cellular providers

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January 2000

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1.0 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1 Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.2 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.3 Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

2.0 Company Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.1 Company Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.2 Company Locations and Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

3.0 Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63.1 Service Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63.2 Competitive Comparison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63.3 Fulfillment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73.4 Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

4.0 Market Analysis Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74.1 Market Segmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94.2 Target Market Segment Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

4.2.1 Market Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104.2.2 Market Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

4.3 Business Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114.4 Competition and Buying Patterns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

5.0 Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115.1 Pricing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125.2 Promotion Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125.3 Marketing Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135.4 Strategic Alliances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135.5 Competitive Edge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

6.0 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

7.0 Personnel Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157.1 Management Team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

8.0 Financial Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168.1 Important Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168.2 Projected Profit and Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

8.3 Projected Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188.4 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208.5 Projected Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218.6 Business Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Table of Contents


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1.0 Executive Summary

IntroductionCellular Providers is taking advantage of an opportunity to become a highly distinguished andrecognized industry leader in the cellular communications industry. It is the goal of ourcompany to become established as the leading distributor of wireless communications services.

In order to achieve this goal, Cellular Providers' critical success factors will be to identifyemerging trends and integrate them into Cellular Providers' operations, respond quickly totechnology changes/be there early, provide high-quality services, continue to invest time and

money in marketing and advertising, continue to expand into specialty markets, and stayahead of the "technology curve."

The CompanyThe company was initially formed as a sole proprietorship by Jason Sanderson in September1995. Mr. Sanderson capitalized on the growing wireless communications industry to create aniche market for its services and accessories. Through its research and development, CellularProviders has maintained a technological lead in the marketplace and provided the best qualitycare for the consumer. Today, revenue sources include a variety of phones, and a full range ofaccessories and services.

Cellular Providers' head office is located at 654 Smith Lane, #87, Pullman, WA 23423. CellularProviders' leases its 1,000 square feet head office which, has adequate office space to conductits operations. At some point in the future, management expects to outgrow this office space.

Cellular Providers has a world class management team with direct knowledge of the industry,extensive research experience, and unique administrative skills. Its team includes JasonSanderson, president; Jerry Tillman, vice president; and Joe Dunn. Together, they have acombined total of over 10 years experience in the cellular and retail industries. In the future,

Cellular Providers expects to require a highly qualified CFO, HR manager, additional customerservice personnel, additional sales reps, and a public relations manager.

The ServicesThe company has a developed mix of services targeting both businesses and consumers. Attodays breakneck pace of business, companies need more ways than ever to keep in touch,and the easier the better.

Cellular Providers' innovative product and service offerings provide the best advantages to

customers, including sleek and innovative cellular phone models, text and numeric paging,data capability, no roaming or landline connection charges, and much more.

The MarketThe ten-year outlook in the wireless communications service is excellent. The number of newcellular subscribers in the United States increased dramatically from 1992 to 1998, and 1999saw continuation of that growth The number of new subscribers exceeded 10 million with a

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The company plans to focus on three target markets that will provide us with the greatestmarket penetration. This includes the specialty business users, the general business users, andthe personal users. We intend to offer service packages that are priced appropriately for eachsegment and will offer the services that best suit each segment's needs.

Cellular Providers' ongoing marketing strategy involves the company maintaining andexpanding a broad base of clients in target territories, establishing alliances with product andservices companies so that it can deliver high quality products, and invoking its ownorganization to bring these together and implement total solutions for customers. Thecompany will move from the traditional product-focused strategy to a total-focus on customerownership.

Financial ConsiderationsIt is estimated that Cellular Providers will earn approximately $1.7 million based on $10 millionin sales by year 2002. Cellular Providers is currently seeking funding in the amount of$100,000 for the purpose of increasing market share, opening up additional retail locations,hiring additional staff, and effectively advertising and promoting its services.

1.1 Objectives

Business Objectives

Company growth. Become established as the leading distributor of wireless communications services. Increase number of retail outlets.

Financial Objectives

Increase revenue

Marketing Objectives

Increase marketing efforts. Expand market area. Expand marketing reach. Brand recognition.

Increase telemarketing efforts.

1.2 Mission

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1.3 Keys to Success

Timing is critical in business. Cellular Providers is taking advantage of an opportunity tobecome a highly distinguished and recognized industry leader because of certain keyadvantages:

The management team has a unique combination of business knowledge andexperience in this market.

Cellular Providers has combined its expertise to offer services for every type ofcustomer in this credit-sensitive industry.

Cellular Providers has established partnering relationships with leading companies inthe industry and customers.

Cellular Providers' critical success factors include funding, marketing, quality salesprofessionals, good management, aggressive branding, increasing reach, affiliating with theright partners, being specific to the needs of businesses and the public, competitiveintelligence, appropriate use of technology, and remaining dynamic to keep pace with evolvingwireless communications business strategies.

