The Lobby Start-up

Confidentiality Agreement The undersigned reader acknowledges that the information provided by Matthew Rohde in this business plan is confidential; therefore, reader agrees not to disclose it without the express written permission of Mr. Rohde. It is acknowledged by reader that information to be furnished in this business plan is in all respects confidential in nature, other than information which is in the public domain through other means and that any disclosure or use of same by reader, may cause serious harm or damage to Mr. Rohde. Upon request, this document is to be immediately returned to Mr. Rohde. ___________________ Signature Jim Steele Name (typed or printed) 07/01/2009 Date This is a business plan. It does not imply an offering of securities.

Table of Contents

1.0 Executive Summary...............................................................................................................................1 1.1 Objectives..........................................................................................................................................1 1.2 Mission...............................................................................................................................................2 The Lobby seeks to serve companies, customers, and the community by providing top quality candies, sweets, and snacks on demand and at the right price. We look to the future and using our talents, expertise, and the "secret recipe" we will sweeten the lives around us and of our community. Great customer service, dependability, honesty, integrity, and loyalty are the backbone of our company.1.3 Keys to Success........................................................................................................................................2 2.0 Company Summary...............................................................................................................................2 2.1 Company Ownership.........................................................................................................................2 The Lobby is a private owned preparer of candies, sweets, and snacks. It is owned and operated by Matthew Rohde.2.2 Start-up Summary...................................................................................................2 Table: Start-up..........................................................................................................................................2 3.0 Products..................................................................................................................................................3 4.0 Market Analysis Summary.....................................................................................................................4 4.1 Market Segmentation.........................................................................................................................4 Table: Market Analysis............................................................................................................................4 4.2 Target Market Segment Strategy........................................................................................................5 4.3 Industry Analysis...............................................................................................................................5 4.3.1 Competition and Buying Patterns...................................................................................................5 5.0 Strategy and Implementation Summary.................................................................................................6 5.1 Competitive Edge...............................................................................................................................6 Our biggest competitive edge comes from combining relatively cheap product, on demand delivery, and our "secret family recipe." This combination will virtually sell itself. Everyone needs a quick pick-me-up every now and again and in this economy especially getting it cheaply and with very little effort will blow away our customers. The lobby will be especially different from other companies in the aspect that we will be able to set up recurring orders as well as on demand delivery. The very nature of the location with several large populations close together will provide massive opportunities for growth. This competitive edge will give us sustainable value and high growth opportunities. ......6 5.2 Marketing Strategy.............................................................................................................................6 5.3 Sales Strategy.....................................................................................................................................7 5.3.1 Sales Forecast..................................................................................................................................7 Table: Sales Forecast................................................................................................................................7 5.4 Milestones..........................................................................................................................................9 Table: Milestones.....................................................................................................................................9 6.0 Management Summary..........................................................................................................................9 6.1 Personnel Plan..................................................................................................................................10 Table: Personnel.....................................................................................................................................10 7.0 Financial Plan.......................................................................................................................................10 7.1 Start-up Funding..............................................................................................................................10 Table: Start-up Funding.........................................................................................................................11 7.2 Important Assumptions....................................................................................................................11 7.3 Break-even Analysis........................................................................................................................11 Page 1

Table of Contents

Table: Break-even Analysis....................................................................................................................11 7.4 Projected Profit and Loss.................................................................................................................12 Table: Profit and Loss............................................................................................................................12 7.5 Projected Cash Flow........................................................................................................................14 Table: Cash Flow...................................................................................................................................15 7.6 Projected Balance Sheet...................................................................................................................16 Table: Balance Sheet..............................................................................................................................16 7.7 Business Ratios................................................................................................................................17 Table: Ratios..........................................................................................................................................17 Table: Sales Forecast................................................................................................................................1 ..................................................................................................................................................................2 Table: Personnel.......................................................................................................................................3 ..................................................................................................................................................................3 Table: Profit and Loss..............................................................................................................................4 ..................................................................................................................................................................4 Table: Cash Flow.....................................................................................................................................5 ..................................................................................................................................................................6 Table: Balance Sheet................................................................................................................................7

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The Lobby Start-up

1.0 Executive Summary Welcome to The Lobby! Located in beautiful Idaho Falls, Idaho, The Lobby will combine the exquisite perfection of our secret family recipe for premium popcorn and caramel corn with on demand delivery. We are perfect for businesses looking to enhance their own customer experience or a simple and cheap way to increase their own profits. The best popcorn and concession items will find their way to many business meetings, special events, and to all those who need a quick delicious pick-me-up! The purpose of the plan is to announce the presence of The Lobby unto the world, and to secure initial funding for it. We have outlined our marketing and product strategies and hinted at our unique feature that will give us the competitive edge. We have a talented management team with a fiery passion to succeed, and a base of support to help see us there. We have the equipment, the desire, the "secret recipe", and the know how to become a success. With the great environment and the huge opportunities for growth we can expect, not good things, but great things and a very profitable future.

Highlights $100,000 $90,000 $80,000 $70,000

Sales

$60,000 $50,000

Gross Margin

$40,000

Net Profit

$30,000 $20,000 $10,000 $0 FY 2010

FY 2011

FY 2012

1.1 Objectives The Objectives of The Lobby: 1. To provide the best candies, sweets, and snacks to customers on demand at a low price to help sweeten their lives, and do it all with a smile. 2. To create a successful local company that will show a profit and be self-sustaining within one month of operation. 3. To develop a brand into a power house that will allow for massive growth and expansion. 4. To develop a strong and stable company that can give back to our community through several programs and donations.

