January 1997

Trinity Capital business plan strategic development by Timothy J. Dineen -consultantNorcross, Georgia Phone: 770-935-0480 Fax: 770-935-1075 e-mail: lepcap@mindspring.com

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Table of Contents
1.0 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3 Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Company Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 Company Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 Start-up Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 Company Locations and Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 Product Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 Competitive Comparison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 Sales Literature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 Sourcing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6 Future Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Market Analysis Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 Market Segmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Industry Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2.1 Industry Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2.2 Distribution Patterns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Strategy and Implementation Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1 Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1.1 Pricing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1.2 Promotion Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1.3 Distribution Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 Sales Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.1 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Management Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1 Organizational Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2 Management Team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3 Management Team Gaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4 Personnel Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1 Important Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2 Key Financial Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4 Projected Profit and Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5 Projected Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6 Projected Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.7 Business Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2 2 2 3 3 3 5 5 5 6 7 7 7 8 8 9 10 10 11 11 11 12 12 12 12 12 14 14 15 15 16 16 17 17 18 19 20 22 22

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These highlights of the over-all plan are illustrated in the chart below: Highlights (Planned) $20.000. A Tennis Master Pro Shop is 5. and $23 million in 1999. 1.000 $0 1997 1998 1999 Sales Gross Margin Net Profit Page 1 . Combined revenues are forecast to be $6.000 square feet and includes two virtual reality tennis simulators.000. Profits are expected to be $1.000 $2. Custom fitted rackets are made on site from components and are marketed under the "Tennis Master" brand name.8 million in '97.000. Tennis Master franchise operations and company owned stores will all be included under the corporate umbrella of Tennis Master Pro Shops. $14.3 million in 1998. Forty "Master Franchise" licenses will be sold to qualified regional marketers in order to achieve the high rate of growth targeted by this expansion plan.000 $16.000 $10. operates retail tennis stores known as Tennis Master Pro Shops.3 million in '99. and reach $9.000.000 $18.000.000. Inc. Inc. These two primary revenue streams are both high in profit margin and low in inventory requirements.000 $14. two computer swing analysis systems.000.000.7% to 40. Margins will also increase over the same time frame from 26.0 Executive Summary Tennis Master Pro Shops.8 million in 1997.Tennis Master Pro Shops. increase to $5 million in '98. and four additional practice court and net combinations.000 $6.000 $4. Inc.3%. Private label and brand name tennis merchandise are also included in the product mix. Tennis instruction and training are conducted by in-store staff under the direction of a USTA professional at each store.000 $8.000. Ten stores will be company owned and the remainder will be franchised.000 $12. Tennis Master forecasts growth from its current 15 stores to a cumulative total of 380 stores over the next three years. a racket fitting analysis system.000. Each retail location markets indoor tennis instruction and custom racket fitting.

1998--20 Master Franchises and 120 retail stores (Cumulative: 30 Master Franchises and 180 retail stores). each with ten retail stores in a "Master Group. 9. 1. Tennis Master Pro Shops. Inc. not part of a standard business plan).3 Keys to Success The keys to success in Tennis Master's business are: 1. We are targeting 400 retail locations as our ultimate goal.2 Mission Tennis Master Pro Shops. Page 2 . The combination of profitable stores and successful franchise sales will be essential to the success of the plan. Executing retail marketing program.Tennis Master Pro Shops. 1. Obtaining initial capitalization. 1. Attainment of our store expansion goals (both company stores and franchise stores). We offer all of our products and services at times and locations convenient to our customers." Roll-out by year is as follows: • • • 1997--10 Master Franchises and 60 retail stores. 4. 7. The over-all retail objective for each store is to achieve 25% utilization of available training time. Management of cash flow--maintaining the pace of franchise sales--and obtaining additional investment in year one to maintain the pace of company owned store expansion. 6. Executing franchise marketing program. strives to offer the finest indoor tennis training available. We will deliver this product by individual instruction in tennis fundamentals and individual fitting of a tennis player's equipment.1 Objectives Tennis Master has the objective of becoming the nation's largest retail indoor training facility. 5. Converting existing stores to training/racket fitting format. 1999--10 Master Franchises and 200 retail stores (Cumulative: 40 Master Franchises and 380 retail stores). A table illustrating this expansion plan is in Appendix "D" (Note: this is a customer-included appendix. pledges to offer an outstanding business opportunity to our franchisees and to deliver at all times the training and ongoing support outlined in our franchise program. Inc. The attainment of this level of utilization will produce highly profitable retail stores. Inc. All the projections in this plan are based on timed growth up to the 25% utilization level. 3. 8. We seek to promote the enjoyment of the game of tennis by helping tennis enthusiasts of all levels play better tennis. Forty "Master Franchises" have been targeted. Careful attention to store locations by using economic and tennis playing demographics. Management control of both company and franchise stores. 2. Attainment of 25% minimum utilization of training time in each retail location.

the extra benefits of these systems to all but the most serious of tennis enthusiasts could amount to "overkill.S. and attractive. Inc. and Jeff Clark. the company that created lifelike human animation for Acclaim Entertainment's high end computer games. and [name omitted]. All Tennis Master stores will be open. WA. Inc. 2. clean. seeks to extend its ownership via a Private Placement to a select few additional investors.2 Start-up Summary The next generation of computer training combines the "computer coach" concept with the simulator in one piece. There can be no doubt that the system goes beyond anything currently available in its capabilities. For the purpose of this plan the expansion of Tennis Master Pro Shops." There is a need in tennis training to "keep it simple. Total revenues to date are approximately $1 million and operations have produced a very minimal profit." And it is debatable if the consumer is willing to spend the fare this system would require under its present cost structure. Inc. Inc.0 Company Summary Tennis Master Pro Shops are positioned to fill the growing need for tennis instruction demanded by both a growing number of new tennis enthusiasts and more than 20 million existing tennis enthusiasts in the U. 2. these technologies tend to come down in price as they are further developed. indoor tennis practice and simulation on "real" tennis courts. called [name omitted] runs on a [name omitted] Platform and is currently being marketed at $500.000 per system. At this time Tennis Master Pro Shops. Inc. Page 3 . The Tennis Master store will be a tennis "center" where tennis enthusiasts of all abilities will feel welcome and comfortable. The joint venture is between Tennis Training Systems. is treated as a start-up as of January 1997 with all previous assets and operations "rolled in" to this plan. Inc. [Name omitted] also did the computer animation for the action scenes in [name omitted]. The previous operating history of Tennis Master Pro Shops. and ongoing tennis lessons and instruction for tennis enthusiasts who desire to improve their game. This new simulation training system.Tennis Master Pro Shops. well-merchandised. and also the sale of approximately 15 franchise locations (not all of which have opened as of the date of this plan). This cost is beyond the scope of Tennis Master's retail concept at this time.1 Company Ownership Tennis Master Pro Shops. At the present time. and [name omitted]. 2. Other stockholders include Doug Smith. Custom racket fitting of "Tennis Master" tennis rackets and also top-selling national name brand rackets will offer the individual tennis player the equipment that is most suited to his/her game. It is a privately held Cascade State "C" corporation. The stores offer computerized swing analysis. includes the retail sales of the original "flagship" store located in Anytown. [name omitted]. It's now being developed and initial marketing is underway. James Brown. The patrons of the store will want to spend time there and will want to return again and again. was founded in 1994 by John Jones. Our management will maintain a working relationship with [name omitted] to stay abreast of product development and cost reduction. However.

000 $25.000 $126.000 $50.000 $15.500 $15.000 $0 $0 $0 $0 $0 $0 ($374.000 $5.000 $374.000 $10. Inc.000 $30.000) $126.000 $500.000 Page 4 .000 $12.Tennis Master Pro Shops.000 $36.000 $150.000 $0 $126.000 $40.000 $0 $126. Table: Start-up Start-up Requirements Start-up Expenses Legal Franchise Marketing Materials Investment Offering Costs Consultants Insurance Rent & Deposits Store Build-out Expensed Equipment Simulator (1) Swing Analysis Systems (2) Racket Fitting Analysis System Existing Debt Retirement Total Start-up Expense Start-up Assets Needed Cash Balance on Starting Date Start-up Inventory Other Short-term Assets Total Short-term Assets Long-term Assets Total Assets Total Requirements Funding Investment Private Placement Other Total Investment Short-term Liabilities Accounts Payable Current Borrowing Other Short-term Liabilities Subtotal Short-term Liabilities Long-term Liabilities Total Liabilities Loss at Start-up Total Capital Total Capital and Liabilities $500.000 $90.500 $1.000 $0 $500.000 $20.

