Company That Focuses On Medicinal Herb Research Biology Essay

Published:

This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

InHerB is a start-up company that focuses on medicinal herb research and its commercialization. Currently, the company is working on herbal supplements for treating degenerative musculoskeletal diseases such as rheumatoid arthritis and osteoarthritis. Thus, the company developed this herbal composition, a nutraceutical, ARTURGIN® to release into the market. The company's growth strategy involves the following objectives:

Establish business identity and brand name.

Achieve short-term and long-term goals.

Built company infrastructure.

Carry out research and development and establish a market for its product.

InHerb is located in Delaware and the company shares are owned by its founders Dr. Bolor Tumurpurev, Ms Shruti Singh and Mr. Sony Philip. The company is S corporation. The board of directors includes Ms. Singh, Mr. Philip and Dr. Tumurpurev.

InHerb's first product is a nutraceutical called ARTURGIN® which is an herbal treatment for Rheumatoid Arthritis. It comprises of herbal extracts i.e. ASHWAGANDHA (Withania somnifera), SALLAI GUGGUL (Boswellia serrata), TURMERIC (Curcuma longa), and GINGER (Zingiber officinale), a substance that can be administered orally as a capsule or tablet or in liquid form. When given to patients of RA it reduces the symptoms and improves overall clinical picture of the patient.

Rheumatoid arthritis is a chronic disease that causes pain, swelling and stiffness in the joints. The body's immune system attacks healthy tissue leading to inflammation and damage to joints. Patients usually develop signs and symptoms of the disease between the ages of 35 and 50, with women being affected 2 to 3 times more often than men. ARTURGIN® helps reduce inflammation and pain caused by RA.

Rheumatoid arthritis has an estimated prevalence of 1 to 2% worldwide. The global market for arthritis drugs was worth $32 billion in 2008 out of which TNFα Inhibitors accounted for sale of $18 billion and COX II inhibitors $3.7 billion. NSAIDs branded, OTC and generics generated sales of $10 billion and DMARDs $3 billion in 2008.

The competition for the treatment of RA is high. Big companies like Roche, Merck pose threats. Also supplement companies like MNI nutriceuticals inc., Nutraceutical International have come up with treatment for RA. As most conventional medicines have severe side effects, people are now turning towards complementary and alternative medicines.

Keys Success Factors:

First major advantage in terms of a remedy which provides two major differentiation factors: instantaneous relief from excruciating pain & an herbal but effective alternative.

Patent protection to defend our medicinal formula and the product concept from our competitors.

Cost advantage.

When coming to the finance of the company, funds were initially raised by us, the founders. Each of us put in $100,000 as an investment into the company. Additional funding was received as an SBIR grant and from angels, which gives us an additional $ 600,000 to start up the company. Profits from revenue sales are projected to start from the 4th year. Setup up of our own manufacturing plant is expected to start within the 6th year. As the market for CAM increases, we expect to gain a huge profit in the years to come.

INDEX

INTRODUCTION

Company Summary

Mission and Vision

Company Ownership

Company location and facilities

Management

SCIENCE

Introduction

Causes

Symptoms

Diagnosis

Treatment

Medications

PRODUCT

Mechanism of Action

Side effects and Drug Interactions

MARKET ANALYSIS

Market Segmentation

Industry Analysis

Porter's five force model:

Market Strategy and promotion

SWOT analysis

FINANCE

Funding

Price and Analysis

Income Statement

Balance Sheet

Cash Flow

Exit Considerations

Company Summary

InHerb is a start-up company that focuses on medicinal herb research and its commercialization. Currently, the company is working on herbal supplements for treating degenerative musculoskeletal diseases such as rheumatoid arthritis and osteoarthritis. Thus, the company developed this herbal composition, a nutraceutical, ARTURGIN® to release into the market. The company's growth strategy involves the following objectives:

Establish business identity and brand name.

Achieve short-term and long-term goals.

Built company infrastructure.

Carry out research and development and establish a market for its product.

Mission

'To promote development of alternative medicines for patients suffering from various diseases and provide an effective solution in its treatment to alleviate their sufferings.

Vision

To unlock into nature's untapped resources for the benefit of mankind.

