Escolar Documentos
Profissional Documentos
Cultura Documentos
C.E.O.
11908 Cypress Canyon Rd. #2
San Diego, CA 92131
619-246-3990
1. Executive Summary 1
2. Business Description 3
Mission Statement 3
History of Idea 3
Form of Organization 3
Entry Strategy 3
3. Products 4
Year 1 Timeline of Events 4
Timeline Explanation 4
Product/Service Description 4
Research and Development 7
4. Management Team 8
Background of Team Members 8
Board of Directors 8
Board of Advisors 9
5. Market Analysis 10
Industry Description 10
Market Research 10
Target Markets 10
Competition 12
Entry Barriers 13
6. Marketing Strategy 14
Product/Service 14
Pricing Issues 14
Promotion & Sales Strategy 15
Customer Support 16
7. Operations 17
Product and Service Issues 17
Quality Standards 18
Office Location 18
Personnel 18
Future Research and Development Plans 18
Network Service 19
8. Critical Risks 19
Additional Risks 19
Proactive Management 19
Insurance Provisions 20
9. Financial Projections 21
Capital Requirements 21
Income Statement 21
Statement of Cash Flows 21
Balance Sheet 22
Years, 2-3, Comments on Financial Statements 22
Income Statement 22
Statement of Cash Flows 22
Balance Sheet 22
Year 5 Projections 22
Breakeven Analysis 23
Exit Strategy 23
Appendices
Financial Statements 24
Founder and Employee Resumes 28
1. Executive Summary
COMPANY PROFILE
Telematics refers to the term used to describe the utilization of telecommunications systems to
transport data between computers. Automotive Telematics allows computers to communicate
with vehicles through a wireless network.1 These systems have the capability to provide real-
time data communications between employees in the field and their company’s home office.
They are used to give the office information such as vehicle location, customer billing
information, and customer payment processing. With the growing use of wireless technology,
companies with fleet vehicles are turning toward adopting in-vehicle data systems to improve
productivity. Field Technologies offers a line of products that perform a wide range of services
from tracking vehicles using Global Positioning Technology, to in-vehicle automation systems,
to handling work order and payment processing. These services will entail monthly service fees,
which will be priced at a substantial profit and will require a significant commitment period from
the customer.
MobileTech is currently in the prototype stage. We have identified the hardware required and
are in discussions with suppliers for both the hardware and telecommunications networks. A
prototype model of the in-vehicle unit has been developed and we are in the process of
developing software. TruckTracker is currently in the concept stage. We have identified the key
hardware required for the product. For both products, telecommunication service options have
been researched and key air service providers have been identified. Software is yet to be
developed for the TruckTracker hardware and server. The server software developed for
TruckTracker will also be used for MobileTech, with some modifications.
1
Telematics Research Group, “Telematics: Technologies, Trends and Markets,” September 2001.
1
TARGET MARKETS
Our initial target market consists of the field service industry. The field services industry
encompasses plumbing, HVAC, landscaping, pest control, mobile repair services, and waste
management companies. According to the Yankee Group, there are approximately seven million
field service technicians throughout the U.S.2 Companies in this sector have a desire to increase
field productivity and reduce lengthy paperwork. For TruckTracker, we will extend our target
market to include construction companies, couriers, and taxi services. Our geographic focus is
initially on the southwest United States, which consists of over 67,000 target companies. In the
beginning of year 2 we will extend our business to the central and northeastern states.
MARKET TRENDS
Many companies throughout the U.S. are currently struggling to keep labor costs down while
also trying to improve productivity. Existing vehicle location companies have been successful in
convincing businesses that these types of products will help reduce costs and improve profits. In
addition, some businesses are beginning to utilize wireless services for communication, billing,
inventory control, and other functions to help reduce costs. Studies indicate that up to 20% of a
field service technician’s week is underutilized due to paperwork and communications
challenges.3 This translates to 8 hours of a technician’s week, which could be utilized to bring in
additional revenue for the company. At a standard billable rate of $45 per hour, a technician can
utilize this time to generate as much as $18,720 in additional revenue per year. As of 2001, total
telematics services constituted a 1.4 billion-dollar industry. Industry experts predict that the
telematics industry will grow to a 7.4 billion-dollar industry by the year 2006. These forces lead
to the predicted telematics annual compounded growth rate of 38.9 percent from 2001 to 2006.
This anticipated growth rate leads some industry experts to predict that by 2020 the telematics
market will be equal in size to the current cellular phone market.4
MANAGEMENT TEAM
Ramesh Kasavaraju (CTO) and Yukon Palmer (CEO) have both gained experience by working
for industry leaders in telematics applications, specifically, Ramesh in technology development,
and Yukon in sales. Complementing expertise of our management team is our major asset. We
are planning to expand the management team in years 3 and 4. We plan to hire managers with a
solid reputation in the industry to manage operations and marketing.
2
Yankee Group. 2001
3
Field Centrix, Company Backgrounder 2001
4
Telematics Research Group, “Telematics: Technologies, Trends and Markets,” September 2001.
2
2. Business Description
Mission Statement
Form of Organization
Entry Strategy
Field Technologies will debut its telematics products in the field services market. We will enter
the market with TruckTracker, a low-cost, quality vehicle tracking system, to build brand
recognition and market share as well as to take advantage of the education and marketing that the
early vehicle location product entrants—Teletrac, At Road, and Qualcomm—have undertaken
over the past several years. We will also attempt to upgrade TruckTracker customers to
MobileTech once it is released.
3
3 Products
Year 1 Timeline of Events
M onths
1 2 3 4 5 6 7 8 9 10 11 12
Set-up O ffice and Assem bly Shop
Secure Network Svc. Providers
Secure M anufacturers
Software Developm ent
TruckTracker Prototype
TruckTracker Beta Testing
TruckTracker Launch
M obileTech Prototype
M obileTech Beta Testing
Research and Developm ent
Staff Recruitm ent
Personnel Training
M arketing Cam paign
Telem arketing
The above chart describes our timeline of events during year 1 of operations. Our major events
include: Sales and marketing beginning month 3, TruckTracker release during month 5,
MobileTech prototype developed by month 10, and MobileTech beta testing during months 9
through 11. In addition, software development and R&D will be ongoing.
