Bahari House

Will Craig

Tel 0721 970 3

Wilderness Trails (K) Ltd

Private Bag Isiolo

Kenya
 Table of Contents

1. EXECUTIVE SUMMARY 4

1.1. OBJECTIVES 5
1.2. MISSION 5
1.3. KEYS TO SUCCESS 6

2. COMPANY SUMMARY 6

2.1. COMPANY OWNERSHIP 6

2.2. START-UP SUMMARY 6

3. SERVICES 7

4. MARKET ANALYSIS SUMMARY 8

4.1. MARKET SEGMENTATION 8

4.2. TARGET MARKET SEGMENT STRATEGY 9
4.3. SERVICE BUSINESS ANALYSIS 9
4.3.1. COMPETITION AND BUYING PATTERNS 9

5. STRATEGY AND IMPLEMENTATION SUMMARY 10

5.1. COMPETITIVE EDGE 10

5.2. MARKETING STRATEGY 10
5.3. SALES STRATEGY 10
5.3.1. SALES FORECAST 10

6. MANAGEMENT SUMMARY 12

7. FINANCIAL PLAN 12

7.1. START-UP FUNDING 12

7.2. BREAK-EVEN ANALYSIS 13
7.3. PROJECTED PROFIT AND LOSS 14
7.4. PROJECTED CASH FLOW 17
7.5. PROJECTED BALANCE SHEET 18
7.6. BUSINESS RATIOS 19
 Bahari House

1. Executive Summary

Introduction

Wilderness Trail is a well established Tourism product. The company is engaged in high end tourism.
Marketing to guests by word of mouth and selected travel agents and has been operating since 1972.

The company has been looking at expansion possibilities for the last year and has decided that there
exists a good market for our clientele on the Kenyan coast a property has been identified for this project.

The company is dedicated to providing high quality service and accommodation in a quite family context,
this project will be for six people in a private house style accommodation on one acre of land on one of
Kenya's most up market and beautiful beaches.

The Company

Wilderness Trails is located near Isiolo in northern Kenya; it has been run by the same proprietors for the
last 18 years and by the previous generation before that.

The ethos of the company has been to stay small with not more than 20 people in one lodge. This has
proved to be very successful and the company feels that it is time to move this concept on and to keep the
numbers even lower.

Wilderness Trails is part of the Bush and Beyond marketing system which it helped form and which sells
over 40,500 bed nights per annum. Wilderness trails accounts for approximately 8.6% of these beds being
the biggest single provider to the system.

The Products

Wilderness Trails provides a service which includes most of the facilities that a person would find at home.
Meals, drinks, comfortable house, cars and such like with none of the hassle of administrating the system
yourself.

Further to this the company will organize all the transport needs around the country and during the stay
provide access to all the facilities that may be required on a beach holiday.

• Massage,
• Shopping tours
• Sailing
• Diving
• Water skiing
• Kite surfing
• any new fashion that becomes available.

The Market

The market for Wilderness Trails is quite specific in that it is the upper echelon of companies and
institutions and their retired senior staff as well as family and honey mooners. This is a market that has a
large amount of funds has traveled a lot through most of the worlds best hotels and is happy with some
home comfort, with all the facilities and none of the hassle.

Most of the marketing required for this is word of mouth. Wilderness trails has developed this over the last
35 years and is good at using it.

Financial Considerations.

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This project will cost the company $1,036,000 to put into place.

The owners will provide $400,000. the company will provide $236,000. and finance will be sourced for
$400,000.

The owners have agreed to source the extra capital over the next two years and so finance is being sort
on an interest only basis for three years at which point the company will have the capital available or
refinancing will be sort.

The capital will be repayable after 7.5 years.

Should refinancing be sort after three years then this will be for $250,000 the company will have raised
the balance of $150,000 through operations.

