Business Plan for Skate Brake Invention

CONTROLLERBLADE™, INC. Business Plan for a Manufacturing Business Revised: December 28, 1996

Proposal for a Skate Brake System Manufacturing Company, a Product for Exclusive Licensing Rights, and / or a Joint Venture

Prepared by Eric Talaska 547 Hwy. 317 Ashdown, AR 71822 (501) 898-2328 Home/Message

SECURITIES NOTICE THIS MEMORANDUM IS NOT AN OFFERING FOR SALE OF ANY SECURITIES OF THE COMPANY. IT IS FOR YOUR CONFIDENTIAL USE ONLY, AND MAY NOT BE REPRODUCED, SOLD, OR REDISTRIBUTED WITHOUT PRIOR WRITTEN APPROVAL OF ERIC TALASKA. ANY ACTION CONTRARY TO THESE RESTRICTIONS MAY PLACE YOU AND THE ISSUER HEREOF IN DIRECT VIOLATION OF THE STATE SECURITIES ACT.

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EXECUTIVE SUMMARY Name of Business: Controllerblade™, Inc. Description and Location of Plant: The current location is out of Eric Talaska’s home. A suitable manufacturer’s location is needed.

Brief Description of Product: In-line skate braking systems to be retrofitted and/or manufactured onto in-line skates. The products are designed to allow skaters to slow and stop with control.

A new hand-activated brake device and method particularly for in-line roller skates having numerous forms and mounting locations. All forms use direct hand pressure to activate the brake.

Optimum slowing, stopping, and balance can be achieved, even when used in hilly areas. Left and right skates can be operated simultaneously or singly. A brake assembly is mounted to the skate and a rod is pushed or pulled by hand. An elastic strap assembly is provided for holding a rod in an easy to reach position along the outer lower leg area and skate. A brake pad contacts the skating surface or the skate’s wheels and automatically retracts to maintain a desired ground clearance when hand pressure is released. The user need not maintain a constant grip on anything. Has unique safety and convenience features and options (see appendix).

Currently, there is one product and one replacement part for it. The primary product is a hand-activated in-line skate braking system. The replacement part is a brake pad for the braking system.

The product's purpose for the consumer is to provide a means for slowing and stopping inline skates with minimum effort and inconvenience.

The product is very simple. There is nothing complicated to figure out. The consumers can use it immediately after reading a brief set of instructions with diagrams designed for even the most technically deficient people. Pictures will be included for the benefit of clarity. No training is necessary.

The product can be ordered / purchased in pairs or singly in two sizes. Custom length sizes can be specially ordered. Replacement brake pads are to be made available from the manufacturer of dealers. There are plans to offer other versions of the product.

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Markets and Competition The in-line skate market is growing faster than any other sports-related market in the U.S. The market is estimated to be in the middle of its growth. Competitive products lack effectiveness and some are too complex to be user friendly. The HABIT™ is radically different and more beneficial than other braking systems. For details, refer to the detailed description of competition.

Highlights of the Owner-Manger The founder / Inventor (Eric Talaska) has ten years of work experience, working for fourteen different companies, including a Fortune 500 Manufacturer.

He has a four-year degree from the University of Arkansas at Fayetteville in communication. He completed 10 semester hours strictly classified as business courses to include business law. For details, refer to the resume in the appendix.

Eric Talaska’s Contributions for Inventions and Controllerblade™, Inc.     

Independently invented and developed all models and trademarks.

One year of intensive research, development, model building, and testing.

Researched patent process and consulted with several patent attorneys.

Purchased all research and development parts, tools, copies, etc.

Conducted thorough 10-day patent search in Arlington, VA to include consultation with patent examiners, accomplished formal patent application and drawings.  Conducted market research via trade shows, the Internet, consumers, and manufacturers.  Designed an Internet / www ad: Learned how to advertise strategically on the Internet.

Staffing Plan There are no plans for hiring employees within the next year. In the second year of operations employees may be hired as follows: • Two Assemblers for product assembly • Other employees will be hired and trained as needed.

Company's Goals and Objectives: The company's primary goal is to be the first to successfully market an in-line skate brake that is both profitable and acceptable for skaters of all levels. There is an ethical obligation to get the product out on the market to reduce the amount of in-line skate injuries.

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Explanation of how much money needed, why it is needed, and how the funds will be used: Startup Registration: Business license, sales tax permit, incorp., attorney fees: $200 Product evaluation: Wal Mart: $175 Legal Patent attorney for office action with the U.S. Patent Office: $2,000 Foreign patent application: $5,000 Patent “continuation in part� application and attorney help: $2,000 Nation-wide / U.S. Trademark Registrations : $300 Operational Bank account, business: checking: 2,000 Post Office Box: $50 / yr.

Insurance, product / third party liability "limited binder"$ 2,000 Internet access: $200 / yr.

