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Internet Sample Business Plan

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Table of Contents

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


Chart: Highlights ......................................................................................................................2
1.1 Objectives ...................................................................................................................................2
1.2 Mission........................................................................................................................................3
1.3 Keys to Success ........................................................................................................................3
2.0 Company Summary.............................................................................................................................3
2.1 Start-up Summary ......................................................................................................................3
Table: Start-up Funding ..........................................................................................................4
Chart: Start-up .........................................................................................................................5
Table: Start-up .........................................................................................................................5
2.2 Company Ownership .................................................................................................................5
2.3 Company Locations and Facilities ..........................................................................................6
3.0 Products ...............................................................................................................................................6
3.1 Product Description...................................................................................................................6
3.2 Competitive Comparison..........................................................................................................6
3.3 Sales Literature ..........................................................................................................................6
3.4 Sourcing ......................................................................................................................................7
3.5 Technology..................................................................................................................................7
3.6 Future Products ..........................................................................................................................7
4.0 Market Analysis Summary..................................................................................................................7
4.1 Market Segmentation ................................................................................................................8
Table: Market Analysis ...........................................................................................................8
Chart: Market Analysis (Pie) ..................................................................................................9
4.2 Target Market Segment Strategy.............................................................................................9
4.2.1 Market Trends................................................................................................................9
4.2.2 Market Growth ...............................................................................................................9
4.2.3 Market Needs ..............................................................................................................10
4.3 Industry Analysis.......................................................................................................................10
4.3.1 Competition and Buying Patterns .............................................................................10
4.3.2 Main Competitors .......................................................................................................10
4.3.3 Industry Participants....................................................................................................10
4.3.4 Distribution Patterns ...................................................................................................10
5.0 Web Plan Summary ..........................................................................................................................11
5.1 Website Marketing Strategy...................................................................................................11
5.2 Development Requirements ...................................................................................................11
6.0 Strategy and Implementation Summary..........................................................................................12
6.1 Strategy Pyramid .....................................................................................................................12
6.2 Competitive Edge....................................................................................................................12
6.3 Sales Strategy..........................................................................................................................12
6.3.1 Sales Forecast ............................................................................................................12
Chart: Sales Monthly ...................................................................................................13
Table: Sales Forecast.................................................................................................14
Chart: Sales by Year ...................................................................................................14
6.3.2 Sales Programs ..........................................................................................................15
6.4 Marketing Strategy ..................................................................................................................15
6.4.1 Distribution Strategy ...................................................................................................15
6.4.2 Marketing Programs ...................................................................................................15
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Table of Contents
6.4.3 Positioning Statement ................................................................................................15
6.4.4 Pricing Strategy...........................................................................................................15
6.4.5 Promotion Strategy.....................................................................................................15
6.5 Strategic Alliances...................................................................................................................15
6.6 Value Proposition ....................................................................................................................16
6.7 Milestones ................................................................................................................................16
Table: Milestones..................................................................................................................16
Chart: Milestones ..................................................................................................................17
7.0 Management Summary ....................................................................................................................17
7.1 Organizational Structure..........................................................................................................17
7.2 Management Team .................................................................................................................18
7.3 Management Team Gaps .......................................................................................................18
7.4 Personnel Plan.........................................................................................................................18
Table: Personnel ...................................................................................................................19
8.0 Financial Plan ....................................................................................................................................19
8.1 Important Assumptions............................................................................................................19
Table: General Assumptions ...............................................................................................20
8.2 Key Financial Indicators ..........................................................................................................20
Chart: Benchmarks ...............................................................................................................20
8.3 Break-even Analysis................................................................................................................21
Chart: Break-even Analysis .................................................................................................21
Table: Break-even Analysis .................................................................................................21
8.4 Projected Profit and Loss .......................................................................................................21
Chart: Gross Margin Monthly ...............................................................................................22
Chart: Gross Margin Yearly..................................................................................................22
Table: Profit and Loss ..........................................................................................................23
Chart: Profit Monthly .............................................................................................................24
Chart: Profit Yearly................................................................................................................24
8.5 Projected Cash Flow ...............................................................................................................24
Chart: Cash ...........................................................................................................................25
Table: Cash Flow ..................................................................................................................26
8.6 Projected Balance Sheet ........................................................................................................27
Table: Balance Sheet ...........................................................................................................27
8.7 Business Ratios .......................................................................................................................28
Table: Ratios .........................................................................................................................29
8.8 Exit Strategy .............................................................................................................................30
Table: Sales Forecast ...............................................................................................................................1
Table: Personnel ........................................................................................................................................2
Table: Profit and Loss ...............................................................................................................................3
Table: Cash Flow .......................................................................................................................................5
Table: Balance Sheet ................................................................................................................................6
Table: General Assumptions ....................................................................................................................7

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InteliChild Business Plan

1.0 Executive Summary


Introduction

InteliChild.c om offers bright children an entertaining plac e to interac t with eac h other, the
Web, educators, and the world in general. It generates traffic first, valuation for investors, and
eventually commerce and profits. It is a healthy plac e for kids to play, for parents and sc hools to
buy, and a creative and fair work environment for employees.

The InteliChild.c om e-commerce projec t is the natural evolution for the InteliChild.c om Internet
presence. The site will market and sell selec ted toys, books, and software products. It will also
produce Web products and Web applications that will increase market share, promote name
rec ognition, and maximize efficiency.

The Company

The present InteliChild.c om is a start-up company with four full-time employees. The company
was incorporated as a California C corporation owned by its principal founders, at 25% ownership
each. (Name Omitted) Capital partners ac quired 50% of the company. The company has a
single office. The initial website is at www.citruscoolkids.com.

Our key competitive advantage is the in-house knowledge base we have developed. Our
competitor spends five to 10 times the amount of money we do outsourcing to expensive
companies for services we perform in-house. The same will take plac e with the InteliChild.c om
website. We already have the SQL™ server and ColdFusion™ programming expertise, and we
will be adding the Flash™ integration of these skills.

Products and Services

InteliChild will be offering a steadily increasing mix of three lines of products:

· Toys and Games: carefully selec ted toys and games that appeal to the target market,
the parents of the target market, and educators.
· Books: there should be a selec tion of books that appeal specifically to the parents and
educators of the target market, so that these interested adults can go to this site and
order books about their children. In addition, of course there is also a selec tion of books
to be ordered by and for the kids to read.
· Software: carefully selec ted software to appeal to the target market and target
parents and educators.

The Internet reinvents itself every three months, or even faster. Therefore, our strategy for
future development is to remain positioned with enough flexibility to adapt new technologies, and
adapt to changes quickly.

The Market

The InteliChild.c om market has been expanding exponentially with the advances of tec hnology
in the teac hing sectors and the ac ceptance of tec hnology as a teaching aid. The critical
component to our entrance into the market will be approval and support from the sc hool
communities - including teachers, the PTA, and special education programs.

