Amilie Clean Cosmetics GCC Business Plan May 4th

Business Plan Amilie Clean Cosmetics Rachel Brockhage & Sharon Seiter Grove City Entrepreneurship Business Plan Competition

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NON-DISCLOSURE AGREEMENT This Non-Disclosure Agreement (the “Agreement”) is entered into by and between Amilie Clean Cosmetics (“ACC”) with its principal offices at 332 Rockaway Valley Road, Boonton Twp., NJ 07005 (“Disclosing Party”) and ____________________ , located at _______________________________________________________________ , (“Receiving Party”) for the purpose of preventing the unauthorized disclosure of Confidential Information. The parties agree to enter into a confidential relationship with respect to the disclosure of certain proprietary and confidential information (“Confidential Information”). 1. Definition of Confidential Information. For purposes of this Agreement, “Confidential Information” shall include all information or material that has or could have commercial value or other utility in the business in which Disclosing Party is engaged. If Confidential Information is in written form, the Disclosing Party shall label or stamp the materials with the word “Confidential” or some similar warning. If Confidential Information is transmitted orally, the Disclosing Party shall promptly provide a writing indicating that such oral communication constituted Confidential Information. 2. Exclusions from Confidential Information. Receiving Party‟s obligations under this Agreement do not extend to information that is: (a) publicly known at the time of disclosure or subsequently becomes publicly known through no fault of the Receiving Party; (b) discovered or created by the Receiving Party before disclosure by Disclosing Party; (c) learned by the Receiving Party through legitimate means other than from the Disclosing Party or Disclosing Party‟s representatives; or (d) is disclosed by Receiving Party with Disclosing Party‟s prior written approval. 3. Obligations of Receiving Party. Receiving Party shall hold and maintain the Confidential Information in strictest confidence for the sole and exclusive benefit of the Disclosing Party. Receiving Party shall carefully restrict access to Confidential Information to employees, contractors and third parties as is reasonably required and shall require those persons to sign nondisclosure restrictions at least as protective as those in this Agreement. Receiving Party shall not, without prior written approval of Disclosing Party, use for Receiving Party‟s own benefit, publish, copy, or otherwise disclose to others, or permit the use by others for their benefit or to the detriment of Disclosing Party, any Confidential Information. Receiving Party shall return to Disclosing Party any and all records, notes, and other written, printed, or tangible materials in its possession pertaining to Confidential Information immediately if Disclosing Party requests it in writing. 4. Time Periods. The nondisclosure provisions of this Agreement shall survive the termination of this Agreement and Receiving Party‟s duty to hold Confidential Information in confidence shall remain in effect until the Confidential Information no longer qualifies as a trade secret or until Disclosing Party sends Receiving Party written notice releasing Receiving Party from this Agreement, whichever occurs first. 5. Relationships. Nothing contained in this Agreement shall be deemed to constitute either party a partner, party to a joint venture or employee of the other party for any purpose. 6. Severability. If a court finds any provision of this Agreement invalid or unenforceable, the remainder of this Agreement shall be interpreted so as best to effect the intent of the parties. 7. Integration. This Agreement expresses the complete understanding of the parties with respect to the subject matter and supersedes all prior proposals, agreements, representations and understandings. This Agreement may not be amended except in a writing signed by both parties. 8. Waiver. The failure to exercise any right provided in this Agreement shall not be a waiver of prior or subsequent rights.

This Agreement and each party‟s obligations shall be binding on the representatives, assigns and successors of such party. Each party has signed this Agreement through its authorized representative. ______________________________ ____________ Signature Date

______________________________ ____________ Signature Date

______________________________ Printed Name

______________________________ Printed Name

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The reader acknowledges that the information contained in this business plan is confidential. Therefore, the reader agrees not to disclose it without the express written permission of Sharon Seiter and Rachel Brockhage. Upon request, this document is to be immediately returned to Sharon Seiter or Rachel Brockhage. This is a business plan. It does not imply an offering of securities.

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Table of Contents 1.

Executive Summary ............................................................................................................................ 7

2.

Industry ................................................................................................................................................ 9

3.

4.

5.

6.

2.1

Cosmetics Industry ..................................................................................................................... 9

2.2

Gluten-free Products................................................................................................................... 9

2.3

Gluten-free Cosmetics............................................................................................................... 10

Amilie Clean Cosmetics .................................................................................................................... 14 3.1

Background ............................................................................................................................... 14

3.2

Value Proposition ...................................................................................................................... 15

3.3

Barriers to Entry ....................................................................................................................... 15

3.4

Keys to Success .......................................................................................................................... 15

Market Analysis ................................................................................................................................ 17 4.1

Customers .................................................................................................................................. 17

4.2

Market Research ....................................................................................................................... 18

4.3

Market Size and Trends ........................................................................................................... 19

4.4

Estimated Market Share .......................................................................................................... 19

4.6

Competitors ............................................................................................................................... 20

4.7

Differentiation ........................................................................................................................... 21

Marketing Plan .................................................................................................................................. 22 5.1

Positioning ................................................................................................................................. 22

5.2

Pricing Strategy ......................................................................................................................... 22

5.3

Sales & Distribution .................................................................................................................. 23

5.4

Promotions Mix ......................................................................................................................... 25

Operations.......................................................................................................................................... 26 6.1

Operations Model...................................................................................................................... 26

6.2

Facilities and Equipment .......................................................................................................... 27

6.3

Development Status .................................................................................................................. 28

6.4

Intellectual Property ................................................................................................................. 30

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Amilie Clean Cosmetics Management Team and Company Structure ................................................................................. 31

7.

7.1

Key Management Personnel .................................................................................................... 31

7.2

Management Compensation and Ownership ......................................................................... 31

7.3

Board of Advisers ...................................................................................................................... 32

7.4

Operations Expansion Plan ...................................................................................................... 32

8.

Critical Risks, Problems, and Assumptions .................................................................................... 33

9.

Financial Plan .................................................................................................................................... 34 9.1

Startup Cash .............................................................................................................................. 34

9.2

Source of Funds ......................................................................................................................... 34

9.3

Financial Assumptions Sheet ................................................................................................... 35

9.4

Pro-Forma Income Statement.................................................................................................. 36

9.5

Pro-Forma Balance Sheet ......................................................................................................... 40

9.6

Pro-Forma Cash Flow Statement ............................................................................................ 41

9.7

Breakeven Analysis ................................................................................................................... 42

11.

Appendix ........................................................................................................................................ 43

11.1

Partnership Agreement ............................................................................................................ 43

11.2

Founder Resumes ...................................................................................................................... 45

11.3

March 7th Beta-Test Presentation ............................................................................................ 47

11.4

Five Month Implementation Schedule .................................................................................... 49

11.5

Sample Web Content ................................................................................................................ 50

11.6

Interviews of Gluten-free Individuals ..................................................................................... 51

11.7

Monthly Balance Sheets............................................................................................................ 53

11.8

Monthly Cash Flow Statements ............................................................................................... 56

11.9

Monthly Operating Schedules.................................................................................................. 59

11.10

Monthly Budgets ................................................................................................................... 64

11.11

Seasonality ............................................................................................................................. 69

11.12

Pricing Assumptions ............................................................................................................. 72

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1. Executive Summary Amilie Clean Cosmetics solves the growing need for gluten-free cosmetics by manufacturing and distributing gluten-free, organic makeup and personal care products. Gluten is a protein in wheat, barley, and rye which causes severe health problems for individuals with Celiac Disease. Celiac disease is linked to long term problems such as osteoporosis, infertility and cancer. Individuals who are gluten-intolerant can improve their quality of life by eliminating all traces of gluten from their diet. Today, over 10% of the American population is eating gluten free, and the rate of diagnosis for Celiac Disease is rising rapidly.1 In the past three years, demand for gluten-free food has risen 33%.2 However, gluten is also a hidden threat lurking in the ingredients of name-brand cosmetics products.3 Because the FDA does not mandate disclosure of ingredients on makeup labels, the presence of gluten can slip by undetected, with consequences ranging from breakouts to debilitating digestive flare-ups.4 Amilie products offer peace of mind. We give our customers freedom to enjoy the luxuries of quality makeup worry-free. Unlike competitors, we focus on the gluten-free claim. Our products are certified gluten-free by a third party and backed with scientific consumer education which competitors do not offer. Our primary customers are natural and organic grocery stores and distributors, reached through trade shows and sales programs. Our end users are women ages 16-60 who suffer from food allergies, especially gluten-intolerance. We will reach them through web marketing, consumer events, grocery stores where they shop. Today, our nourishing Lip Balm is fully prototyped, and receiving positive reviews from family and friends. Prototypes of our Mineral Foundation and Eye Shadow will be completed in a matter of weeks. We believe that Amilie Clean Cosmetics will meet the real and growing need for gluten-free makeup and personal care products. We will break even in our first year of operations, and grow in profitability as Amilie becomes a household name in the brand-loyal gluten-free community. Amilie will require $50,000 of startup capital. Thank you for taking the time to read this plan. We welcome as much advice as you can give us. We will launch Amilie after graduation, and want to make it the best it can possibly be. Sincerely, Sharon Seiter, CEO 1

Data taken from a webinar entitled “The Gluten Free Movement Within Specialty Foods”. Full powerpoint available upon request. 2 http://www.nytimes.com/2011/11/27/magazine/Should-We-All-Go-Gluten-Free.html?pagewanted=all 3 http://news.consumerreports.org/health/2011/11/gluten-in-cosmetics-may-pose-risk-for-celiac-patients.html 4 http://www.sciencedaily.com/releases/2011/10/111031114941.htm

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Rachel Brockhage, COO

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2. Industry Amilie Clean Cosmetics is part of a young niche industry providing cosmetic products to individuals who struggle with gluten intolerance and wheat allergies. This niche is currently underserved and growing, providing serendipitous opportunities for Amilie.

2.1 Cosmetics Industry Amilie Clean Cosmetics participates in the growing gluten-free cosmetics industry.5 The value of cosmetics manufactured in the US annually is over $55 Billion.6 According to Forbes.com, the global cosmetics industry generates over $203 Billion in annual sales.7 The Industry is segmented as follows, with over $19 Billion in “Other Cosmetics and Toilet Preparations”. This segment includes traditional makeup.

Cosmetics Industry Segments 5%

2%

Other cosmetics and toilet preparations

6%

35%

9%

Creams, lotions and oils, excluding shaving, hair, and deodorant Hair preparations (including shampoos) Hair tonics, including hair and scalp conditioners

10%

Perfumes, toilet waters, and colognes 12% 21%

Dentifrices, mouthwashes, gargles, and rinses 8

The cosmetics industry struggled during the recession, but has rebounded, with healthy 5% growth in 2011.9 The industry shows especially strong growth in the high-tech and organic sectors.

2.2 Gluten-free Products While the cosmetics industry is mature and stable, the gluten-free products industry is relatively new and volatile. Since 2009, public awareness of gluten-intolerance has grown significantly. Gluten is a protein found in wheat, barley, and rye which frequently triggers adverse reactions 5

Our NAICS industry code is 325620 - Toilet preparation manufacturing. Our SIC code is 2844 – Toilet preparations. http://www.ibisworld.com/industry/default.aspx?indid=499 7 http://www.forbes.com/2006/02/08/best-selling-cosmetics_cx_me_0209feat_ls.html 8 http://www.census.gov/econ/industry/products/p325620.htm 9 http://www.skininc.com/spabusiness/trends/126516783.html 6

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ranging from headaches and nausea to debilitating fatigue. Gluten exposure in women with Celiac disease has been linked to long term problems like osteoporosis, infertility and cancer. Individuals who are gluten-intolerant can substantially improve their quality of life by eliminating all traces of gluten from their diet.

Today, 10% of the US population eats gluten-free.10 (That’s more than the entire population of Texas) In response to burgeoning consumer demand, the natural and specialty food industry has created an impressive array of gluten-free food products. SPINs, a market research service for the natural food industry, says that gluten-free food is a $6.3 Billion industry, up 33% since 2009.11 The NASFT, a specialty food organization, says the gluten-free industry will grow to $8-10 Billion in 2013.12

2.3 Gluten-free Cosmetics Amid rising demand for gluten-free foods, there is a notable lack of attention to gluten in cosmetics13. Gluten intolerant individuals spend hours of time and thousands of dollars ensuring that their diets are completely gluten-free, yet fail to realize that gluten is hiding in their makeup bags, causing breakouts or even more serious symptoms. A popular gluten-free blog lists over 20 common personal care product ingredients which contain gluten and an additional 10 which may be cross-contaminated.14 One of the most ubiquitous of these ingredients is Vitamin E oil, which may be derived from wheat, soy, or rice. If Vitamin E oil is derived from wheat, gluten contamination is inevitable. Cynthia Kupper of the Gluten Intolerance Group of North America says that gluten-free labeling on body care products has grown 43% over last year.15 Within the profitable gluten-free products industry, cosmetics are largely ignored. Only four companies offering full gluten-free certification of their cosmetics and a handful of others make a gluten-free claim.16 Unlike food and pharmaceuticals, cosmetics do not require pre-approval from the Food and Drug Administration (FDA) before going on store shelves. The FDA does not require companies to list ingredients on the product label, and this can cause big problems for consumers with gluten sensitivity.

