Business Plan for Aero Technologies

November, 1999

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Table of Contents
1.0 Executive Summary.............................................................................................................................1
1.1 Mission........................................................................................................................................3
1.2 Objectives ...................................................................................................................................4
1.3 Keys to Success ........................................................................................................................5
2.0 Company Summary.............................................................................................................................5
2.1 Company Ownership .................................................................................................................5
2.2 Start-up Summary ......................................................................................................................5
3.0 Products and Services........................................................................................................................8
3.1 SWOT Analysis ..........................................................................................................................8
3.2 Macroenvironment .....................................................................................................................8
3.3 Sales Literature ..........................................................................................................................9
3.4 Technology..................................................................................................................................9
3.5 Future Products and Services ..................................................................................................9
4.0 Market Analysis Summary................................................................................................................10
4.1 Market Segmentation..............................................................................................................10
4.2 Target Market Segment Strategy...........................................................................................11
4.2.1 Market Trends .......................................................................................................................12
4.2.2 Market Needs .......................................................................................................................12
4.3 Service Business Analysis .....................................................................................................13
4.3.1 Competition and Buying Patterns .......................................................................................14
4.3.2 Main Competitors .................................................................................................................15
4.3.3 Distributing a Service...........................................................................................................16
5.0 Strategy and Implementation Summary..........................................................................................16
5.1 Competitive Edge....................................................................................................................16
5.2 Marketing Strategy ..................................................................................................................17
5.2.1 Positioning Statement..........................................................................................................17
5.2.2 Pricing Strategy ....................................................................................................................17
5.2.3 Promotion Strategy ..............................................................................................................18
5.3 Sales Strategy..........................................................................................................................18
5.3.1 Sales Forecast .....................................................................................................................19
5.4 Strategic Alliances...................................................................................................................20
6.0 Management Summary ....................................................................................................................21
6.1 Organizational Structure..........................................................................................................21
6.2 Management Team .................................................................................................................21
6.3 Personnel Plan.........................................................................................................................22
7.0 Financial Plan ....................................................................................................................................23
7.1 Important Assumptions............................................................................................................23
7.2 Key Financial Indicators ..........................................................................................................24
7.3 Break-even Analysis................................................................................................................25
7.4 Projected Profit and Loss .......................................................................................................26
7.5 Projected Cash Flow ...............................................................................................................29
7.6 Projected Balance Sheet ........................................................................................................31
7.7 Business Ratios .......................................................................................................................32

Page 1

Aero Technologies, Ltd.

1.0 Executive Summary

Today the world is defined by the term 'Information Age.' All businesses, both large and small,
require effec tive and efficient business communication solutions in order to continuously meet
their customer expec tations and attain a competitive advantage, and therefore be successful.
Whether a company is large or small it is realized that, the right amount of financing, materials,
talent, and experience are not enough to succeed without a good communication system in
plac e that enables smooth transaction sealing. Communications is at the heart of regional and
international integration, with the development of an efficient, cost effective and tec hnologically
advanced communications infrastructure essential to Botswana's success in the global market.
With the ec onomies of most countries bec oming increasingly sophisticated and knowledge-
intensive, there is a greater need for the existence of an efficient network that will enable
dec ision-makers to have ac cess to timely and ac curate data to fac ilitate dec ision-making and
transaction sealing.

We are on the brink of penetrating a lucrative market in a rapidly growing industry. The current
increase in the number of entrepreneurs, and competition among existing companies presents an
opportunity for Aero Technologies to penetrate the market. Our services/products will be
positioned very carefully. They will be of extremely high quality to ensure client satisfac tion,
supported by impec cable customer service. Aero Technologies will offer the expertise that a
proactive oriented and market-opportunity seeking company needs to develop and maintain a
good communications system. We intend to provide a number of necessary services the business
community and to the public. Initial plans are to introduce five main lines of services, with the
primary foc us on Multimedia, Call Centre fac ility, Data Communications and IT, Financial Services,
and Knowledge Consulting.

We realize that, for us to prosper, there is need to be flexible and responsive, to delight clients
by providing them what they want, when they want it, and before the competition can offer it.
The company intends to ac hieve this through a systematic approach that is customer-centric,
and in which the customer's business objec tives enjoy top priority. This involves not only skill
and depth of knowledge, but time devoted to studying a customer's needs. Aero Technologies
will view the provision of value-added services over the entire sc ope of our customers'
requirements as not only essential, but as a competitive advantage which the company protects
as a key asset; from service concept to service provision, the intention will be to ensure that
every policy and proc edure, system and proc ess has the objec tive of improving the flexibility and
response of the whole company. There is a need for interac tion between all functional areas,
particularly between marketing and service logistics, if the projec t is to realize its full potential,
with marketing being employed as a strategic weapon.

Once the needs and proc esses are understood and described, leading edge products and best-
of-industry skills will be applied to design and develop a fitting solution to satisfy the need and
enable the client's business in the most cost effec tive way.

Our marketing strategy will be based mainly on ensuring customers know what need the service
(s) is able to fulfill, and making the right service and information available to the right target
client. We intend to implement a market penetration strategy that will ensure that our services
are well known and respec ted in our respec tive industry. Our marketing strategy will convey the
sense of quality and satisfac tion in every picture, every promotion, and every publication. Our
promotional strategy will involve integrating traditional advertising, breakfast seminars, events,
Internet marketing, personal selling, public relations, and direc t marketing, details of which are
provided in the marketing section of this plan.

Page 1

We intend to build our projec t management team correc tly. We need the right people in the right
plac e at the right time if we are to ensure optimum growth. We intend to develop our team so
that our people can grow as the company grows -- a mutually beneficial relationship.

The intention is to go into partnership with NNN Limited, a company registered in QQQ, and
provide financial, IT, and data communications consultancy services to industries in the
application and use of latest technologies such as data communication and Wireless Application
Protoc ol (WAP), enabling cellular telec ommunications.

In a nutshell, we don't just intend to market and sell our service, but to market and provide a
service that will ensure our client's customer satisfac tion, ease of communication, improved
corporate logistics, and cost savings on transactions ensuring a total-quality environment. This
will ensure we establish and maintain a reputable corporate image. However it should be noted
that timing and information provision will be of the utmost importance and significance in terms
of the projec t's introduction onto the market. In addition we are apprec iative of the fac t that
entering such a market is not a bed of roses, particularly as it is still a relatively new concept
needing to be implanted in people's minds in terms of the benefits it may bring to them, as well
as the number of 'laggard' firms who often do not easily apprec iate the need for change, be it to
their benefit. In such a case the need will exist to aggressively market the concept to these
organizations and individuals through various means. Hence the intention is to utilize the
technical and business know-how of tec hnical partners in order to implement and attain our
business objec tives.

NOTE: All currency values in this plan are expressed in Botswanan Pula [P].

