September 2004

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 Confidentiality Agreement

The undersigned reader acknowledges that the information provided by Terry Levine in this
business plan is confidential; therefore, reader agrees not to disclose it without the express
written permission of Terry Levine.

It is acknowledged by reader that information to be furnished in this business plan is in all

respects confidential in nature, other than information which is in the public domain through
other means and that any disclosure or use of same by reader, may cause serious harm or
damage to Terry Levine.

Upon request, this document is to be immediately returned to Terry Levine.

___________________
Signature

___________________
Name (typed or printed)

___________________
Date

This is a business plan. It does not imply an offering of securities.

 Table of Contents

1.0 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

1.1 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
1.2 Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
1.3 Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

2.0 Company Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

2.1 Location . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Hours of Operation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3 Company Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4 Start-up Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

3.0 Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.1 Merchandise Assortment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.2 Product Sourcing & Buying . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.3 Inventory Management & Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

4.0 Market Analysis Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

4.1 Market Segmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
4.2 Target Market Segment Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.3 Industry Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
4.3.1 Competition and Buying Patterns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.3.2 Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16

5.0 Strategy and Implementation Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

5.1 Competitive Edge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.2 Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.3 Sales Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
5.3.1 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.4 Milestones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

6.0 Management Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

6.1 Personnel Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24

7.0 Financial Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

7.1 Important Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.2 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
7.3 Projected Profit and Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.4 Projected Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
7.5 Projected Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
7.6 Business Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
 clair de lune

1.0 Executive Summary

clair de lune (french for moonlight), is a new, European influenced lingerie boutique that will
provide high quality lingerie in a wide array of sizes and styles with exceptional customer
service. The 1,300 square foot store will be located in a proven retail center called Hawthorne
Plaza in Southern Johnson County, Kansas where the demographics are suitably upscale,
traffic counts are high, and compatible retailers offer qualified traffic and potential referral
business.

Competition:

The outlets for intimate apparel purchases in Kansas City are much more limited than markets
of similar size. There are mass merchandisers and discount stores that offer mass produced
and lesser quality brands; department stores that offer better brands, but in limited sizes and
with varying degrees of customer service; and 10 Victoria's Secret stores which cater to the
18-34 age group with product of inconsistent quality and untrained store personnel. There are
no lingerie boutiques serving the upper income, south Johnson County, Kansas and south
Kansas City, Missouri area.

Market Potential:

Three key target groups are identified in Sections 4.1 and 4.2 of this business plan, based on
lingerie spending patterns. The three target groups are:

1. Women 25-59 with a household income of $75K+

2. Women 18-24
3. Brides

A common psychographic component that clair de lune is targeting amongst all three groups
is the Intimate Apparel Enthusiast (IAE). An IAE is a woman who cares enough about her
lingerie to want to shop at a specialty store, and is not purchasing her lingerie at Wal-Mart.

There are large numbers of potential customers who fit these target descriptions within a five
mile radius of our store location, which captures Hawthorne Plaza shoppers for impulse
purchases, and within a fifteen mile radius for destination traffic. (See section 4.1).

Unique Selling Proposition:

A recent "Dear Abby" column on May 11, 2004 quoted a desperate bra shopper complaining,
"Why is it that if a woman wears a 32-A and really doesn't need to wear a bra at all, she has
her choice of white, black, beige, navy, shocking pink and turquoise, as well as plaids, polka
dots and leopard prints? But if a woman is a 42-D (or more) and requires a bra every waking
moment, she has a choice of - white."

clair de lune will solve this woman's dilemma by offering a wide range of styles and sizes that
she will not find elsewhere in Kansas City. The moderate to more expensive lines of lingerie
offered by clair de lune are known for quality silks, hand finished laces and superior
craftsmanship. We will be able to up-sell the Victoria's Secret shopper to a higher quality
product that they may have seen in a fashion magazine, by educating her on the better
durability, construction and fit, at a slightly higher price. A full description ofclair de lune's
product offerings can be found in Sections 3.1 and 5.1.

clair de lune's highly trained personnel will get to know each customer's individual needs,
and will offer personal bra fitting and other special services, as described in more detail in
Section 5.1.

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 clair de lune
Leadership and Vision:

The sole owner, Terry Levine, brings over 20 years of marketing and advertising experience
which will be a tremendous asset in analyzing the customer and market potential, as well as in
implementing a strong marketing plan, as outlined in Section 5.2. As a seasoned media
strategist, she has a great grasp of numbers, and will utilize her negotiating and relationship
building skills with vendors and clients. She has extensive experience controlling costs for
other businesses, with a natural penchant for watching the bottom line.

Terry will be guided in her inventory management decisions by one of the most successful
independent intimate apparel retailers in the U.S. Susan Nethero, owner ofIntimacy in
Atlanta, an award winning lingerie store with over $5 million in sales, will serve as a consultant
for start-up inventory, inventory management and other operational issues. She is widely
recognized by vendors and customers alike as an icon in her field.

Financial Projections:

clair de lune expects to produce $439,500 in the first year of operation, with aggressive
growth projections of 15% in year two and 17% in year three, fueled by expanded product
lines and aggressive marketing. The store is projected to become profitable during the third
year of operation.

Highlights

$700,000

$600,000

$500,000

$400,000
Sales
$300,000 Gross Margin
$200,000 Net Profit

$100,000

$0

($100,000)
FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

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 clair de lune

1.1 Mission

clair de lune is a specialty lingerie boutique offering labels, styles and sizes that are currently
unavailable in Kansas City, thereby filling a void that exists between Victoria's Secret and
department store selections.

Our mission is to give the discriminating lingerie shopper what she is looking for, whether it be
fit, comfort or style, in an atmosphere that is comfortable, exciting and satisfying.

We want to create a connection with the Intimate Apparel Enthusiast (IAE) that evokes the
feeling that clair de lune is "my lingerie store."

1.2 Objectives

1. To create a shopping environment where women (and men) feel comfortable,

pampered and stimulated by the wide array of choices that are available to fill their
needs.
2. To utilize superior customer service to create positive word-of-mouth recommendations
and repeat sales
• To give every customer one-to-one attention.
• To have 50% of all customers return within six (6) months of their first
purchase.
3. To be in the consideration set for all planned Intimate Apparel Enthusiast (IAE)
purchases in southern Kansas City and Johnson County by end of year two.
4. To make clair de lune the number one destination for bridal lingerie purchases by the
end of year one.
5. To have first year gross sales of $425,000.
6. To grow the business by 15% in year two.

1.3 Keys to Success

1. Offer superior quality products with cutting edge designs that are not available in other
outlets in the Kansas City market.
2. Secure a great store location that offers high customer traffic for impulse purchases,
caters to desirable demographics, includes compatible stores (e.g. bridal, women's
apparel), and is in an easily accessible, known destination.
3. Understand clair de lune's target customer to ensure that the correct product mix is
available to meet their needs.
4. Offer an assortment of sizes (especially in the larger sizes to meet the needs of the
growing plus size market).
5. Offer superior, personalized customer service to create favorable word-of-mouth
recommendations and influence a high rate of repeat business.
6. Continuously monitor inventory levels, and make adjustments as needed.
7. Educate and advise customers on proper fitting and the quality/value relationship of
some of the higher priced (likely European) brands.
8. Offer a variety of price points so that customers do not feel intimidated by the higher
priced offerings.
9. Change in-store and window displays frequently to increase impulse purchases,
creating the belief that there is always something new atclair de lune.

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 clair de lune

2.0 Company Summary

clair de lune is a European influenced lingerie boutique offering quality merchandise and
personalized service to Intimate Apparel Enthusiasts (IAEs). It is scheduled to open in
September, 2004, in a 1,300 square foot space in the Hawthorne Plaza shopping center in
Overland Park, Kansas.

2.1 Location

Location is a critical element to any retail business. The right location is paramount to the
success of a lingerie boutique since a large share of sales will likely be derived from impulse
purchases and influenced by neighboring store traffic. While it should be possible, and is
definitely desirable, to build clair de lune into a destination location for lingerie purchases, a
location with high foot traffic will contribute to strong awareness and impulse purchases.

Many locations were considered for clair de lune with the following criteria in mind:

1. Desirable demographic composition

2. Strong foot traffic
3. Complementary retailers
4. Open-air mall or neighborhood center vs. strip mall or indoor mall
5. Successful retail reputation
6. Relatively easy access via primary streets

Fortunately, Kansas City offers many neighborhoods with upscale demographics. This bodes
well for a store like clair de lune which is selling the type of lingerie that is a desired luxury
rather than a necessity. We are very fortunate that within one of the best neighborhoods in
the Kansas City metro area, we have found the perfect location forclair de lune at
Hawthorne Plaza.

Located in the heart of Johnson County, Kansas, one of the wealthiest counties in the nation
and the third highest county in the country for population growth, Hawthorne Plaza, a 14-year
old shopping venue, offers the perfect mix of boutique retailers and customers forclair de
lune.

