domino comp tech

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Table of Contents

Page 1

1.0 Executive Summary.............................................................................................................................11.1 Objectives ...................................................................................................................................21.2 Mission ........................................................................................................................................31.3 About This Plan ..........................................................................................................................31.4 Keys to Success ........................................................................................................................3

Chart: Highlights ......................................................................................................................42.0 Company Summary.............................................................................................................................4

2.1 Company History........................................................................................................................4Table: Past Performance .......................................................................................................6Chart: Past Performance .......................................................................................................7

2.2 Company Ownership .................................................................................................................72.3 Company Locations and Facilities ..........................................................................................7

3.0 Products and Services........................................................................................................................83.1 Product and Service Description .............................................................................................83.2 Competitive Comparison ..........................................................................................................93.3 Sales Literature ..........................................................................................................................93.4 Future Products and Services ..................................................................................................93.5 Technology ...............................................................................................................................123.6 Fulfillment ..................................................................................................................................13

4.0 Market Analysis Summary................................................................................................................144.1 Market Segmentation ..............................................................................................................14

Table: Market Analysis .........................................................................................................15Chart: Market Analysis (Pie)................................................................................................15

4.2 Target Market Segment Strategy...........................................................................................154.2.1 Market Growth .............................................................................................................164.2.2 Market Trends .............................................................................................................164.2.3 Market Needs ..............................................................................................................17

4.3 Service Business Analysis .....................................................................................................184.3.1 Distribution Patterns ...................................................................................................184.3.2 Competition and Buying Patterns .............................................................................194.3.3 Main Competitors .......................................................................................................194.3.4 Industry Participants....................................................................................................20

5.0 Strategy and Implementation Summary ..........................................................................................205.1 Strategy Pyramid .....................................................................................................................215.2 Competitive Edge....................................................................................................................215.3 Marketing Strategy ..................................................................................................................22

5.3.1 Promotion Strategy .....................................................................................................225.3.2 Distribution Strategy ...................................................................................................235.3.3 Marketing Programs ...................................................................................................235.3.4 Pricing Strategy...........................................................................................................235.3.5 Positioning Statement ................................................................................................24

5.4 Sales Strategy..........................................................................................................................245.4.1 Sales Forecast ............................................................................................................24

Table: Sales Forecast.................................................................................................25Chart: Sales Monthly ...................................................................................................26Chart: Sales by Year ...................................................................................................27

5.4.2 Sales Programs ..........................................................................................................27

Table of Contents

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5.5 Strategic Alliances...................................................................................................................275.6 Milestones ................................................................................................................................28

Table: Milestones..................................................................................................................28Chart: Milestones ..................................................................................................................28

6.0 Management Summary ....................................................................................................................296.1 Organizational Structure..........................................................................................................296.2 Management Team .................................................................................................................296.3 Management Team Gaps .......................................................................................................306.4 Personnel Plan .........................................................................................................................30

Table: Personnel ...................................................................................................................307.0 Financial Plan ....................................................................................................................................30

7.1 Important Assumptions............................................................................................................31Table: General Assumptions ...............................................................................................31

7.2 Break-even Analysis................................................................................................................31Chart: Break-even Analysis .................................................................................................32Table: Break-even Analysis .................................................................................................32

7.3 Projected Profit and Loss .......................................................................................................32Chart: Profit Monthly .............................................................................................................33Chart: Profit Yearly ................................................................................................................33Chart: Gross Margin Monthly ...............................................................................................34Chart: Gross Margin Yearly..................................................................................................34Table: Profit and Loss ..........................................................................................................35

7.4 Projected Cash Flow ...............................................................................................................35Chart: Cash ...........................................................................................................................36Table: Cash Flow ..................................................................................................................37

7.5 Projected Balance Sheet ........................................................................................................37Table: Balance Sheet ...........................................................................................................38

7.6 Business Ratios .......................................................................................................................38Table: Ratios .........................................................................................................................39

7.7 Long-term Plan.........................................................................................................................40Table: Sales Forecast ...............................................................................................................................1Table: Personnel ........................................................................................................................................3Table: General Assumptions ....................................................................................................................4Table: Profit and Loss ...............................................................................................................................5Table: Cash Flow .......................................................................................................................................6Table: Balance Sheet ................................................................................................................................7

Domino Comptech Holdings

Page 1

1.0 Executive Summary

Domino Comptech Holdings (DCH) was formed as a diversified financial holding company. Thepurpose of the company is to facilitate the acquisition of existing companies and provideadditional capital to continue and increase the volume and the profitability of the acquiredcompanies.

The overall business model created by establishing and funding this holding companyeffectively creates a complete business solution platform of unlimited marketing opportunities.This platform combines certain natural relationship marketing synergies and enables the combinedcompanies to provide a wide variety of complete technology solutions at cost savings to theclient.

Acquire an Internet Service Provider:

Domino Comptech acquired 100% of ZumoNet, an Internet Service Provider (ISP) companyfrom Lynx Caracal last year in exchange for 1,500,000 shares of common stock of DCH. Thecompany intends to enter into a marketing plan to expand ZumoNet's customer base and driveadditional recurring revenue. ZumoNet presently yields a revenue stream of approximately$20,000 annually and requires a record keeping and billing expense of approximately $3,600annually. Expanding the marketing base of the company will yield increased profitsproportionately as the revenue stream increases and the expense factor is held at minimallevels through consolidation of the record keeping merging into the overall operations of theholding company.

Acquire a Technology company which is a White Box computer manufacturer and alsoprovides networking services and support:

Domino Comptech has entered into an agreement to acquire 100% of the common stock ofKettle-Moraine Computers, Incorporated (KMCI) from its founder Lynx Caracal in exchange for20,000,000 shares of common stock of DCH and a loan of $5,000,000 bearing interest at theapplicable federal rate for the first year and adjusted to the prime rate plus 1% with a minimumof 9% thereafter. The prime rate shall be as published in USA Today. This agreement allowsDomino Comptech to immediately acquire and control 100% of KMCI including the revenue streamgenerated by daily operations. Mr. Caracal will receive guaranteed payments of at least$16,000 per month with the remaining interest payments due at December 31 each year until thestock loan is paid in full from proceeds raised from the first $16,000,000 in stock sales in thisbusiness plan. Mr. Caracal agreed to extend the loan period to five years from the signature dateof the agreement to allow DCH five years to achieve its goals of capitalization and repaymentof the loan. All the stock of KMCI will be held as collateral on this loan in the event of default.

KMCI provides technology hardware and servicing to its customer base, primarily in Gulfstate andPlainsstate. The business model of KMCI is directed toward becoming a Midwestern (and thennational) full service Technology provider. The company has developed remarkable marketinginroads into state government procurement contracts and is presently moving into the FederalGovernment arena to facilitate expanded marketing opportunities of its manufactured computerproducts and servicing capabilities. Recently the company implemented a marketing strategythrough it's S.E.A.T. management program. Client's will have the opportunity to purchase all theirtechnology required hardware, software packages, and needed service protection all for onemonthly fee. This concept of purchasing technology will allow the client to have access to thelatest available equivalent while utilizing cost saving software packages that are tailored for thatclient's data system needs.


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Acquire a Software company which has a first class management software program:

DCH has identified a software company which developed and markets a strategic softwareprogram designed to help businesses better manage and increase profitability. Initialdiscussions with management of the company indicate the company can be purchased forapproximately $87,000,000. The software company produces an EBITD of approximately$1,000,000 annually, has total assets of approximately $8,000,000 and equity of approximately$4,300,000.

The combination of the software company, ZumoNet and KMCI will capitalize on a marketingsynergy brought about by the ability to cross market hardware and software products to thepresent client base of the companies and provide a total solution to address technology andmanagement needs of business. It is anticipated the elimination of duplication between thecompanies will generate savings of approximately $500,000 annually.

Acquire a Technology Services company which specializes in data storage, telephonyand security:

KMCI presently offers a variety of service, wiring, and network solutions. However, astechnology is rapidly evolving there is a need to expand into data storage, telephony, andsecurity issues. Government, banks, insurance companies and many other industries needthese additional services as they worry about storage and security issues for large amounts ofdata. There is a need to develop a tailored secure system to protect each of their datasystems from fraud, terrorism and/or natural disaster on a client-by-client basis.

Lynx Caracal, president of Domino Comptech Holdings has identified service providers whichspecialize in these additional services and begun acquisition discussions with one suchcompany. This acquisition would further leverage the existing total solutions provided bythe concatenation of a software company, KMCI, and ZumoNet. The end result would be amarketing force which could provide any entity with a total technology, management, andsecurity solution. This synergy does not generally exist in the marketplace today. Thecapability of large corporate clients to afford and purchase these packages provides stability ofincome desired for DCH and insures the company of income diversification which will carry thecompany through uncontrollable downturn in the economy.

To accomplish this strategy, DCH has already completed first round funding of one milliondollars ($1,000,000), and the board of directors is currently considering extending Phase IIfunding in the form of a Regulation 506 D private placement offering in the amount of 22 milliondollars.

1.1 Objectives

1. Acquire a Technology company which is a White Box computer manufacturer, and whichalso provides networking services and support.

2. Acquire a Software company which has a first class management software program.

3. Acquire a Technology Services company which specializes in data storage, telephony,and security.


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1.2 Mission

Domino Comptech Holdings is a holding company. The purpose of the company is to facilitate theacquisition of existing companies and provide additional capital to increase the volume and theprofitability of the acquired companies. This holding company creates a complete businesssolution platform of unlimited marketing opportunities. This platform combines certain marketingsynergies and enables the combined companies to provide a wide variety of complete technologysolutions at cost savings to the client.

1.3 About This Plan

Form Follows Function

This is the business plan for the holding company, Domino Comptech Holdings. However, for somekey points we show the numbers that DCH expects from the KMCI division, its main revenue-generator. Specifically:

· The Sales Forecast table indicates the actual and projected sales that DCH expectsfrom the KMCI division.

· The Personnel Plan table shows only the principals in the holding company. Otherpersonnel costs, for the divisions, appear as a summary item only, in the projectedProfit and Loss.

· The Profit and Loss table includes only very summarized projections of the divisions,and only the sales and costs of sales of the main (KMCI) division.

· The Cash Flow table presents a summarized and consolidated general cash flow thatincludes the assumed cash flow of the divisions, in aggregate and summary form.

· Many discussions focus on the holding company operations only. For example, thepersonnel plan discussion text presents the holding company only. Detailed personnel ofthe separate divisions are not included in this plan.

1.4 Keys to Success

The keys to success in this business are:

· Maintain and increase product quality by keeping the total product failure rate ofKettle-Moraine Computers, Inc., at or below the current level of five percent.

· Successfully market the S.E.A.T. management program.· Successfully acquire an existing software company with positive cash flow, existing

assets (building, land, and equipment), of at least three million dollars, and with anexisting top notch management team.


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2.0 Company Summary

Domino Comptech Holdings, (DCH) was formed under the laws of the State of Gulfstate, as adiversified financial holding company. The purpose of Domino Comptech Holdings is to facilitatethe acquisition of existing companies and provide additional capital to increase the volume andthe profitability of the acquired companies.

2.1 Company History

Domino Comptech Holdings, a financial holding company, was incorporated as a Gulfstatecorporation in 2002. DCH has purchased existing companies that are revenue producing and havea history of strong revenue production, existing buildings, equipment, vehicles, employees anda minimum of 10 years of profitable business.

Kettle-Moraine Computers, Inc.

Last year, DCH purchased Kettle-Moraine Computers, Inc., (KMCI) a Gulfstate corporation thatwas started in 1990 by Lynx Caracal. Under his direction, the company has developed into afull-service provider of computer hardware and services. Aside from assembling and selling atrademarked brand of PCs, servers and laptops, KMCI is an authorized reseller or service providerfor numerous leaders in the IT industry, such as Compaq, Dell, Gateway, Okidata, Enterasys,World Wide Technology, Structure Wise, Lexmark, Hewlett-Packard, Novell, Panasonic, Cisco,IBM and Nortel Networks.

In order to provide a full range of quality services, KMCI employs skilled and certifiedprofessionals that hold certifications including A+, Microsoft Certified Professional (MCP), ASE,Microsoft Certified System Engineer (MCSE), Novell CNA and CNE, ACT Compaq, Cisco, CCNA,


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IBM, Lexmark, Hewlett-Packard, Network + and Networking Essentials. Theseprofessionals have successfully fulfilled statewide hardware and maintenance contracts. As apart of those contracts they currently provide on-site service for computers in every county inthe state of Gulfstate. In addition, they have contracts in parts of other states, such asPlainsstate and Hillystate.