Product/Service Description
Many U.S. companies with fleets are finding themselves embracing technology in order to
remain profitable in today’s competitive environment. Virtually every fleet, regardless of size,
wastes time and money as a result of inefficient operations.5 Companies have been integrating
computing technology into their businesses in order to streamline operations. Key decision
makers are now considering systems that allow employees to perform functions such as
electronic billing, electronic payment processing, inventory management, navigation, and
invoice printing from the vehicle. According to Harvey Donaldson, Director of the Logistics
Institute at Georgia Tech, “the right tools could save tens of billions of dollars across the
industry.”6 With companies just beginning to utilize products such as Palm handhelds and
paperless billing systems, field information technologies are just starting to gain traction in the
commercial marketplace. Considering a volatile economy and the necessity for companies to
trim transportation costs in order to retain customers, it seems an opportune moment to enter the
5
“Fleet Management Today—driving home an ultra efficient Supply Chain,” www.eyefortransport.com, October 31, 2001.
6
Ibid.
4
market. Field Technologies initially provides two products to satisfy the current needs of the
commercial fleet market.
MobileTech
MobileTech is an in-vehicle computer system that provides data transfer between the home
office and field vehicles. It utilizes GPRS, a wireless network of advanced data communication
capabilities. In addition to vehicle tracking, MobileTech can provide payment processing,
invoicing, inventory control, among other services, from the vehicle. These additional service
features have minimal costs associated with their activation since the unit is assembled with the
capability to handle these functions. The following options will be offered:
MobileTech’s feature offering is tailored to our specific target market. For example, HVAC
companies may require wireless billing services, whereas construction companies will not have
to bill from the field, but may require a mobile time clock to track job arrival and departure times
for job crews.
Flexibility
The MobileTech unit is built to allow the capability to change networks through a plug-in
module. Most existing systems are built to work on one communications network exclusively.
5
An example of this is the existing systems that utilize the CDPD (Cellular Digital Packet Data)
network. As the network data transmission technology evolves, these units become obsolete.
Companies utilizing this network are required to replace their entire in-vehicle unit in order to
upgrade to next generation communication technologies such as GPRS or CDMA. In addition,
upgrades to third generation technologies allow for an increased data transmission speed as well
as potential for increased revenue.
Durability
MobileTech is a boxed size unit installed directly inside the vehicle (out of view). It also
includes optional interfaces such as a keyboard, mouse, and monitor. The unit mounts
underneath a seat or in the glove box and is built to handle the harsh industrial environment.
Many existing telematics systems utilize hand held units, which can easily be lost, stolen, or
damaged.
TruckTracker
TruckTracker is a low priced vehicle location system. It utilizes a GPS antenna for vehicle
location and a national telecommunications network to transmit location information back to the
customer. The customer logs on to the Field Technologies website to view the vehicle’s location
on a digital map. Customers can view and print reports on vehicle activity from the website.
The system can be programmed to be automatically and/or manually updated throughout the day.
Ease of Use
Many existing systems require extensive training due to their many features and complex
software. TruckTracker uses a web-based interface that is designed to be very user friendly and
have the most basic required features.
Quality
We strive to develop a high quality product. Since TruckTracker is our entry product, we
understand that quality is important because it sets the standard for the consumer’s perception of
our future products.
6
Manufacturing
Components are purchased from the manufacturer and product assembly is performed in-house.
Products are to be vigorously tested under various conditions to ensure they perform to the
highest standards. These conditions include the unit’s performance under extreme heat and cold
weather, as well as its reaction to dust and water exposure.
Patents
Most of our patent work is focused on the MobileTech product. Patent opportunities are in the
areas of product design (for durability issues), security (data encryption), and data transmission
rates. We are in the process of determining patent options. Patents on features critical to our
target market will give us a competitive advantage.
Future Products
MobileTech’s feature offerings are designed for specific target industries. MobileTech packages
will also be standardized by industry. For example, service companies will require field
invoicing and payment processing; construction companies will require time clock capabilities
and vehicle location. In addition, we will constantly monitor developments in telematics
applications relevant to the commercial marketplace. This will allow us to begin product
initiatives in the area of remote data transmission for the commercial market.
7
4. Management Team
Background of Team Members
Yukon Palmer, CEO, is a highly effective salesperson and leader. Yukon is currently one of the
top sales representatives for Teletrac, one of the original companies in the commercial telematics
industry. Yukon has generated more than $1.2 million in sales to local fleets over a 21-month
period. In his capacity at Teletrac, Yukon has found that his customers desire products with the
capabilities offered by MobileTech. Previously, Yukon was a management trainee at Cintas
Corporation; an S&P 500 listed company, where he was responsible for developing and
managing a targeted marketing program, and was successful in outside sales within a highly
saturated industry. During his tenure at Cintas, Yukon generated over $1.4 million in sales for
the company. During his college years, Yukon held over 10 leadership positions in student
government, a fraternity, as well as other student organizations. Yukon has a BS in business
administration and will receive his MSBA (entrepreneurship emphasis) at San Diego State
University in August of 2002.
Yukon is responsible for strategic planning, board relations, sales, and developing partnerships.
Yukon is also responsible for leading the marketing and sales initiatives until a market manager
is hired in year 3.
Ramesh oversees research and development, quality control, assembly, supply purchasing,
product installation and maintenance, and the central server. Ramesh is also in charge of
operations until a chief operations officer is hired in year 3.
Board of Directors
A five to seven-person board of directors will provide oversight for the company. Initially, the
board will consist of the two cofounders. The remaining seats are reserved for investors and
professional service providers. Board members will be initially compensated with equity.
8
Board of Advisors
Peter Fisher
Peter is a General Partner of Shepherd Ventures. As an investment professional he has a wide
breadth of experience in private equity, venture capital and executive management situations.
