KANSAS CITY, Mo., July 23, 2014 /PRNewswire/ -- Dear APT Group,
Inc. Shareholders:
We are APT MotoVox Group, Inc., serving the world as a
propulsion technology company that manufactures and distributes
advanced environmentally friendly transportation, utility and
recreational powersport products.
First Initiative – Expanding the product line from
recreational to light transportation products. This move
provides APT/MotoVox the opportunity to enter into both higher
profit and gross margin dollar technologically advanced
products.
MotoVox® has laid the foundation for this initiative throughout
2013 and 2014 through the following objectives:
1. We expanded our line from recreational to light
transportation products. The light transportation "commuter"
sector is growing at a record rate. In certain categories,
demand far exceeds supply. People are simply commuting
differently today.
To answer this demand the Company has developed a unique
"on-road commuter" motorcycle line that is sized in between a full
size motorcycle and a scooter. APT predicted this trend in
2012 and began developing the new line. The model is small
enough to roll into a college dorm room, park into a bike rack,
easily load into a van or pickup, or load in a rack on a motor
home.
MotoVox® endeavors to unveil several models over the next few
months. The first model to be announced in Q4 2014 is the
150cc ON-ROAD production motorcycle that achieves 100-150 miles per
gallon. This motorcycle is unique in six important
ways:
- Design
- Size
- Performance
- Fuel Efficiency
- Automatic Altitude Compensation
- Ultra Low Emissions
The Company believes the motorcycle will prove to be the
cleanest and most fuel-efficient on-road production vehicle of its
kind, setting a new standard that will make a measurable impact on
the motorsport industry. The Company has already received
pre-production order commitments from U.S. and International
buyers.
2. After an investment of over $4M and nearly four years of development,
SmartCarb® is ready for primetime. The small engine industry
continues to scramble in finding ways to meet current and future
emission regulations without compromising performance or raising
manufacturing costs by using expensive catalytic converters.
SmartCarb® is our solution to costly and complicated fuel injection
systems that many small engine applications simply cannot use due
to cost and complexity. SmartCarb® compensates for altitude,
allows for exceptional gains in performance and fuel economy, and
is cost effective and simple. The opportunities are seemingly
endless as the small engine market exceeds $19 billion in annual
revenue.
Much of 2012 and 2013 were focused on sponsoring racing teams
with the SmartCarb® to utilize our disruptive technology. In
our industry, the most effective way to market technology is to
first introduce it to the racing world and let them tell the
story. We sponsored many expert riders and they told the
story over and over again, increasing SmartCarb's® exposure that
opened doors for OEM interests.
SmartCarb® began as a billet product. In 2013, we moved to
investment casting. Our final move is to die casting in
2014-15 allowing for mass production that will lower the cost even
further to the consumer.
This year, we are selling SmartCarbs® to the after-market as APT
continues to test and negotiate OEM contracts. This product
is an exclusive technology to the MotoVox® brand within its product
categories.
SmartCarb® is the first fuel system of its kind to effectively
atomize heavy fuels such as military spec jet fuel and diesel,
which has attracted the interest of developers and agencies such as
Unmanned Aerial Aircrafts (UAV) and submersible outboard marine
engines for armed forces and other government agencies.
This year we have increased aftermarket sales while preparing to
enter into development agreements with OEMs. This takes significant
capital, time, and testing. We expect to be providing the
SmartCarb® to OEMs in 2015.
The SmartCarb® has entered into a new opportunity with outboard
marine engines. Our initial target is the U.S. military
special forces tactical units and border patrol. There is a
significant need for the APT fuel system to meet mission critical
requirements such as: 1) Impervious to electromagnetic pulse (EMP)
signals; 2) Multi-fuel capabilities such as regular gasoline,
diesel, or military spec heavy fuels; 3) Self-compensating for
altitude without electronics and sensors; 4) Lower emissions.
The SmartCarb® has proven multi-fuel capabilities on unmanned
aerial aircraft, and now outboard motors, achieving what NO OTHER
fuel system can without costly, low performing and complicated
electronic systems.
