Written Business Plan Evaluation

Table of Contents

Company Description……………………………………………………………………………………1 Industry Analysis and Trends…………………………………………………………. 5 The Target Market……………………………………………………………………..9 The Competition………………………………………………………………………. 11 Strategic Position & Risk Assessment………………………………………………………………….. 13 Marketing Plan & Sales Strategy…………………………………………………………15 Operations…………………………………………………………………19 Technology Plan………………………………………………………………………... 24 Management and Organization…………………………………………………………………………………... 25 Community Involvement & Social Responsibility………………………………………………. 28 Development, Milestones & Exit Plan……………………………………………………..29 The Financials……………………………………………………………………………... 31

Executive Summary

The Concept Today many active families are choosing to live healthier lifestyles, thus seeking to incorporate their children into the same activities they presently enjoy. The popularity explosion of snowboarding and bicycling for leisure has and will lead to increased opportunities for retailers such as Banzai. Located in beautiful Bend, Oregon, Banzai Bikes –n- Boards is a niche retailer of children’s (5-18) new and used, bicycles and snow sports equipment and accessories. Currently a chasm exists within specialty snow/bike retailers, as many retailers offer a very limited selection and knowledge of children’s products, which considerably under serves this market. Parents and active youth looking to invest in equipment desire a friendly retailer with a large selection of quality products specifically for them, at reasonable prices. Banzai will offer a full line of value added products and complimentary services, designed to generate loyal, repeat business. Banzai will also have a full repair/refurbishment center, offer trade in services, guided trips and conduct educational programs on snow sports/bicycle safety and repair. Banzai’s Mission “Banzai Bikes-n-Boards strives to be the leading specialty retailer of affordable new and used children’s bicycles and snow sports equipment. Banzai’s focus will be on serving the needs of children, by offering a fun and unique “kid friendly” environment, focused yet diverse full-line products, and eXtreme service. We will be a leading community advocate and role model for outdoor safety. Banzai will seek a modest, profitable return to owners and stakeholders.” Background Banzai was founded and conceptualized by partners James Jones and Colby Knight. Both owners have children that lead active lifestyles that require a wide selection of quality products and accessories. The idea was formulated because there are currently zero retailers that specialize in offering a quality selection and related services of outdoor equipment and accessories for children. As a result of much analysis and research, Banzai Bikes –n- Boards was established as a viable business entity with a high probability of success. This success is predicated upon a successful marketing campaign, choosing the right people/location, and most importantly funding. The Company Banzai is positioned to become the market leader in children’s bicycles and snow sports equipment. Banzai intends to capture 50% of the market in Bend, by offering quality products and eXtreme service. Banzai intends to dominate this market by establishing exclusive partnerships with a variety of local schools and organizations such as YMCA,

Boys & Girls Clubs, and various other outdoor clubs as the exclusive provider of equipment and education. Banzai intends to open the doors for business in September 2003. The Market Banzai will have two target markets: children (5-18), and parents of these children. Bend, Oregon has experienced rapid population growth. Since 1995, Bend has experienced the largest population growth rate in Oregon at an astounding 187%. There are no signs of this changing either. The recent 2000 Census data lists Banzai’s target market in Bend at 10,613 children (20% of Bend), while Deschutes County represents 24,324 (21% of the County). Bend’s population growth, and active lifestyle analysis make this city an ideal location for success within this market segment. Competitive Position Currently, the children’s bicycle and snow sports market is extremely under served. Competitors in Bend offer children’s products, although they only allocate approximately 10% of shelf space to children’s equipment. Banzai believes that by offering a quality selection of new and used equipment, a well planned location, unprecedented “trade- in/up” services, a dynamite marketing program, and strategic partnerships with schools and organizations Banzai can and will obtain critical market share from inception. Banzai’s marketing strategy relies on an aggressive campaign aimed at parents and children. Banzai will spend more on average than competitors to generate branding, however we feel as though our initial costs are extremely justifiable. Marketing expenses will be allocated among television, radio, website, print advertisements, and direct mail. Management Team Banzai was founded in January 2002 by James Jones and Colby Knight. Both James and Colby are graduates of Southern Oregon University. James has a degree in Business and 7 years of managerial experience at AVIS RENT A CAR. Colby has a degree in Art, which compliments James’ business experience. Colby has 3 years of retail sales experience at Rogue Ski Shop, where he became extremely knowledgeable and experienced in both products and repair. James and Colby both have children that enjoy the products they will sell. James and Colby are certified bicycle mechanics from United Bicycle Institute. The Future Future plans include the repayment of high startup loans, and a to develop a sales force. Banzai believes in providing benefits for all employees. This is one goal that is currently unfeasible. Banzai’s owners believe in the prospects of success in this marketplace, however there is always a new competitor lurking around the avenue. Banzai must

change and adapt to the needs of the market by staying in touch with active children. Banzai simply wants to return a modest profit to stakeholders, and to just exist in this marketplace. We seek reasonable/fair returns on investments, while continually seeking to increase efficiency/productivity and market/product knowledge. The Financials Banzai expects to remain unprofitable for a minimum of 3 years. Sales revenues of $316,000 in FY 2004 are forecasted, followed by $363,000 in FY 2005. Net Income however is ($23,000) in FY 2004, and ($22,000) in FY 2005. Profitability is finally achieved in FY 2007, however payback of the initial $200,000 investment will limit true profitability for several years beyond FY 2010. Funds Sought Banzai anticipates only 1 round of financing. Financing of $200,000 will be sought for inventory, rent, personnel expenses, remodeling, marketing, and operating cash. A second round of financing will be secured for safety purposes, which will occur in FY 2006, with anticipated funds of approximately $50,000 for operating cash. Banzai’s owners will seek financing from private investors who share our vision and seek a long-term relationship, fully coherent to the risks and immediate unpredictability.

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Company Description: “Banzai Bikes -n- Boards” is a niche retailer of children’s sporting goods equipment/accessories. Banzai seeks to fulfill the bicycle and snow sports needs of active families, by providing children and parent’s a large selection of quality, new and used equipment, while offering a complete complimentary selection of value added products and services. Banzai is owned and operated by the partners of James Jones and Colby Knight. Legal Name & Form of Business: Banzai will file several appropriate applications to establish itself as a Limited Liability Corporation in the State of Oregon. Banzai will file the Articles of Organization and Operating Agreement required by law, no later than July 2002. Name availability has already been confirmed. Upon approval, Banzai will apply for a Federal Tax ID number, an application from the State of Oregon, and the City of Bend for the appropriate business licenses. Once completed, Banzai will operate legally under both state and city laws. Mission Statement: “Banzai Bikes-n-Boards strives to be the leading specialty retailer of affordable new and used children’s bicycles and snow sports equipment. Banzai’s focus will be on serving the needs of children, by offering a fun and unique “kid friendly” environment, focused, yet diverse full-line products, and eXtreme service. We will be a leading community advocate and role model for outdoor safety. Banzai will seek a modest, profitable return to owners and stakeholders.” Top Management: James Jones – Chief Executive Officer and Owner

♦ James Jones has a B.S. in Business Administration/Marketing, and a Minor in Multimedia from Southern Oregon University. James’ work history includes 7 years of Operations Management at Avis Rent A Car. James is a certified bicycle mechanic from United Bicycle Institute in Ashland, Oregon.

Colby Knight – Chief Operating Officer and Owner

♦ Colby Knight has a B.A. in Art from Southern Oregon University. Colby has 3 years of experience in the Ski Industry as a sales associate/ ski/board technician at Rogue Ski Shop. Colby is a certified bicycle mechanic from United Bicycle Institute.

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Location and Geographical Information: Banzai will conduct business in the city of Bend, Oregon, expecting to open for business in September 2003. Tentatively, we will be conveniently located next to an area of rising growth on Highway 97, approximately 3 miles from Bend High School. During the last 5 years, Bend has grown an astounding 80%, while the county grew 23%. There seems to be no sign of a slowdown. People are moving to Bend because of the rich quality of life, mountain sports and leisure activities, climate, and growing employment opportunities. By 2010, Deschutes County is expected to grow an additional 38%, the second highest county growth rate in Oregon. Company’s Development Stage: Banzai Bikes -n- Boards was created in January 2002. Banzai owners are in the continuing process of market research, while revising and finalizing Banzai’s business plan. Once the business plan is complete, and an adequate level of market research has been accomplished, Banzai’s owners will seek out out potential investors for ownership in the company. Banzai’s owners James Jones & Colby Knight are seeking investors that match the compan y’s goals, values, and vision. Trademarks, Copyrights & Legal Issues: Banzai will file an application with the U.S. Patent & Trademark office for the trademark name “Banzai Bikes -n- Boards.” As of January 2002, the name sought is available. This name may change however, and is dependant upon further analysis and consultation with the Board of Directors. Banzai will seek legal council on the development of partnership documents between James Jones and Colby Knight. Banzai’s Products and Services: Banzai will offer a variety of products and services, all of which are selected to meet the needs of our target market. All products and services will be analyzed in detail to determine the best fit with our organization. Criteria for product selection will include price, demand, brand, quality, and service. Banzai’s products and services will include, but are not limited to the following:

• (Detailed products and services are listed in the Appendix)

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Products:

♦ Bikes ♦ Snowboards

o Boots o Bindings

♦ Skis o Boots o Bindings o Poles

♦ Skateboards ♦ Video Games ♦ Snowshoes ♦ Apparel ♦ Accessories

Services:

♦ Trade-in services ♦ Repair ♦ Guided Trips ♦ Rentals ♦ eXtreme Service* ♦ Education

* eXtreme Service is Banzai’s terminology for the superb level of service we expect to provide. eXtreme Service is a combination of extraordinary service elements, discussed in the Marketing Plan.

Financial Status: Approximately 92% of sales our will come from products, with the remaining 8% to come from services, such as repair and guided trips. Product distributions will be approximately 15% bike products, 37% snow products, 13% from video games/consoles, 10% skateboard products, and 17% from apparel and accessories. Banzai is currently seeking $200,000 in loans from private investors to be used for equipment, inventory, lease, marketing, supplies, and labor.

