My hot electronics

Cover Page

M

y Hot Electronics

(313) 283-4537 (phone)

[email protected] (email)

http://www.myhotelectronics.com (website)

http://www.sportsfanplayground.com (website)

mailto:[email protected]

http://www.myhotelectronics.com/

http://www.sportsfanplayground.com/

1.0 Executive Summary

My Hot Electronics is a new e-commerce company that specializes in the sale of electronics around the United States. As our name suggests, our focus is to bring the customers the hottest electronics anywhere at the best prices, and position ourselves as one of the top online retailers in this particular market and niche.

While not having a full physical store, our main control area is located in Michigan and we are able to work with various online retailers to ship products out nationwide in a timely and efficient manner.

With having one of most aggressive PR campaigns in the industry, we will compete against the top e-commerce companies in the industry today, and possibly, out draw them over time.

Highlights

Sales

Gross Margin

Net Profit

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

($20,000)

($40,000)

2012 2013 2014 2015 2016

Highlights

1.1 Objectives

The objectives for My Hot Electronics are outlined below:

1. To create a strong, e-commerce-based company whose main goal is to give the customer quick service and exceed expectations. 2. To be able to reinvest in the metro Detroit area through working with film students and young actors in the area in terms of filming professional level commercials. 3. Sales increase to over $25,000 by the end of the first year and increase aggressively by the end of the second year. 4. To increase the number of consumers serviced by at least 30-35% per year through strong performance, fast shipping, aggressive marketing, and competitive pricing. 5. Achieve a customer return rate of 95% by end of first full year of operation.

6. Gain status as a strong and respected online shopping destination.

1.2 Mission

To provide the state of Michigan, as well as consumers worldwide, with quality brand-name products from the top manufacturers in the world at the best prices, with the quickest shipping, world-class service with a small town feel, and to earn a fair profit through embracing ethical and moral business practices, and to reinvest and help in the revitalization of the State of Michigan.

1.3 Keys to Success

The keys to success at My Hot Electronics are:

- Top-of-the-line customer service: Provide reliable, high quality IT and consumer products and provide quick and reliable service with some of the fastest turnaround times in the industry.

- Convience: Offering clients over 7 million products and licenses, ready to ship at anytime from one of 25 warehouses around the United States

- Location: With My Hot Electronics being a strictly online business, the customer can purchase items through their computer or mobile phone at any time from anywhere in the country with quick shipping from one of the many distribution centers we are partnered with around the United States, as well as the various vendors and brands we are affiliated with.

- Strong Reputation: Conducting business with integrity, morals and credibility from 7 years of experience in sales.

- Respect: Simply treating business partners and potential employees with the same level of dignity and respect that I would expect to be treated with.

2.0 Company SummaryMy Hot Electronics will provide consumer and IT products and services to customers around the world. We provide top-of-the-line products such as -

- Tablets - PCs- Home Appliances (vacuums, refrigerators, stoves, etc) - Video Games - Televisions- Networking and Office Hardware and Software

What will separate My Hot Electronics aside from the competition is having an aggressive PR campaign through PRWeb. With PRWeb's Premium Service, we are able to advertise new products imported into our store and news about our business everyday to millions of people, which we have seen through our current marketing strategy, has increased our hits and sales over 145% since the beginning of May 2012.

While we plan on enjoying success with our company, we will also make a strong commitment to community, as we are pledging that for our video marketing campaigns, we are committed to using local production companies and actors for our videos. We believe in the film schools, companies and the talent that has come from these avenues, and we are committed to giving the students an opportunity to succeed on a high level, allowing their work to be seen worldwide on a regular basis.

2.1 Company Ownership

My Hot Electronics is a Limited Liability Company, and owned by DaVaughn Lucas.

DaVaughn has 7 years of sales experience working for the Gail & Rice marketing firm in Southfield, Michigan, working as a product presenter/specialist for Ford, General Motors and Chrysler.

2.2 Startup Summary

The startup expenses will primarily consist of upgrading the PRWeb advertising program that is currently in place and upgrading computer hardware and software. The direct owner investment has been $3,200.00.

Consistent operation standards, aggressive marketing and a strong returning customer base will allow My Hot Electronics to be self sufficient and profitable in year two, if not sooner.

StartupStartup

Requirements

Startup Expenses

Legal $500

Website Expenses $500

Computer Hardware and Accessories $1,700

Advertising $8,800

Total Startup Expenses $11,500

Startup Assets

Cash Required $2,900

Other Current Assets $3,000

Long-term Assets $9,500

Total Assets $15,400

Total Requirements $26,900

3.0 Products

My Hot Electronics (myhotelectronics.com) is a leading retailer of electronic-based products, which include tablets, televisions, blu-ray discs, DVDs, automotive parts and accessories, video games (old and new), computers, office products, and networking solutions.

