World 15 Company 1 | JACAD | Professor Laura Whitcomb | Final Report |

March 15, 2011
Arlene iniguez david portillo araksya martirosyan christopher amador jorge lozano

CONTENTS

PAGE

CHAPTER 1 - INTRODUCTION 5 Overview 5 History 5 Position 5 Recent Performance 6

CHAPTER 2 - ORGANIZATION 7 Organization Chart 7 Executives 8 Arlene Iniguez 8 Jorge Lozano 8 Araksya Martirosyan 9 David Portillo 9 Christopher Amador 9

CHAPTER 3 – INDUSTRY ANALYSIS 11 Sales 11 Sales Industry Average 12 Net Income 13 Net Income Industry Average 14 Return on Assets 15 Return on Assets Industry Average 16 Return on Equity 17 Return on Equity Industry Average 18 Stock Price 19 Stock Price Industry Average 19

CHAPTER 4 - OBJECTIVES 21 Weighing Factors 21 Preliminary Weighing Factors 21 Final Weighing Factors 21

CHAPTER 5 – STRATEGIES 22 Mission Statement 22 Broad Strategies 22 Marketing Strategies 22 Price 22 Advertising 22 Salary 23 Commission 23 Hiring 23 Turnover 23 Marketing Plan 24 Financial Strategies 24 Dividends 24 Certificate of Deposits 24 Debt Positions 25 Operations Strategies 25 Research and Development 25 Training 25 New Product Introduction 25 Quality Level 25 Planned Decisions for Operations and Production 25 Management 25 Assumptions Behind the Production Plan 26 Overtime 26 Second Shift 26 Number of Lines 26 Decision Making Procedures 26

CHAPTER 6 - FORECAST 28 Summary Results: Industry Sales Forecast in Units (000s) 28 Industry Sales Forecast ($000s) 28 Summary Results: Company Sales Forecast in Units (000s) 29 Company Sales Forecast ($000s) 29 Shipment Orders from Sales Offices 29 Product Pricing in Local Currencies 30 Unit Costs and Total Production Costs Analysis (000s) 30 Total Production Costs Analysis (000s) 30 Forecasting Regression Results for Industry Sales by Market Area 31 Unit Production Cost 31

CHAPTER 7 – PRODUCTION PLAN 32 Planned Production and Inventory Changes 32 Production Schedule Worksheet 33

CHAPTER 8 – FINANCIAL STATEMENTS 35 Pro Forma Assumptions 35 Annual Consolidated Income Sheet 36 Annual Consolidated Balance Sheet 37 Annual Consolidated Cash Flow 38 Year 5 Quarterly Consolidate Pro Forma Income Statement 40 Year 5 Quarterly Consolidate Pro Forma Balance Sheet 41 Year 5 Quarterly Consolidate Pro Forma Cash Flow 42 Year 6 Quarterly Consolidate Pro Forma Income Statement 43 Year 6 Quarterly Consolidate Pro Forma Balance Sheet 45 Year 6 Quarterly Consolidate Pro Forma Cash Flow 46 Pro Forma Analysis 47

CHAPTER 1 – INTRODUCTION

Overview This final report discussed our company’s strategies, performance factors, and forecasts to achieve our desired goals. Our interest in the investment in training our employees has been reflected in the amount we put into each quarter for that particular department. We discussed our reasons for maintaining some values throughout each quarter, such as sales commissions and the number of employees.
History
JACAD Co. originated in Los Angeles, CA by current CEO, Arlene Iniguez. As time progressed, the company expanded into 3 different geographical areas and one international area : Merica 1, Merica 2, Merica 3, and Sereno. The Mericas are located in North America in the Western hemisphere. The population is 260 million with a low growth rate, 25% of which occur through immigration. Sereno is located in Latin America with a growing population of 80 million. Income inequality is very common in this area, about 20% of its residents are wealthy. Manufacturing standard quality products has been the main goal from its start, in order to produce and sell at high volumes.

Position At the end of Y6Q4 in the BPGS game, we
Performance
Our performance throughout this entire game has been exceptional. Our introduction in the production of model 3 shows our interest. JACAD’s lowest performing quarter was Year 3 Quarter 1 where we resulted in a negative income. Our decision as a team was to dramatically decrease price, increase advertising, and R&D b 5% that proved to be successful following the results of the next 7 quarters.

CHAPTER 2 – ORGANIZATION
Organization Chart

JACAD Corporation has five experienced professionals. Our employees worked together on a daily basis, and shared the knowledge and skills for the success and benefits of our organization’s accomplishment. We educate them to be responsible for their daily activities and to be proud as an employee of the company. An important role is given to each team member in the accomplishment of our business operations. All of us work together, as a team, to make every effort to reach our mutual goal.
In order to be a successful company and meet the needs and satisfaction of our consumers, our key is to communicate well within our departments. Our well trained and professional management team meet together twice a week to review the organization’s performance such us product research and development, production scheduling, forecast product price, financial statements, advertisement needs, and sales staff. During each meeting, all members participate in making decisions and share ideas. Each team member’s contribution is very important for our company and we take each of their input into consideration in all decision-making activities. JACAD Corporation’s organization chart, summary of the title, abilities and qualifications of the visionary members of the company are stated as follows.
Executives
Arlene Inguez- Chief Executive Officer/Director of Marketing
Arlene Iniguez is the Chief Executive Officer of JACAD Corporation and has ten years of experience in a management position. She gives direction and leadership toward the achievement of the organization’s philosophy, mission and strategy. She also implements the strategic goals and objectives of the organization. Arlene provides inspiration to allow the organization to produce the best possible results and meet financial objectives.
Arlene is also a director of marketing who supervises marketing activities for JACAD products and services. She has eight years of experience in the marketing field and is the key to managing and directing our company’s marketing plans which eventually decides the success of our company. Lastly, she coordinates marketing strategies such as, advertising, promotions, pricing, and product placement.

