Table of Contents Introductory Components Executive Summary.... 3 Company Description.. 4 Mission Statement 4 Management Functions Planning..... 4 Organization .....

..... 5 Directing.... 7 Controlling..... 7 Assessment of the Environment Current Economic Conditions........ 7 Industry Analysis o Real...... 9 o Virtual..... 10 o Competitive Analysis........ 11 Target Market. 11 Market Segmentation.... 12 The Marketing Mix Product.... 13 Pricing.. 15 Placement... 15 Promotion 16 Positioning... 17 Break-even Analysis 17 SWOT Analysis & Discussion of Business Risks SWOT 18 Risks... 19 Financial Data Financial Write-up.. 20 Income Statement. 21 Balance Sheet... 22 Cash Budget.. 23 Appendix Bank Statement 24 Loan Amortization Table.. 24 Kadabra! Teaser Ad. 26 Market Research Survey 27

Executive Summary ImagiNation Inc. is a new Virtual Enterprise firm that operates in the novelty industry. We strive to inspire our customers. This is why we have created the Kadabra! brand, which aims to unlock something extraordinary within each of our customers. We provide products that seem particularly out of reach, but are appealing to most people, regardless of their gender, nationality and even age. Our products appeal to those who seek efficiency and those more inclined to fun accessories. We offer intelligence that exceeds ones expectations, effortless singing abilities, precious magic carpet rides, and explosions of happiness! Our goal for our first year in business is to achieve $115,000 in sales of special powers. In order to meet this goal, we hope to create an effective website by December and develop aggressive advertising campaigns. These campaigns consist of three months of advertisement on the VE website, possible ads on other firms websites, establishing partnerships with international firms and promoting the idea of our products through How To videos. This, we hope, will promote our image properly to domestic and international firms, assisting us in accomplishing our projections. ImagiNation Inc. revenue will come from four different sources: the internet, the NYC Trade Fair, the International Trade Fair in Vienna, Austria, and contractual sales. Our focus is internet sales, although we expect higher sales to be achieved at trade fairs. We will break even when our firm achieves $106,316 in sales. Being the only company to sell our products, we will implement a price skimming strategy: we can charge prices on the top end of the V.E. general income scale, even if we lack quality. Psychological pricing is implemented because customers will only buy our products if they believe that they truly are otherwise unattainable. ImagiNation Inc. is, fundamentally, a creative and fun company. We hope to inspire our customers to unlock something extraordinary about them, making the little things not seem so big. When our customers think Kadabra!, we want them to think of something unique, creative, imaginative, fun and inspirational. If we can accomplish all the goals set, we project total profit of $6,109 in this fiscal year.
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Company Description ImagiNation Inc. is a new Virtual Enterprise firm that will operate in the novelty industry from the High School for Arts, Imagination and Inquiry. Our firm aims to exercise the imagination of our customers through our Kadabra! brand products. ImagiNation inc. began its first year of operation in September, 2011 with 18 employees. The firm filed with VE Law & Management and became incorporated as of November 5th 2011. ImagiNation Inc. is located at 122 Amsterdam Ave, Room 376, New York, NY 10023. Mission Statement At ImagiNation inc., it is our mission to help our customers unlock their natural potential. We believe every human being is an individual and has something that makes them extraordinary. We strive to create products that inspire our customers to become the best versions of themselves. Management Functions Planning ImagiNation inc. is a new novelty company with unique products. The main goal of our company is not only to meet our sales objectives but to express our message and idea through our products. We have objectives and strategies to meet each of these goals. One of our first objectives is to develop a website by December. The website will be structured to increase our sales and help express the message of our company. Develop an aggressive advertising campaign. Our design department will work to develop ads that express what our company represents and attract customers to our website through placement on the VE website and other firms websites. Establish advertising partnerships with other firms. This will be done by direct communication with those firms. We will explore domestic and international firms that offer advertising space on their websites.

