Business Plan

Presented by: Bill Bockman, Krista White, Peter Mueller

Version 1.0April 19, 2015

Table of Contents

Executive Summary 3

Company Overview 4

Product 5

Market Analysis

Overview & Trends 6

Target Market 7

Competitive Environment 8

Management Team 10

Operational Strategies

R&D 11

Production 12

Marketing 12

Administrative & Personnel 13

Financial 14

Critical Risks

Market Specific Challenges 15

SWOT 15

Porters Five Forces 17

Contingency Plans 18

Funds Required/Used 19

Appendix

Financial Statements 20

Prototype 22

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Executive Summary

Annihilight aims to revolutionize household cleaning, by harnessing the power of Ultra-violet (UV) lighting technology. The main focus is to create a product that will not only streamline cleaning, but also protect the average household from unnecessary exposure to harsh chemical cleaning products.

The first generation model, the Annihilight, is approximately 6 inch square cleaning device that uses UV light to drastically reduce mold and mildew, essentially making scrubbing the tub a “thing of the past.” The Annihilight will be a battery-powered device set on a timer, where the operator can program the light to run through its cycle at convenient times; whether the operator is at work or asleep in bed. With regular use of the Annihilight system, the average time spent cleaning the bathroom will be effectively cut in half.

The market for UV light cleaning systems is growing rapidly, as more households are moving toward more effective and less toxic methods of disinfection. However many other products on the market require owners to manually operate these systems. The Annihilight is unique in that users can set the device to clean the bathroom at a period of time that does not require constant supervision, nor would it impede on their daily activities. Further, the Annihilight is portable; users can use it to clean multiple bathrooms, kitchen counters, or any other area of the household where mold and/or mildew may be an issue.

Annihilight’s marketing strategy is a two-pronged approach, addressing the desire for convenience and the need for cleaning systems that do not expose consumers to caustic chemicals. No one wants to spend hours cleaning their shower, and Annihilight recognizes that. Using the Annihilight will be fast and simple; the user would select one of three preset time periods, at which time the Annihilight would turn on and begin its disinfection cycle. The user does not have to be present during the disinfection cycle; leaving time for other miscellaneous day to day tasks. Further, the Annihilight is committed to providing a means for consumers to protect themselves from chemical cleaners such as bleach or ammonia. Households who own the Annihilight will reduce their use of toxic cleaning chemicals, thus reducing the risks associated with long-term exposure.

Annihilight’s founders, Bill Bockman, Krista White, and Peter Mueller are committed to the creation of a brand that will modernize household cleaning without sacrificing convenience or health. Annihilight will launch in the summer of 2015, with the first generation Annihilight to be available to the market in fall 2016. Based on preliminary estimates, Annihilight, needs $11,500 to begin manufacturing and testing prototypes.

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Company Overview

Mission Statement: To create a premier line of convenient and environmentally sustainable cleaning systems for the everyday green consumer.

Light emitting diode (LED) devices are improving at an impressive pace and making a significant impact on fields outside of general lighting. With low energy consumption and long operating lifetimes, these LED devices are opening new possibilities for disinfection products. Building on the work of University of Tokushima researchers Yagi, Mori and Hamamoto (2007), Annihilight is pioneering ultraviolet (UV) disinfection technology by utilizing commercially available UV LEDs.1

UV disinfection products are now commonplace in hospitals where concerns over drug resistant bacteria are spurring their adoption. Consumer grade UV products are dominated by disinfecting “wands,” used to sterilize countertops or UV chambers used for cell phones. Annihilight is first to pursue the shower and bath application. We intend to pursue patents for our product.

Annihilight was founded in 2015 with the vision of creating environmentally friendly cleaning systems that are effective and convenient. We strive to create a legacy of UV LED products that are just as effective as traditional household cleaners and that cater to the busy lifestyles of today.

Our objective is to create a patentable product that we can produce and sell directly. In the future, we may explore options including partnering or selling to established firms in the consumer electronics or green consumer goods industries.

