Euro Equipment Rental

Confidentiality Agreement

The undersigned reader acknowledges that the information provided by _______________ in this

business plan is confidential; therefore, reader agrees not to disclose it without the express written permission of _______________.

It is acknowledged by reader that information to be furnished in this business plan is in all respects

confidential in nature, other than information which is in the public domain through other means

and that any disclosure or use of same by reader, may cause serious harm or damage to

_______________.

Upon request, this document is to be immediately returned to _______________.

___________________ Signature

___________________ Name (typed or printed)

___________________ Date

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

Table of Contents

Page 1

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

Chart: Highlights .......................................................................................................................... 2

1.1 Objectives .................................................................................................................................... 2

1.2 Mission .......................................................................................................................................... 2

1.3 Keys to Success ........................................................................................................................ 2

2.0 Company Summary ..................................................................................................................... 2

2.1 Company Ownership ............................................................................................................... 3

2.2 Start-up Summary ................................................................................................................... 3

Table: Start-up .............................................................................................................................. 3

Chart: Start-up ............................................................................................................................. 4

3.0 Products ........................................................................................................................................... 4

4.0 Market Analysis Summary ........................................................................................................ 4

4.1 Market Segmentation ............................................................................................................. 4

Table: Market Analysis ............................................................................................................... 4

Chart: Market Analysis (Pie) .................................................................................................... 5

4.2 Target Market Segment Strategy ...................................................................................... 5

4.3 Industry Analysis ...................................................................................................................... 6

4.3.1 Competition and Buying Patterns .............................................................................. 7

5.0 Web Plan Summary ..................................................................................................................... 7

5.1 Website Marketing Strategy ................................................................................................. 7

5.2 Development Requirements ................................................................................................. 7

6.0 Strategy and Implementation Summary ............................................................................ 7

6.1 SWOT Analysis .......................................................................................................................... 7

6.1.1 Strengths ............................................................................................................................. 8

6.1.2 Weaknesses ........................................................................................................................ 8

6.1.3 Opportunities ..................................................................................................................... 8

6.1.4 Threats ................................................................................................................................. 8

6.2 Competitive Edge ..................................................................................................................... 8

6.3 Marketing Strategy .................................................................................................................. 8

6.4 Sales Strategy ........................................................................................................................... 8

6.4.1 Sales Forecast.................................................................................................................... 9

Table: Sales Forecast ............................................................................................................. 9

Chart: Sales Monthly .............................................................................................................. 9

Table of Contents

Page 2

Chart: Sales by Year ............................................................................................................. 10

6.5 Milestones.................................................................................................................................. 10

Chart: Milestones ....................................................................................................................... 10

7.0 Management Summary ............................................................................................................ 11

7.1 Personnel Plan ......................................................................................................................... 11

Table: Personnel ......................................................................................................................... 11

8.0 Financial Plan ............................................................................................................................... 12

8.1 Start-up Funding .................................................................................................................... 12

Table: Start-up Funding .......................................................................................................... 12

8.2 Important Assumptions ....................................................................................................... 13

8.3 Break-even Analysis .............................................................................................................. 14

Table: Break-even Analysis .................................................................................................... 14

Chart: Break-even Analysis ................................................................................................... 14

8.4 Projected Profit and Loss ..................................................................................................... 15

Table: Profit and Loss ............................................................................................................... 15

Chart: Profit Monthly ................................................................................................................ 16

Chart: Profit Yearly .................................................................................................................... 16

Chart: Gross Margin Monthly ................................................................................................. 17

Chart: Gross Margin Yearly .................................................................................................... 17

8.5 Projected Cash Flow .............................................................................................................. 18

Table: Cash Flow ........................................................................................................................ 18

Chart: Cash .................................................................................................................................. 19

8.6 Projected Balance Sheet ...................................................................................................... 20

Table: Balance Sheet ................................................................................................................ 20

8.7 Business Ratios ....................................................................................................................... 20

Table: Ratios ................................................................................................................................ 20

Table: Sales Forecast ......................................................................................................................... 1

Table: Personnel ................................................................................................................................... 2

Table: Personnel ................................................................................................................................... 2

Table: Profit and Loss ......................................................................................................................... 3

Table: Profit and Loss ......................................................................................................................... 3

Table: Cash Flow .................................................................................................................................. 5

Table: Cash Flow .................................................................................................................................. 5

Table of Contents

Page 3

Table: Balance Sheet .......................................................................................................................... 7

Table: Balance Sheet .......................................................................................................................... 7

Euro Equipment Rental

Page 1

1.0 Executive Summary

Euro Equipment Rental, LLC. is a Breaux Bridge, Tennessee company that sells and rents heavy

equipment such as dozers, backhoes, excavators, and trenchers as well as small home use and construction equipment such as tillers, augers, and chain saws.