10

Data taken from a webinar entitled “The Gluten Free Movement Within Specialty Foods”. Full powerpoint available upon request. 11 http://www.nytimes.com/2011/11/27/magazine/Should-We-All-Go-Gluten-Free.html?pagewanted=all 12 NASFT webinar. 13 http://news.consumerreports.org/health/2011/11/gluten-in-cosmetics-may-pose-risk-for-celiac-patients.html 14 http://www.naturallydahling.com/ingredients.html 15 http://supermarketnews.com/nonfood/more-nonfoods-labeled-gluten-free 16 According to the makeup list downloaded from the “Gluten Free Makeup Gal” blog http://www.glutenfreemakeupgal.com/

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The gluten-free cosmetics industry is disproportionately small relative to the gluten-free food industry, with potential for rapid growth. 17 Our own estimates lead us to believe that the glutenfree cosmetics industry had approximately $83 Million in sales in 2011.18 Because the market is fragmented and untapped, we project 20% annual growth in the next two years. Gluten is not known to be directly absorbed through the skin. While it is not a major risk in mineral-based makeup, it is a problem for products that may be ingested, such as lipstick, lip gloss and lip balm. The presence of gluten in cosmetics is an issue increasingly covered by the medical community, warning Celiac cosmetic users of the dangers of long term gluten ingestion directly linked to diarrhea, fatigue and weight loss19. During the American College of Gastroenterology's (ACG) 76th Annual Scientific meeting in 2011, Dr. Marie Borum, MD presented a case called "Body Lotion Causing A Celiac Exacerbation and Dermatitis Herpetiformis: Natural is Not Always Healthy." In the case, a 28 year old woman experienced exacerbation of Celiac symptoms and a recurring skin rash after applying a body lotion advertised as “natural.” These symptoms ended after the woman stopped applying the lotion. Dr. Borum presented the case as an illustration of the huge challenge Celiac patients face in trying to determine whether cosmetic ingredients contain gluten. 20 Another study unveiled during the meeting examined the products offered by the top ten cosmetic companies in the United States. The objective was to evaluate the availability of information about cosmetic ingredients and the accessibility of gluten-free products. The study found that products used on the lips and face resulted in unexpected exposure to gluten. Only two of the ten companies in the study offered detailed ingredient information and of the two companies, neither identified gluten sources, indicating a lack of readily available information on the presence of gluten in cosmetics. Topical application of cosmetics that contain wheat ingredients may also trigger an allergic reaction in people with allergies to wheat. The body mistakenly identifies wheat as a harmful agent and mounts an attack against it, causing a medical condition known as contact urticaria. The symptoms of contact urticaria commonly appear as redness, swelling, itching and hives. 17

In 2007, Food Manufacturing was a $590 Billion industry. (http://factfinder2.census.gov/faces/tableservices/jsf/pages/productview.xhtml?src=bkmk) In comparison, Cosmetics Manufacturing was $43 Billion. Assuming the gluten free cosmetics and food industries follow the proportionality of their mainstream counterparts, the gluten free cosmetics industry should be around $460 Million. However, this young industry is underdeveloped and highly fragmented. We estimate that gluten free cosmetics is at most an $80 Million dollar industry today, with potential for rapid growth in the next 3-5 years. 18 We estimated this number in two ways. First, we estimated that the gluten-free cosmetics industry was 1.4% as large as the gluten-free food industry estimated by SPINs (see above). This was based on the relative popularity of Google keyword searches on “gluten free” (3,350,000), “gluten-free food” (201,000, and “gluten-free makeup” (2,900). Second, we reviewed the list of 16 companies claiming to offer gluten free cosmetics (from Gluten Free Makeup Gal). We estimated that the average revenue for that group of companies is $5 Million x 16 = $80 Million. 19

http://celiacdisease.about.com/od/Coping_with_Celiac_Disease/tp/Make-The-Rest-Of-Your-Home-GlutenFree.htm 20 http://www.sciencedaily.com/releases/2011/10/111031114941.htm

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Cosmetics users who are allergic to wheat can best limit the risk of an adverse reaction by insuring their products are free of wheat proteins. The topical application of wheat-containing cosmetics may trigger even more severe reactions like anaphylaxis. Because of these consequences, people with wheat allergy must take extra precaution to ensure that their food and personal care products are free of wheat. Consumers can best avoid the risk of experiencing an allergic reaction by reading the list of ingredients on all their cosmetic products and keeping track of the products that cause a problem. The Mayo Clinic recommends that buyers “keep it simple” when looking for new products. 21 Amilie‟s products are made from simple formulas, allergen-free ingredients and we fully disclose the ingredients on the package. Our Lip Balm contains only three simple ingredients. Our products will not cause an allergic reaction because they are free from trace amounts of wheat and other allergens.

21

http://www.mayoclinic.com/health/wheat-allergy/DS01002/DSECTION=lifestyle-and-home-remedies

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3. Amilie Clean Cosmetics Amilie Clean Cosmetics (ACC) manufactures and distributes organic, gluten-free, top-8 allergen free makeup and personal care products. Our high-quality products are distributed online and through natural and specialty grocery stores carrying gluten-free products. Awareness of the benefits of organic products has grown dramatically in recent years, and is more than just a trend. In addition, many individuals are diagnosed with food allergies each year, and the rate of diagnosis for gluten intolerance is rising. Research in the gluten-free and food-allergy communities reveals that these individuals are confused and dissatisfied with current cosmetic offerings. In addition, our target market is growing. We identify our primary market as females ages 16-60 who suffer from a food allergy, especially gluten-intolerance. These customers have high purchasing power and are accustomed to spending more than average on allergen-free foods. Amilie Clean Cosmetics can create barriers to entry through strong branding, proprietary formulas, and a superior distribution network. We offer consumers full peace of mind through gluten-free and organic certifications.

3.1 Background Amilie Clean Cosmetics is a new startup, which we are serious about launching in June 2012. As the founders of Amilie Clean Cosmetics, we believe that our skills and passions are relevant to Amilie‟s mission. Sharon, the Chief Executive Officer, has nearly two years of experience working for a snack food company with critical knowledge and contacts in the gluten-free, natural products industry. Rachel, the Chief Operations Officer, has extensive experience in biology which will enable her to understand the formulation and scientific basis for our products. Rachel and Sharon are interested in working together to launch Amilie Clean Cosmetics after graduation as a side venture to their work and graduate school pursuits. To date, we have completed this business plan, prototyped products, built a website, and conducted beta testing and interviews with our target market. 22

22

Please reference Appendices 1 and 2 for complete details and a Five-Month Implementation Schedule.

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3.2 Value Proposition Amilie products offer consumers Peace of Mind. Amilie‟s value proposition encompasses the following key elements: 1. Peace of Mind – assuring consumers that Amilie products are safe 2. Quality – creating products that are effective and luxurious 3. Consumer Education – providing materials to inform consumers of the harmful ingredients in mainstream cosmetics 4. Honesty – fully disclosing the ingredients in our products 5. Purity – sourcing high-quality, organic ingredients for a pure end product

3.3 Barriers to Entry The gluten-free cosmetics industry is made up of a fragmented group of small companies. Barriers to entry exist, but can be overcome by smart and determined entrepreneurs. The greatest barrier to entry for Amilie is developing and retaining strong wholesale accounts in natural & specialty grocery. The costs of sourcing raw materials from certified organic and gluten-free suppliers are substantial, relative to generic ingredients. This forms a second barrier to entry in the gluten-free cosmetics market. The costs of equipment and manufacturing space are substantial, but may be lowered by working with a third-party manufacturer. However, such an arrangement risks contamination from gluten-containing ingredients. Consumer brand loyalty is a key barrier to entry. The gluten-free community is highly brandloyal, and many consumers have found makeup products which work well for them. Amilie faces the major challenge of overcoming that loyalty and persuading them to try a new brand. Finally, Amilie‟s extensive certifications from the GFCO, FDA, and others form barriers against competitors. These certifications are costly and require rigorous tests and periodic renewals.

3.4 Keys to Success Based on our extensive reading and networking in the gluten-free industry, we believe successful gluten-free cosmetics companies must:     

Educate consumers about the need for glutenfree cosmetics Provide 100% gluten-free products Create high quality, enjoyable products Offer a reasonable price-point Engage consumers through social media and consumer events

Consumer Education

Grocery Distribution

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 

Gain distribution in gluten-free and natural grocery stores Innovate frequently with new products

While Amilie will work to achieve all seven of these keys to success, we especially emphasize excellence in these three areas:   

100% Gluten-Free – Our first focus is on creating a line that is completely free of gluten, to give our consumers full peace of mind. Consumer Education –Amilie will become a thought leader on gluten-free cosmetics. Grocery Distribution – we will pursue distribution in gluten-free and natural grocery stores where consumers shop for gluten-free food products.

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4. Market Analysis 4.1 Customers We identify our primary market as females ages 16-60 who suffer from a food allergy, especially gluten-intolerance. These customers have high purchasing power and are accustomed to spending more than average on allergen-free foods. There are three key influences that drive these women to purchase cosmetics: 1. Women have an intense need to feel beautiful. In our high-pressure culture of supermodels and TV stars, most women struggle with deep-seated feelings of inadequacy. 2. Young women lead busy, active lives and seek out personal care products that will contribute to their long-term health and the good of the planet. They have grown up believing in the benefits of natural products and are attracted to organic foods and goods free of toxins and contamination. 3. Middle-aged women desire to turn back the effects of time and look young again. They spend billions of dollars each year in this pursuit. The demand for anti-aging products will continue to grow as the Baby Boomers age. Like all other women, our customers wear makeup to feel beautiful, young, and healthy. However, they have an additional need for products that will not exacerbate their severe gluten intolerance. Gluten often lurks in unlabeled cosmetics. Amilie offers the peace of mind of certified gluten-free, allergen-free cosmetics. Our target market is segmented into two subgroups: Primary Target Market

Secondary Target Market

Age

16-30

30-60

Gender23

Female

Female

Family

Single

Married with 2-3 children

Living Situation

High School/College/Young Professional

Works part time or stays home

Affluence

Upper-middle class

Upper-middle class

23

Women are diagnosed with Celiac Disease at a much higher rate than men. (http://www.glutenfreepages.com.au/CMS/index.php?page=celiac-age-sex-profile)

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Frequency of Makeup Purchase24

3-6 months

3-6 months

Purchase Behavior

Buy makeup for beauty

Buy makeup for anti-aging

Computer Use

Heavily involved in social media, use internet very frequently. Access through mobile devices.

Use some social media and internet during free time. Access through home computer.

Other Media Use

_

TV and print

Leisure Activities

Social events, health-related pursuits.

Family-oriented, health conscious.

4.2 Market Research On March 7th, we gave a brief presentation on Amilie Clean Cosmetics to a group of faculty and students. We asked participants to describe Amilie. They responded with words like “clean, simple, honest, natural, fresh, and wholesome.” One participant said “„Amilie‟ is a name that immediately captures me.” Design-specific words included “girlie, bright, pink and green.” One evaluator wrote “your website was comfortable and agreeable to me.” Participants also included terms pertaining to Amilie‟s viability such as “start-up, market share, opportunity for sound investment and growth.” The idea of healthy, “clean cosmetics” resonated with many participants, as seen from words like “healthy, pure, no allergens, organic, gluten free, all natural, cosmetics for a health conscious generation.” (See Appendix for more detail regarding the March 7th presentation) To ascertain the appeal of our products to the target market, we interviewed25 three young women with gluten intolerance. Emily Topp is a key contact, a junior at GCC with a severe form 24

Based on my personal buying behavior and internet articles, I estimate that most women purchase makeup every 3-6 months. (http://community.sephora.com/t5/Beauty-Confessions/How-often-do-you-replace-YOURmakeup/td-p/132417) 25

For greater detail, see Appendix.

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of Celiac disease. Emily is forming a new Celiac support group and we plan to attend the meetings. Elisa Angione is a junior with an undiagnosed case of Celiac disease and provided our team with scientific research reports on the genetics of gluten intolerance. Abby Pherson is a junior with Celiac disease and Crohn‟s disease, a condition related to Celiac. These friends were all very curious about and supportive of our idea, and expressed an interest in our products. Our team also attended the Celiac Awareness Tour event in Monroeville on January 28.

4.3 Market Size and Trends The gluten-free industry is growing. Over 18 million Americans have some form of gluten sensitivity and a study by the Mayo Clinic found a dramatic increase in the number of Celiac cases over the last ten years.26 Young people are five times more likely to have Celiac disease than youth in the 1950s.27 With greater awareness of Celiac disease and related gastrointestinal disorders, the demand for gluten-free cosmetics has increased. The natural personal care market accounts for over $6 billion in sales, climbing at an annual rate of 9%.28 Of this market, glutenfree cosmetics form an $83 Million niche. Over 96% of gluten-free customers are brand loyal. 29 Once Amilie wins the support of Celiac cosmetic users, it will enjoy long-lasting support from this core customer base. Consumer awareness of the need for gluten-free cosmetics is rising rapidly and will lead to significant growth in this sector during the next 3-5 years. The gluten-free cosmetics industry is made up of a large number of small companies. Amilie Clean Cosmetics has an opportunity to dominate this fragmented market with superior cosmetics and a focused message.

4.4 Estimated Market Share Amilie Cosmetics will gain share primarily from mainstream products that are crossing over into the gluten free category. Currently, these products are not labeled or easily identified as glutenfree, forcing consumers to contact the company directly and engage in dangerous guesswork. Amilie will also gain market share by utilizing an unusual go-to-market strategy which targets distribution through grocery and drugstore channels, rather than traditional beauty stores. Additionally, many existing gluten-free companies cannot offer the peace of mind of a glutenfree certification. With superior convenience, lower price points, and gluten-free certification, Amilie Clean Cosmetics will successfully gain market share.

Gluten-Free Cosmetics

2012 $83 Million

2013 $99.6 Million

2014 $119.52 Million

26

http://www.sciencedaily.com/releases/2003/12/031231084025.htm http://www.nytimes.com/2011/11/27/magazine/Should-We-All-Go-Gluten-Free.html?pagewanted=all 28 http://www.forbes.com/2007/10/31/clorox-burts-bees-markets-equity-cx_af_1031markets15.html 29 http://www.gluten.net/gfrap/list-your-restaurant.aspx 27

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Amilie Market Share

$91,294 0.1%

$191,583 0.2%

$343,500 0.3%

4.5 Competitors There are several small and medium sized players in this market. Of the 16 companies which produce gluten-free cosmetics, only 4 are formally tested and certified gluten-free30. The remainder of the market is commanded by mainstream products which happen to be gluten-free.

Price

Our key competitors are Arbonne, Gabriel Cosmetics Inc., Himalaya Herbal, and Red Apple Lipstick, profiled in the graph below. Each of these companies has their products tested for gluten by a professional lab.

