Business Plan - EB5Projects.com · The Company will utilize guerilla marketing techniques, emailing...

Business Plan

William J Terry [email protected]

302-743-1415

101 Smyrna Ave, Wilmington, De 19809

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Table of Contents

1.0 Executive Summary ........................................................................................... 3

1.1 Objectives ............................................................................................................................. 3

1.2 Mission Statement ............................................................................................................... 6

1.3 Keys to Success .................................................................................................................... 6

2.0 Company Summary ........................................................................................... 6

2.1 Company Ownership .......................................................................................................... 6

2.2 Pre-Operating Source and Use of Funds .......................................................................... 7

3.0 Products and Services ........................................................................................ 8

4.0 Market Summary .............................................................................................11

4.1 Demographics Summary .................................................................................................. 14

4.2 Industry Analysis .............................................................................................................. 15

5.0 Marketing Strategy/Implementation .............................................................17

5.1 SWOT Analysis ................................................................................................................. 19

6.0 Management Summary ...................................................................................20

7.0 Financial Summary ..........................................................................................21

7.1 Revenue Forecast............................................................................................................... 21

7.2 Personnel Forecast ............................................................................................................ 23

7.3 Income Statement .............................................................................................................. 24

7.4 Statement of Cash Flow .................................................................................................... 26

7.5 Balance Sheet ..................................................................................................................... 28

7.6 Break-Even Analysis ......................................................................................................... 29

7.7 Best & Worst Case ............................................................................................................ 30

Appendix A – Year 1 Financials ...........................................................................31

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1.0 Executive Summary Terry J Incorporated (“the Company”) is a new entertainment industry venture. Based in

Newark, Delaware, Terry J Inc. will offer a variety of investment and employment vehicles,

including The Vortex nightclub, Vortex Promotional City Tour Bus, and a performance runway

venue that will tie into the new online Vortex Magazine that showcases local talent. Terry J Inc.

will also provide new and existing artists with the gateway into the worldwide, billion dollar

music industry by offering professional promotional services to assist talented individuals and

groups to realize their dreams to be a part of the highly lucrative music and entertainment

business.

Terry J Inc. will contribute to all aspects of the entertainment industry, from creating a local

nightclub venue to presenting fashion shows and providing entertainer management services.

Initially, however, the Company will focus on launching The Vortex Nightclub, affectionately

referred to as The V. The Vortex Nightclub will eliminate the need for local residents and

visitors to seek high quality entertainment in other larger metropolitan areas. The club will offer

big name entertainment and seek to become a major draw to downtown Newark by offering

entertainment options not found in any other area establishments.

In today’s entertainment business, it is necessary to have the proper contacts and industry

knowledge to succeed. Terry J Inc. was founded by an entertainment industry professional with

over 2 decades of experience and expertise. The Company will especially focus on revitalizing

and putting back into the Newark community via its high profile nightclub, while also cultivating

and developing new, fresh local talent in all genres. Terry J Inc. will leverage this expertise,

along with industry connections to offer a range of services, from mentoring their own aspiring

entertainers to providing promotional services to venues and other artists in a variety of genres.

Emphasis will be placed on providing quality entertainment to a diverse audience in order to

maximize its geographical and demographical reach. The Company will work with artists, using

its extensive lists of industry resources and contacts to promote live music concerts and special

events, providing a full array of marketing and advertising promotional services, and facilitating

music CD and downloading sales - handling all the details and negotiating the best contracts

possible.

To achieve its goals, the Company will purchase the Park N Shop Shopping Center in Newark,

Delaware, refurbish it, and utilize three of the retail spaces to house the Company, while the

other spaces will produce rental revenue on a monthly basis.

The market will consist of a several-mile area surrounding downtown Newark, as well as

outlying areas of New Castle County and beyond. Within just a five-mile radius from the

Company’s proposed location downtown, there are more than 158,000 people, including over

58,000 households, with an average household income of $78,000. The state government,

numerous major employers, and University of Delaware, with 21,000 students, are also nearby,

creating a year-round flow of consumers around this area. From here, The V will tap into

multiple growing, related markets. Bars and clubs are a $20 billion a year industry, having

grown over the past few years as consumer spending away from home has increased

substantially. The market for event and concert promotion is $25 billion in the United States,

and event and party planners generate over $6 billion in revenue. According to market research

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firm IBISWorld, “Despite the economic downturn and low discretionary income, Americans

continued to attend and spend at live events over the past five years. As the economy picks up in

the next few years, industry growth will continue… Over the five years to 2018, industry

revenue is projected to continue increasing.” The Company will be a unique hybrid

bar/club/entertainment concept locally, giving it an edge over established businesses and helping

make it a profitable and growing venture that employs many local residents.

Terry J Inc.’s management realizes it will need a comprehensive marketing plan in order to be

successful. Initially, the Company will primarily market its services in the greater Newark area,

expanding regionally as it strategically grows and increases its staff and services. The Company

will sponsor high-visibility live bus tours, as well as runway, scouting and promotional events

that will draw favorable publicity, and develop name recognition within the region. The

Company will push public awareness through traditional marketing channels, as well at via

robust Internet advertising initiatives. The Company will utilize guerilla marketing techniques,

emailing lists, online social networks and event listing sites to push publicity, along with SMS

text message advertising to the Company’s own lists, and sponsored snippets on third-party lists.

The Company will build its brand by marketing events under a consistent name to develop a

loyal clientele that will follow Terry J Inc. from one city to another.

Terry J Inc. is led by its founder and namesake, William J. Terry, a veteran of the entertainment

industry. Mr. Terry brings with him with a unique blend of skill sets and several years of

experience in different facets of the industry – ensuring that this diverse venture will be a

success. He is well-experienced in marketing different music genres, and establishing solid

client relations and public relations. Through over 20 years in the entertainment industry, he has

developed an in-depth knowledge and understanding of the industry and its market dynamics.

Mr. Terry is dedicated to ensuring the long term success and sustainable profitability of the

Company by providing astute financial oversight and employing solid business practices.

To achieve its objectives, Terry J Inc. is seeking investments to achieve a total of $22 million in

funds. These funds will allow the Company to secure a retail lease, complete build-out of the

space, outfit the nightclub, perform marketing, develop the other aspects of the business concept,

and have working capital during its early stages. The following is a breakdown of the

anticipated funding usage:

$5 Million – Demolition of existing structure and build a loft-style, multi-level Night

Club with Corporate Office and 4 Music Production Studios on the top/3rd floor

$4 Million – Lead Certification and new construction

o $1.5 Million - fully operational Solar Panel Grid for entire property

o $1.0 Million - 2 - 60 ft. water towers that will supply and store drinkable Water

from rain, also the water system with be attached to a filtering system that will

also be attached to the city water line as well.

o $1.5 Million - Build a fully self-sustainable Greenhouse, which will produce its

own produce for the Nightclub and to sell to the public a few 3 days out of the

week.

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$6 million - Purchase Property with the existing businesses from the current owner and

the Parking which will basically be the entire property. To rebuild, and reroute the water

lines plus sewage routing underground according to the city planning committee.

$4 million - Completely reface the entire plaza, new lighting set-up on the solar grid,

running new water and sewage lines to the 2 newly built buildings, and the cost to dig up

the concrete and lay it back down with new parking lines

$2.5 Million - Demo and relocate 2 of the storefronts in the Plaza for 2 new businesses

that are potential coming in, including a tanning salon and possibly a clothing store.

