IN THE UNITED STATES PATENT AND TRADEMARK OFFICE '
`
`In re Application of:
`
`David A. Monroe
`
`Serial No.: 10f3 36,470
`
`Filed: January 3, 2003
`
`IMAGE SIGNAL VIA A DIGITALmmmmmmmamammamamam
`
`Group Art Unit: 2622
`
`Examiner: Joseph R. Pokrzywa
`
`_ For: APPARATUS FOR CAPTURING,
`CONVERTING AND
`
`TRANSMITTING A VISUAL
`
`' TRANSMISSION SYSTEM
`
`AFFIDAVIT OF DAVID A. MONROE UNDER-'37 CFR 1.131
`
`David A. Monroe, being duly sworn, statesas follows:
`
`1.
`
`2.
`
`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 “1 31 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 13] Prior Art is.
`as follows:
`
`PatentfPublication
`
`Earliest Effective Date
`
`Cited by Examiner
`
`US. Pat. No. 5,546,194
`
`March 23, 1994
`
`SN 10/336,470
`
`U.S. Pat. No. 5,550,654
`
`May 13, 1994
`
`-
`
`SN 10/336,470
`
`US. Pat. No. 5,689,300
`
`November 18, 1997
`
`SN 10/336,470
`
`U.S. Pat. No. 5,754,227
`
`September 28, 1994
`
`NOT CITED
`
`E-Watch, Inc
`Exhibit 2001
`Petitioner - Iron Dome LLC
`Patent Owner - E-Watch Inc
`
`|PR2014-OO439
`
`_
`
`1
`
`

`

`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
`
`NOT CITED
`
`NOT CITED
`
`NOT CITED
`
`NOT CITED
`
`U.S.
`
`Pat. No. 5,666,159
`
`April 24, 1995
`
`SN 10/336,470
`
`U.S.
`
`Pat. No. 5,793,416
`
`December 29, 1995
`
`SN 107326503
`
`U.S.
`
`Pat No. 5,825,408
`
`March 18, 1994
`
`SN 107326503
`
`U.S-
`
`Pat. No. 5,893,037
`
`December 9, 1994
`
`SN 10/326,503
`
`U.S.
`
`Pat. No. 5,929,901
`
`October 6, 1997
`
`NOT CITED
`
`U.S.
`
`Pat. No. 5,995,041
`
`December 30, 1996
`
`SN 102’336,470
`
`U.S.
`
`Pat. No. 5,969,750
`
`September 4, 1996
`
`SN 101326503
`
`U.S.
`
`Pat. No. 6,072,600 '
`
`January 30, 1996
`
`SN 10f336,470
`
`U.S.
`
`Pat. No. 5,806,005
`
`May 10, 1996
`
`SN 107326503
`
`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
`
`NOT CITED
`
`NOT CITED
`
`NOT CITED
`
`U.S.
`
`Pat. No. 6,111,863
`
`December 29, 1995
`
`SN 10/326,503
`
`U.S.
`
`Pat. No. 6,122,526
`
`April 24, 1997
`
`- NOT CITED
`
`PCT Publication
`
`WO 97/26744
`
`July 24, 1997
`
`SN 10/326,503
`
`U.S.
`
`Pat. No. 6,181,954
`
`January 12, 1998
`
`SN 10/326,503
`
`U.S.
`
`Pat. No. 6,452,626
`
`October 6,‘ 1997
`
`NOT CITED
`
`

`

`r.—
`
`The earliest effective date of any of the 131 Prior Art is March 18, 1994. My invention
`date for each of the inventions shown and described in the subject applications
`is more
`than one year earlier than the earliest effective date of any of the 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 of which are dated earlier than March 18,
`1993.
`
`During the period from the date of the inventions to the filing date of January 12, 1998 I
`was diligent in pursuing the invention and did not abandon the inventions. During this
`period the invention conceived and shown in Exhibits 6-16 was continually refined and
`revised, primarily in an effort to achieve a viable commercial product that met all the
`requirements of the inventions while at the same time being feasible. Commercial success
`demanded meeting both acceptable performance criteria and financial (cost) criteria.
`
`I began working with the concept of sending image data over transmission systems as
`early as 1983, In 1983 I developed the “PhotoPhoneTM”, a pioneering desktop device
`ultimately was extensively used and thrived as an early “tele-radiology” system for the
`transmission of medical X-Ray images, see Exhibit 1.
`
`In 1985 I started a company called Ph'otoTelesis that focused on extending the
`PhotoPhone to specific Government applications.
`In 1986 1 extended this desktop
`technology to enable transmission over radio circuits, including cellular. This was done
`by the addition of a cellulan’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 Corn-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.
`
`Over the next several years, I developed several Remote Image Transceivers or R.l.T.’s
`for the United States Military, see Exhibit 4, and as shown and described in the 198'?
`Business Plan of my company PhotoTelesis, see Exhibit 5.
`In 1989 I conceived the
`circuitry for a concept model R.1.T. which could be handheld, see Exhibit 6. Over the
`next several years I continued to deve10p 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.
`
`

