April 2005

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 Table of Contents
1.0 Executive Summary.............................................................................................................................1
1.1 Objectives ...................................................................................................................................2
1.2 Keys to Success ........................................................................................................................2
1.3 Mission........................................................................................................................................3
2.0 Company Summary.............................................................................................................................3
2.1 Company Ownership .................................................................................................................3
2.2 Start-up Summary ......................................................................................................................3
3.0 Products ...............................................................................................................................................4
4.0 Market Analysis Summary..................................................................................................................5
4.1 Market Segmentation ................................................................................................................5
4.2 Target Market Segment Strategy.............................................................................................6
4.3 Industry Analysis .........................................................................................................................7
4.3.1 Competition and Buying Patterns .........................................................................................8
5.0 Strategy and Implementation Summary ............................................................................................9
5.1 Competitive Edge ......................................................................................................................9
5.2 Marketing Strategy ..................................................................................................................10
5.3 Sales Strategy..........................................................................................................................11
5.3.1 Sales Forecast .....................................................................................................................11
5.4 Milestones ................................................................................................................................12
6.0 Management Summary ....................................................................................................................13
6.1 Personnel Plan.........................................................................................................................14
7.0 Financial Plan ....................................................................................................................................15
7.1 Start-up Funding ......................................................................................................................15
7.2 Important Assumptions............................................................................................................16
7.3 Break-even Analysis................................................................................................................16
7.4 Projected Profit and Loss .......................................................................................................17
7.5 Projected Cash Flow ...............................................................................................................20
7.6 Projected Balance Sheet ........................................................................................................22
7.7 Business Ratios .......................................................................................................................23

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 Garbles Cellular Phones

1.0 Executive Summary

Cellular telephones have revolutionized the communications arena, redefining how we perceive
voice communications. Traditionally, cellular phones remained out of the hands of most
consumers due to their high cost. As a result, cell phone carriers have invested time and
resources into finding ways to give the systems higher capacity and thus lower cost. Cell
systems are benefiting from this research and starting to develop into large-sc ale consumer
products.

Today, cellular phones are truly consumer elec tronics devices with over 59 million subsc ribers.
The Nokia Bowl and Qualcomm Stadium are further evidence of the idea that cell phones are
consumer elec tronics devices. Cell phones have ceased to be an exclusive status symbol of
high-powered lawyers and are now in the hands of millions of consumers.

Garbles Cellular Phones, Inc. is taking advantage of an opportunity to bec ome a highly
distinguished and rec ognized leader in the cellular communications industry. It is the goal of our
company to bec ome established as the leading distributor of wireless communications services in
the metro Niceburg area.

In order to ac hieve this goal, Garbles Cellular Phones' critical success fac tors will be to identify
emerging trends and integrate them into our company operations, respond quickly to tec hnology
changes/be there early, provide high-quality services, invest time and money in marketing and
advertising, expand into specialty markets, and stay ahead of the "tec hnology curve."

The company was initially formed as a sole proprietorship by Mr. Seramed Garbles in the East
Atlantic Island Archipelago (EAIA), and succeeded tremendously in that market. Capitalizing on
the growing wireless communications industry and based on their success in EAIA the Garbles
family dec ided to expand their company's operations to the U.S.A. and create a niche market for
its products and ac cessories.

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1.1 Objectives

The company plans to foc us on the following target markets that will provide us with the
greatest market penetration: the specialty business users, the general business users, and the
personal users. We intend to offer products and service pac kages that are priced appropriately
for eac h segment and will offer the services that best suit eac h segment's needs.

The suburb of Pleasant Village, picked to be our headquarters' loc ation, is a foc al point in the
Niceburg area. Located a few miles south of downtown Niceburg, it is a community with a small
town atmosphere but big city conveniences.

The Metro Niceburg area is populated today by more than 700,000 inhabitants, is home to 13
Fortune 500 and 24 Fortune 1,000 company headquarters. The Metropolitan Niceburg Chamber of
Commerce and corporate exec utives are committed to ac tively rec ruiting new companies to the
region. Public and private partnerships with business, financial and nonprofit communities are key
to spurring quality job creation and investment throughout the city s neighborhoods.

Our company will center on serving the growing the Niceburg community (presently at a 6% per
year rate) as well as concentrating on the loc al Pleasant Village population, banking on the
current growing trend of using mobile phones.

Our company will concentrate on selling Global System for Mobile Communications (GSM) protoc ol
cellular phones - sales, services and support.

Business Objectives

• Company growth
• Bec ome established as the leading distributor of cellular phones and wireless communications
services
• Increase number of retail outlets

Financial Objectives

• Create and increase revenue

Marketing Objectives

• Increase marketing efforts

• Expand market area
• Expand marketing reach
• Brand rec ognition
• Increase telemarketing efforts

1.2 Keys to Success

Our company keys to success will include:

1. Provide excellent customer service

2. Grow and maintain a referral network of customers
3. Foc us expertise in GSM cellular phones and GSM cellular phone programs
4. Respond rapidly to customer problems with product or plan

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 Garbles Cellular Phones

1.3 Mission

Garbles Cellular's mission is to offer its customers the highest quality cell phone products and
services. Its owner foc uses on personalized service to his customers by offering convenience
and rapid service. Additionally, Garbles Cellular has the technological expertise to assist
customers in picking the product and service that best meets their needs. Finally, our staff will
have strong vendor relationships with the product suppliers and will be able to meet customers'
demand for the newest innovation in c ellular phone tec hnology.

