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General Assumptions |

| Year 1 | Year 2 | Year 3 |

Plan Month | 1 | 2 | 3 |

Current Interest Rate | 10.00% | 10.00% | 10.00% |

Long-term Interest Rate | 10.00% | 10.00% | 10.00% |

Tax Rate | 30.00% | 30.00% | 30.00% |

Other | 0 | 0 | 0 |

8.1 Important Assumptions

The financial plan depends on important assumptions, most of which are shown in the following table as annual assumptions. The monthly assumptions are included in the appendix. From the beginning, we recognize that collection of payments for dance lesson packages is critical, however, not a factor we can influence easily.  Interest rates, tax rates, and personnel burden are based on conservative assumptions.

Three of the more important underlying assumptions are:

1. We assume that people in Whatcom County and more importantly, Bellingham, will be interested in learning to dance and will give us a try.

2. We assume that the area will continue to grow, as in the past, and at the projected rate of 5% per year.

3. We assume that the Majestic will continue to be rented for events as in the past.

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8.2 Break-even Analysis

We will need an average of thirty new students each month taking the introductory classes. Of these thirty students, we are anticipating that 25% will stay to take additional classes (i.e. Social Foundation, Bronze, etc.). We realize that we may have a slow start, until the word gets out about our business, and therefore, will take a few months to "ramp up" to thirty new students.

Break-even Analysis |

Monthly Revenue Break-even | $22,393 |

Assumptions: | |

Average Percent Variable Cost | 10% |

Estimated Monthly Fixed Cost | $20,150 |

8.3 Projected Profit and Loss

Our projected profit and loss is shown on the following table, with sales increasing at a rate of 15% year over year.  If we are able to meet our sales forecast, we will begin making a profit almost immediately. Traditionally in the dance...