cals ltd business plan

CALS, LTD

Composite And Lightweight Structures

M. Bart McMannon Product Development (CALS) 2411 Crosspointe Drive Miamisburg, Ohio 45342 937-478-2357 [email protected] www.buycastings.com

Composite and Lightweight Structures (CALS) – Business Plan

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Table of Contents

Executive Summary .................................................................................................................................... 2

Business Description ................................................................................................................................. 2

Products and Services ............................................................................................................................... 2

CALS 1st Year Product and Marketing Plan ............................................................................................. 2

1. Business Description ............................................................................................................................. 7

1.1 Mission Statement ............................................................................................................................... 7

1.2 Company Ownership ........................................................................................................................... 7

1.3 Management Team ............................................................................................................................. 7

1.4 Organizational Chart ............................................................................................................................ 7

1.5 Operations ........................................................................................................................................... 8

1.6 Exit Strategy ........................................................................................................................................ 8

2. Products / Services ................................................................................................................................. 8

2.1 Product Description ............................................................................................................................. 8

2.2 Unique Features and Aspects of FOPAT Material .............................................................................. 9

2.3 Research and Development .............................................................................................................. 17

2.4 Production ......................................................................................................................................... 17

2.5 New and Follow-on Products/Services .............................................................................................. 17

Competition ............................................................................................................................................. 19

US Manufacturers of Micro & Small Wind Generators ............................................................................ 19

3. Marketing Strategies and Sales ........................................................................................................... 20

3.1 Distribution Channels ........................................................................................................................ 20

4. Ownership and Support ....................................................................................................................... 21

4.1 Ownership ......................................................................................................................................... 21

4.2 Professional and Advisory Support ................................................................................................... 22

4.3 Board of ADVISORS ......................................................................................................................... 22

5. Operations ............................................................................................................................................. 22

5.1 Operations Strategy ........................................................................................................................... 22

5.2 Facility................................................................................................................................................ 22

6. Financials ............................................................................................................................................... 23

6.1 Start-up Funds ................................................................................................................................... 23

6.2 Break Even Analysis .......................................................................................................................... 23

7. Funding Request ................................................................................................................................... 23


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Executive Summary

FOPAT LTD, a spin-off of buyCASTINGS.com, Inc. of Dayton Ohio has developed an advanced, dimensionally accurate, temperature-stable, and cost-effective material and process to manufacture patterns for the investment casting industry. FOPAT patterns can be molded into thinner sections and more complex shapes with better surface finish than the common wax patterns. By applying this new FOPAT (a FOam PATtern material) technology, which was designed for the investment casting industry, to the composites industry, it will help reduce costs for manufacturing of complex shape parts. The proposed technology is based upon an established industrial process of “Reaction Injection Molding” (RIM) where two components react when mixed and then 'molded' to form a part. This technology has been modified and improved in the past two years with the needs of investment casting in mind. However, we have grown to understand that this technology allows for composites manufacturing which has many marketable attributes for various industries. Business Description CALS LTD or Composite and Lightweight Structures, conducts the commercial work outside of the casting application provided by FOPAT. CALS is owned by Neil Chaudhry and Robert Dzugan and is headquartered in Miamisburg, Ohio where it has been conducting business since 1995. With the unique efforts of CALS, the production of cost effective cores with controlled properties can be readily customized for many commercial and military markets. Products and Services With so many opportunities and applications for FOPAT being introduced to CALS, we can’t afford the time and effort to choose which direction to market our foam products. We believe that there is a need of lightweight sandwich materials for various commercial applications. CALS, with a list of nearly 50 potential products wanted to know where to direct its attention to so it applied for and attained a Development Services Grant through the Dayton Development Coalition to conduct a market study of potential products. CALS has been told and agrees they can/should produce small turbine blades, thermal insulating products (medical coolers/small hot tubs), automotive aftermarket kits, and faux/decorative home products. CALS 1st Year Product and Marketing Plan In the early stages of year one, CALS plans to focus on thermal insulated products and automotive aftermarket industries. In early 2012, CALS staff plan on attending the Composites and Polycon and Composites Manufacturing trade shows to possibly better our manufacturing methods and network to broaden our product line and most importantly our customer base.