Highlights

$250,000

$200,000

$150,000 Sales
Gross Margin
$100,000 Net Profit

$50,000

$0
FY 2008 FY 2009 FY 2010

1.1. Objectives

To provide a high end small tourist destination in idyllic setting on the Kenyan coast that will enhance
the product already provided by wilderness trails.

1.2. Mission

Increase in productitive for the company whilst providing better and more interesting service for our
guests.

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1.3. Keys to Success

• Current market position.

• Management capability.
• Systems availability.
• Ideal property.

Wilderness Trails has been looking for the correct setting to enhance its current product line.

Bahari House at Watumu has come available and is ideal for the project envisioned.

2. Company Summary

Wilderness Trails is a high end small tourism enterprise. We have been operating since 1972 running
safaris and providing accommodation on the Lewa Wildlife conservancy near Isiolo.

We allow only twenty guests in one of our lodges and eight in another and provide camel walking safaris
as a side line with only eight people.

Our ethos is to stay small and provide a high quality of service.

2.1. Company Ownership

Wilderness Trails Ltd is a private company started in 1972 working with Tourism in Northern Kenya.

The primary share holders owning the majority of the company are Emma and William Craig.

They have been running the company as a couple for the last eighteen years.

2.2. Start-up Summary

Bahari House, is a project that will take advantage of an, existing structure. Start-up costs will cover a
number of details to convert the structure to suit our concept both visually, and functionally. Included
in start-up costs are all necessary expenditures to cover the pre-opening hiring and training of our
staff, adding and revising equipment needs, supplying small wares and service wares, stock and
other essentials.

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Start-up

Requirements

Start-up Expenses
Legal $2,000
Stationery etc. $500
Insurance $3,000
Rent $1,000
Consultant $3,000
Other $2,000
Total Start-up Expenses $11,500

Start-up Assets
Cash Required $50,000
Other Current Assets $15,000
Fixed Assets $960,000
Total Assets $1,025,000

Total Requirements $1,036,500

Start-up

$1,200,000

$1,000,000

$800,000

$600,000

$400,000

$200,000

$0
Expenses Assets Investment Loans

3. Services

Bahari House will provide the same service as is provided by Wilderness trails and provide this service in
a different environment.

This will include a full package in the house. Very comfortable accommodation and great privacy.

• Safari tours in the nearby Sekoke forest.

• Snorkeling in the Marine park
• Diving in some of Africa's best dive sites.
• Deep sea fishing.
• Water skiing.
• Secluded peace and quite.

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4. Market Analysis Summary

The Kenyan beach holiday market has always aimed at the package holiday market and has ignored the
top end.

The top end market has started to take note of the possibilities and a few places have started to provide
for this market.

Bahari house aims to make use of the market slot and to provide a fully serviced six bed property that can
cater to this market using the know how of Wilderness Trails and learn from some of the mistakes made
by other properties.

4.1. Market Segmentation

The high end tourism business does not visit the Kenyan beach in any great numbers.

The European market has tended to visit most in the past and the area in which Bahari house is
placed is very popular with this group.

The American safari groups tend to stay up country but are very keen to see some of the costal
culture as well have a relaxing few days at the end of a safari.

The Kenyan market tends to look for less expenseive properties but there is always an exclusive
group that will enjoy the privacy and make use of this property.

Market Analysis
2007 2008 2009 2010 2011
Potential Customers Growth CAGR
European Market 10% 80 88 97 107 118 10.20%
US market 10% 60 66 73 80 88 10.05%
Kenyan market 10% 40 44 48 53 58 9.73%
Total 10.05% 180 198 218 240 264 10.05%

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Market Analysis (Pie)

European Market
US market
Kenyan market

4.2. Target Market Segment Strategy

The target market segment for Bahari house is the word of mouth tourism that we generally sell to at
Wilderness trails mainly from Europe followed by the America tourism market that at the moment
does not tend to use the Kenyan beach.

Wilderness Trails has direct access into both of these markets that will allow Bahari house to grow
from word of mouth comparatively quickly.

