PANAMA FACTORING AND FORFAITING GROUP · Financial Analysis with projections to three (3) years,...

CONFIDENTIAL

PANAMA FACTORING AND

FORFAITING GROUP Effective Relationship is an investment in good performance.

Business PlanPrepared July 2015

Contact Information Mark Slazenger

[email protected]

+507 202 7960, +1 (305) 921 9970

http://www.grupopff.com

#1711, 17th Floor, 50th Street, Obarrio

Panama City, Panama, Panama

PANAMA FACTORING AND FORFAITING GROUP, INC.

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Table of Contents Executive Summary .................................................................................................................... 1

Our Mission ......................................................................................................................... 1

Who We Are ......................................................................................................................... 1

Introduction ......................................................................................................................... 1

Financial Summary............................................................................................................. 2

Company ....................................................................................................................................... 4

Company Overview ........................................................................................................... 4

Management Team ............................................................................................................. 5

Locations and Facilities ................................................................................................... 19

What we do ................................................................................................................................. 20

Financial Products and Services .................................................................................... 20

Target Market ............................................................................................................................ 22

Market Overview .............................................................................................................. 22

Market Needs .................................................................................................................... 28

Industry Analysis ............................................................................................................. 30

Strategy and Implementation ................................................................................................. 34


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SWOT Analysis ................................................................................................................. 34

Marketing Plan .................................................................................................................. 35

Milestones .......................................................................................................................... 37

Financial Plan ............................................................................................................................ 38

Revenue Forecast .............................................................................................................. 38

Personnel Plan ................................................................................................................... 39

Budget ................................................................................................................................. 41

Cash Flow Assumptions .................................................................................................. 43

Loans and Investments .................................................................................................... 44

Financial Statements ................................................................................................................ 46

Profit and Loss Statement ............................................................................................... 46

Balance Sheet ..................................................................................................................... 49

Cash Flow Statement........................................................................................................ 50

Appendix .................................................................................................................................... 53

Revenue Forecast .............................................................................................................. 53

Personnel Plan ................................................................................................................... 54

Budget ................................................................................................................................. 56

Loans and Investments .................................................................................................... 59


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Profit and Loss Statement ............................................................................................... 61

Balance Sheet ..................................................................................................................... 65

Cash Flow Statement........................................................................................................ 68

Summary and Conclusions ............................................................................................. 71


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Executive Summary

Our Mission

Our business is helping your business! We understand how valuable time is. As a trustworthy partner, we promise to deliver exceptional service through our simple application process and flexible financing. At PFF, financial solutions are made to suit your business. Let us show you what we have to offer, and how we can start serving you today.

EFFECTIVE RELATIONSHIP IS AN INVESTMENT IN GOOD PERFORMANCE.

Who We Are

We are a Panamanian Financial Company whose difference stems from our original approach to our profession. Our aim is to support each of our clients at every stage of their lives by building long-lasting client relationships underpinned by a set of key values, including personal contact, attentiveness to clients' needs, trust and discretion.

Introduction

Based on Law No. 42 of July 23, 2001, "Whereby the operations of financial companies are regulated" the financial company PANAMA AND FACTORING FORFAITING GROUP, INC. (PFF), presents this Business Plan developed and written in the order established in the terms of reference. It was developed taking into consideration the appropriate parameters which will allow itself the analytical support of the results obtained after their development and formulation.

Fundamentally the conformation and technical and economic approach of this feasibility study will allow for the proper interpretation of these criteria, which are specific to the economic evaluation of investment projects in order that these are reviewed by the Department of Economic Evaluation General Directorate of Financial Enterprises of the Ministry of Trade and Industry of the Republic of Panama. This study links generally related to the Panamanian economy aspects and behavior of the


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magnitudes generated by the activity carried out by the Financial Intermediation sector, which focuses on the specific topics, typical of financial activity.

According to the scenario projected by the market, it was taken into consideration the relationships that exist regarding market forces described in general and how they act the same, that is, the supply and demand for services offered by Financial Companies, Market Strategies, Organization, Funding Source, Expense Structure, Investment, Financial Analysis with projections to three (3) years, Economic Evaluation in the calculation of Net Present Value (NPV) and Internal Rate of Return of capital (IRR) to determine that the investment made is profitable and economically viable.

In the context of this document, it accomplishes to meet the objectives for which it was developed, with the assurance that means for the economics of the country a contribution by PFF, it will be located in the structural assembly sector in all financial companies grouped together in the country and we know that this step will be inserted in the economic sector of financial intermediation.

Financial Summary

Financial Highlights

The business will need start-up capital of approximately 1M US$ which is already secured by owner's investment. It is expected that a portion of US$ 1.5M of the additional investment capital will be secured through Secured Debentures.

Net Income is expected to start conservatively the first year and increase steadily through the third year of operations. Operating income will pay back both the Secured Debentures (at 12% p.a.) and owner's investment in 3 years.

Cash will be retained in the business to cover cash operating needs as well as future expansion.

It is expected that dividends will be paid to the investors annually. The amount of the dividends is estimated to be 25% of profits.


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After the first year of operations, it is expected that PFF will be able to trim expenses in the business as efficiency, experience, and knowledge work together and help the business operate better. Estimates are extremely conservative in the budgeting process.

Financial Highlights by Year


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Company

Company Overview

We are a private, bank-independent financial company who has been in consumer and business lending since its formation in 2008. PFF is a multi-channel provider of consumer and small business customer finance lending in Panama.

Our core business is to provide finance lending to qualified customers. This takes the form of collateralized and non-collateralized cash and non-cash loans primarily to customers seeking purchases of consumer durable goods and to business customers seeking business-oriented loans. PFF also provides revolving loans and equipment loans, predominantly to existing customers who have already established a good track record with the company.

PFF achievements to date have been driven by the successful implementation of its strategy business model. PFF is a licensed finance company focused on facilitating strong selling opportunities and enhancing our customer relations in order to increase retention rates.

Investing in the sectors we know best, we can provide more than just financing: We bring insight, knowledge and expertise to every loan. And as a result, our clients benefit from know-how and expertise of PFF.

We offer loans that meet our customers' needs. Serving to our customers, we are committed to earning their business every day with our personal touch.

At PFF we're not just bankers, we're builders. We provide smart financing and our know-how to help our customers.


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PFF Management Team

SANTA YUDERKA ROMERO DE FLORES

The Chief Executive Officer (CEO)

SANTA is responsible for:

Quality Control and Risk Management of all Operations of PFF Board Administration and Support Financial, Tax, Risk and Facilities Management Human Resource Management Legal and Administrative Compliance

The CEO is member of the Credit Committee.

EMPLOYMENT SUMMARY

PANAMA FACTORING AND FORFAITING GROUP, INC. (PFF)

Panama City, Panama

Chief Executive Officer (October 2014 – Present)

Supports operations and administration of Board by advising and informing Board members

Oversees design, marketing, promotion, delivery and quality of programs, products and services

Recommends yearly budget for Board approval and prudently manages organization's resources within those budget guidelines according to current laws and regulations

Effectively manages the human resources of the organization according to authorized personnel policies and procedures that fully conform to current laws and regulations

Assures the organization and its mission, programs, products and services are consistently presented in strong, positive image to relevant stakeholders


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ADMINISTRADORA DIVISA, S.A.

Panama City, Panama

Chief Accountant (November 1998 - March 2015)

Supervise all company daily transactions. Manage and supervise department employees. Manage complete accounting cycle of 10 real estate promoting companies. Manage complete accounting cycle of promoter Administration department. Register Daily transactions on Ledger. Perform monthly Bank Accounts Conciliations. Determine amount and payment of employee’s payroll and benefits. Prepare and present monthly liquidations for employee’s Social Security. Prepare and present monthly accounting reports to upper management. Prepare and present yearly accounting reports to external auditing Company. Analyses, design, prepare, present and pay company annual tax return. Inventory Control.

CBH CONSTRUCCIONES, S.A.

