Founder&CEO: JohnAdam
BUSINESSPLAN
9th Street Packaging
COMPANY: 9TH STREET PACKAGING
RECEIVER: LOAN OFFICER
9 TH STREET PACKAGING
FOUNDER & CEO
John AdamEXECUTIVE SUMMARY
9th Street Packaging is a new corrugated box supplier that seeks to serve the needs of medium businesses. 9th Street Packaging's primary focus will be providing a convenient, positive customer experience and offering competitively low prices. 9th Street Packaging will be located in Fayette, Georgia, and will serve businesses in the surrounding area. A focused low-cost strategy will be adopted that concentrates on a narrow market segment, mid-sized businesses. It will strive to meet the specific corrugated box needs and requirements at a competitive cost to rivals. The goal of the strategy will be to give the company early positioning to win buyer favor and outcompete rivals. 9th Street Packaging will sell direct to consumers, eliminating activities and costs associated with distributors and dealers. The company will practice strategic Search Engine Optimization (SEO) and social media that result in lead generation and customer acquisition. The benefit-to-cost ratio is relatively high compared to working with distributor channels, as the company's marketing expenses will be used to acquire an already identified target market. The company also plans to leverage online systems and proven software to achieve operational efficiencies. To get the business up and running, 9th Street Packaging must secure loan funding to cover the costs of equipment, staffing, a facility, and supplies. Once the business is up and running, 9th Street Packaging will focus on marketing and sales efforts to attract new customers. 9th Street Packaging's long-term goal is to become the go-to supplier of corrugated boxes for businesses in the area.
BUSINESS PLAN
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COMPANY DESCRIPTION
9th Street Packaging is a Fayette, Georgia-based company that provides the best packaging solutions through a complete design facility. A team of experienced professionals offers unmatched pack-out and fulfillment services that remove costly labor from the clients' operations and eliminate damage and handling issues when packing products. To compete with enterprise-level brands, the company will take a customer experience approach by emphasizing a solid rapport with clients, a streamlined process by leveraging technology, and anticipating the client's needs through experience gained over three decades. 9th Street Packaging will first focus on selling corrugated boxes to medium-sized companies. The company is innovative, adaptative, forward-thinking, and passionate about a streamlined packaging system. The owners of 9th Street Packaging have the experience and knowledge in their prospective fields, which will help mitigate this issue. The plan is to leverage the funds to purchase the necessary equipment, staffing, facility, and supplies to begin the business.
ORGANIZATION AND MANAGEMENT
9th SP is an LLC registered located in metro Atlanta, GA. With more than 30 years of manufacturing experience, John Adam will lead the 9th Street Packaging business. He has managed to manufacture and convert operations exceeding $400MM in annual revenue with a team size of more than 325 members. During the uncertainty of COVID-19, his plants achieved >99% on time and complete service while managing limited raw material availability and sporadic operational coverage. John will use his extensive experience to guide 9th Street Packaging. Several key positions will be filled during the first year of operation, including Art / Design Director, Operations / Logistics Lead, Maintenance Lead, and Sales lead. As an African American-owned company, 9th SP will obtain minority certification from 8a, DBE, GMSDC, MBE, and NMSDC. After certification, we will register with the Diversity Sourcing Team of companies throughout the Southeast that purchase various forms of packaging. 9th Street Packaging's objective will be to gain alternative/secondary supplier status with companies for their packaging needs. This is a critical step in gaining entry into these companies and demonstrating 9th SP capabilities and ability to deliver consistently and on time.
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INDUSTRY ANALYSIS
The Cardboard Box and Container Manufacturing industry is the largest paper-converting industry in the United States. The continued expansion of online retailers has significantly contributed to industry growth over the past five years. However, the COVID-19 pandemic and the following economic slowdown muted some of the gains made during the period. Overall, revenue will increase at a CAGR of 0.1% to $81.7 billion over the past five years, including a 0.1% decline in 2023. The industry is insulated from acute market changes by its broad client base and low-wage spending. In addition, the popularity of automation technologies among more prominent manufacturers and low-skill labor among smaller manufacturers protects the industry somewhat from volatility in labor markets. Despite these insulative forces, the price of paper still influences profitability throughout the industry and the tendency for customers to select plastic packaging instead. Over the next five years, industry revenue growth will be more substantial than the prior period as downstream markets recover following the pandemic. Manufacturers will benefit from heightened demand from e-commerce platforms as consumers purchase more from online stores, requiring more industry products to fulfill shipping needs. Nonetheless, the offshoring of manufacturing facilities will continue, reducing domestic demand for cardboard from the packaging and transportation sectors. Industry revenue will rise at a CAGR of 2.0% to $90.3 billion over the next five years
• ONLINE DEMOGRAPHICS
The target audience for 9th street packaging has been identified through common demographic similarities seen in the clients of direct competitors The total demand from all the named competitors in the company's target market is 4 billion. This includes demand from those who need an offered product or service, even if they are not willing, ready, or able to make a purchase. The amount of demand within the serviceable available market from individuals ready to purchase an offered product or service is 1.9 billion. Most potential clients have taken a leave of absence to pursue startups that require corrugated boxes. The next largest client pool is low to medium-sized business owners with a university or college degree. The average household size is 3-4 persons per household, insinuating that the average owner is married with an average of 2 children and a combined household income of at least $100,000 a year (49.10%).
