Composite Corporate Plan 051208

7/28/2019 Composite Corporate Plan 051208

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Composite Corporate Plan 051208.doc Date Printed 5/15/2008

MACHINETALKER PRODUCTSMARKETING AND SALES PLANNING DOCUMENT

TRAVELING SECURITY SYSTEMS

AND WIRELESS INDUSTRIAL CONTROL

THIS DOCUMENT DESCRIBES THE DEVELOPMENT AND SALE OF

UNIQUE PRODUCTS FOR MAINTAINING SECURITY OF SHIPPING

CONTAINERS AND FOR THE ESTABLISHMENT OF A GLOBAL

TRACKING SERVICE TO MONITOR VALUABLE CARGO IN TRANSIT.

IT ALSO ADDRESSES MACHINETALKER USE FOR WIRELESS DATA

ACQUISITION AND REMOTE CONTROL OF INDUSTRIAL PROCESSES.

HERO-APPROVED TO MONITOR AND TRACK

PALLETS OF MUNITIONS AND REPORT ANY

DISTURBANCE OF CARGO OR INVENTORY

EXPLOSION-PROOF INSTALLATION INSIDE

OIL REFINERIES FOR WIRELESS CONTROL

OF INDUSTRIAL PROCESSES

MachineTalker, Inc. 513 De La Vina St.

Santa Barbara, California 93101

Tel: (805) 957-1680 Fax: (805) 957-1740

www.machinetalker.com


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Composite Corporate Plan 051208.doc Date Printed 5/15/2008

Maintaining Security of Shipping Containers

The MachineTalker product is a battery-powered microcomputer with radio for mounting within a shipping

container to record and communicate container identity and to detect events that impinge upon the security of

its contents. These units automatically interact with other "Talkers" that reside in adjacent shipping

containers to facilitate redundancy and to report location or other information. MachineTalker features

relevant to the shipping industry are listed below.

1. Freight Manifest - A Talker traveling inside a shipping container can store and report on the entire shipping

manifest including: Source, Destination, Content, Ownership, Special Handling Procedures, Routing (if known), Time

Loaded, Time Sealed, and any other downloaded information.

2. Event Detection, Qualification and Reporting - Talkers can monitor detectors and sensors for intrusion, biohazard,

temperature, humidity, atmosphere, gases, and the like. They can be instructed to measure parameters for comparison

to a norm and to report or raise the alarm, through its radio, if there is any event or change.

3. External Network Connection - Through its radio it coordinates its presence with nearby Talkers in other shipping

containers. Together, a number of Talkers inside containers automatically interact to form a "community" to share

awareness among themselves of changes or events that can affect them or the cargo.

4. Reporting By Radio - The on-board Talker maintains a record of all events experienced by its own container withtime of occurrence and relative importance. It can be interrogated by an authorized person through its radio fromanother Talker. A Talker will also operate with a cellular modem or interconnected over the Internet.

==============================================

Wireless Data Acquisition and Industrial Process Control

The same wireless MachineTalker product can be re-configured to service a wide range of detectors

and sensors. It can be powered from a primary source or from batteries or by solar panel. Its

industrial job is to bring intelligent processing power out to a remote installation where it can operate

autonomously to measure and control processes and report by radio.

1. Event Detection, Qualification and Reporting (as above) - Talkers can monitor detectors and sensors for intrusion,biohazard, temperature, humidity, atmosphere, gases, and the like. They can be instructed to measure parameters for

comparison to a norm and to report or raise the alarm, through its radio or over cellular modem if there is any important

event or change. The latest version, CBM6, has built-in switches and can activate or terminate processes if

programmed to do so.

2. The CBM6 MachineTalker Operates 2 High Speed Analog Converters - The CBM6 operates fast enough to

digitize analog signals produced by vibration sensors mounted on large industrial machines. These vibration readings

are gathered by the Talker, qualified and passed along to a software program that analyzes vibration content supportingCondition-Based Maintenance (CBM) determination. For CBM, and change in the vibration pattern emanating from

industrial machinery often precedes catastrophic breakdown.

