SurveillancePoint

An Eye on Your Enterprise from Anywhere

White Paper

Market Analysis

“In the U.S. alone, some two million CCTV cameras are installed each year and the CCTV segment constitutes a significant portion of the $4 billion U.S. “security market”, as it does in Asia, Europe, and Latin America.” Frost and Sullivan…predict that “the network camera and video server markets will continue to grow at around 90% a year through 2005. IP technology is the next step forward for surveillance systems. IP-based streaming video surveillance lets organizations monitor, prevent and/or respond to emergency situations more effectively and affordably, via the Internet. At the same time, the technology allows law enforcement, security companies and other emergency personnel to prepare better and respond more fully to emergencies. Thus, the physical safety of a company's vital human and business assets is far more secure and protected. “ Ian Fowler, Technical Training Manager for Norbain SD Limited reports: “The growth in IP-CCTV adoption depends upon a succession of technological evolutions creating a strong business proposition in its favour”

6/1/2005

www.surveillancepoint.com

Table of Contents

Table of Contents...................................................................................................................... 1 1.0 Product Overview ............................................................................................................... 2 2.0 Market Overview and Trends ............................................................................................. 3

2.1 Today’s Marketplace ...................................................................................................... 3 2.1.1 Surveillance Suppliers with Security Response Centers ......................................... 4 2.1.2 Surveillance Systems and Services Only (No Response Units) .............................. 4 2.1.3 Home and Business Systems (No or limited Networking) ...................................... 5 2.1.4 Home and Small Business Security Systems........................................................... 5 2.1.5 Hardware Security Companies ................................................................................ 6

2.2 Market History and Trends ............................................................................................. 6 2.3 Holes in the Marketplace ................................................................................................ 7

3.0 Market Opportunity Detail.................................................................................................. 8 3.1 Market Opportunity Areas .............................................................................................. 8 3.2 Wireless Infrastructure Evolution ................................................................................. 10 3.3 IP (Internet Protocol) Device Growth........................................................................... 11 3.4 Voice and Mobile Access to Security Systems............................................................. 12 3.5 People and Package Surveillance and Tracking Market............................................... 12

3.5.1 Market Direction and Opportunity......................................................................... 13 3.5.2 Competitors............................................................................................................ 13

3.6 Future of the Marketplace............................................................................................. 13 4.0 SurveillancePoint Patents in the Marketplace................................................................... 15

4.1 Voice Remote Command and Control of a Mapping Security System ........................ 15 4.2 Automated Diagnoses and Prediction in a Physical Security Surveillance System ..... 15 4.3 Law Enforcement and Security Interface in a Networked Physical Security Surveillance System............................................................................................................ 15

5.0 Market Size ....................................................................................................................... 16 5.1 Surveillance Services .................................................................................................... 16 5.2 Surveillance Software Market Segment........................................................................ 18 5.3 Video Surveillance Equipment Market Segment.......................................................... 19 5.4 Surveillance Tracking Systems..................................................................................... 20 5.5 Biometric Equipment .................................................................................................... 21

6.0 Market Development Types.............................................................................................. 22 6.1 Government, Institution and Jumbo Sales .................................................................... 22 6.2 Law Enforcement System and Standards ..................................................................... 22 6.2 Medium to Large Enterprises........................................................................................ 22 6.3 The Small Business....................................................................................................... 22 6.4 The Home Market ......................................................................................................... 22

7.0 Competitive Advantage .................................................................................................... 22 8.0 The Long Term Future of SurveillancePoint .................................................................... 24

1.0 Product Overview This document investigates the security and surveillance marketplace for the SurveillancePoint service by EyeOnEnterprises. This system is complete and operates today and represents a technology jump. This document looks at the general marketplace, market trends, competitors, market size, what is needed and what is available. SurveillancePoint is a global enterprise wide video surveillance, alarm/fire detection, monitoring and tracking management system, over the Internet or private network supporting wireless cell phones, handheld and other access devices. The solution is characterized by providing a service provider model for bringing security system into the IT world. This means the security system can be viewed like any web site and SurveillancePoint can provide a hosting center or the enterprise can use its own. Its use of tamperless wireless networks makes the solution very secure. It also scales from extremely large business down to the home owner. It is a software product suite that supports a wide range of network surveillance and tracking equipment with a full set of management services. It supports Internet (IP) cameras, CCTV devices, sensors, intrusion and fire alerts, monitoring and tracking devices and it provides access from a number of sources (web browsers, PDAs, cell phones, handhelds, mobile terminals, workstations, etc.). It also supports notifications, control of entry access, intrusion/package tracking and has a voice/speech interface. The unique technology features are being protected with three pending patents:

• Easy to use global Internet access (service provider) to facilities and homes • New unique mapping and tracking display system for pinpoint detection • Law enforcement and security agent dynamic notification and link information

to a system with an intrusion • Law enforcement and security agents wireless access in the field • Voice and speech control from cell phones, handhelds, etc. • Ability to use the mapping system from a mobile terminal (police car) • Equipment status feedback, trends and diagnosis prediction

There is a hole in the market place for a fully featured integrated low cost network (and Internet) enabled surveillance and monitoring management system. The market is evolving toward this paradigm and with SurveillancePoint the technology is there and the time is now. This system will provide law enforcement and agencies with intrusion details and a secure connection for cell phone access to the system from the field. The product will be based on quick look floor plans denoting intrusions and statuses. The product supports proactive diagnostic and failure detection with notices to multiple control points. Software at a control central will process notifications and informs technicians of equipment problems severity and frequency. The following diagram presents a simplified overview of the environment:

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SurveillancePoint System Overview This management software product is the basis for a new service provider business model. Customers will have the option to use EyeOnEnterprise’s SurveillancePoint hosting service, lease the service based on usage, or install a web server at their data center. In addition it can also be operated as a local system without any hosting. New leading edge features like support for Microsoft’s SharePoint, will augment the offering. Also a low cost version of the service will be offered to the small business and the home owner market. The product has a three access client types; a Window’s thick client, a web browser thin client and a cell phone (handheld) interface. It is a distributed client application that uses common distributed databases. The thick client is the main configuration and administrative tool where the web browser and cell phone access is for security personnel and police offices to remotely view and act on intrusions. SurveillancePoint has a Software Development Kit with a published Application Program Interface (an API called APEye.dll) that allows clients to modify the system for their own needs.