EER has obtained the authorization to be a distributor for Hancor Pipe, Stone Equipment, Pro-

Cut Diamond Products, Echo Lawn Care, Compact Excavators, and Skid Steer Loaders. The

company is the only authorized distributor for the South-Tennessee area for Slamrod Equipment and Komatsu Forklifts.

EER has a world-class management team with direct knowledge of the industry, extensive

research experience, and unique administrative skills. Its team includes Mr. David James and

Mrs. Sally James. Having lived in Denton Parish for six years, and worked throughout the state,

as well as parts of Texas, Mississippi, Alabama, and Georgia, President/CEO, Mr. James has

compiled an extensive list of customers/potential customers, vendors, and contacts for

equipment consignment.

The company plans to employ two people from the area, in positions within the shop. By

employing local individuals, ER would be contributing toward the development of the area.

Funds would remain in the area thereby boosting the economy and contributing to the

community as a whole. Loyal customers help to expand the company's business area by word-

of-mouth and a pocketful of ER's business cards.

A key component of the company's strategy is to continue to add to its ever-increasing product

line which currently includes homeowner equipment from Echo and Interstate Batteries,

commercial, equipment from Ramrod, Compact S/I Technology, and industrial equipment from Komatsu.

The company is seeking a loan/credit line in the amount of $300,000 for the purpose of

expanding the business. Expansion plans include the purchase of additional land and

construction of a larger shop/service area, increase rental inventory, purchase of delivery truck,

and the hiring of additional personnel including a mechanic and delivery driver. Projected revenues for Year 1 to Year 3 are $210,000, $420,000, and $840,000, respectively.


Page 2

Chart: Highlights

1.1 Objectives

1.2 Mission

EER's mission is to become THE exclusive full-service equipment rental, sales, and service

company in upper and lower Denton Parish with the ability to service the surrounding parishes

of Memphis, Knoxville, Grand Prairie, Plano, Garland, Irvine, and Riverside. Therefore the

company's strategy is to create a limited geographical niche for itself where there are no potential competitors.

EER's vision is to continue to expand its service to other areas. The company's coverage area is constantly increasing, as the areas are becoming aware of the company's presence.

1.3 Keys to Success

2.0 Company Summary

EER began its operations on Jan. 21, 2011 with little capital investment. The company

combined 10 years of experience in the sales and rental field to generate a large customer

base. After eight months of operations at the present facility, the company has increased its

customer list by 100% and its vendor list by 75%. ER takes pride in having brought several

new items to this area that were otherwise unknown, such as the spreader/grader and Ramrod products.


Page 3

2.1 Company Ownership

EER was founded in Memphis, Tennessee in Jan. 2011 to sell and rent heavy equipment, small

home use machines, and construction equipment. The company was formed by Mr. Daphne

James and Mrs. Sally Jameson. EER is a Tennessee Limited Liability, with principal offices

located in Chattanooga, TN.

2.2 Start-up Summary

Table: Start-up

Start-up

Requirements

Start-up Expenses Legal $5,000 Stationery etc. $600 Brochures $500 Consultants $2,500 Insurance $3,000 Rent $12,000 Expensed Equipment $10,000 Other $5,000 Total Start-up Expenses $38,600

Start-up Assets Cash Required $40,000 Start-up Inventory $800,000 Other Current Assets $100,000 Long-term Assets $0 Total Assets $940,000

Total Requirements $978,600


Page 4

Chart: Start-up

3.0 Products

EER sells and rents heavy equipment such as dozers, backhoes, excavators, and trenchers, as

well as small home use, and construction equipment such as tillers, augers, and chain saws. ER

takes pride in having brought several new items to this area that were otherwise unknown, such as the spreader/grader and Ramrod products.

EER has obtained the authorization to be a distributor for Hancor Pipe, Stone Equipment, Pro-

Cut Diamond Products, Echo Lawn Care, Compact Excavators, and Skid Steer Loaders. The

company is the only authorized distributor for the South-Tennessee area for Ramrod Equipment

and Komatsu Forklifts.

4.0 Market Analysis Summary

The company expects to participate in a variety of different industries, including commercial

and residential construction and farm machinery. The following sections will describe the industries in which EER hopes to compete.

4.1 Market Segmentation

The chart and table below describe the segmentation of the market.

Table: Market Analysis

Market Analysis

2011 2012 2013 2014 2015 Potential Customers Growth CAGR

Petro-chemical clients 1% 5 5 5 5 5 0.00% Contractors and subcontractors 10% 160 176 194 213 234 9.97%


Page 5

Municipalities 1% 8 8 8 8 8 0.00% Farmers 3% 127 131 135 139 143 3.01% Industrial clients 4% 86 89 93 97 101 4.10% Other 2% 40 41 42 43 44 2.41% Total 5.86% 426 450 477 505 535 5.86%

Chart: Market Analysis (Pie)

4.2 Target Market Segment Strategy

EER currently has customers in the industrial and commercial fields, petro-chemical plants,

contractors, sub-contractors, oil fields, and municipalities, with expansion potential in other

areas. The Market Analysis table below gives the total potential number of businesses that

could rent or buy our equipment in the local area.


