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 Table of Contents

1.0 Executive Summary.....................................................................................................................1

Chart: Highlights...........................................................................................................................1
1.1 Objectives....................................................................................................................................2
1.2 Mission...........................................................................................................................................2
1.3 Keys to Success.........................................................................................................................2
2.0 Company Summary......................................................................................................................2
2.1 Company Ownership................................................................................................................2
2.2 Start-up Summary....................................................................................................................2
Table: Start-up Funding.............................................................................................................3
Chart: Start-up..............................................................................................................................4
Table: Start-up..............................................................................................................................4
3.0 Services.............................................................................................................................................5
4.0 Market Analysis Summary.........................................................................................................5
4.1 Market Segmentation..............................................................................................................5
Chart: Market Analysis (Pie).....................................................................................................6
Table: Market Analysis................................................................................................................6
4.2 Target Market Segment Strategy.......................................................................................6
4.3 Service Business Analysis......................................................................................................7
4.3.1 Competition and Buying Patterns...............................................................................7
5.0 Strategy and Implementation Summary.............................................................................8
5.1 Marketing Strategy...................................................................................................................8
5.2 Sales Strategy............................................................................................................................8
5.2.1 Sales Forecast....................................................................................................................8
Table: Sales Forecast..............................................................................................................9
Chart: Sales Monthly...............................................................................................................9
5.3 Milestones..................................................................................................................................10
Table: Milestones........................................................................................................................10
Chart: Milestones........................................................................................................................10
5.4 Competitive Edge....................................................................................................................11
6.0 Web Plan Summary....................................................................................................................11
6.1 Website Marketing Strategy................................................................................................11
6.2 Development Requirements................................................................................................11
7.0 Management Summary.............................................................................................................11
7.1 Personnel Plan..........................................................................................................................12
Table: Personnel..........................................................................................................................12
8.0 Financial Plan................................................................................................................................12
8.0 Financial Plan................................................................................................................................12
8.1 Important Assumptions........................................................................................................12
Table: General Assumptions...................................................................................................12
8.2 Break-even Analysis...............................................................................................................13
Table: Break-even Analysis....................................................................................................13
Chart: Break-even Analysis....................................................................................................13
8.3 Projected Profit and Loss.....................................................................................................14
Table: Profit and Loss................................................................................................................14

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 Table of Contents

Chart: Profit Monthly.................................................................................................................15

8.4 Projected Cash Flow...............................................................................................................16
Table: Cash Flow.........................................................................................................................16
Chart: Cash...................................................................................................................................17
8.5 Projected Balance Sheet......................................................................................................18
Table: Balance Sheet.................................................................................................................18
8.6 Business Ratios........................................................................................................................19
Table: Ratios.................................................................................................................................19
Table: Sales Forecast..........................................................................................................................1
Table: Personnel....................................................................................................................................2
Table: Personnel....................................................................................................................................2
Table: General Assumptions.............................................................................................................3
Table: General Assumptions.............................................................................................................3
Table: Profit and Loss..........................................................................................................................4
Table: Profit and Loss..........................................................................................................................4
Table: Cash Flow...................................................................................................................................5
Table: Cash Flow...................................................................................................................................5
Table: Balance Sheet...........................................................................................................................6
Table: Balance Sheet...........................................................................................................................6

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 The Metolius Agency

1.0 Executive Summary

The Metolius Agency is a Eugene, Ore. based graphic design and visual communications firm.
Metolius will be concentrating on corporate identity of established companies. The targeted
customer is a small- to medium-size company that has been established for five to 15 years.
The company has done well with the business so far, but they are in need of a new corporate
identity to allow them to move to the next level.

Metolius will operate out of a small office in the downtown area. For months one through
seven, Kiev Lartiste will be the sole employee. By month seven, Kiev will be hiring an assistant
to help with design work as well as administrative details.

Metolius will offer companies a fresh perspective regarding corporate identity and visual
communication. Kiev has a unique background where he has business skills and creative skills.
Most firms come solely from creative backgrounds. While this is useful for the crafting of logos
and other devices of visual communication, it lacks the intuitive business mindset that Kiev
brings to the firm. This competitive edge allows Kiev to bring both an aesthetic design focus as
well as a practical, quantitative mindset that adds value to the service offerings by creating
solutions that have both creative elements combined with rational, business ideas. This
is useful since the clients are more business oriented.