Internet / www domain name: $100 plus $50 / year.

Long distance calls to include sending and receiving faxes: $100/mo.

Parts / supplies: wholesale: Rubber pads, handles, springs, rods, etc.: 5,000 OEM (original equipment manufacturing) capabilities and molds: $15,000 Packaging: Product display and replacement pads: $500 Unanticipated expenses: $5,000 Accounts receivable: $1,000 Trade Shows / Exibits SGMA Atlanta Supershow, travel, hotel, etc. (Jan. '97): $600 NSGA Chicago World Expo, travel, hotel, etc. (July '97): $600 Skates, demonstration / show: High quality: $400 Mannequin (for product demonstration): $200 Advertising / Promotion Promotion expenses: travel, hotels, etc.: $2,000 Magazine subscriptions: Industry related: On the Edge, Inline, Inline Skater, Global Skate, Inline Retailer: $100 / yr.

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Target Market There are several different classifications of skaters (see appendix). This product is useful for recreation, fitness, and speed skaters. These skaters constitute over 90% of all in-line skaters.

This fact along with the growing number of skaters is what makes this product a particular niche.

This product is not to be used for roller hockey, aggressive skating, and the like.

According to the International In-line Skating Association, the estimated participation for 1996 is 31 million, a 16% increase over 1995.

Industry Overview In-line skates have achieved great popularity. These skates allow users great freedom of personal movement. The skates provide a nonpolluting and quiet means for transportation. Such skates are characterized by a plurality of wheels mounted on a shoe or boot. The wheels are situated in a line along the directional travel of the skate. Thus, the wheels appear to simulate the blade of an ice skate. Common In-line skates were first marketed by Scott Olson, founder of Rollerblade, Inc. and Launch Sports, as a training aid for hockey players and speed skaters. In-line skates are now used by people of all ages and occupations. In-line skates are commonly known as roller blades after a prototypical brand.

In-line skating's stroke recovery and glide is better on joints and works more muscle groups than running. According to the University of Massachusetts Exercise Science Department (1994), in-line skating produces half the impact shock to joints than running, offers comparable aerobic benefits to running, and offers more health benefits than step-machine exercise.

There are two main safety factors for roller skating. One is a way in which to slow or stop skaters and the other is to make the skaters highly visible to motorists and other persons. Roller skating safety has been partially addressed with the use of various devices to include brakes, helmets, reflective patches, knee, elbow, and wrist pads. These safety issues must be addressed in order to allow in-line skating to become a reputably safe as well as an enjoyable sport for those who like the outdoors, fitness and fun.

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In-line Skates - 1995 Exports/Imports: Source: SMGA Exports Imports

$ 57,990,000 $464,800,000

U.S. Wholesale Sales: Source: SGMA 1991 1992 1993 Accessories 1994 Accessories 1995

$192,000,000 $290,000,000 $310,000,000 $125,000,000 (accessories not tracked until 1994) $480,000,000 $175,000,000 $550,000,000

Consumer Purchases: Source: NSGA Skate Purchases 1990 1991 1992 1993 1994 1995 1996

$ 53,254,000 848,000 units $164,584,000 2,527,000 units $215,281,000 3,158,000 units $282,264,000 3,800,000 units $395,971,000 6,122,000 units $459,808,000 7,224,000 units $1 Billion Expected

Protective Gear Purchases 1993 1994 1995 1996

$59,000,000 $82,618,000 $90,900,000 $

Fastest Growing Sports, 1996: Source: Kurt Salmon Associates (212) 319-9450 1.

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Inline Skating Snow Boarding Soccer Golf Walking for Exercise Street In-line Hockey Mountain Biking Basketball Hiking / Trekking Exercise with Machine

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Brief Description of Competition No after-market or retrofitting skate braking system has successfully entered the market.

The Land Fear No, Inc. (5631 Jewell Rd., Paradise, CA 95969 ph./fax 1-800-can stop) sells the Volcano two-handed cable brake systems. Their quality seems to be average. Their prices are among the highest in the market (a pair of their brakes retail for $139.69). The product is cumbersome because cables must be routed up the skater's body and a hand lever must be held.

They provide a video to retailers only.

Grip Inc. (5375 Western Ave., Boulder, CO 80301) sells the Grip, a hand-activated brake which works like a bicycle brake. It brakes the skate wheels instead of pushing a rubber pad to the ground. They have licensed the product with skate manufacturing giant Bauer (now owned by Nike). Bauer is being sued by The Grip company because Bauer lost interest and quit marketing The Grip. Bauer was marketing the Grip retrofit kit for $69. It fit about 90% of existing skates.

Their product was described well in a Popular Mechanics Magazine.