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CALS short list(from many) of potential CALS products are: Automotive aftermarket kits include spoilers, scoops, window louvers, trim, and deck lid panels. These arts are easily molded with in mold coatings to prepare the parts for painting. These parts are lightweight but sturdy and depending on the part, may include a fiber-glass filler for added strength. Thermal insulating products include medical shipping containers and small hot tubs. Our medical coolers can be made with fewer pieces, they are physically more appealing, and outperformed a 35R value product currently on the market. Our product performed 15 degrees cooler over a 36 hour period. Small hot tubs are currently being evaluated but should show they are very energy efficient and lighter than most standard hot tubs while maintaining strength and durability.


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What are thermal insulated products and CALS selection to enter their respective markets? Thermal insulated products include medical shipping containers for both the private and military markets. Other thermal products include thin panel designs with a high R-Value that is incorporated into the walls of freezers and refrigerators.

A study by Marketing Capital Group shows: Insulation as Fraction of Costs

• On average, insulation represents 11% of manufacturing costs • Costs represent…

– 11-33% = almost half – 1-5% = one-third – 6-10% < one-tenth – Do not know = 17%

Insulation Types Considered • Blown foam favored because is traditional and understood product and mfg

process • Fiberglass not liked so much because of safety/health issues • Vacuum liked for efficiency but disliked for durability/handling • “Others” are mainly variants on named types

Insulat io n as F ract io n o f C o sts

0 %

5 %

10 %

15 %

2 0 %

2 5 %

3 0 %

3 5 %

4 0 %

4 5 %

DK 1-5% 6-10% >10%


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Types of Insulation Considered

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Blown Foam Fiberglass Vacuum Other

How to Interest Manufacturers • Compare new insulation to old in medical shipping container and test results • Show mfg process benefits in addition to insulation benefits • Provide working prototype • Show is positive cost/benefit • Show savings accrue because less material, lower cost and improved

performance Considerations for Switching to CALS Encapsulated Vacuum Insulation

• Need to see benefits of new technology against capital costs of implementation and costs of materials

• Need to understand fixtures and materials needed, and impact on strength of structural walls

• Capital costs for new manufacturing processes • Ease of new manufacturing processes • Impact on employee training and skill requirements


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“D” Factors are a mixed set of Economic Factors that “D”rive Sustainable Growth within an industry.

� Energy Markets – e.g. Crude Oil at $98/bbl this week

� Governmental Regulations – e.g. Energy Star Rating

� Mass Affluence – e.g. Demand for Medical Shipping and High-End Appliances

� Housing Markets – e.g. Renovation Activity, Investment Property, New Home Building

CALS will enter with the following lines of business:

• Temperature Sensitive Shipping • Bio-Medical Delivery

CALS will enter the following markets: • Pharmaceutical • Freight / Logistics • Medical/Health


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1. Business Description

1.1 Mission Statement CALS improves products through composite innovation and design utilizing advanced foam technology. 1.2 Company Ownership Neil Chaudhry, COO, buyCASTINGS.com and Robert Dzugan, President, buyCASTINGS.com have a proven track record of starting and growing a business. They share in the ownership of buyCASTINGS.com where it has been awarded Inc. Magazine’s fastest growing companies 4 years running. They have experience in leveraging funds to produce profitable companies. They continue to spinoff and produce profitable companies while leveraging private dollars with government awarded programs. 1.3 Management Team Neil Chaudhry, COO, buyCASTINGS.com, Inc., will oversee the operational and business development side of the business. Robert Dzugan, President, buyCASTINGS.com, Inc. will oversee the product development side of the business. Bart McMannon, Operations and Facility Manager, buyCASTINGS.com, Inc. will oversee research and development, sales, and market potential of new products. Travis Westendorf, FOPAT Production Inc., will oversee production of CALS products. Rick Miller, Controller, buyCASTINGS.com, Inc. will manage CALS finances. 1.4 Organizational Chart


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1.5 Operations CALS will begin operations with 4 part time employees, 2 owners overseeing operations, and 2 outside consultants. Their combined areas of expertise include management, finance, business development, product development, marketing, and production. CALS has the luxury of being housed at buyCASTING.com headquarters in its FOPAT Production Inc. facility. This allows for the sharing of manpower, facilities, and other overhead expenses. The only immediate need would be tooling and testing and no other major equipment required for the first phase of respective products and CALS will utilize FOPAT Production Inc’s patented foam injected process and will not incur any early foam equipment costs. 1.6 Exit Strategy As various products become established, the need for industry trials and innovation R&D (research & development) will decrease. The planned arrangement of in-house manufacturing will likely give way to larger manufacturing companies seeking license agreements from CALS. The plan is to grow the CALS composite manufacturing business to over $8.5M in 5 years and seek a larger player in the industry to entertain a company buyout.

