investor presentation

INVESTOR PRESENTATION
August 27, 2012
VIEW YOUR WORLD™
CAUTIONARY STATEMENT ON FORWARD-LOOKING
INFORMATION AND PRO FORMA FINANCIAL STATEMENTS
This presentation contains certain statements that may be deemed “forward-looking statements”.
Forward-looking statements are statements that are not historical facts and are generally, but not
always, identified by the words “expects”, “plans”, “anticipates”, “believes”, “intends”, “estimates”,
“projects”, “potential” and similar expressions, or that events or conditions “will”, “would”, “may”,
“could” or “should” occur. Forward-looking statements in this presentation relate to the Company’s
continued growth and financial strength and future investment opportunities. The forward-looking
information reflects predictions and possibilities and does not in any way reflect a guarantee. Factors
which could cause actual results to differ materially from current projections include, among other
things: competitive conditions in which the Company participates; changes in consumer spending;
general economic conditions and normal business uncertainty; customer preferences towards
product offerings; the occurrence of a pandemic or other catastrophic event which could create
shortages of labour, products or services required to operate the business profitably; fluctuations in
foreign currency exchange rates; changes in the Company’s relationships with its suppliers. The
Company cautions that this is not an exhaustive list of factors that may affect the forward-looking
information contained in this presentation. Potential investors and readers are urged to give careful
consideration to all of these factors in evaluating any forward-looking information and are cautioned
not to place undue reliance on such information. The Company disclaims any obligation to update
forward-looking information, except as may be required by law. This Investor Presentation is for
informational purposes only and does not constitute an offer to sell or the solicitation of an offer to
buy any securities.
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CAPITAL MARKET PROFILE
Exchange and Ticker Info:
TSX Venture: LOX
Shares Outstanding*:
44,812,778
Shares Fully diluted:
46,267,778
Stock Price (August 27, 2012):
C$0.99
52 Week High / Low:
C$0.99/C$0.405
Market Capitalization (August 27, 2012):
C$45.8 M
June 2012 Trailing 12 Months Revenues:
US$77.3 M
June 2012 Trailing 12 Months EBITDA:
$8.6M
Inside Ownership %:
52%
Institutional Ownership %:
12%
* Shares Outstanding include: 36,052,788 Common Shares and 8,759,990 Convertible Preferred Shares.
PAGE - 4
ABOUT LOREX
LOREX Technology Inc. is a global
leader in the Video Security Market
Space, pioneering “do it yourself”
(DIY) advanced video security
products for consumer applications
and cost effective scalable solutions
for professional applications .
The Company provides consumers
and businesses with leading edge
video surveillance security solutions.
These products are marketed under
the LOREX brand for Consumers /
Small Businesses and under the
DIGIMERGE brand for the Business /
Professional Market.
Responsible people at home or work
can find the peace of mind, costsavings and confidence that LOREX
video monitoring systems provide,
ensuring that valued property,
possessions and loved ones are
properly and constantly watched over
every day, all day and from anywhere.
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LOREX PRODUCT LINES
LOREX offers two lines of products that are
differentiated by the target end user and how
the products are installed.
Plug & Play Wireless
Monitoring Solutions
Do-It-Yourself (DIY - or
Installed by a pro) Video
Surveillance Solutions
The product lines together reflect the breadth of solutions and video
security expertise characterized by the LOREX brand identity.
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LOREX PRODUCT LINES
HOME, FAMILY & BABY VIDEO MONITORS
Crystal clear audio and video with wireless
connectivity
SIMPLE VIDEO SECURITY
Multiple security camera solutions designed in a
simple way for the regular consumer
Easy to install providing complete remote access via
the internet
CONNECTED VIDEO SECURITY
Offers the latest advancements in wireless video
surveillance with simple easy to use camera systems
Plugged into Skype™ for simple remote monitoring
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LOREX PRODUCT LINES
DIGITAL VIDEO RECORDING (DVR) BUNDLES
Cutting edge technology with advanced security features such
as motion recording, real time recording, and high definition
video
Universally compatible with all wired and wireless security
cameras
Access live streaming video via smart-phones or computers
COMPONENT OR INTEGRATED
The innovative Touch security DVR systems are the first
commercial video surveillance recording systems with a touchenabled user interface
Touch screen LCD monitor controls security system with finger
tip
ANALOG OR IP
IP cameras include network, wireless network and high tech
wireless PTZ cameras
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DIGIMERGE PRODUCT LINES
DIGIMERGE serves the needs of professional installers and
system integrators in the rapidly expanding security and
surveillance industry.
DIGIMERGE offers a family of products focused on mobile /
remote connectivity with market leading features at value
pricing.
DIGIMERGE CCTV products set the security industry
standard for price, performance, quality and customer
service.
DIGIMERGE provides full solutions for small to medium size
commercial and industrial applications. The products are
scalable to meet the needs of larger applications and are
also designed to be readily integrated into existing security
systems.
