Location Kings
Business Plan for the Period
Starting September 2005

Funding the Entrepreneurial Venture
MGT 268

Bryce Foster
Ryan Hoskin

	 

						 

						 
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	 Table of Contents 	
 	
Executive Summary 	
		Business Description 	
		Ownership and Management 	
		Key Initiatives and Objectives 	
		Marketing Opportunities 	
		Competitive Advantages 	
		Marketing Strategy 	
		Summary of Financial Projections 	
Confidentiality and Recognition of Risks 	
		Confidentiality Clause 	
		Recognition of Risk 	
Business Overview 	
		Business History 	
		Vision and Mission Statement 	
		Objectives 	
		Ownership 	
		Location and Facilities 	
Products and Services 	
		Description of Products and Services 	
		Key Features of the Products and Services 	
		Production of Products and Services 	
		Future Products and Services 	
		Comparative Advantages in Production 	
Industry Overview 	
		Market Research 	
		Size of the Industry 	
		Key Product Segments 	
		Key Market Segments 	
		Purchase Process and Buying Criteria 	
		Description of Industry Participants 	
		Key Industry Trends 	
		Industry Outlook 	
Marketing Strategy 	
		Target Markets 	
		Description of Key Competitors 	
		Analysis of Competitive Position 	
		Pricing Strategy 	
		Promotion Strategy 	
		Distribution Strategy 	
Management and Staffing 	
		Organizational Structure 	
		Management Team 	
		Staffing 	
		Labor Market Issues  	
Regulatory Issues 	
		Intellectual Property Protection 	
		Regulatory Issues 	
Risks 	
		Market Risks 	
		Other Risks 	
Implementation Plan 	
		Implementation Activities and Dates 	
Financial Plan 	
		Beginning Balance Sheet 	
		Discussion of Projected Net Income 	
		Discussion of Monthly Cash Flow Statement 	
		Discussion of Projected Annual Cash Flow 	
		Discussion of Pro-Forma Balance Sheet 	
		Discussion of Business Ratios 	
		Pro Forma Income Statement 	
		Cash Flow Statement, Year 1 	
		Three Year Projected Annual Cash Flow 	
		Balance Sheet 	
		Business Ratios 	
		Note 1:  Revenue Assumptions 	
		Note 2:  Assumptions Regarding the Collection of Sales Revenue 	
		Note 3:  Cost of Sales Assumptions 	
		Note 4:  Sales and Marketing Assumptions 	
		Note 5:  Property and Utilities Assumptions 	
		Note 6:  Operations Assumptions 	
		Note 7:  Banking and Other Assumptions 	
		Note 8:  Wages and Other Assumptions 	
		Note 9:  Other Sources of Funding 	
		Note 10:  Other Uses of Funding 	

Executive Summary
Summary of Financial Projections 
Revenue is projected to increase from $492,500 in Fiscal Year 2005 to $816,175 by the end of Fiscal Year 2007. This represents a yearly growth of 31% and 26% in Years 2 and 3 respectively.  It must be noted that the partners' labor is not included in this figure as wages are included in indirect expenses. Wages paid to the partners are projected to total $120,000 in the first year, and remain the same to Year 3, accounting for between 10% and 13% of revenues. Net income is projected to be -$42,010 in Fiscal Year 2005, rising to $61,757 in Fiscal Year 2007.   

 

Confidentiality and Recognition of Risks 
Confidentiality Clause 
The information included in this business plan is strictly confidential and is supplied on the understanding that it will not be disclosed to third parties without the expressed consent of management of The Company. 

 
Recognition of Risk 
This business plan represents our best estimate of the future of The Company. It should be recognized that not all of the major risks can be predicted or avoided and few business plans are free of errors of omission or commission. Therefore, investors should be aware that this business has inherent risks that should be evaluated prior to any investment.  

 

Business Overview 
Business History 
With recent advances in technology, we see the ability to create a device that is capable of performing multiple functions in a small package.  We see the need for safety.  Previously outdoor enthusiasts were taking major risks when venturing into the wild.  With our device they would have the vital link to society in case an emergency occurs. 

 
Vision and Mission Statement 
To provide technological equipment that will make outdoor enthusiasts safer. 

 
Objectives 
 Our primary objectives this year are to: -Obtain a bank loan of $20,000 to cover start up costs and initial operating costs. -Have a working model that can be tested in practice. -Achieve a net profit of $50,000. -Continue to network through associations and industry contacts. 

 
Ownership 
Our company will be an equal partnership, owned and operated by Ryan Hoskin and Bryce Foster of Riverside, California.  The company will be registered as a partnership under the laws of California. 

 
Location and Facilities 
Our company will be located at 2565 Colgate Way, which is also the residence of Ryan Hoskin.  Ryan has a dedicated office area in his home, comprising roughly 500 square feet.  We plan on moving our office to an industrial district finance permitting. 

  

Products and Services 
Description of Products and Services 
The Company will be manufacturing and selling GPS-devices to outdoor enthusiasts.  Our device will be an all-in-one device that works as a GPS mapping system and as a location/distress beacon. The device will be capable of showing your current position of where you are, can download maps to show you where you want to go, and can be used as a locator device in emergency situations. We believe that there is growing demand for these types of products and we believe we can meet the markets needs.  Our research shows indicates that there are no similar devices currently on the market that combines these distinctive features.  There will be no subscription service to use these features that we offer, just the price of the device itself. 

  
Key Features of the Products and Services 
The Company offers what we believe to be a unique GPS device that is not currently available on the market.  There seems to be no devices that offer the services that we are offering that are available in one device.  The Company wants to appeal to a wide range of consumers and want to make the device as functional and easy to use as possible.  We want anybody to be able to the device with ease.  The product has the ability to download maps from our company of anyplace in the world.  These maps can also suggest locations of interest (monuments, parks, restaurants, gas stations) and give you directions to wherever you want to go.  The product can also act as an emergency locator beacon when you get lost or stranded and may be unable to call for help. 