31

Prominence of Gluten-free claim

30

Information from “Gluten Free Makeup Gal” product guide: http://www.glutenfreemakeupgal.com/ https://www.arbonne.com/shop_online/showitem.asp?ProductId=7877&menuId=257&withLinks=1 http://www.himalayausa.com/Botanique/skincare/lip-care.htm http://www.gabrielcosmeticsinc.com/index.cfm?fuseaction=product.display&product_ID=8&ParentCat=8 http://www.redapplelipstick.com/red-lipstick/red-lipstick-by-red-apple.html Amilie will pursue a mid-range price point with extremely strong emphasis on the gluten-free status of all our products. 31

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   

Arbonne – offers a wide range of products which are gluten free. However, the glutenfree claim is not prominently displayed on their website and packaging. Himalaya Herbal – low-cost products with gluten-free label. However, their selection focuses more on personal hygiene items and lacks quality makeup. Gabriel Cosmetics – offer a limited number of gluten-free products. High prices. Red Apple Lipstick – offer high-quality lipstick with a clear gluten free claim. It does not offer any other items.

Based on this competitive analysis, we believe Amilie Clean Cosmetics can command market share in the gluten free niche by offering high quality makeup products for a medium price point with a clear gluten free label.

4.6 Differentiation Amilie is differentiated from competitors on the basis of: 1. 2. 3. 4.

Gluten-free certification by the GFCO Full disclosure of ingredients Lower prices than many competitors Scientific consumer education

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5. Marketing Plan 5.1 Positioning Amilie sells peace of mind to the consumer through gluten free products. Our cosmetics are positioned based on their high-quality, pure ingredients, and our honesty about what is in them. Our brand personality is simple, friendly, and relaxed. To explore the look and feel characteristics of Amilie, visit our website – www.amiliecosmetics.com

5.2 Pricing Strategy Amilie products will command a mid-to-high price point relative to competitors, as shown here: MSRP $2.99 $29.99 $11.99

Product Lip Balm Foundation Eye Shadow Lip Balm – 0.15 oz.

$0.51

Gross PM

Wholesale Price (case of 36)

$1.65

69%

Retail Price

$2.99

83%

Cost per Unit i

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This price places us between mainstream and high end lip care products, level with well-known natural brands, such as Burt‟s Bees. Mineral Foundation – 0.3 oz. Cost per Unit

$4.48

Gross PM

Wholesale Priceii (case of 6)

$16.55

73%

Retail Price

$29.99

85%

Cost per Unit

$3.98

Gross PM

Wholesale Priceiii (case of 12)

$6.75

40%

Retail Price

$11.99

67%

Eye Shadow – 0.1 oz.

Because prototyping of our Eye Shadow is not yet complete, these numbers are tentative. (See Appendix for the assumptions underlying our pricing structure.) We project the follow unit sales for each product line in Years One through Three. The resulting dollar revenue amounts are calculated on the basis of our wholesale case price. Product Lip Balm

Year One Cases 599 35,580 $

Year Two 1257 $74,666

Year Three 2250 $133,650

Eye Shadow

Units $

230 18,630

483 $39,123

865 $70,065

Foundation

Units $

409 40,613

858 $85,200

1535 $152,425

Online & Direct to consumer sales will make up about 8% of the dollar volume of total sales. These sales will be at the retail price, and command a higher average Net Profit Margin of 80%, compared to our wholesale average Net Profit Margin of 63%.

Composite Net Profit Margin = 64% Composite COGS32 = 36% of Sales 5.3 Sales & Distribution Because Amilie will sell products through two primary distribution channels, we have two different selling cycles, which are outlined here: 32

Industry leaders, such as Revlon have COGS equal to 35% of Sales

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Sales Cycle 1. Prospect for leads 2. Make contact 3. Qualify the lead

Direct to Consumer via www.amiliecosmetics.com Search Engine Optimization to generate leads, promotion of products through giveaways and consumer events. Consumer clicks on website, enters contest, or tries a free sample. Consumer desires gluten-free cosmetic products.

4. Presentation

Materials on website inform consumer about the benefits of Amilie.

5. Meet Objections & Concerns 6. Close the Sale

Customer service will answer emails and phone calls with questions or concerns.

7. Follow Up

Email customers to ascertain the quality of their experience.

Customer purchases a product through the online store.

Stores & Distributors Gather leads through trade shows and industry networks. Make contact through trade shows or introductions Buyer understands the gluten-free market and need for cosmetics. Formal sales presentation with powerpoint, or less formal phone call. Take questions following the presentation/call. Customer agrees to purchase a quantity of product upon negotiated terms. Call back regularly to check on the status of products and any concerns.

We will receive payment for consumer orders via credit card. Wholesale orders may be paid by credit card or check, depending on size and consumer preference. a. Trade Shows In our first year, we will attend the Natural Products Expo East.33 Expo East provides the opportunity to reach to the largest buying audience for natural, organic and healthy products on the East Coast. At the event, we have the potential to reach 25,000 industry members. Because of the high cost of this event and the age of our company, we will not attend other industry trade shows in 2012. b. Distribution We will also call directly on gluten-free independent grocery stores to promote our products. Some consumers will discover our products on the shelves of their local store. After startup, our communication with consumers and customers will remain essentially the same: internet marketing, consumer events, trade shows, and distribution. The primary difference 33

(http://www.expoeast.com/expoeast2012/public/enter.aspx) Booth costs $3,600, plus fees, travel, plus booth design, free products samples. Total cost approximately $7000.

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will be the quantity of these activities. During the first five years of operations, we will steadily increase our marketing budget and will attend more consumer events and trade shows to drive revenue growth.

5.4 Promotions Mix a. Internet Marketing We will pursue an integrated strategy of internet marketing to drive customers to our website. These efforts will be segmented by age group: ●

16-30 Group: These young consumers use social media and search heavily, and are likely to use a smartphone or other mobile device. 34 We will reach the younger portion of our target market through a campaign to create internet buzz. This will include Facebook ads, Google adWords, excellent SEO, and free giveaway contests. 35 ● 30-50 Group: Middle-aged women are the largest group of social media users. This this age group has become remarkably interested in blogging and related outlets, such as Pinterest. Our social media and SEO efforts will effectively reach this group. We will also employ tactics involving reviews and giveaways by influential bloggers.36 b. Consumer Events The Celiac community is robust and growing, with a network of support groups and events. Amilie will reach consumers on the grassroots level by participating in and sampling at consumer events. 37 ● Provide Celiac support groups with free samples and product information. 38 ● Distribute information and samples at consumer events: 39 ● Celiac Awareness Tour 40 ● The Great Gluten-free Expo 41 ● Gluten Free for Life Expo

34

http://pewresearch.org/pubs/1484/social-media-mobile-internet-use-teens-millennials-fewer-blog http://blog.nielsen.com/nielsenwire/online_mobile/for-social-networking-women-use-mobile-more-than-men/ 36 Internet Marketing Costs: Facebook ads $150/month, giveaways $100/month, free samples for bloggers $100/month = $4,200 in the first year. 37 Celiac support groups are present in all areas of the country. This list is outdated, but provides an idea of the prevalence of these communities: (http://www.enabling.org/ia/celiac/groups/groupsus.html) In the first year, we will send $100 worth of product to 12 influential support groups. Our budget for this activity is $1,200 38 The events listed here are a few of many. More complete listing available here: (http://www.celiaccentral.org/community/Upcoming-Events/78/) (http://www.healthandfitnessexpos.com/gluten_free_expos.html) 39 Hosts recurring events in several locations in the northeast. Estimate cost (based on personal experience) $2,000 with samples and travel. (https://www.facebook.com/celiacawarenesstour) 40 (http://www.bhamkidsandfamily.com/home/2011/10/gluten-free-expo/) Approximate cost unavailable. Estimate $2,000. 41 (http://glutenfreeforlifeexpo.blogspot.com/) Approximate cost: $350 for booth, plus travel and samples = $2,000 35

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6. Operations Amilie will manufacture, market, and distribute high-quality, gluten-free cosmetic products. Our operating model and procedures are explained in the following sections.

6.1 Operations Model Below is a diagram highlighting the workflow of tasks at Amilie. The tasks outlined in purple will be the primary responsibilities of Rachel. Sharon will be responsible for tasks outlined in green.

Source Ingredients & Packaging Manufacture Products

Direct Sales

Web Marketing

Fill Wholesale Orders

Ship Web Orders

Follow Up

Follow Up

Consumer Events

Answer customer concerns & complaints

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6.2 Facilities and Equipment Because of the importance of the gluten-free claim to Amilie‟s value proposition, we feel that it is important to keep manufacturing in-house in a dedicated gluten-free facility. This will eliminate the possibility of cross-contamination and enable us to offer our customers greater peace of mind. Our products will be produced and packaged in a dedicated facility by trained part-time employees. Based on a quick survey of available properties in Cincinnati, Ohio the cost of such a space should be $2.50 - $5.00 per square foot. All of Amilie‟s products can be produced manually for test marketing and early sales. Later, quality machinery will be required. Cosmetics machinery can be expensive, but full-scale machinery is not necessary for niche startups. There are two types of machines which apply to the manufacturing of our cosmetics products: 1. Lip Balm Filling Machine –quoted cost with shipping, $30,000 2. Powder Compacting Machine – quoted cost with shipping, $71,500 At startup, Amilie will purchase a Lip Balm Filling Machine. The equipment will be depreciated over four years. The lip balm machine is fairly compact and will not take up much space. Thus, the majority of our facility will be devoted to the storage of ingredients and finished products on large industrial shelves. Based on our budget for Year One, we will carry up to $5,000 of raw materials during the first year. During the first year, our maximum total inventory on hand will be $4,000 during the first year. 15 square feet will be devoted to storing this inventory, based on the following assumptions: Product

Case Size

Lip Balm Eye Shadow Mineral Foundation

4 x 6 x 3” 4 x 6 x 3” 4 x 3 x 3”

Cases in Inventory 83 30 57

$ Value $1344.6 1436.4 1347.48

Shelves Required 1/3 1/3 1/3

We will use industrial shelving42 to store inventory, estimating that each shelving unit will require 15 square feet of space. Our raw materials and packaging inventory will require an additional three industrial shelves, for a total around 50 square feet of storage space. In addition, the facility will contain 30 square feet of flat work-space containing a sink with hot and cold 42

http://www.homedepot.com/h_d1/N-5yc1v/R-100661857/h_d2/ProductDisplay?catalogId=10053&langId=1&keyword=industrial+shelves&storeId=10051

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water. Each of the necessary machines has a footprint of approximately 50 square feet. Thus the total space consumed by shelving, work-surfaces, and machinery is 130 square feet. Based on this, we estimate that space required during the first year of operations will be 500 square feet. For the first three years, we will house manufacturing in extra space in Rachel‟s home in Cincinnati, OH. Space requirements will grow with sales, incurring the following costs: Space Needed Cost ($4 / sq ft)

Year One 500 sq feet $-

Two 500 $-

Three 500 $-

Four 1000 $4000

Five 1000 $4000

6.3 Development Status We have selected products for initial development based on three criteria:

1. High Profit Margins

2. Simple Manufacturing

3. Widespread Use

a. Lip Balm Our Lip Balm is a soft and nourishing compound of organic oils, waxes, and flavors. Lip Balm is spread generously over the lips to alleviate chapping and add attractive shine.

Status: Prototyping & Testing Complete Our Lip Balm is currently formulated in a fresh and pleasant Orange Cream flavor. It is made from a simple formula of beeswax, olive oil and orange extract. The simplicity of its formulation provides a high quality flavor and texture that soothes chapped lips and leaves a long-lasting fresh, fragrant flavor. We will develop two additional fruit-inspired flavors, for a total of three SKUs in our Lip Balm line. Lip balm is packaged in 0.07oz. slim-line lip balm tubes. These tubes are longer and thinner than standard lip balm tubes, creating a uniquely upscale look and feel. Each

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tube is affixed with a colorful label in compliance with FDA cosmetics labeling guidelines.43 Our Lip Balm tubes will be available individually or by the case of 36. (See Section 5.3 – Pricing Strategy for more details) Because our Lip Balm is made from natural ingredients, we recommend that the product is used within 12 months after opening. b. Mineral Foundation Mineral Foundation is a soft, loose powder containing a variety of minerals, natural pigments, and oils. It is available in a variety of skin-tones. The semi-opaque powder is brushed over the facial area to give the skin a smooth, even appearance before the application of additional makeup, much like primer is applied to walls before painting.

Status: Research & Development Our Mineral Foundation will be formulated in six shades to match a variety of skin tones and packaged in 30 gram sifter jars for easy dispensing onto makeup brushes. Foundation jars will be sold individually, or by cases of 6. Our Mineral Foundation has a shelf-life of three years. c. Eye Shadow Eye Shadow is a soft compound of minerals, pigments, and oils which are pressed firmly into a small container or palate. Eye Shadow is available in almost every color imaginable, and is blended on the eyelid with a small brush or sponge to add color and draw attention to the eyes.

Status: Research & Development Our Eye Shadow will be formulated in three popular shades: Soft Pink, Lavender, and Blue. The Shadows will be packaged in 10 gram jars for convenient use with small brushes and sponges. Eye Shadows will be sold individually and by the case of 12. Our Eye Shadow has a shelf-life of three years. d. Product Improvement and New Products Amilie New products will be developed in response to trends and consumer requests and comments received through surveys, emails, and social media. They may include expansion of existing product lines or addition of new cosmetic products.

43

http://www.fda.gov/Cosmetics/CosmeticLabelingLabelClaims/default.htm

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Publicly traded industry leaders spend about 2-4% of revenue on Research & Development. Therefore, ACC‟s budgeted R&D costs are as follows: Year One

Year Two

Year Three

Year Four

Year Five

Revenue

$91,294

$191,583

$343,500

$551,622

$775,914

R&D (3%)

$2,738

$5,747

$10,305

$16,548

$23,277

6.4 Intellectual Property Our intellectual property will consist of trade secrets surrounding the formulation of our products and trademarks protecting our brand identity. Trade secrets will be protected through careful employee training and division of labor within the manufacturing process. Our name and logo trademarks will be registered through an attorney at startup.

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7. Management Team and Company Structure 7.1 Key Management Personnel Sharon Seiter and Rachel Brockhage are founding managers at Amilie. Sharon has experience in the gluten-free industry through her work with the Mediterranean Snack Food Company and a broad set of business skills gained through her Entrepreneurship degree.

