Basket of Goodies

8/8/2019 Basket of Goodies

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January 2001

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1.0 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1 Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.2 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

2.0 Company Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.1 Company Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.2 Start-up Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

3.0 Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

4.0 Market Analysis Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.1 Market Segmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54.2 Target Market Segment Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54.3 Competition and Buying Patterns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

5.0 Strategy and Implementation Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65.1 Competitive Edge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65.2 Sales Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

5.2.1 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75.3 Milestones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

6.0 Management Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96.1 Personnel Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

7.0 Financial Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107.1 Important Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107.2 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117.3 Projected Profit and Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127.4 Projected Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

7.5 Projected Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Table of Contents



1.0 Executive Summary

IntroductionBasket of Goodies (BOG) is a premier gift basket manufacturer and retailer. BOG isconcentrating on making gourmet gift baskets out of a wide range of high-quality ingredients.In addition to having several flagship baskets, BOG will also offer the option of a custombasket allowing the customer to choose the ingredients themselves. BOG will be selling toindividuals as well as corporations. Initially the bulk of BOG's business will be generated byindividuals from word of mouth referrals, but as time passes, corporations will become agrowing percentage of sales.

Once up and running with some momentum, BOG will be steadily producing profits. It isprojected that BOG will be making a profit by December. By the end of year three, it isprojected that BOG will be generating over $5,000 in income.

The CompanyThe Basket of Goodies' mission is to create the finest gift baskets available. BOG, soon to belocated in Salem, OR, will be hand assembling our products out of premier ingredients, localwhen possible. The business will be based out of Susan Presento's home. Although this will be

a home-based business, toward the end of year one Susan will have an employee.

Susan Presento, founder and owner, managed a flower shop in Salem for three years and thishas given her insight to the gift giving practices of Oregonians. The primary gift baskets thatwill be offered are: smoked fish basket, fruit basket, pasta dinner basket, and picnic basketthat has caviar, crackers, fruit, and smoked fish. BOG also offers a custom basket which allowscustomers to pick items from a list and BOG will assemble the basket with its customingredients.

The MarketThe purchasing of gift baskets is very "seasonal." More than half of the gift basket purchasingoccurs during a wide variety of holidays.

BOG's competitive advantage will be based on two factors, low overhead which allowsreasonable prices, and an unrelenting desire for the highest quality product and service.

1. Low overhead.2. Highest quality product and service.

BOG's sales strategy will be targeted at obtaining both the individual and corporate clientsthrough word-of-mouth referrals. Customers will be able to place an order at the office, overthe phone or via the website.

Financials BOG's start-up costs will include all the equipment needed for the home-based office, legal

The Basket of Goodies



1.1 Objectives

The objectives for the first three years of operation include:1. To create a home-based company whose primary goal is to exceed customer's

expectations.2. To increase the number of clients served by at least 20% per year through superior

performance and word of mouth referrals.3. To develop a sustainable home business, surviving off its own cash flow.

1.2 Mission

The Basket of Goodies' mission is to create the finest gift baskets available. We exist to attractand maintain customers. When we adhere to this maxim, everything else will fall into place.Our products and services will exceed the expectations of our customers.

2.0 Company Summary

BOG, soon to be located in Salem, OR will offer a wide range of gourmet gift baskets,production as well as custom units. BOG will be hand assembling the baskets out of premieringredients, local when possible. The business will be based out of Susan Presento's home.Although this will be a home-based business, toward the end of year one Susan will have anemployee. If the business goes per the forecasted plan, the business will achieve profits by theend of year one.

2.1 Company Ownership

The Basket of Goodies will be a sole proprietorship, owned by Susan Presento.