 
Production of Products and Services 
The Company will use existing technology and production processes that are currently available in the market to manufacture our device.  We want to take advantage of the current marketplace and use the knowledge currently available.  We will also look into sub-contracting some parts of the manufacturing processes. 

 
 Future Products and Services 
At this time, The Company does not have any plans for any future products.  However, if the marketplace warrants it, we will look into upgrading the product to try to always give our customers the best possible device available with the most up-to-date services. 

 
Comparative Advantages in Production 
At this time, we do not see that we have a competitive advantage in our production capabilities. 

Industry Overview 
Market Research 
Extensive research has been conducted in looking at the marketability of our proposed product.  Industry analysis was done by using the Hoover's online databases.  Competitor websites were also used to gain insight into the industry and what pressures are present. 

Size of the Industry 
The GPS industry is in a major state of growth.  The capital expenditures have already been used to develop the infrastructure, and the number of new products on the market is growing rapidly.  With technology consistently getting smaller and more powerful, the number of GPS devices has exploded in recent years.   

 

Key Product Segments 
GPS has a myriad of uses as it is able to provide vital positioning and location information.   

Types of GPS Units: -Handheld GPS:  Handheld GPS units are used in the professional and recreation markets.  They provide location and tracking information can by synchronized with a computer.  There are two groups of handheld units:  Mapping GPS and Non-Mapping GPS.  As the names state one has the capability of displaying a map and position in a graphical form while the non-mapping units cannot.  This is made possible by the increase in power of technology. -Automotive GPS:  Auto manufacturers have begun to use GPS as a value-added feature in their products.  Many high-end autos come equipped with GPS and mapping technology that can assist with directions or traffic information.   -Marine GPS:  Many boat owners have also caught on to the benefit of a GPS unit.  Chart Plotters and GPS/Fishfinders are capable of tracking location and the course taken to get there.  These machines are also capable of tracking fishing "hot spots" and can serve as a dual purpose machine displaying fishfinder information as well. -PC/PDA Units:  These products are either stand alone units or can be added on to existing pc/pda units.  Since they typically run on a computer platform they offer their users a wider range of functionality as they can run more applications.  

Key Market Segments 
There are many companies throughout the world that provide GPS devices.  What differentiates our product is that is has a tracking/locater function which is ideal for individuals who find themselves in positions where they are not easily located.   

Our product is ideal for the "outdoor lifestyle" market.  Hikers, skiers, snowboarders, backpackers, and campers will now not only be able to tell where they are, they can tell others where they are.   

Purchase Process and Buying Criteria
Awareness of need:  Those who enjoy the freedom of the outdoors are taking a risk, and that is that they are taking safety into their own hands.  Injuries are commonplace in such environments and accessibility is typically very limited.  Our product will be the lifeline between the wild and safety. 

Search for Information:  The average GPS customer will spend considerable amount of time researching.  The buyers will likely do their research online or in magazines, therefore it is important for our company to gain as much exposure as possible in these arenas.  There are a multitude of substitutable objects, although none has the full functionality of our unit.  Typically GPS buyers will make one purchase every few years or more, which makes each purchasing experience unique.   

Evaluation of Alternatives:  Safety is a priority for many consumers, and that is the distinctive characteristic that differentiates our product from our competitors.  Buyers will look at the various features offered by competitors and will be able to easily see that our product is superior.  

Description of Industry Participants 
There are several other major manufacturers that produce GPS devices.  They produce a wide range of products from Handheld GPS units to Automotive GPS to GPS/Fishfinders.  Some manufacturers have created GPS devices that are compatible with PC's/laptops, cellular phones and PDA's.    

Key Industry Trends 
As technology continually gets smaller, more powerful and less expensive, GPS technology continues to become integrated into more and more devices.   A major trend in the GPS industry is the use of GPS and mapping technology in automobiles.  Many high-end auto manufacturers have integrated GPS into the car so that users can view their current location relative to the streets that surround them.  Some automobiles are even equipped with OnStar, a technology that allows the automobile passengers to get assistance in a time of need.  OnStar is basically the oversized equivalent to our product, although it is mounted to a car body instead of to a human body.    In times of duress the user would be able to signal for help just as an OnStar user can call for help during an automobile accident.   

Demand for GPS technology is continually growing.  Revenues are predicted to hit $4.6 billion in 2006 and up to $22 billion by 2008. 

Industry Outlook 
Within the GPS industry there is virtually no decline in growth.  Every product segment seems to be in a massive growth stage as technology and functionality improves.  Additionally innovations in technology are making GPS devices more users friendly and more accurate. 

Considering that GPS is still at a point where the market is nowhere near saturation and the growth in the technology that is backing GPS is continually improving, the forecast for GPS looks promising. 

 

Marketing Strategy 
Target Markets 
The Company looks to target the outdoor enthusiast.  This is a growing segment within the market and represents the consumer most likely to want or need the type of product and service that we are offering.  Outdoor enthusiasts are people like hikers, mountain bikers, just generally people who like to be outdoors in areas where channels of communication may not exist or are unable to penetrate.  These are places like the mountains, forests, national parks, and even the ocean.  This emerging segment would use our product as a way of feeling secure, so that they always know where they are, or they can be easily tracked and located. 

Description of Key Competitors 
There are many companies out there that offer GPS devices.  They are essentially device manufacturers or resellers; however, their devices offer only map services, they are not able to locate the owner. They are large international companies with a wide array of non-GPS devices as well.  Our competition includes companies such as Garmin Ltd. and Orbital Sciences Corporation.  Essentially our competitors will have many more resources and production capabilities than ourselves and will not exclusively focus on GPS devices like we will. 

