Curriculum Suites

January, 2001

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1.0 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.2 Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

2.0 Company Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.1 Company Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.2 Start-up Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

3.0 Product/Service Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

4.0 Market Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54.1 Market Segmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54.2 Target Market Segment Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64.3 Market Needs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64.4 Service Business Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64.5 Competition and Buying Patterns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

5.0 Strategy and Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75.1 Competitive Edge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75.2 Sales Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

6.0 Management Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96.1 Personnel Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

7.0 Financial Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107.1 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107.2 Projected Profit and Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117.3 Projected Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127.4 Projected Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147.5 Business Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Table of Contents

1.0 Executive Summary

IntroductionCurriculum Companion Suites (CSS) is a medium-sized software development and consulting firm focused on making the educational process more efficient and effective for K-12 schools. CCS software serves as a virtual teaching assistant for the educational process. Students can follow along with curriculum electronically through a central computer terminal at the front of the classroom.

The CompanyCCS keys to success are the company's commitment to market awarness and future potential direction of the educational process, and CCS' relationships with a large number of educational institutions and districts.

Curriculum Companion Suites is a start-up company comprised of six executives and seventy-six employees. The executives represent all functional areas, with 70 years of combined experience in the software development industry. Two majority shareholders, Andrew Christiansen and David Fields, own 80% of the company. Other investors own a minority stake. At the moment, the company does not have plans for going public, as most of the financing is raised internally. CSS is incorporated in the state of Oregon by the two majority shareholders.

ProductsCCS offers a suite of educational software for each grade level, from kindergarten through 12th grade. These suites are developed in collaboration with major curriculum publishers with whom CCS has established strategic partnerships.

CCS provides full installation, initial and ongoing consulting support. These services are provided as part of each software package purchase.

The MarketThe competitive marketplace includes only a handful of direct competitors within the learning information systems vendors segment, providing software products and installation and systems integration services to kindergarten through senior high (K-12) schools in the United States. CCS competes primarily against more traditional methods of education, training and testing, including pencil and paper testing. In addition, CCS competes with other companies offering educational software products to schools, such as International Business Machines Corporation, Apple Computer, Inc., and Mattel, Inc.

Educational institutions and school districts have not been active in searching out technical enhancements to the educational process. Rather, companies such as CCS have often utilized a more "push" type of marketing strategy. The educational community has had to be "educated" themselves on the opportunities of utilizing technical infrastructures to enhance learning processes.

Since only a handful of other companies are competing directly with CCS in this market, the company plans to develop a healthy level of market share, with a goal of 10% at the end of three years.

The target market for CCS is the urban/metropolitan educational market, as this market presents the highest level of opportunity in terms of revenues. Additionally, software installations and customizations in this market are much more feasible in terms of technical logistics and efficiencies. Thus, profitability is by far more likely in this market.

Relationships have been established with a large number of educational institutions and school districts across the U.S. Significant investments have been made by CCS to research and understand the specific needs and potential enhancements to the current educational process.

Curriculum Companion Suites

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Financial ConsiderationsCCS expects to raise $178,000 as its own capital, and borrow $150,000 guaranteed by the SBA as a 10-year loan. This provides the bulk of the current financing required.

CCS intends to deliver sales of approximately $10.2 million in the first year, $11.7 million in the second year, and $13.4 million in the third year of the plan.

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$2,000,000

$4,000,000

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$14,000,000

2001 2002 2003

Sales

Gross Margin

Net Profit

Highlights

1.1 Mission

Curriculum Companion Suites aims to offer software curriculum suites to K-12 schools within the U.S. market. CCS will focus on providing solutions to enhance the educational capabilities of schools.

1.2 Keys to Success

CCS keys to success include:

1. The company's commitment to being keenly alert to the current educational

environment and future potential direction of the educational process. 2. CCS' relationships with a large number of educational institutions and districts.


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2.0 Company Summary

Curriculum Companion Suites is a start-up comprised of six executives. These executives represent all functional areas, with 70 years of combined experience in the software development industry. Two majority shareholders, Andrew Christiansen and David Fields, own 80% of the company. The bulk of outside financing will come from a 10-year Small Business Administration (SBA) loan.