2.2 Start-up Summary

BOG's start-up costs will include all the equipment needed for the home-based office, legalfees, website creation, and start-up advertising. The home office equipment will be the largestchunk of the start-up expenses. This equipment includes a computer system, fax machine,office supplies, cellular phone, and pager. The computer should have a 500 megahertzCeleron/Pentium processor, 64 megabytes of RAM (preferably 128), 6 gigabyte hard drive, and




$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

Expenses Assets Investment Loans

Start-up

3.0 Products

BOG sells gourmet, hand-assembled gift baskets. Their premier baskets are: smoked fishbasket, fruit basket, pasta dinner basket, and picnic basket that has caviar, crackers, fruit, and

smoked fish. BOG also offers a custom basket which allow customers to pick items from a listand BOG will assemble the basket with their custom ingredients.

For the customer baskets, BOG will provide a list of options grouped into four differentcategories. The customer then chooses two items from each of the four categories and the giftbasket is made for them. BOG highlights four previously mentioned premier baskets. Inaddition to these, BOG will typically have one or two specials, often seasonally based.

4.0 Market Analysis Summary

BOG will be going after two distinct market segments, individuals and corporations. Bothgroups buy gift baskets as a goodwill gesture, typically for different reasons. Individualstypically buy the baskets as a present with over half of sales occur during holidays.Corporations buy the baskets as presents as well but usually for events unrelated to the




4.1 Market Segmentation

BOG's has two distinct groups of customers, individuals and corporate customers:1. Individuals- The individuals are people who are looking to give a friend, relative,

colleague, etc., a gift basket as a gesture of goodwill. These customers typically do nothave a specific type of gift basket in mind when they look at BOG's product offerings,they just want to give a gift.

2. Corporate- The corporate customer is typically buying the basket for a colleague atwork, either as a sign of appreciation, for a special event, or as a thank you for acustomer. The corporate market can be further broken down to banks, health care,employment gifts, real estate, apartments, special events/promotions, corporateheadquarters, hotels/vacation resorts, and automobile dealerships.

Individuals

Corporations

Market Analysis (Pie)

Table: Market Analysis

Market AnalysisPotential Customers Growth 2001 2002 2003 2004 2005 CAGRIndividuals 8% 14,258 15,399 16,631 17,961 19,398 8.00%Corporations 12% 298 334 374 419 469 12.01%Total 8.09% 14,556 15,733 17,005 18,380 19,867 8.09%




of the purchasers of gift baskets. The corporate customer could be buying the basket forsomeone within their company, or they could be buying it for a customer, vendor, etc. Thetrend for the corporation to purchase gifts is not a new phenomenon and therefore wouldappear to be a solid market segment to pursue.

4.3 Competition and Buying Patterns

There are many different forms of competition in the gift basket business:1. Similar gift basket type retail stores: There are several of these stores located in

Salem. These competitors offer a wide range of gift baskets, however none of them areconcentrating on the higher end, gourmet product line.2. Nut/fruit companies: There are several stores that concentrate on nuts and or fruit

baskets.3. Bath product gift basket companies: There is currently one gift basket company

that concentrates on bath products. Bath products have a slightly smaller population of people who appreciate these products (as women predominately appreciate bathproducts more then men do).

4. Regional gift basket: There is one retailer that sells gift baskets composed of localproducts. These type of baskets tend to appeal to people that are buying gifts forpeople that are not from this area.

5. Candy gift baskets: There are several candy stores that offer, as one on theirproducts, a candy gift basket. Similar to the bath products basket, candy typicallyappeals to women a bit more so then men.

6. Florists: Flowers are a similar product that competes with gift baskets. Once againflowers tend to appeal to women more so then men.

The purchasing of gift baskets is very "seasonal." More than half of the gift basket purchasingoccurs during a wide variety of holidays.

5.0 Strategy and Implementation Summary

BOG's marketing and sales strategy will be based on two different types of media, brochuresand a website. Through these two tools, customers will become familiar with BOG's products.BOG will also heavily rely on word of mouth referrals for business. BOG does not anticipate

any difficulties in developing these referrals as BOG's mission is customer centric. Everythingthey do revolves around developing a happy customer.

5.1 Competitive Edge




2. Unrelenting desire for the highest quality product and service. This market space isalready crowded, a mediocre gift basket service will not succeed, so there must be

some sort of differentiation. Susan only uses the finest quality ingredients and canafford to because of her low overhead. Additionally, she always follows the maxim thatthe customer must be 100% satisfied. That means she is willing to loose money in theshort run if necessary to please a customer, confident that in the long run that this is awise business decision.

