Company ABC

Jane Smith, Owner555-555-555

janesmith@nothing.com

Confidentiality Agreement

The undersigned reader acknowledges that the information provided by _______________ in this business plan is confidential; therefore, reader agrees not to disclose it without the express written permission of _______________.

It is acknowledged by reader that information to be furnished in this business plan is in all respects confidential in nature, other than information which is in the public domain through other means and that any disclosure or use of same by reader, may cause serious harm or damage to _______________.

Upon request, this document is to be immediately returned to _______________.

___________________ Signature

___________________Name (typed or printed)

___________________Date

This is a business plan. It does not imply an offering of securities.

1.0 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1 Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.2 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.3 Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

2.0 Company Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.1 Company Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.2 Start-up Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

3.0 Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

4.0 Market Analysis Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54.1 Market Segmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54.2 Target Market Segment Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64.3 Industry Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74.4 Situation Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

4.4.1 Market Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84.4.1.1 Market Needs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84.4.1.2 Market Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84.4.1.3 Market Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

4.4.2 Suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104.4.3 Marketing Mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104.4.4 Marketing Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114.4.5 Contingency Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

5.0 Strategy and Implementation Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125.1 SWOT Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125.2 Competitive Edge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135.3 Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135.4 Sales Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

5.4.1 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

6.0 Management Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166.1 Personnel Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

7.0 Financial Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187.1 Start-up Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187.2 Important Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197.3 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197.4 Projected Profit and Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217.5 Projected Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247.6 Projected Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 267.7 Business Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Table of Contents

1.0 Executive Summary

Company ABC is a year-round specialty retail franchise, which will be formed in September 2007 as a Proprietorship. Company ABC will, upon commencement of operations, sell a wide range of top of the line skin care products and cosmetics. The business will be stationed inside of Northlake Mall.

This location will be strong key point for the business's success. Northlake Mall is located in Charlotte, North Carolina at the intersection of I-77 and Reames Road, approximately 10 miles north of downtown Charlotte. Located in the heart of the southeast, Charlotte lies within the southern Piedmont of North Carolina along the state's border with South Carolina. Charlotte is the largest and most accessible city between Washington, D.C. and Dallas, Texas. Charlotte's culturally enriched tapestry is a distinction that beckons visitors to return to the city year after year. Moreover, Charlotte has grown into the second largest financial capital in the country and continues to build on its reputation as a world-class city through arts, science and historical attractions drawing nearly 2.9 million people in attendance annually. Northlake Mall is the dominant retail destination for the burgeoning, affluent communities in the northern Charlotte metropolitan area. Anchored by Dillard's, Macy's, Belk, Dick's Sporting Goods and AMC 14-screen cinema megaplex. An indoor/outdoor food court and the state's first Bravo Italian Kitchen strengthen Northlake's position as the market's best shopping, dining, entertainment and lifestyle destination. No comparable super regional mall opportunity is available to the residents and visitors of the dynamic north Charlotte market.

Company ABC

Page 1

1.1 Objectives

Company ABC is dedicated to excellence. Our objective is to satisfy our customers' skin care needs in a cost effective way and provide them with the education and information on how to use the products correctly in order to get and maintain consistency with their skin. Our goal is to build customers for a lifetime by offering them great products that they simply cannot live without.

The long-term goal of Company ABC is within the next four or five years of operations is to expand to multiple mall locations within the State of North Carolina. The final goal is to become the kiosk leader of Corporate Company ABC in the Southern district and exceed in the company's distribution and sales operations.

1.2 Mission

• To provide products and services that enhance and improve our clients' overall skin health and to provide customers with knowledge on how to develop and establish a good daily skin care regime in order to maintain beautiful, healthy and glowing skin.

At Company ABC, we demand that our sales associates have a high degree of integrity in all sales relationships. We believe in offering the best products available in our industry, at the best possible prices, while providing the best service possible. We are dedicated to providing consistent high customer satisfaction by rendering excellent service, quality products, and furnishing an enjoyable atmosphere at an acceptable price/value relationship. Company ABC will be a place where customers can find answers to their skin care needs whether they are faced with dry, oily, sensitive, and normal or combination skin. Our products will address our customers skin care and beauty concerns. Company ABC will offer the finest products with a complete skin care line, cosmetics, promotional handbags, fragrances and body oils. In addition to providing our customers with well-known products, we will also perform makeovers and brow shaping services. Our wide range of products will improve the way our customers look and empower the way they feel.

1.3 Keys to Success

Company ABC's keys to success are vital as they are the points that will spell out the difference between success and failure. They are:

• Location: This will be a major key to success. The kiosk will be located inside of the Northlake Mall in Charlotte, North Carolina. This mall is located at the intersection of I-77 and Reames Road, approximately 10 miles north of downtown Charlotte. Northlake Mall as a location for Company ABC will create a large flow of potential customers.

• Desire: The owner of Company ABC has a strong desire to assist people to become as beautiful as possible. She has a love for make-up and great people skills.

Company ABC

Page 2

2.0 Company Summary

Corporate Company ABC provides a unique franchise opportunity offering a turn-key system with low capital required for investment. Corporate Company ABC has been offering entrepreneurs franchise opportunities since the year 2000. To date the company has over fifty successful kiosks owners nationally, some even have more than one kiosk and some are earning a six-figure income with just one kiosk. New locations are opening up on a regular basis. Ms. Smith has attended the mandatory four-day initial training held at the company's headquarters in Chantilly, Virginia (near Washington, D.C.) at an actual operating specialty retailer. Ms. Smith was taught how to successfully run a specialty retailing business. She received training on: product knowledge and personal selling; hiring, training, and scheduling staff; merchandising, and; inventory and operational management.

The president of Corporate Company ABC Specialty Retail Division, Sharon Boone, indicated that Ms. Smith has the personality, selling skills, stamina, tenacity and business acumen that's needed to operate this type of business. Company ABC will sell its products and services to potential buyers. Shoppers spend nearly $10 billion each year on retail products sold from carts and kiosks in malls, subway stations and upscale resorts, according to Specialty Retail Report, the industry's magazine. Although small in size, retail merchandising units (RMU) and kiosks are popular for many reasons, including high profit margins and low startup costs.

