7TH GALAXY STUDIOS, INC.

BUSINESS DEVELOPMENT PLAN

Authors:
Ronald Washington
Paul Wiley
NOTE: This Presentation Package is for Informational Purposes only and is not to
be considered a Solicitation of Funds or the Sale of Securities

Confidentiality Agreement
The undersigned reader acknowledges that the information provided by ___________
____ in this
business plan is confidential; therefore, reader agrees not to disclose it witho
ut the express written
permission of _______________.
It is acknowledged by reader that information to be furnished in this business p
lan is in all respects
confidential in nature, other than information which is in the public domain thr
ough other means
and that any disclosure or use of same by reader, may cause serious harm or dama
ge to
_______________.
Upon request, this document is to be immediately returned to _______________.
Signature
Name (typed or printed)
Date
This is a business plan. It does not imply an offering of securities.

Table of Contents
1.0 Executive Summary ..........................................................
.......................................................... 1
1.1 Objectives .................................................................
................................................................. 1
1.2 Mission.....................................................................
.................................................................... 2
1.3 Keys to Success.............................................................
........................................................... 2
2.0 Company Summary.............................................................
........................................................ 3
2.1 Company Ownership...........................................................
.................................................... 3
2.2 Start-up Summary............................................................
....................................................... 3
Table: Start-up ................................................................
............................................................. 4
3.0 Market Analysis Summary.....................................................
................................................... 5
3.1 Market Segmentation ........................................................
..................................................... 6
Table: Market Analysis..........................................................
..................................................... 6
3.2 Service Business Analysis...................................................
.................................................. 6
3.2.1 Competition and Buying Patterns...........................................
................................... 7
4.0 Sales Forecast .............................................................
.................................................................. 7
Table: Sales Forecast ..........................................................
........................................................... 7
5.0 Management Summary..........................................................
.................................................... 8

5.1 Personnel Plan..............................................................

........................................................... 10
Table: Personnel................................................................
........................................................ 10
6.0 Financial Plan..............................................................
................................................................ 10
6.1 Start-up Funding ...........................................................
......................................................... 10
Table: Start-up Funding.........................................................
................................................. 11
6.2 Break-even Analysis.........................................................
..................................................... 11
Table: Break-even Analysis .....................................................
.............................................. 11
6.3 Projected Profit and Loss ..................................................
.................................................. 12
Table: Profit and Loss..........................................................
..................................................... 12
6.4 Projected Cash Flow.........................................................
..................................................... 15
Table: Cash Flow................................................................
........................................................ 15
6.5 Projected Balance Sheet ....................................................
................................................. 16
Table: Balance Sheet............................................................
.................................................... 16
6.6 Business Ratios.............................................................
.......................................................... 17
Table: Ratios...................................................................
............................................................ 17
Page 1

7th Galaxy Studios

Page 1
1.0 Executive Summary
1.1 Objectives
The past several years have seen rapidly accelerating overseas demand for filmed
entertainment is driving a new wave of growth and profitability for American pro
duction
companies. New distribution technologies like Internet streaming and direct-to-h
ome satellite
transmission have increased the number of channels available, and the need for c
ontent has
increased accordingly. Although there are many established companies competing f
or the
global entertainment dollar, the market is expanding so quickly that it has crea
ted abundant
opportunities for new startups with sound niche strategies.
7th Galaxy Studios, Incorporated (the Company ) was formed to profitably exploit th
ese new
global opportunities. The Company is a diversified company engaged in the develo
pment,
financing and production of entertainment content for the worldwide audience. Us
ing a newly
acquired 6-stage studio facility in Castaic, California as its base, the Company
intends to focus
its activities primarily on the creation of film and television programs for glo
bal theatrical and
television distribution, with a secondary focus on the rapidly increasing field
of cross platform
game development and mobile interactive media. The Company s objective is to build
asset
value by creating a library of entirely owned film, television, and game product
s whose
distribution rights will be exploited in all markets and all media. In addition,
when the timing is
appropriate the Company will establish divisions to exploit ancillary revenue op
portunities
generated by its programs in the merchandising, book and record publishing, new
media, and
merchandising industries.
The Management Team
The Company s management team is comprised of several highly experienced film, tel
evision,
and game production professionals, who among them have been involved with the pr
oduction
of numerous motion pictures, television programs, commercials, music videos, and
successful
cross-platform game titles. Their productions have ranged from low budget indepe
ndent
projects to major studio films with top-caliber acting and directing talent. The
y have managed
or participated in sales and marketing, distribution, and all phases of the film
, television and

