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  • pg 1
									“The World at Your Fingertips”

           Business Plan
               CONFIDENTIAL




             www.vprotect.com
2975 Huntington Drive ● San Marino, CA 91108
   Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL         VProtect System Inc., Business Plan, Rev. K.21.00      CONFIDENTIAL




                     Private Placement of Preferred “A” Stock Shares


                                             Of



                                 VProtect System Inc.
                                     A Delaware Company




                                      $7,500,000
                           3,000,000 Preferred “A” Stock Shares
                                      $2.5 Per Share



This is the Private Placement Memorandum for the second round financing of VProtect System
                                                  st
Inc. This offer shall expire on Monday, January 31 , 2001, unless extended, at the
management’s sole discretion.




                                   www.vprotect.com
               2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                        Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL                  VProtect System Inc., Business Plan, Rev. K.21.00                          CONFIDENTIAL



TABLE OF CONTENTS


1     EXECUTIVE SUMMARY .................................................................................... 1
2     THE OPPORTUNITIES ........................................................................................ 3
    2.1       EVER-INCREASING “AFFORDABLE” INTERNET BANDWIDTH................................. 3
    2.2       OPPORTUNITIES IN THE CCTV INDUSTRY .......................................................... 4
    2.3       THE OPPORTUNITIES – CCTV PLUS INTERNET ................................................... 5
    2.4       CCTV AND BEYOND ......................................................................................... 6
3     THE MARKET ....................................................................................................... 8
    3.1       OVERVIEW OF THE U.S. ECONOMY ................................................................... 8
    3.2       OVERVIEW OF THE SECURITY ECONOMY ........................................................... 8
4     OUR ENABLING PRODUCT - EWEBCCTV ................................................ 10
    4.1       ESSENTIAL ELEMENTS OF EWEBCCTV ......................................................... 10
    4.2       VPROTECT’S CORE TECHNOLOGIES (HIGH ENTRY BARRIER FOR COMPETITORS) . 10
5     COMPETITIVE POSITION ................................................................................ 12
    5.1       DIRECT COMPETITORS: ................................................................................... 12
    5.2       INDIRECT COMPETITORS: ................................................................................ 12
6     MARKETING STRATEGY ................................................................................. 15
    6.1       TARGET MARKET ........................................................................................... 15
    6.2       PRICING MODEL .............................................................................................. 18
    6.3       SALES PROMOTION ......................................................................................... 18
    6.4       WEB SITE ....................................................................................................... 20
    6.5       CORPORATE COMMUNICATIONS ...................................................................... 20
7     COMPANY HISTORY ........................................................................................ 21
8     MANAGEMENT TEAM ...................................................................................... 22
    8.1       FOUNDERS & BOARD MEMBERS ...................................................................... 22
    8.2       MANAGEMENT TEAM ...................................................................................... 23
9     FINANCIAL PROJECTIONS ............................................................................. 25
    9.1       STAFF GROWTH .............................................................................................. 25
    9.2       PROJECTED SALES .......................................................................................... 25
    9.3       2001 INCOME/EXPENSE PROJECTION ................................................................ 26
    9.4       THREE-YEAR INCOME/EXPENSE PROJECTION .................................................... 27
10         FUNDS SOUGHT ........................................................................................... 29
    10.1      PRIVATE PLACEMENT OF PREFERRED “A” STOCK ............................................. 29
    10.2      USE OF PROCEEDS ........................................................................................... 29
    10.3      COMPANY VALUATION AT YEAR 2003 REACHES 400M ..................................... 29

                                         www.vprotect.com
                     2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                              Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL     VProtect System Inc., Business Plan, Rev. K.21.00                           CONFIDENTIAL



APPENDIX A.     COMPETITIVE STUDY ............................................................. 31
 SECTION A.1    EYECAST ......................................................................................... 31
 SECTION A.2    IMONITORING ................................................................................. 32
 SECTION A.3    VITALLINK (FORMERLY CEVERYTHING) ........................................... 33
 SECTION A.4    VPROTECT SYSTEM, INC. ................................................................. 35
APPENDIX B.     UN-AUDITED FINANCIAL STATEMENTS ............................ 38




                               www.vprotect.com
           2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                    Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL           VProtect System Inc., Business Plan, Rev. K.21.00           CONFIDENTIAL



1 Executive Summary
    Opportunity

    Technology and infrastructure related business services are among the fastest growing
    industries in the United States. With diminishing communication costs over the public
    Internet, high-bandwidth services are within the reach of millions of business.

    Due in large part to the ever-increasing affordable Internet bandwidth combined with a
    strong knowledge of the security market, VProtect sees a large opportunity to introduce an
    innovative technology to the security industry. As of November 2000, the affordable Internet
    bandwidth has reached the level for viable security video delivery. The CCTV technology is
    aging, and large numbers of consumers are seeing the need to make the switch from their
    outdated analog VCR system to digital recording and remote viewing. Internet viewing is the
    next logical step in the progression to revamp and update a security system.

    Market Potential

    In addition to the opportunity that aging technology provides VProtect, the market
    opportunity is huge. VProtect’s initial marget focus is the security market segments with
    existing CCTV installations. According to JP Freeman Research, the U.S. market potential
    alone is in a 32 billion dollar security industry with 8.4 million existing CCTV installations. Of
    that 8.4 million, 900,000 were installed in 2000 alone. The European market is estimated to
    be on par with the American market. Worldwide security market is estimated to be 62 billion.

    Product: eWebCCTV

    With eWebCCTV, VProtect has created a market-enabling product that has camera
    multiplexing, digital recording, Internet viewing, and remote maintenance capabilities..
    Through the combination of camera multiplexer + video server + web server + Internet
    data center in one single service offering, security personnel and businesses will be
    empowered to record video digitally, and remotely view live and recorded video over the
    Internet. With the Java Applet universal applicability, no special software is needed at the
    client site, unlike many of VProtect’s competitors. With a product design model of Internet-
    centric end-to-end services, eWebCCTV aims at delivering worry-free video security
    services to every corner of the world.

    VProtect’s system architecture calls for RAISS-Redundant Array of Inexpensive Storage
    System, enabling terabytes of data stored at a fraction of the typical data center cost; SMM-
    Site Monitoring and Maintenance, enabling seamless updates and troubleshooting of
    software automatically and remotely; JPEG encryption and watermarking, allowing video to
    be transmitted securely over the public Internet, and to be used as evidence in court; JPEG
    MMX optimization; and Motion Detection to prevent hours of wasted recorded footage.

    Company Background

    Veterans of the security industry founded VProtect in December 1999. The board of
    directors is comprised of experts in digital image processing, innovators of the CCTV
    technology, veterans of the security industry, and technologists of the Internet world. The
    main investors are also our technology alliance partners: a CCTV equipment manufacture
    and a leading industrial PC manufacturer.

Confidential                                  Page 1                                    8/26/2012 -

                                    www.vprotect.com
                2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                         Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL          VProtect System Inc., Business Plan, Rev. K.21.00      CONFIDENTIAL




    Timeline of Events

    December 1999-             Company Founded
    March 2000-                Company began rapid expansion
                               Installed very first eWebCCTV in Alhambra Hospital, California
            th
    August 4 2000-
    August 2000-               Field test version of eWebCCTV V1 released to 10 sites
    August 2000-               Exhibited eWebCCTV in the ISC international security trade
                               show
    September 2000-            Exhibited eWebCCTV in the ASIS international security trade
                               show
    October 2000-              First out-of-state installation in Maryland (Verizon/SecureX)
    November 2000-             Secure installations in New York City Department of Human
                               Resources
                               General Release of eWebCCTV version 2
               th
    December 8 2000-




Confidential                               Page 2                                 8/26/2012 -

                                   www.vprotect.com
               2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                        Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL           VProtect System Inc., Business Plan, Rev. K.21.00      CONFIDENTIAL



2 The Opportunities
2.1   Ever-increasing “affordable” Internet bandwidth

       For decades, Moore's Law - that the processing power of microprocessors will double
       every 18 months - has been driving the information revolution. A new rule of exponential
       growth has emerged to drive the revolution forward. Gilder's Law holds that bandwidth is
       increasing exponentially even more quickly than Moore's Law - doubling maybe every six
       or nine months.




       The “affordable bandwidth” in US is 250 KB/s now and 256 MB/s projected for 2005.




       Example: Since March 2000 in Los Angeles, the terms of Pacbell’s (Pacific Bell) DSL
       offering includes:

                       $39.95/month
                       128 Kbps upstream
                       384 Kbps to 1.5 Mbps downstream, 1 Mbps typical




Confidential                                Page 3                                 8/26/2012 -

                                   www.vprotect.com
               2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                        Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL          VProtect System Inc., Business Plan, Rev. K.21.00          CONFIDENTIAL


       According to another industry projection, affordable high-speed access will reach 2 GB/s
       in 2004. DSL providers’ footprints will spread explosively.




       The question to ask ourselves is, “How can we make the most out of the business
       opportunity if the cost of digital communication (bandwidth) becomes free?”


2.2   Opportunities in the CCTV industry

       CCTV stands for Closed-Circuit Television. It is used for security video surveillance. The
       security industry is on an upward turn for growth, and promises to be a strong market for
       new companies. According to the 2000 Security Dealer profile, conducted by SDM
       magazine, video surveillance is the number two item on the purchasing list behind burglar
       alarms.

       The CCTV industry has the following characteristics:


       Aging technologies: Disadvantages of using VCR/VHS cassettes as the storage media
       include Deteriorating image quality with time, slow sequential searching/indexing, and
       messy archive tape cassette management. In addition, older systems have a location
       limitation, meaning it offers premise only viewing. Viewing video from a standard VCR,
       which utilizes analog Coaxial cable, means that viewing is limited within physical
       buildings.

