B. Clodfelter ǀ COOResults Highlights

Proprietary information omitted to protect confidentiality

Existing Business Situation

Operational/Finance Issues

Inefficient operations with limited quality control

Inaccurate financial reporting system structure

Created a new category with innovative new products

Significant revenue growth

Increasing competition but still in leadership position

Problems in Year 4

Inventory mismanagement led to significant cash flow problems

Unable to obtain raw materials. 4+ month backorders

Great 1st 3 Years

Order cancellations, customer loss, brand/reputation erosion

Primary Objectives

Commence shipments that had been suspended for 3 months+ Cash flow problems due to inventory mismanagement

Repair brand image and customer relationships

Develop new business Expand product line Expand target market to new consumer segments Obtain new distribution in large, national retailers

Primary Strategic Issue

Strayed from original, successful product area into unrelated items, Did not leverage core competencies, China sourcing: lower margins, high minimum orders, Extreme imbalance between sales & inventory $

Core products offered potential in much larger segments

, Scrapbook market: $2 - $2.5 Billion, Crafting market: $30 - $35 Billion, Home Décor market: $50-$90 BillionSources: Various public reports

RESULTS

Results ǀ New Products

, New formulations to leverage competencies

, Peggable multi-packs, Drive consumption, Encourage trial, Appeal to targeted, new mass retail customers

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NEW SEGMENTS & MASS RETAILRS

Entered broader craft & home decorating segments

Expand Target Market

Gained distribution in the two largest national craft & home decorating stores

New Mass Retailers

REVENUE RESULTS

6/MonthGrowth

+37%⃰, New items & markets, New large customers, Improved marketing

HOW:

* Actual sales figured omitted due to confidentiality

New Biz

Total 6/Month Growth

42%

INVENTORY RESULTS

InventoryLevels

+43%⃰, Rationalized assortment, Eliminated slow movers, Improved process/systems

HOW:

• Actual inventory figured omitted due to confidentiality

ORDER TURNAROUND RESULTS

, Production improvements, Better inventory management, Improved process/systems

HOW:8 Days

Before

3 Days

After

Changes to Drive Workforce Accountability & Performance

Performance management system with regular reviews

Position descriptions with clear accountabilities & expectations for all positions

KPIs and specific objectives for all positions

Incentives for above-goal company performance