Tracking Device Maker Business Plan

RQM Technologies (RQM) is an exciting start-up company in the newly emerging field of Personal Tracking Devices; respected industry analysts such as Ovum and ABI Research predict this will become a $22 billion market within the next five years.

Products and Services
RQM will develop and distribute miniaturized Personal Locator Devices (or Personal Tracking Devices). Initially, the manufacturing of our devices will be subcontracted, while we develop the supporting software and systems internally, although we plan to manufacture our products in-house in future years. Unlike our competitors, we have military-inspired proprietary technology (patents applied for) which allows many of our systems to work with or without the presence of cellular towers, enabling their use anywhere in the world, including cities, deserts, oceans, lakes, mountains, or anywhere else adventurous travelers find themselves. Our products are also distinct in that they are small and fully programmable. Our systems can be customized by the end user for his or her unique, individual applications – for example, maritime applications which include a water-activated signal (as when a crewman falls overboard) are different from those required in business applications.

Market
Our primary target markets include, but are not limited to, the family consumer, channel sales to original equipment manufacturers (OEMs), businesses tracking shipments or vehicles, the military, and the political arena. Because of our unique proprietary programming capabilities for each individual unit, we have already received indications of interest from several of these target markets, including one branch of the U.S. Military.

We predict our systems will also appeal strongly to families concerned about the safety of their loved ones. Sadly, child abduction is on the rise globally.  More than 2,100 children are reported missing each day in the U.S. alone (FBI National Crime Information Center). At the other end of the age spectrum, there are 4.5 million Alzheimer patients in the U.S., 60% of whom (2.7 million adults) wander away from their homes at some point, unaware of their surroundings. We believe our devices will greatly reduce these figures in both cases, while potentially saving lives.

The combined number of “potential” customers for our products is well over 500,000,000; we will focus on a more realistic and attainable three-year sales goal of roughly 99,000 users worldwide, which will generate many millions of dollars in sales revenues.

Management
The founders of RQM Technologies, Steven M. Bloome and Andrew F. Siska, have been associates for over 20 years; they create the perfect synergy to ensure the success of our company. Steven M. Bloome is a Sales and Marketing Management veteran with more than 25 years of successfully penetrating previously unseen markets niches, partnering with other companies in win-win scenarios, and creating national presence for companies. He is also, accomplished in launching new products. Andrew F. Siska is a Chief Electronic Engineer with 20 years experience, and is considered an expert in his field, having previously designed devices for military applications, medical imaging systems, computers and more.

By focusing on our strengths, our key customers, and our customers’ needs, RQM Technologies will increase sales to several millions of dollars within two years, while also improving the gross margin on sales, cash management and working capital.

1.1 Mission

RQM Technologies’ mission is to become the leading vendor of Personal Locator Devices worldwide. Through a combination of evolving technologies, miniaturization, affordability for the end-user, programming capabilities and ease of use, RQM Technologies will be known as the premier developer/supplier of potentially life-saving Personal Locator Devices.

1.2 Keys to Success

The keys to success in this business are:

• Product quality and efficacy in real-life situations.
• Utilizing next-generation technology in order to improve upon current systems, while differentiating ourselves from our competition.
• Marketing: either dealing with channel issues and/or barriers to entry, or solving problems with major advertising and promotion budgets in order to penetrate our target markets.
• Management: products delivered on time, costs controlled, marketing budgets managed. There is a temptation to increase growth at the expense of profits; we will keep a close eye on this temptation in order to live up to our plan.
• Sustaining controlled growth in order to manage start-up costs more efficiently.

To maintain these key factors, RQM Technologies’ needs include start-up funding, partnering with value-added investor/partners, aggressive marketing, quality sales professionals, accomplished C-Level management, product branding, increasing reach into target markets, affiliating with the right channel partners, competitive intelligence and appropriate use of evolving technologies.

1.3 Objectives

RQM Technologies has identified three types of objectives that will serve as challenging but attainable goals for the organization. They are:

Business Objectives

1. To become the premier vendor in the new and evolving Personal Locator Device industry.
2. To reach profitability within one year of the company’s launch.
3. To develop additional profit centers such as programming, training, seminars, ancillary equipment, etc. within the first two years.

Financial Objectives

1. Increase product sales to several million dollars annually by the end of the second year.
2. Bring gross margin up and maintain that high level by the third year.
3. Improve inventory turnover on an ongoing basis, until “just-in-time” inventory is standard by the third year.

Marketing Objectives

1. Focus on target marketing to increase market penetration and domination.
2. Expand target markets with controlled growth.
3. Establish brand awareness for the RQM Technologies’ name and products.
4. Position ourselves as the leading Personal Locator Device company in the world.

RQM Technologies is a privately owned start-up company, located in Bolingbrook, IL, a western suburb of Chicago.

RQM Technologies was formed as a company committed to developing next-generation remote Personal Locator Devices in order to immediately locate and aid in the timely rescue of:

• missing children
• the active elderly (including Alzheimer’s patients)
• soldiers in the field and at sea, mariners lost at sea
• and even pets

while also serving the business arena, as a way to better manage the logistics of:

• outside personnel
• fleet vehicles
• valuable parcels
• and deliveries

The company’s management philosophy is based on responsibility and mutual respect, while encouraging ownership of responsibilities to help foster personal and professional growth. RQM Technologies focuses on productivity for growth and profitability, and respect for its customers and employees to increase repeat and referral business while minimizing employee turnover. Additionally, the company encourages employees to have fun by allowing creative independence and providing professional challenges that are realistic, attainable and rewarding.

