Dev Ronn Enterprises, Llc   Business Plan   Final
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Dev Ronn Enterprises, Llc Business Plan Final

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Our complete business plan for DevRonn Enterprises and Devin\'s Kickass Cajun Seasoning, a venue to help rebuild the city of New Orleans from Hurricane katrina

Our complete business plan for DevRonn Enterprises and Devin\'s Kickass Cajun Seasoning, a venue to help rebuild the city of New Orleans from Hurricane katrina

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    Dev Ronn Enterprises, Llc   Business Plan   Final Dev Ronn Enterprises, Llc Business Plan Final Document Transcript

    • DevRonn Enterprises, LLC Strategic Business and Marketing Plan The information in this document is confidential and is to be only read by authorized parties. Please refer to the confidentiality agreement for further details. This business plan is not an offering for securities.
    • 50% Paid DevRonn Enterprises, LLC Confidentiality Agreement The undersigned reader acknowledges that the information provided in this business plan is confidential; therefore, the reader agrees not to disclose it without the express written permission of an authorized agent of DevRonn Enterprises, LLC. It is acknowledged by the reader that information furnished in this business plan is in all respects confidential in nature, other than information which is in the public domain through other means and that any disclosure or use of same by reader, and may cause serious harm or damage to aforementioned parties. This business plan is not to be copied or reproduced by any means without the sole written consent of an authorized agent of DevRonn Enterprises, LLC. Upon request, this document is to be immediately returned. __________________________________ _______________ Signature Date _______________________________ ame (typed or printed) 2
    • 50% Paid DevRonn Enterprises, LLC Table of Contents Executive Summary ............................................................................................................ 5 The Offer ............................................................................................................................. 7 2.1 Funds Required ......................................................................................................... 7 2.2 Investor Equity .......................................................................................................... 7 2.3 Management Equity .................................................................................................. 7 2.4 Board of Directors Composition ............................................................................... 7 2.5 Exit Strategies ........................................................................................................... 7 2.6 Investor Divestiture ................................................................................................... 8 DevRonn Enterprise Products ............................................................................................. 9 Overview of the Organization ........................................................................................... 10 4.1 Registered Name ..................................................................................................... 10 4.2 Commencement of Operations................................................................................ 10 4.3 History..................................................................................................................... 10 4.4 Mission Statement ................................................................................................... 10 4.5 Vision Statement ..................................................................................................... 10 4.6 Organizational Objectives ....................................................................................... 10 4.7 Organizational Values ............................................................................................. 11 4.8 Founders and Management Team ........................................................................... 11 Strategic Analysis.............................................................................................................. 12 5.1 External Environment Analysis .............................................................................. 12 5.2 Industry Analysis..................................................................................................... 12 5.3 Customer Profile ..................................................................................................... 13 5.4 Competitive Analysis .............................................................................................. 13 Key Strategic Issues .......................................................................................................... 14 6.1 Sustainable Competitive Advantage ....................................................................... 14 6.2 Basis for Growth ..................................................................................................... 14 Marketing Plan .................................................................................................................. 15 7.1 Marketing Objectives .............................................................................................. 15 7.2 Sales Forecasts ........................................................................................................ 15 7.3 Sales Assumptions................................................................................................... 15 3
    • 50% Paid DevRonn Enterprises, LLC 7.4 Marketing Strategies ............................................................................................... 16 7.5 Service Marketing ................................................................................................... 17 7.5.1 Price.................................................................................................................. 17 7.5.2 Distribution....................................................................................................... 17 Organizational Plan ........................................................................................................... 18 8.1 Corporate Organization ........................................................................................... 18 8.2 Organizational Budget............................................................................................. 18 Financial Plan.................................................................................................................... 20 9.1 Underlying Assumptions......................................................................................... 20 9.2 Financial Highlights ................................................................................................ 20 9.3 Sensitivity Analysis................................................................................................. 20 9.4 Source of Funds....................................................................................................... 