Annihilight is currently testing prototypes for the first generation shower disinfection device. The company’s near term goals include:

● Field trials and collection of efficacy data● Obtaining patents● Design improvements and optimization for production● UL safety recognition● Product launch

1 Yagi, Noriyuki, Mirei Mori, Akiko Hamamoto, Masayuki Nakano, Masatake Akutagawa, Souko Tachibana, Akira Takahashi, Toshitaka Ikehara, and Yohsuke Kinouchi. “Sterilization Using 365 Nm UV-LED.” In Engineering in Medicine and Biology Society, 2007. EMBS 2007. 29th Annual International Conference of the IEEE, 5841–44. IEEE, 2007. http://ieeexplore.ieee.org/xpls/abs_all.jsp?arnumber=4353676.

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Product

Annihilight is a battery operated UV LED light used to kill mildew and disinfect showers and bathtubs. Rechargeable batteries and an inductive charging system allow Annihilight to be used in wet locations with high humidity while minimizing the risk of electrical shock. The charging system operates without any wires needing to be plugged in. The device simply sits in a charging cradle.

UV light is dangerous. Annihilight is committed to protecting customers from the photo-biological hazards of UV. Our goal of reducing exposure to chemicals is mute if we trade that hazard for eye or skin damage brought on by UV.

Annihilight approaches safety from four levels. First, labels fixed on the product clearly mark it as a photo-biological hazard and advise that it should not be used in a manner in which the light would shine directly into the consumer’s eyes. Second, Annihilight operates on a time delay switch that will turn the device on either while the user is asleep or at work. The default time is 2.5 hours. An additional safety feature is a photocontrol sensor that will turn off the light should someone enter the bathroom and turn on a light while it is in use. Third, optical design eliminates glare from the light source and distribute light evenly over the shower or bath. Fourth, we use UV-A LEDs, similar to the light found in tanning beds. This light is less damaging than other forms of UV. Before Annihilight will be made available to the public, it will satisfy all requirements to earn an Underwriters Laboratory safety certification.

Future versions of Annihilight will be integrated with home automation systems. The Nest learning thermostat has an open application programming interface (API) that our device can query via the ZigBee wireless protocol. The Nest thermostat has scheduling data and an occupancy sensor that can

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ensure Annihilight product operates when no one is home. A smartphone connection with the Bluetooth low energy standard could be utilized for similar effect. Both of these options can be implemented with minimal investments in additional hardware.

Using precise optics, Annihilight delivers light evenly, killing mildew and germs over a wider area more effectively than any other light source. Mercury free UV LED uses very little energy, just two watts. While UV LEDs do not last as long as LEDs used for general lighting, at 20,000 hours Annihilight’s LED can disinfect for decades before it degrades to 70% of its initial output. Fluorescent and mercury lamps are rated at best to last 9,000 hours and at that point 50% of them have failed.

Cleaning is an unpleasant task. Annihilight will free up consumers from hours of time wasted cleaning and breathing unhealthy fumes. It helps keep showers and bathtubs cleaner, without chemicals, literally at the press of a button. Further, while chemical cleaners overtake the Annihilight in terms of initial upfront costs, our product offers lower costs in the long run, due to its durable design and long-lasting components.

Market Analysis

OverviewThe Household Cleaning Product industry holds a unique position within the Consumer Staples market as an industry that is largely resistant to economic downturns due to their unwavering necessity within the home. In recent years, the cleaning product market has experienced an uptick in growth due to rising concerns about hygiene, the prevalence of bacteria in the home and the spread of infectious diseases. From 2015-2019, growth within the cleaning product US market is expected to grow at a CAGR of 1.89 percent.2 This growth has been largely concentrated within the chemical cleaner subsector. Specifically within the cleaning tools subsector, which is dominated by traditional, established cleaning tools, growth has been relatively stagnant; with the exception of products that are innovative and capture specific niche markets.3

TrendsThere are five important trends within the cleaning product industry: performance, cost-effectiveness, ease of use, environmental awareness, and fragrance, aesthetics, and packaging4. Annihilight effectively satisfies all of these trends as follows:

● Performance : Is the product effective? With regular use, the Annihilight will drastically eliminate mildew growth and the need to use chlorine based chemicals.

● Cost-effectiveness : Does the price accurately reflect the performance of the product? The Annihilight will be competitively priced as compared to the other residential UV cleaning systems on the market. The biggest competitors regarding price will be traditional household cleaners.