Page 6

4.3 Industry Analysis

Industry Description (information provided by imarketinc.com)

Market size statistics - Industrial trucks and tractors

Establishments primarily engaged in manufacturing industrial trucks, tractors, trailers, stackers

(truck type), and related equipment used for handling materials on floors and paved surfaces in

and around industrial and commercial plants, depots, docks, airports, and terminals.

Estimated number of U.S. establishments 1,004

Total people employed in this industry 37,854

Total annual sales in this industry $13,004 million

Average employees per establishment 38

Average sales per establishment $16 million

Market size statistics - Farm machinery and equipment

Establishments primarily engaged in manufacturing farm machinery and equipment including

soil preparation machinery, for use in the preparation and maintenance of the soil, planting and

harvesting of the crop, preparing crops for market on the farm, or for use in performing other

farm operations and processes.





Average sales per establishment $13.3 million

Market size statistics - Construction machinery

Establishments primarily engaged in manufacturing heavy machinery and equipment, such as bulldozers, concrete mixers, cranes.





Average sales per establishment $34.3 million


Page 7

4.3.1 Competition and Buying Patterns

ER's closest competitors are located in Memphis Xarish. They include the following five companies:

WBC Equipment;

Southern Equipment;

Jones Service Rental ;

Rental Service Depot ; Orange-Mound Rental.

Being located in or near Memphis, they charge a drop off and/or pick up fee. EER can, in most

cases, wave this fee which will allow the customer more funds to purchase/rent additional

equipment.

5.0 Web Plan Summary

5.1 Website Marketing Strategy

5.2 Development Requirements

6.0 Strategy and Implementation Summary

The company plans to rapidly develop marketing alliances with industry leaders and pursue new

sales of homeowner, commercial, and industrial equipment. The market strategy is to capitalize

on ER's ever-increasing customer base and contacts by offering the latest products and personalized service.

The company's goal in the next year is to obtain financing which will allow for expanding the

shop/service area with up-to-date servicing equipment, hiring additional employees, and

obtaining a delivery truck as well as rental and sales inventory for all aspects of the company's customer base.

The company's goal in the next two to five years is to hire additional employees, concentrate on

customer service, and promote the company and the environment that has allowed for this

increase in service by way of discounts and promotional specials that will benefit the company

and the customer.

6.1 SWOT Analysis


Page 8

6.1.1 Strengths

6.1.2 Weaknesses

6.1.3 Opportunities

6.1.4 Threats

6.2 Competitive Edge

Obtain financing. The company is currently working to obtain financing that will enable it to

carry out its operations.

Expansion. EER is currently in need of property for expansion and display, rental and sale,

and to increase its product line. Storage is a constant problem without a building and

additional land to met ER's current needs.

Purchase additional equipment. Most previous equipment purchases have been for

resale/consignment, and the markup has not allowed for a great increase in supplies.

Hire more employees. The company plans to employ two people from the area, in positions

within the shop. They will be responsible for maintenance, repair, and delivery. This will

enable Mr. and Mrs. James to focus on the core of the business.

Increase advertising. The company is currently working to expand its advertising

campaigns. The company has designed a tri-fold brochure that will make people in the area

aware of its product offering and how it can meet their needs.

Establish more alliances. ER has contacts with several companies with floor plans, which will

enable the company to stock several of their items for resale. The company plans to purchase some of their products, leaving them to furnish the display equipment.

6.3 Marketing Strategy

The company has strategic alliances with the ARAQ. This alliance is valuable to EER because the

company gets to air television ads, and they are valuable to the ally firms because they are

promoting a local company and this helps in community development. EER plans to also form

strategic alliances with Internet sites, area publications, and other equipment dealers.

6.4 Sales Strategy


Page 9

6.4.1 Sales Forecast

The following table and charts show the Projected Sales Forecast for Equipment Rental.

Table: Sales Forecast

Sales Forecast

FY 2012 FY 2013 FY 2014

Sales Sales and Rentals $201,091 $420,000 $840,000 Other $0 $0 $0 Total Sales $201,091 $420,000 $840,000

Direct Cost of Sales FY 2012 FY 2013 FY 2014 Sales and Rentals $33,498 $60,000 $150,000 Other $3,000 $6,000 $12,000 Subtotal Direct Cost of Sales $36,498 $66,000 $162,000

Chart: Sales Monthly


Page 10

Chart: Sales by Year

6.5 Milestones

Chart: Milestones


Page 11

7.0 Management Summary

The company's management philosophy is based on responsibility, equal opportunity and

respect for all employees. EER maintains an environment and structure that encourages productivity and respect for customers and fellow employees.

