hourtrax 3.20.2012

CONFIDENTIAL

Track Time From Anywhere

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March 2012

CONFIDENTIAL – Savvy Sync LLC

Connect the field to the office with smarter labor management

CONFIDENTIAL

Contents


1. Company and Mission

2. Problem

3. Solution

4. Value Proposition

5. Return on Investment for Customers

6. Market Size

7. Business Model

8. Competitors

9. Differentiation vs. Relevant Competitors

10. Appendix

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CONFIDENTIAL

Company and Mission


• HourTrax provides enterprises with a GPS and biometric time tracking application to manage employees at remote jobsites using Smartphones and Tablets. The product will also include a robust backend portal with reporting and analytics tools for administrators. HourTrax prevents construction companies from losing money when employees give incorrect time and labor data, or enter hours for one another (“buddy punching”). Nucleus Research estimates that 74% of organizations experience “buddy punching” and costs 2.2% of gross payroll annually. The cost of buddy punching in the construction industry is estimated at $3.1B annually1. Misreporting of labor data by just 5 minutes per day costs the construction industry an estimated $16.0B annually2

• Our mission:

- Connect the field to the office with smarter labor management

1 Cost of “buddy punching” is calculated using the following Feb. 2012 BLS statistics: construction production and nonsupervisory employees (4.2mm), average weekly construction pay ($934.95), weeks per year (49) and the following Nucleus Research statistics: cost of buddy punching (2.2% of gross payroll), percentage of firm with buddy punching (74%)2 Cost of labor misreporting is calculated using the following Feb. 2012 BLS statistics: construction production and nonsupervisory employees (4.2mm), average weekly construction pay ($934.95), weeks per year (49), 5 minutes misreporting

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CONFIDENTIAL

Problem: Construction Firms Lose Money from Inaccurate Labor Reporting


Construction Firms• Lose thousands of dollars each year from

misreporting of hours and the occurrence of an employee clocking in for another (“buddy punching”)

• Experience the pain of managing crews working on multiple projects at remote locations

• Require accurate labor data to effectively bid on new projects

• Waste time by recording and deciphering paper timesheets

Traditional Time Clocks• Are bulky and unfit for rugged construction

sites; require an electrical source• Only resolve “buddy punching” with biometric

feature; expensive solution• Ideal for offices but not scalable for

construction firms with multiple job sites

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CONFIDENTIAL

The HourTrax Solution, on the Field


Individual Employee Module

Face verification or PIN clock in and outWhen employees arrive at the job site they clock in using either a PIN or the face verification tool as set by the administrator. The time of clock in and GPS location is recorded. The same occurs when employees clock out

Bulk Crew Module

Supervisors/Foremen check off employeesWhen employees tend to travel together the bulk crew check in module can be used. The supervisor/foreman simply checks off the name of each employee as they arrive. The time of clock in and GPS location is recorded. The same occurs when employees leave the job site

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CONFIDENTIAL

The HourTrax Solution, at the Office


Web-Based Administrator Portal

Data from the job site application is automatically sent to the web-based portal. Administrators have access to the following functions:•Robust viewing of labor hours by employee, crew, location, and project•Export labor hours to timesheets (compatible with 3rd party accounting software)•View red flags (e.g. failed face recognition, missed clock in or out etc.)•Permission setting •Customizable setting (e.g. job codes, crew categorization, employee account details, face verification of PIN identification etc.)

