Section 5

Team 1

Fall 2020

Business Plan

Business Name: DLO Filtering Solutions

Business Idea: We are DLO the only dual filter water bottle company. Our organization takes pride

in offering the first water bottle that provides two filters to give you the cleanest, freshest, best tasting

water possible. DLO strives to provide clean water to markets all around the world starting with the

US. The DLO water bottle features two filters that are located in the straw of the bottle as well as a

spout in the cap that allows water to be filtered as it enters the bottle. The average lifespan of our

filtration system is approximately one year for the two filters as each bottle is supplied with two

straw filters and one spout filter, the straw filter being replaced twice a year.

Team Members: Signatures: Email Address:

Achour, Hasan Hasan Achour achourhj@dukes.jmu.edu

Cao, Wei Wei Cao caowx@dukes.jmu.edu

Cuevas, Marlon Marlon Cuevas cuevasmn@dukes.jmu.edu

Hayes, D'Alontae D’Alontae Hayes hayes2dl@dukes.jmu.edu

Hu, Zefeng Zefeng Hu huzx@dukes.jmu.edu

Martin, Madison Madison Martin martinmg@dukes.jmu.edu

Rozenberg, Art Art Rozenberg rozenbax@dukes.jmu.edu

Yoo, Jaemin Jaemin Yoo yoo4jx@dukes.jmu.edu

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 Executive Summary
DLO Filtering Solutions
Marlon Cuevas
Address: 565 Water Ave, Tampa, Florida, 33601
Phone: [(813)567-5590]
E-mail: filteringsolutions@dlo.com
Management:
Titles: CEO, CFO, General Manager,
Marketing Manager, Human Resource Manager
Industry: Water Filtration
Number of Employees: 15
Amount of Financing Sought: Angel
Investor & Chase Bank, $10,000,000, 50% own
equity, 50% venture capital
Investment Sources: Venture Capital
$10,000,000
Use of Funds: Equipment, raw materials,
everyday expenses, inventory, trademark/patent,
paying off 5- year loan given by the bank
Product/service selling price: $ 34.99
Business Description: DLO is a water bottle company in Tampa, FL
specializing in dual water filtration in a stainless-steel water bottle. DLO is
helping provide the purest drinking water through dual filtration. The
company’s mission is to provide safe to drink water to places with low
accessibility to clean water.
Products/Services: DLO provides a new and improved take on portable
water filtration. DLO’s dual filtered water bottle not only allows consumers
a safe way to transport water, but also allows for luxurious consumption as
your water is passed through both filters ensuring a clean refreshing taste.
The components needed to create the DLO water bottle come to be $12.00
and sold for 34.99 it also is assembled in the USA in DLO’s Tampa Bay
headquarters. The projected first year sales amount to 1,250,000 units. DLO
outsources all components in order to be cost efficient, while assembly takes
place in the US to ensure the best quality control possible.
Competitive Advantage: DLO is the only organization in the water
filtering industry that provides consumers with a dual filtrations system on
the go. Competitors like Clearly Filtered and Brita have similar sized bottles
with the same goal in nature with the clear difference being the filters
themselves. DLO’s filter provides the cleanest water as the DLO water
bottle contains a filtering reservoir in which consumers can fill their bottles
similar to that of a Brita pitcher. As the water passes through this filter, the
consumer will find another filter in the straw that filters the water again as it
is consumed. DLO is in the process of securing patents for its dual filtration
system.
Markets: DLO’s main goal is to tackle the clean water crisis in areas like
Flint, Michigan. DLO sees its main markets being consumers in three main
markets: Outdoor Recreation, Eco-Friendly, and Fresh Water. Our product
targets all age groups, but our marketing will be directed at those ages 21-26
being social media and the internet will be our main way of acquiring
consumers.

Distribution Channels: DLO in the first year will sell directly through the revenue model of web
sales on dlowater.com. An Amazon marketplace will be a key point of distribution, achieved by year
two. By year three the company plans to project sales to wholesalers such as Costco and BJs, retail
stores specializing in outdoor and recreation in hopes to sign a contract deal for wholesaling the dual
filter.
Competition: DLO’s indirect competition is with water bottle industry market, however it is
primarily direct competition with Brita. Filtration water bottles like Brita compete directly in the
same segment as DLO, however DLO’s comparative advantage is the dual filtration system.

Financial Projections (Unaudited):

2021 2022 2023 2024 2025
Revenue $ 26,242,500 $ 33,677,875 $ 83,673,000 $ 100,237,500. $ 122,471,663
EBIT $ 11,205,543 $ 15,784,072 $ 44,580,338 $ 53,026,437 $ 66,045,856

2
1) You’re coming back from a long night out of drinks with friends, we all know that feeling you get

the next morning. Dry mouth, empty stomach…. Dehydrated. The DLO duel filtered water bottle

will come to the rescue, providing the most luxurious drinking water on the market.

