Salad Gardens

8/2/2019 Salad Gardens

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January 2001

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

2.0 Company Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.1 Company Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.2 Start-up Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

3.0 Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

4.0 Market Analysis Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54.1 Market Segmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54.2 Target Market Segment Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64.3 Competition and Buying Patterns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

5.0 Strategy and Implementation Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75.1 Competitive Edge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75.2 Sales Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

5.2.1 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85.3 Milestones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

6.0 Management Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106.1 Personnel Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

7.0 Financial Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117.1 Important Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117.2 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127.3 Projected Profit and Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137.4 Projected Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

7.5 Projected Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167.6 Business Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Table of Contents


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1.0 Executive Summary

Mixed Greens Salad Gardens (MGSG) is a start-up grower and distributor of exotic saladgreens for restaurants and individual consumers. MGSG is located in Blue River, Oregon andserves the southern Willamette Valley. MGSG's objectives are to develop a product-basedcompany whose goal is to exceed customer's expectations, increase production efficiency by10% a year, and lastly, and develop a sustainable farm business, able to survive off their cashflow.

Products

MGSG will sell a spring mix of salad field greens. These greens will include but are not limitedto: red leaf, arugula, radicchio, mustard greens, endive, and chicory. These greens are grownfor use in salad mixtures, purchased by the end consumer as well as by restaurants who thenserve it to their patrons.

The Market

MGSG has decided to target two distinct market segments, individual customers andrestaurants. The individual customers will purchase greens from MGSG at the Tuesday andSaturday Farmer's Market. This segment is growing at 12% and has 12,000 potentialcustomers. The second segment is local restaurants. This market is smaller at only 28potential customers, but is more consistent in demand throughout the year.

Competitive Edge

MGSG has two competitive edges that will help them maintain strong growth rates, increasingtheir market penetration. The first edge is quality. MGSG prides themselves on the high qualityof exotic salad greens. Greens that do not meet MGSG high standards of quality are rejected

as imperfects and go to a not-for-profit food bank. MGSG's second competitive edge is theirflexibility. The entire farm has been set up to allow them to change crops or scale existingcrops to meet demand. This is highly unusual as most farms are unable to change crops midyear.

Management

MGSG is led by Heidi Ponic. Heidi initially got her start in growing while working at agreenhouse. After college, Heidi went to work for a large grass seed company. This experience

is what solidified Heidi's desire to continue working in an agricultural capacity. Soon after herexperience at the Willamette Seed Company she decided to enroll in Oregon State University'sMaster of Horticulture Program. Heidi's Masters provided her with requisite detail and skills todevelop her own farm business.

MGSG is an exciting new company that meets an unsatiated need for quality salad greens. Theclose proximity to Eugene ensures a steady flow of customers. Profitability has been forecasted

Mixed Greens Salad Gardens


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($50,000)

$0

$50,000

$100,000

$150,000

$200,000

2001 2002 2003

SalesGross Margin

Net Profit

Highlights

1.1 Objectives

The objectives for the first three years of operation include:

1. To create a product-based company whose goal is to exceed customers' expectations.2. The utilization of Mixed Greens' lettuce products in at least 20% of the top restaurants

in Eugene as listed in local paper's restaurant reviews.3. To increase the efficiency of our production by 10% a year.4. To develop a sustainable farm, surviving off its own cash flow.

1.2 Mission

Mixed Greens Salad Gardens' mission is to provide the highest-quality salad greens. We existto attract and maintain customers. When we adhere to this maxim, everything else will fall into place. Our services will exceed the expectations of our customers.



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2.1 Company Ownership

Mixed Greens Salad Gardens will be a sole proprietorship with Heidi Ponic as the founder andowner. Heidi will be funding the business with a $50,000 investment of her own. An additional$10,000 will be invested by family member O.G. Tylthe with exit/repayment initially scheduledfor year five.

2.2 Start-up Summary

Mixed Greens Salad Gardens' start-up costs will include all the equipment needed for the home-based office, the construction of the greenhouse and all the necessary equipment, and otheressentials for growing.

