Pro Forma Income Statements Year 1 Year 2 Year 3

Sales $850,000 $900,000 1,000,000

Direct Costs of Goods 44,000 50,000 65,000
Other Production Expenses 0 0
Cost of Goods Sold 44,000 50,000 65,000
Gross Margin $806,000 $850,000 $935,000

Expenses
Payroll $250,000 $300,000 $400,000
Sales and Marketing & other Expenses $45,000 50,000 60,000
Depreciation 4,000 4,000 4,000
leased Equipment 0 0 0
Utilities 3,500 3,500 3,500
Insurance 4,500 4,500 4,500
Rent 30,000 30,000 30,000
Payroll Taxes 15,000 20,000 25,000
Total Operating Expenses 352000 412000 527000
Profit Before Interest and Taxes $454,000 $438,000 $408,000
Interest Expense 352,000 412,000 -527,000
Taxes Incurred 500 200 28,864
Net Profit 101,500 $25,800 -901,136
Pro Forma Balance Sheet Year 1 Year 2 Year3

Current Assets
Cash $30,000 $60,000 $90,000
Inventory 2,500 3,500 4,500
Other Current Assets 25,000 25,000 25,000
Total Current Assets $57,500 $88,500 $119,500

Long-term Assets
Long-term Assets $69,500.00 69,500 69,500
Accumulated Depreciation 5,000 10,000 20,000
Total Long-term Assets 64,500 79,500 89,500
Total Assets $122,000 $168,000 $209,000

Liabilities and Capital

Current Liabilities
Account Payable $12,550 $13,555 $14,550
Current Borrowing 0 0 0
Other Current Liabilities 0 0 0
Subtotal Current Liabilities 12,550 13,555 14,550
Long-term Liabilities 95,500 100,100 111,550
Total Liabilities 108050 113,655 126,100

Paid-in Capital 50,500 50,500 50,500

Retained Earning -45,550 -55,000 -65,000
Earning 101,500 25,800 -901,136
Total Capital 106450 21,300 -915,636
Total Liabilities and Capital 122,000 $168,000 209,000
Net Worth $228,450 189,300 -706,636
Pro Forma Cash Flow Statement Year 1 Year 2 Year 3

Operations
Net Income $101,500 $25,800 ($901,136)
Add:
Depreciation 4,000 4,000 4,000
Increase in Account Payable 12,550 13,555 14,550
Deduct
Increase in Inventories -2,500 -3,500 -4,500
Total cash flow from operations $115,550 $39,855 ($887,086)

Investment

Financing
Insurance 4,500 4,500 4,500
Other Investors -2,500 -5,500 9,500

Total Cash Flow from financing $2,500 ($1,000) $14,000

Total cash flows $115,550 $38,850 ($873,086)