Peter has had extensive operating, advisory and investment experience managing high-risk start-
ups and turnaround corporations. He founded and is CEO of LightSource Ventures, Inc., a firm
providing strategic advisory services to the wireless, optical networking and Internet markets.
Formerly, as the Managing Partner for Newtel Capital Inc., a private investment and advisory
firm, Peter directed the group's investments in terrestrial and satellite telecommunications,
computer hardware and software. His responsibilities included chairing Boards of Directors,
strategic management of investments, capital budgeting, mergers and acquisitions, equity and
debt financing and private placements. Previously, Peter co-founded Canlight Development, Inc.,
a real estate development and management group in Toronto, Canada. Formerly, he was an
investment banker in South Africa and led teams involved in mergers and acquisitions, IPO's,
private placements and capital structuring. Peter was educated in South Africa. He holds a
B.Com in Finance and Economics and qualified as a Chartered Accountant in both South Africa
and Canada.
Joe Sullivan
Joe was a founder of Flextronics, an electronics manufacturing services company headquartered
in Silicon Valley, which serves the computer, telecommunications, and medical device
industries. Beginning in 1980, his responsibilities included strategic planning, sales, marketing,
and operations. He retired as CEO in 1993 when the company had over $100 million in revenue
with 1,000 employees in the U.S. and Asia. During the 1980s, Sullivan was also instrumental in
starting Faraday Electronics; a personal computer chip set company, which was successfully sold
to Western Digital Corporation. Prior to Flextronics, Sullivan was a marketing executive with
the Seagram Wine Company, the parent company of Paul Masson California Wines and the
largest importer of French, Italian and German wines in the U.S. Sullivan is active in the San
Diego entrepreneurial community as a private investor and advisor to early-stage technology
companies. He recently served as an advisor to management in the sale of Simplenet
Communications to Broadcast.com (Yahoo). He is a Founding Director of the Entrepreneurial
Management Center at San Diego State University and a charter member of the San Diego
"Band of Angels". Sullivan earned a Bachelor of Arts degree from San Diego State University
and after serving as an officer in the Navy earned an MBA from the Harvard Business School.
Dick Brooks
Dick is a Marketing Professor for the College of Business Administration at San Diego State
University and the Entrepreneurial Management Center Director of Community Relations. He
was Executive Vice President and General Manager of the Phillips-Ramsey advertising agency.
9
5. Market Analysis
Industry Description
The U.S. telematics industry began to escalate in 2001. Telematics systems and service revenue
will grow from $1.4 billion in 2001 to $7.4 billion in 2006. This reflects a 39% compounded
annual revenue growth for the industry over the next five years. Some industry experts have
compared the current status of the telematics industry to the personal computer industry during
its early stages. Dr. Egil Juliussen, principal analyst with Telematics Research Group states,
“Telematics is an emerging industry at the same stage the PC industry was in back in 1980”.7
These projections show a multi-billion dollar potential for telematics services in the U.S. within
the next five years.
Telematics, and similar technological innovations, are revolutionizing the management of field
personnel. Telematics speeds up communication between vehicles and the home office,
ultimately saving time and money. Many companies throughout the U.S. are currently struggling
to keep labor costs down while also trying to improve productivity. Studies indicate that up to
20% of a field service technician’s week is underutilized due to paperwork and communications
challenges.8 This translates to 8 hours of a technician’s week, which could be utilized to bring in
additional revenue for the company. Consider a service company that bills at a rate of $45 per
hour. With our system, the company could bring in as much as $18,720 in additional revenue per
technician per year. After a cost of $1,140 per technician per year, the customer will recognize a
net savings of $17,580 per technician.
Market Research
A survey conducted by Evans Data of large corporation IT managers found that 46.1 percent
have decided to develop and implement wireless data applications within their organizations in
2002. In addition, 77 percent said they want a system that easily integrates into their back office
software, and 72 percent said they are concerned about security of the data transmission.9
Target Markets
For MobileTech, we will target companies that employ field service technicians. There are
approximately seven million field service technicians throughout the U.S.10 This sector
encompasses plumbing, HVAC, landscaping, pest control, mobile repair services, and waste
management services. These types of companies have a strong desire to increase field
productivity and reduce the lengthy manual paperwork. Our system bundles specific features to
each target industry. Our first package (released in year 2) will be designed for HVAC and
plumbing companies. Of our potential features, we offer only those that are beneficial to these
target companies. During year one of operations, we will expand our target market, with the
TruckTracker product, to include construction companies, taxi services, towing services, courier
services, and other companies operating fleets. These types of companies will be ideal
7
Telematics Research Group, “Automotive Telematics on the Start of Explosive Growth Cycle”, September 2001.
8
FieldCentrix, Company Backgrounder. 2001
9
Staff, AllNetDevices, INT Media Group 2002.
10
Field Centrix, Company Backgrounder 2001
10
TruckTracker candidates due to their desire to track the location of their vehicles for productivity
issues and dispatching. During the first year of operations, our focus will be on the southwestern
U.S. market, specifically on companies with 10+ fleet vehicles, located in San Diego, Los
Angeles, Riverside, Phoenix, and Las Vegas metropolitan areas. According to the U.S. Census,
there were more than 67,000 target companies in our initial target area that managed fleets in
2000. 11 At the beginning of year 2, we will begin sales initiatives in central and eastern states.
We will focus on markets with few existing competitors and a dense concentration of companies
in the relevant industries.
11
Industries considered in totals include the following: general construction; plumbing, heating and air conditioning; electrical
contractors; towing companies; heavy construction contractors; special trade contractors; motor vehicle parts suppliers; freight
trucking; taxis and limousines; couriers; local messenger and delivery
11
Competition
Many of the competitors provide exclusively location or data communications services. The
location only services cost in the $60 to $75 per unit per month range. They are usually limited
to vehicle location and some basic communications services. In addition, other competitors
provide data communications systems through the use of handheld units or in vehicle computers.