Have a strong appearance at both the NYC and Vienna Trade Fairs. Our strategy is to make sure each of our employees has a clear idea of what our company is and how best to represent us. We will use our advertising campaigns to promote these appearances. Achieve $115,000 in sales in our first year of business. This is the amount our company would like to achieve. If we can successfully accomplish the previous goals, we should be able to reach this projection. Organization ImagiNation Inc. is a diverse firm, where each employee is placed upon their capability. We are broken down into five departments: Administration, Sales & Marketing, Accounting & Finance, Human Resources and Technology. The duties in each department are divided between Executives, Vice Presidents, Managers and Associates. Each departments Executive or Manager reports to the Chief Executive Officer. Many of our strategies and plans will require the collaboration of several departments. Administration The duties of the Administration department are to support the pursuit of excellence & innovation of our mission. Also, this department must ensure that all sales and business activities are effective and efficient. Sales & Marketing This department is responsible for setting and meeting sales objectives, developing new products and conducting research to implement advertising and promotion strategies. Accounting & Finance The Accounting & Finance department is responsible for monitoring all financial records, providing financial strategies, listing all planned expenses and revenues. They also manage money owed to us (accounts receivable manager), money owed by us (accounts payable manager), and online bank accounts. Financial reports from this department provide information on financial performance, planning and analysis.

Human Resources The Human Resources department is responsible for overseeing employee activities such as attendance, performance and possible conflicts, which they resolve through the conflict resolution policy in the ImagiNation Inc. Employee Manual. They monitor each employees performance through daily progress logs and evaluations. The Human Resources department also develops methods to motivate employees. These include Employee of the Month, Music Privileges, and Excused Dress for Success. Technology The technology department is responsible for maintenance of technological resources, as well as storage and protection of information. ImagiNation Inc. Organization Chart

Directing At ImagiNation Inc., we hold meetings on a daily basis, check-in meetings in the beginning and follow-up meetings at the end of class sessions. In check-in meetings, the agenda and tasks for the day are discussed; in follow-up meetings, each employee reports to the others about their progress for the day and what has to be done the following day. In case of misunderstandings, departmental meetings are arranged so that each department is on track to meet objectives. Controlling ImagiNation Inc. holds follow-up meetings to assure that every employee is on track and tasks in the agenda have been accomplished. Weekly and monthly status meetings are also done to see if the firm has achieved the projected goals for that period of time. Department evaluations are performed to rate employee and departmental performance. Monthly meetings with department heads compare actual results to projections. Current Economic Conditions Generally, expectations for improvement in global and home economies are very low. According to a survey from McKinsey & Company, the majority of global business executives believe both will be either the same or moderately worse 6 months from now. Their projections have become less hopeful in subsequent surveys.

The pessimistic projections can be attributed to the instability of economic factors within the United States. The current situation is confusing for companies. A recent decrease in personal saving rates shows that consumers have been spending money, which is supported by the chart on U.S. Consumer Average Daily Spending, but unemployment is still at 9%.
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These expectations affect the economy at a company level because factors like unemployment and inflation affect consumers confidence and spending, which is alarming for a wide range of companies in different industries. This lowers profit expectations and companies are forced to rearrange their economic strategies and review their projections. Emerging markets have the most favorable outlook regarding their financial future. A survey, similar to the one shown above, revealed that 58% percent of business executives in India expect their economy to be substantially or moderately better 6 months from now. Other developing markets have presented similar results. In India, China and Latin America, there is little fear of low consumer demand. The positive expectations tempt more companies into business, which increases competition and lowers prices. As of June 2011, in North America and Europe, low consumer demand scared about 48% of executives. Inflation in these places, along with fluctuations in currency exchange rates, poses both opportunities and threats for global trade. Unemployment and inflation do not affect the development and financial success of Virtual Enterprise firms. Low consumer demand is a risk, but not a very probable threat for the success of Kadabra! since we have exclusivity in our market. During international trade fairs, purchases are being made by employees of VE firms from other countries. The decrease in the value of the dollar could be an advantage for us. As we convert our prices to other currencies, they will be comparably lower for our customers.

