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Cape Cabo LLC, a California company

Table of Contents

1.0 Executive Summary

1.1 Objectives
1.2 Mission
2.0 Company Summary
2.1 Company Ownership
2.2 Start-up Summary
3.0 Products
4.0 Market Analysis Summary
4.1 Market Segmentation
4.2 Target Market Segment Strategy
4.3 Industry Analysis
4.3.1 Competition and Buying Patterns
5.0 Strategy and Implementation Summary
5.1 Competitive Edge
5.2 Sales Strategy
5.2.1 Sales Forecast
5.3 Milestones
6.0 Management Summary
6.1 Personnel Plan
7.0 Financial Plan
7.1 Important Assumptions
7.2 Break-even Analysis
7.3 Projected Profit and Loss
7.4 Projected Cash Flow
7.5 Projected Balance Sheet

1.0 Executive Summary

Cape Cabo LLC H20 Global located in Beverly Hills, California converts seawater and or any
contaminated water in to pure drinking water. The trade name "Cape Cabo H20 Global" will
serve as brand name and identity name for the product. Out Patented water system is a high
volume solar distillation system using a solar water heater with automatic sun tracking. It is an
evaporative Still with heat recovery; a Sensor and System Computer Controller. This solar
distillation system produces 10-20 times more distilled water then the present day distillation
systems and does not require vast areas of land for large-scale distillation. No water treatment
process thoroughly removes as many contaminants as distillation. It is the best protection
against biological, inorganic, organic and even radioactive waterborne pollutants.

The manufacturing and bottling facility produces 1000 units per year and 505,000 1/2 liter
bottles of pure drinking water per day.



$150,000,000 Gross


2007 2008 2009

1.1 Objectives

1. Profits of $3.7M in 2008, increasing to $36.9M in 2009 for bottle water.

2. Profits of $7.5M in 2008, increasing to $250M in 2009 for Unit Production

3. Maintain gross margin above 40 percent.

4. Net profits above 40%.

1.2 Mission

Cape Cabo H20 Global is a major water company manufacturing units for desalinization and
bottling plant for the ever growing demand for pure drinking water. We intend to make enough
profit to generate a fair return for our investors and to finance any continued growth and
continued development in a quality product. We also maintain a friendly, fair, and creative work
environment that respects diversity, new ideas, and hard work.

2.0 Company Summary

Cape Cabo H20 Global is a private company created by Cape Cabo LLC, a California company
and is a manufacturer of desalinization project that produces 15,000 gallons of pure drinking
water per day from seawater and/or brackish or decontaminated water. In addition, Cape Cabo
H20 Global bottles 505,000 1/2 liters of pure drinking water daily for worldwide distribution.
2.1 Company Ownership

Cape Cabo H20 Global is a privately held company created and owned by Cape Cabo LLC. Dr.
Alan Weston is Manager of the LLC and Steven Doolittle is a Director and are the majority

2.2 Start-up Summary

The start-up costs for Cape Cabo H20 Global are $25,000,000. All start-up assumptions are
based on an actual infusion of $25,000,000 in new capital. These funds will be utilized to
procure molds and raw materials to fund production of initial inventory by our contract
manufacturer, H20 Global. In addition, initial marketing costs, and overhead, including G & A is

Start-up Plan
Start-up Expenses
Legal $1,000,000
Stationery etc. $25,000
Brochures $25,000
Consultants $25,000
Insurance $50,000
FACILITY $9,000,000
Research and development $750,000
Expensed equipment $14,967,000
Other $0
Total Start-up Expense $25,842,000

Start-up Assets Needed

Cash Requirements $0
Start-up Inventory $0
Other Short-term Assets $0
Total Short-term Assets $0

Long-term Assets $0
Total Assets $0

Total Start-up Requirements: $25,842,000

Left to finance: $842,000

Start-up Funding Plan

Investor 1 $25,000,000
Investor 2 $0
Other $0
Total investment $25,000,000

Short-term Liabilities
Unpaid Expenses $0
Short-term Loans $0
Interest-free Short-term Loans $0
Subtotal Short-term Liabilities $0
Long-term Liabilities $0
Total Liabilities $0
Loss at Start-up ($25,000,000)
Total Capital $0
Total Capital and Liabilities $0
Checkline $0








Expenses Assets Investment Loans

3.0 Products

Cape Cabo H20 Global Solar Distillation System consists of a self contained portable unit in the
size of a 20 ft container with a tracking solar water heater. Instrumentation contained in the
System include Flow Meters, Temperature Sensors, A wind velocity Sensor, Saline Sensors,
Liquid Level Sensors, Continuous Liquid Level Sensor and a computer which automatically
controls the overall system operation including the solar tracking system. It records and stores
water volumes produced. It also provides warnings of problems and information for repairs.
Each self contained portable unit has the ability to produce 15,000 gallons of pure drinking
water daily.

