COB 300 Business Plan

1. Section 1
Team 5
Summer 2016











Business Plan

TreeTop, LLC
BabyPack is TreeTop’s flagship product. It is a portable cooling/heating system for baby bottles.























John Beer [email protected]


Rob Farrell farrelrt@dukes,jmu.edu


Samantha Kynett [email protected]


Patrick Moran [email protected]


Alex Peery [email protected]


Emma Sawyer [email protected]

2. Executive Summary
Treetop LLC
Alex Peery
1048 Lois Lane, Harrisonburg, VA, 22901
Phone: [phone]
E-mail: [email protected]


Management:
Titles:
General Manager, General Marketing Manager, General Operation
Manager



Industry: 44813 - Children's and Infants' Clothing Stores


Number of Employees (year 1): 48


Amount of Financing Sought: $2,000,000
Debt- 0%
Equity - 100%


Investment Sources:
● Venture Capital: (100%) - $2,000,000



Use of Funds: Equipment, materials, marketing, facilities, utilities,
salaries, distribution setup costs, SG&A expenses


Product selling price: $40.00 to distributors (wholesale)
$59.99 online (retail)

Business Description: TreeTop is an LLC operating out of Tualatin,
Oregon. Our product is the BabyPak, a portable heating and cooling
device for infant milk. Our goal is to provide time-saving products to
parents on the go, thus saving our customers time and energy. We will
partner with distributors such as Target and Amazon as well as
conducting business on our website. This will allow us to reach our target
markets of parents nationwide.

Products/Services: The BabyPak, our primary offering, is an all-in-one
portable baby bottle warmer and cooler. By utilizing a reusable ice pack
and a rechargeable battery, the BabyPak will eliminate the need to keep
track of multiple items related to the same parenting task, making it the
first product of its kind. We estimate that our cost per unit on average
will be $20.93.

Competitive Advantage: Our patented design does what no other
market offering does by combining two separate products into one
convenient package at a reasonable cost.

Markets: Our primary target market is mothers of children under one
year of age in the U.S. and Canada. This is an estimated 4,500,000 people,
with an annual growth rate of 10% over five years. Our secondary market
is fathers in a male only household, currently at a figure of 2,600,000
people and a 0.63% growth rate over five years.



Distribution Channels: We will sell through our online ecommerce store, as well as through partnerships with Target and Amazon as distributors.

Competition: Our direct competition is other suppliers of portable baby bottle systems. Munchkin, Medela, and Tommee Tippee are among the largest
contenders in that market. Indirect competitors are those with stationary bottle warmers such as First Years and Dr. Browns, as well as mothers who prefer to
breastfeed directly.

Financial Projections (Unaudited):
2017 2018 2019 2020 2021
Revenue $4,759,483 $6,519,817 $7,910,082 $9,822,839 $11,166,346
EBIT $(131,201) $324,579 $673,691 $1,375,193 $1,481,270

3. Elevator Pitch
Portability and convenience are essential features for today's customers. TreeTop’s aim is to
provide both features for mothers and fathers around the world with our patented, one of a kind
heating and cooling system, the BabyPak. Parents will be able to quickly warm milk for feeding time
and store any unused milk in a cooled environment to prevent spoilage. This product can be used
anytime, anywhere, creating significant value for the consumer. Being a parent is hard enough! Our
hope is to ease their strain and reduce the chaos in their day to day lives.
Product Description (See supplement on Exhibit 16)
TreeTop, LLC’s product is the BabyPak, which is a small pouch for mobile cooling and
heating of milk (or infant formula). The pouch is in a rectangular shape and has two sealable
compartments, one for cooling and the other for heating. The cooling side has a removable and
reusable ice pack surrounded in insulation to ensure cool temperatures are maintained. The heating
compartment contains battery powered heating coils, and a rechargeable battery equipped with a
USB port. Also provided with the purchase are three convenient, serving size (7fl.oz.) baby bottles
and two ice packs. This product will be offered in Target as well as through online orders via
Amazon and TreeTop’s website. The price of the product, direct to customers, is $59.99.
Competitive Advantage
Our patented design does what no other market offering does by combining two separate
products into one portable package, without substantial increase in cost to consumers. This provides
us with a short-term advantage. Long-term, we plan to research and develop even smaller and more
portable products capable of heating any type of liquid, keeping us competitive and relevant in the
market. We will also find an advantage in our employees by hiring and retaining those who share our
company values.
Value Proposition
The major advantage of our product is that of convenience. With current market offerings,
parents have to keep track of multiple, bulky items to accomplish the task of travelling with milk or
formula. Our product will eliminate this hassle by combining two separate functions into one

4. package. Parents value ease and functionality, and so reducing the number of steps that it takes to
accomplish a given task gives our product an edge.
Business Strategy
TreeTop is a niche startup operating in the baby product industry. We separate ourselves
from our competition through our process efficiency, cost control, and our patented design. In order
to differentiate ourselves in an industry dominated by low-cost, high production giants, TreeTop
delivers a fresh new approach to portable infant care. In keeping with our superior product, we will
be utilizing a value-based costing system. As a make-to stock organization, we will hold inventory
short term for weekly shipping to local distributors as well as constant, long-term inventory for
online sales. To avoid supplier shortages or excess demand, we will keep a safety stock of 5% of
estimated sales on hand.
Business Location
TreeTop, LLC will be located in Tualatin, Oregon. All of the purchased materials needed
for the BabyPak will be shipped from China. Therefore, having our facility next to a major port –
Portland - that offers fast shipping times from China is essential. In the case of unexpected
circumstances in this port, our sales and logistics teams will be prepared to transfer shipping to the
port of Seattle. In case of issues with suppliers in China, our secondary purchasing partners in North
America would be utilized. The majority of our sales are projected to be through online orders, but
about 30% of sales will be through our main brick and mortar partner – Target – which has
distribution centers within 200 miles of our facility.
Outsourcing
Logistics include delivery of materials from the Portland or Seattle ports to the factory as
well as being responsible to deliver finished goods to our local Target distributor and handle all
shipping for orders online.

5. Purchasing
Associates
1
Customer
Service
Representatives
2
IT Specialists
2

* All employees will be full time employees in the company.
* Year 2 and 4 will add 11 full-time workers and 1 manager.
* Year 3 and 5 will add 8 full-time workers, Year 5 would have an additional manager.
* Year 5 will see the addition of a R&D specialist.