Exit Strategy

After the first year, the Company will access the finances of the business, keeping in mind that it

could take up to 3-4 years for the project to fully take-off. Depending on the viability, the

Company will either retain the Nightclub and Greenhouse, or bring in other businesses to fill

their spaces and maintain the other businesses in the plaza - completely operating as shopping

plaza and continuing to do business the way it has in the past but with more appealing companies

to attract customers to the plaza. Plan C option is to sell the plaza to investors to regain any

possible loss.

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1.1 Objectives

Develop a client base of loyal customers, talented individuals and premium venues

Create ancillary revenue streams

Build a marquee company that is expandable

1.2 Mission Statement

Terry J Inc. will promote and help reestablish economic growth in the City of Newark in

Delaware. Initially, the Company will seek to create 110 direct employment opportunities within

the Newark Area from investment with goals focused on expansion and increasing that number

within the upcoming years of operation. The Company will create 60-90 indirect positions, due

to construction, as well.

1.3 Keys to Success

Create a full-service entertainment and promotion company

Grow the customer and client lists daily by using a variety of marketing methods

Maintain a lean overhead while continually growing revenues

2.0 Company Summary Terry J Incorporated is a start-up S-Corporation that was registered in the State of Delaware on

June 6, 2014 and will be based in downtown Newark, Delaware. The intent is for the Company

to operate and manage of group of related businesses under a single corporate umbrella.

2.1 Company Ownership

Terry J Incorporated is wholly owned by William J. Terry (100%).

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2.2 Pre-Operating Source and Use of Funds

The Pre-Operating Source & Use of Funds section details the Expenses, Assets, Inventory,

Investment and Debt needed to facilitate the Company’s business objectives. The Pre-Operating

expenses and funding occur before the Company receives revenue.

Expenses

Design Fees $650,000

Fees and Permits $7,000

Marketing $34,900

Professional Services $5,000

Total Expenses $696,900

Assets

Inventory $150,000

Property/Building $12,850,000

Lead Certified Equipment $4,000,000

Reface Plaza $4,000,000

Total Assets $21,000,000

Total Use of Funds $21,696,900

Pre-Operating Use of Funds

Investment

Owner $0

Investor $22,000,000

Total Investment $22,000,000

Debt

Current Debt $0

Long-Term Debt $0

Total Debt $0

Total Source of Funds $22,000,000

Pre-Operating Source of Funds

Total Source of Funds $22,000,000

Total Use of Funds $21,696,900

Month 1 Starting Cash $303,100

Total Source & Use of Funds

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

Investment Debt Expenses Assets Cash

Total Source & Use of Funds

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3.0 Products and Services Terry J Inc. will consist of a group of entertainment-based businesses that share the same vision

and are intertwined via marketing strategies to attract customers to all venues. Initially, the

Company will focus on opening The Vortex Nightclub in one of the many unoccupied spaces in

downtown Newark.

The following are the different businesses envisioned under the Terry J Inc. umbrella.

They are:

The Vortex Nightclub

The Vortex Nightclub or The V is club innovation personified. As more than a singular entity,

the V will function as an entertainment powerhouse, featuring a mobile marketing team that both

advertises for the V Club in Newark as well as hosts outdoor events in a multitude of locations

en route. This approach will embody an avant garde marketing strategy fused directly with a

source of local entertainment to create a completely unexplored business concept.

Newark is a heavily populated college town that has many bars, but lacks any type of legitimate

club. For those individuals seeking an authentic club experience, they are forced to travel to

Philadelphia or Baltimore, which is both inconvenient and expensive. The V will eliminate the

need to travel and spend money outside of the community. As such, The V will position itself as

the go-to destination, not just for its impeccable life entertainment offerings, but for its unrivaled

design.

Ever-aware of its neighbors, The V's environmentally conscious design will greatly add to its

unique appeal. The goal in design is to source “green” and eco-friendly materials and become

the first dance club in the area to be LEED certified. The goal is to ultimately have the club

source its own produce products from company owed greenhouses. The Company wants clients

to have the best possible entertainment experience that is healthy and creates an amazing space

for the dance hall connoisseur to let loose and have fun. To this end, the club will feature several

bars, multi-level dance floors, acoustically cognizant fixtures, and private areas for parties and

special events. There will of course be VIP areas, small scale kitchen service, and lighting and

decorating schemes that epitomize class and cool. Innovation is key for The V. The club will

allow for a massive influx of foot traffic by being designed in such a way that participants

movement through the facility “flows” and promotes movement. This will maximize the amount

of people inside the club without making patrons feel crushed and congested by the crowds.

Hours of operation will be:

Monday thru Thursday 5:00 p.m. to Midnight

Saturday - 8:00 p.m. to 2:00 a.m.

Sunday - Noon to 12 a.m.

Terry J Inc Talent, Entertainment, Production, and Management Agency

Terry J. Inc. Talent Agency and Management Team will manage newly discovered talent in a

variety of genres from vocal performance, hip hop/rap, modeling, acting, and music production.

With more than 20 years of experience in the industry, the Company’s founder will scout the

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best of the best and offer opportunities to deserving individuals who may otherwise have missed

the opportunity due to their demographic locations. The agency’s website will showcase Bio’s

of all artists with short segments of their best performances for organizations to view and request

that individual to audition or to perform. The website will also be the hub of information for all

things-Terry J Inc.-related, including promotional venues, upcoming events, hot news on

entertainment, and where to be when the Company is in a city.

The Fashion hub of the agency will showcase up and coming designers as well many of the

famous names known to-date with a ecommerce portal to purchase and link your right to the

designers’ merchant websites.

The Vortex Promotional City Tour and Runway Show

The Vortex Promotional City Tour and Runway Show will be a new and innovative way to

promote the opening up a nightclub and showcase fashion along with discovered talent. The

Vortex Promotional Tour bus will travel to 24 cites holding entertainment venues consisting of

runway shows, followed by after parties premiering Terry J Inc. artists. Each venue will sell and

promote items exclusively from the Company’s venue merchant stands, giving the communities

the opportunity to take home a piece of the Terry J Inc. agency with them.

Park N Shop Shopping Center

Terry J Inc. will purchase the Park N Shop Shopping Center in Newark, Delaware, refurbish it,

and utilize three of the retail spaces to house the Company. Terry J Inc. will reface the store

fronts, and replace the signage, windows, entrances and pavement in front the building.

Additionally, the 45-50 employees of those businesses that are absorbed by Terry J Inc. will be

placed on the Company payroll, while the other spaces will provide rental/lease revenue on a

monthly basis. Rents will range from $2,500-$3,400 per month. Contracts already in place will

be honored. In addition, any franchise contracts will be bought out, if there are any, which will

be included in the purchase price. The Company will negotiate potential temporary relocation of

businesses and associated cost.

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4.0 Market Summary The National Restaurant Association (NRA) projects that the industry will generate more than

$683 billion in 2014, up from $660 billion in 2013 and $632 billion in 2012, at 990,000 “eating

and drinking” locations nationwide. 1

The “bars and taverns” segment, as shown, will account for an estimated $20 billion in 2014, up

from nearly $19 billion in revenue in 2013.

The market for of Concert and Event Promotion is nearly $25 billion in the United States and has

grown 1.4% annually during the past five years, according to IBISWorld. It is a large and

diverse market, composed of approximately 49,800 companies across the country. The market is

highly fragmented, with most promoters having a limited geographic reach and few employees.

