Company Logo
Framastat Systems Inc.!

The	
  Promise	
  Of	
  Framastats	
  Delivered	
  
September 2013

Company Logo
Team	
  in	
  a	
  graphic	
  format	
  
CEO
General
Partner

VP Sales

CTO

Venture
CFO
Partner

Roger
Rabbit

Fred
Flint...
Agenda	
  
Solution
Market
Technology & IP
Roadmap
Financials & Financing
Confidential: Do Not Distribute Without Written ...
50,000	
  Foot	
  View	
  
•  Mantra: The Promise Of Framastat Delivered
•  Pain: Location Systems are expensive &
• 
• 
•...
Status	
  
Market Development: $11M in signed trials with $180M rollout value

◦ 
◦ 
◦ 

Giant Retailer
Boeing
Monsanto

P...
Pain:	
  	
  Location	
  System	
  Too	
  Slow,	
  
Costly	
  &	
  Not	
  Accurate	
  Enough	
  To	
  
Solve	
  Real-­‐Wor...
Painkiller:	
  	
  Company	
  Makes	
  Location	
  
System	
  Practical	
  &	
  Affordable	
  
•  100X greater accuracy tha...
Company	
  Is	
  100x	
  More	
  Accurate	
  Than	
  
Other	
  Location	
  Systems	
  

Them
1

Them
2

US!
Them
3

Confid...
Company	
  Has	
  Lowest	
  Deployment	
  &	
  
Ownership	
  Cost	
  
Deployment Cost

100x

Them 1

Them 2

10x
1x

Them ...
Company	
  Vs.	
  Competitors	
  Features	
  &	
  
Costs	
  
Company
Tag

Competitor 1

$

$

yrs.

yrs.

Packaged tag cos...
Agenda	
  
Solution
Market
Technology & IP
Roadmap
Financials & Financing
Confidential: Do Not Distribute Without Written ...
Our Industry Ecosystem
Our Customers

.

Representative Vendors

Chips

2012
TAM

PA Salsa
Systems

Nacho Makers

Restaura...
Our	
  Market	
  Is	
  Growing	
  Fast	
  

•  Exponential growth rate based on current (2G) products
•  Introduction of C...
Market	
  Forecast	
  by	
  Product	
  

•  With Company’s introduction of low cost tags and readers, we
expect the Hardwa...
Large	
  Application	
  Markets	
  Will	
  Be	
  
Energized	
  By	
  Lower	
  Cost	
  Solution	
  
•  Asset tracking: $
• ...
Competition	
  Is	
  Fragmented	
  (AeroScout	
  Values	
  Industry	
  at	
  $3.6B)	
  

Source: Frost and Sullivan (2012)...
Current	
  Customer	
  Status	
  –	
  NOTE	
  
LOIs	
  where	
  present	
  
Retail: Betacustomer Systems
◦  Five year LOI:...
Agenda	
  
Solution
Market
Technology & IP
Roadmap
Financials & Financing
Confidential: Do Not Distribute Without Written ...
System	
  Overview	
  
Framastat	
  
Components	
  
Tags (passive or active)

Confidential: Do Not Distribute Without Writ...
Advantages	
  of	
  Company’s	
  	
  
Solution	
  
Low Cost &
Small Form Factor

• 
• 

Readers are 100 times less costly ...
Operation	
  Of	
  Framastat	
  System	
  
1

Narrowband signal powers tag,
initiates query session

2

UHF

Beacon
Narrow...
Current	
  State	
  Of	
  Development	
  
Passive Tag:
§ 
§ 
§ 
§ 

Chip:180 nm CMOS, 1x1 mm
Tag substrate: 4 cm x 8 c...
Strong	
  Patent	
  Protection	
  
• 

Issued: Asymmetric Dual Mode Communications
◦  US Patent # 7,180,421; filings inclu...
Agenda	
  
Solution
Market
Technology & IP
Roadmap
Financials & Financing
Confidential: Do Not Distribute Without Written ...
Achievements So Far…
Today
Technology & IP

Product platform completed
3G η=30% BW=100 MHZ •
• Engaged at&t,
Alcatel-Lucen...
Where We’re Going…
Technology & IP