2. Products / Services

2.1 Product Description CALS LTD will be producing small turbine blades, thermal insulating products (medical coolers/small hot tubs), automotive aftermarket kits, and faux/decorative home products to name a few. CALS is also aware that there are further applications yet to be recognized, so we will be networking at several major composite trade shows to learn what other products we can produce for various markets. Stage of Development CALS has been testing and providing samples for the following companies: EvenFlo, LineX, Burton Snow Boards, and AcuTemp. All are in different markets but have expressed interest in our composite materials. Each product line is unique in size, structural composite, and density when using the FOPAT material. The biggest obstacle is choosing a coating for FOPAT to create a finished product. FOPAT currently is not used as a finished product so there has not been much testing on coatings. We need to test multiple coatings for various applications and best cost methods.


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2.2 Unique Features and Aspects of FOPAT Material CALS will utilize FOPAT’s patented process and the following attributes to help set its products apart from comparable products. FOPAT Material and Process Attributes: � Nearly 0% shrinkage during molding produces stable part dimensions � Stable part dimensions minimize defects or scrap rate � Complex shapes are achieved with uniform properties � Formation of surface skin provides stiffer foam cores � Cores can be shipped & stored without damage or distortion � Cost reduction – potentially 30% cheaper for a given core � Minimal external heating required, exothermic process � Reduced cost of injection machine with fewer number of variables to control � Potentially 50% lower tooling costs compared to traditional aluminum tooling � Conductivity control in FOPAT results in excellent electrical and thermal properties � CALS can increase electrical or thermal conductivity as required � FOPAT parts are an ideal performer around electrical equipment � Can be chemically altered to raise the R-value for thermal products � Resistant to oil, grease, and chemicals Strong Bonding Properties FOPAT foam cores can be bonded to a wide range of materials during or after the molding process. Bonds with metal, wood, plastic substrates are especially strong, but most importantly it creates a strong bond with fiberglass and carbon laminate skins. This technical advancement ensures an end product with even greater bonding properties than ever before. These bonding properties allow encapsulation of various materials inside FOPAT cores, such as carbon and graphite fibers, Kevlar® and Nomex® fibers or sheets, and almost any other lightweight stiffener or strengthening agents. We can also add a thicker polyurethane film on the surface to fully encapsulate the foam core and the stiffening particles, fibers or sheets dispersed inside the part. Stable in Harsh Environments FOPAT cores stand up to temperature extremes and exposure to water, ultraviolet (UV) rays, oxygen, oil, grease, and other chemicals and can provide electrical conductivity control in FOPAT foam cores resulting in custom controlled properties. For instance, CALS can tailor the electrical properties as required by use of fillers, additives, conductive or insulating materials during the molding process. FOPAT parts are an ideal performer around electrical equipment without the cracking and hardening associated with conventional elastomers and plastics. FOPAT cores are also resistant to oil, grease, and chemicals, and resists a wide range of chemicals and substances over most rubbers and plastics. This makes FOPAT compatible with embedded sensors within the core for structural health monitoring and would be researched in Phase II if awarded. Creating Strength w/ Nomex® and FOPAT Cores CALS will encapsulate Nomex® in FOPAT cores to add strength to complex molded shapes/parts. Nomex® and related aramid polymers are related to nylon, but have aromatic backbones, and hence are more rigid and more durable. It has excellent thermal, chemical, and radiation resistance. CALS will provide test parts with Nomex® at varying levels and layers to find the best fit for strength and function.


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Surface Layer by Electroplating with Nickel or Chrome is Possible with FOPAT After the FOPAT cores are reinforced with Nomex®, CALS will then have the test parts finished with nickel or chrome through an electroless plating process, which offers added rigidity, modulus increase, and provides a finished product with metallic appearance if needed. Plating provides the opportunity to increase damage tolerance which is a known issue with current sandwich structures. Other materials such as urethane will be tested as a skin. In mold formation of other materials as laminate skins are also possible with the FOPAT process. These will be evaluated in Phase II if awarded. Lightweight in Structure With the FOPAT core and plated nickel, this will provide the weight reduction vs. solid aluminum i.e. at only 25% the weight prior to adding any Nomex® filler, however that material is very light and will add further strength if required. CALS will test with and without various fillers for added strength to weight ratios. Complex Shapes with Lower Tooling Costs FOPAT cores can be made into very difficult complex shapes including thin walls and unusual geometric shapes. The experts at CALS can design tooling that allows for these complex shapes to be made quickly and at lower cost compared to injection molding or other types of production process tooling. Cost Effective With CALS in control of the design and testing of FOPAT molds in-house, we are able to keep cost low and still provide quick turnaround of more difficult complex parts. Most importantly, the cores will be produced at near net shape which is an advantage over current sandwich panels that require milling. The following pages illustrate early stage trials for various products and show various shape complexities, encapsulated materials, and product applications.