2.1 Start-up Summary

Our plan begins with a two month start-up period during which we will focus primarily on setting up our offices and developing our system designs, but also including significant initial marketing work. Our start-up expenses for these first months will be used for further product development, legal costs, payroll, marketing and typical expenses associated with opening our first office. The founders will provide the first round financing to launch the company, initiate a small production run of our Personal Locator Device(s), and initiate further product development, while marketing and pre-selling our devices.

In addition, we will need another investor/partner to provide funds to cover the cash necessary to see us through our first year in business, as we begin to make and sell our products. We plan to fund future growth from sales revenues.

Initially, we will be leasing a relatively small office space for administrative functions and an electronics bench lab in order to keep our first year expenses to a minimum, as we continue product development while marketing and pre-selling our Personal Locator Device(s) prior to production.  We will consider a larger office space only when we have outgrown our current facility, dependent on sales, budgets and personnel needs.

We have identified the following equipment needed for opening our first office:

• Engineering lab equipment.
• Software and hardware development tools.
• Office furniture for three (sales and administrative) workstations.
• Dell Computer Systems – three desktop computers, two laptop computers, laser printer, color printer, digital camera, scanner, GPS cell phones and a broadband internet connection.
• Telephone system, and two GPS cell phones.
• Copier and fax machine.
• Additional costs for assorted professional service providers’ fees including business, development, legal and accounting providers.
• Professional website development and maintenance.
• Two leased company vehicles and associated costs.

Details of our start-up requirements can be found in the Start-up tables, below.

2.2 Company Ownership

RQM Technologies is owned and operated by its founders, Steven M. Bloome and Andrew F. Siska.  We are currently in search of an investor/partner(s) who will bring more to RQM Technologies than just financing. The ideal Investor/Partner(s) we are seeking should bring expertise in the areas of legal, financial, and international regulatory issues, as a portion of our target market(s) will be international in scope in the near future. The Investor/Partner(s) will receive an equity position in the company and sit on the Board of Directors.

More details on the company’s founding partners may be found below, in the Management Summary.

Products
RQM Technologies develops, markets and sells miniaturized, low-cost, electronic, remote Personal Locator Devices using unassisted GPS/GSM technology, which is not reliant on cellular towers to relay data. The remote Personal Locator Device system includes a small programmable external device (approximately 2″ x 2″ x 3/8″) fitted with GPS/GPM transceivers, which can be activated from a remote location anywhere in the world to instantaneously pinpoint the wearer’s location, speed and direction of travel, accurate to within 3 meters in real-time. This will prove an invaluable tool in helping families and law enforcement agencies locate missing persons within seconds, with the distinct potential of saving lives by finding missing persons much faster than any other current technology available to an end-user.

Our remote Personal Locator Device(s) immediately locate and help rescue lost or missing children, teens, the active elderly (including Alzheimer’s patients) pets, military personnel in the field or at sea, with a simple cellular phone call or computer key stroke. These same Locator Devices can be used in the business arena in order to better manage the logistics of outside personnel, sales people, deliveries, fleet operations, valuable packages or equipment in transit, helping to increase their business efficiency and thus improve profits.

• Phase 1 Personal Tracking Device (PTD) will be cellular-tower-reliant, in order to offer the lowest price point product to the end-user. These will work well in areas where cellular towers are present, such as most cities across the continental U.S., still accurate in real-time to within about 9 feet.
• Phase 2 PTD will utilize military technology not reliant on cellular towers, but rather linking directly to the GPS satellite network in orbit. These will be effective anywhere in the world, for applications where cellular towers are not present, such as mountains, lakes and oceans, deserts, and small or remote cities where cellular towers are not present. Although slightly more expensive to the end-user, we feel this product will address the problems associated in areas without cellular coverage, not currently available outside the military. The Phase 2 PTD is a unit designed for the military, sportsman, hikers, campers, boaters, and other adventurers.

Both units are being developed simultaneously, and will be available for pre-sale orders in the Fall of 2004.

Services
As RQM Technologies grows, we will be defining and developing additional profit centers for our company and investors by offering value-added services such as training classes, seminars, on-site programming, private labeling for our channel market resellers, and other ancillary revenue streams based on individual client needs.

The Personal Locator Device (or Personal Locator Service) industry is fairly new in the consumer market, but as most analysts agree, this is the beginning of a brand new industry with the potential for explosive growth due to the rapidly decreasing technology costs, which will allow consumers to afford and utilize a technology which was originally developed by, and for, the military in the 1970’s.

Ovum Research states that “Location Services” revenues will grow to $18 billion by 2006.  ABI, a NY based technology research firm states that the global personal GPS market will be propelled to more than $22 billion by 2008. While there is a market potential for more than a billion users worldwide, we are estimating a more realistic long-term market for Personal GPS/GSM technology, initially marketed within the United States.

Our Market Analysis focuses on five key potential customer groups:

• Family Consumers
• Original Equipment Manufacturers (OEMs)
• Businesses
• The Military
• Political and other Government Consumers

4.1 Market Segmentation

Our market segmentation focuses on five key areas of potential customers. Our targeted market segments have so far failed to meet their own needs for low-cost, programmable tracking devices by developing such systems internally. While it is difficult to make an exact classification of the market needs for such a new electronics product, our research suggests the following (full market analysis details can be found below in the Detailed Market Breakdown topic):

Family Consumers: With over 875,000 children reported missing in the United States in just the last year, this low-cost device will help families concerned about the whereabouts of their children, teens, elderly parents (including Alzheimer’s patients), and pets, by enabling them to keep tabs on their loved ones’ locations at any given time. One of the many programming capabilities of this device will allow the family to set distance parameter guidelines, such that once the wearer of the device (for example, a young child) travels beyond a set distance from the “base” unit, the remote unit is automatically activated to alert the “home base” unit (a cell phone, pda or computer) of the child’s location, direction and speed of travel. This will be a great asset in assisting law enforcement agencies in recovering missing persons within minutes. Statistics from the FBI indicate that missing children who are murdered are usually killed within three hours of abduction. The RQM Technologies Personal Tracking Device (PTD) will save lives, by immediately alerting the “base” unit, aiding in timely tracking and rescue by law enforcement agencies. Another programming capability is the ability to download all medical information, contact information, emergency numbers, etc., in the event an individual is found incapacitated, allowing emergency teams to treat a patient effectively, while alerting the guardian of her child’s, parent’s, or pet’s whereabouts.