Retail space is expected to lease at approx. inclement weather sometimes forces tennis enthusiasts to miss play or practice on the only days they have available.0 are all geared to the demands of today's active and busy tennis player.000 $200.000 $50.000 $450. With leisure time at a premium most tennis enthusiasts (all but the most avid) seldom take lessons and many don't practice at all. and until 10 or 11 PM depending on market demand.000 $150.1 Product Description The products and services discussed in section 2. 3.. Page 5 .000 $0 Expenses Assets Investment Loans 2. Build-out costs will be approx. Tennis Master Pro Shops will be open seven days per week. This forces most tennis enthusiasts to the pursuit of tennis on weekends when courts and practice facilities are most crowded. 3. In addition. Inc.Tennis Master Pro Shops. The phone # is . $50. The new retail location planned at the launch of this expansion plan will be in one of several spots already investigated.000 $300. Inc.. WA.000 $350.000 $400.3 Company Locations and Facilities Tennis Master Pro Shops. Many tennis enthusiasts would practice more or spend more on lessons if they had the available time to devote to them. Start-up $500. The warehouse and distribution facility (which will also house corporate offices) will be approx. $6 per square foot with $100. The primary obstacle is work and available daylight. rain or shine. 98000. $12 per square foot in the most desirable Anytown locations.000 build-out costs..000 $100. is presently located at: 1234 Main Street.000 $250. Anytown.0 Products The following sub-sections describe our products and services.000.

Once again. like so many franchisors. More discussion is included later in this plan on competitive businesses. An individual store may carry as much as $750. both new Page 6 . No lessons or training are offered. Another new franchise is [name omitted]. "Great Tennis Learning Centers" grew quickly to 18 stores but the franchise company was undercapitalized and." Our research identified scores of small businesses doing "custom racket fitting" from components. Our competent and courteous instructors. The training aspect is in constant demand by tennis enthusiasts. Because of their retail location philosophy they must be able to generate significant advertising monies in order to succeed. Once again. our other primary business segment. no brand loyalty. not part of a standard plan). many with one retail outlet. [name omitted] has grown to about 40 stores mostly located in the Western U. Indoor tennis training. Another common focus of these businesses is their focus on "price" as their marketing centerpiece. at present. Examples are [name omitted]. These stores predominately sell tennis equipment. some with proprietary equipment. there are many local businesses and some small multi-store sites in current operation. [name omitted]. [Name omitted] offers its own proprietary frames and the price point is high.2 Competitive Comparison Tennis retailing is dominated by the "discount tennis" chain stores. The rackets sold are always "off the shelf.S. Our management is aware of one previous franchising effort in indoor training. that are attempting to do national "mail order" or "electronic marketing. and no means of building a business identity. It doesn't demand inventory and the marketing task is not one of selling rackets to new tennis enthusiasts or replacement rackets to existing tennis enthusiasts. The Internet has thirty or forty companies that offer this service. didn't really have a workable retail marketing program. [Name omitted]'s marketing focus is on price. The stores are located in "outlet" retail or semi-industrial areas where rent is low. Information on products and services in Tennis Master's mix are included in appendix "B" ( Note: This is a customer-included appendix.000 in inventory at any given time. Tennis Master intends to position itself as the only national chain that combines custom fitted rackets with indoor training. and [name omitted]. Many of the stores continue in successful retail operation but the franchise is defunct. The common denominator in all of these businesses is that they are local businesses. They offer ONLY custom fitted rackets (their proprietary racket frames) at low price. One fear sighted by new tennis enthusiasts as an obstacle to taking lessons is the fear of embarrassment. 3. it becomes the marketing focus and the primary profit center of a Tennis Master store. Inc. A Tennis Master Pro Shop will offer these tennis enthusiasts a more private and secure atmosphere for their instruction. and even though a partial swing analysis may be performed. others with "clones" of name brand rackets." Certainly there is no focus on product quality. Hence. They seem to be saying "get rackets as good as these other ones for less than half the price." They do not have the economic power or the media strength to build a national identity. Most tennis courts and teaching facilities are out-of-doors and wide open to the view of many. There are currently several franchise or licensed operations in the custom fitted racket area. as well as our advertised concept of "In Tune with Your Game" will promise training that is both fun and effective.Tennis Master Pro Shops. Our management feels that racket sales will flow from building a training and practice base of customers. The two most noteworthy are [name omitted] Tennis which sells through court-side pro shops at tennis complex locations. there is no national identity. rackets are not custom fitted. is not a new concept.

Inc. Page 7 . who can then be converted to the concept of custom fitted rackets as they come to realize that using those rackets will enhance their enjoyment of the game of tennis. there are several manufacturers of competing products in each segment. we can store and catalogue customer's swings--a repeat marketing tool. The simulator experience fits with training (i. The key advantage of the Computer Coach is its association with the [details omitted] name-the premier name in tennis instruction today. 3. facilities. The franchise marketing materials will stress the "fun" of being in the tennis business on a full-time basis. There are two primary retail brochures. and flight path. Certainly the Tennis Master concept is an identifiable one. explanation of racket components and function. In addition. [details omitted]. The name of Tennis Master is perhaps the single best name in tennis retailing. The other concentrates on custom racket fitting.5 Technology The technologies used by Tennis Master are not patented or owned by Tennis Master. 3. Both computer swing analysis and tennis simulation experience have been proven by others to be profitable and marketable concepts.4 Sourcing The primary sources for Tennis Master are as follows: • • • [details omitted]. the swing and "net" time can be transferred to the simulator to actually see the ball flight).. The simulator is highly accurate with respect to ball velocity. distance. 3. not part of a standard plan).3 Sales Literature Tennis Master is currently finalizing all new product literature. Product literature from most of these companies is included in Appendix "B" (Note: This is a customer-included appendix. explanation of fitting procedures. and technology. This includes brochures to be used as retail as well as franchise marketing materials. concept. They are readily available in the marketplace.e. tennis enthusiasts and experienced ones. The franchise marketing materials will include our flagship store in Anytown as a model. One concentrates on training programs. [details omitted]. Brand identity and awareness is only a function of successfully marketing our identity.Tennis Master Pro Shops. More discussion of our "marketing identity" follows later in this plan. Also. and the benefits of using rackets that are fitted to the player.

2. 4. Most of the research and statistics included in this plan are from a survey conducted by the National Tennis Foundation called "Tennis Consumer Spending in the U. $2. The problem with gathering this data is that much of the spending on tennis lessons with professionals. Also.9 billion on other merchandise (court bags.0 Market Analysis Summary In order to effectively analyze our markets. The overcrowded conditions at current tennis facilities. the [details omitted].Tennis Master Pro Shops. Tennis instruction may often lead to [details omitted]. The growing number of tennis participants. The shortage of teaching pros available to non-club members or at non-traditional times.00 per tennis player. $2. The newly created demand for tennis experience in non-traditional hours (i. balls.3 billion is spent on equipment (primarily rackets). in quick day-time breaks. playing fees (reserved court time fees. The tennis simulator [details omitted]. 6." Over-all consumer spending on tennis equipment and tennis activities exceeds $16 billion annually. 7.. The desire for privacy in instruction.1 billion is spent in the largest segment of all. it is necessary to look at both the consumer's needs and the retail and distribution environment in the tennis industry. Much data and information is available in both areas." While no one currently knows the exact level of spending on tennis instruction. 5. fees). club memberships. or in inclement weather)." and additional information is from a database survey of tennis enthusiasts by market called "Tennis in America. is cash "off the books. 3. They [details omitted]. The [details omitted]. shoes. everyone agrees that the actual figure may well be in the hundred million dollar range. Name brand tennis [details omitted]. A non-threatening teaching environment. With more than 20 million tennis enthusiasts that would amount to only $5. A gap in available data exists in the area of spending on tennis lessons and instruction. National name brand rackets [details omitted].e. and apparel).S. The National Tennis Foundation is in the process of conducting a survey to determine these expenditures. for example. Inc. $947 million on accessories. 4. 3. at night. Page 8 . The availability of new technologies in training methods. Lessons are geared for individual instruction.6 Future Products Each product or service in the Tennis Master mix fills a need or demand created by: 1. and $10. and misc.