ZumoNet

Also in Q4 last year, Domino Comptech purchased ZumoNet, an Internet Service Provider(ISP). ZumoNet was wholly owned by Lynx Caracal, and was merged via a stock swap. DCHreceived 100% of the shares, both issued and unissued, of the ISP, in exchange for 1,500,000shares of DCH common stock. In addition to the customer base of the ISP, DCH receives anannual revenue stream of $20,000 annually. The total expenses of the ISP is only $3,600showing a total annual profit of $16,400. ZumoNet service fees are small in comparison to AOL,Sprint, and Bell; however, ZumoNet only offers a 56K dial-up connection for a monthly fee oftwenty dollars for unlimited access. The price for the service is on a sliding scale based on thetype of billing; for example, Bi-Annual unlimited access is one hundred dollars, and if thecustomer pays annually the fee drops to a total of one hundred dollars. In addition, there is aone time sign-up fee of five dollars. DCH is currently investigating the most cost effective wayto increase the ISP's service to include DSL, T-1, and T-4; however, with the announcementof Sprint shutting down its ISP service, we are carefully looking at the ISP business model tomake sure that the new services we offer are competitive and profitable. For this reason, wedo not expect to increase our service offering within the next year.

Past Performance

Our past performance indicates the overall decline that effected the technology sector overthe past three years. In the beginning of Year 1, we have seen a significant up-turn in thenumber of orders placed through our sales department. The management believes that thisincrease is directly related to:

1. Companies and other entities, especially the state of Gulfstate, which previously had theirbudgets frozen, are now purchasing new hardware and software.

2. The Governor of the state of Gulfstate has signed an executive order to enforce aGulfstate state law making it mandatory that all state offices purchase equipment andservices from companies which are based in Gulfstate. DCH maintains its corporateheadquarters and plant facilities in Central City, the capital of Gulfstate.

3. The implementation of the S.E.A.T.* Management program for all business, andeducational institutions.

4. The expansion of the S.E.A.T. Management program into the surrounding states.

*S.E.A.T. (Shrinking Expenses Advancing Technology) Management is a combined product/service offering whereby institutions can contract with us to outsource their full IT needs(hardware, software, service, tech support, and product replacement) on a three yearrenewable contract. This is discussed fully under Products and Services, below.


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Table: Past Performance

Past Performance

FY 2001 FY 2002 FY 2003

Sales $10,392,811 $8,090,275 $2,557,055

Gross Margin $4,019,873 $2,814,145 $977,387

Gross Margin % 38.68% 34.78% 38.22%

Operating Expenses $3,975,828 $3,622,506 $1,288,385

Collection Period (days) 33 41 102

Inventory Turnover 8.76 8.19 3.01

Balance Sheet

FY 2001 FY 2002 FY 2003

Current Assets

Cash $24,045 $13,239 $7,709

Accounts Receivable $940,059 $857,610 $572,109

Inventory $727,207 $561,143 $487,587

Other Current Assets $385,915 $190,731 $193,429

Total Current Assets $2,077,226 $1,622,723 $1,260,834

Long-term Assets

Long-term Assets $1,396,982 $1,464,032 $1,479,498

Accumulated Depreciation $952,728 $1,087,047 $166,002

Total Long-term Assets $444,254 $376,985 $1,313,496

Total Assets $2,521,480 $1,999,708 $2,574,330

Current Liabil ities

Accounts Payable $663,740 $509,665 $166,002

Current Borrowing $0 $0 $370,126

Other Current Liabil ities (interest free) $246,210 $637,873 $335,462

Total Current Liabil ities $909,950 $1,147,538 $871,590

Long-term Liabil ities $2,221,869 $2,091,938 $1,973,421

Total Liabil ities $3,131,819 $3,239,476 $2,845,011

Paid-in Capital $676,193 $676,193 $676,193

Retained Earnings ($1,286,532) ($1,915,961) ($946,874)

Earnings $0 $0 $0

Total Capital ($610,339) ($1,239,768) ($270,681)

Total Capital and Liabil ities $2,521,480 $1,999,708 $2,574,330

Other Inputs

Payment Days 38 35 38

Sales on Credit $10,392,811 $8,090,275 $2,557,055

Receivables Turnover 11.06 9.43 4.47


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2.2 Company Ownership

The company is a privately-held C corporation owned in majority by its founders, officers, anddirectors. There are thirteen shareholders with a total of 33,258,080 common shares. Thereare four major shareholders:

Lynx Caracal 19,733,040 shares

Kit Puma 9,000,000 shares

Neve Palenque 1,500,000 shares

Minerva Astarte 1,204,800 shares

2.3 Company Locations and Facilities

DCH is currently located in Central City, Gulfstate, and housed within the corporateadministrative offices of Kettle-Moraine Computers. While we are in the same location asKMCI, we do maintain totally separate offices, with our own entrance and individual offices forKit Puma and Tulum Margay, and we share a conference room with KMCI.

KMCI currently leases approximately 1,338 square feet of office space, divided into threeseparate locations within the same property. The KMCI retail space is located at street level,with good signage, directly across from the Capital Mall (a shopping mall with anchor tenants ofJC Penny, Sears, and Dillards). In addition, immediately across the street are a large bank anda supermarket. From these three locations, the Kettle-Moraine Computers retail center isclearly visible. The KMCI retail center isn't completely dependent on foot traffic for their sales,since KMCI does have a sales force.


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The balance of the KMCI leased space is in two second-story office spaces. The administrativeoffice, sales office, conference room, and the two offices used by Domino Comptech Holdings arelocated upstairs in suites on the third floor. KMCI also rents a third floor suite, which is LynxCaracal's private office.

KMCI also owns a 100,000 square foot building that houses the computer production facility withplenty of additional land for future explanation.

3.0 Products and Services

DCH provides the management, marketing, and financial expertise to assist those companies thatwe acquire in continuing to maintain a strong and steady growth pattern.

Kettle-Moraine is especially focused on providing network systems and services to small, medium,and large businesses. The systems include both PC-based LAN systems and minicomputerserver-based systems. Our services include design and installation of network systems,servers, and printers in addition to full training, and support. KMCI's production departmentassembles the branded lines of servers, workstations, and laptops where each phase of theproduction process is governed by an ISO 9001:2000 Quality Management System. Thiscertification is also registered through British Standards Institution, Inc.

3.1 Product and Service Description

The hardware provided to KMCI's customers includes servers, workstations, laptops, and networkhardware. KMCI's production department assembles the branded lines of servers, workstations,and laptops where each phase of the production process is governed by an ISO 9001:2000Quality Management System. This certification is registered through British Standards Institution,Inc. KMCI is also a charter member of the North American System Builders Association(NASBA). Lynx Caracal, President and CEO of KMCI, currently serves on NASBA's Board ofDirectors.

KMCI was the second company in North America to be ISO 9001:2000 certified to the neweststandard by the British Standards Institute, the largest of six ISO auditors worldwide.Certification to ISO Standards for procedures and policies ensures KMCI products and serviceswill be of consistently high quality, offering higher levels of assurance to KMCI customers. Thiscertification allows KMCI the unique ability to compete for state, federal and internationalcontracts as more companies require ISO certification in bid proposals.

KMCI's trained engineers provide a full range of services. They are matched with thecompany's experience in Local Area Networks (LAN), Wide Area Networks (WAN), and both singleand multiple server installations. Network engineers hold certifications including Novell, Microsoft,Sun Microsystems, Cisco, Unix and Citrix.

KMCI provides on-site and remote services through trained professionals for the company'sbranded product lines, as well as for IBM, Compaq, Lexmark, Hewlett-Packard, Dell, Gateway andothers. The infrastructure services offered by KMCI include data network wiring, telephonecabling, CATV wiring, fiber optic cable, and wireless connection.


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3.2 Competitive Comparison

Domino Comptech Holdings doesn't compete with any other companies in or around CentralCity, the State of Gulfstate, or in the neighboring states; however, KMCI is in directcompetition with several companies.

KMCI competes with IBM, Gateway, Dell, and Compaq and all original equipment manufacturers(OEMs). Recently Compaq, as well as many other OEM's, announced they will focus more oncomputer services rather than hardware sales. KMCI has already capitalized on this strategy andwill continue to place an emphasis on the company's services, which have a proven highermargin than product assembly.

KMCIs greatest advantages over its competition are:

· We sell, build, test, and ship directly from our own facilities.· We maintain a 5% or less failure rate. · We have designed and Implemented Shrinking Expenses Advancing Technology (S.E.A.

T.) Management

The S.E.A.T. Management program allows companies, institutions, schools, colleges, universities,and state government offices to purchase the technology (hardware, servers, printers, software,networks, on-site service, and help desk) as a line item expense (over a three year contract).When the contract terminates we remove the old technology, and replace it with brand newtechnology. The result is a guaranteed new sale every three years. Full disc losure and salesinformation are contained in the marketing section of the business plan.

3.3 Sales Literature

DCH is a holding company and as such doesn't use sales literature; however, the companies thatwe own do. Samples of those pieces are attached.

3.4 Future Products and Services

Benefits of Acquiring a Software Company

Domino Comptech Holdings is aware of several companies which provide integrated businesssoftware solutions. These software programs generally provide fundamental business processmanagement as well as expanded functions for multi-location product distribution, inventorymanagement, customer service contract management, field service operations, help desk andsales force automation.

This type of system is designed to improve business operational performance and provideknowledge in order to achieve profitable growth. Generally these companies have a strategicfocus on one industry, which makes their company dominant in their market. These companieshave a proven track record of a long-term loyal customer base, positive cash flow, internally-generated capital and a very positive bottom line.

DCH proposes to acquire a software company such as this and use KMCI's relationships and


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positions in the computer industry to enable the software company access to a vast new marketof computer dealers. In addition, DCH will introduce the concept of S.E.A.T. Management tothe new and existing software customers. This will allow them to forego the major up-frontcapital investment needed to update hardware and change software. In place of the traditionalup-front cash outlay, the business will pay a license fee per month for each terminal, which willinclude all hardware, network and software services.

There is a large potential market of small dealers who have, in the past, been unable to affordthe up-front capital expenditure required to purchase the product. By providing them a totalsolution which includes application software, hardware, and services, the newly merged companywill drive sales and profits to a previously unreachable customer base.

The first step in conducting the merger will be to consolidate back room services. Uponcompletion of this consolidation, other departments will undergo integration based on furtheranalysis. An effective integration of the companies is anticipated for completion within oneyear. The merger will result in the following outcomes:

· Creation of a business culture focused on fast growth.· Completion of the graphic user-interfacing project within six months. Movement of the

product to a SQL database platform.· Launch of the product into several other verticals (computer dealers and the medical

industry being the first targets).· Provision of true business consultation.· Acquisition of additional technical employees by relocating Programming and

Development to a major metropolitan area (if deemed necessary).· Increase deployment by delivering the software application via the ASP model* (defined

below) for low-end users and customers that want to outsource their entire IT services.

*Definition of ASP: Application System Providers enable the use of business applicationsthrough the Internet and other low-cost communications vehicles. ASPs offer organizations lowoverhead combined with cost-effective and timely use of strategic business solutions. Usingbrowsers or other thin c lient types of access, these customers — primarily small or mid-tierorganizations — subscribe to the ASP's applications. These applications include supply chainintegration, distribution and human resource management. Using the ASP model, the customeris not required to purchase the hardware, operating systems, databases, licenses, IT staff,and ongoing overhead associated with buying or building an application. A subscriptionapplication offers end-user organizations an option more affordable and efficient than buying andmaintaining a private network.

Benefits of Acquisitions of Storage, Telephony and Security company

The evolution of technology and services, combined with recent terrorist events, has createda new emphasis on storage, telephony and security. Because of the limited market sizewithin a small area, DCH felt it best to look for an acquisition located in a major metropolitanarea. We decided to incorporate these services through acquisition, rather than expansion ofexisting companies, because of the high level of training required for necessarytechnicians. Some of the various certifications needed in this area cost in excess of$100,000. Finding a company with multiple employees with the necessary certifications and anexisting client base allows us to leverage the revenue stream. A further explanation of thethree areas key to this acquisition follows:

StorageAnalysts predict storage area networks (SANs) will be deployed by 70% of all mid-to-largesized companies by 2002. As data grows enormously at a rate of 60% per year in normal


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businesses and up to 100% per year in e-businesses, SANs will help to ease data managementand the storage capacity needed to maintain it. The market for disk storage systems isforecast to rise about 16% a year to $42 billion by 2002, according to industry analysts.

Storage Devices and Systems:Fibre Channel is being provided as a standard disk interface. Industry leading RAID (RedundantArray of Independent Disks) manufacturers are shipping Fibre Channel systems. Soon, RAIDproviders will not be regarded as viable vendors unless they offer Fibre Channel.

Storage Area Network:

The network behind the servers linking one or more servers to one or more storage systems.Each storage system could be RAID, tape backup, tape library, CD-ROM library, or JBOD (Just aBunch of Disks). Fibre Channel networks are robust and resilient with these features:

· Shared storage among systems· Scalable network· High performance· Robust data integrity and reality· Fast data access and backup· Disaster Recovery

In a Fibre Channel network, legacy storage systems are interfaced using a Fibre Channel to SCSIbridge. IP is used for server to server and client/server communications. Storage networksoperate with both SCSI and networking (IP) protocols. Servers and workstations use the FibreChannel network for shared access to the same storage device or system. Legacy SCSI systemsare interfaced using a Fibre Channel to SCSI bridge. Fibre Channel products have defined anew standard of performance, delivering a sustained bandwidth of over 97 MB/second for largefile transfers and tens of thousands of I/Os per second for business-critical databaseapplications on a Gigabit link. This new capability for open systems storage is the reason FibreChannel is the connectivity standard for storage access.

