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Strictly Private & Confidential
© Challenger Engineering 2014
Confidentiality Agreement
1) Executive Summary
2) Company Description
Promoters, shareholders and Board
Advisors
Products and services
Long Term Aim of Business
Objectives
S.W.O.T. Analysis
3) Market Analysis
Target market
Total market valuation
Targeted share
Market trends
Profile of competitors
Competitive advantage
Benefits to clients
4) Marketing/Sales Strategy
Income sources
Marketing strategy
Pricing
Advertising and Promotion
Sales Strategy
5) Research & Development
Patents, copyrights and brands
Product/Service Development
R&D
6) Staffing and Operations
Management Organisation Charts
Staffing
Training Plans
Operations
7) Financial Projections
Key Assumptions
Profit and Loss Accounts
Balance Sheets
Cashflow Projections
8) Sales Pipeline
9) Funding Requirements 15
10) Appendices 16 i
This document is the proprietary property of Challenger Engineering.
Copying or otherwise distributing the information contained herein is a breach of confidentiality agreement.
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Strictly Private & Confidential
© Challenger Engineering 2014
Purpose of the plan
The purpose of this Business plan is to receive €150’000 investment over a three year period for our company Challenger Engineering. In return for this we are willing to offer 20% of the company.
Product & Advantages
Challenger Engineering offers our new product Reactive armour. Reactive armour is a non-obtrusive and flexible piece of clothing designed to be worn by athletes in physical sports or by motorbike users. With reactive armour protection from physical impact and injury is provided to the user without the need for protective padding.
Reactive armour minimizes aerodynamic drag, offers unrestricted flexibility and is lighter than its competitors
Market opportunity
The initial target market is people who participate in contact sports, with expansion into the motorcyclist market planned in the future. This market is evaluated to be approximately 19’993’000 people across the Western Hemisphere with untapped markets in Asia and Africa.
Management team
James Herlihy, Current student of Process and Chemical engineering at University
College Cork – CEO
Jim Herlihy, Production team leader at Novartis pharmaceutical – Production Director
Mike Hourigan, Owner and Director of Horizon Control Groups Inc. – Marketing
Director
Financial Projections:
Year 1 Year 2 Year 3
Sales 8’282’640 21’960’000 30’000’000
Net Profit before Tax
Investment
Employment
R&D
5’839’440 19’591’600 28’820’640
125’000 20’000 5’000
2’000’000 2’000’000 2’400’000
60’000 60’000 60’000
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Promoters and Shareholders
James Herlihy, Current student of Process and Chemical engineering at University
College Cork, Has management experience Won junior business award in 2010 for excellence in the field of business
 Challenger engineering was formed as a Public limited company headquartered in the county of Cork. The founder is currently the director of the company and the majority shareholder. In addition to shares held by the founding partner a number of shares have been set aside to accommodate an employee incentive plan. Shares have been authorized, but are not yet issued, to accommodate future investors.
 James Herlihy , 5100 shares, 51% shareholder, €2000 cash investment to date
Advisors
Mike Hourigan, Owner and Director of Horizon Control Groups Inc., has extensive experience in the formation of new ventures. Mr. Hourigan completed degrees at
University College Cork and the Cork institute of technology.
Jim Herlihy, Production team leader at Novartis pharmaceutical. From 1988 to 2013,
Mr. Herlihy held various positions at Schering Plough now Merck Sharp & Dohme, including Shift supervisor, Project manager, and. Mr. Herlihy has qualifications from both the institute of technology Sligo and Cork institute of technology.
Products and services
Reactive armour is a non-obtrusive and flexible piece of clothing designed to be worn by athletes in physical sports or motorbike users. With reactive armour protection from physical impact and injury is provided to the user without the need for protective padding.
 Blunt abdominal trauma accounts for 75% of all blunt trauma injuries and is the most common injury in motor vehicle accidents and contact sports. No product exists which target this specific type of injury is available to civilians.
Inspiration for our product stems from military grade Kevlar body armour.
 Lightweight, Flexible, Cost effective and Proven technology
 Unlike other forms of armour it is lightweight and non-restrictive without compromising purpose
 Provides protection and peace of mind to users without adding weight
 Possible deterioration of armour after it is washed due to active chemical washing away.
 Solution to aforementioned problem is to refine of design to allow for greater durability against wear and tear and inclement weather.
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Long Term Aim of the Business
Expand business into foreign markets across the globe while developing new products to add to company’s portfolio. Gain brand recognition in domestic and foreign markets
Objectives
Year 1: Sell 150’000 units in Ireland, Production base established in Cork, R&D department established, Establish International marketing campaign
Year 2: Sell 300’000 units in Ireland, Export 100’000 units to European markets, employ approximately 50 people in manufacturing, Brand sponsorship with GAA and IRFU
Year 3: Sell 325’000 units in Ireland, Export 200’000 units to European markets & 50’000 to United States, Expand Operating base to accommodate demand in foreign markets, Brand sponsorship with NHL and NFL. Hire 10 new employees
Year 4: Sell 350’000 units in Ireland, Export 300’000 units to European markets & 150’000 to United States, Marketing campaign targeting motorcyclists, Employ 100 people in manufacturing
Year 5: Sell 350’000 units in Ireland, Export 400’000 units to European markets & 200’000 to United States. Implement refinements suggested by R&D
SWOT Analysis
Strengths
 No similar product on market
 Relatively cheap to produce
Opportunities
 Brand association with various international sport bodies
 Targeting motorcyclists and ATV users
Weaknesses
 Sports apparel is a highly
 competitive environment
Accessing foreign markets may prove difficult
Threats
 Existing companies who operate in physical sports market e.g.

