THE HEALTHSTORE FOUNDATION®

PROPOSAL April 2008

Child and Family Wellness Shops A Public Health Franchise Founded by The HealthStore Foundation®

PROPOSAL

$1,000,000

FOR

CONTINUED DEVELOPMENT OF CFWSHOPS™

FRANCHISE NETWORKS IN KENYA AND RWANDA

AND TO

INCREASE CAPACITY FOR EXPANSION INTO

MORE COUNTRIES IN AFRICA

APRIL 2008

THE HEALTHSTORE FOUNDATION® A U S 5 0 1 ( c ) ( 3 ) n o n p r o f i t c o r p o r a t i o n

The HealthStore Foundation® is pleased to announce the international

expansion of its CFW brand (“Child and Family Wellness”).

Serving nearly 2,000,000 people since inception The HealthStore Foundation’s

CFWshops network of 67 medical clinics and drug shops has become a trusted

brand in rural Kenya. We are presently launching a second network in Rwanda.

The HealthStore Foundation® seeks $1,000,000 to continue its work through the

end of 2008. This money will be used to continue developing the CFW networks in

Kenya and Rwanda, as well as to develop the organizational capacity we’ll need to

expand into 14 countries by the end of 2012.

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EXECUTIVE SUMMARY THE HEALTHSTORE FOUNDATION®

In the developing world, thirty-thousand children under age five die each day—more

than 10,000,000 per year—because they don’t have access to high quality, affordable medical care when and where they need it.1 More than 70% of these deaths are caused by six diseases2; 44% are caused by malaria, diarrheal diseases, and acute respiratory infections.3 Many of these can be prevented or treated for less than the price of a Starbucks latte. But, too often, affordable drugs and services are not available when and where they are needed. And often, where they are available, services and drugs fall below necessary standards of effectiveness (e.g., a large percentage of drugs sold in many African countries are counterfeit). Simply put, millions suffer and die needlessly each year because they lack access to care or, where it’s available, it doesn’t work because prevailing standards fall far below those necessary to effective prevention and treatment.

The HealthStore Foundation® (“HSF”) was organized to apply the lessons learned from the franchise industry to this problem: when consistent standards are maintained it, becomes possible to mass distribute goods and services through large retail networks so that they are accessible and affordable to large populations. From SUBWAY, to ExxonMobil, to Marriott Hotels, the franchise business model has proven to be the most effective way to mass distribute goods and services where standards matter. In delivering healthcare to the world’s poor, maintaining standards is often the difference between life and death. Having accumulated nearly a decade of experience developing and operating a healthcare franchise network in Kenya (with 65 outlets serving approximately 500,000 people in 2007), HSF is preparing to expand the CFW™ branded franchise system to more countries in the developing world. Starting with its second franchise network targeted for launch in Rwanda in May 2008, HSF aims to be operating 14 networks at various stages of development in Sub-Saharan Africa by the end of 2012.

HSF has gathered some of the world’s strongest leaders in relevant fields to take the organization forward. In July, 2008, Gunther Faber, currently V.P. for Africa of GlaxoSmithKline, the world’s second largest pharmaceutical company, will become HSF’s CEO bringing to us his 30 years of experience developing and managing health related businesses in Africa. Supporting Gunther will be Scott Hillstrom, founder and present CEO of HSF, who will continue as HSF’s Chairman of a Board comprised of franchise industry leaders (including two past chairmen and the current chairman of the International Franchise Association), one of the world’s top franchise consultants, and two international health experts with decades of experience in Africa. In addition, other global leaders in their fields continue to advise us.

Meanwhile, several partners and collaborators have joined the effort including ExxonMobil, Procter & Gamble, the Rockefeller Foundation, the United States Agency for International Development, the International Finance Corporation, the Acumen Fund, the Oswald Family Foundation, Chiron Corporation, Rotary, the International Franchise Association, the David Weekley Family Foundation, and many other institutional and individual donors. Like us, they believe that the franchise model has a key role to play in the global battle against needless suffering and death.

1 2005 UN Millennium Development Goals Report, p. 18. 2 WHO World Health Report 2005, p. 106. 32005 UN Millennium Development Goals Report, p. 19.

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Franchising health care networks creates opportunities for individuals to own their own businesses and to create jobs for others, especially women. Preventing and treating infectious diseases through franchised networks improves conditions for economic development in a community. And by treating many people in small franchise outlets, fewer patients burden higher level health care providers so they have more capacity available to treat more difficult cases—existing health care infrastructure can better serve communities without requiring additional investment.

To position itself for dramatic growth over the next five years, HSF will be adding significant capacity to its organizational capabilities in 2008. With the addition of our first full-time CEO HSF will

• Complete a five year strategic plan • Increasingly avail itself of the generous assistance of HSF’s board members and advisors

to continuously improve network and outlet performance in Kenya and Rwanda • Implement three innovations to the HSF franchise model

o A health insurance system that will be packed into each franchise healthcare network

o A wireless electronic data system for supply chain and patient management o Configuring shipping containers into portable medical clinics

• Establish a presence with the regional political/economic/trade blocks in Africa where HSF representatives will be positioned to advise HSF’s franchise development and operations in new countries within these blocks

• Establish a development department to raise the money and other resources necessary to HSF’s present and future operations

• Continue to grow the system to 14 networks at various stages of development by 2012 while establishing a highly respected global brand

CFWshops (“CFW”) has received recognition from several sources as a ground-breaking

innovation for developing countries.4 In May of 2007, CFW was featured in an Emmy Award winning documentary aired on the Public Broadcasting System’s NOW program that can be seen at www.healthstore.org (click the PBS link). We hope you will take a few minutes to view this broadcast—it will give you a ringside seat to see HSF’s model at work in Kenya.

For more information, please contact: Greg Fields Director of Development

The HealthStore Foundation® +1-703-489-2308 fields@philanthropydirections.com

4Recent articles featuring CFW and HSF include: “Franchise Network Up’s Healthcare in Slums,” Business Daily of Kenya, June 5, 2007 “Into Africa,” Franchise Times , May 2007 “Fast 50,” Fast Company Magazine, March 2007 “What Works in Africa,” American Enterprise Institute, January 2007 “Disruptive Innovation for Social Change,” Harvard Business Review, December 1, 2006 See Exhibit D for additional articles and awards.

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TABLE OF CONTENTS

I. World Health Crisis

II. The Three Point Test

III. Creating Business Opportunities and Jobs; Improving the Economy; Enhancing the Capacity of Other Healthcare Infrastructure

IV. CFW in Kenya

V. CFW Franchise System Innovations

VI. Board of Directors and Management Team

VII. Capacity Building

VIII. HSF’s Expansion Plan

IX. The Big Picture

X. Financial Requirements

Exhibit A—Board of Directors

Exhibit B—Senior Staff

Exhibit C—Operation Statistics for CFWshops in Kenya

Exhibit D—Awards and Recognition

Exhibit E—Detailed Description of Third Party Payment Innovation

Exhibit F—Detailed Description of Data Management Innovation

Exhibit G—Detailed Description of Clinic-in-a-Box Innovation

Exhibit H—System Improvements

Exhibit I—New Country Development Sequence

Exhibit J—Rwanda Roll-Out Budget

Exhibit K—The HealthStore Foundation’s Funding Requirements

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The HealthStore Foundation®

The HealthStore Foundation® (“HSF”) is a U.S. tax-exempt, nonprofit organization

founded in 1997. HSF is run by the Executive Committee of its board of directors including

some of the world’s most seasoned professionals in global health and international franchising.

Its U.S. staff includes a volunteer CEO, a part-time CFO, a full- time Vice President, a part-time

Director of Development, and a half-time administrator.1 A full- time CEO drawn from senior

management of one of the world’s leading pharmaceutical companies will assume management

of HSF in July of 2008.

I. World Health Crisis—Millions Suffer and Die Needlessly Due to Market Failure

Thousands of brilliant, well-educated people, with the best intentions, spend whole

careers sincerely devoted to relieving needless suffering and death and contributing to the

economic development of poor nations. Government s and multi- lateral policymakers craft plans

to reduce poverty and disease. Ministries of health struggle mightily to deliver effective health

care services throughout their nations. NGOs (non-governmental organizations) delivering

health services devise methods and strategies for implementation of programs designed to reach

large populations of the world’s poorest people. Large numbers of health workers spend

themselves faithfully doing all that they can for the people in their communities. And billions of

dollars are invested each year funding efforts to reduce morbidity and mortality in developing

countries, particularly among children. Despite some progress in some areas, disease continues

to run rampant. Tens of thousands of children continue to die each day of diseases and other

health problems that are easily preventable and/or treatable.

HSF believes that no amount of money expended in the usual ways can substantially

reduce the suffering and death caused by the world’s worst diseases—malaria, dysentery,

respiratory infections, TB, and AIDS.2 The solution requires a distribution model that creates

widespread access to healthcare, care that meets standards necessary to effective prevention and

treatment. HSF’s mission is to develop and implement large scale, long term strategies making

1 See Exhibit A listing board of directors; See Exhibit B for bios of senior staff. 2 Except for TB and AIDS, all are technically preventable and treatable with low-cost generic drugs. TB and AIDS are also preventable and treatable, although the costs are much higher and the treatment process more prolonged and complex.

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high quality, affordable healthcare accessible to mass populations in developing countries. Since

it’s a distribution problem, HSF uses the commercial franchise distribution model to solve it, the

same model that has been so effectively employed to distribute countless other products and

services where standards matter, from sandwiches to hotels.

