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Team 8 Members:


NIHAD HARKI – T0058955



ZEINA ZKEIH – N0767418

Address: Nottingham Trent University,

23rd March 2018
Clifton Lane, Nottingham, NG11 8NS, UK

Mobile No: (+44) 790 2888 750

Website: www.kahvetecltd.com
Table of Content:

1. Executive Summary
2. Objectives
2.1 Personal Objectives
2.2 Business Objectives
3. Abilities
3.1 Strengths
3.2 Weaknesses
3.3 Motivation
4. Business Description
4.1 Initial Range
4.2 Sales
4.3 Company Ownership
5. Market Research
5.1 Primary Research
5.2 Secondary Research
6. The Marketing plan
6.1 Marketing Mix – 4 P’s
6.2 SWOT Analysis
6.3 PESTEL Analysis
7. Organizational Plan
8. Financial Plan
1. Executive Summary

KAHVETEK is a start-up company specialized in designing a innovative portable

coffee machine by incorporating modernised technology and high-quality material.
This product allows the customers to make coffee on the go without the need of
electrical connections. In addition, the product has an internal heating feature
which is powered by a rechargeable battery which differentiates it from existing
similar products.

Market research indicates that there exists a good business potential for our
product. In context with consuming coffee, as evident in the secondary research,
majority of the people consume more than 3 to 4 cups a day. In addition, people
tend to spend more on buying coffee which is one of the main factors that would
attract clients to purchase our product.

The surveys conducted demonstrates that there is a good response from the
people in context with our business idea. The most favoured feature was the
peculiarity of having a rechargeable high voltage battery that can last for multiple
usages. Customers were mostly attracted to purchase this product since it saves
time and money.

Coffito offers individuality with excellent quality and affordable price which will aid
in penetrating the coffee market within the UK. The company will be set up with
its manufacturing and assembling in China, after which it will be imported to a
rented warehouse in Nottingham. The company will initially be managed by its
investors and will be recruiting required staff as per the need of the business.

Marketing will be through organizing promotional events, digital advertisements,

and social media. There will be popups held for customers in malls and corporate
companies initially to bring awareness of our product. Thus, building the product’s
image through effective and efficient marketing strategies, which will thereby
increase the brand image of the firm and generate revenue. Finally, Coffito will be
sold through the company’s website in order to attract local and international

By focusing on our strengths, our key customers, and our customers' needs,
KAHVETEK will increase sales by introducing new products yearly within the
second and third year while also improving the gross margin on sales, cash
management and working capital.
2. Objectives

2.1 Personal Objectives

❖ To be financially secure.

❖ To be challenged by leading a large organisation.

❖ To make profit out of the business.

❖ To pursue a passion for coffee.

❖ To gain entrepreneurial experience for better business management.

❖ To improve personal and professional skills.

❖ To find pride and fulfilment in creating a business out of passion.

2.2 Business Objectives

❖ To design a coffee maker which is portable, affordable and innovative.

❖ To become a local and international coffee maker supplier by focusing

on high quality standards and optimal customer service.

❖ To decrease the amount of time a customer spends on making coffee

by providing portable and accessible coffee making.

❖ To dominate the coffee machine market in the UK within 5 years.

❖ To create our brand name and build strong reputation.

❖ To create our website to easily reach local and international customers

❖ To ensure company’s financial sustainability

❖ To expand our product range to include coffee beans as well and other

accessories such as battery chargers, spare battery etc.

❖ To maintain a profit margin of around 70% to 100%.

❖ To globalize in future and open branches in different regions.

3. Abilities

3.1 Strengths

❖ The employees of the company have strong background in business

along with working experience in marketing, financial department,

manufacturing and management.

❖ They are keen to the success of the business by encouraging each

other and working effectively.

❖ All members have effective management and leadership skills that

adds value to the business.

❖ Strong connections with china manufacturers due to the origin of one

of the owners.

3.2 Weakness

❖ Lack of reputation and brand loyalty

❖ New in the market

❖ Lack of credibility

❖ Weak start-up financials

3.3 Motivation

Self-motivation is strongly reflected within the owners and they tend to

encourage each other to work smartly and effectively to ensure that Coffito
matches the customers’ expectations which is a key to the success of the
business. Positivity is another factor that the members consider since it inspires
and motivates each other to complete their task successfully in the aspects of
marketing, research about our competitors and so on. In addition, the name
of Coffito came up from combination of Mediterranean languages. As a slogan
of Coffito “just kill it” will bring the sound of world idol Michael Jackson’s song
“Just beat it” which the music video starts in a coffee shop with his red jacket
which was the main reason for our colour choice.

4. Business Description

KAHVETEC LTD, is a technology-established company which is tending to

redesign the existing portable coffee machine and add some new features
to the product in order to attract more customer and dominate this market
in next 5 years. The aim of producing this product is to give the ability to
the customer to make their coffee on the go. Coffito’s unique selling points
❖ Firstly, by Coffito customers will be able to make coffee anywhere and
without the need of electrical connections.

❖ Secondly, the product offers water heating features which eliminates the
need of preheating and packing water on the go.

❖ Thirdly, it will have high voltage battery which allow the customers to
use the product for a long time without the need of charging.

4.1 The Initial Range

The Coffito will be manufactured in China due to less labour expense and
more availability of the required resources. The product will be then
assembled and packed then sent to the UK. The manufacturing process
should meet the quality and safety standards of ISO 9001 and 90377. This
will lead Coffito to be well known for its quality especially and portability
which will encourage word of mouth. Initially, the company will order 2000
pieces and the shipment of the product will be through sea freight (FOB).

4.2 Sales

KAHVETECH LTD will be using many channels for selling their product. E-
commerce such as EBay, Amazon and KAHVETEC LTD’s own website will be
one of the channels that the product could be sold through. Secondly the
company will consider local and international retailers to sell their product
such as Pound land, Pound world, Argos. This will also bring more
awareness of Coffito and eventually increase demand and net gross profit
of the company.
4.3 Company Ownership

KAHVETEK LTD will be co-owned by its main investors. The experiences of the
owners were considered when allocating roles which can be seen below:

Cagin Pekdogan - Sales and Marketing Manager

Owner of a successful business selling car spare parts.
Strong organizational and management skills
MSc in Engineering Management
MSc in Engineering Management

Nihad Harki - Organizational Manager

Executive Manager of construction company
Previous Manager of Laboratory equipment supplying company
MSc in Engineering Management
Excellent Leadership problem solving skills

Zeina Zkeih - Financial Manager

President of SPE (Society of Petroleum Engineers)
MSc in Engineering Management
BSc in Petroleum Engineering

Siyad Hassan - IT Manager

General Manager of small company
MSc in Engineering Management

Xinkai Liang - Production Manager

Previous Supply chain and logistics experience
MSc in Engineering Management
KAHVETEC LTD Logo and Coffito Brand Name Analysis

The name of the company is the

combination of the meaning of coffee in
Turkish “KAHVE” and technology “TEC”
which based on the art of Turkish
coffee. The prestige of Turkish coffee
makes the company’s structure and
management quality considerable
between others. In addition, the name
of Coffito came up from combination of
Mediterranean languages. The chosen colour for the logo is red due to the
meaning of warm and motivating vibes. Energy, action, passion, excitement and
strength are the other means of red in psychology. As a slogan of Coffito “just
kill it” will bring the sound of world idol Michael Jackson’s song “Just beat it”
which the music video starts in a coffee shop and he sings with his red jacket
during whole video.