3. Expand its distribution channels: Standard
MotoVox® products were initially targeted to mass merchants with
market entry price points. We achieved shelf space in some of
the world's largest retailers and quickly brought the MotoVox®
brand to consumers across the country. This year,
MotoVox® has developed a "Pro line". The new specialty line
will feature upgraded designs and proprietary technology that will
result in higher margins and expanded selling seasons for both APT
and its dealer partners. MotoVox® Pro brings new
products to the consumer that initiates the transition to the
performance advantage vs. the price advantage.
MotoVox® Pro will significantly expand distribution through
specialty dealers and direct sales channels.
APT MotoVox® has initiated its launch into Latin American
markets. Although we have multiple distribution
opportunities, we remain focused on completing our agreement with a
strategic partner in Latin America. We expect to finalize
this agreement within a short time. This partner is one of
the largest companies in Latin
America with distribution channels throughout Central and
South America. This is a complex partnership that provides
technology, distribution, and product development between both
parties.
We expect to generate $400,000 to
$600,000 in Latin American gross distribution revenue this
year as a controlled strategic launch. We expect annual
revenues to grow to $3M to $5M by the
end of 2015 and could easily grow 40% to 60% annually for the next
few years.
Second Initiative – The sale of "non-revenue"
producing assets
APT has accepted an offer for the sale of certain non-core
corporate assets that do not produce revenue and are not vital to
operations or the Company's long term business plan. The
transaction is scheduled for closing in September
2014. The proceeds are targeted for the direct
retirement of debt instead of selling equity, which will result in
improvements to the Q3 balance sheet, cash flow and operating
expenses. The asset sale will result in a nearly 40%
reduction of debt on the balance sheet. In addition, the sale
of these assets will significantly reduce operating
expenses.
Third Initiative – Restructure and improve the balance
sheet
We have strengthened our current balance sheet through the
conversion of seasoned debt to equity, with the added impact of
improved cash flow. This action provided the following
benefits:
- Nearly three million dollars of
debt has been removed from the Q2 balance sheet.
- Raised immediate cash for:
- Development and launch of new SKUs for 2014 and new SKUs for
early spring of 2015
- The testing, development and presentation of fuel systems for
marine applications
- Fees for the PCAOB Audit
- Cash flow during off season sale months
- Securing lower cost production financing
- Production capital for international orders
Key impacts of the restructured balance sheet are:
- Between $600,000 to $800,000
annual savings in interest expenses
- A stronger balance sheet with improved performance ratios
COMPLIANCE & REPORTING
APT's greatest challenge to moving the Company public has been
the audit. As stated in previous communication, the audit
process has taken much longer than anticipated. This is due
to the following reasons:
- APT converted to a new ERP (Enterprise Resource Planning)
system weeks prior to the audit. This caused significant
challenges in the transfer of trial balances and files.
- Former FROZ agreements required extensive derivative
calculation work.
- APT possessed equity and loan transactions dating nearly six
years all in which required extensive testing.
- APT's accounting process required critique and changes.
APT and its contractors underestimated the time required to
complete this task. APT should have started the audit process
prior to the merger/acquisition of FROZ. APT hopes the
shareholders will remain patient and forgiving for the extra time
taken to complete this task. APT is near completion as we are
in the final phase of the audit. The executive management
team at APT and its contractors have managed this process ethically
and responsibly and no matter the consequence, will not compromise
the process by cutting corners. We thank you for your
attention and continued support.
Additional Items of Interest
Share Structure
Common Shares
We have 20,000,000,000 authorized common shares and 500,000,000
authorized preferred shares.
At the signing of the Share Exchange Agreement on March 27, there were 897,071,625 issued and
outstanding common shares of FROZ. As of July 17, 2014, we have 5,394,024,814 common
shares issued and outstanding. Of that number, 2,735,501,971
common shares were issued to the legacy investors and employees of
APT, all of which are restricted for six months from the issuance
date.
