066 $30,755 $69,198 $76,887 $115,330 $153,773 $345,990 Oct $23,066 $34,599 $46,132 $103,797 $115,330 $172,995 $230,660 $518,985 Nov $34,599 $51,899 $69,198 $155,696 $172,995 $259,493 $345,990 $778,478 Dec $51,899 $77,848 $103,797 $233,543 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

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Appendix
Table: Personnel

Personnel Plan Jan Mr A Mrs B Mr C Total People Total Payroll $255 $345 $123 3 $723 Feb $255 $345 $123 3 $723 Mar $255 $345 $123 3 $723 Apr $255 $345 $123 3 $723 May $255 $345 $123 3 $723 Jun $255 $345 $123 3 $723 Jul $255 $345 $123 3 $723 Aug $255 $345 $123 3 $723 Sep $255 $345 $123 3 $723 Oct $255 $345 $123 3 $723 Nov $255 $345 $123 3 $723 Dec $255 $345 $123 3 $723

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Appendix
Table: Profit and Loss

Pro Forma Profit and Loss Jan Sales Direct Cost of Sales Other Costs of Sales Total Cost of Sales Gross Margin Gross Margin % $9,000 $2,700 $200 $2,900 $6,100 67.78% Feb $13,500 $4,050 $300 $4,350 $9,150 67.78% Mar $20,250 $6,075 $450 $6,525 $13,725 67.78% Apr $30,375 $9,113 $675 $9,788 $20,588 67.78% May $45,563 $13,669 $1,013 $14,681 $30,881 67.78% Jun $68,344 $20,503 $1,519 $22,022 $46,322 67.78% Jul $102,516 $30,755 $2,278 $33,033 $69,483 67.78% Aug $153,773 $46,132 $3,417 $49,549 $104,224 67.78% Sep $230,660 $69,198 $5,126 $74,324 $156,336 67.78% Oct $345,990 $103,797 $7,689 $111,486 $234,504 67.78% Nov $518,985 $155,696 $11,533 $167,229 $351,757 67.78% Dec $778,478 $233,543 $17,300 $250,843 $527,635 67.78%

Expenses Payroll Marketing/Promotion Depreciation Rent Utilities Insurance Payroll Taxes Other Total Operating Expenses Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred Other Income Other Income Account Name Other Income Account Name Total Other Income Other Expense Other Expense Account Name Other Expense Account Name Total Other Expense $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 $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 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 15% $723 $0 $0 $0 $0 $0 $108 $0 $831 $5,269 $5,269 $0 $1,580 $723 $0 $0 $0 $0 $0 $108 $0 $831 $8,319 $8,319 $0 $2,495 $723 $0 $0 $0 $0 $0 $108 $0 $831 $12,894 $12,894 $0 $3,868 $723 $0 $0 $0 $0 $0 $108 $0 $831 $19,756 $19,756 $0 $5,927 $723 $0 $0 $0 $0 $0 $108 $0 $831 $30,050 $30,050 $0 $9,015 $723 $0 $0 $0 $0 $0 $108 $0 $831 $45,490 $45,490 $0 $13,647 $723 $0 $0 $0 $0 $0 $108 $0 $831 $68,651 $68,651 $0 $20,595 $723 $0 $0 $0 $0 $0 $108 $0 $831 $103,393 $103,393 $0 $31,018 $723 $0 $0 $0 $0 $0 $108 $0 $831 $155,505 $155,505 $0 $46,651 $723 $0 $0 $0 $0 $0 $108 $0 $831 $233,673 $233,673 $0 $70,102 $723 $0 $0 $0 $0 $0 $108 $0 $831 $350,925 $350,925 $0 $105,277 $723 $0 $0 $0 $0 $0 $108 $0 $831 $526,804 $526,804 $0 $158,041

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Appendix
Net Other Income Net Profit Net Profit/Sales $0 $3,688 40.98% $0 $5,823 43.13% $0 $9,025 44.57% $0 $13,829 45.53% $0 $21,035 46.17% $0 $31,843 46.59% $0 $48,056 46.88% $0 $72,375 47.07% $0 $108,853 47.19% $0 $163,571 47.28% $0 $245,647 47.33% $0 $368,762 47.37%