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The Lobby Start-up

1.2 Mission The Lobby seeks to serve companies, customers, and the community by providing top quality candies, sweets, and snacks on demand and at the right price. We look to the future and using our talents, expertise, and the "secret recipe" we will sweeten the lives around us and of our community. Great customer service, dependability, honesty, integrity, and loyalty are the backbone of our company.1.3 Keys to Success The Key to success for The Lobby are: - To establish and maintain strong working relationships and contractual agreements with local businesses and individuals.

- To effectively manage inventory and production levels to minimize loss and maximize profitability, and always be able to provide the customer what they want in a timely manner.

- Constantly grow and develop a network of contacts and potential customers

- Customer Service, Customer Service, Customer Service - keep them happy.

2.0 Company Summary Located in beautiful Idaho Falls, Idaho, The Lobby will take the family tradition for the best concession items and top quality customer service, and using our "secret recipe" we will take the eastern Idaho region by storm. We will provide the best concession items such as caramel corn, to prime local establishments. They will be made fresh and delivered daily. We will target both recurring orders and those customers that need a quick sugar rush. With future expansion plans, and huge market environment The Lobby will, fast become a household name and a dominant figure in the local economy. 2.1 Company Ownership The Lobby is a private owned preparer of candies, sweets, and snacks. It is owned and operated by Matthew Rohde.2.2 Start-up Summary The following table and chart illustrates projected initial start-up costs for the firm. Table: Start-up Start-up Requirements Start-up Expenses Legal Stationery etc. Insurance Rent Computer Utilities Construction Total Start-up Expenses

$1,500 $150 $600 $1,075 $650 $700 $5,000 $9,675

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Start-up Assets Cash Required Start-up Inventory Other Current Assets Long-term Assets Total Assets

$1,925 $900 $500 $7,000 $10,325

Total Requirements

$20,000

Start-up $20,000 $18,000 $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0 Expenses

Assets

Investment

Loans

3.0 Products To begin with, the products that The Lobby will provide will be Popcorn, Caramel Corn, and Cotton Candy as these items provide a highly profitable base to start from, and requiring less up front investment. The products will be developed in-house according to our family recipe. The supplies needed to produce these products will be obtained through Gold Medal, a leader in the industry. (www.gmpopcorn.com) One crucial aspect of or products comes from our ability to change the logo on the packaging to be customized to each event or customer. For example, the logo might read – “A very Special Thank You From Broadway Ford” or “ Happy Holidays from Jim Steele at First Interstate” or simply “It’s a Boy!.” This logo interchange-ability will be as important as the quality of sweets that it covers. We will be selling these products in small portions of 3.5oz. The Caramel corn will be $3.00, the popcorn will be $2.00, and cotton candy will be $1.50. For some of our customers who are reselling them we will also have caramel corn balls that will sell for $1.00. These items will be expanded upon with the addition of various flavors such as white cheddar popcorn and cinnamon caramel corn. Future plans for product expansion will lead to pralines, sugar and spiced almonds, eventually bulk candy and chocolate. This expansion will be mostly driven by customer needs, but it would be reasonable to expect that all will be available by the end of the year, in time for valentines day.

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4.0 Market Analysis Summary The lobby will have a dual focus for targeting customers. We will primarily be focused on attracting recurring customers that will place an order once a week or more. These orders will provide a strong backbone from which we can grow and expand. The best customers for the company will be the ones that order every day or that order in large amounts, and as such they will be targeted immediately. The second customer group we will attract will be the customers that are non-recurring or place orders less than once a week. These customer will help us greatly expand our brand name. We will focus on these customers with an extremely high level of customer service, but as there will initially be less in amount and order volume they will have to be a very close second priority. The Lobby will maintain the family tradition of strong community involvement, and will also be actively be searching for ways to donate, sponsor, and give back to the community. 4.1 Market Segmentation We have one customer already - Autobrokers of Jackson in Driggs Market Examples: Recurring Customer Targets 9+ Movie Theaters 10+ Auto dealers 10+ Service Centers 20+ Realtors 100+ Mom and Pop Operations such as convenience stores, jewellery stores, ATV stores Supermarkets

10+

Non-Recurring Customer Targets 10+ Schools 100+ Offices such as engineers, lawyers, bankers, corporate meetings 3+ Hospitals 40+ retail locations Large Businesses - Maleleuca, Qwest, Regional Medical Center, Etc. Parties and special events With this kind of market opportunities available The Lobby will be profitable and self sustaining extremely quickly. Table: Market Analysis Market Analysis 2009 Potential Customers Recurring Customers - Businesses, community events, etc. Non-Recurring Customers - Individuals, Special Events, etc. Local Population Total

2010

2011

2012

2013

Growth 8% 9% 9% 9.00%

CAGR 500 122,995 211,490 334,985

540 134,065 230,524 365,129

583 146,131 251,271 397,985

630 159,283 273,885 433,798

680 173,618 298,535 472,833

7.99% 9.00% 9.00% 9.00%

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Market Analysis (Pie)