Metolius will grow their customer base by providing clients with well-priced projects due to
reasonably low overhead, creative, practical designs that add more value than competing
graphical art firms, and superior customer attention. The Metolius Agency will reach
profitability by month nine and generate $27,347 in profits by year three.

Chart: Highlights

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 The Metolius Agency

1.1 Objectives

The objectives for the first three years of operation include:

1. To develop a start-up graphics agency that will grow to profitability within year two.
2. To create a company whose primary goal is to exceed customer's expectations.
3. To create a firm that provides the target customers with valuable services and provides the
owner with a flexible, creative, fun, and profitable business opportunity.

1.2 Mission

The Metolius Agency's mission is to provide the customer with creative and practical graphic
design work and visual communication services. We exist to attract and maintain customers.
When we adhere to this maxim, everything else will fall into place. Our services will exceed the
expectations of our customers.

1.3 Keys to Success

The keys to success are:

 Professionalism
 Creativity
 Practical insight
 Enjoyment of the experience

2.0 Company Summary

The Metolius Agency is a start-up graphics firm that serves small- to medium-sized companies.
The firm will be based in Eugene, Ore. and will operate from a small, downtown office.

2.1 Company Ownership

The Metolius Agency is a sole proprietorship owned and operated by Kiev Lartiste.

2.2 Start-up Summary

The Metolius Agency will incur the following start-up costs:

 Assorted office furniture including two filing cabinets, two work desks, a couch and two
chairs for the waiting area, a round table with chairs, and assorted fixtures for the office.
 Two computers, each with 21" monitors, graphic tablet, black and white laser printer, inkjet
color printer, scanner, CD-RW, and the following software: Illustrator, Freehand, Quark,
Photoshop, Font Management Utilities, Traffic Office Manager (a scheduling and billing
software), and Microsoft Project.
 Development of the website which will include design time by Kiev and implementation from
a University of Oregon computer science graduate student.
 A current library of requisite magazines and journals.
 A DSL connection.
 Assorted office supplies.
 Stationary and brochures.
 Legal fees regarding business formation, creation of standard client contracts, and other
general advice.

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 The Metolius Agency

Please note that the following items which are considered assets to be used for more than a
year will be labeled long-term assets and will be depreciated using G.A.A.P. approved straight-
line depreciation method.

Table: Start-up Funding

Start-up Funding
Start-up Expenses to Fund $1,000
Start-up Assets to Fund $42,000
Total Funding Required $43,000

Assets
Non-cash Assets from Start-up $19,800
Cash Requirements from Start-up $22,200
Additional Cash Raised $0
Cash Balance on Starting Date $22,200
Total Assets $42,000

Liabilities and Capital

Liabilities
Current Borrowing $0
Long-term Liabilities $0
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $0

Capital

Planned Investment
Kiev $43,000
Investor 2 $0
Other $0
Additional Investment Requirement $0
Total Planned Investment $43,000

Loss at Start-up (Start-up Expenses) ($1,000)

Total Capital $42,000

Total Capital and Liabilities $42,000

Total Funding $43,000

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 The Metolius Agency

Chart: Start-up

Table: Start-up

Start-up

Requirements

Start-up Expenses
Legal $500
Stationery etc. $250
Brochures $250
Other $0
Total Start-up Expenses $1,000

Start-up Assets
Cash Required $22,200
Other Current Assets $0
Long-term Assets $19,800
Total Assets $42,000

Total Requirements $43,000

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 The Metolius Agency

3.0 Services
The Metolius Agency provides graphic design and visual communication services to established,
primarily Eugene-based, companies. Some of the services offered are corporate identity,
marquees, logos, branding, and packaging.

The pricing of the projects are typically estimated as a project-based cost. The project cost will
be estimated by the approximate number of hours needed to complete the project. Generally,
Kiev will be charging $75 an hour for his services.