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Appendix
Table: Cash Flow

Pro Forma Cash Flow Jan Cash Received Cash from Operations Cash Sales Subtotal Cash from Operations Additional Cash Received Non Operating (Other) Income Sales Tax, VAT, HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received Expenditures Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations Additional Cash Spent Non Operating (Other) Expense Sales Tax, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent Net Cash Flow $0 $0 $0 $0 $0 $0 $0 $0 $900 $8,100 $0 $0 $0 $0 $0 $0 $0 $0 $5,391 $8,109 $0 $0 $0 $0 $0 $0 $0 $0 $7,795 $12,455 $0 $0 $0 $0 $0 $0 $0 $0 $11,402 $18,973 $0 $0 $0 $0 $0 $0 $0 $0 $16,812 $28,750 $0 $0 $0 $0 $0 $0 $0 $0 $24,927 $43,417 $0 $0 $0 $0 $0 $0 $0 $0 $37,099 $65,416 $0 $0 $0 $0 $0 $0 $0 $0 $55,358 $98,416 $0 $0 $0 $0 $0 $0 $0 $0 $82,746 $147,915 $0 $0 $0 $0 $0 $0 $0 $0 $123,827 $222,163 $0 $0 $0 $0 $0 $0 $0 $0 $185,450 $333,535 $0 $0 $0 $0 $0 $0 $0 $0 $277,884 $500,594 $723 $177 $900 $723 $4,668 $5,391 $723 $7,072 $7,795 $723 $10,679 $11,402 $723 $16,089 $16,812 $723 $24,204 $24,927 $723 $36,376 $37,099 $723 $54,635 $55,358 $723 $82,023 $82,746 $723 $123,104 $123,827 $723 $184,727 $185,450 $723 $277,161 $277,884 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $9,000 Jan $0 $0 $0 $0 $0 $0 $0 $0 $13,500 Feb $0 $0 $0 $0 $0 $0 $0 $0 $20,250 Mar $0 $0 $0 $0 $0 $0 $0 $0 $30,375 Apr $0 $0 $0 $0 $0 $0 $0 $0 $45,563 May $0 $0 $0 $0 $0 $0 $0 $0 $68,344 Jun $0 $0 $0 $0 $0 $0 $0 $0 $102,516 Jul $0 $0 $0 $0 $0 $0 $0 $0 $153,773 Aug $0 $0 $0 $0 $0 $0 $0 $0 $230,660 Sep $0 $0 $0 $0 $0 $0 $0 $0 $345,990 Oct $0 $0 $0 $0 $0 $0 $0 $0 $518,985 Nov $0 $0 $0 $0 $0 $0 $0 $0 $778,478 Dec $9,000 $9,000 $13,500 $13,500 $20,250 $20,250 $30,375 $30,375 $45,563 $45,563 $68,344 $68,344 $102,516 $102,516 $153,773 $153,773 $230,660 $230,660 $345,990 $345,990 $518,985 $518,985 $778,478 $778,478 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

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Appendix
Cash Balance $8,532 $16,641 $29,096 $48,068 $76,819 $120,236 $185,652 $284,068 $431,982 $654,145 $987,680 $1,488,275

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Appendix
Table: Balance Sheet

Pro Forma Balance Sheet Jan Assets Current Assets Cash Other Current Assets Total Current Assets Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets Liabilities and Capital Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities Long-term Liabilities Total Liabilities Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital Net Worth $24 $25 $13 $62 $10 $72 $445 ($60) $0 $385 $457 $385 $4,436 $25 $13 $4,474 $10 $4,484 $445 ($60) $3,688 $4,073 $8,557 $4,073 $6,722 $25 $13 $6,760 $10 $6,770 $445 ($60) $9,511 $9,896 $16,666 $9,896 $10,152 $25 $13 $10,190 $10 $10,200 $445 ($60) $18,536 $18,921 $29,121 $18,921 $15,296 $25 $13 $15,334 $10 $15,344 $445 ($60) $32,365 $32,750 $48,093 $32,750 $23,011 $25 $13 $23,049 $10 $23,059 $445 ($60) $53,400 $53,785 $76,844 $53,785 $34,585 $25 $13 $34,623 $10 $34,633 $445 ($60) $85,243 $85,628 $120,261 $85,628 $51,946 $25 $13 $51,984 $10 $51,994 $445 ($60) $133,298 $133,683 $185,677 $133,683 $77,987 $25 $13 $78,025 $10 $78,035 $445 ($60) $205,673 $206,058 $284,093 $206,058 $117,048 $25 $13 $117,086 $10 $117,096 $445 ($60) $314,526 $314,911 $432,007 $314,911 $175,640 $25 $13 $175,678 $10 $175,688 $445 ($60) $478,097 $478,482 $654,170 $478,482 $263,528 $25 $13 $263,566 $10 $263,576 $445 ($60) $723,745 $724,130 $987,705 $724,130 $395,360 $25 $13 $395,398 $10 $395,408 $445 ($60) $1,092,507 $1,092,892 $1,488,300 $1,092,892 $25 $0 $25 $457 $25 $0 $25 $8,557 Jan $25 $0 $25 $16,666 Feb $25 $0 $25 $29,121 Mar $25 $0 $25 $48,093 Apr $25 $0 $25 $76,844 May $25 $0 $25 $120,261 Jun $25 $0 $25 $185,677 Jul $25 $0 $25 $284,093 Aug $25 $0 $25 $432,007 Sep $25 $0 $25 $654,170 Oct $25 $0 $25 $987,705 Nov $25 $0 $25 $1,488,300 Dec $432 $0 $432 $8,532 $0 $8,532 $16,641 $0 $16,641 $29,096 $0 $29,096 $48,068 $0 $48,068 $76,819 $0 $76,819 $120,236 $0 $120,236 $185,652 $0 $185,652 $284,068 $0 $284,068 $431,982 $0 $431,982 $654,145 $0 $654,145 $987,680 $0 $987,680 $1,488,275 $0 $1,488,275 Starting Balances Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

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