02/24/2011

14:28:39

Financial Projections Model

For Business Plans

Frank Moyes and Stephen

Lawrence

Deming Center for Entrepreneurship

Leeds College of Business
University of Colorado
Boulder, Colorado

Copyright © 2003 by the Regents of the University of

Colorado
 02/24/2011
14:28:40

Instructions
Financial Projections Model
v6.8.3

This financial model is designed to enable entrepreneurs and students project the
financial results of their ventures for a five-year period. As with all models there are
certain simplifying assumptions that have been made. Each of the assumption
spreadsheets has an accompanying Comments box (denoted by a cell with small red
triangle in the upper right corner) that provides suggestions on how to complete the
spreadsheet and the underlying assumptions to the model.

You will notice that the cells in the spreadsheet are color-coded. This has been done to
assist you in entering data, creating or changing formulae, or deleting data, formulae
and links.

Enter data and information in Green shaded cells only.

Blue shaded cells calculate results within a spreadsheet.
Data in Yellow shaded cells is transferred to other worksheets.
Purple shaded cells bring in data from other spreadsheets.

In the Green and Blue shaded cells, data and formulas may changed, moved or deleted.
The current calculations are for illustration only -- you will need to tailor these
spreadsheets to fit your plan.

In the Yellow shaded cells data and formulas may be changed, but not deleted.

DO NOT delete the Purple shaded cells -- they link one spreadsheet with others.

There are 7 principal spreadsheet outputs of this model:

INCOME: Income Statement
BALANCE: Balance Sheet
CASHFLOW: Cash Flow Statement
BREAKEVEN: Break-even analysis
SUMMARY: Analysis of key measures
INCOME-MOS: Income Statements by months for Years 1 to 5
CASHFLOW-MOS: Cash flow Statements by months for Years 1 and 2, and
by quarters for Years 3 to 5
VAL-1 & VAL-2: Venture capital method for valuing companies
 INCOME: Income Statement
BALANCE: Balance Sheet
CASHFLOW: Cash Flow Statement
BREAKEVEN: Break-even analysis 02/24/2011
SUMMARY: Analysis of key measures 14:28:40
INCOME-MOS: Income Statements by months for Years 1 to 5
CASHFLOW-MOS: Cash flow Statements by months for Years 1 and 2, and
by quarters for Years 3 to 5
VAL-1 & VAL-2: Venture capital method for valuing companies

All other spreadsheets are to be used for calculating the underlying assumptions of the
7 principal spreadsheets:

COMPS: Comparison of financial measures to peer companies

REVENUE: Revenue Projections
COST OF REV: Cost of Goods Sold
OPER EXPEN: Operating Expenses
PROP & EQUIP: Capital Expenditures, Depreciation, and Net Fixed Assets
SALARIES: Salary Personnel
EXTRA: Extraordinary Income and Expense
TAXES: Tax calculation
WORKCAP: Working Capital
FUNDING: Equity, Debt, Interest Expense, Interest Income, Dividends and
Retained Earnings

These assumption spreadsheets are linked to each other and to the 7 principal
spreadsheets. When you make a change in one of the spreadsheets, the impact is
automatically recalculated for all other spreadsheets.

When doing financial projections, it is easy to get lost in the trees and lose the sense of
what is reality. Most errors can be identified if you continuously ask yourself “Does this
result make sense?” The COMPS spreadsheet, where you look at peer companies, can
be particularly helpful as a reality test.

There is an example in the model with which you can experiment. When you are ready
to start your own projections, clear all the numbers in the green shaded cells, and then
you can begin to enter new numbers. Enter the name of your company in the first cell of
the COMPS spreadsheet. Before you begin, make a copy of the model on a separate
disk.

This original version of the model has been used since the mid-1980’s. It has undergone
numerous revisions over that period. Since 1998, students in the Business Plan
Preparation course at the University of Colorado have used it to prepare their business
plans. We have appreciated their suggestions for improvements and would encourage
all users to send us comments and suggestions.
you can begin to enter new numbers. Enter the name of your company in the first cell of
the COMPS spreadsheet. Before you begin, make a copy of the model on a separate
disk.
02/24/2011
This original version of the model has been used since the mid-1980’s. It has undergone 14:28:40
numerous revisions over that period. Since 1998, students in the Business Plan
Preparation course at the University of Colorado have used it to prepare their business
plans. We have appreciated their suggestions for improvements and would encourage
all users to send us comments and suggestions.

Created by Frank Moyes and Stephen Lawrence

Deming Center for Entrepreneurship
Leeds School of Business
University of Colorado
Boulder, Colorado

Copyright © 2001 by the Regents of the University of Colorado

 02/24/2011
14:28:40

XYZ Company Notes

Peer Company Comparisons

Select Best
Company A
Company B
Company CComparison Projections
Ratios Year 1 Year 2 Year 3 Year 4 Year 5
Accounts Receivable % of Rev 10.0% 10.0% 8.3% 8.3% 8.3% 8.3% 8.3%
Inventory % of Rev 15.0% 15.0% 8.3% 8.3% 6.7% 6.7% 6.7%
Accounts Payable % of Rev 8.0% 8.0% 8.7% 8.7% 8.7% 8.7% 8.7%
Working Capital % of Rev 16.0% 16.0% 7.9% 7.9% 6.3% 6.3% 6.3%
Net Fixed Assets % of Rev 9.0% 9.0% 23.7% 11.5% 9.3% 7.3% 5.5%
Current Ratio 2.3 2.3 4.2 2.0 2.0 1.9 2.1
Debt to Capital (LT Debt + Equity) 1.2 1.2 0.00 0.32 0.18 0.10 0.04

Profitability
Gross Profit % of Rev 30.0% 30.0% -11.7% 32.7% 41.5% 42.5% 46.0%
Sales & Marketing % of Rev 30.0% 22.9% 19.0% 18.5% 17.9% 18.0%
Research & Development % of Rev 30.0% 14.9% 7.9% 7.2% 7.6% 6.7%
General & Administration % of Rev 30.0% 17.2% 8.9% 8.1% 7.3% 6.8%
Operating Expenses % of Rev 40.0% 17.0% 55.0% 35.7% 33.8% 32.9% 31.5%
Earnings from Operations % of Rev 12.0% 12.0% -66.7% -3.0% 7.7% 9.6% 14.5%
EBIT % of Rev 12.0% 12.0% -71.2% -3.0% 7.7% 9.6% 14.5%
Depreciation % of Rev 3.0% 3.0% 4.3% 2.5% 2.5% 2.3% 2.0%
EBITDA % of Rev 14.0% 14.0% -66.9% -0.5% 10.2% 11.9% 16.5%
Net Earnings % of Rev 5.0% 5.0% -71.2% -4.2% 7.2% 6.2% 8.7%

Returns
Return on Assets 12.0% 12.0% -74.1% -9.5% 21.7% 20.0% 27.2%
Return on Equity 15.0% 15.0% -90.4% -20.4% 39.7% 36.1% 45.2%
Return on Capital (LT Debt + Equity) 15.0% 15.0% -90.4% -13.9% 32.4% 32.6% 43.5%