2) DLO is a dual filtration system that is accommodated within a 24oz stainless steel insulated

water bottle. DLO features a filter within the straw that is changed twice during the lifespan of the

filters; there is also a reservoir that allows water to be poured in and filtered directly into the bottle

that gets replaced once during the filtration systems life. The dual filtration feature comes to play

when a consumer pours water into the spout filter and then proceeds to drink the water through the

DLO straw. The DLO bottle is priced at 34.99 available on our website dlowater.com.

3) DLO provides a competitive advantage compared to other players in the market through its

offering of a dual filtering water bottle that will filter out Chlorine (taste and odor) as well as

particulates just like our competitors, in addition Mercury, Cadmium, Benzene, Copper, and Zinc are

filtered out as the water passes through the reservoir. So, our consumers are left with the safest

drinking water. DLO is the first dual filtering water bottle company which makes it hard to be

imitated because there are only a few companies that provide filtered water bottles and they only

offer a single filter system.

4) Investing in DLO Filtering Solutions proves to be a great investment because it is a company

that provides one of everyone's three basic needs: water. DLO is an organization wanting to

improve everyone's ability to access filtered water providing a huge factor in why investing is a great

idea. One of the major risks that are mitigated by investing in DLO is our filters go through

Hemodialysis testing through the WQA meeting NSF standards. DLO as an organization is looking

to help solve the clean water crisis going on in the world and one of our hurting cities here in the

United States, Flint, Michigan. So, by investing in DLO you are investing in the world!

5) DLO’s strategy of differentiation is based off of how we plan to have the water filtered twice

before consumption. Another strategy DLO uses is focus, DLO focuses on provide safe clean

drinking water to all consumers while also working to provide for areas around the world with low

access to clean water. DLO believes its marketing decisions differentiate the company from others
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because they have the ability to appeal to the social media age through different platforms while also

reaching the world at wide.

6) DLO is based in Tampa, Florida. Florida is an attractive state for DLO’s headquarters for

reasons such as the lack of state income tax, property tax, and the close proximity to multiple water

purification labs. Cost of living in Florida sits 10%-17% below the national average, that combined

with the lack of state income and property taxes provides our employee with a higher quality of life

as opposed to being headquartered in a state like California, that sits above the national average in

most categories. DLO’s expenses decrease with the lack of tax of state and property taxes as DLO

plans to expand and operate out of multiple faculties in the subsequent years. Florida also has one of

the lowest state corporate income tax at a mere 4.5% compared to the national average of 21%.

7) Our Tampa facilities will be in charge of quality control and distribution, the materials and

production of the bottle will be done overseas as it proves to be more cost effective being most

materials would have to be imported into the US for assembly and the cost of labor would rise if the

entire operation were to be based in the US. Our profit margins rise as we outsource the different

functions of production as the cost of running overseas facilities allows for a higher rate of

production at a lower cost than that of what would be provided in the US.

8) DLO’s dual filter has the potential to rival that of Brita. The profit margin show that we can

be a profitable business; however, the breakeven contradicts that because we are not supposed to

break even in the first few years. Over the course of 5 years of operation we are consistently growing

revenue while closing in on cost to equity on the DLO water bottle. Our inventory turnover exceeds

the industry standard in each year of operation giving an example of the popularity our DLO’s water

bottle and ability to grow.

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 DLO Filtering Solutions Organizational Chart 12/31/2022

*Year 2- Addition of 2 assembly line workers & 2 packagers which will be full-time
*Year 3 - will add 2 assembly line workers & 2 packagers, 1 general manager and 1 Accountant
*Year 4 - will add 3 assembly line workers & 3 packagers, 1 waste management and 1 IT Specialist
*Year 5 - will add 3 assembly line workers & 3 packagers, 1 waste management, 1 General Manager,
and 1 Marketing supervisor

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Exhibit 2: Employee Costs Chart

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Exhibit #4: Market Quantification
Total Market Annual
Annual Unit W/Sale Retail
Year Potential (No. of Market Share** purchase Annual $ Revenue
Sales Price† Price†
Customers)* amount***
2021 25,000,000 3% 1 750000 0 $34.99 $26,242,500.00
2022 27,500,000 3.50% 1 962500 0 $34.99 $33,677,875.00
2023 67,500,000 4.00% 1 2700000 0 $30.99 $83,673,000.00
2024 74,250,000 4.50% 1 3341250 0 $30.00 $100,237,500.00
2025 81,675,000 5% 1 4083750 0 $29.99 $122,471,662.50
To calculate the total market potential we took found that our three market segements(fresh water, enviromental
protection, outdoor recreation) correlate given that the populous drinks water. Everyone has a glass of water a day and it is
how people sustain life. The benifits of drinking water is numeral, the target is to give better and longer access to clean
water.
At year 5, we were able to come up with a 5% market share when taking our survey into account. We multiplied the % of
people who put a 7 for trying our bottle (32.4%) and the % of people who put a 7 for switching to our product (16.2%)

