The document discusses strategies for Pandemonium, a company, to minimize its tax liability and maximize growth by transferring intangible assets to a subsidiary in Tuong. It analyzes setting up the subsidiary Key-C in Tuong, which has a lower tax rate than Khayali, and allowing Key-C to conduct sales and reinvest profits. Forecasts show Key-C increasing Pandemonium's after-tax income and unlocking its growth potential through tax optimization and data analytics.
2. Unlocking Potential for Pandemonium…
How can Pandemonium expand its
operations with minimal tax liability,
and what data can be accessed and
analyzed to determine the optimal
strategy?
• Strategize & Plan
• Forecast Outcomes
• Analyze Effectiveness
3. Contents
Key Convergence
Tax liability can be minimized by
• Transferring intangibles to a subsidiary
• Allowing the subsidiary to conduct sales of
apps under lower tax rate
• Reinvest that income
Connect
Implement
Circle back
Create
Forecast
Epic Growth
4. Forecasting the Future
Forecasting the Future
Connect
Implement
Circle back
Create
Khayali
16% business tax
rate
25% deduction on
income from
intangible
property
18% business tax
rate
25% professional
staff must be
citizens, changing
laws
Tuong
Taxable
$750
NPAT
$880
Taxable
$1000
NPAT
$820
Hypothetical Gross Income $1,000
5. Connecting with Key-C
• Pandemonium handles R&D in the U.S
• Intangibles for all apps transferred to Key-C
• Key-C performs sales in Tuong
• Reinvest profits into data analytics
Connecting with Key-C
Forecast
Implement
Circle back
Create
Key-C
Customers
6. Creating Key-C
• Key-C as a separate business entity, Pandemonium
as a global company
• Creating data centers & benefiting from telemetry
Forecast
Implement
Circle back
Creating Key-C
Connect
6 months
Key-C
Established
12 months
Full infrastructure
& intangibles
transferred
18 months
Sales &
data
collection
12.8
Million
47%
Services
7. Implementation; Strategy Through Execution
Forecast
Implementing Services
Circle back
Create
Connect
Risk Assurance
Pursuing growth in
an emerging market
through innovative
products
Optimizing
enterprise systems
for better return
Organization
Ensuring alignment
to meet company's
objectives
Assisting HR
organization, both
management of
Human Capital
(HC) and HR
operational
excellence
Information
Technology
Establishing and
realizing the full
potential of IT
resources,
investments, and
assets
Increasing digital
innovation and
analytics
8. Circling Back: Key-C Unlocks Potential
Mission
Progress
Focus
Pandemonium is growing,
but Key-C can make it epic
Collaborative creativity
creates growth
Focus on Pandemonium’s core
The next great thing
is out there
waiting to happen
9. Appendix: Taxable Income Projections
2014 2015 (projected)
Gross Income $12,687.00 $17,156.36
Khayali Tax Rate 18.00% 18.00%
Taxable Income $12,687.00 $17,156.36
Tax Expense $2,283.66 $3,088.15
Income After Tax $10,403.34 $14,068.22
Tuong Tax Rate 16.00% 16.00%
Deduction on gain on intangible property 25.00% 25.00%
Tax Deduction $3,171.75 $4,289.09
Taxable Income $9,515.25 $12,867.27
Tax Expense $1,522.44 $2,058.76
Income After Tax $11,164.56 $15,097.60
ROA (2014) -3.37%
IGR (2014) -3.26%
ROE (2014) 35.23%
SGR (2014) 35.23%
10. Appendix: Statement of Operations
12/31/2014 12/31/2013 12/31/2012
Total Revenue $19,467.00 $12,569.00 $8,954.00
Cost of Revenue $6,780.00 $4,348.00 $3,450.00
Gross Profit $12,687.00 $8,221.00 $5,504.00
Research Development $8,700.00 $5,430.00 $3,987.00
Selling General and Administrative $4,350.00 $3,001.00 $2,950.00
Acquisition & integration $150.00 $750.00-
Other $175.00 $170.00 $164.00
Total Operating Expenses $13,375.00 $9,351.00 $7,101.00
Operating Loss ($688.00) ($1,130.00) ($1,597.00)
Total Other Income (Expenses), Net $107.00 $10.00 ($123.00)
Loss Before Interest and Taxes ($581.00) ($1,120.00) ($1,720.00)
Interest Expense $1,300.00 $600.00 $1.00
Loss Before Tax ($1,881.00) ($1,720.00) ($1,721.00)
Income Tax Expense $55.00 $32.00 $24.00
Net Loss ($1,936.00) ($1,752.00) ($1,745.00)
11. Appendix: Balance Sheet
12/31/2014 12/31/2013
Cash And Cash Equivalents $4,912.00 $4,496.00
Net Receivables $1,634.00 $1,305.00
Other Current Assets $2,290.00 $1,663.00
Total Current Assets $8,836.00 $7,464.00
Property Plant and Equipment $2,716.00 $3,096.00
Goodwill $5,964.00 $5,964.00
Intangible Assets, net $2,524.00 $4,450.00
Other Assets $364.00 $367.00
Total Assets$20,404.00 $21,341.00
12/31/2014 12/31/2013
Accounts Payable $2,688.00 $2,733.00
Other Current Liabilities $2,733.00 $3,224.00
Total Current Liabilities $5,421.00 $5,957.00
Other Liabilities $3,936.00 $3,357.00
Long-term Debt $13,000.00 $13,000.00
Total Liabilities $22,357.00 $22,314.00
Common Stock $8.00 $8.00
Accumulated Deficit ($4,147.00) ($2,211.00)
Additional Paid in Capital $2,186.00 $1,230.00
Total Stockholder Equity (Deficit) ($1,953.00) ($973.00)
Total Liabilities and Stockholder Equity
(Deficit)
$20,404.00 $21,341.00
12. Appendix: Statement of Cash Flows
12/31/2014 12/31/2013 12/31/2012
Net Cash Provided By (Used In) Operating Activities $659.00 ($1,452.00) ($1,749.00)
Net Cash Used For Investing Activities ($188.00) ($12,905.00) ($101.00)
Net Cash Provided By (Used For) Financing Activities ($55.00) $12,950.00 $205.00
Change In Cash and Cash Equivalents $416.00 ($1,407.00) ($1,645.00)