($2,000,000)

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

2000 2001 2002

Sales

Gross Margin

Net Profit

Highlights (Planned)

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2.0 Company Summary

Cellular Providers is one of the state's leaders in the field of wireless communications services.

Cellular Providers is a distributor of AT&T and Sprint PCS services. The company was formedfor the purpose of selling and distributing wireless communications services. Over the courseof its existence, the professionals at Cellular Providers have been involved in selling cellularservice and accessories. Cellular Providers carries the latest in wireless technology from two ofthe major wireless companies in the industry.

The companys management philosophy is based on responsibility and mutual respect. CellularProviders maintains an environment and structure that encourages productivity and respectfor customers and fellow employees. Additionally, the environment encourages employees tohave fun by allowing creative independence and providing challenges that are realistic andrewarding.

2.1 Company Ownership

The legal name of the company is Cellular Providers, LLC. The company was initially formed asa sole proprietorship by Jason Sanderson in September 1995.

Cellular Providers was formed as a company committed to being on the cutting edge ofwireless communications services. Cellular Providers was capitalized with financing arrangedthrough first round investors in the amount of $50,000. These funds were used for acquiringinventory, developing equipment and a complete product and service line, and creatingsupportive marketing materials.

Jason Sanderson capitalized on the growing wireless communications industry to create aniche market for its services and accessories. Through its research and development, CellularProviders has maintained a technological lead in the marketplace and provided the best qualitycare for the consumer. Today, revenue sources include the services, a full range ofaccessories, and a variety of phones.

2.2 Company Locations and Facilities

Cellular Providers' head office is located at 654 Smith Lane, #87, Pullman, WA 23423. CellularProviders' leases its 1,000 square feet head office which has adequate office space to conductits operations. At some point in the future, management expects to outgrow this office space.Additional office space will be sought at the appropriate time.

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Table: Past Performance

Past Performance 1997 1998 1999Sales $275,781 $496,406 $893,530Gross Margin $118,586 $238,275 $464,636Gross Margin % 43.00% 48.00% 52.00%Operating Expenses $94,869 $154,879 $278,781Collection Period (Days) 45 0 0Inventory Turnover 12.00 12.00 24.00

Balance SheetShort-term Assets 1997 1998 1999Cash $150,000 $200,000 $175,000Accounts Receivable $55,156 $99,281 $178,706Inventory $20,000 $24,000 $34,000Other Short-term Assets $3,000 $1,500 $3,000Total Short-term Assets $228,156 $324,781 $390,706Long-term AssetsCapital Assets $20,000 $35,000 $50,000Accumulated Depreciation $0 $0 $0Total Long-term Assets $20,000 $35,000 $50,000Total Assets $248,156 $359,781 $440,706

Capital and Liabilities

1997 1998 1999Accounts Payable $4,700 $12,067 $18,097Current Borrowing $10,000 $0 $0Other Short-term Liabilities $0 $0 $0Subtotal Short-term Liabilities $14,700 $12,067 $18,097

Long-term Liabilities $1,800,000 $1,750,000 $1,650,000Total Liabilities $1,814,700 $1,762,067 $1,668,097Paid-in Capital $200,000 $75,000 $0Retained Earnings ($1,780,261) ($1,510,682) ($1,413,246)Earnings $13,717 $33,396 $185,855

Total Capital ($1,566,544) ($1,402,286) ($1,227,391)Total Capital and Liabilities $248,156 $359,781 $440,706

Other Inputs 1997 1998 1999Payment Days 45 45 45Sales on Credit $0 $0 $0Receivables Turnover 0.00 0.00 0.00

$600,000

$700,000

$800,000

$900,000

Past Performance

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3.0 Services

The company has a developed mix of services targeting both businesses and consumers. Attodays breakneck pace of business, companies need more ways than ever to keep in touch,and the easier the better.

Cellular Providers' innovative product and service offerings provide the following advantages tocustomers.

A full range of sleek, modern handsets to choose from. Text and numeric paging. Data capability. A full range of features. A national network. No roaming or landline connection charges. One-second rounding after the first minute.

3.1 Service Description

Cellular Providers has created a niche market as a one-stop shop for wireless services.Additionally, Cellular Providers has professionals with over 10 years combined experience inthe industry, sophistication, and sales and distribution channels that are successful. Ourservices are formulated with ingredients known to increase the quality of communications,enhance internal business communications, and give users the opportunity to access the latesttechnology such as the ability to access the Internet on their handset.

Cellular Providers maintains a number of different services and accessories. Each of theseservices and accessories can be placed at the growth phase on the product life cycle curve.

3.2 Competitive Comparison

Cellular Providers is well positioned as a significant player in the cellular and two-way radioservice marketplace. There are varying degrees of competition in each area, ranging from a

great deal of perceived competition to the very minimal competition in satellite dishes. Newtechnology research and upgrades will be on the cutting edge to improve our product andservice lines and ensure that Cellular Providers remains a leader in this field. In comparison tothe other key industry players, Cellular Providers offers a greater complement of products andservices that make it a truly one-stop shop for wireless communications services. Significantdifferences include these offerings: satellite dishes, specialty markets with a direct need,services from four different wireless service providers, and residual revenue from service lines.