7th Galaxy Studios

game production processes, from development, pre-production, principal photograp
hy, postproduction
and directing and producing.
Marketing
The Company s management has deep and well-established contacts with film and tele
vision
producers throughout North America. Established consultants are also available t
o assist the
Company s early marketing efforts.
1.2 Mission
The Company is answering a worldwide need. The last decade has seen a growing ap
petite for
film and television product. This resulted in a sharp increase in production act
ivity with the
demand for studio space outpacing the new constructions a fact that industry analy
sts predict
will continue over the next decade. With recent consolidation in the entertainme
nt industry,
corporate pressure on producers to cut costs and improve the bottom-line has int
ensified.
Hollywood, with its convenient locations and surfeit of talent has become the ce
nter of activity.
To capitalize on this exploding market, the Company looks to acquire an existing
Production
Property & 80 acre back lot in nearby Castaic, CA and upgrade it to a state-of-t
he-art studio
facility with multiple sound stages, post-production building and office space.
It will also include
production equipment, mobile production trucks, and production logistic support.
By upgrading
the studio grounds and equipment, the Company will create a prominent independen
t studio
facility with a goal to be recognized as the premier production entity in the ar
ea.
1.3 Keys to Success
The Company s business approach is driven by a shared desire among its principals
to create a
viable alternative to the cumbersome and often inefficient business practices of
Hollywood s
major studios. In contrast to the studio process, the Company will be:
Project-driven.
The Company s investment and growth will occur on a strict as-needed
basis, with projects initiated only when their commercial prospects are reasonab
ly assured and
the investment risk is minimized.
Economical.
Management will exercise rigorous control over the Company s costs, both at the
corporate overhead level and the individual project level. Necessary expenditure
s will be made
only where the expected financial returns on investment are attractive. The Comp
any will

refrain from engaging in costly bidding wars for talent or material.

Talent-friendly. The Company s principals recognize that success in the filmed ent
ertainment
industry is driven largely by the ability to attract top quality creative talent
. Management will
draw upon its extensive relationships with talent and strive to create a culture
that is attractive
to and supportive of writers, directors and actors.
Responsive. The major studios size and abundant layers of bureaucracy can often m
ake the
project decision-making process slow and cumbersome. The Company will differenti
ate itself
and keep costs down by streamlining this process. Management will take hands-on
responsibility for personally reading scripts and evaluating projects quickly an
d minimizing the
bureaucracy and turnaround time for making decisions. The Company s close collaborat
ion
with its producers will enable it to prevent catastrophic cost overruns such as
those that occur
with larger studio films.
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7th Galaxy Studios

2.0 Company Summary
7th Galaxy Studios, Inc. is a California "C" Corporation
Incorporation Date: 6/29/2009
Status: Active
Jurisdiction: CA
Type: Domestic Stock
Corporate Number: C3215897
2.1 Company Ownership
7th Galaxy Studios is a Privately Owned California "C" Corporation. 7GP Holdings
,
Inc. currently holds ownership of 7th Galaxy Studios, Inc. 7GP Holdings is a pri
vately Owned
"S" Corporation whose current stakeholders are:
Paul Wiley
Ron Washington
Eddie Penrice
Bryan J. Thomas, Esq.
2.2 Start-up Summary
The initial step is the purchase of the Cheyenne Studios in Castaic, CA. The fac
ility sits on 80
Acres and boasts 6 Sound Stages, 2 Screening Theaters and ample Post-Production
& Office
Space.
The Studio is located in Castaic in the County of Los Angeles, CA and is conveni
ent to the I-5
Freeway. Castaic is approximately 30 miles northwest of Hollywood and sits on ap
proximately
80 Acres of land. The building structures comprise 70,253 SF of usable space inc
luding 6 Sound
Stages, Post-Production.
The breakdown of the Sound Stages is as follows:
Stage 1: 120' x 91'
Stage 2: 113' x 70'
Stage 3: 77' x 44'
Stage 4: 98' x 47'
Stage 5: 99' x 47'
Stage 6: 71' x 42'
The Post-Production spaces are comprised of approximately 14,400 S.F. and approx
imately and
2 theaters will be outfitted with state-of-the-art equipment.
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7th Galaxy Studios