Our primary target markets include these four areas:


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InteliChild Business Plan
1. The kids themselves.
2. Parents.
3. Educational institutions for children of the upper class.
4. Self-teac hing families.

While we have plans to expand into international territory, our initial launch will target our most
important market - the American upper class. We know that most of our clients drive BMW's
and have very good taste - they spend money on their children bec ause they can apprec iate
the technology that we have created. They also generally have high bandwidth c onnec tions,
and are impressed by first-class design.

Financial Considerations
Our start-up costs are high bec ause of our commitment to dominate the Internet market plac e.

The Break-even Analysis indicates we reach steady-state break-even in this first year.

The sales forec ast is based on increasing website traffic and increasing sales per unique user
session. Sales are projec ted to rise exponentially from Year 1 to Year 3. The forec ast obviously
depends on traffic increase. We plan to lose money for at least three years while we build traffic
and develop our position for the long-term future.

1.1 Objectives
· Traffic, as measured in unique user sessions: 100,000 unique user sessions in June,
Year 1; 450,000 in Dec ember, Year 1; 3.5 million in Year 2; and 5 million in Year 3.

· Sell-through, as measured in dollar sales per unique visit: a high of $0.58 per unique visit
in Dec ember of Year 1; increasing to $0.83 in Year 2; and $0.92 in Year 3.

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InteliChild Business Plan

· Valuation, as measured in ability to bring in additional investment at economically


feasible valuations. We need to attrac t moderate investment this year, and an additional
large infusion in Year 2, with valuation performance that yields attrac tive internal rate
of return (IRR) to investors. The financial section indicates IRR of more than 100% for all
investors, with larger IRR for seed, dec lining slightly for first round and then second
round.

· Ac quisition or Initial public offering (IPO) in Year 4, with a valuation of more than $20
million. This assumes of course the market valuations based on sales and earnings,
which are relatively high as this plan is written.

1.2 Mission
InteliChild.c om offers bright children an entertaining plac e to interac t with eac h other, the
Web, educators, and the world in general. It generates traffic first, valuation for investors, and
eventually commerce and profits. It is a healthy plac e for kids to play, for parents and sc hools to
buy, and a creative and fair work environment for employees.

1.3 Keys to Success


1. We must retain the customers. The website has to be easy to use and quickly
viewable. User satisfac tion is an ultimate priority.

2. The projec t will succeed if it can capitalize on the traffic that InteliChild.c om produces,
and turn the user sessions into dollars through the commerce site.

3. The sales proc ess must be easy to administer and flexible enough to ac commodate the
needs of InteliChild, which is not ready to take on more employees to do so.

4. The e- commerce projec t should further establish InteliChild.c om presence as a


technology leader, not only returning traffic but ac tually bringing in new traffic.

2.0 Company Summary


The present InteliChild.c om is a start-up company with four full time employees. We are a high-
powered team of creative individuals. The company creates an Internet environment attrac tive
to bright kids, and is planning to sell toys, books, and software to those kids, their parents,
and sc hools. Our products will be the best reviewed in our niche.

2.1 Start-up Summary


Our start-up costs reflec t of our commitment to dominate the Internet market plac e.

Our development costs are high, but bec ause we are now loc ated in Oregon instead of the
Silicon Valley, our human resources costs are not as high as they might be - particularly for the
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InteliChild Business Plan
talented programmers that we need. Marketing expenses are also high, but spending on the
costly development of this site without promoting it appropriately would make it difficult to
gather together the traffic necessary to make this a success.

Our loc ation leverages our partner potential, even though we are paying a premium for space
and for talent due to development costs.

Table: Start-up Funding


Start-up Funding
Start-up Expenses to Fund $33,750
Start-up Assets to Fund $499,000
Total Funding Required $532,750

Assets
Non-cash Assets from Start-up $5,000
Cash Requirements from Start-up $494,000
Additional Cash Raised $0
Cash Balance on Starting Date $494,000
Total Assets $499,000

Liabilities and Capital

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

Capital

Planned Investment
Owner $0
Investor $0
Additional Investment Requirement $532,750
Total Planned Investment $532,750

Loss at Start-up (Start-up Expenses) ($33,750)


Total Capital $499,000

Total Capital and Liabilities $499,000

Total Funding $532,750

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InteliChild Business Plan

Table: Start-up
Start-up

Requirements

Start-up Expenses
Legal $1,000
Software $2,500
Design Work $5,000
Programming $15,000
Insurance $250
Rent $500
Research and Development $1,000
Hosting Setup $3,500
Other $5,000
Total Start-up Expenses $33,750

Start-up Assets
Cash Required $494,000
Start-up Inventory $0
Other Current Assets $5,000
Long-term Assets $0
Total Assets $499,000

Total Requirements $532,750

2.2 Company Ownership


The company was incorporated as a California C corporation owned by its principal founders, at

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25% ownership eac h. (Name Omitted) Capital partners ac quired 50% of the company.

2.3 Company Locations and Facilities


The company has a single office. Its important website and Internet infrastructure situation is
explained in detail later in this plan. The initial website is at www.citruscoolkids.com.

3.0 Products
InteliChild will be offering a steadily increasing mix of three lines of products:

1. Toys and Games: carefully selec ted toys and games that appeal to the target market,
the parents of the target market, and educators.

2. Books: there should be a selec tion of books that appeal specifically to the parents and
educators of the target market, so that these interested adults can go to this site and
order books about their children. In addition, of course there is also a selec tion of
books to be ordered by and for the kids to read.

3. Software: carefully selec ted software to appeal to the target market and target
parents and educators.

3.1 Product Description


In the original plan this is a detailed description of the specific toys and games, books, and
software that are included on the website. This level of detail was considered proprietary and
was removed from the plan for purposes of illustration. If you are using this sample plan as an
example, then insert here a detailed list of your own products for your own plan.

3.2 Competitive Comparison


In the original plan this is a detailed description of and analysis of other channels and sources
from which the target market and parents and educators can purchase toys, games, books,
and software. It describes in general some kinds of toy shops, and then spec ifically some
catalog and web businesses that appeal to this audience.

This level of detail was considered proprietary and was removed from the plan for purposes of
illustration. If you are using this sample plan as an example, then insert here a detailed
description of your competitors for your plan.

3.3 Sales Literature


Our answer to sales literature is the web. Within six months we should also have a printed
catalog that we can send to people to go along with the Web purchasing proc ess, bec ause some
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InteliChild Business Plan
buyers will want to refer to a hard-copy catalog.

3.4 Sourcing
In the real plan this section referred in detail to distributors and products they carried. This
detail was considered proprietary and strategic, and was omitted from the sample plan for
purposes of illustration. If you are using this plan as an example, then in this section you
should have detailed disc ussion of how the products to be sold can be purchased from
manufac turers and distributors.

3.5 Technology
The InteliChild.c om e-commerce site will be built on a three-tier structure. Driven by SQL™
servers and an IIS™ Web server bac ked with bandwidth, the site will be coded mostly in
ColdFusion™ and ASP™. We will be taking our registration databases live to be able to email
updates on products and the website to customers. We will offer customers the option to take
themselves out of the list.

