INNOVATIVE WATER CONCEPTS-WATER METER DELETER

NICK KONOVALSKI-OWNER

Innovative Water Concepts710 Downing Dr.

Richardson, TX 75080(972) 835-3091

nkk61@hotmail.com

i

Table of Contents

1. INTRODUCTION TO PLAN...........................................................................2

2. SUMMARY OF PLAN....................................................................................2

3. MISSION, STRATEGIES ETC.......................................................................2

3.1. Vision............................................................................................................................ 2

3.2. Mission......................................................................................................................... 2

3.3. Values........................................................................................................................... 2

3.4. SWOTs.......................................................................................................................... 2

3.5. Strategies..................................................................................................................... 2

3.6. Goals/Targets...............................................................................................................2

4. PRESENT STATUS.......................................................................................2

4.1. Background.................................................................................................................. 2

4.2. Progress to Date..........................................................................................................2

5. PRODUCT/SERVICE DESCRIPTIONS.........................................................2

5.1. General Descriptions...................................................................................................2

5.2. Key Features................................................................................................................2

5.3. Pricing Plans................................................................................................................2

5.4. Competitors’ Offerings................................................................................................2

6. PROFILES OF TARGET MARKETS.............................................................2

6.1. General Background....................................................................................................26.1.1. Market 1................................................................................................................26.1.2. Market 2................................................................................................................26.1.3. Market 3................................................................................................................2

ii

7. MARKETING STRATEGIES, SALES PLANS & PROJECTIONS................2

7.1. Key Marketing Strategies.............................................................................................2

7.2. Marketing/Sales Plans & Resources...........................................................................2

8. TECHNOLOGY AND R&D............................................................................2

8.1. Overview of Technology..............................................................................................2

8.2. R&D Resources............................................................................................................2

8.3. R&D Expense Projections............................................................................................2

9. OPERATIONAL PLANS................................................................................2

9.1. Locations & Facilities..................................................................................................2

9.2. Operating Cost Projections.........................................................................................29.2.1. Direct Labor...........................................................................................................29.2.2. Other Direct/Variable Costs....................................................................................2

10. MANAGEMENT & ADMINISTRATION......................................................2

10.1. Management Structure.................................................................................................2

10.2. Key Management Profiles............................................................................................2

10.3. Administration & Systems...........................................................................................2

10.4. Head Count Projections...............................................................................................2

11. FINANCIAL PROJECTIONS.....................................................................2

11.1. Key Assumptions.........................................................................................................2

11.2. Income (P&L) Projections............................................................................................2

12. FUNDING...................................................................................................2

12.1. Funding Requirements................................................................................................2

13. Conclusion..................................................................................................2

iii

1. Introduction to Plan

Innovative Water Concepts provides an electronic whole-house rapid water shutoff system called the Water Meter Deleter™. This system is designed for new construction or as a retro-fit into existing construction. Innovative Water Concepts will focus on the residential construction markets both nationally and internationally.

The objectives of Innovative Water Concepts are:

Work with new construction general contractors to capture the new construction markets.

Work with plumbers, plumber unions and plumbing distributors to introduce the water shutoff

system to existing homes.

Gain endorsement of insurance companies for the product.

Approach Home Security Stores with the product as a security solution for main water supply

control.

Innovative Water Concepts

Business Plan

1

2. Summary of PlanMission, Key Strategies & Goals

The mission of Innovative Water Concepts is to become the primary resource for residential and commercial whole-building rapid water shutoff systems.

Present StatusInnovative Water Concepts is a general partnership between Nick Konovalski and his father, Al Konovalski, as a silent partner. The focus of the company is the distribution at large quantities of Water Meter Deleters. After further research, the possibility of starting up a home security business is a strong future consideration. Home Security appears to be the best opportunity to gain people’s interest in the new product. The main focus of the business will be on the distribution of Water Meter Deleters in large quantities to either home builders or Home Security Vendors.

Proposed MarketsThe company plans to start locally and grow toward national and international distribution.

Marketing & Sales PlansThe company plans on getting insurance companies to endorse the product. The main targeted customers will be Home Builders, Plumbing Distributors and Plumbing Supply Houses. Home Security is a possibility for marketing as well. From the research done on the competitors, it seems none of their actual shutoff valves can be put in the ground. It seems that a lot of the competitor’s devices are sold and installed in a new home where the water service line is routed for their accessibility. Home Security stores are really where these devices are selling. Since the Innovative Water Concepts product is basically invisible, it could give the company an edge in that respect. It seems like established neighborhoods would be more practical for the Water Meter Deleter since there is no feasible way to put valve in garage as is done with the current designs. It makes it clear in their manual that their valve cannot handle the elements of the outside.