We believe it is important to remain an active member of the community, and to impact people's
lives in more ways than deriving a profit from them. We propose to host community events that
bring out the best in people.

2.0 Company Summary

Garbles Cellular Phones, Inc. will offer its customers GSM cellular phones, and cellular phones
ac cessories.

GSM stands for "Global System for Mobile Communications." GSM is originally a European system
and is largely being adopted today in the United States. Its greatest advantage, a technical
one, is that the owner can use the phone all over the world since the system is used mostly
anywhere.

Market demand drives cell phone manufac tures and service providers to offer new and improved
services and functions in their cell phones. The demand for more visual interac tion and
entertainment with c ell phones in the Japanese market, for instance, is great and as such, their
phones are many years ahead of what we will see in the U.S.A. Phones have definitely bec ome
an important part of people's lives all over the world, whereas in North America many still view
the cell phone as a tool and not as a entertainment device. The average phone in North America
lasts 3-5 years before being replac ed, in Japan it is a frac tion of this time.

We believe that, with our long and thorough experience in the EAIA, our store will be in the
perfec t loc ation to start our operations in the U.S.A., and will start operating in the right time.
Garbles Cellular Phones will provide its customers support and convenience second to none.

2.1 Company Ownership

Garbles Cellular Phones is wholly owned by Mr. Seramed Garbles, who is a citizen of the East
Atlantic Island Archipelago and the owner of Garbles Cellular Phones Ltd in that country.

2.2 Start-up Summary

Mr. Seramed Garbles will invest $43,000 in Garbles Cellular Phones, Inc. He will also invest an
additional $50,000 when operation takes off in April 2005. The following chart and table show
projec ted initial start-up costs for Garbles Cellular Phones, Inc.

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 Garbles Cellular Phones

Table: Start-up
Start-up

Requirements

Start-up Expenses
Legal $5,000
Insurance $1,000
Rent $2,000
Equipment $2,000
Other $1,000
Total Start-up Expenses $11,000

Start-up Assets
Cash Required $2,000
Start-up Inventory $30,000
Other Current Assets $0
Long-term Assets $0
Total Assets $32,000

Total Requirements $43,000

3.0 Products

The following are the products that will be offered by Garbles Cellular Phones:

• GSM Cellular Phones: Motorola, Nokia, Sharp, Siemens, Samsung, Alcatel, Ericsson, Fujitsu,
Hyundai, LG Elec tronics, and others.
• Fixed Wireless Phones
• Cellular Phone Accessories: antennas, batteries, belt clips, cables and adapters, cases,
chargers, fac eplates, and modems.
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 Garbles Cellular Phones

4.0 Market Analysis Summary

The market potential is huge for our products, evidenced by what appears to be the unstoppable
growth of the telec om industry. Currently, the telec om industry is among the strongest growth
industries and is responsible for huge gains in the capital markets. The proliferation of cellular
phones is increasing at rates which at one time were unimaginable. One illustrative example is
that it is forec asted that within two years over 65% of children from age of 10-15 will have cell
phones.
Future growth of the market/products is projec ted in the following areas:
Text messages between friends (in Japan this big). Users can send regular Short-Message
Service (SMS) or email on their phones. Email is of course limited to small file sizes, but many of
the phones allow for English charac ters to be sent. Each provider also allows special charac ters
to be sent, such as an array of happy and sad fac es, small animated images, animals, people,
hearts, etc. When special charac ters are not available, people often use a specialized set of
fac es to show emotion. Email can also be sent between different provider phones, but many of
the special charac ters are lost, hence users may try to keep a circle of friends on the same
provider to rec eive the special charac ters. Email, of course, may be sent from computers as well,
but files are often stripped of headers and attac hments when rec eived on cell phones.
Most North American phones come with a few games to keep people entertained for a limited
duration. Japanese phones come with two different types of games: built-in ones and Java
application ones. The built-in ones are simple, but again the graphics are very important to the
game value. Java application games are delivered via the network to the customer's phone and
there is a charge for this service. These games are much more complex and require streaming
data to ac cess. New games come out monthly. You can even buy joysticks and navigation
consoles that plug into your phone.
One of the rec ent popular additions to many of the Japanese and Korean phone models is a CCD
Camera that is mounted either on the outside of the clamshell or on the clamshell hinge. The
camera lens is slightly smaller than a dime and takes 4x4 cm pictures to display on the phone's
sc reen or to send to others. Not only can users take pictures, they can take video clips as well.
Most phones take between 5-15 seconds of footage due to memory limitations, but they can
send streaming video. Many of the advertisements for camera phones show people taking to
each other and watching each other on the sc reen (both holding the phone and camera at arm's
length and using a hands-free microphone and earpiec e). The camera also has a couple of neat
ac cessories including an external flash that pops into an ac cessory port and a miniature printer
that will print out pictures.

Our company will try to take advantage of these developments and serve its customers in all
these new trends and developments.