In 2013, the industry’s four largest companies were estimated to account for less than 25.0% of

revenue. “Despite the economic downturn and low discretionary income, Americans continued

to attend and spend at live events over the past five years,” states IBISWorld. “As the economy

picks up in the next few years, industry growth will continue… Over the five years to 2018,

industry revenue is projected to continue increasing.”2

In addition, the market for party and event planners in the United States is valued at around $6

billion annually, according to market research firm IBISWorld. There are more than 328,000

businesses nationwide. The vast majority are small companies, often with just the owner as the

lone employee – IBISWorld reports that the industry employs just over 343,000 people. While

1 National Restaurant Association. “2014 Restaurant Industry Fact Sheet.” Obtained at:

http://www.restaurant.org/News-Research/Research/Facts-at-a-Glance 2 IBISWorld. “Concert & Event Promotion in the US.” April 2014.

http://www.ibisworld.com/industry/default.aspx?indid=1960

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the market was affected by the economic downturn, when companies and individuals scaled back

on discretionary spending, the market has fully recovered and experiencing growth. Revenue

grew 2.5% in 2012, for example, to $6.3 billion, with profit accounting for 15.7% of revenue. In

addition, IBISWorld states that, “The industry can expect to roar back to life with the improving

economy in the five years to 2017. The industry is set to benefit from climbing corporate profit

and per capita disposable income…. Similarly, profit will expand as clients choose higher-priced

options.3

Customers for The V and The Vortex Promotional Tour bus will be targeted through various

promotions and advertising initiatives. They are live music lovers and club-goers, typically ages

18-35 (21+ after 9 p.m.), both males and females. They will include everyone from corporate

professionals to students and blue collar workers. The common bond will be the appreciation of

a great venue for music, drinks, and a great live entertainment environment.

While there are many bars in town, there is nothing like The V. With 21,000-student The

University of Delaware, the state government, and major employers in the area like WL Gore,

DuPont, Dow, Siemens, AstraZeneca, and the Delaware Technology Park, there are huge

numbers of young, educated residents who want more than a local dive bar or music club. The V

will provide this and more.

Potential locations have been found at the Newark Shopping Plaza in Downtown Main Street

Newark, and College Square Shopping, two locations right in downtown that have open spaces,

huge parking lots and a series of unused store fronts that is are perfect locations for the

Company. The population surrounding here, as shown below, is large but the night life and

businesses are minimal.

Downtown Newark, DE and Environs4

Population 1-mi. 3-mi. 5-mi.

2013 Total Population 13,952 74,173 158,324

2013 Male Population 6,142 35,235 75,964

2013 Female Population 7,810 38,938 82,360

% 2013 Male Population 44.02% 47.50% 47.98%

% 2013 Female Population 55.98% 52.50% 52.02%

2013 Total Population: Adult 12,355 61,256 124,735

2013 Total Daytime Population 18,639 72,287 171,720

2013 Total Employees 10,398 32,802 90,836

2013 Total Population: Median Age 23 29 33

3 IBISWorld. “The Party & Event Planners Market.” Sept. 2013. http://www.ibisworld.com/industry/party-event-

planners.html 4 Loopnet/Pitney Bowes MapInfo. “College Square.”

http://www.loopnet.com/xNet/MainSite/Listing/Profile/Profile.aspx?LID=18406839

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Downtown Newark, DE and Environs4

Population 1-mi. 3-mi. 5-mi.

2013 Total Population: Adult Median Age 22 41 43

2013 Total population: Under 5 years 516 3,658 9,508

2013 Total population: 5 to 9 years 431 3,436 8,982


2013 Total population: 15 to 19 years 2,514 8,923 14,694

2013 Total population: 20 to 24 years 5,627 12,918 18,666













2013 Total population: 85 years and over 198 1,155 1,985

2013 Households 4,263 26,354 58,347

2013 Household Income: Average $40,422 $73,052 $78,437

Within this market, competitors will include established businesses, including myriad restaurants

and bars, including independent locations and franchised concepts. More specifically to the

downtown area, the Company will compete against venues like Klondike Kate’s, Kildare’s,

Catherine Rooney’s, Grottos, and Deer Park tavern, among others. However, there are no

establishments on the level of The V. The Company will promote a fun and entertaining setting,

introducing an all-encompassing concept to the local market as well as more refined bar and

nightclub environment. On a regional level, the Company will compete against music and

entertainment venues; however, the Company will have an edge against these venues as well

because of its unique presentation of being both a marketing and promotional vehicle fused with

the best source of local entertainment.

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4.1 Demographics Summary

The chart below shows the population for surrounding New Castle County, from which the

Company will also draw.

U.S. Census Bureau American Communities Survey

People QuickFacts

New Castle County Delaware

Population, 2013 estimate 549,684 925,749

Population, 2010 (April 1) estimates base 538,479 897,936

Population, percent change, April 1, 2010 to July 1, 2013 2.1% 3.1%

Population, 2010 538,479 897,934

Persons under 5 years, percent, 2013 6.2% 6.1%

Persons under 18 years, percent, 2013 22.3% 22.0%

Persons 65 years and over, percent, 2013 13.4% 15.9%

Female persons, percent, 2013 51.6% 51.6%

White alone, percent, 2013 (a) 67.6% 71.1%

Black or African American alone, percent, 2013 (a) 24.7% 22.1%

American Indian and Alaska Native alone, percent, 2013 (a) 0.4% 0.7%

Asian alone, percent, 2013 (a) 5.0% 3.6%

Native Hawaiian and Other Pacific Islander alone, percent, 2013 (a) 0.1% 0.1%

Two or More Races, percent, 2013 2.3% 2.4%

Hispanic or Latino, percent, 2013 (b) 9.2% 8.7%

White alone, not Hispanic or Latino, percent, 2013 60.1% 64.1%

Living in same house 1 year & over, percent, 2008-2012 85.1% 85.8%

Foreign born persons, percent, 2008-2012 10.0% 8.3%

Language other than English spoken at home, pct age 5+, 2008-2012 14.4% 12.3%

High school graduate or higher, percent of persons age 25+, 2008-2012

89.2% 87.7%

Bachelor's degree or higher, percent of persons age 25+, 2008-2012 33.5% 28.5%

Veterans, 2008-2012 37,481 76,752

Mean travel time to work (minutes), workers age 16+, 2008-2012 24.9 24.8

Housing units, 2013 218,592 412,009

Homeownership rate, 2008-2012 70.2% 72.7%

Housing units in multi-unit structures, percent, 2008-2012 22.9% 17.7%

Median value of owner-occupied housing units, 2008-2012 $251,200 $241,100

Households, 2008-2012 200,618 334,076

Persons per household, 2008-2012 2.61 2.62

Per capita money income in past 12 months (2012 dollars), 2008-2012 $32,247 $29,733

Median household income, 2008-2012 $64,670 $60,119

Persons below poverty level, percent, 2008-2012 10.7% 11.5%

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4.2 Industry Analysis

The Company will operate in this distinct industry, Drinking Places (Alcoholic Beverages)

(NAICS 722410). All data presented in this section is retrieved from the U.S. Census Bureau.

The map below shows sales per capita.

The map below shows sales in millions.

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Drinking Places (Alcoholic Beverages)

This industry comprises establishments known as bars, taverns, nightclubs, or drinking places

primarily engaged in preparing and serving alcoholic beverages for immediate consumption.

These establishments may also provide limited food services.