Due to our product having a longer filter life, our bottle is made to be bought at a rate where the filters don't need to be
replaced as often. Our marketing strategy is to pitch that someone would not have to replace a filter as much given the life
span of one of DLO's filter and that two filters and a bottle filter comes in a bundle at 34.99. Our understanding of the
consumers is that they don't replace their filters as often as they technically should. So playing into the consumers habit and
allowing the option to not worry about replacing a filter is our goal
The pricing tactic we are taking is that of the cost oriented approach and taking time to develop our product as we progress
through the market. This approach cuts cost and lowers price because we are gaining experience over time to put out a
above average product. Additionally, the market is very grand due to the need of the consumer drinking clean filtered water;
in effect, it would not hurt the channel of revenue coming in.

Breakeven Analysis
Total Fixed Unit Variable
Year Average Price BEP in Units
Costs Cost
2021 $34.99 $7,323,542.00 $12.83 330,485
2022 $34.99 $7,070,079.00 $12.83 319,047
2023 $30.99 $7,079,489.00 $12.24 377,573
2024 $30.00 $7,150,552.00 $12.14 400,367
2025 $29.99 $6,774,363.00 $12.09 378,456
As we penetrate the industry we are learning to cut cost as we progress as a
company. Additionally, perfecting our product is of our highest priority
because it will be reflected based on its usage. As any other start up we will not
be profitable in the few years to come. But we are learning to cut fixed cost
down in order to breakeven. As of now it is financially exspensive to conduct
operations and the more we do it the more we grow, learn, and evolve.

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Exhibit 5: Positioning/Competitive Analysis

Positioning Statement: After doing a market analysis, it is evident that consumers are willing to pay for a

longer filter life for a 24 oz bottle. Additionally, DLO acknowledges that replacing a filter can be a hassle in the

day-to-day of a common consumer and they would be paying for the convenience of not having to replace a

filter as often as consumers of Brita. With the DLO product a consumer would replace a filter every six months;

while on the other hand, Brita, our biggest competitor, would have to replace their filter every two months; given

that general public is on top of replacing their water filters. Our bottle size allows the consumer not to deal with

too big of a bottle nor to small and caters to customer convenience. The dual filter is hard to imitate because

although other brands could hop on the trend, they will not have the experience and knowledge that DLO has

gained in the time they were not implementing the dual filter. We believe we can sustain a competitive advantage

with continuously advancing our product and finding new ways to differentiate and appeal to sustainability.

DLO is satisfying both safety and social needs. Safety needs because it is a must that DLO produces clean, fresh,

drinkable water. DLO is satisfying a social need as well because of the biological need for water. DLO plans to

take the Innovation Approach opposed to Brand Loyalty. We believe that eventually we will take the Brand

Loyalty approach but only before we have differentiated and taken all the necessary steps to make DLO as

innovative, new, and creative as possible.

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Exhibit 6: Marketing Mix (Marketing)

Exhibit #6: Marketing Mix

Product/Service Branding
DLO's brand name is unique and provides instant appeal to consumers. DLO is water in Creole language. DLO strives to provide you the
cleanest, freshest, best-tasting water possible. The DLO logo is simple, yet tasteful. SLOGAN: "H2O on the go, with DLO"
Website: http://www.dlowater.com

2021 2022 2023 2024 2025

Unit Variable Cost: $12.83 $12.83 $12.24 $12.14 $12.09
Wholesale Price:
Retail Price: $34.99 $34.99 $30.99 $30.00 $29.99
The DLO water bottle is priced determined by the time taken to develop our product as we progress through the market. This will cut cost and lower prices because
as time and knowledge is being gained to produce/manufacture, DLO as a whole will improve along with the process. With this being said, DLO is using more of a
Penetration Strategy because we are setting the price fairly low compared to Brita, Hydroflask and other reusable bottle companies. Setting a lower price will allow
for DLO to attract more customers.
Distribution/Location Strategy
DLO plans to sell directly to our consumers on http://www.dlowater.com. In Year 3, the company plans to project sales and is
hopeful that DLO will attract Amazon and chains like Walmart and Target.