7.1 Personnel Plan

EER's management is highly experienced and qualified. Its key management team includes Mr.

David James and Mrs. Sally James.

Jointly, they are responsible for processing quotes, arranging financing, as needed, scheduling invoices for pickup and delivery, and contract sales/rentals.

Descriptions of the management team and responsibilities are as follows.

Mr. David James. Mr. James has 10 years of marketing experience, 15 years rental/sales experience, and 15 years mechanical experience.

Mr. James makes all decisions concerning equipment purchases, as this is his area of expertise.

Mr. James is in charge of obtaining all equipment for sales and rentals, completing contracts,

working up quotes, setting up delivery of merchandise, arranging financing as needed, contacting customers, and verifying pickup and delivery.

Mrs. Sally L. James. Mrs. James has 10 years secretarial experience and 12 years accounts payable and receivable experience.

Mrs. James answers the phone, faxes, does all the computer work, files any monthly or

quarterly tax forms, compiles correspondence as needed, accounts receivable, accounts

payable, meets with a bookkeeper for end of year tax return, keeps all office needs running smoothly, filing, typing, copies, and is majority stock holder in the company (45%).

Future plans call for the hiring of a mechanic and shopman with hopes of adding a truck and

delivery driver shortly there after from the area, with additional office/shop personnel to be added as needed.

On occasion part-time personnel will be used and job training provided through the area

schools for those interested in this area of the job market.

Table: Personnel

Personnel Plan

FY 2012 FY 2013 FY 2014 Sales/Rental Associate $19,200 $19,200 $19,200 Sales/Rental Associate $19,200 $19,200 $19,200 Sales/Rental Associate $19,200 $19,200 $19,200 Maintenance/Technician $0 $5,010 $9,500 Maintenance Technician $0 $0 $6,000 Total People 5 6 7

Total Payroll $57,600 $62,610 $73,100


Page 12

8.0 Financial Plan

EER was capitalized with $5,000 when it was formed in May 1997. A strong knowledge of the

area and supply and demand needs led to the formation of the company. Most items purchased

to this date (truck, trailer, computer, office supplies, envelopes, and stationery) have been financed through personal funds, and a $4,000 line of credit with Hibernia Bank.

EER's first sales placed $5,145 into the business account, most of which was used to pay off

initial purchases with the balance being used for office and truck expenses such as telephone

bill, postage, and fuel. As of April 1, 2000, the truck has been paid in full along with several of

the smaller home use items. The company has generated sales in the amount of $52,490 with cost being $38,870 and a profit of $13,620 (97-98 Income Tax Return).

Funding Requirements and Uses

The company is seeking a loan/credit line in the amount of $300,000 for the purpose of

expanding the business. Expansion plans include the purchase of additional land and

construction of a larger shop/service area, increase rental inventory, and hiring of additional

personnel including a mechanic and delivery driver. The table below provides a breakdown of the use of funds.

Use of Funds

Purchase land 26' X 176' on the north side of existing building $7,000

Erect shop area 26' X 33' on land w/concrete slab, office area $10,000

Shop equipment $14,000

Rental inventory $60,000

Consolidate regions loan, Hibernia L. O. C., current equipment purchases Bosch electric

breaker, 3.0 KW generator, shop items $50,000

Advertising $7,000

Balance for working capital, employee training, office equipment modernization,

maintenance inventory (i.e.: oil, air, and hydraulic filters), unforeseen

building/maintenance expense

$152,000

Shop equipment to include: air compressor, air tools and accessories, blow torch, welding

machine and accessories, 1 1/2 ton chain hoist, oil/water separator, holding tank, assorted hand tools, washing vat, chain saw sharpener and repair accessories.

Rental inventory to include: Trash and diaphragm pumps 2 ea. 2" and 3", 3/4" submersible

pump and accessories, 3 hp. concrete vibrator, 2-48" concrete power trowels, Case 580L or JD

310 Backhoe, small trailer and larger trailer, 1-ton Ford F350 or F450 Diesel delivery truck, air

compressor, 90 lb. air hammer and accessories, rotovator for tractor, 1 push mower, 1 lawn tractor.

8.1 Start-up Funding

Table: Start-up Funding

Start-up Funding Start-up Expenses to Fund $38,600


Page 13

Start-up Assets to Fund $940,000 Total Funding Required $978,600

Assets Non-cash Assets from Start-up $900,000 Cash Requirements from Start-up $40,000 Additional Cash Raised $521,400 Cash Balance on Starting Date $561,400 Total Assets $1,461,400

Liabilities and Capital

Liabilities Current Borrowing $1,500,000 Long-term Liabilities $0 Accounts Payable (Outstanding Bills) $0 Other Current Liabilities (interest-free) $0 Total Liabilities $1,500,000

Capital

Planned Investment Investor 1 $0 Investor 2 $0 Other $0 Additional Investment Requirement $0 Total Planned Investment $0

Loss at Start-up (Start-up Expenses) ($38,600) Total Capital ($38,600)

Total Capital and Liabilities $1,461,400

Total Funding $1,500,000

8.2 Important Assumptions


Page 14

8.3 Break-even Analysis

The table and chart below contain the Break-even Analysis for Equipment Rental.