The home office equipment will be the largest chunk of the start-up expenses. This equipmentincludes a computer system, fax machine, office supplies, cellular phone, and pager. Thecomputer should have at least a 500 megahertz Celeron/Pentium processor, 64 megabytes ofRAM (preferably 128), 6 gigabyte hard drive, and a rewritable CD-ROM for backing up the

system. The home office will also require a few pieces of furniture such as a desk, chair, andbook shelf to transform a standard room into an office. Lastly, an additional land phone linewill be required.

The greenhouse will need the following equipment: a 25' x 100' greenhouse structure madeout of poly carbonate, a ventilation system, a heater, a mister system, supplemental lighting,fertilizer injector, pruners, pots, trays, soil, seeds, and assorted chemicals.

Please note that of the $25,300 of long-term assets, $20,000 will be depreciated straight linefor 27.5 years (real estate) and the remaining $5,300 will be depreciated on a seven yearstraight-line schedule.



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Table: Start-up

Start-up

Requirements

Start-up ExpensesOtherOther $0Total Start-up Expenses $0

Start-up Assets NeededCash Balance on Starting Date $34,700Start-up Inventory $0Other Current Assets $0Total Current Assets $34,700

Long-term Assets $25,300Total Assets $60,000Total Requirements $60,000

Funding

InvestmentHeidi Ponic $50,000

Investor 2 $10,000Other $0Total Investment $60,000

Current LiabilitiesAccounts Payable $0Current Borrowing $0Other Current Liabilities $0Current Liabilities $0

Long-term Liabilities $0

Total Liabilities $0

Loss at Start-up $0Total Capital $60,000Total Capital and Liabilities $60,000

$30 000

$40,000

$50,000

$60,000

Start-up



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3.0 Products

MGSG will sell a spring mix of salad field greens. These greens will include but are not limitedto: red leaf, arugula, radicchio, mustard greens, endive, and chicory. These greens are grownfor use in salad mixtures, purchased by the end consumer as well as by restaurants who thenserve it to their patrons. While the greens are washed at the farm, they are not certifiedwashed and the patrons are told to wash them an additional time.

4.0 Market Analysis SummaryMGSG will be focusing on two distinct users of greens, individual consumers, and restaurants.The consumer market is seasonal so we will have production shifts during the consumer offseason and all of the production will go toward wholesale restaurant distribution. During thespring and the summer MGSG will be serving both the consumer markets through farmermarket stands and the restaurants through direct distribution.

4.1 Market Segmentation

Mixed Greens Salad Gardens has two distinct customers:

1. Individual consumers. This group of people buy exotic salad greens because theyhave a more sophisticated pallette. Average Americans have been raised on iceberglettuce and this is their green of choice (unfortunately). When people from this classget a little "crazy" they might even try romaine lettuce. These people are typically

unsophisticated or unadventurous in terms of culinary habits. These are NOT thepeople MGSG serves. MGSG is going after people that appreciate healthier, tastieralternatives to the standby of iceberg lettuce. This group of consumers is more likely tomake their own meals instead of going out, appreciates fine dining, and generally isfrom a higher socio/economic class. Mixed Greens Salad Gardens' field greens are moreexpensive than choices like iceberg or romaine, therefore one can conclude that theconsumer typically makes more money if they are willing to pay significantly more fortheir salad greens, and second, people with more sophisticated pallettes typically aremore educated.

2. Restaurants. Not all restaurants use exotic field greens mixes, generally it is arestaurant of fine dining that serves the finer greens. To be even more specific, it istypically an adventurous American or nouveau cuisine restaurant as opposed to a nicerFrench or German restaurant that appreciates the exotic field greens mix. For whatever reason (probably attributable to demand of their customers), the French andGerman restaurants, even the finer ones tend to serve "peasant greens." The



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Individual ConsumersRestaurants

Other

Market Analysis (Pie)

Table: Market Analysis

Market AnalysisPotential Customers Growth 2001 2002 2003 2004 2005 CAGRIndividual Consumers 12% 12,000 13,440 15,053 16,859 18,882 12.00%Restaurants 8% 28 30 32 35 38 7.93%Other 0% 0 0 0 0 0 0.00%

Total 11.99% 12,028 13,470 15,085 16,894 18,920 11.99%

4.2 Target Market Segment Strategy

Mixed Greens Salad Gardens' target market segment strategy is fairly easy. Our two differentcustomer groups purchase from two distinct locations so it is quite easy to target themindividually.