Panama City, Panama

Accounting Assistant & Office Clerk (May 1996 - November 1998)

Perform all registers on general ledger Prepare daily accounting reports Calculation of biweekly payroll and employee’s benefit fees General office work operations

EDUCATION

UNIVERSITY OF PANAMA

Certified Public Accountant (CPA # 418) / Panama City Panama, (2000)


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SEMINARS

Panama Certified Public Accountant Association / Tax Compliance (2014) Tax Solutions Center / Income Affidavit (2012) Tax Solutions Center / Fiscal equipment (2011) Tax Solutions Center / New Forms of Taxation (2011) Tax Solutions Center / New Tax reforms (2010) Tax Solutions Center / Reform effects on income affidavit (2010) Panamanian Credit Association / Genuine money & counterfeit management (2010 ) Panamanian Credit Association / Credit Legal forms (2008) Panamanian Credit Association / Credit Risk Management (2007) SMG & Associates / National Account Receivables (2006) JB Capacitation / Supervisor Organizational skills Methods (2004)

SPEAK

• Spanish

MARK SLAZENGER

The Chief Financial Officer (CFO)

MARK is responsible for:

Financial Relationships Company Performance Finance and Raising of Capital Budgeting and Expense Control Shareholder Relations

The CFO is member of the Credit Committee.

EMPLOYMENT SUMMARY


Panama City, Panama


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Chief Financial Officer (October 2014 – Present)

Direct or coordinate an organization's financial or budget activities to fund operations, maximize investments, or increase efficiency.

Analyze operations to evaluate performance of a company or its staff in meeting objectives or to determine areas of potential cost reduction, program improvement, or policy change.

Direct, plan, or implement policies, objectives, or activities of organizations or businesses to ensure continuing operations, to maximize returns on investments, or to increase productivity.

Prepare budgets for approval, including those for funding or implementation of programs.

Serve as liaisons between organizations, shareholders, and outside organizations. Direct or coordinate activities of businesses involved with buying or selling investment

products or financial services. Direct, plan, or implement policies, objectives, or activities of organizations or businesses

to ensure continuing operations, to maximize returns on investments, or to increase productivity.

GE CONSTRUCTION & ARCHITECTURE

Panama City, Panama

Chief Executive Officer (December 2008 - August 2012)

Confer with board members, organization officials, or staff members to discuss issues, coordinate activities, or resolve problems.


Direct or coordinate activities of businesses or departments concerned with production, pricing, sales, or distribution of products.

Appoint department heads or managers and assign or delegate responsibilities to them. Preside over or serve on boards of directors, management committees, or other governing

boards.


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Direct non-merchandising departments, such as advertising, purchasing, credit, or accounting.

Serve as liaisons between organizations, shareholders, and outside organizations. Administer programs for selection of sites, construction of buildings, or provision of

equipment or supplies. Represent organizations or promote their objectives at official functions or delegate

representatives to do so. Confer with board members, organization officials, or staff members to discuss issues,

coordinate activities, or resolve problems.

IPS CONSTRUCTION (merged with HOCHTIEF)

Essen, North Rhine-Westphalia

Chief Financial Officer (October 1998 - November 2008)

Direct or coordinate an organization's financial or budget activities to fund operations, maximize investments, or increase efficiency.

Analyze operations to evaluate performance of a company or its staff in meeting objectives or to determine areas of potential cost reduction, program improvement, or policy change.



Coordinate the development or implementation of budgetary control systems, recordkeeping systems, or other administrative control processes.

EDUCATION

NURNBERG AMERICAN HIGH SCHOOL, Nurnberg, Germany, Bayern High School Diploma (May 1990)

FRANKFURT SCHOOL OF FINANCE & MANAGEMENT, Frankfurt am Main, Hessen Land, Germany, Bachelor of Science in Business Administration (BSc) (May 1994)


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STU FACULTY OF ARCHITECTURE AND CIVIL ENGINEERING, Bratislava, Slovakia, Building Management (March 1995)

FRANKFURT SCHOOL OF FINANCE & MANAGEMENT, Frankfurt am Main, Hessen Land, Germany, Master of Finance (MSc) (July 1997)

ADDITIONAL SKILLS

Business Development and Planning Business Strategy Financial Accounting, Strategy and Planning Construction Management Project Management Direct or coordinate an organization's financial and budget activities to fund operations,

maximize investments, or increase efficiency. Analyze operations to evaluate performance of a company or its staff in meeting

objectives or to determine areas of potential cost reduction, program improvement, or policy change.



Coordinate the development or implementation of budgetary control systems, record-keeping systems, or other administrative control processes.

SPEAK

• German, English, Spanish, Slovak, Russian

KIRSI YAQUIRA ABREU ROMERO

The Chief Operating Officer (COO)

KIRSI is responsible for:

PFF Project Management


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Planning and Development of Administrative Processes Deployment of Operational Activities Troubleshoot and Resolve Technical Problems arising in Operational Activities Direction and Coordination of the Administrative Operations

The COO is a member of the Credit Committee.

EMPLOYMENT SUMMARY


Panama City, Panama

Chief Financial Officer (October 2014 – Present)

Develop and plan operational strategies to enhance business growth. Architect, initiate and execute project management strategies. Plan and develop facilities and human resources to build growing opportunities for a

business growth. Plan and execute daily internet root processing, updating and management. Build, plan and implement security and safety operations strategies around business

facilities. Develop, plan, deploy and improvise operational capabilities. Develop and initiate logistics to expand the operational presence of a business. Troubleshoot and resolve more complex and technical problems arising in operational

activities.

REMAX GRANDE PANAMA

Panama City, Panama

Chief Operating Officer (June 2012 – May 2013)

Deal with the day-to-day details of each department in the company, such as production and human resources. He acts as a liaison between department level managers and the top executive.


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Overseeing human resources, sales and other administrative departments in the company.

Prepare reports for the CEO on the day-to-day activities in each department. Conduct regular meetings with department managers to remain up to date on the status

of each area of the company.

THE TANNING STUDIO

Panama City, Panama

General Manager (December 2009 – May 2013)

Develop and review budget and goals with staff and review progress as compared to budget with staff quarterly.

Hold regular employee meetings. Create and maintain an atmosphere in which employees willingly produce at maximum

capacity. Supervise maintenance of preferred staffing levels. Develop sound working relationships with other cooperatives and within the business

community. Supervise performance of purchasing functions to insure greatest value, while taking

advantage of all discounts. Establish sales goals and develop plans to achieve them.

THE PAUL FRANK STORE

Panama City, Panama

Executive Assistant (December 2007 – December 2009)

Managing the day-to-day operations of the office. Organizing and maintaining files and records. Planning and scheduling meetings and appointments. Managing projects and conducting research. Preparing and editing correspondence, reports, and presentations. Making travel and guest arrangements. Providing quality customer service.


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Working in a professional environment.

COSTA PACIFICA PROPERTY

Panama City, Panama

Executive Assistant (August 2006 – November 2007)

Managing the day-to-day operations of the office. Organizing and maintaining files and records. Planning and scheduling meetings and appointments. Managing projects and conducting research. Preparing and editing correspondence, reports, and presentations. Making travel and guest arrangements. Providing quality customer service. Working in a professional environment.

PEAK MANAGEMENT

McLean, USA

Executive Assistant (August 2006 – July 2006)

Managing the day-to-day operations of the office. Organizing and maintaining files and records. Planning and scheduling meetings and appointments. Managing projects and conducting research. Preparing and editing correspondence, reports, and presentations. Making travel and guest arrangements. Providing quality customer service. Working in a professional environment.