The Sports Fan's Playground (sportsfanplayground.com) is a leading provider of sports products including jerseys, collectible items, sporting goods, fan apparel, accessories and sports toys.

5.0 Web Plan Summary

My Hot Electronics will develop its web presence by continuing to have the website automatically updated with current and relevant products in the various fields. Our website will continue to give strong product information about each of our products, our vendors, our shipping times and any sales that may be happening at the time.

5.1 Website Marketing Strategy

Market strategy in an internet retail business depends on recognition of expertise by the consumer. For My Hot Electronics, our basis will be our internet website and performing press releases 7 days a week to advertise milestone accomplishments and advertise new products that are just released or are about to be released.

5.2 Development Requirements

Costs that My Hot Electronics will expect to incur with development of its website include:

Development Costs

- PRWeb News Release Program - $8,800

- Scanner/Fax/Copier - $500

- Mac Computer - $1,100

6.0 Strategy and Implementation Summary

My Hot Electronics' goal is to provide the most comprehensive line of IT and office solutions on the internet, with the focus being on promptness, customer satisfaction and helping the community. There is room for a strong IT industry to come into West Michigan, and for us, we keep the small town charm and feel that the people of West Michigan hold dear, and spread that across the United States and the world with our company. Our intention is to gain 80% of this market share by focusing on our niche positioning, brands that we well, excellent customer service, and making sure that a customer can reach our company through various means.

6.1 SWOT Analysis

- Aggressive marketing in the online and television mediums is one of the biggest keys to customer retention.

- The changing technology around the world would be a weakness in running the business only because of the need to keep up and the need to be financially ready to stay ahead of the competition.

- Due to the increase in internet usage via social networking, Ebay, and mobile applications, more avenues open for increased brand awareness to the general public.

- New, upstart companies that are opening in various areas will make for tougher competition over time and the need to constantly re-invent ourselves and continue to cater to our customers and find new and creative ways to keep them.

6.1.1 Strengths

- Strong advertising techniques. With the employee's backgrounds in sales, marketing, and performance arts, the overall marketing strategy will be aggressive and successful based primarily on the strength of our PR campaign with PRWeb Premium Program. - Working with strong vendors. Working with companies such as Amazon, Cisco, Nike, BeachBody, Apple and other vendors allow us to gain credibility with consumers and allow for quicker and more reliable shipping and building relationships with customers.

- Ability to have competitive discounts. Due to inexpensive distributor pricing, our entire store of products will always be on sale, with most sales at at least 25-30% off the MSRP. Having the discounts will develop brand loyalty and get a high customer retention rate.

- Ability to expand quickly - lower costs. With the low cost of putting together websites for international customers, our company can expand into Canada and England quickly, and because of our strong search engine marketing program that is already in place, we have received a strong amount of traffic from other countries and this will allow for us to create websites and e-commerce solutions that sell products that cater to the interests of the local consumers in other nations.

6.1.2 Weaknesses

- Budget for television marketing campaign.

Television marketing does have an great impact on consumers' purchasing habits and desires. By having the television marketing, the ROI would be even greater due to the product having a strong search engine presence already, having reputable products and vendors advertising in our store, and being able to reach a broader, nationwide audience.

6.1.3 Opportunities- The growing presence of mobile commerce around the world. As more online features become available via mobile devices, consumers are becoming able to do their shopping directly on their various tablets, phones or even video game device. In 2015, shoppers around the world are expected to spend about $119 billion on goods and services purchased via mobile phones (source: . That number represents 8% of the total ecommerce market. Our presence as a strong competitor in the mobile commerce market allows My Hot Electronics to compete directly with a company such as Ebay. - The increased presence of social networking as a viable marketing vehicle. As more people become more reliant on social networking for news, events, and information about friends and family, businesses have realized that there is a marketing opportunity to reach out to a broader audience, more than even the audience that would visit their stand-alone website. According to Experian, 90% of users aged 18-34 visit social media websites as opposed to online blogs or networking websites. The numbers are also very one-sided for ages 35 and older as well. By developing a strong Facebook and Twitter feed, it allows for My Hot Electronics to develop better brand awareness and opens the company up to new audiences that may not have been familiar with our store and allows for us to continously offer the lowest prices and build consumer trust. - The opportunity to reinvent. As mentioned earlier, the threats for My Hot Electronics will always come in the form of new companies developing and helping move the IT retail industry forward. This threat will be seen by our company as a challenge to look at ourselves and come up with new ways to stay ahead of our competition and improve our company to make the shopping experience better for our customers. - The opportunity to expand quickly. By partnering with multiple distributors, the opportunity to expand business overseas quickly is a guarantee. Within a month, My Hot Electronics will be able to develop websites for Canada and England. By the end of a year, the company will look to develop websites in China, Japan, France, Germany and Australia - for less than $2,000. Distribution centers are located around the world, and opens up the chance to expand brand awareness. - Selling Advertising for the websites. With the popularity of myhotelectronics.com and sportsfanplayground.com, we will be able to sell ad space on our site for a monthly fee or a pay-per-click campaign if the company prefers. As time goes on, we will charge a flat fee for companies to put up an HTML banner or ad in particular areas of the website.

