IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`
`Group Art Unit: 2622
`
`Examiner: Joseph R. Pokrzywa
`
`r
`
`§ § § § § §
`
`§
`
`§ § § §
`
`§
`
`In re Application of:
`
`David A. Monroe
`
`Serial No.: 10/336,470
`
`Filed: January 3, 2003
`
`For: APPARATUS FOR CAPTURING,
`CONVERTING AND
`TRANSMITTING A VISUAL
`IMAGE SIGNAL VIA A DIGITAL
`TRANSMISSION SYSTEM
`
`AFFIDAVIT OF DAVID A. MONROE UNDER 37 CFR 1.131
`
`David A. Monroe, being duly sworn, states as follows:
`
`1.
`
`2.
`
`3.
`
`4.
`
`I am over 21 years of age and am competent to make this declaration.
`
`I am the named inventor of the applications for patent, U.S. Serial Nos. 10/326,503 and
`10/338,470, each of which have an effective filing date of January 12, 1998.
`
`During the prosecution of these applications I have become aware of a number of patents
`and publications which may be relevant to the scope of my invention. These patents and
`publications (the “131 Prior Art”) have an effective prior art date which is earlier than my
`filing date but later than the date of the invention in each of the respective applications.
`
`Some, but not all of the 131 Prior Art has been cited by the Examiner during prosecution
`of each of the subject applications. However, in the interest of thoroughness I desire to
`disclose all of the 131 Prior Art known to me at this time. The relevant 131 Prior Art is
`as follows:
`
`Patent/Publication
`
`Earliest Effective Date
`
`Cited by Examiner
`
`US. Pat. No. 5,546,194
`
`March 23, 1994
`
`US. Pat. No. 5,550,654
`
`May 13, 1994
`
`US. Pat. No. 5,689,300
`
`November 18, 1997
`
`US. Pat. No. 5,754,227
`
`September 28, 1994
`
`SN 10/336,470
`
`SN 10/336,470
`
`SN 10/336,470
`
`NOT CITED
`
`Iron Dome, Exh 1004
`
`Iron Dome, Exh 1004
`
`

`

`U.S. Pat. No. 5,854,694
`
`October 17, 1995
`
`U.S. Pat. No. 5,893,037
`
`December 9, 1994
`
`U.S. Pat. No. 5,517,683
`
`January 18, 1995
`
`U.S. Pat. No. 5,711,013
`
`January 18, 1995
`
`U.S. Pat. No. 5,666,159
`
`April 24, 1995
`
`U.S. Pat. No. 5,793,416
`
`December 29, 1995
`
`U.S. Pat No. 5,825,408
`
`March 18, 1994
`
`U.S. Pat. No. 5,893,037
`
`December 9, 1994
`
`U.S. Pat. No. 5,929,901
`
`October 6, 1997
`
`U.S. Pat. No. 5,995,041
`
`December 30, 1996
`
`U.S. Pat. No. 5,969,750
`
`September 4, 1996
`
`U.S. Pat. No. 6,072,600
`
`A January 30, 1996
`
`US. Pat. No. 5,806,005
`
`May 10, 1996
`
`U.S. Pat. No. 5,864,766
`
`August 13, 1996
`
`U.S. Pat. No. 6,043,839
`
`January 12, 1998
`
`U.S. Pat. No. 6,085,112
`
`November 7, 1996
`
`U.S. Pat. No. 6,111,863
`
`December 29, 1995
`
`U.S. Pat. No. 6,122,526
`
`April 24, 1997
`
`PCT Publication
`WO 97/26744
`
`July 24, 1997
`
`U.S. Pat. No. 6,181,954
`
`January 12, 1998
`
`U.S. Pat. No. 6,452,626
`
`October 6, 1997
`
`NOT CITED
`
`NOT CITED
`
`NOT CITED
`
`NOT CITED
`
`SN 10/336,470
`
`SN 10/326,503
`
`SN 10/326,503
`
`SN 10/326,503
`
`NOT CITED
`
`SN 10/336,470
`
`SN 10/326,503
`
`SN 10/336,470
`
`SN 10/326,503
`
`NOT CITED
`
`NOT CITED
`
`NOT CITED
`
`SN 10/326,503
`
`NOT CITED
`
`SN lO/326,503
`
`SN 10/326,503
`
`NOT CITED
`
`Exh p. 2
`
`Exh p. 2
`
`

