ASSISTED LIVING BUSINESS PLAN - DEWITT

THE COMPANY, LLC

The Company

B U S I N E S S P L A N

PROPRIETARY AND CONFIDENTIAL

This Business Plan is presented for informational and evaluation purposes only. The information and ideas contained herein are to be held in the strictest confidence by the reader and are not to be divulged or acted upon without the express written consent of The Company, LLC.

For Further Information Contact:

Dee Dewitt, Veridian Financial

502.599.012

The Company, LLC

Page 1

Confidentiality and Liability Statement

This confidential Business Plan (the “Plan”) has been prepared by the management of The Company, LLC (“The Company” or “the Company”) and is being delivered to a select number of parties who may be interested in entering into an investment transaction (the “Transaction”). The sole purpose of the Plan is to assist the recipient in deciding whether to proceed with an in-depth investigation of the Company.

By accepting this document, the recipient agrees and acknowledges that all of the information herein, and all other information made available to the recipient in connection with any further investigation, is deemed to be proprietary and confidential information of the Company and that none of the information shall be used by the recipient, its employees or representatives in any manner other than in connection with its evaluation of the Company for the purpose of considering an investment in the Company. All inquiries regarding this opportunity should be forwarded to The Company, LLC, xxx, or yyy, as noted above.

This Plan contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Act”), and Section 21E of the Securities Exchange Act of 1934, as amended, and is subject to the safe-harbor created by such sections. Such statements include, but are not limited to, statements related to (i) the Company’s operations, economic performance and financial condition, (ii) expansion of the Company’s business and operations, (iii) the hiring of additional personnel and (iv) an increase in the Company’s revenues. Forward-looking statements in this Plan include known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements expressed or implied by such forward-looking statements to vary from those stated in this Plan. Such factors include, among others: general economic and business conditions; changes in law regarding internet activities; competition; changes in business strategy; the indebtedness of the Company; quality of management, business abilities and judgment of the Company’s personnel; the availability, terms and deployment of capital; and other various factors referenced in this Plan. The forward-looking statements are made as of the date of this Plan, and the Company assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.

The Company and its management are available to respond to requests for additional information that investors may desire. The Company reserves the right to require the return of this Plan and its collateral information at any time. The Company reserves the right to terminate the entire offering at any time prior to closing, or to terminate participation by any party in its investigation or evaluation of a potential Transaction.

The Company, LLC

Page 2

Investment Opportunity

The Company offers investors an opportunity to profit from the expanding Assisted Living Facility (ALF) and senior housing marketplace with a unique strategy of bringing small residential ALFs to communities across the United States. Similar existing The Company ALF facilities using this business model have demonstrated very attractive profitability.

Management is securing $30 million in real estate collateralized 5 Year Line of Credit debt. This offering will be fully collateralized by ALF income producing real estate at no more than a 1:1 LTV (Loan to Value).

Initial refinancing of any existing ALFs will be completed at a 1:1 LTV; All new construction financing of ALFs will be completed at approximately 80% LTV.

With successful execution of its business plan, a valuation analysis reveals a projected worth of approximately $845 million at the end of 2012, using a Price/Earnings multiple of 8.

At that time, the projected market value of the underlying real estate is expected to equal approximately $221 million.

Product/Services Category: Assisted Living Facilities, Senior Housing

Company: The Company, LLC

Location: The Address The City, The State

Contact: xxx, CEO yyy, CFO

Initial Capital Plan:

Planned The Company Financing Summary Secured LOC Facility $30m Year 1 Institutional Refinancing $10m Annually, Beginning Year 2005

The Company, LLC

Page 3

Table of Contents

Confidentiality and Liability Statement ......................................................................... 1

Investment Opportunity................................................................................................... 2

Table of Contents .............................................................................................................. 3

Executive Summary .......................................................................................................... 5

Keys to The Company’s Continued Success ................................................................ 6 The Assisted Living Industry and The Company .......................................................... 7

Players in the Industry .................................................................................................. 7 Learning and Differentiating The Company from Prior Companies ............................ 8 The The Company Difference .................................................................................... 10

Company Summary ........................................................................................................ 13

Objectives ................................................................................................................... 13 Mission Statement....................................................................................................... 13 Start-Up Summary ...................................................................................................... 13 Management’s Experience with Assisted Living ....................................................... 15 Organization Structure ................................................................................................ 15 Management Team...................................................................................................... 15 Management Team...................................................................................................... 15 Administrators............................................................................................................. 16

The Elderly Population................................................................................................... 18

The Growth of the Elderly Population........................................................................ 18 The Economic Wealth of the Elderly Population ....................................................... 19 Geographic Distribution.............................................................................................. 20 Use of Demographics in Market Research ................................................................. 21 The Company’s Site Selection Committee ................................................................. 22

The Economics of the The Company Approach .......................................................... 23

Financial Projections ...................................................................................................... 25

Actual Financial Performance..................................................................................... 25 Revenue Strategy ........................................................................................................ 26 ALF Expansion Plan ................................................................................................... 27 Financial Pro Formas .................................................................................................. 27 Projected Valuation Analyses ..................................................................................... 29 Secured LOC Debt Offering ....................................................................................... 29 Estimated Use of Proceeds.......................................................................................... 29

Multiple Exit Strategies.................................................................................................. 31

Cash Flow From Operations and Refinancing of Seasoned ALFs ............................. 31 From the Sale of the Facilities .................................................................................... 32 Private Bond Offering................................................................................................. 32

The Company, LLC

Page 4

Initial Public Offering (Traditional)............................................................................ 33 Merger/Acquisition ..................................................................................................... 33

Conclusion ....................................................................................................................... 33

Appendix 1: Financial Pro Forma Statements............................................................. 35

Key Assumptions And Notes...................................................................................... 38 Appendix 2: Consolidated 2002 and 2003 Income Statements ................................... 45

2002 Income Statement Summary by Facility............................................................ 45 2003 Income Statement Summary by Facility............................................................ 47 Appendix 3: Consolidated 2002 Financials – Balance Sheet 12/31/2002 .................. 48 Notes to Consolidated Financial Statements............................................................... 50

Appendix 4: Summary of Recent The Company ALF Appraisals............................. 51

Appendix 5: Photos of Existing The Company ALFs.................................................. 52

The Company, LLC

Page 5

Executive Summary

The Company LLC currently has seventeen existing assisted living facilities in operation with two under construction and four more in the development stage. The Company will achieve a market leadership position by bringing additional assisted living accommodations to rural and bedroom communities surrounding large metropolitan areas of America at rates that are about half of typical nursing home rates. The Company LLC is securing $30 million in real estate collateralized 5 Year Line of Credit debt. This offering will be fully collateralized by ALF income producing real estate at no more than a 1:1 LTV (Loan to Value). The liquidity plan is based on the following options:

• Cash distributions from operations• Refinance of seasoned ALFs• Sale of the Homes• Market valuation through a public offering

Market opportunity statistics vary by study or report, yet every one of them support basic fact that there is a documented need for more ALFs and senior housing.

Industry reports indicate that there are currently 800,000 elderly Americans residing in ALFs and estimate that currently there are 1.7 million more people in need of ALFs within the next 2 years.1 Current market estimates are 28,000 ALF housing units with 1.15 million people.2

The Company is an emerging growth company, with industry-experienced management, and is currently operating ALFs in three states. The company has created a proven “cottage” concept that involves the development of a facility that closely resembles a large home. These cottages have been built in expandable clusters of up to four homes per cluster with capacities of sixteen plus residents per home representing an annualized revenue potential of over $57,000,000 per year for one hundred homes.

There is significant demand for ALFs and their related services in rural and bedroom communities with populations greater than 3,000 and less than 100,000 residents. The The Company development concept meets the needs of these communities by offering a facility with:

• Lower development costs• Fewer market restrictions than the traditional ALFs• Elderly care concept that is similar to their lifestyle and culture• Higher staff to resident ratio• Higher profitability

The Company has developed an effective market research process that can identify successful sites for the establishment of ALFs. Facility designs and management’s elderly care philosophy has been developed, tested and proven. The Company emphasizes an atmosphere that:

1 Alternative Living for the Aging: Assisted Living Industry, PriceWaterhouseCoopers, pp 7. 2 Assisted Living Profile, National Center for Assisted Living, www.nacl.org/about/facility.htm

The Company, LLC

Page 6

• Gives the resident the feeling that their new home feels like a real home• Precludes our residents from being intimidated by large numbers of other residents• Allows our residents to smell and watch the food being prepared• Lets them dine in a family setting• Provides the ability to establish a personal relationship with the management and

staff that work in the home, as well as other residents

These characteristics significantly differentiate The Company from the rest of the assisted living world.

Keys to The Company’s Continued Success In order to maintain continued success and provide appropriate financial returns and liquidity for shareholders and investors, The Company will continue to emphasize the following:

1. Uncompromising service to our residents – All residents must have a sense that themanagement and staff care about them as an individual.

2. Market and demographics research prior to development of an ALF – We havedeveloped proprietary research expertise enabling us to determine the locations whereelderly citizens have the need and financial ability for our services.

3. Capital partners who can provide the needed capital.

4. Regulatory research and analysis assure that each ALF complies with state andlocal statutes.

5. Marketing and lease-up activities that are continual.

6. Qualified and trained employees must be retained.

7. Controlled but aggressive development of ALFs in communities that meet ourcriteria – growth must not be at the expense of management control and profitability.

The Company, LLC

Page 7

The Assisted Living Industry and The Company

Assisted Living is a generic term that describes several stages of care. These range from: (a) highly independent and mobile elderly who require only shelter and the option of prepared meals, to; (b) the elderly who require assistance with all activities of daily living (ADLs). In general, all ALFs can be described as social models and not health models, and in most cases, health services in an ALF are contracted for and performed by skilled, outside personnel.

Potential residents for The Company ALFs are elderly men and women who; recently lost a spouse, fractured a hip, suffered a stroke, fell in a parking lot, became lost or disoriented while driving, couldn’t get out of a bathtub, refused to bathe, ate spoiled food or forgot to eat at all, or took too much/not enough medicine(s) in the wrong combinations and ended up in the hospital emergency room, surrounded by worried family members.

By the time a family reaches this point, they are willing to pay whatever it takes to get their family member into an The Company home as long as it means mom or dad will NOT go into a nursing home.

The Company residents are usually private paying customers, which means they rely upon savings or private resources for the care received. While these customers realize our rates for services and room and board equal about half of nursing home rates, they expect at least the following:

• Nutritious, appetizing food• A warm inviting environment• Nicely-furnished rooms with private bathrooms• Comfortable sleeping arrangements• Opportunities for privacy as well as group activities• Assistance with activities of daily living (ADLs) as needed.

Semi-rural and rural areas offer the greatest opportunity for development. Overbuilding has occurred inside many of the major metropolitan areas. Yet management finds many rural areas with incredible market demand. The Company’s ALFs meet the needs of the smaller communities in a manner that is welcomed in the community.