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3.3 Fulfillment

Cellular Providers is required to comply with various rules and regulations among a number oflocal, state, and federal agencies. Locally, the company is required to maintain its businesslicense and comply with local regulations and city codes. From a State level, the company isrequired to comply with all State laws concerning employment law, corporate law, andconsumer products regulations. From a Federal level, the company is required to comply withadditional consumer product laws, taxation, etc.

Cellular Providers' accounting policy follows generally accepted accounting principals. CellularProviders' financials are turned over to the CPA on a quarterly basis.

Cellular Providers uses Quick Books for its accounting software; Accounting is system based onthe accrual method. The fiscal year is based on year-end. Financial reporting methods includemonthly, quarterly, and annual statements. An annual audit is to be performed by the firm'sCPA firm in January.

Cellular Providers carries insurance for business liability, automobile, and medical coverage.Additional insurance programs such as worker's compensation and key-man coverage willmost likely be consummated by the close of the second quarter of 2000.

Management has no knowledge of pending lawsuits or threat of legal action directed at eitherthe company or its officers.

3.4 Technology

Cellular Providers' business tools may be considered to be those assets that keep the businessrunning smoothly. These tools include computers, software, business forms, standardagreements, various internal process standards, and other company-specific documentation.

Estimated technological changes in this section concern those changes that would most likelyaffect Cellular Providers' ability to compete. As Cellular Providers' management identifieschanging technology, these changes will be studied, analyzed, and evaluated. Of thosetechnological changes that show significant impact on Cellular Providers' future, funds andresources will likely be committed to making adjustments to Cellular Providers' businessoperations. Actions include expanding sales, customer service, and training in order to meetthe demand of the business community.

4.0 Market Analysis Summary

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Gross domestic product grew at a 6.9 percent annual rate in the fourth quarter, the CommerceDepartment said, above the revised 6.5 percent increase expected by economists and well

ahead of the 5.8 percent pace originally reported a month ago. It was the biggest gain sincethe second quarter of 1996, and dwarfed the third-quarter expansion of 5.7 percent.

The GDP price deflator, a key inflation gauge, rose at a 2 percent annual rate, the same rateinitially recorded a month ago and in-line with economists' forecasts of a 2 percent gain. Theprice deflator rang in at 1.1 percent in the third quarter. For the entire year, the U.S. economygrew at a 4.1 percent pace, while the GDP price deflator advanced 1.6 percent. Higherproductivity has allowed businesses to produce more without increasing expenses, keeping thecost of the final product low.

The U.S. economy's rate of expansion during the past three years has been faster than whatFed officials have said can be sustained without a renewed inflation threat. Fed officials havestated at different intervals that a "comfortable" rate of growth is typically around 3 percent.Small businesses are taking advantage of the opportunities the Internet affords.

International Data Corporation (IDC) estimates that the number of small businesses engagedin e-commerce will increase 47.1% annually, from 400,000 at the end of 1998 to almost 2.8million at the end of the year 2003, signaling the broad adoption of the Internet by these small

enterprises. The widespread adoption of the Internet as a purchasing vehicle has created awealth of opportunities for businesses that offer products and services to small businesses andconsumers. Simultaneously, it has given both small businesses and consumers a wider varietyof products from which to choose at competitive prices.

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4.1 Market Segmentation

According to the Cellular Telecommunications Industry Association, industry investment grewto $46 billion in 1997, up over 41% from 1996. Dataquest estimates that the average annualrevenue per subscriber for PCS was $576 in 1997, with total revenue for 1997 at $1.03 billion,over 3% of the combined total for cellular and PCS.

By 2001 there are expected to be about 40 million U.S. PCS subscribers, and total revenue forthe year of $15.9 billion, according to Dataquest. Other predictions vary: Decision Resourcesforecasts that PCS will account for only 21.8% (19.5 million) of U.S. mobile voice subscribers,while cellular will account for the remaining 78.2% (70 million) by the end of 2001, butestimates total revenues will reach $31.4 billion. On average, however, it is projected that PCSsubscribers will account for 40-45% of subscribers and about half of total service revenues by2002.

Table: Market Analysis

Market AnalysisPotential Customers Growth 2000 2001 2002 2003 2004 CAGRSpecialty Business Users 0% 226,000 226,000 226,000 226,000 226,000 0.00%

General Business Users 0% 650,000 650,000 650,000 650,000 650,000 0.00%Personnel Users- WashingtonState

0% 5,987,000 5,987,000 5,987,000 5,987,000 5,987,000 0.00%

Total 0.00% 6,863,000 6,863,000 6,863,000 6,863,000 6,863,000 0.00%

Specialty Business Users

General Business Users

Personnel Users- Washington State

Market Analysis (Pie)

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4.2 Target Market Segment Strategy

Cellular Providers sources of revenue are derived from the sale of wireless communicationsservices to businesses and consumers, the sale of accessories, and co-brands (revenuesharing). In comparison to other start-up companies of recent years, Cellular Providers hasdone very well.

