Down to Earth Technologies Inc. (published Feb. 1994)

Down To Earth

Not

Pie in the Sky

Prepared by

Eugene C. Barlaz

DTET

Incorporated February 16, 1994

90 Clark Street

Dedham MA 02026

617 251 9800

617 251 9234 fax

www.downtoearthtech.com [email protected]

NOTE THIS WAS TAKEN FROM A VERY OLD WORD DOCUMENT / Certain Page Breaks and Content Files did not translate well. It is being posted as an example of a Funded Start-Up from 1994. My First Business plan prior to completing my graduate degree. The company operated between April of 1994 until the Spring of 1998.

Table of Contents

1??????? Executive Summary Page 3

2????????Statement of Purpose Page 4

31 Business Concept & Market AnalysisPage 5

4???????Vendor Relationships Page 12

5????????Organizational Analysis Page 13

6?????????Company Model and Sales Discussion Page 14

7??????????????????? Financial Discussion Request Page 22

?????????? Appendix A Proforma Spreadsheets for Corporate and Regional Offices

??????????????????????????????????? Page One???????? Corporate

??????????????????????????????????? Page Two???????? Southeast

??????????????????????????????????? Page Three????? Midwest

??????????????????????????????????? Page Four??????? West

??????????????????????????????????? Page Five??????? Combined

Disk Included

?????????? Appendix B??? Non-Disclosure Form

1??????????????????? Executive Summary

The enclosed business plan for Down To Earth Technologies Inc.(DTET) represents the remodeling of the company. Down To Earth has been providing Geographic Information System (GIS) and Business Process Modeling services since its in inception in 1994. During that period of time, we have accumulated over 80 clients that turn to us for GIS advice, GIS software, and enterprise software and hardware solutions.

During the first step of remodeling, the company stopped advertising and distributing the Client/Server Version of the Earth DataWareTM product designed for municipalities. While ahead of its time in 1995, there are now several similar products being offered in the Northeast by companies with stronger financial resources than that of DTET. In addition, municipalities and cities alike have not embraced current client server technology and are now moving on towards Intranet automation. The companies just entering the field will find out as we did, that there is a shrinking market for a technology that never took hold in municipal government. This product line is now being distributed through partners in specific states where interest has continued.??????

The new Down To Earth Technologies enterprise combines the staff knowledge of government, GIS and the Web to appear on the cutting edge of Internet Technology. A strong base of GIS clients exists and will be supported and introduced to Web projects and a combination of their GIS with Intranet technology. In addition several commercial products and services are being developed to take advantage of the growing field of business geographics. Several unique target markets have been developed specifically for Down To Earth that center on Web Site Design and Consulting, Healthcare related mapping, and Real Estate related product mapping. Other new projects and markets are appearing daily that will allow a strong return on investment for the current shareholders of the company and those who invest with us in the future.??????????

2??????????????????? Statement of Purpose

It is the intent of this document, as presented by Eugene Barlaz (CEO and Founder), to serve as an overall plan for Down To Earth Technologies Inc. The plan reflects the concept on which this business will base its activities. It is the intent of this plan to illustrate the feasibility of DTET to survive in the current marketplace, serving government and commercial organizations alike.

The background of Eugene Barlaz will support and nourish this company from the business developed over the past three years to a cutting edge Geographic Information Services Company. The model of combining internal company knowledge with strong partnerships with industry leading companies will enable us to grow the projects currently contracted. Our proven ability to pick the right partners will enable us to grow into the new services and products identified in this document.

Existing clients will be driven towards Intranet technology and integration of GIS and the Web using several existing products and certain products that our partners have provided us prior to release. New clients will be generated in our existing target region and in the regions covered by the satellite offices.

Existing partnerships with Intergraph Corporation and DiCesare-Bentley Engineers will be enhanced by the expansion of the target by Down To Earth Technologies Inc. Intergraph has pledged additional marketing support and the ability to expand our target region. DiCesare-Bentley represents the type of engineering firm we will partner with in each state to generate public sector clients. Products recently released by Intergraph will enable us to service commercial product applications without having to build from scratch. We have already generated new partnerships for product development within three major disciplines: Transportation, Real Estate, and Healthcare.??

As Down To Earth expands new applications that have been identified will be developed and marketed, further enabling our expansion into a Nation-Wide GIS Services and Product Development Company.

????????????????????????????????????????? 3?????? Business Concept & Market Study

1.??????? Product Overviews

11.????? Customer Type Description

111.???? Market Analysis Competition

Marketing

VI.?? Forecasts and Associated Model Description

1????????????? Product Overviews

GIS Life Cycle Services

The origin of the GIS Life Cycle Services Product Group is the services provided to our Public Sector clients during the first three years of business. The future of this product group is how we use the different cycles to expand the business in each current client and generate new leads and business from one client to another. The connections between the clients can be used whether it is a Public Sector or a Commercial client.