PAGE - 9
DIGIMERGE PRODUCT LINES
Leading Edge Products Include: Analogue, IP and HD Cameras
Digital Video
Network Video
HD Recorders
PAGE - 10
UNIQUE SYNERGIES
Synergies
Offering professional grade products, simplified for Consumers
(DIGIMERGE  LOREX)
Providing ease of use solutions from the Consumer market to
Businesses and Professionals (LOREX  DIGIMERGE)
Economies of Scale – leveraging large production in the mainstream channel to benefit the professional channel
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TECHNOLOGY DIFFERENTIATION
We have Ability to Sustain Price Points by Providing Leading
Technology and Innovative Solutions
1st to Market Advantage
Product Categories – 1st with All-In-One integrated LCD DVR
Solutions – 1st DVR with a Touch Screen Operation
Compatibility - 1st to Offer Mac Compatibility
Connectivity - 1st to Offer Blackberry Connectivity
Ease of installation – 1st to offer Auto Port Forwarding Wizard
Create Demand in the Consumer Market by Designing Innovative Solutions
that Utilize Latest Technology, Form-Factor and Utility
Digital Wireless with Recording Capabilities
Touch Operation
Cameras with Infra Red Filters
Edge DVR Concept
Multi-Function Operation
PAGE - 12
TECHNOLOGY INNOVATION
Global leader of DIY Security Through Leading Technology
that is 1st to Market : Winners of 6 - Consumer Electronics Show
(CES) Innovation Awards
Multifunction Integrated DVR (DVR - picture frame – component - PC monitor)
CES Innovation Award for L20WD “Video Component” 2009
DVR Edge concept – micro form factor, VESA, Flex IR, HDMI output
CES Innovation Award for EDGE DVR “Video Component” 2009
Digital Wireless 7” LCD, 2 cam, SD-DVR recording
CES Innovations Award for LW2700 “Integrated Home” 2010
Super connected Link DVR – Mobile viewing iPhone, Black Berry + Mac and PC
CES Innovation Award for LINK DVR “Video Component” 2010
Internet Live Connect video Gateway, iPhone, Android, PC, Mac compatible
CES Innovations Award for Live Connect “Integrated Home” 2011
Skype Internet video monitoring Live Connect 2, mobile and PC/Mac applications
CES Innovations Award for Live Connect 2 “Health and Wellness” 2012
PAGE - 13
TECHNOLOGY INNOVATION
New Arrivals For 2012
Edge 2 DVRs with touch screen, 1080p HDMI video, full
mobile, PC and Mac apps CE design
Eco 2 / Eco 3 DVRs real time recorders, HDMI output, APF, full
mobile, PC and Mac apps
LiveView video baby monitor
LW2220 Real time wireless D1 (FHSS) CCTV camera and
receiver for DVR
Live Sense PT wireless pan tilt camera and baby monitor
And More In Development……….
PAGE - 14
END USERS
Vigilant and Responsible Homeowners
Vacation and Second-Home Owners
Business Owners
Multiple Property Owners
New Parents
Pet Owners
Caregivers
Installers
Grandparents, Friends, Relatives, Gift-givers
Nature Lovers, Hunters, Gardeners and Curious Consumers
PAGE - 15
HOW WE SELL
We Sell LOREX Consumer Brand Products....
through 3,500 Retail locations across North America such as:
Via the internet through affiliate reseller web portals such as: Costco.com, Amazon.com,
BestBuy.com and Walmart.com
and our Lorex e-commerce estore www.lorextechnology.com
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HOW WE SELL
We Sell Our DIGIMERGE Professional Products ......
through a multi-point channel strategy; security distribution,
IT distribution and direct to dealer/integrator and Fortune
500 end users
utilizing an international sales and stocking distributor
network across the USA, Canada, Mexico, Central America
and the Caribbean
this network includes Wholesalers, System Integrators and
Value Added Retailers such as: ADI, Tri-Ed, Eastern
Distributing and Systems Distributors... and other Partners
PAGE - 17
CURRENT MARKET TRENDS RETAIL
According to IMS Research…..
Market size in North America for LOREX
DIY Consumer product line was US $300
Million in 2010 and is forecast to grow at
an annual rate (CAGR) of 10.8% to
$500M by 2015
The Increasing Need for Security, Connectivity and
Affordable Technology Costs are Driving the DIY
Video Surveillance Market
Analogue video surveillance = 70%
(Cameras, DVRs, etc)
Ave Annual Growth 8.9%
Network video surveillance = 12%
(NVRs, IP Cameras, etc)
Ave Annual Growth 20.8%
Accessories, Covert Cameras = 18%
(Fake Cameras, Cables, etc)
Ave Annual Growth 10.8%
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OUR POSITION IN THE RETAIL DIY MARKET
In 2010 LOREX was the MARKET LEADER with approximately
16%* market share. In 2011, LOREX North American sales grew
37% compared to prior year – significantly ahead of the
industry trend.