Indirect Competitors
Indirect competitors include Nextel, and LoJack. Qualcomm’s OmniTracs and OmniExpress
products currently focus on long-haul trucking companies. Since Qualcomm has historically
focused its sales efforts on large nationwide companies, we believe they will not utilize their
resources to sell smaller regionally based companies. Nextel is currently in a partnership with
AtRoad in which a product has been developed that allows the user to place their Nextel phone
in the AtRoad cradle to allow location information to be sent from the vehicle. However, this
system is driver-dependent and does not allow for continuous automatic location updating.
LoJack tends to focus on theft recovery systems and has an established relationship with many
law organizations throughout the country. They focus on tracking personal assets for security
rather than selling systems to companies in order to enhance productivity.
12
New Competitors
As this market develops, we anticipate a number of new competitors entering the market in the
near future. We are focusing our efforts on patent opportunities on key features. We will
constantly develop patented technology in the areas of security and product design to improve
our competitive position. In addition, we hope to form significant relationships with our strategic
partners and customers to guard our competitive advantages. Once we are successful, we will
utilize our resources to acquire smaller competitors.
Entry Barriers
Due to growing health and safety concerns regarding in-vehicle electronics, many governments
are in the process of enacting laws restricting the use of certain types of electronics that may
distract drivers. In addition, maintaining an end-to-end communications infrastructure will be
challenging due to the reliance upon a third party air carrier and software development that
requires considerable financial resources. Product development will also require significant
financial resources due to the requirement for sophisticated personnel and equipment. Any
successful company in this industry must develop exclusive technologies with significant market
appeal in order to maintain and increase market share.
13
6. Marketing Strategy
Product/Service
MobileTech
MobileTech is positioned as a high quality, moderately priced, in-vehicle information system.
Initially, we will generate sales through our direct sales representatives. After industry-specific
packages are developed, the sales representatives will contact prospective customers and present
to them with the end goal of selling the account. We are also researching strategic relationships
with existing software vendors to use as a channel to sale and distribute MobileTech.
TruckTracker
TruckTracker is positioned as a low cost, high quality location system. TruckTracker will be
sold directly by our sales representatives. The sales representatives will generate sales by direct
contact with prospective customers.
Pricing Issues
Fleet Technologies’ Pricing Strategy
TruckTracker: Penetration approach
TruckTracker will debut at a price approximately 25-35 percent less than its competitors to
acquire market share immediately.
Existing companies utilize a premium pricing strategy in each of their major markets. Due to the
fact that there is relatively little competition in many of their markets, they can charge more to
get early adopters, then gradually lower their prices to gain market share. In competitive
markets, they price their products on a case-by-case basis depending on the competitive
situation.
14
Product Markup
Under the leasing program the customer will pay $95 per unit per month (equipment and airtime
included). This is based on the total retail price multiplied by a lease rate factor of 0.0365.
Companies that solely provide in-field wireless invoicing services charge approximately $105
per vehicle per month.12
MobileTech Add-Ons
MobileTech add-ons will incur no additional hardware costs since the capabilities are built into
the unit. Customers are charged a monthly service fee, approximately $30 per vehicle per
month, for upgrades.13 This will account for a $10 per month added costs for data transmission.
If any combination of features equal or fall below this cost, we may decide to bundle features.
Field Technologies’ markup will be 300 percent.
TruckTracker
Retail Cost Markup
Unit $454 $311 46%
Three-year airtime contract $888 $360 147%
Total $1,342 $671 100%
On a 36-month lease program, the customer will be charged $49 per vehicle per month
(equipment and airtime included). Pricing is based on the total retail price multiplied by a lease
rate factor of 0.0365. Competitors’ existing retail price is $62 - $75.
12
Field Centrix. Company Backgrounder 2001.
13
Based on adding wireless billing services.
15
Staffing Requirements
During year 1, Yukon will focus on new business generation. An additional sales representative
will be added in June. We will initially focus on prospecting Southern California, Arizona, and
Nevada accounts for TruckTracker. At the beginning of year 2, we will hire two additional sales
reps that will focus their entire time on obtaining new business. They will work with local
sources to generate leads as well as cold call for leads on their own. The sales representatives
will be paid a commission based on the amount of revenue they sell within a month’s period. By
year 5, we will have 26 sales representatives dispersed throughout the United States.
Market managers will be hired to oversee regional markets and sales forces. They may oversee
up four representatives and/or two to three states. The manager will receive a commission based
on revenue growth and a bonus based on profitability within the market. The local market
manager will search for and hire independent contractors to act as installers for the in-vehicle
equipment. Contractors will be chosen based on availability, quality of work performed, and
cost of services.
Expansion
Between years 2 and 5, we will broaden our geographic sales coverage to the most desirable
markets in other parts of the United States. Decisions will be based on demographic data
collected on the region and competitor concentration in those markets.
Customer Support
Phone support will be available from 7am to 6pm, Monday through Friday, at no cost. A
lifetime warranty on in-vehicle equipment is provided. Thirty to sixty day trial periods may be
offered on a case-by-case basis. Generally, the product will not be sold with an initial trial
period. Training will be provided through an interactive demo on our website. The software
includes a tutorial. The Market Manager will perform follow-up services, including courtesy
visits for large accounts, product upgrades, on-site support (if required), and billing issues.
16
7. Operations
Product and Service Issues
We have adopted a three-tier approach to our product and services: in-vehicle telematics units,
on-site servers that receive and store data in a database from the telematics units, and specialty
solutions for the MobileTech product.
The in-vehicle units and server software are developed in-house. Components are purchased
from various suppliers and assembly is completed in our facility. Initially, product assembly will
be done on an “as needed” basis. Contractors will be hired for assembly and installation.
Relative costs are $15 and $50 per unit, respectively.
TruckTracker
Third party technology is used to minimize airtime costs. Minimal hardware assembly is
required. Contractors will be hired for both assembly and installations. Costs are projected at $15
and $50 per unit, respectively.
