ParkIt Brendan Quirk and C. Todd Lombardo

Business Proposal

ParkIt April-2010

1

Table of Contents

Executive Summary 2

Company Mission 3

Product and Service Offering 3

Identifying the Opportunity 3 Providing a Solution 3 Benefits and Impact 5

Market Landscape 5

Parking 5 Mobile Phone 6 Competition and Substitutes 7 Target User Research 8 Market Segment Identification 8

Phases 9

Management 10

Key Job Descriptions 10 Management Team 11

Marketing and Sales 11

Marketing 11 Distribution 12

Financial Summary 12

Pro-Forma Summary 12 Assumptions 12 Income Statement 12 Balance Sheet 13 Cash Flow Statement 14

Exit Strategy 15

Key Challenges 15

Strengths, Weaknesses, Opportunities and Threats 15 Risk Analysis 15

Appendix 18

Exhibit 1 - Survey Characteristics, Results and Conclusions 18 Exhibit 2 – Focus Group Results 22 Exhibit 3 - Financial Details 24

ParkIt   April-2010  

  2  

Executive  Summary  Sixty-six  percent  of  cars  parked  in  Madrid  have  been  shown  to  not  pay  fees.  This  results  in  a  lack  of  revenue   for   the   city.   With   88M   in   revenue   which   could   be   260M ,   this   is   an   issue   in   which   our  venture  can  help  Madrid.  ParkIt  has  been  created  with  the  intention  of  becoming  the  next  breakaway  technology  that  will  revolutionize  the  way  people  park  in  Madrid  and  eventually  Europe.  

Background  

Like  many  major  cities   in  Europe  there   is  an   issue  with  the  congestion  of  cars   in  Madrid.  This   issue  has  become  a  problem  for  many  people  driving  in  the  city  and  the  biggest  bottleneck  in  the  process  of  commuting  to  and  from  Madrid  is  the  park.    For  a  driver,  finding  an  on-street  parking  space  is  not  an   easy   task   in   some   crowded   cities.   Often   times   a   driver   can   be   circling   the   block   for   up   to   45  minutes  depending  on  the  city  and  time  of  day.  Madrid  is  no  different  in  this  case.    

However,  due  to  clear  efficiency  issues  not  to  mention  the  average  Madrileños  lack  of  coins  on  hand  at   any   given   time,   this   system   is   antiquated   and   every   one   knows   it   and   despite   the   steep   fines  associated  with  lack  of  payment  people  find  creative  ways  to  avoid  it.  Sixty-six  percent  of  cars  parked  in   Madrid   have   been   shown   to   not   to   have   paid   parking   fees.   This   results   in   a   significant   lack   of  revenue  for  the  city.  The  current  number  amounts  to  88M  which  could  be  260M ,  this  is  an  issue  in  which  our  venture  can  help  Madrid.  

The  Concept  

The   founders   of   ParkIt   realized   that  with   today’s   technology   they   could   offer   the   city   of  Madrid   an  opportunity  to  advance  the  cities  parking  system  to  the  21st  century.  Not  only  offering  a  better  way  to  administer  the  system  more  efficiently  by  adding  a  network  of  sensors  in  the  city  that  makes  paying  easier  so  much  so  that   it  can  be  done  on  a  smartphone,  but  also  showing  where  people  are  going  over   their   time  or   not  paying  at   all.   This   new  parking   system  can  control   parking   rates,   times,   and  other  information  to  give  more  data  to  the  administrators  of  the  system.  

Given  that  the  smartphone  trend  is  increasing  and  the  penetration  of  mobile  phones  in  Spain  is  114%,  there  is  an  opportunity  to  utilize  this  information.    Park  it  will  also  give  this  information  to  drivers  who  can  find  their  spot  quicker  and  easier  reducing  congestion  in  the  city  and  make  the  city  cleaner  with  reduced  carbon  emissions  and  traffic  flows  more  smoothly.  

The  Solution  

By   importing   a   technology   from  a  US  partner,   Streetline  Networks,  we  will   implement   a   system   to  address   these   issues.  With   an   investment   of   200.000   in   addition   to   financing   from   the  US  Ex/Im  Bank  we  propose  a  phased  installation  of  this  system  in  Madrid  then  expanding  to  other  cities.  Given  that   this   is   a   municipal   project,   essentially   a   public-private   venture,   the   long-term   outlook   shows  profits  starting  in  year  7  with  a  payback  in  year  6  and  an  IRR  of  64%  on  the  initial  investment.    

The  Team  

Brendan  Quirk   an  MBA  with   an   accounting  background  and  C.   Todd  Lombardo,   an  MBA  with   a  technology   and   marketing   background   are   seeking   a   third   partner,   preferably   a   Spaniard   with  experience  in  Madrid  public-private  partnerships  to  launch  this  venture.    

 

 

ParkIt April-2010

3

Company Mission The mission of ParkIt is two-fold (1) implement an improved parking management system in Madrid allowing for higher compliance of parking payments equaling higher revenues to the city and (2) to reduce drivers’ frustrations when searching for a parking spot, decreasing the amount of unnecessary traffic, congestion and pollution from automobiles due to redundant driving in crowded city centers.