A Mobile Production trailer is also intended for purchase. Its purpose is to pro
vide clientele with
offsite live broadcasting & filming solutions. Although originally intended for
live broadcast, the
truck will also allow us to streamline the production process of a film shoot by
feeding cameras
directly into the control board and footage is then available to begin rough ass
embly of the film.
By streamlining the process this way, we can get the property to market more qui
ckly. We will
equip our Post-Production Facility with the latest HD technology. We will offer
highly
competitive rates rounding out the full service capabilities of our studio. The
current average
daily rental rate for a typical HD mobile television production unit (without cr
ew fees), utilized
for live to tape broadcasts ranges between $18K-$26K/Day.
<See attached proposal from Gerling and Assoc.>
Once fully outfitted with production equipment, vehicles, editing bays and perso
nnel, the
company will be in a position to market a full service studio to the industry pr
oviding Production
Companies with turn-key solutions at a cost savings, as almost all needed equipm
ent and
vehicles will be on-site and at their disposal; the facility will also to allow
the company to cost
effectively produce in-house Feature Films, TV Pilots, Etc.
Table: Start-up
Start-up
Requirements
Start-up Expenses
Legal $5,000
Office Supplies, etc. $50,000
Insurance $165,000
Leases and Notes $289,136
Equipment Rental $40,000
Utilities $300,300
Postage / Shipping $43,271
Marketing / Advertising $500,000
Phone / Fax $55,000
Benefits $320,688
Total Start-up Expenses $1,768,395
Start-up Assets
Cash Required $1,250,000
Other Current Assets $50,000
Long-term Assets $16,931,605
Total Assets $18,231,605
Total Requirements $20,000,000
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7th Galaxy Studios

Page 5
3.0 Market Analysis Summary
According to an economic impact report from the Motion Picture Association of Am
erica (MPAA),
more than 1.3 million Americans were employed by the motion picture industry in
2005 and the
total payroll that year exceeded $30 billion. The industry spent an additional $
30 billion in
direct payments for goods and services provided by U.S. businesses in 2005. Thus
, direct
economic benefits of filmmaking in the United States exceeded $60 billion in jus
t one year. The
past three years have seen a steady worldwide growth in the number of theater co
mplexes, an
increase in television stations, expansion in the new technologies of cable and
satellite
broadcasting and the emergence of the Internet as a future distribution channel.
Together, they
have created a huge demand for new entertainment product and with it a need for
more studio
space to produce movies, television, videos and commercials. Even with the major
studios
being located in the Los Angeles area, most of the 330 stages there have been ex
tremely busy.
A 2000 survey by leading accounting firm PriceWaterhouseCoopers showed an averag
e
occupancy rate of 95% and close to 98% in the 13,000 sq/ft to 18,000 sq/ft range
(similar
footage as the new Castaic Studio Facility).
With revenues expected to grow an additional 7-8 percent annually, the worldwide
expenditures
for production of filmed and video entertainment in Los Angeles should exceed $5
0billion by
2010. The opportunity currently exists to build a leading position among indepen
dent studio
facilities. The business is and probably will long be dominated by Hollywood s maj
or studios, but
there have also traditionally been attractive opportunities for facilities opera
ting outside the
studios control. At present, however, there are few such companies in operation.
There are presently a limited number of independent companies capable of exploit
ing those
entertainment opportunities that are either too small or too specialized to be o
f interest to the
majors. Consequently, the timing is excellent for establishing a large independe
nt studio
facility.

