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Table of Contents

1.0 Executive Summary.............................................................................................................................11.1 Objectives ...................................................................................................................................1

Chart: Highlights......................................................................................................................21.2 Mission.......................................................................................... ..............................................21.3 Keys to Success ........................................................................................................................2

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

Table: Star t-up.........................................................................................................................4Table: Start-up Funding..........................................................................................................5Chart: Start-up .........................................................................................................................6

3.0 Services................................................................................................................................................64.0 Market Analysis Summary..................................................................................................................7

4.1 Market Segmentation ................................................................................................................7Table: Market Analysis ...........................................................................................................8Chart: Market Analysis (Pie)..................................................................................................8

4.2 Target Market Segment Strategy.............................................................................................84.3 Service Business Analysis........................................................................................................9

4.3.1 Competition and Buying Patterns................................................................................95.0 Strategy and Implementation Summary..........................................................................................10

5.1 Competitive Edge....................................................................................................................105.2 Marketing Strategy ..................................................................................................................115.3 Sales Strategy..........................................................................................................................11

5.3.1 Sales Forecast............................................................................................................11

Chart: Sales by Year ...................................................................................................12Table: Sales Forecast.................................................................................................13Chart: Sales Monthly ...................................................................................................14

5 4 Milestones 14



Table of ContentsTable: Cash Flow..................................................................................................................23

7.5 Business Ratios.......................................................................................................................23Table: Ratios .........................................................................................................................24

7.6 Projected Balance Sheet........................................................................................................25Table: Balance Sheet...........................................................................................................25

Table: Sales Forecast ...............................................................................................................................1Table: Personnel ........................................................................................................................................2Table: General Assumptions ....................................................................................................................3Table: Profit and Loss ...............................................................................................................................4

Table: Cash Flow.......................................................................................................................................5Table: Balance Sheet ................................................................................................................................6



PC Repair

1.0 Executive Summary

PC Repair will provide computer and technical consulting (repairs, training, networking and

upgrade service) to local small businesses as well as home PC users. The company will focuson marketing, responsiveness, quality, and creating and retaining customer relations.

PC Repair was initially formed as a sole proprietorship, but was reconfigured as an S Corporationin December of 2004. PC Repair will at first be a home office start-up, utilizing one studio room in

the owner's home and serving customers in the local Ramsford-on-Bitstream area. In the thirdmonth of our plan, we will move into a leased office space and hire a second technician. As sales

increase, we will hire additional personnel.

The Market

The very nature of the computing industry, with its extraordinary rate of technologicaldevelopment, creates a constant need for businesses skilled in updating and advising

customers on computer-related issues. In town, the majority of potential customers aredissatisfied with existing options, creating an attractive niche for an innovative start-up. Small

business PC users will provide the majority of our business revenue. Business Week expects thecomputing industry to grow at a rate of 12% and the processor speeds to continue to expand

for years to come, providing a rich resource for sales.

PC Repair has decided to focus mainly on the small business market, as these customers

typically don't have a full-time IT person, but have full-time IT needs. PC Repair will offer anaffordable, on-demand service for these customers. We can also offer maintenance

agreements that generate additional monthly income. For our residential customers, we willoffer a very affordable and helpful service with a very flexible schedule to meet their needs.

Our target market will focus on Ramsford-on-Bitstream and the surrounding areas. Marketresearch indicates there is an abundance of business for a small company such as PC Repair.

Start-up Funding and Financials



PC Repair

1.2 Mission

Our goal is to set the standard for on-site computer solutions through fast, on-site service and

response. Our customers will always receive one-on-one personal attention at a veryaffordable price. Our customers will receive the highest quality of customer service available. Ouremployees will receive extensive training, a great place to work, fair pay and benefits, and

incentives to use their own good judgement to solve customers' problems.



PC Repair

2.1 Company Ownership

PC Repair was initially envisioned as a sole proprietorship in the owner's home. However, recent

feedback from our marketing outreach has suggested a much higher sales potential thanoriginally imagined, and PC Repair has been reformed as an S Corporation. This change willprovide additional legal protection for the owner, and will also streamline the financial

operations of the company as we expand the personnel to 5 within the next three years, lease aseparate space for offices, and purchase company vehicles and cell phones.

The owner, Jack Hacker, has 10 years of experience in the fields of technical support,

networking, and computer training and repair. Jack has also spent the last three years as themanager of a custom computer building and repair store, and understands the computer needs of small businesses.

2.2 Start-up Summary

Total start-up expenses include initial expenses for establishing our website, setting up the

business, and doing our pre-opening advertising. Exact allocations are shown in the table.

