TaTo Cakes - Amazing, ready to serve, all natural,

gourmet potato cakes from TaTo Company

Victor Dergunov|

Business Plan Proposal

Some eat to live and others live to eat, but the important thing is

we are all what we eat. Food brings us comfort, food brings us joy, and

everyone should have a delicious TaTo Cake to enjoy.

2 TaTo Company

Table of Contents

Section Page

Executive Summary 3

Vision/Mission 4

Value proposition 4

Product Line 5

Industry Analysis 5

Porter’s Five Industry Analysis 7

Strategic Position/SWOT Analysis 9/10

Target Market/Marketing Plan 11/12

Operation Management/Technology Overview 15/16

Management (Team) 16

Social Responsibility & Sustainability 18

Financial Narrative 19

Development Plan 21

Business Strategy 21

Milestones 22

Exit Strategy 23

Ask & Deal 24

Appendix

Production Projected Costs & Specifics 25

Ingredient Projected Costs & Specifics 25

Necessary Equipment and other Startup Costs/Technology 26

Development Goals 27

Important Milestones 27

Income Statement (Year 1 Monthly) 28

Income Statement (Years 1-5) 29

Cash Flow Statement (Year 1 Monthly) 30 Cash Flow Statement (Years 1-5) 31 Balance Sheet (Years 1-5) 32

Use of Funds Statement 33

Breakeven Point Analysis 33

3 TaTo Company

Executive Summary

The Problem - A major problem concerning the food industry is its lack of quality, all natural

foods in the frozen section of the supermarkets. It seems that everything from hot pockets, to

frozen pizzas, to TV dinners is low quality, bland in flavor, and is filled

with preservatives, unhealthy fats, high levels of sodium and other

unhealthy ingredients. This is evident as rates of obesity, diabetes and

other unhealthy conditions amongst Americans which have clear links

to unhealthy foods are on a perpetual rise. When we examine the potato

pancake segment, we notice that most products in this segment are low

quality, boring, and tasteless. Although the potato pancakes segment is

not all that prominent at the moment, it has enormous potential which can be unlocked by

introducing the right products to the appropriate consumers. After all, people love potatoes, they

are spongy, tasty, comforting and can be healthy when prepared right. The potential for TaTo

Cakes is essentially limitless, as literally tens of millions of Americans can become loyal

consumers of our products within a few short years.

The Solution – Our solution is to introduce an amazing new product that bridges the world of

incredible quality and taste associated with fine dining and the low cost, easy access and

convenience of a frozen food product. The TaTo Cake, a delicious, gourmet potato cake infused

with incredible all natural ingredients and flavors will

revolutionize the potato world and will have an enormous impact

on the industry similar to the French fry, but in a much more

sensational manner. The introduction of this product essentially

unlocks a blue ocean environment for TaTo Company (TTC) to

operate and grow in. TTC will provide consumers with incredible

products, unrivaled in taste and quality and will unlock a blue ocean of potential customers and

growth.

The Ask & The Offer – TaTo Company is offering a 25% stake in the company for $350,000.

Key Points – TaTo Company begins this business proposal by offering all potential consumers of

our products a significant value proposition that provides enormous worth to their lives. Then,

our plan clearly outlines TTC’s mission and vision statements and how the principles that guide

our company align with the interests of society and every day Americans. Further, the plan

provides a detailed analysis of the underlying frozen food segment and performs a competition

assessment. Also, the document discusses our target markets and our thorough 3 stage marketing

strategy. The plan also outlines TTC’s operations and management structure. Additionally, our

proposal provides detailed financial projections going out 5 years into the future that offer

significant insight into our company’s future prospects. Finally, the underlying document

4 TaTo Company

provides comprehensive information regarding the future profitability, valuation and exit

strategy concerning TaTo Company.

Vision & Mission

Vision/Mission - Our Vision is for a healthier world in which people will consume wholesome,

all natural products. Our vision is a healthy, all natural, great tasting potato cake on every

dinner plate and in every lunch box. Our mission is to provide our customers with a choice to

consume an optimal product, a product that is quick and easy to prepare, is healthy, great tasting,

all natural, and inexpensive.

Value Proposition

Value Proposition – TTC delivers enormous

importance to all potential customers by providing

them access to our amazing products. Most

competing products, such as frozen pizzas, hot

pockets, TV dinners, and other potato pancakes are

often bland, high in fat and sodium and are made

with low quality ingredients which include

additives and preservatives. However, our TaTo

Cakes offer customers great taste, high quality ingredients, amazing all natural flavors, as well as

nutritional and health benefits.

Product – TaTo Cakes are extremely easy to prepare, simply heat in an oven, pan, fryer or

microwave. The products will be 95% cooked. The consumer will simply finish cooking the

product the last 5% using any one of the proposed cooking methods. This will only require 5

minutes in a preheated oven, the longest of the four cooking methods. TaTo Cakes will be

available to order online, and will be accessible at many health food store and supermarket

locations. Remarkably Tato Cakes will cost less on a per weight basis than any of its closest

competing products.

5 TaTo Company

Product Line

Products – The first product TTC will offer is going to be The Healthy

Snack Spinach & Zucchini TaTo Cake, which will have spinach and

zucchini as its primary flavors but will also have secondary flavors, such as

parmesan cheese and garlic. The second product TTC will bring to market

will be The Gourmet Sundried Tomato & Goat Cheese TaTo Cake. The

third offering that TTC is going to deliver is going to be The Pizza Time Basil & Buffalo

Mozzarella TaTo Cake. All three of these creations will be released within the first year of

operations. Additional flavors will be launched according to TTC’s production schedule which

plans on releasing a total of at least 8 TaTo Cake flavors within the first three years of

operations.

Industry Analysis

Industry Highlights

Total Frozen Food Sales (2015) $53 Billion

Revenue Growth Year over Year 5.26%

Best Selling Item Ice Cream $1.52 Billion

Most Significant Player Nestle USA

Sales of Nestle USA Pizza Segment $448.09 Million

(Statista.com)

Industry Overview - The frozen foods market in the U.S. is a huge industry in which frozen food

sales came in at about $50.37 billion in 2014. Sales rose 5.26% to $53 billion in 2015. The

biggest portion of this industry, the frozen prepared food segment showed revenues that topped

$14 billion in 2014. Frozen pizza and snacks came in at $6.2 billion for the same time period.

Brand specific DiGiorno posted impressive sales of just over $1 billion, Red Baron came in at

TaToCake Names & Flavors

Healthy Snack Spinach & Zucchini White Potatoes Spinach Zucchini Parmesan Carrot

Gourmet Sundried Tomato & Goat Cheese Russet Potatoes Sundried Tomato Goat Cheese Pecorino Romano Rosemary

Pizza Time Basil & Buffalo Mozzarella Russet Potatoes Buffalo Mozzarella Tomato Parmesan Basil

Roasted Red Peppers & Swiss Cheese Fingerling Potatoes Swiss Cheese Roasted Peppers Parmesan Thyme

Shrimp & Artichoke Dip Fingerling Potatoes Jumbo Shrimp Artichoke Hearts Pecorino Romano Spinach

Classic Beef & Broccoli White Potatoes Tender Flank Steak Broccoli Pecorino Romano Rosemary

Breakfast Sausage & Sage Sweet Potatoes All Natural Breakfast Sausage Sage x x

Seafood Feast Clams & Muscles Purple/Blue Potatoes Clams Muscles Parmesan Parsley

6 TaTo Company

$597 million and Weight Watchers sales were $257 million in 2014. Additionally, 15% of U.S.

consumers rated the frozen foods section as extremely important to them when purchasing food

products (Statista.com).

