Vempain teknikka inc

1

Entrepreneurship

Business Plan: Vempain Teknikka INC.

Presented to: Mr. Imran hameed

Waqas Qadir Baloch

Waqas Siddique

Rizwan Saeed

Afshan Nazakat

Faculty of Management Sciences

Air University

2

Table of Contents

Executive Summary...................................................... 6

Highlights .......................................................... 8

Objectives....................................................................... 9

Mission Statement ................................................. 11

Key to Success................................................................. 11

Company Summary ............................................................. 12

Start – Up Summary................................................... 12

Company Locations & Facilities .............................................14

Products & Services........................................................... 15

Sales Literature ................................................................... 15

Product & Service Description........................................ 15

Competitive Comparison.................................................. 16

Technology ............................................................. 17

Service & Support....................................................... 17

Future Products & Services......................................................................... 18

Fulfillment........................................................................... 18

Market Analysis Summary........................................................................ 19

Market Segmentation.............................................. 19

Target Market Segment Strategy............................................................... 20

Market Trends................................................................. 21

3

Market Growth.............................................................. 21

Market Needs................................................................ 22

Service Business

Analysis.......................................................................... 22

Industry Analysis......................................................... 24

Competition & Buying

Patterns........................................................................... 26

Distributing a Service.................................... 26

Main Competitors.............................................................. 26

Competitor Analysis.......................................................... 27

Strategy and Implementation Summary.................................................................... 27

Competitive Edge......................................................... 27

Strategy Pyramid............................................................................. 28

Value Propositions...................................................... 29

Value – Stream Mapping .................................. 30

Marketing Strategy............................................................ 31

Sales Strategy............................................................... 32

Sales Forecast................................................................. 32

Milestones..................................................................... 34

Sales Programs ................................................................... 36

Marketing Program ............................................................... 36

Positioning Map ............................................................. 37

4

Strategic Alliances ................................................................ 39

Management Summary......................................................... 39

Organizational Structure.................................................... 40

Personnel Plan ...................................................................40

Management Team ................................................................44

Financial Plan ...................................................................44

Start – Up Funding................................................................. 45

Important Assumptions....................................................... 47

Key Financial Indicators......................................................... 48

Break Even Analysis.............................................................. 49

Projected Profit & Loss......................................................... 50

Projected Cash Flow............................................................ 53

Projected Balance Sheet........................................................ 55

Business Ratios................................................................. 56

Appendix ...................................................................58

5

Acknowledgement

We are extremely grateful to Mr. Imran Hameed for assigning us this

project and giving us the opportunity to explore of inner capabilities as well as implementation of academic acquisition of Entrepreneurial

Skills in Real Life. We are again grateful to him for his guidance, assistance and useful help in fulfillment of this project.

6

Executive Summary

Cellular phones have revolutionized the communications arena, redefining how we perceive voice and visual, as well as advent of the

Personal Digital Assistant’s (PDA) or Pocket Pc’s. Traditionally, cellular phones remained out of the hands of most consumers due to their

high cost. As a result, cell phone carriers have invested time and resources into finding ways to give the systems higher capacity and

thus lower cost. Cell systems are benefiting from this research and

starting to develop into large-scale consumer products.

Today, cellular phones are truly consumer electronics devices with over 59 million subscribers. The Nokia N – 9, Samsung Galaxy and

i - Phone are further evidence of the idea that cell phones are consumer electronics devices. Cell phones have ceased to be an

exclusive status symbol of high-powered lawyers and are now in the hands of millions of consumers.

Vempain Teknikka, Inc. is taking advantage of an opportunity to

become a highly distinguished and recognized leader in the cellular communications industry. It is the goal of our company to become

established as the leading distributor of wireless communications services in Pakistan and in Area of South Asia.

In order to achieve this goal, Vempain Teknikka critical success factors will be to identify emerging trends and integrate them into our

company operations, respond quickly to technology changes/be there early, provide high-quality services, invest time and money in

marketing and advertising, expand into specialty markets, and stay ahead of the "technology curve."

Revolutionary Cell phone-Gadget (Nano-Gadget) is a high-end device.

Symbolic Value Propositions:

Newly-enabled flexible and transparent materials blend more

seamlessly with the way we live. Integrated sensors might allow us to learn more about the

environment around us, empowering us to make better choices

(Environmental Sensing). Transparent electronics offering an entirely new aesthetic

dimension. Devices become self-cleaning and self-preserving.

7

Renewable power resources inclusive moderate wind,

lightening/thundering and solar energy for operation and recharging.

The Nano-Gadget will be sole manufactured at initial stages, followed by Global Alliances/Strategic Alliances for pursuing the manufacturing

and engendering pool of Funds & Investments from Investors/Stake Holders. Alliance/Partnership with Global Thumbs and Big Wigs of the

Industry will also entail Global Expansion with the aim of reaching and

providing this transgressing Nano-Gadget to every Human Being of Human Kind.

Nanotechnology & sciences in the realm of consumer electronics is in its’ own a solid proof and evidence as the Nanotechnology & Sciences

Industry has been evolving since 15 to 20 years along with World Class Business & Products. The so called ―Prototypes & Prologue‖ of

the Cell phone-Gadget (Nano-Gadget), appended Snap of the

Exposition which has also been held and conducted at the ―The Museum of Modern Art‖ and displayed as part of the museum's

"Design and The Elastic Mind" Exhibit.

The unveiling demonstration of the concept, so called‖ Prototype‖

at The Museum of Modern Art in the Global Arena has helped us to impart information and awareness creating widespread

Comprehension , Image and Pre-Dominating Loyal customer Base.

Backend conducted surveys in Global Economies and Repeated Customer Surveys for the Demand-Estimation (Expected) has

engendered trends and outcome depicting rapid growth rate for progressing upward sloping and exponential demand.

8

Highlights

9

Objectives The company plans to focus on the following target markets that will

provide us with the greatest market penetration: the specialty users, the general users, and the personal users. We intend to offer products

and service packages that are priced appropriately for each segment and will offer the services that best suit each segment's needs.

“Inclusive Alliance/Partnership with Global Thumbs and Big Wigs of the Industry for pursuing Global Expansion with the

aim of reaching and providing this transgressing Nano-Gadget to every Human Being of Human Kind.”

The above excerpt Statement Serves as Foundation Stone for

Customer Segmentation, Targeting & Positioning. Planet Earth is the Target Market for the Business, as the Business will operate with the

Maxim, Belief & Vision of Life Enhancement and Problem-Solving. So Target Market will be in the form of Global Community entailing every

Human Being from all Social Classes, Income Categories and Tiers of Economic Pyramid with Differential Pricing Techniques & Semi-Pricing

Techniques serving as Key Success Factor (KSF) for conducting the Business Successfully (From Tier -1 to Tier – 4; Exclusive concern for

the Bottom of The Pyramid).

10

Our company will center on serving the growing Target Market

(Community) (presently at a 6% per year rate) as well as concentrating on the local (Urban & Rural) population, banking on the

current growing trend of using mobile phones.

Our company will concentrate on selling products for Global System for Mobile Communications (GSM) protocol cellular phones - sales,

services and support.

Business Objectives:

Company growth Become established as the leading distributor of cellular phones and

wireless communications services Increase number of retail outlets

Financial Objectives:

Create and increase revenue

Marketing Objectives:

Increase marketing efforts Expand market area

Expand marketing reach Brand recognition

Increase telemarketing efforts

Operational Objectives:

1. Achieve healthy earnings (EBIT) in the first year of operation.

2. Maintain a midrange gross margin throughout the entire operation.

3. Maintain just-in-time (JIT) inventory levels, or 11 turns per year. 4. Increase sales modestly but steadily in the second and third

years.

11

Mission Statement

Vempain Teknikka mission is to offer its customers the highest

quality cell phone products and network services. Its owner focuses on personalized service to his customers by offering convenience and

rapid service. Additionally, Vempain Teknikka has the technological expertise to assist customers in picking the product and service that

best meets their needs. Finally, our staff will have strong vendor relationships with the product suppliers and will be able to meet

customers' demand for the newest innovation in cellular phone technology.

We believe it is important to remain an active member of the community, and to impact people's lives in more ways than deriving a

profit from them. We propose to host community events that bring out the best in people.

