Box Werkz Business Plan

BoxWerkz, Inc.

Business Plan

By: Stephen Shepherd

Table of Contents

1.0 Executive Summary......................................................................................................................21.1 Objectives.....................................................................................................................................21.2 Mission...........................................................................................................................................21.3 Keys to Success..........................................................................................................................2

2.0 Company Summary......................................................................................................................22.1 Company Ownership................................................................................................................22.2 Start-up Summary.....................................................................................................................2

Table: Start-up...............................................................................................................................23.0 Products and Services.................................................................................................................24.0 Market Analysis Summary.........................................................................................................2

4.1 Market Segmentation..............................................................................................................2Table: Market Analysis................................................................................................................2

4.2 Target Market Segment Strategy........................................................................................24.3 Service Business Analysis......................................................................................................2

4.3.1 Competition and Buying Patterns................................................................................25.0 Strategy and Implementation Summary..............................................................................2

5.1 Strengths......................................................................................................................................25.2 Weaknesses.................................................................................................................................25.3 Opportunities..............................................................................................................................25.4 Threats...........................................................................................................................................25.5 Competitive Edge......................................................................................................................25.6 Marketing Strategy...................................................................................................................25.7 Sales Strategy.............................................................................................................................2

5.7.1 Sales Forecast.....................................................................................................................2Table: Sales Forecast...............................................................................................................2

5.8 Milestones....................................................................................................................................2Table: Milestones..........................................................................................................................2

6.0 Management Summary...............................................................................................................26.1 Personnel Plan............................................................................................................................2

Table: Personnel............................................................................................................................27.0 Financial Plan..................................................................................................................................2

7.1 Start-up Funding........................................................................................................................2Table: Start-up Funding..............................................................................................................2

7.2 Important Assumptions...........................................................................................................27.3 Break-even Analysis.................................................................................................................2

Table: Break-even Analysis.......................................................................................................27.4 Projected Profit and Loss........................................................................................................2

Table: Profit and Loss..................................................................................................................27.5 Projected Cash Flow.................................................................................................................2

Table: Cash Flow...........................................................................................................................27.6 Projected Balance Sheet.........................................................................................................2

Table: Balance Sheet...................................................................................................................27.7 Business Ratios..........................................................................................................................2

Table: Ratios...................................................................................................................................2

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BoxWerkz Business Plan

1.0 Executive Summary

Sales

Gross Margin

Net Profit

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

FY 2009 FY 2010 FY 2011

Highlights

1.1 Objectives

To provide short to medium run boxes commercially in the Dallas/Fort Worth area. With costs on everything sky rocketing upward for all businesses, we expect demand for small volume orders of boxes to increase dramatically.

To maintain a minimum of 55% profit margin on all sales. Short run and quick turn around orders would have a much higher margin.

In the period of October 2008 to October 2009 to do $264,000 in gross sales. To have the company at sales of over 1,000,000 by the third year of operation.

1.2 Mission

BoxWerkz will provide the Dallas/Fort Worth area with a resource to obtain short to medium run boxes in special sizes with affordable prices, quick turn around and the highest customer service. It is our goal to match our capabilities with our customer's needs to form long term business relationships. We want our customers to be so happy with the quality of product and the service they receive that they will order from us again and again. BoxWerkz will strive to make itself a place that our employees are proud to work for by treating all with respect and listening to what they have to say.

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1.3 Keys to Success

1. Nothing will happen unless someone sells full time. There are thousands of potential customers in this market that we must go and see. They will not order from us unless they know we are here.

2. We must provide a quality product. They must at least get as good a box as they are use to but we will strive to give better products.

3. We must have a quick turn around. More profits come from moving as fast as our customers need us to.

2.0 Company Summary

With cost exploding upward for virtually all businesses the demand for smaller volume orders of boxes will increase dramatically. Businesses simply can't afford to inventory excess boxes for long periods of time. There are market niches that are under served that present great opportunity. Boxes are an established need that will never go away. The equipment to manufacture boxes is relatively inexpensive and the learning curve of operate is very short. BoxWerkz will be located in Lewisville, Texas and service the Dallas/Fort Worth area.

2.1 Company Ownership

We formed BoxWerkz as an S Corporation to keep our ownership private for now. We have issued 100,000 authorized shares. The primary ownership will be Stephen Shepherd and Keith Steele with 48% each. James Nix and Bradley Nix combine for 4%. Keith Steele is our Chairman of the Board, Stephen Shepherd is President, James Nix is the CFO and Bradley is the Secretary.

2.2 Start-up Summary

In summary, BoxWerkz is a start up company in the business of making boxes. We have located a space that would be needed for this type operation that is a Warehouse/office combination. It is located in an industrial area in Lewisville, Texas at 821 E. Main. We have around 2,000+ square feet and our cost is $1,800 a month. We have the option to double our space for an additional $700 a month in the same facility. We have paid the security deposit of $1,800 and rent starts September 2, 2008.

The box making equipment we would start with would be a Box maker, Slitter and Dye Cutter. We found all these items used and in very good condition. We ordered this equipment and have it on the way. Our cost was $56,500. We would also need a glue gun, air compressor, fork truck (used) and delivery vehicle (like a used van). We will wait for the truck until needed. I will put a camper shell on my personal pickup truck to do deliveries for now. We would need a supply of corrugated sheets of cardboard stock to make boxes with (1,000 sheets). We may want to put in a small supply of tape and packing materials to sell our customers to compliment our core business.