6.1.4 Threats

- Emerging local competitors.

Currently, there are very few IT companies that have as aggressive of a marketing program implented as what My Hot Electronics would be proposing. However, competitors are on the horizon, and we need to be prepared for their entry into the market. Many of our sales and offerings through the website, mobile applications and social media applications are designed to build customer loyalty, and it is our hope that our quality service won't be easily duplicated. With the ability to release press releases every single day, it allows for My Hot Electronics to develop relationships with the top media outlets around the world and continue to build a strong stance in the online marketing medium.

6.2 Competitive Edge

Our biggest advantage and what makes our company different from others is having strong search engine marketing capabilities and quickly building a strong reputation with potential customers because of our PRWeb news releases.

The PRWeb News Releases, as an up-and-coming company, gives us the instant exposure needed to make an impact on people who want to be able to go to a search engine and instantly find their information quickly. The PR allows us to do that consistently.

6.3 Marketing Strategy

Our marketing strategy will focus heavily on sales promotion, niche positioning in the marketplace and friendly customer service with loyalty and retention in sales.

- The marketing budget will not exceed 10% of our gross annual sales after year 1.

- Our promotions will always stay in tune with our company objectives and mission statement.

6.4 Sales Strategy

- We utilize the Amazon.com payment processing portal for credit card processing. The various vendors that advertise on our sites handle the shipping from their direct shipping centers.

- Along with having the transactions, the various vendors keep direct contact with the consumers and delegate certain return policies for their items, relieving us of the responsibility of shipping or product defect.

- My Hot Electronics and The Sports Fan's Playground does not store customer information; however, we do keep track of the orders being placed and the vendors that are selling the items. If a consumer does have a issue with their service, we are able to contact the vendors directly about the status of a particular item that has been ordered.

6.4.1 Sales Forecast

The following table and chart give a highlight on forecasted sales. We expect sales to start off conservatively but grow quickly once the spring begins. This growth would be a direct impact of the aggressive marketing campaign and brand awareness initiative. The end of the summer and the holiday season represent our strongest sales times due to students going away to college and looking for TVs, notebooks and tablets to have on campus and the aggressive sales and marketing efforts for the holiday season, especially on Black Friday.

Sales ForecastSales Forecast

2012 2013 2014 2015 2016

Sales

My Hot Electronics

$25,600 $35,500 $50,250 $65,000 $78,000

Sports Fan Playground

$25,020 $38,500 $55,000 $65,500 $77,500

Total Sales $50,620 $74,000 $105,250 $130,500 $155,500

Direct Cost of Sales

2012 2013 2014 2015 2016

Consumer Electronics

$0 $0 $0 $0 $0

Networking Products

$0 $0 $0 $0 $0

Computer Products

$0 $0 $0 $0 $0

Subtotal Direct Cost of Sales

$0 $0 $0 $0 $0

Sales Monthly

My Hot Electronics


$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

$11,000

Jan

Fe

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Jun

Jul

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No

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Sales Monthly

Sales by Year

My Hot Electronics


$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

2012 2013 2014 2015 2016

Sales by Year

6.5 Milestones

The accompanying milestone chart highlights our plan with specific dates. This schedule reflects our strong commitment to organization and detail.

