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Quality Care PTPC

Business Plan

Quality Care

646-224-22342

123 Anywhere

New York, NY, 10019

1
Confidentiality Agreement

The undersigned reader of QUALITY CARES Business Plan hereby acknowledges that the information
provided is completely confidential and therefore the reader agrees not to disclose anything found in the
business plan without the express written consent of QUALITY CARE/

It is also acknowledged by the reader that the information to be furnished in this business plan is in all
aspects confidential in nature, other than information that is in the public domain through other means
and that any disclosure or use of the same by the reader may cause serious harm and or damage to
QUALITY CARE.

Upon request this business plan document will be immediately returned to QUALITY CARE.

This is a business plan. It does not imply an offer of any securities.

__________________________________________________

Signature

__________________________________________________

Printed Name

2
Overview

Quality Care PTPC, the company, provides outpatient rehabilitation services with a focus
on physical therapy and speech pathology in Jackson Heights, Queens. The following
business plan serves as a proposal to provide outpatient rehabilitation services within the
existing medical facility and the recipient to cover initial startup expenses in exchange for
a profit-sharing agreement to be determined during negotiation phase.

3
Table of Contents

Executive Summary ............................................................................................................... 6


Product & Service Summary ...........................................................................................................6
Market Summary ...........................................................................................................................7
Vision ............................................................................................................................................7
Objectives ......................................................................................................................................8
Keys to Success ..............................................................................................................................8
Market Entry Summary ..................................................................................................................8

Quality Care PTPC .................................................................................................................. 9


Industry Overview ................................................................................................................. 9
Market Trends ...............................................................................................................................9
Market Growth ............................................................................................................................ 10
Market Segmentation................................................................................................................... 10

Strategy & Implementation Summary .................................................................................. 11


Management Team ...................................................................................................................... 12
Organizational Chart .................................................................................................................... 13
SWOT Analysis ............................................................................................................................. 14
Competitive Comparison .............................................................................................................. 15
Marketing Plan............................................................................................................................. 16

Financial Forecasts .............................................................................................................. 17


Start-up Summary ........................................................................................................................ 17
Financial Highlights ...................................................................................................................... 18
Financial Indicators ...................................................................................................................... 19
Revenues Forecast ....................................................................................................................... 20
Projected Profit and Loss .............................................................................................................. 21
Projected Cash Flow ..................................................................................................................... 22
Projected Balance Sheet ............................................................................................................... 23
Sensitivity Analysis ....................................................................................................................... 24
Break-Even Analysis ..................................................................................................................... 25
Appendix ..................................................................................................................................... 26

4
Table of Figures

Figure 1: Organizational Chart .................................................................................................................... 12


Figure 2: Post-Financing Expenses .............................................................................................................. 16
Figure 3: Financial Highlights ...................................................................................................................... 17
Figure 4: Financial Indicators ...................................................................................................................... 18
Figure 5: Revenue Forecast ......................................................................................................................... 19
Figure 6: Profit & Loss ................................................................................................................................. 20
Figure 7: Cash Flow ..................................................................................................................................... 21
Figure 8: Wages & Payroll ........................................................................................................................... 22
Figure 9: Balance Sheet............................................................................................................................... 23
Figure 10: Scenario Analysis........................................................................................................................ 24
Figure 11: Break-Even Analysis ................................................................................................................... 25
Figure 12: 12 Month Profit & Loss .............................................................................................................. 26
Figure 13: 12 Month Cash Flow Statement ................................................................................................ 27

5
EXECUTIVE SUMMARY

The company is a provider of physical therapy located in Jackson Heights, Queens. It will provide
outpatient rehabilitation for speech pathology, physical, and occupational rehabilitation using the existing
partner facility, the facility (partner facility), and predominately to the existing clients of the partner
facility to enable the partner facility to offer more comprehensive services on-site to its existing clients
and form a reliable partnership to diversify its revenue streams and avoid the use of unreliable third-party
referrals.

The following business plan outlines the scope of services provided by the company, along with the
structure of the proposed partnership and anticipated financial results from the partnership based on the
proposed production forecast and hiring schedule. Critical assumptions related to the strengths and
weaknesses of the proposed partnerships have also been outlined, along with a description of how the
management team will properly utilize or mitigate them, respectively.

