Business Plan“interactive card celebrations”

Brandon Till & Eric Jönsson6 May 2011brandon@airohmail.com+46 735 57 34 14

Executive SummaryAirOhMail is an inflatable greeting card which combines two great products: the celebration of balloons and the emotional connection of greeting cards. It is more convenient than a regular balloon and more fun and attractive than a normal greeting card. Itʼs also highly customizable, easily produced, lightweight, simple to use and affordable. Our product is the first of itʼs kind and it will create a niche in the greeting card market.

After a slump from 2000 to 2004, the greeting card market has seen steady growth since 2005 and is expected to reach a worldwide 194 billion SEK by 2015. Much of this growth is attributed to new, novel greeting cards and giving cards as gifts. (www.prweb.com)

The Scandinavian greeting card market is estimated at 8.75 billion SEK annually. If one out of every 1000 people (0.1%) in Scandinavia were to choose AirOhMail instead of a traditional greeting card, AirOhMail would sell 350,000 units and gross over 7 million SEK. Still, the largest greeting card market is the USA which sells over 7 billion greeting cards each year.

AirOhMail is soon to be trademarked in Europe and the US, and we have already gained our first letters of intent for retail sale in Skåne. Our business model involves multiple streams of revenue including commission based B2B sales, B2B wholesale, and B2C internet sales.

AirOhMail is the combined effort of business developers Brandon Till and Eric Jönsson with designer Tien Pham. All three share a desire to celebrate life and connect better to those they love, and AirOhMail is their effort to do just that.

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“I never did a days work in my life, it was all fun.” ~Thomas A. Edison

BackgroundLast summer Brandonʼs grandfather moved away from his home of 40-years. When asked what he wanted to keep from his old house, he ignored all the antique furniture and collectables he had saved over his lifetime, and he only wanted to save one thing: an old drawer from the desk in his bedroom. This drawer was filled with postcards and letters that his friends and family had sent him through the years. If he had to move, this drawer was the one thing he wanted to take with him. It was the one thing he could never replace.

Reflecting on what held value to his grandfather, Brandon partnered with Eric Jönsson and Tien Pham to commercialize a new and better way to send greetings and share moments. Birthday wishes and celebrations are being reduced to text messages and e-mails, and now AirOhMail offers an easy more memorable way to stay connected to those you love.

Tien came up with the idea for AirOhMail after moving to Sweden in 2005. He wanted to send his niece something special for her birthday, and he thought that a card just wasnʼt enough. Tien thought he would send a balloon to his niece as a fun, inexpensive gift. He was surprised, however, to find that balloons cannot be sent the post because they contain compressed gasses. As a designer by trade and an all around creative person, Tien didnʼt give up on the idea. One year later AirOhMail was born.

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Table of Contents

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Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Part I: Business Idea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-7! The Product! Customer Value! Customer Benefit! Revenue & Growth

Part II: Marketing Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-15! Market Description! Industry Analysis! Market Strategy! Sustainable Competitive Advantage

Part III: Business Model. . . . . . . . . . . . . . . . . . . . . . . . . .16-18! Multiple Streams of Revenue! Profit Potential

Part IV: Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-23! Business Team! Design Team! Advisory Board! Support Team! Competencies Needed! Core Values!

Part V: Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . 24-25! Critical Line/Milestones!Part VI: Profitability and Financing . . . . . . . . . . . . . . . . 26-28! Assumptions! Estimates! Costs and Start Up Capital! Investments and Capital Requirement! Bootstrapping

Part VII: Risk Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . .29-31! Risk Analysis: SWOT! Scenario Analysis

Part VIII: Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32-42! Product Use! Letters of Intent! Initial Designs! Product Options! Gantt Chart! Statement of Cash Flow! Income Statement! Balance Sheet! Risk Plan of Action!!

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Part I: Business ideaopen inflate display

The product

AirOhMail is an innovative product that combines the fun of balloons with the emotional connection of greeting cards into one single, unique package. The packaging works as a stand, and AirOhMail is a greeting card, balloon, letter and a gift all at the same time. Every day can offer something to celebrate, from the relief of passing an exam to the joy of welcoming a new family member. However, too often our celebrations are being reduced to text messages, emails or tweets. AirOhMail is working to take back these moments. AirOhMail offers a new and better way to send greetings, and an easy more memorable way to create and share moments.