394.849.598 9.Tennis Master Pro Shops.973.000 5.518.300 5. This is discussed in more detail in the Market Analysis section 4.000 1998 12.588.216.200.58% 1997 11.00% 6.58% Page 9 .000 5.819. Market Analysis (Pie) Occasional Tennis Players Moderate Tennis Players Avid Tennis Players Table: Market Analysis Market Analysis Potential Customers Occasional Tennis Players Moderate Tennis Players Avid Tennis Players Total Growth 11% 10% 6% 9. The National Tennis Foundation has developed extensive demographic data on buying patterns by sub-dividing tennis related purchases by the segments of occasional.572. Inc.00% 32. two million customers is not a sufficient number to sustain Tennis Master's national expansion plan.3 of this plan.S.433 2001 CAGR 17.207.000 22.436 11.103 6. currently more than 20 million tennis enthusiasts and growing by approximately 10% a year.813. That will extend our total segment to more than 20 million current potential customers.966.349 6. The tennis enthusiasts in these three groups have distinctively different needs and buying patterns.246 7.890 1999 13.. and avid tennis enthusiasts.033.080 24.737. This segment alone needs equipment and lessons.672.001 2000 15.693.00% 8.831.510. there are two million new tennis enthusiasts in this country each year. 4. That is. We must also be successful in marketing to existing tennis enthusiasts.730 6.813 10.341.510 6.303 7.1 Market Segmentation Tennis Master's market segment as a whole is the entire tennis playing population of the U.025 27. However.027 29.510. moderate.

we cannot match their group purchasing power. [details omitted]. [details omitted]. and others. Inc. Racket Manufacturers (National Brands). The tennis racket manufacturing business is not a good segment to enter--certainly not if the intention is to establish a new name brand racket line. Tennis Master brand rackets will not be the center of our marketing focus. In the training segment Tennis Master seeks to find its niche and to grow to dominate this newly defined market opportunity. [Details omitted] also markets via catalogue and lately hasn't been able to resist the temptation to jump into the retail fray. Rather. Also. Thus.Tennis Master Pro Shops. 4. and we cannot match their media exposure as it pertains to equipment purchasing. We will also not endeavor to compete with component "discount" racket makers. What better name than Tennis Master to step in and dominate market share? Page 10 . We cannot match their price on national brands. custom-fitting our training clientele will be an add-on or trade-up philosophy. increasing market share. The "Tennis Master" name on these rackets will be consistent with our quality image that has already been embedded in our customer by the quality and enjoyment of his training experience. In component racket assembly there are a multitude of small companies marketing primarily on price to a local customer. the largest being [details omitted]. 4. Racket Assemblers (Components) and their suppliers. and [details omitted]. Several major suppliers of tennis racket components dominate this market at the wholesale level. 4. In tennis retailing we will not attempt to compete with the retail giants such as [name omitted] and [name omitted].2 Industry Analysis The tennis industry over-all may be broken down into the following segments of interest to Tennis Master: 1. These three companies have enjoyed rapid growth. we have no desire to be burdened by the high inventory levels that full line tennis retailing demands. and successful public offerings at the expense of former industry leaders such as Wilson Sporting Goods. Our focus will not be on price but on the quality of custom-fitted rackets. Tennis Tennis Tennis Tennis Retailers. Tennis instruction and training is dispersed and not always available at the times that customers desire it.2. There is currently no national indoor tennis training center. 2. Instruction & Training (Indoor).1 Industry Participants In tennis racket manufacturing the "Big 3" are [details omitted]. 3. These three industry giants now dominate the market with media power and have made the majority of other tennis racket manufacturers only marginally profitable or not profitable at all.

International expansion is not discussed within the scope of this initial three year plan.Tennis Master Pro Shops. courtside pro shops. describing the company strategy in detail. In order to effectively distribute our training programs we will utilize demographic data of tennis enthusiasts by market and sub-data locally to identify the best locations for our retail stores in any market based solely on tennis playing demographics that are readily available. This is sample text only. Then follows sporting goods stores. Most tennis rackets are purchased from the major tennis retailers.S. Finally. and our management has long term plans to expand internationally. present or future. The original was very proprietary. our distribution will extend all the way into the individual tennis player's home via their own copy of the Computer Coach that can be reviewed on an ongoing basis. and catalog/mail order/other as a group. This is sample text only. This is sample text only. Inc. Page 11 . This is sample text only." Effective distribution of our services will result when we attain a "critical" mass of stores in a given market to cover those areas populated by the proper tennis playing demographics coupled with sufficient media execution. This is sample text only. This is sample text only.2.2 Distribution Patterns Distribution of all of Tennis Master's product offerings is secondary to our over-all success that will result from effective distribution of our training programs. This is sample text only. direct mail. Washington may truly be said to be one of only a few recognizable tennis capitals around the world. Thorough data is available on the buying habits of our different classifications of tennis enthusiasts. This is sample text only. Tennis Master has no plans. tennis is growing faster overseas than it is in the U. This is sample text only.1 Marketing Strategy This is sample text only. "The Number of Tennis enthusiasts Ranked by [details omitted]" is included in Appendix "D. and catalog marketing also offer the means to reach tennis enthusiasts in areas where Tennis Master does not have stores. This is sample text only. This is sample text only. The Internet. The name "Tennis Master" will have identifiable meaning to tennis enthusiasts worldwide. However. 5. This is sample text only. This is sample text only. describing the company strategy in detail. mass merchants. This is sample text only. 4. We will not attempt to displace existing consumer buying patterns in these retail segments. This is sample text only. This is sample text only.0 Strategy and Implementation Summary This is sample text only. This is sample text only. This is sample text only. Anytown. This is sample text only. 5. This is sample text only. The original was very proprietary. This is sample text only. This is sample text only. to extend the distribution of its rackets into other retail outlets.

The projections are figured by taking only 50% of stores added during a given year and projecting revenue at 80% of target on those stores only. 5. This is sample text only. This is sample text only. The original was very proprietary. This allows for the staggered opening schedules of stores throughout the year.2.3 Distribution Strategy This is sample text only. This is sample text only. The chart that precedes the table illustrates our volume Page 12 . 5. This is sample text only. This is sample text only. This is sample text only. This is sample text only. This is sample text only. 5. This is sample text only. This is sample text only. This is sample text only. describing the company strategy in detail.1. This is sample text only. This is sample text only. The original was very proprietary. This is sample text only. This is sample text only. These assumptions are used consistently throughout this plan for both multi-year and single year growth. This is sample text only. 5. The original was very proprietary. This is sample text only. This is sample text only. This is sample text only. This is sample text only. This is sample text only. This is sample text only. The following table shows the effect of staggered franchise sales and corresponding retail revenue growth and royalty growth. The original was very proprietary. It also doesn't expect any store to reach its full retail potential until at least year two. describing the company strategy in detail. This is sample text only. This is sample text only. 2. describing the company strategy in detail.1. 3. This is sample text only. This is sample text only. This is sample text only. Inc. This is sample text only. A new store will attain the "pro forma" sales level indicated by the summary in Appendix "E" within one year of opening. This is sample text only.1 Sales Forecast Tennis Master's sales forecasts are based upon certain assumptions: 1. This is sample text only. This is sample text only. This is sample text only. This is sample text only. This is sample text only.1 Pricing Strategy This is sample text only. This is sample text only. This is sample text only. The timing of new stores added is in accordance with Tennis Master's expansion plan. This is sample text only.2 Promotion Strategy This is sample text only. This is sample text only. This is sample text only. This is sample text only. This is sample text only.Tennis Master Pro Shops. This is sample text only.1. 5. describing the company strategy in detail.2 Sales Strategy This is sample text only. This is sample text only. This is sample text only.