Table: Break-even Analysis

Break-even Analysis

Monthly Revenue Break-even $14,275

Assumptions: Average Percent Variable Cost 18% Estimated Monthly Fixed Cost $11,684

Chart: Break-even Analysis


Page 15

8.4 Projected Profit and Loss

The Projected Profit and Loss can be seen in the following table and charts.

Table: Profit and Loss

Pro Forma Profit and Loss

FY 2012 FY 2013 FY 2014 Sales $201,091 $420,000 $840,000 Direct Cost of Sales $36,498 $66,000 $162,000 Other Production Expenses $2,560 $42,000 $126,000 Total Cost of Sales $39,059 $108,000 $288,000

Gross Margin $162,032 $312,000 $552,000 Gross Margin % 80.58% 74.29% 65.71%

Expenses Payroll $57,600 $62,610 $73,100 Sales and Marketing and Other Expenses $14,000 $31,000 $82,598 Depreciation $0 $0 $0 Supplies and equipment $9,924 $19,851 $39,702 Utilities $1,602 $2,403 $3,604 Telephone $7,812 $7,810 $7,810 Insurance $14,448 $21,688 $32,533 Repairs and Maintenance $10,932 $20,397 $30,596 Services $2,832 $2,833 $2,833 Rent $12,420 $12,420 $12,420 Payroll Taxes $8,640 $9,392 $10,965 Other $0 $0 $0

Total Operating Expenses $140,210 $190,404 $296,161

Profit Before Interest and Taxes $21,822 $121,597 $255,839 EBITDA $21,822 $121,597 $255,839 Interest Expense $220,289 $236,580 $231,880 Taxes Incurred $0 $0 $7,188

Net Profit ($198,466) ($114,983) $16,771 Net Profit/Sales -98.69% -27.38% 2.00%


Page 16

Chart: Profit Monthly

Chart: Profit Yearly


Page 17

Chart: Gross Margin Monthly

Chart: Gross Margin Yearly


Page 18

8.5 Projected Cash Flow

Table: Cash Flow

Pro Forma Cash Flow

FY 2012 FY 2013 FY 2014

Cash Received

Cash from Operations Cash Sales $40,218 $84,000 $168,000 Cash from Receivables $141,273 $314,663 $631,063 Subtotal Cash from Operations $181,491 $398,663 $799,063

Additional Cash Received Sales Tax, VAT, HST/GST Received $0 $0 $0 New Current Borrowing $803,646 $20,000 $20,000 New Other Liabilities (interest-free) $0 $0 $0 New Long-term Liabilities $151,000 $0 $0 Sales of Other Current Assets $0 $0 $0 Sales of Long-term Assets $0 $0 $0 New Investment Received $0 $0 $0 Subtotal Cash Received $1,136,137 $418,663 $819,063

Expenditures FY 2012 FY 2013 FY 2014

Expenditures from Operations Cash Spending $57,600 $62,610 $73,100 Bill Payments $279,146 $461,537 $732,557 Subtotal Spent on Operations $336,746 $524,147 $805,657

Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 Principal Repayment of Current Borrowing $45,248 $30,000 $60,000 Other Liabilities Principal Repayment $0 $0 $0 Long-term Liabilities Principal Repayment $29,100 $19,000 $25,000 Purchase Other Current Assets $58,000 $2,000 $22,000 Purchase Long-term Assets $91,000 $4,000 $9,000 Dividends $65,000 $10,000 $20,000 Subtotal Cash Spent $625,094 $589,147 $941,657

Net Cash Flow $511,043 ($170,483) ($122,594) Cash Balance $1,072,443 $901,959 $779,366


Page 19

Chart: Cash


Page 20

8.6 Projected Balance Sheet

EER's projected balance sheets for 2011-2021.

Table: Balance Sheet

Pro Forma Balance Sheet

FY 2012 FY 2013 FY 2014

Assets

Current Assets Cash $1,072,443 $901,959 $779,366 Accounts Receivable $19,600 $40,937 $81,873 Inventory $763,502 $765,328 $770,893 Other Current Assets $158,000 $160,000 $182,000 Total Current Assets $2,013,544 $1,868,224 $1,814,132

Long-term Assets Long-term Assets $91,000 $95,000 $104,000 Accumulated Depreciation $0 $0 $0 Total Long-term Assets $91,000 $95,000 $104,000 Total Assets $2,104,544 $1,963,224 $1,918,132

Liabilities and Capital FY 2012 FY 2013 FY 2014

Current Liabilities Accounts Payable $26,313 $38,975 $62,112 Current Borrowing $2,258,398 $2,248,398 $2,208,398 Other Current Liabilities $0 $0 $0 Subtotal Current Liabilities $2,284,711 $2,287,373 $2,270,510

