Executive Summary T R A N SA C T I O N O V E R V I E W Harris & Harris Group, Inc. (“H&H”) is offering accredited investors the opportunity to purchase a class of interests in H&H Co-Investment Partners, LLC that will invest 100% of its capital in securities issued by HZO, Inc., a portfolio company of H&H. *Please refer to Private Placement Memorandum for full disclosure on proposed transaction*
HZO, I N C . O V E R V I E W HZO, Inc. (“HZO”), founded in 2011 and headquartered in Draper, UT, is: • •
a technology, solutions and licensing company that provides fully commercialized liquid protection solutions to manufacturers of devices and electronics. Fully commercialized protective technology that coats all the electronics inside a device with a thin film nanocoating that seals all circuitry and protects the electronics from liquids, humidity and corrosion, as well as dust, debris and other contaminants and provides scalable end-to-end solutions for manufacturers and device makers Only technology that can withstand extended liquid submersion and prevent the growth of corrosion before it begins (greater than 100x more effective than the highest water protection standard in the industry) Successful submersion validations on over 150 unique electronic devices worldwide
To date, HZO has raised $65.4MM in equity capital since inception from a diverse set of top-tier investors including Translink Capital, Harris & Harris Group, Delta, Horizons Ventures, Iron Gate Capital and Prudence Holdings.
B U SI N E S S M O D E L & G R O W T H S T R A T E G Y • • • •
Royalties: license or per-unit royalty for use of HZO technology and IP. Equipment: Proprietary coating equipment built by partners is either sold to a customer or leased. In a lease arrangement, this revenue is recurring. Materials: HZO sell raw materials to customers for use in the coating systems. This is a recurring revenue stream. Service: If a customer selects to use HZO’s in-house coating capabilities, they are charged a production fee. For factory-installed equipment, HZO collects an ongoing service fee.
I N V E ST M E N T C O N SI D E R A T I O N S Large market finally ready for mass adoption: environmental protection of electronics is a large established market (~12 billion TAM). High-margin, high-growth business model: asset-lite model with recurring revenues from royalties, licenses and materials. Unique, technology solution with unparalleled quality: has protected 3 million+ devices to date for globally recognized brands with zero reported customer failures. Significant momentum with top global brands: engaged with ~80% of OEMs in consumer electronics within the Fortune 500, as well as other market leading companies. Growing IP portfolio: patent portfolio of 176 assets, including 23 grants in 7 countries. Turnkey and scalable solution: manufacturing process can be fully automated and seamlessly scale with OEMs and contract manufacturers. Significant barriers to entry: difficult to replicate given proprietary process, equipment and relationships.
HARRIS & HARRIS GROUP, INC. Ticker | NASDAQ: TINY Role | Managing Member
HZO, INC. Founded | 2011 Employees | ~100 $ Raised | $65MM to date Patents | 23 granted; >150 applications pending Offices | US, China, Japan, EU Production Facilities | USA, China, South Korea, Taiwan, Hungary
FINANCIAL HIGHLIGHTS Forecasting 2.5-3x Revenue Growth in 2016 from 2015 Customer Opportunity Pipeline Increased at 263% CAGR 2013-2015
TARGETED VERTICALS Consumer Electronics Transportation Internet of Things (IoT) Devices Outdoor LED
MANAGEMENT TEAM CEO | Michael Bartholomeusz President & CFO | Larry Polizzotto COO | Andres Morr CTO | Max Sorenson CSO | Steve Sherman
H&H POSITION IN HZO Initial Investment | 2011 Capital Invested | $8.9 Million *As of March 31, 2016
CONTACT INFO Harris & Harris Group Daniel B. Wolfe | President [email protected]
TriPoint Global Equities Mark Elenowitz | CEO [email protected]
This information is published solely for informational purposes and is not to be construed as a solicitation or an offer to buy any security or related financial instrument. The summary may include “forward-looking statements” with the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act of 1934 and are intended to be covered by the safe harbor provisions for forward looking statements. This information is supplied from sources we believe to be reliable but we cannot guarantee accuracy. This document has been furnished to you solely for your information. The information contained herein may not be reproduced, disclosed or redistributed, in whole or in part, by mail, facsimile, electronic or computer transmission or by any other means to any other person, except with prior written consent of TriPoint Global Equities, LLC. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Investors are cautioned that such forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from anticipated results. Investing in our securities involves a high degree of risk. Our company is at an early stage of its development and our securities may only be appropriate for long-term investment. You should purchase our securities only if you can afford to lose your entire investment.