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The business plan that petitioner wrote in 1987 for Sun
State Farm identified key advisers to the business, such as a
veterinarian, an accountant, a nutritionist, and other experts in
the thoroughbred horse industry. The 1987 plan identified farm
assets and their potential appreciation and outlined expenses
such as wages, utilities, boarding fees, race training fees, and
sale preparation fees. The business plan included a cashflow
projection, an income and loss statement, a description of
additional revenue sources, and a listing of potential capital
improvements for the farm. Petitioner projected annual expenses
of $93,100 and annual income of $102,600. The plan also
projected the acquisition of a stallion to proceed with the
breeding operation. The plan included an economic analysis
compiled by the University of Arizona, which studied the impact
of the thoroughbred horse breeding industry on the Arizona
economy.
The 1995 supplement gave a general description of the
operations of Caduceus Thoroughbreds but did not include any
financial data or income projections other than a projected cost
of between $7,000 and $10,000 to prepare a horse for the
racetrack. The new plan emphasized a change in focus from
breeding to racing. The plan also cautioned that, despite
increasing purses, the value of Arizona thoroughbreds had not
improved commensurately, and owners were still buying expensive
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