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2012 dHybrid Investor Presentation

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2012 dHybrid Investor Presentation where Trevor Milton claims "S.S." was the company's CTO, referencing a contractor who had worked with dHybrid named Steve Scott.

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2012 dHybrid Investor Presentation

  1. 1. CNG/Diesel HybridCNG/Diesel HybridCNG/Diesel HybridCNG/Diesel Hybrid 4/13/20124/13/20124/13/20124/13/2012 Park City Angels |Park City Angels |Park City Angels |Park City Angels | Response to IssuesResponse to IssuesResponse to IssuesResponse to Issues 1111
  2. 2. 4/13/20124/13/20124/13/20124/13/2012 TechnologyTechnologyTechnologyTechnology 2222
  3. 3. Stand alone dHybrid ECU Fully encrypted software/programming A synergistic liaison between OEM and dHybrid™ ECUs Multiple patents pending + Proprietary knowhow 4/13/20124/13/20124/13/20124/13/2012 TechnologyTechnologyTechnologyTechnology 3333
  4. 4. EPA and CARB certifications required to sell Class 8 engine Challenge is daunting – no firm has complied with the task of meeting the rigorous tests First engine family to be addressed is the Cummins 871, which with two other families represents 86% of the overall market Company is set to enter labs on April 30 and final certification is expected within 6 weeks Overall cost is expected to be $275,000K Dynamic control over all elements of combustion allow significant confidence EPA certification will be achieved. 4/13/20124/13/20124/13/20124/13/2012 TechnologyTechnologyTechnologyTechnology 4444
  5. 5. Bi-fuel is the “Sweet Spot” of the industry No one has done it because “it ain’t as easy as it looks.” Others are working on bi-fuel, and entries from two classes of industry participants, are expected in the intermediate term 4/13/20124/13/20124/13/20124/13/2012 CompetitionCompetitionCompetitionCompetition 5555
  6. 6. Engine Manufacturers: ◦ Cummins Westport (CWI) is JV of Cummins and Westport Retrofit Suppliers: ◦ Clean Air Power was founded in 1991 and is AIM-listed Raised $83M and have 66 patents granted or applied for Dual-FuelTM tech Launched Volvo heavy duty Euro 5 as diesel as latest of 1750 vehicles for 50 customers worldwide (excluding USA) ◦ EcoDual Sells dual-fuel conversion for Outside Useful Life Cummins ISX engines of which 1M+ are in service Plans to release “multiple systems certified for newer trucks” over “the next 12 months 4/13/20124/13/20124/13/20124/13/2012 CompetitionCompetitionCompetitionCompetition 6666
  7. 7. Complete the EPA certification process on Cummins 871 07 emissions standard Finalize equity financing, and purchase dyno and emissions equipment Complete installation of emission lab Fill staffing requirements Acquire current models of Cummins, Detroit, and Navistar engines and development retrofit kits Enter relationship(s) with partner(s) to roll fueling network out sequentially in key markets 4/13/20124/13/20124/13/20124/13/2012 Marketing and SalesMarketing and SalesMarketing and SalesMarketing and Sales 7777
  8. 8. Nationwide Press Release upon EPA certification Concurrently, the initial carrier plans to announce purchase of the first 800 systems Publish efficiency gains Publish durability test miles Sales staff currently identifying trucking companies which own the Cummins ISX 871 Demo model taken to trucking company execs Existing Nationwide service networks, such as Inland Kenworth to sell, service and install system 4/13/20124/13/20124/13/20124/13/2012 Marketing and SalesMarketing and SalesMarketing and SalesMarketing and Sales 8888
  9. 9. System installed by trucking companies dHybrid discounts system cost to trucking company and trains the company to install and service their own fleet. System installed by existing repair and service networks. dHybrid discounts system to service networks for installation dHybrid trains service networks to install and service the system Service networks trained to be primary system service and support. 4/13/20124/13/20124/13/20124/13/2012 Marketing and SalesMarketing and SalesMarketing and SalesMarketing and Sales 9999
