POET | Overview

The sound systems market is overloaded with outdated concepts and mass-produced goods from Asia

Many people are tired of their old stereo systems. They want to rid their apartments of bulky speakers and annoying cables. But does the market have any alternatives? So-called "smart" sound systems and sound bars, which are usually manufactured on the cheap in the Far East, are not really an alternative to a real hifi system in terms of sound quality. They may look very discreet but do not provoke enthusiastic reactions from sophisticated customers due to their bland design.

More and more people are using ONLINE music services instead of CDs

While CD sales are declining , digital music services such as iTunes, iMusic, Spotify, Deezer and many more are conquering the market. Millions of people want to stream music from their smartphones or tablets via their hifi system (Source: IFPI Internat. Federation Phonographic Industry).

And VINYL is experiencing a miraculous renaissance

In Germany, vinyl sales are increasing by 30% every year. And rightly so: An LP is the pleasant, slow and stylish alternative to fast-paced yet convenient music services (Source: IFPI Internat. Federation Phonographic Industry).

POET develops and produces exclusive sound systems that take this trend into account.

A sound system has to have a high-class design and should use as few cables as possible. It must be easy to use. And it needs to deliver an authentic, crystal-clear sound. This might sound logical to you, but strangely enough there isn't a single product on the market that satisfies all demands equally. This is where we come in. Test reports and hundreds of customers have confirmed that POET sound systems are unique in terms of design, use and sound quality.

The POET engineering team has more than 20 years of experience developing high-end sound systems. Our knowledge of how to achieve an authentic, honest reproduction of the original sound is based on this experience.

We employ international top designers, such as AUSTRIAN DESIGN AWARD WINNER Thomas Feichtner in order to ensure top-class aesthetics.

This is combined with our vision of a re-simplification of consumer electronics. Our motto is: Unpack, plug in and play. No need to download an app or study an instruction manual!

And we recognize trends straight away: wireless meets vinyl! Our fonetta° is an all-in-one record player with speakers, amplifier and wireless streaming: no cables and compact integration in an elegant design!

Successful market entry

We have been able to generate revenues of more than EUR 580,000 without advertising and external sales since our market entry two years ago. In Austria, we are pursuing a direct sales strategy. That means that we target end customers directly by cooperating with furniture stores such as e.g. Neue Wiener Werkstätte. We were even able to conclude distribution agreements with leading distributors in Hong Kong, Seoul, Beirut and Paris and, in 2015, registered orders worth more than EUR 95,000. In 2015, we almost reached the break even point.

Now we want to climb to the next level with the help of the Companists: Expanding sales in the US and Asia through cooperation agreements with distributors. And, in the EU, installation of POET boutiques in the hot spots of European metropolises.

We are motivated by the vision that listening to music can be made into a special and valuable experience again. We want to create the timelessly elegant and simple systems to do this with.

We financed all the years of research and development entirely by ourselves. Our products have been extensively tested, licensed and are already being produced in small batches in Graz.

Our range of products encompasses three models: poet-one°, fonetta° and pandoretta°

poet-one°

• The Plug&Play sound champion, starting at EUR 1,790
• A sound system could not be any simpler.
• Design by AUSTRIAN DESIGN AWARD WINNER Thomas Feichtner.
• The poet-one° with its attractive price was specifically developed for the European market.

fonetta°

• Wireless meets Vinyl. EUR 2,890
• Wireless music streaming from your smartphone is very practical.
• But putting on a record is much cooler.
• The fonetta° makes both options possible and delivers best hifi sound quality.
• The fonetta° is taking part in the LP renaissance.

pandoretta°

• The 360° flagship. € 3.490,--
• A sculpture for the particularly sophisticated.
• Thanks to the seven invisible speakers, the pandoretta° guarantees outstanding sound irrespective of your position in the room.
• The style icon comes across as even more elegant when placed on the optional base° made from oak or walnut.

All models boast the following features:

• Elegant materials such as wood, stainless steel, finest components
• Wireless music streaming via the newest generation of no-loss Bluetooth° with aptX®
• Optional WLAN (Airplay)
• Integrated, high-range class D amplifier with 170 Watt sinus
• Unique mono sound: The sound is equally outstanding no matter where you are in the room
• Automatic wake-up and standby
• Automatic input selection: Whether streaming, LP or television, you never need a remote control

More product ideas currently being developed. For example, we are already working on a multi room solution and a wireless stereo system. You can expect great things from us in the future!