5. Market Research

In today’s world, coffee has become an important aspect in our daily routine. It
can be found that many people love to have coffee during their busy days.
Rather being just a drink, it has now become a method of relaxing and stress
relieving for most people.

The developed coffee maker “Coffito” will be able to provide tasty hot coffee to
its target customers with portable usage advantage. The innovative design and
hot coffee supply of Coffito will bring high competitiveness among other existing
coffee makers. The product structure was developed by considering high quality
standards, price effectiveness and sustainability for business expansion.
5.1 Primary Research

We designed a questionnaire consisting of 8 questions as shown below:

Some of the vital information gained from this survey were:

❖ 92% of the respondents belong to the millennial category, and

approximately around 70% from them have an affinity towards coffee.

❖ These respondents prefer a portable coffee machine as compared to

going to cafes or shops to sip their coffee.

❖ The most interesting findings we received through this survey was that,
nearly 70% of the people who undertook this survey liked the peculiarity
of our product, which is the rechargeable battery option required to
recharge their Coffito.

5.2 Secondary Research

According to the recent coffee statistics in the U.K, 55 million cups of coffee
are consumed daily. An interesting figure is that 80% of households purchase
instant coffee since it’s easy to prepare in a short period of time. This
indicates that there exists a market in the U.K for Coffito.

Climate in the U.K plays a vital role for the consumption of coffee. The
weather in this country is mostly cold and therefore people sip coffee to keep
their body warm as well as to feel fresh and awake for better work

The targeted customers are the people who love having coffee during their
tiring day. Also, we target the people who live in cold regions who want to
have hot coffee to keep their body warm. In addition, we are more interested
in people who tend to practice outdoor activities like sports, walking, etc.


The targeted customers of Coffito are millennials aged between 18-35 who are
engaged in outdoor activities, who wish to stay awake during their busy day,
who want to have a bit of relaxation in their busy schedules and primarily
students who don’t have time and prefer coffee on the go.

According to a research that we conducted among the students in Nottingham

Trent University, we could find that around 3.7% of 26845 students for the
1000 units of Coffito have potential to get convinced by the technology that we
used in the product and was ready to buy it.


According to the research that we have conducted, we could find many similar
products in the market. But, what makes our product unique from the already
existing products is to be working automatic with rechargeable batteries, to
have bigger water capacity, higher number of hot coffee cups, low in cost and
light in weight. There are currently two coffee maker segments in the market
which are manual working and automatic working and an analysis can be
shown below:
Automatic Coffee Machine
Manual Coffee Machine
(Nowpresso, Lavazza
(Minipresso, Aeropress)

- Automatic pressurizing
- Hand operated
Technical Features - Internal heating
- Small water capacity
- limited capsuled coffee

- Poor quality plastic

- Bulky
Physical Features material
- Requires electricity
- Small in size

Price £20 - £40 £60 - £100


According to the research that we did, we could find that most of the online
retailers has an option of special delivery, wherein the product is delivered to
the customers within a single day. They also have an option of first class
delivery wherein the product is delivered in 1-2 working days. The other
option that is given to the customers is second class delivery. Here the
product is delivered in more than 3 working days.








According to another survey that we conducted, nearly 100 people prefer

next day delivery of their product, whereas around 50 people are okay with
first class delivery. At the same time, only 10 people preferred second class

According to a report in Savills in the year 2015, the area of warehouses in

the UK stands at 424 million sq ft, and out of which nearly 7.5% of these
warehouses are empty. This gives us an opportunity to rent required space to
store our product at minimal cost. The warehouses in UK has a rent of nearly
£10-15 per sq ft.

Promotional Channels

In recent times, marketing has become a vital role in the sales of a product.
This is done mainly through TV ads, social media and so on. A 30sec long TV
ad in the morning costs nearly £3000-4000 and varies to £10000-30000
during peak hours. The next option of marketing is through social media like
Instagram, Facebook and other sites.

With respect to a research that we had, advertising in YouTube cost nearly

$.30-.10 per ad. This price range depends on the type of ad that you make.
For example, the price of In-search ad is different from In-slate ads.
Similarly, the In-stream ad and In-display ad price also varies. At the same
time, in Facebook and Instagram, each click on the respective ads gives you
$0.27. There are free trade shows or radio channels that KAHVETEC LTD may
attend for the promotion of products or spread awareness and those TV
shows/radio channels have high viewing rates.

Online Sales

Nowadays, there are many online retailers who offer the customers an option
to compare the prices and delivery delays. Some of them are eBay, amazon,
Alibaba, etc. When a person sells any product in eBay, 10% of the total
revenue is taken by eBay. At the same time, amazon provides 2 different sale
options. If you are a professional seller, they have a monthly subscription
plan of $40 per month, but if you are a normal seller they take 15% of each
sale that you make in amazon. The terms and conditions of Alibaba is
different from all these. They have a security deposit of $25000 initially and
they take 2-5% on each sale.
6. The Marketing Plan

6.1 Marketing Mix - 4P’s


KAHVETEC LTD developed a portable hot coffee maker machine by focusing on

the development of an existing similar products in the market. The developed
side of the machine (Coffito) involves:

Rechargeable and replaceable battery to power its heating


Handle for easy carrying and drinking.

Adequate water capacity by focusing on standard coffee

mug size. This product will be providing fresh and tasty hot
coffee to its users in few minutes.

It has USP (unique selling point) with its potential customers, highest quality
standard, low cost and its unique developed design that bring portable usage
advantage in everywhere. The product has also supportive sides to handle the
market with colourful designs, different sizes and accessories (car charger,
battery case, spare battery supply etc.) for the sustainability of sales. The
product provides the same result of competitor products that give but it has
more effective advantages than others which are low cost and more
functionality time capacity. As an extra advantage, our product will be
working with both instant and grinded coffee instead of working only with
espresso capsules like other coffee makers. After the necessary financial space
was filled with the profit of Coffito, the business venture may be possible for
coffee beans sector to develop the prestige of KAHVETEC LTD.
User instructions:

Add room temperature water from top side of machine.

Add instant coffee or grinded coffee in the coffee container which is

located in the middle section of the machine.

Press the button on coffee machine

Wait several minutes for hot water supply and then hot water will be
mixing with coffee and pass through coffee mug of machine

NOTE: When the red light is on, it indicates the need for recharging the battery
with the accompanied plug-in charging adaptor. The green light will appear
when the battery is full. A full battery will be able provide 10-15 cups of hot
coffee (if room temperature water usage). Warning: excessive charging may
reduce the life period of the battery.

Minipresso (manual-£50) Coffito

(One of the competitor products) (Designed with developed sides by KAHVETEC LTD)

According to the competitor products, the price ranges of manual portable coffee
makers are between £20 and £40, and around £60 to £100 for automatic coffee
makers. Coffito coffee maker manufacturing cost will be around £15 for lowest
possibility and £20 for highest possibility. Additional costs (taxes, shipping etc.)
will make the cost of product around £20 lowest/£25 highest. Therefore, the
Coffito selling price must be between manual and automatic coffee maker selling
prices for the correct PLC (product life cycle). In the first business action, the
Coffito product needs to get awareness between others for the business
development and sustainability so; the estimated price will be around £45-£50
by selling with aimed 100% profit in the market. The aim is to achieve the
product awareness and customer feedback by minimising the extra costs and
using the way of e-commerce (B2C) as an initial step. For the next steps, will be
focusing wholesales to the distributors in the market (B2B and B2C). The
discounts and payment period will be arranged according to the orders.