To Send:1. Choose from a number of contemporary AirOhMail designs and write

your own message on the back of the balloon. 2. Stuff the balloon into the custom AirOhMail packaging.3. Send AirOhMail through the post or give it directly as a gift.

To Receive:1. Open both ends of the custom AirOhMail package.2. Inflate through the one-way valve.3. Display.

For more detailed product use, see appendix 1

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The Customer Value

As a new and improved greeting card, AirOhMail provides the customer value in the following ways:

• AirOhMail turns a greeting card into a gift.

• AirOhMail makes a greeting card interactive by making the opening and inflation part of the fun.

• AirOhMail allows a balloon to be sent safely through the mail.

• AirOhMail is an inexpensive “mid-range” gift. An ideal solution for birthdays, graduations, births, anniversaries and holiday or religious celebrations.

• An AirOhMail greeting makes greeting cards meaningful to children who are usually not interested in gift cards.

The Customer Benefit

1. Celebration: AirOhMail is a more attractive alternative to a traditional greeting card. It provides user interaction, surprise and fun by inflating from itʼs small package.

2. Convenience: AirOhMail is more convenient than a traditional balloon. It does not require helium to stand upright and is easily packed, stored, used and reused.

3. Customizable: Each AirOhMail balloon offers a reverse side which can be personalized to the individual.

4. Sustainable: If not saved as a keepsake, an AirOhMail greeting is 100% recyclable. The paperboard packaging is commonly recycled, and the foil coated nylon balloon is recyclable at a growing number of recycling centers worldwide.

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Revenue and GrowthAirOhMail offers multiple streams of revenue including bulk business-to-business sales and direct internet sales to customers through http://www.airohmail.com.

Start Up Phase (Year 0-1)Beginning in August 2011 AirOhMail will offer six original designs available through retailers in Skåne and online. We have received our first four letters of intent to retail AirOhMail in Lund and Malmö with two more letters pending and one verbal agreement with a large toy retailer in Malmö (appendix 2). We also have made initial contact with retailers in Copenhagen and Helsingborg and expect letters of intent from these retailers in the coming months.

Initially our webpage will sell cards in bulk for business-to-business sales. Once we have inventory from our manufacturer we will introduce direct business-to-consumer sales through our webpage.

Growth Phase (Year 2)AirOhMail has had made initial contact with chain retailer Gallerix and the Axel Johnsson stores Lagerhaus and Åhléns. We hope to sign our first national distribution contract to begin in early 2012. For our web based sales, we aim to introduce drop shipping warehouses enabling sales throughout Europe near the end of the growth phase.

Expansion Phase (Year 3-5)We aim to expand sales into the larger United Kingdom greeting card market and to partner with an existing Swedish card manufacturers for distribution channels across Europe. In the end of this phase we aim to enter the US market through Brandonʼs hometown contacts at Target stores. AirOhMail has a planned product roll out strategy that will begin to take effect in 2014.

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Part II: Marketing Plan“send along a smile today”

Market Description

Step 1: Scandinavian Market PotentialAccording to interviews with Card Group Greetings AB, the Scandinavian greeting card market is estimated as follows:

• 14-15 cards are sold per person per year in Scandinavia• The retail cost per card ranges from 10 SEK to 80 SEK• The greeting card market in Scandinavia is an estimated 8.75 billion SEK

annually.

Step 2: United Kingdom Market PotentialAccording to a British Greeting Card Association study from 2010, the UK greeting card market is as follows (www.greetingcardassociation.org.uk):

• The average number of greeting cards sent is 31 per person per year.• The UK greeting card industry is worth nearly 15.1 billion SEK annually - more than tea and coffee combined.

Step 3: United States Market PotentialThe Greeting Card Association in 2011 estimates market figures for the US are as follows (www.greetingcard.org):

• Americans purchase 7 billion greeting per year or 23 to 24 cards per person.• The retail sale of greeting cards in the USA is estimated at 48.7 billion SEK.

