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Business Description

COFFEE NEWS USA, Inc. ("we" or "us") was, incorporated in Maine, On January 27, 1994, and maintains its principal business at One Cumberland Place, Suite 102, Bangor, Maine 04401. We conduct business under our corporate name and the mark "Coffee News USA" only, our agents for service of process are listed in Attachment B.

Prior Experience

On February 5,1996, we purchased the exclusive rights to franchise Coffee News in the continental United States, Alaska, Puerto Rocco, Hawaii, Central America, and the Caribbean from'2703203 Manitoba, Inc. d/b/a Coffee News, 54 Harlow Bay, Winnipeg, Manitoba R2C 5N5, a corporation of the Province of Manitoba, Canada. Since 1988, 2703203, Manitoba, Inc. has licensed the distribution of Coffee News in most of the prime population areas of Canada and is seeking to establish a worldwide network in a variety of languages. We are; the first to acquire the rights outside of Canada. Recently, other parties either have or are in the process of acquiring franchise rights in other countries, 2703203, Manitoba, Inc. provides us weekly copy for Coffee: News which we distribute to our United States publishers every 8 weeks. The Weekly Copy provided to you contains all material to be, published' except advertising copy and local events listed under the "What's Happening" section, which you will provide. Due to language differences and local customs. We are authorized to edit the copy for the United States market. You are not authorized to edit the copy without our written permission to do so. We purchased a printing company, July 1, 2008, that primarily prints Coffee News editions for our publishers primarily in North America called Coffee News Printing, LLC and located in Houlton, Maine^ The printing company is Offering commercial printing services to local communities and has added a FedEx Service center to the location. On October 21, 2008, William Buckley purchased 2703203 Manitoba, Inc. located in Winnipeg, Manitoba. This company holds all the rights and marks for Coffee News worldwide and holds all agreements with publishers of Coffee News in Canada and 7 other countries. The shares of 2703203 Manitoba; Inc. are 100% owned by William A. Buckley. Coffee News USA, Inc shares are 45% owned by William ,A. Buckley, 45% Owned by SuerAnn Buckley and 10% owned by John B. Buckley: The Shares of Coffee News Printing, LLC are 51% owned by William A. Buckley and 49% Owned by Garrett Guernsey, the Chief Financial Officer of Coffee News USA, Inc. On January 1. 2015, Coffee News USA, Inc., entered into a marketing agreement with Darter Specialties, Inc., P; 0. Box 188, Cheshire, CT 0641010 provide exclusive rights within the geographic boundaries of the United States, to produce, inventory, promote, sell and ship Products using the Coffee News Marks, in exchange for a percentage of the sale proceeds to publishers. Certain amounts of unsold existing inventory from Coffee News USA will be sold by Darter Specialties and the proceeds remitted to Coffee News USA, Inc. on. A monthly basis. On or about March 1, 2Q17, we entered into; a joint promotion agreement with KVH Media Group, a division of KVH; Inc. to promote the, sale of a daily digital publication in 34 different languages to hotels and leisure Companies through our franchisees in North America in exchange for assisting Coffee News in the sale of Coffee News franchises worldwide. This arrangement gives Coffee News USA, Inc. the exclusive rights to market a daily publication called, “Good Morning News” primarily in North America, but also in any international countries where we currently have franchises. KVH, Inc. is headquartered in 50 Enterprise Center, Middletown, Rl 02842 USA; CN FDD;CA.2019 3 We have no parents or affiliates. Neither we nor 2703203 Manitoba, Inc. have ever offered franchise in any other tine of business. Our company was incorporated under the name of Ergonomic Consulting Services, Inc. on January 27, 1994 and operated under a d/b/a of Coffee News. Effective on May 25, 2004, our name was changed to Coffee News USA, Inc. d/b/a Coffee News. This was a simple: name change and all other aspects of our company remain unchanged. Other than laws or regulations that apply to businesses generally, we know of no regulations specific to this industry which may affect the operation of your franchise.

Business Offered

We sell to you the right to publish Coffee News (the. Periodical) and to distribute the Periodical to restaurants and other local establishments within a specified geographic area which is your exclusive territory., "You" or “Publisher;” represents the franchisee, or in the event of a corporation, limited partnership, or other entity, "you" represents the owners of the franchisee or the Publisher. You will generate revenue through sales of advertising space on weekly editions Of the Periodical. Food-related businesses such as restaurants distribute Coffee, News as a service to their clientele and do not pay or receive any fee for this service. There are no limits as to where you may sell advertising. On July 3; 1995, we acquired and operated 4 franchises in the Greater Bangor, Maine area until October 1, 2003 when they were sold. On August 1, 2012, we reacquired the 4 franchises in the Greater Bangor Area in Maine and have added a S"' franchise for Waldo County, Maine. On June 1, 2017, we assumed control of five (5) franchises in Maine due to the sudden death of the franchisee. Two (2) have been; sold to new franchisees and three (3) are now owned by us, bringing our company owned franchises to eight (8). Since February 5, 1996, we have offered franchises tor sale. We do not operate any other line of businesses in this corporation. The Periodical will compete for readership, display space, and advertising revenue with other print media. The publication is designed and intended for readership in restaurants, coffee shops, and other public places where patrons, sit and eat. We know of no other periodical that has this specific focus. You will compete for advertising revenue with all other media forms in the territory and there is no reason to believe you will be insulated in any way from the Competition. The following strategies employed by us are new to the United States market, but these strategies have been used extensively in Canada since 1988: 1) The Periodical is designed specific|(y for use in foodservice establishments. 2) only one advertisement is allowed from each industry per edition. 3) Restaurants are not allowed to advertise except in seasonal editions' during the high season. 4) All advertisements are the same size and are arranged to ensure maximum readership. 5) A new issue is published and distributed each week and placed in holders uniquely designed to display the Periodical,