2.1 Company Ownership

CSS is incorporated in the state of Oregon by Andrew Christiansen and David Fields. Other investors own a minority stake. At the moment, the company does not have plans for going public, as most of the financing is raised internally.

CSS is a start-up company that was registered in the year 2000.

2.2 Start-up Summary

Out of the total $24,000 of the start-up expenses, $20,000 has been spent on software licenses. Estimated start-up cash requirements of $180,000 should be sufficient to cover ongoing expenses in the first months of operation. Christiansen and Fields have each invested $60,000, with the rest of investment coming from minority shareholders. The company has also secured a 10-year SBA loan in the amount of $150,000 and a one-year, $50,000 loan from its bank. Following is a chart and table summarizing projected initial start-up costs.

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Table: Start-up

Start-up

Requirements

Start-up ExpensesLegal $3,000Software Licenses $20,000Other $1,000Total Start-up Expenses $24,000

Start-up Assets NeededCash Balance on Starting Date $180,000Other Current Assets $75,000Total Current Assets $255,000

Long-term Assets $100,000Total Assets $355,000Total Requirements $379,000

Funding

InvestmentAndrew Christiansen $60,000David Fields $60,000Other $58,000Total Investment $178,000

Current LiabilitiesAccounts Payable $1,000Current Borrowing $50,000Other Current Liabilities $0Current Liabilities $51,000

Long-term Liabilities $150,000Total Liabilities $201,000

Loss at Start-up ($24,000)Total Capital $154,000Total Capital and Liabilities $355,000

3.0 Product/Service Description

CCS offers a suite of educational software for each grade level, from Kindergarten through 12th grade. These suites are developed in collaboration with major curriculum publishers with whom CCS has established strategic partnerships.

CCS provides full installation, initial, and ongoing consulting support. These services are provided as part of each software package purchase.


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4.0 Market Analysis

CCS has a focus on K-12 schools within the U.S. market, especially schools who:

• already own educational packages from large curriculum publishers who are CCS strategic partners

• owns software that has been recently developed by CSS.

The following chart and table summarize the total market potential for CSS products.

Urban K-12 Schools

Rural K-12 Schools

Market Analysis (Pie)

Table: Market Analysis

Market AnalysisPotential Customers Growth 2001 2002 2003 2004 2005 CAGRUrban K-12 Schools 5% 2,500 2,625 2,756 2,894 3,039 5.00%Rural K-12 Schools 5% 1,500 1,575 1,654 1,737 1,824 5.01%Total 5.01% 4,000 4,200 4,410 4,631 4,863 5.01%

4.1 Market Segmentation

Metropolitan Schools

Metropolitan schools often have larger student populations, with more classes, requiring more extensive and comprehensive software packages. The installations are consequently more extensive in nature.

Rural Schools

Rural schools often have relatively smaller student populations, and fewer classes. Additional customization during installations is usually necessary, as the infrastructure for computer networks is either substandard or nonexistent.


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4.2 Target Market Segment Strategy

The target market for CCS is the urban/metropolitan educational market, as this market presents the highest level of opportunity in terms of revenues. Additionally, software installations and customizations in this market are much more feasible in terms of technical logistics and efficiencies. Thus, profitability is by far more likely in this market.

Relationships have been established with a large number of educational institutions and school districts across the U.S. Significant investments have been made by CCS to research and understand the specific needs and potential enhancements to the current educational process. By working closely with educational administrators in efforts to optimize the educational process, strong relationships have been established and a high sales closing rate has resulted.

4.3 Market Needs

CCS's research has found that educators, as well as parents of K-12 children believe that the educational process is in need of significant improvements. Children, for the most part, have been found to strongly prefer an educational environment where they can learn "hands on" using the computer in conjunction with teacher facilitation, as opposed to teacher facilitation only.

4.4 Service Business Analysis

Major competition to CSS comes not from other software developers but from traditional book publishers. In fact, one of the goals of the company is to educate its clientele about the possibilities and features of the specially-designed software that assists in the educational process. The tool CSS provides teachers with will help them become more effective and efficient in classrooms. The company believes that the novelty and added value its products provide to educators will be key buying decision criteria for the customers.