According to demographic research provided by the Kansas City Star, the median household
income of persons who have shopped at Hawthorne Plaza in the past 30 days is $83,820. This
is higher than any other major shopping center in Kansas City, including Town Center Plaza,
which is across the street from Hawthorne, and the prestigious Country Club Plaza, in Kansas
City, MO.

Scarborough Research indicates that 65% of persons who have shopped at Hawthorne in the
past 30 days are between the ages of 25 and 54, which encompasses the key age groups for
the lingerie brands that clair de lune will offer.

Not only does Hawthorne offer ideal demographic composition, but it offers high traffic volume
as well. More than 200,000 people live within five miles of Hawthorne. It is situated across
the street from another highly trafficked mall, Town Center Plaza, and is within a few blocks of
Sprint World Headquarters Campus, which employs approximately 10,000 people.
Scarborough Research from '02/'03 estimates that over 56,000 adults shopped Hawthorne in
an average 30-day period.

Hawthorne Plaza features a great mix of specialty stores, many of which are locally owned.
Complementary businesses that have the potential of sharing customers withclair de lune

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 clair de lune
include a number of women's apparel shops: Talbots, Saffees, Vinones, Keil & Co, Under the
Palm Tree; a swimwear boutique; a bridal boutique; a perfume shop; a hair salon; and a
couple of upscale jewelry stores. Hawthorne offers some popular restaurants that help to
maintain high traffic counts.

The open-air mall has a sophisticated profile that offers an appealing backdrop for a European
influenced lingerie boutique. Hawthorne Plaza is an established shopping destination in the
Kansas City market and is considered a "go to center" for sophisticated shoppers.

2.2 Hours of Operation

Exact hours of operation are to be determined. We plan to follow schedules similar to the
other women's apparel retailers in the shopping center. Additionally we will be sensitive to
holiday hours and special group opportunities to maximize our exposure and sales potential.

2.3 Company Ownership

clair de lune will be formed as a privately held S corporation in the state of Kansas. The
company is owned by Terry Levine, who has over 20 years of marketing and advertising
experience, with a specialty in the retail industry. Ms. Levine will work full time as an
owner/operator, responsible for running the business, sales and buying. She will be assisted
by a 3/4 time store manager and part-time salespeople.

2.4 Start-up Summary

Start-up expenses and proposed financing are outlined below.

• clair de lune will open with several month's of inventory. The majority of the
company's assets will reside in inventory.
• The major start-up expenses and acquired long-term assets include $100,000 in start-
up inventory and $45,100 to build-out the store and prepare it for operations (design,
fixtures, lease-hold improvements, signage, Point of Sale (POS) system, packaging,
supplies, etc.).
• Start-up requirements include sufficient working capital to help meet the running costs
for the first 2-3 months of operations.
• The total start-up requirements are estimated to be $171,750.
• The start-up costs will be financed through a combination of owner investment, line-of-
credit (LOC) and long-term borrowing:
• Owner's investment $21,750 cash
• Ten year SBA loan $150,000
• Short-term $25,000 revolving line-of-credit for inventory replenishment and
new purchases

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 clair de lune

Start-up

$160,000

$140,000

$120,000

$100,000

$80,000

$60,000

$40,000

$20,000

$0
Expenses Assets Investment Loans

Table: Start-up

Start-up

Requirements

Start-up Expenses
Legal $1,000
Logo, Stationery, Business Cards $1,500
Utilities & Telephone $2,000
Packaging/Sacks/Boxes $2,500
Hangers $300
Business Supplies $600
Real Estate Attorney $2,000
CPA $500
Grand Opening Event $3,000
Signage $1,500
POS System $3,500
Bank Card Machine & Supplies $400
Build-out $15,000
Business & Inventory Insurance $2,500
Travel-Market Buying Trips $2,250
Other $0
Total Start-up Expenses $38,550

Start-up Assets
Cash Required $18,200
Start-up Inventory $100,000
Other Current Assets $0
Long-term Assets $15,000
Total Assets $133,200

Total Requirements $171,750

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 clair de lune

Table: Start-up Funding

Start-up Funding
Start-up Expenses to Fund $38,550
Start-up Assets to Fund $133,200
Total Funding Required $171,750

Assets
Non-cash Assets from Start-up $115,000
Cash Requirements from Start-up $18,200
Additional Cash Raised $0
Cash Balance on Starting Date $18,200
Total Assets $133,200

Liabilities and Capital

Liabilities
Current Borrowing $0
Long-term Liabilities $150,000
Accounts Payable (Outstanding
$0
Bills)
Other Current Liabilities $0
Total Liabilities $150,000

Capital

Planned Investment
Investment Cash--Terry Levine $21,750
Investor 2 $0
Other $0
Additional Investment Requirement $0
Total Planned Investment $21,750

Loss at Start-up (Start-up

($38,550)
Expenses)
Total Capital ($16,800)

Total Capital and Liabilities $133,200

Total Funding $171,750

3.0 Products

The right mix of products has previously been identified as one of the keys to success forclair
de lune. The importance of delivering products that meet the needs and desires of our
customers can not be underestimated.

clair de lune will carry quality European and U.S. labeled products that are unique to the
Kansas City market. Part of the excitement of shopping atclair de lune will be that our
customers will find merchandise that they will not find anywhere else in Kansas City. Our
customers may be familiar with some of the brands from shopping on the coasts, on the
Internet or seeing them in fashion magazines, but they will not see many, if any, in other local
retail outlets.

The quality of the products will be evident in the fabric, structure and design. clair de lune's
knowledgeable staff will educate our customers on unfamiliar brands that offer design
elements and fit to which they have not previously been exposed. The depth of brands will
enable clair de lune to show our customers what will work best for them in terms of size,
style, fit, design, fabric and price.

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 clair de lune
clair de lune will carry a wide range of prices from moderate to upscale. We want to be in
reach of the Victoria's Secret shopper who spends an average of $30 on a bra. But we also
want the opportunity to upsell her to a higher quality line by demonstrating the
brand/price/value relationship.

The QuickBooks inventory management software will allow us to track what is selling on a
daily basis, and identify hot performers as well as "dogs." We will also solicit customer
feedback and invite suggestions for new offerings.

We have taken two precautions to establish the right product mix up front.

1. We have engaged the services of Susan Nethero, owner ofIntimacy in Atlanta, GA to

serve as buying consultant for the initial inventory order. Susan has been in the retail
lingerie business for 12 years, and operates an extremely successful 2,700 sq. ft. store
which won an award as Intima Magazine's Top Lingerie Store in the U.S. in 2004. She
has expanded her current store location once, and is acquiring a second store in the fall.
2. We will hold a Shoppers Focus Group to gain feedback on product offerings, price
points, brand awareness and buying patterns of Kansas City women. The focus group
will consist of 10 women representing different age groups and lifestyles.

3.1 Merchandise Assortment

Bras & Panties:

The mainstay of our inventory will be bras and panties. In order for any woman to feel that
clair de lune is "her lingerie store," we must be able to meet her needs for basics, as well as
special occasion lingerie. According to Women's Wear Daily, bras and panties represented the
majority of all intimate apparel sales at 57% of the total dollar volume, and we expect that it
will lead the volume for clair de lune as well.

Panties have become a particularly hot item over the past couple of years, with a strong
consumer demand for fashion coordinates. Women are stocking up on multiple pairs of
panties to match each bra or camisole, knowing that styles are rapidly changing. According to
NPD Group, panty sales increased 7.8% from 2002 to 2003.

The biggest growth is the boy leg and boy brief silhouette. The styling appeals to the junior
market in colorful prints and appliques as well as the misses market with a lacier model
sometimes referred to as a Tanga panty. Most manufacturers are anticipating another strong
season for thongs.

clair de lune will have displays that feature a complete array of panty silhouettes including
classic briefs, bikinis, hi-cut briefs, boy-shorts, g-strings, v-strings and more. This will allow
customers to mix and match panties with any item, depending on the style they prefer.

Industry resources typically estimate that 7 out of 10 women wear the wrong bra. clair de
lune will be known for expertise in bra fitting as well as carrying a large range of styles and
sizes. We will stock AA-J cup sizes and band width to at least 48 and possibly higher. We will
special order other sizes as needed. Prices will range from $35 to $150, with the greatest
depth in the $45-$80 range.

Daywear:

Daywear sales were up 27% in 2003 according toWomen's Wear Daily. The lines continue to
blur between innerwear and ready-to-wear with many women choosing to wear their lingerie
outside of the home. Daywear is an important impulse purchase as well as gift-giving item.

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 clair de lune
clair de lune will be well stocked in beautiful camisoles, lacy shells and sleeveless and sleeved
tops to inspire special purchases.

Nightwear/At-Homewear:

The appetite for comfortable, cocooning clothes has continued to increase post-September 11.
Add to this the increased interest in wellness and exercise that has spurred yoga wear to
crossover to street-wear and at-homewear, and the advances in softer, multifunctional
microfibers that feel great against the skin, and you have a great formula for increased sales
in this category.