There are six types of services within the Life Cycle Product Area. Starting-up GIS provides organizations information regarding GIS through a one-day seminar . The seminar has been given to several existing clients and a few who chose other firms following the first two life cycles. The seminar is non-vendor specific as we present what GIS is, what is needed to implement GIS, and who the players are during the implementation process. The specifics of the seminar have changed and been further customized to present our view of GIS. We plant the seeds relating to Open GIS and industry leading technologies, enabling us to promote Intergraph and Microsoft as solutions during the next cycle. Since we are one of a very few consulting firms specializing in Open GIS, this promotion enables us to expand the projects for which we have been retained.??

The Decision Analysis Cycle product provides analysis through organizational interviews and data inspection regarding the implementation of GIS for the client. During the interviews we examine what each division in an organization has identified as its objectives. We offer suggestions during the interview of how one might use GIS, by the end of the analysis phase these suggestions have been prioritized, outlined, budgeted and recommended for project development. With the investment Down To Earth is seeking we will be able to provide more of the implementation services discussed next, these being the products developed during Decision Analysis Stage.????????

The Implementation Services product includes several types of services and in some cases custom development for a GIS interface or function. While the custom development may relate to a GIS ByProduct Development Application, it is often handled here if a client has a proprietary requirement for the application and wants to own rights for code or data model development. During a GIS implementation there are three major steps, data development, system choice and purchase, and training/start-up. Currently

Down To Earth handles a small piece of the first, all of the second, and all of the third. Following investment Down To Earth will add many components of the first, strengthen our ability to provide the second and third steps. In addition, by being able to manage the entire project, we will create a stronger barrier to entry for our current competitors or firms newly entering the marketplace with lower prices.

Data Development includes the data mining of existing applications, land base geographic data conversion and aerial or satellite data collection. With the infusion of a new investment we will add digital conversion services to our product mix and include pricey Quality Control Services so that other conversion vendors will work as sub-contractors to us for certain public sector projects.

The System Choice step is recommended during the Decision Analysis Phase. During Implementation in states where we have a state or regional sales contract, Down To Earth will sell the software and hardware required. In States where a contract does not yet exist we will receive a commission from Intergraph for each sale. In either case an annuity support contract is generated that will assist us in keeping the existing clients and the new clients as they expand their projects.

System Implementation Start-up and Training generates training classes, provided by Down To Earth and new functional projects that require Down To Earth consulting assistance. In the public sector many of these projects are funded by grants that Down To Earth staff will assist a client in receiving. In Private Sector clients many of these projects will require presentation and analysis products sooner than the on-line GIS will be able to produce them. In either case, the organizational model for Down To Earth has been planned to handle the many possibilities. Other services that become part of this product area are recommendations to clients on distributing their data and what to charge for it. Depending on the client some of these distributorship projects may be managed by Down To Earth on a consulting or a profit-sharing basis.??????

The Process Change Product Group has generated several products and interest in the past. However, conducting this type of project is time consuming and leads only to confusion within the target of expanding the business base for the company. This product group will only be offered to existing clients interested in understanding how a GIS or other new technology affects their way of doing business.

The Management ofGIS Product Group will be offered to organizations that want to outsource their GIS to Down To Earth Consulting Services. While some public sector organizations may choose this approach during a start-up phase, most commercial clients will choose to hire an employee and manage the system in-house. In the past we have preferred not to provide this service as the existence of in-house management provides for more growth of the GIS division, a large budget and therefore more opportunity for the company. Many of our competitors offer this service in the Public Sector for sites using proprietaGIS packages.?????

GIS By-Product Development???????????????????????????????

This product area provides the most growth potential within the company and the GIS industry. Down To Earth is already involved with new product areas in the HealthCare and real estate industries. In addition we are working with a transportation management agency to develop products for Ride Sharing and Work Force transportation. During the first six months following investment these and other projects will be transformed from demo and test applications to distributable applications within the vertical GIS industry. The applications will increase sales and consulting opportunities for the company and our development partners.???????????

The Healthcare product development group includes applications for patient mapping, HMO development, merger analysis, and hospital facility management. Our partner has over 900 clients that cover these product areas and test projects are soon to be started. All test projects are being handled at market rates. The Real Estate product combines commercial real estate needs and public sector economic development concerns to provide an Internet based solution, an on-line service solution to high-end real estate firms, and desktop application for users of Microsoft Office products.

The Transportation product integrates Intergraph's GeoMedia Web Map and several commuter transportation requirements covered in the Work Force Federal Projects and the Clean Air Act. Both are well funded by State and Federal government agencies.??????

Public Sector application development projects aimed at municipalities in specific states are also underway. These projects include the generation of a GIS in a box solution for Tax Assessment departments across the country and the generation of an Intranet application for permitting and licensing for municipalities in

Massachusetts and New Jersey.