Establishments Total Sales Annual Payroll Paid Employees

46,924 $18,318,068,000 $4,183,499,000 356,194

$11,745 $51,427

Employees per Establishment Payroll as a Percent of Sales

USA Drinking Places (Alcoholic Beverages)

Sales per Establishment Payroll per Establishment

$390,377 $89,155

7.6 22.8%

Annual Payroll per Employee Sales Per Employee


1,290 $472,529,000 $109,038,000 8,238

$366,302 $84,526

New Jersey Drinking Places (Alcoholic Beverages)

Sales per Establishment Payroll per Establishment


6.4 23.1%


$13,236 $57,360


84 $22,669,000 $4,623,000 309

Payroll per Establishment

$269,869 $55,036



3.7 20.4%

Newark Drinking Places (Alcoholic Beverages)

Sales per Establishment

$14,961 $73,362

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5.0 Marketing Strategy/Implementation Terry J Inc. will primarily market its services in the greater Newark area and surrounding states

with a niche marketing approach to target and attract customers and artists of all ages and genres.

High-visibility promotional events will draw favorable publicity, and develop name recognition

within the region. The Terry J Inc. team will also focus on capitalizing on extensive list of

industry resources, contacts, and influential associates developed throughout the owner’s years in

the industry. The Company will also drive awareness by using traditional marketing channels

such as radio and TV advertising.

In true Terry J Inc. style, conventional and traditional avenues of promotion are made obsolete

by the addition of a new sector of the Terry Group that merges Club V advertisement and

promotion into its own profit-making entity. For the first two to three years of operation, the

Company will be launching its promotional bus tour, which will circumnavigate 24 cities on the

East Coast, hosting V sponsored parties. These street events will feature new talent as well as

the Vortex's own MC's and professional models and dancers known as the V Girls. The purpose

of these shows is to advertise the Vortex nightclub and create revenue by hosting these outdoor

stage spectaculars. The tour bus team will essentially create an outdoor dance party with a

fashion show, bringing all forms of entertainment and art to the public. After the two-three year

tour is completed, the talent and employees of the tour bus team venture will be assimilated into

positions working for The Vortex Nightclub as well as the Vortex Magazine. At this time, the

Vortex nightclub and online magazine will have enough exposure to bring in big name draws to

the club and to focus on signing new talent to the Terry J. Inc. label. Any talent that signs with

the group commits to allocating ten percent of their profits directly back to the Group in

exchange for booking, exposure, and future performance tours. The Group discovers, cultivates,

and leases out new talent for the entertainment industry.

The Company also sees the need for other creative approaches to marketing to its customers. For

marketers, the currently economic climate is creating a need to both cut costs and reach

consumers in more ways than ever. Creative marketing initiatives are not only cost-effective but

they also can result in new revenue streams. Tactics for succeeding in the new economy include:

Grassroots market research: The Company will communicate with its customers via online

forums and monitor ratings and review sites and industry blogs to determine the prevailing

consumer attitudes, the level of Terry J Inc. brand recognition and trends the Company needs to

address.

Customer retention/cross-selling: The Company will also place a premium on marketing to

the existing customer bases of Terry J Inc. artists and venues. It is much cheaper and far more

effective because of the existing relationships and an understanding of their needs.

Video: The Terry J Inc. brand and its services will be presented through dynamic multimedia

communications vehicles. Videos, in particular, are often the most effective methods of

communicating a message, and the Company’s industry connections and capabilities will allow it

to create marketing videos that can be deployed to YouTube, Google Video, and other sites.

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Relevancy-based marketing initiatives: With the wide-ranging technological capabilities of

Terry J Inc., the Company will be able to reach customers across a variety of devices, including

e-mail, smartphones, text messages, and instant messages. This all hinges on creating a pertinent

message that is tailored to individual customer segments.

Enhanced search marketing: As the Internet becomes the primary source for both business-to-

business and business-to-consumer information, a strong presence on major search engines is

paramount to educate customers and form a dialogue that extends beyond one medium.

Effective search optimization includes using a multi-channel approach with social media, such as

Facebook, Twitter, and blogs, as well as mobile, and local search.

The Company will also drive awareness by using traditional marketing channels such as radio

and TV advertising, flyers and other printed materials, and aggressive online advertising and

through live scouting and entertainment events. Additionally, the Company will employ the

following methods:

Internet Advertising: The Company will allot portions of its marketing budget for strategic

Internet marketing, including search engine optimization. This tactic involves organically

improving the quality and volume of traffic to its website through search engines. Search engine

optimization can also target different kinds of searches, including image, local, and industry-

specific vertical search engines.

Website: An attractive and user-friendly website will be professionally designed. It will outline

the Company’s philosophy and services, as well as spotlight the experienced Terry J Inc.

management, as well as the Company’s talented artists. A calendar of events, especially

Company sponsored promotional events, bus tour and live concerts will encourage return visitors

to the website.

Outdoor marketing: The Company’s signage, on its building and company vehicles will be

prominently placed for maximum visibility to both foot and vehicular traffic.

Word of mouth: Terry J Inc.’s adherence to offering a quality service paired with superior

public relations and customer service will garner a solid and positive reputation within the

industry and local communities. The Company’s clients will undoubtedly return for additional

services, while also spreading the word to their friends, family and colleagues. Through this

simple marketing tactic, Terry J Inc. will become further recognized as the premier full-service

entertainment and promotion and talent Management Company.

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5.1 SWOT Analysis

Internal

Factors

External

Factors

Positive Negative

Appeals to all genres of artists & aficionados

Travels to a wide variety of

Strengths WeaknessesOwner has 20 years experience and

in-depth knowledge of the industry

Innovative/comprehensive business concept

Offers something for everyone

Adding new clients and ancillary revenue

other music and entertainment types

Threats

Playing off popularity of rap and R&B and

streams as Company grows

and production/management companies

Prolonged economic recovery

running in a timely manner of the lucrative national market

Not having the Company up and

Other existing entertainment venues

Expanding to capture a sizeable share

cities within the region

New Company

Lacks brand recognition

Niche market without current consumers

Currently undercapitalized

OpportunitiesCapturing a large share of a lucrative

market with a wide region

20

6.0 Management Summary William Terry, Owner, Chief Executive Officer, and President

Terry J Inc. will be owned and managed by its founder and namesake, William Terry, who

possesses the requisite management skills and experience to successfully run this operation. Mr.

Terry is an entrepreneurial-minded leader who is a veteran of the entertainment industry. During

his 20 years in the industry, he has gained considerable experience and expertise that will be

invaluable toward the success of the Company. Mr. Terry has outstanding customer service,

public relations, and communications skills, and is well-connected within the industry and the

community, making penetration into the marketplace easily attainable.

As a strong team builder and experienced promoter with expertise in efficiently coordinating

resources, he will oversee the day-to-day operation of the Company. He will work directly with

every aspect of club design, talent management, and public relations. Mr. Terry will also work

closely with the Company’s Chief Operating Officer, Colleen Olkowski who will assist with the

creation and execution of planning and management strategies.

The Company will greatly benefit from Mr. Terry’s numerous direct ties to several local

governing bodies and social services. Mr. Terry has been a resident of Newark for several years

and is a great proponent of bringing in local businesses that will put money directly back into the

community to help Newark achieve a growth potential that would otherwise never be possible

because of the constant ebb and flow of the migratory living situations of University of Delaware

students.

21

7.0 Financial Summary 7.1 Revenue Forecast

The Revenue Forecast section details the revenue that the Company will receive. This section

also details the direct costs.