Promotional Strategy
2021 2022 2023 2024 2025
Total IMC Budget: $50,000 $50,000 $75,000 $168,750 $30,000
Campaign 1- Influencers $100,000
Campaign 2- Sustainability Video $75,000
Campaign 3- Viral campaign w/Columbia $198,750
DLO plans to communicate with various target markets through a variety of different campaigns. The first campaign (2020-2022) will communicate directly to our
Fresh Water Segment through various influencers. These influencers will post an informational video on Instagram, Tik Tok, Facebook, and Snapchat. Next, DLO will
implement Search Engine Optimization in order to draw traffic to dlowater.com in order to communicate with our Environmental Protection Segment. This will allow
for consumers to see our direct efforts towards sustainability. Our third Campaign features Columbia Sportswear in PR efforts. This will direct our Outdoor
Recreation segment and will show a thrilling video of Columbia/DLO users partaking in various outdoor recreation activities. DLO will implement Paid Search so
whenever a consumer types in "water bottle" the video will be easily accessbile on Google and Amazon.

5 5 6 6 7 If applicable
Compensation Method: Supervisor Salary: $124,000, Marketing Associate Salary: $31,000
DLO's mission is to provide the cleanest, freshest, best-tasting water possible.DLO is a start-up company and the only dual filtered water bottle on the
market. In order to convey this message, DLO has allocated our advertising budget to fund our Campaign/Marketing efforts. DLO has hired 4 Marketing
Associates who will work side-by-side on all of our social media efforts. They are also responsible for branding and website re-modeling. Every other
year, DLO will hire another Marketing Supervisor who will recieve a salary of $124,000. The Marketing Supervisors are in charge of overseeing the
Marketing Associates and fufilling our Paid Search/Search Engine Optimization efforts. They will also organize DLO's viral campaigns. DLO's Target
Market consists of the common fresh-water drinkers, outdoorsy people, environmentalists and more. Our Marketing Supervisors are required to attend
workshops and will continue to recieve training throughout their time at DLO. Although DLO has some big-brand competitors, such as Brita, DLO is
focused on what is trending now. The dual filter is something never seen before, this is what differentiates DLO. Marketing and Sales has never been so
digital, DLO is dedicated to keep shopping as easy as it can be for consumers. Viral/Digital Campaigns are what especially draws consumers in, DLO is
motivated to keep the campaigns as fun and interactive as possible in order to create long-lasting relationships.

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Exhibit 7: Flow Chart

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

Reliability The consistent reliability of DLO’s dual filter is
the key to getting loyal customers for
our product in the clear water market.
Durability Good durability is an essential standard of
quality for our products due to the fact most
customers will only consider buying our
products once. A highly durable product could
lead to good reputation and repeat customers.
To ensure reliability in the water bottle, we
will first do an raw materials check when the
components are shipped to the facility to
make sure none are damaged. The water
quality testing will be done at a scientific lab.
The water bottle will be tested for leakage
and durability at the decision point.

Serviceability As a startup company we have a late-mover
disadvantage. Therefore, our company should
place an emphasis on building
personal relationships with our
customers though good sales and after-sales
service. We need to assure them that our
company is focused on more than just another
sale.
To ensure great serviceability, we will have
same day shipping and supply a tracking
number as soon as orders are shipped. We
will also have an online customer support
service.

Special Features What makes DLO different from other water
filter companies is that we offer assurance that
there is a dual filter guaranteeing
proper purification of the impurities in water.
To ensure customers are satisfied
with DLO’s special features the actual filter
part will be US (United States)
made. Also, DLO’s water quality statistics will
be found on the back of the packaging.

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.
DLO’s biggest goal and comparative advantage is being able to supply the best filtered water quality in
comparison to our competitors. To ensure optimal quality, we placed a quality checkpoint at the decision
point. The tests will be conducted in a third-party facility where scientists from WQA will run the filters
through Hemodialysis. This tests for PH, Nitrate, Sulfate, and total dissolved solids to ensure we are up to par
with the NSF standards. The quality assurance tests are administered to a sample size of a collective whole. If
the sample size of those few that fail the test then the collective whole is reprocessed to recycling. This pre-
emptive cost measure promises a high-quality product. Operation fluidity should not be disturbed since there
will be a que at the decision point to see if the finished good passes the test.

Describe any reactive quality assurance plans. Include a recovery plan should a customer receive
poor quality goods and/or services.
Safety stock will come into play if customers have an unpleasant experience with DLO’s product. Return
labels will come with product to replace defects customers may receive. This should not happen often
because of the quality check points we have in place. We will also offer real-time customer service where
customers can chat with a representative at their leisure. Customer service representatives will be
outsourced to India.