2http://www.prnewswire.com/news-releases/household-cleaning-products-market-in-the-us-2015-2019-300020192.html3 http://www.cleaningproductsconference.com/news/what-are-the-main-challenges-impeding-innovation4 http://www.smithersapex.com/news/2013/November/5-important-trends-in-the-cleaning-products-market

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● Ease of use : Is the product easy and convenient to use? The Annihilight’s design is largely driven by the aspect of convenience. Set on a timer, the consumer will not have to be present during the cleaning cycle.

● Environmental awareness : Is the product sustainable and environmentally friendly? The Annihilight prides itself on being environmentally friendly, through compliance with RoHS standards the product will be free of harmful substances such as lead. Further, the Annihilight does not contain any harmful chemicals and it intends to work with North American based suppliers that are committed upholding the same high environmental standards. With regular use of the Annihilight, households will be able to reduce their use of harsh chemical cleaners and instead, move toward “green” cleaners in order to eliminate dirt and grime.

● Fragrance , aesthetics, and packaging : Is the product attractive to the consumer? With a small, sleek and simplistic design, the Annihilight’s modern aesthetic will appeal to consumers who shy away from bulky, overbearing cleaning systems.

Target MarketOne of the fastest growing trends within the cleaning product industry is the green movement. Consumers are moving toward more sustainable and environmentally friendly products with improved formulas that effectively compete against traditional, harsh chemical-laden cleaners. Retail sales for green cleaning products more than doubled from 2007 to 2011, from $303 to $640 million.5 Sales growth among green cleaning products remains strong and steady, as improved formulae make products more effective and consumer demand drives product availability from smaller niche stores to larger retailers such as Walmart and Target.

5https://www.bulldogreporter.com/dailydog/article/green-pr-benefitting-household-cleaning-product-industry-sustainable-lifestyles-exp

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Types of Green Consumers6: ● LOHAS(lifestyles of health and sustainability): Progressive; not concerned about price● Naturalites : Focused on personal health and wellness● Conventionals : Practical; want products that are effective with regards to sustainability;

more conservative spending habits ● Drifters : Not extremely concerned with the environment, buys few green products● Unconcerned: Not concerned with green products; buys products based strictly on

value, effectiveness, and/or convenience

Annihilight’s target market will be mainly LOHAS, with some crossover to appeal to Naturalites and Conventionals; roughly 63% of the green consumer market. Annihilight’s innovative design appeals to the LOHAS’s desire for products that aim at making a significant impact within the industry. Annihilight’s main function is to virtually eliminate bacteria, thus making the home a cleaner, more sterile environment for the Naturalites, whose main concern is to consume sustainable products that improve health and wellness. The most difficult consumer to appeal to will be the Conventionals, who desire quality products at a lower price target. With a LED that lasts 20,000 hours, the Annihilight is a long-lived product that will deliver quality results. Given that the Annihilight can be used extensively over a long period of time, the initial investment for the product will pay for itself in the long run.

Competitive Environment

6http://ecopreneurist.com/2008/04/16/how-to-reach-green-consumers-using-psychographics-to-define-your-target-market/

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Direct competitors of the Annihilight include traditional chemical cleaners as well as other commercial UV cleaning systems.

Traditional cleaners have the competitive edge over Annihilight with regards to initial price; however, they do not offer the same quality with regards to longevity. The LED UV bulb within the Annihilight will last 20,000 hours, or 20,000 cleaning cycles, whereas comparable chemical cleaners such as the Scrubbing BubblesⓇ Automatic Shower Cleaning system will require refills each month. Chemical cleaners will need to be constantly repurchased, whereas the Annihilight will only require a battery replacement after 1000 charges, and a LED replacement after 20,000 hours. Further, the Annihilight poses little risk of harm to consumers, as it runs when the consumer is away; whereas chemical cleaners are harmful and abrasive when they come into contact with skin and eyes.

The emergence of other cleaning systems that utilize UV technology pose a more direct threat to Annihilight. Most common are products such as a UV wand or a vacuum that incorporates UV technology to kill bacteria and pathogens that are picked up. The Annihilight’s competitive advantage over other commercial UV products lies in its inherent convenience; with the Annihilight, consumers are not present during the cleaning cycle, whereas other UV products require the consumer to actively control the product in order to disinfect surfaces. In addition, the Annihilight uses a UV-A technology versus more hazardous UV-C.