Product and Service Offering

Identifying the Opportunity

Finding parking is an issue in Madrid. Recently there was an issue with certain parking meters overcharging resulting in a backlash and a request for 400.000 parking fines to be nullified and a loss of revenue for the city. In Madrid's "Blue Zone," 2 out of 3 parked cars have exceeded the time that has been paid and there was no fine levied.1 This leaves a significant amount of parking fee revenue uncollected by the city of Madrid. Last year, Madrid collected approximately 89M! in parking fee revenue2. This equates to approximately 530! per parking spot per annum, which should be closer to 1.055! per annum, assuming 168.000 on-street spots in the city of Madrid. Additionally, there are approximately 434.000 cars which enter the city of Madrid on a daily basis, half of which have a destination near the city center and on average a driver takes 12 to 15 minutes to find a spot, sometimes up to 45 minutes depending on the time, day and neighborhood.3 Due to this demand for parking, the Ayuntamiento has created a zoning system to regulate the demand, however this has not solved the problem. Given there is finite space the ability to create new parking spaces is costly and an option to remedy the problem is to enable better management of parking availability.

Providing a Solution

By capitalizing on the fact that the Spanish mobile market has a penetration of 114%4 and that 25% of Madrileños have smartphones, our plan is to offer a complete solution which incorporates sensors installed on the street, use of the existing parking meters, the internet, and a downloadable smartphone application to bring together a solution to increase the city’s parking fee revenue.

The process works as such: Sensors installed in the street send wireless signals to base stations (located in parking meters) which then communicates either via cellular 3G network or the internet the status of each sensor. A centralized database manages this information and relays it out to the user's mobile phone in real time.

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!1 http://revista.consumer.es/web/es/20080201/actualidad/tema_de_portada/72320_5.php#madrid (Accessed 25-April-2010) 2 http://www.gonzalomontero.com/noticias/Ayuntamiento_Madrid/Proyecto_%20Presupuesto_2008_tomo2_1_Pagina_082.pdf (Accessed 20-April-2010) 3 http://www.20minutos.es/noticia/195235/3/ (Accessed 27-April-2010) 4 http://ec.europa.eu/information_society/doc/factsheets/14thimplementation/14th-progress-report-es-final.pdf (accessed 28-April-2010)

ParkIt April-2010

4

A downloadable software application from the Internet onto a smartphone over-the-air (OTA) will utilize the phone’s geo-location ability either via GPS or via co-location of cell-towers and identify where the user (i.e. car) is located. The application will display a street map of the local area with an overlay of the availability of parking spaces. There would not be individual spaces highlighted, rather only probabilities represented by a color. Zones in displayed in red would signify low-probability of an available space, yellow, a medium probability and green high probability.

Once a user has located and parked in an available spot, the user can pay for the parking fees with via their smartphone. This reduces the need for specific coins or a pre-purchased card. When the allotted time is up, the user is sent a message to their phone for either renewal of the fee, or a message requesting them to move their car. Options are presented for the user to renew the fee or leave the parking spot. This can increase the compliance for payment as well as increase the revenue the city earns from parking fees.

The technology is provides by Streetline Networks (Streetline) in the United States.

Streetline is building the future of cities with ultra-low power radio technology wireless networks, sensors and management systems. Streetline builds solutions to longstanding problems in city management and operations, through the customized design and application of new sensing technologies. Our parking management system offers cities the first real control and oversight of their complex inventory of on- and off-street spaces, and forms the backbone for other innovative sensing solutions that lower city costs and improve public services.

At the heart of the sensors are electromagnetic sensors manufactured by Dust Networks. Streetline has combined all of the hardware, middleware and software into a total solution package and has successfully implemented this solution in the City of San Francisco. More information can be found at SFPark.org. They are currently expanding to Los Angeles, CA as well. Our intent is to import this technology and install an analogous system here in Madrid.

ParkIt April-2010

5

Benefits and Impact

This proposed parking solution is estimated to cause an increase in revenue per parking spot. Applied over 10.000 spots in the most congested areas of Madrid, there could be significant reduction in traffic as well as an increase in revenue due to the increased ease of use and the convenience of payment ability with the system.

It is estimated that in large cities people who are circling the block looking for a place to park their car cause 20-40% of driving traffic.5 This results in consumption of over 177.000 unnecessary liters of gasoline or the equivalent to driving around the globe approximately 14 times. One study by the Texas Transportation Institute in 2000 suggests that traffic congestion from unnecessary driving wasted an estimated 67.5 billion dollars, based on lost productivity and fuel consumption.6,7 Should this system be successfully implemented in Madrid, traffic could flow smoother, drivers could make more informed decisions about when and where to drive in the city and the environment and the city will benefit. The user will be informed of when the fee is up along with the convenience for payment. There would be no need for coins nor purchased cards, only a mobile phone is necessary.