Footnotes:
1. General Manager will have many years of experience working in the baby-product industry that has managed product divisions
for other baby product companies and is well versed in managing and expanding the company.
2. Market Manager will create marketing strategies and develop new or modified versions of the product. He will be responsible
for conducting market research, identifying the needs and wants of the consumers, and develop forecasting figures to which
he/she must attain using the resources at his/her disposal.
3. General Operation Manager will implement, direct, and coordinate with his/her staff in order to be as efficient and effective as
possible with the materials that are provided, but maintain the quality, functionality, and safety of the products and the
workers. He/she will be responsible for inventorying of products and working with distributors and supply chain to insure that
products can be made and that orders can be filled.
Exhibit 1: Organizational Chart

6. Position Title
Salary Wage
(Range)
Actual
pay
Projected
Mandatory
payroll taxes
Benefits
Total Taxes
and Benefits
Total Cost
Cumulative
Year 1 Cost
General Manager $150,000-$200,000 $150,000 $10,731.40 $23,272.30 $34,003.70 $184,004 $184,004
Accountant $60,000-$70,000 65,000 $6,509.90 $13,936.90 $20,446.80 $85,447 $85,447
Marketing Manager $110,000-$120,000 $113,000 $10,277.90 $22,092.10 $32,370.00 $145,370 $145,370
Sales Associates (Sales Representative) $60,000-$70,000 $63,500 $6,392.15 $13,685.44 $20,077.59 $83,578 $167,155
Customer Service Representative $30,000-$40,000 $34,840 $4,088.78 $8,092.10 $12,180.88 $47,021 $94,042
Marketing Associate $60,000-$70,000 $64,500 $6,470.65 $13,853.08 $20,323.73 $84,824 $169,647
Information Technology Specialist $55,000-$60,000 $59,960 $6,114.26 $13,091.99 $19,206.25 $79,166 $158,333
Operations Manager $95,000-$105,000 $99,920 $9,251.12 $19,886.81 $29,137.93 $129,058 $129,058
Shipping and Logistics Manager $70,000-$80,000 $71,010 $6,981.69 $14,944.42 $21,926.11 $92,936 $92,936
Purchasing Associate $50,000-$60,000 $50,950 $5,406.98 $11,581.56 $16,988.54 $67,939 $67,939
Shipping and Logistics Team Member $33,000-$43,000 $33,160 $3,913.22 $7,848.50 $11,761.72 $44,922 $44,922
Assembly Line Manager $50,000-$60,000 $55,330 $5,750.81 $12,315.82 $18,066.63 $73,397 $146,793
Assembly Line Worker $16.62/hr $30,581 $3,643.69 $8,166.87 $11,810.56 $42,391 $1,229,349
$2,714,994
Notes for Cost Chart
1) All salaries are averages from http://www.bls.gov/oes/current/oes_or.htm#13-0000-0000.
2) Total Salary increased in year 2 because we hired 11 additional factory workers and 1 additional manager.
3) Total Salary increased in year 3 because we hired 8 additional factory workers.
4) Total Salary increased in year 4 because we hired 11 additional factory workers and 1 additional manager.
5) Total Salary increased in year 5 because we hired 8 additional factory workers and 1 additional manager.
6) All workers are required to pay mandatory payroll taxes: FICA, FUTA, SUTA.
7) 3 levels of Benefits.
-Top tier: 3 weeks paid Vacation, 1-week unpaid vacation, 401(k) with 6% contribution rate, 6-month maternity leave, and holidays.
-Middle tier: Full benefit package with reduced contribution rate on 401 (k)- 4.4%.
-Lower Tier: full benefit package with paid vacation reduced to 2 weeks, and no company 401 (k) plan.
8) Tax rates were based on the 2016 tax rates
9) Maternity leave value was found by taking 10% of the total semi-annual salary average across the company, and spread across all employees
10) Life insurance is costed at 8.4% of total annual income
11) 401 (K) is estimated at an employee savings rate of 6% of annual income, and we contribute 4.4% for middle tier benefits, and 6% on top Tier benefits.
12) Workers compensation is costed at 2.1% of total annual salary across the company.
13) Listed pay is for 12 months
14) We received our health insurance quote from Bankrate.com, and provided health insurance because we see it as a necessary benefit for workers in our industry.
15) The Medicare rate is 1.45% and the social security rate is 6.4% on the first $118,500. These figures were used to find tax expense.
16) Training costs are included in annual salary.


Year
Social
Security
Medicare
Workers
Comp
FUTA SUTA
Health
Benefits
401(k)
3 Weeks Paid
Vacation
6 Month
Maternity
Leave
Total
$106,371.20 $24,099.73 $34,903.05 $17,024.00 $32,155.24 $139,612.20 $2,514.00 $98,396.60 $115,531.40 $570,607.41
$181,954.43 $41,224.05 $59,703.80 $33,600.00 $61,902.57 $238,815.19 $2,806.14 $169,255.88 $228,022.50 $1,017,284.56
$286,895.23 $64,999.70 $94,137.50 $56,896.00 $103,576.41 $376,549.99 $3,098.28 $267,637.88 $386,118.10 $1,639,909.09
$368,723.20 $83,538.85 $120,987.30 $75,264.00 $136,339.84 $483,949.20 $3,244.35 $344,351.60 $510,770.40 $2,127,168.74
$506,562.69 $114,768.11 $166,215.88 $105,728.00 $190,899.59 $664,863.53 $3,682.57 $473,576.12 $717,510.80 $2,943,807.29
Exhibit 2: Employee Costs Chart: Salaries, Benefits, Taxes, and Totals
2017
2018
2019
2020
2021

7. Exhibit 3: Market Segmentation and Targeting
Target Name
Size (# of
People or
Households
in Segment)
Growth
Projection
Description
Priority
level for
targeting
Justification for Targeting
Mothers of
children 1
year and
younger
4,500,000
people
1

10% in 5
years
2

This segment consists of mothers of
infants who are 1 year or younger,
and thus, need milk constantly. Due
to the American way of life many
parents lead a mobile lifestyle, which
allows for the need of an easy and
effective way to feed their infant.
This segment will mostly be middle
class or higher.
1
The members of this segment are constantly on the go. 80% of families
have at least one member employed, and 69% of mothers with children
under 18 are in the labor force (BLS, 2016). Among mothers, 85% have
used a breast pump, and 25% use a breast pump regularly (Campbell,
2014). The focus of the promotion for this target will be convenience and
size. Whether the parent (mother or father) have to take their baby on the
go, or leave it home with a babysitter, this product will help it be easy for
them to do so. This segment is our first priority because it is the most
directly related to this product, and thus has the most need for it.
Male only
household
2,600,000
people
.63% in 5
years
3

This segment consists of single
fathers, whether they are the only
parent in the household, or have a
male partner. They would be a
smaller segment, but still could use
the product for formula and keeping
bottles warm.
2
Members of this segment would still likely be on the go, and appreciate this
product. The number of single-father households has increased from less
than 300,000 in 1960 to 2.6 million in 2011. 24% of all single parent
households are headed by fathers. (Livingston, 2013) Due to these
statistics, they are an obvious and possibly profitable target.