  10. 10. Dedicated CNG Trucks (100% CNG Trucks) Dedicated LNG (Liquefied Natural Gas) Trucks Hybridization (Diesel Electric) Electric Super Fuels (Additives, Hydrogen, Blends) Undiscovered Fuels Transportation Model Accommodations (Shorter Routes, More Frequent Driver changes, more frequent fuel stops to accommodate dedicated CNG and LNG) Refinement of existing technologies (synthetic lubricants, ECM, etc.) Undiscovered Technologies 4/13/20124/13/20124/13/20124/13/2012 Trends and DevelopmentsTrends and DevelopmentsTrends and DevelopmentsTrends and Developments 10101010
  11. 11. The initial trucking customer is one of the largest fleets operators in North America This carrier invested in excess of $2M at the outset for initial engine conversions and equity The agreement provides for purchase of a significant number of conversions under favorable pricing Discussions are proceeding on changes to the original agreement sought by each party The initial carrier has actively promoted dHybrid in the marketplace 04/13/201204/13/201204/13/201204/13/2012 SwiftSwiftSwiftSwift 12121212
  12. 12. First Engine for EPA Certification (Cummins ISX871) is the dominantFirst Engine for EPA Certification (Cummins ISX871) is the dominantFirst Engine for EPA Certification (Cummins ISX871) is the dominantFirst Engine for EPA Certification (Cummins ISX871) is the dominant engine currently in service in the Swift fleet.engine currently in service in the Swift fleet.engine currently in service in the Swift fleet.engine currently in service in the Swift fleet. Swift is obligated to purchase 800 dHybrid Systems forSwift is obligated to purchase 800 dHybrid Systems forSwift is obligated to purchase 800 dHybrid Systems forSwift is obligated to purchase 800 dHybrid Systems for $16,000,000$16,000,000$16,000,000$16,000,000,,,, within a year after EPA Certification of the Cummins ISX871 engine.within a year after EPA Certification of the Cummins ISX871 engine.within a year after EPA Certification of the Cummins ISX871 engine.within a year after EPA Certification of the Cummins ISX871 engine. Swift has the option to purchase up to11,700 dHybrid Systems throughSwift has the option to purchase up to11,700 dHybrid Systems throughSwift has the option to purchase up to11,700 dHybrid Systems throughSwift has the option to purchase up to11,700 dHybrid Systems through May 21, 2016, at $20,000 per system.May 21, 2016, at $20,000 per system.May 21, 2016, at $20,000 per system.May 21, 2016, at $20,000 per system. When exercising its option to purchase, for every 325 systems that SwiftWhen exercising its option to purchase, for every 325 systems that SwiftWhen exercising its option to purchase, for every 325 systems that SwiftWhen exercising its option to purchase, for every 325 systems that Swift purchases, it acquires an additional 1% equity in dHybrid, up to 36%.purchases, it acquires an additional 1% equity in dHybrid, up to 36%.purchases, it acquires an additional 1% equity in dHybrid, up to 36%.purchases, it acquires an additional 1% equity in dHybrid, up to 36%. Swift spends approximately $600,000,000 a year on diesel fuel, utilizingSwift spends approximately $600,000,000 a year on diesel fuel, utilizingSwift spends approximately $600,000,000 a year on diesel fuel, utilizingSwift spends approximately $600,000,000 a year on diesel fuel, utilizing dHybrid systems will substantially improve Swift’s gross profit.dHybrid systems will substantially improve Swift’s gross profit.dHybrid systems will substantially improve Swift’s gross profit.dHybrid systems will substantially improve Swift’s gross profit. To be a “front runner” and competitive in its industry Swift must buyTo be a “front runner” and competitive in its industry Swift must buyTo be a “front runner” and competitive in its industry Swift must buyTo be a “front runner” and competitive in its industry Swift must buy systems.systems.systems.systems. Swift cannot seek alternative source of supply until May 2018.Swift cannot seek alternative source of supply until May 2018.Swift cannot seek alternative source of supply until May 2018.Swift cannot seek alternative source of supply until May 2018. Other Swift issues will be the subject of discussion.Other Swift issues will be the subject of discussion.Other Swift issues will be the subject of discussion.Other Swift issues will be the subject of discussion. 4/13/20124/13/20124/13/20124/13/2012 SwiftSwiftSwiftSwift 11111111
