chiro2

January 2003

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Table of Contents

Page 1

1.0 Executive Summary.............................................................................................................................11.1 Mission ........................................................................................................................................21.2 Objectives ...................................................................................................................................21.3 Keys to Success ........................................................................................................................2

2.0 Company Summary.............................................................................................................................22.1 Company Ownership .................................................................................................................22.2 Start-up Summary ......................................................................................................................3

3.0 Services................................................................................................................................................64.0 Market Analysis Summary ..................................................................................................................6

4.1 Market Segmentation ................................................................................................................74.2 Target Market Segment Strategy .............................................................................................84.3 Service Business Analysis........................................................................................................84.3.1 Competition and Buying Patterns .........................................................................................8

5.0 Strategy and Implementation Summary ............................................................................................95.1 Sales Strategy ............................................................................................................................95.1.1 Sales Forecast........................................................................................................................95.2 Competitive Edge....................................................................................................................115.3 Marketing Strategy ..................................................................................................................115.4 Milestones ................................................................................................................................11

6.0 Management Summary ....................................................................................................................126.1 Personnel Plan .........................................................................................................................13

7.0 Financial Plan ....................................................................................................................................137.1 Important Assumptions............................................................................................................137.2 Projected Cash Flow ...............................................................................................................137.3 Break-even Analysis................................................................................................................157.4 Projected Profit and Loss .......................................................................................................167.5 Projected Balance Sheet ........................................................................................................197.6 Business Ratios .......................................................................................................................20

Betcher Chiropractic

Page 1

1.0 Executive Summary

Betcher Chiropractic is an Oregon L.L.C. with doctor Tarri Betcher as the majority owner. Betcher Chiropractic is a start-up business that will achieve profitability by the second year of operation.

The MarketDemand for chiropractic medicine has been growing over the last few years. Growth is due to acceptance by many insurance policies, and an increase of published research that indicates the effectiveness for patients. Betcher Chiropractic has identified two distinct customer segments: individuals ages 45-65 and individuals ages 20-44.

ServicesChiropractors diagnose and treat patients whose health problems are associated with the body's muscular, nervous, and skeletal systems, especially the spine. Chiropractors believe interference with these systems impairs normal functions and lowers resistance to disease. They also hold that the spinal or vertebral dysfunction alters many important body functions by affecting the nervous system and the skeletal imbalance through joint or articular dysfunction.

This chiropractor's approach to health care is holistic, emphasizing the patient's overall health and wellness. Betcher Chiropractic recognizes that there are many factors that can effect one's wellness including but not limited to: exercise, diet, rest, environment, and hereditary. Betcher Chiropractic provides natural, drugless, nonsurgical health treatments, relying on the bodies inherent recuperative functions.

Competitive EdgeBetcher Chiropractic treats every patient with the philosophical approaches of individualism and holistic medicine. Wellness problems are generally affected by various systems working together and should be treated accordingly. Success is achieved by addressing and managing the problems that prompted the patient to visit the doctor.


Page 2

1.1 Mission

Betcher Chiropractic's mission is simply to attract and maintain clients by offering the most uniquely individualized and professional care available, and to promote the well being of all patients while helping each to achieve and maintain the highest quality of life.

1.2 Objectives

1. To create a health care facility whose goal is to exceed patient's expectations. This will be tracked with patient surveys as the feedback mechanism.

2. To increase the number of clients served by at least 25% each year.3. To create a start-up business surviving off its own cash by month 20 of operation.4. To build a strong repeat and referral client base.

1.3 Keys to Success

1. Location: providing easy accessibility and amply parking for patients that may have physical limitations.

2. Environment: providing an environment that is both relaxing and professional.

3. Convenience: offering patients extended business hours.

4. Reputation: establishing an excellent reputation within the community.

2.0 Company Summary

Betcher Chiropractic has been established as an Oregon L.L.C. in 2003.

2.1 Company Ownership

Tarri Betcher D.C. has a majority ownership interest in Betcher Chiropractic.


Page 3

2.2 Start-up Summary

Please see the following start-up chart and table for a detailed breakdown of the various expenses. Tarri brings $2,500 of already existing equipment.

The following equipment are needed for start up.