20 9.5 Financial Proformas ................................................................................................ 21 9.6 Breakeven Analysis................................................................................................. 25 9.7 Business Ratios ....................................................................................................... 25 9.8 General Assumptions .............................................................................................. 26 Appendixes SWOT Analysis................................................................................................................. 27 Critical Risks and Problems .............................................................................................. 28 Reference Sources ............................................................................................................. 29 Expanded Profit and Loss Statements............................................................................... 30 Expanded Cash Flow Analysis.......................................................................................... 36 4
    • 50% Paid DevRonn Enterprises, LLC Executive Summary The purpose of this business plan is to raise and examine the allocation of $1,000,000 of investor funds for the expansion of a specialty food product business that has developed a line of Cajun spices. DevRonn Enterprises, LLC (“the Company”) is a California based company that has been in operation for over one year. The Company’s founder, Devin Devasquez is a former Playboy Playmate and connoisseur chef that has developed her own line of Cajon seasonings. The Company has already begun revenue generation and is now seeking a capital infusion to expand the business over the next five years. This business plan will showcase the operations of the business, its line of products, and its expected financial results during this time frame. The Founder – Devin Devasquez Ms. Devin Devasquez is a well known former Playboy Playmate that has achieved nationwide fame for her modeling and acting pursuits. She is also a fantastic chef, which led her to develop her flagship product line, “Devin’s Kick Ass Cajun Seasoning.” Through her celebrity and business expertise, she and the Senior Management Team, will be able to bring the operations of the business to profitability very quickly. Their biographies can be found in the fourth section of the business plan. The Products The flagship product line for the Company is “Devin’s Kick Ass Cajun Seasoning”, which is an all natural blend of peppers, chili power, garlic, and paprika. Ms. Devasquez developed this blend over a number of years. Currently, the business has produced and sold more than 1,000 units. The product has attracted the attention of many prominent televised food networks. As mentioned above, the Company is now seeking capital to ramp up distribution and sales operations to a national level. The third section of the business plan will further discuss the Company’s flagship product line, and future product developments of DevRonn Enterprises. The Offer At this time, the Company is seeking to raise $1,000,000. on a tentative basis, the Company will provide the investor(s) with a 25% ownership interest in the business, a seat on the board of directors, and a regular stream of dividends starting in the first year of operations. The funds are required in three segments of the Company: • Expansion of the Company’s marketing infrastructure. • Expansion of saleable inventory. • Cash for maintaining normal business operations. 5
    • 50% Paid DevRonn Enterprises, LLC Sales Forecasts The Company anticipates an exceptional rate of growth upon the commencement of operations. Below is a chart that exemplifies Management’s vision for growth during the first five years of operations. Sales, Operating Costs, and Profit Forecast $7,000,000 $6,000,000 $5,000,000 $4,000,000 Sales $3,000,000 Total Operating Costs $2,000,000 Net Profit $1,000,000 $0 2009 2010 2011 2012 2013 Year The Future As time progresses, the business will continually develop new lines of seasoning as well as ancillary products such as cookbooks that will compliment the food products produced and distributed by DevRonn Enterprises. The business will also develop apparel branded with the logos and trademarks of the business. Additionally, the Company will make continued reinvestments into DevRonn Enterprises’ marketing campaigns and sales infrastructure so that the products offered by the business reach national level distribution/prominence by the second year of expanded operations. 6
    • 50% Paid DevRonn Enterprises, LLC The Offer 2.1 Funds Required DevRonn Enterprises, LLC will require a cash inflow of $1,000,000 to properly operate and maintain its product distribution and sales operations. Below is a brief breakdown of how the funds will be allocated: Projected Startup Costs Business Expansion Year 2009 Expanded Web Development $15,000 Computers $10,000 FF&E $35,000 Working Capital $200,000 Expanded Inventory $300,000 Marketing Budget $325,000 Expanded Distribution Capabilities $100,000 Misc. Development Costs $15,000 Total Startup Costs $1,000,000 2.2 Investor Equity The investor will receive a 25% ownership interest in the Company. Dividends and other capital disbursements may be made during this time at the discretion of the board of directors. 2.3 Management Equity The Management of the Company, led by Devin Devasquez, currently retains a 100% ownership interest in the business. 2.4 Board of Directors Composition The board of directors will be comprised as follows: • Investor (2 Seats) • Current Principals (2 Seats) • Independent Chairperson (1 Seat) 2.5 Exit Strategies Management has planned for one possible exit strategy. The most economically viable exit strategy would be to sell the entire DevRonn Enterprises entity to a third party for a significant earnings multiple. After Ms. Devasquez and her staff create a strong brand name for the Company, the business could easily receive a sales price equivalent to a price to earnings ratio of 8 to 12 times the previous year’s net earnings depending on the 7
    • 50% Paid DevRonn Enterprises, LLC strength and regularity of the Company’s earnings. In the event that Management wishes to sell the business, a qualified business broker or small mergers and acquisitions investment bank will be hired to manage the sale of the business. 2.6 Investor Divestiture This will be discussed during negotiations. 8
    • 50% Paid DevRonn Enterprises, LLC DevRonn Enterprise Products As stated in the executive summary, DevRonn Enterprise has launched its flagship line of Cajun spices under the trade name “Devin’s Kick Ass Cajun Spices.” Below is a description of the product. Please note that the seventh section of the business plan will focus on Management’s strategic plan for marketing and distributing this line of products to the general public. It should be noted that the Company has already begun distribution of this product, and more than 1,000 units have been sold over the past two months. The spice features a mixture of salt, black pepper, white pepper, onion, garlic, paprika, and chili powder. No MSG is found in this product, and all ingredients are all natural with no artificial flavorings or colorings. The spice is a great additive for any Cajun dish. The Company also has a number of other products planned including several different spice combinations, salad dressings, and recipe books that focus on the use of Devin’s Kick Ass Cajun Seasoning. 9
