Xodtec Group USA, Inc. (OTCBB: XODG) is an energy-saving lighting solutions provider based in Taiwan. Xodtec provides high performance and cost-effective energy-saving LED (light emitting diode) solutions and traditional lighting products for private companies, public facilities, residential communities, factories and households. XODG products provide optimal energysaving lighting solutions designed to meet energy management requirements. Xodtec's lighting solutions provide many benefits over traditional incandescent, halogen, fluorescent, and compact fluorescent (CFL) light sources, including lower energy consumption, longer life spans, and absence of hazardous materials, lower maintenance costs and greater design flexibility. Xodtec's proprietary digital control chipset and remote control technologies can be easily integrated into wireless and Internet applications, video conferencing, and 3G communication systems, allowing users to monitor and analyze energy consumption and lighting equipment status in real time. Consumers use Xodtec products for interior and exterior lighting, and to create unique visual effects superior to traditional lighting. Industrial applications include signage, automotive interior and exterior lighting displays and gaming consoles which are marketed under the Shinex brands. Xodtec has more than 200 franchised stores and service stations in Taiwan currently and plans to enter the Chinese market in late 2009.
Outlook
Relative to alternative lighting products, LED’s offer advantages in terms of efficiency, color, size, speed, cycling, waste heat, failure, shock resistance, focus, toxicity, and perhaps most importantly, long-term economics. As predicted by Haitz’s Law, discussed later in the report, LED technology will continue to become both more economical and suitable for an ever expanding array of applications. A recent report from Strategies Unlimited predicts that the $5 billion LED market will grow 24% annually from 2010 to 2013, with much of the demand coming from Southeast Asia. Recognizing this opportunity, XODG already has begun expanding
distribution beyond its home base in Taiwan into China and throughout the region.
Energy Efficiency Solutions
XODG energy efficiency solutions include energy efficiency engineering and program management. XODG offers a full spectrum of engineering and total solution services required to complete facility energy management projects. XODG is one of the few in the region capable of integrating energy saving opportunity assessment, program design, program management, implementation with turn-key engineering and construction services, and performance contract with financial solution arrangement. The solution is tailor-made to meet the customer’s best interest. XODG services include commercial office buildings, college and high
school campuses, hospitals, hotels, retail stores, high technology, light industrial, and water/wastewater treatment facilities. In addition to, facility energy use optimization assessment, we also built up its energy saving technical competence in areas such as power metering and management, chillers and chiller plants, HVAC systems, automated electricity demand management systems, and air compressors. Two potential energy optimization products, one for air compressors and one for facility automated demand management system, are also under development and expected to be commercialized in the near future.
Localization Service
XODG globalization services span industries worldwide and include adaptation of marketing strategies to regional requirements specialized in energy saving and IT
sectors, such as energy saving industry, energy sources, material, gas industry, automobile, lighting, pollution. The localization service follows the localization process of adapting software and accompanying materials to suit a target-market locale with the goal of making the product "transparent" to that locale, so that native users would interact with it as if it were developed there and for that locale alone. XODG’s software localization solutions are geared specifically for
software targeting global markets. XODG assists software developers deliver professional and culturally sensitive localized software faster to the market than their competition, at a competitive price. The hardware experienced localization solution helps leading hardware and equipment manufacturers deliver professionally localized products faster to the market than their competition and at a competitive price.
XODG Marketing, Manufacturing and Growth Strategy
XODG had 50 employees as of 6/24/09. The corporate headquarters are in Carson City, Nevada and Jhonge City, Taiwan. Following are comments on XODG marketing, manufacturing and the Company’s growth strategy.
Marketing
XODG sells through an array of outlets driven by the target market application:
Architectural, garden, public lighting: Marketing through internal sales teams, franchise channels, and public project management channels and individual lighting agencies that sell to government / construction / public lighting design houses.
Commercial and residential lighting: Marketing through franchised stores, service stations and interior decorators. XODG believes customers are better served by selling through these outlets which sometimes bundle sales and installation.
Energy efficiency solution and localization service: Working through this broad range of industry relationships, XODG also markets its service offering.
Manufacturing
XODG relies on outsourced manufacturing and assembly. XODG engineers and designs all LED lighting systems internally and purchases all LED’s used in LED lighting products and systems from qualified 3rd party manufacturers in Asia and the U.S.
Growth strategy
As noted by XPDG President Curtis Su, the Company’s recent success reflects the successful effort to distribute LED streetlights into the Chinese market, and the Company will continue to build the distribution network and product offering to attack the market opportunity in Southeast Asia and Europe. XODG identifies the following drivers as the core of the Company’s growth strategy:
Capitalizing on opportunities in target markets by introducing new products and expanding the distribution network for existing products.
