Mr. Tyler Hansen

1583 University Ave.

Ames, Iowa 50010

Dear Mr. Hansen,

I am Dylan Kay, owner of TemperaGuard Valve Guards. Tim Jones of the

Entrepreneur’s Financing Group recommended me to you as a potential investor for my

company.

TemperaGuard produces trumpet valve guards and heated pads that are placed inside the

guard. We offers trumpet players of outdoor marching bands a valve guard that is weather proof

and offers a heat source for when weather conditions are in temperatures that require doctoring

to the horn for it to perform properly. TemperaGuard is currently the only company on the

market that produces valve guards that have built in heat sources.

TemperaGuard is currently in the design stage with a mock-up template and material

composition already completed. TemperaGuard is seeking a $75,000 investment with 10%.

Your consideration in investing with TemperaGuard would be greatly appreciated.

Thank you for your consideration. If you have any questions you can contact me at (712)

249-2969, and you can expect a response within 48 hours of contact.

Sincerely,

Dylan Kay

Dylan Kay Jake Sinnett Danh Phan

(712) 249-2969 (816) 876-7853 (214) 558-3288

April 2014

Table of Contents

1. Executive Summary.....................................................................................................1

2. Company And the product...........................................................................................2

2.1. Company Summary...............................................................................................2

2.2. Company History..................................................................................................3

2.4 Product .................................................................................................................3

3. Legality.........................................................................................................................4

3.1. Legality Issues.......................................................................................................4

4. Customer/Market Analysis..........................................................................................9

5. Marketing Plan.............................................................................................................6

5.1. Entry Strategy.......................................................................................................6

5.2. Pricing...................................................................................................................6

5.3. Marketing Budget…………………………………………………………….……7

5.4. Distribution/Location………………………………………………………………7

6. Competitor Analysis....................................................................................................7

6.1. Competitor Analysis.............................................................................................8

6.2. Industry Analysis………………………………………………………………8

7. Management Team......................................................................................................8

8. Financial Highlights...................................................................................................10

9. Proposed Offering......................................................................................................10

10. Overall Schedule........................................................................................................10

Table of Contents

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1. Executive Summary

TempraGuard (Thermal Valve Guard) is a company that produces thermal valve guard for

brass trumpet instruments. The company was founded in 2005 in Ames, Iowa by Dylan Kay. The

company currently sells the thermal valve guards to local high schools and is used by the Iowa

State Cyclone Marching Band.

The Products

TemperaGuard sells valve guards for trumpets, and heated pads that go inside the guard.

The Market

TemperaGuard current sells heated valve guards directly to individual consumers

around Central Iowa and to nationwide distributors. The company is expected to grow, by

selling its product outside of local high schools and Iowa State University. Most

interestingly, there is no other product out there like ours.

Marketing

TempraGuard will focus its marketing strategies with two different ways to reach

its customers. One of the strategies will consist of educating the consumers of the product

through a website. While the website is already up and running, we will continue to

improve it as the company develops. The second strategy will consist of marketing at

industry trade shows. Trade shows will help showcase our product to potential

distributors of instruments.

Financial Highlights

TemperaGuard is forecasted to reach profitability during first year. Our sales

have reached $20,000 in 2014, increasing to $120,000 in 2017. By 2017 we will have a

gross margin of 89.23%.

2

Management Team

Our management team consists of 3 students from Northwest Missouri State.

Each of the students have played an integral role in the formation of this business.

Objectives

To become the leading thermal valve guard manufactures.

Increase profitability to make TemperaGuard a long-lasting company in a new

market.

Increase units sold by expanding our market outside of Central Iowa.

Mission

TemperaGuard is here to revolutionize the way trumpets are played in frigid

temperatures. To improve the quality of sound and ease of play is our product’s goal.

Key to Success

Produce a consistent product

Provide excellent customer service to both the distributor and consumer.

Stable control of financial budgets

2. The Company and Product

2.1. Company Summary

TemperaGuard is an Iowa-based L.L.C. that was started in early 2005 by

Dylan Kay. The company began as a “home based” venture with Dylan selling

directly to student at his local high school. Dylan is ready to take it the next level

by hiring new people and selling to distributors in addition to direct to the

consumer. TemperaGuard will use an in house production produced locally. The

product designs have been created and normalized.

3

2.2. Company History

The company was created in 2014 by Dylan Kay when he used his

background in music to discover a solvable problem that will help aid in the use

of instruments in cold weather.