Nike, Adidas
Securing International patent
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Target Market
The initial target market is people who participate in contact sports, with expansion into the motorcyclist market planned in the future.
Irish Market
The number of people who play GAA in Ireland is approximately 750’000 people,
Rugby accounts for 200’000 people and Motorcyclists 50’000 people. This gives an approximate Irish market size of 1’000’000 people.
European Market
The number of European rugby players is approximately 2’623’000 people excluding the Irish market, GAA accounts for less than 25’000 players in Europe. European motorcyclists represent 5’305’000 people. The approximate European market size not including Ireland is therefore 7’953’000 people.
American Market
Rugby accounts for 460’000 players in the United States, 598’000 Ice hockey players,
1’200’000 American football players and approximately 50’000 GAA players. Last year there were 8’780’555 motorcycles registered in the United States. The American market size is estimated to be 11’040’000 people.
Predicted Growth
GAA and Rugby are becoming more popular past times in Ireland and with this we can expect a gradual increase in the size of the market. The RSA indicates that the amount of motorbikes registered in Ireland increases at approximately 9% annually, a similar trend can be expected in other countries.
Total Market Valuation
Total Market Valuation of 19’993’000 people.
Target Company revenue
Average deal size to individual consumers is predicted to be 2 units per annum,
Retailers are expected to order in bulk sizes of 50 to 100 units and replace throughout the year as their stock sells.
The sales cycle is expected to last 12 months as different sports take place in different seasons and Motorcyclists are yearlong customers.
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© Challenger Engineering 2014
Profile of Competitors
Motorcycle jackets are produced by a large number of companies like Dainese and
Furygan. The typical products they sell are large jackets comprised of a leather and polymer mix designed to be worn over the user’s clothes.
No competitors exist in the market for protective armour in rugby or the GAA.
The American football and hockey sectors however have a significant amount of competition with large companies such as Nike down to smaller companies like
Schutt present. The product these companies sell are a under armour set of shoulder pads created from High strength polymers.
Dainese is an Italian company founded in 1972 It specializes in protective wear for sports such as motorcycling, mountain biking and downhill skiing. It is known well in motorcycling circles, sponsoring current riders such as Valentino Rossi. Dainese offers both an 'off-the-shelf' and a 'made to measure' service, therefore opening the brand to variety of types and price levels. Dainese had total revenue of 11.6 billion euro last year
Nike, Inc is an American multinational corporation that is engaged in the design, development, manufacturing and worldwide marketing and selling of footwear, apparel, equipment, accessories and services. It is one of the world's largest suppliers of athletic shoes and apparel and is a major manufacturer of sports equipment, with revenue in excess of US$24.1 billion in its fiscal year 2012. In 2014 the brand alone was valued at $19 billion, making it the most valuable brand among sports businesses.
Competitive Advantage
Reactive armour is non-obtrusive and flexible piece of clothing designed to be worn under clothing so as not to cover numbers on a jersey or restrict movement. Reactive armour can be produced for a low price and so can enter the market at a significantly lower retail price than its competitors
Benefits to Clients
Reactive armour minimizes aerodynamic drag for the user because of its skin tight nature. The fact it is made out of fabric not rigid polymers like its competitors means the user has almost unrestricted flexibility
The fabric in the armour also allows it to be lighter than its competitors so it does not have an adverse effect on the performance of the athlete or vehicle where as competitors products weigh between 4-5 kg.
The reactive armour is significantly cheaper to produce then its competitors which means it can enter the market for less than its competitors giving a financial saving to the consumer
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Strictly Private & Confidential
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Marketing Strategy
We will leverage social media and word of mouth for the vast majority of our marketing using platforms such as Twitter, Facebook, and Instagram. These platforms are widely used by the customers in our demographic market. We will make announcements via regular tweets and updates to our fan page on Facebook.
We will also use our email marketing list which is comprised of people who have expressed interest in knowing when we release new products. We have segmented our email list so that we can send appropriate emails to media and different ones to actual consumers.
The advertising will primarily be online via search engine ads so we can see the results within days instead of not knowing whether a print ad has any effect. We have identified major sports teams who we could offer free versions of the product in exchange for brand exposure.
Sales Strategy
A key factor in the success of Challenger Engineering will be its distribution. The company plans to use the following retail distribution channels:
 Department stores
 Apparel specialty stores
 Internet store
Challenger Engineering intends to build a sales team that will be tasked with generating sales leads on a national and International basis. They will also be responsible for establishing connections with retail outlets. The company will begin operations with two full-time delivery/sales representatives, who will be responsible for providing full service and delivery to current customers, but also make sales calls for potential new business. These delivery/sales representatives will receive a base salary, with commission on qualified sales, as well as bonuses for new acquired business.
Customers will be scheduled for a pre-arranged delivery day depending on the quantity and timeline of product needed. Product orders can be placed in a number of ways to help facilitate the process:
 Phoned Orders: Customers can easily phone orders into our office, up until
2:30 p.m. of the afternoon prior to their scheduled delivery day.
 Faxed Orders: Customers can fax in a completed product order sheet, with the same deadline as phoned orders.
An internet store will be established where consumers can buy directly from the company without any intermediate vendor. Online sales accounted for 6% of all sales last year in the US and it is expected that a large portion of sales will come from the online store
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Pricing
Reactive armour is expected to retail at €55 per unit which is 21% cheaper than that of its biggest competitor Nike shoulder pads which retail at €70, Schutt products retail at a price of €60.
The competitive nature of the sports apparel environment suggests that by undercutting the competitors in terms of retail price the product is made more attractive. The price differential should allow the product to gain traction and establish itself in the market.
Market analysis of our consumers also suggest that the price margin is also insufficient to create the perception that the product is made of inferior quality goods or otherwise defective instead being of a price range where consumers expect a higher standard of performance for such a price tag.
Production costs are expected to be 6 euro depending on the price of raw materials, with employee wages and other overheads are expected to incur a cost of €3 per unit.
The product can be sold for a price of €45 on our internet store, a markup of 460% or sold at retail stores for the price of €55 which accounts for a markup of 580%
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Technology Roadmap
Product will have to be refined for use in different climates such as insulation for colder climates or ways of wicking sweat for warmer climates in order to keep the user comfortable.
More expensive shear thickening fluids will be utilized if there is a demand for a luxury product in certain markets
IP, Patents, Copyrights, Brands
As this technology is relatively new achieving a patent should not prove to be difficult, however difficulties may arise due to the similarities of the products function with that of the copyrighted product Kevlar.
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Copying or otherwise distributing the information contained herein is a breach of confidentiality agreement.

