EDSR INFORMATION 02-14-2000 iik3 3 1 25100
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• MC v.64-io / T
StepMate
by Enhanced Living
Technologies
January 27, 2000
The Economic Development Authority for the City of Elk River
P.O.Box 490
Elk River, MN 55330
Dear Sirs:
I'm sorry that the weather on the 19th was not a little more conducive to travel. Shareholder
turnout for the meeting was far lower than expected, but we did have a quorum present and were
able to conduct the 1 annual meeting of shareholders for Protector Care, Inc. The only item
requiring shareholder action was for the election of directors. The following individuals were
elected to the Board: Paul Probst,Nick Stockwell, Dave Dent, Karl Groth and Billy Kroll.
This letter summarizes the information included in the"business review" segment of the meeting
in order to provide you with an update of the progress your company has made over the past
• year.
• Our business report began with a brief review of the"transition" which the company
has undergone in the past couple of years, moving from an entity which sought to
market its products through medical equipment dealers to one operating as a virtual
company, and marketing directly to consumers.
• After the planning phase of this transition, which occurred during the second half of
1998, the company moved into the implementation phase. The first step in this
implementation involved selection of a Brand name and a corporate name better
suited to the consumer marketing process. After careful consideration, StepMate was
selected to replace CareStair as the Brand name, and Enhanced Living Technologies
was selected as the"dba" to be used in reference to the corporate entity in marketing
materials. Hence the logo you see alongside this page.
• In developing its marketing program, the company settled on a two phased approach.
The first of these involved generating consumer awareness and interest, and used four
specific elements:
15500 Wayzata Boulevard
Suite 1018
• Wayzata,MN 55391
Tel:612-249-0210
Fax:612-249-0250
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III Public Relations Release
Direct Mail advertising
Magazine advertising
Web site
The second phase involved a sales video designed to be mailed to consumers
who responded to the company's advertising and PR efforts and to function as the
company's primary sales agent.
• The StepMate web site went live in May of 1999, and has been up and running ever
since at www.steprnate.com.
• The company's Public Relations effort began in May of 1999 with distribution of a
story on StepMate to newspaper editors throughout the country. The StepMate story
was included as one of several on a disk,which is circulated by the North American
Precis Syndicate to newspapers on a regular basis.
• The direct mail effort was sent out in two waves in August and September.
• Magazine advertising for the Brand broke with a 1/3 page 4 color ad in September
issues of Prevention and Arthritis Today magazines. Second and third waves
followed with the October issue of Prevention, and the November/December issue of
Arthritis Today. (Arthritis Today has a bimonthly circulation of 626M and
Prevention a monthly circulation of 3,000M.)
Results achieved as a result of this marketing activity are noteworthy:
• • Over 700 newspapers across the country have run the press release as of mid-
December, 1999.
• By year-end, the company had mailed out nearly 800 copies of the StepMate video
and 45 literature packs.
• Most importantly, by year-end,the company had filled 33 orders for a total of 246
steps.
Orders have continued into January despite the lack of any new consumer advertising since
November 1.
In the course of marketing the StepMate product and processing the resulting consumer
responses we have also learned a good deal about our target market:
• It is primarily female by more than a 3 to 1 margin
• It is heavily skewed towards 70 and 80 year olds, significantly older than the 50 and
60 year olds we had anticipated.
• Respondents who view the StepMate video tend to be interested in purchasing the
product by almost a 4 to 1 margin over those who are not.
• The target market we have identified tends to like to see and feel the product before
committing to a purchase.
• The only apparent"barrier" to purchase identified to this point has been price
Alk ($79.95/step.)
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• • The senior market we have identified moves very slowly and methodically in making
its purchase decisions.
Management has taken this information and developed"marketing responses" designed to
improve upon the sales trends experienced to date:
• An outbound telemarketing staff has been recruited and trained in an effort to help
"close" sales.
• Telemarketers have been provided with special financing options tailored to needs of
our audience to assist them in dealing with consumer resistance to price.
• A"Free 30 Day Trial" offer has been developed in an effort to show consumers first
hand how helpful the product can be within their own homes.
This"Free 30 Day Trial" offer is featured in a new, stronger, magazine ad appearing in the
February issue of Rxemedy magazine. The same ad is scheduled to appear in March issues of
selected versions of Health Monitor, and will then be re-run in the April issue of Rxemedy. We
are doing our best to make the most of a limited budget, and we are all convinced that we are
moving in the right direction. The most difficult part of operating with such budgetary
limitations, however, is that it takes that much longer to achieve the end result.
Turning specifically to the company's financial picture, you will find attached the unaudited
financial statements for the periods ended December 31, 1999 and December 31, 1998.
• •. Sales of nearly $19,000 in 1999 were even with last year. Note though that 75%
of this year's sales are from higher margin consumer direct shipments. In
addition, 75%of 1999 sales occurred during the last 4 months of the year at the
higher per unit step price of$79.95.
• The company has experienced very few returns to date. A returns reserve has,
however, been established to recognize our guarantee to customers that if they are
not completely satisfied with the product for any reason, they can return it for full
credit for a period of 90 days.
• The company's current cost per step is approximately $28. As sales increase,
management sees a definite opportunity to significantly reduce this cost,thus
further improving margins.
• Distribution Expense includes the costs associated with the company's outsourced
telemarketing and fulfillment center.
• Sales and Marketing Expense includes costs associated with development of new
brand and corporate names and logo treatments,the design and launch of the
company's web site,scripting and production of the new video and the
development and execution of all related marketing activities.
• The company's Balance Sheet includes significant balances in terms of both loans
and Accounts Payable. We do have a$150,000 line of credit with Riverside Bank
that has enough availability to get us into the April time period,but the company
will have to raise additional capital soon in order to continue operations. It is
probably no surprise that the company has a negative net worth, even though we
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think that we are on the threshold of creating significant value in the StepMateTM
• brand.
We continue to be very optimistic about the company's new marketing strategy,and look
forward to being able to report that this optimism is justified when we communicate the results
of our first year of the new millennium a year from now.
Very truly yours,
6,142A / 0 , //,,&--,14,----(7eZ
hcolas J. tockwell Stephen C. Martin
resident, CEO Chief Financial Officer
Enclosures
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