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Helping producers save time and add their creative
brilliance to visual media
A new venture from an undergraduate team in the
Entrepreneurship and Emerging Enterprises Program
Whitman School of Management
Syracuse University
April 2007
Dream > Believe > Pursue
Table of ContentsTable of ContentsTable of ContentsTable of Contents Execut ive Summary and Introduct ionExecut ive Summary and Introduct ionExecut ive Summary and Introduct ionExecut ive Summary and Introduct ion Pages 1 through 5Pages 1 through 5Pages 1 through 5Pages 1 through 5 Concept and ServiceConcept and ServiceConcept and ServiceConcept and Service Pages 6 through 8Pages 6 through 8Pages 6 through 8Pages 6 through 8 The Concept Page 6 Serv ices Pages 6 - 7 Value-added Pages 7 - 8 The IndustryThe IndustryThe IndustryThe Industry Pages 8 through 10Pages 8 through 10Pages 8 through 10Pages 8 through 10 Postproduct ion Industry Structure Page 8 Industry Dynamics Page 9 Industry Trends Page 9 The Market and GrowthThe Market and GrowthThe Market and GrowthThe Market and Growth Pages 10 through 11Pages 10 through 11Pages 10 through 11Pages 10 through 11 Enter ing the Market Page 10 Market Segments Page 11 Market Share and Prof i tabi l i ty Page 11 EEEEconomics of the Businessconomics of the Businessconomics of the Businessconomics of the Business Pages 12 through 15Pages 12 through 15Pages 12 through 15Pages 12 through 15 Overview Page 12 Revenue Sources, Operat ing & Gross Margins Page 13 Var iable Costs Page 14 Break Even Page 14 Prof i t Potent ial and Durabi l i ty Pages 14 - 15 Market ing StrateMarket ing StrateMarket ing StrateMarket ing Strategygygygy Pages 15 through 17Pages 15 through 17Pages 15 through 17Pages 15 through 17 Pr ic ing Page 15 Adver t is ing Effor ts Pages 15 - 16 Sales Cycle Page 16 Cr i t ical Risks Page 17 Operat ions StrategyOperat ions StrategyOperat ions StrategyOperat ions Strategy Pages 18 through 19Pages 18 through 19Pages 18 through 19Pages 18 through 19 Operat ing Model Page 18 Legal Issues Page 19
The Management TeamThe Management TeamThe Management TeamThe Management Team Pages 19 through Pages 19 through Pages 19 through Pages 19 through 21212121 Founders Pages 19 - 20 Advisory Board Pages 20 - 21 F inancial PlanFinancial PlanFinancial PlanFinancial Plan Pages 21 through 22Pages 21 through 22Pages 21 through 22Pages 21 through 22 F inancial Overview Page 21 Income Statement Highl ights Pages 21 - 22 Balance Sheet Highl ights Page 22 Cash Flow Analysis Highl ights Page 22 The Offer ingThe Offer ingThe Offer ingThe Offer ing Pages 22 through 23Pages 22 through 23Pages 22 through 23Pages 22 through 23 Overview Pages 22 - 23 Valuat ion Page 23 Exi t Strategy Page 23 AppendicesAppendicesAppendicesAppendices Pages 24 through 33Pages 24 through 33Pages 24 through 33Pages 24 through 33 Appendix A – Producer Prof i le Page 24 Appendix B – Uni t Sales Page 25 Appendix C – Fixed and Var iable Costs Page 25 Appendix D – Break Even Page 26 Appendix E – Dai ly Product ion Duties Page 26 Appendix F – Operat ions Flowchar t Page 27 Appendix G – Overal l Schedule Page 28 Appendix H – Income Statements Pages 29 - 30 Appendix I – Balance Sheets Page 31 Appendix J – Cash Flow Statements Page 32
Appendix K – Financial Highl ights Page 33
Executive SummaryExecutive SummaryExecutive SummaryExecutive Summary
To produce a five-minute television segment it may require up to 15 hours of unedited video
footage. So consider that for an hour-long program — such as NBC’s Dateline — each episode
requires, on average, upwards of 35-hours of raw video footage. A critical step in preparing this raw
footage for the editing process requires that the production staff review all of the footage. The
producers create a time-coded ‘log’ so that they can easily navigate the hours of raw footage to find
the clips and shots they want to use in the final production. While video logging is low-tech and
tedious, logging is critical to the production process, and exceedingly expensive.
Our company, Logmedia, sees an opportunity to add substantial value throughout the
television production process by offering high quality, efficient, and cost-effective logging services
provided by an industry-experienced, well-trained logging staff. Andre Poulin, long time producer
for NBC’s Today Show, tells Logmedia that, “Producers don’t like logging. Partly because they
don’t like doing it and partly because they don’t have time.” In the television industry, time is money
– time spent by the production staff on logging footage translates to escalating production costs;
this relationship defines Logmedia’s opportunity. Logmedia takes the mundane and sometimes
overwhelming production task of logging raw footage from busy producers, allowing them to focus
their resources and creative talents on producing a quality program, and at the same time reducing
the exceedingly high cost of production.
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What We Do What We Do What We Do What We Do –––– TTTThe he he he LogmediaLogmediaLogmediaLogmedia Advantage Advantage Advantage Advantage
Initially based out of the New York Metropolitan area, an international communications hub,
Logmedia will provide producers with a simple, digital means to satisfy their video logging
requirements. Producers will digitally upload their footage to a Logmedia server, where
experienced, ‘Logmedia Certified’ loggers will log the footage according to producers’ specific
preferences. Producers and production staff will be able to access completed logs via a secure
server and download, in whole or in part, the completed product. Logmedia will subsequently act as
a log-data repository for its clients, maintaining completed logs and transcriptions on our secure-
server accessible to our clients, anytime, anywhere. We represent that Logmedia’s competitive
advantage is grounded in our ability to provide a value-added service to our clients, thus defining
an industry standard for quality and consistency where none currently exists. Further, we represent
that Logmedia is uniquely positioned to capitalize on this opportunity by leveraging our existing
industry relationships.
� A ValueA ValueA ValueA Value----Added ServiceAdded ServiceAdded ServiceAdded Service: Television pre and post-production activities represent a $62 billion-
dollar industry. Logmedia’s market research suggests that our service will reduce the cost of
post-production activities – given a typical, 30 minute news broadcast – between $140,000 to $140,000 to $140,000 to $140,000 to
$700,000$700,000$700,000$700,000 annually (depending upon factors such as broadcast genre, national vs. local
broadcast, etc). In New York City alone, our initial target geography, more than 300
independently produced news, entertainment, and documentary programs and companies that
require video logging services. In addition to the significant cost-savings, Logmedia’s service
will relieve the client’s production staff of the burden of logging, allowing them to focus their
time and creative talents on producing a quality production. Adam Wald, an associate producer
for Dateline, tells Logmedia that he could “spend 25 hours a week logging footage,” time that
would be better spent focused on developing new content or organizing for the show to come.
Jason Fisher, independent producer for “In the Zone” Productions, states that a company like
Logmedia would “save me hours of time—it’s a no-brainer!”
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� Defining the Industry Standard:Defining the Industry Standard:Defining the Industry Standard:Defining the Industry Standard: Logmedia’s portfolio of services include basic and advanced
logging, as well as transcription and ADtrac services. We have defined a standard for each
service in terms of the format content, ensuring a quality and consistent product. Further,
Logmedia will ‘Logmedia Certify’ all loggers through an extensive training program. Basic and
advanced logging requires a skill and industry know-how that will be taught and emphasized
during the logger certification process. This certification ensures the quality and consistency of
throughout the logging process, and differentiates us from in-house loggers who are mostly
production interns; these individuals are untrained and have an extremely high turnover rate.
� Established Industry Ties:Established Industry Ties:Established Industry Ties:Established Industry Ties: Logmedia’s established relationships and first-hand industry
experience has allowed the company to tailor the business around the customer’s needs.
Through our close association with the S.I. Newhouse School of Public Communications at
Syracuse University - the top-ranked communications school in the world - Logmedia’s
founders have established relationships within the television industry that will aid in gaining
clients, creating a buzz, and maintaining trust. Kevin Prince, CEO, is in constant contact with
producers, human resource representatives and executives at NBC; specifically
representatives at Today, Weekend Today, Late Night with Conan O’Brien and NBC Olympics.
Other founders have leveraged relationships at IMG Sports, Entertainment and Media and J&R
Music. These relationships will prove to be invaluable, as networking and word - of - mouth are
just as important in the television industry as the product or service one offers, and Logmedia
unquestionably has an advantage fostering relationships and buzz even before the business is
in operation. Dateline producer Adam Wald recently told our management team, “You’ve got a
great idea on your hands.”
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The IndustryThe IndustryThe IndustryThe Industry
Logmedia will compete in the Teleproduction and Other Postproduction Services industry,
NAICS 512191. Approximately 68% of the market is concentrated in only three states - New York,
California, and Illinois—and consists of small businesses, focusing on a particular geographic area
and segment of the television industry. As of the last economic census in 2002, there were 19,101
Teleproduction and Other Postproduction Services companies with annual revenues that exceed
$62 billion dollars.