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• DEMAND DETERMINANTS
Demand for the industry's products is closely related to the economy ’s physical output level, with nearly all manufacturing industries requiring some cardboard packaging. Other important demand determinants include economic growth, production activity, business sentiment, and consumer sentiment. The landscape of the economy has changed over the past decade as manufacturers have put a stronger emphasis on the service sector than manufacturing, which has led to a decline in demand for packaging products. Additionally, consumer preferences have changed recently, with a growing appreciation for e-commerce and environmentally friendly products.
BARRIERS TO ENTRY
The US's Cardboard Box & Container Manufacturing industry faces a few legal barriers, primarily from the federal government. These barriers relate to environmental standards and worker protection. In addition, there are high start-up costs for any new entrant into the industry, as they must procure the necessary machinery and hire qualified staff. The industry is also facing high internal competition due to a need for more product diversification. As a result, new entrants need to offer a differentiated product to succeed. The industry is capitalintensive, relying on machinery and other equipment for production
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COMPETITOR ANALYSIS
The target audience for 9th Street Packaging will be medium-sized business owners in the low to medium-income bracket. 9th Street Packaging can gain significant market share within the next three to five years from Dalton Box, Akers Packaging, and FEFCO. In the last year, the companies have amounted to over 1 million visits across their websites, and Dalton Box had the most unique visits at 1.6 million. Direct marketing amounts the most traffic compared to other channels across all competitors at 40.10%.
• DALTON BOX
Dalton Box is a family-owned business that has operated for over 60 years. The company is considered a niche player, meaning it has had a low growth rate over the last year compared to its competitors. Dalton Box has increased domain traffic within the same period by 995.07%, totaling 413 K online visits. Of those total visits, 57.7 K constitute unique visitors, an increase of 116%. Direct marketing resulted in 85.32% of Dalton Box's total online traffic resulting in 352.4 K visits and a 12.5 % increase over the last year. Internet searches were the second-largest traffic generator for the company, with 11.67 % of overall visitors at 48.2 K. The client base for the company comes mainly from The United States, with over 98.42% of total traffic. 9th Street Packaging plans to gain market share from Dalton Box by challenging its limited resources and capabilities. Small firms typically have limited expertise and resources; a challenger with broader or deeper capabilities is well-positioned to raid their biggest and best customers particularly those growing rapidly, with increasingly sophisticated requirements, and may already be thinking about switching to a supplier with more full-service capability.
• AKERS PACKAGING
Akers Packaging is an independent corrugate box supplier in the Midwest Over the last year, Akers Packaging has increased domain traffic by 53.3%, totaling 19.9 K visits. Of those total visits, 11.8 K constitute unique visitors, a decrease of 0.66%. Internet searches resulted in 79.12% of Akers Packaging's total online traffic resulting in 15.8 K visits and a 20.88% decrease over the last year. Direct marketing was the second-largest traffic generator for the company, with 15.97% of overall visitors at 3.2 K. The client base for the company comes mainly from The United States, with over 84.84% of total traffic. 9th Street Packaging plans to gain market share on Akers Packaging's middle-size business clients based on an alternative low-cost option. The company will exploit Aker's weakness of a subpar marketing strategy. The company has spent $5,800 on recent marketing campaigns and has done so
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almost exclusively through google ads. Unfortunately, the company has not leveraged social media, which accounts for only 4.9% of total traffic. 9th Street Packaging will gain market share by launching social media campaigns that target the same client demographics as Akers Packaging. The effort will indirectly allow the company to compete with its Google ad campaigns but at a significantly lower cost for marketing.
• FEFCO
FEFCO is the European Federation of Corrugated Board Manufacturers, a non-profit organization representing the interests of the European corrugated packaging industry. The company is considered a niche player, meaning it has had a low growth rate over the last year compared to its competitors. FEFCO has increased domain traffic within the same period by 76.21%, totaling 70.2 K online visits. Of those total visits, 41.6 K constitute unique visitors, an increase of 31.53%. Internet searches resulted in 68.26% of FEFCO's total online traffic resulting in 47.9 K visits and a 31.46 % increase over the last year. Direct marketing was the company's second-largest traffic generator, with 28.25 % of overall visitors at 19.8 K. The client base for the company comes mainly from The United States, with over 43.68% of total traffic. 9th Street Packaging plans to gain market share from FEFCO by challenging its limited resources and capabilities. Small firms typically have limited expertise and resources; a challenger with broader or deeper capabilities is well-positioned to raid their biggest and best customers particularly those proliferating, have increasingly sophisticated requirements, and may already be thinking about switching to a supplier with more fullservice capability.
