www.sanwestinc.com
with its wholly owned subsidiary
Company Overview 
San West USA Inc. (OTCBB: HBSY) designs and manufactures off-road buggies and provides repair services and after-market performance parts and accessories for buggies built in China for the U.S. market. In August 2008, the Company acquired California-based Buggy World, an exclusive authorized sales, service and parts distributor. Buggy World provides products and services to the off-road industry through a dedicated retail network and the Internet. Well-known brands in Buggy World’s product line include Volkswagen, Subaru, Fox Racing, Shox and Joyner. Vehicle prices range from $1,400 to $45,000 for family and sport buggies and $90,000 for high performance sand rails. In 2008, Buggy World generated sales of $1.685 million and produced 30% profit margins. The Company anticipates growing both of these numbers substantially in 2009.
San West recently secured the rights to market the Ruesch Rhino turbo utility terrain vehicle (UTV) in Orange and San Diego Counties in CA. It believes Ruesch Rhino is the only long-travel suspension turbo UTV in the U.S. market priced under $10,000. The average stock utility terrain vehicle (UTV) offered by competing manufacturers is priced at roughly $10,000 and requires at least $5,000 in aftermarket upgrades. San West markets its vehicles through three facilities in California (Huntington Beach, San Marcos and San Diego) and online. The Company was incorporated in July 2001.
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Investment Highlights
China for the U.S. market. Despite an increasing number of Chinese vehicles entering the U.S., market, there are few competent UTV repair shops for Asian models. San West plans to capitalize on this opportunity by becoming a premier manufacturer of aftermarket performance UTV products that require far less maintenance than the off-the-shelf variety.
Sizable market opportunity!!
Off-road enthusiasts in the U.S. are increasingly purchasing off-road buggies and scooters manufactured in China for a variety of reasons, including their lower prices relative to domestic models. Moreover, as gasoline prices remain high and parking rates in most major cities continue to climb, urban commuters are increasingly adopting motor scooters as a primary mode of transportation.
San West is tapping into a $31.5 billion motorcycle/ATV market opportunity. According to Kawasaki Motor Corp.’s product manager for ATVs and UTVs, the sport side of the UTV market is currently selling between 50,000-60,000 units per year and this number is likely to double over the next three to four years.
Acquisition of Buggy World positions San West for rapid growth!!
The 2008 acquisition of Buggy World provides San West with annual revenues exceeding $1.6 million, increased visibility and an established presence in the Southern California market. The addition of the Buggy World brands also gives the Company a world class product line featuring names such as Volkswagen, Subaru, Fox Racing, Shox and Joyner and a great platform for penetrating the market for gas saving scooters with brands such as BMS, CF Moto and Lance Scooter. Buggy World has two retail locations in California and a growing Internet presence.
Multi-faceted growth strategy!!
The Company plans to grow by expanding its number of brick & mortar retail centers, increasing its Internet presence, and making synergetic acquisitions of retailers and dealer¬ships. San West plans to expand its physical store network to four locations, which will then allow the Company to ne¬gotiate exclusive sales rights on a regional basis for several key brands. San West has already established an online sales presence at www.merchantdirectdepot.com and through Amazon and eBay. Online sales channels are expected to drive a significant part of the Company’s growth and posi¬tion San West for greater price elasticity and lower inventory risk than is possible with only a physical stores environment.
The Company is also planning to acquire additional retailers and dealerships in the California market and automate back office functions to reduce overall expenses, simplify opera¬tions and dealer management and create economies of scale.
Agreement to provide non-traditional financing to customers!!
The Company is establishing a partnership with a Southern California-based regional auto title loan provider which will enable it to offer customers non-traditional loans at attractive rates at Buggy World stores. San West will retain 30% of each repaid loan issued at one of its brick & mortar locations. Its financing partner’s proven strategy has historically facilitated an annual bad loan rate of less than 1%. Buggy World already accepts vehicles for sale on consignment, so adding title loans to its services is beneficial. Customers will be able to drop off their vehicle and get cash quickly, and then pay off the loan when the vehicle sells.
Public listing improves access to capital!!
Business growth in the past few years is increasing the Company’s need for capital and encouraged San West to become a publicly-traded entity. In February 2008, San West announced plans for a reverse merger with Human BioSystems (OTCBB: HBSY). The merger is likely to close by the end of Q2 2009.
Business Model
San Diego County. Buggy World sells more than 100 product lines and has five exclusive distributor agreements across Southern California. The Company’s products are sold through its stores, online site and through a growing dealer network. Buggy repair services are provided at two retail locations in San Diego County.