Year 1 Year 2 Year 3 Year 4 Year 5

Units

Door Cover 147,571 261,128 353,906 431,786 526,802

Bar Drinks 254,228 449,859 609,693 743,859 907,550

Food 16,690 29,532 40,025 48,833 59,579

Venue 96,000 122,980 166,675 203,353 248,102

Talent Agency 2,432 4,304 5,834 7,117 8,684

Studio Time 3,722 5,735 6,819 7,732 8,344

Total Units 520,678 873,575 1,182,988 1,442,716 1,759,095

Unit Price

Door Cover $4.68 $4.68 $4.68 $4.68 $4.68

Bar Drinks $4.25 $4.25 $4.25 $4.25 $4.25

Food $6.00 $6.00 $6.00 $6.00 $6.00

Venue $36.00 $36.00 $36.00 $36.00 $36.00

Talent Agency $225.00 $225.00 $225.00 $225.00 $225.00

Studio Time $100.00 $100.00 $100.00 $100.00 $100.00

Revenue

Door Cover $690,420 $1,221,706 $1,655,777 $2,020,139 $2,464,682

Bar Drinks $1,080,468 $1,911,900 $2,591,196 $3,161,403 $3,857,086

Food $100,137 $177,194 $240,151 $292,997 $357,473

Venue $3,456,000 $4,427,288 $6,000,299 $7,320,696 $8,931,655

Talent Agency $547,309 $968,469 $1,312,565 $1,601,402 $1,953,800

Studio Time $372,170 $573,496 $681,859 $773,178 $834,360

Gross Revenue $6,352,706 $9,386,253 $12,588,047 $15,276,016 $18,505,256

Unit Cost

Door Cover $0.23 $0.23 $0.23 $0.23 $0.23

Bar Drinks $1.28 $1.28 $1.28 $1.28 $1.28

Food $2.10 $2.10 $2.10 $2.10 $2.10

Venue $1.80 $1.80 $1.80 $1.80 $1.80

Talent Agency $11.25 $11.25 $11.25 $11.25 $11.25

Studio Time $5.00 $5.00 $5.00 $5.00 $5.00

Direct Costs

Door Cover $34,521 $61,085 $82,789 $101,007 $123,234

Bar Drinks $324,141 $573,570 $777,359 $948,421 $1,157,126

Food $35,048 $62,018 $84,053 $102,549 $125,116

Venue $172,800 $221,364 $300,015 $366,035 $446,583

Talent Agency $27,365 $48,423 $65,628 $80,070 $97,690

Studio Time $18,609 $28,675 $34,093 $38,659 $41,718

Direct Cost of Revenue $612,484 $995,136 $1,343,937 $1,636,741 $1,991,466

Yearly Revenue

22

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000

$18,000,000

$20,000,000


Yearly Revenue Projections

Studio Time

Talent Agency

Venue

Food

Bar Drinks

Door Cover

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

Month

1

Month

2

Month

3

Month

4

Month

5

Month

6

Month

7

Month

8

Month

9

Month

10

Month

11

Month

12

Year 1 Revenue Projections

Studio Time

Talent Agency

Venue

Food

Bar Drinks

Door Cover

23

7.2 Personnel Forecast

The Personnel section breaks down the payroll expense line on the Income Statement. It

provides total headcount, average salary per category and total pay per category.


Headcount

T.J Inc Corp Staff 18 20 22 24 26

PRMO Tour Staff 51 58 65 72 79

The V Night Club 41 46 51 56 61

Total Headcount 110 124 138 152 166

Compensation

T.J Inc Corp Staff $59,948 $61,747 $63,599 $65,507 $67,472

PRMO Tour Staff $25,020 $25,770 $26,543 $27,340 $28,160

The V Night Club $27,924 $28,762 $29,625 $30,514 $31,429

Payroll

T.J Inc Corp Staff $1,079,070 $1,234,936 $1,399,182 $1,572,172 $1,754,282

PRMO Tour Staff $1,276,000 $1,494,671 $1,725,315 $1,968,451 $2,224,623

The V Night Club $1,144,900 $1,323,058 $1,510,874 $1,708,769 $1,917,178

Total Payroll $3,499,970 $4,052,665 $4,635,371 $5,249,392 $5,896,083

Yearly Personnel

24

7.3 Income Statement

The Income Statement is also known as a Profit & Loss Statement. This table breaks down

Revenue, Cost of Revenue, Operating Expenses, Depreciation, Interest, Taxes, and bottom line

Earnings for the first five years.


Gross Revenue $6,352,706 $9,386,253 $12,588,047 $15,276,016 $18,505,256

Direct Cost of Revenue $612,484 $995,136 $1,343,937 $1,636,741 $1,991,466

Merchant Fees $95,291 $140,794 $188,821 $229,140 $277,579

Total Cost of Revenue $707,774 $1,135,930 $1,532,757 $1,865,881 $2,269,045

Gross Profit $5,644,932 $8,250,323 $11,055,289 $13,410,135 $16,236,211

Gross Margin Percentage 88.9% 87.9% 87.8% 87.8% 87.7%

Operating Expenses

Travel Gas $5,500 $6,050 $6,655 $7,321 $8,053

Truck Insurance $7,500 $8,250 $9,075 $9,983 $10,981

Marketing & Advertising $317,635 $469,313 $629,402 $763,801 $925,263

Business Insurance $18,000 $19,800 $21,780 $23,958 $26,354

Professional Services $60,000 $66,000 $72,600 $79,860 $87,846

Utilities & Related $180,000 $198,000 $217,800 $239,580 $263,538

Travel & Entertainment $90,000 $99,000 $108,900 $119,790 $131,769

Dues & Subscriptions $18,000 $19,800 $21,780 $23,958 $26,354

Total Payroll $3,499,970 $4,052,665 $4,635,371 $5,249,392 $5,896,083

Payroll Taxes $419,996 $486,320 $556,245 $629,927 $707,530

Payroll Benefits $104,999 $121,580 $139,061 $157,482 $176,882

Total Operating Expenses $4,721,601 $5,546,777 $6,418,669 $7,305,051 $8,260,652

Operating Profit $923,331 $2,703,546 $4,636,620 $6,105,084 $7,975,558

Operating Profit Percentage 14.5% 28.8% 36.8% 40.0% 43.1%

Depreciation $267,361 $275,694 $284,028 $292,361 $300,694

Earning Before Interest & Taxes $655,970 $2,427,852 $4,352,593 $5,812,723 $7,674,864

EBIT Percentage 10.3% 25.9% 34.6% 38.1% 41.5%

Interest Expense $0 $0 $0 $0 $0

Taxes Accrued $0 $0 $0 $0 $0

Earnings $655,970 $2,427,852 $4,352,593 $5,812,723 $7,674,864

Earnings Percentage 10.3% 25.9% 34.6% 38.1% 41.5%

Yearly Income Statement

25

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000

$18,000,000

$20,000,000


Yearly Income Statement

Gross Revenue

Gross Profit

Operating Profit

Earning Before

Interest & Taxes

Earnings

($100,000)

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

Month

1

Month

2

Month

3

Month

4

Month

5

Month

6

Month

7

Month

8

Month

9

Month

10

Month

11

Month

12

Year 1 Income Statement

Gross Revenue

Gross Profit

Operating Profit

Earning Before

Interest & Taxes

Earnings

26

7.4 Statement of Cash Flow

The Statement of Cash Flow illustrates the Company’s cash received and cash spent for the five

year period. The table is broken down into three main categories; Operating, Investing, and

Financing. The Operating Activities report the Company’s business operations. Investing

Activities detail the Company’s property, plant, and equipment transactions. Financing

Activities account for the Company’s paid-in capital and debt.


