Mcdonald’s Business Strategy

10 October 2016

, Inc. 11410 N. E. 124th Street #223 Kirkland, Washington 98034 USA O: 425-822-3106 C: 206-257-9839 [email protected] com Table of Contents Page 3 Page 5 Page 6 Page 9 Page 11 Page 12 Page 16 Page 18 Page 21 Executive Summary Our Business Plan The Market Defined World View Pilot Program (Ethiopia) Projected Market Share Market Strategy Promotion Competition The Bottled Water Industry Product Development – Four Keys Norit Ultra-Filtration System (Perfector – E) Solar Powered Modules Prototype configuration and assembly

The Patented 20-liter Tamper-proof Bottle Organizational Development USAgua Partnership Program US Home Office East Africa Central Assembly Distribution (Operators to Owners) Mile Stones Financial Statements Sales Projections Personnel Budgets Cash Flow Projections Income Statements – Projected Expense Statements – Projected 2 Executive Summary W e are now in a position to profitably enter into the lucrative and expanding worldwide market for pure, clean, safe drinking water. We have developed and will introduce to the world, the concept of small community commercial water purification systems.

Mcdonald’s Business Strategy Essay Example

We call our systems ‘USAgua™ Pure Water Kiosks’. Each of our Kiosks is capable of taking in 8,000 liters of dangerously polluted raw water every day and, through the technologically phenomenal process of ultra-filtration, they process that unhealthy water into safe, clean, purified drinking water. Our systems are containerized, modular, solar powered and ultra-filtered — they function completely ‘off-the-grid’. Our markets are the vibrant, sophisticated, newly emerging middle-classes of the developing world. These middle-class niches represent over one billion people and their numbers are growing daily.

These people realize the importance of safe drinking water for themselves and their families but, at the same time, they know that their governments are incapable of providing this most basic need. What is important to our program is that these middle class families are financially capable of paying for our water. The proof is the fact that they now consume literally tens of millions of gallons of bottled water every year. Our competition is the bottled water industry and, very soon, we will have a substantial piece of that market.

The product we sell is clean, pure, safe drinking water. How we produce, market and sell our product is through our USAgua Pure Water Kiosks Program. Our Kiosks are a melding of two wonderful technologies just now coming into their own. The first is called ‘ultra-filtration’. Picture a bundle of spaghetti sized perforated tubes through which polluted water is pumped under pressure. The perforations are so small that they block viruses, bacteria and parasites down to a ‘Log 2-4’ EPA rating. This means that the water we sell is 99. 99% pure or better when it leaves our system.

And, because the filters require only ‘back-flushing’ instead of costly filter replacements, the long-term costs are minimized. The second basic technology we have employed is Solar Power. Our Kiosks, including all the necessary pumps, batteries, electronics and lighting requirements run perfectly using a Solar Power package designed specifically for our needs. The initial costs of the solar option are steep, but the long term reliability, the fact that we don’t depend on any outside sources of energy and the nearly-maintenance-free specifications we have developed, make them a perfect fit in developing countries. Our ultra filtration systems and our solar power systems have been rigorously field tested by their manufacturers. Our own design engineers have melded the two technologies together, combined them with our storage tanks and lab gear and integrated them seamlessly into our retail USAgua Kiosks. After a final prototype development program, our manufacturers will ship their modules to our USAgua Central Assembly Plants in our target markets. We will use local technicians to retrofit universally available freight containers and perform final installation and assembly.

Once our Kiosks are complete, they will be delivered to our ‘Operators’ in the field. Our Management Team will locate, recruit and train local ‘Operators’ in our various ‘Target Markets’. In time, our Operators will be given the opportunity to own their own USAgua Kiosk, thus allowing us to tap the entrepreneurial energy and spirit that can be found within individuals in every corner of the world. Our USAgua Operator program will ensure our market position and stability through world-wide name branding, equipment standardization, standardized maintenance routines and universally accepted accounting procedures.

With the help of some very smart engineers we have developed the concept of our USAgua Pure Water Kiosks. At the same time, we have put together a business model that takes the best of the American business concepts we are so proud of and we, very carefully, introduce them into the potentially lucrative new middle-class markets of the developing world. Our ‘financial package’ is strong. Our assumptions and our projections are conservative, our research is up to date and our key players are heavy on both education and real world experience. We are ready to take the next giant step forward.