Keys to Success

The keys to our success are:

Building and maintaining strategic alliances with our manufacturers and other industry related business partners;

Adopting a customer- and market-focused sales and marketing paradigm; and,

Managing the business by implementing, and consistently measuring and adjusting the fundamentals of a Balanced

Scorecard:

1. Financial Goals vs. Results 2. Internal Business Process Goals vs. Results

3. Employee Learning and Growth Goals vs. Results 4. Customer Satisfaction Goals vs. Results

Our company keys to success will include:

Provide excellent customer service Grow and maintain a referral network of customers

Focus expertise in GSM cellular phones and GSM cellular phone programs

Respond rapidly to customer problems with product or plan

12

Company Summary

Vempain Teknikka, Inc. will manufacture, sell and serivce high-end

devices, with a focus on the Target Market (community). Vempain Teknikka, will be formed as the result of the acquisition of three

existing businesses: Maui Technologies, Inc.; Electronics Hilo, Inc.; and, Kauai Telecommunications, Inc.

Company Ownership Vempain Teknikka will be initially a sole proprietary company for its

first year launch and official commencement of the business, in order to make it a fully fledged and newly Fangled Company for future.

Afterwards it will be privately-held [Limited Liability Company] owned in majority by its Employee Stock Ownership Trust. There are currently

15 employees, and all will own equal shares in the ESOT. New employees will be given the opportunity to become vested in the

Employee Stock Ownership Plan (ESOP) after a suitable probationary

period.

Start-up Summary Our start-up costs will be $1M, which includes $450,000 for the acquisition of the Maui and Hilo operations of Integrated Office

Technology.

The remainder of the funds will be used for: Initial Inventory: $200,000

Initial Capitalization: $225,000 Legal, Insurance, Rent & Misc: $125,000

The start-up funding will be financed by loans arranged through the Micro Finance Bank, and by the Community Loan Fund, and the Small

Business Administration as a guarantor. Start-up assumptions are shown in the following table and chart.

13

Start-up Requirements

Start-up Expenses

Legal/Accounting $10,000

Stationery etc. $1,500

Brochures $1,000

Consultants $7,500

Insurance $25,000

Rent $15,000

Software & IT (Web) $40,000

SPI Buyout $450,000

Setup New Company/ESOP $25,000

Total Start-up Expenses $575,000

Start-up Assets

Cash Required $225,000

Start-up Inventory $200,000

Other Current Assets $0

Long-term Assets $0

Total Assets $425,000

Total Requirements $1,000,000

Start-up Funding

Start-up Expenses to Fund $575,000

14

Start-up Assets to Fund $425,000

Total Funding Required $1,000,000

Assets

Non-cash Assets from Start-up $200,000

Cash Requirements from Start-up $225,000

Additional Cash Raised $0

Cash Balance on Starting Date $225,000


Liabilities and Capital

Liabilities

Current Borrowing $1,000,000

Long-term Liabilities $0

Accounts Payable (Outstanding Bills) $0

Other Current Liabilities (interest-free) $0

Total Liabilities $1,000,000

Capital

Planned Investment

Investor 1 $0

Investor 2 $0

Other $0

Additional Investment Requirement $0

Total Planned Investment $0

Loss at Start-up (Start-up Expenses) ($575,000)

Total Capital ($575,000)

Total Capital and Liabilities $425,000

Total Funding $1,000,000

Company Locations and Facilities The company will be headquartered in Islamabad, Pakistan. We have

two locations, one South Korea and the other in China. The two offices

are presently being leased by the local authorities by Vempain Teknikka and we will rent from them on a month-to-month basis until

we are able to relocate to more suitable facilities. On Kauai, we have a sub-contractor agreement with Kauai Technology Equipment to handle

installations and service.

15

Products and Services

Vempain Teknikka will acquire an existing operation whose primary

business has been the manufacture, sale and service of business appliances (consumer electronics, facsimiles, High End Devices etc.)

and will operate as a part of the Nano –Sciences Telecommunications Industry. We will build from this base to transform the business into a

value-added provider of the emerging services and technologies of the new Information Industry. Following the lead of Nokia, Germany and

other manufacturers which we represent, we will approach the marketplace from a total communications and connectivity solutions

viewpoint.

This new paradigm will begin with an analysis of the customers existing and planned usage, and will provide total workflow solutions

utilizing multifunctional platforms and information distribution systems. These systems will be backed by professional and reliable

technical service and proactive customer service. By forming strategic

alliances with Global Nano Sciences & Telecommunications Industry Value-Added Resellers, we will be able to offer Global System for

Mobile GSM, General Packet Radio Service GPRS or Enhanced Data Rates for GSM Evolution (EDGE), Wireless Application Protocol (WAN)

and turnkey Local Area Network (LAN) systems and the ability to retrofit existing LAN and peer-to-peer communications & systems.

Sales Literature Copies of our product and sales literature are attached as appendices.

Of course, one of our first tasks will be to change the message of our literature to make sure we are selling the company, rather than the

product.

Product and Service Description

Vempain Teknikka will market and sell brand name consumer and

business communication, connectivity & information distribution systems and hardware, technical service and support for these

products, and the consumable supplies used by these systems. We will be a single-source provider for and business communication,

connectivity & information distribution systems products and services.

16

After researching our various manufacturers’ offerings and

evaluating our core competencies, we will focus our marketing and sales efforts around the digital & High – End products offered by

our manufacturers. We will supplement this product line with Litter Guard and Bolt Cellular Phone Accessories which includes:

antennas, batteries, belt clips, cables and adapters, cases, chargers, faceplates, and modems.

As we continue to transition the company into the high end & digital

product/service vendor, we will form alliances with additional IT manufacturers and suppliers who can round out our product and

services line.

The following are the products that will be offered by Vempain

Teknikka, Inc:

GSM Cellular Phones: Nano – G, Nano – G Extreme & Nano 7.

Fixed Wireless Phones

Cellular Phone Accessories: antennas, batteries, belt clips,

cables and adapters, cases, chargers, faceplates, and modems.

Competitive Comparison The only way we can hope to differentiate well is to define the vision of

the company to be a technology provider to our customers. We will not be able to compete in any effective way with the large giants. We need

to offer a real complete package to our local (urban & rural) customers.

The benefits we sell include many intangibles: confidence, reliability, knowing that somebody will be there to answer questions and help at

the important times. These are complex products that require serious knowledge and experience to use. Our competitors tend to sell only

the products themselves, and very little in the way of after-sale training and support.

17

Unfortunately, we will not sell these products at a higher – end of

prices not just because we are here to offer products and services both which will engender substantial revenues by offsetting each other but

we are here with a vision to provide our customers accessibility, connectivity and portability, along with products and services at

Quality, Quantity and Economically affordable; the market has shown that it will not support that concept. We have to also sell the service

and consumable supplies and charge for them separately. This monthly recurring revenue is the foundation of our financial stability.

Technology New technology has changed almost everything about the traditional

office equipment (copier) industry, and for all practical purposes it no longer exists. The Nano Sciences Industry has emerged because of the

technology of convergence. The primary driver of convergence of different forms of information is technological change, specifically the

rapid diffusion of digital technology into an ever-wider array of

information. Beyond digitization, dramatic changes in computing and telecommunications industries (mainly in faster microprocessors and

increasing bandwidth) are also driving convergence.

Vempain Teknikka, will make convergence the theme of its vision, planning, and marketing strategies. We will move into the new

Information Industry's technology with the aim of bringing the most efficient workflow solutions to our Customers while providing value-

added customer support and service, and earning a reasonable profit in the process.

Service and Support Our strategy hinges on providing unparalleled service and support,

which is critical to setting us apart from the competition. We need to differentiate on service and support in order to become true partners

with our Customers. Our service offers will include:

Uptime guarantees: we will include "uptime guarantees" with

our all-inclusive service agreements to insure maximum productivity for our Customers.

Internal training: the "learning and growth" part of our

Balanced Scorecard performance measurement strategy will include the requirement that our Systems Engineers and sales

18

professionals become network and IT certified by the end of

FY2011.

Customer training: we will package comprehensive customer training programs with all of our offerings, to include systematic

follow up and refresher training.

Upgrade analysis: we will periodically assess our client's

business processes and requirements, and offer cost-effective upgrade solutions to meet changing needs.