MobileTech
The core of the hardware is based on IBM technology. Minimal assembly is required. The unit
will come with Microsoft Windows and our software already loaded. Software upgrades for
add-on features will be downloaded from our website.
Server
Server hardware is rented from an Internet Service Provider and configured to meet our needs.
The software has proprietary data collection and distribution methods. Four servers are utilized:
a web server, database server, fleet vehicle interface and geographic information server, and a
MobileTech interface server. The software engineer performs the development for the above
servers.
Material/Component Cost
Server Hardware $100/m for 46 m x 4 units
Microsoft Small Business Server 2000 $920 x 4 units
Software
Geographic Information Server Software $5000
Uninterrupted Power Supply $299 x 4 units
4-port Router $99
Total Cost $23375
17
Quality Standards
Defects or errors in our products could harm relations with our customers and expose us to
liability. To limit our liability, products and add-on features will undergo Beta testing. Initially,
all products will be tested as they come off the production line. As product volume increases, a
comprehensive quality control system will be put in place. In addition, we will monitor and
assess quality standards that our suppliers adopt. We will model ISO 9000 standards, which have
been a basic quality enhancement standard.
Office Location
Our headquarters will be in located in San Diego, California. Initially, a 1000-square-foot space
will be leased and office furniture will be rented. Additional space will be obtained when
required.
Personnel
The management team will undertake initial marketing, product development, operations and
administration. An agreement has been made with a software engineer to work on the server side
software development. Product assembly and installation will be contracted to independent
contractors.
A technician will handle initial customer service calls. They will be responsible for
troubleshooting and performing service calls. Generally, units will be traded out if problems
exist. The technician will be paid the same per unit rate as installation, as long as the issue is
isolated to a manufacturing defect. A contract assembly technician will repair units or units will
be sent to the original equipment manufacturers. Software will be upgraded via the Internet.
• Server Software: We use Microsoft’s back office server software and high performance Dell
Servers. Internet information server (IIS) and Microsoft’s SQL databases provide proven
methods in implementation of the server. The server side applications are developed in-
house, giving us control over customization, optimization, and development of intellectual
property to erect entry barriers for competition.
18
Our hardware platform provides us the ability to make lower cost products. Our products are
less dependent on custom hardware development, requiring less research and development
investments in hardware. However, we are planning to replace expensive GPS units with
upcoming single GPS chips. We will ensure that Microsoft’s operating systems are used on the
CPU units, and that our software remains compatible with new hardware units. The
TruckTracker modem units will be purchased from Motorola while the network service carrier
will provide MobileTech modems.
Network Service
We will initially use Skytel for TruckTracker, while MobileTech will utilize Cingular. Cingular
is encouraging wireless solution developers to use their network. Moreover, they are the second
largest wireless service providers in the United States. The carriers’ push toward utilization of
this network may allow us to create a strategic alliance with them.
In 2005, 3G wireless technologies will be available in most parts of the country. We will
upgrade our systems to take advantage of its chief benefits of high data rates, and wider
bandwidth. Hardware modules will be upgraded to state of the art chip technologies (64-bit
processors etc.). Close integration with PDAs and other products using Bluetooth will also be
considered for our product listing.
8. CRITICAL RISKS
Additional Risks
To follow are additional risks that we have identified.
19
Companies offering similar products in the individual market are also spending a lot to inform
the public about telematics’ future capabilities. Our market entry strategy builds on the
groundwork laid out by the early entrants. Although our main product will be MobileTech, we
are entering the market with TruckTracker because it is one of the most widely accepted forms
of telematics in the commercial industry. In situations where a customer might be concerned of
our product’s functional capabilities, we will offer a limited trial program. Also, we will build
our customer base by leveraging our relationships with existing customers to gain positive
references and referrals.
Insurance Provisions
The following insurance policies will be maintained to alleviate some of risks associated with
our business. In addition, workers’ compensation as well as medical insurance costs are
included in the financial statement.
20
9. Financial Projections
Capital Requirements
Computer and assembly equipment constitutes the largest part of the items to be purchased
initially. Computers for administration are estimated at $2,000 each and those for the engineers
at $6,000 each. In addition to office furniture, we are required to setup the assembly facility.
The monthly inventory levels reflect sales forecasts and inventory levels are projected to be low
for the months with low sales. Capital allocated to inventory in the first year is $3,521. The total
capital requirement for the first year is $435,828 and this amount would be sufficient to cover
the operating and sales expenses for the first year.
Income Statement
TruckTracker will enter the market in May of year 1 and MobileTech will be introduced in the
beginning of year 2. Sales prices will be $1342 and $2603, respectively. At the end of year 1,
projected sales are 180 units for TruckTracker. The sales projections are based on 360 units per
sales person annually. First year estimates are lower due to our infancy in the market. A sales
representative and Yukon will act as the sales team for the first year.
The office will be 1000-square-feet and the rent will be 1.25$/ft2. The payroll is the major
expense item. The software engineer’s salary constitutes the major portion of payroll. The
utility/phone costs increase significantly when the telemarketers are hired. Training costs are
mainly for telemarketers and sales representatives. Insurance cost is $12,000 annually and paid
in two equal payments.
Depreciation is based on the straight-line method; the furniture and fixtures will be depreciated
over 10 years, computers at 5 years with no residual value. The expected loss during year 1 is
about ($299,482). However, we are confident that we can make about $1.6 million in profit in
year 5.
21
Balance Sheet
Accounts receivable is equal to sales in each period since all hardware sales are on a three-month
credit basis. The inventory levels are low and FIFO would be appropriate as an inventory model.
Financing of the venture will be done through selling common stock. The management team
will invest $100,000 and get 400,000 shares at the $0.25/share price in the beginning of year 1.
Outside investors will be found to participate in the investment. There will be one round of
investing. The round will take place in the beginning of year 1. Potential investors will be invited
to invest $550,000. We will not require an additional investment round.