The information architec ture will be based on four fundamental arenas - the free valuable
information arena, the product detail arena, the final purchasing arena, and the purchase
administration area.

The purchase arena will require a Verisign™ certificate and a Cybercash™ connec tion. That will
begin immediately bec ause dealing with Cybercash™ can sometimes be a lengthy proc ess.

The administrative arena will be hosted on mirror servers that query to the live databases for
migration into loc al databases. This server is hidden from Internet traffic and kept under high
security even within the company.

The entire set-up will be somewhat costly. We will need five servers, two for in-house
reasons, and three for Web hosting reasons. Two of the Web host servers will be serving
traffic through ColdFusion™ and ASP™ in c luster, and the third will be a dedicated SQL™ server.

3.6 Future Products


The Internet reinvents itself every three months, or even faster. Our strategy for future
development is to remain positioned with enough flexibility to adapt new tec hnologies, and adapt
to changes quickly.

4.0 Market Analysis Summary


The InteliChild.c om market has been expanding exponentially with the advances of tec hnology
in the teac hing sectors and the ac ceptance of tec hnology as a teaching aid. The critical
component to our entrance into the market will be approval and support from the sc hool

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InteliChild Business Plan
communities - including teachers, the PTA, and special education programs.

4.1 Market Segmentation


Our primary target markets include these four areas:

1. The kids themselves. We include ages 5-9 and ages 10-14 in our market statistics
bec ause these are the breakdowns available at www.census.gov, and we include only
10% of the total in eac h c ategory.

2. Parents. We include 10% of the parents, assuming that leads to an average combined
income above $100,000. Most of these people live in suburban areas, but the urban upper
class is also a major component. [Editor note: details for this sample plan are not
necessarily correc t.]

3. Educational institutions for the children of the upper class. This includes day care
and private sc hools. Penetrating this market is excellent bec ause it generates leads to
our other targets. We include 107,000 sc hools in the U.S. in our table.

4. Self-teaching families. There is an excellent group of established customers who


teac h their children from home. The site will benefit greatly from the time available from
this target group.

Table: Market Analysis


Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
U.S. Kids 5-9 2% 1,994,000 2,033,880 2,074,558 2,116,049 2,158,370 2.00%
U.S. Kids 1-14 2% 1,961,200 2,000,424 2,040,432 2,081,241 2,122,866 2.00%
U.S.Parents 2% 12,000,000 12,240,000 12,484,800 12,734,496 12,989,186 2.00%
U.S.Schools 1% 107,000 108,070 109,151 110,243 111,345 1.00%
Home School Families 40% 5,000 7,000 9,800 13,720 19,208 40.00%
Non-U.S.Parents 4% 24,000,000 24,960,000 25,958,400 26,996,736 28,076,605 4.00%
Non-U.S.Schools 0% 225,000 225,000 225,000 225,000 225,000 0.00%
Total 3.20% 40,292,200 41,574,374 42,902,141 44,277,485 45,702,580 3.20%

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InteliChild Business Plan

4.2 Target Market Segment Strategy


While we have plans to expand into international territory, our initial launch will target our most
important market - the American upper class. We know that most of our clients drive BMW's
and have very good taste - they spend money on their children bec ause they can apprec iate
the technology that we have created. They also generally have high bandwidth c onnec tions,
and are impressed by first-class design.

4.2.1 Market Trends


The market for intelligent tec hnological teaching devices is growing exponentially. The key
fac tors driving this growth are the increase in salaries in the tec hnology sectors, the double-
income household and the loss of leisure time. Hardworking parents are dedicated to giving
their children every educational opportunity possible. Our target market's behavioral patterns are
changing dramatically as well - research used to happen in many plac es; now increasingly it
happens on the Internet.

4.2.2 Market Growth


The mac ro-environment is the real reason for the urgency of the InteliChild.c om e- commerce
projec t. All trends in our market indicate that strong a Web presence will not be a frivolous extra
for the company, but rather, an absolute necessity. As mentioned before, the double- income
family in the tec hnological sector is doing their research on the Internet. In order to survive,
InteliChild.c om must be present as a destination for these search results.

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InteliChild Business Plan

4.2.3 Market Needs


The InteliChild.c om website will have to reflec t its product line - simultaneously fun, easy to
use and informative. In order to gain rec ognition for our site efforts, we are going to have to put
together a site that is worthy of attention. The design work should promote the feeling of
superior quality. The InteliChild.c om attitude will match the company's inherent value drive -
parents and educators will feel guilty not buying into these products.

4.3 Industry Analysis


The website industry is exploding. Growth is absurd, amazing. We don't have business reasons to
detail this situation in this plan, our readers are aware of it.

4.3.1 Competition and Buying Patterns


This is sample text describing fac tors in c ompetition for website use by bright children ages 8-
14, for sales to their parents and sc hools. It details information available about the importance
of fac tors such as pricing, shipment, quality, presentation, etc.

4.3.2 Main Competitors


Our competition is the market leader - and their success is a symbol of our potential market.
We were pleased to see their Web division spin-off to its own c ompany that went public with a
tremendous initial offering. The market is too large for them to cover entirely, and as a second-
best in dollar market share, with better reviews from the critical industry leaders, InteliChild.
com stands in a position to expand our business significantly.

4.3.3 Industry Participants


This is sample text describing the different companies addressing the same target market. The
real plan included details on which c ompanies sell products (toys, books, or games) into this
market. It includes who owns them, how much market share they get (according to available
information sources), and what we know about their assorted business models.

4.3.4 Distribution Patterns


This is sample text describing the different websites addressing the same target market. The real
plan included details identifying these websites, who owns them, how much traffic they get
(according to available information sources), and their assorted business models.

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InteliChild Business Plan

5.0 Web Plan Summary


The primary InteliChild.c om strategy is to build an impressive destination website. The
marketing of the site will be built around the core value that the site will offer. Although our
competition has built a simple store for ordering the product, the InteliChild.c om site will be
reviewed by Web award companies as a great destination. We will build our revenue and
market share around this traffic.

Our business model is based on the sales of our products over the website. Bec ause the site is
also intended to increase brand equity and awareness, we are building for high traffic. Our model
requires giving users an excellent free experience and to develop trust to increase sell-
through. We plan to lose money for at least three years while we build traffic and develop our
position for the long-term future.

The traffic forec ast is based on increasing sessions, increasing page views per session, and
increasing orders per session. The bottom line called "sell-through" is the overall dollars in
order per user session, an important indicator that should be increasing over time.

5.1 Website Marketing Strategy


Our first class design and product quality are critical to our positioning as a dot-com company
- we should be the best reviewed website in our category, and that will bec ome the key to
future sales. In the past, our design work and marketing has not matched our better-funded
competitor. However, the core experience for the children has always been better, and with a
new design team and a round of financing, the InteliChild.c om company is ready to grow with the
market. InteliChild.c om will distinguish itself from its competitor as a full learning center, rather
than just a store front.