II. The Three-Point Test—Standards; Geometric Scalability; Economies of Scale

There are no panaceas; there are only better and worse ways to deliver healthcare to the

world’s poor. Progress consists not in doing what is perfect, but in doing what is better. Three

things are necessary to any large-scale healthcare intervention if it is to reach large populations

over large areas over long periods of time. The HSF “Three-Point Test” should be applied to any

program to determine whether it meets three main objectives:

• It must maintain both clinical and business standards so that healthcare is effective and

the outlets providing it can be easily replicated

• It must be geometrically scalable so that it can rapidly grow to large numbers of outlets

• It must achieve economies of scale so that the larger the network grows, the lower the

cost per unit of drugs and services provided.

A. Top-Down Bureaucracies Do Not Pass the Three-Point Test

Most efforts to distribute essential drugs and basic healthcare services in developing

countries involve networks of hundreds or thousands of points of access (e.g., dispensaries,

clinics, hospitals) spread across large geographical areas, even whole countries. These networks

are generally operated by top-down, command-and-control bureaucracies that cannot maintain

standards, are not geometrically scalable, and do not generate economies of scale.

Notwithstanding best intentions and the investments of billions of dollars over the decades, no

system presently exists in the developing world that passes the Three Point Test. Standards fail

so patients often don’t get well and outlets cannot be easily replicated. Because outlets are not

standardized, networks do not scale geometrically. And because networks don’t scale well,

economies of scale are not achieved. Healthcare in the developing world today is dominated by

inefficient networks delivering sub-standard care.

Maintenance of standards requires reliable supply chains for drugs and supplies; the

exclusion of counterfeit and substandard drugs and supplies; and adequate medical equipment,

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training, and standards compliance programs. Too often, however, health workers who staff

outlets are not supported by reliable supply chains (e.g., most government-run hospitals and

clinics are out of drugs much of the time; a large percentage of drugs are counterfeit). Also, they

lack medical equipment, and are generally overwhelmed by more patient needs than they can

meet. And for this, health workers are paid so poorly that they cannot keep their children in

school. Many health workers become demoralized and lack motivation or incentives to follow

better practices. In addition, many doctors and nurses leave the developing world each year in

search of better paid jobs and career opportunities; this adds further strain to an already

precarious situation. To make matters worse, administrative systems are weak or non-existent,

business practices are irregular, and few people running healthcare facilities possess even basic

management skills. The lack of sound business and clinical standards makes large scale

replication of outlets impossible. Efforts to scale typically result in more outlets with poor

standards; sometimes standards fall so far that outlets are left vacant with no staff at all. Since

outlets cannot be easily replicated, economies of scale are not achieved and costs rise as

bureaucracies strive to cope by the addition of more centralized overhead. The end result is poor

access at the community level, low quality, and high costs.

Nevertheless, top-down, command-and-control organizations make plans and implement

programs as if standards would be maintained, as if networks would scale to large numbers while

maintaining standards, and as if economies of scale would be achieved keeping costs low enough

so that healthcare could be provided to the masses. In real life, however, it doesn’t happen.

HSF believes a new paradigm is needed—one that actually can make high-quality, basic

healthcare and essential drugs accessible to a majority of the world’s poor.

B. Business-Format Franchising—A Better Way to Deliver Healthcare

The franchise business model is designed to pass the Three-Point Test. In a business-

format franchise system, the franchisor provides franchisees with a complete system for doing

business under the franchisor’s brand—HSF’s brand is “CFW” (Child and Family Wellness) and

is used in connection with very small clinics and drug shops owned and operated by franchisee

nurses or community health workers. This system includes easy-to-follow standards, policies,

procedures, and forms that enable franchisees with no business experience to properly operate

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their healthcare businesses.3 Each franchisee is supported by the CFW franchisor’s supply

chain, training, compliance program, financing, and other support resources. Franchisees sell

products and services and earn a living from the profit that they earn . . . but only if they comply

with franchise standards. If they don’t comply, the franchisor may revoke the franchise and

terminate its support, putting the franchisee out of business. This gives franchisees a strong

incentive to comply with standards. When they do, outlets may be easily replicated and, because

they can be replicated, a network of them can scale geometrically. As a network scales,

economies of scale are achieved; the more high-quality health care delivered, the lower the cost

of delivering it to each patient. So the business-format franchise model meets the requirements

of the Three-Point Test and is, therefore, a new and better paradigm for the distribution of

essential drugs and basic healthcare services to the world’s poor.

III. Creating Business Opportunities and Jobs; Improving the Economy; Enhancing the Capacity of Other Healthcare Infrastructure

Franchising is one of the dominant forms of small business ownership worldwide. Used

by over 120 different industries today, franchising provides assurance to consumers that the

products and services they receive are cons istently delivered to the high quality standards

established by the franchisor. Franchising also creates an opportunity for individuals to own

their own business under a recognized brand name and to create wealth for themselves and their

families. The franchisor provides the franchisee with a business system, standards for

performance and operations, training and continual support. Each franchisee creates new jobs in

the community and, in turn, many of these new employees over time become candidates to open

their own branded franchise. The business-format franchising model has been successfully

applied to thousands of businesses from oil, to hotels, to food. Just as the commercial franchise

business model has succeeded in achieving global distribution of other products and services to

billions around the world, it holds promise for the distribution of essential drugs and basic health

services to the world’s two billion poorest people.

3 Step-by-step instructions are provided for things like opening the store each day, hiring and supervising employees, managing inventory, providing customer service, marketing the store to surrounding communities, etc.

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Under the CFW business-format franchise system, each franchisee makes a significant

investment and becomes the owner/operator of his or her own healthcare business. Like business

owners everywhere, franchisees derive an income from the business and take great pride in the

investment they have made of their money and energy. Some franchisees, as their businesses

grow and operating demands increase, hire employees who also earn a living wage working for

the CFW franchise that employs them. Some who succeed in their first outlet, go on to open a

second each time creating more jobs. Often, franchisees become leaders in their communities as

they deliver what is often the only high-quality, affordable medicine in their communities. Some

become so motivated to serve their communities that they stay open 7 days a week even serving

patients who can’t pay for the care they need.4

In addition to creating business opportunities and jobs, healthcare franchise networks

improve economic conditions for the whole community. Research shows that infectious disease

significantly hinders economic productivity in sub-Saharan Africa. By preventing and

effectively treating easy-to-treat diseases like malaria and respiratory infections, the people, and

the community as a whole, are more productive. This means more income to the people, more

school fees to pay for education, and more resources generally available to serve all the needs of

the community. The positive economic impact of a healthcare franchise network is further

enhanced by the fact that, by treating easy-to-treat children for the most common diseases, those

children do not go on to consume the limited services of more comprehensive healthcare

providers (e.g., government dispensaries and hospitals). This has the effect of increasing the

capacity of other healthcare providers to care for patients not so easy to treat. This, too, has the

run-on effect of improving the local economy.

IV. CFW in Kenya —A Business-Format Franchise Solution

HSF founded the CFW business-format franchise network in Kenya in 1999. Thanks to

the experience obtained, good and bad, in the operation of CFW in Kenya, HSF has learned a

great deal about what works and, equally important, what does not. As of April 2008, the

4 This problem of patients not able to afford treatment will be addressed by the implementation of the third-party payment system discussed below.

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network was comprised of 67 medical clinics and drug shops and served approximately 500,000

customers and patients5 in 2007. Please see Exhibit C for CFW statistics from Kenya.

1. Medical Clinics. Two thirds of the outlets are medical clinics owned and operated by

nurses with at least 10 years of post- licensing work experience. Because of their years of

education and experience, nurses are allowed to prescribe and dispense a much wider

range of drugs, as well as diagnose and counsel patients more fully than community

health workers (CHWs).

2. Drug Shops. One third of the outlets are drug stores owned and operated by CHWs.

CHWs do very basic diagnosis, treatment, and prevention as allowed by law, referring

sicker patients to other health providers. They stock over-the-counter drugs such as pain

killers, antacids, cough syrups, oral re-hydration solutions, and skin ointments for fungal

infections.

CFW clinics and shops target the short list of the most common diseases that cause over

70% of illness and death in sub-Saharan Africa (e.g., respiratory infections, malaria, dysentery)

in addition to treating a range of other health care needs. The outlets concentrate on prevention,

detection, and treatment of diseases using standardized procedures (e.g., diagnostic and treatment

guidelines). While the model undergoes continuous change and improvement, most current

CFW franchisees have invested up to $300 of their own funds to go into business.6 Our local

franchisor in Kenya has loaned them up to $1,500 to cover the balance of start-up costs. The

loans are generally repaid from franchisee profits although, in many cases, some or all of loaned

amounts proved to be more than they could repay and were forgiven. 7 Other start-up costs are

paid by HSF from donated funds.

HSF continues to study unit economics and healthcare financing strategies with an eye to

the closest possible compliance with commercial franchise methods and practices.8 Most CFW

outlets provide a living income to the nurses and community health workers who own them. In

2006, of the outlets that were open all year, 92% of CFW clinics and 73% of CFW drug shops

5 CFW serves patients who require medical diagnosis and treatment as well as customers for over-the-counter drugs and other products. 6 The average income in rural Kenya is $300-$400 per year. 7 Among the many lessons learned is the close relationship between the management of capital loans to franchisees and the management of inventory financing. HSF is presently working to improve access to inventories at the outlets to generate more cash flow to franchisees while improving access to products for patients and customers. We continue to learn from our experience the amount franchisees can invest in their own capital and what level of debt can be serviced from profits. We expect to see variation in these figures. 8See Third Party Payor information below.

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were profitable.9 Some franchisees have been particularly successful and have opened additional

outlets. The attrition rate for failed outlets is approximately 15% and, in most cases, HSF’s

mission continues in a failed location by arranging for new owners to take over from failed ones.