Players in the Industry The Company’s competition includes:

• Family-run organizations that operate small 6 to 8 bed facilities• Local and Regional based companies• Publicly traded assisted living companies that are regional and national in scope

The National Center for Assisted Living (NCAL) identifies 16 publicly traded Assisted Living companies. By number of beds, the largest Assisted Living Company is Altera Healthcare Corp.

Industry reports indicate that there are 1.7 million more people in need of ALFs within the next 2 years

The Company, LLC

Page 8

with 22,100 beds. The next largest is Emeritus Assisted Living with 14,180 beds. In 2002, Altera reported 94% occupancy while Emeritus reported 84% occupancy.

The largest company, Sunrise Assisted Living, has a market capitalization of $625 million. Sunrise did not disclose their average census for the year.3

The NCAL reports over 28,000 facilities housing 1.15 million people. Contemporary Long-Term Care (CLTC) reports that 49% of all senior housing projects developed in 1998 were freestanding ALFs with an additional 41% of the projects including assisted living services with other senior care services.

Their 2000 data states that the typical ALF has 40 beds, an average occupancy of 91% and an average resident length of stay at 26 months. They also report the following:

$1,866 Avg. Monthly Rents 38.9% Avg. Monthly Labor Costs 6.4% Avg. Monthly Food Costs 3.6% Avg. Monthly Utility Costs 6.2% Avg. Monthly Management Fees.4

Learning and Differentiating The Company from Prior Companies The Company’s business and care models are new and unique in the ALF industry, and are already a proven success with the Company’s 17 facilities. In part, the reason for this success is management’s study of industry failures and the Company’s resulting competitive differentiation.

The following are examples of previous industry failures – highlighting why The Company is a success.

Generally, each example operated facilities larger than The Company resulting in added construction costs per bed, added staffing costs per bed, and increased regulatory oversight – all areas the The Company business model minimizes.

JUST LIKE HOME Just Like Home was sold in May of 2000 to Senior Living Management Properties who are operating the facilities today. The name on the homes was changed to Savannah Court. Approximately 6 years ago, The Company management visited their homes in Ohio while doing market research. The home was in was new and had a 14-bed capacity. At that time it was full.

The Company management researched the Ohio marketplace 6 years ago and concluded not to go into Ohio because of the tremendous number of assisted living facilities already in existence. Ohio was already saturated several years before surrounding states began to even regulate the industry

The Company management has interviewed with five owners of homes primarily in Ohio and the corporate office for Senior Living Management in Florida. Savannah Courts now number about

3 Assisted Living Profile, National Center for Assisted Living, www.ncal.org/about/facility.htm.

4 Assisted Living Statistics, Contemporary Long-term Care, CLTC On-Line, www.cltcmag.com.

The Company, LLC

Page 9

23 in Florida, Georgia, Alabama and Pennsylvania. From this research and experience with Just Like Home, the following differences represent key differences between Just Like Home and the The Company model:

a. The Just Like Homes in Ohio had significant competition, The Companytargets areas with out significant competition by identifying areas with ourproprietary demographic research.

b. A number of the homes were converted residential houses with limited spacethat do not allow for economies of scale (we have found that 16 bed facilitiestakes almost the same staff as a smaller facility).

c. Their homes in the southeast are primarily 40 beds and more thus exposingthem to higher construction costs, higher operating cost during lease up, higherstaffing requirements, and less profit due to more regulation of larger facilities.

CARE MATRIX CORP Care filed for bankruptcy in November of 2000 and is in the process of going out of business. During their “heyday” in 1999, the Care Matrix operated approximately 3,000 units in 40 states. They were a prime example of getting caught in the over building of assisted living which peaked in 2000. The key differences between Care Matrix Corporation and the successful The Company model include:

a. Their facilities ranged in size from 40 to 220 units. As a result, economies of scaleproprietary to The Company were not achieved. Care Matrix faced higher constructioncosts, higher operating cost during lease up, higher staffing requirements, and less profitdue to more regulation of larger facilities.

b. Care Matrix relied heavily on Medicaid reimbursement, thus subjecting these facilities togovernment regulation and time delays. The Company is 100% private pay.

ASSISTED LIVING CONCEPTS The Company management has been unable to obtain specific information on ALC. Their corporate office would not discuss their current situation. However, all of ALC’s published homes are closed.

Importantly, all but one of their homes are located in Indiana. Like Ohio, The Company conducted extensive research in Indiana as The Company has experience in building homes in adjoining Kentucky and Illinois. Indiana rules and regulations do not allow smaller homes to operate – resulting in the same higher construction costs, higher operating cost during lease up, higher staffing requirements. Inn, Indiana does not allow an administrator to manage more than one home regardless of the number of beds (the The Company business model has an Administrator overseeing multiple facilities in each region to maximize economies of scale).

Overall, the key differentiator is The Company’s proprietary market demographic research model. The Company long ago found Indiana to be an unfavorable place for assisted living businesses and has consciously avoided this market unlike Assisted Living Concepts.

ALTERRA Alterra is in bankruptcy and has built no new facilities since mid 2000 and have paid top dollar for facilities already constructed. Corporate officials are hesitant to say that they will ever develop any new facilities. They, like the previous troubled companies mentioned, have built mid-sized facilities. The key differences are that:

The Company, LLC

Page 10

a. Their facilities are midrange and lack the warmth and home-like quality of the smallerThe Company home.

b. Alterra’s homes range from 38 to 50 beds, resulting in higher construction costs, higheroperating cost during lease up, higher staffing requirements, and less profit due to moreregulation of larger facilities.

c. By having a business model that does not construct facilities and instead pays top dollarfor existing facilities, Alterra operates at a higher breakeven point and lower marginsover and above the already lower margins associated with larger 3-50 bed facilities.

The Company Difference Overall, The Company differentiates itself from the local, regional and national assisted living companies in the following ways:

1. THE DESIGN OF THE COMPANY FACILITIES. The Company facilities are designed to helpresidents feel like they are living in a home-like setting. Each home is designed toincorporate a central living area called the great room. This room is the center of livingand activity for our residents. It encourages them to congregate and have interchange withthe other residents and the staff.

Management minimizes the use of hallways to provide the residents with a direct view oftheir personal rooms from the living area. The design also provides staff with a direct viewof most of the personal rooms and the living area from the kitchen.

The following is a typical floor plan of our homes.

The Company, LLC

16-Bed The

CompanyCottage

Great Room

Page 11

2. THE SIZE AND CONSTRUCTION COST OF THE COMPANY FACILITIES. The Company’sfacilities are approximately 7,500 square feet. Because the design of our facilities providesfor occupancy levels of 16 or less residents, we can develop our facilities using residentialconstruction standards. This provides distinct savings in construction costs. Firewall,drywall, plumbing and electrical codes for residential construction are significantly lessthan the commercial standards.

These standards when properly applied do not reduce the quality of care or safety forresidents, yet significantly reduce construction costs. Residential construction standardsreduce the development cost of our facilities to less than $60,000 per resident. Otheroperators who design facilities to accommodate more than 16 residents must usecommercial construction standards. Their development costs will exceed $70,000 perresident.5

3. A TRUE SOCIAL MODEL. The size of staff, the number of residents and the design offacilities create a true social model. The residents can interact with other residents and thestaff has an opportunity to communicate and interact with the residents on a one-on-one

5 Statistics relating to the cost of development of competing ALFs come from business plans, annual reports of publicly traded assisted living companies and architects.

Front Entry

The Company, LLC

Page 12

basis. As the residents become acquainted with the staff and their fellow residents, they gain a sense of belonging, dignity, security and comfort. This model is difficult to develop and maintain in the larger facilities.

4. THE SITE SELECTION PROCESS. Management has gained valuable experience inestablishing demographic studies and guidelines. The Company has seen the mistakesmade by other assisted living companies who have failed to study the markets and havebuilt facilities that could not be supported by the community demographics. Victims ofthese misjudgments have been unable to meet their projections, endangering theirfinancial viability.

5. THE ECONOMICS OF THE SIXTEEN-UNIT FACILITY. The sixteen-unit facility, placed inour targeted communities, is easier to fill than a 50+-unit facility and therefore less risky.Most of the operating expenses associated with an ALF are fixed rather than variable.Labor and the operating costs associated with the facilities (insurance, utilities, taxes,repairs and maintenance, etc.) are the same whether there is one or up to sixteen residents.These costs will also be fixed for other facilities whether their occupancy levels aresixteen residents or fifty. For this reason, the costs associated with start-up and the risksassociated with the development of a sixteen resident facility are significantly less.

6. RURAL VS. URBAN SETTING. The The Company sixteen-unit facility has been designed tomeet the demographics of the rural communities as well as larger cities. Communitieswith less than 10,000-15,000 citizens generally cannot support the larger institutionalALFs.

7. EMPLOYEE SELECTION AND RETENTION. A steady, trained and motivated employeeworkforce is critical to the success of an ALF. The Company’s choice to locate ourfacilities in the small and rural communities where industries and jobs are limited,improves our opportunity to retain such a workforce. These communities have anabundance of people who prefer to work where they live.

8. EMPLOYEE BENEFITS. The Company has developed a profit sharing program that isbased on the census of each home. The Company provides a portion of the rents from thelast two rooms to be split among administrators and managers. In addition, we providehealth insurance for key employees and make insurance available for all employees.

These are some of the reasons management is confident the Company can successfully compete with the established companies in the assisted living industry.

We are confident that we can even co-exist in the same communities with established ALFs and still be successful in attracting elderly citizens to our homes.

The Company, LLC

Page 13

Company Summary

The Company is a privately owned xxx limited liability company. The company was founded by experienced assisted living industry and financial industry executives to develop and manage ALFs in communities where the need exists for 14 to 100 beds for its elderly citizens with a particular focus on communities where we can develop the cluster concept.

Objectives The objectives of the Company are:

1. To provide compassionate and supportive care to the frail elderly.2. To create an assisted living company that will lead the industry in the development and

management of the cottage style ALFs that will meet the needs of the frail elderly,especially in rural America.

3. To achieve financial objectives, providing an attractive return to shareholders andinvestors, and expand under a controlled management environment.

4. To identify communities, utilizing its proprietary market research process, where theneed for ALFs meets the company’s criteria for development.

5. To raise sufficient capital to implement management’s expansion to grow The Companyto 200 ALFs within a relatively short period of time.6

6. To hire and train competent employees and provide compensation and employee benefitsthat will enhance their retention.

Mission Statement The Company is dedicated to achieving a market leadership position by providing assisted living at its best. At its best means:

• The best homes and staff that provide residents with security, comfort, care and dignity.• The best workplace that offers employees challenges and rewards.• The best Cottages that are strategically located in the right communities

Start-Up Summary The Company was formed in 199x. Our activity since inception has been dedicated to the development and enhancement of the “cottage” approach to assisted living services. The results to date from the company’s activities is summarized as follows:

• xxx, Illinois.

xxx 1 • Grand opening 3/15/01• One outside partner• Stabilized occupancy 11/1/01• Currently at 100% occupancy

6 These The Companys will be developed in groups of two or more homes that can be effectively managed by one administrator. This group of homes is defined in this business plan as a “cluster.”