Competition – TaTo Cakes are in a blue ocean category and do not have any real, direct

competition. There are no gourmet, multi flavored, all natural potato cakes or pancakes in the

frozen food market right now. Consumers currently have access to plain, bland, boring, frozen

potato pancakes or they may occasionally have access to something that can be considered as a

gourmet potato pancake at an upscale restaurant. Our product bridges this gap in the market

place by combining the best of two worlds, the convenience, affordability, and easy access of a

frozen foods product and the high quality and gourmet flavor of an upscale restaurant product.

Other relatively closely competing products include frozen pizzas, lean pockets, frozen French

fries and other frozen meals and snacks. The reason we identify frozen pizzas and products such

as lean pockets as our closest competition as opposed to tater tots, hash browns or other potato

pancakes is due to two reasons. First, TaTo Cakes come in 8 ounce sizes and can be considered a

meal or a considerable portion of one, much like a comparative portion of two hot pockets or

several slices of pizza. Second, TaTo Cakes have cheese, vegetables, meats and sea food and

come in several exciting, colorful flavors. This factor also puts TaTo Cakes in a category closer

to pizzas which share some of these diverse flavors and toppings as opposed to tater tots and

hash browns which are just plain potatoes in most cases.

(Statista.com)

0.00

200.00

400.00

600.00

800.00

1,000.00

1,200.00

Frozen Pizza Sales 2014

Data in Millions

7 TaTo Company

Porter’s Five Industry Analysis

Threat of New Entrants - The threat of new, competing products always exists. However, most

companies have demonstrated that they are mainly concerned with maximizing profits as

opposed to producing high quality, healthy, all natural

products. Furthermore, a company would need to have the

vision and expertise to create a product that could truly be

competitive with TaTo Cakes.

Threat of Substitutes - Threats of substitutes constantly

exist, however, there are no close substitutes available to TaTo Cakes. Any new competitors

would find it difficult to deliver similar quality at such a low price point, therefore, would not

appear to truly challenge TTCs market position.

Bargaining Power of Buyers - Since there are no direct competitors that offer similar taste,

quality and attributes and the product is priced relatively cheaply when compared to its nearest

competitors, customers have little or on bargaining power in relation to TaTo Cakes.

Bargaining Power of Suppliers - Since all of the ingredients that are used in the preparation of

TaTo Cakes are widely used and massively produced, product suppliers have little or no

bargaining power relative to TaTo Cakes.

Industry Rivalry - The frozen food industry is a huge arena for business in which intense rivalry

does exist. However, this rivalry mainly exists between or amongst extremely close resembling

products such as pizzas and other widely consumed food items. A blue ocean product such as

TaTo Cakes should not be seriously affected by industry rivalry mainly because it operates in

such a massive industry which has sales of over $50

billion and does not have any closely resembling

products.

Industry Changes - An import catalyst for change

within the frozen food industry is the

consumers’ awareness and demand for healthier products. The frozen food industry has an

unfortunate association with unhealthy foods and low quality products, much like fast and junk

foods. Companies are aiming to re gear their products to be or at the

very least appear and seem healthier. There is real demand for

healthy products and companies that can deliver well balanced

products within the frozen foods sector can carve out great market

share for themselves.

Industry Players - The most prominent company in the frozen food industry is Nestle. This

juggernaut is the parent company of DiGiorno, Lean Pockets, as well as other major frozen foods

brands. DiGiorno alone produced revenues north of $1 billion in 2014. Another big player in the

8 TaTo Company

frozen food industry is Red Baron a prominent pizza producer with sales topping $500 million in

2014. Other major brands in this industry include Weight Watchers, California Pizza Kitchen

and others. These companies have strong market positions due to their economies of scale

advantage. This factor especially applies to Nestle, do to

its massive size, seemingly unlimited resources and

enormous market share (Statista.com n.d.).

Rival Strategic Moves - A probable strategic move by

rivals in response to the introduction of TaTo Cakes will be to try to introduce similar products.

Comparable products could come in the form of analogous potato pancake products or they

could come in the form of other healthier products. However, these moves are likely to come

after TaTo Cakes capture some market share in the frozen food industry. By this time TTC

should have ample resources to innovate and stay a few steps ahead of the competition.

Key Factors for Competitive Success - There are several factors concerning competitive success

in this industry in relation to TaTo Company. The first element is creating a truly great

product which is high quality, great tasting and is relatively healthy compared to the competition.

The industry is somewhat short on high quality products and our main objective should be to

create an amazing product for consumers. Another crucial element is to form a comprehensive

strategy that can be implemented with grate precision which will enable a cost effective business

to succeed. Yet another key factor is to be innovative and

to stay ahead of the competition.

Industry Attractiveness - The bottom line is that this

industry is extremely attractive. This is a systemically

important industry for consumers with over $50 billion in

annual revenues. Furthermore, the industry lacks a significant amount of high quality, healthy

products. In addition, the frozen food industry completely lacks any direct competitors to our

proposed product which translates to a great blue ocean for TTC to operate and grow in if we are

successful in implementing our strategy and executing our plan.

Competition Matrix

Distinct Competitive Advantage - At the heart of TaTo Company’s competitive advantage is the

ability to create a unique, blue ocean product, which is priced lower than the competition, is

Factor TaToCake DiGiorno Red Baron California Pizza Kitchen Lean Pockets

Low Price 9 7 8 7 8

Ingredient Quality 9 8 6 7 7

Taste Quality 9 9 7 8 8

Product Quality 9 8 7 8 8

Preparation Ease 9 9 9 9 9

Preparation Speed 9 8 8 8 8

Brand Reputation 7 9 7 7 8

Low Cost Structure 7 9 8 8 9

Total 68 67 60 62 65

9 TaTo Company

composed of higher quality ingredients and provides much more with concern to health benefits.

Strategic Position & Risk Assessment

Strengths & Interests – TaTo Company’s strategic position is strongly supported by the

company’s strengths and interests. Some of our key strengths include product quality, innovative

capabilities, growth potential, simplicity of our business and blue ocean potential. Our main

interest is to provide our consumers with the most amazing

products possible at a fair price.

Industry Trends & Developments - Some of the most promising

industry trends and developments pertain to producing better

quality, and healthier products. This puts our company in a prime strategic position to introduce

products that are unique, great tasting, and healthy. The current atmosphere also allows for

companies to charge higher prices for higher quality and healthier products as opposed to lesser

quality products.

Market Changes & Opportunities - Market forces are continuously changing, and right now they

are evolving the food business into a healthier, more conscious industry, which sets up valuable

opportunities for our company to capitalize on.

Customer Perception Factors - An important element concerning our strategic position is the way

we are perceived by our customers. TTC works extremely hard to create, sustain and project an

image of a company that is clean, healthy, and responsible and that cares first and foremost about

its clients, employees as well as the environment.

Societal Impact – Our products are not only great tasting but are extremely healthy and this can

have an enormously powerful impact on society.

Price – TTC’s products will be priced very fairly, in fact cheaper than most of the closely

competing products. TaTo Cakes will be priced at 19.97 cents per ounce. In comparison most

low quality pizza brands are priced from 20 to 30 cents an ounce and premium brands such as

DiGiorno charge 30 to 45 cents per ounce for most of their pizzas.

Quality – Quality is something TTC’s management takes enormous pride in and it is the

cornerstone of our business. TTC only offer the highest quality products made from the best all

10 TaTo Company

natural ingredients.

Customer Service – There is nothing more important to us than our clients. We offer the highest

quality in customer service through our specially trained product representatives and our call

center specialists.