Real Industry Analysis

Companies in the novelty industry can have a varied portfolio of products such as toys, trinkets and other items. Novelties are popular in companies such as Rickys NYC, Spencers, and Brooklyn Superhero Supply Company, which are our real world competitors. The Brooklyn Superhero Supply Co. is most similar to our company. As they say on their website,1 they are the Online purveyors of high quality crime fighting merchandise. One of their products is a Secret Identity Starter Kit (above right) including a short brown wig, clip-on tie and plastic glasses. Another is Muscle (above left), which comes in a 32 oz. can. Although the products are not real, the idea is to give the customers a feeling of self improvement. According to a report from First Research Inc, the US gift, novelty, and souvenir store industry includes about 30,000 stores. Major companies include Hallmark, Spencer Gifts, and Disney Stores. The industry is fragmented: the top 50 companies account for about 30 percent of sales. The industry's revenue for the year 2010 was approximately $711.1 million USD, with an estimated gross profit of 32.78%. Import was valued at $1.9 billion USD from 104 countries. The industry also exported $287.8 million USD worth of merchandise to 127 countries. Adding import value to and subtracting export value from the industry's shipment value, the total domestic demand for the industry in 2010 was $2.3 billion USD. A snapshot from the Small Business Development Center on Gift and Greeting Card Stores (2006) states the following: In order to maintain a competitive advantage, it is important for novelty shops to be unique and offer items not found in other stores. One rapidly growing trend in novelty
1

http://www.superherosupply.com

shops is the use of technology. Shops without computerized systems or an Internet presence are at a disadvantage. Computerization and software allow the gift shop owner to keep track of revenues, product movement, and the customers themselves. Approximately 75% of all stores have an online presence. These current trends in the novelty industry would benefit our company because one of our most reliable sources of revenue is the Internet. Virtual Competition Below is a chart listing VE firms that offer creative products. This chart also includes brief explanations and examples of products and prices.

About Them Katz & Dogs is a firm from Calhoun High School that sells pets and pet services such as daycare, dentist, and grooming. The Student Super Store sells office/school supplies at high and low prices depending on the chosen item or package.

Products German Sheppard Orange Tabby Cat Black Cat White Tiger Panda Penguin Metropolis (school supplies package) Lois Lane (mp3 player and headphone package) Kryptonite (iPad and printer) Clark Kent (desktop publishing package) Yankees vs. Mets Celtics vs. Lakers Heat vs. Mavericks Lil Wayne and Drake Kanye West and Jay-Z Usher / Chris Brown Wireless Keyboard Pant Mens Air Force One Speaker Shoe Body Suit Seadoo Sea Scooter Off Road Wheelchair Solarwing Electric Go Kart

Prices $100 $40 $40 $200 $300 $150 $39 $299.99 $659.99 $999.98 $52.20 $120.00 $120.00 $82.50 $105.00 $82.50 $175.00 $175.00 $65.00 $220.00 $1900.00 $500.00

Website http://www.wix.co m/colekalibat/katzand-dogs

http://www.student superstore.biz

Stubway sells tickets for concerts, sport events, and theatre. The prices vary.

http://schools.lcss. us/stubway/

Electric Avenue sells technologically advanced products and very abstract items. Product titles, for the most part, are self explanatory.

file:///C:/Users/pan gel/Desktop/Untitl ed%20Document. htm

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Competitive Analysis The total sales revenue for New York City VE retail firms for 2010 2011 was $2,120,412.2 All retail firms are our indirect competitors. Since we sell products directly to individuals (rather than to other businesses, for example), we are competing with every other retail firm for the employee dollar. We project $115,000 worth of sales for ImagiNation Inc. at the end of the fiscal year and we hope that, with this value, we will achieve a 5% share of the NYC retail market. Target Market Our target market age range is generally from 15 to 21 years of age and our product appeals equally to both men and women of any race. The general income is that of V.E. students, which ranges from $75 to $150 a week. Most of our customers will come from the following locations: New York, California, South Carolina, Illinois, New Jersey and Tennessee. We also anticipate a portion of our customers will come from international firms. In terms of psychographics, we are aiming to sell to individuals who generally search for efficiency. We conducted a market research survey throughout the month of November. As shown in the graph below, 50% of those who responded to our survey said they wish to improve in time management.3

