Tyler Hutchens Dave Ryan Gary Tobin Carrie 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 = $ 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

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)

Giraffe Rack Growth

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

Giraffe Rack Growth

Giraffe Rack Cash Flow

Giraffe Rack Cash Flow (b)

Giraffe Rack Repayment