The Nanoboxx By Mikael Thakur

Business Plan Prepared by: Mikael Thakur Schulich School of Business York University Masters of Business Program

Nanoboxx™ - Convergence comes of age

AGARTHA TECHNOLOGY INC. EXECUTIVE SUMMARY Agartha Technology Inc. (Agartha Inc.) is aiming to commercialize the world’s

smallest

portable

computer:

the

Nanoboxx™.

Measuring

approximately 5x2x2 inches, Nanoboxx™ has no physical keyboard and no physical monitor, yet boasts a full-size laser projected keyboard and full-size projected display (figure 1). By incorporating innovations in projection technology, Nanoboxx™ combines the pocket-sized convenience of a PDA with the computing power and ease of use of a laptop. Portability, durability, and feature pack: the Nanoboxx™ will go everywhere your business takes you.

Figure 1: Agartha Inc.’s rendition of the Nanoboxx™. The Nanoboxx™ is a portable computer measuring approximately 5x2x2 inches that projects both the display and the keyboard and is targeted to businesses and the

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Nanoboxx™ - Convergence comes of age

mobile professionals.

The miniaturization of portable computing and telecommunication devices faces an inherent challenge: as devices get smaller, so do their keyboards and displays, which makes them uncomfortable to use. Nanoboxx™ overcomes this challenge.

Product: What makes Nanoboxx™ unique is its innovative technology which uses low cost holographic laser projection and diffractive mirror technology to project a full colour, high-quality graphical user interface (GUI) on virtually any surface, eliminating the challenge of small displays many small portable devices face. In fact, the projected GUI has a diagonal measurement of approximately 10-12 inches, which is comparable to that of many laptops. The embedded micro projector has no moving parts, consumes minimal power and does not need a fan to dissipate heat. Nanoboxx™ also projects a virtual laser keyboard to generate a full-size QWERTY keyboard that recognizes tapped strokes through an optical recognition mechanism. Agartha Inc.’s Nanoboxx™ is perfect for general business computing, gaming, and web browsing and all the projection technologies (for both the keyboard and the GUI) are already fully functional and available on the market individually from different suppliers. The initial market niche for the Nanoboxx™ within the U.S. and Canada is estimated to be worth over $1.0 billion. Agartha Inc. intends to enter this market swiftly by partnering with a

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Nanoboxx™ - Convergence comes of age

third party and outsourcing manufacturing. Future growth opportunities include an expansion of the current product into new markets and the development of a line of innovative peripherals and nano devices. Competition: Nanoboxx’s™ competition stems from the advancement of portable computing devices such as laptops, PDAs and Smartphone’s. Yet the Nanoboxx™ offers several benefits over these other portable electronic devices. Nanoboxx’s™ functionality is not limited by the size of its screen or its keyboard. The projected keyboard and screen can be displayed on flat or curved surfaces and allow business persons to conduct presentations on the fly. The trend toward miniaturization and the evolution of more powerful computer and projection technologies emphasize the demand for smaller, yet practical computing. Agartha Inc. is uniquely positioned to capitalize on this demand. The Management Team: Agartha Inc.’s management team consists of Cristian Blidariu, Orin Zhao, Rudi Lof, and Mikael Thakur. In addition to the fact that each member is currently completing an MBA, the team represents a strong blend of complementary skills and diverse business experience: Orin and Mikael have worked intensively in the high tech industry while Rudi and Cristian have intensive corporate law experience and are presently completing the requirements of a law degree concurrent with their MBA’s. Therefore, a matrix management style will be employed in order to utilize all skill sets to the furthest extent. As the company grows, additional 4 | Page

Nanoboxx™ - Convergence comes of age

professional help will be hired as the need for such personnel becomes significant and justifiable. Financial Strategy: Agartha Inc. is seeking seed capital of $100,000 for initial company operations to: • • • • •

Secure the license for the GUI micro projector from Microvision Inc; Secure the license for the laser keyboard from I-Tech; Develop a pre-manufacturing prototype; Conduct negotiations with potential industrial partners and customers; and Begin alpha-testing with select corporate collaborators.

Formal operations will begin in the second half of 2009. Approximately one year later, Agartha Inc. will raise an additional $3 million in private equity, corporate partnerships and federal grants to: • • • • •

Begin full-scale product development; Hire a seasoned CEO and management team; Research and development of new product lines; Identify outside vendors and contract the design and manufacture of the Nanoboxx™; and Develop corporate partnership efforts.

Agartha Inc. intends to raise another $5 million in follow-on investment in the third year of operations to scale-up its production and new product development efforts. The initial investor will receive an equity stake in the company and preferential rights to invest in subsequent equity rounds. Possible exit strategies for the investor include a leveraged buyout by management, the sale of the entire company to a major consumer, or taking the company public. 5 | Page

Nanoboxx™ - Convergence comes of age

The Nanoboxx™ is an exciting and potentially very rewarding investment opportunity. Agartha Inc.’s management team looks forward to further discussions with you regarding this Business Plan.