Page 2


1.1 Mission

Aero Technologies, Ltd. offers marketing oriented organizations a reliable, high-quality alternative
to in-house resources for business development, market development, and channel development
on a loc al and regional sc ale. A true alternative to in-house resources offers a very high level of
prac tical experience, know-how, contac ts, and confidentiality. Clients will know that working
with Aero Tec hnologies is a more professional, less risky way to undertake communication with
its various stakeholders, than working completely in-house with their own people. Aero
Tec hnologies must also maintain financial balance, charge a reasonable value for its services,
and deliver a higher value to its clients. Initial foc us will be development in the regional markets,
or for international clients in Botswana. Aero Technologies is also an excellent plac e to work, a
professional environment that is challenging, rewarding, creative, and respec tful of ideas and
individuals. Aero Technologies ultimately provides excellent value to its customers and fair
reward to its owners and employees.

Internally we intend to create and nurture a healthy, creative, respec tful and enjoyable office
environment, in which our employees are fairly compensated and encouraged to respec t the
customer and the quality of the service we provide. In addition follow-up will be mandatory so as
ensure customer satisfac tion and make any improvements as rec ommended by the customers in
future. We seek fair and responsible profit, enough to keep the company financially healthy for
the short and long term, and to fairly compensate investors for the money and risk.

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1.2 Objectives

Our business strategy will revolve around the need to provide quality service and products to our
various target clients, in the proc ess fully satisfying their needs. This shall be undertaken
through rec ruitment of a professional telemarketing, sales and tec hnical team and the provision
of good quality custom-designed services, catering for the clients' particular needs.

With time our marketing campaign will increase the knowledge of our services to the various
market segments we shall be targeting. This is particularly so with organizations looking at
establishing a competitive advantage(s) on the market due to increased competition, hence
providing them with the opportunity to foc us on their core ac tivities whilst proc uring increased
business from new and existing customers. Marketing material shall be professionally done so as
to be reflec tive of our intended image and reputation. We shall position ourselves as a quality
total communications solution service provider that strives to provide effective and efficient
communication solutions. We intend to establish a good rapport with all the relevant
stakeholders.

In summary we intend to attain the following objec tives:

• Continuously provide professional quality services on time and on budget.
• Develop a follow-up strategy to gauge performance with all our clients.
• Implement and maintain a quality control system and assurance policy.
• To continuously formalize and measure cross-functional working communication so as to
ensure that the various departments work harmoniously towards attainment of company
objec tives.
• To instill a culture of continuous improvement in beating standards of customer satisfac tion
and efficiency.
• We are fully committed to supporting growth and development in the economy.

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1.3 Keys to Success

The keys to this projec t's success will undoubtedly be effective market segmentation through
identification of several niche markets and implementation strategies. Along these lines the
company intends to implement personal selling and direc t marketing strategies to the target
markets. Hence the key success fac tors will include the following:

1. Excellence in fulfilling the promise: Completely confidential, reliable, trustworthy expertise
and service(s) through the provision of an uncompromising service. This dictates that we
have in plac e the latest technology, hardware and software, and well-trained personnel so
as to fulfill the aforesaid.
2. Timely response to clients' orders: We cannot afford to delay our clients for whatever
reason, as this will have a negative bearing on our image and reputation, including future
business. Hence we need to be continually communicating with the client ensuring we
provide needs-based solutions.
3. Skill and depth of knowledge: Considering the nature of our services and their relative
infancy on the market, the skill and depth of knowledge of our personnel shall be of utmost
importance in determining the provision of the service(s) to the end-users.
4. Marketing know-how: In a relatively volatile market there will be a need to aggressively
market our business and the services we provide so as to be continuously at the top of our
prospec tive and current clients minds. This will also ac t as a temporary deterrent for
companies contemplating entering our market. Advertising shall be one of our competitive
advantages.
5. Leveraging from a large pool of expertise: The company's various alliances with
technological partners shall prove invaluable considering the skills and intellec tual capacity
these partners will have in the fields of design and system integration, implementation and
exec ution, lifecycle support and understanding, and in the application of new technology.
This has the potential of proving to be an important differentiator on the market.

2.0 Company Summary

Aero Technologies, Ltd. was founded in November 1999 as a Private Limited Company through
the foresight and vision of the three direc tors. It was formed as a division of TTT with the
direc tors having identified a large potential market for their products and services. For most of
its initial existence, the company intends to utilize the large database and experience of its
direc tors in obtaining orders, with the intention of establishing close relationships with its clients.

2.1 Company Ownership

Aero Technologies is a company incorporated at the Registrar of Companies by XXX, YYY, and
ZZZ. Though relatively new, the direc tors realize their company's vast potential market and
opportunity for growth given implementation of the appropriate strategies, aided by the
necessary finances. Aero Tec hnologies was established with 3,000 shares equally distributed
amongst the direc tors.

2.2 Start-up Summary

Total start-up expenses covered (including legal costs, logo design, stationery and related
expenses) came to approximately P1,192,000. Start-up assets required and utilized included
personal computers, vehicles, office furniture, and other office equipment.

NOTE: All currency values in this plan are expressed in Botswanan Pula [P].

Page 5


Table: Start-up
Start-up

Requirements

Start-up Expenses
Legal $2,000
Stationery etc. $2,000
Brochures $5,000
Consultants $5,000
Supplier Contracts $3,000
Rent $4,000
Staff Training $8,000
Expensed Equipment $1,135,000
Other $28,000
Total Start-up Expenses $1,192,000

Start-up Assets
Cash Required $350,000
Start-up Inventory $0
Other Current Assets $0
Long-term Assets $1,012,400
Total Assets $1,362,400

Total Requirements $2,554,400

Page 6


Table: Start-up Funding
Start-up Funding
Start-up Expenses to Fund $1,192,000
Start-up Assets to Fund $1,362,400
Total Funding Required $2,554,400

Assets
Non-cash Assets from Start-up $1,012,400
Cash Requirements from Start-up $350,000
Additional Cash Raised $0
Cash Balance on Starting Date $350,000
Total Assets $1,362,400

Liabilities and Capital

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

Capital

Planned Investment
Investor 1 $1,000,000
Investor 2 $1,000,000
Investor 3 $554,400
Additional Investment Requirement $0
Total Planned Investment $2,554,400

Loss at Start-up (Start-up Expenses) ($1,192,000)
Total Capital $1,362,400

Total Capital and Liabilities $1,362,400

Total Funding $2,554,400

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3.0 Products and Services

Aero Technologies offers the expertise a proactive oriented and technologically inclined company
needs to perform its operations efficiently and effectively, through allowing it to concentrate on
its core ac tivities whilst deploying the latest communication implements. Its wide range of
solutions will incorporate and embrac e customer contac t centres, technology enabled
relationship management, technology enabled marketing and tec hnology enabled selling solutions,
multi-service data and voice networking as well as Individualized Customer Relationship
Management centres, integration services and Knowledge Management Consulting. Hence we
intend to provide a number of necessary services to the business community, primarily the upper
ec helons, as well as the public. These can be summed up in five main areas:

• Multimedia
• Call Centre Fac ility
• Data Communications and IT
• Financial Services
• Knowledge Management.

Hence we intend to offer the expertise a high-technology company needs to develop new
product distribution and new market segments in new markets. However it should be noted that
the Knowledge Management Centre will invariably incorporate the functions of the other
divisions.

