Business Plan for DVR With Charts

Business Plan for

Digital Video Recording and Surveillance Solutions

Michael Jang

Neugent Global

2621 W. Woodland Drive

Anaheim, CA 92801

Phone: 1 + 866-495-2288

E-mail: [email protected]

Global ID: http://michael.neugent.net

Website: http://dvr.neugent.net

http://dvr.neugent.net/

http://michael.neugent.net/

mailto:[email protected]

Table of Contents

I. Executive Summary.............................................................................................................3

II. General Company Description.............................................................................................4

III. Products and Services.........................................................................................................5

IV. Marketing Plan................................................................................................................... 11

V. Operational Plan................................................................................................................28

VI. Management and Organization..........................................................................................32

VII. Personal Financial Statement............................................................................................33

VIII. Startup Expenses and Capitalization.................................................................................34

IX. Financial Plan..................................................................................................................... 35

X. Appendices........................................................................................................................ 38

XI. Refining the Plan................................................................................................................39

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I. Executive Summary

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We suggest that you make it two pages or fewer.

Include everything that you would cover in a five-minute interview.

Explain the fundamentals of the proposed business: What will your product be? Who will your customers

be? Who are the owners? What do you think the future holds for your business and your industry?

Make it enthusiastic, professional, complete, and concise.

If applying for a loan, state clearly how much you want, precisely how you are going to use it, and how the

money will make your business more profitable, thereby ensuring repayment.

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COMPANY PROFILENeugent Global is a total security solutions provider that helps Original Equipment Manufacturers (OEMs) and other security solution providers from all over the world to complete the gaps in their product line-up, reduce development operating costs, and ultimately, increase end-user purchase revenues. Neugent Global, with headquarters in Irvine, California, began its mark in the security industry with the development of the Linux-based embedded DVR system and integrated application and network systems. Since its founding, Neugent Global has produced sales across the United States and the Asian region demonstrating its rapid acceptance in the marketplace. In addition, the company has continued to develop new and customized products in close conjunction with intended customers, which are expected to further accelerate revenue growth in 2006 and beyond. In particular, Neugent Global’s mobile DVR technology, is expected to be deployed by major distributors in the United States, Europe, and Asia. The company expects to generate over $20million of revenue with 45% gross margin.

Neugent Technologies, Philippines, is the Research and Development Center of Neugent Global. Neugent Technologies develops and sells security systems and solutions that cater to the needs of customers worldwide. It is also the International Sales and Technical Service Center of the company. The company’s core technologies are video processing, network IP communication, and mobile technology. To date, Neugent Global has also opened two outsourcing offices in Korea and China for hardware production and technology.

Mission We are committed to being the top-of-mind security systems and solutions provider in the world by providing our customers with greater value than our competition through optimized and innovative technology and superior customer support..VisionWe will become the company that provides our customers the best quality security system and solutions at the most reasonable price.

Our Industry

The Security Industry is one of the world's fastest growing sectors creating both employment and economic growth at a rapid rate. In the United States, the industry generates revenues of approximately $18.75 billion per year with a growth rate of 11.1%. The industry has developed in its innovation, diversity and professionalism, often leading the way internationally. Today, it provides a wide range of security products and services designed to meet the needs of the worldwide community.

The growth of the industry has partly been generated by the ongoing evolution of technology offering new products and services that are not only more effective, reliable and convenient, but also more affordable. In addition, the level of crime in the community and the random nature of crime, has encouraged many consumers to take proactive steps to ensure that their assets and property is protected.

The services and products provided by the industry can be categorized into three broad areas: Electronic –CCTV and surveillance, access control, video and audio intercom systems,

integrated security and fire systems, home automation, building management systems; biometrics, alarms and alarm monitoring

Manpower- crowd control, airport security, guard services, mobile patrols, concierge duties, traffic management

Physical & barrier security – locksmiths, perimeter fencing, security grilles, bollards and boom gates; safes / records protection Security systems are more than just alarms or simple barriers - they are a combination of technology and good human practices, ones that offers an efficient and effective method of keeping people and businesses secure, while also adding to the quality of ones life.

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II. Products and Services

What is Hawkeye Security?Hawkeye Security is a comprehensive line of surveillance and security solutions. Hawkeye Security is built on open standards hardware, operates on a converged network infrastructure and integrates legacy and advanced systems.

High performance and reliability – Hawkeye Security is developed on the Linux platform to deliver optimized performance, reliability and stability. It comprises a line of Linux-embedded and PC-Based digital video surveillance systems, Linux-based central and mobile monitoring systems, Linux-based network solutions and complimentary security applications. These are: Hawkeye PC-Based, Hawkeye Embedded, Hawkeye Hybrid & Hawkeye Mobile digital video recorders, Hawkeye Video Servers, Hawkeye Central Monitoring System and Hawkeye Mobile Central Monitoring System. We also have powerful DVR cards that allow you to capture true color images and full motion videos, without the risk of system crashes, frame drops or virus attacks!

Converged networking and integration – Hawkeye Security is readily expandable and compatible with a whole host of devices and systems. It allows a variety of security-related data streams, such as video, audio, alerts, command messages, and other digital data to share a common IP-based network infrastructure, thereby providing a centralized, cost-effective system administration. It also enables users to gather information from numerous dispersed systems and consolidate such information on a single view for decision-making. At the same time, it can provide decentralization and collaboration capabilities to enable many people to view similar activities concurrently so that they can take appropriate synchronized actions.

Advanced core technologies – Hawkeye Security offers hardware MPEG4 (hardware H.264*) compression, robust video management functions that go beyond passive detection, efficient network IP communication, advanced mobile security solution and much more. (*Note: Future versions of Hawkeye Security will utilize hardware H.264.)

Hawkeye Security Applications

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A. PC-Based DVR Series 1. LX (Linux) DVR Series

The LX DVR Series is a set of 8/16 channel digital video recorders, built on the Linux platform that integrates analog cameras in the DVR unit. Together with our powerful Hawkeye DVR cards, the LX DVR Series can work as a TRUE real-time digital video recording solution.

