August, 2004
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Table of Contents
1.0 Executive Summary.............................................................................................................................1
1.1 Objectives ...................................................................................................................................2
1.2 Mission........................................................................................................................................3
1.3 Keys to Success ........................................................................................................................3
2.0 Company Summary.............................................................................................................................4
2.1 Company Ownership .................................................................................................................4
2.2 Start-up Summary ......................................................................................................................5
3.0 Products and Services........................................................................................................................8
4.0 Market Analysis Summary..................................................................................................................9
4.1 Market Segmentation..............................................................................................................10
4.1.1 Detailed Market Breakdown ...............................................................................................13
4.2 Target Market Segment Strategy...........................................................................................15
4.3 Service Business Analysis .....................................................................................................16
4.3.1 Competition and Buying Patterns .......................................................................................16
5.0 Strategy and Implementation Summary..........................................................................................17
5.1 Competitive Edge....................................................................................................................18
5.2 Marketing Strategy ..................................................................................................................20
5.3 Sales Strategy..........................................................................................................................21
5.4 Sales Forecast.........................................................................................................................22
5.5 Web Plan Summary.................................................................................................................23
5.5.1 Development Requirements................................................................................................24
5.6 Milestones ................................................................................................................................24
6.0 Management Summary ....................................................................................................................25
6.1 Management Team .................................................................................................................26
6.2 Personnel Plan.........................................................................................................................26
7.0 Financial Plan ....................................................................................................................................27
7.1 The Investment Offering...........................................................................................................27
7.2 Important Assumptions............................................................................................................28
7.3 Break-even Analysis................................................................................................................29
7.4 Projected Profit and Loss .......................................................................................................30
7.5 Projected Cash Flow ...............................................................................................................34
7.6 Projected Balance Sheet ........................................................................................................37
7.7 Business Ratios .......................................................................................................................37
Page 1
RQM Technologies
1.0 Executive Summary
RQM Technologies (RQM) is an exciting start-up company in the newly emerging field of Personal
Trac king Devices; respec ted industry analysts such as Ovum and ABI Research predict this will
bec ome a $22 billion market within the next five years.
Products and Services
RQM will develop and distribute miniaturized Personal Locator Devices (or Personal Trac king
Devices). Initially, the manufac turing of our devices will be subcontrac ted, while we develop the
supporting software and systems internally, although we plan to manufac ture our products inhouse in future years. Unlike our competitors, we have military-inspired proprietary technology
(patents applied for) which allows many of our systems to work with or without the presence of
cellular towers, enabling their use anywhere in the world, including cities, deserts, oc eans, lakes,
mountains, or anywhere else adventurous travelers find themselves. Our products are also
distinct in that they are small and fully programmable. Our systems can be customized by the
end user for his or her unique, individual applications - for example, maritime applications which
include a water-ac tivated signal (as when a crewman falls overboard) are different from those
required in business applications.
Market
Our primary target markets include, but are not limited to, the family consumer, channel sales to
original equipment manufac turers (OEMs), businesses trac king shipments or vehicles, the military,
and the political arena. Bec ause of our unique proprietary programming capabilities for eac h
individual unit, we have already rec eived indications of interest from several of these target
markets, including one branch of the U.S. Military.
We predict our systems will also appeal strongly to families concerned about the safety of their
loved ones. Sadly, child abduction is on the rise globally. More than 2,100 children are reported
missing each day in the U.S. alone (FBI National Crime Information Center). At the other end of
the age spectrum, there are 4.5 million Alzheimer patients in the U.S., 60% of whom (2.7 million
adults) wander away from their homes at some point, unaware of their surroundings. We believe
our devices will greatly reduce these figures in both c ases, while potentially saving lives.
The combined number of "potential" customers for our products is well over 500,000,000; we will
foc us on a more realistic and attainable three-year sales goal of roughly 99,000 users worldwide,
which will generate many millions of dollars in sales revenues.
Management
The founders of RQM Technologies, Steven M. Bloome and Andrew F. Siska, have been
associates for over 20 years; they create the perfect synergy to ensure the success of our
company. Steven M. Bloome is a Sales and Marketing Management veteran with more than 25
years of successfully penetrating previously unseen markets niches, partnering with other
companies in win-win scenarios, and creating national presence for companies. He is also,
ac complished in launching new products. Andrew F. Siska is a Chief Elec tronic Engineer with 20
years experience, and is considered an expert in his field, having previously designed devices for
military applications, medical imaging systems, computers and more.
By foc using on our strengths, our key customers, and our customers' needs, RQM Technologies
will increase sales to several millions of dollars within two years, while also improving the gross
margin on sales, cash management and working capital.
Page 1
RQM Technologies
1.1 Objectives
RQM Technologies has identified three types of objec tives that will serve as challenging but
attainable goals for the organization. They are:
Business Objectives
1. To bec ome the premier vendor in the new and evolving Personal Locator Device industry.
2. To reach profitability within one year of the company's launch.
3. To develop additional profit centers such as programming, training, seminars, ancillary
equipment, etc. within the first two years.
Financial Objectives
1. Increase product sales to several million dollars annually by the end of the second year.
2. Bring gross margin up and maintain that high level by the third year.
3. Improve inventory turnover on an ongoing basis, until "just-in-time" inventory is standard by
the third year.
Marketing Objectives
1.
2.
3.
4.
Foc us on target marketing to increase market penetration and domination.
Expand target markets with c ontrolled growth.
Establish brand awareness for the RQM Technologies' name and products.
Position ourselves as the leading Personal Locator Device company in the world.
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RQM Technologies
1.2 Mission
RQM Technologies' mission is to bec ome the leading vendor of Personal Locator Devices
worldwide. Through a combination of evolving tec hnologies, miniaturization, affordability for the
end-user, programming capabilities and ease of use, RQM Technologies will be known as the
premier developer/supplier of potentially life-saving Personal Locator Devices.
1.3 Keys to Success
The keys to success in this business are:
• Product quality and efficac y in real-life situations.
• Utilizing next-generation technology in order to improve upon current systems, while
differentiating ourselves from our competition.
• Marketing: either dealing with c hannel issues and/or barriers to entry, or solving problems
with major advertising and promotion budgets in order to penetrate our target markets.
• Management: products delivered on time, costs controlled, marketing budgets managed.
There is a temptation to increase growth at the expense of profits; we will keep a close eye
on this temptation in order to live up to our plan.
• Sustaining controlled growth in order to manage start-up costs more efficiently.
To maintain these key fac tors, RQM Technologies' needs include start-up funding, partnering
with value-added investor/partners, aggressive marketing, quality sales professionals,
ac complished C-Level management, product branding, increasing reach into target markets,
affiliating with the right channel partners, competitive intelligence and appropriate use of
evolving technologies.
Page 3
RQM Technologies
2.0 Company Summary
RQM Technologies is a privately owned start-up company, loc ated in Bolingbrook, IL, a western
suburb of Chicago.
RQM Technologies was formed as a company committed to developing next-generation remote
Personal Locator Devices in order to immediately loc ate and aid in the timely rescue of:
•
•
•
•
missing children
the ac tive elderly (including Alzheimer's patients)
soldiers in the field and at sea, mariners lost at sea
and even pets
while also serving the business arena, as a way to better manage the logistics of:
•
•
•
•
outside personnel
fleet vehicles
valuable parcels
and deliveries
The company's management philosophy is based on responsibility and mutual respec t, while
encouraging ownership of responsibilities to help foster personal and professional growth. RQM
Tec hnologies foc uses on productivity for growth and profitability, and respec t for its customers
and employees to increase repeat and referral business while minimizing employee turnover.
Additionally, the company encourages employees to have fun by allowing creative independence
and providing professional challenges that are realistic, attainable and rewarding.
2.1 Company Ownership
RQM Technologies is owned and operated by its founders, Steven M. Bloome and Andrew F.
Siska. We are currently in search of an investor/partner(s) who will bring more to RQM
Tec hnologies than just financing. The ideal Investor/Partner(s) we are seeking should bring
expertise in the areas of legal, financial, and international regulatory issues, as a portion of our
target market(s) will be international in scope in the near future. The Investor/Partner(s) will
rec eive an equity position in the company and sit on the Board of Direc tors.
More details on the company's founding partners may be found below, in the Management
Summary.
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RQM Technologies
2.2 Start-up Summary
Our plan begins with a two month start-up period (June and July, 2004), during which we will
foc us primarily on setting up our offices and developing our system designs, but also including
significant initial marketing work. Our start-up expenses for these first months will be used for
further product development, legal costs, payroll, marketing and typical expenses associated
with opening our first office. The founders will provide the first round financing to launch the
company, initiate a small production run of our Personal Locator Device(s), and initiate further
product development, while marketing and pre-selling our devices.
In addition, we will need another investor/partner to provide funds to cover the cash nec essary
to see us through our first year in business, as we begin to make and sell our products. We plan
to fund future growth from sales revenues.
Initially, we will be leasing a relatively small office space for administrative functions and an
elec tronics bench lab in order to keep our first year expenses to a minimum, as we continue
product development while marketing and pre-selling our Personal Locator Device(s) prior to
production. We will consider a larger office space only when we have outgrown our current
fac ility, dependent on sales, budgets and personnel needs.
We have identified the following equipment needed for opening our first office:
•
•
•
•
•
•
•
•
•
Engineering lab equipment.
Software and hardware development tools.
Office furniture for three (sales and administrative) workstations.
Dell Computer Systems - three desktop computers, two laptop computers, laser printer, color
printer, digital camera, sc anner, GPS cell phones and a broadband internet connec tion.
Telephone system, and two GPS cell phones.
Copier and fax mac hine.