2.3. Product

TemperaGuard produces two products: valve guards for trumpets and a

heated 1 time use pads that go inside of our valve guards. The valve guard itself

is comprised of an elastic synthetic neoprene rubber that is weather resistant in

temperatures decreasing all the way down to -58o F. After multiple tests of

materials, Dylan found that the neoprene would best suit the TemperaGuard

because of its elastic nature that would help it fit snugly around valves of all

instruments that the product is intended for. In addition to the elastic nature, the

neoprene material is weather resistant and does a great job at retaining heat.

CITE The inner lining of the pad will consist of a fleece material that will also

hold a heated pad. Fleece’s soft and “fluffy” material will provide a nice

breathable cushion for the valves that will also do a good job at retaining heat.

The heated pads, currently provided by Hot Hands, are comprised of a perforated

pouch with a combination of cellulose, iron, and active carbon that heat to an

average temperature of 138o F when exposed to oxygen. CITE The heated pads

are purchased in air-tight packages and are activated when opened and exposed to

the air. After the heating pad is opened and activated, it will be place in the fleece

4

pouch on the valve guard. The Temperaguard will go around the valves of the

trumpet and be fastened on with a Velcro strip.

What makes us so unique from any competition is that there is no other

product out there like ours. The TemperaGuard offers players of brass

instruments with valves a simple, yet quality solution to the sticking and freezing

of valves which common in cold weather situations. The TemperaGuard provides

trumpet players the ease of mind knowing that they can perform with an

instrument that will work properly in temperatures that otherwise would freeze

their valves. In addition to the TemperaGuard’s heating capabilities, it also acts

as a standard valve guard without the heated pad in place giving the user a soft,

comfortable material for their hand to grip onto which would relieve any hand

fatigue and protect the valves from sweat, grease, or any other harmful things to

the brass.

Currently the TemperaGuard is still in the design stage of development.

We have a template for the shape and proportion of the valve guard itself. (Weber

2011) We would also like to attempt to create our own heated pads similar to the

heated pads that we are purchasing, but our research for that part of the product

has yet to reach that extent.

3. Legality

3.1. Legal Issues

TemperaGuard will require a multitude of things to make sure our product stays

with our company legally.

5

First our company name “TemperaGuard” will need a copy right for its title. If we

are going to own the company and run it then we need to make sure no other

company can take our name.

Patent: Our product, since it is unique and distinct, will need its own patent. A

patent will ensure that once our product is created will not be able to be made

through other companies.

License: Of course according to the Small business administration we will need to

get a business license. In order to do this we will have to fulfil the checklist

required by the Missouri SBA.

http://www.business.mo.gov/BusinessRegistrationChecklist.pdf after this

registration is completed we will be able to start hiring and moving our business

forward.

Insurance: We would have to gain business insurance. This will be located

through insureon where we can specifically design an insurance based on our

company’s needs. This will help protect our company in the instance of an

accident that may hinder our company in the future.

4. Customer/Market Research and Analysis

Our market is very specific, consisting only of marching band trumpet players.

Although we have a very specific customer base, our market is still quite large. Division

1 colleges have the average size of 275 members per band. Out of those members, 20%

is composed of trumpet players. We calculated that 20 Division 1 schools would benefit

from our product so that gives us a market of roughly 1,080 players just within Division 1

colleges. (K. Strickland, personal interview, March 31, 2014) Through Division 2

6

colleges, we found 40 schools that could benefit from our product. With an average of

150 students per band and an average of those is 16 percent, we found that our market

would be around 1,200 players in Division 2 bands. The Division 1 and 2 numbers were

the most consistent so those are the only numbers that we used to forecast our financials.

Competitive marching bands within Drum Corp International and high schools would

also benefit from our product, but the numbers were not nearly as consistent, making

forecasting difficult. (K. Strickland, personal interview, March 31, 2014)

5. Marketing Plan

5.1. Entry Strategy

TempraGuard will use a differentiation focus marketing strategy with two

different ways to reach its customers. One of the strategies will consist of marketing

to the basic consumer through our website and local communities. While the website

is already up and running, we will continue to improve it as the company develops.

TempraGuard will be set up a pay per click advertisement through well-known music

internet sites. While local efforts will be contacting Central Iowa school districts.

The second strategy will consist of marketing at industry trade shows. Trade shows

will help showcase our product to potential distributors of musical instruments. The

main trade show called National Association of Music Merchants (NAMM), which

consist of over 75% of the business transactions of instrument retailers and

distributors, will be our primary marketing target.

