Executive Summary

Introduction InteliChild.com offers bright children an entertaining place to interact with each other, the Web, educators, and the world in general. It generates traffic first, valuation for investors, and eventually commerce and profits. It is a healthy place for kids to play, for parents and schools to buy, and a creative and fair work environment for employees. The InteliChild.com e-commerce project is the natural evolution for the InteliChild.com Internet presence. The site will market and sell selected toys, books, and software products. It will also produce Web products and Web applications that will increase market share, promote name recognition, and maximize efficiency. The Company The present InteliChild.com is a start-up company with four full-time employees. The company was incorporated as a California C corporation owned by its principal founders, at 25% ownership each. (Name Omitted) Capital partners acquired 50% of the company. The company has a single office. The initial website is at www.citruscoolkids.com. Our key competitive advantage is the in-house knowledge base we have developed. Our competitor spends five to 10 times the amount of money we do outsourcing to expensive companies for services we perform in-house. The same will take place with the InteliChild.com website. We already have the SQL server and ColdFusion programming expertise, and we will be adding the Flash integration of these skills. Products and Services InteliChild will be offering a steadily increasing mix of three lines of products: Toys and Games: carefully selected toys and games that appeal to the target market, the parents of the target market, and educators. Books: there should be a selection of books that appeal specifically to the parents and educators of the target market, so that these interested adults can go to this site and order books about their children. In addition, of course there is also a selection of books to be ordered by and for the kids to read. Software: carefully selected software to appeal to the target market and target parents and educators. The Internet reinvents itself every three months, or even faster. Therefore, our strategy for future development is to remain positioned with enough flexibility to adapt new technologies, and adapt to changes quickly.

The Market The InteliChild.com market has been expanding exponentially with the advances of technology in the teaching sectors and the acceptance of technology as a teaching aid. The critical component to our entrance into the market will be approval and support from the school communities - including teachers, the PTA, and special education programs. Our primary target markets include these four areas: 1. 2. 3. 4. The kids themselves. Parents. Educational institutions for children of the upper class. Self-teaching families.

While we have plans to expand into international territory, our initial launch will target our most important market - the American upper class. We know that most of our clients drive BMW's and have very good taste - they spend money on their children because they can appreciate the technology that we have created. They also generally have high bandwidth connections, and are impressed by first-class design. Financial Considerations Our start-up costs are high because of our commitment to dominate the Internet market place. The Break-even Analysis indicates we reach steady-state break-even in this first year. The sales forecast is based on increasing website traffic and increasing sales per unique user session. Sales are projected to rise exponentially from Year 1 to Year 3. The forecast obviously depends on traffic increase. We plan to lose money for at least three years while we build traffic and develop our position for the long-term future.

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Objectives
Traffic, as measured in unique user sessions: 100,000 unique user sessions in June, Year 1; 450,000 in December, Year 1; 3.5 million in Year 2; and 5 million in Year 3. Sell-through, as measured in dollar sales per unique visit: a high of $0.58 per unique visit in December of Year 1; increasing to $0.83 in Year 2; and $0.92 in Year 3. Valuation, as measured in ability to bring in additional investment at economically feasible valuations. We need to attract moderate investment this year, and an additional large infusion in Year 2, with valuation performance that yields attractive internal rate of return (IRR) to investors. The financial section indicates IRR of more than 100% for all investors, with larger IRR for seed, declining slightly for first round and then second round.

Acquisition or Initial public offering (IPO) in Year 4, with a valuation of more than $20 million. This assumes of course the market valuations based on sales and earnings, which are relatively high as this plan is written.

Mission
InteliChild.com offers bright children an entertaining place to interact with each other, the Web, educators, and the world in general. It generates traffic first, valuation for investors, and eventually commerce and profits. It is a healthy place for kids to play, for parents and schools to buy, and a creative and fair work environment for employees.

Keys to Success
1. We must retain the customers. The website has to be easy to use and quickly viewable. User satisfaction is an ultimate priority. 2. The project will succeed if it can capitalize on the traffic that InteliChild.com produces, and turn the user sessions into dollars through the commerce site. 3. The sales process must be easy to administer and flexible enough to accommodate the needs of InteliChild, which is not ready to take on more employees to do so. 4. The e-commerce project should further establish InteliChild.com presence as a technology leader, not only returning traffic but actually bringing in new traffic.