2 3

According to the NYC VE firm financial data (FY 2010 2011). Results of ImagiNation Market Research Survey, November 17, 2011

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We have speculated that our customers would like to achieve a certain level of success without having to go through as many obstacles because, in early adulthood, consumers want things made easier. As seen above, the second most wanted aspect to improve is artistic ability. Still, artistic talent is not a favorite when it comes to desired special powers, as shown in the following chart:

Market Segmentation The most popular abilities are Invisibility, with 55% of votes, super speed and super intelligence, both with 52% of votes4. Based on these results, our target market can be segmented into those who seek efficiency and those who want things that are more inclined to the fun side. In this case, the former consists of powers in the area of super speed and super intelligence, which directly affect ones efficiency, and the latter consists of invisibility and other abilities that are more inclined to fun purposes. Efficiency is substantially more popular with those who took our survey, and will probably become our focus for upcoming products and marketing strategies.

Results add to over 100% because consumers could choose more than one option.

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Product

Kadabra! is a new brand by ImagiNation Inc. that sells special powers. We do not literally sell special powers, but accessories that stimulate them. The purpose of Kadabra! is to satisfy and improve our customers. Our goal is to provide our consumers with the confidence and strength one might need to be the best they can without actually selling any substantial power. In the V.E industry there is much room for creativity. We have created products that satisfy our customers needs. We want to keep producing products using the ideas of our customers. We intend on doing this through surveys that can be found and completed on our website. We will have a FAQ tab and How To videos for each of our products. Each special power will come with an accessory or starter kit.

Products Super Smarts: Our package to help one improve on their intelligence will come complete with a pair of glasses that will help you feel smarter and work more efficiently.

Price: $100 Cost of goods sold: $8

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Special Voices Package: Will come complete with a microphone and wig of the celebritys voice you have purchased.

Price: $150

Cost of goods sold: $50

Super Speed: Consists of a pair of sneakers with wings. These will have you going anywhere in a flash.

Price: $200

Cost of goods sold: $60

Magic Carpet: This carpet will take you to A Whole New World. (Results may vary.)

Price: $300

Cost of goods sold: $40

Special Healing Power: Our own line of the much loved confectionary, Pop Rocks. The idea of this is that one will feel instantly more content because of the popping. Price: $30 Cost of goods sold: $2

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Our products are designed to help the individual improve and feel better about who they are and give them confidence so that they can think about who they want to be. Kadabra! will have a range of prices to accommodate all consumers. We are always looking for ideas on inventing anything new for our customers. We plan on keeping people interested in Kadabra! by constantly conducting plenty of research so that we can stay on top of the market. Our main priority is our costumer and their well being. Pricing Our focus is price skimming. We have a substantial competitive advantage in the V.E. market for being the only company selling the products we sell. Nevertheless, the creation of a new market tends to attract new competitors, which would force us to decrease our prices. Thus far, our products could be sold at a high price, even if they lack quality. However, our prices are not so high that they will be out of reach or promote bad debt, but they are on the top end of V.E. employees affordability. As other companies are tempted into our industry, other pricing strategies will have to be implemented. Psychological pricing is also a big part of our strategy. Our product depends strongly on our customers capacity to ignore rationality and common sense for the chance of being inspired. Much of our pricing will take psychological features into consideration. The majority of our products have a low cost of goods sold. At the same time (and this is where the psychological part of our business steps in), we sell many unattainable things. Because our products seem out of reach or improbable, we assume that people are willing to pay a lot for them. Placement Our firm counts on four sources of revenue. Below, the total projected sales for the 2011-2012 year are depicted: Source of Revenue Internet NYC Trade Fair International Trade Fair Contractual Sales Total Projected Sales Total Projected Sales for Source $21,000 $50,000 $20,000 $24,300 $115,300 % of Projected Sales 18% 43% 17% 21% 100%