The Company uses the latest computer-aided technology for design and manufacturing, from CAD design and simulation, to laser tube cutting, CNC tube bending, milling and turning. Significant investment has been made in production equipment and San West’s products are rigorously tested by its own experienced research and de¬velopment team. All of its vehicles are custom tailored to customer requirements and handmade to order.
The Company has an online sales presence at its www.buggyworld.net Web site and through online stores like EBay and Amazon. It markets its own products and resells products manufactured by others through strategic partner-ships. San West intends to expand its bricks & mortar pres¬ence to four locations, which will enable the Company to ne¬gotiate exclusive sales rights on a regional basis for several key brands.
San West has established relationships with key manufactur¬ers and suppliers including Team Joyner USA, Redline, Fox Shocks, Empi Parts, CF Moto Scooters, BMS Scooters and SSR Scooters. The Company utilizes a “just-in-time” inventory system to reduce overall inventory expense and risk; it typi¬cally carries about six of each kit in stock at any given time. Additional parts can generally be obtained within 24-hours if the Company is out of stock and all kits and products are shipped within 72 hours of order.
Recent Developments
Silicon Valley based biotech company. The main advantage of obtaining a public listing through a reverse takeover is speed and lower cost than an initial public stock offering. Under the terms of the non-binding LOI, San West Inc. will acquire 85% of the outstanding common stock of Human BioSystems. If a definitive merger agreement is signed, the ongoing business will be San West and the current operations of Human BioSystems will be suspended.
Due to the recession and virtually frozen credit markets, San West has recognized the need to provide consum¬ers with access to non-traditional financing. The Company is establishing a joint venture with a Southern CA-based regional auto title loan provider through which it will be able to offer title loans to customers at its Buggy World stores. San West retains 30% of each repaid loan issued at one of its bricks & mortar locations. Its partner’s proven loan strategy has historically facilitated an annual bad loan rate of less than 1%. Buggy World already accepts vehicles for sale on consignment so adding title loans to its services is complementary. Customers will be able to drop off their vehicles and get cash quickly, and then pay off the loan when the vehicles sell.
Corporate Strategy
The Company plans to capitalize on growing demand in the U.S. market for less expensive Chinese-manufac¬tured off-road buggies and go-karts, establish dealership arrangements with leading brands, grow its online sales and leverage its equity to negotiate and acquire synergistic businesses.
In addition, San West intends to augment its current design capabilities to expand and capture new markets and to continue to design and manufacture custom body kits for the buggy aftermarket.
San West plans to accomplish these goals by:
• Establishing strategic relationships with automobile dealers and distributors;
• Pursuing selective acquisitions of similar or complementary businesses;
• Leveraging the full capabilities of its equipment and personnel to drive new product development;
• Insuring effective test bed support for new market technologies and designs; and
• Providing a high end, high performance off-road vehicle experience for the customer.
San West increases visibility for its products through expositions and demonstrations. The Company’s market¬ing strategy also includes displaying and demonstrating the buggies at regional and national buggy tradeshows, and advertising its vehicles through television, radio, print and outdoor advertising as well as on the Internet.
The Company intends to acquire additional dealerships and then reduce overall expenses, simplify operations and dealer management, and create economies of scale by automating back office functions. San West will also benefit from leveraged buying power and be able to provide a level of service and expertise that would other¬wise be unobtainable at each dealership individually
Industry Outlook
Motorcycle Industry
The $14.6 billion U.S. motorcycle industry experienced double-digit growth during most of the 1990s, driven mainly by Baby Boomers and their need to break free from midlife doldrums. Although sales have fallen off since this period of unprecedented growth, the motorcycle industry remains strong. According to the Motor¬cycle Industry Council, 1.11 million motorcycles were sold in the United States in 2007, down from 1.19 million in 2006. The Motorcycle Industry Council (MIC) preliminary estimate for all motorcycles and scooters sold nationwide in 2008 is 1,087,000, down just 3.3% compared to 2007. Sales still topped the 1-million mark for the sixth straight year.
Unlike the saturated European marketplace with some 30 million vehicles sold, the U.S. scooter market remains largely untapped, with only about 1 million scooters in use. According to the Motorcycle and Moped Industry Council, 3,761 scooters were sold in the U.S. during 2002. Annual sales then began growing at approximately 30% annually, peaking at 9,347 in 2006 and then cooling off a bit in 2007.
The Revolt is a versatile machine that is designed for multiple applications – from Sand dunes to trail riding to motocross tracks. San West took features from many different products and refined them into a product that is both fun and safe.