4.5 Competition and Buying Patterns

Only a handful of other companies are competing directly with CCS in this market. CCS plans to develop a healthy level of market share, with a goal of 10% at the end of three years. With the exponential increase in computer and Internet usage among the public in the last five years, this is a relatively new market. CCS has taken a lead primarily due to its intense efforts both in research and development, as well as in establishing relationships in the educational community.

Educational institutions and school districts have not been active in searching out technical enhancements to the educational process. Rather, companies such as CCS have often utilized a more "push" type of marketing strategy. The educational community has had to be "educated" themselves on the opportunities of utilizing technical infrastructures to enhance learning processes.

The competitive marketplace includes only a handful of direct competitors within the learning information systems vendors segment, providing software products and installation and systems integration services to kindergarten through senior high (K-12) schools in the United States. Typical learning information systems consist of computer software and related training designed to improve student academic performance by increasing the quality, quantity, and timeliness of performance data available to educators and by facilitating increased student


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practice of essential skills.

There are a number of competing products covering a wide range of educational requirements. These include:

• Accelerated reading products--software for motivating and monitoring increased literature-based reading practice.

• Accelerated math--software aimed to increase a student's competency across this discipline utilizing the latest techniques.

• Professional development training for educators. • Test-generation software.

Software products offered by competitors also aim to improve student academic performance by intensifying skills practice and increasing the quality, quantity and timeliness of information available to educators.

CCS competes primarily against more traditional methods of education, training and testing, including pencil and paper testing. In addition, CCS competes with other companies offering educational software products to schools, such as International Business Machines Corporation, Apple Computer, Inc., and Mattel, Inc. Many other companies, including Microsoft Corporation and Walt Disney Company, provide educational software products.

5.0 Strategy and Implementation

CCS intends to succeed by offering K-12 schools a technological tool to assist teachers in making the educational process more efficient and effective.

5.1 Competitive Edge

CCS' competitive edge is its new ideas and first to market technologies.

5.2 Sales Strategy

As the table shows, CCS intends to deliver sales of approximately $10.2 million in the first year, $11.7 million in the second year, and $13.4 million in the third year of the plan.


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

Software Systems

Installation & Customization

Other Consulting

Sales Monthly

Table: Sales Forecast

Sales ForecastUnit Sales 2001 2002 2003Software Systems 240 276 317Installation & Customization 240 276 317Other Consulting 120 138 159Total Unit Sales 600 690 794

Unit Prices 2001 2002 2003Software Systems $25,000.00 $25,000.00 $25,000.00Installation & Customization $15,000.00 $15,000.00 $15,000.00Other Consulting $5,000.00 $5,000.00 $5,000.00

SalesSoftware Systems $6,000,000 $6,900,000 $7,935,000Installation & Customization $3,600,000 $4,140,000 $4,761,000Other Consulting $600,000 $690,000 $793,500Total Sales $10,200,000 $11,730,000 $13,489,500

Direct Unit Costs 2001 2002 2003Software Systems $2,000.00 $2,000.00 $2,000.00Installation & Customization $10,000.00 $10,000.00 $10,000.00Other Consulting $2,000.00 $2,000.00 $2,000.00

Direct Cost of Sales 2001 2002 2003Software Systems $480,000 $552,000 $634,800Installation & Customization $2,400,000 $2,760,000 $3,174,000Other Consulting $240,000 $276,000 $317,400Subtotal Direct Cost of Sales $3,120,000 $3,588,000 $4,126,200


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6.0 Management Summary

Andrew B. Christiansen has extensive experience in business planning and finance, including tenures as chief financial officer with ABC Conglomerate and DEF International. David E. Fields brings in experience in the area of marketing, advertising, and communications.

6.1 Personnel Plan

CSS will focus on strong product development and marketing. These are the areas where most of the investments and training will go. The table below outlines the company's personnel plan for the next years.

Table: Personnel

Personnel Plan2001 2002 2003

Product Development $900,000 $945,000 $992,250Installation Technicians $875,000 $918,750 $964,688Administrative $595,000 $624,750 $655,988Sales & Marketing $900,000 $945,000 $992,250Other $0Total People 82 86 90Total Payroll $3,270,000 $3,433,500 $3,605,175


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7.0 Financial Plan

CCS expects to raise $178,000 as its own capital, and to borrow $150,000 guaranteed by the SBA as a 10-year loan. This provides the bulk of the current financing required.