• One drop style adjusting table.• One ultra sound/high volt physical therapy machine.• Computer software including DSL connection, QuickBooks Pro, and Microsoft Office.• Filing cabinet.• Two phone lines with answering machine and fax machine.• Copy machine.• Reception area furniture and decorations.

Existing equipment:

• Two adjusting tables (one bench style and one portable).• Computer system with printer.• Desk.• Activator chiropractic instrument.• Welch Allyn oto-opthomoscope.• Lettmann stethoscope.• Tyco blood pressure instrument with all cuffs.• Chiropractic and medical health care library.


Page 4

Table: Start-up

Start-up

Requirements

Start-up Expenses

Legal $300

Advertising $2,000

Stationery etc. $200

Brochures $150

Consultants $150

Insurance $800

Rent deposit and 1st and last months rent $2,700

Rent for six months $7,200

Leasehold improvements $5,000

Expensed equipment $2,000

Other $1,000

Total Start-up Expenses $21,500

Start-up Assets

Cash Required $41,000

Other Current Assets $2,500

Long-term Assets $15,000

Total Assets $58,500

Total Requirements $80,000


Page 5

Table: Start-up Funding

Start-up Funding

Start-up Expenses to Fund $21,500

Start-up Assets to Fund $58,500

Total Funding Required $80,000

Assets

Non-cash Assets from Start-up $17,500

Cash Requirements from Start-up $41,000

Additional Cash Raised $0

Cash Balance on Starting Date $41,000

Total Assets $58,500

Liabilities and Capital

Liabilities

Current Borrowing $0

Long-term Liabil ities $20,000

Accounts Payable (Outstanding Bills) $0

Other Current Liabil ities (interest-free) $0

Total Liabil ities $20,000

Capital

Planned Investment

Investor 1 $40,000

Investor 2 $20,000

Additional Investment Requirement $0

Total Planned Investment $60,000

Loss at Start-up (Start-up Expenses) ($21,500)

Total Capital $38,500

Total Capital and Liabil ities $58,500

Total Funding $80,000


Page 6

3.0 Services

Chiropractors, also known as doctors of chiropractic or chiropractic physicians, diagnose and treat patients whose health problems are associated with the body's muscular, nervous, and skeletal systems, especially the spine. Chiropractors believe interference with these systems impairs normal functions and lowers resistance to disease. They also hold that the spinal or vertebral dysfunction alters many important body functions by affecting the nervous system, and the skeletal imbalance through joint or articular dysfunction.

This chiropractor's approach to health care is holistic, emphasizing the patient's overall health and wellness. Betcher Chiropractic recognizes that there are many factors that can effect one's wellness including but not limited to: exercise, diet, rest, environment, and hereditary. Betcher Chiropractic provides natural, drugless, nonsurgical health treatments, relying on the bodies inherent recuperative functions.

Betcher Chiropractic specializes in the following body areas for treatment:

• Back pain: Many factors can be responsible for back pain. Betcher Chiropractic will attempt to restore a more normal motion and position of affected spinal bones through specific chiropractic adjustments.

• Shoulder pain: There is a range of shoulder pain from a persistent ache that merely irritates to acute pain the affects daily activities.

• Neck pain: Betcher Chiropractic can have significant success in reducing a wide range of neck pains.

• Headaches: Some studies estimate that 25% of the population have a headache right now. Headaches are often caused by a malfunction of spinal bones in the neck and upper back.

• Whiplash: Whiplash is defined as an injury to the neck by a sudden movement of the head and a variety of directions. Betcher Chiropractic is often able to offer significant relief from pain caused by whiplash.

4.0 Market Analysis Summary

Betcher Chiropractic has identified two distinct market segments that it will target. The largest segment is individuals ages 45-65. This is the age group that begins to experience an increased incidence of health problems. The second market segment is individuals age 20-44. This group is interested in chiropractic medicine due their larger acceptance of alternative medicine.


Page 7

4.1 Market Segmentation

Betcher Chiropractic has identified two distinct market segments that it will target services to.

Individuals age 45-65This customer segment has experienced an increase in wellness issues, particularly those that are related to the vertebral dysfunction. This segment often has the disposable income to pay for visits in the event that their insurance does not cover chiropractic visits.

