Business Plan Presentation

Business Plan Presentation
Mobius Microsystems Inc. 3430 E. Jefferson Ave. #140 Detroit, MI 48207 Business Plan Presentation MBA Jungle Business Plan Competition New York, New York April 25th, 2003

Overview Pain and Solution Technology and Product Management Team
Industry and Market Competition Marketing and Sales Strategy Financials FINANCIALS MANAGEMENT MARKET COMPETITION STRATEGY TECHNOLOGY PAIN&SOLUTION

The Problem: Disparate Systems
Electronic products currently require assembly of many discrete components Printed Circuit Board Digital Microprocessor Memory Mixed-Signal Circuits Mechanical Sensor Crystal Oscillator Analog Circuits FINANCIALS MANAGEMENT MARKET COMPETITION STRATEGY TECHNOLOGY PAIN&SOLUTION

The Pain These systems are: Expensive: package costs
Large: package sizes Power-hungry: signal across board requires 10x power Limited in functionality: size and power constraints FINANCIALS MANAGEMENT MARKET COMPETITION STRATEGY TECHNOLOGY PAIN&SOLUTION

The Solution: Mobius Microsystems
Microsystems are intelligent miniaturized systems comprising sensing, processing, and actuating functions integrated onto a single chip. They are smaller, cheaper, lower power, simpler, more reliable, and more functional. Digital Microprocessor Mixed-Signal Circuits Crystal Oscillator Memory Mechanical Sensor Analog Circuits PCB Printed Circuit Board FINANCIALS MANAGEMENT MARKET COMPETITION STRATEGY TECHNOLOGY PAIN&SOLUTION

The Solution: Mobius Microsystems
The vision for our products: Enable electronic system developers to produce less expensive, smaller, more functional, and more reliable products that consume less power. The vision for our customers: Reap orders of magnitude improvements in the products they build and lead their industries in end-product performance, functionality, and value. FINANCIALS MANAGEMENT MARKET COMPETITION STRATEGY TECHNOLOGY PAIN&SOLUTION

The Clock is as Fundamental as Power
Pocket PC fclk Clock frequency signal drives processor inside Every single synchronous semiconductor produced requires a clock to operate FINANCIALS MANAGEMENT MARKET COMPETITION STRATEGY TECHNOLOGY PAIN&SOLUTION

Mobius“Digital Monolithic Clock”
State of the Art versus State of the Art vs. Mobius “DMC” Mobius“Digital Monolithic Clock” Existing Clock Solutions Crystal-based Large off-chip component Fixed frequency Power-hungry Expensive Mobius DMC MEMS-based Small on-chip Tunable frequency Low-power Inexpensive Crystal Electronics 4 Mobius DMCs vs. FINANCIALS MANAGEMENT MARKET COMPETITION STRATEGY TECHNOLOGY PAIN&SOLUTION

The Mobius DMC in Action…
Example: iPAQ PDA Using Current Technology Using Mobius’ Technology Clock Hardware Costs ~$1.00 ~$0.45 Clock Space Requirements 323mm2 on circuit board 0.09mm2 on semiconductor Clock Power Requirements 32mW 4mW Tuning Range Fixed (w/o add. electronics) 62.5MHz to 1GHz COMPAQ Pocket PC What Mobius can do for Compaq Reduce total cost Increase functionality Increase battery life Decrease time to market Reduce component inventory FINANCIALS MANAGEMENT MARKET COMPETITION STRATEGY TECHNOLOGY PAIN&SOLUTION

Semiconductor Intellectual Property
Design Blueprint Mobius’ DMC IP Manufacturing handled by customer Low COGS Like a software company Successful business model: ARM, MIPS, Parthus Packaged Semiconductor FINANCIALS MANAGEMENT MARKET COMPETITION STRATEGY TECHNOLOGY PAIN&SOLUTION