       The Security Industry is also characterized by their slow acceptance of technologies.
       The Industry is years behind in digital/computer technology. It is also years behind in
       applying Internet capabilities. VProtect offers strengths and innovation by having a
       strong knowledge base of the security industry and its marketing/sales channels.
       VProtect gains this knowledge through having Founders that are veterans in the security
       industry. The Founders have extensive experience in establishing the distribution
       channels.

       The security industry distribution channels are categorized by their operational sizes:


Confidential                                 Page 4                                   8/26/2012 -

                                   www.vprotect.com
               2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                        Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL          VProtect System Inc., Business Plan, Rev. K.21.00         CONFIDENTIAL



                          Distributors- multi-state, carry multiple brand names products, with
                           warehouse facilities and financial strength
                          Industry representatives, middlemen/matchmakers, sell their
                           connections, income is commission based.
                          Dealers/Installers- The sizes of dealerships and installation shops
                           vary greatly. They are the ones who have direct interactions with the
                           customers. They keep very low level of inventory. They are very
                           territorial/protective of their end-customer connection.

         VProtect will concentrate on building partnerships with the players in these distribution
         channels. By generously rewarding its partners, VProtect hopes to create a win-win,
         fast expanding situation.

       VProtect’s strongest tool is that Wwe understand Internet technology.
          VProtect has a knowledgeable Internet savvy engineering team. The Internet is our
          company culture and life style.

2.3   The Opportunities – CCTV plus Internet
                                                                  eWebCCTV Deployment Diagram
       VProtect combines its strengths in two areas – CCTV
       and Internet, creating CCTV over Internet. The
       technology rides on the fast, cost-dropping Internet
       bandwidth wave. It enables millions of businesses to
       have high-speed access for digital recording and
       remote monitoring.

       There are a few key components of VProtect’s
       eWebCCTV system, including digital video storage,                                             Formatted
       easy storage retrieval, remote internet viewing, web
       based software, and an end-to-end service offering.

       Digital video storage ensures that there will be No
       deteriorating image quality as with analog, VCR tapes.
       Digital Video also gives a “hyper” quality to the video,
       meaning a viewer can jump forward and back by
       hours or minutes without scanning hours of video.
       Interactive, digital video storage is easily retrieved
       instantly wasting no time procuring the correct
       videotape and finding the right camera image on the
       right day at the right time.


              Remote Internet viewing
                   Anywhere, anytime, any browser
                   Live and archived video

              Centralized web-based configuration, customization, and maintenance

              End-to-end service offerings
                   Integrated solution with equipment, software, services, and maintenance


Confidential                                 Page 5                                  8/26/2012 -

                                   www.vprotect.com
               2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                        Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL           VProtect System Inc., Business Plan, Rev. K.21.00          CONFIDENTIAL



                       Zero customer-side maintenance

2.4   CCTV and Beyond

       The existing CCTV market is only the tip of the iceberg. The potential market and
       applications of eWebCCTV are much bigger.

       Our mission statement is - “The World at Your Fingertips”. Enabling business owners to
       manage from anywhere, any time is our goal. The tool to make this goal achievable is
       VProtect’s innovative product eWebCCTV - an integration of security industry, digital
       imaging, and Internet technology.

       The primary factor in the success of VProtect is the rapid advances in technology.
       Cheaper, faster broadband, digital storage devices, and the viral growth of Internet usage
       all are technological factors in the rise of remote video and digital recording. An article on
       the CCTV advances in technology illustrates how VProtect’s cutting-edge technology fits
       into the market scheme.

       CCTV Melds With Digital Technology

       "Closed circuit television (CCTV) offers a cost-effective manner to monitor a business 24
       hours a day," says Ginsburg. "Video surveillance can serve as an excellent deterrent.
       The use of a video recorder provides a permanent pictorial record of events to aid
       security personnel and law enforcement officials with identification, apprehension, and
       prosecution of suspects."

       However, like many personal recorders, the digital age has invaded the realm of CCTV,
       taking it to a new level of convenience and reliability.

       According to many industry professionals, old VCR systems can become unreliable over
       time and do not always provide a clear, crisp picture. In addition, many small companies
       do not have the storage capacity for old surveillance tapes since they are bulky and take
       up a great deal of room. To make matters worse, retrieving specific tapes and cuing them
       up to specific points in time can prove to be very time consuming—and more than a little
       annoying.

       With digital imaging, users can take the desired shots whenever necessary, and then
       store them in digital format on a hard drive for later use. Afterwards, that same picture
       can be sent back to the hard drive for later usage.

       "Increases in the capacity of recording media now permit recording of images on large
       hard drives rather than on VCRs prone to mechanical breakdowns," says Ginsburg.
       "These recorders can be accessed remotely by customers to extract crucial information
       when an incident must be investigated."

       New forms of digital CCTV will not only save firms valuable time and storage space,
       some systems will save money by eliminating the need to purchase and maintain
       expensive mechanical pan/tilt mechanisms, multiple cameras, and recording devices.



Confidential                                 Page 6                                    8/26/2012 -

                                   www.vprotect.com
               2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                        Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL            VProtect System Inc., Business Plan, Rev. K.21.00            CONFIDENTIAL


        The benefits of a properly installed CCTV system are obvious. Not only can it keep track
        of the numerous activities in any given facility, it can cut costs, save crucial amounts of
        manpower, and safely store footage until it is needed.” 1




1 James D'Arienzo, Today’s Facility Manager,” Digital CCTV, Standalone Locks, Visitor Management,
Software, And Guard Outsourcing Are Examined,” August 2000.


Confidential                                    Page 7                                    8/26/2012 -

                                     www.vprotect.com
                 2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                          Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL           VProtect System Inc., Business Plan, Rev. K.21.00            CONFIDENTIAL




3 The Market
        The total global security industry market is estimated to be $62 billion USD, according to
        The Securitas Group Annual Report, with the American market growing at a rate of 6 to
        9% per year.2 According to Freeman Security Research, “by the end of the calendar year
        2000 it is estimated that there will be 8,400,000 CCTV systems in operation in the U.S.
        Almost 900,000 of them will have been sold in 2000 alone.”

3.1     Overview of The U.S. Economy

        The US economy maintained strong growth patterns in 2000, and shows some signs of
        slowing down, but overall, the future looks bright. Market Analyst, Lawrence Kudlow,
        writes, “According to First Call/Thomson Financial, share-weighted earnings growth is
        running 16% ahead of last year, while market-cap-weighted profits are up 20%.
        Recessions don't occur while profits are rising. Profits are always the very heart of the
        business situation. Declining profits would force employment layoffs, production cutbacks
        and wage and salary declines, all of which accumulate into a business downturn. But
        expanding profits flag an expanding economy. That's the key point. This is not the fragile
        unbalanced economy of the 1970s, where over-inflation, over-taxation and over-
        regulation kept business conditions on a thin sliver by the water's edge. Instead, the
        dynamic U.S. economy of today is backed by record technology investment, a solid
        wealth-creating incentive reward system and a super-strong King Dollar that is capable of
        absorbing a few mild shocks. Keep the faith, investors. Better times are coming.”3

3.2     Overview of The Security Economy

        The Security Industry is on an upward turn for growth, and promises to be a strong
        market for new companies. “The top Systems Integrators, which has grown to include
        100 companies, tallied revenue of more than $1.6 billion. Systems integration is a
        growing market fueled by technology and the desire of end users to limit their exposure to
        liability. There are opportunities in both new markets and existing markets in which
        technology upgrades are needed. In the $16.1 billion electronic security market, this
        segment serves a critical need.”4

        In addition to the strong technological growth as discussed in the section on our
        opportunity, VProtect’s primary customers will be businesses with multiple locations.
        Businesses with multiple locations are the greatest beneficiary of web-based surveillance
        technology. It is their pain that will be eased through the ability to view multiple places at
        once with a point and click interface. According to one Security Magazine study, a great
        number of facility and loss prevention managers have more than one site to oversee.




2 The Securitas Group 2000 Annual Report, pg 12.
3 Kudlow, Lawerence, “Ignore the Doomsayers,” www.cnbc.com, October 20, 2000.
4 SDM Magazine, “Top 100 Systems Integrators,” October 2000.


Confidential                                   Page 8                                    8/26/2012 -

                                    www.vprotect.com
                2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                         Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL              VProtect System Inc., Business Plan, Rev. K.21.00           CONFIDENTIAL


          As shown in the chart below, 73% of readers of Security Magazine are responsible for
          managing more than one site, giving VProtect a great opportunity to tap into this market.