PRODUCT & SERVICE SUMMARY

The company will exclusively provide outpatient physical therapy services to the existing clients of the
facility, in addition to new external patients that it will acquire through its marketing and promotional
campaigns. As the company expands, it is also expected that its positive reputation will generate referrals
and word of mouth business. Additional medical professionals will also be hired to increase the extent
and diversification of services provided to new and existing patients.

Outpatient Physical Therapy: Physical therapy or physiotherapy (often abbreviated to PT) is a


physical medicine and rehabilitation specialty that, by using mechanical force and movements,
remediates impairments and promotes mobility, function, and quality of life through
examination, diagnosis, prognosis, and physical intervention.

Outpatient Speech Pathology: Speech-language pathologists (SLPs) work to prevent, assess,


diagnose, and treat speech, language, social communication, cognitive-communication, and
swallowing disorders in children and adults

Occupational Therapy: Occupational therapy provides training and development for individuals
seeking emotional and personality development to interact in a workforce environment and
maintaining productive lifestyles.

6
MARKET SUMMARY

There are an estimated 108,152 citizens residing within the 300-acre radius of Jackson Heights, Queens
and an estimated 2.296 million citizens residing within the Queens borough of New York City, per a 2013
U.S. Census Poll. The same U.S. Census data showed that the Average Adjusted Gross Income (AGI) in
2012 was $37,821 with an average salary of $40,998. Most residents are between the ages of 25 55 and
over 75% of the population has a high school diploma or greater with 29% having a college diploma or
greater. Therefore, the community primarily consist of working class and young professionals that are
likely either members of Medicare or Medicaid healthcare plans

VISION

The vision of Quality Care PTPC is to assist New York City residents to live more productive, happier, and
healthier lives in the most efficient and lease burdensome manner by providing outpatient therapy
services with the best staff possible.

7
OBJECTIVES

The Company has the following five year objectives:

The facility will recommend the company as a private care partner.


Scale the number of practicing therapists and assistants every year to increase capacity.
Start with minimal assets to reduce overhead costs and decrease risk.
Ensure that clients have access to quality, consistent care in a timely manner.
Ensure that the company accepts a reasonable number of insurance providers.
Ensure that the company is well versed on the latest healthcare law and its policies.

KEYS TO SUCCESS

The Company has the following keys to success:

Operate in an efficient manner in order minimize patient wait time.


Ensure that the companys diagnostic equipment is fully functional and maintained.
Utilize HIPPA compliant patient information storage standards.
Only hire highly qualified and trained therapists to perform the service.
Effectively diagnose patient symptoms to advise the most advantageous treatment.

MARKET ENTRY SUMMARY

The market entry strategy of the company proposes that the partnership will cover the rent related
expenses, along with adequate operating capital for the company to mitigate risk during its initial period
of operations. The exact amount incurred is likely to vary, but the budgeting below has been done to
conservatively account for all expenses related to starting the facility and managing it for a period of at
least three months, providing adequate period to acquire patients and reach a stable point in operations.

8
QUALITY CARE PTPC

The company provide outpatient physical therapy services to some clients of the partnership facility, in
addition to new external patients that it will acquire through its marketing and promotional campaigns.
As the company expands, it is also expected that its positive reputation will generate referrals and word
of mouth business.

Outpatient Physical Therapy: Physical therapy or physiotherapy (often abbreviated to PT) is a


physical medicine and rehabilitation specialty that, by using mechanical force and movements,
remediates impairments and promotes mobility, function, and quality of life through
examination, diagnosis, prognosis, and physical intervention. The most common conditions
treated with physical therapy and rehab are lower back pain, spine, shoulder and rotator-cuff
injuries, knee disorders as well as sprains and strains of various types. With pressures to lower
patient costs across the board, private insurers and government health programs are increasingly
turning to low cost/high quality outpatient providers.

Outpatient Speech Pathology: Speech-language pathologists (SLPs) work to prevent, assess,


diagnose, and treat speech, language, social communication, cognitive-communication, and
swallowing disorders in children and adults.

Occupational Therapy: Occupational therapy provides training and development for individuals
seeking emotional and personality development to interact in a workforce environment and
maintaining productive lifestyles.

INDUSTRY OVERVIEW
Per the Bureau of Labor Statistics, Employment of physical therapists is projected to grow 34 percent from
2014 to 2024, much faster than the average for all occupations. Demand for physical therapy services will
come from the aging baby boomers, who are staying active later in life. In addition, physical therapists
will be needed to treat people with mobility issues stemming from chronic conditions, such as diabetes
or obesity.