Long-term Liabilities $121,900 $102,900 $77,900 Total Liabilities $2,406,611 $2,390,273 $2,348,410

Paid-in Capital $0 $0 $0 Retained Earnings ($103,600) ($312,066) ($447,050) Earnings ($198,466) ($114,983) $16,771 Total Capital ($302,066) ($427,050) ($430,278) Total Liabilities and Capital $2,104,544 $1,963,224 $1,918,132

Net Worth ($302,066) ($427,050) ($430,278)

8.7 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the

Standard Industrial Classification (SIC) code 7359, [Euro Equipment Rental], are shown for

comparison.

Table: Ratios

Ratio Analysis


Page 21

FY 2012 FY 2013 FY 2014 Industry Profile Sales Growth n.a. 108.86% 100.00% 7.07%

Percent of Total Assets Accounts Receivable 0.93% 2.09% 4.27% 27.61% Inventory 36.28% 38.98% 40.19% 3.96% Other Current Assets 7.51% 8.15% 9.49% 44.65% Total Current Assets 95.68% 95.16% 94.58% 76.22% Long-term Assets 4.32% 4.84% 5.42% 23.78% Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 108.56% 116.51% 118.37% 33.47% Long-term Liabilities 5.79% 5.24% 4.06% 16.23% Total Liabilities 114.35% 121.75% 122.43% 49.70% Net Worth -14.35% -21.75% -22.43% 50.30%

Percent of Sales Sales 100.00% 100.00% 100.00% 100.00% Gross Margin 80.58% 74.29% 65.71% 100.00% Selling, General & Administrative Expenses 81.36% 57.86% 45.92% 84.88% Advertising Expenses 3.33% 5.71% 6.90% 1.01% Profit Before Interest and Taxes 10.85% 28.95% 30.46% 1.94%

Main Ratios Current 0.88 0.82 0.80 1.73 Quick 0.55 0.48 0.46 1.33 Total Debt to Total Assets 114.35% 121.75% 122.43% 57.72% Pre-tax Return on Net Worth 65.70% 26.93% -5.57% 3.77% Pre-tax Return on Assets -9.43% -5.86% 1.25% 8.92%

Additional Ratios FY 2012 FY 2013 FY 2014 Net Profit Margin -98.69% -27.38% 2.00% n.a Return on Equity 0.00% 0.00% 0.00% n.a

Activity Ratios Accounts Receivable Turnover 8.21 8.21 8.21 n.a Collection Days 58 33 33 n.a Inventory Turnover 0.05 0.09 0.21 n.a Accounts Payable Turnover 11.61 12.17 12.17 n.a Payment Days 27 25 24 n.a Total Asset Turnover 0.10 0.21 0.44 n.a

Debt Ratios Debt to Net Worth 0.00 0.00 0.00 n.a Current Liab. to Liab. 0.95 0.96 0.97 n.a

Liquidity Ratios Net Working Capital ($271,166) ($419,150) ($456,378) n.a Interest Coverage 0.10 0.51 1.10 n.a

Additional Ratios Assets to Sales 10.47 4.67 2.28 n.a Current Debt/Total Assets 109% 117% 118% n.a Acid Test 0.54 0.46 0.42 n.a Sales/Net Worth 0.00 0.00 0.00 n.a Dividend Payout 0.00 0.00 1.19 n.a

Appendix

Page 1

Table: Sales Forecast

Sales Forecast

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

Sales Sales and Rentals 0% $10,000 $10,000 $11,200 $14,400 $17,500 $20,400 $24,426 $25,050 $24,614 $18,500 $15,000 $10,000 Other 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Sales $10,000 $10,000 $11,200 $14,400 $17,500 $20,400 $24,426 $25,050 $24,614 $18,500 $15,000 $10,000

Direct Cost of Sales Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb

Sales and Rentals $1,500 $1,500 $2,063 $2,160 $3,108 $3,485 $4,200 $4,173 $3,723 $3,259 $2,250 $2,078

Other $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250

Subtotal Direct Cost of Sales $1,750 $1,750 $2,313 $2,410 $3,358 $3,735 $4,450 $4,423 $3,973 $3,509 $2,500 $2,328

Appendix

Page 2

Table: Personnel

Personnel Plan

Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Sales/Rental Associate 0% $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 Sales/Rental Associate 0% $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 Sales/Rental Associate 0% $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 Maintenance/Technician 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Maintenance Technician 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total People 5 5 5 5 5 5 5 5 5 5 5 5

Total Payroll $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800

Appendix

Page 3

Table: Profit and Loss

Pro Forma Profit and Loss


Sales $10,000 $10,000 $11,200 $14,400 $17,500 $20,400 $24,426 $25,050 $24,614 $18,500 $15,000 $10,000