Recurring Customers - Businesses, commu

Non-Recurring Customers - Individuals, Spe Local Population

4.2 Target Market Segment Strategy The lobby will have a dual focus for targeting customers. We will primarily be focused on attracting recurring customers that will place an order once a week or more. These orders will provide a strong backbone from which we can grow and expand. The best customers for the company will be the ones that order every day or that order in large amounts, and as such they will be targeted immediately. The second customer group we will attract will be the customers that are non-recurring or place orders less than once a week. These customer will help us greatly expand our brand name. We will focus on these customers with an extremely high level of customer service, but as there will initially be less in amount and order volume they will have to be a very close second priority. The Lobby will maintain the family tradition of strong community involvement, and will also be actively be searching for ways to donate, sponsor, and give back to the community. 4.3 Industry Analysis Since sugar was developed so many years ago human beings have craved it in a myriad of forms. This craving has given way to a thriving industry where we spend billions of dollars just to get a taste. This industry has survived even the harshest of economic environments. This industry is so powerful many other industries have turned to the power of sweets to augment their own profitability, movie theaters are a good example. Even with a good amount of competition the demand for candies, sweets, and snack for out weighs it supply. 4.3.1 Competition and Buying Patterns Their are many ways the consumer can get their hands on the various sweets, and because of this there is a certain level of competition. What our market lacks is the ability to get it on demand. Within the industry if you are going to make weekly deliveries to get the best price requires special paperwork from the bulk dealers. Even then you will usually have to wait a few days to get your product. This delay usually results with lesser quality of sweets. The best part about the competition is, that even if they are operating at 100% the demand for sweets is still wide open. After all "a spoon full of sugar makes the medicine go down."

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5.0 Strategy and Implementation Summary Since the bulk of the machines needed to produce our products is already owned the initial start-up funding will be relatively small, $20,000. The funds will go primarily to the purchase of packaging, supplies, and securing a location. The obvious aim for The Lobby will be to open up and start making money as fast as possible. To do this we will have the following goals top most on our agenda. 1. Secure funding. 2. Secure a location, set up the machines, and prepare the supplies to open up business. 3. Research customers and plan the first wave of contact and customer development 4. Open up and start making money! 5.1 Competitive Edge Our biggest competitive edge comes from combining relatively cheap product, on demand delivery, and our "secret family recipe." This combination will virtually sell itself. Everyone needs a quick pick-me-up every now and again and in this economy especially getting it cheaply and with very little effort will blow away our customers. The lobby will be especially different from other companies in the aspect that we will be able to set up recurring orders as well as on demand delivery. The very nature of the location with several large populations close together will provide massive opportunities for growth. This competitive edge will give us sustainable value and high growth opportunities. 5.2 Marketing Strategy

The Main Marketing idea for The Lobby will be KIS - "Keep It Simple!" In the beginning we will provide several incentives to attract new clients, and as we expand we will delve into more elaborate marketing plans. The main source for our marketing will be from flyers and business cards. Each business card will be good for a buy one get one free. During the initial phase of start-up we will utilize the proven "Free Samples" method. We will canvas our targets and provide free samples to get them hooked on our "secret recipe." Our clients will be provided a small amount to see how they test for resale or for customer satisfaction. The cost in this type of a program will be very small due to the low cost of goods, but will attract a large amounts of customers. There will be a referral program in which clients will receive free product for referring new clients. Again we will keep it simple, the more people that try our "secret recipe" the more customers we will have. To keep track of these referrals we will simply ask where the new client heard of us. For the recurring customers that are using our product for resale, such as movie theaters and convenience stores we will depending on order size have a buy-back program. the program will simply work like this: Customer buys a tub for $2.50 if it doesn't sell in 2 days we buy it back for $1.50. All item bought back in this manner will be donated back to the community at one of the various non-profit organizations. These donations will be tax deductible to the amount of $2.50 per unit. Since the shelf life for these items is about 5 days, they can then sell them or give them away as needed. About the time we start expanding to pralines and other items we will look into radio and print ads.

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5.3 Sales Strategy In the beginning prime market targets will be researched and approached. Using one of our marketing programs and a proven sales process the client will be presented our product line from which they can select which products they would like, then they will be able to set up a delivery schedule. As far as compensation goes, in the beginning their will be only The owner for employees. When the need for additional support arrives they will be compensated on an hourly basis with a bonus for new clients added. The order process will be simple they will be able to place an order over the phone, email, or online from our website. these orders will be processed the same day or the customer will be notified when the order can be completed. the official hours of delivery will be 10 am to 6 pm this will allow the morning to be saved for product creation and the afternoon for sales. The pricing structure will be $3.00 per 3.5 ounces of caramel corn, $2.00 per 3.5 ounces of popcorn, and $1.00 per bag of cotton candy. There will be a discount of $0.50 per unit for recurring customers, except in the case of Cotton Candy in which case the discount will be $0.25 per unit. The Cost to produce these product are $0.95 per unit of caramel corn, $0.35 per unit of popcorn ($0.40 per unit if flavored), and $0.18 per bag of cotton candy. All deliveries will initially be hand deliveries. For special events and large production needs special delivery times and pricing will be available but will not fall too far from those outlined from above. All moneys will be placed into the business account from which all expenses will be drawn. Product supplies, operation expenses, and loan repayment will be the top priorities for the moneys. 5.3.1 Sales Forecast The following chart and table show our present sales forecast. we project sales to grow at roughly 10% per year. We also expect noticeable jumps in sales when we expand our product line, the addition of a bulk candy line is an illustration of this. The numbers we have presented here are low estimates, it would not be unreasonable to expect much higher growth rates. Table: Sales Forecast Sales Forecast FY 2010

FY 2011

FY 2012

6,409 19,256 2,845 3,211 31,721

7,000 17,000 3,300 4,000 31,300

8,000 19,000 4,000 4,500 35,500

FY 2010 $2.00 $3.00 $4.00 $1.50

FY 2011 $2.00 $3.00 $4.00 $1.50

FY 2012 $2.00 $3.00 $4.00 $1.50

Popcorn Caramel Corn Bulk Cotton Candy Total Sales

$12,818 $57,768 $11,380 $4,817 $86,783

$14,000 $51,000 $13,200 $6,000 $84,200

$16,000 $57,000 $16,000 $6,750 $95,750

Direct Unit Costs Popcorn Caramel Corn Bulk Cotton Candy

FY 2010 $0.25 $1.05 $1.40 $0.19

FY 2011 $0.25 $1.05 $1.40 $0.19

FY 2012 $0.25 $1.05 $1.40 $0.19

Unit Sales Popcorn Caramel Corn Bulk Cotton Candy Total Unit Sales Unit Prices Popcorn Caramel Corn Bulk Cotton Candy Sales