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CONFIDENTIAL

A solution with low switching costs• One or two mobile devices can handle the bottleneck of an entire construction site• Used Smartphones can be purchased for less than $100• Low switching cost is further suppressed by the growing number of Smartphones and Tablets on

construction sites1

1 “Tablets Take Off in Construction” - http://enr.construction.com/technology/construction_technology/2011/0912-tabletstakeoff.asp

The HourTrax Value Proposition


Provides mobility• HourTrax runs on iPhone, Android, Blackberry, and Tablets as a native application• Can track anywhere from one employee to thousands of employees at unlimited locations

Eliminates time theft and “buddy punching”• PIN or face verification authentication options provide infallible identification• Accurate time tracking through software mitigates misreporting of hours and increases profitability

Flexible and easy to implement• HourTrax does not require every employee to have a mobile device. One Smartphone can service an

entire crew• Construction supervisors and foremen tend to be computer illiterate. The HourTrax application is easy

to set up and use on mobile devices; does not require a manual like competing enterprise solutions• Easy to add employees or recycle accounts due to seasonal turnover (i.e. snow removal industry)

Empowers managers with analytics• Web-based portal allows administrators to customize settings such as job codes and view

employee labor data in real time; connecting the field to the office• Automatically generate timesheets and reports by projects for analysis; lets owners make better

labor management decisions

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CONFIDENTIAL

74% of organizations experience “buddy punching”1 and the cost is estimated at 2.2% of gross payroll per year2. The table below highlights the cost of buddy punching and the cost of misreporting of hours for firms with varying number of employees:

Return of Investment for Customers


1 Nucleus Research – 20062 Nucleus Research – 2005

Number of Employees in Firm Cost of “Buddy Punching”2 Cost of Misreporting of Hours per Day3 Combined Cost Effect

15 $ 15,188 $ 85,898 $ 101,016

20 $ 20,157 $ 114,531 $ 134,688

25 $ 25,197 $ 143,164 $ 168,361

30 $ 30,236 $ 171,797 $ 202,033

35 $ 35,276 $ 200,429 $ 235,705

40 $ 40,315 $ 229,062 $ 269,377

45 $ 45,354 $ 257,695 $ 303,049

50 $ 50,394 $ 286,328 $ 336,721

The following table demonstrates the ROI achieved by customers using the HourTrax solution:

Number of Employees in Firm Annual Cost of HourTrax Solution

“Buddy Punching” Mitigation Cost Savings/ROI

Misreporting of Hours Mitigation Cost Savings/ROI

Combined Cost Savings / ROI

15 $ 1,260 $ 13,858 / 1,100% $ 84,638 / 6,717% $ 99,756 / 7,917%

20 $ 1,680 $ 18,477 / 1,110% $ 112,851 / 6,717% $ 133,008 / 7,917%

25 $ 2,100 $ 23,097/ 1,100% $ 141,064 / 6,717% $ 166,261 / 7,917%

30 $ 2,460 $ 27,776/ 1,129% $ 169,337 / 6,883% $ 199,573 / 8,113%

35 $ 2,820 $ 32,456 / 1,151% $ 197,609 / 7,007% $ 232,885 / 8,258%

40 $ 3,180 $ 37,135 / 1,168% $ 225,882 / 7,103% $ 266,197 / 8,371%

45 $ 3,540 $ 41,814 / 1,181% $ 254,155 / 7,180% $ 299,509 / 8,461%

50 $ 3,900 $ 46,494 / 1,192% $ 282,428 / 7,242% $ 332,821 / 8,534%

3 Cost of buddy punching is computed basted on the following metrics: % of gross payroll, average weeks worked per employee in a year (49), average hourly earning ($25.9) – source: Bureau of Labor Statistics4 cost of misreporting oh hours is computed based on the following metrics: conservative minutes of labor over-reporting per day (5 minutes), average weeks worked per employee in a year (49), average hourly earning ($25.9) – source: Bureau of Labor Statistics

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CONFIDENTIALCurrent size of the construction industry in the U.S.1

•The construction sector has 4.2 million employees on payroll as of February 20122

o 440 thousand residential building employeeso 515 thousand non-residential building employeeso 599 thousands heavy and civil engineering construction employees

HourTrax employee tiered pricing plan - monthly•First 25 employees tracked: $7 / employee•Next 75 employees tracked: $6 / employee•Each additional employee tracked: $5 / employee•Average price point is $6 / employee