    • 50% Paid DevRonn Enterprises, LLC Overview of the Organization 4.1 Registered ame DevRonn Enterprises, LLC. It is registered as a limited liability company (or “LLC”) in the state of California. 4.2 Commencement of Operations The Company plans to commence expanded business operations by early 2009. 4.3 History EXPAND WITH FORMAL OPERATING HISTORY 4.4 Mission Statement “DevRonn is all about living well, being happy and having a balanced life. So much stress is in our world today, and we wanted to create a place that reflects what we have learned in life and what works for us to share with you! We believe you must have balance in all areas of life, home, work, relationships and health. Our products help give you balance in all of those areas through books, music, nutrition, exercise and creativity. These are products we believe work and make a difference in our world. Life is meant to "live well" and that is our slogan.” 4.5 Vision Statement Through their diverse areas of expertise and knowledge, the Founder and Senior Management Team of DevRonn Enterprises expects to build a business that will achieve $6,000,000 dollars of revenue by the fifth year of operations. 4.6 Organizational Objectives • Develop a marketing infrastructure that maximizes the brand name of products developed by DevRonn Enterprises, starting with the Company’s flagship line, “Devin’s Kick Ass Cajun Seasoning.” • Comply with all state and federal laws regarding the distribution of food products to the general public. • Maintain a committed program for researching, testing, and developing new products under the DevRonn Enterprises brand name. • Maintain fiscally sound operations. • Successfully capitalize on Ms. Devasquez’s celebrity to expand the Company’s marketing reach and scope. 10
    • 50% Paid DevRonn Enterprises, LLC 4.7 Organizational Values • Complete disclosure and transparency regarding all financial transactions. • Complete honesty and integrity when working with a client. • Develop DevRonn Enterprises as a wealth and income creating vehicle. 4.8 Founders and Management Team Below are the biographies of the Company’s Founders: Devin Devasquez - Devin DeVasquez made a name for herself as the 'Star Search' $100,000 spokesmodel on the hit talent show 'Star Search' and has been a successful model, actress, author and entrepreneur for over 25 years. She wanted to make a difference and help her home state of Louisiana and the city of New Orleans, so she created 'Devin's Kickass Cajun Seasoning' and the 'Cookin Cajun' cookbook as an avenue to give back to her Cajun heritage and, preserve the great city of New Orleans. Together with her soul mate and life partner Ronn Moss they want to oversee rebuilding New Orleans to the authentic city it once was. She is also dedicated to helping others in the area of nutrition, health and well being with her upcoming book on keeping your life in balance. She believes in all the products that you see here and uses them in her everyday life. Ronn Moss - Ronn Moss is an International television star and has been portraying "Ridge Forrester" for the past 21 years on the CBS series, 'The Bold and The Beautiful'. He is also an accomplished musician with the band PLAYER, who had hit songs such as "Baby Come Back" and "This Time I'm In It For Love". Ronn has joined together with his soul mate in life, Devin DeVasquez, to create products that they both love and enjoy, such as 'Devin's Kickass Cajun Seasoning' which proceeds will help rebuild the city of New Orleans from the devastation of hurricane Katrina. He is also dedicated to helping others live well and stress free through music and balance. Ronn formed DevRonn as a place to help inspire people to live as well as they can, and supports mind, body and soul enlightenment through products that are found here on this site. 11
    • 50% Paid DevRonn Enterprises, LLC Strategic Analysis 5.1 External Environment Analysis The business of food and consumer packaging is a complex business that has significantly difficult operations to manage. This section of analysis will detail the overall economic climate and interest rate environment. Management feels that this analysis is often overlooked by many businesses, and as DevRonn Enterprises is in the food product business – changes in interest rates and the political/economic environment can impact the costs of doing business. Currently, the US economic climate is moderate. Rising oil prices, slumping housing prices, inflation, and issues with the credit market have led many economists to believe that the economy is heading for a recession or is currently in a recession. However, recent economic indicators, including recent releases of major corporate earnings reports, indicate that the US may not have a recession, but rather a prolonged period of sluggish growth. Surprisingly, in late July of 2008, consumer confidence levels rose. This sluggish economic growth may present issues with top line income generation for DevRonn Enterprises as consumers cut back on their discretionary purchases. Inflation is somewhat of a concern for the Company. As the inflation rate decreases, the purchasing power parity of the American dollar decreases in relation to other currencies. This may pose a risk to the Company should rampant inflation, much like the inflation experienced in the late 1970s, occur again. This event would significant weaken the Company’s ability to borrow funds (should the need arise), but it could also severely impact the gross margins of the business. Higher rates of inflation would cause a deleterious change in the Company’s profit and loss statements as the Company intends to purchase ingredients from third party suppliers, who may increase their prices significantly in response to inflationary pressures. A secondary concern for the Company is its ability to price its services affordably during times of economic recession or spikes of oil prices. As of August 2008, the price of oil and its associated refined energy products have reached a multiyear high. This increase in oil prices has caused the general public’s discretionary income to decrease significantly over the last twelve months. This may also increase the operating costs of the business by significantly increasing the energy costs associated with distributing DevRonn Enterprises’s products. 5.2 Industry Analysis Food manufacturing, development, and distribution is one of the country’s largest industries with aggregate sales receipts exceeding $421 billion dollars on the retail level. The industry represents almost 5% of the total GDP of the United States. Additionally, these businesses employ more than 1.5 million people and provide gross annual payrolls of over $38 billion dollars per year. Within this industry there are more than 26,400 food 12