The EconomicsThe EconomicsThe EconomicsThe Economics
Logmedia will price its logging and transcription services on a per page basis, and position
itself as a cost competitive player in the industry. That said, it is important to note that the majority
of video logging is currently performed ‘in-house’ by producers and production staff, whose salaries
are exceedingly high as compared to our costs for hiring full-time loggers at Logmedia. As such, we
can maintain a cost leadership position as compared to our existing competition (which we
perceive as the option to keep logging ‘in-house’), and yet still realize attractive margins on our
services. Because networks, cable stations, and independent production companies are always
looking for ways to reduce production costs, our low cost position is attractive. NBC Today’s Andre
Poulin suggested that, “producers are always looking for shortcuts” to reduce production costs.
Logmedia will generate its revenue from four service dimensions: basic and advanced
logging, transcription, and ADtrac services. Based on Logmedia’s projected revenue-mix, 75% of
the sales will be generated from logging services, 15% from ADtrac, and 10% from transcription
services. While in many respects a ‘virtual’ business, we will concentrate our marketing efforts,
during the first three years of operation, on the New York Metropolitan area. New York and the
surrounding communities are home to the largest concentration of news outlets in the U.S. As our
brand and reputation become established in the industry, we plan to expand fully to both Chicago
and Los Angeles within five years. Logmedia projects revenues of $1.5M in year one of operations,
growing at a CAGR of 36% over the next five years.
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Revenues at year three are projected to be $3.2M, and growing to $6.8M by year five. We
project that Logmedia will break even in the first quarter of our second year of operations.
The Management TeamThe Management TeamThe Management TeamThe Management Team
Logmedia’s five founders will be graduating with degrees in business and communications
from the Martin J. Whitman School of Management and the S.I. Newhouse School of Public
Communications at Syracuse University. Kevin Prince, CEO, is a dual major in Marketing and
Television, Radio and Film, and has extensive experience within the television industry. Interning at
MTV, NBC’s “Today,” “Late Night with Conan O’Brien,” and traveling to Torino, Italy with NBC as a
Production Associate for the 2006 Winter Olympic Games, Mr. Prince recognizes the importance of
Logmedia within the industry and is passionate about the industry it serves. Other relevant
experience among the founding members include summer analyst for Merrill Lynch, producer for
on-campus television show, broadcasting intern at IMG Sports, Entertainment and Media,
advertising intern at Princeton Partners and marketing analyst for J&R Music. Each founder
possesses an enthusiasm, drive, and motivation to take our concept from an idea to a viable
business opportunity.
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Section ISection ISection ISection I Logmedia’s Concept and Service
The The The The ConceptConceptConceptConcept
Through first hand industry experience and extensive market research, Logmedia’s
founders have identified meaningful opportunities for cost and quality improvement in the television
production process. In offering a cost competitive, high quality solution to overcome existing
inefficiencies in the production process, Logmedia will establish itself as a first mover position in the
industry. The company will offer basic and advanced logging, transcription, advertisement tracking,
and data storage services to its clients.
Logmedia, a C-corporation, will provide business-to-business services to the television
postproduction industry beginning in January 2008. Logmedia’s primary clientele will include
independent and network television producers (news, entertainment, sports and unscripted
programming). Located in the Metro-New York City area, Logmedia’s primary focus will be on
communication hubs including New York, Los Angeles and Chicago.
LogmediaLogmediaLogmediaLogmedia ServiceServiceServiceServicessss
Logmedia offers a comprehensive selection of services to aid the television production
process for networks, cable stations, and independent production companies. More specifically,
news-magazine segments, unscripted reality television, and documentary producers represent our
target clients.
Logmedia offers a traditional transcription service and two new service formats, basic and
advanced logging. Transcription services provide a time-coded, word-for-word written account of
events on a tape. Logging refers to the written record of time-coded footage used for video-editing.
Despite whether the footage makes it into the finished program, all raw footage must be logged by
the producer. Once logged, the producer can easily choose shots to be used for the segment.
Basic logging includes general time-coded information about the footage and is ideal for a producer
who wants a general summary of events on the tape.
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Advanced logging relies heavily on Logmedia’s custom ‘starring’ system to provide a more
detailed account summary of the footage on a tape. The aforementioned services apply to logging
interviews, background footage and archived materials, all of which are of great importance to a
producer. As an additional value added service, Logmedia will digitally store all logs on a secure
searchable server. This allows producers to locate and print past logs easily, and search for
specific content on any logged tape.
In addition to logging and transcription services, Logmedia offers an advertisement tracking
service called ADtrac. Product placement has become a significant source of revenue for television
programs. In order to satisfy contractual requirement, however, advertisers require verification that
their product received the proper amount of airtime. ADtrac provides written verification services to
production companies, creating a reliable account of product placement air-time.
ValueValueValueValue----AddedAddedAddedAdded
Logmedia will revolutionize the production industry by unveiling a new standard for logging.
Producers either want a basic understanding or an in-depth, intricate account of the footage on a
tape. The current market simply does not fulfill these needs. Logmedia recognizes this need and
has created a new concept of basic and advanced logging. The information of each log produced
will be stored in a digital database that can be searched by keyword, date added and logged, shot
specification, and other technicalities of production.
Logmedia’s logging service is backed by Logmedia Certified loggers and the development
of Logmedia Producer Profiles (see Appendix A). Andre Poulin stressed the necessity of employing
media savvy loggers that understand the importance of logging in the production process.
Therefore, Logmedia loggers will have 15 hours of customized training for each basic, advanced
and transcription log format. Each producer client will have a customized Logmedia Producer
Profile, which specifies the preferences of the producer and provide log consistency. Ultimately, the
profile will make the logger more efficient, which will correlate to a quicker log turnaround time and
higher productivity.
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The importance of fulfilling an advertising contract is imperative in the media industry.
ADtrac is valuable to any company or sponsor who buys and sells advertising space. Logmedia will
benefit from economies of scale because employees are familiar viewing large quantities of footage
while paying attention to details.
Section IISection IISection IISection II The Industry
Postproduction Industry StructurePostproduction Industry StructurePostproduction Industry StructurePostproduction Industry Structure
The Teleproduction and Other Postproduction Services Industry, NAICS 512191, is
comprised of, “establishments primarily engaged in providing specialized motion picture or video
postproduction services, such as editing, film/tape transfers, subtitling, credits, closed captioning,
and animation and special effects” (US Census Bureau NA). As of the last economic census in
2002, there were 19,101 Teleproduction and Other Postproduction Services companies with
annual revenue of $62,012,526,000 and annual payroll of $10,235,709,000 (US Census Bureau
NA). Further, television product placement spending in 2004 was $1.9 billion, up 46% over 2003.
Overall product placement spending from film, TV, and other media was $3.5 billion in 2004, up
30.5% versus 2003, according to industry publications.
In 2002, the total number of postproduction companies decreased from 1997, when there
were 19,269 established companies. However, the total revenue increased from 1997 when it was
$44,785,652,000. These numbers show approximately a 0.85% decrease in companies and
approximately a 38% increase in total revenue (US Census Bureau). As an overall trend, while the
industry size is decreasing it is growing substantially in revenue, indicating the industry is in an
early maturity stage.
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Industry DynamicsIndustry DynamicsIndustry DynamicsIndustry Dynamics
The Teleproduction and Other Postproduction Services industry is very concentrated, and
traditionally, suppliers of pre and post-production services have little bargaining power; producers
only engage outside production service if a pain point is exposed. If the producer is convinced that
the service will alleviate that pain, then the supplier is contracted. Approximately 68% of the
market is located in only three states - New York, California, and Illinois - and consists of small
businesses, focusing on a particular geographic area and segment of the television industry (US
Census Bureau). These three markets are the primary focus of Logmedia’s efforts.
Industry Trends Industry Trends Industry Trends Industry Trends
The postproduction industry is dynamic. In October 2006, NBC Universal announced
“sweeping cuts to its television division” shedding 700 jobs or 5% of the workforce (Ahrens). Other
networks and producers are under similar levels of competitive pressures; there are fewer
employees to handle the same workload. While a challenge for NBC, Logmedia plans to capitalize
on this opportunity. Further, due to increased competition in television programming and alternative
forms of entertainment, e.g. online, downloadable and on demand video/television, and gaming
devices, cost efficiency has become a key driver in all segments of the television and film
industries.
Most companies in the industry focus on offering one postproduction service. Logmedia
offers four complimentary services: logging, transcription, ADtrac and a searchable database of
logs. This offers production teams a one-stop-shop at the beginning of the production process.
Further, the Federal Trade Commission mandated all broadcasters to switch from analog to digital
broadcast services by 2008. All major broadcasters will have the capability to send footage digitally
to Logmedia, thus expediting the logging, transcription, and ADtrac processes.
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SSSSection IIIection IIIection IIIection III The Market and Growth
Entering the MarketEntering the MarketEntering the MarketEntering the Market
Logmedia will enter the market by capitalizing on existing relationships with independent
producers, as well as network producers at NBC, ABC, CBS, and ESPN. Initially targeting the
Metro-NYC area, and rapidly enter the Los Angeles and Chicago markets. The company will
primarily use targeted industry advertising, cold and warm referral calls, and trade shows to
penetrate the market. Over 40% of Logmedia’s total market is located in the Metro-NYC area.
Secondary targets include all digitally capable production facilities in Los Angeles and Chicago.