2.1 Company Ownership

The legal structure will be established as a Proprietorship in the State of North Carolina. The anticipated opening date is September 3, 2007.

2.2 Start-up Summary

The table below provides details of the start-up costs for Company ABC. The majority of start-up will be expenses, totaling $24,600. These expenses for Company ABC include fixtures & equipment, decorating & furnishing, deposits & public utilities, professional fees, licenses & permits, promotional advertising, consulting & software, rent & deposit, insurance and operating supplies. The company's current assets are worth $8,000 at start-up and include $1,000 of cash on hand and $7,000 worth of inventory. The total start-up costs are $32,600.

Company ABC

Page 3

Table: Start-up

Start-up

Requirements

Start-up ExpensesFixtures & Equipment $5,000Decorating & Furnishing $350Deposits & Public Utilities $250Professional Fees $3,000Licenses & Permits $300Promotional Advertising $5,000Consulting & Software $2,000Rent & Deposit $3,500Insurance $1,600Operating Supplies $600Other $3,000Total Start-up Expenses $24,600

Start-up AssetsCash Required $1,000Start-up Inventory $7,000Other Current Assets $0Long-term Assets $0Total Assets $8,000

Total Requirements $32,600

Company ABC

Page 4

3.0 Products

Company ABC's skin care treatment products are designed for customers with normal, dry, oily and combination skin types. We also have products for customers who are experiencing skin conditions, such as, sensitive, mature, acne prone and aging skin. Our product line consists of cleansers, toners, moisturizers, exfoliators, masks, eye cream, fade creams and eye gels, etc.

The cosmetics product line consist of concealers, creme to powder and liquid foundations, loose powder, pressed powder, face palettes, bronzing powders, blush, brow gel, eye liners, mascara, eye shadows, brow powder, eye lashes, lip contour pencils, moisturizing lipsticks, lip polish, lip gloss and lip shimmers.

Specialty products consist of the enlighten skin perfecting system, wrinkle minimizers, clean and even skin tone creams, anti-aging cremes, complexion enhancers and eye lifting firming gel.

Treatments for the body are: skin correction body polish treatment, face and body spritz, body buffers, body butters, body lotions, healing balm, body souffle, makeup remover and had spa treatments.

Ladies fragrances line consists of Patti LaBelle's Girlfriend and Signature, Ashanti, Essence of Iman, Adriessence, Interlude and Sunset Boulevard. Some of these fragrances come with matching hand and body lotion, bath and shower gel, dusting powder and body spray. In addition, we offer U cologne for men. Company ABC also carries a wide selection of body oils for both men and women.

4.0 Market Analysis Summary

Company ABC's market has been divided into three sections. Females who are ages 25 to 45 and make up approximately 18% of the total population of Charlotte, females that are 46 years old and older make up 20% of the population and males/others, with males being 49% of the population and others are 62% of the population.

4.1 Market Segmentation

Company ABC will focus on three different types of customers:

1. Females 25 to 45 Years Old: This will be the largest group of customers, accounting for nearly 70% of the total amount of sales for the company. This is a large group because many of these women will be in employed somewhere in the workforce. No matter where a woman works, she always wants to look her best.

2. Females 46 to 70 Years Old: This segment makes up about 20% of the sales for Company ABC. These women tend to already be set on a certain skin care brand or line, thus, convincing them to change could be a struggle. This is why this segment is significantly less.

Company ABC

Page 5

3. Males and Others: The remaining 10% of sales will be derived from males and from females of other ages. Company ABC offers more than cosmetics, thus men may want to purchase those other items, like skin care.

The following graph and chart illustrates the population demographics of Charlotte, North Carolina. Numbers are projected in thousands.

Table: Market Analysis

Market Analysis2007 2008 2009 2010 2011

Potential Customers Growth CAGRFemales 25 to 45 Years Old

2% 35 36 37 38 39 2.74%

Females 46 to 70 Years Old

5% 10 11 12 13 14 8.78%

Males and Others 6% 101 107 113 120 127 5.89%Total 5.37% 146 154 162 171 180 5.37%

4.2 Target Market Segment Strategy

The target market for Company ABC will be females who are 25 to 45 years old. This market segment will be achievable for Company ABC to successfully market to because of the level of quality of product provided. Females in this segment tend to have an understanding of their skin and its needs, thus when Company ABC can offer them a product exactly for their skin's needs, it will prompt a sale. These females are also more likely to develop brand loyalty after using the product.

Company ABC

Page 6

4.3 Industry Analysis

Company ABC falls under the North American Industry Classification System (NAICS) code 44612: Cosmetics, Beauty Supplies and Perfume Stores and the Standard Industrial Classification (SIC) code 5999: Beauty Supply Stores. This industry comprises management establishments primarily engaged in retailing cosmetics, perfumes, toiletries, and personal grooming products. These include specialty cosmetics stores, perfume/fragrance stores and beauty supply stores. With stores located throughout the country, products are sold to household with individual stores/chains targeting different marketing segments. Products are sourced from upstream wholesalers and/or cosmetics and toiletries manufacturers.

As of 2005, the industry revenue was $8.2 million, the industry employment was 99,150 units and the number of enterprises was 6,450 units.

The major players are the top 5-10 companies in the industry based on total revenue. Companies must account for at least 5% of industry revenue to qualify.

• Intimate Brands, Inc• The Estee Lauder Companies, Inc• Ulta Salon, Cosmetics & Fragrance, Inc• E Com Ventures, Inc• The Body Shop International, Plc

The industry "Cosmetics, Beauty supplies and Perfume Stores" is in a mature phase of its life cycle, which means that the industry is generally growing at the same rate as the economy. Capital/labor intensity is low and the uptake of new technology is slow. The industry's globalization level is low and the trend is faster than the economy.

