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  • 1. Business PlanContact: Don RussellPhone: (312) 291-8317Fax: (773) 818-6786E-mail: drussell@piracycontroltechnology.comwww.piracycontroltechnology.comwww.mcvtechnology.com
  • 2. MISSIONThe mission of Piracy Control Technology is to revolutionize,reform, and restore control of music distribution by introducingtechnologies that eliminate piracy and increase profitability. __ CONFIDENTIAL – Do Not Distribute Without Permission 2
  • 3. Table of ContentsExecutive Summary ...................................................................................................... 4Use Of Funds ................................................................................................................................. 5Investor Proposition ...................................................................................................................... 6Company Ownership .................................................................................................................. 6Company Location ..................................................................................................................... 6Services .......................................................................................................................... 7Product and Service Description ............................................................................................... 7Market Analysis Summary............................................................................................ 9Market Segmentation ............................................................................................................... 10Market Needs ............................................................................................................................. 10Competitive Comparison ......................................................................................................... 11Strategy and Implementation Summary .................................................................. 12Competitive Edge...................................................................................................................... 12Marketing Strategy .................................................................................................................... 12Management Summary ............................................................................................. 14Financial Projections ................................................................................................... 18Appendix ..................................................................................................................... 28 __ CONFIDENTIAL – Do Not Distribute Without Permission 3
  • 4. Executive Summary thSince the sudden arrival of Napster in the late 20 century, the music industry has experienced an unprecedentedupheaval in revenues and profits. Although companies in this sector have gone to extreme measures to combatpiracy, including upending distribution chains and adding watermarks to promotional materials, experts have beenunable to develop a comprehensive solution that retains consumer access to music while eliminating the piratedmusic market - until now.Piracy Control Technology, Inc. (also referred to as “PC Tech”) is an Illinois-based start-up business. PC Tech isthe developer of Media Codec 5, or MCV, an innovative technology designed to prevent illegal piracy of music.MCV is a revolutionary new security platform that will help to control, market, measure, report and manage music.This end-to-end music licensing and entitlement management solution will allow complete control of the musicfrom the moment it is recorded to when it is downloaded and played on any portable device. Through acomprehensive four-phase process, Piracy Control Technology will facilitate industry-wide implementation of itspowerful solution, providing record labels and recording artists with an effective tool against music piracy withoutcompromising consumers’ access to the music they enjoy. PC Tech is seeking funding to pay for its operationalcosts. Piracy Control Technology will commence services immediately upon receipt of funding. The music industry has suffered remarkable setbacks in recent years, experiencing dramatic declines in revenue and album sales as music piracy has soared and the monetary value of music itself has plummeted. Major label revenues continued their fall in 2010, totaling $7.5 billion, almost half of the industry’s 2001 revenues of $14.4 billion. CD singles have comprised less than 0.1% of the sector’s revenues for the past five years, and sales revenue from physical formats fell 20.8% in 2009. These indicators all confirm what industry experts have forecast for years; without drastic and immediate action, the music industry faces an unsustainable and unprofitable future. Piracy Control Technology’s powerful technology will offer an unprecedented solution to fulfill this market need. PC Techwill not experience any significant competition and will benefit from a high demand among record labels for itseasy-to-integrate technology. As a result, Piracy Control Technology is positioned to instantly succeed in thismarket and thrive for years to come.Piracy Control Technology will engage in a variety of promotional tactics to generate interest in its unique anti-piracy technology. PC Tech’s initial marketing strategy will include meetings, direct sales calls, presentations,trade show attendance, print ads, public relations efforts, and a comprehensive website. Through these methods,Piracy Control Technology intends to develop a strong reputation and identify itself as the premier provider of anti-piracy technology for digital media.Don Russell owns and operates PC Tech. Mr. Russell has extensive experience in the entertainment industry,combined with a strong record of success that includes streamlining operations and maximizing productivity. Heis the Founder and Chief Executive Officer of Piracy Control Technology, and has been responsible forcoordinating all aspects of project development since its inception. Prior to launching PC Tech, Mr. Russellserved as Vice President of Marketing at Rockstar Beverage Corporation. He gained further experience servingas the Creative Director of Expo Theatre Productions, and as Owner and President of PM Studios. Mr. Russellbegan his career working as a Personnel Relations Supervisor at YBM Enterprises. He attended ColumbiaCollege, and has years of experience as a performer, director, and producer in the entertainment field.To achieve the Company’s objectives, Piracy Control Technology, Inc. is being capitalized by $456,000 in directowner investment, and is seeking $7,500,000 in additional funding through outside investment. __ CONFIDENTIAL – Do Not Distribute Without Permission 4
  • 5. Use Of FundsThe table below outlines the sources and uses of funding: SOURCES OF FUNDS Loan $0 Ow ner Investment $456,000 Investor $7,500,000 Total Sources $7,956,000 USES OF FUNDS Start-up Expenses Development Salaries $470,100 Administrative Expenses $143,900 Business Expenses $190,000 SOURCES & USES Legal $128,900 MCV Technology $1,289,900 TMR Web Based Softw are $425,000 PC Tech Website (Update) $9,000 Softw are Plug-in $135,000 DKM Design (Program Update) $27,000 DKM Model Construction $96,000 Operational Manuals (Drafts) $10,000 Total Start-up Expenses $2,924,800 Start-up Assets Starting Cash Balance $2,999,000 Other Current Assets $0 Office Equipment & Furniture $32,200 DKT Acquisition $2,000,000 Other Long-term Assets $0 Total Start-up Assets $5,031,200 Total Uses $7,956,000 __ CONFIDENTIAL – Do Not Distribute Without Permission 5
  • 6. Investor PropositionThe following investor proposition uses a number of variables to determine a hypothetical share of the Companyin exchange for investment. The following scenario is up for negotiation and is dependent on operating andvaluation assumptions. The investor share is based on an investor-required rate of return of 50% per year, and aYear 5 Company valuation at 5 times EBITDA. It should be noted that the rate of return is dependent onsubjective measurements of risk and reward, and valuations are subject to market conditions. Investment $7,500,000 INVESTOR PROPOSITION Required Rate of Return 50% Value of Investment (Year 5) $85,430,000 Year 5 Earnings $291,006,000 EBITDA Multiple 5 Projected Company Value (Year 5) $1,455,030,000 Equity Sold 6% (Value of Investment/Value of Company)Company OwnershipPiracy Control Technology, Inc. is a C-Corporation registered in the states of California and Illinois.The Company is wholly owned by Don Russell (90%) David Ubeda (5%) Neil Thakker (5%)Company LocationThe Company is located at:47 W Polk StreetSuite 135Chicago, IL 60605 __ CONFIDENTIAL – Do Not Distribute Without Permission 6
