EFTA01199952.pdf

Artspace 2014-17 Income Statement & Cash Flow Key Assumptions Revenue - Income Statement - Revenue in the out years is based on the number of monthly visits to the site, average conversion rate & average revenue per order - Increase in average monthly visits driven by increased marketing, staffing and inventory on site - Modest yearly increases in average order size and conversion rate Expenses - Income Statement - Base (2014) Headcount 14, Additional (8) FTE in 2015 and (2) in 2016 drive salary increases - 2015 additional headcount includes Product/Developers (4) and Editorial (2) to build back the technology and editorial teams - Model assumes the following GM%: Q4 2014 (22%), 2015 (22%), 2016 (23%) and 2017 (23%) - Model includes Monthly Rent of $20k Cash Flow - Inflows - The majority of transactions are paid by credit card online - Cash Receipts assumes 90% of revenue received in month ordered with 10% the following month Cash Flow - Outflows - COGS paid 2 months after the expense is occurred - Salaries paid in month the expense occurred - All other expenses paid the month following expense incurred. Prepared by 1. Murphy 1/7/2015 EFTA01199952 Artspace Quarterly Income Statement (2014 - 2017) 04 2014 01 2015 Q22015 Q32015 Q42015 FY 2015 Total Revenue 658200 $ 571049 $ 646,608 $ 530,771 $ 986,699 $ 2,735,927 COGS 513.917 $ 446,042 $ 504,354 $ 414,001 $ 769,625 $ 2,134,023 Gross Profit 144,283 $ 125.807 $ 142,254 $ 116,770 $ 217.074 $ 601,904 Gross Margin % 21.9% 22.0% 22.0% 22.0% 22.0% 22.0% Operating Expenses G&A 136,323 $ 121,750 $ 161,750 $ 103,750 $ 113,750 $ 501,000 Marketing 16,629 $ 60000 $ 60,000 $ 60,000 $ 90000 $ 270,000 Merchandising 22,340 $ 6.000 $ 6,000 $ 6,000 $ 6,000 $ 20,000 Editorial 2,100 $ 7,500 $ 7,500 $ 7,500 $ 7,500 $ 30,000 Tech/Product 30,852 $ 42,870 $ 02,870 $ 42,882 $ 42,870 $ 171,492 Salaries/Benefits 353,305 $ 602.998 $ 673,683 $ 932,233 $ 682,233 $ 2,891,147 Capitalized Tech Salads (64,125) $ (122,097) $ (173,850) $ (173,850) $ (173,850) $ (643,647) Total Operating Expenses 497,424 $ 719,021 $ 777,953 $ 978,515 $ 768,503 $ 3,203.992 EWE% (353,141) $ (593.214) $ (635,699) $ (861,745) $ (551,429) $ (2,642,088) Headcount 412016 Q22016 Q32016 Q42016 FY 2016 412017 Q2 2017 03 2017 Q42017 Total 2017 Total Revenue $ 1,018,015 $ 992,845 $ 849,234 $ 1,923,687 $ 4,783,781 $ 1,752,959 5 1,972,780 $ 1,987,354 $ 3,263,032 $ 8,976,129 COGS $ 783,872 $ 764,491 $ 653,910 $ 1,481,239 $ 3,683,511 $ 1,309,778 $ 1,519,000 5 1,530,262 $ 2,512,535 $ 6,911,619 Gross Profit $ 234,143 $ 228,354 $ 195,324 $ 442,448 $ 1,100,270 $ 003,180 $ 453,740 5 457,091 $ 750,497 $ 2,064,510 Gross Margin % 23.0% 23.0% 23.0% 23.0% 23.0% 23.0% 23.0% 23.0% 23.0% 23D% Operating Expenses G&A $ 104,063 $ 114,063 $ 104,063 $ 110,063 $ 436,250 $ 104,719 5 114,719 5 104,719 $ 110,719 $ 438,875 Marketing $ 61,800 $ 61,800 $ 61,803 $ 92,700 $ 278,100 $ 63,654 5 63,654 5 63,654 $ 95,481 $ 286,443 Merchandising $ 6,000 $ 6,000 $ 6,000 $ 6.000 $ 24,000 $ 6,000 5 6,000 5 6,000 $ 6,000 5 24,000 Editorial $ 