1. There were roughly 4,000,000 births (CDC, 2014) in 2014, and numbers in years surrounding are similar. From the 4,000,000, 77% of new
mothers breastfeed (CDC,2013), thus, roughly 3,080,000 mothers breastfeed. In addition to this number is births in Canada, which average
in the range of 500,000 to 700,000 per year according to the Government of Canada’s website.
2. U.S. native births are projected to increase by 22% by 2020 (U.S. Census, 2015), thus for 5 years it would increase 10%.
3. There has been a 7% increase from 1960 to 2016, thus a .13 increase a year. Projecting for 5 years would be .63%.

8. Year
Tot Mkt
Potential (#
Customers)
1
Mkt Growth
Projection
2
Market
Share
3 Product Channel
Annual Unit
Sales
4
Unit Price
(Less
Markup)
Annual $
Revenue
Year 1 4,100,000 --- 2.150% BabyPak Direct (B2C) 61,705 $59.99 $3,701,683
Retail (B2B) 26,445 $40.00 $1,057,800
Totals 88,150 $4,759,483
Year 2 4,543,425 0.965% 2.660% BabyPak Direct (B2C) 84,527 $59.99 $5,070,775
Retail (B2B) 36,226 $40.00 $1,449,040
Totals 120,753 $6,519,817
Year 3 4,586,385 0.946% 3.197% BabyPak Direct (B2C) 102,552 $59.99 $6,152,095
Retail (B2B) 43,950 $40.00 $1,758,000
Totals 146,502 $7,910,083
Year 4 4,629,636 0.943% 3.933% BabyPak Direct (B2C) 127,350 $59.99 $7,639,727
Retail (B2B) 54,578 $40.00 $2,183,120
Totals 181,928 $9,822,839
Year 5 4,672,414 0.924% 4.430% BabyPak Direct (B2C) 144,768 $59.99 $8,684,633
Retail (B2B) 62,043 $40.00 $2,481,720
Totals 206,811 $11,166,347
1
US Census Population Reports on the number of new babies born (Colby, 2014) and foreign adopted children under 1 (Bureau of Consular Affairs -
travel.state.gov); and QuickFacts for fertility projection (U.S. 2015). In year 2, our online campaigns will launch in Canada (births in Canada per year -
Government of Canada)
2
Population projections as well as US demand factors, i.e. Increased employment, improving economy, optimism ("Baby", 2016)
3
Industry giants dominate the share (P&G, J&J, KC) with 9% - 18%. Our share of the market as a whole would be small, but we are profiting in the niche market
(Company Shares, 2016)
4
Because our top target market operates primarily online, we project that 70% of our sales will be through online channels

Forecast by
month Units Revenue ($)
Jan '17 5,245 $283,250
Feb 6,171 $333,235
Mar 6,665 $359,894
Apr 6,788 $366,558
May 8,146 $439,870
Jun 6,612 $357,037
Jul 9,257 $499,852
Aug 10,579 $571,260
Sep 7,405 $399,882
Oct 6,480 $349,897
Nov 7,714 $416,543
Dec 7,097 $383,220
Exhibit 4: Market Quantification

9. *Monthly demand includes the slight increase in
births in the summer months

10. Exhibit 5: Positioning/Competitive Analysis




Positioning Statement: For parents living in today's high pace world, the BabyPak is the most convenient and portable
baby bottle system on the market. By combining a cooler to keep milk or formula cool until use and a warmer to ensure
optimal drinking temperature, the BabyPak eliminates the need for carrying separate, bulky products all related to the same
task. Where convenience and ease-of-use are a must, the BabyPak will be a one stop solution to a core parenting task.

While there are separate products designed to warm or cool milk and formula, the previously unpatented Babypak will
combine both functions into one streamlined product.

11. Exhibit 6: Marketing Mix
Product/Service Branding
Our name, T reeT op, is positive and distinctive. We also wanted to use a name that allows for growth and diversification. Our logo is clean and simple, yet memorable
and easily recognized. Our motto, "Giving to Grow", symbolizes our desire to aid parents in raising happy, healthy children. As a whole, our brand is designed to
instill thoughts of caring and positivity while avoiding limitations in the child care industry.

Pricing 2017 2018 2019 2020 2021
Unit Variable Cost: $21.46 $21.53 $23.07 $21.42 $21.47
Wholesale Price: $40.00 $40.00 $40.00 $40.00 $40.00
Retail Price: $59.99 $59.99 $59.99 $59.99 $59.99
T here is a wide range of prices on products in this market. Competing products range from $10 for very basic insulated bottles to over $200 for high end specialty
warmers or coolers. Our product, with a retail price of $59.99, employs psychological pricing by using a number that includes nines and is below the major price point
of $60. T his is a price point that is still well within the price range of our competition, and reflects the significant added value of our product. Our variable cost should
remain fairly constant, as our materials are non-specialty and our suppliers well established. Amazon fees and fulfillment will cost an estimated 25% of the sale price
(Amazon Fees and Fulfillment, 2016) and we estimate T arget to have a markup of 35% (T arget Corporate, 2013). We are assuming an average of 30% markup on our
product, giving a wholesale price of $40.00.

Distribution/Location Strategy
We will be utilizing both direct and indirect distribution methods in order to maximize our customer base. T he majority of our products will be sold online. We will
also maintain our own ecommerce site to capitalize on those consumers who prefer to purchase directly from the manufacturer. Our location in T ualatin, Oregon is
ideal for our business, as it is in close proximity to all of the major landmarks necessary for a manufacturing company. Nearby Portland is home to a major port with
one of the shortest shipping routes to China, making sourcing materials cheap and timely. Our major distributors (Amazon, T arget) all have facilities within 200 miles
of our location, and we are in a location with easy access to experienced executives and manufacturing workers.


Promotional Strategy (,000) 2017 2018 2019 2020 2021
Total IMC Budget (100%): $380.8 $522.1 $633.3 $589.9 $670.6
Production Exp (9%): $34.27 $46.99 $57 $53.09 $60.35
Advertising Exp (75%): $285.6 $391.58 $474.98 $442.43 $502.95
Sales Promo Exp (6%): $22.85 $31.33 $38 $35.4 $40.24
PR Exp (10%): $38.08 $52.21 $63.33 $58.99 $67.06

Other Promo Expense
We will be advertising exclusively through the internet and social media to target our customer demographic (primarily young adults), and on a constant basis with
pulses in spring to account for an increase in births in the summer months. Our advertising budget is designed to reach approximately two million potential consumers
in the first year across YouT ube, Facebook, and Pandora. With a conversion rate of 0.25%, we should be able to acquire 50,000 customers from advertising alone.
Word-of-mouth and impulse purchases should let us surpass our sales target of 88,000. We will spend $12,900 to produce Pandora ads in year one, and an additional
$19,360 to produce video ads for YouTube. Facebook ads are generally short and photo based, and so we are budgeting only $2,000 for research into what makes an
effective Facebook ad. We assume that ad production costs will rise slowly through the years, to account for refreshing ads and increasing quality as audience increases. Our
sales are primarily through our online store, and so sales promotions will be limited to discounts on our website and promotional giveaways, which will be targeted around
Mother's day and Christmas. We are allowing 10% of our promotional budget for public relations each year.
# of Salespeople: 2 2 2 2 2
Compensation Method: $63,500.00 $63,817.50 $64,136.59 $64,458.28 $64,780.59

Our sales associates are responsible for maintaining connections with our retail businesses and suppliers. Since they’re not responsible for making sales, the
compensation method reflects the cost of salaries. Interpersonal skills and a history in sales relations will be highly desired. T he marketing associates will need to have
experience in internet marketing to maximize conversions while staying within our marketing budget. T he marketing manager should be well versed in both fields in
order to manage resources effectively. We will keep a close eye on advertising effectiveness and sales figures to ensure that we reach our goals.