  • 7. ServicesPiracy Control Technology is a start-up technology development business based in Chicago. PC Tech is thecreator of a remarkable new solution to music piracy called Media Codec 5, or MCV. Modern music production isalmost entirely processed through digital devices and software, offering engineers, producers, and musicianscomplete control over every song’s sound levels, arrangement, and more. Piracy Control Technology’s uniquetechnology equips music professionals with a powerful tool that embeds security features into a song’s MIDI(Musical Instrument Digital Interface) signals. The following typical sound spectrum analysis of a song reveals thevisual manifestation of the virus in a song’s digital analysis, which is audibly unnoticeable. This virus ishighlighted in red lines.MCV technology does not require the use dongles or other physical media in order for the technology to correctlyfunction. Physical devices can be lost, are much more difficult to update, and require too much on the part of theend-user in order to ensure proper functionality. Through MCVs patent pending technology, PC Tech has beenable to find the ideal balance, protecting both the artist’s intellectual property and preserving the end-user’sexperience. MCVs are inserted into music during production, safely embedding the files deep within the song’sdata file. They are only enabled if a user attempts to make a digital copy of a song, disabling the secondarysource. This dependable security measure prevents illegal music piracy while ensuring law-abiding consumersenjoy an unaffected listening experience. Piracy Control Technology intends to introduce its technology to themusic industry through a comprehensive four-part process: Phase I: MCV Technology Implementation Phase II: Creating Joint Ventures Phase III: Launch The Music Room Software Phase IV: Launch MCV Advisories through Digital Kiosk TechnologyProduct and Service DescriptionPhase I: MCV Technology ImplementationThe effectiveness of MCV technology is predicated on its widespread adoption and implementation. PC Tech willwork closely with record labels, recording artists, producers, and other music professionals to phase in theinclusion of MCVs into new and existing recordings. Music piracy primarily occurs during post-production, eitherout of recording studios, distribution warehouses, or record companies. This is why it is essential to utilize MCVtechnology during the recording and production processes.Phase II: Creating Joint VenturesDuring PC Tech’s second phase, Piracy Control Technology will partner with a wide scope of MIDI sound moduleand outboard gear manufacturers to develop stand-alone units capable of directly applying MCV technology tosongs as they are recorded. PC Tech’s product will be a rack mount unit that will communicate event messagesto digital recording studio software such as Pro Tools, Nuendo, and Cubase. By relying on MCV-basedtechnology to safely embed MCVs into modern recordings, music industry professionals will be able to instantly __ CONFIDENTIAL – Do Not Distribute Without Permission 7
  • 8. protect their product without the need for additional challenging or tedious processes. This phase will alsoprovide PC Tech with an additional stream of revenue.Phase III: Launch The Music RoomIn Piracy Control Technology’s third phase of operations, PC Tech will launch a software program called “TheMusic Room.” This program will provide record companies with an innovative administration tool capable ofreceiving all MCV-recorded files and performing additional tasks central to the music industry, including: Tracking album progress Viewing album layout and song structure Establishing price per record Establishing regional and national release dates for records The Music Room will feature multiple “rooms” specialized for specific departments of recording businesses, giving authorized users access to the information vital to their particular area of work, such as sales, industry feedback, album budgets, and retailer feedback. This product will be supported by a robust set of security measures and technological enhancements to provide unparalleled protection of data. The Music Room will consolidate key data into a single powerful software in order to reduce costs, protect recordings, and equip professionals with an unparalleled range of administrative options. The Music Room Software will be the only software that will give record companies the ability to access MCV music directly from the recording studios. The Music Room is also the only software that will provide access to send records and marketing materials directly to the Kiosks, as described below. The Music Room will also combat piracy by limiting access to hard copies of the records, which eliminates the possibility of the record ending up in the wrong hands.Phase IV: Launch MCV Advisories through Digital Kiosk TechnologyUsers attempting to illegally receive, reproduce, or transfer music enhanced with MCVs will be alerted through aseries of on-screen pop-ups and packaging notices. These alerts will include warnings regarding the severedamage a user can bring upon their computer or electronic deviceby pirating music. In order to ensure that consumers retain a broadrange of options for legally receiving and enjoying music in avariety of formats, PC Tech will establish Digital Kiosk Machinesthrough which to distribute music in addition to secured Internetdownloads and hard copy sales. Piracy Control Technology willpartner with various Digital Kiosk Machine manufacturers todevelop remote machines capable of receiving MCV-enhancedrecords and promotional materials from record companies.Consumers will be able to purchase records as compact discs,MP3 downloads delivered directly to mobile music devices, or as aproof of purchase available through machines that can be used asa download voucher at a later time. Once music is purchased,however, it will not be capable of being transferred, guaranteeingthat musicians and record industry professionals receive the salesrevenues that would normally be lost to piracy.The Kiosks’ enormous hard drive space will store millions of mp3files. This will give consumers access to titles that may beotherwise hard to find. Kiosks will be introduced to the generalpublic as the new form of major and independent retail. Kiosks willalso service millions of consumers and revolutionize the shoppingexperience. __ CONFIDENTIAL – Do Not Distribute Without Permission 8
  • 9. Market Analysis SummaryPC Tech will primarily operate in the Major Label Music Production industry in the United States, an economicsegment that has been severely impacted by falling album sales due to the systemic piracy of music on the 1Internet. The following information on this industry is provided by market research firm IBISWorld.1 “Major Label Music Production in the US Industry Report.” IBISWorld: Obtained December 2010. __ CONFIDENTIAL – Do Not Distribute Without Permission 9
  • 10. Market SegmentationPiracy Control Technology will introduce its product in multiple phases, designed to ease each particular segmentof the music industry toward a new standard in music protection. PC Tech will initially offer its technology tomajor labels for use on all new and existing recordings. Over time, Piracy Control Technology will releasesubsequent versions of its technology that can be sold to major label subsidiaries and branches. Eventually, thetechnology will be available as a stand-alone unit for musicians and producers everywhere to use as part of theproduction process. According to IBISWorld, there are a total of 236 major music labels and 834 independentlabels in the United States, providing PC Tech with a strong and thriving base of potential clients.The final target market for PC Tech’s products will be consumers across the world. Following in the footsteps ofRedbox, which redefined the video market by providing a video-rental system through automated kiosks placedstrategically to attract a maximum of consumer traffic, PC Tech’s Kiosks will allow users to compile their owncustomizable albums that will be copy-proof and competitively priced.Market Needs 2IBISWorld succinctly describes the key challenge facing today’s leading companies in the music industry: “Piracy was once thought to be the great threat to the industry as CD copying software proliferated and the ability to transfer larger files online improved. As intellectual property laws became more strictly enforced and legitimate digital markets grew, consumers decreasing valuation of digital media has emerged as the true challenge to the industry. Consumers now have the opportunity to download music from an almost limitless library via peer-to-peer (P2P) websites for free or stream free music online 24 hours a day. Despite listening to greater volumes, the free music revolution online subsequently has consumers valuing their music less than ever.” Every solution that has been attempted by record labels, recording artists, and distributors has resulted in negligible effects on the gradual devaluation of music. As a result, it is clearer than ever before thatthe industry must develop new ways to protect its property from online piracy. PC Tech’s remarkable productprovides a previously unimaginable solution to this issue by equipping the industry with a tool to immediatelyprotect recordings the minute they are completed, preempting the piracy that commonly occurs along recorddistribution chains.2 “Major Label Music Production in the US Industry Report.” IBISWorld: Obtained December 2010. __ CONFIDENTIAL – Do Not Distribute Without Permission 10
