Table of Contents

1.0 Executive Summary .................................................................................................................... 1 1.1 Objectives.................................................................................................................................... 1 Chart: Highlights .......................................................................................................................... 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 ................................................................................................................... 3 Table: Start-up.............................................................................................................................. 3 Table: Start-up Funding ............................................................................................................ 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 ...................................................................................... 7 4.3 Service Business Analysis ..................................................................................................... 8 4.3.1 Competition and Buying Patterns .............................................................................. 8 5.0 Strategy and Implementation Summary ............................................................................ 9 5.1 Competitive Edge ..................................................................................................................... 9 5.2 Marketing Strategy .................................................................................................................. 9 5.3 Sales Strategy ......................................................................................................................... 10 5.3.1 Sales Forecast.................................................................................................................. 10 Chart: Sales by Year ............................................................................................................. 12 Table: Sales Forecast ........................................................................................................... 11 Chart: Sales Monthly ............................................................................................................ 12 5.4 Milestones.................................................................................................................................. 13 Table: Milestones ....................................................................................................................... 13 Chart: Milestones ....................................................................................................................... 14 6.0 Management Summary ............................................................................................................ 14 6.1 Personnel Plan ......................................................................................................................... 15 Table: Personnel ......................................................................................................................... 15 7.0 Financial Plan ............................................................................................................................... 15 7.1 Important Assumptions ....................................................................................................... 15 Table: General Assumptions .................................................................................................. 15 7.2 Break-even Analysis .............................................................................................................. 16 Chart: Break-even Analysis ................................................................................................... 16 Table: Break-even Analysis.................................................................................................... 16 7.3 Projected Profit and Loss ..................................................................................................... 17 Chart: Gross Margin Monthly................................................................................................. 17 Chart: Gross Margin Yearly .................................................................................................... 18 Table: Profit and Loss ............................................................................................................... 18 Chart: Profit Monthly ................................................................................................................ 19 Page 1

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Chart: Profit Yearly .................................................................................................................... 19 7.4 Projected Cash Flow .............................................................................................................. 20 Chart: Cash .................................................................................................................................. 20 Table: Cash Flow ........................................................................................................................ 21 7.5 Business Ratios ....................................................................................................................... 21 Table: Ratios ................................................................................................................................ 22 7.6 Projected Balance Sheet ...................................................................................................... 23 7.6 Projected Balance Sheet ...................................................................................................... 23 Table: Balance Sheet ................................................................................................................ 23 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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1.0 Executive Summary PC Repair will provide computer and technical consulting (repairs, training, networking and upgrade service) to local small businesses as well as home PC users. The company will focus on marketing, responsiveness, quality, and creating and retaining customer relations. PC Repair was initially formed as a sole proprietorship, but was reconfigured as an S Corporation in December of 2004. PC Repair will at first be a home office start-up, utilizing one studio room in the owner's home and serving customers in the local Ramsford-onBitstream area. In the third month of our plan, we will move into a leased office space and hire a second technician. As sales increase, we will hire additional personnel. The Market The very nature of the computing industry, with its extraordinary rate of technological development, creates a constant need for businesses skilled in updating and advising customers on computer-related issues. In town, the majority of potential customers are dissatisfied with existing options, creating an attractive niche for an innovative start-up. Small business PC users will provide the majority of our business revenue. Business Week expects the computing industry to grow at a rate of 12% and the processor speeds to continue to expand for years to come, providing a rich resource for sales. PC Repair has decided to focus mainly on the small business market, as these customers typically don't have a full-time IT person, but have full-time IT needs. PC Repair will offer an affordable, on-demand service for these customers. We can also offer maintenance agreements that generate additional monthly income. For our residential customers, we will offer a very affordable and helpful service with a very flexible schedule to meet their needs. Our target market will focus on Ramsford-on-Bitstream and the surrounding areas. Market research indicates there is an abundance of business for a small company such as PC Repair. Start-up Funding and Financials To get PC Repair started the owner is providing cash and assets. We are also seeking a shortterm loan, to be secured with the owner's home equity, and repaid within three years. Our conservative sales forecasts, based on industry research within the local area, project hefty sales in year one, steadily increasing through year three. To reach these goals, we will use an aggressive advertising campaign to exploit our competitors' weaknesses. With good cost control, we will see a modest, yet comfortable, net profit the first year, even after moving into a leased space and hiring additional technicians. 1.1 Objectives 1. 2. 3. 4. To provide the best service available to the community at an affordable price. To generate substantial market share so that PC Repair is a common name. Constant growth in sales from start up through year three. To generate customer satisfaction so that at least 40% of our customer base is repeat business.

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Chart: Highlights

1.2 Mission Our goal is to set the standard for on-site computer solutions through fast, on-site service and response. Our customers will always receive one-on-one personal attention at a very affordable price. Our customers will receive the highest quality of customer service available. Our employees will receive extensive training, a great place to work, fair pay and benefits, and incentives to use their own good judgement to solve customers' problems. 1.3 Keys to Success Establishing a brand identity and generating brand recognition through marketing. Responsiveness: being an on-call computer paramedic with fast response time. Quality: getting the job done right the first time, offering 100% guarantee. Relationships: developing loyal repeat customers--retainers.

2.0 Company Summary PC Repair is an S Corporation located in Ramsford-on-Bitstream, owned by Jack Hacker. With a small 3-year loan, PC Repair will grow in one year from a one-man, home-office based repair shop to a profitable, 3-person business in a leased location. We will build the necessary infrastructure to quickly and efficiently respond to customers' computer needs, guaranteeing speedy, friendly, competent, and cost-effective technical support. 2.1 Company Ownership PC Repair was initially envisioned as a sole proprietorship in the owner's home. However, recent feedback from our marketing outreach has suggested a much higher sales potential than originally imagined, and PC Repair has been reformed as an S Corporation. This change will provide additional legal protection for the owner, and will also streamline the financial