`

`10.
`
`11.
`
`12.
`
`l3.
`
`14.
`
`I perceived that a small, handheld image RIT was needed and in 1989 I conceived the
`circuit architecture 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
`performance. Over the next several years I continued my efforts to develop the handheld
`R.I.T. while continuing to work on, develop and build the larger specialized tactical
`military R.I.T. systems such as those shown in the 1987 Business Plan, Exhibit 5.
`Evidence of this continuing effort are the design concept drawings generated in
`corroboration with an industrial designer shown in Exhibits 7 and 8, dated 1990.
`In
`addition, in 1991 I 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.
`
`In 1992, the first comprehensive circuit was completed for a handheld R.I.T., as shown in
`Exhibit 11. This circuit became Fig. 8 of U.S. Application No. 10!336,470. Continued
`work done in 1992 on a packaging modification that would be more desirable to
`Government Customers, as is shown in Exhibits 12 and 13. Some of the design concepts
`of the 1992 and earlier period were also included in the Government model as was shown
`in the Application. Compare, for example, Fig. 6 in the application to the 1992 concept
`drawings Exhibits 12 and 13.
`
`Over the next several years, 1993—1997, Photo-Telesis became the standard R.I.T. for
`Government
`tactical
`image
`transmission. The
`tactical
`systems developed and
`commercialized by PhotoTelesis were employed by the U.S. Government in many
`systems. Many of the products developed and sold by PhotoTelesis followed the
`concepts shown and described in the 198? Business Plan (Exhibit 5).
`
`During this time, I continued to be interested in and continued to develop the concept of a
`true handheld R.I.T. product.
`In fact, I came up with a formal proposal of a handheld
`R.I.T. in 1995 and put together a concept proposal in November, 1995 (Exhibit 14), using
`secure radio transmission. Ultimately this project was never Government funded, I went
`on to fund and develop a commercially feasible handheld R.I.T.
`that was first
`publicly disclosed in late 199? and first sold to the Government in 1998.
`
`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 to the Examiner in charge
`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—kincl prototype are
`contained in this record as Exhibit 15.
`
`15.
`
`The circuitry for supporting the product resulting from the 1995 proposal is provided in
`the schematics of Exhibit 16, which ultimately became Fig. 5 of Application No.
`10/326,503.
`
`

`

`16.
`
`17.
`
`18.
`
`19.
`
`The product based on the prototype (Exhibit 15 and Exhibit 16) was put into production
`and sold to the Government. One of the production units Physical Exhibit 17 as is
`photographed111 Exhibit 1?, was demonstrated transmitting over cellular telephone tothe
`Examiner.
`
`As shown by the Exhibits attached hereto 1 conceived the invention at least as early as
`March 13,1993 and worked diligently in developing a commercially viable product
`culminating in the first commercial handheld R.1.T. in late 199111113 handheld R.1. _T: .
`used cellular telephone transmission technology, as evidenced by Exhibits 15-17 33,3131:
`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 and1n fact, prior to any public disclosure
`The above facts establish reduction to practice prior to the earliest effective dates of the
`131 Prior Art, or as a minimum, establish couception of the inventionprior to the earliest
`effective date of the 131 Prior Art coupled with due diligence from prior to this date to a
`subsequent reduction of practiCe culminating in‘ the prototype of the cofin'nercial
`embodiment Exhibit 15 in mid-1997.
`
`Further affiant sayeth naught.
`
`Executed this 2. ?£ day of December, 2004, by:
`
`
`
`