Risk - Risks are constantly present and additional risks may materialize at any time. There is risk

that the market will not respond well to TTC’s products, risk of competition, risk of our products

not succeeding, risk concerning execution, and financial risk. There are many risks at any given

time, especially in the initial stages of a business. However, there is no substantive indication

that these risks are something to be afraid of; instead, it is simply important to be mindful of

these risks, now that they exist and do everything possible to prevent them from materializing. In

order to prevent such risks from having a negative impact on our company management will be

constantly working on strategies to envision the future and any risks associated with forthcoming

developments. Furthermore, strategies will be developed in advance to deal effectively with any

risks that may materialize in the future.

11 TaTo Company

Target Market

Primary Target Segment – TaTo Company’s target market is the mother/housewife segment

due to several key factors. Our product is first and foremost a healthy, and great tasting

alternative to low quality, and unhealthy frozen food products. Therefore, TaTo Cakes will be

marketed as a healthy, all natural, gourmet food item. The most logical group of potential

consumers to whom our product’s attributes should appeal to is the mother/housewife segment

due to their motherly instincts and their desire to raise healthy offspring and have a healthy

family. The ideal target customer in our segment is, age 18 and onward, middle to upper middle

class family income, and preferably well educated. Some other attributes that are preferable in

our primary target customer is that the person is responsible, has strong family values and is

interested in leading a relatively healthy lifestyle. This primary target market will first be

targeted locally, then on a statewide level, then regionally and eventually nationally.

Secondary Target Segment – TTC’s secondary target market is the kids and teenager segment.

This is an extremely important market segment due to kids and

teenagers being potential early adopters of our products and as a

result becoming lifelong consumers. Kids and teenagers are also

constant consumers of easy to prepare frozen foods and are an ideal

segment to target in regards to our products. This segment will also

be targeted locally in initial stages, then regionally, and ultimately nationally.

Third Target Segment - Our third target market is the broad consumer segment consisting of all

potential customers. Our products can and should be enjoyed by everyone and not just by a

certain group of consumers belonging to a certain, age group or demographic. Some consumer

segments are more important initially, however, in the long run our products should gain the

12 TaTo Company

attention of all shoppers and consumers.

Marketing Plan

Marketing Strategy - TTC’s marketing strategy will have a multipronged approach and initially

will be primarily geared towards our principal target market, the mother and housewife segment

of middle to upper-class income. Since our company is young and lacks extensive funding

capabilities in regards to marketing, we will not be able to incorporate all of the marketing that

we might like in the initial stages of our development. This means we will not be able to film and

run costly TV commercials, we will not be able to take out expensive magazine or newspaper

ads, we will not be able to engage in costly internet ads, however, there are some marketing

channels which we can exploit to get our message out to our target customers.

Stage 1 Marketing

Partner Based Advertising - The initial stage of the marketing

campaign will be geared mostly at TTC’s primary target market

segment. Our products will be primarily sold through intermediaries,

Stage 1 Marketing

•Partner Based Advertising

•Word of Mouth Advertising

•Viral Marketing

•Direct Mailing/Flyer Marketing

•Direct Consumer Marketing

Stage 2 Marketing

•Stage 1 Marketing

•Basic Radio, Print & Internet Adverising

•Promotional Advertising

Stage 3 Marketing

•Stage 1 & Stage 2 Marketing

•TV Adverising

•Advanced Print & Internet advertising

13 TaTo Company

such as retailers, including supermarkets and health food stores. An important part of our initial

marketing strategy will be to create partnerships with retailers which will be able to market our

products to our target segment via store ads, and coupons. This will be beneficial to us as well as

to our retail partners as it will be in our mutual interests to sell as many products as possible.

Word of Mouth Advertising - Another form of marketing that we will

initially partly rely on is word of mouth advertising. Since our product is

unique and is in a blue ocean environment, naturally the early adopters of

our products will rave about them and will pass on the information

regarding the beneficial attributes of our products to their friends,

relatives, and associates. Furthermore, our primary target market is the

wife and housewife segment of middle to upper-class family income, incidentally this is the

perfect demographic group to effectively spread the benefits of our products.

Viral Marketing - Viral marketing is an ideal element that could propel our product into the

proverbial stratosphere. TaTo Company is in a blue ocean environment and thus has the ability to

become a cult brand much like Netflix, or Apple. It is fathomable to imagine that the right

YouTube video involving our product could turn our brand into a household name. This is a

creative initiative that will be developed as time goes on and will be implemented at an

appropriate time.

Direct Mailing and Flyer Marketing - Direct mailing is another form of marketing our company

will implement in the initial stages of our marketing strategy to reach our target consumer.

Special advertising pamphlets with select coupons will be mailed to potential customers in our

primary segment. Additionally, company flyers with select coupons will be handed out to

potential consumers in select retail locations.

Direct Consumer Marketing - Consumers will be able to try our products at select retail locations

as they will be displayed for all interested parties free of charge. This is a very effective form of

marketing as it is relatively inexpensive and has the potential to gain the interest of many

potential customers at the cost of a single bite. Furthermore, these customers have the potential

to become repeat and even lifelong customers.

Stage 2 Marketing

Traditional Advertising/Radio, Print and Internet - In addition to our initial stage marketing

strategies some more traditional forms of marketing will be implemented in the second stage of

the campaign. Throughout this stage our company will make use of relatively inexpensive radio

ads by playing catchy radio ads on local radio stations, will make use of relatively inexpensive

print ads, such as taking out space in local newspapers and will make use of relatively

inexpensive internet advertising.

14 TaTo Company

Promotional Advertising - Another form of marketing we intend to implement at this stage of the

campaign is to hold promotional events during which our products can be sampled and some

select portions will be given away to potential customers. These events will be held at fairs and

various food related events as well as at select partner retail locations. During the second stage

of our marketing campaign we will attempt to attract our second preferred customer segment in

addition to our primary target market consumer.

Stage 3 Marketing

TV Advertising/Advanced Print and Internet Marketing - Although television advertising would

be extremely effective in creating demand for our

products, especially with our secondary consumer segment

it will not be available to us in the initial stages of our

marketing campaign due to the high costs associated with

developing and running TV ads. However, once our

products are introduced on a wide scale and our

company’s cash flow position becomes more favorable,

TV ads will be introduced, especially in relation to targeting our secondary market segment that

is comprised of kids and teenagers.

During the third stage of our marketing campaign we will attempt to attract our third target

market segment in addition to our secondary customer segment as well as our primary target

market consumer segment. Throughout this stage of our marketing strategy our company will

also expand its presence online, by gaining more exposure on the internet through the

development of web based advertising. This strategy is meant to make our products known to a

wider audience and to attract clients to shopping at our internet store.

Another aspect of advertising we will expand in this stage is

print. By taking out full page

ads in newspapers and magazines we will attract a wider

demographic of consumers to our

products. This strategy is especially tactful when attracting

our primary target consumer segment

through placing our ads in cooking and home style

magazines. Our stage three advertising strategies will be

implemented parallel with our stage one and stage two strategies and should serve to gain the

attention of a wide range of consumers in our primary, secondary and broad target market

segments.

15 TaTo Company

Operations Management

Location – TaTo Company’s key starting facility will be the company’s production, packaging,

shipping and corporate office (PPSC) facility. The PPSC facility will be approximately 8,000

square feet and will be situated in a convenient location in which the company’s employees can

handle all key operations concerning the products. This location will have adequate access to

transportation to easily receive supplies and ship products. Furthermore, the location will be

relatively close to a rail station, a port and an airport in order to easily handle future production

expansion and logistics. In later stages of our company’s expansion additional regional facilities

similar to our PPSC will be brought online to handle additional production demand. The original

lease concerning our PPSC will be for one year for which the estimated cost will be $4,000 per

month plus utilities, maintenance and any improvement costs that might arise.