Individuals. These customers will be buying MGSG products from the different farmermarkets located in Eugene, OR. The main one is "The Farmers Market" held downtown twice aweek in the spring, summer, and the early autumn. This market gets quite a bit of trafficbecause there is a nice selection of different farmers and products and it is in a central locationin the heart of Eugene. Additionally, there are several other smaller farmer markets that existin outlining communities. By setting up a booth in these markets, there is already a steadyflow of interested customers There obviously is a fee to set up a stand but what you get for



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4.3 Competition and Buying Patterns

There are three different types of competitors that MGSG faces:

1. Supermarkets. These stores sell a salad greens mix to consumers. The advantage ofthe supermarket is convenience. There are many supermarkets around the city andthey are open many hours during the day. Their disadvantage is price and quality. Thequality and variety lower than the standards set by the offerings of MGSG and othersimilar local farmers. The cost is higher, usually 15% more.

2. Similar local farmers. These are very similar operations to MGSG, sometimes largerand sometimes smaller. There appears to be room in the market for multiple farmersas most of the farmers sell out their products each day at the farmer markets.

3. Large distributors. An example of this would be Food Service of America (FSA) whichbuys a wide variety of products and quality of produce from farmers and distributesthem to restaurants. The produce is not usually local, and is a few more days olderfrom the field compared with the local farmers. The price is comparable and the qualitycan be comparable, but not necessarily. The disadvantage of a food distributor is thelack of flexibility relative to a local grower when serving local customers.

Buying patterns are based on the customer's desires. What is meant by this is that lower-endrestaurants (or at least restaurants that are less concerned about quality) will not bother toget greens from local farmers, there is no need for them to. This pattern is similar for theindividuals. There are some individuals that are content with the offerings from supermarkets.There are others that appreciate the difference in quality and are willing to schedule a trip tothe farmers market to meet their weekly needs.

5.0 Strategy and Implementation Summary

MGSG will be aggressively courting the farmer markets to ensure the ability to have a booth atthe markets. Additionally, MGSG will be aggressive in going after the local restaurants thathave a consistent need for the greens. Through an assurance of top-shelf service and superiorcustomer service and reliability, MGSG will continue to grow its number of clients.

5.1 Competitive Edge

Mixed Greens Salad Gardens' competitive edge has two main aspects: quality and flexibility.

1. Quality. While the quality of the other local farmers is quite good, Heidi's extensive



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A combination of quality and flexibility will create a sustainable competitive advantage that willallow MGSG to succeed.

5.2 Sales Strategy

MGSG's sales strategy will be based on visibility, consistency, and strategic relationships.

Visibility. MGSG will need to generate visibility that sets them apart from the otherlocal farmers that sell at the market. This in part will be done through the use of acolorful, distinct booth set-up that stands out among the other farmers. This visibilitywill create recognition for MGSG. This is important because the produce of the differentfarmers appears to be the same. The differences are discovered upon tasting theproduce in your home. If MGSG stands out in terms of the booth appearance, therepeat customer will more easily make the connection between the unusual booth andMGSG's product.

Consistency. In addition to product consistency, MGSG will have consistency inregards to their presence at the farmer markets. It is much easier to build awarenessand loyalty if people can reliably expect to see MGSG every week in the same place.

Strategic relationships. This will be the key for restaurant sales. As stated before,restaurant sales are a consistent income that help reduce the seasonality of MGSG'ssales. Forming mutually beneficial, strategic partnership will be of upmost importancefor building a good revenue base.

5.2.1 Sales Forecast

The first month will be used to set up the greenhouse and get things underway. There will notbe sales activity until month three when the first greens will be sprouting. Month three will seea steady increase in production and sales, and this will continue until month nine when theconsumer sales will be significantly decreasing due to the closing of the farmer markets. Frommonth nine to 16 Mixed Greens Salad Gardens will have an increase in restaurant sales tooffset the elimination of the consumer sales. By month 17, restaurant sales will decreaseslightly to accommodate for the ramping up of consumer sales again.