According to the NPD Group, the youth market drove the growth of sleepwear and at-
homewear in 2002 and 2003. In the 13-17 and 18-34 age groups, sales rose by double digits,
while sales were down by less than 10% for consumers 35 to 54 and 55 or older. The styles in
loungewear are less unkempt, and more flattering. They have cleaner lines and are more put
together, and very acceptable to wear for casual activities outside of the home.

clair de lune will offer nightshirts, pajamas, loungewear and robes in mostly lightweight
fabrics. Initially, we will not buy very deeply in this category until we get a better read on
what our customers desire. There are more outlets for these types of products in Kansas City,
so we may choose to minimize our offerings in this category, other than during the holiday gift
buying season in 4th quarter.

Bridal:

We expect bridal to be a big category for clair de lune since the opportunity for personal
service works especially well for this category. We will establish a strong referral network with
the bridal store that is a few doors down as well as other bridal stores in Kansas City.

Shapewear and Maternity:

clair de lune will have minimal offerings in this category, but plans to expand as demand
dictates.

Hosiery:

We recognize that hosiery can be a great driver for repeat visits, and plan to open with at least
one line in year one, and expand this category in year two. Since hosiery has unique display
requirements and lower per unit revenue, we will start slowly in this category and develop this
area based on customer demand.

3.2 Product Sourcing & Buying

Our merchandise will be purchased from the top manufacturers in the world, through their
regional representatives or direct from the manufacturer.

Inventory will be tracked and monitored through the QuickBooks POS system. Basic designs
that are kept in-stock by suppliers will be re-ordered on a continual basis, as needed.
Seasonal designs will be ordered several months in advance.

As previously mentioned, a key to opening our store with a desirable mix of inventory will be
utilizing Susan Nethero, owner of Intimacy in Atlanta, as a buying consultant. We will utilize
Susan's vast knowledge of the industry and her supplier relationships to determine the ideal
brands, styles, colors, sizes and quantities for our target market. SU.S.an will also advise us
in negotiating the most favorable terms with vendors.

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 clair de lune
We will carefully monitor what sells and what doesn't, listen to customer feedback, and keep a
careful eye on ever-changing fashion trends to optimize future orders.

We will attend at least two industry shows per year, to stay current on new designers and
trends. We have already attended Intima America and Lingerie Americas, both in New York, in
March, 2004, which featured a wide array of international and U.S. product lines. The shows
were invaluable in giving us some ideas of what product lines to initially carry atclair de lune
, and in establishing vendor relationships. In addition to exposing us to the wide array of
available lines, both shows provided us with educational seminars that either reinforced many
of our plans or provided new thinking to our business strategies.

3.3 Inventory Management & Technology

We will use the QuickBooks Pro Point of Sale system for cash register, inventory, and customer
information tracking. The software was developed for a retail environment and has the
capacity to handle up to 40,000 SKUs. It is much more affordable than the Retail Pro system,
which is the top-of-the line system for multi-store retailers. We believe that QuickBooks
should meet our initial inventory management needs; however we will be continuously
monitoring this system and how it serves our needs to determine if an upgrade will be
necessary in the future.

4.0 Market Analysis Summary

There is little reason to doubt that the Kansas City market is a reflection of the national
market when it comes to a growing interest among women for intimate apparel. This coupled
with the continued economic strength of the Johnson County, KS and south Kansas City
geographic portion of the market lends further credence to the great potential forclair de
lune.

This portion of the plan will explore the key target audiences we have identified as best
prospects for the products and services clair de lune will provide.

4.1 Market Segmentation

clair de lune will target specific market segments:

1. Women 25-59 with household income of $75K+

2. Women 18-24
3. Brides

Market Potential for Target Segment 1:

Within a five (5) mile radius of our store location, 51.4% of the households have an income of
$75K+. This translates into 39,956 households that fall within our primary target income
bracket. This number is projected to grow to 54,560 by 2008.

Since one of our goals is to build clair de lune into a destination location for lingerie
purchases, it is also pertinent to look at households with $75K+ income in a 15 mile radius of
our location. There are 130,986 households that meet this criteria, and that number is
projected to grow to 183,630 by 2008.

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There are 49,281 women aged 25-59 that live within five miles of our location. That number is
projected to grow to 53,671 by 2008.

Within a 15 mile radius, there are 256,303 women aged 25-59 with a growth projection of
270,040 by 2008.

While we do not have statistics that quantify the number of women 25-59 with household
income of $75K+, we can estimate that number. Within a 15 mile radius, 32.2% of
households have an income of $75K+. If we apply a 32.2% factor against 256,303 women
aged 25-59, that gives us 82,529 potential customers in Segment 1.

Market Potential for Target Segment 2:

There are 7,140 women 18-24 that live within five miles of our location. That number is
projected to grow to 8,578 by 2008.

Since 18-24 year olds are much more likely to be impulse purchasers, we are limiting our
market potential number to a five mile radius for this age group.

We have not put a household income qualifier on this segment, since the age group includes
students and young singles that are only supporting themselves rather than an entire
household. Many in this age group are Victoria's Secret shoppers, and Scarborough Research
data shows us that two-thirds of their customers have a household income under $75K.
However, we believe it is realistic to assume that many women in this target segment still
reside in those $75K+ households referenced above. They take advantage of available
disposable income to purchase lingerie.

Market Potential for Target Segment 3:

The Kansas City Star tells us that approximately 15,000 women get married in Kansas City
each year. If we conservatively estimate that an average of three persons (including the
bride) will be purchasing bridal lingerie for the bride, that gives us a market potential of
45,000 women in this category.

Overall Potential:

Expenditures on women's apparel within a five (5) mile radius in 2003 was $113,444,950. We
can assume that approximately 14% of that total was intimate apparel, based on national
averages. We can then estimate that there were $1,588,293 expenditures on intimate apparel
within a five mile radius. clair de lune would only need to capture 2.8% of that potential
market to meet our sales forecasts for 2004. And that is only looking at expenditures within
that five mile radius.

Source: ESRI BIS forecasts for 2003 and 2008

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Market Analysis (Pie)

Women 25-59, HHI $75K+

Women 18-24
Bridal

Table: Market Analysis

Market Analysis
2004 2005 2006 2007 2008
Potential Customers Growth CAGR
Women 25-59, HHI
5% 82,529 86,953 91,614 96,525 86,953 1.31%
$75K+
Women 18-24 20% 7,140 8,568 10,282 12,338 8,578 4.69%
Bridal 0% 45,000 45,000 45,000 45,000 45,000 0.00%
Total 1.07% 134,669 140,521 146,896 153,863 140,531 1.07%

4.2 Target Market Segment Strategy

Women have varying attitudes towards the role of undergarments in their lives. This is
evidenced by the different personalities that are projected through the contents of their
underwear drawers. For example, there's the "low involvement" segment, who buy just
enough lingerie to get them through the week. For them, underwear is a functional necessity,
and they really don't care if it's all white or all black, as long as they have a clean pair of
panties to wear.

The fact that a woman spends a fortune on designer suits does not necessarily translate into
designer labels on her bras.

clair de lune wants to capture the attention of the Intimate Apparel Enthusiast (IAE).
According to a segmentation study done by the Cambridge Group, the IAE is aged 18-34,
wears matching bras and panties, and loves to shop for underwear, especially on impulse.
Although IAEs are only 18 percent of the market, they account for 25 percent of the sales.
Their entire underwear collection looks like most women's "special occasion" section of their
lingerie drawer.

Many of these local IAEs are currently Victoria's Secret customers because that is the only
specialty retailer in Kansas City that offers the variety they are looking for. According to
Scarborough Research (March 2002-Feb 2003) over 200,000 persons in Kansas City have

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shopped at a Victoria's Secret in the past 90 days. Of those Victoria's Secret shoppers, over
one-third (33.8%) are aged 18-24, and 82.1% are aged 18-44.

What this means for clair de lune is that approximately one (1) out of every seven (7)
women in Kansas City over the age of 18 has enough "involvement" with their lingerie to want
to shop at a specialty store versus a department store or mass merchandiser.

Although the young IAE is buying a lot of undergarments, she is not necessarily the most
profitable customer. Mediamark Research (MRI) from Fall of 2003 shows that adults who
spend over $100 per year on lingerie tend to be in the 25-59 age group. Adults 25-59 account
for 65.5% of all Adults 18+ in the U.S., whereas Adults spending over $100 per year on
lingerie account for 80.7% of all Adults 18+.