5.2. Pricing

TemperaGuard will use a partition pricing strategy because it needs two

components for the product to fully work. The valve guard itself will be priced at

7

a $15.99 and the one time use heated pads priced in bulk at $7.99 for 6-pack,

$12.99 for 12-pack, $19.99 for 24-pack, and $29.99 for 36-pack. These prices

will be discounted with large quantity purchases through high schools and

colleges depending on the quantity purchased.

5.3. Marketing Budget

TemperaGuard will focus on two marketing segments to reach consumers.

Marketing for individuals will be done primarily over the internet and local

communities. Another segment will be trade shows.

5.4. Distribution/Location

TemperaGuard headquarters will be based out of Ames, Iowa. Products

will be sold around Central Iowa to local high schools. Our online website will

help educate distributors of our products and complete contracts.

6. Competitor Analysis

6.1. Competitor Analysis

TemperaGuard’s product is unique in that there is little competition in our

market. We are the first of our kind to address the problem of keeping a constant

heat source to brass instrument valves during outdoor performances. Currently, a

standard valve guard is the only in production solution, however, heat is rapidly

lost due to the lack of any heat source so the valves rapidly lose heat and soon

freeze after. How marching bands have been coping with this heat loss problem

in the past is by taking Hand Warmers, putting them in something like a sock, and

then taping that around the valves to keep them warm. This alternative is still not

8

as effective because the sock is bulky and does not fit snugly on the valves, which

is inefficient when trying to keep heat. Another alternative solution is completely

flushing the horn of any valve oil, taking a mix of valve oil and vodka, and then

placing that in the horn. This solution does help from keeping the valve oil from

freezing, but it still doesn’t keep the valves from sticking and malfunctioning.

The horn also needs to be flushed again immediately after the performance to

prevent damage to the instrument which is very time consuming.

6.2. Industry Analysis

The product will mainly be on a 3 tier system. It will go from Online store,

to distributor, to customer. We plan on marketing directly to our potential buyers

due to the importance of our high volume sales being from direct buyers such as

musical institutions and schools.

7. Management Team

In 2014 a team of 3 highly innovated college students came together with an idea to

help trumpet players around the nation. The idea started with Dylan having his own

experience in the marching band, his idea is what sparked the creative invention of

TempraGuard. With all of us having a background in the entrepreneurship class we

brought our minds together to make the innovative company. With Danh handling

financing, Dylan handing Research and development, and me handling marketing and

sales we got together to make a great team. With our creative minds and Dylans high

background and interest in the marching band we figured our idea would sky rocket

in the entrepreneur industry. Here is a little background on each of our leading Co.

Founders.

9

Individuals

Danh (Financing): I am from Kansas City and currently a senior at

Northwest Missouri State University, pursuing a double major in Financial

Management and Business Management. My goal to be involved in the company

is taking the role of the financing position. I believe with knowledge our team will

provide anything is possible. I have taken many finance classes and with my

background already starting in finance I was able to dive in to this role. I feel with

my skills I will boost the company to exactly where it needs to be and in the

future even farther than it expected.

Jake (Sales): I am also from Kansas City and am junior at Northwest

Missouri State University. I have had much experience in sales through my past 6

years of work solely in retail. I completed a great internship at Buckle Co. where I

was solely involved in sales, with this background already and a striving

personality my goal in the company will be to get the word out. I have a strong

determination to boost this company to the top that it can be where. A strong start

with a founder with an already experienced background in sales is key. If you

believe in your product you will be able to sell it.

Dylan (Research and Development): I am a student at Northwest Missouri

State University obtaining a Bachelor's of Science Degree in Business

Management as well as in Marketing. Although my studies are in marketing and

management, my real passion is music. Playing the snare drum in the Bearcat

Marching Band for 4 years, percussion, guitar, and saxophone in the Northwest

Studio Jazz Ensemble for 2 years shows my true love for music. My involvement

10

with the marching band is what sparked my initial idea for this product, and my

degree in marketing will provide the knowledge for marketing the product.

8. Financial Highlights

TemperaGuard is forecasted to reach profitability during first year. Our

sales have reached $20,000 in 2014, increasing to $120,000 in 2017. By 2017

we will have a gross margin of 89.23%.

9. Proposed Offering

TemperaGuard is seeking the amount of $75,000 for 10% of return on

investments.

10. Overall Schedule

Schedule

With the creation of TemperaGuard in early 2014 we can understand that

not a lot of sales and production will sky rocket at the begging. Our first milestone

is the creation of our website, we hope to have this up and launched by mid-2014

with the site fully up and running. Of course we will encounter some technical

difficulties as most companies do, so by the end of 2014 we want to have our

website full fastened and secure with easy access and understandable ventures.