7.1 Break-even Analysis

CCS's Break-even Analysis is based on the average of the first-year figures for total sales by units, and by operating expenses. These are presented as per-unit revenue, per-unit cost, and fixed costs. These conservative assumptions make for a more accurate estimate of real risk.

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Break-even point = where line intersects with 0

Break-even Analysis

Table: Break-even Analysis

Break-even Analysis:Monthly Units Break-even 27Monthly Revenue Break-even $466,023

Assumptions:Average Per-Unit Revenue $17,000.00Average Per-Unit Variable Cost $5,200.00Estimated Monthly Fixed Cost $323,475


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7.2 Projected Profit and Loss

The projected Profit and Loss for CCS is presented in the accompanying table. The three yearly totals are shown here, with year one monthlies in the appendices.

Table: Profit and Loss

Pro Forma Profit and Loss2001 2002 2003

Sales $10,200,000 $11,730,000 $13,489,500Direct Cost of Sales $3,120,000 $3,588,000 $4,126,200Other $0 $0 $0

------------ ------------ ------------Total Cost of Sales $3,120,000 $3,588,000 $4,126,200Gross Margin $7,080,000 $8,142,000 $9,363,300Gross Margin % 69.41% 69.41% 69.41%Expenses:Payroll $3,270,000 $3,433,500 $3,605,175Sales and Marketing and Other Expenses $96,000 $150,000 $265,000Depreciation $24,000 $27,600 $31,740Utilities $1,200 $1,500 $1,700Payroll Taxes $490,500 $515,025 $540,776Other $0 $0 $0

------------ ------------ ------------Total Operating Expenses $3,881,700 $4,127,625 $4,444,391Profit Before Interest and Taxes $3,198,300 $4,014,375 $4,918,909Interest Expense $20,000 $19,660 $18,945Taxes Incurred $794,575 $998,679 $1,224,991Net Profit $2,383,725 $2,996,036 $3,674,973Net Profit/Sales 23.37% 25.54% 27.24%Include Negative Taxes TRUE TRUE TRUE

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7.3 Projected Cash Flow

The cash flow projection shows that provisions for ongoing expenses are adequate to meet CCS's needs as the business generates cash flow sufficient to support operations.

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Table: Cash Flow

Pro Forma Cash Flow 2001 2002 2003

Cash ReceivedCash from Operations: Cash Sales $3,468,000 $3,988,200 $4,586,430Cash from Receivables $5,909,200 $7,618,380 $8,761,137 Subtotal Cash from Operations $9,377,200 $11,606,580 $13,347,567

Additional Cash ReceivedNon Operating (Other) Income $0 $0 $0Sales Tax, VAT, HST/GST Received $0 $0 $0New Current Borrowing $0 $0 $0New Other Liabilities (interest-free) $0 $0 $0New Long-term Liabilities $0 $0 $0Sales of Other Current Assets $0 $0 $0Sales of Long-term Assets $0 $0 $0New Investment Received $0 $0 $0 Subtotal Cash Received $9,377,200 $11,606,580 $13,347,567

Expenditures 2001 2002 2003Expenditures from Operations:Cash Spending $416,678 $498,284 $593,184Payment of Accounts Payable $7,071,244 $8,148,276 $9,120,058 Subtotal Spent on Operations $7,487,921 $8,646,560 $9,713,242

Additional Cash SpentNon Operating (Other) Expense $0 $0 $0Sales Tax, VAT, HST/GST Paid Out $0 $0 $0Principal Repayment of Current Borrowing $0 $0 $0Other Liabilities Principal Repayment $0 $0 $0Long-term Liabilities Principal Repayment $0 $6,800 $7,500Purchase Other Current Assets $0 $0 $0Purchase Long-term Assets $135,000 $225,000 $295,000Dividends $0 $0 $0 Subtotal Cash Spent $7,622,921 $8,878,360 $10,015,742

Net Cash Flow $1,754,279 $2,728,220 $3,331,825Cash Balance $1,934,279 $4,662,499 $7,994,324


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7.4 Projected Balance Sheet

Following is the projected Balance Sheet for CCS.