TECHNOLOGY IMPLICATIONS
The cardboard box and container manufacturing industry is experiencing a low level of new patent concentration and a common threat of disruption from new technologies. The sector focuses on key customer segments, presenting an opportunity for strategic entrance into lower-end or unserved markets for innovations. The industry has seen technological improvements in reducing energy consumption, including more recycled materials in the production process and progress in production processes. However, the production process for corrugated products has remained relatively unchanged in recent years. The Alliance for Pulp and Paper Technology Innovation focuses on reinventing the forest products market through innovation in processes and materials.
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KEY SUCCESS FACTORS
Key success factors refer to critical elements of a business that significantly affect its success in a specific industry. The Cardboard Box and Container Manufacturing industry has several critical essential factors of success that consultants have identified. These include ensuring a guaranteed supply of crucial inputs, adopting automation to reduce labor costs and enhance efficiency, achieving economies of scale to reduce costs and boost profitability, establishing contacts within key markets, undertaking technical research and development, and having the ability to alter goods and services produced in line with market conditions. Guaranteeing a steady supply of paperboard and other inputs can ensure a reliable supply chain and meet production goals. Automating processes can help enhance efficiency, speed, and quality, reducing costs and increasing profitability. Economies of scale can also help businesses lower costs and improve profitability. Establishing contacts within target markets is vital to ensuring a consistent demand for products. At the same time, research and development can help companies to develop more efficient production schedules and higher-quality products. Flexibility is also critical to enable businesses to adapt to changing market demands. By focusing on these essential factors of success, firms in the Cardboard Box and Container Manufacturing industry can enhance their competitiveness, increase efficiency, lower costs, and improve profitability. Ultimately, these factors can help businesses to thrive in a highly competitive market and achieve long-term success.
• Ability to manage external contracts: Companies in the industry must be able to manage outsourced packaging contracts.
• Ability to change which market the company operates in: Successful industry operators will be flexible and able to offer services to clients across various industries.
• Effective cost controls: Successful industry operators must manage costs to maximize their generally small profit margins.
• Access to a multiskilled and flexible workforce: Companies in the industry need a multi-skilled labor force capable of highly specialized tasks.
• Access to niche markets: It is beneficial for companies in the industry to operate in niche markets that may be less price sensitive.
ANNUAL CHANGES
The annual changes indicate fluctuations in various economic indicators over some time. Some indicators, such as revenue and IVA, have fluctuated widely, while others, such as establishment and enterprise percentages, have remained negative throughout the period. Employment, exports, imports, and domestic demand percentages have generally
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increased over time but have also fluctuated. Manufacturing capacity utilization has increased in some years but has remained stable in others. Wages have consistently increased over the period, with a peak in 2022. The overall pattern is one of fluctuations and recoveries from the financial crisis of 2008.
FINANCIAL SUMMARY
The industry's profitability was negatively affected by economic volatility during the COVID19 pandemic. A downturn in instability was due to the decreased demand for cardboard items from downstream markets, which was caused by the decrease in consumer demand for leisure items. Additionally, the industry faced uncertainty due to the fluctuating prices of raw materials, such as paper. However, the sector recovered its profitability due to the solid economic rebound following the pandemic. The improvement was mainly driven by consistent demand for cardboard boxes and containers from the food and beverage industry and the growth of e-commerce markets, which provided the industry with a new source of revenue.
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Looking ahead to 2023, the industry is expected to achieve a profit margin of 4.5% of industry revenue. This suggests that the industry is expected to remain stable and profitable However, it is essential to note that economic conditions can change rapidly and unexpectedly, and there may be risks and uncertainties that could impact profitability in the future. Therefore, industry manufacturers must remain vigilant and adaptable to changing market trends and consumer demands to ensure continued profitability.
COST STRUCTURE
The cost structure benchmarks provide insights into the different cost components that make up the cardboard box and container manufacturing industry. The industry experienced a dip in profitability during the COVID-19 pandemic due to a decline in consumer demand for leisure items. However, a solid economic rebound, particularly in the food, beverage, and e-commerce markets, helped offset this decline. In 2023, profits will account for 4.5% of industry revenue. On the other hand, the industry continues to face high wage costs, which account for 13% of industry revenue. The consistent demand for manual labor and transportation of finished goods contribute to this. The cost of purchases, particularly raw materials like paper, adhesives, and resins, is the industry's most significant expense, accounting for 64% of industry revenue. Volatility in commodity prices, exacerbated by supply chain disruptions during the pandemic, has added to this expense. Lastly, other costs associated with the industry, including administrative fees, research and development, and logistics, can fluctuate with the broader economy. Consistent research and development investment is critical for the industry to remain competitive against substitute packaging materials like plastic. 9th Street Packaging will remain consistent with the division of revenue in the industry to satisfy company costs.