Jorge Lozano- Chief Financial Officer Jorge Lozano is the Chief Financial Officer for JACAD Company and he has eight years of experience in finance field. Jorge takes care of all financial matters to ensure our company’s goals are met. Also, he is in charge to forecasting the sales and financial statements. In addition, Jorge is in charge of finding ways to increase stock price, return on assets and return on equity.
Araksya Martirosyan- Chief Operating Officer/Manager Araksya Martirosyan is the Chief Operating Officer/Manager of JACAD Corporation. Araksya has strong background in operations, as well in concentration of management. She has seven years of experience in being a management and nine years of experience in operational field. Araksya is responsible for all the transactions regarding operations and production. Her mission is to improve production and prevent excess spending in research and development. She also anticipates consumer's needs as well as upcoming trends. Lastly, her responsibility is to document all functions and review the data of both domestic and international market in order to prepare company’s quarterly report.
David Portillo - Accountant David Portillo is the accountant for JACAD Corporation. He has ten years of experience being an accountant. David has a wide range of knowledge and skills in his field. His responsibility is to prepare, analyze, and verify financial documents for our company. Lastly, David’s responsibility is to establish internal procedures and controls.
Chris Amador- Human Resource Director Chris Amador is the Human Resource Director of JACAD Corporation. He hasseven years of experience in working as a Human Resource Director. Chris has strong oral and written communication skills as well as interpersonal and coaching skills. He leads and develops members of our company. Also, he is responsible for hiring and firing of employees of our company. Lastly, he is responsible for educating and training the employees of JACAD Corporation.

CHAPTER 3 – INDUSTRY ANALYSIS
Sales
| Co 1 | Co 2 | Co 3 | Co 4 | Co 5 | Co 6 | Y3Q1 | 2562 | 2070 | 3057 | 2930 | 3077 | 3055 | Y3Q2 | 3635 | 3156 | 3405 | 3524 | 3648 | 3544 | Y3Q3 | 3298 | 3771 | 3232 | 3291 | 3413 | 3370 | Y3Q4 | 4707 | 4536 | 4855 | 4445 | 5181 | 4619 | Y4Q1 | 3835 | 3182 | 4080 | 3716 | 4611 | 3807 | Y4Q2 | 4864 | 4336 | 4858 | 4455 | 5286 | 4359 | Y4Q3 | 4474 | 3958 | 5534 | 4499 | 5316 | 4274 | Y4Q4 | 5472 | 4904 | 6452 | 6296 | 7401 | 6627 | Y5Q1 | 4748 | 3694 | 5987 | 5271 | 6177 | 5204 | Y5Q2 | 5278 | 4194 | 6509 | 6027 | 7677 | 6318 | Y5Q3 | 4748 | 3557 | 6325 | 5894 | 7019 | 5904 | Y5Q4 | 5436 | 3367 | 7511 | 6802 | 7877 | 7209 | Y6Q1 | 4582 | 2050 | 6585 | 5870 | 6612 | 6191 | Y6Q2 | 5486 | 5272 | 9307 | 6332 | 7534 | 7166 | Y6Q3 | 4584 | 4142 | 8410 | 6032 | 6140 | 6135 | Y6Q4 | 4976 | 5836 | 9371 | 7710 | 8540 | 8779 |

Sales Industry Average | Co 1 | Industry Average | Y3Q1 | 2562 | 2792 | Y3Q2 | 3635 | 3485 | Y3Q3 | 3298 | 3396 | Y3Q4 | 4707 | 4724 | Y4Q1 | 3835 | 3872 | Y4Q2 | 4864 | 4693 | Y4Q3 | 4474 | 4676 | Y4Q4 | 5472 | 6192 | Y5Q1 | 4748 | 5180 | Y5Q2 | 5278 | 6001 | Y5Q3 | 4748 | 5575 | Y5Q4 | 5436 | 6367 | Y6Q1 | 4582 | 5315 | Y6Q2 | 5486 | 6850 | Y6Q3 | 4584 | 5907 | Y6Q4 | 4976 | 7535 |

Sales during Y3 and Y4 have been increasing progressively throughout each company. As you can see in the chart, an introduction of a new model has constituted for an increase in sales. Model 2 was in production during Y3 and model 3 was in production during Y4. An increase in the trend of total sales during this time lead to an increase in total production, where our company has to respond by a price change. During Year 4 Quarter 4, Company 5 peaked to the top, increasing the industry average.
Our company’s sales average resulted in 4543, while the industry average resulted in 5160 which is a 13.6% difference. Companies 3 and 5 made a huge impact on the industry average (5967 and 5969 respectively) which they were the top grossing throught the game. Company 2 also made a huge impact since they scored well below average, 33.1% difference. All companies with the exception of our company and company 2, showed an increasing trend in sales each quarter during Y5 and Y6 while we hit a plateau trend. This effect was due to not supplying the demand by the industry, while other companies were able to successfully do so.