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Nanoboxx™ - Convergence comes of age

TABLE OF CONTENTS

AGARTHA TECHNOLOGY INC. EXECUTIVE SUMMARY..................................................................................... ............2 Agartha Technology Inc. (Agartha Inc.) is aiming to commercialize the world’s smallest portable computer: the Nanoboxx™. Measuring approximately 5x2x2 inches, Nanoboxx™ has no physical keyboard and no physical monitor, yet boasts a full-size laser projected keyboard and full-size projected display (figure 1). By incorporating innovations in projection technology, Nanoboxx™ combines the pocket-sized convenience of a PDA with the computing power and ease of use of a laptop. Portability, durability, and feature pack: the Nanoboxx™ will go everywhere your business takes you.............................................................................................2 1.0 COMPANY OVERVIEW............................................................................................9 1.1 The Idea............................................................................................................9 2.0 THE PRODUCT................................................................................................... ..11 2.1 Projection Technology......................................................................................11 2.1.1 The Display................................................................................................ 11 ........................................................................................................ ...............12 PicoP™ projector component..............................................................................12 Canadian Dime........................................................................................ ...........12 Figure 2................................................................................. .............................13 2.1.2 How The Projector Works...........................................................................13 The desired image is deconstructed into electronic signals. The electronic signals drive red, green, and blue laser light sources with intensity and color formation. Spectrally pure light delivers brilliant colors using tiny red, green, and blue lasers. Red, green, blue laser light paths are combined into a single modulated light path that represents a full pallet of colors. Light output from the combiner optic is directed onto the MEMS scanning mirror which reproduces the desired image pixel by pixel. For complete specifications of the PicoP™ display engine, please refer to Appendix B........................................................13 2.1.3 The Keyboard............................................................................................13 7 | Page

Nanoboxx™ - Convergence comes of age

The Nanoboxx™ will also embed a virtual laser keyboard by partnering with ITech Inc. The virtual keyboard uses state of the art infrared & laser technology to project a full-size keyboard onto any flat surface. This virtual keyboard acts exactly like any other "ordinary" keyboard and uses an optical recognition mechanism to recognize inputted keys. For the first time mobile device users can type normally and taking the pain and frustration out of existing minuscule keyboards and handwriting recognition software that current pocket PC’s have incorporated. Figure 3 shows how the I-tech keyboard is displayed..................13 2.1.3 PC components........................................................................................15 2.2 Benefits.................................................................................. .........................15 3.0 MARKET ANALYSIS..............................................................................................15 3.1 Market Segmentation......................................................................................16 3.2 Customer Analysis................................................................................. .......17 3.2.1 Target Market Size.....................................................................................18 The initial market niche for the Nanoboxx™ within the U.S. and Canada is estimated to be worth over $1.0 billion. The worldwide handheld PC revenue was nearly $4.1B in 2000, which increased to over $23B in 2005. According to technology analysts ET Forecasts, worldwide handheld PC revenue will reach over $65B in 2011 for a compound annual growth rate of nearly 28% between 2000 and 2011...................18 3.3.1 Promotions................................................................................................21 3.3.2 Distribution............................................................................................. ...22 3.4.1 Direct........................................................................................................ .23 There are around 20 handheld computer manufacturers around the world, such as OQO, U.S.A.; Samsung, Korea; PBJ, Japan; Han Wang, China, etc. Their products are the direct competitors of the Nanoboxx™. The competition is not intensive because the space for such a startup market to grow is huge. Therefore, the present major competitors of the Nanoboxx™ are the PDA and laptops. Regarding to the unique advantage of our products, it is not difficult for the Nanoboxx™ to win a credible market share. All these competitors have a product that do not have a full keyboard nor a full-size display.........................23 3.4.2 Indirect.................................................................................... ..................23 4.0 OPERATIONS............................................................................. ..........................23 4.2 Operating Complexity.................................................................................. ....24 5.0 SUMMARY OF FINANCIALS................................................................................. ..26 8 | Page

Nanoboxx™ - Convergence comes of age

6.0 MANAGEMENT.................................................................................................... .29 APPENDICES............................................................................. ................................30

1.0 COMPANY OVERVIEW

1.1 The Idea What if you could embed a projector, a laser keyboard, and PC components into a box that can fit into your pocket? That’s the idea behind Nanoboxx™ by Agartha Inc., a Toronto Ontario base startup that is looking to commercialize

the

world’s

smallest

portable

computer.

1.2 Genesis of Concept In late 2006, a technological evolution occurred with the prospect of producing a projector the size of a dime. In early 2007 this idea became 9 | Page

Nanoboxx™ - Convergence comes of age

reality. The application of the dime sized projector seemed limitless, and as a

result

the

idea

of

the

Nanoboxx™

was

created.

The mission of Agartha Inc. is to commercialize new projection technology with existing technology and transform the portable handheld computing industry with the introduction of the Nanoboxx™. The management team of Mikael Thakur, Cristian Blidariu, Rudi Lof, and Orin Zhao, has identified several windows of opportunity for the application of this revolutionary technology in the portable PC industry and together constitute the nucleus of the expertise required to take advantage of this industry.