`

`7.
`
`e 131 Prior Art is March 18, 1994. My invention
`The earliest effective date of any of th
`n the subject applications
`is more
`date for each of the inventions shown and described i
`than one year earlier than the earliest effective date of any ofthe 131 Prior Art, namely,
`earlier than March 18, 1993. This is supported by the schematic drawings Exhibits 10
`and 11, that are dated earlier than March 18, 1993, and by the design renderings and
`sketches contained in Exhibits 7, 8, and 9, all ofwhich are dated earlier than March 18,
`
`1993.
`
`the filing date of January 12, 1998 I
`the date of the inventions t0
`abandon the inventions. During this
`During the period from
`invention and did not
`was diligent in pursuing the
`6—16 was continually refined and
`d and shown in Exhibits
`period the invention conceive
`‘al product that met all the
`revised, primarily in
`ile at the same time being feasible. Commercial success
`requirements of the inventions wh
`and financial (cost) criteria.
`demanded meeting both acceptable performance criteria
`over transmission systems as
`I began working with the concept of sending image data
`, a pioneering desktop device
`In 1983 I developed the “PhotoPhoneTM”
`system for the
`early as 1983,
`d as an early “tele-radiology”
`ultimately was extensively used and thrive
`Exhibit 1.
`transmission of medical X-Ray images, see
`
`focused on extending the
`that
`pany called PhotoTelesis
`In 1986 I extended this desktop
`In 1985 I started a com
`nt applications.
`PhotoPhone to specific Governme
`uding cellular. This was done
`technology to enable transmission over radio circuits, incl
`by the addition of a cellular/radio interface circuit board called “CIS”, see Exhibit 2. On
`May 26, 1986, a press release was released that discussed several new products that were
`announced at
`the Armed Forces Communication and Electronics Associations in
`Washington, DC. The Com-RIT TM product included the CIS board and provided image
`transmission from a desktop unit over mobile telephones and portable satellite terminals,
`
`see Exhibit 3.
`
`oped several Remote Image Transceivers or R.I.T.’s
`Over the next several years, I devel
`for the United States Military, see Exhibit 4, and as shown and described in the 1987
`Business Plan of my company PhotoTelesis, see Exhibit 5.
`In 1989 I conceived the
`circuitry for a concept model R.I.T. which could be handheld, see Exhibit 6. Over the
`next several years I continued to develop the handheld R.I.T. while continuing to work
`on, develop and build the military R.I.T. systems such as those shown in the 1986
`Business Plan,Exhibit 5. Evidence of this continuing effort
`is the design concept
`drawings of Exhibits 7 and 8, dated 1990. Additional concepts were generated during
`1991 (Exhibit 9).
`In addition,
`in 1991, the first detailed schematic was generated
`(Exhibit 10), which would permit a prototype circuit to be built.
`
`Exh p_ 3
`
`Exh p. 3
`
`

`

`eded and in 1989 1 conceived the
`l perceived that a small, handheld image RIT was ne
`for a concept model R.I.T. that could be handheld, see Exhibit 6. This
`design, although functionally viable, was in practice power hungry and slow in
`circuit architecture
`'
`d my efforts to develop the handheld
`performance. Over the next several ye
`R.I.T. while continuing to work on, develop and build the larger specialized tactical
`military R.1.T. systems such as those shown in the 1987 B
`Evidence of this continuing effort are the design concept drawings generated in
`corroboration with an industrial designer shown in Exhibits 7
`addition, in 1991 1 developed the enhanced architecture that enabled the first detailed
`schematic (Exhibit 10), which would permit a higher performance and low-power
`prototype circuit to be built.
`
`usiness Plan, Exhibit 5.
`
`and 8, dated 1990.
`
`In
`
`10.
`
`11.
`
`12.
`
`13.
`
`(1 for a handheld R.1.T., as shown in
`'on No. 10/336,470. Continued
`In 1992, the first compreh
`that would be more desirable to
`Exhibit 11. This circuit
`ackaging modification
`13. Some of the design concepts
`work done in 1992 on a p
`hown in Exhibits 12 and
`Government Customers, as is s
`vemment model as was shown
`e also included in the Go
`of the 1992 and earlier period wer
`the 1992 concept
`le, Fig. 6 in the application to
`in the Application. Compare, for examp
`drawings Exhibits 12 and 13.
`s, 1993-1997, Photo-Telesis became the standard R.I.T. for
`tactical
`systems developed and
`Over the next several year
`image
`transmission. The
`Government
`tactical
`commercialized by PhotoTelesis were employed by the US. Government in many
`systems. Many of the products developed and sold by PhotoTelesis followed the
`concepts shown and described in the 1987 Business Plan (Exhibit 5).
`ontinued to develop the concept of a
`During this time, 1 continued to be interested in and c
`eld
`true handheld R.I.T. product.
`In fact, I came up with a formal proposal of a handh
`R.1.T. in 1995 and put together a concept proposal inNovember, 1995 (Exhibit 14), using
`secure radio transmission. Ultimately this project was never Government funded, 1 went
`‘
`feasible handheld R.I.T.
`that was first
`on to fund and develop a commer
`publicly disclosed in late 1997 and first sold to the Government in 1998.
`14. While the proposal shown in Exhibit 14 did not feature a cellular telephone compatible
`R.I.T., it was architecturally consistent and a development stepping—stone toward that
`goal. The final product incorporated my design concepts of 1993 and earlier, and did
`include cellular telephone compatibility. A first prototype of this product is embodied
`in physical Exhibit 15. Physical Exhibit 15, which was shown
`of prosecution of each subject cases during an interview,
`is a prototype of the first
`commercial embodiment of the invention. This was completed in mid-1997 and was first
`publicly disclosed sometime early 1998. Photographs of this one—of-a—kind prototype are
`contained in this record as Exhibit 15.
`
`to the Examiner in charge
`
`15.
`
`om the 1995 proposal is provided in
`duct resulting fr
`The circuitry for supporting the pro ich ultimately became Fig.
`5 of Application No.
`the schematics of Exhibit 16, wh
`10/326,503.
`
`Exh p_ 4
`
`Exh p. 4
`
`