3.1 SWOT Analysis

We are presently in a highly lucrative market in a rapidly growing economy. We foresee our
strengths as the ability to respond timeously to the market dictates and to provide custom
designed technological services. Our key personnel will have a wide and thorough knowledge of
the technological services we intend to provide, and expertise, which will go a long way towards
penetrating the market. Below are the summarized strengths, weaknesses, opportunities and
threats.

3.2 Macroenvironment

Research indicates that the younger more ambitious market presently in the exec utive and
overall business sector, being more educated and aware of the global environment, assesses and
implements its core ac tivities to a much higher degree than past trends have indicated. This is
exac erbated by the increase in c ompetition in all industries. Therefore with the emergence of
this generation of individuals, the apprec iation of quality services and business communication
solutions/rec ommendations that provide for and enable company growth, dictates that our
service lines will be popular.

The current drive by the government towards a more diversified economy presents an
opportunity for our business to propel and excel in our intended markets, benefiting from the
support of the concerned institutions and trade bodies. In addition with the country increasingly
bec oming an ec onomic hub, we foresee a demand for high quality business communication
solutions. Through undertaking our business ac tivities professionally, we foresee that it should
not be too difficult to gain market ac ceptance if we deliver the final service timeously and of
good quality, at competitive rates.

Page 8


3.3 Sales Literature

The business will begin with a general services broc hure establishing the positioning of the
company and services clients are able to benefit from. These shall be designed for the dec ision-
makers ensuring they are not too technical, but short and concise. Literature and mailings shall
also be designed in such a way that they establish a high-quality look and feel, in order to
create and fulfill the right sense of professionalism. Breakfast seminars shall be undertaken in the
initial period of the projec t targeting dec ision-makers and ensuring they understand the benefits
of our services in today's business environment. Another important marketing tool will be CD-
ROMS. These shall be targeted at business exec utives who often do not have much time on their
hands and are looking at utilizing every second productively. These CD-ROMS shall be most
useful as they will listen to them whilst in transit from one business meeting to another.

We also intend to have well designed posters, table tents, T-shirts, mouse pads, keys-holders,
and mugs distributed at strategic points and proc ured through reputable manufac turers so as not
to compromise on quality. Potential strategic points for our literature include hotels, lodges,
computer hardware and software distributors amongst others.

3.4 Technology

Aero Technologies will strive to maintain the latest business communication hardware and
software capabilities so as to ensure we are continuously at the forefront in our market arena.
The one certainty in our industry is that technology will continue to evolve and develop,
changing what we market as well as how we market it. Our aim will be to be aware of the
implications of this new tec hnology and utilize it in our existing framework where possible.
Complete presentation fac ilities for preparation and delivery of multimedia presentations on
Mac intosh or Windows mac hines, in formats that include on-disk presentation or video
presentation are also possibilities that still are being looked into. We also intend to have the
latest and most efficient software in plac e to enable smooth operations. Please see the capital
equipment for further details.

3.5 Future Products and Services

In putting the projec t together we have attempted to offer enough services to allow us to
always be in demand by our clients. However, technological developments have provided us with
a new era of opportunities for the various organizations in which we can only guess at the
needs. For example, current rapid innovations/ development of Wireless Application Protoc ol
(WAP) technology, which is seeing a new service being introduced almost on a fortnightly basis
overseas, presents an opportunity to be realized, particularly foc using on WAP enabled
cellphones that enable individuals to ac cess or send their email messages over the cellphone.
There is also the possibility to introduce video-conferencing, as we will have the necessary
infrastructure in plac e. Applications such as banking by cellphone, online telephone direc tories
and delivery of breaking news headlines are also future services to be utilized. However, the
most important fac tor in developing future services will be market need. Our understanding of
the needs of our target market segments will be one of our competitive advantages. It is critical
to our effort to develop the right new services.

Page 9


4.0 Market Analysis Summary

We are today experiencing a rapid growth in the economy of unsurpassed nature. This has been
brought about by, amongst other things, the relaxation of foreign exchange policies and
mac roeconomic policies geared towards attrac ting foreign investors into the country. The fisc al
and monetary policies of the government geared towards maintaining growth with soc ial justice
have largely contributed towards this, evidenced by our ec onomy averaging a growth rate of 7%
since 1990 -- very high by international standards.

The current drive and emphasis by the government on diversification of the industrial base away
from the minerals sector presents an opportunity for Aero Tec hnologies to make a valuable
contribution towards ac hieving this goal. This will result in implementation of modern Information
Tec hnology services and techniques, and transfer of knowledge.

Aware of the fac t that we will be operating in a predominantly infant market we intend to ensure
that our marketing strategies are considerate of the importance of the fit between our services
capabilities and benefits, and the target market, so as to develop a strong sustainable
competitive position in the market. As a result we intend to implement a niche marketing
strategy, foc using on certain target markets.

It should be apprec iated that entering such a market is not a bed of roses, particularly
considering its infancy and hence the intention will be to implement an aggressive marketing
strategy, well supported by the other business functions. The above prognosis influenced our
dec ision to enter the IT business communication service provision/consultancy industry.

4.1 Market Segmentation

We will be foc using on proactive, market seeking organizations, who want to sell into markets in
the region and overseas. These are mostly larger companies, and oc casionally medium-sized
companies.

Our most important group of potential customers are business exec utives in large, medium and
small corporations. These are marketing managers, general managers, sales managers, sometimes
charged with international foc us and sometimes charged with market or even specific channel
foc us. They do not want to waste their time or money looking for bargain information or
questionable expertise. As they go into markets looking at new opportunities, they are very
sensitive to risking their company's name and reputation. Hence the need to professionally
market our services and business as a whole, offering impec cable expertise. Our intention will be
to offer an attrac tive development alternative to the company that is management constrained
and unable to address opportunities in new markets and new market segments due to
technological shortfalls.

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Table: Market Analysis
Market Analysis
1999 2000 2001 2002 2003
Potential Customers Growth CAGR
SOHO Executives 1% 100 101 102 103 104 0.99%
Professionals 10% 1,000 1,100 1,210 1,331 1,464 10.00%
Medium-sized Co. Executives 14% 2,100 2,394 2,729 3,111 3,547 14.00%
Large-sized Co. Executives 19% 2,850 3,392 4,036 4,803 5,716 19.00%
Academics 1% 150 151 152 153 154 0.66%
Total 15.37% 6,200 7,138 8,229 9,501 10,985 15.37%

4.2 Target Market Segment Strategy

Our marketing strategy will be based mainly on making the right service(s) available to the right
target customer. We will ensure that our services' prices take into consideration
organizations'/peoples' budgets, and that these people apprec iate the service and know that it
exists, including where to find it. The marketing will convey the sense of quality in every picture,
every promotion, and every publication. Our intention will be to target those innovative or
proactive companies contemplating transferring a part of their marketing ac tivities on the
Internet, in order to benefit from the advantages offered by this unique system of
communication. We realize the need to foc us our marketing message and our service offerings.
We need to develop our message, communicate it, and make good on it.

