Should we move into the operational due diligence stage of our NYC candidate store?

FriesDAO initial organizing advisors and various contributing community members have reviewed the finances of the candidate store in NYC.

In order to move to the next step, the reviewing team involved in the financial due diligence process is hereby presenting our notable findings for the community to consider in this proposal. Note that some of these issues are not unusual for a non-franchised mom and pop store but will involve some work for us to standardize them into ideal, compliant operations. The advising team has the opinion that it is prudent for the DAO to be aware of these these factors before we move forward. Please keep in mind because we are under an NDA, actual numbers and further details can only be found in the Discord's gated #prospect-data and #prospect-talk channel as well as the member login on the https://fries.fund website. Thus your voting consideration for this proposal should include these data sources and discussion points.

Key Findings: -Cost of goods were on a cash accounting basis, thus no true cashflow-based glimpse of each item's cost of goods and waste on a rolling basis; the COGS is therefore extrapolated on an 8-month aggregate basis of about 20-25% of sales revenue after sales taxes -Overall accounting is not very stringent thus we believe figures should be still taken with a grain of salt with anticipated smaller surprises -Forecast to recuperate investment (acquisition price + ~$100k additional improvements) may be as little as 3 years if claimed income statement is true; 5 years if we discount the gap in cash for a conservative projection and assume flat growth -Income reported in NY sales tax filings does not correspond to the claimed monthly income statements; seller claims the difference is in cash payments -Overall, even with possible cash gaps, unit appears to be positive cashflow and profitable -Nearby area also has two boba competitors within walking distance (one pairs with small hot foods like chicken tenders, ramen, and spring rolls, and the other pairs with juices and acai bowls while our candidate store pairs with froyo) -- the competition may impact our sales if we do not maintain sustained marketing and branding/offering differentiation -Seller agreed to include terms that removes liability for any potentially non-compliant operations relating to cash operations for a period of time while we get up to compliance

If we are to move into the next phase, it would involve operational due diligence such as lease information, payroll handling, wastefulness and waste disposal, health and safety, supply chain/logistics, various legal, and other non-financial related issues. According to the Letter of Intent, this phase also locks the negotiation process into an exclusive state and commits us to complete the acquisition in good faith if there is no glaring or unfixable issues.

Voting options:

A - Move into operational due diligence B - Reject and abandon the deal C - Postpone and ask for more time