These two markets account for 25% of Logmedia’s market base. The company’s emphasis on the
newly developed advanced logging services will provide significant, value-added first mover
positioning. Logmedia’s founders estimated market potential of logging services by using the chain-
ratio analysis method. Specifically, the logic serving as a basis our projected market potential for
advanced, basic, and transcription services is as follows:
Step 1Step 1Step 1Step 1: The total number of finished, unique television programming hours per year (national,
regional, and local)
Step 2:Step 2:Step 2:Step 2: multiplied by the average number of raw hours of footage per finished hour
Step 3:Step 3:Step 3:Step 3: multiplied by the number of pages per hour of raw footage
Step 4:Step 4:Step 4:Step 4: multiplied by 5% market capture (based on known workforce reductions)
Step 5:Step 5:Step 5:Step 5: multiplied by weighted average of basic, advanced, and transcription services as a
percentage of total revenue.
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The estimates for product placement tracking (ADtrac) were based on modified market buildup
forecasts. Total industry estimates of annual product placement advertisements (mean average of
2005 and 2006)
Step 1:Step 1:Step 1:Step 1: Industry growth rate (percentage)
Step 2:Step 2:Step 2:Step 2: 5% market capture
= Basis for = Basis for = Basis for = Basis for ADtracADtracADtracADtrac market potentialmarket potentialmarket potentialmarket potential
Specific projections of market potential can be found in Appendix B....
Market SegmentsMarket SegmentsMarket SegmentsMarket Segments
In the first three years, Logmedia’s logging and transcription service will focus on
independent production companies that account for up to 60% of all television programming, along
with network producers, e.g. Dateline and Today, and cable stations such as MSNBC. . . . Logmedia
plans segmentation of potential ADtrac users including corporate clients and sport sponsors, both
of which buy and sell their advertising space.
Market Share and ProfitabilityMarket Share and ProfitabilityMarket Share and ProfitabilityMarket Share and Profitability
Using NBC’s recent 5% employee cutback as a guideline, including production personnel,
Logmedia believes it can obtain this percentage as an achievable market share. With independent
producers and network production staffs becoming leaner, Logmedia’s services are at the center of
client needs.
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Section IVSection IVSection IVSection IV Economics of the Business
OverviewOverviewOverviewOverview
The figure below serves to summarize the economic characteristics of our venture.
Logmedia’s revenue is generated from four distinct, but related value-added services that together
drive revenues: transcription, basic logging, advanced logging, and ADtrac services.
Operating Leverage
LowLow
Volume
HighHigh
Margins
MediumMedium
Product Mix
HighHigh
Operating Leverage
LowLow
Volume
HighHigh
Margins
MediumMedium
Product Mix
HighHigh
Our diverse (high) product mix reduces risk to the venture that may result from poor
performance of any one product line. Further, the economic model is based on realizing high
volumes associated with reasonable but attractive margins (as a weighted average, initially 20%
across four product lines). Finally, because our costs are predominately variable in nature, our
leverage position is such that we will breakeven (cover fixed costs) sooner, and realize profit gains
faster, than comparable businesses with higher leverage positions. A discussion of costs, margins,
and breakeven position follows is detailed in subsequent sections.
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Revenue Sources, Operating Margins and Gross MarginsRevenue Sources, Operating Margins and Gross MarginsRevenue Sources, Operating Margins and Gross MarginsRevenue Sources, Operating Margins and Gross Margins
Based on market research, we project the relationship between our product mix and
revenues will be such that 10% of our revenues will come from transcription services, 25% from
basic logging services, 50% from advanced logging, and 15% from ADtrac customers. Allocating
variable costs as a weighted average, the contribution of each revenue driver toward covering our
fixed costs is depicted in the table below.
Revenue DriverRevenue DriverRevenue DriverRevenue Driver
Percentage of Total Percentage of Total Percentage of Total Percentage of Total Revenue Revenue Revenue Revenue
Unit PriceUnit PriceUnit PriceUnit PriceWeighted Allocation of Weighted Allocation of Weighted Allocation of Weighted Allocation of
Variable CostsVariable CostsVariable CostsVariable CostsAverage Average Average Average
ContributionContributionContributionContribution
Transcription 10% $3.10 $55,400.00 $0.21
Basic Logging 25% $2.95 $138,500.00 $0.50
Advanced Logging 50% $3.05 $277,000.00 $1.05ADtrac® 15% $30.00 $83,100.00 $2.42
Weighted Average ContributionWeighted Average ContributionWeighted Average ContributionWeighted Average Contribution $1.05
Again allocating costs (both fixed and variable) as a weighted average across our four
revenue drivers, we were able to determine a weighted average margin – 19.2% - for each unit of
sale (defined per page for transcription and logging services, or per hour for ADtrac services).
Fixed CostsFixed CostsFixed CostsFixed Costs
Logmedia’s fixed costs total $487$487$487$487,650,650,650,650 (47% of total costs), and are detailed at Appendix C.
Primary contributors to our pool of fixed costs are full-time employees’ salaries, rent for the office in
Jersey City, NJ, and marketing and technology budgets.
• Logmedia’s full time employees consist of the five owners making $35,000 per year and one
IT network administrator making $50,000 per year. In addition, pay roll tax charges will total
$29,250 per year. Total Cost: $254,250/yrTotal Cost: $254,250/yrTotal Cost: $254,250/yrTotal Cost: $254,250/yr.
• Logmedia will be located in Jersey City, NJ where, on average, rent and utilities approach
$20/sq/ft for industrial space. Given our projected space requirements, on an annualized
basis we project rent and utilities to cost $75,000. Total Cost: $7Total Cost: $7Total Cost: $7Total Cost: $75,000/yr.5,000/yr.5,000/yr.5,000/yr.
• Logmedia allocates $20,000 a year for technology/equipment upgrades and/or replacement
requirements. Total Cost: $20,000/yrTotal Cost: $20,000/yrTotal Cost: $20,000/yrTotal Cost: $20,000/yr....
Other fixed costs include charges for insurance, equipment, marketing and utilities.
Variable CostsVariable CostsVariable CostsVariable Costs Page 13
The majority of Logmedia’s costs are variable, such that as our volume of sales increases,
costs will increase accordingly. Logmedia’s variable costs total $554,000$554,000$554,000$554,000 (53% of total costs) in our
initial year of operation. . . . Variable costs associated with per/unit increases in volume are primarily
the hourly wages of our logging staff. Based on estimated volumes in our initial year of operation,
we anticipate the costs associated with employee wages of $550,000.
Additional variable costs include the charges for server storage space (for completed logs,
and associated client products), and office supplies associated with printing and delivering
completed logs to clients. A complete accounting of variable costs can be found at Appendix C.
Break Even Break Even Break Even Break Even
Break even was determined as a function of the weighted average contribution margin of its
four distinct revenue drivers as it relates to total costs. As Logmedia maintains a low operating
leverage and projects high volumes, we anticipate covering fixed costs in first quarter of our second
year of operations. Specifically, break even will occur at 569,467 units of sale or equivalently at
$1,580,270 in revenue. Logmedia’s gross margins will exceed 49% in year one. A break even
analysis is depicted at Appendix D.
Profit Potential and DurabilityProfit Potential and DurabilityProfit Potential and DurabilityProfit Potential and Durability
We suggest Logmedia’s profit stream is sustainable because the media industry is based
on long lasting relationships. When clients begin working with Logmedia, in short order they will
recognize the monetary and time-saving benefits of satisfying their logging requirements using
Logmedia loggers. As demonstrated at Appendix E, conservatively Logmedia could reduce a
producer’s daily work load associated with logging by up to five hours per day. Instead of logging,
producers could use these hours to do other productive tasks such as seeking content for a new
show, collaborating on future endeavors or working with other employees. Accordingly, producer
salaries would be the most efficient way to analyze exactly how much money Logmedia could
potentially save any given show, network, or company. The average salary for producers is
between $70,000 and $113,000 per year.
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Logmedia’s team would be saving production companies about $54.00 a day per producer if
these five hours were returned to them totaling approximately $14,000 per producer per year.
Using NBC’s Today show as an example, the show has over 50 producers on-staff. This means
that Logmedia can save NBC’s Today show about $700,000 a year in logging duties. In the
television business, there is no price on time and any time saved is valuable.
Section VSection VSection VSection V Marketing Strategy
PricingPricingPricingPricing
Logmedia plans to price its logging service on a price per page basis. Specific prices per
page will depend on the logging format: basic, advanced or transcription. Transcript Associates Inc
uses a price per page basis and charges $3.25 per page for time-coded transcription. Logmedia’s
loggings services will be competitively priced based on these numbers. ADtrac will be priced on an
hourly basis by amount of real-time footage logged. Logmedia will charge $30.00 per hour of
ADtrac.
FormatFormatFormatFormat PricePricePricePrice Revenue Per Hour/Per LoggerRevenue Per Hour/Per LoggerRevenue Per Hour/Per LoggerRevenue Per Hour/Per Logger
Basic LoggingBasic LoggingBasic LoggingBasic Logging $ 2.95 / page $44.25Advanced LoggingAdvanced LoggingAdvanced LoggingAdvanced Logging $ 3.05 / page $45.75TranscriptionTranscriptionTranscriptionTranscription $ 3.10 / page $31.00ADtrac ® ADtrac ® ADtrac ® ADtrac ® $ 30.00 / hour $30.00
The table above breaks down Logmedia’s services and pricing. In addition, we have
estimated the amount of revenue each logger will bring in per hour of logging. It is estimated that a
Logmedia logger can log approximately 15 advanced logging pages per hour and transcribe ten
pages per hour.