Internet Product Group

Products in this group integrate either public sector organizations for use with GIS and Internet technologies on the Intranet or Extranet or commercial Internet sites that require spatial data to enhance their current use of the Web. In addition, we have generated several project possibilities that add Internet consulting to our services related to the improvement of corporate web sites. These services would integrate live GIS for corporate product distribution and sales management areas. The Corporate Office will only offer this group until a good client base can be established.

11??????? Customer Profile

l)????????? Public Sector

2)????????? HealthCare

3)??????????Real Estate

4)??????????Distributorship Clients

Customer Type One??? Public Sector

The Public Sector target is made up of four major groups; Municipal, Regional, State, and Indian Nation. Federal targets will be added as the company grows in size, however the current administrative overhead required to generate Federal projects is overwhelming.

Municipalities started using GIS in the 1980's and the numbers are continuously rising. The municipal clientele that we have generated since 1994 has come to us using three different paths. Responses to public RFP's have generated several clients and enabled us to get our first few clients. Clients that knew one of our partners, DiCesare-Bentley Engineers, asked them for a reference and thus were handed to us and clients that chose Intergraph as their vendor and were referenced to us by their regional or national offices. Our Public RFP response success rate remains over 60%. We have beaten several major GIS consulting firms during the first three years and are constantly called to partner with firms that compete at the edges of the GIS industry.?

All four-target types are possibilities for each of the three Product groups described in Section One. The

GIS Life Cycle Services should be the highest sales product in the group,

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Customer Type Two ?? Healthcare??????????????????????????

The Healthcare industry is made up of several business sectors. Each is concerned where their network will draw patients from and where the service providers and service users are in comparison. Using GIS to manage and analyze this information will increase the competitiveness of our clients and their ability to operate in the marketplace. Our partner, a hospital and healthcare software provider, has over 900 clients to which this product will initially be aimed. We are already prepared to offer patient mapping and network mapping services to the industry. The investment infusion will enable product and service advertising as well as the employees to provide the services. In addition several hospitals have shown interest in the facility management software products that exist within the Intergraph software suite. Down To Earth is ready to sell to this market and generate facility management system implementation services similar to those within the GIS Product Life Cycle Group.

Customer Type Three Real Estate

Residential Real Estate brokers have begun to use GIS as a tool to locate homes for their clients. The field is still waiting for a break through product. Commercial brokers use proprietary lists as to what is available in the leasing market. Down To Earth has started discussions with two lease management data vendors to start a GIS based leasing system. The system would be based on Intergraph's Jupiter technology, under which their GeoMedia products were developed. One of these companies services the southeast and would

work with the Corporate and North Carolina offices of Down To Earth, the other services the Southwest and would work with the Corporate and Western offices of Down To Earth. Once these projects are underway and contacts have been developed in the Real Estate industry, Down To Earth would begin to develop a GIS based solution for the residential marketplace.

Customer Type Four Logistics and Distributorship Channel Management

Distribution Channels are based on parameters that enable companies to identify where to place distribution nodes such as restaurants, retail outlets, warehouses etc. within a distribution model. Using GIS and these parameters it is possible to design and ultimately manage these channels. Down To Earth has begun developing several demonstration products for this application. In addition we have identified several national and local chains that are at the edge of using GIS without taking the plunge. While we will be proceeding with this target market prior to investment, capital infusion will enable a stronger market presence and faster application development.???????????

Il Market Analysis

The market analysis contained in this document was generated by using GIS World market analysis reports and products, DataQuest reports available to clients regarding the industry, and investigation of consulting firms and partners information available on the World Wide Web. Information contained is also part of the knowledge base of Eugene Barlaz.

Competition Identification

There are several types of competitors:

?????? Other GIS consulting firms

?????? GIS Manufacturers

?????? Nation-Wide Engineering Firms ??????????? Intergraph Business Partners

1.

Consulting firms include a few local firms and two nationally known companies. The Nationally known companies target large clients, primarily in the 1 million and above project range. While they have tried competing in the local markets, their prices have been too high. Their location models are one large corporate office and in one case, one office in Washington. Neither has established regional offices to serve public sector or commercial GIS opportunities. The local firms specialize in the proprietary GIS packages from Environmental System Research Institute. There are four companies across the country that admit to working with Intergraph. None advertise that they specialize with Open GIS products as will Down To Earth, and none have the contacts within Intergraph that Down To Earth has developed. One firm in northern California has strong contacts but provides conversion and implementation services to the Public Sector in the West only. They may provide strong competition as we market our services to Indian Nations from the planned Denver office.?

