software startup- business plan

7/28/2019 Software Startup- Business Plan

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February 2004


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Confidentiality Agreement

The undersigned reader acknowledges that the information provided by Austin Kinetic in thisbusiness plan is confidential; therefore, reader agrees not to disclose it without the expresswritten permission of an Austin Kinetic officer.

It is acknowledged by reader that information to be furnished in this business plan is in allrespects confidential in nature, other than information which is in the public domain throughother means and that any disclosure or use of same by reader, may cause serious harm or

damage to Austin Kinetic.

Upon request, this document is to be immediately returned to any Austin Kinetic officer.

___________________Signature

___________________Name (typed or printed)

___________________Date

This is a business plan. It does not imply an offering of securities.


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1.0 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

1.1 Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.2 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.3 Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

2.0 Company Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.1 Company Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.2 Start-up Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

3.0 Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

4.0 Market Analysis Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84.1 Market Segmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84.2 Target Market Segment Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94.3 Service Business Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

4.3.1 Competition and Buying Patterns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

5.0 Strategy and Implementation Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95.1 Competitive Edge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95.2 Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105.3 Sales Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

5.3.1 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105.4 Milestones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

6.0 Web Plan Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126.1 Website Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136.2 Development Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

7.0 Management Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

7.1 Personnel Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

8.0 Financial Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148.1 Important Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Table of Contents


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1.0 Executive Summary

Austin Kinetic is an information technology consulting firm serving the Austin Metro area withtop quality engineers who have a keen interest in customer satisfaction. The time is right forconsulting companies to flourish. With the recent gains in the stock market, capital is againbecoming available for IT infrastructure improvements. Austin Kinetic will position itself to wina good deal of that emerging business. The company has been incorporated in Nevada andhas acquired an operating permit for Texas. Austin Kinetic anticipates a cumulative net profitof over $1M by the end of FY2008.

The MarketAustin is known as "little Silicon valley" due to its high percentage of technology companies.With its relatively low cost of living and ample space for expansion, Austin promises to be astrong market into the foreseeable future. There are currently over 7,000 companies that fitthe aim of Austin Kinetic in the Austin Metro area, with only four major competitors. Thiscombination provides a rich opportunity, bolstered by the current up-turn in the area andnational economy.

The Business Model

Austin Kinetic will leverage the industry knowledge of its founding members to provideoutstanding service to its customers. The company will initially have as little overhead aspossible with its founders working out of their own homes, using their own transportationmeans to reach clients. The company will be developed with a "customer service andsatisfaction first" mentality in an effort to build acceptance and a positive reputation in thelocal industry.

The Management TeamIn order for the company to be successful, Austin Kinetic must fully leverage the experience

and insight of its management team, which includes Adam Authortisement, Bob Borgware,Cary Curry, Dean Dri, and Edgar Extension. The team has over forty-eight cumulative years ofexperience in service operations management and information technology support. Theycurrently hold multiple technology industry vendor certifications crossing several disciplinesincluding both logical and physical network structure and management Over the course of

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$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

SalesGross Margin

Net Profit

Highlights

1.1 Objectives

Austin Kinetic's objectives for the first five years:

1. Establish and maintain at least twenty-four full time service contract customers.2. Establish an office in Austin, TX.3. Break the $1M revenue mark.

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2.0 Company Summary

Austin Kinetic is incorporated in Nevada with an operating office in Austin, Texas. Initial staffwill consist of a small group of experienced computer engineers who's skills and experiencecollectively cover a very broad segment of the open systems' distributed client/server field.The company's initial focus will be installation and configuration projects which will bedeveloped into ongoing support contracts.

2.1 Company Ownership

Austin Kinetic is incorporated. The major share holders are Adam Authortisement, BobBorgware, Cary Curry, Dean Dri, and Edgar Extension.

2.2 Start-up Summary

The start-up costs for the company are expected to be $11,00 and will be funded by thefounder's personal funds. There will be only small initial equipment cost as the company will begreatly dependent upon its founders' resources. It is expected that each employee will initiallycover the cost of transportation, cell phone, and incidentals that arise in the course of duebusiness. The company will begin covering those costs as revenue streams are generated.Specific guidelines and policies will be developed prior to the sixth operating month.

