890 Commonwealth Ave, Boston, MA 02215

Fly Riders Annual Report

RIDE IN, FLY OUT
22 April 2024, AT 6 PM

Table of Contents
Letter to Shareholders...2
CFO Report.3

CMO Report...4, 5

COO Report..6, 7

CAO Report..8

Income Statement..9

Balance Sheet10

Cash Flow Statement.11

CEO Report
Dear Shareholders,
In a highly competitive bicycle manufacturing market our company,
Fly Riders decided to go with the small market but high profitability strategy. We started
off as a small company still trying to figure out our image and style, we finally realized
that we wanted to stand apart from the competition. Therefore we came up with the idea
that we should customize our bicycles and allow our customers to design their own
personal bicycle. This would attract a higher class of customers, and in order to achieve
this we knew we had to be unique. We wanted to be known for our cool design style. Our
history as a company has consisted of us slowly increasing and steady growth which is
exactly what we wanted.
In this past year we have really focused on increasing our sales on our new road
bicycle. Our first product was our mountain bicycle, which did well for us and then we
added our road bicycle to our production. In this past year we focused on paying back
our debt. Which helped increase our shareholder value because our company had more
appeal, without so much debt. As we look forward to the future we would like to keep
growing our sales of the road bicycle, so that we will attract a higher class or those who
can afford our bicycles, which is our target market. We would like to finish paying off our
debt, and we want to increase the production of our road bicycles so that we are selling
more of our products. Our mountain bicycle is still very popular and we have been
underestimating the amount that we produce and the amount that we sell, therefore we
will look more closely at these numbers so that we can produce enough bicycles to keep
up with the demand of the mountain bicycles.
The unique aspect that Fly Riders has over the competition is that we customize
our bicycles to what the customer would like. To customize our bicycles we make the
bikes any color, size, and design the customer wants. We can even add specialty items
on like bells, baskets, and special seats. This is our
competitive advantage, we have an edge over the
Fly Riders Company
competition that sells all the same bicycles in
Values:
masses. This advantage helps us target a certain
Give personal attention to
market, and it allows for our company to be different.
each customer
Any customer can go to our competition and get a

Make them feel like they are

mountain or road bicycle, but they cannot get a
part of the family at Fly
customized bicycle unless they come to Fly Riders.
Riders
When our customers come to Fly Riders they can talk
Work together to create the
to our employees and use our CAD program to design
their own bicycle right there and then on the floor of the store. We like to promote our
customization so that our customers know that they do not have to settle for a regular
bicycle and they can create their very own dream bicycle.
Our vision as a company is to accommodate to each unique personality that a
customer has so that they have the option to create the bicycle that they want, and to
2

make sure that we have all the materials to make our customers happy. For
the future Fly Riders is going to keep our missions and values so that we
will always be able to call customers family. We want to give our customers such a great
experience that they will want to come back again and again. With my senior officers we
will hope to strengthen our business so that we can create the most successful business
we can!
Sincerely,

CFO Report

Maggie OReilly
CEO

Over the past seven years Fly Riders has been very successful financially.
Each year our company continued to grow bringing in more money and selling more
bikes. Every year we made some changes to our company by changing the price of our
bikes, the amount of bikes we were producing and how many bicycle models we were
selling.

NET INC OME

Amount

$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
$-

Years

In 2021 we decided to start

producing a new bicycle. Now we are selling two styles of bikes; mountain bikes and road
bikes. When we started making the road bikes it cost our company a lot more money
than we originally thought. At the end of the year when it was time to look at the income
statement our company ended up losing 1.3 million dollars, and our net income
decreased by a little over 1 million. The next year we realized what mistakes we had
made and changed some of the decisions for the next year.

The following year 2022 our cash balance increased by over 3.5 million dollars and
our net income increased by 1.2 million. After having that one bad year we realized what
we needed to fix and manage our money better. Our company started making smarter
decisions and we had our best year ever!

The two graphs that are being represented on the page are the Net
Income and the Cash Balance. The Net Income chart shows how over the
years our net income increases slowly and then falls drastically and then the next year it
goes back up. The cash balance chart is the same as the net income chart. Every year
our cash balance increases and the year we started producing our new bicycle our cash
balance decreases.

AVAILABLE CASH BALANCE

$20,000,000
$15,000,000
$10,000,000
Amount
$5,000,000
$-

Years

As we continue to grow as a company we

plan on making the same decisions we have made all along. Every year we are going to
pay back some of our debt that we owe and produce more bikes as needed. Hopefully in
the future we continue to grow at a steady rate. Fly Riders will continue to produce high
quality bikes that are custom made for anyone to ride.

