Drone Shop, Inc.

Strategic Business Plan

The information in this document is confidential and is to be only read

by authorized parties. Please refer to the confidentiality agreement for
further details. This business plan is not an offering for securities.
 Confidentiality Agreement

The undersigned reader acknowledges that the information provided in this business plan
is confidential; therefore, the reader agrees not to disclose it without the express written
permission of or an authorized agent of Drone Shop, Inc.

It is acknowledged by the reader that information furnished in this business plan is in all
respects confidential in nature, other than information which is in the public domain
through other means and that any disclosure or use of same by reader, and may cause
serious harm or damage to aforementioned parties.

This business plan is not to be copied or reproduced by any means without the sole
written consent of an authorized agent of Drone Shop, Inc.

Upon request, this document is to be immediately returned.

__________________________________ _______________
Signature Date

_______________________________
Name (typed or printed)

2
 Table of Contents

1.0 Executive Summary...................................................................................................... 4

1.1 The Products ............................................................................................................. 4
1.2 Financing................................................................................................................... 4
1.3 Mission Statement..................................................................................................... 4
1.4 Management Team.................................................................................................... 4
1.5 Sales Forecasts .......................................................................................................... 5
1.6 Expansion Plan.......................................................................................................... 5
2.0 Company and Financing Summary............................................................................... 6
2.1 Registered Name and Corporate Structure ............................................................... 6
2.2 Required Funds ......................................................................................................... 6
2.3 Investor Equity.......................................................................................................... 6
2.4 Management Equity .................................................................................................. 7
2.5 Exit Strategy.............................................................................................................. 7
3.0 Products and Services ................................................................................................... 8
3.1 Sales of Drone Products............................................................................................ 8
3.2 Online Sales of Products........................................................................................... 8
4.0 Strategic and Market Analysis ...................................................................................... 9
4.1 Economic Outlook .................................................................................................... 9
4.2 Industry Analysis ...................................................................................................... 9
4.3 Customer Profile ....................................................................................................... 9
4.4 Competition............................................................................................................. 10
5.0 Marketing Plan............................................................................................................ 11
5.1 Marketing Objectives.............................................................................................. 11
5.2 Marketing Strategies ............................................................................................... 11
5.3 Pricing ..................................................................................................................... 11
6.0 Organizational Plan and Personnel Summary ............................................................ 12
6.1 Corporate Organization........................................................................................... 12
6.2 Organizational Budget ............................................................................................ 12
6.3 Management Biographies ....................................................................................... 13
7.0 Financial Plan ............................................................................................................. 14
7.1 Underlying Assumptions ........................................................................................ 14
7.2 Sensitivity Analysis ................................................................................................ 14
7.3 Source of Funds ...................................................................................................... 14
7.4 General Assumptions .............................................................................................. 14
7.5 Profit and Loss Statements...................................................................................... 15
7.6 Cash Flow Analysis ................................................................................................ 16
7.8 Breakeven Analysis ................................................................................................ 18
Three Year Profit and Loss Statement.............................................................................. 19
Three Year Cash Flow Analysis ....................................................................................... 23

3
 1.0 Executive Summary

The purpose of this business plan is to raise $100,000 for the development of a drones
and related radio controlled toy products store while showcasing the expected financials
and operations over the next three years. Drone Shop, Inc. (“the Company”) is a New
York based corporation that will provide sales of drones and related radio controlled toy
products to customers in its targeted market. The Company was founded by John Doe.

1.1 The Products

As stated above, the Company will specialize in carrying a number of hobby related
products through its retail location. These products include, but are not limited to radio
controlled drones, model airplanes, other radio controlled devices, and high end drones
and related radio controlled toy products.

The Company will generate substantial secondary revenues from sales of drones and
related radio controlled toy products through an e-commerce platform.

The third section of the business plan will further describe the services offered by the
Drone Shop.

1.2 Financing

Mr. Doe is seeking to raise $100,000 from as a bank loan. The interest rate and loan
agreement are to be further discussed during negotiation. This business plan assumes that
the business will receive a 10 year loan with a 9% fixed interest rate. The financing will
be used for the following:

 Development of the Company’s Drone Shop location.

