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<br />Debt Service Coverage <br /> <br />Below is a summary of historical revenue performance for the company. In addition, an analysis <br />has been completed showing the ability of the company to service the proposed debt. <br /> <br /> <br />INCOME STATEMENT: <br />Net Sales <br />Cost of Sales <br />Gross Profit <br />Officer Compensation <br />Wages <br />Rent <br />Depreciation <br />Other OperaUng Expenses <br />Total Expenses <br />Other Expenses <br />Net Income (Loss) <br /> <br />104.0 <br />31.0 <br />73.0 <br />12.0 <br />0.0 <br />16.0 <br />3.0 <br />41.0 <br />72.0 <br />0.0 <br />1.0 <br /> <br />Operational Cash <br />Depreciation/Amort. <br />+ Other: 1 time tool <br />purchases <br />= Available Cash <br />- Existing Debt Service <br />- New Debt Service <br />- Other: est. owners draw <br />= Surplus <br />Coverage Ratio <br /> <br />0.0 <br />4.0 <br />12.0 <br />7.0 <br />0.0 <br />-15.0 <br />0.21 <br /> <br />29.8% <br />70.2% <br />11.5% <br />0.0% <br />15,4% <br />.2.9% <br />39.4% <br />69.2%.. <br />0.0% . <br />.1.0% <br /> <br />1.0 <br />3.0 <br /> <br />232.0 <br />97.0 <br />135.0 <br />14.0 <br />13.0 <br />22.0 <br />6.0 <br />64.0 <br />119.0 <br />23.0 <br />-7.0 <br /> <br />23.0 <br />22.0 <br />12.0 <br />7.0 <br />0.0 <br />3.0 <br />1.16 <br /> <br />58.2% <br />6.0% <br />5~6% <br />9.5% <br />2:6% <br />27.6% <br />.51.3%. <br />9.9% <br />.-3.0% <br /> <br />-7.0 <br />6.0 <br /> <br />63.0 <br />0.0 <br />5.0 <br />4.0 <br />0.0 <br />9.0 <br />18.0 <br />0.0 <br />45.0 <br /> <br />45.0 <br />0.0 <br /> <br />0.0 <br />45.0 <br />4.0 <br />3.0 <br />12.0 <br />26.0 <br />2.37 <br /> <br />16.0% <br />84.0% <br />0.0% <br />6.7% <br />5.3% <br />.0.0% . <br />.12.0% <br />24.0% <br />0.0% <br />60.0% <br /> <br />Revenue trends are positive. After adjustment for a one-time tool purchase in 2007, cash flow <br />would have been adequate to service the debt as proposed. Fixed costs are now covered and <br />incremental sales should result in a majority of the gross profit remaining as net profit. Matt <br />operates the company with very little overhead and has chosen to retain profits to improve the <br />balance sheet and allow for adequate liquidity to fund continued growth. Debt service ability <br />YTD 2008 is strong even before the increased revenues expected from the increased capacity <br />provided by the equipment to be purchased. Projected debt service is based the requested loan <br />amount of$31,500 amortized over 5 years at a rate of6%. <br /> <br />Funding Source: <br /> <br />EDA Revolving Loan Fund <br /> <br />Recommendation: <br /> <br />Staff is recommending approval of the loan request as presented subject to the execution ofa <br />loan agreement between the City of Ramsey and Clear Choice Countertops and the personal <br />guarantee of Matt Semler. <br /> <br />1 1 <br />