Net Income | Co 1 | Co 2 | Co 3 | Co 4 | Co 5 | Co 6 | Y3Q1 | -195 | 51 | 259 | 104 | 246 | 149 | Y3Q2 | 384 | 186 | 240 | 252 | 314 | 262 | Y3Q3 | -54 | -172 | 185 | 68 | 68 | 169 | Y3Q4 | 501 | -463 | 392 | 170 | 405 | 308 | Y4Q1 | 140 | -421 | 328 | -71 | 294 | 248 | Y4Q2 | 327 | 181 | 235 | 112 | 425 | 278 | Y4Q3 | 17 | -388 | 381 | 186 | 387 | 137 | Y4Q4 | 486 | -328 | 832 | 539 | 940 | 536 | Y5Q1 | 285 | -424 | 634 | 322 | 509 | 222 | Y5Q2 | 447 | -378 | 725 | 501 | 903 | 740 | Y5Q3 | 391 | -414 | 676 | 321 | 400 | 572 | Y5Q4 | 551 | 121 | 965 | 228 | 1206 | 936 | Y6Q1 | 205 | -629 | 478 | 44 | 732 | 508 | Y6Q2 | 391 | 396 | 1032 | -282 | 1115 | 704 | Y6Q3 | 231 | 238 | 259 | -24 | 833 | 562 | Y6Q4 | 179 | 1016 | 630 | 377 | 1410 | 1110 |

Net Income Industry Average

| Co 1 | Industry Average | Y3Q1 | -195 | 102 | Y3Q2 | 384 | 273 | Y3Q3 | -54 | 44 | Y3Q4 | 501 | 219 | Y4Q1 | 140 | 86 | Y4Q2 | 327 | 260 | Y4Q3 | 17 | 120 | Y4Q4 | 486 | 501 | Y5Q1 | 285 | 258 | Y5Q2 | 447 | 490 | Y5Q3 | 391 | 324 | Y5Q4 | 551 | 668 | Y6Q1 | 205 | 223 | Y6Q2 | 391 | 559 | Y6Q3 | 231 | 350 | Y6Q4 | 179 | 787 |

The total net income throughout each company seemed to be the most diverse during Y3 and Y4. Our company experienced a loss for Year 3 Quarter 1 with a value of -195 ($000s) and Year 3 Quarter 3 with a value of -54 ($000s). Starting Year 4 Quarter 3, however, we experienced a sudden decline due to a new model we decided to introduce into the market due to expansion.

Our company’s net income average was 268 compared to that of the industry average of 329. Companies 3, 5, and 6 achieved a high average net income that played a hug impact in the net income industry average. JACAD’s net income resulted an extremely low figure during Y6Q4 due to our introduction of a new model, Model 5. Company 2 resulted in a high net income during Y6Q4, 1016 since we stocked which our customers might have chosen to purchase their products from this company.

ROA | Co 1 | Co 2 | Co 3 | Co 4 | Co 5 | Co 6 | Y3Q1 | -1.3 | 0.3 | 1.7 | 0.7 | 1.6 | 1 | Y3Q2 | 2.5 | 1.2 | 1.5 | 1.6 | 2 | 1.7 | Y3Q3 | -0.3 | -1.1 | 1.2 | 0.4 | 0.4 | 1.1 | Y3Q4 | 2.9 | -2.9 | 2.3 | 1.1 | 2.3 | 1.9 | Y4Q1 | 0.8 | -2.7 | 1.9 | -0.4 | 1.6 | 1.5 | Y4Q2 | 1.9 | 1 | 1.4 | 0.6 | 2.3 | 1.6 | Y4Q3 | 0.1 | -2.1 | 2.1 | 1.1 | 2 | 0.8 | Y4Q4 | 2.6 | -1.8 | 4.3 | 2.9 | 4.6 | 2.9 | Y5Q1 | 1.5 | -2.3 | 3.2 | 1.7 | 2.5 | 1.2 | Y5Q2 | 2.4 | -2.1 | 3.5 | 2.6 | 4.1 | 3.9 | Y5Q3 | 2 | -2.4 | 3.2 | 1.7 | 1.9 | 2.9 | Y5Q4 | 3 | 0.8 | 4.4 | 1.2 | 5.7 | 4.9 | Y6Q1 | 1.2 | -4.4 | 2.2 | 0.2 | 3.6 | 2.6 | Y6Q2 | 2.3 | 2.7 | 4.5 | -1.5 | 5.4 | 3.5 | Y6Q3 | 1.4 | 1.6 | 1.1 | -0.1 | 4.3 | 2.9 | Y6Q4 | 1.1 | 6.7 | 2.7 | 2 | 7.7 | 5.3 | | | | | | | |