Table: Start-up

Start-up

Requirements

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Table: Start-up Funding

Start-up FundingStart-up Expenses to Fund $7,550Start-up Assets to Fund $4,550Total Funding Required $12,100

AssetsNon-cash Assets from Start-up $0Cash Requirements from Start-up $4,550Additional Cash Raised $0Cash Balance on Starting Date $4,550Total Assets $4,550

Liabilitiesand Capital

LiabilitiesCurrent Borrowing $0Long-term Liabilities $0Accounts Payable (Outstanding Bills) $0Other Current Liabilities $0Total Liabilities $0

Capital

Planned InvestmentJohn Butler $2,500Eddie Hodges $2,400Sidney Johnson $2,400Darren Galatas $2,400Johnathan & Grace Panepinto $2,400Additional Investment Requirement $0Total Planned Investment $12,100

Loss at Start-up (Start-up Expenses) ($7,550)

Total Capital $4,550

Total Capital and Liabilities $4,550

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3.0 Services

Austin Kinetic will offer several support options, including hourly support services, with theoption to buy in blocks of 40 hours at a discounted rate. Blocks purchased will be valid for 180days from date of purchase. Additionally, semi-annual service contracts will be available.Contract pricing will be negotiated on a per-contract basis.

Project work will be billed and estimated on a per-project basis. Web and ASP hosting will be billed on a per-system basis.

Operating systems supported (limited to current and three previous revisions):

Windows Novell NetWare Solaris Red Hat Linux

Hardware supported (hardware configurations must be validated by OEM):

All open desktop, server, storage, and network systems. Dell, ADIC, Storagetech, and HP tape drives and libraries. Additional hardware will have to be reviewed on a per-case basis.

Software packages supported (Restricted to implementation and initial configuration):

Microsoft Exchange Lotus Notes/Domino SUS Messaging Center

Microsoft SQL server Oracle DBS Veritas Backup Exec / Net Backup Legato Networker Arcserve

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Basic Server Management*$350 per monthAustin Kinetic provides professional management of operating systems, including Windows,NetWare, Red Hat Linux, and Solaris. This service is perfect for companies that want tomanage their own applications, but not deal with the ongoing hassle of tuning, securing, andmaintaining the operating system. We will take the burden of ensuring you get the properservices for your specific server and operating system.

A system audit to document your architecture and suggest improvements 24/7 technical support of the server and operating system from experienced engineers Security and bug patch notification for the operating system, and when approved, a

service call will be scheduled for installation.* Monitoring the network availability of one IP. Monitoring the server's disk usage, processor usage and load average Visibility into Austin Kinetic's trouble ticket system via a secure portal

* Except for the initial system audit, service time to repair or otherwise service the monitoredsystem is not included in this monitoring agreement.

Application Server Management Services* $450 per month.Ensuring your applications are available and running at peak efficiency is a 24/7 responsibility.Austin Kinetic offers comprehensive application monitoring and management so yourcustomers and employees will be able to use your applications without significant unscheduledinterruption. We offer a complete range of management services tailored to remove theburden of ensuring your applications are up and getting the proper maintenance.

A system audit to document your architecture and suggest improvements 24/7 technical support of the server, operating system and applications from

experienced engineers Security and bug patch notification for the operating system and applications, and

when approved, installation

Monitoring application and network availability Monitoring application response time Monitoring the server's disk usage, processor usage, and load average Visibility into Austin Kinetic's trouble ticket system via a secure portal

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Network Device Management Services* $450 per month.Network devices - firewalls, load balancer, routers, switches and hubs - must be properlyconfigured and maintained to ensure network security and reliable operation. Austin Kineticoffers a broad range of network management services and will take the burden of ensuringyou get the proper services for your specific network.

A network audit to document your topology and addressing scheme 24/7 technical support of the network devices from experienced engineers Security and bug patch notification, and when approved, installation Maintaining the security of firewalls Monitoring bandwidth usage Monitoring network device availability and performance Visibility into Austin Kinetic's trouble ticket system via a secure portal


Benefits of Security Management Services (Priced determined on a per-site basis.)Maintaining the security of your Internet-based systems is more important and more timeconsuming that ever. Austin Kinetic removes the burden of protecting your systems by offering24/7 security management that combines intrusion detection and vulnerability scanning. Wealso will not burden your existing hardware as a pre-configured 1U server is installed in yournetwork to handle the intrusion detection and vulnerability task.