This robust digital video recording solution features hardware MPEG4 compression, hardware audio recording using G.723 audio format, hardware motion detection, hardware watermark, triplex multifunctional operations, remote client (remote management flexibility with remote monitoring, playback, recording, back up and PTZ control) & web connection, PTZ functions, record schedule management, easy search & playback, sensor and alarm integration and much more. (See Appendix for complete details.)

The LX DVR Series are cost-effective VCR replacement solutions that are ideal tools for loss prevention and business process efficiency strategies. The LX DVR Series is ideally suited for corporate applications, medium- to large-sized offices and buildings, hotels, airports & seaports, and some retail & commercial areas.

2. HX (Hybrid) DVR Series

The HX DVR Series is a set of high-end 16/32 channel digital video recorders that integrates IP cameras and analog cameras in the DVR unit. The HX DVR Series features hardware MPEG4 compression, hardware audio recording using G.723 audio format, hardware motion detection, hardware watermark, remote client (remote management flexibility with remote monitoring, playback, recording, back up and PTZ control) & web connection, PTZ functions, record schedule management, easy search & playback, sensor and alarm integration and more. (See Appendix for complete details.)

The HX DVR Series is ideally suited for facilities or environments which are remotely dispersed, in order to leverage on existing network infrastructure and minimize cabling costs.

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B. Embedded DVR Series1. SX (Standalone) DVR Series

The SX DVR Series is our mid-range embedded digital video recorders that provide a durable, heavy-duty surveillance solution featuring 8 to 16 channel versions, access control system and POS integration. It has an embedded Linux platform to ensure system reliability and stability of your surveillance equipment!

The SX DVR Series can provide integrated solutions in order to strengthen perimeter control, such as access control system integration for a variety of industrial and penitentiary environments. One other line of the SX DVR Series integrates the POS system to guarantee 99.9% shrinkage loss and increase control of inventory in many retail and commercial establishments.

The SX DVR Series targets small- to medium-sized buildings, retail & franchise areas, commercial spaces & convenient stores, gas stations, warehouses, plants or factories, resorts, hospitals, banks, government facilities, museums and schools.

2. MX (Mobile) DVR SeriesThe MX DVR Series is specifically designed for in-the-vehicle video recording

requirements. It’s perfect for recording events such as police footage or covert video surveillance footage. Its very compact size is suited for all kinds of vehicles, such as police patrol cards, private investigator surveillance vehicles, subways and railways, taxis, mini cabs, school buses and public transport. Our MX DVR Series, including our modern GPS solutions are protecting people in motion. Please see below for more details.

3. VS (Video Server) SeriesThe VS Series is a high-performance video server designed for professional

surveillance applications, featuring 2 and 4 channel versions. It’s very easy to use and it’s the perfect single-box solution for transmitting digital video over intranet networks or the Internet. The VS Series connects to a wide range of Ethernet devices, such as Wireless Ethernet and Ethernet to ISDN, PSTN, xDSL or cable modem routers.

The VS Series is ideal for a lot of applications: remote monitoring, security systems, traffic surveillance, public transport monitoring, remote administration and management, parking facilities and some retail shops. Please see below for more details.

C. Network Security Solutions1. MCMS – Mobile Central Monitoring System

The Mobile Central Monitoring System is a turnkey surveillance solution for business operators who want to centrally monitor and manage mobile assets, resources and people more efficiently. The Mobile Central Monitoring System provides administrators and managers with unprecedented information on locations and status of

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vehicles, powerful mapping capabilities and much more, thereby increasing profitability and reducing operating costs.

The Mobile Central Monitoring System is ideally suited for banks, freight & cargo companies, railway and transit stations, and police & military sectors.

2. CMS – Central Monitoring SystemThe Hawkeye Central Monitoring System provides an overall central monitoring solution for many applications, such as commercial, industrial and residential. Several Hawkeye digital video surveillance systems may be connected in one centralized monitoring program with hundreds of cameras and integrated with sensors, alarms, and other related systems (access control systems, POS, etc).

What are the competitive advantages of the Hawkeye Security?Hawkeye Security offers:

Optimized performance - Our Linux-based digital video surveillance and security applications are borne out of intensive planning & research, passionate development and numerous tests to ensure a high performance security solution. Hawkeye Security can be customized to provide only optimum performance.

Scalability – Change is the only thing that is constant. Hawkeye Security can deliver reliable, durable and stable protection today and tomorrow, adapting to the growth of company security and safety needs. We provide innovative products that match what the customer needs.

Value for your Money – A PC-based DVR, which costs from $1,000 to $4,000 has higher performance and larger capacity storage. Such are ideal for large offices. Standalone DVRs range from $400 to $1,000 and are perfect for small shops, like 7 Eleven and small offices. But how does an organization choose which one is right solution for them? We sit down with our clients in order to come up with the best solution and the right price for their security needs.

Take a look at some of the key advantages & benefits of Linux-based security solutions:

Optimized system performance - Since Linux is an open-source, the DVR (for instance) system can be customized to include only functions and services which the customers need. Unnecessary applications such as e-mail and spreadsheet programs may be removed while some services may be fine-tuned to deliver optimized system performance. When you boot a Hawkeye DVR, the security application will auto-launch...and that is the only application inside the server.

More reliable, stable and secure - Because Linux can be customized, it means that the operating system is not constantly carrying unnecessary application code. This increases the DVR's system reliability simply because there are fewer services running. Your surveillance system is also less susceptible to attacks since most of the active computer viruses today that have been designed to strike server & desktop applications cannot damage anything (because the applications are not running). Moreover, Linux provides the ability for security and surveillance equipment developers to go directly into the code to remedy performance vulnerabilities.

High-speed viewing, recording & playback - Optimized Linux-based DVRs and surveillance applications require less memory or RAM. It also provides a bigger hard drive space.

Our Hawkeye Linux DVR solutions were built on the digital multimedia standard MPEG-4 codec. MPEG-4 delivers professional-quality audio and video streams over a broad range of bandwidths, from dial-up to broadband, in several distribution channels, from wireless to satellite television. MPEG-4 delivers DVD-

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quality video at low data rates and smaller file sizes and it can be viewed in most media players, such as Windows Media Player, Quicktime and RealPlayer.

