Table of Contents Executive Summary 5
Risk Analysis and Contingency Plans
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5.4 Risk Analysis and Contingency PlansThe following risks have been identified: Risk – AutoIQ does not obtain CSA regulatory approval Contingency Plan – Should AutoIQ fail to obtain CSA approval, we will peruse International Underwriters Laboratories Certification in the United States. The certification should be easier to obtain and will allow CarBack to be sold in Canada. Risk - AutoIQ does not obtain CRTC regulatory approval Contingency Plan – CRTC approval is required for the CarBack product because of the cell phone communications required. Should AutoIQ fail to obtain CRTC approval during the first year of operations, the venture would not be viable and operations would cease. Although the magnitude of the risk is substantial we do not perceive the likelihood of its occurrences as very high. Risk – Production model development overrun Contingency Plan – We expect production model development of CarBack to take no longer than one year. If however, the development takes longer than expected, sales would be delayed severely impacting profitability and the narrow window of sales opportunity. This risk is primarily mitigated because we have two engineers working on the development and the engineers are principles in AutoIQ. Again, the magnitude of this risk is very high but the likelihood is relatively low. Risk – AutoIQ experiences low sales at $150.00 price point Contingency Plan – Our research indicates the product will be adopted by our target consumer at the projected volume and price levels. Despite this, should actual sales volume not meet projected expectations at the $150.00 price point we can lower the price. Risk – CarBack experiences increased competition sooner than expected Contingency Plan – Increased competition is expected as other companies reverse engineer the product and car manufactures develop similar products (as OnStar already has). If competition enters the market sooner than expected however, we may have to lower prices and/or alter the exit strategy. Summary of the Business Plan“Our mission is to empower automobile owners by providing a reliable and affordable auto theft recovery device” AutoIQ’s CarBack auto recovery device is a differentiated low cost product that empowers drivers. In a market which a car is stolen every 3.6 minutes at a tremendous social and personal cost, CarBack is an efficient and affordable means of recovery. Using advanced technology the user has two way communication with their car to learn about the car’s activities and location. CarBack is empowering. With an equity cash injection of $240, 000 and the development and patent search by the inventors, AutoIQ equity investors are expected to realize a 45%. annualized rate of return. The majority of the risk is found in the volume sold, unit price, and the cost of goods sold respectively; significant variation still yields a substantial return. The marketing of the CarBack uses a combination of push/pull with retail partners spread across Canada. The other objective in marketing the product is to sell the technology to an auto manufacturer or an auto accessory manufacturer after a couple years of high sales growth. Through a firm marketing strategy with a knowledge of the market to mitigate the risks, CarBack can help the investor realize a substantial return on their investment. AppendicesAppendix A: Income Statement
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