APT MotoVox Group, Inc. Shareholder Update

USA - English

KANSAS CITY, Mo., July 23, 2014 /PRNewswire/ -- Dear APT Group, Inc. Shareholders:

We are APT MotoVox Group, Inc., serving the world as a propulsion technology company that manufactures and distributes advanced environmentally friendly transportation, utility and recreational powersport products.

First Initiative – Expanding the product line from recreational to light transportation products.  This move provides APT/MotoVox the opportunity to enter into both higher profit and gross margin dollar technologically advanced products.

MotoVox® has laid the foundation for this initiative throughout 2013 and 2014 through the following objectives:

1.  We expanded our line from recreational to light transportation products.  The light transportation "commuter" sector is growing at a record rate.  In certain categories, demand far exceeds supply.  People are simply commuting differently today. 

To answer this demand the Company has developed a unique "on-road commuter" motorcycle line that is sized in between a full size motorcycle and a scooter.  APT predicted this trend in 2012 and began developing the new line.  The model is small enough to roll into a college dorm room, park into a bike rack, easily load into a van or pickup, or load in a rack on a motor home. 

MotoVox® endeavors to unveil several models over the next few months.  The first model to be announced in Q4 2014 is the 150cc ON-ROAD production motorcycle that achieves 100-150 miles per gallon.  This motorcycle is unique in six important ways:

1. Design
2. Size
3. Performance
4. Fuel Efficiency
5. Automatic Altitude Compensation
6. Ultra Low Emissions

The Company believes the motorcycle will prove to be the cleanest and most fuel-efficient on-road production vehicle of its kind, setting a new standard that will make a measurable impact on the motorsport industry.  The Company has already received pre-production order commitments from U.S. and International buyers.  

2.  After an investment of over $4M and nearly four years of development, SmartCarb® is ready for primetime.  The small engine industry continues to scramble in finding ways to meet current and future emission regulations without compromising performance or raising manufacturing costs by using expensive catalytic converters.  SmartCarb® is our solution to costly and complicated fuel injection systems that many small engine applications simply cannot use due to cost and complexity.  SmartCarb® compensates for altitude, allows for exceptional gains in performance and fuel economy, and is cost effective and simple.  The opportunities are seemingly endless as the small engine market exceeds $19 billion in annual revenue.   

Much of 2012 and 2013 were focused on sponsoring racing teams with the SmartCarb® to utilize our disruptive technology.  In our industry, the most effective way to market technology is to first introduce it to the racing world and let them tell the story.  We sponsored many expert riders and they told the story over and over again, increasing SmartCarb's® exposure that opened doors for OEM interests.

SmartCarb® began as a billet product.  In 2013, we moved to investment casting.  Our final move is to die casting in 2014-15 allowing for mass production that will lower the cost even further to the consumer.  

This year, we are selling SmartCarbs® to the after-market as APT continues to test and negotiate OEM contracts.  This product is an exclusive technology to the MotoVox® brand within its product categories.

SmartCarb® is the first fuel system of its kind to effectively atomize heavy fuels such as military spec jet fuel and diesel, which has attracted the interest of developers and agencies such as Unmanned Aerial Aircrafts (UAV) and submersible outboard marine engines for armed forces and other government agencies.

This year we have increased aftermarket sales while preparing to enter into development agreements with OEMs. This takes significant capital, time, and testing.  We expect to be providing the SmartCarb® to OEMs in 2015.  

The SmartCarb® has entered into a new opportunity with outboard marine engines.  Our initial target is the U.S. military special forces tactical units and border patrol.  There is a significant need for the APT fuel system to meet mission critical requirements such as: 1) Impervious to electromagnetic pulse (EMP) signals; 2) Multi-fuel capabilities such as regular gasoline, diesel, or military spec heavy fuels; 3) Self-compensating for altitude without electronics and sensors; 4) Lower emissions.