  
Analysis of Competitive Position 
The Company will have an advantage over our competitors from our business focus, as we will focus solely on GPS devices.  Our competitors have many more products and a much bigger market focus.  They are stretched out all over the world, which is out of the scope of our capabilities at this time.  This can also be a disadvantage.  Our competitors will have many more resources and customers available to them than our company will since they are international organizations. 

  
Pricing Strategy 
The Company will use a consumer-driven pricing strategy, pricing our product at a competitive position with the rest of the industry, but based on the needs and wants of the consumers.  The company will use an odd-even pricing strategy to differentiate the company from it competitors and will try to offer a competitive price that will give our company a favorable reference pricing position. 

Promotion Strategy 
The Company will advertise in areas frequented by outdoor enthusiasts, such as outdoor equipment sellers or in magazines targeted at the outdoor enthusiast, such as Backpacker magazine and Outdoor Life.  These are magazines that cater to the target consumers that we are looking at.  We will also try to develop promotional relationships with the sellers of our products through the use of personal selling.  As we develop relationships with retailers, we can use their existing promotional activities to help promote our product.  Additional promotional opportunities can be developed through trade shows and direct mail advertising using subscriber information of the magazines that we want to use to go after our target consumers. 

  
Distribution Strategy 
Distribution can be a major issue for a manufacturing company like ours.  Developing a distribution network to transport our product may be difficult.  It is important that we not spread ourselves to far early in the development of the company.  If we are able to develop relationships with purchasing companies as well as potentially with the retailers themselves, we can use their existing distribution networks for national coverage.  However, we will have to develop our own distribution network to get our products to the proper places so that they can reach the proper retailers.  We would like to target retailers such as Big 5 Sporting Goods, SportMart or Sport Chalet to carry our product, as well as some electronics retailers, such as BestBuy or Circuit City.  We will offer limited warranties on all of our devices and offer a customer service call center and mail-in service to try to take care of any problems that may arise from the use of our product. 

Management and Staffing 
Organizational Structure 
Location Kings will be owned and operated as a partnership by Ryan Hoskin and Bryce Foster.  Prashant Patel will be in charge of designing the product and working with manufacturers.  The design of the product will include the integration of several existing technologies.  Ryan and Bryce will be in charge of securing contracts with manufacturers, suppliers and investors.  Private consultants will be used when necessary. 

 
Management Team 
Ryan Hoskin started his career at an early age.  As an undergraduate studying Computer Science at the University of California, Riverside, Ryan took the initiative and took on a programming position at a local information systems development firm, Isca Technologies.  Throughout Ryan's time at Isca he gained valuable learning experience and was able to begin working for Isca's sister company Pherobank Technologies.  After a period of nearly a year Ryan decided to break off from Pherobank and started his own venture as an independent web developer.  Through connections made from Isca and Pherobank as well as through his network of friends though the University, Ryan was able to build a large of clients including Colwell Banker Commercial, Media Environment Design and Acorn Technology.  After graduating with his Bachelor degree, Ryan decided to pursue his M.B.A. where he felt that he could gain additional experience and have the opportunity to network with motivated individuals like himself.  Even before his first year of graduate school was over, Ryan secured two internships.  The first was working for the City of Riverside's Finance Department where Ryan's computer background allowed him to streamline processes and save the city thousands of dollars annually.  The second internship was at a telecommunications and data storage provider known as Swiftcomm.  At the time that Ryan entered Swiftcomm they were just emerging out of bankruptcy.  Ryan had the opportunity to fill a multitude of roles at Acorn including the development of the company image and marketing collateral, developing a formalized internship program, taking charge as the head of the spawning customer service department and assassinating the sales department as well.    Throughout Ryan's time as an M.B.A. he has also held a Teaching Assistant position every quarter and has taught over 400 students, many of whom he still keeps in touch with. 

 
Staffing 
During the startup phase of our business non-management positions will be integrated into the function of the executives. 

 
Labor Market Issues  
At this time there is an oversupply of technically oriented people.  This will make it less difficult to find trustworthy, hard working and intelligent employees. 

 

Regulatory Issues
Intellectual Property Protection 
Where possible, The Company would like to retain ownership of our business processes.  However, at this time, that does not seem to be the case. 

  
Regulatory Issues 
The only license required to operate a business such as this is a business license. The Company will be registered as a (partnership) under (State) law.   

 

Risks 
Market Risks 
With numerous competitors and relatively low barriers to entry, competition within the industry is fairly high.  To counter this challenge, The Company will strive to provide comprehensive service and competitive pricing, as well as a unique product style and service, to stay competitive within this industry. 

 
Other Risks 
Among the risks inherent in any start-up venture are the cultivation of business relationships and the development of a consumer base.  The location of funding can also be a risk when the need for more capital arises. 

  

Implementation Plan 
Implementation Activities and Dates 
In the next several months, PullTech Solutions will undertake the following activities:  

-Obtain approval for an operating loan of up to $20,000.  -Secure the first sales/distribution contract.  -Develop a company promotional website. -Obtain the resources necessary to manufacture, market, and sell our product. 

 

Financial Plan 
Discussion of Projected Net Income 
Revenue is projected to increase from $492,500 in Fiscal Year 2005 to $816,175 by the end of Fiscal Year 2007. This represents a yearly growth of 31% and 26% in Years 2 and 3 respectively.  It must be noted that the partners' labor is not included in this figure as wages are included in indirect expenses. Wages paid to the partners are projected to total $120,000 in the first year, and remain the same to Year 3, accounting for between 10% and 13% of revenues. Net income is projected to be -$42,010 in Fiscal Year 2005, rising to $61,757 in Fiscal Year 2007.  

Sales and marketing expenses average about 5.5% of revenues. These items include advertising brochures and networking lunches. Operations, banking and professional expenses average 21% of revenues and include office supplies, vehicle and travel, bank charges and accounting fees. An accountant will be brought in every month to maintain the books.  