The industry has a low level of exports, which means exports generate less than 5% of the industry's revenue.

The industry has a low level of imports, which mean imports generate less than 5% of the industry's domestic demand. Exports are steady and imports are steady. The level of regulation is light and steady and government assistance is low and steady.

*Information derived from Americas Small Business Development Center Network

4.4 Situation Analysis

Company ABC is in its first year of business as a start-up company. Company ABC recognizes the fact that a comprehensive, strategic marketing plan is required to ensure profitability and success. Company ABC offers a wide range of beauty products and a few services. The market need is for a one-stop, convenient, beauty product store with employees that are skilled and reasonably priced products, serving all beauty needs.

Company ABC

Page 7

4.4.1 Market Summary

Northlake mall serves a trade area of 540,118 people with average household income exceeding $70,000. With a population of 1.6 million, Charlotte is the largest metropolitan area in the Carolina's. Nearly 500 newcomers move to Charlotte every week as people from all over the country seek the area's attractive climate, economy and quality of life. Northlake Mall's primary trade area, including the nearby affluent communities around Lake Norman is experiencing the fastest growth, with 100,000 more people expected to move in over the next decade. Site Selection magazine ranked Charlotte first in foreign business growth, with more than 375 foreign-owned firms doing business in the metropolitan area. Metropolitan Charlotte is the nation's second-largest banking center, ranking just behind New York. Two of the top U.S. banks are headquartered in Charlotte, Wachovia Corporation with 17,000 employees and Bank of America with 12,700 employees. Six other Fortune 500 corporations call Charlotte their home Duke Energy, Sonic Automotive, B.F. Goodrich, Nucor, SPX and Family Dollar - and 286 Fortune 500 companies have operations in Charlotte.

4.4.1.1 Market Needs

Company ABC's product will be filling the need for its customers to look their best. Beauty is a popular issue in America today that is continually pushed into the faces of people every day. Company ABC will be fulfilling the need and desire for people to look beautiful and to have their skin taken care of. Company ABC will be there to guide those who need guidance and provide for those who already know what they need.

4.4.1.2 Market Trends

The potential market trends are illustrated in the graph to follow. The population is represented in millions. Company ABC will benefit directly from the growth of Charlotte as it will bring in more customers. A trend that will benefit Company ABC also is the consistent pursue of the perfect beauty product. Until a consumer finds a brand that they adore and become loyal, they will be changing and trying out different brands. The most popular characteristics of a good brand to become loyal with include price, quality, variety, and availability. The Corporate Company ABC product line does a great job of representing all of these characteristics.

Company ABC

Page 8

4.4.1.3 Market Growth

The following chart illustrates the potential population growth of the market for Company ABC.

Company ABC

Page 9

4.4.2 Suppliers

Corporate Company ABC, which is headquartered in Chantilly, Virginia will supply all merchandise and supplies for Company ABC's kiosk. Ms. Smith is permitted to sell any and all of the Corporate Company ABC brands as a Specialty Retailer and may select products from Iman, Corporate Company ABC, Patti LaBelle, Flori Roberts, Gale Hayman of Beverly Hills, Interface and Adrien Arpel so long as Corporate Company ABC supplies such products and Ms. Smith agrees to purchase products only from Corporate Company ABC not less than $2,000 monthly. Northlake Mall will furnish the Retail Merchandising Unit along with one cart stool. See appendix for exact dimensions of merchandising unit. Company ABC will also need to purchase two additional stools to accommodate makeup and brow services.

4.4.3 Marketing Mix

Promotion

Other than paid advertising Company ABC plans to promote its business utilizing business cards, letterhead, brochures and flyers. Moreover, they will use the web for product information/tips and online ordering. Also, they will use e-mail marketing and they will also give their customers the option of telephoning or faxing their orders in.

Company ABC will promote its business by utilizing a replicated web page (www.colormedirect.com/LillianSmith) through Corporate Company ABC Internet System for Independent Success (ISIS Website) to promote its products and services. This web page will be an extension of the business. It will facilitate finding new clients and building relationships with existing clients.

E-mail marketing has become a favored method of reaching consumers among U.S. businesses. In a survey by the Direct Marketing Association, two-thirds of companies say their sales increased in 2001 because of e-mail marketing, and sixty-three percent credit e-mail as the most effective way to retain customers. This is not so surprising given that e-mail is the most popular activity among Internet users. This popularity, coupled with e-mail's cost-effectiveness as a marketing vehicle, make it an important customer acquisition and retention tool.

Pricing

Company ABC gift sets and holiday specialty packages will be priced accordingly.

1. Corporate Company ABC agrees to sell products to Ms. Smith at "Favored Nation" pricing, which is: (1) for basic products, up to a sixty percent discount from retail; (2) for promotional products, at a fifty percent discount, and; (3) for testers, supplies, and promotional and marketing materials, at Corporate Company ABC's cost.

2. Ms. Smith must purchase, on average, at least $2,000 wholesale (net) per month in product to continue to receive "Favored Nation" pricing. If owner's average purchases fall below $2,000 net per month, Corporate Company ABC will lower owner's inventory

Company ABC

Page 10

purchase discount to forty percent from retail on basic product until owner's average purchases increase to at least $2,000 net per month on a consistent basis.

3. With the approval of Corporate Company ABC management, the owner is authorized a one-time restocking return, with no handling fee, in order to balance inventories. For this return, Ms. Smith is responsible for the expense of shipping to Corporate Company ABC's warehouse. This one-time, no handling fee return must be accomplished within sixty days of Ms. Smith opening the kiosk. Thereafter, all inventory returns must be authorized by Corporate Company ABC and there is a restocking and handling charge of fifteen percent of the net whole sale value of the return. The owner is responsible for shipping the merchandise back to Corporate Company ABC in saleable condition. If merchandise is not returned in saleable condition, the inventory will be returned to Ms. Smith and no return credit given.