ROA Industry Average

| Co 1 | Industry Average | Y3Q1 | -1.3 | 0.67 | Y3Q2 | 2.5 | 1.75 | Y3Q3 | -0.3 | 0.28 | Y3Q4 | 2.9 | 1.27 | Y4Q1 | 0.8 | 0.45 | Y4Q2 | 1.9 | 1.47 | Y4Q3 | 0.1 | 0.67 | Y4Q4 | 2.6 | 2.58 | Y5Q1 | 1.5 | 1.30 | Y5Q2 | 2.4 | 2.40 | Y5Q3 | 2 | 1.55 | Y5Q4 | 3 | 3.33 | Y6Q1 | 1.2 | 0.90 | Y6Q2 | 2.3 | 2.82 | Y6Q3 | 1.4 | 1.87 | Y6Q4 | 1.1 | 4.25 |

Return on assets is the measurement of how well a company uses its assets to generate income. Return on assets has also been significantly diverse during Y3 and Y4 with an upward trend for Y5 and Y6. At most, all companies had an upward trend for only two consecutive quarters at a time. Our company experienced an increasing trend from Y5Q1 to Y5Q3, but fell below the rest of the year. Based on our return on assets and compared to the industry average, we fell below the industry average during Y5Q4, Y6Q2, Y6Q3, and Y6Q4. The industry average for return on assets was 172, compared to that of our company’s which was 1.51. An ROA greater than 1 is desired to show that a company is using its assets efficiently. Company 5 resulted in the highest ROA (3.25), while Company 3 and Company 6 resulted in 2.58 and 2.48 respectively. Throughout Y5 and Y6, our company was able to generate ROA greater than 1, compared to Y3 and Y4 where we did not meet those requirements.

ROE | Co 1 | Co 2 | Co 3 | Co 4 | Co 5 | Co 6 | Y3Q1 | -1.6 | 0.4 | 2.1 | 0.9 | 2 | 1.2 | Y3Q2 | 3.1 | 1.5 | 1.9 | 2 | 2.5 | 2.1 | Y3Q3 | -0.4 | -1.4 | 1.4 | 0.5 | 0.5 | 1.3 | Y3Q4 | 3.9 | -3.9 | 3 | 1.3 | 3.1 | 2.4 | Y4Q1 | 1.1 | -3.7 | 2.4 | -0.6 | 2.2 | 1.9 | Y4Q2 | 2.5 | 1.6 | 1.7 | 0.9 | 3.1 | 2.1 | Y4Q3 | 0.1 | -3.5 | 2.7 | 1.4 | 2.7 | 1 | Y4Q4 | 3.6 | -2.8 | 5.6 | 4 | 6.3 | 3.8 | Y5Q1 | 2.1 | -3.5 | 4.1 | 2.3 | 3.3 | 1.5 | Y5Q2 | 3.2 | -3.3 | 4.5 | 3.5 | 5.6 | 4.9 | Y5Q3 | 2.7 | -3.8 | 4 | 2.2 | 2.5 | 3.7 | Y5Q4 | 4.1 | 1.4 | 5.6 | 1.6 | 7.7 | 6.3 | Y6Q1 | 1.5 | -7.8 | 2.7 | 0.3 | 4.5 | 3.3 | Y6Q2 | 2.9 | 5.2 | 5.6 | -2.1 | 6.8 | 4.6 | Y6Q3 | 1.7 | 3.3 | 1.4 | -0.2 | 5.2 | 3.7 | Y6Q4 | 1.3 | 12.5 | 3.3 | 2.8 | 9.5 | 6.8 |

ROE Industry Average

| Co 1 | Industry Average | Y3Q1 | -1.6 | 0.83 | Y3Q2 | 3.1 | 2.18 | Y3Q3 | -0.4 | 0.32 | Y3Q4 | 3.9 | 1.63 | Y4Q1 | 1.1 | 0.55 | Y4Q2 | 2.5 | 1.98 | Y4Q3 | 0.1 | 0.73 | Y4Q4 | 3.6 | 3.42 | Y5Q1 | 2.1 | 1.63 | Y5Q2 | 3.2 | 3.07 | Y5Q3 | 2.7 | 1.88 | Y5Q4 | 4.1 | 4.45 | Y6Q1 | 1.5 | 0.75 | Y6Q2 | 2.9 | 3.83 | Y6Q3 | 1.7 | 2.52 | Y6Q4 | 1.3 | 6.03 |

The total return on equity has varied throughout each quarter that resulted from the inability to produce the required earnings produced by the dollar of equity. Based on our total return on equity and compared to the industry average, our company fell below during Y3 and Y4, but was able to generate ROE greater than 1 during Y5 and Y6. Company 5 achieved the highest ROE (4.22), with Company 3 and Company 6 also achieving a relatively close amount with each other (3.25 vs. 3.16).