Income Statement
The new product MobileTech and add-ons for this product are introduced. Sales will increase in
proportion to the number of sales representatives. Estimated TruckTracker sales double in the
second year and an additional sales representative will be hired in the beginning of the year.
MobileTech sales will be 10 units per person per month and add-on sales will be an additional
half of the MobileTech sales. Total sales will be 1,920 units at year-end. Another software
engineer will also be hired in mid-year and these will increase the payroll expenses. Net profit
will be realized at the end of the period.
In year 2 all product sales will increase as new sales people are hired. Payroll expenses will
increase accordingly. An additional 300-square-foot space will be added when new employees
are hired. Administrative staff will also increase during the period. Additional money will be
invested in computer equipment in both years. There will be a small loss in the beginning of the
period due to the increase in salaries but it will be recovered by an increase in sales. Bad debt
would be around three percent of the sales and would decrease in time.
Balance Sheet
The most significant change other than the increase in accounts receivable and inventory (due to
an increase in sales) is in the shareholder’s equity portion. The firm will start to be profitable and
sales will boost, these will be important considerations in financing.
Year 5 Projections
Starting year 4, the sales will boost further. In the Income Statement, net profit will increase
rapidly from $.7 million to $1.2 million in year 3 and around $1.6 million in year 5. Staffing will
change accordingly and number of sales representatives will increase substantially. Changes in
22
sales also affect the balance sheet and statement of cash flows providing very strong cash
positions. All earnings will be retained and carried forward.
Breakeven Analysis
Since we are offering more than one product, the calculations are based on separating the fixed
costs between two products. 60% of the fixed costs are allocated to TruckTracker and 40% is
allocated to MobileTech. The breakeven point for TruckTracker is 278 units and 88 for
MobileTech. Breakeven is realized at the beginning of year 2.
Exit Strategy
Valuation:
We estimated sales and income figures for years 1-5 in our income statements. Existing
companies in this industry often use a price to sales ratio to determine valuation. We considered
3 scenarios; most likely, worst case and best case in our valuation analysis. In the most likely
scenario the price to sales ratio is the industry average of 1.30.
Exit Strategy:
A merger with an appropriate company in the industry is our chosen exit strategy. Timing of this
action will depend on net income, the market environment, and valuation given at the time. This
will most likely take place in year 5 if the conditions are favorable. An IPO would also be a
reasonable alternative. Comparable IPO prices of the similar companies range from $9 to $20 per
share, average at $14.25 per share.
23
Proforma Income Statement
Years One to Five
Year 1 Year 2 Year 3 Year 4 Year 5
Total Sales 241,560 2,439,720 4,499,040 7,899,960 13,599,840
Cost of Service Revenue 7,000 157,050 627,840 1,664,640 3,450,240
Cost of Product Revenue 55,980 496,944 793,536 1,388,688 3,242,880
Cost of Goods Sold 62,980 653,994 1,421,376 4,117,320 8,081,280
Gross Profit 178,580 1,785,726 3,077,664 3,782,640 5,518,560
Operating Expenses
Advertising and Promotion 16,656 121,986 224,952 394,998 679,992
Payroll 331,257 684,355 1,243,926 1,570,614 2,196,058
Rent 12,000 12,360 16,536 17,004 17,472
Utilities/Phone 13,600 20,200 22,000 28,000 34,000
Office supplies 1,900 2,000 2,400 2,800 3,000
Insurance 12,000 12,000 12,000 15,000 15,000
Depreciation 10,325 13,125 15,525 18,325 22,725
Training 6,000 4,200 2,600 6,300 12,100
Trade Show costs & Travel 14,130 22,215 22,215 34,230 34,230
R&D 18,080 121,986 224,952 394,998 679,992
Bad debt 12,078 48,794 89,981 79,000 135,998
Licenses and Professional Fees 7,000 6,000 12,000 15,000 18,000
Repairs and maintenance 1,120 2,200 2,200 2,500 2,500
Miscellaneous 6,000 2,400 2,400 3,000 3,000
Total Operating Expenses 478,062 1,073,821 1,893,687 2,581,769 3,854,067
Profit (Loss) before Taxes (299,482) 711,905 1,183,977 1,200,871 1,664,493
Less: Taxes
Net Profit (Loss) (299,482) 711,905 1,183,977 1,200,871 1,664,493
Proforma Income Statement
(Year 1 by month)
January February March April May June July August Sept. Oct. Nov. Dec. Total
Total Revenue 13,420 26,840 26,840 26,840 26,840 40,260 40,260 40,260 241,560
Cost of Service Revenue 100 300 500 700 900 1,200 1,500 1,800 7,000
Cost of Product Revenue 3,110 6,220 6,220 6,220 6,220 9,330 9,330 9,330 55,980
Total Costs 3,210 6,520 6,720 6,920 7,120 10,530 10,830 11,130 62,980
Gross Profit 10,210 20,320 20,120 19,920 19,720 29,730 29,430 29,130 178,580
Operating Expenses
Advertising and Promotion 14,862 1,468 1,468 1,468 2,218 1,468 1,468 2,218 1,468 1,468 29,573
Payroll 18,300 18,300 18,300 21,815 21,815 35,459 32,878 32,878 32,878 32,878 32,878 32,878 331,257
Rent 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 15,000
Utilities/Phone 250 250 1,100 1,100 1,250 1,250 1,400 1,400 1,400 1,400 1,400 1,400 13,600
Office supplies 500 300 200 100 100 100 100 100 100 100 100 100 1,900