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The Lobby Start-up

Direct Cost of Sales Popcorn Caramel Corn Bulk Cotton Candy Subtotal Direct Cost of Sales

$1,602 $20,219 $3,983 $602 $26,406

$1,750 $17,850 $4,620 $750 $24,970

$2,000 $19,950 $5,600 $844 $28,394

Sales Monthly $12,000 $10,000

Popcorn $8,000

Caramel Corn

$6,000

Bulk Cotton Candy

$4,000 $2,000 $0 Aug

Oct Sep

Dec Nov

Feb Jan

Apr Mar

Jun May

Jul

Sales by Year $100,000 $90,000 $80,000

Popcorn

$70,000 $60,000

Caramel Corn

$50,000

Bulk

$40,000

Cotton Candy

$30,000 $20,000 $10,000 $0 FY 2010

FY 2011

FY 2012

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The Lobby Start-up

5.4 Milestones The accompanying table shows specific milestones, with responsibilities assigned, dates, and budgets. The milestones represented in this plan are those which we have determined to be the most important. Table: Milestones Milestones Milestone Secure Funding Secure Location Finalize Start-up Stage Equipment Finalize Production Soft opening Research/ Plan Contacts Grand opening 1st week - 30 per day First Month - 1st Loan Repayment First Month - Profits Totals

Start Date 6/29/2009 6/29/2009 6/29/2009 6/29/2009 6/29/2009 6/29/2009 6/29/2009 6/29/2009 6/29/2009 6/29/2009 6/29/2009

End Date 7/29/2009 7/29/2009 7/29/2009 7/29/2009 7/29/2009 7/29/2009 7/29/2009 8/2/2009 8/8/2009 9/1/2009 9/1/2009

Budget $0 $2,000 $10,000 $5,000 $1,000 $1,000 $0 $1,000 $0 $0 $0 $20,000

Manager Matt Rohde Matt Rohde Matt Rohde Matt Rohde Matt Rohde Matt Rohde Matt Rohde Matt Rohde Matt Rohde Matt Rohde Matt Rohde

Department Owner Owner Owner Owner Owner Owner Owner Owner Owner Owner Owner

Milestones First Month - Profits First Month - 1st Loan Repayment 1st week - 30 per day Grand opening Research/ Plan Contacts Soft opening Finalize Production Stage Equipment Finalize Start-up Secure Location Secure Funding Jul

Aug

6.0 Management Summary The Lobby will be managed primarily by Matthew Rohde. Matthew Rohde has a degree in psychology from the University of Nevada and has over ten years in sales. He has managed the biggest bulk candy store in Las Vegas, several retail locations, and a $300 Million resort hotel. He has been certified to teach customer service classes, and has extensive experience in both cash based and accrual accounting. He has had specialized training in hiring and firing laws, and inventory management. Matthew has developed programs both computer based and procedurally for the streamlining of the audit process and Standard Operating Procedures. The Lobby will also have support from several noteworthy individuals.

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Kathy Myers - Former theater and concession stand owner. Glenn Myers - Local Attorney Mark Rohde - Local Entrepreneur Ethan and Carol Spring - Local business owners 6.1 Personnel Plan The personnel plan is noticeably blank, their will be no extra employees needed to start up with. In fact the need for an extra associate will not happen until we reach the state where we are consistently sell 100 Units a day or more. This will be completely customer driven I would expect within in the first year it would be likely that the need will arise. However it maybe in the first month, and because of this i have not forecasted for it. This forecast shows a situation where we perform less than expected, however unlikely. When we do take on an associate they will be paid an hourly wage. The best part is, if we are selling 100 or more units a day we will have more than enough money coming in to cover all payroll, insurance, and taxes from our profits. Table: Personnel Personnel Plan FY 2010

FY 2011

FY 2012

Manager Associate Total People

$0 $0 0

$0 $0 0

$0 $0 0

Total Payroll

$0

$0

$0

7.0 Financial Plan To begin with the first month will be understandably the slowest month for The Lobby with an average of 30 units sold per day. However, due to the low cost of production even this slow we should be profitable within the first month. Every month thereafter I have a very low forecasted growth of 10%. It wound not be unreasonable to expect growth of 20% to 30%. The majority of the profits from the first year will go to paying of debts and becoming self-sustaining. The profit margin is high enough that we will even have enough to fund growth of our product line. The biggest growth within the first year will be the addition of the praline line of sugar and spiced nuts. This will be a significant boost to our profits. Initially we will be seeking funding from the private sector. In order to insure that our investors get their loans repaid we will be beginning loan repayment the first month and after the first months of operation a portion of the monthly profits will go to repayment in order to speed up this process. The bottom line is, The Lobby will be able to start with a relatively small amount of money. The Lobby will be able to show a profit within the first month, and also begin loan repayment that same month. The Lobby even in a worst case scenario will still be able to become self-sustaining and grow in the first year! 7.1 Start-up Funding The Start-up cost of The Lobby will consist primarily of equipment, supplies, and leasehold improvements. Mr. Rohde will invest equipment, benefits, and labor to start up. We will be seeking funding through a bank and through the SBA in the amount of $20,000.00. The amount allocated for leasehold improvement will go to bringing the site up to the standards of the health department.