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$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

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

Individual Consumers

Restaurants

Sales Monthly

Table: Sales Forecast

Sales ForecastSales 2001 2002 2003Individual Consumers $23,154 $40,519 $70,908Restaurants $58,558 $81,981 $114,774Total Sales $81,712 $122,500 $185,682

Direct Cost of Sales 2001 2002 2003Individual Consumers $2,778 $4,862 $8,509Restaurants $7,027 $9,838 $13,773Subtotal Direct Cost of Sales $9,805 $14,700 $22,282

5.3 Milestones

MGSG will have several milestones early on:

1. Business plan completion. This will be done as a road map for the organization. Whilewe do not need a business plan to raise capital, it will be an indispensable tool for theongoing performance and improvement of the company.

2. Greenhouse set-up.3. First batch of greens sold.

h d f h d h f h l l



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Table: Milestones

MilestonesMilestone Start Date End Date Budget Manager DepartmentBusiness Plan Completion 1/1/01 1/1/01 $0 Heidi N/AGreenhouse Setup 1/1/01 2/1/01 $0 Heidi N/AFirst Batch of Greens Sold 4/1/01 4/1/01 $0 everyone N/AEnd of the Consumer Seasonand the Ramping up of theRestaurant Supply Cycle

9/1/01 9/1/01 $0 everyone N/A

Totals $0

6.0 Management Summary

Heidi Ponic, founder and owner, first became interested in growing vegetables at the age offive. Heidi pursued her love for plants by obtaining a biology degree at the University ofWashington. Throughout her last three years at Washington, she worked in a greenhouse thatgrew many different types of annuals. Upon graduation, Heidi went to work for a large grassseed manufacturer. Although the growing of grass seed proved to be far less interesting thenmost other plants, she was determined to get management experience, a skill set that shelacked. After two years at Willamette Seed Company, she enrolled in Oregon State University's

Masters of Horticulture program.

Having gone through the three years of the Masters program, she realized two things, 1) sheneeded to create a job/company for herself, 2) she should follow her passion and growvegetables. These realizations were the final catalyst to pursue her lifelong dream of runningher own greenhouse operation.

Heidi's educational training and her passion creates the ideal combination for an owner of astart-up company.

6.1 Personnel Plan

The staff will consist of Heidi working full time. While the bulk of the time Heidi will spendmanaging the operation, she will always spend a few hours a week tending to the plants. Inaddition to all of the general management required for the production of the greens, Heidi willbe setting up strategic relationships with local restaurants. Mixed Greens Salad Gardens will

have hired two full-time gardeners beginning in the middle of the first month, and will hire apart-time helper by month four. The gardeners will be primarily responsible for the raising ofthe field greens, while the part-time help will be used to help staff the farmers market boothfor the consumer selling of the greens.



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Table: Personnel

Personnel Plan2001 2002 2003

Heidi $24,000 $24,000 $24,000Gardener $16,650 $17,500 $18,500Gardener $16,650 $17,500 $18,500Part-time Helper $0 $9,000 $9,500Part-time Helper $6,750 $0 $9,000Total People 4 5 6Total Payroll $64,050 $68,000 $79,500

7.0 Financial Plan

The following sections will outline the important financial information.

7.1 Important Assumptions

The following table highlights some of the important financial assumptions.

Table: General Assumptions

General Assumptions2001 2002 2003

Plan Month 1 2 3Current Interest Rate 10.00% 10.00% 10.00%Long-term Interest Rate 10.00% 10.00% 10.00%Tax Rate 25.00% 25.00% 25.00%

Sales on Credit % 60.00% 60.00% 60.00%Other 0.00% 0.00% 0.00%Calculated TotalsPayroll Expense $64,050 $68,000 $79,500Sales on Credit $49,027 $73,500 $111,409New Accounts Payable $95,096 $106,390 $136,618Inventory Purchase $12,420 $16,005 $24,304



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7.2 Break-even Analysis

The Break-even Analysis indicates a monthly sales of $8,636 is needed to break even.

($8,000)

($6,000)

($4,000)

($2,000)

$0

$2,000

$4,000

$6,000

$0 $2,000 $5,000 $7,000 $10,000 $12,000

Monthly break-even point

Break-even point = where line intersects with 0

Break-even Analysis

Table: Break-even Analysis

Break-even Analysis:Monthly Units Break-even 1,439Monthly Revenue Break-even $8,636

Assumptions:Average Per-Unit Revenue $6.00Average Per-Unit Variable Cost $0.72Estimated Monthly Fixed Cost $7,600



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7.3 Projected Profit and Loss

The following table will indicate projected profit and loss. Our losses at start-up are evident, asis the turn of the corner in July when we become profitable.

