Investor presentation 1 April 14

An Introduction to RightPSITM

John K. Milanovich, President 1627 West Main Street – 331

Bozeman, MT 59715 [email protected], (406)219-3290

mailto:[email protected]

Proprietary and Confidential Proprietary and Confidential 2

RightPSI is an Auto Aftermarket company that produces user friendly tire pressure solutions.

Overview

• Our initial product is a patented tire cap that provides convenient, unobtrusive visual indication of proper tire inflation.

• Prototyping is complete, and the tire cap is production ready. • Intellectual Property:

• One auto aftermarket patent which is a fully articulated production ready product.

• Two OEM product patents ready for development. • Award Winning Product:

• Popular Mechanics Editor’s Choice Award Winner. • MSN Top Pick from the SEMA Show.

• Expressed interest from suppliers. • Huge potential for explosive growth.

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Proprietary and Confidential

Why RightPSI?

• 1 in 4 cars is driving on at least one tire that is 25% or more below required tire

pressure

• People find the experience of filling tires cumbersome and inefficient.

• Crashes resulting from underinflated tires cause $600 million in damage every year.

• AAA reports 4 million tire service calls a year. Its no wonder that tire pressure is ranked as a top safety concern among motorists.

• Having properly inflated tires saves the average motorist $65 a year in fuel cost.

• In an era of high gas prices motorists are looking for a way to improve fuel efficiency and save money.

• The average car produces 1.5 tons of CO2 because of tire under inflation.

The Problem:

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Product

RightPSI Tire Pressure Indicator

• Patent number 5,386,794 • Product targeted to mass auto aftermarket retail. • We plan to sell to distributors, retail operators, and fleet operators. •Thanks to fill through feature, cap can be used as a gauge. • Shows an orange band when underinflated, yellow when overfilled, and a low-profile black when correctly pressurized. • Able to produce product in a wide range of PSI levels. • Company will develop a version that is to be incorporated in tires for OEM sales or license.

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OEM Products: Blow-off valve and valve stem indicator

• Products for license or sale to tire manufacturers. • Patent numbers 7,404,412 and 7,493,808 • One is a built in pressure gauge similar to our aftermarket product that is incorporated in the tire sidewall during manufacture • Potential for differentiation in tire industry • Second product is a valve that starts venting air as soon as the tire is properly filled. • Ease of use – fill until air blows off side • No need for gauge • Intuitive filling •Both products are still in the development stage

Products in Development

Impact of TPMS

• There are 180 million cars without TPMS on the road today.

• Federal Regulations beginning in 2008 mandated all new cars come equipped with TPMS.

– The standard is a light (shown on the left) on the dash.

• Schrader estimates that there are 100 million cars with TPMS on the road.

• 90% (90 million) of cars with TPMS show only an indication light and not until one tire is over 25% underinflated.

– RightPSI begins indicating when tires are 5% underinflated. – The standard TPMS does not indicate which tires are underinflated. – TPMS does not indicate overinflation. – RightPSI works as a gauge while pumping. – Close to half of drivers with TPMS do not know what the icon

means.

• For the 10 million cars that have full tire pressure indication on the dash RightPSI still adds value, working as a gauge.


Tire Pressure Management System


Saving Lives, Money, and the Environment

Saving Lives: • 9% of all crashes each year caused by tire problems. • AAA responds to 4 million motorists every year who are stranded from tire

problems. Saving Money: • Average US motorist’s would reap $65 a year in gas savings at $3.50/gallon. • RightPSI pays for itself in saved gas in four and a half months. • Running tires constantly underinflated by 20% reduces tire life by 30%. Tires

40% low reduce tire life by 50%. Saving the Environment: • 4 million gallons of gas a day are wasted by drivers with low tire pressure, or

1.5 billion gallons a year. 8

Marketing


US Auto Market

• Annual US Auto Aftermarket Sales topped $307 Billion last

year. This market is growing at 3.4% annually. • 40% of US households purchase automotive accessories

annually. • Recession has prompted owners to prolong the life of their

cars leading to expanding auto aftermarket sales. • Average age of US auto fleet (280 Million cars) has climbed from 8.5

years two decades ago to 11.4 years today.