Operating Activities

Cash Received

Gross Revenue $6,352,706 $9,386,253 $12,588,047 $15,276,016 $18,505,256

Total Cash Received $6,352,706 $9,386,253 $12,588,047 $15,276,016 $18,505,256

Cash Used

Cost of Revenue $707,774 $1,135,930 $1,532,757 $1,865,881 $2,269,045

Payroll/Taxes/Benefits $4,024,966 $4,660,564 $5,330,677 $6,036,801 $6,780,496

Other Operating Expenses $696,635 $886,213 $1,087,992 $1,268,250 $1,480,157

Additional Inventory $10,465 $13,116 $8,430 $10,212 $12,380



Total Cash Used $5,439,840 $6,695,823 $7,959,856 $9,181,143 $10,542,077

Net Cash From/(Used By) Operating $912,865 $2,690,430 $4,628,190 $6,094,873 $7,963,178

Investing Activities

Cash Received

Proceeds from Property/Land $0 $0 $0 $0 $0

Proceeds from Equipment $0 $0 $0 $0 $0

Total Cash Received $0 $0 $0 $0 $0

Cash Used

Purchase of Property/Land $0 $0 $0 $0 $0

Purchase of Equipment $250,000 $250,000 $250,000 $250,000 $250,000

Total Cash Used $250,000 $250,000 $250,000 $250,000 $250,000

Net Cash From/(Used By) Investing ($250,000) ($250,000) ($250,000) ($250,000) ($250,000)

Financing Activities

Cash Received

Proceeds from Investors $0 $0 $0 $0 $0

Proceeds from Long-Term Debt $0 $0 $0 $0 $0

Total Cash Received $0 $0 $0 $0 $0

Cash Used

Dividends Paid $0 $0 $0 $0 $0

Repayment of Long-Term Debt $0 $0 $0 $0 $0

Total Cash Used $0 $0 $0 $0 $0

Net Cash From/(Used By) Financing $0 $0 $0 $0 $0

Net Cash Flow $662,865 $2,440,430 $4,378,190 $5,844,873 $7,713,178

Cash Balance $965,965 $3,406,395 $7,784,586 $13,629,459 $21,342,637

Yearly Statement of Cash Flow

27

($200,000)

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000M

on

th 1

Mo

nth

2

Mo

nth

3

Mo

nth

4

Mo

nth

5

Mo

nth

6

Mo

nth

7

Mo

nth

8

Mo

nth

9

Mo

nth

10

Mo

nth

11

Mo

nth

12

Year 1 Statement of Cash Flow

Net Cash Flow Cash Balance

28

7.5 Balance Sheet

The Balance Sheet shows the Company’s Assets, Liabilities, and Shareholders’ Equity for a

given time period.


Assets

Current Assets

Cash $965,965 $3,406,395 $7,784,586 $13,629,459 $21,342,637

Inventory $160,465 $173,582 $182,012 $192,223 $204,603

Other Current Assets $0 $0 $0 $0 $0

Total Current Assets $1,126,431 $3,579,977 $7,966,597 $13,821,682 $21,547,240

Long-Term Assets

Property/Building $12,850,000 $12,850,000 $12,850,000 $12,850,000 $12,850,000

Lead Certified Equipment $4,250,000 $4,500,000 $4,750,000 $5,000,000 $5,250,000

Reface Plaza $4,000,000 $4,000,000 $4,000,000 $4,000,000 $4,000,000

Accumulated Depreciation ($267,361) ($543,056) ($827,083) ($1,119,444) ($1,420,139)

Total Long-Term Assets $20,832,639 $20,806,944 $20,772,917 $20,730,556 $20,679,861

Total Assets $21,959,070 $24,386,921 $28,739,514 $34,552,237 $42,227,101

Liabilities

Current Liabilities

Current Debt $0 $0 $0 $0 $0

Total Current Liabilities $0 $0 $0 $0 $0

Long-Term Liabilities

Long-Term Debt $0 $0 $0 $0 $0

Total Long-Term Liabilities $0 $0 $0 $0 $0

Total Liabilities $0 $0 $0 $0 $0

Shareholders' Equity

Paid-in Capital

Owner $0 $0 $0 $0 $0

Investor $22,000,000 $22,000,000 $22,000,000 $22,000,000 $22,000,000

Total Paid-in Capital $22,000,000 $22,000,000 $22,000,000 $22,000,000 $22,000,000

Retained Earnings

Previous Retained Earnings ($696,900) ($40,930) $2,386,921 $6,739,514 $12,552,237

Current Earnings $655,970 $2,427,852 $4,352,593 $5,812,723 $7,674,864

Total Retained Earnings ($40,930) $2,386,921 $6,739,514 $12,552,237 $20,227,101

Total Shareholders' Equity $21,959,070 $24,386,921 $28,739,514 $34,552,237 $42,227,101

Total Liabilities & Equity $21,959,070 $24,386,921 $28,739,514 $34,552,237 $42,227,101

Yearly Balance Sheet

29

7.6 Break-Even Analysis

The Operating Break-Even accounts for the Company’s revenue and expenses on the Income

Statement.

Analysis Month

Operating Break-Even 11

Break-Even

Operating Break-Even

$0

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

$70,000,000

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59

Month

Accumulated Revenue Accumulated Expenses

30

7.7 Best & Worst Case

The Best and Worst Case analysis illustrates what the Company’s financial statements might

look like with an increase or decrease in Revenue.

10%


Gross Revenue $6,987,976 $10,324,878 $13,846,851 $16,803,618 $20,355,781


Gross Profit $6,209,425 $9,075,355 $12,160,818 $14,751,149 $17,859,832



Operating Profit $1,487,824 $3,528,579 $5,742,149 $7,446,098 $9,599,179


Earning Before Interest & Taxes $1,220,463 $3,252,884 $5,458,122 $7,153,737 $9,298,485

EBIT Percentage 17.5% 31.5% 39.4% 42.6% 45.7%



Earnings $1,220,463 $3,252,884 $5,458,122 $7,153,737 $9,298,485


Net Cash Flow $1,227,359 $3,265,462 $5,483,719 $7,185,886 $9,336,799

Cash Balance $1,530,459 $4,795,921 $10,279,640 $17,465,527 $26,802,326

Best Case -- Revenue Increase By:

10%


Gross Revenue $5,717,435 $8,447,628 $11,329,242 $13,748,415 $16,654,730


Gross Profit $5,080,438 $7,425,291 $9,949,761 $12,069,122 $14,612,590



Operating Profit $358,838 $1,878,514 $3,531,092 $4,764,071 $6,351,937


Earning Before Interest & Taxes $91,477 $1,602,819 $3,247,064 $4,471,710 $6,051,243

EBIT Percentage 1.6% 19.0% 28.7% 32.5% 36.3%



Earnings $91,477 $1,602,819 $3,247,064 $4,471,710 $6,051,243


Net Cash Flow $98,372 $1,615,398 $3,272,662 $4,503,859 $6,089,557

Cash Balance $401,472 $2,016,870 $5,289,532 $9,793,391 $15,882,948

Worst Case -- Revenue Decrease By:

31

Appendix A – Year 1 Financials

Year 1 Monthly Forecast illustrates the Company’s first 12 months after the Pre-Operating stage.