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Milestones Achieved to Date: Banzai has very simplistic and realistic goals, to gain a reputation as “the” place to shop for children’s bikes and snow sports equipment. Our method of achieving this goal will be to focus on quality products, tailored service, and knowledgeable/friendly staff. Banzai seeks to maintain a modest, reliable profit for owners and stakeholders. Banzai has already accomplished several notable milestones before opening its doors. Business partnerships have already been established with Elementary Schools to be the primary bike safety educator. This partnership will enable Banzai to actively market to school age students. Banzai’s management has also begun to search out bike/ski repair equipment. Several promising contacts have been made with one business in Arizona that has a used, quality Wintersteiger (ski repair/tuner) for a very reasonable price. Banzai’s management has also begun the search for a qualified employee. Many highly qualified applicants have expressed an interest in working for Banzai. Banzai has inquired about leasing a property from Coldwell Banker Commercial Properties. The property is located at 222 SE Reed, Bend, Oregon. This location is 3 miles from Bend High School, situated perfectly on Highway 97 with 2,400 square feet of space at $.75 per square feet. Monthly rent will be $1,800. Several local contractors have been contacted regarding the remodeling project, and asked to submit initial estimates.

Sales by Product

Repair 5%

Guide 3%

Snowboards/Boots/Bi ndings 21%

Video Games 13%

Accessories & Apparel

17%

Bikes 15%

Skateboards 10%

Skis/Boots/Bindings 16%

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Industry Analysis and Trends:

Size and Growth: Snowsports: The fastest growing segment of the outdoor sport industry is the snowboarding population. According to the Sporting Goods Manufacturing Association 2001 Topline Report, participation in Alpine skiing has decreased by 17% since 1996, while snowboarding has increased an astounding 238% (Participation in Snowsports, 2001). Other notable increases have been in the snowshoeing segment. What is even more astounding is the potential in both industries. Bicycle retail sales at specialty stores have steadily increased every year, accounting for $1.2 billion in annual retail dollars in 1998 (Retail Bicycle Sales), while sales at specialty snow sports stores in 2000-01 actually decreased, but were twice as large at $2.2 billion. Nevertheless, these industries are quite substantial, certainly large enough for Banzai’s owners to share a slice.

Products Purchased by Consumers at Snow Sports Specialty and Chain Stores (dollars) Season Apparel Equipment Accessories Total

$ 691,452,301 $ 815,846,444 $ 693,167,634 $ 2,200,466,379 2000-01 31.4% 37.1% 31.5% 100%

$ 772,675,628 $ 895,325,367 $ 659,386,722 $ 2,327,387,717 1999-00 33.2% 38.5% 28.3% 100% Source: Skiing Industry Association Retail Audit - August 1, 2000 to March 31, 2001

Retail Bicycle Sales Mass Merchants vs. Specialty Retailers ~ 1998 Mass Specialty Bike Merchants Retailers Total Unit Sales 6.8 million 3.4 million % Unit Sales 61.0% 30.50% Domestic/Import Ratio 18% / 82% 23% / 77% Average Unit Value $100 $355 Annual Retail Dollars $680 million $1.2 billion Major Retail Outlets 5 large retailers that do 7,100 Specialty 60% of mass-merchant total, Bike Retailers Or 36% of all retail sales: Source: The Bicycle Council, National Bicycle Dealers Association, Jay Townley & Associates

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Maturity of Industry: Contrary to popular opinion, both the bicycle and snow sports industries have experienced steady growth, with skier visits and cycling for leisure, as a means of analysis. According to The National Ski Areas Association, only the Pacific Northwest declined in skier visits (-11%) during the 2000-2001 season, which was mostly attributed to a poor winter and a slumping economy. As more people continue to seek out a healthy lifestyle for themselves and their family, bikes and snow sports equipment will continue to be a favorite choice. Bicycle stores however, continue to take a beating. According to The Bicycle Industry Retailers Executive Summary there were 7,000 bike stores in 1998, and in 1999 only 6,000 remained, a decrease of 15% in just 1 year! This raises many questions as to why bicycle stores continue to fail.

U.S. Skier Visits (millions) Season Northeast Southeast Midwest Rockies Pacific Ore. & Washington* Total 2000-01 13.9 5.5 7.6 19.1 11.1 3.115 57.2

1999-00 12 5.2 6.4 18.1 10.5 3.485 52.2

% Change 15.8% 5.8% 18.8% 5.5% 5.7% -10.6% 9.6%

Source: National Ski Areas Association (NSAA) Kottke National End of Season Survey, 2000-01

* Pacific Northwest Ski Areas Association (data excluded from total)

Vulnerability to Economic Factors: Like many recreational/retail stores, Banzai is susceptible to economic factors and discretionary spending patterns. When unemployment rates increase and disposable income decreases, parents simply spend less on recreational equipment for their children. However when the economy is roaring, parents spend money on their kids. Banzai’s owners understands this relationship, thus we seek to counteract this by offering a full line of used products for those parents choosing to spend less. We feel it is important to offer used equipment to families as a method of entry to popular sports that traditionally have high start up costs. Seasonal Factors: Banzai relies heavily on both economic factors and seasonal factors for success. If snow doesn’t fall during a winter season, we would definitely experience negative sales impacts. Another long-term concern for Banzai’s owners is in the study of global warming. As the earth warms, as scientific reports state that it is, obviously less snowfall is accumulated each year. This may eventually force Banzai to close its doors, or seek other business ventures, which is the preferred. Mt. Bachelor currently receives an annual snowfall of just over 300 inches, however some years are much better than others.

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Technological Factors: The cycling world advances almost as fast as the computer industry. Industry technology has enabled bicycle manufactures to add components such as disc brakes, front and full suspension, and advanced, lightweight, titanium bike frames. These rapid advancements have created fierce competition in the bike manufacturing world. This has led to some disenchantment for many bicycle consumers, as they feel cheated as new bikes reach the market for less, with better components. Banzai plans to counteract this disenchantment with our trade in service. Supply and Distribution: Banzai will receive a majority of its products from suppliers at the annual trade shows, Interbike and Snow Sports shows held each year in Las Vegas. Once initial purchases have been made from suppliers, relationships can be formed with future arrangements such as price and quantity discounts, and credit arrangements. UPS has a variety of shipment times of less than a week for supply situations that occur out of necessity. Accurate forecasts of product needs are essential to capitalize on the best shipping prices. Banzai is currently in the process of researching suppliers. Banzai plans on securing a minimum of 3 suppliers before opening, thus ensuring that Banzai is not dependent on 1 supplier. Financial Considerations:

Cost of Goods Sold: 57.70%

Staff salaries and wages: 11.80%

Occupancy expenses: 6.80%

Owners Salary: 5.30%

Net, Margins, and costs of the average shop:

Before-Tax net: 5.3%

Costs of doing business 36.6%

Gross Profit Margin on retail bike sales 34.4%

Gross Profit Margin on clothing 44.5%

Gross Profit margin on other equipment 46.6%

(Source: Fast Facts About the U.S. Bicycle Market)

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Anticipated Changes & Trends in Industry: Consumer trends are fueling both industries. Listed below is how I could best describe both industries.

“With the aging population and consequent increase in leisure time and travel, the emphasis in sports participation will be less on the competitive team sports and more on leisure and individual sports. This development will stimulate the market for outdoor activities (footwear, clothing, rucksacks), golf equipment, fitness goods (in-home trainers, fitness clothing), water sports and snow sports equipment. On the other hand, young people will favor adventurous, alternative, beach, fun and extreme sports." (BikeBiz.com)

Bicycling has long been a favorite activity of children. Consequently, married couples with school-aged children spend nearly two-and-one-half times the average on bicycles. Householders aged 35 to 44 spend 75 percent more on average on bicycles for the same reason: they’re buying bikes for their children. (Russell, 2001)

Married couples with school aged children spend more than three times the

average on winters sports equipment and account for more than half the market. The growing population of children and young adults should boost spending on skis, snowboards, sleds, and other winter sports gear. (Russell, 2001)

However, a worrying trend for the future is that, because of perceived road

danger the number of children allowed by their parents to ride their bikes on local roads has fallen dramatically in a generation, from 75 percent in 1971 to 25 percent in 1990. (Hillman, Adams, Whitelegg, 1990) Increasingly crowded highways could drive bicycle off the road and dampen sales. But many communities are building paved walking and cycling trails. This may counteract the effects of highway congestion. (Russell, 2001)

The market is split 60/40 between children's and adult's bikes. (Key Note, 1995)

Participation in Snow Sports: Year Alpine Snowboarding Cross Country Snowshoeing 2000 14,749,000 7,151,000 4,613,000 1,970,000 1999 13,865,000 4,729,000 3,988,000 1,673,000 1998 17,567,000 2,567,000 6,489,000 N/A 1997 18,209,000 2,116,000 7,292,000 N/A 1996 17,676,000 N/A 8,344,000 N/A % Change -16.6% 237.9% -44.7% 17.8% Source: Sporting Goods Manufacturing Association 2001 Topline Report

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The Target Market: Demographics/Geographics: Demographic research revealed that a children’s bike & snow sports store would have a strong likelihood for success in Bend, Oregon. According to The Bicycle Dealers Association Fast Facts, 54.6 million children ages 6 and up cycle at least once per year. The characteristics of our target market will be children (boys and girls) ages 5-18. We will not under estimate the importance of girls in this market. As reported in the 2000 Census, kids ages 5-18 represent 27.3% of Deschutes County, and 21.1% of Bend’s total population. Deschutes County is an ideal market for this segment. Lifestyle and Psychographics: Bend is simply becoming “the place to be” for young adults and families choosing to live a high quality of life. The outdoor opportunities in Bend range from famous Mt. Bachelor (skiing and boarding), Smith Rock (world class climbing), and abundant high mountain lakes for fishing/boating opportunities. Many mountain biking magazines rate Bend by as one of the finest places to bike and raise a family. The Lifestyle Market Analyst 2001 lists the top lifestyle activity in Bend, Oregon as Snow Skiing frequently, with Bicycling Frequently at sixth. To further confirm this, The Bend Register reported, in a survey of 29 kids polled at Bend High School, 100% of youth stated they either skied or snowboarded at Mt. Bachelor within the past month; 50% were boarders and 50% were skiers. Purchasing Patterns: Christmas is obviously a time when sales of Banzai’s products will be the most successful. Many parents will buy bikes for their children at Christmas, not to mention this is the time when snow sports are gaining full momentum. Banzai has predicted through a detailed sales forecast that December will represent approximately 20% of FY2004’s sales. (See Below)