  13. 13. Trevor Milton – Founder & CEO ◦ Successful serial entrepreneur. Founded and sold SGS Alarms. Founded classified site upillar.com. William Milton – Vice President of Operations ◦ Operations Manager at Union Pacific Railroad and industrial development in Las Vegas. BS degrees in accounting and psychology from Brigham Young University Tony Allen – Chief Legal Counsel ◦ Former in-house Legal Counsel for ProPay, Inc., one of the largest merchant processors in the country. BS degree from Brigham Young University and JD/MBA degrees from University of California/Berkley S.S. – Chief Technology Officer ◦ Attained twelve years of automotive systems engineering and product development experience at General Motors, Mercury Marine and Parker Hannifin. BS and MS from Univ. of Michigan Timothy Hunt – Implementation Consultant ◦ CEO of Go Natural CNG managing entry into Class 8 trucking market 4/13/20124/13/20124/13/20124/13/2012 Management TeamManagement TeamManagement TeamManagement Team 14141414
  14. 14. Continue to firm up management team with senior additions: Ronald White – CFO Successful venture capitalist with seven IPOs (including Nextel) from $400 million pool; 25 years of experience as CFO and advisor in the over-the-road trucking industry; cofounded Olympus Angels; MBA from HBS In discussions with team of three well-known trucking industry sales executives to increase sales reach and success Plan to expand the board with industry expert and representative of equity investors 4/13/20124/13/20124/13/20124/13/2012 Management TeamManagement TeamManagement TeamManagement Team 14141414
  15. 15. dHybrid goal is to sell 20,000 systems over the next 3 years. Compelling savings to trucking companies Unique Supply Chain fundamentals can support this growth Emphasize product development and IP protection to maintain technology leadership Full engine control is the most important factor for safety, durability and EPA certification Product now ready for EPA testing Pre-financing valuation is open to discussion 4/13/20124/13/20124/13/20124/13/2012 ValuationValuationValuationValuation 16161616
  16. 16. 2012 2013 2014 Revenue 8,940,000 52,800,000 105,600,000 CoGS 7,318,148 39,600,000 82,368,000 Gross Profit 1,621,852 13,200,000 23,232,000 Operating Costs 1,452,880 7,392,000 12,672,000 Operating Income 168,972 5,808,000 10,560,000 dHybrid P&L Projections 2012-2014 4/13/20124/13/20124/13/20124/13/2012 ValuationValuationValuationValuation 17171717
  17. 17. Cash invested to date totals $1.9M Raising $1M through: ◦ Bridge offering to individual Accredited Investors ◦ Preferred stock financing for Angel groups Use of funds as follows: ◦ Product development $250,000 ◦ Sales and marketing 100,000 ◦ Production and inventory 90,000 ◦ Working capital 560,000 Total $1,000,000 4/13/20124/13/20124/13/20124/13/2012 ValuationValuationValuationValuation 18181818
  18. 18. dHybrid’s marketplace strategy will create relationships with numerous potential acquirers ◦ Engine manufacturers such as Cummins (which invested $20M in its JV with Westport) ◦ Oil companies (most of which have significant gas holdings which are complimentary to trucking cycle) ◦ Entrepreneurs like T. Boone Pickens and/or financial buyers such as private equity firms ◦ Natural Gas Pipeline and Truckstop Companies An IPO would be a clear possibility if dHybrid is able to achieve its strategic positioning goals and achieve its financial projections 4/13/20124/13/20124/13/20124/13/2012 ValuationValuationValuationValuation 19191919
  19. 19. Questions?