Growth
Revenue Growth Rate - CAGR: 15.0% 15.0% 425.0% 85.7% 66.7% 60.0%
Net Earnings Growth Rate - CAGR: 12.0% 12.0% Negative Negative 42.3% 124.6%
 02/24/2011
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XYZ Company
Revenue Projections
Years 1 to 5
($)
Year 1 Year 2 Year 3 Year 4 Year 5
Product A
Number of Units 20000 75000 150000 250000 400000
Price per unit 50 50 45 45 40
Total 1000000 3750000 6750000 11250000 16000000
Service B
Number of Customers 50000 100000 200000 500000
Fee per Customer 30 30 25 20
Total 1500000 3000000 5000000 10000000

Net Revenue 1000000 5250000 9750000 16250000 26000000

Revenues by Months & Quarters

($)
Months Year 1 Year 2 Year 3 Year 4 Year 5
Month 1 262500
Month 2 262500
Month 3 367500
Total 1st Quarter 892500 2000000 3000000 5000000
Month 4 50000 315000
Month 5 80000 367500
Month 6 100000 367500
Total 2nd Quarter 230000 1050000 2500000 4000000 6000000
Month 7 100000 420000
Month 8 120000 525000
Month 9 150000 525000
Total 3rd Quarter 370000 1470000 2500000 4500000 7000000
Month 10 120000 577500
Month 11 130000 630000
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Month 12 150000 630000
Total 4th Quarter 400000 1837500 2750000 4750000 8000000
Total for year 1000000 5250000 9750000 16250000 26000000

Average Revenue
by Month 83333 437500 812500 1354167 2166667
by Quarter 250000 1312500 2437500 4062500 6500000
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XYZ Company
Cost of Revenues
Years 1 to 5
($)
Year 1 Year 2 Year 3 Year 4 Year 5

Revenue 1000000 5250000 9750000 16250000 26000000

Cost of Revenue

Product A
Material Costs per Unit 15.00 14.00 11.00 10.00 9.00
Subcontact Costs per Unit 10.00 10.00 7.00 6.50 6.00
Total Direct Costs per Unit 25.00 24.00 18.00 16.50 15.00
Unit Sales 20000 75000 150000 250000 400000
Total Direct Costs 500000 1800000 2700000 4125000 6000000
Labor Costs 69000 227700 552000 864000 1200000
Total Direct Costs 569000 2027700 3252000 4989000 7200000

Service B
Service Personnel Costs 120750 212750 480000 1500000 2750000

Other Expenses
Salary Expenses 276000 690000 990000 1410000 2000000
Depreciation 36714 91714 137429 190286 243143
Facility costs (rent, energy) 50000 200000 300000 300000 450000
System Costs 25000 100000 150000 300000 350000

All other costs % of Revenue 4% 40000 210000 390000 650000 1040000

Total Cost of Revenues 1117464 3532164 5699429 9339286 14033143
% of Revenue 111.7% 67.3% 58.5% 57.5% 54.0%

Allocation of Cost of Revenue between:

Variable 729750 2450450 4122000 7139000 10990000
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Fixed 387714 1081714 1577429 2200286 3043143
Total 1117464 3532164 5699429 9339286 14033143

Cost of Revenues by Months & Quarters

($)
Year 1 Year 2 Year 3 Year 4 Year 5
Month 1 176608
Month 2 176608
Month 3 247252
Total 1st Quarter 600468 1169114 1724176 2698681
Month 4 55873 211930
Month 5 89397 247252
Month 6 111746 247252
Total 2nd Quarter 257017 706433 1461392 2298901 3238418
Month 7 111746 282573
Month 8 134096 353216
Month 9 167620 353216
Total 3rd Quarter 413462 989006 1461392 2586264 3778154
Month 10 134096 388538
Month 11 145270 423860
Month 12 167620 423860
Total 4th Quarter 446986 1236258 1607531 2729945 4317890
Total for year 1117464 3532164 5699429 9339286 14033143
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XYZ Company
Operating Expenses
Years 1 to 5
($)
Year 1 Year 2 Year 3 Year 4 Year 5

Net Revenues 1000000 5250000 9750000 16250000 26000000

Sales & Marketing

Drivers
Salaries and Benefits 69000 270250 432900 624000 816000
Commissions % of Revenue 5% 50000 262500 487500 812500 1300000
Direct Mail Campaign 50000 150000 300000 500000 1000000

All other expenses % of Revenue 6% 60000 315000 585000 975000 1560000

Total Sales and Marketing 229000 997750 1805400 2911500 4676000
% of Revenue 22.9% 19.0% 18.5% 17.9% 18.0%

Research & Development

Drivers
Salaries and Benefits 69000 195500 310050 504000 672000
Testing 50000 60000 100000 250000 300000

All other expenses % of Revenue 3% 30000 157500 292500 487500 780000

Total Reaserch & Development 149000 413000 702550 1241500 1752000
% of Revenue 14.9% 7.9% 7.2% 7.6% 6.7%

General & Administration

Drivers
Salaries and Benefits 125000 300150 388440 573600 784800
Depreciation 6667 40000 106667 183333 266667
Rent and Utilities 20000 20000 100000 110000 200000

All other expenses % of Revenue 2% 20000 105000 195000 325000 520000

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Total General & Administration 171667 465150 790107 1191933 1771467

% of Revenue 17.2% 8.9% 8.1% 7.3% 6.8%

Total Operating Expenses 549667 1875900 3298057 5344933 8199467

% of Revenue 55.0% 35.7% 33.8% 32.9% 31.5%

Allocation of Operating Expenses between:

Vaiable 160000 840000 1560000 2600000 4160000
Fixed 389667 1035900 1738057 2744933 4039467
Total 549667 1875900 3298057 5344933 8199467
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Sales & Marketing by Months & Quarters

($)
Year 1 Year 2 Year 3 Year 4 Year 5
Month 1 49888
Month 2 49888
Month 3 69843
Total 1st Quarter 169618 370338 537508 899231
Month 4 11450 59865
Month 5 18320 69843
Month 6 22900 69843
Total 2nd Quarter 52670 199550 462923 716677 1079077
Month 7 22900 79820
Month 8 27480 99775
Month 9 34350 99775
Total 3rd Quarter 84730 279370 462923 806262 1258923
Month 10 27480 109753
Month 11 29770 119730
Month 12 34350 119730
Total 4th Quarter 91600 349213 509215 851054 1438769
Total for year 229000 997750 1805400 2911500 4676000

Research & Development by Months & Quarters

($)
Year 1 Year 2 Year 3 Year 4 Year 5
Month 1 20650
Month 2 20650
Month 3 28910
Total 1st Quarter 70210 144113 229200 336923
Month 4 7450 24780
Month 5 11920 28910
Month 6 14900 28910
Total 2nd Quarter 34270 82600 180141 305600 404308
Month 7 14900 33040
Month 8 17880 41300
Month 9 22350 41300
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Total 3rd Quarter 55130 115640 180141 343800 471692
Month 10 17880 45430
Month 11 19370 49560
Month 12 22350 49560
Total 4th Quarter 59600 144550 198155 362900 539077
Total for year 149000 413000 702550 1241500 1752000