Our primary objective following will be to reach out to close businesses and

potential customers that we can sell to and start creating local consumers. This

will start getting our name out and by mid-2015 we want to have a small customer

basis with the hopes of networking that will soon launch our business into the

next level. Since TemperaGuard is based online than the mile stones of finding

and renting a building for offices is not of the most important factors. We at

11

TemperaGuard are here to sell to distributors who will then relay our product to

potential buyers. By 2016 TemperaGuard will have its name in the music industry

with hopes of expanding nationwide; this will create more buyers and the

potential of even more distributors. Our main focus to start within the early years

of creation is to get our name out, we want the music industry to know that we are

here to help out musicians who face the exact problem that we are trying to fix.

Therefore our next milestone is firmly planting our feet into a nationwide

industry. Music, of course, involves a multitude of industries, companies,

products, and consumers. Therefore once the word gets around of TemperaGuard

we will be having a large amount of traffic for potential buyers and distributors.

Our goal is that by 2020 we will have a stable basis of distributors all over the

nation that will help boost and maintain sales; TemperaGuard is reaching to

everyone who needs our product not just major cities and large music companies.

We understand our product is there to benefit the buyer and that is our main goal.

Milestones

TemperaGuard has come up with a list of milestones that the business wishes to

complete. This chart will show what needs to be accomplished and by the date, it

will also supply the price that will come with it and who is in charge of doing said

task.

Milestone Start-end Date Budget Manager(s) Department

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Complete

business plan1/1/2014-4/2/2014 $0 Dylan, Jake, Danh

Strategic

Operations

Creating the

Website5/1/2014-6/1/2014 $0 Dylan Online Operations

First Sale 6/2/2014-7/2/2014 $0 Danh Distributor Sales

Profitability 1/1/2015-9/1/2015 $0 Danh Accounting

Initial Discussion of risks and problems

With the utilization of our product one can speculate that problems and risks can

occur naturally. Nothing is ever guaranteed pure 100% safety so therefore you can always

expect a risk or a problem. The product itself is supposed to be an asset when playing an

instrument; it involves a source of heat that covers valves making the instrument easier to

play. This is where the risk comes in; having any electronic device you can believe

malfunctions may occur. A major risk we have associated is the possibility of the product

over heating causing instrument damage or worse physical injury to the customer.

Electronics have always had problems and this is one of them. Another risk associated

with the product is the possibility of it not working at all; having electrical issues with the

product could cause it to cop out during a performance which would not be good.

Another risk is the product causing problems with the instrument. The idea of the product

is to help instrument proficiency in cold weather; unfortunately if the weather is to cold

13

and the product is making part of the instrument to hot then a build of condensation can

occur. If a buildup of condensation occurs than this can cause major damage in how the

instrument handles and sounds. This would put the product at inefficient and irrelevant.

TemperaGuard Income StatementTemperaGuard

For 2014 through 2018

14

REVENUE 2014 2015 2016 2017

Gross sales $20,000$48,00

0 $70,000 $120,000Less sales returns and allowances 1,000 1,200 1,500 2,000

Net Sales $19,000$46,80

0 $68,500 $118,000

COST OF SALESBeginning inventory $0 $646 $674 $620

Plus goods purchased / manufactured 3,385 5,380 7,580 12,955Total Goods Available $3,385 $6,026 $8,254 $13,575

Less ending inventory 646 674 620 650Total Cost of Goods Sold $2,739 $5,352 $7,634 $12,925

Gross Profit (Loss) $16,261$41,44

8 $60,866 $105,075

OPERATING EXPENSESSelling

Salaries and wages $0 $0 $0 $0Commissions 0 0 0 0Advertising 1,500 2,000 2,500 3,000Depreciation 0 0 0 0Other 500 600 600 700

Total Selling Expenses $2,000 $2,600 $3,100 $3,700

General/AdministrativeSalaries and wages $0 $0 $0 $0Employee benefits 0 0 0 0Payroll taxes 0 0 0 0Insurance 2,000 6,000 7,000 7,000Rent 8,000 8,000 9,000 9,000Utilities 2,000 2,000 2,000 4,000Depreciation & amortization 3,000 4,000 4,000 5,000Office supplies 1,000 1,000 1,000 1,000Travel & entertainment 300 200 300 300Postage 100 200 250 400Equipment maintenance & rental 100 200 300 350