To that end, we are asking to secure a US $2,200,000 Investment package so that we can bring our USAgua International Program to fruition. Please, feel free to call me anytime for more information or clarifications. Sincerely, Timothy McDonald 4 Our Business Plan The World Wide Market Defined: Of the 6 billion people in the world today, over 3 billion1 live either totally ‘off-the-grid’ or in communities not serviced by safe, dependable water systems. Families within this demographic, no matter their economic level, are left vulnerable to water borne diseases including viruses, parasites and bacteria.

The negative social and economic repercussions of not having access to safe, clean drinking water are immense. Some United Nations reports have gone so far as to predict that safe drinking water will be as economically significant as oil within the next decade2. We intend to be a big player in solving the drinking water problem. We have designed both our USAgua Water Purification System and our Business Model to be universally adaptable. Our equipment and our business model will function beautifully in the suburbs of Nairobi, along the Yangtze River in China and in the mountains of northern India.

Anywhere there is both a source of water (no matter how polluted) and an open view of the sun, our USAgua water purification systems will work. Anywhere there are energetic and entrepreneurial individuals who aspire to a better life for their families, our USAgua Operator network will prosper. At the ‘Macro’ scale, our market is unlimited. Good business practices, however, dictate that we start small and grow carefully. We will introduce our program to a small, representative market we are familiar with. One that can be easily documented and controlled.

In our ‘Pilot Market’ we will learn a great deal from both our successes and our mistakes. Once we have field proven both our equipment and our business model, we will enter additional markets with much greater knowledge and enthusiasm. _________________________________ It is very important to understand that we are in competition with the ‘Bottled Water Industry’ in all aspects of our program. The statistics and the markets for bottled water, world wide, are the statistics and markets relevant to USAgua™. _______________________________________ 1 2 United Nations Development Program Report – August 2008

United Nations Development Program Report – August 2008 5 Our Ethiopian Pilot Program and Our Share of the Market For several reasons, including a thirty year professional involvement in East Africa, we have chosen the country of Ethiopia to establish our ‘Pilot Program’. The Ethiopian Market Defined: Population (millions) 2007 Population growth (annual %) Life expectancy at birth (years) Literacy rate GNI (US $ billions) GNI per capita (US $ ) 78. 6 2. 6 55. 0 38. 5 19. 4 220. 0 The United Nations Children’s Fund (UNICEF) acquired these statistics: Health of population using improved drinking-water sources, 2006, total 42 (cut and paste from the UNICEF 2008 Report) These UNICEF statistics show us that there is a large segment of the Ethiopian population that understands the need for safe water. The definition of ‘improved drinking-water sources’, however, does not address the quality of the water. It only documents the fact that the water has been drawn from a centralized source and is conveyed to the end user via an established distribution network; either municipal water systems, tanker trucks or bottled water.

The water may or may not be processed. It may or may not be safe. The quality of both the tap water and the bottled water in Ethiopia is suspect due to poor infrastructure maintenance and a lack of Health Department regulation enforcement. 3 3 UNICEF Annual Report – 2006 6 The Ethiopian Central Statistical Agency (CSA) estimates that currently 4. 18% of the households, nationwide, have access to community water systems and taps within their homes. Ethiopia Total 2004 2. 2 2006 2. 7 2008 3. 3 Current 4. 18 (cut and paste from the 2008 CSA Report)

This means the vast majority of people considered to have access to ‘improved drinking water sources’ are using tanker truck delivery (very dangerous) or bottled water. (78. 6 million X 42%) – 4. 18% ) = 31. 4 million people drink non-tap water. ) The CSA also publishes a quarterly retail price listing for nearly every commodity found in Ethiopia. In 2008 the average cost per liter of bottled water was 6 birr. (Ethiopian currency) BEVERAGES – NON ALCOHOLIC Ambo Mineral Water………… 500cc 3. 00 3. 00 3. 00 3. 17 3. 00 3. 00 2. 50 3. 00 2. 96 2. 50 3. 00 3. 00 2. 50 2. 5 Bure Mineral Water………… 500cc – – – – – – – – – – – – – – (cut and paste from the 2008 CSA Report) ! (Or … US $0. 48/liter at the current exchange rate) The CSA has not been able to estimate a total volume of bottled drinking water produced or consumed. We have been told many reasons for this lack of statistical documentation. The most plausible is the lack of government oversight and a huge black market for recycling local water in used plastic bottles. This is a very dangerous practice and one the central government has taken action to stop. 4 A few assumptions:

W e are going to assume, in the interest of simplifying our Business Plan, that within and near the cities of Addis Ababa, Mekele, Bahra Dar, Nazerit and Awassa ( a total population of over 27 million ) there is a need for 27,000,000 liters of pure, safe drinking water every day. (27,000,000 X 365 days = nearly 10 Billion liters per year) (One liter of safe drinking water per day is the World Health Organization’s minimum requirement. ) 4 Ethiopian Health Ministry – 2008 7 Our Pilot Program Cities: 10% Purchase Vicinity of Population Addis Ababa 15,375,000 15% Purchase 20% Purchase 5% Purchase Bottled Water at US $0. 50/liter Bottled Water at US $0. 40/liter Bottled Water at US $0. 30/liter Bottled Water at US $0. 20/liter 1,537,500 2,306,250 3,075,000 3,843,750 Nazerit 3,580,000 358,000 537,000 716,000 895,000 Bahri Dar 1,790,000 179,000 266,850 355,800 447,500 Awasa 1,430,000 143,000 214,500 286,000 357,500 Mekele 4,825,000 482,500 723,750 965,000 1,206,250 27,000,000 2,700,000 4,050,000 5,400,000 6,750,000 $1,350,000 $1,620,000 $1,620,000 $1,350,000 $492,750 ,000 $591,300,000 $591,300,000 $492,750,000 Population Market Value Market Value Per Day Per Year

Our Pilot Program Market Our Pilot Program Market focuses on five major cities in Ethiopia. We can take a very conservative but educated guess that 15% of the 27 million population is capable of purchasing 1 liter of drinking water every day for US 0. 40/liter. (about a billion and a half liters per year demand) 1,248,000 liters (62,400 20-Liter USAgua Bottles) is the annual sales figure we have projected for each of our USAgua Kiosks. Or less than one tenth of one percent (. 001%) of our Pilot Program Middle-class Market Demand. Our Kiosks are actually capable of physically producing ,920,000 liters of safe, clean drinking water annually, but for budgeting and logistical reasons as well as a conservative margin of safety, we are building our Business Model on a 1,248,000 liters/year basis or a 4,000 liters per day sales capacity, six days per week. ! The total cost to our USAgua Kiosk Program to produce, bottle and sell safe, clean drinking water is less than $0. 10 per liter The universal laws of supply and demand would tell us that we could completely dominate the ‘Bottled Drinking Water Industry’ in our Pilot Program Market.

By assuring two things — Highest Quality, Lowest Price — we should expect to capture a substantial share of this huge market while at the same time realizing a very profitable return on investment very quickly. It is not difficult to imagine 40 USAgua Kiosks working profitably within Ethiopia within two years of start-up. 8 Market Strategy The Market for pure, clean, safe drinking water already exists. It is large, growing and lucrative. Our dominant piece of that worldwide market is what we will develop. Branding… W e own the internet web domain and the trade marked name, USAgua™.

We are now in the process of building a comprehensive website that will address everything from the biology of parasites, bacteria and viruses to the science of removing those contaminants from our drinking water. It will show how important safe drinking water is to individuals, societies and economies. It will differentiate our USAgua Water Purification Kiosks from our competition, the bottled water industry. Our website will play very well in East Africa. Since the election of President Obama, a new, very pro-American, attitude has emerged. America and all things American are now very popular.

Our USAgua Kiosks provide safe drinking water at standards equal to or better than our American EPA standards for domestic drinking water. In East Africa, they trust our standards and want that same high quality for their families. Our Kiosks are painted in American national colors. The USA in USAgua is meant to emphasize our American roots and our American standards. When a USAgua Kiosk is delivered to an African community our customers will feel that part of America has arrived. Our USAgua 20-liter plastic bottles are designed to be used and re-used and re-used by the family to which they are assigned.

The boldly branded bottles can not be refilled by anyone other than our Kiosk operator. Our branded one-liter personal bottles will be carried with pride on the streets of our communities. The name, USAgua, will be synonymous with American high quality and good health. Lower retail pricing… W e know there is a large and growing demand for safe, pure drinking water. On the macro scale this is evidenced by the rise of the bottled water industry in every city and village in the world. In Ethiopia, our Pilot Program Market, we know the retail price of a liter of bottled water is US$0. 48.