Future Products and Services Beginning at start up, we will explore and research new information

technologies for inclusion in our product offerings. The products which

we choose will be in line with our vision to transition the company from being an appliance seller, to being a provider of total information

management solutions. These convergent information products will include:

Wireless LAN systems

Information & Connectivity management systems (hardware and software)

Tele-business and E-Commerce systems Media transport and reproduction (Distribute and Share)

Fulfillment We have an established relationship with our manufacturers and

suppliers, and will be able to take advantage of all discounts and

promotions in order to keep our margins at roughly 49% throughout the operation. We will also implement and employ "just-in-time"

inventory strategies for hardware, supplies, and service parts orders to further strengthen our margins.

As we continue to grow the business, we will evaluate other IT

industry manufacturers and product lines to strengthen our offerings with a view primarily to quality and margin advantages.

19

Market Analysis Summary

Vempain Teknikka will focus on global as well as on local markets,

including Children in the (age group of 10-17 years old), Students, General public, Professionals & Service organizations and companies

that need to be in constant communication with their employees and people around them.

Market Segmentation Vempain Teknikka, Inc., Inc. will focus on five customer groups, bearing in mind that it is quite customary today to have more than one

cell phone per family:

Children in the age group of 10-17 years old Students

General public/ Generic Users Professionals

Service organizations and companies that need to be in constant

communication with their employees.

20

Market Analysis

Year 1 Year 2 Year 3 Year 4 Year 5

Potential

Customers Growth CAGR

Children 10-

17 years old 3% 90,000 92,700 95,481 98,345 101,295 3.00%

Students 2% 50,000 51,000 52,020 53,060 54,121 2.00%

Professionals 2% 40,000 40,800 41,616 42,448 43,297 2.00%

General Public 2% 250,000 255,000 260,100 265,302 270,608 2.00%

Operating

Service Companies 4% 40,000 41,600 43,264 44,995 46,795 4.00%

Other 1% 30,000 30,300 30,603 30,909 31,218 1.00%

Total 2.29% 500,000 511,400 523,084 535,059 547,334 2.29%

Target Market Segment Strategy

Developing a market strategy is a departure from the way the company has been managed in the past. We will change the paradigm

of being a product- and price-focused sales organization, to that of becoming a customer- and market-focused organization, with all

departments sharing responsibility for customer satisfaction. We will

accomplish this paradigm shift through the implementation of a balanced scorecard philosophy of management, with special attention

to employee learning and growth.

As mentioned previously our market segmentation strategy is straightforward, and addresses all components of the Target Market

(Community). Planning and implementing specific strategies for each of the four identified segments will be an on-going process, and we will

consult with marketing specialists, and our manufacturers, to further refine these efforts as we develop our marketing plan.

21

The market for cellular phones and their accessories is very

fragmented, crowded and competitive. Vempain Teknikka, Inc. current niche in its location, variety of products and expertise in

serving the public will assure the projected sales.

We expect to take full advantage of the trends described in the Market Analysis above, and try to penetrate the market with new innovations

and gadgets — mainly with the younger generation, using advertisements and demonstrations. We shall also try to lure

independent small sellers and manufacturers to join our effort.

Market Trends

The most significant trend in today's business-to-customer marketplace is the move from analog to digital technology and from

stand-alone workflow functions to multifunctional platforms which are

connected to a network. It is this trend that has caused many of the major players in the outdated connectivity and

telecommunications industry (Motorola, Ericsson etc.) to falter, and see their profits decline. This is true mainly because of their inability to

change rapidly from an "analog mentality" and move forward in applying the emerging convergence of digital and modern

technologies to their products and the marketplace.

That is the primary reason that VEMPAIN TEKNIKKA, INC. has chosen as Maui Technologies, Inc; its preferred manufacturer. Maui

Technologies, Inc has led the way in the industry with its digital technology innovations, and its ability to bring both the product and

the concept to the marketplace. We will follow Maui Technologies, Inc lead and bring this efficient, productivity-enhancing technology.

Market Growth

As Cell phone-Gadget continue to fall, unit sales increase. The published market research on sales of Cell phone-Gadget is

astounding, as the United States market alone is absorbing more than 30 million units per year, and sales are growing at more than 20

percent per year. We could quote Dataquest, Infocorp, IDC, or others; it doesn't matter, they all agree on high growth of cell phones sales.

This rapid growth rate holds true for Cell phone-Gadget which

connects people and business around the globe whether they are urban or rural. The stand-alone analog systems and appliances which

abound in the customer and business marketplace today will be

22

replaced by connected digital convergence systems in the coming

months and years. VEMPAIN TEKNIKKA, INC. will position itself to be a value-added provider of this rapidly emerging technology for its

customers.

Market Needs

All customers and businesses have in common a need to be continuously productive, and they rely on their service providers and

vendors to sustain their productivity. Effectively filling this need requires that the vendor bring to the table sound planning, quality

products, reliable service, and a true partnership and support relationship.

Specific business needs include the ability to communicate, connect,

access, portability and gather, compile, analyze, and distribute

information in various formats. This is where VEMPAIN TEKNIKKA, INC.'s strengths will be most beneficial to our Customers, both big and

small. Anyone can sell the "Cell phone" at an attractive price, but only a true value-added provider can offer the peace-of-mind that comes

from a customer-focused approach to the relationship.

Primarily due to geographic distances/High proximity and hefty population, the Target Market (Community) has an additional common

need of being able to rely on other locally-based vendors and suppliers for quick, reliable, customer service and support. Having to call

someone on Alaska, or the mainland, to place a service call, or to order supplies, or get an answer to a simple billing question, is both an

irritant and a hindrance to most people. Our primary goal is to fill this need by bringing true pro-active, and total, customer service to the

Target Market (Community), and to gain their confidence and loyalty.

This will become one of our underlying strengths.

Service Business Analysis

VEMPAIN TEKNIKKA, INC. will be part of the Nano Sciences & Telecommunications Industry, and specialize in providing connectivity

& information management systems and technology for customer purposes as well as business processes. We envision that a converged

Nano Sciences & Telecommunications industry operating within the context of an advanced information infrastructure will be a huge boost

for Customers and businesses. Several Washington think tanks estimate that it could spur more than $300 billion annually in new

sales and increase worker productivity by 20 to 40 percent.

23

At the present time, an estimated two-thirds of all global jobs are information related, and that number will increase as the shift from

manufacturing to service industries continues. The convergence of Nano Sciences & Telecommunications industries will continue because

the technological and business imperatives are compelling. If one company does not see the possibilities, another will.

24

Industry Analysis

Porter Five Forces Model

Force Rating/Score

Threat of New Entrants High

Threat of Substitute Products

or Services

Low

Rivalry Among Existing

Competitors

High

Bargaining Power of

Costumers

High

Bargaining Power of

Suppliers

High

The Global market is dominated today by three large companies:

T-Mobile Wireless - owned by a subsidiary of Deutsche Telekom since May 31, 2001.

Revenues: Exceeding $13.6 billion in 2001.

Wireless Phone Service Subscribers: Cellular voice, messaging and high-speed wireless data services to more than 8 million customers.

Cellular Phone Service and Technology: T-Mobile Wireless operates the largest all digital, wireless networks based exclusively on GSM

(Global System for Mobile Communications) technology. GSM is the

25

most widely used digital standard worldwide, accounting for more

than 70 percent of the total digital wireless market.

Nextel Communications, based in Reston, VA, is a leading provider of fully integrated, wireless communications services on the largest

guaranteed, all-digital, wireless network in the country. Ownership: Nextel Wireless is traded on the NASDAQ National

Market under the symbol NXTL. Nextel Partners is a separate company traded on the NASDAQ National Market.

Revenue on the cellular service $8.7 billion (2002). Cellular Phone Service Subscribers: 10.61 million (Q4 2002).

Cellular Phone Service and Technology: Nextel uses a packet-based platform, the integrated Digital Enhanced Network (iDEN™)

technology, developed by Motorola. The Nextel 4-in-1 service—Nextel Digital Cellular, Direct ConnectSM, Nextel Mobile Messaging,

and Nextel Online®—covers thousands of communities across the

United States. Nextel and Nextel Partners, Inc., currently serve 197 of the top 200 U.S. markets.

Nokia Corporation, a Finnish multinational communications corporation

that is headquartered in Keilaniemi, Espoo, a city neighboring Finland's capital Helsinki.

Nokia is engaged in the manufacturing of mobile devices and in converging Internet and communications industries, with over

132,000 employees in 120 countries, sales in more than 150 countries and global annual revenue of over €42 billion and

operating profit of €2 billion as of 2010.