The SmartCarb® has proven multi-fuel capabilities on unmanned aerial aircraft, and now outboard motors, achieving what NO OTHER fuel system can without costly, low performing and complicated electronic systems.

3.  Expand its distribution channels:  Standard MotoVox® products were initially targeted to mass merchants with market entry price points.  We achieved shelf space in some of the world's largest retailers and quickly brought the MotoVox® brand to consumers across the country.  This year, MotoVox® has developed a "Pro line".  The new specialty line will feature upgraded designs and proprietary technology that will result in higher margins and expanded selling seasons for both APT and its dealer partners.  MotoVox® Pro brings new products to the consumer that initiates the transition to the performance advantage vs. the price advantage.  MotoVox® Pro will significantly expand distribution through specialty dealers and direct sales channels. 

APT MotoVox® has initiated its launch into Latin American markets.  Although we have multiple distribution opportunities, we remain focused on completing our agreement with a strategic partner in Latin America.  We expect to finalize this agreement within a short time.  This partner is one of the largest companies in Latin America with distribution channels throughout Central and South America.  This is a complex partnership that provides technology, distribution, and product development between both parties. 

We expect to generate $400,000 to $600,000 in Latin American gross distribution revenue this year as a controlled strategic launch.  We expect annual revenues to grow to $3M to $5M by the end of 2015 and could easily grow 40% to 60% annually for the next few years.

Second Initiative – The sale of "non-revenue" producing assets

APT has accepted an offer for the sale of certain non-core corporate assets that do not produce revenue and are not vital to operations or the Company's long term business plan.  The transaction is scheduled for closing in September 2014.  The proceeds are targeted for the direct retirement of debt instead of selling equity, which will result in improvements to the Q3 balance sheet, cash flow and operating expenses.  The asset sale will result in a nearly 40% reduction of debt on the balance sheet.  In addition, the sale of these assets will significantly reduce operating expenses.  

Third Initiative – Restructure and improve the balance sheet

We have strengthened our current balance sheet through the conversion of seasoned debt to equity, with the added impact of improved cash flow.  This action provided the following benefits:

1. Nearly three million dollars of debt has been removed from the Q2 balance sheet.
2. Raised immediate cash for:
   1. Development and launch of new SKUs for 2014 and new SKUs for early spring of 2015
   2. The testing, development and presentation of fuel systems for marine applications
   3. Fees for the PCAOB Audit
   4. Cash flow during off season sale months
   5. Securing lower cost production financing
   6. Production capital for international orders

Key impacts of the restructured balance sheet are:

1. Between $600,000 to $800,000 annual savings in interest expenses
2. A stronger balance sheet with improved performance ratios

COMPLIANCE & REPORTING

APT's greatest challenge to moving the Company public has been the audit.  As stated in previous communication, the audit process has taken much longer than anticipated.  This is due to the following reasons:

1. APT converted to a new ERP (Enterprise Resource Planning) system weeks prior to the audit.  This caused significant challenges in the transfer of trial balances and files.
2. Former FROZ agreements required extensive derivative calculation work.
3. APT possessed equity and loan transactions dating nearly six years all in which required extensive testing.
4. APT's accounting process required critique and changes.

APT and its contractors underestimated the time required to complete this task.  APT should have started the audit process prior to the merger/acquisition of FROZ.  APT hopes the shareholders will remain patient and forgiving for the extra time taken to complete this task.  APT is near completion as we are in the final phase of the audit.  The executive management team at APT and its contractors have managed this process ethically and responsibly and no matter the consequence, will not compromise the process by cutting corners.  We thank you for your attention and continued support.

Additional Items of Interest

Share Structure

Common Shares

We have 20,000,000,000 authorized common shares and 500,000,000 authorized preferred shares.

At the signing of the Share Exchange Agreement on March 27, there were 897,071,625 issued and outstanding common shares of FROZ.  As of July 17, 2014, we have 5,394,024,814 common shares issued and outstanding.  Of that number, 2,735,501,971 common shares were issued to the legacy investors and employees of APT, all of which are restricted for six months from the issuance date.  