    • 50% Paid DevRonn Enterprises, LLC (excluding beverages) manufacturers that provide over half a million different food products. The growth of this industry has remained stable and inline with the growth of the general economy. Generally, this business is somewhat insulated from changes in the general economic environment as food is necessity for survival. Over the last five years, the number of establishments operating within the industry has increased 2.4%, which is slightly under the GDP’s annual growth rate of 3%. However, high end packaged foods and recipes are subject to decreases in top line revenue as the general economy wanes. As consumers have less discretionary income, high end and premium brand name food manufacturers often suffer decreases in their profitability during these times. 5.3 Customer Profile Any person with an interest in cooking (more specifically Cajun cooking) is a potential buyer of the Company’s products. As such, the demographic profile of the Company’s target market is exceeding large. However, Management has identified the following common characteristics that will be common among consumers: • Annual household income exceeding $50,000 per year. • Lives within 50 miles of a major metropolitan area. • Is a cooking connoisseur with an interest in southern and Cajun cooking. 5.4 Competitive Analysis There are a number of different companies within the United States that provide spice products that are similar or identical to those of DevRonn Enterprises. The key to thriving within this industry is to develop a strong brand name associated with the products distributed by the business. As will be discussed in the seventh section of the business plan, the Company will heavily use Ms. Devasquez’s existing celebrity as a former Playboy Playmate and food connoisseur. Major competitors within the spice distribution industry include, but are not limited to: • McCormick • Kraft Foods • Cargill • Tyson Foods • Unilever However, these are major competitors, and their focus is on mass producing traditional spices with limited quantities of specialty products. Among specialty spice product distributors, there are approximately 600 different competitors that the business will face as the Company progresses through its business operations. 13
    • 50% Paid DevRonn Enterprises, LLC Key Strategic Issues 6.1 Sustainable Competitive Advantage The Company will be able to maintain successful business operations because of the following: • Business operations that have already commenced and are generating revenues. • Use of Ms. Devasquez’s celebrity to promote the Company’s initial flagship line of Cajun seasoning. • The manufacturer and initial distributors of the Company’s products have already been sourced. • The Company has already received significant public relations support through televised appearances by Ms. Devasquez. • Low operating and overhead costs. • High gross margins on each unit of “Devin’s Kick Ass Cajun Seasoning” sold by the business. 6.2 Basis for Growth DevRonn Enterprises, LLC will grow through three main avenues: • Continued expansion of the product lines developed and distributed by the Company. • Aggressive expansion of the Company’s marketing campaigns, which will be discussed in the next section of the business plan. • Expansion of the Company’s inventory holdings so that the business can accommodate more sales as the brand name of DevRonn Enterprises grows. 14
    • 50% Paid DevRonn Enterprises, LLC Marketing Plan 7.1 Marketing Objectives • Effectively use Ms. Devasquez’s celebrity to promote products developed and distributed by the Company. • Establish strong relationships with manufacturers that will produce developed products on behalf of DevRonn Enterprises. • Develop a marketing infrastructure that will effectively bring the Company’s line of products to national prominence by the second year of expand operations. 7.2 Sales Forecasts Yearly Sales Forecast Year 2009 2010 2011 2012 2013 Growth (%) 0.0% 125.0% 60.0% 45.0% 35.0% DevRonn Enterprises Product Sales $852,000 $1,917,000 $3,067,200 $4,447,440 $6,004,044 Totals $852,000 $1,917,000 $3,067,200 $4,447,440 $6,004,044 Cost of Sales Forecast Year 2009 2010 2011 2012 2013 Growth (%) 0.0% 125.0% 60.0% 45.0% 35.0% DevRonn Enterprises Product Sales $170,400 $383,400 $613,440 $889,488 $1,200,809 Totals $170,400 $383,400 $613,440 $889,488 $1,200,809 Gross Profit Year 2009 2010 2011 2012 2013 Total $681,600 $1,533,600 $2,453,760 $3,557,952 $4,803,235 7.3 Sales Assumptions Year 1 • After the Company receives its capital infusion, the business will immediately begin expanded marketing and distribution of its flagship product line within targeted markets. • Aggregate sales are expected to each $852,000 in the first year of expanded operations. • Gross profits from sales are expected to each $681,000. Year 2 • In Year 2, sales will increase by 125% as the Company expands into new geographical regions while concurrently expanding its network of independent sales agents. 15
    • 50% Paid DevRonn Enterprises, LLC • Revenues will reach $1.9 million. • Gross profits will exceed $1.53 million. Years 3-5 • By the fifth year of operation, the Company will have developed nationwide distribution and sales channels in every major US market. • Ms. Devasquez will now appear on major television programs promoting the expansive line of DevRonn Enterprise Cajun food products. • Aggregate sales will reach $6 million. • Gross profits from sales are expected to reach $4.8 million. 7.4 Marketing Strategies Management intends on using a number of marketing strategies to ensure maximum visibility for DevRonn Enterprises and its line of developed spices and related food products. The Company intends to develop an independent sales network that will operate on a commission basis. At this time, Management is developing a commission schedule that will provide agents with 5% (for large orders) to 15% (for small orders) commission for each sales order. Prior to launching operations, Management expects to have two to three independent sales agents that will approach major food retailers and grocery chains to carry the Company’s initial flagship line of Cajun spices. As the Company develops additional products, the business will continue to use these sales channels for distribution. Additionally, conventions, food and cooking business trade shows, online advertising activities, sales development and viral marketing campaigns will follow carefully orchestrated strategies by our marketing personnel in conjunction with marketing experts. Timely coverage of DevRonn Enterprises will be further directed through ongoing press relations, news releases and feature stories targeted at food/cooking publications and other media outlets. Publicity activities will be designed to generate ongoing coverage about Ms. Devasquez, DevRonn Enterprises, and its line of Cajun seasonings in targeted media by providing writers and editors with newsworthy releases, features, stories, briefs, and visual material for their columns and stories. In depth coverage may also be obtained about the Company by hosting in-house interviews to be conducted by the Company’s spokesperson, Devin Devasquez. DevRonn Enterprises, LLC also intends to use an online based marketing campaign to develop its sales via its online platform (www.devronn.com). Primarily, the Company will use search engine optimization techniques that will increase the Company’s visibility when selected key words are used among major search engines. For instance, when a person does a Google search Ms. Devasquez (a popular web search already) or Cajun spices, the Company’s website will appear on the first page of the search. This strategy is technically complicated, and the Company will use a search engine optimization firm to develop the Company’s visibility on a non-paid basis. Management expects that a SEO 16