Channel Sales to Original Equipment Manufacturers (OEMs): As the heavily saturated markets of cellular phone carriers and computer manufacturers grow more competitive each year, both segments are continuously looking to add new technologies and systems to draw consumers to their specific and sometimes proprietary products and services. The RQM Technologies remote devices are designed to be used with a “home base” unit, (a PDA, most cell phones or computer), and we see great potential to partner with cellular providers, cell phone manufacturers, computer manufacturers and resellers. This natural synergy between our product’s capabilities and this market segment’s needs should prove to have a large and positive impact on the awareness of the RQM Technologies name and products, as well as increasing revenues through positioning our products with the leaders of this market segment. It is our understanding that cellular phone providers will be incorporating the technologies used in our “home base” units into their cell phones within the next three years. This will prove invaluable for RQM Technologies, as we position ourselves as the leader in this remote technology, which will work with almost every new cell phone manufactured by 2006 – 2007.

Businesses: Our product enables a business location to keep real-time tracking of company vehicles, valuable packages, outside employees, deliveries, etc. We believe our device will be viewed by businesses as an economical way to increase productivity, giving them real-time data on the locations of their field employees and vehicles at all times, and helping to better manage fleet and deliveries logistics. One of our key strengths in this market segment is the low one-time cost, rather than a recurring fee for usage, adding to the business’s ROI for our products.

The Military:  According to recent Department of Defense press releases, the military appears to be searching for a device such as ours. The United States Coast Guard, for instance, is called upon for Search and Rescue missions more than 40,000 per year, on average. The problem with the currently used “beacon system”: Since 121.5 MHz beacons transmit anonymously, the only way to ascertain the location is to dispatch expensive resources to investigate. Current beacon systems can take up to an hour to translate information, while only providing vague location data, forcing time intensive and expensive Search and Rescue (SAR) missions. In the field, the RQM Technologies’ remote unit will save lives, finding those missing in action, and locating sailors lost at sea. Their use will also taxpayer dollars, making Search and Rescue missions shorter and less expensive. A consultant to the U.S. Navy has indicated solid interest in two of our devices for use in the military.

The Political Market: According to statistics from specialized insurers like Hiscox (UK), political kidnappings are prevalent in restive countries such as Colombia, Mexico, and the Philippines; they are also on the rise in smaller countries such as Turkey and Trinidad. The governments of these countries are spending millions of dollars in ransom each year in order to minimize publicity and embarrassment. By fitting political figures, captains of industry and high profile businessmen with our device, we believe this trend will decrease in the countries which use our product, proving its efficacy in the field and sparking interest from other countries.

Our research shows that all current competitors with similar products require the user to log on to the competitors website (or phone into call-centers) to actually locate the missing person, while incurring monthly fees ranging from $20.00 – $40.00 per month. In essence, their systems dictate that the users must be located at their internet-accessible computer in order to use the competitors’ systems. Imagine that you are a mother, visiting a park with your child. Suddenly, you turn around and cannot see him – he has disappeared! With our competitors’ systems, you would have to run home to log on to your computer, losing valuable time and probably increasing the distance between yourself and your child. With our system, however, you simply turn on your PDA or cell phone while still at the park, and view your child’s location, direction and speed of travel while you are still in close proximity. The RQM Technologies systems will allow a user to locate the missing person(s) from potentially any cell phone, wireless Palm Pilot, or PDA, freeing them from the need to be in front of a fixed computer, while increasing real-time efficiencies. This important difference of a few minutes will literally translate into saving lives.

In addition, we project the following secondary long-term markets:

Maritime Market: Personal Flotation Device (PFDs) and Life Boat companies are typically manufacturers of textiles, and do not generally have the expertise to develop high-end global positioning satellite electronic tracking systems. We are planning on lobbying the Senate, through our consultant to the U.S. Navy (and Coast Guard), to enact laws mandating that these life-saving devices be fitted in all Personal Flotation Devices. This would save lives, and save taxpayers hundreds of millions of dollars in costs associated with traditional U.S. Coast Guard Search and Recovery methods. The Coast Guard admits that radio beacons are outdated technology, and they are currently implementing a program called Rescue 21, searching for better ways to locate missing persons at sea in a more timely and efficient manner.

Pet Supply Chain Stores:  RQM Technologies Personal Locator Device is small enough to fit onto a pet collar. We are planning to partner with large pet-supply chains such as PetCo, PetSmart, etc., as well as pet collar manufacturers, to make this technology more accessible to consumers worried about their pets wandering off.