4.3. Service Business Analysis

The small scale private hosting business is quite wide spread in Kenya. This business depends on
the owner / hosts always being on site to work with the guests. This limits the number of guests that
can be accommodated since the hosts get worn out.

Wilderness Trails has pioneered a system of providing character hosts for small lodges that allows
the owners to stand back and administrate, whilst the guest feel that they have had a personal
hosted experience.

4.3.1. Competition and Buying Patterns

The key element to the type of accommodation that the company provides is that the travel
agent or friend that has sent guests is confident that there clients or friends will return saying
thank you that was a very good recommendation.

We aim to provide this feed back on a consistent basis.

Our experience over 35 years in the business is that this feed back is what drives the buying
patterns of the up market travel agents.

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5. Strategy and Implementation Summary

The Type of guest that stays in hotels such as Wilderness Trails has limited capability to find similar
accommodation on the coast.

Our strategy is to provide some of this accommodation and bring it into production as quickly as possible.

Thereby increasing the turnover for the whole company as well as enhancing our name.

5.1. Competitive Edge

The company will be providing a product that is not currently on the market that is being looked for by
a large client base.

Maintaining our competitive edge once this market is seen by our competitors will be a task that will
be under taken on the same basis that the company has always maintained. Reliable and consistent
good service in an area that can provide what the guest wants to see or be part of.

5.2. Marketing Strategy

The company will market through its own marketing organization. This will utilize the association with
other lodges that Wilderness trails operate and provide for most of our marketing requirements.

5.3. Sales Strategy

The Sales Strategy for Bahari house will begin with word of mouth sales through friends and selected
travel agents.

Wilderness Trails has a marketing system that deals with a very wide range of travel agents and this
property will be fed into this system and grow with its own reputation from here.

Our sales team is selling 250 beds per day with 75 % occupancy through the nine month upcountry
tourism season.

These extra 6 beds will fit nicely into the system.

5.3.1. Sales Forecast

The sales forecast is split into two sections for tax purposes.

The transport of tourists is VAT exempt where as accommodation attracts 16 %

Since we sell an all inclusive package it is normal therefore to separate these two aspects of
the bill.

Both of these lines will therefore grow along side each other. The expected sales growth per
annum is 10% with a slow but steady growth in turnover controlled by price rather than bed
nights.

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Sales Forecast
FY 2008 FY 2009 FY 2010
Sales
Accommodation $66,200 $74,900 $82,280
Transportation $142,200 $145,800 $164,240
Total Sales $208,400 $220,700 $246,520

Direct Cost of Sales FY 2008 FY 2009 FY 2010

cost of accommodation $43,092 $47,300 $52,140
Cost of transportation of tourists $23,700 $26,400 $32,600
Subtotal Direct Cost of Sales $66,792 $73,700 $84,740

Sales Monthly

$35,000

$30,000

$25,000

$20,000
Accomerdation
$15,000 Transportation

$10,000

$5,000

$0
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep

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Sales by Year

$250,000

$200,000

$150,000
Accomerdation
Transportation
$100,000

$50,000

$0
FY 2008 FY 2009 FY 2010

6. Management Summary

The management of Bahari House will be carried out by Wilderness Trails administration and by a
Wilderness Trails manager who is currently under training.

The staff for the property will come from the current Wilderness Trails lodge system with new trainees
being taken in to replace them.

Personnel Plan
FY 2008 FY 2009 FY 2010
Manager $7,000 $9,000 $10,000
Three general staff $7,000 $7,000 $7,700
Total People 4 4 4
Total Payroll $14,000 $16,000 $17,700

7. Financial Plan

Our financial plan is based on conservative estimates and assumptions. We will need to plan on initial
investment to make the financials work.

We have used a conservative 36% occupancy to allow this model to work.

7.1. Start-up Funding

Start up funding will come from owner investment of $636,000 being $400,000 down payment on the
property, $186,000 for redevelopment of the property to suite the required standards. $50,000 for the
purchase of a vehicle that will allow the guests to travel in comfort.