4.2.1 Market Trends

The most significant trends are greater marketing and advertising efforts, rapidly expandingnetworks, and technological advances. New services and applications such as advancedmessaging, data and video transmission, location technology, and remote monitoring are inthe early stages of what most analysts predict will be a period of explosive growth.

4.2.2 Market Growth

Current economic conditions driving Cellular Providers' industry sector include a rising GNP,interest rates edging up gradually, communications economy that is growing, and anincreasing number of consumers with greater amounts of disposable income. The savings ratehas begun to rise as well. Warning signs of change include rising interest rates and inflation. Ifthese begin to rise sharply, it signals a faltering economy and can have negative effects on allbusiness including Cellular Providers.

The ten-year outlook in the wireless communications service is excellent. The U.S.,

Department of Commerce estimates that billions are invested each year for research anddevelopment. The number of new cellular subscribers in the United States increaseddramatically from 1992 to 1998, and 1999 saw continuation of that growth. The number ofnew subscribers exceeded 10 million, with a record 11.5 million net new subscribers in 1997,for a total of 55.3 million at the end of that year. By the end of 1999 analysts had that figurereaching 80 million. One analytical firm believes that 82 percent of U.S. adults fromhouseholds with an income higher than $35,000 per year (approximately 90 million people)will be subscribers by 2002. While projections differ, the number of cellular and PCSsubscribers in the U.S. is expected to have a compound average growth rate (CAGR) of 12%.

With the evolution of new technology, this industry is expected to generate increased revenues.

The explosive growth of the Internet, as a tool for global communications, has enabled millionsof people to interact electronically. IDC estimates that there were 142 million Web usersworldwide at the end of 1998, and expect this number will grow to approximately 502 millionby the end of the year 2003. Rapid acceptance of the Internet as a communications platformby both businesses and consumers has created the foundation for significant growth in

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4.3 Business Participants

Within the U.S., there are numerous companies that provide one or more types ofcommunications services. According to U.S. Trade and Outlook 99, there were more than1,500 cellular systems operating in 750 U.S. markets. Far fewer provide the depth, breadth,and level of expertise as that of Cellular Providers. Globally, as in the U.S, there are companiesthat offer wireless communications services. Few carry the range of services as that of CellularProviders.

4.4 Competition and Buying Patterns

Effective competitive strategies are built upon understanding what defines and determines ifanother company is a competitor. Cellular Providers does not believe that all cellular and two-way radio service firms compete with it because many of these do not provide the array ofservices that it provides. The number of companies selling cellular services continue to growand each competes for a share of the market. This translates into escalating advertising costsespecially with larger and established companies. This trend is expected to continue and

intensify over the coming years.

Cellular Providers' outline for competitive strategy includes monitoring competitors forinnovative changes, devising responsive and timely strategies, contingency andimplementation plans, devising marketing strategies, compare pricing by rivals, and remainalways watchful of technology developments and innovation by service providers, and respondaccordingly.

5.0 Marketing Strategy

Cellular Providers developed its sales and marketing strategy by analyzing its own internalstrengths and then analyzing current market conditions. This process helped Cellular Providerscreate its marketing and sales strategy to leverage its competitive advantages with a uniquemarketing strategy, thus establishing it as the nation's leading wireless communicationsservice provider for businesses and consumers.

The company will create momentum through critical mass and brand recognition. CellularProviders will monitor the effectiveness of its marketing efforts in order to determine theadvertising return on investment and the commerce generated from the various channels.

Cellular Providers' ongoing marketing strategy involves the company maintaining andexpanding a broad base of clients in target territories, establishing alliances with product andservices companies so that it can deliver high-quality products, and invoking its own

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Our year 2000 marketing goals include the following:

Capture 5% market share of businesses in the Idaho and Washington market areas.

Capture 1% market share of consumers in the Idaho and Washington market areas. Develop market share for satellite dishes and equipment. Educate businesses and consumers about services provided. Substantially increase sales over 1999 levels. Position the company as the number one provider of solutions to wireless

communications. Make a major branding effort emphasizing Cellular Providers' name and array of

services. Initiate new marketing program with a budget of $240,000.

Create new collateral marketing materials (brochures, radio ads, video). Media placements including magazine, TV, radio, Internet, print, and banner

advertising. Expand product and service offerings. Provide sales reps with free demo systems.

5.1 Pricing Strategy

Cellular Providers' retail prices are competitive and affordable for businesses. The companyhas also established a pricing and commissions structure for sales representatives anddistributors. Bulk purchasing enables the company to reduce its cost of goods sold, increaserevenue, and pass on the savings to businesses and consumers.