Company Ownership

The company is located in New York and the founders of the company own the shares. The proposed share capital of the company before raising capital

Owner

Percentage of Shares Owned

Bolor Tumur…

33%

Sony Phillip

33%

Shruti Singh

33%

The company has raised $300,000 from the founders, $500,000 from angel guilds and $150,000 from Phase I SBIR grants during the first year of its business operations. Additional working capital was raised from SBIR Phase II grants of $250,000 in year 2 of operation. During the third year of its operation, the company is expected to raise funds from angel guilds or VC's of about $2 million.

Company location and facilities

The company is located in DELAWARE in view of the strategic plan for manufacturing requirements that has been given to NutriLabs Company for the first few years of the company's operation. This had been done in accordance with the current status as our company being a start up firm does not have a manufacturing unit. After 4 years, when the company reaches a milestone and earns the anticipated profit, it will explore the possibilities of setting up its own manufacturing unit.

Management

The founders of InHerb are Shruti Singh, Sony Phillip and Bolor T. Shruti will serve the company as the Chief Executive Officer (CEO), Sony Phillip will serve as interim Chief Financial Officer (CFO) and Bolor T. will serve as Chief Scientific Officer( CSO).

Ms. SHRUTI SINGH- CEO and CMO

Ms. Singh has done her graduation in Biotechnology and after working in the pharmaceutical industry, pursued her MBA in Strategy management. She has had more than 10 years of industrial work experience before establishing InHerb.

Dr. BOLOR TUMURPUREV- CSO

Dr. Tumurpurev has done her MD/Phd in Biochemistry from Georgetown University, USA. She has been actively involved in the field autoimmune disorders and has been working in the pharmaceutical industry for more than 15 years.

Mr. SONY PHILIP- CFO

Mr. Philip has also graduated with majors in Biotechnology before doing his MBA in finance from Stanford University. He has an industrial experience of more than 10 years.

Scientific Advisory Board

Mr. Stephen Fischer- Mr. Fisher has done his MBA FROM Stanford University, USA. He is the immediate Past Chairman of Council for Responsible Nutrition.

Dr. Robert FulgoniIII- Dr.Fulgonihas done his doctorate from Georgetwon University and is currently the Vice President in the nutrition department of Kellogg Corporation.

Dr. George Guerrero- Dr. Guerrero has completed his PhD from John Hopkins's University and is currently the COO/VP of supply chain management at Leiner Health Products Inc.

Mr. Mike Locke- Mr. Locke is the Sr. Vice President and General Manager

at General Nutrition Products.

Mr. Donald Harvey- Mr. Harvey has done his PhD and MBA from the Haward University and is the Product Manager Business Development at Westvaco / Chemical Division.

Product

The company will market herbal composition product in the form of neutraceutical for the treatment of Rheumatoid Arthritis and target the alternative medicine market. Our product 'ARTURGIN' comprises herbal extracts i.e. ASHWAGANDHA (Withania somnifera), SALLAI GUGGUL (Boswellia serrata), TURMERIC (Curcuma longa), and GINGER (Zingiber officinale). A drug that can be administered orally as a capsule or tablet or in liquid form. When given to patients of RA it reduces the symptoms and improves overall clinical picture of the patient.

ARTURGEN AND RHEUMATOID ARTHRITIS- SCIENCE

Introduction

Autoimmune diseases are disorders in which the immune system attacks the body's organs which it is supposed to otherwise, protect. There are about 80 known common autoimmune diseases like Ankylosing Spondylitis, Lupus, Rheumatoid Arthritis, Juvenile Arthritis, Celiac disease etc. One of the most common autoimmune disease is Rheumatoid Arthritis or RA. (http://arthritis.about.com/od/diseasesandconditions/g/autoimmune.htm).

Rheumatoid arthritis is a chronic disease that causes pain, swelling and stiffness in the joints. The body's immune system attacks healthy tissue leading to inflammation and damage to joints. Patients usually develop signs and symptoms of the disease between the ages of 35 and 50, with women being affected 2 to 3 times more often than men. (http://www.insidera.com/what-is-ra.jsp).

There are different types of RA classified depending on the severity of disease and occurrence of inflammation in different parts of the body. Some of them are Polyarteritis nodosa, SLE, Polymyal giarheumatica etc. (http://www.wrongdiagnosis.com/r/rheumatoid_arthritis/subtypes.htm).

Causes

Cause of Rheumatoid arthritis is still unknown. The immune system fights of foreign substances like viruses, but in an autoimmune disorder the immune system generally confuses the body substance for foreign substances. Hence the body attacks itself.