Environmentally Sustainable

Price Longevity EffectivenessProduct

Scrubbing Bubbles® Automatic Shower

Wet and Forget® No Scrub Shower Spray

Annihilight

Clorox® Bleach (64 oz.)

Verilux Cleanwave®

$150

$22.99 1 month Cleans soap scum and mildew stains

Kills 99% of germs, allergens & bacteria

667 Months (20,000 hours)

$14.02

Cleans soap scum, mold & mildew stains

3 Months

9 Months Kills 99.99% of germs and bacteria

Kills 99% of germs, allergens & bacteria

300 months (9,000 hours)

$89.95

$22.14

Convenient

Overall, the Annihilight’s innovative design is positioned to be successful in within the market, especially among green consumers. It simplistic design, where the consumer can simply set the timer in order to initiate a cleaning cycle, will appeal to consumers looking to simplify their cleaning routine, and the use of LED UV technology is environmentally sustainable, which will appeal to our target market of green consumers. While the Annihilight has a higher price than its competitors, it offers quality performance at no harm to the consumer, and is clearly the superior product.

Management Team

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Bill Bockman - Founder

As the University of Puget Sound’s 2009 Miki Takeo Memorial Scholar Bill conducted fieldwork in Tokushima Japan, examining the prefecture’s effort to promote its optoelectronics sector. Bill has a successful track record of team work and collaborative engagement in both academia and business. He holds a Master’s degree in International Studies from the University of Washington and Bachelors in Politics and Government from the University of Puget Sound. Bill is currently pursuing a Masters of Finance degree at Pacific Lutheran.

Krista White - Founder

With an extensive background in social research, Krista White is uniquely qualified to lead the Annihilight team in areas such as marketing, communication and general administration. She is committed to cultivating the brand image for Annihilight by ensuring that all Annihilight products meet the high standards demanded by the consumer. Krista holds a Bachelors in Sociology and Political Science from the University of Nevada, Las Vegas, and is currently working toward a Master of Science in Finance at Pacific Lutheran University.

Peter Mueller - Founder

Peter Mueller is an undergraduate at Pacific Lutheran University majoring in Business Administration with a concentration in Finance. Outside of the classroom, Peter is a client associate at Merrill Lynch, captain of the men’s lacrosse team, and serves on the board of the national charity, Hope on the Slopes. Peter has an extensive experience in entrepreneurship, founding Odessa Web Consulting at 17.

Chris Takahashi - Product Design Advisor

Chris is a PhD student in the University of Washington’s Electrical Engineering program. He is the founder of Takahashi Instruments, LLC, and a supplier of novel bio-reactors used in academic and commercial research. Chris brings strong expertise with optoelectronics, mechanical engineering and biology to Annihilight. Chris has previously worked for Fluke and Intel.

Neil Jackson - Prototyping Engineer

Neil has broad expertise in electronics, prototyping and 3D printing. He has provided engineering services on numerous projects for clients in the Puget Sound area. Neil graduated from Duke University with a Bachelor’s in Physics.

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Operating Strategies

Research and DevelopmentR&D will be lengthy but very efficient in terms of capital requirements. Currently, Annihilight is prototyping a UV device with commercially available components and a 3D printed enclosure. Upon completion of field trials, we will incorporate any necessary design changes and ensure compliance with UL safety standards as well as moisture ingress (IP rating) necessary for a moist and humid environment.