    • 50% Paid DevRonn Enterprises, LLC firm will place large amounts of linking data and text specific keywords into the business’s website, which will allow the Company to appear more frequently among search engines. A majority of web portal and search engine companies use very complicated algorithms to determine a website’s relevance in relation to a specific keyword. SEO firms place text and tags on the website to increase the rank of a specific website. Additionally, DevRonn Enterprises, LLC will use several pay methods for increasing the Company’s visibility. This strategy is expensive, but the results can be phenomenal if this marketing strategy is properly executed. These advertisements appear along the border and side of a website, and each time a person clicks on the website, a small fee ranging from fifty cents to one dollar is charged to the Company’s account. An SEO firm will also manage this aspect of the Company’s marketing operation. Management expects that these costs will reach approximately $20,000 per year towards the end of the first year, with initial marketing expenses costing $3,000 for search engine optimization and the initial advertising budget. 7.5 Service Marketing Using the aforementioned marketing strategies, the Company will aggressively promote the Company’s initial flagship line of “Devin’s Kick Ass Cajun Seasoning” through the use of the above described marketing infrastructure and Ms. Devasquez’s existing celebrity. The focus on the Company’s marketing messages will be on the high quality and healthy nature of the Company’s products coupled with their affordability. 7.5.1 Price Below is the current pricing schedule used for the Company’s line of Cajun seasoning products: • 8 oz can of seasoning - $8.00 The Company provides bulk discounts of approximately 30% for customers that order more than 1 unit of seasoning. 7.5.2 Distribution The Company has already sourced the manufacturer that will continue to produce DevRonn Enterprises developed products. This manufacturer is located in Louisiana. As the business expands, Management will develop small distribution centers starting in California and moving towards the East Coast depending on customer’s buying patterns and demand in specific geographical locations. 17
    • 50% Paid DevRonn Enterprises, LLC Organizational Plan 8.1 Corporate Organization The Company will be organized as follows: Senior Management Product Distribution Back Office Functions Product Branding/Marketing Accounting Quality Control and Assurance Invoice Pricing Research and Development Legal Compliance Product Representation Services 8.2 Organizational Budget Personnel Plan - Yearly Year 2009 2010 2011 2012 2013 Senior Management $130,000 $200,850 $275,834 $284,109 $292,632 Product Development Staff $100,000 $206,000 $265,225 $327,818 $450,204 Distribution Staff $58,000 $119,480 $184,597 $221,824 $261,118 Marketing Staff $105,000 $180,250 $259,921 $344,209 $433,321 Administrative and Accounting Staff $60,000 $92,700 $127,308 $163,909 $202,592 Total $453,000 $799,280 $1,112,884 $1,341,869 $1,639,866 Numbers of Personnel Year 2009 2010 2011 2012 2013 Senior Management 2 3 4 4 4 Product Development Staff 2 4 5 6 8 Distribution Staff 2 4 6 7 8 Marketing Staff 3 5 7 9 11 Administrative and Accounting Staff 2 3 4 5 6 Totals 11 19 26 31 37 18
    • 50% Paid DevRonn Enterprises, LLC 8.2 Organizational Budget (Cont.) Personnel Expense Breakdown 13% 29% Senior Management Product Development Staff Distribution Staff 23% Marketing Staff Administrative and Accounting Staff 13% 22% 19
    • 50% Paid DevRonn Enterprises, LLC Financial Plan 9.1 Underlying Assumptions The Company has based its proforma financial statements on the following: • Accounts receivables will not impact the Company’s cash flow as all transactions are closed at the time an order is placed for DevRonn Enterprise products. • The Company anticipates that its growth rate will be 66% per year during the first five years of operation. • DevRonn Enterprises, LLC will solicit $1,000,000 of capital to grow and expand the business. 9.2 Financial Highlights • Positive cash flow and profitability in each year of expanded operation. • The ability to create high gross margin cash flows through the Company’s food/seasoning/spice preparation, packaging, and distribution. • A highly liquid inventory of operating assets that can be easily divested to a third party within six months time. 9.3 Sensitivity Analysis DevRonn Enterprises’ revenues will provide significant operating income to the Company, and in the event that top line income decreases significantly, the business will still be able to operate profitably and with a positive cash flow. In Management’s estimation, sales of branded food products would need to decrease by more than 30% for the Company to become unprofitable. 9.4 Source of Funds Financing Equity Financiers Investor(s) $1,000,000.00 Total Equity Financing $1,000,000.00 Banks and Lenders Total Debt Financing $0.00 Total Financing $1,000,000.00 20
    • 50% Paid DevRonn Enterprises, LLC 9.5 Financial Proformas A) Profit and Loss Statements Proforma Profit and Loss (Yearly) Year 2009 2010 2011 2012 2013 Sales $852,000 $1,917,000 $3,067,200 $4,447,440 $6,004,044 Cost of Goods Sold $170,400 $383,400 $613,440 $889,488 $1,200,809 Gross Margin 80.00% 80.00% 80.00% 80.00% 80.00% Operating Income $681,600 $1,533,600 $2,453,760 $3,557,952 $4,803,235 Expenses Payroll $453,000 $799,280 $1,112,884 $1,341,869 $1,639,866 General and Administrative $25,560 $57,510 $92,016 $133,423 $180,121 Marketing Expenses $61,344 $138,024 $220,838 $320,216 $432,291 Professional Fees and Licensure $4,200 $7,980 $15,162 $28,808 $54,735 Insurance Costs $8,200 $8,610 $9,041 $9,493 $9,967 Distribution Costs $27,605 $62,111 $99,377 $144,097 $194,531 Office Expenses $2,812 $6,326 $10,122 $14,677 $19,813 Miscellaneous Costs $2,130 $4,793 $7,668 $11,119 $15,010 Payroll Taxes $63,420 $111,899 $155,804 $187,862 $229,581 Total Operating Costs $648,270 $1,196,533 $1,722,912 $2,191,562 $2,775,917 EBITA $33,330 $337,067 $730,848 $1,366,390 $2,027,319 Federal Income Tax $10,999 $111,232 $241,180 $450,909 $669,015 State Income Tax $1,666 $16,853 $36,542 $68,320 $101,366 Interest Expense $0 $0 $0 $0 $0 Net Profit $20,664 $208,982 $453,126 $847,162 $1,256,938 Profit Margin 2.43% 10.90% 14.77% 19.05% 20.93% Sales, Operating Costs, and Profit Forecast $7,000,000 $6,000,000 $5,000,000 $4,000,000 Sales $3,000,000 Total Operating Costs $2,000,000 Net Profit $1,000,000 $0 2009 2010 2011 2012 2013 Year 21
