Boulder Coffee

Co.
Business Purchase Plan by KLM Transport LLC

5880 Bird Rd p. 347-323-4964 KLMTransport14@gmail.com

Byron, NY 14422 f. 585-548-3012
Table of Contents
I. Executive Summary ............................................................................................... 2
Overview
Highlights
Objectives
Mission Statement
Keys to Success
II. Description of Business......................................................................................... 4
Company Ownership/Legal Entity
Location
Interior
Hours of Operation
Products and Services
Suppliers
Service
Management
Financial Management
Start-Up/Acquisition Summary
III. Marketing .............................................................................................................. 8
Market Analysis
Competition
Pricing
IV. Financial Statements Apppendix ......................................................................... 11
Start-Up Expenses Budget
Cash Flow
Income Projection Statement
Sales Forecast
Executive Summary
This is the business plan for the purchase of Boulder Coffee Co. by KLM Transport LLC. Facts regarding this business
purchase plan:

1. KLM Transport LLC is a sole proprietorship owned wholly by Kanwal S. Singh.

2. KLM Transport LLC will continue to operate for at least 3 months after the purchase as a trucking company. ( see
KLM Transport budget)

3. All personal and household expenses will be covered by Michelle Singh, Kanwals wife, who at this time has no
ownership in KLM Transport LLC and makes a current salary of $88,400 as an employee of Underwriters Laboratories.

4. Boulder Coffee Co. is an already profitable business running with an absentee owner for over 4 years. (see financial
statements and business valuation documents from AMD)

5. As the new owner of Boulder Coffee Co., I will focus on low cost improvements that will have impact on profits that
have not been part of the current owner or managers scope of involvement. (see below for more detail)

Overview
Boulder Coffee Co. Caf and Lounge is an established and iconic Rochester hot spot known for great coffee and
popular local entertainment and open mic nights. The company has had great success locally and once boasted 5
successful locations in the Rochester area. The current owner, Lyjha Wilton, established the cafs in 2005 and grew
them substantially through the years and the name is well known. If you ask anyone in the area they have likely heard of,
if not frequented, a Boulder Coffee location. If you look on social media you will see that Boulder Coffee receives great
reviews online and has a large number of customers. The Facebook page alone shows thousands of local customers
have checked-in. In recent years Mr. Wilton has broadened his business interests which have taken him away from
active management of the Boulder Coffee Cafs. He has sold all but the flagship location prior to now. The flagship
location and company name are what I am purchasing with the intent to make a good thing even better.

Even with an absentee owner over the past several years the location and brand have retained steady revenues above
$400,000 and yearly profits averaging over 15%. With myself and my wife as new and energetic owner-operators the
baseline revenues of the past will only stand to grow as we invest our time, experience, education, creativity and passion
into the re-blossoming of an already profitable company and brand. With keen eyes on waste and reduction in cost of
goods sold, increased active marketing and minor improvements we are confident we can increase profitability by
appealing to a wider client base and re-expanding the company presence on the Rochester caf scene. In the first year
we plan to increase advertising and events. By actively participating in the management of the caf we will encourage
accountability amongst the employees and make business decisions with our profit in mind, something that cannot be
accomplished by an hourly manager with no ownership in the business. By paying close attention to feedback on social
media and sales reports we will be able to capitalize on trends and comments and be more customer focused leading to
increased favorability and revenues.

BOULDER COFFEE CO. - JANUARY 2017 2

Highlights
Boulder Coffee Co. has been a highly successful caf and lounge in Rochester, NY. Below is a chart showing
profitability over the past several years with an absentee owner.