Table: Profit and Loss

Pro Forma Profit and Loss2001 2002 2003

Sales $81,712 $122,500 $185,682Direct Costs of Goods $9,805 $14,700 $22,282

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

------------ ------------ ------------Cost of Goods Sold $9,805 $14,700 $22,282Gross Margin $71,906 $107,800 $163,400Gross Margin % 88.00% 88.00% 88.00%Expenses:Payroll $64,050 $68,000 $79,500Sales and Marketing and Other Expenses $0 $0 $0Depreciation $2,532 $2,532 $2,532Leased Equipment $0 $0 $0

Utilities $3,000 $3,000 $3,000Insurance $2,400 $2,400 $2,400Rent $6,000 $6,000 $6,000Payroll Taxes $9,608 $10,200 $11,925Other $0 $0 $0

------------ ------------ ------------Total Operating Expenses $87,590 $92,132 $105,357Profit Before Interest and Taxes ($15,683) $15,668 $58,043Interest Expense $0 $0 $0Taxes Incurred $0 $3,917 $14,511Net Profit ($15,683) $11,751 $43,532Net Profit/Sales -19.19% 9.59% 23.44%

Include Negative Taxes FALSE TRUE TRUE

($4,000)

($3,000)

($2,000)

($1,000)

$0

$1,000

$2,000

Profit Monthly



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7.4 Projected Cash Flow

The following chart and table will indicate projected cash flow.

($10,000)

($5,000)

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

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

Net Cash Flow

Cash Balance

Cash



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Table: Cash Flow

Pro Forma Cash Flow 2001 2002 2003

Cash ReceivedCash from Operations:Cash Sales $32,685 $49,000 $74,273Cash from Receivables $39,575 $68,782 $104,100

Subtotal Cash from Operations $72,259 $117,782 $178,373

Additional Cash ReceivedNon Operating (Other) Income $0 $0 $0Sales Tax, VAT, HST/GST Received $0 $0 $0New Current Borrowing $0 $0 $0

New Other Liabilities (interest-free) $0 $0 $0New Long-term Liabilities $0 $0 $0Sales of Other Current Assets $0 $0 $0Sales of Long-term Assets $0 $0 $0New Investment Received $0 $0 $0

Subtotal Cash Received $72,259 $117,782 $178,373

Expenditures 2001 2002 2003Expenditures from Operations:Cash Spending $2,382 $3,132 $5,021Payment of Accounts Payable $93,031 $105,740 $134,980

Subtotal Spent on Operations $95,413 $108,872 $140,002

Additional Cash SpentNon Operating (Other) Expense $0 $0 $0Sales Tax, VAT, HST/GST Paid Out $0 $0 $0Principal Repayment of Current Borrowing $0 $0 $0Other Liabilities Principal Repayment $0 $0 $0Long-term Liabilities Principal Repayment $0 $0 $0Purchase Other Current Assets $0 $0 $0Purchase Long-term Assets $0 $0 $0Dividends $0 $0 $0

Subtotal Cash Spent $95,413 $108,872 $140,002

Net Cash Flow ($23,154) $8,910 $38,371Cash Balance $11,546 $20,456 $58,827



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7.5 Projected Balance Sheet

The following table will indicate the projected balance sheet.

Table: Balance Sheet

Pro Forma Balance Sheet

AssetsCurrent Assets 2001 2002 2003Cash $11,546 $20,456 $58,827

Accounts Receivable $9,452 $14,171 $21,480Inventory $2,615 $3,920 $5,942Other Current Assets $0 $0 $0Total Current Assets $23,614 $38,547 $86,249Long-term AssetsLong-term Assets $25,300 $25,300 $25,300Accumulated Depreciation $2,532 $5,064 $7,596Total Long-term Assets $22,768 $20,236 $17,704Total Assets $46,382 $58,783 $103,953

Liabilities and Capital2001 2002 2003

Accounts Payable $2,065 $2,715 $4,353Current Borrowing $0 $0 $0Other Current Liabilities $0 $0 $0Subtotal Current Liabilities $2,065 $2,715 $4,353

