ENGINEERED CORPORATE STRUCTURE Walker Center 175 SOUTH MAIN ST. 15TH FLOOR SALT LAKE CITY, UT 84111 firstname.lastname@example.org email@example.com firstname.lastname@example.org 801-‐303-‐5736 801-‐214-‐9215
DDR & ASSOCIATES, LLC DDR & ASSOCIATES DDR & Associates was formed to provide broad-‐based solu>ons to our clients by bridging the gaps that exist between tradi>onal strategic consul>ng, legal, ﬁnancial service and venture capital ﬁrms to facilitate the raising of capital. We accomplish this by helping our clients evaluate all the poten>al opportuni>es that exist to raise capital and acquire strategic resources. Our approach is never one of form ﬁIng your needs to the solu>ons that we oﬀer. Instead we ﬁnd the right investment channel for your organiza>on. We then help you prepare the informa>on to support a highly targeted and proven communica>on approach that will op>mize your opportunity so it will appeal to our extensive network of investment channels and poten>al partners. We focus on working with growing and emerging mid-‐capitaliza>on companies. Our advisory and technical experience and exper>se, and that of our alliance partners, enable us to provide services that leverage your global market poten>al. Our clients are located in Utah and throughout the United States, as well as overseas in China, India, the United Kingdom, the Netherlands, and other interna>onal loca>ons. As a result, we have extensive experience helping our clients conduct business both domes>cally and interna>onally. DDR uses a blended approach to public and private ﬁnance. Our clients are typically development stage, however each business must be fundamentally based and able to move to a na>onal exchange within approximately 36-‐48 months. Early sage investors expect signiﬁcant returns, therefore the DDR team works to incubate each client to carefully blend a private equity approach, basing investment on current non-‐market related valua>ons, recognizing the upside alongside a company’s business execu>on. Below is a outline of services and criteria within DDR & Associates: Vincent & Rees Private Equity Criteria Public Equity Criteria Legal Services Provided 12 M illion Cminimum blocks ommi]ed Should be able to make na>onal • $50K exchange in 36-‐48 months Merger & Acquisi>ons Par>cipants may choose project Should be able to earn $0.5 -‐ $1.00 Private Placements Ownership or controlling per share EBITDA in 36-‐48 months Securi>es Law interest Management team should have Commercial Law Target 10% net annual growth proven experience to mi>gate Transac>onal Legal Services execu>on risk Capitaliza>on to reach earning targets should be 25-‐30M or less
DAVID REES MICHAEL DORON BIOS David M. Rees is a partner in the Salt Lake City ﬁrm of Vincent & Rees, a law and Michael J. Doron is a visionary corporate leader with execu>ve-‐level experience business advisory ﬁrm. David has represented and worked extensively with in investment, banking, debt-‐restructuring, consumer services, and land numerous ﬁnance and lending ins>tu>ons, assis>ng with the due diligence development at small to large organiza>ons. Strategic planner using background process for lending as well as structuring hundreds of debt ﬁnancing as CFO, COO, VP, consultant, and lobbyist to devise most eﬀec>ve tac>cs in transac>ons. David has many years of experience working with small, medium achieving goals. Adept at leading business development, opera>ons, and all and large companies in various capaci>es, including in mergers and acquisi>ons, ﬁnancial aspects to mi>gate risk, increase revenue, and drive customer arranging and structuring ﬁnancing, opera>ons, sales/marke>ng, and cross-‐ sa>sfac>on. Rela>onship manager with track record of raising signiﬁcant funds border transac>ons. David has assisted many companies in going public and for companies and non-‐proﬁts. going private, raising capital, and growing sales opportuni>es within the US and interna>onally. David has traveled extensively throughout Asia throughout his Currently Michael is a Managing Director with Covalence Solu>ons, a consul>ng business career. company specializing in mergers and acquisi>ons, turnarounds, supply chain management, start-‐ups, and venture capital. Covalence Solu>ons is focused on David is also currently serving as a member of the Board of Directors of Learning assis>ng