The bottling plant manufactures at full operation 505,000 1/2 liter bottles daily.

4.0 Market Analysis Summary

The bottled water industry is a multibillion dollar industry and growing. Bottled water, a $6 Billion
dollar industry in the US, is largely unregulated. The FDA classifies drinking water as a food, but
is incapable of safe guarding the public’s consumption of the unknown chemical contents
dissolved in the water.

Within the bottled water business there are two distinct industries and segmentations. The
biggest by volume is the five-gallon or returnable container business. Companies like
Arrowhead, Sparkletts and Hinckley & Schmitt are leaders in this field. Often associated with the
office cooler, bottlers also use two and one half as well as one-gallon containers for
supermarket distribution. This type of bottled water is sold as an alternative to tap water.
Premium bottled waters, such as

Evian, Vittel and Perrier, are sold as soft drink and alcohol alternatives.

Packaging ranges from six ounce to two liters and from custom glass and PET plastic to
aluminum cans. More and more bottled water producers have switched from glass to
polycarbonate because of the increased acceptance of quality with this kind of packaging.

The International Bottled Water Association said that, “For the past 37 years, no confirmed
reports in the U.S. of illness or disease have been linked to bottled water.’’ But it is noted that
bottled water companies market their products for claims of purity and health benefits.

Try testing your water by freezing. If ice cubes appear cloudy, then the water contains invisible
dissolved solids.

A common misconception is that minerals in water are healthy. Minerals in water are inorganic
rock. Some of it stays in the tissues, e.g., kidney and gallstones. The only source for organic
minerals is plants and plant eating animals.

The American Medical Association position is that, “The body’s need for minerals is met through
foods, and food supplements, not drinking water.”

In truth, many bottled water companies just filter tap water; some filter not at all. The 3,400M
gallons consumed by Americans annually is sold as mineral water, spring water, distilled water,
plain tap water, or undefined. A third of 103 bottled water brands tested by the Natural

Resources Defense Council contained bacteria or other chemicals exceeding industry


The study, released March 1999, acknowledged that most bottled water “is of good quality”; but
Eric Olson, author of the report, explains that, “Just because water comes from a bottle doesn’t
mean it’s any cleaner or safer than water straight from the tap.”

Since 97% of the Earth's water is salt water, which can only be used if processed by
desalinization plants, and over 2% is part of the ice cap or polluted, there is less than 1% that is
actually available for human use. In the home, 3/4 of the water is used in the bathroom. Letting
water run while brushing teeth can increase daily usage by up to 20 gallons. Older toilets use up
to 5 gallons of water per flush (low flow toilets use 3 1/2 gallons). During the drought of 1989 in
California, many restaurants stopped serving water to their customers unless it was requested.
It was considered better to have a dirty car and a brown lawn than to waste water. Bottled water
became a necessary alternative to tap water because as the reservoirs got lower the
concentration of minerals and chemicals increased at the tap and the taste deteriorated.

The amount of fresh water used by humanity has roughly quadrupled as world population has
doubled. Given the finite nature of the earth's fresh water resources, such a quadrupling of
world water use probably cannot occur again. In many of the regions where world population is
growing most rapidly, the needed water is simply unavailable. (Ref) World Resources Institute.
4.1 Market Segmentation

As indicated, the product segment sought by Cape Cabo H20 Global is not a new one. It can
best be defined by the demographic of its targeted customer. Water is in demand worldwide.
There are reported major problems in Africa, Asia, China and South America.

With such a large potential market available, Cape Cabo H20 Global management is confident
of the ability to sell Solar Distillization Systems and bottled water in the conservative numbers
estimated by first year production availability.

Market Analysis
Potential Customers Growth 2008 2009 2010 2011 2012 CAGR
Bottled Water 10% 500,000,000 550,000,000 605,000,000 665,500,000 732,050,000 10.00%
Solar Still System 10% 1,000,000,0001,100,000,0001,210,000,0001,331,000,0001,464,100,000 10.00%
Other 0% 0 0 0 0 0 0.00%
Total 10.00% 1,500,000,0001,650,000,0001,815,000,0001,996,500,0002,196,150,000 10.00%

Market Analysis (Pie)

Bottled Water
Solar Still System

4.2 Target Market Segment Strategy

Our market analysis is defined by potential users. The United Nations is consistently seeking
suppliers of bottled water. In addition, the United Nations and other International organizations
are seeking ways to provide inexpensive drinking water throughout the world.