    • 50% Paid DevRonn Enterprises, LLC B) Common Size Income Statement Proforma Profit and Loss (Common Size) Year 2009 2010 2011 2012 2013 Sales 100.00% 100.00% 100.00% 100.00% 100.00% Cost of Goods Sold 20.00% 20.00% 20.00% 20.00% 20.00% Operating Income 80.00% 80.00% 80.00% 80.00% 80.00% Expenses Payroll 53.17% 41.69% 36.28% 30.17% 27.31% General and Administrative 3.00% 3.00% 3.00% 3.00% 3.00% Marketing Expenses 7.20% 7.20% 7.20% 7.20% 7.20% Professional Fees and Licensure 0.49% 0.42% 0.49% 0.65% 0.91% Insurance Costs 0.96% 0.45% 0.29% 0.21% 0.17% Distribution Costs 3.24% 3.24% 3.24% 3.24% 3.24% Office Expenses 0.33% 0.33% 0.33% 0.33% 0.33% Miscellaneous Costs 0.25% 0.25% 0.25% 0.25% 0.25% Payroll Taxes 7.44% 5.84% 5.08% 4.22% 3.82% Total Operating Costs 76.09% 62.42% 56.17% 49.28% 46.23% EBITA 3.91% 17.58% 23.83% 30.72% 33.77% Federal Income Tax 1.29% 5.80% 7.86% 10.14% 11.14% State Income Tax 0.20% 0.88% 1.19% 1.54% 1.69% Interest Expense 0.00% 0.00% 0.00% 0.00% 0.00% Net Profit 2.43% 10.90% 14.77% 19.05% 20.93% 22
    • 50% Paid DevRonn Enterprises, LLC C) Cash Flow Analysis Proforma Cash Flow Analysis - Yearly Year 2009 2010 2011 2012 2013 Cash From Operations $20,664 $208,982 $453,126 $847,162 $1,256,938 Cash From Receivables $0 $0 $0 $0 $0 Operating Cash Inflow $20,664 $208,982 $453,126 $847,162 $1,256,938 Other Cash Inflows Equity Investment $1,000,000 $0 $0 $0 $0 Increased Borrowings $0 $0 $0 $0 $0 Sales of Business Assets $0 $0 $0 $0 $0 A/P Increases $8,000 $9,200 $10,580 $12,167 $13,992 Total Other Cash Inflows $1,008,000 $9,200 $10,580 $12,167 $13,992 Total Cash Inflow $1,028,664 $218,182 $463,706 $859,329 $1,270,930 Cash Outflows Repayment of Principal $0 $0 $0 $0 $0 A/P Decreases $6,000 $7,200 $8,640 $10,368 $12,442 A/R Increases $0 $0 $0 $0 $0 Asset Purchases $475,000 $114,940 $249,219 $465,939 $691,316 Dividends $8,266 $83,593 $181,250 $338,865 $502,775 Total Cash Outflows $489,266 $205,733 $439,110 $815,172 $1,206,532 Net Cash Flow $539,399 $12,449 $24,596 $44,157 $64,397 Cash Balance $539,399 $551,848 $576,444 $620,601 $684,998 Proforma Cash Flow (Yearly) $1,400,000 $1,200,000 $1,000,000 $800,000 Total Cash Inflow $600,000 Total Cash Outflows $400,000 Net Cash Flow $200,000 $0 2009 2010 2011 2012 2013 Year 23
    • 50% Paid DevRonn Enterprises, LLC D) Balance Sheet Proforma Balance Sheet - Yearly Year 2009 2010 2011 2012 2013 Assets Cash $539,399 $551,848 $576,444 $620,601 $684,998 Amortized Expansion Costs $130,000 $170,229 $257,456 $420,534 $662,495 Technology Assets $10,000 $21,494 $46,416 $93,010 $162,141 FF&E $35,000 $52,241 $89,624 $159,515 $263,212 Inventory $300,000 $351,723 $463,872 $673,544 $984,636 Accumulated Depreciation ($4,750) ($9,500) ($14,250) ($19,000) ($23,750) Total Assets $1,009,649 $1,138,035 $1,419,561 $1,948,204 $2,733,733 Liabilities and Equity Accounts Payable $2,000 $4,000 $5,940 $7,739 $9,289 Long Term Liabilities $0 $0 $0 $0 $0 Other Liabilities $0 $0 $0 $0 $0 Total Liabilities $2,000 $4,000 $5,940 $7,739 $9,289 Net Worth $1,007,649 $1,134,035 $1,413,621 $1,940,465 $2,724,444 Total Liabilities and Equity $1,009,649 $1,138,035 $1,419,561 $1,948,204 $2,733,733 Proforma Balance Sheet $3,000,000 $2,500,000 $2,000,000 $1,500,000 Total Assets Total Liabilities $1,000,000 Net Worth $500,000 $0 2009 2010 2011 2012 2013 Year 24
    • 50% Paid DevRonn Enterprises, LLC 9.6 Breakeven Analysis Monthly Break Even Analysis Year 2009 2010 2011 2012 2013 Monthly Revenue $67,528 $124,639 $179,470 $228,288 $289,158 Yearly Revenue $810,338 $1,495,666 $2,153,640 $2,739,452 $3,469,896 Break Even Analysis $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 Monthly Revenue $1,000,000 $500,000 Yearly Revenue $0 2009 2010 2011 2012 2013 Year 9.7 Business Ratios Business Ratios - Yearly Year 2009 2010 2011 2012 2013 Sales Sales Growth 0.0% 125.0% 60.0% 45.0% 35.0% Gross Margin 80.0% 80.0% 80.0% 80.0% 80.0% Financials Profit Margin 2.43% 10.90% 14.77% 19.05% 20.93% Assets to Liabilities 504.82 284.51 238.98 251.74 294.28 Equity to Liabilities 503.82 283.51 237.98 250.74 293.28 Assets to Equity 1.00 1.00 1.00 1.00 1.00 Liquidity Acid Test 269.70 137.96 97.04 80.19 73.74 Cash to Assets 0.53 0.48 0.41 0.32 0.25 25
    • 50% Paid DevRonn Enterprises, LLC 9.8 General Assumptions General Assumptions Year 2009 2010 2011 2012 2013 Short Term Interest Rate 9.5% 9.5% 9.5% 9.5% 9.5% Long Term Interest Rate 10.0% 10.0% 10.0% 10.0% 10.0% Federal Tax Rate 33.0% 33.0% 33.0% 33.0% 33.0% State Tax Rate 5.0% 5.0% 5.0% 5.0% 5.0% Personnel Taxes 14.0% 14.0% 14.0% 14.0% 14.0% 26
    • 50% Paid DevRonn Enterprises, LLC SWOT Analysis Strengths • Business operations have already commenced, and the business is generating a small but growing number of orders among grocers and through the Company’s online ordering platform. • The Company’s Founder, Devin Devasquez, is a former Playboy Playmate who intends to use her celebrity and her contacts to aggressively promote the products developed and distributed by DevRonn Enterprises. • Relatively low operating and overhead expenses. • Strong demand for specialty spices among home and professional chefs across the country. • Low costs of goods sold. • Moderate distribution costs. • The initial flagship product line, Devin’s Kickass Cajun Seasoning, has already been developed, and is ready for expansion. Weaknesses • Adverse economic market conditions could hamper sales. • Strong competition from other vendors that produce specialty spices and related products. • Continued increases in the price of oil can impact the Company’s distribution costs. Opportunities • Develop new products using the DevRonn Enterprises established brand name. • Continued expansion of the Company’s marketing campaigns to a nationwide level. • Potential sale of the business for a substantial earnings multiple. Threats • The sale of food products always creates a potential liability for the business due to improper handling or distribution. • Costs of spice mixtures and related ingredients can increase, causing a shift in the Company’s profit and loss statements. 27
    • 50% Paid DevRonn Enterprises, LLC Critical Risks and Problems Development Risk – Moderate The initial product line developed by DevRonn Enterprises has already been developed as has been sold in limited quantities. The primary development risk now faced by the business is Management’s ability to properly raise the requisite capital sought in this business plan. The secondary development risk stems from Ms. Devasquez’s ability to properly implement the large scale marketing campaigns discussed in the seventh section of the business plan. Financing Risk – Moderate The Company will require significant financing to enable Management to develop DevRonn Enterprises, LLC to its fullest potential. A majority of this financing will be used for the development of expanding the Company’s marketing and distribution infrastructure. The risks associated with this investment are ameliorated by Ms. Devasquez’s celebrity (which will be used heavily to market the product), and the high gross margins generated from the sale of the Company’s flagship product line. Marketing Risk – Moderate Management intends to use the marketing strategies discussed in the seventh section of the business plan to properly position the Company’s line of Cajun spices in the market. However, these strategies are expensive and they may not yield the financial results anticipated in this business plan. Management Risk – Low/Moderate The Company’s Founder, Devin Devasquez, is a highly recognized former Playboy Playmate that has developed the described line of Cajun spices for sale to the general public. Through her celebrity, and the assistance of the Senior Management Team, she will be able to bring the operations of the business to profitability by the end of the first year of operation. Valuation Risk – Low The risk that an investor pays too much for the venture is offset by: • The Company’s growth rate will create value and equity in the business very quickly. • DevRonn Enterprises, LLC will generate significant revenues from the sale of its packaged food products. Exit Risk - Moderate As discussed in the seventh section of the business plan, there is a very strong demand for established brand name food packaging, branding, and distribution businesses. In the event of a business sale, Management estimates that it would take approximately one year to successfully sell the business to a third party. 28