4. In the event of Corporate Company ABC mis-shipping merchandise or sending Ms. Smith damaged merchandise, the merchandise can be returned to Corporate Company ABC, after Corporate Company ABC's approval, with no handling charge to Ms. Smith and Corporate Company ABC will pay for shipping expenses back to its warehouse facilities.

Marketing

At the beginning, Company ABC will have to select a good "media mix" to enhance the business as the reputation of the kiosk has not yet been established. The medium that Company ABC will select in which to place its commercials will be the radio. The local newspapers (weekend edition) and flyers will be the other advertising media. Company ABC potential customers must see a newspaper ad or hear a radio spot, to reinforce the company's message at the outset of business. The impact of these potential customers will be far greater if Company ABC uses the "media mix," rather than just one of these media's.

4.4.4 Marketing Organization

Currently, there is no marketing team. The owner, Ms. Smith will be responsible for all marketing related responsibilities and duties.

Company ABC

Page 11

4.4.5 Contingency Planning

If sales do not perform as expected, then Company ABC will need to alter its marketing plan and materials. The owner will try to complete all marketing tasks on her own, but Corporate Company ABC has a marketing division to assist owners. In the worst case scenario, Company ABC will have Corporate Company ABC assist with the marketing.

5.0 Strategy and Implementation Summary

Company ABC's goal is to provide a quality product in a great location that will have many passer-bys. The product name will definitely be the strongest point as Corporate Company ABC is already known by customers, and this will allow customers to purchase products in person and have it in their hands immediately. Another strong key in the strategy and implementation plan is the support provided by the franchiser. Company ABC will not have to develop much of its own marketing materials, because Corporate Company ABC will already have those created. The following subsections go into greater detail of the strategy and implementation plan.

5.1 SWOT Analysis

The SWOT analysis provides us with an opportunity to examine the internal strengths and weaknesses Company ABC must address. It also allows us to examine the opportunities presented to Company ABC as well as potential threats.

Company ABC has a valuable inventory of strengths that will help it succeed. These strengths include:

• Continual customer courtesy• Ongoing marketing support from franchiser• Selling reputable name brand products• Establishing the first Corporate Company ABC kiosk at Northlake Mall

Strengths are valuable, but it is also important to realize the weaknesses Company ABC must address. These weaknesses include:

• Locating an adequate amount of start-up funding• Uncertainty how personnel will handle interface between various cultures• Uncertainty if traffic flow will occur at the level indicated by market research study

Company ABC's strengths will help it capitalize on emerging opportunities. These opportunities include, but are not limited to,

• Effective training provided by Corporate Company ABC• The constant need for women to take care of their skin

Company ABC

Page 12

Threats that Company ABC should be aware of include:

• The potential of similar mall kiosks having a greater market share• Large department stores selling other brands of skin care products

5.2 Competitive Edge

• Convenient location• The Corporate Company ABC product line is a well known brand name• Products are reasonably priced

5.3 Marketing Strategy

The marketing strategy is a simple one: satisfied clients are Company ABC's best marketing tool. When a client leaves our kiosk with a new look or the tools to create beautiful and healthy looking skin, he or she is broadcasting the Company ABC name and quality to the public. Many of our customers will be referrals from existing clients. Company ABC will run specials throughout the month. We will also ask clients for referrals, and reward them with discounted or free services depending on the number of clients they bring. Company ABC also offers discounts to the new clients who have been referred.

Company ABC will use the following forms of advertisement:

• RADIO: This is the most universal of all media. The average American has three radios per household and most cars are also equipped with one. The air times will be selected carefully because the target audience is very important to the organization. The cost for radio advertising is relatively low and is usually within the reach of many small businesses. The major drawback of radio advertising is the absolute need for repetition. Company ABC will use V101.9 WBAV FM Charlotte's Best Variety of Hits & Oldies to advertise its grand opening and holiday specials.

• NEWSPAPERS: Newspapers appeal to a diverse range of age groups and income levels, however, since this is the main publication distributed in the area, it will assist Company ABC to expand its market in later years. Newspapers, like radio, can offer advertisers its flexibility; the amount of advertising is not limited, as in radio, by the constraints of times. Advertisers are not limited to just one format, they can choose a full page, a two page spread, or even buy space by the column-inch. On the other hand, newspapers have a very short life span, and like the radio, need a high degree of repetition to be effective. The cost is relatively low and there is reader loyalty. However, because the life span is very short there will be a need for repeat ads. Company ABC will be able to take advantage of the discounts being offered for "run-ons" (i.e., discounts for ads running Wednesday/Sunday combo). Company ABC will advertise its grand opening and holiday specials in the Charlotte Observer Newspaper. See advertisement rates in the appendix.

• FLYERS: Company ABC will circulate flyers announcing its grand opening throughout the surrounding communities near Northlake Mall. As an ongoing marketing tool, flyers

Company ABC

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will be distributed to daily mall visitors. FedEx Kinko's will provide printing services for flyers.

• BUSINESS CARDS AND STATIONERY: Company ABC will design full-color business cards and stationery to help promote its new business venture. Its true image is everything! It is essential to make astonishing impressions when presenting a business card, sending a package or a note. Company ABC will utilize ABC Printing Company for all of its business cards and stationery printing needs at a low cost.

Eventually, the most important marketing tool will be by word-of-mouth. Company ABC will inevitably concentrate on this tool. As the company's reputation grows, Company ABC will move away from all other modes of advertising and the advertising cost will be lowered.

5.4 Sales Strategy

Sales will take place either at the mall kiosk, over the telephone, via fax, or by ordering online. Sales done at the kiosk will be finalized by a sales associate.

5.4.1 Sales Forecast

The following provides details for the projected sales for Company ABC. Product groups have been created for the sales forecast, thus, sales are forecasted by values, not units. Generally, there is a 60% profit margin on all sales. Details for sales projections of the first year can be found in the appendix.