The bulk of our start-up requirements are asset needs: we need diagnostic and repair

equipment, half of which will be contributed to the business by the owner from his own materials.We are treating this equipment as assets because we expect it to last at least three years,

and to have some resale value when we are through with it; we will buy additional expensedequipment in years two and three. We also need start-up inventory which includes RAM, spare

hard drives, cables, and cases. Although we will keep expenses to a minimum for the firstthree months, before we move, we will also need cash at start-up, to see us through the nextseveral months with a positive cash balance.



PC Repair

Table: Start-up

Start-up

Requirements

Start-up Expenses

Legal $650

Website $350

Business Cards $100

Insurance $150

Uniforms $300

CPA $275

Advertisement $1,200

Total Start-up Expenses $3,025

Start-up Assets

Cash Required $28,000

Start-up Inventory $1,200

Other Current Assets $10,000

Long-term Assets $0

Total Assets $39,200

Total Requirements $42,225



PC Repair

Table: Start-up Funding

Start-up Funding

Start-up Expenses to Fund $3,025

Start-up Assets to Fund $39,200

Total Funding Required $42,225

Assets

Non-cash Assets from Start-up $11,200

Cash Requirements from Start-up $28,000

Addit ional Cash Raised $0

Cash Balance on Starting Date $28,000

Total Assets $39,200

Liabilities and Capital

Liabilities

Current Borrowing $19,225

Long-term Liabili ties $0

Accounts Payab le (Outstanding Bi ll s) $0

Other Current Liabili ties (interest-free) $0

Total Liabili ties $19,225

Capital

Planned Investment

Owner $23,000

Investor $0

Addit ional Investment Requi rement $0

Total Planned Investment $23,000

Loss at Start-up (Start-up Expenses) ($3,025)

Total Capital $19,975



PC Repair

3.0 Services

PC Repair will offer computer repairs, training, networking and upgrade service to clients in two

major categories: home PC users and small business users. As PC Repair and the clientdemands grow, we will offer software development to our business clients.

From the very first day, we will offer on-site repair and consulting services, so that our clientsd 't d t t k ti t f th i b d t h l t i t k h Thi i th



PC Repair daily records are stored electronically.

4.0 Market Analysis Summary

PC Repair will provide computer support in both a consulting and technical capacity to smallbusiness owners as well as home PC users. Since PC Repair is currently a one man operation,

its growth in the first three months will be limited by the owner's capacity to complete work.However, these first three months are c ritical for establishing our credibility and a reputation

for getting the job done quickly and well. We will focus on delivering excellent service, andusing the good word of mouth from this initial period to network with other potential clients.

Personal market research by the owner indicates an attractive market niche for our services,of which PC Repair will take full advantage. The very nature of the computing industry, with its

extraordinary rate of technological development, creates a constant need for businesses skilledin updating and advising customers on computer-related issues.

National chains, such as "Geeks on Call," and Best Buy's "Geek Squad" have seen rapid growth

in demand for these services in the last few years. Customers are seeking skilled help witheverything from installation of software and hardware components, to networking, to transferring

files from an old computer to a new one. Those who can often enlist their tech-savvychildren's help, but others are not so fortunate, and small-business owners need reliable andquick help with all their computer needs, since every hour down may mean an hour or more of

lost revenue, especially for any business with a website or those doing e-commerce.

4.1 Market Segmentation

The existing computer service market is so extensive that categorizing it is rather difficult. We

have broken our potential market down into two groups, based on their needs: home PC users



PC Repair minor usage, such as updating a business website for a brick-and-mortar store, keeping the

books, designing graphics or ad campaigns, and writing copy for press releases. It may also bemore extensive, incorporating inventory tracking, POS systems, customer databases, online

product /service delivery, or product development. The more intensive their computer usage forbusiness, the more critical it is to them that their technology work well and reliably, and that

quality repairs and support are available in a crisis. Their hardware needs will include the sameitems as home users, plus servers, backup systems, data storage, and wireless networking.

The portion of the small business market we are targeting is growing at around 2% a year.

Table: Market Analysis

Market Analysis

Year 1 Year 2 Year 3 Year 4 Year 5

Potential Customers Growth CAGR

Home PC Users 7% 25,000 26,750 28,623 30,626 32,770 7.00%

Small Business Users 2% 10,000 10,100 10,201 10,303 10,406 1.00%

Other 0% 0 0 0 0 0 0.00%

Total 5.39% 35,000 36,850 38,824 40,929 43,176 5.39%



PC Repair technical assistance.