Net income is projected to be -$42,010 in Fiscal Year 2005, rising to $61,757 in Fiscal Year 2007. No income tax is taken from the business since it is a partnership. As such, partners only personal income tax on their own earnings.   

  
Discussion of Monthly Cash Flow Statement 
The partners will both contribute $10,000 to the business during the first month. In addition, a $40,000 operating loan will be required to maintain positive cash flow during the startup phase.  Assuming monthly payments of $2000, and an interest rate of 10%, the loan will be paid off in 22 months. 

 
Discussion of Projected Annual Cash Flow 
The Company will require additional investments of $5,000 each from the partners as well as an additional operating loan in Year 2 to maintain positive cash flow.  

 
Discussion of Pro-Forma Balance Sheet 
The Company's cash position will vary from year to year depending on investments and operating loans. The partners would like to maintain a range of $5,000 to $10,000 in the account to cover unforeseen expenses. The company plans to purchase $20,000 of manufacturing equipment each year which is reflected in an increase in fixed assets every year. 

 
Discussion of Business Ratios 
Average collection period for accounts receivable is projected to be 15 days. This is difficult to compare, as it is difficult to find information on comparable companies.  All other ratios are difficult to compare to the industry standards as it has proven difficult to find comparable industry data.  Our ratios, however, do not look to be within reasonable industry standards at this time. 

 

Location Kings 
PRO FORMA INCOME STATEMENT 
For the Periods Ending August 
 
 	2005	2006	2007	  
Net Sales	492,500	647,500	816,175	  
Direct Cost of Sales	260,000	310,000	397,500	  
Gross Margin	232,500	337,500	418,675	  
				  
Expenses:				  
Sales & Marketing	28,000	35,073	44,880	  
Property & Utilities	73,450	73,450	73,450	  
Operations	74,210	96,075	115,738	  
Banking & Other	38,850	38,850	38,850	  
Other Wages & Benefits	60,000	72,000	84,000	  
Interest Operating Loan	0	0	0	  
Interest Term Loan	0	0	0	  
Depreciation	0	0	0	  
Total Expenses	274,510	315,448	356,918	  
				  
Net Income Before Taxes	-42,010	22,052	61,757	  
Less: Income Taxes	0	0	0	  
Net Income	-42,010	22,052	61,757	  
	 
Location Kings 
PROJECTED CASH FLOW STATEMENT 
For the Year Ending August, 2006 
 
 	Month 1	Month 2	Month 3	Month 4	Month 5	Month 6	Month 7	  
Cash Inflows:								  
Cash Receipts	19,500	23,950	25,950	27,375	27,500	27,500	48,950	  
Other Sources of Funding:								  
Owner Investment	20,000	0	0	0	0	0	0	  
Operating Loan Advances	40,000	0	0	0	0	0	0	  
Term Loan Advances	0	0	0	0	0	0	0	  
Sale of Fixed Assets	0	0	0	0	0	0	0	  
Other Assets	0	0	0	0	0	0	0	  
Total Cash Inflows	79,500	23,950	25,950	27,375	27,500	27,500	48,950	  
								  
Cash Outflows:								  
Payment Of:								  
Cost of Sales Items	20,000	20,000	20,000	20,000	20,000	20,000	20,000	  
Sales & Marketing Items	9,000	2,000	2,000	2,000	2,000	2,000	2,000	  
Operations Items	16,100	6,100	5,850	5,850	5,850	5,850	5,850	  
Property & Utilities Items	10,650	5,650	5,650	5,650	5,650	5,650	5,650	  
Banking & Other Items	15,000	1,000	1,000	1,000	1,000	1,000	11,000	  
Other Wages & Benefits Items	5,000	5,000	5,000	5,000	5,000	5,000	5,000	  
Other Uses of Funding:								  
Repayment of Shareholder Capital	0	0	0	0	0	0	0	  
Payment of Dividends/Earnings	0	0	0	0	0	0	0	  
Term Loan Interest & Principal	0	0	0	0	0	0	0	  
Operating Loan Interest & principal	2,000	2,000	2,000	2,000	2,000	2,000	2,000	  
Purchase of Fixed Assets	50,000	0	0	0	0	0	0	  
Payment of Other Assets	-50,000	0	0	0	0	0	0	  
Payment of Taxes	0	0	0	0	0	0	0	  
Total Cash Outflows	77,750	41,750	41,500	41,500	41,500	41,500	51,500	  
								  
Increase/Decrease in Cash	1,750	-17,800	-15,550	-14,125	-14,000	-14,000	-2,550	  
Beginning Cash Balance	20,000	21,750	3,950	-11,600	-25,725	-39,725	-53,725	  
Closing Cash Balance	21,750	3,950	-11,600	-25,725	-39,725	-53,725	-56,275	  

								
 
 	Month 8	Month 9	Month 10	Month 11	Month 12	Total	  
Cash Inflows:							  
Cash Receipts	51,700	53,625	55,000	55,000	55,000	471,050	  
Other Sources of Funding:							  
Owner Investment	0	0	0	0	0	20,000	  
Operating Loan Advances	0	0	0	0	0	40,000	  
Term Loan Advances	0	0	0	0	0	0	  
Sale of Fixed Assets	0	0	0	0	0	0	  
Other Assets	0	0	0	0	0	0	  
Total Cash Inflows	51,700	53,625	55,000	55,000	55,000	531,050	  
							  
