August 1, 2000

Position Integrity Issues Business Plan to Venture Capitalists

August 1, 2000

 

At the request of several prominent Venture Capital firms, Position Integrity released today a Business Plan and Investment Prospectus to help raise funding for several new global initiatives.  An Executive Summary is provided below.  If you would like to obtain a copy of the Business Plan in electronic format, please contact Robert A. Severino at Position Integrity or by email at

robert.severino@positionintegrity.com

 

Executive Summary

 

Company Overview

 

Position Integrity (PI) is a privately-held technical services company which is seeking to become the low-cost, one-stop content provider of global navigation and atmospheric data and imagery for all consumer, commercial, military and scientific applications.  The company specializes in the acquisition, processing, and distribution of government and military data that aid in the field of "situational awareness" for both the aviation and marine industries. In its self-funded status, Position Integrity has already generated over $4 million in revenue through the successful completion of a series of contract engagements with various agencies of the U.S. government (e.g. the Navy, NASA/JPL), as well as with several leading private sector concerns (e.g. Honeywell).  Using the proceeds from these contracts and the resulting technology innovations from this work, Position Integrity subsequently developed several packaged products for the aviation industry, as well as a PC-based moving map software application suite.  A number of these "data products" are in the process of being, or are already licensed to various industry leaders in navigational data provision.

 

Position Integrity has also developed a unique patent-pending process for transforming and consolidating critical elements of worldwide aeronautical and nautical navigational data (produced by agencies like JPL, NIMA, and NOAA) into a single repository called the PI Geospatial Database Framework (GDF).  Position Integrity has continued to enhance and augment this global data-warehouse, which collects, correlates and maintains these disparate sets of data to create a framework that has a virtually limitless capacity for customization.  And, in contrast to current industry leaders that market only proprietary products to end-users, PI offers its customers a multitude of custom-tailored products and services that are not only extremely useful to both pilots and mariners, but are also in increasing demand throughout a broad range of other market segments.  By leveraging the Internet for its distribution and a production system that uses industry standard database technology, PI is capable of creating customized extracts for each consumer or OEM (original equipment manufacturer), thereby allowing every client to obtain their data in exactly the formats they require.  Moreover, our prior access approvals, security clearances and contractual relationships with government agencies constitute enormous barriers to entry for anyone trying to duplicate our success.

 

Opportunity

 

Position Integrity intends to revolutionize the existing business strategies that are endemic to the currently fragmented and conflicted industries of aviation and maritime navigational data provision.  Both industries are presently facing formidable obstacles in retooling their operations to adjust to the market's escalating demand for electronic, instead of paper-based, products.  Because such a transition entails not only tremendous cost, but also the restructuring of existing staff and paper-based production and distribution systems, industry constituents have been extremely slow to meet this challenge.  Exhibiting a "take it or leave it" attitude with respect to the provision of data in anything other than their traditional restrictive formats, they continue to resist this shift to a primarily electronic environment. Their dependence on legacy paper-based products, which have for so long been the basis of their profitability and market dominance, has left them ill prepared to meet the demands of the current electronic marketplace.

 

Recent market analysis suggests that there is a combined opportunity of over $500 million in the aviation and marine data provision markets--an opportunity that is estimated to grow to over $1 billion within five years.  Furthermore, the marine market for navigational data, which is an order of magnitude greater than its aviation counterpart, remains largely untapped. These conditions give Position Integrity the ability to seize market share without the encumbrance of intense initial competition. Also, because of Position Integrity's heritage and demonstrated success in the production and distribution of electronic data, it is well-situated to capture a sizeable market share in unexploited areas of the marine sector, as well as to challenge the incumbent in the aviation market in terms of both technical innovation and overall product value.  As an established business operation with an existing customer base, Position Integrity is already both structurally and strategically configured to meet the distinctive demands of the e-commerce arena--where the future of the navigational data provision industry inevitably lies.

 

Products and Services

 

Position Integrity has grown far beyond the "concept phase" of development, having established several key strategic alliances and licensing agreements, as well as possessing a customer base that is already paying for tailored data subscriptions, recurring real-time updates and technical consulting services.  Using high-speed Internet servers as our distribution channel, PI is able to connect directly with our users' computers on a 24 x 7 basis, within both B2B and B2C domains.  In addition, satellite communications and the wireless revolution are ushering in a global infrastructure that will enable updates from our automated data warehouse directly to our customers' on-board computers.  Furthermore, our next generation of JPL-generated products will be derived from high-ticket NASA satellite and shuttle missions, where long-standing relationships with governmental agencies give us the inside track on getting these electronic maps first to market. As such, we project that by mid-2001 we will actually manage the electronic portal providing public access to these previously classified sets of data.  And, in contrast to the industry's current reliance upon obtaining distinct data elements from different data providers, the net effect of PI's strategic implementation will be a single point of contact for every client's specialized navigational needs.

 

Funding Requirements

 

Position Integrity is seeking $5 million in venture funding to establish itself as the dominant navigation data provider for the marine and aviation industries, in return for which the investor(s) would receive a 30% membership in the LLC.  During the first 24 months, these funds will be applied equally for research and development, as well as to marketing and promotion.  Additionally, certain funds will be allocated to establish a corporate headquarters in the Irvine, California area.  The largest element of our intended R&D expenditures will be the salaries and related benefits for the technical and management resources we will recruit and hire.  Our largest marketing expense will be directed toward advertising initiatives aimed at creating immediate and sustained brand awareness.  Any additional funding requirements will be satisfied with income generated during this interim two-year period.

 

Investor Payoff

 

Position Integrity intends to generate nearly $17 million in revenue by the end of its second full calendar year of venture-funded operation.  More importantly, with a gross profit margin in excess of 75 percent, Position Integrity will be profitable within 15 months.  Further, because it already has an initial product offering suitable for deployment in the aviation industry, it can begin generating revenue almost immediately.  This will complement initial venture funding and reduce the overall amount required to establish and sustain a dominant market presence.

 

Capturing less than 3% of the existing aeronautical market for digital navigational data subscriptions would repay our investors over the base period (2000-2003).  Accordingly, the 6% share of the aeronautical market that we intend to control by 2003 will yield a handsome ROI for all investors.  Moreover, this analysis does not even consider the revenue from the marine market products we will launch in 2001.

 

By the fourth year of operation, an equity position in PI will be founded on three formidable assets: 1) material market penetration in two niches formerly dominated by a few long-standing incumbents, 2) an increasingly profitable operation with decreasing overhead, and 3) a cash balance allowing for a sizeable return on investment.  These assets will afford an easy exit strategy for the investor, either by cashing out, through sale of the company to an entrenched competitor, or as a result of gains realized from an Initial Public Offering, the latter two which will almost certainly yield a marked increase in membership or share valuation.

 

Conclusion

 

Position Integrity offers an exceptional investment opportunity.  It seeks to apply technology innovation to a niche market with high barriers to entry and few capable competitors.  It brings not only a solid business model, but also an established market presence, an existing initial product line, and validated marketplace opportunities.  Its products and services, both present and prospective, offer high profit margins that can be sustained with only modest investment.  In light of the uncertainty surrounding many of today’s technology investment opportunities and Internet startups, Position Integrity is a truly compelling business prospect.

 

 

For more information contact Robert A. Severino at Position Integrity or by email at

robert.severino@positionintegrity.com

 

 

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