Operational & R&D Plans

Research and development of the Water Meter Deleter™ is complete and the product is immediately available for large quantity sales and installations. A supplier for the valve in large quantities at low cost has been identified.

Management

Innovative Water Concepts is a general partnership between Nick Konovalski and his father, Al Konovalski, as a silent partner.

2

Financial Projections

While long term financial projections have not been estimated, it is believed that the necessary components for each Water Meter Deleter™ can be obtained for around $200.00. Typical sales cost to builders may range between $400 - $600. Typical sales and installation cost may range between $900 - $1800.

Sales to small builders, in lots of 100 units, would result in minimum net profits of $20,000. Sales to large builders, in lots of 500 units, would result in minimum net profits of $100,000.

Funding Proposals

Funding is currently sought for advertisement and marketing of the Water Meter Deleter™. Costs to ramp up marketing and sales are estimated to range from about $75,000 to about $100,000.

3

3. Mission, Strategies etc.

3.1. VisionInnovative Water Concepts will become the leader in electronic main water shutoff systems. The company will start off with local installations and grow with sales to builders and general contractors. The company will gain a reputation for having a superior product and excellent service.

3.2. Mission

To become the leader in electronic main water shutoff systems through competitive pricing and excellent service.

3.3. Values

Innovative Water Concepts will be based on honesty and integrity, earning a reputation for fair dealing and excellent service.

3.4. SWOTs

Internal External

Strengths:

Licensed irrigator, familiar with plumbing codes and industry needs

Low-cost source of the necessary components has been identified

Opportunities:

Insurance company endorsement

Marketing through Home Security Business

Weaknesses:

Funding needed for proper advertising and marketing

Threats:

Other, different products on the market to shut off water

4

3.5. Strategies

Innovative Water Concepts plans to market and sell the Water Meter Deleter™ to individuals, building

contractors, plumbers, plumber unions and plumbing distributors.

Marketing to new construction general contractors would help to capture the new construction markets,

while marketing to plumbers, plumber unions, plumbing distributors and home security stores would help

introduce the Water Meter Deleter™ to existing homes.

Endorsement from insurance companies may help marketing efforts.

Innovative Water Concepts could branch out into home security should that market generate significant

sales.

3.6. Goals/Targets

1-3 months : Individual unit sales to local builders and homeowners via word of mouth.

3-6 months : Gain endorsement from home insurance companies

3-12 months : Marketing to builders nationally as well as large home building companies (such as Toll Brothers, K. Hovnanian, Pulte Homes, D.R. Horton, Lennar Corp., Centex Corp., and the like).

Within 2 years : Sales of over 100,000 units.

5

4. Present Status

4.1. Background

The research and development of the Water Meter Deleter™ is complete and the device has successfully been installed on residential homes. The device is covered by a pending patent application filed in the United States Patent and Trademark Office in November 2010.

4.2. Progress to Date

Our company has sold and installed 25 Water Meter Deleters in the DFW area to this date, and have sold 3 units over the internet from the demonstration video I posted on YouTube.

6

5. Product/Service Descriptions

5.1. General Descriptions

The Water Meter Deleter™ is an electronic main water shutoff device.

5.2. Key Features

The Water Meter Deleter™ includes a shutoff valve that can be installed at various locations, including underground on a water main before it enters the home. The valve may be controlled be a switch that can be hidden from view, typically at a water tap in the home for easy confirmation of water shutoff. The Water Meter Deleter™ will keep the valve open in case of a power failure. The Water Meter Deleter™ can be activated to turn off the main water supply when, for example, going on vacation or leaving the home for any extended period of time, offering the homeowner peace of mind.

5.3. Pricing Plans

The Water Meter Deleter™ may be sold as a kit to home builders at a price point between about $400 and about $500. The Water Meter Deleter™ may be installed (retrofitted) in an existing home for a cost from about $900.00 to about $1700 depending on the labor involved, as each installation is different.

5.4. Competitors’ Offering

Competitors offer various water shutoff and detection devices. Some devices are not suitable for installation in an underground main water line. For example, some devices require installation in a garage. Other devices may detect water leaks and activate a valve. These devices require installation inside the home. The Water Meter Deleter™ may be installed outside the home and may be hidden from view, offering the homeowner an undetectable device to shut off the main water supply to the home.