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

DLO would be entering a market that Brita made a set consumer standard for. Using industry standards
would be the best approach to entering this market. In the first year, the company will focus on ways
to implement kaizen as the company moves forward. It is primarily important to focus internally first. We
do this by documenting our understanding of current performances while also tracking our successes and
failures. We will then focus on industry statistics, borrowing ideas, and implementing them into our own
organizational structure. From there our goal is to beat the industry averages by having DLO executives
collaborate free flow ideas to improve the business, product, and organizational structure. Waste management
and general managers would collaborate in quality circle to revamp and improve processes. That way DLO
will be able to keep any processes and costs optimal. We will also implement TQM within the organization in
order to ensure constant improvement in all departments. DLO will implement structures like “Kanban” in
the assembly line to manage and improve work across human systems.

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 Exhibit 11: Income Statement (Finance)

Common Size (as a percent of

DLO Filtering Solutions Key
Pro Forma Income Statement Input Field
Build Formula

Date Ending Date Ending Date Ending Date Ending Date Ending
2021 % 2022 % 2023 % 2024 % 2025 %

Sales Revenue $ 26,242,500 100.00% $ 33,677,875 100.00% $ 83,673,000 100.00% $ 100,237,500 100.00% $ 122,471,663 100.00%
COGS 9,622,500 36.67% 12,348,875 36.67% 33,048,000 39.50% 40,562,775 40.47% 49,372,538 40.31%
Gross Profit $ 16,620,000 63.33% $ 21,329,000 63.33% $ 50,625,000 60.50% $ 59,674,725 59.53% $ 73,099,125 59.69%

General and Administrative Expenses

Salaries and Wages $ 1,145,046 4.36% $ 1,210,787 3.60% $ 1,453,528 1.74% $ 1,737,139 1.73% $ 2,111,750 1.72%
Payroll Tax Expenses 120,985 0.46% 128,545 0.38% 156,460 0.19% 189,075 0.19% 232,155 0.19%
Employee Benefits and Retirement 52,136 0.20% 57,832 0.17% 71,493 0.09% 88,362 0.09% 108,876 0.09%
Testing Expense 1,800,000 6.86% 1,900,000 5.64% 2,000,000 2.39% 2,100,000 2.10% 2,276,306 1.86%
Maintenance Expense 1,000,000 3.81% 1,000,000 2.97% 1,000,000 1.20% 1,000,000 1.00% 1,000,000 0.82%
Depreciation Expense 16,000 0.06% 32,000 0.10% 48,000 0.06% 64,000 0.06% 80,000 0.07%
Rent Expense 230,967 0.88% 230,967 0.69% 230,967 0.28% 230,967 0.23% 230,967 0.19%
Website Expense 8,000 0.03% 8,000 0.02% 10,500 0.01% 10,500 0.01% 10,500 0.01%
Advertising and Promotion Expense 50,000 0.19% 50,000 0.15% 75,000 0.09% 168,750 0.17% 30,000 0.02%
Licenses Expense 285,728 1.09% 248,830 0.74% 267,870 0.32% 285,139 0.28% 267,990 0.22%
Office Expense 12,000 0.05% 12,000 0.04% 15,000 0.02% 15,000 0.01% 15,000 0.01%
Utilities Expense 693,595 2.64% 665,967 1.98% 715,844 0.86% 759,356 0.76% 689,725 0.56%
Total General & Administrative Expenses $ 5,414,457 20.63% $ 5,544,928 16.46% $ 6,044,662 7.22% $ 6,648,288 6.63% $ 7,053,269 5.76%

Earnings Before Interest and Taxes $ 11,205,543 42.70% $ 15,784,072 46.87% $ 44,580,338 53.28% $ 53,026,437 52.90% $ 66,045,856 53.93%

Interest Expense 1,400,000 5.33% 1,188,189 3.53% 946,725 1.13% 667,255 0.67% 0.00%

Earnings Before Taxes $ 9,805,543 37.37% $ 14,595,883 43.34% $ 43,633,613 52.15% $ 52,359,182 52.24% $ 66,045,856 53.93%

Income Tax Expense 1,500,248 5.72% 2,233,170 6.63% 6,675,943 7.98% 8,010,955 7.99% 10,105,016 8.25%

Net Income (Loss) $ 8,305,295 31.65% $ 12,362,713 36.71% $ 36,957,671 44.17% $ 44,348,227 44.24% $ 55,940,840 45.68%

Operational Cash Flow $ 8,321,295 $ 12,394,713 $ 37,005,671 $ 44,412,227 $ 56,020,840

Free Cash Flow $ 33,308,908 $ 47,668,829 $ 106,911,776 $ 156,066,132 $ 223,535,585