Financial Overview
$450,000 Total
$400,000 Revenue
$350,000 Gross Profit
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
$0
2012 2013 2014 2015 2016 projected

Objectives
Through the purchase of Boulder Coffee Co. we plan to take an already successful and iconic Rochester caf and lounge
and make it even more profitable. We plan to maintain the status quo which is responsible for the current success and
slowly, over the first year of new ownership, make changes that will refresh and re-energize the space, company and
brand. These improvements to include:

Thorough cleaning and reorganizing of the space to create a more sanitary, inviting and useful space for our customers.
(no additional cost to us, covered in Cash Flow Projection table under cleaning)

Menu modernization to include healthier and more substantial caf offerings such as salads, fruit, gluten-free and vegan
options as well as improvements to panini and drink selections. (shown as the gradual increase in cost of goods sold
after initial re-balance in Cash Flow Projection table)

Dcor updates to include removal of old and dirty items and artwork that has not moved in years and replacing these
with newer artwork on consignment by local artists. (no cost to us)

While maintaining the feel of the place is important to loyal customers, the sofas and chairs are currently in a declining
state and would either be cleaned or replaced to provide a more inviting seating area and would be re-arranged to
provide more seating areas and larger workspaces for students or groups. ($2,000 allocated in Start-Up Budget as FFE
improvements)

Currently the venue hosts open mic and comedy nights twice a week which are very popular and get a great deal of
social media interest. We plan to increase the open mic nights from 2 days a week to 3 days a week and add scheduled
events to Friday and Saturday evenings. (no additional cost for open-mic increase, scheduled events covered in Cash
Flow Projection table as entertainment)

Expansion of bar area seating through simple re-designation of existing furnishings and fixtures and increased alcohol
selection and more prominent display. The alcoholic beverage aspect is currently underplayed and will be more a focal

BOULDER COFFEE CO. - JANUARY 2017 3

point to enhance the lounge aspect of the establishment. (additional costs covered in Cash Flow Projection table in cost
of goods sold and expected revenue increases covered in gross revenue)

Decrease cost of goods sold by actively renegotiating current distributor arrangements and looking for more cost
efficiencies and closely monitoring waste, something that Mr. Wilton has admittedly not paid attention to in recent years.
(shown in the expected decrease in cost of goods sold percentage back down to 30%)

We plan to eliminate the position of manager at the caf by taking on the administrative and supervisory duties
therefore saving cost on salary and increasing awareness of daily activities and busy times to better manage inventory and
staffing. (shown in the Cash Flow Projection table in the decrease in payroll spend)

We plan to maintain status quo while we learn all additional required skills. We also plan to continue our current jobs
outside of Boulder Coffee to ensure steady income for our personal use while we invest in the acquisition and
enhancement of this business. We will therefore not be taking any owner salary the first year.

Mission Statement
Our mission is to be Rochesters premiere destination for coffee, cocktails and entertainment. We want to provide a
comfortable atmosphere for our customers and a professional yet intimate venue for local performers. We want to be
the place people think of for their morning coffee, casual meetings and lunch during the day, and for a trendy yet relaxed
lounge in the evening where they can sample new or regularly scheduled local talent while enjoying alcoholic or caf
beverages.

Keys to Success
Our business plan is sure to succeed as we are purchasing an already profitable business in an increasingly trendy part of
the city and our personal livelihood does not depend on drawing a salary from the business the first year. My
background in starting my own successful business as a truck driver shows my dedication to hard work and discipline.
With an MBA and experience owning my own company I know I have the financial education and discipline to keep on
track with my objectives and propel Boulder Coffee into an even more profitable period. My wife will be supporting me
in this venture through her creativity and interpersonal skills. She will also be supporting our family financially while I
focus my resources on this business. She is currently working as a Global Program Manager for Underwriters
Laboratories and finishing her Masters in Organizational Leadership. She has many years of prior experience in retail
and customer and food service and will be actively involved in helping me with the decision making for the company
and assistance with the staff.

Description of Business
Boulder Coffee Caf and Lounge is a coffee shop in the South Wedge neighborhood of Rochester, NY. It has been
successfully serving excellent coffee and entertainment since 2005. It is a large and successful caf which maintains
consistent streams of customers throughout the day. The caf serves breakfast and lunch sandwiches and salads in
addition to a number of beverages including coffee items, tea, soda, water, juice, specialty drinks, and alcohol. The caf
also currently serves a selection of locally sourced baked goods. What really makes Boulder unique on the Rochester
scene is that it occupies 3,500 square feet and features a stage, piano and full stage lighting. The focus on coffee shop
foods and beverages separate it from other entertainment venues and promotes casual and intimate performances. The
full liquor license and bar area and full stage setting differentiate this location from other competitors in the area. It is a
location that truly stands out in Rochester for the combination of coffee, alcohol and entertainment in a low-key and
inviting space.

