Coffe Luwak Business Plan

8/12/2019 Coffe Luwak Business Plan

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Okyna Rempah Bali Agro

Br. Kayuambua, Bangli, Bali - Indonesia

Phone: +62 878 6204 4578

E-Mail: [email protected] Web: www.kopiluwakbaliagro.com


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Executive SummaryOkyna Rempah Bali Agro prepares Luwak coffee beans grown in Kayuambua

Bangli for exportation and also sells to domestic market. We will expandproduction capacity from 139,000/60kg bags per year to 120-160,000/60kg

per year. Our coffee stands out from that of the competition. We prepare the

top five percent, in terms of quality standards, of all Luwak coffee beans on

the market. Our customers seek this product as it provides them with a point

of differentiation to specialty roasters. In the past six years, demand for our

coffee has exceeded the amount we are able to supply and we have been

forced to refuse requests for larger shipments.

We predict growth of thirty percent in the first year with sales exceeding (US

$) expectations. In year three the plant will run at maximum capacity and

based on the current price of coffee we expect excellent profits (US $). We

have positive indicators from current importers that the additional amount of

beans will be sold.

Our keys to success are:

1. Establishing and maintaining working relationships and contractualagreements with all importers and Indonesian coffee brokers and wholesalers.

2. Bringing the facility to maximum production within three years of operation.3. Increasing our profit margin with the use of improved technology in the

current facility.

4. Effectively communicating to current and potential customers, throughtargeted efforts, our position as a differentiated provider of the highest

quality Luwak coffee in the world.

1.1 Objectives

The objectives of Okyna Rempah Bali Agro:

Increase production and sale from 78,000/60kg bags per year toapproximately 100,000/60kg bags per year in the first year of operation at

the proposed facility and reach maximum capacity of 120,000/60kg bags per

year by year three.

Increase sales substantially in the first full year of operation. Increase gross margins in the next three years.

1.2 Mission

Okyna Rempah Bali Agro seeks to serve coffee importers and enthusiasts by

exceeding minimum acceptable quality standards and by providing the

highest quality product at the lowest possible price. We value our


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relationships with current and future customers and hope to communicate our

appreciation to them through our outstanding, guaranteed product quality,

personal service, and efficient delivery. Our commitment to our customers

and the country of Indonesia will be reflected through honest and responsible

business.

1.3 Keys to Success

The keys to success for Okyna Rempah Bali Agro are:

Establishing and maintaining working relationships and contractualagreements with importers and Indonesian coffee brokers and wholesalers.

Bringing the new facility to maximum production within three years ofoperation.

Increasing our profit margin with the use of improved technology in the newfacility.

Effectively communicating, to current and potential customers, our position asa differentiated provider of the highest quality Luwak coffee in the world.

Company Summary

Okyna Rempah Bali Agro prepares raw coffee in parchment (pergamino), or

coffee since planting stage. The finished product, Luwak coffee beans are

packaged in 60kg sacks and sold on international and Indonesian market. Our

customers are importers and Indonesian wholesalers who provide high-quality

beans to the specialty roasting market.

2.1 Company Ownership

Okyna Rempah Bali Agro is a private, family owned preparer and exporter of

Bali-grown, Luwak coffee beans. It is owned and operated by Wayan Widana.

2.2 Company History

Okyna Rempah Bali Agro is in its seventh year of operation. The plant has

been arranged and maintained for maximum production and sales. It is

currently operating at maximum capacity.


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Past Performance

Past Performance2011 2012 2013

Sales $16,262,532 $17,304,066 $18,345,600Gross Margin $2,439,380 $2,630,218 $2,814,215Gross Margin % 15.00% 15.20% 15.34%Operating Expenses $12,196,899 $12,631,968 $13,346,424Inventory Turnover 12.00 12.00 12.00Balance Sheet

2011 2012 2013Current AssetsCash $0 $0 $994,260Inventory $0 $0 $355,200Other Current Assets $0 $0 $243,936Total Current Assets $0 $0 $1,593,396Long-term Assets

$-

$2,000,000

$4,000,000$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000

$18,000,000

$20,000,000

2011 2012 2013

Sales

Gross

Net


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Long-term Assets $0 $0 $521,650Accumulated Depreciation $0 $0 $100,000Total Long-term Assets $0 $0 $421,650Total Assets $0 $0 $2,015,046Current LiabilitiesAccounts Payable $0 $0 $8,435Current Borrowing $0 $0 $58,000Other Current Liabilities (interest free) $0 $0 $0Total Current Liabilities $0 $0 $66,435Long-term Liabilities $0 $0 $402,000Total Liabilities $0 $0 $468,435Paid-in Capital $0 $0 $525,000Retained Earnings $0 $0 $85,985Earnings $0 $0 $935,626Total Capital $0 $0 $1,546,611Total Capital and Liabilities $0 $0 $2,015,046Other InputsPayment Days 0 0 60

2.3 Company Locations and Facilities

Okyna Rempah Bali Agros plant and office is located in Kayuambua - Bangli.

The warehouse has the capacity to prepare approximately 6,000 60kg bags ofexportable coffee beans. The facility is 1.000m2and will have 30 selecting

machines with capacity to prepare 40,000 bags for exportation and 80,000

bags for storage. The proposed facility also handle shipping.