After a significant mass sensors are installed and the majority of drivers are using the system, variable pricing schemes could be offered to give drivers the ability to make more informed decisions prior to getting into their car. This could reduce traffic and congestion and also have the potential to increase the revenue to the city. For example: in blue zone parking, the time limit is 2 hours. However if the user wishes to stay for a 3rd hour, they would be charged a higher rate such as 10! to incentive-ize the driver to move their car, and the city receives this revenue without having to issue any particular fines.

A final benefit is one of security. By having the technology available in sensitive areas, the length of time cars are parked in certain locations can be tracked. This may prove useful to foreign embassies and other organizations that may have any terror threats to consider.

Market Landscape

Parking

There exist two zones of on-street parking in Madrid: "Blue" for short-term (less than two hours) parking and "Green" for resident parking. There are an estimated 168.000 on street parking spaces in Madrid. See figure 1 for the distribution of on-street parking places in Madrid.

In the blue parking zones, preferably reserved for visitors, parking is permitted to non-residents and residents of specific district, for a maximum of two hours as a rate of 1,05!, with some minor variation depending on time of day and season. Additionally, commercial and industrial vehicles displaying the appropriate orange decal are permitted for up to five hours. The time intervals are fractions, except for the first twenty minutes, intermediate time intervals between two rates, in multiples of 0.05! in proportion between the anterior and posterior rate. Supplement charges are incurred for the excess

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!5 Markhoff, John (2008). Can’t Find a Parking Spot, Check Smartphone New York Times

http://www.nytimes.com/2008/07/12/business/12newpark.html?ex=1373601600 (Accessed 9-August-2009) 6 Downs, Anthony (2004). Still Stuck in Traffic: Coping with Peak-Hour Traffic Congestion. Brookings Institution Press, Washington, D.C., USA 7 Driven to Excess: What under-priced curbside parking costs the Upper West Side. Transportation Alternatives.

http://transalt.org/files/newsroom/reports/driven_to_excess.pdf (Accessed 9-September-2009)

ParkIt April-2010

6

up to an hour on the time authorized in the ticket: 3! (without penalty). After the maximum permitted period, a car may not park in the neighborhood for a four hour window.

In the green parking zones, non-residents in the district can park their vehicle specific for a maximum of 1 hour. Local residents may park their vehicle without time limit, exhibiting their specific residence on the front windshield of the vehicle. In Madrid, there exists about two times as many green parking spaces than blue parking spaces.

Mobile Phone

Spain itself has a mobile phone penetration of 114%8, meaning that nearly everyone has a mobile phone and many have more than one. According to an extensive study “Smartphone & Chip Market Opportunities,” Smartphone’s will grow 13% in 2009 to 164 million units. Forward Concepts forecasts a compound annual growth rate of 21.7% to the 387 million-unit level in 2013.9 As of today Madrid is one of the most sophisticated cities in Europe, and has a continuously growing base of Smartphone users. Our research in the Barrio de Salamanca showed that 54% have a smart phone (iPhone, Blackberry or other 3G phone) that would support ParkIt’s offering. The remaining 46% of the users have regular phones. Currently smartphones make up 25% of the entire mobile market in Spain and this is expected to more than double over the next two years, as smartphone’s will soon become a common good. This increasing competition will help prices for smartphone’s to decrease, and therefore becoming available to almost all mobile phone users.

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!8 http://ec.europa.eu/information_society/doc/factsheets/14thimplementation/14th-progress-report-es-final.pdf (accessed 28-April-2010) 9 Marsal, Katie (2008) Apple's Smartphone share closer to 13%, still ahead of Microsoft

http://www.appleinsider.com/articles/08/12/04/apples_smartphone_share_closer_to_13_still_ahead_of_microsoft.html (Accessed 29-August-2009)

ParkIt April-2010

7

Nokia continues to be the leader in Smartphone shipments in Europe however this is changing rapidly as Apple's iPhone and Google's Android platforms gain popularity and traction. With an estimated 2008 market share of 34%, followed by RIM at 13%, Apple at 9.6% and Sharp at 5.7%. Sony Ericsson follows with a 5.3% market share, and then HTC at 5%, Motorola at 4.6% and Samsung at 4% and 16 other smartphone vendors constitute the other 18% share. See Figure 2.10

The applications provided by this mobile phones, provide a segment of the mobile phone industry easily accessed by external parties, which are not provided by the main phone companies.

Competition and Substitutes

To our knowledge there are no other companies operating this exact business model in Madrid. There are a number of substitutes in the form of public and private garages offering off-street parking. The private parking garages have a higher cost per hour, however unlike some countries the cost is not exorbitant. Average costs to park in a garage in Madrid is approximately 34.5!/24 hours, however in higher demand areas this cost is upwards of 3,40!/hour.

FCC – manages 25.000 on-street parking spaces in Madrid

Versia Holdings – manages 56.000 parking spaces in Madrid

SICE - Sociedad Ibérica de Construcciones Eléctricas, S.A – manufactures and installs parking signs, magnetic card readers, cash payment machines and handicap sensors

Vinci Park – Operates 5 underground garages in Madrid

InterParking – Operates private underground parking 7 garages in Madrid

Madrid Movilidad operates 5 garages in Madrid which are primarily for residents

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!10 ibid

ParkIt April-2010

8

Target User Research

In order to understand the end user, a survey was conducted to determine the attractiveness of the planned product offering. The survey evaluated potential clients’ interest in using ParkIt to find parking and also provided information on individual’s behavior while traveling in Madrid. This information is essential to narrow down the company’s target population in calculating utilization and penetration estimates. The results of the survey suggest that the product would be well received and we could use some data extracted in estimating our potential customers.