BOULDER COFFEE CO. - JANUARY 2017 4

Company Ownership/Legal Entity
KLM Transport is the LLC which will be purchasing Boulder Coffee Co. It is an LLC which is wholly owned and
operated by myself, Kanwal S. Singh. Boulder Coffee Co. will be a DBA under the LLC and I will be the owner-
operator of the business. My wife, Michelle I. Singh, will be a consultant to me and take on some hours managing daily
operations and strategic initiatives at the company.

Location
The flagship location of Boulder Coffee Co. is on the corner of Clinton and Alexander streets in Rochester, NY. It is a
large and highly visible building with signage existing on both roads. The neighborhood continues to grow in offerings
and reputation. There is currently a tattoo artist next door, a Mexican restaurant across the street and an artisan pizzeria
behind the Boulder Coffee location. When you search on Google for a coffee shop in Rochester, Boulder Coffee Co. is
one of the most prominently described and visibly located. There is ample parking and it is walking distance from
residential neighborhoods, schools, colleges, parks and museums. The caf occupies the entire first level of the large
brick corner building and has an outdoor patio with seating. The major walls facing the street are made of glass which
allows those passing by to see inside. The location is easily accessible from the 490 and inner loop as well as from the
nearby towns of Brighton and Henrietta and visible from major roads. The building is owned by Lyjha Wilton, the
current owner of Boulder Coffee Co. We will be entering into a lease agreement with him for 3 years with 4 options to
renew at rates starting at $4000 for year one, $4500 for year two, and $5000 for year three and structured increases of
~5% thereafter. This puts the current rate at $13.71/sq. ft. which is quite good for the area and when compared to
Park Avenue in Rochester is much less. Park Avenue retail space is averaging currently around $20/ sq. ft.

Interior
The interior of the location is well suited for the current purpose as a coffee shop, caf, lounge and entertainment venue.
The interior has brick walls and tile floors. There is a service counter/bar for counter service, several sofas and
oversized chairs, caf tables, and a wooden bar for pub height chairs or stools. There is a stage with a piano and full
lighting and sound equipment for entertainment which is located so it can be seen from most areas of the caf. There
are 3 single-stall unisex bathrooms. There is a designated patio area as well as shared deck space with Napa Pizzeria.
The walls are covered in consignment artwork by local artists. The kitchen space is open to the caf and limited in scope
to only what is needed by a caf serving sandwiches and salads and drinks. There are decorative displays throughout.
There is a large office and walk-in cooler in the basement.

As mentioned above, we plan to make some improvements to the interior for function and modernization. We plan to
remove old and dirty decorative items and thoroughly clean the space and remaining fixtures. We will be replacing
damaged sofas with used furnishings of similar style but in better condition. The current display of alcohol is hidden
from customer view and we will install a shelf above the kitchen area where the selection of beverages can be fully
viewed. We will be re-arranging the furniture to add some more tables and chairs as there is a great deal of empty space
currently. The bar area is currently used to order food but there are several feet of unused space where we will put some
bar stools for customers to enjoy their food or beverage at the counter. We also intend to rotate out the older artwork
for some newer and more inviting pieces on consignment. All of these changes will require minimal monetary
investment.

The interior space of this location is a clear advantage over the competition as it is large and has a large performance
area. Other competing coffee shops in the area, such as Caf Sasso, lack the space to host entertainers or larger groups
of customers. Unlike chain coffee shops, the environment is unique and inviting and truly locally focused. The space
and feel may be closest to Spot Coffee but with an advantage in having a full liquor license and functioning stage.

BOULDER COFFEE CO. - JANUARY 2017 5

Hours of Operation
The current hours of operation are quite extensive:

Monday-Thursday 7am to 11pm

Friday 7am to 12am
Saturday 8am to 12 am
Sunday 8am to 11pm

We plan to maintain these hours until trends indicate that we should adjust them to better suit our customer needs.