5.2 Sales Strategy

BOG's sales strategy will be targeted at obtaining both the individual and corporate clients. Itis our belief that the individual customers will be primarily obtained through word of mouthreferrals. It is likely that they will have spoken to a previous client about BOG and the referralof our services will speak for itself. Our sales strategy will be to use an emphasis on our valueand high quality when trying to close the sale of the prospect. The prospective client can get asimilar product from a number of different vendors. BOG will attempt to close the sale byshowing the high quality of the basket by highlighting some of the individual ingredients.BOG's expectation is that once they are impressed with the quality of the basket, they willthen be surprised that it is priced the same as competing products. The combination of theperception of higher quality and the recognition of value should turn a lead into a customer.

Additionally, we provide several ways to procure the baskets. One way is for the customer tocome by the office and place the order. The customer can also place the order through aphone call. Either they have ordered before, or are looking at a brochure and know what theywant, or they can visit our website for a complete catalog of our products. To receive theproduct, they can pick up the product, or they may have it shipped via UPS. BOG believes thatby providing the customer a wide range of options, they will feel that they are special as we

will do a wide range of services to accommodate them. Our sales strategy for individuals andparticularly corporations will be based on our Web presence in conjunction with our printedcatalog. Both media will have detailed information about our service offerings.

Through our marketing efforts we will be driving people to our website and/or catalog. Once onour website, people will see the wide range of product offerings we have and then can contactus. The website will be especially useful for someone out of town who is need of a gift forsomeone. BOG expects the corporate customers to utilize the website as a catalog, as well asan order taker, because it takes less time for them to order on the Web then it does from

them to do in person.

5.2.1 Sales Forecast




has a friend who works at a large company and she will serve as a consultant for ways of increasing corporate purchases. Because Susan's husband will be helping out with picking upsome of the materials, Susan will not need an employee until near the end of year one.

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Individuals

Corporations

Sales Monthly (Planned)

Table: Sales Forecast (Planned)

Sales Forecast

Sales 2001 2002 2003Individuals $33,640 $64,575 $78,452Corporations $9,905 $28,744 $31,458Total Sales $43,545 $93,319 $109,910

Direct Cost of Sales 2001 2002 2003Individuals $11,484 $18,474 $24,124Corporations $3,505 $7,854 $9,898Subtotal Direct Cost of Sales $14,989 $26,328 $34,022

5.3 Milestones

BOG will have several milestones early on:1. Business plan completion. This will be done as a road map for the company. While BOG

does not need a business plan to raise capital, it will be an indispensable tool for theongoing performance and improvement of the company.




Table: Milestones (Planned)

MilestonesMilestone Start Date End Date Budget Manager DepartmentBusiness plan completion 1/1/01 1/1/01 SusanSet-up office 1/1/01 1/1/01 SusanProduction of brochure andwebsite

1/1/01 2/1/01 Susan

Name me 3/1/01 3/1/01 SusanTotals $0

6.0 Management Summary

BOG will be formed as a sole proprietorship, owned and operated by Susan Presento. There isno compelling need to incorporate. The advantage of incorporation would be limited liability,yet the disadvantage would be the set-up costs and maintenance (tax disadvantages). Acomprehensive insurance policy should cover any liability that BOG is exposed to.

Susan Presento, founder and owner, has a degree in communications from the University of Portland. During her undergraduate years, Susan worked at Nothstroms, perfecting her

customer-centric perspective. After graduation, Susan managed a flower shop in Salem. It wasduring these three years that Susan gained her insight to the gift giving practices of Oregonians. Susan also gained valuable management experience in her work at the florist.Susan will be relying on Robert Presento, her husband to help out in the pick up of theingredients of her products. In addition to Robert's help, Susan will be using Jennifer Simonwho works in the purchasing department of a large corporation. Jennifer will act as aconsultant regarding the purchasing habits of corporations, a niche of the industry that Susanwould like to be a part of.