It is the world's largest manufacturer of mobile phones: its global device market share was 23% in the second quarter 2011. Nokia's

estimated share of the converged mobile device market was 31% in

the fourth quarter, compared with 38% in the third quarter 2010.

Nokia produces mobile devices for every major market segment and protocol, including GSM, CDMA, and W-CDMA (UMTS).

Nokia offers Internet services such as applications, games, music,

maps, media and messaging through its Ovi platform. Nokia's joint venture with Siemens, Nokia Siemens Networks produces

telecommunications network equipment, solutions and services. Nokia is also engaged in providing free digital map information

and navigation services through its wholly owned subsidiary Navteq.

26

Vempain Teknikka, Inc. is aiming to gather a share of the market from

these three giants.

Competition and Buying Patterns

Optimally Generic Users, Urban Professionals, decision makers and corporate professionals understand the concept and value of products

service and support, and are much more likely to pay for it when the offering is clearly stated.

There is no doubt that we compete more against the product pushers

than against other service providers. We need to effectively compete against the idea that our costumers should buy gadgets as plug-in

appliances that don't need ongoing service, support, and training.

Our research and experience has indicated that our target market

segments think about price, but would buy based on quality service, if the offering were properly presented. They think about price because

that is what is traditionally presented to them first. We have very good indications that many would rather pay 10-20% more for a

relationship with a long-term vendor providing back-up and quality service and support. They end up in the channels because they are

not aware of the alternatives.

Accessibility, Availability & Distribution is also very important. The Generic Users, Professionals & decision makers (customers) tend to

want immediate, global solutions to problems.

Distributing a Service Medium to large customer segment buyers are accustomed to buying

from vendors and their outlets, who visit their offices. Businesses usually expect the cell phone or network connection vendors, office

products vendors, or whomever, to visit their office to make their sales.

Unfortunately our target segment buyers may not expect to buy from

us. Many of them turn immediately to the retailers, intermediaries or other dealers (Cell phones, Network Connections, and Cell phone

accessories), the Web, and mail order to look for the best price, without realizing that there is a better option for them for only a little

bit more. We will overcome this hurdle through innovative service offerings, and targeted marketing.

27

Main Competitors Our main competitors as mentioned earlier are Nokia, T – Mobile and

Nextel Communications in context of Services (Telecommunication & Network).

Whereas, our main competitors in context of products (cell phones &

Cell phone accessories) are Nokia, Samsung & I – Phone currently being offered by them.

Competitor Analysis

Key Industry

Success Factors

Competitor

#1 rating

T – Mobile

Competitor

#2 rating

Nokia

Competitor

#3 weighted

Nextel

1 - Extensive distribution 6 3 1.2

2 - Customer focus 4 5 1.5

3 - Economies of scale 3 3 .6

4 - Product innovation 7 4 .4

Totals 20 15 3.7

Strategy and Implementation Summary Vempain Teknikka, Inc. will use a strategy of total market service. Assumptions:

1. Every person is a potential customer and all our potential markets

will experience growth. 2. Marketing to one segment of the population will lead to an

expansion in overall market growth.

28

The following sections review the various strategies that will support

this effort.

Competitive Edge

Our competitive edge is our positioning as a strategic ally with our clients, who are clients more than customers. By building a business

based on long-standing relationships with satisfied clients, we simultaneously build defenses against competition. The longer the

relationship stands, the more we will help our clients understand what we offer them and why they should both stay with Vempain Teknikka,

and refer us to other businesses. In close-knit communities like the South Asia, Europe and North America reputation is extremely

important, and word-of-mouth advertising is invaluable

Vempain Teknikka, competitive edge will be:

Location: Locating the company in a suburb of South Asia enables the company

to cover a large and rapidly developing customer populace.

Customer Service: The CEO of Vempain Teknikka, Inc has a lot of research and has dig

out in these industries for past many years, and accumulated a vast knowledge and experience in the cellular phone market, with a special

expertise in GSM phones. He is very familiar with his target customer base. He has an excellent reputation for customer service.

E-Commerce:

The company will make an effort to enhance its sales through a serious and advantageous website in order to attract customers that

are reluctant to do business with large companies.

Strategy Pyramid

Our main strategy will be placing emphasis on service and support, and our main tactics are networking expertise, systems training, and

implementing a customer relationship management system (CRM) from e-automate. Our specific programs for networking include mailers

and internal training. Specific programs for end user training include direct mail promotion, and on-site customer programs. Implementing

29

the CRM software and training will be coordinated with the e-automate

Corporation.

Our second strategy is emphasizing relationships. The tactics are marketing the company (instead of the products), more regular

contacts with the customer, and increasing sales per customer. Programs for marketing the company include new sales literature, and

direct mail. Programs for more regular contacts include call-backs after installation, direct mail, and sales management. Programs for

increasing sales per customer include upgrade mailings and sales training.

Value Proposition

The phone's feature list would include the ability

to mould/reshaped into numerous shapes, so it can be worn around the wrist or held up to the face; transparent electronics, which would

allow the device to be see-through yet functional, self-cleaning surfaces that can absorb solar energy, renewable power resources

inclusive moderate wind, lightening/thundering and solar energy for operation and recharging of the cell phone-gadget and a wide range of

fully integrated sensors and connectors that will operate in the form of Grass Sensors; using the platform of ―Nano-Grass‖.

Symbolic Value Propositions:

Newly-enabled flexible and transparent materials blend more

seamlessly with the way we live. Integrated sensors might allow us to learn more about the

environment around us, empowering us to make better choices

(Environmental Sensing). Transparent electronics offering an entirely new aesthetic

dimension. Devices become self-cleaning and self-preserving.

Renewable power resources inclusive moderate wind, lightening/thundering and solar energy for operation and

recharging.

30

Value – Stream Mapping

Daily

4,167 Units

Ship

4,167 Units

Monthly

End User

(Target Customer)

Component

/Circuit

Configurati

on

Software

Installation

Operational

Run Quality

Assurance

Laser

Marking

Assembling Packaging

12

Operators

4 – 5

Operators

2

Operators

2

Operators

6

Operators

2

Operators

5

Operators

Process

Management

Production in - Charge

Daily Communication

20 Days

Supplier of

Sub -

Assemblies

31

Marketing Strategy

The marketing strategy is the core of our main strategy:

Emphasize service and support

Build a relationship business Develop specific programs for each target market segment

Short-term marketing strategies are those that bring will bring us a temporary boost in traffic. Although these techniques are very

important to our over-all plan, they are only a temporary traffic source and must not be solely relied upon. Short-term marketing strategies

include:

Purchasing Advertising Bulletin Boards

Search Engines

Long-term marketing strategies are those that will bring us a steady stream of targeted traffic over time. These strategies will continue to

produce results even years down the road. Long-term marketing

strategies include:

Opt-in Lists Freebies

Content

By creating and implementing a balanced marketing strategy, using both short-term and long-term strategies, Vempain Teknikka will drive

a steady stream of targeted traffic to our website. Using this simple formula when creating our Internet marketing

strategy and excelling at all three, we hope to guarantee our success. Our short-term marketing strategy will focus heavily on sales

promotion, niche positioning in the market and customer service with loyalty and retention in sales.

Our promotions will always stay in tune with our company objectives

and mission statement.

32

Sales Strategy

Constructing our Sales Strategy we shall follow the following steps:

Sales Success Requires Planning - we shall formulate our sales

strategy and tactics to achieve our sales success.

Analyze Our Potential - we shall step through a structured process that will prepare us for the development of our sales strategy.

Strategize Around Strengths - the description of our sales

activity will be analyzed producing a report that reveals factors impacting our sales potential.

Develop Our Tactics - we shall receive guidance to develop a

comprehensive tactical plan to achieve our success.

Measuring Our Success - we shall constantly develop key

measurements that mark the progress of financial estimates that guide our growth.

Employ An Action Plan for Success - we shall provide our sales

force a clear tactical plan that is also aligned with management's strategic objectives.

The sales strategy of Vempain Teknikka, Inc. is simple. The key to

customer satisfaction is having the product and services that meet the customer's needs. A crucial part of that is to also have

knowledgeable employees to help customers quickly find what they want.

Sales Forecast

Sales forecast displayed here is very conservative — although we aim very high, we decided to show a very slow growth and revise the plan

on a yearly basis. As a rule we expect to expand the volume much more rapidly.