Since ParkIt target clients are both commuters residing outside of Madrid as well as local Madrid residents when traveling their timing needs may differ, however these parking spots act as a direct channel to segment potential customers into the two categories of commuters and residents. Surveyed individuals included men and women between the ages of 25 and 45. The survey sought to gather data on drivers’ behavior while parking in Madrid, their interest in improving the parking experience, means of getting to know the city parking availability and information sources that they use for arranging parking both public and private.

Of the total sample, 76% had used more than 2 hours of parking during their stay in Madrid and 24% had less than 2 hours. Therefore, the majority of the public would need 3-4 hours of parking. Preferred parking by individuals who took the survey overwhelmingly prefer public parking and we infer that this is due to convenience and price.

All of the interviewees had mobile phones and preferred to use the internet with their smart phones to find information on parking.

Also discovered in the data collection and analysis was that while commuting, the majority of the interviewees did not obtain information before parking to find a spot. Most people use no method to find parking and according to a study done in New York there are more than 55% of people who do not pay for public parking because they either have no coins or are simply not paying. These last two data-points are imperative for ParkIt’s planned communication strategy as they highlight the importance of reaching potential customers through the internet and informing them to the benefits of the new technology being used to facilitate parking in Madrid.

In terms of ParkIt’s service per se, the majority of interviewees are drivers with the use of a smart phone as 54% own one and 25% use phone applications. However, as the usage of smart phones grows so will our potential penetration into the market. We even consider the possibility of people getting smart phones and using the applications to increase in Madrid because they realized the benefits of our application.

Eighty-eight percent of people surveyed were interested in using the ParkIt application, of which 59% would purchase the service on a monthly fee basis and 29% would pay for it on a per-use basis. However, because we are offering a way to not only support the customer, and more so the local government and parking administrators in capturing more paying customers and better control of the parking system in Madrid, we are planning on offering the application for free to offer an incentive to customers to use the service. This added value will help build up a base of users quicker than if there was a charge to use the system.

Market Segment Identification

In order to arrive to a potential number of ParkIt clients per year the following filters were applied to the survey results.

According to most recent estimates from the Spanish National Institute of Statistics there are 2,981,541 licensed drivers in the Comunidad de Madrid. There are 434,000 cars entering Madrid on a daily basis and just over half them are going to the center of the city. This is important to understand about how many customers are going to be downloading the application available on line.

ParkIt April-2010

9

According to the European Commision there are 114% of Madrid citizens use mobile phones and of those mobile phones 25% are smart phones. We can break those smart phone users down to the different phones available in the market. There are 78% iPhone, 10% Symbian, 8% Andriod and 4% others. Of those smart phone users we looked into those purchase applications and find that we can drill this number down even further using the smart phone application purchasers who use each type of smart phone, 50% iPhone, 10% Symbian, 19% Android, 10% others.

Target customers should satisfy all of the following conditions to be considered a potential user:

1. Must be a licensed driver in Madrid either commuter or resident

2. Must use the public parking services and not be a private parker

3. Be a smart phone user

This first filter yielded in 20% of interviewees to be considered as potential ParkIt clients. Such respondents should also use smart phone applications (and be familiar with their use). This additional filter reduced the figure to 15%. That said, this last filter was applied for conservatism, as instructing an individual to use a smart phone application should not be considered a tedious task.

These figures were used to estimate the market for the number of people who we could consider as clients of our service and potential users to bring us to our basic assumptions of users of the technology and the penetration into the market we can have in our key area of the pilot.

Using this information ParkIt’s total initial market is considered to be the average number of drivers per year in Madrid, and based on the aforementioned filters, 15% of this total would be our initial clients. An initial penetration level of such potential client base was assumed to be high in our target area of Salamanca, resulting in high ParkIt customers’ penetration into the key target market where we test the project.

The average number of expected drivers per day allowed for a calculation of the minimum number of sensors needed in ParkIt’s network. Of the total parking spot utilization level of 60% was inversely assumed to generate our potential penetration into the market of drivers. This came to be a initial assessment of our market and is the basis for our estimation of a pilot program of 325 sensors to launch the business.

Phases The project will be completed in phases, with the continuation of each phase expanding the business further.

Phase 1 - Barrio 41 - Recoletos - Approximately 8 city block consisting of 325 sensors installed south of Calle de Villanueva to Calle de Alcalá between Calle de Serrano and Calle de Velasquez. This phase can prove to be a testing ground and also offer a study of parking behaviors so that the local parking ordinances can be optimized in Phase 2.

ParkIt April-2010

10

Phase 2 - Once the pilot is implemented and proven successful, the project can begin to grow to other areas of the city. We expect this to occur after one year of business operation, and about 6 months after implementation of the pilot area.