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Samples of FOPAT lightweight complex foam cores showing sample size and complexities


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Sample nickel electroplated blades with FOPAT cores

Sample complex, thin-

walled part

Sample large part


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Sample encapsulated fiber in FOPAT core part

Sample encapsulated fiber in FOPAT core part

Sample encapsulated fiberglass rod in FOPAT Core


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Sample complex FOPAT parts


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Examples of complex FOPAT part geometries


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Encapsulated fiberglass

Encapsulated fiberglass rod – surf/snow boards

FOPAT poured/sealed with laminate

Dense foam wood grained board w/ stiffener


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2.3 Research and Development Bart McMannon will lead the effort involved in the development of new products for CALS. Research has been conducted on infant car seat inserts, coolers for the medical industry, and surf boards to name a few. Early stage testing has been conducted with the Line-X company to find coating for various applications. Most recently glass fibers have been introduced into FOPAT providing incredible strength and a nice cosmetic look for the automotive industry. There will be relatively low costs associated with testing and CALS will outsource coatings during its first phase of operation. Molding costs are reduced during testing as epoxy molds are made in house by CALS. 2.4 Production All CALS production will take place at the 2411 Crosspointe Facility in Miamisburg until we require the need for larger manufacturing space. At that time, we plan on bringing in our coating applications in house if it makes financial sense to do so. There currently is over 9,300 sq. ft. of manufacturing and office space available next door. FOPAT machines will be setup with rotating tables to allow for mass production and there is a shipping dock to allow for daily shipments of product(s). 2.5 New and Follow-on Products/Services As CALS business expands, it will look to launch new products into different markets. Our plan is to demo our current products at trade shows and network at those shows to plan on future products. Some potential future products are as follows: HVAC blades can be made to be very durable, light weight, and net shape. This has a huge market potential for CALS. The blades can be designed in to encapsulate glass fiber to form a composite that would not break down to the elements. Small turbine blades can be molded into complex shapes which will increase turbine efficiency output. Threaded rods can also be encapsulated in the material to allow for a quicker assembly.


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What is wind energy and the need for turbine blades? Small wind energy is an inexhaustable, renewable, no-carbon energy source that can be used to generate electricity almost anywhere. Advances in wind turbine technology are enabling even limited-wind locations to take advantage of the free energy available. In some locations, simply changing the height of the turbine's tower can solve problems with limited wind velocity. In other locations, almost any reasonable tower size can capture the prevalent winds. Wind turbines can access the winds on the earth’s surface and use it to generate electricity for homes or commercial buildings. Since the source of energy is found all over the world, this technology can be utilized virtually anywhere on the planet and is a clean, renewable energy source that is not dependent on geology or solar radiation. Current usage of wind turbines for energy in a small turbine (home, farm or small business) situation has been limited. However, the demand for more environmentally sensitive energy sources as well as the desire to locally control them is leading to increased research and improvements in small turbine wind technologies. Small wind turbines offer a number of advantages over traditional dependence on the electrical grid or local sources of electricity such as carbon-based power generators. Some of those advantages are: - Reliable, comparatively simple technology - Renewable source (self-replenishing natural resource) - Combustion-free power generation - Zero environmental emissions - No contribution to global warming - Local availability (no expense in getting power to the user) When available wind is below minimums, electricity can still be purchased from the utility. However, when wind availability is beyond local needs, the excess electricity is sold back to the utility company. Essentially, the local utility 'becomes' the storage technology for small wind producers. The total market for U.S. small wind turbines for 2009 expanded by nearly 15%. Almost 10,000 units were sold to generate over 20 megawatts of new electricity. The total value was estimated to be about $121 million dollars, including equipment and installation cost (and not reduced by government or utility incentives). The dealer who sells the equipment often installs it. By 2014, PMG projects the U.S. small wind turbine market to be in excess of a quarter of a billion dollars. As of 2009, the global market for small wind turbines was approximately equal to the U.S. market but with a high concentration of installations in just a few countries. With the US projections approaching $250 million by 2014, the market is more than doubling over the next several years with production of over 20,000 turbines requiring 60,000 small turbine blades. Small turbine blades range from 8’ – 15’.