The majority of services will be provided at The Metolius Agency's office space. This office will
be modern, practical, and sleek. This is very important because the office of a graphic designer
is to a large degree a piece of their portfolio and reflects their work product. Therefore, a
decent amount of money will be used to develop a proper appearing business office.

4.0 Market Analysis Summary

The Metolius Agency will be targeting small- to medium-sized companies. What these
companies have in common is they have started as a small company with a good idea and have
grown into a larger, more mature company that must now decide if they are going to maintain
the current business strategy, or reinvigorate the company, employ professional service
providers, and move to the next level.

4.1 Market Segmentation

The Metolius Agency has two distinct customer groups which they will concentrate on:

 Small-size companies: typically five to 15 employees

 Medium-size companies: 15 to 40 employees

These companies started with a valuable concept and leveraged their original grassroots visual
communication elements. Now that they have matured into a larger company, they can no
longer rely on the original grassroots corporate identity. These companies are in need of a
professional firm like The Metolius Agency to expand their identify and take them to that same
level as their competitors and be able to compete.

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 The Metolius Agency

Chart: Market Analysis (Pie)

Table: Market Analysis

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Small companies 8% 234 253 273 295 319 8.05%
Medium companies 7% 145 155 166 178 190 6.99%
Total 7.65% 379 408 439 473 509 7.65%

4.2 Target Market Segment Strategy

The market segments will be targeted in a number of different ways. It must be noted that
graphics firms generate visibility and sales not through advertising, but through networking and
client referrals. The methods used for the target market segment strategy will be:

 Networking. The networking will be based on leveraging Kiev's personal and

professional relationships that he has developed after spending years in the industry. Ways
of networking include sending out notecards to all acquaintances announcing the opening of
The Metolius Agency, periodically meeting with people to catch up--as well to continue to
network which means to find out who this person knows within the target companies that
Metolius will try to turn into customers.

 Client referral. A lot of business is derived through referrals. Some of the referrals will
come through the Chamber of Commerce, some of the referrals will come from customers.
Recognizing that referrals will be a good source of new customers, Kiev will be in constant
contact with the Chamber. In addition to being in contact with them, Kiev will investigate
the possibility of doing a small project pro bono for the Chamber. This will be done to let
the Chamber view an example of The Metolius Agency's work. It will also provide a reason
for the Chamber to recommend The Metolius Agency. Kiev will work very hard to satisfy all

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 The Metolius Agency

of his customers. By making sure that he exceeds their expectations, he will increase the
likelihood that he will receive referrals from satisfied customers.

 Targeted customer acquisition. This is the researching and strategic formulation to attract a
chosen company to become a customer. Kiev will put together a list of 20-30 companies
that would be excellent customers. Once these companies have been identified, Kiev will
devise a strategy to target these companies as customers by initially determining what
value Metolius can offer them. Eventually, the goal is to be able to meet with the decision
maker of the company and present them with a portfolio of Kiev's past work as well as the
proposed value Kiev can offer them.

4.3 Service Business Analysis

The graphic design industry is fairly diverse with all types of service providers. There are large
advertising agencies, freelance designers, and in-house firms that typically only serve the
specific company.

Within the last seven to 10 years, there has been a trend in the industry for the general
advertising agencies, that previously only worked with advertising, to act as a full-service
agency that not only prepares advertisements, but also does a lot of the creative work in-house
instead of outsourcing it. This trend toward full-service agencies has continued. To a large
degree it is occurring due to higher profit margins for the service providers. The Metolius
Agency will be bucking this trend and concentrating on their specific skill set.

4.3.1 Competition and Buying Patterns

The following are examples of the different types of competitors:

 Large advertising agencies: over the years these firms have increased their number of
service offerings from selling media forms of advertising, to a full-service company that
develops creative work in-house, working with companies to develop corporate identity, etc.

 Freelance designers: these competitors are similar to Kiev because they are typically a one-
man operation, often operating out of their own home. Often the freelance designers are
just getting into the business and are trying to get experience, or they have left a firm in
search of a more flexible lifestyle. Some freelance designers are well experienced and can
offer the same professional level of quality the large agencies offer.