Products

Luwak coffee comes from Bali island - Indonesia, an area well known for its

excellent coffee. Also native to the area is a small civilize animal called a

Paroxurus. The locals call them luwaks. These little mammals live in trees and

one of their favorite foods is the red, ripe coffee cherry. They eat the cherries,


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bean and all. While the bean is in the little guys stomach, it undergoes

chemical treatment and fermentation. The bean finishes it journey through

the digestive system, and exits.

The still intact beans are collected from the forest floor, and are cleaned, then

roasted and ground just like other coffee. The resulting coffee is said to be

like no other. It has a rich, heavy flavor with hint of caramel or chocolate.

Other terms used to describe it are earthly, musty and exotic. The body is

almost syrupy and its very smooth.

3.1 Competitive Comparison

In order to differentiate our product, coffee, which is a commodity, from theproduct offering of competitors, all beans are guaranteed fresh and are

shipped within seven days of preparation. The beans shipped by Okyna

Rempah Bali Agro are therefore better than most and are guaranteed fresh.

In addition, all of the farms of Okyna Rempah Bali Agro adhere to

environmentally sound farming practices and avoid the use of pesticides and

chemicals in crop production.

There are approximately ten competitors who offer a product similar to ours.

Our research indicates that with our special treatment for the coffee, we

would become one of the top four, in terms of quality, providers. We alsohave the advantage of established distribution channels and reputation. In

addition, improvements to our marketing efforts will further separate us from

the larger market and from our close competitors.

3.2 Sales Literature

Okyna Rempah Bali Agro currently works with importers who handle all of our

shipments. Likewise, we have dealt with the same Indonesian wholesalers, for

internal sales, each year. Sales to this point have been handled through

personal selling. Additional sales literature will include a website, and direct

mail to specialty roasters and importers.

3.3 Sourcing

The facility is ideally located in Kayuambua, Kintamani - Bangli. The beans

produced in the region are of the highest quality. With additional financing,

we want to make more volume the product.


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Market Analysis Summary

Coffee is the second largest commodity market next to oil, and Luwak coffee

comes from Bali Island - Indonesia well known for its excellent coffee.

Imports of coffee in the United States have increased ninety-four percent in

the past five years and consumption of coffee within Indonesia has seen

similar increases. In addition, demand for Luwak coffee is above the market

clearing level, and market price and crop yield estimates are at an all time

high.

The increase in the number of independent specialty roasters in the United

States, Australia and others has contributed to and is an indicator of theincreased demand for coffee. Within the larger coffee market is our target

market is the specialty roaster. These discerning customers want the highest

quality coffee beans. They serve the growing "gourmet" coffee market and

are represented by thousands of specialty roasters. The Luwak coffee bean is

considered to be the best in the world and as such, the demand for Luwak

coffee is high on the specialty roaster market. Specialty roasters are willing to

pay more for Luwak coffee and attempt to distinguish themselves via the

characteristics of the bean they use i.e. the location in which it was grown,

farming methods, bean size, etc. The final consumer is relatively price

insensitive if the coffee is good, has won awards, or is compatible with apopular trend. We estimate that specialty roasting in the U.S. alone is a

($USD) one-billion market.

4.1 Market Segmentation

The potential customer groups for Okyna Rempah Bali Agro are:

Market research suggests that there are approximately 100 importers ofLuwak coffee that would be able to handle the quantities of our shipments

and are in our target market . Market serves as a safety valve for our export business. By maintaining

relationships with wholesalers we have an alternative market with established

distribution channels.

As we move towards maximum capacity we will plan to more aggressivelytarget this audience. We hope to eventually reduce transactions with

wholesalers and capture their value-added costs as profit. We anticipate that

this effort will begin approximately four years into operation of the facility.


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Market Analysis2009 2010 2011 2012 2013

PotentialCustomers Growth CAGR

U.S. Importers(60kg bags) 26% 70,140 88,376 111,354 140,306 176,786 26.00%

AustralianImporters (60kgbags)

26% 30,060 37,876 47,724 60,132 75,766 26.00%

Total 26.00% 100,200 126,252 159,078 200,438 252,552 26.00%

4.2 Strategy and Implementation Summary

Okyna Rempah Bali Agro strategy is to expand production capabilities in order

to fulfill the requests of importers with whom we currently deal for larger

orders which we are unable to currently fulfill. We intend to first maximize

quantity of coffee sold within existing channels and second, establish

additional accounts through targeted marketing efforts.

Marketing Strategy

Okyna Rempah Bali Agro marketing strategy will include the use of targeted

print media advertising and direct selling to importers who provide Luwak

coffee to specialty roasters. We will capitalize on existing relationships with

importers who have stated their willingness to contact affiliates and

recommend Okyna Rempah Bali Agro coffee. We have positioned ourselves as

a differentiated provider of the highest quality Luwak coffee. The primary goalof all marketing efforts will be to communicate this to existing and potential

customers.

5.1 Distribution Strategy

Distribution is one of the greatest challenges faced by Okyna Rempah Bali

Agro. The distribution system of Indonesia is largely outdated and inefficient.

Moreover, taxes, specifically excise taxes are high. Distribution costs for

internal sales are absorbed by the customer but distribution costs for exports

are absorbed by us. Increasing the volume of our exports makes us eligible to


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receive reduced fees and helps ensure that trucks and rail cars are running at

maximum capacity.