          Access Control: Multiple Site Monitoring

          27 % Monitor 1 facility

          32 % Monitor 2 to 4 facilities

          23 % Monitor 5 to 14 sites

          18 % Monitor 15 or more (most often in education, government, and
          w/ security budgets over $1 million)5




5   Ira S. Somerson, “Security At the Millenium” Security Magazine, September 1999.

Confidential                                     Page 9                                  8/26/2012 -

                                       www.vprotect.com
                   2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                            Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL          VProtect System Inc., Business Plan, Rev. K.21.00         CONFIDENTIAL



4 Our Enabling Product - eWebCCTV
      VProtect developed eWebCCTV to solve the problems of existing CCTV industry.

4.1    Essential elements of eWebCCTV

         Essential elements include: V160A + web site + Internet data center

                1. V160A
                    Hardware for video delivery
                    All in one box: Consists of
                      multiplexer, web server, and
                      video server
                    Linux based software for its
                      superior reliability and extensibility with automatic updates

                2. Web site
                    The nerve center of eWebCCTV
                    Centralized configuration setup, customization, and maintenance
                    Automatic live-update
                    Constant live-diagnostic
                    Alarm/event email notification delivery
                    Supports universal browser interface

                3. Internet Data center
                    For off-site video recording
                    SOS video image storage feature
                    Economical RAISS architecture
                    Fail-safe redundant storage

4.2    VProtect’s Core technologies (high entry barrier for competitors)

                1. Internet-centric end-to-end services
                    Most remote-viewing and digital recorder vendors provide equipment and
                       software only
                    VProtect delivers services from V160A/web to users with no customer
                       involvement needed

                2. RAISS, Redundant Array of Inexpensive Storage System
                    Fault-tolerant redundant storage
                    Hot-swappable Plug-and-play storage servers
                    Built on open-standard Linux platforms
                    Cost-effective
                    The cost is around 2 times raw IDE disk price, while data center storage
                      costs are around 20 times IDE price

                3. SMM- Site Monitoring and Maintenance
                    Live update
                    Constant checking and live maintenance
                    Auto-recovery from transient hardware/software failures

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                                    www.vprotect.com
                2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                         Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL         VProtect System Inc., Business Plan, Rev. K.21.00       CONFIDENTIAL




               4. JPEG Encryption and Watermarking
                   JPEG encryption enables secure video image transmission over the
                     public Internet
                   Encrypt only the essential part for maximum efficiency and security
                   Watermarking authenticates each captured image to prevent any
                     alternation

               5. JPEG MMX optimization
                   Optimize JPEG compression program with Intel Pentium MMX instruction
                     set
                   Can achieve same JPEG compression ratio with less hardware
                     investment

               6. Build-in multiplexer, hardware motion detection, watchdog timer

               7. Universal GUI with Java Applet
                   Universal application
                   Changes in applet effective immediately when they take place

                                      Figure 1. Universal Java Applet




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                                   www.vprotect.com
               2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                        Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL          VProtect System Inc., Business Plan, Rev. K.21.00           CONFIDENTIAL




5 Competitive Position
    There are around twenty players in the U.S. with roughly three direct competitors. The
    majority of direct competitors are new to the security industry. The more established players
    are not manufacturing an Internet-based, remote video system and will be forced to play
    catch-up when they choose to enter the market. VProtect’s competitive edge over the
    contenders lies in technological, forward-thinking decisions to store video both on-site and
    off-site, as well as, web-based software. None of VProtect’s competitors offers the
    redundancy of mirrored recording, rather they offer on-site only or off-site only recording.

    5.1   DIrect Competitors:



    Eyecast: Eyecast offers a similar solution to VProtect in that their video retrieval system is
    all web based. However, their Customer Premise Equipment offers no on-site recording
    capabilities, and can only take up to 4 camera inputs. Retrieval and recording of video is
    entirely dependant on the internet connection between the customer’s site and the Eyecast
    data center. In the event that the line goes down, all recording and viewing is disabled.
    Eyecast is relying on the reliability of the Internet to maintain the integrity of recorded
    images, and the Internet is inherently unreliable. Congestion on the Internet will cause
    images to be lost. In addition, Eyecast stores all video at their data center, incurring an
    almost 10 times greater cost for storage than the RAISS solution.




    iMonitoring: iMonitoring is similar to Eyecast in that their recording is all done off-site in
    their data center. In addition, iMonitoring recommends that video be transmitted via phone
    lines, rather than high-speed data causing huge potential for loss of data packets.




    VitalLink: VitalLink offers similar viewing capabilities as Eyecast and iMonitoring. However,
    VitalLink does not offer recording. Rather, they give the ability to the user to download
    buffered video in 30-minute segments. This forces the end-user to record onto their hard
    drive that is unstable, and too small to offer a long-term storage solution.


    5.2   Indirect Competitors:

    PC/Windows recording: This solution offers a video transmitter deployed at the client
    premise and the recording is at the remote PC. The end-user cannot record unless the PC
    is viewing, therefore, critical events may be missed. Windows has been proven unreliable
    for a 24/7 operation due to its instability, tendency to crash, and statistic that 95%+ of all



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                                   www.vprotect.com
               2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                        Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL          VProtect System Inc., Business Plan, Rev. K.21.00         CONFIDENTIAL


    viruses are aimed at PC platforms. In addition, this solution is not scalable and cannot
    handle multiple sites efficiently.

    Some competitors offer a viewing only solution, which does not offer storage capability.
    Solutions such as the Axis camera server, are useful for acting as a high-end web camera,
    but cannot offer the user the ability to store and retrieve data.

    Another solution that many competitors are turning to is the option of adding network
    connectivity to a digital recorder. This solution only opens a door to the web without paving
    the road, because each recorder is an isolated island as far as configuration, customization,
    and maintenance are concerned. This solution misses the main point of the Internet – the
    web site, disallowing the end user the freedom to access from anywhere at any time.




Confidential                                Page 13                                  8/26/2012 -

                                   www.vprotect.com
               2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                        Tel: 626.844.4656 ● Fax: 626.844.0337
   CONFIDENTIAL             VProtect System Inc., Business Plan, Rev. K.21.00   CONFIDENTIAL




             VProtect       Admeco Cvideo Eyecast GYY iMonitoring Sensormatic         VitalLink     VPON
                                                   R                                  (formerly     (Aegis
                                                                                     Ceverything)   Micro)
On-Site
                  X            X       X              X        X            X             X           X
Recording
Off-Site
                  X                            X               X
Recording
DSL
inclusive
                  X                    X       X                                          X           X
standard
package
Automated
Maintenanc        X                            X
e
30 days
                  X            X       X       X               X            X
Storage
16 cameras        X            X       X              X                     X
Unlimited
Multiple
                  X                                            X            X
User
Access
No
Software          X                            X               X                                      X
Needed
Web Based         X                            X               X                          X           X
P.C. Based                     X       X              X                     X




   Confidential                                 Page 14                               8/26/2012 -

                                          www.vprotect.com
                      2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                               Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL             VProtect System Inc., Business Plan, Rev. K.21.00        CONFIDENTIAL




6 Marketing strategy
       Overview

       VProtect’s primary objectives as a new market player in the Security Industry include
       education of consumer and sales promotion to dealers.

       Education will encompass teaching the end-user about how VProtect can help ease their
       pain in their security needs. Any business with multiple locations must be made aware of
       their surveillance and digital video options. In addition, they must learn the differences
       between Internet-based, Dial-up and camera server options, as discussed in the section on
       competition. Many businesses are not aware of the newer web-based technologies in the
       security industry, and feel stuck in an old system. VProtect plans to educate the market
       place of their options through trade show participation, magazine advertisements, direct
       mailings, and press releases.

       DSL is also a new technology for many businesses, and the provisioning of DSL can often
       be a lengthy and confusing process. VProtect offers business grade, SDSL as part of the
       service offering to customers without an existing LAN or WAN. Should the end user choose
       to, the same DSL can be used for email or web hosting, thereby eliminating another pain for
       many smaller to medium sized businesses.

       Distribution Channels will focus on Security Dealers as the primary entrant to customers. In
       addition, a new breed of high-end security dealers, known as Systems Integrators, is coming
       to the forefront. These integrators are able to combine VProtect’s video surveillance with
       other aspects of security such as access control and alarms.


       6.1                Target Market

       Direct Consumer

       Security Dealers will be the primary sales channels, with most becoming a VProtect
       Authorized Agent. Geographically, we will initially be targeting dealers and end users in
       Southern California. Eventually we will target nationwide dealers and with an education
       emphasis on large corporations as end users. “Dealer involvement in CCTV sales is high -
       over 73 percent - while manufacturer-direct sales are lower when compared to other types of
       security equipment. During the last half of the 90s, dealers reported that the percent of
       revenue they derive from CCTV climbed about 1 percent per year to nearly 13 percent.
       Median or typical purchase retail price expected over the next year is $45,000; the average
       system planned in the next year is $215,000. Most likely because they (dealers) specify
       systems for multiple clients, security consulting and architect/engineering firms, have the
       highest average CCTV sale: $533,000.”6

       VProtect’s goal is to make the barrier for entry for becoming a VProtect Authorized Agent as
       easy and seamless as possible. VProtect offers high profit margins for Dealers as well as,
       full-service DSL ordering/provisioning/maintenance, full-service product maintenance and

6   www.securitymagazine.com/surveillance/2.htm

Confidential                                  Page 15                                  8/26/2012 -

                                      www.vprotect.com
                  2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                           Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL          VProtect System Inc., Business Plan, Rev. K.21.00           CONFIDENTIAL



    free education and training. eWebCCTV has site monitoring and maintenance, so all fixes
    can be done remotely, freeing the dealer from making site visits.

    Indirect Consumer

    VProtect’s authorized agents will sell to large corporations with multiple locations, as well as
    any business with multiple locations such as retail operations, restaurant chains and
    convenience stores. Large Scale data centers also offer an ideal setting for eWebCCTV.

    All multi-location businesses share the following needs and commonalities, the need to
    monitor activities in a variety of locations. Facility Managers and Security Directors are the
    target audience at the following market segmentations:

                   Department Stores
                   Convenience Stores
                   Restaurant Chains
                   Retail Stores
                   Hotels
                   Supermarkets
                   Hospitals
                   Drug Stores
                   Data Centers
                   Gas Stations
                   Tourist Centers such as Zoos, Museums, and Amusement Parks,
                   Factories/Warehouses
                   Fortune 500/100’s and other large corporations. It is this market
                    segmentation that VProtect is particularly interested in. The majority of this
                    segment has a corporate WAN in place with the budget to spend on a high-
                    end security system. A study by SDM Magazine reveals the following:

       “More Fortune 500 security directors use CCTV/surveillance as part of their security
       system - 78.4% -than any other product category, followed by electronic access control
       (71.1%), photo ID/badging (67.0%), intrusion/burglar alarms (64.9%) and electronic locks
       (62.9%).