Table: Sales Forecast

Sales ForecastFY 2008 FY 2009 FY 2010

SalesCleansers $45,180 $47,439 $52,182Toners $42,670 $44,803 $49,284Moisturizers $54,890 $57,634 $63,397Cosmetics $41,055 $43,107 $47,418Fragrances $79,200 $83,160 $91,476Total Sales $262,995 $276,143 $303,757

Direct Cost of Sales FY 2008 FY 2009 FY 2010Cleansers $18,072 $18,975 $20,873Toners $17,068 $17,921 $19,713Moisturizers $21,956 $23,053 $25,358Cosmetics $16,422 $17,242 $18,967Fragrances $31,680 $33,264 $36,590Subtotal Direct Cost of Sales $105,198 $110,455 $121,501

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Company ABC

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6.0 Management Summary

Ms. Smith, the owner, possess the necessary training for operating Company ABC. She attended the mandatory four-day initial training held at the company's headquarters in Chantilly, Virginia at an actual operating specialty retailer. Ms. Smith was taught how to successfully run a specialty retailing business. She received training on:

1. Product knowledge and personal selling2. Hiring, training and scheduling staff3. Merchandising 4. Inventory and operational management

Ms. Smith also has the necessary personality for selling and operating Company ABC. She has selling skills, stamina, tenacity and business acumen.

6.1 Personnel Plan

Company ABC will be organized and managed in a creative and innovative fashion to generate very high levels of customer satisfaction, and to create a working climate conducive to a high degree of personal development and economic satisfaction for employees. The leadership team will consist of Ms. Smith, as the owner. Besides the owner, Company ABC recognizes that additional staff is required to properly support the kiosk operation. The staff requirements will include personnel in the following areas:

• One full-time experienced sales manager• Three qualified part-time sales associates• One part-time licensed esthetician• Secret/mystery shoppers will be hired from time to time

Company ABC will go out and recruit competent staff at established government and private employment agencies, and through referral from friends and other business firms. Advertising in local daily publication can also be effective to building a superior workforce through careful hiring and continuous training and development, closely meeting the needs of each customer, by differentiating our products and by offering superior service.

References will have to be checked carefully, and extended interviews will be conducted to weed out the undesirable. Job descriptions will be completed for each position and a copy will be given to each employee along with an employee handbook. The training process will begin with orientation on industry education. There will be a monthly review of each employee's progress and productivity. These reviews will be discussed with the employees so that they will know where they stand with the company. Recognition and rewards will be given to employees who consistently provide exceptional customer service and sales goals. Additionally Company ABC will be a uniformed kiosk operation. All staff will be required to wear the same color of clothing until uniformed smocks become available. They will also be required to wear name tags and (feet protectors) walk fit orthotics. Having uniformed staff will make it easier for potential customers to feel more comfortable coming forward with questions and/or concerns.

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Fringe benefits, health and hospital insurance, profit-sharing plans, pensions, and paid personal leave/vacations will not be a part of Company ABC personnel program. All successful business owners recognize that fair wages, desirable working conditions, and concern for employees are important in building a dedicated, efficient staff. Such staff will advance Company ABC goals, and by word-of-mouth, create an image of this company as a good place to work. This will definitely encourage employee contributions and cooperation and create a true spirit of accomplishment. Employee morale and team spirit are important to the success of Company ABC.

The following is a brief description of the duties and responsibilities of the personnel of Company ABC.

Owner

• Overseeing the operations of the business• Developing policies and procedures• Maintaining an inventory and re-ordering when necessary• Creating schedules for employees• Hiring and training all employees• Maintaining up to date financials for the business

Sales Manager

• Implementing a customer care program• Reviewing and handling product or service concerns• Overseeing and supervising sales• Responsible for overseeing sales associates

Sales Associate

• Ensuring that the customer receives outstanding service• Creating a friendly environment• Possessing a knowledge about the products• Completing product training• Maintaining awareness of promotions and advertisements

Esthetician

• Preparing customers for esthetic services• Maintaining cleanliness of equipment and supplies• Professionally grooming and shaping eye brows• Promoting the skin care product line• Creating a more beautiful "you" in the client

Mystery Shopper

• Observing trends and loop holes in employee behavior• Checking for efficiency, honesty, sales techniques and misbehavior in the employees

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Because the business is still in the growing stages, the staff will only consist of the owner/sales manager, sales associate, and a mystery shopper.

Table: Personnel

Personnel PlanFY 2008 FY 2009 FY 2010

Owner/Sales Manager $36,000 $36,000 $36,000Sales Associate $15,360 $16,128 $16,934Mystery Shopper $720 $720 $720Total People 3 3 3

Total Payroll $52,080 $52,848 $53,654

7.0 Financial Plan

The financial plan is based on projections and estimations for Company ABC.

7.1 Start-up Funding

The following table provides details for the funding of the start-up operation costs of Company ABC.

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Table: Start-up Funding

Start-up FundingStart-up Expenses to Fund $24,600Start-up Assets to Fund $8,000Total Funding Required $32,600

Assets Non-cash Assets from Start-up $7,000Cash Requirements from Start-up $1,000Additional Cash Raised $3,400Cash Balance on Starting Date $4,400Total Assets $11,400

Liabilities and Capital

LiabilitiesCurrent Borrowing $35,000Long-term Liabilities $0Accounts Payable (Outstanding Bills) $0Other Current Liabilities (interest-free) $0Total Liabilities $35,000

Capital

Planned InvestmentOwner $1,000Investor $0Additional Investment Requirement $0Total Planned Investment $1,000

Loss at Start-up (Start-up Expenses) ($24,600)Total Capital ($23,600)

Total Capital and Liabilities $11,400

Total Funding $36,000

7.2 Important Assumptions

All financials are projection and estimates, which are based on the following assumptions:

• Northlake Mall will continue to remain open and attract a high volume of shoppers• The economy remains at a stable position, allow people to purchase luxury items, such as

cosmetics

7.3 Break-even Analysis

Company ABC

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Table: Break-even Analysis

Break-even Analysis

Monthly Revenue Break-even $14,502

Assumptions:Average Percent Variable Cost 40%Estimated Monthly Fixed Cost $8,701

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7.4 Projected Profit and Loss

The projected profit and loss for the first year overall is well. There will be a few months where the business struggles to create enough sales to create a profit, but the first year will end with a profit of at least $30,000.