3. MachineTalkers Service Different Sensors and Applications - Talkers in explosion-proof enclosures will detectunusual vibrations in the bearings of rotating fans located throughout petroleum refineries. Talkers will service sensors

and detectors to provide environmental observation and analysis. The Company has tested sensors that detect CO2

(carbon dioxide), CO (carbon monoxide), Temperature, Pressure (PSI), Flow (GPM), Current (Amperes), Presence

(Infrared), Limits (Photo-Optics), Rotating Speed (Reluctance) and Vibration/Movement (3-axis Accelerometer).Certain Talkers carry sensors for temperature, movement and light detection while the current design will service

sensors for moisture, motion, direction (of movement), leaks, salinity and intrusion.


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Composite Corporate Plan 051208.doc Date Printed 5/15/2008 3

SECURITYSecurity Products Complete and OperationaliRFID

GuardDog UWB Intrusion Detector


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New Business Approach for Shipping Container Security

A Talker Controlled Ultra-Wideband Intrusion Detector

UWB-Talker Enhancement - The Company is in the process of merging the two separate products

pictured above to produce a single product for placement within a shipping container. It will have

all the attributes of a MachineTalker plus the ability to detect any change that occurs within thecontainer or any breech of its external walls.

The individual products are separate but complete in their own spheres of operation. The

interconnection has been implemented and the first prototypes are operating in test mode. A newphysical package must be designed that incorporates the two sections and that will employ a new

battery powered enclosure that is "hardened" to withstand the very rough handling and harsh

environment of travel over land and sea.

In this configuration the UWB-Talkers will communicate with other Talker units in nearby

containers or with a nearby gateway to reach a satellite or other long-distance communicationfacility. Local interrogation by another hand-held Talker will also be able to take a report.

Penetrating the Container Tracking and Security Market - Two years ago the Company soldToughTalker units to Kellogg Brown & Root to be used in a demonstration of identifying and

downloading freight information into containers they transport in Iraq. KBR completed software to

track the inventory and experimented with reading and writing information to the Talkers. Theproject was discontinued for lack of funding.

The iRFID units were made the central feature of a feasibility study by Rock Island Arsenal,whereby pallets loaded with munitions were tracked using Talkers that carried a listing of the

contents on the Pallet. These Talkers digested the freight manifest, woke periodically to report and

if moved. The Talker features allow a programmed sleep pattern to save on battery life and onlyawaken when disturbed by being moved. Their small batteries are expected to last at least 2 yearswhile the pallets of munitions are in storage. The Navy viewed results of the study and expects to

issue a request for quotation to build an entire tracking operation in the future.

The security of goods plus a better means to avoid losing containers should be important to the

shippers. Several companies responsible for moving goods have lost a significant number of

containers through misdirection, mishandling or by accident. The use of an on-boardMachineTalker would minimize the mishandling and could keep a container on the correct route to

destination. This Talker will also record and report any event that affects the container..

Conclusion - When completed, this new package will be easy to use by those who wish to protectand track a given shipping container and its contents. However, it is evident that success in this

market will require the cooperation of major shippers, consolidators, ports, transportation andinsurance companies, among others. To date, no Government or Commercial operation has made a

decision on how to accomplish the task of guaranteeing that containers arriving at a destination have

not been breeched. For this reason the Company is proposing to implement and alternative to thetracking and security methods that are discussed today and found unacceptable.


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Offering Single Security MachineTalkers on a Per-Trip Subscription Basis

An Alternative to Existing Business Models - If the Company is able to bypass all of the Agencies

and the objections of the shippers, and supply the means for tracking and security for an individualcontainer, it is expected that a tracking service business can be initiated that will not be impeded by

government and shipper inactivity. The Company plans to offer its new combined security product

on a subscription basis, whereby a customer rents the Talker unit for a single trip and returns it

when the trip has been completed.

These new Talkers will be rented, programmed and installed by the customer or its representatives.

This Talker unit will travel inside the shipment to report on contents, source and destination to anauthorized person anywhere on route. It will also record and report any environmental changes or

intrusion. Use of this rented Talker will minimize misdirection, loss and damage to shipments

while alerting authorities in the event a container is accessed at any time between source anddestination.