`

`16.
`
`17.
`
`18.
`
`19.
`
`xhibit 16) was put into production
`ype (Exhibit 15 and E
`The product based on the protot
`sical Exhibit 17 as is
`One of the production units, Phy
`llular telephone to the
`and sold to the Government.
`strated transmitting over ce
`photographed in Exhibit 17, was demon
`Examiner.
`
`‘
`
`at least as early as
`As shown by the Exhibits attached hereto, 1 conceived the invention
`1y viable product
`March 18, 1993 and worked diligently in developing a commercial
`5 handheld R.1.T.
`culminating in the first commercial handheld R.1.T. in late 1997. Thi
`5-17 as first
`used cellular telephone transmission technology, as evidenced by Exhibits 1
`conceived and document as early as March 18, 1993, see Exhibits (6 —13).
`The subject applications were timely filed, being within one year of the first public
`disclosure of the inventions, and in fact, prior to any public disclosure.
`actice prior to the earliest effective dates of the
`The above facts establish reduction to pr
`e invention prior to the earliest
`131 Prior Art, or as a minimum, establish conception of th
`ior to this date to a
`effective date of the 131 Prior Art coupled with due diligence from pr
`f . the commercial
`subsequent reduction of practice culminating in the prototype o
`embodiment Exhibit 15 in mid-1997.
`
`Further affiant sayeth naught.
`
`Executed this 2 iz‘flg day of December, 2004, by:
`
`Exh p_ 5
`
`Exh p. 5
`
`

`

`Group Art Unit: 2622
`
`Examiner: Joseph R. Pokrzywa
`
`§ § § § § §
`
`§ § § § §
`
`§
`
`In re Application of:
`
`David A. Monroe
`
`Serial No.: 10/336,470
`
`Filed: January 3, 2003
`
`For: APPARATUS FOR CAPTURING,
`CONVERTING AND
`TRANSMITTING A VISUAL
`IMAGE SIGNAL VIA A DIGITAL
`TRANSMISSION SYSTEM
`
`
`INDEX
`
`Exhibit 1
`
`PhotoPhone Transmission System - 1983
`
`Exhibit 2
`
`Circuit Board
`
`Exhibit 3
`
`Press Release FOCIS System - 1986
`
`Exhibit 4
`
`Brief Case Telecommunication
`
`Exhibit 5
`Exhibit 6
`
`Phototelesis Business Plan (1987)
`Circuitry Sketch for a Concept Model R.I.T. — Handlheld - 1989
`
`Exhibit 7
`
`Design Concept Drawing - 1990
`
`Exhibit 8
`
`Design Concept Drawing - 1990
`
`Exhibit 9
`
`3-D Design - 1991
`
`Exhibit 10 Detailed Schematic - 1991 ,
`
`Exhibit 11
`
`Comprehensive Circuit Schematic - 1992
`
`Exhibit 12
`
`Concept Drawing - 1992
`
`Exhibit 13
`
`Concept Drawing - 1992
`
`Exhibit 14 MicroRIT Proposal - 1995
`Exhibit 15
`Photos of Physical Exhibit — Handheld R.I.T. - 1997
`
`Exhibit 16
`
`Schematics — 1997
`
`Exhibit 17
`
`Photos of Production Model - 1998
`
`3760972v.1
`
`Exh p. 6
`
`Exh p. 6
`
`