Sales by Month (Year 1)

$- $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000

Se pte

mb er

Oc tob

er

No ve

mb er

De ce

mb er

Ja nu

ary

Fe bru

ary Ma

rch Ap ril

Ma y

Ju ne Ju

ly

Au gu

st

(i n

D o

ll a

rs )

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Retail purchasing patterns can be quite difficult to predict, as most consumers purchase when the need for a particular product arises. What can be determined about the purchasing patters of those consumers in our target market, is that most consumers purchase during the season. This simply means that snow sport consumers will not purchase a board during July, unless they can get a “great deal.” The majority will purchase the products during the season of a particular sport. This represents some stability; while offering tremendous opportunities and extreme disadvantages. Buying Sensitivities: Youth rely on parental financing to purchase products, with a parent as the ultimate decision maker. Banzai accepts this relationship, and will seek to employ strategies consistent with these purchasing patterns and buying sensitivities. Banzai will ultimately have 2 target markets. These markets are both the purchasers (parents) and the users (children). Banzai will employ unique marketing strategies to gain awareness to both markets, by using marketing strategies that are specific, yet synergistic. Parents: When purchasing equipment for their children, most parents are sensitive towards price. Most parents want quality equipment at an affordable price. Simply, they want quality, price, selection, and service. Most parents however, are not willing to spend the same amount on a bike for their child that they would spend on a bike for themselves. Parents want affordable, mid-priced, quality equipment because they know their child will outgrow/abuse the products they purchase. Parents also require selection, and want to feel as though they are making a good firm decision among alternatives. They want to know that they are making the right choice. Banzai will counteract these feelings by offering a wide selection at a variety of prices. Youth: Children want to fit in and be accepted by their peers. They also want to participate in the activities/sports their peers participate in, so that they can be accepted. They want their peers to acknowledge the clothes and products that they have. This is one of the popularity factors. Therefore, youth are very sensitive to brand and image. Banzai will offer popular brands to gain acceptance into this market, and will employ a marketing strategy aimed at youth that is focused around “Coolness.” However, it is not Banzai’s intent to market children with a strategy that say’s “your not cool, unless you have a Burton Snowboard, or shop at Banzai.” We do recognize that this social status exists and will prominently use the brands we carry to gain acceptance into this market.

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Size and Trends of Target Market: The market size for bikes and snow sports equipment is a positive indicator that Banzai can achieve success. 1998 trade industry association figures shows that both industries are doing quiet well. Both specialty industries combined for a record $3.4 billon dollars in sales (The Bicycle Council and Skiing Industry Association, 2001). The total estimated market size for children’s bikes in Bend, Oregon is the entire population of youth. The estimated market size for children’s snow sports in Bend is 50% of the population, which is very conservative. This assumes that every child will own, or are considering buying at least one bike in the near future. According to the Census Bureau, demographic analysis reports the following: To obtain a valuable and truly representative market size for both bikes and snow sports in Bend, industrial standards, local trends, and an educated guess were applied.

City of Bend Deschutes County Age Group: Number % of total pop. Age Group: Number % of total pop. 5 to 9 3,572 6.9% 5 to 9 7,854 6.8% 10 to 14 3,485 6.7% 10 to 14 8,634 7.5% 15 to 19 3,556 6.8% 15 to 19 7,836 6.8% 10,613 24,324 Total Bend Pop. 52,029 Total Deschutes Pop 115,367 % of youth to total pop 20.4% % of youth to total pop 21.1% Family Households Family Households with children under 18 7,144 with children under 18 15,655 Average # kids per house 1.49 Average # kids per house 1.55 Source: 2000 Census Data

The Competition: Competitive Position: Banzai will be the “only” exclusive retailer of children’s snow sports and bicycle equipment in Bend. Currently, there are no other existing businesses in Bend that truly serve the needs of active youth. Several prominent bike shops such as Hutch’s, Century, and Sunnyside do sell a limited line of children’s bikes, while their selections are very

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small. There are also no snow sports/skateboard retailers that exclusively target children. As Banzai enters this niche market first, and the development of strategic partnerships occurs, a substantial competitive advantage can and will occur. This is one element of Banzai’s competitive advantage. Banzai’s entry strategy will be an aggressive marketing campaign to capture a minimum of 35% of the market, which will create a barrier for entry to future competition. Market share distribution: There are currently 3 specialty bike shops, 5 ski shops, 3 board shops, 2 mountain supply stores, 2 skateboard shops, and 3 large retailers (Wal-Mart, GI Joes, Big 5) which represent our primary direct competition. There are a total of 10 bike retailers within Deschutes County, and 4 within Bend’s city limit. The market for adult bicycle sales in Bend is fierce, due to the increasing popularity of the sport here. However, the children’s market is relatively untapped. As you can probably assume, there are many ski/board/skateboard shops in Bend. Listed below is the assumed market share distribution. These assumptions are derived from conversations with local industry experts.

Bicycle Market Share

50%

30%

20%

Hutches

Century Cycle

SunnySide Sports

Ski Market Share

30%

20%20%

20%

10% Skjersaa's

Powder House

Skyliner Sports

Pine Mountain

Sunnyside

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Board Market Share

50%

30%

20%

Side Effect

Westside Ride

Sunriver Snowboards

Barriers to Entry & Future Competition: Banzai will establish barriers to entry by forming strategic partnerships with local schools, organizations, and outdoor clubs. A key strategy will be to form partnerships early on, to prevent competition from coming in. Aggressive Marketing strategies will deter future competition from entering the children’s bicycle and snow sports market. Banzai’s owners believe strongly that partnerships, with an aggressive marketing campaign will develop a consumer base that will be difficult for competition to match. Banzai will also create a barrier to entry in the services we offer, such as our unique trade-in services. Consumers will purchase products from Banzai, and will return later to trade in their products in for a store credit. This will gain repeat, loyal customers to return for years. Strategic Position and Risk Assessment: Company Strengths & Strategic Position: Banzai’s objective is to gain a superior reputation in Bend, Oregon as the primary provider of children’s sporting goods needs. We seek to meet these needs through our high quality, affordable, assortment of new and used products, services, and our “kid friendly” atmosphere. Banzai’s strategic vision will be based on evaluating four key elements: our location in relation to the target market, strategic partnerships, well- trained/quality employees, and branding. The area of risk that poses the greatest threat to Banzai is the emergence of new or existing competitors that are well funded and present a strong brand such as other existing ski/bike shops. Hutches Bike Shop, which currently has 2 locations in Bend, poses the greatest threat. Fortunately, with a dominant/growing market share, Banzai will be able to present a substantial competitive advantage. Banzai’s strengths and competitive advantages are a solid business plan and conceptual foundation, educated and experienced owners with children that actively participate in the sports we seek to provide for, and being the first to market. Banzai’s owners are committed to success, and driven to fulfill the needs of our target market.

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SWOT Analysis: Strengths:

♦ First to Market – Banzai is the “only” provider of children’s snow sports and bicycle products and accessories in Deschutes County (in Oregon too).

♦ Banzai will offer new and used equipment, as well as trade in services. Currently there are no competitors offering such services.

♦ Banzai’s owners have children that are active participants the products they sell, thus they are in touch with the needs and demands of their target market.

♦ Banzai will be in a very visible, high traffic location; conveniently located within a 5-mile radius of 2 High Schools, 2 Middle Schools, and 3 Elementary schools.

♦ Banzai will actively target girls, which other ski/bike stores tend to neglect. ♦ Banzai’s early formation of key strategic partnerships. ♦ Banzai’s assortment of complimentary products and services ♦ Banzai’s use of technology and innovation in the marketplace. ♦ We simply are “Cooler” than everyone else.

Weaknesses:

♦ Banzai is a startup company, we currently have zero market share. ♦ Banzai’s owners, however experienced in business and knowledgeable

regarding their products, have never solely operated a retail business before. ♦ Banzai will find it difficult to secure loans from banks (if needed), because it

is a startup with high fixed costs, a prior sales/performance history, and because of profitability issues.

♦ Banzai’s owners are not from Bend. This means that they will be required to learn/understand the specific area trends that relate to the market/products they intend to sell.

Opportunities:

♦ To foster and develop more partnerships that mutually “win.” ♦ E-Commerce ♦ To develop products and services that “fill a need & increase revenue”

during slow times of the year. (March-June) Threats/Risks:

♦ Future competition from local/established, well-funded companies who also see our market as an opportunity.

♦ Sales do not transpire as anticipated, which will lead to rapid decreases in cash and owners equity.

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♦ A marketing campaign failure. ♦ Seasonality & Weather: What if the snow doesn’t come, or recession hits

= ↓ Sales ♦ Bankruptcy

Marketing Plan and Sales Strategy: Banzai’s Company Message: Banzai will establish a highly aggressive marketing campaign aimed at multiple market segments. These segments include but are not limited to: children, householders (decision makers), tourists, and educators. Banzai will portray this strategy in the quality and assortment of new and used children’s products, unique and valuable trade-in services, a “kid friendly” service and environment, high quality rentals and refurbished/guaranteed used equipment. Banzai will acquire a reputation as a leader in innovation and vision, and commitment to families, and as a definit ive source for kids gear. Our message will promote a healthy, active, and safe lifestyle. Banzai will use the word “kids” throughout our campaign to portray our strategy. Kid refers to our target market of those between the ages of 5-18. Banzai’s name represents the feelings of many kids today. This feeling is one of excitement, carefree, enthusiasm, and fun. The word Banzai means “A Japanese Battle Cry.” This is the feeling that kids feel when cruising down fresh powder slopes, or while hitting “Phat Air.” Banzai’s slogan is Banzai Bikes-n-Boards “For Active Youth.” This slogan will be on nearly every advertisement. This trademarked slogan communicates to the community that Banzai is a youth outfitter of active lifestyle products. We want customers to drive by and say “I have a child…how can that meet my needs?” This encourages customers to look closer. Banzai’s synergy in our marketing campaign will create an environment for kids that meets and exceeds their needs, and the needs of parent’s. Banzai’s committed to providing an atmosphere of fun, comfort, intrigue, style, value/affordability, and safety. Banzai’s employees are a very important part of our customer’s experiences. Our staff will be highly trained and educated in the products and services we provide. We must have the skills necessary to explain various products and service benefits, and portray to our customers how they can benefit from our products and services. Banzai is focused on providing a safe, healthy, and comfortable environment. We will heavily focus on post sale marketing campaigns, which many companies neglect. We want our customers to “know” that we appreciate their business and are willing to stand by our products, and our word.