2nd Generation RRH/DAS •

Interference Cancellation System Repeater
3G PA η=45%
4G η=2...
Agenda	
  
Solution
Market
Technology & IP
Roadmap
Financials & Financing
Confidential: Do Not Distribute Without Written ...
Financial Summary: Breakeven
In 2010 With $12M Financing
2008
Revenues ($K)
Gross Margin ($K)
Gross Margin (%)
Expenses ($...
Milestones	
  &	
  Budget	
  

•  Funding need: $6M in two $3M tranches
◦ First tranche has greater liquidity preference

...
Financing Plan
•  Angel Round:
◦ 
◦ 
◦ 
◦ 

$2.4M in convertible notes (2011)

Developed 3G & 4G Pre-production units
Init...
Use of Proceeds
•  Complete paid trials & scale-up for subsequent
roll-outs

•  Engineer small form-factor “brick” & effic...
Exit Comparables
Company

Symbol

Market Segment

Market
Cap

2007
Revenue

Last 12
mos Rev

Last 12
mos P/R

Last 12
mos ...
Contact Information

Startup Capital Ventures!
Backup	
  Slides	
  Or	
  Appendix	
  

Startup Capital Ventures!
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Long Form Business Plan Format

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Long Form Business Plan Format

  1. 1. Company Logo Framastat Systems Inc.! The  Promise  Of  Framastats  Delivered   September 2013 Company Logo
  2. 2. Team  in  a  graphic  format   CEO General Partner VP Sales CTO Venture CFO Partner Roger Rabbit Fred Flintstone Homer Simpson Betty Boop CAS ICCP Ventures WOODSIDE FUND SFU OKC Innovation Center BSEE UC Irvine MBA Stanford BA & MBA Northwestern Kellogg BA Holy Cross, MBA Wharton BA Principia College, MBA NYU-Stern Startup Capital Ventures! 2
  3. 3. Agenda   Solution Market Technology & IP Roadmap Financials & Financing Confidential: Do Not Distribute Without Written Permission from Company Startup Capital Ventures!
  4. 4. 50,000  Foot  View   •  Mantra: The Promise Of Framastat Delivered •  Pain: Location Systems are expensive & •  •  •  •  •  •  •  perform poorly Painkiller: low power, low cost, long range, high accuracy solution Initial Market: $XB inventory, shrinkage & asset tracking markets Technology: Magic Pixie Dust (MPD)… Key IP: MPD is patented! Team: Rock star pixies Invested: $X.X from Intel, SCV Startup Capital Ventures! Seeking: $6M
  5. 5. Status   Market Development: $11M in signed trials with $180M rollout value ◦  ◦  ◦  Giant Retailer Boeing Monsanto Product ◦  Complete demonstrable system incorporating all elements: active & passive tags, reader / digital antennas, master readers, real-time software Capabilities: ◦  ◦  Extremely low power RF-CMOS based Location System & Framastat Software Six employees Founded 2006 Confidential: Do Not Distribute Without Written Permission from Company Startup Capital Ventures!
  6. 6. Pain:    Location  System  Too  Slow,   Costly  &  Not  Accurate  Enough  To   Solve  Real-­‐World  Problems   •  Retail shrinkage management requires low cost, •  •  •  high accuracy & real time not possible today Inventory management requires low cost & high accuracy not possible today Asset tracking requires real time & high accuracy not possible today Other Application Confidential: Do Not Distribute Without Written Permission from Company Startup Capital Ventures!
  7. 7. Painkiller:    Company  Makes  Location   System  Practical  &  Affordable   •  100X greater accuracy than other locational •  •  •  •  systems (2 cm / 1 inch)* Real time system 100X lower tag cost (we will not price 100X lower!) 3X greater range (up to 30m / 100 feet) 10X lower tag power consumption ◦  5X greater battery life in active systems •  10X lower system cost Confidential: Do Not Distribute Without Written Permission from Company Startup Capital Ventures!
  8. 8. Company  Is  100x  More  Accurate  Than   Other  Location  Systems   Them 1 Them 2 US! Them 3 Confidential: Do Not Distribute Without Written Permission from Company Startup Capital Ventures!