Which media to utilize to cost effectively reach these users is the critical decision path. The
universe of potential customers exceeds 500 million users. It is projected to grow only
moderately each year. Although old customers will be replaced by new ones as they pass
through the age demographic, it is impossible to estimate erosion from re-sale or re-use at this
point. Management recognizes that a market exists for used sporting goods equipment.
The Market Analysis table and the Potential Market pie chart illustrate our key customer
segments. The "other" category is defined as a specific direct sales test with two leagues.

4.3 Industry Analysis

The bottled water industry is a major industry worth more than $6 billion per year. It includes
some of the largest and most powerful manufacturers in the world, major national grocery
chains, tens of thousands of stores, thousands of vendors, and, of course, hundreds of millions
of buyers. The United Nations is a major buyer in the market.

The desalinization industry is similar in basic structure, channels, costs, and distribution worth
more than $20 Billion per year.

4.3.1 Competition and Buying Patterns

The single most important factor in our product is the bandwagon. The concept of "Critical
Mass" is what Cape Cabo H20 Global must overcome. The rich get richer, and the poor poorer.
However, there is still room for new products and new companies outside the main design

• In the main design types, market share generates more market share. Pepsi Cola and Coca
Cola are enriched in the bottle water market. Initially it was Perrier and Evan and a limited
number of other companies. More people know it better than any other brand. Most important,
the retailers feature it. So they continue to dominate. Despite the existence of better products, it
is the wisest choice for the buyer.

• Buyers want brand names. Quality of products is hard to measure. Brand names assure
quality. However, brand names only operate in mainstream product types; there is room for
smaller names with specific solutions that appeal to buyers.

• Buyers are willing to pay high prices for solutions that work. While competitors chip away at
market leaders for lower prices, the leaders continue to command high prices.

• Channels discount heavily. Brand name, packaged goods become a commodity and are
bought on price. Buyers will pay a heavy premium for Perrier or Evian over Pepsi and Coca
Cola Bottled Water. However, their pricing is too high for the third world market, the majority in

• There is no consensus about product copying. Estimates of its revenue impact vary from
10% to 60% of the theoretical revenue manufacturers would receive if copying were impossible.
Illegal product copying is a fact of life that manufacturers live with because they have no other
choice. There

• Impulse buying goes on with products below $1. Buyers have discovered products like store
brand bottled water that was low priced. There is more freedom in the lower end of the market.

• Distribution channels are clogged. Lack of channels is a serious barrier to industry growth.
Wal-mart and Sports Authority stores are insufficient for the wealth of products available, and
the constant flood of new products.

Support becomes a serious factor for the world's demand for bottled water. Our product will not
require extensive support other than the easy of production and quality.

• The demand is such that the market will attend to our branding, H20 Global

5.0 Strategy and Implementation Summary

Our strategy is based on serving third world markets well. The world is in demand for bottled
water and desalinization systems that produce high yield volumes.

What begins as a customized version of a standard product can eventually become a niche
product that will fit the needs of people across the world. Our test market will be offering sample
quantities to the United Nations who is constantly seeking bottled water for Africa and other
parts of the world. Although certain media selections (on-line in particular) are as broad in
geographical scope.

We are building our marketing infrastructure so that we can eventually reach specific kinds of
customers across broad geographic lines.

We focus on satisfying the needs of pure drinking water.

We focus on follow-on technology that we can take to the masses, not leading edge technology
that aims at the experts and volume leaders.

5.1 Competitive Edge

Our most important competitive edge is our ability through our Solar Distillation System to
produce pure drinking water at the rate of 15,000 gallons per day using a system that is
portable, 20' container sized and energy efficient requiring no fossil fuels for operation.

Our bottled water is generated at lower pricing because of our Patented Solar Distillation

5.2 Sales Strategy

Initially all sales are direct response. Countries are constantly seeking alternative systems to
large desalinization systems costing in the billions of dollars. We will invite their representatives
to view our facility and the system that we are offering to them.

The United Nations and responses to Requests for Proposals to provided bottled water to the
United Nations.
5.2.1 Sales Forecast

The following table and related charts show our present sales forecast. We are projecting sales
at $37.9 Million year 1 which represents 117 Solar Distillation System units sold via direct
marketing and 28,886,000 bottles of water to the United Nations and elsewhere. We are
forecasting sales to increase to $289.9 Million in year two with expanded media expenditures
and reach. This reflects an increase to 12,000 Solar Distillation System units sold via direct
marketing and 133,320,000 bottles of water. The direct cost of sales is not margin adjusted here
but it is adjusted on the P & L statement.