5.2 Marketing Programs

Our most important marketing program is an increase in personal selling

combined with targeted direct mail and print advertising. The program is

intended to establish contractual agreements with 10 additional importers,

increase brand awareness of our product, and communicate our position as a

provider of the highest quality Luwak coffee on the market.

Another key marketing program is the development of a sophisticated

Website. The goal of this program is to increase our presence on the worldwide web and provide additional means of communication and customer data

collection.

5.3 Pricing Strategy

Because Okyna Rempah Bali Agro adheres to higher quality standards, the

price of our coffee is slightly higher (four to nine percent) than the market

average. Beans that do not meet Okyna Rempah Bali Agro quality standards

are resold on the Indonesian market at the current market price. Luwak

coffee, on the import market, now sells for US$ 213.56/60kg bag. According

to Okyna Rempah Bali Agro pricing strategy, Okyna Rempah Bali Agro coffee

would sell for approximately US$ 224/60kg bag. Importers have to this point

been willing to pay the additional cost.

5.4 Sales Strategy

Okyna Rempah Bali Agro strategy focuses first on meeting the increased

demand from importers with whom we have established relationships for

larger orders. These importers are critical to our ability to acquire additionalaccounts without having to spend a great deal on sales efforts. Secondly we

will focus on increasing the volume, while maintaining the percentage of

sales, of beans sold to the internal Indonesian market. When we have

reached maximum sales to existing channels we can then shift the majority of

our focus to securing additional import accounts.

5.4.1 Sales Forecast

The following chart and table show our present sales forecast. We projecthealthy growth in sales in 2011, a slightly smaller increase again in 2012, and


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reach maximum for production capacity in 2013 representing a large growth

over the previous year.

Sales by year

$-

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

$40,000,000

$45,000,000

$50,000,000

2011 2012 2013

Other

Export


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Sales Forecast2011 2012 2013

Unit SalesImport and Export 100,200 120,000 160,000Other 0 0 0Total Unit Sales 100,200 120,000 160,000Unit Prices 2011 2012 2013Import and Export $262.08 $275.18 $288.29Other $0.00 $0.00 $0.00SalesImport and Export $26,260,416 $33,021,600 $46,126,400Other $0 $0 $0Total Sales $26,260,416 $33,021,600 $46,126,400Direct Unit Costs 2011 2012 2013Import and Export $212.00 $222.60 $233.20Other $0.00 $0.00 $0.00Direct Cost of SalesImport and Export $21,242,400 $26,712,000 $37,312,000Other $0 $0 $0Subtotal Direct Cost of Sales $21,242,400 $26,712,000 $37,312,000

Management Summary

Okyna Rempah Bali Agro management consists of four full-time employees.

Additional assistance is acquired on a part-time basis and/or through the use of

consultants, specifically in legal matters. Detailed descriptions are found in the

following section.


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6.1 Management Team

Okyna Rempah Bali Agro is organized into three functional areas: product

sourcing, sales, and marketing; production and shipping; and finance and

administration.

I Wayan Widana S.Sos., President in charge of finance and administration, 41,

has worked in the coffee export business for 10 years. Before starting Okyna

Rempah Bali Agro he is also President of Bali Okina carving stone in Bali Island

Indonesia. He began Bali Okina Carving Stone 15 years .

Thea Kustiati in charge of product sourcing, sales, and marketing. Completed her

MBA at Calstate University of Northridge and owned Company for 15 years on

Aviation Industry and commodities market as a broker. Her later took a position

as an International Sales and Marketing Representative for a major agricultural

brokerage and supply firm .

I Putu Resika in charge of production and shipping. Worked as a for the

Indonesian government . He is responsible for the supervision of all plant

employees.

Additional Management:

Pandu Prasnaditya as a Quality Control and IT Manager

Ni Ketut Darmayanti as a Financial Manager

Financial Plan

We want to finance growth through a combination of long-term debt and cashflow. Purchase of the larger facility and equipment will require approximately

eighty percent debt financing. Additional technology will be primarily financed

with cash-flow. Inventory turnover must remain at or above four or we run the

risk of backing up orders and jeopardizing our freshness guarantees. We have

had no problems with accounts receivable and we expect to maintain our

collection days at 30 with thirty percent of sales on credit.

In addition, we must achieve gross margins of thirty-five percent and hold

operating costs no more than sixty-five percent of sales.

7.1 Break-even Analysis


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The break-even analysis shows that Okyna Rempah Bali Agro has sufficient sales

strength to remain viable. Our per month break-even point projections are

detailed in the following table and chart.

Break-even AnalysisMonthly Units Break-even 2,049Monthly Revenue Break-even $537,078Assumptions:Average Per-Unit Revenue $262.08Average Per-Unit Variable Cost $212.00Estimated Monthly Fixed Cost $102,629

7.2 Important Assumptions


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Important assumptions for this plan are found in the following table. These

assumptions largely determine the financial plan and require that we secure

additional financing.