1.3 Strategy and Objectives Agartha Inc. has identified a significant market opportunity for innovative and scalar technology products and developed Nanoboxx™ to capture this market as the first mover. In the short term Agartha Inc. plans to gain funding for initial working capital, secure the license for the projection technology

and

form

cooperative

partnerships

with

designers,

manufacturers, and resellers to enter the market swiftly. In the medium term the company will expand its product range by developing other innovative portable projection products such as the windshield projected GPS. Agartha Inc.’s long-term objectives are to continue R&D, enter new markets, and capture 1-5% of the $1Billion portable electronic computing industry.

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2.0 THE PRODUCT

Agartha Inc. is aiming to solve the keyboard and display bottleneck seen in portable computing devices by introducing the Nanoboxx™. The Nanoboxx™ is a portable computer measuring approximately 5x2x2 that will bridge the gap between a pocket PC and laptop. Finished in piano black, this innovative product displays both the display and keyboard on virtually any surface. For detailed product specifications please refer to Appendix A. 2.1 Projection Technology 2.1.1 The Display Agartha Inc. will partner with U.S. based Microvision Inc. to bring to market the next generation of portable projection technology. The Nanoboxx™ will embed Microvision Inc.’s PicoP™ display engine which contains Microvision's patented MEMS scanner.

PicoP™ is an ultra miniature projection module

capable of producing full color, high-resolution images but small enough and low power enough to be embedded directly into the Nanoboxx™ and enable a large screen viewing experience.

The ultra miniature PicoP™ display

engine is comprised of 1) electronics, 2) laser light sources,3) combiner optic, and 4) MEMS scanning mirror. These four components of the PicoP display engine are brought to life using Microvision’s proprietary software which Agartha Inc. will license. The desired image is reproduced in WVGA format onto any projection surface. Figure 2 shows the relative size of the PicoP™ projector module relative to a dime. 11 | P a g e

Nanoboxx™ - Convergence comes of age

PicoP™ component

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projector

Canadian Dime

Nanoboxx™ - Convergence comes of age

Figure 2

2.1.2 How The Projector Works The desired image is deconstructed into electronic signals. The electronic signals drive red, green, and blue laser light sources with intensity and color formation. Spectrally pure light delivers brilliant colors using tiny red, green, and blue lasers. Red, green, blue laser light paths are combined into a single modulated light path that represents a full pallet of colors. Light output from the combiner optic is directed onto the MEMS scanning mirror which reproduces the desired image pixel by pixel. For complete specifications of the PicoP™ display engine, please refer to Appendix B. 2.1.3 The Keyboard The Nanoboxx™ will also embed a virtual laser keyboard by partnering with ITech Inc.

The virtual keyboard uses state of the art infrared & laser

technology to project a full-size keyboard onto any flat surface. This virtual keyboard acts exactly like any other "ordinary" keyboard and uses an optical recognition mechanism to recognize inputted keys. For the first time mobile device users can type normally and taking the pain and frustration out of existing minuscule keyboards and handwriting recognition software that current pocket

PC’s have incorporated.

keyboard is displayed.

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Figure 3 shows how the I-tech

Nanoboxx™ - Convergence comes of age

Figure 3: Laser projected keyboard. Source: I-Tech Inc.

2.1.4 How The Keyboard Works The virtual laser keyboard projects a template of the desired interface and the keyboard is illuminated by a specially designed holographic optical element. Then an infra red plane of light is generated just above and parallel to the interface surface. This light is invisible to the user. The reflected light from the users interactions with the interface surface is passed though an infra-red filter and an imaged on to a CMOS image sensor in the sensor module.

Custom hardware embedded in the sensor chip within the

Nanoboxx™ then makes a real time determination of the location of the reflected light. Tapped keys are recognized and processed through an OCR mechanism. Appendix C.

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For full specifications of the virtual keyboard please review

Nanoboxx™ - Convergence comes of age

2.1.3 PC components The PC components of the Nanoboxx™ are sourced from VIA Technology Inc. of Taiwan. VIA Technology Inc. is a complete platform provider and is the foremost fab-less supplier of market-leading core logic chipsets, low power x86 processors, advanced connectivity, multimedia, networking and storage silicon, and complete platform solutions that are driving system innovation in the PC and embedded markets.

VIA has also leads the market in

miniaturization of the platform, in order to allow the system design innovation that will drive the next generation of personal electronics form factors. For complete technical specifications of the platform that Agartha Inc. will use in the Nanoboxx™, please refer to Appendix D. 2.2 Benefits Some of the benefits of the Nanoboxx™: • Conference anywhere and have impromptu meetings on the fly; • Work on a full size screen and keyboard. No more squinting and slow data

processing entry; • Give added dimension to videos and images otherwise limited by a tiny screen; • Watch videos, share images, and truly have a mobile office in your pocket. • improve work efficiency through wireless connectivity

3.0 MARKET ANALYSIS

The Nanoboxx™ targeted niche is the high value-added handheld PC market. The traditional PCs industry is under the threat of permanent decline from a revenue perspective. The targeted handheld computer market was exploded 15 | P a g e