7

6. Profiles of Target Markets

6.1. General Background

6.1.1. Market 1 Local builders – Market limited with estimated sales from about 10 – 100 units a year.

6.1.2. Market 2 National builders – For new construction, sales could range in the thousands of units a year.

6.1.3. Market 3 Home Security Companies – For existing construction, sales could range in the hundreds of units a year.

8

7. Marketing Strategies, Sales Plans & Projections

7.1. Key Marketing Strategies

1. Approach local builders to grow reputation

2. Approach insurance companies to gain endorsements

3. Once reputation is obtained, approach large, national builders for increased sales

7.2. Marketing/Sales Plans & Resources

As a licensed irrigator, the owner knows many local builders and general contractors. Initial plans include marketing and sales to these local individuals to grow the business, establish satisfied users, and gain an excellent reputation. The costs for this initial phase requires funding.

Once a reputation is established, marketing to national builders may require travel, demonstrations, product samples, brochures and the like.

9

8. Technology and R&D

8.1. Overview of Technology

Research and Development of the Water Meter Deleter™ is complete and no further research expense is needed for the device.

The device is covered by one or more patent applications filed with the United States Patent and Trademark Office.

8.2. R&D Resources

Any future development, for example, at the suggestion of customers, can be done by the current company personnel with minimal additional resources.

The company plans to be responsive to customer’s suggestions and recommendations.

8.3. R&D Expense Projections

There are no current R&D expenses expected for the company.

10

9. Operational Plans

9.1. Locations & Facilities

The company is currently based in the State of Texas. A supplier for the valve used in the Water Meter Deleter™ has been identified. A kit for the Water Meter Deleter™ can be assembled in minimal manufacturing space. The contents of the kit can be customer for builder’s needs. No future expansion is deemed necessary at this time, however, space is readily available should company expansion require.

9.2. Operating Cost Projections

Operating costs are critical. Ordering the valves in higher quantity can lead to higher profit margins. Therefore, operating capital may be needed for a large initial purchase of the desired valve and associated hardware.

9.2.1. Direct Labor Minimal additional labor would be needed, at least for the initial phases of the business. Should shipment and sales of larger quantities of Water Meter Deleters™ occur, additional labor for these tasks is readily available.

9.2.2. Other Direct/Variable Costs Other costs include those costs conventional associated with operating a business, such as computer, phone, accounting and other products and services.

11

10. Management & Administration

10.1. Management StructureInnovative Water Concepts is a general partnership between Nick Konovalski and his father, Al Konovalski, as a silent partner.

10.2. Key Management Profiles

Nick Konovalski is a licensed (State of Texas) irrigator #2559, and has over 30 years experience as a landscape irrigator.

Al Konovalski is a licensed (State of Texas) irrigator #344, and is also a Realtor in the State of Texas.

10.3. Administration & Systems

The Company’s equipment requirements consist primarily of computer and communications tools. Because of the maintenance and upkeep involved in owning a trencher, the company has decided to lease riding and walk behind trenchers, abandoning this unneeded overhead

The Company has all of the following resources in place:

Cell phone and computers, including desktop and laptop computers, as well as a high speed internet provider.

10.4. Head Count Projections

Head Count is expected to remain unchanged for the upcoming year and may increase to assist in shipping and sales as the business grows.

12

11. Financial Projections

11.1. Key AssumptionsSales to local builders of 10-50 units a year, with a minimum net profit of $200 per unit (with a maximum cost of goods of $200 per unit and a minimum sales price of $400 per unit).

Sales to national builders, after the first year, of about 200 – 2000 per year.

11.2. Income (P&L) Projections

In the first full year, income is projected from about $20,000 to $65,000, with expenses from about $10,000 to about $25,000.

With national builder sales and expansion from home security market sales, income in the second year is projected from about $65,000 to $600,000, with expenses from about $20,000 to about $300,000.

13

12. Funding

12.1. Funding Requirements

Innovative Water Concepts seeks funding to assist in their marketing , sales efforts, and most of all, payroll, and to have a somewhat substantial amount of inventory. The funding requirement initially ranges from about $100,000 to about $150,000 to cover start-up costs. Without this funding, the company can still exist, however, growth may be delayed. However, with local sales, the proceeds may be used to cover marketing costs to larger, national home builders.

The funding will be paid back in residuals, either long term or short term, depending on the amount funded.

14

13. ConclusionInnovative Water Concepts has a patent pending product for an electronic main water shutoff. The company has identified several approaches for the sales and marketing of their product, and believes the approach outlined above permits a sustained and continuous growth, approaching maximum sales within about 2 years.

15