General Assumptions2011 2012 2013

Plan Month 1 2 3Current Interest Rate 14.00% 14.00% 14.00%Long-term Interest Rate 9.00% 9.00% 9.00%Tax Rate 47.00% 47.00% 47.00%Other 0 0 0

7.3 Key Financial Indicators

The most important factor to Okyna Rempah Bali Agro anticipated growth is the

procurement of necessary financing. The size of the orders currently requested by

importers are larger than what can be produced given our present plant capacity.

The following chart shows changes in key financial indicators: sales, gross

margin, operating expenses, collection days, and inventory turnover. The growth

in sales goes above thirty percent in the first year, twenty percent in second, and

back to thirty percent in year three after which it will settle. We expect to

increase gross margin but our projections show a decline in the first two years

following the purchase of the new facility. This is due to the facilities not being

run at maximum capacity. The projections for collection days and inventory

turnover show that we expect a decline in these indicators.


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Benchmark

7.4 Projected Profit and Loss

We expect to close the first year of production in the new facility with quite

exempary ($USD) sales and to increase our sales in the second and third years.

Net earnings will be above industry average ($USD).

0

0.5

1

1.5

2

2.5

3

Sales Gross Margin % OperatingExpenses

InventoryTurnover

2011

2012

2013


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$-

$1,000,000.00

$2,000,000.00

$3,000,000.00

$4,000,000.00

$5,000,000.00

$6,000,000.00

$7,000,000.00

$8,000,000.00

$9,000,000.00

2011 2012 2013

Gross Margin Yearly


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Pro Forma Profit and Loss2011 2012 2013

Sales $26,260,416 $33,021,600 $46,126,400

$-

$500,000$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

2011 2012 2013

Profit Yearly


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Direct Cost of Sales $21,242,400 $26,712,000 $37,312,000Production Payroll $300,396 $316,884 $331,912Other Costs of Sales $300,000 $345,000 $410,000Total Cost of Sales $21,842,796 $27,373,884 $38,053,912Gross Margin $4,417,620 $5,647,716 $8,072,488Gross Margin % 16.82% 17.10% 17.50%Operating ExpensesSales and Marketing ExpensesSales and Marketing Payroll $225,492 $128,150 $136,521Advertising/Promotion $144,000 $165,000 $165,000Travel $21,000 $22,500 $24,000Other Sales and Marketing Expenses $24,000 $26,500 $28,500Total Sales and Marketing Expenses $414,492 $342,150 $354,021Sales and Marketing % 1.58% 1.04% 0.77%General and Administrative ExpensesGeneral and Administrative Payroll $119,400 $130,228 $173,377Marketing/Promotion $0 $0 $0Depreciation $216,000 $216,000 $216,000Leased Equipment $50,400 $50,400 $50,400Utilities $36,000 $36,000 $36,000Insurance $72,000 $75,000 $78,000

Rent

$305,250

$300,000

$300,000

Payroll Taxes $0 $0 $0Other General and AdministrativeExpenses $0 $0 $0

Total General and AdministrativeExpenses $799,050 $807,628 $853,777

General and Administrative % 3.04% 2.45% 1.85%Other Expenses:Other Payroll $0 $0 $0


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Consultants $18,000 $24,000 $30,000Other Expenses $0 $0 $0Total Other Expenses $18,000 $24,000 $30,000Other % 0.07% 0.07% 0.07%Total Operating Expenses $1,231,542 $1,173,778 $1,237,798Profit Before Interest and Taxes $3,186,078 $4,473,938 $6,834,690EBITDA $3,402,078 $4,689,938 $7,050,690Interest Expense $269,166 $238,449 $225,191Taxes Incurred $1,370,949 $1,990,680 $3,106,465Net Profit $1,545,964 $2,244,809 $3,503,035Net Profit/Sales 5.89% 6.80% 7.59%

7.5 Projected Cash Flow

Okyna Rempah Bali Agro expects to manage cash flow over the next three years

with the assistance of a loan supported by Private Loan Investor This financing

assistance is required to provide the working capital to meet the current needsfor the construction of the new production facility and additional personnel,

distribution costs, and other related expenses.


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Pro Forma Cash Flow2011 2012 2013

Cash ReceivedCash from OperationsCash Sales $26,260,416 $33,021,600 $46,126,400Subtotal Cash from Operations $26,260,416 $33,021,600 $46,126,400Additional Cash ReceivedSales Tax, VAT, HST/GST Received $0 $0 $0New Current Borrowing $0 $0 $0New Other Liabilities (interest-free) $0 $0 $0New Long-term Liabilities $2,700,000 $0 $0Sales of Other Current Assets $0 $0 $0Sales of Long-term Assets $0 $0 $0New Investment Received $0 $650,000 $650,000


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Subtotal Cash Received $28,960,416 $33,671,600 $46,776,400Expenditures 2011 2012 2013Expenditures from OperationsCash Spending $645,288 $575,262 $641,810Bill Payments $23,678,478 $29,770,693 $41,735,934Subtotal Spent on Operations $24,323,766 $30,345,955 $42,377,744Additional Cash SpentSales Tax, VAT, HST/GST Paid Out $0 $0 $0Principal Repayment of Current Borrowing $57,996 $0 $0Other Liabilities Principal Repayment $0 $0 $0Long-term Liabilities Principal Repayment $305,250 $294,636 $0Purchase Other Current Assets $60,000 $75,000 $85,000Purchase Long-term Assets $2,700,000 $0 $0Dividends $0 $0 $0Subtotal Cash Spent $27,447,012 $30,715,591 $42,462,744Net Cash Flow $1,513,404 $2,956,009 $4,313,656Cash Balance $2,507,664 $5,463,673 $9,777,329

7.6 Projected Balance Sheet

As shown in the balance sheet in the following table, our net will grow quickly by

the end of 2013 and to continue steadily through the end of the plan period. The

monthly projections are in the appendix.

