April 2014nibanet.org/wp-content/uploads/2014/07/Tattoff-Investor... · 2014. 7. 30. · Market Opportunity • 35 Million individuals,18-40 years old have tattoos* • 7.5 Million

Investor Presentation

April 2014

© 2014 Dr. Tattoff, Inc. - Confidential

Forward Looking Statements

Certain of the ma-ers discussed in this presenta3on may cons3tute forward looking statements for the purposes of the Federal Securi3es Laws and as such, may involve known and unknown risk. Uncertain3es and other factors may cause actual results, performance or achievements of Dr. Ta-off, Inc. to be materially different from future results of performance or achievements expressed or implied by such forward looking statements. Addi3onal informa3on concerning factors that could cause actual results to be materially different than those in the forward looking statements can be found in Dr. Ta-off Inc.’s filings with the Securi3es and exchange Commission, including Form 10-‐Q and Form 10-‐K. All forward-‐looking statements are expressly qualified in their en3rety by these cau3onary statements.

1© 2014 Dr. Tattoff, Inc. - Confidential

The Dr. TATTOFF Advantage

•  Pure play in $10 Billion+ tattoo removal market* •  Specialized, experienced, & physician supervised operations:

•  Standardized procedures & guidelines •  Creators of Kirby-Desai Scale, the only medically published predictive scale estimating # of tattoo removal sessions

•  Strong, favorable clinic economics •  Brand recognition and strategic marketing roll-out campaign

* Marketdata Enterprises, Inc., 2012, IBISWorld, 2012

2

®


Market Opportunity

•  35 Million individuals,18-40 years old have tattoos*

•  7.5 Million potential candidates**

•  20,000 tattoo studios continually creating new customers***

•  Tattoo removal represents a market opportunity exceeding $10 Billion in US only

* Pew Research | ** Harris Poll | *** US News & World Report


Target Customer

•  Female ≈ 70%

•  Age 18 - 40 years

•  50% have income over $50K

•  Willing to spend to improve “Body Image”

•  Financial ability & personal dedication for treatments

•  10 sessions = $1,000+ (approx.)

•  Not bikers or sailors


Who Else Needs It?

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…Seeking gainful employment…


Those outgrowing their youth-culture trends…

…Needing to erase past mistakes!!!

Strategic Marketing

•  Digital-age demographic (18 - 40 yrs), mostly females

•  Search engine optimization, pay-per-click Internet advertising, social media and additional digital media marketing

•  Traditional media (radio, billboards) to drive web traffic and name awareness

•  Leverage national media and celebrities

•  Cluster clinic locations to maximize advertising expenditures (approx. 3-4 sites/region)


Unpaid Exposure Leading Publications

THE STORY OF YOUR LIFE DOES NOTHAVE TO BEWRITTEN IN INK.

Dr.TATTOFFThe Tattoo Removal Specialists

People change. The tattoo that defined you at 18, may not feel right at age 30. Perhaps you have a new job... a new partner... a new baby... a different life. If you’re ready to remove your tattoo, there is a safe, proven, effective way to remove your tattoo and renew your life. Dr. Tattoff. Click to learn more...

Now 2 Houston Area LocationsWestheimer/Galleria & Sugar Land

Dr.TATTOFFThe LaserTattoo Removal SpecialistsOver 170,000 Treatments Performed

People change. The tattoo that defined you at 18, may not feel right at age 30. Perhaps you have a new job... a new partner... a new baby... a different life. If you’re ready to remove your tattoo, Dr. Tattoff is the safe, proven, effective way to remove your tattoo and renew you life. Click to learn more...

The story of your life does nothave to be writtenin INK!

FREE CONSULTATION

LASER TATTOO REMOVAL

THE STORY OF YOUR LIFE DOES NOTHAVE TO BEWRITTEN IN INK.

Dr.TATTOFFThe Tattoo Removal Specialists

People change. The tattoo that defined you at 18, may not feel right at age 30. Perhaps you have a new job... a new partner... a new baby... a different life. If you’re ready to remove your tattoo, there is a safe, proven, effective way to remove your tattoo and renew your life. Dr. Tattoff. Click to learn more...

Now 2 Houston Area LocationsWestheimer/Galleria & Sugar Land

Dr.TATTOFFThe LaserTattoo Removal SpecialistsOver 170,000 Treatments Performed

People change. The tattoo that defined you at 18, may not feel right at age 30. Perhaps you have a new job... a new partner... a new baby... a different life. If you’re ready to remove your tattoo, Dr. Tattoff is the safe, proven, effective way to remove your tattoo and renew you life. Click to learn more...

The story of your life does nothave to be writtenin INK!