Infections, genes and hormones can also lead to Rheumatoid Arthritis.

Symptoms

RA basically affects joints in the body. Wrists, fingers, knees, feet, and ankles are the most commonly affected.

The most basic symptoms are:

Fatigue

Loss of appetite

Morning stiffness (lasting more than 1 hour)

Widespread muscle aches

Weakness

Joint destruction may occur within 1-2 years after the appearance of the disease.

Diagnosis

The most common test is the anti-CCP antibody test, this test helps distinguish from other types of arthritis. Other tests done are:

Complete blood count

C-reactive protein

Erythrocyte sedimentation rate

Joint ultrasound or MRI

Joint x-rays

Rheumatoid factor test (positive in about 75% of people with symptoms)

Synovial fluid analysis

Treatment

Treatment usually requires lifelong treatments which include medications, physical therapy, exercise, education, and possibly surgery. Early, aggressive treatment for RA can delay joint destruction.

Medications

Disease modifying anti-rheumatic drugs (DMARDs): The current standard of care for RA is DMARDs, in addition to rest, strengthening exercises, and anti-inflammatory drugs. Methotrexate (Rheumatrex) and Leflunomide (Arava) are DMARDs that are most commonly used. Frequent blood tests are required since these drugs are associated with toxic side effects.

Anti-inflammatory medications: These comprise aspirin and nonsteroidal anti-inflammatory drugs (NSAIDs), such as ibuprofen. Even though NSAIDs work well, long-term use can cause stomach problems, such as ulcers and bleeding, and possible heart problems. NSAID casing now carries a warning label to alert users of an increased risk for cardiovascular events and gastrointestinal bleeding.

Antimalarial medications: This collection of medicines includes hydroxychloroquine (Plaquenil) and sulfasalazine (Azulfidine), and is typically used in mixture with methotrexate. Benefit for this may take weeks or months to take effect.

Corticosteroids: These work very well to reduce joint swelling and inflammation. Corticosteroids should be taken only for a short time and in low doses due to possible long term side effects.

Cyclooxygenase-2 (COX-2) inhibitors: drugs that block an inflammation-promoting enzyme are called COX-2. This class of drugs was at first supposed to work as well as traditional NSAIDs, but with fewer stomach problems. But, numerous reports of heart attacks and stroke have prompted the FDA to re-evaluate the risks and benefits of the COX-2s. Celecoxib (Celebrex) is still available, but labeled with strong warnings and a recommendation that it be prescribed at the lowest possible dose for the shortest possible duration. Talk to your doctor about whether COX-2s are right for you.

Biologic agents

Specific white blood cell modulators: These treatments effectively control inflammation. They include:

Orencia (abatacept) - Given under the skin (subcutaneously) or into a vein (intravenously) once a month. Reduces the number of T-cells (a type of white blood cell).

Rituxan (rituximab) - Given under the skin or into a vein twice a year. Reduces the number of B-cells (a type of white blood cell).

Tumor necrosis factor (TNF) inhibitors: This class of medication blocks a protein in the body involved in creating inflammation. They are given under the skin or directly into a vein. They include:

adalimumab (Humira)

etanercept (Enbrel)

infliximab (Remicade)

(https://health.google.com/health/ref/Rheumatoid+arthritis)

Cost of Treatments:

Cost of the conventional treatment varies from $0.9 - $1.9 per pill. But since most of these drugs have adverse side effects it is best to consult a number of physicians before the drug can be administered.

Complementary and Alternative Medicine:

Complementary and alternative medicine (CAM) is another treatment followed by many due to the side effects of conventional medical treatments. There are different types of CAMs available these days some of these treatment or therapies are Mind-Body therapies, dietary supplements, acupuncture and balneotherapy. In some cases, people follow special diets to help in the fight against RA. (http://nccam.nih.gov/health/RA/#othercam)

PRODUCT

Our product 'ARTURGEN' is a dietary supplement that helps in reducing the pain and suffering caused by RA. Our invention relates to a process of obtaining beneficiated biologically active extracts obtained from following naturally occurring plant species:

WithaniaSomnifera - Ashwaganda Withasteroids

BoswelliaSerrata - Sallai Guggul

Zingiber offcinale - Ginger

Curcuma Longa -Turmeric

Mechanism of Action

WithaniaSomnifera - Ashwaganda Withasteroids

Alkaloids, steroidal lactones, saponins, and withanolides are thought to be the biologically active components of ashwagandha. Studies have pointed to cyclooxygenase (COX) inhibition as the mechanism for the herb's antiarthritic properties. In animal studies, Ashwagandha's anti-inflammatory effects were comparable to hydrocortisone. Microarray analysis has revealed that ashwagandha represses proinflammatory gene expression, including IL-6, IL-1â, IL-8, Hsp70, and STAT-2.