Since the reverse merger, APT strengthened the company by
utilizing less than 9% of the authorized shares for debt
conversion. This modest dilution was necessary to eliminate
only that debt which restricted corporate growth. APT is
stronger and better as a result, which serves long term shareholder
interests.
Preferred Shares
We have four classes of preferred shares: A, B, C & E.
There are no shares of Class A Preferred Stock issued or
outstanding.
Old FROZ management retained 500,000 shares of Preferred B Stock
in accordance with the terms of the Share Exchange
Agreement.
On May 9, 2014, we announced the
creation of two new classes of convertible preferred stock, Class C
and Class E, for exclusive issuance to the legacy investors and
employees of APT. We authorized and issued 19,738,646 Class C
Preferred Shares and 22,155,729 Class E Preferred shares
exclusively to the people who worked tirelessly for years to
develop our products and to get them on store shelves. Class
C is restricted for 18 months from the issuance date and Class E is
restricted for 12 months from the issuance date.
Equity Partners
The Company began operations in 2008 with angel capital
investment and then financed production with working capital
loans. We also utilized account receivable factoring
companies that were expensive, placed limits on orders, and made it
hard for us to manage our own cash flow. After reviewing
several options and interviewing multiple firms, we selected
IronRidge Global, Tangiers Capital, and Mammoth Capital as our
partners to remove the liabilities from our balance sheet enabling
the company to grow the business. Management made a strategic
decision that was in the best long-term interests of the Company.
Name Change and Ticker Symbol Change
Our new ticker symbol is MTVX. The new name of the Company is
APT MotoVox Group, Inc.
APT MotoVox Group, Inc., Historical Overview
From 2008 to 2013, APT invested over $20M in the development of technology, an
emissions testing laboratory, product development and the
acquisition of an 18 acre campus of land and buildings. We
developed a scalable corporate infrastructure of customer service,
service & warranty, product development, engineering, sales,
marketing, supply chain and quality control operations. In
addition to these expenses and investments, APT recruited the
management team and staff needed to drive a high revenue growth
business.
In efforts to minimize the sale of equity in the early stages of
the Company, we raised a significant amount of capital through debt
financing to fund operations, acquisitions and patented technology
development, while carrying planned losses. While this debt
was necessary to build and scale the Company, the weight on our
balance sheet and the associated interest costs inhibited our
continued growth. Our transition to a public company provides
us with the tools necessary to improve our balance sheet and the
growth capital to drive the Company towards profitability.
About APT MotoVox Group, Inc.
APT MotoVox Group, Inc. is a Delaware registered corporation headquartered
in Kansas City and is the holding
company for the MotoVox® motorsport product line, SmartCarb®
patented fuel system, and the Sonic Flow small engine technology
lines (http://www.motovox.com/ and http://www.powerapt.com/).
MotoVox® has become the fastest growing brand of small engine
price-point powersport products in the world, with nearly 100,000
powersport products sold to date earning nearly $25 million in less than three years of
commerce.
Forward-Looking Statements
Some statements made in this press release are forward-looking
statements, which are made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. We use
words such as "anticipate," "believe," "expect,'' "future,"
"intend," "plan," and similar expressions to identify
forward-looking statements. These statements including those
related to the growth of the industry and the Company's
performance, are only predictions and are subject to certain risks,
uncertainties and assumptions. Additional risks are identified and
described in the Company's public filings with the Securities and
Exchange Commission. Statements made herein are as of the date of
this press release and should not be relied upon as of any
subsequent date. The Company's past performance is not necessarily
indicative of its future performance. The Company does not
undertake, and the Company specifically disclaims any obligation to
update any forward-looking statements to reflect occurrences,
developments, events, or circumstances after the date of such
statement.
Contact
William Maher, SVP
APT Group, Inc.
InvRel@motovox.com
Paul Knopick
E & E Communications
(940) 262-3584
pknopick@eandecommunications.com
SOURCE APT MotoVox Group, Inc.