33

Sales Forecast

Year 1 Year 2 Year 3

Sales

Cellular Phones $138,000 $190,000 $270,000

Cellular Phones Accessories $126,000 $160,000 $200,000

Fixed Wireless Phones $46,500 $60,000 $90,000

34

Other Sevices $46,500 $90,000 $150,000

Total Sales $357,000 $500,000 $710,000

Direct Cost of Sales Year 1 Year 2 Year 3

Cellular Phones $31,650 $43,560 $61,900

Cellular Phones Accessories $30,450 $41,500 $51,800

Fixed Wireless Phones $11,700 $15,500 $23,300

Other Services $11,710 $23,300 $38,900

Subtotal Direct Cost of Sales $85,510 $123,860 $175,900

Milestones

The Milestones table hereunder is destined to be a working plan for the formation of the new organization, including legal negotiations, hiring

of personnel, rental of the facility, building of initial inventory, beginning of marketing and start of physical operation.

The team to execute the chores will have to follow up on the timetable

and make sure that everything falls in place — to ensure smooth start

of sales and success of the organization.

35

Milestones

Milestone Start Date End Date Budget Manager Department

Preview of Business

Plan by Investor 1/1/2005 1/15/2005 $1,000 CEO Department

Concluding

Legal Matters 1/10/2005 2/10/2005 $4,000 Owner Department

Hiring of

Operators 2/1/2005 3/1/2005 $500 CEO Department

Conclusion of Rentals 1/15/2005 2/15/2005 $2,000 Owner Department

Preparation of Website 1/15/2005 3/1/2005 $2,500 Programmer Department

Acquiring Initial

Inventory 2/15/2005 3/15/2005 $31,000

Store

Personnel Department

Start of Marketing 3/1/2005 4/1/2005 $3,500

Marketing Mgr. Department

Start of

Operation 4/1/2005 4/10/2005 $2,000 All Department

Totals $46,500

36

Sales Programs

Specific sales programs will be included in our new Marketing Plan, and

will be included in this Business Plan as they are finalized. In general however, our sales programs will be centered around conducting

workflow and information distribution analyses, direct mail, and placing an emphasis on the benefits which VEMPAIN TEKNIKKA, INC.

and its manufacturers will be able to offer its Customers through "total care" service and support.

Marketing Programs As we worked to complete this Business Plan, we have simultaneously

worked on our Marketing Plan. Because we are developing a new start

– up business, the foundations stones for our vision of customer- and market-focused strategies will not happen overnight. We must plan

this shift carefully, and implement it judiciously, so as not to disrupt our immediate operations. The business has been budgeted for, and

will utilize, marketing advisors and consultants (including our manufacturers) for future designing of a New Marketing Plan, which

will be its operations oriented.

Positioning Statement

For businesses who want to be sure their information distribution systems are always working reliably, VEMPAIN TEKNIKKA, INC. is a

vendor and trusted strategic ally who make certain their systems

work, their people are trained, and their down time is minimal. Unlike the product/price oriented vendors, it knows the customer and goes to

their site when needed, and offers proactive support, service, training, and installation.

37

Positioning Map

Pricing Strategy

We must charge appropriately for the high-end, high-quality service

and support we offer. Our revenue structure has to match our cost structure, so the salaries we pay to assure good service and support

must be balanced by the revenue we charge.

We cannot build the service and support revenue into the price of products. The market can't bear the higher prices and the buyer feels

ill-used when they see a similar product priced lower with the competition. Despite the logic behind this, the market doesn't support

this concept.

High Quality

Low Quality

Low

Price

High

Price

Vempain

Teknikka

38

Pricing Model:

39

1Skimming Pricing Strategy


2 & 3Semi-Skimming Pricing Strategy


4Differential & Penetration Pricing Strategy








Promotion Strategy

We will employ the following general promotional strategies for the various market segments:

Generic User: We will depend on periodic local newspaper

advertising, to reach new buyers in this segment. We will also utilize direct mail and and the resources of the local Chambers of

Commerce and other affinity groups to reach this segment. The message will emphasize service first, and "complete product and

service packaging" as a secondary theme.

Urban Professionals: Direct face-to-face contact (direct sales) will continue to be our primary strategy for this market segment. Direct

selling will be supplemented by periodic promotional direct mailings and personalized system upgrade opportunities.

Corporate Professionals: This segment will be handled by direct contact and relationship building only. We will make personal

40

presentations to the decision makers in this group, and stress our

service and technical benefits and advantages.

Service/Operating Organization: a combination of direct mail and face-to-face promotional strategies with this segment and the

message will be the local service and technical advantages of VEMPAIN TEKNIKKA, INC. We will produce an attractive RFQ/RFP

response package to accompany our submissions.

Distribution Strategy

VEMPAIN TEKNIKKA, INC. is first and foremost a direct sales organization, meaning that we must present our services and products

directly to the majority of our customers and Customers. Having said that, for our planned penetration into the our Target market, we will

need to establish a presence as a Value-Added Reseller (VAR) for certain high-end product lines which don't carry the margins

necessary to sustain the costs of direct sales. We will plan our new

locations accordingly.

Strategic Alliances

Our alliances with our manufacturers, and especially Maui Technologies, will be the most pivotal to our success. We will remain a

Maui Technologies Authorized Dealer, and continue to enjoy all of the benefits of this long-standing relationship.

We will form alliances with other locally-based VARs and computer

network providers to enable us to provide complete turnkey packages for our Customers. These relationships are included in our Marketing

Plan.

Management Summary

Our management philosophy is simple and is an integral part of our

values: doing right things right, the first time (Kina'ole).

VEMPAIN TEKNIKKA, INC. will be an employee-owned company and

we all share the same vision of providing our Customers (who in many cases are friends and neighbors) with the very best in customer

service - period. We will encourage personal growth, creativity, and enable individual empowerment to achieve this goal. We will manage

41

the business by setting achievable Balanced Scorecard goals,

measuring them, and making mid-stream adjustments as necessary.

Organizational Structure

Our team includes 15 employees initially, and is organizationally flat. The departmental divisions are sales and marketing, service, and

administration. Operational managers include:

President and General Manager:

He will oversee all operations with primary responsibilities for sales and marketing. Functioning as the GM, this position will spend a good

deal of time in the field assisting the Account Managers, and helping to build and maintain client relationships.

Secretary/Treasurer and Administrative Manager:

He will supervise all administrative functions including inventory; A/P and A/R, banking, HR, and vendor and manufacturer relations. Primary

contact point for customer service issues and follow up. He will be assisted by an Office Manager in the Hilo branch.

Systems Manager (two positions - Maui):

Will Manage all service issues including; service agreements, service

call prioritization and response, carry-in service, customer support, and systems training and development. He will be assisted by Systems

Engineers, and Systems Technicians.

Personnel Plan

The total head count moving over from grass root level to fully fledged

company, at the time of the acquisition will be 13. We are adding two former employees at startup to round out our team, for a total startup

head count of 15.

There are an additional six positions shown as "vacant" in the Personnel plan. During each quarterly business plan review, we will

assess the need to fund these positions to sustain our growth, and more evenly distribute the workload.

42

Personnel Plan


Production Personnel

None planned $0 $0 $0

Other $0 $0 $0

Subtotal $0 $0 $0

Sales and Marketing Personnel

Sales (Maui) $38,250 $40,545 $42,978

Sales (Kona) $38,250 $40,545 $42,978

Sales (Maui) $38,250 $40,545 $42,978

Sales (Hilo) $38,250 $40,545 $42,978

Vacant - Aftermarket Sales (Maui) $0 $0 $0

Vacant - Aftermarket Sales (Hilo) $0 $0 $0

Subtotal $153,000 $162,180 $171,911

General and Administrative

Personnel

General Manager $57,600 $61,056 $64,719

Admin Manager $45,600 $48,336 $51,236

Vacant - Office Manager (Hilo) $31,200 $33,072 $35,056

Vacant - WHSE & Delivery (Maui) $0 $0 $0

Vacant - WHSE & Delivery (Hilo) $0 $0 $0

Other $0 $0 $0

Subtotal $134,400 $142,464 $151,012

Other Personnel

Systems Manager (Hilo) $49,800 $52,788 $55,955

Systems Manager (Maui) $49,800 $52,788 $55,955

System Engineer (Hilo) $39,600 $41,976 $44,495

System Engineer (Hilo) $39,600 $41,976 $44,495

System Engineer (Kona) $39,600 $41,976 $44,495

Sr. System Engineer (Maui) $41,100 $43,566 $46,180

System Tech (Maui) $28,800 $30,528 $32,360

System Tech (Maui) $28,800 $30,528 $32,360

Vacant - Syst Tech (Kona) $0 $0 $0

Vacant - Syst Tech (Maui) $0 $0 $0

Subtotal $317,100 $336,126 $356,294

Total People 15 15 15

Total Payroll $604,500 $640,770 $679,216

43

Management Team

President and General Manager: 55 years old, and has lived on

Maui for 43 years. Joined Integrated Office of Technology in 1998 as Maui branch manager, and became general manager for

Neighbor Island operations six months later. Prior management experience includes: BTA market manager of the Neighbor Islands

for VoiceStream Wireless, Neighbor Island area sales manager for Central Security Systems, and radar project manager for Telcom

International in Nigeria, West Africa. Bill has attended numerous management and sales training courses and seminars throughout

his career.