The manufacturing process of Coffito will be carried out in China due to more
opportunities of suppliers and their low-cost demands. The investment for the
business will be limited amount so the action needs to be performed in a correct
way. By considering the effect of additional costs (shipment, UK warehouse cost
etc.) the warehouse will be arranged in UK due to early delivery request of
customers (market research data). The Coffito products will be selling via e-
commerce such as Amazon, eBay and KAHVETEC LTD own website due to the
power of online shopping in UK market as an initial step. The secondary step will
be developing according to the customer feedbacks and reach the distributor
channels such as Poundland, Poundworld, Argos, Superstores. This will also
bring more awareness of Coffito and cause to more selling units in the market.
Social media may be another option to sell Coffito product to the market.
Cargo companies such as FedEx or DHL may be considered for the overseas
delivery of product to customers. For the future steps, cold countries have
more potential for bigger market share and customer demand so; Coffito may
have opportunity to be a global product in cold countries like UK (initial),
Norway, and Iceland etc. as well as the places which most visited by students for
the show up of product and sales.
Above pictures shows the normal coffee mug sale in Nottingham Trent University
at University coffee shop.


Coffito coffee maker will be promoted by focusing on social media (Facebook,

Instagram, and Twitter etc.) and promotion stands for free try and taste the
hot Coffito coffee in public places (city centres, libraries, universities etc.) as an
initial promotion method. The deals can be provided for the first 100
customers or only for online shopping by making discounts. During the initial
stage, leaflets or other handouts may be given to people for awareness.
Secondary step will be focusing on advertisement of the product in trade
magazines for investor attraction. That will also increase the awareness of
market and potential customers by publishing company and contact details to
everyone. Additionally, trade shows may be a good advantage for the
advertisement by presenting the product to the whole UK via TV or Radio
channel and may attract more investors to the business such as Dragons’ Den.
The advertisements can be also supported via YouTube “20second rule
advertisements” which means watch force the advertisement due to 20 seconds
limit for skip it.
6.2 SWOT Analysis

Strength Weakness

• Low and affordable price • Many competitor products

advantage against competitors
• Low business experience in UK
• Many developed sides than others market

• High selling probability in UK • New entrant in the market

• Aesthetic and customised design • Loyalty of customers to competitor

• High quality

• Potential selling support with


• Developable and sustainable


Opportunities Threats

• Potential product for cold countries • High investment needed for orders

• Possibility for expansion with e- • Competitor attacks before go for

commerce in global secondary promotion step

• Investor attractive • Copying by competitors

• Many distributor channels and • High bargaining of delivery

their changing sale strategy with companies
increased selling price range such
as Poundland

6.3 PESTEL Analysis

Political and Legal

Our main market will be UK and our main manufacture will be in China. The political
environment in these two counties are relatively stable, and there are not too many
policies could affect our business and product in these two countries. However, after
Brexit there will be new tariffs for import and export between UK and Europe countries
because at the moment companies based on the UK can sell their product freely
throughout EU without paying any tax for import and export as well but after that they
need to pay extra tax for any product which is brought from outside of the UK. These
tend to show that because of the Brexit the relationship between UK and China will be
improved which will have positive effect on our business.

Brexit will have negative effect on UK economy due to loss of economic scale. However
because many investors are ready to invest in the UK after Brexit the UK will be able to
establish their economic of scale and take advantages from Chinese market.

Coffee is one of the most popular hot beverages which are consumed over the world and
more than two billion cups are consumed every day. According to yahoo finance, buying
a four Dollars coffee every day means we will be spending 1460 dollars each year. These
data might show that there is a big market to be dominated by producing a product
which could reduce the cost and benefit customers.


Coffee are playing a great role in British culture. Every day 55 million cups of coffee are
consumed by UK people and near 80% of UK households prefer to buy instant coffee in
order to make their coffee at home instead of buying and wasting money. This data
shows that the Coffito will be able to fulfill the UK people need by providing a service
which let customer to prepare their coffee at home without the need to use other
expensive coffee machine or paying for coffee from outside.


Technological factor play a vital role in any new business. According to mail online
(2018) more than 95% of UK people are purchasing their need form online. Therefore
KAHVETECH will be using internet to sell and promote their product through that. For
this reason they will create their own website to sell their product directly and a part of
that they will be using other commercial channels as well such as Instagram, Youtube,
and Facebook.

Environment and Law

Environment factors will not have a significant effect on the business

7. Organisational Plan

The Company

KAHVETEC is the trading name of a VAT registered company that will launch its
innovative product by June 2018. The co-owners of the company will have an
equal sharing and will co-manage the different aspects of the business
depending on each owner’s experience and background.


Initially, the product’s design and specifications will be drafted by the firm in UK
to ensure that the product meets quality and safety standards such as ISO
9001:2014 and ISO 10377:2013 respectively. However, it will be manufactured
overseas, specifically china since it’s proven to be the most cost-effective
approach. The drafted design will outline all materials, dimensions, tolerances,
designs, processes, control checks, etc. Quality procedures and testing will also
be specified and agreed upon by the manufacturer in a written agreement in
order to identify the working terms between the companies and to avoid as
many disputes as possible.

Product cost and features

Body Power Battery
Power Consumption: 6W Battery
Coffee Capacity: 8g
Voltage: 5V Capacity:16800MAH
Water Tank Capacity: Extraction time:25-
Electrical port: USB Wire
min 50ml ,max 90ml 30seconds

Total: £17.9 / P
Body – £10.7 / P Heater - £7.2 / P
Packaging, Warranty & After Sales Services

Figure #: Packaging illustrations.

The product will be pre-assembled and packaged with warranty and instruction
manual which will be integrated within the box as illustrated in the above
picture. Upon purchase, a limited product warranty will be provided for one year
from the date of purchase. The warranty will cover component failures caused by
manufacturing defects for the warranty duration. The warranty will not cover
accidental damage due to misuse, general wear and tear, etc. If the product
failed to work as warranted, it will be repaired or replaced according to the
terms of the limited warranty. A sample of warranty and instruction manual can
be found in appendix B.

Furthermore, a product registration card is attached to the warranty which

requires the customer to fill and mail it to us in order to expedite the after-sale
support. In addition, A local service hotline will also be available for customer
support and a list of FAQ (Frequently Asked Questions) will be made available on
the company’s website.

Logistics and Location

Due to the owner’s strong connections in china, the handling and delivery
process will be through freight on board (FOB) from china with minimal costs.
This approach is chosen to keep our first-year expenses to a minimum. In
addition, the operations manager will conduct regular audits in china on to
ensure efficiency of the entire process. The product will be then stored in a
rented warehouse within the UK to decrease shipping cost and ensure fast
delivery to the customer. All delivery charges to will be displayed at the
checkout for customers to view before order confirmation. In the second year of
the company’s development, a head office will be set up in the UK to ease the
management of business activities and improve logistics processes.

Payment Terms and Methods

It’s vital to establish an actual arrangement between two parties involved in any
deal since it clearly sets their duties, rights, roles and responsibilities. Since
interaction with customers will be digital, payments will be through free payment
gateways such as “Paypal” since they are secure, accept all major credit/ debit
cards and issue corresponding invoices. However, for the Chinese suppliers,
Paypal won’t be the cost-effective method since the transfer fees increase
linearly with the amount of money transferred. Thus TT (Telegraphic Transfer)
30% in advance and the rest 70% is after shipment is confirmed. However,
payment will be made after a signed and stamped contract and within 30 days of
receiving proforma invoice.