• All car tires worldwide have Schrader valves on them. • Over 1 billion cars worldwide.

• In 2012 the US tire industry had $43 Billion in revenue. • North American tire and wheel accessory sales were a $6

Billion dollar business in 2012

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Motorcycle Market


• ~800 Million motorcycles in use worldwide.

• 7.8 Million motorcycles registered in the US.

• Global market forecast to grow to 130 million units sold and $90 billion in revenue worldwide by 2016.

• Industry is growing at a 7% rate internationally and at a sluggish 0.5% domestically.

• $6.7 Billion Industry with 450k units sold each year in the US.

Bike Market


• Estimated 1.5 billion bikes worldwide • 140 Million sold world wide in each year. • 18.7 Million bikes sold each year in the US. • $60 billion world wide. • Industry - $7.3 Billion in sales in US • Focus Specialty stores (4,089 Locations in

US) • Account for 52% of bike sales by revenue.

Average store turnover $866,000 in 2012. • Trend is for higher per store revenue with

fewer stores. • Large potential market


Distribution Strategy

• There are 232,111 auto aftermarket POS locations in the US.

• Substantial interest from buyers expressed from contacts cultivated at SEMA.

• Leverage distributor introductions into warehouse, auto parts store and tire dealership channels.

• Direct sales to large auto fleets. • The company will peruse sales to or

partnerships with tire manufactures for our OEM products.

• Interest expressed from many international buyers. (Israel, South Africa, Australia, France, etc…)

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Case Study: Tireflys

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• Manufacturer of tire cap novelty item that lights up via motion.

• Distribution reached 60,000 store locations within 4 yrs. This projects to 75,000 stores in year 5.

• Walmart, K-Mart and Target shelf space. • Sold 10 million Units of niche product.

Using same store growth rate, here is a projection for domestic sales figures after 5 years ± 10%:

Locations available

Total yearly sales

Sales per store per week

Revenue at $10/Unit Gross profit at $6/Unit

Plus 10% 82,500 8,250,000 1.9 $82,500,000 $49,500,000 Baseline 75,000 7,500,000 1.9 $75,000,000 $45,000,000 Minus 10% 67,500 6,750,000 1.9 $67,500,000 $40,500,000

Kickstarter

• Hit 20k goal in 5 days – 40k in the first 2 weeks – Campaign ended at $70k or at

350% funded • Over 1500 Backers • Social media engagement

– 750 FB likes on project – Social media engagement up

on all platforms significantly • Introductions to distributors

worldwide • Continued pre-sales on

website


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Kickstarter Raise

Press

RightPSI outreach was successful in reaching a large market in all targeted segments: •Dream Big America

•5th ranked radio show in the country •TechCrunch

•14.7 Million Unique visitors/month •Digital Trends

•50 Million Unique visitors/month •Tire Business Magazine •Overdrive Magazine •Sustainable America •Bike Rumor •Motorcycle.com •Etc..


Exit Strategy

• 6 tire companies control 75% of market share, 95 others compete for remaining 25%. Economies of scale are a huge factor and product differentiation is minimal.

• US aftermarket industry attracting private equity. • $500 million in mergers and acquisitions of tire

distributors/companies in 2012. • 136 Automotive Aftermarket M&A transactions were concluded in

2012.

• Auto aftermarket M&A multiples in 2013 were 6x EBITDA and 1x Revenue.

Active M&A Market

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Questions?

Call us up in the office at (406)219-3290, check out our website rightpsi.com, or shoot us an email [email protected].


Investor presentation 1 April 14

Business

Transcript of Investor presentation 1 April 14