Production Schedule

Operate on a 10-hour/4-day workweekIngredient Requirements:

20 tonnes of flour 2 tonnes of canola oil 16 bags of baking powder (25kg each) 13 bags of salt (25kg each)

Produce approximately 91,000 units per month (Two loads a month)

Cracker Production Process

Ingredients MixerDough Feeder Laminator

Gauge Rolls

Oven

Salt Sprinkler

Panner Web

Rotary CutterPackager

Finished Product

Oil SprayerStacker

Cooling Conveyer

Capital Requirements

Land (12 acre) 10,250 Buildings 372,965 Cracker Manufacturing Line 893,550 Reverse Osmosis 8,000 Oil Tank (2000 gallons) 7,200 Water Tank (424 gal) 800 Flour Bin (50 tonne) 8,850 Forklift 9,500 Office Equipment 28,000 Yard Tractor 14,000 Packaging Machine 45,000 Installation Cost (labour & material) 50,000 Total Capital Outlay 1,448,115

Cost of Goods Manufactured

Direct Materials Used 625,492 Direct Labour Used 173,937 Manufacturing Overhead 268,565 Cost of Goods Manufactured 1,067,994

(Year 1)

Human Resource Management

Lines of Authority

Board of Directors

Board of Directors

PresidentPresident

Production Manager

Production Manager

Account ManagerAccount Manager

Production Staff (5)Production Staff (5) Receptionist/Clerical Assistant

Receptionist/Clerical Assistant

Marketing Manager

Marketing Manager

Employee Responsibilities

President ($120,000)

Coordinates all major aspects of operations including production, marketing, accounting, and logistical activities

Reports major decisions, activities, and results to the board of directors

Employee Responsibilities (cont’d)

Marketing Manager ($100,000) Build and maintain customer

relationships

Develop marketing strategies

Explore niche markets

Coordinate logistical operations

Employee Responsibilities (cont’d)

Account Manager ($48,700) maintains ledger and other financial

documents Prepare quarterly & annual financial

statements for President and Board of Directors

Handle accounts payable, accounts receivable, and payroll

Employee Responsibilities (cont’d)

Production Manager ($85,000)

Oversees entire production process Supervise production staff Oversee quality assurance procedures Compile daily production related data Trouble shoot mechanical problems coordinates inventory management

Employee Responsibilities (cont’d)

Production Staff (5): ($23,500/each)

operate and maintain production equipment

conduct warehouse distribution

Miscellaneous labour related activities

Employee Responsibilities (cont’d)

Receptionist ($31,700)

Direct incoming calls

Assist account manager in daily clerical activities

Assist marketing manager in contract preparation and logistical operations

Wage & Salary Expense

Employee Year 1 Year 2 Year 3 Year 4 Year 5 Total WagesPresident 120,000$ 123,000$ 126,075$ 129,227$ 132,458$ 630,760$ Marketing Manager

100,000$ 102,500$ 105,063$ 107,689$ 110,381$ 525,633$

Account Manager

48,700$ 49,918$ 51,165$ 52,445$ 53,756$ 255,984$

Production Manager

85,000$ 87,125$ 89,303$ 91,536$ 93,824$ 446,788$

Production Staff (5)

117,500$ 120,438$ 123,448$ 126,535$ 129,698$ 617,619$

Receptionist 31,700$ 32,493$ 33,305$ 34,137$ 34,991$ 166,626$

Total Wages 502,900$ 515,474$ 528,359$ 541,569$ 555,108$ 2,643,410$

Five year estimate of Wages + Salaries

Benefit Breakdown

Benefit % 5-Year EstimateEmpolyment Insurance 3.08% 18,283$ Canada Pension Plan 4.70% 26,090$ Workers Compensation 2% 12,749$ Holiday Pay 5.80% 9,552$ Total 66,674$

5 Year Breakdown of Potential Employee Benefits

HR Strategy

Team Work

Ease of Communication

Trust Among Employees

Happiness+Motivation=Hard Work

Marketing Analysis

Objectives To develop markets in California To build a prestigious brand and a loyal

customer base To expand production and our

marketing base as the organic market grows

Market trends

All information is taken from the U.S. Embassy

Market is increasing at 25% annually25% of shoppers buy organic

products at least once a weekJust over 1% of U.S. grocery sales

are organic. ($7.8 billion/year)