Intellectual Property

IP is essential since it protects genuine business assets and allows the creation
of value in the business. Since our product’s design is different from existing
competitors, it is crucial to apply for design registration in order to differentiate
our product and maintain strong presence within the marketplace. Even though
it can be expensive but losing market share early on in our business’s
development can be devastating and time consuming. In addition, the
company’s name and slogan were checked on the intellectual property office and
World Intellectual Property Office websites to confirm that it has not been
registered by other parties. Initially, the company’s name, product name, and
slogan will be registered as a trademark locally within the UK for minimal costs,
then in the coming years, international registration will be considered since the
company will be expanding internationally and will be economically afford the
Furthermore, a manufacturing agreement will be signed with manufacturers
involved in the design and specifications of our product. Mutual confidentiality
clause will be included to prevent disclosure of confidential information to
external parties. A template of the agreement can be found in appendix C.


Insurance in a small business is extremely important and aims at minimizing the

impacts of mishaps. Thus, the company will invest in a Business Owners Policy
(BOP) which assembles the basic insurance coverages needed for a small
business at a reasonable cost. Since our budget is limited, the package will
provide a good coverage of product liability, business interruption insurance, and
property insurance for the first year of our business. As the business grows,
workers compensation insurance will be considered since KAHVETEC will begin
recruiting professionals to aid in business development. In addition, professional
indemnity insurance and vehicle insurance will also be considered in an
advanced stage of the company’s development to sustain the company’s
profitable growth.
8. Financial Plan

Sales Assumptions
The start-up costs of KAHVETEC LTD consists of product inventory, creating
a promotion campaign and establishing its website. Our plan begins with a two-
month start-up period during which we will focus primarily on developing our
product design and also including significant initial marketing work. Our start-
up expenses for these first months will be used for further product development,
legal costs, marketing and typical expenses associated with manufacturing and
logistics. The founders will provide the first-round financing to launch the
company, initiate a small production run of our product, and initiate marketing

In addition, we will need another source of fund to cover the cash necessary to
see us through our first year in business, as we begin to make and sell our
product. So, g with ELEM (Enterprise Loan East Midlands) will be considered.
£25,000 will be obtained from ELEM which is a government fund for start-up
business in Nottingham that offers funds over 5 years with no registration fees
and early repayment fee. However, 6% interest rate will be annually paid.
Furthermore, company’s future growth will be funded from annual sales

Set up Costs

Insurance £1200

Prelaunch Promotion £5000

Miscellaneous (Trademark &

Design Reg,etc.)

Financial assumptions
The financial plan depends on important assumptions, most of which are:
• A slow start as we educate potential customers about the new product.
• Steady growth is assumed once the efficiency of our product and services
are demonstrated.
• No unforeseen changes in technology which could make our product
obsolete, while newer technologies and in-house innovations will only
advance the scope of our product line and target markets.

• Ability to self-fund further growth after Start-up financing is secured.

• Maintaining or improving profit margins based on lower costs per unit for
higher quantity production runs.

Profit Margins on various products:

Body Power Battery
Power Consumption: 6W
Coffee Capacity: 8g Battery Capacity:16800MAH
Voltage: 5V
Water Tank Capacity:
Extraction time:25-30seconds Electrical port: USB Wire
min 50ml ,max 90ml
Product Cost
Body £10.7 / P
Heater £7.2 / P
Assembly and Packaging £7 / P
Total Cost ~ £24.9 / P
Profit Margin (£) £20 /P
Selling Price £45 / P
Profit Margin (%) 80%
COFFITO – Medium size
Body £12 / P
Heater £7.2 / P
Assembly and Packaging £12 / P
Total Cost ~ £31 / P
Profit Margin (£) £24 /P
Selling Price £55 / P
Profit Margin (%) 77%

COFFITO – Large size

Body £14 / P
Heater £7.9 / P
Assembly and Packaging £14 / P
Total Cost ~ £36 / P
Profit Margin (£) £29 /P
Selling Price £65 / P
Profit Margin (%) 81%
Battery Charger Voltage: 5V
External Battery Battery Capacity:16800MAH
Product Cost
Battery Charger (car adaptor) £4 / P
Assembly and Packaging £3 / P
Total Cost £7 / P
Profit Margin (£) £5 /P
Selling Price £12 / P
Profit Margin (%) 71%
External Battery £3 / P
Assembly and Packaging £1 / P
Total Cost £4 / P
Profit Margin (£) £4 /P
Selling Price £8 / P
Profit Margin (%) 100%

Arabica 100%
Coffee Beans
Product Cost
Arabica 100% £6 / P
Packaging £2 / P
Total Cost £8 / P
Profit Margin (£) £8 /P
Selling Price £16 / P
Profit Margin (%) 100%
Robusta £3 / P
Assembly and Packaging £2 / P
Total Cost £5 / P
Profit Margin (£) £5 /P
Selling Price £10 / P
Profit Margin (%) 100%
Break-even Analysis:

Breakeven Point



CLosing Balance (£)


25,000 Breakeven Point

15,000 Linear (Breakeven Point)


-5,000 0 1 2 3 4 5 6 7 8 9 10 11 12 13




For our break-even analysis, we assume per month running costs which include our full

payroll, rent, utilities, insurance and an estimation of other running costs.

Owner’s payroll alone, at our present run, rate is estimated 20% of the profit
made. Which means that it will vary according to the gross profit made each
month. Our overall average price point of £45 per unit is based on a cost of
approximately £25 with a gross profit margin of 80% in order to sustain healthy
growth. We hope

Monthly Revenue Break-Even £40,308

Average Percent Variable cost 67%
Estimated Monthly Fixed Cost £21,452

The chart shows that break-even will occur in December 2019 which is expected
since the product is innovative and has a unique selling point. Moreover, we will
be able to use the profit gained to further develop and improve our product and
introduce additional accessories which will boost our profit by the time we reach
the second year of production.
Projected Cash-flow for Year 1:

Cash-flow of Year 1






Cash-flow for 3 Years








Year 1 Year 2 Year 3

The Cash-flow above explains how the profit is gradually increasing since new
products are introduced every year. In addition, the manufacturing costs
associated with the product decreased gradually since quantity increased which
significantly improved the yearly gross profit. Detailed cash-flow tables can be
found in appendix A.
Projected Profit and Loss:

The Profit and Loss table, below, shows our projected sales, cost of sales, and
operating expenses for the first three years.

Yeraly Profit





Year 1
Year 2
Year 3

The yearly profit increased significantly when new products were introduced in
the second and third year. In the second year, new ranges of the original
product were offered along with corresponding accessories such as battery
charger and external batteries. In year three, a new line was added which was
two different types of coffee beans. The types where chosen to match various
regions, for example, Arabica coffee was aimed for the middle-east.
Furthermore, the cost difference is also a main contributor since we tried to
provide expensive coffee beans for specialty coffee lovers.