Other Active Participants:
* Based on 2010 ISM Research Data
PAGE - 19
CURRENT MARKET TRENDS PROFESSIONAL
CCTV Market size for DIGIMERGE Professional
Product Line was Approximately US $600 Million
in 2011 in North America *
This segment of the market is expected to grow
10% in 2012; and 12% in 2013 *
* These are estimates based on 2008 ISM Market Research Data
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DIGIMERGE POSITION IN PROFESSIONAL MARKET
We Grow Market Share Because:
Product Simplicity and High
Service Level Leading to
Reoccurring Sales from Dealers
and Integrators
DIGIMERGE Sales in 2011 Estimated to Represent
Approximately 1.5%* of the Professional CCTV Market
in North America. DIGIMERGE North American Growth
in 2011 was 17% = Above Average Growth Trend
Ease of Use and Technology
Innovation Allows DIGIMERGE to
Capture Increased Market share
Strong Relationships at the
Corporate Level of our Distributors
Highly Trained Sales Professionals
Recognized by Distributors
Dealers and Integrators
*Estimated based on 2008 IMS Research Data
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HOW WE CONTINUE GROWTH
Continue to Lead in Technology
Innovation
Introduction of New Products &
Evolution of Existing Products at
Consistent Price Points
Retailer Expansion (both Bricks &
Mortar and Ecommerce)
Geographic Expansion
Increased Internal E-Store Sales
Expansion of Professional
DIGIMERGE Products Distribution
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OUTSOURCED MANUFACTURING
We utilize a simple low cost
outsourced manufacturing model
Redundancy of suppliers ensures
competitiveness and reliability
Strong supplier base
manufacturing to the design
requirements of LOREX
ISO certified manufacturing
partners with high quality
standards
Model enables flexible and timely
response to demand changes
PAGE - 23
FINANCIAL OVERVIEW
Select Balance Sheet Info
As of June 30
2012
As of Sep 30
2011
$3,789
$995
Accounts Receivable
$10,332
$10,632
Inventory *
$13,530
$17,153
$32,800
$33,203
$0
$4,168
$12,535
$13,614
Total Liabilities
$13,155
$18,023
Shareholders' Equity
$19,645
$15,180
Expressed in Thousands USD (000’s)
Assets
Cash
Total Assets
Liabilities
Bank Debt / Working Capital Revolver
Accounts payable and accrued liabilities
* Inventory level is in anticipation of sales forecasted; financed by improved working capital.
PAGE - 24
FINANCIAL OVERVIEW
2012 Q3 and Trailing 12 Months P & L Highlights
Expressed in Thousands USD (000’s)
Three Months Ended
June 30
2012
2011
Revenue
$21,218
$16,488
EBITDA
$2,448
$1,464
Earnings Before Income
Taxes
$2,322
$1,347
2010
Twelve Months Ended
June 30
2012
2011
2010
$13,661 $77,288
$57,334
$45,300
$1,390
$8,635
$5,873
$2,788
$1,261
$8,112
$5,457
$2,007
Strong top and bottom line growth over the last three years. See full Financials for complete analysis.
PAGE - 25
FINANCIAL OVERVIEW
Revenues and Earnings Trending Higher
Gross Profit Margin Consistent Year over Year – (2009, 2010, 2011)
(2012* Revenues are Projected at $78M)
Revenue
80
Gross Profit
70
EBITDA
Millions
60
50
40
30
20
10
0
2009
2010
Years
2011
2012 *
Sustained Profitability with 15 Consecutive Quarters of Positive EBITDA
PAGE - 26
MANAGEMENT
Lorex Technologies Inc. is led by an exceptional management team that has over 225 years of
combined experience in consumer products and the security industry. This experience includes
the ownership, operations and sale of Sonigem Products, a business with over $150M in revenue
at time of sale by Reuben Klein, Lorex’s CEO. It also includes executive and senior level
leadership by Lorex’s management team in finance, sales, marketing, operations, logistics,
manufacturing, R&D and e-commerce with leading organizations including Sony, Panasonic, G.E.
Security, Samsung, Sanyo, Acer, Magnasonic, Obus Forme and other leading companies.
Lorex’s senior management team includes:
Reuben Klein, Chairman and CEO
Chris Atwood, Vice President Operations – Lorex Corporation
Eric Miller, Chief Financial Officer
Godfrey D’Cruz, Senior Vice President Operations and Logistics
Gilad Epstein, Vice President Product Management & Marketing
Joel Kligman, Vice President Marketing & Corporate Development – Digimerge
Martin Worndl, Senior Vice President - Product Development
Sufi Khan Sulaiman, Director of Ecommerce and Digital Services
Steven Gold, President, Lorex Corporation
Wayne Hurd, Executive Vice President of Sales & Marketing – Digimerge
PAGE - 27
INVESTMENT THESIS
Market Leader in DIY Consumer and Professional Advanced
Video Security Products
Proven First Mover in Technology Innovation and New Product
Introductions
Revenue Trend Outpacing the Industry while Delivering Strong
Earnings to Shareholders with 15 Consecutive Quarters of
Positive EBITDA
Engaging and Attacking Tech-Savvy Consumer and Professional
Market – Combined Markets are Experiencing Double Digit
Growth that is Expected to Reach over a Billion Dollars by 2015
Capitalizing on LOREX Premium Brand Image in the Retail /
Consumer Space
Expanding Market Share in the Professional Market
Growth Business currently Trading at Low Valuation and P/E
Minimal Capital Expenditures Required
Only Pure Play Public Company Investment Opportunity in this
Space
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