Efneo

Idea

Introduction.

Efneo’s product is a 3-speed front bicycle gearbox called GTRO.

GTRO is an alternative to a front derailleur - the chainring gear shift mechanism. The public have noticed certain features:. 1) shifting gears is easy, smooth and immediate. 2) shifting is possible while riding and while stationary. 3) it looks great. 4) it's low maintenance.

The product is fully developed. 430 units have been sold to date and our customers have tested the bike in different conditions. We have worked to solve pre-maturity issues that have been highlighted by our first customers. We feel the product is fully suitable and ready for market expansion. It's protected with patents granted and France and Italy, and pending in countries like the USA, the UK, China, Germany and others.

We received some fantastic feedback from customers and the cycling media.

GTRO is dedicated to all non-sports bicycles - touring, city/urban, folding, ebikes and trikes/recumbents. It's both a b2b and b2c product.

Since April GTRO is officially specified on a first ready-to-buy bike from a Belgian company Ahooga.

We are ready for growth!

Intended impact.

The Efneo GTRO's purpose is to offer more comfort to all everyday cyclists. However, besides that, in both of our target segments, it adds value differently.

In ebikes, GTRO allows customers to build a rear-wheel ebike with a front gearbox that offers fully closed, clean set-up with a gear range sufficient for an e-bike.

Folding bikes (and particularly ebikes) typically need a large chainring. GTRO solves this problem by making the chainring bigger "virtually". On higher gears, the chainring rotates quicker than a crank, which makes pedalling easier at high speed. For folding ebikes, the most common method is to have an engine which supports rear wheel drive. With the GTRO on the front wheel, this makes a suitable match.

In these two segments, our objective is to make the GTRO the first choice for all upper-market bike-builders and designers.

In two other large non-sports segments – touring/hybrid bikes and city/urban bikes – our ambition is to be an attractive alternative for a premium bike builder.

Substantial accomplishments to date.

Mechanical products take time to develop. It took us five years to get from the rough idea to a ready-to-sell product. GTRO is now fully developed. 430 units were sold (app. USD $141,000) to date.

Now we believe we are ready for the market growth. We've reached a crucial first milestone - GTRO is now specified on a first ready-to-buy bicycle from a Belgian brand Ahooga. You can buy it online or in their retail stores.

GTRO was presented at various industry fairs and media outlets. We have a range of manufacturers in our CRM willing to talk about specifying the GTRO on their bikes. We also have a list of distributors from countries like USA, Switzerland, Germany, Australia and Holland interested in the potential opportunity of our gearbox in their markets.

We have fantastic feedback from the distributers, end-users and media. You can find links to the reviews and testimonials on our website.

Until recently, the biggest challenge for us was the manufacturing cost that pushed the OEM price to USD 220-280 range. Now we plan to sell the product at USD 140-150, still keeping at least a 50% margin. This makes the product more affordable for premium bikes. Most of the manufacturing is outsourced, with the aim of keeping our relative fixed costs low internally.

We are planning to have a product in stock in July/August available for sales, and we'll be ready to build a strong brand around GTRO.

Monetisation strategy.

We are a manufacturer, and the manufacturer's business model is straightforward. We are selling our product to:
1. bicycle manufacturers (B2B sales).
2. end-users - directly (through our web store) and indirectly (through distributors and dealers).

Our innovation sits in a product, not in a business model.

There are a couple of strong tendencies that we feel create a massive chance for Efneo:
1. Growing popularity of ebikes and folding bikes - GTRO makes a perfect match for all rear-wheel e-bikes and folding e-bikes
2. Growing popularity of belt systems (alternative to a chain) - a belt cannot be used with a derailleur - only a gearbox can be used to shift gears

Use of proceeds.

Our objective is to build a presence in all our target markets. To reach this objective, we must: 1). finance sales growth 2). build a brand. We feel Efneo has the potential to be a fashionable premium brand of the first choice in selected markets.

The majority of the capital raised will be used to support our sales & marketing efforts, including:
1. building a strong sales team.
2. supporting our b2c distributors with free samples, POS materials and dedicated media campaigns.
3. supporting selected bike manufacturers to promote their GTRO equipped bikes in their local markets.
4. growing our b2b lead/customer base.

We'll aim to have our stock refilled with the products, mainly financed from our resources, but it may happen that a minor part of the capital raised will be used to finance the products on stock.

Efneo have two loan agreements with the same shareholder - one for 60,000 PLN and the other for 70,000 PLN; together it totals approximately 30,600 EUR.

The 60,000 PLN loan has an annual interest rate of 6% and will be repaid when the company is profitable.

The 70,000 PLN loan has a 6% interest rate if repaid before 31st December 2020. If paid after this date the loan has an annual interest rate of 12%.

The funds raised as part of this round will not be used to pay off these loans.

A proportion of funds have been invested in PLN but we have used the rate 1:0.24 to calculate the EUR equivalent.

Important Information

The Company has agreed liquidation and exit preferences with certain existing shareholders.

Liquidation preference: on a winding up or liquidation of the company, the proceeds shall be distributed to shareholders in the following priority:
- Four shareholders will first receive 1.89x their total initial investment of PLN 1,524,704 (c.€359,029.67).
- One other investor will then receive its initial investment of PLN 560,115.
- The remaining proceeds will then be distributed pro-rata amongst all shareholders.

Exit preference: on an exit, the proceeds will be distributed to shareholders in the following priority:
- Four shareholders will first receive 1.89x their total initial investment of PLN 1,524,704 (c.€359,029.67).
- The remaining proceeds will then be distributed pro-rata amongst all shareholders.

Seedrs investors will also receive the 1.89x liquidation and exit preference, and rank pari passu with the four existing shareholders receiving this preference.