`

`
`
`rv,
`
`P,
`
`,bra; ,4
`
`an
`
`EXh p. 7
`
`Exh p. 7
`
`

`

`PH-OTOTELesus
`
`Remote Image Transmission Systems
`
`‘-
`
`
`
`9W“ '
`
`Press Release
`
`For immediate Release
`
`PhotoTelesis and image Data Sign Agreement
`
`Secure Remote Image Transmission over Telephone & Tactical -
`Transceivers
`
`Secure .video image‘transmission
`'TX.
`. May 26, ‘1986. San Antonio,
`telephone,‘ wireless radio and satellite
`between any remote sites over
`circuits are now possible through an agreement between image Data
`Corporation, makers of the commercial Photophone, and PhotoTelesis.
`
`PhotoTelesis is a San Antonio ’based video systems Integration company
`supplying video teleconferencing rooms, video teleconferencing equipment
`and specializing in image transmission equipment
`for government
`applications.
`The agreement makes PhotoTelesis the officiaiwevendormof
`Photophones specially adapted fori’Government applications.
`/-'
`-
`.,
`PhotoTelesis introd-uced‘thre'e new procgct “lines at the Armed Forces
`
`_
`
`Communcation and Electronics Association annual Convention and
`Exposition May 27 28, and29 at the Washington D. C. Convention Center.
`Three special versions of
`the commercially successful Photophone are
`.. produced and marketed by PhotoTelesis.
`Ali enable freeze frame
`monochrome video pictures to be transmitted in seconds over various
`carriers. They are called R'lTs -- for Remote image Transceivers.
`
`_
`
`line of sight and
`images over secure tactical
`Tac-RlT'l'M transmits
`satellite receivers.
`Since the units are compatible with current standard
`military radio‘ transceivers, fast reliable visual communication can now be
`added to tactical communication "and command centers.
`
`including-
`Sec-RiT'l'M is compatible with secure (enorypted) COMSEC gear,
`STU ii, STU'iIi, and PSV (Personai‘Secure Voice) secure telephones over _
`common dial-up lines.
`
`.
`
`801 LincolnCenter. _7800lH10West_
`
`SanAntonio,Texas 78230
`
`(512)349-2020.
`
`I
`
`'
`
`'
`
`j
`
`Exh p. 8
`
`

`

` PHOTOTELESUS
`. 4/
`RemoteImageTransmissionSystems
`
`m-
`
`Page Two
`
`3
`
`'
`
`. News Release
`
`0
`r41.
`
`the additional advantages of allowing
`The PhotoTelesis units offer
`voice and video over the same channel, enabling discussion of the picture.
`An interactive pointer contrblled by either party allows discussion of the
`document as though the two parties were across the table from each other
`rather than half-way around the world.
`
`the
`lines of RlTs at
`introduce three new product
`PhotoTelesis will
`Armed. Forces Communication and Electronics? Association annual
`Convention and Exposition May 27, 28, and 29 at the Washington D.C.
`Convention Center.
`
`line of sight and
`Tac-FilTTM transmits images over secure tactical
`, satellite receivers.
`Since the units are compatible with current standard
`‘3 military radio transceivers, fast ”reliable visual communication can now be
`‘
`added to tactical communication and command centers.
`
`Sec-RITTM. is compatible. with scours (encrypted) 'COMSEC gear,
`.
`including STU ll, STU lll,'.and 'PSV (Personal Secure Voice) secure
`telephones over common dial-up lines.
`.
`-
`~
`
`Com-RITTM provides compatibility with non-secure mobile cellular
`telephones and private portable carrier. satellite communication systems.
`
`PhotoTelesis is a San Antonio based video systems integration company
`supplying video teleconferencing 'rooms, video teleconferencing equipment
`and specializing in
`image transmission equipment
`for government
`applications.
`‘
`
`."h
`
`Exh p. 9
`
`Exh p. 9
`
`