  9. 9. Company  Has  Lowest  Deployment  &   Ownership  Cost   Deployment Cost 100x Them 1 Them 2 10x 1x Them 3 US! $1 $50 $100 Recurring Cost (Tag Cost) Lowest cost of ownership at the highest performance Confidential: Do Not Distribute Without Written Permission from Company Startup Capital Ventures!
  10. 10. Company  Vs.  Competitors  Features  &   Costs   Company Tag Competitor 1 $ $ yrs. yrs. Packaged tag cost $ $ Tag cost / year $ $ Reader / D.A. $ $ Master Reader $ $ Software $ $ 1,000 tag system cost $ Competitor 2 $ Tag battery life Locational accuracy Range Real Time Confidential: Do Not Distribute Without Written Permission from Company Startup Capital Ventures!
  11. 11. Agenda   Solution Market Technology & IP Roadmap Financials & Financing Confidential: Do Not Distribute Without Written Permission from Company Startup Capital Ventures!
  12. 12. Our Industry Ecosystem Our Customers . Representative Vendors Chips 2012 TAM PA Salsa Systems Nacho Makers Restaurants COMPANY $450M $4-6B RF Subsystems $36B $450B Sources: iSuppli 06, IDC March 12 12 Startup Capital Ventures!
  13. 13. Our  Market  Is  Growing  Fast   •  Exponential growth rate based on current (2G) products •  Introduction of Company’s low cost / high performance products will expand the market for Location System. Source: Frost and Sullivan (2012) Confidential: Do Not Distribute Without Written Permission from Company Startup Capital Ventures!
  14. 14. Market  Forecast  by  Product   •  With Company’s introduction of low cost tags and readers, we expect the Hardware segment to shrink while the Tags segment grows due to more deployments Source: Frost and Sullivan (2012) Confidential: Do Not Distribute Without Written Permission from Company Startup Capital Ventures!
  15. 15. Large  Application  Markets  Will  Be   Energized  By  Lower  Cost  Solution   •  Asset tracking: $ •  Inventory management: $ •  Shrinkage management: $ •  Other 1: $ •  Other 2: $ Sources: Confidential: Do Not Distribute Without Written Permission from Company Startup Capital Ventures!
  16. 16. Competition  Is  Fragmented  (AeroScout  Values  Industry  at  $3.6B)   Source: Frost and Sullivan (2012) •  •  •  •  •  No dominant player / technology in the market AeroScout was acquired in 2012 by Stanley Black & Decker for more than $200 million Most players are focused on a specific vertical Company’s products apply to all segments/verticals Company’s dramatically lower cost + higher performance solution could produce a dominant crosssegment player Confidential: Do Not Distribute Without Written Permission from Company Startup Capital Ventures!
  17. 17. Current  Customer  Status  –  NOTE   LOIs  where  present   Retail: Betacustomer Systems ◦  Five year LOI: $30 million (in US alone) by year 3 with growth planned to ◦  ◦  ◦  nearly 500M tags / year in five years Theft prevention, merchandizing, compliance Initial rollout in 2013 Addressable market > $10 B U.S. Government: Osterhout Design Group ◦  3 years revenue : $20 million with exponential growth for both active and ◦  ◦  ◦  passive tags Osterhout Design Group Warehouse inventory management and goods tracking Addressable market > $1 B Manufacturing: Boeing & Monsanto ◦  3 year revenue: $5 million with exponential growth for both active and ◦  ◦  passive tags Tools and parts tracking Addressable market > $1 B Confidential: Do Not Distribute Without Written Permission from Company Startup Capital Ventures!
  18. 18. Agenda   Solution Market Technology & IP Roadmap Financials & Financing Confidential: Do Not Distribute Without Written Permission from Company Startup Capital Ventures!
  19. 19. System  Overview   Framastat   Components   Tags (passive or active) Confidential: Do Not Distribute Without Written Permission from Company Startup Capital Ventures!