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The balance required to purchase the balance of the property $400,000 will be borrowed from
financial institution for a period of two years on an Interest only mortgage where upon this will be paid
off or renegotiated.

Start-up Funding
Start-up Expenses to Fund $11,500
Start-up Assets to Fund $1,025,000
Total Funding Required $1,036,500

Assets
Non-cash Assets from Start-up $982,000
Cash Requirements from Start-up $50,000
Additional Cash Raised $0
Cash Balance on Starting Date $50,000
Total Assets $1,032,000

Liabilities and Capital

Liabilities
Current Borrowing $400,000
Fixed Liabilities $0
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $400,000

Capital

Planned Investment
Owner $636,500
Investor $636,500
Additional Investment Requirement $0
Total Planned Investment $0

Loss at Start-up (Start-up Expenses) ($11,500)

Total Capital $625,000

Total Capital and Liabilities $1,025,000

Total Funding $1,036,500

7.2. Break-even Analysis

The Break-even Analysis gives an indication of the success capability of the business.

Break-even Analysis

Monthly Revenue Break-even $3,446

Assumptions:
Average Percent Variable Cost 32%
Estimated Monthly Fixed Cost $2,342

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Break-even Analysis

$2,500
$2,000
$1,500
$1,000
$500
$0
($500)
($1,000)
($1,500)
($2,000)
($2,500)

$0 $1,200 $2,400 $3,600 $4,800 $6,000

Monthly break-even point

Break-even point = where line intersects with 0

7.3. Projected Profit and Loss

As the Profit and Loss table shows, the company expects to continue its steady growth in profitability
over the next three years of operations.

After 7.5 years the project will have returned its investment.

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Pro Forma Profit and Loss

FY 2008 FY 2009 FY 2010
Sales $208,400 $220,700 $246,520
Direct Cost of Sales $66,792 $73,700 $84,740
Other Costs of Sales $0 $0 $0
------------ ------------ ------------
Total Cost of Sales $66,792 $73,700 $84,740

Gross Margin $141,608 $147,000 $161,780

Gross Margin % 67.95% 66.61% 65.63%

Expenses
Payroll $14,000 $16,000 $17,700
Marketing/Promotion $6,700 $7,000 $7,000
Depreciation $0 $0 $0
Rent $0 $0 $0
Rates $0 $0 $0
Electricity $3,000 $3,000 $3,500
Insurance $0 $0 $0
Payroll Taxes (National Insurance, etc.) $1,400 $1,600 $1,770
Other General and Administrative $3,000 $3,000 $3,500
Expenses
------------ ------------ ------------
Total Operating Expenses $28,100 $30,600 $33,470

Profit Before Interest and Taxes $113,508 $116,400 $128,310

EBITDA $113,508 $116,400 $128,310
Interest Expense $40,000 $40,000 $40,000
Taxes Incurred $22,052 $22,920 $26,493

Net Profit $51,456 $53,480 $61,817

Net Profit/Sales 24.69% 24.23% 25.08%

Profit Monthly

$20,000

$15,000

$10,000

$5,000

$0

($5,000)

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

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Profit Yearly

$70,000

$60,000

$50,000

$40,000

$30,000

$20,000

$10,000

$0
FY 2008 FY 2009 FY 2010

Gross Margin Monthly

$30,000

$25,000

$20,000

$15,000

$10,000

$5,000

$0

($5,000)

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

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Gross Margin Yearly

$180,000

$160,000

$140,000

$120,000

$100,000

$80,000

$60,000

$40,000

$20,000

$0
FY 2008 FY 2009 FY 2010

7.4. Projected Cash Flow

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

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Pro Forma Cash Flow

FY 2008 FY 2009 FY 2010
Cash Received

Cash from Operations

Cash Sales $208,400 $220,700 $246,520
Subtotal Cash from Operations $208,400 $220,700 $246,520