2.0 Market Overview and Trends This section covers surveillance, intrusion and tracking systems market.

2.1 Today’s Marketplace The old method of using CCTV equipment to provide video surveillance is no longer the leading trend setter. With the advent of network attached (IP) cameras and other security equipment the marketplace is in the beginning of a revolution. The new network equipment is not only less expensive it opens a whole new aspect to security monitoring and tracking especially for remote access via wireless devices. The market is evolving into a networked systems strategy but it needs a push from providing individual services to a web enabled service provider model. So where exactly is the marketplace today? Let’s first look at what is available. It becomes apparent that it is a services orientated market with segmented target solutions that are not networked based or integrated. The market is segmented and described below. In each segment some of the vendors are listed with a brief description.

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2.1.1 Surveillance Suppliers with Security Response Centers This segment is covered by large companies that provide a security system that is installed at the customer site and generally use phone lines to notify their security centers. These centers in turn notify either the police or a contracted security agent company. They sometimes provide individual systems to large clients. Except for the ADT Business Unit with its limited camera access these companies do not proved a service for customers to remotely access their security cameras. This market segment is over eight (8) billion dollars.

• ADT ADT is the largest single provider of electronic security services to over six million commercial, federal and residential customers throughout North America. ADT's security solutions include video surveillance, access control, electronic article surveillance, intrusion detection, fire and life safety and integrated systems. They have limited networking capability for their business customers and do not provide security guards.

• Brinks Brink's® Business Security, a division of Brink's Home Security®, can help provide security and digital surveillance for your business. Their security center only notifies security agents or police.

• The Slonin’s Shield They are one of the largest and fastest-growing security companies. Slomin's is a family-owned and operated company that has been in the business of taking care of customers since 1923. Today, we have successfully developed a full-line of services for a home or business. They provide badge and reader access control with pictures.

• Guardian Security They are an authorized dealer of ADT with a command center that dispatches the police. They do not have field security agents but they have a command center that receives all alarm notices. They are a typical urban security company.

• Protect America Protect America uses their Peacekeeper Home Security System in homes and like Guardian Security dispatch police in response to received alarms. Peacekeeper is a product of GE Home Security Systems.

2.1.2 Surveillance Systems and Services Only (No Response Units) This segment does not provide a security center but does provide services in helping customers to install a security system. Some of these systems can have video surveillance cameras that customers can access remotely. The surveillance offering is very limited and the intrusion detection information is either missing or hardly supported. This segment overlaps the previous one and is in the four (4) billion dollar range.

• Inter-Pacific Inter-Pacific is a manufacturer/distributor of video surveillance products. They provide customers with high quality/low cost products along with customer and warranty support. Through their nation-wide dealer/installer network, they offer complete systems design/installation to meet specific requirements and budget.

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• Protection One For more than 10 years, Protection One has provided integrated electronic security systems and now serves more than one million customers nationwide. From system design and engineering, to product specification and installation, all the way through testing and training of personnel, they oversee all stages of a commercial security system project.

• Total Recall Total Recall Corp. is dedicated to understanding customer's needs and utilizing extensive knowledge of security products, system design, and close working relationship with the industry's leading manufacturers; the result an effective solution at a good price.

• Tangent Security Systems Tangent offers video surveillance systems to education, government, and small to mid-size businesses. Tangent video surveillance systems provide surveillance capability from anywhere in the world through Internet Explorer. Tangent video surveillance systems allows observation from any Web-enabled client running Internet Explorer 5.5. Depending on security needs, a client may use from one up to 16 cameras for a customizable surveillance range. You can then view this range from a PC monitor, a television screen, or even from your Web-enabled PDA or cellular phone. And with the optional Alarm Panel interface, you can email alarms with a 3-photo snapshot to up to 15 addresses.

• Salient Systems Salient Systems Corporation designs, manufactures and sells PC-based Digital Video Surveillance systems and related equipment for the Closed Circuit Television (CCTV) dealer channel in the U.S. and Europe.

2.1.3 Home and Business Systems (No or limited Networking) There are several security hardware systems with high prices in narrow market segments like CCTV camera surveillance and detection equipment. All of these systems require sophisticated installations and configurations and are limited in what they can do and almost all are based on CCTV not TCP/IP equipment. None of these companies have the comprehensive service provider model and for the most part they only support CCTV equipment. The home systems market is about two (2) billion dollars. This segment includes:

• Honeywell – Camera systems • GE Security – Camera and alarm systems • Phasys – Camera and alarm system • Adome International – CCTV camera system • JAI (Denmark) – Camera and alarm system • PlanetCCTV – CCTV cameras only • Anand – Internet custom solutions with cameras only • Skyway Security – Viewing station, cameras and recorders

2.1.4 Home and Small Business Security Systems Other products that are similar are the home security systems which address even smaller segments based around X10 equipment and internet video streaming. This

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market is around one (1) billion dollars. None of these systems come close to SurveillancePoint features. One exception is Verint which like a number of CCTV companies offer video surveillance only. Some of the home software systems are:

• Verint with SmartSight • Active Home • SmartHome • Homeseer • Shell Home Genie • Xanboo

2.1.5 Hardware Security Companies These companies are many and only provide network hardware with very limited system support that end users can acquire directly and install. The hardware alone is over eight (8) billion dollars. A few are:

• Surveillance-Video Home video equipment but no viable security application. They provide service as well as products.