Advertising budget, year one:
Pandora:
$133,518
for an estimated
30,487
views per day

YouTube:
$76,027
for an estimated
4,166
views per day

Facebook: $76,027 for an estimated
18,329
views per day


Pandora Ads(n.d.), Youtube Advertising (n.d.), Facebook Ad Manager (2016)

12. Exhibit 7: Process Map










































Major quality steps:
Quality
Step
What is measured? How often? How will you ensure quality?
Q1
Check that the seams are up to
Standards, that the zipper is functional.
1 out of 10
units
If the seams are not within the standard range and/or the zipper, the stitching will be
removed and new stitching will be applied. Non-functional zipper will be replaced.
Q2 Shielding and solder is installed 1 out of 5 units If any of the components are not functioning, the unit will be re-soldered and tested.
Q3 That the interior lining fits correctly.
1 out of 10
units
If the interior lining does not fit the standard case the old lining will removed from the case
and a new one will be sewed.
Critical failure points:
Failure
Point
Brief description How will you prevent this failure? How will you recover if this failure occurs?
F1 Non-Standard made cases will not leave
enough room for the bottles
Quality control check point before
the case moves in the assemble
process.
This will be corrected by removal from the assembly line and a new unit
will be manufactured in its place.
F2 Inadequate flux applied to the wires can
lead to loss of power and potential fire
hazard.
Adequate training and quality review
by supervisors.
The failure will be addressed and the old solder removed from the
component(s) and new flux will be applied to the connection until a solid
connection is made. Continuous failure will lead to retraining.
F3 Inadequate flux applied to the wire lead
to fire hazard and loss efficiency in
heating.
Adequate training and quality review
by supervisors.
The failure will be addressed and the old solder removed from the
component(s) and new flux will be applied to the connection until a solid
connection is made. Continuous failure will lead to retraining.

13. Exhibit 8: Quality Assurance
Indicate the
Dimensions of
Quality on which
you will focus.
Why is this dimension important, given your industry & target
market?
Identify the Quality Step(s) on
the Process Flowchart /
Service Blueprint to which this
corresponds.
Performance


Quality in performance for young parents is very central. The BabyPak
has to be able to perform quickly, easily, and without complicated
processes.

Purchasing Materials
Assembly
Convenience


The convenience factor of the BabyPak is imperative. Our market, young
families, needs the product to fit in a diaper bag for on the go. They need
it to be compact and portable.

Design
Reliability


BabyPak’s reliability dimension refers to its safety features, which are
priority one in a parent’s mind. The bottles are breast milk and formula
safe; the plastic is BPA free; the battery is rechargeable and contained in
hard plastic.

Purchasing Materials
Assembly


Use the space below to describe any additional Proactive Quality Assurance Plans that are not connected to a specific
activity on your Process Flowchart / Service Blueprint.

Other specific proactive plans for BabyPak include maintaining quality relationships with suppliers and distributors; hiring and training
superior Assembly Line managers; and cultivating incentive programs for Assembly
Line workers.

Describe any reactive quality assurance plans. Include a recovery plan should a customer receive poor quality goods
and/or services.

If a defective unit is purchased, the LLC will provide easy returns and refunds. The unit will be inspected and researched to find the
other units its batch. If the defect is dangerous, the batch will be recalled. If the source of the fault (dangerous or not) is with our
processes or suppliers, an extensive investigation will be made priority.



If you will utilize a quality/process improvement methodology, indicate which:
☐ NA ☒ TQM ☐ Six Sigma ☐ ISO ☐ Benchmarking

Note: You will not use all of them; only those with highest relevance.
Provide a specific explanation of how your chosen quality methodology relates to your business and how it will be
applied:

As a relatively small startup operation with only one product, Total Quality Management, while intensive and costly, will be the most
relevant quality/process improvement methodology. As safety and performance are high priorities for our customers, the extra cost will
be offset by the improvement of assembly processes, thereby avoiding inefficiency cost. Each process in the flow will be fully tested
and analyzed every few months to determine issues in quality as well as determine from which process the quality issues stem. We will
control TQM to keep costs low.

14. Exhibit 9A: Inventory Supplier and Distribution

Material Inventory & Supplier Selection If your organization does not have raw material inventory, please check this box: ☐NA
*Data is an estimation from Supply Intermediary and Certifier Alibaba.com
Secondary suppliers in U.S. and Mexico w ill be on hand in case of emergencies, and w e w ill have a long term goal to shift all operations to these suppliers. These suppliers
include Novatex, Axiom, SANYO energy corporation.

Finished Goods Inventory If your organization does not have finished goods inventory, please check this box: ☐NA
Time Period Finished goods produced
(per hour)
Frequency of shipping finished
goods
Amount of safety stock on site (5% of
estimated demand per year, divided by 12)
At the end of Year 1 51 Once a day 408
At the end of Year 2 69 Once a day 552
At the end of Year 3 84 Once a day 672
At the end of Year 4 104 Once a day 832
At the end of Year 5 119 Once a day 952

What is the lifespan of your finished goods inventory? ☐NA Nonperishable
How will you manage perishability of Finished Goods Inventory? ☒NA
Distribution If your organization does not require distribution, please check this box: ☐NA
Name of transportation provider/carrier Reason(s) for selecting this provider/carrier Frequency of Pick Up / Drop off

May Trucking Company (provider)
- Our facility to distributer

They are located in Oregon; their rates are competitive; as a company, they are established in the region; and
their mission is people and planet oriented, w hich aligns w ith our long-term quality goals.


Once a w eek for the first tw o years, tw ice a w eek
for the next three as the business expands. After
five years, once a day.