Identify misconfigured firewalls Catch attacks that firewalls legitimately allow through (such as attacks against Web

servers)

Document hacker attempts that fail Watch for insider hacking Identify users installing unsecured software on their machines Recognize unauthorized machines using the network

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4.0 Market Analysis Summary

The Information and Technology Service industry is expected to grow at 8.58% per yearthrough 2010.

--U.S. Department of Labor (2003) http://www.bls.gov/iag/iag.services.htmWe will be primarily focusing on mid-sized companies with 500 or fewer employers. Thesecompanies typically do not have large internal IT departments and could benefit the greatestfrom our offerings.

4.1 Market Segmentation

The information in the market analysis table gained from the U.S. Census Bureau,http://factfinder.census.gov/servlet/GQRGeoSearchByListServlet?ds_name=E9700A1. Thoughthe data is based upon 1997 data, it is representative of the local market's potential.

Table: Market Analysis

Market Analysis2004 2005 2006 2007 2008

Potential Customers Growth CAGRRetail trade 8% 2,925 3,159 3,412 3,685 3,980 8.00%Professional, scientific,& technical services

8% 3,128 3,378 3,648 3,940 4,255 8.00%

Health care & socialassistance

8% 1,705 1,841 1,988 2,147 2,319 7.99%

Total 8.00% 7,758 8,378 9,048 9,772 10,554 8.00%

Market Analysis (Pie)

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4.2 Target Market Segment Strategy

Austin Kinetic is interested in servicing companies that are large enough to show direct P&Lbenefit from information technology investment, but not large enough to maintain their ownpermanent IT staff. The business groups targeted in the market analysis table represent thelargest groups in our target area that fit our interests.

4.3 Service Business Analysis

Austin Kinetic is in the business of satisfying companies' information technology infrastructureneeds. We will provide service at various levels from consulting to installation. Services will besold on a per-customer/case basis with heavy personal interaction between Austin Kineticsales representatives and prospective customers.

4.3.1 Competition and Buying Patterns

In this industry that Austin Kinetic, word of mouth and reputation are king. While a limitedamount of highly focused marketing will be effective, most contracts are gleaned from socialcontacts and networking.

5.0 Strategy and Implementation Summary

Austin Kinetic's initial funding will be from its founders' personal funds. Word-of-mouth andindustry networking will be Austin Kinetic's key source of clients. The company's success willbe based upon the service and satisfaction of customers to the point that they willingly refer

b i

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5.2 Marketing Strategy

Austin Kinetic's initial marketing strategy will be largely word-of-mouth and industry groupnetworking. Our biggest initial challenge will be to get our name known in the local market.We will become involved in several industry specific organizations in the local community whichwill give us direct access to potential customers.

5.3 Sales Strategy

Sales will focus a bit less on building relationships and more on solidifying confidence in AustinKinetic's competencies and skills. Our primary focus will be to answer the question, "how canAustin Kinetic best meet a customer's information technology needs?" Delivering this answer ina clear, concise proposal allied with competitive pricing will be the key to closing deals.

5.3.1 Sales Forecast

Sales are forecast with an emphasis on project work at the onset. In the first few months, wewill be primarily occupied in conducting short-term one-day to one-week projects whilebuilding Austin Kinetic's reputation and brand name. Within the first six months, Austin Kineticwill have signed three annual service contracts, doubling that by the end of the year and eachsemi-annual period thereafter. Sales contracts will be set period contracts paid by monthlyinstallments.

As a service business, our only direct costs would relate to the time spent by employees in

responding to customers' needs. Our employees are all paid a set salary, and not by hourlybilling, so we have no direct costs of sales; these salaries can be found in the Personnel Plan.

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$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000

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

Project related

Service contract

Sales Monthly

$2,000,000

$2,500,000

Sales by Year

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5.4 Milestones

Austin Kinetic will have very simple marketing milestones geared toward industry networkingand beginning to build name recognition.