6.1 Personnel Plan

The staff of BOG will consist of Susan working full time. Susan's husband Robert will help withinventory procurement but will not be listed on the payroll. Robert will be picking up inventoryon his way home from work occasionally and will not be billing BOG for his work. JenniferSimon will be an consultant for BOG for insight into the corporate market. By month eight BOGwill have gotten fairly busy, at least for Susan and she will bring on board a part-time

employee. This employee will be used for the assembly of the baskets.

Table: Personnel (Planned)

Personnel Plan2001 2002 2003

Susan $24,000 $24,000 $24,000




7.0 Financial Plan

The following sections will outline the important financial data.

7.1 Important Assumptions

The following table details important financial assumptions for BOG.

Table: General Assumptions

General Assumptions2001 2002 2003

Short-term Interest Rate % 10.00% 10.00% 10.00%Long-term Interest Rate % 10.00% 10.00% 10.00%Tax Rate % 25.00% 25.00% 25.00%Expenses in Cash % 10.00% 10.00% 10.00%Personnel Burden % 15.00% 15.00% 15.00%




7.2 Break-even Analysis

The Break-even Analysis indicates BOG will need to sell 267 baskets per month to break even.

($4,000)

($3,000)

($2,000)

($1,000)

$0

$1,000

$2,000

$3,000

$0 $1,600 $3,200 $4,800 $6,400 $8,000

Monthly break-even point

Break-even point = where line intersects with 0

Break-even Analysis

Table: Break-even Analysis

Break-even Analysis:Monthly Units Break-even 4,917Monthly Sales Break-even $4,917

Assumptions: Average Per-Unit Revenue $1.00 Average Per-Unit Variable Cost $0.34Est imated Monthly Fixed Cost $3,225




7.3 Projected Profit and Loss

The following table will indicate projected profit and loss.

Table: Profit and Loss (Planned)

Pro Forma Profit and Loss2001 2002 2003

Sales $43,545 $93,319 $109,910Direct Cost of Sales $14,989 $26,328 $34,022Other $0 $0 $0

------------ ------------ ------------Total Cost of Sales $14,989 $26,328 $34,022Gross Margin $28,556 $66,991 $75,888Gross Margin % 65.58% 71.79% 69.05%Operating Expenses:

Advertising/Promotion $0 $0 $0Travel $0 $0 $0Miscellaneous $1,200 $1,200 $1,200Payroll Expense $31,500 $39,000 $39,000Payroll Burden $4,725 $5,850 $5,850Depreciation $672 $672 $672

Leased Equipment $0 $0 $0Utilities $0 $0 $0Insurance $600 $600 $600Rent $0 $0 $0Contract/Consultants $0 $0 $0

------------ ------------ ------------Total Operating Expenses $38,697 $47,322 $47,322Profit Before Interest and Taxes ($10,141) $19,669 $28,566Interest Expense Short-term $0 $0 $0Interest Expense Long-term $0 $0 $0Taxes Incurred $0 $4,917 $7,142

Extraordinary Items $0 $0 $0Net Profit ($10,141) $14,752 $21,425Net Profit/Sales -23.29% 15.81% 19.49%




7.4 Projected Cash Flow

The following chart and table will indicate projected cash flow.

($5,000)

$0

$5,000

$10,000

$15,000

$20,000

$25,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Net Cash Flow

Cash Balance

Cash (Planned)




Table: Cash Flow (Planned)

Pro Forma Cash Flow 2001 2002 2003

Cash ReceivedCash from Operations:Cash Sales $43,545 $93,319 $109,910From Receivables $0 $0 $0

Subtotal Cash from Operations $43,545 $93,319 $109,910

Additional Cash ReceivedExtraordinary Items $0 $0 $0Sales Tax, VAT, HST/GST Received $0 $0 $0New Current Borrowing $0 $0 $0New Other Liabilities (interest-free) $0 $0 $0New Long-term Liabilities $0 $0 $0Sales of other Short-term Assets $0 $0 $0Sales of Long-term Assets $0 $0 $0New Investment Received $0 $0 $0