Table: Profit and Loss

Pro Forma Profit and LossFY 2008 FY 2009 FY 2010

Sales $262,995 $276,143 $303,757Direct Costs of Goods $105,198 $110,455 $121,501Other Costs of Goods $0 $0 $0

------------ ------------ ------------Cost of Goods Sold $105,198 $110,455 $121,501

Gross Margin $157,797 $165,688 $182,256Gross Margin % 60.00% 60.00% 60.00%

ExpensesPayroll $52,080 $52,848 $53,654Marketing/Promotion $10,000 $8,000 $6,000Depreciation $0 $0 $0Rent $26,250 $26,250 $26,250Utilities $2,500 $2,500 $2,500Insurance $1,600 $1,600 $1,600Payroll Taxes $7,812 $7,927 $8,048Conferences/Workshops $1,500 $1,600 $1,800Maintenance & Repairs $600 $600 $700Operating Supplies $2,075 $3,075 $4,075Other $0 $0 $0

------------ ------------ ------------Total Operating Expenses $104,417 $104,400 $104,627

Profit Before Interest and Taxes $53,380 $61,288 $77,629EBITDA $53,380 $61,288 $77,629 Interest Expense $3,273 $2,870 $2,450 Taxes Incurred $15,032 $17,525 $22,554

Net Profit $35,075 $40,892 $52,625Net Profit/Sales 13.34% 14.81% 17.32%

Company ABC

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Company ABC

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Company ABC

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7.5 Projected Cash Flow

Because Company ABC will begin operations with a cash balance of $1,000 at start-up, the cash balance will not fall below zero, although the net cash flow may be lower in certain months. The business is expected to end the first year with a cash balance just below $27,000.

Table: Cash Flow

Pro Forma Cash FlowFY 2008 FY 2009 FY 2010

Cash Received

Cash from OperationsCash Sales $262,995 $276,143 $303,757Subtotal Cash from Operations $262,995 $276,143 $303,757

Additional Cash ReceivedSales Tax, VAT, HST/GST Received

$0 $0 $0

New Current Borrowing $0 $0 $0New Other Liabilities (interest-free) $0 $0 $0New Long-term Liabilities $0 $0 $0Sales of Other Current Assets $0 $0 $0Sales of Long-term Assets $0 $0 $0New Investment Received $0 $0 $0Subtotal Cash Received $262,995 $276,143 $303,757

Expenditures FY 2008 FY 2009 FY 2010

Expenditures from OperationsCash Spending $52,080 $52,848 $53,654Bill Payments $184,220 $172,291 $198,185Subtotal Spent on Operations $236,300 $225,139 $251,839

Additional Cash SpentSales Tax, VAT, HST/GST Paid Out $0 $0 $0Principal Repayment of Current Borrowing

$4,200 $4,200 $4,200

Other Liabilities Principal Repayment

$0 $0 $0

Long-term Liabilities Principal Repayment

$0 $0 $0

Purchase Other Current Assets $0 $0 $0Purchase Long-term Assets $0 $0 $0Dividends $0 $0 $0Subtotal Cash Spent $240,500 $229,339 $256,039

Net Cash Flow $22,495 $46,804 $47,718Cash Balance $26,895 $73,699 $121,417

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Company ABC

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7.6 Projected Balance Sheet

The projected balance sheets provides details of the business's assets and liabilities. Company ABC will create a positive net worth by December. As the sales increase in the future, the business's assets will outweigh the liabilities creating a higher net worth. Details of the first year can be found in the appendix.

Table: Balance Sheet

Pro Forma Balance SheetFY 2008 FY 2009 FY 2010

Assets

Current AssetsCash $26,895 $73,699 $121,417Inventory $19,372 $20,340 $22,374Other Current Assets $0 $0 $0Total Current Assets $46,267 $94,039 $143,791

Long-term AssetsLong-term Assets $0 $0 $0Accumulated Depreciation $0 $0 $0Total Long-term Assets $0 $0 $0Total Assets $46,267 $94,039 $143,791

Liabilities and Capital FY 2008 FY 2009 FY 2010

Current LiabilitiesAccounts Payable $3,992 $15,072 $16,398Current Borrowing $30,800 $26,600 $22,400Other Current Liabilities $0 $0 $0Subtotal Current Liabilities $34,792 $41,672 $38,798

Long-term Liabilities $0 $0 $0Total Liabilities $34,792 $41,672 $38,798

Paid-in Capital $1,000 $1,000 $1,000Retained Earnings ($24,600) $10,475 $51,368Earnings $35,075 $40,892 $52,625Total Capital $11,475 $52,368 $104,993Total Liabilities and Capital $46,267 $94,039 $143,791

Net Worth $11,475 $52,368 $104,993

7.7 Business Ratios

Company ABC's ratios can be seen in the table below. North American Industry Classification System (NAICS) code 44612: Cosmetics, Beauty Supplies and Perfume Stores is shown for comparison.