5.2 Development Requirements


Of course the development needs to match the overall business strategy as explained in the rest
of the plan. This has to be an excellent site or we just haven't implemented. That involves both
front-end and bac k-end strategies, as explained in the following topics.

Front End

Bec ause InteliChild.c om's target customers are all affluent, we have the luxury of using the
latest technologies to impress the visitors with excellent design and animation. We plan to
release the site entirely in Shockwave™ format as almost 90% of our visitors will already have
it installed.

We will carry on the colorful and extremely well branded design of our company literature and
logo - the dec isions on basic aesthetics will not get in the way. The site will have a colorful and
intelligent design, taking the ad campaign and product art into an interac tive medium on the
Web.

Back End

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InteliChild Business Plan
The InteliChild.c om e-commerce site will be built on a three-tier structure. Driven by SQL™
servers and an IIS™ Web server bac ked with bandwidth, the site will be coded mostly in
ColdFusion™ and ASP™. We will be taking our registration databases live to be able to email
updates on products and the website to customers. We will offer customers the option to take
themselves out of the list.

The purchase arena will require a Verisign™ certificate and a Cybercash™ connec tion. That will
begin immediately bec ause dealing with Cybercash™ can sometimes be a lengthy proc ess.

The administrative arena will be hosted on mirror servers that query to the live databases for
migration into loc al databases. This server is hidden from Internet traffic and kept under high
security even within the company.

The entire set-up will be somewhat costly. We will need five servers, two for in-house
reasons, and three for Web hosting reasons. Two of the Web host servers will be serving
traffic through ColdFusion™ and ASP™ in c luster, and the third will be a dedicated SQL™ server.

6.0 Strategy and Implementation Summary


This is sample text only. The original was very proprietary, describing the company strategy in
detail. This is sample text only.

6.1 Strategy Pyramid


This is sample text only. The original was very proprietary, describing the company strategy in
detail. This is sample text only.

6.2 Competitive Edge


Our key competitive advantage is the in-house knowledge base we have developed. Our
competitor spends five to 10 times the amount of money we do out-sourcing to expensive
companies for services we perform in-house. The same will take plac e with the InteliChild.c om
website. We already have the SQL™ server and ColdFusion™ programming expertise, and we
will be adding the Flash™ integration of these skills.

6.3 Sales Strategy


This is sample text only. The original was very proprietary, describing the company strategy in
detail. This is sample text only.

6.3.1 Sales Forecast


The sales forec ast in the following table and charts is based on increasing website traffic and

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InteliChild Business Plan
increasing sales per unique user session. Sales are projec ted to rise exponentially from 2000
through 2002. The forec ast obviously depends on traffic increase.

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InteliChild Business Plan

Table: Sales Forecast


Sales Forecast
Year 1 Year 2 Year 3
Unit Sales
Toys and Games 17,622 61,250 112,500
Books 4,619 17,500 50,000
Software 3,604 17,500 50,000
Total Unit Sales 25,845 96,250 212,500

Unit Prices Year 1 Year 2 Year 3


Toys and Games $30.00 $30.00 $30.00
Books $20.00 $20.00 $30.00
Software $40.00 $40.00 $30.00

Sales
Toys and Games $528,660 $1,837,500 $3,375,000
Books $92,380 $350,000 $1,500,000
Software $144,160 $700,000 $1,500,000
Total Sales $765,200 $2,887,500 $6,375,000

Direct Unit Costs Year 1 Year 2 Year 3


Toys and Games $12.00 $12.00 $12.00
Books $8.00 $8.00 $8.00
Software $16.00 $16.00 $16.00

Direct Cost of Sales


Toys and Games $211,464 $735,000 $1,350,000
Books $36,952 $140,000 $400,000
Software $57,664 $280,000 $800,000
Subtotal Direct Cost of Sales $306,080 $1,155,000 $2,550,000

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InteliChild Business Plan

6.3.2 Sales Programs


This is sample text only. The original was very proprietary, describing the company strategy in
detail. This is sample text only.

6.4 Marketing Strategy


This is sample text only. The original was very proprietary, describing the company strategy in
detail. This is sample text only.

6.4.1 Distribution Strategy


This is sample text only. The original was very proprietary, describing the company strategy in
detail.

6.4.2 Marketing Programs


This is sample text only. The original was very proprietary, describing the company strategy in
detail. This is sample text only.

6.4.3 Positioning Statement


This is sample text only. The original was very proprietary, describing the company strategy in
detail. This is sample text only.

6.4.4 Pricing Strategy


This is sample text only. The original was very proprietary, describing the company strategy in
detail. This is sample text only.

6.4.5 Promotion Strategy


This is sample text only. The original was very proprietary, describing the company strategy in
detail. This is sample text only.

6.5 Strategic Alliances


This is sample text only. The original was very proprietary, describing the company strategy in
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InteliChild Business Plan
detail. This is sample text only.

6.6 Value Proposition


This is sample text only. The original was very proprietary, describing the company strategy in
detail. This is sample text only.

6.7 Milestones
The milestones graphic illustrates key implementation ac tivities. The most important milestone to
reach will be the design templates. During that time we will be putting together the bac k-end
phases, and both milestones should be ac hieved at the same time. After that point, integration
can begin between the bac k-end and the front-end phases. Our next milestone will be the beta
release, followed by the full launch two weeks later.

Table: Milestones
Milestones

Milestone Start Date End Date Budget Manager Department


Design Template 1/1/2000 3/1/2000 $2,500 Terry Front End
Back-end Phase 1 1/1/2000 4/1/2000 $10,000 Sonny Back End
Integration 1/1/2000 5/1/2000 $500 Leslie Management
Beta Phase 1 3/1/2000 6/1/2000 $1,000 Leslie Management
Back-end Phase 2 5/1/2000 5/15/2000 $5,000 Sonny Back End
Front-end Phase 2 5/1/2000 5/15/2000 $2,500 Terry Front End
Launch 5/1/2000 12/1/2000 $0 Leslie Management
Redesign 12/1/2000 4/1/2001 $35,000 Leslie Management
Totals $56,500

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InteliChild Business Plan

7.0 Management Summary


Our producer, Sonny Cieliblu, will head the InteliChild.c om projec t. This full-time position will
oversee all ac tivities for the projec t. Sonny interfac es with eac h partner and staff member.
This plac es Sonny in the role of administrator and coordinator of development and marketing
ac tivities, but also requires him to implement training and individual development ac tivities for
each partner. We all rec ognize the challenge Sonny fac es as an employee, coach, and
supervisor.

More sample text here, not useful for purposes of example, describing the people involved and
the management structure.

7.1 Organizational Structure


We need an agile organizational structure that rec ognizes the need for a smooth flow of ideas
and implementation between sales, marketing, and website development. We can't allow the
team to think as if these were separate functions.

