See if franchising is right for you.

EcoClear – Financial Plan

Assumptions

  • All figures are in real dollars;
  • All costs incurred during the initial six-month period of negative cashflows have been shown as January 1997 expenses;
  • Expenses for new R&D efforts are included in the Financial Statements. However, revenue for these efforts are not included;
  • Straight line growth has been assumed for the filter markets;
  • Market penetration is calculated as a five year cumulative normal distribution. The average diffusion rate for each year was used to calculate sales revenue;
  • Royalty payments from EcoClear Inc. to ABF ($1 per unit) are paid from year two onwards;
  • Royalty payments are received quarterly in arrears;
  • Dividend payments are 50% of Net Profits After Tax.

Summary Financial Results (Expected Scenario)

Years 1997 1998 1999 2000 2001
Sales($) 101,240 858,000 2,429,040 4,393,920 5,328,240
EBIT($) (492,427) 199,090 1,398,463 2,820,320 3,457,077
NPAT($) (313,756) 164,449 975,622 1,940,704 2,380,977
Cash Balance($) 51,660 207,330 1,414,649 3,312,691 4,856,680

The Internal Rate of Return (IRR) calculated from the projected profit streams and the end of year 5 valuation of the company (P/E = 10) is 112%. The Net Present Value (NPV) discounted at 40% is $4.5 million.

Key Performance Indicators

1997 1998 1999 2000 2001
NPAT as % of Sales -310 19 40 44 45
NPAT as % of Total Assets -172 43 57 52 45
NPAT as % of Paid Capital -46 24 145 288 353
NPAT as % Shareholder’s Funds -172 55 106 103 78

Proforma Financial Statements

The following tables show the forecast Profit and Loss statements, Cash Flows and Balance Sheets for the first five years of operation under the ‘Expected Scenario’.

The Deal

EcoClear Inc. is seeking, in an Investor.,

  • $300,000 equity capital;
  • Pool industry experience (preferable); and
  • Harmonious relationship (personality fit).

The Investor will receive from EcoClear Inc.:

  • 33% equity (200,000 shares);
  • Two seats on the Board, which has an independent Chairperson;
  • Shareholder agreement that protects all stockholders;
  • The shareholders’ agreement requires unanimous consent for annual budgets, dividend policy, acquisition of debt and dilution of shareholding. Dispute resolution is through an agreed third party arbitrator, if required;
  • Performance contract with management team;
  • In the event that the management fails to exceed the ‘worst case scenario’ financials the management contract lapses. The future of the management team will then be decided by the board;
  • Five year exit value of equity approaching $8 million (assuming P/E = 10).
  • NPV to the investor of dividend stream and exit value (discounted at 40%) is $1.4 million, with an internal rate of return of 101%;
  • Payback from dividends alone in 3.1 years (see table below).

Dividend Streams ($)

Entities Share of Equity 1997 1998 1999 2000 2001
ABF 14% 0 11,552 68,535 136,330 167,259
New Endeavour 20% 0 16,309 96,756 192,467 236,130
Degloss 16.5% 0 13,591 80,630 160,389 196,775
Port Bargo 16.5% 0 13,591 80,630 160,389 196,775
New Investor 33% 0 27,182 161,260 320,778 393,550
Total 100% 0 82,225 487,811 970,352 1,190,489

Conclusion

The EcoClear water filtration technology is truly innovative. It satisfies long felt needs in the US pool filtration industry. It also offers promising applications in other industries and geographical markets. The management team trusts you will agree that EcoClear Inc. represents an exciting and lucrative investment. The management team look forward to discussing this opportunity with you in greater detail.


EcoClear, Inc.
Table of Contents Appendices
1. Executive Summary
2. The Company
3. Marketing Plan
4. Operational Plan
5. Financial Plan
Proforma Financial Statements
Sources and Uses of Funds
Sensitivity Analysis
Break Even Analysis
Worse Case Scenario
Product Diagrams
Direct Production Costs
Resumes
References
All information herein is confidential and belongs to EcoClear,Inc.

Get help with writing a business plan or choosing a franchise.

Talk to a Consultant

Services of Interest

12 + 5 =