Phase 3 - Expand into other cities - First in Spain: Barcelona, Valencia, Bilbao and then to Europe. For the purposes of our financial analysis we only included Madrid, however similar implementation costs would apply at each new city.

Management

Key Job Descriptions

Chief Executive Officer (CEO): The CEO will need to report to the Board of Directors on a monthly basis of the continuous development of the company, s/he will have full authority over the 3 directors, and will need to reach the pre-established goals by the Board of Directors. Parkit’s CEO will direct and overlook the company as whole as well as playing an important roll as Sales and Public Relations agent in order to visit and negotiate with the Ayuntamiento to target new locations. She or he will be acting as the direct image of the company. At the same time the assigned person must have a minimal understanding of Information’s Systems in order to fully recognize the operations of the business and be familiarized with ParkIt’s technology operational details when they need to be explained.

Chief Information Officer (CIO): will be in charge to direct all IT related activities within the company making sure that all hardware (sensors at the street) and software (servers) are running at full capacity. S/He will be responsible for all communication with the technology providers and suppliers. The maintenance team will be in charge of installing, repairing and adjusting the sensors whenever it is needed. The CIO will serve as director of research and development and will play a major role in the success of the company; s/he is in charge of developing all the required application software for the product and all the IT requirements in order to process all sensor information.

Chief Operating Officer (COO): The COO will be responsible for keeping all companies assets in optimal shape. He will be responsible for having all sensors and antennas operating correctly as well

ParkIt April-2010

11

as all the IT equipment at the same time he is responsible for supervising all technicians operating the service.

Chief Financial Officer (CFO): The CFO will have the responsibility of generating accurate financial statements on a quarterly basis for review with the CEO and Board of Directors. ParkIt’s CFO will have a background both in accounting and law as this person will be in charge of dealing with all fiscal and legal matters of the company. In charge of dealing with: company salaries, company contracts, fiscal policies and tax payment, HHRR legal hiring formalities, bank accounts and transfers management, accounts consolidation and financial forecasts.

Management Team

Brendan Quirk (CFO) was the Interim Director of Finance and Administration for the Latin American Headquarters of Covance Inc. where he managed the company's growth and expansion into five different Latin American countries. His Latin American experience began in Mendoza, Argentina, where he learned to speak fluent Spanish and was the Finance Manager for the start-up wine and real estate business, Vines of Mendoza. A 2001 graduate of the Boston College Carroll School of Management with a Bachelors degree in Accounting and Business Information Systems, Brendan has successfully completed the Massachusetts CPA Exam (2003) and has worked in various capacities as an auditor and consultant for both the government and private sector. He also holds an International MBA from IE Business School, where he led the Ultimate Frisbee team to victory in the 2010 Spring Fling.

C. Todd Lombardo (CIO/COO) is a 35-year-old American with over 10 years experience in product marketing and strategy in the biotech and technology sectors. He has been the founder or co-founder of a number of web ventures and most recently Powerpointology, a presentation consulting service. In addition, he has led teams to promote various conferences on product management in Boston and was one of the initiators of TEDxMadrid. He holds a bachelor’s degree from Merrimack College, has studied Biomedical Engineering at University of Connecticut and holds an International MBA from IE Business School.

A third member of the team (CEO) to be appointed, who has connections to the Madrid Ayuntamiento and Muni Madrid with experience in Spanish public-private partnerships would be an ideal CEO to complete this team.

Marketing and Sales

Marketing

Given the phased approach to the implementation, the initial pilot project would be only marketed via a direct mail campaign and flyering in the specific area. This cost is expected to be minimal.

As the project moves to phases 2 and 3, the ability for bringing awareness to the program will be as follows:

In conjunction with mobile operators, targeting specifically those users who live in the congested areas.

News coverage of system installation as newspapers may wish to cover the topic.

ParkIt will also develop a marketing plan with the Ayuntamiento of Madrid, where together we will market the product. The Ayuntamiento should engage in a personal marketing spree communicating their intention to provide a vast and reliable service to the community that will reduce traffic, facilitate day-to-day activities and at the same time reducing pollution within the city, this marketing initiative should focus on the local media (newspapers and radio). ParkIt will also peruse the Ayuntamiento to place a small advertisement on the actual “parquímetro,” with the ParkIt logo and some small description of the application and how to obtain it.

ParkIt April-2010

12

Distribution

Distribution of the smart-phone application will be through the app stores such as Apple's iTunes, Google's Android Market, the Blackberry App store and Nokia's Ovi Market. The application will simply be downloaded from those sites onto their phone. In each market, if the application is offered for free, there is no charge to use the market's distribution channel. If there is a price to the application, then each will take a 30% fee.

Financial Summary

Pro-Forma Summary

The ten-year pro-forma summary is shown in Table 1 below.