7.300 $ 7,500 $ 7,500 $ 7,500 $ 30,000 $ 7,800 $ 7,800 5 7,800 $ 7,800 5 31,200 Tech/Product $ 45,018 $ 45,018 $ 45,030 $ 52,018 $ 187,084 $ 07,195 $ 47,195 $ 47,207 $ 07,195 $ 188,790 Salaries/Benefits $ 709.322 $ 724,722 $ 732,322 $ 736,851 $ 2,903,418 $ 775,865 $ 775,865 $ 775,865 $ 775,865 $ 3,103,461 Capitalized Tech Salaries $ 180,804 $ (180.804) $ (180,800) $ (180.804) $ (723.216) $ (188,036) 5 1.88 36 $ (188,036) $ (188,036) 5 (752,145) Total Operating Expenses $ 753,099 $ 778,299 $ 775,911 $ 828,328 $ 3,135,636 $ 817,196 $ 827,196 $ 817,208 $ 859,023 $ 3,320,624 EBIIOA S (518.955) $ (549.944) $ (580,587) $ (385,880) $ (2,035,367) $ (414,016) $ (373,056) $ (360,117) $ (108,526) $ (1,256,115) • Note 2017 revenue in Ow acquisition financial model included SLIM revenue associated with Plus:Ion books sold to Anspace customerswall a 75% margin, this model Includes similar total revenue in 2017 but wnh /inspect mammal 23% Prepared by J. Murphy 1/7/2015 EFTA01199953 Artspace Cash Flow (2014 - 2017) Q4 2014 FY 2015 FY 2016 FY 2017 14 - 17 Cash Inflows Receipts 837,701 2,715,770 4,756,066 8,928,915 17,238,451 Credit/Overdraft Facility 650,000 2,550,000 2,325,000 1,350,000 6,875,000 1,487,701 5,265,770 7,081,066 10,278,915 24,113,451 Cash Outflows COGS (292,817) (1,935,705) (3,218,939) (6,229,441) (11,676,902) G&A (136,193) (496,417) (436,146) (438,656) (1,507,412) Marketing (15,458) (244,402) (277,200) (285,516) (822,576) Merchandising (24,440) (25,500) (24,000) (24,000) (97,940) Editorial (2,100) (27,500) (30,000) (31,100) (90,700) Technology/Product (31,469) (167,202) (186,368) (188,065) (573,104) Salaries (510,612) (2,891,147) (2,903,418) (3,103,461) (9,408,637) (1,013,089) (5,787,872) (7,076,071) (10,300,239) (24,177,271) Net Inflow/(Outflow) 474,612 (522,102) 4,994 (21,324) (63,820) • Acquisition Cash Flow Model Credit/Overdraft Facility ($6.1M) did not include $0.7M in Rent Prepared by J. Murphy 1/7/2015 EFTA01199954 Artspace Monthly CashFlow (2014 • 2015) 400 14 14.-14 ON-I4 Nov-14 Dec-14 04 2014 lan.I5 Feb.15 114ac.I5 Apr.15 May.13 NmIS 181.13 4.84.15 Sep.1$ Oct-15 Nov-I5 FY 2015 Cask Intlows 49,405 137.289 188.615 2)9235 222,508 837.701 157,538 204.788 210,478 209,729 262.154 174871 153278 151.202 218951 260,177 297.470 409,533 2.715,770 CroditiOarcfrah Facility 0 0 200.000 0 450.000 654000 0 150.000 200000 2251200 100,000 300000 400.000 550.000 300000 100.000 150,000 MOO 2.554000 157 538 354 788 4 78 434 729 362.154 474871 553278 702.202 518,951 360.177 447.470 484,533 5,265,770 Git114441048) COGS 0 127.016) (117,324) 1148.477 1292217) (192,574) 1172.866) 1117,466) (164431 1164.144) (163,527) (209,031 1131296) (118,717) 1118,717) 1176867) (205,868 (1.935,705) GSA 11.317) 140.523) (48234) 143.089 1136.193) (45.0001 122.083) 14686)) (53.583 156083) (56.083) (49.583 132.033) (32083) 139.583) 132083) (324183 1496417) PAsekelong 1520) 12.711) (1AP) 111.140 115.458) (4,4021 110.000) 11080)) (20.000 120.000) (10.00D) (20.000 120.000) (20000) 120.0001 134000) (30,000 1144A02) Merchancliti% 15.600) (7,000) 