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Although trade fairs happen only now and then, we speculate that they will result in more sales because we will have the opportunity to reach a broader audience and explain our idea, convincing customers that they should buy our products. The internet will still be a focus when it comes to the promotion of Kadabra! and ImagiNation Inc. Our website is being developed and is expected to be ready by December of 2011. There, customers will be able to view and purchase our products. In order to expand our market, we plan on building our website in a few different languages, so that the internet continues to be a focus when regarding international sales. Our internet sales are expected to increase gradually. We projected that the month of November would bring about $2,000 worth of test sales made by our employees. In December, we project sales of about $1,000, being our first month of public sales. In January we expect to increase sales to about $3,000. In February, this number is expected to increase reaching $5,000 and it will, we hope, stay steady through the end of the fiscal year. Promotion For a Virtual Enterprise firm, promotion is done mostly on the internet. Our goal is to advertise as much as possible, which means sending e-mails to promote our image, creating advertising partnerships with other firms and include commercials on our website. In order to promote our website internationally and reach a broader audience, we plan on building our website in various different languages. We are aware that our product may be difficult to understand. Therefore, we will have How To videos on our website. This way, customers will be able to get what Kadabra! is, what it does and how it works. When our customers have that better understanding, the products we sell are likely to be more appealing to them. Our initial advertising budget is $30,000 dollars: the price of three months of advertising on the V.E. International website. Our first advertisement has been put up for the month of November and it consists of a teaser to our brand and link to our market research survey. This, we hope, will get people used to our name. Our next advertisements will be on the website for the course of the months of February and March in order to promote ourselves for upcoming trade fairs. Additional capital raised through the sale of common stock will be used to advertise with other VE firms, including finding international partnerships.
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In order to improve our promotional strategies, it is necessary to know how successful each of them is. To gather that information, we intend to give our customers different coupon codes through surveys, e-mails and other means of promotion. When placing an order, customers will be able to provide any available codes for discounts. By checking which codes are used the most, we will know where our promotion works best and where we should focus our marketing efforts. Positioning ImagiNation Inc. is, fundamentally, a creative and fun company. The creation of the Kadabra! brand allows us to sell items that will inspire our customers to unlock something extraordinary about them because, that way, we can bring solutions and make the little things not seem so big. When our customers think Kadabra!, we want them to think of something unique, creative, imaginative, fun and inspirational. This is the only company that sells these products and they are sold with the intention of inspiring imagination and providing confidence. Our authenticity is a reflection of our customers and the idea that we want them to get from what we do. Break Even Analysis After doing a Break Even Analysis, we found our break-even point to be $106,316. This means that, once we have earned that amount in sales, we will have no profit and no loss. The analysis was done with the estimation of 20% costs of goods sold and 80% gross profit margin. Each of our products has a different cost of goods sold and gross profit margin, but averaged together, they come out to the aforementioned percentages. We have the opportunity to have a relatively low break-even point because we have a fixed cost of $85,053 and very low costs of goods sold. This is because we use a price skimming strategy: our products are not of exceptional quality, but we have a substantial advantage for being the only ones selling them.

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S.W.O.T. ImagiNation Inc. conducted an internal and external audit. Strengths and weaknesses are internal factors; opportunities and threats are external factors. The results are compiled in the chart below.
Strengths: Communication is strong because of our daily meeting system and organization We have many creative employees in our firm which helps us offer unique products Our idea is original and easy to deliver into our costumers minds Diversity of employees Threats: Difficult to convey idea to customers which may lead to lower than projected sales Failure of technology could cause problems because all work is done electronically More established retail companies that are competing for the retail dollar Weaknesses: Punctuality Many of our employees have difficulty in getting to work on time VE Learning Curve As a new firm we are still learning to adapt to the VE market place Time management Creative minds struggle to stay on task

Opportunities: New Market is a great chance for us to deliver our idea New Idea that has never been introduced to the market Exclusivity-No direct competition Potential to inspire our costumers

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Risks One of the major risks the firm faces this year is not meeting our sales goals. The chart below indentifies three reasons that may lead to lower than projected sales. Problem
Customers dont understand or are confused about our idea and products. Not being able to attend the international trade fair. Not meeting deadlines and marketing objectives.

