CONFIDENTIAL

OSMOTECH ICT BUSINESS PLAN

BUSINESS PLAN
OSMOTECH ICT PTY LTD

DATE PREPARED
17/03/2020

CONTACT

Tlholohelo Hatlane
tlholohelo.hatlane@osmotechict.co.za
+27 78 184 1646

986 Crocodile street

Johannesburg, Gauteng 1818

www.osmotechict.co.za

Page 1
 CONFIDENTIAL
TABLE OF CONTENTS
EXECUTIVE SUMMARY..............................................................................................................................................3
COMPANY OVERVIEW................................................................................................................................................3
PROBLEM & SOLUTION..............................................................................................................................................3
THE PROBLEM..........................................................................................................................................................3
OUR SOLUTION........................................................................................................................................................3
TARGET MARKET........................................................................................................................................................3
MARKET SIZE & SEGMENTS..................................................................................................................................3
COMPETITION..............................................................................................................................................................3
CURRENT ALTERNATIVES TARGET BUYERS ARE USING..............................................................................3
OUR COMPETITIVE ADVANTAGES......................................................................................................................3
PRODUCT OR SERVICE OFFERINGS.........................................................................................................................3
PRODUCT OR SERVICE...........................................................................................................................................3
MARKETING.................................................................................................................................................................. 3
MARKETING PLAN..................................................................................................................................................3
TIMELINE & METRICS................................................................................................................................................3
TIMELINE...................................................................................................................................................................3
MILESTONES.............................................................................................................................................................3
KEY PERFORMANCE METRICS.............................................................................................................................3
FINANCIAL FORECASTS.............................................................................................................................................3
KEY ASSUMPTIONS.................................................................................................................................................3
FINANCING................................................................................................................................................................... 3
SOURCES OF FUNDING...........................................................................................................................................3
USE OF FUNDING.....................................................................................................................................................3

Page 2
 CONFIDENTIAL
EXECUTIVE SUMMARY

OSMOTECH ICT is 3 years old and quite new in the IT industry but is a registered business partner and reseller of top IT
brands and equipment.

The company is focused on Technology Refresh Projects and innovative interactive technology provision as well. We are
an organization that works on enterprise integration and align company’s business processes with their information
technology departments by implementing digital transformation.
We provide IT outsourcing services and manage services to let the customer focus on their business development and
generate revenue.

The organization does information technology consulting, IT Support and Repairs as well. This gives us a wider net to
cover more ground.
Organizations are required to rollout and refresh their IT hardware and equipment every twelve to 36 months to keep up
with IT and Business governance. This is beneficial for OSMOTECH ICT for generating a perpetual revenue stream.

The B2G (business to government) and B2B (business to business) is another revenue stream via RFQ when tasked with
bidding for tender contracts. This is highly beneficial as these projects come with a very large price tags going into
millions in revenue for a single project. The organization is looking into diversity in terms of combining all different
facets of IT into one single solution.

With the business partners we have currently and the access to the top brands of IT equipment and hardware, we have
all the potential to bring in prospective customers as well as invite our competitors customers to our products. Being
new to the industry comes with an advantage of having the same best products our competitors have and bringing them
with a slightly lower price tag.

Page 3
 CONFIDENTIAL
COMPANY OVERVIEW

Products/Services

OTICTs’ current focus is twofold: technology refresh management and application support.

Technology Refresh Management

In general, the government sectors require old broken outdated systems to be upgraded and stagnant legacy systems to be
streamlined and operating more efficiently. Operating efficiency has become vital as the government seeks to get its arms
around the largest databases in the country. The government’s information systems are clogged with a variety of old and
disparate sources. Legacy systems, databases, and data warehouses are ‘clogging’ the systems As these sources and data
volumes multiply, over time, it becomes too critical to incorporate, regiment and apply rules of order to avoid further data
‘glut’.