Roll Control (PO Box 2097, Portland, OR 97208 phone # 800-292-1993 and via http://www.businessexchange.com/filesavce/skatebrk.html) sells the Roll Control Hydraulic Brake System. It uses a single hand-grip and a hydraulic tubing system to engage two drum-brake assemblies, one in each skate. It takes its cue from cars. The Roll Control Kit costs $69 to $125 depending on the skates. It uses tubing made of pliable Kevlar-reinforced urethane that attaches to a thumb-controlled actuator built into a wrist glove. The 1/8-in. tubing runs down the body to a Y fitting at the waist. Two lines pass down the legs to hydraulic cylinders at the back of each skate.

This company is seeking $7 Million from a venture capitalist. Their financial projections are as follows: $ 40.9 million sales year 1 = 1% Market Capture $100.7 million sales year 2 = 2% Market Capture $297.0 million sales year 3 = 4% Market Capture

Inline Modifications Inc. (2820 S. Buchanan St., Arlington, VA 22206 - 703-671-3690 and via http://users.aol.com/inventorr/inventor.html) sells a hand-activated cable brake that brakes the rear wheel of the skate for $35. Plus $4.95 shipping each. They sell them in choices of black, chrome, or white. It is pre-assembled with a 48� cable.

RollerWand (PO Box 113, Chilmark, MA 02535 ph. 508-645-2505 fax 645-3670) sells very large / bulky hand-held rods that the skater must carry at all times and drag one end of the rod to stop.

Rollerbrake Industries, Inc. (PO Box 2788, Sun Valley, ID 83353 Phone # 800-359-9415 fax 208-343-5599 sells a product just like the RollerWand. Their prices are $34.95 + s/h for kids and $39.95 + s/h for adults. They have an excellently edited product video, but the content is not good. They are inactive in sales.

Out of Line Sports (3140 S. Williams St., Englewood, CO 80110 ph. 303-761-4177 fax 303-781-7669) sells a Ground Engaging Movable (GEM) retrofit kit for $34.95 (for one skate).

It is very similar to any other cuff-activated brake. Somehow they are associated with and / or licensed to a Georgia based skate company called CaliforniaPro. Invivo (1547 Washington St., Birmingham, MI 48009 phone #810-642-0886 same fax E-mail: tsefton@invivo.com - Tim Sefton is VP of Sales and Mktg.) unsuccessfully marketed the GMAB (Give Me A Brake) on 6/15/96. It is activated by pulling a pvc part upwards, thus forcing a brake pad to the ground. They sell them for $10. Each. The quality is very low. They have a product video of poor quality and content. Ordering is difficult and very limited.

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Comparing Other In-line Skate Braking Methods to the HABIT™ … Objectively Written for the Beginner to the Engineer.

The number-one question in-line skaters have is: "How do I stop these things?" In-line skating is thrilling. But when you can’t control your speed, the thrill can have detrimental consequences. The number-one cause of in-line skate accidents is the inability to slow down or stop. Consequently, many beginning in-line skaters fall often and may lose interest in the sport, unable to attain braking proficiency. This has made many new skaters reluctant to use in-line skates, store them away, or return them for a refund.

The desired in-line skate brake should be capable of being placed on both left and right skates to significantly increase the braking surface area in contact with the skate surface. Braking left and right skates simultaneously is preferred also because in order to maintain proper stability, both skates must be slowed at the same time. To understand this, imagine a car with brakes on one side only. Each side of the car represents a skater’s leg ultimately joined by a body. If only one side is slowed, the vehicle will turn unless the user fights the steering. It is impossible to brake both skates at the same time with any other non-cable skate braking system.

Additionally, the brake should use the direct power of the skater's hand rather than the skater's foot, leg or indirect hand pressure of cables to activate the brake. Using direct hand pressure to activate the brake will allow the skater to use the total body to maintain the desired balance at all times, including when the skater needs to brake and when there is a need for balance.

If the brake is mechanically activated, it should have an emergency brake which can be used in the event of a malfunction in the first brake used.

In-Line Skating Basics (1996) by Cam Millar describes that “If at any time you feel offbalance or out of control on your skates, bring your hands to your knees. By doing this, you make sure that your knees are slightly bent and that your upper body is in a slightly forward position.

This will prevent you from falling backwards. A beginner’s stance is hands on knees. Skaters should keep their hands on their knees while gliding. Keep your knees bent at all times when skating downhill. Bring your hands to your knees, stay low, and try to use your brake.” It is obvious that the desired skate brake should be located at the user’s knees for activation because this is where skaters should put their hands immediately upon a need for braking or control and it allows for a lower center of gravity. The HABIT™ is engineered for this hands-to-knees action.

Many attempts have been made to market a braking system that slows the skates wheels.