Expenditures by Age of Lingerie Purchasers

Nightwear Bra Panties Night/Bras/Panties/Shape

U.S. 18+ <$50 $50-99 $100+ <$50 $50-99 $100+ <$50 $50-99 <$50 $50-99 $100+
18-24 13.1 10.8 14.5 10.4 12.8 10.1 10.2 11.5 14.0 12.0 12.6 10.1
25-29 8.5 8.3 10.0 11.1 7.8 9.5 9.3 8.6 9.2 8.3 9.0 10.2
30-34 10.0 9.9 9.9 16.9 9.6 10.8 13.2 10.3 10.3 9.9 10.6 13.2
35-39 9.9 12.7 9.2 11.0 10.5 10.0 12.4 10.7 11.4 10.7 10.2 12.0
40-44 11.23 13.1 11.9 6.7 10.6 11.9 17.7 11.3 15.1 11.5 12.9 16.2
45-49 10.0 8.9 10.2 10.9 10.5 13.6 11.1 10.5 12.4 10.4 12.3 11.4
50-54 8.9 10.1 13.2 13.2 9.8 11.5 8.7 10.1 10.1 9.8 11.0 9.2
55-59 6.9 8.7 8.1 9.1 8.6 7.4 7.7 8.0 7.0 8.0 7.6 8.5
60-64 5.4 5.1 5.4 6.4 5.7 5.1 4.0 5.4 3.8 5.4 4.7 4.0
65-69 4.3 4.1 2.2 2.8 4.4 3.8 2.5 4.4 2.1 4.3 3.3 2.4
70-74 3.9 3.0 2.1 1.5 3.6 2.8 1.8 2.9 2.4 3.3 2.8 1.5
75+ 7.9 5.4 3.4 0.0 6.2 3.6 1.5 6.4 2.1 6.3 3.1 1.4

Source: MRI Fall 2003

Income is another key factor in amount spent per year on lingerie. It also influences the types
of brands that a consumer purchases. clair de lune is most interested in consumers who are
spending at least $100+ per year on lingerie. These consumers tend to have a household
income of $75K+.

Expenditures by Household Income of Lingerie Purchasers

Night/Bras/Panties/Shape

HH Income U.S. 18+ <$50 $50-99 $100+

<$25K 22.3 20.0 12.9 7.7
$25-35K 11.4 11.2 7.6 6.1
$35-45K 10.7 10.4 9.7 11.1
$45-60K 13.7 14.6 15.3 12.6
$60-75K 11.4 11.4 11.3 9.2
$75-100K 12.9 14.0 19.0 20.6
$100-150K 11.1 11.9 14.8 21.2
$150-200K 3.6 3.7 5.7 7.4
$200K 2.9 2.8 3.7 4.2

Source: MRI Fall 2003

Characteristics of our target customers:

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• Women 25-59 with household income $75K+
• Of this segment, women over 35 are more lifestyle and status conscious; they
favor European brands with high design and quality, shop less often, but favor
premium brands.
• Young women 18-24 shop more often and are likely to be currrent Victoria's Secret
customers.
• We can offer this segment better customer service, higher quality merchandise
and more selection that they are used to receiving at Victoria's Secret.
• Teens (13-17) often have media created tendencies; they are avid readers of fashion
magazines.
• With ever-increasing disposable income, purchase decisions are influenced by
those publications and peers. While not with in our core target demographic,
they are also influenced by mothers and older sisters and may follow their
purchase paths.

4.3 Industry Analysis

Mass merchandisers lead the women's innerwear market in share, as they do in a variety of
consumer products. Mass merchandisers like Target not only offer the convenience of one-
stop shopping for a variety of needs, but they are increasing their selection of designer labels
at lower prices. Brands sold at mass merchandisers include:

• Hanes
• Vassarette
• Fruit of the Loom
• Bestform
• Jockey

Department stores hold second place in terms of market share, offering a wider variety of
merchandise, more high-end products, more hard to find sizes, and, if you're lucky, some
customer service. Brands sold at department stores include many of the above, plus:

Mid-Tier: (Kohl's, JC Penney)

• Vanity Fair
• Warners
• Playtex

Major: (Dillard's, Jones)

• Bali
• Olga
• DKNY
• Tommy Hilfiger

Better Dept: (Saks, Nordstrom's)

• Wacoal
• Chantelle
• Donna Karan
• On Gossamer

Victoria's Secret is the leading specialty chain and garners approximately a 20% share of the
U.S. bra market, according to NPD Group.

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None of these stores carry the international brands and up and coming labels that will be
offered at clair de lune.

The rest of the women's intimate apparel sales are primarily through non-chain specialty
stores, other national chains (e.g. Gap) and Internet/direct mail (catalog sales).

4.3.1 Competition and Buying Patterns

In Kansas City, the choices of outlets for women to purchase intimate apparel is more limited
than many other markets in the U.S. THERE ARE NO INDEPENDENT LINGERIE BOUTIQUES
TO SPEAK OF IN KANSAS CITY.

The only store that can be classified as a lingerie boutique in Kansas City, is a 200 sq. ft. shop
in the downtown area called Birdies. It opened in late 2003 and carries approximately 200
SKUs and three to four brands that are primarily trendy and youth oriented with low to
moderate pricing. The store does very little promotion, and is in a low traffic area (hard to
find), with little retail surrounding it. We don't consider Birdies to be direct competition in its
current state, but it does have some awareness among younger shoppers.

There are nine (9) Victoria's Secret stores in Kansas City with a 10th location opening in May
'04 in north Kansas City. If you are an Intimate Apparel Enthusiast (IAE) in Kansas City,
chances are that you shop at Victoria's Secret since your other retail options are so limited.
According to Scarborough Research, 15% of all women in Kansas City have shopped at a
Victoria's Secret in the past 90 days. Considering that this number takes into account women
over 65 years old and all economic brackets, that number is significant.

The fact that there is a Victoria's Secret in Town Center Plaza across the street fromclair de
lune is considered a positive. Customers who are lingerie shopping and do not find what they
want at Victoria's Secret can easily cross the street to visitclair de lune. Although Town
Center and Hawthorne are technically different retail venues, traffic patterns suggest that
consumers treat them as one destination. The challenge will be to attract the younger
customers. According to Scarborough Research, over one third of Victoria's Secret shoppers in
Kansas City are 18-24, and 56% are 18-34. The demographics of Town Center Plaza skew
younger than Hawthorne Plaza, so we will need to encourage Moms to bring their daughters
into clair de lune to shop.

Other chain specialty lingerie retailers in Kansas City include BodyGap and Inner Self.
BodyGap appeals to similar demographics as Victoria's Secret, and has a location across the
street at Town Center Plaza. We believe that this is a positive for the same reasons as stated
above for Victoria's Secret. Inner Self has one location on the Country Club Plaza, which is
approximately 15 miles away. Inner Self targets the 30 to 45 year old, size 12 woman, who is
looking for comfort, not fashion. It is not a store for IAEs, and is not considered to pose a
geographic or demographic competitive threat.

Of the various channels described above, clair de lune will most likely share customers with
the Department Stores and Specialty Chains as those are the only true retail options currently
available in Kansas City with the types of products that appeal to the IAE. However, both of
these channels fall dramatically short in terms of customer service and depth of quality
product.

Tom Wyatt, President of Warnaco--"The department store is confusing. It's hard to find a
product, there's no service and it's very sterile. Until a decade ago, the department store
dominated the bra industry. But it has ceased to be at all inspirational. It's no longer a place
where a woman shops and feels special."

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According to Warnaco focus groups, women HATE the underwear shopping experience at
department stores. Bras and underwear are jammed onto racks that are packed too close
together; the layout is determined by brand rather than purpose; and customer service is non-
existent, which is a crucial component to bra shopping, hence about 80 percent of women
wear the wrong size.

CLAIR DE LUNE HAS A TRUE VOID TO FILL.

4.3.2 Trends

The U.S. Intimate Apparel industry appears to be healthy. Women's Wear Daily reported that
for the 12 months ending October 2003, total volume in dollars was up 4.3 percent, and total
volume units were up 6 percent. The largest percentage increases came from the daywear
category with sales up 27.1 percent and units up 27.5 percent.

Women's Wear Daily reports that department stores and chain specialty stores are losing
market share. We assume that much of that erosion is a result of the increasing confidence in
Internet shopping and where available, specialty retailers. IAEs recognize that a specialty
boutique such as clair de lune will offer excellent customer service, product knowledge,
personal fitting service, custom order options and wonderful product.

Innovations in textiles and manufacturing have caught consumer's attention. Seamless

undergarments that permit a greater range of motion and a smoother silhouette as well as
new generations of microfibers that keep a body warmer, cooler or drier have encouraged
consumers to seek out garments and fabrics that meet and exceed their demands.

The hottest trends at the intimate apparel shows in New York in March 2004 were:

• Increased interest in and availability of plus-size undergarments

• Innerwear that crosses over to outerwear
• Multiple silhouettes in panty styles, with popular junior styles such as boy briefs
showing up more in mature lines

5.0 Strategy and Implementation Summary

Specific details regarding our strategic and tactical plans will be covered in greater detail in the
following sections. However, to create an overview of the opportunity that exists forclair de
lune, we offer the following SWOT (Strengths/Weaknesses/Opportunities/Threats) Analysis:

Strengths:

• Quality and selection of products

• Differentiation
• Excellent customer service
• Commitment of owner
• Location

Weaknesses:

• Owner's inexperience as a lingerie retailer

• A target audience with limited exposure to many higher end, quality lingerie brands

Opportunities:

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• Void in Kansas City market for lingerie boutiques
• Attractive retail environment in Kansas City, and especially around the store location
• Educate Kansas City consumers on quality international brands of lingerie
• Establish relationships with complementary retailers (e.g. bridal shops) to share
customers
• Increased consumer interest in intimate apparel

Threats:

• Slow recovery from recent economic downturn

• Mis-calculating customer's tastes and needs, resulting in too many mark downs
• Talk of Victoria's Secret adding lines from international designers in the near future

5.1 Competitive Edge

clair de lune will establish itself as the best place to shop for lingerie in Kansas City through
its product offering, the scope and level of services it provides and outstanding customer
service.