Additional costs for assorted professional service providers' fees including business,
development, legal and ac counting providers.
Professional website development and maintenance.
Two leased company vehicles and associated costs.
Details of our start-up requirements can be found in the Start-up tables, below.
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RQM Technologies
Table: Start-up Funding
Start-up Funding
Start-up Expenses to Fund
Start-up Assets to Fund
Total Funding Required
$100,700
$349,300
$450,000
Assets
Non-cash Assets from Start-up
Cash Requirements from Start-up
Additional Cash Raised
Cash Balance on Starting Date
Total Assets
$0
$349,300
$0
$349,300
$349,300
Liabilities and Capital
Liabilities
Current Borrowing
Long-term Liabilities
Accounts Payable (Outstanding Bills)
Other Current Liabilities (interest-free)
Total Liabilities
$0
$0
$0
$0
$0
Capital
Planned Investment
Founders
Investor
Other
Additional Investment Requirement
Total Planned Investment
$250,000
$200,000
$0
$0
$450,000
Loss at Start-up (Start-up Expenses)
Total Capital
($100,700)
$349,300
Total Capital and Liabilities
$349,300
Total Funding
$450,000
Page 6
RQM Technologies
Table: Start-up
Start-up
Requirements
Start-up Expenses
Legal
Stationery etc.
Consultants
Insurance
Utilities
Rent
Research and Development
Expensed Equipment
Industrial Design
Personnel
Company Vehicles & Associated Expenses
$30,000
$1,500
$5,000
$1,000
$2,400
$3,800
$3,500
$10,000
$10,700
$30,000
$2,800
Other
Total Start-up Expenses
$0
$100,700
Start-up Assets
Cash Required
Start-up Inventory
Other Current Assets
Long-term Assets
Total Assets
$349,300
$0
$0
$0
$349,300
Total Requirements
$450,000
Page 7
RQM Technologies
3.0 Products and Services
Products
RQM Technologies develops, markets and sells miniaturized, low-cost, elec tronic, remote
Personal Locator Devices using unassisted GPS/GSM technology, which is not reliant on cellular
towers to relay data. The remote Personal Locator Device system includes a small programmable
external device (approximately 2" x 2" x 3/8") fitted with GPS/GPM transc eivers, which c an be
ac tivated from a remote loc ation anywhere in the world to instantaneously pinpoint the wearer's
loc ation, speed and direc tion of travel, ac curate to within 3 meters in real-time. This will prove
an invaluable tool in helping families and law enforcement agencies loc ate missing persons within
seconds, with the distinct potential of saving lives by finding missing persons much faster than
any other current technology available to an end-user.
Our remote Personal Locator Device(s) immediately loc ate and help rescue lost or missing
children, teens, the ac tive elderly (including Alzheimer's patients) pets, military personnel in the
field or at sea, with a simple cellular phone call or computer key stroke. These same Locator
Devices can be used in the business arena in order to better manage the logistics of outside
personnel, sales people, deliveries, fleet operations, valuable pac kages or equipment in transit,
helping to increase their business efficiency and thus improve profits.
• Phase 1 Personal Tracking Device (PTD) will be cellular-tower-reliant, in order to offer the
lowest price point product to the end-user. These will work well in areas where cellular
towers are present, such as most cities ac ross the continental U.S., still ac curate in realtime to within about 9 feet.
• Phase 2 PTD will utilize military technology not reliant on cellular towers, but rather linking
direc tly to the GPS satellite network in orbit. These will be effec tive anywhere in the world,
for applications where cellular towers are not present, such as mountains, lakes and oc eans,
deserts, and small or remote cities where cellular towers are not present. Although slightly
more expensive to the end-user, we feel this product will address the problems associated in
areas without cellular coverage, not currently available outside the military. The Phase 2 PTD
is a unit designed for the military, sportsman, hikers, campers, boaters, and other
adventurers.
Both units are being developed simultaneously, and will be available for pre-sale orders in the Fall
of 2004.
Services
As RQM Technologies grows, we will be defining and developing additional profit centers for our
company and investors by offering value-added services such as training classes, seminars, onsite programming, private labeling for our channel market resellers, and other ancillary revenue
streams based on individual client needs.
Page 8
RQM Technologies
4.0 Market Analysis Summary
The Personal Locator Device (or Personal Locator Service) industry is fairly new in the consumer
market, but as most analysts agree, this is the beginning of a brand new industry with the
potential for explosive growth due to the rapidly dec reasing tec hnology costs, which will allow
consumers to afford and utilize a tec hnology which was originally developed by, and for, the
military in the 1970's.
Ovum Research states that "Location Services" revenues will grow to $18 billion by 2006. ABI, a
NY based tec hnology research firm states that the global personal GPS market will be propelled
to more than $22 billion by 2008. While there is a market potential for more than a billion users
worldwide, we are estimating a more realistic long-term market for Personal GPS/GSM
technology, initially marketed within the United States.
Our Market Analysis foc uses on five key potential customer groups:
•
•
•
•
•
Family Consumers
Original Equipment Manufacturers (OEMs)
Businesses
The Military
Political and other Government Consumers
Page 9
RQM Technologies
4.1 Market Segmentation
Our market segmentation foc uses on five key areas of potential customers. Our targeted market
segments have so far failed to meet their own needs for low-cost, programmable trac king
devices by developing such systems internally. While it is difficult to make an exac t classification
of the market needs for such a new elec tronics product, our research suggests the following (full
market analysis details can be found below in the Detailed Market Breakdown topic):
Family Consumers: With over 875,000 children reported missing in the United States in just
the last year, this low-cost device will help families concerned about the whereabouts of their
children, teens, elderly parents (including Alzheimer's patients), and pets, by enabling them to
keep tabs on their loved ones' loc ations at any given time. One of the many programming
capabilities of this device will allow the family to set distance parameter guidelines, such that
once the wearer of the device (for example, a young child) travels beyond a set distance from
the "base" unit, the remote unit is automatically ac tivated to alert the "home base" unit (a cell
phone, pda or computer) of the child's loc ation, direc tion and speed of travel. This will be a
great asset in assisting law enforcement agencies in rec overing missing persons within minutes.
Statistics from the FBI indicate that missing children who are murdered are usually killed within
three hours of abduction. The RQM Technologies Personal Trac king Device (PTD) will save lives,
by immediately alerting the "base" unit, aiding in timely trac king and rescue by law enforcement
agencies. Another programming capability is the ability to download all medical information,
contac t information, emergency numbers, etc., in the event an individual is found incapacitated,
allowing emergency teams to treat a patient effec tively, while alerting the guardian of her
child's, parent's, or pet's whereabouts.
Channel Sales to Original Equipment Manufacturers (OEMs): As the heavily saturated
markets of cellular phone carriers and computer manufac turers grow more competitive eac h year,
both segments are continuously looking to add new technologies and systems to draw
consumers to their specific and sometimes proprietary products and services. The RQM
Tec hnologies remote devices are designed to be used with a "home base" unit, (a PDA, most cell
phones or computer), and we see great potential to partner with c ellular providers, cell phone
manufac turers, computer manufac turers and resellers. This natural synergy between our
product's capabilities and this market segment's needs should prove to have a large and positive
impact on the awareness of the RQM Tec hnologies name and products, as well as increasing
revenues through positioning our products with the leaders of this market segment. It is our
understanding that cellular phone providers will be incorporating the technologies used in our
"home base" units into their cell phones within the next three years. This will prove invaluable for
RQM Technologies, as we position ourselves as the leader in this remote tec hnology, which will
work with almost every new cell phone manufac tured by 2006 - 2007.
Businesses: Our product enables a business loc ation to keep real-time trac king of company
vehicles, valuable pac kages, outside employees, deliveries, etc. We believe our device will be
viewed by businesses as an economical way to increase productivity, giving them real-time data
on the loc ations of their field employees and vehicles at all times, and helping to better manage
fleet and deliveries logistics. One of our key strengths in this market segment is the low one-time
cost, rather than a rec urring fee for usage, adding to the business's ROI for our products.
The Military: Ac cording to rec ent Department of Defense press releases, the military appears to
be searching for a device such as ours. The United States Coast Guard, for instance, is called
upon for Search and Rescue missions more than 40,000 per year, on average. The problem with
the currently used "beacon system": Since 121.5 MHz beacons transmit anonymously, the only
way to ascertain the loc ation is to dispatch expensive resources to investigate. Current beacon
Page 10
RQM Technologies
systems can take up to an hour to translate information, while only providing vague loc ation
data, forcing time intensive and expensive Search and Rescue (SAR) missions. In the field, the
RQM Technologies' remote unit will save lives, finding those missing in action, and loc ating sailors
lost at sea. Their use will also taxpayer dollars, making Search and Rescue missions shorter and
less expensive. A consultant to the U.S. Navy has indicated solid interest in two of our devices
for use in the military.
The Political Market: Ac cording to statistics from specialized insurers like Hisc ox (UK), political
kidnappings are prevalent in restive countries such as Colombia, Mexico, and the Philippines;
they are also on the rise in smaller countries such as Turkey and Trinidad. The governments of
these countries are spending millions of dollars in ransom each year in order to minimize publicity
and embarrassment. By fitting political figures, captains of industry and high profile businessmen
with our device, we believe this trend will dec rease in the countries which use our product,
proving its efficac y in the field and sparking interest from other countries.