In addition to the treatment and care provided at CFW outlets, franchisees also reach out

to the community through events (e.g., malaria prevention and sale of bed nets), school health

screenings, and participation at community gatherings (e.g., church, town meetings, etc.). With

support from CFW personnel, franchisees increase the reach of health services, build trust in the

community, and firmly establish CFW outlets and the brand as fair and reliable healthcare

providers.10

V. CFW Franchise System Innovations

HSF has gained enough experience struggling with the challenges presented in Africa to

have identified three potential innovations that it is considering for incorporation into its

franchise business system. These include:

• A third-party payment system that will ensure that patients have access to care

and that will better incentivize the franchisor and franchisees to serve franchisees

and their patients well by removing the burden of the subsidy they now often pay

to serve their patients and customers.

• Implementation of an electronic data management system that can be used over

the cell phone networks now accessible in developing countries, even in many

rural areas

• Using shipping containers configured as medical clinics to better standardize the

medical outlet format while having better control over and mobility of outlet

infrastructure

These innovations will bring revolutionary improvements of the functionality and capabilities of

CFW franchise medical networks. HSF hopes to adapt and implement them in Kenya, Rwanda,

and other deve loping countries as the CFW franchise system expands internationally. Please

review the fuller details on each of these three innovations in Exhibits E, F and G.

9This statistic reflects the 46 CFW outlets that were open all year in 2006. 10 Please see Exhibit C for CFW statistics from Kenya.

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VI. Board of Directors and Management Team

HSF has on its team the top-flight business, franchise, and medical leaders that it requires

to achieve its long range mission. Commencing in July of 2008 HSF will have its first full-time

CEO. Dr. Gunther Faber comes to HSF from his position as Vice President for Africa of

GlaxoSmithKline, the world’s second largest pharmaceutical company. Having run many

businesses involved in African health care these past 29 years, many involving the distribution of

essential drugs (our most important function), Gunther could not be better qualified to lead HSF

through its strategic planning and expansion. His in-depth experience using effective

management practices to develop and operate commercial organizations in the developing world,

combined with his access to existing private sector expertise in Africa, will improve the

performance of CFW franchise health networks throughout Africa. Importantly, Gunther’s depth

of experience in successful Public Private Partnerships will be critical to building bridges to the

public sector as we work together to meet health needs on a national level in the countries where

we will operate.

HSF also has some of the world’s leading franchise entrepreneurs actively working on its

projects. The Executive Committee of HSF’s Board of Directors includes:

• Sid Feltenstein who led numerous large franchise businesses for decades including

Long John Silver’s and A&W Restaurants. Sid is also a past Chairman of the

International Franchise Association (IFA).

• Jim Amos who led Mail Boxes, Etc. to become a global franchise business now

known as UPS Stores. Jim also is a past Chairman of the IFA.

• Steve Greenbaum, the current chairman of the IFA, has built the PostNet franchise

system into a global network with approximately 1,000 outlets worldwide, including

more than 200 in Southern Africa.

• Michael Seid is among the world’s leading franchise consultants and wrote

Franchising for Dummies along with the late Dave Thomas, founder of Wendy’s.

In addition, other franchise industry leaders have been instrumental advisors to HSF. For

example, Fred DeLuca has advised HSF for more than 3 years and developed the basic elements

of our franchise system plan in Rwanda. As the founder and CEO of SUBWAY, with 30,000

outlets worldwide, Fred’s guidance has been extremely valuable. And Tom MacIntosh, a U.S.

franchise attorney for more than 30 years, has served as a key advisor to HSF for more than six

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years. Tom was the person who introduced us into the franchise industry. Thanks to all of these

franchise leaders, HSF could not be better equipped to surmount the franchise business

challenges that lay ahead.

On the health side, Dr. Denis Broun, a leading medical specialist in tropical medicine,

with more than 30 years of developing world experience from the policy to the practice level, has

guided HSF’s medical aspects since nearly the beginning. And, Dr. Eva Ombaka, a Ph.D. in

pharmaceutical microbiology, is the co-founder of HSF with decades of experience working on

the ground throughout Africa to improve access to essential drugs for the poor. Thanks to these

deeply committed medical leaders, HSF is sure to establish and maintain high medical

standards—the most important thing we strive to do.

Background information on management and the Board of Directors can be found in

Exhibits A and B.

VII. Capacity Building—Positioning HSF for International Expansion of the CFW Brand

Presently, led by a volunteer CEO, HSF employs only two full-time equivalent

employees.11 As our new CEO takes over to execute HSF’s long range plan, it will be necessary

to increase capacity to execute that plan throughout the organization. Following are some of the

things HSF’s new CEO will pursue.

• Implement ing a long-range strategic planning process to support HSF’s development and

expansion goals (to have 14 networks in various stages of development by the end of

2012).

• Building HSF’s capacity to execute its strategic plan by the recruitment of appropriate

human resources.

• Developing a corporate culture that engages HSF employees’ sense of pride and

ownership in the mission and vision of the organization.

• Establishing a presence with the regional political/economic/trade blocks in Africa where

HSF representatives will be positioned to advise HSF’s franchise development and

operations in new countries within these blocks.

11 Current paid staff include FT VP, ½ T Development Director, ½ T Administrative Manager, and a CFO as needed. See Exhibit B for descriptions of present senior staff members.

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• Continuing to avail itself of the generous assistance of HSF’s board members and

advisors to continuously improve network and outlet performance putting into practice

the proven business methods of the franchise industry while maintaining high medical

quality standards.

• Establishing an adequate development department to generate money and other resources

necessary to HSF’s present and future operations.

• Building CFW into a highly respected and recognized brand in the African health care

arena.

• Pursuing the expansion plan outlined below

VIII. HSF’s Expansion Plan—Expanding the CFW Brand Internationally

HSF began more than 10 years ago to learn how to apply the commercial franchise

business model, which has been so successful distributing other products and services around the

world, to the distribution of basic health services and essential drugs to the world’s poor. We

have accumulated significant and valuable know-how from our successes, and even more from

our failures. Significant improvements are presently underway in the franchise system we are

using in Kenya (see Exhibit H). These improvements will help to ensure that CFW in Kenya

achieves its long-term goals. Likewise, they will guide the adoption of the CFW franchise

system for use in other countries. In the five years from 2008 through 2012, HSF will extend its

brand to more countries in the developing world by applying its accumulated know-how and

tools to meet the unique needs and conditions of each country.

HSF has deferred an in-depth strategic planning process pending the arrival of its new

CEO who will lead that process. So the many issues to be considered and decided to arrive at a

strategic plan and budget will be addressed later this year after the new CEO becomes

established in his new position. Following is an overview of where the strategic planning

process will begin.

A. Country Selection Criteria

Throughout the developing world, millions of poor people die each year, and hundreds of

millions suffer needlessly, because they lack access to high-quality essential drugs and basic

health services. The business-format franchise model can serve those who live in countries, and

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areas within those countries, that are politically stable and have at least subsistence economies.

The model appears not to be well suited where political stability is lacking (e.g., Congo, Liberia),

in emergency relief situations (e.g., Sudan), or where poverty is so severe that cash-based

economies don’t function (e.g., parts of Ethiopia). The model also requires population densities

that generate enough business at the individual outlet level to make profitability possible for

franchisees. And, enough outlets need to be located in clusters within a given area so that

franchisor support can be supplied by one field support person for each 20 outlets. In addition, a

sufficient number of nurses or other healthcare workers must be available along with a way for

them to prescribe and dispense medicine. Then, it must be possible to procure supplies of high-

quality, essential drugs and to distribute them through a reliable supply chain (e.g., roads must be

passable).

There are many criteria that HSF has learned to use to evaluate where the model can be

effectively applied and where it cannot. HSF plans to have a total of 14 health franchise

networks in various stages of development and operation by the end of 2012. Countries under

consideration include Nigeria, Ghana, Uganda, Tanzania, and other countries in Sub-Saharan

Africa, but no decisions have yet been made except for Rwanda.

B. First CFW Expansion Country: Rwanda

HSF is presently expanding into Rwanda. The development of the Rwanda healthcare

franchise network borrows from the strengths of the Kenya experience and avoids its mistakes.

Michael Seid (a leading franchise consultant now working on improvements to the Kenya

system) and other franchise and health advisors are playing a key role in shaping the effort in

Rwanda. With their help, and our experience in Kenya, HSF is developing and will implement

in Rwanda a franchise health network that will significantly surpass all similar health projects in

the developing world, including our own in Kenya.

Rwanda was chosen as an appropriate market for the expansion of the CFW brand for

several reasons including political stability, receptivity to innovative businesses, a growing

economy, population density, and HSF’s in-country contacts. HSF began work in earnest in

Rwanda in September 2007. After assessing the Rwandan healthcare market and determining an

entry strategy, HSF built a network of local allies, hired a qualified Country Director, gained

official approval from the Ministry of Health, and recruited a local advisory board. HSF then

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secured and refurbished a space to house its CFW national hub outlet and hired a well-qualified

nurse as its first outlet operator. Adaptation of the CFW system from Kenya is underway with

the help of expert local medical advisors and HSF’s board of directors. Over the coming two

months (April—May 2008) , HSF and its Country Director in Rwanda will train the first operator

into the CFW system, select and negotiate with local suppliers for high-quality products and

supplies, and outfit the first outlet according to CFW specifications.

HSF hopes to open the first CFW clinic in Rwanda in May 2008. This first outlet will be

company-owned, will be the site of further refinements of the CFW system in its first 1-3 months

of operations, and will then function as the national hub of the CFW network in Rwanda.