       The Fortune 500 expects a relatively swift economic payback on security system
       investments: 57.7% expect systems to pay for themselves in 3 to 5 years, while 22.7%
       expect a payback in 1 to 2 years. Fewer than one in ten (9.3%) is willing to wait 6 to 10
       years for a payback. Factors influencing cost justification include lower incidence of
       crime/violence (rated 5.2 on a 6-point scale), improved operations (4.9), and less
       loss/shrinkage (4.8).

       Some 27.8% of respondents are standardizing and use the same brand/manufacturers'
       components at all locations. Another 22.7% are phasing in the practice, while 49.5% do
       not standardize components.

       Respondents expect their systems to last between 6 and 8 years on average, with fire
       detection and alarms expected to last the longest time (7.8 years on average).




Confidential                                 Page 16                                   8/26/2012 -

                                   www.vprotect.com
               2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                        Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL           VProtect System Inc., Business Plan, Rev. K.21.00           CONFIDENTIAL


        Asset protection is the most important factor driving security investments (4.9 on a 6-
        point scale), while terrorism is the least important factor (3.6 average rating).

        Discussing Emerging Trends
        Emerging technologies and changing needs will guide the future course of security
        among Fortune 500 companies, according to our survey respondents.
        When we asked Fortune 500 security directors what trends or changes they anticipate
        will affect security in the next five years, their answers were dominated by mentions of
        new technologies and new security challenges.
        Several respondents suggested that more high-tech solutions will decrease their
        manpower needs in coming years. "More technology equals less people," was one
        comment. Technologies mentioned include the following:

                    Elimination of VCRs and image storage on PCs.
                    Wireless technology.
                    Integrated systems, in-house control monitoring.
                    Computer and Internet use.
                    Technological advances in access control.
                    Biometrics.”7

        Security Management Magazine’s Reader breakdown found the following information
        about VProtect’s Market Segmentation:

    Business/industry                                                            Subscriber %
    Security Consulting
                                                                                 9%
    (Architectural/Engineering Firms, Design/Contracting Firms)
    Security Services
                                                                                 20%
    (Security Dealers/Distributors, Other Security Services)
    Other Security Services allied to the field                                  2%
    Banking/Investments/Brokerage/Financial Services, Insurance, Real
                                                                                 8%
    Estate
    Investigative Services                                                       9%
    Other Services                                                               1%
    Institutional
    (Health Care, Educational, Lodging, Museums, Libraries,                      10%
    Entertainment/Sports Facilities)
    Communications Industries, Other Utilities and
                                                                                 7%
    Transportation/Distribution Industries
    Industrial/Manufacturing/Processing                                          11%
    Retail/Wholesale Trade                                                       5%
    Government
                                                                                 12%
    (Military/Non-Military, Law Enforcement, State/Local/Federal)
    Other                                                                        4%

7www.securitysolutions.com. “Access Control & Security Systems Integration's Exclusive,” 1998 Fortune
500 Security Director Study

Confidential                                  Page 17                                   8/26/2012 -

                                    www.vprotect.com
                2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                         Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL           VProtect System Inc., Business Plan, Rev. K.21.00          CONFIDENTIAL




       6.2               Pricing model

       VProtect developed a value-based pricing model, where the price is based on the
       conceived “value” instead of the cost. Low pricing is not a substitute for an adequate
       marketing and sales efforts.

       Due to the newness of eWebCCTV and similar systems, the “value” in the marketplace
       is not yet well established. To establish VProtect’s presence as a premier solution
       provider, a high-end list price is employed to set the perceived “value” of eWebCCTV.
       We position our offering right along our high-end competitors: EyeCast and VitalLink.

       Regardless of the list price, VProtect offers a low distribution price with high margins to
       stimulate the channels’ willingness to try and promote untested innovations.


     6.3                 Sales Promotion

       VProtect plans to generate interest in the product through the following strategies:

           1. Magazine advertisements in select trade and vertical industry magazines
              VProtect advertises in the following magazines:




                                    SECURITY DEALER REACHES OVER 30,000
                                    DEALERS MONTHLY.
                                    Security Management, the magazine of the American
                                    Society for Industrial Security. Security Management
                                    reaches 35,000 management level end users, monthly.




                                    28,000 industry professionals read Security Distributing
                                    and Management.




             2. VProtect participates in the following trade shows:



Confidential                                 Page 18                                   8/26/2012 -

                                     www.vprotect.com
                 2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                          Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL         VProtect System Inc., Business Plan, Rev. K.21.00     CONFIDENTIAL



                                 ISC East & West- The International Security Conference &
                                 Exposition (ISC EXPO) attracts an audience of more than
                                 20,000 security professionals each year.




                                 ASIS INTERNATIONAL IS THE LARGEST
                                 INTERNATIONAL ORGANIZATION FOR
                                 PROFESSIONALS RESPONSIBLE FOR
                                 SECURITY, INCLUDING MANAGERS AND
                                 DIRECTORS OF SECURITY. THE SHOW HOSTS
                                 AROUND 20,000 ATTENDEES YEARLY.




Confidential                             Page 19                                8/26/2012 -

                                   www.vprotect.com
               2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                        Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL         VProtect System Inc., Business Plan, Rev. K.21.00          CONFIDENTIAL




  6.4 Web Site

     A corporate web site is the most public, accessible marketing tool a company can have.
     VProtect plans to utilize cutting edge web technology to advance sales and interest in the
     company. VProtect’s web site maintains a dual role of being a resource for product
     information, as well as, the actual product. VProtect also plans to develop the web site as
     a resource for dealers and security managers by designing tools and databases to help
     track orders and services that VProtect offers. VProtect generates traffic to the web site by
     citing the URL on all corporate communication, listing with multiple, major search engines
     and directories, and posting reciprocal links on partner pages.

     The VProtect Web site offers the following sections:

          A Live Demo of Video over the Internet
          Members Login for customers to remotely view cameras and customize viewing
           privileges
          A service description with frequently asked questions, a glossary of security and
           technology terms, and technical specifications of eWebCCTV
          A security community with links to security resources, upcoming security events,
           news articles, and a message board for security professionals to meet and chat
          Corporate Information including company history, press releases, and job openings


   6.5 Corporate Communications

       Both direct mail and press releases are an inexpensive yet effective ways to educate the
       marketplace and generate interests in VProtect’s service offering. Direct mailers are sent
       on a regular basis to targeted recipients in the security industry. In addition, company
       news is released to Business Wire and targeted trade magazines frequently.




Confidential                               Page 20                                   8/26/2012 -

                                   www.vprotect.com
               2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                        Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL          VProtect System Inc., Business Plan, Rev. K.21.00          CONFIDENTIAL




7 Company History                             VProtect Office in So. Calif.
    VProtect, located in San Marino,
    California, provides sophisticated
    technology through our wide
    range of security monitoring and
    storage systems for a myriad of
    industries. December 1999
    marked the start of Mr. John C.
    Lee’s, Mr. Jemmy C. Huang’s,
    Dr. C. C. Jay Kuo’s, and Dr. Alan
    N. Ying’s dream to provide live
    broadcasting, monitoring and
    surveillance services, as well as,
    data management through Internet web control. Although the idea was formulated almost
    three years ago, it was not considered viable until recently due to the surge of new Internet
    users.

    A talented team of engineers, web developers and sales and marketing personnel was
    assembled in March 2000. The company has grown to twenty-five employees by November
    2000. Field-testing of eWebCCTV began in August 2000 with a general release planned
                    th
    for December 8 , 2000. ISC East in August of 2000 was the first trade show where VProtect
    displayed, followed closely by the American Society for Industrial Security Show in
    September 2000 in Orlando, FL.

     Opening Ceremony with Mayor                    VProtect fulfills our customers’ needs with
                                                    affordable hardware costs, effective
                                                    integration of hardware performance,
                                                    efficient video compression algorithms, and
                                                    powerful interface software for security
                                                    industry devices and their application
                                                    software. The comprehensive service
                                                    offering allows customers to stay in touch
                                                    and in control of their business remotely
                                                    providing a strong security presence and
                                                    reassurance of control for business owners
                                                    and facility managers.

                                                    VProtect’s strongest asset is our dynamic
    ensemble of expert security advisers, talented technical designers and service-oriented
    marketing personnel. As a result of our team, our work environment is a model of
    democracy, multi-culturalism and efficiency where creative problem solving and empathy is
    valued.




Confidential                                Page 21                                   8/26/2012 -

                                   www.vprotect.com
               2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                        Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL          VProtect System Inc., Business Plan, Rev. K.21.00         CONFIDENTIAL




8 Management Team
8.1   Founders & Board Members

      John Lee brings his entrepreneurial spirit as the leader of the top CCTV manufacturer in
      Taiwan to VProtect. His strong business and financial background brought EverFocus
      Electronics Corporation to its IPO in Taiwan Stock Exchange within 5 years of its inception.
      Prior to the success of EverFocus Electronics Corporation, Mr. Lee established Witty Mate
      Corporation, which has become the top importer in copper products supplying the electrical
      and electronics industry in Taiwan. Both EverFocus Electronics Corporation and Witty
      Mate Corporation have extended their trade to a global market under Mr. Lee's leadership
      and market savvy. With his sharp sense of the ever-changing trend in the business world
      and down-to-earth personality, Mr. Lee has lived up to, if not surpassed, the high
      reputation of National Taiwan University from where he received his B.S. degree in
      Economics.