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operations of the company as we expand the personnel to 5 within the next three years, lease a separate space for offices, and purchase company vehicles and cell phones. The owner, Jack Hacker, has 10 years of experience in the fields of technical support, networking, and computer training and repair. Jack has also spent the last three years as the manager of a custom computer building and repair store, and understands the computer needs of small businesses. 2.2 Start-up Summary Total start-up expenses include initial expenses for establishing our website, setting up the business, and doing our pre-opening advertising. Exact allocations are shown in the table. The bulk of our start-up requirements are asset needs: we need diagnostic and repair equipment, half of which will be contributed to the business by the owner from his own materials. We are treating this equipment as assets because we expect it to last at least three years, and to have some resale value when we are through with it; we will buy additional expensed equipment in years two and three. We also need start-up inventory which includes RAM, spare hard drives, cables, and cases. Although we will keep expenses to a minimum for the first three months, before we move, we will also need cash at start-up, to see us through the next several months with a positive cash balance. We plan to fund our total start-up requirements direct owner investment (including the contributed assets), and a three-year loan secured with the owner's collateral (his home equity). We should be able to easily repay this loan within three years, even with a much lower sales revenue than projected. (See the Cash Flow table for projected repayment.) Table: Start-up

Start-up Requirements Start-up Expenses Legal Website Business Cards Insurance Uniforms CPA Advertisement Total Start-up Expenses Start-up Assets Cash Required Start-up Inventory Other Current Assets Long-term Assets Total Assets Total Requirements $28,000 $1,200 $10,000 $0 $39,200 $42,225 $650 $350 $100 $150 $300 $275 $1,200 $3,025

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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 $11,200 $28,000 $0 $28,000 $39,200 $3,025 $39,200 $42,225

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 $23,000 $0 $0 $23,000 ($3,025) $19,975 $19,225 $0 $0 $0 $19,225

Total Capital and Liabilities Total Funding

$39,200 $42,225

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Chart: Start-up

3.0 Services PC Repair will offer computer repairs, training, networking and upgrade service to clients in two major categories: home PC users and small business users. As PC Repair and the client demands grow, we will offer software development to our business clients. From the very first day, we will offer on-site repair and consulting services, so that our clients don't need to take time out of their busy days to haul a computer in to our workshop. This is the single biggest frustration Jack has seen among small business owners needing computer help. Much of our diagnostic equipment is portable, and we will remove a PC to our workshop only when the problem requires more detailed diagnosis or repair. We will also offer free pickup and delivery of PCs needing repair. To meet the growing demand for this service, we will purchase a company vehicle in the third month. We will also offer extended maintenance contracts, so that business clients can deal with technical support and repair needs as a single line-item expense, rather than having to plan for unexpected crashes and problems with a rainy-day fund they may never use. Maintenance contracts yield a high gross margin for us, and provide peace of mind for the customer. We will offer limited software support (installation and compatibility issues), and focus on hardware and networking support - this is a vital distinction, since software is evolving much more rapidly than hardware, and our clients will have such diverse software needs that we couldn't possibly keep up with all of them. We will encourage clients to register their software and use the software's own support options to their full potential. We will, however, keep up to date with multiple operating systems and networking developments, working with clients to make sure they have the most appropriate combinations of hardware, OS, networking, backup systems, and software. Backup and security are becoming higher priorities for all our potential customers, as internet usage (and its pitfalls) becomes more common, and as more and more daily records are stored electronically.

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4.0 Market Analysis Summary PC Repair will provide computer support in both a consulting and technical capacity to small business owners as well as home PC users. Since PC Repair is currently a one man operation, its growth in the first three months will be limited by the owner's capacity to complete work. However, these first three months are critical for establishing our credibility and a reputation for getting the job done quickly and well. We will focus on delivering excellent service, and using the good word of mouth from this initial period to network with other potential clients. Personal market research by the owner indicates an attractive market niche for our services, of which PC Repair will take full advantage. The very nature of the computing industry, with its extraordinary rate of technological development, creates a constant need for businesses skilled in updating and advising customers on computer-related issues. National chains, such as "Geeks on Call," and Best Buy's "Geek Squad" have seen rapid growth in demand for these services in the last few years. Customers are seeking skilled help with everything from installation of software and hardware components, to networking, to transferring files from an old computer to a new one. Those who can often enlist their techsavvy children's help, but others are not so fortunate, and small-business owners need reliable and quick help with all their computer needs, since every hour down may mean an hour or more of lost revenue, especially for any business with a website or those doing e-commerce. 4.1 Market Segmentation The existing computer service market is so extensive that categorizing it is rather difficult. We have broken our potential market down into two groups, based on their needs: home PC users and small business clients. Home PC User Our home PC user market includes non-tech-savvy residents of the local area (15 mile radius), generally between the ages of 30 and 70, with at least one home computer. We are not expecting income from users below 30, who tend to be more comfortable with technology and willing to attempt repairs and upgrades on their own, without seeking professional assistance. Such home users generally own a computer to do email, play games, write letters, scan and print photos, and occasionally to do bookkeeping or taxes. Home PC users with more sophisticated applications generally have enough tech savvy, from tech experience at work, to do their own repairs and upgrades. Their hardware needs will include the computer itself, monitors, keyboards, mouse, printer, and scanner. This group is growing slightly faster than the overall population growth in our area, in part due to the increasing demand for computers among retired people and young families, about 7% a year. Small Business Users Small business users will provide the majority of our business revenue. The small business market will be defined as customers within a 15 mile radius, with 2 or more computers or a network which they use for business purposes at least 25% of the time. Their business use may include minor usage, such as updating a business website for a brick-and-mortar store, keeping the books, designing graphics or ad campaigns, and writing copy for press releases. It may also be more extensive, incorporating inventory tracking, POS systems, customer databases, online product/service delivery, or product development. The more intensive their computer usage for business, the more critical it is to them that their technology work well and reliably, and that

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quality repairs and support are available in a crisis. Their hardware needs will include the same items as home users, plus servers, backup systems, data storage, and wireless networking. The portion of the small business market we are targeting is growing at around 2% a year. Table: Market Analysis

Market Analysis Year 1 Potential Customers Home PC Users Small Business Users Other Total Growth 7% 2% 0% 5.39% 25,000 10,000 0 35,000 26,750 10,100 0 36,850 28,623 10,201 0 38,824 30,626 10,303 0 40,929 32,770 10,406 0 43,176 Year 2 Year 3 Year 4 Year 5 CAGR 7.00% 1.00% 0.00% 5.39%

Chart: Market Analysis (Pie)