Sales Forecast
Unit Sales 2008 2009 2010
SOLAR STILLS 117 1,000 1,000
BOTTLED WATER 28,886,000 133,320,000 133,320,000
Other 0 0 0
Total Unit Sales 28,886,117 133,321,000 133,321,000

Unit Prices 2008 2009 2010

SOLAR STILLS $250,000.00 $250,000.00 $250,000.00
BOTTLED WATER $0.30 $0.30 $0.30
Other $0.00 $0.00 $0.00

SOLAR STILLS $29,250,000 $250,000,000 $250,000,000
BOTTLED WATER $8,665,800 $39,996,000 $39,996,000
Other $0 $0 $0
Total Sales $37,915,800 $289,996,000 $289,996,000

Direct Unit Costs 2008 2009 2010

SOLAR STILLS $50,000.00 $50,000.00 $50,000.00
BOTTLED WATER $0.10 $0.10 $0.10
Other $0.00 $0.00 $0.00

Direct Cost of Sales 2008 2009 2010

SOLAR STILLS $5,850,000 $50,000,000 $50,000,000
BOTTLED WATER $2,888,600 $13,332,000 $13,332,000
Other $0 $0 $0
Subtotal Direct Cost of Sales $8,738,600 $63,332,000 $63,332,000
Sales Monthly






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

5.3 Milestones

The first milestone for Cape Cabo LLC H2OGlobal is design and prototype production of a fully
functional product. The Initial Operating Unit prototype was developed.

The second milestone is to erect and equip a Facility in Baja California Sur, Mexico.

The third milestone is to expand our U.S. Patent into an International Patent.

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

Milestone Start Date End Date Budget Manager Department
Initial Operating Unit 1/1/2008 6/1/2008 $750,000 Manager Management
Facility 1/1/2008 3/15/2008 $9,000,000 Contractor Management
Equipment 2/1/2008 3/30/2008 $14,966,000 Supplier Management
International Patent 1/1/2008 3/1/2008 $1,000,000 Legal Management
Other 3/1/2008 4/1/2008 $0 ABC Department
Totals $25,716,000

6.0 Management Summary

Cape Cabo H20 Global will have a very thin management team at inception. Production
management will in effect be contracted during the development of the facility and equipping.
Key internal needs are for general financial control, strategic planning, and sales and marketing
implementation will be developed upon completion of the facility and instillation of the initial
operating unit. When fully operational the facility will operate with more than 250 employees.
6.1 Personnel Plan

As the following table shows, salary and compensation increases are projected in line with
growth in sales and profits. Salary increases are roughly similar to growth of the company and
cost of living.

Personnel Plan
Personnel 2008 2009 2010
Manager $120,000 $120,000 $120,000
Employees $371,250 $1,350,000 $1,500,000
Technical Support $300,000 $25,000 $25,000
Total Payroll $791,250 $1,495,000 $1,645,000

Total Headcount 250 250 250

Payroll Burden $118,688 $224,250 $246,750
Total Payroll Expenditures $909,938 $1,719,250 $1,891,750

7.0 Financial Plan

Cape Cabo H20 Global desires to finance growth through a combination of equity/debt
investment and internally generated cash flow. Because of the cost of initial tooling and
inventory and marketing costs of establishing a market presence, the business will be financed
primarily by its' generated cash. The target of break-even in year one will only apply if one stops
at selling initial inventory and stops marketing or does not engage in additional production.
Obviously, any of those courses would hinder growth. Thus, it is expected that additional
investment will be required.

The most important indicator in our case is inventory turnover. We will only maintain a 30 day
inventory for water. The Solar Units albeit reflected in 30 day inventory will be presold. We
already have demand for first year’s production for 12000 units.

Our business will be basically for cash.

7.1 Important Assumptions

The financial plan depends on important assumptions, most of which are shown in the following
table. They 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 make products
immediately obsolete.

• We assume access to equity capital and financing sufficient to maintain our financial plan as
shown in the tables.
General Assumptions
2008 2009 2010
Short-term Interest Rate % 10.00% 10.00% 10.00%
Long-term Interest Rate % 10.00% 10.00% 10.00%
Payment Days Estimator 30 30 30
Inventory Turnover Estimator 12.00 12.00 12.00
Tax Rate % 25.00% 25.00% 25.00%
Expenses in Cash % 10.00% 10.00% 10.00%
Personnel Burden % 15.00% 15.00% 15.00%

7.2 Break-even Analysis

The break-even analysis shows that Cape Cabo H20 Global has a good balance of fixed costs
and sufficient sales strength to remain healthy. Our break-even point is only 1 Solar Distillation
System unit per month, while our sales forecast for the next year calls for almost 1000 units per
month on average.