Strictly Private & Confidential
© Challenger Engineering 2014
Management Organisation Chart
Staffing
Production:
 30 employees with relevant production training
Management:
 Managing Director, 1 production director, 1 finance director, 1 marketing director, 1 finance supervisor, 1 marketing supervisor, 3 production supervisors
Marketing:
 5 employees with business & sales skills backgrounds
Finances:
 5 employees with accounting and tax backgrounds
Training Plans
 Lean six sigma training for production managers and staff which reduces inventory and exposes key manufacturing problems.
 Ethics awareness training for all staff in order to further appreciate the responsibilities of producing consumer goods
 Fire safety training for all employees in order to prevent damage to stock and downtime in production areas
Operations
 Premises: Challenger engineering requires a facility large enough to house a medium sized production operation with sufficient space to store goods on site. An industrial estate would fit for this purpose.
 Equipment: Standard production equipment for the production of clothes,
Delivery vehicles
 Infrastructure: High speed internet along with a range of telecommunication equipment are needed in order for the online store and marketing department to work at full capacity
 Communications facilities: Fibre optic broadband, Business phone connection, Fax machines
 Suppliers: Raw materials available from manufacturers, Shear thickening fluid can be manufactured on site
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Copying or otherwise distributing the information contained herein is a breach of confidentiality agreement.