Products and Services

Boulder Coffee Co. currently offers food, beverages and limited retail merchandise. The food is limited to baked goods,
sandwiches, paninis and salads. The drink menu includes coffee beverages, tea, specialty drinks, coffee cocktails, beer,
wine, and cider. Retail merchandise is limited to coffee beans and containers. The beer selection is limited to Genesee
brand and wine is limited to only one type in individual bottles. The liquor selection is specific to what is used in the
coffee cocktails. The food menu has remained the same for 7 years and while it has some popular items, it is ready for
some fresh offerings. We plan to add to the salad selection and have fresh made salads ready in the cooler display for
lunch, including vegetable, chicken and fruit salads. We also plan to add to the beer, wine and liquor selection and add
additional signature cocktails. We will add wraps and egg whites for lighter breakfast and lunch selections. We will also
add snack options for the evening such as samosas or other finger foods which can be easily sourced and prepared with
the current kitchen equipment. We also plan to expand the retail offerings to include promotional items such as mugs or
t-shirts.

Suppliers
Our plan is to start our transition as the business owners by maintaining the current suppliers. We do not yet have the
supplier information from Mr. Wilton. Any change to vendors that we make will be in the interest of increasing sales by
offering a more premium item or decreasing the cost of goods sold. Any such decisions will be made after we take full
ownership and have thoroughly researched suppliers and our sales trends.

Service
We want our customers to feel like they belong at Boulder Coffee Co. We plan to improve upon the current counter
service by offering table service for large groups and offer paid refills and additional snacks to those seated in the lounge
area. We will strive to learn the names and orders of our regular customers and offer personalized mugs to our daily
patrons. We will encourage repeat business through the use of loyalty rewards cards.

Management
Boulder Coffee Co. Caf and Lounge will be managed by myself and my wife. We will maintain the current employees
in starting and I will replace the current on-site manager. We plan to maintain the additional current staff who most
benefit the company. Finances, ordering, maintenance and operations will be managed by me. My years of owning my
own business and managing all financial and operating duties are well suited for this role. I am very careful with my
finances and calculate and prepare for expenses as far in advance as I can. I have an MBA and understand key financial
concepts of profit and loss. I am operationally organized and thorough and will provide a keen eye to all operational
tasks. My wife will manage the personnel, marketing, entertainment and dcor. She is a very involved and thorough
person and very creative. She is currently obtaining her Masters in Organizational Leadership and works as a Global

BOULDER COFFEE CO. - JANUARY 2017 6

Program Manager developing new services for her company and managing teams of customer service, sales and
operational staff. She has years of retail experience working for restaurants and stores in many different roles.

We will be providing a simple yet detailed manual for employees which outlines operations, expected conduct, and rules.
Employees will be hired by me and my wife and report to me operationally. She will be responsible for incentives or
other creative strategies for growth as they present themselves. Either me or my wife will be on-site during most
operating hours. I will open the location Thursday through Sunday and remain on premises until the afternoon for the
first three months and take over on all days thereafter. We will alternate our presence during events but rely primarily on
a supervisor to close in the evenings. Based on input from Mr. Wilton we will keep two employees working at all times
(including ourselves) and three during the busier times. Employees will be paid $10 per hour with the supervisor making
$12 per hour. Each employee will average 20-30 hours a week. As we have additional sources of income I will not be
taking a wage from the business. I will pay myself from the profits at the end of the year.

Financial Management
I will be responsible for the financial management of the company. Inventory management and POS is currently
Shopkeep and we will continue to use this for ease of transition. I use Quicken for budgeting and have an accountant,
Emily Cokeley, who will be handling the oversight of the finances. As this will be the transfer in ownership of a turn-
key operation I will anticipate the same operating expenses as are currently being reported with the expectation that
these will go down as we optimize sourcing and staffing.