Company Summary
The present InteliChild.com is a start-up company with four full time employees. We are a high-powered team of creative individuals. The company creates an Internet environment attractive to bright kids, and is planning to sell toys, books, and software to those kids, their parents, and schools. Our products will be the best reviewed in our niche.

Start-up Summary
Our start-up costs reflect of our commitment to dominate the Internet market place. Our development costs are high, but because we are now located in Oregon instead of the Silicon Valley, our human resources costs are not as high as they might be - particularly for

the talented programmers that we need. Marketing expenses are also high, but spending on the costly development of this site without promoting it appropriately would make it difficult to gather together the traffic necessary to make this a success. Our location leverages our partner potential, even though we are paying a premium for space and for talent due to development costs.

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Start-up Funding
Start-up Expenses to Fund Start-up Assets to Fund Total Funding Required Assets Non-cash Assets from Start-up Cash Requirements from Start-up Additional Cash Raised Cash Balance on Starting Date $5,000 $494,000 $0 $494,000 $33,750 $499,000 $532,750

Total Assets Liabilities and Capital Liabilities Current Borrowing Long-term Liabilities Accounts Payable (Outstanding Bills) Other Current Liabilities (interest-free) Total Liabilities Capital Planned Investment Owner Investor Additional Investment Requirement Total Planned Investment Loss at Start-up (Start-up Expenses) Total Capital Total Capital and Liabilities Total Funding

$499,000

$0 $0 $0 $0 $0

$0 $0 $532,750 $532,750 ($33,750) $499,000 $499,000 $532,750

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Start-up
Requirements Start-up Expenses Legal Software Design Work Programming Insurance Rent Research and Development Hosting Setup Other Total Start-up Expenses Start-up Assets Cash Required Start-up Inventory Other Current Assets Long-term Assets Total Assets Total Requirements $494,000 $0 $5,000 $0 $499,000 $532,750 $1,000 $2,500 $5,000 $15,000 $250 $500 $1,000 $3,500 $5,000 $33,750

Company Ownership
The company was incorporated as a California C corporation owned by its principal founders, at 25% ownership each. (Name Omitted) Capital partners acquired 50% of the company.

Company Locations and Facilities

The company has a single office. Its important website and Internet infrastructure situation is explained in detail later in this plan. The initial website is at www.citruscoolkids.com.
Products InteliChild will be offering a steadily increasing mix of three lines of products: 1. 2. Toys and Games: carefully selected toys and games that appeal to the target market, the parents of the target market, and educators. Books: there should be a selection of books that appeal specifically to the parents and educators of the target market, so that these interested adults can go to this site and order books about their children. In addition, of course there is also a selection of books to be ordered by and for the kids to read. 3. Software: carefully selected software to appeal to the target market and target parents and educators. Product Description In the original plan this is a detailed description of the specific toys and games, books, and software that are included on the website. This level of detail was considered proprietary and was removed from the plan for purposes of illustration. If you are using this sample plan as an example, then insert here a detailed list of your own products for your own plan. Competitive Comparison In the original plan this is a detailed description of and analysis of other channels and sources from which the target market and parents and educators can purchase toys, games, books, and software. It describes in general some kinds of toy shops, and then specifically some catalog and web businesses that appeal to this audience. This level of detail was considered proprietary and was removed from the plan for purposes of illustration. If you are using this sample plan as an example, then insert here a detailed description of your competitors for your plan. Sales Literature Our answer to sales literature is the web. Within six months we should also have a printed catalog that we can send to people to go along with the Web purchasing process, because some buyers will want to refer to a hard-copy catalog. Sourcing In the real plan this section referred in detail to distributors and products they carried. This detail was considered proprietary and strategic, and was omitted from the sample plan for purposes of illustration.