This is the wrong approach. The brake should not rely on wheel friction because unlike most other wheels that are air-inflated or made of rubber, in-line skate wheels are solid, extremely narrow, and made of polyurethane. When locked up, the skate wheels skid and quickly wear out because there is not enough wheel surface contact with the ground. Braking performance is poor because there is an inadequate amount of wheel-to-ground contact for frictional braking. In-line skate wheels quickly wear unevenly, especially when locked in a skid such as during a “T-stop” (dragging the wheels sideways). Wheel brakes do not emit a warning sound to pedestrians of skater’s approach from behind as well as ground engaging pads do. Wheel brakes can cause problems when changing the size or diameter of the wheels.

Inventing an effective and practical device for slowing and stopping skates has been challenging. There is only a small amount of space to place skate brakes, unlike other vehicles where limited space is not a major concern. To make matters even more difficult, the brake cannot protrude anywhere on the inside of the skate because it would scrape upon the ground during stokes and could interfere with the other skate.

The HABIT™ is the only skate brake allowing activation on both skates at the same time and body movement without the interference of cables, hydraulics, levers, belts, and straps above the knees. Cable brakes take more time to install. The bulky parts mean high expense to the consumer. The hand cannot supply as much pressure with a cable device to push a pad to the ground as the hand can with the HABIT™. Brake pad wear affects the performance of cable, cuffactivated, and heel brakes but does not affect the performance of the HABIT™. The only affect

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brake pad wear has on the HABIT™ is further pad retraction (higher ground clearance). The cable type brake is dangerous because the skater’s hands are never free of the levers (unless uncomfortably mounted on the waist) in case he/she needs them to break a fall or regain his/her balance by grabbing onto something. Cable brakes do not allow skaters to wear protective wrist guards, a critical skate safety component.

In-line skates generally have a brake mounted at the rear of the skate. There are two popular types of rear-mounted brakes. The first is the standard heel brake and the second is the cuff-activated brake. The standard heel brake requires the skater to significantly change the position of the skate to engage the brake. The user must shift the weight to the non-braking foot, thrust the braking foot forward, and glide on the opposite foot all while re-shifting body weight to the braking foot to engage the ground with the brake pad of the braking foot. Sound confusing? It is, especially in practice. “It's similar to a golf swing - you have to do a lot of things right all at once" explains Douglas Miller, head of R&D at Rollerblade, Inc. According to the Popular Mechanics Magazine, “this method has serious drawbacks and does not deliver genuine stopping power.”

Put another way, the user must pick up and thrust forward his or her toe to drag a small piece of rubber that sticks out from the back of the skate. Enough pressure must be applied to the small pad to stop the entire weight of the skater. That is very difficult to do in such an unnatural position, especially when the skater needs it most: Downhill or at higher speeds. If the skater tries to engage this kind of brake without sliding the braking foot forward, he or she can easily lose control and spin. The required pivot arc forces the skater to jeopardize balance in order to apply the brake. The brake causes stress on the skater’s legs.

The HABIT™ uses arm muscle groups where more energy is available when legs get tired from skating a length of time. “When you pivot your toe up and heel back, you’re not using a strong muscle group,” explains Douglas Miller. This means skaters can skate longer due to less leg stress with the HABIT™.

The longer the wheel frame on any skate, the more problematic the standard heel braking technique becomes. A longer frame such as those found on speed and fitness skates is difficult to pivot on the rear wheel. It becomes more like trying to pivot a ski. Consequently, most speed and fitness skaters do not or cannot use the standard heel brake. Because the standard heel brake requires the skater to “ride” on the brake with all but one wheel off the ground, it is particularly dangerous on rough surfaces and gravel. The HABIT™ can be more safely used on such surfaces.

The cuff-activated brake, commonly known as ABT™ for active braking technology is activated by thrusting the foot forward and putting pressure against the cuff (upper portion) of the skate. This causes discomfort due to the pressure applied against the user’s upper ankle. This brake is particularly problematic for females because the brake requires them to hyper-extend a knee (female knees are generally weaker than a male knees). Thrusting the foot forward is unnatural and awkward. Balance is reduced. This type of brake must have a pad placed close to the ground at all times and therefore can be unintentionally activated. As the brake pad wears, adjustments are constantly necessary. Nonetheless, this brake generally offers two advantages over the standard heel brake described above because the user need not lift any wheel off the ground and it is easier to learn how use The HABIT™ solves the problems associated with the described skate brakes and offers additional safety and convenience features not possible with any other skate brakes.

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MARKET STRATEGY Projections The projected number of customers in the next five years is 1,000,000. Currently there are about 31 million in-line skaters / potential customers, all of which really need to brake effectively at one time or another. The projected number of dealer orders in the next five years is 300. These numbers may be considerably higher or lower ranging from 5,000 to 15,000,000 as the success is based upon marketing strategy and budget. Business trends indicate phenomenal growth in the specific business and the industry as a whole. The growth rate is expected to continue, with an increasing need and demand for braking systems from consumer safety organizations and insurance companies.

Sales Strategy There is a market for the product because competitive products are known to be inadequate and ineffective, and in-line skating (roller blading) is highly trendy.