 Financing for the first six months of operation.
 Capital to purchase inventories of drones and related radio controlled toy
products.

Mr. Doe will contribute $10,000 to the venture.

1.3 Mission Statement

Drone Shop’s mission is to become the recognized leader in its targeted market for
having an expansive inventory of drone and radio controlled products.

1.4 Management Team

The Company was founded by John Doe. Mr. Doe has more than 10 years of experience
in the retail management and radio-controlled toy industry. Through his expertise, he will
be able to bring the operations of the business to profitability within its first year of
operations.

4
1.5 Sales Forecasts

Mr. Doe expects a strong rate of growth at the start of operations. Below are the expected
financials over the next three years.

Proforma Profit and Loss (Yearly)

Year 1 2 3
Sales $487,578 $526,584 $568,711
Operating Costs $264,854 $275,382 $286,419
EBITDA $64,353 $80,161 $97,568
Taxes, Interest, and Depreciation $37,299 $39,610 $45,813
Net Profit $27,054 $40,551 $51,755

Sales, Operating Costs, and Profit Forecast

$600,000

$500,000

$400,000

$300,000 Sales

$200,000 EBITDA
Net Profit
$100,000

$0
1 2 3
Year

1.6 Expansion Plan

The Founder expects that the business will aggressively expand during the first three
years of operation. Mr. Doe intends to implement marketing campaigns that will
effectively target individuals within the target market and on an online basis. The
business will use substantial pay-per-click and search engine optimization marketing
techniques so that the business can effectively reach an audience of hobbyists that have
an extensive interest in drone technology.

5
 2.0 Company and Financing Summary

2.1 Registered Name and Corporate Structure

Drone Shop, Inc. The Company is registered as a corporation in the State of New York.

2.2 Required Funds

At this time, the Drone Shop requires $100,000 of debt funds. Below is a breakdown of
how these funds will be used:

Projected Startup Costs

Initial Lease Payments and Deposits $10,000
Working Capital $35,000
FF&E $23,000
Leasehold Improvements $5,000
Security Deposits $5,000
Insurance $2,500
Inventories $17,000
Marketing Budget $7,500
Miscellaneous and Unforeseen Costs $5,000
Total Startup Costs $110,000

Use of Funds

Initial Lease Payments and Deposits

7% 5% 9%
Working Capital
15% FF&E
Leasehold Improvements
Security Deposits
31% Insurance
2%
Inventories
5% 5%
Marketing Budget
21%
Miscellaneous and Unforeseen Costs

2.3 Investor Equity

Mr. Doe is not seeking an investment from a third party at this time.

6
2.4 Management Equity

John Doe owns 100% of the Drone Shop, Inc.

2.5 Exit Strategy

If the business is very successful, Mr. Doe may seek to sell the business to a third party
for a significant earnings multiple. Most likely, the Company will hire a qualified
business broker to sell the business on behalf of the Drone Shop. Based on historical
numbers, the business could fetch a sales premium of up to 4 times earnings.

7
 3.0 Products and Services

Below is a description of the products offered by the Drone Shop.

3.1 Sales of Drone Products

As stated in the executive summary, the Drone Shop will carry a number of premium
drones and related radio controlled toy products and brands that are in demand among the
general public. As the store will act in a general drone shop capacity, its product lines
will include, but are not limited to:

 Drones
 Drone Parts
 DIY Drone Kits
 Related Radio Controlled Devices

3.2 Online Sales of Products

The Company will generate secondary revenues from the sale of these products through a
Company branded online platform. This online platform will be developed once Drone
Shop, Inc. has developed its traditional retail operations. However, this is an extremely
important aspect to the Company’s operations as it will provide a significant amount of
additional revenue for the business. The business may also list its inventories on third
party sales platforms.

8
 4.0 Strategic and Market Analysis

4.1 Economic Outlook

This section of the analysis will detail the economic climate, the drone shop industry, the
customer profile, and the competition that the business will face as it progresses through
its business operations.