• 4Hidden Spy Cameras Home video equipment but no viable security application. They provide a do it yourself kit.

• All Things Digital Home video equipment but no viable security application. They provide a do it yourself kit and some software for PC surveillance.

There are plenty more!

2.2 Market History and Trends This market has been around for decades and evolves very slowly. It is always looking for new solutions and technologies but almost always it is added on top of existing systems limiting the capability. If we review the past security market trend events the following is true:

1. The Romans had security guards and organized handing of intrusions. 2. There have been night watchmen since the middle ages. 3. Since the 1800’s guards were used to walk rounds on business and other

sites looking for security problems. 4. In the early 1900s electronics were used to alert when an intrusion occurred. 5. In the 1950s local business viewing security systems were implemented with

on-site guards. 6. In 1961 the first camera security system was installed. 7. In 1969 CCTV equipment started being widely used. 8. In 1969 the first home security system was patented. 9. In the 1970s remote security centers appeared that could be notified via

system generated phone calls and security agents or police could be notified. 10. By 1985 police mobile digital terminals were appearing in police cars. 11. In 1992 the first cameras for traffic light enforcement.

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12. In 1994 video surveillance on ATM teller machines. 13. In 1995 the Internet became universally easy to use. 14. September 11, 2001 – 911 attack takes place. 15. In 2001 the first IP enabled security device began to show up commercially.

Customers themselves can now access their security cameras and observe intrusions or other activity.

16. In 2002 some companies began to use IP devices in a limited fashion and build limited systems supporting them.

17. In 2002 face recognition systems were in use. 18. In 2003 IP devices became available in simple home systems. 19. Now, after reviewing all the market segments it becomes very apparent that

there is not a single security company or system that offers a low cost web based service provider model like a utility company. SurveillancePoint takes advantage of Internet technology to make the move to the next generation.

For the most part the market trend is moving in three directions (these are non-networked solutions):

1. Business as usual for the home and business security systems providers. Continue to sign up new businesses or home owners and provide a phone based security system.

2. Add features to CCTV based systems and continue to develop expensive business solutions.

3. Start to take advantage of the new IP surveillance equipment and customer by customer install a somewhat custom system with limited access. The access for a few vendors includes wireless. Some can even send alert emails. Very limited networking.

The time is ripe to push the revolution, for example: “The IP network camera market is growing faster than the IP TV market,” said Charles Fox, Senior vice-president of marketing at Cradle Technologies. Ian Fowler, Technical Training Manager for Norbain SD Limited reports: “The growth in IP-CCTV adoption depends upon a succession of technological evolutions creating a strong business proposition in its favour”

2.3 Holes in the Marketplace The security business is still laced with legacy systems and solutions. The time is now to combine the solutions into a network or Internet play. The market is ready for a service provider model with centralized web services that can be signed on to and administered from network service centers. Besides being more cost effective it is easier to administer and control. This includes providing mobile viewing access to intrusions and security events through the internet to police officers and security agents opening up a whole new paradigm. Add voice control for more hands free operation to complete the mobile access. SurveillancePoint provides the next generation filling in these missing segments. What are the holes?

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• No fully networked solution • No service provider methodology (security as a utility) • No use of voice and speech • No presentation (graphic or otherwise) to wireless and remote devices • No system with good graphic presentation • No multi-feature integrated fully functional security system • No system that users can customize for special needs • No system with prediction and analysis capability

3.0 Market Opportunity Detail This section covers the details of the market opportunity. It looks at where the market is today and where it is going.

3.1 Market Opportunity Areas The target market for SurveillancePoint ranges from high end enterprises, government, mid-sized and small businesses to homes. In other words any business, government entity or home is a potential customer. The current world concern over terrorism makes this product even more important. The huge market base and the future of the technology are illustrated in the following excerpts. The first is by Anders Laurin, Vice President, Networked Facility, Axis Communications. In the U.S. alone, some two million CCTV cameras are installed each year and the CCTV segment constitutes a significant portion of the $4 billion U.S. “security market”, as it does in Asia, Europe, and Latin America. This new Internet Protocol (IP)-Surveillance technology creates digitized video streams that when transferred via a computer network, enable remote monitoring as far away as the network or the Internet reaches. Frost and Sullivan, in the same report cited above, predict that the network camera and video server markets will continue to grow at around 90% a year through 2005. From my vantage point, remote monitoring by IP-Surveillance represents one of the most exciting and important global market prospects for this year and beyond. In addition to the specific cases noted above, IP-Surveillance technology is successfully being implemented in a wide range of applications:

• Government: Increasing security in public areas, facilities and prisons. • Education: Used in schools and other educational establishments for security and

remote monitoring of playground areas, corridors, halls and classrooms. • Transportation: Remotely monitoring of railway stations, highways and airports. • Offices: Used for surveillance to increase safety of technical equipment, property

and people. Often integrated into access control systems. • Retails Stores: For security and remote monitoring purposes, makes store

management easier and more efficient. • Process and Manufacturing Industry: For monitoring manufacturing lines,

industrial and pharmaceutical processes, parcels and mail handling, warehouse and stock control systems.

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• Financial and Banking Institutions: Within traditional security applications, used in bank offices and where ATMs are located.

The following quote is from an article by Kacey Carpenter the senior director of Solutions Development, Engineering & Marketing at Cisco Systems, Inc.