Milestones

Milestones

Milestone Start Date End Date Budget Manager Department

Computer Hardware

6/12/2012 6/12/2012 $1,100 DaVaughn Lucas

Department

Press Release Marketing

6/12/2012 6/12/2013 $8,800 DaVaughn Lucas

Department

Totals $9,900

Milestones

190019011902190319041905190619071908190919101911191219131914191519161917191819191920192119221923192419251926192719281929193019311932193319341935193619371938193919401941194219431944194519461947194819491950195119521953195419551956195719581959196019611962196319641965196619671968196919701971197219731974197519761977197819791980198119821983198419851986198719881989199019911992199319941995199619971998199920002001200220032004200520062007200820092010201120121899

0

0

0

0

0

0

0

Press Release Marketing

Computer Hardware

0

Milestones

7.0 Management SummaryDaVaughn Lucas will access the productivity and perform informal employees evaluations of all employees every six months. DaVaughn will be responsible for day-to-day operations of business which will include - - Writing press releases - Researching trends in consumer purchasing - Assisting in website development - Developing online marketing campaigns

Melissa Morgan would be hired on to work as the primary website developer. Melissa has an extensive background in HTML and CSS coding and has worked with DaVaughn from day 1 in terms of the basic design and flow of the website. Melissa's duties would include -

- Assisting DaVaughn with the online marketing campaigns when needed - Primary website developer - Researching International Trends in Marketing - Assisting in writing press releases

7.1 Personnel Plan

The personnel plan is included in the following table below. There will be one full-time employee and 1 part-time employee working 35 hours per week.

Personnel

Personnel Plan

2012 2013 2014 2015 2016

DaVaughn Lucas - Owner/Sales Rep/Marketing

$34,992 $36,700 $38,700 $40,200 $41,250

Melissa Morgan - Sales Rep/Web Designer

$27,600 $29,300 $30,500 $31,400 $32,570

$0 $0 $0 $0 $0

Total People 2 2 2 2 2

Total Payroll $62,592 $66,000 $69,200 $71,600 $73,820

8.0 Financial Plan

The growth of My Hot Electronics will be steady and moderate and the cash balance will always be positive. Being a retail environment we will not be selling on credit.

We will accept credit cards through the Amazon checkout system, which will save on processing costs.

Both myhotelectronics.com and sportsfanplayground.com are selling products currently and within 6 months, we project having strong sales numbers averaging in the 200-250 sales a month range.

8.1 Startup Funding

Startup Funding

Startup Funding

Startup Expenses to Fund $11,500

Startup Assets to Fund $15,400

Total Funding Required $26,900

Assets

Non-cash Assets from Startup $12,500

Cash Requirements from Startup $2,900

Additional Cash Raised $0

Cash Balance on Starting Date $2,900

Total Assets $15,400

Liabilities and Capital

Liabilities

Current Borrowing $0

Long-term Liabilities $0

Accounts Payable (Outstanding Bills) $0

Other Current Liabilities (interest-free) $0

Total Liabilities $0

Capital

Planned Investment

Owner $2,000

Investor $0

Additional Investment Requirement $24,900

Total Planned Investment $26,900

Loss at Startup (Startup Expenses) ($11,500)

Total Capital $15,400

Total Capital and Liabilities $15,400

Total Funding $26,900

8.3 Break-even Analysis

Break-even Analysis

Break-even Analysis

Monthly Revenue Break-even $5,998

Assumptions:

Average Percent Variable Cost 0%

Estimated Monthly Fixed Cost $5,998

Break-even Analysis

$0

$2,000

$4,000

$6,000

($2,000)

($4,000)

($6,000)$0

$1,000$2,000

$3,000$4,000

$5,000$6,000

$7,000$8,000

$9,000$10,000

$11,000

Break-even Analysis

8.4 Projected Profit and Loss

The following chart and table will indicate projected profit and loss. There are certain notes about the startup fees:

*The software that is needed for the implementation of products is a once-a-year fee of $8,800.

*The hardware and software needed (desktop, notebooks) - $3,000 total - are one time fees.

*The advertising that will be needed (commercial, internet marketing) will be one-time fees.