11. The GIS manufacturers provide competition in two forms. The manufacturers other than

Intergraph are each fighting for market share on UNIX and NT platforms. Each win for companies other than Intergraph generates a site that we will not be targeting. In addition these firms each have a consulting services group that services their clients, lessening our chances of switching clients for just the purpose of GIS. Intergraph has 15 GIS Application Engineers that service pre and post sales consulting opportunities. These engineers work with us on many public sector sites and have created a short-term barrier to entry at utilities. Utilities generally want to work with established long running companies. As Down To Earth gets older and larger we will be able to break through and provide Utilities with the GIS Life Cycle Services Products as well as the Internet Integration products. On the positive side, Intergraph has 80% of the existing GIS market that uses Windows NT. This number has risen the last two years. As clients switch from one GIS package to another, they require services within our GIS Life Cycle Group and sales from our Intergraph distributorship. In both cases revenue increases for Down To Earth and drops off for our competitors.??????

111.????? Several Nation Wide engineering firms and some regional firms offer GIS as an add-on service. In New England alone, Camp Dresser, Woodward and Curran, and EarthTech all offer some level of GIS implementation services. This enables their Waste Water and Civil design areas an added service to sell their clients. To date in three years we have lost 2 projects to these types of firms and in both cases have generated sub-contractor relationships to assist with the projects. The Nation-Wide firms have not entered the New England marketplace and we have not had to compete directly as of June 1997. Lastly, one of the largest remediation engineering firms has hired Down To Earth to develop their GIS usage and join us as a partner. We will be providing consulting and training services as well as Intergraph software and hardware products to this company.???????

IV.??????? There are hundreds of Intergraph partners that are allowed to distribute products to the public sector. However less than 10 partners across the country are supported for sale of GIS products by Intergraph. Five of the firms, including Down To Earth are regularly supported and are expected to generate new clients as well as referred leads in the GIS industry. Only Down To Earth specializes in Intergraph GIS, which has made Intergraph excited about the prospect of having a nationwide consulting partner for many current and future projects.

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IV Marketing Plan

There are two major areas required to market Down To Earth Technologies Inc. across the country. One area is magazine and other printed media advertising, the other is the use of conferences and seminars.

There are three major magazines that serve the GIS industry and many vertical magazines that serve the vertical markets we will be targeting commercially. These are the publications that will require both advertisements and articles written by Down To Earth management and GIS staff. Eugene Barlaz already knows the editors of each of the 3 GIS publications and has been published in 2 of them. In addition to the general GIS publications Intergraph has 2 publications that Down To Earth regularly writes for and advertises in, this will continue.????????

Seminars will be sponsored by Down To Earth in each region being covered. In March 1996 Down To Earth sponsored an "Open Solutions for Government" conference that attracted over 100 people and generated several projects. This type of forum will be repeated in each region. There are 3 major GIS conferences in the U.S. each year. Down To Earth will exhibit in each for National Name recognition and the increased opportunity to present and moderate sessions. Lastly there are vertical conferences for the industries being targeted, such as Health forum and Real Estate Technology. Down To Earth will get involved with these sectors and exhibit at the conferences.

The advertising budget for the corporate office and each of the regional offices includes dollars for conferences, start-up mailings, a company newsletter, and further industry research. The operations plan illustrates and discusses the advertising dollars needed in order to properly market the company. The plan is to follow the regional model of introducing Down To Earth as a local company with roots in the industries being targeted. For instance in New England the reason we won several municipal jobs was Eugene's background as a City Planner. He hit it off with the municipal employees since he was once in their shoes. This will be taken into consideration as we hire Intergraph and Commercial GIS Analyst's around the country.????????? 4?????????? Vendor Relationships

Currently Down To Earth Technologies Inc. has two major relationships with other corporations.

Intergraph Corporation considers Down To Earth a Premier Business Partner and will upgrade the relationship to elite status by the end of the current calendar year. Intergraph is a Fortune 1000 company that is an industry leader in the GIS, Mapping and Utilities software industries. In addition their hardware products have won awards across the information technology industry. Several major companies and web sites are powered by Intergraph and companies in many industries use a combination of Intergraph software and hardware to power their businesses.

DiCesare-Bentley Engineers is a regional engineering firm that represents the model-engineering firm for future relationships around the country. They began integrating GIS into their business in the late 1980's but had won less then $50,000 worth of work until 1994 when they partnered with Down To Earth. The

Two companies are involved with projects totaling over $300,000 currently with coattails in the millions. They provide data conversion services and a strong "name" in Connecticut and we provide the expertise to handle the other implementation cycle steps and the entire Product Life Cycle.

There are additional relationships that allow us to sell related products to our clients including:

Anatech:

Large Scale Scanners

Printing and Plotting Products

Tech Data:

Microsoft and other software products; other hardware products

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??????????????????????????????????????????? 5???????????????????? Organizational Analysis

1?????????? Ownership

11 Legal Structure 111 Organizational Structure

1.???????? Ownership

The Chief Executive and President of the Company will be Eugene C. Barlaz. He currently retains controlling ownership of DTET Inc. Equity is currently owned by Eugene Barlaz (80%) and an angel investor (20%). Disclosure of the Angel can only be made following a non-disclosure agreement being signed by potential investors and partners.