`

`IN THE UNITED STATES PATENT
`
`AND TRADEMARK OFFICE
`
`Group Art Unit: 2643
`Examiner: Wing F. Chan
`
`In re Application of:
`David A. Monroe
`Serial No.: 10826503
`Filed: December 20, 2002
`For: METHOD AND APPARATUS
`FOR IMAGE CAPTURE
`COMPRESSION AND
`TRANSMISSION OF A VISUAL
`IMAGE OVER TELEPHONIC
`OR RADIO TRANSMISSION
`SYSTEM
`
`§
`2
`2
`g
`g
`§
`§
`§
`§
`§
`§
`
`
`INDEX
`
`Exhibit 1
`
`PbotoPhoneTM Transmission System - 1983
`
`Exhibit 2
`
`Circuit Board - 1986
`
`Exhibit 3
`
`Press Release PhotoTelesis Systems - 1986
`
`Exhibit 4
`
`Briefcase Telecommunication - 1985
`
`Exhibit 5
`
`Phototelesis Business Plan -198'ir
`
`Exhibit 6
`
`Circuitry Sketch for a Concept Model R.I.T. — Handlheld - 1989
`
`Exhibit 7
`
`_ Design Concept Drawing - 1990
`
`Exhibit 8
`
`Design Concept Drawing -l99l]
`
`Exhibit 9
`
`3-D Design - 1991
`
`Exhibit 10- Detailed Schematic -1991
`
`Exhibit 11
`
`Comprehensive Circuit Schematic -l992
`
`Exhibit 12
`
`Concept Drawing - 1992
`
`Exhibit 13 Concept Drawing - 1992
`
`Exhibit 14 MicroRlT Proposal - 1995
`
`Exhibit 15
`
`Photos of Physical Exhibit — Prototype Handheld R.I.T. — 1997
`
`Exhibit 16
`
`Schematics — 1997
`
`Exhibit 17
`
`Photos of Production Model - 1997
`
`

`

`EXHIBIT 1
`
`

`

`
`
`7J-""'“"""T""~‘"
`"L
`
`
`
`- —-'-v-~\1v_q.-.é-.
`
`

`

`EXHIBIT 2
`
`

`

`
`
`.L-xai'cuua
`
`
`
`
`‘_
`
`rhlllll!
`
`h
`
`
`
`

`

`EXHIBIT 3
`
`11
`
`

`

`s/z.aMr
`
`9W“
`PHOTOTELESHS
`
`r. I Remoteimage TransmissionSystems . ©\L/ 4
`
`Press Release
`
`- For Immediate Release
`
`:
`
`L.
`
`PhotoTelesis and image Data Sign Agreement
`
`Secure Remote image Transmission over Telephone & Tactical —
`Transceivers
`
`Secure-video image transmission
`San Antonio, TX.
`May26, 1986.
`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
`
`The agreement makes PhotoTele'sis the otticial:~vendor-~of
`applications.
`Photophones specially adapted for’f"'Government applications.
`.
`_
`r-’- ‘— /
`‘
`.
`PhotoTelesis introduced-three new product
`lines at
`the Armed Forces
`Communcation and- Electronics _Association annual Convention" and
`Exposition May 27. 28, and-"29 at the Washington D.C. Convention Center.
`Three special versions of
`the commercially successful Photophoneare
`produced and marketed by PhotoxTelesis.
`All
`'enable freeze frame
`monochrome video pictures to be transmitted in seconds over various
`carriers. They are called R'ITs -- for Remote Image Transceivers.
`
`sight-"and
`line of
`images over secure tactical
`Tac-RITTM 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.
`
`.
`_
`"
`i
`i r“.
`
`including
`Sec-RITTM. is compatible with secure (enorypted) COMSEC gear.
`STU ll, STU 'III, and PSV (Personal 'Secure Voice) secure telephones over
`common dial-up lines.
`
`801' Lincoln Center
`
`7800 |H_-10 West
`
`8: 1‘2 ionic. Texas 78230
`
`{512] 349-2020
`
`

`

`PHOTOTELESUS
`
`Remote image Transmission Systems
`
`'
`
`\
`
`'
`
`_ News Release
`
`
`
`Page Two
`
`The PhotoTelesis units offer the additional advantages of allowing
`voice and video over the same channel, enabling
`discussion of the picture.
`An interactive pointer controlled by either party allows discussion of
`the
`document as though the two parties were across the table from each other
`rather than hall-way'around the world.
`
`the
`lines of FliTs 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 DC.
`Convention Center.
`
`line of sight and
`Tac-RITTM transmits images over secure tactical
`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.
`
`Sec-HIT'I‘Mis compatible. with secure (encrypted) ICOMSEC gear,
`including STU II, STU Ill, and PSV (Personal Secure Voice)
`secure
`telephones over common dial-up lines.
`
`Com-Fll'l'TM 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.
`
`13
`
`

