NOTE 11 - TOLL-FREE CHARGES ABOVE VARIABLE COST

Toll-free charges result from customers calling the Company's 1-800 service to inquire or buy our product. These charges are calculated on a per minute bases - $0.33 per minute in year one and a 5% increase in year two and year three. In year one, J&B is estimating that 15,522 people will call the 800 line to only inquire about our product. The average length of time these callers will spend on the phone is estimated at 3 minutes.

Therefore, each inquiry will cost approximately $1.00 (.33 x 3 minutes), resulting in a budget of $15,522. In year two, the cost per call is expected to increase by 5% or $1.05. With a budget of $20,275, the Company is expecting approximately 19,310 callers. In essence, the company is forecasting 66% of callers will only inquiring about the product; they will NOT buy it. Below shows the toll free charges for year one, two and three.