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Estimate of Scandinavian Market 14 cards/person x 25 SEK/card

x 25million people = 8,750,000,000 SEK

10

$0

$2.5

$5.0

$7.5

$10.0

Billio

n U

SD

1980 1985 1990 1995 200020052008

Data adapted from Forbes survey. No information was available for 1996 to 2000 so growth was assumed to be zero.

Market GrowthAccording to a Global Industry Analysts, Inc. (GIA) survey from October 2010, the worldwide greeting card market is expected to exceed $30.4 billion by 2015. Factors driving market growth includes cards with unique designs, the capability of cards to address sentiments and occasions, and the ease and availability of greeting cards.

GIA reports that greeting cards have emerged as a cost-effective and feasible alternative to expensive gifts. The greeting card industry proved relatively immune to the recent economic slowdown thanks to the launch of novel and unique design cards.

CustomersBecause AirOhMail does not require compressed gases, it can be retailed anywhere greeting cards are currently sold. This includes: card stores, department stores, grocery stores, toy stores, specialty gift shops and book stores. Additionally, AirOhMail can be sold at flower shops as an addition to or substitute for the gift of flowers.

First CustomersAirOhMail will launch in Skåne this summer as a test market before moving to the greater Scandinavian, European, and US markets. AirOhMail has arranged letters of intent from our first customers (appendix 2) with more LOIʼs pending. We have also made initial contact with the chain retailers Gallerix, Lagerhaus, Åhléns, Akademibokhandeln and ICA for future retail.

US Greeting Card Industry Growth

Industry AnalysisCompetitor AnalysisTraditional greeting cards, specifically high end greeting cards, are the most direct competition for AirOhMail. The two largest greeting card sellers today are Hallmark and American Greetings who together control 80% of the greeting card market (www.referenceforbusiness.com). Therefore, AirOhMail aims to partner with a smaller Swedish greeting card company such as Pictura AB or Intercard AB to help them gain market shares on the two greeting card giants. Meanwhile, these companies could help AirOhMail quickly reach new, foreign markets.

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Image Competition Strengths Weaknesses

The Original Pop Up

•Currently available in over 40 countries•Won “Louie” Award for design•Easy to use and understand•Element of surprise in the card

•Does not meet children/younger market needs well•Not interactive•Not easily customized or personalized•Difficult to display/communicate product offerings

Musical Cards •Easy to use•Easily customized and personalized•Easy to retail and widely available

•Mechanical Flaws•“Annoying” sound quality•Environmentally wasteful (batteries)

Traditional Card•Inexpensive•Useful for all occasions•Culturally expected for many situations

•Not interactive•Does not meet children/younger market needs•Boring/no surprise

Flowers

•Culturally expected and welcomed•Shows romance and sympathy well•Unlimited variety•Interactive through smell

•Short life span•Difficult to personalize•Environmental impact is high (high energy input)•Does not target male market well

Helium Filled Foil Balloons

•Culturally accepted and familiar•Floats/Fun•Decorative•Widely available

•Helium mining is not sustainable•California pushing legislation to end helium filled foil ballon due to interference with power lines•Not customizable

Market StrategySegmentationAirOhMail is focusing on three segments of the greeting card market and has balloons to fit these markets specifically.

1. Birthdays - Birthdays make up 30% of all greeting cards sold. AirOhMail can function as both a card and a gift for birthdays giving the customer more value.

2. Christmas/Holiday - Christmas makes up another 30% of the total greeting card market. Since Christmas is traditional gift giving time, AirOhMail again provides value to the customer by being both a card and a gift.

3. Congratulations - AirOhMail offers and element of surprise and joy which can be a gift solution for many celebrations.

For planned AirOhMail designs see appendix 3 and 4.

PositioningAirOhMail is positioning itself as a high end greeting card competing with products such as The Original Pop Ups and musical cards. Our product has similar offerings to these competitors, but AirOhMail offers more customer benefit through celebration, customization and convenience.

Greeting cards range in price from 10 SEK to 80 SEK depending on their offerings. AirOhMailʼs wholesale price is 20 SEK per card with a suggested retail price 69 SEK. This satisfies the 3.5 times margins necessary for chain retailers such as Gallerix and is equal to The Original Pop Ups retail price.