Currently, the economic market condition in the United States is moderate.

Unemployment rates have declined while asset prices have risen substantially. As such,
now is a strong climate for launching a new business. However, hobbies are extremely
popular among their respective fan bases, and the customers that purchase these goods
will continue to do so in any economic climate, including recessions, as it is a form of
lower cost entertainment and enjoyment.

4.2 Industry Analysis

Within the United States, there are approximately 5,000 stores that solely specialize in
the sale of radio controlled toy products, specialized toys, and games. Each year, these
businesses aggregately generate more than $1.8 billion of sales while concurrently
providing payrolls of $200 million. The industry employs approximately 15,000 people.

This is a mature industry, but one of the most common trends is for hobby stores
(especially individually owned stores) is to develop e-commerce capabilities. Drone
Shop, Inc. intends to capitalize on this trend once its retail operations have been
established.

4.3 Customer Profile

Drone Shop’s average client will be a middle to upper middle class man living in the
Company’s target market. Common traits among clients will include:

 Annual household income exceeding $50,000

 Lives or works no more than 15 miles from the Company’s location.
 Will spend $25 to $700 per visit to the Drone Shop

Among businesses that will make purchases with the Company, Management has
developed the following demographic profile:

 Operates as a real estate brokerage or photographer

 Will spend $1,000 to $5,000 per purchase order with the Company.
 Operates within the United States.

Within the United States, there are more than 15 million people that have an interest in
drone technology as a hobby. Additionally, the business will seek to develop ongoing
relationships with photographers and real estate brokerages that want to capture aerial

9
images and videos. This is an important customer base given that these companies will
not retract their drone purchases during times of economic recession. These buyers will
help ensure that Drone Shop, Inc. is able to remain profitable and cash flow positive in
any economic climate.

4.4 Competition

Competition in the field of drone technology is starting to solidify. There are a number of
companies within this market that provide an expansive inventory of drone products
through retail stores as well as online sales channels. The number of companies selling
drones within these markets is expected to increase significantly over the next ten years.
As such, it is imperative that Drone Shop, Inc. maintain an expansive marketing
campaign at all times in order to increase brand awareness.

10
 5.0 Marketing Plan

Drone Shop, Inc. intends to maintain an extensive marketing campaign that will ensure
maximum visibility for the business in its targeted market. Below is an overview of the
marketing strategies and objectives of the business.

5.1 Marketing Objectives

 Develop an online presence by developing a website and placing the Company’s

name and contact information with online directories.
 Implement a local campaign with the Company’s targeted market via the use of
flyers, local newspaper advertisements, and word of mouth advertising.

5.2 Marketing Strategies

Mr. Doe intends on using a number of marketing strategies that will allow the Drone
Shop to easily target men (and women to a lesser extent) within the target market. These
strategies include traditional print advertisements and ads placed on search engines on the
Internet. Below is a description of how the business intends to market its services to the
general public.

Drone Shop, Inc. will also use an internet based strategy. This is very important as many
people seeking local retailers, such as drone shops, now the Internet to conduct their
preliminary searches. Mr. Doe will register the Drone Shop with online portals so that
potential customers can easily reach the business. The Company will also develop its own
online website, which will feature e-commerce ordering functionality. The business will
aggressively use search engine optimization and pay-per-click marketing in order to
boost visibility of the website during the early years of operation.

Drone Shop, Inc. will also market its products directly to professional photographers and
real estate brokerage that have aerial photography needs. As many drones now have
video technology installed, the demand among these companies for drone technology has
increased significantly. This trend is expected to continue in perpetuity. As such, the
business will send a substantial amount of literature to these companies in order to boost
the visibility of the business among business owners and photography professionals.

5.3 Pricing

On average, each sale will generate $400 of revenue for the Company.