FREE CONSULTATION

LASER TATTOO REMOVALStrategic Ads

High-Traffic Billboard

Brand Awareness

•  Cover page - NY Times and LA Times – Countless other domestic & foreign popular press publications

•  Television, print, internet, radio – Featured articles, management interviews, expert quotes, celebrity endorsements

•  Top unsponsored Google search result 400,000+ website views annually

•  Millions of dollars of free publicity through corporate, medical & celebrity relationships

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Dr. Will Kirby – Dr. Tattoff’s Medical Advisor – Highly publicized as leading authority on tattoo removal.


Corporate Timeline

Public Merger Into Shell Corp.

2004 2006 2008 2011 2012 2013 2010

Enhanced Medical & Advisory Board Corporate Recapitalization

© 2014 Dr. Tattoff, Inc. - Confidential 8

Founded & Beverly Hills Clinic Opens

Market Demand Grows Orange County Clinic Opens

Continued Demand Encino, CA Clinic Opens

Southwest Region Dallas, TX Clinic Opens

South California Region Inland Empire, CA Clinic Opens

Sunbelt Phoenix, AZ Clinic Opens

Southwest Region Houston, TX Clinic Opens

Southwest Region Sugar Land, TX Clinic Opens

Southeast Region Atlanta, GA Clinic Opens

Current Activities – 1H - 2014 •  National Rollout Plan in Place: •  “Best Practices Guidebook” •  Standardized Training Program •  National Branding •  Investor Relations

Milestones to Date •  240,000+ treatments completed •  9 Clinics fully operational •  $$M in free media coverage &

celebrity endorsements

Coming Soon! Q2 - 2014 Fort Worth, TX

2014

Southwest Region Frisco, TX Clinic Opens

Dr. Tattoff Locations


4 Texas Clinics •  Dallas •  Houston •  Frisco •  Ft. Worth*

(*Q2-‐2014)

4 California Clinics •  Beverly Hills •  Montclair •  Sherman Oaks •  Santa Ana

1 Arizona Clinic •  Phoenix

1 Georgia Clinic •  Atlanta

Our Clinics

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Offering Best-in-Class Experience

•  Licensed healthcare professionals on site

•  Highest level of safety & treatment practice

•  Clean, relaxing environment

•  Open 5 - 6 days/week (extended hours)

•  Convenient locations


How It Works

•  Treatment by licensed medical professional

•  Consultation process – Kirby-Desai scale

•  10 treatments typically spaced 6-8 weeks apart

•  Most treatments last under 10 minutes

•  Fee based on size and number of treatments, average total cost approx. $1,000

•  More than 240,000 treatments total to date

11 © 2014 Dr. Tattoff, Inc. - Confidential

Before After

Clinic Growth Capability

Reproducible Business Model •  Standardized interior design •  Equipment and vendors •  Training protocols •  Marketing materials prepared •  Optimum locations pre identified •  New cities under review


Nationwide Growth

Corporate Training Manuals

Ensure Consistent, High-

Level Care

Grand Opening Celebration

State-of-the-Art Equipment

Clinic Model Start-Up

Property •  $300K (approx.) per location to open, including start

up costs and advertising. Opening takes about 120-150 days from site selection.

•  Visible retail location of approximately 2,000 sq. ft.

•  About $90-100K per location net in tenant improvements

•  Typical 5 year lease

Equipment •  Tattoo and hair device – typically $75-125K each,

current pricing on lower end of range. About $30K for computers, office furnishings, etc.

•  Devices typically financed 75%, (~$90K cash expended)

Operations •  $75K for operations – training, pre-opening

marketing

13

Leasehold Improvements (net of LL share - $40,000) includes signage and architecture

$100,000

Laser Equipment (net of financed portion – $75,000)

90,000

Furniture and Office Equipment – phone, computers (net of financed portion – $10,000)

20,000

Pre-Opening Marketing 60,000

Training 15,000

Deposits and Initial Month’s Rent 15,000

Total $300,000


Clinic Financial Model

Revenue

•  $1,000 per tattoo (avg. total cost)

•  $100/treatment ($49/sq. inch) •  Avg. 10 treatments, 6-8 weeks apart

•  75% of patients buy package •  Most pay cash or credit card •  Less than 20% use patient financing

•  ~15% of business is hair removal •  $1,200 avg. cost •  Avg. 7–9 treatments •  More than 75% of clients buy package (avg.)

•  GAAP revenue steps up with 80% of revenue related to previously sold treatments

•  GAAP accounting vs. cash collection dynamics

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Expenses

•  Small clinic staff – manager, patient coordinator and clinician. Second clinician after volume builds.