If you are using this plan as an example, then in this section you should have detailed discussion of how the products to be sold can be purchased from manufacturers and distributors. Technology The InteliChild.com e-commerce site will be built on a three-tier structure. Driven by SQL servers and an IIS Web server backed with bandwidth, the site will be coded mostly in ColdFusion and ASP. We will be taking our registration databases live to be able to email updates on products and the website to customers. We will offer customers the option to take themselves out of the list. The information architecture will be based on four fundamental arenas - the free valuable information arena, the product detail arena, the final purchasing arena, and the purchase administration area. The purchase arena will require a Verisign certificate and a Cybercash connection. That will begin immediately because dealing with Cybercash can sometimes be a lengthy process. The administrative arena will be hosted on mirror servers that query to the live databases for migration into local databases. This server is hidden from Internet traffic and kept under high security even within the company. The entire set-up will be somewhat costly. We will need five servers, two for in-house reasons, and three for Web hosting reasons. Two of the Web host servers will be serving traffic through ColdFusion and ASP in cluster, and the third will be a dedicated SQL server. Future Products The Internet reinvents itself every three months, or even faster. Our strategy for future development is to remain positioned with enough flexibility to adapt new technologies, and adapt to changes quickly.

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Market Analysis Summary The InteliChild.com market has been expanding exponentially with the advances of technology in the teaching sectors and the acceptance of technology as a teaching aid. The critical component to our entrance into the market will be approval and support from the school communities - including teachers, the PTA, and special education programs. Market Segmentation Our primary target markets include these four areas: 1. 2. The kids themselves. We include ages 5-9 and ages 10-14 in our market statistics because these are the breakdowns available at www.census.gov, and we include only 10% of the total in each category. Parents. We include 10% of the parents, assuming that leads to an average combined income above $100,000. Most of these people live in suburban areas, but the urban upper class is also a major component. [Editor note: details for this sample plan are not necessarily correct.] 3. Educational institutions for the children of the upper class. This includes day care and private schools. Penetrating this market is excellent because it generates leads to our other targets. We include 107,000 schools in the U.S. in our table.

4.

Self-teaching families. There is an excellent group of established customers who teach their children from home. The site will benefit greatly from the time available from this target group.

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Market Analysis
Year 1 Potential Customers U.S. Kids 5-9 U.S. Kids 1-14 U.S.Parents U.S.Schools Home School Families Non-U.S.Parents Non-U.S.Schools Total Growth 2% 2% 1% 40% 0% 1,994,000 1,961,200 107,000 5,000 225,000 2,033,880 2,000,424 108,070 7,000 225,000 2,074,558 2,040,432 109,151 9,800 225,000 2,116,049 2,081,241 110,243 13,720 225,000 2,158,370 2,122,866 111,345 19,208 225,000 Year 2 Year 3 Year 4 Year 5 CAGR 2.00% 2.00% 2.00% 1.00% 40.00% 4.00% 0.00% 3.20%

2% 12,000,000 12,240,000 12,484,800 12,734,496 12,989,186

4% 24,000,000 24,960,000 25,958,400 26,996,736 28,076,605 3.20% 40,292,200 41,574,374 42,902,141 44,277,485 45,702,580

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Target Market Segment Strategy While we have plans to expand into international territory, our initial launch will target our most important market - the American upper class. We know that most of our clients drive BMW's and have very good taste - they spend money on their children because they can appreciate the technology that we have created. They also generally have high bandwidth connections, and are impressed by first-class design. Market Trends The market for intelligent technological teaching devices is growing exponentially. The key factors driving this growth are the increase in salaries in the technology sectors, the double-income household and the loss of leisure time. Hardworking parents are dedicated to giving their children every educational opportunity possible. Our target market's behavioral patterns are changing dramatically as well - research used to happen in many places; now increasingly it happens on the Internet. Market Growth The macro-environment is the real reason for the urgency of the InteliChild.com e-commerce project. All trends in our market indicate that strong a Web presence will not be a frivolous extra for the company, but rather, an absolute necessity. As mentioned before, the double-income family in the technological sector is doing their research on the Internet. In order to survive, InteliChild.com must be present as a destination for these search results. Market Needs The InteliChild.com website will have to reflect its product line - simultaneously fun, easy to use and informative. In order to gain recognition for our site efforts, we are going to have to put together a site that is worthy of attention. The design work should promote the feeling of superior quality. The InteliChild.com attitude will match the company's inherent value drive - parents and educators will feel guilty not buying into these products. Industry Analysis The website industry is exploding. Growth is absurd, amazing. We don't have business reasons to detail this situation in this plan, our readers are aware of it. Competition and Buying Patterns This is sample text describing factors in competition for website use by bright children ages 8-14, for sales to their parents and schools. It details information available about the importance of factors such as pricing, shipment, quality, presentation, etc. Main Competitors Our competition is the market leader - and their success is a symbol of our potential market. We were pleased to see their Web division spin-off to its own company that went public with a tremendous initial offering. The market is too large for them to cover entirely, and as a second-best in dollar market share, with better reviews from the critical industry leaders, InteliChild.com stands in a position to expand our business significantly. Industry Participants This is sample text describing the different companies addressing the same target market. The real plan included details on which companies sell products (toys, books, or games) into this market. It includes