On the surfac e, however, we have the president dealing with three direc t reports: admin/
finance, sales/marketing, and web development. In fac t we are not going to manage with a
strict hierarchy, bec ause we need to emphasize the team. Still, particularly as we grow in
size, structure is necessary. We will want to preserve dec ision-making power, and the ability
to ac t, rather than trying to do everything by consensus.

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InteliChild Business Plan

7.2 Management Team


Person 1: More sample text here, not useful for purposes of example, describing the people
involved and the management structure.
Person 2: More sample text here, not useful for purposes of example, describing the people
involved and the management structure.

Person 3: More sample text here, not useful for purposes of example, describing the people
involved and the management structure.

Person 4: More sample text here, not useful for purposes of example, describing the people
involved and the management structure.

7.3 Management Team Gaps


We agree that the most obvious weakness at this point is the lac k of seasoned professional
management with experience. This is what the investors call the "gray haired fac tor." We will
be looking to add more experience to the team as we build our administrative and financial
capabilities.

7.4 Personnel Plan


The following personnel plan details our plans for the ramp-up. We start with the four key
founders; by the end of 2000 we should have 14 people, and 18 by the end of 2002.

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InteliChild Business Plan

Table: Personnel
Personnel Plan
Year 1 Year 2 Year 3
Production Personnel
VP Support $33,000 $75,000 $90,000
Support Engineers $27,000 $65,000 $90,000
Support Technicians $21,000 $60,000 $75,000
Other $0 $25,000 $50,000
Subtotal $81,000 $225,000 $305,000

Sales and Marketing Personnel


VP Sales & Marketing $60,000 $75,000 $90,000
Business Development $31,500 $60,000 $75,000
Sales Systems $30,000 $60,000 $75,000
Sales Technicians $40,600 $90,000 $120,000
Other $12,000 $30,000 $100,000
Subtotal $174,100 $315,000 $460,000

General and Administrative Personnel


CEO $60,000 $75,000 $75,000
CFO $60,000 $75,000 $75,000
General Admin $42,700 $90,000 $120,000
Other $14,000 $50,000 $100,000
Subtotal $176,700 $290,000 $370,000

Other Personnel
CTO $60,000 $75,000 $75,000
Devel Systems $39,800 $62,000 $90,000
Devel Engineers $22,500 $75,000 $100,000
Other $0 $50,000 $75,000
Subtotal $122,300 $262,000 $340,000

Total People 18 18 18

Total Payroll $554,100 $1,092,000 $1,475,000

8.0 Financial Plan


This is an Internet venture that, of course, depends on the developing financial prospec ts of the
growing Internet world. To make it work financially, we need to increase valuation on sc hedule
to bring in substantial additional capital. The following table defines the investment offering for
investors. Spec ifically:

1. The exit strategy is ac quisition in 2003, valuing the company at more than $20 million.
2. Equity plan and valuations at time of exit are detailed in the section that follows, "Exit
Strategy." The plan assumes an ending valuation of $20 million based on market trends,
with IRR of more than 100% for all investors.

8.1 Important Assumptions


The general assumptions are listed in the following table. Obviously these are detailed financial
assumptions, trivial compared to the underlying critical assumptions, which include:

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InteliChild Business Plan
1. Continued growth of Internet usage. We ac cept published forec asts that say 4% of
the world's population presently uses the Internet, and that will grow to 11% by 2005.
That's strong growth.
2. No e-commerce disaster sc enarios. We'll have no huge problems with c redit card
authorization, shipping, etc.
3. Continued support of financial markets, which means continued rise in valuations of
Internet companies, even Internet companies losing money. The increase in valuation is
critical to our financial strategy.

Table: General Assumptions


General Assumptions
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 0.00% 0.00% 0.00%
Other 0 0 0

8.2 Key Financial Indicators


The following benchmarks chart indicates a very ambitious increase in sales and matching
increases in operating expenses. We expec t to improve ratios of inventory, payable days, and
collec tion days.

One of the more important assumptions is that we can increase sales at a very high rate without
corresponding increase in operating expenses. This is bec ause of the leverage available in use of
Internet technology as our main marketing and sales channel.

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InteliChild Business Plan

8.3 Break-even Analysis


The break-even analysis is a good financial indicator. The following table and chart show
break-even based on sales level per month and a high monthly fixed cost. Given those
assumptions, we reach steady-state break-even by the end of this first year.

Table: Break-even Analysis


Break-even Analysis

Monthly Units Break-even 8,948


Monthly Revenue Break-even $264,916

Assumptions:
Average Per-Unit Revenue $29.61
Average Per-Unit Variable Cost $11.84
Estimated Monthly Fixed Cost $158,950

8.4 Projected Profit and Loss


Despite the present trend towards investors encouraging losses for website businesses, we
believe that we can turn a profit by the third year. We also intend to reduce losses significantly
in the second year, as shown by the following table. Nevertheless, the investment in on-line and
off-line advertising is substantial, and the traffic justifies the loss.

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InteliChild Business Plan

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InteliChild Business Plan

Table: Profit and Loss


Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $765,200 $2,887,500 $6,375,000
Direct Cost of Sales $306,080 $1,155,000 $2,550,000
Production Payroll $81,000 $225,000 $305,000
Fulfillment $45,845 $0 $0
Total Cost of Sales $432,925 $1,380,000 $2,855,000

Gross Margin $332,275 $1,507,500 $3,520,000


Gross Margin % 43.42% 52.21% 55.22%

Operating Expenses

Sales and Marketing Expenses


Sales and Marketing Payroll $174,100 $315,000 $460,000
Online Advertising $640,880 $0 $0
Other Advertising $444,400 $0 $0
Collaterals $42,000 $0 $0
Events $20,000 $0 $0
Public Relations $27,000 $0 $0
Website Infrastructure $90,000 $0 $0
Other Sales and Marketing Expenses $12,000 $0 $0
Total Sales and Marketing Expenses $1,450,380 $315,000 $460,000
Sales and Marketing % 189.54% 10.91% 7.22%

General and Administrative Expenses


General and Administrative Payroll $176,700 $290,000 $370,000
Marketing/Promotion $0 $0 $0
Depreciation $2,000 $0 $0
Leased Equipment $9,000 $0 $0
Utilities $2,400 $0 $0
Insurance $500 $0 $0
Rent $42,000 $0 $0
Payroll Taxes $83,115 $163,800 $221,250
Other General and Administrative $0 $0 $0
Expenses
Total General and Administrative $315,715 $453,800 $591,250
Expenses
General and Administrative % 41.26% 15.72% 9.27%

Other Expenses:
Other Payroll $122,300 $262,000 $340,000
Consultants $0 $0 $0
Software & Equipment $19,000 $0 $0
Total Other Expenses $141,300 $262,000 $340,000
Other % 18.47% 9.07% 5.33%

Total Operating Expenses $1,907,395 $1,030,800 $1,391,250

Profit Before Interest and Taxes ($1,575,120) $476,700 $2,128,750


EBITDA ($1,573,120) $476,700 $2,128,750
Interest Expense $6,667 $32,750 $32,750
Taxes Incurred $0 $0 $0

Net Profit ($1,581,787) $443,950 $2,096,000


Net Profit/Sales -206.72% 15.37% 32.88%

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InteliChild Business Plan

8.5 Projected Cash Flow


As is to be expec ted in this kind of venture, the cash flow is supported mainly by new capital
from new investment in the company. We've sc heduled additional rounds of financing to make
that realistic.

