NOTE 27 - CASH OUTFLOWS FROM PRODUCT COSTS

The following charts will be used as a reference in explaining each sub-note discussed below:

NOTE 27 A - PURCHASE OF FINISHED DISKETTE FORM
In year one, J&B will order its initial product in diskette form in qualities of 1000 and 1500. As illustrated above, the cost per product in diskette form in year one is $8.67. As a result, cash outflows of $8,667 and $13,001 is scheduled at various times throughout year one. In year two and three, the Company will purchase the product in diskette form in qualities of 1000 only.

NOTE 27 B - PURCHASE OF FINISHED CD FORM
In year one, J&B will purchase its initial product in CD form in qualities of 1,000 . As illustrated above, the cost per product in CD form in year one is $2.50. As a result, cash outflows of $2,500 is scheduled at various times throughout the year. In year two, the Company will order the product in CD form is quantities of 1,000 and 1,500. In year three, the demand for this form dictates the product be ordered in quantities of 2,000.

NOTE 27 C - CREDIT CARD CHARGE
J&B will accept credit cards from customers purchasing our products. The forecasted financial statements expects the cost for using these cards to be 5% of each sale. As illustrated in the above chart, the forecasted credit card charge for each diskette and CD sale is $3.71 in year one ($74.22 x 5%), and $3.44 in year two and three ($68.82 x 5%). The credit card charge for each product sold in Internet form is $3.37 in year one ($67.49 which does not include shipping revenue X 5%), and $3.04 in year two and three ($60.74 x 5%). As shown in the Cash Flow Statements, the monthly credit card charges are directly linked to the number of units sold during any giving month. In addition, payment will commence one month after the charge has been incurred.

NOTE 27 D - PACKAGING CHARGES
As shown in the above chart, packaging charges per unit is estimated at $0.58, $0.61, $0.64 in year one, two and three respectively. The packaging is simply an "bubble wrap" envelop which will be used to safely ship the product to customers. As indicated in the Cash Flow Statements, these costs are directly linked to the number of units sold during any month. In addition, actual payment will commence in the month the cost is incurred. Notice packaging charges are not applicable to the product sold in Internet Form.

NOTE 27 E - SHIPPING CHARGES
The product in diskette form will weigh between 250 and 500 grams, resulting in a shipping charge of $3.80 per unit in year one. The product in CD form will weigh between 30 and 100 grams, resulting in a shipping charge of $1.17 per unit in year one. In year two, the Company is estimating an increase of 5% over year one. In year three, J&B is estimating a 10% increase in shipping charges over year one. As indicated in the Cash Flow Statements, these costs are directly linked to the number of units sold during any month. In addition, actual payment will commence in the month the cost is incurred. Notice shipping charges are not applicable to Internet sales.

NOTE 27 F - TOLL-FREE CHARGES
Toll-free charges result from customers calling our 1-800 service. As illustrated above, year one shows an average selling cost of $1.99 per unit. This was arrived at by multiplying the cost per minute by the estimated number of minutes our telephone operators would spend to make a sale and collect the required personal information needed to complete the product fulfillment process . Moreover, the cost per minute is $0.33 while the estimated number of minutes is six (6). Therefore, in year one the total cost per sale is forecasted at $1.99. In year two, the Company is estimating an increase of 5% over year one. In year three, J&B is estimating a 10% increase over year one. As indicated in the Cash Flow Statements, these costs are directly linked to the number of units sold during any given month. In addition, payment will commence ONE MONTH AFTER the cost is incurred.

NOTE 27 G - COMMISSION ON SALES
The Company's sales operators will receive a commission on each sale they make. In year one, J&B plans to provide a $1.00 commission on each sale, above and beyond their hourly wage. In year two and three the sales commission will increase to $1.05 and $1.10 respectively on each unit sold. As illustrated in the Cash Flow Statements, commissions are directly linked to the number of units sold during any given month. In addition, actual payment will commence ONE MONTH AFTER the cost has been incurred.

NOTE 27 H - PRODUCT MISCELLANEOUS
To be objective, J&B is allowing a miscellaneous cost in year one of $0.50 per unit. This cost does not relate to any specific item, but rather is used to reflect any unforeseen increases in product costs. In year two and three, the Company increases the product miscellaneous cost by 5% and 10% respectively over its first year forecast. As indicated in the Cash Flow Statements, these costs are directly linked to the number of units sold during any given month. In addition, payment will commence in the month the cost is incurred.