who owns them, how much market share they get (according to available information sources), and what we know about their assorted business models. Distribution Patterns This is sample text describing the different websites addressing the same target market. The real plan included details identifying these websites, who owns them, how much traffic they get (according to available information sources), and their assorted business models.

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Web Plan Summary The primary InteliChild.com strategy is to build an impressive destination website. The marketing of the site will be built around the core value that the site will offer. Although our competition has built a simple store for ordering the product, the InteliChild.com site will be reviewed by Web award companies as a great destination. We will build our revenue and market share around this traffic. Our business model is based on the sales of our products over the website. Because the site is also intended to increase brand equity and awareness, we are building for high traffic. Our model requires giving users an excellent free experience and to develop trust to increase sell-through. We plan to lose money for at least three years while we build traffic and develop our position for the long-term future. The traffic forecast is based on increasing sessions, increasing page views per session, and increasing orders per session. The bottom line called "sell-through" is the overall dollars in order per user session, an important indicator that should be increasing over time. Website Marketing Strategy Our first class design and product quality are critical to our positioning as a dot-com company - we should be the best reviewed website in our category, and that will become the key to future sales. In the past, our design work and marketing has not matched our better-funded competitor. However, the core experience for the children has always been better, and with a new design team and a round of financing, the InteliChild.com company is ready to grow with the market. InteliChild.com will distinguish itself from its competitor as a full learning center, rather than just a store front. Development Requirements Of course the development needs to match the overall business strategy as explained in the rest of the plan. This has to be an excellent site or we just haven't implemented. That involves both front-end and back-end strategies, as explained in the following topics. Front End Because InteliChild.com's target customers are all affluent, we have the luxury of using the latest technologies to impress the visitors with excellent design and animation. We plan to release the site entirely in Shockwave format as almost 90% of our visitors will already have it installed.

We will carry on the colorful and extremely well branded design of our company literature and logo the decisions on basic aesthetics will not get in the way. The site will have a colorful and intelligent design, taking the ad campaign and product art into an interactive medium on the Web. Back End The InteliChild.com e-commerce site will be built on a three-tier structure. Driven by SQL servers and an IIS Web server backed with bandwidth, the site will be coded mostly in ColdFusion and ASP. We will be taking our registration databases live to be able to email updates on products and the website to customers. We will offer customers the option to take themselves out of the list. The purchase arena will require a Verisign certificate and a Cybercash connection. That will begin immediately because dealing with Cybercash can sometimes be a lengthy process. The administrative arena will be hosted on mirror servers that query to the live databases for migration into local databases. This server is hidden from Internet traffic and kept under high security even within the company. The entire set-up will be somewhat costly. We will need five servers, two for in-house reasons, and three for Web hosting reasons. Two of the Web host servers will be serving traffic through ColdFusion and ASP in cluster, and the third will be a dedicated SQL server.

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Strategy and Implementation Summary This is sample text only. The original was very proprietary, describing the company strategy in detail. This is sample text only. Strategy Pyramid This is sample text only. The original was very proprietary, describing the company strategy in detail. This is sample text only. Competitive Edge Our key competitive advantage is the in-house knowledge base we have developed. Our competitor spends five to 10 times the amount of money we do out-sourcing to expensive companies for services we perform in-house. The same will take place with the InteliChild.com website. We already have the SQL server and ColdFusion programming expertise, and we will be adding the Flash integration of these skills. Sales Strategy This is sample text only. The original was very proprietary, describing the company strategy in detail. This is sample text only. Sales Forecast

The sales forecast in the following table and charts is based on increasing website traffic and increasing sales per unique user session. Sales are projected to rise exponentially from 2000 through 2002. The forecast obviously depends on traffic increase.