General & Administrative by Months & Quarters

($)
Year 1 Year 2 Year 3 Year 4 Year 5
Month 1 23258
Month 2 23258
Month 3 32561
Total 1st Quarter 79076 162073 220049 340667
Month 4 8583 27909
Month 5 13733 32561
Month 6 17167 32561
Total 2nd Quarter 39483 93030 202591 293399 408800
Month 7 17167 37212
Month 8 20600 46515
Month 9 25750 46515
Total 3rd Quarter 63517 130242 202591 330074 476933
Month 10 20600 51167
Month 11 22317 55818
Month 12 25750 55818
Total 4th Quarter 68667 162803 222851 348411 545067
Total for year 171667 465150 790107 1191933 1771467
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XYZ Company
Personnel
Years 1 to 5
($)
Year 1 Year 2 Year 3 Year 4 Year 5

Net Revenues 1000000 5250000 9750000 16250000 26000000

Sales & Marketing

Sales Manager 60000 80000 100000 125000 150000
Marketing Manager 80000 100000 125000 150000
Customer service 40000 120000 200000 250000
Tech support 35000 50000 70000 130000
(other…)
(other…)
(other…)
Total Salary 60000 235000 370000 520000 680000
Benefits
Percent (%) 15% 15% 17% 20% 20%
Total benefit costs 9000 35250 62900 104000 136000
Total S & M Compensation 69000 270250 432900 624000 816000
% of Revenue 6.9% 5.1% 4.4% 3.8% 3.1%

Research and Development

R & D Manager 80000 100000 125000 150000
Engineers 60000 60000 130000 230000 300000
Technicians 30000 35000 65000 110000
Subcontract
(other…)
(other…)
Total Salary 60000 170000 265000 420000 560000
Benefits
Percent (%) 15% 15% 17% 20% 20%
Total benefit costs 9000 25500 45050 84000 112000
Total R & D Compensation 69000 195500 310050 504000 672000
% of Revenue 6.9% 3.7% 3.2% 3.1% 2.6%
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General & Administration

Chief Executive Officer 60000 80000 100000 125000 150000
Chief Financial Officer 50000 60000 75000 100000
Accounting 40000 45000 25000 50000 75000
Secretarial 25000 26000 27000 28000 29000
Clerks and admin personnel 60000 120000 200000 300000
(other…)
(other…)
Total Salary 125000 261000 332000 478000 654000
Benefits
Percent (%) 15% 15% 17% 20% 20%
Total benefit costs 39150 56440 95600 130800
Total G & A Compensation 125000 300150 388440 573600 784800
% of Revenue 12.5% 5.7% 4.0% 3.5% 3.0%
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Cost of Revenue
Manufacturing Personnel
Operations Manager 100000 125000 150000 175000 200000
Quality Assurance 50000 100000 150000 300000 350000
Materials and Logistics 40000 150000 200000 300000 450000
Engineering 75000 125000 150000 300000
Other personnel 50000 150000 200000 250000 300000
(other...)
Total Salary 240000 600000 825000 1175000 1600000
Benefits
Percent (%) 15% 15% 20% 20% 25%
Total benefit costs 36000 90000 165000 235000 400000
Total Salary Costs 276000 690000 990000 1410000 2000000
Hourly Personnel
Number of employees 3 9 20 30 40
Average wages per employee 20000 22000 23000 24000 24000
Total wages 60000 198000 460000 720000 960000
Benefits
Percent (%) 15% 15% 20% 20% 25%
Total benefit costs 9000 29700 92000 144000 240000
Total Wage Costs 69000 227700 552000 864000 1200000
Service Personnel
Number of employees 3 5 10 25 40
Salary per employee 35000 37000 40000 50000 55000
Total salaries 105000 185000 400000 1250000 2200000
Benefits
Percent (%) 15% 15% 20% 20% 25%
Total benefit costs 15750 27750 80000 250000 550000
Total Salary Costs 120750 212750 480000 1500000 2750000

Total COR's Compensation 465750 1130450 2022000 3774000 5950000

% of Revenue 46.6% 21.5% 20.7% 23.2% 22.9%

Total Salary & Wages 545000 1464000 2252000 3313000 4454000

Total Benefits 63000 219600 421390 662600 1018800
Total Compensation 728750 1896350 3153390 5475600 8222800
% of Revenue 72.9% 36.1% 32.3% 33.7% 31.6%
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XYZ Company
Extraordinary Income & Expense
Years 1 to 5
($)
Year 1 Year 2 Year 3 Year 4 Year 5

Income
(Item…)
(Item…)
(Item…)
Total
Start-up expenses
Legal 25000
Relocation 20000
(Item…)
Total 45000
Total Extraordinary Income/(Expense) -45000

Extraordinary Income and Expense by Months & Quarters

($)
Year 1 Year 2 Year 3 Year 4 Year 5
Month 1 -25000
Month 2 -20000
Month 3
Total 1st Quarter -45000
Month 4
Month 5
Month 6
Total 2nd Quarter
Month 7
Month 8
Month 9
Total 3rd Quarter
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Month 10
Month 11
Month 12
Total 4th Quarter
Total for year -45000
 02/24/2011
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XYZ Company
Taxes
Years 1 to 5
($)
Year 1 Year 2 Year 3 Year 4 Year 5

Net Revenues 1000000 5250000 9750000 16250000 26000000

Income Tax (Rate Federal & State) 0.40 0.40 0.40 0.40 0.40

Net Earnings Before Taxes -712131 -218064 704515 1520781 3753390

Cumulative -712131 -930195 -225681 1295100 5048491

Taxes -518040 -1501356

Percent of Revenues 0.0% 0.0% 0.0% -3.2% -5.8%
 02/24/2011
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XYZ Company
Property and Equipment
Years 1 to 5
($)
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Purchased
Net Revenues Assets 1000000 5250000 9750000 16250000 26000000

Capital Expenditures
Computers, Software & Office Equipment 20000 100000 200000 250000 350000
Plant & Equipment 250000 350000 250000 300000 300000
Other 10000 50000 100000 100000 100000
Total Capital Expenditures 280000 500000 550000 650000 750000
% of Revenue 28.0% 9.5% 5.6% 4.0% 2.9%

Depreciation Computers, Sofware & Office Equipment (allocated to General & Administrative Expenses)
Depreciation Rate: Years 1 3 3 3 3 3
Year 0
Year 1 6667 6667 6667
Year 2 33333 33333 33333
Year 3 66667 66667 66667
Year 4 83333 83333
Year 5 116667
Total Depreciation 6667 40000 106667 183333 266667

Depreciation on Plant and Equipment (allocated to Cost of Revenue)

Depreciation Rate: Years 1 7 7 7 7 7
Year 0
Year 1 35714 35714 35714 35714 35714
Year 2 50000 50000 50000 50000
Year 3 35714 35714 35714
Year 4 42857 42857
Year 5 42857
Total Depreciation 35714 85714 121429 164286 207143

Depreciation Other (allocated to Cost of Revenue)