 Kinko's: while Kinko's is not a true competitor, it is a substitute competitor that should be
mentioned. Kinko's stores do not have a true creative department, but for some of the
larger accounts, it offers free creative services as a value-added feature to the larger
customer. These services are typically provided by an employee who has introductory or
intermediate skills using graphic design software such as Quark or Freehand, and in a small
amount of time can generate creative images for the client. These services are typically not
billed but used as a value-added benefit. While the price is quite good, the customer must
recognize the fact that these services are not on par with a professional agency.

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 The Metolius Agency

5.0 Strategy and Implementation Summary

The Metolius Agency's marketing and sales strategy will utilize networking and referrals to
develop visibility for the company. Prospective customers will be turned into qualified sales
through a professional showing that displays Kiev's portfolio of past work. The portfolio is key
for making a positive impression regarding Kiev which illustrates his skill set and capacity as a
creative designer.

5.1 Marketing Strategy

As noted previously in the target market segment strategy, The Metolius Agency will rely on
three activities in their marketing efforts. These include:

 Networking: leveraging relationships to build more relationships within Eugene's relatively

intimate community.

 Client referral: by providing outstanding customer attention, current customers are more
likely to become a long-term customer and are more likely to refer their friends.

 Targeted customer acquisition: the first step of this process is to target who the ideal
customer is, determine how Metolius can offer them value, and then network to come into
contact with the decision maker at that company.

5.2 Sales Strategy

The sales strategy will be to utilize Kiev's portfolio of past work to qualify a sales lead. Using a
portfolio is very common within the industry to show past examples of work. Kiev's strategy
will be the development of several different portfolios, each one customized to a specific type of
work. By having different portfolios, Kiev is able to better illustrate his proficiency with
that specific skill set. In addition to the use of the portfolio, Kiev will do research on the
prospective company and their industry so that he has specific knowledge of the needs the
company may have and solutions that he can offer.

5.2.1 Sales Forecast

The first month of operation will be used to get the office set up and ready for business. Some
of the time will be working with the interior designers to create a modern looking office space.

Months two through four will be somewhat slow as Kiev is developing clients. He is forecasted
to take on some smaller projects. By month five Metolius will have developed larger projects
and will continue to grow steadily.

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 The Metolius Agency

Table: Sales Forecast

Sales Forecast
Year 1 Year 2 Year 3
Sales
Small companies $29,339 $50,697 $58,849
Medium companies $40,058 $74,554 $86,543
Total Sales $69,397 $125,251 $145,392

Direct Cost of Sales Year 1 Year 2 Year 3

Small companies $880 $1,521 $1,765
Medium companies $1,202 $2,237 $2,596
Subtotal Direct Cost of Sales $2,082 $3,758 $4,362

Chart: Sales Monthly

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 The Metolius Agency

5.3 Milestones

The Metolius Agency will have several milestones early on:

1. Business plan completion

2. Office set up
3. Establishment of the first major account
4. Profitability

Table: Milestones

Milestones

Milestone Start Date End Date Budget Manager Department

Business plan completion 1/1/2001 2/1/2001 $0 ABC Marketing
Office set up 1/1/2001 2/1/2001 $0 ABC Department
Establishment of the first major 1/1/2001 5/15/2001 $0 ABC Department
account
Profitability 1/1/2001 9/31/01 $0 ABC Department
Totals $0

Chart: Milestones

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 The Metolius Agency

5.4 Competitive Edge

The Metolius Agency's competitive edge is based on Kiev's diverse background of business and
creativity. Typically, most creative agencies are staffed by right-brain creative types. These
people are extremely aesthetically oriented. While this is certainly an asset in the field of
graphic design, it can be limiting because while their work might be extremely creative, it might
not "hit home" with non-creative types which make up a large portion in the business world.

Kiev's background is based both in aesthetics and business. While Kiev always had a creative
streak that he would use, his education was business oriented. This competitive edge allows
The Metolius Agency to offer similar creative services other firms can offer, but also provide a
unique business perspective.

6.0 Web Plan Summary

The website will be used as a way to disseminate information regarding the firm, show past
examples of work, provide the interested party will several ways of contacting The Metolius
Agency. In today's day and age, a website is almost a given, a standard source of information
regarding the company.