May Trucking Company (carrier)
- New port Dock to our facility


See above


About once a month
Item(s)
Supplier Name & Location
(City, State, Country)
Reason for selecting this supplier
Supplier lead
time (in
days)
Frequency of
replenishment (in
days)
System of Management Mode(s) of Transportation
Canvas Fabric and
Zippers
Ningbo UniCord Imp & Exp
Co. (Zhejiang, China)
Cost per meter is competitive; shipping is quick; payment, shipping,
and quality is certified.
>30 37
ABC System

☒ Highw ay ☐ Rail
☒ Waterw ay ☐ Air
IcePack
Jack Zhang Shanghai Huizhou
Industrial Co. (Shanghai, China)
While minimum number of units is high, customizable options
(color, size, material) and food safety outw eigh outright cost and
storage.
>30 234
ABC System

☒ Highw ay ☐ Rail
☒ Waterw ay ☐ Air
Batteries (rechargeable)
Ningbo Bodaw utong Battery Co.
(Zhejiang, China)
Minimum purchase is flexible, battery produced is rechargeable,
pow erful (5 yr longevity), and safe. Shipping is fast.
21 35
ABC System

☒ Highw ay ☐ Rail
☒ Waterw ay ☐ Air
Bottles
Guangzhou Laodou Baby
Commodity Co. (Guangdong,
China)
Bottles are BPA free, lead free, nontoxic, inexpensive per unit, and
the dimensions are customizable.
>30 33
ABC System

☒ Highw ay ☐ Rail
☒ Waterw ay ☐ Air
Insulation
Shaoxing Zhizi Textile Co.
(Zhejiang, China)
The insulated fabric is stretchable, w ater resistant, and uses eco-
friendly dyeing. Cost per Kilogram.
45 37
ABC System

☒ Highw ay ☐ Rail
☒ Waterw ay ☐ Air
Mesh Fabric
Jinjiang Huayu Weaving Co.
(Fujian, China)
Design, color, and w eight is customizable. Company is
environmentally green. Product is shrink resistant and moisture
proof.
25 140
ABC System

☒ Highw ay ☐ Rail
☒ Waterw ay ☐ Air

15. Exhibit 10: Capacity
Time Period
Average
Production
(units per hour)
Hours of Operation
(per day)
Capacity
(units per hour)
Utilization
per hour
At Start Up 0 0

0 -%
At the end of Year 1 48 8

51
30%
At the end of Year 2 66 8

69 30%
At the end of Year 3 80 8

84 30%
At the end of Year 4 99 8

104 30%
At the end of Year 5 113 8

119 30%

Bottleneck
Brief description of
Bottleneck
How will you manage the bottleneck identified on your
Process Map to ensure you can appropriately serve or
supply your customers?
B1
The bottleneck is the
assembly of the
components and
manufactured parts into the
final product.
Efficient sewing machines, employee training with a set
procedure on how to assemble the product, and higher
percentage of workers located at this station.

Additional resources (beyond your bottleneck) must be appropriately allocated to support
operations. Identify which resources have a significant impact on your capacity at start up and
describe why these are appropriate amounts of resources to start up your organization.

Workforce: At start up, our workforce will include high level management (General Manager, Marketing
Manager, Operations Manager), 29 Assembly Line workers and basic support staff (to maintain supplier
relations and to continue hiring assembly line labor).

Supplies inventory: The first supplies purchase will be an investment. It will maintain inputs for at least a
month, but can last longer depending on year one demand.

Facility: Our intended facility includes office space, an assembly floor, an input warehouse, a finished
good warehouse, and a loading bay. There is enough space to start up, and expansion would not involve
moving operations to a new facility.

Describe all/any adjustments you will make as resource requirements vary with time. Be specific
regarding which key resources will be adjusted, when and how. If you will make multiple
adjustments, explain each adjustment.

Our most prominent adjustment will be for expansion. In the 5
th
year, our resource orders will need to
increase as well as our equipment.


How will you manage
seasonality?
☐NA

There is a slight increase in children born in the summer months, especially
July and August. By over producing and keeping a larger safety stock in less
profitable months, we will have the inventory to cover high demand months
without increasing production.

16. Exhibit 11: Income Statement



TreeTop, LLC
For the Year Ended Month 31,

12/31/2017 % 12/31/2018 % 12/31/2019 % 12/31/2020 % 12/31/2021 %
Sales Revenue $4,759,482.95 100.00% $6,519,816.73 100.00% $7,910,082.49 100.00% $9,822,838.50 100.00% $11,166,346.32 100.00%
COGS
Direct Labor $997,503.20 20.96% $1,416,829.80 21.73% $1,798,282.68 22.73% $2,274,280.44 23.15% $2,803,762.35 25.11%
Direct Materials $931,133.48 19.56% $1,275,517.46 19.56% $1,547,509.68 19.56% $1,921,711.50 19.56% $2,184,549.12 19.56%
MOH $23,139.50 0.49% $31,697.75 0.49% $38,457.00 0.49% $47,756.25 0.49% $54,288.00 0.49%
Total COGS $1,951,776.18 41.01% $2,724,045.01 41.78% $3,384,249.36 42.78% $4,243,748.19 43.20% $5,042,599.47 45.16%
Gross Profit $2,807,706.77 58.99% $3,795,771.72 58.22% $4,525,833.13 57.22% $5,579,090.31 56.80% $6,123,746.85 54.84%

General and Administrative Expenses
Salaries and Wages* $1,028,640.00 21.61% $1,049,212.80 16.09% $1,070,197.06 13.53% $1,091,601.00 11.11% $1,177,943.02 10.55%
Payroll Tax Expenses $220,016.00 4.62% $271,164.96 4.16% $304,613.82 3.85% $355,078.32 3.61% $394,393.20 3.53%
Employee Benefits and Retirement $480,646.00 10.10% $582,797.00 8.94% $656,299.00 8.30% $766,617.00 7.80% $852,435.00 7.63%
Shipping Expense (3PL) $528,900.00 11.11% $724,518.00 11.11% $879,012.00 11.11% $1,091,568.00 11.11% $1,240,866.00 11.11%
General Insurance Expense $147,045.36 3.09% $147,780.59 2.27% $148,519.49 1.88% $149,262.09 1.52% $150,008.40 1.34%
Equipment Expense $4,550.00 0.10% $24,399.00 0.37% $6,100.00 0.31% $4,550.00 0.06% $0.00 0.04%
Depreciation Expense $47,929.80 1.01% $48,839.80 0.75% $53,719.60 0.68% $54,939.60 0.56% $55,849.60 0.50%
Amortization Expense $2,416.00 0.12% $2,416.00 0.09% $2,416.00 0.07% $2,416.00 0.06% $2,416.00 0.05%
Rent Expense $62,565.00 1.31% $62,565.00 0.96% $62,565.00 0.79% $62,565.00 0.64% $62,565.00 0.56%
Advertising and Promotion Expense $380,800.00 8.00% $522,100.00 8.01% $633,300.00 1.00% $589,900.00 6.01% $670,600.00 6.01%
Manufacturing License $400.00 0.01% $400.00 0.00% $400.00 0.01% $400.00 0.00% $400.00 0.00%
Server/Website maintenance Expense $15,000.00 0.32% $15,000.00 0.23% $15,000.00 0.19% $15,000.00 0.15% $15,000.00 0.13%
Office Expense $20,000.00 0.42% $20,000.00 0.31% $20,000.00 0.25% $20,000.00 0.20% $20,000.00 0.18%
Total General & Administrative
Expenses $2,938,908.16 61.75% $3,471,193.15 53.24% $3,852,141.97 48.70% $4,203,897.01 42.80% $4,642,476.22 41.58%
Earnings Before Interest and Taxes ($131,201.39) -2.76% $324,578.57 4.98% $673,691.16 8.52% $1,375,193.30 14.00% $1,481,270.63 13.27%
Interest Expense $0.00 0.00% $0.00 0.00% $0.00 0.00% $0.00 0.00% $0.00 0.00%
Earnings Before Taxes ($131,201.39) -2.76% $324,578.57 4.98% $673,691.16 8.52% $1,375,193.30 14.00% $1,481,270.63 13.27%
Income Tax Expense ($8,659.29) -0.18% $21,422.19 0.33% $44,463.62 0.56% $90,762.76 0.92% $97,763.86 0.88%
Net Income (Loss) ($122,542.10) -2.57% $303,156.38 4.65% $629,227.54 7.95% $1,284,430.55 13.08% $1,383,506.77 12.39%