Telephony"Computer telephony" describes the technology that enables voice and data to travel the samenetwork (LAN/WAN) and function in an integrated manner. In the past, all businessesmaintained two totally separate network infrastructure, one for voice and one for data. Eachinfrastructure had its own independent communications links and hardware. Each infrastructurehad its own separate set of applications for usage and management. As a result of the totalisolation of voice and date networks, infrastructure costs were high, administration costs werehigh (because separate teams of engineers were needed to manage each), flexibility was limited,and interoperability was non-existent.

A new technology emerged that began closing the gap between voice and data. The newtechnology was Voice Over IP (VoIP). With VoIP, businesses could begin to leverage theirexisting, and much less expensive, data infrastructure to handle voice traffic as well. Thisopened the door to cost savings through lowering infrastructure costs (reducing the number ofdedicated voice circuits) and lowering long distance costs between corporate sites (becausevoice calls could travel across pre-existing data links rather than the public switch phonenetwork).

Seeing the great efficiencies of converging voice and data (and video for that matter) ontoone IP-based network infrastructure, the demand for business applications has created awhole new industry. This hot new market is called IP Telephony (or computer telephony). IPTelephony has created the technological foundation for unified messaging (unifying e-mail,


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voice mail and faxes into a common inbox), interactive Web-based call centers, greatly simplifiedsystems management and more. This new market is still in the emerging phase, so many moreapplications will be forthcoming.

In fact, the business applications are limited only by our creativity! To quote a Cisco article, "thenumbers show that migrating to IP telephony is possible and profitable right now. According toa survey by Stamford, Conn. based Meta Group Inc., 26% of enterprises have already begunto move to integrated voice and data networks, and 42% plan to begin such a migration withinthe next two years. Two thousand Cisco Systems Inc. customers have already implementedsuch merged networks, ranging in size from several hundred phones to 25,000 phones."

SecuritySensitivity to security issues has risen dramatically with the propagation of the Internet as abusiness tool, new government regulations regarding privacy, and concern with terrorism. TheInternet has opened up the enterprise network to the world! But in reality, security has alwaysbeen a serious issue. The Internet has simply illuminated and intensified awareness of theissue. Security services must assess the impact of security policies (or the lack thereof),practices and technologies at three main levels of the infrastructure:

· Physical security refers to the physical safety of electronic data from unauthorizedphysical access. For example, can just anyone walk up to a workstation on thenetwork? Could someone literally grab a laptop off the desk and walk out with it, andthe sensitive corporate data that it contains? These are examples of physical securityissues.

· Systems security refers to the safety of server- or workstation-based user/application data to unauthorized access. For example, are there proper securityparameters around system user accounts to prevent unauthorized user access tosensitive material, such as payroll data? Are auditing tools in place to detectunauthorized access attempts? Are clearly defined security policies in place?

· Infrastructure security refers to the safety of application data, system data, userinformation and other network traffic from unauthorized access, monitoring orimpediment from outside entities. For example, does the organization utilize an optimizedfirewall? Are VLANs being utilized where it makes sense? What is the organization doing toprevent attacks from the outside that could overload routers or servers therebydenying access.

DCH will structure its future departments so as to facilitate collaboration in meeting ourcustomers' needs from all angles of technology use. This will allow KMCI to offer additionalservices to its customer base, and will allow the software company customer base to enjoythe benefits of the S.E.A.T. Management program.

3.5 Technology

From 2000 through 2002, the technology industries have taken a huge financial hit. The mostnoticeable change was that all companies, regardless of industry or size, simply stoppedpurchasing computer hardware and software in the same quantities as before. The companiesswitched their focus from replacement of antiquated equipment to upgrading that equipment (ifpossible). In addition, companies that had projected spending on hardware, software, andservers, immediately began revising their projections, and purchasing or upgrading fewer and


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fewer units. This change was felt across the industry.

In response to this downward trend, KMCI designed and implemented the S.E.A.T. Managementprogram, which changes the entire way that companies purchase and service hardware andsoftware. S.E.A.T Management encompasses the complete management of informationtechnology assets from hardware to software, on-site service to removal and updating of allequipment. In an age of outsourcing, KMCI proposes treating information technology productsand services the same as a utility such as electricity, water, or cable television. S.E.A.T.Management eliminates the need for large capital expenditures and reduces the need for grandfunding or new bond issues.

S.E.A.T Management provides:

· State-of-the-art information technology.· Installation of products and services selected from KMCI's program menu.· Resolution of problems in a prompt, professional manner.· One convenient monthly invoice for all products and services.· Removal of all hardware at the end of the 36 month contract period.· Following removal, a replacement of equipment and software with new items, according

to the customer's current information technology needs.

S.E.A.T. Management benefits the customer:

· The customer stays current with state-of-the-art technology and service.· Outsourcing:

° Eliminates technology maintenance tasks and reduces staffing requirements.° Eliminates responsibility for information technology hardware removal and disposal.° Eliminates the need for large up-front capital expenditures.° Reduces the need for grant funding or proposal of new bond issues.° Reduces the time and resources spent on costly bid processes.° Eliminates Microsoft licensing issues.° Offers accounting advantages in expense write-off versus depreciation of hardware.° Allows technology products and services to become part of the customer's recurring

monthly expense budget.° Offers a convenient single bill per month for information technology products and

services.

KMCI is currently signing up dealers and customers at a 50% close rate on the first call.

3.6 Fulfillment

DCH acquires businesses that produce, market, and service their own products. This eliminatesthe middleman, and allows us to keep our products priced competitively when compared to thecompetition.

KMCI owns a 100,000 square foot manufacturing facility (the plant), which is completely paidfor. In addition, KMCI builds every product to customers' specifications, and therefore, eliminatesthe need for hardware inventory (computer and servers) that are already built, and may ormay not sell. KMCI continues to deliver every order on time (on or before the promised deliverydate), while maintaining a 5% or lower failure rate on every product KMCI produces.

In order to hold costs down, we only order the specific supplies that we need to complete the


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orders that have been made and paid for. This eliminates the problem that our competitionhas, of having non-current technology (computer parts) sitting in a warehouse. The secret toour business is to provide the most current technology, combined with outstanding service oneverything that we build and sell, and make it easy for our customers to purchase from us. Inaddition, for those customers that require "brand names" we are a value added reseller (VAR)for Perpetual Systems, IBM, Compaq, Hewlett-Packard, Lexmark, and Cisco, to name a few.

Service and installation is a major part of our business, and also one of the most profitableones. KMCI has hardware, software, wiring, backbone infrastructure, maintenance, andconsulting capability. This eliminates the customers' frustration in dealing with multiple vendors.

4.0 Market Analysis Summary

Domino Comptech Holdings' computer division, Kettle-Moraine Computers, has focused oninstitutional clients, such as the government of the state of Gulfstate, law enforcement, andeducational institutions. With the implementation of the S.E.A.T. Management program, we arenow able to expand our target market to all state governments, law enforcement agencies(municipal, county, and federal), all educational institutions, and small, medium and largeprivate and public companies across the United States.

In our market analysis, the figures for target market size and growth rates come from:

1. The United States Census website2. The SBA business research website3. Individual state business censuses, retrieved from individual state websites4. The United States Business Census

4.1 Market Segmentation

The target markets Kettle-Moraine Computers has penetrated include education, lawenforcement, government, and small business. Domino Comptech plans to utilize KMCI's strongbrand recognition among the large state institutions to broaden national coverage. Productsand services are promoted through standard channels: print, radio, television, and direct mail; aswell as seminars, product fairs, industry conferences, etc.

KMCI's major advantages in the market include:

· KMCI is a value added reseller (VAR). KMCI's product line includes Perpetual Systems,IBM, Compaq, Hewlett-Packard, Lexmark, Cisco, and others. This broad range of productsallows KMCI to satisfy virtually any customers' hardware needs.

· KMCI has hardware, software, wiring, backbone infrastructure, maintenance, andconsulting capability. This eliminates the customers' feelings of frustration in dealingwith multiple vendors.

· KMCI has numerous Blue Chip contracts in place, providing name recognition andcredibility when bidding for contracts.

· KMCI has had evident success developing strong strategic relationships. Some of thecompany's key relationships include IBM, Microsoft, Intel, Cisco, World Wide Technology,Inc., Structure Wise, Inc., North American System Builders Association, Value AddedReseller Partners, and many others.


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KMCI uses internal and external sales representatives who are offered competitivecompensation packages. ISO approved marketing and sales procedures guarantee efficiencyand customer satisfaction throughout the purchase process.

Table: Market Analysis

Market Analysis

2003 2004 2005 2006 2007

Potential Customers Growth CAGR

Home Offices 15% 200,000 230,000 264,500 304,175 349,801 15.00%

Educational Institution K-12 1% 128,484 129,769 131,067 132,378 133,702 1.00%

Law Enforcement (state, local,

federal)

6% 983,412 1,042,417 1,104,962 1,171,260 1,241,536 6.00%

State Government in several

states

7% 322,419 344,988 369,137 394,977 422,625 7.00%

Total 7.07% 1,634,315 1,747,174 1,869,666 2,002,790 2,147,664 7.07%

4.2 Target Market Segment Strategy

Our choice of target markets is strategic, and reflects our strengths and weaknesses. Qualityis our primary focus. Currently we are operating on a 100% on-time delivery, with an equipmentfailure rate equal to or less than five percent. The industry standard for equipment failure isclose to fifty percent. In addition we provide additional added value by providing the bestinstallation and service of any company. As a result, we are picking up service contracts fromcompanies who didn't even purchase their hardware from KMCI, but have had such a highequipment failure rate, combined with poor service, that it has opened the doors for KMCI topenetrate that market, and secure the service contract, which in turn will lead to newequipment sales.

We don't want to compete at the low end, because we realize that all except the high-end home


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buyer is going to look at computers as boxed prices and buy based mainly on price. Thismarket belongs to the chain stores and office stores.

In the small business target market segment, we are looking for the types of small businessesthat need at least five networked units. We will offer them network servers, network installation,maintenance, and software support. Many of our target market customers already have theirown in-house IT department; however, we can offer them additional support. For those in ourtarget market that do not have an IT staff, we provide that service on a contractual basis.

We are listed on the preferred provider list with all members of our primary target market, and wehave expanded our marketing efforts to include all of the companies that have been on thefringe of our established target market. In addition, our new program, called S.E.A.T.Management, will allow companies to shift the purchase of new hardware and software fromthe traditional capital expense, to a line item expense via a lease feature. Now the companycan lease the needed equipment, and pay for it monthly. KMCI will maintain the equipmentand software, and then in three years, will replace the old equipment with new technology andupdate all software, thus generating a new sale.

4.2.1 Market Growth

At the time it was acquired by Domino Comptech Holdings, Kettle-Moraine Computers wasexperiencing three years of declining profits. While several factors contributed to this decline,the most important was the general economy of the United States. Businesses in general, andstate governments and educational institutions, in particular, simply stopped purchasingcomputer hardware and software unless it was absolutely critical to their operations; thenthey would try to simply do a basic upgrade of their existing equipment. Every target marketKMCI had established was cutting back spending at the exact same time. KMCI had to workharder, and submit bids with a much lower profit margin, to secure contracts.

Since the acquisition by DCH, KMCI has broadened its specific target market. We are still veryactive in the state of Gulfstate, working with state government offices and law enforcement,but KMCI has expanded this target market to the surrounding states as well. In addition, wehave refocused our in-house sales organization to begin an aggressive campaign to penetratefurther into the Small, Medium, and Large, public, and privately held corporations.

In a 1999 profile by the Small Business Administration, the Office of Advocacy ( http://www.sba.gov/gopher/Local-Information/99Pro/99us.txt ), states that, "the number of small businesseswith employees increased by 2.6 percent." The report further stated that, "37.1 percent of thetotal self-employment nationwide" was "Women-Owned businesses." In addition, the SBAreported cited that 52% of all businesses in the United States were "small business with less(sic) than 500 employees," and that the ethnic make up of these companies was varied. This is ahuge untapped market, and KMCI has begun to aggressively market to these new potentialmarket segments, while maintaining our established relationships with state and localgovernments and law enforcement.

