Sunglass Action CameraCharter Presentation to: Jxxxxx Vxxxxxxxxx

By: Kevin OttermanFebruary 27, 2012

Executive SummarySunglass Action Camera – multiple models

USP: More convenient than helmet/chest/dash mounting; less conspicuous or theft prone

Dedicated innovation: compact integration into sunglass platform; optional path to support prescription lenses

Price Point (RRP): US$349, US$249 at launch (optional: $399) Time-to-market/ Lifecycle: Flagship release Q4/2012, 3 year LC (min) Addressable Market: Action Cameras, Estimated market size >1.3MM devices

per year Planned (total) volume: ~60,000/year across models Product EBITDA target: TBD

Regional Market Focus: All Regions, split TBD

Sales Channel Split: TBD

Main reference/ competitor products: GoPro HD Hero2, Contour ROAM, Oregon Scientific ATC9K

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Market Overview

• Action (Helmet) Cameras are hot sellers in today’s market

• Sales of action cameras tripled from CY2010 to CY2011 to 1.3MM units (source: Chris Chute, International Data Corp)

• Generally retail for $200-400• Most today are ‘wearable’ or

‘helmet-mounted’

Competitive Landscape

$250 $350 $400

Flagship HD Model ($349)

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$200

ROAM ($199)

HD Helmet Hero ($239)

$300

HD Hero2 OD ($389)

HD Hero 960 ($229)

Oth

ers

HD Hero2 MS ($299)HD Hero2 MS ($299)

Base Model ($249) OPTIONAL: Prescription Frame ($399)

GSI ($99)

Coleman CSXSWP ($99)Drift Innovation HD ($429)Drift HD ($359)

Oregon Scientific ATC9K ($349)

Competitive Landscape

GoPro HD HERO GoPro HD HERO 960

GoPro HD HERO2 Contour+ V.I.O. POV HD Sony HXR-MC1 Drift HD Oregon Scientific ATC9K

Sensor Type 5 MP 1/2.5" CMOS

5 MP 1/2.5" CMOS

11 MP 1/2.3" CMOS 5 MP CMOS 1/2.7" CMOS 4MP 1/5" Exmor

CMOS 9 MP CMOS 5 MP 1/3.2" CMOS

Lens Fixed Focus f/2.8

Fixed Focus f/2.8

Fixed Focus f/2.8

Fixed Focus f/2.8

Fixed Focus f/2.0

Carl Zeiss 10x Optical Zoom NA Fixed Focus

f/3.2

Max. Video Resolution 1920 x 1080/30p 1280 x 960/30p 1920 x

1080/30p1920 x 1080 / 30p

1920 x 1080/30p 1920 x 1080/60i 1920 x 1080 /

30p1920 x 1080 / 30p

Storage Media SDHC SDHC SDHC Micro SD SDHC MS PRO Duo Micro SD SDHC

Display Size 1.5" status only 1.5" status only 1.5" status only None 2" 2.7" 1.5" 1.5"

Waterproof 180' with case 180' with case 180' with case No 3.3' No No Yes

Inputs None None Mic None Mic None Mic None

OutputsAudio, Composite Video, USB 2.0

Audio, Composite Video, USB 2.0

Audio, Composite Video, USB 2.0, HDMI

USB 2.0, HDMIAudio, Composite Video, USB 2.0

Audio, Composite, Component, USB 2.0, HDMI

HDMI USB 2.0, HDMI

Built-in Speaker No No No No Yes Yes Yes Yes

Battery Type Lithium- Ion Lithium- Ion Lithium- Ion Lithium- Ion 4x AA Lithium- Ion Lithium- Ion Lithium- Ion

Other Features Battery Warmer Battery Warmer Battery Warmer, LED Lights Pivoting Lens Wireless remote Dual Recording 4x Digital Zoom,

Pivoting Lens Optional GPS

Dimensions 1.6 x 2.4 x 1.2" 1.6 x 2.4 x 1.2" 1.6 x 2.4 x 1.2" 1.34 x 2.28 x 3.86"

1.57 x 2.36 x 6.57"

1.5 x 1.9 x 3.5", 3.3 x 4.8 x 1.8" 1.30 x 1.97 x 4.09" 1.73 x 2.17 x 3.94"

Weight 5.9 oz 5.9 oz 5.9 oz 5.29 oz 11.7 oz 1.1 lb 4.23 oz 7.04 oz

The Product Concept

• A limited effort has been made toward camera Sunglasses (ref: www.sunnycamglasses.com)

• No mount attachment necessary (vs. typical action cameras on the market)

• The pinhole camera is located between eyes, so the camera sees what the user sees

• What is needed: Compact HD video recording unit embedded in stylish sunglasses

Challenges

• Make compact and attractive• Retain good battery life• Cost• Establishing market presence• Suitable higher-res camera sensor• Other Sunglass cameras exist today

(check for patent/IP issues)

Opportunities

• Most of today’s action/helmet cameras are awkward/inconvenient – chest mounts– helmet mounts– surface mounts

• Existing action cameras are conspicuous– Stand out in crowd vs. stealth– Prone to theft and breakage

• A more convenient HD recording device would be popular

Opportunities (cont.)