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Future MarketsBecause AirOhMail does not use compressed gas or require a helium tank, it could easily retail in a variety of stores such as candy and toy shops, grocery stores, souvenir shops, stationary stores, department stores or even vending machines.

Initially, AirOhMail will be sold to retailers for customer resale, however, AirOhMail could also be used by businesses for branding, promotion, or as collectibles, giveaways and mailers (see appendix 5).

Entrepreneurial MarketingTo market within the greeting card industry, AirOhMail plans to enter the 2011 Fall Gift Awards in Great Britain and the 24th Annual Louie Awards for greeting cards. Furthermore, we plan to follow the ideas of Seth Godin for viral and entrepreneurial marketing such as using our webpage to include “e-balloons” a type of interactive e-card to promote and build the AirOhMail brand.

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Brandonʼs nephew loved inflating and re-inflating

his first AirOhMail card.

Target MarketAirOhMail makes a great gift for people of all ages, but within our segments of birthdays, Christmas and congratulations we will target children as the recipients of AirOhMail for the following reasons:

• Children do not enjoy receiving traditional greeting cards. • Children have a natural love of balloons.• Parents and grandparents love to buy small gifts for their children.• AirOhMail is fun, safe and easy to use for children ages 3 and up.

Strategic Plan

Product DifferentiationAirOhMail aims to differentiate itself using the following strategies:

1. Brand Name - AirOhMail is a unique product on the market and will build itʼs brand as “interactive card celebrations.”

2. Design - The packaging of AirOhMail is designed as a combination of function, style and quality. Our balloons feature contemporary designs that are not available anywhere else.

3. Premium/Comparative Pricing - AirOhMail offers more than a traditional greeting card and is priced at 69 SEK which is more expensive than an average card, but it is still a competitive price for other high end cards and gifts.

4. Product Rollout Strategy - We have designed first and second generation balloons to follow a product rollout strategy. Second generation include more advanced designs such as using 3D hologram designs and interacting with stickers.

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Timeline _|__________________|__________________|__________________|__________________|2011

20122013

20142015

Start Up Phase• 6 designs retail in Skåne• Commission based sales• Swedish B2B internet sales• Swedish B2C internet sales

Growth Phase• 12 cards available for retail in

Scandinavian chain stores• Begin marketing to UK retail• All Europe B2C internet sales

and drop shipping.

Expansion Phase• Partner with Swedish greeting card company• Retail in UK and enter greater Europe market• Begin product roll out strategy for new

designs• Expand e-marketing to include smart phone

applications. • Enter US market through Target Stores

Sustainable Competitive Advantage

Partnerships1. DistributionWhen AirOhMail reaches the growth and expansion stage of business, we plan to partner with an existing Swedish greeting card company such as Pictura AB or Intercard Greetings AB. These established companies can help AirOhMail quickly and easily reach new markets while gaining shares on the two leading greeting card companies, Hallmark and American Greetings.

2. DesignAirOhMail would work as an excellent licensed product for children's characters including Sanrio, Disney, Pixar or Warner Bros.

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Part III: Business Modelmultiple streams of revenue

Business Model

Multiple Streams of Revenue1. Business to Business - AirOhMail provides two options for retailers to buy AirOhMail cards: wholesale and commission. These

two models allows us to sell to both independent retailers and large chain suppliers.

• Wholesale - A retailer buys an entire display of AirOhMail cards for a price of 20 SEK per card. Chain stores such as Gallerix prefer to buy goods using this model, and at 20 SEK AirOhMail is at the top of card prices that these retailers will purchase. There is a 4 times profit margin when selling AirOhMail wholesale.

• Commission - AirOhMail provides the cards and display to a retailer free of charge. The retailer then only pays for what they sell at a price of 25 SEK per card. This strategy allows smaller, independent retailers to sell AirOhMail risk free. There is 5 times profit margin when selling AirOhMail wholesale.

2. Internet Sales - AirOhMail will sell though our own website (www.airohmail.com) and through third party internet retailers such as stuffbay.se and amazon.com.