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Table: Ratios

Ratio AnalysisFY 2008 FY 2009 FY 2010 Industry Profile

Sales Growth 0.00% 5.00% 10.00% 6.95%

Percent of Total AssetsInventory 41.87% 21.63% 15.56% 27.62%Other Current Assets 0.00% 0.00% 0.00% 27.37%Total Current Assets 100.00% 100.00% 100.00% 82.59%Long-term Assets 0.00% 0.00% 0.00% 17.41%Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 75.20% 44.31% 26.98% 38.63%Long-term Liabilities 0.00% 0.00% 0.00% 15.67%Total Liabilities 75.20% 44.31% 26.98% 54.30%Net Worth 24.80% 55.69% 73.02% 45.70%

Percent of SalesSales 100.00% 100.00% 100.00% 100.00%Gross Margin 60.00% 60.00% 60.00% 28.84%Selling, General & Administrative Expenses

46.66% 45.19% 42.68% 12.61%

Advertising Expenses 3.80% 2.90% 1.98% 0.34%Profit Before Interest and Taxes 20.30% 22.19% 25.56% 0.69%

Main RatiosCurrent 1.33 2.26 3.71 1.94Quick 0.77 1.77 3.13 1.17Total Debt to Total Assets 75.20% 44.31% 26.98% 63.68%Pre-tax Return on Net Worth 436.66% 111.55% 71.60% 2.44%Pre-tax Return on Assets 108.30% 62.12% 52.28% 6.72%

Additional Ratios FY 2008 FY 2009 FY 2010Net Profit Margin 13.34% 14.81% 17.32% n.aReturn on Equity 305.66% 78.09% 50.12% n.a

Activity RatiosInventory Turnover 3.75 5.56 5.69 n.aAccounts Payable Turnover 47.15 12.17 12.17 n.aPayment Days 27 19 29 n.aTotal Asset Turnover 5.68 2.94 2.11 n.a

Debt RatiosDebt to Net Worth 3.03 0.80 0.37 n.aCurrent Liab. to Liab. 1.00 1.00 1.00 n.a

Liquidity RatiosNet Working Capital $11,475 $52,368 $104,993 n.aInterest Coverage 16.31 21.35 31.69 n.a

Additional RatiosAssets to Sales 0.18 0.34 0.47 n.aCurrent Debt/Total Assets 75% 44% 27% n.aAcid Test 0.77 1.77 3.13 n.aSales/Net Worth 22.92 5.27 2.89 n.aDividend Payout 0.00 0.00 0.00 n.a

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Table: Sales Forecast

Sales ForecastSep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08

SalesCleansers 0% $2,700 $3,600 $9,360 $9,360 $1,710 $2,700 $1,800 $1,800 $6,930 $1,710 $1,710 $1,800Toners 0% $2,550 $3,400 $8,840 $8,840 $1,615 $2,550 $1,700 $1,700 $6,545 $1,615 $1,615 $1,700Moisturizers 0% $3,300 $4,400 $11,440 $11,440 $1,980 $3,300 $2,200 $2,200 $8,470 $1,980 $1,980 $2,200Cosmetics 0% $2,760 $3,450 $7,475 $7,475 $1,725 $1,840 $1,955 $2,300 $6,325 $1,725 $1,725 $2,300Fragrances 0% $5,400 $6,750 $14,625 $14,625 $3,150 $3,375 $3,600 $4,500 $12,375 $3,150 $3,150 $4,500Total Sales $16,710 $21,600 $51,740 $51,740 $10,180 $13,765 $11,255 $12,500 $40,645 $10,180 $10,180 $12,500

Direct Cost of Sales Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08Cleansers $1,080 $1,440 $3,744 $3,744 $684 $1,080 $720 $720 $2,772 $684 $684 $720Toners $1,020 $1,360 $3,536 $3,536 $646 $1,020 $680 $680 $2,618 $646 $646 $680Moisturizers $1,320 $1,760 $4,576 $4,576 $792 $1,320 $880 $880 $3,388 $792 $792 $880Cosmetics $1,104 $1,380 $2,990 $2,990 $690 $736 $782 $920 $2,530 $690 $690 $920Fragrances $2,160 $2,700 $5,850 $5,850 $1,260 $1,350 $1,440 $1,800 $4,950 $1,260 $1,260 $1,800Subtotal Direct Cost of Sales $6,684 $8,640 $20,696 $20,696 $4,072 $5,506 $4,502 $5,000 $16,258 $4,072 $4,072 $5,000

Appendix

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Table: Personnel

Personnel PlanSep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08

Owner/Sales Manager 0% $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000Sales Associate 0% $1,280 $1,280 $1,280 $1,280 $1,280 $1,280 $1,280 $1,280 $1,280 $1,280 $1,280 $1,280Mystery Shopper 0% $60 $60 $60 $60 $60 $60 $60 $60 $60 $60 $60 $60Total People 3 3 3 3 3 3 3 3 3 3 3 3

Total Payroll $4,340 $4,340 $4,340 $4,340 $4,340 $4,340 $4,340 $4,340 $4,340 $4,340 $4,340 $4,340

Appendix

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Table: Profit and Loss

Pro Forma Profit and LossSep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08

Sales $16,710 $21,600 $51,740 $51,740 $10,180 $13,765 $11,255 $12,500 $40,645 $10,180 $10,180 $12,500Direct Costs of Goods $6,684 $8,640 $20,696 $20,696 $4,072 $5,506 $4,502 $5,000 $16,258 $4,072 $4,072 $5,000Other Costs of Goods $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------Cost of Goods Sold $6,684 $8,640 $20,696 $20,696 $4,072 $5,506 $4,502 $5,000 $16,258 $4,072 $4,072 $5,000

Gross Margin $10,026 $12,960 $31,044 $31,044 $6,108 $8,259 $6,753 $7,500 $24,387 $6,108 $6,108 $7,500Gross Margin % 60.00% 60.00% 60.00% 60.00% 60.00% 60.00% 60.00% 60.00% 60.00% 60.00% 60.00% 60.00%

ExpensesPayroll $4,340 $4,340 $4,340 $4,340 $4,340 $4,340 $4,340 $4,340 $4,340 $4,340 $4,340 $4,340Marketing/Promotion $833 $833 $833 $833 $833 $833 $833 $833 $833 $833 $833 $833Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Rent $2,188 $2,188 $2,188 $2,188 $2,188 $2,188 $2,188 $2,188 $2,188 $2,188 $2,188 $2,188Utilities $208 $208 $208 $208 $208 $208 $208 $208 $208 $208 $208 $208Insurance $133 $133 $133 $133 $133 $133 $133 $133 $133 $133 $133 $133Payroll Taxes 15% $651 $651 $651 $651 $651 $651 $651 $651 $651 $651 $651 $651Conferences/Workshops $125 $125 $125 $125 $125 $125 $125 $125 $125 $125 $125 $125Maintenance & Repairs $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50Operating Supplies $600 $100 $250 $250 $100 $100 $100 $100 $175 $100 $100 $100Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------Total Operating Expenses $9,129 $8,629 $8,779 $8,779 $8,629 $8,629 $8,629 $8,629 $8,704 $8,629 $8,629 $8,629