Since the reverse merger, APT strengthened the company by utilizing less than 9% of the authorized shares for debt conversion.  This modest dilution was necessary to eliminate only that debt which restricted corporate growth.  APT is stronger and better as a result, which serves long term shareholder interests. 

Preferred Shares

We have four classes of preferred shares: A, B, C & E.

There are no shares of Class A Preferred Stock issued or outstanding. 

Old FROZ management retained 500,000 shares of Preferred B Stock in accordance with the terms of the Share Exchange Agreement. 

On May 9, 2014, we announced the creation of two new classes of convertible preferred stock, Class C and Class E, for exclusive issuance to the legacy investors and employees of APT.  We authorized and issued 19,738,646 Class C Preferred Shares and 22,155,729 Class E Preferred shares exclusively to the people who worked tirelessly for years to develop our products and to get them on store shelves.  Class C is restricted for 18 months from the issuance date and Class E is restricted for 12 months from the issuance date. 

Equity Partners

The Company began operations in 2008 with angel capital investment and then financed production with working capital loans.  We also utilized account receivable factoring companies that were expensive, placed limits on orders, and made it hard for us to manage our own cash flow.  After reviewing several options and interviewing multiple firms, we selected IronRidge Global, Tangiers Capital, and Mammoth Capital as our partners to remove the liabilities from our balance sheet enabling the company to grow the business.  Management made a strategic decision that was in the best long-term interests of the Company.  

Name Change and Ticker Symbol Change

Our new ticker symbol is MTVX. The new name of the Company is APT MotoVox Group, Inc.

APT MotoVox Group, Inc., Historical Overview

From 2008 to 2013, APT invested over $20M in the development of technology, an emissions testing laboratory, product development and the acquisition of an 18 acre campus of land and buildings. We developed a scalable corporate infrastructure of customer service, service & warranty, product development, engineering, sales, marketing, supply chain and quality control operations.  In addition to these expenses and investments, APT recruited the management team and staff needed to drive a high revenue growth business. 

In efforts to minimize the sale of equity in the early stages of the Company, we raised a significant amount of capital through debt financing to fund operations, acquisitions and patented technology development, while carrying planned losses.  While this debt was necessary to build and scale the Company, the weight on our balance sheet and the associated interest costs inhibited our continued growth.  Our transition to a public company provides us with the tools necessary to improve our balance sheet and the growth capital to drive the Company towards profitability.

About APT MotoVox Group, Inc.
APT MotoVox Group, Inc. is a Delaware registered corporation headquartered in Kansas City and is the holding company for the MotoVox® motorsport product line, SmartCarb® patented fuel system, and the Sonic Flow small engine technology lines (http://www.motovox.com/ and http://www.powerapt.com/).

MotoVox® has become the fastest growing brand of small engine price-point powersport products in the world, with nearly 100,000 powersport products sold to date earning nearly $25 million in less than three years of commerce. 

Forward-Looking Statements
Some statements made in this press release are forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. We use words such as "anticipate," "believe," "expect,'' "future," "intend," "plan," and similar expressions to identify forward-looking statements. These statements including those related to the growth of the industry and the Company's performance, are only predictions and are subject to certain risks, uncertainties and assumptions. Additional risks are identified and described in the Company's public filings with the Securities and Exchange Commission. Statements made herein are as of the date of this press release and should not be relied upon as of any subsequent date. The Company's past performance is not necessarily indicative of its future performance. The Company does not undertake, and the Company specifically disclaims any obligation to update any forward-looking statements to reflect occurrences, developments, events, or circumstances after the date of such statement.

Contact
William Maher, SVP
APT Group, Inc.
[email protected]

Paul Knopick
E & E Communications
(940) 262-3584
[email protected]

SOURCE APT MotoVox Group, Inc.