In a nutshell, IP-Surveillance uses a company's existing network and Internet technology to transmit images from analog cameras and/or IP cameras over public networks. These systems allow live streaming video and still image transfer (both one-way and two-way) so video can be viewed in real time from police cars and other emergency vehicles.

IP-based systems deliver a great deal of additional functionality. For instance, they provide motion detection, auto time and date stamps, easy transfer of visuals, and pre- and post-alarm messaging. Business owners are notified immediately if an event is occurring; they can then log on to the system remotely to see what's happening in their offices and businesses.

An enormous variety of organizations have already installed IP-based surveillance systems to help secure both the interior and exterior of buildings. A few examples include retail stores, banks, law firms, gas stations, parking garages, schools and government offices; but these systems provide greater security to all organizations and businesses. Users have found that IP surveillance:

• Enhances and expedites law enforcement and emergency services to high-risk calls. • Contributes to reliable identification of criminals and reduces the need for

eyewitnesses. • Can be used locally and remotely. • Integrates easily with CCTV cameras, thus preserving existing security investments.

Most users also have discovered that IP surveillance is very affordable, since companies already have many components of the system in place (such as an IP network and broadband connectivity). Other system components include an 802.11 wireless LAN, an access router, a video server, an IP camera (existing analog cameras can also be used) and host PC surveillance software.

IP technology is the next step forward for surveillance systems. IP-based streaming video surveillance lets organizations monitor, prevent and/or respond to emergency situations more effectively and affordably, via the Internet. At the same time, the technology allows law enforcement, security companies and other emergency personnel to prepare better and respond more fully to emergencies. Thus, the physical safety of a company's vital human and business assets is far more secure and protected.

Regarding the future of voice recognition and computing in a “Wired News” article Elisa Batista said:

MOUNTAIN VIEW, California -- If companies like Microsoft, Intel and Cisco have their way, future cellular phones, PDAs and television sets won't come with any buttons. Instead, people will navigate using their own voices --twangs, impediments, accents and all.

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"Speech will become the primary interface, especially in mobile computing," said Intel VP Howard Bubb, at the Microsoft campus in Mountain View. "The (computer's) processors are becoming tailored to human interaction."

Intel (INTC), Microsoft (MSFT), Cisco (CSCO), Comverse (CMVT), Philips (PHGZF) and SpeechWorks (SPWX) are working together to develop speech-enabled software that will let users call up any website on any device without having to click a button.

Ian Fowler, Technical Training Manager for Norbain SD Limited reports: “Demand for IP is being partly driven by end users who desire to integrate all security applications - CCTV, Access Control, and Fire - into a single system, running over the same network and under the same management. The benefits that IP brings to CCTV – ease of communication way beyond the limits of a dedicated network, the management flexibility, the functional benefits of being software controlled, and the immediate and long term cost advantages of being part of the huge IT industry – all apply equally to the other technologies. The decision to bring these diverse applications together onto the IP network is straightforward common sense, especially where a company’s LAN and WAN already carry all other communications traffic - voice telephony as well as data. The growth in IP-CCTV adoption depends upon a succession of technological evolutions creating a strong business proposition in its favour”.

These quotes are discussing just a few market segments finishing with a quote on the direction toward a network trend. This covers SurveillancePoint’s direction of a fully comprehensive network solution. This key to a successful IP surveillance and mobile access system is a product that configures, manages and monitors the entire enterprise via a network. SurveillancePoint is the product that provides this ability and is the first of its kind to create a strong business proposition.

3.2 Wireless Infrastructure Evolution This is worth looking at by itself because some large clients will want their own wireless solution. Wireless communications at the facility and to the hosting center is a major advantage to a remotely accessible security system. Once a wireless system is installed, the user owns the medium, and there are no ongoing charges for communications. The equipment costs for a wireless link are often recovered within a very short time. By contrast, the difficulty of installing and maintaining leased lines makes their cost very high. This is particularly true in high bandwidth applications, such as the transmission of video. The cost of video-capable lines can easily exceed $300 per month.

Network security is another concern with hardwired systems. Because cables are vulnerable to accidental or intentional damage, it is nearly impossible to ensure the integrity of the network. While no system can be 100% secure, wireless solutions offer an inherently more secure infrastructure, as there are no cables exposed to possible damage, sabotage or tapping by unauthorized persons. Wireless systems replace the wired infrastructure with an over-the-air RF link, allowing immediate,

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reliable communication with remote sites that can also run over wireless phone systems.

One of the most exciting areas of growth in wireless security communication today, involves the transmission of IP and industrial protocols over wireless Ethernet devices. This type of communication offers distinct advantages over serial transmission, including hardware and software platform interoperability, collision avoidance, high throughput efficiency, and the ability to add new devices to a network without disrupting traffic flow. The use of IP also opens up new possibilities for integrating an enterprise-wide Intranet, the World Wide Web and video into a network control scheme.

Until recently, most wireless Ethernet products were designed for office environments, and were not built to survive the harsh, external environments of industrial applications. Light duty transceivers of this type are suitable for carrying data short distances within a building, but are not intended for long haul, mission-critical applications. Today, an industrial-grade wireless device can carry Ethernet and serial data considerable distances. It effectively eliminates the risks involved with running long spans of cable. Additionally it is capable of handling multiple users and protocols in both new and legacy networks. In addition to traditional SCADA/Telemetry service, products of this type have huge potential for use in alarm and surveillance monitoring, including the transmission of video and other high bandwidth traffic.

3.3 IP (Internet Protocol) Device Growth A growing number of peripheral devices are being manufactured today with direct Ethernet connections as standard features. This simplifies the connection of these devices to wireless and Ethernet equipment and makes the expansion of a network feasible from a cost and installation standpoint. The responsibility to integrate the different locations, protocols, interfaces and baud rates is delegated to the network itself and the administrative product to support it. This is a key factor toward building networked security solutions.