The Company, LLC

Page 14

xxx 2 • Grand opening 6/15/02• One outside partner• Memory Care or Alzheimer facility• Currently at 106% occupancy

• yyy, Illinois and yyy, Illinois.

yyy Grand opening 1/15/02Currently at 112% occupancy

yyy • Currently with 9 residents

• zzz, Illinois.The grand opening is projected for February 2003.

• aaa and bbb, Illinois.Land has been secured and entitlements are in place for four homes,two in each location. We have verbal commitment to close on aconventional loan by the end of October anticipate building to startin November, 2003.

• ccc, OklahomaThe Company built this home and was approached by BrownSchools to lease 100% of the facility. Browns provides fordevelopmentally disable children.

• ddd, Oklahoma

Shawnee is in the lease-up phase and currently has 11 residents.

• eee, OklahomaConstruction started in June of 2002 and we anticipate completion inApril of 2003.Currently 3 resident deposits and 2 on a waiting list

• fff FloridaPurchased a 9 home cluster in January of 2002, currently with 78residents.

The Company has been self-funded to date.

The Company, LLC

Page 15

Management’s Experience with Assisted Living The Company’s first home was opened in March of 2001. Since that time The Company has either opened or purchased approximately 16 other homes. The individual members of our management team gained extensive experience in the development of facilities including demographic studies, site location, architectural designs, financing, construction, staffing and operations of a facility. Management has developed approximately 100 assisted living homes in 10 states.

Furthermore, the founding management of The Company has accumulated 10 years of industry related experience. Management also has 20 years of management, 15 years of accounting/financial related experience and 40 years of construction and development experience. Key management team members are well versed in industry fundamentals, educated in the evolution of the assisted living industry and share a vision for the successful positioning of The Company, within the industry.

Organization Structure Current Board of Directors includes www, yyy, xxx and zzz. Several individuals are being considered for the positions of directors-at-large. xxx has assumed the responsibilities of President and will report directly to the Board of Directors. yyy will assume the responsibilities of CFO and will report directly to the board of directors. All other management personnel will report directly to the President. The following chart shows the outline of the organization:

Management Team

xxx, co-founder of The Company, has worked full time since its inception and also has overseen the growth of the company to its current state of more than 200 employees with 15 facilities and six more in the development and construction stages. xxx has started several successful companies including aaa and ccc franchise where he also worked with the corporate franchising company helping the franchisees set up their businesses. He has owned and operated his own construction company, specializing in small commercial and custom home building. He has owned and operated his own marketing company specializing in sporting goods.

yyy, CPA, co-founder of The Company, has worked in public accounting from late 1989 through 1993. He spent one year with the international accounting firm of Coopers & Lybrand where he received specialized corporate tax training and worked as a consultant with the Resolution Trust Corporation (RTC). yyy’s work with zzz in city, state was focused on consulting new startup companies. Because of his expertise in managed growth, many of these new companies grew from small business concerns to multi-million dollar entities with hundreds of employees.

yyy became the Chief Financial Officer of a multi-national manufacturing company in late 1993 at the age of 29. During this time, the company grew from $3.5 million to nearly $20 million in revenues. He was subsequently named President and has managed the acquisition of three subsidiary companies. yyy is a member of the American Institute of Certified Public Accountants and the state Association of Certified Public Accountants. He is the past President

The Company, LLC

Page 16

of the Utah Valley Management Society. He has published articles in the state Small Business Development Guide and has been a featured speaker at the state SBA Symposium. yyy received his Bachelor of Science and Master of Accountancy simultaneously in 1989 from zzz University.

zzz is a co-founder of The Company. Prior to The Company, he worked as Vice President in the building of a national franchise assisted living company. Over the past six years, zzz has built, owned, and developed assisted living projects in over ten states. He has been project leader in over 50 developments. He was an owner and key executive in the franchise company, and has developed a strong network of associates across the country. His work in the assisted living industry is extensive and covers all aspects of the business. Prior to the assisted living business, zzz worked in business and real estate development.

xxx, RN, is Vice President of Operations for The Company. Before getting involved with The Company she was a medical/surgical nurse and pediatric nurse for ddd Regional Medical Center in city, state. She received her degree in nursing from aaa University.

ddd, Controller, manages the finances of the individual facilities as well as corporate operations. His managerial emphasis on standard controls and reporting mechanisms ensure best practices at the individual home level. His background in Economics and involvement in marketing ensure a strategically sound direction for each facility.

ddd has a background in financial management in Manufacturing, Mortgage lending and various service companies. He received his bachelors of science in Economics in 1996 at ccc University. He is currently ranked in the top third of his class in the ccc University MBA program with an emphasis in Finance.

eee, is Vice President of Construction. Prior to joining the The Company team, he worked as the Vice President of fff, Inc., specializing in residential, commercial, custom homes and high-density housing. While under his direction the company grew rapidly into a multi-million dollar business. His background also includes over a decade of entrepreneurship successfully owning and operating multiple sporting goods stores. He also worked as the Marketing Director and National Sales Manager for bbb Outdoor Products. He has served as a member of the board of directors for several companies and has been a guest speaker on many occasions at ddd University’s School of Business. He has degrees in Business and Marketing.

Administrators

eee, RN, oversees all of the homes in the northern Illinois region. She came to The Company after successfully filling a new 35-bed assisted living facility in fff, IL. She has been in health care for eight years specializing in geriatrics. She has degrees in Nursing and in Restorative Nursing in Geriatrics. Her administrative experience includes Executive Director of ggg Retirement Village, Assistance Administrator of hhh Health Care and Nurse Manager of sss Good Samaritan.

ggg, is currently the Executive Director and Administrator of our fff Florida operations. Prior to joining The Company, he served as Director of Operations for hhh Care,

The Company, LLC

Page 17

Inc., eees Assisted Living and aaa House, three of the largest providers in the United States. He has also worked in additional corporate roles as the Director of Sales and Training for ddd Care and fff Assisted Living. Gerald holds a Bachelors Degree with ccc Aeronautical University and a Masters in Management/Human Relations and Organizational behavior with the University of hhh.

xxx, CMA, is the administrator for The Company’s aaa, bbb, and ccc projects. She is a Certified Medical Assistant and has had nine (9) years of prior experience in assisted living. She was the Administrator for sss Manor Care Center, rrr Health Services and ttt Nursing Facilities.

The Company, LLC

Page 18

The Elderly Population

The Growth of the Elderly Population In 1990 there were 31.1 million elderly Americans, ten times as many as in 1900. One in eight Americans was elderly in 1990.

From 1990 to 2020, the elderly population is projected to increase to 54 million persons. In 2020, 1 in 6 Americans will be elderly. Approximately 6.5 million persons will be 85 years old or older.7

The Bureau of the Census issued a Statistical Brief 8 in May 1995 that provided the following statistics regarding our aging population:

• The elderly population will more than double between now and the year 2050.• By that year as many as one in 5 Americans could be elderly.• During this period the number of elderly will grow by an average of 2.8% annually. By

comparison, general population annual growth will average 1.3%.

Even more dramatic than the growth of the elderly population (considered as those individuals age 65 and older), is the growth of the oldest old -- those in the population who are over 85 years of age. The oldest old are the most rapidly growing segment of the elderly age group. Between 1960 and 1994, their numbers rose by 274%. It is expected that the oldest old will number 19 million in 2050--24% of the elderly and 5% of all Americans.9

The past, present and projected growth of the elderly and the oldest old is summarized by the following graph:

010000

20000

3000040000

50000

6000070000

1900 1990 2020 2050

Growth of the Elderly Population (000's)

85+

65+

7 We the American Elderly, US Department of Commerce, Bureau of Census, Issued Sept. 1993, pp. 2-3. 8 Bureau of the Census Statistical Brief, SB/95-8. 9 Ibid.

The Company, LLC

Page 19

This dramatic growth is due to the fact that we are living longer. Living longer does not always provide an assurance that we are going to remain healthy and independent during the latter years of our lives. The chart below reflects the dramatic growth and projected growth of the oldest elderly from 1900 through 2050.

GROWTH OF 85+ POPULATION (000'S)

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050

DECADES

NU

MB

ER O

F EL

DER

LY (0

00'S

)

The 85+ group of the elderly population is the focus of the assisted living industry and the focus of our determination of sites for development. This is the group of our population who experience increased difficulties with independent living and who have limitations with their activities of daily living (ADLs).

The Economic Wealth of the Elderly Population Households containing families headed by persons 65+ reported a median income in 1998 of $31,568. Approximately 44.6% had incomes of $35,000 or more (Figure 4.3). For all older persons reporting income in 1998 (31.7 million), 22% reported $25,000 or more (Figure 4.3.1).

The major sources of income as reported by the Social Security Administration for older persons in 1996 were:

• Social Security (40% of the income reported by the elderly)• Income from assets• Public and private pensions• Earnings, and public assistance.

The median net worth of older households of $86,300 was well above the U.S. average of $37,600 when this data was compiled. Net worth was above $250,000 for 17% of older households.

10/6/03 10:02 AM The Company, LLC

The Company facilities will charge an average fee between $2,300 and $3,200 per month for our

DISTRIBUTION OF INDIVIDUAL INCOME LEVELS

0%

5%

10%

15%

20%

25%

30%

Under

$5

$5 - $

10

$10 -

$15

$15 -

$25

$25 -

$35

$35 -

$50

$50 +

Level of Income ($000's)

Distribution of individual income levels for individuals over 65.

DISTRIBUTION OF FAMILY INCOME LEVELS

0%

5%

10%

15%

20%

25%

Under$10

$10 -$15

$15 -$25

$25 -$35

$35 -$50

$50 -$75

$75 +

Level of Income ($000's)

Distribution of family income levels withheads of households over 65.

services. The elderly citizen that is a candidate for our ALF is the individual who has annual

Page 20

earnings and/or financial resources in excess of $25,000. Other sources of income or other financial resources needed to meet the financial requirements for assisted living often come from the sale of home or other assets and/or from family support. Assisted living is often the first stage in the senior citizens life where assets are sold and retirement benefits are drawn to meet their care needs.

Geographic Distribution10 A study of the geographic and economic factors for the elderly population is important to the identification of locations for development of the ALFs. A study of where the elderly live and their potential ability to afford the assisted living fees and services is critical to our success. The Company’s demographic research has identified four critical factors that must be considered when making our initial selection of sites for study. These critical factors include:

1. Total number of elderly2. Total number of elderly as a percentage of the total population3. The trend (growth factors) of the population4. The economic strength of the elderly population.

10 (Data for this section and for Figure 4. were compiled primarily from Internet releases of the U.S. Bureau of the Census See: (http://www.census.gov/population/estimates/state/5age9890.txt).


Page 21

Persons 65+ were slightly less likely to live in metropolitan areas in 1998 than younger persons (77% of the elderly, 81% of persons under 65). About 28% of older persons lived in central cities and 49% lived in the suburbs.

The elderly are less likely to change residence than other age groups. In 1997 only 5% of persons 65+ had moved since 1996 (compared to 18% of persons under 65). A large majority of those elderly (81%) had moved to another home in the same state.