Cash Outflows:							  
Payment Of:							  
Cost of Sales Items	20,000	20,000	20,000	20,000	20,000	240,000	  
Sales & Marketing Items	2,000	2,000	2,000	2,000	2,000	31,000	  
Operations Items	5,850	5,850	5,850	5,850	5,850	80,700	  
Property & Utilities Items	5,650	5,650	5,650	5,650	5,650	72,800	  
Banking & Other Items	1,000	1,000	1,000	1,000	2,000	37,000	  
Other Wages & Benefits Items	5,000	5,000	5,000	5,000	5,000	60,000	  
Other Uses of Funding:							  
Repayment of Shareholder Capital	0	0	0	0	0	0	  
Payment of Dividends/Earnings	0	0	0	0	0	0	  
Term Loan Interest & Principal	0	0	0	0	0	0	  
Operating Loan Interest & principal	2,000	2,000	2,000	2,000	2,000	24,000	
Purchase of Fixed Assets	0	0	0	0	0	50,000	  
Payment of Other Assets	0	0	0	0	0	-50,000	  
Payment of Taxes	0	0	0	0	0	0	  
Total Cash Outflows	41,500	41,500	41,500	41,500	42,500	545,500	  
							  
Increase/Decrease in Cash	10,200	12,125	13,500	13,500	12,500	-14,450	  
Beginning Cash Balance	-56,275	-46,075	-33,950	-20,450	-6,950	20,000	  
Closing Cash Balance	-46,075	-33,950	-20,450	-6,950	5,550	5,550	  
 
Location Kings 
PROJECTED ANNUAL CASH FLOW STATEMENT 
For the Years Ending August 
 
 	2,005	2,006	2,007	  
Cash Inflows:				  
Cash Receipts	471,050	635,950	783,175	  
Other Sources of Funding:				  
Owner Investment	20,000	10,000	10,000	  
Operating Loan Advances	0	0	0	  
Term Loan Advances	40,000	25,000	0	  
Sale of Fixed Assets	0	0	0	  
Other Assets	0	0	0	  
Total Cash Inflows	531,050	670,950	793,175	  
				  
Cash Outflows:				  
Payment Of:				  
Cost of Sales Items	240,000	310,000	397,500	  
Sales & Marketing Items	31,000	34,375	43,498	  
Operations Items	80,700	95,010	114,825	  
Property & Utilities Items	72,800	73,450	73,450	  
Banking & Other Items	37,000	38,850	38,850	  
Other Wages & Benefits Items	60,000	72,000	84,000	  
Other Uses of Funding:				  
Repayment of Shareholder Capital	0	0	0	  
Payment of Dividends/Earnings	0	0	0	  
Term Loan Interest & Principal	0	0	0	  
Operating Loan Interest & principal	24,000	20,000	27,500	  
Purchase of Fixed Assets	50,000	20,000	20,000	  
Payment of Other Assets	-50,000	0	0	  
Payment of Taxes	0	0	0	  
Total Cash Outflows	545,500	663,685	799,623	  
				  
Increase/Decrease in Cash	-14,450	7,265	-6,448	  
Beginning Cash Balance	20,000	5,550	12,815	  
Closing Cash Balance	5,550	12,815	6,367	  
 
		Location Kings 
PRO FORMA BALANCE SHEET 
As at August 
 
 	Starting Balance	2005	2006	2007	  
ASSETS					  
					  
Current Assets:					  
Cash	20,000	5,550	12,815	6,367	  
Accounts Receivable	0	21,450	33,000	66,000	  
Inventory	20,000	10,000	10,000	10,000	  
Other Assets	0	0	0	0	  
Total Current Assets	40,000	37,000	55,815	82,367	  
					  
Fixed Assets:					  
Fixed Assets	20,000	20,000	40,000	60,000	  
Accumulated Depreciation	1,000	1,000	1,000	1,000	  
Total Fixed Assets	19,000	19,000	39,000	59,000	  
					  
TOTAL ASSETS	59,000	56,000	94,815	141,367	  
					  
LIABILITIES & OWNER'S EQUITY					  
					  
Liabilities:					  
Accounts Payable	20,000	23,010	24,773	27,068	  
Taxes Payable	0	0	0	0	  
Operating Loans Payable	20,000	36,000	41,000	13,500	  
Term Loans & Mortgages	0	0	0	0	  
Total Liabilities	40,000	59,010	65,773	40,568	  
					  
Owner's Equity:					  
Paid-in Capital	0	20,000	30,000	40,000	  
Retained Earnings	19,000	-23,010	-958	60,799	  
Total Owner's Equity	19,000	-3,010	29,042	100,799	  
					  
TOTAL LIABILITIES & OWNER'S EQUITY	59,000	56,000	94,815	141,367	  
 
	Location Kings 
RATIO ANALYSIS 
As of August 
 
RATIOS	2005	2006	2007	  
Gross Margin	                 47.21	                 52.12	                 51.30	  
Net Profit Margin	                  -8.53	                  3.41	                  7.57	  
Return on Assets	                 -73.06	                 29.24	                 52.30	  
Average Collection Period Days	                  7.95	                 15.35	                 22.14	  
Inventory Turnover	                 17.33	                 31.00	                 39.75	  
Total Assets Turnover	                  8.57	                  8.59	                  6.91	  
Debt to Net Worth	              -1,960.47	                226.48	                 40.25	  
Return on Owner's Equity	                -525.45	                169.42	                 95.13	  
Times Interest Coverage	                  0.00	                  0.00	                  0.00	  
 
Note 1:  Revenue Assumptions 
a. Our revenue projections by product and by month for the first year are: 
Year 1	The Product	Subscriptions	*****	*****	Total	  
Month 1	25,000	0	0	0	25,000	  
Month 2	25,000	2,500	0	0	27,500	  
Month 3	25,000	2,500	0	0	27,500	  
Month 4	25,000	2,500	0	0	27,500	  
Month 5	25,000	2,500	0	0	27,500	  
Month 6	25,000	2,500	0	0	27,500	  
Month 7	50,000	5,000	0	0	55,000	  
Month 8	50,000	5,000	0	0	55,000	  
Month 9	50,000	5,000	0	0	55,000	  
Month 10	50,000	5,000	0	0	55,000	  
Month 11	50,000	5,000	0	0	55,000	  
Month 12	50,000	5,000	0	0	55,000	  
Total	450,000	42,500	0	0	492,500	  
 
b. Our revenue projections by product for Years 2 and 3 are: 
Year 1	The Product	Subscriptions	*****	*****	Total	  
Year 2	562,500	85,000	0	0	647,500	  
Year 3	703,125	113,050	0	0	816,175	  
 
 	Note 2:  Assumptions Regarding the Collection of Sales Revenue 
a. We assume that the percent of our sales which are collected in the month they are made, in the month following, in the two months, and in the three months are: 
 
Current Month	78	  
In the Following Month	10	  
In Two Months	7	  
In Three Months	5	  
Total	100	  
 
b. Based on these assumptions, we have projected how much we will collect from our sales in each month.  The following table also identifies any adjustments we may have made to these figures. 
 