Solution
How To diagrams easily located and highlighted on the website Videos and commercials that will deliver the idea to the customers FAQ section on the website Refocus marketing efforts towards increasing web traffic and thus increasing sales revenue Keeping up with employee progress logs & To Do lists Daily follow up meetings Weekly/monthly progress meetings to compare actual results with projections

Backup Data Plan ImagiNation Inc. has all computers connected through a network drive, which allows us to save our work onto a public folder so that it can be revised from any computer. We have all data and files saved in a RAID (Redundant Arrays of Inexpensive Disks) configuration so that, if there are any problems regarding technology, we do not lose any of our work. Our VP of technology also has a password recovery system for computers and the company e-mail.

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Financial Summary Income Statement This year ImagiNation Inc. began its operations in September 2011. We project $115,300 in sales from November to April. We are hoping to participate in two trade fairs. We are projecting to bring in $20,000 at the International trade fair and $50,000 from the NYC trade fair in March. Our projected Internet sales are $21,000 starting from the month of November. Our projected operating expenses from the period of September through April will be $85,053. Overall that leaves us with a projected profit of $6,109 for FY 11/12. Cash Budget We received a start up loan of $80,000 in November 2011 along with $60,000 from the sale of common stock. We assume that internet sales will be received in the following breakdown: 50% during the month of sale, 30% in the following month, and 20% in the second month. We assume that 50% of NYC Trade Fair sales will be paid by check and the other 50% will be paid on account. We project our total receipts by the end of April to be $258,057. Our total payments should be $121,516. Lastly our cash balance by the end of the Fiscal Year is projected to be $136,541. Balance Sheet This year we are projecting to have $136,541 in cash on April 30th, 2012 with $9,516 in accounts receivables, bringing our total current assets to $146,657. Our fixed assets lose their value after 5 years; total depreciation for this year is $3,000. We project our total assets to be $172,657. Our current liabilities as of April 30th , 2012 should be $9,586 in total. That includes shipping, sales tax, salaries, payroll tax, and corporate tax. In November we received a loan of $80,000 to begin our business. After making payments, our loan balance should be $72,539 at the conclusion of our fiscal year. VEC invested $90,000 in ImagiNation Inc. and in exchange they received 9,000 shares of common stock. We used that money to buy our fixed assets including computers, furniture, fixtures, and other office supplies. Overall that accounted for $30,000 and we received the remaining $60,000 in cash which will be used to develop advertising partnerships with other firms.

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Income Statement FY 2011-2012

Sep-11 Sales revenues Internet Sales NYC Trade Fair International Trade Fair Contractual Sales Total sales revenues Cost of goods sold or services provided Gross profit Operating expenses Salaries Payroll tax Rent Advertising/ Promotion Trade Fair Booth Insurance Accounting & Legal fees Utilities Interest Expense Pension or 401(k) Depreciation Other or miscellaneous Total operating expenses Income from operations Other gains and losses Net income before taxes Corporate income tax Net income after taxes 0 0 Oct-11 Nov-11 2,000 Dec-11 1,000 Jan-12 3,000 Feb-12 5,000 20,000 0 0 2,000 400 1,600 24,300 25,300 5,060 20,240 3,000 600 2,400 25,000 5,000 20,000 55,000 11,000 44,000 5,000 1,000 4,000 Mar-12 5,000 50,000 Apr-12 5,000 Totals 21,000 50,000 20,000 24,300 115,300 23,060 92,240

872

5,400 413 872

5,400 413 872 10,000 42 42 297 0 500 500 18,065 -16,465 -16,465 -16,465

4,050 310 872

4,050 310 872

42 42 297

42 42 297

42 42 297 311 500 500 6,923 13,317 13,317 13,317

42 42 297 306 500 500 6,918 -4,518 -4,518 -4,518

4,050 310 872 10,000 500 42 42 297 301 500 500 17,413 2,587 2,587 2,587

5,400 413 872 10,000 500 42 42 297 297 500 500 18,862 25,138 25,138 25,138

4,050 310 872

42 42 297 292 500 500 6,904 -2,904 -2,904 -2,904

500 150 1,902 -1,902 -1,902 -1,902

500 500 8,065 -8,065 -8,065 -8,065

32,400 2,479 6,975 30,000 1,000 333 333 2,375 1,507 0 4,000 3,650 85,053 7,187 7,187 1,078 6,109