What are the advantages of MPEG4 over other codecs? Motion JPEG & wavelet compression tend to limit video resolution and frame rate. With MPEG-4,

frame rates reach 30 frames per second, thereby delivering true real-time video. MPEG-4 has smaller file sizes, thus allowing fast distribution over low bandwidths and longer

hours for storage

MPEG-4 provides interoperability, such that videos are readable in most applications.

What are the features of the Hawkeye Security?A. PC-Based DVR Series

1. LX (Linux) DVR Series Linux O/S platform to provide optimized system performance

total display rate of 480 fps (NTSC) / 400 fps (PAL)

total recording rate of 480fps (480fps: 352X240 (NTSC) / 400fps: 352X288 (PAL))

up to 16 channels (camera input) ( NTSC / PAL )

up to 16 channels for audio

up to 16 sensor inputs

up to 16 relay outputs

hardware MPEG4 Encoder/Decoder*

hardware G.723 Encoder/Decoder*

hardware motion detection and watermarking*

excellent & independent TV-Out Function

PTZ support for RS-485

alert on event (sensor/relay/motion detection)

multi-tasking: simultaneous monitoring, recording, playback and remote monitoring

display mode 1, 3, 4, 7, 9, 10, 13, 16 screen division/split modes (H/W Display)

search recorded files by event type, via built-in calendar or by camera

schedule back-ups and restore old videos

alarm messages, i.e. e-mail and sms notification*

remote transmission via LAN and Internet

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remote management: remote monitoring, back up, recording & playback

video recording modes: continuous or sequence, scheduled, sensor/alarm-triggered, motion-detection with buffer

Watch Dog Function Support with auto rebooting & warning sound

OSD functions include Channel, Date, Time, Status OSD on TV

e-MAP with live camera display

multi-level access

The LX-8000 DVR Series is a set of high-performance PC-based digital video recorders that utilize an on-chip MPEG4 encoder capable of delivering 30 frames per second at ½ D1 resolution per camera. The LX-8000 DVR Series runs on top of a very reliable and secure operating system – Linux. The LX-8000 DVR Series are ideal for banks and companies that require some form of integration with existing systems.

Model Name Description

LX-8800 16 Channel H/W MPEG4 encoding, 480fps/480fps display & capture rates

LX-8700 8 Channel H/W MPEG4 encoding, 480fps/240fps display & capture rates

LX-8700C 8 Channel DVR Card

Target start of sale: February 2006

The LX-E DVR Series is a more compact version of the LX-8000 DVR Series. At the heart of the LX-E DVR is an MPEG4 chip that can churn out 480 frames per second at ½ D1 resolution.


LX-E320 32 Channel H/W MPEG4 encoding, 960fps/960fps display & capture rates

LX-E160 16 Channel H/W MPEG4 encoding, 480fps/480fps display & capture rates

LX-E160C 16 Channel DVR Card

Target start of sale: July 2006

The LX-9000 DVR Series is a set of high performance digital video recorders that produce superb quality video. The LX-9000 DVR Series utilizes software MPEG4 encoding at the rate of 480 frames per second.

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LX-9800 16 Channel S/W MPEG4 encoding, 480fps/480fps display & capture rates

LX-9500 8 Channel S/W MPEG4 encoding, 480fps/240fps display & capture rates

Products are currently on sale

2. HX (Hybrid) DVR Series Linux O/S platform to provide optimized system performance

total display rate of up to 480 fps (NTSC) / 400 fps (PAL) for analog cameras

total recording rate of up to 480fps (480fps: 352X240 (NTSC) / 400fps: 352X288 (PAL)) for analog cameras

up to 32 channels (camera input) ( NTSC / PAL ) (16 IP cameras; 16 analog)

32 (16)channels for audio

32 (16) sensor inputs

32 (16) relay outputs

hardware MPEG4 Encoder/Decoder*

hardware G.723 Encoder/Decoder*

hardware motion detection and watermarking*

excellent & independent TV-Out Function

PTZ support for RS-485

alert on event (sensor/relay/motion detection)

multi-tasking: simultaneous monitoring, recording, playback and remote monitoring

display mode 1, 3, 4, 7, 9, 10, 13, 16 screen division/split modes (H/W Display)

search recorded files by event type, via built-in calendar or by camera

schedule back-ups and restore old videos

alarm messages, i.e. e-mail and sms notification*

remote transmission via LAN and Internet

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remote management: remote monitoring, back up, recording & playback

video recording modes: continuous or sequence, scheduled, sensor/alarm-triggered, motion-detection with buffer

Watch Dog Function Support with auto rebooting & warning sound

OSD functions include Channel, Date, Time, Status OSD on TV

e-MAP with live camera display

multi-level access

The HX DVR Series are hybrid digital video recorders – capable of capturing video from analog and network (or IP) cameras. The HX DVR Series are particularly useful for customers that have both remote offices and a central office.


HX-9032 16 Channel (analog) + 16 Channel (IP)

HX-9016 8 Channel (analog) + 8 Channel (IP)

Target start of sale: March 2006

B. Embedded DVR Series 1. SX (Standalone) DVR Series

The SX DVR Series are standalone DVRs that are very easy to install and operate. The SX DVR Series are ideal for industrial environments and for end users that are looking for basic monitoring, recording, search & playback functions.


SX-2016 16 Channel H/W MPEG4 encoding, 480fps/240fps display & capture rates

SX-2008 8 Channel H/W MPEG4 encoding, 480fps/240fps display & capture rates

SX-3008 Wall-mount DVR

SX-4008 DVR integrated with Access Control System

SX-5008 DVR integrated with POS

Target start of sale: March 2006

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2. MX (Mobile) DVR Series

The MX DVR Series are digital video recorders specifically designed for vehicles. One model comes with a GPS device that enables the vehicle to be tracked from a central monitoring office. At the same time, the wireless modem will allow the video be remotely viewed as well.


MX-1004 4 Channel Mobile DVR

MX-2004 4 Channel Mobile DVR with GPS and wireless modem

3. VS (Video Server) Series

A video server is a small device that converts analog video signals to Internet Protocol. Our VS Series provides a simple and cost-effective solution for remote monitoring without the need for bulky equipment.