    • 50% Paid DevRonn Enterprises, LLC Reference Sources All statistics and market information was obtained through: 1. U.S. Government Bureau of Labor Statistics 2. U.S. Economic Census Spice Mixtures Manufacturing – NAICS 311942 Specialty Food Distributions – NAICS 455299 3. Bureau of Economic Analysis – Food Product Distributors 29
    • 50% Paid DevRonn Enterprises, LLC Expanded Profit and Loss Statements Profit and Loss Statement (First Year) Months 1 2 3 4 5 6 7 Sales $60,000 $62,000 $64,000 $66,000 $68,000 $70,000 $72,000 Cost of Goods Sold $12,000 $12,400 $12,800 $13,200 $13,600 $14,000 $14,400 Gross Margin 80.0% 80.0% 80.0% 80.0% 80.0% 80.0% 80.0% Operating Income $48,000 $49,600 $51,200 $52,800 $54,400 $56,000 $57,600 Expenses Payroll $37,750 $37,750 $37,750 $37,750 $37,750 $37,750 $37,750 General and Administrative $2,130 $2,130 $2,130 $2,130 $2,130 $2,130 $2,130 Marketing Expenses $5,112 $5,112 $5,112 $5,112 $5,112 $5,112 $5,112 Professional Fees and Licensure $350 $350 $350 $350 $350 $350 $350 Insurance Costs $683 $683 $683 $683 $683 $683 $683 Distribution Costs $2,300 $2,300 $2,300 $2,300 $2,300 $2,300 $2,300 Office Expenses $234 $234 $234 $234 $234 $234 $234 Miscellaneous Costs $178 $178 $178 $178 $178 $178 $178 Payroll Taxes $5,285 $5,285 $5,285 $5,285 $5,285 $5,285 $5,285 Total Operating Costs $54,023 $54,023 $54,023 $54,023 $54,023 $54,023 $54,023 EBITA -$6,023 -$4,423 -$2,823 -$1,223 $377 $1,977 $3,577 Federal Income Tax $775 $800 $826 $852 $878 $904 $929 State Income Tax $117 $121 $125 $129 $133 $137 $141 Interest Expense $0 $0 $0 $0 $0 $0 $0 Net Profit -$6,914 -$5,344 -$3,774 -$2,204 -$633 $937 $2,507 30
    • 50% Paid DevRonn Enterprises, LLC Profit and Loss Statement (First Year Cont.) Month 8 9 10 11 12 2009 Sales $74,000 $76,000 $78,000 $80,000 $82,000 $852,000 Cost of Goods Sold $14,800 $15,200 $15,600 $16,000 $16,400 $170,400 Gross Margin 80.0% 80.0% 80.0% 80.0% 80.0% 80.0% Operating Income $59,200 $60,800 $62,400 $64,000 $65,600 $681,600 Expenses Payroll $37,750 $37,750 $37,750 $37,750 $37,750 $453,000 General and Administrative $2,130 $2,130 $2,130 $2,130 $2,130 $25,560 Marketing Expenses $5,112 $5,112 $5,112 $5,112 $5,112 $61,344 Professional Fees and Licensure $350 $350 $350 $350 $350 $4,200 Insurance Costs $683 $683 $683 $683 $683 $8,200 Distribution Costs $2,300 $2,300 $2,300 $2,300 $2,300 $27,605 Office Expenses $234 $234 $234 $234 $234 $2,812 Miscellaneous Costs $178 $178 $178 $178 $178 $2,130 Payroll Taxes $5,285 $5,285 $5,285 $5,285 $5,285 $63,420 Total Operating Costs $54,023 $54,023 $54,023 $54,023 $54,023 $648,270 EBITA $5,177 $6,777 $8,377 $9,977 $11,577 $33,330 Federal Income Tax $955 $981 $1,007 $1,033 $1,059 $10,999 State Income Tax $145 $149 $153 $156 $160 $1,666 Interest Expense $0 $0 $0 $0 $0 $0 Net Profit $4,077 $5,648 $7,218 $8,788 $10,359 $20,664 31
    • 50% Paid DevRonn Enterprises, LLC Profit and Loss Statement (Second Year) 2010 Quarter Q1 Q2 Q3 Q4 2010 Sales $383,400 $479,250 $517,590 $536,760 $1,917,000 Cost of Goods Sold $76,680 $95,850 $103,518 $107,352 $383,400 Gross Margin 80.0% 80.0% 80.0% 80.0% 80.0% Operating Income $306,720 $383,400 $414,072 $429,408 $1,533,600 Expenses Payroll $159,856 $199,820 $215,806 $223,798 $799,280 General and Administrative $11,502 $14,378 $15,528 $16,103 $57,510 Marketing Expenses $27,605 $34,506 $37,266 $38,647 $138,024 Professional Fees and Licensure $1,596 $1,995 $2,155 $2,234 $7,980 Insurance Costs $1,722 $2,153 $2,325 $2,411 $8,610 Distribution Costs $12,422 $15,528 $16,770 $17,391 $62,111 Office Expenses $1,265 $1,582 $1,708 $1,771 $6,326 Miscellaneous Costs $959 $1,198 $1,294 $1,342 $4,793 Payroll Taxes $22,380 $27,975 $30,213 $31,332 $111,899 Total Operating Costs $239,307 $299,133 $323,064 $335,029 $1,196,533 EBITA $67,413 $84,267 $91,008 $94,379 $337,067 Federal Income Tax $22,246 $27,808 $30,033 $31,145 $111,232 State Income Tax $3,371 $4,213 $4,550 $4,719 $16,853 Interest Expense $0 $0 $0 $0 $0 Net Profit $41,796 $52,245 $56,425 $58,515 $208,982 32
    • 50% Paid DevRonn Enterprises, LLC Profit and Loss Statement (Third Year) 2011 Quarter Q1 Q2 Q3 Q4 2011 Sales $613,440 $766,800 $828,144 $858,816 $3,067,200 Cost of Goods Sold $122,688 $153,360 $165,629 $171,763 $613,440 Gross Margin 80.0% 80.0% 80.0% 80.0% 80.0% Operating Income $490,752 $613,440 $662,515 $687,053 $2,453,760 Expenses Payroll $222,577 $278,221 $300,479 $311,608 $1,112,884 General and Administrative $18,403 $23,004 $24,844 $25,764 $92,016 Marketing Expenses $44,168 $55,210 $59,626 $61,835 $220,838 Professional Fees and Licensure $3,032 $3,791 $4,094 $4,245 $15,162 Insurance Costs $1,808 $2,260 $2,441 $2,531 $9,041 Distribution Costs $19,875 $24,844 $26,832 $27,826 $99,377 Office Expenses $2,024 $2,530 $2,733 $2,834 $10,122 Miscellaneous Costs $1,534 $1,917 $2,070 $2,147 $7,668 Payroll Taxes $31,161 $38,951 $42,067 $43,625 $155,804 Total Operating Costs $344,582 $430,728 $465,186 $482,415 $1,722,912 EBITA $146,170 $182,712 $197,329 $204,637 $730,848 Federal Income Tax $48,236 $60,295 $65,119 $67,530 $241,180 State Income Tax $7,308 $9,136 $9,866 $10,232 $36,542 Interest Expense $0 $0 $0 $0 $0 Net Profit $90,625 $113,281 $122,344 $126,875 $453,126 33
    • 50% Paid DevRonn Enterprises, LLC Profit and Loss Statement (Fourth Year) 2012 Quarter Q1 Q2 Q3 Q4 2012 Sales $889,488 $1,111,860 $1,200,809 $1,245,283 $4,447,440 Cost of Goods Sold $177,898 $222,372 $240,162 $249,057 $889,488 Gross Margin 80.0% 80.0% 80.0% 80.0% 80.0% Operating Income $711,590 $889,488 $960,647 $996,227 $3,557,952 Expenses Payroll $268,374 $335,467 $362,305 $375,723 $1,341,869 General and Administrative $26,685 $33,356 $36,024 $37,358 $133,423 Marketing Expenses $64,043 $80,054 $86,458 $89,660 $320,216 Professional Fees and Licensure $5,762 $7,202 $7,778 $8,066 $28,808 Insurance Costs $1,899 $2,373 $2,563 $2,658 $9,493 Distribution Costs $28,819 $36,024 $38,906 $40,347 $144,097 Office Expenses $2,935 $3,669 $3,963 $4,109 $14,677 Miscellaneous Costs $2,224 $2,780 $3,002 $3,113 $11,119 Payroll Taxes $37,572 $46,965 $50,723 $52,601 $187,862 Total Operating Costs $438,312 $547,890 $591,722 $613,637 $2,191,562 EBITA $273,278 $341,598 $368,925 $382,589 $1,366,390 Federal Income Tax $90,182 $112,727 $121,745 $126,254 $450,909 State Income Tax $13,664 $17,080 $18,446 $19,129 $68,320 Interest Expense $0 $0 $0 $0 $0 Net Profit $169,432 $211,790 $228,734 $237,205 $847,162 34