Secretary/Treasurer and Administrative Manager: 48 year’s old and local Maui resident. He/She has been at the same location

through three different owners prior to acquisition of The Office Place in 1995, for a total of 15 years of local office

equipment industry experience. Laurie has extensive knowledge of

service procedures and dispatching, A/R and A/P procedures, inventory control and tracking, as well as an intimate knowledge of

our customer base. Her experience and knowledge will be invaluable in recovering our customer base, and in growing the

business.

Office Manager (Hilo): 40 years old and local Hilo resident. He/She has also been with the company through all of the

acquisitions, and has 12 years experience in the office equipment industry. She will assist Secretary/treasurer and administrative

manager by handling the administrative and customer service tasks for our Hilo branch, and will be instrumental in our Big Island

customer recovery efforts.

Systems Manager: 38 years old and local Hilo resident. Like

above, He/She has been with the company through four different owners, and has 10 years of local office equipment service

management experience. Earle has also completed Maui Technologies "train the trainer" course, and will be a great asset in

the on-going training and development of our systems engineers and technicians.

Systems Manager (Maui): 35 years old and local Maui resident

joined the Maui branch in 1999 as field service manager. He has 8 years of local office equipment industry service experience, and is

familiar with both Maui Technologies and Electronics Hilo products.

44

He/She is an asset to the Maui team, and has outstanding customer

service skills.

Management Team Gaps

We believe we have a good team for covering the main points of the business plan. Key members have the experience and knowledge to

manage and grow the business, and are highly motivated by the employee-owner concept.

The obvious management gap is a plan to fill the general manager's

position at some point in the future, before the current GM reaches retirement age. As an employee-owned company, the preferred

strategy will be to promote from within, and fill vacancies as they occur. As the company grows, we will seek out additional talent in all

operational areas.

Financial Plan

It is assumed that the owner's private resources will be sufficient to finance any monthly cash-flow shortage. However, it would be

advisable to establish a bank relationship as soon as possible. Sales could very well increase at a much sharper rate than assumed in these

conservative projections. Sharper sales will result in a greater need for funds in support of inventory and receivables. An over-draft line of

credit with the bank will be an excellent cushion to fall back on.

This is considered a very good time to start a new business. The economy is beginning its trek up, and consumer spending is up. The

Commerce Department reported, "Consumers had increased their spending, the largest advance in nine months."

A shorter learning curve will be brought to the business by the owner

due to his extensive background and in-depth market knowledge. He

has a clear understanding of the need to manage costs and forecast future needs so that the business is not "broadsided" by the

unexpected.

One other component on which the financial plan is based is wise purchases. Finding the right product, at the right price will enable the

business to meet planned margins and maintain inventory at an attractive level with a high turn rate.

45

Start-up Funding Our start-up costs will be $1M, which includes $450,000 for the

acquisition of the Maui and Hilo operations of Integrated Office of Technology.

The remainder of the funds will be used for:

Initial Inventory: $200,000 Initial Capitalization: $225,000

Legal, Insurance, Rent & Misc: $125,000

The start-up funding will be financed by loans arranged through the Micro Finance Bank, and by the Community Loan Fund, and the Small

Business Administration as a guarantor. Start-up assumptions are shown in the following table and chart.

Start-up Requirements

Start-up Expenses

Legal/Accounting $10,000

Stationery etc. $1,500

Brochures $1,000

Consultants $7,500

Insurance $25,000

Rent $15,000

Software & IT (Web) $40,000

SPI Buyout $450,000

Setup New Company/ESOP $25,000

Total Start-up Expenses $575,000

Start-up Assets

Cash Required $225,000

Start-up Inventory $200,000

Other Current Assets $0

Long-term Assets $0


Total Requirements $1,000,000

Start-up Funding

46

Start-up Expenses to Fund $575,000

Start-up Assets to Fund $425,000

Total Funding Required $1,000,000

Assets

Non-cash Assets from Start-up $200,000

Cash Requirements from Start-up $225,000

Additional Cash Raised $0

Cash Balance on Starting Date $225,000


Liabilities and Capital

Liabilities

Current Borrowing $1,000,000

Long-term Liabilities $0

Accounts Payable (Outstanding Bills) $0

Other Current Liabilities (interest-free) $0

Total Liabilities $1,000,000

Capital

Planned Investment

Investor 1 $0

Investor 2 $0

Other $0

Additional Investment Requirement $0

Total Planned Investment $0

Loss at Start-up (Start-up Expenses) ($575,000)

Total Capital ($575,000)

Total Capital and Liabilities $425,000

Total Funding $1,000,000

47

Important Assumptions

As a general rule our company will not sell on credit. However for very

special cases we might offer short-term credit against valid assurances. We shall accept cash and checks, Visa, MasterCard,

Discover and American Express, and PayPal on the Internet. All sales paid via credit cards will be deposited in our business checking account

within 48 hours.

The financial plan depends on important assumptions, most of which are shown in Table. As mentioned previously, we assumed interest and

tax rates based on a "worst case" scenario, and these will be adjusted once we have finalized the initial funding and establish the ESOT. We

have also assumed our personnel burden at 30% of payroll in order to allow for above-average benefits for our employees. As we shop

around for benefits vendors, this assumption will be subject to revision as well.

Other key business assumptions are:

We assume continued steady economic growth on the Global Level especially in South Asia and Asia Pacific where our production

facilities and office locations will reside as predicted by World Bank, and other Global Economists.

We assume the continued move towards convergence technology in

the Information Industry.

We assume access to the start-up funding necessary to re-shape

and re-build the company, and to provide adequate initial capitalization.

General Assumptions


Plan Month 1 2 3

Current Interest Rate 14.00% 14.00% 14.00%

Long-term Interest Rate 10.00% 10.00% 10.00%

Tax Rate 37.33% 38.00% 37.33%

Other 0 0 0

48

Key Financial Indicators

As shown in the Benchmarks chart below, our key financial indicators

are:

Projected Sales: Projections are based on actual past performance, and are conservative. We will increase sales at an

average rate of 15% per year.

Gross Margins: Average gross margins are based on: hardware sales = 37%; service = 57%; supplies = 52%; and, other = 50%,

for an overall operating gross margin of 49%.

Operating Expenses: Operating expenses are based on providing our employee-owners with above average wages and benefits, and

providing superior customer service. Expenses are projected to increase at the rate of 6% per year.

Collection Days (A/R): Based on the extensive use of leasing, and including service and supply agreements into leasing packages,

we will maintain an average A/R turnover of 30 days. This is projected to be reduced to 28 days in subsequent years by

increasing efficiencies in our internal business processes.

Inventory Turnover: We will maintain just-in-time inventory levels, or 11 turns per year. This will require accurate sales

forecasting, and working closely with our manufacturers.

49

Break-even Analysis

Our break-even analysis is summarized by the following chart and table.

Break-even Analysis

Monthly Revenue Break-even $17,916

Assumptions:

Average Percent Variable Cost 24%

Estimated Monthly Fixed Cost $13,625

50

Projected Profit and Loss

There are many factors to include when determining a projected profit

and loss statement these are included in the following table.