Our research shows that all current competitors with similar products require the user to log on
to the competitors website (or phone into call-centers) to ac tually loc ate the missing person,
while incurring monthly fees ranging from $20.00 - $40.00 per month. In essence, their systems
dictate that the users must be loc ated at their internet-ac cessible computer in order to use the
competitors' systems. Imagine that you are a mother, visiting a park with your child. Suddenly,
you turn around and cannot see him - he has disappeared! With our competitors' systems, you
would have to run home to log on to your computer, losing valuable time and probably increasing
the distance between yourself and your child. With our system, however, you simply turn on
your PDA or cell phone while still at the park, and view your child's loc ation, direc tion and speed
of travel while you are still in c lose proximity. The RQM Technologies systems will allow a user to
loc ate the missing person(s) from potentially any cell phone, wireless Palm Pilot, or PDA, freeing
them from the need to be in front of a fixed computer, while increasing real-time efficiencies.
This important difference of a few minutes will literally translate into saving lives.
In addition, we projec t the following secondary long-term markets:
Maritime Market: Personal Flotation Device (PFDs) and Life Boat companies are typically
manufac turers of textiles, and do not generally have the expertise to develop high-end global
positioning satellite elec tronic trac king systems. We are planning on lobbying the Senate,
through our consultant to the U.S. Navy (and Coast Guard), to enact laws mandating that these
life-saving devices be fitted in all Personal Flotation Devices. This would save lives, and save
taxpayers hundreds of millions of dollars in c osts associated with traditional U.S. Coast Guard
Search and Rec overy methods. The Coast Guard admits that radio beacons are outdated
technology, and they are currently implementing a program called Rescue 21, searching for
better ways to loc ate missing persons at sea in a more timely and efficient manner.
Pet Supply Chain Stores: RQM Technologies Personal Locator Device is small enough to fit onto
a pet collar. We are planning to partner with large pet-supply chains such as PetCo, PetSmart,
etc., as well as pet collar manufac turers, to make this technology more ac cessible to consumers
worried about their pets wandering off.
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RQM Technologies
Table: Market Analysis
Market Analysis
2004
Potential Customers
Family Consumers
OEMs
Businesses
Military
Political and Gov't
Misc Sales
Total
Growth
10%
10%
5%
5%
5%
0%
8.55%
280,500,000
109,000,000
12,753,076
753,000
50,000
0
403,056,076
2005
308,550,000
114,450,000
13,390,729
790,650
52,500
0
437,233,879
2006
339,405,000
120,172,500
14,060,265
830,183
55,125
0
474,523,073
2007
373,345,500
126,181,120
14,763,278
871,692
57,882
0
515,219,472
2008
410,680,050
132,490,170
15,501,441
915,276
60,775
0
559,647,712
CAGR
10.00%
5.00%
5.00%
5.00%
5.00%
0.00%
8.55%
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RQM Technologies
4.1.1 Detailed Market Breakdown
Family Consumer Segment
We predict our systems will appeal strongly to families concerned about the safety of their loved
ones. Ac cording to the FBI's National Crime Information Center (NCIC), 85% to 90% of the
876,213 persons reported missing to America's law enforcement agencies in 2000 were juveniles
(persons under 18 years of age). That indicates that 2,100 times per day, parents or primary
care givers felt the disappearance was serious enough to call law enforcement. In addition, 152,
265 of the persons reported missing in 2000 were categorized as either endangered or
involuntary. The number of missing persons reported to law enforcement has increased from
154,341 in 1982 to 876,213 in 2000. These figures represent an increase of 468%, and the
numbers sadly continue to rise. Ac cording to the Missing Children Soc iety of Canada (MCSC), in
2002 there were 66,532 children reported missing in Canada alone. And even more frightening,
the National Center for Missing and Exploited Children (NCMEC) reports that 74% of abducted
children who are murdered are dead within three hours of the abduction.
These figures indicate the strong market need for a method of quickly and reliably loc ating
missing children. This so-far untapped market is quite large, even just within the U.S. Ac cording
to the 2002 U.S. Census Bureau reports, there are 60,492, 447 are under 14 years of age in the
U.S., including:
• 33,050,162 children in elementary sc hool (grades 1-8)
• 4,005,938 children in kindergarten
• 4,613,179 children in nursery/preschool
But the family market also has to worry about its elderly loved ones. Ac cording to the same
census report, there are 40,144,000 adults over 62 years of age in the U.S., 4.5 million of whom
have Alzheimer's disease. With a median income in the U.S. of $51,742 per family, our family
consumer market in the U.S. has the potential for selling our affordable devices for over
60,492,447 children under the age of 14, in addition to over 4,500,000 ac tive senior citizens
afflicted with Alzheimer', based on the above figures, for a combined target market of over
64,992,447 consumers.
Business Segment
It is more difficult to determine exac t numbers for the business segment, as specific data is not
as readily available. However, as of 2001 (latest census data available) there were 12,753,076
businesses operating in the U.S. which fit our target market, meaning they have a strong or
immediate need for our products; this number excludes others, such as retail sales, wholesale
traders, information management, education, public administration, or other services not defined.
Business breakdown by employment in spec ific industries:
•
•
•
•
•
2,405,825 Americans work in agriculture, forestry, fishing, hunting and mining.
9,161,256 work in c onstruction.
17,067,103 work in manufac turing.
6,884,607 work in transportation, warehousing and utilities.
12,486,846 work in professional, sc ientific, management, administrative and waste
management services.
The price points for similar Personal Locator Device systems using GPS/GSM technologies in the
business segment are currently in the $200 - $2000 range, and in most cases, do not offer the
remote abilities or programming capabilities for specific businesses needs in managing logistics
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RQM Technologies
and trac king. We believe our low prices, combined with these features and the autonomous
internal trac king ability (not reliant on a vendor's website with monthly fees) will be very
attrac tive to the business segment.
Military and Government
On an average day, the United States Coast Guard assists 192 people in distress, and conducts
109 search and rescue cases. In 2000, the Coast Guard responded to 40,264 calls for assistance
- from a broad spectrum of the public ranging from rec reational boaters in distress to the
captains of freighters sinking in gale-force winds. During that same year - on a share of its
operating expenses, totaling $342 million - the service saved more than 3,400 lives and saved
over $80 million in property. Our system will shorten the duration of current Search and Rescue
missions, which in turn will allow rescuers to loc ate victims at sea faster. This will not only save
more lives, but will cut costs for the United States Department of Defense.
This same system used at sea would immediately alert the dec k's computers if a serviceman at
sea fell overboard, once the remote unit is programmed to be water ac tivated. We have a
preliminary interest from the U.S. Navy, thanks in part to our ability to program individual remote
units with medical histories and other pertinent information for eac h serviceman's remote unit. By
using our system, coupled with encrypted signals for the military, our programmable PTDs also
work in deserts, jungles, mountains, etc., showing longitude, latitude, altitude, speed and
direc tion of travel, representing "eyes in the skies" for the military to know exac tly where their
field personnel are loc ated at any given moment.
We have also developed a lower-cost unit for the U.S. Navy which relies on "line of sight"
technology, which is affordable enough to equip every seaman in the U.S. Naval fleet. We have
already rec eived an indication of interest from the U.S. Navy, through our consultant, due to the
extremely low cost and efficac y of the product.
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RQM Technologies
4.2 Target Market Segment Strategy
Our choice of target markets is strategic, and reflec ts our strengths and weaknesses.
The Family Consumer Market is key for RQM Tec hnologies for several reasons. First, as a
system that works anywhere in the world, (versus all of our competitors' cellular tower reliant
systems), our potential market is 8 billion people worldwide. Capturing a market share of only
1/10 of 1% of this potential, we would realize the sale of 8 million units. As we enter this market
segment, we will be aggressively seeking partner companies such as cellular phone providers and
computer OEMs (included in c hannel sales to further penetrate the consumer market) and
associations such as The National Center for Missing and Exploited Children, The National
Alzheimer's Association, Amber Alert Network, etc. An alliance with any of these type of
organizations will add significant credibility, branding and positioning, thus generating sales for
RQM Technologies.
The Channel Sales to OEMs segment will be strong for several reasons. By positioning our
product for cellular providers, cell phone manufac turers, and computer manufac turers as an
ancillary item to help them market their own products, we will effec tively increase our sales force
substantially, without the expenses of payroll, benefits, etc., bec ause their sales force(s) will
sell our products for their respec tive companies. This would also positively impact branding,
making our name more commonplac e in all the markets disc ussed herein. By securing alliances in
this market, we also position ourselves as the leader in this new technology and its associated
applications. This will foster confidence in the RQM Technologies' product, increase sales
dramatically and help our company break into the global market.
We will also be seeking entry into the automotive market to compete with LoJack. Our system is
more effec tive than the current LoJac k system, and with a lower price point, we feel we will be
able to partner with the automotive manufac turers. The RQM system will allow them to offer a
more efficient product to their customers, while increasing their profit margins for this type of
technology.
The Business Market is more difficult to estimate. RQM Tec hnologies' products will benefit any
business that depends on knowledge of the whereabouts of their products, services, vehicles,
valuable parcels or outside personnel are on a real-time basis. The keys to success in this
segment are threefold:
• An affordable, one-time cost per unit for the business, instead of our competitors' higherpriced units with rec urring monthly charges.
• The ease and ability to self-manage this program internally without the necessity to use call
centers or websites for a monthly fee.
• The programming capabilities of our units, which allows businesses to easily customize eac h
individual unit based on their unique needs for eac h individual application.
The Military Market: We have a strong c ontac t with a consultant to the U.S. Navy, who feels,
based on rec ent DOD press releases, coupled with previous projec ts on which he has
successfully consulted, that we are developing a product the military would greatly desire
bec ause of its purpose, abilities and low price point. One of the benefits to the programming
capabilities of our PTD is the ability to program eac h soldier's medical information and history into
their remote units, so that any medic attending to them in the field would immediately have this
valuable information. The U.S. Navy will be very interested in two of our loc ator systems.