Stock Price | Co 1 | Co 2 | Co 3 | Co 4 | Co 5 | Co 6 | Y3Q1 | 0.75 | 0.77 | 0.78 | 0.77 | 0.78 | 0.78 | Y3Q2 | 0.77 | 0.77 | 0.79 | 0.78 | 0.79 | 0.78 | Y3Q3 | 0.95 | 0.95 | 1 | 0.98 | 0.99 | 0.99 | Y3Q4 | 1.09 | 1.01 | 1.13 | 1.09 | 1.13 | 1.12 | Y4Q1 | 1.01 | 0.89 | 1.06 | 0.99 | 1.06 | 1.04 | Y4Q2 | 1.09 | 0.94 | 1.13 | 1.05 | 1.14 | 1.11 | Y4Q3 | 1.24 | 1.03 | 1.33 | 1.21 | 1.33 | 1.28 | Y4Q4 | 1.29 | 0.89 | 1.41 | 1.27 | 1.42 | 1.34 | Y5Q1 | 1.35 | 0.79 | 1.52 | 1.34 | 1.51 | 1.4 | Y5Q2 | 1.38 | 0.75 | 1.75 | 1.38 | 1.94 | 1.45 | Y5Q3 | 1.35 | 0.69 | 1.92 | 1.35 | 1.8 | 1.44 | Y5Q4 | 1.25 | 0.55 | 1.96 | 1.3 | 1.98 | 1.46 | Y6Q1 | 1.22 | 0.49 | 1.69 | 1.26 | 2.07 | 1.62 | Y6Q2 | 1.18 | 0.45 | 1.88 | 1.18 | 2.16 | 1.5 | Y6Q3 | 1.1 | 0.41 | 1.51 | 1.1 | 2.4 | 1.38 | Y6Q4 | 1.22 | 0.5 | 1.71 | 1.24 | 3.33 | 1.62 |

| Co 1 | Industry Average | Y3Q1 | 0.75 | 0.77 | Y3Q2 | 0.77 | 0.78 | Y3Q3 | 0.95 | 0.98 | Y3Q4 | 1.09 | 1.10 | Y4Q1 | 1.01 | 1.01 | Y4Q2 | 1.09 | 1.08 | Y4Q3 | 1.24 | 1.24 | Y4Q4 | 1.29 | 1.27 | Y5Q1 | 1.35 | 1.32 | Y5Q2 | 1.38 | 1.44 | Y5Q3 | 1.35 | 1.43 | Y5Q4 | 1.25 | 1.42 | Y6Q1 | 1.22 | 1.39 | Y6Q2 | 1.18 | 1.39 | Y6Q3 | 1.1 | 1.32 | Y6Q4 | 1.22 | 1.60 |

CHAPTER 4 – GOALS AND OBJECTIVES

Weighting Factors | Preliminary | Final | Return on Equity (ROE) | 5 | 1 | Total Net Income (NI) | 5 | 4 | Stock Price (SP) | 0 | 5 | Unit Production Cost (UPC) | 4 | 3 | Market Share (MS) | 0 | 5 | Return on Assets (ROA) | 6 | 2 |

Return on Equity

| Co 1 | Co 2 | Co 3 | Co 4 | Co 5 | Co 6 | Y3Q4 | 3.9 | -3.9 | 3 | 1.3 | 3.1 | 2.4 | Y4Q4 | 3.6 | -2.8 | 5.6 | 4 | 6.3 | 3.8 | Y5Q4 | 4.1 | 1.4 | 5.6 | 1.6 | 7.7 | 6.3 | Y6Q4 | 1.3 | 12.5 | 3.3 | 2.8 | 9.5 | 6.8 |

| Co 1 | Industry Average | Y3Q4 | 3.9 | 1.63 | Y4Q4 | 3.6 | 3.42 | Y5Q4 | 4.1 | 4.45 | Y6Q4 | 1.3 | 6.03 |

Return on Equity measures the rate of return on the ownership interest (shareholders' equity) of the common stock owners. JACAD Corporation decided to give 5 points to preliminary factors because we thought that the higher return on equity we have, our corporation will be more likely to generate cash internally.

Total Net Income

| Co 1 | Co 2 | Co 3 | Co 4 | Co 5 | Co 6 | Y3Q4 | 501 | -463 | 392 | 170 | 405 | 308 | Y4Q4 | 486 | -328 | 832 | 539 | 940 | 536 | Y5Q4 | 551 | 121 | 965 | 228 | 1206 | 936 | Y6Q4 | 179 | 1016 | 630 | 377 | 1410 | 1110 |

| Co 1 | Industry Average | Y3Q4 | 501 | 219 | Y4Q4 | 486 | 501 | Y5Q4 | 551 | 668 | Y6Q4 | 179 | 787 |

Total Net Income is the residual income of a firm after adding total revenue and gains and subtracting all expenses and losses for the reporting period. In comparison to the industry average, our company fell below Y4Q4, Y5Q4, and Y6Q4 but, however, resulted in a higher net income during Y3Q4 (282 difference).

Stock Price

| Co 1 | Co 2 | Co 3 | Co 4 | Co 5 | Co 6 | Y3Q4 | 1.09 | 1.01 | 1.13 | 1.09 | 1.13 | 1.12 | Y4Q4 | 1.29 | 0.89 | 1.41 | 1.27 | 1.42 | 1.34 | Y5Q4 | 1.25 | 0.55 | 1.96 | 1.3 | 1.98 | 1.46 | Y6Q4 | 1.22 | 0.5 | 1.71 | 1.24 | 3.33 | 1.62 |

| Co 1 | Industry Average | Y3Q4 | 1.09 | 1.10 | Y4Q4 | 1.29 | 1.27 | Y5Q4 | 1.25 | 1.42 | Y6Q4 | 1.22 | 1.60 |

During Y3Q4, Y5Q4, and Y6Q4, our company fell below the industry average.