11??????? Legal Structure

DTET is incorporated as an S Corp. in the State of Massachusetts. The stated accountant is Larry

Nannis of Levine, Zeidman and Daitsch. The Stated Attorneys are Steve Kravitz and Harold Leach.

Ill ?????? Organizational Structure

Currently Eugene Barlaz holds the executive position as well as the legal officer positions with the company. Following investment a Chief Administrative Officer will be added and a Board of Directors will be set-up. The Board will consist of 7 people chosen by the current ownership and 4 people chosen by the new investors. In addition, two industry known people will be chosen to assist in marketing the company. The seven people chosen by current ownership will include Eugene Barlaz and a designee of the Angel investor.

Section 6????? Company Model and Explanation of Proforma Model

4 Offices:

??????????????? Corporate Located in Boston Area (serving northeast)

??????????????? 2nd located in Chicago (serving Midwest)

??????????????? 3 rd located in North Carolina (serving Georgia, North / South Carolina, Florida, Virginia)

??????????????? 4th located in the Denver area (serving Colorado, Arizona, Nevada, California, Oregon)

Each Office offers three major product/service groups

??????????????? GIS Consulting Services

??????????????? GIS By Product Development

??????????????? Intergraph Software and Hardware Distributorship

Corporate Office handles (in addition to three major product areas)

??????????????? All administrative functions with exception of scheduling local office appointments

??????????????? Marketing / Advertising ,including coordinating regional exhibitions ?Accounting / Payroll

??????????????? Distribution Channel Creation for products developed by Down To Earth

??????????????? Web Presence

??????????????? Web Hosting

??????????????? Personnel

Regional Offices have the following positions

1.??????????????? Office Administrator/Marketing

2.??????????????? GIS Analyst Intergraph MGE Consultant

3.??????????????? GIS Analyst Broad GIS Disciplines including Commercial Applications 4. Distribution Sales (except West where a Windows NT Engineer is added)

Corporate Office has the following positions

1.?????? Chief Executive / Business Development

2.?????? Chief Administrative Officer / Personnel / Finance

3.GIS Analys Intergraph MGE Consultant

4. GIS Analyst Broad based commercial applications

5. SQL Support SQL / Visual Basic Programmer

6. PC Programmer Microsoft Office / Visual Basic Programmer

7. NT Engineer NT Certified Network Engineer / Hardware Support

8.?????? Office Manager

9.?????? Marketing Director / PR Promoter

10.??? Web Designer

11.??? Graphic Designer / Web / Marketing Support

12.??? Book keeper

Reasoning on the Corporate Pro Forma Sheet (Summary)

Advertising???? The first quarter contains initial magazine advertising dollars announcing both the products and services that the Nationalized Down To Earth will offer and budgeting for one National Convention. The GIS Industry has one major conference in each quarter. In addition there are many regional URISA (Urban and Regional Information Systems Association) conferences that are listed in the regional offices area. Intergraph has 1 major conference each year (International Graphic Users Group) and this will be listed within the corporate area for that quarter. Initial industry research will be in the form of purchasing 2 documents, one from Data Quest and the other from GIS World regarding the industry. In addition, there will be regional competitive analysis research that will be done on a regular basis to keep Down To Earth ahead of it's regional and National competitors. This type of work will be done at the Corporate, rather than regional offices.

The remaining quarters contain the estimated budgets for corporate national Advertising and supporting costs associated with follow-ups. The Web Presence consist of a current home page and hosting Once we are hosting a server for client projects, these fees should disappear. The industry research also includes dollars for using a media relations firm to generate speaking opportunities and place articles written by Down To Earth staff in major publications.

Travel????????????? The first quarter travel budget contains initial start-up expenses for the CAO, Office Manager or CEO to travel to the different regions, select office space, and begin to support the region in question. Prior to the first quarter, investigations on areas for office sites in each city are being made. The first quarter assumes 2 trips to each regional city for these visits and arrangements. The Regional office budgets will contain travel expenses for operational and recruiting trips. Company Car (constant $400/month) is for the existing vehicle owned by Down To Earth.

The remaining quarters include travel for the CEO and GIS Analysts to visit prospects and the regional offices as business develops. The travel increases as more business projects are started and require more involvement from the corporate office.

Office????????????? Office Space within the RT 128 loop is being researched. Based on current estimates provided by 2 commercial office leasing management firms, space will be between 2.5 and 3k per month for the specification provided. The office relocation includes moving expenses and build out expenses. The area we are investigating includes Newton, Dedham, Waltham and Needham. The Computer and Networking slots include additional computers and software for new employees. The estimate is 5k for each new computer. The computers will be Intergraph Technical Desktop's across the board. This will enable us to use the computers as demo machines as well.

The office expenses drop off after initial start-up with the exception of the phone charges. These will increase incrementally as the business grows.