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Table: Start-up Funding Start-up Funding Start-up Expenses to Fund Start-up Assets to Fund Total Funding Required

$9,675 $10,325 $20,000

Assets Non-cash Assets from Start-up Cash Requirements from Start-up Additional Cash Raised Cash Balance on Starting Date Total Assets

$8,400 $1,925 $0 $1,925 $10,325

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

$0 $20,000 $0 $0 $20,000

Capital Planned Investment Owner Investor Additional Investment Requirement Total Planned Investment

$0 $0 $0 $0

Loss at Start-up (Start-up Expenses) Total Capital

($9,675) ($9,675)

Total Capital and Liabilities

$10,325

Total Funding

$20,000

7.2 Important Assumptions Important assumptions for this plan are found in the following table. As we will be seeking funding the rates in the following table are high estimates. 7.3 Break-even Analysis The break-even analysis shows that The Lobby has sufficient sales strength to remain viable. Our break-even point is close to 1,300 units per month and our sales forecast for the next year calls for almost 1500 units per month on average. Projections are detailed in the following table. Table: Break-even Analysis Break-even Analysis Monthly Units Break-even Monthly Revenue Break-even

1,300 $3,557

Assumptions: Average Per-Unit Revenue Average Per-Unit Variable Cost

$2.74 $0.83

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Estimated Monthly Fixed Cost

$2,475

Break-even Analysis $2,000 $1,600 $1,200 $800 $400 $0 ($400) ($800) ($1,200) ($1,600) ($2,000) ($2,400) 0

200

400

600

800

1000

1200

1400

1600

1800

2000

2200

7.4 Projected Profit and Loss We expect to close the first Month showing a profit. Depending on the growth of the company we expect to grow about18% to 22% each year as far as net profits are concerned. This will ensure that we are completely self-sustaining right off the bat. Table: Profit and Loss Pro Forma Profit and Loss FY 2010

FY 2011

FY 2012

Sales Direct Cost of Sales Other Costs of Sales Total Cost of Sales

$86,783 $26,406 $2,532 $28,938

$84,200 $24,970 $3,000 $27,970

$95,750 $28,394 $3,300 $31,694

Gross Margin Gross Margin %

$57,844 66.65%

$56,230 66.78%

$64,056 66.90%

Payroll Marketing/Promotion Depreciation Rent Utilities Insurance Payroll Taxes Other

$0 $1,200 $0 $12,900 $6,000 $3,600 $6,000 $0

$0 $1,200 $0 $12,900 $6,600 $4,000 $6,600 $0

$0 $1,200 $0 $12,900 $7,260 $4,400 $7,260 $0

Total Operating Expenses

$29,700

$31,300

$33,020

Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred

$28,144 $28,144 $1,726 $7,926

$24,930 $24,930 $1,240 $7,107

$31,036 $31,036 $734 $9,091

Expenses

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Net Profit Net Profit/Sales

$18,493 21.31%

$16,583 19.69%

$21,212 22.15%

Profit Monthly $4,000 $3,600 $3,200 $2,800 $2,400 $2,000 $1,600 $1,200 $800 $400 $0 Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Profit Yearly

$21,000 $18,000 $15,000 $12,000 $9,000 $6,000 $3,000 $0 FY 2010

FY 2011

FY 2012

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Gross Margin Monthly $9,000 $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Gross Margin Yearly

$70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 FY 2010

FY 2011

FY 2012

7.5 Projected Cash Flow The Lobby expects to manage cash flow over the next three years with the assistance of a loan of $20,000. This financing assistance is required to provide the working capital to meet the current needs for the construction of the new production facility and other related expenses.

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Table: Cash Flow Pro Forma Cash Flow FY 2010

FY 2011

FY 2012

$86,783 $86,783

$84,200 $84,200

$95,750 $95,750

Sales Tax, VAT, HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received

$0 $0 $0 $0 $0 $0 $0 $86,783

$0 $0 $0 $0 $0 $0 $0 $84,200

$0 $0 $0 $0 $0 $0 $0 $95,750

Expenditures

FY 2010

FY 2011

FY 2012

$0 $62,826 $62,826

$0 $70,173 $70,173

$0 $74,397 $74,397

Sales Tax, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent

$0 $0 $0 $5,064 $0 $0 $0 $67,890

$0 $0 $0 $5,064 $0 $0 $0 $75,237

$0 $0 $0 $5,064 $0 $0 $0 $79,461

Net Cash Flow Cash Balance

$18,893 $20,818

$8,963 $29,781

$16,289 $46,070

Cash Received Cash from Operations Cash Sales Subtotal Cash from Operations Additional Cash Received

Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations Additional Cash Spent

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Cash $20,000 $18,000 $16,000 $14,000 $12,000

Net Cash Flow

$10,000

Cash Balance

$8,000 $6,000 $4,000 $2,000 $0 Aug

Oct Sep

Dec Nov

Feb Jan

Apr Mar

Jun May

Jul

7.6 Projected Balance Sheet As shown on the balance sheet our net worth is expected to grow from $8,000 the first year to nearly $50,000 by the third year of operation. The monthly projections are in the appendix. Table: Balance Sheet Pro Forma Balance Sheet FY 2010