Unit Production Cost

| Co 1 | Co 2 | Co 3 | Co 4 | Co 5 | Co 6 | Y3 | 4.78 | 4.99 | 4.97 | 4.94 | 5.34 | 5.04 | Y4 | 5.18 | 5.22 | 5.46 | 5.79 | 5.56 | 5.55 | Y5 | 4.99 | 5.49 | 5.72 | 5.82 | 5.91 | 5.61 | Y6 | 4.93 | 4.92 | 7.36 | 6.27 | 5.72 | 5.79 |

| Co 1 | Industry Average | Y3 | 4.78 | 5.01 | Y4 | 5.18 | 5.46 | Y5 | 4.99 | 5.59 | Y6 | 4.93 | 5.83 |

The production cost per unit is the cost you would physically spend to manufacture an item. Our company, successfully, maintained our low-cost strategy for each year (Y3-Y6).

Market Share

| Co 1 | Co 2 | Co 3 | Co 4 | Co 5 | Co 6 | Y3Q4 | 17.6 | 16.7 | 16.1 | 15.9 | 17.2 | 16.4 | Y4Q4 | 17.3 | 12.7 | 16.5 | 16.5 | 18.9 | 18 | Y5Q4 | 16.8 | 8.2 | 19.5 | 18.6 | 18.3 | 18.6 | Y6Q4 | 13.9 | 13.3 | 19.1 | 18.8 | 16.5 | 18.5 |

| Co 1 | Industry Average | Y3Q4 | 17.6 | 16.65 | Y4Q4 | 17.3 | 16.65 | Y5Q4 | 16.8 | 16.67 | Y6Q4 | 13.9 | 16.68 |

Return on Assets

| Co 1 | Co 2 | Co 3 | Co 4 | Co 5 | Co 6 | Y3Q4 | 2.9 | -2.9 | 2.3 | 1.1 | 2.3 | 1.9 | Y4Q4 | 2.6 | -1.8 | 4.3 | 2.9 | 4.6 | 2.9 | Y5Q4 | 3 | 0.8 | 4.4 | 1.2 | 5.7 | 4.9 | Y6Q4 | 1.1 | 6.7 | 2.7 | 2 | 7.7 | 5.3 |

| Co 1 | Industry Average | Y3Q4 | 2.9 | 1.27 | Y4Q4 | 2.6 | 2.58 | Y5Q4 | 3 | 3.33 | Y6Q4 | 1.1 | 4.25 |

CHAPTER 5 – STRATEGIES

Marketing Strategies

Price

| Merica 1 | Merica 2 | Merica 3 | Sereno | | Forecasted | Actual | Forecasted | Actual | Forecasted | Actual | Forecasted | Actual | Y5Q1 | 9.75 | 9.75 | 9.75 | 9.75 | 9.75 | 9.75 | 75 | 80 | Y5Q2 | 9.75 | 9.5 | 9.75 | 9.75 | 9.75 | 9.75 | 75 | 80 | Y5Q3 | 9.75 | 10 | 9.75 | 10.25 | 9.75 | 10.25 | 75 | 82 | Y5Q4 | 9.75 | 10.25 | 9.75 | 10.25 | 9.75 | 10.25 | 75 | 85 | Y6Q1 | 10 | 10.25 | 10 | 10.25 | 10 | 10.25 | 80 | 85 | Y6Q2 | 10 | 10.25 | 10 | 10.25 | 10 | 10.25 | 80 | 85 | Y6Q3 | 10 | 10.5 | 10 | 10.5 | 10 | 10.5 | 85 | 87 | Y6Q4 | 10 | 10.75 | 10 | 10.75 | 10 | 10.75 | 85 | 120 |

Our product price was based on low cost while being profitable. Our decision to increase product price by $.50 from Y5Q2 to Y5Q3 was due to the introduction of a new model with standard qualities and features. Under emergent strategy, we discovered that our low cost strategy was unsuccessful which forced us to increase our price to keep up with our competitors. The exchange rate also played a huge role in our decision to increase price each quarter. During Y5Q3, we had more inventory at hand at Merica 1 and wanted to liquidate the remaining products, which lead us to price our product at $10 compared to Merica 2 and Merica 3 which is priced at $10.25. During Y6Q3, an increase in price by $.25 to $10.50 was required since we resulted in a stock out. In order to be competitive, we were required to increase price to be able to be in business in the industry.
Advertising

| Merica 1 | Merica 2 | Merica 3 | Sereno | | Forecasted | Actual | Forecasted | Actual | Forecasted | Actual | Forecasted | Actual | Y5Q1 | 56 | 56 | 56 | 56 | 56 | 56 | 125 | 125 | Y5Q2 | 59 | 59 | 59 | 59 | 59 | 59 | 131 | 131 | Y5Q3 | 62 | 59 | 62 | 59 | 62 | 59 | 138 | 131 | Y5Q4 | 65 | 59 | 65 | 59 | 65 | 59 | 145 | 131 | Y6Q1 | 68 | 59 | 68 | 59 | 68 | 59 | 152 | 131 | Y6Q2 | 71 | 59 | 71 | 59 | 71 | 59 | 160 | 131 | Y6Q3 | 75 | 59 | 75 | 59 | 75 | 59 | 168 | 131 | Y6Q4 | 79 | 59 | 79 | 59 | 79 | 59 | 176 | 131 |