Long-term Liabilities $0 $0 $0Total Liabilities $2,065 $2,715 $4,353

Paid-in Capital $60,000 $60,000 $60,000Retained Earnings $0 ($15,683) ($3,932)Earnings ($15,683) $11,751 $43,532

Total Capital $44,317 $56,068 $99,600Total Liabilities and Capital $46,382 $58,783 $103,953Net Worth $44,317 $56,068 $99,600

7.6 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on theStandard Industrial Classification (SIC) code 0161, Lettuce Farms, as part of Vegetables and

Melons, Not Elsewhere Classified, are shown for comparison.



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Table: Ratios

Ratio Analysis2001 2002 2003 Industry Profile

Sales Growth 0.00% 49.92% 51.58% -4.60%

Percent of Total AssetsAccounts Receivable 20.38% 24.11% 20.66% 12.90%Inventory 5.64% 6.67% 5.72% 14.40%Other Current Assets 0.00% 0.00% 0.00% 28.90%Total Current Assets 50.91% 65.58% 82.97% 56.20%Long-term Assets 49.09% 34.42% 17.03% 43.80%Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 0.00% 0.00% 0.00% 31.10%Long-term Liabilities 0.00% 0.00% 0.00% 20.50%Total Liabilities 0.00% 0.00% 0.00% 51.60%Net Worth 100.00% 100.00% 100.00% 48.40%

Percent of SalesSales 100.00% 100.00% 100.00% 100.00%Gross Margin 88.00% 88.00% 88.00% 32.00%Selling, General & Administrative Expenses 107.19% 78.41% 64.56% 20.70%Advertising Expenses 0.00% 0.00% 0.00% 0.20%Profit Before Interest and Taxes -19.19% 12.79% 31.26% 1.70%

Main RatiosCurrent 11.44 14.20 19.82 1.65Quick 10.17 12.75 18.45 0.88Total Debt to Total Assets 4.45% 4.62% 4.19% 51.60%Pre-tax Return on Net Worth -35.39% 27.94% 58.28% 2.20%Pre-tax Return on Assets -33.81% 26.65% 55.84% 4.50%

Business Vitality Profile 2001 2002 2003 IndustrySales per Employee $20,428 $24,500 $30,947 $0Survival Rate 0.00%

Additional Ratios 2001 2002 2003Net Profit Margin -19.19% 9.59% 23.44% n.aReturn on Equity -35.39% 20.96% 43.71% n.a

Activity RatiosAccounts Receivable Turnover 5.19 5.19 5.19 n.aCollection Days 43 59 58 n.aInventory Turnover 6.00 4.50 4.52 n.aAccounts Payable Turnover 46.06 39.18 31.39 n.aPayment Days 6 98 113Total Asset Turnover 1.76 2.08 1.79 n.a

Debt RatiosDebt to Net Worth 0.05 0.05 0.04 n.aCurrent Liab. to Liab. 1.00 1.00 1.00 n.a

Liquidity RatiosNet Working Capital $21,549 $35,832 $81,896 n.aInterest Coverage 0.00 0.00 0.00 n.a



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Appendix Table: Sales Forecast

Sales Forecast

Sales Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecIndividual Consumers $0 $0 $0 $2,956 $3,354 $3,789 $3,458 $3,687 $2,847 $2,063 $1,000 $0Restaurants $0 $0 $0 $2,974 $3,654 $4,545 $5,588 $6,245 $7,258 $7,987 $9,412 $10,895Total Sales $0 $0 $0 $5,930 $7,008 $8,334 $9,046 $9,932 $10,105 $10,050 $10,412 $10,895

Direct Cost of Sales Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecIndividual Consumers $0 $0 $0 $355 $402 $455 $415 $442 $342 $248 $120 $0Restaurants $0 $0 $0 $357 $438 $545 $671 $749 $871 $958 $1,129 $1,307Subtotal Direct Cost of Sales $0 $0 $0 $712 $841 $1,000 $1,086 $1,192 $1,213 $1,206 $1,249 $1,307

