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NEIG’s financial plan is comprised of financial projections for the first five years of operations.
Attached are the income statement, balance sheet, and statement of cash flows, along with other
supportive pieces of the financial model. NEIG’s fiscal year is from January 1 to December 31.
Based on the thorough analysis of the industry, market research and an efficient business model,
NEIG will successfully launch the product nationally and remain a profitable entity.
Initial Capitalization
NEIG will require $350,000 in paid-in capital in the first month of operations. The Company
plans on securing this financing from external investors. NEIG team is working for free currently
which not only shows their commitment to the organization but also their belief into the
business. The capital will fund initial startup costs, including a salesperson, an administrative
assistant, travel expenses, marketing, a website, a professional sales video, legal expenses,
insurance, and other office expenses. Securing this equity is highly critical to the launch of
operations since the initial start-up funds will be used to initiate marketing efforts like visiting
various trade shows, conferences and live product demonstrations.
NEIG should be cash positive from year one and should generate a positive net income in all
years of operation. The gross profit margin will remain relatively stable at 38% since the
contracts for purchase of machines are already in place. By year three, NEIG should have
generated enough cash to be able to fund expansion into new regions.
Financial Statement Explanations & Assumptions
Income Statement
Sales Revenue: NEIG’s revenues are derived from the sale of the P-3000LM machines. Even
though NEIG is exploring options of leasing the machines to the hospitals in partnership with
external lenders and providing external servicing and maintenance contracts, the revenue from
leasing and maintenance are not considered in the projections. Harmony’s revenues are derived
from both products and services. The number of P-3000 LM projected to be sold are estimated
from the number of hospitals in the target segment that will be first to accept the new technology
for waste disposal. This number has been estimated from the interviews carried out with a
sample of hospitals in the New England region. The price for a single machine will be kept
constant for the first two years at $265,000 (plus transportation costs) with a price escalation of
3% going forward every year. After five years, NEIG will increase the price to $295,000 after
having established itself as a proven alternative to current disposable techniques.
Cost of Goods Sold: The cost of goods sold consists of cost of the machine being sold.
SterAssure currently demands $165,000 for every single machine sold by NEIG with freight
being proposed to be paid by the end customer. Commission of $10,000 per machine sold will be
offered by NEIG during the initial years to motivate the sales team.
Salary: For the first 7 months of operations, the management and employees will work on
reduced salary. Once the cash flows stabilize, the salary will be increased proportionately.
Annual
Annual rate for

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first 7 months
President
$ 150,000
$ 60,000
CFO
$ 150,000
$ 60,000
VP Strategy & Marketing & Sales
$ 150,000
$ 60,000
Admin (Part time initially)
$ 55,000
$ 24,000
Overhead Expense:
Rent: NEIG will be working out of a suite in Newton, MA. With the current leasing rate of
$25/square foot, NEIG will pay $3,000 rent per month for the space.
1
Utilities: Monthly costs of utilities, including water, electricity, and heat, are forecasted to equal
$7,250
Depreciation/Amortization: NEIG will depreciate the PP&E over a period of 5 years, using
straight-line depreciation.
Insurance Expense: NEIG will be paying $500 per month for the inventory and premises.
Advertising and Promotions Expenses: The advertising and sales expenses include marketing,
travelling and attending trade shows, and event marketing. Rob, Bill and Beth are each expected
to travel and attend conferences and trade shows every month.
SG&A (Including Personnel Expenses): NEIG will hire additional sales rep as and when the
volume starts to increase. NEIG will also hire additional staff to deal with customer service.
Taxes: NEIG is organized as a LLC. As a result, it does not pay taxes.
Balance Sheet
Cash: NEIG will target to maintain one month of sales as a target cash balance. Excess cash at
month end, before interest income, will be allocated to buy short-term investments.
Investments: Investments for NEIG are classified as short-term Investments, such as a bank
savings account and CD’s. If the need for cash should arise, the investments will be liquidated
and the funds transferred back into the cash account.
Accounts receivable: NEIG will provide a period of 30 days to the hospitals after installations to
pay the bills.
Merchandise Inventory: NEIG will target to maintain 1 day of inventory. Inventory will consists
of spares and other parts required for general maintenance.
Building & Equipment: NEIG’s office space will be renovated by items like chairs and desks,
supply closets, as well as causal as casual furniture and fixtures. This also includes the IT
hardware and software that are purchased for operations.
1
http://www.cityfeet.com/cont/ma/boston-retail-space#pgNum=2; http://www.officespace.com/Boston-MA

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NEIG’s financial plan is comprised of financial projections for the first five years of operations. Attached are the income statement, balance sheet, and statement of cash flows, along with other supportive pieces of the financial model. NEIG’s fiscal year is from January 1 to December 31. Based on the thorough analysis of the industry, market research and an efficient business model, NEIG will successfully launch the product nationally and remain a profitable entity. Initial Capitalization NEIG will require $350,000 in paid-in capital in the first month of operations. The Company plans on securing this financing from external investors. NEIG team is working for free currently which not only shows their commitment to the organization but also their belief into the business. The capital will fund initial startup costs, including a salesperson, an administrative assistant, travel expenses, marketing, a website, a professional sales video, legal expenses, insurance, and other office expenses. Securing this equity is highly critical to the launch of operations since the initial start-up funds will be used to initiate marketing efforts like visiting various trade shows, conferences and live product demonstrations. NEIG should be cash positive from year one and should generate a positive net income in all years of operation. The gross profit margin will remain relatively stable at 38% since the contracts for purchase of machines are already in place. By year three, NEIG ...
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