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Sales Forecast
Year 1 Unit Sales Toys and Games Books Software Total Unit Sales Unit Prices Toys and Games Books Software Sales Toys and Games Books Software Total Sales Direct Unit Costs Toys and Games Books Software Direct Cost of Sales Toys and Games $211,464 $735,000 $1,350,000 $528,660 $92,380 $144,160 $765,200 Year 1 $12.00 $8.00 $16.00 $1,837,500 $350,000 $700,000 $2,887,500 Year 2 $12.00 $8.00 $16.00 $3,375,000 $1,500,000 $1,500,000 $6,375,000 Year 3 $12.00 $8.00 $16.00 17,622 4,619 3,604 25,845 Year 1 $30.00 $20.00 $40.00 61,250 17,500 17,500 96,250 Year 2 $30.00 $20.00 $40.00 112,500 50,000 50,000 212,500 Year 3 $30.00 $30.00 $30.00 Year 2 Year 3

Books Software Subtotal Direct Cost of Sales

$36,952 $57,664 $306,080

$140,000 $280,000 $1,155,000

$400,000 $800,000 $2,550,000

Need real financials? We recommend using LivePlan as the easiest way to create automatic financials for your own business plan. Create your own business plan Sales Programs This is sample text only. The original was very proprietary, describing the company strategy in detail. This is sample text only. Marketing Strategy This is sample text only. The original was very proprietary, describing the company strategy in detail. This is sample text only. Distribution Strategy This is sample text only. The original was very proprietary, describing the company strategy in detail. Marketing Programs This is sample text only. The original was very proprietary, describing the company strategy in detail. This is sample text only. Positioning Statement This is sample text only. The original was very proprietary, describing the company strategy in detail. This is sample text only. Pricing Strategy This is sample text only. The original was very proprietary, describing the company strategy in detail. This is sample text only. Promotion Strategy This is sample text only. The original was very proprietary, describing the company strategy in detail. This is sample text only. Strategic Alliances This is sample text only. The original was very proprietary, describing the company strategy in detail. This is sample text only. Value Proposition This is sample text only. The original was very proprietary, describing the company strategy in detail. This is sample text only. Milestones The milestones graphic illustrates key implementation activities. The most important milestone to reach will be the design templates. During that time we will be putting together the back-end phases, and both milestones should be achieved at the same time. After that point, integration can begin between the back-end and the front-end phases. Our next milestone will be the beta release, followed by the full launch two weeks later.

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Milestones
Milestone Design Template Back-end Phase 1 Integration Beta Phase 1 Back-end Phase 2 Front-end Phase 2 Launch Redesign Totals Start Date 1/1/2000 1/1/2000 1/1/2000 3/1/2000 5/1/2000 5/1/2000 5/1/2000 12/1/2000 End Date 3/1/2000 4/1/2000 5/1/2000 6/1/2000 5/15/2000 5/15/2000 12/1/2000 4/1/2001 Budget $2,500 $10,000 $500 $1,000 $5,000 $2,500 $0 $35,000 $56,500 Manager Terry Sonny Leslie Leslie Sonny Terry Leslie Leslie Department Front End Back End Management Management Back End Front End Management Management

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Management Summary

Our producer, Sonny Cieliblu, will head the InteliChild.com project. This full-time position will oversee all activities for the project. Sonny interfaces with each partner and staff member. This places Sonny in the role of administrator and coordinator of development and marketing activities, but also requires him to implement training and individual development activities for each partner. We all recognize the challenge Sonny faces as an employee, coach, and supervisor. More sample text here, not useful for purposes of example, describing the people involved and the management structure. Organizational Structure We need an agile organizational structure that recognizes the need for a smooth flow of ideas and implementation between sales, marketing, and website development. We can't allow the team to think as if these were separate functions. On the surface, however, we have the president dealing with three direct reports: admin/finance, sales/marketing, and web development. In fact we are not going to manage with a strict hierarchy, because we need to emphasize the team. Still, particularly as we grow in size, structure is necessary. We will want to preserve decision-making power, and the ability to act, rather than trying to do everything by consensus. Management Team Person 1: More sample text here, not useful for purposes of example, describing the people involved and the management structure. Person 2: More sample text here, not useful for purposes of example, describing the people involved and the management structure. Person 3: More sample text here, not useful for purposes of example, describing the people involved and the management structure. Person 4: More sample text here, not useful for purposes of example, describing the people involved and the management structure. Management Team Gaps We agree that the most obvious weakness at this point is the lack of seasoned professional management with experience. This is what the investors call the "gray haired factor." We will be looking to add more experience to the team as we build our administrative and financial capabilities. Personnel Plan The following personnel plan details our plans for the ramp-up. We start with the four key founders; by the end of 2000 we should have 14 people, and 18 by the end of 2002.