Direct Cost of Sales $1,750 $1,750 $2,313 $2,410 $3,358 $3,735 $4,450 $4,423 $3,973 $3,509 $2,500 $2,328

Other Production Expenses $0 $0 $0 $0 $0 $0 $0 $0 $560 $750 $500 $750

Total Cost of Sales $1,750 $1,750 $2,313 $2,410 $3,358 $3,735 $4,450 $4,423 $4,533 $4,259 $3,000 $3,078

Gross Margin $8,250 $8,250 $8,887 $11,990 $14,142 $16,665 $19,976 $20,627 $20,081 $14,241 $12,000 $6,922

Gross Margin % 82.50% 82.50% 79.35% 83.26% 80.81% 81.69% 81.78% 82.34% 81.58% 76.98% 80.00% 69.22%

Expenses

Payroll $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 Sales and Marketing and Other Expenses $917 $917 $917 $2,417 $2,417 $917 $917 $917 $917 $917 $917 $917

Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Supplies and equipment $827 $827 $827 $827 $827 $827 $827 $827 $827 $827 $827 $827

Utilities $134 $134 $134 $134 $134 $134 $134 $134 $134 $134 $134 $134

Telephone $651 $651 $651 $651 $651 $651 $651 $651 $651 $651 $651 $651

Insurance $1,204 $1,204 $1,204 $1,204 $1,204 $1,204 $1,204 $1,204 $1,204 $1,204 $1,204 $1,204

Repairs and Maintenance $911 $911 $911 $911 $911 $911 $911 $911 $911 $911 $911 $911

Services $236 $236 $236 $236 $236 $236 $236 $236 $236 $236 $236 $236

Rent $1,035 $1,035 $1,035 $1,035 $1,035 $1,035 $1,035 $1,035 $1,035 $1,035 $1,035 $1,035 Payroll Taxes 15% $720 $720 $720 $720 $720 $720 $720 $720 $720 $720 $720 $720 Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Operating Expenses $11,434 $11,434 $11,434 $12,934 $12,934 $11,434 $11,434 $11,434 $11,434 $11,434 $11,434 $11,434

Profit Before Interest and Taxes ($3,184) ($3,184) ($2,547) ($944) $1,208 $5,231 $8,542 $9,193 $8,647 $2,807 $566 ($4,512)

EBITDA ($3,184) ($3,184) ($2,547) ($944) $1,208 $5,231 $8,542 $9,193 $8,647 $2,807 $566 ($4,512)

Interest Expense $15,000 $15,971 $16,808 $17,485 $18,121 $18,733 $19,322 $19,665 $19,746 $19,787 $19,814 $19,836

Taxes Incurred $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Net Profit ($18,184) ($19,155) ($19,355) ($18,429) ($16,913) ($13,502) ($10,780) ($10,472) ($11,100) ($16,980) ($19,248) ($24,348)

Appendix

Page 4

Net Profit/Sales -181.84% -191.55% -172.81% -127.98% -96.65% -66.19% -44.13% -41.80% -45.09% -91.78% -128.32% -243.48%

Appendix

Page 5

Table: Cash Flow

Pro Forma Cash Flow


Cash Received

Cash from Operations

Cash Sales $2,000 $2,000 $2,240 $2,880 $3,500 $4,080 $4,885 $5,010 $4,923 $3,700 $3,000 $2,000

Cash from Receivables $0 $267 $8,000 $8,032 $9,045 $11,603 $14,077 $16,427 $19,558 $20,029 $19,528 $14,707

Subtotal Cash from Operations $2,000 $2,267 $10,240 $10,912 $12,545 $15,683 $18,963 $21,437 $24,481 $23,729 $22,528 $16,707

Additional Cash Received Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 New Current Borrowing $149,000 $116,543 $100,372 $83,643 $78,625 $75,836 $73,048 $43,494 $24,535 $22,305 $20,632 $15,613

New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Long-term Liabilities $151,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Cash Received $302,000 $118,810 $110,612 $94,555 $91,170 $91,519 $92,011 $64,931 $49,016 $46,034 $43,160 $32,320

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

Expenditures from Operations

Cash Spending $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800

Bill Payments $721 $21,667 $22,633 $23,514 $25,640 $26,225 $25,387 $25,968 $26,321 $26,949 $27,164 $26,957

Subtotal Spent on Operations $5,521 $26,467 $27,433 $28,314 $30,440 $31,025 $30,187 $30,768 $31,121 $31,749 $31,964 $31,757

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $12,416 $12,416 $12,416 $8,000

Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Long-term Liabilities Principal Repayment $0 $0 $0 $2,350 $2,350 $2,350 $2,350 $2,350 $2,350 $5,000 $5,000 $5,000

Purchase Other Current Assets $10,000 $12,000 $25,000 $4,000 $7,000 $0 $0 $0 $0 $0 $0 $0