Table: Balance Sheet

Pro Forma Balance Sheet

AssetsCurrent Assets 2001 2002 2003Cash $1,934,279 $4,662,499 $7,994,324Accounts Receivable $822,800 $946,220 $1,088,153Other Current Assets $75,000 $75,000 $75,000Total Current Assets $2,832,079 $5,683,719 $9,157,477Long-term AssetsLong-term Assets $235,000 $460,000 $755,000Accumulated Depreciation $24,000 $51,600 $83,340Total Long-term Assets $211,000 $408,400 $671,660Total Assets $3,043,079 $6,092,119 $9,829,137

Liabilities and Capital2001 2002 2003

Accounts Payable $305,354 $365,157 $434,703Current Borrowing $50,000 $50,000 $50,000Other Current Liabilities $0 $0 $0Subtotal Current Liabilities $355,354 $415,157 $484,703

Long-term Liabilities $150,000 $143,200 $135,700Total Liabilities $505,354 $558,357 $620,403

Paid-in Capital $178,000 $178,000 $178,000Retained Earnings ($24,000) $2,359,725 $5,355,761Earnings $2,383,725 $2,996,036 $3,674,973Total Capital $2,537,725 $5,533,761 $9,208,734Total Liabilities and Capital $3,043,079 $6,092,119 $9,829,137Net Worth $2,537,725 $5,533,761 $9,208,734


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7.5 Business Ratios

The following table represents business ratios for the educational support software industry. These numbers are determined by the Standard Industry Classification (SIC) Index code 7372.

Table: Ratios

Ratio Analysis2001 2002 2003 Industry Profile

Sales Growth 0.00% 15.00% 15.00% 9.70%

Percent of Total AssetsAccounts Receivable 27.04% 15.53% 11.07% 21.50%Inventory 0.00% 0.00% 0.00% 3.00%Other Current Assets 2.46% 1.23% 0.76% 45.70%Total Current Assets 93.07% 93.30% 93.17% 70.20%Long-term Assets 6.93% 6.70% 6.83% 29.80%Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 11.68% 6.81% 4.93% 42.40%Long-term Liabilities 4.93% 2.35% 1.38% 19.20%Total Liabilities 16.61% 9.17% 6.31% 61.60%Net Worth 83.39% 90.83% 93.69% 38.40%

Percent of SalesSales 100.00% 100.00% 100.00% 100.00%Gross Margin 69.41% 69.41% 69.41% 100.00%Selling, General & Administrative Expenses 46.04% 43.87% 42.17% 79.40%Advertising Expenses 0.59% 0.85% 1.48% 1.30%Profit Before Interest and Taxes 31.36% 34.22% 36.46% 2.20%

Main RatiosCurrent 7.97 13.69 18.89 1.51Quick 7.97 13.69 18.89 1.16Total Debt to Total Assets 16.61% 9.17% 6.31% 61.60%Pre-tax Return on Net Worth 125.24% 72.19% 53.21% 3.50%Pre-tax Return on Assets 104.44% 65.57% 49.85% 9.20%

Business Vitality Profile 2001 2002 2003 IndustrySales per Employee $124,390 $136,395 $149,883 $0Survival Rate 0.00%

Additional Ratios 2001 2002 2003Net Profit Margin 23.37% 25.54% 27.24% n.aReturn on Equity 93.93% 54.14% 39.91% n.a

Activity RatiosAccounts Receivable Turnover 8.18 8.18 8.18 n.aCollection Days 43 42 42 n.aInventory Turnover 0.00 0.00 0.00 n.aAccounts Payable Turnover 24.15 22.48 21.14 n.aPayment Days 14 15 16 n.aTotal Asset Turnover 3.35 1.93 1.37 n.a

Debt RatiosDebt to Net Worth 0.20 0.10 0.07 n.aCurrent Liab. to Liab. 0.70 0.74 0.78 n.a

Liquidity RatiosNet Working Capital $2,476,725 $5,268,561 $8,672,774 n.aInterest Coverage 159.92 204.19 259.64 n.a

