THE CLEANTECH INVESTOR

FORUM 2011

Infrared Applications Inc. Session 1

The Four Seasons Hotel

Palo Alto, California
March 7 & 8, 2011
 Infrared Applications Inc.
“Turn off the Lights, Turn on the Security”

Gary L. Bane & Gary E. Ball

March 7, 2011
Presentation: HarmAlarm.com
 Agenda
• Physical Security Market
• The next Generation in Physical Security
Surveillance Systems:
• HarmAlarm
– Evolutionary (existing visual systems)
– Revolutionary (advanced technology)
• The Future: 21st Century – The Security Age
• Green Energy Conservation
• Enterprise Value
• Summary
 Defining Issue
Industry Security Requirements
1. Detect security threat
2. Verify
3. Provide actionable intelligence
4. Operational communication
5. Update the event
6. Document the incident
7. No false alarms
8. Affordability
State of Security Status
• Control rooms are costly, energy
consuming, and understaffed for
video volume
• Most security systems operate in
a record only mode.
• Technology until now has failed to
find the solutions desired.
 HarmAlarm: Next Generation
Defined by the concept & claims of US Patent 7,738,008, June 2010

• A surveillance field is formed by two independent imaging sources.

• Objects common to the surveillance field are detected:
– They are computed as physical objects in linear dimensions (SqFt)
– They are located at precise coordinates (x,y,z)
– And they are tracked over time.
• When objects are tracked, real time data is available:
– This data supports higher order threat detection criteria (behavioral).
– Also, the simultaneous detection, independent validation, & tracking
eliminates false alarms
• The elimination of false alarms:
– HarmAlarm the first automatic physical security system in the industry.
– Detection  Response/Alarm, the benefit is:

Improve the effectiveness of control rooms and provide record-

only Security systems a real time capability
 HarmAlarm Architecture
US Patent No. 7,738,008, June 2010

Key elements
• Two imaging sensors form a
Secured area, defined by
overlapping fields-of-views
• 3 D real time scientific equations
for target detection & classification
• Connectivity:
– Optimized for each application
• Host computers:
– Remote: mainframe,
– Site: desk top or Cloud based
• IP Protocol
– End-user set up
– Menu driven
• Threat Criteria:
– Menu specific, End-user defined
• Remote threat notification
– Response team
– Safety alert
– Embedded Applications
 Retrofit Plan
Add a second camera, (if needed), and install HarmAlarm 3 D processing

• Manned security Control rooms: Benefits

– Improve the control rooms effectiveness
– Layer Security for critical applications (redundancy)
– Downsize or eliminate Control Rooms
• TV monitors & recorders
• Air conditioning
• Electrical power consumption

• For Record-only systems: Benefit:

– A real time threat detection capability
• Workers safety
• End-user an option to add a response capability
• Direct response are affordable
•

• Build relationships for the future

– 1,000 plus existing physical security integrators and service providers
– Most will need technical assistance to implement HarmAlarm
– Integrators become our “feet on the ground” for HarmAlarm growth
 Revolutionary
• HarmAlarm’s preferred embodiment is:
– Infrared Imagers with wireless connectivity.
• Why?
– Infrared imaging provides stable target signatures.
– Infrared enhances target tracking
• Especially in multi-target environments
• Precise target signature and uniqueness
• Maintains all objects in the track file
– The track file:
• Needed for advanced behavioral threat recognition
Infrared technology ensures the lowest false alarms rate.
 False Alarm Improvement

• Camera A false alarm 1/100

• Camera B false alarm 1/100
• Occurring in common area 1/100
• Independent Size matching 1/100
• 3 D “single look” combined probability 1 in 107
• Tracked over time 1/10
False Alarm probability 1 in 100 Million
If Camera A was a single camera security system
the false alarm rate would be 1 in 100
HarmAlarm versus single camera 1,000,000:1
 Visual Camera vs Infrared

• Camera A false alarm 1/100

• Camera B false alarm 1/100
• Occurring in common area 1/100
• Independent Size matching -
• 3 D “single look” combined probability 1 in 106
• Tracked over time -
False Alarm probability 1 in 1 Million
If Camera A was a single camera security system
the false alarm rate would be 1 in 100
Improvement for visual camera 10,000:1
 Visual Camera vs Infrared

• False Alarm rate single camera 0.01/hour

• Probability of threat occurrence 1 per 90 days

• Probability of false alarm (base) 95.6%

• Probability True target visual cameras

with HarmAlarm 79%

• Probability True target Infrared Cameras

with HarmAlarm 99.8%
 Advanced Threat Detection

• Lying-in-wait (home, parking lots, etc.)