Administrative functions will be housed adjacent to company-owned national and regional hub

outlets, with successful hub operators moving into managerial roles overseeing each region.

There will be no central administrative office in Rwanda. After opening 11 company-owned

hubs and outlets, hopefully by the end of 2008, we will begin franchising the CFW brand in

Rwanda in 2009, with the goal to reach a total of 30 outlets by the end of 2009.

The details of how we have developed the new network launch in Rwanda are included in

Exhibit I, which outlines the process that will be used in future network expansion locations.

This process will, of course, be continuously improved as we gain experience launching new

networks in Rwanda and other countries.

The detailed roll-out budget for the CFW network in Rwanda is included as Exhibit J.

C. Expansion Plan 2008-2012

HSF intends to expand the CFW brand into up to 14 health franchise networks by the

end of 2012. Informed and guided by a board of directors and executive team with a combined

total of roughly 100 years of franchising experience and 100 years of developing world

healthcare experience, HSF is poised to achieve this aggressive goal. CFW networks in 14

locations will deliver high-quality essential drugs and basic healthcare to millions of people per

year. To achieve this goal, HSF’s capacity is being dramatically increased beginning in 2008.

We will go from a volunteer CEO and two full time equivalent employees in the U.S. to a full

time CEO, additional franchise development people in Africa, and other personnel who will be

necessary to the expansion plan. Significant front-end work is necessary to design, launch, and

staff each new network so key people will be positioned where they can be most effective.

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Some functions of launching and scaling each CFW network will be carried out by regional staff

shared between different territories, rather than replicating each and every function in each new

territory. CFW staff and franchisees will constitute a worldwide community of practitioners who

can share lessons learned.

The staggered progression outlined in HSF’s long-range plan (attached as Exhibit K)

projects 14 total CFW networks (including Kenya and Rwanda) in various stages of development

by the end of 2012. Each will require a complement of personnel and other resources as may be

appropriate to its stage of development. In time, as local health insurance programs become

available, other funding sources will gradually reduce the need for HSF funding at the local

level. The attached projection includes HSF’s best present estimate of the aggregate start-up cost

of each network and the corresponding headquarters cost that HSF will incur to launch and

support them. This projection will be further refined and improved in the course of the strategic

planning process that will be undertaken when HSF’s new CEO commences service in July

2008.

IX. The Big Picture

Anyone who reads the papers or watches news on TV knows that death and disease in the

developing world have become weekly headlines. The world’s biggest killer diseases are no

longer topics of interest only for governments and aid workers. Global health and diseases are

mainstream news for three reasons. First, more people suffer and die from disease in the world

today than ever before. Second, unlike the centuries before, we can actually do something about

it. Third, some of these diseases, like TB, are beginning to find their way into our world. HSF’s

mission is to use the franchise business model to improve access to basic healthcare services and

essential drugs to stem the advance of killer diseases. For the same reasons that this model has

been so effective meeting consumer needs for everything from gasoline to donuts, it is also the

world’s best tool to deliver medical care and drugs to the world’s poor.

While franchised health networks are not a panacea, they have a major part to play in the

battle against disease because franchise systems pass the Three Point Test.

More than a decade ago, HSF began to study the root causes of so much needless

suffering and death in developing countries. Since then, we’ve accumulated a unique mass of

information and experience unlike any other that we know of in the world. We’ve brought

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together some of the world’s strongest franchise and medical experts and a world-class CEO of

highly relevant experience to lead them. We have what may be the world’s only business-format

franchise network already practicing the model in the conditions of rural Africa; discovering

what works and what doesn’t; enabling us to apply lessons learned in Kenya and Rwanda to

other countries as we learn them. No organization in the world is better poised than we are to

gain ground against the deadly diseases that are the world’s oldest and most lethal enemies.

Allies in this battle abound. Already great partners and collaborators have joined us

including ExxonMobil, Procter & Gamble, the Rockefeller Foundation, the United States

Agency for International Development, the International Finance Corporation, the Acumen

Fund, the Oswald Family Foundation, Chiron Corporation, Rotary, the International Franchise

Association, the David Weekley Family Foundation, and many other institutional and individual

donors. Like us, they believe that the franchise model has a key role to play in the global battle

against needless suffering and death.

CFW has received recognition from several sources as a ground-breaking innovation for

developing countries.12 It has become an award-winning franchise, receiving attention and

support from the worlds of academia, business, and public health. In May of 2007, CFW was

featured in a documentary aired on the Public Broadcasting System’s “NOW” program as the

first in a series featuring innovative business approaches to meeting social needs around the

world. This 25-minute documentary won an Emmy Award and can be freely viewed at

http://www.pbs.org/now/shows/321/index.html (click the link for “Healthcare Franchise”). A

link to it can also be found on our homepage at www.healthstore.org . We hope you will take a

few minutes to view this broadcast—it will give you a ringside seat to see HSF’s model at work

in Kenya.

X. Financial Requirements

The funding that it will take to expand the CFW brand to 14 networks over the next five

years will be many times more than HSF has required in the past. Discussions are underway

12Recent articles featuring CFW and HSF include: “Franchise Network Up’s Healthcare in Slums,” Business Daily of Kenya, June 5, 2007 “Into Africa,” Franchise Times , May 2007 “Fast 50,” Fast Company Magazine, March 2007 “What Works in Africa,” American Enterprise Institute, January 2007 “Disruptive Innovation for Social Change,” Harvard Business Review, December 1, 2006 See Exhibit D for additional articles and awards.

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with institutional sources in the business of funding larger scale roll-outs like the one we plan.

Sometime before the end of 2008, we expect to have a clear view of what institutional sources

will be available to support the five year strategic plan. For now, however, we need to

concentrate on funding the $1,000,000 requirement for the balance of 2008.

We hope you will consider assisting us to increase our capacity in 2008 so that we are

positioned to carry on development in Kenya and Rwanda and to continue to launch more

networks in more countries over the coming five years.

THE HEALTHSTORE FOUNDATION®

Scott D. Hillstrom, Chairman and CEO

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Exhibit A

Board of Directors

*Executive Committee Member James H. Amos, Jr.*

• CEO, Tasti-D-Lite, LLC • Chairman Emeritus, Mail Boxes, Etc. • Former Chairman, International Franchise Association

Mark Benson

• President, APCO Insight Hon. Rudy Boschwitz (Ret.)

• Former U.S. Senator • Chairman, Home Valu Interiors

Ward Brehm

• Chairman, United States African Development Foundation • Founder and President, The Brehm Group

Dr. Denis Broun*

• Country Coordinator of UNAIDS India Sidney J. Feltenstein*

• Founder and Past Chairman, Sagittarius Brands Incorporated (the holding company for Captain D’s and Del Taco Restaurant Chains)

• Past Chairman, International Franchise Association Steven J. Greenbaum, CFE*

• President and CEO, PostNet International Franchise Corporation William F. Haddad

• Chairman/CEO, Biogenerics, Inc. Scott Hillstrom, J.D.*

• Chairman, The HealthStore Foundation® • CEO, Guardian Law Group

Kaye Kirsch

• Administrative Director, Sewa Ashram

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Edward G. Martin, MBA

• Business Executive Greg Nelson, MBA, CPA

• President of Rotherwood Investments, LLC Dr. Eva Ombaka*

• Coordinator of Ecumenical Pharmaceutical Network Colin Owen

• Mission of Mercy Michael H. Seid*

• Managing Director and Founder, Michael H. Seid & Associates, LLC Pastor Rick Warren

• Author of The Purpose-Driven Life • Pastor of Saddleback Church in Orange County, California

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Exhibit B

Senior Staff 1. Scott Hillstrom -Volunteer Chairman, CEO, and Co-Founder of The HealthStore Foundation

Scott D. Hillstrom, J.D., is founder, Chairman and volunteer CEO of The HealthStore Foundation®. Mr. Hillstrom is a U.S. based entrepreneur and business/legal advisor. Prior to co-founding The HealthStore Foundation® in 1997, Mr. Hillstrom served for 10 years as the volunteer President of Steiger International, a youth evangelism ministry spun out of Youth With a Mission. After practicing business law as Managing Partner of Hillstrom & Bale, Ltd., in the 1980s, he became co-founder and Managing Director of Rehab One, Inc., a multi-state network of hospital-based medical clinics in the 1990s. Since then, he has advised and invested in computer networking, software, entertainment, intellectual property and other businesses in the U.S., Europe and New Zealand. Presently, Mr. Hillstrom is Managing Director of Premier Mounts, based in Anaheim, California. 2. Dr. Gunther L. Faber

-Incoming CEO, The HealthStore Foundation® Gunther Faber is currently Vice President, Sub-Saharan Africa, for GlaxoSmithKline and is based at the company’s corporate head office in Brentford. He qualified as a veterinarian specializing in genetics and nutrition, before moving into general management. He joined the pharmaceutical industry in 1979 for the then Beecham Group plc and was appointed as Director of the International Division in 1980. During successive mergers, his area of responsibility increased, with him being accountable for pharmaceuticals, consumer health and manufacturing in SmithKline Beecham. Following the merger between Glaxo Wellcome and SmithKline Beecham he was appointed as Vice President, Sub Saharan Africa until he reached the position he holds today.

Besides being accountable for the commercial operation in Sub-Saharan Africa, Gunther is also a member of the company’s Policy Team on Access to Medicine, as well as being a director of the International Division which covers all countries with the exception of the USA, Europe and Japan. Gunther interacts at senior political and bureaucratic level with African governments, as well as those of the OECD countries. Gunther is a member of the Africa Regional Advisory Board of London Business School.