  • 11. Competitive ComparisonPiracy Control Technology is keenly aware of the need to evaluate its competitors. A detailed analysis of thecompetitive landscape will prepare PC Tech for any potential market variables that may arise. PC Tech will bethe first to market with its technology, fulfilling a market need that has remained unsolved for more than a decade.The slow transition of the music industry to a fully digital sector has been largely facilitated by Apple, which hasleveraged the popularity of iPods to establish iTunes and its online market. Although Apple represents PC Tech’smost significant competitor, it will essentially lose its market share when record labels adopt Piracy ControlTechnology’s technology and successfully begin curbing online music piracy. PC Tech will initially sign long-termlicensing contacts with record companies. As a result, PC Tech will be well-positioned to succeed and thrive inthis market.For more information regarding PC Tech’s competitive advantages, see Competitive Edge. __ CONFIDENTIAL – Do Not Distribute Without Permission 11
  • 12. Strategy and Implementation SummaryPiracy Control Technology will develop a brand that emphasizes its innovative technology designed to curb musicpiracy, thus increasing profitability in the music industry. PC Tech will also highlight its unique kiosks that allowusers to purchase songs or albums on-demand and at competitive prices. To increase brand awareness, PiracyControl Technology has created a memorable logo. PC Tech will display this logo prominently on all marketingmaterials and kiosk signage.With its brand and guiding principlesestablished, Piracy Control Technology willsend a clear message about the advantagesits product offers prospective customers. PCTech will promote this message using acomprehensive marketing strategy thatincludes direct sales efforts, brochuredistribution, public relations, and a user-friendly website. Piracy Control Technologyintends to use this approach to accomplishthe following objectives: Establish itself as a trusted anti- piracy resource for the music industry Build a customer base that is large enough to sustain business Generate enough revenue to expand operationsTo achieve the aforementioned operational goals, Piracy Control Technology will build on its advantages, asoutlined in the following section.Competitive EdgeThough PC Tech is unaware of any competing business that currently offers comparable technology, PiracyControl Technology will experience indirect competition from Redbox and iTunes, both of which incorporatetechnology to limit or prevent media piracy. However, iTunes recently began allowing users to purchase songsfree of digital rights management (DRM) encryption, and Redbox only offers movies and video games that are indemand. Piracy Control Technology will capitalize on its competitors’ weaknesses by building on the followingstrengths: Unique technology mutates from album to album and is incurable Designed to prevent piracy of electronic media Knowledgeable and experienced staff Endless supply of titles, not limited by hard copy selection on hand Reinvents the music shopping experienceMarketing StrategyPiracy Control Technology will use a direct sales approach and a variety of advertising channels to increase itsexposure among record labels and production companies. Specific channels will include the following:Direct Sales Brochures: PC Tech will create informative brochures for distribution to prospective customers. These brochures will highlight the benefits of PC Tech’s technology and will provide its contact information. Meetings: Piracy Control Technology will use direct sales calls, presentations, and appointments with record labels and production companies throughout the United States. PC Tech will also arrange __ CONFIDENTIAL – Do Not Distribute Without Permission 12
  • 13. conference calls and webinar presentations when necessary. The benefits of a direct sales approach include:  Increasing sales while lowering monthly marketing costs through increased efficiency  Immediate results, as these calls and meetings can generate orders instantly  Enhanced lead generation Trade shows: PC Tech will attend relevant industry trade shows to increase brand awareness and establish valuable business partnerships. Trade show attendance will include demo sessions, PowerPoint presentations, question-and-answer periods, and distribution of informative literature.Supplemental Marketing Public relations: Piracy Control Technology intends to build a strong public relations campaign via appropriate media outlets. Public relations efforts will include advertising, community support and approval, customer relations, print articles, press releases, and events. Website: PC Tech will create a comprehensive website to generate interest in its technology. This website will be search engine optimized and contain a number of features including: product information, company profile, contact information, testimonials, and demo videos. Print media: Piracy Control Technology will place ads in industry trade publications. These advertisements will include PC Tech’s contact information and web address, as well as a brief overview of Piracy Control Technology’s capabilities. Television advertising: PC Tech recognizes that television advertising is still an effective means of reaching a large target population. For this reason PC Tech will create television commercials introducing the new Digital Kiosk Technology and providing a virus advisory regarding the MCV format. __ CONFIDENTIAL – Do Not Distribute Without Permission 13
  • 14. Management SummaryDon Russell, Founder and Chief Executive OfficerDon Russell developed PC Tech’s key concept and has been in charge of coordinating all aspects of projectdevelopment up to this point. His expertise in the music and entertainment industry is what drives PC Tech andprovides its competitive advantage. Mr. Russell is passionate about preserving and promoting the evolution ofentertainment by creating a resource center that encourages constant development through networking andcommunication on each level of one’s journey to success.Mr. Russell has more than 15 years of experience and a strong track record of success that includes streamliningoperations and maximizing productivity. Prior to launching Piracy Control Technology, he served as VicePresident of Marketing at Rockstar Beverage Corporation. There, Mr. Russell was responsible for researchingand understanding product brand study demographics, producing promotions to target key areas, coordinatingproduct breakouts to maximize productivity, and acting as a liaison between various departments. Mr. Russellgained additional experience by serving as the Creative Director of Expo Theatre Productions, where he preparedand presented client presentations and maintained responsibility for hiring independent contractors. He was alsothe President and Owner of PM Studios for more than three years, and served as a Personnel RelationsSupervisor at YBM Enterprises.Mr. Russell attended Columbia College in Chicago and the University of Phoenix – Chicago campus. He hasextensive experience as a performer, producer, and director in the music industry. He has performed in ordirected several notable productions over the past 10 years. Some of his production credits include: “Riverdance,” where he served as a principal artist “Satin Suite,” where he performed as headliner on the Olive Garden Theater stage at Walt Disney World “Broadway Soul Jam,” where he performed in Amsterdam as a headliner in the very popular and successful musical directed by Maurice HinesMr. Russell’s innovation in the area of musical theater has captured the attention of many great icons such as: Oprah Winfrey, on whose show Mr. Russell performed Gregory Hines, with whom he has performed President Bill Clinton, for whom Mr. Russell performed for at the opening ceremony for the 1996 Democratic National ConventionAs sole owner of one of California’s premier recording studios, Mr. Russell has had the opportunity to work withsuch talents as R. Kelly, The Brat, Onyx, Ideal, 112, Savion Glover, LeVert, The Nicolas Brothers, Sinbad, BernieMac, and Steve Harvey. Mr. Russell has also directed or produced television commercials for such companies asHonda, Seagram’s, McDonalds, Coca-Cola, Fujitsu, Nupremis, AMD, Unisys, and IBM.Ronald E Sweeney,Ronald Sweeney is a entertainment lawyer who represents a variety of recording artists, producers