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Depreciation Rate: Years 1 10 10 10 10 10
Year 0
Year 1 1000 1000 1000 1000 1000
Year 2 5000 5000 5000 5000
Year 3 10000 10000 10000
Year 4 10000 10000
Year 5 10000
Total Depreciation 1000 6000 16000 26000 36000

Total Depreciation 43381 131714 244095 373619 509810

% of Revenue 4.3% 2.5% 2.5% 2.3% 2.0%

Property & Equipment

Gross Asset Value 280000 780000 1330000 1980000 2730000
Accumulated Depreciation 43381 175095 419190 792810 1302619
Net Property and Equipment 236619 604905 910810 1187190 1427381
% of Revenue 23.7% 11.5% 9.3% 7.3% 5.5%

Capital Expenditures by Months & Quarters

($)
Year 1 Year 2 Year 3 Year 4 Year 5
Month 1 50000 100000
Month 2 100000 100000
Month 3 50000
Total 1st Quarter 200000 200000 100000 200000 200000
Month 4 40000
Month 5
Month 6 100000
Total 2nd Quarter 40000 100000 200000 200000 200000
Month 7 40000
Month 8
Month 9 100000
Total 3rd Quarter 40000 100000 100000 100000 200000
Month 10
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Month 11
Month 12 100000
Total 4th Quarter 100000 150000 150000 150000
Total for year 280000 500000 550000 650000 750000
 02/24/2011
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XYZ Company
Working Capital
Years 1 to 5
($)
Year 1 Year 2 Year 3 Year 4 Year 5
Net Revenues 1000000 5250000 9750000 16250000 26000000

Accounts Receivable
% of Revenue 8.3% 8.3% 8.3% 8.3% 8.3%
Days Outstanding 30 30 30 30 30
Accounts Receivable 149400 627480 913000 1577000 2656000
(Increase)/Decrease from Prev. Period -149400 -478080 -285520 -664000 -1079000

Inventory
% of Revenue 8.3% 8.3% 6.7% 6.7% 6.7%
Inventory Turns 12 12 15 15 15
Inventory Days 30 30 24 24 24
Inventory 149400 627480 737000 1273000 2144000
(Increase)/Decrease from Prev. Period -149400 -478080 -109520 -536000 -871000

Other Current Assets

% of Revenue 1.0% 1.0% 1.0% 1.0% 1.0%
Days 4 4 4 4 4
Other CA Value 18000 75600 110000 190000 320000
(Increase)/Decrease from Prev. Period -18000 -57600 -34400 -80000 -130000

Accounts Payable & Accrued Expenses

% of Revenue 8.7% 8.7% 8.7% 8.7% 8.7%
Days 31 31 31 31 31
AP & Accrued Value 155720 657720 957000 1653000 2784000
Increase/(Decrease) from Prev. Period 155720 502000 299280 696000 1131000

Other Current Liabilites

% of Revenue 1.0% 1.0% 1.0% 1.0% 1.0%
Days 4 4 4 4 4
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Other Current Liabilities 18000 75600 110000 190000 320000
Increase/(Decrease) from Prev. Period 18000 57600 34400 80000 130000

Revenues by Months & Quarters

($)
Year 1 Year 2 Year 3 Year 4 Year 5
Month 1 262500
Month 2 262500
Month 3 367500
Total 1st Quarter 892500 2000000 3000000 5000000
Month 4 50000 315000
Month 5 80000 367500
Month 6 100000 367500
Total 2nd Quarter 230000 1050000 2500000 4000000 6000000
Month 7 100000 420000
Month 8 120000 525000
Month 9 150000 525000
Total 3rd Quarter 370000 1470000 2500000 4500000 7000000
Month 10 120000 577500
Month 11 130000 630000
Month 12 150000 630000
Total 4th Quarter 400000 1837500 2750000 4750000 8000000
Total for year 1000000 5250000 9750000 16250000 26000000

Accounts Receivable by Months & Quarters

($)
Year 1 Year 2 Year 3 Year 4 Year 5
Month 1 - 261,450
Month 2 - 261,450
Month 3 - 366,030 664,000 996,000 1,660,000
Month 4 49,800 313,740
Month 5 79,680 366,030
Month 6 99,600 366,030 830,000 1,328,000 1,992,000
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Month 7 99,600 418,320
Month 8 119,520 522,900
Month 9 149,400 522,900 830,000 1,494,000 2,324,000
Month 10 119,520 575,190
Month 11 129,480 627,480
Month 12 149,400 627,480 913,000 1,577,000 2,656,000

Inventory by Months & Quarters

($)
Year 1 Year 2 Year 3 Year 4 Year 5
Month 1 - 261,450
Month 2 - 261,450
Month 3 - 366,030 536,000 804,000 1,340,000
Month 4 49,800 313,740
Month 5 79,680 366,030
Month 6 99,600 366,030 670,000 1,072,000 1,608,000
Month 7 99,600 418,320
Month 8 119,520 522,900
Month 9 149,400 522,900 670,000 1,206,000 1,876,000
Month 10 119,520 575,190
Month 11 129,480 627,480
Month 12 149,400 627,480 737,000 1,273,000 2,144,000

Other Current Assets by Months & Quarters

($)
Year 1 Year 2 Year 3 Year 4 Year 5
Month 1 - 31,500
Month 2 - 31,500
Month 3 - 44,100 80,000 120,000 200,000
Month 4 6,000 37,800
Month 5 9,600 44,100
Month 6 12,000 44,100 100,000 160,000 240,000
Month 7 12,000 50,400
Month 8 14,400 63,000
Month 9 18,000 63,000 100,000 180,000 280,000
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Month 10 14,400 69,300
Month 11 15,600 75,600
Month 12 18,000 75,600 110,000 190,000 320,000
 02/24/2011
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Accounts Payble & Accrued Expenses by Months & Quarters

($)
Year 1 Year 2 Year 3 Year 4 Year 5
Month 1 - 6,600
Month 2
Month 3 31 31 696,000 1,044,000 1,740,000
Month 4 50,000 331,170
Month 5 82,200 381,360
Month 6 103,520 383,670 870,000 1,392,000 2,088,000
Month 7 104,400 436,170
Month 8 124,400 543,480
Month 9 155,280 548,100 870,000 1,566,000 2,436,000
Month 10 126,600 600,600
Month 11 135,280 655,410
Month 12 155,720 657,720 957,000 1,653,000 2,784,000

Other Current Liabilities by Months & Quarters

($)
Year 1 Year 2 Year 3 Year 4 Year 5
Month 1 - 31,500
Month 2 - 31,500
Month 3 - 44,100 80,000 120,000 200,000
Month 4 6,000 37,800
Month 5 9,600 44,100
Month 6 12,000 44,100 100,000 160,000 240,000
Month 7 12,000 50,400
Month 8 14,400 63,000
Month 9 18,000 63,000 100,000 180,000 280,000
Month 10 14,400 69,300
Month 11 15,600 75,600
Month 12 18,000 75,600 110,000 190,000 320,000
 02/24/2011
14:28:42