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3. Greg Starbird -Vice President, The HealthStore Foundation

Greg Starbird has been with The HealthStore Foundation® since 2005. In his current role, Mr. Starbird leads the iteration of the CFW concept outside of Kenya, beginning with Rwanda in 2008. Mr. Starbird analyzes potential partner opportunities, structures assessments of new markets, and advises partners interested in launching franchise health networks. Prior to joining The HealthStore Foundation®, he directed a program at Star Education, an innovative and award-winning private organization working in Los Angeles public schools. Mr. Starbird attended Cornell University and UC Santa Barbara (B.A.) and continued to Fuller Theological Seminary (M.Div.).

4. Steve Dahl

- CFO, as needed, for The HealthStore Foundation

Steve Dahl is a businessman and consultant whose background includes managing retail, franchise, manufacturing and marketing companies in the both the USA and abroad. His career includes fifteen years of financial management in Fortune 500 corporations, and senior operational and financial positions in other large public firms, and privately owned start-up and turnaround companies.

From 1992 through 1995 he served as a volunteer in the Peace Corps before returning to the private sector as Chief Financial Officer and Regional Operating Officer of a diversified restaurant franchise and real estate company in Central Europe. Since returning to the USA in 2000 he has been an economic development consultant to USAID-sponsored NGO’s in emerging economies. His consulting experience includes the development of franchise and multi-unit retail businesses, and training in and implementation of managerial control and planning disciplines.

He is a Certified Management Accountant and has served as Chief Financial Officer, Treasurer, Executive Director, and Corporate Secretary for The HealthStore Foundation® since joining the organization as a volunteer in 2004. 5. Gregory A. Fields -Development Director, The HealthStore Foundation

Greg Fields is the President of Philanthropy Directions International, and he has forged a career in philanthropy that has distinguished him as one of the leading conceptual thinkers concerning domestic and international giving. He has presented or participated in numerous symposia focusing on international development, including Stanford University’s Global Philanthropy Forum, The Conrad Hilton Humanitarian Award seminar, the Synergos Institute’s University for a Night at the United Nations, the 2006 International AIDS Conference and the European Foundation Centre’s general assembly. He has also been an invited participant at the Salzburg Seminar in Austria.

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Most recently he served as Managing Director for the Global Fund for Children, where he helped bring a small organization to its current posture as a multimillion-dollar international grant maker with distributions to groups in more than 45 countries. During his tenure, GFC developed sophisticated grant making procedures, including rigorous due diligence mechanisms, evaluation steps, and detailed eligibility criteria. He also assisted in virtually doubling GFC’s operating budget from year to year.

6. Esther Njuguna -Executive Director, CFWshops in Kenya Esther Njuguna is a business woman with over twenty years of experience advising clients and acting as business manager for major companies in Kenya, including multi-million dollar enterprises like Baraka Agrovet Limited, a nationwide distributor of agricultural chemicals and veterinary products. She has performed considerable community service as well, most particularly in support of girls’ groups and associations. Ms. Njuguna holds a BS and an MBA from the University of Nairobi. Her business management skills and commitment to community service are an ideal match to the requirements for the Executive Director of CFWshops in Kenya, particularly as the franchise prepares to scale and expand. 7. Emmanuel Ndoba -Country Director, CFWclinics in Rwanda

Emmanuel Ndoba is Country Director of the CFWclinics network in Rwanda. The CFWclinics network is being launched by The HealthStore Foundation® in 2008, its first country of expansion after its success with CFWshops in Kenya. Prior to working with The HealthStore Foundation®, Mr. Ndoba obtained extensive experience as a social entrepreneur, developing projects at international non-profit organizations such as Population Services International (PSI). He served for 8 years with PSI in Rwanda, where he rose to the level of Project Manager for HIV/AIDS prevention programs for High Risk Populations (Militaries, Prisoners, National Police, Sex Workers, Local Defense Forces, and Youths); he later became a Senior Manager overseeing PSI's Social marketing and Behavior Change Communication activities. Later, he served as a Country Program Director for the Extension of an HIV/AIDS treatment and care project targeting the Rwanda military, funded by the United States Department of Defense (DOD). Mr. Ndoba has served on several national- level steering committees, notably the national behavior change communications (BCC) and prisoners' affairs steering committees, where he contributed to the development of national policies. Mr. Ndoba is also an evangelist since age 15 and oversees the New Covenant Church based in Kigali. He is also a member of the Rwanda Women Foundation Ministries working to create greater social impact among inter-denominational women and youths, in addition to spiritual, emotional, economical and intellectual empowerment.

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Exhibit C Statistics from CFW Network in Kenya

Customers and Patients 2007(tentative*) 2006 2005 Total Visits to Shops 69,992 121,155 233,299 Total Visits to Clinics 317,983 269,407 202,228 Total Outreach 137,477 80,086 # (see note) Total Customers and Patients (visits + outreach) 525,452 470,648 435,527 Addressing Prevalent Diseases Malaria Treatments 41,422 53,311 63,948 Bednets Sold 3,444 14,542 20,475 Respiratory Infections Treatments 71,494 77,763 84,980 Worms and Deworming 48,862 40,033 31,944 Diarrheal Diseases Treated 9,894 18,064 33,244 Sales Total sales in shops $36,906 $51,728 $72,634 Total sales in clinics $269,531 $190,536 $116,937 Total sales overall $306,437 $242,264 $189,571 Average sales per shop $2,319 $2,141 $1,874 Average sales per clinic $5,902 $5,185 $4,856 Average transaction value at shops $0.53 $0.43 $0.31 Average transaction value at clinics $0.85 $0.71 $0.58 * 2007 data is still being verified for accuracy; please treat these numbers as very tentative. # outreach numbers for 2004 and 2005 are included in the overall totals for these years Please note: While we are ever striving to improve the accuracy of our data, we are aware of deficiencies in our system that make the above numbers less than 100% reliable. Please see section IV and Exhibit F for information on how we intend to upgrade our data systems.

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Exhibit D

Awards and Recognition Recent Press Featuring CFWshops and The HealthStore Foundation:

• PBS broadcast a 25-minute documentary on CFWshops in Kenya in 2007; this documentary won an Emmy award for best business documentary and is freely available for viewing at http://www.pbs.org/now/shows/321/index.html

• The Economist includes the HealthStore Foundation and CFWshops in Kenya

among a group of global public health efforts making effective use of donor funds, July 5, 2007. http://www.economist.com/world/international/displaystory.cfm?story_id=9441391

• Franchise Times Magazine ran a feature story in May of 2007 describing

CFWshops and Michael Seid’s impressions from his trip to Kenya. http://www.franchisetimes.com/content/story.php?article=00396

• Franchise Times Magazine ran a feature story in December of 2007 subtitled, “Why Doing Good is Good for Business.” http://www.franchisetimes.com/content/story.php?article=00621

• Fast Company featured The HealthStore Foundation® in 2007 as part of its 6th annual “Fast 50” awards: “50 Profit Driven Solutions for What Ails the Planet.” http://www.fastcompany.com/magazine/113/open_10-healthstore.html

• Harvard Business Review featured CFWshops in an article by Clayton

Christenson in December of 2006 entitled, “Disruptive Innovation for Social Change.” http://harvardbusinessonline.hbsp.harvard.edu/b01/en/common/item_detail.jhtml;jsessionid=03KRZKOXUY4ZIAKRGWDR5VQBKE0YIISW?id=R0612E

• The Kenyan Business Daily featured CFWshops on June 5, 2007. http://www.bdafrica.com/index.php?option=com_content&task=view&id=1307&Itemid=4422

Awards in Recent Years:

• In May of 2006, Sustainable Healthcare Foundation (local franchisor of CFWshops in Kenya) was one of ten finalists in the Ashoka Changemaker’s Competition in the category of “improving health for all.”

• CFWshops won the Marketplace competition at the 2005 Global Philanthropy Forum at which the focus was ingenuity in philanthropy, policy and private enterprise.

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Exhibit E Third Party Payment

The HealthStore Foundation® and its CFWshops network in Kenya have been extraordinarily successful. We are fulfilling our mission and are serving hundreds of thousands of patients each year. We have an outstanding board of directors and incoming CEO, along with the backing of major corporations, philanthropists, and donor agencies. We are now ready to implement a fundamental innovation to take the CFW network to the next level of success. When The HealthStore Foundation® founded the CFWshops network in Kenya, it anticipated that once the network grew to scale, it would be self-sustaining like any successful commercial franchise network. However, we have since learned that the poverty of the populations we are serving, combined with the poor infrastructure where CFWshops outlets located, prevent this self-sustainability. Just as basic healthcare for low-income people is subsidized in other parts of the world (including the United States), we believe that a subsidy is necessary in order for CFWshops to achieve its mission. So far, we have been administering this subsidy through top-down grants to pay for the inputs into the system—training, procurement, distribution, HQ and field staff, etc. This has led to two dynamics which are antagonistic to our mission: 1) our local franchisor in Kenya is distanced from the normal and effective incentives at work in a true commercial franchise network; 2) our franchisees are delivering drugs and services to patients too poor to pay for even the cost of goods incurred by our franchisees, undermining their own unit economics. We intend to implement a fundamental innovation to address these two challenges simultaneously. We call this innovation the Third Party Payment System. Instead of funding the inputs of our sub-franchisor through top-down grants, we will begin funding the system from the bottom up by reimbursing franchisees for care delivered to patients. Because CFWshops is a network of standardized outlets, we already collect standard data in standard forms. This data will constitute claims documentation submitted to a 3rd party payment pool, documentation whose validity will be bolstered by verification technology appropriate for the rural and peri-urban contexts where we are working. The 3rd party fund will receive this data and reimburse franchisees for care delivered according to standards. The 3rd party fund will also accredit and audit providers (i.e., CFWshops outlets) to make sure high clinical and business standards are being maintained. This system will be administered in such a way that it lowers the threshold of wealth necessary to access drugs and services at CFWshops outlets. This in turn will make franchisees more profitable because more patients will access their services. Local franchisors will be funded on the basis of outputs at the franchisee level. This means that our in-country local franchisors will be directly incentivized towards our core mission of increasing access to healthcare according to the high standards of the CFWshops brand.