MARKET TRENDS

The U.S. outpatient rehabilitation market is estimated to be a $29.6 billion industry with a projected
annual growth rate of seven percent or higher. The sector is also highly fragmented, with no company
controlling significant market share. Given the aging and active US population, the demographics favor a
sustained growth in patients seeking or requiring rehabilitation services. Also, increasing numbers of

9
Americans who engage in fitness regimens, coupled with increasing numbers of weekend warriors, is
driving increased demand for physical therapy and rehabilitation treatments across the U.S.

MARKET GROWTH

Outpatient rehabilitation is a $29.6 billion industry that is expected to grow 7% annually through 2018P.
Numerous, positive factors driving long-term growth including an aging U.S. population, unhealthy youth
lifestyles, growth in employment, increasing penetration of physical therapy services, and outpatient
rehabilitation.

MARKET SEGMENTATION

The market segmentation of rehabilitation services if predominately centered around orthopedic physical
therapy with general physical therapy and speech pathology making up 19% of the total $29.6 billion
market. The aging population within Jackson Heights along with the lower income levels is likely to lead
to a less healthy lifestyle and greater dependence on the government healthcare system.

10
STRATEGY & IMPLEMENTATION SUMMARY
The strategy of the company is three-fold. The facility will be in an area that is convenient to shoppers and
a central area to commuters. It will also implement measurable marketing strategies to acquire new
patients by leveraging digital mediums and word-of-mouth referrals. Finally, the company with emphasize
relationship development by minimizing patient wait time and training staff to be courteous.

Strategic Location
Jackson Heights is a growing community within the most populated city in the United States. It is unlikely
that growth will slow any time within the future as economic opportunities continue to become more
prevalent within the borough and city at large.

Customer Acquisition
The customer acquisition strategy of the company is to launch an ongoing marketing campaign that
integrates with the website to gain leads. The center will also have a presence on free directories including
Yelp! and Google Places

Customer Relationship Management

Effective customer retention will be a key success factor for the company. This will be accomplished by
minimizing patient wait times, hiring a friendly staff, and sending patient reminders via the
communication medium of the patients choice.

11
MANAGEMENT TEAM

John Doe Chief Executive Officer

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Susan Miller Chief Operating Officer


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Kevin Jones -Chief Financial Officer


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Adrian Wilcourt Legal Compliance


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12
ORGANIZATIONAL CHART

Adrian
Board/Investors
Wilcourt/Legal

John Doe/CEO

Susan Kevin
Miller/COO Jones/CFO

Marketing
Sales Director Accounting
Director

Sales Reps Collections

13
SWOT ANALYSIS

Strengths

The Company is managed by an experience occupation therapist executive.


There is presently a void in the occupational therapy market within Jackson Heights, Queens.
The company may form a strategic partnership to acquire patient referrals.
Such a partnership would increase control over third-party services by the partner company.
Such a partnership would diversify the revenue stream of non-core services by the partner.
Only highly qualified and trained therapists will be hired and operate at the facility.
The services provided will be covered by government insurance policies to ensure payment.

Weaknesses

The company must be able to acquire new patients with little known brand history.
The most established competitors will already have positive online reviews and references.

Opportunities

The population in Jackson Heights, Queens continues to grow y-o-y.


Being in a city with a burgeon population means the constant inflow of new patients.
The government healthcare system provides widely accessible means to access service.
Customers tend to be loyal within the physical therapy industry.
Very little sales & marketing expenses are necessary in the physical therapy industry.
Higher income individuals will be more likely to have vision plans or afford out-of-pocket.
The new healthcare law will likely cause companies to invest more into healthcare plans.

Threats

The rapidly increasing population is likely to mean that more competitors will enter the market.
Jackson Heights has a smaller than average population over 65, which require frequent visits.
The new healthcare law under the presidency of Donald Trump may alter healthcare access.

14
COMPETITIVE COMPARISON

There are several companies providing physical therapy services within Jackson Heights and the
surrounding area. However, the main competitive advantage that the company will have is its association
and relationship with the existing facility which has the potential to generate new business. Therefore, it
will benefit from the prior relationships and client network of the partner company and is immediately
able to be profitable during its first business quarter of operations.