7th Galaxy Studios

The Company will capitalize on these opportunities by providing a studio facilit
y with worldwide
commercial appeal in a low-risk, cost-efficient manner. The Company will be diff
erentiated from
the major studios by its ability to maintain a low overhead and cost structure,
its ability to be
attentive and responsive to clients, and by its commitment to undertake only tho
se projects
that have sound business prospects and attractive profit potential.
3.1 Market Segmentation
Table: Market Analysis
Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Production Companies 1% 11,039 11,149 11,260 11,373 11,487 1.00%
Independant Record Labels -2% 1,408 1,380 1,352 1,325 1,299 -1.99%
Music Video Directors -3% 288 279 271 263 255 -3.00%
Music Video Production Companies -2% 60 59 58 57 56 -1.71%
Notable Television Producers 4% 70 73 76 79 82 4.03%
Commercial Production Companies 3% 263 271 279 287 296 3.00%
Commerical Directors 6% 1,069 1,133 1,201 1,273 1,349 5.99%
Producers 10% 469 516 568 625 688 10.05%
Major Record Labels 0% 4 4 4 4 4 0.00%
Film Directors 2% 1,186 1,210 1,234 1,259 1,284 2.00%
Total 1.46% 15,856 16,074 16,303 16,545 16,800 1.46%
3.2 Service Business Analysis
The Company will offer several flexible studio configuration options. Our digita
l control rooms
in our post production facility and sound stages are perfectly suited for music
video
productions, commercials, television programs, industrial and training productio
ns, direct
response, media and satellite tours, web casting events, and video conferencing.
The
Games/Animation Division will work in tandem with the post production facility t
o create turnkey
solutions for prospective clientele. The Digital Pre/Post Production Hub, (2) Di
gital
Page 6

7th Galaxy Studios

Screening Rooms, onsite production offices, along with the onsite personnel will
make any
production successful.
3.2.1 Competition and Buying Patterns
The majority of Studios within the Thirty Mile Zone (also known as the TMZ) are
booked solid
for the next 1-2 years in advance due to the limited quantity of stage space, an
d the explosion
of commercial and television productions. This generates a great deal of spill-o
ver business to
independent studio facilities.
In the Motion Picture Studio business, competition depends on the the total numb
er of sound
stages onsite, as well as the total amount per square feet per stage. Other fact
ors may include
available production office space, the amount of power available, and available
parking; this will
dictate the assessment that a potential client will use to determine production
constraints of the
facility, and project compatibility. The competition also depends on exclusivity
for production
equipment rental to guarantee a back-end revenue stream (outside vendors for pro
duction
equipment is not usually allowed); inflated pricing for equipment rental is usua
lly a tool
to compensate for a lower stage rental rate. As this is currently a widely used
"bait and switch"
tactic, the Client is left with no other alternatives but to agree to the terms
of use for the stage
rental.
Our company will offer competitive a great location which is in the opposite dir
ection of the
morning and evening traffic, competitive stage rental rates, production office s
pace rental, and
post-production to offer a turn-key package. To set ourselves above the competit
ion, we will
offer our clients the ability to bring in their own production equipment, which
will allow them
the ability to save on their production budgets.
4.0 Sales Forecast
Table: Sales Forecast
Sales Forecast
Year 1 Year 2 Year 3 Year 4 Year 5
Sales
Stage Rental $1,611,249 $1,675,699 $1,742,727 $1,847,291 $1,995,074
Office Space Rental $200,507 $208,527 $216,868 $229,880 $248,271
Post Production $1,395,300 $1,409,253 $1,437,438 $1,466,187 $1,524,834
HD Mobile Production Unit $5,676,812 $5,733,580 $5,848,252 $5,965,217 $6,203,825
Equipment Rental $74,839 $77,833 $80,946 $85,803 $92,667
Total Sales $8,958,707 $9,104,892 $9,326,231 $9,594,378 $10,064,671

Direct Cost of Sales Year 1 Year 2 Year 3 Year 4 Year 5

Sales Expense $174,960 $176,710 $180,244 $183,850 $191,205
Row 2 $0 $0 $0 $0 $0
Subtotal Direct Cost of Sales $174,960 $176,710 $180,244 $183,850 $191,205
Page 7

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Page 8
5.0 Management Summary
The strength of our company comes from its principal members -- each with experi
ence that
demonstrates maturity in business, entrepreneurial talent, and personal success.
Our ability to
feed off each other s creativity, together with a strong commercial focus and indo
mitable work
ethic, makes us a very powerful team. We bring a solid balance in our understand
ing of story
and the business of entertainment. The management team's experience includes nat
ional and
international concert tour production personnel, as well as film and television
award winning
professionals. Specifically, the company has brought together the experience tha
t can justify
competing in the production arm of the entertainment industry that grossed over
750 Billion