"IP-networked surveillance systems are particularly popular in large-scale enterprise networks where hundreds, or even thousands, of cameras monitor a multitude of locations," observes Frost & Sullivan Research Analyst Michael Valenti”.

Solutions also include devices to attached CCTV equipment to networks to protect companies that have invested in CCTV technology. These devices exist today and are supported by SurveillancePoint. The system converts analog images to digital and stores to disk for easy retrieval and replay.

According to Frost & Sullivan Research “Another emerging trend, is the use of video servers to digitize the images captured by analog cameras by integrating existing analog closed circuit television systems into an IP-based solution”.

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In recent years, a number of IP-capable cameras have appeared on the market, driven chiefly by the interest in providing webcam services over the Internet. IP cameras can be connected directly to a personal computer (PC) and are typically supplied with software that provides all necessary setup and configuration tools. These cameras allow users to transmit near real-time video to a worldwide audience with minimal expense and plug-and-play installation.

While the history of IP cameras can be traced largely to the consumer market, several models have evolved into sophisticated industrial solutions worthy of consideration for the most demanding commercial applications. Indeed, some industry experts predict that IP solutions will eventually gain an edge over the currently dominant serial protocols used by many organizations. These IP devices are positioned to be easily added to a networked security solution like SurveillancePoint.

3.4 Voice and Mobile Access to Security Systems The use of voice and mobile devices like cell phones is paramount in providing a complete system. Police, firemen and security agents can view and access events form handheld device while in the field. The ability to command the display using voice provides for ease of use.

According to Milestone Systems regarding the use of Cisco’s mobile network technology, “The car is a tangible example of how technology today can contribute to improved public safety. In the trunk is a Cisco 3200 Series Wireless and Mobile Router, which can roam across WLANs, mobile phone and TETRA networks to give seamless communication between emergency headquarters and the moving vehicle regardless of physical location”.

"The mobile Internet is a new tool for emergency service providers. It provides them with voice, video and data access across any medium, so they can exchange mission-critical information anywhere, anytime and any place," says Andy Lockhart, Vice-President for Cisco Systems Northern Europe. "The Cisco Connected Car is more than just a vision; it's a technology demo center on wheels, showing capabilities that are available now."

SurveillancePoint provides the software and web service system that can take advantage of technologies like the Cisco Connect Car.

"With wireless transmission of IP video surveillance to and from their roving vehicles and the base location or hospital, first responders can have better information delivered on-the-go, for fast coordination of emergency activities," says Lars Thinggaard, CEO at Milestone Systems. "Improving their response effectively translates to better public services for the safety of citizens while using resources more efficiently."

3.5 People and Package Surveillance and Tracking Market This market not only includes surveillance using cameras but also covers the entry access control and location of people within facilities.

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3.5.1 Market Direction and Opportunity This market depends on four main device types:

1. Cameras 2. Sensors 3. Card and tag readers including RFID tags 4. Power control and X10 support

As people pass between security points and their access cards or tags are read a system can keep track of whereabouts. Some transmitting RFID tags can read the tag identifier as someone passes through a door or anywhere a loop reader is installed. This is access control and each access point can have a video camera with that takes a picture of the person as they pass through. The cameras can trigger on the card or tag reader activation or via a sensor.

3.5.2 Competitors There are many companies that offer RFID tracking systems. There are none that offer it as part of an integrated security system. This marketplace runs as an island of technology. A few of the companies are:

• Barcoding Incorporated Use of RFID tags and readers for tracking equipment and packages as well as using barcodes

• Sonitor Technologies Use of RFID tags, ultrasonic tags and readers for tracking people and equipment

• Castlecops Use of RFID tags and readers for tracking people and equipment

• Datex • Intermec

The products are expensive and for the most part the software is minimal. In some cases it may make sense to look into partnering with a tracking company and running them under the SurveillancePoint graphical system.

3.6 Future of the Marketplace The most important aspect for the future of security systems is the use of cell phones and handhelds to view the system and to enable the use of voice control. This encompasses many emerging technologies including:

• Wireless networking • Service provider solution like using a utility company • Web enabled cell phones and handhelds for real time viewing • IP (Internet Protocol) cameras and security devices • Law enforcement and security agent notifications with access links • An easy to use and view graphical security system • Improved voice and speech interfaces for hands free operation

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• A fully featured integrated system for single access point • Web browser access to the system • A highly scalable software system from homes to giant enterprises • Easy and fast replay of video from any access point including cell phones • Intrusion detection and real time tracking

The market is still islands of technology with narrow solutions. The easy to sign up, install and use paradigm is not available today. Getting a security system should be like signing up for a utility company, electric, water, etc. Installation needs to be fast and easy with a set of optional features that depend on the user need. Large enterprises have a much bigger need for features than a home owner but both can use the same service. This service should follow the service provider model used by people that purchase access to the internet. A security company needs to provide this service for all that wish to sign up. This security company will provide the servers and centralized operation for the service. The solution should also provide the ability for giant enterprises to set up their own service provider servers for their affiliates to sign on and use. The features of an integrated security solution must meet the needs of both small and large users. They must include:

• Cell phone and handheld support • Web browser support • Window’s client support • Voice and speech command and control • Easy to use graphical user interface • Real time status screens • Multi-monitors with multiple configurable windows for on site viewing • A mapping hierarchy with the ability to view building and floor plans • Easy to locate intrusions and associated cameras and sensors • Notifications and alerts • Equipment detection and diagnosis • System and equipment problem reporting and tracking • People, equipment and package tracking • Entry access control • Digital recording with rapid replay and video capture • System and event logs • Easy to administer • Control of device operation including X10 support • User modifiable through an API

The market is ready and SurveillancePoint is the first product to meet the emerging needs.