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Marketing Vehicles: Television Commercial: Banzai will employ the services of the esteemed Jacob’s and Ryan Advertising Agency. Banzai will create 2 versions of our commercials. The kids version will show children on mountain bikes, skiing, snowboarding, and skateboarding. The parent’s version will show many smiling kids, and happy families enjoying time together participating in cycling and snow sports. The television commercial will be strategically aired on a limited number of local channels such as NBC, Cartoon Network, and perhaps other local/cable channels. Banzai will invest heavily in this initial investment, to ensure that full marketing saturation is reached. Early commercials will focus on the Grand Opening to gain exposure and legitimacy. Banzai has budgeted $23,000 in FY 2004 to advertising expenses, with a total sales and marketing budget of just under $31,000. Listed below are estimated advertising expenses for FY 2004.

Advertising Expenditures FY 2004

$6,900

$4,600$3,450

$3,450

$4,600

Television

Radio

Newspaper

Website

Other….

Radio Advertisements: Local radio advertisements are a key component to Banzai’s marketing strategy and goals. Banzai will research local radio stations to establish the best fit for our target market, determine pricing, research listening patterns, and begin to develop a reasonably priced radio advertisement. Banzai’s management will create a variety of different versions of radio advertisements to segment and target our 2 market segments. We intend to have the message played before school, after school, early evening (drive time), and late evening, and as funds allow.

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Yellow Page Advertisements: Banzai’s vision for a yellow page advertisement is simple. Make the ad bigger than competition, more colorful/graphic, and unique. We believe this is a critical element for success, often overlooked. We seek to be included in the prime space under the headings of Children, Kids, Bicycles, Snowboards, Ski’s, and Sporting Goods. Understandably this is expensive, but we feel that this amount of saturation and visibility is essential. Banzai’s Website: http://www.banzaibikesnboards.com Banzai’s website will incorporate several features of web design that other competitors do not offer. We will offer company information, Banzai’s product and service information, industry links, research, local bike club links and information, weather reports, ski reports, and basic repair. Our website, once a considerable customer base has been established, will also have personalization features added, such as those found at My Yahoo. If the market is ready and willing, Banzai will also create chat rooms and list serves. We will research and hire a qualified/reputable, and experienced firm to create and maintain our website. Our website will be synergistic with other marketing vehicles. We will change our website often to create that need for return, and incorporate streaming video, animation, visually appealing graphics and quality content throughout the website. Bend Chamber of Commerce Website and Printed Material: Banzai’s owners will be active, involved members of the Bend Chamber of Commerce, attending monthly chamber meetings and offering community assistance whenever possible. We will ask the local Chamber of Commerce for an active link from their website. Brochures/Business Cards: Banzai will hire a graphic design firm to create our company logo, letterhead, business cards, and several printed brochures. These brochures will feature high quality-appealing graphics, clear content on products and services, hours of operation, company information, and prominent display of our website address. Brochures and flyers will promote and compliment our entire strategy as the leader in assortment and quality products, services, healthy lifestyles, bike rentals and refurbished used equipment, and our kid friendly atmosphere, and friendly experienced staff. Print Advertisements: Banzai intends to advertise in the local paper the Bend Bulletin. However, this channel will not be used on a constant basis. Why? Kids don’t read the paper. Banzai will market heavily in the early phases of operation in this channel for exposure, but over time this

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channel will receive a smaller allocation of expenses, compared to direct mail, radio advertisements, and television commercials. Banzai will advertise in local school newspapers, and also in visitor guides. This channel will be used specifically when particular needs arise, such as the need to move inventory or promote special savings or events. Direct Mail: Direct mail will be used to segment and target specific customers within Bend. The process of obtaining address from potential customers can be expensive and time consuming, but worth it. Banzai's future plans for direct mail include, surveys, post sale reminders, such as a yearly bike tune up reminder, a post sale thank you, happy birthday cards to customers and other direct mail strategies. Banzai seeks to ensure that customers will know we are the legitimate, reputable, and offer great products and services, and that we appreciate all business. This service will be an opt-in system. Strategic Partnerships: Banzai’s owners have an important role in establishing productive and sustainable partnerships with organizations in Deschutes County. Various partnerships arrangements are listed below:

♦ Local Public and Private Schools ♦ Boys and Girls Club ♦ Boys and Girls Scouts ♦ Campfire Girls ♦ 4-H ♦ YMCA ♦ County and City Parks and Recreation Departments ♦ Mt. Bachelor ♦ Various other clubs and organizations

Banzai seeks to accomplish several goals though our partnerships arrangements; to establish valuable relationships that meet and exceed mutual needs by nurturing long- term relationships. This will be the focus of our strategy. A variety of partnerships arrangements are currently being studied. These arrangements include offering programs that compliment Mt. Bachelor’s children’s programs. Our programs will offer local schools bike and snow safety classes, and free bike repair classes as an after-school program. We will donate bikes and helmets to under-privileged children.

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Other Marketing Tactics: In addition to media advertising and strategic partnerships, Banzai seeks to implement a customer-based approach to marketing. We will place a great deal of emphasis on developing employee-customer relationships that guarantee repeat sales, word-of-mouth advertising, and perhaps even the lease of a strategic billboard. Banzai must establish the trust of customers to be successful, by being everywhere they are. Exposure and hype are essential early in the phases of operation. If reach and exposure are not obtained from the beginning critical market share will not be achieved, thus opening the door for existing competition to react and counter our strategy. Sales Force and Structure: Banzai is a firm believer in obtaining and retaining quality personnel. We are committed to offering above average, living wages to those we employ. Banzai’s staff will be the finest in Central Oregon. We will offer our part time sales staff a rate of $10.00 per hour, with incentive programs developed/implemented at a future date. Banzai’s staff will be required to be on the floor with customers, which is critical to understanding our clients. We will apply a “no pressure” sales policy, while trying to connect/explore the needs of our customers, make assessments, and offer educated/experienced advice. We will provide a friendly comfortable environment and seek to create long-term partnerships with each customer. Each of our staff will be required to stay current on product knowledge, display excellent communication skills, outgoing and friendly people skills. Sales Assumptions: * See Financial Appendix

Operations: Retail Facilities: Banzai Bikes-n-Boards will be extremely thorough during the process of searching for the ideal location of our retail store. Proximity to the target market and easy/convenient accessibility will be some of the criteria. Banzai recently found a tentative site for further analysis. This store is located at 222 SE Reed, Bend, Oregon, which is strategically located on the corner of Reed and Highway 97, and within a 5-mile radius of seven K-12 schools. This location is away from our direct competitors. Several highly successful retail businesses are located nearby, which fit the criteria of Banzai’s target market. An adjacent, easily accessible lot will provide more than sufficient parking for Banzai’s customers.

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Banzai will utilize the full capacity of our leased building. We will use every inch of this 2,400 sq. ft. highly visible, upscale, retail space from Coldwell Banker Commercial Properties. The quoted price is $.75 / sq. ft, or $1,800 per month. This space will be allocated among the showroom, repair facilities, inventory, bathrooms, and a small office. This is a triple net lease, which includes routine maintenance, and paid real estate taxes and property insurance. Total yearly lease costs are $21,600. Coldwell Banker reports that daily passenger traffic along this section of Highway 97 and Reed St. is approximately 50,000 vehicles per day. Griffin & Sons Construction Company has been contacted to bid on facility improvements at this future location. Our remodeling effort will include painting, additional lighting (sky lighting), new counters, and minor repairs. Each of these additional remodeling activities will be financed by Banzai, except for the replacement of several energy inefficient windows. Estimated monthly utility costs for gas, water, and electricity are $300. This facility is presently wired for high-speed Internet access. Production Plan: Management: Banzai’s owners are exceedingly committed to increasing efficiency levels. Banzai’s team will continually review efficiency and productivity among all staff members. Each owner will be assigned specific areas of accountability/responsibility and functional tasks. Increases in productivity will occur over time though the learning/experience curve, and with increased scrutiny, analysis, and correction. Job functions and qualifications are described in further detail in the management section. Part-Time (October-January): 1 P/T Repair Technician: Our repair staff will have a variety of tasks, which will change as our business evolves. Our repair staff will be required to repair and install equipment with a high degree of efficiency and quality. Technicians will be certified in bike and board repair/tuning, and will continually seek education and industry certifications to increase productivity/industry knowledge. Each Banzai employee will be responsible for delivering the highest standards of customer service. Each employee will be accountable for his or her specific tasks. Banzai’s owners will develop family, team-based relationships. Banzai’s management will be responsible for monitoring quality control. Banzai’s owners will be paid a salary of $35,000 per year. Our part-time staff will be paid a rate of $10/hr., however this pay will be based on experience. Future plans include

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offering health benefits to employees. Currently, we cannot offer benefits to owners or staff due to high startup costs. Equipment/Technology & Management Information Systems: Banzai’s owners have begun researching equipment and technology needs. There are many critical items that will contribute to the success of Banzai Bikes-n-Boards. Banazi will purchase a variety of necessary products and equipment, such as bike repair and display stands/racks (2 tiered), a Wintersteiger ski-tuning machine, and a plethora of necessary tools. Banzai will also purchase 3 Apple Macintosh computers and the appropriate software for Banzai’s Management Information System (see below), 1 fax machine, 3 telephones, and 2 printers. Additional equipment includes office furniture, display equipment, and counters. Banzai will use Microsoft’s Great Plains Business Solutions Small Business Manager software, as our preferred Management Information System. This software was chosen because of the many features and capabilities, efficiency/control, and integration with other Microsoft software, ease of use, and the training and support provided. This software will perform a variety of important functions such as financial reports, sales reports, payroll, banking, and purchases. The cost of this software will be approximately $4,000. Estimated startup costs for fixed assets will be approximately $54,000. This equipment is estimated to be replaced every 5-7 years. Banzai’s owners will invest $5,000 (per year) in new equipment beginning in the second year of operations. Variable Labor Requirements: Variable labor will be used operationally for a part-time repair technician. Variable expenses will also consist of outside services such as accountants, consultants, and Board fees. Inventory Management: Banzai’s owners will be responsible for weekly inventory control. Banzai will maintain a minimum level of inventory on many products. Seasonal products will be ordered as demand dictates. When a minimum inventory on products and supplies have been reached, our Small Business Manager software will generate reports, and with a visual check, inventory will be ordered. This is our version of JIT. Many of Banzai’s products will be ordered extremely cautiously to capitalize on new models, shipping expenses, and price. Banzai fully understands the implication of excess inventory and it’s relation to profitability. Banzai will use several shipping providers whenever necessary, but UPS will be our preferred provider. Delivery schedules will be determined with appropriate orders.