emerging and established companies that have the poten>al for short Through Sports, a privately held educa>on company in Birmingham, Alabama; term posi>ve cash-‐ﬂow and EBITDA. We seek out under-‐valued opportuni>es and as a member of the Board of Directors of Shaka Shoes, a publicly traded shoe with quality assets, superior strategic and growth prospects, enabled by and apparel company in Kona, Hawaii. proac>ve superior management and Boards. Among other previous posi>ons, David has served as CEO of Well Renewal, a Michael served as both COO and CEO of a publicly traded company where he diversiﬁed oil and gas services company in Tulsa, Oklahoma; CEO of English oversaw a complete turnaround of the company, concluding with a $5MM debt Language Learning and Instruc>on System, a publicly traded educa>onal restructuring and spinning oﬀ a public en>ty. sofware company in Sandy, Utah; as a member of the Board of Directors and Vice President of Strategic Planning for iMall, a publicly traded Internet company His previous posi>on was both as CFO and COO for FSA, a Utah Consor>um in Provo, Utah and Los Angeles, California; as a Vice President of Investment transac>ng over $92 million annually, and specializing in land development, Banking for Catalyst Financial in Connec>cut; and as general counsel to engineering, design, construc>on, ﬁnance and marke>ng. Michael’s numerous public and private companies. responsibili>es at FSA included, planning and direc>ng all aspects of the organiza>ons opera>onal policies, objec>ves and ini>a>ves, with a focus on David was an associate in the Mergers & Acquisi>ons and Corporate Finance strategic, tac>cal, and opera>ons management. Michael was primarily departments at the law ﬁrm of Skadden, Arps, Slate, Meagher & Flom in New responsible for the a]ainment of the organiza>ons short-‐ and long-‐term ﬁnancial York, NY. and opera>onal goals, as well as ensuring future growth. David received his B.A. in History from Weber State University in 1990 and his Michael has also worked as Private Banking VP for Bank of the West, managing, J.D. from New York University in 1993. preserving and crea>ng wealth for high net worth individuals and companies. He worked directly with Bank of the Wests Asset Management Group, Wealth Investment Group and Real Estate Investment Trust Group. Michael received his undergraduate degree from the University of Maryland, College Park, and graduate degree from American University in Washington DC.
MICHAEL DANCY ASSOCIATES & DDR Services BIOS Associates includes: Michael Dancy spent the last ten years in the trenches of the public ﬁnance and corporate structure world as the President of M.E. Dancy Consul>ng Services, • Broker Dealer relaTonships Inc. Michael’s client list included numerous BioMedical ﬁrms, an IP Broadcast • Access to Capital markets Television Media and Network Company, an Air Cargo Company and several • Merger and AcquisiTon professionals companies developing green energy solu>ons including an environmental energy technology company focused on hybrid drive train development and geothermal • SEC PracTce aorneys power development and technology licensing of renewable geothermal electric • SEC PracTce AccounTng Firms power plants with one opera>ng plant in southern Utah and eight ac>ve and early stage projects in four western United States: Utah, New Mexico, Nevada • Public and Investor RelaTon Firms and Oregon, as well as a concession for 100,000 acres in Indonesia. • Brokerage Firm Market Makers Each of these public companies underwent signiﬁcant corporate incuba>on With DDR you can: including the placement of key management and public and private ﬁnance on Gather compeTTve intelligence and industry insight -‐ their way to be acquired, furthering their corporate objec>ves or transi>on to na>onal exchanges such as the New York Stock Exchange. Prior to his experience with analy>cal project research with the public ﬁnance world, Michael served as the CEO of MedQuest Benchmark your ﬁnancial performance and capital Pharmaceu>cals of Utah. structure against your peers Monitor and assess risk within your counterparty banks, Michael spent 12 years in special projects, program management and suppliers, partners and clients engineering with McDonnell Douglas/Boeing, working on numerous government Determine your strategic growth