NTIT Solutions, LLC: “Go Locker” · Business Plan NTIT Solutions, LLC: “Go Locker” Nigel...

Business Plan

NTIT Solutions, LLC: “Go Locker”

Nigel Thomas Founder, CEO NTIT Solutions, LLC [email protected] Strictly Confidential

NTIT Solutions, LLC “Go Locker” - - Business Plan Unauthorized Distribution Strictly Prohibited

“Go Locker” | Confidential Page 2 of 43

Table of Contents

I. Executive Summary ................................................................................................................................ 4

A. Overview .......................................................................................................................................... 5

B. Background and Mission .................................................................................................................. 5

C. Market Problem ............................................................................................................................... 6

D. NTIT Go Locker Solution ................................................................................................................... 7

E. NTIT Competitive Advantage ........................................................................................................... 8

F. NTIT Economic Model ...................................................................................................................... 8

G. Timeline and Milestones ................................................................................................................ 10

H. Exit Strategy ................................................................................................................................... 10

II. Market Opportunity Sizing Analysis ..................................................................................................... 12

III. Market Opportunity ............................................................................................................................. 13

A. Package Delivery Industry .............................................................................................................. 13

B. E-Commerce ................................................................................................................................... 13

C. Package Locker Industry ................................................................................................................ 14

IV. Business Development Strategy ........................................................................................................... 15

A. Overview ........................................................................................................................................ 16

B. Promotions ..................................................................................................................................... 16

C. Web Marketing .............................................................................................................................. 16

D. Partnerships ................................................................................................................................... 17

E. Shipping and Package Delivery Industry Trade .............................................................................. 17

V. Daily Operations ................................................................................................................................... 18

A. Organizational Chart ...................................................................................................................... 19

B. Management .................................................................................................................................. 19

C. Workflows ...................................................................................................................................... 20

D. Administration ............................................................................................................................... 20

VI. Competitive Landscape ........................................................................................................................ 21

VII. Financial Highlights ............................................................................................................................... 23

A. Management’s Discussion & Analysis ............................................................................................ 24

VIII. Management Summary ........................................................................................................................ 29



IX. Potential Risks and Suggested Mitigants .............................................................................................. 31

I. Appendix ............................................................................................................................................... 33

Income Statement : Pro Forma Annual ...................................................................................................... 38

Operating Metrics: Pro Forma Annual ........................................................................................................ 39

Balance Sheet: Pro Forma Annual............................................................................................................... 40

Statement of Cash Flows & Debt: Pro Forma Annual ................................................................................. 41

Preliminary Discounted Cash Flow Model: $20M - $25M .......................................................................... 43



I. Executive Summary



Use Cases: *Urban dwellers want to protect their valuable e-commerce package deliveries against theft, damage or weather *Urban dwellers who desire more convenience, predictability and privacy for locker delivery vs. home delivery *College students who move every year and sometimes find themselves in between mailing addresses *College students who value privacy and the security of locker delivery vs. to their dorm room or fraternity house

Snapshot:

First independent Parcel Locker delivery company in New York City - - focused on “last mile” delivery logistics

10 parcel locker locations in New York City within the first 10 months of operations

Value added services / functionality

Management team with experience and credibility in shipping and logistics

Seeking $550k to help fund the purchase of 10 indoor parcel lockers, marketing initiatives and working capital

A. Overview

NTIT Solutions, LLC (or “NTIT” or “the Company”) is the developer and marketer of “Go

Locker” parcel lockers, the first independent parcel locker service in New York City. Go

Lockers, with its smaller compartments and indoor form factor, will be available at

indoor locations in urban cities and on / near college campuses. At initial launch, there

will be five Go Locker banks at various partner retail locations near major subway

stations for the convenience of pick up for commuters on the way back home.

Management expects to activate an additional five locker banks within the next 10

months for a total of 10 in the first year.

NTIT was founded in 2012 by Nigel Thomas, an experienced software engineer and

analyst for FedEx, who is setting up the Company and will manage the go forward day-to-

day operations. NTIT and the Go Locker operations will initially be run out of dedicated

office and warehouse space located at Nigel’s home in New York City.

B. Background and Mission

In Europe, particularly in Germany, parcel lockers have been well-established for over 10

years, populated with 2,500 of DHL’s packstations. It was on a business trip to Dusseldorf

six months ago, that Nigel discovered the popularity and utility of parcel lockers and

when he identified its applicability to the New York City way of life. The next six months

have been spent by Nigel on identifying the best suited parcel locker supplier and

preliminary business model planning.

Aided by the Internet, wireless connectivity and smartphones, we live in an “on demand”

world in which consumers have the ability to control and customize delivery of



Parcel Lockers is

Still a Nascent,

Yet Growing

Industry

everything from digital video and audio content to package delivery. NTIT’s mission is to

mitigate the waste of time, uncertainty and frustration inherent in package delivery.

While 7.6% of all retail sales in 2012 (or $231 Billion) originated through the e-commerce

channel, package delivery options in the U.S. remain limited, stuck in the traditional

model.

The parcel locker industry is a nascent, yet growing industry in the U.S. with large e-

tailers like Amazon and large delivery companies like the U.S. Postal Service testing

through pilot programs. Independent providers have sprung up in Toronto and San

Francisco but to date, nobody has addressed the most urban geography in the United

States - - New York City.

Company Merits:

The first and only independent parcel locker delivery and management company in New York

Rapidly growing industry with huge market opportunity size

Differentiated value proposition - - plans for functionality beyond parcel deposit / withdrawal

Growth strategies: diversification of target market, location, form factors and P2P logistics

Branding and name brand awareness is key - - familiarity breeds trust

Parcel locker surface area prime for advertising

Experienced Management Team experienced in shipping and logistics

The Company is seeking approximately $550K to help fund the purchase of 10 indoor parcel lockers,

marketing initiatives and working capital Sources and Uses table is illustrated below:

C. Market Problem

There are three major factors that are causing a large and growing problem for package delivery. (1) The

United States is a nation that is increasingly shifting its shopping habits from in store to online.