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4.0 SurveillancePoint Patents in the Marketplace EyeOnEnterprise has applied for three patents to protect its SurveillancePoint technology and to lock up the market in the service provider model.

4.1 Voice Remote Command and Control of a Mapping Security System This patent (#10/803,001) addresses the voice and speech support for security systems and protects the SurveillancePoint mapping and intrusion detection methods. The mapping scheme with the ability to quickly move to buildings and floor plans through highly innovative graphic methods is the basis for this solution. It allows web and mobile access to the graphics and with the unique use of icons provides a patentable method for the service provider model. Voice and speech support are added to the system to complete this patent. This sets the foundation for the service provider model.

4.2 Automated Diagnoses and Prediction in a Physical Security Surveillance System This patent (#10/978,188) addresses the use of information systems data in diagnosing and predicating security problems. SurveillancePoint collects a significant amount of information that can be used to determine security problems and trends. The following is possible:

• Equipment failure patterns • Equipment lifetime • Frequency of equipment reported problems • Failure trends • Patterns and behaviors that predicts security breaches and failures • Missing sensors causing undetected intrusions • Frequency patterns and behaviors • Tracking failures where the intruder is lost • Produce corrective action reports • Detect suspicious activity • Produce periodic security activity reports

4.3 Law Enforcement and Security Interface in a Networked Physical Security Surveillance System This patent (#60/670,677) address the use of the service provider model to send intrusion information to law enforcement and security agents so they can not only be alerted but can be provided with a connection link for cell phones or handhelds to view the intrusion activity while on the scene. This opens the door to providing camera and floor plan intrusion activity at virtually no cost to the police department (as long as they at least have a cell phone). Police and security agents can view

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what is going on in a facility and plan how to enter even before they arrive on the scene. They can also track all activity while handling the intrusion. The unique mapping scheme form the first patent applies to the handheld devices so they can quickly locate and track the intrusion.

5.0 Market Size The SurveillancePoint service covers many areas in the $20 billion a year security market. Various areas are covered in this section with the size of each. In particular SurveillancePoint concentrates on the networking aspect of security surveillance, for example: Like the pro audio visual market, security systems integrators are experiencing convergence with the IT world. “There is no question that physical security and information technology are rapidly converging,” says Sir Terence Matthews, Chairman and CEO of March Networks, an innovator of networked and mobile video monitoring and surveillance systems based in Ottawa, Ontario. “The rapid expansion of broadband networks has precipitated a dramatic transformation toward the adoption of high-speed, converged voice, video, and data solutions.” According to Mark Mayfield of ProAV Magazine, technology is certainly making an impact on recent developments in this market. When Bill Bozeman, president and CEO of PSA Security Network, and others speak of the “high-end” security market, the intent is to differentiate between traditional burglar alarm-type systems and more sophisticated video surveillance/monitoring and access control technologies. “According to statistics, the fastest growing segment of the low-voltage systems integration business is electronic security,” Bozeman says. “Of the entire electronic security menagerie, which includes burglar, fire, access, and CCTV, video surveillance is the fastest growing.” Frost and Sullivan were drawn upon to get a lot of the forecasts used in this section. Frost & Sullivan, a global growth consulting company, has been partnering with clients to support the development of innovative strategies for more than 40 years. The company's industry expertise integrates growth consulting, growth partnership services, and corporate management training to identify and develop opportunities. Frost & Sullivan serves an extensive clientele that includes Global 1000 companies, emerging companies, and the investment community by providing comprehensive industry coverage that reflects a unique global perspective and combines ongoing analysis of markets, technologies, econometrics, and demographics. For more information, visit www.frost.com

5.1 Surveillance Services Surveillance services include the network security solution provided by SurveillancePoint. It is position to revolutionize today’s business and residential security systems offerings. This general market place will be attacked using the Service Provider Model of SurveillancePoint. It will become easy for this new service to sign up, install and provide support for business and homes. Below are market forecasts for this general segment.

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The U.S. Census Bureau has released fiscal year 2003 expenditures on homeland security in a state-by-state format. The data was published as part of the Consolidated Federal Funds Report, a publicly shared document recently made available from the Census Bureau. Washington, D.C., spent approximately $1.8 billion, or $3,153 per each of the city's residents, to garner the top spot in per capita expenditures.

5.2 Surveillance Software Market Segment The software is one of the components of the SurveillancePoint service. If a software only solution was provided there is a growing market. SurveillancePoint of course is a lot more than just a software management solution.

Video management software provides an effective and efficient method of managing a large number of cameras. New analysis from Frost & Sullivan (http://www.autoID.frost.com),

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World Video Surveillance Software Markets, reveals that market revenues totaled $153.7 million in 2004 and expects to reach $670.7 million in 2011.

“Video surveillance software helps buyers save costs by requiring them to deploy fewer personnel at monitoring stations,” says Frost & Sullivan Senior Research Analyst Soumilya Banerjee. “With lesser requirement of human intervention at the monitoring station, security personnel can be either relocated on site or be dispensed, depending on the premise under surveillance.”

“For an end-user with an existing network infrastructure, the use of video management software makes more business sense, as no additional investment in building a network is required,” notes Banerjee. “Network-based systems expect to replace analog and hybrid systems, providing opportunities for video management software.”

"The use of video management software makes more business sense as no additional investment in building a network is required," notes the Frost and Sullivan. "Network-based systems are expected to completely replace analog and hybrid (analog video capture devices with digital storage devices) systems by 2015-2016, providing huge opportunities for video management software."