PRODUCTS: clair de lune will provide a high level of quality and value to the consumer by
offering a wide range of styles and sizes, with little or no crossover of brands with other
retailers in Kansas City. Some brands under consideration include:

• Andres Sarda
• Borner
• Cagi
• Calida
• Cosabella
• Huit
• Le Caprice de Marie
• LZ
• NK
• Nina Von C
• Oscalito
• Selmark
• Simone Perele

SERVICES: clair de lune will create customer loyalty by offering one-to-one attention to all
of their shopping needs. The following is an initial list of services that will be offered:

1. Professional bra fitting

2. Signature gift wrapping to reinforce the store image and make the recipient feel special
3. Gift registry & wish list for wedding, birthday and anniversary. This allows spouses and
friends to know just what the recipient would like and simplifies the shopping
experience.
4. Bridal showers--By special arrangement, clair de lune will offer space and catering for
bridal showers with incentives to purchase merchandise.
5. Custom/special orders
6. Record of customers' size needs and purchase history

EMPLOYEES: clair de lune's employees will enjoy a fun, friendly, fair and challenging work
environment which rewards hard work and dedication to the business and its customers. It is
our desire that employees are long-term, ensuring an expertise that will support the customer
experience. clair de lune will seek out employees who not only desire to train for success,
but have the personality and drive to be the best in customer service, while representing the

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best lingerie retailer. clair de lune will provide product and customer service training to
assure every employee not only benefits from, but contributes to our #1 goal of outstanding
customer service.

5.2 Marketing Strategy

Marketing Objective:

Generate awareness through various marketing communications tactics to generate customer

trial visits in support of the business goals and objectives forclair de lune.

Strategies:

• Utilize print advertising to generate awareness among the target audience and to
emphasize key shopping periods.
• Ongoing use of direct marketing to keep clair de lune top-of-mind among a portion of
the target audience at all times.
• Develop and implement on-going in-store promotions, guerrilla marketing tactics and
cross-retail marketing to generate on-going awareness, trial and repeat visits toclair
de lune.
• Employ strategic placement on the Internet.

Tactics:

Print advertising: Employ key print advertising vehicles to build awareness among the target
market:

• Advertise in Kansas City Star's "STAR" Sunday magazine on an on-going basis to

generate awareness as well as advertise call-to-action messages during key shopping
periods, e.g. Christmas holidays, wedding/bridal season.
• Advertise in the twice annual KC Weddings magazine to create awareness among the
all-important wedding/bridal audience.
• KC Weddings is distributed throughout the Greater Kansas City regional
area, with bridal retailers offering free copies, and other bookstores and
retailers offering it for purchase. The circulation is 26,000 annually.
• Periodic advertising in other publications focusing on specific audiences within the
target segments to generate awareness and highlight key shopping periods, e.g.Jewish
Chronicle and Johnson County Sun.

On-going use of direct marketing:

• Direct mail will target a portion of the trade area (defined as a 15 mile radius) on a
monthly basis. From 500 to 1,000 post-card mailings will be sent out on a monthly
basis. Messages will run the gamut from "Now Open" to introduction of product lines to
special shopping events. In the case of special shopping events, larger quantities will
be mailed (see below). Our rationale for limited quantity mailings on a monthly basis is
to keep the clair de lune name a "new news" message among a portion of the target
audience at all times. This will generate awareness, which will lead to trial visits and
word-of-mouth interest.
• Special Shopping Event mailings will be generated to reach a higher percentage of the
target audience in the trade area. These events will include the all important 4th
quarter holiday shopping season and mark down events. For these events, we
anticipate mailing to as many as 1,500 to 2,000 customers and prospects minimum.
• As clair de lune generates its trackable customer data base, we will utilize direct mail
to target specific interests, whether that be based on particular products, brands or

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seasonal purchases. A "preferred customer" mailing list will also be utilized to inform
those important friends in advance of special shopping events.
• We intend to implement a birthday program and quarterly trunk shows to also be
driven by direct mail.

Low or no-cost "guerrilla" marketing will be a key strategy in the first 12-24 months thatclair
de lune is open for business.

• Cross-promotion/marketing with complementary stores in Hawthorne - We will create

incentives for the nearby women's apparel and specialty stores to refer their customers
to clair de lune. Whether that be by honoring a similar sale incentive (percentage off
retail) or limited time discounts to employees, we will find ways to make it worth the
effort to send their customers to our shop.
• Emphasis on Bridal Shops - Recognizing the important role that lingerie plays in
completing a bridal wardrobe, clair de lune will cross-market with area bridal shops to
provide those customers with the total positive experience. Our staff will be available
to provide advice, special fittings, and group pricing for wedding parties.
• Generate awareness - Whether it's classy introduction cards under windshield wipers,
participation in bridal and fashion shows, or telling our story to women's groups and
organizations, the staff of clair de lune will look for those no-cost opportunities to
generate awareness within our target audience.
• Drive increased customer traffic with a customer referral program targeting our
preferred customer base.

Employ strategic placement among key websites on the Internet.

• Purchase ad space on the popular Knot.com wedding advisory website.

• Negotiate with key product vendors for a regional listing as a key retailer for the brand.
• Negotiate with Kansas City Star for ad space on its website for occasional exposure.
• By year-end have our own website plan written for implementation during year two.

The following is a month-by-month overview of our marketing plans execution:

Star KC
Direct Mail
Magazine Weddings
Sep 1x 1,000
Oct 1x 1,000
Nov 1x 1,000
Dec 2x 1x
Jan 1x 1,500
Feb 1x 2,000
Mar 1x 500
Apr 1,000
May 1x 500
Jun 1x 1x 500
Jul 500
Aug 1x 1,500

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5.3 Sales Strategy

1. Offer personalized customer service by well-trained, well compensated and appreciated

employees. Develop customer relationships and loyalty that creates a desire for return
visits.
2. Utilize the Quickbooks POS system to record customers' contact and purchase
information, enabling us to follow up with direct mail and/or phone calls to
communicate special events and the arrival of new products of interest.
3. Offer a 14-day exchange policy to give customers an option to return undesired
selections without losing revenue from the sale.
4. Establish two major markdown events per year and promote the events to customers
and prospects. These events will be used to move old inventory and create a special
reason to visit clair de lune. Except for during the markdown events, merchandise
will be sold at full price to maintain the integrity of the quality products we are offering.
We do not want to train our customers to wait for a sale.
5. Network with bridal shops throughout Kansas City to promote gift registry and the
personalized attention that clair de lune offers brides and their wedding parties.
6. Employees will receive added incentive to help meet/exceed customer service and sales
goals.

5.3.1 Sales Forecast

clair de lune's projected average transaction is $70. This figure was derived using a couple
of different sources.

1. The average transaction on figleaves.com, a hugely successful online lingerie website,

with a customer base of 250,000 is $63. We can assume that customers buying on
figleaves.com have a specific purchase objective in mind, and are not "just shopping."
The in-store experience at clair de lune will facilitate additional impulse purchases
with successful merchandising techniques, which will raise the average transaction
above an online purchase.
2. The average transaction during the start-up phase of a similar lingerie boutique in
Connecticut was $75. While you may expect a higher average transaction in
Connecticut due to the wealth of the community and the higher awareness and
acceptance of upscale brands, their start-up was over 15 years ago, and the cost of
goods has increased significantly in that time.

We feel that an initial average transaction projection of $70 is conservative, and will work to
increase that number to $80 by year two (2).

For the first year, our sales projections are based on 20 transactions per day times the
number of selling days in the month. These numbers have been seasonally adjusted based on
U.S. Department of Commerce monthly sales of women's clothing specialty stores (3-year
average, 2000-2002). The monthly indices are as follows:

Women's
Specialty Index
Store
Jan 5.9 71
Feb 6.7 81
Mar 8.6 104
Apr 8.7 105
May 8.8 106

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Jun 8.0 96
Jul 7.4 89
Aug 8.3 100
Sep 7.9 95
Oct 8.3 100
Nov 8.9 107
Dec 12.5 151

In the sales projections table, we have adjusted our sales projections for February to a 110
index to account for a Valentine's Day spike.

We are projecting a rate of growth of 15% in year two and 18% in year three. This will come
from garnering a larger market share based on increased awareness, positive word-of-mouth
recommendations, and customers adopting clair de lune as their exclusive lingerie outlet, as
well as increased offerings in high demand areas such as maternity and hard-to-find sizes.