Subtotal Cash Received $43,545 $93,319 $109,910

Expenditures 2001 2002 2003Expenditures from Operations:Cash Spent on Costs and Expenses $1,986 $3,159 $3,000

Wages, Salaries, Payroll Taxes, etc. $36,225 $44,850 $44,850Payment of Accounts Payable $17,704 $43,505 $100,775Subtotal Spent on Operations $55,915 $91,514 $148,624

Additional Cash SpentSales Tax, VAT, HST/GST Paid Out $0 $0 $0Principal Repayment of Current Borrowing $0 $0 $0Other Liabilities Principal Repayment $0 $0 $0Long-term Liabilities Principal Repayment $0 $0 $0Purchase Other Short-term Assets $0 $0 $0Purchase Long-term Assets $0 $0 $0

Dividends $0 $0 $0Adjustment for Assets Purchased on Credit $0 $0 $0Subtotal Cash Spent $55,915 $91,514 $148,624

Net Cash Flow ($12,370) $1,805 ($38,714)Cash Balance $10,280 $12,085 ($26,630)




7.5 Projected Balance Sheet

The following table will indicate the projected balance sheet.

Table: Balance Sheet (Planned)

Pro Forma Balance Sheet

AssetsShort-term Assets 2001 2002 2003Cash $10,280 $12,085 ($26,630)

Inventory $12,656 $27,440 $59,620Other Short-term Assets $0 $0 $0Total Short-term Assets $22,936 $39,525 $32,991Long-term AssetsLong-term Assets $2,000 $2,000 $2,000

Accumulated Depreciation $672 $1,344 $2,016Total Long-term Assets $1,328 $656 ($16)Total Assets $24,264 $40,181 $32,975

Liabilities and Capital2001 2002 2003

Accounts Payable $174 ($14,902) ($88,681)Current Borrowing $0 $0 $0Other Short-term Liabilities $0 $0 $0Subtotal Short-term Liabilities $174 ($14,902) ($88,681)

Long-term Liabilities $0 $0 $0Total Liabilities $174 ($14,902) ($88,681)

Paid-in Capital $28,000 $28,000 $28,000Retained Earnings ($3,350) ($13,491) $1,261Earnings ($10,141) $14,752 $21,425

Total Capital $14,509 $29,261 $50,685Total Liabilities and Capital $14,683 $14,359 ($37,995)Net Worth $24,090 $55,083 $121,655




Appendix Table: Sales Forecast (Planned)

Sales Forecast

Sales Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecIndividuals $0 $0 $1,245 $1,854 $1,987 $2,854 $3,254 $3,475 $3,654 $3,758 $4,014 $7,545Corporations $0 $0 $75 $187 $421 $564 $745 $887 $998 $1,014 $1,645 $3,369Total Sales $0 $0 $1,320 $2,041 $2,408 $3,418 $3,999 $4,362 $4,652 $4,772 $5,659 $10,914

Direct Cost of Sales Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecIndividuals $0 $0 $621 $751 $812 $1,354 $1,547 $1,354 $1,345 $1,345 $154 $2,201Corporations $0 $0 $35 $64 $158 $225 $354 $321 $351 $352 $658 $987Subtotal Direct Cost of Sales $0 $0 $656 $815 $970 $1,579 $1,901 $1,675 $1,696 $1,697 $812 $3,188

Appendix

Page 1



Appendix Table: Person nel (Planned)

Personnel Plan

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecSusan $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000Part-time employee $0 $0 $0 $0 $0 $0 $0 $1,500 $1,500 $1,500 $1,500 $1,500Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Payroll $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $3,500 $3,500 $3,500 $3,500 $3,500

Total People 1 1 1 1 1 1 1 2 2 2 2 2Payroll Burden $300 $300 $300 $300 $300 $300 $300 $525 $525 $525 $525 $525Total Payroll Expenditures $2,300 $2,300 $2,300 $2,300 $2,300 $2,300 $2,300 $4,025 $4,025 $4,025 $4,025 $4,025