• Have a household income of at least $65,000• 67% of the group have at least an undergraduate degree• 29% of the customers have a graduate degree• Tend to fall in the middle or slightly to the left politically• Are open to try new treatments in search of a wellness program that will reduce their current

pain levels• 44% of the customer are vegetarian• 67% of the customers are cognizant of their food intake and are careful to analyze their diet

Individuals age 25-44This segment is in search of a wellness treatment/program to address their constant or intermittent pains. This segment may or may not have tried a more traditional medical treatment, with no relief. This is a more liberal group that is embracing alternative therapy in replace of more traditional western medicine regimes.

• Have an individual income of at least $35,000• 76% of the group population have an undergraduate degree• 24% of the group have a graduate degree or some graduate course work• Are politically liberal• 54% have tried another type of alternative treatments to address their wellness issues• 49% of the group are vegetarians


Page 8

Table: Market Analysis

Market Analysis

2003 2004 2005 2006 2007

Potential Customers Growth CAGR

Individuals age 45 - 65 15% 345,090 396,854 456,382 524,839 603,565 15.00%

Individuals age 20 - 44 10% 387,090 425,799 468,379 515,217 566,739 10.00%

Total 12.44% 732,180 822,653 924,761 1,040,056 1,170,304 12.44%

4.2 Target Market Segment Strategy

Betcher Chiropractic has targeted these groups for two separate but important reasons. Each factor applies more directly to one of the two different groups.

• Health Problems: A variety of health problems associated with the body's muscular, nervous, and skeletal systems is the impetus for the majority of customers age 45-65. It is at this mid to late portion of a person's life that they began to develop more wellness issues. This customer segment seeks out chiropractors to aid in the management of the pain/discomfort.

• Openness to alternative medicine: For individuals age 25-44, the willingness to try alternative medicine therapy is a significant motivator for the customers to use a chiropractor's treatment. They are open to the possibility that an alternative form of treatment can be effective in allowing them to manage their pain. This openness to alternative treatment could be a result of western medicine's ineffectiveness, or a willness to try non-conventional means.

4.3 Service Business Analysis

Chiropractors are licensed doctors of chiropractic medicine. All states regulate the practice of chiropractic and grant licenses to chiropractors who meet educational and examination requirements. Most state boards require a four year bachelors degree in additional to chiropractic college coursework from an accredited program for becoming a Doctor of Chiropractic. There are currently 16 accredited Chiropractic Education programs.

The job market for chiropractors is growing at a faster rate than the average of all occupations. There are about 50,000 licensed chiropractors, most in a solo practice, although some practice with a group. Median annual earnings of salaried chiropractors was $67,030 in 2000. The middle 50% earned between $44,030 and $105,520 a year.

Self employed doctors typically earn more than their salaried counterparts. Typically chiropractic doctors experience relatively low earnings initially, increasing as their practice grows.

4.3.1 Competition and Buying Patterns

There are approximately 2,300 chiropractic doctors in Oregon, 1,390 in Portland alone. In Portland, 89% of the chiropractors are in a solo practice. The direct competitors to Betcher Chiropractic are other local chiropractors. Indirect competitors are other alternative treatment providers as well as more traditional physicians.

Buying patterns of customers are usually dictated by the element of networking or word of mouth. Patients are more likely to visit a doctor that is recommended to them, however not everyone can get a referral. Patients that have success with a chiropractor are often quite vocal about their results thereby increasing the word of mouth effect.


Page 9

5.0 Strategy and Implementation Summary

Betcher Chiropractic will leverage its competitive edge of a strict individual, holistic approach which is more successful than other doctors by truly concentrating on the individual and making specific analysis and recommendations for the particular individual. The marketing strategy will employ several different methods including free public seminars, print advertising, and networking activities. The sales effort will be a specific and conscious effort to exceed the customer's expectations. This effort recognizes the significant value of word of mouth referrals and by adopting this approach fuels these customer base building activities.

5.1 Sales Strategy

The sales strategy is based on the need to exceed all of the customer's expectations. By exceeding all expectations, customer's will have only positive things to say about Betcher Chiropractic. Additionally, a patient that has been successfully treated is particularly vocal about the experience with their friends and aquaintances because the improvement of one's wellness is so fundamental and apparent in one's life.

5.1.1 Sales Forecast

Betcher Chiropractic has developed a conservative forecast that recognizes growth in a doctor's practice is slow, steady and incremental. This type of growth is acceptable because it adopts a long-term perspective as opposed to short-term profits that are unlikely to be sustainable. Please review the following chart and table for more detailed information of the sales forecasts.