The Political Market may be more difficult to penetrate bec ause of the complexity of foreign
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RQM Technologies
governments, and international laws, and wide variations in c ultural approaches to safety and
government oversight of individuals. However, we feel we will still be able to enter into
agreements with several smaller countries that are in the throws of political turmoil. We projec t
that the benefits our products provide will quickly foster confidence in their potential, and will
not be seen as a "Big Brother" device. Once our products have proven their efficac y by saving
individuals from kidnappings, espec ially high profile officials, we believe markets in other countries
will quickly open up to RQM Technologies.
4.3 Service Business Analysis
We are part of the life-saving elec tronic devices industry, specifically Personal Locator Device
(s), an industry projec ted to grow to over $22 billion dollars within the next five years. Market
leaders in this small but growing personal loc ator industry are iTrac k, Wherify and uLoc ate, and
LoJac k for the automotive industry. RQM Technologies' Personal Locator Devices (PLDs) are
smaller and more easily concealed, less expensive, uniquely programmable for individual needs,
and more user-friendly than our competitors' products.
RQM Technologies will continue to conduct industry analysis to stay current on the nature and
dynamics of this new and evolving tec hnology (and emerging target markets) which, while in its
infancy, is poised to experience explosive growth. This foc us will help management develop
insight and devise sustainable business and marketing strategies to assure future success and
avoid making dec isions based on blind assumptions, while continuing to develop next generation
technologies to remain the leader in this industry.
4.3.1 Competition and Buying Patterns
In the Personal Locator Industry, consumers are searching for the most effective product at the
lowest possible price; different market segments will put different emphases on ease of use
versus reliability or cost, depending on their needs and budgets. Although we will emphasize
some aspec ts of our products differently for the distinct market segments described above, our
products beat the competition on all grounds.
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RQM Technologies
5.0 Strategy and Implementation Summary
Differentiate ourselves from our competitors.
This will be easy, as our PTD product has more capabilities, is easier to use, is more concealable
and will work with most cellular providers. We need to establish our products as cost efficient,
viable solutions for our target markets.
Build a relationship-oriented business.
For clients such as our channel market resellers, and institutional consumers like the military,
relationships will be important. We will bec ome a revenue-generating partner for them, not just a
vendor, making these market segments increasingly rec eptive to our offerings. We must
effectively convey the potential monetary value of the relationship, as well as the intrinsic value
in being able to offer life-saving, user-friendly devices to their end-users and members.
Focus on target markets.
We need to foc us our sales and marketing efforts strategically in order to succeed in our target
markets. As a start-up company, we believe the consumer market and channel sales will give us
the quickest launch and penetration while immediately generating revenues to sustain our
company's growth and expansion into other markets. The business market will likely be the next
key, as we promote our products as tools for businesses to manage outside personnel and fleet
costs and logistics.
Fulfill the promise.
We can't just market and sell our products, service and support; we must ac tually deliver as
well. We need to make sure we have the technological knowledge we claim to have, while
keeping up with evolving technologies to advance the capabilities of our newest products and
services.
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RQM Technologies
5.1 Competitive Edge
Our competitive edge lies with our innovative products, as well as the successful planning and
implementation of our marketing plans.
RQM Technologies' unique application of a remote miniaturized unit that incorporates an end-user
programmable transmitter/rec eiver inside a unit only 2" x 2" x 3/8" that has GPS/GSM tec hnology
is relatively new to the marketplac e. It is this new technology which will make our Personal
Locator Device(s) attrac tive to resellers such as our channel market segment. While not widely
known, most of the major cellular phone manufac turers will be incorporating GPS technology into
their newly manufac tured cell phones over the next three years. We believe this is a key
advantage for us, as our remote unit has been designed to work with these next-generation cell
phones. We are a couple of years ahead of our competition in the sense that our remote unit will
immediately work with these "new technology" cell phones.
Another competitive edge is our positioning as a strategic ally with original equipment
manufac turers of PDAs and cellphones, who are clients more than customers. By building a
business based on long-standing relationships, we build defenses against competition through
the demonstrated efficac y of our products, and our partners' loyalties. For our channel sales
partners, our products translate into new customers and additional rec urring revenues. The
longer the relationship stands, the more our clients will understand what we offer them and why
they need it, further solidifying our intended relationships with major cell phone carriers and
computer manufac turers.
Competitors' Disadvantages
While RQM Tec hnologies competes against other companies and technologies meant to provide
similar products and services, they cannot match ours. Our competitors have several
disadvantages:
Effectiveness:
• Most competitors do not offer remote miniaturized concealable units which users can wear;
their devices would be especially bulky, awkward, and obvious on children.
• Their products do not allow for a loc ating "home-base" which is a cell phone, Palm Pilot or
wireless mobile computer or desktop anywhere in the world, which c an report on the unit's
loc ation instantly, even while both units (remote and base units) are in transit.
• Our competitors' devices cannot be programmed for individual remote unit applications, such
as water ac tivation, parameter limit alert, medical history of the wearer, etc.
• The units cannot be armed from a remote loc ation.
Price:
• Greater initial cost to the end user ($200-$2000), with fewer features and capabilities.
• Rec urring monthly fees to the end user with most systems.
The most significant difference between our system and our competitors' is our use of
"unassisted" GPS/GSM tec hnology. Unlike our competitors', our system is not reliant on being in
an area where cellular towers exist. Our competitors' products do not work in areas where there
is no cellular coverage, or less than the three three cellular towers needed for triangulation. Our
system uses military inspired radio frequencies which transmit direc tly to the GPS satellite
network. Our system will work anywhere in the world, including deserts, mountains, oc eans and
all other remote loc ations.
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RQM Technologies
RQM Technologies also eliminates the need for the "trac ker" to -hone into a call center, or to sit
in front of a computer to download from a our website (both for a monthly fee ranging from $20$40/month) in order to find someone who is missing, losing valuable minutes which c an mean the
difference between life and death. Our Personal Locator Device(s) allow the chase unit (wireless
Palm Pilot, laptop, and most cell phones) to follow the remote unit, even as both units (remote
and "base unit") are in transit.
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RQM Technologies
5.2 Marketing Strategy
Our most important marketing goal as a start-up is to build product and brand awareness. The
way we go about this task will vary from one market segment to another.
Family Consumers
While it is widely know that child abductions are on the rise every year, and that Alzheimer's
disease afflicts more seniors annually, it is not well known that products such as the RQM
Tec hnologies' Personal Locator Device(s) are available at such an affordable cost. We are
anticipating the end-user's cost at less than 33 cents per day for one year, based on a price
point of only $120.00 per unit to the end user.
To raise awareness of our products among Family Consumers, our main marketing strategy hinges
upon a high-publicity, one-time "stunt," to take plac e in late October or early November of 2004.
With the knowledge, assistance and approval of a respec ted police department, (and media
outlets) we plan on staging a demonstration child abduction and rescue to show the system's
immediate response and efficac y. In order to comply fully with the law, we will ask a police
officer to perform the charac ter of the abductor, in portraying the "abduction" of his/her own
child; this will minimize any potential risk, keeping the child firmly under the protector of his or
her own parent throughout the demonstration. After a 10 minute head-start, another officer,
with no foreknowledge of the "abductor's" intended destination, will then trac k down the
"abductee," in order to demonstrate how quick and easy it is to loc ate the abducted child in a
timely manner that could ultimately save the child's life.
For this demonstration, we will invite a respec ted television news crew or popular talk show to
follow the staged abduction in order to document our success, while broadcasting this life-saving
demonstration nationwide. As an incredibly worthy cause, we believe that many media outlets
will want to run this human-interest story in an effort to help aid against child abductions and
wandering Alzheimer's patients by helping to make our tec hnology public knowledge. We expec t
this nationwide publicity to break down most existing barriers of entry into our other targeted
markets.
We will aggressively target publicity of our staged abduction through TV shows such as Oprah,
The Maury Povich Show, Regis and Kelly, 60 Minutes, and all others that can sway national
opinion that cater to family and safety issues. We believe that this and further demonstrations
will be very well rec eived, while gaining invaluable exposure as we begin branding our name while
positioning our company.
We will then market heavily in publications geared towards parenting and Alzheimer's associations
for the consumer market, while aggressively seeking free publicity through print, radio and
television, specifically once our Personal Location Device has demonstrated its efficac y during
the staged abduction.
Channel Market to OEMs
We will foc us our efforts to partner with Original Equipment Manufacturers on nationwide cellular
providers and computer manufac turers. We will emphasize our products' potential as an
additional source of revenue for them, both at the front end for product sales, and in the case
of cellular providers, with rec urring monthly revenues; this should make our product very
desirable as part of their product lines. By solidifying these partnership agreements, we will also
enable cross-marketing bac k into the consumer market through their sales forces' efforts and
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RQM Technologies
their advertising, increasing our sales efforts nationwide without the expense of additional
personnel to cover the entire U.S. We believe that once partnered with these companies, our
channel market partners (resellers) will advertise the RQM Technologies Personal Locator Device
(s) as new features in their traditional outlets, primarily print advertising and in-house POS
material, in order to increase mutual sales and brand awareness, benefiting both organizations,
while fitting a nation of families with our potentially life-saving device.
Business Market
We will be marketing to businesses through traditional sales efforts, such as advertising in trade
publications and establishing a presence at selec t trade shows geared towards businesses in our
market segment. For the larger companies we target, we will offer the free use of a limited
number of our products for a limited time, to prove their efficac y in c ontrolling costs of outside
fleets and personnel, in order to penetrate and gain market share in this segment. We believe
once senior management of these businesses feel more in c ontrol of the whereabouts of their
outside concerns (personnel and vehicles, deliveries, pac kages, equipment, etc.) they will
understand that they can, in essence, manage their outside logistics from the comfort of their
office more efficiently than through traditional methods.