      Jemmy Huang acts as a technical consultant for VProtect from Taiwan, where he received
      both his B.S. and M.S. Degree in Electrical Engineering from National Taiwan University.
      Mr. Huang received several National Rewards in Innovation from the Taiwan Government
      and obtained his first patent for his invention on scoring machine. Mr. Huang joined
      Hewlett-Packard Company before becoming a co-founder of EverFocus Electronics
      Corporation and SVEC Computer Company both in Taiwan. Mr. Huang's strength lies in
      carrying out plans devised upon his capabilities to foresee the impending trending future
      products and technology. Combining his expertise in the Internet arena and strong work
      ethic, Mr. Huang is an integral part of the future success of VProtect.

      Professor Jay C.C. Kuo transfers his expertise in the areas of digital signal and image
      processing, audio and video coding, wavelet theory and applications to VProtect as a
      technical consultant. Dr. Kuo received his M.S and Ph.D. degrees in Electronics
      Engineering from the Massachusetts Institute of Technology, and he has been with the
      Department of Electrical Engineering-System and the Signal and Image Processing
      Institute at The University of Southern California, where he currently has a joint
      appointment as professor of Electrical Engineering and Mathematics. Dr. Kuo received the
      National Science Foundation Young Investigator Award (NYI) and Presidential Faculty
      (PFF) Award in 1992 and 1993, respectively.

      Dr. Alan N. Ying an engineer turned entrepreneur, Dr. Ying received his M.S and Ph.D.
      degrees in Chemical and Petroleum Engineering from The University of Southern
      California. He has managed and helped the development of large-scale energy related
      projects throughout the world. Dr. Ying has extensive experience in forming and operating
      private capital ventures during the last 10 years. He is the founder of a California energy
      company, and eventually led it to its private buy out. Dr. Ying also played a role in the
      success of EverFocus Electronics as a successful CCTV company in the U.S. security
      market. His experience at Everfocus will guide him in pushing forth the VProtect mission of
      broadcasting CCTV across the Internet.




Confidential                                Page 22                                  8/26/2012 -

                                   www.vprotect.com
               2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                        Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL          VProtect System Inc., Business Plan, Rev. K.21.00          CONFIDENTIAL



8.2   Management Team

      Tzung Liu, President & Chief Technology Officer, combines his higher-level university
      degrees with a plethora of experience in the technology world. Mr. Liu received his B.S.
      degree in electrical engineering from National Taiwan University in 1980 and his M.S.
      degree in Computer Science from Penn State University in 1983. His employment record
      includes responsibilities as Chief Architect, Principal Engineer, lead programmer and
      Director of Engineering for companies including Unisys, Sybase, Pyramid Technology,
      Siemens, Datatape Inc, Convergent Technology, FreePC, eMachines, and Versyss. In
      1988, Unisys granted Mr. Liu an award for technical excellence, marking a highlight in his
      career. 1996 brought the Internet to the forefront of Mr. Liu’s attention, not simply as a
      technology, but as a way of life, and he validated this belief by joining Free PC (later
      emerging as eMachines) as an expert in web development and data warehousing. Mr. Liu
      leads VProtect with the vision to create a strong presence in the Internet and security
      industry.
         Halloween 2000
                                    Teresa Lu, Chief Operating Officer, combines her
                                    background in computer science and her Masters in
                                    Business Administration to bring a strong knowledge base to
                                    VProtect. She received her Bachelors degree from National
                                    Taiwan University, and her MBA degree from University of
                                    Illinois. In her former rolls as lead operation analyst and
                                    Executive Assistant to the President in a number of major
                                    corporations, Ms. Lu was responsible for all operational
                                    aspects of the companies from legal issues, relationship
                                    building, finance, to human resource procedures and
                                    policies. Ms. Lu’s highly professional attitude and empathy
                                    create a well-functioning VProtect team.

                                     Linda Heller, Director of Marketing, brings strong project
                                    management and creativity to VProtect as Marketing
      Director. She received her Bachelors of Art and Masters in Education from the George
      Washington University. Prior to working for VProtect, Ms.
      Heller worked at International Mobile Communications,
                                                                      Carving Contest
      where she worked on the business development team,
      overseeing projects to expand the company’s cellular
      service globally. Previously, she worked at Network
      Solutions in the technical operations team as a wireless
      services specialist.

      Kip Tashiro, Director of Sales, is responsible for the
      sales effort within the United States for VProtect
      System, Inc. He majored in Business Administration at
      the University of Southern California and Cal State
      University of Los Angeles. From 1984 until 1992, Mr.
      Tashiro served as Vice President of the North American
      Region for The Mizuho Corporation, an international
      products manufacturer. For two years he was the Major
      Accounts Manager for Savin Corporation in Stamford,
      Connecticut. During the next five years Mr. Tashiro was


Confidential                                Page 23                                   8/26/2012 -

                                   www.vprotect.com
               2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                        Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL         VProtect System Inc., Business Plan, Rev. K.21.00         CONFIDENTIAL


     the District Sales Manager in the Los Angeles and San Gabriel districts of Pitney Bowes
     Corporation, a Fortune 100 company, where Mr. Tashiro was one of the top managers in
     the nation for 1998 – 1999. Mr. Tashiro brings 15 years of national and international sales
     experience to VProtect System, Inc.

    Grace Kan, Director of Business Development, received her BA degree in Human
    Development from the University of California, San Diego in 1996. Since then, she has
    earned experience in sales and marketing in two Fortune 500 companies. She started her
    career at Pitney Bowes as an Account Executive and worked her way up to Senior Account
    Executive. Her responsibilities included: managing territories in the Los Angeles region,
    conducting intense teleprospecting and cold calling, responsible for current accounts and
    preparing written proposals and lease agreements. In 1997, she continued her career in
    sales and marketing at Automatic Data Processing (ADP) as an Area District Manager. In
    the fiscal year of 1999, Ms. Kan achieved Champion's Circle, a selected group based on
    generated sales for the year. She was also responsible for attaining new accounts and
    marketing to specific industries. Ms. Kan has been with VProtect since May 2000.




Confidential                               Page 24                                  8/26/2012 -

                                   www.vprotect.com
               2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                        Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL               VProtect System Inc., Business Plan, Rev. K.21.00       CONFIDENTIAL




9 Financial Projections
      The projected budget for 2001 is $7,5000,000 for                     Budget for Year 2001
      building 5,000 customer sites. Other than payroll
      related expenses, most of the budget will be           Payroll, taxes, fringe benefit       $2,500,000
      spent on setting up the data center for hosting the R/D Equipments and Data Center $2,500,000
      off-site storage for 5,000 units of V160A video
      servers. Using the RAISS architecture, we              Marketing and Sales                    $750,000
                  13%                              expect Office, Facilities, Misc.                 $750,000
              10%                34%
                                                   to
                                                             Working Capital                      $1,000,000
                                                   realize
             10%
                                                   a5        Total                                $7,500,000
                       33%
             Payroll
                                                   times of cost efficiency compare with the average
             R/D Equipments and Data Center
                                                   cost of our major competitors.
           Marketing and Sales
           Office, Facilities, Misc.           $750,000 was budgeted for marketing and sales
           Working Capital                     for exhibiting in four trade shows, attending five
                                               trade shows, advertising in four security industry
      magazines, and for other various promotions.

9.1    Staff Growth
       As of November 2000, we have 24 full-time employees. We expect our staff to grow to 45
       by the end of 2001.

                                               Staffing for 2000 and 2001
                 R&D IT Web                      Mkt/Sales/CS        Operation   Executives    Total
          Nov-00 7    3  3                              5                4           2          24
           1-Dec 12   5  5                             14                4           5          45


9.2    Projected Sales
       Projected unit sales include 5,000 units for 2001, 13,000 units for 2002, and 23,000 units
       for 2003. The average wholesale price per unit is expected to be at $2,500.

                                                     Unit Sales


                                   25000
                                   20000
                                   15000
                                   10000
                                       5000
                                         0
                                              2001       2002     2003




Confidential                                             Page 25                       8/26/2012 -

                                      www.vprotect.com
                  2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                           Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL                  VProtect System Inc., Business Plan, Rev. K.21.00                       CONFIDENTIAL



9.3     2001 income/expense projection
        The year 2001 income/expense projection is detailed below. With a conservative estimate
        of $1,100 gross profit per unit, and $30 monthly fee, we expect to have a positive cash flow
        starting from October 2001 when units sold reaches roughly 4,000.