Statement of Retained Earnings

Beginning Balance of Retained Earnings $ - $ 8,305,295 $ 20,668,007 $ 57,625,678 $ 101,973,905

Net Income $ 8,305,295 $ 12,362,713 $ 36,957,671 $ 44,348,227 $ 55,940,840

Dividends to Stockholders $ - $ - $ - $ - $ -

Ending Retained Earnings $ 8,305,295 $ 20,668,007 $ 57,625,678 $ 101,973,905 $ 157,914,744

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 Exhibit 12: Balance Sheet (Finance)

DLO Filtering Solutions Common Size (as a percent of total Key

Pro Forma Balance Sheet Input Field
Build Formula

As of Inception Date Ending Date Ending Date Ending Date Ending Date Ending
1-Jan-21 % 31-Dec-21 % 2022 % 2023 % 2024 % 2025 %
ASSETS

Current Assets

Cash and Cash Equivalents $ 20,000,000 100.00% $ 24,833,439 87.79% $ 34,728,491 88.58% $ 64,988,980 85.19% 105,472,300 88.52% 156,761,441 90.37%
Accounts Receivable 0.00% 2,186,875 7.73% 2,806,490 7.16% 6,972,750 9.14% 8,353,125 7.01% 10,205,972 5.88%
Inventory 0.00% 1,202,813 4.25% 1,543,609 3.94% 4,131,000 5.42% 5,070,347 4.26% 6,171,567 3.56%
Short Term Investments 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Total Current Assets $ 20,000,000 100.00% $ 28,223,127 99.77% $ 39,078,590 99.67% $ 76,092,730 99.75% $ 118,895,772 99.79% $ 173,138,980 99.82%
Fixed (Long-Term) Assets

Machinery and Equipment 0.000% 80,000 0.283% 160,000 0.408% 240,000 0.315% 320,000 0.269% 400,000 0.231%
Total Gross Fixed Assets 0.000% $ 80,000 0.283% $ 160,000 0.408% $ 240,000 0.315% $ 320,000 0.269% $ 400,000 0.231%
Less: Accumulated Depreciation - $ - 16,000 0.06% 32,000 0.08% 48,000 0.06% 64,000 0.05% 80,000 0.05%
Total Net Fixed Assets $ - 0.000% $ 64,000 0.226% $ 128,000 0.326% $ 192,000 0.252% $ 256,000 0.215% $ 320,000 0.184%

Other Long Term Assets

Long Term Saving - 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

Intangibles, Net of Amortization 0.0000% 0.0000% 0.0000% 0.0000% 0.0000% 0.0000%
Total Other Long Term Assets $ - 0.0000% $ - 0.0000% $ - 0.0000% $ - 0.0000% $ - 0.0000% $ - 0.0000%

Total Assets $ 20,000,000 100.00% $ 28,287,127 100.00% $ 39,206,590 100.00% $ 76,284,730 100.00% $ 119,151,772 100.00% $ 173,458,980 100.00%

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities

Current Liabilities

Accounts Payable - 0.00% 1,494,767 5.28% 1,776,264 4.53% 3,892,944 5.10% 4,657,439 3.91% 5,544,235 3.20%

Current Maturity of LT Debt 1,512,935 7.56% $1,724,746 6.10% $1,996,211 5.09% $2,245,680 2.94% $2,520,427 2.12% -
Total Current Liabilities $ 1,512,935 7.56% 3,219,513 11.38% $ 3,772,474 9.62% $ 6,138,625 8.05% $ 7,177,867 6.02% $ 5,544,235 3.20%

Long-Term Liabilities
Notes Payable 8,487,065 42.44% 6,762,319 23.91% 4,766,108 12.16% 2,520,427 3.30% - 0.00% - 0.00%
0.00% 0.00% 0.00% - 0.00% 0.00%

Total Liabilities $ 10,000,000 50.00% $ 9,981,832 35.29% $ 8,538,582 21.78% $ 8,659,052 11.35% $ 7,177,867 6.02% $ 5,544,235 3.20%

STOCKHOLDER'S EQUITY

Owners Capital 10,000,000 50.00% 10,000,000 35.35% 10,000,000 25.51% 10,000,000 13.11% 10,000,000 8.39% 10,000,000 5.77%
Retained Earnings 0 0.00% $ 8,305,295 29.36% $ 20,668,007 52.72% 57,625,678 75.54% 101,973,905 85.58% 157,914,744 91.04%
Total Stockholders' Equity $ 10,000,000 50.00% $ 18,305,295 64.71% $ 30,668,007 78.22% $ 67,625,678 88.65% $ 111,973,905 93.98% $ 167,914,744 96.80%