11
 6.0 Organizational Plan and Personnel Summary

6.1 Corporate Organization

Senior Management

Retail Operations Administrative Staff

Store Management Accounting

E-Commerce Management Sales - Marketing

Inventory Management Administrative

6.2 Organizational Budget

Personnel Plan - Yearly

Year 1 2 3
Owner $40,000 $41,200 $42,436
Store Manager $35,000 $36,050 $37,132
Store Employees $52,500 $54,075 $55,697
Bookkeeper (P/T) $12,500 $12,875 $13,261
Administrative $20,000 $20,600 $21,218
Total $160,000 $164,800 $169,744

Numbers of Personnel
Year 1 2 3
Owner 1 1 1
Store Manager 1 1 1
Store Employees 3 3 3
Bookkeeper (P/T) 1 1 1
Administrative 1 1 1
Totals 7 7 7

12
6.2 Organizational Budget (Cont.)

Personnel Expense Breakdown

13%
25% Owner
8%
Store Manager
Store Employees
Bookkeeper (P/T)
32% 22% Administrative

6.3 Management Biographies

In this section of the business plan, you should write a two to four paragraph biography
about your work experience, your education, and your skill set. For each owner or key
employee, you should provide a brief biography in this section.

13
 7.0 Financial Plan

7.1 Underlying Assumptions

The Company has based its proforma financial statements on the following:

 Drone Shop, Inc. will have an annual revenue growth rate of 8% per year.
 The Owner will acquire $100,000 of debt funds to develop the business.
 The loan will have a 10 year term with a 9% interest rate.

7.2 Sensitivity Analysis

In the event of an economic downturn, the business may have a decline in its revenues.
Hobby products and supplies are not necessities, and an economic recession may have an
impact on the Company’s ability to generate sales as consumers have less discretionary
income. However, the business will be able to remain profitable and cash flow positive
given its high margins from both retail and online sales.

7.3 Source of Funds

Financing
Equity Contributions
Management Investment $10,000.00

Total Equity Financing $10,000.00

Banks and Lenders
Banks and Lenders $100,000.00
Total Debt Financing $100,000.00
Total Financing $110,000.00

7.4 General Assumptions

General Assumptions
Year 1 2 3
Short Term Interest Rate 9.5% 9.5% 9.5%
Long Term Interest Rate 10.0% 10.0% 10.0%
Federal Tax Rate 33.0% 33.0% 33.0%
State Tax Rate 5.0% 5.0% 5.0%
Personnel Taxes 15.0% 15.0% 15.0%

14
7.5 Profit and Loss Statements

Proforma Profit and Loss (Yearly)

Year 1 2 3
Sales $487,578 $526,584 $568,711
Cost of Goods Sold $158,371 $171,041 $184,724
Gross Margin 67.52% 67.52% 67.52%

Operating Income $329,207 $355,543 $383,987

Expenses
Payroll $160,000 $164,800 $169,744
General and Administrative $10,000 $10,400 $10,816
Marketing Expenses $19,503 $21,063 $22,748
Professional Fees and Licensure $3,500 $3,605 $3,713
Insurance Costs $9,500 $9,975 $10,474
Travel and Vehicle Costs $7,500 $8,250 $9,075
Rent and Utilities $25,000 $26,250 $27,563
Miscellaneous Costs $5,851 $6,319 $6,825
Payroll Taxes $24,000 $24,720 $25,462
Total Operating Costs $264,854 $275,382 $286,419

EBITDA $64,353 $80,161 $97,568

Federal Income Tax $21,236 $23,770 $29,733
State Income Tax $3,218 $3,601 $4,505
Interest Expense $8,738 $8,131 $7,468
Depreciation Expenses $4,107 $4,107 $4,107

Net Profit $27,054 $40,551 $51,755

Profit Margin 5.55% 7.70% 9.10%

Sales, Operating Costs, and Profit Forecast

$600,000

$500,000

$400,000

$300,000 Sales

$200,000 EBITDA
Net Profit
$100,000

$0
1 2 3
Year

15
7.6 Cash Flow Analysis

Proforma Cash Flow Analysis - Yearly

Year 1 2 3
Cash From Operations $31,161 $44,658 $55,862
Cash From Receivables $0 $0 $0
Operating Cash Inflow $31,161 $44,658 $55,862

