Implementation And Control

Implementation

Given the positive trends in the market for mobile phones and in the market for wireless messaging, we plan to increase our revenue by 38% for a total of 78,855,803 in the current year, growing to $150,000,000 by 2008, by increasing our marketing expenses of $10,000,000, which is about 13 % of sales. 50% of the marketing expenses are represented by operating expenses, which correspond to about 6% of the projected revenue in 2006.

The plan assumes a relatively high initial investment in product development, which involves the addition of new features and the enhancements in terms of compatibility with different platforms and in terms of security and reliability. The expenses in advertising and partnerships even thought the 6.4% figure we project for the first year is quite low compare to projected revenue, are going to decrease further as the reputation of the company builds up.

We think that the key to succeed in the market for wireless messaging is not to create another platform. Therefore, Good is focusing on wireless data synchronization and communications, working with the platforms in the market without forcing companies to adopt a new platform to use Good's applications. Partnerships with US and international carriers are the key to beat the rivals. Under that perspective, an initial higher investment in long-term partnerships, sponsorships, travels and employees' training is perfectly justifiable. The acquisition of technology and engineers from JP Mobile to tap into the more than 118 million Lotus users worldwide (The GoodLink Lotus Domino Edition that will be available in the first half of 2006) and the stipulation of long-term partnerships are fixed costs for the company and represent a major portion of the total cost. We anticipate the total fixed costs, which reflect the decrease in assets due to commissions to sales parsons, salaries and wages, to be 56.2 millions of dollars per years in the next three years. This figure is attained by adding the 5 millions of the start-up cost for product development to the existing 51.2 millions of dollars. The operating expenses as percentage of sales for Good are going to be about 71% in 2006 to fall to a more acceptable 37% by the end 2008.

The remaining portion of the operating expenses is variable costs such as advertising and other activities such as sponsorships and public relations plus the cost the inventory items that are sold to generate revenue. We are going to face high operating expenses at the beginning due to the aggressive advertising campaign and the training of new personnel and our activity of partnerships, sponsorship and public relations. But the operating expenses are going to increase at a decreasing rate during the three-year period, as the company builds up its name. This means that the percentage of variable costs over sales is going to decrease from about 16% in 2006 to 11% by the end of 2008.

Break-even analysis

The Breakeven analysis is designed to determine that point in sales at which you have enough money left over after covering your Variable Costs (Cost of Sales) to pay all of the company Fixed Costs (Operating Expenses or SG&A Expense)

The gross profit based on our projections is expected to be about 65 millions of dollars and the gross profit margin is 83%

At the breakeven point, income perfectly balances against Costs + Expenses. The breakeven point is reached at 67 millions. This means that we should break even before the end of the second part of 2006.

Sales Forecasts

The sales will benefit both from the aggressive advertising campaign and from the partnerships with the most important carriers.

We expect the sales to increase in the three-year period for the effect of our campaign, at an increasing rate. Our projections are based on the 40% increase observed in the period 2004-2005 paired the 70% increase. We