4.1 Market Segmentation

Garbles Cellular Phones, Inc. will foc us on five customer groups, bearing in mind that it is quite
customary today to have more than one cell phone per family:

• Children in the age group of 10-17 years old

• Students
• General public
• Professionals
• Service organizations and companies that need to be in c onstant communication with their
employees.

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 Garbles Cellular Phones

Table: Market Analysis

Market Analysis
2005 2006 2007 2008 2009
Potential Customers Growth CAGR
Children 10-17 years old 3% 90,000 92,700 95,481 98,345 101,295 3.00%
Students 2% 50,000 51,000 52,020 53,060 54,121 2.00%
Professionals 2% 40,000 40,800 41,616 42,448 43,297 2.00%
General Public 2% 250,000 255,000 260,100 265,302 270,608 2.00%
Operating Service Companies 4% 40,000 41,600 43,264 44,995 46,795 4.00%
Other 1% 30,000 30,300 30,603 30,909 31,218 1.00%
Total 2.29% 500,000 511,400 523,084 535,059 547,334 2.29%

4.2 Target Market Segment Strategy

The market for cellular phones and their ac cessories is very fragmented, crowded and
competitive. Among these, there are only a few large loc al firms that serve the entire city of
Niceburg and its surroundings. The remainder are small firms that sell from kiosks in the
surrounding malls. Garbles Cellular Phones current niche in its loc ation, variety of products and
expertise in serving the public will assure the projec ted sales.

We expec t to take full advantage of the trends described in the Market Analysis above, and try
to penetrate the market with new innovations and gadgets mainly with the younger
generation, using advertisements and demonstrations. We shall also try to lure independent small
sellers to join our effort.

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4.3 Industry Analysis

The U.S. market is dominated today by three large companies:

T-Mobile Wireless - owned by a subsidiary of Deutsc he Telekom since May 31, 2001.

• Revenues:Exceeding $13.6 billion in 2001.

• Wireless Phone Service Subscribers: Cellular voice, messaging and high-speed wireless data
services to more than 8 million customers.
• Cellular Phone Service and Technology: T-Mobile Wireless operates the largest all digital,
wireless network based exclusively on GSM (Global System for Mobile Communications)
technology. GSM is the most widely used digital standard worldwide, ac counting for more
than 70 percent of the total digital wireless market.

Cingular Wireless is the second largest wireless company in the U.S. A leader in mobile voice
and data communications, Cingular is a wireless company determined to promote the individual to
a new level.

• Ownership: Cingular Wireless is a joint venture between the domestic wireless divisions of
SBC (NYSE:SBC) and BellSouth (NYSE: BLS). Headquarters in Atlanta, Georgia. SBC owns 60
percent of the company and BellSouth owns 40 percent, based on the value of the assets
both c ontributed to the venture.
• Revenue on the cellular service in Year 2002 was more than $14.7 billion.
• Cellular Phone Service Subscribers: more than 22 million voice and data customers ac ross the
U.S.A.
• Cellular Phone Service and Technology: A leader in mobile voice and data communications,
Cingular is the only U.S. wireless carrier to offer Rollover, the wireless plan that lets
customers keep their unused monthly minutes. Cingular provides cellular/PCS service in 43 of
the top 50 markets nationwide, and provides corporate e-mail and other advanced data
services through its GPRS and Mobitex pac ket data networks

Nextel Communications, based in Reston, VA, is a leading provider of fully integrated, wireless
communications services on the largest guaranteed, all-digital, wireless network in the country.

• Ownership: Nextel Wireless is traded on the NASDAQ National Market under the symbol NXTL.
Nextel Partners is a separate company traded on the NASDAQ National Market.
• Revenue on the cellular service $8.7 billion (2002).
• Cellular Phone Service Subscribers: 10.61 million (Q4 2002).
• Cellular Phone Service and Technology: Nextel uses a pac ket-based platform, the integrated
Digital Enhanced Network (iDEN") tec hnology, developed by Motorola. The Nextel 4-in-1
service Nextel Digital Cellular, Direc t Connec tSM, Nextel Mobile Messaging, and Nextel
Online® covers thousands of communities ac ross the United States. Nextel and Nextel
Partners, Inc., currently serve 197 of the top 200 U.S. markets.

Garbles Cellular Phones is aiming to gather a share of the market from these three.

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 Garbles Cellular Phones

4.3.1 Competition and Buying Patterns

Brand names are of little, if any, importance. The key to the buying dec ision on the part of the
consumer is the salesman and the cell phone being in front of them. As has been pointed out in
the Competitive Analysis section there are other sellers with similar brand names as those
supplied by Garbles Cellular Phones, Inc. which may even be less expensive. It is essential that
the salesman point out the salient features and selling points favoring our products. Most
importantly, our products must be available in the retail outlet, since whatever products our
store carries are the ones that are going to be sold.

The need to attrac t, ac quire, leverage, and retain c ustomers remains a primary concern to
business. Revenue growth through customer ac quisition and retention is as important a
requirement in e-commerce as it is in other business. Customers, espec ially in the Western
business culture, count speed of service as a key reason why they do business with a company.
They resent delays and hate waiting for service. In the United States, almost 80% of the gross
domestic product (GDP) is generated through different kinds of services, and speed of service no
longer distinguishes an enterprise as providing superior value. Customers generally are not thrilled
if they rec eive good service, but they are highly dissatisfied if they do not. Garbles Cellular will
provide the necessary framework to cope with these demands by cutting the waiting time for a
service.