000 $1.000.814.00 1998 20 120 2.135 1998 $125.00 $5.000 $1.00 $1.041.119.000.000.000.104.811.000.00 $1.406.000 $5.500.00 $0.062 761.00 1999 10 200 5. Inc.850 2.000 $0 $0 $1.00 $0.062 $761.000.400 1.400 2. All unit costs represent the corresponding margins in that product or service.814.00 $0.732 1997 $125.798.400 $2.200 1.000 $2. Franchise sales commissions are included as unit costs of franchise sales and are deducted from revenue in all sales forecasts.875.995 1998 $12.166. Table: Sales Forecast (Planned) Sales Forecast Unit Sales Master Franchises Franchise Store Royalties Advertising Contribution Wholesale Sales Company Store Sales Total Unit Sales Unit Prices Master Franchises Franchise Store Royalties Advertising Contribution Wholesale Sales Company Store Sales Sales Master Franchises Franchise Store Royalties Advertising Contribution Wholesale Sales Company Store Sales Total Sales Direct Unit Costs Master Franchises Franchise Store Royalties Advertising Contribution Wholesale Sales Company Store Sales Direct Cost of Sales Master Franchises Franchise Store Royalties Advertising Contribution Wholesale Sales Company Store Sales Subtotal Direct Cost of Sales 1997 10 60 518.00 $0.500.916.531 $0 $19.000.177 $1.000.500.419.00 $1.000.600.00 $1.00 $25.000.000 $600.395 3.00 $0.310.00 1999 $125.875.500.572 $0 $3.131 1999 $12.200 $4.577.954.Tennis Master Pro Shops.531 3.00 $1.000 8.395 $0 $11.577.000 4.00 $0.450.419.250.00 $0.000.750 $389.850 $0 $4.295 $0 $958.000 $0 $0 $533.750 389.70 $0.00 $25.250.000.177 $0 $1.00 $1.406.200 $1.00 $1.000 $3.00 $1.00 $1.000 $518.448.000 $0 $0 $2.000.400 $1.419.00 $25.00 $5.00 $1.000 $5.916.00 1997 $125.341 1999 $125.295 $2.00 $0.662 1997 $12. projections for year one on a month-by-month basis.00 $0.00 $0.200 4.500.70 $0.70 $0.000 16.572 Page 13 .000 $300.00 $5.00 $0.00 $0.00 1998 $250.

The payroll of individual stores is included in Appendix "E" (Note: this is a customer-included appendix. and the gaps in management that will need to be filled. 6.000 $400.Tennis Master Pro Shops.000 $300. Washington. the future personnel needs of the company. Racket maker/repair. Page 14 . Sales Manager/Asst.0 Management Summary This section presents both the credentials and experience of Tennis Master's management team. Receptionist/Administrator/Scheduler. 3. 5. not part of a standard plan). projections of personnel costs.1 Organizational Structure Tennis Master's franchise and general management team will be headquartered in Anytown. Two to four Trainers/Operators (in accordance with hourly demand).000 $200. Inc. General Manager (USTA Pro) and head instructor. 4. General Mgr.000 $100. Sales Monthly (Planned) $600. Company owned stores will report to the Corporate Store Operations Manager. 2.000 $0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Master Franchises Franchise Store Royalties Advertising Contribution Wholesale Sales Company Store Sales 6.000 $500. Each store will be staffed as follows: 1.

and professional organizations. Mr. Chief Financial Officer. He has a BBA in Marketing from Anytown College (1985). Mr. Page 15 . CEO John Jones is the founder of Tennis Master. Inc. Store Operations Manager. Doug Smith (48)--Secretary. Smith also serves on the board of governors of the State Bar of Washington and is a member of the National Association of Bond lawyers. and Capitalization. Smith is also a founder of Tennis Master. Mr. Has been responsible for originating the concept.3 Management Team Gaps The following management personnel will need to be added to our team to effectively grow at the rate projected. • • • • • • • Controller/Systems Administrator. Clark has a BBA in Marketing from the [name omitted]. are the following: John Jones. He also serves as Chief Operating Officer of [name omitted]. church. and marketing the franchises to date. of Anytown. Clark (48)--Vice-President. He is a member of the Forum on Health Law of the American Bar Association and the National Health Lawyers Association. Mr.Tennis Master Pro Shops. 6. 6. Doe. an investment advisory firm in Anytown. (34)--Chairman. Strategic Planning. and political organizations. Franchise Sales Director. He has also held senior management positions with three different development stage companies with responsibility for P & L. Smith is active in civic. Wa. P.2 Management Team The key management personnel of Tennis Master Pro Shops. Clark's background includes middle management positions in Sales and Marketing with [name omitted] Company and the [name omitted]. Inc. Jones is active in many numerous civic. Inc. Corporate Development Mr. Jones founded a Home Medical Equipment Company which he sold to a national firm. a regional human resource company advancing to Vice President of Industrial Services. General Counsel.C. operating the Anytown retail store. Some candidates have already been identified for these positions. James J. Inc. Inc. Clark is the principal and founder of [name omitted]. Warehouse/Distribution Manager. in both Chicago and New York. Previously Mr. Washington. Mr. Jr. Director of Marketing. & Johnson. and Director Mr. business. Training Manager. Smith holds Bachelor of Business Administration (1970) and Juris Doctor (1973) degrees from the University of Washington. Mr. Prior to that he spent 11 years with [name omitted]. He is a partner of Smith.

This capital flows in from March to June of 1997 as indicated in the plan.000 $63. Mgr.000 $48. The $250. a Private Placement of $1 million will be sold.000 $19.500 $19.107.000 $44.000 $15.628 $403.500 1998 $30.730 $1.836.000 is infused from a continuation of the same placement.0 Financial Plan The growth of Tennis Master will be financed by its successful initial capitalization.000 $1.500 $30. If franchises are marketed successfully and on schedule that revenue will fuel growth to positive cash flow and profitability in year one.000 Total People Total Payroll Payroll Burden Total Payroll Expenditures 13 14 13 $907.000 $84.500 $15.000 $18. Company owned store salaries are grouped together as one entry. Company Stores Other Subtotal 1997 $25. Table: Personnel (Planned) Personnel Plan Production Personnel Whse.000 $16.239.920 $2. An additional $500.400 $1.4 Personnel Plan The following table illustrates the personnel needs and salary projections for the next three years.500 $518.000 infusion in March will permit the corporate headquarters and warehouse to open on schedule. $500. Distribution Asst.028 $2.296.500 $395.000 $72.649.000 $47.000 $96.000 $1. Administrative Assistant Subtotal Other Personnel Salaries.000 $2.000 $245.400 $1. Initially. Page 16 .000 $363.000 $30. Inc.000 $42.400 $1.000 $48. Training Mgr.000 $33.500 $72. Customer Service Subtotal Sales and Marketing Personnel Franchise Sales Dir.000 $25.000 $90.000 $36.000 $66.500 $68. Dist. The personnel burden for taxes and benefits is 22%.920 $477.230 7.000 1999 $32.000 $15. Franchise Salesperson Director of Marketing Subtotal General and Administrative Personnel CEO VP Corp.000 $0 $40. Dev. All positions are phased in as needed.000 $54.620.500 $199.000 $36. followed by franchise fees and royalties. 6.000 $22.000 $0 $40.000 $88.000 $33.000 $48.000 $18.296.000 $114. Store Operations Mgr.000 $48. Chief Financial Officer Controller/Systems Admin.000 $76.171.Tennis Master Pro Shops.000 $0 $0 $0 $518.000 is required to start-up.000 $72.000 $60.620.000 $7.

control of costs.00% 100. and increasing margins as market maturity is attained. 1997 1998 1999 Page 17 .00% 33.00% 22.Tennis Master Pro Shops. Other assumptions appear in the table below: Table: General Assumptions General Assumptions Short-term Interest Rate % Long-term Interest Rate % Tax Rate % Expenses in Cash % Personnel Burden % 1997 0.00% 100.00% 33.00% 1999 0.00% 0.00% 0. Royalties are also treated as cash even though they lag 30 days to collect from the time period incurred. • • • There is no projected borrowing.00% 100. There are no payment terms on these items. Inc. 7.00% 7.00% 0. Benchmarks (Planned) 5 4 4 3 3 2 2 1 1 0 Sales Gross OpEx Turns Est.00% 1998 0. Retail sales and franchise fees are treated as cash when collected.00% 33.1 Important Assumptions The following assumptions are used in this plan. They appear as collected.2 Key Financial Indicators The key indicators in our plan illustrate increasing sales.00% 22.00% 22.