By creating a comprehensive data model, ITS offers insight into organizational needs and provides the roadmap for
successful integration. Mr. Hatlane leads teams with specialists in business process and data analysis, system design and
integration, and business intelligence to develop solutions that deliver results.

Application Support

Application development, the creation of programs that perform functions for software and hardware, are in great demand
for government entities. OTICT can create many applications for example, that run behind-the-scenes for tracking
inventory, maintaining account balances and billing clients automatically.

Once, applications focused primarily on functionality. Today, the most complex applications focus on elements such as
speed, compatibility, security, scalability and customer experience. OTICT strives to create the fastest and the most user-
friendly applications to meet these needs.

Future Plans

OTICT has future plans to expand into government contracts, and expects to hire a full-time proposal writer. Additional
plans include diversification into other popular government contracting sectors such as defense and energy. Another goal
is secure recurring base, consulting, revenue to serve as a cushion against sales declines when the spending environment
deteriorates. Long-term contracts provide revenue continuity: Contracts are often five to ten years long, and are rarely
broken.

Market Analysis

The global market for IT Consulting Services is estimated to increase and to reach R 1.832,176,000,00 by 2028,
exhibiting a CAGR of 6.6% during 2022-2028. The IT outsourcing services segment is the markets most lucrative in
2023. (Proficient Market Insight- 2022 November 6)

Page 4
 CONFIDENTIAL
PROBLEM & SOLUTION
THE PROBLEM

A demand for applications that makes everyday business processes efficient and automated is very high, this presents
an issue for many organizations and manual labour is time consuming for employees and this in turn equals loss of
revenue.

Before the organizations would have their own software developers to tackle any issue that the organization’s systems
and business processes would come across, but this proved costly for the companies.

Currently companies want to align their business with their information technology systems to better reach the goal of
digital transformation without losing too much of their revenue.

OUR SOLUTION

OSMOTECH ICT is more than capable of providing these services to all the prospective customers by means of
outsourcing. The organizations are more than happy to hand over processes and systems maintenance to outsourced
resources due to the fact that there is an SLA (service level agreement) that both parties agree on and sign.

This gives the organization a peace of mind knowing that a missed SLA results in a penalty for the outsourced
resources.
We can offer the best in workmanship and our revenue stream will increase exponentially as we continue to work on
site for our clients and prospective customers.

Monitoring and maintenance of the IT systems and business processes is part of this process of developing solutions
aligned to our clients needs.

Page 5
 CONFIDENTIAL
TARGET MARKET
MARKET SIZE & SEGMENTS

Market Needs

In general, the government sectors require old broken outdated software systems to be upgraded and stagnant legacy
systems to be streamlined and operating more efficiently. Operating efficiency has become vital as the government seeks to
get its arms around the largest databases in the country. The government’s information systems are clogged with a variety
of old and disparate sources. Legacy systems, databases, and data warehouses are ‘clogging’ the systems As these sources
and data volumes multiply, over time, it becomes too critical to incorporate, regiment and apply rules of order to avoid
further data ‘glut’.

Market Trends

Many areas of high technology are highly competitive and are subject to rapid, unanticipated changes. The dynamic
business climate poses significant challenges requiring companies to adapt rapidly to evolving conditions, cash balances
can be depleted very rapidly. (Standard and Poor’s)

While the timing of technological change and obsolescence is difficult to predict, rapidly changing technologies with
marked potential for materially eroding companies' business and financial profiles are one of the few constants in the high
technology sector. Cyclicality and technological change can create sharp declines and significant shifts in competitive
dynamics, customer requirements, and buying patterns, which can rapidly reshape industry subsectors. The ongoing
transformation of the data storage and semiconductor industry segments is an example of these market dynamics at work.
(Standard and Poor’s)