In addition to the relationship that the company will form with its strategic partner, it will also have
distinctive positioning as hiring highly qualified and trained therapists. The owner and director has
extensive experience managing similar facilities and therefore, has a greater ability to source and retain
top talent, which will lead to more consistent quality services being provided to clients in the Jackson
Heights area, along with surrounding neighborhoods within Queens.

Moreover, not all physical therapists and speech pathologists are within the healthcare network of
prospective patients, which limits them to a restricted patient base. The company will accept most
healthcare plans and therefore, be more accessible to a wider market than competing facilities that are
more limited in scope and service.

15
MARKETING PLAN

The marketing strategy of the company is two-fold. It will first launch an initial campaign to gain awareness
in the market and later follow-up with additional pulse promotions to control the inflow of new patients.
The initial launch will consist of reaching out to regional media agencies to pitch a story, followed up a
website, and the creation of online directories.

Public Relations
Most local media agencies will not be interested in writing about the opening of a physical therapy
office. However, the media may be interested in the relationship established and the existing
facility may have a reputation which will make press coverage much easier. Local media outlets
will be notified of the agreement and requested to cover the story.

Website
A basic website will be created that includes the office location, hours, therapist information, a
basic product selection, and enables online appointment scheduling. As the website grows, it may
also integrate the online sales and additional production selection of frames so that patients may
shop on the website when they are not on-site with free pick-up at the store items that assist with
the therapy (not included in the financial projections).

Social Media
Social media is more important than ever for therapists. Rather than looking to the Yellow Pages,
consumers search online for their nearest provider. This means being listed on Google Places with
positive reviews, Yelp!, and other directories. For instance, some websites enable patients to
search for providers that accept their healthcare plan within a zip code. Positive online reviews
are extremely important and every patient should be encouraged to write one.

Digital & Physical Marketing


Perhaps the most effective advertising medium for an optometrist is geotargeted pay-per-click
advertising. For instance, Google Adwords will enable The Company to be displayed above and to
the side of organic search results for people located in Queens searching for physical therapist
or similar queries. The same promotions may be applied to Facebook and while potentially less
effective, can still enable targeted marketing leading directly to the company website that
encourages them to call-in to schedule an appointment. Direct mail flyers will also be sent out to
residents within a 10-mile radius of the company location.

16
FINANCIAL FORECASTS

The financial forecasts have been prepared based upon the assumption that the company will not pay
rent and instead, will compensate a strategic partner based upon a revenue sharing agreement for use of
the facility and initial support to cover startup operating expenses. These fees have primarily been
allocated to startup equipment for a total cost of $40,000 in addition to other operating capital reserved
to cover fixed business expenses as a risk mitigation strategy to prevent liquidity risk. The financials have
been performed based upon the estimated billable hours at $80.00 per hour. Hence, revenue is a function
of billable hours and the total billable hours generated can be determined based upon dividing the total
revenue by $80.00, which is the average payout for Medicare healthcare plans.

START-UP SUMMARY

Startup Expenses Startup Liabilities


Business Insurance 450 Liabilities and Capital
Phone/Internet 900 Current Borrowing -
Other Utilities 900 Long-Term Liabilities 106,130
Professional Services 3,600 Accounts Payable -
Sales & Marketing 1,200 Other Current Liabilities -
Meals & Entertainment 600
Transporation 1,200
Startup Investments
Other SG&A 1,500 Planned Investment
Wages & Payroll 44,980 Owner -
Total Startup Expenses $55,330
Investor -
Startup Assets Total Planned Investment $0
Equipment 40,000
Rent Deposits & Fees 10,800 Startup Funding
Total Startup Assets $50,800
Total Liabilities 106,130
Total Requirements Total Planned Investment -
Total Startup Expenses 55,330 Total Funding $106,130
Total Startup Assets 50,800
Total Requirements $106,130

17
FINANCIAL HIGHLIGHTS

The financial highlights are how the company is projected to perform over the course of the next twelve
months and three to five years. The projections are based on comparable facilities based on estimated
revenue range and size, along with geographic location. We have assumed that for at least the first six-
months of post-money financing that expenses may be greater than revenues while the company invests
into growth.