Production - Initial stages of production will be handled by four full time employees, consisting

of one dishwasher, two cooks and one supervisor. Additionally, TaTo Company will initially

employ one sale professional and shipping as well as maintenance work will be done through the

use of third parties.

7 Stage Production Process

Stages

1. Ingredients are received and unpackaged.

2. Ingredients are prepared and processed to their desired condition.

3. Ingredients are combined and molded to their desired shape.

4. Shaped ingredients are fried until 95% cook rate.

5. Cooked product is cooled for 2 hours in a refrigerator.

6. Finished product is packaged.

7. Packaged product is frozen and made ready for shipping.

Productivity & Quality Control - Productivity improvements will

be an ongoing part of TTC’s perpetual business strategy and

production will be constantly enhanced through innovations and

other efficiency increasing tactics. Quality and consistency

regarding the production of TaTo Cakes will be closely

monitored by the experienced supervisor as well as by the

owner/operator of the company.

Inventory Management - Everything concerning deliveries and shipments concerning TTC’s

products will be closely monitored by the plant supervisor and when possible by the

16 TaTo Company

owner/operator of the company. Furthermore, other security measures such as cameras and easily

monitored areas will be used to prevent any possible theft attempts concerning our inventory.

Sales – TaTo Cakes will be sold directly to supermarket and wholefoods retailers or will be sold

on their shelves under consignment agreements. Consignment partnerships will be made with

appropriate retailers and supermarket chains.

Technology Overview

Technology – This is an intrinsic part of any modern business and our

company is no acceptation some of our prime technology uses will

include: accounting, taxes and finances, order taking and tracking,

order fulfillment and shipping, inventory management, database

management, communication with customers, internal

communication, presentations, personnel management, production, internet marketing, internet

sales, and security.

Software, Hardware & Network Infrastructure- TTC’s technology infrastructure will be designed

so that it is easy to use, highly functional, cost effective, secure, and has the ability to be

upgraded. All necessary networking will be Cisco based systems. TTC will use a cloud based

Oracle database system for its primary functions in regards to products and business operations.

For its financial and accounting functions TTC will the Intuit Quickbooks accounting software.

For sales TTC will implement the use of Loyverse POS a point of sale software designed for

small and medium size businesses. For its hardware needs TTC will use Dell desktop, laptop and

tablets as needed to fulfill all proper functions of the business.

Management

Victor Dergunov, CEO, Owner/Operator – Top decision maker, a person

with over 10 years of experience in launching and managing successful

businesses who is also a skilled chef with extensive experience managing

kitchen operations at several fine dining establishments. Furthermore, this

individual holds a Bachelors of Science degree in business management

from Colorado State University as well as an MBA from Washington State

University. This person will be responsible day to day management as well as for making the

strategic decisions regarding the business, especially in the initial stages.

Outside Consulting Expert – This person will be hired for a limited time to help launch initial

operations successfully and with the highest possible amount of efficiency. This person will be

an expert in the frozen food production, and distribution business.

Plant Manager – This person will be the plant administrator and will be responsible for giving

instructions and overseeing the day to day concerning production operations. This person will be

17 TaTo Company

an experienced manager in the food production and distribution business and will work directly

under the guidance and supervision of the owner/operator of the business.

Production Cooks – Production personnel will be experienced culinary professionals and will go

through a comprehensive training program detailing all of the required tasks and duties in

regards to TaTo Cake production. Production cooks will work under the explicit guidance of the

plant manager and owner/operator.

Sales Manager – In the initial stages a single sales manager will be responsible for connecting

our products with distributors. Most of our products will be sold directly to supermarkets or will

be sold at supermarket locations under consignment agreements. As our operations expand to

new locations, more sales personnel will be hired as necessary.

Board of Directors & Advisory Committee - The board of directors will be comprised of the

owner operator as well as of the representatives pertaining to the key investors in the company.

The board of directors will act as the advisory committee. The key functions of the board and the

advisory committee will be to determine appropriate pay packages concerning management and

the overall strategy concerning the company. The board will meet once a month to discuss the

underlying issues and make the appropriate decisions.

Future Management - As the company expands to other regions new production and distribution

facilities will be brought online and new managers will be hired to oversee activities at these

facilities. In later stages of the business development cycle regional managers will be needed to

oversee the work conducted by facility managers. Other key management roles will include

Chief Financial Officer, Chief Operating Officer, Chief Information Officer, Head of Human

Resources, Marketing Director and others.

Compensation and Incentives – Plant managers will receive an initial base salary of $35,000 per

year for a 40 hour work week with a basic benefits package. They will be reviewed for a raise

after the first year and will be presented with an option to get a small percentage of company

stock if they chose to stay with the company. Incremental portions of company stock will be

continuously distributed to those employees who prove they are loyal and productive members

of the TTC organization. As the company and its revenues expand, so will the salaries

concerning key members of our organization. Other basic incentives will include free meals,

drinks and other basic on the job amenities.

18 TaTo Company

Management Tree at Year End 5

Social Responsibility & Sustainability

Objective - Our main objective as a company is to do right by our customers by offering them

amazing products that are great tasting and healthy. This principle in turn will benefit our

company and will provide great social advantages for society as a whole.

Positive Corporate Image – Due to our all natural, healthy products our

corporate image is that of

a clean company, providing a great benefit and service to society.

Strong Team – Positive factors associated with our company’s products,

operations, image and management help to cement a healthy team of

professionals with a succinct image of a better future for everyone.

More Satisfied Employees – Our corporate mission and our strong position concerning social

responsibility enable our employees to be satisfied with what they are doing. Our employees

know that they are helping people and improving society.

Contacts with Other Companies – Our positive image and strong social responsibility policies

make other companies want to work with us. They too want to be perceived favorably as and will

work with us to gain a more positive image.

Triple Bottom Line - Our triple bottom line policy refers to people, planet, and profit. As

opposed to many companies that put greater emphasis on the later, we put our primary emphasis

on the former, putting people and planet first before profits. We are convinced that this is the real

sustainable way to operate a business. We put the interest of the people first by providing them

amazing products that are healthy. We treat our planet with respect by being green, clean and

CEO

Chief Information Officer

Chief Operating Officer

Head Of HR

Regional Manager

Plant manager

Plant Manager

Regional Manager

Plant Manager

Plant manager

Plant Manager

Regional Manager

Plant Manager Plant

Manager

Marketing Director

Chief Financial Officer

Chief Accountant

19 TaTo Company

limiting our carbon footprint and we know that as a result profits will be abundant at our

company.

Financial Narrative

Executive Summary - TaTo Company, a gourmet potato pancake manufacturer startup will show

a positive net cash flow by month 6 of year 1 of operations. The company will also make a

modest profit for the first year of $5,228. Furthermore, revenues will rise on average 78.75%

year over year (yoy) for the first 5 years. In addition, as operational productivity and efficiencies

improve and operations expand, net income will increase by an average of 212.5% yoy for the

first 5 years. At the end of year 5 TatoCake Company will have a gross profit of $822,400, a net

income of $534,560, and an ending cash balance of $867,175.

Revenues - TatoCake Company revenues are based on 1,000 package blocks. Each package

holds 5 eight ounce cakes and has a sale price of $8.