The chart below presents a graphic display of the concentration of the elderly as a percentage of the total population. It is important to note that the mid-western states where the elderly represent large percentages of the population are also the states the have significant numbers of small and rural communities where assisted living facilities are needed.

Persons 65+ as a Percentage of Total Population - 1998

Use of Demographics in Market Research Demographics are one of the most important elements of The Company’s development concept for the following two reasons. First, Management will concentrate projects in the small bedroom communities and rural communities. The elderly that live in these small communities prefer not to move to a new community when they need assistance. However, The Company has found that our facilities work well in any size community and The Company will look to establish itself anywhere that competition and demographics will allow. Second, the Company’s ability to establish projects in the small and rural communities provides us with a competitive advantage since the larger institutional facilities cannot economically fit in these communities.

Our market study will include five determinant factors in the selection of sites for development. They include:


Page 22

1. The number of elderly (particularly those over 85 years of age). This information is determinedfrom census reports.

2. The financial abilities of this group of people to afford our services. This information is alsodetermined from census reports and other database services.

3. The existence of established ALFs in the market area. This is determined from available databasesand from firsthand investigation of those facilities.

4. The compatibility of the state’s regulation with our operating philosophy. For example, the state ofOregon and Washington have Medicare reimbursement programs for assisted living services butwith Medicare reimbursement also comes numerous burdensome regulations that cause thesestates to be less desirable than other states with similar demographics.

5. The ability to effectively and efficiently manage the project given the geographic location and itsproximity to other projects.

The Company’s Site Selection Committee The Company has formed a Site Selection Committee that gathers and analyzes the information that identifies sites that can be developed into successful assisted living projects. The site selection committee and their contribution to the site selection process is summarized as follows:

zzz – Responsible for the evaluation of population demographics including numbers of elderly citizens and the economic viability of the target group. Mr. zzz also will gather information from the targeted community through on-site visits to existing ALFs, city planners, chambers of commerce and referral agencies.

Mr. zzz will be responsible for determining the state rules and regulations for the targeted state and communities within the state. xxx evaluates the proposed project to determine how our cottage concept will fit with the rules and regulations from an operational perspective.

xxx – will oversee construction and development of each home.

yyy – will oversee the financial feasibility and requirements of each home.

The decision to select a site for development must have the unanimous consent of the members of the committee. Committee members will also assist in the evaluation of the financial requirements and opportunities of the targeted project. The Company Board of Directors will review the findings; evaluate the cost of real estate, construction, labor costs, potential rental and service fee income, and other financial aspects to determine the financial viability of the project.


Page 23

The Economics of the The Company Approach

Management’s approach to the development and operations of the ALF is unique in the industry for the following reasons:

• The “cottage” concept is an inexpensive facility. Construction costs will approximate $130 persquare foot. Total development costs will approximate $63,000 per unit--unit being the number ofbedrooms in each facility. These development costs will compare to $150 per square foot and$70,000 to $80,000 per unit cost for construction and development of competing, traditionalinstitutional facilities.

• Our rent and service fees will vary by the needs of the elderly but will average $2,300 per month.These fees will be competitive but will provide the shareholders with a competitive rate of returnon capital investment.

• Operating expenses will be similar to those experienced in the industry. Our labor costs will beslightly higher than similar costs in other ALFs because our staff to resident ratio will be higherthan our competitors.

• A sixteen-unit ALF, when fully stabilized at 90% occupancy, will produce the followingoperating results:

Projected Cash Flow from Stabilized Cottage Monthly Annually

Gross Revenue $33,120 $397,440

Cost of Labor $12,569 $150,834

Food and Supplies $2,296 $27,552

Other Overhead Expense $5,699 $68,387

Net Earnings from Operations $12,626 $151,510

Debt Service $7,686 $92,226

Net Cash Flow from Stabilized Facility $4,940 $59,284

A stabilized cottage with projected monthly rent and service fees of $2,300+ will generate approximately $5,000 in minimum cash flow per month after debt service. The cash flow from the individual cottage will be utilized to meet the obligations to the joint venture partners, for individual ALF operation and cash reserves.

Construction costs also include a cash reserve sufficient to service the financing and start up operating costs during absorption for approximately six to twelve months assuming an absorption rate of one resident per month.

The following table summarizes break-even based management’s our projections:


Page 24

BREAK EVEN CALCULATION Number of Beds = 16Monthly Expenses (see Monthly Cash Flow Sheet) $28,180

Rate / Month $1,900 $2,000 $2,100 $2,200 $2,300 $2,400 $2,500

# Residents % Occupied

9 56.30% ($11,080) ($10,180) ($9,280) ($8,380) ($7,480) ($6,580) ($5,680)

10 62.50% ($9,180) ($8,180) ($7,180) ($6,180) ($5,180) ($4,180) ($3,180)

11 68.80% ($7,280) ($6,180) ($5,080) ($3,980) ($2,880) ($1,780) ($680)

12 75.00% ($5,380) ($4,180) ($2,980) ($1,780) ($580) $620 $1,820

13 81.30% ($3,480) ($2,180) ($880) $420 $1,720 $3,020 $4,320

14 87.50% ($1,580) ($180) $1,220 $2,620 $4,020 $5,420 $6,820

14.4 90.00% ($820) $620 $2,060 $3,500 $4,940 $6,380 $7,820

15 93.80% $320 $1,820 $3,320 $4,820 $6,320 $7,820 $9,320

16 100.00% $2,220 $3,820 $5,420 $7,020 $8,620 $10,220 $11,820


Page 25

Financial Projections

Actual Financial Performance After a planned loss in 2002 of approximately $340k, The Company has reached breakeven during Q1 of 2003 and profitability during April of 2003.

During 2002, the company had a number of ALFs remaining in lease up mode, in addition to extraordinary expenses associated with the purchase of stae ALFs and HUD financing fees for four HUD ALF projects due to begin construction in June 2003.

During Q1 of 2003, only 3 facilities remained in the lease up mode, and the Company met budget goals of breakeven during this period while putting into place corporate and operational infrastructure capable of supporting a national expansion in the upcoming months and years. In April, The Company had only three existing properties still in the lease in lease up phase and concluded activities associated with the extra-ordinary expenses. As a result, both revenues and Net Operating Income increased dramatically.

The following is a summary of the Company’s income statement for both Q1 2003 and April 2003:

Actual Income Statement - 2003 Jan-Mar 03 Apr-03

Total Income $165,191 $83,735

Total COGS $44,217 $18,971

Gross Profit $120,974 $64,764

Total Expense $100,268 $10,225

Net Ordinary Income $20,706 $54,539

Other Income $283 $2,207

Net Operating Income $20,989 $56,746

Amortized Extraordinary Expenses $35,052 $1,604

Adjusted Net Operating Income -$14,063 $58,350

Three facilities remain in the lease up stage. Even so, YTD profitability through June 30, 2003 totals $132k, or approximately $264k annually:

YTD 6-30-03 Income Statement Quad Quad

By Facility aaa bbb ccc eee eee ggg sss

Income $210,683 $93,156 $10,400 $198,397 $235,195 $120,980 $1,008,292

Gross Profit $210,683 $93,156 $10,400 $198,397 $235,195 $120,980 $1,008,292

Expenses $122,051 $78,966 $54,980 $122,143 $129,052 $130,709 $833,510

Net Ordinary Income $88,632 $14,190 -$44,580 $76,254 $106,143 -$9,729 $174,781

Other Income $4 $95 $109 $20 $108 $2,554

Other Expenses $32,199 $23,137 $35,526 $24,462 $21,443 $139,702

Adjusted Net Operating Income $56,436 -$8,948 -$44,485 $40,837 $81,702 -$31,063 $37,634


Page 26

Dixon 1This property is in a lease-up mode, and currently has 9 residents, past break even. 2This property has absorbed slowly at a rate of approximately .8 residents per month rather than the budgeted 1 resident per month. This is one of the earlier properties purchased.

Oregon 1This property is in a lease-up mode.

Quad Cities 2 1ALZ facilities have extra staff due to the type of client, and is at 106% occupancy.

Shawnee 1Currently at 7 residents, this property has absorbed slowly at a rate of approximately .5 residents per month rather than the budgeted 1 resident per month. This is one of the earlier properties purchased.

Rockledge 1This property currently has 78 residents and stabilized. During April it was in a lease up mode and was not stabilized

Revenue Strategy The Company has projected revenue streams from the sale ALFs room and board. The table below shows the average price per ALF room. Pricing differentials reflect varying regional prices or an up charge for The Company memory impaired cottages. All beds within individual The Company facilities are equally priced. Prices are all inclusive with the exception of special food needs and personal telephone and cable television:

Revenue Type Monthly Pricing

Beds at Rate 1 $2,300



The table below shows the current and planned growth in total number of facilities, projected number of beds occupied:

No. ALFS No. Rooms Open Leased

Currently 17 296 2003 17 296 2004 25 400 2005 34 544 2006 44 704 2007 56 896 2008 68 1,088 2009 80 1,280 2010 92 1,472 2011 104 1,664 2012 104 1,664


Page 27

ALF Expansion Plan Expanding on the Company’s existing 17 facilities, The Company will add another 90+ ALFs over the coming ten years. The following table summarizes planned development and operational start up costs on a per facility basis:

Development and Start Up Costs Per ALF

Hard Bldg Costs $578,236

Soft Costs $33,788

FF&E $58,000

Development Costs $50,000

Land $150,000

Start Up Costs $170,576

Total $1,040,600

The Company will earn a development fee of $50,000 per facility to cover initial costs. Facilities will be developed at a rate of 4 per quarter beginning September or October of 2003:

Financial Pro Formas Over the term, The Company expects to generate over $48 million in net earnings on revenues in excess of $290 million. The Company is targeting a minimum of 33% gross profit margin from operations based upon current experience, and a ten-year average of 36%. Beginning in 2005 and going through 2012, management expects the gross profit margin from operations to increase steadily to 38%. All known and projected costs of operations are included in the cost of goods sold with the exception of mortgage/bond interest and corporate overhead expenditures.

The Company plans to maintain corporate overhead expenses at relatively small levels in comparison to total revenues. As a percentage of total revenues, corporate overhead expenses, including salaries and expenses, are projected at 11% for 2003-2004; 8% for 2005-2007, and; 4% to 5% from 2008 through 2012.

Net margins are expected to follow similar trends, with average net margins of 17% over ten years.

Beyond the current funding round, management expects early positive cash flow from current operations to offset any working capital needed over the period with the exception of planned institutional refinancing of income producing ALF properties. Any additional capital injections – for example, a possible Public Offering - will be utilized strictly for expansion purposes, including development of additional revenue streams. The Company will be an attractive candidate for a sale, acquisition, or merger to a larger strategic partner, or a possible public offering within 12-24 months. Ten-year income statement projections are shown in below.


