SAMPLE TERM SHEET

FOR PRIVATE PLACEMENT OF SECURITIES

OF ABC, INC.
The following information describes, in summary form, a proposed private placement of Shares of
Common Stock of ABC, Inc. (the “Company”) a _______________ Corporation, incorporated on
___________, 2005 with its principal office at ________________________________. The Company
was established for the purpose of ____________________________________________________.

The Company is in its start-up phase. The Company has minimal assets and minimal revenues to date
and is therefore a high-risk investment. This offer can only be made in states in which the offering is
qualified or an available exemption from registration exists.

1. Description of offering: Up to 200,000 Shares of Common Stock (the "Shares"), $0.25 per share.
Shares are offered in minimum units of 20,000 shares ($5,000), although the Company, in its sole
discretion, may sell less than the minimum unit. The total amount of the offering is $50,000.

2. Common Stock: Holders of Common stock are entitled to one vote for each share held of record on
all matters submitted to a vote of the stockholders. Holders of common stock are entitled to receive
ratably such dividends as the Board of Directors may declare out of funds legally available, although
the Company has never paid dividends on the Common Stock and the Board of Directors does not
anticipate paying any such dividends in the foreseeable future. In the event of a liquidation or
dissolution or winding up of the Company, holders of Common stock are entitled to share ratably in
all assets remaining after payment of all the Company’s liabilities. The holders of Common stock
have no preemptive rights and no right to convert their Common stock into any other securities.
There are no redemption or sinking fund provisions applicable to the Common stock. All outstanding
shares of Common stock are validly issued, fully paid and non-assessable.

3. Current Capitalization and Principal Shareholders: The capitalization of the Company consists of
5,000,000 Shares of Common Stock, of which 2,500,000 were issued to the founder and President
James Butter, and 100,000 Shares of Common Stock were issued to other Shareholders.

4. Restricted Securities. The securities being purchased have not been registered pursuant to the
Securities Act of 1933, as amended (the “Act”) or any state securities laws and the holder must
represent to the Company that the securities have been acquired for investment purposes and not with
a view to distribution within the meaning of the Act and the rules and regulations thereunder. The
holder of the securities must agree not to effect a disposition of the securities unless or until (1) a
registration statement under the Act and applicable state securities laws pertaining to the securities
has become effective, or (2) the Company has received an opinion of counsel satisfactory to it that
registration under the Act and applicable state securities laws is not required in connection with such
disposition.

5. Use of Proceeds: The following is an initial projected use of the investor funding being raised in this
initial offering of $50,000 (not reflecting Offering expenses):

NOTE: THIS TERM SHEET IS OFFERED AS AN EXAMPLE ONLY. YOU SHOULD

CONSULT WITH YOUR PROFESSIONAL ADVISORS BEFORE USING ANY DOCUMENTS.
 ABC, Inc. Budget
[Numbers and categories are illustrative only]

Items of Expenditure Maximum

Professional Services $ 20,000
Direct Marketing Campaign $ 5,000
Distribution $ 5,000
Administrative Expenses $ 10,000
Working Capital $ 10,000
TOTAL $ 50,000.00

The expenditures set forth above are best estimates by the Company and may be subject to change if
management determines that it is in the best interests of the Company to reallocate its resources.

THERE WILL BE NO ESCROW OF FUNDS AND ALL SUBSCRIPTION MONEYS WILL

BE IMMEDIATELY AVAILABLE TO THE COMPANY FOR ITS OPERATING
EXPENSES.

6. Management. James Butter, President and CEO. Mr. Butter started ABC, Inc. after over twenty
years in the manufacturing business. In 1975, Mr. Butter started XYZ, Inc., a company that turned a
metal hole-punching factory into a leading provider of hole punching for municipalities. After selling
the business in 1995, Mr. Butter joined Fliegen Consulting, a Seattle, Washington consulting
company, applying his experience with hole punching and metal alterations. From 1995 to 2003, Mr.
Butter served as a management and strategic consultant to companies such as Prestone, Inc., and True
Link Fence, Inc. In January of 2005, Mr. Butter started the new venture, ABC, Inc. to fill an unfilled
need for metal alteration work.

7. Method of Subscribing. The investor must complete and sign the subscription agreement and deliver
a check for the amount of the subscription made payable to “ABC, Inc.”

8. Qualifications for Investment. At this time, the Company is primarily seeking Investors who are
“Accredited Investors” as that term is defined in Rule 501(a) of Regulation D, Securities Act of 1933,
as amended, and a limited number of qualified investors who have a net worth of at least $250,000 or
an annual income of at least $75,000 (a ”Qualified Investor”).

9. Exit Strategies. The Company is well positioned to grow and be an attractive target to be bought or
merged into or with another company. In order to seek capital as the Company grows, ABC, Inc.
may register its shares with the SEC pursuant to the Securities Act of 1933, at which time the
Company intends to offer an exchange of old Common Shares with new registered shares.

10. Further Information. The Company will answer all questions concerning the offering and provide
requested information to all interested investors. Please contact James Butter, President, at (555) 123-
4567.

NOTICE: THIS TERM SHEET IS NOT AN OFFER TO PURCHASE TO SECURITIES. SUCH

AN OFFER MAY ONLY BE MADE THROUGH A PRIVATE PLACEMENT MEMORANDUM
AND MAY ONLY BE MADE IN THOSE STATES WHERE ALLOWABLE.

NOTE: THIS TERM SHEET IS OFFERED AS AN EXAMPLE ONLY. YOU SHOULD

CONSULT WITH YOUR PROFESSIONAL ADVISORS BEFORE USING ANY DOCUMENTS.