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4.2.1 Market Trends

Today we are passing through a tec hnological disc ontinuity of epic proportions. The growth of
the Internet shows no signs of abating and has profound implications for businesses not only in
Africa, but also throughout the world. Though e-commerce is largely developed country-led, with
the Americas and Europe in the forefront, this is slowly changing with more and more servers
being set up in Asian and African countries, Botswana being no exception. As e-commerce knows
no boundaries the intention of Aero Tec hnologies will be to assist clients in undertaking
communication and transactions with ease, initially on a regional level, but also at the global
level. This has resulted in the significant trend toward greater international sales and
communication between organizations throughout the world. Another important trend is the one
toward greater use of specialized and foc used consultants, instead of in-house resources.
Companies are increasingly looking for more out-sourcing and, in general, a preference for
variable costs instead of fixed costs. This shall have important implications on the ac ceptance of
our services on the market.

In summary, the range and volume of products sold online are likely to increase vastly in the
future, expanding the size and value of the elec tronic market. However, encouragement may be
obtained from the fac t that in its pursuit of diversification the Government of Botswana would
very much encourage an additional player in the e-commerce market, provided they are of the
right caliber and beneficial to the ec onomy as a whole.

4.2.2 Market Needs

Aero Technologies intends to provide customers with the necessary systems and services to
provide cutting-edge customer service, by essentially offering a certain spec trum of
communications solutions, primarily the interac tion applications.

We understand that our target markets need more than just continuous communication and
information from their various stakeholders, but communication and information that will enable
them to make more informed dec isions and transactions at the earliest opportunity. We don't
just intend to provide a service(s), but to provide one of unparalleled nature relative to the
market. Our target market are not businesses that want to make dec isions solely on the basis of
price, but instead are mainly concerned with having reliable providers of expertise and a good
communications network in plac e.

Page 12


4.3 Service Business Analysis

A general market study about the benefits of wireless technology undertaken by Ovum Research,
an international research c ompany, was conducted on the use of cellular data communications
and other conferencing fac ilities. The study notes that with the provision of wireless tec hnology
to various sub-Saharan countries, telec ommunications systems could be profitably established.

The art of m-commerce relies on the convergence of Internet technologies, mobile devices,
cellular phones, band-width and a whole lot of companies champing at the bit of m-commerce.
M-commerce is about being able to transact business through any portable intelligent device and
some of the greatest growth in the m-commerce arena is coming from the development of the
cellular phone. The one wireless standard uniting and gaining momentum in the use of personal
digital assistants (PDA) is the Wireless Application Protoc ol (WAP). This protoc ol uses wireless
means to connec t any mobile device to specific Internet information. The computing device has
to be WAP enabling and only a few Internet sites have been set up to cope with WAP
transactions.

It is an obvious fac t that the wireless revolution will have a positive impact on the ec onomic and
social development of Africa. Africa's critical requirement is to build infrastructure. Wireless
technology overcomes infrastructure costs of setting up fixed lines. International research has
projec ted that wireless portals will bec ome a US$42 billion revenue opportunity by 2005 as mobile
users, including those in Africa, increasingly shift their businesses and other transactions from
PCs to their handsets. Banking, email, surfing the Web, and even shopping will now be done
anywhere and at any time.

There is a significant demand for WAP, with the prime candidate being small businesses, sales
forces, and field support engineers as well as growing numbers of mobile managers equipped with
PCs and cellular phones. In this way WAP is an important step toward third-generation mobile
networks.

New WAP enabling phones provide the user with email, personal organizer and the ability to
check bank ac counts, time sc hedules, restaurant menus and more. All these online interac tive
services are especially written and formatted to be ac cessed on cellular phones. The growing
popularity of WAP phones (c urrently 25,000 in South Africa alone) has meant that a number of
companies are developing Internet sites with the content to service the WAP devices on the
market.

The above analysis indicates how the wireless tec hnology will revolutionize African business and
particularly the small businesses run by individuals that may not be able to afford the luxury of a
PC but will always need a phone and ac quire the same services offered by the PC through their
mobile phones. It should also be noted that the IT industry is an environment where small niche
players and developers can compete with the larger groups and corporations. An individual can
have the vision or development skills to deliver a meaningful concept, product or service, but the
weak links in this proc ess are the foc us to end-user requirements, financial support in the
development stages and the effec tive channels to market for the finished product or service.

Page 13


4.3.1 Competition and Buying Patterns

The key element in purchase or subsc ription dec isions made at the company's client level is trust
in the professional reputation and reliability of the firm. The most important fac tor in this market
will be the quality of the service. This is particularly so considering the potential impact e-
commerce will have on organizations meeting their bottom lines. The very nature of our services
dictates that oc casionally the pricing of our projec ts and billing rates will be variable, as different
clients require different needs to be fulfilled in variable industry environments.

In our line of business clients rarely compare service providers direc tly, looking for two, or more,
possible providers of a proposed projec t or job. Usually they follow word-of-mouth
rec ommendations and either go for the job or not, rather than selec ting from a menu of possible
providers.

The most important element of general competition, by far, is what it takes to keep clients for
repeat business. It is worth making concessions in any single service to maintain a client
relationship that brings the client bac k for future services -- realizing customer-lifetime value.

Page 14


4.3.2 Main Competitors

In identifying competition in this new concept market, we find few companies currently offering
services similar to ours. There are numerous providers of the older established ancillary services
including traditional call centres. Hence there will be a need to strongly differentiate ourselves
from these other businesses and market the benefit of utilizing our service(s). However on a
broader sc ale our competition comes in several forms:

1. The most significant competition will be the traditional communication systems currently in
plac e within the respec tive organizations, particularly considering advances in technology
enabling these organizations (potential clients) to better handle their calls, inquiries, and
transactions. Many organizations are currently investing in technological instruments that will
enable them to better handle their customers. This is particularly so considering the
advances that have been made in terms of customer relationship management and all its
related hardware and software programs, many of which have not yet been fully exposed on
the loc al and African markets. The current onset and wave of customer relationship
management overseas does pose a serious challenge for Aero Tec hnologies's intended
services, as they are bound to infiltrate into the region in the form of software programs and
hardware components.
2. The increasing investment in training by organizations also represents competition in the
area of intent. With organizations striving to instill a performance culture through training
there will be a need to market the benefits of utilizing our service in c onjunction with these
organizations' respec tive communications systems. This is due to the fac t that these same
organizations may feel that there is no need to utilize our service(s) as they would have
invested large amounts into hardware and customer handling training of front office
personnel.
3. Major potential competitors will include all those service providers that offer Internet, email,
e-commerce, and other related services to the market. Examples include (Disc ussion
omitted). These companies already have a firm footing in their Internet businesses and are
carefully analyzing the prospec ts of e-commerce.
4. Though currently not engaged in e-commerce, numerous other IT, marketing and advertising
companies are also contemplating entering this market. They are seeking to utilize or foc us
on their core competencies in their respec tive markets, whilst taking advantage of the
technological revolution in c onjunction with strategic partners who are well versed in the
technical aspec ts. The rec ent installation of a top-of-the range computer network (with
Internet) system by FFF is one case in point, as they seek to tap the vast opportunity
presented by e-commerce. The majority of these have alliances with international firms.
However, upon closer analysis of the above competitors it may be observed that several of
these potential competitors also represent client opportunities to be realized by us.

