Foreward : Assume the beta release had been executed with lean a startup model and had generated impressive traction within a single city launch.
In preparation for investment proposals for a web application opportunity, our team has drafted: a development road map, talent acquisition plan, and also a breakdown of all projected expenses for the first 18 months of the project.
 Is 18 months too long of a runway?
Here are the projected expenses (per year) we calculated:
 Do we just calculate total expenses over 18 months and raise that as our Series AA?
 How in-depth do angels want to know in detail how their investment is being spent?
I think you are too heavy on your engineering staff, and too lite on your Sales & Marketing expense. Without customers you are dead in the water.
How do you attract & retain the Power Users in each city? If they are key to your sales and customer development, how are you accounting for their expense in your development plan (i.e.- whether you are throwing them a party, giving them some sort of referral fee or override for everyone who they influence to sign up in their city, etc.), there will be some sort of expense associated with that.
Also, I don't think you are doing enough to account for your fund raising activities - that's the CEO's job (which, BTW, CEO stands for "Cash Extraction Officer"; don't forget it). $2,000 is probably not going to be sufficient. If you think you'll need a 6 month time frame to raise funds, you should be planning for and allowing expenses for 12 - 18 months. The markets have been very tight for the last 3 years, and while there are some signs that they might be loosing up and their have been some high-profile deals recently (LinkedIn), the environment is not going to change very quickly. Without a more robust IPO market, people either can't put in new funds, or are very skittish about doing so.
Looking at your line items, I'd characterize your company as "technology development oriented" vs. "business oriented"; nothing wrong with that, but you need to show how you are going to ramp you Sales & Marketing activities in order to drive revenue. I like to see companies "fund themselves" as soon as possible. Funding from cash flow is the best and cheapest money you will ever get - and it has the added benefit of preserving your equity/control positions.
Things I would cut & re-purpose include: * Furnished Office Space - do you need a full time, dedicated space? Can you sub-lease space from someone at a lower rate, and only be there part-time? Can you "look a little harder" for a better deal. Commercial space is taking a beating, and they are very, very willing to make deals right now; it's a GREAT time to negotiate on space)
Instead of going for $500k - $600K, I'd instead go for $1.5M - $3M and show how you'll get to more revenue faster. Spending money is only one part of the equation; generating revenue is the other (and BIGGER) part of the answer - build for that.
You're probably not going to get a software patent for $12,000, let alone having some left over for employee agreements. I spent $15,000 on a patent the last time I did it, and that was with me writing the specification by myself. It can go much higher.
As others have commented, I personally wouldn't get a patent unless your business model is licensing intellectual property.
Also, if you're in the US I doubt you'll get health insurance for $700/month.
I am sure that there are many others that can discuss the details of patents, software expenses, time to launch. I would like to simply address the Sales/Marketing expenses associated with the 18 month budget.
These are my assumptions:
If I was pert of the investor group -- and was only looking at the budget, not the plan (which unforuttely is often a good assumption) these would be my thought:
Where is customer acquisition? As important as the production and support of the product is the attraction and retention of customers is even more important at this stage of business development. After deployment of the beta one of the most important -- if not the most important is bringing in customers. The experience of the customers and the sales process is what should be directing the development. Meeting the needs of these customrs to ensure rentation, renews, and referrals.
Yet, over 80% of my dollars are arguably being spent on continued development of the product rather then securing customers to pay for it -- and pay for the return on my investment. Throwing two bodies -- one in marketing/sales and one in customer service does not seem sufficient to me. What I don't want is a great fantastic working application -- and no customers.
Show me a line item for marketing and sales that reflects the importance of this goal/outcome and milstone. When I look at the detail of that line item I expect to see:
Obviously the details of the sales/marketing portion of the business plan may explain why the sales goals can be met with the investment of one $35K/year person and that retention rates will be maintain with one $35K/year customer relations person. But if I was the investor or part of the investor group this would be one of the critical areas that I would focus on.
Your salaries seem low. Where are you located?
Hiring great devs is hard. You may not need to, but I would PLAN on having to pay 50-100% more in salary for your key devs.
EDIT: Just saw this article. It is very relevant:
"It's a Good Time To Be A Developer " (CNET)
Will it really take 18 months to build this? Seems long unless there is a lot of deep engineering (and based on your salary estimations I dont get that is your intent). As an angel, I'd rather see you have an 18 month plan but be focused on the first 9-12 months (e.g. The seed money would be for 9-12 months then we go to next round).
Lastly, it will take you 3-6 months to get fully staffed. Your burndown will be less early on as a result.