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In the Pipeline
Financial Plan

Assumptions

Financial Results - Summary (Expected Scenario)

Years19981999200020012002
Sales($)2,414,2035,032,62310,107,25115,348,59123,329,825
EBIT($)502,6641,206,7892,565,332956,5316,069,547
NPAT($)65,568389,6621,078,4811,868,3082,917,454
Cash Balance($)337,972470,9061,434,1462,296,6283,404,092

ITP's Internal Rate of Return (IRR) is 157%. It has been calculated using the adjusted profits to arrive at a net cash flow stream and an end of year five valuation using a price/earnings ratio of 10. The net present value (NPV) is $6.9 million, discounted-at 40%. The IRR of the convertible note holder has been calculated using an average of the first two years' earnings and a price/earnings ratio of 10. An IRR of 89% and an NPV of $2.1 million is achieved.

Proforma Financial Statements (Expected Scenario)

The following tables show that forecast Income Statements, Cash Flows, Balance Sheets for the first five years operating under the Expected Scenario

Consolidated Income Statement (Expected Scenario)

Qtr 1Qtr 2Qtr 3Qtr 4Total Yr 1Qtr 1Qtr 2Qtr 3Qtr 4Total Yr 2Year 1Year 2Year 3Year 4Year 5
199819981998199819981999199919991999199919981999200020012002
SALES482,841555,267651,835724,2612,414,2031,006,5251,157,5031,358,8081,509,7875,032,6232,414,2035,032,62310,107,25115,348,59123,329,825
Less Cost of Goods Sold
Opening Inventory02,9095,5939,868014,68522,90232,13143,75214,685014,68557,009202,960296,466
Add Manufacturing Costs242,420279,633328,917367,1301,207,101558,583642,620754,337838,3742,767,9151,207,1012,767,9155,969,4269,563,43214,863,885
 242,420282,542334,510376,"81,207,101573,268665,522786,469882,1262,782,6001,207,1012,792,6006,026,4369,766,39215,160,351
Less Closing Stock2,9095,5939,86814,68514,68522,90232,13143,75257,00957,00914,68557,009202,960296,466520,236
TOTAL COST OF GOODS SOLD239,511276,950324,642362,3131,203,416550,~66633,391742,716825,1172,751,5911,203,4162,751,5915,823,4759,469,92614,640,115
GROSS PROFIT243,329278,317327,192361,9481,210,786456,158524,112616,092694,6702,281,0321,210,7862,281,0324,283,7765,878,6668,689,710
Gross Margins %50%50%50%50%50%45%45%45%45%45%50%45%42%38%37%
LESS EXPENSES
Administration Expenses169,99584,90681,02394,798430,622144,470147,981165,393164,899622,743430,622622,743968,1431,103,8451,453,994
Research & Development38,0004,0004,5003,50050$00025,5002,0007,0008,5()043,00050,00043,00044,00070,00097,500
Sales & Marketing103,50042,00041,00041,000227,596,37596,37597,375118,375408,500227,500409,500706,300748,2901,068,680
TOTAL EXPENSES311,495130,806126,523139,298708,122266,345246,356269,768291,7741,074,243708,1221,074,2431,719,4431,922,1352,620 163
% of Total Sales65%24%19%19%29%26%21%20%19%21%29%21%17%13%11%
Earnings Before Interest & Tax(68,166)147,511200,669222,650502,664189,813277,756346,324392,8961,206,789502,6641,206,7892,565,3323,956,5316,069,547
Less Interest Expense43,75043,75043,75043,750175,00043,75043,75043,75043,750175,000175,000175,00097,50000
NET INCOME BEFORE TAX(111,916)103,761156,919178,900327,6641446,063234,006302,574349,1461,031,789327,6641,031,7892,477,8323,956,5316,069,547
Less Income Tax Expense @ 40%44,766(41,504)(62,768)(71,560)(131,066)(58,425)(93,602)(121,030)(139,659)(412,716)(131,066)(412,716)(991,133)(1,582,612)(2,427,819)
NET INCOME AFTER TAX(67,149)62,25794,151107,34019615"87,639140,403191,544209,488619,073196,5"619,0731,486,6"2,373,9193,641,729
Less Minority Interest(26,417)(30,107)(35,429)(39,077)(131,030)(45,874)(52,670)(61,979)(68,888)(229,411)(131,030)(229,411)(407,219)(505,611)(724,274)
NET INCOME to ITP SHAREHOLDERS(93,566)32,14958,72368,26365,56841,76487,733119,565140,600389,66265,S68389,6621,079,4811,868,3082,917454
% of Total Sales-19%6%9%9%3%4%8%9%9%8%3%8%11%12%13%
Retained Earnings - Opening Balance0(93,566)(61,417)(2,694)065,568107,333195,066314,63165,568065,568455,230767,3561,317,832
Total Available for Distribution(93,556)(61,417)(2,694)65,56865,568107,333195,066314,631455,230455,23065,568455,2301,534,7112,635,6644,235,296
Dividends Provided000000000000767,3561,317,8322,117,643
Retained Earnings - Closing Balance(93,566)(61,417)(2,694)65,56865,568107,333195,066314,631455,230455,23065,568455,230767,3561,317,8322,117,643