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The HealthStore Foundation® believes that this Third Party Payment innovation is a fundamental, necessary, and game-changing innovation that will benefit patients, franchisees, franchisor, and donors. Franchisee and franchisor incentives will be aligned towards a single goal: increasing access to basic healthcare. There is already a widespread market for private healthcare in sub-Saharan Africa, but the amount of money patients can afford to pay is limited compared to the amount of money it takes to distribute healthcare to rural areas. The Third Party Payor fund will be injecting money in precisely the place where, combined with patient membership fees and co-pays, a viable commercial market will be created for delivering healthcare to rural Africa. This means that entrepreneurs will be attracted to start healthcare delivery businesses that meet the standards of the Third Party fund(s). Access to care will increase and donor funds will be used efficiently. With the help of expert advisors, The HealthStore Foundation® is in the process of designing the nuts and bolts the Third Party Payment system. The HealthStore Foundation® intends to test and refine this system in 2008 before deploying it widely throughout its CFW networks beginning in 2009. Initial research indicates that such a system will likely involve a combination of the following:

1. Patient identification and membership scheme (e.g., $x per year to receive y% discount on purchases at CFW outlets)

2. Visibility into transactions by recording for each transaction a unique patient id along with provider id, diagnostic id, and product/treatment id

3. Housing transaction data and other data in an online database rather than in fragmented spreadsheets

4. Pushing inventory on consignment to franchisees based on recorded consumption, rather than having franchisees pull inventory based on perceived need and constraints of their cash on hand

5. Designing a proper formula by which to pay franchisees and local franchisors for approved transactions/outputs

6. Establishment of an independent 3rd party pool which can accredit and audit CFW outlets

and administer claims

7. All of the above using technology that is as simple, reliable, and inexpensive as possible so as to succeed in the relatively remote environments where CFW outlets are located.

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Exhibit F

Data-Management System In our prototype CFWshops network in Kenya, we have embodied data collection and reporting into the franchise operating system. Franchisees use a paper-based system to collect information on patients, transactions, and inventories. CFWshops field consultants collect this data when they visit the outlets and aggregate the data in regional offices for analysis by CFWshops staff. We are pleased with the detailed information we are able to collect and analyze in this manner. For example, we know how many patients were treated for which diseases in each CFWshops outlet each month. We can see the effects of CFWshops promotions, e.g. how many more bars of soap we sell during a sale on soap. This granularity of data is extremely unusual for an organization working in rural Africa. Building on such successes, we would like to implement more sophisticated, low-cost database technology as we begin to take the CFWshops brand to other countries. Innovation:

HSF will implement a low-cost data-management and IT system. This will very likely involve:

• A central database housed on a secure, browser-accessible server • Franchisees submitting data via mobile phones • Initial patient registration entered into a central database • Patient, provider, diagnostic, and treatment codes recorded per transaction

Such a system will be extremely useful as HSF expands the CFWshops brand, for the

following reasons: • HSF will be able to migrate from paper-based reporting by franchisees to more

accurate and immediate electronic reporting by franchisees. • CFWshops field consultants will be able to quickly see up-to-date snapshots of

the performance of the outlets they are visiting prior to visiting them. • HSF and the Third Party Payment pool will be able to administer and track funds

from the third-party pool on the basis of key data collected at the franchisee leve l [see Exhibit E for detailed information on the Third Party Payment innovation].

• HSF will be able to monitor epidemiological patterns in areas where no such epidemiological monitoring exists.

• HSF will be able to collect and aggregate data from all CFWshops outlets in all countries.

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Assuming that power supplies, data collection devices, and communication devices (perhaps combined into one unit) can be available at an affordable price, we would then tailor a system to collect and manage data such as:

1) Patient registration 2) Patient history 3) Presenting complaint 4) Diagnosis 5) Treatment 6) Patient visit notation 7) Inventory and stock by product description 8) Order placement (electronic transmission of purchase orders) 9) Inventory receipts (i.e., deliveries received) 10) Daily cash receipts 11) Periodic expenses 12) Franchisee compliance (fields to be determined) 13) Franchisee training history 14) Etc. We are currently researching the design of the data management innovation in concert

with the Third Party Payment innovation; the two are intimately related because Third Party Payment requires increased visibility and verifiability of transactions at the franchisee level.

We believe that this innovation will raise the CFWshops brand to the next level of

precision and authority as we strive to serve millions of patients and customers each year in multiple countries.

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Rensselaer Polytechnic Institute’s Prototype Shipping Container Medical Clinic

Photo from http://www.cfr.org/project/1247/docinabox_project.html

Exhibit G

Clinic-in-a-Box CFWshops outlets in Kenya are currently located in rented store-front locations in rural and peri-urban strip malls. Although equipment, pricing, and signage are standardized, the different layouts of the physical spaces yield differences in outlet format. For example, some outlets have three small rooms while others have only two. Some shelves fit nicely in some outlets, while different shelves need to be procured for others.

In order to standardize the outlet format and make use of emerging low-cost technologies, HSF is considering the use of shipping containers as CFWshops outlets. Shipping containers are manufactured in two standard sizes and are ubiquitous in ports throughout the world. Throughout sub-Saharan Africa, shipping containers are already being outfitted for use as microfinance offices, barber shops, etc. It is also possible to outfit a shipping container as a secure and standard medical outlet, complete with a standard package of medical equipment, data management system, power supply, water catchment, etc. This would be a vast improvement on our current storefront CFWshops outlet format in Kenya. Rensselaer Polytechnic Institute has already developed a prototype shipping container medical outlet that is extremely attractive. HSF is exploring the possibility of implement ing this sort of innovation in its CFW networks.

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Innovation: The HealthStore Foundation® is considering a fundamental innovation to the current format: outfitting shipping containers to serve as CFWshops outlets. This arrangement would work as follows:

• A number of shipping containers (e.g. 25) will be outfitted using a CFWshops clinic design.

o Note: A 15-student architecture class at RPI (Rensselaer Polytechnic Institute) in upstate New York has designed and built a prototype box, including solar panels, water catchments, etc. The architecture professor leading this is Michael Oatman. See photos of this box here: http://www.cfr.org/project/1247/docinabox_project.html

• When new franchisees join the system, CFWshops staff and the franchisees work

together to find suitable pieces of land on which to place the clinics- in-a-box. Since shipping containers are only 8 x 20 or 8 x 40 feet, finding suitable land in rural or periubran areas should be possible. The size of the containers is one of the only standard things on planet earth—it fits ships, trucks, trains, airplanes, ports.

• The outfitted shipping containers (clinics- in-a-box) are delivered to the franchisees by

18-wheel truck or airlift along with standard furniture and equipment package. Laurie Garrett imagines that the layout and equipment could include:

o an examining room o storage space o outdoor waiting area under an attached awning o solar panels welded or nailed to the roof to deter theft o water catching device o photo id cards for patients with barcodes to monitor treatment history, etc. o dedicated IT system.

• All boxes would be connected to a central IT hub, to which data would be uploaded at the end of each day. Franchisees would use rapid diagnostics. Inventory would be monitored by comparing collected consumption data to products on shelves. Data would also effectively produce the first real epidemiology base for certain regions.

• In the event that the chosen location turns out not to yield the desired customer traffic, the

clinic-in-a-box can be moved to a new location • Laurie Garrett has said it cost $5000 to build the prototype but estimates the cost could

be more like $1500 if produced on a mass scale.

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The result of this clinic- in-a-box innovation would be an extremely standardized CFW outlet format. This would be extremely valuable for:

• training : new franchises would trained in an outlet with the identical layout to theirs • compliance : CFW field consultants would be evaluating each franchisee in the same

space and would quickly recognize deviations from the franchise system • branding : not only will the CFW logo and uniform be the same from outlet to outlet, but

the whole building will be the same, new, clean, and appealing • security: almost no building in rural Africa is as secure as a metal box • upkeep: current outlets undergo significant wear and tear simply on the basis of their

location in run-down strip malls • IT: security and uniformity of outlets will allow for easier introduction and upgrading of

a dedicated IT system with which franchisees can feed data into a central database for analysis by franchisor staff

Following are more details on the origins and status of the clinic- in-a-box concept:

• Laurie Garrett is the Pulitzer-prize-winning public-health-minded author of The Coming Plague and Betrayal of Trust. She is currently senior fellow for global health at the Council of Foreign Relations. She is the (conceptual) architect of the concept of outfitting shipping containers as medical clinics (they call it “doc- in-a-box”). (Her bio is at www.laur iegarrett.com)

• Here is a slick summary of the basic concept :

http://www.cfr.org/content/meetings/global_health_rt/doc_in_a_box.pdf

• The clinic- in-a-box idea could be a business opportunity beyond clinics—imagine 5 key designs (a clinic, a microfinance office, a Coca-cola retail store, etc.) leading an assembly line in a major African port city such as Mombasa or Durban.

o See this blog: http://cfr-doc-in-a-box.blogspot.com/ o See this World Vision site which features the doc- in-a-box and an audio file of

Laurie Garrett describing the concept: http://www.worldvision.org/worldvision/radio.nsf/stable/wvradiostory_052007_docinabox

o Here is a 2-minute video of the doc- in-a-box: http://www.ny1news.com/ny1/content/index.jsp?&aid=60227&search_result=1&stid=8