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Competition Even though CALS acknowledges the major competition involved in small turbine manufacturing, CALS sees this as a list of potential customers and plans to become a supplier of better quality blades at less cost. Unless a sole source provider agreement is reached with a US small turbine manufacturer, CALS views them all as potential customers.

US Manufacturers of Micro & Small Wind Generators

Bergey Windpower Company

Worldwide leader of small wind turbine generators. Good resource.

Southwest Windpower

Worldwide leader for battery charging small wind turbines.

Wind Turbine Industries Corporation

The Jacobs®. wind turbines are considered by many to be the "Cadillac" of the wind turbine industry. Founded in the mid 1920s, the Jacobs®. name is the oldest and best established company in the field of wind energy.

Cascade Wind Corporation

Cascade Wind Corporation designs, manufactures, and distributes high quality distributed wind energy systems.

Humdinger Wind Energy

Windbelt™: aeroelastic flutter technology - turbine-less wind generators.

Faux/decorative home products would come in a variety of shapes and sizes. We would start with our faux stone line that would have in mold color features to include UV protection. What sets our faux stone apart is how easy it is to apply in interior applications. With its lightweight but durable design, we plan to develop the first peal and stick interior faux stone on the market so easy to use anyone can do it. The CALS faux stone product would also act as an insulating product to help lower electric bills.


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There are plans for future products like the products mentioned above and CALS will continuously be looking to produce new product lines into various markets. With low cost epoxy molds, samples can be produced for customers with minimal investment and short lead times. 3. Marketing Strategies and Sales

3.1 Distribution Channels Distribution Strategy CALS plans to work directly with manufacturers where the small turbine blades are concerned and will utilize manufacturer’s product representatives for various lines of thermal product. In some instances, the factory direct approach would be most cost effective when the automotive aftermarket product lines are concerned. CALS will launch a website in year 2 to allow for online sales.

With its affiliation with buyCASTINGS.com, CALS can tap into the Manufacturers’ Agents National Association (MANA) database to find the right manufacturer’s representative for our various products. We can recruit composite industry sales reps with a commission based structure so we can keep costs of sales low and gain access to new customers in the automotive aftermarket, thermal, and other targeted industries. MANA is the association of interdependent manufacturers and representatives dedicated to educating, protecting and promoting the multi-line, outsourced sales function.

CALS will maintain lean overhead costs to continue to produce cost effective value added products.


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4. Ownership and Support

4.1 Ownership

Owner / Program Manager - Robert (Bob) Dzugan

(President & CEO of buyCASTINGS.com, Inc.)

Education: B.S. Materials Engineering; Wilkes College, Wilkes-Barre PA (1970-1974)

• Thirty years metal casting experience- worked anywhere from a process engineer to a chief engineer in mostly aerospace related foundries.

• Program Manager for DLA “Cast tooling using Cast in Cooling Passages”. • DOE States Program Manager for Metal Casting in Ohio–Manage an outreach program

funded by DOE and State of Ohio to inform Ohio foundries of energy saving projects and opportunities available through DOE

• Two patents on novel manufacturing of castings- both patents are currently being used in production of aerospace engines for General Electric.

• Proven innovative ability- Winner of 1990 Badger Award at GE for outstanding technical achievement in materials and manufacturing process technology in areas of creativity, state of the art advances and applications that provide product pre-eminence and represent lasting contribution to engineering. Designed and implemented a wax/metal correlation program which eliminated metal straightening of castings and resulted in a 1984 Technical Excellence

• Knowledge of the state of the art in the casting industry – Work currently with thousands of buyers and suppliers of castings to provide matching of capabilities with needs as President and founder of buyCASTINGS.com

Owner / Technical Director - Anil (Neil) Chaudhry

(Chief Operating Officer, buyCASTINGS.com) Education: M.S.E.M (Engineering Management), USF ( 1990); MS Metallurgy , MIT (1983); BS Metallurgy & Material Science , Columbia University (1981)

• Launched buyCASTINGS.com with 30 foundries. The site has grown to 800 foundries and was selected by INC500 as #240 of 500 fastest growing private companies in the US from 2000-2009.