Page 28

10-Yr. Income Statement Projections (000s) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Gross Revenues

Beds at Rate 1 $4,328 $5,310 $7,525 $9,772 $12,420 $15,912 $20,367 $23,962 $28,616 $31,415

Beds at Rate 2 $1,129 $1,492 $2,098 $3,936 $4,968 $6,365 $8,095 $9,523 $11,305 $12,411

Beds at Rate 3 $1,290 $2,273 $3,184 $4,479 $5,630 $7,213 $9,139 $10,752 $12,718 $13,962

Total Revenues $6,747 $9,075 $12,808 $18,186 $23,018 $29,490 $37,601 $44,237 $52,639 $57,788

Cost of Goods Sold (COGS) $3,765 $5,064 $7,147 $10,149 $12,845 $16,457 $20,983 $24,686 $29,375 $32,248

Gross Profit $2,982 $4,011 $5,660 $8,038 $10,173 $13,034 $16,618 $19,551 $23,264 $25,540

Other Operating Costs

Corporate G&A Expenses $669 $1,144 $1,395 $1,878 $2,167 $2,469 $2,786 $3,117 $3,466 $3,783

Net Operating Income $2,313 $2,867 $4,265 $6,160 $8,006 $10,564 $13,833 $16,434 $19,798 $21,757

% Operating Margin 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%

Mortgage/LOC Interest $777 $381 $984 $1,918 $3,048 $4,303 $5,665 $7,079 $8,494 $9,446

Depreciation & Amortization $755 $647 $1,928 $2,614 $3,114 $2,908 $3,260 $3,550 $3,469 $2,744

Mgmt Developer Fees $600 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000

Earnings Before Taxes $1,381 $2,838 $2,353 $2,628 $2,844 $4,354 $5,908 $6,804 $8,836 $10,567

Cumulative Income Tax Shield $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Income Tax Expense (0%) - LLC $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Net Income (Loss) $1,381 $2,838 $2,353 $2,628 $2,844 $4,354 $5,908 $6,804 $8,836 $10,567

Percent Net Margin 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%

$0$20,000,000$40,000,000$60,000,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

REVENUES vs PRETAX COSTS

GrossRevenues

Net OperatingIncome


Page 29

Projected Valuation Analyses With the continued expansion of current operations, a valuation analysis reveals a projected worth of approximately $227 million at the end of 2007 and $845 million in 2012 using a Price/Earnings multiple of 8.

Alternatively, a valuation of the Company using present value of discounted cash flow methodology (25% discount for risk) equals approximately $156 million:

Valuation Based on PV of Future Cash Flows = $156,193,153Based on a discount rate of: 25% for risk

$1,443,123 $1,393,123 $1,061,709 $5,097,464 $8,142,451 $1,290,176 $20,810,345 $13,934,664 $1,015,383,150 -$983,329,998

$1,044,843 796,281 3,823,098 6,106,838 967,632 15,607,758 10,450,998 761,537,362 (737,497,499)

$597,211 2,867,324 4,580,129 725,724 11,705,819 7,838,249 571,153,022 (553,123,124)

$2,150,493 3,435,097 544,293 8,779,364 5,878,687 428,364,766 (414,842,343)

$2,576,322 408,220 6,584,523 4,409,015 321,273,575 (311,131,757)

$306,165 4,938,392 3,306,761 321,273,575 (233,348,818)

$3,703,794 2,480,071 321,273,575 (175,011,613)

$1,860,053 321,273,575 (175,011,613)

$240,955,181 (131,258,710)

-$98,444,033

It is important to note this valuation analysis is based on projected earnings and cash flows. Per GAAP standards, ALF real estate is booked on the The Company balance sheet at cost. However, management expects the fair market value of these facilities to equal approximately $221 million in 2012.

Secured LOC Debt Offering To finance its planned expansion of Assisted Living Facilities, the Company is seeking $30 million in Line of Credit debt for 5 years, fully collateralized by ALF income producing real estate at no more than a 1:1 Loan to Value.

The following is a summary of The Company’s strategic financing schedule:

Planned The Company Financing Summary Secured LOC Facility $30m Year 1 Institutional Refinancing $10m Annually, Beginning Year 2005

Estimated Use of Proceeds Real Estate Related Capital Expenditures: The following table summarizes planned offering, facility development and facility start up costs for years 1 through 10 according to the Company’s depreciation and amortization schedule.

This table includes all planned costs associated with development and start up of 90+ facilities over this period:


Page 30

Planned Non-

Capital Expenditures 3 Years 7 Years 39 Years Depreciable Total

2003 $160,000 $4,400,000 $1,300,000 $40,000 $5,900,000

2004 $1,110,000 $400,000 $5,200,000 $810,000 $7,520,000

2005 $1,287,500 $450,000 $6,175,000 $910,000 $8,822,500

2006 $1,480,000 $500,000 $6,825,000 $1,020,000 $9,825,000

2007 $1,667,500 $600,000 $7,800,000 $1,200,000 $11,267,500

2008 $1,680,000 $600,000 $7,800,000 $1,200,000 $11,280,000

2009 $1,680,000 $600,000 $7,800,000 $1,200,000 $11,280,000

2010 $1,680,000 $600,000 $7,800,000 $1,200,000 $11,280,000

2011 $1,200,000 $600,000 $5,850,000 $1,080,000 $8,730,000

2012 $75,000 $0 $0 $0 $75,000

Total Thru 10 Years $30,384,340 $11,940,000 $91,939,524 $9,251,710 $143,515,574

Management may to refinance a portion of its existing ALFs through proceeds, as well development of additional.

Management projects that cash flow from operations and financing of stabilized ALFs will be sufficient beginning in 2005 to sustain the building program as summarized above with appropriate refinancing of seasoned properties. Beginning in year 2005, the Company will refinance approximately 10 facilities every 12 months through 2012 to supplement cash flow for continued expansion of new facilities and repayment of the LOC debt.

Refinancing will most likely be provided through FHA or private institutional sources. As a means of continuing to build balance sheet equity, management expects to refinance each facility at the facility’s cost of $1,040,600, rather than at present value. By 2012, management estimates the market value of ALF real estate to equal $221 million.


Page 31

Multiple Exit Strategies

The Company believes in the long-term viability and investment value of the Company, as demonstrated by current and projected cash flow from Assisted Living Facility homes. Nevertheless, management intends to work actively with investors to choose among several exit strategies as such opportunities become available, including a public stock offering, sale, acquisition, or merger.

Cash Flow From Operations and Refinancing of Seasoned ALFs Lenders will be repaid both principal and interest through cash flow generated from income producing Assisted Living Facilities. The following is a summary of The Company’s projected cash flow for years 2003 through 2012. This cash flow projection includes repayment of total principal approximately six months early:

10-Yr. Cash Flow Statement Projections (000s) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Cash Flow From Operations

Net Income/Loss $1,381 $2,838 $2,353 $2,628 $2,844 $4,354 $5,908 $6,804 $8,836 $10,567

Depreciation Charges $755 $647 $1,928 $2,614 $3,114 $2,908 $3,260 $3,550 $3,469 $2,744

Distribution to Shareholders ($539) ($1,107) ($918) ($1,025) ($1,109) ($1,698) ($2,304) ($2,654) ($3,446) ($4,121)

Change in Accounts Receivable ($185) ($64) ($278) ($470) ($580) ($847) ($1,182) ($1,242) ($1,642) ($1,426)

Change in Other Current Assets ($169) ($58) ($93) ($134) ($121) ($162) ($203) ($166) ($210) ($129)

Change in Inventory $0 ($363) ($149) ($215) ($193) ($259) ($324) ($265) ($336) ($206)

Change in Current Liabilities $1,049 ($832) $1,074 $1,115 $1,094 $1,120 $1,146 $1,124 $1,152 ($3,900)

Net Cash Flow from Operations $2,293 $1,062 $3,917 $4,512 $5,049 $5,415 $6,301 $7,151 $7,823 $3,529

Cash Flows from Investing Activities

Purchases - Capital Expenditures ($2,400) ($7,520) ($8,823) ($9,825) ($11,268) ($11,280) ($11,280) ($11,280) ($8,730) ($75)

Net Cash Flow from Investing ($2,400) ($7,520) ($8,823) ($9,825) ($11,268) ($11,280) ($11,280) ($11,280) ($8,730) ($75)

Cash Flows from Financing Activities

Cash Received from Borrowing $1,500 $7,520 $10,003 $13,455 $7,509 $26,675 $18,914 $1,019,512 ($982,423) $9,555

Cash Received from Investors

Net Cash Flow from Financing $1,500 $7,520 $10,003 $13,455 $7,509 $26,675 $18,914 $1,019,512 ($982,423) $9,555

Net Cash Flow $1,393 $1,062 $5,097 $8,142 $1,290 $20,810 $13,935 $1,015,383 ($983,330) $13,009

Cash Available at beginning of period $50 $1,443 $2,505 $7,602 $15,745 $17,035 $37,845 $51,780 $1,067,163 $83,833

Net Cumulative Cash Flow $1,443 $2,505 $7,602 $15,745 $17,035 $37,845 $51,780 $1,067,163 $83,833 $96,843

Permanent lenders will finance an ALF once it has reached stabilization. For example, the Fannie Mae program has established that stabilization for their loans is that point in time when the facility reaches 90% occupancy for a consecutive 90 days. Other lenders require that the facility maintain 90% occupancy for as much as 24 months.


Page 32

The rate at which permanent lenders will finance ALFs varies from 75% to 80% of appraised value. For example, the Fannie Mae program will loan up to 75% of appraised value on a 25-year amortization at 8.5% per annum. The loan is (except for certain carve-outs) without recourse to the borrower. The Company has used an 80% LTV for proforma purposes.

A stabilized cottage with projected monthly rent and service fees of $2,300+ will generate minimum cash flow of approximately $5,000 per month after debt service. The cash flow from the individual cottage will be utilized to meet the debt obligations of the Company.

From the Sale of the Facilities Another exit strategy available to the Company is the sale of facilities. The long-term strategy for The Company is to own and operate ALFs. However, ALFs in their first five years after stabilization will realize the maximum return to the owner.

Management has projected the valuation of ALFs by using actual MAI appraisals from current facilities. The ALFs are valued as business units rather than real estate. The Company, to be conservative, values its projects using recent MAI appraisals (less than 24 months old). Using these valuation assumptions and the projected cash and/or other accumulated assets from the operations of the facilities, the total of the fair value of the stabilized cottages is summarized as follows: 11

SUMMARY OF PROJECTED REAL ESTATE VALUES & EQUITY 2005 2007 2009 2012

Market Value of Each Facility (At Stabilization) $1,600,000 $1,760,000 $1,936,000 $2,129,600

Less Underlying Debt (Permanent Loan Amount) $1,040,000 $1,040,000 $1,040,000 $1,040,000

Equity in Each Facility $260,000 $260,000 $260,000 $260,000

Total Stabilized Units 34 56 80 104

Total Value of Real Estate $54,400,000 $98,560,000 $154,880,000 $221,478,400

Private Bond Offering The Company LLC is offering $55 million in senior debt to develop and operate 194 assisted living facilities (ALFs). The Secured Real Estate Debentures will be secured by real estate properties at all times for the benefit of the holders of the Secured Real Estate Debentures, and will be issued in denominations of $100,000.00 or more each.