Emily Diezemann, CFO

CMO Report

CMO Report

Dear Shareholders,
As the CMO of Fly Riders, I can confidently say that our marketing strategies are
efficient and vary based upon the products we sell. The initial mountain bike we sold
has a completely different strategy than the road bike in which we produced for a
variety of reasons.
Market strategy is determined based upon a variety of factors. Things to take into
consideration are the stores at which your product is sold most heavily, the sensitivity
of advertising and retail price of the certain bike, the sensitivity of quality, distribution
and public relations of our bicycles. Another important thing to have is a great
4

spokesperson. For all of our products, we have 7-time Tour de France

winner Lance Armstrong as our sponsor. He is a great role model and is
well known athlete, so he is perfect for the job!
The mountain bike was the first bike we produced and we decided to go with a
medium-high price, targeting middle aged people primarily form the ages of 20-30.
For this bike, producing a custom, high-quality bike was the ideal strategy. The
sensitivity for pricing was medium for the mountain bike, so increasing the price did
not have a huge toll on the amount of sales we had. Advertising is huge for the
mountain bike, especially in magazines, so we decided to put a lot of our money into
that aspect of the market. Our bikes will be located primarily in the city so we can
reach our middle aged target market. There are also a lot of discount stores located in
the city and since 60% of mountain bikes are sold in discount stores, the city seemed
like the most logical place to be located. Quality is also a sizeable factor of our
mountain bike strategy. By creating a custom, quality bike meant for passionate
riders, we were able to reach our target market efficiently.
Road bicycles have to be approached with different strategies because different
fields of marketing need to be focused on more than other bikes. We decided to go
with a high price because there is very low sensitivity on the retail price of the bike.
The target market is also middle-aged city folks because these bikes will be
expensive, and we cannot have them being sold in low-income areas. Advertising is
not as important for the mountain bike due to the sensitivity being low, but public
relations is a huge factor. Expenditures in this area are very high in the magazine
category, due to the high sensitivity in that category.
This ensures us that we will reach our target market.
Also, bike shops are pretty much the only place that sell
road bikes, so by putting the majority of our retailer
margin into the bike shop category it allows us to
maximize our sales.
We saw achieved success in both methods we applied
so we know that our market strategies were on point. We
may consider a youth bike in the upcoming years, which
will require a completely different strategy, but we will
worry about that when the time comes!

CMO Graphs
Market Share (2023)

Fly Riders

Bike and Chill Bike R Us

8
13.3
8
9.4

JBAM Rides Inc

23.6
Unspokin Bicyles

Firm3
37.6

As of right now in
the year 2023, we own about 13.3% of the market. This is something that we have
improved on over the years. By owning a decent portion of the market we are able to
connect with our shareholders and find a bike that best fits them. We plan to continue
to grow and increase our market share to become the most dominant bike company in
the market. We have a long way to go in the years ahead, but here at Fly riders we
are confident that we can succeed and come out on top.

Product Awareness Index

30.00%
25.00%
20.00%
Percent 15.00%
10.00%
5.00%
0.00%

2017 2018 2019 2020 2021 2022

Year

Over the years we have

seen a great increase in the product awareness index. As our company made decisions
year after year, our bike popularity flourished. Starting at about a 19% awareness in
2017, to a 28% awareness, showing we have taken priority in the popularity of our bike.
The more people who know about your product, the more customers you will get. By
maintaining consistent growth in this section ensures us that our bike will always be the
talk of the town!

Christian Pizzotti, CMO

COO Report

SUPPLY CHAIN:
Our supply chain is as follows; we purchase our tires from Tire World, in Saugus
Massachusetts right off of Route One and our steel from Steel Strength, located in
Manchester Massachusetts. Those are our two primary suppliers for the base of our bike.
The accessories such as lights, bells, and whatever else is needed to create our styling
bikes is purchased from the supplier East Coast Accessories, which has a variety of
locations, the closest being in Chelmsford Mass. All of the nuts, bolts, and sprockets are
purchased from a hardware store called Whittimore Hardware, located in our CMOs
hometown, Melrose Massachusetts.

Suppliers: East Coast

Accessories,
Whittimore Hardware,
Tire World

Fly
Riders
Supply
Chain

Retailer: Our
customers can go to
any of our stores to
pick up their bicycles

Manufacturer:
Assembly-line and
mass customization to
create the bicycle

Wholesaler: We are
our own wholesaler
and distribute to our
retailers

Distribution: Our
bicycles are trucked to
all of our stores

Once all of the raw materials are purchased from the various suppliers, the
assembly line process with mass customization can take place in our factories. It starts
with the steel being assembled to create the framework of the bike. Once the base of the
bike is put together, we attach the rims of the bike to the sprockets and lock them into
place using the nuts and bolts purchased at Whittimore. The bike continues to move
8

down the line and the tires are put on and the bike is then tested to ensure
its durability. Mass customization takes place all along too because the
accessories that are attached are determined by the consumer and what
they wanted in their bicycle. Since we are the wholesaler we only had to figure out the
distribution of our bicycles.
For the distribution process we are mostly using trucks to move our bicycle from
our warehouses to our retailers. This is not a long process because our warehouse is
located right outside the city in Beverly, Massachusetts so we just use the trucks to
move our products into our stores located in Boston. Once our products are distributed to
our store our customer can go to pick up their custom bicycles.

