COSTS & REVENUE

I P E N A B L EIPembed, IPmanage, IPoptimize

5 6 1 K e y s t o n e A v e S u i t e 1 1 6 R e n o , N V 8 9 5 0 3 • w w w . i p e n a b l e . c o m

Costs

IPenable operates a lean business model: as a design and strategy firm we have work to keep relatively low overhead costs so that we can evolve our offering based on customer feedback. Our primary cost is time spent developing cus-tomer leads and developing our proprietary services: IPembed, IPmange, and IPoptimize.

Costs:

1. Time - Network Consulting and Design

2. Chip or Board based Hardware Development

3. Website - Maintenance

4. Travel - Customer Meetings

Time - Network Consulting and Design (Salaries)

As a IP design and consulting firm, our biggest cost is the time involved in research and development of communications solutions that can support our partner’s technology. Since we don’t have a compensation model in place, it is hard to quantify the cost of the time we are spending on these strategic and technical business development activities.

Chip and Board-Based Networking Solutions (Materials)

IPenable’s IPembed solution includes a chipset with software and circuit layout. Our customers will most likely integrate that solution into their circuitry and do the final manufacturing themselves.

We are still working with partners to determine some of the specifics for integration be-tween IPembed and existing solutions. IPenable has developed three use cases based on hypothetical partner capabilities.

Embedded price = chips only.Module price = solution we will provide to other customers.

1st solution: 900MHz Network Card Embedded price: ~4 USD Target Unit price: ~5 USD

2nd solution: 2.4GHz Network CardEmbedded price: ~7 USD

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Unit price: ~10 USD

3rd solution: It's a mix of 900MHz and 2.4GHz ISM bandEmbedded price: ~8 USD Target Unit price: ~10 USD

A potential customer could pursue a project that could include anywhere from 100 to tens of thousands of smart meters. The price of the chipsets would be part of a larger design solution that includes building out a personalized communication solution - Markup and consulting prices will vary.

Website - Maintenance (Hosting) $5/month

Travel - Customer Meetings - Variable and dependent on customer location

RevenueHow will customers pay you and how much are they willing to pay?

Customers will pay IPenable to design end-to-end networking solutions that supplant their existing utilities infrastructure. IPenable is in the early stages of woking with a few customers on developing a IPv6 integration strategy; these initial projects will smaller consulting projects that could range from $100K - $500K* and could expand to larger-scale technology build-outs with proprietary communications embedding ($500K - $5M*.) **These are hypothetical estimates based on existing customers - The size and scope of each project could affect and change these estimates substantially.

Is a subscription model better than a one time payment?

At IPenable, we have a fee-for-service cost model which is project based and depend-ent on the size and scope of the network communication buildout.

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Is it better to rent to them or sell?

Sell - for now: IPenable sells IP communication expertise as well as proprietary solu-tions to build out intelligence in a utility network. As part of our consulting services, we integrate proprietary solutions which include hardware (e.g. a chipset that adds intelli-gence to a field area router.)

Future - managed services: IPenable also is developing a solution called IPmanage which will include software and data analytics as a managed service. This offering is a differentiation point that will also create a recurring revenue stream.

Run some tests with customers to see what the best revenue model would be.

Our customers have been interested in engaging IPenable to help with specific projects relating to IPv6 communication with opportunity for additional communication-related projects that would add value to their products.

Are you planning to make money through advertising?

Right now, IPenable is not trying to make money through advertising. We have begin marketing ourselves at relevant channels including trade shows, business associations, and industry affiliated groups. IPenable also has a social media presence through well-known channels like Facebook, Twitter, LinkedIn, and Google+.

Try to think outside of the box and not just rely on advertising-based business models.

IPenable provides boutique consulting design services to a niche in the utilities market. We are developing a service for this industry but with a lean business model, our plan are to expand the offering to other verticals that could benefit from improved connec-tivity and Internet of Things intelligence.

IPenable Revenue Streams:

IPenable has three core offerings that provide the potential for multiple revenue streams and business expansion. Currently, customers that we have met with are most inter-ested in our IPembed solution because utilities are increasing their investments in AMI and DA infrastructure and they are interested in migrating communications to IPv6.

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1. IPembed: consulting, hardware, partner technology integration - chip or board (hard-ware) based to support partner communication solution

2. IPmanage: consulting and partner technology integration

3. IPoptimize - consulting, SaaS, managed service

Cash Flow: From Customer to Start-Up- Customer meets with IPenable team to discuss project. - IPenable provides design solutions and engages a preferred partner.- IPenable drafts design specifications and scope of project with associated costs.- Customer gets budgetary approval to move forward with the project.- Customer pays IPenable upon completion of consulting and design or in pre-

determined increments for managed service.

Conclusion: Based on IPenable’s current and future costs of doing business and the revenue we can generate from our IP design solutions (as tested through customer en-gagements), we are confident that we have a profitable business model. We understand that while our overhead is almost negligible right now, our model still works when we look at the project opportunities that our target customers will be taking on in the next 2 - 5 years.

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