• Direct - AirOhMail initially plans to sell to retailers through our webpage. Beginning in the summer of 2011 we plan to add direct web sales to individuals for 69 SEK plus shipping. These internet sales provide a 14x profit margin.

• Indirect - Using the existing customer base of internet retailers such as stuffbay.se and amazon.com will greatly expand our own customer base.

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Profit PotentialAirOhMailʼs prototype has been produced for 6 SEK by T&F Enterprises Jiangbei Ningbo in China. The final production of AirOhMail will be even less expensive due to a simplified valve design and purchasing in higher volume. The estimated final production cost for AirOhMail is 4-5 SEK per item including shipping. With wholesale and commission prices at 20 and 25 SEK and a retail price of 69 SEK, AirOhMail has a 4 to 5 times profit margin for retailers and 14 times margin for direct internet sales.

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The AirOhMail Business Model Diagram

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Part IV: Organizationbusiness + design

Mangement Team

Brandon Till Head of Business Development and Sales As head of Business Development and Sales, Brandon is responsible for creating AirOhMailʼs industry and retail contracts. He is actively seeking finance and developing AirOhMailʼs business strategy. Brandon has management experience in both the US and the UK, and is currently finishing his second Masters Degree, a Masterʼs in Entrepreneurship from Lund University.

Eric Jönsson Head of Marketing and CommunicationsEric recently teamed up with Brandon to help jump start AirOhMailʼs growth in Sweden. He has a Bachelorʼs Degree in Peace & Conflict studies from Lund University and is currently working toward a Masters in Entrepreneurship from Lund. Eric gained experience starting a telecommunications company during his undergraduate studies which he later sold to 118110. At AirOhMail Eric is in charge of building the AirOhMail brand, dealing with public relations and communicating our offerings to the public.

Design Team

Tien Pham Lead DesignerAs the lead designer for AirOhMail Tien is responsible for creating new card designs and the company identity. Tien invented AirOhMail in 2005 and spent two years perfecting our current prototype. Tien is a licensed designer and has worked in interior design, branding, product design, illustration and graphic design for a variety of businesses including Starbucks, John Bartlett, and The Looking Glass Optique.

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Advisory BoardAnette Henriksson Mentor/Shipping and Distribution AdvisorAnette is involved with AirOhMail as a Lund University Entrepreneurship Mentor. She works work Brandon as an advisor, supporter and consultant. She has extensive experience with shipping and distribution as well as entrepreneurship in Skåne.

Greg Till Sales and Packaging AdvisorGreg has over 40-years of experience in the paperboard packaging industry specializing in folding cartons, the same material as AirOhMailʼs custom packaging. Greg has worked in sales as Vice President of Sales and COO for Walter G. Anderson Inc., Simkins Industries, Gibraltar Packaging and Rosmar Packaging. Greg is recently retired and enjoys advising AirOhMail as a side project to his professional-recreational golf career.

Bengt Rohne Financial AdvisorBengt is a close family friend of Brandon and a retired accountant, consultant and manager from Karlskrona, Sweden. He has been involved in a number of businesses in Blekinge and acts as a consult and advisor for financial and tax related issues for AirOhMail.

Support TeamThroughout the past year AirOhMail has worked with a number of supporters through Lund University including Masterʼs students from the International Insititue for Industrial Environmental Economics (IIIEE) and Information Systems and Information Technology Students (ISIT).

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Value PropositionAirOhMail is currently seeking an external investor to fund our initial production in return for a number of company shares to be approved by the business team and advisory board. The business team currently owns 100% of AirOhMail in an agreement with Tien Pham that he will earn an inventors fee of 100,000 SEK when the company becomes profitable.

PayrollAirOhMail plans to hire additional employees to increase sales during years three and five. As a start up, however, the company payroll is as follows:

Function Monthly Salary

Head of Business Development and Sales

15,000 SEK

Head of Marketing and Communication

15,000 SEK

Total cost to company after tax and insurance

42,000 SEK

Competencies NeededThe AirOhMail team has a wide range of skills, but still has a few competencies needed:

• Chairman of the Board: We are seeking someone with direct experience in the greeting card industry. AirOhMail is joining the Connect Skåne network to help find someone to fill this role.