We develop and produce our sound system independently. We earn money by selling the sound systems to end customers, dealers and distributors.

Production in Austria

Assembly and quality control of our sound systems is conducted at the company headquarters in Graz. Thanks to efficient logistics, we registered premiums, i.e. margins, of between 40 and 48% on our production costs. The majority of our high-quality dealers are located within a radius of 250 km which guarantees ideal and perfect quality control.

We use only the best materials such as brushed steel for the outer casing. The internal sound bodies of our systems are made from densified wood (MDF medium density fiberboard) and resemble a violin's body more than the regular plastic, injection molded cages that we are used to seeing. Our sound systems are MADE IN AUSTRIA. Each device is tested prior to shipping and is sampled by an audio engineer.

Distribution outside Europe

We cooperate with distributors outside of Europe. For logistic and financial reasons, cooperating with distributors outside of Europe is currently our first choice at this point. Distributors take care of import, sales and marketing in their respective countries, and ensure repairs in cases of warranty claims.

We already have agreements with the following renowned distribution partners:

• SCHMIDT Marketing, Hong Kong, importer of LEICA and METZ TV
• HEIS, RP Corp, Seoul: professional distributor of audio systems in South Korea
• TEKNOSAL, Beirut

Direct sales in Europe: POET boutiques

We are going down a new path in Europe by installing POET boutiques (sales areas in large stores) at hot spots in European metropolises. Only a small share of our target group reads specialized hifi magazines or shops in hifi stores. That is why we are going to pick up potential customers in places they normally frequent: furniture stores, luxury hotels, luxury shopping centers.

A POET boutique is a 6-10 m² shop in the POET design that is located within a store or hotel that attracts large numbers of our target group.

All models will be on display in POET boutiques. Interested customers can watch a promotional video on a fixed iPad and listen to the sound via a POET sound system. Customers can also call a POET consultant directly with questions about the products from the boutique. At peak times, there will be a trained POET consultant on site for personal demonstrations.

Marketing & PR

We invest in targeted online marketing (Google AdWords) and advertorials in selected magazines and newspapers. In addition, we are very good at public relations, as the following examples illustrate. All press reports so far have been editorials and have not cost us a single euro.

Online-shop (EU only)

Thanks to the favorable press reports, we also attract customers who order through our online shop. They are still the smallest group of customers but we intend to increase this number to approx. 4 % with the help of online marketing measures and advertorials. Our 14-day return policy makes it easier for customers to finalize their orders.

POET assumes a clear position among the other market participants. So far, a truly overlooked position.

• Unique design: The exceptional designer Thomas Feichtner (Swarovsky, Adidas etc.) from Vienna achieved a great success with his design that is being praised and recognized all over the world. Our sound systems are beautiful pieces of furniture as well as technical devices.
• Simplest operation ever. Our sound systems require neither remote controls, nor buttons nor specific apps. 100% Plug&Play. Customers can play music with any modern smartphone or tablet within seconds of unpacking our product. Wake-up, standby and input selection (Bluetooth/WLAN/TV) are also fully automated.
• Unrivalled sound in the category of wireless sound systems. This is not only evidenced by customer and dealer feedback but also in independent tests (FINANCIAL TIMES, WIRED, MAC LIFE). A unique characteristic of our sound systems is the option of mono sound that has the advantage over stereo that customers who are constantly moving around in a room will always experience the same amazing sound quality.
• Quality made in Austria. While almost all manufacturers of audio systems produce their goods in low-income countries and thereby accept defects in quality, ecology and ethics, we consistently manufacture in Graz, Austria and buy most of our components in the immediate surroundings.

Our target group can be narrowed down according to the following factors:

• Tendencies and attitude to life: People who like the beautiful, high-quality and elegant things in life; people who buy music online and want to listen to good quality sound via their music systems; people who have rediscovered vinyl but who do not want a bulky stereo system in their living room.
• Jobs: Business people, managers, freelancers.
• Income and age: High-income earners between the ages of 25 and 60
• Region: In the EU, as opposed to developing countries, education and income are distributed evenly across rural areas. For logistic reasons, however, we will focus on European metropolises with more than 500,000 inhabitants and on large cities outside of Europe, such as Hong Kong, Seoul, Singapore, Tokyo, New York, Los Angeles etc.
• Trend:

This chart reinforces the application opportunities of our new model, the fonetta°.