5.2 Promotion Strategy

Cellular Providers overall goal is to generate additional retail traffic, increase the business andconsumer base, and create more awareness to the need for this type of service in themarketplace. Currently, marketing efforts have revolved around sales representatives andtelemarketing.

During 2000, Cellular Providers' marketing goals also include positioning the company for co-branding alliances with several industry leaders. It is Cellular Providers' belief that the bestway to introduce its services to businesses as well as consumers is through aggressivetelemarketing.

In addition to standard advertisement practices, Cellular Providers will gain considerablerecognition through these additional promotional mediums:

Press releases sent to major industry publications.

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5.3 Marketing Programs

Advertising programs include direct response advertising, public relations program, co-marketing promotion, relationship building, direct sales efforts, telemarketing, trade shows,ads in print media and radio and television.

Cellular Providers' marketing propositions are designed to appeal to various target audiences,regardless of their level of sophistication. Cellular Providers will continually inform businessesand consumers through press releases and media placements about the service benefits aswell as endorsements from other customers.

These two factors naturally create a curiosity from those not previously exposed to CellularProviders services, as well as the public sector seeking improved methods in cellular servicedeals. Overall, this is intended to encourage further investigation by businesses andconsumers and is precisely the result Cellular Providers seeks. It is believed that this strategywill draw an abundance of curiosity from which a substantial market can be developed.

As an extra incentive for customers and potential customers to remember Cellular Providers'name, the company plans to distribute advertising specialties with the company logo. This willbe an ongoing program for the company, when appropriate and where it is identified as

beneficial.

The objective of incentives is to portray Cellular Providers goals and products as an attractivefunctionality. It is also to show customers how to use the latest in technology as it relates towireless communications services.

5.4 Strategic Alliances

Cellular Providers has strategic partnerships with the leading companies industry. Managementfeels that these partnerships will enhance sales and help build critical mass and businessmomentum. The partnering companies are given below.

AT&T; Sprint PCS.

When Cellular Providers agrees to accept a new client, it is accepting a new business partner.

Plans are underway to further strengthen relationships and establish other relationships as theneed arises in the future.

5.5 Competitive Edge

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the technology curve. In general our strengths include business management, accounting andfinance, knowledge of the wireless communications services industry, and experience inrunning successful businesses in the past.

Cellular Providers prides itself on its high-quality customer service. Although excellentcustomer service is expected, not all provide this. Cellular Providers is available at all times forcustomer orders and inquiries.

6.0 Sales Forecast

The following table and chart illustrates the projected sales forecast of Cellular Providers.

Table: Sales Forecast (Planned)

Sales ForecastSales 2000 2001 2002Personal User Sales $1,734,283 $4,800,000 $8,000,000Business User Sales $419,800 $960,000 $1,920,000Total Sales $2,154,083 $5,760,000 $9,920,000

Direct Cost of Sales 2000 2001 2002Personal User Sales $728,399 $2,030,400 $3,400,000Business User Sales $188,910 $ 406,080 $ 812,160Subtotal Direct Cost of Sales $917,309 $2,436,480 $4,212,160

$0

$50,000

$100,000

$150,000

$200,000

$250,000

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

Personal User Sales

Business User Sales

Sales Monthly (Planned)

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7.0 Personnel Plan

Future staffing needs require monthly evaluation. Factors determining future staffing includegrowth, demand on existing resources, future capabilities needed, and budgeting. In thefuture, Cellular Providers will require a highly qualified CFO, HR manager, additional customerservice personnel, additional sales reps, and a public relations manager.

7.1 Management Team

Cellular Providers has a world class management team with direct knowledge of the industry,extensive research experience, and unique administrative skills. Its team includes JasonSanderson, president; Jerry Tillman, vice president; and Joe Dunn. Together, they have acombined total of over 10 years experience in the cellular and retail industries.

Table: Personnel (Planned)

Personnel Plan

2000 2001 2002CEO $0 $150,000 $175,000CFO $60,000 $95,000 $110,000HR Manager $49,992 $55,000 $60,000Regional Manager $45,000 $50,000 $55,000Office Manager $30,000 $35,000 $40,000Marketing Staff $69,000 $150,000 $250,000Retail Staff #1 $54,000 $65,000 $76,000Retail Staff #2 $34,500 $65,000 $76,000Retail Staff #3 $18,000 $65,000 $76,000Retail Staff #4 $0 $65,000 $76,000Retail Staff #5 $0 $42,500 $76,000Retail Staff #6 $0 $30,000 $76,000Retail Staff #7 $0 $0 $32,500Retail Staff #8 $0 $0 $20,000Other Personnel $31,166 $84,000 $112,000Total Payroll $391,658 $951,500 $1,310,500

Total People 10 16 22Payroll Burden $58,749 $142,725 $196,575Total Payrol l Expenditures $450,407 $1,094,225 $1,507,075

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8.0 Financial Plan

The following sections outline the financial plan for Cellular Providers.

