Tyler HutchensDave RyanGary TobinCarrie Xing

Business Plan Presentation

Agenda

The Problem Giraffe Rack Solution Marketing Strategy Operations Strategy Financial Plan Questions

Bicycle Rack Market trends

SUV Sales are increasing as a percentage of total vehicle sales.

Sales of racks to SUV owners are increasing by 15% annually.

People Want Roof Racks

“Most people would rather use a roof rack, but can’t because of the vehicle size”

Bobby Noyes, founder, Rocky Mounts, Inc.

Roof Racks can be tough to use

“I get hurt far more often loading and unloading my bike than riding it.” Pam Simich, Director, VeloNews Magazine.

“I’ve seen people use ladders…” Margaret Principe, Counselor, Englewood High School.

“I constantly struggle to get my bike on and off of my car.” Christy McDevitt, Physician, Kaiser Permanente.

Our Solution

Get the rack to the bike, not the bike to the rack!

Giraffe Rack

Rack Design

Giraffe Rack

Rack Design

Giraffe Rack

Rack Design

Giraffe Rack

Rack Design

Giraffe Rack

Rack Design

Giraffe Rack

Rack Design

Giraffe Rack

Rack Design

Giraffe Rack

Rack Design

Giraffe Rack

Rack Design

Giraffe Rack

Rack Design

Giraffe Rack

Rack Design

Giraffe Rack

Rack Design

Giraffe Rack

Rack Design

Giraffe Rack

Rack Design

Giraffe Rack

Rack Design

Giraffe Rack

Rack Design

Giraffe Rack

Rack Design

Giraffe Rack

Rack Design

Giraffe Rack

Rack Design

Giraffe Rack

Rack Design

Innovative Design

Yakima and Thule complementary No need to design to vehicle types Easy to use

Marketing Strategy

Market Size

2005 SUV rack market = $215M

Total Market Potential = $630M

Focused Strategy

Roof rack accessory Compatible product SUVs

Customer

Survey Findings Bike enthusiasts SUV owners Women Vertically Challenged Already own/shopping for roof rack

Pricing Strategy

MSRP = $150.00 Retail discount = 45%

65% surveyed will pay $150

Retailer

Specialty Stores Good discount for merchant – 45% Can sell to existing rack customers Additional installation revenue opportunity

Rollout Year One - Colorado

Great Market! Most SUVs per capita High concentration of bicyclists Wealthiest counties in Rockies

Sales, Sales, Sales

Ongoing Rollout

Year Two Colorado mountain towns California, Portland, Seattle

National Rollout in Year Three 180 stores by Year Five

Brand Image

Targeted Advertising Print ads, point-of-purchase displays

Guerilla Marketing Demo units Events

Giraffe Rack Advertising

Brand Image

Targeted Advertising Print ads, point-of-purchase displays

Guerilla Marketing Demo units Events

Talented Management

Dave Ryan – President 10 years experience in early-stage companies Experienced Sales and Marketing

Management Tyler Hutchens – Vice President

7 years experience in Marketing, Promotion, Operations, Finance

Experience with early-stage companies

Operations Strategy

Operations Plan

Major Features: Complements Sales and Marketing Low fixed costs Outsource

Scope of Operation

Outsource design Contract out to manufacturers for

tooling and production Minimal assembly and packaging

Key Success Factors

Strong supplier relationships Strong retailer relationships Management involvement

Development Timeline

Concept R&D (30 days) Product Development (55 days) Product Release to Manufacturing (50 days) Manufacturing Ramp-up (85 days)

Total Duration 220 Days

(Dec ’01 – Oct ’02)

Financial Plan

Giraffe Rack Gross Margin

Selling price of $82.50 Cost of goods sold $41.80 Our Gross Margin is 49.3%

Outdoor Products average = 38.8% Higher for Marketing Costs

Giraffe Rack Revenue

30 retail outlets in Year 1 Average 100 units per location

Year 1 Revenues = $247,500 Year 1 Operating Expenses = $182,675 Year 1 Earnings = ($180,776)

Revenue Growth

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

Annual Revenue $247,500 $544,500 $998,250 $1,536,150 $2,168,100

1 2 3 4 5

Giraffe Rack Cash Flow

($200,000)

