The ComfyLinks to an external site. is a product dreamed by the Speciale brothers, Michael and Brian. The Speciale Brothers hit the jackpot on Shark Tank and agreed to sell a 30% stake in their business for $50,000 on Dec 31, 2020. The first year went amazing! The company went from just a few protypes they made to over $15 million in sales. The companys first year results are given below. The retail price of a Comfy is $40, but the wholesale price (what they sell to stores for) is $30.

They have a negotiated contract with a manufacturer in Bangladesh for the following orders:

Production Costs
Monthly Production Bill with under 20,000 order	$13/Comfy
Monthly Production Bill with under 20,001-99,999 order	$12/Comfy
Monthly Production Bill with 100,000+ order	$11/Comfy

Shipping costs are $4 per Comfy (either to the customer directly or to the store/QVC).

Additionally, the brothers have rolled out an advertising platform and website: thecomfy.comLinks to an external site.. Customer acquisition costs (the cost of accepting credit cards and advertising on Facebook) are approximately $6 per comfy and occur the same month as the sale, regardless of the venue sold.

Creating a Comfy Proforma

Using the percentage of sales approach and the companys expectations of sales in the chart below, create a proforma income statement and balance sheet. Determine any additional funding needed in order to sustain the projected growth rate. The Shark wants her 30% of profits in the form of a cash dividend paid out. The Speciale brothers have promised to re-invest their money into the business for the first three years.

Product Sale Forecast
	Online	Home Shopping Network	Bed Bath and Beyond
YR 1	100,000	400,000	275,000
YR 2	150,000	580,000	250,000
Current Assets, Long-term assets, and account payable are 25%, 50%, and 20% of sales, respectively. Long-term debt and equity are not fixed in relation to sales.

Project Instructions

Excel File

• Download this templateDownload this template
• Using the template and the information above, create a pro forma for The Comfy.
• Name your file: Comfy_YourName.xls

Word Document

• Create a Word Document explaining your expectations for additional funding to the Shark.
• Name your file: Comfy_YourName.docx
• In your memo, either explain how the cash coming in is going to be sufficient to fund growth OR outline how much additional cash will be needed.
• You will most likely need to make up a few small charts to make your plan clear and readable.
• Address what you believe should be done with any excess cash (for example: pay it out to the Speciale Brothers, keep it for a rainy day in cash, etc.) OR if you think the company should issue debt, equity, or a combination of both to fund the shortfall.
• Note: Points will be given not based on your choice but rather your justification of which you choose.

Submission Instructions

• Submit your Excel file
• Submit your Word file

\begin{tabular}{|c|c|c|c|c|} \hline \multicolumn{4}{|c|}{ Income Statement } & \multirow{6}{*}{ Year 3} \\ \hline & & Year 1 & \multirow[t]{5}{*}{ Year 2} & \\ \hline Revenues & $ & 16,330,000 & & \\ \hline Manufacturing Costs & $ & 6,132,000 & & \\ \hline Shipping Costs & $ & 2,044,000 & & \\ \hline Customer Acquisition Costs & $ & 3,066,000 & & \\ \hline EBT & $ & 5,088,000 & & \\ \hline Taxes (21\%) & $ & 1,068,480 & & \\ \hline Net Income & $ & 4,019,520 & & \\ \hline \multicolumn{4}{|c|}{ Balance Sheet } & \multirow{5}{*}{ Year 3} \\ \hline & & Year 1 & \multirow[t]{4}{*}{ Year 2} & \\ \hline \multicolumn{3}{|l|}{ Assets } & & \\ \hline Current Assets & & 4,082,500 & & \\ \hline Long-Term Assets & & 8,165,000 & & \\ \hline Total Assets & & 12,247,500 & & \\ \hline \multicolumn{3}{|l|}{ Liabilities } & & \\ \hline Accounts Payable & $ & 3,266,000 & & \\ \hline Long-Term Debt & $ & 6,067,836 & & \\ \hline Common Stock & $ & 100,000 & & \\ \hline Accumulated Retained Earnings & $ & 2,813,664 & & \\ \hline Total Liabilities and Equity & $ & 12,247,500 & & \\ \hline \end{tabular} \begin{tabular}{|c|c|c|c|c|} \hline \multicolumn{4}{|c|}{ Income Statement } & \multirow{6}{*}{ Year 3} \\ \hline & & Year 1 & \multirow[t]{5}{*}{ Year 2} & \\ \hline Revenues & $ & 16,330,000 & & \\ \hline Manufacturing Costs & $ & 6,132,000 & & \\ \hline Shipping Costs & $ & 2,044,000 & & \\ \hline Customer Acquisition Costs & $ & 3,066,000 & & \\ \hline EBT & $ & 5,088,000 & & \\ \hline Taxes (21\%) & $ & 1,068,480 & & \\ \hline Net Income & $ & 4,019,520 & & \\ \hline \multicolumn{4}{|c|}{ Balance Sheet } & \multirow{5}{*}{ Year 3} \\ \hline & & Year 1 & \multirow[t]{4}{*}{ Year 2} & \\ \hline \multicolumn{3}{|l|}{ Assets } & & \\ \hline Current Assets & & 4,082,500 & & \\ \hline Long-Term Assets & & 8,165,000 & & \\ \hline Total Assets & & 12,247,500 & & \\ \hline \multicolumn{3}{|l|}{ Liabilities } & & \\ \hline Accounts Payable & $ & 3,266,000 & & \\ \hline Long-Term Debt & $ & 6,067,836 & & \\ \hline Common Stock & $ & 100,000 & & \\ \hline Accumulated Retained Earnings & $ & 2,813,664 & & \\ \hline Total Liabilities and Equity & $ & 12,247,500 & & \\ \hline \end{tabular}