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I. DESCRIPTION OF OPERATION <br />Automated Hot Food Systems was initially founded over two years ago to <br />introduce, to the public, the "Hot Choice Tombstone Diner". Our main goal was to <br />place and sell "Hot Choice Foods" with purpose and dedication to a successful <br />venture. In doing so we have expanded our territory from Orange County to include <br />Riverside and San Bernardino County. To date we have purchased neazly five <br />hundred various vending machines, which include Pepsi, Coke, Snack, Coffee, Ice <br />Cream and the "Hot Choice Diner". We have placed these various machines in over <br />80 locations across the counties. <br />Along with the experience and knowledge we have gathered in the past two yeazs <br />we have focused recourses to provide consumers with "Convenience". We aze very <br />pleased and enthusiastic about the direction Automated Hot Food Systems is headed. <br />We aze constantly pursuing the placements as well as the acquisitions and ownership <br />of all vending and food services at any given location. <br />The question was posed as how to increase our profitability and remain steadfast <br />to the placement and development of the "Hot Choice Diner". The answer to our <br />concerns has come in the way of acquisitions. Since October 1, 2003 Automated Hot <br />Food Systems has been aggressively pursuing vending accounts and placing vending <br />equipment such as bottled and canned soda machines, snack, coffee and other <br />vending equipment. Our first vending route generated over $60,000 in revenue in the <br />first six months. Our current accounts have paid for themselves and generated <br />positive cash flow. Our combined accounts should generate approximately $450,000 <br />in gross sales this year. <br />Automated Hot Food Systems is actively pursuing additional opportunities in the <br />vending industry. Over the last six months, Automated Hot Food Systems has <br />increased our gross sales by over one thousand percent. We expect to add to our <br />current vending accounts and incorporate the Hot Choice Diner to most of these <br />locations. None of the vending accounts mentioned currently have the "Hot Choice <br />Diner". Through our efforts we have established excellent relationships with <br />companies like Coke, Pepsi and Starbucks Coffee and aze now seen as a viable force <br />in the food and vending industry. In just six short months, Automated Hot Food <br />Systems has broken into the top ten for vending companies in Orange County for <br />gross sales. Our goal is to be in the top five by December 2004. <br />