4.2 Target Market Segment Strategy Although there are more potential customers among home PC users, we expect the majority of our revenue to come from small business clients, since their need for our services is more urgent, and they are willing to invest in technology as part of their business plan. The majority of our marketing efforts will thus be focused on small business owners. These customers typically don't have a full-time IT person, but have full-time IT needs. Home PCs are often used by multiple people, and serve multiple purposes. Our home PC users need help with managing their settings to integrate the different needs of all household members as much as they need technical assistance. ComputingNet magazine recently reported on the substantial need for timely and cost-effective computer upgrades and repairs in this region; Jack Hacker has seen this market need in

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person, as frustrated clients waited for days or weeks for their critical components to be returned to full capacity, with no inexpensive alternative to the existing computer repair shops. All of our clients need technical assistance, but we are also selling peace of mind: our clients will know that friendly, efficient help is just a phone call away. As more and more companies switch their support services to automated call centers or touch-tone menus, the simple reassurance of hearing another human voice on the phone within a few rings is immeasurable. Even better is knowing that within a few hours, someone will show up and take care of their problem. Both the software and hardware side of the computer industry continue to turn out new and revised computer components at alarming rates. For PC Repair this means job security well into the future. As reported by the Wall Street Journal, there seems to be no end to the development of the computer market. Business Week expects the computing industry to grow at a rate of 12% and the processor speeds to continue to expand for years to come. 4.3 Service Business Analysis Secondary market research shows computer service customers tend to be very loyal to providers that do good work and satisfy their needs. An analysis of PC Repair's main competitors shows no overwhelming strengths that would be significant barriers to entry into the market, as our local competitors have serious weaknesses. The computer maintenance and repair industry is fragmented, with a few large, national players and hundreds of small, local stores. While most computers are actually repaired in-store, near the customer, parts for the repair come from major manufacturers and distributors; delays in receiving necessary parts can significantly slow down the repair process. Large chains have solved this problem by keeping vast amounts of inventory in stock at all times, while local stores offer customers the trade-off of personal interaction and trust that may make up for some delay. PC Repair has established a relationship with a local distributor to do rapid special-ordering; although this capability is more expensive than normal channels, it will enable us to quickly establish a reputation as efficient and responsive to customer needs, particularly for our small business users. We will leverage this customer loyalty into great word of mouth marketing and steady growth. 4.3.1 Competition and Buying Patterns Customers choose computer repair and assistance services based on reputation, previous experience, and price. They may choose to return to a mediocre provider with whom they're familiar, rather than try out a new unknown company about whom they've heard nothing. Large stores, especially the service departments of national chains, have a great advantage simply in their affiliation with an established brand. Establishing our brand identity and a great reputation in the first few months is critical to our success. Once we have broken in to the local market, our great service will turn new clients into permanent clients. Our services will be second to no one and our prices will be very reasonable for the high quality service we offer. By providing superior service, word of mouth alone will bring in many new clients. The satisfaction our consumers find will keep them coming back. There are two main competitors for the computer upgrade and repair business in this area:

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1. Competitor A. They are a well established provider of computer upgrades and services, and do quick work. However, they have a high staff turnover, a young and inexperienced staff, and are more interested in selling new components than in maintaining existing machines or finding custom solutions. They do not offer any kind of pick-up and drop-off service, and do not offer on-site help. They really only offer hardware support. 2. Competitor B. Smaller and less known then A, B provides many services for residents living in east and south parts of town. They are more willing to spend time with a client, figuring out exactly what his or her needs are, and suggesting new options than competitor A. However, they have an inefficient ordering system and an unkempt shop, which deters potential customers and can turn existing customers to the competition. They also do not offer on-site services, although they are considering instituting a trial pick-up/drop-off service. They are in the best position to copy our innovations and steal customers, but their management is complacent and may not respond to competition. Both of these companies charge rates in excess of PC Repair; we will be able to attract the price-sensitive market without much work. 5.0 Strategy and Implementation Summary Our Strategy and Implementation turn on three points: 1. A value proposition of timely and practical solutions, at a reasonable rate, coupled with a 100% guarantee. 2. Exploiting our competitors weaknesses: a competitive edge based on quick, effective, and sympathetic customer service, which meets the customer where his needs are, rather than trying to fit him into an existing box. 3. Quickly establishing a brand identity and developing a great reputation among local customers to generate word of mouth advertising. 5.1 Competitive Edge Quick response: PC Repair will provide same day and after hours service. A flat rate policy: This undermines the competition, who charge by the hour. The pricing has been set to reflect the average amount of time it takes to perform the task. With this strategy we can undercut most competitors and gain local market power. On-site and pick-up/drop-off services: This will minimize the time and effort a customer needs to put into dealing with his computer problem. Suprisingly, our small size is an advantage: customers will recognize me (and future employees), and will know they will get the same great service every time they call.

5.2 Marketing Strategy Our marketing strategy will aggressively exploit our competitors' weaknesses. During the startup phase, we will run large ads in the business section of the local newspaper, asking, "Are you fed up with poor customer service for your computer needs?" These ads will focus on our advantages, including on-site service, competitive rates, and quick response and turn-