During Year 3 and Year 4, we increased our advertising by 5% but did not achieve that same goal during Year 5 and Year 6 because we realized that advertising was not our priority. Since we were selling most of our inventory, it was not necessary to continue to increase our advertising expense. We decided that we had gained brand recognition and established our target market. For Y5Q2, we decided to increase advertising to gain an advantage since our competitors had the same product model and availability.
Salary

| Merica 1 | Merica 2 | Merica 3 | Sereno | | Forecasted | Actual | Forecasted | Actual | Forecasted | Actual | Forecasted | Actual | Y5Q1 | 3000 | 3000 | 3000 | 3000 | 3000 | 3000 | 8941 | 8941 | Y5Q2 | 3060 | 3060 | 3060 | 3060 | 3060 | 3060 | 9388 | 9388 | Y5Q3 | 3121 | 3060 | 3121 | 3060 | 3121 | 3060 | 9857 | 9388 | Y5Q4 | 3184 | 3184 | 3184 | 3184 | 3184 | 3184 | 10350 | 10350 | Y6Q1 | 3247 | 3247 | 3247 | 3247 | 3247 | 3247 | 10868 | 10868 | Y6Q2 | 3312 | 3312 | 3312 | 3312 | 3312 | 3312 | 11411 | 11411 | Y6Q3 | 3378 | 3312 | 3378 | 3312 | 3378 | 3312 | 11982 | 11411 | Y6Q4 | 3446 | 3446 | 3446 | 3446 | 3446 | 3446 | 12581 | 12581 |

Our initial strategy was to have a fixed salary expense during Year 3 and Year 4 due to our employees not leaving the company. An increase in salary, was due to our interest in retaining quality employees and continue to build our positive corporate culture. At the end of Year 5, our forecasted value of 3184 for Merica 1, Merica 2, Merica 3, and our forecasted value of 10350 for Sereno proved to be successful. Originally, our forecast was to increase 2% each quarter, but we decided to postpone Y5Q3 and Y6Q3 salary increase. But during Y5Q4 and Y6Q4, we decided to increase the salary expense by 4% because we wanted to reducing selling expenses to see if we would achieve the same results.
Commission

| Merica 1 | Merica 2 | Merica 3 | Sereno | | Forecasted | Actual | Forecasted | Actual | Forecasted | Actual | Forecasted | Actual | Y5Q1 | 20 | 20 | 20 | 20 | 20 | 20 | 60 | 60 | Y5Q2 | 20 | 20 | 20 | 20 | 20 | 20 | 60 | 60 | Y5Q3 | 20 | 20 | 20 | 20 | 20 | 20 | 60 | 60 | Y5Q4 | 20 | 20 | 20 | 20 | 20 | 20 | 60 | 60 | Y6Q1 | 20 | 20 | 20 | 20 | 20 | 20 | 60 | 60 | Y6Q2 | 20 | 30 | 20 | 30 | 20 | 30 | 60 | 90 | Y6Q3 | 20 | 30 | 20 | 30 | 20 | 30 | 60 | 90 | Y6Q4 | 20 | 30 | 20 | 30 | 20 | 30 | 60 | 90 |

Originally, our company decided to keep the commission rate consistent throughout Year 5 and Year 6. During Y6Q2 we increased our commission rate to $.30 per unit. We concluded that commission did not make a huge impact, therefore we did not increase during Y5Q1 to Y6Q1. However, during Y6Q2 we increased commission from $.20 to $.30 to offer a more appealing commission rate to motivate our sales team.
Preserve motivation
Increase to $.40 in year 7 and 8, why?
Hiring

| Merica 1 | Merica 2 | Merica 3 | Sereno | | Forecasted | Actual | Forecasted | Actual | Forecasted | Actual | Forecasted | Actual | Y5Q1 | 0 | 0 | 0 | 0 | 0 | 1 | 0 | 1 | Y5Q2 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | Y5Q3 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | Y5Q4 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | Y6Q1 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | Y6Q2 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | Y6Q3 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | Y6Q4 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |

* Decided not o hire anyone throughout Y5, Y6 except Y5Q1 * Somebody quit * Reflect resignation * Strategy was to hire when someone quits *

Financial Strategies

Dividends

| Forecasted | Actual | Y5Q1 | 0 | 0 | Y5Q2 | 0 | 0 | Y5Q3 | 0 | 0 | Y5Q4 | 0 | 0 | Y6Q1 | 0 | 0 | Y6Q2 | 0 | 0 | Y6Q3 | 0 | 0 | Y6Q4 | 0 | 0 |

Up to date we have not issued any dividends to shareholders. We have chosen to hold off from paying dividends in order to be able to reinvest earnings to fuel company growth in the hopes of providing investors with capital gains through stock price appreciation. The plan would be to expand in year 7 to meet the great demand of our product. We do plan to start paying dividends at a 15% rate beginning in year 8. At that point we believe to reach a level to payout our investors and sustain our growth.

CDs

| Forecasted | Actual | Y5Q1 | 2000 | 2000 | Y5Q2 | 2000 | 2000 | Y5Q3 | 2000 | 2000 | Y5Q4 | 2000 | 3000 | Y6Q1 | 2000 | 1000 | Y6Q2 | 2000 | 3000 | Y6Q3 | 2000 | 1000 | Y6Q4 | 2000 | 2000 |

Our policy regarding CD’s is to keep a constant investment strategy rather than maintaining large amounts of cash in reserve. We have deviated from our forecasted amounts starting in year 5 quarter 4. We chose to invest greater amounts in the quarters of our higher sales, quarter 2 and 4, and decrease in quarters of less sales, quarter 1 and 3. We invested less to maintain operating cash levels for planned future growth. We purchased back 500,000 bonds back, paying back bonds starting in Year 6 going from quarter 1 to quarter 4. During the planned growth in year 7 we will return back to the forecasted straight line amount of 2000.