(http://www.mskcc.org/mskcc/html/69127.cfm#MechanismOfAction)

BoswelliaSerrata - Sallai Guggul

Studies have shown that salai guggul has really high effects on Rheumatoid arthritis. Guggul consists of Boswellic Acid which is believed to suppress the proliferating tissue found in the inflamed areas and also prevents the breakdown of connective tissue.

The mechanism is similar to the action of non-steroidal groups of anti-arthritic drugs with no side effects, gastric irritation and ulcerogenic activity.

(http://www.holisticonline.com/Herbal-Med/_Herbs/h34.htm)

Boswellic acid

Zingiber offcinale - Ginger

Turmeric has anti-inflammatory and choleretic actions. Both curcuminoids (curcumin) and volatile oils are responsible for the anti-inflammatory activity, which may be due to leukotriene inhibition. Curcuminoids induce glutathione S-transferase and are potent inhibitors of cytochrome P450. Turmeric acts as a free radical scavenger and antioxidant, inhibiting lipid peroxidation and oxidative DNA damage. It also inhibits activation of NF-kB 17, 20, c-jun/AP-1 function, and activation of the c-Jun NH2-terminal kinase (JNK) pathway. (http://www.mskcc.org/mskcc/html/69401.cfm#MechanismOfAction

According to various studies done Ginger has shown promising effects on its treatment against Rheumatoid Arthritis. Though the mechanism of this antiemetic activity is unknown, various speculations are made. A mechanism involving the central nervous system cannot be ruled out. In vitro studies shows that ginger may produce its anti-inflammatory effects by inhibiting arachidonic acid metabolism in both the cyclooxygenase and lipoxygenase pathways. (http://www.medscape.com/viewarticle/406882)

Curcuma Longa -Turmeric

Curcumin

Side effects and Drug Interactions

ASHWAGANDHA

Ashwagandha does not have any significant and severe side effects. High dose may although at times result in stomach upset and gastric problems. Therefore, ashwagandha is considered to be safe in accordance with proper dosing guidelines. It is preferred not to give ashwandha to people with stomach ulcers and pregnant women.

(http://www.vitamins-supplements.org/herbal-supplements/ashwagandha.php)

GINGER

Ginger is commonly consumed as an ingredient in the form of spice to enhance the taste of food. Ginger if taken in large quantities causes heartburn and stomach distress. Another severe side effect is that it reinforces warfarin action by heterogeneous mechanisms and thus, it is strictly not recommended to be used in patients on oral anticoagulant or anti platelet therapy. (http://www.personalhealthzone.com/ginger.html)

Also, ginger should not be given to patients on anti diabetic prescriptions as it causes blood glucose level to fall down very rapidly. Ginger also causes lowering of blood pressure, therefore, people on medication for high blood pressure specially calcium channel blockers should take ginger cautiously. (http://www.rxlist.com/script/main/art.asp?articlekey=96924&page=3)

SALAI GUGGUL

The side effects associated with Salai guggul are not serious. The side effects consist of occasional allergic interactions or mild gastrointestinal distress. Dosing is very important to be taken care of while prescribing Boswellia. There are no associated drug interactions of guggul when taken in proper dose.

(http://www.herbalremedies.com/boswellia-serrata.html)

TURMERIC

Turmeric should not be taken with anti coagulants and anti platelet therapies as it can cause severe bleeding and blood thinning in those patients. Other than that, turmeric in normal quantities in food has no known side effects.(http://www.umm.edu/altmed/articles/turmeric-000932.htm)

Market Analysis

The global market for arthritis drugs was worth $32 billion in 2008 out of which TNFα Inhibitors accounted for sale of $18 billion and COX II inhibitors $3.7 billion. NSAIDs branded, OTC and generics generated sales of $10 billion and DMARDs $3 billion in 2008. (http://knol.google.com/k/global-arthritis-market-review-2008-world-top-ten-ra-drugs#Table_1(C2)(A0)(C2)(A0)(C2)(A0)(C2)(A0)_Global_Arthritis_Market_2006(2D)2008_(28)(24)_billion(29))