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around times. They will announce our opening date, and include a coupon for free diagnostic service for the first 20 customers. We will follow up on these opening ads with a smaller direct-marketing campaign to small business owners, with lists drawn from the local Chamber of Commerce. Jack will use his contacts with business customers from his years as a manager to create a "buzz" about this new business. We will continue periodic advertisements, including several promotions (discounts, free diagnosis, etc.) throughout the first year. We expect a small but steady response from home PC users who see our ads elsewhere, but will also run monthly ads in sections other than the business one. We will offer a promotion during the first 90 days of business to generate business traffic and word of mouth. Our promo is Spyware removal on any desktop PC for $70 including tax and software. Spyware is a huge problem for a lot of residential and small business customers, and the offer should draw a lot of interest. 5.3 Sales Strategy Our marketing strategy will generate customer inquiries. We will close the deals by offering an outstanding service and a very reasonable price. Happy customers generate repeat business and word of mouth. Our toll free number is operational 24 hours a day, seven days a week, and from 8am to 9pm, I will be available to answer calls. At other times, or when I am on the phone, an answering service we have hired will catch callers and give them an estimated wait time for a call-back; this is another step towards delivering a complete solution to our customers. Sales forecast figures are based on industry figures for the typical growth of a start-up and reflect repeat business generated through meeting customer needs. 5.3.1 Sales Forecast The sales strategy is a prediction of controllable growth for the first year. PC Repair will focus on quality and attention to detail to avoid some potential pitfalls encountered by many new businesses. The predicted growth is moderate in the home PC market and in the small business arena. However, with aggressive advertising and word of mouth, this will increase. Our agressive TV advertising will increase our residential and small business customer base as well as word of mouth within the first year. Within a few months we will have the need for additional employees to handle the work load. At that time, we will move into a leased space with additional square footage, and buy a company vehicle to help with the on-site calls. Our competitors average 75+ calls a month. Given that our advertising will be aggressive, we expect the same results. The sales forecast is conservative, which gives us a chance to gauge our experience and adjust the plan accordingly. We will service all of Ramsford-on-Bitstream, and the surrounding area. We expect that the majority of our jobs will be performed in the immediate town area. A service technician can perform an average of 3 jobs per day. Our sales forecast predictions are less than that. With our agressive advertising campaign we expect nominal growth. We predict it will take a few weeks for the marketing to settle in with customers. However, we are going to offer a promo for our services which should generate some substantial results.

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The one element of sales not represented in the table below is direct costs for our maintenance contracts. We estimate these costs at 12% of sales revenue, but expect a delayed occurrence that is, we will sell maintenance contracts starting in February, but do not expect to actually perform maintenance on computers guaranteed under them for the first few months. We will incur more and more costs from these as time goes on, and the computers age - most of the service in a maintenance contract is performed within the last quarter of the specified period. Projections for the direct costs for these contracts can be found in the Profit and Loss Table, as other costs of sales. Table: Sales Forecast

Sales Forecast Year 1 Unit Sales Home PC Unit Small Business Unit Promo Maintenance Contracts Total Unit Sales Unit Prices Home PC Unit Small Business Unit Promo Maintenance Contracts Sales Home PC Unit Small Business Unit Promo Maintenance Contracts Total Sales Direct Unit Costs Home PC Unit Small Business Unit Promo Maintenance Contracts Direct Cost of Sales Home PC Unit Small Business Unit Promo Maintenance Contracts Subtotal Direct Cost of Sales $13,944 $27,720 $940 $0 $42,604 $18,000 $37,800 $0 $0 $55,800 $20,250 $44,100 $0 $0 $64,350 $46,480 $132,000 $11,750 $12,800 $203,030 Year 1 $84.00 $105.00 $4.00 $0.00 $60,000 $180,000 $0 $36,000 $276,000 Year 2 $90.00 $126.00 $0.00 $0.00 $67,500 $210,000 $0 $51,000 $328,500 Year 3 $90.00 $126.00 $0.00 $0.00 166 264 235 32 697 Year 1 $280.00 $500.00 $50.00 $400.00 200 300 0 60 560 Year 2 $300.00 $600.00 $0.00 $600.00 225 350 0 85 660 Year 3 $300.00 $600.00 $0.00 $600.00 Year 2 Year 3

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Chart: Sales by Year

Chart: Sales Monthly

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5.4 Milestones Our milestones, listed in the table below, outline the major events that will promote, as well as insure the success of PC Repair and keep it a going concern well into the future. We will measure our success in meeting these milestones every month, and adjust the plan to keep up with our objectives. Name recognition, in particular, is very important to breaking into this market - we will conduct a survey by calling 200 randomly selected small businesses from the Chamber of Commerce listings on the specified dates and asking them whether they have heard of PC Repair, and if so, what their impression is of our service. If any of the respondents have actually used our services, we will elicit feedback on their experience with us, and suggestions for improvement. We will also ask if they would recommend us to a colleague. Table: Milestones

Milestones Milestone Procurement of materials for opening Start-up Ad Campaign Get Loan Approved Open Business Name Recognition by 5% of potential market Meet with Leasing Agent Interview potential Techs Move into Leased Space Sign on Leased Vehicle Targeted Ads Begin 1st Tech Starts 2nd Round Tech Interviews Direct marketing to Small Businesses Increase Name Recognition to 20% 2nd Tech Starts Totals Start Date 12/1/2004 12/15/2004 1/1/2005 2/7/2005 2/28/2005 3/1/2005 3/1/2005 4/1/2005 4/15/2005 4/15/2005 5/1/2005 7/1/2005 7/1/2005 8/1/2005 8/1/2005 End Date 2/1/2005 2/6/2005 1/17/2005 2/8/2005 2/28/2005 3/10/2005 4/25/2005 4/10/2005 4/20/2005 5/15/2005 5/1/2005 7/31/2005 9/30/2005 8/2/2005 8/7/2005 Budget $1,200 $1,200 $0 $0 $0 $0 $0 $2,000 $6,000 $4,000 $0 $0 $8,000 $0 $0 $22,400 Manager JMH JMH JMH JMH JMH JMH JMH JMH JMH JMH JMH JMH JMH JMH JMH Department Department Department Department Department Department Department Department Department Department Department Department Department Department Department Department

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Chart: Milestones

6.0 Management Summary PC Repair will be owned and managed by Jack Hacker. Jack has 10 years of experience in the fields of technical support, networking, and computer training and repair. Jack has also spent the last three years as the manager of a custom computer building and repair store, and understands the computer needs of small businesses. Jack is adept at managing his time, and at quickly responding to multiple customer calls and needs. For the first three months, Jack will be in charge of all aspects of the business. In the third month, when another tech is hired, Jack will shift some of his energy from directly responding to customer needs, to training and managing others to do this work effectively. Jack will maintain direct control over inventory ordering and bookkeeping, and will try to do as many of the on-site calls as possible himself. Part of our brand recognition strategy is to identify PC Repair with Jack's efficiency, friendliness, and technical expertise. The easiest way to associate the two is for Jack to be a major part of many customers' experiences with us. He will delegate technical repairs later in the year to the techs working in the leased office space, and will also train them in his method of direct phone support. Jack has worked extensively with computer technicians and support staff in the past, and knows that they work best when given free rein within a set of mutually-agreed-upon guidelines. The first week of each tech's employment will be dedicated to helping them understand PC Repair's guidelines: the customer needs help, and we're here to help them; the customer is frustrated, upset, or confused - but that doesn't make the customer a problem; the customer needs reassurance as well as solutions.