•  $16K/month 1st clinician •  $23K/month w/ 2nd clinician

•  Clinician license requirements varies by state

•  Other Monthly Overhead •  $9K - Rent and utilities •  $5K - Medical director •  $2K - Supplies •  $2K - Insurance and other misc.

•  Marketing – approx. $7.5K, after initial campaign

•  Total Monthly Cost - $45K to $50K


Accounting/Cash Treatment

-20

0

20

40

60

80

100

GAAP CASH

Owned Clinics

Cash Collections Deferred Revenue Revenue Expenses Net Income Net Cash Flow


0

20

40

60

80

100

GAAP & Cash

Managed Clinics

Cash Collections Revenue Expenses Net Income Net Cash Flow

Clinic Model Summary

Start Up

•  Break-even monthly EBITDA (approx. 6 - 9 mo.)

•  Positive cash flow when achieve an average of 10 patients per day

•  Year 1 – $314K revenue, $600K cash collected & $283K EBITDA loss (approx.)

Established Business

•  Mature at 36 months

•  $1 - $1.3M annual rev. at maturity

•  EBITDA margin ~ 40% at maturity


(000s) Year 1 Year 2 Year 3 Year 4 Year 5

Revenue $314 $784 $950 $1,100 $1,300

Clinic Expenses $662 $696 $742 $804 $815

Opertaing Income (EBITDA) ($283) $149 $266 $356 $546

Depreciation/Interest $65 $61 $58 $60 $60

Clinic Net Income ($348) $88 $208 $296 $486

EBITDA Margin -90% 19% 28% 32% 42%

Cash Collections $600 $800 $950 $1,100 $1,300

Cash Clinic Expenses $598 $635 $684 $744 $755

Cash Flow from Operations $2 $165 $266 $356 $546

Clinic Expansion Plans

0 20 40 60 80

100

2011 2012 2013 2014 2015 2016 2017

Total Number of Clinics (company owned only)

($000) 2011 2012 2013 2014 2015 2016 2017

Clinics/Opened/During/Year 2 2 2 8 12 24 24

Capital/ExpendituresTotal/Expenditures $487 $590 $515 $2,631 $3,983 $7,226 $7,388Amount/Financed 246 166 240 1,154 1,694 3,120 3,221

Total/Cash/Expended 242 424 275 1,477 2,290 4,106 4,167

Year/one/operations 38 (271) (544) (377) (39) (413) 119

Total/Cash/Invested/in/New/Clinics $204 $695 $819 $1,874 $2,329 $4,519 $3,968

Franchise Plans •  Domes0c

•  Begin in 2014 •  Concentrate on Secondary

Markets •  Franchise Fee + Royalty

Arrangement

•  Interna0onal •  Begin in 2015 •  Already have inquiries from

several countries •  Give country territories


Management & Board

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Board of Directors

Eugene A. Bauer, M.D. – Chairman •  Internationally recognized dermatologist , entrepreneur •  Former Dean, School of Medicine, Stanford •  Involved with Conetics (acquired by Stiefel Labs in 2006),

Noesil (acquired by Peplin in 2008), Medgencis Gene E. Burleson – Director •  Successful healthcare entrepreneur/executive •  Founder and CEO of GranCare (NYSE) •  CEO of AMI prior to sale to Tenet Health Systems Joel Kanter – Director •  Veteran early-stage healthcare investor •  Backed over 400 healthcare companies including: Encore

Medical Corporation, Biosystems, Medgencis, I-Flow William Kirby, D.O. – Director & Chief Medical Officer •  Board certified dermatologist and is widely considered to be

a leading authority on laser tattoo removal. •  Developed Kirby-Desai Scale to estimate required tattoo

treatments •  Extensive professional publications on tattoo removal


Management Team John Keefe, CEO & Director •  Seasoned healthcare executive/entrepreneur - raised

$50 million+ for his companies •  Co-founder and COO of Centerre Healthcare •  Former CFO of Intensiva Healthcare, Equicare Capital,

NextCare Hospitals, and Safecare Health Services Harry Zimmerman, COO & EVP •  General Counsel and Executive Vice President of

Encore Medical Corp. from formation to when sold to Blackstone in 2006 for $900 million

•  CFO – Pet DRx Corporation during turnaround and sale to VCA Antech in 2010

•  12+ years of private legal practice, Certified Public Accountant

•  Degrees from the Wharton School and the University of Texas School of Law

Mark Edwards, CFO •  Corp. Controller & SVP of Comprehensive Care Corp. •  CFO of Advanced Rehabilitation Resources, Inc. •  CFO of Sterling Healthcare, and VP Finance & CIO of

Centerre Healthcare.