The biggest challenge faced in the development stage for the Annihilight will be designing and fabricating a suitable optic for the LED. Annihilight will work with Proto Labs of Maple Plain, MN to develop an optic based on Dow Corning’s novel Liquid Silicone Rubber (LSR) material. Field trials, optimization of the bill of materials, compliance with UL standards and industrial design considerations for our product will take 12 months and cost $11,500. Annihilight will monitor advances in the consumer and commercial UV sanitation market and analyze the progression of UV LED technologies. Innovation in the UV segment of the LED market has been accelerating, especially during the past five years as large LED firms such as Nichia Chemical, LEDEngin, and startups such as Crystal IS release novel devices with greater efficiencies7 LED manufacturing is a highly competitive industry. Both Nichia and LEDEngin have offered competitive pricing to Annihilight. The first 1,000 Annihilight units will consist of a split order of Nichia and LEDEngin LEDs in order to establish flexibility in supplier relations. Annihilight can be designed to work with home automation systems or smart phones to offer additional functionality for our customers. We anticipate reaching a decision on wireless connectivity early on in the development process. Hardware revisions to Annihilight would be relatively minor and the production bill of materials is expected to only increase by $5. However, software modifications and validity testing are expected to be extensive and require additional engineering resources. We anticipate total engineering charges to enable smart/phone or Nest connectivity to cost an additional $10,000 due to the relative accessibility of Nest’s application programming interface (API). Annihilight will implement a kaizen continuous improvement plan to improve quality and decrease costs. The consumer electronics and LED components that underlie Annihilight are in a stage of rapid improvement. New components make it necessary to reverse engineer our product to eliminate unnecessary parts and processes to reduce production costs. Annihilight will approach the design of the product bi-annually to see if there is any opportunity to design a product that has a more appealing visual aesthetic than the one previously built. The Annihilight is a consumer product. Therefore, we must constantly explore ways to reduce costs in order to benefit both the company and the consumer, and continuously look to improve design to increase product appeal.Production

7 “UV LEDs Ramp up the Quiet Side of the LED Market (MAGAZINE).” Accessed April 19, 2015.

http://www.ledsmagazine.com/articles/print/volume-9/issue-2/features/uv-leds-ramp-up-the-quiet-side-of-the-led-market-magazine.html.

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Annihilight will pursue production strategies that add value, diminish costs, and allow us to meet demand and increases in volume. To minimize startup cost, Annihilight will keep assembly in house at a two-car garage in Parkland, Washington, and outsource enclosure manufacturing to Proto Labs. Proto Labs offers production and manufacturing services that are dependable, offer scalability, at an appealing price point. Once demand increase from the Kickstarter campaign and other sales avenues, the company will look to outsource the entire production process.

The suppliers for the required product components have been vetted and selected, based on cost and the ability to supply at different levels of demand. Consistent reevaluation of the bill of materials and the companies that provide them is crucial to ensure that components for the device are meet the necessary standard of quality at a low price. The companies that will produce the components are: Advanced Circuits, Delta Products, a123 Systems, Advanced Photonix, Omron, Proto Labs, LEDEngin, Ledil, Avvid Thermalloy, and Anker. Annihilight will build relationships with existing suppliers and develop new relationships with prospective suppliers for the sake of supply chain efficiency.

As volume increases, in an effort to increase the benefit to consumers, Annihilight will look to outsource the production to diminish costs and further fund research and development. Further, Annihilight may also explore the idea of minimizing the amount of components used in the product, as per described in Research and Development.

MarketingAnnihilight’s initial push into the market will be marked by the launch of a Kickstarter campaign combined with a streamlined website. The purpose of the website is twofold; first, as a pilot for the Kickstarter campaign and second, as an avenue to inform the consumer and sell the product. Annihilight’s website will be simplified to limit maintenance and monotony, featuring four pages: home, about, shop, and FAQ. Technology based home products that feature application functionality are well received by the Kickstarter community. A thorough marketing campaign featuring sleek graphics will be developed, with a well-produced informative video that will be the main focus point on the Kickstarter page. The goal is to attract customers to the product by highlighting the benefit, ease of use, design, and eco-friendly aspects of the Annihilight.

Annihilight will look to sell 1000 units for $150 each in the first Kickstarter campaign, raising $150,000 in capital. After the Kickstarter campaign, sales will be maintained through the website, and active effort will be made to ensure that Annihilight stays prominent through social media marketing on Twitter and Facebook. Annihilight will release its second product that will also use Kickstarter as its platform. We will look to move into selling wholesale to retailers after the release of our second product.

Administrative/PersonnelAnnihilight is currently composed of five people with unique skills and experience, from electronic engineering to graphic design. As a small and focused firm, Annihilight will operate effectively with a

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horizontal organizational structure. The will strive to connect team members with tasks that match their skill set and interests.

Annihilight draws on the exceptional engineering talent of Chris Takahashi and Neil Jackson. Their ideas and feedback are critical to the success of the firm. Current efforts can be supported by Neil’s freelance work on the first generation prototype. After prototype testing is completed, Annihilight will seek additional engineering services to improve our industrial design for aesthetic considerations and manufacturability. Efforts will also be made to further optimize the product’s bill of materials at this stage. Annihilight will not hire any full time employees until the production phase passes the 1,000 unit mark during 2017.