111.840 124,440) (3.5001 12.000) PICO) (2,000 12.000) (LOCO) (2.000 12.000) (2=1 12.000) 12,000) (2,000 115.500) (dilate (2.100) 11.100) 0 12.500) 11,500) (2.500 12.500) (1.500) (2.500 12.500) (2.500) 12.5001 11.500) (2.500 127.5002 lethocdort/Preduct 0 110.617) (10290) 110.562 131.469) (10.0001 114.290) 114290) (14.290 114.2901 (14,290) (14.2% 114.290) (14.301) 114.2901 114290) (14.290 1167,202) Salaries 145,98 11,324 108274 119,727) 125.304 010,612) (176242) 003.019) 023,136) (223,136 1223.136) (227,411) (227.411 1477.411) (227,433) 1227.411) 1227,411) (227,411 (2)591347) (412.3200 036.759) 1425 476) WON 1482,154) (185411i (524,825 1610.080) 14178141 1424.502) 1484.851).. (514.152 (5787072) Net InFlow/lOutflow) 3.422 21.098 193.874 (63,877) 122,094 (174710) (81.971) 114.997) (45,21 1119.999) 16.940) 29,061 22.121 101,937 (64.125) 117.944) (28619 1322402) •9934w+Ns In Balance Orentog Bounce 99.568 293,442 227,565 589,661 278881 191.910 177,913 132.702 11.701 5,763 34.826 56,947 158,884 94,559 57,178 Net inF8m/(0611148) 193.874 (65477) 322,096 (214,7413) 181.9711 (14,997) (45,2111 1119.999) (4940) 29063 22.121 101,937 164.325) 137382) (29,6191 Ending Balance 293.442 227,565 549,661 274,881 192.910 177.913 132,702 12.702 5,763 34226 56.947 158084 94,559 57.178 27,558 PreOated by 3. Murphy 1/7/201. EFTA01199955 Arts pace Monthly Cash Flow (2016) Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 FY 2016 Cash Inflows Receipts 334,919 344,527 346,120 344,888 374,438 281,090 246,206 243,523 350,322 565,593 631,913 692,527 4,756,066 Credit/Overdraft Facility 250,000 300,000 200,000 250,000 200,000 300,000 375,000 300,000 125,000 0 0 25,000 2,325,000 584,919 644,527 546,120 594,888 574,438 581,090 621,206 543,523 475,322 565,593 631,913 717,527 7,081,066 Cash Outflows COGS (234,933) (328,825) (250,474) (266,931) (266,466) (265,464) (290,857) (208,171) (187,512) (187,512) (278,885) (452,909) (3,218,939) G&A (49,583) (32,188) (32,188) (39,688) (32,188) (32,188) (49,688) (32,188) (32,188) (39,688) (32,188) (32,188) (436,146) Marketing (30,000) (20,600) (20,600) (20,600) (20,600) (20,600) (20,600) (20,600) (20,600) (20,600) (30,900) (30,900) (277,200) Merchandising (2,000) (2,000) (2,000) (2,000) (2,000) (2,000) (2,000) (2,000) (2,000) (2,000) (2,000) (2,000) (24,000) Editorial (2,500) (2,500) (2,500) (2,500) (2,500) (2,500) (2,500) (2,500) (2,500) (2,500) (2,500) (2,500) (30,000) Technology/Product (14,290) (15,006) (15,006) (15,006) (15,006) (15,006) (15,006) (15,006) (15,018) (15,006) (22,006) (15,006) (186,368) Salaries (236,507) (236,507) (216,507) (236,507) (244,107) (244,107) (244,107) (244,107) (244,107) (244,107) (244,107) (248,636) (2,903,418) (569,814) (637,626) (559,275) (583,232) (582,867) (581,864) (624,758) (524,572) (503,926) (511,413) (612,586) (784,139) (7,076,071) Net Inflow/(Outflow) 15,106 6,901 (13,155) 11,656 (8,429) (775) (3,552) 18,951 (28,604) 54,180 19,327 (66,612) 4,994 Bank Balance Opening Balance 27,558 42,664 49,565 36,410 48,066 39,637 38,862 35,310 54,261 25,658 79,838 99,165 Net