Beginning Balance of Retained Earnings $0.00 ($122,542.10) $180,614.29 $809,841.82 $2,094,272.37
Net Income (Loss) ($122,542.10) $303,156.38 $629,227.54 $1,284,430.55 $1,383,506.77
Dividends to Stockholders $0.00 $0.00 $0.00 $0.00 $0.00
Ending Retained Earnings ($122,542.10) $180,614.29 $809,841.82 $2,094,272.37 $3,477,779.14

17. Exhibit 11A: Income Statement Notes

- Sales Revenue is based on the channel, unit sales, and unit price (less markup). Exact figures can be found on the market
quantification.
- COGS is based on product cost, which includes DL, MOH, and DM. Year 1 Product cost is $21.09. Year 2, $27.28. Year 3,
$22.00. Year 4, $22.22. Year 5, $23.22.
- Salaries/Wages: 30 factory workers and 2 managers added in year 1, 11 Factory workers and 1 manager added in year 2, 9 factory
workers added in year 3, 12 factory workers and 1 manager added in year 4, 9 factory workers and 1 manager added in year 5. Pay
roll and tax expense is derived from both administrative and direct labor salaries. In years 3 and 5 Admin employees get a 5% raise
based on good job performance (we expect half of employees to get raise in year 3 and other half in year 5). Factory Workers
receive a cost of living adjustment on their wages of $1 in years 3 and 5. In years 3 and 5 all Factory Managers receive a 5% cost
of living adjustment on their salaries. All salaries are adjusted for inflation, cost of living adjustments, and raises.
- Payroll tax expense is based on a combination of Medicare, SS, FUTA, SUTA, and income taxes for each employee.
- Employee benefits and retirement is based on the data from the cost chart.
- General Insurance Expense is based on data from the benefit cost chart.
- Depreciation Expense is based on straight-line depreciation.
- Rent Expense is based on a distribution warehouse located in Tualatin, OR, that is currently available for rent. There are
12,513 Sq. Ft. available, with a negotiable rate. We looked up the average and made an estimate of $5.00 per square foot.
Rent stays constant for all 5 years.
- Website Expense is based on an estimate of a flat fee for annual maintenance.
- Advertising and Promotion Expense is based on obtaining 50,000 sales as a result of pure marketing in year one. Costs rise at a
steady rate as our advertising budget and sales figures increase.
- Manufacturing License is $400, and has to be renewed on a yearly basis, because it expires on September 30, annually.
- Office Expense is based on an estimate of a $20,000 flat yearly expense. This will be our budget to stay within for office
supplies/ongoing expenses.

18. Inception Date Ending Date Ending Date Ending Date Ending Date Ending
Date % Year 1 % Year 2 % Year 3 % Year 4 % Year 5 %
ASSETS
Current Assets
Cash and Cash Equivalents $1,485,706.00 74.29% $1,335,723.62 55.82% $1,654,937.11 55.67% $2,262,039.19 59.08% $3,463,638.18 64.49% $4,781,159.53 68.26%
Rent $62,565.00 3.13% $62,565.00 2.61% $62,565.00 2.10% $62,565.00 1.63% $62,565.00 1.16% $62,565.00 0.89%
Accounts Receivable $0.00 0.00% $475,948.30 19.89% $651,981.67 21.93% $791,008.25 20.66% $982,283.85 18.29% $1,116,634.63 15.94%
Inventory $0.00 0.00% $92,951.76 3.88% $222,675.35 7.49% $383,848.94 10.03% $585,944.89 10.91% $826,078.62 11.79%
Short Term Investments 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Total Current Assets $1,548,271.00 77.41% $1,967,188.68 82.21% $2,592,159.14 87.20% $3,499,461.38 91.41% $5,094,431.92 94.86% $6,786,437.78 96.89%
Fixed (Long-Term) Assets
Machinery and Equipment $239,649.00 11.98% $264,048.00 11.03% $270,148.00 9.09% $274,698.00 7.18% $279,248.00 5.11% $279,248.00 3.99%
Buildings $0.00 0.00% $0.00 0.00% $0.00 0.00% $0.00 0.00% $0.00 0.00% $0.00 0.00%
Servers, Computers, and
Networking $200,000.00 10.00% $200,000.00 8.36% $200,000.00 6.73% $200,000.00 5.22% $200,000.00 3.72% $200,000.00 2.86%
Land $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 Gross Fixed Assets $439,649.00 21.98% $464,048.00 19.39% $470,148.00 15.82% $474,698.00 12.40% $479,248.00 8.92% $479,248.00 6.84%
Less: Accumulated
Depreciation $0.00 0.00% $47,929.80 2.00% $96,769.60 3.26% $150,489.20 3.93% $205,428.80 3.83% $261,278.40 3.73%
Net Fixed Assets $439,649.00 21.98% $416,118.20 17.39% $373,378.40 12.56% $324,208.80 8.47% $273,819.20 5.10% $217,969.60 3.11%
Other Long Term Assets
Long Term 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%
Patent, Net of Amortization $12,080.00 0.60% $9,664.00 0.40% $7,248.00 0.24% $4,832.00 0.13% $2,416.00 0.04% - 0.03%
Total Other Long Term
Assets $12,080.00 0.60% $9,664.00 0.40% $7,248.00 0.24% $4,832.00 0.13% $2,416.00 0.04% $0.00 0.00%
Total Assets $2,000,000.00 100.00% $2,392,970.88 100.00% $2,972,785.54 100.00% $3,828,502.18 100.00% $5,370,667.12 100.00% $7,004,407.38 100.00%
LIABILITIES
Current Liabilities
Accounts Payable $0.00 0.00% $465,566.74 90.31% $637,758.73 80.51% $773,754.84 75.96% $960,855.75 75.28% $1,092,274.56 71.55%
Accrued Salaries and Wages $0.00 0.00% $41,145.60 7.98% $113,721.52 14.36% $179,309.52 17.60% $230,452.00 18.05% $316,601.68 20.74%
Accrued Payroll Taxes and
Benefits $0.00 0.00% $8,800.64 1.71% $40,691.00 5.14% $65,596.00 6.44% $85,087.00 6.67% $117,752.00 7.71%
Notes Payable $0.00 0.00% $0.00 0.00% $0.00 0.00% $0.00 0.00% $0.00 0.00% $0.00 0.00%
Current Maturity of LT Debt $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 Current Liabilities $0.00 0.00% $515,512.98 100.00% $792,171.25 100.00% $1,018,660.36 100.00% $1,276,394.75 100.00% $1,526,628.24 100.00%
Long-Term Liabilities
LT Debt Less Current
Maturities 0.00% $0.00 0.00% $0.00 0.00% $0.00 0.00% $0.00 0.00% $0.00 0.00%
Total Liabilities $0.00 0.00% $515,512.98 100.00% $792,171.25 100.00% $1,018,660.36 100.00% $1,276,394.75 100.00% $1,526,628.24 100.00%
STOCKHOLDER'S
EQUITY
Shares Outstanding $2,000,000.00 100.00% $2,000,000.00 83.58% $2,000,000.00 67.28% $2,000,000.00 52.24% $2,000,000.00 37.24% $2,000,000.00 28.55%
Retained Earnings $0.00 0.00% ($122,542.10) -5.12% $180,614.29 6.08% $809,841.82 21.15% $2,094,272.37 38.99% $3,477,779.14 49.65%
Total Stockholders' Equity $2,000,000.00 100.00% $1,877,457.90 78.46% $2,180,614.29 73.35% $2,809,841.82 73.39% $4,094,272.37 76.23% $5,477,779.14 78.20%
Total Liabilities and
Stockholders' Equity $2,000,000.00 100.00% $2,392,970.88 100.00% $2,972,785.54 100.00% $3,828,502.18 100.00% $5,370,667.12 100.00% $7,004,407.38 100.00%
Exhibit 12: Balance Sheet