Peter Mueller is an experienced programmer with experience in developing mobile applications, should the company seek to develop Bluetooth connectivity with smartphones. If an event arises where more than one programmer is necessary to tackle the workload, the Annihilight team will look to exercise professional contacts for help or contract out the labor required.

Annihilight intends to divide administrative tasks among its three founding members based on their specialties, while requiring all members to support assembly of the first 1,000 units. Bill Bockman will be in charge of administration and general management, sales, customer service, and risk assessment. Krista White will be in charge of human resources, invoicing, shipping, and accounting. Peter Mueller will be in charge of website and app development, media management, marketing, web analytics, compliance and supplier relations. All members will be charged with assembly and strategic development. All decisions will require final approval from Bill Bockman. A code of conduct will be written before the launch of Annihilight’s Kickstarter campaign.

Taxes will be dealt with in house until Annihilight receive revenue of greater than $60,000, during which a CPA will be hired. Legal and consulting matters will be handled by Green Consulting out of Denver, CO with which Annihilight has close connections with.

The Annihilight team is highly skilled, yet there are several services that will be needed in order for the company to run properly. Kickstarter and other avenues for marketing are important to the success of Annihilight. A key factor in the success of a Kickstarter campaign is a well-produced and well-edited video. There are no team members that have video production or editing skills, therefore it is necessary to contract someone to film, produce, and edit a marketing video. Further, if business increases beyond the intended capacity or there is a flaw within some aspect of the product, Annihilight will seek the services a consulting firm.

Financial The miniaturization and cost reduction of electronics for the cell phone industry allows for the development of Annihilight with modest resources. Annihilight intends to fund its operations through

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member contributions, bank loans and crowd funding. During the product validation phase and first year of production, projections estimate the production of 1,000 units per year without access to specialized facilities or equipment. It is not anticipated that Annihilight will need to raise additional equity during the first two years of our business. Critical Risks

Market Specific Challenges Two specific challenges that are unique to the market for green cleaners are consumer's willingness to pay higher costs and consumer skepticism. 8 Compared to traditional household cleaners, green cleaners tend to be more expensive, due in part to the eco-friendly ingredients they are comprised of. Consumers, unwilling to shell out more money for new products that are more expensive than their regular products will tend to shy away from green products, unless prompted by a change in personal preference. Further, there is a noticeable skepticism regarding the effectiveness of green cleaners among consumers. Green cleaners are absent of chemicals such as chlorine and ammonia, and thus, tend to require more product and/or more physical scrubbing in order to effectively clean a surface.

While Annihilight will cost noticeably more than traditional cleaners, due to the quality in technology, it will be cost effective in the long run. Further, Annihilight will be effective in disinfecting surfaces; however, it will not eliminate the need for consumers to clean their shower altogether (i.e., soap scum). In the future, Annihilight may look to partner with manufacturers of “green” cleaning products in order to satisfy the needs of the environmentally conscious consumer. The Annihilight will effectively disinfect surfaces, while the green cleaning products can be used in order to clean off soap scum/dirt/grime.

SWOT Analysis

8 http://www.greenbiz.com/blog/2011/07/22/3-challenges-facing-green-cleaners

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Strengths: Annihilight has a unique design, is easy to use and it frees customers from an unpleasant task. Annihilight tackles a problem that no one has yet pursued. UV LED products are more durable and more efficient than systems based on fluorescent or mercury lamps, meaning Annihilight is well positioned compared to the rest of the UV disinfection market. Weaknesses: The Annihilight is more expensive than traditional chemical cleaners that consumers are familiar with. Further, while UV-A is a safer form of UV light, Annihilight is a photo biological hazard and some consumers will be uncomfortable using it, reluctant to embrace this form of new cleaning technology. In addition, the photo biological hazard of Annihilight’s UV LED could delay or complicate our efforts to receive Underwriters Laboratories recognition.