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Supply and Distribution: We “understand” the importance of dependency on suppliers for consistency, accuracy, and quality. Furthermore, dependency on just one supplier would leave us vulnerable if a supplier fails to perform. Banzai will establish a variety of relationships with many suppliers to alleviate this situation. For example, Banzai will order bike accessories from multiple suppliers such as Seattle Bike Supply, Great Northwest, and Olympic Supply. Banzai will limit the number of suppliers; to best fit the organizations goals. We are currently researching these and other suppliers to determine the best fit. Criteria such as price, quality, fulfillment, accuracy, marketing support, and credit terms will determine selection. Banzai has contacted K2 as our major supplier of products for our store. K2 has both bike and snow products that would make a great fit. Banzai has also contacted Trek and Specialized bike manufacturers. Trek and Specialized were contacted because they offer a full line of both bike and complimentary accessories for children, which may eliminate the need to purchase from other distributors. Both manufacturers have high brand awareness in the bike industry as a leader in quality products, and both offer excellent sales support services. Current supplier research is being conducted on issues regarding geographic supply distribution among retailers. For example, some manufacturers of bikes will only allow a limited amount of retailers within a certain geographic location to carry their line of products. This is particularly the case with Specialized Bicycle Company. Suppliers will be contacted and relationships established to discuss potential business opportunities. A thorough selection criterion will be developed to ensure consistency and high standards in the selection process. Order Fulfillment & Customer Service: Each employee will be directly involved in the routine operations of the business. Each employee will administer the highest level of customer service, or eXtreme service. Banzai will offer many services, discussed in detail in the Products and Services chapter. Banzai will do everything within reason to guarantee that customers are completely satisfied. We will offer a 100% money back product guarantee on most products, during the first 7 days. Banzai’s staff will focus heavily on post sale relationships with our customers. A simple follow up call from one of our managers will allow us to gather important feedback on our products and services, while creating another opportunity to provide superior levels of customer service. Relationships are essential to our goal of gaining customers as repeat buyers. At this time, Banzai’s Internet site will not sell products over the web. We believe that it is important to establish a profitable and successful brick and mortar operation before

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venturing into e-commerce applications. This decision was reached to ensure the highest levels of service are obtained to our valuable customers. Research and Development: Banzai’s owners James Jones and Colby Knight will attend Interbike’s Annual Trade Show each year to research new products and develop relationships with potential suppliers. Interbike is the premier trade show for the bike industry, with an attendance in 2000 of 21,000 attendees, 4,500 bike storeowners and managers, and an astounding 1,000+ exhibitors. This conference is held each October in Las Vegas, Nevada. Banzai’s owners will also attend the Snow Sports Industries of America during February, also in Las Vegas, Nevada. Banzai’s owners will also subscribe to several trade magazines to keep up with industry trends. Quality Control: Banzai’s owners will be responsible for quality assurance in both services and products. We will inspect the delivery of all new products to ensure the quality and accuracy of orders. We want our staff to feel as though we are not watching over their shoulder, so a high degree of empowerment will be necessary. Although, we will continually assist employees in reaching higher quality standards in both sales/service through education, goals, and rewards. Monthly meetings will reinforce good work, and to discuss concerns/suggestions for improvements. Banzai will have an active quality program that facilitates customer feedback in determining the quality of our products and services. We will actively mail surveys to our customers who opt in, and determine the extent of our customers’ satisfaction. Thanking customers them for business is our entry. Banzai will have a goal of contacting 20% of customers’ by mail or phone. Safety, Health, & Environmental Concerns: We strive to ensure customers’ and employee safety, while conducting business as environmentally friendly as we possibly can. Banzai will operate in complete compliance with The Oregon Safety and Health Department to minimize risks and assess compliance. Banzai will provide a mandatory class for all new employees to attend that focuses on safety, regulations, and compliance. This class is administered by Central Oregon Community College, and will be paid for by Banzai. Banzai will conduct bi-monthly safety meetings to solicit feedback. Banzai will eliminate waste responsibly, actively recycle, and reward those employees who benefit the environment.

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Shrinkage: Banzai’s staff is committed to limiting shrinkage in every way possible. Banzai may install several cameras for in-store security, while also using ink tags on merchandise over $200. Banzai will train employees in theft policies and procedure, to minimize liability. Banzai will have a zero tolerance, internal theft policy. Banzai will immediately terminate employment with any employee caught stealing. Technology Plan: Technology Goals and Position: Banzai’s ownership is extremely excited about future technology development and the opportunities associated with new technologies. Banzai is committed to expanding with technology, and not allowing technology to leave us behind. We strive to be the “leaders with vision” in retail technology, by offering customers a 12 x 12 ft. projection, visual/ audio paradise that will display products, movies, art, multimedia, Internet sites, and video games from Playstation, Nintendo, and X Box. Banzai will offer a sensory palette overload. Internet Goals and Plan: Banzai will have a powerful website that offers much in terms of both content and graphics. Banzai will mix personalization, style, and current content to provide customers with a fresh taste of Banzai as often as they choose. Banzai will hire the firm Butterfly Designs to design and maintain our website. Butterfly Designs has produced many successful, classy, easy to use websites for businesses in Central Oregon. Banzai’s website will incorporate technologies such as Flash, Java Scripting, streaming audio/video, and dynamic graphics. Banzai will be positioned extensively and accurately among search engines to maximize eyeballs. Banzai’s website will offer several viewing options for those with varying bandwidth. Hardware Needs: Initial hardware requirements will be costly. Banzai will network 3 Apple Macintosh G4’s. The server computer will operate the projector. Banzai will purchase three cable modems for high speed Internet accessibility. Banzai will also purchase a complete mid- priced Bose stereo system for audio enjoyment.

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Software Needs: Banzai will use two software suites to assist in the operational tasks of tracking customer information, sales, inventory levels, appointments, schedules, and pricing. The two suites are Microsoft’s Small Business Manager and Microsoft’s Office 2000. Employees will perform purchase and service transactions by accessing Small Business Manager. Banzai will operate from the Macintosh platform. Our computers will also need other software to perform Multimedia, such as Flash, Photoshop, Final Cut Pro, and many others. Telecommunications Needs: Banzai’s telecommunications needs will be contracted to AT&T. AT&T’s Small Business Solutions Center will provide Banzai with high-speed Internet connectivity, multi-line phones, cell phones, and 24-hour customer service. AT&T will deliver and install our equipment, and offering training and support at a reasonable price. Technology Personal Needs: Banzai’s owners James Jones and Colby Knight will each possess a cellular phone from AT&T. This will allow them to be reached at any time, thus maintaining open communication lines with the store. Management: Principals: Banzai’s principals concerning management and supervision are very simple; treat your employees, as you would want to be treated. We will operate/work as a family, and demonstrate respect, caring, kindness, trust, and honesty in all employee/customer relationships. Key Employees: James Jones, Co -Owner and CEO. Primary Responsibilities: Sales & Marketing, Business Development, Finance, Operations. Prior to founding Banzai Bikes -n-Boards in January 2002, James Jones attendeds Jones attended Southern Oregon University, where he obtained a Bachelor of Science in Business Administration. During this period, James worked for Bear Creek Corporation in as an intern to Bear Creek’s CEO. Prior to attending SOU, James had a successful career at AVIS RENT A CAR, where he was rapidly promoted into various managerial positions. James finished his career at AVIS as the Airport Manager at Portland International

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Airport, where he supervised 3 managers and a staff of 100+. James decided to further his education, and left his career to attend school. James Jones is a certified bicycle/ski mechanic. During James’ career at AVIS he accomplished many noteworthy achievements. James was promoted into management at an early age of 21, partly because of his monthly sales rankings. Without a college degree, James was promoted to Oakland, and then Pasco, WA where he compiled the largest market share (in Pasco) in history at 43%, among 4 quality, national competitors. James ended his successful career at AVIS just as Portland was ranked “second most profitable in the division”, and ranked internally by AVIS’ Quality Assurance team as the “7th best AVIS in both service and quality.” James attended Southern Oregon University from 1998-2002, where he obtained a Bachelor of Science in Marketing/Business Administration, earning a 3.6 GPA. James has a minor in Applied Multimedia. James posses' a comprehensive knowledge of operating a successful and profitable business. His previous work experience, added with a quality education, a quality understanding of the market, make James the ideal CEO. James loves kids! His son Cameron (6) is a “rippin” little snowboarder and bike “shredder”. James’ coaching experience at the Ashland YMCA, and his own love and passion for mountain sports, show that James is just a “kid at heart.” James has excellent written and verbal communication skills, a fun, and easygoing personality, which make a great fit for both Banzai and James. Colby Knight, Co- Owner and COO. Primary Responsibilities: Human Resources, Supply & Distribution, Finance, Operations. As Co-Founder of Banzai, Colby brings many great qualities and experiences to the company. Colby has worked in retail for over 10 years in many capacities, both in hourly and managerial positions. Most recently, Colby was employed at Rogue Ski Shop in Ashland, while attending Southern Oregon University. Colby is a certified bike and ski repair technician, and an outstanding sales associate. Colby’s experience and extensive knowledge of snow sports products coupled with his love for mountain biking make Colby the guru of experience and knowledge. Colby Kight is an excellent sales associate and a great manager. While employed at Rogue Ski Shop, Colby had his “own” repeat customer base, because of his personalized, friendly, no pressure advice and quality tuning/repairs. Colby was voted sales associate employee of the month a record 4 times in 2000, because he simply sold more with better service. Colby Knight attended Southern Oregon University from 1998-2002, obtaining a Bachelor of Art degree. Colby’s is artistic and creative, excelling as one of the finest Art students at SOU. Colby has received many distinguished awards for his abstract Art.