Dic-11 Dic-12 Dic-13 Dic-14 Dic-15 Dic-16 Dic-17 Dic-18 Dic-19 Dic-20

aaaa E aaaa E aaaa E aaaa E aaaa E aaaa E aaaa E aaaa E aaaa E aaaa E

Net Revenue 99 212 615 1.573 3.840 8.378 17.374 28.551 37.057 42.888

EBITDA (414) (351) (24) 867 3.041 7.425 16.207 27.127 35.396 41.059

Net Income (330) (386) (276) 175 1.309 4.070 9.621 16.422 21.630 25.442

Total Assets 168 226 347 466 585 732 918 1.137 1.221 1.323

Shareholders' Equity (126) (47) 39 130 226 322 420 515 610 691

Free Cash Flow (754) (1.054) (734) (673) (875) 3.015 5.319 13.844 21.755 26.968

Assumptions

Financial projections from January 2011 to December 2020 are shown in the Appendices.

The following assumptions were made in development of our financial projections:

We assume a consistent increase in costs of 3% per year.

Revenue growth depends on the number of sensors that are installed in the ground and he expect to have this growing at 25% per quarter based on estimates of worker capacity reaching its limits at around 50,000 sensors installed in a year.

We will only install sensors in approximately 75% of the 168,885 total spots in the city of Madrid.

Income Statement Revenue

The revenue per spot is an estimate of the amount of new income generated by the sensors in each parking spot. Calculating the number of hours each parking spot in the city is operating each year and using an average charge per hour to come a total income possible for the city that year derive the amount of new income. We estimate that to be !5,824 per spot per year at capacity. We estimate to capture 60% of these spots to bring that number to !3,494 per spot per year. This amount is then multiplied by the percentage of people who pay for parking which is 45%. This is then compared to the amount we think that the sensors will generate. We estimate that the sensors will have at a minimum a 15% increased in the payment of parking fees. Therefore, we are looking to capture 20% of that increase amount in per spot income as a commission we would charge the city for each spot we have in our system.

ParkIt April-2010

13

For simplicity, we used 2!/per hour for the cost of parking in Madrid. Taking actual prices taken from the parking meters in the city in order to simplify the calculations derived this. The actual prices range from 1! to 3! depending on the zone, day and time.

Expenses

For the operation of the business it will be necessary to purchase the sensors from Streetline Networks. At this point we decided to work with them because they have the latest technology in place and a functioning model successfully implemented in San Francisco. However, in the event of a technology such as ultrasonic which is cheaper but at very developmental stages, we would consider changing if it were available in the short term.

Additionally, ParkIt will work with Streetline to build an application specifically for Madrid and have the server that stores and administers the information generated by the network of sensors. For this service we will pay a maintenance fee to the partner Company for the use of the sensors, application and the network of information. As mentioned before this is quoted at 300! yet could be reduced over time with favorable relations and/or bulk orders. Also this price includes installation costs and has a guarantee of 5 years.

For this purpose we have estimated initially at 136,500! to build the network of approximately 325 sensors in the pilot stage. This will including the information technology and network administration that will be done by Streetline, but not the cost of building the application which we estimate from inside sources in the application market to be 73,600! to build the application. We calculate that it will be 2,000! a year to cover the maintenance of the mobile phone application.

We will also need an office for employees to handle the administrative work of the business and marketing. Administrative and other office and marketing expenses of the business will need at least one employee each at first and then build to a total of ten in the 10 year development of the project. We pay each employee 2,000! salary plus benefits.

As part of the Company’s expected partnerships with the government and our relationship with current administrators of parking in Madrid we will need to maintain those relationships via quality service and transparency to the end consumers. Based on the outlined communication strategy, a marketing budget of 2% of sales has been set for the first year of operation. As outlined in the following financial summary, total expenses for the first year amount to approximately 570.000!; with a revenue base of 100.000! (based on 325 sensors at 150! each) yielding an initial loss. As revenue grows over a predominantly fixed cost structure, net income is expected to oscillate from 175.000! in 2014 to 25M! in 2020.

Balance Sheet

Losses in the first 3 ears will result in tax credits used to reduce taxable income. ParkIt expects to obtain an installed sensor price of 150! due to volume purchase agreements with Streetline. In addition we expect to keep high levels of fixed assets since the sensors are an essential part of the business.

We have assumed that we will be granted the Import Export Bank of the US terms of 4.8% debt financing on 80% of our goods purchased for export from the US. The debt financing will be a revolving debt agreement that we can use throughout our development of the project

ParkIt April-2010

14

Cash Flow Statement

We have assumed that we can collect from the government of Spain within 30 days. We assume that our supplier will grant us terms of 30 days. Financing Offering

The financial needs of ParkIt will be significantly supported with the favorable loan terms offered by the Import Export Bank. This will give ParkIt the ability to fund its capital expenditures in purchasing the sensors from Streetline. However, this does not cover all our capital needs in the first year.

We are looking for an equity value of ! 200,000 and we hope to raise these funds with one financial investor. We are willing to offer are convertible preferred shares with mandatory redemption rights.

ParkIt will be looking for an outside investor that can provide significant value added resources to the company. These resources would be key contacts in the government and industries that can support our business in Spain. We look at this investment as an opportunity in this venture to have a key strategic partner. We hope to have support throughout the projects growth and offer two board seats as well to the investment firm as well as the right to pick an independent board member with the current management team.