Customers also want consistent, reliable, and easy-to-use service. As the speed of service
increases, customer expec tations grow, making friendly, easy, and solution-oriented customer
service an important business trend.

Reflec tive shoppers get some support from e-commerce as well. They like to investigate
products prec isely and consc iously. However, when browsing costs a lot bec ause of on-line
charges, they do less of it. Consequently, they do not get a holistic view of the available
options, and their expec tations often are not met. Reference-spending customers do not let
themselves be hurried or forced. They use alternative offline sources to get information. They
refuse aggressive marketing, which is ac cepted in Western e-commerce.

Soon, shoppers will simply wave their cell phone over the item they want and the charge will
automatically appear on their cell phone bill. It s happening in some cities overseas already. And
right now, MasterCard and Motorola are testing out a similar program here in the States.
Retailers have registers that will take the signal from the cell phone, and the purchase is
automatically converted to a MasterCard charge. Buyers don t have to sign anything. The
sc ary part is what could happen when people lose their cell phones or have them stolen. There
are lots of technical and legal issues to work out here, but paying wirelessly is going to gain
momentum quickly.

Garbles Cellular is planning to take advantage of these trends of buying patterns. We shall also
be very quick in establishing our own website to take advantage of E-trade.

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 Garbles Cellular Phones

5.0 Strategy and Implementation Summary

Garbles Cellular Phones will use a strategy of total market service. Assumptions:

1. Every person is a potential customer and all our potential markets will experience growth.
2. Marketing to one segment of the population will lead to an expansion in overall market
growth.

The following sections review the various strategies that will support this effort.

5.1 Competitive Edge

The Seramed Communication's competitive edge will be:

Location: Locating the company in a suburb of Niceburg, Homestate enables the company
to cover a large and rapidly developing customer populac e.

Customer Service: Mr. Seramed Garbles, owner and CEO of Garbles Cellular Inc., has been
the CEO of the Garbles Cellular Phones Ltd. in the East Atlantic Island Archipelago for many
years past, and ac cumulated a vast knowledge and experience in the cellular phone market,
with a special expertise in GSM phones. He is very familiar with his target customer base.
He has an excellent reputation for customer service.

E-Commerce: The company will make an effort to enhance its sales through a serious and
advantageous website in order to attrac t customers that are reluctant to do business with
large companies.

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 Garbles Cellular Phones

5.2 Marketing Strategy

Short-term marketing strategies are those that bring will bring us a temporary boost in traffic.
Although these techniques are very important to our over-all plan, they are only a temporary
traffic source and must not be solely relied upon. Short-term marketing strategies include:

• Purchasing Advertising
• Bulletin Boards
• Search Engines

Long-term marketing strategies are those that will bring us a steady stream of targeted traffic
over time. These strategies will continue to produce results even years down the road. Long-
term marketing strategies include:

• Opt-in Lists
• Freebies
• Content

By creating and implementing a balanced marketing strategy, using both short-term and long-
term strategies, Garbles Cellular will drive a steady stream of targeted traffic to our website.
Using this simple formula when c reating our Internet marketing strategy and excelling at all
three, we hope to guarantee our success.

Our short-term marketing strategy will foc us heavily on sales promotion, niche positioning in the
market and customer service with loyalty and retention in sales.

Our promotions will always stay in tune with our company objec tives and mission statement.

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 Garbles Cellular Phones

5.3 Sales Strategy

Constructing our Sales Strategy we shall follow the following steps:

Sales Success Requires Planning - we shall formulate our sales strategy and tac tics to
ac hieve our sales success.

Analyze Our Potential - we shall step through a structured proc ess that will prepare us for the
development of our sales strategy.

Strategize Around Strengths - the description of our sales ac tivity will be analyzed producing
a report that reveals fac tors impacting our sales potential.

Develop Our Tactics - we shall rec eive guidance to develop a comprehensive tac tical plan to
ac hieve our success.

Measure Our Success - we shall constantly develop key measurements that mark the progress
of financial estimates that guide our growth.

Employ An Action Plan for Success - we shall provide our sales force a clear tac tical plan that
is also aligned with management's strategic objec tives.

The sales strategy of Garbles Cellular Phones is simple. The key to customer satisfac tion is
having the product and services that meet the customer's needs. A crucial part of that is to also
have knowledgeable employees to help customers quickly find what they want.

5.3.1 Sales Forecast

Sales forec ast displayed here is very conservative although we aim very high, we dec ided to
show a very slow growth and revise the plan on a yearly basis. As a rule we expec t to expand
the volume much more rapidly.