Military and Political Markets
Our military and political markets will necessitate a slightly different and more personal approach
through specific relationships we have developed with individuals inside these market segments.
We feel these markets are worth pursuing aggressively. We are currently in disc ussion with a
consultant to the U.S. Navy, who feels the military is looking for a device such as the RQM
Tec hnologies' Personal Locator Device(s), in order to better protec t their servicemen.
5.3 Sales Strategy
We need to convince consumers of the serious benefits of RQM Technologies' Personal
Locator Devices. Except for vehicle, equipment or pac kage trac king, we sell a "life-saving
loc ator-rescue product," not an elec tronics system that relays GPS/GSM loc ation data. Once our
device has been proven effec tive in a real-life situation, we firmly believe that multiple media
sources will want to run our product's life-saving results as a human interest story. Any press,
print or broadcast third party endorsements will be included in future sales and marketing
literature. We are planning to stage a moc k-abduction, with the media present in order to
document and feature the efficac y of our product on their respec tive television programs or in
their print media.
We have to sell our service and support. The RQM Tec hnologies' Personal Locator Device(s)
remote unit, while very easy to program and fac ilitate, will be better rec eived if we offer (fee
based) training services for our larger clients, such as our channel sales partners and large
corporate ac counts. Simplifying the understanding and implementation of our system will help
encourage the daily use and sales efforts of our product, while generating additional revenues
for RQM Tec hnologies, our channel market resellers while increasing the ROI for our
investor/partner(s).
The Yearly Total Sales chart summarizes our ambitious sales forec ast. We expec t sales to
increase dramatically as the RQM Tec hnologies' Personal Locator Device(s) demonstrate its
efficac y, and is well rec eived in our target markets. Once our system saves a life, we will
aggressively pursue widespread press and publicity, at which point, we believe all barriers into
the consumer markets will be eliminated, while opening markets we may not have targeted as
primary markets.
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RQM Technologies
5.4 Sales Forecast
The important elements of the sales forec ast are shown in the table below. We are using
aggressive forec asts that will ac hieve momentum, revenues, positive cash flow and profitability.
We feel these are attainable goals, as we plan to offer our Personal Locator Device(s) in
minimums of 1000 unit orders to our channel, military and political markets. Units will be sold to
our individual and family consumer market either through our channel markets, or direc tly for a
slightly higher fee through our website.
Table: Sales Forecast
Sales Forecast
Sales
Family Consumers
Channel Sales to OEMs
Businesses
Military
Political
Total Sales
Direct Cost of Sales
Chipset
Programming
Packaging
Subtotal Direct Cost of Sales
FY 2005
FY 2006
FY 2007
$540,000
$605,000
$206,500
$150,000
$450,000
$1,951,500
$800,000
$1,500,000
$300,000
$1,000,000
$472,500
$4,072,500
$1,250,000
$2,225,000
$750,000
$1,125,000
$496,125
$5,846,125
FY 2005
$683,025
$0
$292,725
$975,750
FY 2006
$1,425,375
$0
$570,150
$1,995,525
FY 2007
$2,046,144
$0
$701,535
$2,747,679
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RQM Technologies
5.5 Web Plan Summary
The RQM Tec hnologies' website will be the virtual business card and portfolio for the company,
as well as its online "corporate home" for business-to-business marketing and investor relations.
It will showcase our products and services, as well as hosting a portfolio of all past and current
real-life testimonials. The website needs to be simple to navigate, yet well designed and flexible,
to ac commodate changes in our online needs.
RQM Technologies is dedicated to helping find those who are lost, and will entertain adding links
to rec ognized agencies that have the same goals, as long as it adds value to the company. To
show our concerns and good will, while reminding visitors of our products' potential, we will add
banner links to agencies such as The National Center for Missing and Exploited Children (NCMEC),
AMBER Alert, Child Search and other national missing children's programs. We will also have a link
to the National Alzheimer's Association.
The key to the website strategy will be combining a very well-designed front end, with a bac k
end capable of rec ording leads, proc essing online orders and information requests, offering online
manuals and running RQM Tec hnologies' own online marketing program for OEM affiliates.
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RQM Technologies
5.5.1 Development Requirements
The RQM Tec hnologies' initial website will be developed with few tec hnical resources; a simple
hosting provider will host the site and provide the technical bac k end.
The design, updates and maintenance of the site will be done by contrac ted web designers, for
a more professional image of our company, freeing up senior management to foc us on company
growth and product development. As the website rolls out future developments such as new
products, product add-ons and software updates, ancillary products, newsletters and
downloadable market research reports. We may need to contrac t further tec hnical resources to
build the trac kable download information with the capabilities of transmitting and organizing
extensive information.
5.6 Milestones
The following table lists important program milestones, with dates and managers in c harge, and
budgets for eac h. The milestone sc hedule indicates our emphasis on planning for implementation.
What the table doesn't show is the commitment behind it. Our business plan includes complete
provisions for plan-vs.-ac tual analysis, and we will be holding follow-up meetings every month to
disc uss the variance and course correc tions.
Table: Milestones
Milestones
Milestone
Prototype Completion
Patent Applications
Independent Lab Testing
Funding
Staged Child Abduction
Publicity in Major Print
Publication
Begin Sales
Marketing Materials
Publicity on broadcast media
Consumer Electronic Show 2005
Totals
Start Date
6/1/2004
6/1/2004
7/1/2004
6/1/2004
10/1/2004
9/15/2004
End Date
8/1/2004
8/1/2004
9/1/2004
10/1/2004
11/1/2004
11/1/2004
Budget
$2,500
$50,000
$10,000
$500
$1,000
$1,500
Manager
AS
AS/SB
AS/SB
SB
AS/SB
SB
Department
Tech/R&D
Tech/R&D
Tech/R&D
Marketing
Tech/R&D
Marketing
11/1/2004
9/1/2004
11/15/2004
10/15/2004
11/1/2004
11/15/2004
12/1/2004
1/11/2005
$0
$5,000
$1,000
$25,000
$96,500
SB/AS
SB/AS
SB
SB/AS
Sales
Marketing
Marketing
Marketing/Tech
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RQM Technologies
6.0 Management Summary
RQM Technologies' management will be slow to hire new people, and very loyal to those who are
hired. We believe our employees will be our greatest asset, and therefore, as we increase
personnel, we will be looking only for individuals whose experience, skills, contac ts and expertise
will help foster the development and growth of our company. While there is a temptation to hire
inexpensive personnel in order to further control costs, our philosophy is that there is a better
rate of return in hiring more experienced personnel with expertise in areas we need, so they can
immediately contribute to helping attain or exceed the company's goals and objec tives.
Initially, RQM Technologies' day-to-day operations will be managed by its founders, who prefer a
close, hands-on approach to all aspec ts of their business. As the company grows, we will be
adding ac complished Exec utive Management at the C-Level in order to manage our growth with
expertise in the areas most needed. RQM Tec hnologies is a small company with a minimum
command hierarchy and a maximum of community spirit and cooperation. Once profitable, we
intend on donating a small percentage of proc eeds to charitable causes that are within our
target market(s), both as a measure of good will and as an added marketing leg. Despite the
small size of this company, our business prac tices are centered on implementing our goals, never
losing sight of profitability objec tives and ROI for our investor/partner(s).
In order to minimize our start-up costs, we will continue to outsource the manufac turing,
industrial design and pac kaging of our devices until the product demand warrants a more
profitable method of producing the quantities needed to fulfill sales orders. Only at that point will
we consider manufac turing the products ourselves.
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RQM Technologies
6.1 Management Team
Steven M. Bloome - President/CEO
Mr. Bloome is a 25 year veteran in Sales and Marketing Management, who has worked for such
companies as MobileComm - A BellSouth Company, Bear Stearns, Telec ast Productions and HiTec
Group, International. Mr. Bloome's strengths include the ability to understand a wide range of
business profiles, prac tices and markets. His ac complishments demonstrate superior strengths
and skills in the developing and managing successful sales forces, as well as loc ating and
developing untapped market niches in numerous and diverse industries. He is experienced in
partnering with rec ognized industry-leading companies to add sc ope, strength and brand
awareness to both partner companies in win-win situations. He brought the first battery program
to the paging industry by partnering MobileComm with Ray-O-Vac Battery, as well as partnering
HiTec Group Int'l with Ameritech to bec ome the Spec ial Needs Center in a five state area. Mr.
Bloome is also experienced in c ompany start-ups, turnaround situations, new product launches
and developing a national presence for companies.
Andrew F. Siska - Chief Electrical Engineer/CTO
Mr. Siska has owned and ac ted as Chief Elec tronics Engineer of Embedded Systems Elec tronics,
Inc. (ESE) since 1994 and is an ac tive member of the Institute of Elec trical and Elec tronics
Engineering. As CEE of Embedded Systems Elec tronics, Mr. Siska has been c ontrac ted by major
elec tronic companies to initially design or improve products such as communication devices,
imaging systems, digital camera circuitry, computers, video imaging systems, medical equipment.
In his field, Mr. Siska is considered an expert in hardware, software, and elec tronic engineering.
Mr. Siska holds a Bac helors of Elec tronics Engineering from the Ohio Institute of Tec hnology, and
an MBA from the Keller Graduate Sc hool of Management.
6.2 Personnel Plan
Immediate personnel plans call for a minimum of three, to a maximum of five employees for the
first year, unless unforseen sales growth dictates the absolute need for additional personnel.
After the first year, we anticipate the need for additional personnel in the areas of office
management and human resources, experienced technical sales professionals, and financial and
technical operations. We may hire these addition personnel on a part-time basis, and move into
full time positions as warranted by the company's growth.