X

R&D

X

Web Management

X

X

HR

X

Marketing & Sales

X

Customer Service

Accounting

X X

Manufacturing & Shipping

Finance

Rachel Sharon

Executive Leadership

Rachel has research experience in clinical chemistry, nanotechnology and a background in biology. The skill profile of each of the founders is outlined here. See the organizational chart in section 6.1 – Operations Model for a breakdown of primary responsibilities. See the Appendix for detailed resumes of both founders.

X X

7.2 Management Compensation and Ownership Sharon and Rachel are equal joint owners of Amilie Clean Cosmetics (See Appendix for full Partnership Agreement). Their monetary investment in the company is as follows:

Sharon Seiter Rachel Brockhage

Invested $130 $75

Committed $4870 $4925

Total $5,000 $5,000

During Year One and Year Two, founders will each be compensated with 12.5% of total revenue. In Year Three, they will each receive salaries of $40,000, growing to $50,000 and $60,000 in Years Four and Five respectively.

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7.3 Board of Advisers We are currently in the process of selecting a board of knowledgeable individuals to offer advice and guidance to Amilie Clean Cosmetics. Our board will include:      

Mike Ellison, Owner of Ellison Group, company dedicated to manufacturing world-class surface technologies Professor George Howley – business planning expert. Mike Ellison – successful entrepreneur and CEO. Mary Kate Breese – accounting student. Emily Topp – student with Celiac disease and numerous food allergies. Steve Myers – VP of Sales at Mediterranean Snacks with over 25 years of sales experience in natural foods.

7.4 Operations Expansion Plan During the first six to twelve months of operations, Sharon and Rachel will operate Amilie as a part-time venture. Once the venture breaks even and begins to grow, they will develop the venture full time. As Amilie grows, certain gaps in the founders‟ experience may be filled by mentoring from the Board of Advisers. They will seek out advisers with skills in sales, R&D and operations, and manufacturing during the early months of launching Amilie. These areas are critical to success, and Amilie will benefit from the expertise of qualified consultants in the cosmetics industry. While we have a strong management team, maximizing growth will require more personnel with a diverse range of skills. After the first year of operations, Amilie will pursue the following team expansions, with an emphasis on acquiring experienced individuals in the natural products industry. The cost of hiring employees to assist in the production, packing, and shipping of products is included in Cost of Goods Sold (See Appendix). As students, we believe in the benefits of internships, and would like summer interns to figure prominently in the startup of Amilie. We will select interns with strong marketing skills to drive consumer interest and sales growth.

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8. Critical Risks, Problems, and Assumptions This business plan contains several key assumptions, which could pose a risk to Amilie if they are not realized. We assume that the gluten-free cosmetics industry will experience rapid and sustained growth, enabling Amilie to grow 110% in Year Two, 80% in Year Three, 60% in Year Four, and 40% in Year Five. (See Appendix for full Financial Assumptions). Based on industry growth projections, we believe these growth figures are attainable. It is assumed that our materials will be available on time and in sufficient quantities. Difficulty sourcing organic materials and packaging could cause production to grind to a halt. Diversified supplier relationships will be critical to mitigating this risk, and we will order each ingredient from a minimum of two different suppliers. Another assumption is that Amilie will be able to reach a sufficient number of consumers and stores to meet sales projection. Without these key distributions channels, sales may be unsustainably low. In light of this risk we have added Steve Myers to our advisory board to mentor us in the natural food sales process. Some legal risk is inherent in the production of consumer products, such as makeup. To protect against legal issues, damage claims, and lawsuits, Amilie will carry general liability insurance. It is assumed that Amilie will be able to meet the standards required for FDA, GFCO, and other certifications. Based on the simplicity of our manufacturing process and careful sourcing of organic ingredients, we will be able to fulfill this assumption. The greatest risk for Amilie is relatively low barriers to entry for competitors. It is possible that major cosmetics companies could re-label their products as gluten-free, however this is unlikely because of the small size of the gluten-free niche relative to the whole market. Small, entrepreneurial competitors may respond with similar products. Amilie‟s barriers against such future competitors will be strong wholesale account relationships, sourcing relationships, the expense of manufacturing equipment, strong brand loyalty within the gluten-free community, and extensive certification processes. The brand loyalty working in Amilie‟s favor could also be a problem during startup. Because the gluten-free community is strongly brand loyal, many consumers are hesitant to try new brands. Overcoming this problem will be possible with strong, intentional marketing efforts, as outlined earlier. Finally, Amilie Clean Cosmetics will face the cash flow problems common to young businesses. There is a risk that the venture will be undercapitalized. Therefore, investments at startup must be sufficient. Startup Capital of $50,000 will help alleviate cash flow difficulties while the company grows to maturity. In addition, Amilie will carry a $10,000 line of credit for cash flow emergencies. 33 of 72

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9. Financial Plan Pro Forma financials for Amilie are displayed below, with additional detailed financials in the Appendix. Startup capital of $50,000 will fuel inventory buildup and cash flow, while sales grow to sustainable levels. For information on the seasonality of the cosmetics industry, please see the Appendices.

9.1 Startup Cash Amilie Clean Cosmetics will begin operations with a cash balance of $16,950, $550 in inventory, and $32,500 in Equipment. Startup capital required is $50,000 and will be used as follows:

Startup Capital Amount

Capital Investments

$2,000

Computer Equipment

$30,000

Manufacturing Equipment

$500

Other Equipment Amount

Operating Expenses Legal Services

$3,000

Licenses and permits

$1650

Prepaid insurance

$500

Starting inventory

$550 $11,700

Cash (working capital)

$100

Line of Credit Annual Renewal Fee Total Startup Cash Needed =

9.2 Source of Funds

$50,000

Sources of Funds

The chart at right illustrates our plan for raising necessary startup cash.

$10,000 Founders

We are currently seeking $28,000 of additional outside funding.

$2,000 $28,000 $10,000

Business Plan Competition Prizes Family and Friends Funds Needed

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9.3 Financial Assumptions Sheet Below is an alphabetized list of the assumptions underlying each item in our financials. 

Accounting Costs - Accounting Costs are calculated based on fees of $0.50 per transaction (with an average transaction size of of $72) plus $100 for financials.

                  

Capital Expenditures – We will purchase $32,500 of equipment at startup, to be depreciated over four years. Computers for Rachel and Sharon will cost approximately $5,000 each, as reflected in starting capital expenditures. Cost of Good Sold = 36% of Revenue, based on our Pricing Assumptions (11.3) and the P&L statements of industry leaders, such as Revlon. Credit Sales = 80% of wholesale sales Ending Inventory = 50% of the following month‟s projected COGS. Insurance – we will carry $1,000,000 of general liability insurance. Legal Costs - Legal Costs are based on fees of $200 - $250 per hour. We estimate requiring 20 hours of legal service in the first year.

Legal Services at startup will cost approximately $3,000. This spend is in addition to the ongoing item listed in our budget. Licenses – the state of NJ requires a Wholesale Food/Cosmetics License. For companies with under $100,000 in sales, the fee is $150. For companies with over $500,000 in sales, the fee is $500. We also include annual costs of $1,500 for maintaining our gluten free certification with the GFCO. Line of Credit - According to conversations with our banker, we will be able to secure a $10,000 line of credit with cosigners for an annual fee of $100, and can expect an interest rate of around 6.25% Marketing - Internet Marketing Costs: Facebook ads $150/month, giveaways $100/month, free samples for bloggers $100/month = $4,200 in the first year. Marketing to Consumer events and support groups = $8,000 (see marketing plan).

Online Sales = 7.5% of total sales Purchases – 50% of purchases will be paid in the month of purchase. Research & Development – based on the budgets of Revlon, Estee Lauder, and others, we project R&D as 3% of revenue. Rent – See Section 6.2 Salaries – Rachel and Sharon each receive a salary equal to 25% of sales. Additional salaries are explained in Section 7.4. Sales - Revenue numbers are forecast based on our ability to receive about 20 online orders of $5 each and 18 wholesale orders of about $200 each during the first month and grow sustainably thereafter according to industry trends (see Section 1)

Seasonality –Amilie‟s seasonality will include: slow, gradual sales during the summer, sustained growth starting in September and lasting through early January, steady decline during the spring. (see 11.8) Shipping – The shipping costs listed cover shipping of wholesale orders to customers. (Online orders will have shipping covered as an additional charge) The average order Wholesale order will be $72 with $7 cost of shipping.

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9.4 Pro-Forma Income Statement

Amilie Clean Cosmetics Pro Forma Income Statement

Year 1

Year 2

Year 3

Year 4

Year 5

$91,294

$191,583

$343,500

$551,622

$775,914

32,866

68,970

123,660

198,584

279,329

58,428

122,613

219,840

353,038

496,585

22,824

47,896

80,000

100,000

120,000

2,739

6,287

10,845

19,189

25,917

600

1,354

2,429

3,900

5,486

8,876

18,626

33,396

53,630

75,436

0

0

4,000

4,000

13,694

28,737

51,525

82,743

116,387

7,992

5,000

7,500

10,000

10,000

1650

2000

2000

2000

2000

100

100

100

100

100

Insurance

2,000

2,000

2,000

2,000

2,000

Research & Development

2,738

5,747

10,305

16,548

23,277

Miscellaneous

1,999

4,196

7,523

12,081

16,993

65,212

121,942

207,623

306,191

401,596

($6,784)

$671

$12,217

$46,847

$94,989

-7%

0%

4%

8%

12%

Revenue Cost of Goods Sold Gross Profit

Operating Expenses Salaries Payroll Taxes Office Supplies Shipping Rent Marketing & Promotions Legal & Accounting Services Licenses & Permits Line of Credit

Total Operating Expenses

Net Income:

Net Profit Margin

-

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Amilie Clean Cosmetics Pro Forma Income Statement – Year One

June

July

August

September

October

November

December

January

February

$1,007

$4,168

$5,158

$5,764

$6,578

$7,869

$9,133

$10,316

363

1,501

1,857

2,075

2,368

2,833

3,288

$644

$2,667

$3,301

$3,689

$4,210

$5,036

252

1,042

1,290

1,441

1,645

Payroll Taxes

30

125

155

173

Office Supplies

50

50

50

Shipping

98

405

151

Legal & Accounting Services Licenses & Permits

Revenue Cost of Goods Sold Gross Profit

March

April

May

$11,164

$10,777

$9,873

$9,486

3,714

4,019

3,880

3,554

3,415

$5,845

$6,602

$7,145

$6,897

$6,319

$6,071

1,967

2,283

2,579

2,791

2,694

2,468

2,372

197

236

274

309

335

323

296

285

50

50

50

50

50

50

50

50

50

501

560

640

765

888

1,003

1,085

1,048

960

922

625

774

865

987

1,180

1,370

1,547

1,675

1,617

1,481

1,423

3,416

416

416

416

416

416

416

416

416

416

416

416

1650

-

-

-

-

-

-

-

-

-

-

-

Operating Expenses Salaries

Rent Marketing & Promotions

Line of Credit

100

Insurance

166

166

166

166

166

166

166

166

166

166

166

166

Research & Development

228

228

228

228

228

228

228

228

228

228

228

228

Miscellaneous

166

166

166

166

166

166

166

166

166

166

166

166

6,307

3,223

3,746

4,065

4,495

5,174

5,841

6,464

6,912

6,708

6,231

6,028

($5,663)

($556)

($445)

($376)

($285)

($138)

$4

$138

$233

$189

$88

$44

Total Operating Expenses

Net Income:

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Amilie Clean Cosmetics Pro Forma Income Statement - Year Two

June

September

October

November

December

January

February

$11,720

$12,228

$14,181

$16,642

$20,041

$21,994

4,219

4,219

4,402

5,105

5,991

7,215

$6,027

$7,501

$7,501

$7,826

$9,076

$10,651

2,355

2,930

2,930

3,057

3,545

Payroll Taxes

463

532

532

367

Office Supplies

113

113

113

Shipping

916

1,139

1,413

Revenue Cost of Goods Sold Gross Profit

July

August

March

April

May

$9,418

$11,720

$22,424

$19,025

$17,072

$15,119

3,391

7,918

8,073

6,849

6,146

5,443

$12,826

$14,076

$14,351

$12,176

$10,926

$9,676

4,161

5,010

5,499

5,606

4,756

4,268

3,780

425

499

601

660

673

571

512

454

113

113

113

113

113

113

113

113

113

1,139

1,189

1,379

1,618

1,948

2,138

2,180

1,850

1,660

1,470

1,758

1,758

1,834

2,127

2,496

3,006

3,299

3,364

2,854

2,561

2,268

416

416

416

416

416

416

416

416

416

416

416

416

2000

-

-

-

-

-

-

-

-

-

-

-

Operating Expenses Salaries

Rent Marketing & Promotions Legal & Accounting Services Licenses & Permits Line of Credit

100

Insurance

166

166

166

166

166

166

166

166

166

166

166

166

Research & Development

479

479

479

479

479

479

479

479

479

479

479

479

Miscellaneous

349

349

349

349

349

349

349

349

349

349

349

349

8,770

7,882

7,882

7,970

8,999

10,297

12,088

13,119

13,346

11,554

10,524

9,495

($2,743)

($381)

($381)

($144)

$77

$355

$738

$958

$1,005

$622

$402

$181

Total Operating Expenses

Net Income:

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Amilie Clean Cosmetics

Amilie Clean Cosmetics Pro Forma Income Statement - Year Three

September

October

November

December

January

February

$21,096

$22,010

$25,526

$29,956

$36,074

$39,589

7,594

7,594

7,924

9,189

10,784

12,986

$9,986

$13,502

$13,502

$14,086

$16,337

$19,172

6,666

6,666

6,666

6,666

6,666

Payroll Taxes

648

813

813

660

Office Supplies

202

202

202

1,517

2,051

2,340 625

Revenue Cost of Goods Sold Gross Profit

June

July

August

March

April

May

$15,603

$21,096

$40,363

$34,245

$30,729

$27,213

5,617

14,252

14,531

12,328

11,063

9,797

$23,088

$25,337

$25,832

$21,917

$19,666

$17,416

6,666

6,666

6,666

6,666

6,666

6,666

6,666

766

899

1,082

1,188

1,211

1,027

922

816

202

202

202

202

202

202

202

202

202

2,051

2,140

2,482

2,912

3,507

3,849

3,924

3,329

2,988

2,646

3,164

3,164

3,301

3,829

4,493

5,411

5,938

6,054

5,137

4,609

4,082

625

625

625

625

625

625

625

625

625

625

625

Operating Expenses Salaries

Shipping Rent Marketing & Promotions Legal & Accounting Services Licenses & Permits