Other Cash Inflows

Equity Investment $10,000 $0 $0
Increased Borrowings $100,000 $0 $0
Sales of Business Assets $0 $0 $0
A/P Increases $37,902 $43,587 $50,125
Total Other Cash Inflows $147,902 $43,587 $50,125

Total Cash Inflow $179,063 $88,246 $105,987

Cash Outflows
Repayment of Principal $6,463 $7,070 $7,733
A/P Decreases $24,897 $29,876 $35,852
A/R Increases $0 $0 $0
Asset Purchases $57,500 $11,165 $13,965
Dividends $21,813 $31,261 $39,103
Total Cash Outflows $110,673 $79,372 $96,653

Net Cash Flow $68,390 $8,874 $9,334

Cash Balance $68,390 $77,264 $86,598

Proforma Cash Flow (Yearly)

$180,000
$160,000
$140,000
$120,000
$100,000
Total Cash Inflow
$80,000
$60,000 Total Cash Outflows
$40,000 Cash Balance
$20,000
$0
1 2 3
Year

16
7.7 Balance Sheet

Proforma Balance Sheet - Yearly

Year 1 2 3
Assets
Cash $68,390 $77,264 $86,598
Amortized Development/Expansion Costs $17,500 $18,616 $20,013
Inventories $17,000 $22,582 $29,565
FF&E $23,000 $27,466 $33,052
Accumulated Depreciation ($4,107) ($8,214) ($12,321)
Total Assets $121,783 $137,714 $156,907

Liabilities and Equity

Accounts Payable $13,005 $26,716 $40,990
Long Term Liabilities $93,537 $86,467 $79,397
Other Liabilities $0 $0 $0
Total Liabilities $106,542 $113,183 $120,387

Net Worth $15,241 $24,532 $36,520

Total Liabilities and Equity $121,783 $137,714 $156,907

Proforma Balance Sheet

$160,000
$140,000
$120,000
$100,000
$80,000 Total Assets
$60,000 Total Liabilities
$40,000 Net Worth
$20,000
$0
1 2 3
Year

17
7.8 Breakeven Analysis

Monthly Break Even Analysis

Year 1 2 3
Monthly Revenue $32,689 $33,988 $35,351
Yearly Revenue $392,267 $407,860 $424,206

Break Even Analysis

$500,000
$400,000
$300,000
$200,000 Monthly Revenue
$100,000 Yearly Revenue
$0
1 2 3
Year

7.9 Business Ratios

Business Ratios - Yearly

Year 1 2 3
Sales
Sales Growth 0.0% 8.0% 8.0%
Gross Margin 67.5% 67.5% 67.5%

Financials
Profit Margin 5.55% 7.70% 9.10%
Assets to Liabilities 1.14 1.22 1.30
Equity to Liabilities 0.14 0.22 0.30
Assets to Equity 7.99 5.61 4.30

Liquidity
Acid Test 0.64 0.68 0.72
Cash to Assets 0.56 0.56 0.55

18
 Three Year Profit and Loss Statement

Profit and Loss Statement (First Year)

Months 1 2 3 4 5 6 7
Sales $39,900 $40,033 $40,166 $40,299 $40,432 $40,565 $40,698
Cost of Goods Sold $12,960 $13,003 $13,046 $13,090 $13,133 $13,176 $13,219
Gross Margin 67.5% 67.5% 67.5% 67.5% 67.5% 67.5% 67.5%

Operating Income $26,940 $27,030 $27,120 $27,209 $27,299 $27,389 $27,479

Expenses
Payroll $13,333 $13,333 $13,333 $13,333 $13,333 $13,333 $13,333
General and Administrative $833 $833 $833 $833 $833 $833 $833
Marketing Expenses $1,625 $1,625 $1,625 $1,625 $1,625 $1,625 $1,625
Professional Fees and Licensure $292 $292 $292 $292 $292 $292 $292
Insurance Costs $792 $792 $792 $792 $792 $792 $792
Travel and Vehicle Costs $625 $625 $625 $625 $625 $625 $625
Rent and Utilities $2,083 $2,083 $2,083 $2,083 $2,083 $2,083 $2,083
Miscellaneous Costs $488 $488 $488 $488 $488 $488 $488
Payroll Taxes $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
Total Operating Costs $22,071 $22,071 $22,071 $22,071 $22,071 $22,071 $22,071