Nanoboxx™ - Convergence comes of age

2 years ago in filling in the gap between personal digital assistants (PDA) and laptops by the introduction of thumb computing. This niche market grows very fast in an approximately 28% compound annual growth rate (Refer to Appendix E for market share analysis). The entry of the Nanoboxx™ will extend this market tremendously above its present horizon. However, the handheld computer market is relatively new and the market of the Nanoboxx™ is even prior its infant stage, it is essential to cultivate the potential market at the start of the product by appropriate promotions. 3.1 Market Segmentation The market for the Nanoboxx™ will overlay the current PDA market and overlap a portion of traditional PC/Laptop market. The permeation of PCs, both desktops and laptops, led to the human’s reliance of personal computers and naturally resulted in the born of handheld computer. PDA was the pioneer product to response the needs. However, the weak functionality and poor performance of PDA was not able to satisfy the major body of customers. Hence, the market for PDA will finally end into 2 categories: the advanced cell phone, Smartphone, and the powerful, practical and portable handheld computer. The Nanoboxx™ is designed to fulfill the demands for the handheld computers.

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3.2 Customer Analysis Business users are a premium segment of the overall mobile market, not only spending more on innovative technologies but also adopting advanced portable computing devices. The Nanoboxx™ will initially target the mobile business person market. These users are willing and eager to receive the benefits that converged devices offer. Choosing the right equipment for the road is essential and it can make the difference between making the sale and losing an account. This lucrative niche market has deep pockets, want the latest technological and innovative devices that come to market, and usually work for large global organizations and do extensive travelling and are involved in numerous presentations. ABI Research1 analysis shows that the average revenue per user (ARPU) among business users is 24% higher than among personal users. For mobile devices, the gap is even wider - business users spend 80% more than personal users. Such users deliver the highest ARPU for both business applications and hardware. Combining the two will pay dividends. Agartha Inc. intends to capitalize on this lucrative market.

1

http://www.abiresearch.com

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3.2.1 Target Market Size The initial market niche for the Nanoboxx™ within the U.S. and Canada is estimated to be worth over $1.0 billion. The worldwide handheld PC revenue was nearly $4.1B in 2000, which increased to over $23B in 2005. According to technology analysts ET Forecasts, worldwide handheld PC revenue will reach over $65B in 2011 for a compound annual growth rate of nearly 28% between 2000 and 2011.2 The major portion of the initial revenue will come from the North American PDA market which is estimated to be worth around $2.0 billion. In the medium run, the market for the Nanoboxx™ will be expanded to overlap the traditional North American PCs market, especially the market for laptops. The estimated market value is over $4.0 billion, a major portion from the global $4.0 billion PDA market and a slight portion from the global $201.0 billion revenue

of

the

PCs

industry.

The Nanoboxx™ will lead the PCs industry trends in the end of the day. The long run market value of the Nanoboxx™ is estimated to be more than $65 billion based on the compound annual growth rate of handheld computers. The

2

size

of

relative

market

is

listed

http://www.etforecasts.com/products/ES_SP-PDA.htm

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in

following

table:

Nanoboxx™ - Convergence comes of age

HANDHELD COMPUTER SEGMENTS

HANDHELD MARKET IN Q3 2007

Unit Sales 2000 2003 2005 2006 2008 2010

Q3 2007 Q3 2006 Growth

Vendor Shipments Share, %

USA Market:

Shipments Share, % YTY

PDA Sales (#M) 5.98 6.09 6.21 6.31 6.54 6.81

Smartphone Sales (#M) 0.34 3.77 7.58 16.37 26.39

Handheld PC Sales (#M) 0.008 0.045 0.27 1.18

Handheld Computer Sales (#M) 5.98 6.43 9.99 13.94 23.18 33.98

Worldwide Market:

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Palm 325,000 44.6 450,000 37.5 -27.8

HP 198,100 27.2 240,000 20.0 -17.5

Mio 81,903 11.2 117,557 9.8 -30.3

Fujitsu-Siemens 39,519 5.4 25,354 2.1 55.9

Sharp 17,500 2.4 101,000 8.4 -82.7

Others 66,872 9.2 267,634 22.3 -75.0

Total

Nanoboxx™ - Convergence comes of age

Source: IDC. Vendors shipped 728,894 handheld devices in Q3 2007, approximately 1.5% more than Q2 2007 but 39.3% less from Q3 2006.

Current market circumstances have opened opportunities for super-small devices. The technological foundation to make robust, miniature computers finally exists; another factor at play supporting handhelds is that consumers and corporate buyers have become acclimated to portability. The explosive growth, until recently, of handheld devices and mobile phones established the market for portable devices. Once the infrastructure for wireless networking is established, ultra-portable PCs will become more popular than PDAs

because

they

can

do

more

By 2011, research company IDC expects portable computers to comprise 66% of all corporate PCs sold, up from 40% in 2006, and 71% of all consumer PCs sold, up from 44%.

3.3 Target Market Segment Strategy The Nanoboxx™ is an innovative, completely original

product, which is

targeting at the market niche for the powerful and practical handheld computers, which recently has experienced explosive growth. The age of electronic convergence has arrived as consumers are demanding smaller streamline full functional computing products. Therefore, it is necessary to educate the potential consumers in the initial stage. We choose to start with the U.S. and Canada as the testing market according to the North America’s

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leading position in the portable electronic devices market. The largest group of technology enthusiasts and fans are in this area.