Yearly Gross Margin

Year 1
Year 2
Year 3

For the first years of the business, the profit margin is ranging between 15% to
30% which is acceptable. However, by year 5, we are aiming to reach a profit
margin of 50% so that a new line of business will be approached. The new line
would be importing coffee beans and building a big range of specialty coffee
which will act as an additional business.
Year 1 Ending MAY 2019 Year 2 Ending MAY 2020 Year 3 Ending MAY 2021

£ £ £ £ £ £
Sales 860,000 5,040,600 5,249,900

Cost of sales:

Opening Stock 358,000 1802800 1676300

Purchases 240,000 1,105,800 998,650
Employees Direct Labour 0 144,000 240,000
598,000 3,052,600 2,914,950
598,000 3,052,600 2,914,950
Gross Profit 262,000 1,988,000 2,334,950


Rent, 9900 24000 30000

Rates 0 0 0
Insurance 1200 2500 3500
Gas/Electricity 0 0 0
Telephones 0 0 0
Motor & Travel expenses 6000 0 0
Advertising & Promotion 22000 26000 23000
Printing, Stationery and Postage 13000 18000 18000
Professional fees/accountancy 0 0 0
Indirect/Admin staff wages inc NI 81540 596400 700485
Bank Charges 0 0 0
Directors Remuneration 0 0 0
Directors PAYE and NI 0 0 0
Hive Royalty 0 0 0
Depreciation 0 0 0
Misc 1000 11000 12000
134640 677900 786985
Operating Profit (EBIT) 127,360 1,310,100 1,547,965
Interest payable 5797 5796 5796

Net Profit (Pre-tax) 121,563 1,304,304 1,542,169

Taxation 23096.97 247817.76 293012.11

Net Profit after interest &tax) 98,466 1,056,486 1,249,157

Ordinary dividend 0 0 0

Retained profit 98,466 1,056,486 1,249,157

Gross Profit Margin (%) 30.47 39.44 44.48

Net Profit Margin (%) 14.14 25.88 29.38
Risk Identification and Sensitivity Analysis:

As a company, we will have several strategies to address future risks. Basic

business insurance will cover any professional disputes, damages to assets and
product liability. Thus, Business income insurance will be considered in order to
anticipate for any losses due short supply.

What if sales are lower than expected

A different approach will be considered in order to compensate and overcome

the situation. First, the payroll of owners will be adjusted to a lower percentage.
Since its 20% of the gross profit, the percentage will be adjusted to 10%. In
addition, within the marketing strategy, a discount on accessories and coffee
beans will be offered along with a limited outer case for the product since their
corresponding costs won’t have significant effect on the overall cost.

What if sales are higher than expected

Plan A- A pre-agreement with the supplier is made which includes a response

plan for high demand. The supplier will manufacture the product in an external
warehouse with minimal additional cost in order to maintain strong internal
relationship and exclusivity of the product production.

Plan B- If plan A failed, the company will consider internal manufacturing. The
machines and equipment costs will be studied in order to expand the company’s
borders. This will impact the company’s growth and maintain its future healthy
Cashflow Projections for Year 1
INCOME £ £ £ £ £ £ £ £ £ £ £ £ £
Total Sales (incl of VAT @20%)* 0 45,000 45,000 67,500 67,500 90,000 99,000 90,000 90,000 81,000 67,500 67,500 810,000
Start-up - directors' capital 25,000 25,000
Start-up capital - ELEM 25,000 25,000
Total cash inflow 50,000 45,000 45,000 67,500 67,500 90,000 99,000 90,000 90,000 81,000 67,500 67,500 860,000

Sales net of VAT 0 37,500 37,500 56,250 56,250 75,000 82,500 75,000 75,000 67,500 56,250 56,250 675,000

COST OF SALES (variable costs)

Purchases - stock* 35,800 17,900 17,900 26,850 26,850 35,800 39,380 35,800 35,800 32,220 26,850 26,850 358,000
Purchases: consumables* 24,000 12,000 12,000 18,000 18,000 24,000 26,400 24,000 24,000 21,600 18,000 18,000 240,000
Total cost of sales 59,800 29,900 29,900 44,850 44,850 59,800 65,780 59,800 59,800 53,820 44,850 44,850 598,000

GROSS PROFIT -9,800 15,100 15,100 22,650 22,650 30,200 33,220 30,200 30,200 27,180 22,650 22,650 262,000

OVERHEADS (fixed costs)

Rent* 0 900 900 900 900 900 900 900 900 900 900 900 9,900
Business Rates 0 0 0 0 0 0 0 0 0 0 0 0 0
Insurance 1,200 0 0 0 0 0 0 0 0 0 0 0 1,200
Utilities /Gas/Electricity* 0 0 0 0 0 0 0 0 0 0 0 0 0
Telephone* 0 0 0 0 0 0 0 0 0 0 0 0 0
Travel costs/ Motor running costs* 0 0 0 0 3,000 3,000 0 0 0 0 0 0 6,000
Advertising and promotion* 0 0 3,000 3,000 3,000 3,000 3,000 2,000 2,000 0 0 3,000 22,000
printing, stationery and postage* 0 0 2,000 2,000 2,000 2,000 0 2,500 2,500 0 0 0 13,000
professional fees /accountancy charges* 0 0 0 0 0 0 0 0 0 0 0 0 0
Indirect/admin staff wages incl. NI 0 4,530 4,530 6,795 6,795 9,060 9,966 9,060 9,060 8,154 6,795 6,795 81,540
Loan repayments & interest 527 527 527 527 527 527 527 527 527 527 527 5,797
TOTAL OVERHEADS 1,200 5,957 10,957 13,222 16,222 18,487 14,393 14,987 14,987 9,581 8,222 11,222 139,437

Miscellaneous* 1,000 0 0 0 0 0 0 0 0 0 0 0 1,000
Pre-launch promotion /publicity* 5,000 0 0 0 0 0 0 0 0 0 0 0 5,000
Total set-up costs 6,000 0 0 0 0 0 0 0 0 0 0 0 6,000

TOTAL COSTS (cost of sales + set up + 67,000 35,857 40,857 58,072 61,072 78,287 80,173 74,787 74,787 63,401 53,072 56,072 743,437
Total costs that attract VAT* 65,800 30,800 35,800 50,750 53,750 68,700 69,680 65,200 65,200 54,720 45,750 48,750
Total costs that attract VAT net of VAT 54,833 25,667 29,833 42,292 44,792 57,250 58,067 54,333 54,333 45,600 38,125 40,625

VAT payable on sales 0 7,500 7,500 11,250 11,250 15,000 16,500 15,000 15,000 13,500 11,250 11,250
VAT reclaimable on purchases 10,967 5,133 5,967 8,458 8,958 11,450 11,613 10,867 10,867 9,120 7,625 8,125
VAT to be paid or reclaimed -10,967 2,367 1,533 2,792 2,292 3,550 4,887 4,133 4,133 4,380 3,625 3,125
Quarterly VAT bill payable or reclaimable -7,067 8,633 13,153

MONTHLY BALANCE -27,967 6,776 2,610 6,636 4,136 8,163 13,940 11,080 11,080 13,219 10,803 8,303 116,563
OPENING BANK BALANCE 0 -27,967 -21,190 -18,581 -11,944 -7,808 355 14,295 25,375 36,455 49,674 60,477
CLOSING BANK BALANCE -27,967 -21,190 -18,581 -11,944 -7,808 355 14,295 25,375 36,455 49,674 60,477 68,780
Cash-flow Projections for Year 2
INCOME £ £ £ £ £ £ £ £ £ £ £ £ £
Total Sales (incl of VAT @20%)* 417,500 387,400 388,400 434,400 444,800 493,800 518,300 472,500 422,400 360,900 333,400 366,800 5,040,600
Start-up - directors' capital 0 0
Start-up capital - bank loan 0 0
Total cash inflow 417,500 387,400 388,400 434,400 444,800 493,800 518,300 472,500 422,400 360,900 333,400 366,800 5,040,600

