138 Part I • Information Technology
Key Milestones Milkowski strongly believed in setting
firm, measurable milestones during the Phase II Plan.
The operations team would be expected to:
- Deploy a second co-location site in order to have
tandem network and call processing facilities and
back up connectivity. This facility was planned for
the third quarter of 2006, and would be implemented
in downtown Indianapolis. - Complete implementation of a graphical user inter-
face for end user management via a Web-based tool
by the fourth quarter of 2006. - Implement the recently available extensions to
Asterisk that provided for end user integration with
Microsoft Outlook by the fourth quarter of 2006. - Implement a billing system for automating the
billing of clients for end user long-distance minutes
by the fourth quarter of 2006.
The business development team would be expected to:
- Add additional sales resources for business expan-
sion in Indianapolis during the third quarter of 2006.
Close at least 8 new business contracts per month
starting six months after entry into a market. Close at
least 12 new business contracts per month starting a
year after entry into a market. - Select the appropriate markets and begin staffing for
the expansion into additional geographic markets by
August 2006.- Initiate targeted sales activities to Midwest call cen-
ters and smaller carrier prospects by the fourth quar-
ter of 2006. - Complete the development of the franchise business
approach for smaller geographic markets and begin
recruiting franchise partners during the fourth quar-
ter of 2006.
- Initiate targeted sales activities to Midwest call cen-
The Investment Required In order to carry out the Phase II
Plan, management at VoIP2.biz planned to raise an addi-
tional investment of $3 million. Milkowski believed that his
plan was an excellent investment because the company had
successfully sold and implemented several customers in the
greater Indianapolis marketplace, and the firm was poised
to enter several additional Midwestern markets. The suc-
cessful implementation of the Phase II Plan would require
significant expenditures in marketing and working capital
investment. The $3 million investment would be used pri-
marily to fund this market expansion, and to fund general
corporate and operating needs. A detailed breakdown of an-
ticipated cash flows from the implementation of the plan is
included in Exhibit 3.
Milkowski knew that this investment would have to
come from outside sources. While HSC and some angel
investors had provided the funding for VoIP2.biz to date,
HSC management had determined that they would be invest-
ing only internally for the next two years. While some of the
other investors could provide some investment capital, no
current investor was willing to invest the entire $3 million.EXHIBIT 3 Projected Statement of Cash Flow
Forecasted 2006 2007 2008 2009 2010
Net (Loss) Income $ (428) $ (1,193) $ 1,151 $ 9,738 $ 22,866
Adjustments for non-cash item
Depreciation $ 43 $ 124 $ 215 $ 196 $ 148
Working capital changes
Accounts Receivable (Increase) $ (384) $ (1,633) $ (3,611) $ (3,902) $ (3,147)
Inventory (Increase) $ (36) $ (290) $ (535) $ (343) $ 914
Accounts Payable Increase $ 304 $ 1,644 $ 3,743 $ 4,129 $ 3,292
Accrued Payroll Increase $ 26 $ 108 $ 144 $ 81 $ (14)
Cash used for operations $ (476) $ (1,238) $ 1,106 $ 9,899 $ 24,058
Cash used for investments $ (68) $ (244) $ (244) $ (100) $ (100)
Cash from financing activities $ 3,000 $ (250)
Change in cash for period $ 2,456 $ (1,482) $ 612 $ 9,799 $ 23,958
Cash beginning of period $ 250 $ 2,706 $ 1,224 $ 1,836 $ 11,635
Cash ending of period $ 2,706 $ 1,224 $ 1,836 $ 11,635 $ 35,593Statement of Cash Flow (All figures in $000)