Table: Sales Forecast

Sales Forecast
FY 2005 FY 2006 FY 2007 FY 2008 FY 2009
Sales
Lingerie $439,558 $505,492 $591,469 $617,547 $691,653
Other $0 $0 $0 $0 $0
Total Sales $439,558 $505,492 $591,469 $617,547 $691,653

Direct Cost of Sales FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Lingerie cost $219,779 $252,746 $295,735 $308,774 $345,827
Other $0 $0 $0 $0 $0
Subtotal Direct Cost of Sales $219,779 $252,746 $295,735 $308,774 $345,827

Sales Monthly

$60,000

$50,000

$40,000

$30,000 Lingerie
Other
$20,000

$10,000

$0
Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug

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Sales by Year

$700,000

$600,000

$500,000

$400,000
Lingerie
$300,000 Other

$200,000

$100,000

$0
FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

5.4 Milestones

Table: Milestones

Milestones

Milestone Start Date End Date Budget Manager

Complete business plan 2/1/2004 4/30/2004 $100 Levine
Secure financing 5/3/2004 6/18/2004 $0 Levine
Logo & packaging design 5/3/2004 6/4/2004 $500 Levine
Secure store location & lease 5/3/2004 5/28/2004 $6,000 Levine
Hire designer & confirm build-out
5/7/2004 5/28/2004 $0 Levine
plan
Apply for business licenses,
5/31/2004 6/4/2004 $300 Levine
registration, etc.
Purchase QuickBooks hardware &
5/31/2004 6/2/2004 $3,500 Levine
software
Hire staff 5/31/2004 8/20/2004 $0 Levine
Remodel store 6/7/2004 9/3/2004 $15,000 Levine
Order store fixtures 6/7/2004 6/18/2004 $15,000 Levine
Place inventory orders 6/12/2004 6/20/2004 $100,000 Levine
Secure insurance 7/5/2004 7/9/2004 $2,500 Levine
Order Bankcard Supplies &
7/5/2004 7/9/2004 $400 Levine
Machine
Order POS Supplies 7/5/2004 7/9/2004 $400 Levine
Order packaging 7/12/2004 7/12/2004 $2,500 Levine
Design and place opening
7/12/2004 7/30/2004 $3,000 Levine
advertising
Contact utility companies 7/12/2004 7/16/2004 $2,000 Levine
Order business supplies & forms 8/2/2004 8/6/2004 $600 Levine
Plan opening event 8/2/2004 9/2/2004 $3,000 Levine
Bra fitting training 8/16/2004 8/20/2004 $0 Levine
Store opening 9/7/2004 9/7/2004 $0 Levine
Opening event 9/10/2004 9/10/2004 $0 Levine
Totals $154,800

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Milestones

Complete business plan

Logo & packaging design
Hire designer & confirm build-out plan
Purchase QuickBooks hardware & software
Remodel store
Place inventory orders
Order Bankcard Supplies & Machine
Order packaging
Contact utility companies
Plan opening event
Store opening

6.0 Management Summary

Management of clair de lune is made up of the owner, Terry Levine, and a manager who still
needs to be hired. The owner will focus on sales, inventory and marketing. The manager will
also focus on sales and handle the many administrative functions that are necessary to run a
lingerie boutique.

Terry Levine is the owner/operator. Her experience in retail advertising will be a tremendous
asset in establishing clair de lune. Terry has more than 20 years of advertising agency
experience as a media strategist and media director involved with many well known retail,
consumer and package goods clients including Wal-Mart, Thrifty Car Rental, Farmland Foods,
NetZero, Commerce Bank, Rentway, the Buckle, Mission Mall, and Blockbuster Video and Music
among others. These clients all benefited from Terry's leadership role as a retail strategist and
visionary.

As a seasoned media specialist, Terry honed her expertise as a numbers "expert," negotiator
and relationship builder with vendors and clients alike; skills that will again prove very
beneficial in her role as a retailer.

In addition to her extensive association with diverse retail entities, Terry is a seasoned
traveler. Travelling throughout Europe, particularly France and Italy, and her zeal for retail,
helped focus her attention on boutique shopping, and especially lingerie boutiques. She
recognized that these European retailers provided focus on product and a level of customer
service and product knowledge rarely seen in the U.S. and especially not in Kansas City. It
was this seed of a dream, planted several years ago, that is now developing into these plans
for clair de lune.

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 clair de lune

6.1 Personnel Plan

The personnel plan is included in the following table. It calls for Terry Levine, owner/operator
to work full time and draw a salary of $52,700 the first year of operation. There will be one
manager who will work at least 30 hours per week, and draw a salary of $21.50 per hour.
This would be equivalent to a full time salary of $45,000. There will be two part-time
salespeople who will each work 18 hours per week at a salary of $10.00 per hour. We feel
that we are offering generous salaries to our employees so we can attract and retain high
quality personnel. It is imperative that our salespeople demonstrate a level of maturity,
knowledge and comfort with our customers that will put them at ease and make them want to
come back frequently.

All personnel, except the owner, will be eligible for bonuses when monthly sales goals are
achieved.

Scheduling will allow for two people to be working during all hours thatclair de lune is open.
More will be scheduled to meet the demand of the day or season.

At this time, medical benefits will not be offered to employees. The status of medical benefits
will be re-assessed after the first year of operation.

Outside consultants will be used to help with the following functions:

• Buying
• In-store and window displays
• Accounting

Table: Personnel

Personnel Plan
FY 2005 FY 2006 FY 2007 FY 2008 FY 2009
Terry Levine--CEO $52,705 $55,340 $58,107 $61,013 $64,063
Manager $31,220 $35,000 $40,000 $42,000 $44,100
Salespeople $16,720 $27,556 $28,934 $30,380 $31,900
Total People 4 5 5 5 5

Total Payroll $100,645 $117,896 $127,041 $133,393 $140,063

7.0 Financial Plan

• A 10-year SBA loan will be secured to cover start-up expenses and the first 2-3 months
of salary, rent, taxes, insurance and credit card fees.
• A line-of-credit up to $25,000 will be used to cover any monthly cash-flow shortage
and greater than anticipated inventory requirements.
• Sales growth is expected to be aggressive with projections of sales increases of 15% in
year two and 18% in year three.
• Profits will be reinvested to reduce debt, expand product lines and increase personnel,
as needed.
• clair de lune is a retail store, and will not be selling on credit. clair de lune will
accept cash, checks and all major credit cards.
• Marketing and advertising will be no greater than 6% of sales.

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 clair de lune

7.1 Important Assumptions

Table: General Assumptions

General Assumptions
FY 2005 FY 2006 FY 2007 FY 2008 FY 2009
Plan Month 1 2 3 4 5
Current Interest Rate 9.00% 9.00% 9.00% 9.00% 9.00%
Long-term Interest
9.00% 9.00% 9.00% 9.00% 9.00%
Rate
Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00%
Other 0 0 0 0 0

7.2 Break-even Analysis

Table: Break-even Analysis

Break-even Analysis

Monthly Revenue Break-even $37,044

Assumptions:
Average Percent Variable Cost 50%
Estimated Monthly Fixed Cost $18,522

Break-even Analysis

$0

($5,000)

($10,000)

($15,000)

($20,000)

$0 $6,000 $12,000$18,000$24,000$30,000

Monthly break-even point

Break-even point = where line intersects with 0

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7.3 Projected Profit and Loss

Table: Profit and Loss

Pro Forma Profit and Loss

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009
Sales $439,558 $505,492 $591,469 $617,547 $691,653
Direct Costs of Goods $219,779 $252,746 $295,735 $308,774 $345,827
Other Costs of Goods $0 $0 $0 $0 $0
------------ ------------ ------------ ------------ ------------
Cost of Goods Sold $219,779 $252,746 $295,735 $308,774 $345,827

Gross Margin $219,779 $252,746 $295,735 $308,774 $345,827

Gross Margin % 50.00% 50.00% 50.00% 50.00% 50.00%

Expenses
Payroll $100,645 $117,896 $127,041 $133,393 $140,063
Marketing and Advertising $26,495 $30,000 $34,000 $36,000 $38,000
Depreciation $3,000 $3,000 $3,000 $3,000 $3,000
Rent $36,000 $36,000 $36,000 $36,000 $36,000
Packaging $2,400 $2,400 $2,400 $2,400 $2,400
Cell Phone $600 $600 $600 $600 $600
Travel $4,800 $2,400 $2,400 $2,400 $2,400
Utilities $7,200 $7,416 $7,638 $7,868 $8,104
Payroll Taxes $15,097 $17,684 $19,056 $20,009 $21,009
Merchandiser $1,800 $1,800 $1,800 $1,800 $1,800
Buying Consultant $9,600 $0 $0 $0 $0
Web Design $1,420 $1,000 $1,000 $1,000 $1,000
Insurance $2,496 $2,621 $2,752 $2,890 $3,034
Credit Card Fees $10,110 $11,626 $13,604 $14,204 $15,908
Accountant $600 $600 $600 $600 $600
------------ ------------ ------------ ------------ ------------
Total Operating Expenses $222,263 $235,044 $251,891 $262,164 $273,918