FY 2011

FY 2012

$20,818 $3,736 $500 $25,054

$29,781 $3,533 $500 $33,814

$46,070 $4,017 $500 $50,587

Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets

$7,000 $0 $7,000 $32,054

$7,000 $0 $7,000 $40,814

$7,000 $0 $7,000 $57,587

Liabilities and Capital

FY 2010

FY 2011

FY 2012

$8,299 $0 $0 $8,299

$5,541 $0 $0 $5,541

$6,166 $0 $0 $6,166

Long-term Liabilities Total Liabilities

$14,936 $23,235

$9,872 $15,413

$4,808 $10,974

Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital

$0 ($9,675) $18,493 $8,818 $32,054

$0 $8,818 $16,583 $25,401 $40,814

$0 $25,401 $21,212 $46,612 $57,587

Assets Current Assets Cash Inventory Other Current Assets Total Current Assets Long-term Assets

Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities

Page 16

The Lobby Start-up

Net Worth

$8,818

$25,401

$46,612

7.7 Business Ratios Standard business ratios are provided in the following table. The ratios show strong, yet safe growth. Industry profile ratios are based on Confectionary and Nuts Stores, Our business model will be quite a bit different than this profile as we will not have a public location, but it is the closest SIC index classification. Table: Ratios Ratio Analysis FY 2010

FY 2011

FY 2012

Industry Profile

0.00%

-2.98%

13.72%

5.69%

Inventory Other Current Assets Total Current Assets Long-term Assets Total Assets

11.66% 1.56% 78.16% 21.84% 100.00%

8.66% 1.23% 82.85% 17.15% 100.00%

6.98% 0.87% 87.84% 12.16% 100.00%

24.08% 26.59% 85.32% 14.68% 100.00%

Current Liabilities Long-term Liabilities Total Liabilities Net Worth

25.89% 46.60% 72.49% 27.51%

13.58% 24.19% 37.76% 62.24%

10.71% 8.35% 19.06% 80.94%

38.82% 11.17% 49.99% 50.01%

100.00% 66.65% 45.34% 1.38% 32.43%

100.00% 66.78% 47.09% 1.43% 29.61%

100.00% 66.90% 44.75% 1.25% 32.41%

100.00% 11.34% 5.62% 0.26% 0.91%

Current Quick Total Debt to Total Assets Pre-tax Return on Net Worth Pre-tax Return on Assets

3.02 2.57 72.49% 299.60% 82.42%

6.10 5.47 37.76% 93.26% 58.04%

8.20 7.55 19.06% 65.01% 52.62%

1.96 1.21 57.99% 5.79% 13.78%

Additional Ratios

FY 2010

FY 2011

FY 2012

Net Profit Margin Return on Equity

21.31% 209.72%

19.69% 65.28%

22.15% 45.51%

n.a n.a

12.00 8.57 27 2.71

6.87 12.17 37 2.06

7.52 12.17 28 1.66

n.a n.a n.a n.a

2.63 0.36

0.61 0.36

0.24 0.56

n.a n.a

$16,754 16.31

$28,273 20.10

$44,420 42.28

n.a n.a

0.37 26% 2.57 9.84

0.48 14% 5.47 3.31

0.60 11% 7.55 2.05

n.a n.a n.a n.a

Sales Growth Percent of Total Assets

Percent of Sales Sales Gross Margin Selling, General & Administrative Expenses Advertising Expenses Profit Before Interest and Taxes Main Ratios

Activity Ratios Inventory Turnover Accounts Payable Turnover Payment Days Total Asset Turnover Debt Ratios Debt to Net Worth Current Liab. to Liab. Liquidity Ratios Net Working Capital Interest Coverage Additional Ratios Assets to Sales Current Debt/Total Assets Acid Test Sales/Net Worth

Page 17

The Lobby Start-up

Dividend Payout

0.00

0.00

0.00

n.a

Page 18

Appendix Table: Sales Forecast Sales Forecast Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Unit Sales Popcorn

