may 6-7, 2010 company confidential pg 1 stratfor’s fiscal imperatives offsite meetings may 6-7,...

May 6-7, 2010Company Confidential Pg 1

Stratfor’s Fiscal ImperativesStratfor’s Fiscal ImperativesOffsite Meetings May 6-7, 2010Offsite Meetings May 6-7, 2010

Jeff Stevens / Darryl O’Connor


Stratfor’s Fiscal Imperatives: May Offsite 2010

I. General Look at Cash Flow

II. P&L Realities

III. Anticipated Financial Difficulties

IV. What Needs to be Done?



I. General Look at Cash FlowAs we look at our 6 week cash flow forecast, we can see that in the short-term we will soon be reliant upon a loan from our bank to make payroll and pay our bills. Assuming we hit our budgeted sales numbers, we will remain in the red until we receive payments from the Air Force and OSIS (both came in at the end of September last year). Conversely, if we miss our budgeted new sales numbers, we run the risk of burning through our available bank loan dollars before the OSIS and Air Force payments come in.

NOTE: these numbers reflect projected collections based upon the dashboard, not budgeted sales. The next slide is based upon our budget numbers.

04/24/10 05/01/10 05/08/10 05/15/10 05/22/10 05/29/10 June

Starting Cash Position 107 165 (210) (113) (142) (30) (296)

Total Incoming Cash 132 90 114 348 267 127 819

Total Outflows (73) (465) (17) (378) (155) (392) (876)

Ending Operating Cash Position 165 (210) (113) (142) (30) (296) (353)

FORECAST



II. P&L Realities

An extension of the cash flow forecast in P&L format shows recovery in Q3 and Q4 such that we are once again able to meet all our obligations including the repayment of our bank loan. Note the bulk of the Q3 incoming dollars (OSIS, Air Force) are expected to come in during the last two weeks of the quarter. Finally, please note our expenditures by quarter are flat and even fall in the fourth quarter. The budget we are operating from assumes no growth in expenditures.

All figures $K ACTUAL BUDGET BUDGET BUDGETQ1 Q2 Q3 Q4

Total New Sales 947 1,360 1,492 1,545Total Renewal Sales 1,635 1,259 2,069 1,286

Cost of Goods Sold 115 164 180 189

Gross Margin 2,467 2,455 3,381 2,642

Total Expenditures (2,576) (2,545) (2,542) (2,508)

Net Profit (109) (89) 840 134




The underlying new sales assumptions need to be closely examined. While the new Consumer sales are very aggressive and present a fair amount of risk, they appear achievable, both nominally and based on all the activities/efforts currently being undertaken by Grant’s team.

Actl Bud Bud BudSales Category Q1 Q2 Q3 Q4

Consumer - New: $K 648 788 954 1069Pcnt Grwth vs Prior Qtr 22% 21% 12%

Pcnt Grwth vs Q1Actl 22% 47% 65%




Institutional sales appear to pose much greater risk. As you can see below there is a large spike in Q2 and then a flattening for the remaining quarters. This Q2 spike is caused by some larger, one-off deals (by no means certain). These deals are not part of the third quarter when new Institutional sales will need to be driven by new products. Note that Q3 sales are more than 4x what we actually did in Q1.

Note after 3 weeks in April, new Institutional sales stand at $16K.

Actl Bud Bud BudSales Category Q1 Q2 Q3 Q4

Institutional - New: $K 48 251 215 190Pcnt Grwth vs Prior Qtr 420% -14% -12%

Pcnt Grwth vs Q1Actl 420% 345% 293%



IV. What needs to be Done?

The largest risk here is the acceleration of institutional revenue failing to occur within the timeframe. It strikes us that we are behind where we should be to introduce and sell new products in sufficient numbers to cover our expenses as our bank loan may quickly prove inadequate. Our message is therefore primarily one of urgency and speed in execution in our efforts to bring on new Institutional products.

This by no means ignores the necessity of meeting the consumer publishing sales budget.

Additionally, we need to continue to selectively pursue non-publishing deals to help bridge the cash gap until new Institutional sales begin to grow.

may 6-7, 2010 company confidential pg 1 stratfor’s fiscal imperatives offsite meetings may 6-7,...

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