Expanding the white light LED product lineup to leverage the unique features and efficiency of the Ares series of products.
Expanding the color-changing LED product lineup as the functionality of the XODG controller technology enables users to change colors or brightness remotely becomes increasingly attractive for accent lighting in the modern living environment.
Developing and protecting intellectual property to expand the product offering and to create potential licensing opportunities.
Leveraging the strength of the distribution network by expanding beyond the 200 franchised stores and service stations selling XODG products to reach over 30 distributors in over 20 countries.
The Lighting and LED Markets
Driven by Increasing Asia/Pacific Demand, Electric Lighting and Lighting Fixture Demand to Grow Globally through 2012, With LED Demand Expected to Double: In a report entitled “World Lighting Fixtures”, the Freedonia Group estimates that demand for lighting fixtures will grow 5.2% annually to $118 billion by 2012, when China will become the largest fixture market, consuming 20% of global sales. In the “World Electric Lighting” report, the Freedonia Group estimates that demand for electric lighting will increase 7.4% annually, reaching $40 billion by 2012, with growth again driven by China as well as Brazil, Russia and India. With regard to LED lighting, The Freedonia Group estimates that Asia/Pacific demand will double between 2007 and 2012, driven by growth in utilization for both construction and manufactured goods.
Strategies Unlimited Forecasts 24% Annual Growth for High-Brightness LED, Approaching $15 Billion in 2013: LED industry research expert Strategies Unlimited recently announced the availability of a report estimating that the high-brightness LED market grew by 11% in 2008 to $5.1 billion, will fall by 3.7% in 2009, with rapid growth of 24% expected for 2010 – 2013. The Tremendous Market Opportunity Has Attracted a Many Small and Large Operators: Reflecting the market’s view of the LED opportunity, the EnergyStar.gov site lists 115 U.S. manufacturing partners and 7 approved Taiwanese manufacturers. Publicly traded companies with LED related businesses are numerous and include titans like Philips (PHG), General Electric (GE), Honeywell (HON), Toshiba (Tokyo: 6502), Siemens (SI) and more focused LED companies like Nexxus Lighting (NEXS), Energy Focus (EFOI), LSI Industries, (LYTS), Cree Inc. (CREE), and Lighting Science Group (LSCG).
Haitz’s Law for LED Advances Mirrors Moore’s Law for Chips: Roland Haitz, who was a scientist for Agilent Technologies, predicted that the amount of light generated by an LED will increase by a factor of 20 every decade while the cost per lumen will fall by a factor of 10. Haitz’s Law implies that LED lighting should become technically suitable for an ever increasing array of applications, but also demands that LED manufacturers remain committed to ongoing demand.
Growth Driven LED Economics, Not Solely Environmental Sensitivity or Superior Functionality: As illustrated by LSI Industries (NASDAQ: LYTS) in an analysis of its Crossover LED technology relative to a traditional 2x2 lighting fixture, the 85%+ reduction in energy consumption allows a Crossover user to reach breakeven in 2 years without approximately 45% less total expense over a six year period.
Management
Yao-Tin (Curtis) Su. Age 45. Mr. Su serves as the Company’s Chairman of the Board of Directors. Since 2007, Mr. Su has served as the Chairman of the Company’s subsidiary, Xodtec Technology Co., Ltd., and from 1997 as the Chief Executive Officer of another of the Company’s other subsidiaries, Targetek Technology Co. Ltd. Mr. Su received a Bachelors Degree from Soochow University (Taipei, Taiwan) and was the Valedictorian of the Air Defense Missile School of the United States Army in Fort Bliss, Texas. Mr. Su also served in the Army of Taiwan from 1979 to 1981.
Chao-Wu (Mike) Chou. Age 51. Mr. Chou serves as Chief Executive Officer and Director. Simultaneously therewith and since December 2008, Mr. Chou serves as the Chief Executive Officer of the Company’s subsidiary Xodtec Technology Co., Ltd., where he is responsible for the formulation and execution of corporate strategies, integration of resources and setting and achieving sales revenues and profit goals. From July 2003, Mr. Chou served as the Senior Vice-President of Elitegroup Computer Systems Co., Ltd. Mr. Chou received a Masters Degree from National Chiao Tung University (Taiwan) and his Bachelors Degree from National Taiwan University of Science and Technology.
Hui-Yu (Rachel) Che. Age 43. Ms. Che serves as the Company’s Chief Financial Officer and Director. Since 2001, Ms. Che has served as the Chief Financial Officer of the Company’s subsidiary Targetek Technology Co., Ltd. Ms. Che is a certified public accountant and has a degree from National Chung Hsing University.