Purchase Long-term Assets $0 $30,000 $27,000 $34,000 $0 $0 $0 $0 $0 $0 $0 $0

Appendix

Page 6

Dividends $5,417 $5,417 $5,417 $5,417 $5,417 $5,417 $5,417 $5,417 $5,417 $5,417 $5,417 $5,417

Subtotal Cash Spent $20,938 $73,883 $84,850 $74,081 $45,207 $38,792 $37,954 $38,534 $51,303 $54,581 $54,797 $50,174

Net Cash Flow $281,062 $44,926 $25,762 $20,474 $45,963 $52,727 $54,057 $26,397 ($2,288) ($8,548) ($11,636) ($17,854)

Cash Balance $842,462 $887,389 $913,151 $933,625 $979,588 $1,032,315 $1,086,372 $1,112,769 $1,110,481 $1,101,933 $1,090,297 $1,072,443

Appendix

Page 7

Table: Balance Sheet

Pro Forma Balance Sheet


Assets Starting Balances

Current Assets Cash $561,400 $842,462 $887,389 $913,151 $933,625 $979,588 $1,032,315 $1,086,372 $1,112,769 $1,110,481 $1,101,933 $1,090,297 $1,072,443 Accounts Receivable $0 $8,000 $15,733 $16,693 $20,181 $25,136 $29,853 $35,317 $38,930 $39,064 $33,835 $26,307 $19,600 Inventory $800,000 $798,250 $796,500 $794,187 $791,777 $788,419 $784,684 $780,234 $775,811 $771,838 $768,330 $765,830 $763,502 Other Current Assets $100,000 $110,000 $122,000 $147,000 $151,000 $158,000 $158,000 $158,000 $158,000 $158,000 $158,000 $158,000 $158,000 Total Current Assets $1,461,400 $1,758,712 $1,821,622 $1,871,031 $1,896,583 $1,951,143 $2,004,852 $2,059,923 $2,085,510 $2,079,383 $2,062,098 $2,040,433 $2,013,544

Long-term Assets Long-term Assets $0 $0 $30,000 $57,000 $91,000 $91,000 $91,000 $91,000 $91,000 $91,000 $91,000 $91,000 $91,000 Accumulated Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Long-term Assets $0 $0 $30,000 $57,000 $91,000 $91,000 $91,000 $91,000 $91,000 $91,000 $91,000 $91,000 $91,000 Total Assets $1,461,400 $1,758,712 $1,851,622 $1,928,031 $1,987,583 $2,042,143 $2,095,852 $2,150,923 $2,176,510 $2,170,383 $2,153,098 $2,131,433 $2,104,544

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

Current Liabilities Accounts Payable $0 $20,913 $21,852 $22,660 $24,765 $25,380 $24,522 $25,091 $25,423 $26,043 $26,266 $26,050 $26,313 Current Borrowing $1,500,000 $1,649,000 $1,765,543 $1,865,915 $1,949,558 $2,028,183 $2,104,019 $2,177,067 $2,220,561 $2,232,680 $2,242,569 $2,250,785 $2,258,398 Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Subtotal Current Liabilities $1,500,000 $1,669,913 $1,787,395 $1,888,575 $1,974,323 $2,053,563 $2,128,541 $2,202,158 $2,245,983 $2,258,723 $2,268,835 $2,276,835 $2,284,711

Long-term Liabilities $0 $151,000 $151,000 $151,000 $148,650 $146,300 $143,950 $141,600 $139,250 $136,900 $131,900 $126,900 $121,900 Total Liabilities $1,500,000 $1,820,913 $1,938,395 $2,039,575 $2,122,973 $2,199,863 $2,272,491 $2,343,758 $2,385,233 $2,395,623 $2,400,735 $2,403,735 $2,406,611

Paid-in Capital $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Retained Earnings ($38,600) ($44,017) ($49,433) ($54,850) ($60,267) ($65,683) ($71,100) ($76,517) ($81,933) ($87,350) ($92,767) ($98,183) ($103,600) Earnings $0 ($18,184) ($37,340) ($56,694) ($75,123) ($92,036) ($105,538) ($116,318) ($126,790) ($137,890) ($154,870) ($174,118) ($198,466) Total Capital ($38,600) ($62,201) ($86,773) ($111,544) ($135,390) ($157,720) ($176,638) ($192,835) ($208,724) ($225,240) ($247,637) ($272,302) ($302,066) Total Liabilities and Capital $1,461,400 $1,758,712 $1,851,622 $1,928,031 $1,987,583 $2,042,143 $2,095,852 $2,150,923 $2,176,510 $2,170,383 $2,153,098 $2,131,433 $2,104,544

Net Worth ($38,600) ($62,201) ($86,773) ($111,544) ($135,390) ($157,720) ($176,638) ($192,835) ($208,724) ($225,240) ($247,637) ($272,302) ($302,066)

Documents

Euro Equipment Rental