Table 1 Projection 2001 ($1,100/$30)
                                                 FINANCE PROJECTION 2001
                        Jan   Feb Mar      Apr    May      Jun      Jul    Aug       Sep     Oct      Nov      Dec
Monthly Income/Expense
Expense                 200    269   339   408    477      547     616     685       720     755       789     824
# of Unit Sold           50     67    91   122    165      222     299     402       542     730       984    1,325
Revenue                 127    172   233   315    426      576     777    1,049     1,414   1,907    2,570    3,464
COGS                     70     94   127   171    231      311     418     563       759    1,023    1,377    1,856
Gross Profit             57     78   106   144    196      265     359     485       655     884     1,193    1,608
 Gross Unit Profit       55     74   100   134    181      244     329     443       596     803     1,082    1,458
 Monthly Fee              2      4     6    10     15       22      30        43      59      81       110     150
Net Income             (144) (192) (233) (264)   (281)    (281)   (257)   (200)      (65)    129       403     784


Cumulative Income/Expense
Expense                 200    469   808 1,216   1,693    2,240   2,856   3,542     4,262   5,017    5,806    6,630
# of Units Sold          50    117   208   330    495      717    1,016   1,418     1,960   2,691    3,675    5,000
Revenue                 127    298   531   847   1,273    1,849   2,627   3,676     5,090   6,997    9,567 13,030
COGS                     70    164   291   462    693     1,003   1,422   1,985     2,744   3,767    5,144    7,000
Gross Profit             57    134   240   385    580      846    1,205   1,690     2,346   3,230    4,422    6,030
 Gross Unit Profits      55    129   229   363    544      788    1,117   1,560     2,156   2,960    4,042    5,500
 Monthly Fee              2      5    11    21     36       58      88     131       189     270       380     530
 (fee/Unit_profit)       3%    4%    5%    6%      7%       7%      8%      8%        9%      9%       9%      10%
Net Income             (144) (335) (568) (832) (1,113) (1,394) (1,651) (1,851) (1,916) (1,787) (1,384)        (600)



           The following two diagrams show the monthly income/expense projection, and
           cumulative income/expense projection for year 2001.


                                                                                   Cumulative Income/Expense
                 Monthly Income/Expense
                                                                      8000
   2000
                                                                      7000
                                                                      6000
   1500                                                               5000
                                                                      4000
   1000                                                               3000
                                                                      2000
    500                                                               1000
                                                                         0
       0                                                             (1000)
                                                                     (2000)
   (500)                                                             (3000)

                                                                           Expense                  Gross Profit       Net Income
Confidential                                             Page 26                                             8/26/2012 -

                                          www.vprotect.com
                      2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                               Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL                  VProtect System Inc., Business Plan, Rev. K.21.00                  CONFIDENTIAL


          A more rosy projection calls for $1,400 gross profit per unit with $39 monthly fee. With
          this projection, we expect to reach positive cash flow on September 2001, and achieve a
          net income of 1.09 millions.

Table 2 Projection 2001 ($1,400/$39)
                                                 FINANCE PROJECTION 2001
                        Jan   Feb    Mar   Apr   May     Jun      Jul    Aug     Sep     Oct     Nov      Dec
Monthly Income/Expense
Expense                 200    269   339   408    477    547      616    685     720     755     789      824
# of Unit Sold           50     67    91   122    165    222      299    402     542     730     984     1,325
Revenue                 127    173   235   318    431    582      787   1,062   1,432   1,931   2,603    3,509
COGS                     55     74   100   134    181    244      329    443     596     803    1,082    1,458
Gross Profit             72     99   135   184    250    338      458    619     836    1,127   1,521    2,051
 Gross Unit Profit       70     94   127   171    231    311      418    563     759    1,023   1,377    1,856
 Monthly Fee              2     5      8    13     19     28      40      55      76     105     143      195
Net Income             (128) (170) (204) (224) (228)    (208)   (158)    (67)    115     373     731     1,226


Cumulative Income/Expense
Expense                 200    469   808 1,216 1,693    2,240   2,856   3,542   4,262   5,017   5,806    6,630
# of Units Sold          50    117   208   330    495    717    1,016   1,418   1,960   2,691   3,675    5,000
Revenue                 127    300   535   853 1,284    1,867   2,653   3,715   5,147   7,078   9,681 13,189
COGS                     55    129   229   363    544    788    1,117   1,560   2,156   2,960   4,042    5,500
Gross Profit             72    171   306   490    740   1,078   1,536   2,155   2,990   4,118   5,639    7,689
 Gross Unit Profits      70    164   291   462    693   1,003   1,422   1,985   2,744   3,767   5,144    7,000
 Monthly Fee              2     7     15    28     47     75      114    170     246     351     494      689
 (fee/Unit_profit)      3%     4%    5%    6%     7%      7%      8%      9%      9%      9%     10%      10%
Net Income             (128) (299) (502) (726) (954) (1,162) (1,320) (1,387) (1,271)    (899)   (167)    1,059




9.4     Three-year income/expense projection

With a conservative estimate on gross profit margin and an optimistic projection of sales volume,
we expect to see the following income/expense in year 2001, 2002, and 2003.

                               Table 3 Three-year summary
                         Three-Year Income/Expense Summary (in thousands)
                                                      2001    2002    2003
                         Revenue                  $12,938 $36,989 $62,635
                         Gross Income               $5,938 $17,583 $30,822
                         R/D & Operation Cost       $6,500 $12,650 $17,123
                         Net Income                 ($562) $4,932 $13,699
                         Cumulative Net Income      ($562) $4,370 $18,070




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                                          www.vprotect.com
                      2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                               Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL                   VProtect System Inc., Business Plan, Rev. K.21.00               CONFIDENTIAL



Table 4 Three-year Projection 2001 - 2003
                                       2001                            2002                             2003
                         Q1       Q2    Q3       Q4      Q1      Q2      Q3      Q4      Q1      Q2       Q3       Q4
Monthly Income/Expense
Expense                  786 1,345 1,905       2,464   2,743   3,023   3,302   3,582   3,861   4,141    4,420    4,700
# of Unit Sold           419     973 1,527     2,081   2,635   3,188   3,742   4,296   4,850   5,404    5,958    6,512
Revenue                1,067 2,495 3,949       5,427   6,930   8,458 10,011 11,589 13,192 14,820 16,473         18,150
COGS                     587 1,362 2,138       2,913   3,688   4,464   5,239   6,015   6,790   7,565    8,341    9,116
Gross Profit             480 1,133 1,811       2,514   3,242   3,994   4,772   5,575   6,402   7,254    8,132    9,034
 Gross Unit Profit       461 1,070 1,680       2,289   2,898   3,507   4,117   4,726   5,335   5,944    6,553    7,163
 Monthly Fee              19      63   131      225     344      487    655     849    1,067   1,310    1,578    1,871
Net Income              (306) (212)    (94)      50     498      972   1,470   1,993   2,541   3,114    3,711    4,334
Yearly Revenue                                12,938                               c                            62,635
Yearly Net Income                              (562)                           4,932                            13,699


Cumulative Income/Expense
Expense                  786 2,132 4,036       6,500   9,243 12,266 15,568 19,150 23,011 27,152 31,573          36,273
# of Units Sold          419 1,392 2,919       5,000   7,635 10,823 14,565 18,862 23,712 29,115 35,073          41,585
Revenue                1,067 3,562 7,511 12,938 19,868 28,326 38,337 49,927 63,119 77,938 94,411 112,561
COGS                     587 1,949 4,087       7,000 10,688 15,152 20,392 26,406 33,196 40,762 49,102           58,218
Gross Profit             480 1,613 3,424       5,938   9,180 13,174 17,946 23,520 29,922 37,177 45,309          54,343
 Gross Unit Profits      461 1,532 3,211       5,500   8,398 11,905 16,022 20,748 26,083 32,027 38,580          45,743
 Monthly Fee              19      82   213      438     781    1,268   1,924   2,773   3,840   5,150    6,728    8,599
 (fee/Unit_profit)       4%       5%    7%       8%      9%     11%     12%     13%     15%     16%      17%      19%
Net Income              (306) (519) (612)      (562)    (64)     908   2,378   4,370   6,911 10,025 13,736      18,070




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                                          www.vprotect.com
                      2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                               Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL          VProtect System Inc., Business Plan, Rev. K.21.00        CONFIDENTIAL




10 Funds Sought

10.1 Private placement of Preferred “A” stock

     We seek equity funding of $7,500,000 with 3,000,000 preferred “A” stock shares priced at
     $2.5 per share. The following paragraph highlights this offerings:

          1. Funding target - $7,500,000

          2. 3,000,000 shares of Preferred “A” stocks at $2.5 per share

          3. Pre-money
                  4.6 million common shares
                  0.9 million shares of option reserved for employees
                  Company valuation at 13.75 millions ($2.5 x 5.5 million shares)

          4. Post-money
                 4.6 million common shares
                 0.9 millions shares of existing options
                 3 million Preferred “A” shares
                 0.9 million shares of option reserved from this round of funding
                 Company valuation at 23.5 millions ($2.5 x 9.4 million shares)

          5. Min/max offering
                  Minimum of 3.75 million shares
                  Maximum of 7.5 million shares
                  Fund will be held in escrow account until reaching minimum target

10.2 Use of proceeds

     The follow table details the allocation of proceeds from this offering.

      USE OF PROCEEDS                                       MIN: 3,750,000      MAX: 7,500.000
      Payroll, tax and fringe benefit                          $1,750,000          $2,500,000
      R/D Equipments and Data Center                             $750,000          $2,500,000
      Marketing and Sales                                        $375,000            $750,000
      Office, Facilities, Misc.                                  $375,000            $750,000
      Working Capital                                            $500,000          $1,000,000
      Total                                                    $3,750,000          $7,500,000

10.3 Company valuation at year 2003 reaches 400M

     Three valuations of VProtect at year 2003 are listed below for your reference.




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                                   www.vprotect.com
               2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                        Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL         VProtect System Inc., Business Plan, Rev. K.21.00        CONFIDENTIAL


               1. 332M @ 2003: Security industry’s monthly fee x100 factor

               Valuation = monthly fee times 100 times number of customers
                       = monthly fee x 100 x number_of_customer
                       = ($39 + $42) x 100 x 41,000
                       = 332M @ 2003

               Note that $39 is the monthly and $42 is the derived monthly fee from $2500
               spread in five years.