To set the office up I would get two desks, chairs and file cabinet. We would need two phone lines and a fax line. I would put in a used multi-functional copier that would also serve as my

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fax and printer. I have some computers we will use but we will need to buy a laptop for presentations. I would build a counter for the office area and build a large staging table, as well as some smaller tables, in the warehouse.

We would need to put together some marketing handouts, letterhead, business cards and develop a web site.

Table: Start-up

Start-up

Requirements

Start-up Expenses

Stationery etc. $750 Insurance $1,276 Rent $1,800 consulting $200 Business trip for company research $1,000 Build out expenses $3,000 Shipping expenses $2,000 Total Start-up Expenses $10,026

Start-up Assets

Cash Required $42,500 Start-up Inventory $5,000 Other Current Assets $3,000 Long-term Assets $69,500 Total Assets $120,000

Total Requirements $130,026

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

$180,000

$200,000

Expenses Assets Investment Loans

Start-up

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3.0 Products and ServicesWhen a manufacturer designs a product for market they don't design it with a standard size box in mind. They make the product and then get a box or boxes to ship, custom made, to fit the application they developed. Typically they order a large amount of the boxes needed to get price breaks. The problem with that is they have to store them for long periods of time while they use them up. The product design could change and all the boxes bought could become useless. The space for storage is also not free.

What BoxWerkz is offering is an alternative. Why buy more now that you need? Why store boxes for a year when you could have what you need delivered to you every month as you need it. Why pay for all those boxes in advance and risk losing the investment? What if your sales go up or down and you need less or more? Can you buy more boxes at the same volume price? Will your large volume box supplier take boxes back if you don't need as many as you thought when you placed that big order? BoxWerkz will make your boxes to the sizes you need and the amount you need this month (or what ever time frame you are under). We will make them and deliver them to you on time every time. We can make any box in any size (within reason) other than die cut boxes.

4.0 Market Analysis Summary

According to Jerry Jenkins, owner of Lake View Sales LLC, any operation that ships products is worth looking into. Jerry's company sells the equipment that makes the boxes. He has been in this industry for many years and has sold to others with a similar concept as BoxWerkz. He does point out that mass production, volume box users such, as food processors, would be better supplied by large multi million dollar box production plants.

Jerry has identified the following as good prospects:

Packaging Distributors Independent Pack & Mail Furniture Manufacturers Architectural Features e.g.,lighting fixtures, display cases, etc. Specialty Manufacturing ego., roll up security doors Art Dealers (arts and crafts manufacturers) Parts Distribution Centers Freight Consolidators Contract Packaging Folding Carton and Display Manufacturers Aerospace & Defense Industry Logistics Technology Automotive and Aircraft Components Chemicals/Pharmaceuticals/Cosmetics Makers

The U.S. Census Bureau has a Web site where they post number from every major metropolitan area in the United States. Dallas is the 4th largest metropolitan area in the U.S. with 6.1 million people living here. As of the last census, Dallas/Fort Worth had 6,365 companies in the manufacturing business sub sector. In the wholesale trade business, Dallas/Fort Worth had 9,596 companies in this sub sector. In transportation and warehousing, DFW had 3,121 companies in this sub sector. In these three areas alone BoxWerkz would have 19,082 companies to call on.

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To reach our targets of 500K in the second year and 1 million in the third we would have to have 150 customers that would average 7 jobs a day, 22 days a month(500K mark) and double that for the 1 million mark. We have plenty of target accounts to go for.

4.1 Market Segmentation

Table: Market Analysis

Market Analysis

2008 2009 2010 2011 2012

Potential Customers Growth CAGR

Manufacturing 7% 6,365 6,811 7,288 7,798 8,344 7.00% Transportation and Warehousing 12% 3,121 3,496 3,916 4,386 4,912 12.01% Wholesale Trade 9% 9,596 10,460 11,401 12,427 13,545 9.00% Total 8.86% 19,082 20,767 22,605 24,611 26,801 8.86%

Manufacturing

Transportation and Warehousing

Wholesale Trade

Market Analysis (Pie)

4.2 Target Market Segment Strategy

4.3 Service Business AnalysisIn the Dallas/Fort Worth market there are some box makers like International Paper, PCA, Liberty Carton and Bates Container company. These are very large box makers that specialize in large quantity orders. They print on the boxes for there customers. BoxWerkz is not in this same arena. We are looking for customers that do not want to keep large quantities of boxes laying around and taking up space. We will make shorter run boxes as our customers need them. We can make them as large or small as they need. We have very little competition in this market doing what we do. A good order to us would be 200 boxes a month from each of our customers. We will make one if that is all they need. Copier companies have to ship back

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lease returns and need boxes in non-standard sizes. Display makers have all kinds of odd sizes of fixtures they need to ship. A furniture store may not have the original box to ship back a broken sofa. We can make them and deliver the boxes when and where our customers want and need them. I talked to a company today that will be manufacturing wine racks for a wine store that is nation wide. They said they would need boxes made to fit the wine racks. They don't know if this product will be a big hit so why would they order a large quantity of boxes that may never be used and take up space in the warehouse. Because of our short run and fast delivery we will be able to make more margin on the quicker turn around and shipping charges and still save our customers money.

4.3.1 Competition and Buying Patterns

BoxWerkz has little competition doing what we will do. We will be selling business-to-business with outside sales call on target accounts and telephone solicitation. Our target accounts will order boxes monthly or at least quarterly as they need them. Some may order twice or three time a month. Everyone who ships products needs a box. Our market (Dallas/Fort Worth) is full of companies that need boxes. We just need to show them there is a better way than ordering large quantities of boxes they may never use.