Pro Forma Balance Sheet2011 2012 2013

AssetsCurrent AssetsCash $2,507,664 $5,463,673 $9,777,329Inventory $1,958,880 $2,463,262 $3,440,747


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Other Current Assets $303,936 $378,936 $463,936Total Current Assets $4,770,480 $8,305,872 $13,682,013Long-term AssetsLong-term Assets $3,221,650 $3,221,650 $3,221,650Accumulated Depreciation $316,000 $532,000 $748,000Total Long-term Assets $2,905,650 $2,689,650 $2,473,650Total Assets $7,676,130 $10,995,522 $16,155,663Liabilities and Capital 2011 2012 2013Current LiabilitiesAccounts Payable $1,786,801 $2,506,020 $3,513,127Current Borrowing $4 $4 $4Other Current Liabilities $0 $0 $0Subtotal Current Liabilities $1,786,805 $2,506,024 $3,513,131Long-term Liabilities $2,796,750 $2,502,114 $2,502,114Total Liabilities $4,583,555 $5,008,138 $6,015,245Paid-in Capital $525,000 $1,175,000 $1,825,000Retained Earnings $1,021,611 $2,567,575 $4,812,383Earnings $1,545,964 $2,244,809 $3,503,035Total Capital $3,092,575 $5,987,383 $10,140,418Total Liabilities and Capital $7,676,130 $10,995,522 $16,155,663Net Worth $3,092,575 $5,987,383 $10,140,418

7.7 Business Ratios

Standard business ratios are included in the following table. The ratios show an

aggressive plan for growth in order to reach maximum production within three

years. Return on investment increases each year as we bring the new facility to

maximum capacity and production. Return on sales and assets remain strong and

cost of goods decreases based upon efficiency projections.


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Ratio Analysis2011 2012 2013 Industry

ProfileSales Growth 43.14% 25.75% 39.69% 5.50%Percent of Total AssetsInventory 25.52% 22.40% 21.30% 12.43%Other Current Assets 3.96% 3.45% 2.87% 27.50%Total Current Assets 62.15% 75.54% 84.69% 60.13%Long-term Assets 37.85% 24.46% 15.31% 39.87%Total Assets 100.00% 100.00% 100.00% 100.00%Current Liabilities 23.28% 22.79% 21.75% 8.46%Long-term Liabilities 36.43% 22.76% 15.49% 16.54%Total Liabilities 59.71% 45.55% 37.23% 25.00%Net Worth 40.29% 54.45% 62.77% 75.00%Percent of SalesSales 100.00% 100.00% 100.00% 100.00%Gross Margin 16.82% 17.10% 17.50% 23.32%Selling, General & AdministrativeExpenses 10.94% 10.31% 9.91% 9.39%

Advertising Expenses 0.55% 0.50% 0.36% 2.06%Profit Before Interest and Taxes 12.13% 13.55% 14.82% 4.36%Main RatiosCurrent 2.67 3.31 3.89 5.32Quick 1.57 2.33 2.92 3.45Total Debt to Total Assets 59.71% 45.55% 37.23% 27.13%Pre-tax Return on Net Worth 94.32% 70.74% 65.18% 12.79%Pre-tax Return on Assets 38.00% 38.52% 40.91% 17.55%Additional Ratios 2011 2012 2013Net Profit Margin 5.89% 6.80% 7.59% n.aReturn on Equity 49.99% 37.49% 34.55% n.a


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Activity RatiosInventory Turnover 10.91 12.08 12.64 n.aAccounts Payable Turnover 14.25 12.17 12.17 n.aPayment Days 27 26 26 n.aTotal Asset Turnover 3.42 3.00 2.86 n.aDebt RatiosDebt to Net Worth 1.48 0.84 0.59 n.aCurrent Liab. to Liab. 0.39 0.50 0.58 n.aLiquidity RatiosNet Working Capital $2,983,675 $5,799,847 $10,168,882 n.aInterest Coverage 11.84 18.76 30.35 n.aAdditional RatiosAssets to Sales 0.29 0.33 0.35 n.aCurrent Debt/Total Assets 23% 23% 22% n.aAcid Test 1.57 2.33 2.92 n.aSales/Net Worth 8.49 5.52 4.55 n.aDividend Payout 0.00 0.00 0.00 n.a

Appendix

Sales Forecast

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

UnitSales

Import and Export 0% 8,700 8,200 8,800 8,300 8,450 8,050 8,000 8,200 8,050 8,000 9,050 8,400

Other 0% 0 0 0 0 0 0 0 0 0 0 0 0

TotalUnit Sales 8,700 8,200 8,800 8,300 8,450 8,050 8,000 8,200 8,050 8,000 9,050 8,400

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

Importand Export $262.08 $262.08 $262.08 $262.08 $262.08 $262.08 $262.08 $262.08 $262.08 $262.08 $262.08 $262.08