Since Boulder Coffee Co. is already a profitable and functioning caf and lounge we should be able to maintain status
quo at the least but intend to increase profitability in the first year. This can be seen in the financial analyses in the
appendix. This is an asset sale and we are not purchasing any debt or accounts payable or receivable. KLM Transport
LLC does not have any debt or accounts payable. The only debt I am planning to have is the business loan for purchase
of Boulder Coffee Co. in the amount of $120,000. With estimated monthly payments of $1700-$1800 there will still be
profit even at the current expense level, however, there will be immediate savings in eliminating the salaried managers
position.

Start-Up/Acquisition Summary
KLM Transport LLC is purchasing Boulder Coffee Co. Caf and Lounge from Wilton Enterprises Inc. for the price of
$165,000. This is an asset sale and includes the name, logo, all fixtures, furnishings and equipment and the fully
operational business located at 100 Alexander Street in Rochester, NY. The building is owned by Wilton Enterprises
Inc. and lease arrangements are being reached for the continued occupation of this space at a monthly gross rent. The
lease is currently agreed to for 3 years with 3/3 year options to renew. We will receive training from Lyjha Wilton and
his current manager on operations. $5,000 worth of inventory is also included in the sale. Existing contracts or debts
will not transfer in the sale. We are putting $45,000 cash towards the purchase price and applying for $120,000 small
business loan to cover the remaining purchase price. We have $20,000 additional cash on hand for licensing and closing
expenses and starting operating costs and will have another $10,000 from current KLM Transport operations by the
time we take ownership (assuming ownership transfer April 1, 2017).

In addition to financial and operational transfer we will be applying for a full liquor license, food service license and
entertainment license. We foresee no issues or delays in acquiring any of these licenses since they are all currently active
and in good standing for the location under current ownership and there is nothing in my personal history or that of
KLM Transport LLC that would cause any concerns. We are having a professional service provider assist us with these
applications and are receiving legal counsel along the way. My wife and I will be receiving our individual food safety
certificates before we take ownership of the business.

BOULDER COFFEE CO. - JANUARY 2017 7

Marketing
The coffee shop industry continues to grow as the number of coffee drinkers in the United States continues to rise.
Some statistics from Smallbusiness.Chron.com (http://smallbusiness.chron.com/target-market-coffee-71600.html
retrieved 1/9/2017) related to coffee shops are below:

According to SBDCNet, 77 percent of adults in the United States drink coffee on a daily basis.
40 percent of people aged 18-to-24 drinking coffee daily, while 54 percent of people aged 25-to-39 indulge in a daily cup.
SBDCNet says that 22 percent of patrons at coffee shops are between the ages of 18-to-24.

These figures show a nation of coffee drinkers. Coffee Shops are particularly popular with students, academics, business
people, and artists. The success of Boulder Coffee Co. over the past 12 years has been in part to a location in close
proximity to the University of Rochester, MCC, and RIT students. The trendy nature of the caf and lounge add to
appeal to those in the 18-39 age range. Currently Boulder Coffee Co. is a recognized name and has a steady number of
customers with a firm place in the competitive landscape for coffee shops in the area. By adapting to changing market
trends and the addition of some strategic marketing we will be able to reach an even broader customer base.

Market Analysis
While the current market share is substantial enough for the company to remain profitable running at status quo, we
intend to invest in researching our customers and appealing to wider audiences to increase the market share. With a city
population of around 200,000 people and 73% are over 18 and if 77% of these people drink coffee we have a total
potential market of over 112,000 people. This only includes those that live in the city, not students, visitors or
commuters. This location can also appeal to non-coffee drinkers who may be interested in alcoholic beverage
consumption or live entertainment. Some ways we intend to reach a wider market share are by:

Participating in events aimed at different demographic segments to broaden brand awareness

Advertising in local papers and on social media

Hosting events and groups for game nights and meet-ups

Selling some branded merchandise such as t-shirts and mugs

Competition
While there are several coffee shops in Rochester, the most competitive locations are probably Equal Grounds on South
Ave and Caf Sasso on Park Ave. See below descriptions and competitive analysis.