Why IP is Used Samsung is building a cell phone
Market opportunity and window identified System specification defined by engineering management Chip specification defined and handed off Chip designers need to meet deadline and budgets Develop many parts of chip in-house (if capable) Buy 3rd party IP (Mobius) for some functions Integrate IP with their design and send to fabrication facility for manufacturing What Mobius IP offers chip designers Functions outside their core competency Accelerated time to market More profit per chip FINANCIALS MANAGEMENT MARKET COMPETITION STRATEGY TECHNOLOGY PAIN&SOLUTION

Management Team Michael S. McCorquodale, CEO and CTO
Invented technology while electrical engineering Doctoral Fellow, U of Michigan Commercial semiconductor experience with Hughes Space and Communications Vision of how microsystems technology and Mobius will change the world Jeffrey G. Wilkins, COO MBA 2003, U of Michigan Business development and start-up experience, Huntington Bank and Velocys Inc The commitment and experience to turn Mobius’ vision into reality James E. Vincke, CFO M.S.E., MBA, U of Michigan 23 years in start-up, executive management, Mechanical Dynamics Inc Fund raising, acquisitions, international expansion, rapid growth The financial acumen and perspective to manage growth from start-up to IPO PAIN&SOLUTION TECHNOLOGY MANAGEMENT MARKET COMPETITION STRATEGY FINANCIALS

Industry and Market Overview
Semiconductor industry: $141B (2002) CAGR: 8% Cyclical, mature System-on-chip market: $32B (2002) FINANCIALS MANAGEMENT MARKET COMPETITION STRATEGY TECHNOLOGY PAIN&SOLUTION

System-on-Chip Explained
SoC’s combine a processing core, memory, and logic on a single chip Communications SoC SoC with microprocessor, memory, and communications Clock Sensor Analog Front End Other Subsystems PCB Analog Front Clock End Microprocessor Core Sensor Other Subsystems Memory Printed Circuit Board (PCB) FINANCIALS MANAGEMENT MARKET COMPETITION STRATEGY TECHNOLOGY PAIN&SOLUTION

Why SoC? SoC’s Market Dynamics and Needs
Broad range of end products and markets Medium to high volume Fast design cycles to meet product windows Every SoC uses some IP Comfort with IP and IP companies Fabrication facilities (TSMC, IBM) FINANCIALS MANAGEMENT MARKET COMPETITION STRATEGY TECHNOLOGY PAIN&SOLUTION

Industry and Market Overview
Semiconductor industry: $141B (2002) CAGR: 8% Cyclical, mature SoC Market: $32B (2002) Growing 25% to 30% Players: Texas Instruments, Motorola, Intel, Sony FINANCIALS MANAGEMENT MARKET COMPETITION STRATEGY TECHNOLOGY PAIN&SOLUTION

First Addressable Market
Clock generation for SoC SoC: $32 Billion or $20/unit) 1.6 Billion units/yr Each unit now requires at least $1 for clock generation Mobius’ DMC average selling price of $0.45/unit 1.6 Billion units x $0.45 per DMC = First addressable market size: $720 Million In Revenue FINANCIALS MANAGEMENT MARKET COMPETITION STRATEGY TECHNOLOGY PAIN&SOLUTION

Source: Gartner Dataquest Source: Gartner Dataquest
SoC End Markets Source: Gartner Dataquest Source: Gartner Dataquest FINANCIALS MANAGEMENT MARKET COMPETITION STRATEGY TECHNOLOGY PAIN&SOLUTION

Competition Competitive landscape: 3 kinds of competitors
Discrete Crystal Clock Generation Epson Integrated Clock Manufacturers Motorola Hybrid Clock Manufacturers Epson + Texas Instruments Currently there is no solution on the market for clock generation that is able to meet all of the needs of the market. PAIN&SOLUTION TECHNOLOGY MANAGEMENT MARKET COMPETITION STRATEGY FINANCIALS

Mobius’ Competitive Advantage
Patent-protected intellectual property portfolio Design cycle lead Microsystems development trade secrets Industrial membership and “first-look” rights from “WIMS”: Microsystems Research Center “Product Hopping” strategy FINANCIALS MANAGEMENT MARKET COMPETITION STRATEGY TECHNOLOGY PAIN&SOLUTION

