confidentialjuly 17, 2015 wind opportunities in us & mexico
TRANSCRIPT
Confidential July 17, 2015
Wind Opportunities in US & Mexico
Who is xFlashpoint?
• Exclusive distributor• We sell everything that Hi-Energy
makes• US, Canada, Mexico• Many contacts in South America &
Caribbean (next markets)
Value Proposition
• US Wind Energy will double in next 5 years• Hi-Energy Turbines are more efficient• Protected by 14 patents in 20 countries• xFlashpoint has exclusive rights• xFlashpoint has partnered with Blue Earth• xFlashpoint needs small investment to
capitalize on opportunity• Can quickly realize significant growth• A distribute vehicle for other Korean
products
Hi-Energy Products
• Turbines– Single
Hi-Energy Products
• Turbines– Single– Towers– Tower Clusters
Hi-Energy Products
• Turbines– Single– Towers– Tower Clusters
• Streetlights
Hi-Energy Products
• Turbines– Single– Towers– Tower Clusters
• Streetlights• Surveillance
Hi-Energy Products
• Turbines– Single– Towers– Tower Clusters
• Streetlights• Surveillance• HVAC
US & Canadian Market
• Average Cost of Electricity
US & Canadian Market
• Average Cost of Electricity• Average Wind Speed
US & Canadian Market
• Average Cost of Electricity• Average Wind Speed• Green Penetration (Particularly Solar)
Mexican Market
• Average Cost of Electricity ($0.21/kWh)– One utility company (production &
distribution)– Regulations changing quickly
• Average Wind Speed
Market Verticals
• Direct Sales• Indirect Sales• HVAC• Surveillance• Streetlighting• Telecommunications• Government/Military• Agriculture
Subsidies and Incentives
• 30% Federal Tax Credit• 25% State Agricultural Grants• Regional “Energy Trust” Grants
New Product Development
• Integrate Hi-Energy Turbines into new Products specific for our region– Cold Storage Warehouses
New Product Development
• Integrate Hi-Energy Turbines into new Products specific for our region– Cold Storage Warehouses– Intel
Main Competitors
Company Technology Main Products Location
Bergey WindPower HAWT 1 - 10 kW USA
Urban Green Energy VAWT 200 W to 3.2 kW
USA
Helix Wind VAWT 2 - 3.5 kW USA
Southwest Wind - Xzeres
HAWT 500 W to 1 kW USA
Ventera Wind HAWT 10 kW USA
Dyo Tech HAWT 400 W USA
Kliux Energies VAWT 1.8 kW Spain
Turbina Energy VAWT 500 W to 4 kW Germany
Eoltec HAWT 6.1 kW France
Gaia Wind HAWT 11 kW Scotland
Montanari Energy HAWT 1 - 2.5 kW Italy
Evance HAWT 5 - 15 kW UK
Solar/Wind Parity
• Do we consider Solar a Competitor?
No!
Solar/Wind Parity
• Do we consider Solar a Competitor?• Complementary Technologies• Solar Panel– 250W (on the surface of the sun)– 15-20% efficiency– Effective Output: 50W
• Wind Turbine– 300W (in a hurricane)– 40% efficiency (5-6 m/s)– Effective Output: 120W
Similar Rating, Twice the Output
Solar vs. Wind Price
4.5 m/s 5 m/s 5.5 m/s 6.0 m/s$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
xF Wind TurbinesBE Solar ($4/W)BE Solar
Wind Speed (1 m/s = 2.2 mph)
Cost
per
Watt
Solar vs. Wind Footprint
• Wind requires 10% of the space of solar
• Hybrid Wind/Solar is best
Footprint Parity Solar Wind (1 tower)Rated Output (W) 20,000 W 20,000 parity WNumber of panels 80Footprint of panels 160 m^2 16.65 m^2Percentage 100% 10%
Marketing & Brand Management
• Active Social & Web presence• Advertising (narrowly targeted
industry segments)• Budget for promotion to raise brand
awareness• Industry trade shows
Unique Distribution Opportunities
• Amazon– Channel for product promotion– Fulfillment potential
• Don’t need a warehouse• Don’t need warehouse and shipping
staff• Don’t need invoicing and payment
process tools and staff• Don’t need inventory control and
delivery systems and staffSaves Us Money
Risks
Completely Risk Free!
Risks
• Just Kidding!• Currency Risk• Competition could invent something
new• ROI’s are 5-7 years (a lot can happen
in technology in that time)• Regulations changing (reduced
subsidies, changing laws)
Financial Projections
• Main components of the projections– Compounded Annual Growth Rate
(CAGR)–Main Driver is Experienced Personnel
(reflected as % of revenue)– Invest in Marketing and Brand
Recognition– Conservative Promotional Expenses– Cash flow and breakeven (Month 23)
Financial Projections
Month 1
Month 3
Month 5
Month 7
Month 9
Month 11
Month 13
Month 15
Month 17
Month 19
Month 21
Month 23
Month 25
Month 27
Month 29
Month 31
Month 33
Month 35
Month 37
Month 39
Month 41
Month 43
Month 45
Month 47
Month 49
Month 51
Month 53
Month 55
Month 57
Month 59 $-
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
Cash Balance
Financial Projections
Month 1
Month 3
Month 5
Month 7
Month 9
Month 11
Month 13
Month 15
Month 17
Month 19
Month 21
Month 23
Month 25
Month 27
Month 29
Month 31
Month 33
Month 35
Month 37
Month 39
Month 41
Month 43
Month 45
Month 47
Month 49
Month 51
Month 53
Month 55
Month 57
Month 59
$(1,000,000)
$-
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
$8,000,000
$9,000,000
5 Yr Revenue and EBIT
Revenue COGS SG&A
EBIT
Financial Projections
$ 000s
Revenue 3,115$ 16,243$ 32,136$ 41,552$ 49,309$ COGS 2,460$ 79% 12,669$ 78% 24,423$ 76% 31,164$ 75% 36,489$ 74%Gross Profit 654$ 21% 3,573$ 22% 7,713$ 24% 10,388$ 25% 12,820$ 26%
Operating ExpensesTOTAL OPEX 1,295$ 42% 3,628$ 22% 6,476$ 20% 8,859$ 21% 11,028$ 22%
Salaries and Compensation 676$ 22% 1,256$ 8% 1,980$ 6% 3,148$ 8% 4,342$ 9%Others 619$ 20% 2,372$ 15% 4,495$ 14% 5,711$ 14% 6,686$ 14%
EBIT (641)$ -21% (54)$ 0% 1,237$ 4% 1,529$ 4% 1,792$ 4%
Accumulated Cash Flow Generation(641)$ (695)$ 541$ 2,071$ 3,863$
Total Headcount 5 11 17 24 33
Year 1 Year 2 Year 3 Year 4 Year 5
Summary
• Great Opportunity!• Expanding Market• Well Positioned to Capture Significant
Market Share• Lean Management and Expense
Approach• Perfect Timing for Renewable Energy
Investment
Thank You