* Payroll for Oct. Nov. Mar. are based on 4 work weeks in the month. Dec. Jan. Feb. Apr. are based on 3 work weeks due to school breaks. *Other Miscellaneous expenses include office supplies *Contractual sales are capped at 75% of projected salaries

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Projected BalanceSheet FY 2011-2012

4/30/2012 Assets Current Assets Cash Investments in stocks Accounts receivable Merchandise inventory Supplies Total Current Assets Fixed Assets Computers Less: accumulated depreciation Furniture and fixtures Less: accumulated depreciation Office equipment Less: accumulated depreciation Total Fixed Assets Total Assets Liabilities and Shareholders' Equity Current Liabilities Accounts payable Unearned revenue Shipping Payable Sales tax payable Salaries payable Payroll tax payable Corporate tax payable Total Current Liabilities Long Term Liabilities Loan payable Total Liabilities Shareholders' Equity Common stock, $10 par value, * # shares issued Additional paid-in-capital Retained earnings Total Shareholders' Equity Total Liabilities and Shareholders' Equity 90,000 0 531 90,531 172,657 72,539 82,125 0 0 1,125 4,813 1,789 782 1,078 9,586 10,000 1,333 15,000 2,000 5,000 667 26,000 172,657 136,541 0 9,516 0 600 146,657

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Projected Cash Budget FY 2011-2012

1 Description Cash balance at beginning of period: Receipts of cash: Internet NYC Trade Fair International Trade Fair Contractual Sales Receipts of accounts receivable Loan proceeds Other Total receipts Beginning balance + cash receipts Payments: Cost of merchandise Salaries Accounts payable Rent Advertising/ promotion Payroll tax Insurance Accounting and legal fees Utilities Loan Payment Pension, 401(k) Sales tax Shipping Other or miscellaneous Corporate tax Total payments Cash balance at end of period Net increase or decrease in cash September October 0 November 0 December 112,802 2,822 January 129,078 1,641 February 120,490 2,734 20,000 27,641 328 80,000 60,000 140,000 140,000 400 4,771 5,913 1,744 10,000 782 500 500 594 1,495 1,203 2,297 11,266 March 120,585 2,734 42,656 April 134,618 2,734

2 3

0 0

0 0

30,463 143,265 5,060 3,578 1,744 1,042

1,969 131,047 600 3,578 1,744 782

23,938 144,427 5,000 3,578 1,744 10,000 782

47,688 168,273 11,000 4,771 1,744 10,000 782

14,000 148,618 1,000 3,578 1,744 1,042

594 1,495 175

594 1,495

594 1,495

594 1,495 2,520 250 500 33,655 134,618 14,033

594 1,495

500 0 0 0 0 0 0 27,198 112,802 112,802

500 14,188 129,078 16,276

1,265 500 10,557 120,490 -8,588

150 500 23,842 120,585 96

2,125 500 12,078 136,541 1,922

4 5 6

* Accounts payable for November includes payroll, rent, utilities for October * Salaries is based on projected net pay * Payroll tax includes employee with holdings and company payroll tax expense * We assume that internet sales will be received in the following breakdown: 50% month of sale,30% following month, 20% second month. * We assume that 50% of internet sales will come from NYS residents and subject to VEC sales tax of 8.75% * We assume that shipping costs will be $5 per $100 in sales and will be paid by the customer * We assume that 50% of NYC trade fair sales will be paid by check, the other 50% will be paid on account. * Shipping is paid the following month. * Other receipts of cash from VEC for sale of 6,000 shares of common stock.