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Appendix Table: Personnel

Personnel Plan

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecHeidi $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000Gardener $700 $1,450 $1,450 $1,450 $1,450 $1,450 $1,450 $1,450 $1,450 $1,450 $1,450 $1,450Gardener $700 $1,450 $1,450 $1,450 $1,450 $1,450 $1,450 $1,450 $1,450 $1,450 $1,450 $1,450Part-time Helper $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Part-time Helper $0 $0 $0 $750 $750 $750 $750 $750 $750 $750 $750 $750Total People 0 3 3 4 4 4 4 4 4 4 4 4Total Payroll $3,400 $4,900 $4,900 $5,650 $5,650 $5,650 $5,650 $5,650 $5,650 $5,650 $5,650 $5,650

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Appendix Table: General Assumptions

General Assumptions

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecPlan Month 1 2 3 4 5 6 7 8 9 10 11 12Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%Long-term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%Tax Rate 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00%Sales on Credit % 60.00% 60.00% 60.00% 60.00% 60.00% 60.00% 60.00% 60.00% 60.00% 60.00% 60.00% 60.00%Other 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Calculated TotalsPayroll Expense $3,400 $4,900 $4,900 $5,650 $5,650 $5,650 $5,650 $5,650 $5,650 $5,650 $5,650 $5,650Sales on Credit $0 $0 $0 $3,558 $4,205 $5,000 $5,428 $5,959 $6,063 $6,030 $6,247 $6,537New Accounts Payable $4,765 $6,490 $6,490 $9,274 $8,342 $8,539 $8,483 $8,617 $8,481 $8,426 $8,555 $8,633Inventory Purchase $0 $0 $0 $2,135 $1,100 $1,318 $1,256 $1,404 $1,254 $1,193 $1,336 $1,423

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Appendix Table: Profit and Loss

Pro Forma Profit and Loss

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecSales $0 $0 $0 $5,930 $7,008 $8,334 $9,046 $9,932 $10,105 $10,050 $10,412 $10,895Direct Costs of Goods $0 $0 $0 $712 $841 $1,000 $1,086 $1,192 $1,213 $1,206 $1,249 $1,307Production Payroll $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------Cost of Goods Sold $0 $0 $0 $712 $841 $1,000 $1,086 $1,192 $1,213 $1,206 $1,249 $1,307Gross Margin $0 $0 $0 $5,218 $6,167 $7,334 $7,960 $8,740 $8,892 $8,844 $9,163 $9,588Gross Margin % 0.00% 0.00% 0.00% 88.00% 88.00% 88.00% 88.00% 88.00% 88.00% 88.00% 88.00% 88.00%Expenses:Payroll $3,400 $4,900 $4,900 $5,650 $5,650 $5,650 $5,650 $5,650 $5,650 $5,650 $5,650 $5,650Sales and Marketing and Other Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Depreciation $211 $211 $211 $211 $211 $211 $211 $211 $211 $211 $211 $211Leased Equipment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Utilities $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250Insurance $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200Rent $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500Payroll Taxes 15% $510 $735 $735 $848 $848 $848 $848 $848 $848 $848 $848 $848Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------Total Operating Expenses $5,071 $6,796 $6,796 $7,659 $7,659 $7,659 $7,659 $7,659 $7,659 $7,659 $7,659 $7,659Profit Before Interest and Taxes ($5,071) ($6,796) ($6,796) ($2,440) ($1,491) ($325) $302 $1,082 $1,234 $1,186 $1,504 $1,929Interest Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Taxes Incurred $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Net Profit ($5,071) ($6,796) ($6,796) ($2,440) ($1,491) ($325) $302 $1,082 $1,234 $1,186 $1,504 $1,929Net Profit/Sales 0.00% 0.00% 0.00% -41.15% -21.28% -3.89% 3.34% 10.89% 12.21% 11.80% 14.45% 17.71%Include Negative Taxes

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Appendix Table: Cash Flow

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

Cash ReceivedCash from Operations:Cash Sales $0 $0 $0 $2,372 $2,803 $3,334 $3,618 $3,973 $4,042 $4,020 $4,165 $4,358Cash from Receivables $0 $0 $0 ($0) $1,898 $3,903 $4,629 $5,228 $5,711 $6,015 $6,045 $6,146

Subtotal Cash from Operations $0 $0 $0 $2,372 $4,701 $7,236 $8,248 $9,201 $9,753 $10,035 $10,210 $10,504

