Sports Medical Equipment Business Plan

Professional Athletic Equipment, Inc. is a privately held Georgia Corporation founded by Dr. Jim Smith of Anytown. Dr. Smith is the inventor and designer of “Body Armor.” Prototypes have been produced, used, and tested. This business plan will serve as the framework for bringing the product to market. All development costs to date have been born by Dr. Smith personally. At this point Dr. Smith owns 100% of the common stock of Professional Athletic Equipment, Inc. It is his intention to invest further in this expansion plan as well as to open limited initial investment via private placement. At this point the company can offer no assurances of the marketability of its product, or that sufficient capital can be raised to execute its business plan.

2.1 Company Ownership

Dr. Jim Smith of Anytown, Ga. currently owns 100% of the common stock of Professional Athletic Equipment, Inc. It is his intention to sell limited ownership to outside private investors in the first round of external financing. With success of initial business plan executions, additional capital will be required. Further offerings to both individuals and institutions are planned. Initial investors will be granted participation rights in any future offerings the company undertakes on a right-of-first-refusal basis.

It is expected that stock option plans totaling no more than 15% of equity will be made available to key company management personnel.

2.2 Start-up Summary

The start-up costs for Professional Athletic Equipment, Inc. are $250,000 minimum to $500,000 maximum. All start-up assumptions are based on an actual infusion of $250,000 in new capital. These funds will be utilized to procure molds and raw materials to fund production of initial inventory by our contract manufacturer, ABC Plastics. Cash outlay for capital equipment will be $65,000. Investment in initial inventory will be $25,437. In addition, initial marketing costs, and overhead, including G & A is included.

If $500,000 in new capital is secured from the initial offering the overage will be allocated to cash surplus and will serve to make funds available to accelerate marketing plans with no delay to secure funding. This acceleration and use of funds will be reflected in the first six-month revision of this business plan.

Professional Athletic Equipment, Inc. management intends to raise the initial capital with a private offering of cumulative convertible preferred stock. The conversion would be at 3 shares of common to one share of preferred and would be exercised at the end of year two. The interest would be accumulated at 8% per annum but not paid until time of conversion. For the purpose of all charts and graphs included in this plan the interest is not treated as paid on a monthly basis, but will in fact be held in reserve. Management reserves the right to utilize such reserve funds as operating capital if necessary. Repayment of principal and interest is treated as a line item paid of $290,000 in 1998. If interest cannot be repaid at the end of the two year term, preferred stock holders will have liquidation preference. Or preferred stockholders may exercise, at their option, to forgive payment of interest in return for upgrading to a 4 to 1 conversion ratio. It is expected that all issued convertible preferred shares will be retired by the end of year two of operations.

2.3 Company Locations and Facilities

A company office is presently maintained by Dr. Smith at 1234 Main Street, Anytown, Ga. 30000. Subsequent to funding the office may be relocated to the Atlanta market area. Available office space has been located in Atlanta. This office space is small and may be secured at nominal cost. As needs dictate office and/or distribution facilities will be expanded. Initially, the small office will serve to manage marketing functions and sales/order processing.

Distribution will initially be handled by the contract manufacturer. Orders will be drop shipped directly from the plant. This precludes the need to invest in distribution space at the outset. ABC Plastics is located in Anyplace, Ga. between Anytown and Somewhere, off of Interstate Route 123 The plant has been visited by Professional Athletic Equipment, Inc. management and has substantial capacity both for production and warehousing of inventory. Preliminary terms for production, material and assembly costs and capital expenditures for molds are used as the cost basis in this plan. Shipping and handling expense will be billed to the customer.