Making Contact and Reporting While On Route - Talkers are now able to communicate bycellular telephone connection and through the Internet. Both the world wide GSM and local CDMA

version are operational with Talkers and the Company has tracked MachineTalkers traveling inFrance, on the East Coast, in Santa Barbara and in the oil fields near Santa Maria. We expect that

this feature will be incorporated in the product that is prepared for the rental business. If so, thenew "traveling" MachineTalker will be able to report by telephone from almost any point on earth.

Revenue From Providing a Global Tracking Service - Preliminary plans and a CompanyConfidential disclosure have been prepared. They discusses the merit and the features of the Global

Tracking Service envisioned as the way the Company will capitalize on its existing Talker

technology when employed to track and secure shipments.

The Company will complete development of a composite product that embodies the Talker, the

GuardDog and cellular modems. This new package to be manufactured in quantity and offered forrent on a single-trip basis to individuals who wish to have a measure of security and the possibility

to find shipments that go astray. The unit will be rented for insertion at the source, and returned to

the Company after the shipment reaches its destination. Along the way it will have recorded

pertinent details of interest to the shipper. Once read-out the unit will be sanitized and returned toinventory to be sent out again when rented.

This is a subscription business and it will require a centralized tracking facility where computerswill maintain all records about the customer and the shipment. This Global Tracking Service will

maintain knowledge about the shipment wherever it goes and will report to the customer who has

rented the Talker unit. The introduction of this service eliminates the need to involve government

organizations; in fact, reports of trouble should interest the Coast Guard and the Port Authorities.The following Table summarizes the Global Tracking Service plan:


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Global Tracking Service Planning Statements

1. A new Talker package will be designed for rental and establishment of a unique global monitoring service to supportthem in identification and tracking of cargo or inventory in shipping containers or other conveyance wherever it is

located on the earth while in transit or in storage, access to its whereabouts and freight manifest in real-time with on-

board details about events affecting the shipment from source to destination. For the record these are the notes of thoseplanning ideas.

-Carries Manifest (loaded by cell phone)-Records events, temperature, (other sensors)?-Maintains intrusion detection (GuardDog)

-Rented for one transit from beginning to end

-Returned to tracking/security service (ala Netflix)

-Can be seen to disappear if so located w/others

2. Discussions centered on an umbrella service to provide shipping container tracking & security without involving the

usual purveyors of transport services, nor any other business, nor Homeland Security - because none of them have

produced results and are fearful of a decision that will not be accepted by the shipping industry.

3. The Solution is to offer the complete service, just like FedEx, DHL, UPS - International coverage by cell phone in

each area of the world (all shipping ports).

4. Basis for Service is to supply Talker/Intrusion Detector to any shipper on a one-time (Netflix like) use & return. Its

features are listed below:

5. A single use renting service avoids confronting all interested (and disinterested) participants in global transport

Existing problems force a new plan to accomplish the container security business. See this list of National Problems:

There is no global standard for tracking and securing containers.

There is no plan to develop a global standard.American based customs agents are faced with an impossible task.

A very small percentage of containers are opened and searched.

There is continual pilfering of high value items from containers.

Almost all loss takes place at the terminals and container storage yards.

6. Planning difficulties abound:

Initiating a global infrastructure for tracking and securing containers is a daunting task.

There is literally no way to get agreement among all of the parties involved in container shipping.

Therefore, MachineTalker will build its own infrastructure.

However, this infrastructure will be built upon existing communications networks that already exist in all ports

and terminal yards throughout the globe.MachineTalker devices, called Talkers, create a community and are aware of each other by utilizing existing RF

and the latest UWB technology.

Most importantly, they will all be able to communicate to the central tracking network by using existing multi

band cellular modems, sending status and alerts as necessary.

7. Positive aspects of this new service:

This system will be flexible, easy to implement on a small scale and also easy to scale up.

Devices will be portable and once secured in a container; automatically create an image of the inside of the

container that can match and verify the content manifest.

The Talkers can be recycled; easily removed from the container upon arrival at destination and sent from or toany port for the next container shipment.