200 at that point in time. Training and franchise sales are figured at 90% gross margins for this purpose. one master franchise sale.Tennis Master Pro Shops. or three retail store franchise sales.000) ($40.000) 0 20000 40000 60000 80000 100000 Monthly break-even point Break-even point = where line intersects with 0 Table: Break-even Analysis Break-even Analysis: Monthly Units Break-even Monthly Sales Break-even Assumptions: Average Per-Unit Revenue Average Per-Unit Variable Cost Estimated Monthly Fixed Cost 68.3 Break-even Analysis The following assumptions are used for the purpose of this break-even analysis. The break-even sales required to stay in business is thus $68. 7.000 $1.000 $20.000 in either franchise fees or combined franchise fees and retail training revenue.00 $0. Or. Monthly overhead or "burn rate" is pegged at $61. Inc.000 $0 ($20.200 Page 18 .10 $61.000) ($80. If Tennis Master opens the Anytown flagship corporate retail store and also the new corporate headquarters and incurs the overheads and salaries associated with those two events. Break-even Analysis $40.000) ($60. then the analysis shows how much monthly revenue in either franchise sales (from corporate) or retail training (from the store) would be required to sustain business until either more investment or more revenues could be developed.000 $68.

Tennis Master Pro Shops.177 $9.390. (The lease payments are projected at rates consistent with high-cost franchise lease rates. Depreciation is for leasehold improvements for company owned stores ($50.200 $62.213.000 depreciated) and corporate headquarters and warehouse ($100.280 39.960 $105.000 $1.895.966 $36.24% $96.000 $1.730 $119.781.310.000 $403.815. All depreciation is straight-line five years.741.000 $50.4 Projected Profit and Loss The following projected profit and loss table and chart derives from sales projections over operating expenses.877 15.000 $44.954.10% $395.000 $2.152.8 million in 1997. While it is unusual for a business to show such a substantial profit in its first year of operations.293.995 $1.177 $63.572 $68.166.37% $88.000 $40.875.000 $715.550 8.52% 1998 $11.795 $3. 7.413.67% $2. 2.000 8.448.731 $0 $0 $3. Two important explanations are required: 1.337.500 $1.98% 1999 $19.000 $1.99% $3.017.45% $363.559 83.662 $958.189 $0 $0 $1.680.295 $47.628 $43.304 19. these figures are attainable in a franchise company primarily from the impact of franchise fees alone.06% Page 19 . Any variance in sales would have an immediate impact on these figures.000 11.005.356.234.000 $1.596. $5 million in 1998.829 $11.422 9.3 million in 1999.000 $872.407 $80.240 $68.584.407 7.402 $0 $3.398.952 $126.000 $48.400 14.500 $686.000 $60.000 $3.00% $1.74% $518.380.17% $114.867 77.630 $5.170 $1.000 $0 $60.572 $16.451 $0 $7.080 14.819 82.360 $47. Term of leases is five years with a 10% residual buy-out or renewal option).131 $3.000 $38.000 $869.67% $245.000 $33.000 $0 $60.000 $540.620.000 $955. Leased equipment consists of swing analysis systems and simulators needed for company stores.500 $477. and $9.466 19. Tennis Master projects bottom-line profits of $1.920 $99.296.800 $178.786 31.000 depreciated).000 $60.000 $648.419.000 $468.616.000 $1.000 $199.000 $1.697 $0 $0 $337.820 $0 $685.550 $66.64% $4. Inc.023.200 $38.316 $87.000 $55.400 $75. Table: Profit and Loss (Planned) Pro Forma Profit and Loss Sales Direct Cost of Sales Production Payroll Total Cost of Sales Gross Margin Gross Margin % Sales and Marketing Payroll Advertising/Promotion Travel/Entertainment Marketing Materials Total Sales and Marketing Expenses Sales and Marketing % General and Administrative Payroll Payroll Burden Depreciation Depreciation Depreciation Telephone/Fax Insurance Rent Total General and Administrative Expenses General and Administrative % Other Payroll Contract/Consultants Legal Total Other Expenses Other % Total Operating Expenses Profit Before Interest and Taxes Interest Expense Short-term Interest Expense Long-term Taxes Incurred Extraordinary Items Net Profit Net Profit/Sales 1997 $4.33% $1.

000 $100. These cash expenditures are all hard cash out to be recouped by depreciation.5 Projected Cash Flow The critical time for cash flow for Tennis Master is the first half of 1997. the following table and chart show that there will be sufficient cash to execute the plan. The only way to survive through this period is to curtail expansion if that becomes necessary.000 $600.6 million cash balance at the end of 1997 and in excess of $15 million at the end of 1999.000) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Net Cash Flow Cash Balance Page 20 .000 $0 ($100. Given the above assumptions.Tennis Master Pro Shops. Cash (Planned) $700. With successful execution the company would have a $1.000 $200. Inc.000 $500. During this time period substantial cash-out is needed to establish both the flagship Anytown store and the new corporate headquarters and warehouse.000 $400.000 $300. Additional capital (not planned for) would need to be raised later in 1997 if franchise sales fall far behind expectations. 7. Flow-in of investment funds are also critical.

672.662 $0 $4.969 $0 $0 $0 $0 $0 $0 $0 $0 $11.187.310. Table: Cash Flow (Planned) Pro Forma Cash Flow Cash Received Cash from Operations: Cash Sales From Receivables Subtotal Cash from Operations Additional Cash Received Extraordinary Items Sales Tax.662 1997 $3.995 $0 $11.801 $1. etc.131 $0 $19. VAT.000 $0 ($498.285 $2.859 $2.995 $19.585 Page 21 .975.028 $0 $4.419.448.335. VAT.919. HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Short-term Assets Purchase Long-term Assets Dividends Adjustment for Assets Purchased on Credit Subtotal Cash Spent Net Cash Flow Cash Balance 1997 1998 1999 $4.311.939 $2.000) $4.310. Inc.335.000 $0 ($576.514. Salaries.859 $0 $0 $0 $0 $0 $0 $0 $0 $19.662 $11.311.933.515 $0 $0 $0 $0 $0 $498.833 $0 $0 $0 $0 $0 $576. Payment of Accounts Payable Subtotal Spent on Operations Additional Cash Spent Sales Tax.204.995 1998 $6.833 $697. HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of other Short-term Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received Expenditures Expenditures from Operations: Cash Spent on Costs and Expenses Wages.310.920 $0 $8. Payroll Taxes.829 $0 $0 $0 $0 $0 $0 $0 $0 $11.419.107.Tennis Master Pro Shops.230 $0 $11.649.000 $4.131 $0 $0 $0 $0 $0 $0 $0 $500.515 $7.829 $607.933.095.616 $11.284.239.000) $8.131 1999 $9.448.448.136 $3.

943 1997 $697.7 Business Ratios Business ratios for the years of this plan are shown below.970 $0 $3.928.316 $454.663 1999 $11.524.928. Sporting Goods and Bicycle Shops.939 $1.228 $810.524.928.877 1998 $3.280 $12.6 Projected Balance Sheet The following table projects our balance sheet for the next three years: Table: Balance Sheet (Planned) Pro Forma Balance Sheet Assets Short-term Assets Cash Inventory Other Short-term Assets Total Short-term Assets Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets Liabilities and Capital Accounts Payable Current Borrowing Other Short-term Liabilities Subtotal Short-term Liabilities Long-term Liabilities Total Liabilities Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital Net Worth 1997 $0 $0 $0 $0 $0 $0 $1.000 $263.000 $311.360 $0 $857.877 $1.187.724 $4.663 $4.877 $1.943 $12. Industry profile ratios based on the Standard Industrial Classification (SIC) code 5941.833 $159.524.193 $498.000.714. 7.786 $4.Tennis Master Pro Shops.000 $143.969 $324.000.311.943 $12.311.877 1998 $0 $0 $0 $0 $0 $0 $1.000 $43.311.997. Page 22 .311.596.000 ($374.000) $685.616.524.943 7. are shown for comparison.772 $12.663 $4. Inc.000.663 1999 $0 $0 $0 $0 $0 $0 $1.672.586 $0 $11.877 $3.928.928.877 $1.663 $7.684 $1.000 $3.585 $526.171 $1.276 $930.074.074.