300

330

363

399

439

483

531

584

642

Caramel Corn

900

990

1,089

1,198

1,318

1,450

1,595

1,755

1,931

Bulk Cotton Candy Total Unit Sales Unit Prices

706

777

855

2,124

2,336

2,570 531

0

0

0

0

0

300

330

363

399

439

483

150

165

182

200

220

242

266

293

322

354

389

428

1,350

1,485

1,634

1,797

1,977

2,475

2,722

2,995

3,294

3,623

3,985

4,384

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Popcorn

$2.00

$2.00

$2.00

$2.00

$2.00

$2.00

$2.00

$2.00

$2.00

$2.00

$2.00

$2.00

Caramel Corn

$3.00

$3.00

$3.00

$3.00

$3.00

$3.00

$3.00

$3.00

$3.00

$3.00

$3.00

$3.00

Bulk

$4.00

$4.00

$4.00

$4.00

$4.00

$4.00

$4.00

$4.00

$4.00

$4.00

$4.00

$4.00

Cotton Candy

$1.50

$1.50

$1.50

$1.50

$1.50

$1.50

$1.50

$1.50

$1.50

$1.50

$1.50

$1.50

Popcorn

$600

$660

$726

$798

$878

$966

Caramel Corn Bulk

$2,70 0 $0

$2,97 0 $0

$3,26 7 $0

$3,59 4 $0

$3,95 4 $0

Cotton Candy

$225

$248

$273

$300

Total Sales

$3,52 5

$3,87 8

$4,26 6

$4,69 2

Sales

Direct Unit Costs Popcorn Caramel Corn Bulk Cotton Candy

Aug 12.50 % 35.00 % 35.00 % 12.50 %

Sep

Oct

Nov

$1,28 4 $5,79 3 $1,59 6 $483

$1,554

$1,710

$6,372

$7,008

$7,710

$1,756

$1,932

$2,124

$330

$1,16 8 $5,26 5 $1,45 2 $440

$1,412

$4,35 0 $1,20 0 $363

$1,06 2 $4,78 5 $1,32 0 $399

$531

$584

$642

$5,16 2

$6,87 9

$7,56 6

$8,32 5

$9,15 6

$10,07 1

$11,07 8

$12,18 6

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

$0.25

$0.25

$0.25

$0.25

$0.25

$0.25

$0.25

$0.25

$0.25

$0.25

$0.25

$0.25

$1.05

$1.05

$1.05

$1.05

$1.05

$1.05

$1.05

$1.05

$1.05

$1.05

$1.05

$1.05

$1.40

$1.40

$1.40

$1.40

$1.40

$1.40

$1.40

$1.40

$1.40

$1.40

$1.40

$1.40

$0.19

$0.19

$0.19

$0.19

$0.19

$0.19

$0.19

$0.19

$0.19

$0.19

$0.19

$0.19

Direct Cost of Sales Popcorn Caramel Corn Bulk Cotton Candy Subtotal Direct Cost of Sales

$75

$83

$91

$100

$110

$121

$133

$146

$161

$177

$194

$214

$1,03 9 $0

$1,14 3 $0

$1,25 8 $0

$1,38 4 $0

$1,52 2 $420

$1,67 5 $462

$1,84 3 $508

$2,02 8 $559

$2,230

$2,453

$2,698

$615

$676

$743

$28

$31

$34

$38

$41

$45

$50

$55

$60

$66

$73

$1,04 8

$1,15 3

$1,26 8

$1,39 5

$1,53 5

$2,10 9

$2,31 9

$2,55 2

$2,80 7

$945 $0

$3,088

$3,396

$80 $3,736

Page 1

Appendix

Page 2

Appendix Table: Personnel Personnel Plan Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Manager

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Associate

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Total People Total Payroll

0 $0

0 $0

0 $0

0 $0

0 $0

0 $0

0 $0

0 $0

0 $0

0 $0

0 $0

Jul

0 $0

Page 3

Appendix Table: Profit and Loss Pro Forma Profit and Loss Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

$3,52 5 $1,04 8 $200

$3,87 8 $1,15 3 $202

$4,26 6 $1,26 8 $204

$4,69 2 $1,39 5 $206

$5,16 2 $1,53 5 $208

$6,87 9 $2,10 9 $210

$7,56 6 $2,31 9 $212

$8,32 5 $2,55 2 $214

$9,15 6 $2,80 7 $216

$10,07 1 $3,088

$11,07 8 $3,396

$12,18 6 $3,736

$218

$220

$222

Total Cost of Sales

$1,24 8

$1,35 5

$1,47 2

$1,60 1

$1,74 3

$2,31 9

$2,53 1

$2,76 6

$3,02 3

$3,306

$3,616

$3,958

Gross Margin

$2,27 7 64.59 %

$2,52 3 65.06 %

$2,79 4 65.49 %

$3,09 1 65.87 %

$3,41 9 66.24 %

$4,56 0 66.29 %

$5,03 5 66.54 %

$5,55 9 66.77 %

$6,13 3 66.98 %

$6,765

$7,461

$8,228

67.18 %

67.36 %

67.52 %

Sales Direct Cost of Sales Other Costs of Sales

Gross Margin %

Expenses Payroll Marketing/Promotion Depreciation

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$100

$100

$100

$100

$100

$100

$100

$100

$100

$100

$100

$100

$0

Rent

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$1,07 5 $500

$1,07 5 $500

$1,07 5 $500

$1,07 5 $500

$1,07 5 $500

$1,07 5 $500

$1,07 5 $500

$1,07 5 $500

$1,075

$1,075

$1,075

Utilities

$1,07 5 $500

$500

$500

$500

Insurance

$300

$300

$300

$300

$300

$300

$300

$300

$300

$300

$300

$300

$500 $0

$500 $0

$500 $0

$500 $0

$500 $0

$500 $0

$500 $0

$500 $0

$500 $0

$500 $0

$500 $0

$500 $0

$2,47 5

$2,47 5

$2,47 5

$2,47 5

$2,47 5

$2,47 5

$2,47 5

$2,47 5

$2,47 5

$2,475

$2,475

$2,475

($198)

$48

$319

$616

$944

$5,753

$319

$616

$944

$3,65 8 $3,65 8 $135

$4,986

$48

$3,08 4 $3,08 4 $139

$4,290

($198)

$2,56 0 $2,56 0 $142

$4,290

$4,986

$5,753

Payroll Taxes Other Total Operating Expenses Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred

Net Profit Net Profit/Sales

15%

$163

$160

$156

$153

$149

$2,08 5 $2,08 5 $146

$132

$128

$124

($108)

($34)

$49

$139

$239

$582

$725

$884

$1,05 7

$1,248

$1,457

$1,689

($253)

($78)

$114

$324

$557

6.91%

10.78 %

$2,46 6 26.93 %

$3,940

2.67%

$2,06 2 24.76 %

$3,401

-2.02 %

$1,69 2 22.37 %

$2,911

-7.17 %

$1,35 8 19.74 %

28.91 %

30.70 %

32.33 %

Page 4

Appendix Table: Cash Flow Pro Forma Cash Flow Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

$3,52 5 $3,52 5

$3,87 8 $3,87 8

$4,26 6 $4,26 6

$4,69 2 $4,69 2

$5,16 2 $5,16 2

$6,87 9 $6,87 9

$7,56 6 $7,56 6

$8,32 5 $8,32 5

$9,156

$10,07 1 $10,07 1

$11,07 8 $11,07 8

$12,18 6 $12,18 6

Cash Received Cash from Operations Cash Sales Subtotal Cash from Operations

$9,156

Additional Cash Received Sales Tax, VAT, HST/GST Received New Current Borrowing

0.00 %

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

New Other Liabilities (interestfree) New Long-term Liabilities

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Sales of Other Current Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Sales of Long-term Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