The following represents the anticipated use of the proceeds for the secured real estate debentures:

11 Note the appraisals for the memory care facilities (Alzheimer) will be higher than for standard ALF’s.


Page 33

Gross Proceeds: $55,000,000 Property Acquisition & Closing Costs $5,600,000 Construction Cost $35,400,000 Trustee Services $500,000 Accounting $250,000 Advertising and Printing $250,000 Office Expense $7,500,000 Underwriter's Concession $5,500,000

Total Disbursements $55,000,000

The Company is currently in negotiations with potential investors and or market makers in New York.

Initial Public Offering (Traditional) Current market and demographic conditions are positive for a successful IPO prior to 2012. Management expects conditions to improve further over time as numbers of seniors – specifically baby boomers - expand significantly. The strategy associated with funding is to market The Company as the preferred solution and lifestyle for seniors. Considering the potential for revenue and earning from a relatively small percentage of the overall marketplace, management considers a public offering a viable strategy beginning in 2006.

Merger/Acquisition Management believes many merger and/or acquisition opportunities will arise throughout the next 24 to 48 months. Should the appropriate buy-out or partnership be presented that positively effects shareholder value, The Company will encourage its Board of Directors to thoroughly review such an option. Due to the underlying fair market value of the Company’s Assisted Living Facility real estate, it is management’s opinion that the Company already is and will continue to be an attractive acquisition target to several national and international companies.

Conclusion

The Company offers investors an opportunity to profit from the expanding Assisted Living Facility (ALF) and senior housing marketplace, and a unique business strategy of bringing small residential ALFs to communities across the United States. The marketplace is undergoing rapid change while families, industry, and public entities search for solutions to the increasing demand for family-oriented senior living facilities.

Based on the attached financial projections and secured debt offering, management is confident that the Company offers investors the potential for an attractive return.


Page 34

This Page Left Intentionally Blank


Page 35

Appendix 1: Financial Pro Forma Statements

The following financial statements are based on actual historical operations and on certain assumptions regarding market size, anticipated market penetration, revenue projections, and the anticipated capital required to achieve those projections. These assumptions have been outlined in the following notes. Although prepared by an accountant, these financial statements have not been audited. The founders, managers, joint venture partners, investors, contractors, employees, and other supporters of the company cannot guarantee that any of the pronouncements, projections, or forward-looking statements contained in this business plan will be fully realized.

10-Yr. Income Statement Projections 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Gross Revenues Beds at Rate 1 $4,327,680 $5,310,240 $7,525,440 $9,771,840 $12,420,000 $15,912,000 $20,367,360 $23,961,600 $28,615,680 $31,415,040 Beds at Rate 2 $1,128,960 $1,491,840 $2,098,440 $3,935,880 $4,968,000 $6,364,800 $8,094,720 $9,523,200 $11,304,960 $12,410,880 Beds at Rate 3 $1,290,240 $2,273,280 $3,183,840 $4,478,760 $5,630,400 $7,213,440 $9,139,200 $10,752,000 $12,718,080 $13,962,240

Total Revenues $6,746,880 $9,075,360 $12,807,720 $18,186,480 $23,018,400 $29,490,240 $37,601,280 $44,236,800 $52,638,720 $57,788,160

Cost of Goods Sold (COGS) $3,765,029 $5,064,414 $7,147,220 $10,148,783 $12,845,188 $16,456,734 $20,983,018 $24,685,904 $29,374,511 $32,248,105 Gross Profit $2,981,851 $4,010,946 $5,660,500 $8,037,697 $10,173,212 $13,033,506 $16,618,262 $19,550,896 $23,264,209 $25,540,055

Other Operating Costs

Corporate G&A Expenses $668,764 $1,144,000 $1,395,370 $1,877,697 $2,167,096 $2,469,322 $2,785,601 $3,117,280 $3,465,838 $3,782,898 Net Operating Income $2,313,087 $2,866,946 $4,265,130 $6,160,000 $8,006,116 $10,564,185 $13,832,661 $16,433,616 $19,798,371 $21,757,157

% Operating Margin 34% 32% 33% 34% 35% 36% 37% 37% 38% 38%

Mortgage/LOC Interest $776,790 $381,383 $984,364 $1,918,127 $3,047,658 $4,302,542 $5,664,609 $7,079,423 $8,493,631 $9,445,807 Depreciation & Amortization $755,238 $647,143 $1,927,500 $2,613,929 $3,114,048 $2,907,738 $3,260,119 $3,550,000 $3,468,571 $2,744,286 Mgmt Developer Fees $600,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000

Earnings Before Taxes $1,381,059 $2,838,420 $2,353,266 $2,627,945 $2,844,410 $4,353,905 $5,907,933 $6,804,194 $8,836,169 $10,567,064 Cumulative Income Tax Shield $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Income Tax Expense (0%) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Net Income (Loss) $1,381,059 $2,838,420 $2,353,266 $2,627,945 $2,844,410 $4,353,905 $5,907,933 $6,804,194 $8,836,169 $10,567,064 Percent Net Margin 20% 31% 18% 14% 12% 15% 16% 15% 17% 18%


Page 36

10-Yr. Balance Sheet Projections 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Current Assets Cash $1,443,123 $1,870,571 $7,692,868 $15,499,028 $16,493,266 $37,043,187 $50,748,677 $1,065,930,154 $82,422,684 $95,275,954

Accounts Receivable, net $184,846 $248,640 $526,345 $996,519 $1,576,603 $2,423,855 $3,605,602 $4,847,868 $6,489,705 $7,916,186

Other Current Assets $168,672 $226,884 $320,193 $454,662 $575,460 $737,256 $940,032 $1,105,920 $1,315,968 $1,444,704

Inventory $0 $363,014 $512,309 $727,459 $920,736 $1,179,610 $1,504,051 $1,769,472 $2,105,549 $2,311,526

Total Current Assets $1,796,641 $2,709,109 $9,051,715 $17,677,668 $19,566,065 $41,383,908 $56,798,363 $1,073,653,415 $92,333,906 $106,948,371

Property & Equipment $5,900,000 $13,420,000 $22,242,500 $32,067,500 $43,335,000 $54,615,000 $65,895,000 $77,175,000 $85,905,000 $85,980,000

Less Cumulative Depreciation ($755,238) ($1,402,381) ($3,329,881) ($5,943,810) ($9,057,857) ($11,965,595) ($15,225,714) ($18,775,714) ($22,244,286) ($24,988,571)

Existing Fixed Assets, Net $6,429,187 $5,657,685 $4,978,762 $4,381,311 $3,855,554 $3,392,887 $2,985,741 $2,627,452 $2,312,158 $2,034,699

Net Fixed Assets $11,573,949 $17,675,304 $23,891,381 $30,505,001 $38,132,696 $46,042,292 $53,655,026 $61,026,738 $65,972,872 $63,026,127

Other Assets $418,845 $418,845 $418,845 $418,845 $418,845 $418,845 $418,845 $418,845 $418,845 $418,845

Total Assets $13,789,435 $20,803,258 $33,361,941 $48,601,515 $58,117,607 $87,845,045 $110,872,234 $1,135,098,997 $158,725,622 $170,393,343

Current Liabilities Borrowings, current portion $900,000 $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $3,000,000

Accounts Payable $121,474 $170,094 $234,044 $329,493 $411,295 $518,522 $651,195 $761,731 $899,736 $987,151

Other Current Liabilities $27,483 $47,014 $57,344 $77,166 $89,059 $101,479 $114,477 $128,107 $142,432 $155,462

Total Current Liabilities $1,048,957 $217,107 $1,291,388 $2,406,658 $3,500,354 $4,620,001 $5,765,672 $6,889,838 $8,042,167 $4,142,612

Long Term Borrowings - Shareholder $200,000 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Long Term Borrowings ALFs $1,500,000 $9,020,000 $19,023,000 $32,478,000 $39,987,000 $66,662,000 $85,576,000 $1,105,088,000 $122,665,000 $132,220,000

Existing LTB - ALFs and Notes $10,048,032 $8,842,268 $7,781,196 $6,847,452 $6,025,758 $5,302,667 $4,666,347 $4,106,385 $3,613,619 $3,179,985

Total Long Term Liabilities $11,748,032 $17,862,268 $26,804,196 $39,325,452 $46,012,758 $71,964,667 $90,242,347 $1,109,194,385 $126,278,619 $135,399,985

Owners' Equity Paid In Capital - Investors $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Paid In Capital - Founders $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000

Accumulated Retained Earnings $1,381,059 $3,680,866 $6,034,132 $7,744,303 $9,563,814 $12,808,399 $17,018,309 $21,518,409 $27,700,942 $34,821,901

Distribution to Shareholders ($538,613) ($1,106,984) ($917,774) ($1,024,898) ($1,109,320) ($1,698,023) ($2,304,094) ($2,653,635) ($3,446,106) ($4,121,155)

Total Owners' Equity $992,446 $2,723,882 $5,266,358 $6,869,404 $8,604,494 $11,260,376 $14,864,215 $19,014,774 $24,404,836 $30,850,746

Total Liabilities & Owners' Equity $13,789,435 $20,803,258 $33,361,942 $48,601,515 $58,117,607 $87,845,045 $110,872,234 $1,135,098,997 $158,725,623 $170,393,343


Page 37

10-Yr. Cash Flow Statement Projections 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Cash Flow From Operations Net Income/Loss $1,381,059 $2,838,420 $2,353,266 $2,627,945 $2,844,410 $4,353,905 $5,907,933 $6,804,194 $8,836,169 $10,567,064

Plus Depreciation Charges $755,238 $647,143 $1,927,500 $2,613,929 $3,114,048 $2,907,738 $3,260,119 $3,550,000 $3,468,571 $2,744,286

Less Distribution to Shareholders ($538,613) ($1,106,984) ($917,774) ($1,024,898) ($1,109,320) ($1,698,023) ($2,304,094) ($2,653,635) ($3,446,106) ($4,121,155)

Minus Change in Accounts Receivable ($184,846) ($63,794) ($277,705) ($470,175) ($580,083) ($847,253) ($1,181,747) ($1,242,266) ($1,641,837) ($1,426,481)

Minus Change in Other Current Assets ($168,672) ($58,212) ($93,309) ($134,469) ($120,798) ($161,796) ($202,776) ($165,888) ($210,048) ($128,736)

Minus Change in Inventory $0 ($363,014) ($149,294) ($215,150) ($193,277) ($258,874) ($324,442) ($265,421) ($336,077) ($205,978)

Plus Change in Current Liabilities $1,048,957 ($831,850) $1,074,280 $1,115,271 $1,093,696 $1,119,647 $1,145,671 $1,124,167 $1,152,329 ($3,899,555)

Net Cash Flow from Operations $2,293,123 $1,061,709 $3,916,964 $4,512,451 $5,048,676 $5,415,345 $6,300,664 $7,151,150 $7,823,002 $3,529,445