Advertising EffortsAdvertising EffortsAdvertising EffortsAdvertising Efforts
Trade magazines focus on a limited number of targeted vehicles. The two television media
niche magazines Logmedia will advertise in are Broadcasting & Cable and Variety. Broadcasting &
Cable is a leading source of the television industry serving the broadcast, cable and syndication
communities with a circulation of 24,000. In Variety, Logmedia will advertise within the Daily
Gotham Edition, a regional New York edition with a circulation of 10,000 people.
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In conjunction with print advertising, Logmedia will place ads on Variety.com. This site
receives 1.5 million unique visitors; 68% are in top management positions and 39% are directly
involved in the television industry.
Logmedia will have an exhibition at the NAB POST+ trade show, sponsored by the National
Association for Broadcasters. This is the largest annual event for audio and content creation and
highlights production and post-production techniques. Last year, $50 billion in purchase plans were
attributed to the trade show and more than 105,000 industry professionals attended it.
Logmedia will focus advertising efforts during the stressful times before and during Sweeps
Week. Sweeps run four times a year (February, May, July, and November) and are a time when
producers aim to obtain the highest ratings by producing the best shows possible. It is a time filled
with scouring through footage, meeting deadlines, and dealing with pressure. Logmedia will work to
assist those clients participating in Sweeps Week by handling production tasks and monitoring
advertisements with its ADtrac service.
Sales CycleSales CycleSales CycleSales Cycle
Initially, Logmedia will rely heavily on industry contacts and referrals to personally
sell clients rather than heavily rely on costly, traditional advertising. Two of the founders with
significant television/sales presentation experience, Kevin Prince and Janet Levine, will be the
main sales agents for the business. Furthermore, these two have the the most direct contacts
within the target market.
Logmedia predicts the sales cycle will take, approximately, 4 weeks, from initial pitch to final
sale. This is an average cycle. The actual sales cycle may be shorter or longer depending on the
nature of the client and the level of need the client is presently experiencing. Where an
independent production company might immediately adopt Logmedia’s services, a network like
NBC, with more complicated chains of command, might take longer for approval.
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CritCritCritCritical Risksical Risksical Risksical Risks
Logmedia recognizes there are some critical risks associated with entering the post
production industry that must be addressed. Firstly, high turnover of loggers and employees is a
potential risk. Logmedia, however, will offer its loggers above average industry salaries, and
expects its loggers to move on to higher up positions within the industry, as logging is, primarily, an
entry-level job. Logmedia's loggers will move into production jobs. Keeping positive working
relationships and proving the value of Logmedia's services should help ensure continued success
as these former workers become decision-makers in using external logging services.
Secondly, attaining clients could be a potential risk facing Logmedia. Through its industry
contacts, Logmedia has secured significant interest from three of the major networks and one
independent production company. Contrary to popular belief, it is important to note that
independent production companies and cable stations will comprise a majority of Logmedia’s
revenues, not the networks.
Thirdly, technological security concerns will play a major role in the success of Logmedia.
Logmedia has spoken with IT experts who assured Logmedia that our T3 line will be secure and
password protected, similar to online banking systems.
Finally, a lack of funding could be detrimental to the beginning years of success of
Logmedia. Logmedia has already established funding prospects from an angel investor and has
been assured that Logmedia's financials, along with its collateral proposal will secure a commercial
loan from Wells Fargo Bank.
Page 17
Section VISection VISection VISection VI Operations Strategy
Operating ModelOperating ModelOperating ModelOperating Model
Logmedia will be headquartered in Jersey City, easily accessible to all major news outlets,
cable stations and hundreds of independent production companies. This accessibility is important
as not all customers will have the capability to transmit footage in a digital format to Logmedia. The
location, right outside Metro-NYC, allows Logmedia significant savings when compared to
Manhattan space costs. Logmedia will need approximately 1,400 square feet of space for initial
operations. This location outside of, but easily accessible to, New York City keeps overhead costs
lower.
Front stage operations visible to Logmedia’s clients include sales/marketing initiatives,
administrative knowledge, speed and ease of order processing and finished goods delivery. Back
stage operations, crucial to Logmedia’s success, include specialized training of employees, quality
insurance and billing.
Bottlenecks may appear due to the cyclical nature of the business. This applies most
directly to the news segment, which can spike without notice if and when news breaks. Logmedia’s
plan for measured growth allows flexibility and conservatism in its abilities to grow within the
confines of its projections. Physical expansion, factored in to the company’s financial growth model,
accounts for equipment, personnel, and space growth on a planned basis. Quality assurance
occurs during and after order processing in order to minimize customer problems. For a complete
operations flowchart see Appendix F.
Page 18
Operational Legal IssuesOperational Legal IssuesOperational Legal IssuesOperational Legal Issues
Confidentiality of customer’s footage is of utmost importance to Logmedia. Complying with
industry standards, Logmedia will require employees to sign confidentiality contracts regarding any
footage viewed and logged and Logmedia will be able to provide clients with copies of these
contracts upon request. Transcript Associates Inc. states, “We require all transcribers to sign
confidentiality contracts. Many times our customers want to see these contracts to ensure
confidentiality.”
Section VIISection VIISection VIISection VII The Management Team
Kevin Prince: Chief Executive Officer Kevin Prince: Chief Executive Officer Kevin Prince: Chief Executive Officer Kevin Prince: Chief Executive Officer
Mr. Prince brings a wealth of knowledge and experience to Logmedia. Some of Mr. Prince’s
experience includes working as a Production Associate with NBC in Torino for the Winter Olympic
Games, interning for NBC's Today, interning for Late Night with Conan O'Brien and working at
MTV. Mr. Prince has had first-hand logging experience at these networks, and has established
contacts and ties within the industry. Mr. Prince is a dual Marketing major in the Martin J. Whitman
School of Management and Television, Radio and Film major at the S.I. Newhouse School of
Public Communications. Newhouse is among the top communication schools in the nation and
Kevin has done extensive logging there as well.
Emily Wasco: Chief Operating Officer Emily Wasco: Chief Operating Officer Emily Wasco: Chief Operating Officer Emily Wasco: Chief Operating Officer
Ms. Wasco has a dynamic balance of business and communications experience that is
relevant to Logmedia. For the past two summers, Ms. Wasco has worked as a summer analyst at
Merrill Lynch. She also has logged footage in the television industry, serving as Entertainment
Director and Producer for Citrus TV. Ms. Wasco is a dual Marketing and Finance major in the
Martin J. Whitman School of Management at Syracuse University.
Page 19
Evan Olesh: Chief Financial OfficerEvan Olesh: Chief Financial OfficerEvan Olesh: Chief Financial OfficerEvan Olesh: Chief Financial Officer
Mr. Olesh has interned in the broadcasting division of IMG Sports, Entertainment, and
Media so he understands the workings of the television industry. Mr. Olesh brings a range of skills
as he is a dual Finance and Marketing major in the Martin J. Whitman School of Management and
a Public Communications minor in the S.I. Newhouse School of Public Communication. .
Janet Levine: Chief Communications OfficerJanet Levine: Chief Communications OfficerJanet Levine: Chief Communications OfficerJanet Levine: Chief Communications Officer
Ms. Levine interned in the Media Department at a full-service advertising agency, so she is
familiar with what it takes to create and execute an advertising campaign. Ms. Levine is a dual
Advertising major at the S.I. Newhouse School of Public Communications and Marketing major at
Martin J. Whitman School of Management.
Alison Pellingra: Human Resource DirectorAlison Pellingra: Human Resource DirectorAlison Pellingra: Human Resource DirectorAlison Pellingra: Human Resource Director
Ms. Pellingra, an extrovert who possesses strong interpersonal skills, will oversee all
employee relations, from hiring to training and payment. Bringing international experience to the
founding team, Ms. Pellingra helped create new distribution channels while aiding in the brand
management for an Italian jean company. Ms. Pellingra is a dual Marketing and Entrepreneurship
major in the Martin J. Whitman School of Management at Syracuse University.
Advisory BoardAdvisory BoardAdvisory BoardAdvisory Board
Logmedia has filled its advisory board with media savvy individuals. The advisory board will
consist of four members: Andre Poulin, John Hanington, Peter Feiner, Patricia Longstaff.
� AnAnAnAndre Poulindre Poulindre Poulindre Poulin is a long time producer for NBC’s Today. Mr. Poulin would provide invaluable
advice and expertise as he is Logmedia’s targeted customer.
� JohnJohnJohnJohn Hanington Hanington Hanington Hanington has worked in television sales for over 25 years with ABC. He is now a
sales executive and would be able to provide Logmedia with insightful recommendations
and marketing guidance.
� Peter FeinerPeter FeinerPeter FeinerPeter Feiner is a producer for the New York City evening news on CBS. His expertise in the
news field will aid Logmedia’s news initiatives.
� Patricia LongstaffPatricia LongstaffPatricia LongstaffPatricia Longstaff is a lawyer and communications law professor in the S.I. Newhouse
School of Public Communications at Syracuse University. A Research Associate for Page 20
Harvard’s Information Policy Center, Longstaff can provide Logmedia legal expertise
regarding television and media.
Section VIIISection VIIISection VIIISection VIII
Overall Schedule Beginning in September 2007, Logmedia will formally establish the corporate structure
while concurrently working to raise the capital required to commence operations. In the months
that follow, Logmedia will establish the necessary infrastructure to include leasing, renovating office
space, purchasing equipment and establishing the technological capabilities to digitally upload
footage from our clients. The next phase will be the start of the marketing initiative. Employees will
be hired and Logmedia certified to begin services for clients. By the years end, Logmedia will have
a client base established and will be planning on the expansion of the business. Appendix G
outlines the first three years of operation as well as future market expansion.