4.2.2 Market Trends

The most obvious and important trend in the market is declining prices. This has been true foryears, but the trend seems to be accelerating. We see the major brand-name manufacturersputting systems together with amazing specs — more power, more speed, more memory, more


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disk storage — at amazing prices. In the past, major companies have always filled their hardwareneeds on a bid basis. The larger companies, such as Dell, Gateway, and IBM, have had theadvantage, because they could reduce the cost of the hardware, and make up the reduction inthe service area. This trend has started to take a new direction. The market is demanding amore reliable piece of equipment with a failure rate of less than twenty-five percent. The majorchain shops and many of the small computer manufacturers have targeted the home, student,and home office user. This target market is very sensitive to price and really does not showthe brand loyalty that they once showed. In addition, this specific target market is comprisedof consumers that are more of the do-it-yourself mindset, and will upgrade orreplace computer components themselves, rather than to pay someone to do it for them.

This may be related to a second trend, which is the computer as throw-away appliance. By thetime a system needs upgrading, it is cheaper to buy completely new. The increasing power andstorage of a sub-$1,000 system means buyers are asking for less service.

A third trend is ever greater connectivity. Everybody wants onto the Internet, and every smalloffice wants a LAN. A lot of small offices want their LAN connected to the Internet.

With the implementation of the S.E.A.T. program, we have successfully circumvented theexisting trend to purchase items on bid, or to purchase inexpensive computers and upgrade orrepair them in house. Within our specific target market namely state government, K–12elementary schools, high schools, colleges, and universities, and law enforcement, S.E.A.T.has completely rewritten how equipment has been purchased. S.E.A.T. Management allows thecapital expense that must have budgetary approval to move to a line item expense that doesnot require the bid process or special budgetary approval. S.E.A.T. simply requires a smallmonthly expense that will combine all hardware, software, service and installation into onesmall easy payment. This allows our target market to always have the latest technology and thebest service with an affordable solution.

S.E.A.T. has eliminated the need to purchase cheaper equipment and then throw it away in acouple of years, by building into the contract a three year term. In other words, our client iseffectively leasing the equipment, returning it at the end of the lease term (three years) andthen replacing the old leased equipment with new equipment.

4.2.3 Market Needs

Since our target market is the service seeker, the most important market needs are support,service, training, and installation, in that order. One of the key points of our strategy is thefocus on target segments that know and understand these needs and are willing to pay tohave them filled.

All personal computer users need support and service. The self-reliant ones have suppliedthose needs themselves; however, this is changing. In an effort to become more competitivein the face of economic decline, many companies are downsizing their in-house ITdepartments, and have started using consultants. Within the state sector of our targetmarket, budgets have been sliced, and for the past three years all capital expenditures withthe exception of the most critical have been terminated. This means that this specific targetmarket is using old equipment that is requiring more and more service. The critical serviceareas are hardware and software upgrades.

The market needs more than just the physical hardware and the service to support it: Ourcustomers depend on their systems. They need the assurance that they can find help when they


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need it. KMCI has successfully captured a sizable position within all of our target markets, andwe are increasing that position.

4.3 Service Business Analysis

We are part of the computer manufacturing and reselling business, which includes several kindsof businesses:

1. Large manufacturers such as IBM, Dell, Compaq, and Gateway. These are our directcompetitors, and it is interesting to note that three of these companies have a fairly highproduct failure rate, and they have all reduced their computer service to help desk, andtelephone tech support.

2. Computer dealers: storefront computer resellers, usually less than 5,000 square feet,often focused on a few main brands of hardware, usually offering only a minimum ofsoftware, and variable amounts of service and support. These are usually old-fashioned(1980s-style) computer stores and they usually offer relatively few reasons for buyersto shop with them. Their service and support is not usually very good and their prices areusually higher than the larger stores.

3. Chain stores and computer superstores: these include major chains such asCompUSA, Computer City, Future Shop, etc. They are almost always more than 10,000square feet of space, usually offer decent walk-in service, and are often warehouse-likelocations where people go to find products in boxes with very aggressive pricing and littlesupport.

4. Mail order/Online: the market is served increasingly by mail order businesses thatoffer aggressive pricing of boxed product. For the purely price-driven buyer, who buysboxes and expects no service, these are very good options.

5. Others: there are many other channels through which people buy their computers,usually variations of the main three types above.

4.3.1 Distribution Patterns

Our existing target market buyers are accustomed to buying from vendors who visit their offices.They expect the copy machine vendors, office products vendors, and office furniture vendorsto visit their office to make their sales. We are accustomed to this type of selling, and oursales force has been assigned exclusive selling areas. Within this selling area, the individualrepresentative is responsible for the continued sales and service, in addition to the cold calling,and sales prospecting for new business.

Unfortunately, our Home Office target buyers may not expect to buy from us. Many of them turnimmediately to the superstores (office equipment, office supplies, and electronics) and mail orderto look for the best price, without realizing that there is a better option for them for only alittle bit more.

Once KMCI implemented the S.E.A.T. Management program, the response from our existing andnewly identified target markets was so strong that Minerva Astarte, the VP of Sales, decidedto contract the smaller computer dealerships, large, and medium sized IT consulting firms, andsmall individual IT consultants, to sell S.E.A.T. Management to their customers. Each andevery product will pay the contracted individual or company a commission. The acceptancewithin this targeted group has been a 50% close and sign rate, on the first call. This meansthat KMCI is effectively increasing its sales force, while not having the burden of paying salaries,


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and employee benefits.

4.3.2 Competition and Buying Patterns

DCH is a holding company, and as such really doesn't have a "target market," "competitors," orchannels of distribution; however, KMCI, as the computer manufacturing division of DCH, does.

The target markets of KMCI usually work on a "personal relationship" basis with the salesrepresentative, but the bottom line is still the bid process. KMCI has found that if two bids arevery close, sometimes the buying decision may be swayed based on the relationship thewinning company has with the clients, or the reputation for fulfilling the contract, on time, withexcellent service, and a minimum of downtime for the installation. KMCI has an outstandingreputation within the state of Gulfstate, and that reputation is expanding into the neighboringstates as well.

KMCI enjoys the advantage of building each workstation, server and network to the clients'specifications. That means that the clients get exactly what they want, the way they want it,each and every time without exception. In addition, we are ISO Certified, which means theabsolute highest quality of product. All of our products have less than a 5% failure rate. Noneof our competition can make such a claim.

Service is another area where the industry is pulling back, and KMCI is moving forward. In aninterview with Tom Meredith the CFO of Dell Computer, on August 21, 1999 on The Motley FoolRadio Show, the co-founder Tom Gardner asked Mr. Meredith, "what stands out for you as afew of the highlights for Dell this quarter that might not pop up immediately on someone'sradar?" The response was, "I think perhaps the most compelling is the consistent performance,frankly, over the entire decade on our topline growth, on our market share gains, and ourcontinuous focus on the low-cost provider and therefore the best value proposition whilegrowing profitability." Dell at the time of the interview was selling $30 million dollars in sales perday on the Internet. Mr. Meredith predicted that would increase, because "In fact, as part ofthat you have to understand we're the ones passing the declining component cost throughfaster than any other single competitor, and that is what the Internet does...allow us tocontinue to enhance our customer touch, and at the same time bring our suppliers intocontact more directly with our customers so they feel the pulse of real demand." In addition,Mr. Meredith stated that 40% of all services issues are handled over the Internet, 70%of all order status, and 95% of Dell's bill of materials hooked through their top 50supplies are now online.

Dell Computer has reduced the amount of face-to-face contact, and service, exchanged it fora call center, "Help Desk" type of of service, and will send replacement parts to the end user,and then walk them through the proper repair or installation. This is great from a corporatebottom line situation; however, it is contrary to everything that KMCI clients, and many other ITconsultants are saying that business clients want. Corporate and institutional clients wantservice after the sale, and they don't want to have to pay extremely high prices for thatservice.

4.3.3 Main Competitors

IBM, Compaq, Lexmark, Hewlett-Packard, Dell, and Gateway:


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· Strengths: national image, high volume, strong brand name, large advertising budgets,and economies of scale.

· Weaknesses: lack of company representation: IBM, for example, has their "contractedservice providers" that will service IBM equipment for a price, and if it is an emergencythey traditionally charge a "RUSH" fee on top of the regular service fee. Compaq,Lexmark, Hewlett-Packard, Dell, and Gateway, will either send the customer thereplacement part, and have them install it with telephonic help desk support, or theywill often request that the client send the item back. Only as a last resort will thesecompanies seek out a contracted service provider to go to the site, and correct theproblem.

Other local computer stores:

· We have lots of smaller computer stores that are in direct competition with our "storefront." In reality, these companies are not our competitors. Many of them carry ourprivate labeled products, or have contracted with KMCI to build systems under their label.We maintain the service contracts for most of these companies.

4.3.4 Industry Participants

The national chains are a growing presence.CompUSA, Computer City, Incredible Universe, Circuit City, and Sears, to name a few, benefitfrom national advertising, economies of scale, volume buying, and a general trend towardname-brand loyalty for buying in the channels as well as for products. National chains suffer froma huge weakness: to achieve good prices, they must purchase in huge quantities frommanufacturers such as KMCI, and once the computer is built, and delivered to the chain, thehardware becomes a ticking bomb. The chain is forced to sell that product as quickly as possible,because technology is advancing so quickly, that in reality by the time they receive theirshipment, and distribute it to the stores, the hardware is already out of date.

Local computer stores are threatened.

These tend to be small businesses, owned by people who started them because they likedcomputers. They are under-capitalized and under-managed. Margins are squeezed as theycompete against the chains, in a competition based on price more than on service andsupport. The local computer store is also under the same time restraints as the national chain,unless they custom build the computer for the consumer. Due to their size, and the fact thatmost are under-capitalized, they cannot afford to purchase the individual components asinexpensively as KMCI can.

5.0 Strategy and Implementation Summary

Emphasize service and support.We must differentiate ourselves from the box pushers. We need to establish our business offeringas a clear and viable alternative for our target market, to the price-only kind of buyer.

Build a relationship-oriented business.Build long-term relationships with c lients, not single-transaction deals with customers. Becometheir computer department, not just a vendor. Make them understand the value of the


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relationship.

Focus on target markets.We need to focus our offerings on small, medium, and large size businesses as the key marketsegment we should own. This means the 5-20 unit system, tied together in a local area network,in a company with 5-50 employees. Our values — training, installation, service, support,knowledge — are more clearly differentiated in this segment. We must continue to service ourexisting relationships, contracts, and even expand them into neighboring states; however, wemust focus on all of our target markets, rather than just one segment as we have done in thepast.

As a corollary, the high end of the home office market is also appropriate. We do not want tocompete for the buyers who go to the chain stores or mail order, but we definitely want to beable to sell individual systems to the smart home office buyers who want a reliable, full-servicevendor.

Differentiate and fulfill the promise.We can't just market and sell service and support, we must actually deliver as well. We needto make sure we have the knowledge-intensive business and service-intensive business we claimto have. In addition, we will continue to maintain the highest quality control.

5.1 Strategy Pyramid

Our strategy is emphasizing relationships. The tactics are marketing the company (instead of theproducts), more regular contacts with the customer, and increasing sales per customer.Programs for marketing the company include new sales literature, revised ad strategy, and directmail. Programs for more regular contacts include call-backs after installation, direct mail, andsales management. Programs for increasing sales per customer include upgrade mailings (the S.E.A.T Management program), and sales training.

We have also formed strategic relationships with IT staffing companies and consulting groups;we are entering into a joint relationship with these individuals and companies for the expresspurpose of selling equipment, service, and network installations to their existing clientele. Thisproduces a win–win situation for both the consultant and us. From the consultants' point ofview, they are selling our S.E.A.T. Management service to their existing clients, thereby furtherfortifying the relationship against a competitor. The benefit to DCH is that we are not havingto convince a client to terminate a good relationship with their dealer, or consultant. We workseamlessly with each dealer, and consultant.

Once the acquisition of the software company is completed, we will immediately begin placingemphasis on service and support: our main tactics are good hardware, networking expertise,excellent training, and selling our own proprietary software/network administrative systemspecifically designed for business machine dealers. For developing our own proprietary systems,our programs are company direct mail marketing, and working with VARs (Value Added Resellers).

5.2 Competitive Edge

Our competitive edge is our positioning as a strategic ally with our clients, who are clients morethan customers. By building a business based on long-standing relationships with satisfiedclients, we simultaneously build defenses against competition. The longer the relationship stands,


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the more we help our clients understand what we offer them and why they need it.

Many of our existing contracts show huge potential but, over the past three years we havenot addressed the changing needs of our clients. We are now specifically targeting each andevery client with specific reasons that they should buy from us. In addition, we haveimplemented programs to make it very attractive for our existing client base to acquire theirequipment from us, and we have started a strong outreach program within the community toincrease our market share.

5.3 Marketing Strategy

1. Emphasize service and support.2. Build a relationship business.3. Maintain our existing client base, and expand within that established base. 4. Focus on small business and high-end home office as key target markets.

5.3.1 Promotion Strategy

We depend on word-of-mouth advertising and direct contact by our sales representatives as ourmain ways to reach new buyers. As we change strategies, however, we need to change the waywe promote ourselves:

1. Direct Contact: Our sales department directly makes contact via coldcalling, combined with direct office visits. This has already been effective, but adds tothe total length of time for the sales cycle. To reduce this time we have implemented:

° A online quoting system. This will enable the sales representatives to make acomplete presentation, and offer an immediate quote. This also enables the salesrepresentative to make a one call close, and come back with a signed contract.