Table: Personnel
Personnel Plan
Steven M. Bloome (Pres/CEO)
Andrew J. Siska (CTO)
CEO
CFO
Reception/Secretarial
Total People
Total Payroll
FY 2005
$97,000
$95,500
$0
$0
$22,500
3
FY 2006
$130,000
$120,000
$125,000
$120,000
$75,000
6
FY 2007
$175,000
$150,000
$150,000
$120,000
$160,000
6
$215,000
$570,000
$755,000
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RQM Technologies
7.0 Financial Plan
As a start-up company in an emerging and changing industry, we have intentionally designed a
conservative plan, looking to ensure the ac hievement of our corporate goals along with a solid
ROI to our investor/partner(s). We will of course revise our financial plan throughout the first
year based on ac tual figures in sales, manufac turing costs, technological advances, personnel,
office space, marketing costs, and so on.
Securing the patents (applied for) for our advanced devices and systems in a new and emerging
industry will add immediate value to RQM.
Our plan's success is also predicated on the following assumptions:
•
•
•
•
•
•
•
•
•
•
Securing seed money with investor(s)/partner who will bring added value to RQM.
The ac ceptance of our device(s)/systems by the public, the business sector and the military.
The ability to attrac t strong C-Level management to our team as needed.
Managing growth and production costs so as to maintain projec ted margins and cash flow.
Staying ahead of tec hnological advances in this field, and reacting to these changes in a
timely and efficient manner.
Managing the start-up of RQM with minimal personnel until steady growth nec essitates hiring
additional department management and support staff.
Partnering with strong OEMs quickly in order to penetrate and dominate market share.
Partnering with industry leaders (such as UPS, the U.S. Navy, etc.,) to assist in
demonstrating the efficac y of our systems.
Success in marketing our products for brand awareness and positioning.
Adjusting and adapting to the market trends within this new and emerging industry.
7.1 The Investment Offering
We are currently in search of an investor/partner(s) who will bring more to RQM Tec hnologies
than just financing. The ideal Investor/Partner(s) we are seeking should bring expertise in the
areas of legal, financial, and international regulatory issues, as a portion of our target market(s)
will be international in scope in the near future. The Investor/Partner(s) will rec eive an equity
position in the company and sit on the Board of Direc tors.
The success of this plan is predicated on securing start-up funding from an investor/partner in
exchange for a minority equity stake in RQM. We are only looking for investor/partners that will
also bring additional added value to RQM, such as expertise in finance, international business, CLevel contac ts, industry networks, and more. Additional second round funding may eventually be
needed to go into a larger sc ale production run, if RQM c annot self-fund our own growth.
However, we believe that we will be in a position to fund ourselves, limiting the risks while
increasing the ROI on our investor/partner(s).
Of particular interest to investors is the Dividends row in the Cash Flow table. We projec t
increasing dividends, which will be distributed first to outside investors; the founders will defer
dividends until the third year.
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RQM Technologies
Table: Investment Offering
Investment Offering
Seed
Round 1
Round 2
Exit
Proposed Year:
2004
2005
2006
2007
$200,000
30.00%
$666,667
$1,350,000
3
88.99%
$0
0.00%
$0
$0
2
0.00%
$0
0.00%
$0
$0
1
0.00%
Year 2004
50,000
Year 2005
50,000
0
0
0
Year 2006
50,000
0
0
0
Year 2007
50,000
0
0
$9.33
0
21,429
$0.00
0
21,429
0
71,429
71,429
$0.00
0
21,429
0
0
71,429
$63.00
0
21,429
0
0
71,429
Year 2004
70.00%
0.00%
30.00%
Year 2005
70.00%
0.00%
30.00%
0.00%
100.00%
30.00%
70.00%
100.00%
30.00%
70.00%
Year 2006
70.00%
0.00%
30.00%
0.00%
0.00%
100.00%
30.00%
70.00%
Year 2007
70.00%
0.00%
30.00%
0.00%
0.00%
100.00%
30.00%
70.00%
Valuation, Investment, Shares
Investment Amount
Equity Share Offering Percentage
Valuation
Investor Exit Payout
Investor Years Until Exit
Investor IRR
Share Ownership
Founders' Shares
Stock Split Multiple
Stock Options Issued
Investor Shares Issued
Price per share
Options Holders' Shares
Year 2004 Investors' Shares
Year 2005 Investors' Shares
Year 2006 Investors' Shares
Total Shares Outstanding
Equity Ownership Percentage
Founders' Equity
Option Holders' Equity
Year 2004 Investors' Equity
Year 2005 Investors' Equity
Year 2006 Investors' Equity
Total Equity
Investors' Equity
Founders' & Employees' Equity
0
21,429
$4,500,000
7.2 Important Assumptions
The financial plan depends on important assumptions, most of which are shown in the following
table. The key underlying assumptions are:
• A slow start as we educate potential customers about this new tec hnology.
• In c ontrast, we assume steady growth once the efficac y of our product and services are
demonstrated.
• That there are no unforeseen c hanges in technology which c ould make products immediately
obsolete, while newer tec hnologies and in-house innovations will only advance the sc ope of
our product line and target markets.
• Ac cess to equity capital and financing sufficient to maintain our financial plan as shown in
the tables.
• Ability to self-fund further growth after Start-up financing is secured.
• Maintaining or improving profit margins based on lower costs per unit for higher quantity
production runs.
Page 28
RQM Technologies
Table: General Assumptions
General Assumptions
FY 2005
Plan Month
Current Interest Rate
Long-term Interest Rate
Tax Rate
Other
1
FY 2006
2
6.00%
8.50%
30.00%
0
FY 2007
3
6.00%
8.50%
30.00%
0
6.00%
8.50%
30.00%
0
7.3 Break-even Analysis
For our break-even analysis, we assume per month running costs which include our full payroll,
rent, utilities, and an estimation of other running costs. Payroll alone, at our present run rate, is
only about $18,000 per month. Margins are harder to estimate. Our overall average price point of
$120 per unit is based on a cost of $60 (+ or - 2%), or a minimum gross profit margin of
approximately 50%. We hope to attain a margin that high in the future as our cost per unit
dec reases, as manufac tured volume increases, while foc using on a 20%-30% net profit.
The chart shows what we need to sell per month according to these assumptions in order to
break even. This is about 80% of our planned average 2004 - 2005 monthly sales goals, even
with four months of no revenue before sales begin; therefore we believe we can realistically
ac hieve these goals and maintain these levels.
Table: Break-even Analysis
Break-even Analysis
Monthly Revenue Break-even
Assumptions:
Average Percent Variable Cost
Estimated Monthly Fixed Cost
$156,331
50%
$78,165
Page 29
RQM Technologies
7.4 Projected Profit and Loss
The Profit and Loss table, below, shows our projec ted sales, cost of sales, and operating
expenses for the first three years. of particular note are the high Sales and Marketing expenses;
our research indicates these approximate spending levels will be necessary for launching such a
new and unique product successfully. We are currently taking bids from four prominent
advertising agencies to manage this aspec t of our product launches.
All costs associated with manufac turing and distributing the physical products can be found
under cost of sales in the Sales Forec ast table, above.
We anticipate that sales will begin to generate a stable profit for RQM in February of 2005, about
halfway through our first year.
Page 30
RQM Technologies
Page 31
RQM Technologies
Page 32
RQM Technologies
Table: Profit and Loss
Pro Forma Profit and Loss
FY 2005
$1,951,500
$975,750
$0
$975,750
FY 2006
$4,072,500
$1,995,525
$0
$1,995,525
FY 2007
$5,846,125
$2,747,679
$0
$2,747,679
Gross Margin
Gross Margin %
$975,750
50.00%
$2,076,975
51.00%
$3,098,446
53.00%
Expenses
Payroll
Sales and Marketing and Other Expenses
Depreciation
Advertising & Marketing Collateral
Industrial Design
Rent
Telephone
Utilities
Insurance
Payroll Taxes
Company Vehicles and related expenses
Trade Shows & Events
$215,000
$216,000
$0
$295,000
$64,284
$22,800
$7,500
$14,400
$6,000
$50,200
$16,800
$30,000
$570,000
$200,000
$0
$350,000
$75,000
$26,000
$10,000
$18,000
$7,500
$85,500
$18,000
$0
$755,000
$250,000
$0
$425,000
$80,000
$30,000
$15,000
$20,000
$7,500
$113,250
$19,000
$0
Total Operating Expenses
$937,984
$1,360,000
$1,714,750
Profit Before Interest and Taxes
EBITDA
Interest Expense
Taxes Incurred
$37,766
$37,766
$0
$11,330
$716,975
$716,975
$0
$215,093
$1,383,696
$1,383,696
$0
$415,109
Net Profit
Net Profit/Sales
$26,436
1.35%
$501,883
12.32%
$968,587
16.57%
Sales
Direct Cost of Sales
Other Costs of Goods
Total Cost of Sales
Page 33
RQM Technologies
7.5 Projected Cash Flow
The Cash Flow table below shows that while initial cash flow will be out of the business,
sufficient start-up funding, combined with projec ted sales revenues, should allow us to maintain
a high positive cash balance throughout our first year, as we launch our products.
Of particular interest to investors is the Dividends row, below. We projec t increasing dividends,
which will be distributed first to outside investors; the founders will defer dividends until the third
year.