Appendix

Page 2



Appendix Table: General Assumptions

General Assumptions

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecShort-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%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 % 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00%Expenses in Cash % 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%Personnel Burden % 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00%

Appendix

Page 3



Appendix Table: Profit and Loss (Planned)

Pro Forma Profit and Loss

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecSales $0 $0 $1,320 $2,041 $2,408 $3,418 $3,999 $4,362 $4,652 $4,772 $5,659 $10,914Direct Cost of Sales $0 $0 $656 $815 $970 $1,579 $1,901 $1,675 $1,696 $1,697 $812 $3,188Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

---- ---- ---- ---- ---- ---- - ---- --- ---- ---- ---- ---- - ---- --- ---- - ---- --- ---- - ---- --- ---- - ---- --- ---- - ---- ---- --- - ---- --- ---- - ---- ----- -- -- ---- ---- --Total Cost of Sales $0 $0 $656 $815 $970 $1,579 $1,901 $1,675 $1,696 $1,697 $812 $3,188Gross Margin $0 $0 $664 $1,226 $1,438 $1,839 $2,098 $2,687 $2,956 $3,075 $4,847 $7,726Gross Margin % 0.00% 0.00% 50.30% 60.07% 59.72% 53.80% 52.46% 61.60% 63.54% 64.44% 85.65% 70.79%Operating Expenses: Advertising/Promotion $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Travel $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Miscellaneous $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100Payroll Expense $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $3,500 $3,500 $3,500 $3,500 $3,500Payroll Burden $300 $300 $300 $300 $300 $300 $300 $525 $525 $525 $525 $525Depreciation $56 $56 $56 $56 $56 $56 $56 $56 $56 $56 $56 $56Leased Equipment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Utilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Insurance $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50Rent $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Contract/Consultants $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

---- ---- ---- ---- ---- ---- - ---- --- ---- ---- ---- ---- - ---- --- ---- - ---- --- ---- - ---- --- ---- - ---- --- ---- - ---- ---- --- - ---- --- ---- - ---- ----- -- -- ---- ---- --Total Operating Expenses $2,506 $2,506 $2,506 $2,506 $2,506 $2,506 $2,506 $4,231 $4,231 $4,231 $4,231 $4,231Profit Before Interest and Taxes ($2,506) ($2,506) ($1,842) ($1,280) ($1,068) ($667) ($408) ($1,544) ($1,275) ($1,156) $616 $3,495Interest Expense Short-term $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Interest Expense Long-term $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Taxes Incurred $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Extraordinary Items $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Net Profit ($2,506) ($2,506) ($1,842) ($1,280) ($1,068) ($667) ($408) ($1,544) ($1,275) ($1,156) $616 $3,495Net Profit/Sales 0.00% 0.00% -139.55% -62.71% -44.35% -19.51% -10.20% -35.40% -27.41% -24.22% 10.89% 32.02%

Appendix

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Appendix Table: Cash Flow (Planned)

Pro Forma Cash Flow Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Cash ReceivedCash from Operations:Cash Sales $0 $0 $1,320 $2,041 $2,408 $3,418 $3,999 $4,362 $4,652 $4,772 $5,659 $10,914From Receivables $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Cash from Operations $0 $0 $1,320 $2,041 $2,408 $3,418 $3,999 $4,362 $4,652 $4,772 $5,659 $10,914

Additional Cash ReceivedExtraordinary Items $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Sales of other Short-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Cash Received $0 $0 $1,320 $2,041 $2,408 $3,418 $3,999 $4,362 $4,652 $4,772 $5,659 $10,914

Expenditures Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecExpenditures from Operations:Cash Spent on Costs and Expenses $15 $15 $212 $128 $143 $295 $270 $137 $189 $185 $15 $383Wages, Salaries, Payroll Taxes, etc. $2,300 $2,300 $2,300 $2,300 $2,300 $2,300 $2,300 $4,025 $4,025 $4,025 $4,025 $4,025Payment of Accounts Payable $5 $135 $194 $1,881 $1,159 $1,333 $2,645 $2,386 $1,251 $1,736 $2,787 $2,192