2000

-

-

-

-

-

-

-

-

-

-

-

Line of Credit

100

Insurance

166

166

166

166

166

166

166

166

166

166

166

166

Research & Development

858

858

858

858

858

858

858

858

858

858

858

858

Miscellaneous

627

627

627

627

627

627

627

627

627

627

627

627

15,749

15,172

15,172

15,245

16,221

17,448

19,144

20,119

20,333

18,637

17,663

16,688

($5,763)

($1,670)

($1,670)

($1,159)

$116

$1,724

$3,944

$5,218

$5,499

$3,280

$2,003

$728

Total Operating Expenses

Net Income:

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Amilie Clean Cosmetics

9.5 Pro-Forma Balance Sheet Amilie Clean Cosmetics Balance Sheet

Starting

Year 1

Year 2

Year 3

Year 4

Year 5

16,950

12,190

16,851

28,943

73,103

156,152

6,371

10,118

18,213

29,140

40,796

550

2,110

3,797

6,076

8,506

11,908

17,500

20,671

30,766

53,232

110,749

208,856

32,500

32,500

32,500

32,500

32,500

32,500

8,125

16,250

24,375

32,500

32,500

32,500

24,375

16,250

8,125

0

0

Total Long-term Investments:

32,500

24,375

16,250

8,125

0

0

Total Assets:

50,000

45,046

47,016

61,357

110,749

208,856

1,830

3,129

5,253

7,797

10,915

0

1830

3129

5253

7797

10915

0

1830

3129

5253

7797

10915

50,000

50,000

50,000

50,000

50,000

50,000

-6,784

-6,113

6,104

52,952

147,941

ASSETS Current Assets: Cash & Cash Equivalents Accounts receivable Inventory Total Current Assets Long-term Investments: Property, plant, and equipment Accumulated depreciation Net:

LIABILITIES & EQUITY Current Liabilities: Accounts payable Line of Credit Total Current Liabilities Long-term Liabilities: Long-term debt Total Long-term Liabilities: Total Liabilities: Equity: Paid-in Capital Retained Earnings Total Equity:

50,000

43,216

43,887

56,104

102,952

197,941

Total liabilities & Equity

50,000

45,046

47,016

61,357

110,749

208,856

Monthly balance sheets for the first three years of operations are included in the Appendix.

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Amilie Clean Cosmetics

9.6 Pro-Forma Cash Flow Statement Amilie Clean Cosmetics Cash Flow Statement

Year 1

Year 2

Year 3

Year 4

Year 5

Operating Activities Net Income

($6,784)

$671

$12,217

$46,847

$94,989

Accounts Receivable

-6,371

-3,747

-8,095

-10,927

-11,656

Inventory

-1,560

-1,687

-2,279

-2,430

-3,402

1,830

1,299

2,124

2,544

3,118

8,125

8,125

8,125

8,125

0

($4,760)

$4,661

$12,092

$44,159

$83,049

Purchase of Long-term investments

0

0

0

0

0

Cash Generated by Investing

0

0

0

0

0

0

0

0

0

0

Add: Decreases in Non-cash Current Assets

Increases in Current Liabilities Accounts Payable Depreciation Cash Generated by Operations: Investing Activities

Financing Activities Line of Credit Cash Generated by Financing

Net Increase in Cash

($4,760)

$4,661

$12,092

$44,159

$83,049

Cash & Cash Equivalents at Beginning of Year

16,950

12,190

16,851

28,943

73,103

Cash & Cash Equivalents at End of Year

$12,190

$16,851

$28,943

$73,103

$156,152

Free Cash Flow

($4,760)

$4,661

$12,092

$44,159

$83,049

Monthly cash flow statements provided in the Appendix.

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Amilie Clean Cosmetics

9.7 Breakeven Analysis Below is a Breakeven Analysis for Amilie Clean Cosmetics based on our monthly pro-forma income statements for the first two years of operations. Breakeven will occur in November 2012. During the seasonal lull of Summer 2013, income will become negative again for a short period of time, before turning strongly positive in Fall 2013.

Amilie Cosmetics - Breakeven Analysis $2,000.00 $1,000.00 $$(1,000.00) $(2,000.00) $(3,000.00) $(4,000.00) $(5,000.00) $(6,000.00)

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Amilie Clean Cosmetics

11.Appendix 11.1 Partnership Agreement PARTNERSHIP AGREEMENT Date: March 17, 2012 Commences March 17, 2012 Location: Grove City, PA

This partnership agreement is made on this seventeenth day of March, 2012, between the individuals listed below: Sharon Seiter Rachel Brockhage

The partners listed above hereby agree that they shall be considered partners in business upon the commencement date of this PARTNERNSHIP AGREEMENT for the following purpose: The terms and conditions of this partnership are as follows: 1) The NAME of the partnership shall be: Amilie Clean Cosmetics The PRINICPAL PLACE OF BUSINESS of the partnership shall be: 7726 Laurel Avenue Madeira, Ohio 45243 2) The CAPITAL CONTRIBUTION of each partner to the partnership shall consist of the following property, services or cash to which each partner agrees to contribute: Name of partner Sharon Seiter Rachel Brockhage

Capital contribution

Agreed-upon cash value

Percent share (%)

50%

$55,000

50

50%

$55,000

50

Furthermore, the PROFITS AND LOSSES of the partnership shall be divided by the partners according to a mutually agreeable schedule and at the end of each calendar year according to the proportions listed above. 3) Each partner shall have equal rights to MANAGE AND CONTROL the partnership and its business. Should there be differences between the partners concerning ordinary business matters, a decision shall be made by unanimous vote. It is understood that the partners may elect one of the partners to conduct day-to-day business of the partnership; however, no partner shall be able to bind the partnership by act or contract to any liability exceeding $1,000 without the prior written consent of each partner. 4) In the event a partner WITHDRAWS from the partnership for any reasons, including death, the remaining partners may contribute to operate the partnership using the same name. The withdrawing partners shall be obliged to sell his or her interest in the partnership. No partner shall TRANSFER interest in the partnership to any another party without the written consent of each partner.

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Amilie Clean Cosmetics 5) Should the partnership be TERMINATED by unanimous vote, the assets and cash of the partnership shall be used to pay all creditors with the remaining amounts to be distributed to the partners according to their proportionate share. 6) Any DISPUTES arising between the partners as a result of this agreement shall be settled by voluntary mediation. Should mediation fail to resolve the dispute, it shall be settled by binding arbitration. In witness thereof, this PARTNERSHIP AGREEMENT has been signed by the partners on the day and year listed above.

Partner___________________________________________________________

Partner___________________________________________________________

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Amilie Clean Cosmetics

11.2

Founder Resumes

Sharon K. Seiter Home: 332 Rockaway Valley Road – Boonton, NJ 07005 College: Box #2720 – 200 Campus Dr. – Grove City, PA 16127 Email: [email protected] Cell Phone: 973-461-3802 OBJECTIVE Locate a challenging position in an organization seeking an optimistic, tenacious, and innovative individual with strong team-building skills. EDUCATION Grove City College – Grove City, PA BS in Entrepreneurship – May 2012 GPA 3.88/4.00 – Dean‟s List EXPERIENCE Mediterranean Snacks – Intern Marketing Brand Coordinator – Boonton, NJ Summer 2010-Present  Supported growth of Facebook fans from 300 to 7,500 in three months.  Gained Content Marketing skills by managing the company website and blog.  Designed and generated highly detailed sales reports in Excel.  Traveled to trade shows to sell products and learn from food industry personnel.  Cared for customers, bloggers, and members of the press.  Built collaboration skills by working with individuals from many functional areas. Sharie Kaye – Founder & Owner – Boonton, NJ 2009 – Present  Designed and sold a line of fitness attire for the unique needs of Irish Step Dancers.  Concept was awarded second place in the 2011 Grove City College Business Plan Competition. Andrew Schlafly – Paralegal – Far Hills, NJ 2008 – 2010  Developed professionalism and knowledge of the legal field.  Honed excellent writing and proofreading skills.  Gained knowledge of the LEXIS research system. ACTIVITIES AND HONORS  Recipient of the Joseph C. Cicero, Jr. Entrepreneurship Scholarship  Recipient of the Grove City College Presidential Merit Scholarship  Entrepreneurship Club – President  Business Plan Competition – Second-place winner in For-Profit Category in 2011  Elevator Pitch Competition – Winner in For-Profit Category in 2009  500 Fives – Organized an on-campus fundraiser to benefit gypsies in Chennai, India  Law Society – Member

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Rachel M. Brockhage Home: 5207 Minuteman Court –Mason, Ohio 45040 College: Box #2508 – 100 Campus Dr. – Grove City, PA 16127 Email: [email protected] Cell Phone: 513-204-9082 OBJECTIVE PROVEN ACHIEVER with consistent track record in balancing academics and leadership activities. Independent, self-motivated student with extensive experience in working on a team. Committed to long-term career in scientific inquiry and medical research. EDUCATION Grove City College – Grove City, PA BS in Biology, minor in Communication Studies – May 2012 GPA 3.66/4.00 – Dean’s List EXPERIENCE Cornell Nanoscale Facility – Student Intern– Ithaca, NY Summer 2011  Successfully completed Technology and Characterization at the Nanoscale course offered to users of Cornell Nanoscale Facility  Received certification in CNF microscopy methods  Maintained database of National Nanotechnology Infrastructure Network users from pharmaceutical companies, hospitals and biotech startups Genomic Research Institute– Research assistant – Cincinnati, Ohio Summer 2010  Investigated size differences in native High Density Lipoprotein Complexes with and without Apolipoprotein A-II  Gained experience in FPLC, high density ultracentrifugation and covalent chromatography  Improved skills in running gel electrophoresis and Lowry assays  Findings published and used for further size heterogeneity studies of ApoA-II and HDL  Presented findings at UC’s SURF research symposium and the Sigma Xi Research Showcase International Medical Missions – Student assistant – Guatemala 2010  Partnered with Caring Partners International to serve rural and urban communities in Guatemala  Cooperated with patients and certified physicians on the trip in running several full-day clinics  Gained experience in taking blood pressure readings, monitoring blood glucose levels and diagnosing rare diseases ACTIVITIES AND HONORS  Omicron Delta Kappa national leadership honorary member  Beta Beta Beta national biology honorary society member  Teaching assistant for Cellular and Molecular Biology (2010)  Web Editor for the campus newspaper The Collegian  Webmaster for the radio station WSAJ The One and co-host of “Amoebas and Social Loafing”  Grove City College Presidential Scholar

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11.3

March 7th Beta-Test Presentation

On March 7th, we gave a brief presentation on Amilie Clean Cosmetics to a group of faculty and students. The beta test was very successful, and gave us much food for thought. Below is our evaluation of the feedback we received. Summary - We asked participants to give us words to describe Amilie. They responded with words like “clean, simple, honest, natural, fresh, and wholesome.” One participant said “„Amilie‟ is a name that immediately captures me.” Design-specific words included “girlie, bright, pink and green.” One evaluator wrote “your website was comfortable and agreeable to me.” Participants also included terms pertaining to Amilie‟s viability such as “start-up, market share, opportunity for sound investment and growth.” The idea of healthy, “clean cosmetics” resonated with many participants, as seen from words like “healthy, pure, no allergens, organic, gluten free, all natural, cosmetics for a health conscious generation.” Positive Feedback Participants liked the “certified gluten free” label, the market label “allergen free,” and “reduced skin irritation for gluten and allergens.” One participant highlighted how the concept is “scientificallyfounded.” Another noted “research shows you know your stuff.” Praise for design elements included Amilie design, the color scheme of the website, website design, with one participant noting “love the packaging, name, etc. All very appealing!” In terms of its viability as a startup, evaluators noted that Amilie is in an emerging market and has great potential. One participant noted “no one is paying attention is an excellent selling point to investors.” Another said “the size and growth of market, the prospect for a small firm to enter the niche natural product market.” Yet another said “I like the fact the market appears to be virtually untapped by an exclusive manufacturer of gluten-free products.” Finally, we received praise for the product itself. One evaluator said “I LOVED the extremely mild citrus fragrance/flavor. I loved the plainness of it. It was very mild on my lips.” Another wrote “I will be investing in your company for its lip balm. I use lip balm 365 days a year!” Areas for Improvement A participants said “I‟m wondering if you should brainstorm the tagline a little more. I‟m not sure „clean‟ really describes the products or the benefit of the end-user.” For marketing, another individual recommended that we “emphasize what the product will do for the consumer, rather than just what the product won‟t do (benefits, not just problems avoided).” Participants recommended that we more critically evaluate barriers to entry for the company. Future extensions, such as investigating lead contamination in cosmetics and the degree to which these are absorbed through the skin were also discussed. In terms of the presentation, evaluators recommended that we consider how to “present complex technical details in a way that connects it to the layperson‟s understanding.” Similarly, one participant said “start with the sizzle, then describe research.” On the product, one person stated “Please list the ingredients,” a suggestion to consider during label reconfiguration. Another said “the top of the stick should be flat, not convex” and recommended “make the formulation SLIGHTLY less waxy, make it a little more melty on the lips. Right now, it‟s kind of hard to get on your lips because of the convex shape and highish melting point. It felt pretty good once it was on, but just a tiny bit too waxy.”

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Questions raised during the session There were two lines of questions, one around investment and one around marketing. Questions inherent to the product image included “What happens if, to this advantage, I go gluten free?” “What is the advantage to not using preservatives?” “What ingredients in normal makeup contain gluten to persuade gluten free person to not use past makeup and buy your makeup?” “Is there research that suggests this is needed and at what level?” For marketing and presentation of the concept, participants asked “Have you presented to a gluten free audience?” This is important to keep in mind for launching another beta-test in the future. At this stage, it would be good to discuss how we may begin to develop partnerships with gluten free support groups in the region. Participants also suggested that we emphasize the unique benefits of our cross-disciplinary team. Additionally, we need to further clarify how and where the product will be manufactured. During the Question and Answer session, we were asked the size of the cosmetics industry in global sales. We answered $74 billion based on prior reading, to the surprise of our audience. After consulting Forbes.com, we found the correct figure is $230 billion.