Soon as the result from this testing market is positive, Agartha Inc. will head to formal manufacturing stage, which we define as the medium run. In order to keep the image of trend leader, Agartha Inc. will launch a series design competitions of customized Nanoboxx™ regarding to the coating, shape, peripheral, etc.

3.3.1 Promotions

In the initial stage, it is convenient and effective to bring forth the Nanoboxx™ through professional computer journalisms and websites to technology enthusiasts, who are usually the trend change agents of the hightech products market. After releasing the specifications of the Nanoboxx™ to professional computer journalisms and websites and sending samples to these media, we will open for public subscription in short time. A number between 5,000 to 10,000 devices are expected to be sold initially by subscription such as through Stuff magazine and online. After the initial stage, the product will be promoted on CNBC and Bloomberg and then all major consumer and electronic shows as well as technology and financial magazines such as Fortune and Wired, in order to attract the major body of our potential customers, the business professionals.

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3.3.2 Distribution

Regarding to the initial promotion manner, we have determined that we will distribute the Nanoboxx™ through direct mail in the beginning to fulfill the subscription orders. In the medium run, Agartha will setup representative offices in major cities in North America and utilize the traditional PCs sales channel, such as Best Buy, Future Shop to distribute the Nanoboxx™. In a long run, Agartha will setup branch offices in major cities around the world to cooperate with electronic retailers worldwide. Agartha Inc. will also entertain the opportunity of a joint venture with industry giants such as Dell, Compaq, and Microsoft. 3.4 Competitor Analysis The Nanoboxx™ will compete with both the PCs industry players and all other portable electronic devices manufacturers.

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3.4.1 Direct There are around 20 handheld computer manufacturers around the world, such as OQO, U.S.A.; Samsung, Korea; PBJ, Japan; Han Wang, China, etc. Their products are the direct competitors of the Nanoboxx™. The competition is not intensive because the space for such a startup market to grow is huge. Therefore, the present major competitors of the Nanoboxx™ are the PDA and laptops. Regarding to the unique advantage of our products, it is not difficult for the Nanoboxx™ to win a credible market share. All these competitors have a product that do not have a full keyboard nor a full-size display.

3.4.2 Indirect However, all portable electronic devices are the potential competitors of the Nanoboxx™. The usage of the Nanoboxx™ is unlimited so that it is very likely for the Nanoboxx™ to invade in the markets for other portable electronic devices, such as portable game consoles, Smart phones, etc. 4.0 OPERATIONS

4.1 Plans for Production In order for Agartha Inc.’s managers to focus on its core competencies, the company will want to: • • • •

rely on contracted specialists to achieve even faster speed to market; maximize the flexibility of their capital resources by eliminating unnecessary manufacturing equipment; increase their market responsiveness by reducing their organizational structure; maintain a laser-like focus on their markets, with no manufacturingrelated distractions;

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Nanoboxx™ - Convergence comes of age

•

lower costs while maintaining and even enhancing quality.

At every stage along the Electronics Manufacturing Services (EMS) supply chain, it makes sense for Agartha Inc. to partner with outsourcing specialists for private label production. This somewhat fragmented structure has created profitable opportunities for product design for niches within the portable

computing

industry.

Appendix

D

shortlist’s

potential

EMS

candidates. By doing this Agartha Inc. will have first mover advantage such as cost advantage, less competition, secure important channels, and price position for customers. 4.2 Operating Complexity The following are those areas of particular concern and importance to management: 1. Timing will play a critical role in the success of the Nanoboxx™. The key variables are Product readiness Financing Approach to marketplace Production, from delivery of components to assembly, inventory & shipping procedures. • • • •

2. Financial projections used are “best” estimates and all financial needs and operating costs have been based on what is considered to be the most likely volume of sales achievable. Because selling activity will begin in early 2009 reaction of the marketplace should be clear by late spring. Decisions can still be

made

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to

cut

back

or

to

gear

up

for

the

2009

seasons.

Nanoboxx™ - Convergence comes of age

3.

Financing would be another major consideration if sales were much in

excess of expectations, particularly because we must assume that early orders are going to require an accompanying letter of credit if EMS is outsourced. For this the marketing plan is meant to guard against some of these problems and is specially geared to reach upscale technology retailers that will commit early to carry the “limited production” of the first year. 4.3 Production plan The housing will be manufactured in Mainland China(Guangzhou). The labor costs and the cost for raw material are competitive. Agartha Inc. will also outsource the assembly and testing of the actual product to a reputable EMS an drop shipped to a storage facility in Canada, then shipped to retailers. 4.4 Future Potential The

new

technological

innovations

that

have

emerged

during

the

development of the Nanoboxx™ have significance for the future of the company as well. By benchmarking the success of Apple’s iPod’s, Agartha Inc. will introduce enhanced feature packed versions of the Nanoboxx™. At the end of the product lifecycle, Agartha Inc will cannibalize the product and introduce a more innovative version developed through intensive R&D. Concurrently the company will release a plethora of peripherals for the Nanoboxx™ as well as cellular phones and handheld PC’s. In addition, as

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product quality increased, specially designed device for the mass market become possible at reasonable costs. 5.0 SUMMARY OF FINANCIALS

The major startup investment is the research and development costs, which include the expenditure for securing license with major parts manufacturers, such

as

Microvision,

I-Tech

and

VIA.