Financial Highlights ($000)


Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Year 1 Year 2 Year 3 Year 4 Year 5
Revenue 24 28 32 37 37 38 39 40 40 40 40 40 434 869 912 958 1006
Gross Margin 9 10 12 14 14 14 15 15 15 15 15 15 163 326 342 359 377
Operating Expense 4 4 4 7 7 7 7 7 7 7 7 7 75 88 91 94 97
EBITDA 5 7 8 7 7 7 7 8 8 8 8 8 88 237 251 266 281
Net Profit 4 5 6 5 5 5 5 6 6 6 6 6 64 184 195 209 224

Gross Margin/Revenue 38% 38% 38% 38% 38% 38% 38% 38% 38% 38% 38% 38% 38% 38% 38% 38% 38%
EBITDA/Revenue 23% 25% 26% 18% 18% 19% 19% 19% 20% 20% 20% 20% 20% 27% 28% 28% 28%
Net Profit/Revenue 16% 18% 19% 13% 13% 14% 14% 14% 14% 14% 14% 14% 15% 21% 21% 22% 22%

Net Cash Flow 5 6 4 6 6 2 6 7 3 7 7 2 60 180 190 205 220


Cash Balance - Ending 5 10 14 20 25 28 34 41 44 51 58 60 60 240 430 635 854

Projected Operating Highlights By Year ($000) Projected Revenues By Year ($000)


1200 1200
Revenue
1000 1000

800 800
Gross Margin
600 600

400 EBITDA 400

200 200
Net Profit
0 0
Year 1 Year 2 Year 3 Year 4 Year 5 Year 1 Year 2 Year 3 Year 4 Year 5

Projected Cash Flow By Year ($000) Projected Net Income By Year ($000)
900 250
800
700 200

600 Net Cash Flow


150
500
400
100
300
Cash Balance
200 50
100
0 0
Year 1 Year 2 Year 3 Year 4 Year 5 Year 1 Year 2 Year 3 Year 4 Year 5
18
FINANCIAL INDICATORS

The company believes that it can reach an increasing net profit margin due to economies of scale. Through
investments in capital expenditures, it may decrease its general and administrative expenses. Financial
indicators are based upon the performance of comparable companies in the same asset class, revenue
range and age both from publicly available information and our internal database of research.

Financial Indicators
Year 1 Year 2 Year 3
Profitability %'s:
Gross Margin 38% 38% 38%
Net Profit Margin 15% 21% 21%
EBITDA to Revenue 20% 27% 28%
Return on Assets 60% 63% 41%
Return on Equity 0% 74% 44%

Financial Indicators
70%

60% Gross Margin

50%
Net Profit Margin
40%

30%
EBITDA to Revenue

20%

10% Return on Assets

0%
Year 1 Year 2 Year 3

19
REVENUES FORECAST

Revenue Forecast
Year 1 Year 2 Year 3 Year 4 Year 5
Revenue Forecast
Therapy (Out-Of-Pocket) 434,493 868,986 912,435 958,057 1,005,960
- - - - -
- - - - -
- - - - -
Total Revenue $ 434,493 $ 868,986 $ 912,435 $ 958,057 $ 1,005,960

Direct Cost of Revenue


Therapy (Out-Of-Pocket) 271,558 543,116 570,272 598,786 628,725
- - - - -
- - - - -
- - - - -
Subtotal Cost of Revenue $ 271,558 $ 543,116 $ 570,272 $ 598,786 $ 628,725

Revenue By Year
1200

1000

800

600

400

200

0
Year 1 Year 2 Year 3 Year 4 Year 5

Year 1 Revenue Monthly


45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
-
Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

20
PROJECTED PROFIT AND LOSS

The profit and loss assume that the company will have margins at a comparable level to companies within
its industry. While management might not have incurred exactly for future operating expenses, they have
been assumed to reasonable reach comparable profit margins to industry comparables. The management
will operate with minimal expenditures to focus on R&D and commercialization expenses until the
company has sufficient income to support dividend distribution.

Pro Forma Profit and Loss


Year 1 Year 2 Year 3 Year 4 Year 5
Revenue 434,493 868,986 912,435 958,057 1,005,960
Subtotal Cost of Revenue 271,558 543,116 570,272 598,786 628,725
Total Cost of Revenue $ 271,558 $ 543,116 $ 570,272 $ 598,786 $ 628,725