7th Galaxy Studios

dollars in 2008. A vital element of the company is to employ a Human Resource St
aff to
manage the personnel growth, and an executive staff to manage and steer the deve
lopment of
each area vital to the company's goals and objectives.
Core Team Members
R. Allen Washington, Chairman / President
Film & Television Division
Mr. Washington brings over 35 years of experience in the entertainment business
working as a
business manager, professional musician, production manager, producer, and sound
& stage
technician. Mr. Washington incorporates a vast network of relationships with sea
soned and
talented professionals to complete any production challenge posed to 7th Galaxy.
Being the
principal planner of the 7th Galaxy concept, Mr. Washington uses his planning an
d project
management background, includes Architecture and mixed use development, design u
nique
business model that will expand into a continually evolving business organism. M
r.
Washington s leadership, competitive & creative spirit motivates and ultimately un
ites a well
focused unit to achieve the common goal. Ron majored in Urban Studies from San F
rancisco
State University. Mr. Washington has been a producer on such music videos for su
ch artists as
Force One Network (Quest Records, 1992), Digital Underground Tupac (Tommy Boy Re
cords,
1988). Miss Venus International Swimsuit Contest Las Vegas in 2006 and produced
TV
content for PCTV for 2 years in Oakland, CA. He attended UC
Berkeley where he co
mpleted
the intensive Certificate Program in film production.
Edward B. Penrice CEO | President

Mobile Production Division

Eddie Penrice comes to 7th Galaxy with over 40 years of Industrial & Advertising
Sales,
Commercial Banking, Marketing, Media, Merchandising, Special Event Planning and
front-line
experience as a Production Manager and Coordinator. He majored in Business Admin
istration at
The University of Missouri-Kansas City. He began in the entertainment industry a
s a musician
and popular radio disc jockey in Kansas City, Missouri. After touring extensivel
y as a guitarist
and singer, it wasn t long before he found himself working in the wings rather tha
n downstage
center. Mr. Penrice recently retired as Special Events Manager for the City of K
ansas City s
Parks and Recreation Department, Penrice has managed and coordinated special eve
nts,
concerts, festivals and productions featuring artists Jeffery Osbourne, En Vogue
, Bloodstone,

Wayman Tisdale, Luther Van Dross, Morris Day and The Time, The Temptations, The
Manhattans, Lee Greenwood, Donald Byrd, Herbie Hancock, The Count Basie Orchestr
a, Tito
Puentes, Pete Escavedo, Shelia E, Midnight Star, Slave, Norman Brown, Stanley Tu
rrentine,
Billy Eckstine, Della Reese, The Wynans, The Clark Sisters, Marvin Sapp, Fred Ha
mmond, Mary,
Mary, and a multitude of others in varied genres.
Bryan J. Thomas, Esq. CFO
Bryan bears the responsibility of directing all financial and legal matters of t
he 7th Galaxy
family. His extensive background as Managing Attorney of Thomas & Assoc. is exem
plary. His
firm contracts in music, film, television and sports; serves as business/financi
al advisor to
corporations and independent production companies in the entertainment industry;
is trial
attorney for complex litigation involving business transaction; copyright infrin
gement,
trademark and other litigation matters involving entertainment issues and perfor
ms corporate
law regarding corporate organization, merger and acquisition. His vast experienc
e in the
entertainment industry and corporate law, along with amazing leadership skills h
as proven
essential to 7th Galaxy s ultimate success.
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7th Galaxy Studios