• Production Quality Assurance Manager: We have found a supplier in China but needed to work with a middle man to insure quality. With the help of Teknopol, we are currently sourcing a new supplier and determining if the Quality Assurance role can be outsourced.

• Corporate Collaboration Partner: The role of a strategic partner as discussed in the marketing plan could include:

Other competencies such as web development will be outsourced as needed.

Core Values

Mantra: “Interactive Card Celebrations” In lieu of a traditional mission statement, the focus of AirOhMail is the mantra “Interactive Card Celebrations”. In those three words we summarize the value we aim to bring our customers and what we work toward as an organization.

Environmental SustainabilityAirOhMail has been designed with sustainability in mind. The packaging for AirOhMail, instead of being used only once, is used to sell, store, ship, gift and display the product. Furthermore, AirOhMail is recyclable or reusable. Unlike traditional balloons, AirOhMail can be inflated and deflated multiple times creating a keepsake for our customers.

We have collaborated with IIIEE to improve our overall sustainability as a company. Currently, we looking into a glue-free product design and reviewing how local assembly could decrease our carbon footprint. Finally, AirOhMail uses air to inflate instead of helium which the US National Research Council recently cited as a limited natural resource.

Looking ForwardLooking forward, AirOhMailʼs focus is on growth. Based on the size and culture of the current greeting card market, we feel that our product needs only to capture a fraction of a percentage to be profitable. Furthermore, AirOhMail fits well into a variety of geographical markets. We hope to enter as many of these markets as possible to help people in Europe, North America and Asia celebrate with “interactive card celebrations.”

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(http://blogs.ngm.com/blog_central/2011/02/bye-bye-helium.html).

“interactive card celebrations”

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Part V: Implementationgetting things done

ImplementationThe following chart illustrates AirOhMailʼs goals and milestones for the coming year. Each item is classified by department and importance. For a more detailed three-year Gantt analysis see appendix 6.

2011 Critical Line__|______________ |______________|______________|______________|_____________|

25

Feb

Beta Prototype

Receive 5 LOIʼs Receive 10 LOIʼs

Secure Reliable Supplier

First Sale

Trademark

Expand airohmail.com to include webshop

Create retail display

Secure External Capital

Create initial website for b2b sales and marketing

April JuneAug Oct Dec

AOM for sale in first chain storeAOM for sale in retail stores

Register Company

Begin Viral Marketing Campaign

Apply for External Capital

Enter Louie Awards 2012

Critical FactorCritical Milestone for Success

Important Milestone for Success

Completed Milestones

Production

Marketing

Internet

Legal

Finance

Sales

Design

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Part VI: Profitability and Finanacingstart up capital, meet bootstrapping

Profitability and Financing

Assumptions1. AirOhMail will follow the timeline laid out in this business plan. 2. AirOhMail will secure 10 retailers from Copenhagen to Helsingborg before summer 2011.3. AirOhMail will secure an additional 5 retailers before the fall of 2011.4. AirOhMail will secure its fist Scandinavian chain retailer in the beginning of 2012.5. Direct internet sales will increase as our retail sales increase do to increased exposure and marketing.6. AirOhMail will hire its first employee for sales and marketing in 2013.7. AirOhMail will pay Tien Pham a 100,000 SEK inventors fee in 2013.8. AirOhMail will enter the UK market in 2014.9. AirOhMail will enter the US market through at least one major chain retailer (Target Stores) in 2015.

EstimatesOur sales estimates are based on interviews with three different shop owners in Lund and Helsingborg from their experience retailing high end greeting cards in the region. They include the following:

• The Original Pop Ups sell anywhere from 5 to 10 cards per week. Seeing AirOhMail as a direct competitor we assumed we would sell 3 cards per week in each shop the first year, and 5 cards per week after year one.

• One wholesale display is calculated as costing 2,400 SEK (12 designs x 10 cards of each design x 20 SEK/card).

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Costs and Start Up CapitalThe main expense for AirOhMail is the cost of card production and human capital. To begin retailing AirOhMail in stores we need to offer at least six card designs, each with a minimum production quantity of 10,000 cards. Therefore, our minimum production order is 60,000 cards costing 300,000 SEK including shipping.