According to the U.S. Commerce Department, by 2017 10% of all retail sales will be e-commerce. (2)

Sources & Uses of Capital

SOURCES Total

Paid-in Capial $0 Equipment HW & SW Costs:

Bank Loan Funding $0 Service & Support Costs $356,070

Equity Funding $542,959 Lease 1-Time Cost $26,400

Transportation + Installation $45,530

Subtotal Equipment & SW $428,000

Operating Capital:

Payroll $68,400

Marketing $46,559

Subtotal Operating Capital $114,959

TOTAL SOURCES $542,959 TOTAL USES $542,959

USES



The U.S. is also a working nation, with approximately 150 million employees (66% of the population). (3)

As a nation, we are also working longer hours. Taking into aggregate consideration the factors 1 – 3, the

probability to receive a package delivery in person at one’s home is becoming infinitesimally small. What

are the alternatives? Receiving personal packages at work is generally frowned upon and there are

numerous obvious issues with packages left at one’s doorstep including theft, physical damage and

inclement weather. The other alternative, to advise the shipping company to hold for pick up at one of

their retail locations, is inconvenient due to distance of location and limited hours of operation; and

adds to the overall delivery time.

Parcel lockers seem to be the logical solution and have proven to be successful and ubiquitous in

Europe, Australia and New Zealand. However, outside of a few pilot programs in limited locations in

Virginia, San Francisco and Seattle, independent parcel lockers are largely non-existent in the U.S.

D. NTIT Go Locker Solution

Go Locker provides three things to its customers: (1) convenience, (2) peace of mind and (3) ease of use.

Future growth areas for Go Lockers will be in diversification of functionality and expansion of locations.

One significant development that the Company is working on is the person-to-person (P2P) exchange

business model, whereby Go Locker customer’s can exchange products and payment with each other.

The Company seeks to find creative solutions for everyday consumer needs and create a brand through

value proposition.

Go Locker’s initial and near term solution set is illustrated in the table below:

Features Location Pricing Future

Functionality

Center control console

Alpha-numeric keypad

Small, medium, large

boxes

10 -20 boxes

Style / Appearance

Bright colors

Eye-catching

Modern

Advertising

Urban

New York City

Boston (Future)

Philadelphia (Future)

Colleges

NYU

Columbia

Boston / Cambridge

(Future)

Berkeley (Future)

Small

$2.00 for 1st 24 hrs

$1.00 for Subsequent 24

hrs

Large

$5.00 for 1st 24 hrs

$2.50 for Subsequent 24

hrs

Refrigerated

compartment for delivery

of perishables

Forwarding or redirecting

Expansion of locations

Person to Person

exchanges (P2P)



E. NTIT Competitive Advantage

For more detail on NTIT’s Go Locker competitive advantages as benchmarked against competitors,

please refer to Section VII.

NTIT’s Go Locker is the first independent provider and manager of parcel lockers in New York City. Go

Lockers are agnostic to e-tailer and shipper, whereas Amazon’s lockers are dedicated to Amazon sales

only. The US Postal Service’s Go Post, services US Postal deliveries only. The other independent parcel

locker service providers such as Bufferbox and Swapbox have operations limited to Toronto and San

Francisco, respectively.

While NTIT plans to initially launch Go Locker in New York City, expansion plans include other

geographical areas that are dense in colleges and students such as Boston and Chicago. Go Locker’s long

term competitive advantage is comprised of both strategic location as well as increased functionality at

the box itself.

F. NTIT Economic Model

Excel Financial Model detail provided upon request. See Appendix for additional detail.

NTIT features an attractive business model driven by number of locker box bookings. The Company’s

long term strategy is to (a) continue to increase the capacity of overall number of locker boxes and (b)

continue to add functionality at each locker bank / console box. Additional functionality will not only

help differentiate the Company’s products / services vs. those of the others but also will help diversify

the revenue stream.

The table below is a summary of the Company’s financial forecast in terms of Net Revenues, EBITDA

(Earnings Before Interest, Taxes, Depreciation & Amortization; and adjusted for stock based

compensation, if any) and Net Income for the forecast period. Note, for conservatism, the Company’s

forecast model excludes price increases during the forecast period but it does assume a moderate

level of utilization percentage increase, as is logical given the Company’s expected ad campaigns and

viral growth through effective web marketing. Also note that while P2P (peer-to-peer) deliveries to

the Go Locker will be an important future line of business, it is excluded from the forecast model.



NTIT Financial Summary Forecast

Management has built a bottom up financial forecast model that incorporates assumptions from market

precedent business models and Management’s expectations. It is currently contemplated that in the

first year, there will be 10 Go Lockers deployed.

Forecasted Number of Go Locker Deployments (Years 1 – 5)

Revenue

Management projects revenue for years 1 – 5 to be: $728K, $2.8M, $5.7M, $9.5M and $13.9M

respectively. Assumes constant prices during the forecast period. The Company will have a solid level of

Gross Profits, driven by a relatively low level of Cost of Revenue, consisting mostly of retail location

rental expenses. Management forecasts Gross Margin to be in the high 80 percentile of overall revenue

for most of the forecast period. The majority of the Company’s operating expenses will be salaries for

$728,544

$2,824,308

$5,771,412

$9,516,690

$13,937,346

$510,129

$2,103,143

$4,197,559

$6,294,545

$9,705,988

$307,472

$1,344,063

$2,707,942

$4,075,351

$6,300,025

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000

Year 1 Year 2 Year 3 Year 4 Year 5

Revenue EBITDA Net Income

0

20

40

60

80

100

120

140

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59



the couriers to deliver the last mile and stock the lockers; and marketing, sales and advertising.

Management projects to become profitable in year 1 and operating income for years 1 – 5 to be: $471K,

$2.1M, $4.2M, $6.3M and $9.7M, respectively. Corresponding operating margins are from 65% to 70%.

Management expects that the remaining 50% of excess cash (after debt service and principle paydown

(if any), reinvestments and other), will be distributed to the equity holders on a pro rata basis.