Table: Milestones

Milestones

Milestone Start Date End Date Budget Manager Department

Join Austin's chamber of commerce 2/1/2004 3/1/2004 $0 Adam MarketingRegister with Austin BusinessJournal

2/1/2004 3/1/2004 $0 Adam Marketing

Obtain first service contract 5/30/2004 6/5/2004 $0 Bob and Dean AllOpen Office 2/1/2004 2/1/2005 $3,500 Edgar OperationsTotals $3,500

Join Austin's chamber of commerce

Register with Austin Business Journal

Obtain first service contract

Open Office

Milestones

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6.1 Website Marketing Strategy

Austin Kinetic's Web presence will be utilized as a tool to assist the company's overallmarketing strategy. It will serve as a point of reference for information about the companyand its services, and in a small part, lend credibility to the marketing message.

6.2 Development Requirements

Austin Kinetic's site will reside in a two-tier environment. A back-end database will be utilizedto manage customer data. The site will be developed with the assistance of a contractedprofessional developer.

7.0 Management Summary

At the outset, Austin Kinetic will maintain five part-time employees, its founders. Theseemployees will be responsible for all aspects of the business and serve in both managerial aswell as technical roles. As the business grows, additional engineers will be hired. We anticipatethat during the fourth year of operation, the original five employees will be free from anytechnical duties and concentrate solely on their management responsibilities. At this time,Austin Kinetic will look to add a full-time sales and marketing manager as well.

7.1 Personnel Plan

Business permitting, Austin Kinetic will maintain a staff of five engineers through most of FY2007. A secretary will be hired at the start of FY2006 to assist with telephone and office

A h d f FY 2007 ddi i l i ill b b h b d

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Table: Personnel

Personnel Plan FY 2005 FY 2006 FY 2007 FY 2008 FY 2009Profit Sharing - 5% net profits $0 $7,923 $12,464 $23,621 $16,616Adam Authortisement (CEO) $14,400 $55,000 $63,000 $73,000 $83,600Edgar Extension (COO) $14,400 $55,000 $63,000 $73,000 $83,600Cary Curry (CIO) $14,400 $55,000 $63,000 $73,000 $83,600Dean Dri (CFO) $14,400 $55,000 $63,000 $73,000 $83,600Bob Borgware (CTO) $14,400 $55,000 $63,000 $73,000 $83,600Secretary $0 $30,000 $31,500 $33,000 $34,700Sales/Marketing $0 $0 $0 $70,000 $73,500Technician-1 $0 $0 $13,750 $55,688 $58,472

Technician-2 $0 $0 $0 $55,000 $57,750Technician-3 $0 $0 $0 $55,000 $57,750Technician-4 $0 $0 $0 $55,000 $57,750Technician-5 $0 $0 $0 $55,000 $57,750Technician-6 $0 $0 $0 $55,000 $57,750Technician-7 $0 $0 $0 $45,833 $57,292Technician-8 $0 $0 $0 $9,167 $55,458Technician-9 $0 $0 $0 $0 $36,667Total People 5 6 7 15 16

Total Payroll $72,000 $312,923 $372,714 $877,309 $1,039,455

8.0 Financial Plan

Austin Kinetic will initially grow with project work, beginning to build service contracts from thesix month point forward. The company will increase its project work to 2,560 man hours permonth and increase its service contracts count by six each year. The initial growth will befinanced primarily out of the pockets of its founders. The company will fund all growth fromthe cash flow of the business, remaining debt-free.

8.1 Important Assumptions

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Table: General Assumptions

General Assumptions FY 2005 FY 2006 FY 2007 FY 2008 FY 2009Plan Month 1 2 3 4 5Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00%Long-term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00%Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00%Other 0 0 0 0 0

8.2 Break-even Analysis

The table and chart below show our break-even analysis. As a service business, we have nodirect cost of sales. Our break-even point ni the first year is therefore equal to the amountneeded to cover our operating expenses, including payroll. We will reach break even at $9,435per month, in the third month.