Medical Advisory Board


Brian Berman, M.D., Ph.D. •  Author of 250+ peer-reviewed scientific and clinical articles, chapters and books •  Included among “The Best Doctors in America •  M.D. and Ph.D. degrees from New York University •  Prof. of Dermatology and Internal Medicine - Univ. of Miami, Miller School of

Medicine.

David E. Cohen, M.D., MPH •  Vice Chair for Clinical Affairs at NYU’s Langone Medical •  Director of NYU Dermatologic Associates •  Published authority in clinical dermatology and national and international lecturer. •  Editorial Board/Advisory of the Journal of Drugs in Dermatology, Dermatitis, and Skin

and Allergy News

Tejas Desai, D.O., FAOCD •  Board certified dermatologist, fellowship trained Mohs Micrographic Surgeon •  Assoc. Professor of Dermatology at Western University of Health Sciences

Michael H. Gold, M.D., FAAD •  Board certified dermatologist/dermasurgeon and the founder of Gold Skin Care,

Center, Advanced Aesthetics Medical Spa, The Laser and Rejuvenation Center and Tennessee Clinical Research Center in Nashville, TN

•  Clinical Assistant Professor at Vanderbilt University School of Medicine and School of Nursing

Neil A. Swanson, M.D., FAAD •  Director of Dermatologic Surgery at Oregon Health & Science University •  Former Chairman of the Department of Dermatology •  Former Board Director for the American Academy of Dermatologists

Financials & Forecasts

2011 2012 2013 2014 2015 2016 2017Clinics'('Operating 5 7 9 17 29 53 77Clinics'('Pre(Open'&'Open 0 8 11 21 35 59 83

Gross-Cash-Collections $3,817 $4,869 $5,529 $10,065 $19,120 $34,371 $55,346

Less:'Contractual'Allowance (986) (1,351) (1,263) (1,418) (1,555) (1,690) (1,795)Less:''Deferred'Revenue (165) (318) (611) (2,019) (3,608) (5,413) (7,193)

Revenue $2,666 $3,200 $3,655 $6,628 $13,957 $27,268 $46,358

Clinic'Operating'Expenses 2,112 3,094 3,862 7,353 14,520 26,102 41,256

Clinic'Operating'Income $554 $106 $(207) $(726) $(564) $1,166 $5,102

G&A'Expenses 2,750 2,567 3,117 3,754 4,373 5,279 6,468

Operating-Income-(EBITDA) $(2,196) $(2,461) $(3,324) $(4,479) $(4,937) $(4,113) $(1,366)

Depreciation/Interest 277 378 977 1,172 1,560 2,667 4,162

Net'Income $(2,473) $(2,839) $(4,301) $(5,651) $(6,497) $(6,780) $(5,528)

Cash-Provided-by-Operations $(2,031) $(2,143) $(2,713) $(2,460) $(1,328) $1,300 $5,827

Cash-from-Clinic-Operations $719 $424 $404 $1,294 $3,045 $6,579 $12,295

ForecastActual


Financials & Forecasts Clinics Opened More than 12 Months


2011 2012 2013 2014 2015 2016 2017Number/of/Clinics 3 4 7 9 17 29 53

Gross/Cash/Collections $2,985 $4,126 $4,695 $6,060 $12,210 $24,091 $40,957Less:1Contractual1Allowance (822) (1,286) (1,263) (1,211) (1,555) (1,690) (1,795)Less:11Deferred1Revenue 0 27 (214) (424) (189) (194) (347)

Revenue $2,163 $2,867 $3,218 $4,425 $10,466 $22,207 $38,814

Clinic1Operating1Expenses 1,482 2,145 2,441 3,362 7,614 15,409 27,065

Clinic1Operating1Income 678 696 546 741 2,178 5,405 9,296

Clinic/Operating/Income/(EBITDA) $681 $722 $777 $1,063 $2,852 $6,798 $11,749

Cash/from/Clinic/Operations $681 $695 $991 $1,486 $3,041 $6,992 $12,096

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•  Large and developing market

•  First-mover advantage

•  Strong competitive advantage – Pure play clinics

•  Proven business model and clinical expertise

•  Experienced and engaged Board and Management

•  National media exposure and established brand

Summary Highlights


Contact Information

John Keefe Chief Executive Officer [email protected] Harry Zimmerman, Esq. Chief Operating Officer [email protected] Headquarters: 8500 Wilshire Blvd, Suite 105 Beverly Hills, CA 90210 888-828-8633 www.drtattoff.com


Documents

April 2014nibanet.org/wp-content/uploads/2014/07/Tattoff-Investor... · 2014. 7. 30. · Market Opportunity • 35 Million individuals,18-40 years old have tattoos* • 7.5 Million