EFTA02710768.pdf

From: Hosain Rahman Sent: Sunday, August 30, 2015 5:38 PM To: Jeffrey Epstein Subject: Jawbone Opportunity Attachments: Jawbone Mort investment analysis 2015-08-28.pdf; Untitled attachment 00277.htm Jeffrey, Nice to speak with you briefly. As promised, here's an =pdate on the financing round and business: Investment Opportunity =or Mort (see attached): For a $1.25M =nvestment you will elevate all your previous common and preferred to =he most senior equity preference (after convertible note) with a 1.5x =reference. You currently have $SM in Series 5 preferred =ith - $1B in preference ahead of it and $SM in common. Closing is on Monday. Financing Round: Although our latest major investment round was later than =xpected, we're pleased to have BlackRock as a partner. BlackRock =nvested $220M in a convertible note in April and then added an =dditional $50M to it paired with $40M in Series 8 Preferred equity from =P Morgan and Sequoia. Now, BlackRock is obligated to invest an =dditional $50M if we raise an additional $35M in Series 8 Preferred by =he end of August. We're offering it to Major Investors and it's =tructured to be a great way for holders of prior preferred to increase =heir preference coverage and seniority. Every investor we've =poken to has been pleasantly surprised by how advantageous the terms =re: investors essentially get to increase their preference on 9x their =oney invested. More details on the transaction and potential for you =re attached. I know Andrew Lindsay on my team has spoken to =ichard Kahn about it a couple times. Team: We recently hired two =xceptional business leaders to partner with me to run the =usiness. With the addition of Sameer Samat and Jason Child we =ave one of the premier executive teams of any late-stage =tartup. Sameer =amat joined in June as our President. He was previously a VP at =oogle leading their commerce business and a key lieutenant to Sundar =ichai, the new Google CEO. He's responsible for our entire =roduct development organization including R&D, software, hardware =nd design. In the two months he's been here we've already =nstilled important discipline in our development process that will help =s better launch products on time and on cost. We also hired a new =FO. Jason Child joined last month from Groupon where he took them =ublic as their CFO. Prior to that he was CFO of Amazon's =nternational business. He's excited about helping us grow with =he exploding wearables market while keeping gross margins and operating =osts in line. Sales =nd Partnerships: EFTA_R1_02123357 EFTA02710768 Confidentially, we're in =alks with several key partners to integrate our products into their =fferings. We're deep in talks with Microsoft on combining UP into their =ffice productivity suite. It would be huge for corporate =ellness. We're discussing powering watches with our sensors and =oftware. Fossil is driving these conversations and eager to =artner. They sells over 30M watches annually under brands such as =ichael Kors and Tory Burch so we're seriously considering it. Our recent sales have =een a mixed bag. We have successfully narrowed our focus to =earables exclusively in 2014 but total sales were below =xpectations. Last year nearly 80% of our revenues were from UP =ands and this year we expect it to be over 95%. Total sales in Q4 =014 and H1 2015 were hampered though by delayed funding and product =aunches. We didn't have the necessary marketing support when we =aunched the products and they suffered from low awareness. Despite this =e forecast wearable sales to grow 43% from $201M in 2014 to $288M in =015. We should be fully on track going into 2016 and expect to =row with the market and generate $651M in revenues. Market: The wearables market is =rowing incredibly fast. Consumers are excited about the space and =eeking new products. While we've ceded some of the market to =itbit we're seeing that consumers are not brand loyal at this early stage. Best Buy recently surveyed their customers and found that =alf of them are interested in wearables and 92% of them are not loyal =o any brand. It's reminiscent of the early stages of the =martphone market when Symbian had 50% of the share in 2009 and fell to =% in 2012. Products: We launched three great =ew bands this year: UP2, UP3 and UP4. UP3 is the market's only =and with bioimpedance sensors to get accurate heart rate and UP4 has =11 UP3's features with American Express payment functionality. =P2 has all the functionality of UP24 but at lower cost with better =esign. The products have remarkable technology but the clasp and =he capacitive touch input mechanism disappointed some customers. =e've worked quickly to resolve those issues and expect to continue to =elight customers. We also have some beautiful new jewelry-like =P2 and UP3 designs coming out in a couple weeks. Channel partners =ave been raving about them and if you send me the best address to reach =ou at I'll send you one. Development: Our =urrent products are exciting but the real magic is what we have on =eck. We have the industry's best intellectual property and we're =ncorporating it into groundbreaking new products with features such as =food pressure, stress detection and respiration. We have even =ore advanced sensors in development. With our sensor development =e're at the forefront of the convergence of health and consumer and the =arket opportunity for that is massive. Let me know if you would like to =iscuss any of this further. All my best, Hosain 2 EFTA_R1_02123358 EFTA02710769