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Units

Door Cover 8,493 9,046 9,634 10,261 10,928 11,639 12,396 13,202 14,061 14,975 15,949 16,987

Bar Drinks 14,632 15,584 16,597 17,677 18,826 20,051 21,355 22,744 24,223 25,799 27,477 29,264

Food 961 1,023 1,090 1,160 1,236 1,316 1,402 1,493 1,590 1,694 1,804 1,921

Venue 8,000 8,000 8,000 8,000 8,000 8,000 8,000 8,000 8,000 8,000 8,000 8,000

Talent Agency 140 149 159 169 180 192 204 218 232 247 263 280

Studio Time 214 228 243 259 276 294 313 333 355 378 402 428

Total Units 32,443 34,033 35,726 37,529 39,449 41,494 43,673 45,993 48,464 51,095 53,898 56,883

Unit Price

Door Cover $4.68 $4.68 $4.68 $4.68 $4.68 $4.68 $4.68 $4.68 $4.68 $4.68 $4.68 $4.68

Bar Drinks $4.25 $4.25 $4.25 $4.25 $4.25 $4.25 $4.25 $4.25 $4.25 $4.25 $4.25 $4.25

Food $6.00 $6.00 $6.00 $6.00 $6.00 $6.00 $6.00 $6.00 $6.00 $6.00 $6.00 $6.00

Venue $36.00 $36.00 $36.00 $36.00 $36.00 $36.00 $36.00 $36.00 $36.00 $36.00 $36.00 $36.00

Talent Agency $225.00 $225.00 $225.00 $225.00 $225.00 $225.00 $225.00 $225.00 $225.00 $225.00 $225.00 $225.00

Studio Time $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00

Revenue

Door Cover $39,737 $42,321 $45,074 $48,005 $51,128 $54,453 $57,995 $61,767 $65,784 $70,063 $74,620 $79,473

Bar Drinks $62,186 $66,230 $70,538 $75,126 $80,012 $85,216 $90,759 $96,662 $102,949 $109,645 $116,776 $124,371

Food $5,763 $6,138 $6,537 $6,963 $7,415 $7,898 $8,411 $8,959 $9,541 $10,162 $10,823 $11,527

Venue $288,000 $288,000 $288,000 $288,000 $288,000 $288,000 $288,000 $288,000 $288,000 $288,000 $288,000 $288,000

Talent Agency $31,500 $33,549 $35,731 $38,055 $40,530 $43,166 $45,974 $48,964 $52,148 $55,540 $59,153 $63,000

Studio Time $21,420 $22,813 $24,297 $25,877 $27,560 $29,353 $31,262 $33,295 $35,461 $37,767 $40,224 $42,840

Gross Revenue $457,456 $467,902 $479,027 $490,876 $503,496 $516,936 $531,251 $546,496 $562,734 $580,027 $598,445 $618,061

Unit Cost

Door Cover $0.23 $0.23 $0.23 $0.23 $0.23 $0.23 $0.23 $0.23 $0.23 $0.23 $0.23 $0.23

Bar Drinks $1.28 $1.28 $1.28 $1.28 $1.28 $1.28 $1.28 $1.28 $1.28 $1.28 $1.28 $1.28

Food $2.10 $2.10 $2.10 $2.10 $2.10 $2.10 $2.10 $2.10 $2.10 $2.10 $2.10 $2.10

Venue $1.80 $1.80 $1.80 $1.80 $1.80 $1.80 $1.80 $1.80 $1.80 $1.80 $1.80 $1.80

Talent Agency $11.25 $11.25 $11.25 $11.25 $11.25 $11.25 $11.25 $11.25 $11.25 $11.25 $11.25 $11.25

Studio Time $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00

Year 1 Revenue

32

Direct Costs

Door Cover $1,987 $2,116 $2,254 $2,400 $2,556 $2,723 $2,900 $3,088 $3,289 $3,503 $3,731 $3,974

Bar Drinks $18,656 $19,869 $21,161 $22,538 $24,004 $25,565 $27,228 $28,999 $30,885 $32,893 $35,033 $37,311

Food $2,017 $2,148 $2,288 $2,437 $2,595 $2,764 $2,944 $3,135 $3,339 $3,557 $3,788 $4,034

Venue $14,400 $14,400 $14,400 $14,400 $14,400 $14,400 $14,400 $14,400 $14,400 $14,400 $14,400 $14,400

Talent Agency $1,575 $1,677 $1,787 $1,903 $2,026 $2,158 $2,299 $2,448 $2,607 $2,777 $2,958 $3,150

Studio Time $1,071 $1,141 $1,215 $1,294 $1,378 $1,468 $1,563 $1,665 $1,773 $1,888 $2,011 $2,142

Direct Cost of Revenue $39,706 $41,352 $43,105 $44,972 $46,960 $49,078 $51,333 $53,735 $56,294 $59,019 $61,921 $65,011


Headcount

T.J Inc Corp Staff 18 18 18 18 18 18 18 18 18 18 18 18

PRMO Tour Staff 51 51 51 51 51 51 51 51 51 51 51 51

The V Night Club 41 41 41 41 41 41 41 41 41 41 41 41

Total Headcount 110 110 110 110 110 110 110 110 110 110 110 110

Compensation

T.J Inc Corp Staff $4,996 $4,996 $4,996 $4,996 $4,996 $4,996 $4,996 $4,996 $4,996 $4,996 $4,996 $4,996

PRMO Tour Staff $2,085 $2,085 $2,085 $2,085 $2,085 $2,085 $2,085 $2,085 $2,085 $2,085 $2,085 $2,085

The V Night Club $2,327 $2,327 $2,327 $2,327 $2,327 $2,327 $2,327 $2,327 $2,327 $2,327 $2,327 $2,327

Payroll

T.J Inc Corp Staff $89,923 $89,923 $89,923 $89,923 $89,923 $89,923 $89,923 $89,923 $89,923 $89,923 $89,923 $89,923

PRMO Tour Staff $106,333 $106,333 $106,333 $106,333 $106,333 $106,333 $106,333 $106,333 $106,333 $106,333 $106,333 $106,333

The V Night Club $95,408 $95,408 $95,408 $95,408 $95,408 $95,408 $95,408 $95,408 $95,408 $95,408 $95,408 $95,408

Total Payroll $291,664 $291,664 $291,664 $291,664 $291,664 $291,664 $291,664 $291,664 $291,664 $291,664 $291,664 $291,664

Year 1 Personnel

33


Gross Revenue $457,456 $467,902 $479,027 $490,876 $503,496 $516,936 $531,251 $546,496 $562,734 $580,027 $598,445 $618,061

Direct Cost of Revenue $39,706 $41,352 $43,105 $44,972 $46,960 $49,078 $51,333 $53,735 $56,294 $59,019 $61,921 $65,011

Merchant Fees $6,862 $7,019 $7,185 $7,363 $7,552 $7,754 $7,969 $8,197 $8,441 $8,700 $8,977 $9,271

Total Cost of Revenue $46,568 $48,370 $50,290 $52,335 $54,512 $56,832 $59,302 $61,933 $64,735 $67,719 $70,897 $74,282

Gross Profit $410,888 $419,531 $428,737 $438,541 $448,983 $460,104 $471,949 $484,564 $497,999 $512,308 $527,548 $543,779

Gross Margin Percentage 89.8% 89.7% 89.5% 89.3% 89.2% 89.0% 88.8% 88.7% 88.5% 88.3% 88.2% 88.0%

Operating Expenses

Travel Gas $458 $458 $458 $458 $458 $458 $458 $458 $458 $458 $458 $458

Truck Insurance $625 $625 $625 $625 $625 $625 $625 $625 $625 $625 $625 $625

Marketing & Advertising $22,873 $23,395 $23,951 $24,544 $25,175 $25,847 $26,563 $27,325 $28,137 $29,001 $29,922 $30,903

Business Insurance $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500

Professional Services $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000

Utilities & Related $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000

Travel & Entertainment $7,500 $7,500 $7,500 $7,500 $7,500 $7,500 $7,500 $7,500 $7,500 $7,500 $7,500 $7,500

Dues & Subscriptions $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500

Total Payroll $291,664 $291,664 $291,664 $291,664 $291,664 $291,664 $291,664 $291,664 $291,664 $291,664 $291,664 $291,664

Payroll Taxes $35,000 $35,000 $35,000 $35,000 $35,000 $35,000 $35,000 $35,000 $35,000 $35,000 $35,000 $35,000

