MISCELLANEOUS PROFORMAS
MICROSOURCE ONLINE
Audited 2002 Proforma - 2003 Proforma - 2004 Proforma - 2005
------------ --------------- --------------- ---------------
Total sales 9,000 9,587,100 131,841,486 323,682,972
Net Income - 1,794,189 33,868,033 104,092,893
Net margin 0% 19% 26% 32%
EBITDA - 3,778,035 73,986,479 186,692,953
EBITDA as a % - 39% 56% 58%
Current ratio - 4.82 9.65 6.24
Accounts receivable turnover - 6.0 6.0 6.0
Accounts receivable in days - 61 61 61
Total assets 146 12,853,484 304,377,441 442,348,658
Sales turnover - 0.7 0.2 0.5
Debt (long term) - - - -
Shareholder loan 0 0 0 0
Common stock 1 101,641 502,224 502,224
Contributed Surplus - 10,445,762 250,394,908 250,394,908
Retained earnings - 959,300 34,827,333 138,920,226
Total equity -287,482 11,506,703 285,724,465 389,817,358
Debt to equity $ - $ - $ - $ -
Return on assets (ROA) 0.0% 14.0% 11.1% 23.5%
Return on equity (ROE) 0.0% 15.6% 11.9% 26.7%
Return on assets (ROA) - EBITDA 0.0% 29.4% 24.3% 42.2%
Return on assets (ROE) - EBITDA 0.0% 32.8% 25.9% 47.9%
Number of distributors - 150 1,000 2,000
Fee for distributors per month - $1000.00 $1,000.00 $1,000.00
Number of VARs - 33,000 100,000 200,000
Fee for VARs per month - $ - $50.00 $50.00
Transaction base - $165,000,000 $3,000,000,000 $12,000,000,000
Transaction rate - 0.0% 1.0% 1.0%
Revenue per distributor per
year - $1,800,000 $12,000,000 $24,000,000
Revenue per VAR - $ - $5,000,000 $10,000,000
Manufacturers - 100 1,000 2,000
Revenue per Manufacturers - $24,000 $24,000 $24,000
1
PROJECTED USE OF PROCEEDS
MICROSOURCE ONLINE
FINANCIAL MODEL
4-Apr-02
Accounts receivable turnover 6
Accounts receivable in days 61
USE OF PROCEEDS
START UP COSTS PHASE 1 - YR 1 PHASE 2 - YR
Private 2
Placement Public Market
-------------- -------------
Office set up 500,000 3,000,000
Computers 1,000,000 25,000,000
Legal and other professional fees (non-operating 750,000 2,000,000
costs)
Technology development 1,500,000 70,000,000
Initial development of web site 750,000 2,500,000
Web server 1,000,000 2,400,000
Phone system 100,000 600,000
Wages: re set up and operating 1,000,000 40,0000,000
Network installations 500,000 4,000,000
T3 connection 300,000 1,200,000
Other 100,000 30,000,000
Net asset fund 2,500,000 60,000,000
- --------------- --------- ----------
10,000,000 240,700,000
---------- -----------
DEBT - -
REPAYMENT/RATE 10 10%
EQUITY 9,999,996 240,350,000
NBV
Capital assets, opening 146 6,360,000 124,376,000
Purchase - Capital assets 7,950,000 100,700,000 -
Capitalization - EDI - 50,000,000 50,000,000
- -------------------- ---------- ----------
7,950,000 157,060,000 174,376,000
--------- ----------- -----------
Amortization 40% 1,590,000 32,684,000 59,750,400
- ------------ --- --------- ---------- ----------
NBV END OF YEAR 6,360,000 124,376,000 114,625,600
- --------------- --------- ----------- -----------
2
PROJECTED USE OF PROCEEDS (cont.)