Cash Flows from Investing Activities Purchases - Capital Expenditures ($2,400,000) ($7,520,000) ($8,822,500) ($9,825,000) ($11,267,500) ($11,280,000) ($11,280,000) ($11,280,000) ($8,730,000) ($75,000)

Net Cash Flow from Investing ($2,400,000) ($7,520,000) ($8,822,500) ($9,825,000) ($11,267,500) ($11,280,000) ($11,280,000) ($11,280,000) ($8,730,000) ($75,000)

Cash Flows from Financing Activities Cash Received from Borrowing $1,500,000 $7,520,000 $10,003,000 $13,455,000 $7,509,000 $26,675,000 $18,914,000 $1,019,512,000 ($982,423,000) $9,555,000

Cash Received from Investors $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Net Cash Flow from Financing $1,500,000 $7,520,000 $10,003,000 $13,455,000 $7,509,000 $26,675,000 $18,914,000 $1,019,512,000 ($982,423,000) $9,555,000

Net Cash Flow $1,393,123 $1,061,709 $5,097,464 $8,142,451 $1,290,176 $20,810,345 $13,934,664 $1,015,383,150 ($983,329,998) $13,009,445

Cash Available at beginning of period $50,000 $1,443,123 $2,504,832 $7,602,296 $15,744,748 $17,034,923 $37,845,268 $51,779,932 $1,067,163,082 $83,833,084

Net Cumulative Cash Flow $1,443,123 $2,504,832 $7,602,296 $15,744,748 $17,034,923 $37,845,268 $51,779,932 $1,067,163,082 $83,833,084 $96,842,529

Performance Ratios 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Quick Ratio 1.376 8.616 5.957 6.440 4.712 8.018 8.802 154.710 10.249 22.999 Current Ratio 1.713 12.478 7.009 7.345 5.590 8.958 9.851 155.831 11.481 25.817

Gross Margin 0.442 0.442 0.442 0.442 0.442 0.442 0.442 0.442 0.442 0.442 Net Margin 0.205 0.313 0.184 0.144 0.124 0.148 0.157 0.154 0.168 0.183


Page 38

Key Assumptions And Notes

1.1 Note A: Forward Looking Statements and Projections

The financial statements are the Company’s estimates of its financial performance for the future periods shown based on both historical performance and management’s plan for strategic expansion.

The projections are based on assumptions made by the Company concerning future conditions and circumstances. Accordingly, the projections reflect management’s judgment, based on present circumstances, on an assumed set of conditions and its most likely course of action. Some assumptions may not materialize and unanticipated events and circumstances may occur subsequent to the date that these projections were prepared. Therefore, the actual results achieved during the projections periods may vary from the projections.

1.2 Note B: Scope of the Financial Projections

This business plan projects the strategic expansion of The Company, LLC, from 17 Assisted Living Facilities (ALFs) located in three states to 194 ALFs by the end of year 2012. The Company is already performing successfully in state, state and state and has proven demand for their services.

1.3 Note C: Revenues

The Company has projected revenue streams from the sale ALFs room and board. The table below shows the planned growth in total number of facilities, projected number of beds occupied, and facilities under construction:


Page 39

No. ALFS No. Beds Open Occupied

Currently 17 296 2003 17 296 2004 25 400 2005 34 544 2006 44 704 2007 56 896 2008 68 1,088 2009 80 1,280 2010 92 1,472 2011 104 1,664 2012 104 1,664

For financial projection purposes, ALFs are divided into less than 1 year old and greater than 1 year old. Projected occupancy for facilities older than 1 year is 90%. Projected occupancy for new ALFs is a factor of the overall age of facilities in this category each year:

Projected New ALFs Occupancy ALFs > 1 Yr

2003 90% 5% 2004 90% 6% 2005 90% 8% 2006 90% 10% 2007 90% 6% 2008 90% 8% 2009 90% 7% 2010 90% 8% 2011 90% 8% 2012 90% 8%


Page 40

The table below shows the average price per ALF room. Pricing differentials reflect varying regional prices or an up charge for The Company memory impaired cottages. All beds within individual The Company facilities are equally priced. Prices are all inclusive with the exception of special food needs and personal telephone and cable television:

Revenue Type Monthly Pricing

Beds at Rate 1 $2,300 Beds at Rate 2 $2,800 Beds at Rate 3 $3,200

1.4 Note D: Historic Financial Statements and Expansion Costs The Company was formed in 1999 as a state limited Liability corporation, currently owns and operates 17 ALFs with 4 additional facilities under construction and approximately 200 employees. Management has prepared historic financial statements.

All expenses related to the current offering and the expansion of the number of ALFs and appropriate start-up operations for each facility have been capitalized on the projected balance sheets. The company has chosen to amortize the start-up costs over three, five, seven, and 39 years in keeping with GAAP accounting standards and tax reporting rules and regulations.

The following table summarizes planned development and operational start up per facility. The Company will earn a development fee of $50,000 per facility to cover initial costs. Facilities will be developed at a rate of 5 per quarter beginning September or October of 2003:

Development and Start Up Costs Per ALF

Hard Bldg Costs $578,236 Soft Costs $33,788 FF&E $58,000 Development Costs $50,000 Land $150,000 Start Up Costs $170,576

Total $1,040,600


Page 41

The following table summarizes planned offering and facility development and operational start up costs for years 1 through 10 according to the Company’s depreciation and amortization schedule. This table includes all planned costs associated with development and start up of 173 facilities over this period:

Planned Non-

Capital Expenditures 3 Years 7 Years 39 Years Depreciable Total

Purchases

2003 $160,000 $4,400,000 $1,300,000 $40,000 $5,900,000

2004 $1,110,000 $400,000 $5,200,000 $810,000 $7,520,000

2005 $1,287,500 $450,000 $6,175,000 $910,000 $8,822,500

2006 $1,480,000 $500,000 $6,825,000 $1,020,000 $9,825,000

2007 $1,667,500 $600,000 $7,800,000 $1,200,000 $11,267,500

2008 $1,680,000 $600,000 $7,800,000 $1,200,000 $11,280,000

2009 $1,680,000 $600,000 $7,800,000 $1,200,000 $11,280,000

2010 $1,680,000 $600,000 $7,800,000 $1,200,000 $11,280,000

2011 $1,200,000 $600,000 $5,850,000 $1,080,000 $8,730,000

2012 $75,000 $0 $0 $0 $75,000

Total Thru 10 Years $12,020,000 $8,750,000 $56,550,000 $8,660,000 $85,980,000

Depreciation/Amort.

2003 $53,333 $628,571 $33,333 $40,000 $755,238

2004 $423,333 $57,143 $166,667 $0 $647,143

2005 $852,500 $750,000 $325,000 $0 $1,927,500

2006 $1,292,500 $821,429 $500,000 $0 $2,613,929

2007 $1,478,333 $935,714 $700,000 $0 $3,114,048

2008 $1,609,167 $398,571 $900,000 $0 $2,907,738

2009 $1,675,833 $484,286 $1,100,000 $0 $3,260,119

2010 $1,680,000 $570,000 $1,300,000 $0 $3,550,000


Page 42

2011 $1,520,000 $598,571 $1,350,000 $0 $3,468,571

2012 $985,000 $534,286 $1,225,000 $0 $2,744,286

Total Thru 10 Years $11,570,000 $5,778,571 $7,600,000 $40,000 $24,988,571

1.5 Note E: Cost of Goods Sold

The Company is targeting a minimum of 33% gross profit margin from operations based upon current experience. Beginning in 2005 and going through 2012, management expects the gross profit margin from operations to increase steadily to 40%. All known and projected costs of operations are included in the Cost of Goods Sold with the exception of mortgage/bond interest and corporate overhead expenditures.

1.6 Note F: Expenditures

The expenses projected are scaled to levels believed by management to adequately support the organization and growth of the Company. Additional explanation of some of the more material projected expenses follow:

• Mortgage or Line of Credit InterestManagement expects to refinance some of its existing 17 ALFs through proceeds of the current real estate collateralized bond issue, aswell development of additional facilities over approximately two years beginning September 2003. Total LOC debt is projected to beapproximately $22+/- million.

Beginning in year 2005, the Company will refinance approximately 10 facilities every 12 months through 2012 to supplement cash flowfor continued expansion of new facilities. Refinancing will most likely be provided through FHA or private institutional sources, and isbudgeted at an interest rate of 7.5% (and an assumed principal pay down of 5% annually). As a means of continuing to build balancesheet equity, management expects to refinance each facility at the facility’s cost of $1,040,600, rather than at present value.

• PersonnelThe Company plans to maintain relatively few corporate employees. Staffing at the corporate overhead level include three seniormanagement, finance and accounting personnel, a government liaison, senior operations and quality management staff, and support.

A 22% payroll burden for taxes and benefits has been factored in with the personnel expense.

• Overall Corporate Overhead


Page 43

The Company plans to maintain corporate overhead expenses at relatively small levels in comparison to total revenues. As a percentage of total revenues, corporate overhead expenses, including salaries and expenses, are projected at 11% for 2003-2004; 8% for 2005-2007, and; 4% to 5% from 2008 through 2012.

• Depreciation and AmortizationBeyond expansion of income generating ALFs, the Company plans to keep fixed assets as low as possible to avoid the need to fund andservice a large physical infrastructure.

Intellectual property (intangible assets) is projected to play a minor role, although the Company intends to copyright certain care programsand related branding.

1.7 Note G: Inventory

The Company maintains no substantive inventory from month to month. Food items are the largest item and are perishable.

1.8 Note H: Accounts Receivable / Payable

Historically, the Company has little or no non-performing receivables due to the nature of operations. Nevertheless, while payments from residents are made in advance at the first of each month, Management has elected to project Accounts Receivable equal to 10 days of sales.

The projections further demonstrate the Company’s history of paying all obligations promptly. However, management will likely be aggressive in finding ways to stretch its payables as long as possible as part of it efforts to soundly manage cash. This will especially be true in cases of volume merchandise vendors that allow longer terms.

1.9 Note I: Membership Units

Please refer to the Company’s offering documents for detailed information regarding capital formation and other disclosures of ownership and matters relating to the Company’s securities and legal compliance. Currently, the Company has a total of 100 membership units authorized and issued.

Each individual The Company facility is a separate limited liability corporation for asset protection purposes, with The Company, LLC being the owner and parent company.


Page 44

The Company plans to raise $55,000,000 in senior debt collateralized by income producing real estate, with an interest rate of 6.25%. The Company is not offering any equity participation at this time.

1.10 Note J: Income Taxes

As is common in profitable LLC’s, distributions will likely be made to owners in amounts at least adequate to cover the tax burdens on their personal tax returns associated with reporting their portion of the Company’s income as a pass through via an annually prepared Form K-1 at a budgeted rate of 39%. These amounts have been projected from tax table calculations with no attention to tax strategies and planning that most likely will occur with the success the Company projects. The projected loss during 2004, if realized, will be carried forward to offset earnings in future months and years. Although not included as an asset, this carry-forward loss implies a deferred tax benefit.


