The PRODUCTS of ACT-DYNAMIC

 

 

3.    Manufacture and sale of the DYNAMIC computer software product.

 

 

A    Mission

 

 

3.A.1.         Nature and purpose of the business plan.

 

            The purpose is to develop, manufacture and sell the DYNAMIC computer program      to end users in the pipeline corrosion control industry.

 

3.A.2.         Ownership of the concept.   

 

            The original idea was conceived by Roger Alexander while in Libya and a broad            description of the product was described in an artical published by John Tiratsoo in           the mid 80's.

 

          Outcome of the project.

 

            It is hoped that the product can be sold world wide into the oil and gas production         and distribution industry.  The product will be installed our own teams who will     train the clients personnel and offer technical support as an ongoing operation.

 

          How it will be achieved.

 

 

            An article has been published by John Tiratsoo in the international magazine       'Corrosion Prevention and Control', which reaches the right targets in the oil and       gas industry.  We will are preparing a pamphlet on the DYNAMIC project, to be    sent to possible users and main pipeline operators world-wide.  We hope to interest      a major pipeline operator who will sponsor the manufacture of the product in        return for the licence to use it when complete.   We would market the product in   the conventional way within the computer software industry.

           

 

 

3.A.3.         Capability to succeed.

         

            This venture will require a project manager with experience in the production of             such packages and a sales manager with experience in the relevant industries.  An   existing software house could be used to engineer the product, maybe based on a         selection of existing software.  The capability to succeed will depend on the team           recruited for the project.

 

 

3.A.4.         Functional capabilities throughout the project                                       duration.

 

            This item will depend on the team management.

 

3.A.5.         Management information and control systems.

 

            These will be developed by the project manager and his team but are likely to be based on a standard computer software package.

 

 

3.B.       Sales

 

 

3.B.6.          The sales forecast is feasible.

 

            There are pipeline networks in most countries of the world, which are operated by         large organisations who would be interested in this product. 

 

 

3.B.7.          The sales forecast take account of the industry                                     environment and future trends.

 

 

            There are thousands of miles of buried pipelines which are essential to the economy       of the country, and are operated at very high pressures under ground to which the         public have access.  The operators are not 100% certain of the integrity of these      assets and the DYNAMIC  package is a step towards ascertaining their exact   condition.

 

 

3.B.8.          The sales forecasts take account of market pricing                     volume and gross margins.

 

            The product will enter the market of dedicated  software with limited application            and the price must reflect this.  It has been estimated that a charge of £150,000 per          installation is not unreasonable.

 

 

 

3.B.9.          The sales forecasts take account of the likely behaviour            of competitors.

 

            There appears to be no competition at present and it will take some time for      competition to emerge as the technology which allows the true modelling of the           corrosion process has only just been accepted by the academic institutions.   It is           anticipated that competition will soon emerge and that time must not be wasted in           selling the first product.  Once this is installed within a large organisation this will be            a 'springboard' for further sales which will give any competition a severe    disadvantage.

 

3.B.10.        Customer profile, buying habits and distribution                                    channels.

 

            Potential customers are considered to be large corporate bodies and national     organisations producing and developing products in pipeline networks.  These           organisations buy software direct from developers and co-operate in the        production manufacturers on the recommendation of their specialised departments,        and it is therefore senior management and senior technical personnel that we must           target.

 

            Some sales can be obtained through agents who have a personal connection with           the clients in their operating area.  The agent can introduce the product where a       market need is identified.  We will identify such agents and sales networks through          consultancy networks which have connections world wide and, maybe through service companies which do not have this speciality within their portfolio.

 

 

3.B.11.        Historic trends and external factors.

 

            Demand for this type of product is low volume but world-wide.   Corrosion control       is enhanced by environmental issues, energy conservation  and the occurrence of           well publicised pipeline failures.  Corrosion control activity can be held up by          management as a token of long term concern about these issues.  Failure to        consider new technology could even be regarded as neglect by the media. 

 

            Asset condition monitoring is a major concern of such organisations as Shell       International who have research projects about this matter.  Are presentative of the         Shell, Arnhem team was visiting Nigeria when he expressed an interest in a minor          feature of the DYNAMIC  spreadsheet which I was working on at the time.  There       is a major trend towards computerisation in the oil and gas industry and this           product would fill a place in this trend.

 

 

 

 

 

3.B.12.        Time taken to develop the product/service, complete a                        sale and receive payment.

 

           

C.   Expenditure

 

3.c.13.        The expenditure forecast is feasible.