Additional Cash Received

VAT Received (Output Tax) $10,592 $11,984 $13,165
VAT Repayments $4,441 $3,435 $3,510
New Current Borrowing $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Fixed Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Fixed Assets $0 $0 $0
New Investment Received $0 $0 $0
Subtotal Cash Received $223,433 $236,119 $263,194

Expenditures FY 2008 FY 2009 FY 2010

Expenditures from Operations

Cash Spending $14,000 $16,000 $17,700
Bill Payments $129,779 $151,956 $165,706
Subtotal Spent on Operations $143,779 $167,956 $183,406

Additional Cash Spent

VAT Paid Out (Input Tax) $13,405 $14,623 $16,674
VAT Payments $2,425 $0 $0
Subtotal Cash Spent $159,609 $182,579 $200,080

Net Cash Flow $63,825 $53,540 $63,114

Cash Balance $113,825 $167,365 $230,479

Cash

$140,000

$120,000

$100,000

$80,000

$60,000 Net Cash Flow

Cash Balance
$40,000

$20,000

$0

($20,000)
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep

7.5. Projected Balance Sheet

The balance sheet is quite solid. We do not project any real trouble meeting our debt obligations--as
long as we can achieve our specific objectives.
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Pro Forma Balance Sheet

FY 2008 FY 2009 FY 2010
Assets

Current Assets
Cash $113,825 $167,365 $230,479
Other Current Assets $15,796 $15,000 $15,000
Total Current Assets $129,621 $182,365 $245,479

Fixed Assets
Fixed Assets $960,000 $960,000 $960,000
Accumulated Depreciation $0 $0 $0
Total Fixed Assets $960,000 $960,000 $960,000
Total Assets $1,089,621 $1,142,365 $1,205,479

Liabilities and Capital FY 2008 FY 2009 FY 2010

Current Liabilities
Accounts Payable $13,165 $12,429 $13,726
Current Borrowing $400,000 $400,000 $400,000
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $413,165 $412,429 $413,726

Fixed Liabilities $0 $0 $0
Total Liabilities $413,165 $412,429 $413,726

Paid-in Capital $636,500 $636,500 $636,500

Retained Earnings ($11,500) $39,956 $93,436
Earnings $51,456 $53,480 $61,817
Total Capital $676,456 $729,936 $791,753
Total Liabilities and Capital $1,089,621 $1,142,365 $1,205,479

Net Worth $676,456 $729,936 $791,753

7.6. Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the
Standard Industrial Classification (SIC), are shown for comparison.

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Ratio Analysis
FY 2008 FY 2009 FY 2010 Industry Profile
Sales Growth 0.00% 5.90% 11.70% 7.24%

Percent of Total Assets

Other Current Assets 1.45% 1.31% 1.24% 24.20%
Total Current Assets 11.90% 15.96% 20.36% 29.12%
Fixed Assets 88.10% 84.04% 79.64% 70.88%
Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 37.92% 36.10% 34.32% 16.94%

Fixed Liabilities 0.00% 0.00% 0.00% 26.60%
Total Liabilities 37.92% 36.10% 34.32% 43.54%
Net Worth 62.08% 63.90% 65.68% 56.46%

Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 67.95% 66.61% 65.63% 100.00%
Selling, General & Administrative 43.26% 42.37% 40.55% 75.85%
Expenses
Advertising Expenses 0.00% 0.00% 0.00% 2.17%
Profit Before Interest and Taxes 54.47% 52.74% 52.05% 0.35%

Main Ratios
Current 0.31 0.44 0.59 0.98
Quick 0.31 0.44 0.59 0.75
Total Debt to Total Assets 37.92% 36.10% 34.32% 58.28%
Pre-tax Return on Net Worth 10.87% 10.47% 11.15% 0.29%
Pre-tax Return on Assets 6.75% 6.69% 7.33% 0.70%