ParkIt April-2010

15

Exit Strategy The options for exit strategy are the following:

Sale Acquisition Merge

Initial Public Offering

The plan to exit will be to sell the company or merge to a complimentary organization. Perhaps an organization such as Vinci or SICE who manage parking solutions already in Spain may be viable candidates. An alternative would be to sell the company to an investor looking for a secure dividend investment as once this system is setup, a steady stream of income is generated without further costs. Mobile/Telecom companies may also have interest in this since there is crossover from the mobile application aspect. As for timing the optimum timing for exit would be in year 10 as the company is showing significant profits. The enterprise value at that point according to our calculations would be 152M!.

Key Challenges

Strengths, Weaknesses, Opportunities and Threats

Strengths Weaknesses

No service exactly like this exists in Madrid at the moment.

Connections to US-based companies offering similar service

Setup time and installation cost/time

Bureaucracy and long legal and approval times of the Ayuntamiento

Opportunities Threats

Benefit to traffic congestion, reduction of 100.000 km or more of unnecessary driving

Benefit to environment –reduction by 20% or more of carbon emissions

Possibility to setup payment system via mobile phones

Improving life quality of Barrio de Salamanca visitors – reduce 12,5m time to find a parking spot.

Mobile phone manufacturers rejecting applications to distribute via online stores

Competitors pre-emptively entering market to lock ParkIt out

Ayuntamiento de Madrid not approving the project

ParkIt April-2010

16

Risk Analysis

Several issues and events might arise during the execution stage that has a negative impact on the business. We have incorporated contingency measures.

Risk Effect Mitigation

Costs of Implementation Limited installation, or forced to utilize another technology

Looks for alternative technologies or negotiate with Streetline for better pricing

Agreement with Ayuntamiento Critical risk item, without permission from Ayuntamiento this project cannot move forward.

Attain contacts and/or hire another manager who is Spanish and has appropriate contacts to the right offices.

Profitability Inability to expand to larger areas of Madrid and inability to expand to other cities.

Seek other sources of revenue, from local based advertising to government security to subscription model

Agreement with Streetline No technology to install and no application to offer customers

Alternative suppliers and/or technologies will be sourced

Users frustrated with service by not able to find an open spot

Users will not use application, spread negative opinion via WoM. Network externality of a group of users may be lost.

A system of education and expectations setting will need to be enforced. Social media will need to be monitored, and being software, application modification can be made fairly rapidly in response to demands of users.

Americans doing business in Spain Difficulty getting connected to Ayuntamiento

Bring a 3rd partner into the team, either from an investor firm or otherwise who has connections into the Ayuntamiento

Market adoption of smart-phone technology

Limit the available market for mobile phones

Legal limitation of mobile phone use while driving

Can interfere with adoption of application

Understand local legislation and craft application to require little, if any input from user while driving similar to many GPS models. Voice commands and other features can be examined to reduce this risk.

ParkIt April-2010

17

Risk Effect Mitigation

Increase in electric vehicles Electric vehicles can park for free in Madrid currently, this would have revenue impacts on the organization if the number of electric vehicles rises significantly

Monitor the number of electric vehicles parking in Madrid

ParkIt April-2010

18

Appendix

Exhibit 1 - Survey Characteristics, Results and Conclusions

Characteristics:

Area of survey: Barrio de Salamanca

Size of sample: 66 people

Gender: 60 % males 40 % Females

Average age: 38

Range of ages: 20 to 64

Time Frame of Survey: from June 2009 to September 2009

Average duration of the survey: 4 minutes

Within the barrio de Salamanca the team conducted the survey in the following locations:

Underground Car Parks

Private underground and open Car Parks

Public Parking areas

Results (Administered through http://polldaddy.com)

ParkIt April-2010

19

ParkIt April-2010

20

Survey Conclusions

1. Logistics in the Barrio de Salamanca.

82% of the interviewees were unsatisfied or greatly unsatisfied when trying to find an available parking location in the Barrio of the Salamanca. The remaining percentage was either satisfied or greatly satisfied and was mostly private car park owners.

74% of the interviewees were unsatisfied or greatly unsatisfied with their final car parking location in comparison to their actual destination. The remaining percentage that was either satisfied or greatly satisfied was mostly private car park owners.

38% of the interviewees would take between 5 to 10 minutes to park in Barrio de Salamanca once they have decided to do so.

31% of the interviewees would take between 10 to 20 minutes to park in Barrio de Salamanca once they have decided to do so.

20% of the interviewees would manage to park in no longer than 5 minutes.

The remaining 11% needs between 20 minutes to even more than half an hour to park.

As a whole this shows that Salamanca drivers would take on average no less than 12.5 minutes to park going around till finding an available slot

ParkIt April-2010

21

2. Parking Pricing in the Barrio de Salamanca

92% of the interviewees were unsatisfied or greatly unsatisfied with the price they pay for outside public parking. Dissatisfaction in this case refers to the little time of parking allowance they get for the paid time.

