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Leading Edge Lighting Technology for an Enlightened World
Investor Presentation –Spring 2016Investor Presentation –Winter 2018
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““The significant differences in LED technology
versus other lighting technologies will lead to a fundamental disruption of the lighting industry
along the entire value chain.”
- McKinsey & Company
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““Citadel’s management team has completed four
years of research and development, market testing, tooling and certification leading to the
creation of a brilliant LED product line that is now ready for launch in North America.”
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““The company is seeking outside investment capital to finance what will be an extremely
profitable and rapid growth enterprise.”
“Proceeds of this share offering will be used almost exclusively for investing in inventory and
Accounts Receivable”
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Transformative Shift to LED Lighting Products
▹ Overall quality of LED lighting products have risen while the cost of component parts has decreased 50% in the past year
▹ Return on Investment for the end user greatly accelerated due to increasing energy rates combined with decreased LED costs
▹ Commercial customers’ Energy Managers focus on the payback period; quality of the lighting (ambience); and lifecycle of the product when making purchase decisions
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Transformative Shift to LED Lighting Products
▹ Political will through government tax deductions and utility rebates further accelerate payback to the customer
▹ Citadel LED light ing’s patented products are more efficient , cost effect ive, and aesthet ically superior to the compet it ion.
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Citadel LED Lighting Boasts Major Advantages
▹ Saves up to 90% of the energy consumed by traditional incandescent and halogen lighting products
▹ Saves 50% of the energy consumed by Compact Fluorescent Lights (“CFL’s”) and fluorescent tube lamps (T5’s, T8’s, T12’s)
▹ Product lifecycle of up to 50,000 hours, up to 50x longer than halogen or incandescent lights
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Citadel LED Lighting Inc.
▹ Partnered with Chinese lighting manufacturers to bring state of the art LED lighting products to North America
▹ Owns Intellectual Property rights for innovative lighting technologies throughout North America in perpetuity
▹ Highly focused and targeted commission driven sales and marketing system
▹ Citadel’s lamps look exactly like the incandescent, fluorescent and halogen lights that they are replacing.
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Citadel LED Lighting Inc.
▹ Citadel is able to achieve gross profit margins of 45 to 50% due to its “Direct to End User” delivery model, which eliminates multiple wholesale/retail mark ups, resulting in customers receiving the best quality products at significantly lower cost.
▹ Experienced global sourcing and management team with an extensive history of managing and growing consumer product companies from zero to ten’s of millions of dollars in gross revenue
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Comparison of Annual Operating Costs in 24/ 7 Use1
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1Power costs calculated at North American average of $0.15 per KwH
Bulb Type Tradit ional Citadel
T8 Tubes $45.33 $22.95
PAR 30 $108.16 $22.75
MR 16 $80.88 $17.61
A 19 $92.10 $17.61
Candelabra $40.73 $11.84
T8 Tubes
PAR 30
MR16
A19
Candelabra
Trial Projects to DateCitadel has either successfully sold the Company’s LED products or has sales pending with the following major commercial accounts:
1. Fairmont Hotel Banff Springs Hotel (sold)2. Fairmont Pacific Rim Hotel (sold)3. Fairmont Chateau Whistler (sold)4. Fairmont Chateau Lake Louise (sold)5. Overwaitea Food Group (samples approved)6. Lawrence Technological University (first purchase order was issued for
6,000 T8s –USD $81,000 for building 1 of 20)7. Pattison Outdoor Sign (product approved, awaiting certification)8. Oxford Properties (sold)9. Westbank Developments (sold)10. Shato Holdings Ltd. (sold)
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Citadel LED Deck V1012
Fairmont Pacific Rim Vancouver Lobby
Fairmont Pacific Rim Hotel–Case Study
Citadel successfully completed a retrofit of 6,500 halogen MR16 bulbs in the property, inclusive of custom dimming capabilities to synchronize with the Hotel’s Inncom in room operating system. Citadel beat out Philips, Sylvania, and GE to win this project by creating a custom printed circuit board (PCB) to enable the hotel to use existing light fixtures, dimmers and Inncom controllers. This technology can now be used to retrofit other hotels using the popular Inncom system.