Consolidated Cash Flow Statement (Expected Scenario)

Qtr 1Qtr 2Qtr 3Qtr 4Total Yr 1Qtr 1Qtr 2Qtr 3Qtr 4Total Yr 2Year 1Year 2Year 3Year 4Year 5
199819981998199819981999199919991999199919981999200020012002
RECEIPTS
Sales202,793513,259595,825682,2541,994,131842,8121,069,9361,242,0511,422,2194,577,0181,994,1314,577,0189,062,55014,352,73721,813,391
JV (MNF/DIST) Subscriptions64,30000064,3000000064,3000000
Common Stock Subscriptions150,000000150,00000000150,0000000
Venture Capital Loan500,000000500,00000000500,0000000
Sale Proceeds, Plant & Equipment000000000000000
TOTAL CASH RECEIPTS917,093513,259595,925682,2542,708,431842,8121,069,9361,242,0511,422,2194,577,0182,708,4314,577,0189,062,55014,352,73721,813,391
DISBURSEMENTS
Total Cost of Goods Sold101,817258,050300,333344,9671,005,166447,540593,879689,541789,6332,520,5931,005,1662,520,5935,321,4928,880,57113,956,799
Administration Expenses169,99584,80681,02394,798430,622144,470147,981165,393164,899622,743430,622622,743968,1431,103,8451,453,984
Less: Depreciation & Amortization-10,000-9,953-9,905-9,856-39,713-16,305-16,206-16,105-16,001-64,617-39,713-64,617-87,011-91,133-105,090
Add: Lease payments3,3793,3793,3793,37913,5166,7586,7586,7586,75827,03213,51627,03240,54945,05454,063
Research & Development38,0004,0004,5003,50050,00025,5002,0007,0008,50043,00050,00043,00044,00070,00097,500
Sales & Marketing103,50042,00041,00041,000227,50096,37596,37597,375118,375408,500227,500408,500706,300749,2901,068,680
Interest Expense43,75043,75043,75043,750175,00043,75043,75043,75043,750175,000175,000175,00087,50000
Cash Payments to JV (MNF/DIST)26,41723,17525,91931,679107,19027,60738,25442,90553,263162,029107,190162,029244,403383,661504,339
Tax Paid on Income of JV Co59,70466,90578,73086,838291,178101,941117,045137,732153,085509,803291,178153,085904,9301,123,5791,609,498
Tax Paid on Income of ITP000000000000-170,997459,033818,321
Capital Purchases110,000000110,00040,00000040,000110,00040,00040,000030,000
TOTAL CASH DISBURSEMENTS645,562516,112568,729640,0562,370,459917,6381,029,8351,174,3491,322,2624,444,0842,370,4594,097,3668,099,31012,722,89919,398,094
Cash Dividends Paid0000000000000767,3561,317,832
Net Cash Flow271,531-2,85327,09642,198337,972-74,82640,10167,70299,957132,934337,972132,934963,240862,4821,107,465
Add Opening Balance0271,531268,678295,7750337,972263,146303,247370,949337,9720337,972470,9061,434,1462,296,628
CLOSING CASH BALANCE271,531268,678295,775337,972337,972263,146303,247370,949470,906470,906337,972470,9061,434,1462,296,6283,404,092

Consolidated Balance Sheet (Expected Scenario)