Additional RatiosAssets to Sales 0.30 0.52 0.73 n.aCurrent Debt/Total Assets 12% 7% 5% n.aAcid Test 5.65 11.41 16.65 n.aSales/Net Worth 4.02 2.12 1.46 n.aDividend Payout 0.00 0.00 0.00 n.a


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Appendix Table: Sales Forecast

Sales ForecastUnit Sales Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecSoftware Systems 20 20 20 20 20 20 20 20 20 20 20 20Installation & Customization 20 20 20 20 20 20 20 20 20 20 20 20Other Consulting 10 10 10 10 10 10 10 10 10 10 10 10Total Unit Sales 50 50 50 50 50 50 50 50 50 50 50 50

Unit Prices Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecSoftware Systems $25,000.00 $25,000.00 $25,000.00 $25,000.00 $25,000.00 $25,000.00 $25,000.00 $25,000.00 $25,000.00 $25,000.00 $25,000.00 $25,000.00Installation & Customization $15,000.00 $15,000.00 $15,000.00 $15,000.00 $15,000.00 $15,000.00 $15,000.00 $15,000.00 $15,000.00 $15,000.00 $15,000.00 $15,000.00Other Consulting $5,000.00 $5,000.00 $5,000.00 $5,000.00 $5,000.00 $5,000.00 $5,000.00 $5,000.00 $5,000.00 $5,000.00 $5,000.00 $5,000.00

SalesSoftware Systems $500,000 $500,000 $500,000 $500,000 $500,000 $500,000 $500,000 $500,000 $500,000 $500,000 $500,000 $500,000Installation & Customization $300,000 $300,000 $300,000 $300,000 $300,000 $300,000 $300,000 $300,000 $300,000 $300,000 $300,000 $300,000Other Consulting $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000Total Sales $850,000 $850,000 $850,000 $850,000 $850,000 $850,000 $850,000 $850,000 $850,000 $850,000 $850,000 $850,000

Direct Unit Costs Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecSoftware Systems 0.00% $2,000.00 $2,000.00 $2,000.00 $2,000.00 $2,000.00 $2,000.00 $2,000.00 $2,000.00 $2,000.00 $2,000.00 $2,000.00 $2,000.00Installation & Customization 0.00% $10,000.00 $10,000.00 $10,000.00 $10,000.00 $10,000.00 $10,000.00 $10,000.00 $10,000.00 $10,000.00 $10,000.00 $10,000.00 $10,000.00Other Consulting 0.00% $2,000.00 $2,000.00 $2,000.00 $2,000.00 $2,000.00 $2,000.00 $2,000.00 $2,000.00 $2,000.00 $2,000.00 $2,000.00 $2,000.00

Direct Cost of Sales Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecSoftware Systems $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000Installation & Customization $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000Other Consulting $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000Subtotal Direct Cost of Sales $260,000 $260,000 $260,000 $260,000 $260,000 $260,000 $260,000 $260,000 $260,000 $260,000 $260,000 $260,000

Appendix

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Appendix Table: Personnel

Personnel PlanJan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Product Development $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000Installation Technicians $72,917 $72,917 $72,917 $72,917 $72,917 $72,917 $72,917 $72,917 $72,917 $72,917 $72,917 $72,917Administrative $49,583 $49,583 $49,583 $49,583 $49,583 $49,583 $49,583 $49,583 $49,583 $49,583 $49,583 $49,583Sales & Marketing $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000OtherTotal People 82 82 82 82 82 82 82 82 82 82 82 82Total Payroll $272,500 $272,500 $272,500 $272,500 $272,500 $272,500 $272,500 $272,500 $272,500 $272,500 $272,500 $272,500

Appendix

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Appendix Table: General Assumptions