`

`EXHIBIT 4
`
`14
`
`

`

`
`
`
`
`
`
`
`
`mmwm/__3-1-1:35%;?41/
`
`15
`
`

`

`EXHIBIT 5
`
`16
`
`

`

`_
`
`__
`
`
`
`PHOTOTELESHS -
`‘ Business Plan-
`
`/M;_
`
`
`
`

`

`
`
`PHOTOTI‘EILESUS Business Overview Copy ii .'
`
`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, orqlmake 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 recrpient
`and the preparers of this document in violation of the Texas and Federal secun'ties- 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.
`
`Prior to the sale of any securities related to the corporation described herein, the '
`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
`
`'18
`
`

`

`PHOTOTIELESUS 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 appiicabie 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
`
`19
`
`

`

`
`
`
`
`CONTENTS
`
`
`
`
`
`Executive Summary
`
`About the Company
`
`The Market
`
`Competition
`
`Marketing
`
`Technology
`Products
`_ TEMPEST
`
`Risks
`
`\
`
`.
`
`.
`
`.
`
`Contracts and Agreements
`Financials
`
`Appendix-
`
`PHOTOTJELESHS—CONFIDENTIAL
`20
`
`

`

`
`
`
`EXECUTIVE SUMMARY
`
`
`
`
`
`
`_
`-
`-.
`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 solutions to its customers including
`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 US.
`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 deveIOp 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 FederalGovernment 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 1989.
`'
`
`in the tall 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.
`
`"
`
`PHOTOTEILESflS-CQN FIDENTIAL
`'
`21
`
`

`

`
`
`EXECUTIVE SUMMARY
`
`
`
`
`
`The PHOTOTELESIS management team brings together broad skills in the
`management of high technology companies. as well as specific expertise in the
`'deveIOpment and marketing of image commonications 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:
`
`-
`
`-
`
`.
`
`'
`
`.
`
`-
`
`An identified and unfulfilled need for low cost image communications to supplant.
`the development of major program-level initiatives in Communications,
`_
`Command. Control ang Intelligence systems (Known as C3!) 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 for the DOD. arena, with program-level
`expenditures on the order of billions of dollarsin the next five years.
`
`The burgeoning market for products designed to government standards for
`handling classified information, called TEMPESFI', presently estimated at $350
`million and expected to-double 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 oi 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 successin the targeted markets.
`
`PHOTOTIELESUS—CON FIQENTIAL
`22
`'
`
`

`

`
`
`EXECUTIVE SUMMARY
`
`
`
`
`
`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 oi Treasury
`
`INASA
`
`PHOTOTELESlShas made revenue shipments of evaluation quantities to target '
`customers during 1936 and has received orders tor additional equipment for delivery
`in 1987. In addition. high-level user groups have been identified in each of the above
`departments who are prospects fer sale in 1987.
`-
`
`Marketing Strategy
`_ PHOTOTELESIS sells its products directly to major accounts in its target markets.
`through government purchasing contracts, and-plans to. otter 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
`tor large volume contracts in the future.
`
`‘
`PHOTOTELESIS 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.
`'
`
`PHOTOT'lEILIESflS—CONFIDENTIAL
`23
`
`
`
`

`

`
`
`EXECUTIVE SUMMARY
`
`
`
`
`
`
`
`.
`Product Line Overview
`The PHQTOTELESIS products are known as Fiemote Image Transceivers, or Ft.I.T.'-s.
`The RIT‘ 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 WT which are specialized for its
`target markets:
`
`Desktop
`. Products
`
`ATFt-FtlT
`
`Prod ucts
`
`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 (ATFi) form factor suitable for
`mounting in aircraft, marine or mobile environments. The ATFt-FtlT 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 RIT for both secure and non-secure applications where
`portability is a necessity. The packaging technology for the ATFt-RIT will
`be adapted forthe 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 FtIT technology and push
`the product into applications in which image communications has‘pot
`heretolore been available. Target field applications include infantry.
`disaster recovery. paramedic, construction. surveiliance and security.
`
`PHOTOTELESBS-CONFIDENTIAL
`24
`
`