EBITDA $4,869 $4,959 $5,048 $5,138 $5,228 $5,318 $5,408

Federal Income Tax $1,738 $1,744 $1,749 $1,755 $1,761 $1,767 $1,773
State Income Tax $263 $264 $265 $266 $267 $268 $269
Interest Expense $750 $746 $742 $738 $734 $730 $726
Depreciation Expense $342 $342 $342 $342 $342 $342 $342

Net Profit $1,775 $1,862 $1,949 $2,037 $2,124 $2,211 $2,298

19
Profit and Loss Statement (First Year Cont.)
Month 8 9 10 11 12 1
Sales $40,831 $40,964 $41,097 $41,230 $41,363 $487,578
Cost of Goods Sold $13,262 $13,306 $13,349 $13,392 $13,435 $158,371
Gross Margin 67.5% 67.5% 67.5% 67.5% 67.5% 67.5%

Operating Income $27,569 $27,658 $27,748 $27,838 $27,928 $329,207

Expenses
Payroll $13,333 $13,333 $13,333 $13,333 $13,333 $160,000
General and Administrative $833 $833 $833 $833 $833 $10,000
Marketing Expenses $1,625 $1,625 $1,625 $1,625 $1,625 $19,503
Professional Fees and Licensure $292 $292 $292 $292 $292 $3,500
Insurance Costs $792 $792 $792 $792 $792 $9,500
Travel and Vehicle Costs $625 $625 $625 $625 $625 $7,500
Rent and Utilities $2,083 $2,083 $2,083 $2,083 $2,083 $25,000
Miscellaneous Costs $488 $488 $488 $488 $488 $5,851
Payroll Taxes $2,000 $2,000 $2,000 $2,000 $2,000 $24,000
Total Operating Costs $22,071 $22,071 $22,071 $22,071 $22,071 $264,854

EBITDA $5,497 $5,587 $5,677 $5,767 $5,857 $64,353

Federal Income Tax $1,778 $1,784 $1,790 $1,796 $1,802 $21,236
State Income Tax $269 $270 $271 $272 $273 $3,218
Interest Expense $722 $718 $714 $710 $706 $8,738
Depreciation Expense $342 $342 $342 $342 $342 $4,107

Net Profit $2,385 $2,472 $2,560 $2,647 $2,734 $27,054

20
Profit and Loss Statement (Second Year)
2
Quarter Q1 Q2 Q3 Q4 2
Sales $105,317 $131,646 $142,178 $147,444 $526,584
Cost of Goods Sold $34,208 $42,760 $46,181 $47,891 $171,041
Gross Margin 67.5% 67.5% 67.5% 67.5% 67.5%

Operating Income $71,109 $88,886 $95,997 $99,552 $355,543

Expenses
Payroll $32,960 $41,200 $44,496 $46,144 $164,800
General and Administrative $2,080 $2,600 $2,808 $2,912 $10,400
Marketing Expenses $4,213 $5,266 $5,687 $5,898 $21,063
Professional Fees and Licensure $721 $901 $973 $1,009 $3,605
Insurance Costs $1,995 $2,494 $2,693 $2,793 $9,975
Travel and Vehicle Costs $1,650 $2,063 $2,228 $2,310 $8,250
Rent and Utilities $5,250 $6,563 $7,088 $7,350 $26,250
Miscellaneous Costs $1,264 $1,580 $1,706 $1,769 $6,319
Payroll Taxes $4,944 $6,180 $6,674 $6,922 $24,720
Total Operating Costs $55,076 $68,846 $74,353 $77,107 $275,382

EBITDA $16,032 $20,040 $21,643 $22,445 $80,161

Federal Income Tax $4,754 $5,942 $6,418 $6,656 $23,770
State Income Tax $720 $900 $972 $1,008 $3,601
Interest Expense $2,092 $2,053 $2,013 $1,973 $8,131
Depreciation Expense $1,027 $1,027 $1,027 $1,027 $4,107