Page 34
RQM Technologies
Page 35
RQM Technologies
Table: Cash Flow
Pro Forma Cash Flow
FY 2005
FY 2006
FY 2007
$975,750
$745,583
$1,721,333
$2,036,250
$1,786,092
$3,822,342
$2,923,063
$2,713,875
$5,636,938
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$1,721,333
$0
$3,822,342
$0
$5,636,938
FY 2005
FY 2006
FY 2007
$215,000
$1,648,592
$1,863,592
$570,000
$3,071,925
$3,641,925
$755,000
$4,134,180
$4,889,180
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$50,000
$1,913,592
$0
$0
$75,000
$3,716,925
$0
$0
$225,000
$5,114,180
($192,259)
$157,041
$105,417
$262,458
$522,758
$785,216
Cash Received
Cash from Operations
Cash Sales
Cash from Receivables
Subtotal Cash from Operations
Additional Cash Received
Sales Tax, VAT, HST/GST Received
New Current Borrowing
New Other Liabilities (interest-free)
New Long-term Liabilities
Sales of Other Current Assets
Sales of Long-term Assets
New Investment Received
Subtotal Cash Received
Expenditures
Expenditures from Operations
Cash Spending
Bill Payments
Subtotal Spent on Operations
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out
Principal Repayment of Current Borrowing
Other Liabilities Principal Repayment
Long-term Liabilities Principal Repayment
Purchase Other Current Assets
Purchase Long-term Assets
Dividends
Subtotal Cash Spent
Net Cash Flow
Cash Balance
Page 36
RQM Technologies
7.6 Projected Balance Sheet
The Balance Sheet shows an increasingly stable cash position and net worth over the first three
years, as our products bec ome more established in the market. We do not plan to borrow money
to fund growth, so our liabilities in all years represent simple Ac counts Payable stemming from
ongoing operating expenses.
Table: Balance Sheet
Pro Forma Balance Sheet
FY 2005
FY 2006
FY 2007
Current Assets
Cash
Accounts Receivable
Inventory
Other Current Assets
Total Current Assets
$157,041
$230,167
$130,900
$0
$518,108
$262,458
$480,325
$267,706
$0
$1,010,489
$785,216
$689,512
$368,610
$0
$1,843,338
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
$0
$0
$0
$518,108
$0
$0
$0
$1,010,489
$0
$0
$0
$1,843,338
FY 2005
FY 2006
FY 2007
Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities
$192,371
$0
$0
$192,371
$257,870
$0
$0
$257,870
$347,132
$0
$0
$347,132
Long-term Liabilities
Total Liabilities
$0
$192,371
$0
$257,870
$0
$347,132
$450,000
($150,700)
$26,436
$325,736
$518,108
$450,000
($199,264)
$501,883
$752,619
$1,010,489
$450,000
$77,619
$968,587
$1,496,206
$1,843,338
$325,736
$752,619
$1,496,206
Assets
Liabilities and Capital
Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital
Net Worth
7.7 Business Ratios
Our main business ratios can be found in the following table, along with standard ratios for our
industry, Radio and Television Broadcasting and Wireless Communications Equipment
Manufacturing (e.g. GPS), NAICS code 334220. We do intend to improve gross margin, collec tion
days, and inventory turnover.
Our high gross margin reflec ts the nature of our particular kind of elec tronic equipment; a much
higher percentage of our products' value lies in the innovative design and (patents applied for)
customizable interfac e, than in skilled assembly (the typical distinguishing feature in this
industry). Our ratios will, therefore, differ from others in this industry.
Page 37
RQM Technologies
Table: Ratios
Ratio Analysis
Sales Growth
FY 2005
0.00%
FY 2006
108.69%
FY 2007
43.55%
Industry Profile
5.37%
Percent of Total Assets
Accounts Receivable
Inventory
Other Current Assets
Total Current Assets
Long-term Assets
Total Assets
44.42%
25.27%
0.00%
100.00%
0.00%
100.00%
47.53%
26.49%
0.00%
100.00%
0.00%
100.00%
37.41%
20.00%
0.00%
100.00%
0.00%
100.00%
20.57%
32.33%
31.89%
84.79%
15.21%
100.00%
37.13%
0.00%
37.13%
62.87%
25.52%
0.00%
25.52%
74.48%
18.83%
0.00%
18.83%
81.17%
44.07%
12.73%
56.80%
43.20%
100.00%
50.00%
48.65%
26.18%
1.94%
100.00%
51.00%
38.68%
13.51%
17.61%
100.00%
53.00%
36.43%
11.55%
23.67%
100.00%
28.38%
16.09%
0.71%
1.84%
2.69
2.01
37.13%
11.59%
7.29%
3.92
2.88
25.52%
95.26%
70.95%
5.31
4.25
18.83%
92.48%
75.06%
1.77
0.87
64.99%
2.57%
7.35%
FY 2005
1.35%
8.12%
FY 2006
12.32%
66.68%
FY 2007
16.57%
64.74%
n.a
n.a
4.24
56
10.91
9.57
4.24
64
10.01
12.17
4.24
73
8.64
12.17
n.a
n.a
n.a
n.a
Payment Days
Total Asset Turnover
27
3.77
26
4.03
26
3.17
n.a
n.a
Debt Ratios
Debt to Net Worth
Current Liab. to Liab.
0.59
1.00
0.34
1.00
0.23
1.00
n.a
n.a
$325,736
$752,619
$1,496,206
n.a
0.00
0.00
0.00
n.a
0.27
37%
0.82
5.99
0.25
26%
1.02
5.41
0.32
19%
2.26
3.91
n.a
n.a
n.a
n.a
Current Liabilities
Long-term Liabilities
Total Liabilities
Net Worth
Percent of Sales
Sales
Gross Margin
Selling, General & Administrative Expenses
Advertising Expenses
Profit Before Interest and Taxes
Main Ratios
Current
Quick
Total Debt to Total Assets
Pre-tax Return on Net Worth
Pre-tax Return on Assets
Additional Ratios
Net Profit Margin
Return on Equity
Activity Ratios
Accounts Receivable Turnover
Collection Days
Inventory Turnover
Accounts Payable Turnover
Liquidity Ratios
Net Working Capital
Interest Coverage
Additional Ratios
Assets to Sales
Current Debt/Total Assets
Acid Test
Sales/Net Worth
Page 38
RQM Technologies
Dividend Payout
1.89
0.15
0.23
n.a
Page 39
Appendix
Table: Sales Forecast
Sales Forecast
Sales
Family Consumers
Channel Sales to OEMs
Businesses
Military
Political
Total Sales
Direct Cost of Sales
Chipset
Programming
Packaging
Subtotal Direct Cost of Sales
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
0%
$0
$0
$0
$35,000
$45,000
$50,000
$60,000
$60,000
$65,000
$70,000
$75,000
$80,000
0%
0%
0%
$0
$0
$0
$0
$0
$0
$0
$0
$0
$60,000
$14,000
$0
$70,000
$16,000
$0
$70,000
$18,000
$0
$70,000
$20,000
$25,000
$75,000
$23,000
$25,000
$75,000
$25,000
$25,000
$85,000
$27,500
$25,000
$50,000
$30,000
$25,000
$50,000
$33,000
$25,000
0%
$0
$0
$0
$0
$0
$0
$50,000
$159,000
$50,000
$181,000
$50,000
$188,000
$50,000
$225,000
$50,000
$233,000
$50,000
$240,000
$50,000
$257,500
$50,000
$230,000
$50,000
$238,000
Aug
$0
$0
$0
$0
Sep
$0
$0
$0
$0
Oct
$0
$0
$0
$0
Nov
$55,650
$0
$23,850
$79,500
Dec
$63,350
$0
$27,150
$90,500
Jan
$65,800
$0
$28,200
$94,000
Feb
$78,750
$0
$33,750
$112,500
Mar
$81,550
$0
$34,950
$116,500
Apr
$84,000
$0
$36,000
$120,000
May
$90,125
$0
$38,625
$128,750
Jun
$80,500
$0
$34,500
$115,000
Jul
$83,300
$0
$35,700
$119,000
Page 1
Appendix
Table: Personnel
Personnel Plan
Steven M. Bloome (Pres/CEO)
Andrew J. Siska (CTO)
0%
0%
Aug
$7,500
$7,500
Sep
$7,500
$7,500
Oct
$7,500
$7,500
Nov
$7,500
$7,500
Dec
$7,500
$7,500
Jan
$8,500
$8,000
Feb
$8,500
$8,000
Mar
$8,500
$8,000
Apr
$8,500
$8,000
May
$8,500
$8,000
Jun
$8,500
$8,000
Jul
$8,500
$10,000
CEO
CFO
Reception/Secretarial
0%
0%
0%
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$2,500
$0
$0
$2,500
$0
$0
$2,500
$0
$0
$2,500
$0
$0
$2,500
$0
$0
$2,500
$0
$0
$2,500
$0
$0
$2,500
$0
$0
$2,500
Total People
2
2
2
3
3
3
3
3
3
3
3
3
Total Payroll
$15,000
$15,000
$15,000
$17,500
$17,500
$19,000
$19,000
$19,000
$19,000
$19,000
$19,000
$21,000
Page 2
Appendix
Table: General Assumptions
General Assumptions
Aug
Plan Month
Current Interest Rate
Long-term Interest Rate
Tax Rate
Other
1
Sep
2
Oct
3
Nov
4
Dec
5
Jan
6
Feb
7
Mar
8
Apr
9
May
10
Jun
11
Jul
12
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
8.50%
30.00%
0
8.50%
30.00%
0
8.50%
30.00%
0
8.50%
30.00%
0
8.50%
30.00%
0
8.50%