 

           

            Promotion and management of this product could be enhanced with a greater initial        investment and the management of this promotion would be part of the expenditure             to be specified.  The investor must judge the cost of setting up a company which       has this function.

 

 

3.c.14.        The expenditure forecast takes  account of likely                                 supplier behaviour.

 

 

3.c.15.        Do the additional working capital requirements reflect                        the reasonable needs of the new project and the core                       business?

 

            This feature will have to be defined by the manager put in place by the initial       investor.  The present management do not have the financial experience to present   this feature in terms which conform to the current conventions.

 

            It is however, obvious that there must be sufficient funds to pay all debts until     clients money is flowing into the company in return for the product. 

 

 

3.C.16.       That the projected product and market expenditure,                            and capital expenditure reflects the reasonable                                  requirements of the business objectives.

 

            Operational advice from market professionals is an item which will be procured             with the investment for this element of the operation.  If  the investor thinks that it    is a forgone conclusion that this venture will succeed then there is likely to be many           investors wishing to be included.  It is up to the investors make this judgement, all I        can do is to present the technology as a product for them to market.

 

 

3.D.              Existing and future funding requirements

 

 

3.D.17.       The forecast of trading assets and liabilities appear                              feasible for a business in its industry sector.

 

 

3.D.18        Terms and conditions of  all proposed borrowings will                           be negotiated with investors.

 

            There are no existing liabilities except to the Technical Director ( the author ) who          is the sole source of finance to date.

 

 

3.D.19        Full details of the future of the equity structure and                              managements financial commitment.

 

            This will be negotiated and formalised with the investors.

 

3.D.20.       Details of drawings and dividends for controlling                                   shareholders and directors.

 

            These will be negotiated and agreed, subject to professional advice between the            investors and present directors who are the owners of the intellectual property            which constitutes the sole asset of the company. 

 

3.D.21.       Interest and repayments on all borrowings from third                           parties must be included in the business plan which is                     part of the product of the investment sought at present.

 

            The investor in the present activity must ensure that sufficient funds are provided to         secure this issue.  It is up to the investor to ensure that his judgement is adequate.

 

 

3.D.22        The funding requirement includes consideration of                      contingency amounts.

 

            Normal insurance will be taken out for any of our activities, and we will operate             within the constraints of such insurance contracts.

 

 

3.D.23        Professional advice will be utilised to ensure that                                  accounting policies are appropriate for the industry                              sector.

 

            The structure of the accounting will continue to be developed with the company             accountant.

 

3.E.       Downside Risk

 

 

3.E.24         The management will understand the risks associated                          with the project and will be able to recognise problems,                  determine options and take appropriate actions, as it                          will be their own funds and experience that they are                       investing.

 

            As in my own case, I am investing my own intellectual property and expertise, and         my future is at risk in any judgement that I make, so I would expect the investor(s)           of finance and management expertise to risk their own futures in this venture.  It is        up to them to decide whether this risk is worth the probable results.

 

 

3.E.25.        The management realise that the main purpose of this                         element of the operation is to raise funds for, and co-                      ordinate, further activities which naturally follow the                        successful promotion of the technology.

 

 

3.E.26.        The investors should be sufficiently expert to include                           sensitivity analysis to indicate what reasonable                                     contingency funding should be made available.

 

            They should consider at the outset, how much extra money might be required to             follow up any unplanned turn of events.   This might include a sudden interest by a           potential client from overseas, requiring greater funding than that to follow up one     from the UK.

           

 

3.E.27         The medium term profit forecasts are reasonable for                           the sector.

 

           

 

 

 

3.F        Funding terms and conditions.

 

3.F.28         The requirements of investors will be considered                                  during negotiations to raise the funds.

 

            In raising this investment it will be necessary to take outside advice which will     have to be charged to this investment.   It would seem that this puts the investor in total control but this is not so.   My own investment is the intellectual property and     ability to apply the technology to produce good field results. 

 

 

 

3.F.29         The management are aware that they may be required                        to give investors minority protection rights.

 

            This is my lifetime product in the same way that the funds of the investor are his.  It         is merely a matter of negotiation to reach protection and a reasonable return for all     parties.

 

3.G        Conclusion.

 

3.G.30        Taken as a whole the business plan is consistent and                            credible.

 

            I have not the expertise to determine a realistic cash flow forecast for this operation        but I am in a position to realise that I have a truly profitable product after many   years of specialised work.   It is up to those who are skilled in financial matters to        contribute the effort required to formulate a business plan to realise the potential of         DYNAMIC to fill a gap in a very lucrative market.

 

            With the proper funding and management there is no reason why this should       should not be marketed on a world-wide scale.