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Appendix ImagiNation Inc. Bank Statement

Loan Amortization Table

ImagiNation Inc. Loan Amortization Table Loan Information Loan Amount (Principal) Annual Interest Rate Term of Loan in Years # of Payments per Year Payment Type Monthly Payment Interest for the Period 0.00 310.75 306.06 301.36 296.64 291.89 287.13 282.35 277.55 272.74 267.90 263.04 80,000 4.75% 5 12 beginning of period ($1,494.64) Total Balance Outstanding 80,000.00 78,816.11 77,627.54 76,434.26 75,236.26 74,033.52 72,826.02 71,613.73 70,396.65 69,174.75 67,948.02 66,716.42 Payment for the period 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 Summary Rate (per period) Number of Payments Total of Payments Total Interest 0.3958% 60 89,678.20 9,678.20

No. 1 2 3 4 5 6 7 8 9 10 11 12

Principal 80,000 78505.36 77321.48 76132.90 74939.63 73741.63 72538.88 71331.38 70119.10 68902.01 67680.12 66453.38

Principal Reduction 1494.64 1183.89 1188.57 1193.28 1198.00 1202.74 1207.50 1212.28 1217.08 1221.90 1226.74 1231.59

Revised Balance Outstanding 78,505.36 77,321.48 76,132.90 74,939.63 73,741.63 72,538.88 71,331.38 70,119.10 68,902.01 67,680.12 66,453.38 65,221.79

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13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 Totals

65221.79 63985.32 62743.96 61497.68 60246.48 58990.31 57729.18 56463.06 55191.92 53915.75 52634.53 51348.24 50056.85 48760.36 47458.73 46151.95 44840.00 43522.86 42200.50 40872.90 39540.06 38201.93 36858.51 35509.77 34155.70 32796.26 31431.44 30061.22 28685.58 27304.49 25917.93 24525.89 23128.33 21725.24 20316.60 18902.39 17482.57 16057.14 14626.06 13189.32 11746.89 10298.75 8844.88 7385.25 5919.85 4448.65 2971.62 1488.74

258.17 253.28 248.36 243.43 238.48 233.50 228.51 223.50 218.47 213.42 208.35 203.25 198.14 193.01 187.86 182.68 177.49 172.28 167.04 161.79 156.51 151.22 145.90 140.56 135.20 129.82 124.42 118.99 113.55 108.08 102.59 97.08 91.55 86.00 80.42 74.82 69.20 63.56 57.89 52.21 46.50 40.77 35.01 29.23 23.43 17.61 11.76 5.89 9,678.20

65,479.96 64,238.60 62,992.32 61,741.11 60,484.95 59,223.82 57,957.69 56,686.55 55,410.39 54,129.17 52,842.87 51,551.49 50,255.00 48,953.37 47,646.59 46,334.64 45,017.49 43,695.13 42,367.54 41,034.69 39,696.57 38,353.15 37,004.41 35,650.33 34,290.90 32,926.08 31,555.86 30,180.21 28,799.12 27,412.57 26,020.52 24,622.97 23,219.88 21,811.24 20,397.02 18,977.21 17,551.77 16,120.70 14,683.95 13,241.52 11,793.39 10,339.51 8,879.89 7,414.49 5,943.28 4,466.25 2,983.38 1,494.64

1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 1494.64 89,678.20

1236.47 1241.36 1246.28 1251.21 1256.16 1261.13 1266.13 1271.14 1276.17 1281.22 1286.29 1291.38 1296.49 1301.63 1306.78 1311.95 1317.15 1322.36 1327.59 1332.85 1338.12 1343.42 1348.74 1354.08 1359.44 1364.82 1370.22 1375.64 1381.09 1386.56 1392.04 1397.56 1403.09 1408.64 1414.22 1419.81 1425.43 1431.08 1436.74 1442.43 1448.14 1453.87 1459.63 1465.40 1471.20 1477.03 1482.87 1488.74 80,000.00

63,985.32 62,743.96 61,497.68 60,246.48 58,990.31 57,729.18 56,463.06 55,191.92 53,915.75 52,634.53 51,348.24 50,056.85 48,760.36 47,458.73 46,151.95 44,840.00 43,522.86 42,200.50 40,872.90 39,540.06 38,201.93 36,858.51 35,509.77 34,155.70 32,796.26 31,431.44 30,061.22 28,685.58 27,304.49 25,917.93 24,525.89 23,128.33 21,725.24 20,316.60 18,902.39 17,482.57 16,057.14 14,626.06 13,189.32 11,746.89 10,298.75 8,844.88 7,385.25 5,919.85 4,448.65 2,971.62 1,488.74 (0.00)

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