19. Cash and Cash Equivalents: -Inception balance is a $2 mil loan less machinery and equipment, and prepaid rent. All other years are from the changes in cash flows.
Accounts Receivable: -AR balance is based on an optimistic estimate that 10% of sales are credit purchases.

Inventory: -Value of unsold stock at the end of each year.

Machinery and Equipment: -For each type of equipment: Number of worker stations using equipment, times the number of machines they need, times the price per machine.
Buildings: -We pay $62,565 yearly, prepaid rent.

Land: -We own no land.

Less: Accumulated Depreciation: -Straight-line deprecation for five years on all new purchases, added deprecation from previous year

Long Term Investments: - No long term investments

Intangibles, Net of Amortization: - Straight line in the amount of $2416

Accounts Payable*: - 50% of supplies expense in the only purchase we intend to make on credit.

Accrued Salaries and Wages: -TreeTop pays out wages and salaries on the 1st and the 15th. So accrued salaries are calculated based on 4% (last two weeks of the
year) of their annual salary.
Accrued Payroll Taxes and Benefits: -TreeTop pays out wages and salaries on the 1st and the 15th. So accrued taxes and benefits are calculated based on 4% (last two
weeks of the year) of their annual salary.

Accrued Salaries and Wages: -TreeTop pays out wages and salaries on the 1st and the 15th. So accrued salaries are calculated based on 4% (last two weeks of the year) of their annual salary.
Accrued Payroll Taxes and Benefits: -TreeTop pays out wages and salaries on the 1st and the 15th. So accrued taxes and benefits are calculated based on 4% (last two weeks of the year) of their
annual salary.


* Supplies Expense: Our production capacity in years 1 through 5 is 51, 69, 84, 104, and 119 units per hour, respectively. Using the capacity figures, growth rate is 111.76% for year 1 to 2, 83.33%
for year 2 to 3, 36.36% year 3 to 4, and 43.33% for year 4 to 5. Total cost of our year one supplies multiplied by 1 plus the growth rate is roughly each years' supplies expense.


Exhibit 12A: Balance Sheet Notes

20. 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021
Cash Flows From (For) Operations
Net Income ($122,542.10) $303,156.38 $629,227.54 $1,284,430.55 $1,383,506.77
Amortization $2,416.00 $2,416.00 $2,416.00 $2,416.00 $2,416.00
Depreciation $47,929.80 $48,839.80 $53,719.60 $54,939.60 $55,849.60
Changes in Current Assets
Accounts Receivable ($475,948.30) ($176,033.38) ($139,026.58) ($191,275.60) ($134,350.78)
Rent Expense ($62,565.00) $0.00 $0.00 $0.00 $0.00
Inventory ($92,951.76) ($129,723.59) ($161,173.59) ($202,095.94) ($240,133.74)
Changes in Current Liabilities
Accounts Payable $465,566.74 $172,191.99 $135,996.11 $187,100.91 $131,418.81
Accrued Salaries and Wages $41,145.60 $72,575.92 $65,588.00 $51,142.48 $86,149.68
Accrued Payroll Taxes and Benefits $8,800.64 $31,890.36 $24,905.00 $19,491.00 $32,665.00
Cash From (For) Operating Activities ($188,148.38) $325,313.48 $611,652.09 $1,206,148.99 $1,317,521.34

Cash Flow (For) From Investing Activities
Fixed Asset Purchases ($464,048.00) ($6,100.00) ($4,550.00) ($4,550.00) $0.00
Short Term Investments $0.00 $0.00 $0.00 $0.00 $0.00
Long Term Investments ($12,080.00) $0.00 $0.00 $0.00 $0.00
Net Cash Flows (For) From Investing ($476,128.00) ($6,100.00) ($4,550.00) ($4,550.00) $0.00

Cash Flow From (For) Financing Activities
Short Term Debt Borrowings $0.00 $0.00 $0.00 $0.00 $0.00
Long Term Debt Borrowings $0.00 $0.00 $0.00 $0.00 $0.00
Short Term Debt Payments $0.00 $0.00 $0.00 $0.00 $0.00
Long Term Debt Payments $0.00 $0.00 $0.00 $0.00 $0.00
Dividends Paid to Stockholders $0.00 $0.00 $0.00 $0.00 $0.00
Issuance of Common Stock $2,000,000.00
Cash Flows From (For) Financing $2,000,000.00 $0.00 $0.00 $0.00 $0.00
Net Change in Cash $1,335,723.62 $319,213.48 $607,102.09 $1,201,598.99 $1,317,521.34
Beginning Cash Balance $0.00 $1,335,723.62 $1,654,937.11 $2,262,039.19 $3,463,638.18
Net Change in Cash $1,335,723.62 $319,213.48 $607,102.09 $1,201,598.99 $1,317,521.34
Ending Cash Balance $1,335,723.62 $1,654,937.11 $2,262,039.19 $3,463,638.18 $4,781,159.53
Exhibit 13: Statement of Cash Flows

21. - Cash flow for net income and depreciation comes directly from the income statement.
- The change in Accounts Receivable is found by subtracting the end of year balance for the
target year from the year before (or inception date in the case of Year 1 AR)
- The Inventory is found by subtracting the current year's inventory by the previous year's
inventory.
- Accounts Payable is referenced from the balance sheet in year one, and in all other years it is
the difference between the current AP and the previous AP.
- Accrued salaries and wages and accrued payroll, taxes, and benefits is referenced from the
balance sheet, with each years' cash flow as the difference between the current years' accrual
and the previous years' accrual.
- Fixed Asset Purchases for year 1 is referenced to the balance sheet, where we are buying
fixed assets for both year 1 and year 2, and every year after that is buying the fixed assets
needed for the next year.
- Long Term Investments is the one time purchase of our patent.