`

`w
`
`PHOTOTELEsns
`Business Plan
`
`WW
`
`‘
`
`-
`
`Exh p. 10
`
`

`

`PHOTOTEILESDS Business Overview Copy #
`
`January 27, 1987
`
`The information contained in this memorandum concerning image transmission products
`for government applications is furnished to the recipient on a confidential basis for the
`recipient's exclusive use. By acceptance of this confidential memorandum the recipient
`agrees not
`to transmit, divulge, reproduce, or make available to anyone other than
`himself,
`this confidential memorandum and any exhibits and documents supplied in
`connection therewith.
`Violation of this confidentiality requirement may place the recipient
`and the preparers of this document in violation of the Texas and Federal securities laws
`and the applicable securities laws of other states.
`Any decision to invest in this enterprise should be deferred until the recipient has had the
`opportunity to review a confidential private placement memorandum now in the process of
`completion which will describe the specific terms under which an investment may be _
`made and the substantial risks involved in any such investment in addition to any risks
`which may be described herein.-
`
`the
`Prior to the sale of any securities related to the corporation described herein,
`preparers of this memorandum will undertake to make available to the recipient hereof the
`same kind- of information that is specified in Schedule A of the Securities Act of 1933, to
`the extent such persons possess such information or can acquire it without unreasonable
`effort or expense.
`
`Signature
`
`Exh p. 11
`
`Exh p. 11
`
`

`

`PHOTOfiElLlESllS Business Overview Copy #
`
`January 27, 1987
`
`The information contained in this memorandum concerning image transmission products
`for government applications is furnished to the recipient on a confidential basis for the
`recipient's exclusive use. By acceptance of this confidential memorandum the recipient
`agrees not
`to transmit, divulge,
`reproduce, or make available to anyone other than
`himself,
`this confidential memorandum and any exhibits and documents supplied in
`connection therewith.
`Violation of this confidentiality requirement may place the recipient
`and the preparers of this document in violation of the Texas and Federal securities laws
`and the applicable securities laws of other states.
`
`Any decision to invest in this enterprise should be deferred until the recipient has had the
`opportunity to review a confidential private placement memorandum now in the process of ..
`completion which will describe the specific terms under which an investment may be
`made and the substantial risks involved in any such investment in addition to any risks
`which may be described herein.
`
`the
`Prior to the sale of any securities related to the corporation described herein,
`preparers of this memorandum will undertake to make available to the recipient hereof the
`same kind "of information that is specified in Schedule A of the Securities Act 30f 1933, to
`the extent such persons possess such information or can acquire it Without unreasonable
`effort or expense.
`
`Signature
`
`Exh p. 12‘
`
`Exh p. 12
`
`

`

`wf
`
`/ .
`
`2/
`
`Executive Summary
`
`About the Company
`The Market~
`
`7 Competition
`
`A Marketing.
`
`Technology
`
`Products
`
`TEMPEST
`
`Risks
`
`ContraCts and Agreements
`
`Financials-
`
`Appendix
`
`PHOTOTELESflg-CONFIDENTIAL
`
`Exh p. 13
`
`Exh p. 13
`
`

`

`___’_‘________,______.__——————
`'
`. EXECUTIVE SUMMARY .
`
`(ff—M
`
`//
`
`____’_________________._______————————————————
`Overview
`.
`-
`‘
`-
`The charter of PHOTOTELESIS is to provide advanced image communications and
`processing systems to the US. Federal Government market. These systems are being
`developed using proprietary technology and integration of industry-standard
`components. The company provides total solutionsto its customers including 2
`development, integration, manufacturing, marketing, support and training, using
`resources within the company as well as external contract resources.
`
`The PHOTOTELESIS product line permits the capture, manipulation, storage and
`communication of images, documents and graphics using advanced techniques which
`permit communication to take place over ordinary voice grade telephone lines or
`specialized radio or satellite circuits.
`
`The company specializes in providing prodUCts which may be connected to U.-S.
`Government approved encryption devices, permitting secure (scrambled) operation
`over a variety of existing equipment designed for secure voice communications.
`,
`PHOTOTELESIS also provides specialized packaging of its products to meet needs in
`desktop, airborne, naval and vehicular environments.
`The company‘s objective is to develop its business to achieve annual revenues of over
`$7 million by the end of fiscal 1991, with pre-tax earnings of $1.6 million.
`
`_
`Company Background ‘
`PHOTOTELESIS was foUnded in September, 1985 to address specific vertical
`markets with image communications product needs. The company conducted ‘
`extensive test marketing before selecting the Federal Government sector as the most
`promising area to develop. After consulting many high-level users within policy-making
`groups, the company generated product requirements which it felt would address
`‘
`broad needs within selected government departments and agencies.
`
`The products developed from these requirements were announced at a major trade
`conference in May of 1986,, and active marketing began. Initial product shipments '
`commenced in June of 1986.
`'
`'
`
`In the fall of 1986 the company completed development of its business strategy,
`assembled the executive team, and began work on a business plan to” solicit funding
`for a significant expansion of marketing and manUfacturing activities.
`
`PHQTOTELEsns-CONFIDENTIAL
`
`. Exh p. 14
`
`Exh p. 14
`
`