5.3 Video Surveillance Equipment Market Segment The equipment manufacturing is growing at an astonishing rate. SurveillancePoint includes the equipment and is therefore part of this market segment. New analysis from Frost & Sullivan World Video Surveillance Equipment Markets, reveals that revenue in this market totaled $4.09 billion in 2003. It projects to reach $8.64 billion in 2010. The market expects to grow at a compound annual growth rate of 11.3 percent.

According to Jack Shandle of a TechOnline article Feb. 2005 regarding video only:

“The overall video surveillance market will grow to approximately $3 billion by 2007, according to market research firm J.P. Freeman & Co. The fastest growing segment will be digital surveillance. This growth will have a significant impact on several technologies including DSPs, imaging software, and mass storage”.

The following three quotes are from Frost and Sullivan: IP-networked Video Surveillance Systems Gaining in Popularity Video surveillance devices, designed to work over an Internet protocol (IP), are allowing users to obtain the cost-effectiveness, flexibility, and remote accessibility of a digital technology. IP-networked systems are particularly popular in large-scale enterprise networks where thousands of cameras are installed to monitor a multitude of locations. For instance, Port Everglades - a major U.S. seaport - uses IP networked video cameras to monitor hundreds of locations dispersed over its 2,000-acre site. The network software monitors video feeds in real time, and in the event of a security breach, it alerts and downloads images to a security officer’s PC, laptop, or even personal digital assistant (PDA).

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Increasing Demand for Digital Video Surveillance Equipment The wide network of legacy analog cameras is becoming increasingly expensive and difficult to replace. In the future, digital video recorders (DVRs) that convert analog images into digital format for transmission over an IP network are likely to be a critical component of video surveillance solutions.

Analog-to-digital converters are becoming vital components of security cameras and a tool to compete with traditional charge-coupled device (CCD) wide dynamic range cameras. With such a converter, the translation to a digital signal occurs at the point of capture, rather than through a separate converter device.

Efforts to Remain Competitive Drive Technology Improvements Competitive pressures in the video surveillance equipment market are driving vendors to incorporate new and innovative features. For example, pan/tilt/zoom (PTZ) cameras track incidents or people, and zoom in for a closer look by remote control or through in-built automation. New-generation surveillance cameras are incorporating infrared light sources that enable them to work 24 hours a day in pitch darkness and harsh outdoor environments.

Researchers are also developing Ethernet-based video-matrix switchers that simplify the process of handling multiple video surveillance systems and also reduce the costs of running individual cables through an analog system. Mobile DVRs used in police cruisers, ambulances, and fire trucks, which were initially record-only types, are now available with an optional cellular air card that converts the device into a wireless unit. This transmits broadband digital streaming of both real-time and recorded images over the Internet to cell phones, computers, and PDAs.

5.4 Surveillance Tracking Systems A good security service needs to also provide a tracking system for equipment and people. RFID is the best method but others are available like card and barcode readers. The tracking market covers a wide range of applications. As a summary from the latest research by IDTechEx, in 2006 almost three times the volume of RFID tags will be sold than over the previous 60 years since their invention, primarily driven by the use of RFID for tagging vehicles, pallets and cases. This exponential growth will continue and, by 2015, the value of sales of RFID tags will have increased by thirteen times over the figure for 2005. The value of the total market, including systems and service, will be $24.5 billion in 2015. Primarily, this will be driven by another new and dramatic development. This will be the tagging of high volume items - notably consumer goods, drugs and postal packages - at the request of retailers, military forces and postal authorities and for legal reasons. In these cases, the primary benefits sought will be broader and include cost, increased sales, improved safety, reduced crime and improved customer service. “According to a new report from market analysts Frost & Sullivan, the asset tracking/RFID industry is prepared to experience explosive growth. With recent RFID pushes from Wal-Mart and the Department of Defense, RFID technology has pushed into more and more widespread usage. Such growing market areas as security, toll collecting and access control

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will continue to make RFID tracking a technology growth sector according to a Frost & Sullivan statement released to the press via research reseller Mindbranch.com”.

Radio frequency identification could be an answer to drug counterfeiting that costs the pharmaceutical industry more than $30 billion annually, according to a new ABI Research study, "The RFID Life Sciences Market."

According to a new report from market analysts Frost & Sullivan, the asset tracking/RFID industry is prepared to experience explosive growth. With recent RFID pushes from Wal-Mart and the Department of Defense, RFID technology has pushed into more and more widespread usage.

According to PR Newswire: Government technology executives see IT innovation, including the use of Radio Frequency Identification (RFID) technologies, as key to achieving their organizational strategy, according to a new report by BearingPoint, Inc. (NYSE: BE), the Information Technology Association of America (ITAA) and Federal Computer Week magazine. However, while most respondents view RFID as an emerging technology that will improve government processes and are investigating application opportunities for RFID, few organizations have actually deployed the technology. The survey clearly shows that most government IT executives believe that RFID technologies can help their agencies carry out their missions more effectively," said John Monroe, editor of Federal Computer Week. "There are still questions that need to be answered, but IT executives believe that the potential of RFID makes it worth the time, energy and effort to invest and learn more about the technology.

5.5 Biometric Equipment The use of biometrics to insure the identification of people is growing. Biometrics must be handled using a system solution like SurveillancePoint.

According to Mark Mayfield of ProAV Magazine, another technology that has catapulted to the forefront since Sept. 11 is biometrics, which is the science of measuring and analyzing biological data. In security applications, it’s being used to develop technologies for identification and access control, and the potential growth is staggering. The International Biometric Group, an industry consulting firm based in New York, estimates biometrics systems will account for $1 billion in sales this year and projects this figure will exceed $4 billion by 2008.