Table: Break-even Analysis

Break-even Analysis

MonthlyRevenue Break-even $9,435

Assumptions:Average Percent Variable Cost 0%Estimated MonthlyF ixed Cost $9,435

$10,000

$15,000

Break-even Analysis

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8.3 Projected Profit and Loss

In the first year, we will be based out of the founders' homes. Adam Authortisement hasrenovated his garage for use as a meeting space and general office, when we need to gettogether as a group. Utilities in the first year represent the cost of home high-speed Internetaccess for all five employees ($45 each per month). This access is necessary forcommunications between personnel and for file transmission for all project and service work.

After the first year, it will be more cost-effective and attuned to our growth to rent a space indowntown Austin, where we can consolidate equipment, combine utilities, and have a central

location for our work and our secretary. Office space rented beginning FY2006 is forecast to be$2,500 per month.

The Profit and Loss also includes a provision for charity donations, which we have deemedimportant to our mission, as well as to marketing and outreach in the community. Starting inthe second year, 5% of net profits each will be set aside for charity on an annual basis basedupon the previous year's performance.

After the first month, Marketing and Promotion expenses are set at 5% of the previousmonth's and year's sales.

Table: Profit and Loss

Pro Forma Profit and LossFY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Sales $339,600 $813,600 $1,231,200 $1,648,800 $2,066,400Direct Cost of Sales $0 $0 $0 $0 $0Other Costs of Sales $0 $0 $0 $0 $0

------------ ------------ ------------ ------------ ------------Total Cost of Sales $0 $0 $0 $0 $0

G M i $339 600 $813 600 $1 231 200 $1 648 800 $2 066 400

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$0

$5,000

$10,000

$15,000

$20,000

$25,000


Profit Monthly

$350,000

$400,000

$450,000

$500,000

Profit Yearly

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$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000


Gross Margin Monthly

$2,000,000

$2,500,000

Gross Margin Yearly

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8.4 Projected Cash Flow

We have no sales on credit; all service accounts and projects are paid in advance, ininstallments. We anticipate no problems with our cash flow. By staying debt free and keepingexpenses down, we expect a cash balance over $180,000 by the end of the first year.

Table: Cash Flow

Pro Forma Cash FlowFY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Cash Received

Cash from OperationsCash Sales $339,600 $813,600 $1,231,200 $1,648,800 $2,066,400Subtotal Cash from Operations $339,600 $813,600 $1,231,200 $1,648,800 $2,066,400

Additional Cash ReceivedSales Tax, VAT, HST/GSTReceived

$0 $0 $0 $0 $0

New Current Borrowing $0 $0 $0 $0 $0New Other Liabilities (interest-free) $0 $0 $0 $0 $0New Long-term Liabilities $0 $0 $0 $0 $0Sales of Other Current Assets $0 $0 $0 $0 $0Sales of Long-term Assets $0 $0 $0 $0 $0New Investment Received $0 $0 $0 $0 $0Subtotal Cash Received $339,600 $813,600 $1,231,200 $1,648,800 $2,066,400

Expenditures FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Expenditures from OperationsCash spending $72,000 $312,923 $372,714 $877,309 $1,039,455Bill Payments $91,591 $91,486 $439,238 $352,342 $618,253Subtotal Spent on Operations $163,591 $404,409 $811,953 $1,229,651 $1,657,708

Additional Cash SpentSales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0Principal Repaymentof CurrentBorrowing

$0 $0 $0 $0 $0

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$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

$180,000

$200,000


Net Cash Flow

Cash Balance

Cash

8.5 Projected Balance Sheet

Our Balance Sheet is quite solid. We will build our asset base slowly over the first five years,expensing most of our computer and hardware equipment to offset taxes, since they will need

replacing every two to three years.