ComputingNet magazine recently reported on the substantial need for timely and cost-

effec tive c omputer upgrades and repairs in this region; Jack Hacker has seen this market need inperson, as frustrated clients waited for days or weeks for their critical components to be

returned to full capacity, with no inexpensive alternative to the existing computer repairshops. All of our clients need technical assistance, but we are also selling peace of mind: ourclients will know that friendly, efficient help is just a phone call away. As more and more

companies switch their support services to automated call centers or touch-tone menus, thesimple reassurance of hearing another human voice on the phone within a few rings is

immeasurable. Even better is knowing that within a few hours, someone will show up and takecare of their problem.

Both the software and hardware side of the computer industry continue to turn out new andrevised computer components at alarming rates. For PC Repair this means job security well into

the future. As reported by the Wall Street Journal , there seems to be no end to the developmentof the computer market. Business Week expects the computing industry to grow at a rate of

12% and the processor speeds to continue to expand for years to come.

4.3 Service Business Analysis

Secondary market research shows computer service customers tend to be very loyal to providers

that do good work and satisfy their needs. An analysis of PC Repair's main competitors showsno overwhelming strengths that would be significant barriers to entry into the market, as our

local competitors have serious weaknesses.

The computer maintenance and repair industry is fragmented, with a few large, nationalplayers and hundreds of small, local stores. While most computers are actually repaired in-store, near the customer, parts for the repair come from major manufacturers and distributors;

delays in receiving necessary parts can significantly slow down the repair process. Large



PC Repair our great service will turn new clients into permanent clients.

Our services will be second to no one and our prices will be very reasonable for the high quality

service we offer. By providing superior service, word of mouth alone will bring in many newclients. The satisfact ion our consumers find will keep them coming back. There are two main

competitors for the computer upgrade and repair business in this area:

1. Competitor A. They are a well established provider of computer upgrades and

services, and do quick work. However, they have a high staff turnover, a young andinexperienced staff, and are more interested in selling new components than in

maintaining existing machines or finding custom solutions. They do not offer any kind of pick-up and drop-off service, and do not offer on-site help. They really only offer

hardware support.

2. Competitor B. Smaller and less known then A, B provides many services for residents

living in east and south parts of town. They are more willing to spend time with a client,figuring out exactly what his or her needs are, and suggesting new options than

competitor A. However, they have an inefficient ordering system and an unkempt shop,which deters potential customers and can turn existing customers to the competition.

They also do not offer on-site services, although they are considering instituting a trialpick-up/drop-off service. They are in the best position to copy our innovations andsteal customers, but their management is complacent and may not respond to

competition.

Both of these companies charge rates in excess of PC Repair; we will be able to attract theprice-sensitive market without much work.

5.0 Strategy and Implementation Summary

Our Strategy and Implementation turn on three points:



PC Repair customer needs to put into dealing with his computer problem.

· Suprisingly, our small size is an advantage: customers will recognize me (and future

employees), and will know they will get the same great service every time they call.

5.2 Marketing Strategy

Our marketing strategy will aggressively exploit our competitors' weaknesses. During the start-up

phase, we will run large ads in the business section of the local newspaper, asking, "Are youfed up with poor customer service for your computer needs?" These ads will focus on

our advantages, including on-site service, competitive rates, and quick response and turn-around times. They will announce our opening date, and include a coupon for free diagnosticservice for the first 20 customers.

We will follow up on these opening ads with a smaller direct-marketing campaign to small

business owners, with lists drawn from the local Chamber of Commerce. Jack will use hiscontacts with business customers from his years as a manager to create a "buzz" about this new

business.

We will continue periodic advertisements, including several promotions (discounts, free diagnosis,etc.) throughout the first year. We expect a small but steady response from home PC userswho see our ads elsewhere, but will also run monthly ads in sections other than the business

one.

We will offer a promotion during the first 90 days of business to generate business traffic andword of mouth. Our promo is Spyware removal on any desktop PC for $70 including tax and

software. Spyware is a huge problem for a lot of residential and small business customers, andthe offer should draw a lot of interest.



PC Repair agressive TV advertising will increase our residential and small business customer base as well as

word of mouth within the first year. Within a few months we will have the need for additionalemployees to handle the work load. At that time, we will move into a leased space with

additional square footage, and buy a company vehicle to help with the on-site calls.

Our competitors average 75+ calls a month. Given that our advertising will be aggressive, weexpect the same results. The sales forecast is conservative, which gives us a chance to gaugeour experience and adjust the plan accordingly.

We will service all of Ramsford-on-Bitstream, and the surrounding area. We expect that the

majority of our jobs will be performed in the immediate town area. A service technician canperform an average of 3 jobs per day. Our sales forecast predictions are less than that. With our

agressive advertising campaign we expect nominal growth. We predict it will take a few weeksfor the marketing to settle in with customers. However, we are going to offer a promo for ourservices which should generate some substantial results.