• Stalking (a two object relationship over time)
• Loitering (peeping tom)
• Man-down (many causes)
• Crowd recognition (gathering targets)
• Profiling for signs of anxiety (retail theft, airports, etc.)
• Child-at-risk (child unattended)
• Animal threat (situation unique)
• Perimeter enhancement (home evasion)
• Agriculture (threat: human & natural)
• Natural events (fire, wind, water, slides, etc.)

Threats defined at site (End-user specific)

Example
Camera A ------ Camera B
 Geometric
Relationships

Location Location
Camera A Camera B

R2
R1

Target Location

Known Set-up value

Cameras Position & target Location
Range computations, R1 & R2
 HarmAlarm Slant Range
Calculations, for R1 & R2

• R1 & R2 calculations require • R1 = (Distance Between

information from both cameras
• Both cameras, the 3 D solution
is patent protected
• HarmAlarm is not a flat earth
extrapolation (competitors)
• HarmAlarm equations are
closed form scientific updated
at video frame rates.
• Powerful “best estimating”
algorithms based upon target
signature properties.
Equations shown have been simplified from
their spherical trigonometry form.
Cameras) x Sin (camera B
angleo)/ (Sin (180o – {camera
B angleo} – {camera A
angleo})
• R2 = (Distance Between
Cameras) x Sin (camera A
angleo)/ (Sin (180o – {camera
B angleo} – {camera A
angleo})
Color coding is matched to HarmAlarm
Geometry relationships
Camera A ------ Camera B
Camera A ------ Camera B
Camera A ------ Camera B
Camera A ------ Camera B
Partially obscured
 IR Video Frames
• The four sequence still frames were
over a 12 second period
• More than 720 frames for each camera
was taken, as single shot data.
• The subjects actual size, height, and
inherent thermal contrast was computed.
•The information unique identifies the
subject.
The Future
21 Century: The Security Age

Cyber-space Personnel
Common
Data Base

Physical
 Shared Data Base
Synergism: Where the sum exceeds the parts

Shared communications Common Data Base

– Identification, from all sources
– Verification, by all sources
– Correlation, linking of events
Multi-discipline Threat Detection,
Tracking actions over time
Recognized by combined systems
Threat Alert notification Multi-discipline alert
Responder Information
Situation awareness Identify threat elements
Updated in real time simultaneous broadcast

Consolidation of Enterprise Security

Vendor support: Currently overlapping, redundant, holes, and confusing
Simplify: Authority and responsibility with a single authority
Green Benefits
 Green Applications
IR technology
• Old practices, formed when energy was cheap
and abundant.

• Wasting energy is an economic and

environmental problem.

• A major use of electrical energy is for lighting.

• One of the common uses of night time

illumination is for security.
 Commercial Car Lot
Application

• 70,000+ cars lots in the USA.

• They operate and deploy strong illumination.
• It is estimated they consume greater 500 KMWHs per day.
• ~40% of the power is consumed after the close of business.
• Millions of dollars per day with a large carbon footprint.
• Car theft rings are sophisticated.
– They targeted certain car models
– To be dissembled, crated, and shipped to foreign markets
within hours of the theft.
– The car thief is not just stealing, they are filling an order.
• When a car lot is lighted, the total time from entering, locating the
car, and departing is less than 5 minutes for a professional thief.
• We would like to increase the response window to > 10 minutes
 Darkness:
The new Ally of Security
• HarmAlarm places the scene in total darkness.
– Darkness slows down the actions and movements of the thief.
– The search takes longer.
• The thief is identified when he enters the surveillance field.
– Early detection
– Actions are slowed down
– The time window is lengthen
– The opportunity for apprehension is increased.
• Infrared technical performance is superior to visual cameras,
stable signature.
• The stable IR signature makes a positive unambiguous
identification possible, Inherent Thermal Contrast (ITC).
• Better performance, lower cost of ownership, and Green Benefits
Enterprise Value
 Enterprise Value
• Reduces Operating costs
– Lowering operating costs will increase market size
• Increase Revenues from:
– Retrofits to existing security systems
– Expansion of existing market or market share
– New Applications, leading to new markets
• Revenue Sources
– Sale or Lease of HarmAlarm components
– Wireless service monthly fees
• Five year forecast
 Five Year Cash Flow
(Based upon 7.6 million units)