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FINANCIAL RATIOS
9th Street Packaging will aim for a quick ratio, current ratio, EBITDA/Revenue ratio, leverage ratio, sales/working capital ratio, debt/net worth ratio, and debt service coverage ratio (DSCR) that is averaged between the one year, three years, and five-year averages of Cardboard box and container Manufacturing industry.
• QUICK RATIO
The quick ratio, also known as the "acid test" ratio, uses a conservative measure of liquidity to measure the ability to pay liabilities. A ratio value of less than one indicates that industry operators would rely on less current asset types to liquidate current debt obligations. A quick ratio of 1 or above is considered good. When the ratio is at least 1, a company's quick assets equal its current liabilities, which means it should not have trouble paying short-term debts. The higher the ratio, the better. 9th Street Packaging is performing above industry standards in this statistic, with a quick percentage 0.4 more elevated than the industry average for Cardboard box and container manufacturing companies in the United States.
• CURRENT RATIO
The current ratio measures industry businesses' ability to service current obligations. A higher current ratio represents a tremendous difference between liabilities and assets to pay them. However, the makeup of existing assets determines the degree of the cushion provided. An excellent current ratio is between 1.2 to 2, which means that the business has two times more current assets than liabilities to cover its debts. A current ratio below 1 indicates that the company doesn't have enough liquid assets to cover its short-term liabilities. 9th street packaging plans to perform slightly above industry standards, with a current ratio of 0.1 higher than the industry average.
• EBIDTA/REVENUE RATIO
The EBITDA/Revenue ratio, or EBITDA margin, is calculated as follows: earnings before interest, taxes, depreciation, and amortization divided by total revenue. An EBITDA margin of 10% or more is typically considered good, as S&P-500-listed companies have EBITDA margins between 11% and 14% for the most part. 9th Street Packaging has an EBITDA margin of 1.2%, which is 30.3% lower than the industry average for packaging and Cardboard box and container manufacturing companies in the United States.
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• LEVERAGE RATIO
The leverage ratio measures the ability to decrease debt on the balance sheet. A low leverage ratio is generally preferred by analysts, as it indicates that a company is not excessively indebted and should be able to repay its debt obligations. Conversely, if the leverage ratio is high, it suggests that a company is heavily burdened with debt. Ratios above 3 or 4 serve as "red flags'' and indicate that the company may be financially distressed. 9th Street Packaging plans to average a leverage ratio of 3.1, below the 4.0 threshold but 0.1 points higher than the industry average for Cardboard box and container manufacturing services companies in the United States.
• SALES/WORKING CAPITAL RATIO
The Sales/Working Capital ratio measures the ability to finance current operations with working capital. A higher ratio indicates a degree of cushion for creditors. Generally, a working capital ratio of less than one is taken as indicative of potential future liquidity problems, while a ratio of 1.5 to two is interpreted as indicating a company on solid financial ground in terms of liquidity. An increasingly higher ratio above two is not necessarily considered to be better. 9th Street Packaging plans to have a Sales/Working Capital ratio of 4.33, which indicates a decent liquidity status. This is 2.27 points lower than the industry standard of 6.6.
• DEBT/NET WORTH RATIO
The Debt/Net Worth ratio demonstrates the relationship between contributions of creditors and ownership. A higher ratio suggests longer term risk for creditors, since there is less of a cushion provided by ownership. A ratio of 1.0 suggests that the company has the capability to pay off its debts using all of its tangible net worth. So in most cases, you want this ratio to be lower than 1.0, and a good ratio should be lower than 0.4. That's to say, the company should have an ability to pay off its debt obligations using less than 40% of its current tangible net worth. 9th Street Packaging is aiming for a Debt/Net Worth Ratio of 2.6, which is above the 1.0 threshold and 0.1 points higher than the industry average.
• DEBT SERVICE COVERAGE RATIO (DSCR)
The debt service coverage ratio (DSCR) is a key measure of a company's ability to repay its loans, take on new financing and make dividend payments. It is one of three metrics used to measure debt capacity, along with the debt-to-equity ratio and the debt-to-total assets ratio. The higher the ratio, the better, though. The higher the DSCR is, the more cash flow
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leeway the company has after making its annual necessary debt payments. Companies should strive to achieve a DSCR greater than 1. 9th Street Packaging plans to have a DSCR of 1, which is 0.5 points below the industry average.