The one element of sales not represented in the table below is direct costs for our

maintenance contracts. We estimate these costs at 12% of sales revenue, but expect a delayedoccurrence - that is, we will sell maintenance contracts starting in February, but do not expect

to actually perform maintenance on computers guaranteed under them for the first fewmonths. We will incur more and more costs from these as time goes on, and the computers age -

most of the service in a maintenance contract is performed within the last quarter of thespecified period. Projections for the direct costs for these contracts can be found in the Profitand Loss Table, as other costs of sales.



PC Repair

Table: Sales Forecast

Sales Forecast

Year 1 Year 2 Year 3

Unit Sales

Home PC Unit 166 200 225

Small Business Unit 264 300 350

Promo 235 0 0

Maintenance Contracts 32 60 85

Total Unit Sales 697 560 660

Unit Prices Year 1 Year 2 Year 3

Home PC Unit $280.00 $300.00 $300.00

Small Business Unit $500.00 $600.00 $600.00

Promo $50.00 $0.00 $0.00

Maintenance Contracts $400.00 $600.00 $600.00

Sales

Home PC Unit $46,480 $60,000 $67,500

Small Business Unit $132,000 $180,000 $210,000

Promo $11,750 $0 $0

Maintenance Contracts $12,800 $36,000 $51,000

Total Sales $203,030 $276,000 $328,500

Direct Unit Costs Year 1 Year 2 Year 3

Home PC Unit $84.00 $90.00 $90.00

Small Business Unit $105.00 $126.00 $126.00

Promo $4.00 $0.00 $0.00

Maintenance Contracts $0.00 $0.00 $0.00

Direct Cost of Sales

Home PC Unit $13,944 $18,000 $20,250

Small Business Unit $27,720 $37,800 $44,100

Promo $940 $0 $0



PC Repair

5.4 Milestones

Our milestones, listed in the table below, outline the major events that will promote, as well as

insure the success of PC Repair and keep it a going concern well into the future. We will measureour success in meeting these milestones every month, and adjust the plan to keep up with ourobjectives. Name recognition, in particular, is very important to breaking into this market - we

will conduct a survey by calling 200 randomly selected small businesses from the Chamber of C li ti th ifi d d t d ki th h th th h h d f PC R i



PC Repair

Table: Milestones

Milestones

Milestone Start Date End Date Budget Manager Department

Procurement of materials for

opening

12/1/2004 2/1/2005 $1,200 JMH Department

Start-up Ad Campaign 12/15/2004 2/6/2005 $1,200 JMH Department

Get Loan Approved 1/1/2005 1/17/2005 $0 JMH Department

Open Business 2/7/2005 2/8/2005 $0 JMH Department

Name Recognition by 5% of potential market

2/28/2005 2/28/2005 $0 JMH Department

Meet with Leasing Agent 3/1/2005 3/10/2005 $0 JMH Department

Interview potential Techs 3/1/2005 4/25/2005 $0 JMH Department

Move into Leased Space 4/1/2005 4/10/2005 $2,000 JMH Department

Sign on Leased Vehicle 4/15/2005 4/20/2005 $6,000 JMH Department

Targeted Ads Begin 4/15/2005 5/15/2005 $4,000 JMH Department

1st Tech Starts 5/1/2005 5/1/2005 $0 JMH Department

2nd Round Tech Interviews 7/1/2005 7/31/2005 $0 JMH Department

Direct marketing to Smal l

Businesses

7/1/2005 9/30/2005 $8,000 JMH Department

Increase Name Recognition to

20%

8/1/2005 8/2/2005 $0 JMH Department

2nd Tech Starts 8/1/2005 8/7/2005 $0 JMH Department

Totals $22,400



PC Repair the computer needs of small businesses. Jack is adept at managing his time, and at quickly

responding to multiple customer calls and needs.

For the first three months, Jack will be in charge of all aspects of the business. In the thirdmonth, when another tech is hired, Jack will shift some of his energy from directly responding

to customer needs, to training and managing others to do this work effectively. Jack willmaintain direct control over inventory ordering and bookkeeping, and will try to do as many of the on-site calls as possible himself. Part of our brand recognition strategy is to identify PC

Repair with Jack's efficiency, friendliness, and technical expertise. The easiest way toassociate the two is for Jack to be a major part of many customers' experiences with us. He

will delegate technical repairs later in the year to the techs working in the leased office space,and will also train them in his method of direct phone support.

Jack has worked extensively with computer technicians and support staff in the past, and knowsthat they work best when given free rein within a set of mutually-agreed-upon guidelines. The

first week of each tech's employment will be dedicated to helping them understand PC Repair'sguidelines:

· the customer needs help, and we're here to help them;·

the customer is frustrated, upset, or confused - but that doesn't make the customer aproblem;

· the customer needs reassurance as well as solutions.