Caf Sasso is a former Boulder Coffee location which was sold in 2015 to former employees of the location. They have
modernized the interior and expanded the menu. The Park Avenue location is a prime location for foot traffic to those
who live and shop in the area. The menu and beverages are similar to Boulder Coffee since it used to be under the same
ownership. They still sell Boulder coffee, which is owned also by Lyjha Wilton and Wilton Enterprises Inc. (In terms of
our purchase of the name for Boulder Coffee we will be entering into a licensing agreement for use of the name for the
coffee roasting business). This caf has limited space and has more of a focus on their art theme than entertainment.
There is no stage and parking is very limited.

BOULDER COFFEE CO. - JANUARY 2017 8

Equal Grounds is physically the closest competition for a coffee and entertainment venue being only 4-5 blocks away. It
is centered closer to other walkable destinations in the South Wedge and slightly south of the Boulder location, making it
slightly more accessible to students in Brighton and Henrietta. The location does not serve alcohol and has limited
parking. This location does have open mic nights periodically although no regular schedule can be found on their
website. This caf markets specifically to the LGBT community in their advertising, branding and dcor.

Competitive Analysis (improvements to be made in italics)

Name Location Alcohol Menu/ Coffee Retail Entertain Parking Marketing History
pricing ment and
comments
Caf Park Ave. Yes. Focus on Same Serves Artwork Limited Street Facebook Formerly a
Sasso close to coffee and juice menu as Boulder on walls space and parking page, article Boulder
shopping cocktails. More Boulder Coffee for sale, no stage. in local Coffee
extensive but with and sells whole No paper upon location.
offerings and more Boulder beans advertised purchase in Acquired
better display options. bagged and events. 2015. by new
than Boulder Pricing is beans ground owners in
currently. the same coffee 2015 and
as for sale continues
Boulder. to be
successful.
Equal South Ave. No Similar Sells Location Hosts open Street Facebook Open and
Grounds close to offerings their is also a mic nights parking page, catering to
shopping at similar own gift shop per some website the LGBT
prices to blend with a websites but community
Boulder variety of nothing on since 2007
LGBT their
themed calendar
items for
sale
Boulder Alexander Yes. Focus on Paninis, Serves Artwork Actively Huge Facebook Opened in
Coffee St. in the coffee and juice salads Boulder on walls hosts open shared page, 2005 by
South cocktails. (Will and Coffee for sale, mic and parking website, Lyjah
Wedge be adding more baked and sells whole comedy lot Youtube Wilton as
selections and goods. Boulder beans nights with videos (plan part of his
enhancing the (Will bagged and a stage and to improve renovation
display) update and beans ground sound web and social of the
enhance coffee system and media presence South
menu) for sale lighting as well as Wedge.
(plan to (Plan to host adverstise) Successful
increase even more flagship
retail sale events) location.
items)

Pricing
We plan to keep the pricing the same until we are able to assess our vendors and profit margins. Since there is currently
a profit on the business, any changes to pricing we make will be to optimize profits. We will be looking closely at
current supplier relationships and look for the best deals possible. As active managers rather than absentee owners, we
will be keeping a close eye on finances and waste and price according to the market and our desired margins. We will
also be taking our labor costs into account when pricing our items for sale as minimum wage is set to increase but our
paid staff will be getting smaller we will need to evaluate this on an ongoing basis.

BOULDER COFFEE CO. - JANUARY 2017 9

Advertising and Promotion
Boulder Coffee Co. has functioned at a rather level status without advertising over the past few years with an absentee
owner but we will be increasing advertising to further build the brand. We will be actively managing and updating social
media pages including Facebook, Twitter, and Instagram. We will actively monitor reviews on websites such as Yelp,
Google, and Trip Advisor. We will engage in active membership and promotion through local avenues such as the City
Paper, Freetime Magazine, the Democrat and Chronicle, and The South Wedge Quarterly. In coming years we plan to
have booths at the Lilac Festival, Park Ave Fest and other local events and initiatives. We will be updating the company
website and keeping an active calendar of events. For promotions, we intend to have a loyalty card, personalization for
regulars, and periodic promotions to entice customer feedback and positive reviews on social media. We will also look
into charity sponsorships and opportunities to jointly advertise with neighboring businesses as time goes on.