The

other

expenses

include

administration costs and travel expenses. The only marketing expense in the startup period is to send out prototype models to few electronic community websites, such as ZDNet. In 2009, the projected sales volume is 1,000 units. All the sales are expected to be from internet subscription. The units will be distributed by direct mail. The selling price is $800 per unit and the distribution cost which include insurance and mail cost is $50 per unit. The manufacturing and transportation costs are totally $60 per unit. The material costs are $263 per unit. In this year, an R&D expenditure of $100,000 is allocated in order to perfect the Nanoboxx™. Meanwhile, one full-time general manager and one full-time product manager will be hired at a cost of $700,000. In order to maintain the operation, Agartha Inc. would introduce another $3 million investment. The total intangible assets will be evaluated at a price of 26 | P a g e

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$1.1 million. The total income at 2009 is estimated to be negative $373,000. The cumulated loss is $100,000. In 2010, there are 2,000 units expected to be sold through internet and another 5,000 units to be sold by retailers. The retailer price will be set at $750 per unit and the wholesaler price will be set at $350 per unit. The material, manufacturing and transportation costs will decrease by $60 to $263 per unit. The balance from product is estimated to be more than $1 million. However, Agartha Inc. will invest $1.25 million in R&D, marketing and Administration in order to look for future growth. The total loss at 2010 is expected to be $11,000. From 2011, Agartha Inc. will use electronic devices retailers as the major distribution channel of the Nanoboxx™. 20,000 units are expected to be sold through this channel, though 1,000 units are still expected to be sold through the Internet. The production profit is estimated to be above $2 million. However, Agartha Inc. will keep invest $3 million in R&D, marketing and Administration in order to seek a high future growth. The total loss at 2011 is expected to be $348,000. At 2011, Agartha Inc. intends to raise another $5 million in follow-on investment to seek a potential future growth. The total intangible assets is expecting to be valued at $8.2 million.

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At 2012, we are expecting a burst in sales to reach 100,000 units. With the continuing investment in R&D and marketing, the total EBIT will reach $5.5 million. The Pro Forma Income Statements and Balance Sheets are provided as following:

Pro Forma Income Statement

2008

2009

2010

2011

2012

Revenue

Revenue from subscription Revenue from wholesalers Total Costs Manufacturing and Transporation Costs Material Costs Distribution Costs

$0 $0 $0

$800,000 $0 $800,000

$1,500,000 $1,750,000 $3,250,000

$700,000 $7,000,000 $7,700,000

$550,000 $30,000,000 $30,550,000

$0

$60,000 $263,000 $50,000

$420,000 $1,491,000 $100,000

$1,050,000 $3,948,000 $50,000

$5,050,000 $15,958,000 $50,000

$100,000

$250,000

$1,000,000

$1,000,000

$700,000 $1,173,000 ($373,000)

$1,000,000 $3,261,000 ($11,000)

$2,000,000 $8,048,000 ($348,000)

$3,000,000 $25,058,000 $5,492,000

$0 $0 ($373,000)

$0 $0 ($11,000)

$0 $0 ($348,000)

$1,373,000 $1,373,000 $4,119,000

Nanoboxx aspect design Nanoboxx box prototype Nanoboxx prototype R&D Secure license with Microvision Secure license with I-Tech Secure license with VIA

$3,000 $3,000 $12,000 $30,000 $20,000 $10,000 Total R&D Cost $78,000 Travel Expense $7,000 Internet community promotion $3,000 General Administration $12,000 Total Marketing & Admin Costs $22,000 Total $100,000 Gross Margin ($100,000) Tax & Interest Total Net Income

Pro Forma Balance Sheet Assets Cash and cash equivalents Inventory and Accounts receivable Intangible Assets Total Liabilities and Shareholders' Equity Accounts payable Long-term debt Total Shareholders' equity Retained Earnings Total

$0 $0 ($100,000)

2008 $100,000 $0 $100,000 $0 $0 $0 $100,000 $100,000

2009 $2,250,000 $0 $1,100,000 $3,350,000

2010 $1,000,000 $0 $1,100,000 $2,100,000

2012

$3,500,000 $0 $8,200,000 $11,700,000

$5,000,000 $4,119,000 $6,000,000 $15,119,000

$0 $0 $0 $0 $0 $0 $0 $0 $0 $4,100,000 $4,100,000 $14,200,000 ($750,000) ($2,000,000) ($2,500,000) $3,350,000 $2,100,000 $11,700,000

$0 $0 $0 $14,200,000 $919,000 $15,119,000

Please see the detail costs/benefits chart in Appendix F

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Nanoboxx™ - Convergence comes of age

6.0 MANAGEMENT A key objective of Agartha Inc. is to be profitable early, while being nimble enough to grow rapidly and profitably as demand grows. Taking into account these objectives, as well as a desire to be good stewards with the resources of the corporation, Agartha Inc has developed a plan for a flexible management team that provides for what is needed when it is needed.