Other $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

Sales

Importand Export $2,280,096 $2,149,056 $2,306,304 $2,175,264 $2,214,576 $2,109,744 $2,096,640 $2,149,056 $2,109,744 $2,096,640 $2,371,824 $2,201,472

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


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TotalSales $2,280,096 $2,149,056 $2,306,304 $2,175,264 $2,214,576 $2,109,744 $2,096,640 $2,149,056 $2,109,744 $2,096,640 $2,371,824 $2,201,472

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

Import and Export 0.00% $212.00 $212.00 $212.00 $212.00 $212.00 $212.00 $212.00 $212.00 $212.00 $212.00 $212.00 $212.00

Other 0.00% $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

Direct Costof Sales

Importand Export $1,844,400 $1,738,400 $1,865,600 $1,759,600 $1,791,400 $1,706,600 $1,696,000 $1,738,400 $1,706,600 $1,696,000 $1,918,600 $1,780,800

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

SubtotalDirect Costof Sales $1,844,400 $1,738,400 $1,865,600 $1,759,600 $1,791,400 $1,706,600 $1,696,000 $1,738,400 $1,706,600 $1,696,000 $1,918,600 $1,780,800

Personnel Plan


ProductionPersonnel

AntonioSilvera,VPProduction $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200

PlantEmployees $18,333 $18,333 $18,333 $18,333 $18,333 $18,333 $18,333 $18,333 $18,333 $18,333 $18,333 $18,333

Other $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500

Subtotal $25,033 $25,033 $25,033 $25,033 $25,033 $25,033 $25,033 $25,033 $25,033 $25,033 $25,033 $25,033

Salesand Marketing Personnel

MarcoSilveraJr,VPSales/Mktg. $3,750 $3,750 $3,750 $3,750 $3,750 $3,750 $3,750 $3,750 $3,750 $3,750 $3,750 $3,750

Other $15,041 $15,041 $15,041 $15,041 $15,041 $15,041 $15,041 $15,041 $15,041 $15,041 $15,041 $15,041

Subtotal $18,791 $18,791 $18,791 $18,791 $18,791 $18,791 $18,791 $18,791 $18,791 $18,791 $18,791 $18,791

General and AdministrativePersonnel

MarcoSliveraSr,CEO $4,200 $4,200 $4,200 $4,200 $4,200 $4,200 $4,200 $4,200 $4,200 $4,200 $4,200 $4,200

Ralph Henzo,CFO $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500

Admin/Acctg.Staff $750 $750 $750 $750 $750 $750 $750 $750 $750 $750 $750 $750

Other $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500

Subtotal $9,950 $9,950 $9,950 $9,950 $9,950 $9,950 $9,950 $9,950 $9,950 $9,950 $9,950 $9,950

Other Personnel

NameorTitleor Group $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

NameorTitleor Group $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

NameorTitleor Group

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total People 15 15 15 15 15 15 15 15 15 15 15 15

Total Payroll $53,774 $53,774 $53,774 $53,774 $53,774 $53,774 $53,774 $53,774 $53,774 $53,774 $53,774 $53,774

Pro Forma Profit and Loss


Sales $2,280,096 $2,149,056 $2,306,304 $2,175,264 $2,214,576 $2,109,744 $2,096,640 $2,149,056 $2,109,744 $2,096,640 $2,371,824 $2,201,472

DirectCostofSales $1,844,400 $1,738,400 $1,865,600 $1,759,600 $1,791,400 $1,706,600 $1,696,000 $1,738,400 $1,706,600 $1,696,000 $1,918,600 $1,780,800

Production Payroll $25,033 $25,033 $25,033 $25,033 $25,033 $25,033 $25,033 $25,033 $25,033 $25,033 $25,033 $25,033

Other Costs ofSales $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000


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TotalCost of Sales $1,894,433 $1,788,433 $1,915,633 $1,809,633 $1,841,433 $1,756,633 $1,746,033 $1,788,433 $1,756,633 $1,746,033 $1,968,633 $1,830,833

Gross Margin $385,663 $360,623 $390,671 $365,631 $373,143 $353,111 $350,607 $360,623 $353,111 $350,607 $403,191 $370,639

Gross Margin % 16.91% 16.78% 16.94% 16.81% 16.85% 16.74% 16.72% 16.78% 16.74% 16.72% 17.00% 16.84%

Operating Expenses

Sales andMarketingExpenses

Sales and MarketingPayroll $18,791 $18,791 $18,791 $18,791 $18,791 $18,791 $18,791 $18,791 $18,791 $18,791 $18,791 $18,791

Advertising/Promotion $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000

Travel $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750

Other SalesandMarketingExpenses $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000

TotalSales andMarketingExpenses

$34,541 $34,541 $34,541 $34,541 $34,541 $34,541 $34,541 $34,541 $34,541 $34,541 $34,541 $34,541

Sales and Marketing% 1.51% 1.61% 1.50% 1.59% 1.56% 1.64% 1.65% 1.61% 1.64% 1.65% 1.46% 1.57%

Generaland AdministrativeExpenses

General and AdministrativePayroll

$9,950 $9,950 $9,950 $9,950 $9,950 $9,950 $9,950 $9,950 $9,950 $9,950 $9,950 $9,950