03% 78.a n.06% 60.a n.65% 0.30% 81.00% 44.00% 31.40% 0.70% 3.00 0 9.98% 73.28% 0.00 0.90% 1.53% 6.00% 0.93% 58.974 0.00 0.00% 0.a n.a n.193 0.00% 100.88% 100.30% 100.20% 16.00% Industry Profile 4.53% 1998 $807.010 1. 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 Business Vitality Profile Sales per Employee Survival Rate Additional Ratios Net Profit Margin Return on Equity Activity Ratios Accounts Receivable Turnover Collection Days Inventory Turnover Accounts Payable Turnover Total Asset Turnover Debt Ratios Debt to Net Worth Short-term Liab.00 0.19% 6.75 57.55 0. Table: Ratios (Planned) Ratio Analysis Sales Growth Percent of Total Assets Accounts Receivable Inventory Other Short-term Assets Total Short-term Assets Long-term Assets Total Assets Other Short-term Liabilities Subtotal Short-term Liabilities Long-term Liabilities Total Liabilities Net Worth Percent of Sales Sales Gross Margin Selling.00 0.00 0.07 0.a n.33% 47.03% 1997 $339.a n.714.92% 0.00 0 7. Inc.171 0.a $857.20% Industry $0 0.997.00% 12.00% 100.00 0 8.00% 90.00% 81.00% 1. to Liab.00 1.00% 0.a n.00% 0.37 $0 0.00 1998 31.80% 13.64 0% 0.00% 93.a n.a n.00 1999 39.55 0.72% 15.34% 34.94% 0.00% 100.00% 0.80% 19.00 n.00% 78.81 0.30 0% 0.00 2.20% 100.97 0.29 0.59% 0.00% 0.00% 49.10% 18.80% 50.00 $3.44 0% 0.00% 1998 155. Liquidity Ratios Net Working Capital Interest Coverage Additional Ratios Assets to Sales Current Debt/Total Assets Acid Test Sales/Net Worth Dividend Payout 1997 0.a n.53% 109.00% 109.60% 40.52% 1999 $1.00% 0.00% 0.44 0.00% 0.00% 0.00 $11.00% 0.00 0.00 n.66% 100.54% 23.37 0.15% 0.47% 100.00% 65.00% 82.a n.00 0.00 3.90% 100.00% 6.00% 77.00 0.a Page 23 .70% 36.928 0.52% 52.00% 1999 71.00% 0.29 0.52% 90.a n.40% 8.31% 5.00% 4.a n.a 0.00% 0.00% 83.00 3.12% 18.20% 24.00 n.24% 61.00 0.00 2.73% 100.939 0.00% 1997 15.38% 0.Tennis Master Pro Shops.37% 44.20% 0.00 0.496.17% 50.00 1.16% 100.

000 $37.208 $0 $75.000 441.00 $1.000 22.319 $125.000.Appendix Appendix Table: Sales Forecast (Planned) Sales Forecast Unit Sales Master Franchises Franchise Store Royalties Advertising Contribution Wholesale Sales Company Store Sales Total Unit Sales Unit Prices Master Franchises Franchise Store Royalties Advertising Contribution Wholesale Sales Company Store Sales Sales Master Franchises Franchise Store Royalties Advertising Contribution Wholesale Sales Company Store Sales Total Sales Direct Unit Costs Master Franchises Franchise Store Royalties Advertising Contribution Wholesale Sales Company Store Sales Direct Cost of Sales Master Franchises Franchise Store Royalties Advertising Contribution Wholesale Sales Company Store Sales Subtotal Direct Cost of Sales Jan 0 2 0 0 20.680 Page 1 .400 360.002 Jan $125.00 $0.00 $1.360 $0 $466.000 30.000.700 $0 $482.465 Apr $12.240 Jun $12.000.00 $1.00 $1.00 $1.500.00 $1.00 $0.000.500 $1.000.00 Dec 0 3 200.00 $5.00 $5.000 97.00 $1.150 $0 $150.00 $0.70 $0.868 $250.000 $22.500 $30.000.875 20.000.000.000 $75.70 $0.000.00 $0.000 $25.00 $0.500 $0 $533.00 $1.914 $125.00 $1.340 80.00 $0.000.440 Nov $12.000 $125.000 $120.000 $20.500 $15.00 $0.00 $1.914 $0 $101.00 May $25.00 $1.000 $0 $0 $69.00 $1.00 $5.812 $31.500 89.546 $0 $24.70 $0.00 $1.00 $0.00 $5.00 $0.00 $0.00 $0.00 $25.000 $22.500.00 $25.00 $25.368 $0 $88.500 16.000.780 40.00 Feb $0 $10.00 Jun $12.00 $1.00 $0.00 $0.00 $0.500.00 $0.500.625 32.00 $0.546 $125.000 15.000.000 92.000.00 Jul $25.00 $25.500.500 1.00 $0.00 $0.700 320.00 $5.000 $92.000 366.500 $28.00 $5.00 $1.440 $0 $457.170 60.00 Aug 1 8 30.000 $0 $24.125 $91.240 $0 $376.138 $250.782 May $125.00 $0.157 Feb $125.70 $0.000.552 $0 $115.00 $25.000 647.000.690 $125.375 53.340 $0 $245.00 $25.000 477.000 $0 $0 $14.00 $5.00 $25.00 $0.70 $0.403 Dec $125.869 Aug $125.625 $32.000.000 $150.000 $0 $0 $14.000 $15.70 $0.875 67.000.00 $1.000 $0 $0 $21.875 $99.00 $0.000 $200.00 $0.000 301.000 225.00 $1.440 340.00 Apr 1 3 7.70 $0.000.500.052 $125.446 Nov $125.00 Jan $0 $10.00 Nov 0 6 120.000 $2.000 $30.00 $0.000 $0 $0 $64.00 Sep 1 8 37.000 66.400 Dec $12.500 28.000 $12.000 $0 $0 $64.500.247 Jun $125.884 Oct $125.00 $5.00 Oct 1 8 62.000.00 $25.00 $1.170 $0 $237.00 $1.000 $3.000 $75.000.000 $66.000.000 150.000 65.000 $200.500 9.00 $0.500.00 $0.875 Oct $12.00 $5.403 Jul $125.000 $200.000 $0 $0 $62.00 $0.500 $15.000 $30.000 $0 $0 $20.00 $0.00 $5.638 $0 $50.000 $0 $0 $37.00 $0.000 $150.500.860 Aug $12.00 $1.70 $0.500 $46.334 Sep $125.875 $20.375 $53.500 5.00 Feb 0 2 2.000.500 $40.000 $0 $0 $22.000.70 $0.000.000 $150.875 99.00 $1.00 $5.00 $0.819 $0 $49.750 2.240 200.00 $0.500 $40.00 May 2 5 12.00 Jun 1 6 20.875 $67.00 $1.500 $5.00 $0 $50.000 $0 $0 $68.000.00 $0.000 538.00 $0.000 $97.020 260.00 Mar $12.00 Apr $12.70 $0.00 $1.00 $0.500 330.00 $0.000.208 $0 $98.395 Jul $12.00 $25.125 91.00 $1.000.00 $0.00 $0.190 $0 $116.00 $1.00 Oct $12.70 $0.469 Apr $125.400 $0 $517.650 $0 $122.000 Jan $12.000 $200.000 $90.000 $0 $0 $46.70 $0.500.020 $0 $506.155 Feb $12.500 $40.732 Mar $12.000.00 $0.00 $0.00 $1.00 $0.00 $1.500 $16.736 Mar $125.00 $0.00 $0.00 $0.00 Aug $12.00 $25.000 10.000.000 125.750 $2.00 $25.00 $0.00 Sep $12.500 $9.00 $1.00 Jul 2 6 22.000.00 Mar 1 3 3.00 $1.000.000.00 $0.000.00 $1.000.730 $125.500 $89.00 $1.00 $0.000 90.00 $25.00 $5.325 Sep $12.00 Dec $0 $15.000 $0 $70.000 802.00 $1.780 $0 $75.775 May $12.00 $1.000 97.00 $0.00 $1.900 $0 $450.00 $0.00 $1.360 300.000 $62.00 Nov $0 $30.000 $0 $0 $46.500.730 $0 $87.500.000 $7.00 $0.500 46.812 31.900 150.000.000 $0 $50.680 $0 $79.00 $1.000.