• Provided Program Management assistance and coordinated the Technology Commercialization tasks in Inventions & Innovations project: Highly Efficient Rapid Tooling, 1998-1999.

• Program Manager for the Plant Wide Assessment– Built the project team, submitted the proposal, managed the project, and helped generate over $3.6M in plant savings recommendations, 2000.

• Authored proposal, built the team, and co-managed the Metal Casting Statewide Pilot program for Ohio’s Office of Energy Efficiency, 2000-2001.

• Built the team and initiated the Plant Wide Assessment – covering Glass IOF, 2001. • Provided input and technical interface for DOE’s Aluminum Partnership project: Severe

Plastic Deformation of Al Alloys with ORNL and other members, 2000

• EMTEC Proposal Manager for NIST-ATP collaborative team project: Lean Manufacturing of Hardened Steels - coordinated all proposal writing and submission, and interfaced with NIST-ATP Program Managers for reviews

• Managed Technology Transfer and Commercialization projects and tasks to help industry members leverage State programs, Federal Labs, and Academia, 1990-1999.


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4.2 Professional and Advisory Support

Professional and business consultants include:

� Corporate Attorney - James Kordik, Rogers & Greenburg LLP � Accounting - Teffan Moler CPA, Inc. � Insurance Agent - Robert K. Jones Insurance � Banker - Sheryl Palmer, Huntington National Bank � Consultants - Chris Meyer and Jim Hartings

4.3 Board of ADVISORS Neil Chaudhry, COO, buyCASTINGS.com, Inc. Robert Dzugan, President, buyCASTINGS.com, Inc. Robert Shinkle, CFO, Edison Materials Technology Center (EMTEC) Chris Meyer, Principal, GreenTech Advisors, LTD Jim Hartings, Engineering Consultant and Adjunct Instructor, University of Dayton Bart McMannon, Operations and Facility Manager, buyCASTINGS.com, Inc. 5. Operations

5.1 Operations Strategy

CALS will conduct business under the buyCASTINGS.com umbrella during its 1st year of product development to help lower startup costs while also using existing equipment, office space, and tools.

CALS can be very flexible when addressing customer’s needs. We will provide low cost tooling that will provide for dimensional sound parts per the customer. Parts will be provided in a timely manner and only at the quality specifications provided by the customer. FOPAT Production Inc. is ISO 9001:2008 Certified, while CALS shares the same shop floor it will also adopt FOPAT’S proven processes and procedures. 5.2 Facility Resources, Equipment, and Facilities: buyCASTINGS new facility is shown is the figure on the right and an example of investment FOPAT injection machine in operation at new facility is shown beside. A spin-off company of the Edison Materials Technology Center (www.emtec.org), buyCASTINGS has grown from less than 150 to over 2750 participating companies to become the world’s one of the largest on-line marketplace for the manufacturing, materials and processing industry. With OVER 1250 buyers and suppliers

New buyCASTINGS Facility –Miamisburg, Ohio


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registered (with details of their capabilities), buyCASTINGS is able to bring choice, convenience and competitive prices to buyers of custom made parts, equipment, supplies and services. buyCASTINGS also manages the CastingExpert.com and has developed a network of technology experts and skilled individuals in the industry. By tapping into this vast network, buyCASTINGS pulls together teams of experts to solve problems and provide “design-to-production” services, including CAD, engineering, prototyping, tooling, and production. 6. Financials

Describe the timing and amount of investment that you will require to achieve your plans. Then demonstrate that this investment is a good one by showing that profits, assets, and ROI are all favorable as the business progresses.

6.1 Start-up Funds CALS is seeking $150,000 in year one to seed the business and fund product development cost, 8 part time employees and marketing effort. 6.2 Break Even Analysis Based on its financial projections, CALS will break even and show a profit in the 4th month of its 2nd year (16 month).

7. Funding Request

CALS is requesting $150,000 in year 1 to prove the manufacturing capabilities and for production of samples for initial customer trials and another $50,000 in year 2 to promote its product launch. CALS is looking for 1st year support in 3 increments and one initial 2nd year investment as follows:

1. $50,000 - funding in the 1st month to fund further product development efforts, 2 trade shows, and labor cost.

2. $50,000 – funding in the 4th month following the 2 trade shows efforts. At this time, CALS will be able to provide a top 10 list of potential clients from various industries and a better definition of each product line. The funds will help ramp up the development efforts where tooling, coating, and testing will make up a majority of the cost.