Salary????????????? The salaries listed is estimated on what certain "recruits" are making now and are also estimated on known salaries within the industry. During the first quarter we would recruit the new employees over a 2-month period. This has actually started on an informal basis, however several people have expressed interest in joining Down To Earth already. The workers comp/payroll tax is estimated at 28% of payroll. Insurance is listed estimated at 50% of premium for each employee. At the corporate office level, a bookkeeper is listed to handle basic AR and AP. The accountant would handle tax issues

and quarterly documents as well as end of year tax issues. The company currently uses Quickbooks and the accrual method of accounting.

The Intergraph Analyst in both the Corporate office and the regional offices will either be people that have worked for Intergraph as GIS Application Engineers or people who have worked for their larger GIS clients. The Commercial Applications GIS Analyst will be someone from specific vertical commercial applications field such as HealthCare. The Marketing Director will be hired away from another company within the GIS industry who has current contacts within the field and can quickly come up to speed. Several people have already been identified for this position including two who are in executive positions at Intergraph and one in a regional marketing position at ESRI. The Web and Graphic designers will be offering consulting services within the product markets as well as assisting the internal marketing functions.

Using this model, a Corporate Office with several regional sub-sets, that the Corporate Office contains both the cost centers for the company as well as a regional office. While consulting services are generating sales and therefore dollars, certain employees, such as the SQL Support, PC Programmer and others are developing the GIS products that will turn into revenue down the road. Most of the development and testing will take place at the corporate offices. Only regional customization would be done at a regional center. After 9 months a dedicated distributorship sales person would be added. The NT Engineer would continue to generate sales along with the new person.

Professional ?? The initial quarter's accounting and legal fees reflect expected expenses relating to the negotiation of the agreements between current Down To Earth owners and the investment firm that becomes our partner. In addition, the legalities of setting up offices, registering in different states, and generating various documents such as non-compete and intellectual property, will be assigned in this area. Contract Consultant requirements are included in this section. In fact they are the Cost of Goods Sold for consulting services where Down To Earth contracts pieces of a production project to another firm.

Sales and Consulting Projects

Sales

Sales include GIS Clients to which Intergraph GIS Software, Microsoft Back Office and Office

Professional, Intergraph Civil Software, and Bentley CAD software is sold. Hardware sales may either be to these software site clients or an expanded set of clients that include any company, government agency or Indian Nation that is interested in NT Workstations or Servers.

Software Sales estimates are based on the type of clients we will pick-up in each region. The Corporate Sales reflect the Northeast region and to some extent existing projects that will be producing software sales that relate to consulting projects. In the Northeast we already have access to State Contracts in New Jersey and Massachusetts. In Connecticut we have placed our services and products on a contract that covers the region near Hartford and are working on the State Blanket Contract. As we begin operations in other regions of the country these avenues for sale enable the company to skip traditional government RFP's and sell right into the prospects. Each of these will take between 3 and 9 months to develop, and as such sales will be harder earlier and easier later.

Initial Sales leads will be generated from 3 primary sources and supplemented by responses from regional advertising and national magazine announcements. In addition, Eugene Barlaz is scheduled for speaking engagements at the major conferences throughout the fall and early winter, these engagements generally produce interest in the consulting services. Currently the Intergraph Business Partnership covers the Northeastern United States. This will be enlarged to cover all of the United States. Many marketing services are included within the partnership and these include good leads that will be followed. Using the types of leads we currently receive, we are estimating what will be forwarded in other regions.

Intergraph generally provides 30 days, so the cash flow Proforma shows sales in month " I " and payment in month "2". The Microsoft Software requires payment on order so the cost payment is made the same month of order. In most cases there is never really an inventory as orders are delivered directly to the customer. This may change in cases where the GIS software is being bundled with Down To Earth developed products. The other category will identify products that we generate a pass through for such as modems or basic printers.

Our COGS for hardware and software improves once overall sales reach $300,000 in any region, as the Intergraph resale points improve. We are also able to get better float terms and marketing support when we cross into this range.

Consulting Sales

Consulting Services includes DTET Developed Products. There is 5k/month that should be generated from our distributor in NJ for the Earth DataWare product that they sell and support in New Jersey. We receive 22.5% of the sales from the product. We also received an up front licensing fee in 1997 that was a onetime fee. Knowing the adjustments that will be occurring in the first quarter, several projects will be either completed prior to investment or delayed till the 3 rd month of the I st quarter to allow time for business issues versus client issues. In addition, clients will be getting used to the idea that a GIS Analyst will be working on projects and the current CEO will be involved but not on a daily basis.

Newly developed GIS products have been identified and the tools and ingredients needed to generate these tools are being generated currently. A few are discussed in this report and the General Business Plan. Others are being guarded while plans are put in place to gain a competitive edge on perceived and existing competitors.

Regional Offices Summary

Each regional office will be initially staffed with four employees. An office administrator will handle secretarial duties, scheduling for the professional staff, and serve as marketing staff in the region. A GIS Analyst specializing on the Intergraph services side and a GIS Analyst specializing in commercial markets will house the consulting services and part of the distributorship area. The Distributor Sales Person will be responsible for generating sales in the distributorship area, primarily on the hardware and services side.