Profit and Loss

Pro Forma Profit and Loss

2012 2013 2014 2015 2016

Sales $50,620 $74,000 $105,250 $130,500 $155,500


$0 $0 $0 $0 $0

Other Costs of Sales

$20,259 $0 $0 $0 $0

Total Cost of Sales

$20,259 $0 $0 $0 $0

Gross Margin $30,360 $74,000 $105,250 $130,500 $155,500

Gross Margin %

59.98% 100.00% 100.00% 100.00% 100.00%

Expenses

Payroll $62,592 $66,000 $69,200 $71,600 $73,820

Marketing/Promotion

$0 $0 $0 $0 $0

Depreciation $0 $0 $0 $0 $0

Rent $0 $0 $0 $0 $0

Utilities $0 $0 $0 $0 $0

Insurance $0 $0 $0 $0 $0

Payroll Taxes $9,389 $9,900 $10,380 $10,740 $11,073

Other $0 $0 $0 $0 $0

Total Operating Expenses

$71,981 $75,900 $79,580 $82,340 $84,893

Profit Before Interest and Taxes

($41,620) ($1,900) $25,670 $48,160 $70,607

EBITDA ($41,620) ($1,900) $25,670 $48,160 $70,607

Interest Expense

$0 $0 $0 $0 $0

Taxes Incurred

$0 $0 $7,701 $14,448 $21,182

Other Income

Other Income Account Name

$0 $0 $0 $0 $0


$0 $0 $0 $0 $0

Total Other Income

$0 $0 $0 $0 $0

Other Expense

Other Expense Account Name

$0 $0 $0 $0 $0


$0 $0 $0 $0 $0

Total Other Expense

$0 $0 $0 $0 $0

Net Other Income

$0 $0 $0 $0 $0

Net Profit ($41,620) ($1,900) $17,969 $33,712 $49,425

Net Profit/Sales

-82.22% -2.57% 17.07% 25.83% 31.78%

Profit Monthly

$0

$1,000

$2,000

($1,000)

($2,000)

($3,000)

($4,000)

($5,000)

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

Profit Monthly

Profit Yearly

$0

$10,000

$20,000

$30,000

$40,000

$50,000

($10,000)

($20,000)

($30,000)

($40,000)

2012 2013 2014 2015 2016

Profit Yearly

Gross Margin Monthly

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000


Gross Margin Monthly

Gross Margin Yearly

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

2012 2013 2014 2015 2016

Gross Margin Yearly

8.5 Projected Cash Flow

The following table explains projected cash flow for My Hot Electronics.

Cash Flow

Pro Forma Cash Flow

2012 2013 2014 2015 2016

Cash Received

Cash from Operations

Cash Sales $50,620 $74,000 $105,250 $130,500 $155,500

Subtotal Cash from Operations

$50,620 $74,000 $105,250 $130,500 $155,500

Additional Cash Received

Non Operating (Other) Income

$0 $0 $0 $0 $0

Sales Tax, VAT, HST/GST Received

$3,037 $4,440 $6,315 $7,830 $9,330

New Current Borrowing

$0 $0 $0 $0 $0

New Other Liabilities (interest-free)

$0 $0 $0 $0 $0

New Long-term Liabilities

$0 $0 $0 $0 $0

Sales of Other Current Assets

$0 $0 $0 $0 $0

Sales of Long-term Assets

$0 $0 $0 $0 $0

New Investment Received

$0 $0 $0 $0 $0

Subtotal Cash Received

$53,657 $78,440 $111,565 $138,330 $164,830

Expenditures 2012 2013 2014 2015 2016

Expenditures from Operations

Cash Spending

$62,592 $66,000 $69,200 $71,600 $73,820

Bill Payments

$26,531 $12,203 $17,409 $24,604 $31,674

Subtotal Spent on Operations

$89,123 $78,203 $86,609 $96,204 $105,494

Additional Cash Spent

Non Operating (Other) Expense

$0 $0 $0 $0 $0

Sales Tax, VAT, HST/GST Paid Out

$3,037 $4,440 $6,315 $7,830 $9,330

Principal Repayment of Current Borrowing

$0 $0 $0 $0 $0

Other Liabilities Principal Repayment

$0 $0 $0 $0 $0

Long-term Liabilities Principal Repayment

$0 $0 $0 $0 $0

Purchase Other Current Assets

$0 $0 $0 $0 $0

Purchase Long-term Assets

$0 $0 $0 $0 $0

Dividends $0 $0 $0 $0 $0

Subtotal Cash Spent

$92,161 $82,643 $92,924 $104,034 $114,824

Net Cash Flow

($38,504) ($4,203) $18,641 $34,296 $50,006

Cash Balance

($35,604) ($39,807) ($21,165) $13,131 $63,137

Cash

Net Cash Flow

Cash Balance

$0

($4,000)

($8,000)

($12,000)

($16,000)

($20,000)

($24,000)

($28,000)

($32,000)

($36,000)

Jan

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Jul

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Cash

8.6 Projected Balance Sheet

The following table explains the projected balance sheet.