Exhibit 13A: Statement of Cash Flows Notes

22. Year 1 Year 2 Year 3 Year 4 Year 5 Benchmarks
1
Liquidity
Working Capital $1,451,675.70 $1,799,987.89 $2,480,801.02 $3,818,037.17 $5,259,809.54 $1,075,923.00
Current Ratio $3.82 $3.27 $3.44 $3.99 $4.45 $1.79
Quick Ratio $3.64 $2.99 $3.06 $3.53 $3.90 $0.84
Efficiency

Gross Profit Margin 58.99% 58.22% 57.22% 56.80% 54.84% 26.47%
Op. Profit Margin -2.76% 4.98% 8.52% 14.00% 13.27% 43.70%
Net Profit Margin -2.57% 4.65% 7.95% 13.08% 12.39% 29.90%
Productivity

Inventory TO

20.9977

12.2333

8.8166

7.2426

6.1043 7.9900
A/R TO 10.0000 10.0000 10.0000 10.0000 10.0000 10.4200
Fixed Asset TO 10.2564 13.8676 16.6634 20.4964 23.2997 36.7400
Total Asset TO 2.3797 2.1932 2.0661 1.8290 1.5942 2.9500
Financial Leverage

Debt Ratio* NA NA NA NA NA 0.5890
Debt-Equity Ratio* NA NA NA NA NA 0.6960
Equity Multiplier 3.815 3.272 3.435 3.991 4.445 2.436
Times Interest
Earned* NA NA NA NA NA 11.8726
Cash Flow to Debt -$0.36 $0.41 $0.60 $0.94 $0.86 $0.03
Owner

Book Value per Share $1 $1 $1 $1 $1 *
Market to book 1 1.26 1.67643 2.05476975 2.283876577 *
Dividend Payout
3 NA NA NA NA NA *
Dividend Per Share
3 NA NA NA NA NA *
Price-Earnings Ratio -65.28 26.38 12.71 6.22 5.78 15.04
2

* TreeTop has a zero-debt structure, so some ratio comparisons are not able to be performed.
1
Benchmarks were calculated using a report from BizMiner outlining the average financial ratios from 17 baby product
companies making about the same as us in terms of revenue (http://reports.bizminer.com/temp/pdf/6073349550.pdf)
2
Mean of Fortune 500 P/E ratios according to Investopedia
3
TreeTop does not have plans to distribute dividends in our beginning 5 years.


Exhibit 14: Financial Ratios and Analysis
21

23. Year 5
Sensitivity
Bust Estimated
1 Boom
-20% 0% 20%
Market Share 3.544% 4.430% 5.316%
Demand (Units) 165,449 206,811 241,280
Revenue $8,933,077 $11,166,346 $13,027,404
COGS
2 -$3,639,874 -$4,549,842 -$5,308,149
Gross Profit $5,293,203 $6,616,504 $7,719,255
Fixed Costs -$4,577,966 -$4,577,966 -$4,577,966
EBIT $2,354,295 $3,677,596 $4,780,347





























Exhibit 13: Statement of Cash Flows
1 Estimated numbers are from year 5 on the Income Statement
2 Average COGS is $22 per unit
Equity
- Shareholders will buy in at $1.00 per share with an expected return of 78% in 10 years.
- We determined this price and return was appropriate because similar speculative grade
investments are in the same range (found on finra.org).

Cost of Capital
- Our budding organization has a zero debt capital structure and a plan to withhold equity
dividends in our first years in order to focus on growth stimulation.
- Without a cost of debt or a cost of equity, a WACC is unlikely to be calculated reliably.

Sensitivity
- Even if our estimated market share is off - therefore changing our demand and our revenue,
TreeTop's EBIT by year five will still sustain our operations and growth.
Exhibit 15: Valuation

24. Exhibit 16: Product Design






1. Battery 5. Interior Water Proof Canvas lining 9. Controller Board
2. Interior Insulation Lining 6. Heating Pad 10. Power Button
3. Zipper Lid 7. Water Proof Canvas 11. Micro-USB Charging Port
4. Rubberized Handle 8. Temperature Sensor 12. Wiring

25. Exhibit 17: Online CVP

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29. Team 5
John Beer, hailing from Alexandria, Virginia, is a Senior Accounting major at James Madison University. His
family moved to Longmont, Colorado two years ago and he travels there twice a year to snowboard and engage
in other outdoor activities.

From Harrisonburg, VA, Patrick Moran is Senior Computer Information Systems major and a
Telecommunications minor. He is currently a Lab technician and teacher assistant at JMU’s 3-Space Lab as well
as IT Intern at Leidos working on enterprise infrastructure and engage in IT supporting functions. He enjoys
working on computers, servers, and networking equipment from a variety of different vendors (Cisco, Dell,
IBM, ect.). He enjoys the outdoors and doing activities such as tennis, golf, and skiing.

Raised in Roanoke, Virginia, Emma Sawyer is a Management major at James Madison University. Emma is the
Vice President of Service for a national service organization, and is employed in the Human Resources
Department for the JMU Libraries. Her free time is devoted to the JMU Marching Royal Dukes as well as child
care for the Science Museum of Western Virginia.

Born and raised in Charlottesville, Virginia, Alex Peery is working towards a Computer Information Systems
degree at James Madison University. An entrepreneur at heart, Alex currently holds licenses for three
different businesses. When he’s not working, Alex can usually be found under the hood of a car or
snowboarding on the slopes, weather permitting.
Robert Farrell, born and raised in Reston, Virginia, is a junior Marketing major. A transfer from Northern
Virginia Community College, Robert spent three years working Administration in a law firm located in Fairfax,
Virginia. He enjoys sports, music and shenanigans with friends. His goal in life is to retire abroad at the age of
forty-five.
Samantha Kynett, from Virginia Beach, Virginia, is majoring in International Business and minoring in Spanish
at James Madison University. She is interested in travelling within and beyond the scope of business, as she has
been to over 7 countries for both leisure and volunteer work. In her spare time, she volunteers with various
youth organizations, and works at Black Sheep Coffee in downtown Harrisonburg, VA.