Gross Margin $ 162,935 $ 325,870 $ 342,163 $ 359,271 $ 377,235


Gross Margin/Revenue 38% 38% 38% 38% 38%

Expenses
Rent 32,400 44,496 45,831 47,206 48,622
Business Insurance 1,800 1,854 1,910 1,967 2,026
Phone/Internet 3,600 3,708 3,819 3,934 4,052
Other Utilities 3,600 3,708 3,819 3,934 4,052
Professional Services 28,800 29,664 30,554 31,471 32,415
Sales & Marketing 4,800 4,944 5,092 5,245 5,402
Total Operating Expenses $ 75,000 $ 88,374 $ 91,025 $ 93,756 $ 96,569
Wages & Payroll - - - - -
Depreciation, Amortization & Taxes 24,099 53,604 55,895 56,039 56,190
Net Income $ 63,835 $ 183,892 $ 195,243 $ 209,477 $ 224,476
Net Income/Revenue 15% 21% 21% 22% 22%

21
PROJECTED CASH FLOW

Pro Forma Cash Flow


Year 1 Year 2 Year 3 Year 4 Year 5
Beginning Cash Balance $ - $ 60,034 $ 239,615 $ 430,000 $ 634,620
Cash Inflows
Income from Sales $ 434,493 $ 868,986 $ 912,435 $ 958,057 $ -
Accounts Receivable $ - $ - $ - $ - $ -
Total Cash Inflows $ 434,493 $ 868,986 $ 912,435 $ 958,057 $ 1,005,960

Cash Outflows

Investing Activities
New Fixed Assets Purchases $ - $ - $ - $ - $ -
Inventory Addition to Bal.Sheet $ - $ - $ - $ - $ -
Cost of Sales $ 271,558 $ 543,116 $ 570,272 $ 598,786 $ 628,725

Operating Activities
Salaries and Wages $ - $ - $ - $ - $ -
Fixed Business Expenses $ 75,000 $ 88,374 $ 91,025 $ 93,756 $ 96,569
Taxes $ 16,771 $ 46,785 $ 49,623 $ 49,767 $ 49,918

Financing Activities
Loan Payments $ 11,129 $ 11,129 $ 11,129 $ 11,129 $ 11,129
Line of Credit Interest $ - $ - $ - $ - $ -
Line of Credit Repayments $ - $ - $ - $ - $ -
Dividends Paid $ - $ - $ - $ - $ -

Total Cash Outflows $ 374,458.74 $ 689,404.90 $ 722,049.70 $ 753,437.53 $ 786,341.06


Cash Flow $ 60,034.15 $ 179,580.87 $ 190,385.36 $ 204,619.27 $ 219,618.59
Operating Cash Balance $ 60,034.15 $ 239,615.01 $ 430,000.37 $ 634,619.65 $ 854,238.23
Ending Cash Balance $ 60,034.15 $ 239,615.01 $ 430,000.37 $ 634,619.65 $ 854,238.23

Year 1 Cash
70,000

60,000

50,000

Net Cash Flows


40,000

30,000

20,000
Cash Balance

10,000

-
Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

22
PROJECTED BALANCE SHEET

The projected balance sheet assumes that there are no dividend draws and all cash flow is re-invested
back into the company at the end of the year. The balance sheet does not assume any line of credits or
account receivables that are outstanding at the end of the year and that the company will have paid off
all liabilities. Likewise, it assumes that all accounts will pay within thirty-days and there will be no
delinquency of payments.

Pro Forma Balance Sheet


Year 1 Year 2 Year 3 Year 4 Year 5
Assets
Current Assets
Cash $ 56,158 $ 239,615 $ 430,000 $ 634,620 $ 854,238
Other Current Assets $ - $ - $ - $ - $ -
Total Current Assets $ 56,158 $ 239,615 $ 430,000 $ 634,620 $ 854,238

Long-term Assets
Long-term Assets $ 50,800 $ 50,800 $ 50,800 $ 50,800 $ 50,800
Accumulated Depreciation $ 0 $ 0 $ 0 $ 0 $ 0
Total Long-term Assets $ 50,800 $ 50,800 $ 50,800 $ 50,800 $ 50,800
Total Assets $ 106,958 $ 290,415 $ 482,073 $ 691,549 $ 916,025

Liabilities and Capital


Current Liabilities
Accounts Payable $ - $ - $ - $ - $ -
Current Borrowing $ - $ - $ - $ - $ -
Other Current Liabilities $ 54,399 $ 46,838 $ 38,730 $ 38,730 $ 38,730
Subtotal Current Liabilities $ 54,399 $ 46,838 $ 38,730 $ 38,730 $ 38,730