15

Interest 0 0 0 0Furniture & equipment 400 475 550 750

Total General/Administrative Expenses $16,900$22,07

5 $24,400 $27,800

Total Operating Expenses $18,900$24,67

5 $27,500 $31,500

Net Income Before Taxes ($2,639)$16,77

3 $33,366 $73,575Taxes on income 22 32 26 28

Net Income After Taxes ($2,661)$16,74

1 $33,340 $73,547

Extraordinary gain or loss $0 $0 $43 $0Income tax on extraordinary gain 0 0 12 0

NET INCOME (LOSS) ($2,661) $16,741 $33,371 $73,547

16

TemperaGuard Balance SheetTemperaGuard Corporation

For 2014 to 2017ASSETS 2014 2015 2016 2017Current AssetsCash $2,000 $57 $59 $64

Net accounts receivable $19,000 $46,800$68,50

0 $118,000Inventory $3,385 $5,380 $7,580 $12,955Temporary investment $0 $0 $0 $0Prepaid expenses $0 $0 $0 $0

Total Current Assets $24,385 $52,237 $76,139 $131,019

Fixed AssetsLong-term investments $42 $43 $43 $46Land $0 $0 $0 $0Buildings (net of depreciation) $0 $0 $0 $0Plant & equipment (net) $300 $375 $450 $600Furniture & fixtures (net) $100 $100 $100 $150

Total Net Fixed Assets $442 $518 $593 $796

TOTAL ASSETS $24,827 $52,755 $76,732 $131,815

LIABILITIESCurrent Liabilities

Accounts payable $16,400 $21,400$23,55

0 $26,700Short-term notes $2,400 $2,500 $2,600 $2,800Current portion of long-term notes $1,400 $1,400 $1,400 $1,500Accruals & other payables $1,400 $1,400 $1,400 $1,400

Total Current Liabilities $21,600 $26,700 $28,950 $32,400

Long-term LiabilitiesMortgage $0 $0 $0 $0Other long-term liabilities $4,430 $4,850 $5,270 $5,760

Total Long-term Liabilities $4,430 $4,850 $5,270 $5,760

SHAREHOLDERS' EQUITYCapital stock $3,000 $3,000 $3,000 $3,000Retained earnings ($4,203 $18,205 $39,51 $90,655

17

) 2

Total Shareholders' Equity ($1,203) $21,205 $42,51

2 $93,655

TOTAL LIABILITIES & EQUITY $24,827 $52,755 $76,732 $131,815

TemperaGuard Cash Flows2014 2015 2016 2017 - -

Beginning Cash Balance $2,115 $25,735 $65,155 $148,200 $148,200Cash Inflows (Income):

Accts. Rec. Collections 0 0 0 0Loan Proceeds 0 0 0 0Sales & Receipts 20,000 48,000 68,500 118,000Other:

Total Cash Inflows $20,000 $48,000 $68,500 $118,000 $0 $0Available Cash Balance $20,000 $50,115 $94,235 $183,155 $148,200 $148,200Cash Outflows (Expenses):

Advertising 1,500 2,000 2,500 3,000Bank Service Charges 0 0 0 0Credit Card Fees 0 0 0 0DeliveryHealth Insurance 0 0 0 0Insurance 2,000 6,000 7,000 7,000Interest 0 0 0 0Inventory Purchases 3,385 5,380 7,580 12,955MiscellaneousOfficePayroll 0 0 0 0Payroll Taxes 0 0 0 0Professional Fees 0 0 0 0Rent or Lease 8,000 8,000 9,000 9,000Subscriptions & DuesSupplies 1,000 1,000 1,000 1,000Taxes & LicensesUtilities & Telephone 2,000 2,000 2,000 2,000Other:

Subtotal $17,885 $24,380 $29,080 $34,955 $0 $0Other Cash Out Flows:

Capital PurchasesLoan Principal

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Owner's Draw 0 0 0 0Other:

Subtotal $0 $0 $0 $0 $0 $0 Total Cash Outflows $17,885 $24,380 $29,080 $34,955 $0 $0

Ending Cash Balance $2,115 $25,735 $65,155 $148,200 $148,200 $148,200

19

Citations

Weber, Scott. 2011. Valve Guard Template. Retrieved March 20, 2014, from

https://docs.google.com/viewer?

a=v&pid=sites&srcid=ZGVmYXVsdGRvbWFpbnxjb29sbXVzaWNsZXNzb25zfGd4OjI3NWV

jMWJlYTAwNmJlMDQ

Strickland, Kathryn. (2014, March 31). Personal interview.

Instant Mini Hand Warmer. (n.d.). www.alibaba.com. Retrieved March 25, 2014, from

http://www.alibaba.com/product-detail/Instant-Mini-Hand-Warmer-2012-Best_598536061.html