The laws of supply and demand dictate that as the price is lowered, the demand rises. The cost of our water, including all business related expectations, is less than US $0. 10 per liter. We will price our product to maximize both the quantity sold and the profit generated. 9 Flyers and Brochures Distributed Locally …. And a billboard or two Because each of our USAgua Kiosks are designed to satisfy the drinking water demand of only 400 families per day, (we are saying 10 liters per family per day) the geographic market area for each of our Kiosks is small, (by design) less than one square kilometer.

Prior to our Kiosks arriving at their final destinations, a local flyer and brochure campaign will saturate the area to introduce our program. Community meetings will be held to educate members of our market and sell our products. A large colorful bill-board will be erected so that people will begin identifying our branding. 10 Competition: The Competition for our Pilot Program Market (and every other market in the developing world, for that matter) consists of a handful of legitimate Centralized Water Bottling and Distribution Companies as well as black-market water bottle recycling scams.

The government is now in the process of both adopting new quality standards for all bottled water plus they are developing the means to enforce those standards. Because none of the major international bottled water producers (Danone, Nestle, and Coca-Cola) have entered the African markets, statistical documentation is lacking for total production and demand. We do know a few things, however. First is that the existing legitimate bottled water industry depends on centralized plants that are, by definition, saddled with the tremendous costs associated with transporting heir product to market. Plus, they must purchase plastic bottles that will be used only once, but then become potential competition as those same bottles are refilled on the black-market and resold. We also know that the end user of bottled water is becoming much more sophisticated. They know full well the problem with boot-legged water and in most cases have gone back to boiling local water (at a tremendous expense in fuel) rather than purchase suspect bottled water. The Bottled Water Industry is not the answer for the Developing World. 11 Product Development ….. some history

For generations, scientists around the world have known that viruses, parasites and bacteria are present in much of the water we drink. They have also known that these tiniest of creatures are the source of the water borne diseases that have plagued humanity since Lucy stood up on her two legs and peered over the tall grasses of the African Savannah. Personal Note: McDonald was stationed in the Awash Valley of Ethiopia in 1973-75 only 20 miles from where Lucy – Australopithecus afarensisr – was discovered. On several occasions his Agricultural School and Farm hosted Lucy’s rcheologists. They appreciated the water system he had developed that pulled water from the muddy Awash River and provided them safe, pure drinking water. In the developed world, from our largest cities to our smallest villages, our technology has solved the problem of purifying our waters. In America, we long ago realized the importance of safe water to the overall health and well being of our society. It was so important to previous generations that they mandated our government to set and enforce the highest water standards in the world.

Our municipal and community water systems now process and distribute a dependable flow of amazingly inexpensive water to the homes of every citizen. The success of America is due, in no small part, to the overall health of our people. And, the overall health of our people is, in no small part, due to our wonderful communal water systems. On the macro scale, the per gallon cost of water in America is very small; a penny or two a gallon at the most. The reality is, however, that a water purification plant and a distribution network are tremendously expensive to develop and operate; tens of millions of dollars.

And, the technical sophistication necessary to maintain these systems is overwhelming to any but the most advanced economies. For so many reasons (economic, political, cultural, technical) there is little hope that the vast majority of people in the second and third worlds will ever be able to build and maintain the water systems necessary to provide safe water for their people. Even now, as a burgeoning middle class emerges, the central governments are powerless to act. The problem is just too large and the costs too high. 12 Product Development …. the Stars Line Up

The USAgua™ Pure Water Kiosk Program is……Four Components. The product we sell is clean, pure, safe drinking water. How we produce, market and sell our product is through our USAgua Pure Water Kiosks Program. Our Kiosk Program brings together four independent but equally important physical components. Namely: Ultra-Filtration, Solar Power, Retro-fitted Freight Containers and Keyed, Tamper-proof 20-liter Bottles. 1. Ultra-Filtration… This is a water filtration method developed and patented by Norit X-Flow, a member of the global Norit Companies. Norit is headquartered in the

Netherlands with sales offices throughout the world including one just outside of Chicago. Ultra-filtration is easy to visualize. Picture a bundle of spaghetti sized perforated tubes through which polluted water is pumped under pressure. The perforations are so small that they block viruses, bacteria and parasites down to a ‘Log 2-4’ EPA rating. This means that the water they process is 99. 99% pure or better when it leaves their system. And, because the filters require only ‘back-flushing’ instead of costly filter replacements, the long-term costs are minimized.