Within this framework, the techs can solve the customer's problem the best way they see fit Jack is not a micro manager.

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6.1 Personnel Plan Jack Hacker will be the only employee for the first few months; his salary is directly related to the success of the business, and will never exceed 18% of sales revenue. In the third month, we will move to a leased office space and hire a second employee, with a third hire planned for August, if projections are on target. We plan to hire additional part-time employees in the second year, to better handle the increasing sales. Our employees will be skilled professionals, with equally strong technical and people skills. It is very important to Jack that they be paid salaries commensurate with their abilities and dedication- happy tech support people make for happy customers. To that end, our full-time employees will receive health benefits (premiums split between the employee and PC Repair), paid holidays, and sick time. Those benefits are included in the payroll totals listed below. Table: Personnel

Personnel Plan Year 1 Owner Tech1 Tech2 Part Time Total People Total Payroll $33,000 $21,600 $14,400 $0 3 $69,000 Year 2 $38,000 $30,000 $30,000 $12,000 5 $110,000 Year 3 $40,000 $30,000 $30,000 $15,000 5 $115,000

7.0 Financial Plan The following sections include the annual estimates for the standard set of financial tables. Detailed monthly pro-forma tables are included in the appendix. Our financial plan calls for limited growth in the first three months, followed by much higher sales when we move and hire additional employees. These projections are based on sound market research and ratios for comparable businesses. As we grow, we will keep our operating expenses down, and maintain a positive cash balance as we repay our three-year loan. 7.1 Important Assumptions PC Repair's customer base would fluctuate if there was a recess in the economy or other extenuating circumstances that pertain directly to consumer or industry behavior. However, given the steady increase in computer users despite the recent recession, we assume that sales forecasts are unlikely to be dramatically altered by economic events. The table below shows some of our other assumptions. Table: General Assumptions

General Assumptions Year 1 Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Other 1 7.00% 10.00% 30.00% 0 Year 2 2 70.00% 10.00% 30.00% 0 Year 3 3 70.00% 10.00% 30.00% 0

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7.2 Break-even Analysis Fixed costs are projected at a monthly average for the first year. This includes payroll, moving expenses and rent, purchase of a company vehicle, and other necessities like cell phones and the answering service. Variable costs (inventory used in repairing or servicing computers) are projected as well. At these levels, what we need to bring in per month to break even is shown in the table and chart below. We will reach our break-even point mid-year, although we expect sales in November and December to dip below this level because of holidays.

Chart: Break-even Analysis

Table: Break-even Analysis

Break-even Analysis Monthly Units Break-even Monthly Revenue Break-even Assumptions: Average Per-Unit Revenue Average Per-Unit Variable Cost Estimated Monthly Fixed Cost $291.29 $70.00 $11,479 52 $15,110

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7.3 Projected Profit and Loss

The table below shows our projected profit and loss. There are two lines for direct cost of sales - the second line shows projected inventory costs of fulfilling our maintenance contracts. The marketing/promotion line shows our planned advertising program expenses. Although these are aggressive, we must spend heavily in the first year in order to establish the brand recognition that will help us break in to the local market. This table also shows our projected expense increases as we hire more employees and move into a larger rented space. Before the move, the owner will absorb expenses related to utilities. In years two and three, we have budgeted for additional expensed equipment to expand our diagnostic and repair capabilities to keep up with orders. We are seeking a modest net profit in the first year. As our reputation grows, we will see higher revenues and net profit over the next three years. Chart: Gross Margin Monthly

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Chart: Gross Margin Yearly

Table: Profit and Loss

Pro Forma Profit and Loss Year 1 Sales Direct Cost of Sales Costs of Fulfilling Maintenance Contracts Total Cost of Sales Gross Margin Gross Margin % $203,030 $42,604 $1,488 $44,092 $158,938 78.28% Year 2 $276,000 $55,800 $4,320 $60,120 $215,880 78.22% Year 3 $328,500 $64,350 $6,120 $70,470 $258,030 78.55%

Expenses Payroll Marketing/Promotion Depreciation Lease Expensed Equipment Insurance Website Answering Service Mileage Vehicles Cell Phones Utilities Internet Moving Expenses Total Operating Expenses Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred Net Profit Net Profit/Sales $69,000 $28,000 $0 $10,000 $0 $3,150 $2,080 $200 $2,660 $13,200 $1,260 $5,000 $1,200 $2,000 $137,750 $21,188 $21,188 $1,097 $6,027 $14,064 6.93% $110,000 $6,000 $0 $12,000 $10,000 $1,200 $480 $2,400 $5,400 $15,000 $1,260 $6,000 $1,200 $0 $170,940 $44,940 $44,940 $6,570 $11,511 $26,859 9.73% $115,000 $12,000 $0 $12,000 $12,000 $1,200 $480 $2,400 $5,400 $17,000 $1,260 $7,000 $1,200 $0 $186,940 $71,090 $71,090 $2,139 $20,685 $48,266 14.69%

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Chart: Profit Monthly

Chart: Profit Yearly

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7.4 Projected Cash Flow The Cash Flow chart, below, shows our projected cash position for the first year; the table following it shows highlights for the first three years. With the requested start-up funding, we will maintain a positive cash balance throughout, and repay the loan within three years.

Chart: Cash

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Table: Cash Flow

Pro Forma Cash Flow Year 1 Cash Received Cash from Operations Cash Sales Subtotal Cash from Operations Additional Cash Received 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 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 $6,564 $0 $0 $0 $0 $0 $186,437 $16,593 $44,593 $0 $6,550 $0 $0 $0 $0 $0 $259,093 $16,907 $61,500 $0 $6,111 $0 $0 $0 $0 $0 $284,486 $44,014 $105,514 $69,000 $110,873 $179,873 $110,000 $142,543 $252,543 $115,000 $163,375 $278,375 $0 $0 $0 $0 $0 $0 $0 $203,030 Year 1 $0 $0 $0 $0 $0 $0 $0 $276,000 Year 2 $0 $0 $0 $0 $0 $0 $0 $328,500 Year 3 $203,030 $203,030 $276,000 $276,000 $328,500 $328,500 Year 2 Year 3

7.5 Business Ratios Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 7379, Computer Related Services, (NAICS 811212) are shown for comparison. Our projected growth is much higher than the industry average; in part, this is because we are a start-up, growing sales steadily in these first three years. We are sure that our sales forecast is conservative, given the dissatisfaction among local computer users with existing options, and our planned aggressive marketing campaign.