Therefore, each revenue block is $8,000 and produces 1,000

TaToCake packages. Revenues are projected to pick up

gradually over the first year with first month revenue being

$8,000, second and third month revenues being $16,000 and

last month revenues being $48,000. In total, revenues for year

end 1 are projected to be $376,000, representing 47 blocks of production. As a new plant comes

online and new products are introduced in the beginning of year 2 and production capacity

increases, revenues are projected to rise to $816,000 representing 102 production blocks by year

end 2 of production. Year 3 year over year revenue growth will increase by 53% to $1,248,000,

year 4 yoy revenue will increase by 52.5% to $1,904,000, and year five yoy revenue will

increase by 62% to $3,080,000.

Expenses - Capital expenses in the amount of $30,000 will be used procure, set up and equip the

manufacturing facility. Working capital in the amount of $25,000 will be used to launch

production and sustain it through the first 5 months of operations until TTC reaches its

breakeven point in month 6 of year 1. The working capital will cover salaries and all other

essential expenses needed to sustain operations through the initial production period.

Cash Flow - As production and sales increase cash flow turns positive in month 6 of year 1.

Ending cash balance at the end of year 1 will be $26,855. As production, sales, productivity, and

operational efficiencies increase year 2 yoy cash flow will rise by 96.5% to $52,855, year 3 yoy

cash flow will increase by 107% to $109,405, year 4 yoy cash flow will rise by 179% to

$305,175, and year 5 yoy cash flow will rise by 184% to $867,175.

Burn Rate - TTC will have a gross burn rate of $22,910 a month during the first 5 months of

production which is the projected period before the company’s breakeven point. The net burn

rate for the same period is $5,310 per month.

Cost per Unit - Each block of production consists of 1,000 TaToCake packages containing 5

eight ounce TaToCakes each. Each production block is 40,000 ounces or 2,500 pounds. 2,500

pounds of raw materials required to produce 1 block of TaToCakes has a cost of $950 or $.95 per

one 40-ounce package of TaTo Cakes. All other direct operating costs associated with production

20 TaTo Company

are $4.05 per 1 block of production. The total cost per unit is $5.00, and the selling price is $7.99

per unit.

Competition Comparison - The selling price per package is $7.99 or 19.97 cents per ounce. Low

quality frozen pizza brands typically sell for from 20 to 30 cents per ounce and the so called

premium brands such as DiGiorno and California Pizza Kitchen sell for 30 to 45 cents per ounce.

Marketing & Advertising - Marketing costs are based on a 3 stage

marketing plan that takes aim at certain customer segments in

each phase. The first stage of the plan which will be geared at the

primary mother/house wife segment which incorporates basic

forms of relatively inexpensive advertising will be used during

year 1 and 2 of operations. For these periods marketing costs will

be $36,000 or 9.5% of revenue in year 1 and $ 54,000 or 6.6% of revenue in year 2. In year 3 and

4 our second stage of our marketing plan will be implemented which will also focus more

heavily on promotional and print advertising. For the following periods marketing costs will be

$62,000 or 4.9% of revenue in year 3 and $80,000 or 4.2% of revenue. In year 5 and beyond our

third stage of the marketing plan will be implemented which will also focus on TV ads and will

cost TTC $96,000 or 3.1% of revenues in year 5.

Customer Retention - Our products are fun, exciting, great tasting and healthy, therefore TTC

will have a high customer retention rate. We expect to have approximately 10,000 consumers of

our products at the end of year 1. We expect to attract 15,000 additional customers by the end of

year 2 and we presume TTC will have 22,000 total customers at the end of year 2. Further, we

predict that our products will attract an additional 20,000 new customers by the end of year 3 and

we expect to have a total of 38,000 customers by the end of year 3. This will give our company a

70% customer retention rate at the end of year 2 and an 81.8% retention rate by the end of year 3.

Our goal is to reach the highest retention rate possible and we believe that 90% is completely

attainable by end of year 5. To accomplish our objective, we will continuously strive to improve

our products and our relationships with our customers.

Personnel - Initial production and sales will require 4 full time employees and one supervisor to

monitor, direct and control operations. 3 employees will take care of preparation and production

regarding the products and 1 sales professional will handle the first stages concerning

distribution. The two employees responsible for cooking our products will earn a starting wage

of $12 per hour. The employee responsible for cleaning the dishes will earn an hourly wage of

$10 an hour. The sales professional will earn $15 per hour and additional bonuses, based on

performance. The plant supervisor will have a starting salary of $35,000 per year. Maintenance

and cleaning will be handled by third parties and will be covered by maintenance costs. Product

deliveries will also be handled by third parties and will be covered by shipping costs.

Furthermore, professional services will be retained for services concerning industry professionals

and advisors in areas of sales, marketing, expansion and others. At the end of year 1 TTC will

have no more than 10 full time employees. As we open new operating facilities and increase

production capacity at current facilities new employees will be hired. Full time employees aside

21 TaTo Company

from top management will include production personnel, supervisory personnel and sales

personnel. Full time employee count is projected to be 10 at the end of year 1, 20 at the end of

year 2, 25 at the end of year 3, and 50 at the end of year 5.

Expansion - TTC’s expansion model is based on opening a new operational facility at the

beginning of each year for the first five years. Each production facility will require an investment

in the mount of $30,000 to prepare for operations and purchase all of the required equipment.

Financing - To begin and sustain operations through the initial

stages of production TTC will require $55,000 in capital. Funding

will be secured through long term loan financing at an annual

fixed rate of 7.25%. The next four tranches of $30,000 annual

financing required for expansion will be obtained the same way

through long term loan financing at an annual fixed rate of 7.25%

Sources and Use of Funds - Funding is extremely important for a new business as it provides the

necessary capital to begin operations and keep them going. Several funding methods were

carefully considered when compiling the financial analysis, including multiple funding rounds,

equity financing, long term loans, and convertible debt financing. Although, a combination of

these funding methods is plausible and for certain reasons favorable, only long term loan

financing was used to conduct the financial projections. Under current assumptions TaTo

Company can receive all of the funding necessary to begin, sustain and expand operations by

taking out annual long term loans. If for whatever reason the assumptions change or there is a

problem attaining consistent long term loan financing our company will consider offering equity

or taking on other forms of financing.

Development Plan

Business Vision – Our vision is to create a company that would start

of by becoming the niche leader in the frozen food potato pancake

market. However, with time we would like to develop our products

and bring them to the broader consumer segment, competing with

frozen pizzas, lean pockets and other popular frozen food items. By

innovating and creating new products we would like to become

amongst the market leaders in this industry and would expect to go international within 10 years.

We also expect to become the gold standard in quality amongst our peers and believe we will be

able to continuously grow revenues and profits.

Business Strategy

Market Penetration - Our initial strategy will be focused on market penetration concerning the

frozen food segment. Our products will be made available for sale at local retail locations in the

opening stages of our strategy. As we increase our production capacities our penetration will

branch out to neighboring states, regionally, nationally, internationally, and ultimately globally.

22 TaTo Company

Promotion & Support - Once we get a solid foothold in the frozen food market we will focus on

marketing and support concerning our products. Our multi stage marketing campaign will be

implemented, which will be targeted at the desired consumer segments and will drive demand for

our products.

Expansion - Simultaneously, we will concentrate on our expansion process, offering products

from local, to regional, to national, and ultimately global. Our expansion strategy, which is

correlated with our marketing plan, will focus on bringing our products to new retail location

around the country.

Increase Focus – Our product line will be reevaluated after the first year, certain products will be

kept, some will be enhanced, and some will be exchanged for new products. This will depend on

customer feedback and sales information.

Diversify – In this stage of our plan new products will be released and possible acquisitions

could be made concerning products and or companies which might mesh well with our culture,

product line, and consumer demand.