General AssumptionsJan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Plan Month 1 2 3 4 5 6 7 8 9 10 11 12Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%Long-term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%Tax Rate 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00%Sales on Credit % 66.00% 66.00% 66.00% 66.00% 66.00% 66.00% 66.00% 66.00% 66.00% 66.00% 66.00% 66.00%Other 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Calculated TotalsPayroll Expense $272,500 $272,500 $272,500 $272,500 $272,500 $272,500 $272,500 $272,500 $272,500 $272,500 $272,500 $272,500Sales on Credit $561,000 $561,000 $561,000 $561,000 $561,000 $561,000 $561,000 $561,000 $561,000 $561,000 $561,000 $561,000New Accounts Payable $615,758 $615,758 $615,758 $614,258 $614,258 $614,258 $614,258 $614,258 $614,258 $614,258 $614,258 $614,258

Appendix

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Appendix Table: Profit and Loss

Pro Forma Profit and LossJan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Sales $850,000 $850,000 $850,000 $850,000 $850,000 $850,000 $850,000 $850,000 $850,000 $850,000 $850,000 $850,000Direct Cost of Sales $260,000 $260,000 $260,000 $260,000 $260,000 $260,000 $260,000 $260,000 $260,000 $260,000 $260,000 $260,000Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------Total Cost of Sales $260,000 $260,000 $260,000 $260,000 $260,000 $260,000 $260,000 $260,000 $260,000 $260,000 $260,000 $260,000Gross Margin $590,000 $590,000 $590,000 $590,000 $590,000 $590,000 $590,000 $590,000 $590,000 $590,000 $590,000 $590,000Gross Margin % 69.41% 69.41% 69.41% 69.41% 69.41% 69.41% 69.41% 69.41% 69.41% 69.41% 69.41% 69.41%Expenses:Payroll $272,500 $272,500 $272,500 $272,500 $272,500 $272,500 $272,500 $272,500 $272,500 $272,500 $272,500 $272,500Sales and Marketing and Other Expenses $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000Depreciation $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000Utilities $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100Payroll Taxes 15% $40,875 $40,875 $40,875 $40,875 $40,875 $40,875 $40,875 $40,875 $40,875 $40,875 $40,875 $40,875Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------Total Operating Expenses $323,475 $323,475 $323,475 $323,475 $323,475 $323,475 $323,475 $323,475 $323,475 $323,475 $323,475 $323,475Profit Before Interest and Taxes $266,525 $266,525 $266,525 $266,525 $266,525 $266,525 $266,525 $266,525 $266,525 $266,525 $266,525 $266,525Interest Expense $1,667 $1,667 $1,667 $1,667 $1,667 $1,667 $1,667 $1,667 $1,667 $1,667 $1,667 $1,667Taxes Incurred $66,215 $66,215 $66,215 $66,215 $66,215 $66,215 $66,215 $66,215 $66,215 $66,215 $66,215 $66,215Net Profit $198,644 $198,644 $198,644 $198,644 $198,644 $198,644 $198,644 $198,644 $198,644 $198,644 $198,644 $198,644Net Profit/Sales 23.37% 23.37% 23.37% 23.37% 23.37% 23.37% 23.37% 23.37% 23.37% 23.37% 23.37% 23.37%Include Negative Taxes

Appendix

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Appendix Table: Cash Flow

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

Cash ReceivedCash from Operations: Cash Sales $289,000 $289,000 $289,000 $289,000 $289,000 $289,000 $289,000 $289,000 $289,000 $289,000 $289,000 $289,000Cash from Receivables $0 $299,200 $561,000 $561,000 $561,000 $561,000 $561,000 $561,000 $561,000 $561,000 $561,000 $561,000 Subtotal Cash from Operations $289,000 $588,200 $850,000 $850,000 $850,000 $850,000 $850,000 $850,000 $850,000 $850,000 $850,000 $850,000

Additional Cash ReceivedNon Operating (Other) Income $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Subtotal Cash Received $289,000 $588,200 $850,000 $850,000 $850,000 $850,000 $850,000 $850,000 $850,000 $850,000 $850,000 $850,000

Expenditures Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecExpenditures from Operations:Cash Spending $33,598 $33,598 $33,598 $35,098 $35,098 $35,098 $35,098 $35,098 $35,098 $35,098 $35,098 $35,098Payment of Accounts Payable $324,454 $615,758 $615,758 $601,208 $614,258 $614,258 $614,258 $614,258 $614,258 $614,258 $614,258 $614,258 Subtotal Spent on Operations $358,053 $649,356 $649,356 $636,306 $649,356 $649,356 $649,356 $649,356 $649,356 $649,356 $649,356 $649,356