Within this framework, the techs can solve the customer's problem the best way they see fit -

Jack is not a micro manager.

6.1 Personnel Plan

Jack Hacker will be the only employee for the first few months; his salary is directly related to

the success of the business, and will never exceed 18% of sales revenue. In the third month, we



PC Repair

7.0 Financial Plan

The following sections include the annual estimates for the standard set of financial tables.

Detailed monthly pro-forma tables are included in the appendix.

Our financial plan calls for limited growth in the first three months, followed by much higher sales

when we move and hire additional employees. These projections are based on sound marketresearch and ratios for comparable businesses. As we grow, we will keep our operating

expenses down, and maintain a positive cash balance as we repay our three-year loan.

7.1 Important Assumptions

PC Repair's customer base would fluctuate if there was a recess in the economy or other

extenuating circumstances that pertain directly to consumer or industry behavior. However,given the steady increase in computer users despite the recent recession, we assume that sales

forecasts are unlikely to be dramatically altered by economic events. The table below showssome of our other assumptions.

Table: General Assumptions

General Assumptions


Plan Month 1 2 3

Current Interest Rate 7.00% 70.00% 70.00%Long-term Interest Rate 10.00% 10.00% 10.00%

Tax Rate 30.00% 30.00% 30.00%

Other 0 0 0



PC Repair

Table: Break-even Analysis

Break-even Analysis

Monthly Units Break-even 52

Monthly Revenue Break-even $15,110

Assumpti ons:

Average Per-Unit Revenue $291.29



PC Repair



PC Repair

Table: Profit and Loss

Pro Forma Profit and Loss


Sales $203,030 $276,000 $328,500

Direct Cost of Sales $42,604 $55,800 $64,350

Costs of Ful fi ll ing Mai ntenance Contracts $1,488 $4,320 $6,120

Total Cost of Sales $44,092 $60,120 $70,470

Gross Margin $158,938 $215,880 $258,030

Gross Margin % 78.28% 78.22% 78.55%

Expenses

Payroll $69,000 $110,000 $115,000

Marketing/Promotion $28,000 $6,000 $12,000

Depreciation $0 $0 $0

Lease $10,000 $12,000 $12,000

Expensed Equipment $0 $10,000 $12,000

Insurance $3,150 $1,200 $1,200

Website $2,080 $480 $480

Answering Service $200 $2,400 $2,400

Mileage $2,660 $5,400 $5,400

Vehicles $13,200 $15,000 $17,000

Cell Phones $1,260 $1,260 $1,260

Util ities $5,000 $6,000 $7,000

Internet $1,200 $1,200 $1,200

Moving Expenses $2,000 $0 $0

Total Operating Expenses $137,750 $170,940 $186,940

Profit Before Interest and Taxes $21,188 $44,940 $71,090

EBITDA $21,188 $44,940 $71,090

Interest Expense $1,097 $6,570 $2,139



PC Repair



PC Repair

Table: Cash Flow

Pro Forma Cash Flow


Cash Received

Cash from Operations

Cash Sales $203,030 $276,000 $328,500

Subtotal Cash from Operations $203,030 $276,000 $328,500

Addit ional Cash ReceivedSales Tax, VAT, HST/GST Received $0 $0 $0

New Current Borrowing $0 $0 $0

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

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

Sales of Other Current Assets $0 $0 $0

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

New Investment Received $0 $0 $0

Subtotal Cash Received $203,030 $276,000 $328,500

Expenditures Year 1 Year 2 Year 3

Expenditures from Operations

Cash Spending $69,000 $110,000 $115,000

Bill Payments $110,873 $142,543 $163,375

Subtotal Spent on Operations $179,873 $252,543 $278,375

Addit ional Cash Spen t

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

Principal Repayment of Current Borrowing $6,564 $6,550 $6,111

Other Liabil ities Principal Repayment $0 $0 $0Long-term Liabili ties Principal Repayment $0 $0 $0

Purchase Other Current Assets $0 $0 $0

Purchase Long-term Assets $0 $0 $0



PC Repair

Table: Ratios

Ratio Anal ysis

Year 1 Year 2 Year 3 Industry Profile

Sales Growth n.a. 35.94% 19.02% 5.23%

Percent of Total Assets

Inventory 8.22% 9.07% 5.90% 2.79%

Other Current Assets 16.81% 12.72% 8.15% 51.19%

Total Current Assets 100.00% 100.00% 100.00% 75.09%

Long-term Assets 0.00% 0.00% 0.00% 24.91%Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabil i ties 42.77% 22.55% 11.07% 31.75%