Potential Market

California: Population of over 34 million very diverse population Health conscience consumers demographic group of 22-55 years of

age Higher income brackets Professional occupations

Competition

Devonsheer Organic Crackers $6.99/box location advantage

Breton Wheat Crackers/Nabisco Ritz $2.99/box non-organic established brands

Sales Objective and Price Policy

Our sales objective is to sell 864,000 boxes in our first year

Expected increase in sales of 5%Shelf price is $4.49 USDCompany revenue from one box is

$4.61 CDNIncrease price by 8% in 2008

Distribution Channel

Producer Retailer Customer

- Intermediary: Retailer/broker

BrokerOption

Producer Retailer Customer

- Intermediary: Retailer/broker

BrokerOption

Promotion-Shows

NASFT-Winter International Fancy Food Show A wide selection of specialty foods

Natural Products Expo West March 7-10, 2003 Organic, natural, specialty foods

Nutrocon 2003 March 11-13, 2003

Promotion-Web site

Interactive web page about our product which includes: nutritional information feedback, contact list, purchase enquiry's links to other organic lifestyle sites

Purchase advertising space and links to our site on other organic sites (Organic Style magazine)

Promotion-Additional

Distribute ads through magazines aimed at our target market

Free product and coupons

Finance

Financial Overview

Projected financial plan for a ten year period

Base case scenario takes into account all known an assumed variables

Base case makes North Country Organics very appealing to investors

NPV 874,203$ IRR 47.8%ERR 26.3%

Base Case

Financing

Total capital required $1,448,115Shareholders = 75 investors @ $10,000

Long Term Debt 700,000.00$ Shareholder's Equity 750,000.00$ Total Financing 1,450,000.00$

Financing Budget

Projected Net Income

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

$900,000

Year

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

Dividends Paid

ERR = 26.3% (with salvage value)ERR = 23.8% (without savage value)

Financial Ratios

2003 2006 2009 2012Liquidity RatiosCurrent Ratio 16.64 46.08 56.18 56.41Quick Ratio 15.13 44.57 54.55 54.78Leverage RatiosDebt Ratio 38% 23% 11% 2%Debt to Equity 63% 29% 13% 2%Profitability RatiosGross Profit Margin 73% 72% 74% 74%Net Profit Margin 8% 9% 12% 12%Return on Total Assets 19% 18% 25% 26%Return on Equity 31% 23% 28% 26%

Critical Variables

Critical Variables Base Case IRR = 25% Allowable % ChangePrice per Box $4.61 $3.95 14%Sales Output 864000 658610 24%Packaging Costs per Box $0.53 $0.86 61%Marketing Expense 1,592,607$ 2,975,965$ 87%Direct Materials Cost 625,492$ 1,997,593$ 219%

- 25% IRR is required due to the high risk of the company

Sensitivity Analysis

Net Income and End of Year Cash Break-even AnalysisBy Changing selling Price

$2.50

$3.00

$3.50

$4.00

$4.50

$5.00

$5.50

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Year

Se

llin

g P

ric

e

Selling Price with Net Income = 0Selling Price with end of Year Cash = 0Base case Scenario

Sensitivity Analysis

Net Income and End of Year Cash Break-even AnalysisBy changing Sales Output

400,000500,000600,000700,000800,000900,000

1,000,0001,100,0001,200,0001,300,0001,400,0001,500,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Year

sa

les

Ou

tpu

t

Sales Output with Net Income = 0Sales Output with End of Year Cash = 0Base Case Scenario

Conclusion

North Country Organics is a profitable and feasible business in the base case scenario

Will provide job opportunity for the surrounding area as well as bring in new families

Opportunity for the company to expand their brand into future brand extensions

A strong brand development could create unlimited potential for the future of North Country Organics

Questions/Comments??

North Country Organics

North Country Organics

North Country Organics