Paul M. Wiley, Secretary | Director of Studio Operations & President -Gaming Div
ision
Paul Wiley s desire for new challenges and ability to quickly adapt has allowed hi
m to navigate
adverse career between a variety of industries including Game Development, Music
, film
&television, and High End Commercial & Residential Development. While at Activis
ion Studios,
Paul worked on and Credited on such games titles as: Mechwarrior II, Spycraft: T
HE GREAT
GAME, Zork Nemesis,Pitfall: THE MAYAN ADVENTURES, and Earthworm Jim. In the fiel
d of
Music he worked on Marketing for recording artists Dru Hill and Suga Free. While
working as
Promotions Director at 99.1 KGGI Radio, a Popular CHR Station in Southern Califo
rnia, Paul
spear headed Concert Productions held at the Blockbuster Pavilion featuring such
Acts as Zapp
& Roger, and Usher. Paul was also successful in the development and execution of
all offsite
Broadcasts, including an outdoor promotional concert event held at the Rancho Mi
rage Resort in
Palm Springs featuring Ice Cube and the Westside Connection. Partnering with Ste
phen J.
Cannell, Paul Directed the online creative development for Express.com s 2nd Annual
Final
Draft Big Break Screenwriting contest sponsored by Final Draft. This led to the d
iscovery and
film production of the Screenplay Bad Boy . Other ventures included spearheading an
interactive television research and development effort to port the Cannell Studi
os television/film
archive to interactive television. Paul also managed projects for Stephen J. Can
nell including a
viral online promotional campaign to promote his novel Tin Collectors, a complet
e redesign of
his web site (cannell.com). Among his peers Paul has developed a reputation as a
visionary,
Pragmatic Diplomat, and solid team leader Paul Holds a B.S. in Computer Science
from Saint
Leo University. Most Recently, Paul completed the production management of a (13
) Online
show site marketing campaign for the premiere of Disney Channel s Disney XD .
5.1 Personnel Plan
Table: Personnel
Personnel Plan
Year 1 Year 2 Year 3 Year 4 Year 5
Officers $600,000 $700,000 $760,000 $800,000 $900,000
Office Personnel $495,000 $540,000 $570,000 $605,000 $642,000
Studio Staff $391,944 $416,538 $443,363 $467,984 $500,892
Total People 24 24 25 27 27
Total Payroll $1,486,944 $1,656,538 $1,773,363 $1,872,984 $2,042,892

6.0 Financial Plan

6.1 Start-up Funding
Owner Investment: $5,000,000.00
Debt Financing Amount: $15,000,000.00
Terms of Debt Financing:
30 Years (Amortized)
No Pre-Payment Penalty
Rates Locked
Interest Rate Negotiable between 5-7.5%
0 Points
Allow pay-off at Year 5
Page 10

7th Galaxy Studios

Table: Start-up Funding
Start-up Funding
Start-up Expenses to Fund
Start-up Assets to Fund
Total Funding Required
Assets
Non-cash Assets from Start-up
Cash Requirements from Start-up
Additional Cash Raised
Cash Balance on Starting Date
Total Assets
Liabilities and Capital
Liabilities
Current Borrowing
Long-term Liabilities
Accounts Payable (Outstanding Bills)
Other Current Liabilities (interest-free)
Total Liabilities
Capital
Planned Investment
Owner
Investor
Additional Investment Requirement
Total Planned Investment
Loss at Start-up (Start-up Expenses)
Total Capital
Total Capital and Liabilities
Total Funding
6.2 Break-even Analysis
Table: Break-even Analysis
Break-even Analysis
Monthly Revenue Break-even $384,260
Assumptions:
Average Percent Variable Cost
Estimated Monthly Fixed Cost
2%
$376,756
$1,768,395
$18,231,605
$20,000,000

$16,981,605
$1,250,000
$0
$1,250,000
$18,231,605
$0
$15,000,000
$0
$0
$15,000,000
$5,000,000
$0
$0
$5,000,000
($1,768,395)
$3,231,605
$18,231,605
$20,000,000
Page 11

7th Galaxy Studios

Page 12
6.3 Projected Profit and Loss
Table: Profit and Loss
Pro Forma Profit and Loss
Year 1 Year 2 Year 3 Year 4 Year 5
Sales $8,958,707 $9,104,892 $9,326,231 $9,594,378 $10,064,671
Direct Cost of Sales $174,960 $176,710 $180,244 $183,850 $191,205
Other Costs of Sales $0 $0 $0 $0 $0
Total Cost of Sales $174,960 $176,710 $180,244 $183,850 $191,205
Gross Margin $8,783,747 $8,928,182 $9,145,987 $9,410,528 $9,873,466
Gross Margin % 98.05% 98.06% 98.07% 98.08% 98.10%
Expenses
Payroll $1,486,944 $1,656,538 $1,773,363 $1,872,984 $2,042,892
Marketing/Promotion $500,000 $200,000 $200,000 $100,000 $100,000
Depreciation $50,726 $50,726 $50,726 $50,726 $50,726
Equipment Rental $39,996 $52,000 $60,000 $71,000 $80,000
Utilities $300,300 $310,000 $315,000 $320,000 $325,000
Insurance $165,000 $178,000 $1,82,000 $186,000 $188,000
Payroll Taxes $223,042 $248,481 $266,004 $280,948 $306,434
Accounting $39,996 $46,000 $51,000 $57,000 $64,000
Communications $54,996 $55,000 $55,000 $55,000 $55,000
Legal $12,000 $12,000 $12,000 $12,000 $12,000
Leases and Notes $289,128 $332,506 $332,506 $332,506 $354,000
Misc. / Contingency $600,000 $500,000 $400,000 $300,000 $200,000
Postage/Shipping $43,260 $43,260 $43,260 $43,260 $43,260
Employee Benefits $320,688 $320,688 $320,688 $320,688 $320,688
Office Supplies $49,992 $50,000 $50,000 $50,000 $50,000
Maintenance $120,000 $120,000 $120,000 $120,000 $120,000
Property Taxes $225,000 $225,000 $225,000 $225,000 $225,000
Total Operating Expenses $4,521,068 $4,400,199 $4,274,547 $4,397,112 $4,537,000
Profit Before Interest and Taxes $4,262,679 $4,527,983 $4,871,440 $5,013,416 $5,
336,466
EBITDA $4,313,405 $4,578,709 $4,922,166 $5,064,142 $5,387,192
Interest Expense $1,115,625 $918,750 $693,750 $431,250 $150,000
Taxes Incurred $944,116 $1,082,770 $1,253,307 $1,374,650 $1,555,940