BOULDER COFFEE CO. - JANUARY 2017 10

Financial Statements Apppendix
Start-Up Expenses Budget
Down Payment (balance) $40,000
Liquor License $3,500
Food and Entertainment License $600
Legal Fees and Closing Costs $3,500
Food Safety Courses (2) $300
Loan Origination $1,200
Rent $4,000
FFE Improvments $2000
Insurance $300
Opening Inventory $0 (covered in purchase price)
Starting Cash for Operations $5,000
TOTAL STARTUP EXPENSES $60,400

BOULDER COFFEE CO. - JANUARY 2017 11

Cash Flow
The Cash Flow analysis below is conservative in most areas but with a more aggressive approach to advertising spend and cost reduction than the current owner. The
assumptions for increase in sales are conservative considering the marketing and improvements to menus and pricing optimization that we plan to undertake. We will also have
a focus on reducing cost of goods sold over time to reflect the industry average more closely. The payroll spend should decrease significantly by the elimination of two current
positions to be replaced by myself over the first few months. We have included an overestimation of the loan payment which is expected to be between $1700-$1800 per
month. After payment of all start-up costs we plan to have $10,000 available as starting cash but have entered $5,000 below to be conservative. Rent has been negotiated as
part of the purchase agreement as well as $5,000 in starting inventory. Other estimates are based on averages from preceding years which can be found in the tax and valuation
report sent by the seller or through independent research on our actual cost expectations.

BOULDER COFFEE CO. - JANUARY 2017 12

 Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month Month Month
10 11 12
Starting cash $5,000 $13,496 $17,692 $23,888 $30,084 $37,730 $45,376 $53,222 $61,068 $69,264 $77,460 $85,831
Cash In:
Cash Sales $33,500 $33,500 $34,000 $34,000 $34,250 $34,250 $34,500 $34,500 $35,000 $35,000 $35,250 $35,250
Total Cash Intake $33,500 $33,500 $34,000 $34,000 $34,250 $34,250 $34,500 $34,500 $35,000 $35,000 $35,250 $35,250
Cash Out (expenses):

Rent $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000
Utilities/trash $1,400 $1,400 $1,400 $1,400 $1,400 $1,400 $1,400 $1,400 $1,400 $1,400 $1,400 $1,400
Payroll (incl. taxes) $9,000 $8,000 $7,000 $7,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000
Cost of Goods Sold $6,000 $11,000 $10,500 $10,500 $10,300 $10,300 $10,350 $10,350 $10,500 $10,500 $10,575 $10,575
Loan Payments $1,200 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800
Insurance $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150
Advertising $500 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200
Legal/Accounting fees $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150
Office supplies $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200
Telephone/Internet $185 $185 $185 $185 $185 $185 $185 $185 $185 $185 $185 $185
Laundry/Cleaning/maintenance $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400
Other Services $119 $119 $119 $119 $119 $119 $119 $119 $119 $119 $119 $119
Entertainment $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500
Bank fees $1200 $1200 $1200 $1200 $1200 $1200 $1200 $1200 $1200 $1200 $1200 $1200
Total Cash Outgo $25,004 $29,304 $27,804 $27,804 $26,604 $26,604 $26,654 $26,654 $26,804 $26,804 $26,879 $26,879
ENDING BALANCE $13,496 $17,692 $23,888 $30,084 $37,730 $45,376 $53,222 $61,068 $69,264 $77,460 $85,831 $94,202

BOULDER COFFEE CO. - JANUARY 2017 13

Income Projection Statement
This projection compares year over year for the current ownership from 2013-2015 with projections for 2016 to our expected income in our first year of ownership. These
estimates are conservative. Industry averages were found through various sources of personal research online, some could not be found. I have highlighted ratios of concern.
These areas will be addressed through our new ownership and per the current owner are due to poor management and absentee ownership. We have negotiated for a lower rent
with structured increases as we expect to be able to increase revenues substantially with subtle changes and active management. In the coming years we will look for more
creative ways to increase profit through the possibility of additional retail offerings or satellite locations.