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Table: Balance Sheet

Pro Forma Balance Sheet FY 2005 FY 2006 FY 2007 FY 2008 FY 2009Assets

Current AssetsCash

$180,559 $584,750 $993,997$1,408,14

6$1,806,83

8Other Current Assets $0 $0 $0 $0 $0Total Current Assets

$180,559 $584,750 $993,997$1,408,14

6$1,806,83

8

Long-term AssetsLong-term Assets $0 $5,000 $15,000 $20,000 $30,000Accumulated Depreciation $0 $714 $2,752 $5,216 $8,756Total Long-term Assets $0 $4,286 $12,248 $14,784 $21,244Total Assets

$180,559 $589,036 $1,006,245$1,422,93

0$1,828,08

2

Liabilities a nd Capital FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Current LiabilitiesAccounts Payable $17,543 $176,735 $121,517 $205,878 $127,728Current Borrowing $0 $0 $0 $0 $0

Other Current Liabilities $0 $0 $0 $0 $0Subtotal Current Liabil it ies $17,543 $176,735 $121,517 $205,878 $127,728

Long-term Liabilities $0 $0 $0 $0 $0Total Liabilities $17,543 $176,735 $121,517 $205,878 $127,728

Paid-in Capital $12,100 $12,100 $12,100 $12,100 $12,100Retained Earnings

($7,550) $150,916 $400,201 $872,628$1,204,95

2Earnings $158,466 $249,285 $472,427 $332,324 $483,301Total Capital

$163,016 $412,301 $884,728$1,217,05

2

$1,700,35

4Total Liabilities and Capital

$180,559 $589,036 $1,006,245$1,422,93

0$1,828,08

2

Net Worth$163 016 $412 301 $884 728

$1 217 05 $1 700 35

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Table: Ratios

Ratio AnalysisFY 2005 FY 2006 FY 2007 FY 2008 FY 2009

IndustryProfile

Sales Growth 0.00% 139.58% 51.33% 33.92% 25.33% 5.93%

Percent of Total AssetsOther Current Assets 0.00% 0.00% 0.00% 0.00% 0.00% 51.96%Total Current Assets 100.00% 99.27% 98.78% 98.96% 98.84% 71.50%Long-term Assets 0.00% 0.73% 1.22% 1.04% 1.16% 28.50%Total Assets 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Current Liabilities 9.72% 30.00% 12.08% 14.47% 6.99% 36.87%Long-term Liabilities 0.00% 0.00% 0.00% 0.00% 0.00% 15.50%Total Liabilities 9.72% 30.00% 12.08% 14.47% 6.99% 52.37%Net Worth 90.28% 70.00% 87.92% 85.53% 93.01% 47.63%

Percent of SalesSales 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%Gross Margin 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%Selling, General & AdministrativeExpenses

47.42% 59.67% 73.67% 70.43% 69.19% 79.97%

Advertising Expenses 5.00% 2.09% 3.30% 3.73% 3.99% 1.53%Profit Before Interest and Taxes 66.66% 43.77% 54.82% 28.79% 33.41% 1.97%

Main RatiosCurrent 10.29 3.31 8.18 6.84 14.15 1.33Quick 10.29 3.31 8.18 6.84 14.15 1.07Total Debt to Total Assets 9.72% 30.00% 12.08% 14.47% 6.99% 59.80%Pre-tax Return on Net Worth 138.87% 86.37% 76.28% 39.01% 40.61% 3.73%Pre-tax Return on Assets 125.38% 60.46% 67.07% 33.36% 37.77% 9.29%

Additional Ratios FY 2005 FY 2006 FY 2007 FY 2008 FY 2009Net Profit Margin 46.66% 30.64% 38.37% 20.16% 23.39% n.aReturn on Equity 97.21% 60.46% 53.40% 27.31% 28.42% n.a

Activity RatiosAccounts Payable Turnover 6.22 1.42 3.16 2.12 4.23 n.aPayment Days 27 141 142 137 113 n.aTotal Asset Turnover 1 88 1 38 1 22 1 16 1 13 n a

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8.7 Long-term Plan

Austin Kinetic anticipates maintaining a steady profit percentage and plans to build cashreserves to an amount which would cover operating expenses for twelve months should anycatastrophic event occur. This will be a moving target and be recalculated on an annual basisas the business cash flow changes. There has been no pre-set limit placed upon AustinKinetic. Its founders see the possibility of expanding the company into a global force rankedequal to today's top Fortune 500 companies.