89% of the interviewees were unsatisfied or greatly unsatisfied with the price they pay for private underground or open-air parking. Dissatisfaction in this case refers to the little time of parking allowance they get for the paid time.

89% of the interviewees were unsatisfied or greatly unsatisfied with the price they pay for underground public parking. Dissatisfaction in this case refers to the little time of parking allowance they get for the paid time.

3. Parkit general acceptance & price sensitivity

88% of the interviewees would be willing to use Parkit Services as a whole.

Out of these 88%:

59% would purchase the service on a monthly fee basis.

29% would purchase the service on a per use basis.

12% of the interviewees would not be interested at all in Parkit.

Monthly fee analysis

34% of the users would be willing to pay between 10 and 20 Euros monthly usage fee for Parkit services.

9% of the users would be willing to pay no more than 10 Euros monthly usage fee for Parkit services.

Pay per use analysis

16% of the users would be willing to pay between 0,7 !cts to 1,5! per usage. Rest of pay per use users are fragmented through small percentages in either ranges going from 2 ! up or 20 cts.

4. Communication and connectivity & usage

54% of the interviewees have a smart phone (iPhone, Blackberry or 3G phone) that supports the monthly subscription fee. The remaining 46% of the users have regular phones

ParkIt April-2010

22

Exhibit 2 – Focus Group Results

Two focus groups were held; all of the participants live in Madrid and own their car.

Date Quantity and Sex Average Age

22-July-2009 6 men 31 years old

24-July-2009 5 women 27 years old

Although two focus groups are not representative of the whole reality, they gave us very good insights about the main concerns and perspectives of Madrid citizens on parking issues.

Results are divided according to the three main parts of the focus group:

I – Introducing and understanding the parking issue

When deciding whether to take car or use public transports, the factors that are taken into account are: traffic (time), parking (time and cost).

Although most of the participants consider taking the car inconvenient they still take it because they see it as a comfort advantage (speed and flexibility).

When trying to park, people usually go directly to their destination and then start looking for a parking place.

The main emotions that arise when we think about parking the car is: difficulty & frustration

When people get the parking place, they feel relieved and have a sense of achievement.

People prefer parking in the street than in parking lots, as these last ones are usually old and very small, so driving inside some of them can be difficult

II – Parkit solution assessment

Verbatim of the participants: “Why didn’t anyone think about it before?”

People first reaction to Parkit solution was very positive, stressing that it is a small detail that can make their lives much easier.

Main advantages

Easy to send a message and receive a result

On time

Very good solution everyday of the week (including when street parking is not paid but finding a place is still a challenge), at any hour (even at non paid hours)

I can be very useful also for people who live in Barrio de Salamanca and have free street parking

Main disadvantages

What if when I get there (to the free place), it is already occupied?

ParkIt April-2010

23

What if I do not know exactly where the street with the free place is?

Even though we did not talk about the pricing issue, peoples’ comments assumed that it would be priced as a “per service charge” and implicit in the message cost

When told about the two alternatives of pricing (per service our fixed quota per month), people told they would prefer the first one, as only people who live there go there often in order to compensate the fixed cost

III – Communication

Communication should be directed to people from that zone: who lives there, who works there, who often goes there shopping

Distribute fliers in that zone

Possible crossed promotion with for example: El Corte Ingles – free trial of the service (on per each mobile phone)

ParkIt April-2010

24

Exhibit 3 - Financial Details

ParkIt April-2010

25

ParkIt April-2010

26

ParkIt April-2010

27

ParkIt April-2010

28

ParkIt April-2010

29

Pay

back

Initi

al In

vest

men

t(2

00,0

)

Pay

back

Per

iod

(yea

rs)

6,2

Div

.-

(2.9

08,8

)

(2

.431

,1)

198,

1

7.37

6,3

26.6

38,0

64.4

98,7

118.

807,

3

171.

201,

6

21

9.15

3,0

Pay

back

Cal

cula

tion

Per

.C

um. F

CF

Per

. FC

F-

(804

,2)

(3

3,1%

)0

1(6

04,2

)

(604

,2)

-

(1.6

53,6

)

(9

4,7%

)0

2(1

.453

,6)

(849

,4)

-

(2.2

00,5

)

(3

02,3

%)

03

(2.0

00,5

)

(5

47,0

)

-

(2

.856

,2)

(335

,6%

)0

4(2

.656

,2)

(655

,6)

-

(3.9

63,7

)

(2

57,9

%)

05

(3.7

63,7

)

(1

.107

,5)

-

(8

82,9

)

128,

7%0

6(6

82,9

)

3.08

0,7

6,

2

4.

436,

4

16

,6%

77

4.63

6,4

5.31

9,3

-

18.2

80,0

(32,

0%)

88

18.4

80,0

13.8

43,6

-

40

.035

,2

(8

4,0%

)9

940

.235

,2

21

.755

,2

-

67.0

02,9

(148

,5%

)10

1067

.202

,9

26

.967

,7

602.

533,

1

Min

Cas

h20

0,0

initi

al/d

ivid

end

-

ParkIt April-2010

30