Go Global – Going global is our ultimate goal. This is a long-term goal, nevertheless, once the

domestic market is close to being fully penetrated our products will be made available in other

countries around the globe.

Refocus – TTC will periodically analyze and reevaluate current products and potential

options regarding our goods. We will continuously focus on our core products and on our core

principles, however, when need be we will reexamine current circumstances to adequately

adapt to any potential changes in the market place.

Continuous Strive for Excellence – A major part of our overall strategy will always be our

perpetual drive to improve efficiency, productivity and to strive for excellence concerning all of

our processes.

Milestones

Future Milestones – Milestones are extremely important to our organization as they will indicate

to investors that our company is achieving its goals and desired objectives. Some of our

significant milestones will include product launches, plant openings, revenue targets, profit

targets, employee hires and expansion targets.

Product Launches – Our first product is to be launched immediately as our core product. Our

second product is to be launched within the first six months of our operations and the third

product launch is to be introduced within the first 12 months. Furthermore, we expect to unveil a

total of 5 products within the first 3 years and introduce a total of 10 products within the first 5

years.

Plant Openings – We plan on opening one plant each year for the first five years to expand our

production capabilities and capture market share. After the first five years our strategy is to open

an additional 20 plants within the next five years.

23 TaTo Company

Revenue & Income Targets – Our revenue target for the end of year 1 is $376,000 and our net

income target is $5,228 for that same period. Our goal is to more than double those revenues by

the end of year 2 and to increase profits nearly 5 fold. We project to increase revenues to

$1,248,000 by the end of year three and to have revenues of $3,080,000 by the end of year five.

We expect our net profit margin to increase to 5.76% by year five and our net income should be

approximately $534,560.

Employee Hires – Our Company plans to have 10 fulltime employees at the end of year 1. This

number is projected to double in the first year. As new plants open, expand, and production

greatly increases our number of employees is projected to rise to 100 by the end of year 5 and

by the end of year 10 our company is projected to have 1,000 fulltime employees.

Expansion Targets – By the end of year one we anticipate our company will have a strong local

and statewide presence providing access for our products in 500 retail locations statewide. By the

end of year 2 we predict to double the amount of retail locations our products can be purchased

at by venturing into neighboring states. By the end of year three we calculate our products will

be present in 2,000 retail location and will have close to fully penetrated the tri state area market

of New York, Massachusetts and Connecticut. By the end of year five our forecast indicates that

our products will be available in 5,000 locations that encompass the greater area of New

England, New York, and New Jersey. Our strategy is to continue to expand and by the end

of year 10 our products should be available in 50,000 locations including the U.S., Canada, and

Mexico.

Exit Plan Exit Plan - An exit plan is extremely important to us, because this is when

the hard work begins to really pay off. At this point investors get paid,

owners get paid, shareholders get paid, loyal employees get paid, and

anyone else who has a stake in the company gets paid. There are several

favorable ways in which our exit strategy will play out.

Scenario 1 – Acquisition, this situation would consist of a larger company buying our

organization. The main benefit in this situation is that a larger company that wants our operations

in its portfolio will be willing to pay a significant premium to acquire us, and all stakeholders

will be rewarded. However, a drawback is that we would lose control over the direction of the

company and some people, possibly many people will not have a place under new management.

Scenario 2 - Merger (with larger partner), this would be the second most favorable exit plan as it

would provide us with more resources, and some cash and/or stock for the shareholders.

However, we would still lose some control over the company, and its direction. There would also

be new management to report to.

Scenario 3 – Go public, this by far would be the most favorable outcome as there would be an

advantageous reprising of our company’s shares and the stock would become liquid and easily

convertible to cash. Furthermore, current management would be able to maintain control over the

24 TaTo Company

company. Some negatives do exist in the form of increased regulation and accountability to

shareholders.

The Ask & The Deal

What We Need & What are Offering – To begin operations TaTo Company needs a minimum of

$55,000 in startup and working capital. The company will require a total of at least $175,000 in

capital over its first 5 years of operations. We are currently offering 25% of TaTo Company’s

shares for $350,000.

Startup Capital – TaTo Company will need a minimum of $30,000 to set up a suitable location

and to procure all of the necessary supplies and machinery to begin operations.

Working Capital – According to our thorough financial analysis and our operating projections

TTC will require an additional $25,000 to purchase supplies, provide salaries, and to cover any

other expenses essential to sustain operations until we reach our breakeven point. The breakeven

point is estimated to be reached between months 5 and 6 of operations in the first year.

Additional Capital – We project that additional infusions of capital will be required to expand

and grow operations. Our forecasts indicate that for the four following years our company will

require $30,000 annually. In all, the TaTo Company will require a minimum of $175,000 in

financing over the first 5-year period.

Pay off – According to our relatively modest projections our business will have nearly $3.1

million in revenue at the end of year 5 and will produce a net income of $534,560 in that same

year. Year over year net income growth is estimated to be nearly 200% from year end 4 to year

end 5 and if a modest 20 times earnings multiple is used, the TaTo Company will be worth

an estimated $10,691,200 at the end of year 5.

Current Value – We can calculate the current value of the business by applying the businesses’

projected valuation after 5 years and the investor’s required rate of return. Investors who finance

companies in such initial stages usually require a high rate of return on their capital. We can use

a 50% annual benchmark. In order to get today’s value, we take the projected value after 5 years

$10,691,200 and divide it by the required rate of return per year (1+50%) and discount it over 5

years. $10,691,200/(1+50%)5 = $1,407,894. Current value = $1,407,894.

Shares Available – Under current valuations we are offering our potential

investors 25% of shares outstanding in the TaTo Company valued at $351,973

for $350,000. These shares in TaTo Company that are worth $350,000 today

will be worth $2,672,800 at year end 5 of operations which is an impressive

763.5% return on investment.