Long-term Liabili ties 0.00% 0.00% 0.00% 18.48%

Total Liabili ties 42.77% 22.55% 11.07% 50.23%

Net Worth 57.23% 77.45% 88.93% 49.77%

Percent of Sal es

Sales 100.00% 100.00% 100.00% 100.00%

Gross Margin 78.28% 78.22% 78.55% 100.00%

Selling, General & Administrative Expenses 38.70% 65.72% 64.96% 80.06%

Advertising Expenses 0.00% 0.00% 0.00% 1.23%

Profit Before Interest and Taxes 10.44% 16.28% 21.64% 1.95%

Main Ratios

Current 2.34 4.43 9.03 1.53

Quick 2.15 4.03 8.50 1.24

Total Debt to Total Assets 42.77% 22.55% 11.07% 57.27%

Pre-tax Return on Net Worth 59.02% 63.01% 63.16% 2.73%

Pre-tax Return on Assets 33.78% 48.80% 56.17% 6.39%

Addit ional Ratios Year 1 Year 2 Year 3

Net Profit Margin 6.93% 9.73% 14.69% n.a



PC Repair

7.6 Projected Balance Sheet

The Balance Sheet shows a steadily increasing net worth over the next three years. Since we

are planning to rent, and because computer technology changes so rapidly, we will have onlyshort-term assets, such as computer equipment and furniture. This will make our net worth muchmore liquid than many similar businesses.

Table: Balance Sheet

Pro Forma Bal ance Sheet


Assets

Current Assets

Cash $44,593 $61,500 $105,514

Inventory $4,890 $7,129 $7,239

Other Current Assets $10,000 $10,000 $10,000

Total Current Assets $59,482 $78,629 $122,753

Long-term Assets

Long-term Assets $0 $0 $0

Accumulated Deprecia tion $0 $0 $0

Total Long-term Assets $0 $0 $0

Total Assets $59,482 $78,629 $122,753

Liabil ities and Capital Year 1 Year 2 Year 3

Current Liabilities Accounts Payab le $12 ,783 $11 ,620 $13,590

Current Borrowing $12,661 $6,111 $0

Other Current Liabili ties $0 $0 $0



Appendix

Page 1

Table: Sales Forecast

Sales Forecast

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

Unit Sales

Home PC Unit 3 5 3 15 18 20 20 20 17 15 10 20

Small Business Unit 3 3 3 10 25 35 40 45 50 15 10 25

Promo 0 0 10 30 40 0 40 40 40 0 0 35

Maintenance Contracts 0 1 1 2 3 3 3 4 4 3 4 4

Total Unit Sales 6 9 17 57 86 58 103 109 111 33 24 84

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

Home PC Unit $280.00 $280.00 $280.00 $280.00 $280.00 $280.00 $280.00 $280.00 $280.00 $280.00 $280.00 $280.00

Small Business Unit $500.00 $500.00 $500.00 $500.00 $500.00 $500.00 $500.00 $500.00 $500.00 $500.00 $500.00 $500.00

Promo $50.00 $50.00 $50.00 $50.00 $50.00 $50.00 $50.00 $50.00 $50.00 $50.00 $50.00 $50.00

Maintenance Contracts $400.00 $400.00 $400.00 $400.00 $400.00 $400.00 $400.00 $400.00 $400.00 $400.00 $400.00 $400.00

Sales

Home PC Unit $840 $1,400 $840 $4,200 $5,040 $5,600 $5,600 $5,600 $4,760 $4,200 $2,800 $5,600

Small Business Unit $1,500 $1,500 $1,500 $5,000 $12,500 $17,500 $20,000 $22,500 $25,000 $7,500 $5,000 $12,500

Promo $0 $0 $500 $1,500 $2,000 $0 $2,000 $2,000 $2,000 $0 $0 $1,750

Maintenance Contracts $0 $400 $400 $800 $1,200 $1,200 $1,200 $1,600 $1,600 $1,200 $1,600 $1,600

Total Sales $2,340 $3,300 $3,240 $11,500 $20,740 $24,300 $28,800 $31,700 $33,360 $12,900 $9,400 $21,450

Direct Unit Costs Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Home PC Unit 30.00% $84.00 $84.00 $84.00 $84.00 $84.00 $84.00 $84.00 $84.00 $84.00 $84.00 $84.00 $84.00

Small Business Unit 21.00% $105.00 $105.00 $105.00 $105.00 $105.00 $105.00 $105.00 $105.00 $105.00 $105.00 $105.00 $105.00

Promo 8.00% $4.00 $4.00 $4.00 $4.00 $4.00 $4.00 $4.00 $4.00 $4.00 $4.00 $4.00 $4.00

Maintenance Contracts 12.00% $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