Table: Sales Forecast

Sales Forecast

2003 2004 2005

Sales

Routine treatment $25,432 $83,455 $96,554

Initial examination and diagnosis $11,190 $36,720 $42,484

Total Sales $36,622 $120,175 $139,038

Direct Cost of Sales 2003 2004 2005

Routine treatment $509 $1,669 $1,931

Initial examination and diagnosis $509 $1,669 $1,931

Subtotal Direct Cost of Sales $1,017 $3,338 $3,862


Page 10


Page 11

5.2 Competitive Edge

Betcher Chiropractic's competitive edge is the holistic individual approach to wellness. The basic assumptions of this approach are:

1. Each patient is a distinct individual. While there are many common problems among people, each individual's body reacts differently to different stimuli and the most effective treatment assumes that analysis must be made using traditional flow chart frameworks while taking into account the significant individual variance.

2. All wellness treatments must be addressed in a holistic manner. The human body is a complex "ecosystem" of many interconnected systems. Wellness problems are rarely specific to an organ or system, they are generally affected by various systems working together and should be treated accordingly.

Betcher Chiropractic treats every patient with these philosophical approaches. Betcher Chiropractic is able to offer more effective treatment relative to other doctors because its mission is to treat patients in the most effective manner. Success is achieved by addressing the problems that prompted the patient to visit the doctor. By religiously following the above mentioned approaches Betcher Chiropractic can offer more effective care.

5.3 Marketing Strategy

The marketing strategy is based on three different types of activities:

1. Public Seminars: Betcher Chiropractic will offer numerous free public seminars in an effort to increase visibility in the surrounding communities. Seminars are an effective way of introducing Betcher Chiropractic to prospective customers. They increase visibility of Betcher Chiropractic and provide a venue to develop a trust relationship with the individual, an important foundation of a doctor-patient relationship.

2. Print Advertising: Betcher Chiropractic has identified several publications that Betcher Chiropractic will advertise in including The Oregonian and Willamette Weekly.

3. Networking: This marketing effort recognizes that the buying patterns of patients are often based on who you know. By performing numerous networking activities both professional and personally, Betcher Chiropractic will be introduced to a larger number of people and this will increase the number of conversions from potential customer to patient.

5.4 Milestones

Betcher Chiropractic has identified four specific milestones that will be ambitious but achievable goals for the organization:

1. Completion of the business plan.2. Secure and prepare the facilities.3. Full time status.4. Profitability.


Page 12

Table: Milestones

Milestones

Milestone Start Date End Date Budget Manager Department

Completion of business plan 1/1/2003 2/1/2003 $0 Dr. Betcher Marketing

Securing and preparing facil ities 1/1/2003 3/1/2003 $0 Dr. Betcher Department

Full time status 1/1/2003 8/1/2003 $0 Dr. Betcher Department

Profitabil ity 1/1/2003 6/0/04 $0 Dr. Betcher Department

Totals $0

6.0 Management Summary

Tarri Betcher received her undergraduate degree in Biology from the University of Oregon. Throughout school Tarri believed hat she wanted to serve in some sort of care taker role but was unsure in what capacity.

During her final year, Tarri assisted a chiropractor. What she really enjoyed about this line of work was the amount of success or progress that the doctor made with each patient.

Recognizing that most chiropractors are in solo practice, Tarri took an additional year of post undergraduate course work to strengthen her business/small business management skills in anticipation of a future practice.

Tarri began her four year chiropractic college course work at the Portland Chiropractic College. During this four year period where Tarri, was an honors student, earning all of her education requirements and participating in numerous clinics providing her with hands-on experience. Upon graduation Tarri began work on a business plan for the new solo practice, a recognition of the importance of a plan in the success of her future business venture.


Page 13

6.1 Personnel Plan

Dr. Tarri Betcher will be the doctor and sole employee for the first part of year one. Once sufficient business has developed, Dr. Betcher will employ an office assistant that will help with scheduling and appointments, bookkeeping, answering phones, and other various activities. This will free up the doctors time to allow her to service the patients. Please review the following table which contains detailed personnel information.

