Capital Equipment

Start-up Costs

Sources and Uses of Cash Statements

Projected Profit Goals (Cigarettes Only)

Liability Issues

The main liability issues for J B C Smoke Shop concern three areas:

• Smoking is hazardous to the health of the consumer. This fact has led to tobacco companies being successfully sued. We, as only a retail outlet, should not be held liable for selling a legal product and so far, there has been no attempt at anyone sueing a retail outlet.
• Cigarettes, cigars, and other tobacco products are sold only to adults 18 years and older. The website will use internet established procedures to be sure that these products are sold only to adults.
• The federal government and state governments regulate the quantity that can be sold, shipped, and possessed in certain jurisdictions without being in violation of the law. See Legal Restrictions for more details on this and how J B C Smoke Shop will adhere to these laws.

Capital Equipment List

Other than the equipment listed with J B C Enterprises, Inc., there is no additional capital equipment needed for J B C Smoke Shop to begin operations.

Start-up Costs

Our computer is the main purchase to start operations (Already available)	N/A
Online Store Expenses (See infoComCorp) ShopSite Manager / Shopping Cart Setup Domain Name Registration Hosting Service Set-up Costs SSL Certificate Set-up(Encryption / Security) SSL Certificate Annual Fee Monthly SSL service ($20 per month for 6 months) Monthly Hosting Fees ($65 per month for 6 months)	$495 $72 $175 $125 $100 $120 $390
Initial Advertising Costs	Approx. $1500
Preferred Account/Referral Cards	Approx. $250
Other start-up Costs Shipping Materials Operating Capital	Approx. $350 Approx. $1500
Total Estimated Costs	$5,077

Sources and Uses of Cash Statements

Source
Use of personal cash from Matt Scofield, President and CEO of J B C Enterprises, Inc. and any loan that he will be personally responsible for.

Uses of cash as follows:

1. Start-up Expenses
2. Purchase of stock(cigarettes) and supplies

Projected Profit Goals (Cigarettes Only)

Year One: Fiscal Year 2000 (October thru December)

Month	No. of Customers	Cartons1	Gross Profit2 ($)
October	20	80	400
November	50	200	1,000
December	100	400	2,000
FY 2000 Projected Total		680	3,400

Year Two: Fiscal Year 2001 (January thru December)

Month	No. of Customers	Cartons1	Gross Profit2 ($)
January	200	800	4,000
February	300	1,200	6,000
March	400	1,600	8,000
April	500	2,000	10,000
May	600	2,400	12,000
June	700	2,800	14,000
July	800	3,200	16,000
August	900	3,600	18,000
September	1,000	4,000	20,000
October	1,100	4,400	22,000
November	1,200	4,800	24,000
December	1,300	5,200	26,000
FY 2001 Projected Total		36,000	180,000

It is expected that sometime during FY2001, we will have to move from our residentail location to a small warehouse. This will probably occur around February or March, due to our limited capacity. Also, we expect to probably have to hire up two extra people by the end of the year. It is our goal to keep these two expenses, along with all other additional expenses, below 20 percent of our gross profit for FY2001, making our projected profit about $140,000.

¹Research has shown that the average customer orders 4 cartons per month. Our limit per customer is 50 cartons per quarter.
²Our markup will be approximately $6-7 per carton with a gross profit of $5 per carton after expenses.

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Prepared By:	Matt Scofield
	September 2000