COO Graphs

Quality Expenditure
U.S. Dollar

$500,000.00
$400,000.00
$300,000.00
$200,000.00
$100,000.00
$-

Years

This graph shows the amount we spent

on quality over the years. It was a pretty steady increase over the years as quality was
something we cared about. Looking back we probably should have spent some more
money as our index peaked at .76 but we still did well. When we increased our spending
it led to more sales as people wanted the higher quality bicycle we were offering. I think
if we increased spending in this area we could have had capitalized on many more sales.

Quality
0.84
0.82
0.8
0.78
Rating 0.76
0.74
0.72
0.7

2017 2018 2019 2020 2021 2022 2023

Year

Our quality increased every year except for 2021 and 2023. This shows
that we were focused on having a high quality bike. The quality of our
bicycle allowed us to charge a little more as the years increased. Although
we would have liked to increase quality more over the years we did benefit from not
having to pay a lot to manufacture our product because it was not being produced at as
high as quality. This was not our strategy but it did work well for us in the end.

Capacity
30,000
25,000
20,000
SCU's 15,000
10,000
5,000
0

2017 2018 2019 2020 2021 2022 2023

Year

Our capacity was something that we did not

have to worry about until our product was gaining demand. This didnt happen until 2021
for our mountain bicycle, but it meant that the demand for our product was growing. In
2021 we needed to increase SCU capacity by 5,000. Part of the reason was from our
mountain bicycle that we launched which after a few years to grow in the market started
gaining popularity. After we increased by 5,000 SCUs we were able to meet the
demands of our product. Though I believe in a year or two we will have to increase even
more our capacity more for both of our bicycles.
Tim Brigham, COO

10

CAO Report

Fly Riders is a small business in a large city therefore it is important that as a

company we are involved in the community. One way
we are being a good citizen in our community is by
supporting the Boston Triathlon. We volunteer to have a
tent and have some of our workers hand out waters to
the men and women competing in the race. We like to
support this cause because it relates to our company
and we like to support the individuals taking part in the
race. We support their commitment to working hard
and pushing themselves to complete the very hard
course. This shows that we support the people in our
target market, and we support those who like to push
themselves to be the best they can be, and really go to
their limits strength wise. As a company we support health and fitness, we want to make
people in the community aware of living a healthy lifestyle and that riding a bicycle is a
great way to stay fit. When we support the triathlon we are supporting the ideology that
is within our company; a fit and healthy lifestyle.

Another way we are being a good citizen in our community is by supporting the
YMCA. We like to help companies that take initiative to help kids in struggling
communities get out and play. Especially since we have a large target market in the
cities we like to help out the YMCAs in the cities. We donate $1,000 out of our sales each
11

month to the YMCA, so that they can

keep updating with new equipment
and keep their programs running. One main focus
we really like to help the YMCA with is making sure
the community is fit and healthy, so we like to hire
a nutritionist to go into the YMCA and talk to people
how to stay fit and active and keep a healthy diet.
Also to take initiative for our new road bicycle, we
will have to have a special for serious bicycle riders
where they can come and talk to professionals.
This is allowing us to directly target our market,
and also bringing in potential new members,
therefore it is benefitting both Fly Riders and the YMCA. These professionals can talk
about health programs to stay fit and healthy and how much they should be training. All
of this is done in support of the YMCA.

12

Income Statement
Sales Revenue

2023

2022

2021

$15,925,275

$14,997,813

$12,983,449

Less: Cost of Goods Sold

$9,004,317

$8,403,875

$7,254,126

GROSS MARGIN
Selling & Distribution
Expenses

$6,920,958

$6,593,938

$5,729,323

Salaries

$180,000

$180,000

$180,000

Brand Advertising

$550,000

$550,000

$450,000

Product Advertising

$1,235,000

$1,235,000

$1,235,000

Product PR
Distribution Channel
Support
Finished Goods
Warehousing
Product Development
Projects