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Table: Ratios

Ratio Analysis Year 1 Sales Growth Percent of Total Assets Inventory 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 Inventory Turnover 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 Additional Ratios Assets to Sales Current Debt/Total Assets Acid Test Sales/Net Worth Dividend Payout 0.29 43% 2.15 5.96 0.00 0.28 23% 4.03 4.53 0.00 0.37 11% 8.50 3.01 0.00 n.a n.a n.a n.a n.a $34,039 19.32 $60,898 6.84 $109,163 33.24 n.a n.a 0.75 1.00 0.29 1.00 0.12 1.00 n.a n.a 10.25 9.67 27 3.41 9.29 12.17 32 3.51 8.96 12.17 28 2.68 n.a n.a n.a n.a 2.34 2.15 42.77% 59.02% 33.78% Year 1 6.93% 41.32% 4.43 4.03 22.55% 63.01% 48.80% Year 2 9.73% 44.10% 9.03 8.50 11.07% 63.16% 56.17% Year 3 14.69% 44.21% n.a n.a 1.53 1.24 57.27% 2.73% 6.39% 100.00% 78.28% 38.70% 0.00% 10.44% 100.00% 78.22% 65.72% 0.00% 16.28% 100.00% 78.55% 64.96% 0.00% 21.64% 100.00% 100.00% 80.06% 1.23% 1.95% 8.22% 16.81% 100.00% 0.00% 100.00% 42.77% 0.00% 42.77% 57.23% 9.07% 12.72% 100.00% 0.00% 100.00% 22.55% 0.00% 22.55% 77.45% 5.90% 8.15% 100.00% 0.00% 100.00% 11.07% 0.00% 11.07% 88.93% 2.79% 51.19% 75.09% 24.91% 100.00% 31.75% 18.48% 50.23% 49.77% n.a. Year 2 35.94% Year 3 19.02% Industry Profile 5.23%

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7.6 Projected Balance Sheet The Balance Sheet shows a steadily increasing net worth over the next three years. Since we are planning to rent, and because computer technology changes so rapidly, we will have only short-term assets, such as computer equipment and furniture. This will make our net worth much more liquid than many similar businesses. Table: Balance Sheet

Pro Forma Balance Sheet Year 1 Assets Current Assets Cash Inventory 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 $12,783 $12,661 $0 $25,444 $0 $25,444 $23,000 ($3,025) $14,064 $34,039 $59,482 $34,039 $11,620 $6,111 $0 $17,731 $0 $17,731 $23,000 $11,039 $26,859 $60,898 $78,629 $60,898 $13,590 $0 $0 $13,590 $0 $13,590 $23,000 $37,898 $48,266 $109,163 $122,753 $109,163 $0 $0 $0 $59,482 Year 1 $0 $0 $0 $78,629 Year 2 $0 $0 $0 $122,753 Year 3 $44,593 $4,890 $10,000 $59,482 $61,500 $7,129 $10,000 $78,629 $105,514 $7,239 $10,000 $122,753 Year 2 Year 3

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Appendix
Table: Sales Forecast

Sales Forecast Month 1 Unit Sales Home PC Unit Small Business Unit Promo Maintenance Contracts Total Unit Sales Unit Prices Home PC Unit Small Business Unit Promo Maintenance Contracts Sales Home PC Unit Small Business Unit Promo Maintenance Contracts Total Sales Direct Unit Costs Home PC Unit Small Business Unit Promo Maintenance Contracts Direct Cost of Sales Home PC Unit Small Business Unit Promo Maintenance Contracts Subtotal Direct Cost of Sales $252 $315 $0 $0 $567 $420 $315 $0 $0 $735 $252 $315 $40 $0 $607 $1,260 $1,050 $120 $0 $2,430 $1,512 $2,625 $160 $0 $4,297 $1,680 $3,675 $0 $0 $5,355 $1,680 $4,200 $160 $0 $6,040 $1,680 $4,725 $160 $0 $6,565 $1,428 $5,250 $160 $0 $6,838 $1,260 $1,575 $0 $0 $2,835 $840 $1,050 $0 $0 $1,890 $1,680 $2,625 $140 $0 $4,445 30.00% 21.00% 8.00% 12.00% $840 $1,500 $0 $0 $2,340 Month 1 $84.00 $105.00 $4.00 $0.00 $1,400 $1,500 $0 $400 $3,300 Month 2 $84.00 $105.00 $4.00 $0.00 $840 $1,500 $500 $400 $3,240 Month 3 $84.00 $105.00 $4.00 $0.00 $4,200 $5,000 $1,500 $800 $11,500 Month 4 $84.00 $105.00 $4.00 $0.00 $5,040 $12,500 $2,000 $1,200 $20,740 Month 5 $84.00 $105.00 $4.00 $0.00 $5,600 $17,500 $0 $1,200 $24,300 Month 6 $84.00 $105.00 $4.00 $0.00 $5,600 $20,000 $2,000 $1,200 $28,800 Month 7 $84.00 $105.00 $4.00 $0.00 $5,600 $22,500 $2,000 $1,600 $31,700 Month 8 $84.00 $105.00 $4.00 $0.00 $4,760 $25,000 $2,000 $1,600 $33,360 Month 9 $84.00 $105.00 $4.00 $0.00 $4,200 $7,500 $0 $1,200 $12,900 Month 10 $84.00 $105.00 $4.00 $0.00 $2,800 $5,000 $0 $1,600 $9,400 Month 11 $84.00 $105.00 $4.00 $0.00 $5,600 $12,500 $1,750 $1,600 $21,450 Month 12 $84.00 $105.00 $4.00 $0.00 3 3 0 0 6 Month 1 $280.00 $500.00 $50.00 $400.00 5 3 0 1 9 Month 2 $280.00 $500.00 $50.00 $400.00 3 3 10 1 17 Month 3 $280.00 $500.00 $50.00 $400.00 15 10 30 2 57 Month 4 $280.00 $500.00 $50.00 $400.00 18 25 40 3 86 Month 5 $280.00 $500.00 $50.00 $400.00 20 35 0 3 58 Month 6 $280.00 $500.00 $50.00 $400.00 20 40 40 3 103 Month 7 $280.00 $500.00 $50.00 $400.00 20 45 40 4 109 Month 8 $280.00 $500.00 $50.00 $400.00 17 50 40 4 111 Month 9 $280.00 $500.00 $50.00 $400.00 15 15 0 3 33 Month 10 $280.00 $500.00 $50.00 $400.00 10 10 0 4 24 Month 11 $280.00 $500.00 $50.00 $400.00 20 25 35 4 84 Month 12 $280.00 $500.00 $50.00 $400.00 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