52

Pro Forma Profit and Loss


Sales $357,000 $500,000 $710,000

Direct Cost of Sales $85,510 $123,860 $175,900

Other Costs of Sales $26,824 $30,000 $45,000

Total Cost of Sales $112,334 $153,860 $220,900

Gross Margin $244,666 $346,140 $489,100

Gross Margin % 68.53% 69.23% 68.89%

Expenses

Payroll $123,000 $135,960 $148,600

Marketing/Promotion $4,500 $10,000 $25,000

Depreciation $0 $0 $0

Rent $24,000 $24,000 $24,000

Insurance $12,000 $12,000 $12,000

Payroll Taxes $0 $0 $0

Other $0 $0 $0

Total Operating Expenses $163,500 $181,960 $209,600

Profit Before Interest and

Taxes $81,166 $164,180 $279,500

EBITDA $81,166 $164,180 $279,500

Interest Expense $0 $0 $0

Taxes Incurred $24,350 $49,254 $83,850

Net Profit $56,816 $114,926 $195,650

Net Profit/Sales 15.91% 22.99% 27.56%

53

Projected Cash Flow

Our projected cash flow is outlined in the following chart and table.

Pro Forma Cash Flow


Cash Received

Cash from Operations

Cash Sales $357,000 $500,000 $710,000

Subtotal Cash from

Operations $357,000 $500,000 $710,000

Additional Cash Received

Sales Tax, VAT, HST/GST

Received $0 $0 $0

New Current Borrowing $0 $0 $0

New Other Liabilities (interest-free) $0 $0 $0

New Long-term Liabilities $0 $0 $0

Sales of Other Current Assets $0 $0 $0

Sales of Long-term Assets $0 $0 $0

New Investment Received $50,000 $0 $0

Subtotal Cash Received $407,000 $500,000 $710,000

Expenditures Year 1 Year 2 Year 3

Expenditures from Operations

54

Cash Spending $123,000 $135,960 $148,600

Bill Payments $139,315 $247,800 $360,927

Subtotal Spent on Operations $262,315 $383,760 $509,527

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0

Principal Repayment of Current

Borrowing $0 $0 $0

Other Liabilities Principal

Repayment $0 $0 $0

Long-term Liabilities Principal Repayment $0 $0 $0

Purchase Other Current Assets $0 $0 $0

Purchase Long-term Assets $0 $0 $0

Dividends $0 $0 $0

Subtotal Cash Spent $262,315 $383,760 $509,527

Net Cash Flow $144,685 $116,240 $200,473

Cash Balance $146,685 $262,924 $463,397

55

Projected Balance Sheet

The table shows the annual balance sheet results, with a healthy

projected increase in net worth. Detailed monthly projections are in the appendix.

Pro Forma Balance Sheet


Assets

Current Assets

Cash $146,685 $262,924 $463,397

Inventory $8,000 $11,588 $16,457

Other Current Assets $0 $0 $0

Total Current Assets $154,685 $274,512 $479,854

Long-term Assets

Long-term Assets $0 $0 $0

Accumulated Depreciation $0 $0 $0

Total Long-term Assets $0 $0 $0

Total Assets $154,685 $274,512 $479,854

Liabilities and Capital Year 1 Year 2 Year 3

Current Liabilities

Accounts Payable $15,869 $20,770 $30,462

Current Borrowing $0 $0 $0

Other Current Liabilities $0 $0 $0

Subtotal Current Liabilities $15,869 $20,770 $30,462

Long-term Liabilities $0 $0 $0

Total Liabilities $15,869 $20,770 $30,462

Paid-in Capital $93,000 $93,000 $93,000

Retained Earnings ($11,000) $45,816 $160,742

Earnings $56,816 $114,926 $195,650

Total Capital $138,816 $253,742 $449,392

Total Liabilities and Capital $154,685 $274,512 $479,854

Net Worth $138,816 $253,742 $449,392

56

Business Ratios

Business ratios for the years of this plan are shown below. Industry

profile ratios based on the Standard Industrial Classification (SIC) code 5731.9902, Consumer electronic equipment, nec, are shown for

comparison.

Ratio Analysis


Industry

Profile

Sales Growth 0.00% 40.06% 42.00% 5.90%

Percent of Total

Assets

Inventory 5.17% 4.22% 3.43% 33.94%

Other Current Assets 0.00% 0.00% 0.00% 26.57%

Total Current Assets 100.00% 100.00% 100.00% 80.73%

Long-term Assets 0.00% 0.00% 0.00% 19.27%

Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 10.26% 7.57% 6.35% 41.85%

Long-term Liabilities 0.00% 0.00% 0.00% 11.83%

Total Liabilities 10.26% 7.57% 6.35% 53.68%

Net Worth 89.74% 92.43% 93.65% 46.32%

Percent of Sales

Sales 100.00% 100.00% 100.00% 100.00%

Gross Margin 68.53% 69.23% 68.89% 32.59%

Selling, General & Administrative Expenses 52.62% 46.24% 41.33% 17.11%

Advertising Expenses 0.00% 0.00% 0.00% 2.28%

Profit Before Interest

and Taxes 22.74% 32.84% 39.37% 0.85%

Main Ratios

Current 9.75 13.22 15.75 1.73

Quick 9.24 12.66 15.21 0.79

Total Debt to Total

Assets 10.26% 7.57% 6.35% 58.93%

Pre-tax Return on Net Worth 58.47% 64.70% 62.20% 2.27%

Pre-tax Return on Assets 52.47% 59.81% 58.25% 5.54%

57

Additional Ratios Year 1 Year 2 Year 3

Net Profit Margin 15.91% 22.99% 27.56% n.a

Return on Equity 40.93% 45.29% 43.54% n.a

Activity Ratios

Inventory Turnover 8.67 12.65 12.54 n.a

Accounts Payable

Turnover 9.78 12.17 12.17 n.a

Payment Days 27 26 25 n.a

Total Asset Turnover 2.31 1.82 1.48 n.a

Debt Ratios

Debt to Net Worth 0.11 0.08 0.07 n.a

Current Liab. to Liab. 1.00 1.00 1.00 n.a

Liquidity Ratios

Net Working Capital $138,816 $253,742 $449,392 n.a

Interest Coverage 0.00 0.00 0.00 n.a

Additional Ratios

Assets to Sales 0.43 0.55 0.68 n.a

Current Debt/Total

Assets 10% 8% 6% n.a

Acid Test 9.24 12.66 15.21 n.a

Sales/Net Worth 2.57 1.97 1.58 n.a

Dividend Payout 0.00 0.00 0.00 n.a

Revenue Model:

Hypothetical Calculations:

No of Units Produced Annually = 500 Units Unit Price (Price per Unit) = $ 11,800 (P-K-R 1,003,000.00/-)

Margin per Unit = 11,800/500 = $ 23.6 (P-K-R 2,006/-) Revenues = 11,800x500 = $ 5,900,000 (P-K-R

501,500,000.00/-) Annually (Expected).

58

Appendix

Sales Forecast

Month

1

Month

2

Month

3

Month

4

Month

5

Month

6

Month

7

Month

8

Month

9

Month

10

Month

11 Month 12

Sales

Cellular Phones 0% $10,000 $10,000 $10,000 $11,000 $11,000 $11,000 $12,000 $12,000 $12,000 $13,000 $13,000 $13,000

Cellular Phones Accessories 0% $9,000 $9,000 $9,000 $10,000 $10,000 $10,000 $11,000 $11,000 $11,000 $12,000 $12,000 $12,000

Fixed Wireless Phones 0% $3,500 $3,500 $3,500 $3,750 $3,750 $3,750 $4,000 $4,000 $4,000 $4,250 $4,250 $4,250

Other Services 0% $3,500 $3,500 $3,500 $3,750 $3,750 $3,750 $4,000 $4,000 $4,000 $4,250 $4,250 $4,250

Total Sales $26,000 $26,000 $26,000 $28,500 $28,500 $28,500 $31,000 $31,000 $31,000 $33,500 $33,500 $33,500

Direct Cost of Sales

Month

1

Month

2

Month

3

Month

4

Month

5

Month

6

Month

7

Month

8

Month

9

Month

10

Month

11 Month 12

Cellular Phones $2,300 $2,300 $2,300 $2,500 $2,500 $2,500 $2,750 $2,750 $2,750 $3,000 $3,000 $3,000

Cellular Phones Accessories $2,250 $2,250 $2,250 $2,400 $2,400 $2,400 $2,600 $2,600 $2,600 $2,900 $2,900 $2,900

