We here at Versatile would like to thank our shareholders for their interest with

our company. We have devoted ourselves to delivering the best in ergonomic office
supplies to the business public while looking into expanding ourselves into the public
realm. While we are a small and new company, the support you have given us has been
indispensable. We produce this document for your perusal and your benefit.

Versatile Is…

President:
Jane Doe

Vice President:
Jay Doe

Chief of Marketing:
John Doe

Chief of Sales:
Bill Doe

Chief of Production:
Karl Doe

Chief of Finance and Human Resources:

Carol Doe

All those listed are hard workers who feel it is important to deliver the best
quality product that we can produce.

Financial Information

The information provided within this document was compiled in-house by our
own staff and lists our gains and losses between the years 2001 and 2003, as we have a
three-year business cycle which ends at the end of November of each year.
 The first area to be covered will be with production costs. As is the case with any
company, production can come up to a fair amount each year, and as the three years went
by this was no different. As you can see from the numbers below, our rent went up with
each year because of inflation as well as renovations that had to be made to accommodate
new equipment. Our total production dipped in 2003 because our business slowed down
and we had to cut costs.

PRODUCTION COSTS
YEARS
COSTS 2001 2002 2003
Material Bought $2,000.00 $1,850.00 $2,000.00
Marketing $1,050.00 $1,000.00 $1,200.00
Distribution $1,050.00 $1,050.00 $1,100.00
Leasehold Improvements $600.00 $150.00 $0.00
Rent $6,000.00 $6,500.00 $6,750.00
Research and Development $2,500.00 $2,500.00 $2,250.00
Production $3,000.00 $3,100.00 $2,500.00

Total Costs: $16,200.00 $16,150.00 $15,800.00

The next set of costs we must take into account are what we spent on financing
the company as a whole. This includes staff salaries, property taxes, among other things.
As rent went up, so did property tax and our property insurance.

BANK AND FINANCING COSTS

Years
Costs 2001 2002 2003
Bank Loans $10,000.00 $20,000.00 $20,000.00
Property Tax $1,020.00 $1,105.00 $1,147.50
Property Insurance $1,200.00 $1,400.00 $1,500.00
Senior Management Salary $90,000.00 $90,000.00 $90,000.00
Middle Management Salary $120,000.00 $120,000.00 $120,000.00
Worker Salary $25,000.00 $25,000.00 $25,000.00

Total Costs $247,220.00 $257,505.00 $257,647.50

As the three years went by, our costs increased. Our Senior Management was
earning $45,000.00 a year, and our four Middle Managers were earning $30,000.00 a
year each. Our one worker was earning $25,000.00 a year. These costs added up to well
over $200,000.00 per annum.
 Total Costs Per Annum

$300,000.00

$250,000.00

$200,000.00
Production
$150,000.00 Finance
Total Cost
$100,000.00

$50,000.00

$0.00
2001 2002 2003

As can be seen, our total costs per annum have grown with each year. Our hope is
that we will soon be able to pay off these costs in the coming years, as can be seen with
our total income per year:

Total Income Per Year

Years
Products 2001 2002 2003
Back Mold $8,000.00 $10,000.00 $12,000.00
ErgoMouse n/a $8,800.00 $9,000.00
Office Arm n/a n/a $10,000.00
UnderFoot $5,000.00 $6,000.00 $8,400.00

Total Income $13,000.00 $24,800.00 $39,400.00

Our total income increases with each year. One will note that two of our products
are not listed under the earlier years, this is because they had yet to be developed. Our
Back Mold, an ergonomic mold that can be adjusted for any user’s back and easily
attached to, and removed from, the back of any chair has been a good seller since its
inception. The ErgoMouse, a cordless optical mouse that was made to be ergonomically
correct for either left or right hand, has sold quite well since we started offering it in
2002. The Office Arm, an adjustable arm that attaches to the desk beside the computer
screen and holds copy level to the eye, has also sold well since its introduction in 2003.
The UnderFoot, a curved rest for the feet, has done respectfully well since we brought it
to light in 2001, originally as an accompaniment to the Back Mold (it is now available as
a separate product altogether), though it has never been the seller that its fellow products
have been.
 Comparison of Costs vs. Income

$300,000.00
$250,000.00
$200,000.00
Total Cost
$150,000.00
Total Income
$100,000.00
$50,000.00
$0.00
2001 2002 2003
Total Cost $263,420.00 $273,655.00 $273,557.50
Total Income $13,000.00 $24,800.00 $39,400.00

As you can plainly see, however, is that our costs sadly grossly outweigh our
income. Versatile was only founded three years ago, however, and it did not have a grand
product-line at the time. We have slowly been working on our products, and as can be
seen that with each year and each product, our ability to pay off our costs jumps
considerably. We predict that in a few years’ time—eight years if our pattern persists but
if we introduce more products per year as we plan to that number will certainly get
smaller—that our total annual income will outweigh our total annual costs.

Factors That May Affect Future Results

Versatile acknowledges that most things in the world are beyond our control, and
that includes the business world. Markets change, as does demand. Should the demand
for our products fall, then so shall our income. There may also be some political
restructuring to occur in the months ahead which will affect the company as well,
whether for better or worse we have yet to see (we expect there to be a drop in
productivity during the time,