Return on Investment profile for the Fairmont Pacific Rim:▹ Citadel Gross Revenue: $104,000.00 CDN▹ BC Hydro Rebate: $52,000.00 CDN▹ Margin: 50%▹ Payback Period for Fairmont: 4.5 months▹ Total Savings Over 5 Year Lifecycle: $720,000.00 CDN▹ Retrofit reduced energy consumption by 90%
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Near Term Sales Opportunities
1. Fairmont /Raffles : Due to the success of projects in four Fairmont hotels, the President of the Fairmont/Raffles for the Americas (North, Latin, South) organization has agreed to initiate meetings with the General Managers of all of their hotel properties.
2. Pat t ison Sign Group: Over two years of product development activities has resulted in Citadel being approved for use in both new build and retrofits. Custom tooling and a new design for this Fluorescent T12 replacement have resulted in Citadel applying for a patent in China. We will soon apply for a patent in the USA for this product. New build business with PSG alone –Potent ial $10 million in annual sales. Purchasing to commence Summer/Fall 2018. PSG has 5% market share in North America for outdoor illuminated signs. Citadel will commence selling this product to other outdoor sign companies once PSG orders are filled.
3. Overwaitea Food Group: Recently received final color temperature sample approval for T8 and T5 instore retrofits. Once Citadel is funded we will retrofit the first three Save On Food stores. This retrofit program is expected to be rolled out all 200 stores in the system (Estimated $8,000,000 project ).
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T12 Sign Retrofit/ New Build Business Unit
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T12 Sign Retrofit/ New Build Business Unit
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T8/ T5 Retail StoreInterior Retrofit Business Unit
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T8/ T5 Office/ School/ UniversityInterior Retrofit Business Unit
Near Term Sales Opportunities
4. Aramark Corp: Aramark manages Lawrence Technological University where a retrofit of one test building is near initiation ($81,000 sale at 50% gross margin). Samples have been approved and will be delivered once funding is in place. Aramark Corp is North America’s largest facilities management company with 800 million square feet currently under management . We have sales agents ready to approach all other Aramark managed facilities citing this reference project.
5. Oxford Propert ies: Manages approximately $30 billion (over 50 million square feet) in commercial real estate throughout North America. We have earned their trust by working with them on three hotel retrofits. We now intend to move into their office and commercial properties with proposals to replace down lights and fluorescent tubes in offices, parking garages and commercial and industrial space. Further meetings in Toronto will commence when funding is in place.
6. London Drugs: Citadel has started discussion about the opportunity to retrofit all 78 stores. For $1.1 million investment, London Drugs will save $1.2 million per year in operating/hydro costs , even though their power cost is only 7.5 cents per kWh, versus the USA average electricity cost of 15 cents per kWh. The total return on investment will be $8.4 million. London Drugs market capitalization will increase by an estimated $12 million.
7. Low Tide Propert ies: 30 commercial properties throughout the greater Vancouver area.
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Citadel Sales Targets
Commercial –Our focus in existing commercial space will be offices and parking garages. The dominant bulb used currently is a 4’ or 8’ fluorescent tube (linear fluorescent). There are an estimated 2.6 billion fixtures utilizing 1 to 4 tubes each in North America now. Less than 5% of these have been replaced to date using LED tubes. At current selling prices, this is a $7 billion dollar opportunity in Canada and a $70 billion opportunity in the USA.
Hospitality –Our recent success with retrofitting five star hotel properties has allowed us to secure the commissioned services of a hotel professional with strong connections with North America’s leading hotel group, Starwood. Once we are financed, we will start bidding on all large hotels in their group. 93% of the North American Hotel market has not yet been retrofitted with LED lighting.
Retail - We expect that our initial retail customer in Canada will be Save-On-Foods. We are in final stage testing in one of their stores now. Once again, the product is down lights with an emphasis on linear fluorescents. An average 50,000 square foot store utilizes $50,000 worth of interior down lights. For grocery stores, their will be an additional $10,000 per store in freezer/cooler lights.