Payroll Benefits $8,750 $8,750 $8,750 $8,750 $8,750 $8,750 $8,750 $8,750 $8,750 $8,750 $8,750 $8,750

Total Operating Expenses $389,870 $390,392 $390,948 $391,541 $392,172 $392,844 $393,560 $394,322 $395,134 $395,998 $396,919 $397,900

Operating Profit $21,018 $29,139 $37,789 $47,000 $56,811 $67,260 $78,389 $90,242 $102,865 $116,310 $130,629 $145,879

Operating Profit Percentage 4.6% 6.2% 7.9% 9.6% 11.3% 13.0% 14.8% 16.5% 18.3% 20.1% 21.8% 23.6%

Depreciation $22,222 $22,222 $22,222 $22,222 $22,222 $22,222 $22,222 $22,222 $22,222 $22,222 $22,222 $22,917

Earning Before Interest & Taxes ($1,204) $6,917 $15,566 $24,778 $34,589 $45,038 $56,167 $68,019 $80,643 $94,087 $108,406 $122,962

EBIT Percentage -0.3% 1.5% 3.2% 5.0% 6.9% 8.7% 10.6% 12.4% 14.3% 16.2% 18.1% 19.9%

Interest Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Taxes Accrued $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Earnings ($1,204) $6,917 $15,566 $24,778 $34,589 $45,038 $56,167 $68,019 $80,643 $94,087 $108,406 $122,962

Earnings Percentage -0.3% 1.5% 3.2% 5.0% 6.9% 8.7% 10.6% 12.4% 14.3% 16.2% 18.1% 19.9%

Year 1 Income Statement

34


Operating Activities

Cash Received

Gross Revenue $457,456 $467,902 $479,027 $490,876 $503,496 $516,936 $531,251 $546,496 $562,734 $580,027 $598,445 $618,061

Total Cash Received $457,456 $467,902 $479,027 $490,876 $503,496 $516,936 $531,251 $546,496 $562,734 $580,027 $598,445 $618,061

Cash Used

Cost of Revenue $46,568 $48,370 $50,290 $52,335 $54,512 $56,832 $59,302 $61,933 $64,735 $67,719 $70,897 $74,282

Payroll/Taxes/Benefits $335,414 $335,414 $335,414 $335,414 $335,414 $335,414 $335,414 $335,414 $335,414 $335,414 $335,414 $335,414

Other Operating Expenses $54,456 $54,978 $55,535 $56,127 $56,758 $57,430 $58,146 $58,908 $59,720 $60,585 $61,506 $62,486

Additional Inventory $622 $662 $705 $751 $800 $852 $907 $967 $1,029 $1,096 $1,168 $905

Interest Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Taxes Accrued $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Cash Used $437,059 $439,425 $441,944 $444,627 $447,484 $450,528 $453,769 $457,221 $460,898 $464,814 $468,984 $473,088

Net Cash From/(Used By) Operating $20,396 $28,477 $37,083 $46,249 $56,011 $66,408 $77,482 $89,275 $101,836 $115,213 $129,461 $144,973

Investing Activities

Cash Received

Proceeds from Property/Land $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Proceeds from Equipment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Cash Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Cash Used

Purchase of Property/Land $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Purchase of Equipment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $250,000

Total Cash Used $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $250,000

Net Cash From/(Used By) Investing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 ($250,000)

Financing Activities

Cash Received

Proceeds from Investors $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Proceeds from Long-Term Debt $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Cash Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Cash Used

Dividends Paid $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Repayment of Long-Term Debt $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Cash Used $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Net Cash From/(Used By) Financing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Net Cash Flow $20,396 $28,477 $37,083 $46,249 $56,011 $66,408 $77,482 $89,275 $101,836 $115,213 $129,461 ($105,027)

Cash Balance $323,496 $351,973 $389,057 $435,306 $491,317 $557,725 $635,207 $724,482 $826,318 $941,531 $1,070,992 $965,965

Year 1 Statement of Cash Flow

35


Assets

Current Assets

Cash $323,496 $351,973 $389,057 $435,306 $491,317 $557,725 $635,207 $724,482 $826,318 $941,531 $1,070,992 $965,965

Inventory $150,622 $151,284 $151,989 $152,741 $153,541 $154,393 $155,300 $156,267 $157,296 $158,392 $159,560 $160,465

Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Current Assets $474,118 $503,257 $541,046 $588,046 $644,858 $712,118 $790,507 $880,749 $983,614 $1,099,924 $1,230,552 $1,126,431

Long-Term Assets

Property/Building $12,850,000 $12,850,000 $12,850,000 $12,850,000 $12,850,000 $12,850,000 $12,850,000 $12,850,000 $12,850,000 $12,850,000 $12,850,000 $12,850,000

Lead Certified Equipment $4,000,000 $4,000,000 $4,000,000 $4,000,000 $4,000,000 $4,000,000 $4,000,000 $4,000,000 $4,000,000 $4,000,000 $4,000,000 $4,250,000

Reface Plaza $4,000,000 $4,000,000 $4,000,000 $4,000,000 $4,000,000 $4,000,000 $4,000,000 $4,000,000 $4,000,000 $4,000,000 $4,000,000 $4,000,000

Accumulated Depreciation ($22,222) ($44,444) ($66,667) ($88,889) ($111,111) ($133,333) ($155,556) ($177,778) ($200,000) ($222,222) ($244,444) ($267,361)

Total Long-Term Assets $20,827,778 $20,805,556 $20,783,333 $20,761,111 $20,738,889 $20,716,667 $20,694,444 $20,672,222 $20,650,000 $20,627,778 $20,605,556 $20,832,639

Total Assets $21,301,896 $21,308,813 $21,324,379 $21,349,157 $21,383,747 $21,428,785 $21,484,952 $21,552,971 $21,633,614 $21,727,701 $21,836,108 $21,959,070

Liabilities

Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Current Debt $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Long-Term Liabilities

Long-Term Debt $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Long-Term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Shareholders' Equity

Paid-in Capital

Owner $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Investor $22,000,000 $22,000,000 $22,000,000 $22,000,000 $22,000,000 $22,000,000 $22,000,000 $22,000,000 $22,000,000 $22,000,000 $22,000,000 $22,000,000

Total Paid-in Capital $22,000,000 $22,000,000 $22,000,000 $22,000,000 $22,000,000 $22,000,000 $22,000,000 $22,000,000 $22,000,000 $22,000,000 $22,000,000 $22,000,000

Retained Earnings

Previous Retained Earnings ($696,900) ($698,104) ($691,187) ($675,621) ($650,843) ($616,253) ($571,215) ($515,048) ($447,029) ($366,386) ($272,299) ($163,892)

Current Earnings ($1,204) $6,917 $15,566 $24,778 $34,589 $45,038 $56,167 $68,019 $80,643 $94,087 $108,406 $122,962

Total Retained Earnings ($698,104) ($691,187) ($675,621) ($650,843) ($616,253) ($571,215) ($515,048) ($447,029) ($366,386) ($272,299) ($163,892) ($40,930)

Total Shareholders' Equity $21,301,896 $21,308,813 $21,324,379 $21,349,157 $21,383,747 $21,428,785 $21,484,952 $21,552,971 $21,633,614 $21,727,701 $21,836,108 $21,959,070

Total Liabilities & Equity $21,301,896 $21,308,813 $21,324,379 $21,349,157 $21,383,747 $21,428,785 $21,484,952 $21,552,971 $21,633,614 $21,727,701 $21,836,108 $21,959,070

Year 1 Balance Sheet

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