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Commercialization Plan
Executive Summary
1. Value Proposition
1.1 The Problem
Multiple problems are associated with the use of traditional fossil fuels. Concern
over emission of CO2 and other pollutants is increasing as worldwide demand for
electricity grows. Fluctuations in the price of fossil fuels also negatively impacts national
economies. Finally, dependence on fossil fuels can leave societies vulnerable to supply
interruptions.
The fuel cell offers a high-efficiency, low-emission alternative to coal burning
power plants and gasoline engines. The clean generation system uses hydrogen as a fuel
to produce electricity, with water as a byproduct. Though it has great potential and is
embraced by industrial giants such as General Electric, Siemens, and Bosch, obstacles to
adoption include (a) lack of hydrogen infrastructure, (b) short useful life of certain
component parts, (c) reliance on fossil fuel as hydrogen source, and (d) high unit cost.
Fuel cell companies have not yet been profitable. High R&D costs offset revenue
gained from the sale of fuel cell units.
3. Business Model
We have grant funding in hand for development of a prototype unit. Upon
successful completion of the prototype, we will seek strategic and financial partners to
manufacture and market the FlexFormer.
Strategic partners will include a gasifier manufacturer and a fuel cell developer.
Partners will be recruited based upon their complementary capabilities, market niche and
network. Each will benefit from participation in the new company based on the potential
to reach a broader market than they would without this collaboration.
4. Financial Overview
We need to capture only 4% of the burgeoning fuel cell market to achieve profitability in
Year 5.
2008 2009 2010 2011 2012
Revenue
F uel cell market size (25% CAGR) $1,171,875,000 $1,464,843,750 $1,831,054,688 $2,288,818,359 $2,861,022,949
Penetration Rate (of total fuel cell market) 0.0% 0.0% 0.5% 2.0% 4.0%
Licensing Fee Percent of F uel Cell Retail Price 2.0% 2.0% 2.0% 2.0%
Total Revenue $0 $0 $183,105 $915,527 $2,288,818
Expenses
Professional Labor + Direct Overhead
Executive Management (CEO, COO, CFO etc.)
F TE Headcount - Executive 1 1 1 2 2
$ annual labor expense - Executive $90,000 $120,000 $120,000 $240,000 $240,000
Technical Staff (R&D)
F TE Headcount - Technical Staff 3.5 5 4 4 5
$ annual labor expense - Technical $315,000 $450,000 $360,000 $360,000 $450,000
Sales/Marketing
F TE Headcount - Sales/Marketing 0.25 1.5 3 3 3
$ annual labor expense - Sales/Marketing $17,500 $105,000 $210,000 $210,000 $210,000
Customer Service
F TE Headcount - Customer Service 0 1 3 3 3
$ annual labor expense - Customer Service $0 $70,000 $210,000 $210,000 $210,000
Indirect O/H
Indirect O/H rate (% Labor + Direct O/H) 25% 25% 25% 25% 25%
$ Indirect O/H $105,625 $186,250 $225,000 $255,000 $277,500
Totals
Headcount FTE (professional staff) 4.75 8.5 11 12 13
Labor + Direct Overhead $422,500 $745,000 $900,000 $1,020,000 $1,110,000
Indirect Overhead $105,625 $186,250 $225,000 $255,000 $277,500
TOTAL EXPENSES $528,125 $931,250 $1,125,000 $1,275,000 $1,387,500
Operating Income
Operating Income (loss) $ (528,125) $ (931,250) $ (941,895) $ (359,473) $ 901,318
Cummulative Cash F low from Operations ($528,125) ($1,459,375) ($2,401,270) ($2,760,742) ($1,859,424)
Performance Metrics
Operating Margin -514% -39% 39%
Headcount 4.75 8.5 11 12 13
Revenue per Employee $0 $0 $16,646 $76,294 $176,063
% of Revenue
R&D 197% 39% 20%
S elling & Marketing 229% 46% 18%
G&A 188% 54% 23%
Cost of Capital
Terminal Value (20% Growth rate)
NPV
Financing
F inancing Income
Round 1 $750,000
Round 2 $1,500,000
Round 3 $1,000,000
Cash Balance $221,875 $790,625 $848,730 $489,258 $1,390,576
5. Management Team
Chief Executive Officer, to be determined
Ideal candidate will have experience with start up companies, military experience or
energy industry experience.
Chief Marketing Officer, to be determined
Ideal candidate will have experience in both engineering and business to business
marketing.
Chief Operations Officer, to be determined
We hope to borrow talent from a strategic partner to assist with manufacturing &
assembly.
Chief Technical Officer, Johannes Schwank, Ph.D.
Johannes Schwank is a Professor of Chemical Engineering at the University of Michigan.
He has extensive research experience in the area of heterogeneous catalysts and currently
serving as a Director of Transportation Energy Center.