4.1.1 Detailed Market Breakdown

Family Consumer Segment
We predict our systems will appeal strongly to families concerned about the safety of their loved ones. According to the FBI’s National Crime Information Center (NCIC), 85% to 90% of the 876,213 persons reported missing to America’s law enforcement agencies in 2000 were juveniles (persons under 18 years of age). That indicates that 2,100 times per day, parents or primary care givers felt the disappearance was serious enough to call law enforcement. In addition, 152, 265 of the persons reported missing in 2000 were categorized as either endangered or involuntary. The number of missing persons reported to law enforcement has increased from 154,341 in 1982 to 876,213 in 2000. These figures represent an increase of 468%, and the numbers sadly continue to rise. According to the Missing Children Society of Canada (MCSC), in 2002 there were 66,532 children reported missing in Canada alone. And even more frightening, the National Center for Missing and Exploited Children (NCMEC) reports that 74% of abducted children who are murdered are dead within three hours of the abduction.

These figures indicate the strong market need for a method of quickly and reliably locating missing children. This so-far untapped market is quite large, even just within the U.S. According to the 2002 U.S. Census Bureau reports, there are 60,492, 447 are under 14 years of age in the U.S., including:

• 33,050,162 children in elementary school (grades 1-8)
• 4,005,938 children in kindergarten
• 4,613,179 children in nursery/preschool

But the family market also has to worry about its elderly loved ones. According to the same census report, there are 40,144,000 adults over 62 years of age in the U.S., 4.5 million of whom have Alzheimer’s disease. With a median income in the U.S. of $51,742 per family, our family consumer market in the U.S. has the potential for selling our affordable devices for over 60,492,447 children under the age of 14, in addition to over 4,500,000 active senior citizens afflicted with Alzheimer’, based on the above figures, for a combined target market of over 64,992,447 consumers.

Business Segment
It is more difficult to determine exact numbers for the business segment, as specific data is not as readily available. However, as of 2001 (latest census data available) there were 12,753,076 businesses operating in the U.S. which fit our target market, meaning they have a strong or immediate need for our products; this number excludes others, such as retail sales, wholesale traders, information management, education, public administration, or other services not defined.

Business breakdown by employment in specific industries:

• 2,405,825 Americans work in agriculture, forestry, fishing, hunting and mining.
• 9,161,256 work in construction.
• 17,067,103 work in manufacturing.
• 6,884,607 work in transportation, warehousing and utilities.
• 12,486,846 work in professional, scientific, management, administrative and waste management services.

The price points for similar Personal Locator Device systems using GPS/GSM technologies in the business segment are currently in the $200 – $2000 range, and in most cases, do not offer the remote abilities or programming capabilities for specific businesses needs in managing logistics and tracking. We believe our low prices, combined with these features and the autonomous internal tracking ability (not reliant on a vendor’s website with monthly fees) will be very attractive to the business segment.

Military and Government
On an average day, the United States Coast Guard assists 192 people in distress, and conducts 109 search and rescue cases. In 2000, the Coast Guard responded to 40,264 calls for assistance – from a broad spectrum of the public ranging from recreational boaters in distress to the captains of freighters sinking in gale-force winds. During that same year – on a share of its operating expenses, totaling $342 million – the service saved more than 3,400 lives and saved over $80 million in property. Our system will shorten the duration of current Search and Rescue missions, which in turn will allow rescuers to locate victims at sea faster. This will not only save more lives, but will cut costs for the United States Department of Defense.

This same system used at sea would immediately alert the deck’s computers if a serviceman at sea fell overboard, once the remote unit is programmed to be water activated. We have a preliminary interest from the U.S. Navy, thanks in part to our ability to program individual remote units with medical histories and other pertinent information for each serviceman’s remote unit. By using our system, coupled with encrypted signals for the military, our programmable PTDs also work in deserts, jungles, mountains, etc., showing longitude, latitude, altitude, speed and direction of travel, representing “eyes in the skies” for the military to know exactly where their field personnel are located at any given moment.

We have also developed a lower-cost unit for the U.S. Navy which relies on “line of sight” technology, which is affordable enough to equip every seaman in the U.S. Naval fleet. We have already received an indication of interest from the U.S. Navy, through our consultant, due to the extremely low cost and efficacy of the product.

4.2 Target Market Segment Strategy

Our choice of target markets is strategic, and reflects our strengths and weaknesses.

The Family Consumer Market is key for RQM Technologies for several reasons. First, as a system that works anywhere in the world, (versus all of our competitors’ cellular tower reliant systems), our potential market is 8 billion people worldwide. Capturing a market share of only 1/10 of 1% of this potential, we would realize the sale of 8 million units. As we enter this market segment, we will be aggressively seeking partner companies such as cellular phone providers and computer OEMs (included in channel sales to further penetrate the consumer market) and associations such as The National Center for Missing and Exploited Children, The National Alzheimer’s Association, Amber Alert Network, etc. An alliance with any of these type of organizations will add significant credibility, branding and positioning, thus generating sales for RQM Technologies.

The Channel Sales to OEMs segment will be strong for several reasons. By positioning our product for cellular providers, cell phone manufacturers, and computer manufacturers as an ancillary item to help them market their own products, we will effectively increase our sales force substantially, without the expenses of payroll, benefits, etc., because their sales force(s) will sell our products for their respective companies. This would also positively impact branding, making our name more commonplace in all the markets discussed herein. By securing alliances in this market, we also position ourselves as the leader in this new technology and its associated applications. This will foster confidence in the RQM Technologies’ product, increase sales dramatically and help our company break into the global market.

We will also be seeking entry into the automotive market to compete with LoJack. Our system is more effective than the current LoJack system, and with a lower price point, we feel we will be able to partner with the automotive manufacturers. The RQM system will allow them to offer a more efficient product to their customers, while increasing their profit margins for this type of technology.