6.1 Website Marketing Strategy

The marketing strategy for the website will be based on inclusion of the Internet address in all
materials that The Metolius Agency releases, as well as submission to popular websites.
Submission to search engines is an art in itself as different search engines work in different
ways so a customized submission is most effective.

6.2 Development Requirements

A graduate student from the University of Oregon's computer science department will be used
for the development (writing the code, Kiev will be responsible for the creative work) of the
website as well as the periodic maintenance of the site. A graduate student will be used
because of their expertise and typical below market rate.

7.0 Management Summary

Kiev Lartiste received his Bachelor of Arts in graphic design and business administration from
the University of Oregon. While pursuing his undergraduate degree, Kiev was able to take
several different graduate level business courses which were more challenging for him. While
pursuing the double degree, Kiev began to recognize just how unique his skills were. Most of
his colleagues in the art department had artistic skills equal to Kiev, but had no business
sense. Likewise, his colleagues in the business department were very business oriented but
struggled with creativity.

Upon graduation, Kiev went to work for Wieden & Kennedy in Portland. This was a wonderful
experience as Kiev was surrounded by very bright, creative people. Kiev was given small
projects, usually components of larger projects. While this was a good experience, he was
unable to leverage his business skills under these circumstances.

After three years Kiev moved to Eugene and took a position with (name omitted), a large full-
service advertising agency. The firm gave Kiev more management responsibility for his
projects. After the third year, Kiev felt confident enough to entertain the idea of going out on
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 The Metolius Agency

his own and opening his own firm. After market research and writing a business plan, Kiev
gave notice and opened up The Metolius Agency.

7.1 Personnel Plan

Kiev will be the sole employee through month seven at which time he will hire an assistant to
help out with design execution, as well as some of the administrative details.

Table: Personnel

Personnel Plan
Year 1 Year 2 Year 3
Kiev $42,000 $42,000 $42,000
Assistant $17,280 $34,560 $34,560
Total People 2 2 2

Total Payroll $59,280 $76,560 $76,560

8.0 Financial Plan

The following sections will outline important financial information.

8.1 Important Assumptions

The following table details important financial assumptions.

Table: General Assumptions

General Assumptions
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 30.00% 30.00% 30.00%
Other 0 0 0

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 The Metolius Agency

8.2 Break-even Analysis

The Break-even Analysis indicates that approximately $7,000 will be needed in monthly
revenue to reach the break-even point.

Table: Break-even Analysis

Break-even Analysis

Monthly Revenue Break-even $7,053

Assumptions:
Average Percent Variable Cost 3%
Estimated Monthly Fixed Cost $6,841

Chart: Break-even Analysis

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 The Metolius Agency

8.3 Projected Profit and Loss

The following table will indicate projected profit and loss.

Table: Profit and Loss

Pro Forma Profit and Loss

Year 1 Year 2 Year 3
Sales $69,397 $125,251 $145,392
Direct Cost of Sales $2,082 $3,758 $4,362
Other Production Expenses $0 $0 $0
Total Cost of Sales $2,082 $3,758 $4,362

Gross Margin $67,316 $121,493 $141,030

Gross Margin % 97.00% 97.00% 97.00%

Expenses
Payroll $59,280 $76,560 $76,560
Sales and Marketing and Other Expenses $2,820 $2,820 $2,820
Depreciation $2,400 $2,400 $2,400
Website maintenance $600 $600 $600
Insurance $900 $900 $900
Rent $7,200 $7,200 $7,200
Payroll Taxes $8,892 $11,484 $11,484
Other $0 $0 $0

Total Operating Expenses $82,092 $101,964 $101,964

Profit Before Interest and Taxes ($14,776) $19,529 $39,066

EBITDA ($12,376) $21,929 $41,466
Interest Expense $0 $0 $0
Taxes Incurred $0 $5,859 $11,720

Net Profit ($14,776) $13,670 $27,347

Net Profit/Sales -21.29% 10.91% 18.81%

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 The Metolius Agency

Chart: Profit Monthly

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 The Metolius Agency

8.4 Projected Cash Flow

The following chart and table will indicate projected cash flow.