Qtr 1Qtr 2Qtr 3Qtr 4Total Yr 1Qtr 1Qtr 2Qtr 3Qtr 4Totat Yr 2Year 1Year 2Year 3Year 4Year 5
199819981998199819981999199919991999199919981999200020012002
ASSETS
Current Assets
Cash271,531268,678295,775337,972337,972263,146303,247370,949470,906470,906337,972470,9061,434,1462,296,6283,404,092
Accounts Receivable JV Co290,047322,055378,064420,071420,071583,794671,352788,109875,676875,676420,071875,6761,920,3782,916,2324,437,667
Inventory2,9095,5939,86814,68514,68522,90232,13143,75257,00957,00914,68557,009202,960296,466520,236
Other000000000000000
Total Current Assets554,487596,125693,706772,729772,729869,1331,006,7301,202,8091,403,5921,403,592772,7291,403,5923,557,4545,50,3268,356,995
Long Term Assets
Plant & equipment110,000110,000110,000110,000110,000150,000150,000150,000150,000150,000110,000150,000190,000190,000220,000
Less Accumulated Depreciation-5,500-11,000-16,500-22,000-22,000-29,500-37,000-44,500-52,000-52,000-22,000-52,000-90,000-128,000-172,000
104,50099,00093,50088,00088,000120,500113,000105,50098,00098,00098,00098,000100,00062,00048,000
Leased Plant & Equipment60,00060,00060,00060,00060,000120,000120,000120,000120,000120,00060,000120,000180,000200,000240,000
Less Accumulated Amortization-3,000-6,000-9,000-12,000-12,000-18,000-24,000-30,000-36,000-36,000-12,000-36,000-72,000-112,000-160,000
57,00054,00051,00048,00048,000102,00096,00090,00084,00084,00048,00084,000108,00088,00080,000
Future Income Tax Benefit103,471128,872144,834160,113160,113203,629227,071243,773257,200257,200160,113257,200000
Total Long Term Assets264,971281,872289,334296,113296,1134,269,129436,071439,273439,200439,200296,113439,200208,000158,000128,000
TOTAL ASSET819,458878,197973,0401,068,8421,068,8421,295,9611,442,8011,642,0831,842,7921,842,7921,068,9421,842,7923,765,4845,659,3268,484,995
LIABILITIES
Current Liabilities
Overdraft000000000000000
Trade Creditors140,604162,187190,772212,936212,936323,978372,720437,515486,257486,257212,936486,2571,134,1911,817,0522,824,138
Provision for Dist'n to JV (MNF/DIST)000000000000000
Leased Liability58,12156,19554,22152,19752,197108,244104,192100,03995,78195,78152,19795,781128,243116,323115,347
Other000000000000000
Total Current Liabilities193,725218,382244,993265,133265,133432,222476,912537,554582,039592,039265,133582,8391,262,4341,933,3752,939,486
Long Term Liabilities
Venture Capital Facility50,000500,000500,000500,000500,000500,000500,000500,000500,000500,000500,000500,000000
Minority Equity in JV Co64,30071,23280,74288,14088,140106,407120,823139,898155,523155,52388,140155,523318,338440,288660,224
Provision for Dividend000000000000767,3561,317,8322,117,643
Shareholders' Loans000000000000000
Total Long Term Liabilites564,300571,232580,742588,140588,140606,407620,823639,898644,523655,523588,140655,5231,085,69417,581,2012,777,866
TOTAL LIABILITIES763,025789,614825,735853,273853,2731,038,6291,097,7351,177,4521,237,5611,237,561853,2731,237,5612,348,1283,691,4955,717,952
NET ASSETS56,43488,5831,473,016215,568215,568257,333345,066464,631605,230605,230215,568605,2301,417,35611,967,2322,767,643
SHAREHOLDERS' EQUITY
Common Stock150,000150,000150,000150,000150,000150,000150,000150,000150,000150,000150,000150,000650,000650,000650,000
Reserves000000000000000
Retained Profits-93,566-61,417-2,69465,56865,568107,333195,066314,631455,230455,23065,568455,230767,3561,317,9322,117,643
TOTAL SHAREHOLDERS' EQUITY56,43488,583147,306215,568215,568257,333345,066464,631605,230605,230215,568605,2301,417,3561,967,8322,767,643