Section IXSection IXSection IXSection IX Financial Plan
Financial Financial Financial Financial OverviewOverviewOverviewOverview
Logmedia projects revenues to grow at 36%, as a CAGR, over our first five years of
operations. Margins conferred to Logmedia from our four revenue drivers grow at 6% as a CAGR
over out first five years. Margins at year one exceed 49%. Logmedia turns cash positive in year
one, and cash grows at 64% over five year. As revenue drivers, we project growth in transcription,
basic logging, advanced logging and ADtrac at 35%, 45%, 50%, and 30% respectively. Additional
financial highlights can be found at Appendix K.
Income StatementsIncome StatementsIncome StatementsIncome Statements
The Logmedia team has prepared proforma income statements for the first five years of
operations, and these statements are presented at Appendix H. Logmedia projects net profits of
$264,237.18 in year one, and profits of $2,467,402.14 by year 5. In addition, the gross margin
percentage increases significantly as operations continue.
Page 21
Balance SheetsBalance SheetsBalance SheetsBalance Sheets
As Logmedia is a privately owned company it has not issued any common stock. The
management team has decided to retain 100% of its earnings to re-invest back into the company
during the first five years of operations. Depreciation of plant and equipment was calculated based
on the straight line method at 10% each year. For the balance sheets, see Appendix I.
Cash Flow AnalysisCash Flow AnalysisCash Flow AnalysisCash Flow Analysis
A complete, pro forma cash flow analysis is presented at Appendix J. Based on our
projections, Logmedia will require an initial infusion of cash totaling $400,000. This funding will
ensure a positive cash flow and high liquidity throughout our first five years of the company’s
operations. The primary use of Logmedia’s cash will be for capital acquisitions—equipment, space,
and employees.
Section XSection XSection XSection X Offering
Logmedia requires an initial investment of $400,000 to commence operations. This
investment is required to fund Logmedia’s start-up costs, specifically investments in the technology
required to establish a digital interface with our clients. Our required funding will come from two
sources; Logmedia will obtain a bank loan of $160,000, and seek the remaining capital, $240,000,
from an angel investor.
For the angel investor, Logmedia has formulated an equity sharing agreement that
structured as a convertible note. As a negotiated agreement, at the end of year five, our angel(s)
can choose to convert the note into an equity share of Logmedia, or choose repayment of the note
plus interest commensurate with an investment of a similar risk profile as Logmedia.
While our financial projections suggest Logmedia would be in a position to repay the bank
loan in full within three years of operation, we have determined that profits are best reinvested in
the venture to sustain and accelerate growth. Thus our intention is to repay the bank loan over an
seven year period, and the costs of the associated interest have been incorporated into our
financial projections.
Page 22
ValuationValuationValuationValuation
Based on our accelerated growth strategy, we have determined the most appropriate
valuation technique is a discounted cash flow analysis (DCF). Free cash flow, discounted at an
appropriate cost of capital plus a risk premium (30% in total), suggests a firm valuation of $3.4M at
the end of year 5 of operations.
Exit StrategyExit StrategyExit StrategyExit Strategy
Each of Logmedia’s five founders will maintain an equal ownership stake in the venture.
Should one of the founders of Logmedia choose to leave the firm, he/she will sell their equity stake
in the firm to the remaining founders.
A reasonable exit or harvest strategy for Logmedia would be to be either purchased by an
existing competitor, or more likely to be acquired by one of our major customers.
Page 23
Appendix AAppendix AAppendix AAppendix A Producer ProfileProducer ProfileProducer ProfileProducer Profile
Poulin, Andre Network: NBC Division: NBC News Show: Today Title: Producer MANAGER USE ONLY Producer Preferences: Likes close-up shots with motion. Wide shots not acceptable unless establishing shots. Likes funny quotes from interviews, three star anything out of the ordinary. Do not star any shots with nothing going on. Likes to use rack focus to start out segments, three star those. Producer Dislikes: Any wide shot that is not an establishing shot. Shots that are out of focus are unacceptable, not necessary to include in logs. Deadlines: “George Clooney Interview” must be logged by 12/10/06, 5PM
LOGGER USE ONLY
Date Logger Project Comments 11/29/06 Brian Clooney Int. Andre liked the bytes with interesting
comments, plain bytes were not used. Log completed.
11/28/06 Brian Clooney Int. Started basic logging, got about half way through interview
10/30/06 Megan Mascot Seg Andre really liked close up shots of mascots, lots of color. He liked rack focus and used for beginning of seg—said he does that a lot. Log completed.
10/28/06 Megan Mascot Seg Started advanced logging, ¾ the way done.
Page 24
Appendix BAppendix BAppendix BAppendix B Unit SalesUnit SalesUnit SalesUnit Sales
Revenue/Product Mix Revenue/Product Mix Revenue/Product Mix Revenue/Product Mix –––– Unit of Sales Projections Unit of Sales Projections Unit of Sales Projections Unit of Sales Projections****
Revenue DriverRevenue DriverRevenue DriverRevenue Driver PercentagePercentagePercentagePercentage Unit/YearUnit/YearUnit/YearUnit/Year
Transcription 10% 5296Basic Logging 25% 132405
Advanced Logging 50% 264810ADtrac® 15% 6000
*Note: Units/Year for Transcription, Basic Logging and Advanced Logging are in pages while units/year for ADtrac is in hours of footage
Appendix Appendix Appendix Appendix CCCC Fixed and Variable CostsFixed and Variable CostsFixed and Variable CostsFixed and Variable Costs
Rent 75,000$ Part-time Employee Wages 550,000$ Insurance 3,400$ Office Supplies 4,000$ Equipment 20,000$ Full-time Employee Salaries 225,000$ Payroll Taxes 29,250$ Travel and Marketing 50,000$ Utilities 10,000$ Technology/Storage 75,000$
Total FixedTotal FixedTotal FixedTotal Fixed 487,650487,650487,650487,650$ $ $ $ Total VariableTotal VariableTotal VariableTotal Variable 554,000554,000554,000554,000$ $ $ $
Fixed CostsFixed CostsFixed CostsFixed Costs Variable CostsVariable CostsVariable CostsVariable Costs
Page 25
Appendix DAppendix DAppendix DAppendix D Break EvenBreak EvenBreak EvenBreak Even
Appendix EAppendix EAppendix EAppendix E Daily Production Duties (Based on a producer of NBC’s Daily Production Duties (Based on a producer of NBC’s Daily Production Duties (Based on a producer of NBC’s Daily Production Duties (Based on a producer of NBC’s Today Today Today Today show)show)show)show)
TimeTimeTimeTime Producer TaskProducer TaskProducer TaskProducer Task 7A7A7A7A Arrive on set for show, organize props for shoot 8A8A8A8A Greet guest at Green Room, go to control confirming footage 9A9A9A9A Read through all newspapers to search for stories for next day 10A10A10A10A Morning Pitch Meeting 11A11A11A11A Call clients, set up shoots, make sure elements are in place for segment
12P12P12P12P Log yesterday’s interviewLog yesterday’s interviewLog yesterday’s interviewLog yesterday’s interview 1P1P1P1P Lunch 2P2P2P2P Log BLog BLog BLog B----roll anroll anroll anroll and finish up interviewd finish up interviewd finish up interviewd finish up interview 3P3P3P3P Have intern take on BHave intern take on BHave intern take on BHave intern take on B----roll logging, go though shots for segmentroll logging, go though shots for segmentroll logging, go though shots for segmentroll logging, go though shots for segment 4P4P4P4P Organize travel and arrival of guests for tomorrow 5P5P5P5P Scroll through and log archived footageScroll through and log archived footageScroll through and log archived footageScroll through and log archived footage 6P6P6P6P Check in with intern, take and log any extra footageCheck in with intern, take and log any extra footageCheck in with intern, take and log any extra footageCheck in with intern, take and log any extra footage
XXXXXXXX Indicates where producers would use Logmedia’s service.