The Revolt’s industry proven engine combined with the CVT allow for great acceleration with a top speed between 60-70 MPH, but the Revolt is more about the fun factor than just top speed. With the font suspension having 17” True Travel and Rear suspension with 16.5” True Travel, it eats up the bumps. Weighing in at just under 700 lbs, the Revolt is easy to control and maneuver around the trail. All of this combined with the safety features (five point harness, wrist straps, etc.) make the Revolt a safe, reliable, fun way to explore the outdoors. WebBikeWorld provides a graph showing U.S. motorcycle sales figures from 1992 to 2008. These are gross num¬bers, including motorcycles (street bike, dual-sport and off-road) and scooters.
ATV market
Sales in the traditional ATV market have declined over the past three years. According to the Motorcycle Industry Council (MIC) and Powersports Business, in 2007 there were approximately 858,731 ATV’s sold worldwide. This represented an 11% decline from 2006. In 2008, worldwide ATV sales are estimated to have dropped nearly 20% to about 690,000 units according to MIC, Powersports Business and A.G.
Edwards estimates. In the $5 billion an¬nual ATV industry, Honda is the world leader followed by Polaris, Yamaha, Kawasaki, Suzuki, Arctic Cat and Bombardier1. Over the longer-term, industry analysts project ATV unit sales will grow at mid-single digit rates, The ATV segment remains the most under-penetrated of the of the three major power sports segments, despite serving a wider variety of purposes compared to snowmobiles and watercraft.
UTV market
Utility Terrain Vehicles (UTVs) are used in a variety of applications, including by ranchers checking fence lines and by campers and hunters transporting equipment to remote off-road locations. Another dimension is emerg¬ing in the UTV world - a high-performance segment. The sport side of the utility terrain vehicles market is cur¬rently selling between 50,000-60,000 units per year. Overall, the UTV market has grown more than 50% since 1999, according to Power Systems Research.
Off-road aficionados are increasingly adopting Chinese-manufactured models for a number of reasons, includ¬ing their lower relative cost relative to European and domestic models. Despite an increasing number of Chinese vehicles entering the U.S., there are few competent repair shops for Asian models. San West plans to capitalize on this opportunity by providing repair services and parts for Chinese-manufactured vehicles.
Outlook
San West plans to capitalize on growing demand in the U.S. market for China-made off-road buggies and go-karts, establish dealership arrangements with leading brands, continue to expand its online sales and leverage its brands and position to acquire synergistic businesses.
The 2008 acquisition of Buggy World provides San West with a $1.6 million annualized revenue stream, in¬creased visibility and an established presence in the Southern California market. In addition to its current buggy product line, the Company has entered the scooter and UTV markets. As gasoline prices and parking rates rise, an increasing number of urban commuters are adopting motor scooters as a primary mode of transportation.
The Company has two service outlets in California (Letz Go Racing Off-Road Center in Huntington Beach, and Buggy World in Santee) that provide customers with aftermarket parts, accessories and repair services for off-road buggies built in China for the U.S. market. San West intends to expand its brick and mortar presence to four stores, which will allow it to negotiate exclusive sales rights on a regional basis for several key brands. The Company is also planning to acquire additional dealerships, particularly in California.
San West recently became a publicly traded company through a reverse merger and is currently seeking an eq¬uity investment of approximately $1 million to be used for acquisitions and operating capital.
Comparative Analysis
For valuation purposes we compared San West with vehicles retailers in the U.S. that offers various vehicle products and services, including new and used vehicles and related financing; vehicle maintenance and repair services; replacement parts; and warranty, insurance and extended service contracts. The peer group companies are trading at forward P/E multiples of 14 times earnings and P/S multiples of 0.17 times revenues.
In 2008, Buggy World generated sales of $ 1.685 million and produced 30% profit margins. The Company anticipates growing both of these numbers substanially in 2009.
Management as of June, 5th 2009
Frank J. Drechsler (CEO)
Frank J. Drechsler has been our chief executive officer, president, treasurer and one of our directors since our inception, and served as our corporate secretary until July 2005. Since 2002, Mr. Drechsler has been an officer and director of Krinner USA, Inc., a privately-held Nevada corporation (“Krinner”) which markets and sells Christmas tree stands designed in Germany. Mr. Drechsler also works as a sales agent for Krinner but receives no compensation from Krinner when its products are sold on our online store. Since July 2001, Mr. Drechsler has also been the president, secretary and a director of Finger Tip Drive, Inc., a Nevada corporation, which provides online computer data storage services. From October 1998 to May 2001, Mr. Drechsler was the president and a director of Pacific Trading Post, Inc., a Nevada corporation, which marketed and sold products on the Internet within the outdoor sports industries, specifically in the areas of skate, surf and snow. In January 1998, Mr. Drechsler co-founded and developed the business model for skatesurfsnow.com, where he was responsible for the day-to-day operations. During 1997, Mr. Drechsler was self-employed as a consultant and helped start up companies develop sales and marketing programs. From 1995 to December 1996, Mr. Drechsler was the international sales manager for Select Distribution.