FINANCIAL DRIVERS
The Cardboard Box and Container Manufacturing industry will likely see an increase in revenue in 2023 due to several factors. The freight transportation services index and consumer spending are expected to increase, leading to higher demand for cardboard packaging. The growth of e-commerce sales will also likely increase the industry product demand rate. However, the industry may face challenges in the future, as the tradeweighted index may incentivize customers to move overseas, potentially leading to a decline in revenue. Additionally, the price of paper, which impacts the industry as cardboard is a similar product, may pose a threat as it is expected to continue to rise shortly. Overall, the industry is likely to see growth in the coming year but may face challenges in the long term.
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Financing
9th Street Packaging: 2023-2025 Original Page 1 of 14 Financing 2023 2024 2025 Amount received $2.6M Loan $2 6M Payments $184,272 $201,024 $201,024 Loan $184,272 $201,024 $201,024 Principal Paid $42,319 $48,893 $51,909 Interest Paid $141,953 $152,131 $149,115 Balance $2.6M $2.5M $2.5M Short-Term Debt $48,893 $51,909 $55,110 Loan $48,893 $51,909 $55,110 Long-Term Debt $2 5M $2 5M $2 4M Loan $2 5M $2 5M $2 4M
Projected Pro t & Loss (1 of 2)
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9th Street Packaging: 2023-2025 Original Page 2 of 14 Projected Pro t & Loss 2023 2024 2025 Revenue $81,000 $200,008 $400,004 Single Wall Corrugate $9,000 $22,222 $44,444 Double Wall Corrugate $9,000 $22,222 $44,444 Triple Wall Corrugate $9,000 $22,222 $44,444 Paperboard Cartons $9,000 $22,222 $44,444 RSC (Regular Slotted Container) $9,000 $22,222 $44,444 FOL (Full Overlapping Slotted Container) $9,000 $22,222 $44,444 HSC (Half Slotted Container) $9,000 $22,222 $44,444 Tray $9,000 $22,222 $44,444 OPF (One Piece Folder) $9,000 $22,232 $44,452 Gross Margin $81,000 $200,008 $400,004 Gross Margin % 100% 100% 100% Operating Expenses $1.3M $1.1M $1M Salaries & Wages $519,775 $519,775 $519,775 CEO $85,000 $85,000 $85,000 Manager $60,000 $60,000 $60,000 Nonexempt (4) $160,000 $160,000 $160,000 Maintenance $70,000 $70,000 $70,000 Contract (2) $71,290 $71,290 $71,290 Sales $50,000 $50,000 $50,000 FICA Taxes $23,485 $23,485 $23,485 Employee Related Expenses $89,697 $89,697 $89,697 Furniture $10,000 $5,000 $2,500 Rack $21,000 $10,500 $5,250 Fork Truck $25,000 Tools $4,500 $2,500 $500 Transport $10,000 Install $50,000 Misc / Other $15,000 $10,000 $5,000 Computers $8,400 Software $8,400 $8,400 $8,400 Server $12,000 $6,000 $6,000 Consumables $5,000 $5,000 $5,000 Scan Guns $5,200 $1,300 $1,300 Printers $5,400 IT Install $15,000
Projected Pro t & Loss (2 of 2)
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9th Street Packaging: 2023-2025 Original Page 3 of 14
Projected Pro t & Loss 2023 2024 2025 Facility Lease $108,000 $108,000 $108,000 Utilities $132,000 $132,000 $132,000 Insurance $115,200 $115,200 $115,200 Sanitation $6,000 $6,000 $6,000 Corrugate $50,000 $20,000 $20,000 Banding $7,500 Pallets $7,200 Slip Sheets $1,000 Stretch Film $3,000 Ink $24,000 $12,000 $6,000 Labels $5,000 Operating Income ($1 2M) ($851,364) ($630,618) Interest Expense $141,953 $152,131 $149,115 Income Taxes $0 $0 $0 Depreciation and Amortization $608,267 $618,197 $635,176 Total Expenses $2M $1 8M $1 8M Net Pro t ($1 9M) ($1 6M) ($1 4M) Net Pro t % (>999%) (811%) (354%)
Projected Balance Sheet
9th Street Packaging: 2023-2025 Original Page 4 of 14 Projected Balance Sheet 2023 2024 2025 Assets $625,189 ($1M) ($2.5M) Current Assets ($913,544) ($2M) ($2 9M) Cash ($913,544) ($2M) ($2 9M) Accounts Receivable $0 $0 $0 Long-Term Assets $1.5M $975,536 $387,860 Long-Term Assets $2 1M $2 2M $2 2M Accumulated Depreciation ($608,267) ($1 2M) ($1 9M) Liabilities & Equity $625,189 ($1M) ($2.5M) Liabilities $2 6M $2 5M $2 5M Current Liabilities $48,893 $51,909 $55,110 Accounts Payable $0 $0 $0 Income Taxes Payable $0 $0 $0 Sales Taxes Payable $0 $0 $0 Short-Term Debt $48,893 $51,909 $55,110 Long-Term Liabilities $2 5M $2 5M $2 4M Long-Term Debt $2 5M $2 5M $2 4M Equity ($1.9M) ($3.6M) ($5M) Retained Earnings ($1 9M) ($3 6M) Earnings ($1 9M) ($1 6M) ($1 4M)