The Business Market is more difficult to estimate. RQM Technologies’ products will benefit any business that depends on knowledge of the whereabouts of their products, services, vehicles, valuable parcels or outside personnel are on a real-time basis. The keys to success in this segment are threefold:

• An affordable, one-time cost per unit for the business, instead of our competitors’ higher-priced units with recurring monthly charges.
• The ease and ability to self-manage this program internally without the necessity to use call centers or websites for a monthly fee.
• The programming capabilities of our units, which allows businesses to easily customize each individual unit based on their unique needs for each individual application.

The Military Market: We have a strong contact with a consultant to the U.S. Navy, who feels, based on recent DOD press releases, coupled with previous projects on which he has successfully consulted, that we are developing a product the military would greatly desire because of its purpose, abilities and low price point. One of the benefits to the programming capabilities of our PTD is the ability to program each soldier’s medical information and history into their remote units, so that any medic attending to them in the field would immediately have this valuable information. The U.S. Navy will be very interested in two of our locator systems.

The Political Market may be more difficult to penetrate because of the complexity of foreign governments, and international laws, and wide variations in cultural approaches to safety and government oversight of individuals. However, we feel we will still be able to enter into agreements with several smaller countries that are in the throws of political turmoil. We project that the benefits our products provide will quickly foster confidence in their potential, and will not be seen as a “Big Brother” device. Once our products have proven their efficacy by saving individuals from kidnappings, especially high profile officials, we believe markets in other countries will quickly open up to RQM Technologies.

4.3 Service Business Analysis

We are part of the life-saving electronic devices industry, specifically Personal Locator Device(s), an industry projected to grow to over $22 billion dollars within the next five years. Market leaders in this small but growing personal locator industry are iTrack, Wherify and uLocate, and LoJack for the automotive industry. RQM Technologies’ Personal Locator Devices (PLDs) are smaller and more easily concealed, less expensive, uniquely programmable for individual needs, and more user-friendly than our competitors’ products. 

RQM Technologies will continue to conduct industry analysis to stay current on the nature and dynamics of this new and evolving technology (and emerging target markets) which, while in its infancy, is poised to experience explosive growth. This focus will help management develop insight and devise sustainable business and marketing strategies to assure future success and avoid making decisions based on blind assumptions, while continuing to develop next generation technologies to remain the leader in this industry.

4.3.1 Competition and Buying Patterns

In the Personal Locator Industry, consumers are searching for the most effective product at the lowest possible price; different market segments will put different emphases on ease of use versus reliability or cost, depending on their needs and budgets. Although we will emphasize some aspects of our products differently for the distinct market segments described above, our products beat the competition on all grounds.

Differentiate ourselves from our competitors.
This will be easy, as our PTD product has more capabilities, is easier to use, is more concealable and will work with most cellular providers. We need to establish our products as cost efficient, viable solutions for our target markets.

Build a relationship-oriented business.
For clients such as our channel market resellers, and institutional consumers like the military, relationships will be important. We will become a revenue-generating partner for them, not just a vendor, making these market segments increasingly receptive to our offerings. We must effectively convey the potential monetary value of the relationship, as well as the intrinsic value in being able to offer life-saving, user-friendly devices to their end-users and members.

Focus on target markets.
We need to focus our sales and marketing efforts strategically in order to succeed in our target markets. As a start-up company, we believe the consumer market and channel sales will give us the quickest launch and penetration while immediately generating revenues to sustain our company’s growth and expansion into other markets. The business market will likely be the next key, as we promote our products as tools for businesses to manage outside personnel and fleet costs and logistics.

Fulfill the promise.
We can’t just market and sell our products, service and support; we must actually deliver as well. We need to make sure we have the technological knowledge we claim to have, while keeping up with evolving technologies to advance the capabilities of our newest products and services.

5.1 Competitive Edge

Our competitive edge lies with our innovative products, as well as the successful planning and implementation of our marketing plans.

RQM Technologies’ unique application of a remote miniaturized unit that incorporates an end-user programmable transmitter/receiver inside a unit only 2″ x 2″ x 3/8″ that has GPS/GSM technology is relatively new to the marketplace. It is this new technology which will make our Personal Locator Device(s) attractive to resellers such as our channel market segment. While not widely known, most of the major cellular phone manufacturers will be incorporating GPS technology into their newly manufactured cell phones over the next three years. We believe this is a key advantage for us, as our remote unit has been designed to work with these next-generation cell phones. We are a couple of years ahead of our competition in the sense that our remote unit will immediately work with these “new technology” cell phones.

Another competitive edge is our positioning as a strategic ally with original equipment manufacturers of PDAs and cellphones, who are clients more than customers.  By building a business based on long-standing relationships, we build defenses against competition through the demonstrated efficacy of our products, and our partners’ loyalties.  For our channel sales partners, our products translate into new customers and additional recurring revenues. The longer the relationship stands, the more our clients will understand what we offer them and why they need it, further solidifying our intended relationships with major cell phone carriers and computer manufacturers.

Competitors’ Disadvantages
While RQM Technologies competes against other companies and technologies meant to provide similar products and services, they cannot match ours. Our competitors have several disadvantages:

Effectiveness:

• Most competitors do not offer remote miniaturized concealable units which users can wear; their devices would be especially bulky, awkward, and obvious on children.
• Their products do not allow for a locating “home-base” which is a cell phone, Palm Pilot or wireless mobile computer or desktop anywhere in the world, which can report on the unit’s location instantly, even while both units (remote and base units) are in transit.
• Our competitors’ devices cannot be programmed for individual remote unit applications, such as water activation, parameter limit alert, medical history of the wearer, etc.
• The units cannot be armed from a remote location.

Price:

• Greater initial cost to the end user ($200-$2000), with fewer features and capabilities.
• Recurring monthly fees to the end user with most systems.