New Investment Received

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Subtotal Cash Received

Expenditures

$0

$3,52 5

$3,87 8

$4,26 6

$4,69 2

$5,16 2

$6,87 9

$7,56 6

$8,32 5

$9,156

$10,07 1

$11,07 8

$12,18 6

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Expenditures from Operations Cash Spending

$0

Bill Payments

$131

Subtotal Spent on Operations

$131

$0 $3,93 1 $3,93 1

$0 $4,06 8 $4,06 8

$0 $4,27 5 $4,27 5

$0 $4,50 3 $4,50 3

$0 $4,79 0 $4,79 0

$0 $6,09 5 $6,09 5

$0 $6,09 8 $6,09 8

$0

$0

$0

$0

$6,510

$6,962

$7,459

$8,005

$6,510

$6,962

$7,459

$8,005

Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$422

$422

$422

$422

$422

$422

$422

$422

$422

$422

$422

$422

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$553

$4,35 3

$4,49 0

$4,69 7

$4,92 5

$5,21 2

$6,51 7

$6,52 0

$6,932

$7,384

$7,881

$0 $8,427

Page 5

Appendix Net Cash Flow Cash Balance

$2,97 2 $4,89 7

($475 ) $4,42 2

($224 ) $4,19 8

($5) $4,19 3

$237 $4,43 0

$1,66 7 $6,09 7

$1,04 9 $7,14 7

$1,80 4 $8,95 1

$2,224

$2,687

$3,197

$3,759

$11,17 5

$13,86 2

$17,05 9

$20,81 8

Page 6

Appendix Table: Balance Sheet Pro Forma Balance Sheet Aug Assets

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

$13,86 2 $3,088 $500

$17,05 9 $3,396 $500

$20,81 8 $3,736 $500

Starting Balances

Current Assets Cash Inventory Other Current Assets Total Current Assets

$1,925

$4,897

$4,422

$4,198

$4,193

$4,430

$6,097

$7,147

$8,951

$900 $500

$1,048 $500

$1,153 $500

$1,268 $500

$1,395 $500

$1,535 $500

$2,109 $500

$2,319 $500

$2,552 $500

$11,17 5 $2,807 $500

$3,325

$6,445

$6,075

$5,967

$6,088

$6,465

$8,706

$9,966

$12,00 3

$14,48 2

$17,45 0

$20,95 5

$25,05 4

$7,000 $0

$7,000 $0

$7,000 $0

$7,000 $0

$7,000 $0

$7,000 $0

$7,000 $0

$7,000 $0

$7,000 $0

$7,000 $0

$7,000 $0

$7,000 $0

$7,000 $0

$7,000

$7,000

$7,000

$7,000

$7,000

$7,000

$7,000

$7,000

$7,000

$7,000

$7,000

$7,000

$7,000

$10,325

$13,44 5

$13,07 5

$12,96 7

$13,08 8

$13,46 5

$15,70 6

$16,96 6

$19,00 3

$21,48 2

$24,45 0

$27,95 5

$32,05 4

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets

Liabilities and Capital Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities

$0 $0 $0

$3,795 $0 $0

$3,925 $0 $0

$4,125 $0 $0

$4,345 $0 $0

$4,587 $0 $0

$5,892 $0 $0

$5,882 $0 $0

$6,279 $0 $0

$6,714 $0 $0

$7,192 $0 $0

$7,719 $0 $0

$8,299 $0 $0

$0

$3,795

$3,925

$4,125

$4,345

$4,587

$5,892

$5,882

$6,279

$6,714

$7,192

$7,719

$8,299

Long-term Liabilities

$20,000

Total Liabilities

$20,000

$19,57 8 $23,37 3

$19,15 6 $23,08 1

$18,73 4 $22,85 9

$18,31 2 $22,65 7

$17,89 0 $22,47 7

$17,46 8 $23,36 0

$17,04 6 $22,92 8

$16,62 4 $22,90 3

$16,20 2 $22,91 6

$15,78 0 $22,97 2

$15,35 8 $23,07 7

$14,93 6 $23,23 5

Paid-in Capital Retained Earnings

$0 ($9,675)

$0 ($9,67 5) ($253)

$0 ($9,675 ) ($331)

$0 ($9,67 5) ($218)

$0 ($9,67 5) $107

$0 ($9,67 5) $663

$0 ($9,67 5) $2,021

$0 ($9,67 5) $3,713

$0 ($9,67 5) $5,775

$0 ($9,67 5) $8,241

($9,92 8) $13,44 5

($10,00 6) $13,07 5

($9,89 3) $12,96 7

($9,56 8) $13,08 8

($9,01 2) $13,46 5

($7,65 4) $15,70 6

($5,96 2) $16,96 6

($3,90 0) $19,00 3

($1,43 4) $21,48 2

$0 ($9,67 5) $11,15 2 $1,477

$0 ($9,67 5) $14,55 3 $4,878

$0 ($9,67 5) $18,49 3 $8,818

$24,45 0

$27,95 5

$32,05 4

($9,92 8)

($10,00 6)

($9,89 3)

($9,56 8)

($9,01 2)

($7,65 4)

($5,96 2)

($3,90 0)

($1,43 4)

$1,477

$4,878

$8,818

Earnings

$0

Total Capital

($9,675)

Total Liabilities and Capital

$10,325

Net Worth

($9,675)

Page 7

Appendix

Page 8