Store Operations Mgr.200 $15.000 $3.500 $6.000 $3.300 $2.257 Page 2 .500 $4.843 $104.984 $33.864 $38.000 $3.200 $0 $16.204 12 $68.500 $22.500 $0 $1.890 $60.300 $6.600 $0 $48.200 $5.500 $1.300 $6.200 $0 $16.650 $18.000 $2.300 $6.000 $4.500 $1. Mgr.400 $32.407 $124.184 4 $31.300 $6.500 $22.250 Oct $2.500 $4.390 12 $68.500 $22.493 13 $85.000 $3.200 $0 $16.250 Aug $2.300 $2.000 $5.250 Dec $2.500 $22.300 $2.500 $5.300 $2.000 $0 $4.000 $3.204 12 $84.000 $9.000 $7.300 $6.000 $2.500 $5.800 $0 $64.000 $0 $4.000 $0 $4.000 $5.600 $0 $48.500 $3.000 $0 $4.850 $22.500 $4.300 $2.500 $5.000 $5.500 $4.493 13 $101.000 $2.Appendix Appendix Table: Personnel (Planned) Personnel Plan Production Personnel Whse.500 $4.000 $2.300 $2. Dev.000 $9. Administrative Assistant Subtotal Other Personnel Salaries.800 Total People Total Payroll Payroll Burden Total Payroll Expenditures 3 $27.800 $64.850 $22.500 $1.000 $3.000 $0 $0 $0 $0 $0 $11.000 Jul $2.000 Jun $2.000 $6.000 $5.500 $1.400 $0 $32. Distribution Asst.000 Apr $2.500 $3.968 13 $85.500 $1.000 $5.500 $4.650 $18.500 $4.000 $5.500 $3.000 $2.000 $4.000 $0 $4.500 $22.800 $0 $64.300 $16.200 $16.500 $0 $1.000 $6.200 $32.407 $124.500 $5.000 $9.600 $48.250 $0 $0 $0 $0 $4.500 $3.800 $64.850 $22.004 $83.250 $1.500 $0 $1.000 $9.200 $15.500 $4.800 $0 $64.200 $16. Training Mgr.250 $1.300 $6.250 $1.000 $0 $3.600 $0 $48.300 $2.500 $1.500 $22.500 $1.000 $0 $4.500 $3.568 $102.500 $22.000 $0 $4.400 $0 $32.500 $3.000 $9.000 $0 $0 $0 $0 $0 $11.257 13 $101.300 $6.500 $1.000 $5.257 13 $101.000 $3.000 $5.400 $48.300 $6.500 $4.000 $2.500 $1.250 $1.500 $5.500 $5.000 May $2.800 $64.300 $2.400 $18.500 $1.000 $5.300 $2.000 $3.000 $0 $4.500 $1.000 $5.200 $6.500 $0 $1.500 $22.250 $1. Chief Financial Officer Controller/Systems Admin.004 $83. Dist.500 $22.257 13 $101.000 $9.000 $2.300 $2.000 $3.000 $0 $0 $4. Company Stores Other Subtotal Jan $0 $0 $0 $0 Feb $0 $0 $0 $0 Mar $2.000 $0 $4. Customer Service Subtotal Sales and Marketing Personnel Franchise Sales Dir.500 $10.500 $4.000 $9.000 $5.000 $0 $4.500 $1.500 $1.500 $3.000 $9.300 $6.500 $3.250 $1.500 $1.600 $48.500 $22.500 $1.800 $0 $64.843 $104.850 $22.250 Sep $2.000 $5. Franchise Salesperson Director of Marketing Subtotal General and Administrative Personnel CEO VP Corp.500 $3.600 $64.000 $2.000 $3.000 $2.500 $4.407 $124.000 $9.250 Nov $2.500 $1.064 11 $49.407 $124.500 $4.

00% 33.00% Oct 0.00% Aug 0.00% 0.00% 100.00% 33.00% Nov 0.00% 0.00% 0.00% 100.00% May 0.00% 0.00% Sep 0.00% 33.00% 0.00% 22.00% 0.00% 100.00% 100.00% 22.00% Jul 0.00% 33.00% 22.00% 33.00% 22.00% 100.00% 22.00% 0.00% Mar 0.00% 100.00% 33.00% 33.00% 33.00% 100.00% Dec 0.00% 0.00% Apr 0.00% 0.00% Page 3 .00% 33.00% Jun 0.00% 22.00% 33.00% 22.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 22.00% 22.Appendix Appendix Table: General Assumptions General Assumptions Short-term Interest Rate % Long-term Interest Rate % Tax Rate % Expenses in Cash % Personnel Burden % Jan 0.00% Feb 0.00% 22.00% 33.00% 100.00% 33.00% 22.00% 22.00% 100.

393 $0 $27.000 $61.600 $0 $0 $48.600 10.000 $21.17% $220.500 $76.407 $4.458 $353.520 $5.686 $3.000 $81.000 $2.29% Nov $457.50% $262.913 $0 $0 $32.500 $3.332 $5.065 $170.000 $77.84% $9.78% Sep $482.17% $48.372 75.66% $22.14% $54.54% $48.284) $0 ($18.405 $0 $0 $56.516 $2.26% $11.300 $4.890 $2.500 $2.078 $3.200 $0 $0 $16.045 79.516 43.868 $283.875 $122.998 $10.52% $262.200 23.000 $2.490 $4.500 $60.300 $22.000 $94.864 $833 $2.70% Oct $533.200 $0 $0 $16.000 $50.413 77.047 20.000 $20.942 14.400 17.499 $2.000 $48.102 $0 $97.642 20.500 $3.830 $1.140 18.000 $68.558 $105.57% $7.17% $64.500 $4.500 $3.775 $87.300 $22.500 $1.800 $0 $0 $64.94% $9.594 $0 $0 $45.743 $40.920) $0 ($5.800 14.609 67.440 $98.500 $87.492 $18.000 $5.743 ($28.546 $0 $24.025 19.490 $4.585 $0 $0 $13.250 $127.47% Feb $75.000 $2.000 $21.830 $2.000 65.904 14.800 13.300 $10.500 $32.638 $136.95% $22.690 $5.164 $399.518 18.623 21.000 $15.08% $22.08% May $450.165 $8.300 $22.475 76.000 $10.55% Jun $376.800 12.000 $3.847 $80.874 $0 $0 $40.573 $0 $53.000 $5.998 $10.395 $101.400 $79.600 17.600 $17.234 $0 $114.231 78.624 19.500 $92.14% $260.000 $0 $24.407 $4.076 $0 $91.000 $81.830 $1.847 ($8.Appendix Appendix Table: Profit and Loss (Planned) Pro Forma Profit and Loss Sales Direct Cost of Sales Production Payroll Total Cost of Sales Gross Margin Gross Margin % Sales and Marketing Payroll Advertising/Promotion Travel/Entertainment Marketing Materials Total Sales and Marketing Expenses Sales and Marketing % General and Administrative Payroll Payroll Burden Depreciation Depreciation Depreciation Telephone/Fax Insurance Rent Total General and Administrative Expenses General and Administrative % Other Payroll Contract/Consultants Legal Total Other Expenses Other % Total Operating Expenses Profit Before Interest and Taxes Interest Expense Short-term Interest Expense Long-term Taxes Incurred Extraordinary Items Net Profit Net Profit/Sales Jan $70.465 $50.000 $32.921 $0 $0 $6.39% $22.300 $18.500 $3.000 $21.72% $9.400 $25.680 $5.732 $49.660 $3.407 $4.38% $9.134) $0 $0 ($9.984 $833 $2.558 74.568 $4.500 $2.800 $0 $0 $64.138 $4.730 $359.71% $0 $8.000 $29.000 $1.847) $0 $0 ($2.250 $84.923 $0 $70.300 $15.998 $10.898 16.244 $0 $12.000 $13.763 $0 $0 $48.004 $3.843 $4.500 $2.661 18.319 $4.000 $0 $10.519 23.996 17.75% $22.500 $95.800 $0 $0 $64.600 $25.500 $2.500 $80.300 $22.69% $48.520 $5.000 $92.14% $9.000 $6.500 $3.296 27.407 $4.878 $0 $82.000 $2.500 $95.546 $50.500 $79.500 $2.000 $1.000 $9.998 $10.004 $3.29% $11.17% $254.500 $3.078 16.000 $91.500 $3.052 $5.244 20.208 $5.49% $64.34% Jul $506.20% $150.300 $15.23% $9.300 $4.660 $3.971 $0 $66.332 $5.165 $8.65% $9.600 $17.000 $13.069 $99.600 $17.400 $406.300 $4.500 $92.713 $145.500 $3.186 19.59% $9.85% $22.500 $4.240 $88.200 $25.843 $4.43% $254.500 $103.500 $2.677 5.500 $57.500 $2.624 $3.07% Aug $466.000 $28.250 $103.647 40.490 $4.200 21.520 $5.500 $2.34% $4.500 $76.547 $3.733 19.000 $3.200 25.95% $16.800 $0 $0 $64.385 74.027 39.982 77.500 $3.32% $9.250 $107.192 11.250 $120.520 $5.800 12.930 $432.952 14.000 $3.025 18.000 $68.025 20.500 $72.000 $55.000 $81.388 $3.55% $64.600 12.000 $46.327 77.82% $22.000 14.240 19.56% $78.470 83.82% $32.300 $18.92% $16.000 $30.20% $22.525 $0 $0 $26.000 $94.300 $18.000 $94.740 $3.52% $22.600 $0 $0 $48.325 $116.296 15.773 $2.250 $121.000 $88.500 $101.400 $0 $0 $32.888 19.000 $20.41% $222.500 $3.744 $3.63% Dec $517.849) -25.272 $0 $0 $45.30% $22.400 13.000 $21.08% Mar $237.61% $64.33% Apr $245.35% $16.500 $2.500 $75.898 17.138 $191.684 $123.927) -8.171 22.07% Page 4 .914 $5.773 20.74% $165.868 $4.155 $24.500 $86.630 $0 $92.940 $360.000 $54.828 $0 $0 $34.000 $53.302 $346.000 $24.319 $184.774 $138.000 $11.233 $3.025 17.300 $4.730 $4.000 $94.640 $3.860 $115.165 $8.15% $32.000 $15.150 $5.92% $202.