Reinvestment will be for new product development costs. The Company’s cash balance will grow to

reach $6.3M in year 5. The Company may use cash to make acquisitions of more lockers than forecasted

in the model or make acquisitions of existing locker companies - -perhaps even verticalize the supply

chain by acquiring a locker manufacturer.

G. Timeline and Milestones

As of business plan date, Management has accomplished the following milestones:

Incorporation of NTIT Solutions, LLC

Negotiating parcel locker supply

Assembled advisory board

Business model planning

Management’s strategic plan is to secure the seed financing required to procure the initial set of 5 parcel lockers and deploy the required capital to fund strategic marketing campaigns.

Specifically, the following represents the execution timeline:

T - 6 Months: Close on equity funding

T - 5 Months: Finalize parcel locker supply contracts with manufacturer

T - 3 Months: Finalize partnerships / contracts with retail location owner

T - 2 Months: Customization of user front end and back end software

T - 1 Months: Hire and train part time courier / delivery staff

T - 1 Months: Pre-marketing, advertising, social media campaigns and publicity

T – 0 Months: Launch initial set of 5 parcel lockers

H. Exit Strategy

A seed round investment in NTIT has the potential to generate multiples of return on investment from

the initial set of 5 parcel lockers and an additional set of 5 within the first 10 months. The Company’s

growth strategy includes increased technology and functionality of each machine, geographical



expansion and other high growth and value added services. Management will be focused on driving top

line growth as well as bottom line profitability.

Liquidity or exit scenarios include strategic sale or accessing the public markets. Management may also

consider a leveraged recapitalization in the private bank markets as well. NTIT may be an attractive

acquisition target to other large e-commerce sites such as eBay, Craigslist or Walmart.com.

Management may consider an Initial Public Offering.



II. Market Opportunity Sizing Analysis



III. Market Opportunity

A. Package Delivery Industry

The Package

Delivery

Industry is

Large and

Growing

According to the respective websites of each of FedEx, UPS and USPS, there were over 11

billion packages delivered just amongst these three companies in 2012. Combined, these

three companies totaled $142 Billion in revenue in 2012.

Global Package Delivery Volume in 2012 (units in Billions) Global Revenues in 2012 ($ in Billions)

Source: FedEx, UPS, USPS websites

The package delivery industry is a very competitive one that has grown exponentially in the

last few years. With greater numbers of businesses operating globally and with the increase

of e-commerce, parcel shipping has become an important element of the economy.

B. E-Commerce

E-commerce

will reach

$370 Billion in

sales by 2017

10% of all

Retail Sales

will be

Transacted

over the

Internet

According to the U.S. Commerce Department, e-commerce sales revenue was $231 Billion in

2012 and is expected to grow 13.4% to reach $262 Billion in 2013. By 2017, e-commerce

sales in the U.S. is expected to reach $370 Billion or 11.3% Compounded annual growth rate

(CAGR) from $195 Billion in 2011. In 2012, 7.6% of all retail sales were executed over the

Internet. By 2017, e-commerce sales are expected to constitute 10% of all U.S. retail sales.

U.S. E-Commerce Market Size and Forecast

Source: U.S. Commerce Department, Forrester, comScore, Internet Retaiker

3.6

4.1

3.3

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

FedEx UPS USPS

$42.0 $45.0

$65.0

$-

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

$70.0

FedEx UPS USPS

$195

$231

$262

$370

6.8%7.6%

8.0%

10.0%

0.0%

5.0%

10.0%

15.0%

$-

$50

$100

$150

$200

$250

$300

$350

$400

2011 2012 2013 2017

E-c

om

merc

e S

ale

s a

s a

Perc

enta

ge o

f To

tal R

eta

il S

ale

s

E-C

om

merc

e S

ale

s in $

Bill

ions



C. Package Locker Industry

Europe and

Australia are

Parcel Locker

Leaders

Parcel Lockers

is Still a

Nascent, Yet

Growing

Industry

North

American

Parcel Locker

Coverage is

Concentrated

Market research conducted by Irish parcel carrier, Nightline (“Parcel Motel”),

has shown that consumers like the idea of being able to collect deliveries at a

time and place of their choosing rather than having to organize their day in

order to wait at home for a knock on the door from a courier or arranging to

pick up a carded delivery from the post office.

Although no comprehensive research coverage yet exists for this industry,

below is a list of selected players and their statistics.

Parcel Motel: 400 terminals, 20% growth

Amazon Parcel Locker: Testing in 7-11 stores in Seattle; 8,100 7-11

locations worldwide

USPS “Go Post”: 31 Terminals in pilot program in Virginia

Swapbox: 8 terminal locations all in the San Francisco Bay Area

Bufferbox (acquired by Google for approx $20 Million): approximately

20 locations in Canada

DHL Packstation: 2,500 located in Germany

Europe and Australia lead this industry have had a head start; parcel lockers

have just recently gained penetration in the U.S. and currently coverage is

concentrated in a few select areas and limited nationally.

North America Parcel Locker Coverage

Source: PlanIt Business research



IV. Business Development Strategy



A. Overview

Access to Go Locker is exclusively through the Internet from its website and forthcoming smartphone

app. Users will be able to find the closest and most convenient Go Lockers for them and select the

corresponding mailing address for the shipment of their product. Therefore, Go Locker’s visibility and

accessibility through the search engines, Google, Bing and Ask, is critical for NTIT’s success. NTIT will

devote the necessary resources to search engine optimization and search engine marketing. Social

marketing and media will also play a huge role in Go Locker’s promotion, publicity, advertising and viral

marketing.

Management realizes that customer education will play an important role in its marketing and sales

strategy. Confused customers are usually non-buyers. Management will produce intuitive and

compelling "how to” videos in order to educate its customers and also benefit from the enhanced

search engine marketing that web videos provide for key word searches.

B. Promotions

Management may consider limited time and/or permanent promotions that encourage viral word-of-mouth marketing by satisfied customers. For example, a referring customer may receive a limited number of package deliveries for free as an incentive.