The most significant difference between our system and our competitors’ is our use of “unassisted” GPS/GSM technology. Unlike our competitors’, our system is not reliant on being in an area where cellular towers exist. Our competitors’ products do not work in areas where there is no cellular coverage, or less than the three three cellular towers needed for triangulation. Our system uses military inspired radio frequencies which transmit directly to the GPS satellite network. Our system will work anywhere in the world, including deserts, mountains, oceans and all other remote locations.

RQM Technologies also eliminates the need for the “tracker” to -hone into a call center, or to sit in front of a computer to download from a our website (both for a monthly fee ranging from $20-$40/month) in order to find someone who is missing, losing valuable minutes which can mean the difference between life and death. Our Personal Locator Device(s) allow the chase unit (wireless Palm Pilot, laptop, and most cell phones) to follow the remote unit, even as both units (remote and “base unit”) are in transit.

5.2 Marketing Strategy

Our most important marketing goal as a start-up is to build product and brand awareness. The way we go about this task will vary from one market segment to another.

Family Consumers

While it is widely know that child abductions are on the rise every year, and that Alzheimer’s disease afflicts more seniors annually, it is not well known that products such as the RQM Technologies’ Personal Locator Device(s) are available at such an affordable cost. We are anticipating the end-user’s cost at less than 33 cents per day for one year, based on a price point of only $120.00 per unit to the end user.

To raise awareness of our products among Family Consumers, our main marketing strategy hinges upon a high-publicity, one-time “stunt,” to take place in late October or early November of 2004.

With the knowledge, assistance and approval of a respected police department, (and media outlets) we plan on staging a demonstration child abduction and rescue to show the system’s immediate response and efficacy. In order to comply fully with the law, we will ask a police officer to perform the character of the abductor, in portraying the “abduction” of his/her own child; this will minimize any potential risk, keeping the child firmly under the protector of his or her own parent throughout the demonstration. After a 10 minute head-start, another officer, with no foreknowledge of the “abductor’s” intended destination, will then track down the “abductee,” in order to demonstrate how quick and easy it is to locate the abducted child in a timely manner that could ultimately save the child’s life.

For this demonstration, we will invite a respected television news crew or popular talk show to follow the staged abduction in order to document our success, while broadcasting this life-saving demonstration nationwide. As an incredibly worthy cause, we believe that many media outlets will want to run this human-interest story in an effort to help aid against child abductions and wandering Alzheimer’s patients by helping to make our technology public knowledge. We expect this nationwide publicity to break down most existing barriers of entry into our other targeted markets.

We will aggressively target publicity of our staged abduction through TV shows such as Oprah, The Maury Povich Show, Regis and Kelly, 60 Minutes, and all others that can sway national opinion that cater to family and safety issues. We believe that this and further demonstrations will be very well received, while gaining invaluable exposure as we begin branding our name while positioning our company.

We will then market heavily in publications geared towards parenting and Alzheimer’s associations for the consumer market, while aggressively seeking free publicity through print, radio and television, specifically once our Personal Location Device has demonstrated its efficacy during the staged abduction.

Channel Market to OEMs

We will focus our efforts to partner with Original Equipment Manufacturers on nationwide cellular providers and computer manufacturers. We will emphasize our products’ potential as an additional source of revenue for them, both at the front end for product sales, and in the case of cellular providers, with recurring monthly revenues; this should make our product very desirable as part of their product lines. By solidifying these partnership agreements, we will also enable cross-marketing back into the consumer market through their sales forces’ efforts and their advertising, increasing our sales efforts nationwide without the expense of additional personnel to cover the entire U.S. We believe that once partnered with these companies, our channel market partners (resellers) will advertise the RQM Technologies Personal Locator Device(s) as new features in their traditional outlets, primarily print advertising and in-house POS material, in order to increase mutual sales and brand awareness, benefiting both organizations, while fitting a nation of families with our potentially life-saving device.

Business Market

We will be marketing to businesses through traditional sales efforts, such as advertising in trade publications and establishing a presence at select trade shows geared towards businesses in our market segment. For the larger companies we target, we will offer the free use of a limited number of our products for a limited time, to prove their efficacy in controlling costs of outside fleets and personnel, in order to penetrate and gain market share in this segment. We believe once senior management of these businesses feel more in control of the whereabouts of their outside concerns (personnel and vehicles, deliveries, packages, equipment, etc.) they will understand that they can, in essence, manage their outside logistics from the comfort of their office more efficiently than through traditional methods.

Military and Political Markets

Our military and political markets will necessitate a slightly different and more personal approach through specific relationships we have developed with individuals inside these market segments. We feel these markets are worth pursuing aggressively. We are currently in discussion with a consultant to the U.S. Navy, who feels the military is looking for a device such as the RQM Technologies’ Personal Locator Device(s), in order to better protect their servicemen.

5.3 Sales Strategy

We need to convince consumers of the serious benefits of RQM Technologies’ Personal Locator Devices. Except for vehicle, equipment or package tracking, we sell a “life-saving locator-rescue product,” not an electronics system that relays GPS/GSM location data. Once our device has been proven effective in a real-life situation, we firmly believe that multiple media sources will want to run our product’s life-saving results as a human interest story. Any press, print or broadcast third party endorsements will be included in future sales and marketing literature. We are planning to stage a mock-abduction, with the media present in order to document and feature the efficacy of our product on their respective television programs or in their print media.

We have to sell our service and support. The RQM Technologies’ Personal Locator Device(s) remote unit, while very easy to program and facilitate, will be better received if we offer (fee based) training services for our larger clients, such as our channel sales partners and large corporate accounts. Simplifying the understanding and implementation of our system will help encourage the daily use and sales efforts of our product, while generating additional revenues for RQM Technologies, our channel market resellers while increasing the ROI for our investor/partner(s).