Direct Cost of Sales

Home PC Unit $252 $420 $252 $1,260 $1,512 $1,680 $1,680 $1,680 $1,428 $1,260 $840 $1,680

Small Business Unit $315 $315 $315 $1,050 $2,625 $3,675 $4,200 $4,725 $5,250 $1,575 $1,050 $2,625

Promo $0 $0 $40 $120 $160 $0 $160 $160 $160 $0 $0 $140

Maintenance Contracts $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Direct Cost of Sales $567 $735 $607 $2,430 $4,297 $5,355 $6,040 $6,565 $6,838 $2,835 $1,890 $4,445



Appendix

Page 2

Table: Personnel

Personnel Plan

Mon th 1 Mo nth 2 Mo nth 3 Month 4 Month 5 Mon th 6 Mon th 7 Mon th 8 Mon th 9 Month 10 Month 11 Month 12

Owner 0% $2,000 $2,000 $2,500 $2,500 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000

Tech1 0% $0 $0 $0 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400

Tech2 0% $0 $0 $0 $0 $0 $0 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400

Part Time 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total People 1 1 1 2 2 2 3 3 3 3 3 3

Total Payroll $2,000 $2,000 $2,500 $4,900 $5,400 $5,400 $7,800 $7,800 $7,800 $7,800 $7,800 $7,800



Appendix

Page 3

Table: General Assumptions

General Assumptions


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

Current Interest Rate 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00%

Long-term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%

Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%

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



Appendix

Page 4

Table: Profit and Loss

Pro Forma Profit and Loss


Sales $2,340 $3,300 $3,240 $11,500 $20,740 $24,300 $28,800 $31,700 $33,360 $12,900 $9,400 $21,450

Direct Cost of Sales $567 $735 $607 $2,430 $4,297 $5,355 $6,040 $6,565 $6,838 $2,835 $1,890 $4,445

Costs of Fulfilling Maintenance

Contracts

$0 $0 $48 $96 $144 $144 $144 $192 $192 $144 $192 $192

Total Cost of Sales $567 $735 $655 $2,526 $4,441 $5,499 $6,184 $6,757 $7,030 $2,979 $2,082 $4,637

Gross Margin $1,773 $2,565 $2,585 $8,974 $16,299 $18,801 $22,616 $24,943 $26,330 $9,921 $7,318 $16,813

Gross Margin % 75.77% 77.73% 79.78% 78.03% 78.59% 77.37% 78.53% 78.68% 78.93% 76.91% 77.85% 78.38%

Expenses

Payroll $2,000 $2,000 $2,500 $4,900 $5,400 $5,400 $7,800 $7,800 $7,800 $7,800 $7,800 $7,800

Marketing/Promotion $4,000 $1,000 $3,000 $2,000 $2,000 $3,000 $3,000 $2,000 $2,000 $2,000 $2,000 $2,000

Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Lease $0 $0 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000

Expensed Equipment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Insurance $150 $0 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300

Website $40 $40 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200

Answering Service $200 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Mileage $80 $85 $95 $100 $200 $300 $300 $300 $300 $300 $300 $300

Vehicles $0 $0 $6,000 $800 $800 $800 $800 $800 $800 $800 $800 $800

Cell Phones $0 $60 $120 $120 $120 $120 $120 $120 $120 $120 $120 $120

Utilities $0 $0 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500

Internet 15% $0 $0 $120 $120 $120 $120 $120 $120 $120 $120 $120 $120

Moving Expenses $0 $0 $2,000 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Operating Expenses $6,470 $3,185 $15,835 $10,040 $10,640 $11,740 $14,140 $13,140 $13,140 $13,140 $13,140 $13,140

Profit Before Interest and Taxes ($4,697) ($620) ($13,250) ($1,066) $5,659 $7,061 $8,476 $11,803 $13,190 ($3,219) ($5,822) $3,673

EBITDA ($4,697) ($620) ($13,250) ($1,066) $5,659 $7,061 $8,476 $11,803 $13,190 ($3,219) ($5,822) $3,673

Interest Expense $109 $106 $103 $99 $96 $93 $90 $87 $83 $80 $77 $74

Taxes Incurred ($1,442) ($218) ($4,006) ($350) $1,669 $2,090 $2,516 $3,515 $3,932 ($990) ($1,770) $1,080

Net Profit ($3,364) ($508) ($9,347) ($816) $3,894 $4,878 $5,870 $8,201 $9,175 ($2,309) ($4,129) $2,519

Net Profit/Sales -143.77% -15.39% -288.48% -7.09% 18.78% 20.07% 20.38% 25.87% 27.50% -17.90% -43.93% 11.75%