5.0 Strategy and Implementation Summary

5.1 Strengths

Our first strength is that we are not going to just put an advertisement in the Yellow Pages and wait for customers to come to us. We have a strong sales background in business to business sales with Stephen Shepherd and Keith Steele. We have both been top sales people as well as sales management. We have both been in this market for years and know hundreds of contacts we have called on in the past that can use our services. We will be aggressive in getting our name as well as products and services offered out to prospective customers.

Our second strength is that we offer services no one else can unless they are one of the big box makers. We will have a Auto Box box make for corrugated boxes which is one of the best in the world. We will have a large Slitter that is 120" across with 4 rolls to score and cut cardboard. We will also have a Dye Cutter that will separate us into the area of specialty boxes. We will be able to make a box in any size and shape. We will sell standard size boxes like some box stores but that will only be a small part of what we do. The same goes for supplies, they will ask for them so we will supply them.

Our third strength is that we will deliver our customers orders to them. We will always give them quick turn around and speedy service.

5.2 Weaknesses

We are bringing a new concept to the box world. In America most businesses buy on the volume discount when it comes to boxes. Large box makers have minimum sized orders so many will order just once a year and store them until they use them. We are offering to supply them monthly/quarterly and they will have no storage problems or cost related to storage. This concept is wide spread in England, where the Auto Box is made. They have had bad roads

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between towns with high gas prices for years. Having a small box maker or two in every town is common. We feel that this concept will work in the U.S.A. but we could be wrong.

We are not going to set up to be able to print on boxes. We feel that we can out source this to printers for far less cost than buying the printing equipment. We could be wrong.

5.3 Opportunities

We have to get to the people, in business, that want to control costs and have them change the way they think. We have to get them to start thinking about how many do I need the month not how many do I need per year.

5.4 Threats

We see no threats as long as the economy doesn't totally bottom out. The fact that gas prices are high and cost are rising we think helps us to get our concept excepted.

5.5 Competitive Edge

Our edge is that we have something new to offer manufacturers who want to get their products to market. They have to buy a box and we offer a different way to do that. We offer buy as need, quick turn around, we will deliver and no storage fees. All this with competitive prices too!

5.6 Marketing Strategy

In our market analysis we targeted 19,082 business prospects in the Dallas/ Fort Worth market. That number is increasing. If we can get 300 accounts to order from us once a month we will be over a million in sales. We only looked at manufacturing, wholesale and transportation/warehousing markets. We are finding even more prospects as we talk to companies. We have to get our equipment set up and get out and let our prospects know we are here. We also want to get with the box giants in the area. They typically turn down small orders below the set minimum established. We would like to get these orders they do not want and in turn, if we get a order to large we will out source to them.

5.7 Sales Strategy

We have about 20,000 target accounts in the Dallas/Fort Worth Market with no other company doing exactly what we do. Everyone who ships needs a box, so why not BoxWerkz? Our sales strategy is very simple. They won't buy from us unless they know we exist. We will be cold calling and telemarketing to every plant manager, warehouse manager and owner of small manufacturing companies in the area.

In the beginning Stephen Shepherd and Keith Steele will be doing all sales and running the machines to fill orders. We will hire an office person right away that will spend most of their time on the telephone, telemarketing and setting appointments for me. We will give that person a 5% lead fee on each lead that turns into a sale out of profit. That person will answer the phone and do general office duties while we are out in the field. When it gets to the point

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we can no longer sell and run equipment we will hire a warehouse/production person. That person will probably have to serve a delivery driver as well. When we take it to the next step in a year or two, we will hire a second sales rep and pay them an hourly rate plus commissions. We am thinking the commission percentage to be around 20% of profit on accounts they bring in. Unlike some industries, these accounts will most likely order more boxes every month.

No commissions will be paid until the company is paid. We will need to set up an accounting computer system. We are looking at Quick Books. Accounts receivable is the lifeblood of a company and we need to keep a close eye on this.

BoxWerkz is filling a niche that no one is in. We can make any size box as fast as our customer may need it and then deliver it to him. We will charge for this. The fast and larger, the more margin we will make. If our customer wants it fast but he will come and pick it up, he can save delivery charges. With gas as high as it is, we will have a minimum delivery charge of $25. We will deliver on normal business hours of 8:00 AM to 5:00 PM unless the customer is willing to pay extra for special delivery.

5.7.1 Sales Forecast

Our Daily Sales/Production Objective

With one full time sales person our daily goal in the beginning is as follows:

Qty Production time Gross Profit/ea Gross Profit/order

800 3 hours $.25 each $200.00

400 1.5 hours $.50 each $200.00

200 1 hour $.75 each $150.00

100 Half hour $1.00 each $100.00

75 Half hour $1.25 each $93.75



This brings a total of 1650 boxes per day with a profit of $868.75 on seven orders for 7 1/4 hours work. This would be gross sales of $1975 per day with a 44% margin. $1,975 x 22 working days is $43,450 with a profit of $19,112.50 with one sale rep. We will expand to two sales reps in the second year to double or sales by the end of the third year.

If we reach the goal of 150+ repeat accounts we should be able to keep an average of 7 jobs per day, every day of the week. Seven jobs times 22 working days is 154 accounts.