($100,000)

$0

$100,000

$200,000

$300,000

$400,000

$500,000

Cash Flow ($158,861) ($130,126) ($5,539) $183,873 $454,338

1 2 3 4 5

Giraffe Rack Cash Flow

Highly seasonal sales 75% coming between April and September

Cash need early, excess later

Giraffe Rack Funding

Owners will contribute $60,000 Raising $200,000 in debt

Repaid $500,000 at the end of Year 5 Offers a 20.1% compounded return

Interest expensed and accrued each year

Giraffe Rack Cash Flow (b)

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

Cash Flow $101,139 $127,099 $225,506 $391,768 $57,262

1 2 3 4 5

Giraffe Rack Growth

($200,000)

($150,000)

($100,000)

($50,000)

$0

$50,000

$100,000

$150,000

Earnings ($180,776) ($19,546) $76,601 $119,771 $119,675

Net Margin 7.67% 7.80% 5.52%

1 2 3 4 5

Giraffe Rack Exit

Acquisition by a larger company

Licensing agreement with a larger marketing/manufacturing organization Manufacturing and distribution turned over Marketing and royalties negotiated

Wrap Up

Market need Strategy Investment

Questions?

Cost of Goods Sold

Component Quant Cost TotalPivot Plate 4 $1.50 $6.00Outer Bars 2 $1.75 $3.50Inner Bar 1 $2.75 $2.75Mount Bar 1 $2.00 $2.00Piston/spring assembly 1 $12.00 $12.00Handle Assembly 1 $5.50 $5.50Bushings 8 $0.25 $2.00Hardware 12 $0.15 $1.80Packaging 1 $0.25 $0.25Labor 0.5 $12.00 $6.00Total $41.80

Giraffe Rack Growth

Year 1 Year 2 Year 3 Year 4 Year 5Units per outlet 100 110 121 133 146 Outlets 30 60 100 140 180Selling Price $82.50 $82.50 $82.50 $82.50 $82.50Revenue $247,500 $544,500 $998,250 $1,536,150 $2,168,100

AssumptionsYr.1 Locations 30Yr. 1 Units Per Location 100Sales growth/yr 10%

Giraffe Rack Growth

Year 1 Year 2 Year 3 Year 4 Year 5Revenue $247,500 $544,500 $998,250 $1,536,150 $2,168,100Gross Profit $122,100 $268,620 $492,470 $757,834 $1,069,596Operating Expenses $182,675 $239,885 $357,883 $568,422 $789,131EBIT ($140,575) $28,735 $134,587 $189,412 $280,465Net Earnings ($180,776) ($19,546) $76,601 $119,771 $119,675% of Revenue 7.67% 7.80% 5.52%

Giraffe Rack Cash Flow

Year 1 Year 2 Year 3 Year 4 Year 5EBIT ($148,861) $28,735 $134,587 $189,412 $280,465Investing Activities ($10,000) - ($10,000) - ($10,000)Net Cash Build (Burn) ($158,861) $28,735 $124,587 $189,412 $270,465Beginning Cash Balance - ($158,861) ($130,126) ($5,539) $183,873Ending Cash Balance ($158,861) ($130,126) ($5,539) $183,873 $454,338

Giraffe Rack Cash Flow (b)

Year 1 Year 2 Year 3 Year 4 Year 5Cash Flow From Ops ($148,861) $25,960 $108,407 $166,262 ($124,506)Investing Activities ($10,000) - ($10,000) - ($10,000)Net Cash Build (Burn) ($158,861) $25,960 $98,407 $166,262 ($134,506)Increase (Dec) in Debt $200,000 - - - ($200,000)Beginning Cash Balance $260,000 $101,139 $127,099 $225,506 $391,768Ending Cash Balance $101,139 $127,099 $225,506 $391,768 $57,262

Giraffe Rack Repayment

Year 1 Year 2 Year 3 Year 4 Year 5

Beginning Debt Balance $200,000 $240,225 $288,540 $346,573 $416,277Interest Rate 20.1% 20.1% 20.1% 20.1% 20.1%Interest Expense $40,225 $48,315 $58,033 $69,704 $83,724

New Debt $240,225 $288,540 $346,573 $416,277 $500,000