Long-term Liabilities $ 54,399 $ 46,838 $ 38,730 $ 38,730 $ 38,730


Total Liabilities $ 54,399 $ 46,838 $ 38,730 $ 38,730 $ 38,730

Common Stock $ - $ - $ - $ - $ -
Retained Earnings $ - $ 248,100 $ 443,343 $ 652,820 $ 877,296
Total Capital $ - $ 248,100 $ 443,343 $ 652,820 $ 877,296
Total Liabilities and Capital $ 54,398 $ 294,937 $ 482,073 $ 691,549 $ 916,025

23
SENSITIVITY ANALYSIS

Best Case Scenario (Revenue Increase by 15% )


Year 1 Year 2 Year 3 Year 4 Year 5
Revenue $ 499,667 $ 999,334 $ 1,049,300 $ 1,101,765 $ 1,156,854
Cost of Goods Sold $ 312,292 $ 624,584 $ 655,813 $ 688,603 $ 723,033
Gross Margin $ 187,375 $ 374,750 $ 393,488 $ 413,162 $ 433,820
Gross Margin/Revenue 38% 38% 38% 38% 38%
Operating Expenses $ 75,000 $ 88,374 $ 91,025 $ 93,756 $ 96,569
EBIT $ 112,375 $ 286,376 $ 302,462 $ 319,406 $ 337,251
EBIT/Revenue 22% 29% 29% 29% 29%

Worst Case Scenario (Revenue Decrease by 15% )


Year 1 Year 2 Year 3 Year 4 Year 5
Revenue $ 369,319 $ 738,638 $ 775,570 $ 814,348 $ 855,066
Cost of Goods Sold $ 230,824 $ 461,649 $ 484,731 $ 508,968 $ 534,416
Gross Margin $ 138,495 $ 276,989 $ 290,839 $ 305,381 $ 320,650
Gross Margin Revenue 38% 38% 38% 38% 38%
Operating Expenses $ 75,000 $ 88,374 $ 91,025 $ 93,756 $ 96,569
EBIT $ 63,495 $ 188,615 $ 199,813 $ 211,625 $ 224,081
EBIT/Revenue 17% 26% 26% 26% 26%

Revenue
$90,000,000

$80,000,000
Best Case
$70,000,000

$60,000,000
Most Likely
$50,000,000

$40,000,000

$30,000,000 Worst Case


$20,000,000

$10,000,000

$-
Year 1 Year 2 Year 3

24
BREAK-EVEN ANALYSIS

HOURS NET REVENUE FIXED COST VARIABLE COST TOTAL COST TOTAL PROFIT
- $0 $88,374 $0 $88,374 -$88,374
1,000 $80,000 $88,374 $50,000 $138,374 -$58,374
2,000 $160,000 $88,374 $100,000 $188,374 -$28,374
3,000 $240,000 $88,374 $150,000 $238,374 $1,626
4,000 $320,000 $88,374 $200,000 $288,374 $31,626
5,000 $400,000 $88,374 $250,000 $338,374 $61,626
6,000 $480,000 $88,374 $300,000 $388,374 $91,626
7,000 $560,000 $88,374 $350,000 $438,374 $121,626
8,000 $640,000 $88,374 $400,000 $488,374 $151,626
9,000 $720,000 $88,374 $450,000 $538,374 $181,626
10,000 $800,000 $88,374 $500,000 $588,374 $211,626
11,000 $880,000 $88,374 $550,000 $638,374 $241,626
12,000 $960,000 $88,374 $600,000 $688,374 $271,626
13,000 $1,040,000 $88,374 $650,000 $738,374 $301,626
14,000 $1,120,000 $88,374 $700,000 $788,374 $331,626
15,000 $1,200,000 $88,374 $750,000 $838,374 $361,626
16,000 $1,280,000 $88,374 $800,000 $888,374 $391,626

Breakeven Analysis

$1,400,000

$1,200,000
COST-VOLUME-PROFIT

$1,000,000

$800,000

$600,000

$400,000

$200,000

$0
0

10000

16000
11000

12000

13000

14000

15000
1000

2000

3000

4000

5000

6000

7000

8000

9000

NET UNITS

25
APPENDIX

Year 1 Profit & Loss


Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Revenue 24,000 27,600 31,740 36,501 37,231 37,976 38,735 39,510 40,300 40,300 40,300 40,300
Subtotal Cost of Revenue 15,000 17,250 19,838 22,813 23,269 23,735 24,209 24,694 25,188 25,188 25,188 25,188
Total Cost of Revenue $ 15,000 $ 17,250 $ 19,838 $ 22,813 $ 23,269 $ 23,735 $ 24,209 $ 24,694 $ 25,188 $ 25,188 $ 25,188 $ 25,188