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InteliChild Business Plan

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InteliChild Business Plan

Table: Cash Flow


Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received

Cash from Operations


Cash Sales $688,680 $2,598,750 $5,737,500
Cash from Receivables $30,364 $160,735 $427,137
Subtotal Cash from Operations $719,044 $2,759,485 $6,164,637

Additional Cash Received


Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $15,000 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $400,000 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $750,000 $0 $0
Subtotal Cash Received $1,869,044 $2,774,485 $6,164,637

Expenditures Year 1 Year 2 Year 3

Expenditures from Operations


Cash Spending $554,100 $1,092,000 $1,475,000
Bill Payments $1,543,999 $1,864,092 $2,814,373
Subtotal Spent on Operations $2,098,099 $2,956,092 $4,289,373

Additional Cash Spent


Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $15,000
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $80,000 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $2,178,099 $2,956,092 $4,304,373

Net Cash Flow ($309,055) ($181,607) $1,860,264


Cash Balance $184,945 $3,338 $1,863,603

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InteliChild Business Plan

8.6 Projected Balance Sheet


The balance sheet shows our projec ted financial position during the next three years.
Obviously the key variable during this period, overall valuation, isn't shown.

Table: Balance Sheet


Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets

Current Assets
Cash $184,945 $3,338 $1,863,603
Accounts Receivable $46,156 $174,171 $384,534
Inventory $122,342 $399,522 $516,071
Other Current Assets $5,000 $5,000 $5,000
Total Current Assets $358,443 $582,032 $2,769,209

Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $2,000 $2,000 $2,000
Total Long-term Assets ($2,000) ($2,000) ($2,000)
Total Assets $356,443 $580,032 $2,767,209

Liabilities and Capital Year 1 Year 2 Year 3

Current Liabilities
Accounts Payable $369,230 $133,868 $240,045
Current Borrowing $0 $15,000 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $369,230 $148,868 $240,045

Long-term Liabilities $320,000 $320,000 $320,000


Total Liabilities $689,230 $468,868 $560,045

Paid-in Capital $1,282,750 $1,282,750 $1,282,750


Retained Earnings ($33,750) ($1,615,537) ($1,171,587)
Earnings ($1,581,787) $443,950 $2,096,000
Total Capital ($332,787) $111,163 $2,207,163
Total Liabilities and Capital $356,443 $580,032 $2,767,209

Net Worth ($332,787) $111,163 $2,207,163

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InteliChild Business Plan

8.7 Business Ratios


Our ratios, as projec ted here, are typical of the kind of growth c ompany we projec t. The
comparisons are based on NAICS code 454111, Elec tronic Shopping. We do expec t our gross
margin and sales per employee to be much higher than standard retail.

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InteliChild Business Plan

Table: Ratios
Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth n.a. 277.35% 120.78% 7.56%

Percent of Total Assets


Accounts Receivable 12.95% 30.03% 13.90% 12.42%
Inventory 34.32% 68.88% 18.65% 38.62%
Other Current Assets 1.40% 0.86% 0.18% 26.81%
Total Current Assets 100.56% 100.34% 100.07% 77.85%
Long-term Assets -0.56% -0.34% -0.07% 22.15%
Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 103.59% 25.67% 8.67% 39.14%


Long-term Liabilities 89.78% 55.17% 11.56% 17.10%
Total Liabilities 193.36% 80.83% 20.24% 56.24%
Net Worth -93.36% 19.17% 79.76% 43.76%

Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 43.42% 52.21% 55.22% 35.35%
Selling, General & Administrative Expenses 250.14% 36.83% 22.34% 14.05%
Advertising Expenses 83.75% 0.00% 0.00% 4.21%
Profit Before Interest and Taxes -205.84% 16.51% 33.39% 1.42%

Main Ratios
Current 0.97 3.91 11.54 1.71
Quick 0.64 1.23 9.39 0.59
Total Debt to Total Assets 193.36% 80.83% 20.24% 64.96%
Pre-tax Return on Net Worth 475.32% 399.37% 94.96% 3.46%
Pre-tax Return on Assets -443.77% 76.54% 75.74% 9.88%

Additional Ratios Year 1 Year 2 Year 3


Net Profit Margin -206.72% 15.37% 32.88% n.a
Return on Equity 0.00% 399.37% 94.96% n.a

Activity Ratios
Accounts Receivable Turnover 1.66 1.66 1.66 n.a
Collection Days 49 139 160 n.a
Inventory Turnover 10.91 4.43 5.57 n.a
Accounts Payable Turnover 5.18 12.17 12.17 n.a
Payment Days 27 56 23 n.a
Total Asset Turnover 2.15 4.98 2.30 n.a

Debt Ratios
Debt to Net Worth 0.00 4.22 0.25 n.a
Current Liab. to Liab. 0.54 0.32 0.43 n.a

Liquidity Ratios
Net Working Capital ($10,787) $433,163 $2,529,163 n.a
Interest Coverage -236.27 14.56 65.00 n.a

Additional Ratios
Assets to Sales 0.47 0.20 0.43 n.a
Current Debt/Total Assets 104% 26% 9% n.a
Acid Test 0.51 0.06 7.78 n.a
Sales/Net Worth 0.00 25.98 2.89 n.a

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InteliChild Business Plan
Dividend Payout 0.00 0.00 0.00 n.a

8.8 Exit Strategy


Details of the exit strategy are included in two following tables:

1. The Investment Analysis table details how we expec t valuation to proc eed over time,
linked in to the planned rounds of financing.
2. The table included here shows how we plan to distribute equity and shares over time, and
planned ending valuation of $23 million and investment yield for three rounds of
investment.