Projected Cash Flow
9th Street Packaging: 2023-2025 Original Page 5 of 14 Projected Cash Flow 2023 2024 2025 Net Cash from Operations ($1.3M) ($1M) ($779,733) Net Pro t ($1 9M) ($1 6M) ($1 4M) Depreciation and Amortization $608,267 $618,197 $635,176 Change in Accounts Receivable $0 $0 $0 Change in Accounts Payable $0 $0 $0 Change in Income Tax Payable $0 $0 $0 Change in Sales Tax Payable $0 $0 $0 Net Cash from Investing ($2.1M) ($55,000) ($47,500) Assets Purchased or Sold ($2 1M) ($55,000) ($47,500) Net Cash from Financing $2 6M ($48,893) ($51,909) Change in Short-Term Debt $48,893 $3,016 $3,202 Change in Long-Term Debt $2 5M ($51,909) ($55,110) Cash at Beginning of Period $0 ($913,544) ($2M) Net Change in Cash ($913,544) ($1 1M) ($879,142) Cash at End of Period ($913,544) ($2M) ($2.9M)
Financing: 2023
9th Street Packaging: 2023-2025
Original Page 6 of 14 Financing Jan '23 Feb '23 Mar '23 Apr '23 May '23 June '23 July '23 Aug '23 Sept '23 Oct '23 Nov '23 Dec '23 2023 Amount received $2.6M $2.6M Loan $2 6M $2 6M Payments $16,752 $16,752 $16,752 $16,752 $16,752 $16,752 $16,752 $16,752 $16,752 $16,752 $16,752 $184K Loan $16,752 $16,752 $16,752 $16,752 $16,752 $16,752 $16,752 $16,752 $16,752 $16,752 $16,752 $184K Principal Paid $3,752 $3,771 $3,790 $3,809 $3,828 $3,847 $3,866 $3,885 $3,905 $3,924 $3,944 $42,319 Interest Paid $13,000 $12,981 $12,962 $12,943 $12,924 $12,905 $12,886 $12,867 $12,847 $12,828 $12,808 $142K Balance $2.6M $2.6M $2.6M $2.6M $2.6M $2.6M $2.6M $2.6M $2.6M $2.6M $2.6M $2.6M $2.6M Short-Term Debt $46,283 $46,514 $46,747 $46,981 $47,216 $47,452 $47,689 $47,927 $48,167 $48,408 $48,650 $48,893 $48,893 Loan $46,283 $46,514 $46,747 $46,981 $47,216 $47,452 $47,689 $47,927 $48,167 $48,408 $48,650 $48,893 $48,893 Long-Term Debt $2 6M $2 5M $2 5M $2 5M $2 5M $2 5M $2 5M $2 5M $2 5M $2 5M $2 5M $2 5M $2 5M Loan $2 6M $2 5M $2 5M $2 5M $2 5M $2 5M $2 5M $2 5M $2 5M $2 5M $2 5M $2 5M $2 5M
Projected Pro t & Loss: 2023 (1 of 4)
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2023-2025
Original Page 7 of 14 Projected Pro t & Loss Jan '23 Feb '23 Mar '23 Apr '23 May '23 June '23 July '23 Aug '23 Sept '23 Oct '23 Nov '23 Dec '23 2023 Revenue $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $81,000 Single Wall Corrugate $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $9,000 Double Wall Corrugate $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $9,000 Triple Wall Corrugate $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $9,000 Paperboard Cartons $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $9,000 RSC (Regular Slotted Container) $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $9,000 FOL (Full Overlapping Slotted Container) $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $9,000 HSC (Half Slotted Container) $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $9,000 Tray $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $9,000 OPF (One Piece Folder) $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $9,000 Gross Margin $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $81,000 Gross Margin % 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Operating Expenses $361K $82,001 $82,001 $82,001 $82,003 $82,003 $82,003 $82,005 $82,013 $82,013 $82,013 $82,014 $1.3M Salaries & Wages $43,311 $43,311 $43,311 $43,311 $43,312 $43,312 $43,312 $43,314 $43,320 $43,320 $43,320 $43,321 $520K
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Projected Pro t & Loss: 2023 (2 of 4)