Sales net of VAT 347,917 322,833 323,667 362,000 370,667 411,500 431,917 393,750 352,000 300,750 277,833 305,667 4,200,500

COST OF SALES (variable costs)

Purchases - stock* 149,000 138,850 139,200 155,300 159,100 176,100 185,300 169,250 151,250 129,200 119,200 131,050 1,802,800
Purchases: consumables* 91,450 84,650 84,650 94,500 96,900 107,900 113,000 102,850 91,850 78,650 72,700 86,700 1,105,800
Direct Labour 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 144,000
Total cost of sales 252,450 235,500 235,850 261,800 268,000 296,000 310,300 284,100 255,100 219,850 203,900 229,750 3,052,600

GROSS PROFIT 165,050 151,900 152,550 172,600 176,800 197,800 208,000 188,400 167,300 141,050 129,500 137,050 1,988,000

OVERHEADS (fixed costs)

Rent* 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 24,000
Business Rates 0 0 0 0 0 0 0 0 0 0 0 0 0
Insurance 2,500 0 0 0 0 0 0 0 0 0 0 0 2,500
Gas/Electricity* 0 0 0 0 0 0 0 0 0 0 0 0 0
Telephone* 0 0 0 0 0 0 0 0 0 0 0 0 0
Travel/Motor running costs* 0 0 0 0 0 0 0 0 0 0 0 0 0
Advertising and promotion* 5,000 2,000 0 0 3,000 2,000 4,000 4,000 0 0 3,000 3,000 26,000
printing, stationery and postage* 0 0 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 0 18,000
professional fees /accountancy charges* 0 0 0 0 0 0 0 0 0 0 0 0 0
Indirect/admin staff wages incl. NI 49,515 45,570 45,765 51,780 53,040 59,340 62,400 56,520 50,190 42,315 38,850 41,115 596,400
Loan repayments & interest 483 483 483 483 483 483 483 483 483 483 483 483 5,796
Directors' remuneration 0 0 0 0 0 0 0 0 0 0 0 0 0
Directors' NI contributions 0 0 0 0 0 0 0 0 0 0 0 0 0
Miscellaneous* 3,000 0 0 0 0 2,000 2,000 2,000 0 0 0 2,000 11,000
Hive royalty payment @3%* 0 0 0 0 0 0 0 0 0 0 0 0 0
TOTAL OVERHEADS 62,498 50,053 50,248 56,263 60,523 67,823 72,883 67,003 54,673 46,798 46,333 48,598 683,696

TOTAL COSTS (cost of sales +Overheads 314,948 285,553 286,098 318,063 328,523 363,823 383,183 351,103 309,773 266,648 250,233 278,348 3,736,296

Total costs that attract VAT* 250,450 227,500 227,850 253,800 263,000 292,000 308,300 282,100 247,100 211,850 198,900 224,750
Total costs that attract VAT net of VAT 208,708 189,583 189,875 211,500 219,167 243,333 256,917 235,083 205,917 176,542 165,750 187,292

VAT payable on sales 69,583 64,567 64,733 72,400 74,133 82,300 86,383 78,750 70,400 60,150 55,567 61,133
VAT reclaimable on purchases 41,742 37,917 37,975 42,300 43,833 48,667 51,383 47,017 41,183 35,308 33,150 37,458
VAT to be paid or reclaimed 27,842 26,650 26,758 30,100 30,300 33,633 35,000 31,733 29,217 24,842 22,417 23,675
Quarterly VAT bill payable or reclaimable 81,250 94,033 95,950

MONTHLY BALANCE 102,552 101,847 102,302 35,087 116,277 129,977 41,084 121,397 112,627 -1,698 83,167 88,452 1,304,304
OPENING BANK BALANCE 68,780 171,332 273,179 375,481 410,568 526,845 656,822 697,905 819,302 931,929 930,231 1,013,398
CLOSING BANK BALANCE 171,332 273,179 375,481 410,568 526,845 656,822 697,905 819,302 931,929 930,231 1,013,398 1,101,850
Cash-flow Projections for Year 3
INCOME £ £ £ £ £ £ £ £ £ £ £ £ £
Total Sales (incl of VAT @20%)* 422,300 422,300 397,600 400,100 449,000 461,000 511,300 535,300 489,300 437,500 377,000 347,200 5,249,900
Start-up - directors' capital 0 0
Start-up capital - bank loan 0 0
Total cash inflow 422,300 422,300 397,600 400,100 449,000 461,000 511,300 535,300 489,300 437,500 377,000 347,200 5,249,900

Sales net of VAT 351,917 351,917 331,333 333,417 374,167 384,167 426,083 446,083 407,750 364,583 314,167 289,333 4,374,917

COST OF SALES (variable costs)

Purchases - stock* 135,500 128,050 128,950 144,500 148,400 164,250 172,200 157,700 140,950 121,450 111,700 122,650 1,676,300
Purchases: consumables* 80,900 76,250 76,600 86,000 88,200 97,400 102,700 93,700 83,900 72,300 66,900 73,800 998,650
Direct Labour 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 240,000
Total cost of sales 236,400 224,300 225,550 250,500 256,600 281,650 294,900 271,400 244,850 213,750 198,600 216,450 2,914,950

GROSS PROFIT 185,900 198,000 172,050 149,600 192,400 179,350 216,400 263,900 244,450 223,750 178,400 130,750 2,334,950

OVERHEADS (fixed costs)

Rent* 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 30,000
Business Rates 0 0 0 0 0 0 0 0 0 0 0 0 0
Insurance 3,500 0 0 0 0 0 0 0 0 0 0 0 3,500
Gas/Electricity* 0 0 0 0 0 0 0 0 0 0 0 0 0
Telephone* 0 0 0 0 0 0 0 0 0 0 0 0 0
Travel /Motor running costs* 0 0 0 0 0 0 0 0 0 0 0 0 0
Advertising and promotion* 5,000 2,000 2,000 0 0 0 4,000 4,000 0 0 3,000 3,000 23,000
printing, stationery and postage* 0 0 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 0 18,000
professional fees /accountancy charges* 0 0 0 0 0 0 0 0 0 0 0 0 0
Indirect/admin staff wages incl. NI 55,770 59,400 51,615 44,880 57,720 53,805 64,920 79,170 73,335 67,125 53,520 39,225 700,485
Loan repayments & interest 483 483 483 483 483 483 483 483 483 483 483 483 5,796
Directors' remuneration 0 0 0 0 0 0 0 0 0 0 0 0 0
Directors' NI contributions 0 0 0 0 0 0 0 0 0 0 0 0 0
Miscellaneous* 0 2,000 0 0 0 2,000 2,000 4,000 0 0 0 2,000 12,000
Hive royalty payment @3%* 0 0 0 0 0 0 0 0 0 0 0 0 0
TOTAL OVERHEADS 67,253 66,383 58,598 49,863 62,703 60,788 75,903 92,153 78,318 72,108 61,503 47,208 792,781

TOTAL COSTS (cost of sales + overheads 303,653 290,683 284,148 300,363 319,303 342,438 370,803 363,553 323,168 285,858 260,103 263,658 3,707,731

Total costs that attract VAT* 223,900 210,800 212,050 235,000 241,100 268,150 285,400 263,900 229,350 198,250 186,100 203,950
Total costs that attract VAT net of VAT 186,583 175,667 176,708 195,833 200,917 223,458 237,833 219,917 191,125 165,208 155,083 169,958