SOURCES AND USE OF CASH
Proforma - 2003 Proforma - 2004 Proforma - 2005
--------------- --------------- ---------------
Net income 1,794,189 33,868,033 104,092,893
Amortization 1,590,000 32,684,000 59,750,400
3,384,189 66,552,033 59,750,400
Accounts receivable (1,597,850) (20,375,731) (31,973,581)
Prepaid (25,000) (25,000) (25,000)
Accounts payable and accrued liabilities 665,307 10,265,178 18,463,110
Income tax 393,846 7,040,600 15,415,214
2,820,492 63,457,080 165,723,038
Capital asset purchase (7,950,000) (150,700,000) (500,000,000)
Financing - - -
Debt repayment - - -
Equity financing 9,999,996 240,350,000 -
2,049,996 89,650,000 ( 50,000,000)
Increase in cash during the year 4,870,488 153,107,080 115,723,038
Opening cash 146 4,870,780 157,977,860
Ending cash 4,870,780 157,977,860 273,700,898
3
PROFORMA BALANCE SHEET
MICROSOURCE ONLINE
PROFORMA BALANCE SHEET
4-Apr-02
Audited 2002 Proforma - 2003 Proforma - 2004 Proforma - 2005
------------ --------------- --------------- ---------------
Current
Cash 146 4,870,634 157,977,860 256,700,898
Accounts receivable - 1,597,850 21,973,581 53,947,160
Prepaid expenses - 25,000 50,000 75,000
Total current assets 146 9,493,484 180,001,441 327,723,058
Capital assets NIL 6,360,000 124,376,000 114,625,600
146 12,853,484 304,377,441 442,348,658
Current
Bank indebtedness - - - -
Accounts payable and
accrued liabilities 287,628 952,935 11,218,530 29,681,640
Income tax payable - 393,846 7,434,446 22,849,660
Current portion of
long term debt - - - -
Total current
liabilities 287,628 1,346,781 18,652,976 52,531,300
Long term debt - - - -
Due to shareholder - - - -
Contributed Surplus 462,432 10,445,762 230,394,908 230,394,908
Capital stock 84,975 101,641 502,224 502,224
Retained earnings
(Deficit) (834,889) 959,300 34,827,333 138,920,226
12,853,484 304,377,441 442,348,658
4
PROFORMA INCOME STATEMENTS
MICROSOURCE ONLINE
THREE YEAR PROFORMA
4-Apr-02
Variables Proforma - 2003 Proforma - 2004 Proforma - 2005
--------- --------------- --------------- ---------------
REVENUE MODEL
Number of distributors 150 1,000 2,000
Number of VARS 33,000 100,000 200,000
Number of manufacturers 100 1,000 2,000
Broadcasting fee 877,100 5,841,486 11,682,972
Transaction base 165,000,000 3,000,000,000 12,000,000,000
SALES 9,587,100 131,841,486 323,682,972
Advertising and
promotion 10.0% 383,484 13,184,149 32,368,297
Amortization 1,590,000 32,684,000 59,750,400
Bad Debt 1.0% 28,761 1,318,415 3,236,830
General and
Administrative fixed 60,000 1,000,000 1,000,000
Interest - - -
Professional fees 360,000 180,000 360,000 360,000
Research and development 10.0% 331,070 13,184,149 32,368,297
Rent and related costs 500,000 360,000 720,000 1,200,000
Telephone and Internet
cost 5.0% 180,000 6,592,074 16,184,149
5
PROFORMA INCOME STATEMENTS (cont.)