EDUCATION

COMMERCIAL INSTITUTE PANAMA, Panama City, Panama, Accounting and Management High School Diploma (May 1995)


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INTERAMERICAN UNIVERSITY, Panama City, Panama, Bachelor in Finances (Lic) (March 2000)

ADDITIONAL SKILLS

• Financial Accounting • Business Management • Human Resources Management • Public Relations

SPEAK

• English, Spanish

RAFAEL ANTONIO TOVAR AGREDA

The Chief Commercial Officer (CCO)

RAFAEL is responsible for:

Development and Execution of Strategic Directions and Plans of all Commercial Function

Marketing, Business Development and Customer Support / Customer Experience Manage Client - Sale and Client Account Management Operations Development and Execution of Annual Marketing Plan Develop and Monitor Quality Metrics to ensure Outstanding Service and

Customer Support

The CCO is member of the Credit Committee.

EMPLOYMENT SUMMARY


Panama City, Panama

Chief Commercial Officer (October 2014 – Present)


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Responsible for the implementation and achievement of Business Area’s mission, goals and financial objectives. Develop long term plans and budgets for the Commercial Department and its activities, monitor progress, assure adherence and evaluate performance. Ensure systems and procedures necessary to the smooth operation of the department.

Maintain a climate that attracts, retains and motivates top quality personnel. Recruit, train, appraise, supervise, support, develop, promote and guide qualified personnel.

Develop strategic direction and plans for the company with regard to all commercial functions including sales, marketing, business development and customer support / customer experience.

Manage sales operations organization, field sales organization, and manufacturer’s agents, distributors and value added resellers to ensure sales targets are met or exceeded.

Establish and monitor progress against key performance indicators. Identify and develop new market opportunities for the company’s product portfolio. Develop and administer incentive plans which entice individuals as well as teams to

perform successfully against the objectives while respecting the budget.

CONSTRUCTORES NACIONALES, S.A. (CONALSA)

Panama City, Panama

Project Administrator/Resident Engineer (November 2012 - September 2014)

In charge of administrating assigned budget, inventory, labor hours, sub-contractors, union members and labor department issues and cost analysis for a residential project consisting of 1200 houses.

CONSTRUCTORA AEI

Panama City, Panama

Resident Engineer (February 2012 - October 2012)

Supervised subcontractors to reach project completion on time with assigned budget.

ADOLFO OLLOQUI DOMINGUEZ


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Panama City, Panama

Project Manager (January 2011 - January 2012)

Administered and controlled expenses in the construction of two shopping centers in Pacora district.

EASTERN HOME INSPECTIONS & IMPROVEMENTS, INC.

Miami, USA (January 2004 - December 2010)

Lead a team of 15 staff and 5 sub-contractors in construction, remodeling and inspection projects, increasing 10% to 12 % a year for a 5 year period just by referrals from satisfied customers.

AMERADA HESS CORPORATION

Miami, USA

General Manager (March 2001 - December 2003)

Manager in charge of a corporate gas station with convenience store, meeting and exceeding company goals within my first year, reducing employee turnover by progressive training and coaching.

ATLANTA BREAD COMPANY

Miami, USA

Project Manager (June 1999 - February 2001)

Directed and conducted all construction phases of the restaurant successfully by managing strict schedules, enforcing sharp procurement procedures, efficient inventory management, maximized contractor supervision and prioritized financial resources.

RM COMPUTER SYSTEMS, INC.

Miami, USA


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Sales Manager (October 1997 - April 1999)

Responsible for launching Latin America territory sales operations driving sales to established quota in part by reaching distribution agreements with HP, IBM, Compaq and other major manufactures.

MICRODIGITAL SOLUTIONS, INC.

Miami, USA / Barcelona, Spain / Caracas, Venezuela

Sales Manager (March 1996 - August 1997)

With a sales force of 5 account managers, built a client database and established OEM distribution agreements with major suppliers for our operations throughout Latin America and Spain boosting sales to reach company goals.

CONSOLIDADA DE CEMENTOS C.A.

Valencia, Venezuela

Project Assistant (June 1991 - December 1995

Executed all activities related to an import permit, receiving and dispatching all equipment and machinery for our new $100 million dollars Portland Cement Manufacture industrial facility assembly/expansion work.

EDUCATION

UNIVERSITY OF NEW ORLEANS, New Orleans, Louisiana, USA, Electrical Engineering (1988)

INSTITUTO UNIVERSITARIO DE TECNOLOGIA ANTONIO JOSE DE SUCRE, Valencia, Venezuela (1992)

SEMINARS

Microsoft EXCEL, Panama City, Panama (2013)


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Oral Communication Techniques, Miami, FL., USA Professional Home Inspector, Miami, FL., USA (2004)

Advanced Profit & Loss, Amerada Hess Corporation, Miami, USA (2003) Manager in Training, Amerada Hess Corporation, Miami, USA (2003) Manager in Training, Atlanta Bread Company, Atlanta, USA (1999)

SPEAK

• English, Spanish


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Locations and Facilities

PFF Office is located in high density and main business area of San Francisco District, Panama City in the middle of 50th Street in GLOBAL BANK building.


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What we do

Financial Products and Services

PFF FACTORING

PFF is a private and independent factoring provider. We provide our clients with receivable funding, A/R management and collection. As an independent financial company with a private shareholder background, we can ensure the flexibility of our decisions and short validation process. We respond to individual needs in a goal-oriented manner in order provide immediate liquidity for earned revenues, reliable protection against bad debts, complete assumption of debtor management and immediate improvement of the company financing.

We take care of our client’s receivables from origin to collection. PFF Factoring gives businesses access to the critical capital they need to compete and grow encompassing finance efficiently and competently.

PFF BUSINESS LOAN

PFF manages the business in a direction and manner that continuously enhance client satisfaction and value. Through our lending and financing solutions, we enable our clients to pursue ambitious growth strategies and execute value-creating transactions. Our clients can get the working capital they need to handle new projects, increase cash flow, and fill orders while their business grows.

PFF PURCHASE ORDER FINANCING

For small business entrepreneurs, opportunities to grow your business do not come along every day. But growth can be severely handicapped when an opportunity to bid on a big, profitable order does present itself but you are unable to compete due to the


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lack of financing to execute it. With bank loans still difficult, especially for early stage small business, where can you turn? At PFF, we may have the solution for you.

For our clients operating in the construction, manufacturing and distribution sectors purchase order financing can often provide the financial mechanism to say "YES" to a large, out of the norm order. With a purchase order finance arrangement provided by PFF, we will provide the necessary financing to purchase your materials or goods from your vendor. Once delivered to your customer, we will then finance the invoice through normal factoring.

PFF PURCHASE ORDER FINANCING may be the best option to receive the capital you need for your business. Those categories serve as collateral for short term working capital loans that you can obtain fast and cost effectively.

PFF REVOLVING LINE OF CREDIT

A revolving line of credit is a flexible method of borrowing cash for your small business. It is very similar to a credit card in the sense that a Revolving Line of Credit has an established credit limit that you can borrow up to. PFF revolving loan facility provides a client with a maximum aggregate amount of capital, available over a specified period of time.

PFF LEASING

In today's market, equipment leasing and loans can enhance your liquidity, productivity, and competitiveness. Whether you're looking to optimize depreciation, lower your monthly payments, or monetize fixed assets, PFF Leasing can help meet whatever objectives drive your business. We at PFF understand the value of business critical equipment and we can help you manage it from purchase to re-marketing. What's more, you gain access to PFF's management best practices that can help improve your business performance beyond the deal.


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Target Market

Market Overview

PANAMA


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ECONOMICAL SITUATION OF THE COUNTRY

Panama's economy grew 8.4% in the third quarter of 2014 according to data of Gross Domestic Product (GDP) published by the National Statistics and Census Institute (INEC). This occurred at a time when even the Panama Canal expansion to US$ 5,250 million had not entered its peak construction. The expansion of the hotel investment in the period 20 10-2012 has been estimated by the Panamanian Association of Hotels (APATEL) in US$ 2.387 million dollars. Moreover, the government plans to make public investments in the amount of 13.6 billion dollars in 2010-2014. That is to say, the economy of Panama is growing on its own power, without having yet entered significantly large investment projects.