Norit’s filters can be used for months and then ‘back-flushed’ to remove all contaminants. The actual filters will last for years. Ultra-filtration is truly a marvelous breakthrough. One of the first applications that Norit X-Flow developed for its Ultra-filter technology was a very clever machine they call the Perfector-E Mobile Water Purification System. It was originally designed for emergency responders to be used in the aftermath of devastating natural disasters; earthquakes, floods and hurricanes. The systems are small, strong and highly mobile.

They can be transported and set up in any disaster area within hours. They are totally self contained and can draw and purify water from almost any source including exposed surface waters, local lakes, rivers, ponds and irrigation systems. The Perfector-E System can provide literally thousands of gallons of pure, safe drinking water per day to a disaster area under the most extreme conditions. And, there is another very positive aspect to Norit’s system. It is not a big energy user. With some adaptations, we can actually run the systems exclusively on solar power. 13 2.

The second basic technology we have employed is Solar Power. Our Kiosks, including all the necessary pumps, batteries, electronics and lighting requirements run perfectly using a Solar Power package designed specifically for our needs. Our solar energy system was designed by H-Dot Logic, a solar engineering company here in Seattle. The initial costs of the solar option are steep, but the long term reliability, the fact that we don’t depend on any outside sources of energy and the nearlymaintenance-free specifications we have developed, make them a perfect fit in developing countries. . Our Kiosks – Our Containers. We have chosen to utilize universally available, standard steal 20 foot cargo containers as the physical basis of our Kiosk system. Containers are strong and secure. They are easily transported on any flatbed truck in the world, and once they are delivered to our overseas locations, they will serve as the actual retail Kiosk facility. Our in-house engineers have designed the retro-fit of the containers to comfortably house all the various components in and around the retail shell.

The solar panels, the gravel pre-filters, the external raw water storage tank, the internal finished water storage tank with the UV sterilizer, the Ultra-filter modules, the pumps, the battery packs, all the electronics and a water testing system are all neatly configured inside the container. In addition to designing the retrofit, our Kiosk’s will have a copy written exterior color and graphic scheme. The graphic scheme, once painted on our containers will provide a great advertising platform for our USAgua Brand. A prototype unit still needs to be assembled.

USAgua Kiosk # 0001, the prototype, will be assembled in Seattle, Washington. A careful documentation video of the specifications and assembly methods will be produced. This process will take about four months to accomplish. Once the first Kiosk is ready it will be shipped from the Port of Seattle to Ethiopia. Once in Ethiopia, USAgua #0001 will be delivered to our Central Assembly & Fabrication facility. Our local Management will use it to train a team of assembly mechanics. We will then begin purchasing containers on the local market and preparing them for the arrival of our Filter and Solar modules.

Within a four month period, we will be assembling and delivering two complete USAgua units per month. 4. The Keyed-Tamper Proof Bottle Program: One of the reasons the bottled water industry is not a good fit for the developing world is because the plastic bottles are disposable. Each new bottle, when discarded becomes a potential competitor as people refill the bottle and sell it on the black market. Our USAgua bottles are specially designed to discourage re-use by anyone but the family to which it was assigned. The bottles will have a tamper proof valve and seal that can only be refilled at USAgua Kiosks.

This makes the bottles un-usable outside our network and assures our customers that the water inside our stamped and sealed bottles has not been counterfeited on the black market. Our prominent USAgua Logo on each bottle will help promote our brand where ever it is found. 14 Organizational Development Thirty years of experience working in developing countries has taught us many things. One of the most important is that without a very involved and powerful Management presence ‘on the ground’, no program can succeed.

For the success of any project in the developing world, including ours, it is vitally important that we back-up our 21st century technology with an equally robust Management and Operations Program based on century’s old tried and true Business Practices. We call our In-Country USAgua International Management and Operations Program ‘Our Partnership Program’. It is based on five powerful strategies: 1. Recruiting the best and the brightest. Every developing country in the world has vibrant, honest, well educated, hardworking, entrepreneurs looking for an opportunity to improve themselves, their families and their communities.