Insurance 6,000 6,000 12,000
Depreciation 860 860 860 860 860 860 860 860 860 860 860 860 10,325
Training 3,000 1,500 1,500 6,000
Trade Show costs & Travel 10,100 2,015 2,015 14,130
R&D 8,720 4,190 990 1,200 0 0 1,040 0 590 150 0 1,200 18,080
Bad Debt 0 0 0 0 671 1,342 1,342 1,342 1,342 2,013 2,013 2,013 12,078
Licenses and Prof. Fees 5,000 2,000 7,000
Repairs and maintenance 62 124 124 124 124 187 187 187 1,120
Miscellaneous 500 500 500 500 500 500 500 500 500 500 500 500 6,000
Total Operating
Expenses 41,380 25,650 51,162 31,808 31,476 42,354 47,713 41,938 40,513 41,556 40,656 41,856 478,062
Profit (Loss) before Taxes (41,380) (25,650) (51,162) (31,808) (21,266) (22,034) (27,593) (22,018) (20,793) (11,826) (11,226) (12,726)
Less: Taxes
Net Profit (Loss) (41,380) (25,650) (51,162) (31,808) (21,266) (22,034) (27,593) (22,018) (20,793) (11,826) (11,226) (12,726) (299,482)
Proforma Income Statement
Years Two and Three by quarter
Year 2 Year 3
Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total
Total Revenue 365,958 487,944 975,888 609,930 2,439,720 899,808 1,124,760 1,349,712 1,124,760 4,499,040
Cost of Service Revenue 11,790 25,110 51,750 68,400 157,050 97,920 134,820 179,100 216,000 627,840
Cost of Product Revenue 74,542 99,389 198,778 124,236 496,944 158,707 198,384 238,061 198,384 793,536
Total Costs 86,332 124,499 250,528 192,636 653,994 256,627 333,204 417,161 414,384 1,421,376
Gross Profit 279,626 363,445 725,360 417,294 1,785,726 643,181 791,556 932,551 710,376 3,077,664
Operating Expenses
Advertising and Promotion 18,298 24,397 48,794 30,497 121,986 44,990 56,238 67,486 56,238 224,952
Payroll 147,501 147,501 197,313 192,041 684,355 294,182 294,182 294,182 361,382 1,243,926
Rent 3,090 3,090 3,090 3,090 12,360 4,134 4,134 4,134 4,134
Utilities/Phone 4,800 4,800 5,300 5,300 20,200 5,500 5,500 5,500 5,500 22,000
Office supplies 500 500 500 500 2,000 600 600 600 600 2,400
Insurance 6,000 0 6,000 0 12,000 6,000 0 6,000 0 12,000
Depreciation 3,281 3,281 3,281 3,281 13,125 3,881 3,881 3,881 3,881 15,525
Training 3,200 1,000 4,200 2,600 2,600
Trade Show costs & Travel 10,100 2,015 10,100 22,215 10,100 2,015 10,100 22,215
R&D 18,298 24,397 48,794 30,497 121,986 44,990 56,238 67,486 56,238 224,952
Bad debt 7,319 9,759 19,518 12,199 48,794 17,996 22,495 26,994 22,495 89,981
Licenses and Professional Fees 3,000 1,000 1,000 1,000 6,000 3,000 3,000 3,000 3,000 12,000
Repairs and maintenance 550 550 550 550 2,200 550 550 550 550 2,200
Miscellaneous 600 600 600 600 2,400 600 600 600 600 2,400
Total Operating Expenses 226,537 221,890 335,741 289,653 1,073,821 439,124 449,433 480,412 524,718 1,893,687
Profit (Loss) before Taxes 53,090 141,555 389,620 127,641 711,905 204,057 342,123 452,139 185,658 1,183,977
Less: Taxes
Net Profit (Loss) 53,090 141,555 389,620 127,641 711,905 204,057 342,123 452,139 185,658 1,183,977
Proforma Balance Sheet
Years One to Five
Fixed Assets
Property, Plant, Equipment 33,500 47,500 59,500 73,500 95,500
Less Accumulated Depreciation (10,325) (23,450) (38,975) (57,300) (80,025)
Total Fixed Assets 23,175 24,050 20,525 16,200 15,475
0 0 0
Total Assets 361,648 1,255,059 2,660,784 4,270,736 6,728,020
Total Liabilities and Shareholder's Equity 361,648 1,255,059 2,660,784 4,270,736 6,728,020
Balance Sheet
Year One by Quarter
Opening Day First Quarter Second Quarter Third Quarter Fourth Quarter
Assets
Current Assets
Cash 650,000 497,888 391,100 277,234 214,172
Accounts Receivable 0 0 40,260 80,520 120,780
Inventories 0 0 3,521 6,905 3,521
Insurance 0 3,000 0 3,000 0
Total Current Assets 650,000 500,888 434,881 367,659 338,473
Fixed Assets
Property, Plant, Equipment 0 33,500 33,500 33,500 33,500
Less Accumulated Depreciation 0 (2,581) (5,163) (7,744) (10,325)
Total Fixed Assets 0 30,919 28,338 25,756 23,175
Year 2 Year 3
Quarter 1 Quarter 2 Quarter 3 Quarter 4 Quarter 1 Quarter 2 Quarter 3 Quarter 4
Assets
Current Assets
Cash 67,388 121,557 154,091 601,380 557,898 740,360 1,058,785 1,485,267
Accounts Receivable 365,958 487,944 975,888 609,930 899,808 1,124,760 1,349,712 1,124,760
Inventories 19,699 29,548 25,000 19,699 30,232 48,400 42,000 30,232
Total Current Assets 453,045 639,049 1,154,979 1,231,009 1,487,938 1,913,520 2,450,497 2,640,259
Fixed Assets
Property, Plant, Equipment 47,500 47,500 47,500 47,500 59,500 59,500 59,500 59,500
Less Accumulated Depreciation (13,606) (16,888) (20,169) (23,450) (27,331) (31,213) (35,094) (38,975)
Total Fixed Assets 33,894 30,613 27,331 24,050 32,169 28,288 24,406 20,525
Total Assets 486,939 669,661 1,182,310 1,255,059 1,520,107 1,941,807 2,474,903 2,660,784
Net Change in Cash and Cash Equivalents 570,980 (23,790) (49,302) (33,469) (29,616) (43,703) (60,064) (35,069) (18,732) (18,283) (20,793) (23,985)
Cash and Cash Equivalents at Beginning of period 0 570,980 547,190 497,888 464,419 434,803 391,100 331,036 295,966 277,234 258,951 238,157
Cash and Cash Equivalents at End of period 570,980 547,190 497,888 464,419 434,803 391,100 331,036 295,966 277,234 258,951 238,157 214,172
Statement of Cash Flows - The Indirect Method
Years Two and Three by Quarter
Year 2 Year 3
Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total
Cash Flow from Operating Activities
Net Income 53,090 141,555 389,620 127,641 711,905 204,057 342,123 452,139 185,658 1,183,977
Adjustments to Net Income