Table: Personnel

Personnel Plan

2003 2004 2005

Dr. Betcher $26,500 $40,000 $50,000

Office Assistant $8,000 $14,400 $14,400

Total People 2 2 2

Total Payroll $34,500 $54,400 $64,400

7.0 Financial Plan

The following sections will outline important financial information.

7.1 Important Assumptions

The following table details important Financial Assumptions.

Table: General Assumptions

General Assumptions

2003 2004 2005

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 25.42% 25.00% 25.42%

Other 0 0 0

7.2 Projected Cash Flow

The following chart and table will indicate Projected Cash Flow.


Page 14

Table: Cash Flow

Pro Forma Cash Flow

2003 2004 2005

Cash Received

Cash from Operations

Cash Sales $9,156 $30,044 $34,759

Cash from Receivables $18,697 $70,124 $99,762

Subtotal Cash from Operations $27,853 $100,168 $134,521

Additional Cash Received

Sales Tax, VAT, HST/GST Received $0 $0 $0

New Current Borrowing $0 $0 $0

New Other Liabil ities (interest-free) $0 $0 $0

New Long-term Liabil ities $0 $0 $0

Sales of Other Current Assets $0 $0 $0

Sales of Long-term Assets $0 $0 $0

New Investment Received $0 $0 $0

Subtotal Cash Received $27,853 $100,168 $134,521

Expenditures 2003 2004 2005

Expenditures from Operations

Cash Spending $34,500 $54,400 $64,400

Bill Payments $28,678 $45,596 $50,229

Subtotal Spent on Operations $63,178 $99,996 $114,629

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0

Principal Repayment of Current Borrowing $0 $0 $0

Other Liabilities Principal Repayment $0 $0 $0

Long-term Liabil ities Principal Repayment $3,036 $2,783 $2,783

Purchase Other Current Assets $0 $0 $0

Purchase Long-term Assets $0 $0 $0

Dividends $0 $0 $0

Subtotal Cash Spent $66,214 $102,779 $117,412

Net Cash Flow ($38,361) ($2,611) $17,109

Cash Balance $2,639 $28 $17,138


Page 15

7.3 Break-even Analysis

The Break-even Analysis indicates what is needed in monthly revenue to reach the break-even point.


Page 16

Table: Break-even Analysis

Break-even Analysis

Monthly Revenue Break-even $5,685

Assumptions:

Average Percent Variable Cost 3%

Estimated Monthly Fixed Cost $5,527

7.4 Projected Profit and Loss

The following table will indicate Projected Profit and Loss.


Page 17


Page 18

Table: Profit and Loss

Pro Forma Profit and Loss

2003 2004 2005

Sales $36,622 $120,175 $139,038

Direct Cost of Sales $1,017 $3,338 $3,862

Other $0 $0 $0

Total Cost of Sales $1,017 $3,338 $3,862

Gross Margin $35,605 $116,837 $135,176

Gross Margin % 97.22% 97.22% 97.22%

Expenses

Payroll $34,500 $54,400 $64,400

Sales and Marketing and Other Expenses $3,520 $4,010 $4,180

Depreciation $3,000 $3,000 $3,000

Util ities (all) $3,300 $3,900 $4,000

Insurance - malpractice $1,210 $1,530 $1,550

Insurance - workers comp $220 $260 $260

Insurance - l iabil ity $2,200 $2,600 $2,600

Rent $13,200 $15,600 $16,000

Payroll Taxes $5,175 $8,160 $9,660

Total Operating Expenses $66,325 $93,460 $105,650

Profit Before Interest and Taxes ($30,720) $23,377 $29,526

EBITDA ($27,720) $26,377 $32,526

Interest Expense $1,836 $1,557 $1,279

Taxes Incurred $0 $5,455 $7,179

Net Profit ($32,556) $16,365 $21,067

Net Profit/Sales -88.90% 13.62% 15.15%


Page 19

7.5 Projected Balance Sheet

The following table will indicate the Projected Balance Sheet.