For the years 2012 and 2013 the unemployment rate will have dropped to 4.6% and 4.2% respectively as a result of double-digit economic growth during those years. The workforce of the country, measured by the economically active population (EAP), will grow during the period 2011-2014 at an average annual rate of 3.3%. The participation of private enterprise in the relative composition of the working population will grow due to increased creation of formal jobs.

This behavior of a booming economy like Panama, has allowed us to develop, through analyzes and own research, an estimate of the Gross Domestic Product (GDP) which would consider 27,687.2 million dollars for the year 2013.

Among the charts with details that show the relative estimate of Gross Domestic Product (GDP) by province we highlight the provinces of Panama and Colon, the latter being the product of the Colon Free Zone.

If we take conceptually into consideration that the Gross Domestic Product per capita is used as a measure of well-being of a country, and for comparing welfare between countries, as is theoretically the value of goods and services produced by each inhabitant of an average country; the results in the chart below shows that the Provincial GDP 71.1 % and GDP per capita it corresponds to a strong solid economy and growing firmly for purposes of this study.


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THE BUSINESS ENVIRONMENT

Figure 1.1 where economies stand in the global ranking on the ease of doing business


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Figure 1.2 How Panama and comparator economies rank on the ease of doing business

WHERE DOES THE ECONOMY STAND TODAY?

How well do the credit information system and collateral and bankruptcy laws in Panama facilitate access to credit? The economy has a score of 8 on the depth of credit information index and a score of 7 on the strength of legal rights index (see the summary of scoring at the end of this chapter for details). Higher scores indicate more credit information and stronger legal rights for borrowers and lenders. Globally, Panama stands at 17 in the ranking of 189 economies on the ease of getting credit (figure 6.1). The rankings for comparator economies and the regional average ranking provide other useful information for assessing how well regulations and institutions in Panama support lending and borrowing.


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Figure 6.1 How Panama and comparator economies rank on the ease of getting credit

GETTING CREDIT IN PANAMA

One way to put an economy’s score on the getting credit indicators into context is to see where the economy stands in the distribution of scores across economies. Figure 6.2 highlights the score on the strength of legal rights index for Panama and shows the scores for comparator economies as well as the regional average score. Figure 6.3 shows the same for the depth of credit information index.


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Figure 6.2 How strong are legal rights for borrowers and lenders (Economy scores on strength of legal rights index)?

Figure 6.3 How much credit information is shared—and how widely (Economy scores on depth of credit information index)?


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The getting credit indicators reported here for Panama are based on detailed information collected in that economy. The data on credit information sharing are collected through a survey of a credit registry and credit bureau APC. The data on the legal rights of borrowers and lenders are gathered through a survey of financial lawyers and verified through analysis of laws and regulations as well as public sources of information on collateral and bankruptcy laws.

CONCLUSION

With regard to this sector of the national economy, according to a report for the month of June 2014, by the Comptroller General of the Republic of Panama, the total assets of the national banking system increased by 13.4%, mainly liquid assets that grew in15.3% and loan portfolio by 15.1%. As for deposits, they amounted to 12.2%, standing internal and external 10.8 % 15.3% respectively.

If we take conceptually into consideration that the Gross Domestic Product per capital is used as a measure of well-being of a country, and for comparing welfare between countries, as is theoretically the value of goods and services produced by each inhabitant of an average country; the results shows that the Provincial GDP 71.1 % and GDP per capital it corresponds to a strong solid economy and growing firmly for purposes of this study. The potential for the company PFF, at the beginning stage of operations is excellent.

Market Needs

MARKET DEMAND

Panamanian society is constantly in search of opportunities that will enable the development and improvement of their socioeconomic status.

Borrowing for small and medium businesses same as for people of average socioeconomic status has become very difficult because the local banks engaged in this business, are applying a series of requirements that sometimes are difficult to meet for the average customer. In this sense, by analyzing the market and financial analysis, it was established that there is a need for a company to come and meet the borrowing


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requirements for the Panamanian credit applicants, achieving a harmonious environment, safety and trust that encourage peace and social development.

PFF like any business, seeks to have returns on their investments, so it must have an orderly and permanent growth rate.

Panama, in recent years has been developing with significant economic activity and as a result has brought the existence of a financial companies conducting their activities throughout the national territory. In this sense, the market forces defined by the supply and demand to be taken for this type of business across the country without considering the existence of potential demand variables which allow us to estimate and / or to project in terms Quantitative profits for this type of project. For this reason in the development of study and economic evaluation we have taken into consideration the evolution of the market and these results are the result of calculations and Financial Projections. The deals provided by financial firms across the country will depend on the way that they manage their resources for marketing of applicants, and that demand will be distributed among existing financial companies. In relation to the potential demand, this is given by the concurrence of new investments that have been performing across the country and obviously will continue to generate employment. Similarly, as previously mentioned, this will cause growth in demand and will have the effect of strengthening the economically active population (EAP), an indicator that allows us to develop estimates of the economic impact that this can have on foreign and domestic investments the whole country.

OFFER

Economics science is defined as the Supply of the amount of goods or services offered in a market at a certain price. We refer to the supply as the availability of the amount of money from a financial company that provides for their loans and therefore on the local market an increase occurs in the existence of money offered in loans by financial companies. The offer in this market, it constitutes the sum of all the monetary supplies of all existing financial companies operating in our economy.


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FINANCIAL MARKET IN PANAMA

The General Directorate of Financial Companies in Panama of the Ministry of Trade and Industry of Panama is the regulatory and oversight body of economic activity the governing Law 42 of July 23, 2001, as amended and regulations and Law 42 of October 2, 2000, regarding the Money Laundering and Terrorist Financing.

At June 30th 2015 there is registered a total of 164 Financial Companies from which 88% are located in the Province of Panama and the rest is distributed inside the country.

According to the General Directorate of Financial Enterprises of the Ministry of Trade and Industry the funding provided by the registered Financial Companies is mostly reflected in mortgage, personal and auto loans.

DEMAND

With regard to demand, economic theory defines a perfectly competitive market, as the number of units of a particular good or service that consumers are willing to buy in a market at a certain price and time as well.

Panama currently has unsatisfied and growing need of businesses and people requiring to meet their needs of credit. Considering the existence that the demand of individuals for financial resources is greater than the supply that the market presents today so the financial company PFF come into existence to cover the poor market supply.

Industry Analysis

INTRODUCTION

PFF primary objective is the Deployment of Loan Capital. Strong deployment is a means to greater community development impact, a stronger balance sheet, and increased earned income. Most of financial companies in Panama, regardless of staff or portfolio size, face periodic deployment challenges; some face fairly constant deployment challenges. These challenges include but are not limited to lack of staff training, competition from other lenders, and lack of quality deals. PFF has developed techniques tailored to individual client's needs, service areas, and business models to help clients to deploy much needed funds into their markets. The Marketing Plan of


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PFF describes common barriers to deployment and effective methods PFF uses to increase loan volume.

CHALLENGES OF CAPITAL DEPLOYMENT

During the market research conducted by PFF we have found out that financial companies in Panama are facing numerous barriers to deployment of capital, with most respondents indicating that they faced more than one of these issues (See Chart 1). Across all factors it is lack of quality deals and insufficient staff training and capacity were the most commonly cited barriers, followed by insufficient capital to meet demands (mostly reported by responders: Financial Companies) and competition with other lenders (mostly reported by local banks) and lack of a marketing budget. As shown in Chart 1, there are differences between banks and financial companies.

Chart 1


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Staff Training and Capacity and Lack of Quality Deals stands out as the most common barrier to deployment: more than two-thirds of all respondents, and more than 50% of financial companies and 50% of banks, indicated that this was a challenge. Of these respondents, nearly three-quarters indicated that lack of collateral was the applicant’s major issue, followed by low credit score (64%) and lack of financial literacy (45%).