Rheumatoid arthritis has an estimated prevalence of 1 to 2% worldwide. Prevalence of the disease increases with age, becoming 5% in women over age 55. The average annual incidence of RA in the United States is about 70 per 100,000 annually. It is found to be two to three times greater in women than in men. Although rheumatoid arthritis may present at any age, patients most commonly are first affected in the third to sixth decades. (http://www.hopkins-arthritis.org/arthritis-info/rheumatoid-arthritis/rheum_clin_pres.html)

Keys Success Factors:

First major advantage in terms of a remedy which provides two major differentiation factors: instantaneous relief from excruciating pain & an herbal but effective alternative.

Patent protection to defend our medicinal formula and the product concept from our competitors.

Cost advantage.

There is enormous potential for an affordable medicinal remedy that provides the patients with instantaneous relief from pain with no side effects. Considering the great scope of our radical product, we feel it is imperative to center our limited resources on a particular region so that we can establish a demand for our medicine. Subsequently we will commence with penetration of our radical product into the selected market to stimulate further demand and build brand equity that will help us extend our reach to international markets.

Market Segmentation

Neutraceutical's product line covers about 40% of the US market. Our neutraceutical "ARTURGIN" will first be introduced in the capital area Washington DC targeting as many doctors and physicians as possible. This will give sufficient initial exposure to our product and will also help us to further expand our business. After implementing in the capital, we will begin our enlargement into surrounding areas which will expand our market size three to four times as big as the present target market.

Industry Analysis

The RA treatment industry, of which we are a part, is split up mainly based on the origin of the drugs. There are many treatment options available in the market today which include the following:

Allopathic medicines: The conventional treatment of RA includes medications like DMARDs, anti-inflammatory, anti-malarial, corticosteroids, cyclooxygenase-2 (COX-2) inhibitors etc.

Herbal medications: There are many herbal tinctures, oils, ointments etc. available in the form of neutraceuticals and food supplements in the market. Some of them are Chinese herbal tincture for joint and arthritis pain, collagen Type II with herbs and supplements, traditional Chinese Du Huo for Arthritis Relief, oil of eucalyptus etc.

Homeopathic medications: There are many players in the market with homeopathic options available as well for the treatment of RA. The treatment options that are currently in the market include Arthritol, herbal salicylate, zeel tablets and ointments etc.

The current industry growth rate is about 9.6% annually. As per a report published by Australian Journal of Basic and Applied Sciences in 2007, United States of America (USA) currently possesses the largest and most rapidly expanding functional food and nutraceutical market in the world (World Nutraceuticals, 2006). The current industry growth rate of this industry in the United states is about 35% annually, being one of the largest (2008-2009).

(http://www.insipub.com/ajbas/637-649.pdf)

Within the food supplement sector, there is moderate competition for market share among the living manufacturers of neutraceuticals. The reason being, most of the neutraceutical market is crowded in Sub-Asian continent in countries like India, China, Japan etc. There are very few in house companies working on neutraceuticals.

Competition and buying patterns

The customers select a product based on its price, distribution availability and convenience. There are competitors in the nutraceutical market who sell their products to a certain customer category but we intend to target the Rheumatoid Arthritis market on a whole. This gives us an advantage of having a larger market segment and enables us to expand and target more.

Porter's five force model:

Five Forces Analysis assumes that there are five important forces that determine competitive power in a situation. These are:

Supplier Power: This determines how easy it is for suppliers to drive up prices. The price is driven by the uniqueness of the product, its strength and cost and the suppliers themselves. The lesser the number of suppliers, the more control they have on the manufacturer.

Buyers Power: This tells how a buyer can dictate the price and quality of the product. The feedback given by the consumers will help us improvise on our product.

Competitive rivalry: Having been working on RA, one of the most prevalent diseases worldwide, there is no doubt about competition. There is competition from conventional medicines in the market along with alternative medicines as well as herbal medicines.

Threat of substitution: Since our product is patent protected, substitution of our product is unlikely unless there are some changes and a new product revolving around our patent comes up without infringing it.