  20. 20. Advantages  of  Company’s     Solution   Low Cost & Small Form Factor •  •  Readers are 100 times less costly and 20 times smaller than Gen2 Lowest cost of ownership Long Range & Low Power •  •  Increased read distance (50-100 meters) Power : any source, any frequency Precise Location of Many Tags •  •  Achieve resolutions of 2-3 inches 1000s of reads per second per reader Multipath Fading Immunity •  •  Robust tag detection and location determination Signal propagates to reader through openings and cracks Low Power & Long Life •  •  Tag chip consumes average of 2µW (including memory) Enables alternative power options: micro solar cell, MEMS harvesters, etc. Confidential: Do Not Distribute Without Written Permission from Company Startup Capital Ventures!
  21. 21. Operation  Of  Framastat  System   1 Narrowband signal powers tag, initiates query session 2 UHF Beacon Narrowband Transmitter Receiver harvests RF power and wakes up UHF Passive UWB Tag NB Receiver + Power Harvester 4W EIRP: 10m range Digital Antenna UWB Receiver Single Chip/ Very Low Cost 3 UWB UWB 6dBm: 50-100m range Memory + Logic UWB Impulse Transmitter Tag transmits UWB impulses Confidential: Do Not Distribute Without Written Permission from Company Startup Capital Ventures!
  22. 22. Current  State  Of  Development   Passive Tag: §  §  §  §  Chip:180 nm CMOS, 1x1 mm Tag substrate: 4 cm x 8 cm Sensitivity: -15 dBm (915 MHz) @2uA load Impulse strength: 6dBm UWB Antenna Narrowband Antenna Active Tag: §  §  §  §  Chip:180 nm CMOS, 0.5x0.5 mm Tag substrate: 2.5 cm x 2.5 cm Range: more than 100 meters Current: <1uA (cell life X yrs.) Digital Antenna (DA) Reader Chip: §  §  180 nm CMOS, 2.5x2.5 mm Sensitivity: ~ 60 dBm Reader Antenna: §  §  §  Wide angle circularly polarized 2”x2” High gain circularly polarized 2”x4” High gain linearly polarized 4”x4” Software: §  Software for identification and location Confidential: Do Not Distribute Without Written Permission from Company Startup Capital Ventures!
  23. 23. Strong  Patent  Protection   •  Issued: Asymmetric Dual Mode Communications ◦  US Patent # 7,180,421; filings include PCT as well as individual countries Japan, ◦  ◦  China, and European Union Radio frequency tag and reader with asymmetric communication bandwidth Integration of ultra wideband and narrowband (continuous wave) •  Allowed: Low Power Modulation and Massive Medium Access Control ◦  US Patent Application # 20090051496 is being granted; PCT is filed •  Allowed: Inductive Antenna Coupling ◦  US Patent Application # 20090264067 •  + 6 other pending/provisional patents filed Confidential: Do Not Distribute Without Written Permission from Company Startup Capital Ventures!
  24. 24. Agenda   Solution Market Technology & IP Roadmap Financials & Financing Confidential: Do Not Distribute Without Written Permission from Company Startup Capital Ventures!
  25. 25. Achievements So Far… Today Technology & IP Product platform completed 3G η=30% BW=100 MHZ • • Engaged at&t, Alcatel-Lucent, ADC, Cisco/Navini, etc. Filed 12th patent application • 3G & 4G Alpha Prototypes Demos • “B” rev completed • • Acquired SeRon Technologies Hired VP of Engineering • Townsend and Townsend issued IP “freedom to operate” • • Engaged Chinese prospective customers “A” rev completed • & partners Linkwave, Huawei, ZTE, & Mobi Antenna 1st full time engineering employees • • Beijing subsidiary 1st predistortion architecture patent issued • 25 Business Development • Sunnyvale office • Closed $1M FFF Convertible Notes • Incorporated in Cayman Islands and Delaware Startup Capital Ventures!