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Table: Sales Forecast

Sales Forecast

FY 2009 FY 2010 FY 2011

Unit Sales

Corrugated Boxes 88,283 161,000 320,200 Dye Cut Boxes 35,250 65,250 120,250 Standard Boxes 6,973 7,973 8,973 Supplies (Tape, peanuts, bubble wrap, etc.) 3,510 7,020 14,040 Total Unit Sales 134,016 241,243 463,463

Unit Prices FY 2009 FY 2010 FY 2011Corrugated Boxes $1.19 $1.19 $1.19 Dye Cut Boxes $8.00 $8.00 $8.00 Standard Boxes $1.00 $1.00 $1.00 Supplies (Tape, peanuts, bubble wrap, etc.) $5.00 $5.00 $5.00

Sales

Corrugated Boxes $105,057 $191,590 $381,038 Dye Cut Boxes $282,000 $522,000 $962,000 Standard Boxes $6,973 $7,973 $8,973 Supplies (Tape, peanuts, bubble wrap, etc.) $17,550 $35,100 $70,200 Total Sales $411,580 $756,663 $1,422,211

Direct Unit Costs FY 2009 FY 2010 FY 2011Corrugated Boxes $0.54 $0.54 $0.54 Dye Cut Boxes $3.20 $3.20 $3.20 Standard Boxes $0.10 $0.10 $0.10 Supplies (Tape, peanuts, bubble wrap, etc.) $0.25 $0.25 $0.25

Direct Cost of Sales

Corrugated Boxes $47,276 $86,216 $171,467 Dye Cut Boxes $112,800 $208,800 $384,800 Standard Boxes $697 $797 $897 Supplies (Tape, peanuts, bubble wrap, etc.) $878 $1,755 $3,510 Subtotal Direct Cost of Sales $161,650 $297,568 $560,674

Corrugated Boxes

Dye Cut Boxes

Standard Boxes

Supplies (Tape, peanuts, bubble wrap, etc.)

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Sales Monthly

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Corrugated Boxes

Dye Cut Boxes

Standard Boxes

Supplies (Tape, peanuts, bubble wrap, etc.)

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

FY 2009 FY 2010 FY 2011

Sales by Year

5.8 Milestones

Table: Milestones

Milestones

Milestone Start Date End Date Budget Manager DepartmentOrder equipment 8/15/2008 8/30/2008 $60,000 Steve/Keith

Get incorporated 8/21/2008 done $0 James/Brad

Deposit on building 8/22/2008 done $1,800 Steve/Keith

Get insurance 8/22/2008 done $1,250 Steve/Keith

Get space ready for equipment 8/25/2008 8/30/2008 $5,000 Steve/Keith

Set up and build out 8/25/2008 9/9/2008 $8,000 Steve/Keith

Hire employees 8/25/2008 9/4/2008 $0 Steve/Keith

Train employees 8/25/2008 9/5/2008 $0 Steve/Keith

Open for business 8/25/2008 9/15/2008 $0 Steve/Keith

Get Web site up and running 8/25/2008 9/15/2008 $1,200 Steve/Keith

Totals $77,250

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Aug `08 Sep

Order equipment

Get incorporated

Deposit on building

Get insurance

Get space ready for equipment

Set up and build out

Hire employees

Train employees

Open for business

Get Web site up and running

Milestones

6.0 Management SummaryManagement Staff is as follows:

Keith Steele - Chairman

Stephen Shepherd - President

James Nix - CFO

Brad Nix - Secretary

James and Brad fill our accounting and financial monitoring needs and act as a counter weight to Stephen and Keith who have more of a sales mentality. For now, Stephen and Keith will focus on establishing accounts. Soon Keith will switch focus to our plan to do Site Licence agreements to expand the BoxWerkz concept. Stephen and Keith will run the equipment as needed but we will hire a operator before we open. We will also hire an administrative person who can also fill in for production if needed.

6.1 Personnel Plan

James and Brad Nix are really silent partners as far as operations go. As of now James and Brad are working for the value of their percent in the company. Keith will forgo any money for the first few months to help the company get off the ground.

As we develop our business and start to sell the license agreements, some or all of Keith's income could come from the sale to the agreements.

We will supplement our employees with part timers as need.

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We will not offer benefits in the beginning. As we grow with other Boxwerkz installations around the country, we will have the size to offer a medical plan, etc. for our employees.

Table: Personnel

Personnel Plan

FY 2009 FY 2010 FY 2011

Stephen Shepherd $72,000 $72,000 $72,000 Keith Steele $0 $46,000 $56,000 James Nix $0 $0 $0 Brad Nix $0 $0 $0 Machine operator $26,880 $32,000 $36,000 Administrator $23,040 $26,000 $29,000 Total People 0 0 0

Total Payroll $121,920 $176,000 $193,000

7.0 Financial Plan

7.1 Start-up FundingWe plan on paying back all or part of the $61,000 as soon as possible to Keith Steele.

Table: Start-up Funding

Start-up Funding

Start-up Expenses to Fund $10,026 Start-up Assets to Fund $120,000 Total Funding Required $130,026

Assets

Non-cash Assets from Start-up $77,500 Cash Requirements from Start-up $42,500 Additional Cash Raised $55,974 Cash Balance on Starting Date $98,474 Total Assets $175,974

Liabilities and Capital

Liabilities

Current Borrowing $0 Long-term Liabilities $125,000 Accounts Payable (Outstanding Bills) $0 Other Current Liabilities (interest-free) $61,000 Total Liabilities $186,000

Capital

Planned Investment

Owner $0 Investor $0 Additional Investment Requirement $0 Total Planned Investment $0

Loss at Start-up (Start-up Expenses) ($10,026)Total Capital ($10,026)

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Total Capital and Liabilities $175,974

Total Funding $186,000

7.2 Important AssumptionsWe are basing the 7% on the interest rate we were told we could get from Point Bank.

7.3 Break-even Analysis

Our break even is just 360 boxes a day. FibreCorr in Phoenix is averaging over 2,000 a day. That is with no advertizing or sales prospecting.