Table: Balance Sheet

Pro Forma Balance Sheet

2003 2004 2005

Assets

Current Assets

Cash $2,639 $28 $17,138

Accounts Receivable $8,769 $28,776 $33,293

Other Current Assets $2,500 $2,500 $2,500

Total Current Assets $13,908 $31,305 $52,931

Long-term Assets

Long-term Assets $15,000 $15,000 $15,000

Accumulated Depreciation $3,000 $6,000 $9,000

Total Long-term Assets $12,000 $9,000 $6,000

Total Assets $25,908 $40,305 $58,931

Liabilities and Capital 2003 2004 2005

Current Liabil ities

Accounts Payable $3,000 $3,815 $4,156

Current Borrowing $0 $0 $0

Other Current Liabil ities $0 $0 $0

Subtotal Current Liabil ities $3,000 $3,815 $4,156

Long-term Liabil ities $16,964 $14,181 $11,398

Total Liabil ities $19,964 $17,996 $15,554

Paid-in Capital $60,000 $60,000 $60,000

Retained Earnings ($21,500) ($54,056) ($37,691)

Earnings ($32,556) $16,365 $21,067

Total Capital $5,944 $22,309 $43,376

Total Liabil ities and Capital $25,908 $40,305 $58,931

Net Worth $5,944 $22,309 $43,376


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7.6 Business Ratios

The following table outlines some of the more important ratios from the Office of Chiropractors industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the Standard Industry Classification (SIC) code, 8041.


Page 21

Table: Ratios

Ratio Analysis

2003 2004 2005 Industry Profile

Sales Growth 0.00% 228.15% 15.70% 5.93%

Percent of Total Assets

Accounts Receivable 33.85% 71.40% 56.50% 21.14%

Other Current Assets 9.65% 6.20% 4.24% 45.36%

Total Current Assets 53.68% 77.67% 89.82% 71.11%

Long-term Assets 46.32% 22.33% 10.18% 28.89%

Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabil ities 11.58% 9.46% 7.05% 29.10%

Long-term Liabil ities 65.48% 35.18% 19.34% 19.50%

Total Liabilities 77.06% 44.65% 26.39% 48.60%

Net Worth 22.94% 55.35% 73.61% 51.40%

Percent of Sales

Sales 100.00% 100.00% 100.00% 100.00%

Gross Margin 97.22% 97.22% 97.22% 100.00%

Selling, General & Administrative Expenses 187.02% 84.16% 82.76% 75.10%

Advertising Expenses 3.00% 1.00% 0.86% 0.61%

Profit Before Interest and Taxes -83.88% 19.45% 21.24% 3.98%

Main Ratios

Current 4.64 8.21 12.73 1.86

Quick 4.64 8.21 12.73 1.38

Total Debt to Total Assets 77.06% 44.65% 26.39% 10.80%

Pre-tax Return on Net Worth -547.68% 97.81% 65.12% 60.83%

Pre-tax Return on Assets -125.66% 54.14% 47.93% 27.59%

Additional Ratios 2003 2004 2005

Net Profit Margin -88.90% 13.62% 15.15% n.a

Return on Equity -547.68% 73.35% 48.57% n.a

Activity Ratios

Accounts Receivable Turnover 3.13 3.13 3.13 n.a

Collection Days 55 76 109 n.a

Accounts Payable Turnover 10.56 12.17 12.17 n.a

Payment Days 27 27 29 n.a

Total Asset Turnover 1.41 2.98 2.36 n.a

Debt Ratios

Debt to Net Worth 3.36 0.81 0.36 n.a

Current Liab. to Liab. 0.15 0.21 0.27 n.a

Liquidity Ratios

Net Working Capital $10,908 $27,490 $48,774 n.a

Interest Coverage -16.74 15.01 23.09 n.a

Additional Ratios

Assets to Sales 0.71 0.34 0.42 n.a

Current Debt/Total Assets 12% 9% 7% n.a

Acid Test 1.71 0.66 4.72 n.a

Sales/Net Worth 6.16 5.39 3.21 n.a

Dividend Payout 0.00 0.00 0.00 n.a

Appendix

Page 1

Table: Sales Forecast

Sales Forecast

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

Sales

Routine treatment 0% $0 $0 $1,100 $1,325 $1,656 $1,998 $2,254 $2,626 $2,998 $3,232 $3,698 $4,545

Initial examination and diagnosis 0% $0 $0 $484 $583 $729 $879 $992 $1,155 $1,319 $1,422 $1,627 $2,000

Total Sales $0 $0 $1,584 $1,908 $2,385 $2,877 $3,246 $3,781 $4,317 $4,654 $5,325 $6,545

Direct Cost of Sales Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Routine treatment $0 $0 $22 $27 $33 $40 $45 $53 $60 $65 $74 $91