plan and iden>fy and commercial programs domes>cally and interna>onally. poten>al acquisi>ons, partnerships and funding op>ons Gain unique transparency into mul>ples, valua>on and Michael received a Master of Science degree from the University of Southern pricing for comparable M&A, equity, bond and loan California in Systems Management and a Bachelor of Science degree from the California Polytechnic University at San Luis Obispo in Aeronau>cal Engineering. transac>ons Dancy’s further educa>on path includes undergraduate work at Pasadena’s Monitor global market developments and economic California Ins>tute of Technology in Mechanical Engineering and Composite indicators that impact your business Design and Structural Analy>cs at UCLA (University of California at Los Angeles). IdenTfy the most appropriate funding soluTon and reduce your cost of capital
Business Services Business Process Model (DDR Assists with the IntegraTon) BUSINESS SUMMARY IPO Development DTC Filings Current Report Filings (10Ks &10Qs) PPM Development Capital Forma>on Strategy SEC & Legal Subscrip>on Agreements S1 IPO Filings FINRA Filings Funding & Contract Reviews Licensing Development JV Development Debt Restructuring Assist company to complete target acquisi>ons Business Plan Development Core Business Market Strategy & Research Segmenta>on Strategy Assist company with management team Mergers & Acquisi>on Advisory Roll-‐up Strategy Develop funding strategies for growth & corporate capitaliza>on Opera>ons Improvement Supply Chain Improvement Funding Strategy Exit Strategies Provide project funding support to reach corporate goals OperaTonal Structure Summary DDR & Associates oﬀers unique solu>ons and services to its clients which range from small privately held companies to small to midcap publicly DDR & Associates traded companies within the OTC, NASDAQ, AMEX and NYSE markets. Once a client is organized on a ﬁrm strategic, ﬁnancial and opera>onal founda>on, we introduce our clients to select members of our investor and partner network that have an expressed interest in Public Oﬀerings, Private Placements, Licensing Agreements, Debt or Exit Strategy. IPOs Mergers We approach your business as though it is our own. Our success can only and Strategy & IR & Exit be measured by your success. Our clients beneﬁt from our long Legal standing rela>onships with investors, bankers, corpora>ons, VCs, and Capital corporate law ﬁrms. Our commitment to ongoing client service, quality of deliverables, strategic advice, and candid feedback has ensured the Forma>on best possible outcomes and is the founda>on of our long-‐term strategic alliances.
Typical DDR Deliverables – Companies should expect the following when through the DDR process TYPICAL DDR DELIVERABLES The basic error made by most private companies is not beginning early enough to prepare for a private ﬁnancing, or a public oﬀering as part of a transi>on to a na>onal exchange. The result is untold millions lef on the table, or worse, transac>ons are never consummated. The seeds of a successful na>onal exchange lis>ng are sewn months/years in advance. Although Public oﬀerings are each dis>nctly diﬀerent processes, the people signing the checks ul>mately all need to see the same basic things in or about a company, irrespec>ve of the type of transac>on. The following are steps that dont cost a lot, but can make a huge diﬀerence. CLEAN UP THE BALANCE SHEET The ﬁrst ﬁnancial statements given to poten>al investors or buyers set the stage. Subsequent revisions are at best viewed with skep>cism. If owners want to pull out excess cash or retain personal ownership of real estate, equipment, copyrights or patents, get them oﬀ the balance sheet now. Loans to the company from shareholders should be replaced by bank debt, even if the shareholder has to pledge the company’s payoﬀ as addi>onal collateral for the new bank loan. Receivables due from oﬃcers or shareholders should also be cleared up. It is important to “come clean” with a company’s equity structure at the onset. This promotes trust between the balance sheet and poten>al investors. Investors want to make sure there are no “side deals” that exist which might nega>vely inﬂuence their equity posi>on. HAVE AUDITABLE FINANCIALS Audited ﬁnancials add value and may make the diﬀerence between doing the deal or not. (For almost all