Page 45

Appendix 2: Consolidated 2002 and 2003 Income Statements

2002 Income Statement Summary by Facility

2002 Income Statement

Corporate Development 1 2 3 4 5 6 7 Consolidated

Revenues

Residential Rents $1,775,931 $63,939 $4,850 $411,899 $154,377 $289,861 $99,770 $2,800,627

Development Revenue $1,178,068 $1,178,068

Management Fee Revenue $68,724 $68,724

Misc. Revenue $4,676 $1,265 $120 $20 $528 $6,608

Total Revenues $1,251,468 $1,777,196 $63,939 $4,850 $412,019 $154,397 $289,861 $100,298 $4,054,027

Operating Expenses

Accounting & Prof. Fees $22,169 $8,921 $1,900 $72 $4,273 $2,275 $2,278 $1,559 $43,445

Activities/Entertainment $6,527 $1,686 $54 $63 $125 $8,454

Advertising $2,590 $30,695 $16,225 $30 $12,231 $6,059 $12,364 $5,143 $85,338

Bank Fees $2,776 $1,171 $225 $233 $996 $2,235 $304 $7,940

Commercial Insurance $4,723 $119,492 $6,169 $0 $10,281 $3,793 $7,099 $6,493 $158,050

Dues and Subscriptions $88 $492 $264 $171 $123 $584 $400 $2,122

Employee Benefits $1,026 $60,786 $192 $2,050 -$75 $573 $64,553

Employee Training $1,829 $1,935 $35 $1,274 $475 $65 $160 $5,774

Food & Supplies $98 $180,586 $10,815 $272 $24,914 $8,314 $19,838 $6,304 $251,140

Guaranteed Payment $228,800 $500 $229,300

Licenses and Permits $3,244 $563 $175 $400 $223 $737 $224 $5,565

Management Fee's $60,491 $1,328 $27,559 $5,019 $10,585 $861 $105,844

Management Travel $22,091 $2,001 $766 $2,091 $3,064 $1,467 $2,312 $33,792


Page 46

Office Expense $4,900 $14,578 $1,126 $20 $1,875 $1,163 $1,029 $2,279 $26,970

Payroll Taxes $188,535 $9,756 $1,497 -$13,626 -$981 $11,970 $5,378 $202,529

Property Tax $20,269 $43 $5,000 $8,691 $2,314 $1,477 $37,794

Property Insurance $1,083 $571 $1,083 $1,083 $3,820

Office Rent $2,583 $2,583

Repairs & Maintenance $1,733 $53,580 $2,996 $519 $7,420 $3,545 $5,339 $2,757 $77,888

Salaries/Wages $6,468 $871,662 $83,991 $12,365 $171,956 $75,260 $129,758 $93,519 $1,444,978

Seasonal & other Misc $620 $2,489 -$95 $3,014

Taxes & License $3,900 $6,730 $10,630

Telephone $13,181 $21,257 $2,208 $153 $5,793 $1,189 $5,457 $4,383 $53,623

Travel & Entertainment $34,286 $34,286

Utilities $1,038 $88,416 $10,424 $941 $14,002 $5,901 $13,647 $13,710 $148,079

Total Expense $361,425 $1,739,015 $150,110 $16,901 $278,658 $127,919 $226,520 $146,960 $3,047,509

Net Operating Income $890,042 $38,181 -$86,172 -$12,051 $133,361 $26,478 $63,340 -$46,661 $1,006,518

Development Expenses $51,980 $121,164 $86,534 $156,117 $113,311 $112,177 $48,757 $690,041

Mortgage Interest $31,537 $456,086 $13,325 $57,587 $48,079 $21,629 $28,383 $656,626

Total Other Expense $83,517 $456,086 $134,488 $86,534 $213,704 $161,391 $133,806 $77,141 $1,346,667

Net Income $806,525 -$417,905 -$220,660 -$98,586 -$80,343 -$134,913 -$70,465 -$123,802 -$340,149


Page 47

2003 Income Statement Summary by Facility

Q1 2003 Quad Quad

Jan - Mar 1 2 3 4 5 6 7

Income $107,308 $41,850 $7,200 $97,197 $98,833 $59,711 $502,718

Gross Profit $107,308 $41,850 $7,200 $97,197 $98,833 $59,711 $502,718

Expenses $55,796 $35,746 $26,712 $64,561 $63,655 $63,951 $391,184

Net Ordinary Income $51,516 $6,093 -$19,512 $32,635 $35,477 -$4,241 $111,534

Other Income $4 $0 $0 $109 $10 $108 $845

Net Operating Income $51,520 $6,093 -$19,512 $32,744 $35,487 -$4,133 $112,379

Other Expenses $16,099 $11,568 $11,568 $18,149 $13,886 $12,703 $84,396

Adjusted Net Operating income $35,420 -$5,475 -$31,084 $14,594 $21,591 -$16,944 $27,984

APRIL Quad Quad

2003 1 2 3 4 5 6 7

Income $38,225 $17,577 $2,400 $41,800 $42,598 $25,180 $170,520

Gross Profit $38,225 $17,577 $2,400 $41,800 $42,598 $25,180 $170,520

Expenses $20,248 $12,619 $9,775 $17,456 $24,930 $18,318 $144,614

Net Ordinary Income $17,976 $4,957 -$7,375 $24,343 $17,668 $6,862 $25,906

Other Income $0 $0 $0 $0 $0 $0 $494

Net Operating Income $17,976 $4,957 -$7,375 $24,343 $17,668 $6,862 $26,500

Other Expenses $3,867 $3,856 $4,873 $7,292 $5,399 $2,877 $25,413

Adjusted Net Operating income $14,109 $400 -$12,248 $17,051 $12,268 $3,984 $494


Page 48

Appendix 3: Consolidated 2002 Financials – Balance Sheet 12/31/2002

Corporate Development 1 2 3 4 5 6 7 Consolidated

Assets

Current Assets

Cash -$15,083 -$1,667 -$1,801 -$101 -$1,635 -$9,324 $1,072 $7,126 -$21,413

Other Current Assets $412,684 $663,349 $1,076,033

Total Current Assets $397,601 $661,682 -$1,801 -$101 -$1,635 -$9,324 $1,072 $7,126 $1,054,619

Fixed Assets

Land $357,594 $50,000 $48,000 $25,000 $83,000 $80,000 $643,594

Buildings $100,000 $3,771,856 $495,641 $595,409 $595,917 $627,509 $645,695 $579,454 $7,411,482

Furniture, Fixtures & Equipment $17,734 $255,087 $46,456 $34,301 $66,556 $41,794 $29,408 $49,609 $540,945

Improvements $12,790 $12,790

Automobiles $13,400 $6,657 $20,057

Accumulated Depreciation -$4,405 -$85,892 -$21,060 -$111,357

Total Fixed Assets $113,330 $4,312,045 $592,097 $677,710 $685,860 $669,304 $758,103 $709,063 $8,517,512

$0

Other Assets $727,034 $441,811 $1,168,845

Total Assets $1,237,964 $5,415,538 $590,296 $677,610 $684,225 $659,979 $759,176 $716,189 $10,740,976

Liabilities & Equity

Current Liabilities

Accounts Payable $60,020 $77,696 $10,875 $1,196 $8,500 $6,893 $10,196 $6,792 $182,167

Other Current Liabilities $422,640 $1,117,257 $1,539,897

Total Current Liabilities $482,660 $1,194,953 $10,875 $1,196 $8,500 $6,893 $10,196 $6,792 $1,722,064


Page 49

Long-Term Liabilities

Mortgages & Notes $313,256 $5,124,468 $800,080 $775,000 $895,085 $787,500 $819,445 $833,198 $10,348,032

Other Long-Term Liabilities $0 $25,000 $25,000

Total Long-Term Liabilities $313,256 $5,124,468 $800,080 $775,000 $920,085 $787,500 $819,445 $833,198 $10,373,032

Total Liabilities $795,915 $6,319,421 $810,956 $776,196 $928,584 $794,393 $829,641 $839,991 $12,095,096

Equity

Retained Earnings -$364,477 -$485,978 -$164,016 $500 -$1,013,971

Current Earnings (Loss) $806,526 -$417,905 -$220,660 -$98,586 -$80,343 -$134,913 -$70,465 -$123,802 -$340,149

Total Equity $442,049 -$903,883 -$220,660 -$98,586 -$244,359 -$134,413 -$70,465 -$123,802 -$1,354,120

Total Liabilities & Equity $1,237,964 $5,415,537 $590,296 $677,610 $684,225 $659,979 $759,176 $716,189 $10,740,976


Page 50

Notes to Consolidated Financial Statements

1.11 Note A: Preparation of Statements

The 2002 financial statements are the Company are internally prepared by management and to the best of management’s knowledge accurately represent The Company, LLC’s financial condition as of December 31, 2002.

1.12 Note B: Scope of the Financial Projections

The Company was formed in 1999 as a state limited Liability corporation, currently owns and operates 17 ALFs with 4 additional facilities under

construction and approximately 200 employees. Most facilities opened in 2001 or 2002, and are in varying stages of lease up.

1.13 Note C: Revenues

The Company earns core revenue streams from the sale ALF room and board, at a current average of $2,300 per month.


Page 51

Appendix 4: Summary of Recent The Company ALF Appraisals

Recent appraisals of The Company ALF’s indicate values that we can expect from The Company stabilized facilities.12 The following schedule summarizes the appraised values we have received on five of our homes.

The Company The Company The Company The Company The Company Property Name Cottage Cottage Cottage Cottage Cottage

Location xxx, IL yyy, IL zzz, IL www, IL rrr (review)

Name of Appraiser Goldammer

Valuation GroupGoldammer

Valuation GroupGoldammer

Valuation Group Goldammer

Valuation Group Stahl/Hatterly

Date of Appraisal 7/1/2003 7/1/2003 7/1/2003 3/1/2002 7/1/2003

Number of Beds 16 16 16 16 16

Annual Operating Income $145,842 $145,152 $145,728 $140,200

NOI Per Bed $9,115 $9,072 $9,108 $8,763

Appraisal Amount $1,750,000 $1,300,000 $1,750,000 $1,280,000 $1,950,000

Value per Bed $81,250 $80,000 $80,000 $80,000 $80,190

Capitalization Rate 11.22% 11.00% 11.00% 11.00% N/A

12 Note that appraisals for the memory care facilities (Alzheimer) will be higher than for the ALF’s.


Page 52

Appendix 5: Photos of Existing The Company ALFs

bbb, Illinois – 16-bed


Page 53

bbb, Illinois –Two 16-bed Facilities


Page 54

bbb, Florida – 9 12-bed Homes


Page 55

Entry Way – Typical Plan


Page 56

Typical Great Room


Page 57

Visiting Guest Room


Page 58

Family Area of Typical Great Room


Page 59

Partial View of Typical Bedroom (Rooms are similar to studio apartments with private bathrooms and closets)

ASSISTED LIVING BUSINESS PLAN - DEWITT

Documents

company quality of management

forwardlooking statements

confidential business

confidential information

companys business

additional information

information contact

collateral information