Although the quality of deals is perennially an issue for financial companies in particular, interviewees commented that the tight credit requirements of Panamanian banks as the mainstream lenders pushed also qualified businesses to seek capital from non-traditional sources of capital like PFF. The financial companies are attracting clients that are unable to obtain loans from banks, even those with higher credit scores and acceptable collateral. According to respondents, “Banks are only lending in perfect situations, and are not loosening up from a risk standpoint...". Some of PFF's responders were loan officers and ex-bankers, and they’ve made comments that "the Financial Companies - their employers are doing deals that in US and some European countries in banking would have been competing with every bank in town for.”

It is little surprise that 95% of survey respondents indicated that increasing loan volume has been a priority in the past three years; most (over three-quarters) but not all, achieved that goal. The characteristics with increased deployment vary widely. They are both banks and financial companies. Nearly 55% of financial companies had loan portfolios of less than $1 million, while 20% had portfolios greater than $2 million. Almost half of financial companies had 10 or fewer staff members, while 10% indicated that their staff exceeded 20 people.

PFF STRATEGY TO ADDRESS DEPLOYMENT BARRIERS

PFF have developed myriad methods for maintaining and increasing their deployment based on their specific target markets, borrower needs and business models. Marketing and outreach were used by many survey respondents, Fifty seven percent of respondents with loan volume growth over the past three years attributed part of that growth to their marketing and outreach efforts. As shown in Chart 2, developing referral relationships was the main marketing strategy used to increase loan volume, followed by online media and newsletter.


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Chart 2

Included in the “Other” category in Chart 2 are strategies such as: Specialized/focused lending, Continued expansion in existing or larger service area, Partnerships with government agencies, Increasing staff size, Establishment of new branches, Rebranding, Working/partnering with other lenders.


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Strategy and Implementation

SWOT Analysis

Strengths

Flexibility and Know-How Knowledge of financed Sectors and Industries Reduced Labor Costs Ability to sell with high gross margins Visible and well-structured Website with Online Services

Weaknesses

Vulnerable to Ineffective Legal System Small Business Unit Limited Private Capital

Opportunities

Growth of Retail and Service demand in developing country Limited access to Bank Financial Products

Threats

Quality of Available Credit Checks Skilled Labor Shortage


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Marketing Plan

The PFF will use the following marketing tactics to reach its target market of small and medium size businesses in Panama (2 to 50 employees) with following Financial Products:

Business Loan Factoring Purchase Order Financing Personal Loan Leasing Revolving Line of Credit

Using following marketing tools:

Online Advertisement (PFF Website, PFF Social Media and Online Advertisement Portals)

Periodic Advertisements in Panama Newspapers and Small Business Publications, each tracked to determine whether they yield inquiries and clients

Direct Contact with Prospective Clients conducted by Referrals of PFF - Brokers using their Client's Database

The marketing messages will focus on the economics of the decision to use Financial Products from PFF and the advantage of know-how and oversight of credit performance with PFF's experience.

Marketing also encompasses the search for PFF Brokers. Job listings will be posted online (PFF Website and PFF Social Media) and in Newspapers. We will recruit the best candidates possible who already have experience with the financial products and have financial education and background. The costs associated with this hiring are only the time of PFF.

Positioning

For business owners, professionals, and the self-employed who make decisions that impact the success of their companies and who recognize that managing cash flow can


36

be the difference between success and failure PFF provides more than just financing: We bring insight, knowledge and expertise to every loan and for every client. And as a result, our clients benefit from our know-how and expertise. Unlike other financial institutions, PFF is flexible, proactive and efficient in all stages of credit application and credit management.

Pricing

PFF Financial Products will be priced in accordance to the established credit pools and at the upper edge of what the market will bear, competing with similar types of financial products in the area.

Promotion

Quality deals are key to success in the financial business therefore financial analysis and credit evaluation remain our most important means of promotion. PFF will continue to lead this effort identifying and publishing PFF's criteria of quality deals and know-how "How to build and maintain healthy credit" with existing and potential clients. In addition to Referral Program of PFF we have identified several newsletters and publications within which online and print advertisements will run. Direct mail, in the form of personal letters will also be used to communicate with existing and potential clients. Our budget for promotion activities is as follows:

Online Advertisement (PFF Website, PFF Social Media and Online Advertisement Portals): $35,000 to produce a new PFF Website and US$ 30,000 annually for online advertisement and maintenance of PFF Website, PFF Social Media and Online Advertisement

Periodic Advertisements in Panama Newspapers and Small Business Publications, each tracked to determine whether they yield inquiries and clients US$ 24,000 annually

Print Advertising (Brochures and Flyers) US$ 15,000 annually Direct Contact with Prospective Clients conducted by Referrals of PFF - Brokers

using their Client's Database which includes phone expenses and travel US$ 12,000 annually


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Milestones

Milestone Due Date

Launch of Social Media Advertisement July 27, 2015

Implementation of New Loan Management Solution

July 31, 2015

Introduction of PFF Revolving Line of Credit

August 03, 2015

Implementation of New AML and FATCA Policies

August 03, 2015

Launch of New Website with Secured Client's Area

September 30, 2015


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Financial Plan

Revenue Forecast

Revenue Forecast

FY2015 FY2016 FY2017

Total Revenue $750,000 $850,000 $1,150,000

Total Direct Cost $0 $0 $0

Gross Margin $750,000 $850,000 $1,150,000

Gross Margin % 100% 100% 100%

Revenue by Month


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About the Revenue Forecast

The Revenue in this Business Plan are based on owner's investment to the Credit Pools and are expected to rise significantly with the success of the offered Financial Products. In the second and third year PFF's existing revenue streams are projected to grow at slower rates, as PFF can't with projected human resources take on much additional credit deals without investing in expansion of the office or upgrading the license from a Financial Company to a fully operational Panamanian Bank.

Personnel Plan

Personnel Table

FY2015 FY2016 FY2017

Chief Executive Officer (Director Ejecutivo) $31,500 $48,000 $60,000

Chief Financial Officer (Director Financiero) $31,500 $48,000 $60,000

Chief Operating Officer (Director de Operaciones) $22,000 $48,000 $60,000

Chief Commercial Officer (Director Comercial) $24,000 $24,000 $24,000

Executive Assistant (Asistente Administrativo) $11,250 $15,000 $18,000

Messenger (Agente de Mensajeria) $5,350 $6,000 $6,500

Executive Assistant of CCO (Asistente Comercial) $10,250 $15,000 $18,000

Customer Care Agent #1 (Agente de Atencion al Cliente #1) $7,200 $12,000 $13,800

Account Manager (Ejecutivo de Cuentas) $7,200 $12,000 $13,800


Total $156,700 $240,000 $287,900


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About the Personnel Plan

The personnel forecast reflects all necessary personnel to accomplish all objectives of PFF Business Plan. The executives of company will be primarily compensated through profits. It is expected that lower-level staff may turn over, but the positions will be systematized to an extent that this does not disrupt the business.


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Budget

Budget Table

FY2015 FY2016 FY2017

Operating Expenses

Salary $156,700 $240,000 $287,900

Employee Related Expenses $20,032 $30,720 $36,464

Rent + Maintenance of Office (Alquiler Oficina) $30,000 $30,000 $30,000

Rent of Storage (Alquiler de Almacenaje) $1,800 $1,800 $1,800

Rent of IT (Alquiler de Equipo de Informatica) $38,500 $42,000 $42,000

Utility (Utilidades) $21,000 $21,000 $21,000

Software $12,000 $12,000 $12,000

Rent of Office Equipment (Alquiler de Equipo de Oficina) $4,800 $4,800 $4,800

Office Maintenance (Mantenimiento de Oficina) $7,800 $7,800 $7,800

Marketing & Promotions (Marketing y Promociones) $65,000 $72,000 $72,000

Office Supplies (Materiales de Oficina) $2,400 $2,400 $2,400

Insurance (Seguro) $1,500 $1,500 $1,500

Total Operating Expenses $361,532 $466,020 $519,664

Major Purchases

Renovation of Office (Remodelacion de Oficina) $25,000 $0 $0

Office Furniture and Equipment (Muebles y Inventario de Oficina) $15,000 $0 $0

Car (Carro) $15,000 $0 $0

Total Major Purchases $55,000 $0 $0


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Expenses by Month

About the Budget

Marketing will be higher in the first year to accommodate the additional marketing activities described in the marketing strategy and milestones. All the necessary computer equipment and software will be outsourced.