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Citadel Sales Targets
Once we have completed our first install at Save-On-Foods, we will approach Albertsons stores, whohave a strong relationship with Save-On. Their respective Energy Managers are in constantcommunication. USA cradle to grave environmental policy makes disposing of Fluorescent tubesextremely costly. We have recently certified a T5 Fluorescent that creates an incredible valueproposition for these stores. Our LED product will consume half the power of Philips currentlyrecommended fluorescent T5. Our presentation to Save-On resulted in suspension of all plannedretrofits using Philips’ recommended product.
Outdoor Sign Industry –Through our discussions with Pattison Sign Group, we have estimated the new build sign market in North America, using our patent pending product to be $180 million per year. Retrofitting existing legacy signs is estimated at $20 billion over the next 5 years. In the USA, the currently utilized T12 linear fluorescents have been under a domestic production ban since July of 2016. No affordable LED alternative has appeared on the market yet. We will be the first product that will be UL/ETL/CSA certified to come on the market in plug and play format that allows the removal of the troublesome and costly sign ballast, without having to completely rewire the sign.
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22 Citadel’s Target Market
Financial Forecasts23
$0$20,000$40,000$60,000$80,000
$100,000$120,000$140,000$160,000$180,000
Projected Annual Operat ing Results (In thousands of $).
Revenue EBITDA
2018 2019 2020 2021 2022
Fiscal Year (Start Spring 2018) 1 2 3 4 5Revenue $3,025,000 $15,100,000 $50,100,000 $100,500,000 $155,250,000Gross Margin % 50% 50% 50% 50% 50%EBITDA $76,000 $3,100,000 $12,800,000 $25,868,000 $40,191,000
Projected Capitalization Table24
Shares Outstanding Price Market Cap.
Shares Issued/Outstanding as at 01/15/2018 pre $250,000 crowdfunding Financing 10,828,001 $0.10 $1,082,800
Post Financing – $250,000 closing April 2018 (possible maximum raise of up to $500K) assuming conversion
12,498,001 $0.15 $1,874,000
Post Financing-$500,000maximum raise closing April 2018 assuming conversion
14,168,001 $.15 $2,125,200
Post Financing-$500,000 maximum raise assuming conversion of all warrants
17,508,001 $0.30 $5,252,500
Sales/ Distribution Strategy25
Citadel management will recruit a network of supply/install partners across the USA and Canada to both sell and manage installation of the Company’s products in every State, Province and Territory in North America.
Supply/install partners will be paid for their labor and commissions on the dollar value of the contracts they generate. Once properly trained, the supply/install partners will be able to engage in managing all sales activities in their respective geographic territories.
By selling directly to the end user from our Ohio and Ontario distribution centers, much of the costs and mark ups associated with the traditional multi level supply chain model will be greatly reduced.
Supply/Install Partners will be provided with leading edge sales and order processing software installed on Citadel’s touch screen tablet personal computers. Analysis of retrofit options, power savings, labor costs, order confirmation, financing, invoicing and product shipment arrangements can be made on a customers’ premises quickly and efficiently.
Sales/ Distribution Strategy 26
Supply/Install partners will be paired with customers and monitored using GIS and GPS technology.
Data mining from customer quotations and sales will facilitate efficient cost effective inventory management in what is a regionally fractured North American lighting market.
Supply/Install partners will have new products, certifications and pricing downloaded to their touch screen tablet personal computers automatically when they are turned on, guaranteeing that price reductions or increases are immediately implemented.
These personal computers will be connected in real time to Citadel’s cloud based server so that credit approvals, financing, invoicing, and shipping can usually occur efficiently and effectively within 48 hours of order confirmation.
E-Commerce Strategy27
Company management has significant experience in selling to not just big box and mass merchant retailers, but also to their on line channels and affiliates.
To build product awareness and facilitate sales, once sufficient inventory is on hand in North American warehouses, management will enlist the services of an associate to secure product listings with Home Depot.com, Amazon.com, Lowes.com, True Value.com and other leading e-Commerce retailers.