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9th Street Packaging: 2023-2025 Original
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Projected Pro t & Loss Jan '23 Feb '23 Mar '23 Apr '23 May '23 June '23 July '23 Aug '23 Sept '23 Oct '23 Nov '23 Dec '23 2023 CEO $7,083 $7,083 $7,083 $7,083 $7,083 $7,083 $7,083 $7,083 $7,084 $7,084 $7,084 $7,084 $85,000 Manager $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $60,000 Nonexempt (4) $13,332 $13,332 $13,332 $13,332 $13,332 $13,332 $13,332 $13,332 $13,336 $13,336 $13,336 $13,336 $160K Maintenance $5,833 $5,833 $5,833 $5,833 $5,833 $5,833 $5,833 $5,833 $5,834 $5,834 $5,834 $5,834 $70,000 Contract (2) $5,940 $5,940 $5,940 $5,940 $5,940 $5,940 $5,940 $5,942 $5,942 $5,942 $5,942 $5,942 $71,290 Sales $4,166 $4,166 $4,166 $4,166 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $50,000 FICA Taxes $1,957 $1,957 $1,957 $1,957 $1,957 $1,957 $1,957 $1,957 $1,957 $1,957 $1,957 $1,958 $23,485 Employee Related Expenses $7,474 $7,474 $7,474 $7,474 $7,474 $7,474 $7,474 $7,474 $7,476 $7,476 $7,476 $7,476 $89,697 Furniture $10,000 $10,000 Rack $21,000 $21,000 Fork Truck $25,000 $25,000 Tools $4,500 $4,500 Transport $10,000 $10,000 Install $50,000 $50,000 Misc / Other $15,000 $15,000 Computers $8,400 $8,400 Software $700 $700 $700 $700 $700 $700 $700 $700 $700 $700 $700 $700 $8,400
Projected Pro t & Loss: 2023 (3 of 4)
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9th Street Packaging: 2023-2025 Original
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Projected Pro t & Loss Jan '23 Feb '23 Mar '23 Apr '23 May '23 June '23 July '23 Aug '23 Sept '23 Oct '23 Nov '23 Dec '23 2023 Server $12,000 $12,000 Consumables $416 $416 $416 $416 $417 $417 $417 $417 $417 $417 $417 $417 $5,000 Scan Guns $5,200 $5,200 Printers $5,400 $5,400 IT Install $15,000 $15,000 Facility Lease $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $108K Utilities $11,000 $11,000 $11,000 $11,000 $11,000 $11,000 $11,000 $11,000 $11,000 $11,000 $11,000 $11,000 $132K Insurance $9,600 $9,600 $9,600 $9,600 $9,600 $9,600 $9,600 $9,600 $9,600 $9,600 $9,600 $9,600 $115K Sanitation $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $6,000 Corrugate $50,000 $50,000 Banding $7,500 $7,500 Pallets $7,200 $7,200 Slip Sheets $1,000 $1,000 Stretch Film $3,000 $3,000 Ink $24,000 $24,000 Labels $5,000 $5,000
Projected Pro t & Loss: 2023 (4 of 4)
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9th Street Packaging: 2023-2025 Original
Page 10 of 14
Projected Pro t & Loss Jan '23 Feb '23 Mar '23 Apr '23 May '23 June '23 July '23 Aug '23 Sept '23 Oct '23 Nov '23 Dec '23 2023 Operating Income ($361K) ($82K) ($82K) ($73K) ($73K) ($73K) ($73K) ($73K) ($73K) ($73K) ($73K) ($73K) ($1.2M) Interest Expense $13,000 $12,981 $12,962 $12,943 $12,924 $12,905 $12,886 $12,867 $12,847 $12,828 $12,808 $142K Income Taxes $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Depreciation and Amortization $50,689 $50,689 $50,689 $50,689 $50,689 $50,689 $50,689 $50,689 $50,689 $50,689 $50,689 $50,689 $608K Total Expenses $412K $146K $146K $146K $146K $146K $146K $146K $146K $146K $146K $146K $2M Net Pro t ($412K) ($146K) ($146K) ($137K) ($137K) ($137K) ($137K) ($137K) ($137K) ($137K) ($137K) ($137K) ($1 9M) Net Pro t % (>999%) (>999%) (>999%) (>999%) (>999%) (>999%) (>999%) (>999%) (>999%) (>999%)
Projected Balance Sheet: 2023 (1 of 2)