Appendix

Page 5

Table: Cash Flow

Pro Forma Cash Flow


Cash Received

Cash from Operations

Cash Sales $2,340 $3,300 $3,240 $11,500 $20,740 $24,300 $28,800 $31,700 $33,360 $12,900 $9,400 $21,450

Subtotal Cash from Operations $2,340 $3,300 $3,240 $11,500 $20,740 $24,300 $28,800 $31,700 $33,360 $12,900 $9,400 $21,450

Additional Cash Received

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

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

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

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

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

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

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

Subtotal Cash Received $2,340 $3,300 $3,240 $11,500 $20,740 $24,300 $28,800 $31,700 $33,360 $12,900 $9,400 $21,450

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

Expenditures from Operations

Cash Spending $2,000 $2,000 $2,500 $4,900 $5,400 $5,400 $7,800 $7,800 $7,800 $7,800 $7,800 $7,800

Bill Payments $105 $3,102 $2,353 $10,424 $8,954 $13,556 $15,209 $15,896 $16,290 $16,282 $4,550 $4,152

Subtotal Spent on Operations $2,105 $5,102 $4,853 $15,324 $14,354 $18,956 $23,009 $23,696 $24,090 $24,082 $12,350 $11,952

Additional Cash Spent

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

Principal Repayment of Current Borrowing $547 $547 $547 $547 $547 $547 $547 $547 $547 $547 $547 $547

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 $2,652 $5,649 $5,400 $15,871 $14,901 $19,503 $23,556 $24,243 $24,637 $24,629 $12,897 $12,499

Net Cash Flow ($312) ($2,349) ($2,160) ($4,371) $5,839 $4,797 $5,244 $7,457 $8,723 ($11,729) ($3,497) $8,951

Cash Balance $27,688 $25,340 $23,179 $18,809 $24,647 $29,444 $34,688 $42,145 $50,868 $39,139 $35,642 $44,593



Appendix

Page 6

Table: Balance Sheet

Pro Forma Balance Sheet

Mon th 1 Mo nth 2 Mo nth 3 Month 4 Month 5 Mon th 6 Mon th 7 Mon th 8 Mon th 9 Month 10 Month 11 Month 12

Assets Starting Balances

Curren t Assets

Cash $28,000 $27,688 $25,340 $23,179 $18,809 $24,647 $29,444 $34,688 $42,145 $50,868 $39,139 $35,642 $44,593

Inventory $1,200 $633 $898 $1,291 $2,673 $4,727 $5,891 $6,644 $7,222 $7,522 $4,687 $2,797 $4,890

Other Current Assets $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000

Total Current Assets $39,200 $38,321 $36,238 $34,470 $31,482 $39,374 $45,335 $51,332 $59,366 $68,390 $53,826 $48,439 $59,482

Long -term Assets

Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Accumulated Depr eciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Assets $39,200 $38,321 $36,238 $34,470 $31,482 $39,374 $45,335 $51,332 $59,366 $68,390 $53,826 $48,439 $59,482

Liabilities and Capital Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Current Liabilities

Accounts Payable $0 $3,033 $2,004 $10,130 $8,505 $13,05 0 $14,680 $15,354 $15,733 $16,130 $4,422 $3,711 $12,783

Current Borrowing $19,225 $18,678 $18,131 $17,584 $17,037 $16,490 $15,943 $15,396 $14,849 $14,302 $13,755 $13,208 $12,661

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

Subtotal Current Liabilities $19,225 $21,711 $20,135 $27,714 $25,542 $29,540 $30,623 $30,750 $30,582 $30,432 $18,177 $16,919 $25,444

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

Total Liabilities $19,225 $21,711 $20,135 $27,714 $25,542 $29,540 $30,623 $30,750 $30,582 $30,432 $18,177 $16,919 $25,444

Paid-in Capital $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000

Retained Earnings ($3,025) ($3,025) ($3,025) ($3,025) ($3,025) ($3,025) ($3,025) ($3,025) ($3,025) ($3,025) ($3,025) ($3,025) ($3,025)

Earnings $0 ($3,364) ($3,872) ($13,219) ($14,035) ($10,141) ($5,263) $607 $8,809 $17,983 $15,674 $11,544 $14,064

Total Capital $19,975 $16,611 $16,103 $6,756 $5,940 $9,834 $14,712 $20,582 $28,784 $37,958 $35,649 $31,519 $34,039

Total Liabilities and Capital $39,200 $38,321 $36,238 $34,470 $31,482 $39,374 $45,335 $51,332 $59,366 $68,390 $53,826 $48,439 $59,482

Net Worth $19,975 $16,611 $16,103 $6,756 $5,940 $9,834 $14,712 $20,582 $28,784 $37,958 $35,649 $31,519 $34,039

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