3. $50,000 – funding in the 9th month will allow for a concentrated effort in developing tooling and a cost effective production plan of at least 2 products. At this time, CALS will be seeking customer contracts and will utilize the funds to launch its initial products.

4. $50,000 – funding in the 1st month of year 2 to begin production and market our products while continuing to develop further clientele for future products.


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In return for investment funding, CALS LTD will payback the loan at mutually agreeable terms plus a success fee payment of 2X of the loan amount upon a significant liquidity event. We believe that the success fee is justified given that the technology is proven and patented for the casting industry already and will now be optimized for the composites industry. In addition, the equipment, the facilities, and the personnel are already in place to execute this plan. Finally, the management has the experience and the track record of successfully spinning off new businesses, growing the business, commercializing technology, and delivering custom made parts to variety of customers.

Tax Credits Technology Investment Tax Credit Investors can also participate in the Technology Investment Tax Credit program offers a variety of benefits to Ohio taxpayers who invest in small, research and development, and technology-oriented firms. Through this innovative program, Ohio investors may reduce their state taxes by 25 percent on the amount they invest in qualified, technology-based Ohio companies. CALS will be applying for this tax credit for investors in January 2012.

InvestOhio provides a non-refundable personal income tax credit to investors that infuse new equity (cash) into Ohio small businesses to acquire an ownership interest in the company. The small business is required to reinvest that infusion of cash into one of five categories of allowable expenses within six months of its receipt. The investor must retain his or her ownership interest for a two year holding period before the tax credit may be claimed. The small business must similarly retain the property that it purchased from the cash infusion for the entire two year holding period.


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CALS LTD (COMPOSITE and Lightweight Structures)

Six Year Projected Statement of Income

Budgeted Budgeted Budgeted Budgeted Budgeted Budgeted

2012 2013 2014 2015 2016 2017

Sales -$ 456,500$ 2,081,050$ 3,521,925$ 5,660,475$ 8,782,150$

Cost of Goods Sold - 169,800 723,412 1,258,996 2,066,519 3,251,748

Gross Profit - 286,700 1,357,638 2,262,929 3,593,956 5,530,402

Expense

Payroll 62,832 100,200 161,206 228,042 310,883 396,209

Payroll Taxes 5,532 16,085 44,057 72,296 113,494 170,742

Employee Retirement Benefits 1,884 3,012 15,028 24,660 38,713 58,241

Employee Health Benefits 4,536 16,896 68,869 124,927 205,037 344,530

Travel & Entertainment 3,962 3,962 4,081 4,203 4,329 4,459

Utilities 1,800 1,800 1,854 1,910 1,967 2,026

Office Expenses 204 204 210 216 222 229

Advertising & Marketing 8,000 6,800 7,004 7,214 7,430 7,653

Insurance 2,004 3,996 4,116 4,239 4,366 4,497

Legal & Professional 504 504 519 535 551 568

Consulting 12,000 12,000 12,360 12,731 13,113 13,506

Sales Commissions - 22,825 104,053 176,096 283,024 439,108

Rent 3,000 24,372 25,103 25,856 26,632 27,431

Product Development 32,004 32,004 32,964 33,953 34,972 36,021

Total Expense 138,262 244,660 481,424 716,878 1,044,733 1,505,220

Net Income (Loss) Before Financing and Investing Cost (138,262) 42,040 876,214 1,546,051 2,549,223 4,025,182


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Jan 12 Feb 12 Mar 12 Apr 12 May 12 Jun 12 Jul 12 Aug 12 Sep 12 Oct 12 Nov 12 Dec 12 TOTAL

Sales -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

Cost of Goods Sold - - - - - - - - - - - - -

Gross Profit - - - - - - - - - - - - -

Expense

Payroll 5,236 5,236 5,236 5,236 5,236 5,236 5,236 5,236 5,236 5,236 5,236 5,236 62,832

Payroll Taxes 461 461 461 461 461 461 461 461 461 461 461 461 5,532

Employee Retirement Benefits 157 157 157 157 157 157 157 157 157 157 157 157 1,884