Depreciation 3,281 3,281 3,281 3,281 13,125 3,881 3,881 3,881 3,881 15,525
Account Receivable (Increase) Decrease (245,178) (121,986) (487,944) 365,958 (489,150) (289,878) (224,952) (224,952) 224,952 (514,830)
Inventories (Increase) Decrease (16,178) (9,849) 4,548 5,301 (16,178) (10,533) (18,168) 6,400 11,768 (10,533)
Accounts Payable 75,202 38,167 126,029 (57,892) 181,506 63,991 76,577 83,957 (2,777) 221,748
Prepaid Insurance (3,000) 3,000 (3,000) 3,000 0 (3,000) 3,000 (3,000) 3,000 0
Accrued Liability Increase
Net Cash Provided from Operating Activities (132,783) 54,169 32,534 447,289 401,208 (31,481) 182,461 318,425 426,483 895,887
Net Change in Cash and Cash Equivalents (146,783) 54,169 32,534 447,289 387,208 (43,481) 182,461 318,425 426,483 883,887
Cash and Cash Equivalents at Beginning of period 214,172 67,388 121,557 154,091 601,380 557,898 740,360 1,058,785
Cash and Cash Equivalents at End of period 67,388 121,557 154,091 601,380 557,898 740,360 1,058,785 1,485,267
Yukon Palmer
11908 Cypress Canyon Rd. Unit 2
San Diego, CA 92131
619-246-3990
yjpalmer@hotmail.com
A top performing Senior Account Executive who has excelled in all professional capacities, which has resulted in promotions
within each organization. Having been in numerous leadership capacities, there exists a strong desire to motivate teams
toward a focused objective. An enthusiastic and energetic person soon to receive a Masters of Science in Business
Administration, possessing passion and the commitment to win.
CAREER EXPERIENCE
Teletrac, Inc - San Diego, CA. 4/26/00 to present
Senior Account Executive (5/1/01 to present)
Selling GPS-based vehicle location and software solutions to small, medium, and large businesses.
• Over $1,000,000 in generated revenue.
• Consistently ranked among top performing representatives
EDUCATION
Master of Science Business Administration San Diego State University 2000 – 2002
• Emphasis in Entrepreneurship
• 3.5 GPA
Bachelor of Science Business Administration San Diego State University 1992 – 1997
• Emphasis in Management
• Minor in Industrial/Organizational Psychology
• Received Dean's List Honors
ACTIVITIES
Theta Chi Fraternity President 5/96 to 5/97
Theta Chi Fraternity Vice-President 5/94 to 5/95
Associated Students Representative for College of Business 9/95 to 2/96
Public Relations Chairman for Greek Week 2/96 to 5/96
Inter-fraternity Council Judicial Board Chairman 5/97 to 12/97
Ramesh Kasavaraju
9815 Kika Court
San Diego CA 92129
Education: Currently pursuing MBA at SDSU with emphasis on Entrepreneurship. Expected date of
graduation (August 2002)
Master of Science in Electrical Engineering, University of Houston 1994
Bachelor of Engineering in Electronics and Telecommunications, Osmania
University 1988
Skills: Windows SW development using Visual C++ (MFC, Active X, COM), Embedded SW
Development using C, Familiar with MFC, ATL and COM, HTML, Java Script, CMDA
(IS 95), Mobile Phones Technology. Designing high level and low-level software system
design.
Experience:
Manager - PC Tools, DENSO INTERNATIONAL AMERICA, INC., February 2001 – Current
Managed a 6-member team in pc tools to support DENSO CDMA Telematics modules and factory tools.
Designed and managed the development of RF calibration tools that were used in the product line of
DENSO products. Improved yields in the factory by providing high quality tools on time. Headed
redesign effort to enhance the performance of diagnostic tools. Which include supporting USB and other
Vehicle buses and developing IS2000 (3G) standard message decoding.
Team Lead - PC Tools, Nokia Mobile Phones, August 1999 - Jan 2001
Lead of a 12-member team that develops SW tools that are used to test and service Nokia CDMA phones.
COM, Active X technologies with VC++ 6.0 has been used in developing latest SW tools. Involved in
complete SW life cycle development on various projects. Did project planning, scheduling and tracking.
At the same time spent at least 50% of the time on SW developmental activities. Participated, and
contributed to CDG MDM Standards activities. Coordinated globally in pc tools development to share
software and ideas. Coordinated with Infrastructure and network service providers in getting
requirements and delivering SW. Starter new Point of Sale tool concept to provide service of phones at
dealer locations.
Software Engineer - PC Tools, Nokia Mobile Phones, May 1997 - August 1999
Developed Windows Applications using Visual C++, which are used in Test and Service of Nokia Mobile
Phone. Ported 16 bit application into 32 bit. Used MFC and ATL to develop Active X components.
Maintained high-speed data acquisition and display application for the purpose of DSP engineers.
Software Engineer - CDMA Cellular SW, Nokia Mobile Phones, Jan 1995 - May 1997
Developed IS95 Message handing in Layer 3. Designed SMS and OTASP features and implemented in
Layer 3. Familiar with CDMA technology and mobile phones over all. Participated in CDG stage 2 and
Stage 3 testing. Submitted ideas and received a Patent.
Project Engineer - Instrumentation, Indian Petrochemicals Corporation Ltd. Oct 1989 - June 1992
Responsible for commissioning Distributed Digital Control Systems and Instrumentation for a captive
power plant. In charge of instrumentation and control systems for Gas and Steam Turbine generators.