Capacity

Breakeven analysis:-

Break-even Analysis: |

Monthly Units Break-even | 1,436 |

Monthly Revenue Break-even | $38,703 |

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Assumptions: | |

Average Per-Unit Revenue | $26.95 |

Average Per-Unit Variable Cost | $7.94 |

Estimated Monthly Fixed Cost | $27,300 |

Sales forecast:-

The following table and related charts show our present sales forecast. We are projecting sales at $242,550 in test year 1 which represents 9,000 units sold via direct marketing. We are forecasting sales to increase to $4,042,50 in year two with expanded media expenditures and reach. This reflects an increase to 25,000 units sold via direct marketing and 125,000 units sold in initial retail penetration. The direct cost of sales is not margin adjusted here but it is adjusted on the P & L statement.

Sales Forecast |

Sales | 2009 | 2010 | 2011 |

Sales | $0 | $242,550 | $4,042,500 |

Other | $0 | $0 | $0 |

Total Sales | $0 | $242,550 | $4,042,500 |

| | | |

Direct Cost of Sales | 1996 | 1997 | 1998 |

Sales | $0 | $63,520 | $1,191,000 |

Other | $0 | $0 | $0 |

Subtotal Direct Cost of Sales | $0 | $63,520 | $1,191,000 |

General Assumptions |

| 2009 | 2010 | 2011 |

Plan Month | 1 | 2 | 3 |

Current Interest Rate | 0.00% | 0.00% | 0.00% |

Long-term Interest Rate | 8.00% | 8.00% | 8.00% |

Tax Rate | 2.50% | 0.00% | 2.50% |

Other | 0 | 0 | 0 |

* The most important indicator in our case is inventory turnover. We have to make sure that turnover stays above 5, or we are clogged with inventory.

* Collection days is very important. We do not want to let our average collection days get above 45 under any circumstances. This could cause a serious problem with cash flow, because our working capital situation is chronically tight.

We must maintain gross margins of 45 percent at the least, and hold marketing costs to no more than 20% of sales.

Expenses forecast:-

Pro Forma Cash Flow |

| 2009 | 2010 | 2011 |

| | | |

Cash...