XYZ Company
Funding Projections
Years 1 to 5
($)
Begin Year 1 Year 2 Year 3 Year 4 Year 5
Beginning Cash 1500000
Equity
Common 500000 500000 500000 500000 500000 500000
Increase / (Decrease) Previous Period
Preferred
A Round 1000000 1000000 1000000 1000000 1000000 1000000
B Round 500000 500000 500000 500000
Total Preferred 1000000 1000000 1500000 1500000 1500000 1500000
Increase / (Decrease) Previous Period 500000
Total Equity 1500000 1500000 2000000 2000000 2000000 2000000

Debt
Short Term Debt 100000
Increase / (Decrease) Previous Period 100000 -100000

Long Term Debt

Current Portion 100000 100000 100000 100000
Long Term Portion 400000 300000 200000 100000
Total Long Term Debt 500000 400000 300000 200000

Increase / (Decrease) Previous Period

Current Portion 100000
Long Term Protion 400000 -100000 -100000 -100000
Total Long Term Debt 500000 -100000 -100000 -100000

Total Equity & Debt 1500000 1500000 2500000 2400000 2400000 2200000

Interest
Interest Rate
Short Term Debt 9.0% 9.0% 9.0% 9.0% 9.0%
Long Term Debt 12.0% 12.0% 12.0% 12.0% 12.0%
 02/24/2011
14:28:42

Interest Expense
Short Term Debt 9000
Long Term Debt 60000 48000 36000 24000
Total Interest 60000 48000 45000 24000

Interest Income
Interest Rate 4.0% 4.0% 4.0% 4.0% 4.0%
Interest Income 10000

Retained Earnings
Net Income -712131 -218064 704515 1002741 2252034
Dividends 50000
Increase / (Decrease) Retained Earnings -712131 -218064 704515 1002741 2202034
Beginning Retained Earnings -712131 -930195 -225681 777060
Ending Retained Earnings -712131 -930195 -225681 777060 2979094
 02/24/2011
14:28:42

XYZ Company
Income Statement
Years 1 to 5
($)
Year 1 Year 2 Year 3 Year 4 Year 5

NET REVENUES 1000000 5250000 9750000 16250000 26000000

COST OF REVENUE 1117464 3532164 5699429 9339286 14033143

% of Revenues 111.7% 67.3% 58.5% 57.5% 54.0%

GROSS PROFIT -117464 1717836 4050571 6910714 11966857

% of Revenues -11.7% 32.7% 41.5% 42.5% 46.0%

OPERATING EXPENSES
Sales & Marketing 229000 997750 1805400 2911500 4676000
Research & Development 149000 413000 702550 1241500 1752000
General and Administration 171667 465150 790107 1191933 1771467
Total Operating Expenses 549667 1875900 3298057 5344933 8199467
% of Revenues 55% 36% 34% 33% 32%

EARNINGS FROM OPERATIONS -667131 -158064 752515 1565781 3767390

EXTRAORDINARY INCOME / (EXPENSE) -45000

EARNINGS BEFORE INTEREST & TAXES -712131 -158064 752515 1565781 3767390

INTEREST INCOME / (EXPENSE) -60000 -48000 -45000 -14000

NET EARNINGS BEFORE TAXES -712131 -218064 704515 1520781 3753390

TAXES -518040 -1501356

NET EARNINGS -712131 -218064 704515 1002741 2252034

% of Revenues -71.2% -4.2% 7.2% 6.2% 8.7%
 02/24/2011
14:28:42

XYZ Company
Balance Sheet
Years 1 to 5
($)
Begin Year 1 Year 2 Year 3 Year 4 Year 5

ASSETS
CURRENT ASSETS
Cash 1500000 408170 367660 570510 792870 1735714
Accounts Receivable 149400 627480 913000 1577000 2656000
Inventories 149400 627480 737000 1273000 2144000
Other Current Assets 18000 75600 110000 190000 320000
Total Current Assets 1500000 724970 1698220 2330510 3832870 6855714
PROPERTY & EQUIPMENT 236619 604905 910810 1187190 1427381
TOTAL ASSETS 1500000 961589 2303125 3241319 5020060 8283094

LIABILITIES & SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
Short Term Debt 100000
Accounts Payable & Accrued Expen 155720 657720 957000 1653000 2784000
Other Current Liab 18000 75600 110000 190000 320000
Current portion of long term debt 100000 100000 100000 100000
Total Current Liabilities 173720 833320 1167000 2043000 3204000

LONG TERM DEBT (less current portion) 400000 300000 200000 100000

STOCKHOLDERS' EQUITY
CommonStock 500000 500000 500000 500000 500000 500000
Preferred Stock 1000000 1000000 1500000 1500000 1500000 1500000
Retained Earnings -712131 -930195 -225681 777060 2979094
Total Equity 1500000 787869 1069805 1774319 2777060 4979094
 02/24/2011
14:28:42

TOTAL LIABILITIES & EQUITY 1500000 961589 2303125 3241319 5020060 8283094
 02/24/2011
14:28:42

XYZ Company
Cash Flow Statememt
Years 1 to 5
($)
Year 1 Year 2 Year 3 Year 4 Year 5
OPERATING ACTIVITIES
Net Earnings -712131 -218064 704515 1002741 2252034
Depreciation 43381 131714 244095 373619 509810
Working Capital Changes
(Increase)/Decrease Accounts Receivable -149400 -478080 -285520 -664000 -1079000
(Increase)/Decrease Inventories -149400 -478080 -109520 -536000 -871000
(Increase)/Decrease Other Current Assets -18000 -57600 -34400 -80000 -130000
Increase/(Decrease) Accts Pay & Accrd Expenses 155720 502000 299280 696000 1131000
Increase/(Decrease) Other Current Liab 18000 57600 34400 80000 130000
Net Cash Provided/(Used) by Operating Activities -811830 -540510 852850 872360 1942844

INVESTING ACTIVITIES
Property & Equipment -280000 -500000 -550000 -650000 -750000
Other
Net Cash Used in Investing Activities -280000 -500000 -550000 -650000 -750000

FINANCING ACTIVITIES
Increase/(Decrease) Short Term Debt 100000 -100000
Increase/(Decrease) Curr. Portion LTD 100000
Increase/(Decrease) Long Term Debt 400000 -100000 -100000 -100000
Increase/(Decrease) Common Stock
Increase/(Decrease) Preferred Stock 500000
Dividends Declared -50000
Net Cash Provided / (Used) by Financing 1000000 -100000 -250000

INCREASE/(DECREASE) IN CASH -1091830 -40510 202850 222360 942844

CASH AT BEGINNING OF YEAR 1500000 408170 367660 570510 792870

CASH AT END OF YEAR 1500000 408170 367660 570510 792870 1735714
 02/24/2011
14:28:43

XYZ Company
Break-Even Analysis
Years 1 to 5
($)
Year 1 Year 2 Year 3 Year 4 Year 5
Revenue 1000000 5250000 9750000 16250000 26000000

Cost of Revenue
Variable 729750 2450450 4122000 7139000 10990000
Fixed 387714 1081714 1577429 2200286 3043143
Total 1117464 3532164 5699429 9339286 14033143