VS-1002 2 Channel with built-in camera (1 camera)

VS-1004 4 Channel

C. Network Security Solutions 1. Mobile Central Monitoring System

The Mobile Central Monitoring System works with mobile DVRs equipped with GPS and wireless modems. The MCMS provides a real-time visual vehicle tracking system. The MCMS is specifically useful for logistic companies like Fedex and DHL, and bus or taxi operators.

2. Central Monitoring System

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II. Marketing Plan

What is market size, trends in growth and consumer preferences?

From BCCResearcho 2001 - $11 billion market for electronic, optical, acoustic, security, detection, monitoring

and surveillance and security systems o This is expected to reach $18.8 billion in 2006o The market is divided into Access Control Systems (ACS), Acoustic Monitoring (ACSM),

Biometrics, Detection Systems, Electronic Article Surveillance, Law Enforcement, Video (Optical) Monitoring and Security Alarm Systems (Video).

o Video Monitoring and Security Alarms have the largest market share at under $5 billion, followed by ACS segment with a share of about $2.2 billion.

o 1996 - $4.27 billion total sales for Electronic Surveillance and Monitoring Systemso 1998 - $6.47 billion total saleso 2000 - $9.87 billion total saleso 2001 - $11.09 billion total saleso 2006 - $18.75 billion total saleso Annual Growth Rate of 11.1%o Reference: http://www.bccresearch.com

From ScanSourceo Table: US CCTV Market Potential

Year $Billions Growth (%)

2004 1.66 12.7

2005 1.87 12.7

2006 2.1 11.9

2007 2.35 11.9

2008 2.62 11.4

2009 2.92 11.5

2010 3.26 11.6

o Compound Annual Growth Rate (2004-2010): 11.9%

o Table: US CCTV DVR Market Potential

Year $Millions Growth (%)

2004 412.9 35.3

2005 529.9 28.4

2006 666.8 25.8

2007 834.9 25.2

2008 1,028 23.1

2009 1,265 23.1

2010 1,557 23.1


o Table: Global IP-Based CCTV Market Forecasts

Year $Millions Growth (%)

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http://www.bccresearch.com/

2004 159 39.3

2005 227 39.6

2006 312 40.9

2007 441 41.2

2008 611 38.6

2009 848 38.9

2010 1,180 39.1


From Global Sources (December 2005)o Top value additions in digital video recording solutions would include motion detection,

networking, remote and IP surveillance functionso Security products market (of which CCTV cameras are a key product) will be worth some

$74 billion by 2008o Industry drivers include heightened security needs, enhanced attractiveness of higher-

end electronic systems due to advancing technologies and moderating priceso A high degree of vertical integration will be taking place in China and the most advanced

countries. China’s CCTV product supply industry is growing by 25-30% annually. About 50% of makes are capable of manufacturing total CCTV solutions, 25% focus on single product type that they export directly or provide to other domestic makers who assemble total CCTV solutions, and at least 70% produce two or more product types.

o More companies are exploring the market for standalone DVRs and some manufacturers have forecast double-digit growth rates in 2006

o In China, there are about 20 professional DVR manufacturers. There are also 20 new entrants coming from other CCTV product lines. Hangzhou Hikvision Digital Technology Co. Ltd and Shenzen TMVideo Technology Co. Ltd lead the group of professional DVR makers in China.

o In South Korea, the industry is estimated to grow by 12.8%R in 2006. 2005 seems to be the turning point for the line, which shifted from PC-based DVRs to standalone DVRs.

o Demand for DVR products is not as high as that of consumer products, though it has its niche market such as banks, telecommunications, transportation, factories and warehouses.

o Major overseas markets include North America, Europe and Southeast Asia. The major China DVR manufacturers export 70% of their output to America, Europe, UK, Italy and Russia, while the remaining 30% goes to Singapore, Hong Kong, Taiwan and Australia. Shenzen Tongwei Tech Co. Ltd (China) will be exploring markets in South America, specifically Argentina and Brazil.

o South Korean makers’ main markets include the European Union, USA and Japan.

Miscellaneous Sources 2005o Rising instances of security breaches such as attacks on the WTC, bombings in the J.W.

Marriot Hotels, attack on the Indian parliament and train bombings in Madrid have reinforced the need to invest in security devices including video surveillance equipment. CCTV systems have witnessed an increase in demand due to technological improvements and advanced features in terms of integration with ACS, biometrics and digital video software. Smart cameras that provide intelligent analysis of captured video images are also driving the market as the process of surveillance becomes more proactive and efficient.

o Technological advancements have removed some of the barriers to purchase such as price, complexity of operating and installation.

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o While the US and European markets have reached maturity for conventional video surveillance technology, Asia Pacific is still in the late stages of growth and offers strong potential for video surveillance equipment both in terms of manufacturing and consumption.

o The impending switchover from analog to IP systems, the constant demand for video networks, the rising influence of the IT executive, the oncoming trend in smart cameras, intelligent video and new storage systems are all part of the rising importance of video systems to corporate security executives who allocate a higher share of their budget to the technology every year.

o In New Zealand (4M population), there is also a growing awareness and acceptance of safety and security equipment as a result of the world’s security conflicts and domestic society changes. Products from Japan attribute to almost 60% of market demand and dominate the supply of video equipment. China comes in second. US imports of building security equipment seems to be small, but there is a positive outlook for US security companies to offer surveillance equipment, new innovative technologies for building and car alarms. Key purchasing factors include product innovation, brand, reputation and price.

o In Taiwan, an increase in the demand for safety and security products is expected from the private sector (ongoing commercial and residential building construction projects, expanding large wholesale and retail areas, high-tech manufacturing facilities and personnel protection supplies), as well as the public sector such as military, law enforcement, Coast Guard, Customs and energy supply facilities. Taiwan’s safety and security market increased by 27.28% from US $1.25 billion in 2001 to US $1.59 billion in 2003. Safety and security market includes: information and communication security, system integration, general safety equipment (surveillance) and fire fighting and industrial safety equipment. General safety equipment total market size in 2001 was at US $403 million and grew to US $551 million in 2003. Taiwan imports safety and security system equipment primarily from Japan, US, UK, South Korea and Germany. Competitive advantages for local and other Asian firms are lower prices, faster delivery schedules and prompt support. Competitive advantages of US and European firms are quality and performance.