Page 15


4.3.3 Distributing a Service

Service provision and consulting will be sold and purchased mainly on a word-of-mouth basis,
with relationships and previous experience being, by far, the most important fac tor. In this
regard we intend to provide a service that exceeds customer expec tations so as to ensure they
refer us to potential clients through word-of-mouth. New business shall be developed through
industry associations, business associations, and in some cases, social associations such as
country clubs.

As our services are relatively new on both the Botswana and regional markets we intend to host
breakfast seminars and workshops primarily for senior managers and dec ision-makers, who may
benefit from our services. This function will involve a considerable amount of networking on our
part, as these individuals often do not have a lot of spare time.

5.0 Strategy and Implementation Summary

Initially, Aero Technologies will foc us on the loc al and regional markets in the previously
mentioned services. The target customers will include key dec ision-makers in the large, medium,
and small-sized organizations, be they in a start-up, stable, or growth period.

Our marketing strategy will emphasize foc us. This will be the key. We are a relatively new
company on the market and must foc us on certain kinds of services with c ertain kinds of clients.
The projec t will foc us on the loc al and regional markets, expanding into the international markets
as time progresses, and as we gain the necessary experience. The form of growth that shall be
initially pursued will be that of organic growth mainly due to limited resources and the need to
instill awareness and confidence in our services. The target customers will include key dec ision-
makers, sales and marketing personnel involved in decision-making and transaction sealing.

• We intend to build image and awareness through consistency and distinctiveness in our
service provision.
• We intend to foc us on delivering quality services and end products that in turn produces
good referrals, which c an then generate revenue.
• We intend to always have a relatively heavy personal selling component to our marketing.

Our strategy is to (Disc ussion omitted).

Through the implementation of a fair, effec tive and competitive remuneration policy we intend to
optimize our human resource output and advancement. We need the right people in the right
plac e at the right time if we are to ensure optimum growth. We intend to develop our team so
that our people can grow as the company grows -- a mutually beneficial relationship. As a result
we intend to vigorously search and find the right people for our organization.

5.1 Competitive Edge

A key fac tor to the future success of this projec t is the bac kground and experience of the
management team and strategic partners, and their ability to work the market based on an
innate understanding of both the business proc esses and market structures. The delivery of
whole, end-to-end solutions will have a significant impac t on gaining commitment from the
market at all levels. Therefore, the company believes in partnering with its customers to bring
the future in c ommunication and information technology into the customer contac t zone.
Inevitably this shall involve constant liaison with the client, a customer-centric approach that is
need-based.

Page 16


5.2 Marketing Strategy

One core element of our strategy will be that of differentiation from our competitors. In terms of
marketing, we intend to sell our company as a differentiated strategic ally, not just our services.
In price, we intend to offer reasonable and competitive prices in c omparison to competition and
we need to be able to sustain that. Market penetration through lower prices shall be undertaken
where need be whilst premium pricing in the case of high quality services targeted at the upper-
end of the market. Our service marketing will strive to ensure that we establish long-term
relationships with c lients. Our primary intention will be to sell a relationship more than services.

Our service marketing will emphasize the benefits of speed, interac tion and flexibility to be
gained from utilizing our services. The approach will be entirely needs-driven and a thorough
understanding of the business requirements, business proc esses and tec hnology strategy of the
customer being the basis on which an Aero Technologies solution will be built. Once the needs
and proc esses are understood and described, leading edge products and best-of-industry skills
will be applied to design and develop a fitting solution to satisfy the need and enable the
customer's business in the most cost effective way.

5.2.1 Positioning Statement

Aero Technologies intends to be uniquely positioned to help customers apply communication and
information technology products and skills to meet the challenges fac ing their businesses today.
Our competitive edge will be our dominance of the market as early entrants, customer
orientation and traditional hard work. Though our clients might range from large corporations to
medium or even small businesses, what is important to the client irrespec tive of the size or
industry is total satisfac tion with the end product matched to their capabilities and resources.

5.2.2 Pricing Strategy

Aero Technologies will be competitively priced in relation to the dictates of the market. The
pricing fits with the general positioning of Aero Tec hnologies as providing high-level quality
service and expertise. Due to the introductory nature of the vast majority of our services we
intend to implement a penetration pricing strategy which will ensure that potential clients are not
frightened away by our prices up until our services are apprec iated and fully operational.
However this will dictate that our costs are prudently kept so as to ensure our financial goals
come to fruition. Once development of the online applications is completed it is our intention to
charge a monthly/six-monthly, or whichever the client prefers, rec urring fee which will be
charged to their ac count. This fee will be worked out in such a way that it covers for operating
expenses as much as possible (Disc ussion omitted).

We will make sure that we charge for the service, expertise and any delivery with our aim being
to ac hieve a gross profit margin of at least 60%. Naturally services targeted at the higher end of
the market will have higher mark ups as these clients are less price sensitive. All in all we intend
our prices to be extremely competitive on the market.

Page 17


5.2.3 Promotion Strategy

Aero Technologies intends to utilize an aggressive promotional campaign to introduce its business
units to the market. The intention will be to take advantage of several media sources in
announcing the services and in the proc ess reinforcing awareness of its existence. It should be
stressed that these promotional campaigns shall be designed in such a way that they do not
undermine the organization's current corporate image but instead enhance it.

Our promotional ac tivities shall be foc used towards driving the organization's overall strategy
relentlessly, developing internal consistency and preparing it to confront any radical changes
that may arise. This strategy will be based primarily on informing potential customers of the
existence of our services and making the right information available to our target customer. The
intention will be to highlight the benefit of utilizing our service(s) which will include:

• Ease of communication
• Improved corporate logistics
• Cost savings on transactions
• Chance to maintain if not improve the corporate image
• Improvements in the operations of the value chain
• Chance to improve corporate visibility regionally as well as globally, and develop niche
strategies.

In such a market we cannot afford to appear in or produce second-rate material with poor labels
that make our services look less than they are. We intend to leverage our presence using quality
broc hures and other sales literature, including promotional material such as pens, complimentary
slips and pads. We intend to spread the word about our business through the following:

1. Advertising (Disc ussion omitted)
2. Personal Selling (Disc ussion omitted)
3. Public Relations (Disc ussion omitted)
4. Events (Disc ussion omitted)
5. Direc t Marketing (Disc ussion omitted)
6. Internet Marketing (Disc ussion omitted).

In all the above we intend to communicate our ability to deliver a service of uncompromised
nature and high quality that will satisfy the clients needs. Hence our messages will influence the
dec isions of prospec tive clients by emphasizing our unique selling proposition and, persuade
prospec tive clients that we are different from our competitors. All the above promotional tools
shall be well integrated and utilized in c oncert so as to maximize their effec t.

5.3 Sales Strategy

The sales forec ast monthly table is included in the appendix. The annual sales projec tions are
included here. It should be noted that as we bec ome established and known on the market we
projec t sales to increase at a faster rate than during the initial year.