Table: Sales Forecast

Sales Forecast
FY 2006 FY 2007 FY 2008
Sales
Cellular Phones $138,000 $190,000 $270,000
Cellular Phones Accessories $126,000 $160,000 $200,000
Fixed Wireless Phones $46,500 $60,000 $90,000
Other Sevices $46,500 $90,000 $150,000
Total Sales $357,000 $500,000 $710,000

Direct Cost of Sales FY 2006 FY 2007 FY 2008

Cellular Phones $31,650 $43,560 $61,900
Cellular Phones Accessories $30,450 $41,500 $51,800
Fixed Wireless Phones $11,700 $15,500 $23,300
Other Services $11,710 $23,300 $38,900
Subtotal Direct Cost of Sales $85,510 $123,860 $175,900

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 Garbles Cellular Phones

5.4 Milestones

The Milestones table hereunder is destined to be a working plan for the formation of the new
organization, including legal negotiations, hiring of personnel, rental of the fac ility, building of
initial inventory, beginning of marketing and start of physical operation.
The team to exec ute the chores will have to follow up on the timetable and make sure that
everything falls in plac e to ensure smooth start of sales and success of the organization.

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Table: Milestones
Milestones

Milestone Start Date End Date Budget Manager Department

Preview of Business Plan by 1/1/2005 1/15/2005 $1,000 CEO Department
Investor
Concluding Legal Matters 1/10/2005 2/10/2005 $4,000 Owner Department
Hiring of Operators 2/1/2005 3/1/2005 $500 CEO Department
Conclussion of Rentals 1/15/2005 2/15/2005 $2,000 Owner Department
Preparation of Website 1/15/2005 3/1/2005 $2,500 Programmer Department
Acquiring Initial Inventory 2/15/2005 3/15/2005 $31,000 Store Personnel Department
Start of Marketing 3/1/2005 4/1/2005 $0 Marketing Mgr. Department
Start of Operation 4/1/2005 4/10/2005 $2,000 All Department
Totals $43,000

6.0 Management Summary

The management of Garbles Cellular Phones, Inc. is made up of the owner, a Marketing manager
(Mr. Nomassu Perozia) and three other members who will be hired loc ally and will be added: a
Programmer, and two store attendants with one serving at the beginning as secretary.

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 Garbles Cellular Phones

6.1 Personnel Plan

The Garbles Cellular Phones' store will operate virtually 24 hours a day 7 days a week. Although
the store opening hours will be officially 10:00 a.m. to 6:00 p.m., it is clear that due to our
Internet operation the customer support will be a non-stop one. The personnel plan, as detailed
in the following table, has been developed to support these hours.

Assumptions regarding personnel have been made for year 1 through year 3 as follows:

Year 1 Ending March, 2006 - Owner, Mr. Seramed Garbles, will draw a salary of $42,000. The
Marketing Manager, Mr. Nomassu Perozia will rec eive a yearly salary of $26,400. The programmer
will have $21,000 a year plus a percentage of his Internet sales, and the two store attendants
will earn $16,800 eac h. However, they will divide the total week hours between them so that
only during busy hours will they both be present.

Year 2 Ending March, 2007 - Salaries will be boosted by 10 - 15 percent. Additional staff will
be hired if significant increases in sales warrant.

The same applies to Year 3 Ending March, 2008.

Table: Personnel
Personnel Plan
FY 2006 FY 2007 FY 2008
CEO $42,000 $48,000 $54,000
Marketing Manager $26,400 $28,800 $31,200
Programmer/Office Administrator $21,000 $22,200 $23,400
2 Store Attendantds $33,600 $36,960 $40,000
Other $0 $0 $0
Total People 0 0 0

Total Payroll $123,000 $135,960 $148,600

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 Garbles Cellular Phones

7.0 Financial Plan

It is assumed that the owner's private resources will be sufficient to finance any monthly cash-
flow shortage. However, it would be advisable to establish a bank relationship as soon as
possible. Sales could very well increase at a much sharper rate than assumed in these
conservative projec tions. Sharper sales will result in a greater need for funds in support of
inventory and rec eivables. An over-draft line of credit with the bank will be an excellent cushion
to fall bac k on.

This is considered a very good time to start a new business. The economy is beginning its trek
up, and consumer spending is up. The Commerce Department reported, "Consumers had
increased their spending, the largest advance in nine months."

A shorter learning curve will be brought to the business by the owner due to his extensive
bac kground and in-depth market knowledge. He has a clear understanding of the need to
manage costs and forec ast future needs so that the business is not "broadsided" by the
unexpec ted.

One other component on which the financial plan is based is wise purchases. Finding the right
product, at the right price will enable the business to meet planned margins and maintain
inventory at an attrac tive level with a high turn rate.

7.1 Start-up Funding

Mr. Seramed Garbles will invest $43,000 in Garbles Cellular Phones, Inc. to cover start-up costs.
He will also invest an additional $50,000 when operation takes off in April 2005. The table below
illustrates funding sources for our start-up costs.

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Table: Start-up Funding

Start-up Funding
Start-up Expenses to Fund $11,000
Start-up Assets to Fund $32,000
Total Funding Required $43,000

Assets
Non-cash Assets from Start-up $30,000
Cash Requirements from Start-up $2,000
Additional Cash Raised $0
Cash Balance on Starting Date $2,000
Total Assets $32,000

Liabilities and Capital

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

Capital

Planned Investment
Owner $43,000
Investor $0
Additional Investment Requirement $0
Total Planned Investment $43,000

Loss at Start-up (Start-up Expenses) ($11,000)

Total Capital $32,000

Total Capital and Liabilities $32,000

Total Funding $43,000

7.2 Important Assumptions

As a general rule our company will not sell on credit. However for very special cases we might
offer short-term credit against valid assurances. We shall ac cept cash and checks, Visa,
MasterCard, Disc over and American Express, and PayPal on the Internet. All sales paid via credit
cards will be deposited in our business checking ac count within 48 hours.