VAT payable on sales 70,383 70,383 66,267 66,683 74,833 76,833 85,217 89,217 81,550 72,917 62,833 57,867
VAT reclaimable on purchases 37,317 35,133 35,342 39,167 40,183 44,692 47,567 43,983 38,225 33,042 31,017 33,992
VAT to be paid or reclaimed 33,067 35,250 30,925 27,517 34,650 32,142 37,650 45,233 43,325 39,875 31,817 23,875
Quarterly VAT bill payable or reclaimable 99,242 94,308 126,208

MONTHLY BALANCE 118,647 131,617 113,452 495 129,697 118,562 46,189 171,747 166,132 25,434 116,897 83,542 1,542,169
OPENING BANK BALANCE 1,101,850 1,220,497 1,352,114 1,465,566 1,466,062 1,595,759 1,714,321 1,760,509 1,932,256 2,098,388 2,123,822 2,240,719
CLOSING BANK BALANCE 1,220,497 1,352,114 1,465,566 1,466,062 1,595,759 1,714,321 1,760,509 1,932,256 2,098,388 2,123,822 2,240,719 2,324,261
We’re committed to helping you
create a lifetime of delicious meals
for family and friends. To help ensure
the longevity and performance of your
appliance, keep this guide handy. It will
empower you with the best way to
use and care for your product. Your
satisfaction is our #1 goal.

COFFITO is a unique system creating

the perfect espresso, time after time.
It is equipped with a unique system
that guarantees up to 8 bar
Each parameter has been calculated
with great precision to ensure that all
aromas can be extracted, to give the
coffee body and create an
exceptionally thick and smooth
Table of Content


Important safeguards.......................................................................................... 4


Parts and accessories.......................................................................................... 6

WARRANTY AND SERVICE....................................................................................... 7

When using electrical appliances, basic safety precautions should always
be followed, including the following:
1. Read all instructions.
2. Do not touch hot surfaces. Use handles or knobs.
3. To protect against fire, electric shock and personal injury do not immerse cord,
plugs, or appliance in water or other liquids.
4. Close supervision is necessary when any appliance is used by or near children.
Keep appliance, capsules and accessories out of the reach of children.
5. Allow to cool before putting on or taking off parts, and before cleaning.
6. Do not operate any appliance with a damaged cord or plug, or after appliance
malfunctions or has been damaged in any manner.
7. The use of accessory attachments not recommended by the appliance
manufacturer may result in fire, electric shock, or personal injury.
8. Do not place on or near a radiator, hot gas or electric burner, in a heated oven,
open flame, or similar.
9. The safety precautions are part of the appliance. Read them carefully before
using your new appliance for the first time. Keep them in a place where you can
find and refer to them later on.
10. The appliance is intended to prepare beverages according to these instructions.
11. Do not use the appliance for any use other than the intended use.
12. The manufacturer accepts no responsibility and the warranty will not apply for
any inappropriate handling or use of the appliance, any damage resulting from
use for other purposes, faulty operation, nonprofessional repair or failure to
comply with the instructions.

13. Make sure that the voltage of the power source is the same as that specified on
the rating plate.
14. The use of an incorrect connection voids the warranty.
15. To avoid hazardous damage, never place the appliance on or beside hot
surfaces such as radiators, stoves, ovens, gas burners, open flames, or similar.
16. Do not put fingers under coffee outlet, risk of scalding.
17. Do not overfill water tank.
18. Empty water tank if the appliance will not be used for an extended time.
19. Do not use the appliance without the drip tray and drip grid to avoid spilling any
liquid on surrounding surfaces.
20. Reliability tests under practical conditions are randomly performed on selected

Functioning of your machine over its lifetime and that your coffee experience
is as perfect as on the first day. For the safety instructions, correct amount
and procedure to follow, consult the instruction manual included in the


Water Input

Coffee Basket



This warranty extends to the purchaser and any succeeding owner of COFFITO.
Length of Warranty: One Year Full Warranty from date of purchase.

KAHVETEC Will A. Repairs when Espresso Machine is used in

Not Pay for: other than normal single-family home use.
B. Damage resulting from accident, alteration,
misuse or abuse.
This warranty gives you specific legal rights and you may also have other rights
which vary from state to state or province to province.

Always keep a copy of the itemized sales receipt showing the date of purchase of COFFITO.
Proof of purchase will assure you of in-warranty service. Before you use your Espresso
Machine, please fill out and mail your product registration card packed with the unit. This card
will enable us to contact you in the unlikely event of a product safety notification and assist us
in complying with the provisions of the Consumer Product Safety Act. This card does not
verify your warranty.
Please complete the following for your personal records:
Model Number_ ___________________________________________________________
Serial Number ____________________________________________________________
Date Purchased ___________________________________________________________
Store Name _______________________________________________________________


This Manufacturing and Supply Agreement (this “Agreement”) is made as of the __________ (the “Effective
Date”) by and between __________ ("Supplier") located at __________, __________, __________
__________ and __________ ("Buyer") located at __________, __________, __________ __________.
Manufacturing under this Agreement will take place at the Supplier’s address (the “Manufacturing Plant”).

1. Supply of Products. Supplier shall manufacture and supply to Buyer __________ (the “Products”) in
accordance with the specifications contained in the statement of work attached hereto as Exhibit A (the
“SOW”). Buyer will make all reasonable efforts to provide clear instructions, documentation, and product
specifications to Supplier. Supplier must manufacture and supply the Products in accordance with this
Agreement, in compliance with applicable laws and regulation, and using generally accepted industry

2. Grant of License. Buyer represents and warrants to Supplier that all trademarks, trade names, trade
labels, trade dress, packaging and other intellectual property (the “Intellectual Property”) supplied by Buyer
to Supplier for the Products do not infringe upon or otherwise violate the intellectual property rights of any
third party. Buyer grants to Supplier a limited, non-transferrable and non-exclusive license to use the
Intellectual Property and manufacture the Products during the term of this Agreement. Nothing in this
Agreement shall give Supplier any right, title or interest in the Intellectual Property. In addition, Supplier shall
not adopt any trademark, trade name, trade dress, labeling or packaging which is deceptively similar to or
likely to cause confusion with respect to the Intellectual Property and/or the Products. The license granted
by Buyer in this Agreement is non-exclusive, and Buyer will not be limited in any manner to engage in other
manufacturing or distribution activities or to appointment of other manufacturers, dealers, distributors, value-
added resellers, original equipment manufacturers, licensees or agents.

3. Ownership of Products. Buyer owns all rights to the Products produced by Supplier. Supplier's sale, re-
sale or distribution to any entity other than Buyer, including without limitation distribution to retailers or other
distributors or sub-distributors, will be prohibited unless made pursuant to a specific written agreement
between Buyer and Supplier.

4. Payment. Supplier will be paid __________ per unit for the number of units specified in each Purchase
Order. Payment shall be made within __________ days from .

5. Late Payments. Supplier will be entitled to charge interest of __________ on any unpaid balance more
than __________ days past due.

6. Discount. If payment is made at least __________ days before the due date, Buyer will be entitled to a
discount of __________ off the total amount due.

7. Shipments. The Products will be delivered by Supplier to Buyer in accordance with the agreed upon terms
and delivery schedule in the SOW. The Products will be suitably packaged in accordance with the SOW.
__________ will pay for all freight, insurance and other shipping expenses. Title and risk of loss will pass to
Buyer upon delivery of the Products. Supplier will use commercially reasonable efforts to deliver the Products
on the agreed-upon delivery dates and notify Buyer of any anticipated delays.