Page 18


5.3.1 Sales Forecast

Aero Technologies will rec eive its revenue streams from a combination of licensing agreements,
royalties, sales commissions, monthly subsc riptions, registration fees, network ac cess charges,
service fees, transaction charges, marketing fees, promotional incentive programs, etc. From this
one can see the heavy service orientation nature of the projec t. The derived value of Aero
Tec hnologies will come from the key partnerships established and developed in order to deliver a
service provision of transactionally based ac tivities, providing opportunity to build brand and
loyalty, around which relationship marketing will play a key role.

Table: Sales Forecast
Sales Forecast
FY 2000 FY 2001 FY 2002
Sales
All Services $820,000 $1,230,000 $1,835,000
Other $0 $0 $0
Total Sales $820,000 $1,230,000 $1,835,000

Direct Cost of Sales FY 2000 FY 2001 FY 2002
All Services $410,000 $492,000 $734,000
Other $0 $0 $0
Subtotal Direct Cost of Sales $410,000 $492,000 $734,000

Page 19


5.4 Strategic Alliances

In today's volatile and competitive environment it is bec oming increasingly essential for
organizations to concentrate on their core ac tivities so as to gain and maintain a competitive
advantage. This brings out the advantage of undertaking strategic alliances with organizations
that the firm may benefit from and visa versa. The solid partnerships the company intends to
entrench with several companies will ensure that its solutions are world-class, best-of-breed
products and systems. They will also reassure our customers that they are investing in "winning"
technology and service that is maintainable, flexible and sc alable enough to meet future
demands.

At this writing, strategic alliances with several firms are possibilities, including JJJ and KKK given
the content of existing interest and disc ussions. By going into strategic partnerships with
suitable organizations we intend to benefit from being able to concentrate on our core ac tivities
in the delivery of our service(s) to the end-user, whilst ensuring that we do not have to
compromise on quality of exec ution or the number of services we are able to deliver.

Page 20


6.0 Management Summary

The human resources element shall be an essential component in the delivery of the total
service. By encouraging all employees close to our clients to think tac tically about what the
projec ts' service offerings should be, and by having enthusiastic, capable and empowered people
interac ting with our clients, we intend to build the competitive advantage of being able to
comprehensively meet our clients' needs. We also intend to give our teams enough leverage in
dec ision-making (empowerment) in order to ensure that clients are handled promptly and to
reduce lead-time in actual delivery of the service.

There will be a need to evaluate jobs and remuneration pac kages against market benchmarks to
ensure they are competitive. These principles extend to ac cident, medical, death and welfare
benefits such as (but not limited to) support for housing finance, education and training.
Consonant with its efforts to create added value by employees, Aero Tec hnologies seeks to
negotiate the provision of incentive pay delivery mec hanisms against ac hievement of agreed
targets relating to ac complishment in the areas of customer satisfac tion, service provision, and
other specific successes, that is, the implementation of an effective performance management
system.

6.1 Organizational Structure

The organization structure the business units shall take will be that of a matrix structure where
staff reports into a functional structure but are grouped together in projec t or product foc us
teams when nec essary. A projec t foc us team will typically be headed up by a projec t manager or
supervisor, while a service/product foc us team will typically be headed by another supervisor. In
a highly volatile industry and environment, with increased competition and market entry, we
rec ognize the need to be constantly changing so as to adapt to the prevailing environment.
Hence we intend to have in plac e a highly flexible structure allowing for the above to be
undertaken swiftly and smoothly. It shall be noted that the customer will be the foc us in all
instances as we strive to provide the ideal custom-designed service(s).

The following main functional groupings are to be rec ommended:

• Sales & Marketing
• Professional Services
• Customer Service
• Logistics
• Finance.

6.2 Management Team

Management style will reflec t the participation of the shareholders. The company intends to
respec t its community and treat all employees well. We will develop and nurture the company as
community. We do not intend to be very hierarchical. Management's ongoing initiatives to drive
sales, market share, and productivity will provide additional impetus (Disc ussion omitted).

Page 21


6.3 Personnel Plan

The detailed monthly personnel plan for the first year is included in the appendix. The annual
personnel estimates are included here. We believe this plan is an ac ceptable compromise
between fairness and expedience, and meets the commitments of our vision and ethos. We do
not intend to be a large organization or "top heavy" as our industry does not require our doing
so. We want the company to stay lean and flexible so that we can respond to a client's needs
quickly. However as we expand and increase in size (increase in our client base) we do expec t to
increase our personnel.

We intend to compensate our personnel well, so as to retain their invaluable expertise and to
ensure job satisfac tion and enrichment through delegation of authority. Our compensation will
include health c are, generous profit sharing, plus a minimum of three weeks vac ation. Since
multifunctional teams have to be established there is need to establish a support system that
will enable members to easily work together effec tively, meshing well with eac h others' ac tivities.
This will also allow members of a team to apprec iate the implications of the concerns and issues
that may be expressed by their colleagues. All the above point to the fac t that there is need to
instill a good corporate culture that nurtures a fruitful working relationship amongst all
individuals/team members.

In-house training shall be continuous with regular external training being undertaken particularly
following any new developments in the market. This is so as to ensure that we are continuously
able to anticipate our markets needs -- a proactive approach, which is so essential if we are to
gain and maintain a competitive advantage (Disc ussion omitted).

Table: Personnel
Personnel Plan
FY 2000 FY 2001 FY 2002
Directors $216,000 $259,200 $259,200
Multimedia $72,000 $72,000 $108,000
Data Communications $180,000 $144,000 $192,000
Call Center $48,600 $38,880 $58,320
Conference secr. $54,000 $43,200 $72,000
Other $0 $0 $0
Total People 23 23 31

Total Payroll $570,600 $557,280 $689,520

Page 22


7.0 Financial Plan

We want to finance growth mainly through cash flow and equity. We rec ognize that this means
we will have to grow more slowly than we might like.

The most important fac tor in our case is collec tion days. We can't push our clients hard on
collec tion days, bec ause they are in larger companies and will normally have marketing authority,
not financial authority. Therefore we need to develop a permanent system of rec eivables
financing, using one of the established ac counting systems. In turn we intend to ensure that our
investors are compatible with our growth plan, management style and vision. Compatibility in this
regard means:

• A fundamental respec t for giving our customers value, and for maintaining a healthy and
congenial workplac e.
• Respec t for realistic forec asts, and conservative cash flow and financial management.
• Cash flow as first priority, growth sec ond, profits third.
• Willingness to follow the projec t objec tives and contribute valuable input to strategy and
implementation dec isions.

With sufficient working capital the forec asted revenues and sales should be within the
forec asted market demands for the company's services. From the second year onwards, the
various divisions should be able to bring in adequate sales revenues. It is assumed that by then
the objec tive of investing in c omputer equipment and retraining will have taken effec t, the
trained tec hnicians will have bec ome adept at their crafts and new service offers for corporate
clients will be added to the company's product line on a regular basis.

7.1 Important Assumptions

The financial plan depends on important assumptions, most of which are shown in the following
table as annual assumptions. The monthly assumptions are included in the appendix. From the
beginning, we rec ognize that collec tion days are critical, but not a fac tor we can influence
easily. At least we are planning on the problem, and dealing with it. Interest rates, tax rates,
and personnel burden are based on conservative assumptions.