Net Profit $7,439 $10,118 $11,213 $11,781 $40,551

21
Profit and Loss Statement (Third Year)
3
Quarter Q1 Q2 Q3 Q4 3
Sales $113,742 $142,178 $153,552 $159,239 $568,711
Cost of Goods Sold $36,945 $46,181 $49,876 $51,723 $184,724
Gross Margin 67.5% 67.5% 67.5% 67.5% 67.5%

Operating Income $76,797 $95,997 $103,676 $107,516 $383,987

Expenses
Payroll $33,949 $42,436 $45,831 $47,528 $169,744
General and Administrative $2,163 $2,704 $2,920 $3,028 $10,816
Marketing Expenses $4,550 $5,687 $6,142 $6,370 $22,748
Professional Fees and Licensure $743 $928 $1,003 $1,040 $3,713
Insurance Costs $2,095 $2,618 $2,828 $2,933 $10,474
Travel and Vehicle Costs $1,815 $2,269 $2,450 $2,541 $9,075
Rent and Utilities $5,513 $6,891 $7,442 $7,718 $27,563
Miscellaneous Costs $1,365 $1,706 $1,843 $1,911 $6,825
Payroll Taxes $5,092 $6,365 $6,875 $7,129 $25,462
Total Operating Costs $57,284 $71,605 $77,333 $80,197 $286,419

EBITDA $19,514 $24,392 $26,343 $27,319 $97,568

Federal Income Tax $5,947 $7,433 $8,028 $8,325 $29,733
State Income Tax $901 $1,126 $1,216 $1,261 $4,505
Interest Expense $1,932 $1,889 $1,846 $1,802 $7,468
Depreciation Expense $1,027 $1,027 $1,027 $1,027 $4,107

Net Profit $9,708 $12,917 $14,226 $14,904 $51,755

22
 Three Year Cash Flow Analysis

Cash Flow Analysis (First Year)

Month 1 2 3 4 5 6 7 8
Cash From Operations $2,118 $2,205 $2,292 $2,379 $2,466 $2,553 $2,640 $2,727
Cash From Receivables $0 $0 $0 $0 $0 $0 $0 $0
Operating Cash Inflow $2,118 $2,205 $2,292 $2,379 $2,466 $2,553 $2,640 $2,727

Other Cash Inflows

Equity Investment $10,000 $0 $0 $0 $0 $0 $0 $0
Increased Borrowings $100,000 $0 $0 $0 $0 $0 $0 $0
Sales of Business Assets $0 $0 $0 $0 $0 $0 $0 $0
A/P Increases $3,159 $3,159 $3,159 $3,159 $3,159 $3,159 $3,159 $3,159
Total Other Cash Inflows $113,159 $3,159 $3,159 $3,159 $3,159 $3,159 $3,159 $3,159

Total Cash Inflow $115,276 $5,363 $5,450 $5,537 $5,624 $5,711 $5,799 $5,886

Cash Outflows
Repayment of Principal $517 $521 $525 $528 $532 $536 $540 $545
A/P Decreases $2,075 $2,075 $2,075 $2,075 $2,075 $2,075 $2,075 $2,075
A/R Increases $0 $0 $0 $0 $0 $0 $0 $0
Asset Purchases $57,500 $0 $0 $0 $0 $0 $0 $0
Dividends $0 $0 $0 $0 $0 $0 $0 $0
Total Cash Outflows $60,092 $2,595 $2,599 $2,603 $2,607 $2,611 $2,615 $2,619

Net Cash Flow $55,185 $2,768 $2,851 $2,934 $3,017 $3,100 $3,183 $3,267
Cash Balance $55,185 $57,952 $60,803 $63,737 $66,755 $69,855 $73,038 $76,305

23
Cash Flow Analysis (First Year Cont.)
Month 9 10 11 12 1
Cash From Operations $2,815 $2,902 $2,989 $3,076 $31,161
Cash From Receivables $0 $0 $0 $0 $0
Operating Cash Inflow $2,815 $2,902 $2,989 $3,076 $31,161