Operating Expenses
Variable 160000 840000 1560000 2600000 4160000
Fixed 389667 1035900 1738057 2744933 4039467
Total 549667 1875900 3298057 5344933 8199467

Total Costs & Expenses

Variable 889750 3290450 5682000 9739000 15150000
Fixed 777381 2117614 3315485 4945219 7082610
Total 1667131 5408064 8997485 14684219 22232610

Variable Costs/Revenue Ratio 0.89 0.63 0.58 0.60 0.58

Break-Even Point Revenues 7051076 5673484 7946406 12342161 16972152

 02/24/2011
14:28:43

XYZ Company
Income Statement
Year 1 by Months
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7

NET REVENUES 50000 80000 100000 100000

COST OF REVENUE 55873 89397 111746 111746

GROSS PROFIT -5873 -9397 -11746 -11746

OPERATING EXPENSES
Sales & Marketing 11450 18320 22900 22900
Research & Development 7450 11920 14900 14900
General and Administration 8583 13733 17167 17167
Total Operating Expenses 27483 43973 54967 54967

EARNINGS FROM OPERATIONS -33357 -53370 -66713 -66713

EXTRAORDINARY INCOME / (EXPENSE) -25000 -20000

EARNINGS BEFORE INTEREST & TAXES -25000 -20000 -33357 -53370 -66713 -66713

INTEREST INCOME / (EXPENSE)

NET EARNINGS BEFORE TAXES -25000 -20000 -33357 -53370 -66713 -66713

TAXES

NET EARNINGS -25000 -20000 -33357 -53370 -66713 -66713

XYZ Company
Income Statement
 02/24/2011
14:28:43

Year 2 by Months
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7

NET REVENUES 262500 262500 367500 315000 367500 367500 420000

COST OF REVENUE 176608 176608 247252 211930 247252 247252 282573

GROSS PROFIT 85892 85892 120249 103070 120249 120249 137427

OPERATING EXPENSES
Sales & Marketing 49888 49888 69843 59865 69843 69843 79820
Research & Development 20650 20650 28910 24780 28910 28910 33040
General and Administration 23258 23258 32561 27909 32561 32561 37212
Total Operating Expenses 93795 93795 131313 112554 131313 131313 150072

EARNINGS FROM OPERATIONS -7903 -7903 -11065 -9484 -11065 -11065 -12645

EXTRAORDINARY INCOME / (EXPENSE)

EARNINGS BEFORE INTEREST & TAXES -7903 -7903 -11065 -9484 -11065 -11065 -12645

INTEREST INCOME / (EXPENSE) -5000 -5000 -5000 -5000 -5000 -5000 -5000

NET EARNINGS BEFORE TAXES -12903 -12903 -16065 -14484 -16065 -16065 -17645

TAXES

NET EARNINGS -12903 -12903 -16065 -14484 -16065 -16065 -17645

 02/24/2011
14:28:43

Year 1
Total Annual
Month 8 Month 9 Month 10 Month 11 Month 12 12 Months Projection

120000 150000 120000 130000 150000 1000000 1000000

134096 167620 134096 145270 167620 1117464 1117464

-14096 -17620 -14096 -15270 -17620 -117464 -117464

27480 34350 27480 29770 34350 229000 229000

17880 22350 17880 19370 22350 149000 149000
20600 25750 20600 22317 25750 171667 171667
65960 82450 65960 71457 82450 549667 549667

-80056 -100070 -80056 -86727 -100070 -667131 -667131

-45000 -45000

-80056 -100070 -80056 -86727 -100070 -712131 -712131

-80056 -100070 -80056 -86727 -100070 -712131 -712131

-80056 -100070 -80056 -86727 -100070 -712131 -712131

Year 2
 02/24/2011
14:28:43

Total Annual
Month 8 Month 9 Month 10 Month 11 Month 12 12 Months Projection

525000 525000 577500 630000 630000 5250000 5250000

353216 353216 388538 423860 423860 3532164 3532164

171784 171784 188962 206140 206140 1717836 1717836

99775 99775 109753 119730 119730 997750 997750

41300 41300 45430 49560 49560 413000 413000
46515 46515 51167 55818 55818 465150 465150
187590 187590 206349 225108 225108 1875900 1875900

-15806 -15806 -17387 -18968 -18968 -158064 -158064

-15806 -15806 -17387 -18968 -18968 -158064 -158064

-5000 -5000 -5000 -5000 -5000 -60000 -60000

-20806 -20806 -22387 -23968 -23968 -218064 -218064

-20806 -20806 -22387 -23968 -23968 -218064 -218064

 02/24/2011
14:28:43

XYZ Company
Income Statement
Years 3, 4 & 5 by Quarters
Year 3 Year 4
1st Qtr 2nd Qrtr 3rd Qrtr 4th Qrtr Total 1st Qtr 2nd Qtr

NET REVENUES 2000000 2500000 2500000 2750000 9750000 3000000 4000000

COST OF REVENUE 1169114 1461392 1461392 1607531 5699429 1724176 2298901

GROSS PROFIT 830886 1038608 1038608 1142469 4050571 1275824 1701099

OPERATING EXPENSES
Sales & Marketing 370338 462923 462923 509215 1805400 537508 716677
Research & Development 144113 180141 180141 198155 702550 229200 305600
General and Administration 162073 202591 202591 222851 790107 220049 293399
Total Operating Expenses 676524 845656 845656 930221 3298057 986757 1315676

EARNINGS FROM OPERATIONS 154362 192953 192953 212248 752515 289067 385423

EXTRAORDINARY INCOME / (EXPENSE)

EARNINGS BEFORE INTEREST & TAXES 154362 192953 192953 212248 752515 289067 385423

INTEREST INCOME / (EXPENSE) -12000 -12000 -12000 -12000 -48000 -11250 -11250

NET EARNINGS BEFORE TAXES 142362 180953 180953 200248 704515 277817 374173

TAXES -94636 -127459

NET EARNINGS 142362 180953 180953 200248 704515 183181 246714

 02/24/2011
14:28:43

Year 4 Year 5
3rd Qtr 4th Qtr Total 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

4500000 4750000 16250000 5000000 6000000 7000000 8000000

2586264 2729945 9339286 2698681 3238418 3778154 4317890

1913736 2020055 6910714 2301319 2761582 3221846 3682110

806262 851054 2911500 899231 1079077 1258923 1438769

343800 362900 1241500 336923 404308 471692 539077
330074 348411 1191933 340667 408800 476933 545067
1480135 1562365 5344933 1576821 1892185 2207549 2522913

433601 457690 1565781 724498 869398 1014297 1159197

433601 457690 1565781 724498 869398 1014297 1159197

-11250 -11250 -45000 -3500 -3500 -3500 -3500

422351 446440 1520781 720998 865898 1010797 1155697

-143870 -152076 -518040 -288399 -346359 -404319 -462279

278481 294364 1002741 432599 519539 606478 693418

 02/24/2011
14:28:43

Year 3 Year 4 Year 5

Annual Annual Annual
Projection Projection Projection
Total

26000000 9750000 16250000 26000000

14033143 5699429 9339286 14033143

11966857 4050571 6910714 11966857

4676000 1805400 2911500 4676000

1752000 702550 1241500 1752000
1771467 790107 1191933 1771467
8199467 3298057 5344933 8199467