Marketing/Promotion $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Depreciation $18,000 $18,000 $18,000 $18,000 $18,000 $18,000 $18,000 $18,000 $18,000 $18,000 $18,000 $18,000

Leased Equipment $4,200 $4,200 $4,200 $4,200 $4,200 $4,200 $4,200 $4,200 $4,200 $4,200 $4,200 $4,200

Utilities $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000

Insurance $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000

Rent $0 $27,750 $27,750 $27,750 $27,750 $27,750 $27,750 $27,750 $27,750 $27,750 $27,750 $27,750

Payroll Taxes 9% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Other GeneralandAdministrativeExpenses

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

TotalGeneralandAdministrativeExpenses

$41,150 $68,900 $68,900 $68,900 $68,900 $68,900 $68,900 $68,900 $68,900 $68,900 $68,900 $68,900

General and Administrative% 1.80% 3.21% 2.99% 3.17% 3.11% 3.27% 3.29% 3.21% 3.27% 3.29% 2.90% 3.13%

Other Expenses:

Other Payroll $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Consultants $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500

Other Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

TotalOther Expenses $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500

Other % 0.07% 0.07% 0.07% 0.07% 0.07% 0.07% 0.07% 0.07% 0.07% 0.07% 0.06% 0.07%

TotalOperating Expenses $77,191 $104,941 $104,941 $104,941 $104,941 $104,941 $104,941 $104,941 $104,941 $104,941 $104,941 $104,941

ProfitBefore Interestand Taxes $308,472 $255,682 $285,730 $260,690 $268,202 $248,170 $245,666 $255,682 $248,170 $245,666 $298,250 $265,698

EBITDA $326,472 $273,682 $303,730 $278,690 $286,202 $266,170 $263,666 $273,682 $266,170 $263,666 $316,250 $283,698

InterestExpense $23,885 $23,621 $23,356 $23,092 $22,827 $22,563 $22,298 $22,034 $21,769 $21,505 $21,240 $20,976

Taxes Incurred $133,756 $109,069 $123,316 $111,671 $115,326 $106,035 $104,983 $109,815 $106,408 $105,356 $130,195 $115,019

Net Profit $150,831 $122,992 $139,058 $125,927 $130,049 $119,572 $118,385 $123,834 $119,992 $118,805 $146,815 $129,703

Net Profit/Sales 6.62% 5.72% 6.03% 5.79% 5.87% 5.67% 5.65% 5.76% 5.69% 5.67% 6.19% 5.89%

Pro Forma Cash Flow


Cash Received


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Cash fromOperations

Cash Sales $2,280,096 $2,149,056 $2,306,304 $2,175,264 $2,214,576 $2,109,744 $2,096,640 $2,149,056 $2,109,744 $2,096,640 $2,371,824 $2,201,472

SubtotalCashfrom Operations $2,280,096 $2,149,056 $2,306,304 $2,175,264 $2,214,576 $2,109,744 $2,096,640 $2,149,056 $2,109,744 $2,096,640 $2,371,824 $2,201,472

Additional Cash Received

Sales Tax,VAT,HST/GSTReceived 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

NewCurrentBorrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

NewOther Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

NewLong-termLiabilities $2,700,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales ofOther CurrentAssets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales ofLong-termAssets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

NewInvestmentReceived $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

SubtotalCashReceived $4,980,096 $2,149,056 $2,306,304 $2,175,264 $2,214,576 $2,109,744 $2,096,640 $2,149,056 $2,109,744 $2,096,640 $2,371,824 $2,201,472

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

Expenditures fromOperations

Cash Spending $53,774 $53,774 $53,774 $53,774 $53,774 $53,774 $53,774 $53,774 $53,774 $53,774 $53,774 $53,774

BillPayments $132,806 $3,668,016 $1,850,946 $2,222,911 $1,867,189 $2,040,313 $1,827,442 $1,898,330 $1,996,185 $1,883,378 $1,911,190 $2,379,772

SubtotalSpent on Operations $186,580 $3,721,790 $1,904,720 $2,276,685 $1,920,963 $2,094,087 $1,881,216 $1,952,104 $2,049,959 $1,937,152 $1,964,964 $2,433,546

Additional Cash Spent

Sales Tax,VAT,HST/GSTPaid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Principal RepaymentofCurrentBorrowing

$4,833 $4,833 $4,833 $4,833 $4,833 $4,833 $4,833 $4,833 $4,833 $4,833 $4,833 $4,833

Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Long-termLiabilities Principal

Repayment

$0 $27,750 $27,750 $27,750 $27,750 $27,750 $27,750 $27,750 $27,750 $27,750 $27,750 $27,750

PurchaseOther CurrentAssets $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000

PurchaseLong-termAssets $225,000 $225,000 $225,000 $225,000 $225,000 $225,000 $225,000 $225,000 $225,000 $225,000 $225,000 $225,000

Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

SubtotalCashSpent $421,413 $3,984,373 $2,167,303 $2,539,268 $2,183,546 $2,356,670 $2,143,799 $2,214,687 $2,312,542 $2,199,735 $2,227,547 $2,696,129