The sales of in-line skates and related equipment is projected to gross $1 billion in 1996 alone considering the 16% growth rate from 1995 to 1996 ($838 million in 1995). Source: International In-line Skating Association.

For product ordering and pricing strategies, see a sample order form. Because the product is extremely innovative and fits over 95% of all in-line skates, a minimum of a 100% mark-up to set prices is feasible. The estimated SRP for one braking system is $36. A small discount should be offered when purchased in pairs. Even if the brakes retail for at least double the manufacturing cost, the price will be very competitive compared to other after-market braking systems.

The customer will be willing to pay the price because it is significantly lower than the competition's and is the most powerful and stable braking system available. The products cannot be bought from anyone else. See list of competition.

The strategies used to get an edge on competition are price, performance of product, product test results / comparison to competition, and convenience features.

Advertising will be very limited at the beginning until test marketing is conducted and a final version is ready for molding. The only planned advertising will be: 1) in one industry magazine at a moderate cost. This will primarily be to test the effectiveness of magazine advertising.

2) an Internet (World Wide Web) ad, multiple search engine registrations, and a domain name.

An HTML ad is constructed and stored on a disk for use.

Sales, Distribution, and Servicing Methods Distribution channels are limited to ordering direct from the company, via the Internet ad, and through a dealer / sales rep. The product should sell best in sporting goods stores because knowledgeable sales representatives are there to tell customers about the products. Customer service is provided by way of the company's phone number.

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Promotion Strategy There are numerous methods planned for product promotion to include: Magazine articles (send the photos, srp, products, brief description, etc. to them) with the following magazines: Design News - Sports & Leisure section, Andrea Baker, Associate Editor, Cahners Publishing Co., 275 Washington St., Newton, MA 02158-1630, 617-558-4613 Consumer Reports: Irwin Landau, Editor, Consumer Union, 101 Truman Ave., Yonkers, NY 10703-1057, 914-378-2000 (public safety) Popular Mechanics: Joe Oldham, Editor in Chief, Hearst Magazines Corp., 224 W. 57 th St., New York, NY 10019-5905, 212-649-2000 On The Edge Inline Retailer & Industry News: Ellie Rogers, New Products “New Product Reviews,” Sports & Fitness Publishing, 2025 Pearl St., Boulder, CO 80302-4429, 303-440-5111 fax 303-440-3313 Inline Inline Skater Global Skater Other promotion methods include: "What's New" (television show), "Invention" and “Next Step” (The Discovery Channel), television news, the Internet, press releases, vpr’s (video press releases), shows, events, and exhibitions.

Advertising will be moderately conducted via Internet and magazine ads. No promotional pricing strategies will be used such as "two for one." All products will have company identification and the phone number easily in sight by way of labels. Word of mouth, recommendations, and curiosity should provide orders.

LEGAL ENVIRONMENT Corporate Structure The business is an LLC Corporation. According to the Secretary of State, the name “Controllerblade” does not infringe on the company name Rollerblade. In addition the name roller blade is becoming generic in a similar way the word aspirin is used for a pain reliever.

Patent, Trademark, and Other Intellectual Property Protection The company owns the right to approximately three trademarks of which are being used.

Eric Talaska is the owner of one patent pending. He is granted a foreign patent filing license.

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APPENDIX - ADDITIONAL INFORMATION For those of higher interest and for HABIT™ brake system users / testers / evaluators:

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WARNING! REDUCE THE RISK OF SERIOUS INJURY, AND ONLY USE THESE BRAKES WHILE WEARING FULL PROTECTIVE GEAR - HELMET, WRIST GUARDS, ELBOW PADS, AND KNEE PADS. FOLLOW ALL INSTRUCTIONS BELOW AND THE LIMITED WARRANTY BEFORE USING THE BRAKES. INSTRUCTIONS: ♦ ♦ ♦

Not for use on any slick or wet surface. Avoid areas covered by tree leaves.

Do not use the brakes when skating backwards.

Always use braking systems on left and right skates together with equal hand pressure.

TOOLS NEEDED: Two 5/32” Allen wrenches and one ¼” open or closed end wrench or socket.

Remove the rear-most wheel axle. Insert a threadless spacer (see illustr. A) Threadless spacers are available at most skate supply stores. Use aluminum or steel spacers only (no nylon).

Replace wheel in frame. Place the HABIT™ alongside the frame of skate (see illustr. D), insert axle (bolt) through the frame, and screw on supplied lock-nut completely with a standard 5/32" Allen wrench. Loosen the lock-nut 1/2 turn or until the brake system barely pivots (moves) freely. Use more of the supplied washers between the skate frame and the brake frame if needed.

The brake pad should be positioned as close to the skate as possible for maximum hand leverage. For your convenience, each HABIT™ frame comes with brake pad adjustment holes so that you can move the brake pad to a position closest to you skate.