`

`Eff—”J
`The PHOTOTELESIS management team brings together broad skills in the
`management of high technology companies, as well as specific expertise in the
`development and marketing of image communications and processing systems. The
`company intends to focus its personnel on the key activities of marketing, product
`development, and administration, while utilizing outside contractors for manufacturing,
`certain specialized engineering, contract development and technical publications.
`
`Market Potential
`PHOTOTELESIS conducted intensive market research in 1986 in selected segments
`of the Federal Government market, and concluded that a significant opportunity exists
`for the company's products. Key indicators in forming this conclusion include:
`
`3
`
`-
`
`-
`
`.
`
`-
`
`An identified and unfulfilled need for low cost image communications to support
`the development of major program-level initiatives in Communications,
`Command, Control and intelligence systems (known as C3l) for defense-related
`applications. The current budget calls for expenditures of $17.4 billion in fiscal
`'
`1987 to support major programs.
`
`.
`
`The planned deployment of a new generation of secure and mobile
`communications equipment forthe D.O.D. arena, with program—level ‘
`expenditures on the order'of billions of dollars in the next five years.
`
`The burgeoning market for products designed to government standards for
`handling classified information, called TEMPEST, presently estimated at $350
`million and expected todojuble or triple in size by 1990.
`~
`
`,
`
`The absence of significant entrenched competition in providing packaged image
`systems to Department of Defense and related inarkets.
`
`The trend toward use of commercial equipment as opposed to high cost
`procurement of MIL-SPEC components.
`
`The above indicators prompted PHOTOTELESIS management to test market reaction
`to its image communications technology and determine the applications, feature
`requirements and price points necessary for success in the targeted markets.
`
`PHOTOTELESflS-CONFIQENTIAL
`
`Exh p. 15
`
`Exh p. 15
`
`

`

`f/EXECUTIVE SUMMARY
`
`Mid—If
`
`/_
`
`.___’____—_#___________________————————————-—-—
`These activities resulted in the identification of highly receptive user groups in the
`following government departments:
`
`-
`
`-
`
`-
`
`-
`
`.
`
`.
`
`Department of Defense
`
`Executive Office of the President
`
`Department of Energy
`
`Department of Justice
`
`Department of Treasury
`
`NASA
`
`PHOTOTELESIShas made revenue shipments of evaluation quantities to target
`customers during 1986 and has received orders for additional equipment for delivery
`in 1987. In addition, high-level user groups have been identified in each of the above
`departments who are prospects forsale in 1987.
`
`.
`Marketing Strategy
`PHOTOTELESIS sells its products directly to major accounts in its. target markets
`through government purchasing contracts, and plans tooffer its products on the G.S.A.
`(General Services Administration) price lists. The company will also develop indirect
`marketing channels through Prime Contractors, Sales Representatives, and Value
`Added Resellers who specialize in government electronics marketing.
`
`The company markets "top down" by. identifying major program initiatives in high-level
`policy-making groups, and selling "seed units" to elite users who can set requirements
`for large volume contracts in the future.
`
`PHQTOTELESIS management believes that rapid deployment of its image
`communications technology in high-level user groups will lead to the company's
`products becoming a defacto standard, as new users, develop who require compatible
`technology. This strategy will provide a significant barrier to future competition in the
`image communications arena.
`
`PHOTOTELESIS—CONFIDENTIAL
`
`D.
`
`~
`
`Exhp.16
`
`Exh p. 16
`
`