Table: Break-even Analysis

Break-even Analysis

Monthly Units Break-even 7,926 Monthly Revenue Break-even $24,342

Assumptions:

Average Per-Unit Revenue $3.07 Average Per-Unit Variable Cost $1.21 Estimated Monthly Fixed Cost $14,781

$0

$2,000

$4,000

$6,000

($2,000)

($4,000)

($6,000)

($8,000)

($10,000)

($12,000)

($14,000)

0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 11000

Break-even Analysis

7.4 Projected Profit and LossWe are basing our sales and sales projections on a working business in the Phoenix, AZ area. We have a business relationship with the owner, David Basto. He has allowed Keith Steele and

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Stephen Shepherd to fly out and observe his operations and gave recommendations on all aspects of the business. BoxWerkz will be almost identical to David's business. His company is called FibreCorr Container. He is a wealth of knowledge and has pledged to help us any way he can. He has had his Auto Box for 2 years now and is doing about 1.2 million in sales. He makes no sales calls and his advertising is a one liner in the Yellow Pages under boxes. He has given us all his formulas, his vendor lists and costs. He showed us how to operate the machines.

We base our sales and cost of sales on his business. Phoenix has similar cost to our market but we are much richer in prospective customers.

Our payroll and marketing/promotions are like his.

Our equipment is used so most of the big depreciation has already happened. We are basing depreciation on 7 year flat line on what we think the equipment will be worth at that time.

Our rent is locked for 2 years (see attached lease).

Our equipment is much like FibreCorr's so my numbers for utilities are what he pays per month.

Our insurance is for 1 million in liability and contents and workman' s comp for the two employees we are hiring.

Table: Profit and Loss

Pro Forma Profit and Loss

FY 2009 FY 2010 FY 2011

Sales $411,580 $756,663 $1,422,211 Direct Cost of Sales $161,650 $297,568 $560,674 Other Costs of Sales $8,445 $9,289 $10,218 Total Cost of Sales $170,095 $306,857 $570,892

Gross Margin $241,484 $449,806 $851,319 Gross Margin % 58.67% 59.45% 59.86%

Expenses

Payroll $121,920 $176,000 $193,000 Marketing/Promotion $1,413 $3,000 $6,000 Depreciation $6,384 $6,384 $6,384 Rent $21,600 $21,600 $25,000 Utilities $4,374 $6,000 $8,000 Payroll Taxes $18,288 $20,117 $22,128 Insurance $3,396 $3,736 $4,109

Total Operating Expenses $177,375 $236,836 $264,621

Profit Before Interest and Taxes $64,109 $212,970 $586,697 EBITDA $70,493 $219,354 $593,081 Interest Expense $8,001 $6,676 $5,293 Taxes Incurred $16,833 $61,888 $174,421

Net Profit $39,276 $144,406 $406,983 Net Profit/Sales 9.54% 19.08% 28.62%

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$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

($10,000)Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep

Profit Monthly

$0

$40,000

$80,000

$120,000

$160,000

$200,000

$240,000

$280,000

$320,000

$360,000

$400,000

FY 2009 FY 2010 FY 2011

Profit Yearly

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$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

$100,000

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

Gross Margin Monthly

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

$900,000

FY 2009 FY 2010 FY 2011

Gross Margin Yearly

7.5 Projected Cash Flow

Table: Cash Flow

Pro Forma Cash Flow

FY 2009 FY 2010 FY 2011

Cash Received

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Cash from Operations

Cash Sales $308,685 $567,497 $1,066,658 Cash from Receivables $64,312 $156,817 $293,162 Subtotal Cash from Operations $372,997 $724,314 $1,359,821

Additional Cash Received

Sales Tax, VAT, HST/GST Received $33,955 $62,425 $117,332 New Current Borrowing $0 $0 $0 New Other Liabilities (interest-free) $0 $0 $0 New Long-term Liabilities $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 $406,952 $786,739 $1,477,153

Expenditures FY 2009 FY 2010 FY 2011

Expenditures from Operations

Cash Spending $121,920 $176,000 $193,000 Bill Payments $158,823 $502,810 $808,902 Subtotal Spent on Operations $280,743 $678,810 $1,001,902

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $14,121 $31,212 $58,666 Principal Repayment of Current Borrowing $0 $0 $0 Other Liabilities Principal Repayment $40,656 $20,344 $0 Long-term Liabilities Principal Repayment $19,752 $19,752 $19,752 Purchase Other Current Assets $0 $0 $0 Purchase Long-term Assets $0 $0 $0 Dividends $0 $0 $0 Subtotal Cash Spent $355,271 $750,118 $1,080,320

Net Cash Flow $51,681 $36,621 $396,833 Cash Balance $150,155 $186,776 $583,609

Net Cash Flow

Cash Balance

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000


Cash

7.6 Projected Balance Sheet

Page 17


Table: Balance Sheet

Pro Forma Balance Sheet

FY 2009 FY 2010 FY 2011

Assets

Current Assets

Cash $150,155 $186,776 $583,609 Accounts Receivable $38,583 $70,932 $133,322 Inventory $15,856 $29,187 $54,994 Other Current Assets $3,000 $3,000 $3,000 Total Current Assets $207,594 $289,895 $774,925

Long-term Assets

Long-term Assets $69,500 $69,500 $69,500 Accumulated Depreciation $6,384 $12,768 $19,152 Total Long-term Assets $63,116 $56,732 $50,348 Total Assets $270,710 $346,627 $825,273