7th Galaxy Studios

Page 13
Net Profit $2,202,938 $2,526,463 $2,924,383 $3,207,516 $3,630,526
Net Profit/Sales 24.59% 27.75% 31.36% 33.43% 36.07%

7th Galaxy Studios

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7th Galaxy Studios

6.4 Projected Cash Flow
Table: Cash Flow
Pro Forma Cash Flow
Year 1 Year 2 Year 3 Year 4 Year 5
Cash Received
Cash from Operations
Cash Sales $8,958,707 $9,104,892 $9,326,231 $9,594,378 $10,064,671
Subtotal Cash from Operations $8,958,707 $9,104,892 $9,326,231 $9,594,378 $10,06
4,671
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0 $0 $0
New Current Borrowing $0 $0 $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0 $0 $0
New Long-term Liabilities $0 $0 $0 $0 $0
Sales of Other Current Assets $0 $0 $0 $0 $0
Sales of Long-term Assets $0 $0 $0 $0 $0
New Investment Received $0 $0 $0 $0 $0
Subtotal Cash Received $8,958,707 $9,104,892 $9,326,231 $9,594,378 $10,064,671
Expenditures Year 1 Year 2 Year 3 Year 4 Year 5
Expenditures from Operations
Cash Spending $1,486,944 $1,656,538 $1,773,363 $1,872,984 $2,042,892
Bill Payments $4,742,732 $4,946,162 $4,601,875 $4,472,571 $4,350,605
Subtotal Spent on Operations $6,229,676 $6,602,700 $6,375,238 $6,345,555 $6,393,
497
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment $1,500,000 $2,500,000 $3,500,000 $3,50
0,000 $4,000,000
Purchase Other Current Assets $0 $0 $0 $0 $0
Purchase Long-term Assets $0 $0 $0 $0 $0
Dividends $179,174 $182,098 $186,525 $191,888 $201,293
Subtotal Cash Spent $7,908,850 $9,284,798 $10,061,763 $10,037,443 $10,594,791
Net Cash Flow $1,049,857 ($179,906) ($735,532) ($443,065) ($530,120)
Cash Balance $2,299,857 $2,119,951 $1,384,419 $941,354 $411,234
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6.5 Projected Balance Sheet
Table: Balance Sheet
Pro Forma Balance Sheet
Year 1 Year 2 Year 3 Year 4 Year 5
Assets
Current Assets
Cash $2,299,857 $2,119,951 $1,384,419 $941,354 $411,234
Other Current Assets $50,000 $50,000 $50,000 $50,000 $50,000
Total Current Assets $2,349,857 $2,169,951 $1,434,419 $991,354 $461,234
Long-term Assets
Long-term Assets $16,931,605 $16,931,605 $16,931,605 $16,931,605 $16,931,605
Accumulated Depreciation $50,726 $101,452 $152,178 $202,904 $253,630
Total Long-term Assets $16,880,879 $16,830,153 $16,779,427 $16,728,701 $16,677,9
75
Total Assets $19,230,736 $19,000,104 $18,213,846 $17,720,055 $17,139,209
Liabilities and Capital Year 1 Year 2 Year 3 Year 4 Year 5
Current Liabilities
Accounts Payable $475,367 $400,370 $376,254 $366,834 $356,756
Current Borrowing $0 $0 $0 $0 $0
Other Current Liabilities $0 $0 $0 $0 $0
Subtotal Current Liabilities $475,367 $400,370 $376,254 $366,834 $356,756
Long-term Liabilities $13,500,000 $11,000,000 $7,500,000 $4,000,000 $0
Total Liabilities $13,975,367 $11,400,370 $7,876,254 $4,366,834 $356,756
Paid-in Capital $5,000,000 $5,000,000 $5,000,000 $5,000,000 $5,000,000
Retained Earnings ($1,947,569) $73,271 $2,413,209 $5,145,704 $8,151,927
Earnings $2,202,938 $2,526,463 $2,924,383 $3,207,516 $3,630,526
Total Capital $5,255,369 $7,599,734 $10,337,592 $13,353,221 $16,782,454
Total Liabilities and Capital $19,230,736 $19,000,104 $18,213,846 $17,720,055 $1
7,139,209
Net Worth $5,255,369 $7,599,734 $10,337,592 $13,353,221 $16,782,454