3767390 752515 1565781 3767390

3767390 752515 1565781 3767390

-14000 -48000 -45000 -14000

3753390 704515 1520781 3753390

-1501356 -518040 -1501356

2252034 704515 1002741 2252034

 02/24/2011
14:28:43

XYZ Company
Cash Flow Statement
Year 1 by Months
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7
OPERATING ACTIVITIES
Net Earnings -25000 -20000 -33357 -53370 -66713 -66713
Depreciation 3615 3615 3615 3615 3615 3615 3615
Working Capital Changes
(Increase)/Decrease Accounts Receivable -49800 -29880 -19920
(Increase)/Decrease Inventories -49800 -29880 -19920
(Increase)/Decrease Other Current Assets -6000 -3600 -2400
Increase/(Decrease) Accts Pay & Accrd Expenses 31 49969 32200 21320 880
Increase/(Decrease) Other Current Liab 6000 3600 2400
Net Cash Provided/(Used) by Operating Activities -21385 -16385 3646 -79373 -77315 -81618 -62218

INVESTING ACTIVITIES
Property & Equipment -50000 -100000 -50000 -40000 -40000
Other
Net Cash Used in Investing Activities -50000 -100000 -50000 -40000 -40000

FINANCING ACTIVITIES
Increase/(Decrease) Short Term Debt
Increase/(Decrease) Curr. Portion LTD
Increase/(Decrease) Long Term Debt
Increase/(Decrease) Common Stock
Increase/(Decrease) Preferred Stock
Dividends Declared
Net Cash Provided / (Used) by Financing

INCREASE/(DECREASE) IN CASH -71385 -116385 -46354 -119373 -77315 -81618 -102218

CASH AT BEGINNING OF PERIOD 1500000 1428615 1312230 1265877 1146504 1069188 987570
CASH AT END OF PERIOD 1428615 1312230 1265877 1146504 1069188 987570 885352
 02/24/2011
14:28:43

XYZ Company
Cash Flow Statement
Year 2 by Months
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7
OPERATING ACTIVITIES
Net Earnings -12903 -12903 -16065 -14484 -16065 -16065 -17645
Depreciation 10976 10976 10976 10976 10976 10976 10976
Working Capital Changes
(Increase)/Decrease Accounts Receivable -112050 -104580 52290 -52290 -52290
(Increase)/Decrease Inventories -112050 -104580 52290 -52290 -52290
(Increase)/Decrease Other Current Assets -13500 -12600 6300 -6300 -6300
Increase/(Decrease) Accts Pay & Accrd Expenses -149120 -6600 31 331139 50190 2310 52500
Increase/(Decrease) Other Current Liab 13500 12600 -6300 6300 6300
Net Cash Provided/(Used) by Operating Activities-375147 -8527 -214217 432211 -59478 -2778 -58749

INVESTING ACTIVITIES
Property & Equipment -100000 -100000 -100000
Other
Net Cash Used in Investing Activities -100000 -100000 -100000

FINANCING ACTIVITIES
Increase/(Decrease) Short Term Debt
Increase/(Decrease) Curr. Portion LTD 100000
Increase/(Decrease) Long Term Debt 400000
Increase/(Decrease) Common Stock
Increase/(Decrease) Preferred Stock 500000
Dividends Declared
Net Cash Provided / (Used) by Financing 1000000

INCREASE/(DECREASE) IN CASH 524853 -108527 -214217 432211 -59478 -102778 -58749

CASH AT BEGINNING OF PERIOD 408170 933023 824496 610279 1042490 983012 880233
CASH AT END OF PERIOD 933023 824496 610279 1042490 983012 880233 821484
 02/24/2011
14:28:43

Year 1
Estimated Annual
Month 8 Month 9 Month 10 Month 11 Month 12 Year 1 Projection

-80056 -100070 -80056 -86727 -100070 -712131 -712131

3615 3615 3615 3615 3615 43381 43381

-19920 -29880 29880 -9960 -19920 -149400 -149400

-19920 -29880 29880 -9960 -19920 -149400 -149400
-2400 -3600 3600 -1200 -2400 -18000 -18000
20000 30880 -28680 8680 20440 155720 155720
2400 3600 -3600 1200 2400 18000 18000
-96281 -125335 -45361 -94352 -115855 -811830 -811830

-280000 -280000

-280000 -280000

-96281 -125335 -45361 -94352 -115855 -1091830 -1091830

885352 789072 663737 618376 524024 1500000

789072 663737 618376 524024 408170 408170
 02/24/2011
14:28:43

Year 2
Estimated Annual
Month 8 Month 9 Month 10 Month 11 Month 12 Year 2 Projection

-20806 -20806 -22387 -23968 -23968 -218064 -218064

10976 10976 10976 10976 10976 131714 131714

-104580 -52290 -52290 -478080 -478080

-104580 -52290 -52290 -478080 -478080
-12600 -6300 -6300 -57600 -57600
107310 4620 52500 54810 2310 502000 502000
12600 6300 6300 57600 57600
-111680 -5210 -63491 -62762 -10682 -540510 -540510

-100000 -100000 -500000 -500000

-100000 -100000 -500000 -500000

100000 100000
400000 400000

500000 500000

1000000 1000000

-111680 -105210 -63491 -62762 -110682 -40510 -40510

821484 709804 604594 541103 478341 408170

709804 604594 541103 478341 367660 367660
 02/24/2011
14:28:43

XYZ Company
Cash Flow Statement
Years 3, 4 & 5 by Quarters
Year 3 Year 4
1st Qtr 2nd Qrtr 3rd Qrtr 4th Qrtr Total 1st Qtr 2nd Qtr
OPERATING ACTIVITIES
Net Earnings 142362 180953 180953 200248 704515 183181 246714
Depreciation 61024 61024 61024 61024 244095 93405 93405
Working Capital Changes
(Increase)/Decrease Accounts Receivable -36520 -166000 -83000 -285520 -83000 -332000
(Increase)/Decrease Inventories 91480 -134000 -67000 -109520 -67000 -268000
(Increase)/Decrease Other Current Assets -4400 -20000 -10000 -34400 -10000 -40000
Increase/(Decrease) Accts Pay & Accrd Expenses 38280 174000 87000 299280 87000 348000
Increase/(Decrease) Other Current Liab 4400 20000 10000 34400 10000 40000
296626
Net Cash Provided/(Used) by Operating Activities 115976 241976 198272 852850 213586 88119

INVESTING ACTIVITIES
Property & Equipment -100000 -200000 -100000 -150000 -550000 -200000 -200000
Other
Net Cash Used in Investing Activities -100000 -200000 -100000 -150000 -550000 -200000 -200000

FINANCING ACTIVITIES
Increase/(Decrease) Short Term Debt 100000
Increase/(Decrease) Curr. Portion LTD
Increase/(Decrease) Long Term Debt -100000 -100000
Increase/(Decrease) Common Stock
Increase/(Decrease) Preferred Stock
Dividends Declared
Net Cash Provided / (Used) by Financing -100000 -100000 100000