Total Liabilities and Stockholders' Equity $ 20,000,000 100.00% $ 28,287,127 100.00% $ 39,206,589 100.00% $ 76,284,730 100.00% $ 119,151,771 100.00% $ 173,458,980 100.00%

17
Exhibit 13: Cash Flow Statement (Finance)

DLO Filtering Solutions Key

Pro Forma Statement of Cash Flows Input Field
Build Formula

As of Inception Date Ending Date Ending Date Ending Date Ending Date Ending
Date 2021 2022 2023 2024 2025
Cash Flows From (For) Operations
Net Income $ - $ 8,305,295 $ 12,362,713 $ 36,957,671 $ 44,348,227 $ 55,940,840
Depreciation - 16,000 16,000 16,000 16,000 16,000
Changes in Current Assets
Increase in Accounts Receivable - (2,186,875) (619,615) (4,166,260) (1,380,375) (1,852,847)
Increase in Inventories - (1,202,813) (340,797) (2,587,391) (939,347) (1,101,220)

Changes in Current Liabilities

Increase in Accounts Payable - 1,494,767 281,497 2,116,680 764,495 886,796

Net Cash Flow From (For) Operating $ - $ 6,426,374 $ 11,699,798 $ 32,336,699 $ 42,809,000 $ 53,889,569

Cash Flow (For) From Investing Activities

Fixed Asset Purchases (80,000) (80,000) (80,000) (80,000) (80,000)
Long Term Investments -

Net Cash Flow (For) From Investing $ - $ (80,000) $ (80,000) $ (80,000) $ (80,000) $ (80,000)

Cash Flow From (For) Financing Activities

Issuance of Owners Capital $ 10,000,000
Short Term Debt Borrowings - - - - -
Short Term Debt Payments -
Long Term Debt Borrowings 10,000,000 - - - -
Long Term Debt Payments - (1,512,935) (1,724,746) (1,996,211) (2,245,680) (2,520,427)
Dividends Paid to Stockholders - - - - -
Net Cash Flows From (For) Financing $ 20,000,000 $ (1,512,935) $ (1,724,746) $ (1,996,211) $ (2,245,680) $ (2,520,427)

Net Change in Cash $ 20,000,000 $ 4,833,439 $ 9,895,052 $ 30,260,488 $ 40,483,320 $ 51,289,142

Beginning Cash Balance $ - $20,000,000.00 $24,833,439.20 $ 34,728,491 $ 64,988,980 $ 105,472,300

Net Change in Cash $ 20,000,000 $ 4,833,439 $ 9,895,052 $ 30,260,488 $ 40,483,320 $ 51,289,142

Ending Cash Balance $ 20,000,000 $24,833,439.20 $34,728,491.39 $ 64,988,980 $ 105,472,300 $ 156,761,441

18
Exhibit 14: Financial Statement Notes

Income Statement Notes

Exhibit 14: Financial Statement Notes

Income Statement Notes

Revenues in the five-year projection for DLO Water Solutions is taken from various calculations seen in the
market quantification. For example, 2021 revenue is $26,242,500 and was formulated from a 25 million market
potential times a three percent market share of an annual purchase of 1 that gives an annual unit sale
of 750,000 multiplied by a retail price of 34.99.

Cost of goods sold is the accumulation of variable product cost based on raw material, outbound transportation,
and labor. 2021 - $12.83, 2022- $12.83 , 2023- 12.24 , 2024- $12.14 , 2025- $12.09

Salaries for the Chief Executive Officer and Chief Financial Officer in 2021 are $181,000.
Average hourly employee wages are estimated to be at $8.56 an hour at the minimum wage of the State of Florida.
Further employee wage information can be seen in the employee benefit sheet and are estimated at the median
wage given the position. Hourly workers are added each year to make up for the increase in demand. The timeline
for the addition of further employees for

Depreciation expenses are computed using the straight-line method.

Balance Sheet Notes

Inventory is estimated to be _99.6__% of expected yearly sales. .125% is safety stock for defects and customer
dissatisfaction replacements. This will be sold in the following year. Additionally, performing the PH- test on the
filters would inadvertently make the filter have a shelf life because of the resin and carbon pearls being activated;
therefore, majority of inventory needs to sell to maintain the livelihood of the product.

A short-term investment is made for an employee workshop program to further business development.

Equipment would consist of assembly line machinery that would cost 40,000 per machine.

DLO expect 0% sales to be made on credit because of the set-up of the business. Consumers would directly have to
go through the website for purchase and an immediate transaction would occur. Accounts Receivable balance is the
security balance of rent for the warehouse facility. This is expected to be returned when an upgraded facility is needed

Long term debt is of the form of a 5-year, $20,000,000 bank loan with a 14% interest rate.