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

Subtotal Cash Received $0 $0 $0 $2,372 $4,701 $7,236 $8,248 $9,201 $9,753 $10,035 $10,210 $10,504

Expenditures Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecExpenditures from Operations:Cash Spending $95 $95 $95 $308 $205 $227 $221 $235 $220 $214 $229 $237Payment of Accounts Payable $3,939 $6,490 $6,490 $7,417 $9,243 $8,349 $8,537 $8,488 $8,612 $8,479 $8,430 $8,558

Subtotal Spent on Operations $4,034 $6,585 $6,585 $7,725 $9,448 $8,576 $8,758 $8,723 $8,832 $8,694 $8,659 $8,795

Additional Cash SpentNon Operating (Other) Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Long-term Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Cash Spent $4,034 $6,585 $6,585 $7,725 $9,448 $8,576 $8,758 $8,723 $8,832 $8,694 $8,659 $8,795

Net Cash Flow ($4,034) ($6,585) ($6,585) ($5,353) ($4,747) ($1,339) ($510) $478 $921 $1,341 $1,551 $1,709Cash Balance $30,667 $24,082 $17,497 $12,143 $7,396 $6,057 $5,547 $6,025 $6,946 $8,286 $9,838 $11,546

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Appendix Table: Balance Sheet

Pro Forma Balance Sheet

AssetsCurrent Assets Starting Balances Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecCash $34,700 $30,667 $24,082 $17,497 $12,143 $7,396 $6,057 $5,547 $6,025 $6,946 $8,286 $9,838 $11,546Accounts Receivable $0 $0 $0 $0 $3,558 $5,865 $6,963 $7,761 $8,492 $8,844 $8,859 $9,061 $9,452Inventory $0 $0 $0 $0 $1,423 $1,682 $2,000 $2,171 $2,384 $2,425 $2,412 $2,499 $2,615Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Current Assets $34,700 $30,667 $24,082 $17,497 $17,124 $14,943 $15,020 $15,479 $16,901 $18,215 $19,558 $21,398 $23,614Long-term AssetsLong-term Assets $25,300 $25,300 $25,300 $25,300 $25,300 $25,300 $25,300 $25,300 $25,300 $25,300 $25,300 $25,300 $25,300Accumulated Depreciation $0 $211 $422 $633 $844 $1,055 $1,266 $1,477 $1,688 $1,899 $2,110 $2,321 $2,532Total Long-term Assets $25,300 $25,089 $24,878 $24,667 $24,456 $24,245 $24,034 $23,823 $23,612 $23,401 $23,190 $22,979 $22,768Total Assets $60,000 $55,756 $48,960 $42,164 $41,580 $39,188 $39,054 $39,302 $40,513 $41,616 $42,748 $44,377 $46,382

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

Accounts Payable $0 $827 $827 $827 $2,684 $1,783 $1,973 $1,920 $2,048 $1,918 $1,864 $1,989 $2,065Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Subtotal Current Liabilities $0 $827 $827 $827 $2,684 $1,783 $1,973 $1,920 $2,048 $1,918 $1,864 $1,989 $2,065

Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Liabilities $0 $827 $827 $827 $2,684 $1,783 $1,973 $1,920 $2,048 $1,918 $1,864 $1,989 $2,065

Paid-in Capital $60,000 $60,000 $60,000 $60,000 $60,000 $60,000 $60,000 $60,000 $60,000 $60,000 $60,000 $60,000 $60,000Retained Earnings $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Earnings $0 ($5,071) ( $11,867) ( $18,663) ($21,103) ( $22,595) ($22,919) ( $22,617) ($21,536) ($20,302) ( $19,116) ( $17,612) ( $15,683)

Total Capital $60,000 $54,929 $48,133 $41,337 $38,897 $37,405 $37,081 $37,383 $38,464 $39,698 $40,884 $42,388 $44,317Total Liabilities and Capital $60,000 $55,756 $48,960 $42,164 $41,580 $39,188 $39,054 $39,302 $40,513 $41,616 $42,748 $44,377 $46,382Net Worth $60,000 $54,929 $48,133 $41,337 $38,897 $37,405 $37,081 $37,383 $38,464 $39,698 $40,884 $42,388 $44,317

Appendix

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Salad Gardens

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