Place the bungle cord hook on the top of the rear of your cuff at a suitable location. (see illustr. B). On leather cuffs and some K2 brand soft boot skates you may have to be creative by finding a place on a buckle, string eye hole, or any available opening.

Wear your skates as usual. Screw on each hand rod securely by hand (do not use a tool).

Center the strap with the largest part of the leg’s calf. (see illustr. D). Test the unit for proper fit (push the rod up and down). If the strap moves down any, tighten the strap or wrap tape around the rod just below the strap assembly to keep the strap from falling down.

HELPFUL NOTES: The hand rods have a quick release feature for easy storage, easy installation, and easy removal of your skates. Just screw or unscrew the rod by hand (no tool to carry).

For carrying convenience, place the skates over your shoulders and place the strap pad between your shoulders and the rod for comfort. ]

Each HABIT™ brake is interchangeable on left or right skates. To convert, just remove the rod holder and replace it on the other side of the brake frame. (be sure the locknut is secure).

Replacement brake pads (see illustr. C-1) are available from Controllerblade™ and dealers. Call for ordering new brake pads if your dealer is out of them. If your brake pads wear out quickly, that's good! An ineffective braking system will wear much slower. Replacing the brake pad should be the only maintenance ever needed for your high performance braking systems. If you frequently remove and replace the unit, you may need to replace the ¼” locknut as the nylon wears.

15 LIMITED 90 DAY WARRANTY Completion of the Warranty Registration Form #8-W gives you valuable rights. If you, the purchaser, complete your registration form and mail the original to us at Controllerblade™, address as described on package , within 10 days of your purchase or receipt of the braking system as a gift, your HABIT™ braking system will be covered by the Limited Warranty described here.

Limited Warranty: Subject to registration, your new HABIT™ braking system is warranted by Controllerblade™ to be free from defects in workmanship and materials within ninety (90) days from the date of original purchase from an authorized Controllerblade™ dealer, distributor, or the manufacturer.

If your braking system needs repair or replacement as determined by Controllerblade™ due to defect in workmanship or materials, return to the manufacturer within 90 days of your purchase. At Controllerblade's™ option, your braking system will be serviced free of charge when received at the factory freight prepaid, together with proof of purchase. A braking system furnished as a replacement will continue to be covered under the Limited Warranty, until 90 days from the date of the original purchase.

Controllerblade™ reserves the right to change product specifications without notice.

This Limited Warranty does not apply to ordinary wear and tear, an act of God, to damage resulting from abuse, accident, misuse, neglect, alteration, failure to perform maintenance as instructed, unauthorized repair or service, or from causes other than defects in materials and workmanship, including modification of the original product. This warranty does not apply to brake pad wear and paint deterioration.

Limitations on warranty: The warranty on your braking system is limited to the Limited Warranty set forth above. There are no other warranties which extend beyond the face hereof.

ALL WARRANTIES IMPLIED BY STATE LAW, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, ARE EXPRESSLY LIMITED TO THE DURATION OF THE LIMITED WARRANTY SET FORTH ABOVE. Some states do not allow limitations on how long an implied warranty lasts, so the above limitation may not apply to you. WITH THE EXCEPTION OF ANY WARRANTIES IMPLIED BY STATE LAW AS HEREBY LIMITED, THE FOREGOING EXPRESS LIMITED WARRANTY IS EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES, AGREEMENTS, GUARANTEES, AND SIMILAR OBLIGATIONS OF THE MANUFACTURER, DISTRIBUTOR, OR SELLER. THE COMPANY AND WARRANTOR (Controllerblade™) IS NOT LIABLE FOR LOSS OF TIME, INCONVENIENCE, COMMERCIAL LOSS, INCIDENTAL DAMAGES, INDIRECT DAMAGES, OR CONSEQUENTIAL DAMAGES IN CONNECTION OR RELATION WITH THE USE OF ANY HABIT™ BRAKING SYSTEM. Some states do not allow the exclusion or limit of incidental or inconsequential damages; therefore the above may not apply to you. There are no warranties which extend beyond the face hereof.

No agent, person, distributor, dealer (to include any Controllerblade™ dealer) or company is authorized to modify, change, or extend the terms of this warranty in any manner whatsoever. This warranty gives you specific legal rights. You may also have other rights which will vary from state to state.

IMPORTANT SAFETY NOTICE: Since other conditions affecting user safety will be beyond the control of the manufacturer, Controllerblade™ and its marketing agents and distributors cannot warrant the user's safety.

Money Back Guarantee: If the HABIT™ is not the most powerful and stable skate brake you have ever experienced, just send the product to us for a refund.