`

`f/
`'
`EXECUTIVE SUMMARY
`
`f/
`
`//
`
`ffl—I—l
`
`Product Line Overview
`-
`The PHOTOTELESIS products are known as Remote Image Transceivers, or R.l.T.'s.
`The RlT is based on technology and components purchased on an O.E.M. basis from
`Image Data Corporation, who markets their product as The Photophonem.
`‘
`
`The company has developed three versions of the RlT which are specialized for its
`target markets:
`
`Desktop
`Products
`
`ATR-RIT
`Products
`
`Briefcase
`Products
`
`The company provides desktop RIT's which offer specialized
`communications options for secure, radio, or cellular operation, and
`provides an advanced high-resolution camera and shipping cases as
`standard features. A version of the desktop secure product
`is being
`developed for use in classified applications which require special design
`features and certification by the National Security Agency.
`.
`
`This product is a repackaging of the desktop technology into an industry
`standard Aircraft Transport Racking (ATR) form factor suitable for
`mounting in aircraft, marine or mobile environments. The ATR-RIT is
`offered with both secure and non-secure communications options and
`may be powered by an optional battery pack or available DC power. The
`ATR-RIT permits image communications to take place from field locations
`such as battlefields, airspace or intelligence monitoring sites where _
`conventional packaging techniques would be impractical.
`
`_
`
`Test marketing has uncovered a great interest in a portable or "briefcase"
`version of the Rl'lz’ for both secure and non-secure applications where
`portability is a necessity.- The packaging technology for the ATR-RIT will
`be adapted for the briefcase produCts, yielding a package that will fit
`inside a standard briefcase form factor, including display, keypad,
`electronics, battery pack and communications interface. This product'will
`siignificantly increase the market potential of the FilT technology and push
`the product into applications in which image communications has pot
`heretofore been available. Target field applications include infantry;
`disaster recovery, paramedic, construction, survelliance and security.
`
`'
`
`PHOTOTELESflg-CONFIDENTIAL
`
`Exh p. 17
`
`Exh p. 17
`
`

`

`______’_’___________.__.__.__———————————-—
`
`EXECUTIVE SUMMARY
`
`ff
`
`Mfr—#-
`
`Financial Overview
`-
`.PHOTOTELESIS anticipates that revenues from its presently identified markets will be
`in excess of $13 million overthe next three years, with near break-even profitability
`achieved during 1987 on revenue of $1.6 million". Pretax profits are planned to grow to‘
`$1.6 million by the end of calendar 1989 on revenues of $7.2__rn_i_llion. These forecasts
`assume penetration of presently identified markets only and do not include substantial
`potential for the company's products in'other markets which have been tested.
`
`The company's financialprojectlons assume that the corporation is funded with
`$750,000 by the end of May, 1987. The funds will be used to expand marketing and
`product development activities, and to ramp up volume manufacturing through a
`subcontractor.
`
`PHOTOTELEgllS-CONFIDENTIAL
`
`Exh'p'. 18
`
`Exh p. 18
`
`

`

`b
`
`PHOTOTELESflS—CONFIDENTIAL
`
`Exh p.'19
`
`Exh p. 19
`
`

`

`The Company ‘
`
`-
`
`Exh p. 20
`
`Exh p. 20
`
`

`

`’
`
`.
`
`ABOUT THE COMPANY
`. History
`
`-
`
`//
`Founded
`-
`PHOTOTELESlS was founded in SEPTEMBER 1985 and was chartered as a Texas
`Corporation in January 1987. The business purpose of the corporation is to address
`specific vertical markets with customized video transmission products.‘
`
`Test Marketing
`
`Specific product concepts were successfully test marketed at policy-making levels within ‘
`NASA, the Pentagon, and Federal law enforcement agencies. User groups within each
`market sector were also consulted, and specific product specifications were derived.
`
`_
`
`Product Announcement
`
`The first products were announced at the Armed Forces Communication & Electronics
`& Exhibition in Washington, D.C.,in':-».
`ASsociation (AFCEA) 1986 International Conference
`May of 1986.
`
`Development
`
`The first product prototypes, Sec-RlT and ATR-RIT, were completed in January of 1987..
`
`Orders and Shipments
`
`Initial orders for
`Shipment of the Com-RIT product to the FBI occurred in June of 1986.
`Sec-RIT and ATR-RIT were taken in October and November of 1986, respectively.
`
`Organization
`Additional marketing and financial expert
`business opportunity was there.
`In Dece
`plan were developed.
`NOTE: See product literature in this package for more details about specific products.
`
`ise were added when it became apparent the
`mber of 1986, a corporate strategy and business
`
`PHOTOTELESS—CONFIDENTIAL
`
`Exh p. 21
`
`Exh p. 21
`
`