This person will have a technical background supplemented by some sales experience.

Depending on the region, existing area people have approached Down To Earth about career opportunities. This includes people from Intergraph and from competitor companies. Down To Earth has placed people in Intergraph Analyst and sales positions in the Midwest and Southeast which will help us generate a strong networking environment with Intergraph. This will generate stronger leads and a good working relationship from the start.

Southeast

Advertising

Travel

The mail expenses are estimated to be about 25% of the Corporate expenses. The industry research/media relations type expenses are also budgeted as 25% of corporate. Conferences are budgeted at 2 regional conference per quarter, both costing about 50% of a National conference and in the 1 st Quarter a conference based on the "Open

Solutions for Government Forum" sponsored by Down To Earth in 1996. This produced several leads and references from government staff who attended. In addition it can be subsidized by our marketing budget within the Intergraph distributorship. Magazine Advertising includes dollars for regional newsletters and chamber advertising.

Travel for airfare climbs as business opportunities around the region are identified. The other travel expenses are all based on the airfare. Raleigh provides a hub for air travel, a center for Commercial activity (near Research Triangle), and a central area for vehicular

travel. It is the State Capital of N.C. and within 2.5 hours drive of Richmond, the State Capital of Virginia.

Office

Salary

Professional

COGS

3rd Party

Inventory

Sales Figures

Based on several discussions with commercial leasing firms, space in Raleigh (North Raleigh) will be approximately $17/sq. ft. gross. There are several opportunities in good office complexes for 2000 Sq. Ft. and 2-3 year leases. All of the specifications provided included drive time to the airport, access to the beltway, and access to the roads North towards Richmond.

Positions include the 2 GIS Analyst positions, a sales person and an office administrator to start. Other positions can be added as the regional business grows.

The fees noted in the region are for the corporate accounting and legal fees related to registration and business start-up. Corporate Insurance will be designed to cover the regional insurance protection.

The Cost of Goods Sold is directly linked to the Hardware and Software Sales figures. The initial literature is to cover items used to announce the office and develop regionally targeted projects.

Software and Hardware is tied to Sales figures, with the discounts being increased when the company reaches the 300k plateau.

Sales are based on 2 considerations, first with proper advertising the NT Workstations and Servers are strong "sells", and that Intergraph provides at least 4-5 good leads a month for both. The software and hardware will increase as the office settles in and is prepared to do business. In addition, Down To Earth has some contacts in Raleigh that are interested in our services and Intergraph has a lead generator in place for that section of the Southeast.

Consulting Services

The local government dollars reflect 2 Decision Analysis Projects at 7k apiece. These are definitely loss leaders, but as the Town of Middleboro illustrates, they can become major projects if handled properly. In addition, both projects would generate references and additional leads. Regional Projects would be slower to generate and Indian Nations are far and few between in that region.

There are many commercial opportunities in the southeast. Down To Earth is already working on one possible project for a firm that services the real estate market across the southeast. In order to find companies who need GIS but do not know it yet, just open a phone book and look at the yellow pages. The DTET developed products will begin to sell when ready and when customized for the region.

Just as in the corporate plan, the first quarter of operation will produce a loss, so that the office can be set up and ready to generate projects and sales in the quarters to come. It is expected to take 6 to 9 months before this regional office produces strong gains on the investments being made. Note that for this office, a second sales person and a second commercial applications person is added after 9 months to increase sales and the return on investment.

Midwest

Advertising

Travel

Office

Salary

Professional

COGS

3rd Party Inventory

Sales Figures

Consulting Services

The mail expenses are estimated to be about 25% of the Corporate expenses. The industry research/media relations type expenses are also budgeted as 25% of corporate. Conferences are budgeted at 2 regional conference per quarter, both costing about 50% of a National conference and in the 1 st Quarter a conference based on the "Open Solutions for Government Forum" sponsored by Down To Earth in 1996. This produced several leads and references from government staff who attended. In addition it can be subsidized by our marketing budget within the Intergraph distributorship. Magazine Advertising includes dollars for regional newsletters and chamber advertising. Some of the Midwest advertising budget will be aimed at the Michigan DOT. They are one of the largest users of Intergraph Civil and GIS software packages.

Travel for airfare climbs as business opportunities around the region are identified. The other travel expenses are all based on the airfare. Chicago provides a hub for air travel and a center for Commercial activity.

Based on several discussions with commercial leasing firms, space in Chicago will be approximately $22/sq. ft. gross. A downtown office is being researched, however we have not yet connected with a specific location or "best" area to locate.

Positions include the 2 GIS Analyst positions, a sales person and an office administrator to start. An additional commercial analyst and an additional distributorship sales person are added in the 4th quarter.

The fees noted in the region are for the corporate accounting and legal fees related to registration and business start-up. Corporate Insurance will be designed to cover the regional insurance protection.