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Appendix Table: Sales Forecast

Sales ForecastFeb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan

SalesProject related 0% $2,400 $4,800 $9,600 $19,200 $24,000 $26,400 $31,200 $33,600 $36,000 $38,400 $40,800 $43,200Service contract 0% $0 $0 $0 $0 $0 $3,000 $3,000 $4,000 $4,000 $5,000 $5,000 $6,000

Total Sales $2,400 $4,800 $9,600 $19,200 $24,000 $29,400 $34,200 $37,600 $40,000 $43,400 $45,800 $49,200

Direct Cost of Sales Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec JanTechnician Salary $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Subtotal Direct Cost of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

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Appendix Table: Personnel

Personnel PlanFeb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan

Profit Sharing - 5% net profits 5% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Adam Authortisement (CEO) 0% $100 $200 $400 $800 $1,000 $1,250 $1,450 $1,600 $1,700 $1,850 $1,950 $2,100Edgar Extension (COO) 0% $100 $200 $400 $800 $1,000 $1,250 $1,450 $1,600 $1,700 $1,850 $1,950 $2,100

Cary Curry (CIO) 0% $100 $200 $400 $800 $1,000 $1,250 $1,450 $1,600 $1,700 $1,850 $1,950 $2,100Dean Dri (CFO) 0% $100 $200 $400 $800 $1,000 $1,250 $1,450 $1,600 $1,700 $1,850 $1,950 $2,100Bob Borgware (CTO) 0% $100 $200 $400 $800 $1,000 $1,250 $1,450 $1,600 $1,700 $1,850 $1,950 $2,100Secretary 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Sales/Marketing 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Technician-1 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Technician-2 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Technician-3 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Technician-4 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Technician-5 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Technician-6 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Technician-7 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Technician-8 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Technician-9 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total People 5 5 5 5 5 5 5 5 5 5 5 5

Total Payroll $500 $1,000 $2,000 $4,000 $5,000 $6,250 $7,250 $8,000 $8,500 $9,250 $9,750 $10,500

Appendix

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Appendix Table: General Assumptions

General AssumptionsFeb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan

Plan Month 1 2 3 4 5 6 7 8 9 10 11 12Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%Long-term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%

Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%Other 0 0 0 0 0 0 0 0 0 0 0 0

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Appendix Table: Profit and Loss

Pro Forma Profit and LossFeb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan

Sales $2,400 $4,800 $9,600 $19,200 $24,000 $29,400 $34,200 $37,600 $40,000 $43,400 $45,800 $49,200Direct Cost of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Other Costs of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------Total Cost of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Gross Margin $2,400 $4,800 $9,600 $19,200 $24,000 $29,400 $34,200 $37,600 $40,000 $43,400 $45,800 $49,200Gross Margin % 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

ExpensesPayroll $500 $1,000 $2,000 $4,000 $5,000 $6,250 $7,250 $8,000 $8,500 $9,250 $9,750 $10,500Marketing/Promotion 5% $200 $120 $240 $480 $960 $1,200 $1,470 $1,710 $1,880 $2,000 $2,170 $2,290Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Rent $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Moving Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $5,000Utilities $225 $225 $225 $225 $225 $225 $225 $225 $225 $225 $225 $225Insurance $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250Payroll Taxes 15% $75 $150 $300 $600 $750 $938 $1,088 $1,200 $1,275 $1,388 $1,463 $1,575Expensed Computer Equipment 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $5,000 $0 $0

Charity (5% of previous year net profit) 5% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------Total Operating Expenses $1,250 $1,745 $3,015 $5,555 $7,185 $8,863 $10,283 $11,385 $12,130 $18,113 $13,858 $19,840

Profit Before Interest and Taxes $1,150 $3,055 $6,585 $13,645 $16,815 $20,538 $23,918 $26,215 $27,870 $25,288 $31,943 $29,360Interest Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Taxes Incurred $345 $917 $1,976 $4,094 $5,045 $6,161 $7,175 $7,865 $8,361 $7,586 $9,583 $8,808

Net Profit $805 $2,139 $4,610 $9,552 $11,771 $14,376 $16,742 $18,351 $19,509 $17,701 $22,360 $20,552Net Profit/Sales 33.54% 44.55% 48.02% 49.75% 49.04% 48.90% 48.95% 48.80% 48.77% 40.79% 48.82% 41.77%