8. Product Acceptance. The Products delivered by Supplier will be inspected and tested by Buyer within
__________ days of delivery. If the Products delivered do not comply with the specifications in the SOW,
Buyer has the right to reject the non-conforming Products. Products not rejected within __________ days of
delivery will be deemed to be accepted by Buyer. In the event any Products do not comply with the
specifications in the SOW and are rejected by Buyer, Buyer may, at its option:

9. Warranties. Supplier warrants that it will perform the SOW in a good, professional and workmanlike
manner, and Supplier will promptly notify Buyer of any delay or defect in the manufacture and supply of the
Products. Supplier warrants that the Products will be manufactured and supplied in compliance with the
specifications in the SOW and in compliance with all governmental and environmental regulations. Supplier
warrants that the Products will be free from substantive defects in workmanship for a period of __________
from the date of shipment. The warranty does not apply to any Products that are damaged due to the misuse,
abuse, alteration or negligence of any party other than Supplier. SUPPLIER MAKES NO OTHER

10. Term. This Agreement commences on the Effective Date and will remain in effect for __________ years.
This Agreement will renew automatically for a term of __________ year(s), unless either party has given at
least __________ days written notice not to renew to the other party.

11. Termination. Buyer and Supplier may at any time by mutual consent decide to terminate this Agreement
pursuant to written and delivered notice to the other party. Buyer may terminate Supplier's rights to
manufacture and supply the Products for any reason on __________ days’ written notice of termination.
Supplier retains the right at any time to terminate its obligations to manufacture and supply the Products on
__________ days’ written notice of termination. This Agreement also may be terminated automatically,
without notice, (i) upon the institution by or against Buyer or Supplier of any insolvency, receivership or
bankruptcy proceedings or any other proceedings for the settlement of debts, (ii) upon Buyer or Supplier's
making an assignment for the benefit of creditors, or (iii) upon Buyer or Supplier's dissolution.

12. Default. If either party should fail to perform its respective obligations under the terms of this Agreement,
the other party will notify of the party that it is presumed to be in default and give reasonable recourse to cure
the stated issue. The defaulting party will have the opportunity to cure the default within __________ days of
notice by the other party. In the event of a failure to cure a breach or default within the stipulated time, the
other parties will have the right to terminate this Agreement immediately.

13. Effect of Termination. Upon the termination of this Agreement, the rights and licenses granted to
Supplier pursuant to this Agreement, including without limitation the right to use the Intellectual Property and
manufacture the Products, will automatically terminate. All payments owing from Buyer to Supplier, or
refunds due from Supplier, will become immediately due and payable, and legally enforceable, upon
termination. Supplier will not make or retain any copies or samples of any confidential items or information
which may have been entrusted to it.

14. Confidentiality. In the course of manufacturing and supplying the Products, each party may be exposed
to confidential and proprietary information of the other party, including designs, drawings, materials,
manufacturing specifications, trade secrets, business and financial information and other confidential
information (the “Confidential Information). Supplier will keep confidential all Confidential Information of
Buyer, including details of the manufacturing the Products, and will manufacture the Products in accordance
with strict security procedures. During the term of this Agreement, each party will refrain from disclosing any
Confidential Information of the other party, except for the strict purposes or activities specifically authorized
in this Agreement or if required by law. Each party will use all reasonable efforts to maintain the privacy of
the Confidential Information in its possession or control.

15. Prohibited Acts. Neither Supplier, nor any agent, representative, affiliate, or subcontractor of Supplier,
will have the right to copy, manufacture or distribute the Products without the express prior written approval
of Buyer. Anyone who copies, manufactures or distributes the Products without a license and prior written
approval of Buyer will be liable for any cost or loss in sales, revenue or profits by Buyer, plus all applicable
attorneys' fees and costs incurred in investigating and prosecuting an action against the offending party.
Supplier will notify those to whom it entrusts knowledge of, or access to, the Products that Supplier and the
offending party will be liable for losses.

16. Inspection of Books. Buyer will have the right, upon reasonable request, to audit and review the books
and records of Supplier sufficient to verify the number and quality of the Products being manufactured. Any
such audit will be conducted at Buyer's expense and at such times and in such a manner as to not
unreasonably interfere with Supplier's normal operations. Supplier shall maintain all such books and records
for a period of __________ years after shipment of the Products.

17. Insurance. Buyer and Supplier agree to maintain appropriate insurance to adequately cover their
respective risks under this Agreement, with coverage amounts commensurate with levels in their respective

18. Limitation of Liability. In no event will either party be liable for costs, expenses, or damages in
connection with this Agreement in excess of actual costs, expenses, damages, or provable and actual lost

19. Force Majeure. Neither party will be liable for the costs or expenses arising from any failure or delay in
the performance of this Agreement that is due and attributable to causes beyond the control of either party,
including but not limited to acts of God, weather, war, civil unrest, strikes, lockouts, destruction of production
facilities, riots, insurrection, terrorist attacks, government regulatory actions, acts or decrees of governmental
or military bodies, fire, casualty, flood, earthquake, or any other force majeure event, provided that the party
has used commercially reasonable efforts to mitigate the effects of the cause. Supplier will not be liable for
any delays in the normal production or interruption in the workflow process caused by changes to the
specifications by.

20. Amendments. This Agreement may not be modified or amended except by a written agreement signed
by all of the parties.

21. Notices. Any notice or communication under this Agreement must be in writing and sent via personal
delivery, overnight courier service, or certified or registered mail, postage prepaid, return receipt requested
and addressed to the to the address stated above or to another address as that party may subsequently
designate by notice and shall be deemed given on the date of delivery.

22. No Waiver. No party shall be deemed to have waived any provision of this Agreement or the exercise of
any rights held under this Agreement unless such waiver is made expressly and in writing. Waiver by any
party of a breach or violation of any provision of this Agreement shall not constitute a waiver of any other
subsequent breach or violation.

23. Assignment. The parties agree that their rights and obligations under this Agreement may not be
transferred or assigned without the prior written consent of Buyer. Buyer may assign its rights and obligations
under this Agreement without Supplier's consent.

24. Successors and Assigns. This Agreement shall be binding and inure to the benefit of the parties and
their respective legal representatives, heirs, administrators, executors, successors and permitted assigns.

25. Governing Law. This Agreement and the rights and obligations of the parties hereto shall be governed
by and construed in accordance with the laws of the State of __________, without regard to its conflicts of
laws provisions.

26. Disputes. Any dispute arising from this Agreement shall be resolved through mediation. If the dispute
cannot be resolved through mediation, then the dispute will be resolved through binding arbitration conducted
in accordance with the rules of the American Arbitration Association.

27. Severability. If any provision of this Agreement is held to be invalid, illegal or unenforceable in whole or
in part, the remaining provisions shall not be affected and shall continue to be valid, legal and enforceable
as though the invalid, illegal or unenforceable part had not been included in this Agreement.

28. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be
deemed an original and all of which together, shall constitute one and the same document.

29. Headings. The section headings herein are for reference purposes only and shall not otherwise affect
the meaning, construction or interpretation of any provision of this Agreement.

30. Entire Agreement. This Agreement contains the entire agreement between the parties hereto with
respect to the subject matter hereof, and supersedes all prior negotiations, understandings and agreements.

31. Miscellaneous. __________

IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date.

Buyer Signature Buyer Full Name


Supplier Signature Supplier Full Name