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11.4

Five Month Implementation Schedule

March

April

May

June

July

Write Business Plan Prototype Lip Balm Design Website Prototype Foundation & Eye Shadow Raise Startup Capital Lease & Furnish Office Streamline Manufacturing Launch Sell to Initial Customers Marketing Campaign

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11.5

Sample Web Content

This infographic is an example of the high-quality content which will attract users to our website:

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11.6

Interviews of Gluten-free Individuals

Abby Pherson Abby Pherson is a junior biology major who was diagnosed with Celiac disease and Crohn’s disease in January of 2011. Abby is asymptomatic externally. This means that she does not show symptoms, but like all patients with Celiac disease, Abby follows a gluten-free diet to limit the adverse, internal effects of consuming gluten. Abby says “one of the hardest parts of being gluten-free is being diagnosed later on in life, after I was used to breads and pastas. Now, my brain is focused on the cants rather than the possibilities.” Abby believes that greater awareness of Celiac disease among consumers should be a priority. “Many people see gluten-free as a diet, rather than as a have to.” Even still, Abby is encouraged by the growth in the gluten-free industry. “Things are SO much better today, whether it is more recipes or already made products.” Abby follows blogs like Jules Gluten Free and Better Batter, which are a source of articles and recipes for women with gluten intolerance. Abby says that she regularly shares these links with her friends who also have Celiac disease. Abby cites the website Pinterest as a source for information on new gluten free products. “There are lots of opportunities to be connected via the net.” Abby says one of the best parts of being gluten free is the chance to meet new people and to appreciate food more. “I realize that I have to be gluten free, that it is the right thing for my body. It inspires me to think more about taking care of my body for the long term.” Abby and fellow GCC student Emily Topp are launching a gluten free support group on campus. Elisa Angione Elisa is a junior biology major who has never received an official diagnosis of Celiac disease from a medical professional. Even still, she has a family history of gluten intolerance and does not believe a test is worth the cost and thus lives gluten free. “The hardest part of being gluten free is social. Food brings people together, and it is hard not to be able to enjoy what everyone else enjoys, especially coming from an Italian family. Going out to eat becomes more of a burden than a good experience.” Like Abby, Elisa cites positive trends in the gluten free industry. “People are starting to become more aware,” and says her favorite gluten-conscious companies include names like Saladworks and Applebees.

Elisa credits Amilie Clean Cosmetics with raising her awareness of the presence of gluten in personal care products. “Because of Amilie Clean Cosmetics, I am thinking more about gluten in cosmetics. I would like to know what ingredients are in my lipstick.” Elisa says that gluten-free products that the Celiac community would appreciate include lipstick, hand cream, toothpaste and mouthwash.

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Emily Topp Emily is a junior Accounting major who has been diagnosed with Celiac since the beginning of college. Emily says one of the hardest aspects of handling Celiac disease is that ingredients are not often labeled well. “I hate the lack of labeling in drugs,” Emily said. “I have to have my pharmacist check every ingredient.” Emily says the gluten-free diet is what its follower make of it and that nutritional deficiencies can easily be overcome with careful planning. “What is gluten free? For some people, it may be fritos and coco cola. For others, it could be spinach and hummus. It is what you make of it.” Emily is frustrated by the “hype” of the gluten free diet and looks forward to greater awareness of consumers in the future. “People often confuse the gluten free diet with the South Beach diet. I will be glad when the hype dies down. Celebrities promote the gluten-free diet as the next best cure for weight loss or promise of good health, but their facts are not always right. It is easy for people to get confused.” To help address this disparity, Emily has started a Celiac support group at Grove City College with fellow student Abby Pherson. Contamination is a big problem for students with Celiac disease and the group plans to address the problems caused by contamination of cafeteria food. 5

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11.7

Monthly Balance Sheets Amilie Clean Cosmetics - Pro Forma Balance Sheet - Year One Starting

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

s:

sh Equivalents

16,950

9,619

8,879

8,668

8,434

7,870

7,463

7,268

7,324

8,410

10,054

0

2,867

3,703

4,141

4,619

5,575

6,530

7,406

8,282

8,203

7,327

550

901

1,007

1,124

1,356

1,588

1,802

2,015

1,995

1,782

1,763

17,500

13,387

13,589

13,933

14,409

15,033

15,795

16,689

17,601

18,395

19,144

32,500

32,500

32,500

32,500

32,500

32,500

32,500

32,500

32,500

32,500

32,500

0

677

1,354

2,031

2,708

3,385

4,062

4,739

5,416

6,093

6,770

32,500

31,823

31,146

30,469

29,792

29,115

28,438

27,761

27,084

26,407

25,730

32,500

31,823

31,146

30,469

29,792

29,115

28,438

27,761

27,084

26,407

25,730

50,000

45,210

44,735

44,402

44,201

44,148

44,233

44,450

44,685

44,802

44,874

0

873

954

1,065

1,240

1,472

1,695

1,908

2,005

1,889

1,772

0

873

954

1065

1240

1472

1695

1908

2005

1889

1772

m Liabilities:

0

0

0

0

0

s:

0

873

954

1065

1240

1472

1695

1908

2005

1889

1772

50,000

50,000

50,000

50,000

50,000

50,000

50,000

50,000

50,000

50,000

50,000

-5,663

-6,219

-6,663

-7,039

-7,324

-7,462

-7,458

-7,320

-7,087

-6,899

50,000

44,337

43,781

43,337

42,961

42,676

42,538

42,542

42,680

42,913

43,102

50,000

45,210

44,735

44,402

44,201

44,148

44,233

44,450

44,685

44,802

44,874

ceivable

Assets

estments:

ant, and equipment

d depreciation

m Investments:

EQUITY

ties:

ayable

dit

Liabilities

-

bilities:

debt

ital

arnings

s & Equity

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A

Amilie Clean Cosmetics - Pro Forma Balance Sheet - Year Two Jun

Equivalents

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

14,681

14,977

14,922

15,103

15,154

15,834

16,897

19,235

21,269

22,919

24,350

23,872

2,110

2,110

2,285

2,637

3,164

3,692

4,043

3,868

3,340

2,989

2,637

3,129

2,110

2,110

2,461

2,813

3,516

3,868

4,219

3,516

3,164

2,813

2,461

3,797

18,901

19,197

19,668

20,553

21,834

23,394

25,159

26,619

27,773

28,721

29,448

30,798

32,500

32,500

32,500

32,500

32,500

32,500

32,500

32,500

32,500

32,500

32,500

32,500

8,801

9,478

10,155

10,832

11,509

12,186

12,863

13,540

14,217

14,894

15,571

16,248

23,699

23,022

22,345

21,668

20,991

20,314

19,637

18,960

18,283

17,606

16,929

16,252

23,699

23,022

22,345

21,668

20,991

20,314

19,637

18,960

18,283

17,606

16,929

16,252

42,600

42,219

42,013

42,221

42,825

43,708

44,796

45,579

46,056

46,327

46,377

47,050

ble

2,110

2,110

2,285

2,637

3,164

3,692

4,043

3,868

3,340

2,989

2,637

3,129

bilities

2110

2110

2285

2637

3164

3692

4043

3868

3340

2989

2637

3129

0

0

0

0

2110

2110

2285

2637

3164

3692

4043

3868

3340

2989

2637

3129

50,000

50,000

50,000

50,000

50,000

50,000

50,000

50,000

50,000

50,000

50,000

50,000

-9,510

-9,891

-10,272

-10,416

-10,339

-9,985

-9,247

-8,289

-7,284

-6,663

-6,261

-6,079

40,490

40,109

39,728

39,584

39,661

40,016

40,753

41,711

42,716

43,338

43,740

43,921

42,600

42,219

42,013

42,221

42,825

43,708

44,796

45,579

46,056

46,327

46,377

47,050

vable

sets

ments: and equipment

epreciation

nvestments:

QUITY

s:

ties:

Liabilities:

ngs

Equity

0

54 of 72

Amilie Clean Cosmetics - Pro Forma Balance Sheet - Year Three Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

ASSETS Current Assets: Cash & Cash Equivalents

6,972

5,979

4,670

1,586

-539

-3,026

-1,006

3,236

14,299

20,858

26,141

29,007

15,611

15,611

15,611

18,213

20,814

26,018

28,620

31,222

26,018

23,416

20,814

18,213

3,797

3,797

4,430

5,063

6,329

6,962

7,594

6,329

5,696

5,063

4,430

6,076

26,380

25,387

24,711

24,862

26,604

29,954

35,208

40,787

46,013

49,337

51,385

53,296

Property, plant, and equipment

32,500

32,500

32,500

32,500

32,500

32,500

32,500

32,500

32,500

32,500

32,500

32,500

Accumulated depreciation

16,925

17,602

18,279

18,956

19,633

20,310

20,987

21,664

22,341

23,018

23,695

24,372

Net:

15,575

14,898

14,221

13,544

12,867

12,190

11,513

10,836

10,159

9,482

8,805

8,128

Total Long-term Investments:

15,575

14,898

14,221

13,544

12,867

12,190

11,513

10,836

10,159

9,482

8,805

8,128

Total Assets:

41,955

40,285

38,932

38,406

39,471

42,144

46,721

51,623

56,172

58,819

60,190

61,424

3,797

3,797

4,114

4,747

5,696

6,645

7,278

6,962

6,012

5,379

4,747

5,253

3797

3797

4114

4747

5696

6645

7278

6962

6012

5379

4747

5253

0

0

0

0

3797

3797

4114

4747

5696

6645

7278

6962

6012

5379

4747

5253

50,000

50,000

50,000

50,000

50,000

50,000

50,000

50,000

50,000

50,000

50,000

50,000

-11,842

-13,512

-15,182

-16,341

-16,225

-14,501

-10,557

-5,339

160

3,440

5,443

6,171

Total Equity:

38,158

36,488

34,818

33,659

33,775

35,499

39,443

44,661

50,160

53,440

55,443

56,171

Total liabilities & Equity

41,955

40,285

38,932

38,406

39,471

42,144

46,721

51,623

56,172

58,819

60,190

61,424

Accounts receivable Inventory Total Current Assets Long-term Investments:

LIABILITIES & EQUITY Current Liabilities: Accounts payable Line of Credit Total Current Liabilities Long-term Liabilities: Long-term debt Total Long-term Liabilities: Total Liabilities:

0

Equity: Paid-in Capital Retained Earnings

55 of 72

11.8

Monthly Cash Flow Statements

Amilie Clean Cosmetics – Pro Forma Cash Flow Statement - Year One Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Operating Activities Net Income

($5,663)

($556)

($445)

($376)

($285)

($138)

$4

$138

$233

$189

$88

$44

-2,867

-836

-438

-478

-956

-955

-876

-876

79

876

80

876

-351

-106

-117

-232

-232

-214

-213

20

213

19

213

-560

873

81

111

175

232

223

213

97

-116

-117

-116

174

677

677

677

677

677

677

677

677

677

677

677

677

($7,331)

($740)

($212)

($234)

($564)

($407)

($195)

$56

$1,086

$1,644

$942

$1,211

($7,331)

($740)

($212)

($234)

($564)

($407)

($195)

$56

$1,086

$1,644

$942

$1,211

Cash & Cash Equivalents at Beginning of Month

16,950

9,619

8,879

8,668

8,434

7,870

7,463

7,268

7,324

8,410

10,054

10,995

Cash & Cash Equivalents at End of Month

$9,619

$8,879

$8,668

$8,434

$7,870

$7,463

$7,268

$7,324

$8,410

$10,054

$10,995

$12,206

($7,331)

($740)

($212)

($234)

($564)

($407)

($195)

$56

$1,086

$1,644

$942

$1,211

Add: Decreases in Non-cash Current Assets Accounts Receivable Inventory Increases in Current Liabilities Accounts Payable Depreciation Cash Generated by Operations: Investing Activities Purchase of Long-term investments Cash Generated by Investing Financing Activities Line of Credit Cash Generated by Financing Net Increase in Cash

Free Cash Flow

56 of 72

Amilie Clean Cosmetics - Pro Forma Cash Flow Statement - Year Two Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Operating Activities Net Income

($2,743)

($381)

($381)

($144)

$77

$355

$738

$958

$1,005

$622

$402

$181

4,261

0

-175

-352

-527

-528

-351

175

528

351

352

-492

0

0

-351

-352

-703

-352

-351

703

352

351

352

-1,336

280

0

175

352

527

528

351

-175

-528

-351

-352

492

677

677

677

677

677

677

677

677

677

677

677

677

$2,476

$296

($55)

$181

$51

$680

$1,064

$2,338

$2,034

$1,650

$1,431

($478)

$2,476

$296

($55)

$181

$51

$680

$1,064

$2,338

$2,034

$1,650

$1,431

($478)

12,206

14,681

14,977

14,922

15,103

15,154

15,834

16,897

19,235

21,269

22,919

24,350

$14,681

$14,977

$14,922

$15,103

$15,154

$15,834

$16,897

$19,235

$21,269

$22,919

$24,350

$23,872

$2,476

$296

($55)

$181

$51

$680

$1,064

$2,338

$2,034

$1,650

$1,431

($478)

Add: Decreases in Non-cash Current Assets Accounts Receivable Inventory Increases in Current Liabilities Accounts Payable Depreciation Cash Generated by Operations: Investing Activities Purchase of Long-term investments Cash Generated by Investing Financing Activities Line of Credit Cash Generated by Financing Net Increase in Cash Cash & Cash Equivalents at Beginning of Month Cash & Cash Equivalents at End of Month Free Cash Flow

57 of 72

Amilie Clean Cosmetics - Pro Forma Cash Flow Statement - Year Three Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Operating Activities Net Income

($5,763)

($1,670)

($1,670)

($1,159)