30.00%
0
8.50%
30.00%
0
8.50%
30.00%
0
8.50%
30.00%
0
8.50%
30.00%
0
8.50%
30.00%
0
8.50%
30.00%
0
Page 3
Appendix
Table: Profit and Loss
Pro Forma Profit and Loss
Sales
Direct Cost of Sales
Other Costs of Goods
Total Cost of Sales
Gross Margin
Gross Margin %
Expenses
Payroll
Sales and Marketing and Other
Expenses
Depreciation
Aug
$0
$0
Sep
$0
$0
Oct
$0
$0
Nov
$159,000
$79,500
Dec
$181,000
$90,500
Jan
$188,000
$94,000
Feb
$225,000
$112,500
Mar
$233,000
$116,500
Apr
$240,000
$120,000
May
$257,500
$128,750
Jun
$230,000
$115,000
Jul
$238,000
$119,000
$0
$0
$0
$0
$0
$0
$0
$79,500
$0
$90,500
$0
$94,000
$0
$112,500
$0
$116,500
$0
$120,000
$0
$128,750
$0
$115,000
$0
$119,000
$0
0.00%
$0
0.00%
$0
0.00%
$79,500
50.00%
$90,500
50.00%
$94,000
50.00%
$112,500
50.00%
$116,500
50.00%
$120,000
50.00%
$128,750
50.00%
$115,000
50.00%
$119,000
50.00%
$15,000
$15,000
$15,000
$17,500
$17,500
$19,000
$19,000
$19,000
$19,000
$19,000
$19,000
$21,000
$0
$0
$12,500
$16,000
$17,500
$20,000
$25,000
$25,000
$25,000
$25,000
$25,000
$25,000
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$20,000
$25,000
$25,000
$25,000
$25,000
$25,000
$25,000
$25,000
$25,000
$25,000
$25,000
$25,000
Industrial Design
Rent
Telephone
$5,357
$1,900
$500
$5,357
$1,900
$500
$5,357
$1,900
$600
$5,357
$1,900
$600
$5,357
$1,900
$750
$5,357
$1,900
$750
$5,357
$1,900
$750
$5,357
$1,900
$50
$5,357
$1,900
$750
$5,357
$1,900
$750
$5,357
$1,900
$750
$5,357
$1,900
$750
Utilities
Insurance
Payroll Taxes
$1,200
$500
$3,200
$1,200
$500
$3,200
$1,200
$500
$3,200
$1,200
$500
$4,400
$1,200
$500
$4,400
$1,200
$500
$4,400
$1,200
$500
$4,400
$1,200
$500
$4,400
$1,200
$500
$4,400
$1,200
$500
$4,400
$1,200
$500
$4,900
$1,200
$500
$4,900
$1,400
$1,400
$1,400
$1,400
$1,400
$1,400
$1,400
$1,400
$1,400
$1,400
$1,400
$1,400
$0
$0
$0
$0
$15,000
$15,000
$0
$0
$0
$0
$0
$0
$49,057
$54,057
$66,657
$73,857
$90,507
$94,507
$84,507
$83,807
$84,507
$84,507
$85,007
$87,007
Profit Before Interest and Taxes
($49,057)
($54,057)
($66,657)
$5,643
($7)
($507)
$27,993
$32,693
$35,493
$44,243
$29,993
$31,993
EBITDA
Interest Expense
Taxes Incurred
($49,057)
$0
($14,717)
($54,057)
$0
($16,217)
($66,657)
$0
($19,997)
$5,643
$0
$1,693
($7)
$0
($2)
($507)
$0
($152)
$27,993
$0
$8,398
$32,693
$0
$9,808
$35,493
$0
$10,648
$44,243
$0
$13,273
$29,993
$0
$8,998
$31,993
$0
$9,598
Net Profit
Net Profit/Sales
($34,340)
0.00%
($37,840)
0.00%
($46,660)
0.00%
$3,950
2.48%
($5)
0.00%
($355)
-0.19%
$19,595
8.71%
$22,885
9.82%
$24,845
10.35%
$30,970
12.03%
$20,995
9.13%
$22,395
9.41%
Advertising & Marketing Collateral
Company Vehicles and related
expenses
Trade Shows & Events
Total Operating Expenses
15%
Page 4
Appendix
Table: Cash Flow
Pro Forma Cash Flow
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Cash from Operations
Cash Sales
Cash from Receivables
$0
$0
$0
$0
$0
$0
$79,500
$0
$90,500
$2,650
$94,000
$79,867
$112,500
$90,617
$116,500
$94,617
$120,000
$112,633
$128,750
$116,617
$115,000
$120,292
$119,000
$128,292
Subtotal Cash from Operations
$0
$0
$0
$79,500
$93,150
$173,867
$203,117
$211,117
$232,633
$245,367
$235,292
$247,292
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
New Long-term Liabilities
Sales of Other Current Assets
Sales of Long-term Assets
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
New Investment Received
Subtotal Cash Received
$0
$0
$0
$0
$0
$0
$0
$79,500
$0
$93,150
$0
$173,867
$0
$203,117
$0
$211,117
$0
$232,633
$0
$245,367
$0
$235,292
$0
$247,292
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
$15,000
$645
$15,645
$15,000
$19,457
$34,457
$15,000
$23,134
$38,134
$17,500
$38,105
$55,605
$17,500
$223,353
$240,853
$19,000
$175,525
$194,525
$19,000
$174,323
$193,323
$19,000
$206,380
$225,380
$19,000
$195,665
$214,665
$19,000
$200,577
$219,577
$19,000
$215,746
$234,746
$21,000
$175,684
$196,684
Sales Tax, VAT, HST/GST Paid Out
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Principal Repayment of Current Borrowing
Other Liabilities Principal Repayment
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Long-term Liabilities Principal Repayment
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Purchase Other Current Assets
Purchase Long-term Assets
Dividends
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$50,000
$15,645
$34,457
$38,134
$55,605
$240,853
$194,525
$193,323
$225,380
$214,665
$219,577
$234,746
$246,684
($15,645)
$333,655
($34,457)
$299,199
($38,134)
$261,065
$23,895
$284,960
($147,703)
$137,257
($20,658)
$116,599
$9,793
$126,392
($14,264)
$112,129
$17,969
$130,097
$25,790
$155,887
$546
$156,433
$608
$157,041
Cash Received
Additional Cash Received
Sales Tax, VAT, HST/GST Received
New Current Borrowing
New Other Liabilities (interest-free)
Expenditures
0.00%
Expenditures from Operations
Cash Spending
Bill Payments
Subtotal Spent on Operations
Additional Cash Spent
Subtotal Cash Spent
Net Cash Flow
Cash Balance
Page 5
Appendix
Table: Balance Sheet
Pro Forma Balance Sheet
Assets
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Starting Balances
Current Assets
Cash
Accounts Receivable
$349,300
$0
$333,655
$0
$299,199
$0
$261,065
$0
$284,960
$79,500
$137,257
$167,350
$116,599
$181,483
$126,392
$203,367
$112,129
$225,250
$130,097
$232,617
$155,887
$244,750
$156,433
$239,458
$157,041
$230,167
Inventory
Other Current Assets
Total Current Assets
$0
$0
$349,300
$0
$0
$333,655
$0
$0
$299,199
$0
$0
$261,065
$87,450
$0
$451,910
$99,550
$0
$404,157
$103,400
$0
$401,482
$123,750
$0
$453,509
$128,150
$0
$465,529
$132,000
$0
$494,714
$141,625
$0
$542,262
$126,500
$0
$522,392
$130,900
$0
$518,108
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$349,300
$0
$0
$333,655
$0
$0
$299,199
$0
$0
$261,065
$0
$0
$451,910
$0
$0
$404,157
$0
$0
$401,482
$0
$0
$453,509
$0
$0
$465,529
$0
$0
$494,714
$0
$0
$542,262
$0
$0
$522,392
$0
$0
$518,108
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
Liabilities and Capital
Current Liabilities
Accounts Payable
Current Borrowing
$0
$0
$18,695
$0
$22,079
$0
$30,605
$0
$217,500
$0
$169,751
$0
$167,431
$0
$199,863
$0
$188,998
$0
$193,338
$0
$209,916
$0
$169,051
$0
$192,371
$0
Other Current Liabilities
Subtotal Current Liabilities
$0
$0
$0
$18,695
$0
$22,079
$0
$30,605
$0
$217,500
$0
$169,751
$0
$167,431
$0
$199,863
$0
$188,998
$0
$193,338
$0
$209,916
$0
$169,051
$0
$192,371
Long-term Liabilities
Total Liabilities
$0
$0
$0
$18,695
$0
$22,079
$0
$30,605
$0
$217,500
$0
$169,751
$0
$167,431
$0
$199,863
$0
$188,998
$0
$193,338
$0
$209,916
$0
$169,051
$0
$192,371
$450,000
($100,700)
$450,000
($100,700)
$450,000
($100,700)
$450,000
($100,700)
$450,000
($100,700)
$450,000
($100,700)
$450,000
($100,700)
$450,000
($100,700)
$450,000
($100,700)
$450,000
($100,700)
$450,000
($100,700)
$450,000
($100,700)
$450,000
($150,700)
Paid-in Capital
Retained Earnings
Earnings
$0
($34,340)
($72,180)
($118,840)
($114,890)
($114,895)
($115,249)
($95,654)
($72,769)
($47,924)
($16,954)
$4,041
$26,436
Total Capital
Total Liabilities and Capital
$349,300
$349,300
$314,960
$333,655
$277,120
$299,199
$230,460
$261,065
$234,410
$451,910
$234,406
$404,157
$234,051
$401,482
$253,646
$453,509
$276,531
$465,529
$301,376
$494,714
$332,346
$542,262
$353,341
$522,392
$325,736
$518,108
Net Worth
$349,300
$314,960
$277,120
$230,460
$234,410
$234,405
$234,051
$253,646
$276,531
$301,376
$332,346
$353,341
$325,736
Page 6