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Exhibit H

CFWshops Franchise System Improvements

With the help of its expert franchise advisors, Michael Seid & Associates, The HealthStore Foundation® is currently revising its CFWshops franchise operating system in Kenya. The CFWshops network in Kenya has been extraordinarily successful as an NGO delivering healthcare in rural Kenya. Despite this success, there are many ways in which the CFWshops network does not yet conform to international standards of business-format franchising. Improvements are now underway in the following areas:

• Improvement of clinical standards • Streamlining the delivery process so as to reduce expensive inefficiencies • Institution of a more thorough franchisee recruitment process • Standardization of shelving and layout • Elimination of duplication of efforts between central and regional offices • Increasing the presence of retail items to improve franchisees’ bottom lines • Shifting the financial burden of poor patients off of franchisees • Strengthening the CFWshops brand with proprietary educational posters and

materials

Following these revisions to the system in Kenya, the following franchise documentation will become available for adaptation in countries outside of Kenya:

• operations manual • training materials • formulary and inventory lists • checklists and other materials for field consultants • financial worksheets from the unit level to the corporate level

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EXHIBIT I NEW COUNTRY DEVELOPMENT SEQUENCE

Key to The HealthStore Foundation’s long-term strategy is progressive iteration of the CFW concept in new countries. This exhibit gives insight into the current process underway to expand the CFW brand to Rwanda in 2008. Embedded in this development sequence are many lessons which we will use to develop the CFW brand in markets beyond Rwanda in the coming years.

The HealthStore Foundation® (“HSF”) is beginning international expansion of the

CFW brand by launching a new franchise network in Rwanda in 2008. The development is borrowing from the strengths of the Kenya experience and avoid ing its mistakes. Michael Seid (a leading franchise consultant now working on improvements to the Kenya system) and other franchise and health advisors are playing a key role in shaping the effort in Rwanda. With their help, and our experience in Kenya, HSF is developing and will implement in Rwanda a franchise medical network that will significantly surpass all similar health projects in the developing world. Operating as a non-profit organization, it will accomplish this by actually implementing an authentic commercial franchise system that will bring to the poor access to medical care at a standard of care never before seen in rural Africa.

Following is a basic outline of the approach that is being pursued in Rwanda. This

approach is considerably leaner and tighter than the model we have implemented in Kenya. It is designed for rapid deployment at minimal cost and maximum scalability. As we encounter the presently unforeseeable challenges of Rwanda, this plan will likely be modified, but we will adhere to it as much as is practicable under the circumstances that are encountered.

Rwanda Roll-Out Plan 1. Groundwork. In Fall 2007, Greg Starbird (HSF’s Vice President) spent

significant time in Rwanda laying the groundwork to launch a CFW network in Rwanda. This included gaining an understanding of basic healthcare in Rwanda, advocating for the CFW concept with local leaders, and establishing a network of local allies.

2. Country Director. In November 2007, HSF sought and hired a qualified Country Director to lead its efforts in Rwanda: Emmanuel Ndoba. Emmanuel brings a wealth of experience and understanding of Rwandan healthcare, as well as the entrepreneurial instincts necessary to launch a business from scratch in Rwanda.1

1 See Emmanuel Ndoba’s bio in Exhibit B.

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3. Advisory Board. In November 2007, HSF recruited a qualified advisory board including a prominent Anglican Bishop, a doctor, a pharmacist, and an expert in supply chain management. This advisory board provides periodic input into the development of the CFW system in Rwanda.

4. Format. A business format has been designed in accordance with Rwandan regulations and public health demands. Franchisees will be appropriately-qualified health workers (category A2 nurses) and work out of rented storefront outlets configured to CFW standards. A standard modular layout will be introduced to each rented space such that each outlet has separate spaces for 1) waiting/greeting/retail; 2) examination room; 3) secure drug storage. This configuration that will enable each outlet to diagnose and treat diseases with pharmaceutical drugs.

5. Legal Structure. At the advice of trusted local counsel and in concert with advice from the franchise leaders on our board, HSF is registering a branch office in Rwanda, rather than founding a separate Rwandan legal entity.

6. Ministry of Health Approval. The Ministry of Health has signed an agreement authorizing HSF to launch a CFW network in Rwanda. HSF is now pursuing other legal formalities which will give it long-term legal presence in Rwanda; these should be completed by May 2008. In the meantime, HSF is fully authorized to launch the CFW network.

7. Management/Operations: The Country Director is setting up local management functions, arranging for procurement of drugs and supplies, and completing other requirements of operations.

i. First Outlet and National Hub: The site for the first CFW

clinic has been chosen, secured, and refurbished. Rather than having a separate administrative office in the capital city, administrative functions will take place in a space adjacent to this first clinic. This will allow overhead to remain low and administrative functions to remain deeply connected to the operations of the CFW network.

ii. Franchise Operating System : HSF is developing a franchise operating system by adapting the CFW system from Kenya to Rwanda and adding necessary extra components. CFWclinics in Rwanda will be operated by category A2 nurses; the menu will be similar to the clinic- format CFW outlets in Kenya.

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iii. Training: In January 2008, the Country Director received 1 week of mentorship on site at the international headquarters of PostNet International Franchise Corporation, a successful 1000-outlet business format franchise network founded and led by Steve Greenbaum, a member of the HSF Executive Committee. Before opening the first outlet in May 2008, the Country Director and the first outlet operator will undergo 1-2 weeks of training at the CFW network in Kenya.

iv. Continuous System Development : In the first 2-3 months of operating the first CFWclinic, HSF will evolve the CFW system further. This will result in a revised menu and associated inventory, operations and training materials that are further refined for the Rwandan context and then translated to French, and a full set of consumer materials.

v. Central and Regional Hubs: The first CFWclinic with adjacent administrative space has been selected with an eye to operating both as a medical outlet and the Rwandan Central Hub. The clinical half of the space will be operated by a qualified Rwanda nurse; the administrative half will be operated by the Country Director. Five more medical outlet franchise locations will be selected in separate regions with an eye to each also serving as regional hubs. The Central Hub will serve as the supplier to Regional Hubs which will supply franchisees. All six will be available to train franchisees.

vi. Staff Recruitment. One Outlet Development Manager (“ODM”) will be recruited to open each regional outlet/hub. Each ODM will later train an operator to run the medical outlet so that the ODM will be able to later recruit and train franchisees in his region and to help them to get started in Phase 2.

vii. Phase 2: Each ODM will be responsible to open at least six new outlets per year in his region. Having recruited operators to take over operations of the first outlet in each region, each ODM will recruit and train franchisees, select sites, oversee outfitting of new outlets, and perform all other necessary functions. ODMs will be incentivized by performance-based compensation.

See Exhibit J, a detailed roll-out budget for the CFW network in Rwanda.

Exhibit J

Rwanda Rollout Budget 2008-2009

(follows)

2007 2008 2008

Total Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total Year Outlets Open at End of Month - - - - - 1 1 1 6 6 6 11 11 11 Company Operated - - - - 1 1 1 6 6 6 11 11 11 Franchisee Operated - - - - - - - - - - - -

- Total Franchisor Revenue - - - - - 161 323 323 1,130 1,936 1,936 2,743 3,550 12,102

Start-up ExpensesContractor development of franchise system - 3,000 - 3,000 6,000 HealthStore Support Personnel 11,000 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 30,000 Rwanda Country Coordinator 2,750 US/Rwanda Travel and living expenses 9,593 2,382 2,382 Total Start-up Expenses 23,343 4,882 2,500 2,500 5,500 2,500 2,500 5,500 2,500 2,500 2,500 2,500 2,500 38,382

Franchisor Ongoing ExpensesHealthStore East Africa Office Support Services - - Rwanda Executive Director 3,000 3,000 3,000 3,000 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 49,500 Rwanda Operations Director - - - - 1,200 1,200 1,200 1,200 1,200 1,200 2,000 2,000 2,000 13,200 Admin/Receptionist/Accounting - - - - 850 850 850 850 850 850 1,000 1,000 1,000 8,100 Recruit/Compliance/Field Support No.1 - 750 750 1,500 Recruit/Compliance/Field Support No.2 - - Clinical Quality Assurance - - - 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 9,000 Procurement/Supply Chain Manager - 1,000 1,000 1,000 1,000 1,000 1,000 6,000 Unit Operators - - - - 250 250 250 1,500 1,500 1,500 2,750 2,750 10,750 Payroll Taxes/Benefits - - - 450 983 983 983 983 983 983 1,125 1,125 1,125 9,720 Total Payroll & Contractor Expense 3,000 3,000 3,000 4,450 7,533 8,783 8,783 9,783 11,033 11,033 12,125 14,125 14,125 107,770

Warehouse, Training and Office Space at Hub Locations - - 300 300 300 800 800 800 1,050 1,050 5,400 Phones/Internet - - 500 500 500 700 700 700 700 700 700 5,700 Local Travel 2,456 - 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 9,000 International Travel (Rwanda/Kenya/US) 2,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 10,000 New Outlet Launch Expense - - - 500 - - 1,250 - - 1,250 - 3,000 Marketing, materials and support - 500 500 500 500 500 500 500 500 4,000 Miscellaneous 902 902 902 902 902 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 19,608 Total Non-Payroll Expenses 3,358 902 902 902 4,402 5,800 5,300 5,500 7,250 6,000 6,000 7,500 6,250 56,708

Total Expenses 29,701 8,784 6,402 7,852 17,435 17,083 16,583 20,783 20,783 19,533 20,625 24,125 22,875 202,860

Net Profit or (Loss) (29,701) (8,784) (6,402) (7,852) (17,435) (16,921) (16,260) (20,460) (19,653) (17,596) (18,689) (21,382) (19,325) (190,758)