Profit Before Interest and Taxes $898 $4,332 $22,266 $22,266 ($2,521) ($370) ($1,876) ($1,129) $15,684 ($2,521) ($2,521) ($1,129)EBITDA $898 $4,332 $22,266 $22,266 ($2,521) ($370) ($1,876) ($1,129) $15,684 ($2,521) ($2,521) ($1,129) Interest Expense $289 $286 $283 $280 $277 $274 $271 $268 $265 $263 $260 $257 Taxes Incurred $183 $1,214 $6,595 $6,596 ($839) ($193) ($644) ($419) $4,625 ($835) ($834) ($416)

Net Profit $426 $2,832 $15,388 $15,390 ($1,958) ($451) ($1,503) ($978) $10,793 ($1,948) ($1,946) ($970)Net Profit/Sales 2.55% 13.11% 29.74% 29.74% -19.24% -3.27% -13.35% -7.82% 26.55% -19.14% -19.12% -7.76%

Appendix

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Table: Cash Flow

Pro Forma Cash FlowSep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08

Cash Received

Cash from OperationsCash Sales $16,710 $21,600 $51,740 $51,740 $10,180 $13,765 $11,255 $12,500 $40,645 $10,180 $10,180 $12,500Subtotal Cash from Operations $16,710 $21,600 $51,740 $51,740 $10,180 $13,765 $11,255 $12,500 $40,645 $10,180 $10,180 $12,500

Additional Cash ReceivedSales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Subtotal Cash Received $16,710 $21,600 $51,740 $51,740 $10,180 $13,765 $11,255 $12,500 $40,645 $10,180 $10,180 $12,500

Expenditures Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08

Expenditures from OperationsCash Spending $4,340 $4,340 $4,340 $4,340 $4,340 $4,340 $4,340 $4,340 $4,340 $4,340 $4,340 $4,340Bill Payments $610 $18,313 $19,600 $55,320 $31,067 $3,748 $4,354 $3,923 $5,190 $34,650 $3,716 $3,728Subtotal Spent on Operations $4,950 $22,653 $23,940 $59,660 $35,407 $8,088 $8,694 $8,263 $9,530 $38,990 $8,056 $8,068

Additional Cash SpentSales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Principal Repayment of Current Borrowing $350 $350 $350 $350 $350 $350 $350 $350 $350 $350 $350 $350Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Long-term Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Subtotal Cash Spent $5,300 $23,003 $24,290 $60,010 $35,757 $8,438 $9,044 $8,613 $9,880 $39,340 $8,406 $8,418

Net Cash Flow $11,410 ($1,403) $27,450 ($8,270) ($25,577) $5,327 $2,211 $3,887 $30,765 ($29,160) $1,774 $4,082Cash Balance $15,810 $14,407 $41,857 $33,587 $8,010 $13,337 $15,547 $19,434 $50,199 $21,039 $22,813 $26,895

Appendix

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Table: Balance Sheet

Pro Forma Balance SheetSep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08

Assets Starting Balances

Current AssetsCash $4,400 $15,810 $14,407 $41,857 $33,587 $8,010 $13,337 $15,547 $19,434 $50,199 $21,039 $22,813 $26,895Inventory $7,000 $13,368 $17,280 $41,392 $41,392 $37,320 $31,814 $27,312 $22,312 $32,516 $28,444 $24,372 $19,372Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Current Assets $11,400 $29,178 $31,687 $83,249 $74,979 $45,330 $45,151 $42,859 $41,746 $82,715 $49,483 $47,185 $46,267

Long-term AssetsLong-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Accumulated Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Assets $11,400 $29,178 $31,687 $83,249 $74,979 $45,330 $45,151 $42,859 $41,746 $82,715 $49,483 $47,185 $46,267

Liabilities and Capital Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08

Current LiabilitiesAccounts Payable $0 $17,701 $17,729 $54,253 $30,943 $3,602 $4,224 $3,785 $4,000 $34,526 $3,592 $3,590 $3,992Current Borrowing $35,000 $34,650 $34,300 $33,950 $33,600 $33,250 $32,900 $32,550 $32,200 $31,850 $31,500 $31,150 $30,800Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Subtotal Current Liabilities $35,000 $52,351 $52,029 $88,203 $64,543 $36,852 $37,124 $36,335 $36,200 $66,376 $35,092 $34,740 $34,792

Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Liabilities $35,000 $52,351 $52,029 $88,203 $64,543 $36,852 $37,124 $36,335 $36,200 $66,376 $35,092 $34,740 $34,792

Paid-in Capital $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000Retained Earnings ($24,600) ($24,600) ($24,600) ($24,600) ($24,600) ($24,600) ($24,600) ($24,600) ($24,600) ($24,600) ($24,600) ($24,600) ($24,600)Earnings $0 $426 $3,258 $18,646 $34,036 $32,077 $31,627 $30,124 $29,146 $39,939 $37,991 $36,045 $35,075Total Capital ($23,600) ($23,174) ($20,342) ($4,954) $10,436 $8,477 $8,027 $6,524 $5,546 $16,339 $14,391 $12,445 $11,475Total Liabilities and Capital $11,400 $29,178 $31,687 $83,249 $74,979 $45,330 $45,151 $42,859 $41,746 $82,715 $49,483 $47,185 $46,267

Net Worth ($23,600) ($23,174) ($20,342) ($4,954) $10,436 $8,477 $8,027 $6,524 $5,546 $16,339 $14,391 $12,445 $11,475

Appendix

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