o In Thailand, the safety and security market in 2004 was valued at $433 million. For the next few years, market is expected to expand steadily at 5-10% rate. Market includes locks, safes, security boxes and doors, surveillance cameras, CCTV, burglar/fire alarms, exit/entry screening systems, outdoor perimeter protection, sensors, wireless equipment/technology, installation tools, supplies & accessories, packaged software, magnetic strip cards, smart cards, proximity cards, x-ray equipment and accessories, anti-shop lifting devices, fire extinguishers and rescue devices. Estimated total market in 2005 is $225 million. Commercial property, banks, residential high rises and upper-end hotels are major users of safety and security equipment. Retail sector (currently about 117 discount stores, 230 department stores, 247 supermarkets, 3650 convenience stores and 650 specialty stores) is also one of the major markets. In the next 12-18 months, major purchases would come from maintenance and upgrade of international and regional airports, upgrade on security of government buildings and upgrade of ports.

o Malaysian market size for safety and security equipment in 2004 was estimated at $170 million. About 65% of that total market demand, valued at US $110 million, came from imports. US share of import was about 24% or US $26 million. Market remains strong and is expected to experience an annual growth of 5%. Market size for airport and seaport security equipment in Malaysia is 2004 was about $21 million. Demand from 2005-2009 is estimated at $120 million. US companies presently dominate the market for this sub-sector. Commercial, public places, offices and banks also demand safety and security equipment. (There are about 8,000 banking ATMs in Malaysia.)

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o Hong Kong is a growing market for safety and security equipment and services. In general, Hong Kong market leans towards more sophisticated, high-tech products, an area in which US firms enjoy prominent market share. In 2004, imports for security and safety equipment totaled approximately US $873 million. Please see the below table. (Values are in US $ million)

Year 2003 2004 2005

Total Market Size 103 126 150

Total Imports 772 873 1000

Total Imports from US 39 61 100

o US companies should use Hong Kong as a base for outreaching end-users in China. Hong Kong is China’s major sourcing agent for safety and security equipment for the 2008 Olympics in Beijing. Commercial and industrial users are major seekers of video surveillance systems in Hong Kong.

o Indian market for security and safety equipment was at $300 million in 2004. This is expected to grow to about $356 million in 2006. India imports 40% of safety and security equipment. Currently, the US is enjoying an approximately 40% import market share.

o The Singapore market leans towards more sophisticated, high-tech security products, an area in which US firms enjoy a prominent market share. Increased commercial, industrial and institutional construction/renovation continues to fuel the demand for security equipment in Singapore. While the most commonly used security hardware includes intruder alarm systems, ACS, CCTV, CMS and door-entry systems, there are also tremendous opportunities for US firms to develop new technologies to supply the growing demand for security, innovation in products such as frequency identification technologies, biometrics and identity technologies.

o In Australia, most of the technology and equipment needed for security is imported. Major suppliers originate in the US, EU and Israel. Among the markets in Australia include private enterprises, government-owned facilities, national landmarks, manufacturing industries, aviation and maritime sectors.

o In the Philippines, industry insiders note increasing demand for ACS, CCTV and DVRs and integrated building management systems. Property, buildings, commercial and retail establishments, and industrial sector are potential end-users.

o In Japan, the market for security products and systems in 2003 was $110 million. Video surveillance and monitoring systems are one the best prospects for the coming years.

o Aside from major corporations, transportation hubs, casinos, correctional facilities, hospitals and schools who have made the move to digital, there are literally hundreds of thousands of different enterprises around the world who want to use the DVR for improved security. Among these enterprises are small retail shops, gas stations, franchise and retail chain individual outlets, small workshop, warehouses, public utilities, dispatch and freight centers and cargo & luggage transportation depots.

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What are trends in product development?

o By now, many are aware of the advantages of a digital video recorder over VCRs: better images; superior search capability; simultaneous recording, playback and live display; flexible network and remote management capabilities; and robust integration with systems, such as access control systems, POS, and storage systems.

o The DVR market is growing at a very strong rate, with approximately 27% of all recorder units sold in the US in 2000 were digital. By the end of 2002, the number had increased to 39%.

o The most significant technological advances are occurring at the higher end of the market. The DVR is moving from a recording box to a sophisticated system loaded with video management features. Some cool DVR enhancements are a combination of a DVD/multiplexer, video content analysis, and out-of-the-box modular software solutions. Other innovations include neural network processing, which allows security personnel to have the system automatically look for a specific object that was detected during playback.

o Some DVRs can now analyze the color, shape and size of an object. It can also adjust its parameters to an existing situation and learn what counts as normal behavior in that environment. Then it can watch for anything that does not fit that model.

o Another feature concerns the frame rate. Some DVRs can auto-adjust frame rate of stored video based on preset conditions. Some solutions have multi-zone motion detection.

o Another advancement in DVRs is integration with many systems such as access control systems and POS. DVR integrated with POS systems offers search by time and date, cashier, receipt number, transaction type, credit card or product. This integrated solution can also generate graphs of employee activity and other reports. There is also a big space-saving benefit users get from DVRs, because of advancing technologies in storage solutions.

o Being able to provide wireless video transmission is also an interesting development. These transmissions include viewing recorded video from cellphones, PDAs and wireless PCs.

o Some manufacturers are about to release network servers, hybrid DVRs, and server-type DVRs. In China, manufacturers are now focusing on standalone DVRs built on the Linux OS, customized industry application, network ability, optimized storage use and extension applications.

What features, benefits and advantages will our products and services have for the market?

Businesses demand profits and millions of people around the world want a safe and secure place to live, work and play. Security drawbacks lead to loss of millions of money and deaths. Hawkeye Security aims

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to provide a “safe and sound” environment for people around the world. It seeks to improve workplace efficiency, prevent criminal offenses, and deliver safety and security.

The LX DVR Series product will offer the following:

high performance and reliability * (no system crashes, no slow video speeds, no virus attacks!)

first class video compression using a dual-speed full hardwired MPEG-4 encoder that can processes a 16 channel DVR 480 CIF video in real-time

unrivaled audio bitrate of 5.3 - 6.3 kbps (G.723 format) to ensure clear and understandable audio

crisp and high quality images, allowing full motion video for superior facial recognition

smooth real-time playback, optimized bandwidth utilization (lower data rates) and more storage space

multi-level access control for increased management flexibility

unmatched stability to ensure continuous recording for hours or days

integration with access control systems, energy conservation solutions, storage servers and much more

The HX DVR Series has the following benefits (on top of the LX DVR Series’ benefits):

Easy, single and highly accessible Video Management - Users can monitor, record and manage IP video with any web browser-based device like a PC, PDA or a mobile phone. Internet connection is all that is needed. Multiple cameras and locations can be accessed and monitored from a single log-on.