and writers.Those clients include Jimmy “Jam” Harris and Terry Lewis, who collaborate on such top acts as Janet Jackson,the S.O.S Band, the Force M.D.s Patti Austin Lil Wayne, Drake, and Nicki Minage to name a few. And as apartner in Avant Garde Management Inc., Sweeney also served as agent for Klymaxx, the once popular all femaleband that scaled the charts in the 90’s. Sweeney has represented over a hundred major recording artists.Sweeney also, has his own practice with offices on the east and west coast, and sits on several boards.Craig A. Nobles,Once a DJ in Los Angeles, the California - bred music mogul’s journey began in 1973 entertaining the likes ofDavid Lee Roth and Eddie Van Halen while growing up in Pasadena. Contributing to some of the most popularevents in and around Greater Los Angeles, Craig Nobles fell in love with music and developing relationships withartists, promoters, and executives alike. Heeding the advice of his mentor, Maurice Warfield, Nobles jumped atthe opportunity to shadow one of the greatest in the business. Though he would continue developing his skills asa DJ and Socialite/Entrepreneur, Craig Nobles was determined to get the respect from the industry hisremarkable talent deserved, all while fine tuning his skills in the areas of marketing, sales, A&R, publicity, and __ CONFIDENTIAL – Do Not Distribute Without Permission 14
  • 15. promotions. “I thought this was it, but one day I just needed a change, so I moved to New York. “Ironically, the fall of 1983 ushered in those changes, he moved to New York and again resumed entertainingamongst the premieres of nightlife. This would lead to other projects including an assistant position with HarryBelafonte and most notably BEAT STREET, where he taught the actors the DJ style of scratching and assisted inthe A&R administration of the soundtrack. Just a glimpse of things to come...Refusing to follow trends, CraigNobles awed his peers with his drive and passion for music.Joining Grand Jury Productions, Craig Nobles balanced his daily duties as A&R, Marketing, Promotions, Sales,Business Affairs, and Deal Negotiations on behalf of Grand Jury artists with major labels such as Interscope,Warner Brothers, and RCA to name a few. Having grown within the era of Irving Azoff, Russell Simmons, BarryWiess, Steve Berman, Doug Morris, and Steve Rifkind – greatness was never an option.“The formula I use is real and so are the results,” says Nobles. Time will only tell, but looking at history, the futurelooks bright.Specialties- Experienced in budget allocation, forecasting, contract negotiating, marketing, imaging, strategic planning &project management as well as building and maintaining partnerships.- Knowledgeable on youth/pop culture and developing strategies for target demographics.- Extensive knowledge and experience in recording, engineering, production of multi media.- Experience in developing online campaigns, integrated sites, building/running online and ground street teams,and grass roots marketing.Shannon Aldridge, Project LeadShannon Aldridge has spent more than 15 years working in Entertainment and IT-related industries. Whileresiding in Atlanta and New York, Mr. Aldridge has worked for several well-known companies based in the UnitedStates, including the USOC, NBC, NBA, and MLB. Mr. Aldridge was part of an innovative culture that saw therise and fall of several dot-com companies. Meanwhile, he forged ahead at NBA.com to create a subscription-based model that helped to create and capitalize on a new revenue stream called Steaming Media. In early 2000,Mr. Aldridge joined Major League Baseball to start what is now called MLB.com. With his foresight and direction,MLB.com’s streaming media division led a team of talented professionals who created, produced, and deliveredto over 10 million monthly subscribers.In 2005 Mr. Aldridge moved to Chicago to take on another project of rebuilding two companies under oneownership group. Within one year both companies, NCI Technology and HiTide Media, had undergone extensiverenovation, employee training and technology deliverables. As Vice President, Mr. Aldridge was given the task ofassembling the right team of professionals, dedicated hardware installation and new client acquisitions. By yeartwo, both companies on were on the leading edge of Digital Data Collection and HD Video Delivery systems inChicago.In 2007, Mr. Aldridge started SlantMedia with the vision to bring the same expertise and skill to smaller start-upcompanies that need proper guidance, development, and strategies to help them navigate through ever-changingtechnological, social and economic business models. After four years of successful growth, SlantMedia haspositioned itself as a unique company that can function within small to midsize companies’ budgets to consult,create, and produce anything its partners require.Nathan J. Tumulty, Chief Technology OfficerNathan Tumulty, MCSE, brings over 15 years of experience managing and developing software solutions for mid-to large-sized companies. He began his career as a network engineer at Aon Reinsurance, supporting the entireNorth American enterprise. Soon after, he then started his first company, iDesign LLC, whose first contract wasfor the Budnet real-time route accounting and business intelligence application for Anheuser-Busch. His companywould go on to carve a niche out in the real estate industry and was instrumental in the development of the initialRETS platform for real estate property databases. Seeing the ever-increasing amounts of data, he steered thecompany even further toward the development of data mining tools and platforms. In 2006, in a joint project withEpsilon and Acxiom, he managed a group of over 20 software engineers in four states to complete a real-timedata append technology that the companies would eventually license to their clients in the education space, aproduct which is still used to this day. In 2008, he sold his company and moved to Chicago. Then in 2009, he __ CONFIDENTIAL – Do Not Distribute Without Permission 15
  • 16. joined with SlantMedia and began work on several social media projects, including real-time applications for themobile space.June A. Barrett, Administrative AssistantAs a Business Developer Consultant with over 30 years of business experience, which started at an early ageworking in the family-owned retail business started by her parents, June Barrett has been providing direction inevery aspect of developing a solid foundation for new and existing companies and organizations. She has workedwith more than 20 businesses and not-for-profit organizations, developing business strategies that headed theiroperations in an upward, more successful position.Ms. Barrett worked toward her Bachelors of Science degree in Business Administration at Roosevelt University.She formed June’s Point of View Productions in Chicago as an answer to the demand for her business insightand expertise as an Event Producer six years ago. She created numerous opportunities and an outlet for localentertainers she booked to perform in events she produced. These large ethnic multi-day events attractedattendance levels of well over 100,000 people.For Ms. Barrett, becoming an Event Producer was an evolutionary process that included starting in promotions, tocash management, to office administrator, which further included vendor coordination, logistics for nationalentertainers, developing a family pavilion, programming the entertainment stage within the pavilion, andcoordinating participating organizations and sponsors. In the process of this evolution, she found that the eventbusiness is a perfect fit with her organizational qualities, professional respectful attitude to all involved, keensense of peoples personalities, endless resources, and commitment to achieve perfection in the finished product.The concept of a resource center for entertainers was developed from a wish Ms. Barrett had to assist the weakentertainment industry in Chicago. Opportunities for artists were slowly vanishing and frustration was runninghigh. Ms. Barrett set out to help local artists find other outlets besides yearly events to continue performing andget paid while at the same time honing their crafts. The answer was The Music Room, an online resource centerto serve all professionals and artists in the music industry. The Music Room was an inexpensive and interactiveeasy-to-use website. The seed was planted. The Music Room became a reality. It grew into a young sprig but itjust never received enough water for growth to become a tree.Ms. Barrett’s extensive knowledge of producing and business development is what every new start-up needs for asuccessful launch and what existing companies, too: need fresh energy to streamline daily operations andmaximize productivity, putting them on a path to positive growth.Sally A. Lee, Chief Financial OfficerSally Lee brings more than two decades of organizational expertise and experience to PC Tech, and is able toprovide