Year 1	Projected Collections	Adjustment	Revised Estimate	  
Month 1	19,500	0	19,500	  
Month 2	23,950	0	23,950	  
Month 3	25,950	0	25,950	  
Month 4	27,375	0	27,375	  
Month 5	27,500	0	27,500	  
Month 6	27,500	0	27,500	  
Month 7	48,950	0	48,950	  
Month 8	51,700	0	51,700	  
Month 9	53,625	0	53,625	  
Month 10	55,000	0	55,000	  
Month 11	55,000	0	55,000	  
Month 12	55,000	0	55,000	  
Total	471,050	0	471,050

c. Not all of our sales in the first year will be collected during that year.  Based on the assumptions shown above, our Accounts Receivable at the end of Year 1 will be: 
 
 	21,450	  
 
d. We assume that our Accounts Receivable at the end of Years 2 and 3 will be: 
 
Year 2	33,000	  
Year 3	66,000	  
 
	Note 3:  Cost of Sales Assumptions 
a. Our assumptions regarding the amount that we will pay each month in Year 1 for Cost of Sales items listed below.  These figures show up on our cash flow statements. 
 
Year 1	Production Wages	Goods & Materials	*****	*****	Total	  
Month 1	10,000	10,000	0	0	20,000	  
Month 2	10,000	10,000	0	0	20,000	  
Month 3	10,000	10,000	0	0	20,000	  
Month 4	10,000	10,000	0	0	20,000	  
Month 5	10,000	10,000	0	0	20,000	  
Month 6	10,000	10,000	0	0	20,000	  
Month 7	10,000	10,000	0	0	20,000	  
Month 8	10,000	10,000	0	0	20,000	  
Month 9	10,000	10,000	0	0	0	  
Month 10	10,000	10,000	0	0	20,000	  
Month 11	10,000	10,000	0	0	20,000	  
Month 12	10,000	10,000	0	0	20,000	  
Total	120,000	120,000	0	0	240,000	  
 
b. Our assumptions regarding the amount that we will pay in Year 2 and 3 for Cost of Sales items listed below.  These figures show up on our annual Cash Flow Statement. 
 
Year 1	Production Wages	Goods & Materials	*****	*****	Total	  
Year 2	150,000	150,000	0	0	300,000	  
Year 3	187,500	200,000	0	0	387,500	  
 
c. Some of these payments may have been to produce or purchase goods which we won't have sold yet.  We estimate the value of such goods which we will have in inventory at the end of Years 1, 2, and 3 will be: 
 
Year	Inventory	  
Beginning Balance	20,000	  
Year 1	10,000	  
Year 2	10,000	  
Year 3	10,000	  
 
d. Apart from what we have already paid for, there may be additional Cost of Sales goods or services which we have received but we won't have paid for yet.  We estimate the amount that we will owe (have as an Account Payable) for Cost of Sales items at the end of Years 1, 2, and 3 will be: 
 
Year	Cost of Sales Payable	  
Beginning Balance	0	  
Year 1	10,000	  
Year 2	10,000	  
Year 3	10,000	  
 
e. Based on these assumptions, we have calculated our Cost of Sales expenses.  These figures, which show up on our Income Statement, are shown in both dollar values and as a percent of our projected revenues. 
 
Cost of Sales	$	%	  
Year 1	260,000	52.79	  
Year 2	310,000	47.88	  
Year 3	397,500	48.70	  
 
	Note 4:  Sales and Marketing Assumptions 
a. Our assumptions regarding the amount that we will pay each month in Year 1 for Sales and Marketing items are listed below.  These figures show up on our cash flow statements. 
 
Year 1	Advertising	*****	*****	*****	Total	  
Month 1	4,000	0	0	0	4,000	  
Month 2	2,000	0	0	0	2,000	  
Month 3	2,000	0	0	0	2,000	  
Month 4	2,000	0	0	0	2,000	  
Month 5	2,000	0	0	0	2,000	  
Month 6	2,000	0	0	0	2,000	  
Month 7	2,000	0	0	0	2,000	  
Month 8	2,000	0	0	0	2,000	  
Month 9	2,000	0	0	0	2,000	  
Month 10	2,000	0	0	0	2,000	  
Month 11	2,000	0	0	0	2,000	  
Month 12	2,000	0	0	0	2,000	  
Total	26,000	0	0	0	26,000	  
 
b. Our assumptions regarding the amount that we will pay in Year 2 and 3 for Sales and Marketing items are listed below.  These figures show up on our annual Cash Flow Statement. 
 
Year 1	Advertising	*****	*****	*****	Total	  
Year 2	32,375	0	0	0	32,375	  
Year 3	40,800	0	0	0	40,800	  
 
c. Apart from what we have already paid for, there may be additional Sales and Marketing items which we have received by we won't have paid for yet.  We estimate the amount that we will owe (have as an Account Payable) for Sales and Marketing items at the end of Years 1, 2, and 3 will be: 

Year	Sales and Marketing Payable	  
Beginning Balance	5,000	  
Year 1	2,000	  
Year 2	2,698	
Year 3	4,080	  
 
d. Based on these assumptions, we have calculated our Sales and Marketing expenses.  These figures, which show up on our Income Statement, are shown in both dollar values and as a percent of our projected revenues. 

