Federated Precision Feb 8 2010 (1)

Contacts:Leonard Chapman [email protected] 561-350-5906Samuel Havelock Jr. [email protected] 703-254-7791Noel Gonzalez [email protected] 561-202-5239

2/9/2010Franklin's Kite Proprietary

Franklin’s Kite LLC.

mailto:[email protected]



Problem

2/9/2010 Franklin's Kite Proprietary 2

Precision Part Manufacturing Space –

• Fractured & Sub-optimized:

Requires Major OEMs to tender relationships with dozens of

small “mom and pop” part shop manufacturers for volume,

redundancy, and depth.

• Each relationship costs time and $:

Audits, Quality Assurance, Coordination

OEMs spend about $45K-$100K annually per vendor on

relationship costs before parts are ordered

• Small shops can’t scale up and cant afford to use the latest

robotic and automated machining technology

= Higher part costs for OEMs

Lower Total Factor Productivity

Customer Needs


• Core:

Faster order fulfillment

• Problems with Boeing’s 787 LRU subassemblies are a

prime example

Consistent Production Experience

Proximity (to all Major LRU Sub Assembly Areas)

Distributed Redundancy of the manufacturing base

Assured Highest Quality + Reasonable Cost across both

small & large volume orders

Solution


Federated Precision …a precision parts maker

operating as a distributed network of identical

local production facilities… local to major OEMs

…on the backbone of centrally managed & state-

of-the-art automated machine technology

…while leveraging best practices of military

Command & Control, Training, and Intelligence

Dissemination from our Naval, NASA, and

Manufacturing experience

Federated Precision Manufacturing Facility Locations

Solution Graphic

2/9/2010 5Franklin's Kite Proprietary

• Cloud Manufacturing• Measured Expansion• 15,000SF Co-located Facilities (Identical)• Low Overhead/High Technology

• 12-15 persons per site• Centrally Managed & Trained• No Fail Model / Simulation based• Economies of Scale: Bid + Commodities

• Flexible capacity drives optimal pricing approach• Economies of scale - Distribution of G&A across large

sales base improves bidding position• Consolidate vendor base with FP to eliminate $800K

year cost with cut of 20 vendors.• Local proximity of shop improves communication

with customer• Redundancy by design ensures robust supply chain

solution

Benefits to Customer

Magic Sauce Cloud Manufacturing

• Capability and Cost Structure to bid both large and small contracts

• Economies of scale in every volume range & commodity pricing

• Redundant/Flex capacity

Small Automated Production Facilities • Automation at low volume through custom solutions

• Pre-configured manufacturing plants rapidly deployable

• Best machine per application regardless of brand

• Low OSHA and EPA regulatory hurdles

Tactical Operations Center • 24/7 remote command and control, monitoring, and support systems

• Lean, Learning and Adaptive Machining principles : LSS Core Process Improvement

• Manufacturing Knowledge & Best Practices propagate across enterprise in near real time


Business Model

2/9/2010 8Franklin's Kite Proprietary

• We make profit on sales by manufacturing Precision Parts Cheaper, Faster, Better than all others operating in the space

– First in United States & then Internationally• All shops trained to same SOPs & Quality Control

– Lower burden rate

– Pre-certified to ISO 9001

– Better business practice

– Simulation/CAM

Competition

• No Competitor is operating in this Model

• Barriers to Entry:

– Small Scale Shops:• Lack capacity for single source consideration

• Limited technology…they were built 1 machine at a time

– Medium Scale Shops: • Lack entry into capacity, redundancy, automation, or scalability

• Invested all in one Manufacturing form

– Large Scale Shops:• All single location focused

• Group think, heavy influence from insulated/entrenched mgmt, prohibitive overhead costs


“Globally, airlines will need 29,000 new airplanes through

2028, valued at US $3.2 trillion.” Boeing,10/09

“Airbus is projecting the market for commercial aircraft

above 100 seats over the coming two decades to be valued

at $3.1 trillion, with 24,951 passenger and freighter aircraft

to be bought by the world’s airlines.” Robert Wall, Aviation Week, 9/18/2009

“… as of the third quarter of 2009, Boeing had a backlog of

3,400 airplanes, valued at US $254 billion.” Boeing ,10/09

Opportunity

Financial Projection & Key Metrics


Assumptions:

• 50% utilization of total machine hours per month

• $80/hr machine charge out rate

• Staffing at double of plan goal• 1 man per 3 machines goal, using 1 man per 1.5 machines at start

• Revenue Projections do not include:• Contract Assembly Services & Testing - badly needed in the industry

• Medical parts space not modeled - medical sector machine rates range

$150-$300/hr vs. $80/hr

Projected Revenue


FY1

FY2

FY3

FY4

0

10000000

20000000

30000000

40000000

50000000

60000000

70000000

Q1 Q2

Q3 Q4

Annual Sales

FY1

FY2

FY3

FY4

The Need • $12.8m for Start up

– $5.2m Cash for operations months 1-24

– $7.6m bonded/secured deposit as machine tool collateral for first 24 months.

• This gets returned once cash flow from operations ensues

– Shops 3 and higher are funded organically from cash flow

– CapEx/OpEx of 30%/30% of sales


Closing• Investment in a solid business with proven model & growing

market– Lower Risk Investment

• Vast Majority of Funding is collateralized with Property, Plant, and Equipment

• We don’t need to “find” key expertise or a network to sell into– We possess the expertise and a ready network

– Mr. Chapman has 10 years experience running a manufacturing plant in Aerospace with a proven history of leadership, execution, and growing sales (by 300%) in the precision parts manufacturing space

– Nobody can provide the combination of leadership we do

All we need is Investment & Trust


Federated Precision Feb 8 2010 (1)

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