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9th Street Packaging: 2023-2025 Original Page 11 of 14 Projected Balance Sheet Jan '23 Feb '23 Mar '23 Apr '23 May '23 June '23 July '23 Aug '23 Sept '23 Oct '23 Nov '23 Dec '23 2023 Assets $2.2M $2M $1.9M $1.7M $1.6M $1.5M $1.3M $1.2M $1M $906K $766K $625K $625K Current Assets $91,799 ($6,954) ($106K) ($195K) ($285K) ($375K) ($465K) ($554K) ($644K) ($734K) ($824K) ($914K) ($914K) Cash $91,799 ($6,954) ($106K) ($195K) ($285K) ($375K) ($465K) ($554K) ($644K) ($734K) ($824K) ($914K) ($914K) Accounts Receivable $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Long-Term Assets $2.1M $2M $2M $1.9M $1.9M $1.8M $1.8M $1.7M $1.7M $1.6M $1.6M $1.5M $1.5M Long-Term Assets $2 1M $2 1M $2 1M $2 1M $2 1M $2 1M $2 1M $2 1M $2 1M $2 1M $2 1M $2 1M $2 1M Accumulated Depreciation ($51K) ($101K) ($152K) ($203K) ($253K) ($304K) ($355K) ($406K) ($456K) ($507K) ($558K) ($608K) ($608K) Liabilities & Equity $2.2M $2M $1.9M $1.7M $1.6M $1.5M $1.3M $1.2M $1M $906K $766K $625K $625K Liabilities $2.6M $2.6M $2.6M $2.6M $2.6M $2.6M $2.6M $2.6M $2.6M $2.6M $2.6M $2.6M $2.6M Current Liabilities $46,283 $46,514 $46,747 $46,981 $47,216 $47,452 $47,689 $47,927 $48,167 $48,408 $48,650 $48,893 $48,893 Accounts Payable $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Income Taxes Payable $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Sales Taxes Payable $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Short-Term Debt $46,283 $46,514 $46,747 $46,981 $47,216 $47,452 $47,689 $47,927 $48,167 $48,408 $48,650 $48,893 $48,893 Long-Term Liabilities $2.6M $2.5M $2.5M $2.5M $2.5M $2.5M $2.5M $2.5M $2.5M $2.5M $2.5M $2.5M $2.5M Long-Term Debt $2.6M $2.5M $2.5M $2.5M $2.5M $2.5M $2.5M $2.5M $2.5M $2.5M $2.5M $2.5M $2.5M
Projected Balance Sheet: 2023 (2 of 2)
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9th Street Packaging: 2023-2025 Original Page 12 of 14
Projected Balance Sheet Jan '23 Feb '23 Mar '23 Apr '23 May '23 June '23 July '23 Aug '23 Sept '23 Oct '23 Nov '23 Dec '23 2023 Equity ($412K) ($558K) ($703K) ($840K) ($977K) ($1.1M) ($1.2M) ($1.4M) ($1.5M) ($1.7M) ($1.8M) ($1.9M) ($1.9M) Retained Earnings Earnings ($412K) ($558K) ($703K) ($840K) ($977K) ($1.1M) ($1.2M) ($1.4M) ($1.5M) ($1.7M) ($1.8M) ($1.9M) ($1.9M)
Projected Cash Flow: 2023 (1 of 2)
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9th Street Packaging: 2023-2025 Original Page 13 of 14 Projected Cash Flow Jan '23 Feb '23 Mar '23 Apr '23 May '23 June '23 July '23 Aug '23 Sept '23 Oct '23 Nov '23 Dec '23 2023 Net Cash from Operations ($361K) ($95K) ($95K) ($86K) ($86K) ($86K) ($86K) ($86K) ($86K) ($86K) ($86K) ($86K) ($1.3M) Net Pro t ($412K) ($146K) ($146K) ($137K) ($137K) ($137K) ($137K) ($137K) ($137K) ($137K) ($137K) ($137K) ($1 9M) Depreciation and Amortization $50,689 $50,689 $50,689 $50,689 $50,689 $50,689 $50,689 $50,689 $50,689 $50,689 $50,689 $50,689 $608K Change in Accounts Receivable $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Change in Accounts Payable $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Change in Income Tax Payable $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Change in Sales Tax Payable $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Net Cash from Investing ($2.1M) ($2.1M) Assets Purchased or Sold ($2 1M) ($2 1M) Net Cash from Financing $2.6M ($3,752) ($3,771) ($3,790) ($3,809) ($3,828) ($3,847) ($3,866) ($3,885) ($3,905) ($3,924) ($3,944) $2.6M Change in Short-Term Debt $46,283 $231 $233 $234 $235 $236 $237 $238 $240 $241 $242 $243 $48,893 Change in Long-Term Debt $2 6M ($3,983) ($4,003) ($4,023) ($4,043) ($4,064) ($4,084) ($4,104) ($4,125) ($4,146) ($4,166) ($4,187) $2 5M Cash at Beginning of Period $0 $91,799 ($6,954) ($106K) ($195K) ($285K) ($375K) ($465K) ($554K) ($644K) ($734K) ($824K) $0 Net Change in Cash $91,799 ($99K) ($99K) ($90K) ($90K) ($90K) ($90K) ($90K) ($90K) ($90K) ($90K) ($90K) ($914K)
Projected Cash Flow: 2023 (2 of 2)
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9th Street Packaging: 2023-2025 Original Page 14 of 14
Projected Cash Flow Jan '23 Feb '23 Mar '23 Apr '23 May '23 June '23 July '23 Aug '23 Sept '23 Oct '23 Nov '23 Dec '23 2023 Cash at End of Period $91,799 ($6,954) ($106K) ($195K) ($285K) ($375K) ($465K) ($554K) ($644K) ($734K) ($824K) ($914K) ($914K)