Sales Volume Sales Volume Sales Volume Sales Volume (100 thousands)(100 thousands)(100 thousands)(100 thousands)
Dollars Dollars Dollars Dollars ($100 thousands)($100 thousands)($100 thousands)($100 thousands)
Fixed CostFixed CostFixed CostFixed Cost
Total CostTotal CostTotal CostTotal Cost
RevenueRevenueRevenueRevenue
• 569,467 units of sale• $1,580,270.00 revenue• First Quarter of Year 2
Break EvenBreak EvenBreak EvenBreak EvenBreak EvenBreak EvenBreak EvenBreak Even
Logmedia Breakeven Analysis
1010 8080 10010090903030 4040 5050 60602020 7070 140140 150150 160160 170170 180180 190190
500500
110110 130130120120
20002000
10001000
15001500
25002500
45004500
55005500
60006000
65006500
15001500
35003500
40004000
50005000
30003000
Sales Volume Sales Volume Sales Volume Sales Volume (100 thousands)(100 thousands)(100 thousands)(100 thousands)
Dollars Dollars Dollars Dollars ($100 thousands)($100 thousands)($100 thousands)($100 thousands)
Fixed CostFixed CostFixed CostFixed Cost
Total CostTotal CostTotal CostTotal Cost
RevenueRevenueRevenueRevenue
Fixed CostFixed CostFixed CostFixed Cost
Total CostTotal CostTotal CostTotal Cost
RevenueRevenueRevenueRevenue
Fixed CostFixed CostFixed CostFixed Cost
Total CostTotal CostTotal CostTotal Cost
RevenueRevenueRevenueRevenue
• 569,467 units of sale• $1,580,270.00 revenue• First Quarter of Year 2
Break EvenBreak EvenBreak EvenBreak EvenBreak EvenBreak EvenBreak EvenBreak Even• 569,467 units of sale• $1,580,270.00 revenue• First Quarter of Year 2
Break EvenBreak EvenBreak EvenBreak EvenBreak EvenBreak EvenBreak EvenBreak Even• 569,467 units of sale• $1,580,270.00 revenue• First Quarter of Year 2
• 569,467 units of sale• $1,580,270.00 revenue• First Quarter of Year 2
Break EvenBreak EvenBreak EvenBreak EvenBreak EvenBreak EvenBreak EvenBreak Even
Logmedia Breakeven Analysis
1010 8080 10010090903030 4040 5050 60602020 7070 140140 150150 160160 170170 180180 190190
500500
110110 130130120120
20002000
10001000
15001500
25002500
45004500
55005500
60006000
65006500
15001500
35003500
40004000
50005000
30003000
Page 26
Appendix FAppendix FAppendix FAppendix F Operations FlowchartOperations FlowchartOperations FlowchartOperations Flowchart
Initial customer service request (inbound or outbound)
Sign privacy agreement
Terms of service agreement
Profile entered into database
Order entered into billing database
Assign purchase order number and unique password
Completion time estimated
Request for services complete
Manager routes to available specialist
Yes
Manager contacts client for additional information
No
Client satisfaction follow up
Services (Transcript, Basic, Advanced, ADtrac, Archive retrieval completed
Submitted to manager for QA
Reprocessed
Resubmitted to manager for QA
Video and data archived
Purchase order/billing completed
Manager approves
No
Yes
Manager approves
No Yes
Adjustments to profile database made, if applicable
Manager contacts client for resolution
Client notified of completion
Client satisfied
Purchase order closed – sales/marketing account management begins
No
Yes
Client satisfied
No
Yes
Operations
Page 27
Appendix GAppendix GAppendix GAppendix G Overall ScheduleOverall ScheduleOverall ScheduleOverall Schedule
Sept. Sept. Sept. Sept. 07070707
Oct. 07Oct. 07Oct. 07Oct. 07 Nov. Nov. Nov. Nov. 07070707
Dec. Dec. Dec. Dec. 07070707
Jan. 08Jan. 08Jan. 08Jan. 08 Feb. 08Feb. 08Feb. 08Feb. 08 Mar. 08Mar. 08Mar. 08Mar. 08 Apr. 08Apr. 08Apr. 08Apr. 08 May. May. May. May. 08080808
Jun. 08Jun. 08Jun. 08Jun. 08 Jul. 08Jul. 08Jul. 08Jul. 08 Aug. Aug. Aug. Aug. 08080808
Jan. 09Jan. 09Jan. 09Jan. 09 Jan. 10Jan. 10Jan. 10Jan. 10
Corporate structureCorporate structureCorporate structureCorporate structure
Initial capital raisedInitial capital raisedInitial capital raisedInitial capital raised
Fulfill legal/insuranceFulfill legal/insuranceFulfill legal/insuranceFulfill legal/insurance
Lease spaceLease spaceLease spaceLease space
Order equipmentOrder equipmentOrder equipmentOrder equipment
Begin marketing/salesBegin marketing/salesBegin marketing/salesBegin marketing/sales
Renovate spaceRenovate spaceRenovate spaceRenovate space
Begin logger hiringBegin logger hiringBegin logger hiringBegin logger hiring
Training of loggersTraining of loggersTraining of loggersTraining of loggers
Commence loggingCommence loggingCommence loggingCommence logging
Add staffing Add staffing Add staffing Add staffing
Establish client baseEstablish client baseEstablish client baseEstablish client base
Expansion into LAExpansion into LAExpansion into LAExpansion into LA
Expansion into Chicago Expansion into Chicago Expansion into Chicago Expansion into Chicago
Page 28
Appendix HAppendix HAppendix HAppendix H Income StatementsIncome StatementsIncome StatementsIncome Statements
2008200820082008 JanJanJanJan FebFebFebFeb MarMarMarMar AprAprAprApr MayMayMayMay JuneJuneJuneJune JulyJulyJulyJuly AugAugAugAug SeptSeptSeptSept OctOctOctOct NovNovNovNov DecDecDecDecRevenuesRevenuesRevenuesRevenues
Transcription 164,182.00 4,925.46 8,209.10 9,850.92 14,776.38 13,134.56 13,134.56 13,134.56 14,776.38 16,418.20 19,701.84 18,060.02 18,060.02 Basic Logging 390,594.00 11,717.82 19,529.70 23,435.64 35,153.46 31,247.52 31,247.52 31,247.52 35,153.46 39,059.40 46,871.28 42,965.34 42,965.34 Advanced Logging 807,670.00 24,230.10 40,383.50 48,460.20 72,690.30 64,613.60 64,613.60 64,613.60 72,690.30 80,767.00 96,920.40 88,843.70 88,843.70 ADtrac 180,000.00 5,400.00 9,000.00 10,800.00 16,200.00 14,400.00 14,400.00 14,400.00 16,200.00 18,000.00 21,600.00 19,800.00 19,800.00 Total SalesTotal SalesTotal SalesTotal Sales 1,542,446.001,542,446.001,542,446.001,542,446.00 46,273.3846,273.3846,273.3846,273.38 77,122.3077,122.3077,122.3077,122.30 92,546.7692,546.7692,546.7692,546.76 138,820.14138,820.14138,820.14138,820.14 123,395.68123,395.68123,395.68123,395.68 123,395.68123,395.68123,395.68123,395.68 123,395.68123,395.68123,395.68123,395.68 138,820.14138,820.14138,820.14138,820.14 154,244.60154,244.60154,244.60154,244.60 185,093.52185,093.52185,093.52185,093.52 169,669.06169,669.06169,669.06169,669.06 169,669.06169,669.06169,669.06169,669.06
Direct Cost of Sales 554,000.00 46,166.67 46,166.67 46,166.67 46,166.67 46,166.67 46,166.67 46,166.67 46,166.67 46,166.67 46,166.67 46,166.67 46,166.67 Management Payroll 225,000.00 18,750.00 18,750.00 18,750.00 18,750.00 18,750.00 18,750.00 18,750.00 18,750.00 18,750.00 18,750.00 18,750.00 18,750.00
Total Cost of SalesTotal Cost of SalesTotal Cost of SalesTotal Cost of Sales 779,000.00779,000.00779,000.00779,000.00 64,916.6764,916.6764,916.6764,916.67 64,916.6764,916.6764,916.6764,916.67 64,916.6764,916.6764,916.6764,916.67 64,916.6764,916.6764,916.6764,916.67 64,916.6764,916.6764,916.6764,916.67 64,916.6764,916.6764,916.6764,916.67 64,916.6764,916.6764,916.6764,916.67 64,916.6764,916.6764,916.6764,916.67 64,916.6764,916.6764,916.6764,916.67 64,916.6764,916.6764,916.6764,916.67 64,916.6764,916.6764,916.6764,916.67 64,916.6764,916.6764,916.6764,916.67
Gross Margin Gross Margin Gross Margin Gross Margin 763,446.00 (18,643.29) 12,205.63 27,630.09 73,903.47 58,479.01 58,479.01 58,479.01 73,903.47 89,327.93 120,176.85 104,752.39 104,752.39 Gross Margin % Gross Margin % Gross Margin % Gross Margin % 49%49%49%49% -40%-40%-40%-40% 16%16%16%16% 30%30%30%30% 53%53%53%53% 47%47%47%47% 47%47%47%47% 47%47%47%47% 53%53%53%53% 58%58%58%58% 65%65%65%65% 62%62%62%62% 62%62%62%62%
ExpensesExpensesExpensesExpenses