Employee Health Benefits 378 378 378 378 378 378 378 378 378 378 378 378 4,536

Travel & Entertainment 46 1,646 1,856 46 46 46 46 46 46 46 46 46 3,962

Utilities 150 150 150 150 150 150 150 150 150 150 150 150 1,800

Office Expenses 17 17 17 17 17 17 17 17 17 17 17 17 204

Advertising & Marketing - 6,000 2,000 - - - - - - - - - 8,000

Insurance 167 167 167 167 167 167 167 167 167 167 167 167 2,004

Legal & Professional 42 42 42 42 42 42 42 42 42 42 42 42 504

Consulting 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000

Sales Commissions - - - - - - - - - - - - -

Rent 250 250 250 250 250 250 250 250 250 250 250 250 3,000

Product Development 2,667 2,667 2,667 2,667 2,667 2,667 2,667 2,667 2,667 2,667 2,667 2,667 32,004

Total Expense 10,571 18,171 14,381 10,571 10,571 10,571 10,571 10,571 10,571 10,571 10,571 10,571 138,262

Net Income (Loss) Before Financing and Investment Cost (10,571)$ (18,171)$ (14,381)$ (10,571)$ (10,571)$ (10,571)$ (10,571)$ (10,571)$ (10,571)$ (10,571)$ (10,571)$ (10,571)$ (138,262)$

Cumulative Cash Requirement 10,571$ 28,742$ 43,123$ 53,694$ 64,265$ 74,836$ 85,407$ 95,978$ 106,549$ 117,120$ 127,691$ 138,262$

Requested Funding 50,000 - - 50,000 - - - - 50,000 - - - 150,000

Cumulative Funding 50,000 50,000 50,000 100,000 100,000 100,000 100,000 100,000 150,000 150,000 150,000 150,000


Projected Monthly Statement of Income – Year Ended December 31, 2012


27

Jan 13 Feb 13 Mar 13 Apr 13 May 13 Jun 13 Jul 13 Aug 13 Sep 13 Oct 13 Nov 13 Dec 13 TOTAL

Sales 9,100$ 18,300$ 27,400$ 36,500$ 38,800$ 41,100$ 43,400$ 45,700$ 47,900$ 47,900$ 50,200$ 50,200$ 456,500$

Cost of Goods Sold 3,400 6,800 10,200 13,600 14,400 15,200 16,200 17,000 17,800 17,800 18,700 18,700 169,800

Gross Profit 5,700 11,500 17,200 22,900 24,400 25,900 27,200 28,700 30,100 30,100 31,500 31,500 286,700

Expense

Payroll 8,350 8,350 8,350 8,350 8,350 8,350 8,350 8,350 8,350 8,350 8,350 8,350 100,200

Payroll Taxes 884 1,024 1,174 1,315 1,350 1,385 1,420 1,465 1,499 1,499 1,535 1,535 16,085

Employee Retirement Benefits 251 251 251 251 251 251 251 251 251 251 251 251 3,012

Employee Health Benefits 1,408 1,408 1,408 1,408 1,408 1,408 1,408 1,408 1,408 1,408 1,408 1,408 16,896

Travel & Entertainment 46 1,646 1,856 46 46 46 46 46 46 46 46 46 3,962

Utilities 150 150 150 150 150 150 150 150 150 150 150 150 1,800

Office Expenses 17 17 17 17 17 17 17 17 17 17 17 17 204

Advertising & Marketing - 4,800 2,000 - - - - - - - - - 6,800

Insurance 333 333 333 333 333 333 333 333 333 333 333 333 3,996

Legal & Professional 42 42 42 42 42 42 42 42 42 42 42 42 504

Consulting 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000

Sales Commissions 455 915 1,370 1,825 1,940 2,055 2,170 2,285 2,395 2,395 2,510 2,510 22,825

Rent 2,031 2,031 2,031 2,031 2,031 2,031 2,031 2,031 2,031 2,031 2,031 2,031 24,372

Product Development 2,667 2,667 2,667 2,667 2,667 2,667 2,667 2,667 2,667 2,667 2,667 2,667 32,004

Total Expense 17,634 24,634 22,649 19,435 19,585 19,735 19,885 20,045 20,189 20,189 20,340 20,340 244,660

Net Income (Loss) Before Financing and Investment Cost (11,934)$ (13,134)$ (5,449)$ 3,465$ 4,815$ 6,165$ 7,315$ 8,655$ 9,911$ 9,911$ 11,160$ 11,160$ 42,040$

Cumulative Cash Requirement 150,196$ 163,330$ 168,779$ 165,314$ 160,499$ 154,334$ 147,019$ 138,364$ 128,453$ 118,542$ 107,382$ 96,222$

Requested Funding 50,000 - - - - - - - - - - - 50,000

Cumulative Funding 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000


Projected Monthly Statement of Income – Year Ended December 31, 2013

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