Cash Flow (Millions of Dollars)

2012 2013 2014 2015 2016 Total

Production -60 -125 -190 -190 -190 -755
Development
OEM -10 -10 -20
Income
Product
(Sell or Lease) 55 140 210 215 220 840

Wireless fees 18.2 75.2 207.5 285.1 399 985

Cash Flow 3.2 80.2 227.5 310.1 429 1,050

Accumulative 3.2 83.4 310.9 621 1,050

Profit Margins: Hardware 15% & Wireless 70%

Summary
 Point of Convergence
The Market factors have changed since 2004.

• Security and safety requirements want a real time capability,

• Infrared technology has matured since 2004 performance and cost,

– Costs have decreased by a factor of 7-8

• Wireless capability has grown and matured,

– Video applications are here (3G, 4G)
– & Cloud computing potential?

• Internet IP Protocol, has become standard practice

• Growth in handsets, custom applications

– Embedded response action plan

The HarmAlarm provides the architecture, road map and direction.

 Summary
• Protected by US Patent 7,738,008, issued June 15, 2010.
• HarmAlarm
– The next generation in Physical Security Systems.
– Based upon closed form 3-dimensional processing
– Detects, verifies, and sounds a threat alert.
– Eliminates false alarms
• HarmAlarm, the world’s first automatic physical security system
• The Long Term Future direction:
– Integrate HarmAlarm with Personnel and Cyber-space security
to create a Total Security solution.
– Who?, what?, when?, where?, and by whose authorization?
Are all questions to be answered by Total Security.
 Our Strategy
• Formation of the right Team (relationships)
– Understanding of the Physical Security Market
– Knowledgeable of key technologies
• Visual/Infrared imaging advances,
• Wireless: cloud computing, video bandwidth
• Chipset volume production, handsets, cameras, wireless
• Custom handset production, embedded applications.
– A long term relationship

• Segregate HarmAlarm into stand-alone business units

• Profit Centers:
– Green Applications (conservation)
– Upgrade visual wavelength systems (existing Physical Security systems)
– Home Security (extension of threat warning)
– Military (mobile threat perimeter security system)
– OEM Volume Production Base (HarmAlarm components)
 Disclaimer
The Infrared Applications Inc. (IAI) Business Plan contains forward-looking information
that is subject to certain risks and uncertainties that could cause actual results to differ
materially from those projected. Statements that are not historical facts, including
statements about strategies, plans and expectations about new and existing products,
services, technologies, opportunities, industry growth, demand for and acceptance of new
and existing products, and returns on investments in products and markets, are forward-
looking statements that involve risks and uncertainties that could significantly impact the
company. These risks include, but are not limited to, the projected market for IAI products
and potential returns. Factors which could cause actual expectations to differ materially
from these projections include the actual market acceptance of the product, the cost of the
product, unforeseen difficulties in the construction of the product, and the competitive
environment within the industry. When Infrared Applications Inc. uses words such as
“believe,” “expect,” “anticipate” or similar words, it is making forward-looking statements.
Certain articles, studies and reports that management relied on in preparing the
projections also make forward-looking statements. These articles, studies and reports
base their forward-looking statements on a number of different factors and assumptions,
all of which are beyond management’s control. All of these assumptions are subject to a
high degree of uncertainty. One or more of these assumptions may turn out to be
incorrect. Accordingly, actual developments may differ materially from the projections
contained in these articles, studies and reports. The management of Infrared Applications
Inc. makes no assertion over the correctness of the material contained in the Business
Plan, and interested parties must rely on their own independent research and due diligence
to reach their independent conclusions.