Additional Ratios FY 2008 FY 2009 FY 2010

Net Profit Margin 24.69% 24.23% 25.08% n.a
Return on Equity 7.61% 7.33% 7.81% n.a

Activity Ratios
Accounts Payable Turnover 10.86 12.17 12.17 n.a
Payment Days 27 31 29 n.a
Total Asset Turnover 0.19 0.19 0.20 n.a

Debt Ratios
Debt to Net Worth 0.61 0.57 0.52 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a

Liquidity Ratios
Net Working Capital ($283,544) ($230,064) ($168,247) n.a
Interest Coverage 2.84 2.91 3.21 n.a

Additional Ratios
Assets to Sales 5.23 5.18 4.89 n.a
Current Debt/Total Assets 38% 36% 34% n.a
Acid Test 0.31 0.44 0.59 n.a
Sales/Net Worth 0.31 0.30 0.31 n.a
Dividend Payout 0.00 0.00 0.00 n.a

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 Appendix

Sales Forecast
Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May- Jun-08 Jul-08 Aug-08 Sep-08
08
Sales VAT
Rate
Accommodation 16.00% $7,200 $7,200 $10,800 $7,200 $7,200 $7,200 $0 $0 $3,600 $3,600 $7,200 $5,000
Transportation 0.00% $14,400 $14,400 $21,600 $14,400 $14,400 $14,400 $0 $0 $12,150 $12,150 $12,150 $12,150
Total Sales $21,600 $21,600 $32,400 $21,600 $21,600 $21,600 $0 $0 $15,750 $15,750 $19,350 $17,150

Direct Cost of Sales VAT Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May- Jun-08 Jul-08 Aug-08 Sep-08
Rate 08
cost of accommodation 16.00% $3,591 $3,591 $3,591 $3,591 $3,591 $3,591 $3,591 $3,591 $3,591 $3,591 $3,591 $3,591
Cost of transportation of 17.50% $0 $0 $0 $0 $0 $4,740 $0 $4,740 $4,740 $0 $4,740 $4,740
tourists
Row 3 17.50% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Direct Cost of Sales $3,591 $3,591 $3,591 $3,591 $3,591 $8,331 $3,591 $8,331 $8,331 $3,591 $8,331 $8,331
 Appendix

Personnel Plan
Oct- Nov- Dec- Jan-08 Feb- Mar- Apr- May- Jun-08 Jul-08 Aug- Sep-
07 07 07 08 08 08 08 08 08
Manager 0% $0 $0 $0 $1,000 $1,000 $1,000 $0 $0 $1,000 $1,000 $1,000 $1,000
Three general staff 0% $0 $0 $700 $700 $700 $700 $700 $700 $700 $700 $700 $700
Name or Title or Group 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total People 0 0 0 4 4 4 4 4 4 4 4 4

Total Payroll $0 $0 $700 $1,700 $1,700 $1,700 $700 $700 $1,700 $1,700 $1,700 $1,700
 Appendix

Pro Forma Profit and Loss

Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08
Sales VAT $21,600 $21,600 $32,400 $21,600 $21,600 $21,600 $0 $0 $15,750 $15,750 $19,350 $17,150
Rate
Direct Cost of Sales $3,591 $3,591 $3,591 $3,591 $3,591 $8,331 $3,591 $8,331 $8,331 $3,591 $8,331 $8,331
Other Costs of Sales 17.50% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
---------- ---------- ---------- ---------- ---------- ---------- ----------- ------------ ---------- ---------- ---------- ----------
-- -- -- -- -- -- - -- -- -- --
Total Cost of Sales $3,591 $3,591 $3,591 $3,591 $3,591 $8,331 $3,591 $8,331 $8,331 $3,591 $8,331 $8,331

Gross Margin $18,009 $18,009 $28,809 $18,009 $18,009 $13,269 ($3,591) ($8,331) $7,419 $12,159 $11,019 $8,819
Gross Margin % 83.38% 83.38% 88.92% 83.38% 83.38% 61.43% 0.00% 0.00% 47.10% 77.20% 56.95% 51.42%