quality service in an integrity-filled, team-oriented environment. Her managerial and communication skillshave been developed through a variety of finance-related positions, most recently as Staff Accountant for ThePritzker Group in Chicago. Her duties in this position included procedure development and implementation forfinancial processing and analyses, increasing efficiencies without compromising established controls, andcreating and generating customized reporting for ongoing strategic planning for trusts, portfolio investments,private equity, and venture capital sectors. In all aspects of this position, Ms. Lee upheld the highest degree offiduciary standards for the ultra-high net worth family.Prior to her position with The Pritzker Group, Ms. Lee performed financial accounting and administration roles forGVW Holdings Corporation, preceded by a two-year position as Controller for Blue Pearl Stone Tech, LLC. From1995 to 2003, she was the Senior Accountant for Spectrum Stone Group, Inc., and began her career as aBookkeeper and Administrative Assistant for All-Line Electric Company and PaulMarc Electric Company,respectively. She holds a Bachelor of Arts degree in Sociology from State University of New York, where sheadditionally completed graduate-level coursework in sociology. Ms. Lee also studied mathematics andmathematics education at DePaul University.Sean Mulroney, Corporate Attorney __ CONFIDENTIAL – Do Not Distribute Without Permission 16
  • 17. Sean Mulroney graduated from the Loyola University of Chicago School of Law and entered the public practice oflaw whereby he served as Associate Regional Counsel for the United States Environmental Protection Agency,Region V. He worked at USEPA for almost 10 years, where he specialized in toxic and hazardous litigation,serving as lead counsel on several of the region’s most complex cases. Mr. Mulroney now has his own lawpractice specializing in litigation, corporate start-up, entertainment and city business licensing.Mr. Mulroney has been involved in several start-up companies focusing on internet broadcasting, broadbandservice providing, community website development, online music sequencing, and environmental consulting.Additionally, he currently is an owner of two of Chicago’s most successful nightclubs and restaurants. Mr.Mulroney performs regularly with several musical groups and the Ravenswood Community Orchestra.Neil Thakkar, Investment ConsultantNeil Thakkar earned his B.A. in Business Management and Entrepreneurship. The networks Mr. Thakkar hasestablished with other business owners and investors have allowed him to engage in a number of business andreal estate endeavors. For the last four years Mr. Thakkar has become a very successful investor in theChicagoland area and continues to grow his portfolio of properties both in residential and commercial real estate.His experience in facilitating acquisitions and implementing exit strategies is the foundation for Mr. Thakkar’scontinued success. Having built strong relationships with other investors has allowed him to raise capital to fundstart-up businesses and development projects while offering a competitive rate of return. He sees his role as atrusted advisor who builds stable, lifelong relationships with clients, partnering with them to meet short-, mid-, andlong term financial goals.David E. Ubeda, Business DevelopmentDavid E. Ubeda, M.S., owns and operates World Class Acquisitions (WCA), a real estate acquisitions companybased in Downers Grove, Illinois. Mr. Ubeda is a successful real estate investor, buying and selling over $50million in real estate, and enjoys his role as a national success coach. Mr. Ubeda’s company is committed toproviding win-win solutions to as many struggling home owners as possible.Mr. Ubeda is a gifted songwriter and musician and has extensive music recording and touring experience as asolo artist. He is the owner of Latin Soul Heaven Productions.Mr. Ubeda is passionate about education and enjoys teaching at the University of Phoenix’s John Sperling Schoolof Business, where he teaches business and management courses as an associate faculty member. Mr. Ubedais currently completing a doctoral degree (Ed.D.) at the University of Phoenix’s School of Advanced Studies.When Mr. Ubeda is not assisting struggling home owners, teaching, or coaching others to pursue their passionand purpose, he continues to enjoy spending quality time with his family and friends. He has expressed,“spending time with my family and friends keeps me rooted and I feel like the wealthiest man on earth when I amwith them.” __ CONFIDENTIAL – Do Not Distribute Without Permission 17
  • 18. Financial ProjectionsThe following table and graph illustrate the financial goals of the Company during the next five years: Year 1 Year 2 Year 3 Year 4 Year 5 Revenue $239,562,217 $266,341,987 $294,572,934 $324,472,733 $356,291,713 Gross Margin $239,545,133 $266,322,904 $294,551,551 $324,448,705 $356,264,643 Operating Expenses $51,363,923 $57,033,455 $63,025,024 $59,608,521 $65,394,243 EBITDA* $188,316,690 $209,424,929 $231,662,007 $264,975,664 $291,005,880 FINANCIAL HIGHLIGHTS Net Profit $122,973,656 $136,038,142 $150,492,242 $172,146,120 $189,065,760 *Earnings befo re interest, taxes, depreciatio n & amo rtizatio n Profitability Ratios Gross Margin/Revenue 100% 100% 100% 100% 100% EBITDA/Revenue 79% 79% 79% 82% 82% Net Profit/Revenue 51% 51% 51% 53% 53% Debt Ratios Debt Ratio (Total Debt/Total Assets) 33.40% 3.75% 2.67% 2.01% 1.67% Interest Coverage Ratio N/A N/A N/A N/A N/A Debt Service Coverage Ratio N/A N/A N/A N/A N/A Net Cash Flow $187,314,754 $82,256,855 $151,719,657 $172,933,957 $190,382,085 Cash Balance - Ending $190,313,754 $272,570,609 $424,290,266 $597,224,223 $787,606,308 Financial Highlights $400,000,000 $350,000,000 $300,000,000 $250,000,000 Revenue Direct Costs $200,000,000 Operating Expenses $150,000,000 Net Profit $100,000,000 $50,000,000 $0 Year 1 Year 2 Year 3 Year 4 Year 5 __ CONFIDENTIAL – Do Not Distribute Without Permission 18
  • 19. The following is a five-year revenue forecast. Direct costs include all costs which can be directly tied to revenue and include “cost of goods.” Year 1 Year 2 Year 3 Year 4 Year 5 Revenue MCV Chips $3,360,000 $3,864,000 $4,443,600 $5,110,140 $5,876,661 Softw are Plug-ins $2,933,333 $3,373,333 $3,879,333 $4,461,233 $5,130,418 MCV Licensing Contract $52,500,000 $60,375,000 $69,431,250 $79,845,938 $91,822,828 Technical Support $32,550 $37,433 $43,047 $49,504 $56,930 Music Room Softw are Dow n Payment $175,000,000 $175,000,000 $175,000,000 $175,000,000 $175,000,000 Music Room Softw are Balance $0 $17,105,263 $34,210,526 $51,315,789 $68,421,053 Music Room Softw are Training $7,500 $7,500 $7,500 $7,500 $7,500 Facial Recognition Add-On $58,000 $58,000 $58,000 $58,000 $58,000 Digital Kiosk Push Fees $4,167 $4,792 $5,510 $6,337 $7,288REVENUE FORECAST Digital Kiosk Mechanics Fees $5,666,667 $6,516,667 $7,494,167 $8,618,292 $9,911,035 Total Revenue $239,562,217 $266,341,987 $294,572,934 $324,472,733 $356,291,713 Direct Cost of Revenue MCV Chips $0 $0 $0 $0 $0 Softw are Plug-ins $13,333 $15,333 $17,633 $20,278 $23,320 MCV Licensing Contract $0 $0 $0 $0 $0 Technical Support $0 $0 $0 $0 $0 Music Room Softw are Dow n Payment $0 $0 $0 $0 $0 Music Room Softw are Balance $0 $0 $0 $0 $0 Music Room Softw are Training $3,750 $3,750 $3,750 $3,750 $3,750 Facial Recognition Add-On $0 $0 $0 $0 $0 Digital Kiosk Push Fees $0 $0 $0 $0 $0 Digital Kiosk Mechanics Fees $0 $0 $0 $0 $0 Subtotal Cost of Revenue $17,083 $19,083 $21,383 $24,028 $27,070 Other Direct Costs $0 $0 $0 $0 $0 Total Direct Costs $17,083 $19,083 $21,383 $24,028 $27,070 Gross Margin $239,545,133 $266,322,904 $294,551,551 $324,448,705 $356,264,643 Gross Margin % 100% 100% 100% 100% 100% __ CONFIDENTIAL – Do Not Distribute Without Permission 19
  • 20. The table below shows the units and pricing assumptions underlying the revenue forecast: Year 1 Year 2 Year 3 Year 4 Year 5 Units MCV Chips 8,400,000 9,660,000 11,109,000 12,775,350 14,691,653 Softw are Plug-ins 2,667 3,067 3,527 4,056 4,664 MCV Licensing Contract 21 24 28 32 37 Technical Support 210 242 278 319 367 Music Room Softw are Dow n Payment 1 1 1 1 1 Music Room Softw are Balance 0 1 2 3 4 Music Room Softw are Training 1 1 1 1 1 Facial Recognition Add-On 1 1 1 1 1 Digital Kiosk Push Fees 8,333 9,583 11,021 12,674 14,575 Digital Kiosk Mechanics Fees 56,666,667 65,166,667 74,941,667 86,182,917 99,110,354 Total Units 65,077,901 74,839,586 86,065,525 98,975,354 113,821,657UNIT ASSUMPTIONS Unit Price MCV Chips $0.40 $0.40 $0.40 $0.40 $0.40 Softw are Plug-ins $1,100.00 $1,100.00 $1,100.00 $1,100.00 $1,100.00 MCV Licensing Contract $2,500,000.00 $2,500,000.00 $2,500,000.00 $2,500,000.00 $2,500,000.00 Technical Support $155.00 $155.00 $155.00 $155.00 $155.00 Music Room Softw are Dow n Payment $175,000,000.00 $175,000,000.00 $175,000,000.00 $175,000,000.00 $175,000,000.00 Music Room Softw are Balance $0.00 $17,105,263.16 $17,105,263.16 $17,105,263.16 $17,105,263.16 Music Room Softw are Training $7,500.00 $7,500.00 $7,500.00 $7,500.00 $7,500.00 Facial Recognition Add-On $58,000.00 $58,000.00 $58,000.00 $58,000.00 $58,000.00 Digital Kiosk Push Fees $0.50 $0.50 $0.50 $0.50 $0.50 Digital Kiosk Mechanics Fees $0.10 $0.10 $0.10 $0.10 $0.10 Direct Unit Cost MCV Chips $0.00 $0.00 $0.00 $0.00 $0.00 Softw are Plug-ins $5.00 $5.00 $5.00 $5.00 $5.00 MCV Licensing Contract $0.00 $0.00 $0.00 $0.00 $0.00 Technical Support $0.00 $0.00 $0.00 $0.00 $0.00 Music Room Softw are Dow n Payment $0.00 $0.00 $0.00 $0.00 $0.00 Music Room Softw are Balance $0.00 $0.00 $0.00 $0.00 $0.00 Music Room Softw are Training $3,750.00 $3,750.00 $3,750.00 $3,750.00 $3,750.00 Facial Recognition Add-On $0.00 $0.00 $0.00 $0.00 $0.00 Digital Kiosk Push Fees $0.00 $0.00 $0.00 $0.00 $0.00 Digital Kiosk Mechanics Fees $0.00 $0.00 $0.00 $0.00 $0.00 __ CONFIDENTIAL – Do Not Distribute Without Permission 20