Operating ExpensesOperating ExpensesOperating ExpensesOperating Expenses Rent & Utilities 85,000.00 7,083.33 7,083.33 7,083.33 7,083.33 7,083.33 7,083.33 7,083.33 7,083.33 7,083.33 7,083.33 7,083.33 7,083.33 Liability Insurance Premium 1,800.00 150.00 150.00 150.00 150.00 150.00 150.00 150.00 150.00 150.00 150.00 150.00 150.00 Fire/Theft Insurance 1,600.00 133.33 133.33 133.33 133.33 133.33 133.33 133.33 133.33 133.33 133.33 133.33 133.33 Payroll Tax Expense 33,750.00 2,812.50 2,812.50 2,812.50 2,812.50 2,812.50 2,812.50 2,812.50 2,812.50 2,812.50 2,812.50 2,812.50 2,812.50 Travel and Marketing 50,000.00 4,166.67 4,166.67 4,166.67 4,166.67 4,166.67 4,166.67 4,166.67 4,166.67 4,166.67 4,166.67 4,166.67 4,166.67 Depreciation Expense 19,500.00 1,625.00 1,625.00 1,625.00 1,625.00 1,625.00 1,625.00 1,625.00 1,625.00 1,625.00 1,625.00 1,625.00 1,625.00 Technology/Storage 75,000.00 6,250.00 6,250.00 6,250.00 6,250.00 6,250.00 6,250.00 6,250.00 6,250.00 6,250.00 6,250.00 6,250.00 6,250.00 Miscellaneous Expenses 40,073.00 3,339.42 3,339.42 3,339.42 3,339.42 3,339.42 3,339.42 3,339.42 3,339.42 3,339.42 3,339.42 3,339.42 3,339.42 Total Operations ExpenseTotal Operations ExpenseTotal Operations ExpenseTotal Operations Expense 306,723.00306,723.00306,723.00306,723.00 25,560.2525,560.2525,560.2525,560.25 25,560.2525,560.2525,560.2525,560.25 25,560.2525,560.2525,560.2525,560.25 25,560.2525,560.2525,560.2525,560.25 25,560.2525,560.2525,560.2525,560.25 25,560.2525,560.2525,560.2525,560.25 25,560.2525,560.2525,560.2525,560.25 25,560.2525,560.2525,560.2525,560.25 25,560.2525,560.2525,560.2525,560.25 25,560.2525,560.2525,560.2525,560.25 25,560.2525,560.2525,560.2525,560.25 25,560.2525,560.2525,560.2525,560.25
Operations % Operations % Operations % Operations % 0.20 0.55 0.33 0.28 0.18 0.21 0.21 0.21 0.18 0.17 0.14 0.15 0.15
Earnings Before Interest & TaxesEarnings Before Interest & TaxesEarnings Before Interest & TaxesEarnings Before Interest & Taxes 456,723.00456,723.00456,723.00456,723.00 (44,203.54)(44,203.54)(44,203.54)(44,203.54) (13,354.62)(13,354.62)(13,354.62)(13,354.62) 2,069.842,069.842,069.842,069.84 48,343.2248,343.2248,343.2248,343.22 32,918.7632,918.7632,918.7632,918.76 32,918.7632,918.7632,918.7632,918.76 32,918.7632,918.7632,918.7632,918.76 48,343.2248,343.2248,343.2248,343.22 63,767.6863,767.6863,767.6863,767.68 94,616.6094,616.6094,616.6094,616.60 79,192.1479,192.1479,192.1479,192.14 79,192.1479,192.1479,192.1479,192.14
EBIT 456,723.00 (44,203.54) (13,354.62) 2,069.84 48,343.22 32,918.76 32,918.76 32,918.76 48,343.22 63,767.68 94,616.60 79,192.14 79,192.14 Interest Expense 24,000.00 2,000.00 2,000.00 2,000.00 2,000.00 2,000.00 2,000.00 2,000.00 2,000.00 2,000.00 2,000.00 2,000.00 2,000.00 Taxes 155,285.82 (15,029.20) (4,540.57) 703.75 16,436.70 11,192.38 11,192.38 11,192.38 16,436.70 21,681.01 32,169.65 26,925.33 26,925.33 Net ProfitNet ProfitNet ProfitNet Profit 277,437.18277,437.18277,437.18277,437.18 (31,174.33)(31,174.33)(31,174.33)(31,174.33) (10,814.05)(10,814.05)(10,814.05)(10,814.05) (633.90)(633.90)(633.90)(633.90) 29,906.5329,906.5329,906.5329,906.53 19,726.3819,726.3819,726.3819,726.38 19,726.3819,726.3819,726.3819,726.38 19,726.3819,726.3819,726.3819,726.38 29,906.5329,906.5329,906.5329,906.53 40,086.6740,086.6740,086.6740,086.67 60,446.9660,446.9660,446.9660,446.96 50,266.8150,266.8150,266.8150,266.81 50,266.8150,266.8150,266.8150,266.81
Net Profit/Sales 18% -67% -14% -1% 22% 16% 16% 16% 22% 26% 33% 30% 30%
The Monthly Comparative Income StatementThe Monthly Comparative Income StatementThe Monthly Comparative Income StatementThe Monthly Comparative Income Statement
Page 29
Appendix H (Continued)Appendix H (Continued)Appendix H (Continued)Appendix H (Continued)
2008200820082008 2009200920092009 2010201020102010 2011201120112011 2012201220122012RevenuesRevenuesRevenuesRevenues
Transcription 164,182.00 221,645.70 299,221.70 403,949.29 545,331.54 Basic Logging 390,594.00 566,361.30 821,223.89 1,190,774.63 1,726,623.22 Advanced Logging 807,670.00 1,211,505.00 1,817,257.50 2,725,886.25 4,088,829.38 Adtrac 180,000.00 234,000.00 304,200.00 395,460.00 514,098.00 Total SalesTotal SalesTotal SalesTotal Sales 1,542,446.001,542,446.001,542,446.001,542,446.00 2,233,512.002,233,512.002,233,512.002,233,512.00 3,241,903.083,241,903.083,241,903.083,241,903.08 4,716,070.174,716,070.174,716,070.174,716,070.17 6,874,882.136,874,882.136,874,882.136,874,882.13
Direct Cost of Sales 554,000.00 775,600.00 1,085,840.00 1,465,884.00 1,978,943.40 Management Payroll 225,000.00 247,500.00 272,250.00 299,475.00 329,422.50
Total Cost of SalesTotal Cost of SalesTotal Cost of SalesTotal Cost of Sales 779,000.00779,000.00779,000.00779,000.00 1,023,100.001,023,100.001,023,100.001,023,100.00 1,358,090.001,358,090.001,358,090.001,358,090.00 1,765,359.001,765,359.001,765,359.001,765,359.00 2,308,365.902,308,365.902,308,365.902,308,365.90
Gross Margin Gross Margin Gross Margin Gross Margin 763,446.00 1,210,412.00 1,883,813.08 2,950,711.17 4,566,516.23 Gross Margin % Gross Margin % Gross Margin % Gross Margin % 49.50% 54.19% 58.11% 62.57% 66.42%
ExpensesExpensesExpensesExpenses
Operating ExpensesOperating ExpensesOperating ExpensesOperating Expenses Rent & Utilities 85,000.00 93,500.00 102,850.00 113,135.00 124,448.50 Liability Insurance Premium 1,800.00 1,980.00 2,178.00 2,395.80 2,635.38 Fire/Theft Insurance 1,600.00 1,680.00 1,764.00 1,852.20 1,944.81 Payroll Tax Expense 33,750.00 116,340.00 162,876.00 219,882.60 296,841.51 Travel and Marketing 50,000.00 52,500.00 55,125.00 57,881.25 60,775.31 Depreciation Expense 19,500.00 19,500.00 19,500.00 19,500.00 19,500.00 Technology/Storage 75,000.00 90,000.00 108,000.00 129,600.00 155,520.00 Miscellaneous Expenses 40,073.00 56,700.00 68,549.00 82,705.00 100,717.00 Total Operations ExpenseTotal Operations ExpenseTotal Operations ExpenseTotal Operations Expense 306,723.00306,723.00306,723.00306,723.00 432,200.00432,200.00432,200.00432,200.00 520,842.00520,842.00520,842.00520,842.00 626,951.85626,951.85626,951.85626,951.85 762,382.51762,382.51762,382.51762,382.51
Operations % Operations % Operations % Operations % 19.89% 19.35% 16.07% 13.29% 11.09%
Earnings Before Interest & TaxesEarnings Before Interest & TaxesEarnings Before Interest & TaxesEarnings Before Interest & Taxes 456,723.00456,723.00456,723.00456,723.00 778,212.00778,212.00778,212.00778,212.00 1,362,971.081,362,971.081,362,971.081,362,971.08 2,323,759.322,323,759.322,323,759.322,323,759.32 3,804,133.723,804,133.723,804,133.723,804,133.72
EBITDA 456,723.00 778,212.00 1,362,971.08 2,323,759.32 3,804,133.72 Interest Expense 24,000.00 24,000.00 24,000.00 24,000.00 24,000.00 Taxes 155,285.82 264,592.08 463,410.17 790,078.17 1,293,405.46 Net ProfitNet ProfitNet ProfitNet Profit 277,437.18277,437.18277,437.18277,437.18 489,619.92489,619.92489,619.92489,619.92 875,560.91875,560.91875,560.91875,560.91 1,509,681.151,509,681.151,509,681.151,509,681.15 2,486,728.262,486,728.262,486,728.262,486,728.26
Net Profit/Sales 17.99% 21.92% 27.01% 32.01% 36.17%
The Comparative Income StatementThe Comparative Income StatementThe Comparative Income StatementThe Comparative Income Statement
Page 30
Appendix IAppendix IAppendix IAppendix I Balance SheetsBalance SheetsBalance SheetsBalance Sheets
The Comparative The Comparative The Comparative The Comparative 2008200820082008 2009200920092009 2010201020102010 2011201120112011 2012201220122012
AssetsAssetsAssetsAssets
Current Assets Current Assets Current Assets Current AssetsCash 501,937.18 1,009,057.10 1,901,918.01 3,428,679.16 5,932,245.42 Total Current Assets Total Current Assets Total Current Assets Total Current Assets 521,937.18 1,031,057.10 1,926,118.01 3,455,299.16 5,961,527.42 Long Term AssetsLong Term AssetsLong Term AssetsLong Term AssetsGross Property Plant and Equipment 175,000.00 175,000.00 175,000.00 175,000.00 175,000.00 Equipment Upgrades 20000.00 22000.00 24200.00 26620.00 29282.00 (Less Accumulated Depreciation) (19,500.00) (39,000.00) (58,500.00) (78,000.00) (97,500.00) Property Plant and Equipment (Net) 155,500.00 136,000.00 116,500.00 97,000.00 77,500.00 Total Long Term Assets Total Long Term Assets Total Long Term Assets Total Long Term Assets 155,500.00 136,000.00 116,500.00 97,000.00 77,500.00