Initial Fees

You must pay an initial franchise fee of $9,500.00 for the first franchise that is due upon signing the initial franchise agreement, $500.00 of which must be paid to us for document preparation including without limitation draft of the franchise agreement. The $500.00 shall be deducted from $9,500.00 upon signing the initial franchise agreement. For this, you will receive weekly copy within 14 days of signing the agreement with additional copy mailed in 8-week increments (no later than 5 business days prior to the end of the following 8-week period) which effectively CN.FDD.CA,2019 represents reimbursement for weekly copy during the initial 3 month period of the agreement. Agreements may include up to the maximum 20 franchises permitted per publisher. A fee of $7,000.00 for each additional franchise is due at the time of signing the agreement for additional franchise(s), upon our sole discretion, we may offer short term sales promotions to existing Publishers who wish to purchase additional franchise unit(s) from, time to time. In the event that you notify us that you wish to revise the start date of business and postpone; it by one month or more subsequent to your receipt of the initially executed franchise agreement, you need to pay for additional $1,000.00 to us to obtain such extension and hold your proposed licensed area for such one or more months before you pay the full amount due under the agreement. All fees are non-refundable. There are no other initial fees or payments required for services or goods before the date of the agreement. The date of the agreement is considered your date of opening your franchise business. Three months after your opening you will pay a required weekly fee for the continued receipt of copy or content for your periodical. The weekly fee is: more fully explained in Item 6. Initial fees and payments will be due in full upon our completion of all pre-opening obligations.

Financing

After one year under your agreement, we may finance additional purchases of franchise territories through Coffee News USA, Inc. at competitive rates; and terms pursuant to a Promissory Note. If you want to buy more than one franchise, we may finance for up to three more franchises initially as long as you have good credit and net worth of at least $100/000, 00. We also accept all major charge cards in 'payment. Interest will be at 5% APR (Annual Percentage Rate). The term will vary based on the number of franchises purchased and the financing options that you may select; there Is no prepayment penalty. We will hold any such licensed rights to the licensed territories granted Under the Coffee News License Agreement as security until you have paid your Promissory Note in full. There are no waivers of your legal rights and you are not barred from asserting a defense against us. We have no current practice or interest to sell, assign or discount to a third party all or part of the financing arrangement. If you do not pay on time, you hereby agree that Coffee News can call the loan and demand immediate payment of the full outstanding balance and obtain court costs and attorney's fees if a collection action is necessary. If Publisher / Debtor is a corporation, professional corporation, partnership, limited liability partnership, or a limited liability company, a Guarantee of Performance by the Principal stockholder(s), general partner(s), or member(s), aside case may be, must be executed. For those with excellent credit as evidenced by a credit report from Equifax, Experian or Transunion or similar credit rating agencies in other countries, and with verifiable extensive advertising or Similar sales experience including entrepreneurial management experience of at least 2 years, you may be eligible for full funding for the purchase of a minimum of four or more franchises, subject to the initial payment of the training fee as more fully explained in Item 11;. You will be required to attend the next Coffee News College at the time of purchase, and: you will be required to use the printing services of Coffee News Printing, Inc. during the term of the loan. The interest rate will be 5% simple interest with weekly payments for principal and interest for up to 48 months and the weekly fees: beginning at the start of the fourth month under the agreement by credit or debit card or electronic funds transfer in accordance With Item 6, (Other Fees). GN: FDD.GA.2019 although we offer direct and indirect financing, we do not guarantee your note, lease, or obligation associated with any financing plan^ See Item 22, Coffee News License Agreement as exhibit A for a specimen copy of the Promissory Note7

Franchisee Revenue and Profit

The FTC's Franchise Rule permits a franchisor to provide information about the actual or potential financial performance of its franchised and/or franchisor-owned outlets, if there is a reasonable basis for the information, and if the information is included in the disclosure document. Financial performance information that differs from that included in Item 19 may be given only if: (,1) a franchisor provides that actual records of an existing outlet you are considering buying; or (2) a franchisor supplements that information provided in this Item 19, for example, by providing information about possible performance at a particular location or under particular circumstances. Coffee News is a home-based business, so there is generally no need to rent or lease space for an office,. Some basic weekly costs include without limitation printing, delivery, and weekly fees payable to us. Given the fixed amount of weekly fees, the Publisher's revenue is dependent upon how many editions you are operating, and your ability to effectively sell ads and the network in the local community. Factors that may affect your individual performance include without limitation) the variable costs (i.e., stands, vehicle and fuel, office equipment and supplies, networking dues, phone, internet, software, business cards, marketing materials, apparel, ad design & layout, promotional products, etc.); (2) your skill set and previous business experiences; (3) length of your operation of the; franchised outlets; (4) local economy: (5) readership that may vary |n_ different seasons; (6) number of paying ads sold each week- (7) Ad rates; and (8) degree of local competition.