Key Performance Indicators

Years19981999200020012002
NPAT as % of Sales3%8%11%12%13%
NPAT as % of Total Assets6%21%29%33%34%
NPAT as % of Paid Capital44%260%166%287%449%
NPAT as % of Shareholders' Funds30%64%76%95%105%

Sources and Uses of Funds

Admin Expenses199719981999200020012002
Casual Wages022,00022,00024,00028,00034,000
Courier04,0004,0005,0006,0008,000
Depreciation022,00030,00038,00038,00044,000
Set Up Cost000000
Insurance1,2004,0006,0007,5008,5009,500
Lease Amortization012,00024,00036,00040,00048,000
Lease Finance Charges05,71310,61713,01113,13313,090
Legal & Accounting Costs27,00035,00049,00080,00075,00095,000
Motor Vehicle Expenses012,00022,80035,50039,00048,700
Office Servicing Costs3,0005,2007,20013,50014,00021,750
Office Set Up07,00005,00006,000
Patent Cost USA010,00015,00020,00025,00030,000
Patent Insurance013,00016,00020,00022,00024,000
Patent Protection Trust06,00020,00040,00080,000120,000
Relocation016,0000000
Rent6,00032,00033,60070,56074,088116,689
Royalty Costs 1 % of Sales024,14250,326101,073153,486233,298
Salaries & Wages10,00080,000220,000317,500335,875405,544
Salaries On-Costs 30%024,00066,00095,250100,763121,663
Travel04,0006,00015,00018,00027,500
Utilities3,60012,60016,20031,25033,00047,250
Two Months Interest Cost29,16700000
79,967350,655622,743968,1431,103,8451,453,984
Research & Development199719981999200020012002
Consultants4,00010,50017,80027,00035,00042,500
Other R & D Costs2,5006,5006,0008,00010,00014,000
Prototypes1,0001,0001,0009,00020,00025,000
R&D Performance Contract010,00010,0000010,000
Set Up Costs0018,000000
US/Can Standards Approval10,5004,0004,00005,0006,000
18,00032,00043,00044,00070,00097,500
Sales & Marketing199719981999200020012002
Marketing Consultants05,0009,00015,00024,00037,500
Set Up Costs0020,00085,00020,000125,000
Promotion & Entertainment10,00050,00057,00097,000103,000159,000
Advertising & Promotion9,50017,00018,00020,00025,00032,000
Salaries20,00040,000195,000321,000378,300473,215
Salaries on-costs 30%012,00058,50096,300113,490141,960
Trade Shows22,00010,00014,00030,00035,00045,000
Travel3,00029,00037,00042,00049,50055,000
64,500163,000408,500706,300748,2901,068,680
TOTAL EXPENSES:162,467545,6551,074,2431,718,4431,922,1352,620,163

Worst Case Scenario - Summary

In the Worst Case Scenario an IRR of 94% and NPV of $3.1 million are achieved, As debt holders do not convert their debt to equity, their IRR remains at the coupon rate of 32%. The Worst Case Scenario outcomes are summarized in the table below and a detailed Income Statements, Cash-flow Statements and Balance Sheets are shown in Appendix D.
Years19981999200020012002
Sales1,448,5223,019,5745,295,0468,177,55811,906,333
EBIT726,3701,661,2173,179,1625,206,1787,740,823
N PAT(168,629)72,653111,858461,807776,797
Cash Balance110,400(82,192)258,215586,263400,529

In the Worst Case Scenario ITP will use its line of credit to meet a shortfall of cash in 1999.

Worst Case Scenario - Key Performance Indicators

Years19981999200020012002
NPAT as % of Sales(12%)2%2%6%7%
NPAT as % of Total Assets(23%)7%7%19%26%
NPAT as % of Paid Capital(112%)48%75%308%518%
NPAT as % of Shareholders' Funds905%34%71%20%118%

In the Pipeline
Table of ContentsAppendices
1. Executive Summary
2. Company & Product
3. Marketing
4. Operational Plan
5. Financial Plan
6. Offer to Investors
Product Diagrams
Executive Resumes
Action Plan
Financial Statements
The information and ideas herein are the confidential,
proprietary, sole, and exclusive property of the company's founders.