Total Assets Total Assets Total Assets Total Assets 677,437.18677,437.18677,437.18677,437.18 1,167,057.101,167,057.101,167,057.101,167,057.10 2,042,618.012,042,618.012,042,618.012,042,618.01 3,552,299.163,552,299.163,552,299.163,552,299.16 6,039,027.426,039,027.426,039,027.426,039,027.42
LiabilitiesLiabilitiesLiabilitiesLiabilities
Current Liabilities Current Liabilities Current Liabilities Current LiabilitiesAccounts Payable - - - - - Accrued Liabilities - - - - - Total Current Liabilities Total Current Liabilities Total Current Liabilities Total Current Liabilities ---- ---- ---- ---- ---- Long Term Investor Debt 160,000.00 160,000.00 160,000.00 160,000.00 160,000.00 Other Liabilities - - - - - Total Liabilities Total Liabilities Total Liabilities Total Liabilities 160,000.00160,000.00160,000.00160,000.00 160,000.00160,000.00160,000.00160,000.00 160,000.00160,000.00160,000.00160,000.00 160,000.00160,000.00160,000.00160,000.00 160,000.00160,000.00160,000.00160,000.00
Stockholders' EquityStockholders' EquityStockholders' EquityStockholders' Equity
Retained Earnings 277,437.18 767,057.10 1,642,618.01 3,152,299.16 5,639,027.42 Paid In Capital 240,000.00 240,000.00 240,000.00 240,000.00 240,000.00 Common Stock - Total Stockholders' Equity Total Stockholders' Equity Total Stockholders' Equity Total Stockholders' Equity 517,437.18517,437.18517,437.18517,437.18 1,007,057.101,007,057.101,007,057.101,007,057.10 1,882,618.011,882,618.011,882,618.011,882,618.01 3,392,299.163,392,299.163,392,299.163,392,299.16 5,879,027.425,879,027.425,879,027.425,879,027.42
Total Liabilities and Equity Total Liabilities and Equity Total Liabilities and Equity Total Liabilities and Equity 677,437.18677,437.18677,437.18677,437.18 1,167,057.101,167,057.101,167,057.101,167,057.10 2,042,618.012,042,618.012,042,618.012,042,618.01 3,552,299.163,552,299.163,552,299.163,552,299.16 6,039,027.426,039,027.426,039,027.426,039,027.42
The Comparative Balance SheetThe Comparative Balance SheetThe Comparative Balance SheetThe Comparative Balance Sheet
Page 31
Appendix JAppendix JAppendix JAppendix J Cash Flow StatementsCash Flow StatementsCash Flow StatementsCash Flow Statements
2008200820082008 JanJanJanJan FebFebFebFeb MarMarMarMar AprAprAprApr MayMayMayMay JuneJuneJuneJune JulyJulyJulyJuly AugAugAugAug SeptSeptSeptSept Oct Oct Oct Oct NovNovNovNov DecDecDecDec
Cash Flows from Operating ActivitiesCash Flows from Operating ActivitiesCash Flows from Operating ActivitiesCash Flows from Operating Activities
Net IncomeNet IncomeNet IncomeNet Income 277,437.18 (31,174.33) (10,814.05) (633.90) 29,906.53 19,726.38 19,726.38 19,726.38 29,906.53 40,086.67 60,446.96 50,266.81 50,266.81
Adjustments to Net IncomeAdjustments to Net IncomeAdjustments to Net IncomeAdjustments to Net Income+ Depreciation 19,500.00 1,625.00 1,625.00 1,625.00 1,625.00 1,625.00 1,625.00 1,625.00 1,625.00 1,625.00 1,625.00 1,625.00 1,625.00 Change in Other Assets (20,000.00) (20,000.00) - - - - - - - - - - - Net cash inflows from operating Net cash inflows from operating Net cash inflows from operating Net cash inflows from operating 276,937.18 (49,549.33) (9,189.05) 991.10 31,531.53 21,351.38 21,351.38 21,351.38 31,531.53 41,711.67 62,071.96 51,891.81 51,891.81
Cash Flows from Investing ActivitiesCash Flows from Investing ActivitiesCash Flows from Investing ActivitiesCash Flows from Investing Activities
Purchase of Equipment/Technology (175,000.00) (175,000.00) - - - - - - - - - - - Net cash outflows from investing Net cash outflows from investing Net cash outflows from investing Net cash outflows from investing (175,000.00) (175,000.00) - - - - - - - - - - -
Cash Flows from Financing ActivitiesCash Flows from Financing ActivitiesCash Flows from Financing ActivitiesCash Flows from Financing Activities
Proceeds from Bank Loan 160,000.00 160,000.00 - - - - - - - - - - - Proceeds from Paid in Capital 240,000.00 240,000.00 - - - - - - - - - - - Net Cash Inflows from Financing Net Cash Inflows from Financing Net Cash Inflows from Financing Net Cash Inflows from Financing 400,000.00 400,000.00 - - - - - - - - - - - Net Increase in Cash 501,937.18 175,450.67 (9,189.05) 991.10 31,531.53 21,351.38 21,351.38 21,351.38 31,531.53 41,711.67 62,071.96 51,891.81 51,891.81 Cash and Equivalents, from prior period - - 175,450.67 166,261.62 167,252.72 198,784.24 220,135.63 241,487.01 262,838.39 294,369.92 336,081.59 398,153.55 450,045.37 Cash and Equivalents, this periodCash and Equivalents, this periodCash and Equivalents, this periodCash and Equivalents, this period 501,937.18501,937.18501,937.18501,937.18 175,450.67175,450.67175,450.67175,450.67 166,261.62166,261.62166,261.62166,261.62 167,252.72167,252.72167,252.72167,252.72 198,784.24198,784.24198,784.24198,784.24 220,135.63220,135.63220,135.63220,135.63 241,487.01241,487.01241,487.01241,487.01 262,838.39262,838.39262,838.39262,838.39 294,369.92294,369.92294,369.92294,369.92 336,081.59336,081.59336,081.59336,081.59 398,153.55398,153.55398,153.55398,153.55 450,045.37450,045.37450,045.37450,045.37 501,937.18501,937.18501,937.18501,937.18
The Monthly Comparative Cash Flow StatementThe Monthly Comparative Cash Flow StatementThe Monthly Comparative Cash Flow StatementThe Monthly Comparative Cash Flow Statement
2008200820082008 2009200920092009 2010201020102010 2011201120112011 2012201220122012
Cash Flows from Operating ActivitiesCash Flows from Operating ActivitiesCash Flows from Operating ActivitiesCash Flows from Operating Activities
Net IncomeNet IncomeNet IncomeNet Income 277,437.18 489,619.92 875,560.91 1,509,681.15 2,486,728.26
Adjustments to Net IncomeAdjustments to Net IncomeAdjustments to Net IncomeAdjustments to Net Income+ Depreciation 19,500.00 19,500.00 19,500.00 19,500.00 19,500.00 Net cash inflows from operating Net cash inflows from operating Net cash inflows from operating Net cash inflows from operating 296,937.18 509,119.92 895,060.91 1,529,181.15 2,506,228.26
Cash Flows from Investing ActivitiesCash Flows from Investing ActivitiesCash Flows from Investing ActivitiesCash Flows from Investing Activities
Purchase of Equipment/Technology (175,000.00) - - - - Equipment Upgrades (20,000.00) (2,000.00) (2,200.00) (2,420.00) (2,662.00) Net cash outflows from investing Net cash outflows from investing Net cash outflows from investing Net cash outflows from investing (195,000.00) (2,000.00) (2,200.00) (2,420.00) (2,662.00)
Cash Flows from Financing ActivitiesCash Flows from Financing ActivitiesCash Flows from Financing ActivitiesCash Flows from Financing Activities
Proceeds from Bank Loan 160,000.00 - - - - Proceeds from Paid in Capital 240,000.00 - - - - Net Cash Inflows from Financing Net Cash Inflows from Financing Net Cash Inflows from Financing Net Cash Inflows from Financing 400,000.00 - - - - Net Increase in Cash 501,937.18 507,119.92 892,860.91 1,526,761.15 2,503,566.26 Cash and Equivalents, Jan 1st - 501,937.18 1,009,057.10 1,901,918.01 3,428,679.16 Cash and Equivalents, Dec 31stCash and Equivalents, Dec 31stCash and Equivalents, Dec 31stCash and Equivalents, Dec 31st 501,937.18501,937.18501,937.18501,937.18 1,009,057.101,009,057.101,009,057.101,009,057.10 1,901,918.011,901,918.011,901,918.011,901,918.01 3,428,679.163,428,679.163,428,679.163,428,679.16 5,932,245.425,932,245.425,932,245.425,932,245.42
The Comparative Cash Flow StatementThe Comparative Cash Flow StatementThe Comparative Cash Flow StatementThe Comparative Cash Flow Statement
Page 32
Appendix KAppendix KAppendix KAppendix K Financial HighlightsFinancial HighlightsFinancial HighlightsFinancial Highlights
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
2008 2009 2010 2011 2012
Financial HighlightsFinancial HighlightsFinancial HighlightsFinancial Highlights
Revenue
Gross Margin
Net Profit
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
2008 2009 2010 2011 2012
Annual Prof itAnnual Prof itAnnual Prof itAnnual Prof it
Page 33