The Citadel website will be enhanced to better describe product benefits, knowledge and brand awareness, while facilitating orders. The website will assist customers in researching and analyzing products most suitable for retrofitting their businesses and residences, allow them the opportunity to input information into a potential cost savings calculator, and make arrangements for the Citadel supply/install partner in their area to make a visit for confirmation of best product choices, projected payback period based on current consumption patterns, and potential financing options.
Citadel Management Team
▹ Patrick Perry, President Founding Partner & CEO, is a start up specialist, having taken four different companies from commencement to over $10 million in annual revenues, two of which achieved annual revenues of $32 million and $50 million before being sold. Mr. Perry brings 25 years of experience in retail, wholesale, distribution, warehousing and logistics. In the last 15 years, he has managed commercial, industrial and consumer product lines being manufactured in China and sold to leading North American importers. Key customers in retail include Walmart, Target (USA), Menards (USA), Home Depot, Costco, Canadian Tire, and Sears. Mr. Perry is also a partner at Vanco Hong Kong Limited, a Hong Kong based import/export company.
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Citadel Management Team
▹ Mike Gillespie, Founding Partner & COO, brings 20 years of sales management experience at wholesale distribution, warehousing, logistics and trading companies. Mr. Gillespie has sold commercial, industrial and consumer product lines manufactured in China to leading North American retailers, property development companies and major hotel chains. He has also started three successful businesses, including Toplight Building Materials Ltd (TBML) and Toplight International Building Materials Corp (TIBM), for both of which he is currently managing partner. TBML supplies building materials to property development companies and hotels. TIBM has been the leader in sales of LED lighting products with Citadel during the business start up-phase. Key clients include Westbank Developments, Fairmont Hotels, Shangri-la Hotels, Oxford Properties, Bosa Developments, Pattison Group, OverwaiteaFood Group, Low Tide Properties, Shato Holdings, UBC Properties, Ledcor Construction and ICON West Construction.
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Citadel Management Team30
▹ Barb Gillespie, Director of Administ rat ion/Operat ions, brings 22 years of experience in human resource management and business administration in her own consulting firm. In the past 8 years, as partner and director of Toplight Building Materials Ltd. (TBML) and ToplightInternational Building Materials Corp (TIBM), Ms. Gillespie has focused on importing goods for clients in North America and has played a key role in securing contracts, auditing factories, negotiating pricing, procuring quotes, liaising with designers, confirming orders, facilitating sample approvals, fulfilling purchase orders, coordinating logistics and overseeing invoicing and payment processes for prestigious projects on behalf of both TBML and TIBM.
Citadel Management Team31
▹ Craig Valent ine, Director of Sales –USA, brings 33 years of ownership, management, sales and marketing experience with Fortune 500 companies including Champion Spark Plug, Campbell Hausfeld (Berkshire Hathaway) and Clarke Power Products. He has extensive experience selling consumer and industrial products that have been imported from China and Europe. Under his tenure, he grew Clarke Power Products USA, a wholesale distributor, to $30 million in sales. Mr. Valentine was, most recently, President of General International Power Products.
▹ Bruce Leitch, Director of Corporate Finance, brings extensive experience in the capital markets and the securities industry, having worked for Merrill Lynch & Pemberton Securities, as well as serving as a managing partner at a Venture Capital firm in Southern California. Mr. Leitch has been an officer, director and principal of several public and private companies and has extensive experience raising capital for early stage growth companies. He also has experience with consumer products companies and is well versed in all aspects of branding and marketing.
Professional Advisors32
Corporate Counsel:Boughton Law Corporation, 700 -595 Burrard Street, Vancouver, B.C., V7X 1S8
Accountants:Zara Kanji and Associates, 1515 –700 West Pender Street, Vancouver, B.C., V6C 1G8
Audit Firm / Tax Advisors:Davidson and Company LLP, 1200 –609 Granville Street, Vancouver, B.C., V7Y 1G6