               2. 343M @ 2003: P/E ratio of security companies

               ADT* P/E is 21
               Honeywell P/E is 29

               13.7 x (2003 VProtect earnings) x 25 (Average of P/E of ADT & Honeywell)
               343M @ 2003

               *SDM Magazine ranks ADT as the #1 System Integrator, with $220M revenue for
               1999)

               *Our projected earning is $13.7 million in year 2003


               3. 367M @ 2003: Price/Sales of other VoIP companies

               VProtect & Avistar = 5.84
               62.6 (2003 VProtect revenue) x 5.84 (Avistar’s P/S)
               Avistar runs VoIP Applications on Corporate LANs, a similar technology to
               VProtect
               367M @ 2003

       VProtect has an old economy business model, yet a new economy explosive potential.
       Our company’s valuation should be toward the higher end.




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                                   www.vprotect.com
               2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                        Tel: 626.844.4656 ● Fax: 626.844.0337
Appendix A. COMPETITIVE STUDY

Section A.1               Eyecast
                     th
575 Herndon Pkwy, 4 Floor
Herndon, VA 20170
703-375-6900
www.eyecast.com
Founded in 1998

Marketing/Sales:
 Channels: Sell through dealers & directly to End User
      ASPs- Authorized Solution Providers
           o Receive commissions for Sales of Eyecast Products
      WSP- Wholesale Services Partners
           o Resell & Rebrand Eyecast Products
      GSA– General Service Agreement (required for all government purchases)Approved
                   Vendor

 Pricing:
  MSRP (Manufacturer Suggested Retail Price):
  Set-up & Installation- $3500, Monthly Fee- $349
          o (Eyecast owns the hardware)
  1 year contract

 Strategic Alliances: Eyecast maintains Strategic Alliances with:
  Sensormatic
     Sensormatic Electronics Corporation (NYSE:SRM) announced that it has formed an
     alliance with Eyecast Corporation to offer the technology under the product name, VioStar.
     The alliance is a direct result of six-month national usability tests. VioStar provides retailers
     with real-time visual access of their multiple locations over the Internet in a secure and
     controlled manner.
  Sony- Sony On.Site
                                                               tm
     The On.Site service, which includes Eyecast’s Eyeview solution is available through
     Sony’s extensive network of dealers, value-added resellers and system integrators.
  Security Link
     EYECAST Corporation and SecurityLink, a provider of advanced security, fire detection
     and electronic monitoring systems to residential, commercial and government customers
     throughout the United States, Canada, Puerto Rico and Mexico, maintain a strategic
     alliance in which SecurityLink will offer EYECAST’s technology under the product Silent
                 R
     Watchman Internet Edition powered by EYECAST.

 High Profile Customers:
  Virginia Department of Transportation.
     HighwayNet is a public/private partnership begun in 1999 between the Virginia Department
     of Transportation (VDOT) and EYECAST.
  Eckerd Drug
     A drugstore chain, that is a subsidiary of J.C. Penney, that has about 2,600 stores in some
     20 states, mostly in the Northeast, Southeast, and Southwest.

 Direct Market Strategies:
 Strong Direct Marketing Team
      Multiple Direct Mail pieces

                                  www.vprotect.com
                     2975 Huntington Drive ● San Marino, CA 91108
                        Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL             VProtect System Inc., Business Plan, Rev. K.21.00          CONFIDENTIAL



                     Trade Show attendance at ISC East & West, ASIS, and National Retail
                      Federation Show

Technology:
Eyecast offers a similar solution to VProtect in that their video retrieval system is all web based.
However, technologically VProtect is still ahead in the following areas:

       Eyecast Customer Premise Equipment does not offer on-site recording capabilities. Not
        only is the on-site storage the most secure way to store images, it is also:
            o independent of Internet traffic
            o independent of communication link down time

       Eyecast retrieval and recording of video is entirely dependant on the internet connection
        between the customer’s site and the Eyecast data center. In the event that the line goes
        down, all recording and viewing is disabled. Eyecast is relying on the reliability of the
        Internet to maintain the integrity of recorded images, and the Internet is inherently
        unreliable. Congestion on the Internet will cause images to be lost.

       In their system architecture, Eyecast stores all video at their data center, incurring an
        almost 10 times greater cost for storage than the RAISS solution offered by VProtect.
        VProtect passes the savings to customers.

       All of Eyecast’s video image traffic go through their website, which becomes the
        bottleneck when the traffic is heavy. VProtect uses the entire internet as our backbone to
        direct image transmission directly from video capture to viewer’s browser.

       Eyecast system does not offer special features like SMM (Site Monitor / Maintenance)
        which detects mal-functions and resets the hardware. VProtect upgrades its software
        through SMM to user site automatically and seamlessly.

Deployment:
Deployment Case Study: El Sereno Medical
 April 2000: El Sereno Medical ordered an Eyecast System
 June 22, 2000- Customer Order was faxed, signed and sent back with a check for $995
 October: 2000: T-1 Line installed
 November 2000: Eyecast System Installed by Dealer, no user name and password given, 10
 days later, still no user name and password. 10 Calls to the Eyecast Customer Support Team
 resolved nothing.
            Customer Care Hours of Operation: M-F 8am-6pm ET


Section A.2               IMonitoring
1101 San Antonio Rd #400
Mountain View, Ca 94043
www.Imonitoring.Com

Marketing/Sales:
Channels: Will only sell to dealers
 iResellers; Generic or Co-branded
   iResellers are iMonitoring.com partners (e.g. installer/dealers, monitoring companies, central


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                   2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                            Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL           VProtect System Inc., Business Plan, Rev. K.21.00           CONFIDENTIAL


    stations, CCTV equipment manufacturers, distributors) who resell the service to their
    subscribers. iMonitoring.com provides all the back-end database, video and web server
    services.

Pricing:
 Dealer Cost: $750 Hardware + $25 monthly fee (Hardware only takes 4 camera inputs)
    MSRP: $1500 Hardware + $50 monthly fee
    3 year contract

High Profile Customers
 No high profile customers as of yet. Product will not be shipped until March 2001.

Strategic Alliances
 No announced strategic alliances as of yet

Direct Market Strategies
 Advertising: Monthly full page in SDM Magazine

Technology:
iMonitoring does provide 7 days on-site recording as well as off-site recording in their data center.
Their product – iPanel will not be released until March 2001.
    Video is transmitted via phone lines or ISDN, instead of high-speed connection (ex: DSL
        or T1) causing huge potential for loss of data packets.
    Like Eyecast, video goes through their website which becomes the bottleneck when the
        traffic is heavy.
    iPanel does not offer internet centralized configuration setup, customization, and
        maintenance.
        No SMM - hardware repair and software upgrades cannot be done easily.

Deployment:
Not shipping till March 2001- in Field Testing, no knowledge of deployment period or process.
They are in decision-making process.


Section A.3              VitalLink (formerly cEverything)
Headquarters: 270 14th Street
San Francisco, CA 94103
www.vitallink.com
Satellite/sales offices in New York, Dallas, Chicago, and Los Angeles

Marketing/Sales:
Vitallink’s primary focus is on developing business Management tools in specific industry sectors,
such as bars, restaurants, and small businesses. The focus is not on video over IP. The
company believes their strategic name change more accurately reflects its growing portfolio of
products beyond its current video monitoring services – only one aspect of the business
management tools and services offered by the company to small business owners.

Channels:
 VitalLink sells directly to the end-users and through resellers.



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                2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                         Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL           VProtect System Inc., Business Plan, Rev. K.21.00         CONFIDENTIAL


Pricing
 $100/monthly fee for 1 camera
 $135 for 3 cameras

Strategic Alliances
 VitalLink maintains partnerships with a multitude of DSL providers, including:
         AT&T
         NorthPoint
         Rhythms
         DSL Networks
 The California Restaurant Association
         The mission of the California Restaurant Association is to be the definitive voice of
             the California foodservice industry and to protect and promote its success. CRA
             serves as the indispensable resource for California restaurateurs. The California
             Restaurant Association, the oldest restaurant trade association in the United States,
             boasts 3,500 members who represent 14,000 foodservice businesses statewide
 The National Bar & Restaurant Management Association
         The National Bar and Restaurant Management Association's mission is to provide
             educational programs, services, and networking opportunities enabling restaurant,
             bar, and hospitality professionals to increase revenues and profits through innovative
             promotions, marketing and management
 Purchase Pro.com
         PurchasePro.com, a leader in Internet business-to-business e-commerce, operates
             the PurchasePro.com exchange encompassing more than 21,000 businesses and
             powers 155 private marketplaces with its highly scalable, browser-based e-
             commerce engine. The PurchasePro.com exchange and the private marketplaces
             employing its technology make it easy for businesses of all sizes to buy and sell a
             wide range of products and services.
 SkyDesk
         SkyDesk is the leading provider of services for businesses wanting to provide their
             customers with a complete Internet storage, file access and sharing, and PC
             migration solution.

High Profile Customers
 Subway Fast Food

Direct Marketing Strategies
 Trade Shows
 Press Releases

Technology:
    VitalLink offers on-site and off-site recording. On-site recording is limited to 21 camera
      days. If a customer has 6 cameras, it translates to 3 and half days of recording. It is
      charged by per camera per day, cost can add up quickly. Off-site recording was also
      charged at a very high rate ($5/camera/day.)
    Limited camera support – only up to 6 cameras input per site.
    No special features like SMM and SOS.