C. Web Marketing

Management expects to dedicate significant time and effort into web marketing of Go Locker. Web

marketing includes SEO and SEM (search engine optimization and marketing, respectively). Some

specific examples of web marketing includes:

Pay Per Click (“PPC”) o Google Ad Words o Bing o Ask o Network content pages

Direct User acquisition from partner sites o Establishing cross-listing relationships with other industry leaders o Reciprocal advertising for corporate sponsorship / online advertising

Organic Growth Initiatives

Search Engine Optimization o Key word tagging o Use of video o Back links to other partner websites

Invitations / Referrals from existing registered users



Blogs

Posts on social networking and media sites (Facebook, Twitter)

D. Partnerships

E-tailer Partnerships

Management will pitch synergistic relationships with the leading e-commerce market leaders such as

eBay, Walmart.com and others whereby Go Lockers are offered as the shipping destination in a pull

down menu for their customers as they go through the checkout process for their purchases. In return,

NTIT can either offer (a) to subsidize a part of the shipping cost for their customer, (b) advertise on the

Go Locker and/or (c) offer a discount coupon code for their customers. For Go Locker such a deal(s) will

not only increase its visibility to the massive installed base of ebay and Walmart.com customers but also

will save on “last mile” costs. For the e-commerce leaders they get advertising space on each Go Locker

bank and an opportunity for their customers to get discounts on shipping and/or the actual end product.

Branded Products Partnerships

Management will also pitch the same synergistic relationships offered to the leading e-commerce

market leaders as it will directly to branded retailers with an online presence such as Gap.com,

Officedepot.com, gilt.com, etc.

E. Shipping and Package Delivery Industry Trade

NTIT will devote resources into the various package shipping and delivery industry trade associations,

conventions and print and web media. Management will be an active participant in selected package

delivery conventions, trade shows and seminars.



V. Daily Operations



A. Organizational Chart

Management expects that a lean organizational chart ought to be sufficient to support the first set of 10

Go Lockers. Nigel will do the sorting and grouping of the day’s packages received at the NTIT warehouse

and allocate them for the two NTIT couriers for “last mile” delivery and population of the Go Lockers.

B. Management

Nigel is the principal owner and CEO of NTIT. His day to day responsibilities will be package receiving,

sorting and allocation to each of the couriers, which will occupy his late afternoon hours. Earlier in each

day, Nigel will focus on software management and monitoring of orders, customer service and

marketing / business development initiatives. Nigel will likely add additional management team

members at the time the Company expands beyond its initial set of 10 Go Lockers.

Nigel Thomas

(Owner, CEO)

Courier / Delivery #1

Go Lockers

(x5 locations)

Courier / Delivery #2

Go Lockers

(x5 locations)

Advisory Board



C. Workflows

User Experience

Backend Management / Operations

D. Administration

NTIT will implement a disciplined and organized approach to the books and records and administrative

management. Certain of the administrative tasks are outlined below:

Customer enters Go Locker shipping address

Package is routed to NTIT

warehouse

Packages are sorted, affixed a QR code and

allocated to couriers

Courier places package into

locker and sets code

Customer receives email

notice with access code

Recieve packages and "check them in"

A specific locker assigned

with new access code

Packages are sorted, affixed a QR code and

allocated to couriers

Courier places package into

locker and sets code

Resolve any issues with customer service,

returns, etc

•Quickbooks

•Management

•Outsourced CPA firmAccounting, Payroll, Taxes

•Outsourced engagements

• Web and Social Media MarketingLegal, Technical and Other

Professional

•Management

•ACH and in-person banking

Reporting , Banking and Logistical



VI. Competitive Landscape



Benchmarking Against Other Parcel Locker and Management Companies

NTIT Go Locker

SwapBox

BufferBox

Amazon Locker

USPS Go Post

DHL PackStation

Location New York City San Francisco, CA Toronto, Canada

SF, CA

Seattle, WA; SF, CA Virginia Germany, Europe

Number of Terminal Units 5 – 10 in Yr 1 8 20 >50 31 2,500

Agnostic or Dedicated Agnostic Agnostic Agnostic Dedicated to amazon site sales

Dedicated to USPS delivery channel

Dedicated to USPS delivery

channel

Indoor / Outdoor Indoor Indoor Indoor Indoor Indoor / Outdoor Outdoor

Venue Partners TBD (Targeting CVS)

Random proprietors

7-11, Sobeys 7-11, Staples, Radio Shack

N/A N/A

Value Added Services Future: refrigerated

boxes; redelivery; forwarding

N/A N/A N/A N/A N/A

Pricing Small: $2 / $5 (1st 24 hrs /

Subsequent 24 hrs)

Large: $5 / $2.50 (1st 24

hrs / Subsequent 24

hrs)

1st package Free

$1.99 subsequent packages

Currently Free $0 $0 $0

Funding TBD N/A $20 Million N/A N/A N/A



VII. Financial Highlights



A. Management’s Discussion & Analysis

Excel Financial Model detail provided upon request. See Appendix for additional detail.

NTIT features an attractive business model driven by number of locker box bookings. The Company’s

long term strategy is to (a) continue to increase the capacity of overall number of locker boxes and (b)

continue to add functionality at each locker bank / console box. Additional functionality will not only

help differentiate the Company’s products / services vs. those of the others but also will help diversify

the revenue stream.

The table below is a summary of the Company’s financial forecast in terms of Net Revenues, EBITDA

(Earnings Before Interest, Taxes, Depreciation & Amortization; and adjusted for stock based

compensation, if any) and Net Income for the forecast period. Note, for conservatism, the Company’s

forecast model excludes price increases during the forecast period but it does assume a moderate

level of utilization percentage increase, as is logical given the Company’s expected ad campaigns and

viral growth through effective web marketing. Also note that while P2P (peer-to-peer) deliveries to

the Go Locker will be an important future line of business, it is excluded from the forecast model.