7.3 Break-even Analysis

Our break-even analysis is summarized by the following chart and table.

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Table: Break-even Analysis

Break-even Analysis

Monthly Revenue Break-even $17,916

Assumptions:
Average Percent Variable Cost 24%
Estimated Monthly Fixed Cost $13,625

7.4 Projected Profit and Loss

There are many fac tors to include when determining a projec ted profit and loss statement, these
are included in the following table.

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 Garbles Cellular Phones

Table: Profit and Loss

Pro Forma Profit and Loss
FY 2006 FY 2007 FY 2008
Sales $357,000 $500,000 $710,000
Direct Cost of Sales $85,510 $123,860 $175,900
Other Costs of Sales $26,824 $30,000 $45,000
Total Cost of Sales $112,334 $153,860 $220,900

Gross Margin $244,666 $346,140 $489,100

Gross Margin % 68.53% 69.23% 68.89%

Expenses
Payroll $123,000 $135,960 $148,600
Marketing/Promotion $4,500 $10,000 $25,000
Depreciation $0 $0 $0
Rent $24,000 $24,000 $24,000
Insurance $12,000 $12,000 $12,000
Payroll Taxes $0 $0 $0
Other $0 $0 $0

Total Operating Expenses $163,500 $181,960 $209,600

Profit Before Interest and Taxes $81,166 $164,180 $279,500

EBITDA $81,166 $164,180 $279,500
Interest Expense $0 $0 $0
Taxes Incurred $24,350 $49,254 $83,850

Net Profit $56,816 $114,926 $195,650

Net Profit/Sales 15.91% 22.99% 27.56%

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 Garbles Cellular Phones

7.5 Projected Cash Flow

Our projec ted cash flow is outlined in the following chart and table.

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Table: Cash Flow

Pro Forma Cash Flow
FY 2006 FY 2007 FY 2008
Cash Received

Cash from Operations

Cash Sales $357,000 $500,000 $710,000
Subtotal Cash from Operations $357,000 $500,000 $710,000

Additional Cash Received

Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $50,000 $0 $0
Subtotal Cash Received $407,000 $500,000 $710,000

Expenditures FY 2006 FY 2007 FY 2008

Expenditures from Operations

Cash Spending $123,000 $135,960 $148,600
Bill Payments $139,315 $247,800 $360,927
Subtotal Spent on Operations $262,315 $383,760 $509,527

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $262,315 $383,760 $509,527

Net Cash Flow $144,685 $116,240 $200,473

Cash Balance $146,685 $262,924 $463,397

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 Garbles Cellular Phones

7.6 Projected Balance Sheet

The table shows the annual balance sheet results, with a healthy projec ted increase in net
worth. Detailed monthly projec tions are in the appendix.

Table: Balance Sheet

Pro Forma Balance Sheet
FY 2006 FY 2007 FY 2008
Assets

Current Assets
Cash $146,685 $262,924 $463,397
Inventory $8,000 $11,588 $16,457
Other Current Assets $0 $0 $0
Total Current Assets $154,685 $274,512 $479,854

Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $154,685 $274,512 $479,854

Liabilities and Capital FY 2006 FY 2007 FY 2008

Current Liabilities
Accounts Payable $15,869 $20,770 $30,462
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $15,869 $20,770 $30,462

Long-term Liabilities $0 $0 $0
Total Liabilities $15,869 $20,770 $30,462

Paid-in Capital $93,000 $93,000 $93,000

Retained Earnings ($11,000) $45,816 $160,742
Earnings $56,816 $114,926 $195,650
Total Capital $138,816 $253,742 $449,392
Total Liabilities and Capital $154,685 $274,512 $479,854

Net Worth $138,816 $253,742 $449,392

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7.7 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the
Standard Industrial Classification (SIC) code 5731.9902, Consumer elec tronic equipment, nec,
are shown for comparison.

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Table: Ratios
Ratio Analysis
FY 2006 FY 2007 FY 2008 Industry Profile
Sales Growth 0.00% 40.06% 42.00% 5.90%

Percent of Total Assets

Inventory 5.17% 4.22% 3.43% 33.94%
Other Current Assets 0.00% 0.00% 0.00% 26.57%
Total Current Assets 100.00% 100.00% 100.00% 80.73%
Long-term Assets 0.00% 0.00% 0.00% 19.27%
Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 10.26% 7.57% 6.35% 41.85%

Long-term Liabilities 0.00% 0.00% 0.00% 11.83%
Total Liabilities 10.26% 7.57% 6.35% 53.68%
Net Worth 89.74% 92.43% 93.65% 46.32%

Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 68.53% 69.23% 68.89% 32.59%
Selling, General & Administrative Expenses 52.62% 46.24% 41.33% 17.11%
Advertising Expenses 0.00% 0.00% 0.00% 2.28%
Profit Before Interest and Taxes 22.74% 32.84% 39.37% 0.85%