Deployment:
Viasource deploys VitalLink’s systems in the majority of the markets VitalLink services. The


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                2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                         Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL            VProtect System Inc., Business Plan, Rev. K.21.00        CONFIDENTIAL


agreement establishes Viasource as VitalLink primary supplier of deployment services.
Viasource’s deployment services will include installing the capture box, router, monitoring device,
often a video camera, and running the appropriate wiring interface between them. In addition to
installation services, Viasource provides scheduling, dispatching, and job tracking for VitalLink.
Job tracking is conducted through Viasource’s extranet, a real-time job status inquiry resource
that will enable VitalLink to check the up-to-the-minute condition of the jobs.


Section A.4              VProtect System, Inc.
2975 Huntington Drive
San Marino, CA 91108
www.vprotect.com
www.ewebcc.tv

Marketing/Sales:

Channels:
 VProtect sells through a nationwide network of authorized agents and value-added resellers.

Pricing
 Dealer Price: Hardware- $3600 + $39 monthly fee for a 4 camera set-up. DSL is an
    additional monthly fee (exact amount charged by DSL providers.)
 MSRP: Hardware- $5500 + $39 monthly fee

Strategic Alliances
 VProtect maintains partnerships with DSL providers, including:
    o MegaPath
    o DSL.Net

High Profile Customer
 New York City Department of Human Resources

Direct Marketing Strategies
 Trade Shows- ASIS, ISC
 Press Releases
 Advertising in SDM Magazine, Security Management & Security Dealer

Technology:

Essential elements of eWebCCTV

        Essential elements include: V160A + web site + Internet data center

                   V160A
                     Hardware for video delivery
                     All in one box: Consists of multiplexer, web server, and video server
                     Linux based software for its superior reliability and extensibility with
                       automatic updates

                   Web site


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                         Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL           VProtect System Inc., Business Plan, Rev. K.21.00       CONFIDENTIAL



                       The nerve center of eWebCCTV
                       Centralized configuration setup, customization, and maintenance
                       Automatic live-update
                       Constant live-diagnostic
                       Alarm/event email notification delivery
                       Supports universal browser interface

                  Internet Data center
                    For off-site video recording
                    SOS video image storage feature
                    Economical RAISS architecture
                    Fail-safe redundant storage

VProtect’s Core technologies
               Internet-centric end-to-end services
                    Most remote-viewing and digital recorder vendors provide equipment and
                      software only
                    VProtect delivers services from V160A/web to users with no customer
                      involvement needed

                  RAISS, Redundant Array of Inexpensive Storage System
                    Fault-tolerant redundant storage
                    Hot-swappable Plug-and-play storage servers
                    Built on open-standard Linux platforms
                    Cost-effective
                    The cost is around 2 times raw IDE disk price, while data center storage
                      costs are around 20 times IDE price

                  SMM- Site Monitoring and Maintenance
                    Live update
                    Constant checking and live maintenance
                    Auto-recovery from transient hardware/software failures

                  JPEG Encryption and Watermarking
                    JPEG encryption enables secure video image transmission over the
                      public Internet
                    Encrypt only the essential part for maximum efficiency and security
                    Watermarking authenticates each captured image to prevent any
                      alternation

                  JPEG MMX optimization
                    Optimize JPEG compression program with Intel Pentium MMX instruction
                      set
                    Can achieve same JPEG compression ratio with less hardware
                      investment

                  Build-in multiplexer, hardware motion detection, watchdog timer

                  Universal GUI with Java Applet
                    Universal application
                    Changes in applet effective immediately when they take place


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               2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                        Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL             VProtect System Inc., Business Plan, Rev. K.21.00          CONFIDENTIAL




Deployment:
VProtect handles all the ordering and the scheduling of DSL installation. The average wait time
from pre-qualification of the site to actual Inside Wiring takes around six weeks (determined by
DSL providers, not by VProtect). Authorized Dealers are there to install the eWebCCTV within
5 days after installation of DSL. The dealer or VProtect representative provides technical training
at the customer premise immediately after installation. However, in the event of a technical or
administrative issue customer support is available from 8am to 6 pm PST. VProtect also takes
care to qualify dealers. Only reputable dealers who have passed a screening are empowered to
resell VProtect.

A side-by-side view

   Category                VProtect            Eyecast             iMonitoring          VitalLink
Technology            -16 camera inputs   -4 camera inputs     -4 camera inputs      -4 camera

                      on & off site       off-site recording   off-site recording    off-site and
                      recording           only                 only                  on-site
                                                                                     recording
                      Site Monitoring &   No SMM               No SMM                No SMM
                      Maintenance
                      Customizable        No                   No Customization      No
                      Viewer options on   Customization for    for viewer            Customization
                      web                 viewer                                     for viewer




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                                    www.vprotect.com
                2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                         Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL             VProtect System Inc., Business Plan, Rev. K.21.00   CONFIDENTIAL




Appendix B. UN-AUDITED FINANCIAL STATEMENTS
Un-audited Balance Sheet, November 2000

ASSETS

Current Assets
Petty Cash                                   8,104.63
Preferred Bank Money Market                  6,755.01
Preferred Bank Checking Acc.                 2,500.00
CATHAY BANK Checking Account               <8,405.92>
B of A Checking Account                      5,381.25
B of A Money Maximizer                     201,498.18
CATHAY BANK Money Market                    52,858.80
Certificates of Deposit                    520,397.16
Client Fees Receivable                       9,927.60
Inventory                                   57,920.95

Total Current Assets                                      856,937.66

Property and Equipment
Furniture and Fixtures                       27,966.19
Equipment                                   157,536.15

Total Property and Equipment                              185,502.34

Other Assets
Deposits                                      9,178.87
Organization Costs                            1,716.14

Total Other Assets                                         10,895.01

Total Assets                                             1,053,335.01




LIABILITIES AND CAPITAL

Current Liabilities
Accounts Payable                              1,600.00
Sales Tax Payable                               724.60

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                  2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                           Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL                VProtect System Inc., Business Plan, Rev. K.21.00   CONFIDENTIAL




Total Current Liabilities                                      2,324.60

Long-Term Liabilities

Total Long-Term Liabilities                                        0.00

Total Liabilities                                              2,324.60

Capital
Paid-in Capital                              2,250,000.00
Retained Earnings                              <2,703.71>
Net Income                                 <1,196,285.88>

Total Capital                                               1,051,010.41

Total Liabilities & Capital                                 1,053,335.01



Un-audited Income/Expense Eleven Months ending November 30, 2000

Revenues
Sales                                         9,203.00         10.30
Other Regular Income                              0.00          0.00
Interest Income                              80,144.40         89.70
Other Income                                      0.00          0.00
Finance Charge Income                             0.00          0.00
Shipping Charges Reimbursed                       0.00          0.00
Fee Refunds                                       0.00          0.00
Fee Discounts                                     0.00          0.00

Total Revenues                               89,347.40        100.00



Cost of Sales
Cost of Sales                                 7,319.20           8.19

Total Cost of Sales                           7,319.20           8.19

Gross Profit                                 82,028.20         91.81


Expenses

Confidential                                    Page 39                            8/26/2012 -

                                        www.vprotect.com
                    2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                             Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL           VProtect System Inc., Business Plan, Rev. K.21.00   CONFIDENTIAL



Default Purchase Expense                     0.00
Advertising Expense                     44,942.19
Amortization Expense                         0.00
Furniture Expense                            0.00
Tax - Income & Franchise                   800.00
Auto Expenses                              486.75
Bad Debt Expense                             0.00
Bank Charges                               465.73
Cash Over and Short                          0.00
Charitable Contributions Exp               350.00
Commissions and Fees Exp                 2,000.00
Depreciation Expense                         0.00
Dues and Subscriptions Exp               3,959.03
Employee Benefit Programs Exp              850.00
Freight Expense                          2,989.68
Gifts Expense                              232.46
Income Tax Expense                           0.00
Insurance Expense                       25,773.50
Interest Expense                             0.00
Laundry and Cleaning Exp                     0.00
Legal and Professional Expense          16,822.95
Licenses Expense                           574.00
Loss on NSF Checks                           0.00
Research And Development                85,633.25
Education Expense                        4,557.00
Meals and Entertainment Exp              7,269.94
Employee Meals Exp                      10,518.00
Office Expense                          41,298.05
Other Supplies Expense                      54.86
Payroll Tax Expense                     65,466.53
Penalties and Fines Exp                    337.00
Pension/Profit-Sharing Plan Ex               0.00
Postage Expense                          1,807.35
Rent or Lease Expense                   46,300.00
Property Tax                               333.15
Repairs Expense                         <952.29>
Maintenance Expense                      1,905.00
Supplies Services                            0.00
Telephone Expense                        6,898.30
T1 Line Expense                         14,209.58
Data Center Expense                      2,883.62
Travel Expense                          16,430.87
Trade Show Expense                      62,384.43

Confidential                               Page 40                             8/26/2012 -

                                    www.vprotect.com
                2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                         Tel: 626.844.4656 ● Fax: 626.844.0337
CONFIDENTIAL           VProtect System Inc., Business Plan, Rev. K.21.00   CONFIDENTIAL



Salaries Expense                       778,919.51
Wages Expense                              380.00
Utilities Expense                        7,164.13
Other Expense                           10,493.54
Purchase Disc-Expense Items              <46.00>
Gain/Loss on Sale of Assets                  0.00
State Corporate Tax                      4,269.97

Total Expenses                       1,268,762.08


Net Income                      <1,186,733.88>




Confidential                               Page 41                              8/26/2012 -

                                     www.vprotect.com
                 2975 Huntington Drive ● San Marino, California 91108, U.S.A.
                          Tel: 626.844.4656 ● Fax: 626.844.0337

								
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