Ind. % 2013 % 2014 % 2015 % 2016 est. % Year 1 %

Est. Sales 100% $411,821 100% $404,390 100% $413,889 100% $406,193 100% $413,000 100%
Cost Of Sales 30% $126,809 30.8% $123,632 30.6% $141,639 34.2% $135,853 33.4% $126,450 30.6%
Gross Profit 70% $285,012 69.2% $280,758 69.4% $272,250 65.8% $270,340 66.6% $286,550 69.4%
Controllable Expenses:

Total Payroll 30% $98,616 23.9% $110,119 27.2% $103,791 25.1% $127,664 31.4% $79,000 19.1%
Legal/Accounting $5,680 1.4% $5,684 1.4% $3,320 0.8% 0 0 $1,800 0.4%
Advertising $1,207 0.3% 86 0% $121 0% 0 0 $2,700 0.7%
Utilities $18,390 4.5% $16,461 4.1% $16,324 3.9% $15,549 3.8% $16,800 4.1%
Other $40,127 9.8% $30,092 7.4% $37,717 9.1% $22,130 5.4% $33,248 8.1%
Total Controllable Exp. 40% $164,020 39.9% $162,442 40.1% $161,273 39% $165,343 40.7% $133,540 32.3%
Fixed Expenses:

Rent (gross) 10% $36,000 8.8% $36,000 8.9% $36,000 8.7% $54,000 13.3% $48,000 11.6%
Insurance $2,487 0.6% $1,502 0.4% $2,661 0.6% $1,134 0.3% $1,800 0.4%
Permits/Licenses $1,804 0.4% $1,508 0.4% $1,801 0.4% 0 0 $4,400 1.1%
Loan Payments 0 0 0 0 0 0 0 0 $21,600 5.2%
Total Fixed Expenses 15% $40,291 9.8% $39,010 9.7% $40,462 9.8% $55,134 13.6% $75,800 18.4%
Total Expenses 55% $204,311 49.6% $201,452 49.8% $201,735 48.8% $220,447 54.3% $209,340 50.7%
NET PROFIT/LOSS 15% $80,701 19.6% $79,306 19.6% $70,515 17% $49,893 12.3% $77,210 18.7%
BEFORE TAXES

BOULDER COFFEE CO. - JANUARY 2017 14

Sales Forecast

Chart Title
$450,000

$400,000

$350,000

$300,000

$250,000

$200,000

$150,000

$100,000

$50,000

$0
2013 2014 2015 2016 Estimated Year 1 KLM
Transport

Gross Revenue COGS Gross Profit Expenses SDE

BOULDER COFFEE CO. - JANUARY 2017 15

Balance Sheet for KLM Transport

This is a current look at KLM Transport LLC at the time of making the purchase of Boulder Coffee. None of these
figures include my wifes salary (which is independent from the activities of KLM Transport or Boulder Coffee Co.) of
$88,400 per year which will pay our household expenses and should not be considered in the financing decision for the
purchase of Boulder Coffee Co.

Assets Liabilities
Current Assets: Current Liabilities:
Cash: $60,000 Accounts Payable $3,500

Petty Cash $500 Notes Payable $0

Accounts Receivable $4,500 Interest Payable $0

Inventory $0 Taxes Payable:

Short-Term Investment $0 Federal Income Tax $4,952

Prepaid Expense $0 State Income Tax $1098

Long-Term Investment $0 Self-Employment Tax $7998

Fixed Assets: Sales Tax (SBE) $0

Land $0 Property Tax $0

Buildings $0 Payroll Accrual $0

Improvements $0 Long-Term Liabilities $0

Equipment $4,000 Notes Payable $0

Furniture $0 NET WORTH/OWNERS $126,452

EQUITY/RETAINED
Automobiles/Vehicles $75,000
EARNINGS

TOTAL ASSETS: $144,000 TOTAL LIABILITIES: $144,000

BOULDER COFFEE CO. - JANUARY 2017 16