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Design Engineering Intensive efforts have been made by the inventor to develop prototypes. He has been testing these prototypes at least once per week since January, 1996. He has never had a prototype fail. He has experimented with many variations for activating a brake by hand, but concludes the first prototype ever built is essentially the design that works best - push down on a rod that pivots a ground engaging pad at the rear of the skate. Mounting the brake pad on the side of the skate may provide more power via self extraction, but protrudes too far sideways. Thus a rear mount is preferred.

Information on the HABIT™ has been submitted to the ACTT (Arkansas Center for Technology Transfer). They have assisted with design engineering and concluded that the HABIT™ is suitably developed, is practical, and the benefits claimed are valid.

Design engineering for improvements and fashion (in-line skating is fashion-conscious) should be accomplished by using CAD packages such as CATIA software from Dassault Systems, Paramus, NJ. Minimizing/consolidating the components for high-volume production with short cycle times tends to make the molds more complex. The product materials must withstand the potential oven-like heat of a car interior. To endure temperature extremes, attention should be given to the wall thickness, ribbing should be added, and the some components should have an increased radius.

Installation Notes The product can be installed onto the consumer’s own knee guard strap. The company will manufacture straps to be sold with the brake systems for use with or without knee guards. In the future, it may be appropriate for the company to manufacture knee pads designed to hold the rods.

If this is to be accomplished, many different rod lengths should be made available because the rod must protrude several inches above the rod strap to allow room for brake activation.

Suppliers Initially, the most essential supplies will be purchased at retail prices from Wal Mart.

These supplies include the fiberglass rods, brake pads, and bungie cords. Initially, the remaining supplies are to be purchased at hardware stores. Upon higher product demand, supplies are to be purchased wholesale by way of the Thomas Register in bulk to eliminate shortages. Brake pads will be custom made out of vulcanized rubber from a rubber company. Vulcanized rubber with a high durometer reading is needed instead of polyurethane because its coefficient of friction is less likely to be affected by different surfaces.

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Components for One HABIT™ Nuts

Bolts

Axle - Jam Nylock - ¼” Rod pivot - Jam Nylock - 5/16” qty. 2 Brake pad - Jam Nylock -

Axle - flush head - ¼” for 5/32” Allen Brake pad -

Washers ¼” Axle - qty. 6 brake pad - qty. 2 Rod Assembly Solid fiberglass rod: 21/64” (.328”) Rod ferrule (coupling nut / turnbuckle) 5/16” (1/2 way bored at 21/64”) Handle: soft rubber 1-1/8” x 15/16” x 1” Reflective tape Strap assembly Elastic strap Velcro Cushion pad Thread - heavy duty Miscellaneous Vulcanized rubber bake pad Aluminum flat bar for brake frame - 1/8" X 3/4" Thread-all - zinc coated - 5/16” Spacer for thread-all pivot point - 5/16” X ½” Bungle cord with hooks or appropriate sized torsion spring Epoxy glue Tools 5/32” wrench (optional) Printed Material Postcard 20 cent stamp (optional) Paper for instructions, warranty, etc.

Packaging Shipping Materials Brown wrapping paper or box Postal tape

for 5/32” Allen

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FEATURES: HABIT™ SKATE BRAKING SYSTEMS ⇒ Easy to use. No awkward steps to learn. No instructor needed. ⇒ Nothing to maintain a grip on. Just push (not hold) down to brake. ⇒ For skaters of all levels: beginner to advanced. ⇒ Slowing and stopping is possible in almost any body position. Do not have to slide a foot forward, raise any wheels, or hyper-extend a knee. Allows legs to remain parallel, the safest and most stable position when braking. ⇒ Usable on both skates combined for the most powerful and stable skate brake. ⇒ If used on both skates, one can additionally serve as an emergency brake. ⇒ Direct hand pressure ensures maximum force of brake pad onto skating surface. ⇒ Uses arm muscle groups where more energy is available after legs get tired when skating a length of time. User can skate for longer periods of time with more rigor due to less leg stress. ⇒ Allows skaters to skate faster with more confidence because less time is needed for slowing and stopping. Skaters can approach objects quicker because stopping is quicker. This allows for more efficient skating and faster distance accomplishments, to include racing events. ⇒ Installs easily and quickly: Just fasten the Velcro strap. No steps for strapless models. ⇒ When skating downhill, skaters need not waste time worrying, zigzagging, etc. Skaters can skate down steep slopes and narrow paths. Skaters can maintain stops (remain stopped) right in the middle of slopes. ⇒ Highest brake pad ground clearance available. Doesn't get in the way. Cannot be accidentally activated. No adjustment needed as pad wears. No parts on inner side of skate. Flush axle.