6.1 Start-Up Team The president of Agartha Inc. is Mikael Thakur. Mr. Thakur has more than four years of experience in the High Technology Industry and is presently in the MBA program at the Schulich School of Business. Mr. Thakur is a dynamic entrepreneur, results oriented professional with a proven ability to establish rapport and build relationships’ with people from diverse backgrounds. Creative with a flair for forecasting trends with solid academic preparation. He is also adept at handling new challenges with a wide range of industry knowledge such as marketing, e-business, equities, and supply chain management. Mr. Thakur is recognized by clients and colleagues as a consummate professional with a high degree of personal integrity.

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APPENDICES Appendix A Detailed Product Specifications of the Nanoboxx™ PROCESSOR & CHIPSET GRAPHICS OPERATING SYSTEM

STORAGE DRIVE & MEMORY

DISPLAY

- 1.5GHz VIA C7M ULV (also available with 1.2GHz and 1.0GHz) - VIA VX700 with integrated GPU - Embedded with MPEG-2, MPEG-4, WMV9 Hardware acceleration - Ubuntu Linux + OpenOffice - Windows Vista® Ultimate, Business (optional) - Windows® XP Tablet PC Edition 2005, Windows® XP Professional, Windows® XP Home(optional) - HDD capacity: 1.8 inch HDD 40 - 120GB - HDD protection: shock-mounted, drop detect technology - memory: DDRII 512M - 1GB

- Microvision PicoP™ Display Engine - native resolution: WVGA (848 x 480) - Brightness: 10 Lumens - size: 200mm – 2000mm (Ideal) Image size (diagonal) = image-to-projector distance - external display support: VGA, HDMI, & DVI monitors up to 1920x1200 resolution

INPUT

•

virtual laser full-size QWERTY keyboard, dedicated mouse

WIRELESS AND NETWORKING

• • • • • •

Wireless LAN: Atheros tri-mode 802.11a/b/g Wi-Fi with diversity Bluetooth 2.0 with EDR VGA/Ethernet adapter Wireless LAN: Atheros tri-mode 802.11a/b/g Wi-Fi with diversity Bluetooth 2.0 with EDR VGA/Ethernet adapter

PORTS

• • • • • • •

audio jack: 3.5mm line out/line in video out: HDMI port, VGA/Ethernet adapter (included) 1 docking/power connector 1 USB 2.0 port type: removable lithium-ion polymer capacity: 4500mAh (standard), 9000mAh (double capacity) estimated life: up to 3 hours (standard), 6 hours (double capacity)

SECURITY

• •

embedded security: TPM v1.2 security engine: VIA Padlock™ hardware AES encryption engine

DIMENSIONS

• •

size: 5.0”(W) x 2.0”(H) x 1.8”(D) weight: 1.0 lb with standard battery (may vary based on hardware configuration)

BATTERY

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Appendix B Microvision Inc.’s PicoP™ Display Engine Specifications

Display

Microvision PicoP™ Display Engine: Single Bi-axial MEMS Scanning Mirror Technology

Technology

Performance

Resolution

WVGA (848 x 480)

Brightness

10 Lumens

Aspect Ratio

16:9 Native

Light Sources

Red, green, and blue lasers

Refresh Rate

60 Hz

Color Range

16-bit, greater than 150% of NTSC

Projection Lens

None: image always in focus, no manual adjustment

Image Size

200mm – 2000mm (Ideal) Image size (diagonal) = imageto-projector distance

Dimensions

Video Inputs

Power

Volume

≈120 cc, including battery

Weight

≈ 220 grams, including battery

RGB (VGA) Composite

Connects to cell phones, personal media players, laptops,

(NTSC/PAL) S-Video

digital cameras and more

Internal Lithium Polymer Battery

1.5 hour battery life on a single charge

Power and charge using external Mini USB

Operating

10 – 30 degrees C, Ambient

Temperature

Availability

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1st Half 2008 to qualified global OEM’s and leading mobile operators

Nanoboxx™ - Convergence comes of age

Appendix C I-Tech Inc.’s Laser Virtual Keyboard Specifications Keyboard Projection

Light source: Red diode laser Keyboard layout: 63 key / full sized QWERTY layout Keyboard size: 295 x 95mm projected keyboard size Keyboard position: 60mm from VKB unit Required Projection surface: Non-reflective, opaque flat surface Visibility: Good contrast up to 600 lux ambient illumination

Keystroke Sensor

Ambient illumination: Works under all standard indoor illuminations up to 600 lux Detection: rate Up to 400 characters per minute Detection algorithm: Multiple keystroke support Effective keystroke: Approximately 2mm Operating surface: Any firm flat surface with no protrusions greater than 1mm

Bluetooth

Bluetooth Spec: Bluetooth v1.1 class 2 Bluetooth Profile Supported: HID and SPP Range of Frequency: 2.4GHz Spectrum Transmission range: 9m Number of supported passkeys: 5

Electrical

Power source: Integrated, 3.6V rechargeable lithium-ion battery Battery capacity > 120 minutes continuous typing Charge Method: Included 100-240V AC Wall Adapter

Dimensions

Approximately 35 x 92 x 25mm (1.38" x 3.6" x 1")

Compatibility

Support for PalmOS 5, PocketPC 2003, Windows Smartphone, Symbian OS, and Windows 2000/XP (Mac OSX will work but drivers are not provided. See the bottom of this page for details.) Look below for a list of specific compatible devices. Please note your device may still work properly if not on this list as long as it supports one of the OS listed above.