Some of the more important underlying assumptions are:

• We assume a strong economy, without major rec ession.
• We assume, of course, that there are no unforeseen changes in economic policy to make our
clients' products immediately obsolete, though we do forec ast tec hnological changes.

Table: General Assumptions
General Assumptions
FY 2000 FY 2001 FY 2002
Plan Month 1 2 3
Current Interest Rate 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 25.42% 25.00% 25.42%
Other 0 0 0

Page 23


7.2 Key Financial Indicators

We foresee a slow initial growth in sales, though operating expenses will be relatively high, and a
bump in our sales and revenue generation as we spread our services during expansion.

Collec tion days are very important. We do not want to let our average collec tion days get above
the client's ac tual subsc ription period under any circumstances. This could cause a serious
problem with c ash flow, bec ause our working capital situation is chronically tight. However, we
rec ognize that we cannot control this fac tor easily, bec ause of the relationship we wish to
create with our clients.

Page 24


7.3 Break-even Analysis

Our Break-even Analysis will be based on running costs, that is, costs we shall incur in keeping
the business running, including salaries and wages, rent, computer maintenance costs, water
and elec tricity, and insurance amongst others. Hence many fixed costs shall be included in these
costs. We will thus ensure that our sales levels are running comfortably above break-even.

The following table summarizes our break-even analysis.

Table: Break-even Analysis
Break-even Analysis

Monthly Revenue Break-even $109,300

Assumptions:
Average Percent Variable Cost 50%
Estimated Monthly Fixed Cost $54,650

Page 25


7.4 Projected Profit and Loss

The following table presents the profit and loss information for Aero Technologies.

Initial marketing and training expenses will be relatively high as we seek to bec ome known on the
market and staff get trained in provision of our services. This will be brought about by the
development of sales literature, advertising expenses, function expenses including lunches and
dinners with interested stakeholders. As our market share increases and capital is generated,
further marketing programs and the expansion of those in existence at the time will be
undertaken, to ensure market development. However with time these programs will start
generating revenue for the business, which we shall in turn reinvest.

Page 26


Table: Profit and Loss
Pro Forma Profit and Loss
FY 2000 FY 2001 FY 2002
Sales $820,000 $1,230,000 $1,835,000
Direct Cost of Sales $410,000 $492,000 $734,000
Other $0 $0 $0
Total Cost of Sales $410,000 $492,000 $734,000

Gross Margin $410,000 $738,000 $1,101,000
Gross Margin % 50.00% 60.00% 60.00%

Expenses
Payroll $570,600 $557,280 $689,520
Sales and Marketing and Other Expenses $39,600 $0 $0
Depreciation $0 $0 $0
Leased Equipment $0 $0 $0
Utilities $3,600 $0 $0
Insurance $18,000 $0 $0
Rent $24,000 $0 $0
Payroll Taxes $0 $0 $0
Other $0 $0 $0

Total Operating Expenses $655,800 $557,280 $689,520

Profit Before Interest and Taxes ($245,800) $180,720 $411,480
EBITDA ($245,800) $180,720 $411,480
Interest Expense $0 $0 $0
Taxes Incurred $0 $45,180 $104,585

Net Profit ($245,800) $135,540 $306,895
Net Profit/Sales -29.98% 11.02% 16.72%

Page 27


Page 28


7.5 Projected Cash Flow

The chart and table below provide details to the company's cash flow situation. The chart shows
a monthly breakdown while the table shows a year-end statement.

Page 29


Table: Cash Flow
Pro Forma Cash Flow
FY 2000 FY 2001 FY 2002
Cash Received

Cash from Operations
Cash Sales $205,000 $307,500 $458,750
Cash from Receivables $474,875 $852,438 $1,272,865
Subtotal Cash from Operations $679,875 $1,159,938 $1,731,615

Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $0 $0 $0
Subtotal Cash Received $679,875 $1,159,938 $1,731,615

Expenditures FY 2000 FY 2001 FY 2002

Expenditures from Operations
Cash Spending $570,600 $557,280 $689,520
Bill Payments $495,395 $554,674 $842,976
Subtotal Spent on Operations $1,065,995 $1,111,954 $1,532,496

Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $1,065,995 $1,111,954 $1,532,496

Net Cash Flow ($386,120) $47,983 $199,119
Cash Balance ($36,120) $11,863 $210,982

Page 30


7.6 Projected Balance Sheet

The Balance Sheet below highlights the important numbers for the company.

Table: Balance Sheet
Pro Forma Balance Sheet
FY 2000 FY 2001 FY 2002
Assets

Current Assets
Cash ($36,120) $11,863 $210,982
Accounts Receivable $140,125 $210,188 $313,572
Inventory $52,250 $62,700 $93,540
Other Current Assets $0 $0 $0
Total Current Assets $156,255 $284,751 $618,095

Long-term Assets
Long-term Assets $1,012,400 $1,012,400 $1,012,400
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $1,012,400 $1,012,400 $1,012,400
Total Assets $1,168,655 $1,297,151 $1,630,495

Liabilities and Capital FY 2000 FY 2001 FY 2002

Current Liabilities
Accounts Payable $52,055 $45,011 $71,460
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $52,055 $45,011 $71,460

Long-term Liabilities $0 $0 $0
Total Liabilities $52,055 $45,011 $71,460

Paid-in Capital $2,554,400 $2,554,400 $2,554,400
Retained Earnings ($1,192,000) ($1,437,800) ($1,302,260)
Earnings ($245,800) $135,540 $306,895
Total Capital $1,116,600 $1,252,140 $1,559,036
Total Liabilities and Capital $1,168,655 $1,297,151 $1,630,495

Net Worth $1,116,600 $1,252,140 $1,559,035

Page 31


7.7 Business Ratios

The following table presents important business ratios for Aero Technology. These figures come
from the communications services industry, as determined by the Standard Industry
Classification (SIC) Index.

Page 32


Table: Ratios
Ratio Analysis
FY 2000 FY 2001 FY 2002 Industry Profile
Sales Growth 0.00% 50.00% 49.19% 0.00%

Percent of Total Assets
Accounts Receivable 11.99% 16.20% 19.23% 0.00%
Inventory 4.47% 4.83% 5.74% 0.00%
Other Current Assets 0.00% 0.00% 0.00% 100.00%
Total Current Assets 13.37% 21.95% 37.91% 100.00%
Long-term Assets 86.63% 78.05% 62.09% 0.00%
Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 4.45% 3.47% 4.38% 0.00%
Long-term Liabilities 0.00% 0.00% 0.00% 0.00%
Total Liabilities 4.45% 3.47% 4.38% 0.00%
Net Worth 95.55% 96.53% 95.62% 100.00%

Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 50.00% 60.00% 60.00% 0.00%
Selling, General & Administrative Expenses 79.98% 48.98% 43.18% 0.00%
Advertising Expenses 2.56% 0.00% 0.00% 0.00%
Profit Before Interest and Taxes -29.98% 14.69% 22.42% 0.00%

Main Ratios
Current 3.00 6.33 8.65 0.00
Quick 2.00 4.93 7.34 0.00
Total Debt to Total Assets 4.45% 3.47% 4.38% 0.00%
Pre-tax Return on Net Worth -22.01% 14.43% 26.39% 0.00%
Pre-tax Return on Assets -21.03% 13.93% 25.24% 0.00%