Higher brake pad ground clearance allows for a larger, longer wearing brake pad. ⇒ Works on rough surfaces such as gravel because pad friction does not affect ride. (Skater does not sit or ride on the brake as when using the standard heel and the ABT™ brake). ⇒ Reflective tape for higher visibility of motorists, bicyclists, and pedestrians. Warning sound of brake pad engagement to the surface warns pedestrians of skater’s approach from behind. ⇒ Promotes use and respect of the in-line skating sport in safety terms. Completely safe and compatible to use with all wrist and knee guards. Can be used with jeans, shorts, etc. ⇒ Easily retrofitted onto 99% of all skates. Can be transferred on new skates when old skates wear out. Each brake is interchangeable for use on left or right skates. ⇒ Ultra light-weight. Weighs about ½ pound. Strong. Mostly aluminum and fiberglass. ⇒ Simple by design. Little or no maintenance required. No cables or hydraulics. ⇒ The perfect wheel saver. Allows those expensive wheels to last longer. No wheel damage. ⇒ Does not interfere with wheel size changes or wheel changing.

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STATISTICALLY SPEAKING The top 10 skating states are as follows: Source: American Sports Data (914) 328-8877 1.)

2.)

3.)

4.)

5.)

6.)

7.)

8.)

9.)

10.)

California Texas New York Florida Ohio Michigan Minnesota New Jersey Pennsylvania Illinois

2,007,000 1,352,000 1,305,000 1,226,000 1,005,000 1,004,000 791,000 782,000 769,000 596,000

The top 10 skating cities are as follows: Source: American Sports Data 1.)

2.)

3.)

4.)

5.)

6.)

7.)

8.)

9.)

New York City 1,131,000 Los Angeles 803,000 Detroit 529,000 Houston 494,000 Miami 414,000 Minneapolis / St. Paul 360,000 Chicago 350,000 Cleveland 287,000 Boston 266,000

Region: source NSGA (National Sporting Goods Association) (708) 439-4000 New England Middle Atlantic East North Central West North Central South Atlantic East South Central West South Central Mountain Pacific

6.5% 19.2% 15.3% 6.2% 14.8% 2.2% 9.4% 3.3% 22.1%

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SALES 1995 Sales Share - Top 6 States: SMRG (Sport Marketing Research Group) (617) 277-5660 California New York Pennsylvania Texas Florida Illinois

13.3% 9.6% 7.0% 6.4% 4.4% 4.3%

1995 Sales Share of Top 6 Metro Markets: Source: SMRG New York Los Angeles Philadelphia Chicago Dallas-Ft. Worth

7.3% 6.6% 4.0% 3.3% 2.5%

1995 Skate Place of Purchase: Source: NSGA 1.)

2.)

3.)

4.)

5.)

6.)

7.)

8.)

Sporting Goods Stores Discount Stores Specialty Shops Department Stores Other Outlets Catalog Showrooms Mail Order Pro Shops

Average Price $ 93.39 Average Price $ 40.17 Average Price $125.40 Average Price $ 41.93 Average Price $ 50.87

1995 Skate Sales by Category (dollars): Source: SGMA (Sporting Goods Market Association) Recreation Fitness Roller Hockey Aggressive/Stunt Racing/Speed

65.0% 21.0% 8.5% 5.0% .5%

Primary Use of Inline Skates: Source: SMRG Recreation Fitness Roller Hockey Transport Aggressive / Stunt Racing

90% 13% 9% 3% 2% 1%

Participants come from every social and economic background.

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Education of Household Head (In-line Skaters): source: NSGA Less Than H.S. High School Some College College Graduate

2.8% 19.0% 37.0% 41.2%

Household Income: source: SGMA Under $15,000 $15,000 - $24,999 $25,000 - $34,999 $35,000 - $49,999 $50,000 - $74,999 $75,000+

18.4% 13.9% 11.7% 14.1% 24.6% 17.3%

All Participants: Age: Source: NSGA Under 14 14-17 18-24 25-34 35-44 65+

44.7% 13.7% 11.0% 16.0% 10.1% .6%

Gender of Frequent Participants: Source: SGMA Male 62.5% Female 37.5% Race: Source: SGMA White Black Hispanic

72.6% 14.4% 11.8%

Specific Legal Terminology 140-a. In-line skate. A manufactured or assembled device consisting of an upper portion that is intended to be secured to a human foot, with a frame or chassis attached along the length of the bottom of such upper portion, with such frame or chassis holding two or more wheels that are longitudinally aligned and used to skate or glide, by means of a human foot and leg power while having such device attached to each such foot or leg. “brake” shall mean a part which is secured to an in-line skate, as defined in paragraph (b) of subdivision one of section three hundred ninety-one-m of the general business law and intended to enable the user to control his or her speed and/or come to a stop.

“Warning instruction” shall mean a label, hang-tag, shield or plate with substantially the following notice printed in clear and conspicuous type: “WARNING! REDUCE THE RISK OF SERIOUS INJURY, AND ONLY USE THESE WHILE WEARING FULL PROTECTIVE GEAR - HELMET, WRIST GUARDS, ELBOW PADS, AND KNEE PADS.”

End of Business Plan …………………………………………………………………………