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A successful organization must have the proper fit of people. The right people have many characteristics such as intelligence, drive, interpersonal skills, morals/ethics, and the list goes on. Colby Knight has most, if not all of these characteristics. Colby is an ideal fit to partner with James. 1 Part-Time Repair/Sales Technician (To be selected): Primary Responsibilities: Repair and Maintenance, Customer Service/Sales. Pay: $10 per hour Banzai will begin recruiting for a repair technician beginning in July 2003. Banzai will employ 1 part-time repair technician. Banzai will not require a college degree for this position, however bike and snow sports repair certification is required. Banzai will seek an experienced employee who matches/demonstrates the values of our organization. Our repair staff will be required to perform a variety of maintenance duties, and to represent our image as the finest service anywhere. Board of Directors: Immediately upon Incorporation, Banzai will actively begin to search for candidates to serve on the Board of Directors. Banzai will search for individuals from the following arenas: Retired successful businessmen/women from all areas including retailing, service, finance, technology, and educators. Banzai’s Board of Directors will receive monetary compensation for their services. Banzai will seek to employ a total of 5 Board Members, for voting and strategy purposes. Banzai’s Board of Directors will meet twice yearly, or more frequently as circumstances require. Consultants/Specialists: Banzai will employ the reputable firm Deloitte Consulting, for financial planning, taxes, and general consulting. Banzai will also employ the legal services of Babb Heatherman, LLP. Babb Heatherman has a quality reputation in Central Oregon, by providing expert legal services in business, estate planning, and real estate since 1968. Banzai will seek to employ the law services of Dennis Powers on a case-by-case basis. Dennis Powers attended Harvard as an undergraduate, and the University of Oregon, where he obtained a JD/MBA. Dennis Powers had a highly successful career in practice, and is now a full-time professor at Southern Oregon University.

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Management to be Added: Advisory Committee: Banzai will establish an informal advisory committee. The committee members will represent a variety of local/successful business owners, educators, and various organizations. The purpose of this committee is to offer guidance to Banzai’s owners, and gather valuable and necessary market information. This committee will meet on a quarterly basis and will not be compensated monetarily for their participation. The goal of this committee will be on accessing needs, and finding solutions that deliver above expectations to our customers. Banzai will seek 5 members to fill our advisory committee. Organizational Chart: Due to our small operation, an organizational chart is inapplicable at this time. Our staff consists of James Jones (co -owner), Colby Knight (co -owner), and 1 part-time sales/ repair technician. Management Style & Culture: James Jones and Colby Knight will be extremely involved in day -to-day operations, and all aspects of the operation. James Jones will facilitate Sales & Marketing activities, Business Development, Finance, and Operations. Colby Knight will direct Operations, Human Resources, Finance, and Supply/Distribution. Both owners will have specific duties, but not limited to the above. Banzai is a company sincerely dedicated and focused on building long-term “family” relationships with all of its employees and suppliers. Banzai will be in tune with employees’ needs and concerns. As a small business, teamwork and a cooperative/friendly atmosphere are critical to Banzai’s success. If we don’t get along, how can we portray a family to customers? Effective communication skills will be essential. All employees will have specific tasks, each, importantly, contributing to the success of the business as a whole. Banzai will adhere to all federal, state and city laws regarding the fair treatment of employees, such as minimum wage laws and the Family Medical Leave Act. Banzai is an equal opportunity employer.

Community Involvement & Social Responsibility: Social Responsibility Goals: Banzai’s employees are and will forever be, committed to conducting business both legally with high standards of ethics and morality. We are committed to providing both a safe store and safe products. Banzai’s management team understands the inherent

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dangers and liability associated with the products they sell. Therefore, we will be a community advocate of outdoor safety. Through our partnerships, we will offer bike and board workshops that portray our social consciousness. Company Policies: Suppliers may be evaluated if concerns arise regarding the compliance of International Fair Wage/Conditions Labor Laws. Many manufacturers products are made overseas with virtually no regard to human rights issues. Banzai strictly opposes these business practices, and the use of children in any production facility. Banzai will immediately cease relationships with suppliers should this occur. Community Activities: Banzai will be very conscious regarding environmental issues. We will fully comply with Oregon Safety Occupational Association (OSHA). Should the need arise, we may request voluntarily inspections. Banzai will also be a trail conservation advocate. Our feeling is that if “we’re going to use nature, nature should use us.” Therefore, we will offer trail/stream-building projects to give some back.

Development, Milestones, and Exit Strategy: Long-Term Company Goals: Banzai Bikes-n-Boards will strive to differentiate itself in this growing marketplace. Our strengths are in the innovative and integrated products/services, eXtreme service, convenience in location and services, and absolute attention to customers needs. Banzai seeks to become the Market Leader in children’s mountain equipment and accessories. Currently, because of entry sales revenues and high start-up costs, Banzai will not offer benefits to employees and owners. Banzai intends to provide benefits to employees and owners in year six, once profitability is achieved. Growth Strategy: Banzai Bikes -n- Boards is committed to a long-term growth in sales at a rate of approximately 15% annually. Banzai growth strategy lies in being the retail visionary in innovative technology, value added products/services, and selection. Banzai will make marketing and advertising a top priority for the expenditure of funds, allocating 10% of revenues to Sales and Marketing expenditures. Banzai’s marketing message will change as we grow.

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After growing steadily for a minimum of 10 years, Banzai may plan on opening another Bike-n-Board Shop. However, the market may have changed by then. This store may be located in Boise, Idaho. Research is currently being conducted on the growth of Boise and other possible locations to discover it this will be a successful area to open a second Banzai store in 2012. Milestones: Banzai Bikes-n-Boards would like to achieve several milestones within the first five years of operation. Banzai’s CEO, James Jones, would like to secure initial financing by August 2002 in order to completely prepare for the grand opening in September 2003. Exit Plan: Banzai’s partners, will do one of two things when they are ready to leave the business, either sell the business and dissolve the partnership, or hand the business down to family members. The latter is preferable, however, selling the business is probable in order to pay back loans. In either case, James Jones plans to keep the business for the first 15 years of operation. Investors in Banzai will understand that because of high fixed costs and the initial investment required that payback on their investment would not/could not begin until profitabi lity is achieved. Estimated payback of interest would begin in year 3, with payments on principal to begin in 2008 (estimated).

Financial Assumptions

♦ Banzai’s owners are seeking an initial investment of $200,000. ♦ Sales are based on estimated units per month and average sales prices of new and

used items. ♦ Sales of new and used items account for 50% of each product. ♦ Expense Assumptions are listed in the Expense Assumptions Worksheet.

♦ Costs of Goods Sold o Costs of goods are estimated on industry averages. o Costs of goods are estimated with assumptions of overall strategy and

price sensitivity in mind. o Costs of goods are estimated upon the following percentages: Below is

Banzai’s profit margin. § Bikes 38% § Snowboards 38% § Skis 38% § Skateboards 38% § Accessories & Apparel 50% § Video Games 30% § Repair and Guide are listed in the Sales Assumptions Worksheet.

Assumption Conclusion: Banzai must deliver on sales assumptions, while eliminating costs. Banzai’s strategy reflects spending heavily on marketing, because we feel as though this is necessary and vital to our success. Banzai intends to have a combined negative net income of $50,000 during the next 3 years. Sales are estimated to grow at 15% - 20% per year, and Costs of Goods Sold are expected to decrease with volume discounts, which should drive profitability in year 4. Cash flow predicts that Banzai will not need any additional funding at this time. True profitability, after startup costs have been repaid, is not estimated to occur for many years.

"Average" Sales Price/Unit Assumptions:

Snowboards Bikes Used New Average $ Used New Average $

Board $50 $150 $100 Bikes $75 $175 $125 Boots $30 $100 $65 Bindings $30 $80 $55

$220 Repair Used New Average $

Ski's Repair $15 $30 $23 Used New Average $

Ski's $50 $250 $150 Boots $30 $200 $115 SkateBoards Bindings $30 $100 $65 Used New Average $ Poles $40 $60 $50 SkateBoards $45 $85 $65

$380

Example: $Low$ $High$

Snowboard $25 $75 $50

Used Board Calculation

Sales Assumptions:

Sales Per Month (Dollars) Average Price September October November December January February March April May June July August Total Snowboards/Boots/Bindings $220 $7,700 $11,000 $13,200 $17,600 $7,700 $5,500 $2,200 $0 $0 $0 $0 $0 $64,900 Skis/Boots/Bindings $380 $6,460 $9,500 $11,400 $15,200 $6,460 $4,560 $1,900 $0 $0 $0 $0 $0 $55,480 Skateboards $65 $2,275 $1,625 $1,625 $3,900 $1,300 $1,300 $1,300 $1,625 $2,600 $4,225 $4,225 $3,250 $29,250 Bikes $125 $4,250 $3,750 $3,750 $6,875 $1,500 $1,500 $1,500 $3,125 $3,750 $6,250 $5,625 $5,625 $47,500 Repair $23 $1,610 $920 $1,380 $1,610 $1,150 $1,150 $920 $920 $1,150 $1,840 $1,840 $1,840 $16,330 Guide 38% of Revenue / $50 person $0 $0 $0 $750 $0 $0 $0 $0 $0 $3,000 $3,000 $3,000 $9,750 Accessories & Apparel 25% $5,574 $6,699 $7,839 $11,296 $4,528 $3,503 $1,955 $1,418 $1,875 $3,079 $2,923 $2,679 $53,365 Video Games 15% $4,180 $5,024 $5,879 $8,472 $3,396 $2,627 $1,466 $1,063 $1,406 $2,309 $2,192 $2,009 $40,024

$32,049 $38,518 $45,073 $65,703 $26,033 $20,139 $11,241 $8,151 $10,781 $20,703 $19,804 $18,403 $316,599

Units Per Month (30 Day Average) September October November December January February March April May June July August Total Average/Month Snowboards/Boots/Bindings 35.0 50.0 60.0 80.0 35.0 25.0 10.0 0.0 0.0 0.0 0.0 0.0 295.0 42.1 Skis/Boots/Bindings 29.4 43.2 51.8 69.1 29.4 20.7 8.6 0.0 0.0 0.0 0.0 0.0 252.2 36.0 Skateboards 10.3 7.4 7.4 17.7 5.9 5.9 5.9 7.4 11.8 19.2 19.2 14.8 68.0 5.7 Bikes 19.3 17.0 17.0 31.3 6.8 6.8 6.8 14.2 17.0 28.4 25.6 25.6 119.3 9.9 Repair 7.3 4.2 6.3 7.3 5.2 5.2 4.2 4.2 5.2 8.4 8.4 8.4 43.9 3.7 Guide 0.0 0.0 0.0 3.4 0.0 0.0 0.0 0.0 0.0 13.6 13.6 13.6 3.4 0.9 Accessories & Apparel 25.3 30.4 35.6 51.3 20.6 15.9 8.9 6.4 8.5 14.0 13.3 12.2 194.6 16.2 Video Games 19.0 22.8 26.7 38.5 15.4 11.9 6.7 4.8 6.4 10.5 10.0 9.1 145.9 12.2