Liabilities and Capital FY 2009 FY 2010 FY 2011

Current Liabilities

Accounts Payable $96,033 $36,428 $69,177 Current Borrowing $0 $0 $0 Other Current Liabilities $40,178 $51,047 $109,713 Subtotal Current Liabilities $136,211 $87,475 $178,890

Long-term Liabilities $105,248 $85,496 $65,744 Total Liabilities $241,459 $172,971 $244,635

Paid-in Capital $0 $0 $0 Retained Earnings ($10,026) $29,250 $173,656 Earnings $39,276 $144,406 $406,983 Total Capital $29,250 $173,656 $580,639 Total Liabilities and Capital $270,710 $346,627 $825,273

Net Worth $29,250 $173,656 $580,639

7.7 Business Ratios

Table: Ratios

Ratio Analysis

FY 2009 FY 2010 FY 2011 Industry Profile

Sales Growth 0.00% 83.84% 87.96% 6.22%

Percent of Total Assets

Accounts Receivable 14.25% 20.46% 16.15% 14.35% Inventory 5.86% 8.42% 6.66% 12.38% Other Current Assets 1.11% 0.87% 0.36% 26.46% Total Current Assets 76.68% 83.63% 93.90% 53.19% Long-term Assets 23.32% 16.37% 6.10% 46.81% Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 50.32% 25.24% 21.68% 20.06% Long-term Liabilities 38.88% 24.67% 7.97% 28.36% Total Liabilities 89.19% 49.90% 29.64% 48.42% Net Worth 10.81% 50.10% 70.36% 51.58%

Percent of Sales

Sales 100.00% 100.00% 100.00% 100.00% Gross Margin 58.67% 59.45% 59.86% 17.83% Selling, General & Administrative Expenses 49.13% 40.36% 31.24% 6.78%

Page 18


Advertising Expenses 0.34% 0.40% 0.42% 0.13% Profit Before Interest and Taxes 15.58% 28.15% 41.25% 0.74%

Main Ratios

Current 1.52 3.31 4.33 1.73 Quick 1.41 2.98 4.02 0.94 Total Debt to Total Assets 89.19% 49.90% 29.64% 61.04% Pre-tax Return on Net Worth 191.82% 118.79% 100.13% 3.96% Pre-tax Return on Assets 20.73% 59.51% 70.45% 1.54%

Additional Ratios FY 2009 FY 2010 FY 2011

Net Profit Margin 9.54% 19.08% 28.62% n.aReturn on Equity 134.28% 83.16% 70.09% n.a

Activity Ratios

Accounts Receivable Turnover 2.67 2.67 2.67 n.aCollection Days 29 106 105 n.aInventory Turnover 35.55 13.21 13.32 n.aAccounts Payable Turnover 2.65 12.17 12.17 n.aPayment Days 27 55 23 n.aTotal Asset Turnover 1.52 2.18 1.72 n.a

Debt Ratios

Debt to Net Worth 8.25 1.00 0.42 n.aCurrent Liab. to Liab. 0.56 0.51 0.73 n.a

Liquidity Ratios

Net Working Capital $71,383 $202,420 $596,035 n.aInterest Coverage 8.01 31.90 110.84 n.a

Additional Ratios

Assets to Sales 0.66 0.46 0.58 n.aCurrent Debt/Total Assets 50% 25% 22% n.aAcid Test 1.12 2.17 3.28 n.aSales/Net Worth 14.07 4.36 2.45 n.aDividend Payout 0.00 0.00 0.00 n.a

Page 19

Appendix

Table: Sales Forecast

Sales Forecast


Unit Sales

Corrugated Boxes 200 318 506 805 1,280 2,035 3,236 5,145 8,181 13,008 20,683 32,886

Dye Cut Boxes 50 84 140 234 391 653 1,091 1,822 3,043 5,082 8,487 14,173

Standard Boxes 50 70 98 137 192 269 377 528 739 1,035 1,449 2,029

Supplies (Tape, peanuts, bubble wrap, etc.) 25 35 49 69 97 136 190 266 372 521 729 1,021

Total Unit Sales 325 507 793 1,245 1,960 3,093 4,894 7,761 12,335 19,646 31,348 50,109

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

Corrugated Boxes $1.19 $1.19 $1.19 $1.19 $1.19 $1.19 $1.19 $1.19 $1.19 $1.19 $1.19 $1.19

Dye Cut Boxes $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00

Standard Boxes $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00

Supplies (Tape, peanuts, bubble wrap, etc.) $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00

Sales

Corrugated Boxes $238 $378 $602 $958 $1,523 $2,422 $3,851 $6,123 $9,735 $15,480 $24,613 $39,134

Dye Cut Boxes $400 $672 $1,120 $1,872 $3,128 $5,224 $8,728 $14,576 $24,344 $40,656 $67,896 $113,384

Standard Boxes $50 $70 $98 $137 $192 $269 $377 $528 $739 $1,035 $1,449 $2,029

Supplies (Tape, peanuts, bubble wrap, etc.) $125 $175 $245 $345 $485 $680 $950 $1,330 $1,860 $2,605 $3,645 $5,105

Total Sales $813 $1,295 $2,065 $3,312 $5,328 $8,595 $13,906 $22,557 $36,678 $59,776 $97,603 $159,652