  26. 26. Where We’re Going… Technology & IP 2nd Generation RRH/DAS • Interference Cancellation System Repeater 3G PA η=45% 4G η=28% BW=Ultrahigh • Reconfigurable PA 3G η=42% 4G η=25% BW=200 MHz • • Q2: TD-LTE • Q3: 1st Qualifications, China Production Starts Linear Repeaters & RRH/DAS Beta Testing • Q2: 1st Certification & Production Release 3G η=40% BW=100 MHz 4G η=23% BW=100 MHZ • • Q1: First Customer Samples for Field Trials Full Characterization, Quals Begin Sales & Marketing Team In Place • Q4: Series A Closing Business Development • Q4: Pre-Production Units for Lab Trials Today 26 26 Startup Capital Ventures!
  27. 27. Agenda   Solution Market Technology & IP Roadmap Financials & Financing Confidential: Do Not Distribute Without Written Permission from Company Startup Capital Ventures!
  28. 28. Financial Summary: Breakeven In 2010 With $12M Financing 2008 Revenues ($K) Gross Margin ($K) Gross Margin (%) Expenses ($K) Net Income BT ($K) Investment ($K) Headcount 2009 140 68 49% 5,101 (5,116) 10,000 43 2010 2011 2012 2013 1,655 515 31% 7,809 (7,318) 12,000 70 26,625 14,480 54% 12,863 1,612 92 95,326 55,343 58% 20,677 34,666 116 157,440 94,959 60% 29,424 65,535 160 252,805 152,348 60% 41,555 110,792 223 105 35 140 745 350 560 1,655 9,825 9,200 7,600 26,625 37,940 28,136 29,250 95,326 41,500 48,440 67,500 157,440 26,125 52,680 174,000 252,805 30 10 40 210 100 28 338 2,950 2,810 380 6,140 12,650 8,960 1,800 23,410 15,700 16,800 4,860 37,360 11,350 20,400 14,550 46,300 Revenue by Product 3G PA 4G PA Repeater / RRH / DAS Total ($K) Units by Product 3G PA 4G PA Repeater / RRH / DAS Total FCS Field First Trial Order 28 Volume Ramp Startup Capital Ventures!
  29. 29. Milestones  &  Budget   •  Funding need: $6M in two $3M tranches ◦ First tranche has greater liquidity preference •  Deliverable milestones ◦  $2.5MM revenue in 2014 ◦  Profitable in 2015 Tranche 1: $3.0MM Tranche 2: $3MM Beta Tag, DA, & Master Reader For Betacustomer Q2 Q4 Product Support Tag & Reader Tag, DA, Commercial Master Reader V1 & Provisioning Production Tag, DA & Master Reader 2013 Confidential: Do Not Distribute Without Written Permission from Company 2014 Q4 Startup Capital Ventures!
  30. 30. Financing Plan •  Angel Round: ◦  ◦  ◦  ◦  $2.4M in convertible notes (2011) Developed 3G & 4G Pre-production units Initial customer validations Acquired Alternatives Technologies Inc. Secured broad IP portfolio •  Seeking $6M Series A ◦  ◦  ◦  ◦  ◦  Two $3M tranches – first tranche with 1.5x LPF Initial revenues Build team Execute on three field trials Develop production tags & readers •  $12M Series B in Q3 2014 ◦  ◦  ◦  Profitability Volume production Cash flow positive Startup Capital Ventures!
  31. 31. Use of Proceeds •  Complete paid trials & scale-up for subsequent roll-outs •  Engineer small form-factor “brick” & efficiency enhancements •  Develop remote PA control software •  Deliver 3G & 4G PAs FCS by Q1 2009 •  Establish Asia, North America & European sales & marketing organizations & channel partners . 31 31 Startup Capital Ventures!
  32. 32. Exit Comparables Company Symbol Market Segment Market Cap 2007 Revenue Last 12 mos Rev Last 12 mos P/R Last 12 mos P/E Powerwave Technologies PWAV Wireless Systems 652M 780M 903M 0.7x N/A Clearwire Corporation CLWR WiMax Systems 1.6B 151M 197M 8.1x N/A Alvarion ALVR WiMax Systems 435M 237M 264M 1.6x 38.8x Airvana AIRV Mobile Broadband 328M 306M 216M 1.5x 4.2x Acquisitions Market Segment Acquirer Acquirer Market Price Date Allen Telecom RF Systems Andrew RF Systems $500M 7/2003 Flarion Technologies Flash-OFDM Qualcomm CDMA $805M 8/2005 Navini Networks Mobile WiMAX Cisco IP Systems $330M 10/2007 Andrew Corporation RF Systems CommScope Cable, DSL, FTTN $2.65B 12/2007 as of September 2, 2008 Startup Capital Ventures!
  33. 33. Contact Information Startup Capital Ventures!
  34. 34. Backup  Slides  Or  Appendix   Startup Capital Ventures!

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