Balance Sheet

Pro Forma Balance Sheet

2012 2013 2014 2015 2016

Assets

Current Assets

Cash ($35,604) ($39,807) ($21,165) $13,131 $63,137

Other Current Assets

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

Total Current Assets

($32,604) ($36,807) ($18,165) $16,131 $66,137

Long-term Assets

Long-term Assets

$9,500 $9,500 $9,500 $9,500 $9,500

Accumulated Depreciation

$0 $0 $0 $0 $0

Total Long-term Assets

$9,500 $9,500 $9,500 $9,500 $9,500

Total Assets ($23,104) ($27,307) ($8,665) $25,631 $75,637


2012 2013 2014 2015 2016

Current Liabilities

Accounts Payable

$3,117 $814 $1,486 $2,070 $2,651

Current Borrowing

$0 $0 $0 $0 $0

Other Current Liabilities

$0 $0 $0 $0 $0

Subtotal Current Liabilities

$3,117 $814 $1,486 $2,070 $2,651

Long-term Liabilities

$0 $0 $0 $0 $0

Total Liabilities

$3,117 $814 $1,486 $2,070 $2,651

Paid-in Capital

$26,900 $26,900 $26,900 $26,900 $26,900

Retained Earnings

($11,500) ($53,120) ($55,020) ($37,051) ($3,339)

Earnings ($41,620) ($1,900) $17,969 $33,712 $49,425

Total Capital ($26,220) ($28,120) ($10,151) $23,561 $72,986

Total Liabilities and Capital

($23,104) ($27,307) ($8,665) $25,631 $75,637

Net Worth ($26,220) ($28,120) ($10,151) $23,561 $72,986

8.7 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 2014, Electronic Shopping.

Ratios

Ratio Analysis

2012 2013 2014 2015 2016 Industry Profile

Sales Growth

n.a. 46.19% 42.23% 23.99% 19.16% -0.64%

Percent of Total Assets


-12.98% -10.99% -34.62% 11.70% 3.97% 40.03%


141.12% 134.79% 209.63% 62.94% 87.44% 76.45%

Long-term Assets

-41.12% -34.79% -109.63% 37.06% 12.56% 23.55%

Total Assets

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Current Liabilities

-13.49% -2.98% -17.15% 8.08% 3.51% 44.58%


0.00% 0.00% 0.00% 0.00% 0.00% 43.76%

Total Liabilities

-13.49% -2.98% -17.15% 8.08% 3.51% 88.34%

Net Worth 113.49% 102.98% 117.15% 91.92% 96.49% 11.66%

Percent of Sales

Sales 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Gross Margin

59.98% 100.00% 100.00% 100.00% 100.00% 35.24%

Selling, General & Administrative Expenses

142.20% 102.57% 82.93% 74.17% 68.22% 14.88%

Advertising Expenses

0.00% 0.00% 0.00% 0.00% 0.00% 1.65%


-82.22% -2.57% 24.39% 36.90% 45.41% 2.26%

Main Ratios

Current -10.46 -45.23 -12.22 7.79 24.95 1.43

Quick -10.46 -45.23 -12.22 7.79 24.95 1.04

Total Debt to Total Assets

-13.49% -2.98% -17.15% 8.08% 3.51% 88.34%

Pre-tax Return on Net Worth

158.73% 6.76% -252.87% 204.41% 96.74% 113.05%

Pre-tax Return on Assets

180.15% 6.96% -296.24% 187.90% 93.35% 13.18%

Additional Ratios

2012 2013 2014 2015 2016

Net Profit Margin

-82.22% -2.57% 17.07% 25.83% 31.78% n.a

Return on Equity

0.00% 0.00% 0.00% 143.09% 67.72% n.a

Activity Ratios

Accounts Payable Turnover

9.51 12.17 12.17 12.17 12.17 n.a

Payment Days

27 72 23 26 27 n.a

Total Asset Turnover

0.00 0.00 0.00 5.09 2.06 n.a

Debt Ratios

Debt to Net Worth

0.00 0.00 0.00 0.09 0.04 n.a

Current Liab. to Liab.

1.00 1.00 1.00 1.00 1.00 n.a

Liquidity Ratios

Net Working Capital

($35,720) ($37,620) ($19,651) $14,061 $63,486 n.a

Interest Coverage

0.00 0.00 0.00 0.00 0.00 n.a

Additional Ratios

Assets to Sales

-0.46 -0.37 -0.08 0.20 0.49 n.a

Current Debt/Total Assets

0% 0% 0% 8% 4% n.a

Acid Test -10.46 -45.23 -12.22 7.79 24.95 n.a

Sales/Net Worth

0.00 0.00 0.00 5.54 2.13 n.a

Dividend Payout

0.00 0.00 0.00 0.00 0.00 n.a

8.8 Long-term Plan

Our long-term plan includes expansion into the Canadian and England markets within 6-8 months of launch, and expansion into Europe, Asia and Australia by year 2.