19
Exhibit 15: Financial Ratios (Finance)

DLO Filtering Solutions Key

Financial Ratios Table Input Field
Build Formula

Date Ending Date Ending Date Ending Date Ending Date Ending Industry Average
2021 2022 2023 2024 2025 Ratios

Liquidity Ratios
Current Ratio 8.766270682 10.35887492 12.39572967 16.56422094 31.22864979 1.43
Quick Ratio 8.392669979 9.949698022 11.72277761 15.85783463 30.11549948 1.49
Operating Cycle 47.14626798 47.14626795 48.43699581 48.87958333 48.80967268

Leverage Ratios
Debt/Equity 0.1512935 0.094221175 0.065090987 0.03320751 0.02250906 0.3
Times Interest Earned 8.0 13.284 47.089 79.46951289 0 121.91

Asset Management Ratios

Inventory Turnover 21.81761496 21.81761496 20.25490196 19.7693575 19.84449959 13.1
Receivables Turnover 12 12.00000001 12 12 11.99999999 9.55
Fixed Asset Turnover 410.0390625 263.1083984 435.796875 391.5527344 382.7239453 7.18

Profitability Ratios
Gross Profit Margin 0.6333 0.6333 0.6050 0.5953 0.5969 4.8
Operating Profit Margin 0.426999813 0.468677783 0.532792394 0.522351233 0.53927459
Return on Assets 0.293606865 0.31532231 0.5813513 0.372199475 0.322501836 3.4

DuPont Analysis
Net Profit Margin 0.316482598 0.367087076 0.441691711 0.442431494 0.456765578 6.2
Total Asset Turnover 0.927718827 0.858985051 1.096851232 0.841258997 0.706055473 2.76
Equity Multiplier 1.545 1.278419887 1.12804385 1.064103035 1.033018161 1.2
Return on Equity 0.453709966 0.403114312 0.546503514 0.396058591 0.333150254 1.2

20
Exhibit 16: Financial Analysis

• Return on equity is the efficient use of the equity on assets and DLO is very fluid
with their operations we start declining then have a massive jump then back
declining.
• The Quick Ratio, is increasing slowly until 2024 when we see a rapid increase to
2025. DLO is being able to liquefy assets into cash quicker compared to former
fiscal year.

• The company’s debt/equity ratio decreases rapidly in the first two years but then
over time it slowly decreases as our debt because lower due to paying it off.

• DLO's inventory turnover is very high in the first two years due to our high sales
then the following three years it eventually starts to slow down.

21
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23
 Meet the Team - Section 5, Team 1

Hi, my name is Hasan Achour, I'm from Annandale, Virginia. I went to

J.E.B Stuart High School, now known as Justice High School in Falls
Church, VA. I am currently a junior majoring in Computer Information
Systems at James Madison University's College of Business. I plan on
graduating in the spring of 2022.
Hi, my name is D’Alontae Hayes, but I go by Lontae. I am from
Fredericksburg, Virginia. I am a junior majoring in Computer Information
Systems at James Madison University. I am a Cyber Security intern with a
government organization PEO Soldier in Fort Belvoir, Virginia. I expect to
graduate in the spring of 2022.
My name is Arthur Rozenberg, I am from Vienna, Virginia. I am currently a
junior, majoring in Business Management with a minor in Russian at James
Madison University. I expect to graduate in the spring of 2022.

My name is Wei Cao and I am from Fuzhou where is in the south part of
China. I am a junior majoring in Finance. In my free time I enjoy watching
or playing soccer, video games. I expect to graduate in the spring of 2022.

My name is Marlon Cuevas, I am from Clarksville, TN. I am currently a

junior, majoring in Finance with a minor in writing and rhetoric at James
Madison University. My expected graduation date is spring of 2022.

Hi there! My name is Madison Martin, I go by Madi for short. I am from

Westminster, Maryland. I am a Junior, majoring in Marketing with a minor
in Human Resource Development. Over the summer, I began an internship
with Carson & Saint- a cybersecurity company where I interned under the
Marketing manager. I expect to graduate in the Spring of 2022.
My name is Zefeng Hu, and I am a Junior Marketing major at James
Madison University. I am an international student. I was born in
Guangzhou, China. Outside of school, I enjoy playing basketball and e-
sport games. I expect to graduate in the fall of 2021.

Hi, I’m Jaemin Yoo. I’m majoring International Business in James

Madison University. I’m also interested in supply chain management and
business analysis. I had worked as a photograph editor for a year. I’m not
American citizen, I’m an international student from Seoul, Republic of
Korea. I expect to graduate in the fall 2021.

24
25