Financials
Overview
ABC has not generated any revenue since inception. The founders and friends have furnished all equity funding to date. Mindware Pertech has supplemented this with the purchase of 28 percent of the stock.
The company is now seeking equity financing for $5 million in the form of common stock and $6 million in preferred stock. This equity will be used to support the company's expansion plans as well as furnish financing to support the marketing of its trading system. Additionally, ABC is proposing to open a line of credit for $5 million with its bank or, alternatively, to identify private sources of subordinated debt.
Pro Forma Financials
The appendixes show five years of pro forma financials for the company (Income Statements and Balance Sheets). A detailed explanation of revenue generation is provided in the sales section of this document. Detailed and full assumptions are appended.
Use of Proceeds
The company is proposing to sell 1 million common stock shares for $5.00 per share for a total of $5 million. In addition, the company is offering 600,000 preferred stock shares for $10.00 per share for a total of $6 million. The sources of funds and use of proceeds from this offer will be used as follows:
| SOURCES OF FUNDS | |
| Common Stock | $5,000,000 |
| Preferred Stock | $6,000,000 |
| Debt/Line of Credit | $5,000,000 |
| TOTAL | $16,000,000 |
| USE OF PROCEEDS | |
| Marketing | $8,000,000 |
| Operations | $3,000,000 |
| Line of Credit | $5,000,000 |
| TOTAL | $16,000,000 |
Future Financing Plans and Financial Exits
As discussed in the business plan, ABC intends to expand its existing operations by the addition of 28 system centers. Concurrent with this expansion, ABC intends to expand the number of products being traded to 400. Within three years, ABC will be able to support any additional financing needs through retained earnings.
Management believes that within three years from the inception of this financing, it will be prepared to undertake an IPO. This will depend upon market conditions at that time and the profitability of the company.
Management is pleased to entertain further discussions with serious investors concerning its expansion and operating plans.
Capitalization
The company's founders, officers, and directors own all the current stock of ABC Internet Marketplace. The company's articles of incorporation provide for the issuance of preferred stock in a form as determined by its board of directors. No such preferred stock is currently outstanding. The company currently operates as a "C" corporation in the Commonwealth of Vermont. With the exception of the sale of 28 percent of the company to Mindware Pertech, Inc., ABC has not been involved in any material transactions with its shareholders.