8.1 Important Assumptions

Cellular Providers is currently seeking funding in the amount of $100,000 for the purpose ofincreasing market share, opening up additional retail locations, hiring additional staff, andeffectively advertising and promoting its services.

Breakdown of Use of Funds

Office Furniture and Fixtures $50,000

Marketing $10,000

Inventory $20,000

Miscellaneous (InventoryControl, Service Centers)

$20,000

Total $100,000

Use and distribution of proceeds: Integrate new services, develop website, and expandinto other markets. Produce media relations package(s); further build the brand name throughmarketing, advertising, and promotion; and acquire additional products. Funding proceeds willalso be used to increase Cellular Providers' capabilities, enhance brand name, and extendCellular Providers' market area. Funds will also be directed into business relations, televisionadvertising, press releases, print advertising, Internet advertising, and website developmentand maintenance. The initial investment will be used as a kick off marketing budget. It isexpected that from this point on the company will self finance its expansion and marketing

programs.

8.2 Projected Profit and Loss

The financial projections present the companys expected financial position, results ofoperations and cash flow for the three years ending December 31, 2004. Accordingly, theforecast reflects its judgment as of April 4, 2000, the date of this forecast, of the expected

conditions and its expected course of action. There will usually be differences betweenforecasted and actual results, because events and circumstances frequently do not occur asexpected, and those differences may be material.

Financial projections are based on sales volume at the levels described in the revenue sectionand presents, to the best of managements knowledge and belief, the companys expectedassets liabilities capital revenues and expenses Further the projections reflect

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Cost of Goods: Cellular Providers expects that its products will bear a reasonably highmarkup, which translates to a relatively low cost of goods. Our cost of goods includes

consideration cost of products, shipping charges (which may be passed along to theconsumer), and sales commissions.

Sales and Marketing Expenses: We group advertising, promotions, and retail outlets underthis category.

Advertising and Promotions: We are allocating 10% of sales for marketing expenses in ourprojections.

Retail Outlets: We estimate that each retail location will cost $30,000 to setup and weanticipate opening up 10 new stores.

Other: We estimate that we may need additional funds for other promotions and this is setaside in a special fund.

Rent: It is assumed that rent will be an average $1,500 per month per store.

Repairs and Maintenance: This is an estimated figure which is expected to grow with the

setup of service centers.

Salary: Figures are estimated based on the national average for similar positions. Theyassume however, the hiring of a store manager, a regional manager, a CFO, an HR manager,and acquiring the services of a marketing company.

Legal and Professional Expense: Figures are estimated.

Utilities: Figures are estimated. Management estimates that utilities will be at $800 per

month per store.

Bank Charges: Figures are estimated.

Telephone Expense: Figures are estimated. Management estimates that this expense willrun at less than 1% of sales (0.50%).

Miscellaneous/other Expenses: Figures are estimated. Management foresees that theseexpenses outside of the common budgeted items will run at a flat rate per year.

Corporate Tax: Figure is estimated at 7.5% of sales.

Interest: Figure is estimated at 10% annually on the initial requirement of $2,000,000.

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Table: Profit and Loss (Planned)

Pro Forma Profit and Loss2000 2001 2002

Sales $2,154,083 $5,760,000 $9,920,000Direct Cost of Sales $917,309 $2,436,480 $4,212,160Other $0 $0 $0

------------ ------------ ------------Total Cost of Sales $917,309 $2,436,480 $4,212,160Gross Margin $1,236,774 $3,323,520 $5,707,840Gross Margin % 57.42% 57.70% 57.54%Operating Expenses:Advertising/Promotion $215,408 $576,000 $992,000Other Promotional Costs $72,000 $90,000 $200,000

Travel $9,600 $20,000 $20,000Miscellaneous $9,000 $11,000 $13,000Payroll Expense $391,658 $951,500 $1,310,500Payroll Burden $58,749 $142,725 $196,575Depreciation $0 $0 $0Store Set Up Costs $90,000 $60,000 $90,000Utilities $22,400 $57,600 $76,800Insurance $21,600 $50,000 $66,000Rent $42,000 $78,000 $134,000Telephone $107,704 $115,200 $99,200Servicing Costs $24,000 $40,000 $67,000

Contract/Consultants $36,000 $65,000 $85,000------------ ------------ ------------Total Operating Expenses $1,100,119 $2,257,025 $3,350,075Profit Before Interest and Taxes $136,655 $1,066,495 $2,357,765Interest Expense Short-term $0 $0 $0Interest Expense Long-term $158,000 $137,500 $97,500Taxes Incurred $0 $232,249 $565,066Extraordinary Items $0 $0 $0Net Profit ($21,345) $696,746 $1,695,199Net Profit/Sales -0.99% 12.10% 17.09%

8.3 Projected Cash Flow

The following table and chart shows the projected cash flow of Cellular Providers.