Sales and Marketing	$	%	  
Year 1	28,000	5.69	  
Year 2	35,073	5.42	  
Year 3	44,880	5.50	  
 
	Note 5:  Property and Utilities Assumptions 
a. Our assumptions regarding the amount that we will pay each month in Year 1 for Property & Utilities items are listed below.  These figures show up on our cash flow statements. 
 
Year 1	Rent & Property	Utilities	Telephone	Other	Total	  
Month 1	5,000	500	100	50	5,650	  
Month 2	5,000	500	100	50	5,650	  
Month 3	5,000	500	100	50	5,650	  
Month 4	5,000	500	100	50	5,650	  
Month 5	5,000	500	100	50	5,650	  
Month 6	5,000	500	100	50	5,650	  
Month 7	5,000	500	100	50	5,650	  
Month 8	5,000	500	100	50	5,650	  
Month 9	5,000	500	100	50	5,650	  
Month 10	5,000	500	100	50	5,650	  
Month 11	5,000	500	100	50	5,650	  
Month 12	5,000	500	100	50	5,650	  
Total	60,000	6,000	1,200	600	67,800	  
 
b. Our assumptions regarding the amount that we will pay in Year 2 and 3 for Property & Utilities items are listed below.  These figures show up on our annual Cash Flow Statement. 
 
Year 1	Rent & Property	Utilities	Telephone	Other	Total	  
Year 2	60,000	6,000	1,200	600	67,800	  
Year 3	60,000	6,000	1,200	600	67,800	  
 
c. Apart from what we have already paid for, there may be additional Property & Utilities items which we have received by we won't have paid for yet.  We estimate the amount that we will owe (have as an Account Payable) for Property & Utilities items at the end of Years 1, 2, and 3 will be: 
 
Year	Property & Utilities Payable	  
Beginning Balance	5,000	  
Year 1	5,650	  
Year 2	5,650	  
Year 3	5,650	  
 
d. Based on these assumptions, we have calculated our Property & Utilities expenses.  These figures, which show up on our Income Statement, are shown in both dollar values and as a percent of our projected revenues. 
 
Property and Utilities	$	%	  
Year 1	73,450	14.91	  
Year 2	73,450	11.34	  
Year 3	73,450	9.00	  
 
	Note 6:  Operations Assumptions 
a. Our assumptions regarding the amount that we will pay each month in Year 1 for Operations items are listed below.  These figures show up on our cash flow statements. 
 
Year 1	Supplies	Repair and Maintenance	Vehicles and Travel	Licenses and Permits	Other Assets Expensed	Total	  
Month 1	5,000	0	600	500	0	6,100	  
Month 2	5,000	500	600	0	0	6,100	  
Month 3	5,000	250	600	0	0	5,850	  
Month 4	5,000	250	600	0	0	5,850	  
Month 5	5,000	250	600	0	0	5,850	  
Month 6	5,000	250	600	0	0	5,850	  
Month 7	5,000	250	600	0	0	5,850	  
Month 8	5,000	250	600	0	0	5,850	  
Month 9	5,000	250	600	0	0	5,850	  
Month 10	5,000	250	600	0	0	5,850	  
Month 11	5,000	250	600	0	0	5,850	
Month 12	5,000	250	600	0	0	5,850	  
Total	60,000	3,000	7,200	500	0	70,700	  
 
b. Our assumptions regarding the amount that we will pay in Year 2 and 3 for Operations items are listed below.  These figures show up on our annual Cash Flow Statement. 
 
Year 1	Supplies	Repair and Maintenance	Vehicles and Travel	Licenses and Permits	Other Assets Expensed	Total	  
Year 2	75,000	6,000	10,000	500	0	91,500	  
Year 3	93,750	6,000	10,000	500	0	110,250	  
 
c. Apart from what we have already paid for, there may be additional Operations items which we have received by we won't have paid for yet.  We estimate the amount that we will owe (have as an Account Payable) for Operations items at the end of Years 1, 2, and 3 will be: 
 
Year	Operations Payable	  
Beginning Balance	10,000	
Year 1	3,510	  
Year 2	4,575	  
Year 3	5,488	  
 
d. Based on these assumptions, we have calculated our Operations expenses.  These figures, which show up on our Income Statement, are shown in both dollar values and as a percent of our projected revenues. 
Operations	$	%	  
Year 1	74,210	15.07	  
Year 2	96,075	14.84	  
Year 3	115,738	14.18	  
 
Note 7:  Banking and Other Assumptions 
a. Our assumptions regarding the amount that we will pay each month in Year 1 for Banking & Other items are listed below.  These figures show up on our cash flow statements. 
 
 	Bank Charges	Accounting & Legal	Insurance	Other	Total	  
Month 1	0	5,000	10,000	0	15,000	  
Month 2	0	1,000	0	0	1,000	  
Month 3	0	1,000	0	0	1,000	  
Month 4	0	1,000	0	0	1,000	  
Month 5	0	1,000	0	0	1,000	  
Month 6	0	1,000	0	0	1,000	  
Month 7	0	1,000	10,000	0	11,000	  
Month 8	0	1,000	0	0	1,000	  
Month 9	0	1,000	0	0	1,000	  
Month 10	0	1,000	0	0	1,000	  
Month 11	0	1,000	0	0	1,000	  
Month 12	0	2,000	0	0	2,000	  
Total	0	17,000	20,000	0	37,000	  
 
b. Our assumptions regarding the amount that we will pay in Year 2 and 3 for Banking & Other items are listed below.  These figures show up on our annual Cash Flow Statement. 
 