Units Per Day (Average) September October November December January February March April May June July August Average/Day Snowboards/Boots/Bindings 1.2 1.6 2.0 2.6 1.1 0.9 0.3 0.0 0.0 0.0 0.0 0.0 1.4 Skis/Boots/Bindings 1.0 1.4 1.7 2.2 0.9 0.7 0.3 0.0 0.0 0.0 0.0 0.0 1.2 Skateboards 0.3 0.2 0.2 0.6 0.2 0.2 0.2 0.2 0.4 0.6 0.6 0.5 0.4 Bikes 0.6 0.5 0.6 1.0 0.2 0.2 0.2 0.5 0.5 0.9 0.8 0.8 0.6 Repair 0.2 0.1 0.2 0.2 0.2 0.2 0.1 0.1 0.2 0.3 0.3 0.3 0.2 Guide 0.0 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.5 0.4 0.4 0.4 Accessories & Apparel 0.8 1.0 1.2 1.7 0.7 0.6 0.3 0.2 0.3 0.5 0.4 0.4 0.7 Video Games 0.6 0.7 0.9 1.2 0.5 0.4 0.2 0.2 0.2 0.3 0.3 0.3 0.5

September October November December January February March April May June July August Accessories & Apparel (25%)* $22,295 $26,795 $31,355 $45,185 $18,110 $14,010 $7,820 $5,670 $7,500 $12,315 $11,690 $10,715 * 25% of all products & services $5,574 $6,699 $7,839 $11,296 $4,528 $3,503 $1,955 $1,418 $1,875 $3,079 $2,923 $2,679 above. Video Games (15%)** $27,869 $33,494 $39,194 $56,481 $22,638 $17,513 $9,775 $7,088 $9,375 $15,394 $14,613 $13,394 ** 15% of total above $4,180 $5,024 $5,879 $8,472 $3,396 $2,627 $1,466 $1,063 $1,406 $2,309 $2,192 $2,009

Revenue/Week $188 $375 $375 $375 Revenue/Month $750 $3,000 $3,000 $3,000 $9,750 Gross Margin 37.5% 37.5% 37.5% 37.5% $50 per child $2,000 $8,000 $8,000 $8,000

** Oursource Service * 10 children per trip * June, July, August = 2 trips/week

August (8)Guide Service** December (4) June (8) July (8)

Salary and Benefit Assumptions:

Banzai Store Hours 10am-8pm 10am-8pm 10am-8pm 10am-8pm 10am-8pm 10am-8pm 10am-8pm

Sunday Monday Tuesday Wednesday Thursday Friday Saturday Total Hours Week Wages Yearly Wages Taxes Totals Management: James 10am-8pm 10am-8pm OFF 10am - 8pm 10am - 8pm 10am - 8pm 10am - 8pm 54* $35,000 $3,092 $38,092 Colby 10am - 8pm OFF 10am - 8pm 10am - 8pm 10am - 8pm 10am - 8pm 10am - 8pm 54* $673 $35,000 $3,092 $38,092 P/T* OFF OFF 2pm - 8pm 2pm - 8pm 2pm - 8pm 2pm - 8pm 10am - 6pm 32 $320 $5,760 $516 $6,276

* Red represents variable labor Schdeuling will vary over time and by season Totals: 0 $673 $75,760 $6,699 $82,459

*Part Time (October - January)

Benefits Worksheet (Per Year - 52 Weeks) % of Wages James Colby P/T

Sales & Repair* Social Security Taxes 6.20% $2,170 $2,170 $357 Medicare Taxes 1.45% $508 $508 $84 Federal unemployment taxes 0.80% $280 $280 $46 Unemployment Insurance 0.30% $105 $105 $17 Workers Compensation $2.43 Month $29 $29 $12

$3,092 $3,092 $516

Health Insurance 40.00% N/A N/A N/A Dental Insurance $25 Month N/A N/A N/A Vision Insurance Included in Plan N/A N/A N/A

Totals: $3,092 $3,092 $516

Income Statement Assumptions:

FY 2004 Expenses Monthly Average Advertising $23,000 $1,917 See Marketing Plan Commissions $0 $0 Long term plans include expenses here Entertainment $1,200 $100 Literature $600 $50 Promotions $1,200 $100 Salaries $0 $0 Included in Admin Salaries Trade Shows $4,866 $406 See Marketing Plan Travel $0 $0 Consulting $2,400 $200 Board Fees / Consultants Equipment (Expensed Purchases) $1,266 $106 R & D Materials $600 $50 Trade Subscriptions R & D Salaries $0 $0 Accounting $2,400 $200 Admin Salaries $82,464 $6,872 See Payroll Worksheet Bad Debts $560 $47 Depreciation $6,900 $575 Equipment Rental/Small Purchases $1,200 $100 Insurance $3,000 $250 Legal Fees $600 $50 Licenses and Permits $600 $50 Office Expenses $1,200 $100 Office Rental $21,600 $1,800 2,400 Sq. Feet Taxes (non-Income Taxes) $1,200 $100 Telephone $1,850 $154 Utilities $3,650 $304

$162,356

Balance Sheet Assumptions: Est. Inventory needed upon Startup : $87,115

Lease Improvements Signage: $5,000 Counters / Display Racks: $5,000 Remodeling: $12,000 Lighting: $3,000

$25,000

Computers/Software/Tools & Wintersteiger Computers (3 Mac's): $6,000 Wintersteiger (Tuner): $8,000 POS Software: $4,000 Repair Tools: $5,000 Fax/Phones: $1,000

$24,000

Office Equipment/Projector Office Desk: $1,000 Projector: $5,000 Lounge / Couches: $4,000

$10,000

Included in Trade Shows and R & D Materials

FY 2004 % of Sales FY 2005 % of Sales FY 2006 % of Sales FY 2007 FY 2008

Sales: $316,601 15% sales increase $363,802 19% sales increase $433,708 19% sales increase $518,062 $620,014

Cost of Goods Sold: $176,927 55.9% $205,235 56.4% $238,073 54.9% $276,165 $320,351

Gross Profit: $139,674 44.1% $158,567 43.6% $195,635 45.1% $241,897 $299,663

Expenses:

Sales & Marketing $30,866 9.7% $33,953 9.3% $37,348 8.6% $41,083 $45,191 Research & Development $4,266 1.3% $4,351 1.2% $4,438 1.0% $4,527 $4,618 G & A (without Depreciation) $120,324 38.0% $132,356 36.4% $148,239 34.2% $166,028 $185,951 Depreciation $6,900 2.2% $8,900 2.4% $10,900 2.5% $12,900 $14,900

Total Operating Expenses: $162,356 51.3% $179,560 49.4% $200,925 46.3% $224,538 $250,660

Net Income Before Taxes: ($22,682) -7.2% ($20,993) -5.8% ($5,290) -1.2% $15,623 $44,103

Banzai Bikes -n- Boards Income Statement FY 2004-2006

Assets FY 2004 FY 2005 FY 2006

Cash $92,772 $30,650 $10,464 Inventory $32,996 $67,475 $78,271

Total Current Assets $125,768 $98,125 $88,735

Lease Improvements $25,000 $30,000 $35,000 Computers/Software/Tools & Wintersteiger $24,000 $29,000 $34,000 Office Equipment/Projector $10,000 $15,000 $20,000 Accumulated Depreciation ($6,900) ($15,800) ($26,700)

Total Plant & Equipment $52,100 $58,200 $62,300

Total Assets $177,868 $156,325 $151,035

Liabilities & Owners Equity

Liabilities:

Accounts Payable $550 $0 $0

Total Current Liabilities $550 $0 $0

Owners Equity:

Common Stock $200,000 $200,000 $200,000 Retained Earnings ($22,682) ($43,675) ($48,965)

Total Owners Equity $177,318 $156,325 $151,035

Total Liabilities & Owners Equity $177,868 $156,325 $151,035

Balance Sheet FY 2004-2006 Banzai Bikes -n- Boards

September October November December January February March April May June July August FY 2004 Total Sales:

Snowboards/Boots/Bindings $7,700 $11,000 $13,200 $17,600 $7,700 $5,500 $2,200 $0 $0 $0 $0 $0 $64,900 Skis/Boots/Bindings/Poles $6,460 $9,500 $11,400 $15,200 $6,460 $4,560 $1,900 $0 $0 $0 $0 $0 $55,480 Skateboards $2,275 $1,625 $1,625 $3,900 $1,300 $1,300 $1,300 $1,625 $2,600 $4,225 $4,225 $3,250 $29,250 Bikes $4,250 $3,750 $3,750 $6,875 $1,500 $1,500 $1,500 $3,125 $3,750 $6,250 $5,625 $5,625 $47,500 Repair $1,610 $920 $1,380 $1,610 $1,150 $1,150 $920 $920 $1,150 $1,840 $1,840 $1,840 $16,330 Guide $0 $0 $0 $750 $0 $0 $0 $0 $0 $3,000 $3,000 $3,000 $9,750 Accessories/Apparel/Misc. $5,574 $6,699 $7,839 $11,296 $4,528 $3,503 $1,955 $1,418 $1,875 $3,079 $2,923 $2,679 $53,368 Video Games $4,180 $5,024 $5,879 $8,472 $3,396 $2,627 $1,466 $1,063 $1,406 $2,309 $2,192 $2,009 $40,023

Net Sales $32,049 $38,518 $45,073 $65,703 $26,034 $20,140 $11,241 $8,151 $10,781 $20,703 $19,805 $18,403 $316,601

Cost of Goods Sold: Products $18,538 $22,910 $26,620 $38,595 $15,156 $11,564 $6,282 $4,399 $5,859 $9,651 $9,104 $8,249 $176,927