$116

$1,724

$3,944

$5,218

$5,499

$3,280

$2,003

$728

-12,482

0

0

-2,602

-2,601

-5,204

-2,602

-2,602

5,204

2,602

2,602

2,601

0

0

-633

-633

-1,266

-633

-632

1,265

633

633

633

-1,646

668

0

317

633

949

949

633

-316

-950

-633

-632

506

677

677

677

677

677

677

677

677

677

677

677

677

($16,900)

($993)

($1,309)

($3,084)

($2,125)

($2,487)

$2,020

$4,242

$11,063

$6,559

$5,283

$2,866

($16,900)

($993)

($1,309)

($3,084)

($2,125)

($2,487)

$2,020

$4,242

$11,063

$6,559

$5,283

$2,866

23,872

6,972

5,979

4,670

1,586

-539

-3,026

-1,006

3,236

14,299

20,858

26,141

$6,972

$5,979

$4,670

$1,586

($539)

($3,026)

($1,006)

$3,236

$14,299

$20,858

$26,141

$29,007

($16,900)

($993)

($1,309)

($3,084)

($2,125)

($2,487)

$2,020

$4,242

$11,063

$6,559

$5,283

$2,866

Add: Decreases in Non-cash Current Assets Accounts Receivable Inventory Increases in Current Liabilities Accounts Payable Depreciation Cash Generated by Operations: Investing Activities Purchase of Long-term investments Cash Generated by Investing Financing Activities Line of Credit Cash Generated by Financing Net Increase in Cash Cash & Cash Equivalents at Beginning of Month Cash & Cash Equivalents at End of Month Free Cash Flow

58 of 72

11.9

Monthly Operating Schedules Year One

Sales Schedule Starting

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

4%

5%

6%

6%

8%

9%

10%

11%

11%

10%

10%

9%

3874

5004

5596

6242

7533

8825

10009

11192

11085

9901

9793

8610

291

375

420

468

565

662

751

839

831

743

735

646

Credit Sales, 80%

2,867

3,703

4,141

4,619

5,575

6,530

7,406

8,282

8,203

7,327

7,247

6,371

Cash Sales 20%

717

926

1,035

1,155

1,394

1,633

1,852

2,071

2,051

1,832

1,812

1,593

Cash sales this period

1,007

1,301

1,455

1,623

1,959

2,294

2,602

2,910

2,882

2,574

2,546

2,238

Last period's credit sales

0

2,867

3,703

4,141

4,619

5,575

6,530

7,406

8,282

8,203

7,327

7,247

-

1,007

4,168

5,158

5,764

6,578

7,869

9,133

10,316

11,164

10,777

9,873

9,486

Starting

June

July

August

September

October

November

December

January

February

March

April

May

550

901

1007

1124

1356

1588

1802

2015

1995

1782

1763

1550

2110

1395

1802

2015

2247

2712

3177

3603

4029

3991

3564

3526

3099

Sales Forecast

Online Sales Wholesale

Cash Collections

Total Collections

Purchases Schedule Purchases Ending Inventory Cost of Goods Sold Total Needed

550

2296

2809

3138

3603

4300

4978

5618

6025

5773

5327

5075

5209

Beginning Inventory

0

-550

-901

-1007

-1124

-1356

-1588

-1802

-2015

-1995

-1782

-1763

-1550

Purchases

550

1746

1908

2131

2480

2944

3390

3816

4010

3777

3545

3313

3659

50% of last month's purchases

0

275

873

954

1065

1240

1472

1695

1908

2005

1889

1772

1656

50% of this month's purchases

275

873

954

1065

1240

1472

1695

1908

2005

1889

1772

1656

1830

Disbursements for purchases

275

1148

1827

2019

2305

2712

3167

3603

3913

3894

3661

3429

3486

Purchase Disbursements

59 of 72

Year Two

Sales Schedule Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

6%

6%

6%

7%

8%

10%

11%

12%

10%

9%

8%

7%

11720

11720

11720

13673

15626

19533

21486

23440

19533

17580

15626

13673

879

879

879

1025

1172

1465

1611

1758

1465

1318

1172

1025

Credit Sales, 80%

8,673

8,673

8,673

10,118

11,564

14,454

15,900

17,345

14,454

13,009

11,564

10,118

Cash Sales 20%

2,168

2,168

2,168

2,530

2,891

3,614

3,975

4,336

3,614

3,252

2,891

2,530

Cash sales this period

3,047

3,047

3,047

3,555

4,063

5,079

5,586

6,094

5,079

4,571

4,063

3,555

Last period's credit sales

6,371

8,673

8,673

8,673

10,118

11,564

14,454

15,900

17,345

14,454

13,009

11,564

Total Collections

9,418

11,720

11,720

12,228

14,181

16,642

20,041

21,994

22,424

19,025

17,072

15,119

Ending Inventory

2110

2110

2461

2813

3516

3868

4219

3516

3164

2813

2461

3797

Cost of Goods Sold

4219

4219

4219

4922

5626

7032

7735

8438

7032

6329

5626

4922

Total Needed

6329

6329

6680

7735

9141

10899

11954

11954

10196

9141

8087

8720

Beginning Inventory

-2110

-2110

-2110

-2461

-2813

-3516

-3868

-4219

-3516

-3164

-2813

-2461

Purchases

4219

4219

4571

5274

6329

7383

8087

7735

6680

5977

5274

6258

50% of last month's purchases

1830

2110

2110

2285

2637

3164

3692

4043

3868

3340

2989

2637

50% of this month's purchases

2110

2110

2285

2637

3164

3692

4043

3868

3340

2989

2637

3129

Disbursements for purchases

3939

4219

4395

4922

5801

6856

7735

7911

7208

6329

5626

5766

Sales Forecast

Online Sales Wholesale

Cash Collections

Purchases Schedule Purchases

Purchase Disbursements

60 of 72

Year Three

Sales Schedule Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

6%

6%

6%

7%

8%

10%

11%

12%

10%

9%

8%

7%

21096

21096

21096

24612

28128

35159

38675

42191

35159

31643

28128

24612

1582

1582

1582

1846

2110

2637

2901

3164

2637

2373

2110

1846

Credit Sales, 80%

15,611

15,611

15,611

18,213

20,814

26,018

28,620

31,222

26,018

23,416

20,814

18,213

Cash Sales 20%

3,903

3,903

3,903

4,553

5,204

6,504

7,155

7,805

6,504

5,854

5,204

4,553

Cash sales this period

5,485

5,485

5,485

6,399

7,313

9,141

10,056

10,970

9,141

8,227

7,313

6,399

Last period's credit sales

10,118

15,611

15,611

15,611

18,213

20,814

26,018

28,620

31,222

26,018

23,416

20,814

Total Collections

15,603

21,096

21,096

22,010

25,526

29,956

36,074

39,589

40,363

34,245

30,729

27,213

Ending Inventory

3797

3797

4430

5063

6329

6962

7594

6329

5696

5063

4430

6076

Cost of Goods Sold

7594

7594

7594

8860

10126

12657

13923

15189

12657

11392

10126

8860

Total Needed

11392

11392

12025

13923

16455

19619

21518

21518

18353

16455

14556

14936

Beginning Inventory

-3797

-3797

-3797

-4430

-5063

-6329

-6962

-7594

-6329

-5696

-5063

-4430

Purchases

7594

7594

8227

9493

11392

13290

14556

13923

12025

10759

9493

10506

50% of last month's purchases

3129

3797

3797

4114

4747

5696

6645

7278

6962

6012

5379

4747

50% of this month's purchases

3797

3797

4114

4747

5696

6645

7278

6962

6012

5379

4747

5253

Disbursements for purchases

6926

7594

7911

8860

10442

12341

13923

14240

12974

11392

10126

9999

Sales Forecast

Online Sales Wholesale

Cash Collections

Purchases Schedule Purchases

Purchase Disbursements

61 of 72

Year Four

Sales Schedule Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

6%

6%

6%

7%

8%

10%

11%

12%

10%

9%

8%

7%

33753

33753

33753

39379

45004

56255

61881

67506

56255

50630

45004

39379

2531

2531

2531

2953

3375

4219

4641

5063

4219

3797

3375

2953

Credit Sales, 80%

24,977

24,977

24,977

29,140

33,303

41,629

45,792

49,954

41,629

37,466

33,303

29,140

Cash Sales 20%

6,244

6,244

6,244

7,285

8,326

10,407

11,448

12,489

10,407

9,366

8,326

7,285

Cash sales this period

8,776

8,776

8,776

10,238

11,701

14,626

16,089

17,552

14,626

13,164

11,701

10,238

Last period's credit sales

18,213

24,977

24,977

24,977

29,140

33,303

41,629

45,792

49,954

41,629

37,466

33,303

Total Collections

26,988

33,753

33,753

35,216

40,841

47,929

57,718

63,343

64,581

54,792

49,167

43,541

Ending Inventory

6076

6076

7088

8101

10126

11138

12151

10126

9113

8101

7088

8506

Cost of Good Sold

12151

12151

12151

14176

16201

20252

22277

24302

20252

18227

16201

14176

Total Needed

18227

18227

19239

22277

26327

31390

34428

34428

29365

26327

23290

22682

Beginning Inventory

-6076

-6076

-6076

-7088

-8101

-10126

-11138

-12151

-10126

-9113

-8101

-7088

Purchases

12151

12151

13164

15189

18227

21264

23290

22277

19239

17214

15189

15594

50% of last month's purchases

5253

6076

6076

6582

7594

9113

10632

11645

11138

9620

8607

7594

50% of this month's purchases

6076

6076

6582

7594

9113

10632

11645

11138

9620

8607

7594

7797

Disbursements for purchases

11328

12151

12657

14176

16708

19746

22277

22783

20758

18227

16201

15391

Sales Forecast

Online Sales Wholesale

Cash Collections

Purchases Schedule Purchases

Purchase Disbursements

62 of 72

Year Five

Sales Schedule Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

6%

6%

6%

7%

8%

10%

11%

12%

10%

9%

8%

7%

47254

47254

47254

55130

63006

78757

86633

94508

78757

70881

63006

55130

3544

3544

3544

4135

4725

5907

6497

7088

5907

5316

4725

4135

Credit Sales, 80%

34,968

34,968

34,968

40,796

46,624

58,280

64,108

69,936

58,280

52,452

46,624

40,796

Cash Sales 20%

8,742

8,742

8,742

10,199

11,656

14,570

16,027

17,484

14,570

13,113

11,656

10,199

Cash sales this period

12,286

12,286

12,286

14,334

16,381

20,477

22,525

24,572

20,477

18,429

16,381

14,334

Last period's credit sales

29,140

34,968

34,968

34,968

40,796

46,624

58,280

64,108

69,936

58,280

52,452

46,624

Total Collections

41,426

47,254

47,254

49,302

57,178

67,101

80,805

88,680

90,413

76,709

68,834

60,958

Ending Inventory

8506

8506

9923

11341

14176

15594

17012

14176

12759

11341

9923

11908

Cost of Good Sold

17012

17012

17012

19847

22682

28353

31188

34023

28353

25517

22682

19847

Total Needed

25517

25517

26935

31188

36858

43946

48199

48199

41111

36858

32605

31755

Beginning Inventory

-8506

-8506

-8506

-9923

-11341

-14176

-15594

-17012

-14176

-12759

-11341

-9923

Purchases

17012

17012

18429

21264

25517

29770

32605

31188

26935

24100

21264

21831

50% of last month's purchases

7797

8506

8506

9215

10632

12759

14885

16303

15594

13467

12050

10632

50% of this month's purchases

8506

8506

9215

10632

12759

14885

16303

15594

13467

12050

10632

10916

Disbursements for purchases

16303

17012

17720

19847

23391

27644

31188

31897

29061

25517

22682

21548

Sales Forecast

Online Sales Wholesale

Cash Collections

Purchases Schedule Purchases

Purchase Disbursements

63 of 72

11.10

Monthly Budgets Year One

Projected Budget Beginning Cash Balance

June

July

August

September

October

November

December

January

February

March

April

May

16,950

9,906

9,065

8,470

7,857

7,197

6,655

6,236

6,032

6,221

6,472

6,554

1,007

4,168

5,158

5,764

6,578

7,869

9,133

10,316

11,164

10,777

9,873

9,486

17,957

14,074

14,223

14,234

14,435

15,066

15,788

16,552

17,196

16,998

16,345

16,040

1148

1827

2019

2305

2712

3167

3603

3913

3894

3661

3429

3486

252

1042

1290

1441

1645

1967

2283

2579

2791

2694

2468

2372

Payroll Taxes (15%)

30

125

155

173

197

236

274

309

335

323

296

285

Shipping

98

405

501

560

640

765

888

1,003

1,085

1,048

960

922

151

625

774

865

987

1,180

1,370

1,547

1,675

1,617

1,481

1,423

50

50

50

50

50

50

50

50

50

50

50

50

Legal & Accounting Services

3,416

416

416

416

416

416

416

416

416

416

416

416

Licenses and Permits

1650

-

-

-

-

-

-

-

-

-

-

-

Insurance

166

166

166

166

166

166

166

166

166

166

166

166

Line of Credit

100

Research & Development

228

228

228

228

228

228

228

228

228

228

228

228

Miscellaneous expenses

762

125

155

173

197

236

274

309

335

323

296

285

Total disbursements:

8,051

5,009

5,754

6,377

7,238

8,411

9,552

10,520

10,975

10,526

9,790

9,633

Excess of Total Cash

9,906

9,065

8,470

7,857

7,197

6,655

6,236

6,032

6,221

6,472

6,554

6,408

Cash balance

9,906

9,065

8,470

7,857

7,197

6,655

6,236

6,032

6,221

6,472

6,554

6,408

Cash Receipts: Collections from customers Total cash available before financing Cash Disbursements: Inventory Purchase Salaries

Rent Marketing & Promotions Office Supplies

64 of 72

Year Two Projected Budget

June

Beginning Cash Balance

July

August

September

October

November

December

January

February

March

April

May

6,408

3,183

2,799

2,239

1,557

862

202

167

821

2,367

3,287

4,046

9,418

11,720

11,720

12,228

14,181

16,642

20,041

21,994

22,424

19,025

17,072

15,119

15,826

14,903

14,519

14,467

15,738

17,504

20,243

22,161

23,245

21,392

20,359

19,165

Inventory Purchase

3,939

4,219

4,395

4,922

5,801

6,856

7,735

7,911

7,208

6,329

5,626

5,766

Salaries

2355

2930

2930

3057

3545

4161

5010

5499

5606

4756

4268

3780

Payroll Taxes (15%)