Opportunities: We believe our product will resonate strongly with green and technology conscious consumers. Annihilight may expand into other areas of the home that are notorious for bacteria and/or mold, such as the kitchen or garage. Residential customers can benefit from intelligently controlled under cabinet lighting that transitions from visible light during periods of active use to UV disinfection when people are at work or asleep. There are additional opportunities for intelligent UV lighting outside of residential settings including: restaurants, hospitals and schools. Further, Annihilight will aim to create premier versions of the original model, with Bluetooth and Nest thermostat technology. This additional function can be incorporated into the product without dramatically affecting the bill of materials.

Threats: It is possible that an existing or startup UV disinfection firm could beat us to market with a product that is similar to the Annihilight. Annihilight’s profit margin is sufficient that the company can respond to pricing pressure from emerging competitors while still maintaining a positive margin. Furthermore Annihilight intends to seek patent protection for its technology. In addition, advances in

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StrengthsUnique Design

Novel Advantages over

other UV

WeaknessesHigh Upfront Cost

UV HazardConsumer

Skepticism with Green products

OpportunitiesIntegration with

Home Automation & Smart PhonesApplications in Other Markets

ThreatsCompetitors in Stealth Mode?Technological

Leapfrog

technology could disrupt Annihilight’s business or weaken its market position. UV LED technology has been advancing at a steady rate over the last several years. A rapid technological advance could put Annihilight’s product at a disadvantage.

Porters Five Forces

Industry Segmentation: Consumer Goods > Personal Products > Cleaning Products

Key Players Chemical Similar: The Clorox Company, S.C. Johnson Wax, Dow, Seventh Generation, Method Non-Chemical Dissimilar: Spectroline, Zadro,

Non Chemical Similar: LiBa antimicrobial shower curtain Threat of New Entrants: Moderate Threat - 3It is widely known the UV LEDs are becoming more efficient and cheaper every year. Markets that have already been identified and are actively targeted include both large and small scale water purification and hygiene devices for use in labs and hospitals. UV LED technology is much more advanced for industrial applications that require UV light to cure printed or composite materials.

Threat of Rivalry: Low - 1 Presently, only small firms produce UV disinfection devices. The market is highly fragmented and in the early stages of development. Safe and effective application of UV LED technology can help develop this market.

Bargaining Power of Suppliers: Low - 1LED and component suppliers operate in highly competitive industries. Annihilight can work with suppliers to achieve competitively priced components so that the bill of materials is optimized.

Bargaining Power of Buyers: Low - 3 While the Annihilight is unique, customers are price sensitive when evaluating cleaning products. It is important that the Annihilight is viewed as a piece of technology rather than a commodity chemical cleaning product.

Threat of Substitutes: High - 5Customers may fall back on traditional cleaning methods or choose to use chemical products that promise ease of use.

Key 0 – Insignificant threat 1 – Low threat 2 - Somewhat low threat

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3 – Moderate threat 4 – Somewhat high threat 5 – High Threat

Contingency Plans

Issue: The market is not receptive to Annihilight; price point is too high.Solution: Annihilight will explore different target markets and specifically concentrate efforts to target the technology conscious consumer. In order to gain more traction within the green community, Annihilight may contact reputable green bloggers, offer a free system, and ask that the blogger review the product. Annihilight can also consider modifying its strategy and selling its product at a lower profit margin with higher volumes. This may entail a different capital structure for the firm.

Issue: Customers remain apprehensive about UV and potential damage to their healthSolution: Annihilight can provide better education about the safety features incorporated into the product and the health advantages of our product compared to cleaners. Marketing will focus on stressing the fact that with proper usage, the Annihilight poses less of a threat to the consumer than traditional household cleaners, explicitly pointing out the health benefits of Annihilight and the possible dangers posed by traditional cleaners.

Issue: Legal liability for Annihilight is too costly to enter the consumer market.Solution: Annihilight can pivot to pursue niche applications where UV sterilization is already accepted and in use such as biotech research facilities and hospitals. Alternatively the company could also continue to pursue its patent and seek to develop revenues through licensing agreements.

Issue: Capital requirements for product development exceed what Annihilight can raise through member contributions, crowd funding or bank loans.Solution: Annihilight can pursue venture funding and offer equity to outside investors.

Issue: Demand for the Annihilight grows faster than anticipated; current production is unable to satisfy the demand in a timely fashion.Solution: Should demand for the Annihilight grow faster than anticipated and beyond expectations, the company will immediately look to alternative production methods; specifically, outsourcing production. In order to fund expansion, Annihilight will pursue several avenues to gain capital, such as more crowdfunding campaigns, bank loans, or venture funding.