Inflow/(Outflow) 15,106 6,901 (13,155) 11,656 (8,429) (775) (3,552) 18,951 (28,604) 54,180 19,327 (66,612) Ending Balance 42,664 49,565 36,410 48,066 39,637 38,862 35,310 54,261 25,658 79,838 99,165 32,553 Prepared by 3. Murphy 1/7/2015 EFTA01199956 Artspace Monthly Cash Flow (2017) Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Noy-17 Dec-17 FY 2017 Cash Inflows Receipts 527,313 587,073 643,558 695,147 760,577 531,425 523,108 525,096 895,956 1,031,150 1,049,675 1,158,837 8,928,915 Credit/Overdraft Facility 325,000 300,000 100,000 100,000 100,000 350,000 475,000 275,000 (300,000) (200,000) (150,000) (25.000) 1,350,000 852,313 887,073 743,558 795,147 860,577 881,425 998,108 800,096 595,956 831,150 899,675 1,133,837 10,278,915 Cash Outflows COGS (490,313) (538,016) (391,366) (458,788) (499,623) (539,223) (590,802) (389,019) (404,324) (404,324) (721,615) (802,027) (6,229,441) G&A (49,688) (32,406) (32,406) (39,906) (32,406) (32,406) (49,906) (32,406) (32,406) (39,906) (32,406) (32,406) (438,656) Marketing (30,900) (21,218) (21,218) (21,218) (21,218) (21,218) (21,218) (21,218) (21,218) (21,218) (31,827) (31,827) (285,516) Merchandising (2,000) (2,000) (2,000) (2,000) (2,000) (2,000) (2,000) (2,000) (2,000) (2,000) (2,000) (2,000) (24,000) Editorial (2,500) (2,600) (2,600) (2,600) (2,600) (2,600) (2,600) (2,600) (2,600) (2,600) (2,600) (2,600) (31,100) Technology/Product (15,006) (15,732) (15,732) (15,732) (15,732) (15,732) (15,732) (15,732) (15,744) (15,732) (15,732) (15,732) (188,065) Salaries (258,622) (258,622) (258,622) (258,622) (258,622) (258,622) (258,622) (258,622) (258,622) (258,622) (258,622) (258,622) (3,103,461) (849,029) (870,594) (723.944) (798,866) (832,201) (871,800) (940,880) (721,596) (736,913) (744,401) (1,064,801) (1,145,213) (10,300,239) Net Inflow/(Outflow) 3,285 16,479 19,615 (3,719) 28,376 9,625 57,228 78,499 (140,958) 86,749 (165,127) (11,376) (21,324) Bank Balance Opening Balance 32,553 35,838 52,317 71,931 68,212 96,588 106,213 163,441 241,941 100,983 187,732 22,605 Net Inflow/(Outflow) 3,285 16,479 19,615 (3.719) 28,376 9,625 57,228 78,499 (140,958) 86,749 (165,127) (11,376) Ending Balance 35,838 52,317 71,931 68,212 96,588 106,213 163,441 241,941 100,983 187,732 22,605 11,229 Prepared by ). Murphy 1/7/2015 EFTA01199957 ArtSpace Revenue Drivers (2015 - 2017) 2015 2016 2017 Visitor Metrics Average Monthly Unique Visitors to Site 150,688 187,907 229,852 Growth in site visitors 19.3% 24.7% 22.3% Visits Per Unique 1.5 1.5 1.5 Total Visits 2,712,376 3,382,326 4,137,333 Average Site Monthly Conversion Rate 0.07% 0.09% 0.14% Average Monthly Orders 162 277 503 Average $ Order Size (Art Only) 1,392 1,400 1,417 Revenue Art Total Gross Revenue 2,594,857 4,489,284 8,423,544 Other Revenue Total Revenue Framing 99,376 224,464 421,177 Total Revenue Shipping 155,691 269,357 505,413 255,067 493,821 926,590 Total Revenue (Art & Other) 2,849,924 4,983,105 9,350,134 Refunds (113,997) (199,324) (374,005) Total Gross Revenues 2,735,927 4,783,781 8,976,129 Prepared by J. Murphy 1/7/2015 EFTA01199958