With the fonetta°, we are introducing one of the first high-quality, wireless sound system with an integrated record player.

Market Volume

EU: 400 million people › number of people in target group 12% › 48 million › potential customers 3% › 1.4 million potential customers in the EU

ASIA: mega cities 200 million people › number of people in target group 4% › 8 million › potential customers 5% › 400,000 million potential customers in Asian mega cities

USA: 300 million people › number of people in target group 15% › 45 million › potential customers 3% › 1.3 million potential customers in the US

POET is already active on the market and is mostly self-sufficient. We already covered the costs for research and development. Therefore, we can use the new capital generated in the Companisto campaign to invest in expansion measures and advance production in order to exploit scaling effects.

Stage 1: EUR 100,000

• Online Marketing (Google AdWords, Facebook), advertorials
• Purchase of materials for storage; transition to advance production

Stage 2: EUR 200,000

• All stage 1 measures, as well as:
• Opening 3 POET boutiques (shop-in-shop) in Hamburg, Berlin and Munich

Stage 3: EUR 300,000

• All stage 2 measures, as well as:
• Opening 3 POET boutiques (shop-in-shop) in London, Milan and Zurich

Stage 4: EUR 400,000

• All stage 3 measures, as well as:
• Opening 2 POET boutiques (shop-in-shop) in New York and Los Angeles

We were able to win over Stefan Polzhofer as a co-partner. Stefan is CEO and co-owner of the Neue Wiener Werkstätte (NWW) & KAPO, a manufacturer of exclusive furniture, windows and doors, and has over 200 employees. NWW is both supplier and sales partner of POET.

In May 2015, Mr Campbell Gunn joined our business for 10%. Campbell is a Scotsman who studied business in Oxford and worked as an investment banker for many years. He lives in Vienna and Tokyo and currently runs a photo agency.

We are currently looking for music and design enthusiasts who like to sell and give people advice. In addition, we invite all music lovers to become part-time POETs and to present our sound systems in private. It is important that you have connections to our target group: business people, managers and freelancers. Get in touch - we look forward to talking with you!

As POET is an Austrian company headquartered in Austria, investments are subject to Austrian tax law. In the case of Austrian private investors or Companists investing through an Austrian joint-stock company [Kapitalgesellschaft], returns from the equity crowdfunding campaign are considered dividend payments and are subject to Austrian capital gains tax (27.50 %). POET will withhold these taxes and pay them directly to the tax authority.

Companists investing through an Austrian joint-stock company may deduct the taxes withheld and paid by POET from the joint-stock company's corporate income tax [Körperschaftsteuer]. Therefore, Austrian joint-stock companies ultimately do not have to pay any taxes for returns on the investment.

In the case of German private investors and Companists investing through a German joint-stock company, POET will also withhold and pay the Austrian capital gains tax of 27.50 %. In accordance with the convention for the avoidance of double taxation between Austria and Germany, German private investors and joint-stock companies may request a refund of 12.50 % of the taxes withheld from the Austrian tax authority in charge.

In Germany, any gross returns on the investment are considered income from capital investment and are subject to German capital gains tax [Kapitalertragsteuer] (25 %) plus solidarity surcharge [Solidaritätszuschlag] (5.5 %) and – if applicable – church tax [Kirchensteuer]. In the case of Companists investing in POET through a German joint-stock company, gross returns from equity crowdfunding are subject to German corporate income tax [Körperschaftsteuer] and trade tax [Gewerbesteuer].

In the case of taxation in Germany, both private investors and joint-stock companies may deduct 15 % of the taxes withheld in Austria from their taxes. Consequently, if the Companist requests a refund of the remaining 12.50 % of taxes withheld from the Austrian tax authority, there is no double taxation. German private investors and joint-stock companies have to file their German tax return themselves.

POET Audio GmbH

Kollerbergweg 30

8052 Graz

Austria

Phone: +43 (0) 664 540 599 1

Email: office@poetaudio.com

www.poetaudio.com