Additional Ratios FY 2000 FY 2001 FY 2002
Net Profit Margin -29.98% 11.02% 16.72% n.a
Return on Equity -22.01% 10.82% 19.68% n.a

Activity Ratios
Accounts Receivable Turnover 4.39 4.39 4.39 n.a
Collection Days 56 69 69 n.a
Inventory Turnover 10.91 8.56 9.40 n.a
Accounts Payable Turnover 10.52 12.17 12.17 n.a
Payment Days 27 32 24 n.a
Total Asset Turnover 0.70 0.95 1.13 n.a

Debt Ratios
Debt to Net Worth 0.05 0.04 0.05 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a

Liquidity Ratios
Net Working Capital $104,200 $239,740 $546,635 n.a
Interest Coverage 0.00 0.00 0.00 n.a

Additional Ratios
Assets to Sales 1.43 1.05 0.89 n.a
Current Debt/Total Assets 4% 3% 4% n.a
Acid Test -0.69 0.26 2.95 n.a
Sales/Net Worth 0.73 0.98 1.18 n.a

Page 33

Dividend Payout 0.00 0.00 0.00 n.a

Page 34

Appendix
Table: Sales Forecast

Sales Forecast
Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Sales
All Services 0% $40,000 $40,000 $40,000 $55,000 $55,000 $70,000 $70,000 $80,000 $85,000 $95,000 $95,000 $95,000
Other 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Sales $40,000 $40,000 $40,000 $55,000 $55,000 $70,000 $70,000 $80,000 $85,000 $95,000 $95,000 $95,000

Direct Cost of Sales Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
All Services $20,000 $20,000 $20,000 $27,500 $27,500 $35,000 $35,000 $40,000 $42,500 $47,500 $47,500 $47,500
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Direct Cost of Sales $20,000 $20,000 $20,000 $27,500 $27,500 $35,000 $35,000 $40,000 $42,500 $47,500 $47,500 $47,500

Page 1

Appendix
Table: Personnel

Personnel Plan
Directors 0% $18,000 $18,000 $18,000 $18,000 $18,000 $18,000 $18,000 $18,000 $18,000 $18,000 $18,000 $18,000
Multimedia 0% $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000
Data Communications 0% $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000
Call Center 0% $2,700 $2,700 $2,700 $2,700 $2,700 $2,700 $5,400 $5,400 $5,400 $5,400 $5,400 $5,400
Conference secr. 0% $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000
Other 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total People 23 23 23 23 23 23 23 23 23 23 23 23

Total Payroll $37,700 $37,700 $37,700 $37,700 $37,700 $37,700 $57,400 $57,400 $57,400 $57,400 $57,400 $57,400

Page 2

Appendix
Table: General Assumptions

General Assumptions
Plan Month 1 2 3 4 5 6 7 8 9 10 11 12
Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Tax Rate 30.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00%
Other 0 0 0 0 0 0 0 0 0 0 0 0

Page 3

Appendix
Table: Profit and Loss

Pro Forma Profit and Loss
Sales $40,000 $40,000 $40,000 $55,000 $55,000 $70,000 $70,000 $80,000 $85,000 $95,000 $95,000 $95,000
Direct Cost of Sales $20,000 $20,000 $20,000 $27,500 $27,500 $35,000 $35,000 $40,000 $42,500 $47,500 $47,500 $47,500
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $20,000 $20,000 $20,000 $27,500 $27,500 $35,000 $35,000 $40,000 $42,500 $47,500 $47,500 $47,500

Gross Margin $20,000 $20,000 $20,000 $27,500 $27,500 $35,000 $35,000 $40,000 $42,500 $47,500 $47,500 $47,500
Gross Margin % 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00%

Expenses
Payroll $37,700 $37,700 $37,700 $37,700 $37,700 $37,700 $57,400 $57,400 $57,400 $57,400 $57,400 $57,400
Sales and Marketing and Other $11,550 $2,550 $2,550 $2,550 $2,550 $2,550 $2,550 $2,550 $2,550 $2,550 $2,550 $2,550
Expenses
Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Leased Equipment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Utilities $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300
Insurance $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500
Rent $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
Payroll Taxes 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Operating Expenses $53,050 $44,050 $44,050 $44,050 $44,050 $44,050 $63,750 $63,750 $63,750 $63,750 $63,750 $63,750

Profit Before Interest and Taxes ($33,050) ($24,050) ($24,050) ($16,550) ($16,550) ($9,050) ($28,750) ($23,750) ($21,250) ($16,250) ($16,250) ($16,250)
EBITDA ($33,050) ($24,050) ($24,050) ($16,550) ($16,550) ($9,050) ($28,750) ($23,750) ($21,250) ($16,250) ($16,250) ($16,250)
Interest Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Taxes Incurred $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Net Profit ($33,050) ($24,050) ($24,050) ($16,550) ($16,550) ($9,050) ($28,750) ($23,750) ($21,250) ($16,250) ($16,250) ($16,250)
Net Profit/Sales -82.63% -60.12% -60.12% -30.09% -30.09% -12.93% -41.07% -29.69% -25.00% -17.11% -17.11% -17.11%

Page 4

Appendix
Table: Cash Flow

Pro Forma Cash Flow
Cash Received

Cash from Operations
Cash Sales $10,000 $10,000 $10,000 $13,750 $13,750 $17,500 $17,500 $20,000 $21,250 $23,750 $23,750 $23,750
Cash from Receivables $0 $1,000 $30,000 $30,000 $30,375 $41,250 $41,625 $52,500 $52,750 $60,125 $64,000 $71,250
Subtotal Cash from Operations $10,000 $11,000 $40,000 $43,750 $44,125 $58,750 $59,125 $72,500 $74,000 $83,875 $87,750 $95,000

Additional Cash Received
Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Received $10,000 $11,000 $40,000 $43,750 $44,125 $58,750 $59,125 $72,500 $74,000 $83,875 $87,750 $95,000

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

Expenditures from Operations
Cash Spending $37,700 $37,700 $37,700 $37,700 $37,700 $37,700 $57,400 $57,400 $57,400 $57,400 $57,400 $57,400
Bill Payments $1,912 $56,317 $26,350 $26,875 $41,825 $34,375 $49,325 $41,700 $51,842 $51,858 $59,167 $53,850
Subtotal Spent on Operations $39,612 $94,017 $64,050 $64,575 $79,525 $72,075 $106,725 $99,100 $109,242 $109,258 $116,567 $111,250

Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Spent $39,612 $94,017 $64,050 $64,575 $79,525 $72,075 $106,725 $99,100 $109,242 $109,258 $116,567 $111,250

Net Cash Flow ($29,612) ($83,017) ($24,050) ($20,825) ($35,400) ($13,325) ($47,600) ($26,600) ($35,242) ($25,383) ($28,817) ($16,250)
Cash Balance $320,388 $237,372 $213,322 $192,497 $157,097 $143,772 $96,172 $69,572 $34,330 $8,947 ($19,870) ($36,120)

Page 5

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