Our Country Director will identify and recruit these individuals. We will offer them a good basic family wage with the added incentive of merit-based pay raises. 2. In-Country Training for our Operators Our USAgua in-country Management Staff will train every recruit in Kiosk system functions, maintenance procedures, program hygiene, local marketing and program bookkeeping. Trainees will work with seasoned Operators during a six month apprenticeship program. If they prove themselves capable, they will be offered a position as an Operator or Operator’s Helper for one of our USAgua Kiosks. . In-Country Operations Management. We will have one Project Manager for every 10 USAgua Kiosk Operators. These Project Managers will visit each Kiosk Operator every month to make sure that the extremely high USAgua standards are being met and maintained. The PM’s are also in charge of auditing and banking functions. There will be zero tolerance for bookkeeping errors. In addition to our Project Managers, we have a Maintenance & Repair team that routinely visits each Kiosk making sure that no small maintenance problem becomes a big repair problem due to lack of Operator vigilance. 4.

Advertising and Marketing Support Each Kiosk comes with an introductory advertising budget for local marketing. We will saturate any new locale with USAgua literature. In addition, our Staff will visit each Kiosk to conduct community seminars in water quality and family hygiene. 15 5. Operators to Owners Program After two years as a USAgua Operator we will offer some of our most gifted and hardworking employees the opportunity to purchase their own USAgua Kiosk. We are wholly convinced that there exists a universally powerful business strategy that assures the success of a program such as ours.

This is called ‘pride in ownership’ and we intend to tap that strategy to its fullest. Our US Office The home office of McDonald Management is in Seattle, Washington as will be the home offices of USAgua International, Inc. At the top of our organizational chart is the President and CEO, Timothy McDonald. Mr. McDonald has a BS in International Economics (minor in Civil Engineering) with Masters work in International Economics all from the University of Washington. He has been in and out of East Africa for over thirty years with our State Department as both an employee and an independent contractor.

He will oversee day to day operations both in the US and overseas. Norit X-Flow International will provide the Ultra-filtration modules. H-Dot Logic will provide the solar package design and modules. R. L. Clark and Associates of Redmond, Washington will be in charge of Investor Relations, financial program development and implementation. Bahiru G. Egziabiher will be the Country Director in Ethiopia for our Pilot Market Program. He holds a Masters in Electrical Engineering from the University of Washington and has worked for Seattle City Light for over twenty years. Bahiru holds duel US and Ethiopian citizenship.

Dalrymple and Associates will be in charge of our Kiosk design and equipment coordination. In addition his company has designed our logo, the graphic presentation of our USAgua name and our color schemes and themes. RedRover Marketing will be in charge of our website design, maintenance and hosting. Our Office in Ethiopia W e will lease a centralized office/warehouse facility in Addis Ababa where we will identify, recruit and train a team of assemblers and fabricators to retrofit our containers, install our filtration systems, our solar modules and our storage tanks.

Our paint shop will brand each Kiosk with our name, our logo and our color scheme. 16 Bahiru Egziabiher, our Country Director, will be in charge of our Ethiopia operations including the central warehouse and assembly facility. He will oversee the assembly of two complete USAgua Kiosks per month once we get underway. McDonald and Exziabiher and, eventually, a small team of Project Managers, will identify, recruit and train a Network of USAgua Operators. These Project Managers will be responsible for assuring the high standards of training, maintenance, product quality and accounting standards for each of their Network Operators.

Within two years there will be 40 Kiosks producing pure water in Ethiopia. There will be one Project Manager for every ten Kiosks. Our Operator Network is the key to our program. Once our USAgua Operators are identified and recruited, they will go through a thorough training program. They will serve a two year apprenticeship and then, if they have proven themselves capable of maintaining our extremely high standards, they will be given the opportunity to own their own Kiosk. In this way we will tap the entrepreneurial spirit of those who will make our entire program a success.

How Hard is it to Enter the Ethiopian Market? The World Bank ranks countries world wide by their ‘Ease of Doing Business’. Of the 183 countries rated, Ethiopia ranks #107. In comparison, Egypt is #106 and Kenya is #95. Since 1993 when the people of Ethiopia removed their previous communist government and replaced it with one decisively more moderate and business friendly, the new leadership has striven to open its economy to a more capitalistic model. In the past 10 years, Ethiopia has been gradually re-writing its constitution in an attempt to open new markets and stabilize its business community.