Value for your money – The HX DVR Series is the most expensive and high-end DVR solution, but when you think about the total cost of ownership over an analog CCTV/DVR system, the incremental cost of the cameras are not significant when compared to adding DVRs on site, additional cabling and installation.

Complete integration - Both IP and analog cameras can be accessed and monitored on one screen

Intelligent recording and intelligence at the camera level* - Video is recorded and or transmitted only when a specific event or alarm is triggered, which saves up on video storage as well as network bandwidth. Where else does action take place but in the DVR system itself? This makes it difficult to run intelligent video applications. However, the hybrid pushes intelligence out to the camera level, to allow functions such as built-in event handling, sensor input, relay output, video motion detection and other capabilities allow IP cameras to make decisions on when to send alarms and to whom, when to send video, and even at what frame rate or resolution to send the video.

Scalability - Users can scale the system from one camera to thousands of cameras in individual increments. On the contrary, DVRs usually require users to increase in 8-channel or 16-channel jumps, even if only one additional camera is actually added to the network.

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The SX DVR Series offers:

Durability in order to stand the test of time and meet rigorous environments Reliability and stability via an embedded Linux platform Increased retail/commercial transaction management capabilities via integration of video

and transaction data, report generation, power searches and much more

The MX DVR Series provides:

Peace of mind , by providing high-quality products that guarantee safety for passengers and drivers

Cost-effectiveness and efficiency to meet a variety of mobile needs, such as being able to track the speed, zone, route, or locale of the vehicle or being able to track driver performance

Easy-to-use digital video recording solutions that offer clear and crisp images and audio, alarm and GPS (Global Positioning Systems) integration and much more

Faster recovery of stolen assets and reduction in insurance premiums

What after-sale services will we provide?

We will provide up to two (2) years of warranty for our products, phone and online live support, on-site after-sales maintenance, and replacements.Our warranty covers only those defects which arise as a result of normal use of the product, and do not apply to any:

A. Improper or inadequate maintenance or modification; B. Software, media, parts, or supplies not provided or supported by Neugent; orC. Operation outside the product’s specifications

Maintenance is optional and will be billed on a case-to-case basis, while replacement products are covered only for the original warranty period. Please see Appendix for our detailed Warranty and Maintenance Terms.

Who are your customers?

Our target customers are OEMs, such as Fujitsu, D-Link, LG, Sony and the like and leading hardware/electronic manufacturers and distributors, who plan to enter the safety and security market. Some of these customers can be distributing safety and security products already, and would want to have innovative or supplementary products or out-of-the-box solutions mixed with their surveillance products.

Who are our competitors?

FACTOR Hawkeye Strength(s)AverMedia

DX5000GeoVision

Importance to

Customer

Products High performance

and optimized solutions Windows-

based systems are

prone to

1

20


DX5000GeoVision

Importance to

Customer

system crashes and virus attacks

PriceVery

competitive pricing

Slightly higher than Hawkeye

Slightly

higher than Hawkeye

2

Quality

Uses hardware MPEG4

compression to deliver true

real-time video

Almost similar to Hawkeye

Using Wavelet, MPEG4

compression and

proprietary codec

1

SelectionIntelligent and hardworking R&D team

3

Service 24/7 Support ? ? 1

Reliability 1

Stability 1

Expertise ? ? 2

Company Reputation

2

Location Headquarters in USA with R&D in the Philippines,

plus outsourced

manufacturing in Korea and

China

US, Germany,

China, Japan,

Spain, and Taiwan branch

Taiwan, US and Japan

offices

3

21


DX5000GeoVision

Importance to

Customer

offices

Sales Method

Step by step and

aggressive; customer-oriented

salesmanship

? ? 2

(Note: In the final column, 1 = critical and 5 = not very important.)Legends:

Very Satisfactory Satisfactory Fair

What are our marketing strategies?

Our major strategies would include: Continuous product enhancement and development, as well as constant R & D, adhering only to

strategic market positioning standards as stated below:

Product Highlights

LX DVR Series Optimized Linux-based digital video surveillance solution using hardware MPEG4 compression technology

HX DVR Series High performance Linux-based hybrid digital video surveillance solutions integrating analog and IP cameras for corporations with a central head office and many dispersed branches

SX DVR Series Durable standalone surveillance systems integrating access control systems, POS, alarm & sensor and other applications, such as license plate recognition for rugged & industrial environments

MX DVR Series Core digital video surveillance solution for vehicles, protecting people in motion

VS Series The single-box solution for transmitting digital video over intranet networks or the Internet

MCMS A real-time feature-rich visual vehicle tracking system

CMS A powerful overall central monitoring solution

Connection and strengthening business ties with potential partners, distributors and customers Expansion of market reach via aggressive product promotion Educating the market about the need for safety and security products

How are we promoting our products?

The Hawkeye Security products will be promoted via print, online, aggressive below-the-line marketing tools and a variety of other advertising media. Please see details below:

Printo Quarterly Broadsheet and Magazine Advertisementso Annual Direct Mail

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o Press Releases Word of Mouth Online

o Website + E-commerce Websiteso Search Engine Optimization, monthly Webmails, Newsletters, Paid Advertising and B2B

Online Tradingo Press Releases

Online marketing is a powerful way of getting our products out in the market. (There are currently more than 700 million Internet users in the world.) A lot of competitors are educating the market about safety and security through online means. There’s also an essential percentage of B2B transactions taking place online, which poses as a big opportunity for us.

Trade Shows (at least 2 of the major safety and security trade shows) Participation in trade shows is a very effective way to meet business clients and

consumers alike. It will provide us the opportunity to introduce our company and our products and services.

Dealer Promotionso Incentives o Discounts

Providing dealers with the right incentive will make them push our products to the market. An example would be giving the dealer a free product sample if the dealer is able to meet a specific quota for a given period of time.