Mr. Drechsler graduated from California State University, Fullerton with a Bachelor of Science degree in International Business in 1992. Mr. Drechsler was previously an officer and director of Zowcom, Inc. a Nevada corporation, JPAL, Inc., a Nevada corporation, and Expressions Graphics, Inc., a Nevada corporation, all of which are reporting companies. Mr. Drechsler is not an officer or director of any other reporting company.
Bryan Britton (CFO)
Bryan Britton has been our chief financial officer since June 2009. Mr. Britton co-founded LGR with our chief executive officer and president, Frank J. Drechsler, on August 12, 2008. Between August 2004 and June 2007, Mr. Britton worked to develop aftermarket turbo kits, king shocks and other high performance accessories for the imported market. In August 2004, Mr. Britton founded Letz Go Racing Off-Road Center in Lake Havasu City, Arizona, strictly importing off-road mini buggies, and managing operations. In June 1980, Mr. Britton founded Britton’s Unique Auto Service, Inc., d.b.a. Britton’s Automotive Group in Huntington Beach, California. Mr. Britton graduated with a master degree in all phases of automotive, service, repair and diagnosis from the Arizona Automotive Institute in Glendale, Arizona in 1979. He also holds a master ASE certification.
Todd M. Pritcher
Todd M. Pritcher has been our secretary since June 2007. He also currently serves as Chairman of the Board of Superclick since October 2003. Mr. Pritcher is also Managing Director of Comprehensive Communications, a professional services and business consulting firm. Mr. Pritcher has also served in the Executive Management in an interim capacity for 4Dcard, Inc. from March 2002 through July 2003. Mr. Pritcher has several years experience in investment banking, business consulting and equity research, serving as Director of Equity Research at Equity Securities in Golden Valley, Minnesota, and several other regional investment banking firms. Mr. Pritcher has B.A. in Philosophy from the University of California at Berkeley and has attended graduate school at the University of California at Santa Barbara and Claremont Graduate School.
Latest News and SEC-Filings:
San West Inc. to Launch Advertising Campaign Designed to Increase Revenue Stream and Exposure (Nov, 03,2009)
http://finance.yahoo.com/news/San-West-Inc-to-Launch-iw-356707515.html?x=0&.v=1
San West Releases 4th Quarter Expectations and Announcement of Forward Stock Split Approval in Letter to the Shareholders (Nov, 02,2009)
http://finance.yahoo.com/news/San-West-Releases-4th-Quarter-iw-3329043213.html?x=0&.v=1
San West, Inc. (SNWT) Enters Into 3.2 Million Dollar Partnership With Second Largest Online Dealer in U.S. (Oct, 09,2009)
http://finance.yahoo.com/news/San-West-Inc-SNWT-Enters-Into-iw-778698047.html?x=0&.v=1
San West, Inc. (SNWT) Partner With Leading Retailer and Expects to Add $ 700,000 to Top Line Revenues (Oct, 07,2009)
http://finance.yahoo.com/news/San-West-Inc-SNWT-Partners-iw-779865108.html?x=0&.V=1
San West, Inc. (SNWT) Releases Aggressive Strategic Initiatives Aimed at Increasing Sales Streams and Enhancing Revenue Base (Sep, 29,2009)
http://finance.yahoo.com/news/San-West-Inc-SNWT-Releases-iw-3383048360.html?x=0&.v=1
San West, Inc. (SNWT) Anounces New Symbol and Name Change (Sep, 28,2009)
http://finance.yahoo.com/news/San-West-Inc-SNWT-Announces-iw-2466321255.html?x=0&.v=1
San West, Inc. Announces Launch of New Buggy World Website and Online Store (Sep, 22,2009)
finance.yahoo.com/news/San-West-Announces-Launch-of-iw-699908013.html
San West, Inc. Announces Opening of New Buggy World Location in Orange, California (Aug, 20,2009)
finance.yahoo.com/news/San-West-Inc-Announces-iw-439599639.html
San West, Inc. Completes Reverse Merger Transaction With Human BioSystems, Inc. (Jul, 9,2009)
finance.yahoo.com/news/San-West-Inc-Completes-iw-3152172985.html
Human BioSystems (HBSY) Signs Triangular Merger Agreement with San West inc. (Apr 23,2009)
finance.yahoo.com/news/Human-BioSystems-HBSY-Signs-iw-15013136.html?x=1
Plan of Acquistaion between Human BioSystems and San West as of June 5, 2009
http://www.sec.gov/Archives/edgar/data/1070181/000109181809000168/ex21.htm