Subtotal Spent on Operations $2,320 $2,450 $2,706 $4,309 $3,602 $3,927 $5,214 $6,548 $5,465 $5,946 $6,827 $6,600

Additional Cash SpentSales 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 $0Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Long-term Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Purchase Other Short-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Adjustment for Assets Purchased on Credit $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Subtotal Cash Spent $2,320 $2,450 $2,706 $4,309 $3,602 $3,927 $5,214 $6,548 $5,465 $5,946 $6,827 $6,600

Net Cash Flow ($2,320) ($2,450) ($1,386) ($2,268) ($1,194) ($509) ($1,215) ($2,186) ($813) ($1,174) ($1,168) $4,314Cash Balance $20,331 $17,881 $16,495 $14,226 $13,032 $12,523 $11,308 $9,122 $8,309 $7,134 $5,966 $10,280

Appendix

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Appendix Table: Balance Sheet (Planned)

Pro Forma Balance Sheet

AssetsShort-term Assets Starting Balances Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecCash $22,650 $20,331 $17,881 $16,495 $14,226 $13,032 $12,523 $11,308 $9,122 $8,309 $7,134 $5,966 $10,280Inventory $0 $0 $0 $1,312 $1,630 $1,940 $3,158 $3,802 $3,350 $3,392 $4,674 $5,883 $12,656Other Short-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Short-term Assets $22,650 $20,331 $17,881 $17,807 $15,856 $14,972 $15,681 $15,110 $12,472 $11,701 $11,808 $11,849 $22,936Long-term AssetsLong-term Assets $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 Accumulated Depreciation $0 $56 $112 $168 $224 $280 $336 $392 $448 $504 $560 $616 $672Total Long-term Assets $2,000 $1,944 $1,888 $1,832 $1,776 $1,720 $1,664 $1,608 $1,552 $1,496 $1,440 $1,384 $1,328Total Assets $24,650 $22,275 $19,769 $19,639 $17,632 $16,692 $17,345 $16,718 $14,024 $13,197 $13,248 $13,233 $24,264

Liabilities and Capital

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Accounts Payable $0 $131 $131 $1,843 $1,116 $1,244 $2,564 $2,345 $1,195 $1,643 $1,570 ($1,082) $174Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Other Short-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Subtotal Short-term Liabilities $0 $131 $131 $1,843 $1,116 $1,244 $2,564 $2,345 $1,195 $1,643 $1,570 ($1,082) $174

Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Liabilities $0 $131 $131 $1,843 $1,116 $1,244 $2,564 $2,345 $1,195 $1,643 $1,570 ($1,082) $174

Paid-in Capital $28,000 $28,000 $28,000 $28,000 $28,000 $28,000 $28,000 $28,000 $28,000 $28,000 $28,000 $28,000 $28,000Retained Earnings ($3,350) ($3,350) ($3,350) ($3,350) ($3,350) ($3,350) ($3,350) ($3,350) ($3,350) ($3,350) ($3,350) ($3,350) ($3,350)Earnings $0 ($2,506) ($5,012) ($6,854) ($8,134) ($9,202) ($9,869) ($10,277) ($11,821) ($13,096) ($14,252) ($13,636) ($10,141)Total Capital $24,650 $22,144 $19,638 $17,796 $16,516 $15,448 $14,781 $14,373 $12,829 $11,554 $10,398 $11,014 $14,509

Total Liabilities and Capital $24,650 $22,275 $19,769 $19,639 $17,632 $16,692 $17,345 $16,718 $14,024 $13,197 $11,968 $9,932 $14,683Net Worth $24,650 $22,144 $19,638 $17,796 $16,516 $15,448 $14,781 $14,373 $12,829 $11,554 $11,678 $14,315 $24,090

Appendix

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Basket of Goodies

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