`

`ABOUT THE COMPANY -
`r//
`
`W/
`
`/_/—’——
`Our business strategy
`‘
`'
`Our business strategy is to take commercially available, "off-the-shelf" products, add our
`own technology, packaging, and marketing expertise, then sell to our customers. We will .
`make use of contract personnel when appropri
`te to keep overhead costs down. Here's
`how it works:
`_,
`
`-
`
`,
`
`Suppliers
`Suppliers provide us with commercially available products, such as
`
`- Image communication subassemblies
`- Video equipment
`- PC's and PC peripheral equipment.
`
`.
`
`PHOTOTELESIS
`,
`Then we add our own technology and packaging to create our product. And we market
`these products to our vertical market sector.
`
`-
`_
`Contract Personnel
`In particular, this is appropriate for legal
`We use contract professionals where possible.
`work; certain engineering work, technical publications, documentation, advertising, and
`manufacturing;
`
`As a result, we can produce specialized products from off-the-shelf products at very
`competitive prices. We‘ofterthese products through a variety of distribution channels. By
`using contractors where possible for our needs, we greatly reduce overhead costs.
`
`PHOTOTELESflS—CONFIDENTIAL
`
`Exh p. 22'
`
`'
`
`Exh p. 22
`
`

`

`
`ABOUT THE COMPANY
`
`. Strategy Illustration
`
`
`
`
`PHOTOTELESflS—CONFIDENTIAL
`
`Exh p. 23
`
`Exh p. 23
`
`

`

`
`
`ABOUT THE COMPANY
`
`'w
`
`//
`
`Present Organization
`Presently our staff includes:
`
`- David Monroe, President
`
`{Larry Glidewell, Marketing and Sales
`
`. George Leonard, Marketing and Sales
`- Mike Huffman, Finance and Administration
`- Eric Schweppe, Engineering
`I
`
`Planned Expansion ‘
`During 1987, we plan to add these staff functions:
`
`. Hardware Engineer
`
`- Software Engineer
`
`° Secretary '
`
`- Clerk
`
`External Functions
`These functidns will be handled by contract personnel:
`
`- Manufacturing
`
`'4 Government Contract Development
`
`~‘
`
`~ Customer Service
`
`- Accounting and Legal
`
`~ Technical Publications and Documentation
`
`- Engineering Services
`
`PHOTOTELiesus—CONFIDENTIAL
`
`Exh p. 24
`
`Exh p. 24
`
`

`

`
`
`
`
`ABOUT THE COMPANY
`
`
`
`Organization Chart
`
`
`
`Sales
`
`Finance
`
`.
`
`Administration
`
`Marketing
`and
`
`Product Dev.
`
`Support
`
`H
`
`.
`
`V
`
`i
`
`i
`
`PHOTOTEILESlS—CONFIDENTIAL
`
`‘
`
`H
`
`_
`
`Exh p. 25
`
`Exh p. 25
`
`

`

`
`
`
`
`ABOUT THE COMPANY
`
`
`
`Management Profiles
`
`The PHOTOTELESIS executive team contains the key strengths in management,
`finance, engineering and marketing that are required for success in the high technology '
`systems field. This section presents brief profiles of each individual on the team.
`
`David A. Monroe
`David Monroe 34, has worked as an engineer and scientist throughout his career, from
`individual contributor positions progressing to President and Founder of
`PHOTOTELESIS Corporation.
`
`Prior to starting PHOTOTELESIS, Mr. Monroe was Vice President. and Co-Founder of
`Image Data Corporation, where he developed the PHOTOPHONE video telephone
`product from concept through manufacturing startup and product introduction.
`
`Mr. Monroe was previously Vice President of Office Graphics Systems of Datapoint
`~ Corporation, where he was responsible forthe management of several of Datapoint's
`most complex development programs, including the company's Laser Printer, Color
`Graphics System, Impact Printers and Facsimile products. Prior to Datapoint, Mr. Monroe
`was Principal Engineer with Mnemonics, Inc. a San Antonio and Sunnyvale--based
`startup in the field of solid state memory systems.
`
`As President, Mr. Monroe brings vital skills'in management of high-technology startups,
`including research and development, product and market strategy, and general
`management of electronics and computer products companies.
`
`Mr. Monroe's educational background includes Undergraduate curricula in Physics and
`Computer Science, University of Kansas, 1970-1973, Wharton Short'Course on Finance,
`1979, and AMA Management Course, 1980.
`
`——l.
`
`PHOTOTIEILIESHS—CON