Main Ratios
Current 9.75 13.22 15.75 1.73
Quick 9.24 12.66 15.21 0.79
Total Debt to Total Assets 10.26% 7.57% 6.35% 58.93%
Pre-tax Return on Net Worth 58.47% 64.70% 62.20% 2.27%
Pre-tax Return on Assets 52.47% 59.81% 58.25% 5.54%

Additional Ratios FY 2006 FY 2007 FY 2008

Net Profit Margin 15.91% 22.99% 27.56% n.a
Return on Equity 40.93% 45.29% 43.54% n.a

Activity Ratios
Inventory Turnover 8.67 12.65 12.54 n.a
Accounts Payable Turnover 9.78 12.17 12.17 n.a
Payment Days 27 26 25 n.a
Total Asset Turnover 2.31 1.82 1.48 n.a

Debt Ratios
Debt to Net Worth 0.11 0.08 0.07 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a

Liquidity Ratios
Net Working Capital $138,816 $253,742 $449,392 n.a
Interest Coverage 0.00 0.00 0.00 n.a

Additional Ratios
Assets to Sales 0.43 0.55 0.68 n.a
Current Debt/Total Assets 10% 8% 6% n.a
Acid Test 9.24 12.66 15.21 n.a
Sales/Net Worth 2.57 1.97 1.58 n.a
Dividend Payout 0.00 0.00 0.00 n.a

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 Appendix
Table: Sales Forecast

Sales Forecast
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Sales
Cellular Phones 0% $10,000 $10,000 $10,000 $11,000 $11,000 $11,000 $12,000 $12,000 $12,000 $13,000 $13,000 $13,000
Cellular Phones Accessories 0% $9,000 $9,000 $9,000 $10,000 $10,000 $10,000 $11,000 $11,000 $11,000 $12,000 $12,000 $12,000
Fix ed Wireless Phones 0% $3,500 $3,500 $3,500 $3,750 $3,750 $3,750 $4,000 $4,000 $4,000 $4,250 $4,250 $4,250
Other Sevices 0% $3,500 $3,500 $3,500 $3,750 $3,750 $3,750 $4,000 $4,000 $4,000 $4,250 $4,250 $4,250
Total Sales $26,000 $26,000 $26,000 $28,500 $28,500 $28,500 $31,000 $31,000 $31,000 $33,500 $33,500 $33,500

Direct Cost of Sales Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Cellular Phones $2,300 $2,300 $2,300 $2,500 $2,500 $2,500 $2,750 $2,750 $2,750 $3,000 $3,000 $3,000
Cellular Phones Accessories $2,250 $2,250 $2,250 $2,400 $2,400 $2,400 $2,600 $2,600 $2,600 $2,900 $2,900 $2,900
Fix ed Wireless Phones $900 $900 $900 $950 $950 $950 $1,000 $1,000 $1,000 $1,050 $1,050 $1,050
Other Services $900 $900 $900 $950 $950 $950 $1,000 $1,000 $1,000 $1,060 $1,050 $1,050
Subtotal Direct Cost of Sales $6,350 $6,350 $6,350 $6,800 $6,800 $6,800 $7,350 $7,350 $7,350 $8,010 $8,000 $8,000

Page 1
 Appendix
Table: Personnel

Personnel Plan
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
CEO 0% $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500
Marketing Manager 0% $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200
Programmer/Office Administrator 0% $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750
2 Store Attendantds 0% $2,800 $2,800 $2,800 $2,800 $2,800 $2,800 $2,800 $2,800 $2,800 $2,800 $2,800 $2,800
Other 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total People 0 0 0 0 0 0 0 0 0 0 0 0

Total Payroll $10,250 $10,250 $10,250 $10,250 $10,250 $10,250 $10,250 $10,250 $10,250 $10,250 $10,250 $10,250

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 Appendix
Table: Profit and Loss

Pro Forma Profit and Loss

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Sales $26,000 $26,000 $26,000 $28,500 $28,500 $28,500 $31,000 $31,000 $31,000 $33,500 $33,500 $33,500
Direct Cost of Sales $6,350 $6,350 $6,350 $6,800 $6,800 $6,800 $7,350 $7,350 $7,350 $8,010 $8,000 $8,000
Other Costs of Sales $2,000 $2,040 $2,081 $2,122 $2,165 $2,208 $2,252 $2,297 $2,343 $2,390 $2,438 $2,487
Total Cost of Sales $8,350 $8,390 $8,431 $8,922 $8,965 $9,008 $9,602 $9,647 $9,693 $10,400 $10,438 $10,487

Gross Margin $17,650 $17,610 $17,569 $19,578 $19,535 $19,492 $21,398 $21,353 $21,307 $23,100 $23,062 $23,013
Gross Margin % 67.88% 67.73% 67.57% 68.69% 68.54% 68.39% 69.02% 68.88% 68.73% 68.95% 68.84% 68.70%

Expenses
Payroll $10,250 $10,250 $10,250 $10,250 $10,250 $10,250 $10,250 $10,250 $10,250 $10,250 $10,250 $10,250
Marketing/Promotion $0 $500 $500 $500 $0 $0 $1,000 $0 $1,000 $0 $1,000 $0
Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Rent $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
Insurance $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Payroll Taxes 15% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Operating Expenses $13,250 $13,750 $13,750 $13,750 $13,250 $13,250 $14,250 $13,250 $14,250 $13,250 $14,250 $13,250