Gross Profit: $13,511 $15,608 $18,453 $27,108 $10,878 $8,576 $4,959 $3,752 $4,922 $11,052 $10,701 $10,154 $139,674

Expenses: Sales & Marketing $5,650 $2,651 $3,652 $4,653 $1,654 $1,155 $1,156 $1,157 $1,158 $2,659 $2,660 $2,661 $30,866 Research & Development $350 $351 $352 $353 $354 $355 $356 $357 $358 $359 $360 $361 $4,266 Accounting $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $2,400 Salaries & Benefits $6,349 $7,918 $7,918 $7,918 $7,918 $6,349 $6,349 $6,349 $6,349 $6,349 $6,349 $6,349 $82,464 Bank Charges $40 $50 $60 $80 $50 $40 $30 $30 $30 $50 $50 $50 $560 Depreciation $575 $575 $575 $575 $575 $575 $575 $575 $575 $575 $575 $575 $6,900 Equipment Rental/Small Purchases $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $1,200 Insurance $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $3,000 Legal Fees $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $600 Licenses and Permits $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $600 Office Expenses $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $1,200 Office Rental $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $21,600 Taxes (non-Income Taxes) $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $1,200 Telephone $150 $150 $150 $200 $150 $150 $150 $150 $150 $150 $150 $150 $1,850 Utilities $300 $350 $400 $450 $350 $300 $250 $250 $250 $250 $250 $250 $3,650

Total Operating Expenses $16,064 $14,695 $15,757 $16,879 $13,701 $11,574 $11,516 $11,518 $11,520 $13,042 $13,044 $13,046 $162,356

Net Income Before Taxes: ($2,553) $913 $2,696 $10,229 ($2,823) ($2,998) ($6,557) ($7,766) ($6,598) ($1,990) ($2,343) ($2,892) ($22,682)

Banzai Bikes -n- Boards Income Statement by Month (FY 2004)

September October November December January February March April May June July August FY 2004 Total

Net Income After Taxes ($2,553) $913 $2,696 $10,229 ($2,823) ($2,998) ($6,557) ($7,766) ($6,598) ($1,990) ($2,343) ($2,892) ($22,682)

Depreciation $575 $575 $575 $575 $575 $575 $575 $575 $575 $575 $575 $575 $6,900

Increase in Accounts Payable $1,236 $291 $248 $798 ($1,563) ($239) ($352) ($126) $98 $252 ($36) ($57) $550

Increase in Inventory $90,757 $26,743 ($10,339) ($20,074) ($43,084) ($14,343) ($7,607) $4,492 $6,274 $3,186 ($1,299) ($1,710) $32,996

Cash from Operations ($91,499) ($24,964) $13,858 $31,676 $39,273 $11,681 $1,273 ($11,809) ($12,199) ($4,349) ($505) ($664) ($48,228)

Financing $200,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $200,000

Cash from Operations & Financing $108,501 ($24,964) $13,858 $31,676 $39,273 $11,681 $1,273 ($11,809) ($12,199) ($4,349) ($505) ($664) $151,772

Purchase of Fixed Assets $59,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $59,000

Increase/Decrease in Cash $49,501 ($24,964) $13,858 $31,676 $39,273 $11,681 $1,273 ($11,809) ($12,199) ($4,349) ($505) ($664) $92,772

Change in Cash Balance Ending Cash Balance $49,501 $24,537 $38,395 $70,071 $109,344 $121,025 $122,298 $110,489 $98,290 $93,941 $93,436 $92,772 $92,772 Beginning Cash Balance $0 $49,501 $24,537 $38,395 $70,071 $109,344 $121,025 $122,298 $110,489 $98,290 $93,941 $93,436 $0

Increase/Decrease in Cash $49,501 ($24,964) $13,858 $31,676 $39,273 $11,681 $1,273 ($11,809) ($12,199) ($4,349) ($505) ($664) $92,772

Banzai Bikes -n- Boards Cash Flow Statement by Month (FY 2004)

Break Even Analysis

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Sales Fixed Costs Variable Costs Breakeven Sales Volume

Sales by Product

Repair 5%

Guide 3%

Snowboards/Boots/Bindings 20%

Video Games 13%

Accessories & Apparel 17%

Bikes 15%

Skateboards 9%

Skis/Boots/Bindings 18%

Appendix: Products & Services: Products: Bikes: GT, Schwinn, Santa Cruz, Mongoose, Trek, K2, Rocky Mountain Banzai will offer a wide variety of bikes for both beginners and for those who desire something specific. We will offer the several models of bikes for all preferences. Our bikes will be as diverse as our customers’ needs change. We will also offer lines of both scooters and in-line skates. Snowboards: Burton, Kemper, Ride, H2O, Santa Cruz, Lamar Banzai will offer a full selection of new and used snowboards, ranging from the smallest on the market (’99), to a full adult snowboard. We will provide snowboards for the beginner and for the more advanced. We will seek to maintain a variety of snowboards that appeal to kids. Skis: K2, Salomon, Dynastar Banzai will offer a variety of new and used skis for all budgets. We will include products for kids just beginning and for those who race. We will provide a full line selection of various brands and shapes, to the latest trick skis. We will continually seek to maintain a variety of innovative products that appeal to kids needs and desires. Helmets: Boeri, Giro, Pro -Tech, Bell, Leedom Banzai will be a very vocal community and industry advocate in the area of helmet safety. We will have a very large selection of helmets to fill all head sizes. We will carry both new and used snow and bike helmets in various colors and design. Boots: Vans, Airwalk, Heelside, Ride Banzai will carry both new and used snowboards, ski, snowshoe, and outdoor boots for kids’ ages 2-18. Banzai will provide a variety of styles and design, colors, and choices to fit all budgets. Apparel: Quicksilver, Airwalk, Vans, Hot Chilly’s, Helly Hansen, Nike Banzai will carry apparel in the following groups: Socks, Underwear, Snowboard and Ski Pants, Jackets, and Tee Shirts/Sweatshirts. Accessories: Camelbak, Bell, Schwinn, Bula, Airwalk, Shimano, Oakley Because of the nature of snow sports and bicycling, the accessory list here has been shortened for readability. The following children’s products will be sold at Banzai: Hats, Gloves, Goggles/Sunglasses, Hydration systems, Backpacks, Stickers, and Bike Accessories. Skateboards: World Industries, Vision, Santa Cruz, Vans, Fluid A variety of new and used skateboards will be sold at Banzai. Banzai will feature a full line of skateboards for those who want the new long-board style, half-pipe machine, or for those who want just to kick it like Tony Hawk. Snowshoes, Sleds, Snow Bikes, Snow Skates: Redfeather, K2 Due to the small number of kids that snowshoe, this will be an area that Banzai will purchase lightly in. Initially, Banzai will carry 1 brand of all sizes. Video Games: Playstation, X Box, Nintendo 64 & GameBoy Advance Banzai seeks to create a fun and comfortable “kid-friendly” environment. Banzai will display a large screen television with the attached consoles of Sony’s Play station 2, and Microsoft’s X Box, Nintendo 64, and

GameBoy Advance. Kids will have the opportunity to test various games for a determined time period. Banzai plans to sell video games and consoles for the aforementioned video game systems. Services: eXtreme Service: Banzai’s extreme Service consists of the following qualities: On the purchase of any new bike or board the owner will receive a free yearly tune up. Banzai will also have a 100% money back guarantee policy, free assembly/installation with every bike/ski purchase, offer expert experienced advice, exceptional warranty policies, better resale value and overall better value. Banzai’s management will call each customer that purchases a new snowboard/bike and thank him or her for his or her business as part of this service, and to solicit necessary feedback. Trade-In: Banzai will offer customers that purchased products from us, the option of trading in equipment for an in house “fair-market value” credit. Customers will want come back to Banzai for years as repeat buyers. Education: Banzai will teach free classes on Bike and Snow Safety at local schools. Banzai will also offer classes on advanced subject material. Subject matter to be determined later, based upon the needs of Banzai’s customers. Rentals: Banzai will offer a limited supply of rental bikes, however not ski/boards. This fleet will be composed of our quality used equipment. Banzai will offer rental bikes during the summer months. Guide: Banzai will offer guided mountain bike and road cycling trips, geared towards children. Banzai will also offer guided snowshoe and backcountry exploring trips. All trips will be offered to kids of various ages and skill levels, with safety then fun as the highest priorities. Repair: Banzai’s staffs are experts in the area of bike and board (ski’s too) repair. Our focus will be on quality repairs at an affordable cost. Our goal is that our staff will become known as the areas experts for children’s' repairs. Our repairs would consist of tasks as simple as a tire flat repair, and ski (board) tune- ups, to complete bike tune-ups and component replacement.

References

Central Oregon Area Profile (2001). Economic Development for Central Oregon http://www.EdforCO.org Fast Facts About The U.S. Bicycle Market (2001). Retrieved from the World Wide Web: http://www.sgma.org

• The following come from this report: o Bicycle Market Research Institute o Sporting Goods Manufacturers Association o National Sporting Goods Association o Bicycle Retailer & Industry News

Herzog, Boaz (2001, December 2). Skiing Lean. The Oregonian.

Retrieved from the World Wide Web: http://nl12.newsbank.com/nl- search/we/Archives?p_action-doc&p_docid=

Hillman, M., Adams, J, Whitelegg, J, (1990). One False Move. Policy Studies Institute Key Note (2002) Retrieved from the World Wide Web:

www.bikebiz.co.uk “Lies, damn lies and statistics” The Lifestyle Market Analysist (2001). Lifestyles, Bend Oregon. Source: Bend Economic Development Center visit. January 2002. Mast, Jennifer Arnold (1995). Bicycle Shop. Small Business Profiles a Guide to Today’s

Top Opportunities. Press: Gale Research, Detroit MI. Russell, Cheryl (2001) Demographics of Consumer Demand. Best Customers Press: New Strategist Publication 2nd Edition SGMA Sports Participation Topline Report (2001). Retrieved from the World Wide Web: http://www.sgma.org Tauer, Guy (2001, October 24). Oregon’s Snowsport Industry. Olmis

Retrieved from the World Wide Web: http://olmis.emp.state.or.us/olmisj/ArticleReader?itemid=00002079&print=1

U.S. Census Bureau (2000). Profile of General Demographic Characteristics:2000

Retrieved from the World Wide Web on January 18, 2002