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Table: Cash Flow (Planned)

Pro Forma Cash Flow 2000 2001 2002

Cash ReceivedCash from Operations:Cash Sales $1,550,940 $4,147,200 $7,142,400From Receivables $687,359 $1,454,624 $2,595,119

Subtotal Cash from Operations $2,238,299 $5,601,824 $9,737,519

Additional Cash ReceivedExtraordinary Items $0 $0 $0Sales Tax, VAT, HST/GST Received $0 $0 $0New Current Borrowing $0 $0 $0

New Other Liabilities (interest-free) $0 $0 $0New Long-term Liabilities $0 $0 $0Sales of other Short-term Assets $0 $0 $0Sales of Long-term Assets $0 $0 $0New Investment Received $0 $0 $0

Subtotal Cash Received $2,238,299 $5,601,824 $9,737,519

Expenditures 2000 2001 2002Expenditures from Operations:Cash Spent on Costs and Expenses $193,026 $458,835 $736,563Wages, Salaries, Payroll Taxes, etc. $450,407 $1,094,225 $1,507,075

Payment of Accounts Payable $1,566,813 $3,059,112 $4,793,145Subtotal Spent on Operations $2,210,245 $4,612,172 $7,036,783

Additional Cash SpentSales Tax, VAT, HST/GST Paid Out $0 $0 $0Principal Repayment of Current Borrowing $0 $0 $0Other Liabilities Principal Repayment $0 $0 $0Long-term Liabilities Principal Repayment $125,000 $300,000 $500,000Purchase Other Short-term Assets $37,000 $50,000 $100,000Purchase Long-term Assets $100,000 $400,000 $350,000Dividends $0 $400,000 $1,200,000

Adjustment for Assets Purchased on Credit ($137,000) ($450,000) ($450,000)

Subtotal Cash Spent $2,335,245 $5,312,172 $8,736,783

Net Cash Flow ($96,946) $289,652 $1,000,736Cash Balance $78,054 $367,706 $1,368,442

$100 000

$150,000

$200,000

$250,000

$300,000

$350,000

Net Cash Flow

Cash (Planned)

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8.4 Break-even Analysis

The break-even analysis shows that monthly sales revenues will need to be $130,000 to breakeven.

Table: Break-even Analysis

Break-even Analysis:Monthly Units Break-even 2,000Monthly Sales Break-even $130,000

Assumptions:

Average Per-Unit Revenue $65.00Average Per-Unit Variable Cost $25.00Estimated Monthly Fixed Cost $80,000

($80,000)

($60,000)

($40,000)

($20,000)

$0

$20,000

$40,000

$60,000

$0 $39,000 $78,000 $117,000 $156,000 $195,000

Monthly break-even point

Break-even point = where line intersects with 0

Break-even Analysis

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8.5 Projected Balance Sheet

The following table is the projected balance sheet.

Table: Balance Sheet (Planned)

Pro Forma Balance Sheet

AssetsShort-term Assets 2000 2001 2002Cash $78,054 $367,706 $1,368,442Accounts Receivable $94,490 $252,666 $435,147Inventory $102,238 $271,556 $469,463Other Short-term Assets $40,000 $90,000 $190,000Total Short-term Assets $314,782 $981,928 $2,463,052Long-term AssetsLong-term Assets $150,000 $550,000 $900,000Accumulated Depreciation $0 $0 $0Total Long-term Assets $150,000 $550,000 $900,000Total Assets $464,782 $1,531,928 $3,363,052

Liabilities and Capital2000 2001 2002

Accounts Payable $188,518 $1,258,918 $3,094,843

Current Borrowing $0 $0 $0Other Short-term Liabilities $0 $0 $0Subtotal Short-term Liabilities $188,518 $1,258,918 $3,094,843

Long-term Liabilities $1,525,000 $1,225,000 $725,000Total Liabilities $1,713,518 $2,483,918 $3,819,843

Paid-in Capital $0 $0 $0Retained Earnings ($1,227,391) ($1,648,736) ($2,151,990)Earnings ($21,345) $696,746 $1,695,199Total Capital ($1,248,736) ($951,990) ($456,791)

Total Liabilities and Capital $464,782 $1,531,928 $3,363,052Net Worth ($1,248,736) ($951,990) ($456,791)

8.6 Business Ratios

Cellular Providers is a company that is seeking to grow rapidly in order to seize market sharein a dynamic industry. As the company is, on average, in the high growth phase of the productlife cycle for its telecommunications products, the company is experiencing higher leverage of

its assets and a lower ROA than the industry standard.

