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J.H. Reid – Executive Summary

In November 1997, the editor of Upholstery Design and Manufacturing wrote, “While consumers buy large-screen TVs, extra speakers, and assemble their own home theaters, upholstery makers have sat on the sideline unable to sell seating to make that home theater truly comfortable.”1 After four generations of prototypes, five patents, and countless hours of hard work J. H. Reid Corp. has the products for this strong and growing market.

This business plan has been developed to present J. H. Reid Corporation (referred to as JHR or the company) to prospective investors and to assist in raising $275,000 through the sale of common stock. The sale of common stock would result in the investor(s) receiving 15% of the total stock of the company. It is the intent of JHR, that in 3 years, the investor(s) would have the option to sell the stock back to JHR for $750,000. The $275,000 will be used to provide sufficient working capital to successfully launch three models of chairs, and to finance product development and marketing efforts.

The Company

J. H. Reid Corporation is an S corporation, incorporated in Illinois to manufacture and market a line of chairs called “The Chicago Lounge™”. It is J. H. Reid Corporation’s mission to be a profitable world class manufacturer of innovative chairs, and to provide opportunities for profitable work in the inner city.

The Product

The Chicago Lounge™ is “the best chair for watching television the best way”. The basis for this is the clear line of sight advantage for watching television as compared to traditional reclining chairs (See Attachment 5). Other substantial advantages to The Chicago Lounge™ include the design, ergonomic features, compactness, ease of shipping (i.e. by UPS), and its suitability for people who want to relax on a lounge chair while working on a laptop computer. The Chicago Lounge™ has been favorably reviewed by a number of people, including a few in the furniture industry.

Market Potential

The traditional reclining chair was invented in 1928 — during the “Golden Age of Radio”. Significant trends since 1928 point to a strong possible demand for The Chicago Lounge™. The American Furniture Manufacturers Association predicted upholstered furniture sales to reach $10.3 Billion in 1999.2 This business plan projects 5th year sales of $16.6 million, which is approximately .16% of the upholstered furniture market.

Operations Plan

JHR is committed to world class manufacturing. A cornerstone of this plan is a very nimble manufacturing operation to keep capital requirements at a minimum. The nimbleness enables the company to be profitable at very low production levels (break-even point is 600 units), and yet the manufacturing operations can move rapidly to meet dramatic increases in demand through outsourcing of components.

Distinctive Competence

JHR is uniquely positioned to sell seating to the home theater market. With five US Patents, and additional patents pending, JHR has the exclusive right to make and market The Chicago Lounge™. JHR has a very strong start-up team and a capable Board of Advisors. Walter Albecker (president and founder of JHR) has a proven track record in marketing and management, and will soon get his MBA from the University of Illinois at Chicago.

Financial Summary

($ Thousands) Cash Basis Year 1 Year 2 Year 3 Year 4 Year 5
Sales $1,020 $2,088 $4,500 $8,640 $16,560
Gross Margin 41% 41% 41% 42% 42%
Net Income after tax $206 $658 $1,587 $3,406 $6,808
Net Income after tax/sales (ROS) 25% 32% 35% 39% 41%
Return/Equity (ROE) 61% 59% 61% 53% 49%
Return/Assets (ROA) 33% 43% 54% 49% 45%

1 Editor’s Desk, Michael Chazin, Upholstery Design and Manufacturing November/December 1997 p.4
2 “Upholstery News”, Upholstery Design & Manufacturing, February 1999, p. 6

J.H. Reid Corporation
Table of Contents Appendices
1. Executive Summary
2. Business Overview
3. Marketing Plan
4. Risks
5. Operations Plan
6. Management
7. Financial Plan
8. Offering
Cost of Manufacturing
United States Patent
Manufacturing Process
Income Statement
Cash Flow Statement
Balance Sheet
Break Even Point
All information herein is confidential and belongs to J.H. Reid Corporation

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