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MachineTalker Products - For Remote Sensing Applications

INDUSTRIAL CONTROLIndustrial Talkers- With Sensors for Energy Auditand CBM. Packaged in explosion-proof enclosuresfor the Petroleum Industry. In proposals to monitorrotating machinery to detect and anticipate failure, tominimize catastrophic damage. Promotes efficiencyand provides for analysis of industrial operations.

The Next Generation for Industrial Sensing

Talker packaged with multiple vibration sensors tocompletely service grouped machinery like that atopthe lofty towers of wind-powered generators.

Tank Farm and Well Pumping Control - Packagedinside housing for use at the top of 60 deep tanks ofpetroleum products to measure filling levels and tomonitor for leaks. Being considered for unattendedoperation of pump and compressor motors in remotefields. Will report by cell phone to computer centers.

General Purpose Talkers - With external terminalsfor attaching sensors to permit field testing prior toenclosed packaging. Will be used for gathering datafrom environmental sensors and detection devices.


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The Green Industrial Market And Potential Customers

Establishing Acceptance of Wireless Process Control - One major industry that must monitor alltypes of sensors from limit switches to measurement of quantities of liquids, where failure can

result in huge clean-up operations is the Petroleum Industry. Several years ago the Company began

a series of seminars in Houston for petroleum engineers and plant maintenance personnel to

familiarize them with the quality, safety and economic benefit of using wireless sensors andcontrollers. Every sensor has been wired to a central facility using miles of protective conduit at a

cost that is many times the cost of the sensor itself. Attaching that sensor to a local intelligence that

can qualify the information and can forward results by radio, permits sensor installation to be verycost effective, even with redundant detectors for operational assurance.

These seminars constitute the "marketing" of MachineTalkers into the industrial environment. Eachtime there are more attendees with the result that the Company has been invited participant in the

show booths of major sensor suppliers like IMI and Honeywell. The Company is also a

contributing member of the ISA-100 Standards Committee that will publish the specifications onthe use of wireless means for process control. These activities have introduced the MachineTalker

wireless sensor controllers into the plans of several major industrial customers, followed bymeetings and site visits and requests to bid on several large installations. Active proposals are

complete or nearly so in response to requests from the following customers:

CONOCO-Philips (CBM for large machinery); Chevron Oil (a wireless test laboratory); Dutch

Shell (MiniTalker IDs on 30,000 Chemical Totes); GREKA Petroleum (detection of tankoverflow and monitoring boilers and pumps); Las Vegas Water District (monitoring flow and

pressure every hour for up to 190 valve stations); and Wripples (Public Dog Washing Station).

The Next Generation MSU-8 For High Speed Servicing of Multiple Sensors - The MSU-8 is

attached to, and controlled by a Talker and permits one Talker to monitor up to 8 sensors in a single

location. This product is expected to be unique in its capability where CBM is favored.

VIBRATIONSENSORS

44-Pin I/O CONNECTOR

Connects As PeripheralTo A Talker (CBM6?)

THE MSU8-HS IS A MULTI-SENSOR UNIT OPERATING8 SIMULTANEOUS HIGH-SPEED A/D CONVERTERSPLUS FAST CPU AND LARGE MEMORY STORAGE

CPU

ARM

7 orARM

MEMORY

HS A/D

MSU-8


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The MSU-8 contains 8 separate Analog to Digital Converter circuits that can digitize 8 differentsensors simultaneously and it can process 128,000 conversions per second. Supporting this activity

is a powerful processor. With capability that rivals a PC, this Talker accessory can process

incoming vibration data to provide Condition-Based Maintenance determination at the source.There are already several potential partners that will work with the Company to produce and use

this new product in the field. See DLI Engineering and W2 Energy commented belowl

Placing CBM Analysis Software from DLI Engineering into the MSU-8 - The signal pattern

below is created from the vibration data gathered for CBM and then processed by extensive

software operating on a PC. DLI presently installs many wired systems for vibration analysis onshipboard, industrial sites and now, inside wind machines where multiple vibration sources are

present at the top of the tower. This is a major wiring task and DLI Engineering is considering a

joint project to use the MachineTalkers with the MSU-8 to gather that data, process it in the tower

and send only results using the wireless mesh network.