INCREASE/(DECREASE) IN CASH 196626 -84024 141976 -51728 202850 113586 -111881

CASH AT BEGINNING OF PERIOD 367660 564286 480262 622238 570510 684096

CASH AT END OF PERIOD 564286 480262 622238 570510 684096 572215
 02/24/2011
14:28:43

Year 4 Year 5
3rd Qtr 4th Qtr Total 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

278481 294364 1002741 432599 519539 606478 693418

93405 93405 373619 127452 127452 127452 127452

-166000 -83000 -664000 -83000 -332000 -332000 -332000

-134000 -67000 -536000 -67000 -268000 -268000 -268000
-20000 -10000 -80000 -10000 -40000 -40000 -40000
174000 87000 696000 87000 348000 348000 348000
20000 10000 80000 10000 40000 40000 40000
245886 324769 872360 497051 394991 481931 568871

-100000 -150000 -650000 -200000 -200000 -200000 -150000

-100000 -150000 -650000 -200000 -200000 -200000 -150000

100000 -100000

-100000 -100000 -100000

-50000
-100000 -250000

145886 74769 222360 297051 194991 281931 168871

572215 718101 792870 1089921 1284912 1566843

718101 792870 1089921 1284912 1566843 1735714
 02/24/2011
14:28:43

Year 3 Year 4 Year 5

Annual Annual Annual
Projection Projection Projection
Total

2252034 704515 1002741 2252034

509810 244095 373619 509810

-1079000 -285520 -664000 -1079000

-871000 -109520 -536000 -871000
-130000 -34400 -80000 -130000
1131000 299280 696000 1131000
130000 34400 80000 130000
1942844 852850 872360 1942844

-750000 -550000 -650000 -750000

-750000 -550000 -650000 -750000

-100000 100000 -100000

-100000 -100000 -100000 -100000

-50000 -50000
-250000 -100000 -250000

942844 202850 222360 942844

367660 570510 792870

570510 792870 1735714
 02/24/2011
14:28:44

XYZ Company
Summary
Years 1 to 5

Year 1 Year 2 Year 3 Year 4 Year 5

Summary Financials ($)
Revenue 1000000 5250000 9750000 16250000 26000000
Gross Profit -117464 1717836 4050571 6910714 11966857
EBIT -712131 -158064 752515 1565781 3767390
EBITDA -668750 -26350 996610 1939400 4277200
Net Earnings -712131 -218064 704515 1002741 2252034
Net Cash from Operating Activities -811830 -540510 852850 872360 1942844
Capital Expenditures 280000 500000 550000 650000 750000
Interest Income/(Expense) -60000 -48000 -45000 -14000
Dividends 50000
Cash 408170 367660 570510 792870 1735714
Total Equity -212131 -430195 274319 1277060 3479094
Total Debt 500000 400000 300000 200000

Growth
Revenue Growth Rate - CAGR: 425% 86% 67% 60%
Net Earnings Growth Rate - CAGR: Nil Nil 42.3% 124.6%

Ratios
Current Ratio 4.2 2.0 2.0 1.9 2.1
Debt to Capital (LT Debt + Equity) 0.0 0.3 0.2 0.1 0.0

Profitability
Gross Profit % -11.7% 32.7% 41.5% 42.5% 46.0%
Operating Expenses % 55.0% 35.7% 33.8% 32.9% 31.5%
Net Earnings % -71.2% -4.2% 7.2% 6.2% 8.7%

Returns
Return on Assets -74.1% -9.5% 21.7% 20.0% 27.2%
Return on Equity -90.4% -20.4% 39.7% 36.1% 45.2%
Return on Capital (LT Debt + Equity) -90.4% -13.9% 32.4% 32.6% 43.5%
 02/24/2011
14:28:44

XYZ Company Notes

Valuation
Venture Capital Method
Years 1 to 5

Assumptions: REF
Investor required IRR 60% A
P/E ratio at IPO or acquisition 15 B
Initial investment $1,500,000 C FV(A,C) G/F IRR(D,G)

REF D E F G H I J K

Market Required Future Investor's Investor's Investor's Investor's

Valuation Calculation Year Net Income Capitalization Value (Investor) Share Return ROI IRR
Calculation Income Stmt B*E FV(F,D) C/G F*H I/C IRR(I,C,D)
Liquidity Event in Year 1 1 -712131 ($10,681,967 $2,400,000 100.0% $ 0% #N/A
Liquidity Event in Year 2 2 -218064 $3,270,964 $3,840,000 100.0% $ 0% #N/A
Liquidity Event in Year 3 3 704515 $10,567,721 $6,144,000 58.1% $6,144,000 410% 60%
Liquidity Event in Year 4 4 1002741 $15,041,112 $9,830,400 65.4% $9,830,400 655% 60%
Liquidity Event in Year 5 5 2252034 $33,780,514 $15,728,640 46.6% $15,728,640 1049% 60%

Negotiation Workspace
Investor's Investor's Investor's Investor's
Year Share Return ROI IRR
1 25.0% $ 0% #N/A
2 25.0% $ 0% #N/A
3 25.0% $2,641,930 176% 21%
4 25.0% $3,760,278 251% 26%
5 40.0% $13,512,206 901% 55%
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IRR Calculation Workspace

Start Year 1 Year 2 Year 3 Year 4 Year 5
$1,500,000 $
$1,500,000 $ $
$1,500,000 $ $ $6,144,000
$1,500,000 $ $ $ $9,830,400
$1,500,000 $ $ $ $ $15,728,640

$1,500,000 $
$1,500,000 $ $
$1,500,000 $ $ $2,641,930
$1,500,000 $ $ $ $3,760,278
$1,500,000 $ $ $ $ $13,512,206
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XYZ Company
Valuation
Venture Capital Method
Years 1 to 5
Multiple Rounds

Assumptions Ref Calculation

Month of IPO 60 A
Forecast annualized earnings at IPO $2,252,034 B
P/E ratio at IPO 15 C

Investment Round First Second Third

Month of Investment 0 24 C
Investor required IRR 60% 50% D
Amount of Investment $1,500,000 $500,000 E
Required Monthly IRR 5.00% 4.17% 0.00% F D/12
Duration of Investment 60 36 60 G A-C

Calculations
Market Capitalization at IPO $33,780,514 H B*C

First Second Third

Required FV for Investor at IPO $15,728,640 $1,687,500 $ I E*(1+F)^G
Individual Investor's Share 46.6% 5.0% 0.0% J I/H
Individual Investor's ROI 1049% 338% #DIV/0! K I/E
Individual Investor's IRR 60% 50% #DIV/0! L (I/E)^(12/G)-1

Cumulative Investors' Share 46.6% 51.6% 51.6% M sum(J)

Cumulative Founders' Share 53.4% 48.4% 48.4% N 1-M

Negotiations Round First Second Third

Individual Investor's Share 15.0% 5.0% 3.0%
FV for Investor at IPO $5,067,077 $1,689,026 ###
Individual Investor's ROI 338% 338% #DIV/0!
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Individual Investor's IRR 28% 50% #DIV/0!