25 TaTo Company

Appendix Production Projected Costs & Specifics

PPCS Production per 40,000 ounces = 1,000 packages of 5, 8 ounce potato pancakes

Variable costs based on 1 working week

Raw materials $950

Operating Labor costs $2000

Shipping costs $300

Total $3,250

Fixed costs based on 1 working week

Rent $1,000

Utilities $100

Taxes $200

Insurance $100

Depreciation $100

Administrative costs $250

Total $1,750

Total costs $5,000

Ingredient Projected Costs & Specifics

Raw materials per 40,000 ounces = 2,500

pounds

%

Amount

Amount Cost per unit Total

cost

Potatoes 80% 2,000

pounds

$6 per 100

pounds

$120

Carrots 5% 125 pounds $.35 per lb $43.75

Spinach 3% 75 pounds $1.25 per lb $93.75

Zucchini 5% 125 pounds $.98 per lb $122.5

Cheese 2% 50 pounds $3 per lb $150

Garlic 0.20% 5 pounds $2 per lb $10

S&P, Spices 0.10% 2.5 pounds $2 per lb $5

Eggs 3% 1,000 eggs $.31 per egg $308

Flour 2.80% 70 pounds $.33 per lb $23

Oil to fry 40 gallons $.60 per

gallon

$24

Packaging per TTC 1,000 $.05 per

package

$50

Total $950

26 TaTo Company

Necessary equipment for production & storage Units Cost per unit Total cost

Commercial gas ranges 2 $999 $1,998

Commercial 3 bowl unerbar sink 1 $444 $444

Reach in refrigerator 2 $2,999 $5,998

Reach in freezer 2 $3,499 $7,998

Sheet pan racks 2 $99 $198

Shelf 2 $136 $272

Commercial floor mixer 1 $2,699 $2,699

Commercial ventilation system 1 $4,999 $4,999

Commercial food processor 1 $2,000 $2,000

Cutter/slicer 1 $319 $319

Work table 2 $435 $870

Salad dryer 1 $239 $205

Knives, frying pans, other miscellaneous supplies $2,000

Total $30,000

Cost to sustain operations through initial stage of production $25,000

Total capital needed to start business $55,000

Technology Budget

Year 1 Year 2 Year 3 Year 4 year 5

Hardware

Desktops & laptops $4,000 $4,000 $4,000 $4,000 $4,000

Servers $2,000 $2,000 $2,000 $2,000 $2,000

Printers $1,000 $1,000 $1,000 $1,000 $1,000

Networking $2,000 $2,000 $2,000 $2,000 $2,000

Peripherals $1,000 $1,000 $1,000 $1,000 $1,000

Other $1,000 $2,000 $3,000 $4,000 $5,000

Telecommunications

Phone system $1,000 $1,000 $1,000 $1,000 $1,000

Fax machines $400 $400 $400 $400 $400

Internet access $500 $1,000 $1,500 $2,000 $2,500

Other $500 $1,000 $1,500 $2,000 $2,500

Software

Accounting $250 $250 $250 $250 $250

HR Software $250 $250 $250 $250 $250

Inventory mgmt $250 $250 $250 $250 $250

Other $250 $250 $250 $250 $250

Total $14,400 $16,400 $18,400 $20,400 $22,400

27 TaTo Company

Development Goals

Specific Goals One Year Five Years Ten Years

Number of Employees 10 50 500

Number of Sales Locations 500 5,000 50,000

Number of Plants in Operation 1 5 25

Annual Sales $370,000 $3,080,000 $21,000,000

Profit Margin 1.3% 5.76% 15%

Number of Products 3 10 25

List of Important Milestones

Milestones Year 1 Year 2 Year 3 Year 5 Year 10

Total Products 3 4 5 10 25

Total Plants 1 2 3 5 25

Revenue $370,000 $816,000 $1,248,000 $3,080,000 $21,000,000

Profit $5,228 $24,700 $51,350 $177,400 $3,150,000

Employees 10 20 25 50 500

Expansion # of States 1 3 3 8 50

28 TaTo Company

Year 1 Income Statement

Income Statement Projections for First Operating Year

Period Ending Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total

Total Revenue $8,000.00 $16,000.00 $16,000.00 $24,000.00 $24,000.00 $32,000.00 $32,000.00 $32,000.00 $48,000.00 $48,000.00 $48,000.00 $48,000.00 $376,000.00

Cost of Revenue 20200.00 21150.00 21150.00 26025.00 26025.00 30900.00 30900.00 30900.00 40650.00 40650.00 40650.00 40650.00 369850.00

Gross Profit (12,200.00)$ (5,150.00)$ (5,150.00)$ -$2,025.00 -$2,025.00 $1,100.00 $1,100.00 $1,100.00 $7,350.00 $7,350.00 $7,350.00 $7,350.00 $6,150.00

Operating Expenses

Salaries 6000.00 6000.00 6000.00 9000.00 9000.00 12000.00 12000.00 12000.00 18000.00 18000.00 18000.00 18000.00 144000.00

Professional services 2000.00 2000.00 2000.00 2000.00 2000.00 2000.00 2000.00 2000.00 2000.00 2000.00 2000.00 2000.00 24000.00

Employee benefits 300.00 300.00 300.00 450.00 450.00 600.00 600.00 600.00 900.00 900.00 900.00 900.00 7200.00

Payroll taxes 250.00 250.00 250.00 375.00 375.00 500.00 500.00 500.00 750.00 750.00 750.00 750.00 6000.00

Marketing 2000.00 2000.00 2000.00 2500.00 2500.00 3000.00 3000.00 3000.00 4000.00 4000.00 4000.00 4000.00 36000.00

Rent 4000.00 4000.00 4000.00 4000.00 4000.00 4000.00 4000.00 4000.00 4000.00 4000.00 4000.00 4000.00 48000.00

Maintenance 1000.00 1000.00 1000.00 1000.00 1000.00 1000.00 1000.00 1000.00 1000.00 1000.00 1000.00 1000.00 12000.00

Depreciation 400.00 400.00 400.00 400.00 400.00 400.00 400.00 400.00 400.00 400.00 400.00 400.00 4800.00

Insurance 600.00 600.00 600.00 600.00 600.00 600.00 600.00 600.00 600.00 600.00 600.00 600.00 7200.00

Network/Technology 1200.00 1200.00 1200.00 1200.00 1200.00 1200.00 1200.00 1200.00 1200.00 1200.00 1200.00 1200.00 14400.00

Utilities 400.00 400.00 400.00 400.00 400.00 400.00 400.00 400.00 400.00 400.00 400.00 400.00 4800.00

Shipping 300.00 300.00 300.00 450.00 450.00 600.00 600.00 600.00 900.00 900.00 900.00 900.00 7200.00

Travel 200.00 200.00 200.00 200.00 200.00 200.00 200.00 200.00 200.00 200.00 200.00 200.00 2400.00

Loan/Interest 600.00 600.00 600.00 600.00 600.00 600.00 600.00 600.00 600.00 600.00 600.00 600.00 7200.00

Raw materials 950.00 1900.00 1900.00 2850.00 2850.00 3800.00 3800.00 3800.00 5700.00 5700.00 5700.00 5700.00 44650.00

Total Expenses 20,200.00$ 21,150.00$ 21,150.00$ $26,025.00 $26,025.00 $30,900.00 $30,900.00 $30,900.00 $40,650.00 $40,650.00 $40,650.00 $40,650.00 $369,850.00

29 TaTo Company

Income Statement Years 1 – 5

Income Statement Projections for First Five Years

Period Ending Year 1 Year 2 Year 3 Year 4 Year 5

Total Revenue 376,000.00$ 816,000.00$ 1,248,000.00$ 1,904,000.00$ 3,080,000.00$

Cost of Revenue 369850.00 778000.00 1169000.00 1631400.00 2257600.00

Gross Profit $6,150.00 $38,000.00 $79,000.00 $272,600.00 $822,400.00

Operating Expenses

Salaries 144000.00 385000.00 615000.00 882000.00 1260000.00

Professional services 24000.00 24000.00 24000.00 24000.00 24000.00

Employee benefits 7200.00 18000.00 31000.00 36000.00 42000.00

Payroll taxes 6000.00 15000.00 25000.00 29000.00 37000.00

Marketing 36000.00 54000.00 62000.00 80000.00 96000.00

Rent 48000.00 96000.00 144000.00 192000.00 240000.00

Maintenance 12000.00 18000.00 24000.00 36000.00 44000.00

Depreciation 4800.00 9600.00 14400.00 19200.00 24000.00

Insurance 7200.00 10700.00 14400.00 21600.00 28800.00

Network/Technology 14400.00 16400.00 18400.00 20400.00 22400.00

Utilities 4800.00 9600.00 14400.00 19200.00 24000.00

Shipping 7200.00 10700.00 14400.00 21600.00 28800.00

Travel 2400.00 2400.00 3600.00 3600.00 4200.00

Loan/Interest 7200.00 11700.00 16200.00 20700.00 25200.00

Raw materials 44650.00 96900.00 148200.00 226100.00 357200.00

Total Expenses 369850.00 778000.00 1169000.00 1631400.00 2257600.00

Income

Net Income before taxes 6150.00 38000.00 79000.00 272600.00 822400.00

Tax 922.00 13300.00 27650.00 95200.00 287840.00

Net Income $5,228.00 $24,700.00 $51,350.00 $177,400.00 $534,560.00

30 TaTo Company

Year 1 Cash Flow

Cash Flow Projections First Year of Operations

Period Ending Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total

Income from Sales

Cash sales 8000.00 16000.00 16000.00 24000.00 24000.00 32000.00 32000.00 32000.00 48000.00 48000.00 48000.00 48000.00 376000.00