Market Size


Total Addressable Market Size: $302.3 million annually

1 Bureau of Labor Statistics – The Employment Situation February 20122 Data is on employment of production and nonsupervisory employees

o 1,102 thousand residential specialty trade contractorso 1,544 thousand non-residential specialty trade contractors

Target market (63.0% of total)

Target Total Addressable Market Size: $190.5 million annually

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CONFIDENTIAL

Business Model


• Subscription model: optimizing revenue with recurring cash flows- 14 day full free trial followed by monthly subscription- Pricing tiered based on number of employees to be tracked in the

organization

• Product Licensing- Partnerships with software vendors with licensing fee charged

Number of Employees Cost per Month

First 25 employees $7 / employee

Next 75 employees $6 / employee

Each additional employee $5 / employee

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CONFIDENTIAL

Competitors


• Tsheets.com: TSheets provides organizations with time tracking software. It is customizable alternative to paper timesheets and punch cards to streamline HR roles in businesses. The firm sells its software as a mobile application, which is available on the Apple and Android App stores

General time tracking solutions

Specialized time tracking solutions for construction

• Exaktime: Exaktime provides time and attendance systems for industries such as heavy construction, general construction, landscaping, and gas & oil. The firm has a user base of 700,000 employees who clock in and out every day. In 2010 ExakTime introduced time tracking software when it launched PocketClock/GPS for BlackBerry and iPhone and in 2011 it launched PocketClock/GPS for Android

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CONFIDENTIAL

Differentiation vs. Relevant Competitors

CONFIDENTIAL – Savvy Sync LLC 12

HourTrax ExakTime TSheetsOptimal Pricing PlanMonthly subscription

Face VerificationAutomatic biometric feature

SecurityBiometric identification for school/gov’t jobs

GPS TrackingPinpointing of exact location during clock in & out

CompatibilityiPhone, iPad (1 and 2), Android, Blackberry

Bulk Crew Check inTracking of entire crews

Industry Customizable SettingsAdd employees, jobsites, and job codes

Bidding AnalysisAbility to analyze historical projects for bidding decisions

Strength Weakness

CONFIDENTIAL

Appendix

13CONFIDENTIAL – Savvy Sync LLC

CONFIDENTIAL

Financing and Progress


• Ultra Lean Startup- Founders bootstrapped company

• Progress to date- Platform developed, Alpha planned April 2012- SEO campaign launched – HourTrax is on page one of Google for target keywords

• Current Alpha functionality (minimum viable product)- Users can add administrators and employees- Individual PIN and face verification clock in & out- GPS time stamp with check in & out- Administrators can add job sites- Viewing of labor data through web-based portal- Bulk crew check in

• Planned Beta functionality- Additional web-based portal functions (i.e. newsfeed, robust analytics, integration with 3rd party accounting

software etc.)- Equipment and materials tracking- Requests for time off and breaks via mobile application (automatic calculation of net labor hours)

• Seeking $250K - $500K seed round funding- Expand team- Add functionality- Launch Beta- Promote and get traction

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CONFIDENTIAL

Financial Projections (High Case)