We also have set up a different types of dealer membership, such as a Platinum Membership, which in this case the dealer will receive the lowest dealer’s price, on the condition that they sell this corresponding volume and amount of product.

Initially, we will be sourcing out many dealers. This will get our products out into the security channel sector. We will maintain cooperative relations with these dealers and we will make sure that we set reasonable performance standards.

We shall guarantee the dealers’ responsibility for promoting and marketing the products. The dealers shall commit a launch plan with a budget to ensure success. Dealers shall ensure that any marketing strategy or plan does not deviate; harm or damage our marketing objectives for the product. The dealers must at all times uphold the product and carry on an organized and effective marketing plan for the product.

We will also provide full product and technical support Business Partnerships

Our aim to get to know the key players in the industry and learn the marketing strategies that they deploy. There is a big opportunity to integrate certain business applications with our products, such as POS, ATM, traffic systems, and police & military systems.

On top of these promotional methods, we also plan to create new business cards, new product presentations, case studies of safety and security requirements in vertical markets, and an online product demonstration.

We want to be the top-of-the-mind digital video recorder provider. We believe that the mix of print, word of mouth and online advertising will instill strong product recognition.

How do we set price policies?

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Our prices are very competitive, providing value for the customer’s investment. We use standard methods of setting the price via thorough evaluation of product demand, volume of demand, and competitors’ prices.

Our 8ch DVR card’s selling retail price is from $800 to $850. Our OEM price for the 8ch DVR card ranges from $400 to $450, depending on the volume of order. Based on our research, our price is 10%-15% lower compared to other products in the market. In fact, there are some cards (16 channel input and software MPEG4 compression) which offer dealer’s price equal at our OEM price. The same card’s SRP ranges from $950-$1,000.

Our DVR system prices are also very competitive, with the LX-8000 Series SRP from $3,000 to $3,500. Other DVR systems which have similar functions as our product, except for hardware MPEG4 compression technology, are priced from $3,500 to $4,500.

Price is one of the major factors when consumers purchase products. We do not wholly believe in lowering the price, just so to sell our products, although it works sometimes. We value maintaining a competitive price and we believe in other factors, such as quality, support and service.

To accommodate customers who have financial concerns, we have developed several methods of payment such as leasing, installments, discounts, and demo-to-buy strategies.

What is the proposed business location?

Neugent is currently headquartered in the United States. Rising instances of security breaches and acceptance of surveillance cameras in the public sector in the US have increased the demand for safety and security products, thus making the USA one of the major markets for surveillance solutions. This is a critical factor for our business’ success.

Instant and nearby access to customers will be beneficial because it would provide: solid immediate product and technical support and consultation faster transaction processing and product deliveries convenient and cost-effective business operations

Neugent Technologies, Inc., the R&D arm of Neugent Global, is currently situated in the Philippines for the following reasons:

inexpensive labor costs no-communication barrier, as English is a widely accepted second language strong business and workplace cooperation, teamwork and Filipino ingenuity

Neugent Korea and Neugent China offer inexpensive manufacturing costs.

What are our distribution channels?

Our distribution channels include OEM partners, wholesale distributors and leading security dealers. On top of these, we have our own sales force and a few independent representatives.

What are our sales forecast?

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Please see Appendix for more details.

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III. Operational Plan

ProductionAt present, Neugent Global China is dedicated to outsourcing manufacturing companies for hardware production. All products are shipped to the Neugent Technologies R&D Center Philippines for testing to ensure that all products are designed and produced to meet or exceed customer requirements and expectations.

Quality ControlFailure Testing All our products undergo failure testing in Neugent Technologies Philippines to expose any unanticipated weaknesses. It is only after the engineering team has conducted the necessary improvements that they are sent for production.

Total Quality ControlTo avoid major problems which may lead to a decrease in sales, Neugent Global makes sure that the specifications of all our products meet or even exceed customer requirements especially in terms of reliability, maintainability, and safety. We follow the following procedure:

1. Marketing clearly defines the customer requirements..2. Specifications had to be defined to conform to these requirements.3. Conformance to specifications were introduced during development and manufacturing. 4. Management had makes sure that the number of engineers is equal to the work imposed on them

and holidays, celebrations and disputes did not affect any of the quality levels. 5. Inspections and tests were carried out, and all components and materials bought in or otherwise,

conformed to the specifications. 6. Any complaints received from the customers were timorously and satisfactorily dealt with. 7. Feedback from the user/customer is used to review designs.

If the original specification does not reflect the correct quality requirements, quality cannot be inspected or manufactured into the product. Eventually, we also plan to achieve best-in-class operating practices and leverage company-wide opportunities, utilizing six sigma measurements.

Customer ServiceNeugent Global takes time to satisfy customers. We conduct constant research to find out what our customer actually wants. We do calls and on-site visits to existing customers for maintenance of our systems and products. Customers may also reach our technical support group who work round the clock 24/7 through our GID (Global ID) or front office.

LocationThe ideal location for the Neugent Technologies, Inc. R & D is to be in the PEZA (Philippine Economic Zone Area). Business hours would be flexible from 8:00 am to 5:00am or 9:00 am to 6:00 am.

PEZA shall encourage and support investments of Information Technology (IT) Enterprises, as well as the establishment and operation of IT Parks / Buildings to serve as readily available suitable locations for their operations, in order to accelerate the growth and development of the Philippine IT sector.

In this connection, PEZA shall implement the following guidelines on the registration of IT Enterprises and IT Parks and Buildings, for availment of incentives provided under Republic Act No. 7916 (The Special Economic Zone Act of 1995), as amended by Republic Act No. 8748.

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I. Definition of Information Technology, IT Enterprises and IT Parks and Buildings

In connection with the PEZA registration of IT Enterprises and IT Parks and Buildings, for availment of incentives provided under R.A. No. 7916, as amended by R. A. No. 8748, the following definitions shall apply:

"Information Technology" or "IT" is the collective term for the various technologies involved in processing and transmitting information, which include computing, multimedia, telecommunications, microelectronics and their interdependencies. Also called "informatics" or "telematics", the term "IT" is now also often used to refer to the convergence of various information-based, broadcast and mass media communication technologies. (NITC 1997);

"IT Service Activities" are activities which involve the use of any IT software and / or system for value addition;

"IT Enterprises" are companies operating / offering IT services; "IT Park" is an area which has been developed into a complex capable of providing

infrastructures and other support facilities required by IT Enter-prises, as well as amenities required by professionals and workers involved in IT Enterprises, or easy access to such amenities.