  20. 20. MARKET
  21. 21. Fuel Savings: ◦ Annual savings/truck equal $23,400 ◦ Truck fleet average cost per mile equals $.65 Environmental Regulations: ◦ Caterpillar was #1 in engines shipped but exited through inability to meet stringent 2010 Federally- mandated emission standards ◦ New fuel consumption and emission standards set for 2014 may force some engine manufacturers to move to dHybrid-type solution or radically improved diesel solutions (not yet developed)
  22. 22. Primary market is 2M Class 8 Big Rigs ◦ At $34K/engine which turn over every 5 years yields annual addressable market of $13.6B Secondary market is 5M Medium Duty Diesel Trucks ◦ At $25K/engine which turn over every 8 years yielding annual revenues of $15.6B
  23. 23. $1.2 Million $2.4 Million 20,000 40,000
  24. 24. PROPOSITION
  25. 25. CNG is typically 1/3 the cost of Diesel ◦ Example: Team drivers would generate $10,000 savings in 3 months Preliminary tests: 20% less C02, 28% less N0x More power and efficiency than Diesel alone Profitable green alternative Decreases DPF regeneration time Greater range than CNG alone
  26. 26. 15.3 Months* *120,000 miles per year, 6.6 mpg, $3.85 per gallon System Cost $30,000 Team driver ROI much faster 2 yrs. 1 yr. Heavy Duty Years
  27. 27. Stock Diesel Fuel Cost* $89.81 (.62¢ per mile) dHybrid Cost ** = $62.97 (.43¢ per mile) dHybrid Savings = 30.9% (.19¢ per mile savings) *Trip Mileage = 142.7 23.32 Gallons of Diesel @ $3.85 per gallon Trip Cost = $89.81 **Trip Mileage = 142.7 12.44 Gallons of Diesel @ $3.85 per gallon 11.856 GGEs of CNG @ $1.25 per gallon Trip Cost = $62.97
  28. 28. Normal Route: Corinne, UT to Las Vegas, NV Average Savings Per Trip = 30% Average Cost Per Mile = $.44 Diesel only average cost per mile = $.65 Total Savings to Date= $23,348.14
  29. 29. .00¢ .01¢ .02¢ .03¢ .04¢ .05¢ .06¢ .07¢ .08¢ .09¢ .10¢ .11¢ .12¢ .13¢ .14¢ .15¢ .16¢ .17¢ .18¢ .19¢ .20¢ .21¢ .22¢ .23¢ .24¢
  30. 30. 0 100 200 300 400 500 600 700 PartsPartsPartsParts----perperperper----MillionofSampleMillionofSampleMillionofSampleMillionofSample Trip AverageTrip AverageTrip AverageTrip Average 28% Improvement of NOx28% Improvement of NOx28% Improvement of NOx28% Improvement of NOx NOx Diesel Only NOx Dual Fuel #1 Nox Dual Fuel #2
  31. 31. 0 1 2 3 4 5 6 7 PartsPartsPartsParts----perperperper----MillionofSampleMillionofSampleMillionofSampleMillionofSample Trip AverageTrip AverageTrip AverageTrip Average 20% Improvement of CO220% Improvement of CO220% Improvement of CO220% Improvement of CO2 CO2 Diesel Only CO2 Dual Fuel #1 CO2 Dual Fuel #2
  32. 32. 0 0.001 0.002 0.003 0.004 0.005 0.006 0.007 0.008 PartsPartsPartsParts----perperperper----MillionofSampleMillionofSampleMillionofSampleMillionofSample Trip AverageTrip AverageTrip AverageTrip Average CO levels are now nearly at stock and improvingCO levels are now nearly at stock and improvingCO levels are now nearly at stock and improvingCO levels are now nearly at stock and improving CO Diesel Only CO Dual Fuel #1 CO Dual Fuel #2

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