 	Bank Charges	Accounting & Legal	Insurance	Other	Total	  
Year 2	0	17,000	20,000	0	37,000	  
Year 3	0	17,000	20,000	0	37,000	  
 
c. Apart from what we have already paid for, there may be additional Banking & Other items which we have received by we won't have paid for yet.  We estimate the amount that we will owe (have as an Account Payable) for Banking & Other items at the end of Years 1, 2, and 3 will be:
 
Year	Amount Payable	  
Beginning Balance	0	  
Year 1	1,850	  
Year 2	1,850	  
Year 3	1,850	  
 
d. Based on these assumptions, we have calculated our Banking & Other expenses.  These figures, which show up on our Income Statement, are shown in both dollar values and as a percent of our projected revenues. 
 
Banking and Other	$	%	  
Year 1	38,850	7.89	  
Year 2	38,850	6.00	  
Year 3	38,850	4.76	  
 
	Note 8:  Wages and Other Assumptions 
a. Our assumptions regarding the amount that we will pay each month in Year 1 for Wages & Other items are listed below.  These figures show up on our cash flow statements. 
 
Year 1	Owners Salaries	*****	*****	*****	Total	  
Month 1	5,000	0	0	0	5,000	  
Month 2	5,000	0	0	0	5,000	  
Month 3	5,000	0	0	0	5,000	  
Month 4	5,000	0	0	0	5,000	  
Month 5	5,000	0	0	0	5,000	  
Month 6	5,000	0	0	0	5,000	  
Month 7	5,000	0	0	0	5,000	  
Month 8	5,000	0	0	0	5,000	  
Month 9	5,000	0	0	0	5,000	  
Month 10	5,000	0	0	0	5,000	  
Month 11	5,000	0	0	0	5,000	  
Month 12	5,000	0	0	0	5,000	  
Total	60,000	0	0	0	60,000	  
 
b. Our assumptions regarding the amount that we will pay in Year 2 and 3 for Wages & Other items are listed below.  These figures show up on our annual Cash Flow Statement. 
 
Year 1	Owners Salaries	*****	*****	*****	Total	  
Year 2	72,000	0	0	0	72,000	  
Year 3	84,000	0	0	0	84,000	  
 
c. Apart from what we have already paid for, there may be additional Wages & Other items which we have received by we won't have paid for yet.  We estimate the amount that we will owe (have as an Account Payable) for Wages & Other items at the end of Years 1, 2, and 3 will be: 
 
Year	Wages and Payable	  
Beginning Balance	0	  
Year 1	0	  
Year 2	0	  
Year 3	0	  
 
d. Based on these assumptions, we have calculated our Wages & Other expenses.  These figures, which show up on our Income Statement, are shown in both dollar values and as a percent of our projected revenues. 
 
Wages and Other	$	%	  
Year 1	60,000	12.18	  
Year 2	72,000	11.12	  
Year 3	84,000	10.29	  
 
	Note 9:  Other Sources of Funding 
a. Our assumptions regarding other sources of funding for our business in Year 1 are: 

	Investment by Owners	Operating Loan Advances	Term Loan Advances	Sales of Fixed Assets	Other Assets	  
Month 1	20,000	40,000	0	0	0	  
Month 2	0	0	0	0	0	  
Month 3	0	0	0	0	0	  
Month 4	0	0	0	0	0	  
Month 5	0	0	0	0	0	  
Month 6	0	0	0	0	0	  
Month 7	0	0	0	0	0	  
Month 8	0	0	0	0	0	  
Month 9	0	0	0	0	0	  
Month 10	0	0	0	0	0	  
Month 11	0	0	0	0	0	  
Month 12	0	0	0	0	0	  
Total	20,000	40,000	0	0	0	  
 
b. Our assumptions regarding other sources of funding for Years 2 and 3 are: 
 
	Investment by Owners	Operating Loan Advances	Term Loan Advances	Sales of Fixed Assets	Other Assets	  
Year 2	10,000	25,000	0	0	0	  
Year 3	10,000	0	0	0	0	  
 
	Note 10:  Other Uses of Funding 
a. Our assumptions regarding payments to owners and repayment of loan principal and interest in Year 1 are: 
 
Payment or Repayment of	Capital to Shareholders	Dividends/Earnings Shareholders	Operating Loan Interest & Principle	Term Loan Interest & Principle	  
Month 1	0	0	2,000	0	  
Month 2	0	0	2,000	0	  
Month 3	0	0	2,000	0	  
Month 4	0	0	2,000	0	  
Month 5	0	0	2,000	0	  
Month 6	0	0	2,000	0	  
Month 7	0	0	2,000	0	  
Month 8	0	0	2,000	0	  
Month 9	0	0	2,000	0	  
Month 10	0	0	2,000	0	  
Month 11	0	0	2,000	0	  
Month 12	0	0	2,000	0	  
Total	0	0	24,000	0	  
 
b. Our assumptions regarding payments to owners and repayment of loan principal and interest in Years 2 and 3 are: 
 
Payment or Repayment of	Capital to Shareholders	Dividends/Earnings Shareholders	Operating Loan Interest & Principle	Term Loan Interest & Principle	  
Year 2	0	0	20,000	0	  
Year 3	0	0	27,500	0	  
 
c. Our assumptions regarding other payments in Year 1 are: 
 
Other Uses of Funds	Purchase of Fixed Assets	Payments for Other Assets	Payment for Income Taxes	  
Month 1	0	0	0	  
Month 2	0	0	0	  
Month 3	0	0	0	  
Month 4	0	0	0	  
Month 5	0	0	0	  
Month 6	0	0	0	  
Month 7	0	0	0	  
Month 8	0	0	0	  
Month 9	0	0	0	  
Month 10	0	0	0	  
Month 11	0	0	0	  
Month 12	0	0	0	  
Total	0	0	0	  
 
d. Our assumptions regarding other payments in Year 2 and 3 are: 
 
Other Uses of Funds	Purchase of Fixed Assets	Payments for Other Assets	Payment for Income Taxes	  
Year 2	20,000	0	0	  
Year 3	20,000	0	0