  • 21. Year 1 Revenue Monthly$200,000,000$180,000,000$160,000,000$140,000,000$120,000,000$100,000,000 $80,000,000 $60,000,000 $40,000,000 $20,000,000 $0 Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Revenue By Year$400,000,000$350,000,000$300,000,000$250,000,000$200,000,000$150,000,000$100,000,000 $50,000,000 $0 Year 1 Year 2 Year 3 Year 4 Year 5 __ CONFIDENTIAL – Do Not Distribute Without Permission 21
  • 22. The Company’s personnel forecast is outlined below. Personnel wages indicate the average wage per positionand personnel costs are total wages for each position. Year 1 Year 2 Year 3 Year 4 Year 5 Personnel Count Chief Executive Officer 1 1 1 1 1 Chief Financial Officer 1 1 1 1 1 Chief Operations Officer 1 1 1 1 1 Chief Technology Officer 1 1 1 1 1 Senior VP of Sales & Marketing 1 1 1 1 1 Business Development 2 2 2 2 2 Investor Relations 1 1 1 1 1 Administrative Assistant 1 1 1 1 1 Accountant/Bookkeeper 1 1 1 1 1 Office Assistant 1 1 1 1 1 Secretary 1 1 1 1 1 Security Guard 1 1 1 1 1 Admin/Other 0 1 2 3 4 Total Personnel 13 14 15 16 17 PERSONNEL FORECAST Personnel Wage Chief Executive Officer $130,000 $136,500 $143,325 $150,491 $158,016 Chief Financial Officer $65,000 $68,250 $71,663 $75,246 $79,008 Chief Operations Officer $53,300 $55,965 $58,763 $61,701 $64,786 Chief Technology Officer $70,200 $73,710 $77,396 $81,265 $85,329 Senior VP of Sales & Marketing $65,000 $68,250 $71,663 $75,246 $79,008 Business Development $50,700 $53,235 $55,897 $58,692 $61,626 Investor Relations $41,600 $43,680 $45,864 $48,157 $50,565 Administrative Assistant $49,400 $51,870 $54,464 $57,187 $60,046 Accountant/Bookkeeper $35,100 $36,855 $38,698 $40,633 $42,664 Office Assistant $27,820 $29,211 $30,672 $32,205 $33,815 Secretary $28,600 $30,030 $31,532 $33,108 $34,763 Security Guard $26,780 $28,119 $29,525 $31,001 $32,551 Admin/Other $0 $40,000 $42,000 $44,100 $46,305 Personnel Costs Chief Executive Officer $130,000 $136,500 $143,325 $150,491 $158,016 Chief Financial Officer $65,000 $68,250 $71,663 $75,246 $79,008 Chief Operations Officer $53,300 $55,965 $58,763 $61,701 $64,786 Chief Technology Officer $70,200 $73,710 $77,396 $81,265 $85,329 Senior VP of Sales & Marketing $65,000 $68,250 $71,663 $75,246 $79,008 Business Development $101,400 $106,470 $111,794 $117,383 $123,252 Investor Relations $41,600 $43,680 $45,864 $48,157 $50,565 Administrative Assistant $49,400 $51,870 $54,464 $57,187 $60,046 Accountant/Bookkeeper $35,100 $36,855 $38,698 $40,633 $42,664 Office Assistant $27,820 $29,211 $30,672 $32,205 $33,815 Total Payroll $638,820 $670,761 $704,299 $739,514 $776,490 __ CONFIDENTIAL – Do Not Distribute Without Permission 22
  • 23. The Company intends to deploy its funding to maximize growth and profitability. In the Profit and Loss tablebelow, gross margin equals revenue minus direct costs. The “bottom line” or profit (as measured before and afterinterest, taxes, depreciation, and amortization) equals gross margin minus operating expenses. Year 1 Year 2 Year 3 Year 4 Year 5 Revenue $239,562,217 $266,341,987 $294,572,934 $324,472,733 $356,291,713 Total Cost of Revenue $17,083 $19,083 $21,383 $24,028 $27,070 Gross Margin $239,545,133 $266,322,904 $294,551,551 $324,448,705 $356,264,643 Gross Margin/Revenue 100% 100% 100% 100% 100% Expenses PRO FORMA PROFIT & LOSS Marketing $35,930,000 $39,950,000 $44,190,000 $38,940,000 $42,760,000 Rent & Utilities $134,400 $144,700 $155,000 $165,300 $175,600 Travel & Entertainment $24,000 $25,200 $26,500 $27,800 $29,200 Ongoing Development $11,980,000 $13,320,000 $14,730,000 $16,220,000 $17,810,000 Insurance $5,400 $5,700 $6,000 $6,300 $6,600 Professional Services $20,000 $21,000 $22,100 $23,200 $24,400 Misc $2,400,000 $2,660,000 $2,950,000 $3,240,000 $3,560,000 Depreciation $135,480 $135,480 $135,480 $135,480 $135,480 Payroll Taxes & Benefits $95,823 $100,614 $105,645 $110,927 $116,473 Total Personnel $638,820 $670,761 $704,299 $739,514 $776,490 Total Op. Expenses $51,363,923 $57,033,455 $63,025,024 $59,608,521 $65,394,243 Profit Before Interest and Taxes $188,181,210 $209,289,449 $231,526,527 $264,840,184 $290,870,400 EBITDA $188,316,690 $209,424,929 $231,662,007 $264,975,664 $291,005,880 Interest Expense $0 $0 $0 $0 $0 Taxes Incurred $65,207,554 $73,251,307 $81,034,284 $92,694,064 $101,804,640 Net Profit $122,973,656 $136,038,142 $150,492,242 $172,146,120 $189,065,760 Net Profit/Revenue 51.3% 51.1% 51.1% 53.1% 53.1% __ CONFIDENTIAL – Do Not Distribute Without Permission 23
  • 24. The charts below demonstrate when the Company is expected to become profitable. Break-even occurs whenrevenue exceeds expenses. Revenue & Expenses Year 1 Monthly $200,000,000 $180,000,000 $160,000,000 Revenue $140,000,000 $120,000,000 $100,000,000 $80,000,000 $60,000,000 Expenses $40,000,000 $20,000,000 $0 Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Revenue & Expenses Years 1 to 5 $400,000,000 $350,000,000 $300,000,000 Revenue $250,000,000 $200,000,000 $150,000,000 Expenses $100,000,000 $50,000,000 $0 Year 1 Year 2 Year 3 Year 4 Year 5 __ CONFIDENTIAL – Do Not Distribute Without Permission 24
  • 25. The following depictions of the Company’s projected cash flow show that the Company expects to maintainsufficient cash balances over the five years of this plan. The “pro forma cash flow” table differs from the “proforma profit and loss” (P&L) table. Pro forma cash flow is intended to represent the actual flow of cash in and outof the Company. In comparison, the revenue and expense projections on the P&L table include “non-cash” itemsand exclude funding and investment illustrations. Cash Flow $900,000,000 $800,000,000 $700,000,000 $600,000,000 $500,000,000 Net Cash Flow $400,000,000 Cash Balance $300,000,000 $200,000,000 $100,000,000 $0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 1 Year 2 Year 3 Year 4 Year 5 Cash Received Revenue $239,562,217 $266,341,987 $294,572,934 $324,472,733 $356,291,713 New Current Borrow ing $0 $0 $0 $0 $0 New Long-term Liabilities $0 $0 $0 $0 $0 Sale of Other Current Assets $0 $0 $0 $0 $0 Sale of Long-term Assets $0 $0 $0 $0 $0 New Investment Received $0 $0 $0 $0 $0 Subtotal Cash Received $239,562,217 $266,341,987 $294,572,934 $324,472,733 $356,291,713 CASH FLOW Expenditures Expenditures from Operations Personnel Expenses $638,820 $670,761 $704,299 $739,514 $776,490 Bill Payments $51,608,643 $183,414,371 $142,148,979 $150,799,262 $165,133,138 Subtotal Spent on Operations $52,247,463 $184,085,132 $142,853,278 $151,538,776 $165,909,628 Additional Cash Spent Current Borrow ing Repay. $0 $0 $0 $0 $0 L-T Liabilities Principal Repay. $0 $0 $0 $0 $0 Purchase Other Current Assets $0 $0 $0 $0 $0 Purchase Long-term Assets $0 $0 $0 $0 $0 Dividends $0 $0 $0 $0 $0 Subtotal Cash Spent $52,247,463 $184,085,132 $142,853,278 $151,538,776 $165,909,628 Net Cash Flow $187,314,754 $82,256,855 $151,719,657 $172,933,957 $190,382,085 Cash Balance $190,313,754 $272,570,609 $424,290,266 $597,224,223 $787,606,308 __ CONFIDENTIAL – Do Not Distribute Without Permission 25
  • 26. The balance sheet below highlights the Company’s projected assets, liabilities, and capital: Year 1 Year 2 Year 3 Year 4 Year 5 Assets Current Assets Cash $190,313,754 $272,570,609 $424,290,266 $597,224,223 $787,606,308 Other Current Assets $0 $0 $0 $0 $0 Total Current Assets $190,313,754 $272,570,609 $424,290,266 $597,224,223 $787,606,308 Long-term Assets Long-term Assets $2,032,200 $2,032,200 $2,032,200 $2,032,200 $2,032,200 Accumulated Depreciation $135,480 $270,960 $406,440 $541,920 $677,400 BALANCE SHEET Total Long-term Assets $1,896,720 $1,761,240 $1,625,760 $1,490,280 $1,354,800 Total Assets $192,210,474 $274,331,849 $425,916,026 $598,714,503 $788,961,108 Liabilities and Capital Current Liabilities Accounts Payable $64,205,617 $10,288,851 $11,380,785 $12,033,142 $13,213,988 Current Borrow ing $0 $0 $0 $0 $0 Other Current Liabilities $0 $0 $0 $0 $0 Subtotal Current Liabilities $64,205,617 $10,288,851 $11,380,785 $12,033,142 $13,213,988 Long-term Liabilities $0 $0 $0 $0 $0 Total Liabilities $64,205,617 $10,288,851 $11,380,785 $12,033,142 $13,213,988 Paid-in Capital $7,956,000 $7,956,000 $7,956,000 $7,956,000 $7,956,000 Retained Earnings ($2,924,800) $120,048,856 $256,086,998 $406,579,241 $578,725,360 Earnings $122,973,656 $136,038,142 $150,492,242 $172,146,120 $189,065,760 Total Capital $128,004,856 $264,042,998 $414,535,241 $586,681,360 $775,747,120 Total Liabilities and Capital $192,210,474 $274,331,849 $425,916,026 $598,714,503 $788,961,108 __ CONFIDENTIAL – Do Not Distribute Without Permission 26