NTIT Financial Summary Forecast

$728,544

$2,824,308

$5,771,412

$9,516,690

$13,937,346

$510,129

$2,103,143

$4,197,559

$6,294,545

$9,705,988

$307,472

$1,344,063

$2,707,942

$4,075,351

$6,300,025

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000


Revenue EBITDA Net Income



Forecast

Management has built a bottom up financial forecast model that incorporates assumptions from market

precedent business models and Management’s expectations. It is currently contemplated that in the

first year, there will be 10 Go Lockers deployed.

The financial forecast model is driven from the following projections for Go Locker:

1. Number of Cumulative Go Lockers at any given month

2. multiplied by, penetration % for utilization rate

= Number of Go Lockers utilized

3. multiplied by, average price per individual locker by size

= Sales Revenue from Locker Booking

4. plus, Probability to Specialty functions, multiplied by average price for specialty function

= Sales Revenue from Specialty Lockers / Functionality

5. plus, Number of advertising spaces available on locker, multiplied by average price per month

= Sales Revenue from Advertising

Forecasted Number of Go Locker Deployments (Years 1 – 5)

0

20

40

60

80

100

120

140

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59



Revenue

Management projects revenue for years 1 – 5 to be: $728K, $2.8M, $5.7M, $9.5M and $13.9M

respectively. Assumes constant prices during the forecast period.

NTIT Revenue Forecast Annualized

Gross Profit

The Company will have a solid level of Gross Profits, driven by a relatively low level of Cost of Revenue,

consisting mostly of retail location rental expenses. Management forecasts Gross Margin to be in the

high 80 percentile of overall revenue for most of the forecast period.

Forecasted Gross Income and Margin

$728,544

$2,824,308

$5,771,412

$9,516,690

$13,937,346

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000


78.0%

79.0%

80.0%

81.0%

82.0%

83.0%

84.0%

85.0%

86.0%

87.0%

88.0%

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000


Gro

ss P

rofi

t M

arg

in %

Gro

ss P

rofi

t $



Operating Income

The majority of the Company’s operating expenses will be salaries for the couriers to deliver the last

mile and stock the lockers; and marketing, sales and advertising. Management expects the model to

scale with volume. It is expected that the Company will be run efficiently with a relatively light level of

human resources. Initially, the warehousing, sorting and allocation of deliveries will occur at the office

space located at Nigel’s personal residence. Management has modeled a standalone office space and

warehouse in year 3 of the projections.

The CEO will draw a full time salary soon after the second year and it is contemplated that the customer

support staff will be added to the payroll in the second and third years. Management projects to

become profitable in year 1 and operating income for years 1 – 5 to be: $471K, $2.1M, $4.2M, $6.3M

and $9.7M, respectively. Corresponding operating margins are from 65% to 70%.

Forecasted Operating Income and Margin

Dividends

Management expects that the remaining 50% of excess cash (after debt service and principle paydown

(if any), reinvestments and other), will be distributed to the equity holders on a pro rata basis.

Reinvestment will be for new product development costs.

Cash Balance

The Company’s cash balance will grow to reach $6.3M in year 5. The Company may use cash to make

acquisitions of more lockers than forecasted in the model or make acquisitions of existing locker

companies - -perhaps even verticalize the supply chain by acquiring a locker manufacturer. Excess free

cash flow (after income taxes, interest payment on any debt) will be dedicated in the following

priorities: first, to debt paydown (if any), second to reinvestments, third to dividend distributions and

the remaining will go to cash.

60.0%

62.0%

64.0%

66.0%

68.0%

70.0%

72.0%

74.0%

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000


Op

era

ting

Inco

me M

arg

in %

Op

era

ting

Inco

me $



Forecasted Cash Balance

Sources & Uses

The Company is seeking approximately $550K in equity capital to fund the start up costs and working

capital expenses of the Company.

Sources & Uses of Capital

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000


SOURCES Total

Paid-in Capial $0 Equipment HW & SW Costs:

Bank Loan Funding $0 Service & Support Costs $356,070

Equity Funding $542,959 Lease 1-Time Cost $26,400

Transportation + Installation $45,530

Subtotal Equipment & SW $428,000

Operating Capital:

Payroll $68,400

Marketing $46,559

Subtotal Operating Capital $114,959

TOTAL SOURCES $542,959 TOTAL USES $542,959

USES



VIII. Management Summary



Name Position

NTIT Solutions, LLC Management

Nigel Thomas Founder, CEO

James J. Parker Advisor

Selected Biographies

Nigel Thomas, Founder and CEO

Nigel is the Founder and CEO of NTIT Solutions, LLC. Nigel will be chiefly focused on operations, business

development and overall strategy. Nigel has more than thirteen years of software development

experience in the area of parcel delivery and logistic. Nigel was recruited by FedEx services immediately

after completing undergraduate studies at Northeastern University located in Boston Massachusetts. He

also completed a Masters in Industrial Engineering with a concentration on information technology from

the University of Central Florida.

At FedEx, Nigel quickly moved through the ranks from junior software developer to senior software

developer to business application advisor. His body of work included developing revenue systems to

comply with changes resulting from the North American Free Trade Agreement (NAFTA), designing an

imaging system to store and retrieve customs documents for all countries served by FedEx, manage

multinational projects related to FedEx Billing online, Implement digital signature technology for FedEx

customers in Asia, Europe, and Latin America.

James J. Parker, Advisor

James is a tax partner and national leader of Cherry Bekaert’s Specialty Tax Group. James has more than

20 years of experience serving the tax planning and compliance needs of public and private companies

as well as high net worth individuals. Prior to joining Cherry Bekaert, James served in the tax service

practices of several large accounting firms, the last 14 years with McGladrey & Pullen and Grant

Thornton.



IX. Potential Risks and Suggested Mitigants



Market Demand Risk E-commerce is expected to make up 10% of all retail sales by 2017

Market Demand Risk (cont’d) DHL’s Packstation serves as a precedent in Europe; Success of independents in the U.S.