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Appendix
Table: Personnel

Personnel Plan Month 1 Owner Tech1 Tech2 Part Time Total People Total Payroll 0% 0% 0% 0% $2,000 $0 $0 $0 1 $2,000 Month 2 $2,000 $0 $0 $0 1 $2,000 Month 3 $2,500 $0 $0 $0 1 $2,500 Month 4 $2,500 $2,400 $0 $0 2 $4,900 Month 5 $3,000 $2,400 $0 $0 2 $5,400 Month 6 $3,000 $2,400 $0 $0 2 $5,400 Month 7 $3,000 $2,400 $2,400 $0 3 $7,800 Month 8 $3,000 $2,400 $2,400 $0 3 $7,800 Month 9 $3,000 $2,400 $2,400 $0 3 $7,800 Month 10 $3,000 $2,400 $2,400 $0 3 $7,800 Month 11 $3,000 $2,400 $2,400 $0 3 $7,800 Month 12 $3,000 $2,400 $2,400 $0 3 $7,800

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Appendix
Table: General Assumptions

General Assumptions Month 1 Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Other 1 7.00% 10.00% 30.00% 0 Month 2 2 7.00% 10.00% 30.00% 0 Month 3 3 7.00% 10.00% 30.00% 0 Month 4 4 7.00% 10.00% 30.00% 0 Month 5 5 7.00% 10.00% 30.00% 0 Month 6 6 7.00% 10.00% 30.00% 0 Month 7 7 7.00% 10.00% 30.00% 0 Month 8 8 7.00% 10.00% 30.00% 0 Month 9 9 7.00% 10.00% 30.00% 0 Month 10 10 7.00% 10.00% 30.00% 0 Month 11 11 7.00% 10.00% 30.00% 0 Month 12 12 7.00% 10.00% 30.00% 0

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Appendix
Table: Profit and Loss

Pro Forma Profit and Loss Month 1 Sales Direct Cost of Sales Costs of Fulfilling Maintenance Contracts Total Cost of Sales Gross Margin Gross Margin % $2,340 $567 $0 $567 $1,773 75.77% Month 2 $3,300 $735 $0 $735 $2,565 77.73% Month 3 $3,240 $607 $48 $655 $2,585 79.78% Month 4 $11,500 $2,430 $96 $2,526 $8,974 78.03% Month 5 $20,740 $4,297 $144 $4,441 $16,299 78.59% Month 6 $24,300 $5,355 $144 $5,499 $18,801 77.37% Month 7 $28,800 $6,040 $144 $6,184 $22,616 78.53% Month 8 $31,700 $6,565 $192 $6,757 $24,943 78.68% Month 9 $33,360 $6,838 $192 $7,030 $26,330 78.93% Month 10 $12,900 $2,835 $144 $2,979 $9,921 76.91% Month 11 $9,400 $1,890 $192 $2,082 $7,318 77.85% Month 12 $21,450 $4,445 $192 $4,637 $16,813 78.38%

Expenses Payroll Marketing/Promotion Depreciation Lease Expensed Equipment Insurance Website Answering Service Mileage Vehicles Cell Phones Utilities Internet Moving Expenses Total Operating Expenses Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred Net Profit Net Profit/Sales 15% $2,000 $4,000 $0 $0 $0 $150 $40 $200 $80 $0 $0 $0 $0 $0 $6,470 ($4,697) ($4,697) $109 ($1,442) ($3,364) -143.77% $2,000 $1,000 $0 $0 $0 $0 $40 $0 $85 $0 $60 $0 $0 $0 $3,185 ($620) ($620) $106 ($218) ($508) -15.39% $2,500 $3,000 $0 $1,000 $0 $300 $200 $0 $95 $6,000 $120 $500 $120 $2,000 $15,835 ($13,250) ($13,250) $103 ($4,006) ($9,347) -288.48% $4,900 $2,000 $0 $1,000 $0 $300 $200 $0 $100 $800 $120 $500 $120 $0 $10,040 ($1,066) ($1,066) $99 ($350) ($816) -7.09% $5,400 $2,000 $0 $1,000 $0 $300 $200 $0 $200 $800 $120 $500 $120 $0 $10,640 $5,659 $5,659 $96 $1,669 $3,894 18.78% $5,400 $3,000 $0 $1,000 $0 $300 $200 $0 $300 $800 $120 $500 $120 $0 $11,740 $7,061 $7,061 $93 $2,090 $4,878 20.07% $7,800 $3,000 $0 $1,000 $0 $300 $200 $0 $300 $800 $120 $500 $120 $0 $14,140 $8,476 $8,476 $90 $2,516 $5,870 20.38% $7,800 $2,000 $0 $1,000 $0 $300 $200 $0 $300 $800 $120 $500 $120 $0 $13,140 $11,803 $11,803 $87 $3,515 $8,201 25.87% $7,800 $2,000 $0 $1,000 $0 $300 $200 $0 $300 $800 $120 $500 $120 $0 $13,140 $13,190 $13,190 $83 $3,932 $9,175 27.50% $7,800 $2,000 $0 $1,000 $0 $300 $200 $0 $300 $800 $120 $500 $120 $0 $13,140 ($3,219) ($3,219) $80 ($990) ($2,309) -17.90% $7,800 $2,000 $0 $1,000 $0 $300 $200 $0 $300 $800 $120 $500 $120 $0 $13,140 ($5,822) ($5,822) $77 ($1,770) ($4,129) -43.93% $7,800 $2,000 $0 $1,000 $0 $300 $200 $0 $300 $800 $120 $500 $120 $0 $13,140 $3,673 $3,673 $74 $1,080 $2,519 11.75%