Profit Before Interest and

($2,484) $17,702 $43,844 $46,610 $71,908
Taxes
Interest Expense $13,024 $12,134 $11,126 $10,009 $8,787
Taxes Incurred $0 $1,670 $9,815 $10,980 $18,936

Net Profit ($15,507) $3,898 $22,902 $25,621 $44,185

Net Profit/Sales -3.53% 0.77% 3.87% 4.15% 6.39%

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 clair de lune

Profit Monthly

$4,000

$2,000

$0

($2,000)

($4,000)

($6,000)

($8,000)
Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug

Profit Yearly

$50,000

$40,000

$30,000

$20,000

$10,000

$0

($10,000)

($20,000)
FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

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 clair de lune

Gross Margin Monthly

$30,000

$25,000

$20,000

$15,000

$10,000

$5,000

$0
Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug

Gross Margin Yearly

$350,000

$300,000

$250,000

$200,000

$150,000

$100,000

$50,000

$0
FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

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7.4 Projected Cash Flow

Cash

$120,000

$100,000

$80,000

$60,000
Net Cash Flow
$40,000 Cash Balance

$20,000

$0

($20,000)
Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug

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 clair de lune

Table: Cash Flow

Pro Forma Cash Flow

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009
Cash Received

Cash from Operations

Cash Sales $439,558 $505,492 $591,469 $617,547 $691,653
Subtotal Cash from Operations $439,558 $505,492 $591,469 $617,547 $691,653

Additional Cash Received

Sales Tax, VAT, HST/GST
$33,077 $38,038 $44,508 $46,470 $52,047
Received
New Current Borrowing $0 $0 $0 $0 $0
New Other Liabilities (interest-
$0 $0 $0 $0 $0
free)
New Long-term Liabilities $0 $0 $0 $0 $0
Sales of Other Current Assets $0 $0 $0 $0 $0
Sales of Long-term Assets $0 $0 $0 $0 $0
New Investment Received $0 $0 $0 $0 $0
Subtotal Cash Received $472,635 $543,530 $635,977 $664,018 $743,700

Expenditures FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Expenditures from Operations

Cash spending $100,645 $117,896 $127,041 $133,393 $140,063
Bill Payments $239,738 $370,503 $435,581 $455,076 $501,810
Subtotal Spent on Operations $340,383 $488,399 $562,622 $588,469 $641,872

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid
$33,077 $38,038 $44,508 $46,470 $52,047
Out
Principal Repayment of Current
$0 $0 $0 $0 $0
Borrowing
Other Liabilities Principal
$0 $0 $0 $0 $0
Repayment
Long-term Liabilities Principal
$9,908 $10,540 $11,855 $12,968 $14,185
Repayment
Purchase Other Current Assets $0 $0 $0 $0 $0
Purchase Long-term Assets $0 $0 $0 $0 $0
Dividends $0 $0 $0 $0 $0
Subtotal Cash Spent $383,368 $536,977 $618,985 $647,908 $708,104

Net Cash Flow $89,267 $6,553 $16,992 $16,110 $35,596

Cash Balance $107,467 $114,020 $131,012 $147,122 $182,718

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 clair de lune

7.5 Projected Balance Sheet

Table: Balance Sheet

Pro Forma Balance Sheet

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009
Assets

Current Assets
Cash $107,467 $114,020 $131,012 $147,122 $182,718
Inventory $20,790 $23,909 $27,975 $29,208 $32,713
Other Current Assets $0 $0 $0 $0 $0
Total Current Assets $128,257 $137,928 $158,987 $176,330 $215,431

Long-term Assets
Long-term Assets $15,000 $15,000 $15,000 $15,000 $15,000
Accumulated Depreciation $3,000 $6,000 $9,000 $12,000 $15,000
Total Long-term Assets $12,000 $9,000 $6,000 $3,000 $0
Total Assets $140,257 $146,928 $164,987 $179,330 $215,431

Liabilities and Capital FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Current Liabilities
Accounts Payable $32,472 $45,786 $52,797 $54,488 $60,589
Current Borrowing $0 $0 $0 $0 $0
Other Current Liabilities $0 $0 $0 $0 $0
Subtotal Current
$32,472 $45,786 $52,797 $54,488 $60,589
Liabilities

Long-term Liabilities $140,092 $129,552 $117,697 $104,729 $90,544

Total Liabilities $172,564 $175,338 $170,494 $159,217 $151,133

Paid-in Capital $21,750 $21,750 $21,750 $21,750 $21,750

Retained Earnings ($38,550) ($54,057) ($50,160) ($27,258) ($1,637)
Earnings ($15,507) $3,898 $22,902 $25,621 $44,185
Total Capital ($32,307) ($28,410) ($5,508) $20,113 $64,298
Total Liabilities and
$140,257 $146,928 $164,987 $179,330 $215,431
Capital

Net Worth ($32,307) ($28,410) ($5,508) $20,113 $64,298

7.6 Business Ratios

The following table outlines some of the more important ratios from the Women's Accessory
and Specialty Store industry. The final column, Industry Profile, details specific ratios based on
the industry as it is classified by the Standard Industry Classification (SIC) code, 5632.

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 clair de lune

Table: Ratios

Ratio Analysis
Industry
FY 2005 FY 2006 FY 2007 FY 2008 FY 2009
Profile
Sales Growth 0.00% 15.00% 17.01% 4.41% 12.00% 2.95%

Percent of Total Assets

Other Current Assets 0.00% 0.00% 0.00% 0.00% 0.00% 16.69%
Total Current Assets 91.44% 93.87% 96.36% 98.33% 100.00% 86.54%
Long-term Assets 8.56% 6.13% 3.64% 1.67% 0.00% 13.46%
Total Assets 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Current Liabilities 23.15% 31.16% 32.00% 30.38% 28.12% 28.54%

Long-term Liabilities 99.88% 88.17% 71.34% 58.40% 42.03% 10.62%
Total Liabilities 123.03% 119.34% 103.34% 88.78% 70.15% 39.16%
Net Worth -23.03% -19.34% -3.34% 11.22% 29.85% 60.84%

Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Gross Margin 50.00% 50.00% 50.00% 50.00% 50.00% 44.19%
Selling, General &
53.53% 49.23% 46.13% 45.85% 43.61% 21.68%
Administrative Expenses
Advertising Expenses 0.00% 0.00% 0.00% 0.00% 0.00% 2.27%
Profit Before Interest and
-0.57% 3.50% 7.41% 7.55% 10.40% 3.56%
Taxes

Main Ratios
Current 3.95 3.01 3.01 3.24 3.56 2.90
Quick 3.31 2.49 2.48 2.70 3.02 0.53
Total Debt to Total Assets 123.03% 119.34% 103.34% 88.78% 70.15% 50.96%
Pre-tax Return on Net Worth 48.00% -19.60% -594.05% 181.98% 98.17% 9.06%
Pre-tax Return on Assets -11.06% 3.79% 19.83% 20.41% 29.30% 18.48%

Additional Ratios FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Net Profit Margin -3.53% 0.77% 3.87% 4.15% 6.39% n.a
Return on Equity 0.00% 0.00% 0.00% 127.38% 68.72% n.a

Activity Ratios
Accounts Payable Turnover 8.38 8.38 8.38 8.38 8.38 n.a
Total Asset Turnover 3.13 3.44 3.58 3.44 3.21 n.a

Debt Ratios
Debt to Net Worth 0.00 0.00 0.00 7.92 2.35 n.a
Current Liab. to Liab. 0.19 0.26 0.31 0.34 0.40 n.a

Liquidity Ratios
Net Working Capital $95,785 $92,142 $106,189 $121,842 $154,842 n.a
Interest Coverage -0.19 1.46 3.94 4.66 8.18 n.a

Additional Ratios
Assets to Sales 0.32 0.29 0.28 0.29 0.31 n.a
Current Debt/Total Assets 23% 31% 32% 30% 28% n.a
Acid Test 3.31 2.49 2.48 2.70 3.02 n.a
Sales/Net Worth 0.00 0.00 0.00 30.70 10.76 n.a
Dividend Payout 0.00 0.00 0.00 0.00 0.00 n.a

Page 32
 Appendix

Appendix Table: Sales Forecast

Sales Forecast
Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
Sales
Lingerie 0% $27,930 $36,400 $37,450 $54,964 $25,844 $36,960 $39,312 $38,220 $38,584 $34,944 $31,150 $37,800
Other 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Sales $27,930 $36,400 $37,450 $54,964 $25,844 $36,960 $39,312 $38,220 $38,584 $34,944 $31,150 $37,800

Direct Cost of Sales Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
Lingerie cost $13,965 $18,200 $18,725 $27,482 $12,922 $18,480 $19,656 $19,110 $19,292 $17,472 $15,575 $18,900
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Direct Cost of Sales $13,965 $18,200 $18,725 $27,482 $12,922 $18,480 $19,656 $19,110 $19,292 $17,472 $15,575 $18,900