Totaling production costs and general operating costs, AirOhMail will incur just under 1,000,000 SEK of debt in the first year. With our strategy focused on growth, however, AirOhMail can break even by the end of 2013. Assuming AirOhMail gains access to chain retailers and is able to move into foreign markets, we predict a net income of nearly 2 million SEK by the end of 2015. For a more detailed financial analysis see the cash flow, income statement and balance sheet in appendix 7 to 9.

Investment and Capital RequirementsCurrently, AirOhMail has raised just over 200,000 SEK from private and family investors. We are also seeking public funding from ALMI, and we are in the process of joining Connect Skåne in hopes of finding a business angel investor. As a non-tech start up company AirOhMail requires relatively little start up capital. Therefore, individual bank loans are a finance option.

BootstrappingWe believe in limiting unnecessary costs in the start up phase and hope to join a business incubator this summer. We have contacted incubators in both Malmö and Lund and hope to have the costs of our office space sponsored for the next two years. We also plan to use our own finance to not dilute company shares beyond what is necessary.

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Part VII: Risk Analysisopportunity with solutions

Risk Analysis

Plan of ActionTo evaluate our threats and weaknesses AirOhMail has assigned a value on a five point scale (1-Low to 5-High) for both the probability of the risk happening and the consequence if that risk were to occur. We then listed the current and future actions we plan to do to counteract these risks. See appendix 10.

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Threats• Imitation: Large companies (Hallmark) could mimic our

product with a brand of their own.

• Substitution: Pop-up, Rocking Cards, Music Cards, and Flowers all serve the same market as AOM.

• Commission Model: If people do not buy AOM in retail it will not become profitable.

Strengths• AOM fills a niche market

• AOM design is beta tested and market ready• AOM makes greeting cards relevant to children

• AOM has a planned product rollout strategy• AOM packaging is environmentally friendly

Weaknesses• Display: It is difficult to show product offerings in store display

• User Error: If customer packages AOM incorrectly it will not inflate out of itʼs package

• Supplier: Current supplier involves a middle man in China

• Environmental: Foil balloons are viewed by some as an environmental hazard.

Opportunities• Newly expanding market

• Easy to retail at many locations• Local/Swedish packaging company can guarantee

environmental standards and high quality• Use licensed characters in card designs eg: Disney• Legislation may make helium balloons illegal in California

Scenario AnalysisBest Case Scenario - In our best case scenario we are able to reach Scandinavian chain retailers in one year, major UK retailers by year two, and major US manufacturers by year four. Furthermore, our online sales increase at a rate of 2x per year.

Average Case Scenario - In our average scenario we are able to reach Scandinavian chain retailers in two years, UK retailers in four years and by year 5 we are looking to enter the US market through one chain retailer. Our online sales increase at a rate of 1.25x per year.

Worst Case Scenario - In our worst case scenario we are unable to enter any chain retailers and sell only to local shops. Online sales are minimal.

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AirOhMail Scenario Analysis (in SEK)

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Part V: Appendicesshow and tell

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Appendix 1: Product Use

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Appendix 2: Letters of Intent

35

Appendix 3: Design

36

Appendix 4: Design

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Appendix 5: Product Options

Announcements

Corporate Promotion

Branding and Collectables

Holidays

2011 2012 2013

Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Mar May Jul Sep Nov Jan Mar May JulBusiness Development

Secure letters of intentFinalize supplierCreate B2B order webpageCreate B2C order webpageRetail first AOM productsDrop shipping to EuropeEnter UK market

Marketing

Register webpageDevelop webpage as a mktg toolEnter into Louie Award CompetitionViral Marketing CampaignCreate AOM mobile app

Management

Register AirOhMail companySecure external fundingStrategic distribution partnershipBreak evenHire sales employeeSecure chain retail contractsSecure Trademark in Europe

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Appendix 6: Gantt Chart

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Appendix 7: Statement of Cash Flow

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Appendix 8: Income StatementFiscal Year End 12/31 (in SEK) 2011 2012 2013 2014 2015

Revenues

Cost of Goods Sold

Gross Profit

Operating Expenses

Office Rent

Office Supplies

Phone and Internet

Marketing

Accounting Services

Office Equipment (Computers, Software, etc)