Variables Proforma - 2003 Proforma - 2004 Proforma - 2005
--------- --------------- --------------- ---------------
Travel costs 72,000 600,000 1,720,000 1,720,000
Wages and benefits 15.0% 3,685,750 19,776,220 48,552,446
TOTAL EXPENSES 7,399,065 90,539,007 196,740,419
77% 69% 61%
NET INCOME (LOSS)
BEFORE INCOME TAXES 2,188,035 41,302,479 126,942,553
Tax provision (at 18.00%) 393,846 7,434,446 22,849,660
NET INCOME (LOSS) 1,794,189 33,868,033 104,092,893
19% 26% 32%
AMORTIZATION AS
PERCENT OF SALES 17% 25% 18%
INTEREST AS
PERCENT OF SALES 0% 0% 0%
TAX AS
PERCENT OF SALES 4% 6% 7%
6
PROFORMA EXPENSES
MICROSOURCE ONLINE
12 MONTH PROFORMA
EXPENSES
1st six months 2nd six months
Per annum Per month Per annum Per month Proforma 2004 Proforma 2005
--------- --------- --------- --------- ------------- -------------
WAGES
Management
President - - 150,000 12,500 200,000 250,000
CEO - - 90,000 7,500 120,000 150,000
CFO - - 90,000 7,500 120,000 150,000
COO - - 90,000 7,500 120,000 150,000
VP MARKETING - - 90,000 7,500 120,000 150,000
VP PUBLIC RELATIONS - - 90,000 7,500 120,000 150,000
VP TECHNOLOGY - - 90,000 7,500 120,000 150,000
VP HUMAN RESOURCES - - 90,000 7,500 100,000 120,000
- 330,000 27,500 1,020,000 1,270,000
STAFF 3 8 8
AVERAGE COST 110,000 127,500 158,750
Administration
Front desk (2,4,6) - - 40,000 3,333 120,000 192,000
Data entry
(12,24,48) 300,000 25,000 300,000 25,000 720,000 1,536,000
Junior accounting
(2,5,10) 60,000 5,000 60,000 5,000 200,000 450,000
Controller (1,2,4) - - 60,000 5,000 150,000 320,000
360,000 30,000 460,000 38,333 1,190,000 2,498,000
STAFF 17 35 68
AVERAGE COST 27,059 34,000 36,735
7
Technical
IT Manager (2,4,8) - - - - 300,000 680,000
Web designer
(2,4,8) 50,000 4,167 50,000 4,167 192,000 416,000
Database
management (2,4,8) 100,000 8,333 100,000 8,333 200,000 400,000
In-house EDI
(0,2,4) - - 70,000 5,833 140,000 300,000
General system
maintenance (2,4,8) - - 40,000 3,333 160,000 360,000
150,000 12,500 150,000 12,500 992,000 2,156,000
STAFF 3 18 36
AVERAGE COST 50,000 55,111 59,889
Sales
Junior
(distributor
sales) (6,12,24) 480,000 40,000 480,000 40,000 960,000 2,160,000
Junior (manuf.
Sales) (10,25,50) 1,000,000 83,333 1,000,000 83,333 2,000,000 4,500,000
Senior (8,12,24) 1,000,000 83,333 1,000,000 83,333 1,440,000 3,120,000
2,480,000 206,667 2,480,000 206,667 4,400,000 9,780,000
STAFF 24 49 98
AVERAGE COST 103,333 89,796 99,796
TOTAL PAYROLL 2,990,000 249,167 3,420,000 285,000 7,602,000 15,704,000
PAYROLL TAX AND
BENEFITS 15.0% 448,500 37,375 513,000 42,750 1,140,300 2,355,600
3,438,500 286,542 3,933,000 327,750 8,742,300 18,059,600
8
PROFORMA EXPENSES (cont.)
2nd 6 months
Per Annum Proforma 2004 Proforma 2005
------------ ------------- -------------
STAFF 47 110 210
AVERAGE COST 83,681 69,109 74,781
SALES 9,587,100 131,841,486 323,682,972
SALES PER $1 OF WAGE [1] $1 $15 $18
WAGE AS A % 41% 7% 6%
- -------------------------
[1]
WAGES
Data entry is the most significant manpower drain, eventually EDI solution
should minimize the cost.
Data entry includes several people.
The company will relay on external EDI solution, however there will be a need to
have an in-house technical employee in year 2
Sales potential will be based on commissions
9