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 Appendix

Appendix Table: Personnel

Personnel Plan
Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
Terry Levine--CEO 0% $2,292 $4,583 $4,583 $4,583 $4,583 $4,583 $4,583 $4,583 $4,583 $4,583 $4,583 $4,583
Manager 0% $3,010 $2,520 $2,520 $3,010 $2,520 $2,520 $2,520 $2,520 $2,520 $2,520 $2,520 $2,520
Salespeople 0% $720 $1,440 $1,440 $1,600 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440
Total People 3 4 4 4 4 4 4 4 4 4 4 4

Total Payroll $6,022 $8,543 $8,543 $9,193 $8,543 $8,543 $8,543 $8,543 $8,543 $8,543 $8,543 $8,543

Page 34
 Appendix

Appendix Table: General Assumptions

General Assumptions
Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
Plan Month 1 2 3 4 5 6 7 8 9 10 11 12
Current Interest Rate 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00%
Long-term Interest
9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00%
Rate
Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%
Other 0 0 0 0 0 0 0 0 0 0 0 0

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 Appendix

Appendix Table: Profit and Loss

Pro Forma Profit and Loss

Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
Sales $27,930 $36,400 $37,450 $54,964 $25,844 $36,960 $39,312 $38,220 $38,584 $34,944 $31,150 $37,800
Direct Costs of Goods $13,965 $18,200 $18,725 $27,482 $12,922 $18,480 $19,656 $19,110 $19,292 $17,472 $15,575 $18,900
Other Costs of Goods $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Cost of Goods Sold $13,965 $18,200 $18,725 $27,482 $12,922 $18,480 $19,656 $19,110 $19,292 $17,472 $15,575 $18,900

Gross Margin $13,965 $18,200 $18,725 $27,482 $12,922 $18,480 $19,656 $19,110 $19,292 $17,472 $15,575 $18,900
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 $6,022 $8,543 $8,543 $9,193 $8,543 $8,543 $8,543 $8,543 $8,543 $8,543 $8,543 $8,543
Marketing and Advertising $3,025 $2,025 $2,025 $5,000 $2,315 $2,600 $1,735 $580 $1,735 $2,850 $290 $2,315
Depreciation $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250
Rent $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Packaging $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200
Cell Phone $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50
Travel $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400
Utilities $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600
Payroll Taxes 15% $903 $1,281 $1,281 $1,379 $1,281 $1,281 $1,281 $1,281 $1,281 $1,281 $1,281 $1,281
Merchandiser $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150
Buying Consultant $800 $800 $800 $800 $800 $800 $800 $800 $800 $800 $800 $800
Web Design $0 $0 $0 $0 $1,000 $60 $60 $60 $60 $60 $60 $60
Insurance $208 $208 $208 $208 $208 $208 $208 $208 $208 $208 $208 $208
Credit Card Fees $642 $837 $861 $1,264 $594 $850 $904 $879 $887 $804 $716 $869
Accountant $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Total Operating Expenses $16,301 $18,395 $18,419 $22,544 $19,442 $19,043 $18,232 $17,052 $18,215 $19,246 $16,599 $18,777

Profit Before Interest and

($2,336) ($195) $306 $4,938 ($6,520) ($563) $1,424 $2,058 $1,077 ($1,774) ($1,024) $123
Taxes
Interest Expense $1,119 $1,113 $1,107 $1,101 $1,095 $1,089 $1,082 $1,076 $1,070 $1,064 $1,057 $1,051
Taxes Incurred $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Net Profit ($3,455) ($1,308) ($801) $3,837 ($7,615) ($1,651) $342 $982 $7 ($2,838) ($2,081) ($928)
Net Profit/Sales -12.37% -3.59% -2.14% 6.98% -29.46% -4.47% 0.87% 2.57% 0.02% -8.12% -6.68% -2.45%

Page 36
 Appendix

Appendix Table: Cash Flow

Pro Forma Cash Flow

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

Cash from Operations

Cash Sales $27,930 $36,400 $37,450 $54,964 $25,844 $36,960 $39,312 $38,220 $38,584 $34,944 $31,150 $37,800
Subtotal Cash from Operations $27,930 $36,400 $37,450 $54,964 $25,844 $36,960 $39,312 $38,220 $38,584 $34,944 $31,150 $37,800

Additional Cash Received

Sales Tax, VAT, HST/GST
7.53% $2,102 $2,739 $2,818 $4,136 $1,945 $2,781 $2,958 $2,876 $2,903 $2,630 $2,344 $2,844
Received
New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Other Liabilities (interest-
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
free)
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 $30,032 $39,139 $40,268 $59,100 $27,789 $39,741 $42,270 $41,096 $41,487 $37,574 $33,494 $40,644

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

Expenditures from Operations

Cash spending $6,022 $8,543 $8,543 $9,193 $8,543 $8,543 $8,543 $8,543 $8,543 $8,543 $8,543 $8,543
Bill Payments $372 $11,133 $10,715 $11,135 $22,436 $12,447 $32,792 $31,350 $27,915 $29,884 $26,832 $22,726
Subtotal Spent on Operations $6,394 $19,676 $19,258 $20,328 $30,979 $20,990 $41,335 $39,893 $36,458 $38,427 $35,375 $31,269

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid
$2,102 $2,739 $2,818 $4,136 $1,945 $2,781 $2,958 $2,876 $2,903 $2,630 $2,344 $2,844
Out
Principal Repayment of Current
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Borrowing
Other Liabilities Principal
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Repayment
Long-term Liabilities Principal
$792 $798 $804 $810 $816 $822 $829 $835 $841 $847 $854 $860
Repayment
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 $9,287 $23,213 $22,880 $25,274 $33,739 $24,593 $45,123 $43,604 $40,203 $41,904 $38,573 $34,973

Net Cash Flow $20,744 $15,926 $17,388 $33,826 ($5,951) $15,148 ($2,852) ($2,508) $1,285 ($4,330) ($5,079) $5,671
Cash Balance $38,944 $54,870 $72,258 $106,084 $100,133 $115,281 $112,429 $109,921 $111,205 $106,875 $101,796 $107,467

Page 37
 Appendix

Appendix Table: Balance Sheet

Pro Forma Balance Sheet

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

Current Assets
Cash $18,200 $38,944 $54,870 $72,258 $106,084 $100,133 $115,281 $112,429 $109,921 $111,205 $106,875 $101,796 $107,467
Inventory $100,000 $86,035 $67,835 $49,110 $30,230 $17,308 $20,328 $21,622 $21,021 $21,221 $19,219 $17,133 $20,790
Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Current Assets $118,200 $124,979 $122,705 $121,368 $136,314 $117,441 $135,609 $134,050 $130,942 $132,427 $126,095 $118,929 $128,257

Long-term Assets
Long-term Assets $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000
Accumulated Depreciation $0 $250 $500 $750 $1,000 $1,250 $1,500 $1,750 $2,000 $2,250 $2,500 $2,750 $3,000
Total Long-term Assets $15,000 $14,750 $14,500 $14,250 $14,000 $13,750 $13,500 $13,250 $13,000 $12,750 $12,500 $12,250 $12,000
Total Assets $133,200 $139,729 $137,205 $135,618 $150,314 $131,191 $149,109 $147,300 $143,942 $145,177 $138,595 $131,179 $140,257

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

Current Liabilities
Accounts Payable $0 $10,776 $10,358 $10,375 $22,044 $11,352 $31,743 $30,422 $26,916 $28,985 $26,087 $21,606 $32,472
Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Current Liabilities $0 $10,776 $10,358 $10,375 $22,044 $11,352 $31,743 $30,422 $26,916 $28,985 $26,087 $21,606 $32,472

Long-term Liabilities $150,000 $149,208 $148,410 $147,606 $146,796 $145,980 $145,158 $144,329 $143,494 $142,653 $141,806 $140,952 $140,092
Total Liabilities $150,000 $159,984 $158,768 $157,981 $168,840 $157,332 $176,901 $174,751 $170,410 $171,638 $167,893 $162,558 $172,564

Paid-in Capital $21,750 $21,750 $21,750 $21,750 $21,750 $21,750 $21,750 $21,750 $21,750 $21,750 $21,750 $21,750 $21,750
Retained Earnings ($38,550) ($38,550) ($38,550) ($38,550) ($38,550) ($38,550) ($38,550) ($38,550) ($38,550) ($38,550) ($38,550) ($38,550) ($38,550)
Earnings $0 ($3,455) ($4,762) ($5,563) ($1,726) ($9,341) ($10,992) ($10,650) ($9,668) ($9,661) ($12,499) ($14,580) ($15,507)
Total Capital ($16,800) ($20,255) ($21,562) ($22,363) ($18,526) ($26,141) ($27,792) ($27,450) ($26,468) ($26,461) ($29,299) ($31,380) ($32,307)
Total Liabilities and Capital $133,200 $139,729 $137,205 $135,618 $150,314 $131,191 $149,109 $147,300 $143,942 $145,177 $138,595 $131,179 $140,257

Net Worth ($16,800) ($20,255) ($21,562) ($22,363) ($18,526) ($26,141) ($27,792) ($27,450) ($26,468) ($26,461) ($29,299) ($31,380) ($32,307)

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