`

`
`
`EXECUTIVE SUMMARY
`
`
`
`
`
`Financiai Overview
`.
`PHOTOTELESIS anticipates that revenues from its presently identified markets-will be
`in excess of $13 million over the next three'years, with near break-even profitability
`achieved during 1.987 on revenue of'$1 .6 million. Pretax profits are planned to grow to
`$1.6 million by the end of calendar 1989 on'revenues of1$7.2 million. These forecasts
`assume penetrationof presently identified markets only and do notginolude substantial
`potential for the company‘s produpts in other-markets which have been tested.
`
`The company's financial projections assume that the corporation is funded with
`$750,000 lay-the end—of May, 1987. The funds will be used to expand marketing and-
`produot development activities, and to ramp up volume manufactUring through a
`subcontractor.
`
`PHOTOTELESflS-CONFIDENTIAL
`25
`
`

`

`
`
`' Notes
`
`
`
`
`
`PHOTOTEILBDS—CONFIDENTIAL
`
`26
`
`

`

`.
`
` The Company
`
`.
`
`27
`
`

`

`
`
`ABOUT THE COMPANY
`
`
`
`
`
`Founded
`
`"”
`
`PHOTOTELESIS was founded in SEPTEMBER 1985 and was chartered as a Texas
`Corporation in Jahuary 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:.=;.
`Association (AFCEA) 1986 International Conference 8 Exhibition in Washington. DCin
`May of 1986.
`—
`
`_
`Deveiopment
`The first product prototypes, Sec—HIT and ATFi-RIT. were completed in January of 1987.
`
`Orders and Shipments
`Initial orders tor
`Shipment oi the Com-HIT product to the FBI occurred in June of 1986.
`Sec-HIT and ATFi-RIT were taken in October and November of 1986, respectively.
`
`Organization
`Additional marketing and financial expertise were added when it became apparent the
`business opportunity was there.
`In December of 1986, a corporate strategy and business
`plan were developed.
`
`NOTE: See product literature in this package for more details about specific products.
`
`PHOTOTELESIS-CONFIDENTIAL
`
`28
`
`

`

`
`
`ABOUT THE COMPANY
`
`
`
`Strategy
`
`
`
`
`
`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 appropriate 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.
`
`PHOTO TELESIS
`Then we add our own technology and packaging to create our product. And we market
`. these products to ourvertical market sector.
`
`Contract Personnel
`We use contract professionals where possible.- In particular, this is appropriate for legal
`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 offerthese products through a variety of distribution channels. By
`using contractors where possible for our needs, we greatly reduce overhead costs.
`
`
`
`PHOTOTELESflS—CONFIDENTIAL
`
`29
`
`

`

`
`
` BOUT THE COMPANY
`Strategy”'us”at'0n
`
`
`
`Selgct
`
`PHOTOTELESflS—CONFIDENTIAL
`
`30
`
`
`
`

`

`
`
`ABOUT THE COMPANY
`
`
`
`Organization
`
`
`
`
`
`- PresentOrganiza-tfon
`Presently our staff includes:
`
`if"
`
`- David Monroe, President
`
`. Larry Glidewell. Marketing and Sales
`
`. George Leonard, Marketing and-Sales
`
`- Mike Huffman, Finance and Administration
`
`- Eric Schweppe, Engineering
`
`Planned Expansion
`During 1987, we plan to add these staff functions:
`
`- Hardware Engineer
`
`. Software Engineer
`
`- Secretary '
`
`°Cbm
`
`External Functions
`These functions will be handled by contract personnel:
`
`- Manufacturing
`
`. Government Contract Development
`
`- Customer Service
`
`- Accounting and Legal
`
`- Technical Publications and Documentation
`
`- Engineering Services
`
`PHOTOTIELLESUS—CONFIDENTIAL
`
`31
`
`

`

`
`
`L
`
`g
`
`.
`
`"
`
`_.
`
`7
`
`'
`
`'
`
`ABOUTTHE COMPANY .
`
`Organization Chart
`
`
`
`
`
`President
`
`‘1
`..
`J—
`L
`
`] .
`
`.
`
`1
`
`~
`
`Product Dev.
`and
`Support
`
`
`
`
`
`Finance
`-
`and-
`,-
`D“
`._ Administratlon .
`
`Hardware I
`
`-
`
`Engineer
`
`Software
`Engineer
`
`
`
`-
`
`I
`
`1
`
`....H.
`
`-
`
`_
`
`'
`
`'PHOTOTELESflS—CONFIDENTIAL
`
`'
`
`_
`
`32
`
`

`

`
`
`
`
`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.
`
`Priorto 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 comptex 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 Cours