• Models could exist for multiple brands– High-end HD model for higher-end optics

brand (Serengeti?)– Lower-resolution model for mid-range optics

brand (Bolle or Cebe?)– Economies are realized in mfg/scale

• Additional opportunity exists by creating a prescription-friendly frame and partnering with an optics retailer (ex. Wal-Mart)

Risks

• Busy competitive landscape– Shakeout in the future likely– Pricing pressure

• Smartphone apps, some free, provide action camera functions

Road Map – Camera Eyeware

2H 2012 2H 20131H 2013

HD (4Q12)USP’sBest in class convenience/ease

Compact integration to minimize profile and theft risk

Direct storage to social friendly format(s)

Standard Res (2Q13)USP’sBest in class convenience/ease

Affordable

Low profile minimizes theft risk

Prescription (4Q13)USP’sBest in class convenience/ease

Flexibility for prescription users (unique position in mkt)

Low profile minimizes theft risk

Financial Summary – best case

Project / ProductLifecycle

Product HD Std Res PrescriptionTotal

Estimate Lifecycle Volumes 0 0 0 0Net Distributor Price $244.30 $174.30 $279.30Total Lifecycle Revenues $0 $0 $0 $0

Total BOM Cost $119.85 $109.05 $113.04Total Lifecycle COGS $0 $0 $0 $0

Total Gross Margin $0 $0 $0 $0 #DIV/ 0!

Internal and NRE Costs $0 $0 $0 $0SGA Costs $0 $0 $0 $0 6%Warranty Costs $0 $0 $0 $0 2%

EBITDA effect - 3 year lifecycle $0 $0 $0 $0

Net EBITDA Present Value (2012 $) $0 $0 $0 $0 10%Discount rate

Return on Investment #DIV/0!

Action Cam Eyeware2012- 2015

Financial Summary – worst case

Project / ProductLifecycle

Product HD Std Res PrescriptionTotal

Estimate Lifecycle Volumes 0 0 0 0Net Distributor Price $244.30 $174.30 $279.30Total Lifecycle Revenues $0 $0 $0 $0

Total BOM Cost $119.85 $109.05 $113.04Total Lifecycle COGS $0 $0 $0 $0

Total Gross Margin $0 $0 $0 $0 #DIV/ 0!

Internal and NRE Costs $0 $0 $0 $0SGA Costs $0 $0 $0 $0 6%Warranty Costs $0 $0 $0 $0 2%

EBITDA effect - 3 year lifecycle $0 $0 $0 $0

Net EBITDA Present Value (2012 $) $0 $0 $0 $0 10%Discount rate

Return on Investment #DIV/0!

Action Cam Eyeware2012- 2015

Internal and NRE Costs

Internal R&D Costs

FTE COSTS Rate Hours Utilization TotalProduct Manager $70.00 0 50% $0Project Manager $70.00 0 50% $0HW Engineer $70.00 0 50% $0SW Engineer $70.00 0 50% $0Mech Engineer $70.00 0 50% $0PMM $70.00 0 50% $0

TOTAL $0

NRE COSTS

Tooling 1 $0

NRE ODM 1 $0

NRE Application 2 $0

Compliance 1 $0

ID development 3 $0SW development $0

Travel 4 $0

Documentation 5 $0TOTAL $0

TOTAL $0

Margin Calculations

HD Standard Res Prescription

Monthly volumes 0 0 0Annual volumes 0 0 0

ODM BOM cost FOB Hong Kong 1 $0.00 $0.00 $0.00

3rd party application license fee 2 $0.00 $0.00 $0.00Air Freight to KC $3.10 $3.10 $3.10Total BOM cost $3.10 $3.10 $3.10

Launch price ($) $349.00 $249.00 $399.00

Distributor margin 4 30% 30% 30%Net distributor price $244.30 $174.30 $279.30Gross Margin $241.20 $171.20 $276.20GM % 99% 98% 99%

Helmet Camera Manufacturers

• Dongguan Gaoki Electronics Industry Factory• Shenzhen Asmile Technology Co., Limited• Shenzhen Zhongshixun Technology Co., Limited• Shenzhen Laesent Technology Co., Ltd.• Shenzhen Futian SEG Plaza Excellence Exploiter Electronics Business Department• Shenghong Electronic S&T Co., Ltd.• Shenzhen Avery Electronic Co., Ltd• Shenzhen MHC Technology Co., Ltd.• Shenzhen Campark Electronics Co., Limited• Somax (Shenzhen) Tech Co., Ltd.• Shenzhen Adika Tech Co., Ltd.• Shenzhen CG Electronics Co., Ltd.• Shenghong Electronic S&T Co., Ltd.• Shenzhen Risest Technology Co., Ltd.• Shenzhen Kome Technology Co., Ltd.• Shenzhen Speed Sources Technology Co., Ltd.• VG (Shenzhen) High Tech Ltd.