Travel Expenses

Website Development, Domain & Hosting

Payroll

Consultant (Legal, Strategic, Industrial Design)

Other Expenses

Operating Profit

Other Expenses or Losses

Earnings Before Taxes

Income Taxes

Net Income

13,950 456,770 2,207,000 2,790,000 5,325,000

364,500 430,000 550,000 1,250,000 1,550,000

(350,550) 26,770 1,657,000 1,540,000 3,775,000

30,000 60,000 60,000 75,000 75,000

3,000 10,000 20,000 30,000 50,000

10,000 20,000 40,000 40,000 40,000

9,000 30,000 50,000 100,000 200,000

15,000 30,000 30,000 30,000 30,000

2,000 15,000 20,000 20,000 30,000

8,000 30,000 20,000 30,000 40,000

32,000 6,000 8,000 10,000 15,000

504,000 504,000 588,000 588,000 840,000

35,000 8,000 3,000 10,000 10,000

40,000 40,000 40,000 40,000 40,000

(998,550) (686,230) 818,000 607,000 2,445,000

0 0 100,000 0 0

(998,550) (686,230) 718,000 607,000 2,445,000

0 0 0 136,530 611,250

(998,550) (686,230) 718,000 470,470 1,833,750

Liabilities and Shareholders’ Equity 2011 2012 2013 2014 2015

Current Liabilities

Accounts Payable

Total Liabilities

Shareholders’ Equity

Retained Earnings

Total Shareholders’ Equity

Total Liabilities and Equity

1,056,700 1,183,000 1,429,000 1,998,000 2,920,0001,056,700 1,183,000 1,429,000 1,998,000 2,920,000

(1,741,275) (930,850) 1,029,870 1,955,403 4,925,203

(1,741,275) (930,850) 1,029,870 1,955,403 4,925,203

(684,575) 252,150 2,458,870 3,953,403 7,845,203

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Appendix 9: Balance Sheet

Assets (in SEK) 2011 2012 2013 2014 2015

Current Assets

CashAccounts ReceivableInventory

Total Current Assets

Fixed Assets

IPR (Trademark)Computers & Office Supplies-Accumulated Depreciation

Total Net Fixed Assets

Total Assets

(1,033,150) (733,775) 296,400 790,000 2,402,50023,550 449,225 1,725,400 2,788,000 5,322,500

298,025 498,400 395,400 335,400 72,900(711,575) 213,850 2,417,200 3,913,400 7,797,900

25,000 25,000 25,000 25,000 25,0002,000 15,000 20,000 20,000 30,000

0 (1,700) (3,330) (4,997) (7,697)

27,000 38,300 41,670 40,003 47,303

(684,575) 252,150 2,458,870 3,953,403 7,845,203

Weakness Probability Consequence Result (PxC) Action

Display 3 3 9

•AirOhMail is working Deborah Georgsson and Produktställ AB to create a custom retail display for AirOhMail greetings.•The display will be inexpensive, moveable, easily shipped and communicate AirOhMailʼs offerings to final customers.

User Error 2 1 2•AirOhMailʼs design team has created illustrated instructions to minimize the probability of user error.•More detailed instructional videos will be included in the final webpage.

Supplier 4 2 8 •AirOhMail has begun working with Teknopol to help secure a reliable supplier either in Sweden or abroad who can guarantee high quality.

Environmental 1 2 2

•We will include information on our webpage and packaging to communicate the sustainability of AirOhMail.•With the help from Lund University IEEE we have improved our product to become 100% recyclable and are now looking into reducing the use of glue.

Threat Probability Consequence Result (PxC) Action

Imitation 3 4 12•AirOhMail has a first mover advantage and is establishing trademark protection to build our brand.•We are researching the usefulness and limitations of design protection.

Substitution 2 1 2 •AirOhMail is better suited to meet the target market of children than competitors

Commission 1 3 3

•Because this model works for other greeting card companies, we believe it will work for AirOhMail as well.•Our second source of revenue, web sales, can still be profitable even if the commission model is not.

42

Appendix 10: Risk Plan of Action