W2 Energy Wind and Water Technology - The MachineTalkers with the MSU-8 is being

considered for collecting various types of sensor data gathered to monitor operation in their newly

developed "Wind Wing". This innovation may prove much more efficient than the propeller type

wind machines in the production of power. A version of the Talker will service these requirementsvery well.


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Producing Revenue By Concentrated Marketing and Sales Activity

Transition From Developing Products to Selling Them - The products are completed,

demonstrated and ready to deploy. Emphasis must be placed on using capital to increase marketpresence. The Company has worked to introduce its concepts through shows, seminars and

customer visits. This approach was sufficient while finding ways to make wireless products to

challenge customers who are wedded to wired methods of data acquisition. But now, the Company

must market and deliver its new products that will help to move industry into the wirelessgeneration.

It is the same for making sales to those who are considering how to bring about secure transit ofgoods coming into the USA from foreign ports. The Company has been presenting papers on the

use of its iRFID intelligent RFID product and the same has been demonstrated to the Navy and

the Army for the tracking and movement of munitions. However, this has all be done sporadicallywhile the product evolved. It is important to bring on people who are conversant with the shipping

industry to help formulate how the new Global Tracking Service will service that industry and its

customers.

As for the products that service industrial users, the customer base has experienced a growinginterest in wireless process control (helped along by our seminars). This interest and participation

in the standards committees may give the Company an edge. Talkers will operate in isolatedfacilities powered by batteries and by solar power. Talkers can be reached by cellular telephone

services to manage industrial processes in the field.

The diagrams that follow illustrate organizational changes that must take place to bring the

Company to prominence in the marketplace. Engineering support activity will still be made

available to tailor and evolve the product line, particularly in the new realm of Ultra-Widebandapplications.

The Company will now seek sales through direct customer contact, trade shows, seminars,advertising and continued participation in standards committees (an important source for customerinteraction as industrial planners attend the tutorial sessions).

As stated in this Plan, proceeds from new investment will go directly into expanding Marketing andSales operations as depicted below. Hiring will be specific and care will be taken to find

individuals who can make technical sales in the chosen industries.


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Proceeds from investment will allow the Company to build its own sales force by hiring thoseexperienced in the targeted industries. Adding marketing structure as shown above (in white)MTI retains its technical base and brings focus to producing revenue.

The small technical organization pictured above has created the means for a group of computerswith radios to automatically form mesh networks where they share processing and information.These versatile products can be used to enhance and enable many applications. Marketing was asecondary concern until the products were ready.

Figures - Organizational Change to Effect Market Focus


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Hiring Plan for the Parent Company MachineTalker, Inc.

CEO - A person with technical experienced who has had fiscal responsibility, at least at a divisionlevel, for directing a number of employees in both product sales and product development.

Someone of this caliber can be able to envision how our products fit into a variety of applications

and martial the effort of others to build a successful, revenue producing operation.

VP Marketing and Sales - A person with a technical background with experience in some related

field to those our products address, like transit security and/or data acquisition. Should haveexperience in putting together a technical sales and support operation along with policies that will

deal with selling to end users, OEMs and Systems Integrators.

Technical Sales Person(s) - This person will be chosen for their knowledge about one of theindustries to which our products will apply. Because the same product series will fit a number of

applications that service sensors and detectors, a background in sales for systems that support

military logistics or in industrial operations will be helpful in securing sales in either of these areas

of business.

Hiring Plan for the Subsidiary Company WDTI

Research and Development Manager - This person will oversee the development of products that

make use of Ultra Wideband technology. This is a new arena for products that operate with a radar-like facility and for which WDTI has the option to obtain different version dealing with detection orcommunication or identification.

Technical Support Person(s) - A person with an engineering background who has experience in

the design, implementation and testing of communication products. Knowledge of RadioFrequency circuit development, antennas and pulsed radar techniques will be very helpful.

Board of Directors for MachineTalker, Inc.

Needed 2 Outside Board Members - The Company will seek at least 2 individuals to join the

Board as "outside" board members. The Company can benefit significantly if the right people are

available to help guide the business. The technology is well ahead of the sales and marketing

operation, and with the new employees who will drive a sales oriented business, having board

members who have both a technical and a business background will fit well into the plan to createthe new Global Tracking Service.

Composite Corporate Plan 051208

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