102 $0 $0 $0 $0 $0 $0 $0 $100.175 $0 $0 $0 $0 $0 $0 $0 $0 $87.263 ($19.739 $421.493 $0 $405.784 $0 $0 $0 $0 $0 $0 $0 $0 $337.985 $120.493 $0 $436.263 $0 $0 $0 $0 $0 $0 $0 $250.257 $0 $442.390 $0 $482.000 $75.431 $102.427 $0 $0 $0 $0 $0 $96.440 $517.064 $0 $94.155 Feb $56. VAT. Salaries.860 $482.103 $0 $0 $0 $0 $0 $96.395 $466.000 $0 $70.00% $0 $0 $0 $0 $0 $0 $0 $0 $70.Appendix Appendix Table: Cash Flow (Planned) Pro Forma Cash Flow Cash Received Cash from Operations: Cash Sales From Receivables Subtotal Cash from Operations Additional Cash Received Extraordinary Items Sales Tax.975 $0 $0 $0 $0 $0 $0 $0 $0 $482.910 $33.985 $0 $0 $0 $0 $0 $0 $0 $50.395 $0 $506.240 Jun $313.094 $0 $0 $0 $0 $0 $0 $0 $0 $75.155 $0 $75.325 $0 $482.000) $416. Payment of Accounts Payable Subtotal Spent on Operations Additional Cash Spent Sales Tax.775 May $346.000 $0 ($210.325 $533.000 $345.699 $0 $0 $0 $0 $0 $0 $0 $0 $533. VAT.225 $697.918 $124.094 ($17.732 $245.699 ($23.399 $0 $0 $0 $0 $0 $0 $0 $0 $506.879 $124.204 $0 $429.400 Dec $236.804 $69.000 $0 ($96.616 $0 $0 $0 $0 $0 $0 $0 $0 $517. etc. HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Short-term Assets Purchase Long-term Assets Dividends Adjustment for Assets Purchased on Credit Subtotal Cash Spent Net Cash Flow Cash Balance Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec $70.199 $38.860 $0 $466.045 $0 $0 $0 $0 $0 $0 $0 $0 $442.732 $0 $237.824 $541.797 $0 $0 $0 $0 $0 $210.732 Mar $421.136 $0 $0 $0 $0 $0 $0 $0 $0 $457.875 $457.000 $426.400 $0 $517.608 $0 $0 $0 $0 $0 $0 $0 $0 $361.804 $0 $0 $0 $0 $0 $0 $0 $0 $466.875 $0 $533.781 $83.000 $0 ($96.375 $83. HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of other Short-term Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received Expenditures Expenditures from Operations: Cash Spent on Costs and Expenses Wages.534 $0 $0 $0 $0 $0 $0 $0 $0 $405.000 $487.442 $124.418 $0 $0 $0 $0 $0 $96.975 $60.591 $292.257 $0 $337.712 $60.465 $450.374) $330.440 Nov $213.790 $213.175 $156.395 Jul $332.108) $53.841 $222.943 $0 $0 $0 $0 $0 $0 $0 $0 $436.968 $0 $416.102 $5.630 $59.906 $0 $0 $0 $0 $0 $0 $0 $0 $94.257 $0 $361.155 $237.399 $9.440 $0 $457.465 Apr $229.000 $0 ($96.257 $0 $505.833 Page 5 .579 $32.775 $0 $450.094) $72.000) $482.482 $104.885 $353.204 $0 $312.311 $104.359 $124.000 Jan $53.000) $312.400 0.886 $92.465 $0 $245.000) $505.136 $91. Payroll Taxes.313 $0 $0 $0 $0 $0 $0 $0 $0 $429.184 $0 $87.875 Oct $317.000 $550.240 $0 $376.579 $0 $0 $0 $0 $0 $0 $0 $100.325 Sep $381.240 $506.860 Aug $301.775 $376.616 $119.

682 $1.000) ($12.000) $504.000) $336.197.889 $0 $1.104 $0 $583.460 $0 $388.318 $459.360 $0 $857.000 ($374.000 $4.679 $402.193 $498.736 $0 $400.706 $1.203 $879.065 $210.877 Starting Balances $90.000 Jan $72.092 $491.033.608 $196.684 $1.320 $464.000 $126.000 $7.197.300 $0 $666.130.734 $683.000) $571.316 $454.000) $15.159 $382.198 $962.197.835 $363.103 Oct $0 $0 $0 $0 $0 $0 $1.706 Dec $697.522 $402.000.000 ($374.706 $1.000) $161.638 $0 $158.033.033.906 $0 $833 ($833) $120.223 Mar $0 $0 $0 $0 $0 $0 $750.198 $962.311.877 Page 6 .045 $233.563 $306.103 $1.311.900 Apr $0 $0 $0 $0 $0 $0 $850.000) ($24.103 $1.685 $787.006 $787.000 ($374.223 $101.000.130.311.764 $1.203 Aug $0 $0 $0 $0 $0 $0 $1.313 $100.666 ($1.994 $387.103 $175.130.362 $402.906 $48.589 $306.130.000 $14.000 ($374.877 $1.734 Jun $0 $0 $0 $0 $0 $0 $1.503 $491.024 $498.092 $491.784 $244.676 $962.000 ($374.685 $787.197.092 $491.084 $498.000 $0 $0 $0 $126.000) $107.000 ($374.000.534 $203.000) $685.418 $230.Appendix Appendix Table: Balance Sheet (Planned) Pro Forma Balance Sheet Assets Short-term Assets Cash Inventory Other Short-term Assets Total Short-term Assets Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets Liabilities and Capital Accounts Payable Current Borrowing Other Short-term Liabilities Subtotal Short-term Liabilities Long-term Liabilities Total Liabilities Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital Net Worth $0 $0 $0 $0 $0 $0 $500.000) ($5.203 $879.666) $101.000.427 $98.311.000 $10.734 $683.000 ($374.833 $159.777) $101.073 $120.764 Nov $541.943 $177.324 $378.000 ($374.764 $1.797 $49.877 $1.103 $1.000 $36.000 ($374.165 $205.000 $0 $126.223 $101.828 $0 $496.000 $23.000 $28.900 Apr $92.322 $469.092 May $213.900 $363.000 Jan $0 $0 $0 $0 $0 $0 $500.841 $879.033.000 ($374.276 $0 $192.000 $38.000) $407.680 $1.900 $363.497 $298.685 Jul $0 $0 $0 $0 $0 $0 $1.198 Sep $0 $0 $0 $0 $0 $0 $1.706 Dec $0 $0 $0 $0 $0 $0 $1.198 Sep $330.000 ($374.685 $787.425 $498.000.092 $0 $102.734 Jun $222.073 Feb $53.000) $0 $126.103 Oct $421.000) $253.927) $120.073 $120.223 Mar $59.678 $1.416 $0 $738.000 $126.829 $295.764 Nov $0 $0 $0 $0 $0 $0 $1.000.073 Feb $0 $0 $0 $0 $0 $0 $500.000.203 $879.092 May $0 $0 $0 $0 $0 $0 $950.685 Jul $292.000 $19.000 $43.000 ($374.000 $33.734 $683.764 $1.000 ($374.171 $683.380 $0 $563.706 $1.000 $0 $120.877 $1.100) $363.198 $962.203 Aug $353.