Personnel Plan
Year 1 Production Personnel VP Support Support Engineers Support Technicians Other Subtotal Sales and Marketing Personnel $33,000 $27,000 $21,000 $0 $81,000 $75,000 $65,000 $60,000 $25,000 $225,000 $90,000 $90,000 $75,000 $50,000 $305,000 Year 2 Year 3

VP Sales & Marketing Business Development Sales Systems Sales Technicians Other Subtotal General and Administrative Personnel CEO CFO General Admin Other Subtotal Other Personnel CTO Devel Systems Devel Engineers Other Subtotal Total People Total Payroll

$60,000 $31,500 $30,000 $40,600 $12,000 $174,100 $60,000 $60,000 $42,700 $14,000 $176,700 $60,000 $39,800 $22,500 $0 $122,300 18 $554,100

$75,000 $60,000 $60,000 $90,000 $30,000 $315,000 $75,000 $75,000 $90,000 $50,000 $290,000 $75,000 $62,000 $75,000 $50,000 $262,000 18 $1,092,000

$90,000 $75,000 $75,000 $120,000 $100,000 $460,000 $75,000 $75,000 $120,000 $100,000 $370,000 $75,000 $90,000 $100,000 $75,000 $340,000 18 $1,475,000

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Financial Plan
This is an Internet venture that, of course, depends on the developing financial prospects of the growing Internet world. To make it work financially, we need to increase valuation on schedule to bring in substantial additional capital. The following table defines the investment offering for investors. Specifically:

1. The exit strategy is acquisition in 2003, valuing the company at more than $20 million. 2. Equity plan and valuations at time of exit are detailed in the section that follows, "Exit Strategy." The plan assumes an ending valuation of $20 million based on market trends, with IRR of more than 100% for all investors.

Important Assumptions

The general assumptions are listed in the following table. Obviously these are detailed financial assumptions, trivial compared to the underlying critical assumptions, which include:

1. Continued growth of Internet usage. We accept published forecasts that say 4% of the world's population presently uses the Internet, and that will grow to 11% by 2005. That's strong growth. 2. No e-commerce disaster scenarios. We'll have no huge problems with credit card authorization, shipping, etc. 3. Continued support of financial markets, which means continued rise in valuations of Internet companies, even Internet companies losing money. The increase in valuation is critical to our financial strategy.

General Assumptions
Year 1 Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Other 1 10.00% 10.00% 0.00% 0 Year 2 2 10.00% 10.00% 0.00% 0 Year 3 3 10.00% 10.00% 0.00% 0

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Key Financial Indicators

The following benchmarks chart indicates a very ambitious increase in sales and matching increases in operating expenses. We expect to improve ratios of inventory, payable days, and collection days. One of the more important assumptions is that we can increase sales at a very high rate without corresponding increase in operating expenses. This is because of the leverage available in use of Internet technology as our main marketing and sales channel.

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Break-even Analysis
The break-even analysis is a good financial indicator. The following table and chart show break-even based on sales level per month and a high monthly fixed cost. Given those assumptions, we reach steady-state break-even by the end of this first year.

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Break-even Analysis
Monthly Units Break-even Monthly Revenue Break-even Assumptions: Average Per-Unit Revenue Average Per-Unit Variable Cost Estimated Monthly Fixed Cost $29.61 $11.84 $158,950 8,948 $264,916

Projected Profit and Loss

Despite the present trend towards investors encouraging losses for website businesses, we believe that we can turn a profit by the third year. We also intend to reduce losses significantly in the second year, as shown by the following table. Nevertheless, the investment in on-line and off-line advertising is substantial, and the traffic justifies the loss.