IPOs at least two full years of audited statements are mandatory.) If your ﬁnancials aren’t audited, at a minimum have a credible CPA observe year-‐end inventory and ﬁle it away. The cost is nominal, and it usually makes a retroac>ve audit possible if other accoun>ng records are in order. MANAGE THE INCOME STATEMENT Investors, buyers and underwriters all look for consistent earnings and growth. Peaks and valleys make them nervous. Earnings and growth to a degree can be managed within the bounds of generally accepted accoun>ng principles (GAAP). Tax deferral is no longer the main objec>ve. Spikes and dips in year-‐to-‐year proﬁts reduce credibility and value, but in a smaller company can be smoothed out by increasing or decreasing reserves, giving or postponing bonuses or capitalizing or expensing, where the op>on exists. Also, within bounds of accoun>ng rules it is perfectly legi>mate for ﬁnancial reports to be diﬀerent from tax returns. Income statements can be "recast" afer the fact to add back discre>onary expenses such as excess owners compensa>on and perks. If an IPO is the objec>ve, however, high-‐ >cket perks should be eliminated now because you can’t use recast ﬁnancials in an IPO. Every $1 spent in a year can reduce the value of the company in an IPO by $10, $15 or more. If private investment or sale is a more likely goal, at least keep discre>onary expenses readily iden>ﬁable so recast statements are easy to track and reconcile. FILL GAPS IN MANAGEMENT Most investors, underwriters and buyers consider management their top priority. Fill gaps in management, either internally or from the outside, sooner rather than later, and give people already on board the right >tles. Companies with no Vice Presidents make management look thin, and managers with 60 days tenure aren’t par>cularly inspiring. Also, there should be at least the blueprint of a succession plan in place, and senior management should have meaningful and well thought-‐out answers as to their future inten>ons and expecta>ons. Key execu>ves should have professionally prepared employment, op>on and incen>ve agreements in place before discussions start. Seek outside help to determine whats customary given your circumstances and considered acceptable to investors, buyers or underwriters. POSITION THE COMPANY FOR THE RIGHT COMPARISONS Investors and buyers judge by comparison. Maintain a running comparison of your opera>ng and ﬁnancial sta>s>cs vs. those of your peers and compe>tors. Prospectuses, 10K’s and annual reports are excellent sources, as are trade associa>ons and bankers industry proﬁle books. A fair comparison may require changing your accoun>ng categoriza>ons. DDR will study security analysts’ reports on companies in your industry and determine: a) which similari>es you want to reinforce, b) which you should distance yourself from; and c) how to accomplish that. Also, try to determine a range of values for your business in the context of a sale, ﬁnancing or IPO, based on what you can glean from public and trade sources.
Typical Projected Timeline TYPICAL DDR CLIENT -‐ PROJECTED TIMELINE PUBLIC SEC FILING PROCEDURE PUBLIC COMPANY MILESTONES (36 MONTHS) COMPLETE 10K/Q AND OTHER SEC FILINGS COMPLETE S1 REGISTRATION RESPOND TO S1 COMMENTS FROM SEC SIT QUIETLY AND INCUBATE COMPANY CONDUCT INTERNAL FINANCE AUDITS MAKE APPLICATION TO DTC AND FINRA MAKE APPLICATION TO NATIONAL EXCHANGE INVESTMENT MILESTONES (36 MONTHS) INITIAL VALUATION OF 20M 500K SHARES ISSUED @ $1 5M SHARES ISSUED IN STAGES COMMENCERATE WITH BUSINESS @ AVG $3 INITIAL DILUTION (20M SHARES) SECONDARY DILUTION (20M SHARES @$5) 500K SHARES – 36 month incuba>on CAPITAL (SECONDARY AT TIME OF NATIONAL EXCHANGE) 5M SHARES – 18-‐24 MONTH ACQUISITION CAPITAL 12.5M FOUNDER SHARES 40M SHARES ISSUED -‐ $5/SH SECONDARY 2M DDR SHARES – TRANSACTION FEE = 200M ADDITIONAL MARKET CAP AFTER 24 MONTHS 48 Month Projec>on @ $10/Share Poten>al Investor Liquidity (3M Dollars @$3/SH) = 400M MARKET CAP BUSINESS MILESTONES (36-‐48 MONTHS) COMPLETE product development Customer Acquisi>on/Expansion Grow Produc>on Capabili>es ESTABLISH INITIAL VALUATION (20M) WAYPOINT VALUATION (60M) WAYPOINT VALUATION (200M) Ini>al Customer Base Customer Base – Grows substan>ally Start Public Oﬀering Road show(6 months) Should be EBITDA approximately 10M/yr Should be EBITDA approximately 20M/yr