"IT Building" is a building, the whole or part of which has been developed to provide infrastructures and other support facilities required by IT Enter-prises, and which may also provide amenities required by professionals and workers involved in IT Enterprises, or easy access to such amenities.

"Facilities-Providers" are owners / operators of buildings and other facilities inside economic zones / IT Parks which are leased to PEZA-registered locator enterprises.

II. Information Technology Service Activities Registrable with PEZA for Enjoyment of Incentives

IT service activities registrable with PEZA for enjoyment of incentives shall include: Software development and application, including programming and adaptation of system software

and middleware, for business, media, e-commerce, education, entertainment, etc.; IT-enabled services, encompassing call centers, data encoding, transcribing and processing;

directories; etc.; Content development for multi-media or internet purposes; Knowledge-based and computer-enabled support services, including engineering and

architectural design services, consultancies, etc.; Business process out-sourcing using e-commerce; IT research and development; and Other IT related service activities, as may be identified and approved by the PEZA Board.

An IT Enterprise operating any of the above-listed IT service activities may register with PEZA for availment of incentives provided under R. A. No. 7916, as amended by Republic Act No. 8748, provided it physically locates inside a PEZA-registered IT Park, Building or special economic zone, which is covered by the required Presidential Proclamation.

Incentives for PEZA-Registered IT Enterprises

PEZA shall grant registered IT Enterprises the following incentives Income Tax Holiday for four (4) years for Non-Pioneer IT Enterprises, or six (6) years for Pioneer

IT Enterprises; After the ITH period, the option to pay a special 5% tax on gross income earned, in lieu of all

national and local taxes, except real property taxes on land owned by developers; Exemption from payment of import duties and taxes on imported machinery and equipment and

raw materials;

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Additional deduction equivalent to 50% of training expenses, chargeable against the 3% share of the national government in the special 5% tax on gross income;

Permanent resident status for foreign investors with initial investments of US$ 150,000.00 or more;

Employment of non-resident aliens required in the operation of IT Enterprises; and Other incentives, as may be determined by the PEZA Board.

Personnel

We are proud to have engineers who strive for excellence. Our R&D team is composed of self-driven and dedicated individuals with experience and knowledge in software development, database system architecture & design, web development, systems analysis, information systems administration and network & security. Their expertise includes the following:

Operating Systems: Windows, Linux and Unix System Architecture: Intranet/Internet and Client-Server Hardware: x86, IBM PPC, Sun Sparc, DEC Alpha, Zilog 80, Motorola 68k, Firewall, Router, Languages: C/C++, Java, Pascal, Python, VB, VB.NET, Perl, ASPWeb-based Language: PHP, HTML, CGI, Javascript, DHTMLDatabases: MySQL, Oracle, MS Access, MS SQL, PostgreSQL, XML Server Applications: Microsoft IIS 4.0/5.0, Microsoft Message Queue, Tomcat, ApacheNetwork: Extensive experience in TCP/IP, VOIP and VPN

At the same time, we have passionate sales and marketing people who envision Neugent Global to become a global leader in providing digital multimedia communication.

InventoryWe keep an inventory of components as well as finished products. Product parts that have to be sourced out from China have to be ordered two weeks in advance.

ItemsAnnual Cost of Good

SoldInventory

InvestmentAnnual Inventory

Turns

LX-8800 270,000.00 273,600.00 0.99

LX-8700C 1,760,000.00 1,760,400.00 1

LX-8700 507,000.00 509,600.00 0.99

LX-E320 180,000.00 186,000.00 0.97

LX-E160C 1,450,000.00 1,450,500.00 1

LX-E160 500,000.00 504,000.00 0.99

HX-9032 342,000.00 348,000.00 0.98

HX-9016 260,000.00 264,000.00 0.98

SX-2016 1,610,000.00 1,611,400.00 1

SX-2008 1,800,000.00 1,800,800.00 1

SX-3008 800,000.00 801,000.00 1

SX-4008 400,000.00 401,000.00 1

SX-5008 400,000.00 401,000.00 1

MX-104 420,000.00 420,600.00 1

MX-204 350,000.00 351,000.00 1

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VS-102 60,000.00 60,200.00 1

VS-104 90,000.00 90,300.00 1

MCMS 300,000.00 320,000.00 0.94

Suppliers

Neugent Technologies’ suppliers are accredited and established in the industry.

Hardware ComponentsPC Express, PhilippinesAcumax, PhilippinesTQM, PhilippinesBiostar, China

Cables and ConnectorsDeeco, PhilippinesOriental,Philippines

Managing Your Accounts Receivable

For payment policies, please see Appendix. For slow-paying customers, here are some of our policies:

Make phone calls within two (2) days before the due date

Send letter sixty (60) days after the due date

Demand letter from attorney 90 days after the due date

Managing Your Accounts Payable

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IV. Management and Organization

Board of DirectorsDavid J. Cruz Jr.David R. Cruz IIISu Kwan JangSu Jaung ParkJoselito V. Banaag

Management Advisory BoardDavid J. Cruz Jr.

Attorney Accountant

Leoncio Y. Fuertes Insurance agent Banker Consultant or consultants Mentors and key advisors

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V. Personal Financial Statement

Please see Appendix.

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VI. Startup Expenses and Capitalization

A. Monthly Personnel Salaries in Philippine Peso

See Appendix.

B. Depreciation and Repair and Maintenance

Depreciation expense was computed based on a straight-line method. Repair and Maintenance cost is estimated at 15% of depreciation cost annually.

C. Rental

Space and office rental is computed at Php 70,000.00 per month, with an incremental increase of 20% per annum.

D. Taxes and Licenses

Income tax is computed at 35% per annum. There is also Value Added Tax (VAT) of 12% on all Philippine-based sales.

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VII. Financial Plan

See Appendix.

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VIII. Appendices

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Documents

Business Plan for DVR With Charts