Initial examination and diagnosis $0 $0 $22 $27 $33 $40 $45 $53 $60 $65 $74 $91

Subtotal Direct Cost of Sales $0 $0 $44 $53 $66 $80 $90 $105 $120 $129 $148 $182

Appendix

Page 2

Table: Personnel

Personnel Plan


Dr. Betcher 0% $0 $2,000 $2,000 $2,000 $2,300 $2,300 $2,400 $2,500 $2,500 $2,700 $2,800 $3,000

Office Assistant 0% $0 $0 $0 $0 $800 $800 $900 $900 $1,000 $1,200 $1,200 $1,200

Total People 0 1 1 1 2 2 2 2 2 2 2 2

Total Payroll $0 $2,000 $2,000 $2,000 $3,100 $3,100 $3,300 $3,400 $3,500 $3,900 $4,000 $4,200

Appendix

Page 3

Table: General Assumptions

General Assumptions


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% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00%

Other 0 0 0 0 0 0 0 0 0 0 0 0

Appendix

Page 4

Table: Profit and Loss

Pro Forma Profit and Loss


Sales $0 $0 $1,584 $1,908 $2,385 $2,877 $3,246 $3,781 $4,317 $4,654 $5,325 $6,545

Direct Cost of Sales $0 $0 $44 $53 $66 $80 $90 $105 $120 $129 $148 $182

Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Cost of Sales $0 $0 $44 $53 $66 $80 $90 $105 $120 $129 $148 $182

Gross Margin $0 $0 $1,540 $1,855 $2,318 $2,797 $3,156 $3,676 $4,197 $4,525 $5,177 $6,363

Gross Margin % 0.00% 0.00% 97.22% 97.22% 97.22% 97.22% 97.22% 97.22% 97.22% 97.22% 97.22% 97.22%

Expenses

Payroll $0 $2,000 $2,000 $2,000 $3,100 $3,100 $3,300 $3,400 $3,500 $3,900 $4,000 $4,200

Sales and Marketing and Other

Expenses

$0 $320 $320 $320 $320 $320 $320 $320 $320 $320 $320 $320

Depreciation $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250

Utilities (all) $0 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300

Insurance - malpractice $0 $110 $110 $110 $110 $110 $110 $110 $110 $110 $110 $110

Insurance - workers comp $0 $20 $20 $20 $20 $20 $20 $20 $20 $20 $20 $20

Insurance - liability $0 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200

Rent 15% $0 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200

Payroll Taxes 15% $0 $300 $300 $300 $465 $465 $495 $510 $525 $585 $600 $630

Total Operating Expenses $250 $4,700 $4,700 $4,700 $5,965 $5,965 $6,195 $6,310 $6,425 $6,885 $7,000 $7,230

Profit Before Interest and Taxes ($250) ($4,700) ($3,160) ($2,845) ($3,647) ($3,168) ($3,039) ($2,634) ($2,228) ($2,360) ($1,823) ($867)

EBITDA $0 ($4,450) ($2,910) ($2,595) ($3,397) ($2,918) ($2,789) ($2,384) ($1,978) ($2,110) ($1,573) ($617)

Interest Expense $165 $162 $160 $158 $156 $154 $152 $150 $148 $146 $143 $141

Taxes Incurred $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Net Profit ($415) ($4,862) ($3,320) ($3,003) ($3,803) ($3,322) ($3,191) ($2,783) ($2,375) ($2,506) ($1,966) ($1,008)

Net Profit/Sales 0.00% 0.00% -209.62% -157.40% -159.47% -115.46% -98.32% -73.61% -55.02% -53.84% -36.92% -15.41%

Appendix

Page 5

Table: Cash Flow

Pro Forma Cash Flow


Cash Received

Cash from Operations

Cash Sales $0 $0 $396 $477 $596 $719 $811 $945 $1,079 $1,164 $1,331 $1,636

Cash from Receivables $0 $0 $0 $40 $1,196 $1,443 $1,801 $2,167 $2,448 $2,849 $3,246 $3,507

Subtotal Cash from Operations $0 $0 $396 $517 $1,792 $2,162 $2,612 $3,112 $3,527 $4,013 $4,578 $5,144

Additional Cash Received

Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Cash Received $0 $0 $396 $517 $1,792 $2,162 $2,612 $3,112 $3,527 $4,013 $4,578 $5,144