Maintenance Risk Indoor locations protects from weather, vandalism; software is centrally managed

Execution Risk Couriers to populate lockers are trained NTIT Solutions employees

Financing Risk Significant portion of uses of cash to come from paid-in capital

Competition Risk First mover advantage in location (New York); first mover advantage in functionality

Potential Risks Mitigants

Key Man loss Key Management “skin” in the “game”



I. Appendix



NTIT Solutions, LLC

Financial Model

Summer 2013

TABLE OF CONTENTS

Sources & Uses

Model Rationale

Pro Forma Model (60 Month / 5 Yr Projected Financials)

Control Panel

P&L Forecast Build Detail

Capital Budget

Illustrative Charts and Graphs

Valuation

Backup Worksheets



NTIT Solutions, LLC MODEL RATIONALE

INSTRUCTIONS: This model contains circular references, therefore the user must turn on manual calculations and press [F9] to recalculate.

--> Tool / Options / Calculation / Manual

Press [F9] to recalculate

P&L Inputs: Forecast Methodology Description

User Metrics:

Number of Locker Banks

Forecast Methodology Based on initial set of number of locker banks per Management's estimates

Util ization Management's estimates

Number of Lockers per Bank per Size Small, Med, Large Based on manufacturer's specifications: 1st 24 hour price + probability of subsequent 24 hrs times late fee

Other Services Special Functionality Value added services / functionality at the machine demands a premium pricing: probability of usage times util ization rate

Advertising Ad space available on exterior of machine: Number of spots times fixed price per month per spot

Cost of Revenue:

1-time and recurring fees, per locker bank and flat Based on Pricing Schedule of Potential Manufacturer

Based on industry standards

Operating Expenses

Facil ities

Office Rent Operations and warehouse run out of home office initially; transition to leased location with growth

Telecom / Mobile / Internet Operations and warehouse run out of home office initially

Util ities Operations and warehouse run out of home office initially; transition to leased location with growth

Facilities Insurance Operations and warehouse run out of home office initially; transition to leased location with growth

Sales and Marketing

Print & Display Adverstising Management Expectations

Pay Per Click Advertising Management Expectations

Sales / Trade Shows / Travel & Entertainment Management Expectations

Event Coverage & Travel Management Expectations

Marketing / Advertising / Promotion / PR Management Expectations

Payroll

Salaries No payroll in pre-funding phase until product launch in month 1. Base salaries are stepped up by an increase each year in years 3 - 5

Un-named Head Based on industry average metric of $600k in revenue per employee.

Payroll tax Industry standard

Benefits Assumption based on total payroll

Stock Based Compensation Non-cash stock based compensation expense for stock awards and options

Outsourced Consultants / Counsel

Law Firm Forecast assumption

Audit Firm Forecast assumption

Environmental Consulting Forecast assumption

Media Consulting Forecast assumption

SEO, Marketing, PPC Consulting Forecast assumption

Model Inputs:

Income Statement:

- Assumes company starts recording financials on month 1.

- Dividends payments to equity holders commence in year 2 .

- Assumes a tax rate when profitable

Balance Sheet Inputs:

- Assumes for working capital accounts

- Assumes debt paydown with excess cash flow according to a modest % of cash flow (see assumption below) and then cash build when debt serviced. No dividends in year 1.

Statement of Cash Flows Inputs:

- Dividends paid after any debt service from cash flows in years 2 - 5 when profitable

OTHER MODEL INPUTS

Tax Rate 35.0%

Interest Rate on Debt 6.0%

Interest Rate on Cash 0.5%

Rate of Debt Paydown from Excess Cash 33.3%

Philanthropic 0.0%

Dividend Payout 50.0%



Source /

Mo 1 - 3 Mo 4 - 10 Growth (Yr 2 - 3) Growth (Yr 4 - 5) Rationale

Number of Locker Banks 3.0 7.0 24.0 36.0

Utilization 75.00% 80.00% 80.00% 80.00%

Stat Mix % Price Late Penalty Prob Late Avg Days Late

Number of small lockers per bank 20.0 50.0% 2.00$ 1.00$ 2.50% 1.0

Number of medium lockers per bank 15.0 25.0% 3.50$ 1.75$ 5.00% 2.0

Number of large lockers per bank 10.0 25.0% 5.00$ 2.50$ 7.50% 3.0

Specialty Functions 5.0% 5.00$

Advertising Space per Bank 5.0 1,500.00$

Cost of Revenue Source / Rationale

Stat

Credit Card & Processing Fee 3.00%

Retail Space Rental per Locker Bank 1,000.00$ Per Locker Bank, per Month

Depreciation & Amortization per year 38,247$ Calculation

Revenue Assumptions

Cost of Revenue Assumptions



Operating Expenses Starting Put into

Monthly Base Service Basis

Facilities

Office / Warehouse 5,000$ 37 per head Management's Estimate

Telecom / Mobile / Internet 1,000$ 37 per head Management's Estimate

Utilities 500$ 37 per head Management's Estimate

Facilities Insurance 5.0% 37 per rent Management's Estimate

Sales & Marketing

Print & Display Adverstising 20,000$ 25 Per mo Management's Estimate

Pay Per Click Advertising 1,000$ 1 Per mo Management's Estimate

Sales / Trade Shows / Travel & Entertainment 3.3% % of GP Management's Estimate

Event Coverage & Travel 3.3% % of GP Management's Estimate

Marketing / Advertising / Promotion / PR 3.3% % of GP Management's Estimate

Payroll Starting Annual Base

Business Development Management's Estimate

CEO $100,000 13 per head Management's Estimate

Operations Management's Estimate

Courier 1 $30,000 1 per head Management's Estimate





Customer Support Management's Estimate

Representative 1 $24,000 13 per head Management's Estimate

Representative 2 $24,000 25 per head Management's Estimate

Sales & Marketing Management's Estimate

Director Sales, Marketing $75,000 37 per head Management's Estimate

Administrative Management's Estimate

Office Manager / HR Manager $36,000 37 per head Management's Estimate

Executive Assistant $24,000 25 per head Management's Estimate

Receptionist $24,000 49 per head Management's Estimate

Un-named Head $24,000 49 Rev per head $1,000,000 Management's Estimate

Payroll Tax 4.0% per salary Management's Estimate

Benefits 10.0% per salary Management's Estimate

Stock Based Compensation Expense 0.0% per salary Management's Estimate

Outsourced Consultants / Counsel Management's Estimate

Law Firm $3,600 1 per year Management's Estimate

Auditors / Tax $5,000 37 per year Management's Estimate

Consulting $10,000 37 per year Management's Estimate

Operating Expense Assumptions



Income Statement : Pro Forma Annual


Gross Revenues:

Small Box Bookings $71,078 $268,272 $548,208 $903,960 $1,323,864

Medium Box Bookings $101,351 $382,536 $781,704 $1,288,980 $1,887,732

Large Box Bookings $117,366 $442,980 $905,220 $1,492,650 $2,186,010

Specialty Function Bookings $0 $74,520 $152,280 $251,100 $367,740

Advertising $438,750 $1,656,000 $3,384,000 $5,580,000 $8,172,000

Total Gross Revenue $728,544 $2,824,308 $5,771,412 $9,516,690 $13,937,346

Cost of Revenues:

Credit Card & Processing Fee $21,856 $84,729 $173,142 $285,501 $418,120

Retail Space Rental per Locker Bank $78,000 $276,000 $564,000 $930,000 $1,362,000

Depreciation & Amortization $38,247 $38,247 $38,247 $38,247 $38,247

Total Cost of Revenues $138,103 $398,976 $775,389 $1,253,748 $1,818,367

Gross Profit $590,441 $2,425,332 $4,996,023 $8,262,942 $12,118,979

Operating Expenses:

Sales, Marketing and General & Administrative $46,559 $147,076 $534,431 $1,528,625 $1,911,658

Payroll (ex stock based comp) $68,400 $209,760 $298,680 $459,420 $520,980

Stock Based Compensation Expense $0 $0 $0 $0 $0

Outsourced Consultants / Counsel $3,600 $3,600 $3,600 $18,600 $18,600

Total Operating Expenses $118,559 $360,436 $836,711 $2,006,645 $2,451,238

Operating Income (EBIT) $471,882 $2,064,896 $4,159,312 $6,256,298 $9,667,741

Interest Income $1,152 $2,892 $6,752 $13,474 $24,605

Interest Expense $0 $0 $0 $0 $0

Pre-Tax Income $473,034 $2,067,789 $4,166,064 $6,269,771 $9,692,346

Income Tax Expense $165,562 $723,726 $1,458,122 $2,194,420 $3,392,321

GAAP Net Income $307,472 $1,344,063 $2,707,942 $4,075,351 $6,300,025

Dividend Paid ($144,530) ($403,437) ($1,077,065) ($1,621,335) ($2,720,707)

GAAP Net Income Post Dividends $162,942 $940,625 $1,630,877 $2,454,016 $3,579,318

EBITDA $510,129 $2,103,143 $4,197,559 $6,294,545 $9,705,988



Operating Metrics: Pro Forma Annual


Operating Exp. % of Total Revenue

Sales, Marketing and General & Administrative 6.4% 5.2% 9.3% 16.1% 13.7%

Payroll (ex stock based comp) 9.4% 7.4% 5.2% 4.8% 3.7%

Stock Based Compensation Expense 0.0% 0.0% 0.0% 0.0% 0.0%

Outsourced Consultants / Counsel 0.5% 0.1% 0.1% 0.2% 0.1%

Total 16.3% 12.8% 14.5% 21.1% 17.6%

Gross Margin 81.0% 85.9% 86.6% 86.8% 87.0%

Adjusted EBITDA Margin 70.0% 74.5% 72.7% 66.1% 69.6%

EBITDA Margin 70.0% 74.5% 72.7% 66.1% 69.6%

EBIT Margin 64.8% 73.1% 72.1% 65.7% 69.4%

GAAP Net Income Margin 42.2% 47.6% 46.9% 42.8% 45.2%

Effective Tax Rate 35.0% 35.0% 35.0% 35.0% 35.0%

Ratio Analyses

Working Capital Ratios

Accounts Receivable DSO 7.0 7.0 7.0 7.0 7.0

Other Current Assets / Sales % 1.0% 1.0% 1.0% 1.0% 1.0%

Accounts Payable DSO 3.0 3.0 3.0 3.0 3.0

Other Current Liabilities / Sales % 0.0% 0.0% 0.0% 0.0% 0.0%

Net Working Capital $22,670 $84,505 $162,963 $263,492 $389,950

Credit and Leverage Ratios

Debt / EBITDA Ratio 0.00x 0.00x 0.00x 0.00x 0.00x

Debt / Assets Ratio 0.00x 0.00x 0.00x 0.00x 0.00x

Cash / Assets Ratio 0.36x 0.39x 0.51x 0.57x 0.64x

Interest Coverage Ratio N/A N/A N/A N/A N/A

Assets to Sales Ratio 1.65x 0.76x 0.65x 0.66x 0.70x

Performance Ratios

Current Ratio N/A N/A N/A N/A N/A

Quick Ratio N/A N/A N/A N/A N/A

Return on Equity 0.26x 0.63x 0.72x 0.65x 0.64x



Balance Sheet: Pro Forma Annual


Assets

Cash $427,516 $830,953 $1,908,018 $3,529,353 $6,250,060

Accounts Receivable $21,794 $81,182 $112,222 $185,047 $271,004

Other Current Assets $934 $3,479 $57,714 $95,167 $139,373

Total Current Assets $450,244 $915,615 $2,077,954 $3,809,567 $6,660,437

Tangible Assets and Net PP&E $347,410 $822,763 $1,298,116 $2,030,269 $2,762,422

Other Assets $401,600 $401,600 $401,600 $401,600 $401,600

Total Assets $1,199,254 $2,139,978 $3,777,671 $6,241,436 $9,824,460

Liabilities & Equity

Accounts Payable $58 $157 $6,973 $16,722 $20,427

Other Current Liabilities $0 $0 $0 $0 $0

Total Current Liabilities $58 $157 $6,973 $16,722 $20,427

Total Debt $0 $0 $0 $0 $0

Other Long-Term Liabilities $0 $0 $0 $0 $0

Total Liabilities $58 $157 $6,973 $16,722 $20,427

Shareholders' Equity $1,199,196 $2,139,821 $3,770,698 $6,224,714 $9,804,033

Total Liabilities & Shareholders' Equity $1,199,254 $2,139,978 $3,777,671 $6,241,436 $9,824,460



