VC Deck - March 2013

VARILUX Intelligent Light Conservation Page 1

VARI UXEnhance it…

Street Light DimmerStepless 3-Terminal Dimmer Jack I. J’maev

ReadyTrace, Inc.14277 Albers WayChino, CA 91710909-437-8390

[email protected]

www.varilux4hps.com


FULL POWERSized for End of Life

Lumen Output

60% POWERMeets RP-8 Requirements


3-Terminal Means Plug & Play in 5 Minutes

Remove Photocell

Install variLux

Save Money


Problem

• Street Lights – 35% to 50% of City Electricity Costs– Rising Electricity Costs

• Shrinking Municipal Budgets– No Other Economical Options– Willing to Spend to Save Money

• Environmental Concerns– Carbon Footprint Reduction– Light Pollution Concerns


Beta Tested


Market

• Street and Area Lighting– 400,000,000 Units Globally– $66 Billion Potential Market– Distribution Partner Identified– “Displacing” Technology

• Early Adopters – Mexico– Brazil– Costa Rica– Bulgaria


Global Interest


Competition

Induction

LED

ConventionalDimming

variLux

HPSBaseline

Operation Costs Maintenance Costs Purchase Cost

Installation Costs Payback Period


VARILUX is the New Answer

VariLux Street Light Dimmer (SLD)

Energy savings calculated relative to HPS luminaries at various power levels depicted in the chart.This energy calculation is based on a cost of $0.10 US per KW-Hr & accounts for Power Factor Correction.

Payback Period (P.B.P.) calculated on cost of acquisition and difference in installation labor.Life Cycle Cost (LCC) Savings based on 10 year maintenance and electricity usage relative to existing HPS installations and use of standard dimming profiles on a solstice quarter

basis.


Non Price Determinates

• Non-US Markets– Immediate Demand– Not Influenced by “LED Hype”– Markets Embrace Dimming

• United States Markets– Federal LED Incentives – Public Utility Commission

Action Required– Non-Company Owned Meter


Intellectual Property

• 3-Terminal Dimmer– USPTO PCT Search Report– Favorable for Issuance– International Examination– National Stage Filings Complete

• USA, EU, RU, IN, JP, BZ, MX

• Street Light Metering System– Patent Pending


The Technology

• Prior Art – 4 Terminal Dimmer– 50% More Cost

• VARILUX– 3 Terminal Dimmer– Power Factor Preservation– Supports Plug & Play– More Reliable


Conventional Dimming(European “E-Street” Concept)

INCOM

A

REGULATED POSITIVE RAIL

GROUND RAIL

A

B

DIGITAL SIGNALPROCESSOR

INPHS

B

AB

ACTIVEFEEDBACK

ACTODC

PO

WE

R F

ACTO

R C

OR

RE

CTI

ON

PR

E-R

EG

ULA

TOR


variLux 3-Terminal Dimmer

SY

NC

HR

ON

OU

SF

RE

E W

HE

EL

D S DSIFD

D

S

D

S

IFD

CONTROLBOARD

WITHREADYTRACE

RECEIVER

IN OUT

COM

BUCK SWITCHES


variLux Street Light DimmerRADIO

TELEMETRY

0.2 ACCURACYCLASS METER

READYTRACERECEIVER(AM BAND)

STEPLESSDIMMER

POWERFACTOR

PRESERVATION

LUMENMAINTENANCE

TOKENDECRYPTION

FIRMWAREVALIDATION


Pre Money Capitalization

OptionsExercised

Options Outstanding

Warrants Outstanding

Preferred WarrantsWarrants

to be Issued

Founder

Investors

Compensation

8%

20%

7%

15%

25%

17%

• $4.3 MM Paid-In – 1.3MM Shares– Avg. $3.30/Share

• 3.5 MM Shares• 1.5 MM Options• 0.6 MM Warrants• Debt - $1.45MM

– Preferred Warrants– IP Security– $500M Unsubscribed


Post Money Capitalization

• New Money - 39% Stake• Prior Stake Holders

– Issued 27%– Promissory 25%

• New Employee Options– 9% (Discretionary)

• Debt - $1.45MM– Paid from Cash Flow

New Money

ExistingStakeholders

Options&

Warrants

New Options

25% 39%

9%

27%


Financials

2013 2014 2015 2016 2017Sales 6,475,000 30,905,000 43,050,000 57,400,000 82,950,000COGS 3,500,000 15,400,000 21,000,000 28,000,000 42,000,000Other Direct Expense 1,438,500 5,281,000 7,260,000 9,680,000 13,890,000Gross Profit 1,536,500 10,224,000 14,790,000 19,720,000 27,060,000Operating Budget 1,467,470 3,753,525 6,804,740 5,604,594 6,664,314Development & Certifications 257,500 715,000 0 0 0Marketing 33,000 250,000 250,000 250,000 250,000EBIT -221,470 5,505,475 7,735,260 13,865,406 20,145,686Tax 0 0 3,831,419 6,239,433 9,065,559Net after Tax -221,470 5,505,475 3,903,841 7,625,973 11,080,127


Financials

2,013 2,014 2,015 2,016 2,017 Sales 1,450,750 26,022,500 43,050,000 57,400,000 82,950,000 COGS 765,000 12,700,000 21,000,000 28,000,000 42,000,000 Other Direct Expense 125,950 2,219,750 3,630,000 4,840,000 6,945,000 Gross Profit 559,800 11,102,750 18,420,000 24,560,000 34,005,000 Operating Budget 2,075,366 4,596,063 5,454,025 6,484,688 7,635,667 Development & Certifications 515,000 480,000 - - - Marketing 88,000 250,000 250,000 250,000 250,000 EBIT (2,118,566) 5,776,688 12,715,975 17,825,313 26,119,333 Tax - - 5,343,344 8,021,391 11,753,700 Net after Tax (2,118,566) 5,776,688 7,372,632 9,803,922 14,365,633

2,013 2,014 2,015 2,016 2,017 G & A 2,804,316 7,545,813 9,334,025 11,574,688 14,830,667 C O G S 765,000 12,700,000 21,000,000 28,000,000 42,000,000 Tax - - 5,343,344 8,021,391 11,753,700 Debt Pay-Off 1,950,000

Sales 1,450,750 26,022,500 43,050,000 57,400,000 82,950,000 Investments 3,500,000 0 0 0 0

number of units 8,290 148,700 246,000 328,000 474,000


The Plan

• Development Complete– No Hardware R&D Required– Market Specific Variations

• New Money for Operations– Inventory– Sales and Marketing– Customer Support

• Product Cost Reductions• System Control Software

– In-House Development orPartner with Existing Provider


Immediate Needs

• New Management Team– Funding Appointed CXO and CFO

• Additional Bridge Funding ($500K)– Support National Stage Filings– Complete UL Testing

• Expansion Capital ($2.5MM)– Inventory– Sales and Marketing– Customer Support– Product Cost Reductions– System Software

• Lobby Support– Political Connections in US


Exit Strategy

• $200MM in 5 Years– Net Present Value of Future

Income Stream• Established Lighting Company

– Two “Nibbles” Already• LED Industry

– Displaces LED Roll-Outs– Buy and Bury


The Deal

• $ 250K Additional to Bridge• $ 2.5 MM VC Round

– $ 1.5 MM 1st Tranche– $ 1 MM 2nd Tranche

• $ 200 MM Exit– 5 Years after 1st Tranche – NPV1 at 5 Years $ 225 MM

1. NPV – Net Present Value Future Income Streams

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VC Deck - March 2013

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