P&L, Projected Year 1 Year 2 Year 3 Year 4 Year 5

Users 667 2,667 5,333 10,000 13,333

Total Employees Tracked 10,000 40,000 80,000 150,000 200,000

Revenue

Subscription Fees $720,000 $2,880,000 $5,760,000 $10,800,000 $14,400,000

Total Revenue $720,000 $2,880,000 $5,760,000 $10,800,000 $14,400,000

Operating Expenses

Employee Related Costs $154,292 $370,300 $370,300 $370,300 $370,300

Platform Costs $399 $699 $1,299 $1,599 $1,599

Facilities and Office $9,000 $15,000 $15,000 $15,000 $15,000

Equipment and Related $1,000 $2,400 $2,400 $2,400 $2,400

Professional Services $5,000 $12,000 $12,000 $12,000 $12,000

T&E $0 $10,000 $10,000 $10,000 $10,000

Marketing and Promotion $0 $10,000 $10,000 $10,000 $10,000

Total Operating Expenses $169,691 $420,339 $420,999 $421,299 $421,299

EBITDA $550,309 $2,469,601 $5,349,011 $10,388,701 $13,988,701

EBITDA (%) 76.4% 85.8% 92.9% 96.2% 97.1%

EBITDA (Cumulative) $550,309 $3,019,910 $8,368,911 $18,757,612 $32,746,313

Tax $192,608 $864,360 $1,872,150 $3,636,045 $4,896,045

Net Income $357,701 $1,605,241 $3,476,851 $6,752,656 $9,092,656

CONFIDENTIAL



Users 250 1,000 2,000 3,750 5,000


Revenue

Subscription Fees $270,000 $1,080,000 $2,160,000 $4,050,000 $5,400,000

Total Revenue $270,000 $1,080,000 $2,160,000 $4,050,000 $5,400,000

Operating Expenses


Platform Costs $399 $699 $1,299 $1,599 $1,599




T&E $0 $10,000 $10,000 $10,000 $10,000



EBITDA $100,309 $659,601 1,739,001 $3,628,701 $4,978,701

EBITDA (%) 37.2% 61.1% 80.5% 89.6% 92.2%

EBITDA (Cumulative) $100,309 $759,910 $2,498,911 $6,127,612 $11,106,313

Tax $35,108 $230,860 $608,650 $1,270,045 $1,742,545

Net Income $65,201 $428,741 $1,130,351 $2,358,656 $3,236,156

Financial Projections (Mid Case)

CONFIDENTIAL



Users 83 333 667 1,250 1,667


Revenue

Subscription Fees $90,000 $360,000 $720,000 $1,350,000 $1,800,000

Total Revenue $90,000 $360,000 $720,000 $1,350,000 $1,800,000

Operating Expenses


Platform Costs $399 $699 $1,299 $1,599 $1,599




T&E $0 $10,000 $10,000 $10,000 $10,000



EBITDA $(79,691) $(60,339) $299,001 $928,701 $1,378,701

EBITDA (%) 0% 0% 41.5% 68.8% 76.6%

EBITDA (Cumulative) $(79,691) $(140,090) $158,911 $1,087,612 $2,466,313

Tax $0 $0 $104,650 $325,045 $482,545

Net Income $(79,691) $(60,339) $194,351 $603,656 $896,156

Financial Projections (Low Case)

CONFIDENTIAL

Marketing Plan


• Direct

- Target small to midsize construction firms. Specifically, our focus will be on firms in the following industries: residential development, commercial development, landscaping, snow removal, electrical, and plumbing

- Organize a private Alpha to garner feedback and testimonials- Utilize blogs, online forums, and social network to reach target audience - Encourage viral promotion through Facebook and Twitter- SEM and SEO

• Affiliate Marketing

- EPA and local governments: promote HourTrax as an environmentally friendly substitute to paper timesheets

- Collaborate with software vendors in a licensing partnership

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CONFIDENTIAL

Team


Jonathan Trope, Co-CEO and CMO

Jonathan Trope is an Associate at Spencer Barnor Capital where he has had transaction experience in industries ranging from clean-tech to consumer technology. Before joining SBC, he was a consultant at Argus Information & Advisory Services where he advised clients in the financial services industry. Jonathan graduated magna cum laude from New York University with a BA in economics and minors in business studies and mathematics

Pavan Malhotra, Co-CEO and CTO

Pavan Malhotra is a senior at New York University studying computer science at the Courant Institute. He has experience in developing enterprise software as a Software Engineer for Summit Brokerage Services, where he developed financial software to manage a $75 million account. Prior to that he was a Research Assistant at the Seeman Laboratory where he used DNA molecules to create a molecular time clock

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CONFIDENTIAL

Thank You


Contact:Jonathan TropeFounder and [email protected]

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hourtrax 3.20.2012

Documents

time of clock

construction production

nonsupervisory employees

construction companies

cost of labor misreporting

c o construction industry

employeeswhen employees

incorrect time