Startup Costs

Total start-up requirements include legal costs, logo design, stationery and related expenses. The start-up costs are to be financed partially by the direct owner investment and long-term loan financing.


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Cash Flow Assumptions

Cash Flow Assumptions

Cash Inflow

% of Sales on Credit 0%

Cash Outflow

% of Purchases on Credit 50%

Avg Payment Delay (Days) 15

About the Cash Flow Assumptions

We plan to repay 50% of our accounts payable in 30 days on average. Repayment of debt is not a significant factor in the amount of cash that gets paid out due to the fact that all but administrative costs are covered by client.


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Loans and Investments

Loans and Investments Table

FY2015 FY2016 FY2017

Capital Shareholders (Capital Accionistas) Equity investment

$600,000 $0 $0

Additional Capital Shareholders (Capital Adicional Accionistas) Line of credit at 12% interest

$200,000 $0 $0

Loan Shareholders: Renovation of Office (Prestamo Accionistas: Remodelacion de Oficina) Loan at 12% interest for 60 mos.

$25,000 $0 $0

Loan Shareholders: Office Equipment (Prestamo Accionistas: Equipo de Oficina) Loan at 12% interest for 60 mos.

$15,000 $0 $0

Loan Shareholders: Company Car (Prestamo Accionistas: Carro) Loan at 12% interest for 60 mos.

$15,000 $0 $0

Total Amount Received $855,000 $0 $0

Sources of Funds

PFF is offering First Secured Debentures with the following:

• 12% paid annually • 3 Year Term • Principle Secured • Minimums of $150,000 • Maximum offering $600,000

Use of Funds

The company will use its financial resources to following Credit Pools:


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• FA# FACTORING <30 DAYS <05K (for factoring of invoices within 30 days and $5,000 of total advance)

• FB# FACTORING <60 DAYS <10K (for factoring of invoices within 60 days and $10,000 of total advance)

• FC# FACTORING <90 DAYS <25K (for factoring of invoices within 90 days and $25,000 of total advance)

• BLA# SBSLOAN <30 DAYS <05K (for small business loans due within 30 days and $5,000)

• BLB# SBSLOAN <60 DAYS <10K (for small business loans due within 60 days and $10,000)

• BLB# SBSLOAN <90 DAYS <25K (for small business loans due within 90 days and $25,000)


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Financial Statements

Profit and Loss Statement


FY2015 FY2016 FY2017

Revenue $750,000 $850,000 $1,150,000

Direct Cost $0 $0 $0

Gross Margin $750,000 $850,000 $1,150,000

Gross Margin % 100% 100% 100%

Operating Expenses

Salary $156,700 $240,000 $287,900






Software $12,000 $12,000 $12,000







Operating Income $388,468 $383,980 $630,336


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Interest Incurred $53,260 $58,984 $56,836

Depreciation and Amortization $10,750 $11,000 $11,000

Income Taxes $81,115 $78,499 $140,625

Total Expenses $506,657 $614,503 $728,125

Net Profit $243,343 $235,497 $421,875

Net Profit / Sales 32% 28% 37%

Gross Margin by Year


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Net Profit (or Loss) by Year

About the Profit and Loss Statement

Month-by-month forecasts for profit and loss are included in the appendix.


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Balance Sheet

Balance Sheet

As of Period's End FY2015 FY2016 FY2017

Cash $1,052,441 $1,290,926 $1,713,641

Accounts Receivable $0 $0 $0

Inventory $0 $0 $0

Total Current Assets $1,052,441 $1,290,926 $1,713,641

Long-Term Assets $55,000 $55,000 $55,000

Accumulated Depreciation ($10,750) ($21,750) ($32,750)

Total Long-Term Assets $44,250 $33,250 $22,250

Total Assets $1,096,691 $1,324,176 $1,735,891

Accounts Payable $4,069 $4,069 $4,069

Sales Taxes Payable $0 $0 $0

Short-Term Debt $200,000 $200,000 $200,000

Total Current Liabilities $204,069 $204,069 $204,069

Long-Term Debt $49,279 $41,267 $31,107

Total Liabilities $253,348 $245,336 $235,176

Paid-In Capital $600,000 $600,000 $600,000

Retained Earnings $0 $243,343 $478,840

Earnings $243,343 $235,497 $421,875

Total Owner's Equity $843,343 $1,078,840 $1,500,715

Total Liabilities & Equity $1,096,691 $1,324,176 $1,735,891


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About the Balance Sheet

The balance sheet's view of the company is very straightforward. No significant purchases of assets are expected. As the balance sheet shows, we do not expect any real trouble meeting our debt obligations. As long as we can achieve our specific objectives, we should not need to take on additional debt.

Cash Flow Statement

Cash Flow Statement

FY2015 FY2016 FY2017

Operations

Net Profit $243,343 $235,497 $421,875


Change in Accounts Receivable $0 $0 $0

Change in Inventory $0 $0 $0

Change in Accounts Payable $4,069 $0 $0

Change in Sales Taxes Payable $0 $0 $0

Net Cash Flow from Operations $258,162 $246,497 $432,875

Investing & Financing

Assets Purchased or Sold ($55,000) $0 $0

Investments Received $600,000 $0 $0

Change in Short-Term Debt $200,000 $0 $0

Change in Long-Term Debt $49,279 ($8,012) ($10,160)

Net Cash Flow from Investing & Financing $794,279 ($8,012) ($10,160)

Cash at Beginning of Period $0 $1,052,441 $1,290,926

Net Change in Cash $1,052,441 $238,485 $422,715

Cash at End of Period $1,052,441 $1,290,926 $1,713,641


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Cash Flow by Month


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Cash Flow by Year

About the Cash Flow Statement

As you can see, a significant amount of cash is required to fund the first year of operations. The early months show a higher amount of cash going out than coming in while we build up the business.


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Appendix

Revenue Forecast

Revenue Forecast Table (With Monthly Detail)

FY2015 Jan '15 Feb '15 Mar '15 Apr '15 May '15 Jun '15 Jul '15 Aug '15 Sep '15 Oct '15 Nov '15 Dec '15

Total Revenue $15,000 $30,000 $45,000 $60,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000

Total Direct Cost $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Gross Margin $15,000 $30,000 $45,000 $60,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000

Gross Margin % 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

FY2015 FY2016 FY2017

Total Revenue $750,000 $850,000 $1,150,000

Total Direct Cost $0 $0 $0

Gross Margin $750,000 $850,000 $1,150,000

Gross Margin % 100% 100% 100%


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Personnel Plan

Personnel Table (With Monthly Detail)


Chief Executive Officer (Director Ejecutivo)

$0 $2,000 $2,500 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000

Chief Financial Officer (Director Financiero)

$0 $2,000 $2,500 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000

Chief Operating Officer (Director de Operaciones)

$0 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000

Chief Commercial Officer (Director Comercial)

$2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000

Executive Assistant (Asistente Administrativo)

$750 $750 $750 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000

Messenger (Agente de Mensajeria)

$0 $450 $450 $450 $500 $500 $500 $500 $500 $500 $500 $500

Executive Assistant of CCO (Asistente Comercial)

$0 $750 $750 $750 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000

Customer Care Agent #1 (Agente de Atencion al Cliente #1)

$0 $0 $650 $650 $650 $750 $750 $750 $750 $750 $750 $750

Account Manager (Ejecutivo de Cuentas)

$0 $0 $650 $650 $650 $750 $750 $750 $750 $750 $750 $750

Customer Care Agent #2 (Agente de Atencion al Cliente #2)