Equity Shares and Investment Return

Round Amount Shares Per share Year 2003 Value IRR %


($000)
Seed $500K 1.5 million $0.33 1999 $8.4 million 157 %
Round 1 $750K 750K $1.00 2000 $4.2 million 138%
Round 2 $2 million 800K $2.50 2001 $4.5 million 126%

Page 30
Appendix
Table: Sales Forecast

Sales Forecast
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Unit Sales
Toys and Games 0% 0 0 0 79 213 295 610 1,358 1,957 3,043 4,314 5,753
Books 0% 0 0 0 0 0 0 0 272 326 761 863 2,397
Software 0% 0 0 0 0 0 0 0 0 326 761 1,079 1,438
Total Unit Sales 0 0 0 79 213 295 610 1,630 2,609 4,565 6,256 9,588

Unit Prices Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Toys and Games $30.00 $30.00 $30.00 $30.00 $30.00 $30.00 $30.00 $30.00 $30.00 $30.00 $30.00 $30.00
Books $20.00 $20.00 $20.00 $20.00 $20.00 $20.00 $20.00 $20.00 $20.00 $20.00 $20.00 $20.00
Software $40.00 $40.00 $40.00 $40.00 $40.00 $40.00 $40.00 $40.00 $40.00 $40.00 $40.00 $40.00

Sales
Toys and Games $0 $0 $0 $2,370 $6,390 $8,850 $18,300 $40,740 $58,710 $91,290 $129,420 $172,590
Books $0 $0 $0 $0 $0 $0 $0 $5,440 $6,520 $15,220 $17,260 $47,940
Software $0 $0 $0 $0 $0 $0 $0 $0 $13,040 $30,440 $43,160 $57,520
Total Sales $0 $0 $0 $2,370 $6,390 $8,850 $18,300 $46,180 $78,270 $136,950 $189,840 $278,050

Direct Unit Costs Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Toys and Games 0.00% $12.00 $12.00 $12.00 $12.00 $12.00 $12.00 $12.00 $12.00 $12.00 $12.00 $12.00 $12.00
Books 0.00% $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00
Software 0.00% $16.00 $16.00 $16.00 $16.00 $16.00 $16.00 $16.00 $16.00 $16.00 $16.00 $16.00 $16.00

Direct Cost of Sales


Toys and Games $0 $0 $0 $948 $2,556 $3,540 $7,320 $16,296 $23,484 $36,516 $51,768 $69,036
Books $0 $0 $0 $0 $0 $0 $0 $2,176 $2,608 $6,088 $6,904 $19,176
Software $0 $0 $0 $0 $0 $0 $0 $0 $5,216 $12,176 $17,264 $23,008
Subtotal Direct Cost of Sales $0 $0 $0 $948 $2,556 $3,540 $7,320 $18,472 $31,308 $54,780 $75,936 $111,220

Page 1
Appendix
Table: Personnel

Personnel Plan
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Production Personnel
VP Support $0 $0 $0 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $4,000 $4,000 $4,000
Support Engineers $0 $0 $0 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Support Technicians $0 $0 $0 $0 $0 $0 $0 $3,000 $3,000 $3,000 $6,000 $6,000
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal $0 $0 $0 $6,500 $6,500 $6,500 $6,500 $9,500 $9,500 $10,000 $13,000 $13,000

Sales and Marketing Personnel


VP Sales & Marketing $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000
Business Development $0 $0 $0 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500
Sales Systems $0 $0 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Sales Technicians $0 $0 $2,500 $2,500 $2,500 $2,500 $2,500 $3,000 $3,900 $5,200 $6,800 $9,200
Other $0 $0 $0 $0 $0 $0 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
Subtotal $5,000 $5,000 $10,500 $14,000 $14,000 $14,000 $16,000 $16,500 $17,400 $18,700 $20,300 $22,700

General and Administrative Personnel


CEO $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000
CFO $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000
General Admin $0 $0 $0 $0 $0 $3,000 $3,300 $4,300 $5,500 $6,700 $7,900 $12,000
Other $0 $0 $0 $0 $0 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
Subtotal $10,000 $10,000 $10,000 $10,000 $10,000 $15,000 $15,300 $16,300 $17,500 $18,700 $19,900 $24,000

Other Personnel
CTO $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000
Devel Systems $0 $0 $0 $0 $0 $0 $4,000 $4,400 $5,100 $6,400 $7,900 $12,000
Devel Engineers $0 $0 $0 $0 $0 $0 $0 $0 $3,000 $4,500 $6,000 $9,000
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $9,000 $9,400 $13,100 $15,900 $18,900 $26,000

Total People 4 4 5 6 6 7 9 11 13 15 17 18

Total Payroll $20,000 $20,000 $25,500 $35,500 $35,500 $40,500 $46,800 $51,700 $57,500 $63,300 $72,100 $85,700

Page 2
Appendix
Table: Profit and Loss

Pro Forma Profit and Loss


Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales $0 $0 $0 $2,370 $6,390 $8,850 $18,300 $46,180 $78,270 $136,950 $189,840 $278,050
Direct Cost of Sales $0 $0 $0 $948 $2,556 $3,540 $7,320 $18,472 $31,308 $54,780 $75,936 $111,220
Production Payroll $0 $0 $0 $6,500 $6,500 $6,500 $6,500 $9,500 $9,500 $10,000 $13,000 $13,000
Fulfillment $0 $0 $2,000 $2,079 $2,213 $2,295 $2,610 $3,630 $4,610 $6,565 $8,255 $11,588
Total Cost of Sales $0 $0 $2,000 $9,527 $11,269 $12,335 $16,430 $31,602 $45,418 $71,345 $97,191 $135,808

Gross Margin $0 $0 ($2,000) ($7,157) ($4,879) ($3,485) $1,870 $14,578 $32,852 $65,605 $92,649 $142,242
Gross Margin % 0.00% 0.00% 0.00% -301.98% -76.35% -39.38% 10.22% 31.57% 41.97% 47.90% 48.80% 51.16%

Operating Expenses

Sales and Marketing Expenses


Sales and Marketing Payroll $5,000 $5,000 $10,500 $14,000 $14,000 $14,000 $16,000 $16,500 $17,400 $18,700 $20,300 $22,700
Online Advertising $5,000 $17,900 $22,000 $26,100 $29,535 $36,735 $46,335 $63,135 $81,135 $95,535 $105,135 $112,335
Other Advertising $0 $0 $11,535 $23,535 $34,435 $39,835 $44,335 $50,735 $54,235 $58,335 $61,885 $65,535
Collaterals $2,000 $0 $0 $10,000 $0 $0 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000
Events $0 $0 $0 $10,000 $0 $0 $10,000 $0 $0 $0 $0 $0
Public Relations $0 $0 $0 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Website Infrastructure $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000
Other Sales and Marketing $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Expenses
Total Sales and Marketing $16,000 $26,900 $48,035 $90,635 $84,970 $97,570 $137,670 $151,370 $173,770 $193,570 $208,320 $221,570
Expenses
Sales and Marketing % 0.00% 0.00% 0.00% 3824.26% 1329.73% 1102.49% 752.30% 327.78% 222.01% 141.34% 109.73% 79.69%

General and Administrative Expenses


General and Administrative Payroll $10,000 $10,000 $10,000 $10,000 $10,000 $15,000 $15,300 $16,300 $17,500 $18,700 $19,900 $24,000
Marketing/Promotion $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $2,000
Leased Equipment $750 $750 $750 $750 $750 $750 $750 $750 $750 $750 $750 $750
Utilities $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200
Insurance $500 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Rent $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000
Payroll Taxes 15% $3,000 $3,000 $3,825 $5,325 $5,325 $6,075 $7,020 $7,755 $8,625 $9,495 $10,815 $12,855
Other General and Administrative $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Expenses
Total General and Administrative $16,450 $15,950 $16,775 $18,275 $18,275 $24,025 $28,270 $30,005 $32,075 $34,145 $36,665 $44,805
Expenses