Break-even Analysis:
Monthly Units Break-even 1
Monthly Sales Break-even $125,000

Average Per-Unit Revenue $250,000.00
Average Per-Unit Variable $50,000.00
Estimated Monthly Fixed Cost $100,000

Break-even Analysis







0 2 4 6 8 10

Monthly break-even point

Break-even point = where line intersects with 0

7.3 Projected Profit and Loss

We expect income to hit $21,000,000 for the initial year. It should increase to more than $168
Million by the third year of this plan.

Profit and Loss (Income

2008 2009 2010
Sales $37,915,800 $289,996,000 $289,996,000
Direct Cost of Sales $8,738,600 $63,332,000 $63,332,000
Other $0 $0 $0
------------ ------------ ------------
Total Cost of Sales $8,738,600 $63,332,000 $63,332,000
Gross Margin $29,177,200 $226,664,000 $226,664,000
Gross Margin % 76.95% 78.16% 78.16%
Operating Expenses:
Advertising/Promotion $0 $0 $0
Travel $0 $0 $0
Miscellaneous $0 $0 $0
Payroll Expense $791,250 $1,495,000 $1,645,000
Payroll Burden $118,688 $224,250 $246,750
Depreciation $0 $0 $0
Leased Equipment $0 $0 $0
Utilities $0 $0 $0
Insurance $0 $0 $0
Rent $0 $0 $0
Contract/Consultants $0 $0 $0
------------ ------------ ------------
Total Operating Expenses $909,938 $1,719,250 $1,891,750
Profit Before Interest and $28,267,263 $224,944,750 $224,772,250
Interest Expense Short-term $0 $0 $0
Interest Expense Long-term $0 $0 $0
Taxes Incurred $7,066,816 $56,236,188 $56,193,063
Extraordinary Items $0 $0 $0
Net Profit $21,200,447 $168,708,563 $168,579,188
Net Profit/Sales 55.91% 58.18% 58.13%

7.4 Projected Cash Flow

The following table is the projected cash flow. As can be viewed, this is a very profitable
business and a high demand business.

Pro-Forma Cash Flow

2008 2009 2010
Net Profit $21,200,447 $168,708,563 $168,579,188
Depreciation $0 $0 $0
Change in Accounts Payable $4,075,488 $6,757,769 ($1,899,684)
Current Borrowing $0 $0 $0
Increase (decrease) Other $0 $0 $0
Long-term Borrowing $0 $0 $0
Capital Input $0 $0 $0
Subtotal $25,275,935 $175,466,331 $166,679,504
Less: 2008 2009 2010
Change in Inventory $2,611,000 $16,311,923 $0
Change in Other Short-term $0 $0 $0
Capital Expenditure $0 $0 $0
Dividends $0 $0 $0
Subtotal $2,611,000 $16,311,923 $0
Net Cash Flow $22,664,935 $159,154,409 $166,679,504
Cash Balance $22,664,935 $181,819,343 $348,498,847





$10,000,000 Cash Flow

Cash Balance


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

7.5 Projected Balance Sheet

As shown in the balance sheet in the following table, we expect a healthy growth in net worth,
from the very beginning to the very end of the plan period.

Pro-forma Balance Sheet

Short-term Assets 2008 2009 2010
Cash $22,664,935 $181,819,343 $348,498,847
Inventory $2,611,000 $18,922,923 $18,922,923
Other Short-term Assets $0 $0 $0
Total Short-term Assets $25,275,935 $200,742,266 $367,421,770
Long-term Assets
Capital Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $25,275,935 $200,742,266 $367,421,770
Liabilities and Capital
2008 2009 2010
Accounts Payable $4,075,488 $10,833,257 $8,933,573
Short-term Notes $0 $0 $0
Other Short-term Liabilities $0 $0 $0
Subtotal Short-term Liabilities $4,075,488 $10,833,257 $8,933,573

Long-term Liabilities $0 $0 $0
Total Liabilities $4,075,488 $10,833,257 $8,933,573

Paid in Capital $25,000,000 $25,000,000 $25,000,000

Retained Earnings ($25,000,000) ($3,799,553) $164,909,009
Earnings $21,200,447 $168,708,563 $168,579,188
Total Capital $21,200,447 $189,909,009 $358,488,197
Total Liabilities and Capital $25,275,935 $200,742,266 $367,421,770
Net Worth $21,200,447 $189,909,009 $358,488,197