463

532

532

367

425

499

601

660

673

571

512

454

Shipping

916

1,139

1,139

1,189

1,379

1,618

1,948

2,138

2,180

1,850

1,660

1,470

1,413

1,758

1,758

1,834

2,127

2,496

3,006

3,299

3,364

2,854

2,561

2,268

Cash Receipts: Collections from customers Total cash available before financing Cash Disbursements:

Rent Marketing & Promotions Office Supplies

113

113

113

113

113

113

113

113

113

113

113

113

Legal & Accounting Services

416

416

416

416

416

416

416

416

416

416

416

416

2000

-

-

-

-

-

-

-

-

-

-

-

Insurance

166

166

166

166

166

166

166

166

166

166

166

166

Line of Credit

100

Research & Development

479

479

479

479

479

479

479

479

479

479

479

479

Miscellaneous expenses

283

352

352

367

425

499

601

660

673

571

512

454

Total disbursements:

12,643

12,104

12,280

12,910

14,876

17,303

20,075

21,341

20,878

18,105

16,313

15,366

Excess of Total Cash

3,183

2,799

2,239

1,557

862

202

167

821

2,367

3,287

4,046

3,799

Cash balance

3,183

2,799

2,239

1,557

862

202

167

821

2,367

3,287

4,046

3,799

Licenses and Permits

65 of 72

Year Three Projected Budget Beginning Cash Balance

June

July

August

September

October

November

December

January

February

March

April

May

3,799

-3,114

-4,790

-6,783

-8,911

-10,187

-10,292

-7,740

-3,071

3,401

7,217

9,862

15,603

21,096

21,096

22,010

25,526

29,956

36,074

39,589

40,363

34,245

30,729

27,213

19,402

17,982

16,306

15,227

16,615

19,769

25,782

31,849

37,292

37,646

37,946

37,075

Inventory Purchase

6,926

7,594

7,911

8,860

10,442

12,341

13,923

14,240

12,974

11,392

10,126

9,999

Salaries

6,666

6,666

6,666

6,666

6,666

6,666

6,666

6,666

6,666

6,666

6,666

6,666

648

813

813

660

766

899

1,082

1,188

1,211

1,027

922

816

1,517

2,051

2,051

2,140

2,482

2,912

3,507

3,849

3,924

3,329

2,988

2,646

2,340

3,164

3,164

3,301

3,829

4,493

5,411

5,938

6,054

5,137

4,609

4,082

Office Supplies

202

202

202

202

202

202

202

202

202

202

202

202

Legal & Accounting Services

625

625

625

625

625

625

625

625

625

625

625

625

2000

-

-

-

-

-

-

-

-

-

-

-

Insurance

166

166

166

166

166

166

166

166

166

166

166

166

Line of Credit

100

Research & Development

858

858

858

858

858

858

858

858

858

858

858

858

Miscellaneous expenses

468

633

633

660

766

899

1,082

1,188

1,211

1,027

922

816

Total disbursements:

22,516

22,772

23,089

24,138

26,802

30,061

33,522

34,920

33,891

30,429

28,084

26,876

Excess of Total Cash

-3,114

-4,790

-6,783

-8,911

-10,187

-10,292

-7,740

-3,071

3,401

7,217

9,862

10,199

Cash balance

-3,114

-4,790

-6,783

-8,911

-10,187

-10,292

-7,740

-3,071

3,401

7,217

9,862

10,199

Cash Receipts: Collections from customers Total cash available before financing Cash Disbursements:

Payroll Taxes (15%) Shipping Rent Marketing & Promotions

Licenses and Permits

66 of 72

Year Four Projected Budget Beginning Cash Balance

June

July

August

September

October

November

December

January

February

March

April

May

10,199

3,743

3,251

2,253

931

973

2,887

9,052

18,609

31,048

39,235

45,552

26,988

33,753

33,753

35,216

40,841

47,929

57,718

63,343

64,581

54,792

49,167

43,541

37,187

37,496

37,004

37,469

41,772

48,902

60,605

72,395

83,190

85,840

88,402

89,093

11,328

12,151

12,657

14,176

16,708

19,746

22,277

22,783

20,758

18,227

16,201

15,391

Salaries

8,333

8,333

8,333

8,333

8,333

8,333

8,333

8,333

8,333

8,333

8,333

8,333

Payroll Taxes (15%)

1,165

1,367

1,367

1,231

1,400

1,613

1,906

2,075

2,112

1,819

1,650

1,481

Shipping

2,624

3,282

3,282

3,424

3,971

4,660

5,611

6,158

6,279

5,327

4,780

4,233

333

333

333

333

333

333

333

333

333

333

333

333

4,048

5,063

5,063

5,282

6,126

7,189

8,658

9,501

9,687

8,219

7,375

6,531

Office Supplies

325

325

325

325

325

325

325

325

325

325

325

325

Legal & Accounting Services

833

833

833

833

833

833

833

833

833

833

833

833

2000

-

-

-

-

-

-

-

-

-

-

-

Insurance

166

166

166

166

166

166

166

166

166

166

166

166

Line of Credit

100

Cash Receipts: Collections from customers Total cash available before financing Cash Disbursements: Inventory Purchase

Rent Marketing & Promotions

Licenses and Permits

Research & Development

1379

1379

1379

1379

1379

1379

1379

1379

1379

1379

1379

1379

Miscellaneous expenses

810

1,013

1,013

1,056

1,225

1,438

1,732

1,900

1,937

1,644

1,475

1,306

Total disbursements:

33,444

34,245

34,751

36,538

40,799

46,015

51,553

53,786

52,142

46,605

42,850

40,311

Excess of Total Cash

3,743

3,251

2,253

931

973

2,887

9,052

18,609

31,048

39,235

45,552

48,782

Cash balance

3,743

3,251

2,253

931

973

2,887

9,052

18,609

31,048

39,235

45,552

48,782

67 of 72

Year Five Projected Budget Beginning Cash Balance

June

July

August

September

October

November

December

January

February

March

April

May

48,782

44,993

46,633

47,565

47,970

50,287

55,225

66,113

81,748

101,420

115,142

126,243

41,426

47,254

47,254

49,302

57,178

67,101

80,805

88,680

90,413

76,709

68,834

60,958

90,208

92,247

93,887

96,867

105,148

117,388

136,030

154,793

172,161

178,129

183,976

187,201

Inventory Purchase

16,303

17,012

17,720

19,847

23,391

27,644

31,188

31,897

29,061

25,517

22,682

15,594

Salaries

10,000

10,000

10,000

10,000

10,000

10,000

10,000

10,000

10,000

10,000

10,000

10,000

Payroll Taxes (15%)

1,598

1,773

1,773

1,654

1,890

2,188

2,599

2,835

2,887

2,476

2,240

2,004

Shipping

4,028

4,594

4,594

4,793

5,559

6,524

7,856

8,622

8,790

7,458

6,692

5,926

333

333

333

333

333

333

333

333

333

333

333

333

6,214

7,088

7,088

7,395

8,577

10,065

12,121

13,302

13,562

11,506

10,325

9,144

Office Supplies

457

457

457

457

457

457

457

457

457

457

457

457

Legal & Accounting Services

833

833

833

833

833

833

833

833

833

833

833

833

2000

-

-

-

-

-

-

-

-

-

-

-

Insurance

166

166

166

166

166

166

166

166

166

166

166

166

Line of Credit

100

Cash Receipts: Collections from customers Total cash available before financing Cash Disbursements:

Rent Marketing & Promotions

Licenses and Permits

Research & Development

1940

1940

1940

1940

1940

1940

1940

1940

1940

1940

1940

1940

Miscellaneous expenses

1,243

1,418

1,418

1,479

1,715

2,013

2,424

2,660

2,712

2,301

2,065

1,829

Total disbursements:

45,215

45,614

46,322

48,897

54,861

62,163

69,917

73,045

70,741

62,987

57,733

48,226

Excess of Total Cash

44,993

46,633

47,565

47,970

50,287

55,225

66,113

81,748

101,420

115,142

126,243

138,975

Cash balance

44,993

46,633

47,565

47,970

50,287

55,225

66,113

81,748

101,420

115,142

126,243

138,975

68 of 72

11.11

Seasonality

Here is an explanation of our projections of the seasonality of AmilieAmilie. The chart below was downloaded from the Google Insights for Search Tool on March 10, 2012. It reflects normalized search demand data from January 2009 to December 2011 on the search term “makeup”. Seasonal Trends Evident   

A quick rise and fall immediately after the New Year. A small, steady rise during the final months of summer. A major spike in October. This could be influenced by demand for Halloween makeup, but is most likely due to the changing season and “back to school” time.

This chart shows the same data for the search term “lip balm”. 69 of 72

Seasonality:  

Lip Balm is most popular in the winter months, building up from October to a peak in January and then falling through the spring. Slowest season is the middle of summer.

Finally, here is a chart for the search term eyeshadow. 70 of 72

Seasonality:  

Slow season is in the middle of summer. Peak in early January.

Based on this research, we conclude that Amilie Clean Cosmetics will experience:   

Slow, gradual sales during the summer launch period. Sustained growth starting in September and lasting through early January. A steady decline in sales during the spring of 2013.

71 of 72

11.12

Pricing Assumptions

Lip Balm       

Organic Beeswax = $0.27 / ounce (55 pounds from JEdwards costs $240) Organic Olive Oil = $0.05 / teaspoon (from Essential Wholesale & Labs, one gallon is 768 Teaspoons) Organic Orange Extract = $0.37 / teaspoon (from Flavorganics, one ounce = 6 teaspoons) 10 tubes of lip balm contain 1 ounce wax, 12 tsp. olive oil, and 1.5 tsp. orange extract. This means the ingredient cost per tube is: $0.15 Each tube costs 16 cents - http://www.elementsbathandbody.com/15-oz-Black-Lip-TubeWITH-CAP-pr-714.html Add four cents to cover the label and ten cents to cover labor costs Total cost for one tube of lip balm = $0.45

Mineral Foundation Costs – Although prototyping is incomplete, we will tentatively use the following recipe: Ingredients/materials needed (makes 3 jars) Phase I 8 tsp Micronized Titanium Dioxide 3 tsp Bismuth Oxychloride (may substitute Sericite Mica or Kaolin Clay) 4 tsp Zinc Oxide-Low Micron 1 tsp Magnesium Stearate 1/2 - 1 tsp Yellow Iron Oxide 1/16 tsp Brown Iron Oxide Pinch of Red Iron Oxide Phase II 1/4 tsp Jojoba Oil Phase III 1 tsp. Sericite Mica - Matt Finish Mix the ingredients from Phase I in your mortar and pestle or Magic Bullet, blending well. Slowly add the ingredients from Phase II to the mix. Stir/blend until homogenous. Last, add the Phase III ingredient if you need more or less to adjust the color tone.

Ingredient Costs:  Titanium Dioxide = $6.98 / pound (from Costal Scents)  Kaolin Clay = $2.99 / pound (from Costal Scents)  Zinc Oxide = $5.40 / pound (from Costal Scents)  Magnesium Stearate = $9.99 / pound (from Costal Scents)  Yellow Iron Oxide = $19.99 / pound (from Costal Scents)  Brown Iron Oxide = $11.99 / pound (from Costal Scents)  Red Iron Oxide = $11.99 / pound (from Costal Scents)  Organic Jojoba Oil = $1.36 / ounce (from Bulk Natural Oils)  Sericite Mica = $7.58 / pound (from Costal Scents) 72 of 72

Estimated Cost of One Batch:  $1.75 – Titanium Dioxide  $0.75 – Kaolin Clay  $1.35 – Zinc Oxide  $1.00 – Magnesium Stearate  $3.00 – Oxides  $0.50 – Jojoba Oil  $1.00 – Sericite Mica = $9.35 / 3 = $3.12   

Jar costs $0.53 (http://www.coastalscents.com/make-your-own-1/packaging/jars/sj-r-20silver.html) Add four cents to cover labeling and 25 cents to cover labor costs Total Cost for one Foundation = $3.94

Eye Shadow Costs – Recipe makes 30 grams Phase I (Base Powders) 3 Tblsps Micronized Titanium Dioxide 1 ½ Tsps Magnesium Stearate Phase II (Oil & Scent) ¼ Tsp Jojoba Oil Phase III (Color & Finish Look) 2+ Tsps of the iron oxide pigment color of your choice (start with small amounts and build to achieve the desired shade) 2 ½ Tsps Sericite Mica (pearl or matt or pearl flake) Mix ingredients from Phase I in a large bowl or mortar. Slowly add the Phase III ingredients and mix (homogenize) with the pestle being sure to blend the color into the white powders. Choose the pearl sericite if you want a shimmer in your shadow, or the matt sericite if you want low luster. A coffee grinder can also be used, but please reserve it just for cosmetics.

Ingredient Costs:  Titanium Dioxide = $6.98 / pound (from Costal Scents)  Magnesium Stearate = $9.99 / pound (from Costal Scents)  Organic Jojoba Oil = $1.36 / ounce (from Bulk Natural Oils)  Sericite Mica = $7.58 / pound (from Costal Scents)  Iron Oxide Pigments (average) = $13.1 / pound (from Costal Scents) Estimated Cost of One Batch:  $1.00 – Titanium Dioxide  $1.50 – Magnesium Stearate  $1.00 – Jojoba Oil 73 of 72

 $2.50 – Sericite Mica  $3.00 – Oxides = $9.00 / 3 = $3.00 The ingredients above will form a loose, colored powder. That powder will then be mixed with a compound of jojoba oil and pressed firmly into a small compact case.   

The 10 gram containers will cost $0.70 each (http://www.makingcosmetics.com/LipGloss-Eye-Shadow-Ct-Rica-2-p254.html ) Add four cents to cover labeling and 25 cents to cover labor costs Total Cost for one Foundation = $3.99

i

Wholesale pricing modeled off of Burt’s Bees. Wholesale pricing modeled off of Burt’s Bees. iii Wholesale pricing modeled off of Burt’s Bees. ii

74 of 72