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Appendix
General and Administrative % 0.00% 0.00% 0.00% 771.10% 285.99% 271.47% 154.48% 64.97% 40.98% 24.93% 19.31% 16.11%

Other Expenses:
Other Payroll $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $9,000 $9,400 $13,100 $15,900 $18,900 $26,000
Consultants $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Software & Equipment $2,000 $2,000 $2,000 $10,000 $2,000 $1,000 $0 $0 $0 $0 $0 $0
Total Other Expenses $7,000 $7,000 $7,000 $15,000 $7,000 $6,000 $9,000 $9,400 $13,100 $15,900 $18,900 $26,000
Other % 0.00% 0.00% 0.00% 632.91% 109.55% 67.80% 49.18% 20.36% 16.74% 11.61% 9.96% 9.35%

Total Operating Expenses $39,450 $49,850 $71,810 $123,910 $110,245 $127,595 $174,940 $190,775 $218,945 $243,615 $263,885 $292,375

Profit Before Interest and Taxes ($39,450) ($49,850) ($73,810) ($131,067) ($115,124) ($131,080) ($173,070) ($176,197) ($186,093) ($178,010) ($171,236) ($150,133)
EBITDA ($39,450) ($49,850) ($73,810) ($131,067) ($115,124) ($131,080) ($173,070) ($176,197) ($186,093) ($178,010) ($171,236) ($148,133)
Interest Expense $0 $0 $0 $0 $0 $0 $0 $0 $1,500 $1,333 $1,167 $2,667
Taxes Incurred $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Net Profit ($39,450) ($49,850) ($73,810) ($131,067) ($115,124) ($131,080) ($173,070) ($176,197) ($187,593) ($179,343) ($172,403) ($152,800)
Net Profit/Sales 0.00% 0.00% 0.00% -5530.25% -1801.63% -1481.13% -945.74% -381.54% -239.67% -130.96% -90.81% -54.95%

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Appendix
Table: Cash Flow

Pro Forma Cash Flow


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

Cash from Operations


Cash Sales $0 $0 $0 $2,133 $5,751 $7,965 $16,470 $41,562 $70,443 $123,255 $170,856 $250,245
Cash from Receivables $0 $0 $0 $0 $8 $250 $647 $917 $1,923 $4,725 $8,023 $13,871
Subtotal Cash from Operations $0 $0 $0 $2,133 $5,759 $8,215 $17,117 $42,479 $72,366 $127,980 $178,879 $264,116

Additional Cash Received


Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $200,000 $0 $0 $200,000
Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Investment Received $0 $0 $0 $0 $500,000 $0 $0 $0 $250,000 $0 $0 $0
Subtotal Cash Received $0 $0 $0 $2,133 $505,759 $8,215 $17,117 $42,479 $522,366 $127,980 $178,879 $464,116

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

Expenditures from Operations


Cash Spending $20,000 $20,000 $25,500 $35,500 $35,500 $40,500 $46,800 $51,700 $57,500 $63,300 $72,100 $85,700
Bill Payments $648 $19,797 $30,465 $49,999 $98,607 $88,207 $102,120 $149,869 $184,262 $224,360 $279,966 $315,699
Subtotal Spent on Operations $20,648 $39,797 $55,965 $85,499 $134,107 $128,707 $148,920 $201,569 $241,762 $287,660 $352,066 $401,399

Additional Cash Spent


Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $20,000 $20,000 $20,000 $20,000
Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Spent $20,648 $39,797 $55,965 $85,499 $134,107 $128,707 $148,920 $201,569 $261,762 $307,660 $372,066 $421,399

Net Cash Flow ($20,648) ($39,797) ($55,965) ($83,366) $371,652 ($120,492) ($131,802) ($159,090) $260,604 ($179,680) ($193,187) $42,717
Cash Balance $473,352 $433,555 $377,590 $294,224 $665,876 $545,384 $413,582 $254,492 $515,096 $335,415 $142,228 $184,945

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Appendix
Table: Balance Sheet

Pro Forma Balance Sheet


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

Current Assets
Cash $494,000 $473,352 $433,555 $377,590 $294,224 $665,876 $545,384 $413,582 $254,492 $515,096 $335,415 $142,228 $184,945
Accounts Receivable $0 $0 $0 $0 $237 $868 $1,503 $2,686 $6,387 $12,291 $21,261 $32,223 $46,156
Inventory $0 $0 $0 $0 $1,043 $2,812 $3,894 $8,052 $20,319 $34,439 $60,258 $83,530 $122,342
Other Current Assets $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000
Total Current Assets $499,000 $478,352 $438,555 $382,590 $300,503 $674,556 $555,781 $429,319 $286,198 $566,826 $421,934 $262,980 $358,443

Long-term Assets
Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Accumulated Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $2,000
Total Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 ($2,000)
Total Assets $499,000 $478,352 $438,555 $382,590 $300,503 $674,556 $555,781 $429,319 $286,198 $566,826 $421,934 $262,980 $356,443

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

Current Liabilities
Accounts Payable $0 $18,802 $28,855 $46,700 $95,680 $84,857 $97,162 $143,770 $176,846 $215,067 $269,519 $302,967 $369,230
Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Current Liabilities $0 $18,802 $28,855 $46,700 $95,680 $84,857 $97,162 $143,770 $176,846 $215,067 $269,519 $302,967 $369,230

Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $180,000 $160,000 $140,000 $320,000


Total Liabilities $0 $18,802 $28,855 $46,700 $95,680 $84,857 $97,162 $143,770 $176,846 $395,067 $429,519 $442,967 $689,230

Paid-in Capital $532,750 $532,750 $532,750 $532,750 $532,750 $1,032,750 $1,032,750 $1,032,750 $1,032,750 $1,282,750 $1,282,750 $1,282,750 $1,282,750
Retained Earnings ($33,750) ($33,750) ($33,750) ($33,750) ($33,750) ($33,750) ($33,750) ($33,750) ($33,750) ($33,750) ($33,750) ($33,750) ($33,750)
Earnings $0 ($39,450) ($89,300) ($163,110) ($294,177) ($409,301) ($540,381) ($713,451) ($889,648) ($1,077,241) ($1,256,584) ($1,428,987) ($1,581,787)
Total Capital $499,000 $459,550 $409,700 $335,890 $204,823 $589,699 $458,619 $285,549 $109,352 $171,759 ($7,584) ($179,987) ($332,787)
Total Liabilities and Capital $499,000 $478,352 $438,555 $382,590 $300,503 $674,556 $555,781 $429,319 $286,198 $566,826 $421,934 $262,980 $356,443

Net Worth $499,000 $459,550 $409,700 $335,890 $204,823 $589,699 $458,619 $285,549 $109,352 $171,759 ($7,584) ($179,987) ($332,787)

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Appendix
Table: General Assumptions

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

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