$0 $0 $0 $650 $650 $650 $750 $750 $750 $750 $750 $750


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Total $2,750 $9,950 $12,250 $14,150 $14,450 $14,650 $14,750 $14,750 $14,750 $14,750 $14,750 $14,750

FY2015 FY2016 FY2017

Chief Executive Officer (Director Ejecutivo) $31,500 $48,000 $60,000

Chief Financial Officer (Director Financiero) $31,500 $48,000 $60,000

Chief Operating Officer (Director de Operaciones) $22,000 $48,000 $60,000

Chief Commercial Officer (Director Comercial) $24,000 $24,000 $24,000

Executive Assistant (Asistente Administrativo) $11,250 $15,000 $18,000

Messenger (Agente de Mensajeria) $5,350 $6,000 $6,500

Executive Assistant of CCO (Asistente Comercial) $10,250 $15,000 $18,000


Account Manager (Ejecutivo de Cuentas) $7,200 $12,000 $13,800


Total $156,700 $240,000 $287,900


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Budget

Budget Table (With Monthly Detail)


Operating Expenses

Salary $2,750 $9,950 $12,250 $14,150 $14,450 $14,650 $14,750 $14,750 $14,750 $14,750 $14,750 $14,750

Employee Related Expenses

$440 $1,272 $1,560 $1,784 $1,832 $1,864 $1,880 $1,880 $1,880 $1,880 $1,880 $1,880

Rent + Maintenance of Office (Alquiler Oficina)

$2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500

Rent of Storage (Alquiler de Almacenaje)

$150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150

Rent of IT (Alquiler de Equipo de Informatica)

$0 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500

Utility (Utilidades) $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750

Software $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000

Rent of Office Equipment (Alquiler de Equipo de Oficina)

$400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400

Office Maintenance (Mantenimiento de Oficina)

$650 $650 $650 $650 $650 $650 $650 $650 $650 $650 $650 $650

Marketing & Promotions (Marketing y Promociones)

$2,000 $4,000 $5,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000


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Office Supplies (Materiales de Oficina)

$200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200

Insurance (Seguro) $125 $125 $125 $125 $125 $125 $125 $125 $125 $125 $125 $125

Total Operating Expenses

$11,965 $25,497 $29,085 $32,209 $32,557 $32,789 $32,905 $32,905 $32,905 $32,905 $32,905 $32,905

Major Purchases

Renovation of Office (Remodelacion de Oficina)

$25,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Office Furniture and Equipment (Muebles y Inventario de Oficina)

$15,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Car (Carro) $0 $15,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Major Purchases $40,000 $15,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0


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FY2015 FY2016 FY2017

Operating Expenses

Salary $156,700 $240,000 $287,900






Software $12,000 $12,000 $12,000







Major Purchases

Renovation of Office (Remodelacion de Oficina) $25,000 $0 $0

Office Furniture and Equipment (Muebles y Inventario de Oficina) $15,000 $0 $0

Car (Carro) $15,000 $0 $0

Total Major Purchases $55,000 $0 $0


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Loans and Investments

Loans and Investments Table (With Monthly Detail)


Capital Shareholders (Capital Accionistas) Equity investment

$600,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Additional Capital Shareholders (Capital Adicional Accionistas) Line of credit at 12% interest

$50,000 $50,000 $50,000 $50,000 $0 $0 $0 $0 $0 $0 $0 $0


$25,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Loan Shareholders: Office Equipment (Prestamo Accionistas: Equipo de Oficina) Loan at 12% interest for 60 mos.

$15,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0


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Loan Shareholders: Company Car (Prestamo Accionistas: Carro) Loan at 12% interest for 60 mos.

$0 $15,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Amount Received $690,000 $65,000 $50,000 $50,000 $0 $0 $0 $0 $0 $0 $0 $0

FY2015 FY2016 FY2017

Capital Shareholders (Capital Accionistas) Equity investment $600,000 $0 $0

Additional Capital Shareholders (Capital Adicional Accionistas) Line of credit at 12% interest $200,000 $0 $0


$25,000 $0 $0

Loan Shareholders: Office Equipment (Prestamo Accionistas: Equipo de Oficina) Loan at 12% interest for 60 mos. $15,000 $0 $0

Loan Shareholders: Company Car (Prestamo Accionistas: Carro) Loan at 12% interest for 60 mos. $15,000 $0 $0

Total Amount Received $855,000 $0 $0


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Profit and Loss Statement (With Monthly Detail)


Revenue $15,000 $30,000 $45,000 $60,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000

Direct Cost $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Gross Margin $15,000 $30,000 $45,000 $60,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000

Gross Margin % 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

Operating Expenses

Salary $2,750 $9,950 $12,250 $14,150 $14,450 $14,650 $14,750 $14,750 $14,750 $14,750 $14,750 $14,750

Employee Related Expenses

$440 $1,272 $1,560 $1,784 $1,832 $1,864 $1,880 $1,880 $1,880 $1,880 $1,880 $1,880

Rent + Maintenance of Office (Alquiler Oficina)

$2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500

Rent of Storage (Alquiler de Almacenaje)

$150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150

Rent of IT (Alquiler de Equipo de Informatica)

$0 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500

Utility (Utilidades) $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750

Software $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000


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Rent of Office Equipment (Alquiler de Equipo de Oficina)

$400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400

Office Maintenance (Mantenimiento de Oficina)

$650 $650 $650 $650 $650 $650 $650 $650 $650 $650 $650 $650

Marketing & Promotions (Marketing y Promociones)

$2,000 $4,000 $5,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000

Office Supplies (Materiales de Oficina)

$200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200

Insurance (Seguro) $125 $125 $125 $125 $125 $125 $125 $125 $125 $125 $125 $125

Total Operating Expenses

$11,965 $25,497 $29,085 $32,209 $32,557 $32,789 $32,905 $32,905 $32,905 $32,905 $32,905 $32,905

Operating Income $3,035 $4,503 $15,915 $27,791 $42,443 $42,211 $42,095 $42,095 $42,095 $42,095 $42,095 $42,095

Interest Incurred $1,000 $2,800 $4,093 $5,083 $5,074 $5,063 $5,052 $5,041 $5,030 $5,019 $5,008 $4,997

Depreciation and Amortization $666 $916 $916 $916 $917 $917 $917 $917 $917 $917 $917 $917

Income Taxes $342 $197 $2,727 $5,448 $9,113 $9,057 $9,032 $9,034 $9,037 $9,040 $9,042 $9,046

Total Expenses $13,973 $29,410 $36,821 $43,656 $47,661 $47,826 $47,906 $47,897 $47,889 $47,881 $47,872 $47,865

Net Profit $1,027 $590 $8,179 $16,344 $27,339 $27,174 $27,094 $27,103 $27,111 $27,119 $27,128 $27,135

Net Profit / Sales 7% 2% 18% 27% 36% 36% 36% 36% 36% 36% 36% 36%


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FY2015 FY2016 FY2017

Revenue $750,000 $850,000 $1,150,000

Direct Cost $0 $0 $0

Gross Margin $750,000 $850,000 $1,150,000

Gross Margin % 100% 100% 100%

Operating Expenses

Salary $156,700 $240,000 $287,900






Software $12,000 $12,000 $12,000







Operating Income $388,468 $383,980 $630,336

Interest Incurred $53,260 $58,984 $56,836


Income Taxes $81,115 $78,499 $140,625

Total Expenses $506,657 $614,503 $728,125


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Net Profit $243,343 $235,497 $421,875

Net Profit / Sales 32% 28% 37%


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Balance Sheet

Balance Sheet (With Monthly Detail)

As of Period's End Jan '15 Feb '15 Mar '15 Apr '15 May '15 Jun '15 Jul '15 Aug '15 Sep '15 Oct '15 Nov '15 Dec '15

Cash $653,887 $706,417 $765,272 $832,282 $860,029 $887,600 $915,080 $942,558 $970,033 $997,505 $1,024,975 $1,052,441