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Appendix D Electronic Manufacturer Services Shortlist

POTENTIAL EMS COMPANIES INDIC EMS ELECTRONICS PVT. LTD. Celestica Flextronics Foxconn Elcoteq GPC Electronics Integrated Microelectronics, Inc. Jabil Circuit Plexus Quanta Computers Sanmina-SCI SMTC Corporation Solectron Swisstronics Pantronix Corporation Quality Assembly (Thailand),LTD.

Appendix E Market Size and Market Estimates Worldwide: Preliminary PDA Vendor Shipment Estimates, 1Q06 (Units) Company

1Q06 1Q06 Market Shipments Share (%)

1Q05 1Q05 Market Shipments Share (%)

1Q05- 1Q06 Growth (%)

Research In Motion

929,883

25.5

711,000

20.7

30.8

Palm

459,970

12.6

614,750

17.9

-25.2

HewlettPackard

421,336

11.5

601,352

17.5

-29.9

Mio Technology

216,728

5.9

119,622

3.5

81.2

Dell

143,200

3.9

217,000

6.3

-34.0

Others

1,482,433

40.6

1,164,564

34.0

27.3

Total

3,653,550

100.0

3,428,288

100.0

6.6

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Smartphone Market

Notebook and Portable PC Market Share

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Notebook PC Shipments, Share and Nanoboxx™ - Convergence comes of age Growth by Supplier

Brand Q3'06 Q4'06 Change Q4'06

TOP 5 COMMERCIAL VENDOR PORTABLE PC MARKET SHARE TOP 5 CONSUMER VENDOR PORTABLE PC MARKET SHARE

HP 3.6M 4.7M 29% 20.0%

Dell 3.6M 3.5M -2% 15.0%

Acer 2.4M 3.1M 29% 13.3%

Toshiba 2.2M

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2.3M 5%

Vendor Share: IBM 17.8% Dell 15.3% Acer 15.2% Toshiba 15.0% HP 13.1% Others 23.6% Total 100.0% Vendor Share: HP 30.6% Toshiba 19.7% Dell 11.7% Acer 10.8% LG 7.3% Others 19.9% Total 100.0%

Nanoboxx™ - Convergence comes of age

Appendix F Costs/Benefits

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2009 1,000 0 $800.00 $0.00

2010 2,000 5,000 $750.00 $350.00

2011 1,000 20,000 $700.00 $350.00

$30.00 $30.00 $50.00 $30.00 $30.00 $30.00 $2.00 $10.00 $0.50 $0.50 $50.00

$25.00 $25.00 $40.00 $25.00 $30.00 $25.00 $2.00 $10.00 $0.50 $0.50 $30.00

$20.00 $20.00 $30.00 $25.00 $25.00 $25.00 $2.00 $10.00 $0.50 $0.50 $30.00

$20.00 $20.00 $30.00 $25.00 $25.00 $25.00 $2.00 $10.00 $0.50 $0.50 $0.00

$263.00

$213.00

$188.00

$158.00

Revenue

$800,000.00 $3,250,000.00 $7,700,000.00

$30,550,000.00

Total Material Costs Box Manufacturing Costs Assembly Costs Transporation & Insurance

$263,000.00 $1,491,000.00 $3,948,000.00 $20.00 $20.00 $20.00 $20.00 $20.00 $18.00 $20.00 $20.00 $12.00

$15,958,000.00 $20.00 $18.00 $12.00

Anticipated Retailer Sales (In units) Anticipated Wholesaler Sales (In units) Retailer Selling price Wholeseller price Processor Motherboard Display Input Storage Memory Box Battery Power cord Package Other Total Material Costs per Unit

Overall Variable overhead

$60,000.00

$420,000.00 $1,050,000.00

Distribution Costs

$50,000.00

$100,000.00

Cost of Goods Sold Research & Development Sales and marketing General Administration

Profit

$5,050,000.00 $50,000.00

$373,000.00 $2,011,000.00 $5,048,000.00

$21,058,000.00

$250,000.00 $1,000,000.00 $400,000.00 $1,000,000.00 $600,000.00 $1,000,000.00

$1,000,000.00 $1,800,000.00 $1,200,000.00

$800,000.00 $1,250,000.00 $3,000,000.00

$4,000,000.00

-$373,000.00

-$11,000.00 -$348,000.00

Appendix G Agartha Inc.’s rendition of the Nanoboxx™

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1,000 100,000 $550.00 $300.00

$50,000.00

$100,000.00 $200,000.00 $500,000.00 Expense

2011

$5,492,000.00

Nanoboxx™ - Convergence comes of age

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