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

Corrugated Boxes 45.00% $0.54 $0.54 $0.54 $0.54 $0.54 $0.54 $0.54 $0.54 $0.54 $0.54 $0.54 $0.54 Dye Cut Boxes 40.00% $3.20 $3.20 $3.20 $3.20 $3.20 $3.20 $3.20 $3.20 $3.20 $3.20 $3.20 $3.20 Standard Boxes 10.00% $0.10 $0.10 $0.10 $0.10 $0.10 $0.10 $0.10 $0.10 $0.10 $0.10 $0.10 $0.10 Supplies (Tape, peanuts, bubble wrap, etc.) 5.00% $0.25 $0.25 $0.25 $0.25 $0.25 $0.25 $0.25 $0.25 $0.25 $0.25 $0.25 $0.25

Direct Cost of Sales

Corrugated Boxes $107 $170 $271 $431 $685 $1,090 $1,733 $2,755 $4,381 $6,966 $11,076 $17,610

Dye Cut Boxes $160 $269 $448 $749 $1,251 $2,090 $3,491 $5,830 $9,738 $16,262 $27,158 $45,354

Standard Boxes $5 $7 $10 $14 $19 $27 $38 $53 $74 $104 $145 $203

Supplies (Tape, peanuts, bubble wrap, etc.) $6 $9 $12 $17 $24 $34 $48 $67 $93 $130 $182 $255

Subtotal Direct Cost of Sales $278 $455 $741 $1,211 $1,980 $3,240 $5,309 $8,705 $14,285 $23,462 $38,561 $63,422

Page 1

Appendix

Table: Personnel

Personnel Plan


Stephen Shepherd $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000

Keith Steele $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

James Nix $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Brad Nix $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Machine operator $2,240 $2,240 $2,240 $2,240 $2,240 $2,240 $2,240 $2,240 $2,240 $2,240 $2,240 $2,240

Administrator $1,920 $1,920 $1,920 $1,920 $1,920 $1,920 $1,920 $1,920 $1,920 $1,920 $1,920 $1,920

Total People 0 0 0 0 0 0 0 0 0 0 0 0

Total Payroll $10,160 $10,160 $10,160 $10,160 $10,160 $10,160 $10,160 $10,160 $10,160 $10,160 $10,160 $10,160

Page 2

Appendix

Table: Profit and Loss

Pro Forma Profit and Loss


Sales $813 $1,295 $2,065 $3,312 $5,328 $8,595 $13,906 $22,557 $36,678 $59,776 $97,603 $159,652

Direct Cost of Sales $278 $455 $741 $1,211 $1,980 $3,240 $5,309 $8,705 $14,285 $23,462 $38,561 $63,422

Other Costs of Sales $500 $530 $562 $596 $632 $670 $710 $753 $798 $846 $897 $951

Total Cost of Sales $778 $985 $1,303 $1,807 $2,612 $3,910 $6,019 $9,458 $15,083 $24,308 $39,458 $64,373

Gross Margin $35 $311 $762 $1,505 $2,716 $4,684 $7,887 $13,099 $21,595 $35,468 $58,144 $95,279

Gross Margin % 4.26% 23.98% 36.90% 45.45% 50.98% 54.50% 56.71% 58.07% 58.88% 59.33% 59.57% 59.68%

Expenses

Payroll $10,160 $10,160 $10,160 $10,160 $10,160 $10,160 $10,160 $10,160 $10,160 $10,160 $10,160 $10,160

Marketing/Promotion $100 $103 $106 $109 $112 $115 $118 $122 $126 $130 $134 $138

Depreciation $532 $532 $532 $532 $532 $532 $532 $532 $532 $532 $532 $532

Rent $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800

Utilities $275 $289 $303 $318 $334 $351 $369 $387 $406 $426 $447 $469

Payroll Taxes 15% $1,524 $1,524 $1,524 $1,524 $1,524 $1,524 $1,524 $1,524 $1,524 $1,524 $1,524 $1,524 Insurance $283 $283 $283 $283 $283 $283 $283 $283 $283 $283 $283 $283

Total Operating Expenses $14,674 $14,691 $14,708 $14,726 $14,745 $14,765 $14,786 $14,808 $14,831 $14,855 $14,880 $14,906

Profit Before Interest and Taxes ($14,639) ($14,380) ($13,946) ($13,221) ($12,029) ($10,081) ($6,899) ($1,709) $6,764 $20,613 $43,264 $80,373

EBITDA ($14,107) ($13,848) ($13,414) ($12,689) ($11,497) ($9,549) ($6,367) ($1,177) $7,296 $21,145 $43,796 $80,905

Interest Expense $720 $710 $700 $691 $681 $672 $662 $652 $643 $633 $624 $614

Taxes Incurred ($4,608) ($4,527) ($4,394) ($4,173) ($3,813) ($3,226) ($2,268) ($708) $1,836 $5,994 $12,792 $23,928

Net Profit ($10,751) ($10,563) ($10,252) ($9,738) ($8,897) ($7,527) ($5,293) ($1,653) $4,285 $13,986 $29,849 $55,831

Net Profit/Sales -1322.41% -815.43% -496.45% -294.03% -166.98% -87.57% -38.06% -7.33% 11.68% 23.40% 30.58% 34.97%

Page 3

Appendix

Table: Cash Flow

Pro Forma Cash Flow


Cash Received

Cash from Operations

Cash Sales $610 $972 $1,549 $2,484 $3,996 $6,446 $10,429 $16,917 $27,509 $44,832 $73,202 $119,739

Cash from Receivables $7 $207 $330 $527 $845 $1,359 $2,193 $3,549 $5,757 $9,362 $15,259 $24,918