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Appendix
Table: Cash Flow

Pro Forma Cash Flow Month 1 Cash Received Cash from Operations Cash Sales Subtotal Cash from Operations Additional Cash Received 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 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 $547 $0 $0 $0 $0 $0 $2,652 ($312) $27,688 $0 $547 $0 $0 $0 $0 $0 $5,649 ($2,349) $25,340 $0 $547 $0 $0 $0 $0 $0 $5,400 ($2,160) $23,179 $0 $547 $0 $0 $0 $0 $0 $15,871 ($4,371) $18,809 $0 $547 $0 $0 $0 $0 $0 $14,901 $5,839 $24,647 $0 $547 $0 $0 $0 $0 $0 $19,503 $4,797 $29,444 $0 $547 $0 $0 $0 $0 $0 $23,556 $5,244 $34,688 $0 $547 $0 $0 $0 $0 $0 $24,243 $7,457 $42,145 $0 $547 $0 $0 $0 $0 $0 $24,637 $8,723 $50,868 $0 $547 $0 $0 $0 $0 $0 $24,629 ($11,729) $39,139 $0 $547 $0 $0 $0 $0 $0 $12,897 ($3,497) $35,642 $0 $547 $0 $0 $0 $0 $0 $12,499 $8,951 $44,593 $2,000 $105 $2,105 $2,000 $3,102 $5,102 $2,500 $2,353 $4,853 $4,900 $10,424 $15,324 $5,400 $8,954 $14,354 $5,400 $13,556 $18,956 $7,800 $15,209 $23,009 $7,800 $15,896 $23,696 $7,800 $16,290 $24,090 $7,800 $16,282 $24,082 $7,800 $4,550 $12,350 $7,800 $4,152 $11,952 0.00% $0 $0 $0 $0 $0 $0 $0 $2,340 Month 1 $0 $0 $0 $0 $0 $0 $0 $3,300 Month 2 $0 $0 $0 $0 $0 $0 $0 $3,240 Month 3 $0 $0 $0 $0 $0 $0 $0 $11,500 Month 4 $0 $0 $0 $0 $0 $0 $0 $20,740 Month 5 $0 $0 $0 $0 $0 $0 $0 $24,300 Month 6 $0 $0 $0 $0 $0 $0 $0 $28,800 Month 7 $0 $0 $0 $0 $0 $0 $0 $31,700 Month 8 $0 $0 $0 $0 $0 $0 $0 $33,360 Month 9 $0 $0 $0 $0 $0 $0 $0 $12,900 Month 10 $0 $0 $0 $0 $0 $0 $0 $9,400 Month 11 $0 $0 $0 $0 $0 $0 $0 $21,450 Month 12 $2,340 $2,340 $3,300 $3,300 $3,240 $3,240 $11,500 $11,500 $20,740 $20,740 $24,300 $24,300 $28,800 $28,800 $31,700 $31,700 $33,360 $33,360 $12,900 $12,900 $9,400 $9,400 $21,450 $21,450 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

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Table: Balance Sheet

Pro Forma Balance Sheet Month 1 Assets Current Assets Cash Inventory 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 $0 $19,225 $0 $19,225 $0 $19,225 $23,000 ($3,025) $0 $19,975 $39,200 $19,975 $3,033 $18,678 $0 $21,711 $0 $21,711 $23,000 ($3,025) ($3,364) $16,611 $38,321 $16,611 $2,004 $18,131 $0 $20,135 $0 $20,135 $23,000 ($3,025) ($3,872) $16,103 $36,238 $16,103 $10,130 $17,584 $0 $27,714 $0 $27,714 $23,000 ($3,025) ($13,219) $6,756 $34,470 $6,756 $8,505 $17,037 $0 $25,542 $0 $25,542 $23,000 ($3,025) ($14,035) $5,940 $31,482 $5,940 $13,050 $16,490 $0 $29,540 $0 $29,540 $23,000 ($3,025) ($10,141) $9,834 $39,374 $9,834 $14,680 $15,943 $0 $30,623 $0 $30,623 $23,000 ($3,025) ($5,263) $14,712 $45,335 $14,712 $15,354 $15,396 $0 $30,750 $0 $30,750 $23,000 ($3,025) $607 $20,582 $51,332 $20,582 $15,733 $14,849 $0 $30,582 $0 $30,582 $23,000 ($3,025) $8,809 $28,784 $59,366 $28,784 $16,130 $14,302 $0 $30,432 $0 $30,432 $23,000 ($3,025) $17,983 $37,958 $68,390 $37,958 $4,422 $13,755 $0 $18,177 $0 $18,177 $23,000 ($3,025) $15,674 $35,649 $53,826 $35,649 $3,711 $13,208 $0 $16,919 $0 $16,919 $23,000 ($3,025) $11,544 $31,519 $48,439 $31,519 $12,783 $12,661 $0 $25,444 $0 $25,444 $23,000 ($3,025) $14,064 $34,039 $59,482 $34,039 $0 $0 $0 $39,200 $0 $0 $0 $38,321 Month 1 $0 $0 $0 $36,238 Month 2 $0 $0 $0 $34,470 Month 3 $0 $0 $0 $31,482 Month 4 $0 $0 $0 $39,374 Month 5 $0 $0 $0 $45,335 Month 6 $0 $0 $0 $51,332 Month 7 $0 $0 $0 $59,366 Month 8 $0 $0 $0 $68,390 Month 9 $0 $0 $0 $53,826 Month 10 $0 $0 $0 $48,439 Month 11 $0 $0 $0 $59,482 Month 12 $28,000 $1,200 $10,000 $39,200 $27,688 $633 $10,000 $38,321 $25,340 $898 $10,000 $36,238 $23,179 $1,291 $10,000 $34,470 $18,809 $2,673 $10,000 $31,482 $24,647 $4,727 $10,000 $39,374 $29,444 $5,891 $10,000 $45,335 $34,688 $6,644 $10,000 $51,332 $42,145 $7,222 $10,000 $59,366 $50,868 $7,522 $10,000 $68,390 $39,139 $4,687 $10,000 $53,826 $35,642 $2,797 $10,000 $48,439 $44,593 $4,890 $10,000 $59,482 Starting Balances Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

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