Table: Cash Flow

Pro Forma Cash Flow

Year 1 Year 2 Year 3
Cash Received

Cash from Operations

Cash Sales $69,397 $125,251 $145,392
Subtotal Cash from Operations $69,397 $125,251 $145,392

Additional Cash Received

Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $0 $0 $0
Subtotal Cash Received $69,397 $125,251 $145,392

Expenditures Year 1 Year 2 Year 3

Expenditures from Operations

Cash Spending $59,280 $76,560 $76,560
Bill Payments $20,322 $32,111 $38,554
Subtotal Spent on Operations $79,602 $108,671 $115,114

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $79,602 $108,671 $115,114

Net Cash Flow ($10,205) $16,580 $30,278

Cash Balance $11,995 $28,575 $58,853

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 The Metolius Agency

Chart: Cash

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 The Metolius Agency

8.5 Projected Balance Sheet

The following table will indicate the projected balance sheet.

Table: Balance Sheet

Pro Forma Balance Sheet

Year 1 Year 2 Year 3
Assets

Current Assets
Cash $11,995 $28,575 $58,853
Other Current Assets $0 $0 $0
Total Current Assets $11,995 $28,575 $58,853

Long-term Assets
Long-term Assets $19,800 $19,800 $19,800
Accumulated Depreciation $2,400 $4,800 $7,200
Total Long-term Assets $17,400 $15,000 $12,600
Total Assets $29,395 $43,575 $71,453

Liabilities and Capital Year 1 Year 2 Year 3

Current Liabilities
Accounts Payable $2,172 $2,681 $3,213
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $2,172 $2,681 $3,213

Long-term Liabilities $0 $0 $0
Total Liabilities $2,172 $2,681 $3,213

Paid-in Capital $43,000 $43,000 $43,000

Retained Earnings ($1,000) ($15,776) ($2,106)
Earnings ($14,776) $13,670 $27,347
Total Capital $27,224 $40,894 $68,240
Total Liabilities and Capital $29,395 $43,575 $71,453

Net Worth $27,224 $40,894 $68,240

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 The Metolius Agency

8.6 Business Ratios

The following table compares standard business ratios with the Standard Industry Code #7336,
Graphic Design Services.

Table: Ratios

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth n.a. 80.48% 16.08% 9.02%

Percent of Total Assets

Other Current Assets 0.00% 0.00% 0.00% 52.57%
Total Current Assets 40.81% 65.58% 82.37% 76.45%
Long-term Assets 59.19% 34.42% 17.63% 23.55%
Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 7.39% 6.15% 4.50% 34.45%

Long-term Liabilities 0.00% 0.00% 0.00% 23.62%
Total Liabilities 7.39% 6.15% 4.50% 58.07%
Net Worth 92.61% 93.85% 95.50% 41.93%

Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 97.00% 97.00% 97.00% 100.00%
Selling, General & Administrative Expenses 118.29% 86.09% 78.19% 77.05%
Advertising Expenses 1.47% 0.81% 0.70% 1.42%
Profit Before Interest and Taxes -21.29% 15.59% 26.87% 0.83%

Main Ratios
Current 5.52 10.66 18.32 1.51
Quick 5.52 10.66 18.32 1.13
Total Debt to Total Assets 7.39% 6.15% 4.50% 66.33%
Pre-tax Return on Net Worth -54.28% 47.76% 57.25% 2.06%
Pre-tax Return on Assets -50.27% 44.82% 54.67% 6.12%

Additional Ratios Year 1 Year 2 Year 3

Net Profit Margin -21.29% 10.91% 18.81% n.a
Return on Equity -54.28% 33.43% 40.07% n.a

Activity Ratios
Accounts Payable Turnover 10.36 12.17 12.17 n.a
Payment Days 27 27 28 n.a
Total Asset Turnover 2.36 2.87 2.03 n.a

Debt Ratios
Debt to Net Worth 0.08 0.07 0.05 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a

Liquidity Ratios
Net Working Capital $9,824 $25,894 $55,640 n.a
Interest Coverage 0.00 0.00 0.00 n.a