The Yearly Total Sales chart summarizes our ambitious sales forecast. We expect sales to increase dramatically as the RQM Technologies’ Personal Locator Device(s) demonstrate its efficacy, and is well received in our target markets. Once our system saves a life, we will aggressively pursue widespread press and publicity, at which point, we believe all barriers into the consumer markets will be eliminated, while opening markets we may not have targeted as primary markets.

5.4 Sales Forecast

The important elements of the sales forecast are shown in the table below. We are using aggressive forecasts that will achieve momentum, revenues, positive cash flow and profitability. We feel these are attainable goals, as we plan to offer our Personal Locator Device(s) in minimums of 1000 unit orders to our channel, military and political markets. Units will be sold to our individual and family consumer market either through our channel markets, or directly for a slightly higher fee through our website.

5.5 Web Plan Summary

The RQM Technologies’ website will be the virtual business card and portfolio for the company, as well as its online “corporate home” for business-to-business marketing and investor relations. It will showcase our products and services, as well as hosting a portfolio of all past and current real-life testimonials. The website needs to be simple to navigate, yet well designed and flexible, to accommodate changes in our online needs.

RQM Technologies is dedicated to helping find those who are lost, and will entertain adding links to recognized agencies that have the same goals, as long as it adds value to the company. To show our concerns and good will, while reminding visitors of our products’ potential, we will add banner links to agencies such as The National Center for Missing and Exploited Children (NCMEC), AMBER Alert, Child Search and other national missing children’s programs. We will also have a link to the National Alzheimer’s Association.

The key to the website strategy will be combining a very well-designed front end, with a back end capable of recording leads, processing online orders and information requests, offering online manuals and running RQM Technologies’ own online marketing program for OEM affiliates.

5.5.1 Development Requirements

The RQM Technologies’ initial website will be developed with few technical resources; a simple hosting provider will host the site and provide the technical back end.

The design, updates and maintenance of the site will be done by contracted web designers, for a more professional image of our company, freeing up senior management to focus on company growth and product development. As the website rolls out future developments such as new products, product add-ons and software updates, ancillary products, newsletters and downloadable market research reports. We may need to contract further technical resources to build the trackable download information with the capabilities of transmitting and organizing extensive information.

5.6 Milestones

The following table lists important program milestones, with dates and managers in charge, and budgets for each. The milestone schedule indicates our emphasis on planning for implementation.

What the table doesn’t show is the commitment behind it. Our business plan includes complete provisions for plan-vs.-actual analysis, and we will be holding follow-up meetings every month to discuss the variance and course corrections.

RQM Technologies’ management will be slow to hire new people, and very loyal to those who are hired. We believe our employees will be our greatest asset, and therefore, as we increase personnel, we will be looking only for individuals whose experience, skills, contacts and expertise will help foster the development and growth of our company. While there is a temptation to hire inexpensive personnel in order to further control costs, our philosophy is that there is a better rate of return in hiring more experienced personnel with expertise in areas we need, so they can immediately contribute to helping attain or exceed the company’s goals and objectives.

Initially, RQM Technologies’ day-to-day operations will be managed by its founders, who prefer a close, hands-on approach to all aspects of their business. As the company grows, we will be adding accomplished Executive Management at the C-Level in order to manage our growth with expertise in the areas most needed. RQM Technologies is a small company with a minimum command hierarchy and a maximum of community spirit and cooperation. Once profitable, we intend on donating a small percentage of proceeds to charitable causes that are within our target market(s), both as a measure of good will and as an added marketing leg. Despite the small size of this company, our business practices are centered on implementing our goals, never losing sight of profitability objectives and ROI for our investor/partner(s).

In order to minimize our start-up costs, we will continue to outsource the manufacturing, industrial design and packaging of our devices until the product demand warrants a more profitable method of producing the quantities needed to fulfill sales orders. Only at that point will we consider manufacturing the products ourselves.

6.1 Management Team

Steven M. Bloome – President/CEO
Mr. Bloome is a 25 year veteran in Sales and Marketing Management, who has worked for such companies as MobileComm – A BellSouth Company, Bear Stearns, Telecast Productions and HiTec Group, International. Mr. Bloome’s strengths include the ability to understand a wide range of business profiles, practices and markets. His accomplishments demonstrate superior strengths and skills in the developing and managing successful sales forces, as well as locating and developing untapped market niches in numerous and diverse industries. He is experienced in partnering with recognized industry-leading companies to add scope, strength and brand awareness to both partner companies in win-win situations. He brought the first battery program to the paging industry by partnering MobileComm with Ray-O-Vac Battery, as well as partnering HiTec Group Int’l with Ameritech to become the Special Needs Center in a five state area.  Mr. Bloome is also experienced in company start-ups, turnaround situations, new product launches and developing a national presence for companies.

Andrew F. Siska – Chief Electrical Engineer/CTO
Mr. Siska has owned and acted as Chief Electronics Engineer of Embedded Systems Electronics, Inc. (ESE) since 1994 and is an active member of the Institute of Electrical and Electronics Engineering. As CEE of Embedded Systems Electronics, Mr. Siska has been contracted by major electronic companies to initially design or improve products such as communication devices, imaging systems, digital camera circuitry, computers, video imaging systems, medical equipment. In his field, Mr. Siska is considered an expert in hardware, software, and electronic engineering. Mr. Siska holds a Bachelors of Electronics Engineering from the Ohio Institute of Technology, and an MBA from the Keller Graduate School of Management.

