The final step in building our B2B SaaS business operating model is the cash burn and runway calculations. So far, what we've built is all of our revenue and our expenses to give us our income statement, which does show substantial growth in our revenues over the course of these three forecast years, but also substantial growth in our operating expenses as we invest heavily into our sales and marketing team to help drive that growth. Now, that does lead us to have substantial losses, but if it means we can generate market share, that might be something that is acceptable. What we want to have a look at finally, though, is the impact that this has on our cash flows. So if we go down from row 64, what we're gonna look to do is to build out what our cash flows might look like. Our assumptions here is that we have $1 million to start off with, and also that we're going to raise some financing at the end of the first year to help with that push into growing ourselves. And marketing team. There's a 20 million series a capital injection at the end of the first year. That is our underlying assumption here. So in terms of looking at our cash balances, we'll build this on a month by month basis to begin with. So we're gonna say that we've got a million to start off with, and we want to calculate, first of all, our gross cash burn. Now, the gross cash burn is what our cash outflows would be if we stopped doing business straight away. That would mean we would generate no revenue and would also incur no cost of sales, but we would still incur these operating expenses. So our gross cash burn is the operating expenses and the cash runway on a gross basis is to say, how long could we survive generating no revenue and incurring no cost of sales? That's simply gonna be the beginning cash balance divided by the cash outflow through the course of that year.

And here, what this tells us is that we'd be able to survive for 1.3 months if that happened. So if the world totally shut down and we had no revenue generating, then we could survive for a month only. That might be quite concerning if we are worried about losing substantial customers. Our net runway gives us a bit more of a longer term view, though, and the net cash burn is our first starting point here. The net cash burn is the cash outflow that we experience on a monthly basis, taking into account the revenue that we're making from selling this subscription service. So in terms of our net cash burn, we're going to assume that that is our EBITDA number. I'm gonna multiply it by minus one to make it positive. Now, EBITDA is not necessarily the same as your cash flows, but for simplicity here in this model, we're going to just take EBITDA as our monthly operating cash flows is the money we're generating from that gross profit, selling the service and incurring the cost of sales net of all of our operating expenses. So in this situation, EBITDA might not be a bad approximation for our monthly cash outflows, and our cash runway on a net basis will therefore be the cash that we've got a million divided by the monthly cash outflow, and that will tell us that we can survive for 59 months on the current trajectory where we are spending or losing 20,000 every month just from running our operations. From this, we can now calculate our ending cash balance. The ending cash balance is gonna be the opening balance, plus any cash inflows that we have, minus any cash outflows that we have on this net cash burn basis. So we'll have an outflow of 20,000 during the course of this year. Don't forget that the tax expense is not cash inflow. It's an accounting tax gain, a negative expense, effectively reducing the loss in the income statement, but it's not actually a cash flow for month two. We can then take the opening balance to be the closing for last period and everything else that we should be able to copy across from the right.

What this shows us is that our cash position has gone down, our expenses are pretty consistent, and as a result, we'll see a slight worsening in that runway. On a net basis. Cash balance is down, losses are up, and as a result, the net cash runway looks worse.

If we copy this all the way out to the end of the first year where we go that series a cash inflow, we can see what this cash injection is doing for us and why we might need it. So if we get to the end of November, we can see that we burnt through $250,000 through the course of the year. We still have two years left. But on a very, if we assume this is a very optimistic model, then maybe having just two years left might be a course of a concern. And also, we might want to make a big heavy push into actually developing the revenues of this product. So at this point, hopefully we're gonna be able to do a series A capital raise. This is gonna take place at the end of December, the end of the year. So it doesn't have any impact on the December figures except for the year end number. So that year end number, we can see this massive increase in the cash balance that we then have. From here, we can then copy to the right to get the big $20 million cash inflow hitting our cash balance. This will have a massive gain in terms of our cash runway because we've got a whole bunch of cash now, but we're also starting to spend it so we can see that our gross cash burners jumped substantially as well as our operating costs going up. Our net cash burners also jumped substantially as we incur much greater losses because of this push to increase our sales and marketing team. But because we got so much more cash, we also have a much better picture in terms of the net cash runway at this point.

Okay. Let's just scroll this forward for the next two years to see where this seed a investment money takes us. If we go to the end of our forecast model, this gets us to a position where, okay, well, we're spending a whole load of money on these sales and marketing team, and it's generating us loads of revenue. That's great. But unfortunately, by the time we get to 18 months, just less than two years later, September of year three, we're already below one year, or by the time we get to October, at least below one year's worth of net cash runway left. So without additional financing, we're already in a position under two years after we've raised that seed A capital financing where we either need additional new financing or where we need to think about cutting our expenses and reigning in that sales and marketing team.