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Pro Forma Profit and Loss

Year 1 Sales Direct Cost of Sales Production Payroll Fulfillment Total Cost of Sales Gross Margin Gross Margin % Operating Expenses Sales and Marketing Expenses Sales and Marketing Payroll Online Advertising Other Advertising Collaterals Events Public Relations Website Infrastructure Other Sales and Marketing Expenses $174,100 $640,880 $444,400 $42,000 $20,000 $27,000 $90,000 $12,000 $315,000 $0 $0 $0 $0 $0 $0 $0 $460,000 $0 $0 $0 $0 $0 $0 $0 $765,200 $306,080 $81,000 $45,845 $432,925 $332,275 43.42% Year 2 $2,887,500 $1,155,000 $225,000 $0 $1,380,000 $1,507,500 52.21% Year 3 $6,375,000 $2,550,000 $305,000 $0 $2,855,000 $3,520,000 55.22%

Total Sales and Marketing Expenses Sales and Marketing % General and Administrative Expenses General and Administrative Payroll Marketing/Promotion Depreciation Leased Equipment Utilities Insurance Rent Payroll Taxes Other General and Administrative Expenses Total General and Administrative Expenses General and Administrative % Other Expenses: Other Payroll Consultants Software & Equipment Total Other Expenses Other % Total Operating Expenses Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred Net Profit Net Profit/Sales

$1,450,380 189.54% $176,700 $0 $2,000 $9,000 $2,400 $500 $42,000 $83,115 $0 $315,715 41.26% $122,300 $0 $19,000 $141,300 18.47% $1,907,395 ($1,575,120) ($1,573,120) $6,667 $0 ($1,581,787) -206.72%

$315,000 10.91% $290,000 $0 $0 $0 $0 $0 $0 $163,800 $0 $453,800 15.72% $262,000 $0 $0 $262,000 9.07% $1,030,800 $476,700 $476,700 $32,750 $0 $443,950 15.37%

$460,000 7.22% $370,000 $0 $0 $0 $0 $0 $0 $221,250 $0 $591,250 9.27% $340,000 $0 $0 $340,000 5.33% $1,391,250 $2,128,750 $2,128,750 $32,750 $0 $2,096,000 32.88%

Projected Cash Flow

As is to be expected in this kind of venture, the cash flow is supported mainly by new capital from new investment in the company. We've scheduled additional rounds of financing to make that realistic.

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Pro Forma Cash Flow

Year 1 Cash Received Cash from Operations Cash Sales Cash from Receivables Subtotal Cash from Operations Additional Cash Received Sales Tax, VAT, HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received Expenditures Expenditures from Operations Cash Spending $554,100 $1,092,000 $1,475,000 $0 $0 $0 $400,000 $0 $0 $750,000 $1,869,044 Year 1 $0 $15,000 $0 $0 $0 $0 $0 $2,774,485 Year 2 $0 $0 $0 $0 $0 $0 $0 $6,164,637 Year 3 $688,680 $30,364 $719,044 $2,598,750 $160,735 $2,759,485 $5,737,500 $427,137 $6,164,637 Year 2 Year 3

Bill Payments Subtotal Spent on Operations Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent Net Cash Flow Cash Balance

$1,543,999 $2,098,099 $0 $0 $0 $80,000 $0 $0 $0 $2,178,099 ($309,055) $184,945

$1,864,092 $2,956,092 $0 $0 $0 $0 $0 $0 $0 $2,956,092 ($181,607) $3,338

$2,814,373 $4,289,373 $0 $15,000 $0 $0 $0 $0 $0 $4,304,373 $1,860,264 $1,863,603

Projected Balance Sheet

The balance sheet shows our projected financial position during the next three years. Obviously the key variable during this period, overall valuation, isn't shown.