Also, in year 2, we will look to develop our software licensing company that would distribute operations software to major business firms worldwide.

Our goal is to be able to sell products around the world with the quickness and ease of the American service structure, and also run the franchise as a profit center for the purpose of building wealth for employees, the community, and the Lucas family.

Sales Forecast

Sales Forecast


Sales

My Hot Electronics

$544 $873 $949 $1,257

$1,373

$1,481

$1,674

$1,897

$2,588

$3,035

$4,668

$5,262


$446 $825 $902 $1,247

$1,097

$1,686

$1,858

$2,051

$2,605

$3,150

$3,985

$5,168

Total Sales

$991 $1,698 $1,851 $2,504

$2,469

$3,167

$3,532

$3,948

$5,193

$6,184

$8,653

$10,430



Consumer Electronics

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

Networking Products

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

Computer Products

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

Subtotal Direct Cost of Sales

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

Profit and LossPro Forma Profit and Loss

Jan Feb Mar Apr May Jun Jul Aug Sep Oct

Nov Dec

Sales $991 $1,698

$1,851

$2,504

$2,469

$3,167

$3,532

$3,948

$5,193

$6,184

$8,653 $10,430


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

Other Costs of Sales

$734 $1,044

$1,245

$1,437

$1,586

$1,788

$2,026

$1,842

$1,953

$2,028

$2,136 $2,442

Total Cost of Sales

$734 $1,044

$1,245

$1,437

$1,586

$1,788

$2,026

$1,842

$1,953

$2,028

$2,136 $2,442

Gross Margin

$257 $654 $606 $1,067

$883

$1,380

$1,506

$2,106

$3,240

$4,157

$6,517 $7,988

Gross Margin %

25.90%

38.53%

32.74%

42.63%

35.76%

43.56%

42.63%

53.35%

62.39%

67.21%

75.32% 76.59%

Expenses

Payroll $5,216 $5,216

$5,216

$5,216

$5,216

$5,216

$5,216

$5,216

$5,216

$5,216

$5,216 $5,216

Marketing/Promotion

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

Depreciation

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

Rent $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Utilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Insurance

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

Payroll Taxes

15%

$782 $782 $782 $782

$782

$782 $782 $782

$782 $782

$782 $782

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

Total Operating Expenses

$5,998 $5,998

$5,998

$5,998

$5,998

$5,998

$5,998

$5,998

$5,998

$5,998

$5,998 $5,998


($5,742)

($5,344)

($5,392)

($4,931)

($5,115)

($4,619)

($4,493)

($3,892)

($2,759)

($1,842)

$518 $1,990

EBITDA ($5,742)

($5,344)

($5,392)

($4,931)

($5,115)

($4,619)

($4,493)

($3,892)

($2,759)

($1,842)

$518 $1,990

Interest Expense

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

Taxes Incurred

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

Other Income


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


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

Total Other Income

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

Other Expense


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


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

Total Other Expense

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

Net Other Income

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

Net Profit ($5,742)

($5,344)

($5,392)

($4,931)

($5,115)

($4,619)

($4,493)

($3,892)

($2,759)

($1,842)

$518 $1,990

Net Profit/Sales

-579.56%

-314.84%

-291.30%

-196.92%

-207.16%

-145.82%

-127.19%

-98.60%

-53.12%

-29.78%

5.99% 19.08%

Cash FlowPro Forma Cash Flow


Cash Received

Cash from Operations

Cash Sales

$991

$1,698

$1,851

$2,504

$2,469

$3,167

$3,532

$3,948 $5,193 $6,184 $8,653 $10,430

Subtotal Cash from Operations

$991

$1,698

$1,851

$2,504

$2,469

$3,167

$3,532

$3,948 $5,193 $6,184 $8,653 $10,430

Additional Cash Received

Non Operating (Other) Income

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

Sales Tax, VAT, HST/GST Received

6.00%

$59 $102

$111

$150

$148

$190

$212

$237 $312 $371 $519 $626

New Current Borrowing

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

New Other Liabilities (interest-free)

