Annual Report 2015 1

Table of Contents

Mission Statement

Executive Partners 3Product Overview 4Market Share Data 5Evaluation of Gnosis Pricing 6 Compensation Plan 7 Brand 8 Advertising 9 Competitive Environment 11 Overlook for Future Quarter 6 Situation Projections 13 Year-by-Year Plan 14

Our mission is to supply the best high-end microcomputers that are efficient, elegant and easy to use

and to put our customers first by providing the highest quality service in the industry.

2

Executive PartnersGreg RolandPresident

Ian BrownVice President of Accounting and Finance

Lindsey JenksVice President of MarketingVice President of Manufacturing

Corinne GirouxVice President of Human ResourcesVice President of Sales Management

Jenna StaubVice President of Marketing Research

3

Product Line Overview

Elite 2.0

Trek 2.0

This new and improved desktop computer was introduced in Quarter 5. It added a high speed network/internet component and continues to add the security and software features that our past brand, Gnosis Elite, offered. Elite 2.0 also offers a very high capacity hard-drive, which is ideal for business pro-fessionals looking for the highest valued option. Past Brand: Gnosis Trek. Price: $5,000

This laptop contains an extremely long-lasting battery and is a great option for anyone working on the road who still wants a high quality computer! This brand is an upgrade from our previous brand, Gnosis Trek, and now offers a higher speed network and a very high capacity hard drive.Past Brand: Gnosis Trek. Price: $3,700

4

Where?Our sales offices are currently located in New York and Paris, and in Quarter 3, we launched a web center for online sales. In New York, we are one of four brands competing in the microcomputer industry, and in Paris, we are one of three brands.

Market Share and Data

The traveler market represents our area of greatest growth over the last five quarters. The Gnosis Trek first entered the market in quarter 3 and since then the Gnosis Trek and Gnosis Trek 2.0 have grown to make up the third largest market share. After a quick start in the second quarter the Gnosis Elite lost a sizeable portion of its market share as our competitors began to focus more on mercedes clientel and emmulate our computer design. Since then however, Gnosis has increased its market share among mercedes customers steadily to levels consistent with our competitors.

5

Evaluation- Pricing

6

These charts show the customers’ price judgment of each company’s top brand in the respective segment in quarter 5. Iris is not shown in this data because they did not sell a computer targeted at either of these markets. A score of 100 means the customers are willing to pay more while a score of 95 means the product is appropriately priced. The Gnosis Elite 2.0 received a score of 95 meaning that our price point was the best possible, while no other company appropriately priced their product. For the traveler market, the Trek 2.0 scored a 93, which while slightly over priced, is the closest to being appropriately priced. In every quarter we received feedback, our Elite computer received at least a 95 every time. Our Trek computer price rating improved every quarter, reaching 100 in quarter 6. We consistently priced our product the most appropriately.

Evaluation- Compensation Plan

7

In keeping with our company mission of providing the best service, we ensured our employees were well compensated. Our compensation package was always top 2 for Sales Force and always top 3 for Factory workers. Each quarter we increased our salary, health benefits, vacation and pension offerings as workers demanded. These Graphs show the productivity of our sales force and factory workers over time compared to the industry average. The workers’ productivity is a result of the compensation package that the workers receive. Gnosis has always been a leader in worker productivity and have consistently had productivity levels higher than the industry average due to our commitment to high employee satisfaction.

Evaluation- Brand

8

These graphs show how our Elite and Elite 2.0 brands were judged by mercedes customers. A score of 70 or above is considered a good product. Our judgment remained steady with a score of 73 from quarter 2 to 4 since the Elite represented the highest quality product possible and improvement was not possible. With release of the Elite 2.0 our product jumped to a rating of 79, representing a favorable response to the implementation of our research and development. Our brand judgment was a close second behind the market leader in quarter 5. To further show the quality of our brand, our highest end computer, the Elite 2.0, rated in the top four grouping of competitors in a target market that we didn’t even market to.

These graphs depict how the Trek and Trek 2.0 were judged by traveler customers. Data for this does not begin until the third quarter, when the Trek was released. From its introduction, the Trek represented the pinnacle of quality for travelers, receiving the highest rating among computers designed for travelers with a rating of 69. With the unveiling of the Trek 2.0 in quarter 5, our brand judgment jumped to 80, the highest rating received by any computer in the traveler market. Our Trek line started out third worst in brand judgment but quickly elevated to market leader in every quarter thereafter.

Evaluation- Advertising

Our advertisements have improved to provide potential customers with appealing information about our products. Our advestisement for the new and improved Elite 2.0 has moved into the 3rd most appealing

advertisement to mercedes customers. The Trek 2.0 advertisement has consistently been a favorite among travelers and is currently the 2nd

most appealing advertisement.

9

Evaluation- Advertising

Here you can see our advertising placement plan. We chose to primarily focus on placing many ads in less

expensive mediums. Our Trek 2.0 ad was very

successful in the New Venture Magazines and

Leading Trade Journals. We also have the 3rd most total

inserts in the market.

10

Strengths WeaknessesPositive View of Brands

Trek 2.0 was rated highest in Traveler segment

Large R&D investments

Leader in compensations for workers

Poor demand projection

Conservation in the beginning when opening stores

Conservation in the beginning when starting new lines

Advertising was not always efficient

OpportunitiesPossibility for creation of a high quality

Workhouse Brand

Institute micro-segmentation to better tailor computers

Expansion opportunities in Tokyo

R&D leading to new technologies and upgrading our current Brands

ThreatsLITE Inc. owning large market share

Increased transportation costs

High costs of R&D

Rising costs of productivity

Competitive Environment

11

12

It’s just the beginning...

13

Quarter 6 Situation Projections

Earnings Per Share

$78

$6.2m

315%

Increase in Retained Earnings

Sales Revenue Growth

14

Year 1-R&D investment for speed and power improvements in Elite product line and style improvements in the Trek product line-Increase of sales and service people proportionately to market demand-Continue to offer above average compensation plans with the most benefits-Begin research for potential vertical expansion to produce individual components and control shipping-Increase production capacity and capabilities

Year 3-Launch the Gnosis Perform to attract the workhorse market segment-Identify new cities to expand beyond the scope of the game -Increase advertising budget to keep demand high for improved and new brands

Year 2-Move into Tokyo and aim to provide the most appealing brand to the mercedes market segment-Micro-segment the mercedes market to provide computers that fufill more specific needs such as engineering, manufacturing and communication-Start vertical expansion plan