Debt Position

| Forecasted | Actual | Y5Q1 | 0 | 0 | Y5Q2 | 0 | 0 | Y5Q3 | 0 | 0 | Y5Q4 | 0 | 0 | Y6Q1 | 0 | 0 | Y6Q2 | 0 | 0 | Y6Q3 | 0 | 0 | Y6Q4 | 0 | 0 |

JACAD has had a policy of not utilizing any bank loans. We have managed to keep our efficient operating production to maintain relative growth to support our 2 plants. With our company sales growing in all of our sales offices we have continual levels of cash inflows to internally support our growth. As a company, we truly believe that using bank loans sheds a undesirable light on us from potential as well as current investors. This also might influence credit rating agencies to lower our ratings due to use of external financing.

Operations Strategies

R&D | Forecasted | Actual | Y5Q1 | 144 | 144 | Y5Q2 | 151 | 151 | Y5Q3 | 159 | 159 | Y5Q4 | 167 | 167 | Y6Q1 | 175 | 175 | Y6Q2 | 183 | 183 | Y6Q3 | 191 | 193 | Y6Q4 | 200 | 204 |

* To be competitive advantage * No obscolete products * Market demand * Keep up with competition * Strategy was to increase 5% every quarter * Except Y6Q3, 6% increa

Training | Forecasted | Actual | Y5Q1 | 96 | 96 | Y5Q2 | 105 | 105 | Y5Q3 | 114 | 114 | Y5Q4 | 123 | 135 | Y6Q1 | 132 | 150 | Y6Q2 | 141 | 165 | Y6Q3 | 150 | 174 | Y6Q4 | 160 | 191 |

* Reduce UPC * More efficient, productive * Increase 10% during Y5Q4 * More critical in investing in training expense

New Product Introduction | Forecasted | Actual | Y5Q1 | 3 | 3 | Y5Q2 | 3 | 3 | Y5Q3 | 3 | 3 | Y5Q4 | 4 | 3 | Y6Q1 | 5 | 4 | Y6Q2 | 5 | 4 | Y6Q3 | 5 | 4 | Y6Q4 | 5 | 5 |

* New model every year * Model 3 – Y5Q1 * Model 4 – Y6Q1 * Seasonal * Keep up with competition * Based on

Quality Level | Merica 1 | Merica 2 | Merica 3 | Sereno | | Forecasted | Actual | Forecasted | Actual | Forecasted | Actual | Forecasted | Actual | Y5Q1 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | Y5Q2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | Y5Q3 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | Y5Q4 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | Y6Q1 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | Y6Q2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | Y6Q3 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | Y6Q4 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 |

* Standard product

Overtime | Merica 1 | Merica 2 | Merica 3 | Sereno | | Forecasted | Actual | Forecasted | Actual | Forecasted | Actual | Forecasted | Actual | Y5Q1 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | Y5Q2 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | Y5Q3 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | Y5Q4 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | Y6Q1 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | Y6Q2 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | Y6Q3 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | Y6Q4 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |

* No overtime

Second Shift | Merica 1 | Merica 2 | Merica 3 | Sereno | | Forecasted | Actual | Forecasted | Actual | Forecasted | Actual | Forecasted | Actual | Y5Q1 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | Y5Q2 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | Y5Q3 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | Y5Q4 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | Y6Q1 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | Y6Q2 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | Y6Q3 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | Y6Q4 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |

* No second shift * Too expensive

Number of Lines | Merica 1 | Merica 2 | Merica 3 | Sereno | | Forecasted | Actual | Forecasted | Actual | Forecasted | Actual | Forecasted | Actual | Y5Q1 | 8 | 8 | 0 | 0 | 0 | 0 | 2 | 2 | Y5Q2 | 8 | 8 | 0 | 0 | 0 | 0 | 2 | 2 | Y5Q3 | 8 | 8 | 0 | 0 | 0 | 0 | 2 | 2 | Y5Q4 | 8 | 8 | 0 | 0 | 0 | 0 | 2 | 2 | Y6Q1 | 8 | 8 | 0 | 0 | 0 | 0 | 2 | 2 | Y6Q2 | 8 | 8 | 0 | 0 | 0 | 0 | 2 | 2 | Y6Q3 | 8 | 8 | 0 | 0 | 0 | 0 | 2 | 2 | Y6Q4 | 8 | 8 | 0 | 0 | 0 | 0 | 2 | 2 |

* No new lines, did not shut down any lines

Safety Stock | Forecasted | Actual | Y5Q1 | 0 | 0 | Y5Q2 | 0 | 0 | Y5Q3 | 0 | 0 | Y5Q4 | 0 | 0 | Y6Q1 | 0 | 0 | Y6Q2 | 0 | 0 | Y6Q3 | 0 | 0 | Y6Q4 | 0 | 0 |

* 15% safety stock