° Signing up other IT dealers and consultants, and allowing us to sell to their clientsfor a piece of the commission. Currently we have a 50% first call close rate, witha 75% client conversion rate.

2. Sales Brochure: All of our representatives and contracted dealers have full access tothe online quoting, and full four-color sales brochures.

3. Direct Mail: We have to radically improve our direct mail efforts, reaching our establishedcustomers with training, support services, upgrades, and seminars. We then follow upin writing with every prospect to whom we have spoken.

4. Media: It's time to work more closely with the local media. In the past we have had greatsuccess using press releases; however, we need to be much more agressive in our pressrelease campaign. We could offer the local radio a regular talk show on technology forsmall business, or as we take in computers that need to be disposed we might donatethis equipment to 503(c) organizations, and then follow this up with a strong presscampaign to encourage other 503(c) organizations to submit a request for equipment.This is only one example.


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5.3.2 Distribution Strategy

Domino Comptech Holding's computer division, KMCI, focuses on the market need forcustomized and differentiated computer hardware, software, and networking requirements. Allof our products are built entirely to the clients' specifications. We have added customersthrough the VAR (Value-Added Resellers) channel. The VARs need to protect their specialrelationship with their customers, maintaining the sense of customization and personalizedservice. Each VAR is a direct extension of our company, and we respect each and every one oftheir clients, by providing the best equipment and the most reasonable pricing structure, withquality control that is second to none. Our company prides itself on achieving a total failurerate of less than 5%, which is well below the industry standard.

We will also maintain a strong presence in the high volume channels. We recognize that this isharder, because the overall sales cycle is longer; however, because we own ourown manufacturing plant, we can offer the most competitive price, even if we are in competitionwith one of the Big 3 computer names.

5.3.3 Marketing Programs

DCH and KMCI do not have a Marketing Director. This is one of our management gaps, and weare currently interviewing, in an attempt to fill this position as quickly as possible. In lieu ofhaving a formal "Marketing Plan" with well established milestones, we are currently implementingthe marketing plan that was created by the former Marketing Director. The S.E.A.T. program isjust one such example. As you can see in the Sales Forecast table, we expect to see a largeincrease in sales, because of the favorable response that our partner dealers have shown. Weare currently seeing one call closes (something that the industry has not seen since the late90's).

KMCI doesn't have the luxury to sit back and wait; we must capture the market ourselves, andthe best way to do that is to establish strategic alliances with companies and individuals thatalready maintain a "book of business" and then exploit those relationships to the benefit ofboth KMCI and our strategic partners.

5.3.4 Pricing Strategy

We must charge appropriately for the high-end, high-quality service and support we offer. Ourrevenue structure has to match our cost structure, so the salaries we pay to assure goodservice and support must be balanced by the revenue we charge.

We cannot build the service and support revenue into the price of products. The market can'tbear the higher prices and the buyer feels ill-used when they see a similar product priced lowerat the chains or with other competitors. Despite the logic behind this, the market doesn'tsupport this concept; however, we do build in help desk, on-site service, etc., to each andevery one of our S.E.A.T. Management clients, because the overall cost per unit spread over athree year period (the length of the S.E.A.T. immediately contract) reduces the total cost forservice to only a few pennies a month. Because the overall cost to the client using S.E.A.T.


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Management is so low, there is never an objection in charging for the service we provide.

5.3.5 Positioning Statement

For business people who want to be sure their computer systems will work reliably, KMCI is avendor and trusted strategic ally who makes sure their systems work, their people are trained,and their downtime is minimal. Unlike the chain retail stores, and our other competition, the KMCIsales and service staff know the customers, go to their sites when needed, and offer proactivesupport, service, training, and installation.

5.4 Sales Strategy

DCH is divided into different divisions, with each division responsible for the implementationof their own individual sales strategy. Because each division differs in both products and servicesis it vital that each division maintain focus on its own priorities. With that said each divisionhas certain similarities, and some crossover in strategy is evident. The common ground foreach division is:

1. We need to sell the company, not the product. We sell KMCI, not Apple, IBM, Hewlett-Packard, or Compaq, or any of our software brand names.

2. We have to sell our service and support. The hardware is like the razor, and thesupport, service, software services, training, and seminars are the razor blades. Weneed to serve our customers with what they really need. Each of our divisions shareapproximately a 48% profit margin on service as opposed to between 15 – 20% onhardware, or software.

3. We listen to our existing clients and give them exactly what they want, the way theywant it, each and every time.

The sales table and charts, below, indicate KMCI's projected sales, and how we plan toincrease those sales in the immediate future.

5.4.1 Sales Forecast

The Sales Forecast table indicates the actual and projected sales that DCH expects from theKMCI division. In the past, KMCI did not have the captive sales force to generate these types ofsales on a consistent basis; however, with the new marketing strategy of signing up dealers tosell S.E.A.T. Management on our behalf, and then paying these dealers a commission, we have infact increased our present sales force by 200%. KMCI has also initiated an agressive hiringcampaign to increase our in-house sales force. From a profit position, it really doesn't matter if adealer or an in-house sales person makes the sale; both are paid the same rate of commission.


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Table: Sales Forecast

Sales Forecast

FY 2004 FY 2005 FY 2006 FY 2007 FY 2008

Unit Sales

Basic PC 2,685 3,222 3,866 4,640 5,568

Intermediate PC 2,630 3,288 4,109 5,137 6,421

Power PC 2,550 3,315 4,310 5,602 7,283

Laptop 1,915 2,873 4,309 6,463 9,695

Basic Printer 2,130 2,663 3,328 4,160 5,200

Intermediate Printer 2,705 3,517 4,571 5,943 7,726

Power Printer 2,275 3,185 4,459 6,243 8,740

Basic Network Server 1,290 1,935 2,903 4,354 6,531

Intermediate Network Server 1,600 2,560 4,096 6,554 10,486

Power Network Server 1,015 1,827 3,289 5,919 10,655

Other 0 0 0 0 0

Total Unit Sales 20,795 28,383 39,240 55,014 78,303

Unit Prices FY 2004 FY 2005 FY 2006 FY 2007 FY 2008

Basic PC $1,634.00 $1,634.00 $1,634.00 $1,634.00 $1,634.00

Intermediate PC $2,523.00 $2,523.00 $2,523.00 $2,523.00 $2,523.00

Power PC $3,212.00 $3,212.00 $3,212.00 $3,212.00 $3,212.00

Laptop $2,483.00 $2,483.00 $2,483.00 $2,483.00 $2,483.00

Basic Printer $465.00 $465.00 $465.00 $465.00 $465.00

Intermediate Printer $1,393.00 $1,393.00 $1,393.00 $1,393.00 $1,393.00

Power Printer $3,368.00 $3,368.00 $3,368.00 $3,368.00 $3,368.00

Basic Network Server $3,883.00 $3,883.00 $3,883.00 $3,883.00 $3,883.00

Intermediate Network Server $6,351.00 $6,351.00 $6,351.00 $6,351.00 $6,351.00

Power Network Server $9,573.00 $9,573.00 $9,573.00 $9,573.00 $9,573.00

Other $0.00 $0.00 $0.00 $0.00 $0.00

Sales

Basic PC $4,387,290 $5,264,748 $6,317,698 $7,581,237 $9,097,485

Intermediate PC $6,635,490 $8,294,363 $10,367,953 $12,959,941 $16,199,927

Power PC $8,190,600 $10,647,780 $13,842,114 $17,994,748 $23,393,173

Laptop $4,754,945 $7,132,418 $10,698,626 $16,047,939 $24,071,909

Basic Printer $990,450 $1,238,063 $1,547,578 $1,934,473 $2,418,091

Intermediate Printer $3,768,065 $4,898,485 $6,368,030 $8,278,439 $10,761,970

Power Printer $7,662,200 $10,727,080 $15,017,912 $21,025,077 $29,435,108

Basic Network Server $5,009,070 $7,513,605 $11,270,408 $16,905,611 $25,358,417

Intermediate Network Server $10,161,600 $16,258,560 $26,013,696 $41,621,914 $66,595,062

Power Network Server $9,716,595 $17,489,871 $31,481,768 $56,667,182 $102,000,928

Other $0 $0 $0 $0 $0

Total Sales $61,276,305 $89,464,971 $132,925,782 $201,016,561 $309,332,068

Direct Unit Costs FY 2004 FY 2005 FY 2006 FY 2007 FY 2008

Basic PC $490.20 $490.20 $490.20 $490.20 $490.20

Intermediate PC $756.90 $756.90 $756.90 $756.90 $756.90

Power PC $963.60 $963.60 $963.60 $963.60 $963.60

Laptop $744.90 $744.90 $744.90 $744.90 $744.90

Basic Printer $139.50 $139.50 $139.50 $139.50 $139.50

Intermediate Printer $417.90 $417.90 $417.90 $417.90 $417.90

Power Printer $1,010.40 $1,010.40 $1,010.40 $1,010.40 $1,010.40

Basic Network Server $1,164.90 $1,164.90 $1,164.90 $1,164.90 $1,164.90

Intermediate Network Server $1,905.30 $1,905.30 $1,905.30 $1,905.30 $1,905.30

Power Network Server $2,871.90 $2,871.90 $2,871.90 $2,871.90 $2,871.90

Other $0.00 $0.00 $0.00 $0.00 $0.00


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Direct Cost of Sales

Basic PC $1,316,187 $1,579,424 $1,895,309 $2,274,371 $2,729,245

Intermediate PC $1,990,647 $2,488,309 $3,110,386 $3,887,982 $4,859,978

Power PC $2,457,180 $3,194,334 $4,152,634 $5,398,424 $7,017,952

Laptop $1,426,484 $2,139,725 $3,209,588 $4,814,382 $7,221,573

Basic Printer $297,135 $371,419 $464,273 $580,342 $725,427

Intermediate Printer $1,130,420 $1,469,545 $1,910,409 $2,483,532 $3,228,591

Power Printer $2,298,660 $3,218,124 $4,505,374 $6,307,523 $8,830,532

Basic Network Server $1,502,721 $2,254,082 $3,381,122 $5,071,683 $7,607,525

Intermediate Network Server $3,048,480 $4,877,568 $7,804,109 $12,486,574 $19,978,519

Power Network Server $2,914,979 $5,246,961 $9,444,530 $17,000,155 $30,600,278

Other $0 $0 $0 $0 $0

Subtotal Direct Cost of Sales $18,382,892 $26,839,491 $39,877,735 $60,304,968 $92,799,620


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5.4.2 Sales Programs

1. Cold Calling: We have implemented an agressive cold call marketing campaign designedspecifically to accomplish these goals.

° Make IT dealers and consultants aware that we would like to work with them, andtheir existing clients, as well as their future clients.

° Illustrate that there would be a strong financial benefit if they decided to join us.

° Make all of KMCI's existing and future clients aware of a new way to acquire ITequipment without a capital expense.

2. Direct mail: We are implementing a direct mail campaign specifically directed at referraldealers, who may be interested in representing S.E.A.T. Management.

3. Seminars: Geared toward executive law enforcement administrators, executive branch ofstate government, schools, colleges, and universities.

4. Agressive press release media campaign: Aimed specifically at branding of KMCI'sproducts, and services.

5.5 Strategic Alliances

We depend on our sales staff to maintain, and strengthen all of our strategic alliances for theexpress purpose of generating continuous leads for our add-on products. We need to makesure that our personnel are aware of the support and reciprocation that we share with our


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strategic partners.

5.6 Milestones

The accompanying table lists important program milestones, with dates and managers incharge, and budgets for each. The milestone schedule indicates our emphasis on planning forimplementation.

What the table doesn't show is the commitment behind it. Our business plan includes completeprovisions for plan-vs.-actual analysis, and we will be holding follow-up meetings every month todiscuss the variance and course corrections.

Table: Milestones

Milestones

Milestone Start Date End Date Budget Manager Department

Secure Phase II funding $22

mill ion

2/10/2003 12/31/2003 $20,000 Puma Administration

Aquire Software Company 1/1/2003 1/15/2004 $7,000,000 Caracal/Puma Administration

Increase Sales Revenue by 30

Percent

1/1/2003 12/31/2003 $0 Astarte Sales

Increase number of Sales Staff 1/1/2003 12/31/2003 $100,000 Astarte Sales

Reduce Product Failure rate by

1.5%

1/1/2003 12/31/2003 $0 Margay Quality Control

Sign a total of 25 S.E.A.T

Partner

6/1/2003 9/1/2003 $0 Astarte Sales

Future Milestones 12/31/2003 1/1/2004 $0 All All

Totals $7,120,000


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6.0 Management Summary

Our management philosophy is based on responsibility and mutual respect. People who workat DCH want to work at DCH, because we have an environment that encourages creativityand achievement. The team includes 13 members, representing over 106 years of experience.Because DCH has organized its team to draw the most successful individuals from variousindustries, DCH reaps the benefits of being able to look at changing situations, and make aquick and accurate analysis, and then quickly formulate a plan of action.