Pro Forma Balance Sheet

Year 1 Assets Current Assets Cash Accounts Receivable Inventory Other Current Assets Total Current Assets Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets Liabilities and Capital Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities Long-term Liabilities Total Liabilities Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital Net Worth $369,230 $0 $0 $369,230 $320,000 $689,230 $1,282,750 ($33,750) ($1,581,787) ($332,787) $356,443 ($332,787) $133,868 $15,000 $0 $148,868 $320,000 $468,868 $1,282,750 ($1,615,537) $443,950 $111,163 $580,032 $111,163 $240,045 $0 $0 $240,045 $320,000 $560,045 $1,282,750 ($1,171,587) $2,096,000 $2,207,163 $2,767,209 $2,207,163 $0 $2,000 ($2,000) $356,443 Year 1 $0 $2,000 ($2,000) $580,032 Year 2 $0 $2,000 ($2,000) $2,767,209 Year 3 $184,945 $46,156 $122,342 $5,000 $358,443 $3,338 $174,171 $399,522 $5,000 $582,032 $1,863,603 $384,534 $516,071 $5,000 $2,769,209 Year 2 Year 3

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Business Ratios
Our ratios, as projected here, are typical of the kind of growth company we project. The comparisons are based on NAICS code 454111, Electronic Shopping. We do expect our gross margin and sales per employee to be much higher than standard retail.

Ratio Analysis
Year 1 Sales Growth Percent of Total Assets Accounts Receivable Inventory Other Current Assets Total Current Assets Long-term Assets Total Assets Current Liabilities Long-term Liabilities Total Liabilities Net Worth Percent of Sales Sales Gross Margin Selling, General & Administrative Expenses Advertising Expenses Profit Before Interest and Taxes Main Ratios Current Quick Total Debt to Total Assets Pre-tax Return on Net Worth Pre-tax Return on Assets Additional Ratios Net Profit Margin Return on Equity Activity Ratios Accounts Receivable Turnover Collection Days 1.66 49 1.66 139 1.66 160 n.a n.a 0.97 0.64 193.36% 475.32% -443.77% Year 1 -206.72% 0.00% 3.91 1.23 80.83% 399.37% 76.54% Year 2 15.37% 399.37% 11.54 9.39 20.24% 94.96% 75.74% Year 3 32.88% 94.96% n.a n.a 1.71 0.59 64.96% 3.46% 9.88% 100.00% 43.42% 250.14% 83.75% -205.84% 100.00% 52.21% 36.83% 0.00% 16.51% 100.00% 55.22% 22.34% 0.00% 33.39% 100.00% 35.35% 14.05% 4.21% 1.42% 12.95% 34.32% 1.40% 100.56% -0.56% 100.00% 103.59% 89.78% 193.36% -93.36% 30.03% 68.88% 0.86% 100.34% -0.34% 100.00% 25.67% 55.17% 80.83% 19.17% 13.90% 18.65% 0.18% 100.07% -0.07% 100.00% 8.67% 11.56% 20.24% 79.76% 12.42% 38.62% 26.81% 77.85% 22.15% 100.00% 39.14% 17.10% 56.24% 43.76% n.a. Year 2 277.35% Year 3 Industry Profile 120.78% 7.56%

Inventory Turnover Accounts Payable Turnover Payment Days Total Asset Turnover Debt Ratios Debt to Net Worth Current Liab. to Liab. Liquidity Ratios Net Working Capital Interest Coverage Additional Ratios Assets to Sales Current Debt/Total Assets Acid Test Sales/Net Worth Dividend Payout

10.91 5.18 27 2.15 0.00 0.54 ($10,787) -236.27 0.47 104% 0.51 0.00 0.00

4.43 12.17 56 4.98 4.22 0.32 $433,163 14.56 0.20 26% 0.06 25.98 0.00

5.57 12.17 23 2.30 0.25 0.43 $2,529,163 65.00 0.43 9% 7.78 2.89 0.00

n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a

Exit Strategy
Details of the exit strategy are included in two following tables:

1. The Investment Analysis table details how we expect valuation to proceed over time, linked in to the planned rounds of financing. 2. The table included here shows how we plan to distribute equity and shares over time, and planned ending valuation of $23 million and investment yield for three rounds of investment.
Equity Shares and Investment Return

Round Seed Round 1 Round 2

Amount ($000) $500K $750K $2 million

Shares 1.5 million 750K 800K

Per share $0.33 $1.00 $2.50

Year 1999 2000 2001

2003 Value $8.4 million $4.2 million $4.5 million

IRR % 157 % 138% 126%

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