Additional Ratios
Assets to Sales 0.42 0.35 0.49 n.a
Current Debt/Total Assets 7% 6% 4% n.a
Acid Test 5.52 10.66 18.32 n.a
Sales/Net Worth 2.55 3.06 2.13 n.a
Dividend Payout 0.00 0.00 0.00 n.a

Page 19
 Appendix

Table: Sales Forecast

Sales Forecast
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales
Small companies 0% $0 $600 $1,500 $1,360 $1,820 $2,296 $2,811 $3,240 $3,558 $3,769 $3,936 $4,450
Medium companies 0% $0 $0 $0 $2,000 $2,676 $3,376 $4,134 $4,765 $5,232 $5,543 $5,788 $6,544
Total Sales $0 $600 $1,500 $3,360 $4,496 $5,672 $6,945 $8,005 $8,790 $9,312 $9,724 $10,994

Direct Cost of Sales Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Small companies $0 $18 $45 $41 $55 $69 $84 $97 $107 $113 $118 $133
Medium companies $0 $0 $0 $60 $80 $101 $124 $143 $157 $166 $174 $196
Subtotal Direct Cost of Sales $0 $18 $45 $101 $135 $170 $208 $240 $264 $279 $292 $330

Page 1
 Appendix

Table: Personnel

Personnel Plan
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Kiev 0% $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500
Assistant 0% $0 $0 $0 $0 $0 $0 $2,880 $2,880 $2,880 $2,880 $2,880 $2,880
Total People 1 1 1 1 1 1 2 2 2 2 2 2

Total Payroll $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $6,380 $6,380 $6,380 $6,380 $6,380 $6,380

Page 2
 Appendix

Table: General Assumptions

General Assumptions
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Plan Month 1 2 3 4 5 6 7 8 9 10 11 12
Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%
Other 0 0 0 0 0 0 0 0 0 0 0 0

Page 3
 Appendix

Table: Profit and Loss

Pro Forma Profit and 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
Sales $0 $600 $1,500 $3,360 $4,496 $5,672 $6,945 $8,005 $8,790 $9,312 $9,724 $10,994
Direct Cost of Sales $0 $18 $45 $101 $135 $170 $208 $240 $264 $279 $292 $330
Other Production Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $0 $18 $45 $101 $135 $170 $208 $240 $264 $279 $292 $330

Gross Margin $0 $582 $1,455 $3,259 $4,361 $5,502 $6,737 $7,765 $8,526 $9,033 $9,432 $10,664
Gross Margin % 0.00% 97.00% 97.00% 97.00% 97.00% 97.00% 97.00% 97.00% 97.00% 97.00% 97.00% 97.00%

Expenses
Payroll $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $6,380 $6,380 $6,380 $6,380 $6,380 $6,380
Sales and Marketing and Other $235 $235 $235 $235 $235 $235 $235 $235 $235 $235 $235 $235
Expenses
Depreciation $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200
Website maintenance $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50
Insurance $75 $75 $75 $75 $75 $75 $75 $75 $75 $75 $75 $75
Rent $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600
Payroll Taxes 15% $525 $525 $525 $525 $525 $525 $957 $957 $957 $957 $957 $957
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Operating Expenses $5,185 $5,185 $5,185 $5,185 $5,185 $5,185 $8,497 $8,497 $8,497 $8,497 $8,497 $8,497

Profit Before Interest and Taxes ($5,185) ($4,603) ($3,730) ($1,926) ($824) $317 ($1,760) ($732) $29 $536 $935 $2,167
EBITDA ($4,985) ($4,403) ($3,530) ($1,726) ($624) $517 ($1,560) ($532) $229 $736 $1,135 $2,367
Interest Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Taxes Incurred $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Net Profit ($5,185) ($4,603) ($3,730) ($1,926) ($824) $317 ($1,760) ($732) $29 $536 $935 $2,167
Net Profit/Sales 0.00% -767.17% -248.67% -57.32% -18.33% 5.58% -25.34% -9.14% 0.33% 5.75% 9.62% 19.71%

Page 4
 Appendix

Table: Cash Flow

Pro Forma 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

Cash from Operations

Cash Sales $0 $600 $1,500 $3,360 $4,496 $5,672 $6,945 $8,005 $8,790 $9,312 $9,724 $10,994
Subtotal Cash from Operations $0 $600 $1,500 $3,360 $4,496 $5,672 $6,945 $8,005 $8,790 $9,312 $9,724 $10,994