Collections 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Total cash sales 8000.00 16000.00 16000.00 24000.00 24000.00 32000.00 32000.00 32000.00 48000.00 48000.00 48000.00 48000.00 376000.00

Income from Financing

Interest income 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Loan proceeds 55000.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 55000.00

Equity capital investments 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Total cash from financing 55000.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 55000.00

Total Cash Receipts $63,000.00 $16,000.00 $16,000.00 $24,000.00 $24,000.00 $32,000.00 $32,000.00 $32,000.00 $48,000.00 $48,000.00 $48,000.00 $48,000.00 $431,000.00

Cash Disbersments

Expenses

Inventory 950.00 1900.00 1900.00 2850.00 2850.00 3800.00 3800.00 3800.00 5700.00 5700.00 5700.00 5700.00 44650.00

Operating expenses 18700.00 18500.00 18500.00 22500.00 22500.00 26500.00 26500.00 26500.00 34300.00 34300.00 34300.00 34300.00 317400.00

Capital purchases 30000.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 30000.00

Loan payments 600.00 600.00 600.00 600.00 600.00 600.00 600.00 600.00 600.00 600.00 600.00 600.00 7200.00

Income tax payments 0.00 0.00 0.00 0.00 0.00 165.00 165.00 165.00 1100.00 1100.00 1100.00 1100.00 4895.00

Total Cash Desbursements$50,250.00 $21,000.00 $21,000.00 $25,950.00 $25,950.00 $31,065.00 $31,065.00 $31,065.00 $41,700.00 $41,700.00 $41,700.00 $41,700.00 $404,145.00

Net Cash Flow $12,750.00 -$5,000.00 -$5,000.00 -$1,950.00 -$1,950.00 $935.00 $935.00 $935.00 $6,300.00 $6,300.00 $6,300.00 $6,300.00 $26,855.00

Opening cash balance $0.00 $12,750.00 $7,750.00 $2,750.00 $800.00 -$1,150.00 -$215.00 $720.00 $1,655.00 $7,955.00 $14,255.00 $20,555.00

Cash receipts $63,000.00 $16,000.00 $16,000.00 $24,000.00 $24,000.00 $32,000.00 $32,000.00 $32,000.00 $48,000.00 $48,000.00 $48,000.00 $48,000.00 $431,000.00

Cash disbursements $50,250.00 $21,000.00 $21,000.00 $25,950.00 $25,950.00 $31,065.00 $31,065.00 $31,065.00 $41,700.00 $41,700.00 $41,700.00 $41,700.00 $404,145.00

Ending Cash Balance $12,750.00 $7,750.00 $2,750.00 $800.00 -$1,150.00 -$215.00 $720.00 $1,655.00 $7,955.00 $14,255.00 $20,555.00 $26,855.00

31 TaTo Company

Years 1 – 5 Cash Flow

Cash Flow Projections for First Five Years

Period Ending Year 1 Year 2 Year 3 Year 4 Year 5

Income from Sales

Cash sales 376000.00 816000.00 1248000.00 1904000.00 3080000.00

Collections 0.00 0.00 0.00 0.00 0.00

Total cash sales 376000.00 816000.00 1248000.00 1904000.00 3080000.00

Income from Financing

Interest income 0.00 0.00 0.00 0.00 0.00

Loan proceeds 55000.00 30000.00 30000.00 30000.00 30000.00

Equity capital investments 0.00 0.00 0.00 0.00 0.00

Total cash from financing 55000.00 30000.00 30000.00 30000.00 30000.00

Total Cash Receipts $431,000.00 $846,000.00 $1,278,000.00 $1,934,000.00 $3,110,000.00

Cash Disbersements

Expenses

Inventory 44650.00 96000.00 148200.00 226100.00 357200.00

Operating expenses 317400.00 669400.00 996600.00 1358600.00 1833200.00

Capital purchases 30000.00 30000.00 30000.00 30000.00 30000.00

Loan payments 7200.00 11700.00 16200.00 20700.00 25200.00

Income tax payments 4895.00 13300.00 30450.00 102830.00 302400.00

Total Cash Disbersements $404,145.00 $820,400.00 $1,221,450.00 $1,738,230.00 $2,548,000.00

Net Cash Flow $26,855.00 $25,600.00 $56,550.00 $195,770.00 $562,000.00

Opening cash balance 0.00 26855.00 52855.00 109405.00 305175.00

Cash receipts 431000.00 846000.00 1278000.00 1934000.00 3110000.00

Cash disbursements 404145.00 820000.00 1221450.00 1738230.00 2548000.00

Ending Cash Balance $26,855.00 $52,855.00 $109,405.00 $305,175.00 $867,175.00

32 TaTo Company

Balance Sheet Years 1 – 5

Projected Balance Sheet Information

Time Period Year 1 Year 2 Year 3 Year 4 Year 5

Assets

Current Assets

Cash $26,855.00 $52,855.00 $109,405.00 $305,175.00 $867,175.00

Accounts recievable 0.00 0.00 0.00 0.00 0.00

Inventory 0.00 0.00 0.00 0.00 0.00

Total Current Assets $26,855.00 $52,855.00 $109,405.00 $305,175.00 $867,175.00

Fixed Assets

Land 0.00 0.00 0.00 0.00 0.00

Facilities 0.00 0.00 0.00 0.00 0.00

Equipment 30000.00 60000.00 90000.00 120000.00 150000.00

Less depreciation -4800.00 -9600.00 -14400.00 -19200.00 -24000.00

Total Fixed Assets $25,200.00 $50,400.00 $75,600.00 $100,800.00 $126,000.00

Total Assets $52,055.00 $103,255.00 $185,005.00 $405,975.00 $993,175.00

Liabilities

Current Liabilities

Long term debt 47800.00 70940.00 89540.00 103140.00 115140.00

Income tax due 922.00 13300.00 30450.00 102830.00 302400.00

Total Liabilities $48,722.00 $84,240.00 $119,990.00 $205,970.00 $417,540.00

Net Worth

Shareholders' equity $3,333.00 $19,015.00 $65,015.00 $200,005.00 $575,635.00

Retained earnings 0.00 0.00 0.00 0.00 0.00

Total Net Worth $3,333.00 $19,015.00 $65,015.00 $200,005.00 $575,635.00

Total Liabilities & Net Worth $52,055.00 $103,255.00 $185,005.00 $405,975.00 $993,175.00

33 TaTo Company

Use of Funds Statement

Breakeven Point Analysis

Use of Funds

Capital Expenditures

Leasehold Improvements 5,000.00$

Purchase of Equipment and Furniture 25,000.00$

Total Capital Expenditures 30,000.00$

Working Capital

Purchase of Inventory 5,000.00$

Staff Expansion 10,000.00$

Marketing Activities 5,000.00$

Other Business Expansion Activities 5,000.00$

Total Working Capital 25,000.00$

Total Use of Funds 55,000.00$

Break Even Analysis

Fixed Expenses, Projected 1 Month 20,000.00$

Gross Profit Margin, Projected 37.50%

Sales to Break Even 53,333.00$

34 TaTo Company

Reference

Statista.com. (n.d.). Retrieved from: http://www.statista.com/topics/1339/frozen-foods-market/