Net Cash Flow $4,558,683 ($1,835,317) $139,001 ($364,004) $31,030 ($246,926) ($47,159) ($65,631) ($202,798) ($103,095) $144,277 ($494,657)

Cash Balance $5,552,943 $3,717,626 $3,856,626 $3,492,622 $3,523,653 $3,276,727 $3,229,568 $3,163,937 $2,961,139 $2,858,044 $3,002,321 $2,507,664

Pro Forma Balance Sheet


Assets StartingBalances

CurrentAssets

Cash $994,260 $5,552,943 $3,717,626 $3,856,626 $3,492,622 $3,523,653 $3,276,727 $3,229,568 $3,163,937 $2,961,139 $2,858,044 $3,002,321 $2,507,664

Inventory $355,200 $2,028,840 $1,912,240 $2,052,160 $1,935,560 $1,970,540 $1,877,260 $1,865,600 $1,912,240 $1,877,260 $1,865,600 $2,110,460 $1,958,880

Other Current Assets $243,936 $248,936 $253,936 $258,936 $263,936 $268,936 $273,936 $278,936 $283,936 $288,936 $293,936 $298,936 $303,936

Total Current Assets $1,593,396 $7,830,719 $5,883,802 $6,167,722 $5,692,118 $5,763,129 $5,427,923 $5,374,104 $5,360,113 $5,127,335 $5,017,580 $5,411,717 $4,770,480

Long-termAssets

Long-term Assets $521,650 $746,650 $971,650 $1,196,650 $1,421,650 $1,646,650 $1,871,650 $2,096,650 $2,321,650 $2,546,650 $2,771,650 $2,996,650 $3,221,650

Accumulated Depreciation $100,000 $118,000 $136,000 $154,000 $172,000 $190,000 $208,000 $226,000 $244,000 $262,000 $280,000 $298,000 $316,000

Total Long-term Assets $421,650 $628,650 $835,650 $1,042,650 $1,249,650 $1,456,650 $1,663,650 $1,870,650 $2,077,650 $2,284,650 $2,491,650 $2,698,650 $2,905,650


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Total Assets $2,015,046 $8,459,369 $6,719,452 $7,210,372 $6,941,768 $7,219,779 $7,091,573 $7,244,754 $7,437,763 $7,411,985 $7,509,230 $8,110,367 $7,676,130

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

CurrentLiabilities

Accounts Payable $8,435 $3,606,760 $1,776,433 $2,160,879 $1,798,931 $1,979,476 $1,764,281 $1,831,660 $1,933,419 $1,820,231 $1,831,254 $2,318,158 $1,786,801

Current Borrowing $58,000 $53,167 $48,334 $43,501 $38,668 $33,835 $29,002 $24,169 $19,336 $14,503 $9,670 $4,837 $4

Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Current Liabi lities $66,435 $3,659,927 $1,824,767 $2,204,380 $1,837,599 $2,013,311 $1,793,283 $1,855,829 $1,952,755 $1,834,734 $1,840,924 $2,322,995 $1,786,805

Long-termLiabilities $402,000 $3,102,000 $3,074,250 $3,046,500 $3,018,750 $2,991,000 $2,963,250 $2,935,500 $2,907,750 $2,880,000 $2,852,250 $2,824,500 $2,796,750

Total Liabilities $468,435 $6,761,927 $4,899,017 $5,250,880 $4,856,349 $5,004,311 $4,756,533 $4,791,329 $4,860,505 $4,714,734 $4,693,174 $5,147,495 $4,583,555

Paid-in Capital $525,000 $525,000 $525,000 $525,000 $525,000 $525,000 $525,000 $525,000 $525,000 $525,000 $525,000 $525,000 $525,000

Retained Earnings $85,985 $1,021,611 $1,021,611 $1,021,611 $1,021,611 $1,021,611 $1,021,611 $1,021,611 $1,021,611 $1,021,611 $1,021,611 $1,021,611 $1,021,611

Earnings $935,626 $150,831 $273,823 $412,881 $538,809 $668,857 $788,429 $906,814 $1,030,648 $1,150,640 $1,269,445 $1,416,261 $1,545,964

Total Capital $1,546,611 $1,697,442 $1,820,434 $1,959,492 $2,085,420 $2,215,468 $2,335,040 $2,453,425 $2,577,259 $2,697,251 $2,816,056 $2,962,872 $3,092,575

T ot al L ia bi li ti es a nd C ap it al $ 2, 01 5, 04 6 $8,459,369 $6,719,452 $7,210,372 $6,941,768 $7,219,779 $7,091,573 $7,244,754 $7,437,763 $7,411,985 $7,509,230 $8,110,367 $7,676,130

Net Worth $1,546,611 $1,697,442 $1,820,434 $1,959,492 $2,085,420 $2,215,468 $2,335,040 $2,453,425 $2,577,259 $2,697,251 $2,816,056 $2,962,872 $3,092,575

General AssumptionsJan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

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

Current InterestRate 14.00% 14.00% 14.00% 14.00% 14.00% 14.00% 14.00% 14.00% 14.00% 14.00% 14.00% 14.00%

Long-term InterestRate 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00%

Tax Rate 47.00% 47.00% 47.00% 47.00% 47.00% 47.00% 47.00% 47.00% 47.00% 47.00% 47.00% 47.00%

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

Coffe Luwak Business Plan

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