Other Cash Inflows

Equity Investment $0 $0 $0 $0 $10,000
Increased Borrowings $0 $0 $0 $0 $100,000
Sales of Business Assets $0 $0 $0 $0 $0
A/P Increases $3,159 $3,159 $3,159 $3,159 $37,902
Total Other Cash Inflows $3,159 $3,159 $3,159 $3,159 $147,902

Total Cash Inflow $5,973 $6,060 $6,148 $6,235 $179,063

Cash Outflows
Repayment of Principal $549 $553 $557 $561 $6,463
A/P Decreases $2,075 $2,075 $2,075 $2,075 $24,897
A/R Increases $0 $0 $0 $0 $0
Asset Purchases $0 $0 $0 $0 $57,500
Dividends $0 $0 $0 $21,813 $21,813
Total Cash Outflows $2,623 $2,627 $2,632 $24,449 $110,673

Net Cash Flow $3,350 $3,433 $3,516 -$18,214 $68,390

Cash Balance $79,655 $83,088 $86,604 $68,390 $68,390

24
Cash Flow Analysis (Second Year)
2
Quarter Q1 Q2 Q3 Q4 2
Cash From Operations $8,932 $11,165 $12,058 $12,504 $44,658
Cash From Receivables $0 $0 $0 $0 $0
Operating Cash Inflow $8,932 $11,165 $12,058 $12,504 $44,658

Other Cash Inflows

Equity Investment $0 $0 $0 $0 $0
Increased Borrowings $0 $0 $0 $0 $0
Sales of Business Assets $0 $0 $0 $0 $0
A/P Increases $8,717 $10,897 $11,769 $12,204 $43,587
Total Other Cash Inflows $8,717 $10,897 $11,769 $12,204 $43,587

Total Cash Inflow $17,649 $22,061 $23,826 $24,709 $88,246

Cash Outflows
Repayment of Principal $1,708 $1,747 $1,787 $1,827 $7,070
A/P Decreases $5,975 $7,469 $8,067 $8,365 $29,876
A/R Increases $0 $0 $0 $0 $0
Asset Purchases $2,233 $2,791 $3,014 $3,126 $11,165
Dividends $6,252 $7,815 $8,440 $8,753 $31,261
Total Cash Outflows $16,169 $19,823 $21,308 $22,072 $79,372

Net Cash Flow $1,480 $2,239 $2,518 $2,637 $8,874

Cash Balance $69,870 $72,109 $74,627 $77,264 $77,264

25
Cash Flow Analysis (Third Year)
3
Quarter Q1 Q2 Q3 Q4 3
Cash From Operations $11,172 $13,965 $15,083 $15,641 $55,862
Cash From Receivables $0 $0 $0 $0 $0
Operating Cash Inflow $11,172 $13,965 $15,083 $15,641 $55,862

Other Cash Inflows

Equity Investment $0 $0 $0 $0 $0
Increased Borrowings $0 $0 $0 $0 $0
Sales of Business Assets $0 $0 $0 $0 $0
A/P Increases $10,025 $12,531 $13,534 $14,035 $50,125
Total Other Cash Inflows $10,025 $12,531 $13,534 $14,035 $50,125

Total Cash Inflow $21,197 $26,497 $28,617 $29,676 $105,987

Cash Outflows
Repayment of Principal $1,869 $1,911 $1,954 $1,999 $7,733
A/P Decreases $7,170 $8,963 $9,680 $10,038 $35,852
A/R Increases $0 $0 $0 $0 $0
Asset Purchases $2,793 $3,491 $3,771 $3,910 $13,965
Dividends $7,821 $9,776 $10,558 $10,949 $39,103
Total Cash Outflows $19,653 $24,141 $25,963 $26,896 $96,653

Net Cash Flow $1,545 $2,356 $2,654 $2,780 $9,334

Cash Balance $78,809 $81,164 $83,818 $86,598 $86,598

26