A Hitachi survey finds that 55 per cent of firms in the UAE say that iris scanning and fingerprint recognition systems will soon be introduced for increased security in office buildings. The majority of those, 24 per cent, expect this to take place within the next 12-24 months. The survey reveals that more than two-thirds of companies (77 per cent) believe that the use of biometrics in office buildings is a justified security measure, while just 10 per cent anticipate staff or customer resistance to the technology.

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6.0 Market Development Types The markets present themselves as several types. The various market application areas are discussed above in the Market Size section. Selling within these areas will require specific strategies based on types using a service provider solution.

6.1 Government, Institution and Jumbo Sales How to sell and deliver the service to government agencies will need to be developed early in its deployment. In addition sales to large companies (like the fortune 500s) will have to be developed where they wish to establish their own service and computer centers. Enhancements to meet large opportunities will be paramount.

6.2 Law Enforcement System and Standards Marketing will have to understand the needs of this market. They will work with development (technologists) to best determine how to provide standard interfaces. As part of the effort universal standards will appear to unify reporting and handling of security events. The key to success using SurveillancePoint is its low to no cost to law enforcement and a standard interface for quick and easy access from handhelds including cell phones. Voice and speech is necessary for this type of market.

6.2 Medium to Large Enterprises This includes an offering with market requirements and features for mid range to large companies. Determining the market needs in the voice and speech areas is critical to future growth in this area. The product allows scaling from mid to giant enterprises and this is essential to provide a viable security service. In addition the product allows large enterprises the ability to host their own security network.

6.3 The Small Business This market represents businesses that require a small system at a good price. This market segment will always require the service provider model where companies can sign up at not cost and only have a lease contract. This service operates like a utility or web hosting company.

6.4 The Home Market This market represents the low end user where price is everything. The software can be configured for the low end user with minimal needs. This also requires the service provider model with easy sign up and installation.

7.0 Competitive Advantage There are several competitive advantages to this opportunity. First, unique software technology has been developed and is the basis for the business. This software is the first to bring IT administration and service provider model into the security surveillance and monitoring market. Its pending patents with

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its unique features provide the user experience to make security monitoring and tracking fast and easy. No competitor currently offers a competing product. The software investment to date represents millions of dollars in effort. Second, the software produces extremely low operation costs with its patent pending diagnostic, trend and predictive information. Devices and attached systems are continuous monitored for failures, errors, and operational abnormalities. Alerts and notifications are automatically sent to specified users and system administrators. Problems are usually diagnosed and repair planned before users are aware. Third advantage is the unique pending patents on innovative features. The patents cover security agent and police officer wireless access to the system from the field (cell phones, handhelds, etc.) with voice and speech support; the mapping scheme with icons on floor plans; a real time tracking status; and our proactive service method to diagnose problems quickly and report on trends and problem prediction analysis. When the system sends a 911 call to police departments a special secure link will be provided giving them access into the system being intruded from cell phones or other wireless devices. Fourth, the plan offers this software solution in a service based hosting company that businesses and homes can sign on a lease basis with no up front costs. This makes signing up and using the system attractive to potential customers that don't want to invest in capital equipment and want a low cost of entry. The low cost of the equipment and the leases from this model result in high margins in just a few months. Fifth, individual systems can be sold to large organizations that do not want a service. This opens sales and support income to large enterprises, government, transportation and public agencies. These are noted as jumbo sales. Sixth, camera recording takes place digitally on computer disks and/or RAIDs. It records in a circular fashion erasing the oldest images. Images can be archived as they fill up if desired. The recording disks can be located anywhere in the network. Replay becomes instantaneous not requiring any manual operation like rewinding. Video replay is fast and at your fingertips viewable from any supported device including cell phones, handhelds, web browser and Window’s clients. Images can be offloaded or printed for intrusion identification and forwarding to law enforcement. Seventh, the integrated solution includes other technologies as part of the system bringing about a total network service. These other technologies include:

• RFID tracking • Biometric device support • Both CCTV and network device support • X10 devices • Voice recognition

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• Speech servers

8.0 The Long Term Future of SurveillancePoint There are two parts to SurveillancePoint’s future. The first is the “immediate future” to fill the gaps and market the solution as described in this document. The second is to position the solution so that it can continue to meet the future further out, five to ten years. The immediate future is described above and does not need to be reiterated here. The five to ten year future needs some analysis. Below are some of the areas that need to be considered and followed. Public Safety Deeper penetration into law enforcement and terrorist prevention will be evolving over time. Intelligent tracking and real time computer analysis of human events will start to appear as software gets more sophisticated and wireless networks more prevalent. SurveillancePoint already implements methods to allow law enforcement to view surveillance equipment from the field with wireless devices. This feature will be dramatically improved with cooperation from law enforcement and government agencies. In fact standards will be developed in this area. Security Analysis and Prediction This segment will evolve to assist in deterring intrusions and other security violations. A system must first collect the pertinent data then be able to analyze it to assist security administrators and help identify problems areas. This will evolve as the type of data collected improves and analysis software is developed. Global Networking The augmenting of corporate intranets is evolving especially in the use of wireless networks. Technology will continue to quickly evolve in the wireless segment where the elimination of wiring alone is a major factor for ease of implementation, ease of use and improved security. High and low speed Ethernet links can be mixed with wireless when necessary to provide network continuity and a global view of all enterprise systems. Networked Security Devices Internet Protocol (IP) devices continue to improve in functionality and decrease in cost more than any other surveillance equipment. Most IP vendors are providing more wireless devices to augment their Ethernet offerings. Soon devices will be able to connect and operate over major wireless communication networks. Also wireless provider companies will continue to improve and expand universal networks. Voice and Speech Command and Control This market segment will evolve into every aspect of computing and will be extremely useful in the security market especially in hands free environments. It is

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still in its infancy and is continually being improved until in a few years it will be a common means of communicating with computing equipment and systems.

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