Additional Cash SpentNon Operating (Other) Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Long-term Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Purchase Long-term Assets $0 $0 $0 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Subtotal Cash Spent $358,053 $649,356 $649,356 $651,306 $664,356 $664,356 $664,356 $664,356 $664,356 $664,356 $664,356 $664,356

Net Cash Flow ($69,053) ($61,156) $200,644 $198,694 $185,644 $185,644 $185,644 $185,644 $185,644 $185,644 $185,644 $185,644Cash Balance $110,947 $49,791 $250,435 $449,129 $634,772 $820,416 $1,006,060 $1,191,704 $1,377,347 $1,562,991 $1,748,635 $1,934,279

Appendix

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Appendix Table: Balance Sheet

Pro Forma Balance Sheet

AssetsCurrent Assets Starting Balances Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecCash $180,000 $110,947 $49,791 $250,435 $449,129 $634,772 $820,416 $1,006,060 $1,191,704 $1,377,347 $1,562,991 $1,748,635 $1,934,279Accounts Receivable $0 $561,000 $822,800 $822,800 $822,800 $822,800 $822,800 $822,800 $822,800 $822,800 $822,800 $822,800 $822,800Other Current Assets $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000Total Current Assets $255,000 $746,947 $947,591 $1,148,235 $1,346,929 $1,532,572 $1,718,216 $1,903,860 $2,089,504 $2,275,147 $2,460,791 $2,646,435 $2,832,079Long-term AssetsLong-term Assets $100,000 $100,000 $100,000 $100,000 $115,000 $130,000 $145,000 $160,000 $175,000 $190,000 $205,000 $220,000 $235,000Accumulated Depreciation $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000 $20,000 $22,000 $24,000Total Long-term Assets $100,000 $98,000 $96,000 $94,000 $107,000 $120,000 $133,000 $146,000 $159,000 $172,000 $185,000 $198,000 $211,000Total Assets $355,000 $844,947 $1,043,591 $1,242,235 $1,453,929 $1,652,572 $1,851,216 $2,049,860 $2,248,504 $2,447,147 $2,645,791 $2,844,435 $3,043,079

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

Accounts Payable $1,000 $292,304 $292,304 $292,304 $305,354 $305,354 $305,354 $305,354 $305,354 $305,354 $305,354 $305,354 $305,354Current Borrowing $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Subtotal Current Liabilities $51,000 $342,304 $342,304 $342,304 $355,354 $355,354 $355,354 $355,354 $355,354 $355,354 $355,354 $355,354 $355,354

Long-term Liabilities $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000Total Liabilities $201,000 $492,304 $492,304 $492,304 $505,354 $505,354 $505,354 $505,354 $505,354 $505,354 $505,354 $505,354 $505,354

Paid-in Capital $178,000 $178,000 $178,000 $178,000 $178,000 $178,000 $178,000 $178,000 $178,000 $178,000 $178,000 $178,000 $178,000Retained Earnings ($24,000) ($24,000) ($24,000) ($24,000) ($24,000) ($24,000) ($24,000) ($24,000) ($24,000) ($24,000) ($24,000) ($24,000) ($24,000)Earnings $0 $198,644 $397,288 $595,931 $794,575 $993,219 $1,191,863 $1,390,506 $1,589,150 $1,787,794 $1,986,438 $2,185,081 $2,383,725Total Capital $154,000 $352,644 $551,288 $749,931 $948,575 $1,147,219 $1,345,863 $1,544,506 $1,743,150 $1,941,794 $2,140,438 $2,339,081 $2,537,725Total Liabilities and Capital $355,000 $844,947 $1,043,591 $1,242,235 $1,453,929 $1,652,572 $1,851,216 $2,049,860 $2,248,504 $2,447,147 $2,645,791 $2,844,435 $3,043,079Net Worth $154,000 $352,644 $551,288 $749,931 $948,575 $1,147,219 $1,345,863 $1,544,506 $1,743,150 $1,941,794 $2,140,438 $2,339,081 $2,537,725

Appendix

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Documents

Curriculum Suites