Expenses VAT
Rate
Payroll $0 $0 $700 $1,700 $1,700 $1,700 $700 $700 $1,700 $1,700 $1,700 $1,700
Marketing/Promotion 17.50% $1,200 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500
Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Rent 17.50% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Rates 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Electricity 17.50% $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250
Insurance 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Payroll Taxes (National 10.00% $0 $0 $70 $170 $170 $170 $70 $70 $170 $170 $170 $170
Insurance, etc.)
Other General and 17.50% $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250
Administrative Expenses
---------- ---------- ---------- ---------- ---------- ---------- ----------- ------------ ---------- ---------- ---------- ----------
-- -- -- -- -- -- - -- -- -- --
Total Operating Expenses VAT $1,700 $1,000 $1,770 $2,870 $2,870 $2,870 $1,770 $1,770 $2,870 $2,870 $2,870 $2,870
Rate

Profit Before Interest and $16,309 $17,009 $27,039 $15,139 $15,139 $10,399 ($5,361) ($10,101) $4,549 $9,289 $8,149 $5,949
Taxes
EBITDA $16,309 $17,009 $27,039 $15,139 $15,139 $10,399 ($5,361) ($10,101) $4,549 $9,289 $8,149 $5,949
Interest Expense $3,333 $3,333 $3,333 $3,333 $3,333 $3,333 $3,333 $3,333 $3,333 $3,333 $3,333 $3,333
Taxes Incurred $3,893 $4,103 $7,112 $3,542 $3,542 $2,120 ($2,608) ($4,030) $365 $1,787 $1,445 $785

Net Profit $9,083 $9,573 $16,594 $8,264 $8,264 $4,946 ($6,086) ($9,404) $851 $4,169 $3,371 $1,831
Net Profit/Sales 42.05% 44.32% 51.22% 38.26% 38.26% 22.90% 0.00% 0.00% 5.40% 26.47% 17.42% 10.68%
 Appendix

Pro Forma Cash Flow

Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08
Cash Received

Cash from
Operations
Cash Sales $21,600 $21,600 $32,400 $21,600 $21,600 $21,600 $0 $0 $15,750 $15,750 $19,350 $17,150
Subtotal Cash $21,600 $21,600 $32,400 $21,600 $21,600 $21,600 $0 $0 $15,750 $15,750 $19,350 $17,150
from Operations

Additional Cash VAT

Received Rate
VAT Received $1,152 $1,152 $1,728 $1,152 $1,152 $1,152 $0 $0 $576 $576 $1,152 $800
(Output Tax)
VAT Repayments $0 $0 $0 $0 $0 $0 $444 $757 $1,586 $1,020 $191 $444
New Current $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Borrowing
New Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Liabilities
(interest-free)
New Fixed $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Liabilities
Sales of Other 17.50% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Current Assets
Sales of Fixed 17.50% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Assets
New Investment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Received
Subtotal Cash $22,752 $22,752 $34,128 $22,752 $22,752 $22,752 $444 $757 $17,912 $17,346 $20,693 $18,394
Received

Expenditures Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08

Expenditures
from Operations
Cash Spending $0 $0 $700 $1,700 $1,700 $1,700 $700 $700 $1,700 $1,700 $1,700 $1,700
Bill Payments $417 $12,501 $12,130 $14,990 $11,636 $11,747 $14,635 $5,497 $8,854 $13,088 $10,028 $14,257
Subtotal Spent $417 $12,501 $12,830 $16,690 $13,336 $13,447 $15,335 $6,197 $10,554 $14,788 $11,728 $15,957
on Operations