Accounts Receivable $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Inventory $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Current Assets $653,887 $706,417 $765,272 $832,282 $860,029 $887,600 $915,080 $942,558 $970,033 $997,505 $1,024,975 $1,052,441

Long-Term Assets $40,000 $55,000 $55,000 $55,000 $55,000 $55,000 $55,000 $55,000 $55,000 $55,000 $55,000 $55,000

Accumulated Depreciation ($666) ($1,582) ($2,498) ($3,414) ($4,331) ($5,248) ($6,165) ($7,082) ($7,999) ($8,916) ($9,833) ($10,750)

Total Long-Term Assets $39,334 $53,418 $52,502 $51,586 $50,669 $49,752 $48,835 $47,918 $47,001 $46,084 $45,167 $44,250

Total Assets $693,221 $759,835 $817,774 $883,868 $910,698 $937,352 $963,915 $990,476 $1,017,034 $1,043,589 $1,070,142 $1,096,691

Accounts Payable $2,194 $3,569 $3,819 $4,069 $4,069 $4,069 $4,069 $4,069 $4,069 $4,069 $4,069 $4,069

Sales Taxes Payable $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Short-Term Debt $50,000 $100,000 $150,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000

Total Current Liabilities $52,194 $103,569 $153,819 $204,069 $204,069 $204,069 $204,069 $204,069 $204,069 $204,069 $204,069 $204,069

Long-Term Debt $40,000 $54,649 $54,159 $53,659 $53,150 $52,630 $52,099 $51,557 $51,004 $50,440 $49,865 $49,279

Total Liabilities $92,194 $158,218 $207,978 $257,728 $257,219 $256,699 $256,168 $255,626 $255,073 $254,509 $253,934 $253,348


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Paid-In Capital $600,000 $600,000 $600,000 $600,000 $600,000 $600,000 $600,000 $600,000 $600,000 $600,000 $600,000 $600,000

Retained Earnings $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Earnings $1,027 $1,617 $9,796 $26,140 $53,479 $80,653 $107,747 $134,850 $161,961 $189,080 $216,208 $243,343

Total Owner's Equity $601,027 $601,617 $609,796 $626,140 $653,479 $680,653 $707,747 $734,850 $761,961 $789,080 $816,208 $843,343

Total Liabilities & Equity

$693,221 $759,835 $817,774 $883,868 $910,698 $937,352 $963,915 $990,476 $1,017,034 $1,043,589 $1,070,142 $1,096,691


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As of Period's End FY2015 FY2016 FY2017

Cash $1,052,441 $1,290,926 $1,713,641

Accounts Receivable $0 $0 $0

Inventory $0 $0 $0

Total Current Assets $1,052,441 $1,290,926 $1,713,641

Long-Term Assets $55,000 $55,000 $55,000

Accumulated Depreciation ($10,750) ($21,750) ($32,750)

Total Long-Term Assets $44,250 $33,250 $22,250

Total Assets $1,096,691 $1,324,176 $1,735,891

Accounts Payable $4,069 $4,069 $4,069

Sales Taxes Payable $0 $0 $0

Short-Term Debt $200,000 $200,000 $200,000

Total Current Liabilities $204,069 $204,069 $204,069

Long-Term Debt $49,279 $41,267 $31,107

Total Liabilities $253,348 $245,336 $235,176

Paid-In Capital $600,000 $600,000 $600,000

Retained Earnings $0 $243,343 $478,840

Earnings $243,343 $235,497 $421,875

Total Owner's Equity $843,343 $1,078,840 $1,500,715

Total Liabilities & Equity $1,096,691 $1,324,176 $1,735,891


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Cash Flow Statement

Cash Flow Statement (With Monthly Detail)


Operations

Net Profit $1,027 $590 $8,179 $16,344 $27,339 $27,174 $27,094 $27,103 $27,111 $27,119 $27,128 $27,135

Depreciation and Amortization

$666 $916 $916 $916 $917 $917 $917 $917 $917 $917 $917 $917

Change in Accounts Receivable

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

Change in Inventory $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Change in Accounts Payable

$2,194 $1,375 $250 $250 $0 $0 $0 $0 $0 $0 $0 $0

Change in Sales Taxes Payable $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Net Cash Flow from Operations

$3,887 $2,881 $9,345 $17,510 $28,256 $28,091 $28,011 $28,020 $28,028 $28,036 $28,045 $28,052


Assets Purchased or Sold

($40,000) ($15,000) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Investments Received $600,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Change in Short-Term Debt

$50,000 $50,000 $50,000 $50,000 $0 $0 $0 $0 $0 $0 $0 $0


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Change in Long-Term Debt

$40,000 $14,649 ($490) ($500) ($509) ($520) ($531) ($542) ($553) ($564) ($575) ($586)

Net Cash Flow from Investing & Financing

$650,000 $49,649 $49,510 $49,500 ($509) ($520) ($531) ($542) ($553) ($564) ($575) ($586)

Cash at Beginning of Period $0 $653,887 $706,417 $765,272 $832,282 $860,029 $887,600 $915,080 $942,558 $970,033 $997,505 $1,024,975

Net Change in Cash $653,887 $52,530 $58,855 $67,010 $27,747 $27,571 $27,480 $27,478 $27,475 $27,472 $27,470 $27,466

Cash at End of Period $653,887 $706,417 $765,272 $832,282 $860,029 $887,600 $915,080 $942,558 $970,033 $997,505 $1,024,975 $1,052,441


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FY2015 FY2016 FY2017

Operations

Net Profit $243,343 $235,497 $421,875


Change in Accounts Receivable $0 $0 $0

Change in Inventory $0 $0 $0

Change in Accounts Payable $4,069 $0 $0

Change in Sales Taxes Payable $0 $0 $0

Net Cash Flow from Operations $258,162 $246,497 $432,875


Assets Purchased or Sold ($55,000) $0 $0

Investments Received $600,000 $0 $0

Change in Short-Term Debt $200,000 $0 $0

Change in Long-Term Debt $49,279 ($8,012) ($10,160)

Net Cash Flow from Investing & Financing $794,279 ($8,012) ($10,160)

Cash at Beginning of Period $0 $1,052,441 $1,290,926

Net Change in Cash $1,052,441 $238,485 $422,715

Cash at End of Period $1,052,441 $1,290,926 $1,713,641


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Summary and Conclusions

Summary and Conclusions

In this section and all the above, we present for analysis the development of all socio-economic variables considered for this Business Plan of a Financial Company. In view of the above, and in accordance with the terms of reference established for this type of business plan, we are presented the corresponding documentation containing the following information:

1. Determining the profitability of the project through financial economic indicators generally accepted, such as Net Present Value and Internal Rate of Return Financial.

2. These indicators are calculated based on the standards and generally accepted financial criteria for these cases and using methods commonly used for this type of feasibility study.

3. Through the net cash flow, we could evaluate the project in terms of its current value. This means granting the financial flow values without the basis of inflation or monetary value of the resources to the date when the operations begin.

4. The discount rate or opportunity cost of capital used to evaluate the investment made for this study was 10% rate which is considered suitable to the economic situation of the market for this type of investment.

5. The Net Present Value obtained from Net Cash Flow is a positive value of US$ 5,684,235 indicating that the project generates very high profits for these investments.

6. Performance of the total investment was estimated at 48.30% (IRR) in excess of capital and even greater when compared with the opportunity cost established for long-term bank deposits (fixed-term) rate.

7. For all the above, it is concluded that the investment in the project of a financial company must be made by all the benefits it presents.


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This Business Plan has been prepared and endorsed by Mr. Alberto Caceres, ID No. 8-223-2127, License No. 2103 to practice as an economist in the Republic of Panama, as well as the License No. 440 980 to practice as an economist in Mexico which was issued in 1976, and who signs below, as proof of endorsement and authorship of the document.

PANAMA FACTORING AND FORFAITING GROUP · Financial Analysis with projections to three (3) years,...

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