  • 27. The sensitivity analysis below assumes that revenues are 15% higher or lower than figures projected earlier inthis business plan: REVENUE IS 15% GREATER THAN PROJECTED Year 1 Year 2 Year 3 Year 4 Year 5 BEST CASE SCENARIO Revenue $275,496,549 $306,293,285 $338,758,874 $373,143,643 $409,735,470 Cost of Goods $19,646 $21,946 $24,591 $27,633 $31,131 Gross Margin $275,476,903 $306,271,340 $338,734,283 $373,116,011 $409,704,340 Gross Margin/Revenue 100% 100% 100% 100% 100% Operating Expenses $51,363,923 $57,033,455 $63,025,024 $59,608,521 $65,394,243 Net Profit $145,673,437 $162,004,625 $179,211,019 $203,779,868 $223,801,563 Net Profit/Revenue 53% 53% 53% 55% 55% Cash Flow $212,003,426 $106,553,164 $180,472,257 $204,587,914 $225,154,467 Cash Balance $215,002,426 $321,555,590 $502,027,847 $706,615,761 $931,770,228 REVENUE IS 15% LESS THAN PROJECTED WORST CASE SCENARIO Year 1 Year 2 Year 3 Year 4 Year 5 Revenue $203,627,884 $226,390,689 $250,386,994 $275,801,823 $302,847,956 Cost of Goods $14,521 $16,221 $18,176 $20,424 $23,010 Gross Margin $203,613,363 $226,374,468 $250,368,818 $275,781,399 $302,824,947 Gross Margin/Revenue 100% 100% 100% 100% 100% Operating Expenses $51,363,923 $57,033,455 $63,025,024 $59,608,521 $65,394,243 Net Profit $98,131,223 $110,071,659 $121,773,466 $140,512,371 $154,329,957 Net Profit/Revenue 48% 49% 49% 51% 51% Cash Flow $162,470,436 $56,291,955 $123,000,848 $141,300,189 $155,646,248 Cash Balance $165,469,436 $221,761,391 $344,762,239 $486,062,428 $641,708,676 __ CONFIDENTIAL – Do Not Distribute Without Permission 27
  • 28. Appendix M o nth 1 M o nth 2 M o nth 3 M o nth 4 M o nth 5 M o nth 6 M o nth 7 M o nth 8 M o nth 9 M o nth 10 M o nth 11 M o nth 12 Revenue M CV Chips $ 21 ,093 1 $ 221,648 $ 232,730 $ 244,367 $ 256,585 $ 269,415 $ 282,885 $ 297,030 $ 31 ,881 1 $ 327,475 $ 343,849 $ 361,041 So ftware P lug-ins $184,288 $193,502 $ 203,177 $ 213,336 $ 224,003 $ 235,203 $ 246,963 $ 259,312 $ 272,277 $ 285,891 $ 300,186 $ 31 95 5,1 M CV Licensing Co ntract $ 3,298,334 $ 3,463,251 $ 3,636,413 $ 3,818,234 $ 4,009,146 $ 4,209,603 $ 4,420,083 $ 4,641,087 $ 4,873,142 $ 5,1 6,799 1 $ 5,372,639 $ 5,641,271 Technical Suppo rt $ 2,045 $ 2,147 $ 2,255 $ 2,367 $ 2,486 $ 2,610 $ 2,740 $ 2,877 $ 3,021 $ 3,172 $ 3,331 $ 3,498 M usic Ro o m So ftware Do wn P ayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $175,000,000 M usic Ro o m So ftware B alance $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 M usic Ro o m So ftware Training $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $ 7,500 Facial Reco gnitio n A dd-On $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $ 58,000 Digital Kio sk P ush Fees $ 262 $ 275 $ 289 $ 303 $ 318 $ 334 $ 351 $ 368 $ 387 $ 406 $ 426 $ 448REVENUE FORECAST Digital Kio sk M echanics Fees $ 356,011 $ 373,811 $ 392,502 $ 41 27 2,1 $ 432,733 $ 454,370 $ 477,088 $ 500,943 $ 525,990 $ 552,289 $ 579,904 $ 608,899 To tal Revenue $ 4,052,033 $ 4,254,634 $ 4,467,366 $ 4,690,734 $ 4,925,271 $ 5,1 ,535 71 $ 5,430,1 1 1 $ 5,701 7 ,61 $ 5,986,698 $ 6,286,033 $ 6,600,334 $ 1 ,995,851 81 Direct Co st o f Revenue M CV Chips $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 So ftware P lug-ins $ 838 $ 880 $ 924 $ 970 $1 8 ,01 $1,069 $ 1 23 ,1 $ 1 79 ,1 $1,238 $1,300 $1,364 $1,433 M CV Licensing Co ntract $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Technical Suppo rt $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 M usic Ro o m So ftware Do wn P ayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 M usic Ro o m So ftware B alance $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 M usic Ro o m So ftware Training $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $ 3,750 Facial Reco gnitio n A dd-On $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Digital Kio sk P ush Fees $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Digital Kio sk M echanics Fees $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Subto tal Co st o f Revenue $ 838 $ 880 $ 924 $ 970 $1 8 ,01 $1,069 $ 1 23 ,1 $ 1 79 ,1 $1,238 $1,300 $1,364 $ 5,183 Other Direct Co sts $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 To tal Direct Co sts $ 838 $ 880 $ 924 $ 970 $1 8 ,01 $1,069 $ 1 23 ,1 $ 1 79 ,1 $1,238 $1,300 $1,364 $ 5,183 Gro ss M argin $ 4,051 95 ,1 $ 4,253,755 $ 4,466,442 $ 4,689,765 $ 4,924,253 $ 5,170,465 $ 5,428,989 $ 5,700,438 $ 5,985,460 $ 6,284,733 $ 6,598,970 $ 1 ,990,668 81 Gro ss M argin % 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% __ CONFIDENTIAL – Do Not Distribute Without Permission 28
  • 29. M o nth 1 M o nth 2 M o nth 3 M o nth 4 M o nth 5 M o nth 6 M o nth 7 M o nth 8 M o nth 9 M o nth 10 M o nth 11 M o nth 12 Units M CV Chips 527,733 554,120 581,826 610,917 641,463 673,536 707,213 742,574 779,703 818,688 859,622 902,603 So ftware P lug-ins 168 176 185 194 204 214 225 236 248 260 273 287 M CV Licensing Co ntract 1 1 1 2 2 2 2 2 2 2 2 2 Technical Suppo rt 13 14 15 15 16 17 18 19 19 20 21 23 M usic Ro o m So ftware Do wn P ayment 0 0 0 0 0 0 0 0 0 0 0 1 M usic Ro o m So ftware B alance 0 0 0 0 0 0 0 0 0 0 0 0 M usic Ro o m So ftware Training 0 0 0 0 0 0 0 0 0 0 0 1 Facial Reco gnitio n A dd-On 0 0 0 0 0 0 0 0 0 0 0 1 Digital Kio sk P ush Fees 524 550 577 606 636 668 702 737 774 812 853 895 Digital Kio sk M echanics Fees 3,560,107 3,738,1 2 1 3,925,017 4,1 ,268 21 4,327,332 4,543,698 4,770,883 5,009,427 5,259,899 5,522,894 5,799,038 6,088,990 To tal Units 4,088,546 4,292,973 4,507,622 4,733,003 4,969,653 5,21 35 8,1 5,479,042 5,752,994 6,040,644 6,342,676 6,659,810 6,992,803UNIT ASSUMPTIONS Unit P rice M CV Chips $ 0.4 $ 0.4 $ 0.4 $ 0.4 $ 0.4 $ 0.4 $ 0.4 $ 0.4 $ 0.4 $ 0.4 $ 0.4 $ 0.4 So ftware P lug-ins $ 1 00.0 ,1 $ 1 00.0 ,1 $ 1 00.0 ,1 $ 1 00.0 ,1 $ 1 00.0 ,1 $ 1 00.0 ,1 $ 1 00.0 ,1 $ 1 00.0 ,1 $ 1 00.0 ,1 $ 1 00.0 ,1 $ 1 00.0 ,1 $ 1 00.0 ,1 M CV Licensing Co ntract $ 2,500,000.0 $ 2,500,000.0 $ 2,500,000.0 $ 2,500,000.0 $ 2,500,000.0 $ 2,500,000.0 $ 2,500,000.0 $ 2,500,000.0 $ 2,500,000.0 $ 2,500,000.0 $ 2,500,000.0 $ 2,500,000.0 Technical Suppo rt $155.0 $155.0 $155.0 $155.0 $155.0 $155.0 $155.0 $155.0 $155.0 $155.0 $155.0 $155.0 M usic Ro o m So ftware Do wn P ayment $175,000,000.0 $175,000,000.0 $175,000,000.0 $175,000,000.0 $175,000,000.0 $175,000,000.0 $175,000,000.0 $175,000,000.0 $175,000,000.0 $175,000,000.0 $175,000,000.0 $175,000,000.0 M usic Ro o m So ftware B alance $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 0.0 M usic Ro o m So ftware Training $ 7,500.0 $ 7,500.0 $ 7,500.0 $ 7,500.0 $ 7,500.0 $ 7,500.0 $ 7,500.0 $ 7,500.0 $ 7,500.0 $ 7,500.0 $ 7,500.0 $ 7,500.0 Facial Reco gnitio n A dd-On $ 58,000.0 $ 58,000.0 $ 58,000.0 $ 58,000.0 $ 58,000.0 $ 58,000.0 $ 58,000.0 $ 58,000.0 $ 58,000.0 $ 58,000.0 $ 58,000.0 $ 58,000.0 Digital Kio sk P ush Fees $ 0.5 $ 0.5 $ 0.5 $ 0.5 $ 0.5 $ 0.5 $ 0.5 $ 0.5 $ 0.5 $ 0.5 $ 0.5 $ 0.5 Digital Kio sk M echanics Fees $ 0.1 $ 0.1 $ 0.1 $ 0.1 $ 0.1 $ 0.1 $ 0.1 $ 0.1 $ 0.1 $ 0.1 $ 0.1 $ 0.1 Direct Unit Co st M CV Chips $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 So ftware P lug-ins $5 $5 $5 $5 $5 $5 $5 $5 $5 $5 $5 $5 M CV Licensing Co ntract $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Technical Suppo rt $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 M usic Ro o m So ftware Do wn P ayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 M usic Ro o m So ftware B alance $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 M usic Ro o m So ftware Training $ 3,750 $ 3,750 $ 3,750 $ 3,750 $ 3,750 $ 3,750 $ 3,750 $ 3,750 $ 3,750 $ 3,750 $ 3,750 $ 3,750 Facial Reco gnitio n A dd-On $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Digital Kio sk P ush Fees $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Digital Kio sk M echanics Fees $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 __ CONFIDENTIAL – Do Not Distribute Without Permission 29