The Cost of Goods Sold is directly linked to the Hardware and Software Sales figures. The initial literature is to cover items used to announce the office and develop regionally targeted projects.

Software and Hardware is tied to Sales figures, with the discounts being increased when the company reaches the 300k plateau.

Sales are based on 2 considerations, first with proper advertising the NT Workstations and Servers are strong "sells", and that Intergraph provides at least 4-5 good leads a month for both. The software and hardware will increase as the office settles in and is prepared to do business. In addition, Down To Earth has some contacts in Michigan that are interested in our services and Intergraph is excited about our availability in the Midwest as a GIS services company. There are currently several hardware only resellers for Intergraph in the Chicago region, there are not any Intergraph only resellers which will enable us to get secure leads from Intergraph early on. In addition there are several one-person GIS firms in that area but none that specialize in Intergraph.

The local government dollars reflect 2 Decision Analysis Projects at 7k apiece. These are definitely loss leaders, but as the Town of Middleboro illustrates, they can become major projects if handled properly. In addition, both projects would West

Advertising

Travel

Office

Salary

Professional

COGS

3rd Party Inventory

Sales Figures

generate references and additional leads. The Midwest region will generate more projects that have a Department of Transportation involved or the engineering firms that work for them. In addition commercial activity within GIS has been generated by two business Geographics conferences that have taken place in the last 3 years.

The mail expenses are estimated to be about 25% of the Corporate expenses. The industry research/media relations type expenses are also budgeted as 25% of corporate. Conferences are budgeted at 2 regional conference per quarter, both costing about 50% of a National conference and in the 1 st Quarter a conference based on the "Open Solutions for Government Forum" sponsored by Down To Earth in 1996. This produced several leads and references from government staff who attended. In addition it can be subsidized by our marketing budget within the Intergraph distributorship. Magazine Advertising includes dollars for regional newsletters and chamber advertising.

Travel for airfare climbs as business opportunities around the region are identified. Airfare for the Western office is higher than the other regional centers. Travel from the corporate office to the West will cost more and from Denver to the areas covered will also cost more.

Office Space is being researched in Englewood and Fort Collins as well as Denver. We want to be located near one of the two GIS Centers of business that have been formed in Colorado. GIS World is located in Fort Collins and is the largest media firm in the GIS industry. A location near their offices could be forged into a strong working relationship and better access to articles about our customers and services.

In the West we use the Commercial GIS and Intergraph GIS positions as in the other regional offices. We also have an office manager/marketing person. However in the West we begin with an NT Engineer who will double as a hardware distribution sales person. In the 3 rd quarter we add a 2nd commercial analyst.

The fees noted in the region are for the corporate accounting and legal fees related to registration and business start-up. Corporate Insurance will be designed to cover the regional insurance protection.

The Cost of Goods Sold is directly linked to the Hardware and Software Sales figures. The initial literature is to cover items used to announce the office and develop regionally targeted projects.

Software and Hardware is tied to Sales figures, with the discounts being increased when the company reaches the 300k plateau.

Sales are based on 2 considerations, first with proper advertising the NT Workstations and Servers are strong "sells", and that Intergraph provides at least 4-5 good leads a month for both. The

software and hardware will increase as the office settles in and is prepared to do business.

Consulting Services??? The local government dollars reflect 2 Decision Analysis Projects at 7k apiece. These are definitely loss leaders, but as the Town of Middleboro illustrates, they can become major projects if handled properly. Indian Nation and Regional opportunities will be targeted in the region alongside municipal possibilities.

There are many commercial opportunities in the West, though Public Transportation projects related to ridesharing may provide better "first" opportunities. Indian Tribes will be the primary targets for the office as they provide strong returns on early projects. As the Down To Earth by-products become available, we will be able to use the foot in the door approach to begin generating sales.

Just as in the corporate plan, the first quarter of operation will produce a loss, so that the office can set up and be ready to generate projects and sales in the quarters to come. It is expected to take 6 to 9 months before this regional office produces strong gains on the investments being made. Note that for this office, a second sales person and a second commercial applications person is added after 9 months to increase sales and the investor's return capabilities.

7?????? Financial Discussion Request

The model used for the Proforma Model generates expected earnings for each of the regional offices and the corporate office. The final amount required to provide an 82.6% surety level is just over 2.3 million dollars. Following the model, this will return just under 5 million in earnings during the first 5 quarters following investment. With the explosion of commercial business geographics and public GIS these returns should be the tip of the iceberg.

We are ready to proceed with plan and are prepared to do what it takes to satisfy both new and old investors. We seek an investment partner with experience in the Information Technology field who will be an active partner as we grow and develop. We believe there are several Cash out positions that will be available in 2-4 years. These can be discussed after an interested investor returns the Non-Disclosure Papers provided.

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NOTE? THE FINANCIAL PAGES WERE DELETED FROM THE LINKEDIN POST IN FEB 2024

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