6.1 Organizational Structure

The team includes 13 executive team members, with Lynx Caracal serving as CEO andPresident of DCH.

DCH has at this time two divisions, KMCI, and ZumoNet. Lynx Caracal is serving as President ofboth of these divisions, and currently maintains the following management divisions: Sales,Marketing, Service, and Administration. Service handles service, support, training, anddevelopment.

6.2 Management Team

Chairman of Board of Directors:Kit Puma, who has been an organizer in several companies, will serve as the Chairman of theBoard of Directors. Mr. Puma was the founder and president of his last company and served aspresident of its wholly-owned life insurance company for the last four years. He hasbeen repeatedly recognized for Sales and Sales Management Performance.

President:

Lynx Caracal serves as President, CEO and Director of the company, and will be in charge of alloperations. He is also the President of Kettle-Moraine Computers, Inc. (KMCI), a largecomputer hardware company, which he founded and built over the last 12 years into a verysuccessful multi-million dollar company.

Mr. Caracal has served as KMCI's only President since inception and single-handedly built KMCIinto a profitable manufacturer of computer hardware products and services.

Vice President:Neve Palenque will serve as Vice President and hold a position on the Board of Directors. Ms.Palenque will be an employee of KMCI, focusing on normal sales of KMCI products andtechnology. Until recently, she was the President of a large insurance agency with over 12,000clients. Ms. Palenque has also been highly decorated for performance in sales and salesmanagement success.

Secretary:

Felidae Kalakmul recently retired as a Captain of the Gulfstate Highway Patrol. Mr. Kalakmulserved as the Training Director prior to his retirement, and he also served as one of the state's


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chief compliance officers for the Gulfstate Gaming Commission. Mr. Kalakmul, in addition toserving DCH, teaches business ethics and business law at BMOC College, in Central City,Gulfstate, and at Riverford University.

Treasurer:Panthera Dos Pilas is a well-known CPA, in private practice in Central City. Ms. Dos Pilas is anauthority in business analysis and tax law strategies.

The remainder of the Board of Directors and other corporate management team members willbe selected for their reputation of success in business and their reputation for integrity.

6.3 Management Team Gaps

DCH currently needs to fill the position of Marketing Director. Other than that, DCH does nothave any management team gaps, because we have acquired successful business that alreadyhave a successful management, and operations team in place; however, as DCH continues togrow, we will begin to identify gap areas, and as those areas are identified they will be filled by aqualified and successful individual.

6.4 Personnel Plan

The Personnel Plan reflects the immediate DCH team, as new acquisitions are made, there will beadditions to this table. The advantage DCH has over other companies is our ability to identifyoutstanding companies, with excellent management, but for one reason or another have aweakness that DCH can fill. When we identify these companies, we will begin to conduct our owninvestigation and determine if we can acquire the company, and its most successful personnel.Our total employment as represented by the personnel table only reflects DCH, and not itsindividual divisions.

Table: Personnel

Personnel Plan

FY 2004 FY 2005 FY 2006 FY 2007 FY 2008

Kit Puma - Chairman of the Board $99,300 $99,300 $104,265 $109,478 $114,952

Lynx Caracal - President & CEO $49,992 $50,000 $52,500 $55,125 $57,881

Neve Palenque - Vice President $47,400 $48,000 $50,400 $52,920 $55,566

Felidae Kalakmul - Secretary $45,000 $45,000 $47,250 $49,613 $52,093

Panthera Dos Pilas, CPA - Treasurer $18,000 $18,000 $18,900 $19,845 $20,837

Marketing Director (not yet hired) $37,500 $45,000 $47,250 $49,613 $52,093

Other $0 $0 $0 $0 $0

Total People 4 4 4 4 4

Total Payroll $297,192 $305,300 $320,565 $336,593 $353,423

7.0 Financial Plan

The most important element in the financial plan is the critical need for improving several of thekey factors that impact cash flow:


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1. We must at any cost stop the slide in inventory turnover and develop better inventorymanagement to bring the turnover back up to eight turns by the third year. This shouldalso be a function of the shift in focus toward service revenues to add to the hardwarerevenues.

2. We must also bring the gross margin back up. This, too, is related to improving the mixbetween hardware and service revenues, because the service revenues offer much bettermargins.

3. We plan to extend our Private Placement for another two month. The funds will enableDCH to purchase the software company, and begin to market our hardware, and serviceto their established clients.

Our financial plan seems agressive when compared to our past performance; however, it reallyisn't. We must use our sales force, and the dealers and consultants that have signed with us, tojointly sell the S.E.A.T. Management program to its fullest potential. This program officiallystarted on July 1, 2003, and we have already closed sales in companies that we have not beenable to sell to in the past.

7.1 Important Assumptions

The financial plan depends on important assumptions, most of which are shown in the followingtable. The key underlying assumptions are:

· We assume a slow-growth economy, without major recession.

· We assume of course that there are no unforeseen changes in technology to makeproducts immediately obsolete.

· We assume access to equity capital and financing sufficient to maintain our financialplan as shown in the tables.

Table: General Assumptions

General Assumptions

FY 2004 FY 2005 FY 2006 FY 2007 FY 2008

Plan Month 1 2 3 4 5

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

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

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

Other 1 1 1 1 1

7.2 Break-even Analysis

For our break-even analysis, we assume fixed costs and margins based on projections for thecoming year. We hope to attain high margin in the future. The chart shows what we need ourdivisions to produce in revenueper month to break even, according to these assumptions.


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Table: Break-even Analysis

Break-even Analysis

Monthly Units Break-even 392

Monthly Revenue Break-even $1,154,547

Assumptions:

Average Per-Unit Revenue $2,946.68

Average Per-Unit Variable Cost $884.01

Estimated Monthly Fixed Cost $808,183

7.3 Projected Profit and Loss

The most important assumption in the Projected Profit and Loss statement is the Gross Margin,which is supposed to increase over the last year's performance. The increase in Gross Margin isbased on changing our sales and marketing mix, and it is critical.

DCH is housed in the corporate administrative offices of KMCI, and does not have to pay rent,utilities, office equipment depreciation and other insurance other than normal FICA, SocialSecurity, and Medicare on its employees. Month-by-month assumptions for profit and loss areincluded in the appendices.


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Table: Profit and Loss

Pro Forma Profit and Loss

FY 2004 FY 2005 FY 2006 FY 2007 FY 2008

Sales $61,276,305 $89,464,971 $132,925,782 $201,016,561 $309,332,068

Direct Cost of Sales $18,382,892 $26,839,491 $39,877,735 $60,304,968 $92,799,620

Other Costs of Goods $3,070,000 $4,000,000 $5,300,000 $7,000,000 $9,300,000

Total Cost of Sales $21,452,892 $30,839,491 $45,177,735 $67,304,968 $102,099,620

Gross Margin $39,823,414 $58,625,480 $87,748,048 $133,711,593 $207,232,448

Gross Margin % 64.99% 65.53% 66.01% 66.52% 66.99%

Expenses

Payroll $297,192 $305,300 $320,565 $336,593 $353,423

Divisions payroll (see note) $100,000 $0 $1,000,000 $700,000 $900,000

Depreciation $0 $30,200,000 $39,900,000 $52,800,000 $69,600,000

Divisions operating expense (see note) $9,300,000 $12,000,000 $16,000,000 $21,100,000 $27,800,000

Payroll Taxes $1,000 $300,000 $0 $400,000 $400,000

Other $0 $0 $0 $0 $0

Total Operating Expenses $9,698,192 $42,805,300 $57,220,565 $75,336,593 $99,053,423

Profit Before Interest and Taxes $30,125,222 $15,820,180 $30,527,483 $58,375,000 $108,179,025

EBITDA $30,125,222 $46,020,180 $70,427,483 $111,175,000 $177,779,025

Interest Expense $164,999 $546,600 $908,763 $367,142 ($77,330)

Taxes Incurred $419,873 $4,582,074 $8,885,616 $17,402,357 $32,476,906

Net Profit $29,521,544 $10,691,506 $20,733,104 $40,605,500 $75,779,448

Net Profit/Sales 48.18% 11.95% 15.60% 20.20% 24.50%

7.4 Projected Cash Flow

The cash flow depends on assumptions of sales by the KMCI sales team, and on servicing ourexisting clients. Our projected 60 day collection days is critical, and it is also reasonable. Wedo need to assume somewhat standard receivables-based credit line, but aside from that,which is supported entirely by receivables, we are not assuming any new borrowing, or fundingto support the KMCI operation. KMCI is self supporting.

We have not included the revenue of the proposed acquisition of the software company. Thesoftware company does have, and has maintained a strong profit margin; however, we are tooearly into the acquisition process to begin to forecast additional revenues coming from thisproposed acquisition.


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Table: Cash Flow

Pro Forma Cash Flow

FY 2004 FY 2005 FY 2006 FY 2007 FY 2008

Cash Received

Cash from Operations

Cash Sales $15,319,076 $22,366,243 $33,231,446 $50,254,140 $77,333,017

Cash from Receivables $32,062,938 $60,443,815 $89,433,903 $134,687,228 $206,427,414

Subtotal Cash from Operations $47,382,014 $82,810,057 $122,665,348 $184,941,368 $283,760,431

Additional Cash Received

Sales Tax, VAT, HST/GST Received $0 $0 $0 $0 $0

New Current Borrowing $100,000 $8,000,000 $0 $0 $0

New Other Liabil ities (interest-free) $0 $0 $0 $0 $0

New Long-term Liabil ities $0 $0 $0 $0 $0

Sales of Other Current Assets $0 $0 $0 $0 $0

Sales of Long-term Assets $0 $0 $0 $0 $0

New Investment Received $0 $0 $0 $0 $0

Subtotal Cash Received $47,482,014 $90,810,057 $122,665,348 $184,941,368 $283,760,431

Expenditures FY 2004 FY 2005 FY 2006 FY 2007 FY 2008

Expenditures from Operations

Cash Spending $297,192 $305,300 $320,565 $336,593 $353,423

Bill Payments $28,904,040 $50,023,228 $71,723,791 $107,211,779 $163,552,336

Subtotal Spent on Operations $29,201,232 $50,328,528 $72,044,356 $107,548,373 $163,905,759

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0

Principal Repayment of Current Borrowing $0 $0 $0 $10,000,000 ($2,000,000)

Other Liabil ities Principal Repayment $100,000 $0 $100,000 $100,000 $35,462

Long-term Liabil ities Principal Repayment $327,241 $360,354 $396,390 $436,029 $453,407

Purchase Other Current Assets $300,000 $900,000 $1,300,000 $4,000,000 $6,200,000

Purchase Long-term Assets $180,000 $400,000 $2,700,000 $2,000,000 $6,200,000

Dividends $0 $0 $0 $0 $20,000,000

Subtotal Cash Spent $30,108,473 $51,988,882 $76,540,746 $124,084,401 $194,794,628

Net Cash Flow $17,373,541 $38,821,175 $46,124,603 $60,856,966 $88,965,803

Cash Balance $17,381,250 $56,202,425 $102,327,028 $163,183,994 $252,149,797

7.5 Projected Balance Sheet

The balance sheet is quite solid. We do not project any real trouble meeting our debtobligations--as long as we can achieve our specific objectives.


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Table: Balance Sheet

Pro Forma Balance Sheet

FY 2004 FY 2005 FY 2006 FY 2007 FY 2008

Assets

Current Assets

Cash $17,381,250 $56,202,425 $102,327,028 $163,183,994 $252,149,797

Accounts Receivable $14,466,400 $21,121,314 $31,381,748 $47,456,941 $73,028,579

Inventory $3,446,543 $3,592,081 $5,431,229 $8,359,632 $13,090,335

Other Current Assets $493,429 $1,393,429 $2,693,429 $6,693,429 $12,893,429

Total Current Assets $35,787,622 $82,309,250 $141,833,434 $225,693,996 $351,162,139

Long-term Assets

Long-term Assets $1,659,498 $2,059,498 $4,759,498 $6,759,498 $12,959,498

Accumulated Depreciation $166,002 $30,366,002 $70,266,002 $123,066,002 $192,666,002

Total Long-term Assets $1,493,496 ($28,306,504) ($65,506,504) ($116,306,504) ($179,706,504)

Total Assets $37,281,118 $54,002,746 $76,326,930 $109,387,492 $171,455,635

Liabil ities and Capital FY 2004 FY 2005 FY 2006 FY 2007 FY 2008

Current Liabil ities

Accounts Payable $5,588,732 $3,979,209 $6,066,679 $9,057,770 $13,835,334

Current Borrowing $0 $8,000,000 $8,000,000 ($2,000,000) $0

Other Current Liabil ities $235,462 $235,462 $135,462 $35,462 $0

Subtotal Current Liabil ities $5,824,194 $12,214,671 $14,202,141 $7,093,232 $13,835,334

Long-term Liabil ities $1,646,180 $1,285,826 $889,436 $453,407 $0

Total Liabil ities $7,470,375 $13,500,496 $15,091,577 $7,546,639 $13,835,334

Paid-in Capital $676,193 $676,193 $676,193 $676,193 $676,193

Retained Earnings ($946,874) $28,574,670 $39,266,176 $59,999,280 $80,604,780

Earnings $29,521,544 $10,691,506 $20,733,104 $40,605,500 $75,779,448

Total Capital $29,250,863 $39,942,369 $60,675,473 $101,280,973 $157,060,421

Total Liabil ities and Capital $36,721,238 $53,442,865 $75,767,050 $108,827,612 $170,895,755

Net Worth $29,810,744 $40,502,249 $61,235,353 $101,840,853 $157,620,301

7.6 Business Ratios

The following table outlines some of the more important ratios from the Office ComputerAutomation Systems Integration industry. The final column, Industry Profile, details specificratios based on the industry as it is classified by the Standard Industry Classification (SIC) code,7373.0202.