  • 30. M o nth 1 M o nth 2 M o nth 3 M o nth 4 M o nth 5 M o nth 6 M o nth 7 M o nth 8 M o nth 9 M o nth 10 M o nth 11 M o nth 12 P erso nnel Co unt Chief Executive Officer 1 1 1 1 1 1 1 1 1 1 1 1 Chief Financial Officer 1 1 1 1 1 1 1 1 1 1 1 1 Chief Operatio ns Officer 1 1 1 1 1 1 1 1 1 1 1 1 Chief Techno lo gy Officer 1 1 1 1 1 1 1 1 1 1 1 1 Senio r VP o f Sales & M arketing 1 1 1 1 1 1 1 1 1 1 1 1 B usiness Develo pment 2 2 2 2 2 2 2 2 2 2 2 2 Investo r Relatio ns 1 1 1 1 1 1 1 1 1 1 1 1 A dministrative A ssistant 1 1 1 1 1 1 1 1 1 1 1 1PERSONNEL FORECAST A cco untant/B o o kkeeper 1 1 1 1 1 1 1 1 1 1 1 1 Office A ssistant 1 1 1 1 1 1 1 1 1 1 1 1 Secretary 1 1 1 1 1 1 1 1 1 1 1 1 Security Guard 1 1 1 1 1 1 1 1 1 1 1 1 A dmin/Other 0 0 0 0 0 0 0 0 0 0 0 0 To tal P erso nnel 13 13 13 13 13 13 13 13 13 13 13 13 P erso nnel Wage Chief Executive Officer $10,833 $10,833 $10,833 $10,833 $10,833 $10,833 $10,833 $10,833 $10,833 $10,833 $10,833 $10,833 Chief Financial Officer $ 5,417 $ 5,417 $ 5,417 $ 5,417 $ 5,417 $ 5,417 $ 5,417 $ 5,417 $ 5,417 $ 5,417 $ 5,417 $ 5,417 Chief Operatio ns Officer $ 4,442 $ 4,442 $ 4,442 $ 4,442 $ 4,442 $ 4,442 $ 4,442 $ 4,442 $ 4,442 $ 4,442 $ 4,442 $ 4,442 Chief Techno lo gy Officer $ 5,850 $ 5,850 $ 5,850 $ 5,850 $ 5,850 $ 5,850 $ 5,850 $ 5,850 $ 5,850 $ 5,850 $ 5,850 $ 5,850 Senio r VP o f Sales & M arketing $ 5,417 $ 5,417 $ 5,417 $ 5,417 $ 5,417 $ 5,417 $ 5,417 $ 5,417 $ 5,417 $ 5,417 $ 5,417 $ 5,417 B usiness Develo pment $ 4,225 $ 4,225 $ 4,225 $ 4,225 $ 4,225 $ 4,225 $ 4,225 $ 4,225 $ 4,225 $ 4,225 $ 4,225 $ 4,225 Investo r Relatio ns $ 3,467 $ 3,467 $ 3,467 $ 3,467 $ 3,467 $ 3,467 $ 3,467 $ 3,467 $ 3,467 $ 3,467 $ 3,467 $ 3,467 A dministrative A ssistant $ 4,1 7 1 $ 4,1 7 1 $ 4,1 7 1 $ 4,1 7 1 $ 4,1 7 1 $ 4,1 7 1 $ 4,1 7 1 $ 4,1 7 1 $ 4,1 7 1 $ 4,1 7 1 $ 4,1 7 1 $ 4,1 7 1 A cco untant/B o o kkeeper $ 2,925 $ 2,925 $ 2,925 $ 2,925 $ 2,925 $ 2,925 $ 2,925 $ 2,925 $ 2,925 $ 2,925 $ 2,925 $ 2,925 Office A ssistant $ 2,318 $ 2,318 $ 2,318 $ 2,318 $ 2,318 $ 2,318 $ 2,318 $ 2,318 $ 2,318 $ 2,318 $ 2,318 $ 2,318 Secretary $ 2,383 $ 2,383 $ 2,383 $ 2,383 $ 2,383 $ 2,383 $ 2,383 $ 2,383 $ 2,383 $ 2,383 $ 2,383 $ 2,383 Security Guard $ 2,232 $ 2,232 $ 2,232 $ 2,232 $ 2,232 $ 2,232 $ 2,232 $ 2,232 $ 2,232 $ 2,232 $ 2,232 $ 2,232 A dmin/Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 __ CONFIDENTIAL – Do Not Distribute Without Permission 30
  • 31. M o nth 1 M o nth 2 M o nth 3 M o nth 4 M o nth 5 M o nth 6 M o nth 7 M o nth 8 M o nth 9 M o nth 10 M o nth 11 M o nth 12 Revenue $ 4,052,033 $ 4,254,634 $ 4,467,366 $ 4,690,734 $ 4,925,271 $ 5,1 ,535 71 $ 5,430,1 1 1 $ 5,701 7 ,61 $ 5,986,698 $ 6,286,033 $ 6,600,334 $ 1 ,995,851 81 To tal Co st o f Revenue $ 838 $ 880 $ 924 $ 970 $1 8 ,01 $1,069 $ 1 23 ,1 $ 1 79 ,1 $1,238 $1,300 $1,364 $ 5,183 Gross M argin $ 4,051 95 ,1 $ 4,253,755 $ 4,466,442 $ 4,689,765 $ 4,924,253 $ 5,170,465 $ 5,428,989 $ 5,700,438 $ 5,985,460 $ 6,284,733 $ 6,598,970 $ 1 ,990,668 81 Gross M argin/Revenue 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% ExpensesPRO FORMA PROFIT & LOSS M arketing $ 2,994,167 $ 2,994,167 $ 2,994,167 $ 2,994,167 $ 2,994,167 $ 2,994,167 $ 2,994,167 $ 2,994,167 $ 2,994,167 $ 2,994,167 $ 2,994,167 $ 2,994,167 Rent & Utilities $ 1 ,200 1 $ 1 ,200 1 $ 1 ,200 1 $ 1 ,200 1 $ 1 ,200 1 $ 1 ,200 1 $ 1 ,200 1 $ 1 ,200 1 $ 1 ,200 1 $ 1 ,200 1 $ 1 ,200 1 $ 1 ,200 1 Travel & Entertainment $ 2,000 $ 2,000 $ 2,000 $ 2,000 $ 2,000 $ 2,000 $ 2,000 $ 2,000 $ 2,000 $ 2,000 $ 2,000 $ 2,000 Ongo ing Develo pment $ 998,333 $ 998,333 $ 998,333 $ 998,333 $ 998,333 $ 998,333 $ 998,333 $ 998,333 $ 998,333 $ 998,333 $ 998,333 $ 998,333 Insurance $ 450 $ 450 $ 450 $ 450 $ 450 $ 450 $ 450 $ 450 $ 450 $ 450 $ 450 $ 450 P rofessio nal Services $1,667 $1,667 $1,667 $1,667 $1,667 $1,667 $1,667 $1,667 $1,667 $1,667 $1,667 $1,667 M isc $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ 200,000 Depreciatio n $ 1 ,290 1 $ 1 ,290 1 $ 1 ,290 1 $ 1 ,290 1 $ 1 ,290 1 $ 1 ,290 1 $ 1 ,290 1 $ 1 ,290 1 $ 1 ,290 1 $ 1 ,290 1 $ 1 ,290 1 $ 1 ,290 1 P ayroll Taxes & B enefits $ 7,985 $ 7,985 $ 7,985 $ 7,985 $ 7,985 $ 7,985 $ 7,985 $ 7,985 $ 7,985 $ 7,985 $ 7,985 $ 7,985 To tal P erso nnel $ 53,235 $ 53,235 $ 53,235 $ 53,235 $ 53,235 $ 53,235 $ 53,235 $ 53,235 $ 53,235 $ 53,235 $ 53,235 $ 53,235 To tal Op. Expenses $ 4,280,327 $ 4,280,327 $ 4,280,327 $ 4,280,327 $ 4,280,327 $ 4,280,327 $ 4,280,327 $ 4,280,327 $ 4,280,327 $ 4,280,327 $ 4,280,327 $ 4,280,327 P rofit B efo re Int. and Tax ($229,132) ($26,572) $1 1 86,1 6 $ 409,438 $ 643,926 $ 890,139 $ 1 48,662 ,1 $1,420,1 1 1 $1,705,133 $ 2,004,406 $ 2,318,643 $177,710,341 EBITDA ($217,842) ($15,282) $197,406 $ 420,728 $ 655,216 $ 901,429 $ 1 59,952 ,1 $ 1 ,401 ,431 $ 1 6,423 ,71 $ 2,015,696 $ 2,329,933 $177,721,631 Interest Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Taxes Incurred $0 $0 $0 $0 $0 $0 $ 402,032 $ 497,039 $ 596,797 $ 701,542 $ 81 ,525 1 $ 62,198,619 Net P rofit ($229,132) ($26,572) $1 1 86,1 6 $ 409,438 $ 643,926 $ 890,139 $ 746,630 $ 923,072 $ 1 08,337 ,1 $1,302,864 $1,507,1 8 1 $ 1 5,51 ,722 1 1 Net P rofit/Revenue -5.7% -0.6% 4.2% 8.7% 1 % 3.1 17.2% 13.7% 16.2% 18.5% 20.7% 22.8% 63.5% __ CONFIDENTIAL – Do Not Distribute Without Permission 31
  • 32. M onth 1 M onth 2 M onth 3 M onth 4 M onth 5 M onth 6 M onth 7 M onth 8 M onth 9 M onth 10 M onth 11 M onth 12 Cash Received Revenue $4,052,033 $4,254,634 $4,467,366 $4,690,734 $4,925,271 $5,1 ,535 71 $5,430,1 1 1 $5,701 7 ,61 $5,986,698 $6,286,033 $6,600,334 $1 ,995,851 81 New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Sale of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Sale of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Subtotal Cash Received $4,052,033 $4,254,634 $4,467,366 $4,690,734 $4,925,271 $5,1 ,535 71 $5,430,1 1 1 $5,701 7 ,61 $5,986,698 $6,286,033 $6,600,334 $1 ,995,851 81CASH FLOW Expenditures Expenditures from Operations Personnel Expenses $53,235 $53,235 $53,235 $53,235 $53,235 $53,235 $53,235 $53,235 $53,235 $53,235 $53,235 $53,235 Bill Payments $0 $4,357,196 $4,216,683 $4,216,727 $4,216,773 $4,216,822 $4,230,274 $4,622,125 $4,717,347 $4,817,330 $4,922,312 $7,075,055 Subtotal Spent on Operations $53,235 $4,410,431 $4,269,918 $4,269,962 $4,270,008 $4,270,057 $4,283,509 $4,675,360 $4,770,582 $4,870,565 $4,975,547 $7,128,290 Additional Cash Spent Current Borrowing Repay. $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 L-T Liabilities Principal Repay. $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Cash Spent $53,235 $4,410,431 $4,269,918 $4,269,962 $4,270,008 $4,270,057 $4,283,509 $4,675,360 $4,770,582 $4,870,565 $4,975,547 $7,128,290 Net Cash Flow $3,998,798 ($155,796) $197,448 $420,772 $655,263 $901,478 $1 46,602 ,1 $1,026,257 $1 6,1 6 ,21 1 $1 5,468 ,41 $1,624,787 $174,867,561 Cash Balance $6,997,798 $6,842,001 $7,039,449 $7,460,222 $8,1 5,485 1 $9,016,962 $1 63,565 0,1 $1 ,1 1 89,822 $12,405,938 $13,821,406 $15,446,193 $190,313,754 __ CONFIDENTIAL – Do Not Distribute Without Permission 32
  • 33. M o nth 1 M o nth 2 M o nth 3 M o nth 4 M o nth 5 M o nth 6 M o nth 7 M o nth 8 M o nth 9 M o nth 10 M o nth 11 M o nth 12 Current A ssets Cash $ 6,997,798 $ 6,842,001 $ 7,039,449 $ 7,460,222 $ 8,1 5,485 1 $ 9,016,962 $ 1 63,565 0,1 $ 1 ,1 1 89,822 $12,405,938 $13,821,406 $15,446,193 $190,313,754 Other Current A ssets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 To tal Current A ssets $ 6,997,798 $ 6,842,001 $ 7,039,449 $ 7,460,222 $ 8,1 5,485 1 $ 9,016,962 $ 1 63,565 0,1 $ 1 ,1 1 89,822 $12,405,938 $13,821,406 $15,446,193 $190,313,754 Lo ng-term A ssets $ 2,032,200 $ 2,032,200 $ 2,032,200 $ 2,032,200 $ 2,032,200 $ 2,032,200 $ 2,032,200 $ 2,032,200 $ 2,032,200 $ 2,032,200 $ 2,032,200 $ 2,032,200 A ccum. Depreciatio n $ 1 ,290 1 $ 22,580 $ 33,870 $ 45,160 $ 56,450 $ 67,740 $ 79,030 $ 90,320 $ 1 ,61 01 0 $ 1 2,900 1 $124,190 $135,480 To tal Lo ng-term A ssets $ 2,020,910 $ 2,009,620 $1,998,330 $1,987,040 $1,975,750 $1,964,460 $1,953,170 $1,941,880 $1,930,590 $ 1 9,300 ,91 $1,908,010 $1,896,720BALANCE SHEET To tal A ssets $ 9,018,708 $ 8,851,621 $ 9,037,779 $ 9,447,262 $10,091,235 $10,981,422 $1 1 2,1 6,735 $ 1 31 3,1 ,702 $14,336,528 $15,740,706 $17,354,203 $192,210,474 Current Liabilities A cco unts P ayable $ 4,216,640 $ 4,076,125 $ 4,076,168 $ 4,076,213 $ 4,076,259 $ 4,076,309 $ 4,464,991 $ 4,556,886 $ 4,653,375 $ 4,754,689 $ 4,861,068 $ 64,205,617 Current B o rro wing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Subto tal Current Liabilities $ 4,216,640 $ 4,076,125 $ 4,076,168 $ 4,076,213 $ 4,076,259 $ 4,076,309 $ 4,464,991 $ 4,556,886 $ 4,653,375 $ 4,754,689 $ 4,861,068 $ 64,205,617 Lo ng-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 To tal Liabilities $ 4,216,640 $ 4,076,125 $ 4,076,168 $ 4,076,213 $ 4,076,259 $ 4,076,309 $ 4,464,991 $ 4,556,886 $ 4,653,375 $ 4,754,689 $ 4,861,068 $ 64,205,617 P aid-in Capital $ 7,956,000 $ 7,956,000 $ 7,956,000 $ 7,956,000 $ 7,956,000 $ 7,956,000 $ 7,956,000 $ 7,956,000 $ 7,956,000 $ 7,956,000 $ 7,956,000 $ 7,956,000 Retained Earnings ($ 2,924,800) ($ 2,924,800) ($ 2,924,800) ($ 2,924,800) ($ 2,924,800) ($ 2,924,800) ($ 2,924,800) ($ 2,924,800) ($ 2,924,800) ($ 2,924,800) ($ 2,924,800) ($ 2,924,800) Current Retained Earnings ($ 229,132) ($ 255,704) ($ 69,589) $ 339,849 $ 983,775 $1,873,914 $ 2,620,544 $ 3,543,616 $ 4,651,953 $ 5,954,817 $ 7,461,935 $122,973,656 To tal Capital $ 4,802,068 $ 4,775,496 $ 4,961 1 ,61 $ 5,371,049 $ 6,014,975 $ 6,905,1 4 1 $ 7,651,744 $ 8,574,816 $ 9,683,153 $10,986,017 $12,493,135 $128,004,856 To tal Liabilities and Capital $ 9,018,708 $ 8,851,621 $ 9,037,779 $ 9,447,262 $10,091,235 $10,981,422 $1 1 2,1 6,735 $ 1 31 3,1 ,702 $14,336,528 $15,740,706 $17,354,203 $192,210,474