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Table: Ratios (Planned)

Ratio Analysis

2000 2001 2002 Industry ProfileSales Growth 141.08% 167.40% 72.22% 4.80%

Percent of Total AssetsAccounts Receivable 20.33% 16.49% 12.94% 14.30%Inventory 22.00% 17.73% 13.96% 2.50%Other Short-term Assets 8.61% 5.87% 5.65% 46.50%Total Short-term Assets 67.73% 64.10% 73.24% 63.30%Long-term Assets 32.27% 35.90% 26.76% 36.70%Total Assets 100.00% 100.00% 100.00% 100.00%

Short-term Liabilities 40.56% 82.18% 92.02% 43.60%Long-term Liabilities 328.11% 79.96% 21.56% 26.30%Total Liabilities 368.67% 162.14% 113.58% 69.90%Net Worth -268.67% -62.14% -13.58% 30.10%

Percent of SalesSales 100.00% 100.00% 100.00% 100.00%Gross Margin 57.42% 57.70% 57.54% 57.80%Selling, General & Administrative Expenses 58.41% 45.60% 40.45% 35.50%Advertising Expenses 10.00% 10.00% 10.00% 1.00%Profit Before Interest and Taxes 6.34% 18.52% 23.77% 1.90%

Main RatiosCurrent 1.67 0.78 0.80 1.17Quick 1.13 0.56 0.64 0.95Total Debt to Total Assets 368.67% 162.14% 113.58% 69.90%Pre-tax Return on Assets 63.40% 78.59% 73.01% 4.20%Pre-tax Return on Net Worth -23.60% -126.47% -537.50% 14.00%

Business Vitality Profile 2000 2001 2002 IndustrySales per Employee $215,408 $360,000 $450,909 $0Survival Rate 0.00%

Additional Ratios 2000 2001 2002Net Profit Margin -0.99% 12.10% 17.09% n.aReturn on Equity 0.00% 0.00% 0.00% n.a

Activity RatiosAccounts Receivable Turnover 6.38 6.38 6.38 n.aCollection Days 83 39 45 n.aInventory Turnover 13.47 13.04 11.37 n.aAccounts Payable Turnover 9.22 3.28 2.14 n.aTotal Asset Turnover 4.63 3.76 2.95 n.a

Debt RatiosDebt to Net Worth 0.00 0.00 0.00 n.aShort-term Liab. to Liab. 0.11 0.51 0.81 n.a

Liquidity RatiosNet Working Capital $126,264 ($276,990) ($631,791) n.aInterest Coverage 0.86 7.76 24.18 n.a

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Appendix Table: Sales Forecast (Planned)

Sales Forecast

Sales Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecPersonal User Sales $109,615 $123,643 $139,600 $139,600 $139,600 $139,600 $139,600 $139,600 $139,600 $139,600 $174,712 $209,513Business User Sales $35,650 $35,650 $35,650 $35,650 $35,650 $35,650 $35,650 $35,650 $35,650 $35,650 $31,650 $31,650Total Sales $145,265 $159,293 $175,250 $175,250 $175,250 $175,250 $175,250 $175,250 $175,250 $175,250 $206,362 $241,163

Direct Cost of Sales Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecPersonal User Sales $46,038 $51,930 $58,632 $58,632 $58,632 $58,632 $58,632 $58,632 $58,632 $58,632 $73,379 $87,995Business User Sales $16,043 $16,043 $16,043 $16,043 $16,043 $16,043 $16,043 $16,043 $16,043 $16,043 $14,243 $14,243Subtotal Direct Cost of Sales $62,081 $67,973 $74,675 $74,675 $74,675 $74,675 $74,675 $74,675 $74,675 $74,675 $87,622 $102,238

Appendix

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Appendix Table: Personnel (Planned)

Personnel Plan

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecCEO $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0CFO $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000HR Manager $4,166 $4,166 $4,166 $4,166 $4,166 $4,166 $4,166 $4,166 $4,166 $4,166 $4,166 $4,166Regional Manager $3,750 $3,750 $3,750 $3,750 $3,750 $3,750 $3,750 $3,750 $3,750 $3,750 $3,750 $3,750Office Manager $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500Marketing Staff $4,000 $4,000 $4,000 $4,000 $4,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000Retail Staff #1 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500Retail Staff #2 $0 $0 $0 $2,500 $2,500 $2,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500Retail Staff #3 $0 $0 $0 $0 $0 $0 $0 $0 $4,500 $4,500 $4,500 $4,500Retail Staff #4 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Retail Staff #5 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Retail Staff #6 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Retail Staff #7 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Retail Staff #8 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Other Personnel $1,167 $1,167 $1,167 $2,333 $2,333 $2,333 $2,333 $2,333 $4,000 $4,000 $4,000 $4,000Total Payroll $25,083 $25,083 $25,083 $28,749 $28,749 $31,749 $33,749 $33,749 $39,916 $39,916 $39,916 $39,916

Total People 6 6 6 8 8 8 8 8 10 10 10 10Payroll Burden $3,762 $3,762 $3,762 $4,312 $4,312 $4,762 $5,062 $5,062 $5,987 $5,987 $5,987 $5,987Total Payroll Expenditures $28,845 $28,845 $28,845 $33,061 $33,061 $36,511 $38,811 $38,811 $45,903 $45,903 $45,903 $45,903

Appendix

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