    • 50% Paid DevRonn Enterprises, LLC Profit and Loss Statement (Fifth Year) 2013 Quarter Q1 Q2 Q3 Q4 2013 Sales $1,200,809 $1,501,011 $1,621,092 $1,681,132 $6,004,044 Cost of Goods Sold $240,162 $300,202 $324,218 $336,226 $1,200,809 Gross Margin 80.0% 80.0% 80.0% 80.0% 80.0% Operating Income $960,647 $1,200,809 $1,296,874 $1,344,906 $4,803,235 Expenses Payroll $327,973 $409,967 $442,764 $459,163 $1,639,866 General and Administrative $36,024 $45,030 $48,633 $50,434 $180,121 Marketing Expenses $86,458 $108,073 $116,719 $121,042 $432,291 Professional Fees and Licensure $10,947 $13,684 $14,778 $15,326 $54,735 Insurance Costs $1,993 $2,492 $2,691 $2,791 $9,967 Distribution Costs $38,906 $48,633 $52,523 $54,469 $194,531 Office Expenses $3,963 $4,953 $5,350 $5,548 $19,813 Miscellaneous Costs $3,002 $3,753 $4,053 $4,203 $15,010 Payroll Taxes $45,916 $57,395 $61,987 $64,283 $229,581 Total Operating Costs $555,183 $693,979 $749,497 $777,257 $2,775,917 EBITA $405,464 $506,830 $547,376 $567,649 $2,027,319 Federal Income Tax $133,803 $167,254 $180,634 $187,324 $669,015 State Income Tax $20,273 $25,341 $27,369 $28,382 $101,366 Interest Expense $0 $0 $0 $0 $0 Net Profit $251,388 $314,234 $339,373 $351,943 $1,256,938 35
    • 50% Paid DevRonn Enterprises, LLC Expanded Cash Flow Analysis Cash Flow Analysis (First Year) Month 1 2 3 4 5 6 7 8 Cash From Operations -$6,914 -$5,344 -$3,774 -$2,204 -$633 $937 $2,507 $4,077 Cash From Receivables $0 $0 $0 $0 $0 $0 $0 $0 Operating Cash Inflow -$6,914 -$5,344 -$3,774 -$2,204 -$633 $937 $2,507 $4,077 Other Cash Inflows Equity Investment $1,000,000 $0 $0 $0 $0 $0 $0 $0 Increased Borrowings $0 $0 $0 $0 $0 $0 $0 $0 Sales of Business Assets $0 $0 $0 $0 $0 $0 $0 $0 A/P Increases $667 $667 $667 $667 $667 $667 $667 $667 Total Other Cash Inflows $1,000,667 $667 $667 $667 $667 $667 $667 $667 Total Cash Inflow $993,752 -$4,678 -$3,107 -$1,537 $33 $1,604 $3,174 $4,744 Cash Outflows Repayment of Principal $0 $0 $0 $0 $0 $0 $0 $0 A/P Decreases $500 $500 $500 $500 $500 $500 $500 $500 A/R Increases $0 $0 $0 $0 $0 $0 $0 $0 Asset Purchases $475,000 $0 $0 $0 $0 $0 $0 $0 Dividends $0 $0 $0 $0 $0 $0 $0 $0 Total Cash Outflows $475,500 $500 $500 $500 $500 $500 $500 $500 Net Cash Flow $518,252 -$5,178 -$3,607 -$2,037 -$467 $1,104 $2,674 $4,244 Cash Balance $518,252 $513,075 $509,467 $507,430 $506,964 $508,067 $510,741 $514,985 36
    • 50% Paid DevRonn Enterprises, LLC Cash Flow Analysis (First Year Cont.) Month 9 10 11 12 2009 Cash From Operations $5,649 $7,218 $8,788 $10,359 $20,664 Cash From Receivables $0 $0 $0 $0 $0 Operating Cash Inflow $5,649 $7,218 $8,788 $10,359 $20,664 Other Cash Inflows Equity Investment $0 $0 $0 $0 $1,000,000 Increased Borrowings $0 $0 $0 $0 $0 Sales of Business Assets $0 $0 $0 $0 $0 A/P Increases $667 $667 $667 $667 $8,000 Total Other Cash Inflows $667 $667 $667 $667 $1,008,000 Total Cash Inflow $6,315 $7,885 $9,455 $11,025 $1,028,664 Cash Outflows Repayment of Principal $0 $0 $0 $0 $0 A/P Decreases $500 $500 $500 $500 $6,000 A/R Increases $0 $0 $0 $0 $0 Asset Purchases $0 $0 $0 $0 $475,000 Dividends $0 $0 $0 $8,266 $8,266 Total Cash Outflows $500 $500 $500 $8,766 $489,266 Net Cash Flow $5,815 $7,385 $8,955 $2,259 $539,399 Cash Balance $520,801 $528,185 $537,140 $539,399 $539,399 37
    • 50% Paid DevRonn Enterprises, LLC Cash Flow Analysis (Second Year) 2010 Quarter Q1 Q2 Q3 Q4 2010 Cash From Operations $41,796 $52,245 $56,425 $58,515 $208,982 Cash From Receivables $0 $0 $0 $0 $0 Operating Cash Inflow $41,796 $52,245 $56,425 $58,515 $208,982 Other Cash Inflows Equity Investment $0 $0 $0 $0 $0 Increased Borrowings $0 $0 $0 $0 $0 Sales of Business Assets $0 $0 $0 $0 $0 A/P Increases $1,840 $2,300 $2,484 $2,576 $9,200 Total Other Cash Inflows $1,840 $2,300 $2,484 $2,576 $9,200 Total Cash Inflow $43,636 $54,545 $58,909 $61,091 $218,182 Cash Outflows Repayment of Principal $0 $0 $0 $0 $0 A/P Decreases $1,440 $1,800 $1,944 $2,016 $7,200 A/R Increases $0 $0 $0 $0 $0 Asset Purchases $22,988 $28,735 $31,034 $32,183 $114,940 Dividends $16,719 $20,898 $22,570 $23,406 $83,593 Total Cash Outflows $24,428 $30,535 $32,978 $34,199 $122,140 Net Cash Flow $19,208 $24,010 $25,931 $26,892 $96,042 Cash Balance $558,607 $582,617 $608,549 $635,440 $635,440 38
    • 50% Paid DevRonn Enterprises, LLC Cash Flow Analysis (Third Year) 2011 Quarter Q1 Q2 Q3 Q4 2011 Cash From Operations $90,625 $113,281 $122,344 $126,875 $453,126 Cash From Receivables $0 $0 $0 $0 $0 Operating Cash Inflow $90,625 $113,281 $122,344 $126,875 $453,126 Other Cash Inflows Equity Investment $0 $0 $0 $0 $0 Increased Borrowings $0 $0 $0 $0 $0 Sales of Business Assets $0 $0 $0 $0 $0 A/P Increases $2,116 $2,645 $2,857 $2,962 $10,580 Total Other Cash Inflows $2,116 $2,645 $2,857 $2,962 $10,580 Total Cash Inflow $92,741 $115,926 $125,201 $129,838 $463,706 Cash Outflows Repayment of Principal $0 $0 $0 $0 $0 A/P Decreases $1,728 $2,160 $2,333 $2,419 $8,640 A/R Increases $0 $0 $0 $0 $0 Asset Purchases $49,844 $62,305 $67,289 $69,781 $249,219 Dividends $36,250 $45,313 $48,938 $50,750 $181,250 Total Cash Outflows $87,822 $109,777 $118,560 $122,951 $439,110 Net Cash Flow $4,919 $6,149 $6,641 $6,887 $24,596 Cash Balance $640,360 $646,509 $653,150 $660,037 $660,037 39
    • 50% Paid DevRonn Enterprises, LLC Cash Flow Analysis (Fourth Year) 2012 Quarter Q1 Q2 Q3 Q4 2012 Cash From Operations $169,432 $211,790 $228,734 $237,205 $847,162 Cash From Receivables $0 $0 $0 $0 $0 Operating Cash Inflow $169,432 $211,790 $228,734 $237,205 $847,162 Other Cash Inflows Equity Investment $0 $0 $0 $0 $0 Increased Borrowings $0 $0 $0 $0 $0 Sales of Business Assets $0 $0 $0 $0 $0 A/P Increases $2,433 $3,042 $3,285 $3,407 $12,167 Total Other Cash Inflows $2,433 $3,042 $3,285 $3,407 $12,167 Total Cash Inflow $171,866 $214,832 $232,019 $240,612 $859,329 Cash Outflows Repayment of Principal $0 $0 $0 $0 $0 A/P Decreases $2,074 $2,592 $2,799 $2,903 $10,368 A/R Increases $0 $0 $0 $0 $0 Asset Purchases $93,188 $116,485 $125,804 $130,463 $465,939 Dividends $67,773 $84,716 $91,493 $94,882 $338,865 Total Cash Outflows $163,034 $203,793 $220,096 $228,248 $815,172 Net Cash Flow $8,831 $11,039 $11,922 $12,364 $44,157 Cash Balance $668,868 $679,907 $691,830 $704,194 $704,194 40
    • 50% Paid DevRonn Enterprises, LLC Cash Flow Analysis (Fifth Year) 2013 Quarter Q1 Q2 Q3 Q4 2013 Cash From Operations $251,388 $314,234 $339,373 $351,943 $1,256,938 Cash From Receivables $0 $0 $0 $0 $0 Operating Cash Inflow $251,388 $314,234 $339,373 $351,943 $1,256,938 Other Cash Inflows Equity Investment $0 $0 $0 $0 $0 Increased Borrowings $0 $0 $0 $0 $0 Sales of Business Assets $0 $0 $0 $0 $0 A/P Increases $2,798 $3,498 $3,778 $3,918 $13,992 Total Other Cash Inflows $2,798 $3,498 $3,778 $3,918 $13,992 Total Cash Inflow $254,186 $317,732 $343,151 $355,860 $1,270,930 Cash Outflows Repayment of Principal $0 $0 $0 $0 $0 A/P Decreases $2,488 $3,110 $3,359 $3,484 $12,442 A/R Increases $0 $0 $0 $0 $0 Asset Purchases $138,263 $172,829 $186,655 $193,568 $691,316 Dividends $100,555 $125,694 $135,749 $140,777 $502,775 Total Cash Outflows $241,306 $301,633 $325,764 $337,829 $1,206,532 Net Cash Flow $12,879 $16,099 $17,387 $18,031 $64,397 Cash Balance $717,073 $733,173 $750,560 $768,591 $768,591 41
    • 50% Paid DevRonn Enterprises, LLC 42