Marketing and Sales Strategy
Goal: De-facto standard in clock generation for SoC Step 1: Create awareness and “buzz” Existing relationships Conferences, tradeshows, competitions Step 2: Direct sales effort Founders and technical sales representative Specific existing relationships: Motorola, National Semiconductor, TSMC, Cadence, IBM FINANCIALS MANAGEMENT MARKET COMPETITION STRATEGY TECHNOLOGY PAIN&SOLUTION

Marketing and Sales Tactics
IP Partnership Effort Direct Sales Effort For Design Win Compaq Pocket PC End Customer Intel Packaged SoC Packaged SoC With Mobius DMC Influence To Compaq: Mobius = Less expensive, smaller, and more functional products To Intel: Mobius = More revenue per chip FINANCIALS MANAGEMENT MARKET COMPETITION STRATEGY TECHNOLOGY PAIN&SOLUTION

Marketing and Sales Tactics
Direct Sales Effort For Design Win IP Partnership Effort Packaged IC With Mobius DMC End Customer Intel Compaq End Product Packaged IC IC Design Foundry or “Fab” Influence FINANCIALS MANAGEMENT MARKET COMPETITION STRATEGY TECHNOLOGY PAIN&SOLUTION

Electronic System Design Cycle
Concept Production Evaluation No re-design cost Prototype Design Influence No customer risk: System functional independent of Mobius IP at prototype phase FINANCIALS MANAGEMENT MARKET COMPETITION STRATEGY TECHNOLOGY PAIN&SOLUTION

Initial Target Customer Profile
SoC cost ≤ $10-20 Volume per design: ~ 1M units/year Total electronic system COGS ≤ $50 2 or more crystals per system Cell phones, DVDs, PDAs, microcontrollers, disk drives, WLAN FINANCIALS MANAGEMENT MARKET COMPETITION STRATEGY TECHNOLOGY PAIN&SOLUTION

Existing Target Customer Relationships
Cell phones Motorola, Samsung PDAs ARM, Intel Microcontrollers National Semiconductor, IBM WLAN Infineon (WLAN security chipsets) FINANCIALS MANAGEMENT MARKET COMPETITION STRATEGY TECHNOLOGY PAIN&SOLUTION

Business System Revenue Model Design License Royalty
Tiered $100,000 to $300,000 (low to high volume) Royalty Tiered $0.50 to $0.15 per unit (low to high volume) Annual Support & Maintenance Contract 15% of initial license annually Services Design services for customers FINANCIALS MANAGEMENT MARKET COMPETITION STRATEGY TECHNOLOGY PAIN&SOLUTION

Financials Financial Highlights Similar to software company
First customer contract and revenue in 2003 Cash flow positive and profitable in 2005 Initial product R&D completed, only commercialization effort required for product sales introduction FINANCIALS MANAGEMENT MARKET COMPETITION STRATEGY TECHNOLOGY PAIN&SOLUTION

Financials Revenue, Net Income, and Cash Flow from Operations
MANAGEMENT MARKET COMPETITION STRATEGY TECHNOLOGY PAIN&SOLUTION

Investment Opportunities
Self-Fund Operations Until First Sale Is Made $110K Founders Investment (Q3 2003) After First Sale (Q3 2003): Seeking $500K 1st Round Investment Uses: Hire Marketing and Sales Director Hire Additional Engineering Expertise Enable Additional Manufacturing Processes Establish IP Partnerships Milestone: 5 Reference Customer Relationships FINANCIALS MANAGEMENT MARKET COMPETITION STRATEGY TECHNOLOGY PAIN&SOLUTION

Investment Opportunities
$500K 2nd Round Investment (Q1 2004) Uses: Hire Sales Person in Munich, Germany Continue to Develop Engineering Team Milestone: 3 International Reference Customers FINANCIALS MANAGEMENT MARKET COMPETITION STRATEGY TECHNOLOGY PAIN&SOLUTION

Why Invest? $720 million first addressable market
Truly compelling, protected IP Committed and experienced management team Small investment required for high return potential

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