Gross Margin $ 9,000 $ 10,350 $ 11,903 $ 13,688 $ 13,962 $ 14,241 $ 14,526 $ 14,816 $ 15,113 $ 15,113 $ 15,113 $ 15,113
Gross Margin/Revenue 38% 38% 38% 38% 38% 38% 38% 38% 38% 38% 38% 38%

Expenses
Rent - - - 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600
Business Insurance 150 150 150 150 150 150 150 150 150 150 150 150
Phone/Internet 300 300 300 300 300 300 300 300 300 300 300 300
Other Utilities 300 300 300 300 300 300 300 300 300 300 300 300
Professional Services 2,400 2,400 2,400 2,400 2,400 2,400 2,400 2,400 2,400 2,400 2,400 2,400
Sales & Marketing 400 400 400 400 400 400 400 400 400 400 400 400
Total Operating Expenses $ 3,550 $ 3,550 $ 3,550 $ 7,150 $ 7,150 $ 7,150 $ 7,150 $ 7,150 $ 7,150 $ 7,150 $ 7,150 $ 7,150

EBIT $ 5,450 $ 6,800 $ 8,353 $ 6,538 $ 6,812 $ 7,091 $ 7,376 $ 7,666 $ 7,963 $ 7,963 $ 7,963 $ 7,963
EBIT/Revenue 23% 25% 26% 18% 18% 19% 19% 19% 20% 20% 20% 20%

26
Year 1 Cash Flow
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Cash Received

Revenue
$ 24,000.0 $ 27,600.0 $ 31,740.0 $ 36,501.0 $ 37,231.0 $ 37,975.6 $ 38,735.2 $ 39,509.9 $ 40,300.1 $ 40,300.1 $ 40,300.1 $ 40,300.1
New Current Borrowing
$ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
New Long-Term Liabilities
$ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -

Sale of Other Current Assets


$ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
Sale of Long-Term Assets
$ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
New Investment Received
$ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
Subtotal Cash Received
$ 24,000.0 $ 27,600.0 $ 31,740.0 $ 36,501.0 $ 37,231.0 $ 37,975.6 $ 38,735.2 $ 39,509.9 $ 40,300.1 $ 40,300.1 $ 40,300.1 $ 40,300.1

Expenditures

Expenditures from Operations


$ 18,550.0 $ 20,800.0 $ 27,294.9 $ 29,963.1 $ 30,419.4 $ 34,765.8 $ 31,359.5 $ 31,843.7 $ 36,737.5 $ 32,337.5 $ 32,337.5 $ 36,920.4
Subtotal Spent on Operations
$ 18,550.0 $ 20,800.0 $ 27,294.9 $ 29,963.1 $ 30,419.4 $ 34,765.8 $ 31,359.5 $ 31,843.7 $ 36,737.5 $ 32,337.5 $ 32,337.5 $ 36,920.4

Additional Cash Spent

Current Borrowing Repay


$ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
L-T Liabilities Principal Repay
$ 927.4 $ 927.4 $ 927.4 $ 927.4 $ 927.4 $ 927.4 $ 927.4 $ 927.4 $ 927.4 $ 927.4 $ 927.4 $ 927.4
Purchase Inventory
$ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
Purchase Long-Term Assets
$ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
Dividends
$ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
Cash Spent
$ 19,477.4 $ 21,727.4 $ 28,222.4 $ 30,890.6 $ 31,346.8 $ 35,693.3 $ 32,286.9 $ 32,771.1 $ 37,665.0 $ 33,265.0 $ 33,265.0 $ 37,847.9

Net Cash Flow


$ 4,522.6 $ 5,872.6 $ 3,517.6 $ 5,610.4 $ 5,884.2 $ 2,282.4 $ 6,448.2 $ 6,738.8 $ 2,635.1 $ 7,035.1 $ 7,035.1 $ 2,452.2
Cash Balance
$ 4,522.6 $ 10,395.1 $ 13,912.7 $ 19,523.2 $ 25,407.4 $ 27,689.7 $ 34,138.0 $ 40,876.7 $ 43,511.8 $ 50,546.9 $ 57,582.0 $ 60,034.1

27