Fixed Wireless Phones $900 $900 $900 $950 $950 $950 $1,000 $1,000 $1,000 $1,050 $1,050 $1,050

Other Services $900 $900 $900 $950 $950 $950 $1,000 $1,000 $1,000 $1,060 $1,050 $1,050

Subtotal Direct Cost of

Sales $6,350 $6,350 $6,350 $6,800 $6,800 $6,800 $7,350 $7,350 $7,350 $8,010 $8,000 $8,000

Personnel Plan

Month

1

Month

2

Month

3

Month

4

Month

5

Month

6

Month

7

Month

8

Month

9

Month

10

Month

11 Month 12

CEO 0% $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500

Marketing Manager 0% $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200

Programmer/Office Administrator 0% $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750

2 Store Attendant’s 0% $2,800 $2,800 $2,800 $2,800 $2,800 $2,800 $2,800 $2,800 $2,800 $2,800 $2,800 $2,800

Other 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total People 0 0 0 0 0 0 0 0 0 0 0 0

Total Payroll $10,250 $10,250 $10,250 $10,250 $10,250 $10,250 $10,250 $10,250 $10,250 $10,250 $10,250 $10,250

59

Pro Forma Profit and Loss

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9

Month

10

Month

11 Month 12

Sales $26,000 $26,000 $26,000 $28,500 $28,500 $28,500 $31,000 $31,000 $31,000 $33,500 $33,500 $33,500

Direct Cost of Sales $6,350 $6,350 $6,350 $6,800 $6,800 $6,800 $7,350 $7,350 $7,350 $8,010 $8,000 $8,000

Other Costs of Sales $2,000 $2,040 $2,081 $2,122 $2,165 $2,208 $2,252 $2,297 $2,343 $2,390 $2,438 $2,487

Total Cost of Sales $8,350 $8,390 $8,431 $8,922 $8,965 $9,008 $9,602 $9,647 $9,693 $10,400 $10,438 $10,487

Gross Margin $17,650 $17,610 $17,569 $19,578 $19,535 $19,492 $21,398 $21,353 $21,307 $23,100 $23,062 $23,013

Gross Margin % 67.88% 67.73% 67.57% 68.69% 68.54% 68.39% 69.02% 68.88% 68.73% 68.95% 68.84% 68.70%

Expenses

Payroll $10,250 $10,250 $10,250 $10,250 $10,250 $10,250 $10,250 $10,250 $10,250 $10,250 $10,250 $10,250

Marketing/Promotion $0 $500 $500 $500 $0 $0 $1,000 $0 $1,000 $0 $1,000 $0

Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Rent $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000

Insurance $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000

Payroll Taxes 15% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Operating

Expenses $13,250 $13,750 $13,750 $13,750 $13,250 $13,250 $14,250 $13,250 $14,250 $13,250 $14,250 $13,250

Profit Before Interest

and Taxes $4,400 $3,860 $3,819 $5,828 $6,285 $6,242 $7,148 $8,103 $7,057 $9,850 $8,812 $9,763

EBITDA $4,400 $3,860 $3,819 $5,828 $6,285 $6,242 $7,148 $8,103 $7,057 $9,850 $8,812 $9,763

Interest Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Taxes Incurred $1,320 $1,158 $1,146 $1,748 $1,886 $1,873 $2,144 $2,431 $2,117 $2,955 $2,644 $2,929

Net Profit $3,080 $2,702 $2,673 $4,079 $4,400 $4,369 $5,003 $5,672 $4,940 $6,895 $6,168 $6,834

Net Profit/Sales 11.85% 10.39% 10.28% 14.31% 15.44% 15.33% 16.14% 18.30% 15.93% 20.58% 18.41% 20.40%

60

Pro Forma Cash Flow

Month

1

Month

2

Month

3

Month

4 Month 5 Month 6 Month 7 Month 8 Month 9

Month

10

Month

11 Month 12

Cash Received

Cash from Operations

Cash Sales $26,000 $26,000 $26,000 $28,500 $28,500 $28,500 $31,000 $31,000 $31,000 $33,500 $33,500 $33,500

Subtotal Cash from

Operations $26,000 $26,000 $26,000 $28,500 $28,500 $28,500 $31,000 $31,000 $31,000 $33,500 $33,500 $33,500

Additional Cash Received


Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Other Liabilities

(interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales of Other Current

Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Investment Received $50,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Cash Received $76,000 $26,000 $26,000 $28,500 $28,500 $28,500 $31,000 $31,000 $31,000 $33,500 $33,500 $33,500

Expenditures

Month

1

Month

2

Month

3

Month

4 Month 5 Month 6 Month 7 Month 8 Month 9

Month

10

Month

11 Month 12

Expenditures from

Operations

Cash Spending $10,250 $10,250 $10,250 $10,250 $10,250 $10,250 $10,250 $10,250 $10,250 $10,250 $10,250 $10,250

Bill Payments $211 $6,333 $6,699 $6,836 $10,148 $13,851 $13,961 $16,256 $15,103 $15,850 $17,017 $17,050

Subtotal Spent on

Operations $10,461 $16,583 $16,949 $17,086 $20,398 $24,101 $24,211 $26,506 $25,353 $26,100 $27,267 $27,300

Additional Cash Spent


Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Principal Repayment of

Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Other Liabilities Principal

Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Long-term Liabilities

Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Purchase Other Current

Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Cash Spent $10,461 $16,583 $16,949 $17,086 $20,398 $24,101 $24,211 $26,506 $25,353 $26,100 $27,267 $27,300

Net Cash Flow $65,539 $9,417 $9,051 $11,414 $8,102 $4,399 $6,789 $4,494 $5,647 $7,400 $6,233 $6,200

Cash Balance $67,539 $76,957 $86,008 $97,421 $105,523 $109,922 $116,710 $121,204 $126,852 $134,251 $140,484 $146,685

61

Pro Forma Balance Sheet

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9

Month

10

Month

11 Month 12

Assets

Starting

Balances

Current Assets

Cash $2,000 $67,539 $76,957 $86,008 $97,421 $105,523 $109,922 $116,710 $121,204 $126,852 $134,251 $140,484 $146,685

Inventory $30,000 $23,650 $17,300 $10,950 $6,800 $6,800 $6,800 $7,350 $7,350 $7,350 $8,010 $8,000 $8,000

Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Current Assets $32,000 $91,189 $94,257 $96,958 $104,221 $112,323 $116,722 $124,060 $128,554 $134,202 $142,261 $148,484 $154,685

Long-term Assets

Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Accumulated Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Assets $32,000 $91,189 $94,257 $96,958 $104,221 $112,323 $116,722 $124,060 $128,554 $134,202 $142,261 $148,484 $154,685

Liabilities and Capital Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9

Month

10

Month

11 Month 12

Current Liabilities

Accounts Payable $0 $6,109 $6,475 $6,502 $9,687 $13,389 $13,418 $15,753 $14,576 $15,283 $16,448 $16,503 $15,869

Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Current Liabilities $0 $6,109 $6,475 $6,502 $9,687 $13,389 $13,418 $15,753 $14,576 $15,283 $16,448 $16,503 $15,869

Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Liabilities $0 $6,109 $6,475 $6,502 $9,687 $13,389 $13,418 $15,753 $14,576 $15,283 $16,448 $16,503 $15,869

Paid-in Capital $43,000 $93,000 $93,000 $93,000 $93,000 $93,000 $93,000 $93,000 $93,000 $93,000 $93,000 $93,000 $93,000

Retained Earnings ($11,000) ($11,000) ($11,000) ($11,000) ($11,000) ($11,000) ($11,000) ($11,000) ($11,000) ($11,000) ($11,000) ($11,000) ($11,000)

Earnings $0 $3,080 $5,782 $8,455 $12,535 $16,934 $21,304 $26,307 $31,979 $36,919 $43,813 $49,982 $56,816

Total Capital $32,000 $85,080 $87,782 $90,455 $94,535 $98,934 $103,304 $108,307 $113,979 $118,919 $125,813 $131,982 $138,816

Total Liabilities and Capital $32,000 $91,189 $94,257 $96,958 $104,221 $112,323 $116,722 $124,060 $128,554 $134,202 $142,261 $148,484 $154,685

Net Worth $32,000 $85,080 $87,782 $90,455 $94,535 $98,934 $103,304 $108,307 $113,979 $118,919 $125,813 $131,982 $138,816

Vempain teknikka inc

Technology

Transcript of Vempain teknikka inc