6.2 Personnel Plan

Immediate personnel plans call for a minimum of three, to a maximum of five employees for the first year, unless unforseen sales growth dictates the absolute need for additional personnel. After the first year, we anticipate the need for additional personnel in the areas of office management and human resources, experienced technical sales professionals, and financial and technical operations. We may hire these addition personnel on a part-time basis, and move into full time positions as warranted by the company’s growth.

As a start-up company in an  emerging and changing industry, we have intentionally designed a conservative plan, looking to ensure the achievement of our corporate goals along with a solid ROI to our investor/partner(s). We will of course revise our financial plan throughout the first year based on actual figures in sales, manufacturing costs, technological advances, personnel, office space, marketing costs, and so on.

Securing the patents (applied for) for our advanced devices and systems in a new and emerging industry will add immediate value to RQM.

Our plan’s success is also predicated on the following assumptions:

• Securing seed money with investor(s)/partner who will bring added value to RQM. 
• The acceptance of our device(s)/systems by the public, the business sector and the military.
• The ability to attract strong C-Level management to our team as needed.
• Managing growth and production costs so as to maintain projected margins and cash flow.
• Staying ahead of technological advances in this field, and reacting to these changes in a timely and efficient manner.
• Managing the start-up of RQM with minimal personnel until steady growth necessitates hiring additional department management and support staff.
• Partnering with strong OEMs quickly in order to penetrate and dominate market share.
• Partnering with industry leaders (such as UPS, the U.S. Navy, etc.,) to assist in demonstrating the efficacy of our systems.
• Success in marketing our products for brand awareness and positioning.
• Adjusting and adapting to the market trends within this new and emerging industry.

7.1 The Investment Offering

We are currently in search of an investor/partner(s) who will bring more to RQM Technologies than just financing. The ideal Investor/Partner(s) we are seeking should bring expertise in the areas of legal, financial, and international regulatory issues, as a portion of our target market(s) will be international in scope in the near future. The Investor/Partner(s) will receive an equity position in the company and sit on the Board of Directors.

The success of this plan is predicated on securing start-up funding from an investor/partner in exchange for a minority equity stake in RQM. We are only looking for investor/partners that will also bring additional added value to RQM, such as expertise in finance, international business, C-Level contacts, industry networks, and more. Additional second round funding may eventually be needed to go into a larger scale production run, if RQM cannot self-fund our own growth. However, we believe that we will be in a position to fund ourselves, limiting the risks while increasing the ROI on our investor/partner(s).

Of particular interest to investors is the Dividends row in the Cash Flow table. We project increasing dividends, which will be distributed first to outside investors; the founders will defer dividends until the third year.

7.2 Break-even Analysis

For our break-even analysis, we assume per month running costs which include our full payroll, rent, utilities, and an estimation of other running costs. Payroll alone, at our present run rate, is only about $18,000 per month. Margins are harder to estimate. Our overall average price point of $120 per unit is based on a cost of $60 (+ or – 2%), or a minimum gross profit margin of approximately 50%. We hope to attain a margin that high in the future as our cost per unit decreases, as manufactured volume increases, while focusing on a 20%-30% net profit.

The chart shows what we need to sell per month according to these assumptions in order to break even. This is about 80% of our planned average 2004 – 2005 monthly sales goals, even with four months of no revenue before sales begin;  therefore we believe we can realistically achieve these goals and maintain these levels.

7.3 Important Assumptions

The financial plan depends on important assumptions, most of which are shown in the following table. The key underlying assumptions are:

• A slow start as we educate potential customers about this new technology.
• In contrast, we assume steady growth once the efficacy of our product and services are demonstrated. 
• That there are no unforeseen changes in technology which could make products immediately obsolete, while newer technologies and in-house innovations will only advance the scope of our product line and target markets.
• Access to equity capital and financing sufficient to maintain our financial plan as shown in the tables.
• Ability to self-fund further growth after Start-up financing is secured.
• Maintaining or improving profit margins based on lower costs per unit for higher quantity production runs.

7.4 Projected Profit and Loss

The Profit and Loss table, below, shows our projected sales, cost of sales, and operating expenses for the first three years. of particular note are the high Sales and Marketing expenses; our research indicates these approximate spending levels will be necessary for launching such a new and unique product successfully. We are currently taking bids from four prominent advertising agencies to manage this aspect of our product launches.

All costs associated with manufacturing and distributing the physical products can be found under cost of sales in the Sales Forecast table, above.

We anticipate that sales will begin to generate a stable profit for RQM in February of 2005, about halfway through our first year.

7.5 Projected Cash Flow

The Cash Flow table below shows that while initial cash flow will be out of the business, sufficient start-up funding, combined with projected sales revenues, should allow us to maintain a high positive cash balance throughout our first year, as we launch our products.

Of particular interest to investors is the Dividends row, below. We project increasing dividends, which will be distributed first to outside investors; the founders will defer dividends until the third year.

7.6 Projected Balance Sheet

The Balance Sheet shows an increasingly stable cash position and net worth over the first three years, as our products become more established in the market. We do not plan to borrow money to fund growth, so our liabilities in all years represent simple Accounts Payable stemming from ongoing operating expenses.

7.7 Business Ratios

Our main business ratios can be found in the following table, along with standard ratios for our industry, Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing (e.g. GPS), NAICS code 334220. We do intend to improve gross margin, collection days, and inventory turnover.

Our high gross margin reflects the nature of our particular kind of electronic equipment; a much higher percentage of our products’ value lies in the innovative design and (patents applied for) customizable interface, than in skilled assembly (the typical distinguishing feature in this industry). Our ratios will, therefore, differ from others in this industry.