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

Expenditures from Operations

Cash Spending $0 $2,000 $2,000 $2,000 $3,100 $3,100 $3,300 $3,400 $3,500 $3,900 $4,000 $4,200

Bill Payments $5 $246 $2,614 $2,655 $2,667 $2,838 $2,850 $2,888 $2,916 $2,945 $3,011 $3,043

Subtotal Spent on Operations $5 $2,246 $4,614 $4,655 $5,767 $5,938 $6,150 $6,288 $6,416 $6,845 $7,011 $7,243

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 $253 $253 $253 $253 $253 $253 $253 $253 $253 $253 $253 $253

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 $258 $2,499 $4,867 $4,908 $6,020 $6,191 $6,403 $6,541 $6,669 $7,098 $7,264 $7,496

Net Cash Flow ($258) ($2,499) ($4,471) ($4,391) ($4,228) ($4,029) ($3,791) ($3,429) ($3,142) ($3,085) ($2,686) ($2,353)

Cash Balance $40,742 $38,242 $33,772 $29,381 $25,153 $21,124 $17,333 $13,905 $10,763 $7,678 $4,992 $2,639

Appendix

Page 6

Table: Balance Sheet

Pro Forma Balance Sheet


Assets Starting Balances

Current Assets

Cash $41,000 $40,742 $38,242 $33,772 $29,381 $25,153 $21,124 $17,333 $13,905 $10,763 $7,678 $4,992 $2,639

Accounts Receivable $0 $0 $0 $1,188 $2,579 $3,172 $3,887 $4,520 $5,189 $5,979 $6,620 $7,368 $8,769

Other Current Assets $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500

Total Current Assets $43,500 $43,242 $40,742 $37,460 $34,460 $30,824 $27,511 $24,353 $21,594 $19,242 $16,798 $14,860 $13,908

Long-term Assets

Long-term Assets $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000

Accumulated Depreciation $0 $250 $500 $750 $1,000 $1,250 $1,500 $1,750 $2,000 $2,250 $2,500 $2,750 $3,000

Total Long-term Assets $15,000 $14,750 $14,500 $14,250 $14,000 $13,750 $13,500 $13,250 $13,000 $12,750 $12,500 $12,250 $12,000

Total Assets $58,500 $57,992 $55,242 $51,710 $48,460 $44,574 $41,011 $37,603 $34,594 $31,992 $29,298 $27,110 $25,908

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

Current Liabilities

Accounts Payable $0 $159 $2,525 $2,566 $2,573 $2,743 $2,754 $2,791 $2,818 $2,845 $2,910 $2,940 $3,000

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 $159 $2,525 $2,566 $2,573 $2,743 $2,754 $2,791 $2,818 $2,845 $2,910 $2,940 $3,000

Long-term Liabilities $20,000 $19,747 $19,494 $19,241 $18,988 $18,735 $18,482 $18,229 $17,976 $17,723 $17,470 $17,217 $16,964

Total Liabilities $20,000 $19,906 $22,019 $21,807 $21,561 $21,478 $21,236 $21,020 $20,794 $20,568 $20,380 $20,157 $19,964

Paid-in Capital $60,000 $60,000 $60,000 $60,000 $60,000 $60,000 $60,000 $60,000 $60,000 $60,000 $60,000 $60,000 $60,000

Retained Earnings ($21,500) ($21,500) ($21,500) ($21,500) ($21,500) ($21,500) ($21,500) ($21,500) ($21,500) ($21,500) ($21,500) ($21,500) ($21,500)

Earnings $0 ($415) ($5,277) ($8,597) ($11,601) ($15,403) ($18,725) ($21,916) ($24,700) ($27,075) ($29,581) ($31,547) ($32,556)

Total Capital $38,500 $38,085 $33,223 $29,903 $26,899 $23,097 $19,775 $16,584 $13,800 $11,425 $8,919 $6,953 $5,944

Total Liabilities and Capital $58,500 $57,992 $55,242 $51,710 $48,460 $44,574 $41,011 $37,603 $34,594 $31,992 $29,298 $27,110 $25,908

Net Worth $38,500 $38,085 $33,223 $29,903 $26,899 $23,097 $19,775 $16,584 $13,800 $11,425 $8,919 $6,953 $5,944

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