Threat of new entry: There is always a threat of new entrances in the market for this disease as it is very lucrative and holds a huge promise. Also, market for RA is very large and not forgetting the fact that this disease is incurable attracts many companies to plunge themselves to come up with new ideas and treatment options. (http://www.mindtools.com/pages/article/newTMC_08.htm)

Market Strategy and promotion

The initial focus of marketing and making our product known would be to go to doctors and organizations that work for Rheumatoid Arthritis patients and organizations that are food supplement and neutraceutical oriented. This will help us to promote our product and make people aware of our presence.

Also, distribution of pamphlets and brochures at different pharmacies and conferences should help us gain some market. Internet marketing these days has also become popular. The plan includes putting advertisements of our product on different sites to create awareness amongst patients.

SWOT analysis

STRENGTHS: The strengths include the following:

Being an herbal product, it is natural without any additives and shows potent activity.

It is cheaper than its counterparts.

Already being through clinical trials.

The production takes place in c GMP environment.

No FDA approval required.

WEAKNESSES: The weaknesses are as listed below:

The neutraceutical pipeline is small.

It is a treatment like any other drug or neutraceutical present in the market not a CURE.

OPPORTUNITIES: The company sees itself en-cashing the following opportunities in future:

The expanding and growing market of alternative medicine provides us an emerging opportunity.

With lots of side-effects from conventional drugs, our neutraceutical gives us an opportunity to say that it does have any side-effects.

THREATS: We face the following threats-

Existing competition from conventional drug companies.

New entrances in the market with similar kinds of neutraceutical products.

FINANCE

Funding

Key elements in the start up of the company are:

Location of the company

Purchase of equipments and assets deemed necessary for the operating activities of the company

Salary for employees

Formulation of the strategic business plans

Approximately $ 300,000 was raised by us (founders) for the above purposes. Also, funding was received from NIH SBIR grant I of $ 100,000. The remaining of the funding is received from angel investors who will be given shares via private investment.

Price

Cost of Product = $19.95 (60 capsules)

Cost per capsule = $.3325

Graph Analysis

Income Statement

2009

2010

2011

2012

2013

INCOME

Gross Receipts on Sales

99,750

399,000

2,596,000

4,987,500

TOTAL INCOME

$ 99,750

$ 399,000

2,596,000

$ 4,987,500

EXPENSES

cost of production

50,000

50,000

250,000

1,000,000

2,000,000

Facilities

Total Cost of Goods

$ 50,000

$ 50,000

$ 250,000

$1,000,000

$ 2,000,000

Sales and Administration

Salaries and wages

180,000

220,000

220,000

260,000

340,000

Marketing

20,000

20,000

52,000

104,000

104,000

Rent and lease expenses

20,000

20,000

20,000

20,000

20,000

5,000

5000

5,000

5,000

5,000

Insurance

7,000

7,000

7,000

7,000

7,000

Web site hosting

4,000

4,000

4,000

4,000

4,000

Advertising

12,000

12,000

50,000

100,000

100,000

Vehicle expenses

Accounting and legal services

7,000

12,000

Total Sales, General, and Administration

$ 248,000

$ 288,000

$ 365,000

$ 512,000

$ 580,000

Buildings and Equipment

Building and renovations

500,000

Manufacturing machinery and equipment

350,000

Office equipment and computers

100,000

Total Buildings and Equipment

$ 450,000

$ 500,000

Other Expenses

New product development

53,000

100,000

Web site development

10,000

Debt reduction

Total Other Expenses

$ 63,000

$ 100,000

TOTAL OPERATING EXPENSES

$ 811,000

$ 338,000

$ 615,000

$1,512,000

$ 3,180,000

Operating Profit

$(811,000)

$(238,250)

$(216,000)

$1,084,000

$ 1,807,500

Less: interest expense

Profit Before Taxes

$(811,000)

$(238,250)

$(216,000)

$1,084,000

$ 1,807,500

Less: corporate taxes

NET PROFIT

$(811,000)

$(238,250)

$(216,000)