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Table: Ratios

Ratio Analysis

FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 Industry Profi le

Sales Growth 2296.36% 46.00% 48.58% 51.22% 53.88% 9.53%

Percent of Total Assets

Accounts Receivable 38.80% 39.11% 41.11% 43.38% 42.59% 27.73%

Inventory 9.24% 6.65% 7.12% 7.64% 7.63% 5.15%

Other Current Assets 1.32% 2.58% 3.53% 6.12% 7.52% 47.52%

Total Current Assets 95.99% 152.42% 185.82% 206.33% 204.81% 80.40%

Long-term Assets 4.01% -52.42% -85.82% -106.33% -104.81% 19.60%

Total Assets 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Current Liabil ities 15.62% 22.62% 18.61% 6.48% 8.07% 35.94%

Long-term Liabil ities 4.42% 2.38% 1.17% 0.41% 0.00% 21.59%

Total Liabil ities 20.04% 25.00% 19.77% 6.90% 8.07% 57.53%

Net Worth 79.96% 75.00% 80.23% 93.10% 91.93% 42.47%

Percent of Sales

Sales 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Gross Margin 64.99% 65.53% 66.01% 66.52% 66.99% 100.00%

Selling, General & Administrative Expenses 21.55% 21.37% 21.25% 21.17% 21.11% 82.72%

Advertising Expenses 0.00% 0.00% 0.00% 0.00% 0.00% 1.19%

Profit Before Interest and Taxes 49.16% 17.68% 22.97% 29.04% 34.97% 0.94%

Main Ratios

Current 6.14 6.74 9.99 31.82 25.38 1.72

Quick 5.55 6.44 9.60 30.64 24.44 1.36

Total Debt to Total Assets 20.04% 25.00% 19.77% 6.90% 8.07% 1.50%

Pre-tax Return on Net Worth 100.50% 37.71% 48.37% 56.96% 68.68% 65.79%

Pre-tax Return on Assets 80.36% 28.28% 38.81% 53.03% 63.14% 4.39%

Additional Ratios FY 2004 FY 2005 FY 2006 FY 2007 FY 2008

Net Profit Margin 48.18% 11.95% 15.60% 20.20% 24.50% n.a

Return on Equity 99.03% 26.40% 33.86% 39.87% 48.08% n.a

Activity Ratios

Accounts Receivable Turnover 3.18 3.18 3.18 3.18 3.18 n.a

Collection Days 55 97 96 95 95 n.a

Inventory Turnover 10.91 7.63 8.84 8.75 8.65 n.a

Accounts Payable Turnover 6.14 12.17 12.17 12.17 12.17 n.a

Payment Days 27 36 25 25 25 n.a

Total Asset Turnover 1.64 1.66 1.74 1.84 1.80 n.a

Debt Ratios

Debt to Net Worth 0.25 0.33 0.25 0.07 0.09 n.a

Current Liab. to Liab. 0.78 0.90 0.94 0.94 1.00 n.a

Liquidity Ratios

Net Working Capital $29,963,428 $70,094,579 $127,631,293 $218,600,764 $337,326,805 n.a

Interest Coverage 182.58 28.94 33.59 159.00 0.00 n.a

Additional Ratios

Assets to Sales 0.61 0.60 0.57 0.54 0.55 n.a

Current Debt/Total Assets 16% 23% 19% 6% 8% n.a

Acid Test 3.07 4.72 7.39 23.95 19.16 n.a

Sales/Net Worth 2.06 2.21 2.17 1.97 1.96 n.a


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Dividend Payout 0.00 0.00 0.00 0.00 0.26 n.a

7.7 Long-term Plan

We expect to increase our KMCI sales substantially by 2008, while also increasing grossmargin. To achieve this will require the sales force to sell reasonable numbers of units eachmonth. In the past our greatest problem was simply that our sales force was not effective. Wehave designed and implemented programs to correct this problem, and it has been working.

Appendix

Page 1

Table: Sales Forecast

Sales Forecast

Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan

Unit Sales

Basic PC 0% 75 100 125 180 210 220 250 275 290 300 320 340

Intermediate PC 0% 100 110 120 140 150 180 200 250 300 340 370 370

Power PC 0% 120 130 140 160 180 200 220 240 260 280 300 320

Laptop 0% 25 50 75 100 125 160 180 200 220 240 260 280

Basic Printer 0% 100 120 140 150 160 170 180 190 200 220 240 260

Intermediate Printer 0% 50 75 100 125 150 200 250 300 325 350 380 400

Power Printer 0% 20 40 60 80 100 150 200 250 300 325 350 400

Basic Network Server 0% 10 20 30 40 50 60 80 100 150 200 250 300

Intermediate Network Server 0% 25 30 35 40 45 50 125 150 200 250 300 350

Power Network Server 0% 10 20 30 40 50 75 95 105 125 130 145 190

Other 0% 0 0 0 0 0 0 0 0 0 0 0 0

Total Unit Sales 535 695 855 1,055 1,220 1,465 1,780 2,060 2,370 2,635 2,915 3,210

Unit Prices Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan

Basic PC $1,634.00 $1,634.00 $1,634.00 $1,634.00 $1,634.00 $1,634.00 $1,634.00 $1,634.00 $1,634.00 $1,634.00 $1,634.00 $1,634.00

Intermediate PC $2,523.00 $2,523.00 $2,523.00 $2,523.00 $2,523.00 $2,523.00 $2,523.00 $2,523.00 $2,523.00 $2,523.00 $2,523.00 $2,523.00

Power PC $3,212.00 $3,212.00 $3,212.00 $3,212.00 $3,212.00 $3,212.00 $3,212.00 $3,212.00 $3,212.00 $3,212.00 $3,212.00 $3,212.00

Laptop $2,483.00 $2,483.00 $2,483.00 $2,483.00 $2,483.00 $2,483.00 $2,483.00 $2,483.00 $2,483.00 $2,483.00 $2,483.00 $2,483.00

Basic Printer $465.00 $465.00 $465.00 $465.00 $465.00 $465.00 $465.00 $465.00 $465.00 $465.00 $465.00 $465.00

Intermediate Printer $1,393.00 $1,393.00 $1,393.00 $1,393.00 $1,393.00 $1,393.00 $1,393.00 $1,393.00 $1,393.00 $1,393.00 $1,393.00 $1,393.00

Power Printer $3,368.00 $3,368.00 $3,368.00 $3,368.00 $3,368.00 $3,368.00 $3,368.00 $3,368.00 $3,368.00 $3,368.00 $3,368.00 $3,368.00

Basic Network Server $3,883.00 $3,883.00 $3,883.00 $3,883.00 $3,883.00 $3,883.00 $3,883.00 $3,883.00 $3,883.00 $3,883.00 $3,883.00 $3,883.00

Intermediate Network Server $6,351.00 $6,351.00 $6,351.00 $6,351.00 $6,351.00 $6,351.00 $6,351.00 $6,351.00 $6,351.00 $6,351.00 $6,351.00 $6,351.00

Power Network Server $9,573.00 $9,573.00 $9,573.00 $9,573.00 $9,573.00 $9,573.00 $9,573.00 $9,573.00 $9,573.00 $9,573.00 $9,573.00 $9,573.00

Other $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

Sales

Basic PC $122,550 $163,400 $204,250 $294,120 $343,140 $359,480 $408,500 $449,350 $473,860 $490,200 $522,880 $555,560

Intermediate PC $252,300 $277,530 $302,760 $353,220 $378,450 $454,140 $504,600 $630,750 $756,900 $857,820 $933,510 $933,510

Power PC $385,440 $417,560 $449,680 $513,920 $578,160 $642,400 $706,640 $770,880 $835,120 $899,360 $963,600 $1,027,840

Laptop $62,075 $124,150 $186,225 $248,300 $310,375 $397,280 $446,940 $496,600 $546,260 $595,920 $645,580 $695,240

Basic Printer $46,500 $55,800 $65,100 $69,750 $74,400 $79,050 $83,700 $88,350 $93,000 $102,300 $111,600 $120,900

Intermediate Printer $69,650 $104,475 $139,300 $174,125 $208,950 $278,600 $348,250 $417,900 $452,725 $487,550 $529,340 $557,200

Power Printer $67,360 $134,720 $202,080 $269,440 $336,800 $505,200 $673,600 $842,000 $1,010,400 $1,094,600 $1,178,800 $1,347,200

Basic Network Server $38,830 $77,660 $116,490 $155,320 $194,150 $232,980 $310,640 $388,300 $582,450 $776,600 $970,750 $1,164,900

Intermediate Network Server $158,775 $190,530 $222,285 $254,040 $285,795 $317,550 $793,875 $952,650 $1,270,200 $1,587,750 $1,905,300 $2,222,850

Power Network Server $95,730 $191,460 $287,190 $382,920 $478,650 $717,975 $909,435 $1,005,165 $1,196,625 $1,244,490 $1,388,085 $1,818,870

Appendix

Page 2

Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Sales $1,299,210 $1,737,285 $2,175,360 $2,715,155 $3,188,870 $3,984,655 $5,186,180 $6,041,945 $7,217,540 $8,136,590 $9,149,445 $10,444,070

Direct Unit Costs Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan

Basic PC 0.00% $490.20 $490.20 $490.20 $490.20 $490.20 $490.20 $490.20 $490.20 $490.20 $490.20 $490.20 $490.20

Intermediate PC 0.00% $756.90 $756.90 $756.90 $756.90 $756.90 $756.90 $756.90 $756.90 $756.90 $756.90 $756.90 $756.90

Power PC 0.00% $963.60 $963.60 $963.60 $963.60 $963.60 $963.60 $963.60 $963.60 $963.60 $963.60 $963.60 $963.60

Laptop 0.00% $744.90 $744.90 $744.90 $744.90 $744.90 $744.90 $744.90 $744.90 $744.90 $744.90 $744.90 $744.90

Basic Printer 0.00% $139.50 $139.50 $139.50 $139.50 $139.50 $139.50 $139.50 $139.50 $139.50 $139.50 $139.50 $139.50

Intermediate Printer 0.00% $417.90 $417.90 $417.90 $417.90 $417.90 $417.90 $417.90 $417.90 $417.90 $417.90 $417.90 $417.90

Power Printer 0.00% $1,010.40 $1,010.40 $1,010.40 $1,010.40 $1,010.40 $1,010.40 $1,010.40 $1,010.40 $1,010.40 $1,010.40 $1,010.40 $1,010.40

Basic Network Server 0.00% $1,164.90 $1,164.90 $1,164.90 $1,164.90 $1,164.90 $1,164.90 $1,164.90 $1,164.90 $1,164.90 $1,164.90 $1,164.90 $1,164.90

Intermediate Network Server 0.00% $1,905.30 $1,905.30 $1,905.30 $1,905.30 $1,905.30 $1,905.30 $1,905.30 $1,905.30 $1,905.30 $1,905.30 $1,905.30 $1,905.30

Power Network Server 0.00% $2,871.90 $2,871.90 $2,871.90 $2,871.90 $2,871.90 $2,871.90 $2,871.90 $2,871.90 $2,871.90 $2,871.90 $2,871.90 $2,871.90

Other 0.00% $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

Direct Cost of Sales

Basic PC $36,765 $49,020 $61,275 $88,236 $102,942 $107,844 $122,550 $134,805 $142,158 $147,060 $156,864 $166,668

Intermediate PC $75,690 $83,259 $90,828 $105,966 $113,535 $136,242 $151,380 $189,225 $227,070 $257,346 $280,053 $280,053

Power PC $115,632 $125,268 $134,904 $154,176 $173,448 $192,720 $211,992 $231,264 $250,536 $269,808 $289,080 $308,352

Laptop $18,623 $37,245 $55,868 $74,490 $93,113 $119,184 $134,082 $148,980 $163,878 $178,776 $193,674 $208,572