Appendix

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Appendix Table: Cash Flow

Pro Forma Cash FlowFeb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan

Cash Received

Cash from Operations

Cash Sales $2,400 $4,800 $9,600 $19,200 $24,000 $29,400 $34,200 $37,600 $40,000 $43,400 $45,800 $49,200Subtotal Cash from Operations $2,400 $4,800 $9,600 $19,200 $24,000 $29,400 $34,200 $37,600 $40,000 $43,400 $45,800 $49,200

Additional Cash ReceivedSales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Subtotal Cash Received $2,400 $4,800 $9,600 $19,200 $24,000 $29,400 $34,200 $37,600 $40,000 $43,400 $45,800 $49,200

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

Expenditures from OperationsCash spending $500 $1,000 $2,000 $4,000 $5,000 $6,250 $7,250 $8,000 $8,500 $9,250 $9,750 $10,500

Bill Payments $37 $1,114 $1,706 $3,079 $5,701 $7,281 $8,822 $10,242 $11,274 $12,140 $16,357 $ 13,839Subtotal Spent on Operations $537 $2,114 $3,706 $7,079 $10,701 $13,531 $16,072 $18,242 $19,774 $21,390 $26,107 $24,339

Additional Cash SpentSales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Principal Repayment of CurrentBorrowing

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Long-term Liabilities PrincipalRepayment

$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 $0Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Subtotal Cash Spent $537 $2,114 $3,706 $7,079 $10,701 $13,531 $16,072 $18,242 $19,774 $21,390 $26,107 $24,339

Net Cash Flow $1,864 $2,686 $5,894 $12,121 $13,299 $15,869 $18,128 $19,358 $20,226 $22,010 $19,693 $24,861Cash Balance $6,414 $9,100 $14,994 $27,115 $40,414 $56,283 $74,411 $93,769 $113,994 $136,005 $155,698 $180,559

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Appendix Table: Balance Sheet

Pro Forma Balance SheetFeb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan

Assets Starting Balances

Current Assets

Cash $4,550 $6,414 $9,100 $14,994 $27,115 $40,414 $56,283 $74,411 $93,769 $113,994 $136,005 $155,698 $180,559Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Current Assets $4,550 $6,414 $9,100 $14,994 $27,115 $40,414 $56,283 $74,411 $93,769 $113,994 $136,005 $155,698 $180,559

Long-term AssetsLong-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Accumulated Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Assets $4,550 $6,414 $9,100 $14,994 $27,115 $40,414 $56,283 $74,411 $93,769 $113,994 $136,005 $155,698 $180,559

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

Current LiabilitiesAccounts Payable $0 $1,059 $1,606 $2,891 $5,460 $6,989 $8,481 $9,867 $10,875 $11,591 $15,900 $13,234 $17,543Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Subtotal Current Liabilities $0 $1,059 $1,606 $2,891 $5,460 $6,989 $8,481 $9,867 $10,875 $11,591 $15,900 $13,234 $17,543

Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Liabilities $0 $1,059 $1,606 $2,891 $5,460 $6,989 $8,481 $9,867 $10,875 $11,591 $15,900 $13,234 $17,543

Paid-in Capital $12,100 $12,100 $12,100 $12,100 $12,100 $12,100 $12,100 $12,100 $12,100 $12,100 $12,100 $12,100 $12,100Retained Earnings ($7,550) ($7,550) ($7,550) ($7,550) ($7,550) ($7,550) ($7,550) ($7,550) ($7,550) ($7,550) ($7,550) ($7,550) ($7,550)Earnings $0 $805 $2,944 $7,553 $17,105 $28,875 $43,251 $59,994 $78,344 $97,853 $115,554 $137,914 $158,466Total Capital $4,550 $5,355 $7,494 $12,103 $21,655 $33,425 $47,801 $64,544 $82,894 $102,403 $120,104 $142,464 $163,016Total Liabilities and Capital $4,550 $6,414 $9,100 $14,994 $27,115 $40,414 $56,283 $74,411 $93,769 $113,994 $136,005 $155,698 $180,559

Net Worth $4,550 $5,355 $7,494 $12,103 $21,655 $33,425 $47,801 $64,544 $82,894 $102,403 $120,104 $142,464 $163,016

Appendix

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