Statement of Cash Flows & Debt: Pro Forma Annual


Operations

Net Income $307,472 $1,344,063 $2,707,942 $4,075,351 $6,300,025

(+) Depreciation & Amortization $38,247 $38,247 $38,247 $38,247 $38,247

(+) Stock Based Compensation $0 $0 $0 $0 $0

(+) Change in Net Working Capital ($56,660) ($61,835) ($78,459) ($100,528) ($126,459)

Total Cash Flow from Operations $289,060 $1,320,475 $2,667,730 $4,013,070 $6,211,813

Cash Flow Available for Debt Repayment $289,060 $1,320,475 $2,667,730 $4,013,070 $6,211,813

Investing

(-) Capital Expenditures $0 ($513,600) ($513,600) ($770,400) ($770,400)

Total Cash Flow from Investing ($513,600) ($770,400) ($770,400)

Financing

(-) Repayment of Debt $0 $0 $0 $0 $0

(+) Investment of Equity $0 $0 $0 $0 $0

(+) Investment of Debt $0 $0 $0 $0 $0

Total Cash Flow from Financing $0 $0 $0 $0 $0

Sub-Total Net Increase / (Decrease) in Cash $289,060 $806,875 $2,154,130 $3,242,670 $5,441,413

(-) Dividend Payment ($144,530) ($403,437) ($1,077,065) ($1,621,335) ($2,720,707)

Total Net Increase / (Decrease) in Cash $862,821 $403,437 $1,077,065 $1,621,335 $2,720,707



NTIT Solutions, LLC Debt Paydown & Cash Schedule


Debt Paydown Schedule

Beginning Balance Debt $0 $0 $0 $0 $0 $0

Actual Debt Paydown $0 $0 $0 $0 $0 $0

Ending Balance Debt $0 $0 $0 $0 $0 $0

Interest Expense $0 $0 $0 $0 $0

Cash Schedule

Beginning Balance $708,789 $761,781 $830,953 $1,908,018 $3,529,353

Cash Flow Increase / (Decr) Cash $862,821 $403,437 $1,077,065 $1,621,335 $2,720,707

Ending Balance $1,571,610 $1,165,218 $1,908,018 $3,529,353 $6,250,060

Interest Income $1,152 $2,892 $795 $1,471 $2,604

NTIT Solutions, LLC Assets and Property, Plant & Equipment Schedule


Assets & PPE Beginning Balance $743,538 $783,151 $822,763 $1,298,116 $2,030,269

Less D&A ($35,060) ($38,247) ($38,247) ($38,247) ($38,247)

Plus Cap Ex $0 $513,600 $513,600 $770,400 $770,400

Assets & PPE Ending Balance $708,478 $1,258,504 $1,298,116 $2,030,269 $2,762,422



Preliminary Discounted Cash Flow Model: $20M - $25M

($ in Millions only)

Projected (a)

CAGR

Fiscal Year Ending June 30, Year 1 Year 2 Year 3 Year 4 Year 5 Yr 3-'Yr 5

Net Revenues $0.7 $2.8 $5.8 $9.5 $13.9 34.2%

% Growth 287.7% 104.3% 64.9% 46.5%

Adjusted EBIT $0.5 $2.1 $4.2 $6.3 $9.7 32.5%

% of Net Revenues 65.7% 69.4%

Less: Cash Taxes @ 35.0% (0) (1) (1) (2) (3)

Tax-adjusted EBIT $0.3 $1.3 $2.7 $4.1 $6.3 32.5%

Plus: Depreciation & Amortization 16.9 0.0 0.0 0.0 0.0 0.0

Less: Capital Expenditures (10.4) 0.0 0.5 0.5 0.8 0.8

Less: Change in Net Working Capital (32.6) ($0.1) ($0.1) ($0.1) ($0.1) ($0.1)

Unlevered Free Cash Flow $0.3 $1.8 $3.2 $4.8 $7.0 29.8%

% Growth 50.1% 45.8%

Discount Rate(b)

20.0% 25.0% 30.0%

EBITDA Multiple(c)

5.0x 6.0x 7.0x 5.0x 6.0x 7.0x 5.0x 6.0x 7.0x

Year 5 Adj. EBITDA $10 $10 $10 $10 $10 $10 $10 $10 $10

Terminal Value $49 $58 $68 $49 $58 $68 $49 $58 $68

PV of Terminal Value $16 $20 $23 $13 $15 $18 $10 $12 $14

PV of Free Cash Flows $9 $9 $9 $7 $7 $7 $6 $6 $6

Implied Enterprise Value $24.77 $28.02 $31.27 $20.05 $22.59 $25.14 $16.41 $18.42 $20.43

Plus: Cash & Equivalents $0 $0 $0 $0 $0 $0 $0 $0 $0

Less: Debt $0 $0 $0 $0 $0 $0 $0 $0 $0

Implied Value of Equity $24.77 $28.02 $31.27 $20.05 $22.59 $25.14 $16.41 $18.42 $20.43

(a) Based on Management's likely case projections.

(b) Based on Wall Street research for median discount rate of publicly traded comparable companies plus a premium for private company illiquidity as well as uncertainty.

(c) Based on Wall Street research for median forward EBITDA multiples of publicly traded comparable companies in comparable industries or business models.

Key

Operating

Assumptions

DCF

Summary

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