These efforts have paid off. In 2008-9 the World Bank ranked Ethiopia at #122 for ‘ease of starting a business’. This year they are ranked # 93. And, they are getting better every year. The following statistics are all from the World Bank. Ease of doing Business 107 Starting a Business 93 Dealing with Construction Permits 60 Employing Workers 98 Registering Property 110 Getting Credit 127 Protecting Investors 119 Paying Taxes 43 Trading Across Borders 159 Enforcing Contracts 57 Closing a Business 77 Summary of Indicators – Ethiopia Starting a Business Procedures (number) 5

Time (days) 9 Cost (% of income per capita) 18. 9 Min. capital (% of income per capita) 492. 4 17 Dealing with Construction Permits Procedures (number) 12 Time (days) 128 Cost (% of income per capita) 561. 3 Employing Workers Difficulty of hiring index (0-100) 33 Rigidity of hours index (0-100) 20 Difficulty of redundancy index (0-10) 30 Rigidity of employment index (0-100) 28 Redundancy costs (weeks of salary) 40 Registering Property Procedures (number) 10 Time (days) 41 Cost (% of property value) 2. 2 Getting Credit Strength of legal rights index (0-10) 4

Depth of credit information index (0-6) 2 Public registry coverage (% of adults) 0. 1 Private bureau coverage (% of adults) 0. 0 Protecting Investors Extent of disclosure index (0-10) 4 Extent of director liability index (0-10) 4 Ease of shareholder suits index (0-10) 5 Strength of investor protection index (0-10) 4. 3 Paying Taxes Payments (number per year) 19 Time (hours per year) 198 Profit tax (%) 26. 8 Labor tax and contributions (%) 0. 0 Other taxes (%) 4. 3 Total tax rate (% profit) 31. 1 Trading Across Borders Documents to export (number) 8

Time to export (days) 49 Cost to export (US$ per container) 1940 Documents to import (number) 8 Time to import (days) 45 Cost to import (US$ per container) 2993 Enforcing Contracts Procedures (number) 37 Time (days) 620 Cost (% of claim) 15. 2 Taking into account the above information provided by the World Bank, it will take McDonald Management about 90 days to secure all the necessary permits, licenses, patent protection registrations and lease agreements in Ethiopia. This will all be done prior to our first Kiosk leaving the US. 8 Mile Stones First Three Months Investors have been identified and secured… A US $2,200,000 credit line is opened … Dalrymple & Associates secures a short term warehouse lease where the prototype Kiosk will be assembled and the process documented. Norit X-Flow, H-Dot Logic and USAgua finalize specifications for the prototype filter/solar modules The USAgua Prototype is completed and Unit #0001 is prepared for shipment to Africa In Month One, McDonald and Exziabiher leave for East Africa to secure business licenses and leases.

While in Africa McDonald and Exziabiher identify and recruit a team of mechanics and fabricators as well as a Project Manager. They identify the first five individuals for the USAgua Operators Network. Months 4 and 5 USAgua Kiosk number 0001 is shipped from Seattle to Addis Ababa USAgua – Seattle begins producing and shipping filter/power modules to Ethiopia at the rate of 2 units per month. Containers are purchased and retrofitted in our Addis Ababa facility at the rate of 2 units per month.

Assembly begins and the first delivery of a unit is accomplished. Months 6 -12 All elements of our program are coordinated and we are assembling and placing USAgua Kiosks in client communities at the steady rate of 2 units per month. Project Managers and Operators are continuing the training, quality control and apprenticeship programs. Month 13 W e achieve income/expense financial Break Even Month 24 The first 40 USAgua Kiosks are in place and working. The first USAgua Operator recruits are offered ownership of their Kiosks. 19 Business Plan Summary

W e are confident that a vibrant and lucrative market for safe, clean drinking water exists in every country of the world. We are also confident that we have the right Technology and Business Model to enter and eventually dominate those markets. To prove this, we are going to introduce 40 of our USAgua Kiosks into the Ethiopian market. There we will show that our technology is exactly right; that each of our Kiosks can be operated and maintained profitably for years. And, that our Business Model is sound and worthy of the trust our investors have shown.

We have developed a set of financial projections. These itemize the key elements of our program and put a dollar figure on their implementation. They show that an initial two year investment of US $2,200,000 will produce an operating income/expense breakeven within a year and actual profit by the end of the 40 Unit 2 Year Pilot Program. Anyone interested in viewing our Financial Report, please, call Timothy McDonald. He will be more than happy to send along our spreadsheets. Many Thanks, Timothy McDonald 206-257-9839 20

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