Capital InvestmentInventory - warehouse per outlet - - - - - (400) - - (2,000) - - (2,000) - (4,400) Start-up capital - corporate outlets - - - (2,350) - - (11,750) - - (11,750) - (25,850) Micro loans to franchisees for start-up capital -

Vehicle - - - Computers and software, cell phones and supplies - - (3,000) (3,000) Total Capital Spending - - - - (3,000) (2,750) - - (13,750) - - (13,750) - (33,250)

- Net Cash Required (29,701) (8,784) (6,402) (7,852) (20,435) (19,671) (16,260) (20,460) (33,403) (17,596) (18,689) (35,132) (19,325) (224,008)

RWANDA ROLL-OUT BUDGET (2007 - 2008)

Outlets Open at End of Month Company Operated Franchisee Operated

Total Franchisor Revenue

Start-up ExpensesContractor development of franchise systemHealthStore Support PersonnelRwanda Country CoordinatorUS/Rwanda Travel and living expenses Total Start-up Expenses

Franchisor Ongoing ExpensesHealthStore East Africa Office Support ServicesRwanda Executive DirectorRwanda Operations DirectorAdmin/Receptionist/AccountingRecruit/Compliance/Field Support No.1 Recruit/Compliance/Field Support No.2Clinical Quality AssuranceProcurement/Supply Chain ManagerUnit OperatorsPayroll Taxes/Benefits Total Payroll & Contractor Expense

Warehouse, Training and Office Space at Hub LocationsPhones/InternetLocal TravelInternational Travel (Rwanda/Kenya/US)New Outlet Launch ExpenseMarketing, materials and supportMiscellaneous Total Non-Payroll Expenses

Total Expenses

Net Profit or (Loss)

Capital InvestmentInventory - warehouse per outletStart-up capital - corporate outletsMicro loans to franchisees for start-up capital

VehicleComputers and software, cell phones and supplies Total Capital Spending

Net Cash Required

RWANDA ROLL-OUT BUDGET (2007 - 2008)

2009

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total 2009 11 14 14 17 17 21 21 25 25 30 30 35 35 11 11 11 11 11 11 11 11 11 11 11 11 11

- 3 3 6 6 10 10 14 14 19 19 24 24

3,682 4,422 3,794 4,516 4,038 5,000 4,363 4,720 4,042 5,195 4,348 5,502 53,622

- -

- - - - - - - - - - - - - -

2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 24,000 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 54,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 24,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000

750 750 750 750 750 750 750 750 750 750 750 750 9,000 750 750 750 750 750 750 750 5,250

1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000 2,750 2,750 2,750 2,750 2,750 2,750 2,750 2,750 2,750 2,750 2,750 2,750 33,000 1,125 1,125 1,125 1,125 1,125 1,125 1,125 1,125 1,125 1,125 1,125 1,125 13,500

16,125 16,125 16,125 16,125 16,125 16,875 16,875 16,875 16,875 16,875 16,875 16,875 198,750

1,050 1,050 1,050 1,050 1,050 1,050 1,050 1,050 1,050 1,050 1,050 1,050 12,600 900 900 900 900 900 900 900 900 900 900 900 900 10,800

1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 18,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000

- 750 - 750 - 1,000 - 1,000 - 1,250 - 1,250 6,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000 2,500 2,500 2,500 2,500 2,500 5,000 5,000 5,000 5,000 5,000 5,000 5,000 47,500 7,950 8,700 7,950 8,700 7,950 11,450 10,450 11,450 10,450 11,700 10,450 11,700 118,900

24,075 24,825 24,075 24,825 24,075 28,325 27,325 28,325 27,325 28,575 27,325 28,575 317,650

(20,393) (20,403) (20,281) (20,309) (20,037) (23,325) (22,962) (23,605) (23,283) (23,380) (22,977) (23,073) (264,028)

- (1,200) - (1,200) - (1,600) - (1,600) - (2,000) - (2,000) (9,600) - - - - - - - - - - - - - - (7,050) - (7,050) - (9,400) - (9,400) - (11,750) - (11,750) (56,400)

(25,000) (25,000) -

(25,000) (8,250) - (8,250) - (11,000) - (11,000) - (13,750) - (13,750) (91,000) -

(45,393) (28,653) (20,281) (28,559) (20,037) (34,325) (22,962) (34,605) (23,283) (37,130) (22,977) (36,823) (355,028)

RWANDA ROLL-OUT BUDGET (2009)

The HealthStore Foundation

Exhibit K

The HealthStore Foundation® 2008 Funding Requirements

The HealthStore Foundation® 2008 – 2012 Funding Requirements

(follow)

Actual ForecastDescription 2007 2008

Contributed SupportGeneral Funds: US and Kenya 803,873 7,444 General Funds: Capacity Building 136,174 47,084 Sub-Total Non-restricted donations 940,047 54,528 Designated Grants - Kenya 148,000 - Designated Grants - Rwanda 50,000 50,000 Matching Pledge for Rwanda 75,000 Unfunded Rwanda - Designated: New Country Network Launches 300,000 Sub-Total Designated donations 198,000 425,000

Total Contributed Support 1,138,047$ 479,528$

Grants to Third PartiesGeneral Funds: Kenya Network (508,245) (715,000) General Funds: Pilot Indoor Residual Spraying (Carlos) (15,538) (14,500) General Funds: Grants to Others (1,020) - Non-restricted grants to third parties (524,803) (729,500) Designated Kenya Grants (103,000) (45,000) Designated Rwanda Launch (6,652) (191,627) Designated Allocations to Rwanda from HealthStore (23,049) (32,382) Designated New Country Grant 2008 (300,000) Designated Grants to third parties (132,701) (569,009)

Less Total Grants to Third Parties (657,504) (1,298,509)

Net Grant Revenue after Grants to 3rd Parties 480,543 (818,981)

General Corporate ExpensePayroll Expense (91,676) (92,167) Payroll Taxes (8,295) (9,374) Employee Benefits (9,900) Contract Labor (29,310) (212,785) Payroll and Contractor Expense (129,281) (324,226) Professional Services (86,200) (41,061) Supplies (808) (2,289) Telecommunications (3,694) (5,703) Postage, Priniting and Subscriptions (4,989) (5,500) Occupancy (10,726) (6,183) Travel and Meetings (62,177) (84,149) Computer Equipment Purchased (2,524) (23,000) Other General and Administrative Expenses (29,810) (9,934) Allocations to Rwanda 23,049 32,382 Non-labor expenses (177,879) (145,437)

Total General Corporate Expense (307,160) (469,663)

Net Finance Charges (8,081) (5,423) -

Surplus/(Deficit) Total 165,302 (1,294,067)

Change in Working Capital (timing of payments) (15,692) (29,565) Change in Borrowing, Increase/(Decrease) (15,677) (85,227)

Total Increase/(Decrease) in Cash 133,933 (1,408,858)

Cumulative Total Cash at End of Period 394,627$ (1,014,231)$

The HealthStore Foundation® 2008 Funding Requirements

The figure $1,014,231 represents the total financial requirement of The HealthStore Foundation® through the end of 2008, and is the basis for the $1,000,000 fund raising campaign commenced in April 2008.

THE HEALTHSTORE FOUNDATION® 2008 - 2012 Funding Requirements

2008 - 2012 Plan

Actual 2007 2008 2009 2010 2011 2012

Total 2008 - 2012

FUNDING REQUIRED

Kenya/USA 1,088,047 935,521

1,847,105

2,029,818

2,166,998

2,483,434 9,462,876 Rwanda 50,000 78,710 400,000 500,000 500,000 500,000 1,978,710

Total Existing Operations 1,138,047 1,014,231

2,247,105

2,529,818

2,666,998

2,983,434 11,441,586 New Country Expansion 2008 New Country 300,000 400,000 500,000 500,000 500,000 2,200,000

2009 Three New Countries 900,000

1,200,000

1,500,000

1,500,000 5,100,000

2010 Three New Countries 900,000

1,200,000

1,500,000 3,600,000

2011 Three New Countries 900,000

1,200,000 2,100,000 2012 Three New Countries 900,000 900,000

Total New Country Expansion - 300,000

1,300,000

2,600,000

4,100,000

5,600,000 13,900,000

TOTAL FUNDS REQUIRED 1,138,047 1,314,231

3,547,105

5,129,818

6,766,998

8,583,434 25,341,586 New outlets opened in period 26 65 144 243 351 829 Number of outlets at end of year 67 93 158 302 545 896

Annualized patients served 744,000

1,264,000

2,416,000

4,360,000

7,168,000 Assumptions Kenya expansion resumes in Fall 2008 following system improvements Completion of Rwanda funding for year one in June 2008 ($75,000 match) and beginning of year two of $70,710 One additional country funded in 2008 Three countries per year from 2009 - 2012 Commencing start-up in new countries one month following receipt of funds Construction of outlets in new countries commencing six months following start-up Scaled roll-out of outlets beginning one year following start-up 2008 shown net of funds received/committed to date ($125,000 for Rwanda match and $54,528 general funds received through February) Year-end 2007 cash balance of $395,627 is expended in full for Kenya/USA, subsequent year-end balances held to zero

The figures above are The HealthStore Foundation's present best estimate of the of the figures that will emerge from the strategic planning process that will be commenced by our new CEO after he assumes his duties in July, 2008.

These figures are based on a highly generalized development model representing the broad outlines of the expected strategic plan.

The actual figures that will be developed in the planning process will likely be substantially at variance with these figures. Therefore, the figures presented above are intended only to provide our supporters with a broad overview of the general strategic direction of the organization.