Subtotal Cash from Operations $617 $1,179 $1,879 $3,011 $4,841 $7,805 $12,622 $20,466 $33,266 $54,194 $88,461 $144,657

Additional Cash Received

Sales Tax, VAT, HST/GST Received 8.25% $67 $107 $170 $273 $440 $709 $1,147 $1,861 $3,026 $4,931 $8,052 $13,171 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 $684 $1,286 $2,049 $3,284 $5,281 $8,514 $13,770 $22,327 $36,292 $59,125 $96,513 $157,828

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

Expenditures from Operations

Cash Spending $10,160 $10,160 $10,160 $10,160 $10,160 $10,160 $10,160 $10,160 $10,160 $10,160 $10,160 $10,160

Bill Payments $20 $598 $718 $893 $1,166 $1,848 $5,854 $9,202 $14,658 $23,573 $38,174 $62,121

Subtotal Spent on Operations $10,180 $10,758 $10,878 $11,053 $11,326 $12,008 $16,014 $19,362 $24,818 $33,733 $48,334 $72,281

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $414 $563 $766 $1,042 $1,417 $1,417 $1,417 $1,417 $1,417 $1,417 $1,417 $1,417

Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Other Liabilities Principal Repayment $3,388 $3,388 $3,388 $3,388 $3,388 $3,388 $3,388 $3,388 $3,388 $3,388 $3,388 $3,388

Long-term Liabilities Principal Repayment $1,646 $1,646 $1,646 $1,646 $1,646 $1,646 $1,646 $1,646 $1,646 $1,646 $1,646 $1,646

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 $15,627 $16,355 $16,678 $17,129 $17,777 $18,459 $22,465 $25,813 $31,269 $40,184 $54,785 $78,732

Net Cash Flow ($14,944) ($15,069) ($14,628) ($13,845) ($12,497) ($9,944) ($8,695) ($3,486) $5,023 $18,941 $41,729 $79,097

Cash Balance $83,531 $68,461 $53,833 $39,988 $27,491 $17,547 $8,852 $5,366 $10,389 $29,330 $71,059 $150,155

Page 4

Appendix

Table: Balance Sheet

Pro Forma Balance Sheet


Assets Starting Balances

Current Assets

Cash $98,474 $83,531 $68,461 $53,833 $39,988 $27,491 $17,547 $8,852 $5,366 $10,389 $29,330 $71,059 $150,155 Accounts Receivable $0 $196 $313 $499 $800 $1,288 $2,077 $3,361 $5,451 $8,864 $14,446 $23,587 $38,583 Inventory $5,000 $4,722 $4,267 $3,526 $2,315 $495 $810 $1,327 $2,176 $3,571 $5,865 $9,640 $15,856 Other Current Assets $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 Total Current Assets $106,474 $91,449 $76,041 $60,858 $46,103 $32,274 $23,434 $16,540 $15,993 $25,824 $52,641 $107,286 $207,594

Long-term Assets

Long-term Assets $69,500 $69,500 $69,500 $69,500 $69,500 $69,500 $69,500 $69,500 $69,500 $69,500 $69,500 $69,500 $69,500 Accumulated Depreciation $0 $532 $1,064 $1,596 $2,128 $2,660 $3,192 $3,724 $4,256 $4,788 $5,320 $5,852 $6,384 Total Long-term Assets $69,500 $68,968 $68,436 $67,904 $67,372 $66,840 $66,308 $65,776 $65,244 $64,712 $64,180 $63,648 $63,116 Total Assets $175,974 $160,417 $144,477 $128,762 $113,475 $99,114 $89,742 $82,316 $81,237 $90,536 $116,821 $170,934 $270,710

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

Current Liabilities

Accounts Payable $0 $574 $688 $855 $1,109 $1,656 $5,553 $8,723 $13,888 $22,327 $36,146 $58,809 $96,033 Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Other Current Liabilities $61,000 $57,265 $53,421 $49,437 $45,281 $40,915 $36,819 $33,161 $30,217 $28,438 $28,565 $31,812 $40,178 Subtotal Current Liabilities $61,000 $57,839 $54,109 $50,292 $46,390 $42,571 $42,372 $41,885 $44,105 $50,765 $64,710 $90,621 $136,211

Long-term Liabilities $125,000 $123,354 $121,708 $120,062 $118,416 $116,770 $115,124 $113,478 $111,832 $110,186 $108,540 $106,894 $105,248 Total Liabilities $186,000 $181,194 $175,817 $170,355 $164,806 $159,342 $157,496 $155,363 $155,937 $160,952 $173,251 $197,515 $241,459

Paid-in Capital $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Retained Earnings ($10,026) ($10,026) ($10,026) ($10,026) ($10,026) ($10,026) ($10,026) ($10,026) ($10,026) ($10,026) ($10,026) ($10,026) ($10,026)Earnings $0 ($10,751) ($21,314) ($31,567) ($41,305) ($50,202) ($57,729) ($63,022) ($64,675) ($60,390) ($46,404) ($16,556) $39,276 Total Capital ($10,026) ($20,777) ($31,340) ($41,593) ($51,331) ($60,228) ($67,754) ($73,047) ($74,700) ($70,415) ($56,430) ($26,581) $29,250 Total Liabilities and Capital $175,974 $160,417 $144,477 $128,762 $113,475 $99,114 $89,742 $82,316 $81,237 $90,536 $116,821 $170,934 $270,710

Net Worth ($10,026) ($20,777) ($31,340) ($41,593) ($51,331) ($60,228) ($67,754) ($73,047) ($74,700) ($70,415) ($56,430) ($26,581) $29,250

Page 5