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

New Long-term Liabilities

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

Sales of Other Current Assets

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

Sales of Long-term Assets

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

New Investment Received

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

Subtotal Cash Received

$1,050

$1,799

$1,962

$2,654

$2,617

$3,357

$3,744

$4,184 $5,505 $6,555 $9,172 $11,056

Expenditures


Expenditures from Operations

Cash Spending

$5,216

$5,216

$5,216

$5,216

$5,216

$5,216

$5,216

$5,216 $5,216 $5,216 $5,216 $5,216

Bill Payments

$51 $1,527

$1,833

$2,034

$2,224

$2,375

$2,578

$2,802 $2,628 $2,738 $2,814 $2,928

Subtotal Spent on Operations

$5,267

$6,743

$7,049

$7,250

$7,440

$7,591

$7,794

$8,018 $7,844 $7,954 $8,030 $8,144

Additional Cash Spent

Non Operating (Other) Expense

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

Sales Tax, VAT, HST/GST Paid Out

$59 $102

$111

$150

$148

$190

$212

$237 $312 $371 $519 $626

Principal Repayment of Current Borrowing

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

Other Liabilities Principal Repayment

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

Long-term Liabilities Principal Repayment

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

Purchase Other Current Assets

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

Purchase Long-term Assets

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

Dividends

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

Subtotal Cash Spent

$5,326

$6,845

$7,160

$7,400

$7,588

$7,781

$8,006

$8,255 $8,155 $8,325 $8,549 $8,770

Net Cash Flow

($4,276)

($5,045)

($5,198)

($4,746)

($4,971)

($4,424)

($4,262)

($4,071)

($2,651) ($1,770) $623 $2,286

Cash Balance

($1,376)

($6,421)

($11,619)

($16,364)

($21,335)

($25,759)

($30,021)

($34,092)

($36,742)

($38,513)

($37,889) ($35,604)

Balance Sheet

Pro Forma Balance Sheet


Assets

Starting Balances

Current Assets

Cash $2,900

($1,376)

($6,421)

($11,619)

($16,364)

($21,335)

($25,759)

($30,021)

($34,092)

($36,742)

($38,513)

($37,889)

($35,604)


$3,000

$3,000

$3,000

$3,000

$3,000

$3,000

$3,000

$3,000

$3,000

$3,000

$3,000

$3,000

$3,000


$5,900

$1,624

($3,421)

($8,619)

($13,364)

($18,335)

($22,759)

($27,021)

($31,092)

($33,742)

($35,513)

($34,889)

($32,604)

Long-term Assets

Long-term Assets

$9,500

$9,500

$9,500

$9,500

$9,500

$9,500

$9,500

$9,500

$9,500

$9,500

$9,500

$9,500

$9,500

Accumulated Depreciation

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

Total Long-term Assets

$9,500

$9,500

$9,500

$9,500

$9,500

$9,500

$9,500

$9,500

$9,500

$9,500

$9,500

$9,500

$9,500

Total Assets

$15,400

$11,124

$6,079

$881

($3,864)

($8,835)

($13,259)

($17,521)

($21,592)

($24,242)

($26,013)

($25,389)

($23,104)



Current Liabilities

Accounts Payable

$0 $1,466

$1,765

$1,960

$2,145

$2,290

$2,484

$2,715

$2,537

$2,645

$2,716

$2,821

$3,117

Current Borrowing

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

Other Current Liabilities

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

Subtotal Current Liabilities

$0 $1,466

$1,765

$1,960

$2,145

$2,290

$2,484

$2,715

$2,537

$2,645

$2,716

$2,821

$3,117


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

Total Liabilities

$0 $1,466

$1,765

$1,960

$2,145

$2,290

$2,484

$2,715

$2,537

$2,645

$2,716

$2,821

$3,117

Paid-in Capital

$26,900

$26,900

$26,900

$26,900

$26,900

$26,900

$26,900

$26,900

$26,900

$26,900

$26,900

$26,900

$26,900

Retained Earnings

($11,500)

($11,500)

($11,500)

($11,500)

($11,500)

($11,500)

($11,500)

($11,500)

($11,500)

($11,500)

($11,500)

($11,500)

($11,500)

Earnings

$0 ($5,742)

($11,086)

($16,478)

($21,409)

($26,525)

($31,143)

($35,636)

($39,528)

($42,287)

($44,129)

($43,610)

($41,620)

Total Capital

$15,400

$9,658

$4,314

($1,078)

($6,009)

($11,125)

($15,743)

($20,236)

($24,128)

($26,887)

($28,729)

($28,210)

($26,220)

Total Liabilities and Capital

$15,400

$11,124

$6,079

$881

($3,864)

($8,835)

($13,259)

($17,521)

($21,592)

($24,242)

($26,013)

($25,389)

($23,104)

Net Worth

$15,400

$9,658

$4,314

($1,078)

($6,009)

($11,125)

($15,743)

($20,236)

($24,128)

($26,887)

($28,729)

($28,210)

($26,220)

My hot electronics

Business

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