Profit Before Interest and Taxes $4,400 $3,860 $3,819 $5,828 $6,285 $6,242 $7,148 $8,103 $7,057 $9,850 $8,812 $9,763
EBITDA $4,400 $3,860 $3,819 $5,828 $6,285 $6,242 $7,148 $8,103 $7,057 $9,850 $8,812 $9,763
Interest Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Taxes Incurred $1,320 $1,158 $1,146 $1,748 $1,886 $1,873 $2,144 $2,431 $2,117 $2,955 $2,644 $2,929

Net Profit $3,080 $2,702 $2,673 $4,079 $4,400 $4,369 $5,003 $5,672 $4,940 $6,895 $6,168 $6,834
Net Profit/Sales 11.85% 10.39% 10.28% 14.31% 15.44% 15.33% 16.14% 18.30% 15.93% 20.58% 18.41% 20.40%

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 Appendix
Table: Cash Flow

Pro Forma Cash Flow

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

Cash from Operations

Cash Sales $26,000 $26,000 $26,000 $28,500 $28,500 $28,500 $31,000 $31,000 $31,000 $33,500 $33,500 $33,500
Subtotal Cash from Operations $26,000 $26,000 $26,000 $28,500 $28,500 $28,500 $31,000 $31,000 $31,000 $33,500 $33,500 $33,500

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 $0 $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 $50,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Received $76,000 $26,000 $26,000 $28,500 $28,500 $28,500 $31,000 $31,000 $31,000 $33,500 $33,500 $33,500

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

Expenditures from Operations

Cash Spending $10,250 $10,250 $10,250 $10,250 $10,250 $10,250 $10,250 $10,250 $10,250 $10,250 $10,250 $10,250
Bill Payments $211 $6,333 $6,699 $6,836 $10,148 $13,851 $13,961 $16,256 $15,103 $15,850 $17,017 $17,050
Subtotal Spent on Operations $10,461 $16,583 $16,949 $17,086 $20,398 $24,101 $24,211 $26,506 $25,353 $26,100 $27,267 $27,300

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 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Spent $10,461 $16,583 $16,949 $17,086 $20,398 $24,101 $24,211 $26,506 $25,353 $26,100 $27,267 $27,300

Net Cash Flow $65,539 $9,417 $9,051 $11,414 $8,102 $4,399 $6,789 $4,494 $5,647 $7,400 $6,233 $6,200
Cash Balance $67,539 $76,957 $86,008 $97,421 $105,523 $109,922 $116,710 $121,204 $126,852 $134,251 $140,484 $146,685

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 Appendix
Table: Balance Sheet

Pro Forma Balance Sheet

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

Current Assets
Cash $2,000 $67,539 $76,957 $86,008 $97,421 $105,523 $109,922 $116,710 $121,204 $126,852 $134,251 $140,484 $146,685
Inventory $30,000 $23,650 $17,300 $10,950 $6,800 $6,800 $6,800 $7,350 $7,350 $7,350 $8,010 $8,000 $8,000
Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Current Assets $32,000 $91,189 $94,257 $96,958 $104,221 $112,323 $116,722 $124,060 $128,554 $134,202 $142,261 $148,484 $154,685

Long-term Assets
Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Accumulated Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Assets $32,000 $91,189 $94,257 $96,958 $104,221 $112,323 $116,722 $124,060 $128,554 $134,202 $142,261 $148,484 $154,685

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

Current Liabilities
Accounts Payable $0 $6,109 $6,475 $6,502 $9,687 $13,389 $13,418 $15,753 $14,576 $15,283 $16,448 $16,503 $15,869
Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Current Liabilities $0 $6,109 $6,475 $6,502 $9,687 $13,389 $13,418 $15,753 $14,576 $15,283 $16,448 $16,503 $15,869

Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Liabilities $0 $6,109 $6,475 $6,502 $9,687 $13,389 $13,418 $15,753 $14,576 $15,283 $16,448 $16,503 $15,869

Paid-in Capital $43,000 $93,000 $93,000 $93,000 $93,000 $93,000 $93,000 $93,000 $93,000 $93,000 $93,000 $93,000 $93,000
Retained Earnings ($11,000) ($11,000) ($11,000) ($11,000) ($11,000) ($11,000) ($11,000) ($11,000) ($11,000) ($11,000) ($11,000) ($11,000) ($11,000)
Earnings $0 $3,080 $5,782 $8,455 $12,535 $16,934 $21,304 $26,307 $31,979 $36,919 $43,813 $49,982 $56,816
Total Capital $32,000 $85,080 $87,782 $90,455 $94,535 $98,934 $103,304 $108,307 $113,979 $118,919 $125,813 $131,982 $138,816
Total Liabilities and Capital $32,000 $91,189 $94,257 $96,958 $104,221 $112,323 $116,722 $124,060 $128,554 $134,202 $142,261 $148,484 $154,685

Net Worth $32,000 $85,080 $87,782 $90,455 $94,535 $98,934 $103,304 $108,307 $113,979 $118,919 $125,813 $131,982 $138,816

Page 5