$1,325,000

$1,325,000

$1,325,000

$235,763

$216,696

$200,055

$9,050

$47,100

$38,050

$0

$0

$1,000,000

$0

$0

$0

$0

$0

$0

$3,534,813

$3,553,796

$4,428,105

$0

$0

$0

$0

$0

$0

$150,000

$150,000

$120,000

Salaries

$0

$0

$0

Legal Fees

$0

$0

$0

$150,000

$150,000

$120,000

Interest on Short Term Debt

$0

$0

$0

Interest on Long Term Debt

$40,000

$80,000

$80,000

$40,000

$80,000

$80,000

$3,724,813

$3,783,796

$4,628,105

$285,472

$223,713

$200,150

$0

$0

$0

Sales Of Obsolete Stock

Cost Of Obsolete Goods
Sold

Production Management
Expenses

Administration Expenses

Miscellaneous Expense
Financial Expenses

TOTAL OTHER
EXPENSES
Other Income
Interest on Cash in Bank
Miscellaneous Cash
Windfall
Total Other Income

200150
$285,472

$223,713

$200,150

Profit Before Taxation

$3,481,617

$3,033,855

$1,301,368

Less: Income Tax

$1,044,485

$910,157

$390,410

$0

$0

$0

$2,437,132

$2,123,699

$910,957

Plus: Tax Credit

Profit After Taxation

13

Net Income

Balance Sheet

ASSETS

$2,437,132

$2,123,699

$910,957

2023

2022

$15,689,454

$13,143,176

Current Assets
Cash
Raw Materials Inventory

$0

$0

Finished Goods Inventory

$0

$250,328

$15,689,454

$13,393,504

Plant

$5,000,000

$5,000,000

Less: Accumulated Depreciation

$2,979,598

$2,755,109

Total Current Assets

Non-Current Assets

Total Non-Current Assets

TOTAL ASSETS

$2,020,402

$2,244,891

$17,709,856

$15,638,395

LIABILITIES AND
STOCKHOLDERS'
EQUITY
Current Liabilities
Short Term Debt (Overdraft)

$0

$0

Company Tax To Pay

$1,044,485

$910,157

Total Current Liabilities

$1,044,485

$910,157

Long Term Debt

$500,000

$1,000,000

Total Non-Current Liabilities

$500,000

$1,000,000

$1,544,485

$1,910,157

1,000,000

1,000,000

$1,000,000

$1,000,000

Retained Earnings

$15,165,370

$12,728,238

TOTAL EQUITY

$16,165,370

$13,728,238

LIABILITIES AND
STOCKHOLDERS' EQUITY

$17,709,856

$15,638,395

Non-Current Liabilities

TOTAL LIABILITIES
Equity
Number of Shares Outstanding:
Share Capital

14

Cash Flow
Statement
Cashflows from Operating Activities

2023

2022

2021

$15,925,275

$14,997,813

$12,983,449

$180,000

$180,000

$180,000

Cash was provided from:

Sales
Cash was disbursed to:
Marketing Admin Salaries
Brand Advertising

$550,000

$550,000

$450,000

Product Advertising

$1,235,000

$1,235,000

$1,235,000

Product PR

$1,325,000

$1,325,000

$1,325,000

Distribution

$235,763

$216,696

$200,055

Design & Development Projects

$0

$0

$1,000,000

$60,000

$60,000

$90,000

Prodn Direct Labour

$1,648,778

$1,443,556

$1,585,722

Raw material purchases

$5,770,722

$5,052,444

$5,550,028

Prodn Admin Salaries

Finished Goods Holding Cost

$9,050

$47,100

$38,050

Efficiency Improvement

$400,000

$250,000

$250,000

Quality Systems

$400,000

$300,000

$300,000

Other Factory Overheads

$250,000

$250,000

$250,000

Admin Salaries

$150,000

$150,000

$120,000

Company tax paid

$910,157

$390,410

$841,168

$2,800,806

$3,547,607

($431,574)

Purchase of Plant

$0

$0

$1,000,000

INVESTMENT CASHFLOWS

$0

$0

($1,000,000)

$285,472

$223,713

$200,150

$500,000

$0

$0

OPERATING CASHFLOWS
Cashflows From Investing Activities
Cash was disbursed to:

Cashflows From Financing Activities

Cash was provided from:
Interest on Cash in Bank
Cash was disbursed to:
Long Term Debt Repaid
Interest on Long Term Debt

$40,000

$80,000

$80,000

FINANCING CASHFLOWS

($254,528)

$143,713

$120,150

$2,546,277

$3,691,320

($1,311,424)

$13,143,176

$9,451,856

$10,763,280

$15,689,454

$13,143,176

$9,451,856

Net Cash Change

Beginning Cash Balance

ENDING CASH

15

BALANCE

16

Thank You for

Investing in Fly
Riders!

17