Additional Cash Received

Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Received $0 $600 $1,500 $3,360 $4,496 $5,672 $6,945 $8,005 $8,790 $9,312 $9,724 $10,994

Expenditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Expenditures from Operations

Cash Spending $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $6,380 $6,380 $6,380 $6,380 $6,380 $6,380
Bill Payments $50 $1,486 $1,504 $1,532 $1,587 $1,621 $1,671 $2,126 $2,158 $2,181 $2,197 $2,210
Subtotal Spent on Operations $3,550 $4,986 $5,004 $5,032 $5,087 $5,121 $8,051 $8,506 $8,538 $8,561 $8,577 $8,590

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Spent $3,550 $4,986 $5,004 $5,032 $5,087 $5,121 $8,051 $8,506 $8,538 $8,561 $8,577 $8,590

Net Cash Flow ($3,550) ($4,386) ($3,504) ($1,672) ($591) $551 ($1,106) ($501) $252 $751 $1,147 $2,404
Cash Balance $18,651 $14,265 $10,761 $9,089 $8,498 $9,049 $7,943 $7,442 $7,693 $8,444 $9,592 $11,995

Page 5
 Appendix

Table: Balance Sheet

Pro Forma Balance Sheet

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Assets Starting Balances

Current Assets
Cash $22,200 $18,651 $14,265 $10,761 $9,089 $8,498 $9,049 $7,943 $7,442 $7,693 $8,444 $9,592 $11,995
Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Current Assets $22,200 $18,651 $14,265 $10,761 $9,089 $8,498 $9,049 $7,943 $7,442 $7,693 $8,444 $9,592 $11,995

Long-term Assets
Long-term Assets $19,800 $19,800 $19,800 $19,800 $19,800 $19,800 $19,800 $19,800 $19,800 $19,800 $19,800 $19,800 $19,800
Accumulated Depreciation $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 $2,200 $2,400
Total Long-term Assets $19,800 $19,600 $19,400 $19,200 $19,000 $18,800 $18,600 $18,400 $18,200 $18,000 $17,800 $17,600 $17,400
Total Assets $42,000 $38,251 $33,665 $29,961 $28,089 $27,298 $27,649 $26,343 $25,642 $25,693 $26,244 $27,192 $29,395

Liabilities and Capital Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Current Liabilities
Accounts Payable $0 $1,436 $1,453 $1,479 $1,533 $1,566 $1,600 $2,055 $2,085 $2,108 $2,123 $2,135 $2,172
Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Current Liabilities $0 $1,436 $1,453 $1,479 $1,533 $1,566 $1,600 $2,055 $2,085 $2,108 $2,123 $2,135 $2,172

Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Liabilities $0 $1,436 $1,453 $1,479 $1,533 $1,566 $1,600 $2,055 $2,085 $2,108 $2,123 $2,135 $2,172

Paid-in Capital $43,000 $43,000 $43,000 $43,000 $43,000 $43,000 $43,000 $43,000 $43,000 $43,000 $43,000 $43,000 $43,000
Retained Earnings ($1,000) ($1,000) ($1,000) ($1,000) ($1,000) ($1,000) ($1,000) ($1,000) ($1,000) ($1,000) ($1,000) ($1,000) ($1,000)
Earnings $0 ($5,185) ($9,788) ($13,518) ($15,444) ($16,268) ($15,951) ($17,712) ($18,444) ($18,415) ($17,879) ($16,944) ($14,776)
Total Capital $42,000 $36,815 $32,212 $28,482 $26,556 $25,732 $26,049 $24,288 $23,556 $23,585 $24,121 $25,056 $27,224
Total Liabilities and Capital $42,000 $38,251 $33,665 $29,961 $28,089 $27,298 $27,649 $26,343 $25,642 $25,693 $26,244 $27,192 $29,395

Net Worth $42,000 $36,815 $32,212 $28,482 $26,556 $25,732 $26,049 $24,288 $23,556 $23,585 $24,121 $25,056 $27,224

Page 6