Funds Required/Used

Phase I - Proof of Concept (July 2015 - July 2016):Business License $200

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Prototype $200Patent Application $4,000Legal Consultation $3,500Marketing $3,600Funds Required Total: $11,500

Phase I funds will be used to lay the groundwork for the launch of Annihilight. Upon confirming and quantifying the effectiveness of Annihilight, the firm will pursue patent protection for our product as well as seek legal services to ensure our product is marketed in a responsible way. The company will also launch a Kickstarter campaign with the goal of raising $150,000 from the sale of 1,000 units.

Phase II - Product Certification and Production (July 2016 - July 2017)

Business License $200Liability Insurance $5,000Accounting services $500Engineering Costs $5,000UL Certification $20,000Materials for 1,000 units $83,000Funds Required Total: $113,700

During the summer of 2016, Annihilight will complete its crowdfunding campaign with the goal of selling 1,000 units and raising approximately $150,000. These funds will allow Annihilight to proceed with Underwriters Laboratories testing and a bulk purchase of materials to supply the units from the Kickstarter campaign. The company anticipates fulfillment of the initial 1,000 units during the spring/summer of 2017. During this time Annihilight will explore options related to strategic alliances, possible licensing or sale of our technology or transitioning to internally financed organic growth.

Appendix

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2015 2016 2017Net Revenue

Sales -$ 7,500$ 142,500$

Operating ExpensesMaterials -$ 83,000$ -$ Prototype 200$ -$ -$ Business License Fee 200$ 200$ 200$ Engineering Costs 5,000$ -$ -$ UL Listing 20,000$ -$ -$ Marketing 3,450$ -$ -$ Patent Application 4,000$ -$ -$ Liability Insurance -$ -$ 5,000$ Legal Consulting 3,500$ -$ -$ Accounting Costs 150$ -$ 500$ Total Operating Expenses 36,500$ 83,200$ 5,700$

Operating Income (36,500)$ (75,700)$ 136,800$ Taxes -$ -$ 47,880$

Net Income (36,500)$ (75,700)$ 88,920$

Income Projections (July 2015 - July 2017)

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2015 2016 2017AssetsCurrent Assets

Cash and Cash Equivalents -$ 41,800$ 36,100$ Inventory -$ 78,850$ -$

Total Current Assets -$ 120,650$ 36,100$ Intangible Assets 4,000$ 4,000$ 4,000$ Deferred Tax Assets 12,775$ 39,270$ -$

Total Assets 16,775$ 163,920$ 40,100$

LiabilitiesCurrent Liabilities

A/P 25,000$ -$ -$ Deferred Revenue -$ 142,500$ -$

Total Current LiabilitiesWarranty Reserve 3,750$ 7,500$

Total Liabilities 25,000$ 146,250$ 7,500$ Equity

Owners Equity (8,225)$ 17,670$ 32,600$ Total Equity (8,225)$ 17,670$ 32,600$ Total Liabilities and Owners Equity 16,775$ 163,920$ 40,100$

Year End Balance Sheet July 2015 - July 2017

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2015 2016 2017Cash Flow from Operating Activities

Cash Received from Kickstarter -$ 150,000$ -$ Cash Paid to Suppliers -$ (83,000)$ -$ Cash Paid for Other Operating Expenses (11,500)$ (25,200)$ (5,700)$ Cash Paid for Income Tax -$ -$ (8,610)$

Net Cash Provided by Operating Activities (11,500)$ 41,800$ (5,700)$

Cash Flow from Investing Activities -$ -$ -$ Net Cash Used for Investing Activities -$ -$ -$

Cash Flow from Financing Activites -$ -$ -$ Net Cash Used for Financing Activities -$ -$ -$ Net Increase (Decrease) in Cash (11,500)$ 41,800$ (5,700)$ Cash Balance -$ 41,800$ 36,100$

Cash Flow Statement (July 2015 - July 2017)

Prototype Renderings

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Enclosure – Nylon Cord Mounting Grommets and LED Mounting Location

Enclosure, Wet Rated Cooling Fan, Batteries and UV LED

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