Additional Cash VAT

Spent Rate
VAT Paid Out $872 $750 $757 $767 $767 $1,596 $757 $1,586 $1,596 $767 $1,596 $1,596
(Input Tax)
VAT Payments $0 $280 $402 $971 $385 $385 $0 $0 $0 $0 $0 $0
Principal $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Repayment of
Current
Borrowing
Other Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal
Repayment
Fixed Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal
Repayment
Purchase Other 17.50% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Current Assets
Purchase Fixed 17.50% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Assets
Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash $1,289 $13,530 $13,989 $18,428 $14,488 $15,428 $16,092 $7,783 $12,150 $15,555 $13,324 $17,553
Spent

Net Cash Flow $21,463 $9,222 $20,139 $4,324 $8,264 $7,324 ($15,648) ($7,026) $5,762 $1,791 $7,369 $841
Cash Balance $71,463 $80,685 $100,824 $105,147 $113,411 $120,735 $105,088 $98,062 $103,824 $105,615 $112,984 $113,825
 Appendix

Pro Forma Balance Sheet

Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08
Assets Starting
Balances

Current
Assets
Cash $50,000 $71,463 $80,685 $100,824 $105,147 $113,411 $120,735 $105,088 $98,062 $103,824 $105,615 $112,984 $113,825
Other $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,444 $15,757 $16,586 $16,020 $15,191 $15,444 $15,796
Current
Assets
Total Current $65,000 $86,463 $95,685 $115,824 $120,147 $128,411 $136,179 $120,844 $114,648 $119,844 $120,805 $128,428 $129,621
Assets

Fixed Assets
Fixed Assets $960,000 $960,000 $960,000 $960,000 $960,000 $960,000 $960,000 $960,000 $960,000 $960,000 $960,000 $960,000 $960,000
Accumulated $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Depreciation
Total Fixed $960,000 $960,000 $960,000 $960,000 $960,000 $960,000 $960,000 $960,000 $960,000 $960,000 $960,000 $960,000 $960,000
Assets
Total Assets $1,025,000 $1,046,463 $1,055,685 $1,075,824 $1,080,147 $1,088,411 $1,096,179 $1,080,844 $1,074,648 $1,079,844 $1,080,805 $1,088,428 $1,089,621

Liabilities Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08
and Capital

Current
Liabilities
Accounts $0 $12,100 $11,626 $14,602 $11,248 $11,248 $14,456 $5,206 $8,414 $12,759 $9,552 $13,803 $13,165
Payable
Current $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000
Borrowing
Other $0 $280 $402 $971 $385 $385 $0 $0 $0 $0 $0 $0 $0
Current
Liabilities
Subtotal $400,000 $412,380 $412,029 $415,574 $411,634 $411,634 $414,456 $405,206 $408,414 $412,759 $409,552 $413,803 $413,165
Current
Liabilities

Fixed $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Liabilities
Total $400,000 $412,380 $412,029 $415,574 $411,634 $411,634 $414,456 $405,206 $408,414 $412,759 $409,552 $413,803 $413,165
Liabilities

Paid-in $636,500 $636,500 $636,500 $636,500 $636,500 $636,500 $636,500 $636,500 $636,500 $636,500 $636,500 $636,500 $636,500
Capital
Retained ($11,500) ($11,500) ($11,500) ($11,500) ($11,500) ($11,500) ($11,500) ($11,500) ($11,500) ($11,500) ($11,500) ($11,500) ($11,500)
Earnings
Earnings $0 $9,083 $18,656 $35,250 $43,514 $51,778 $56,724 $50,638 $41,234 $42,085 $46,254 $49,625 $51,456
Total Capital $625,000 $634,083 $643,656 $660,250 $668,514 $676,778 $681,724 $675,638 $666,234 $667,085 $671,254 $674,625 $676,456
Total $1,025,000 $1,046,463 $1,055,685 $1,075,824 $1,080,147 $1,088,411 $1,096,179 $1,080,844 $1,074,648 $1,079,844 $1,080,805 $1,088,428 $1,089,621
Liabilities
and Capital

Net Worth $625,000 $634,083 $643,656 $660,250 $668,514 $676,778 $681,724 $675,638 $666,234 $667,085 $671,254 $674,625 $676,456