Basic Printer $13,950 $16,740 $19,530 $20,925 $22,320 $23,715 $25,110 $26,505 $27,900 $30,690 $33,480 $36,270

Intermediate Printer $20,895 $31,343 $41,790 $52,238 $62,685 $83,580 $104,475 $125,370 $135,818 $146,265 $158,802 $167,160

Power Printer $20,208 $40,416 $60,624 $80,832 $101,040 $151,560 $202,080 $252,600 $303,120 $328,380 $353,640 $404,160

Basic Network Server $11,649 $23,298 $34,947 $46,596 $58,245 $69,894 $93,192 $116,490 $174,735 $232,980 $291,225 $349,470

Intermediate Network Server $47,633 $57,159 $66,686 $76,212 $85,739 $95,265 $238,163 $285,795 $381,060 $476,325 $571,590 $666,855

Power Network Server $28,719 $57,438 $86,157 $114,876 $143,595 $215,393 $272,831 $301,550 $358,988 $373,347 $416,426 $545,661

Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Direct Cost of Sales $389,763 $521,186 $652,608 $814,547 $956,661 $1,195,397 $1,555,854 $1,812,584 $2,165,262 $2,440,977 $2,744,834 $3,133,221

Appendix

Page 3

Table: Personnel

Personnel Plan


Kit Puma - Chairman of the Board 0% $8,500 $8,500 $5,800 $8,500 $8,500 $8,500 $8,500 $8,500 $8,500 $8,500 $8,500 $8,500

Lynx Caracal - President & CEO 0% $4,166 $4,166 $4,166 $4,166 $4,166 $4,166 $4,166 $4,166 $4,166 $4,166 $4,166 $4,166

Neve Palenque - Vice President 0% $3,950 $3,950 $3,950 $3,950 $3,950 $3,950 $3,950 $3,950 $3,950 $3,950 $3,950 $3,950

Felidae Kalakmul - Secretary 0% $3,750 $3,750 $3,750 $3,750 $3,750 $3,750 $3,750 $3,750 $3,750 $3,750 $3,750 $3,750

Panthera Dos Pilas, CPA - Treasurer 0% $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500

Marketing Director (not yet hired) 0% $0 $0 $3,750 $3,750 $3,750 $3,750 $3,750 $3,750 $3,750 $3,750 $3,750 $3,750

Other 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total People 4 4 4 4 4 4 4 4 4 4 4 4

Total Payroll $21,866 $21,866 $22,916 $25,616 $25,616 $25,616 $25,616 $25,616 $25,616 $25,616 $25,616 $25,616

Appendix

Page 4

Table: General Assumptions

General Assumptions


Plan Month 1 2 3 4 5 6 7 8 9 10 11 12

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

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

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

Other 1 1 1 1 1 1 1 1 1 1 1 1

Appendix

Page 5

Table: Profit and Loss

Pro Forma Profit and Loss


Sales $1,299,210 $1,737,285 $2,175,360 $2,715,155 $3,188,870 $3,984,655 $5,186,180 $6,041,945 $7,217,540 $8,136,590 $9,149,445 $10,444,070

Direct Cost of Sales $389,763 $521,186 $652,608 $814,547 $956,661 $1,195,397 $1,555,854 $1,812,584 $2,165,262 $2,440,977 $2,744,834 $3,133,221

Other Costs of Goods 5% $60,000 $90,000 $110,000 $140,000 $160,000 $200,000 $260,000 $300,000 $360,000 $410,000 $460,000 $520,000

Total Cost of Sales $449,763 $611,186 $762,608 $954,547 $1,116,661 $1,395,397 $1,815,854 $2,112,584 $2,525,262 $2,850,977 $3,204,834 $3,653,221

Gross Margin $849,447 $1,126,100 $1,412,752 $1,760,609 $2,072,209 $2,589,259 $3,370,326 $3,929,362 $4,692,278 $5,285,613 $5,944,612 $6,790,849

Gross Margin % 65.38% 64.82% 64.94% 64.84% 64.98% 64.98% 64.99% 65.03% 65.01% 64.96% 64.97% 65.02%

Expenses

Payroll $21,866 $21,866 $22,916 $25,616 $25,616 $25,616 $25,616 $25,616 $25,616 $25,616 $25,616 $25,616

Divisions payroll (see note) 20% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $100,000

Depreciation 1% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Divisions operating expense

(see note)

38% $200,000 $300,000 $300,000 $400,000 $500,000 $600,000 $800,000 $900,000 $1,100,000 $1,200,000 $1,400,000 $1,600,000

Payroll Taxes 15% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $1,000

Other 1% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Operating Expenses $221,866 $321,866 $322,916 $425,616 $525,616 $625,616 $825,616 $925,616 $1,125,616 $1,225,616 $1,425,616 $1,726,616

Profit Before Interest and Taxes $627,581 $804,234 $1,089,836 $1,334,993 $1,546,593 $1,963,643 $2,544,710 $3,003,746 $3,566,662 $4,059,997 $4,518,996 $5,064,233

EBITDA $627,581 $804,234 $1,089,836 $1,334,993 $1,546,593 $1,963,643 $2,544,710 $3,003,746 $3,566,662 $4,059,997 $4,518,996 $5,064,233

Interest Expense $16,228 $16,009 $15,789 $15,566 $15,342 $15,116 $18,805 $14,658 $14,426 $14,192 $13,956 $13,718

Taxes Incurred $183,406 $236,467 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Net Profit $427,947 $551,757 $1,074,047 $1,319,426 $1,531,251 $1,948,527 $2,525,905 $2,989,088 $3,552,236 $4,045,805 $4,505,040 $5,050,515

Net Profit/Sales 32.94% 31.76% 49.37% 48.59% 48.02% 48.90% 48.70% 49.47% 49.22% 49.72% 49.24% 48.36%

Appendix

Page 6

Table: Cash Flow

Pro Forma Cash Flow


Cash Received

Cash from Operations

Cash Sales $324,803 $434,321 $543,840 $678,789 $797,218 $996,164 $1,296,545 $1,510,486 $1,804,385 $2,034,148 $2,287,361 $2,611,018

Cash from Receivables $286,055 $318,535 $985,359 $1,313,916 $1,645,015 $2,048,209 $2,411,547 $3,018,529 $3,911,029 $4,560,849 $5,436,131 $6,127,764

Subtotal Cash from Operations $610,857 $752,856 $1,529,199 $1,992,704 $2,442,232 $3,044,373 $3,708,092 $4,529,016 $5,715,414 $6,594,996 $7,723,493 $8,738,781

Additional Cash Received

Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Current Borrowing $0 $100,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Cash Received $610,857 $852,856 $1,529,199 $1,992,704 $2,442,232 $3,044,373 $3,708,092 $4,529,016 $5,715,414 $6,594,996 $7,723,493 $8,738,781

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

Expenditures from Operations

Cash Spending $21,866 $21,866 $22,916 $25,616 $25,616 $25,616 $25,616 $25,616 $25,616 $25,616 $25,616 $25,616

Bill Payments $192,354 $807,805 $1,305,385 $1,233,804 $1,556,248 $1,804,489 $2,297,762 $3,021,778 $3,318,927 $4,024,577 $4,373,757 $4,967,155

Subtotal Spent on Operations $214,220 $829,671 $1,328,301 $1,259,420 $1,581,864 $1,830,105 $2,323,378 $3,047,394 $3,344,543 $4,050,193 $4,399,373 $4,992,771

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Other Liabilities Principal Repayment $100,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Long-term Liabilities Principal Repayment $26,043 $26,260 $26,479 $26,699 $26,922 $27,146 $27,372 $27,600 $27,830 $28,062 $28,296 $28,532

Purchase Other Current Assets $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000

Purchase Long-term Assets $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000

Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Cash Spent $380,262 $895,931 $1,394,779 $1,326,119 $1,648,785 $1,897,251 $2,390,751 $3,114,995 $3,412,373 $4,118,255 $4,467,669 $5,061,303

Net Cash Flow $230,595 ($43,075) $134,420 $666,585 $793,447 $1,147,122 $1,317,342 $1,414,021 $2,303,041 $2,476,741 $3,255,823 $3,677,479

Cash Balance $238,304 $195,229 $329,649 $996,234 $1,789,681 $2,936,803 $4,254,145 $5,668,166 $7,971,207 $10,447,948 $13,703,771 $17,381,250

Appendix

Page 7

Table: Balance Sheet

Pro Forma Balance Sheet


Assets Starting Balances

Current Assets

Cash $7,709 $238,304 $195,229 $329,649 $996,234 $1,789,681 $2,936,803 $4,254,145 $5,668,166 $7,971,207 $10,447,948 $13,703,771 $17,381,250

Accounts Receivable $572,109 $1,260,462 $2,244,891 $2,891,052 $3,613,502 $4,360,140 $5,300,422 $6,778,510 $8,291,439 $9,793,565 $11,335,159 $12,761,112 $14,466,400

Inventory $487,587 $428,739 $573,304 $717,869 $896,001 $1,052,327 $1,314,936 $1,711,439 $1,993,842 $2,381,788 $2,685,075 $3,019,317 $3,446,543

Other Current Assets $193,429 $218,429 $243,429 $268,429 $293,429 $318,429 $343,429 $368,429 $393,429 $418,429 $443,429 $468,429 $493,429

Total Current Assets $1,260,834 $2,145,934 $3,256,853 $4,206,998 $5,799,166 $7,520,577 $9,895,590 $13,112,523 $16,346,876 $20,564,989 $24,911,611 $29,952,629 $35,787,622

Long-term Assets

Long-term Assets $1,479,498 $1,494,498 $1,509,498 $1,524,498 $1,539,498 $1,554,498 $1,569,498 $1,584,498 $1,599,498 $1,614,498 $1,629,498 $1,644,498 $1,659,498

Accumulated Depreciation $166,002 $166,002 $166,002 $166,002 $166,002 $166,002 $166,002 $166,002 $166,002 $166,002 $166,002 $166,002 $166,002

Total Long-term Assets $1,313,496 $1,328,496 $1,343,496 $1,358,496 $1,373,496 $1,388,496 $1,403,496 $1,418,496 $1,433,496 $1,448,496 $1,463,496 $1,478,496 $1,493,496

Total Assets $2,574,330 $3,474,430 $4,600,349 $5,565,494 $7,172,662 $8,909,073 $11,299,086 $14,531,019 $17,780,372 $22,013,485 $26,375,107 $31,431,125 $37,281,118

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

Current Liabilities

Accounts Payable $166,002 $764,198 $1,264,619 $1,182,196 $1,496,637 $1,728,718 $2,197,350 $2,911,945 $3,185,153 $3,879,435 $4,209,121 $4,774,440 $5,588,732

Current Borrowing $370,126 $370,126 $470,126 $470,126 $470,126 $470,126 $470,126 $470,126 $0 $0 $0 $0 $0

Other Current Liabilities $335,462 $235,462 $235,462 $235,462 $235,462 $235,462 $235,462 $235,462 $235,462 $235,462 $235,462 $235,462 $235,462

Subtotal Current Liabilities $871,590 $1,369,786 $1,970,207 $1,887,784 $2,202,225 $2,434,306 $2,902,938 $3,617,533 $3,420,615 $4,114,897 $4,444,583 $5,009,902 $5,824,194

Long-term Liabilities $1,973,421 $1,947,378 $1,921,119 $1,894,640 $1,867,941 $1,841,019 $1,813,873 $1,786,501 $1,758,901 $1,731,071 $1,703,008 $1,674,712 $1,646,180

Total Liabilities $2,845,011 $3,317,164 $3,891,326 $3,782,424 $4,070,166 $4,275,325 $4,716,812 $5,404,034 $5,179,516 $5,845,967 $6,147,592 $6,684,614 $7,470,375

Paid-in Capital $676,193 $676,193 $676,193 $676,193 $676,193 $676,193 $676,193 $676,193 $676,193 $676,193 $676,193 $676,193 $676,193

Retained Earnings ($946,874) ($946,874) ($946,874) ($946,874) ($946,874) ($946,874) ($946,874) ($946,874) ($946,874) ($946,874) ($946,874) ($946,874) ($946,874)

Earnings $0 $427,947 $979,704 $2,053,751 $3,373,178 $4,904,429 $6,852,956 $9,378,860 $12,367,948 $15,920,185 $19,965,990 $24,471,030 $29,521,544

Total Capital ($270,681) $157,266 $709,023 $1,783,070 $3,102,497 $4,633,748 $6,582,275 $9,108,179 $12,097,267 $15,649,504 $19,695,309 $24,200,349 $29,250,863

Total Liabilities and Capital $2,574,330 $3,474,430 $4,600,349 $5,565,494 $7,172,662 $8,909,073 $11,299,086 $14,512,214 $17,276,783 $21,495,471 $25,842,901 $30,884,963 $36,721,238

Net Worth ($270,681) $157,266 $709,023 $1,783,070 $3,102,497 $4,633,748 $6,582,275 $9,126,985 $12,600,856 $16,167,518 $20,227,515 $24,746,511 $29,810,744

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