Strictly Private & Confidential
© Challenger Engineering 2014
I Key Assumptions
II Cash flow
p p
Income Sources
Sales:
 Domestic market starting at 15% of market and increasing annually,
International market sales of 10% with annual increase
Shares:

Grants:
All sales are purchased year 1 at a value of €2.50 a share
 Government start up grant of €20’000 year 1
Salaries:
 For 50 employees paid at the average industrial wage of €40’0000 it will cost
€2’000’000 per annum to pay salaries
Equipment:
 Predicted spending of €100’000 to purchase production equipment and delivery vehicles, Payments will be spread out over the space of year 1. After year 1 equipment fees will be reduced to €1000 monthly for maintenance and repairs
R&D costs:
 The budget for R&D of new and existing products is €5000 a month
Depreciation:
 Vehicles are expected to depreciate at a rate of 20% per annum, Equipment at a rate of 10% per annum
Expected Rent and Rates charges:
 Rent is expected to be €14’000 a month, utilities are expected to cost €8000 a month
Raw materials:
 Raw materials are estimated to cost €1000 euro a month and is dependent on normal production rate
Dividends:
 Start at end of year 2 at a rate of 10% of profits to be evaluated in later years
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Copying or otherwise distributing the information contained herein is a breach of confidentiality agreement.

Strictly Private & Confidential
© Challenger Engineering 2014
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This document is the proprietary property of Challenger Engineering.
Copying or otherwise distributing the information contained herein is a breach of confidentiality agreement.

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© Challenger Engineering 2014
Table as follows:
Regularity Pathway:
Product is in accordance with ISO 13688:2013
The regulatory body in Ireland is the NSAI. The NSAI doctrine for protective clothing is contained in ISO/TC 94/SC 13
Engineering Ethics:
Social Conscious: Having a production facility in an area such as Cork we must be aware of the impacts we will have on the local community. Truck deliveries in the earlier hours of the morning, heavy usage of local infrastructure and the effects on quality of living for local residents must all be considered.
Sustainability: All efforts should be made to use raw materials that come from a producer which use sustainable processes. The processes involved in making the reactive armour will use numerous solvent recovery lines in order to reduce the amount of chemicals used. Utilities will be offset by electricity generated from waster heat.
Environmental awareness: Emissions from the facility must be taken into account and can be reduced by using a CO2 scrubber. Chemical spills and other waste must be treated to according standards before it can be released to the environment. The process involved in manufacturing the product is energy intensive and as such it should be of paramount importance to minimise this by proper fittings and optimising processes.
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Copying or otherwise distributing the information contained herein is a breach of confidentiality agreement.

Strictly Private & Confidential
© Challenger Engineering 2014
Investment:
Bank Lending
€
150’000
Required for:
Equipment
€
100’000
R&D
€
60’000
Government Grant Investment Received Investment Sought
€ € €
20’000 25’000 120’000
Marketing
€
50’000
Staffing
€
165’000
Rent
€
28’000
Raw materials
€
1000
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This document is the proprietary property of Challenger Engineering.
Copying or otherwise distributing the information contained herein is a breach of confidentiality agreement.