7th Galaxy Studios

6.6 Business Ratios
Table: Ratios
Ratio Analysis
Year 1 Year 2 Year 3 Year 4 Year 5 Industry Profile
Sales Growth n.a. 1.63% 2.43% 2.88% 4.90% 6.09%
Percent of Total Assets
Other Current Assets 0.26% 0.26% 0.27% 0.28% 0.29% 44.21%
Total Current Assets 12.22% 11.42% 7.88% 5.59% 2.69% 73.24%
Long-term Assets 87.78% 88.58% 92.12% 94.41% 97.31% 26.76%
Total Assets 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Current Liabilities 2.47% 2.11% 2.07% 2.07% 2.08% 22.93%
Long-term Liabilities 70.20% 57.89% 41.18% 22.57% 0.00% 25.01%
Total Liabilities 72.67% 60.00% 43.24% 24.64% 2.08% 47.94%
Net Worth 27.33% 40.00% 56.76% 75.36% 97.92% 52.06%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Gross Margin 98.05% 98.06% 98.07% 98.08% 98.10% 100.00%
Selling, General & Administrative Expenses 73.46% 70.31% 66.71% 64.65% 62.03% 62
.10%
Advertising Expenses 5.58% 2.20% 2.14% 1.04% 0.99% 1.38%
Profit Before Interest and Taxes 47.58% 49.73% 52.23% 52.25% 53.02% 2.45%
Main Ratios
Current 4.94 5.42 3.81 2.70 1.29 1.91
Quick 4.94 5.42 3.81 2.70 1.29 1.14
Total Debt to Total Assets 72.67% 60.00% 43.24% 24.64% 2.08% 57.39%
Pre-tax Return on Net Worth 59.88% 47.49% 40.41% 34.32% 30.90% 8.06%
Pre-tax Return on Assets 16.36% 19.00% 22.94% 25.86% 30.26% 3.43%
Additional Ratios Year 1 Year 2 Year 3 Year 4 Year 5
Net Profit Margin 24.59% 27.75% 31.36% 33.43% 36.07% n.a
Return on Equity 41.92% 33.24% 28.29% 24.02% 21.63% n.a
Activity Ratios
Accounts Payable Turnover 10.98 12.17 12.17 12.17 12.17 n.a
Payment Days 27 33 31 30 30 n.a
Total Asset Turnover 0.47 0.48 0.51 0.54 0.59 n.a
Debt Ratios
Debt to Net Worth 2.66 1.50 0.76 0.33 0.02 n.a
Current Liab. to Liab. 0.03 0.04 0.05 0.08 1.00 n.a
Liquidity Ratios
Net Working Capital $1,874,490 $1,769,581 $1,058,165 $624,520 $104,479 n.a
Interest Coverage 3.82 4.93 7.02 11.63 35.58 n.a
Additional Ratios
Assets to Sales 2.15 2.09 1.95 1.85 1.70 n.a
Current Debt/Total Assets 2% 2% 2% 2% 2% n.a
Acid Test 4.94 5.42 3.81 2.70 1.29 n.a
Sales/Net Worth 1.70 1.20 0.90 0.72 0.60 n.a
Dividend Payout 0.08 0.07 0.06 0.06 0.06 n.a
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