$1,084,000

$ 1,907,500

Balance Sheet

year 1

year 2

year 3

year 4

year 5

ASSETS

Current Assets

Cash

500,000

189,000

200,750

1,984,750

3,068,750

Accounts receivable

9,591

38,365

32,000

Inventory

12,500

62,500

125,000

125,000

Prepaid expenses

50,000

3,840

9,885

Total Current Assets

$ 550,000

$ 214,931

$ 311,500

$2,141,750

$3,193,750

Fixed Assets

Land

500,000

Buildings

Equipment and machinery

350,000

350,000

350,000

350,000

350,000

Vehicles

Less: accumulated depreciation

Total Net Fixed Assets

$ 350,000

$ 350,000

$ 350,000

$ 350,000

$ 850,000

Intangibles

Goodwill

Intellectual property

1,969,000

1,969,000

1,969,000

Total Intangibles

 

$1,969,000

$1,969,000

$1,969,000

TOTAL ASSETS

$ 900,000

$ 564,931

$2,630,500

$4,460,750

$6,012,750

LIABILITIES AND OWNER'S EQUITY

Current Liabilities

Accounts payable

53,840

100,000

500,000

769,000

Short-term notes payable

Accrued expenses payable

500,000

400,000

Total Current Liabilities

-

53,840

100,000

1,000,000

1,169,000

Long-term Liabilities

Long-term notes payable

103,841

100,000

788,000

2,520,000

Mortgage payable

Total Long-term Liabilities

$ 103,841

$100,000

$ 788,000

$2,520,000

Owner's Equity

Invested capital

900,000

250,000

2,000,000

Accumulated retained earnings

157,250

430,500

2,672,750

2,323,750

Total Owner's Equity

$ 900,000

$ 407,250

$2,430,500

$2,672,750

$2,323,750

TOTAL LIABILITIES and OWNER'S EQUITY

$ 900,000

$564,931

$2,630,500

$4,460,750

$6,012,750

Cash Flow

year 1

year 2

year 3

year 4

year 5

INFLOW

Gross Receipts on Sales

99,750

399,000

2,596,000

4,987,500

Dividend and Interest Income

Invested Capital

900,000

250,000

2,000,000

TOTAL FUNDS IN

$ 900,000

$ 349,750

$2,399,000

$2,596,000

$4,987,500

OUTFLOW

Cost of Goods Produced

50,000

50,000

250,000

1,000,000

2,000,000

Sales, General, and Administration

248,000

288,000

365,000

512,000

580,000

Buildings and Equipment

350,000

Other Expenses

63,000

Interest Expense

Corporate Taxes

TOTAL FUNDS OUT

$ 711,000

$ 338,000

$ 615,000

$1,512,000

$2,580,000

Net Cash Flow

$189,000

$ 11,750

$1,784,000

$1,084,000

$2,407,500

Plus: Beginning Cash Balance

189,000

200,750

1,984,750

3,068,750

Ending Cash Balance

$ 189,000

$ 200,750

$1,984,750

$3,068,750

5,476,250

Exit Considerations

The most likely exit strategy is through acquisitions. If the company's financial status is doing well, this will make the assets of the company to be more attractive to the acquisitive competitiors.

Exceptional results would enhance our company's brand name and financial status and the likelihood of getting a new product into the market will give us an advantage. Thus in this IPO scenario, the opportunity to raise the capital would be an exit for the shareholders becomes more likely.

Yet another exit strategy would be acquisition after IPO.

Writing Services

Essay Writing
Service

Find out how the very best essay writing service can help you accomplish more and achieve higher marks today.

Assignment Writing Service

From complicated assignments to tricky tasks, our experts can tackle virtually any question thrown at them.

Dissertation Writing Service

A dissertation (also known as a thesis or research project) is probably the most important piece of work for any student! From full dissertations to individual chapters, we’re on hand to support you.

Coursework Writing Service

Our expert qualified writers can help you get your coursework right first time, every time.

Dissertation Proposal Service

The first step to completing a dissertation is to create a proposal that talks about what you wish to do. Our experts can design suitable methodologies - perfect to help you get started with a dissertation.

Report Writing
Service

Reports for any audience. Perfectly structured, professionally written, and tailored to suit your exact requirements.

Essay Skeleton Answer Service

If you’re just looking for some help to get started on an essay, our outline service provides you with a perfect essay plan.

Marking & Proofreading Service

Not sure if your work is hitting the mark? Struggling to get feedback from your lecturer? Our premium marking service was created just for you - get the feedback you deserve now.

Exam Revision
Service

Exams can be one of the most stressful experiences you’ll ever have! Revision is key, and we’re here to help. With custom created revision notes and exam answers, you’ll never feel underprepared again.