Revenue Model

The Portable Hydroelectric Generators base model made by Techo will be sold at $699.99 to be competitive with other fossil fueled generators. Through further development and projected demand, a high-end model will be developed and sold for $1,399.99. We project a large initial order when our product launches to accommodate the SBIR mission. After that, throughout year one, we will sell a slowly increasing number of units from 50 units per month to 300 units per month for our base model. The high-end product would be developed throughout the first year and will be designed with feedback from the base model and increased production of power. This product will launch during Q3 of our first year as well, selling a smaller number of units compared to the base model. The second and third year will rapidly increase sales of both models up to 3500 units of our base model and 400 units of our high-end model by Q4. This is expected from our social media presence, trade shows, and developed sales team.

COGS

Using wholesale prices found online, the estimated cost of goods sold will be $235 for the base model. This includes the parts needed for the hydroelectric generator: power inverter, single phase generator, propeller blade, gearbox, float, and fiberglass materials. The estimated time to manufacture the product with the pieces would be 3 hours for a single unit, therefore the estimated manufacturing cost would be around $75. The estimated cost of the high-end model will be $345 including upgrades parts the base model has. The estimated manufacturing time is slightly higher at 4 hours because of the bigger model. Which estimates the cost to be $100 to manufacture a single unit

Personnel

Techno personnel model begins with a small work force in year one. There will be only one executive as the CEO that makes a below average salary of $90,000 with most likely an equity shares in the company. As the company transitions into a larger operation in year 2 and year 3, a CFO and a COO are added with similar compensation to the CEO. This is done to build an executive structure as the number of employees grows.

The research and development team will begin with a hardware developer, a scientist and technician. These people will help with problem solving and development on the high-end model releasing within our first year. The second year will include a senior software developer and an additional technician added to the team. This is decided to possibly create a mobile app integration to the future models of the hydroelectric generator. Year 3 adds another hardware developer and junior software engineer as we plan to expand the generators functions.

The Sales team for the portable hydroelectric generator is very important to the growth of our company. That is why we have 2 direct salespeople with a 3rd joining halfway through year one. Year 2 is projected to hire 2 more salespeople and a sales manager to increase volume being sold. Year 3 continues the amount of salespeople to 2 sales managers and 6 direct salespeople.

The marketing team of our company is important to spread the word about our product. A Web developer is needed for a website that is able to support online transactions. There will be 2 customer service employees by the end of year 1. There will also be a social media person to put our name out onto the internet. As the company grows into year 2 and 3 there will be 2 product managers, 2 additional web developers, 1 additional customer service and social media employee. It is important for our company to have a good online presence to both give customer support or to interact with people.

Techno will have an accountant to keep track of sales and other information. Since the company will be rapidly growing, an additional accountant will be added by the beginning of year 3. There will also be a general assistant added in the middle of year 1 and 2 additional assistants added by year 3.

All employees' salaries are based on national occupational averages with the exceptions of the executive team where they will most likely receive an equity share of the company for performance incentive.

SG&A

The taxes and benefits of our employees are unchanged from the assumed amounts. Since sales are very important for the profit of our company, we have incentivized commissions of our product to be 10%.

The annual costs of our marketing will be $57,000 annually. This is an important sector for us to grow our product and brand. Most of this amount is spent on advertising, social media, consultants, and trade shows.

To continue research and development of the portable hydroelectric generator, a monthly cost of $27,500 is dedicated to equipment rental, supplies, and consultants.

Other monthly expenses we will have been: $10,000 for rent, $3600 for telephone, utilities, internet, and other miscellaneous office supplies. $1000 is allocated for insurance, general travel, and travel allowance. Other costs we will have been $3000 each for legal and human resources services.

Financial Analysis

Our income statement calculates that we will have a deficit within our first year of operations of -$758,000 with no financial help. Year 2 will project a positive net income of $205,000 and Year 3 projects a higher net income of $1,979,000. Because of the heavy startup costs and large initial investment, bootstrapping is not an option. Seed funding will be necessary along with possible personnel investment. Enough money to initially buy the inventory, hire the personnel, and establish the portable hydroelectric generators brand is necessary. This should be around a $1,000,000 investment in exchange for a 10% equity stake of the company. After year 1, the company should be profitable and able to sustain on its own.

Please summarize your capital plan and specify a deal structure for your capital plan:

1. How much capital do you need?

2. What is the use of funds?

3. Deal Structure

4. General Terms

5. Valuation