High technology companies' earnings and cash flows are subject to cyclicality created by the business and/or consumer
cycles. In many developed countries in recent years, volatility in business/corporate sector demand has tended to be
markedly greater than cyclicality in the consumer economy. Historical recessions have largely been business-driven, rather
than consumer-led, but in the current recession, demand is down sharply across both consumer and business markets.
(Standard and Poor’s)

Consolidation remains a long-term trend in many high technology subsectors as growth rates have slowed. Managements
of larger companies view their subsidiaries as components of a portfolio that should be actively managed, a strategy
generating ongoing acquisition and divestment activity. Customers want integrated solutions; in response, high technology
companies are broadening their offerings through acquisitions. (Standard and Poor’s)

Market Growth

While prime contractors saw a decline in growth in 2019-2020, sub-prime contractors actually grew over the same time
period. Sub-prime contracts were reported to be R96.8 billion in years 2019 compared to R97.9 billion in 2020 representing
a 1.12% increase.

Based on the growth in this market and the current government mandates to award to small businesses, it is OTICTs’
contention that annual grown of 20% in revenues and25% in assets does not appear unreasonable. Further this aligns
OTICT with its peers of similar size which enjoy the same growth. OTICT will achieve this growth with the addition of
more staffing. With the addition of billable hours and the built in cushion OTICT has in its billable hours, the company
feels these are sound achievable financial goals. (For more information regarding this ‘cushion’ please refer to the financial
analysis portion of this business plan).

Positioning

OTICT has set itself apart from its competitors by 1) its narrow and targeted market focus (technology and healthcare) and
by completely understanding industry trends. OTICT is truly the market expert. 2) OTICTs’ extreme attention to detail in
its prospective contracts and project planning sets them apart from their peers. 3) Because of its small size, OTICT has the
ability to not only meet /exceed deadlines, but they can adapt quickly as well and on short notice. 4) All these factors lead
to cost savings which in turn are passed on to their clients.

Page 6
 CONFIDENTIAL
Marketing Strategy and Implementation

In order to grow revenues 20% annually and to keep pace with peers, OTICT must sell R2.784,907,52 in new revenue or
put another way, bill an additional 1,344 hours annually. OTICT has built in cushions into its pricing model, which easily
allows for just such an increase.

For example in proforma Year One, OTICT estimates that it will bill 2,794 hours in billable revenue. (2,794 hours *
R2070.07 hourly rate =R5,783,775.58 in revenues). However, with a staff of 5 employees working 40 hours a week, the
company has the potential for 9,600 hours annually. The additional burden of 1,344 hours could easily be absorbed by
current staff. OTICT, however, chose to keep a conservative estimate by basing the projected income and expenses similar
to its peers.

Page 7
 CONFIDENTIAL
COMPETITION
CURRENT ALTERNATIVES TARGET BUYERS ARE USING

We have looked at the alternatives that the prospective customers and clients are currently using and they using
products and services that we can offer at a slightly lower price tag.

Our prospective customers and clients are using products and services which are our main focus such as application
support and technology refresh services.

The main two services are provided on a contractual basis which gives the company a perpetual stream of revenue to
keep up with the ever changing economic climate.

We will be able to invite new and prospective customers and clients to buy in as we have basically the same products
and services coupled with highly experienced personnel for a slightly reduced price tag.

OUR COMPETITIVE ADVANTAGES

Unique Selling Proposition (USP)

OTICT has set itself apart from its competitors by 1) it’s narrow and target market focus (technology and healthcare).
By completely understanding industry trends and trends OTICT is truly the market expert. 2) OTICTs’ extreme
attention to detail in its contracts and project planning sets them apart from their peers. 3) Because of its small size,
OTICT has the ability to not only meet /exceed deadlines, but they can adapt quickly and on short notice. 4) All these
factors lead to cost savings which in turn are passed on to their clients in the form of cost savings.

Competitive Edge

That fact that OTICT works with local government contractors has a narrow, specific targeted customer base,
combined with BOSB status and a proven track record, gives OTICT an edge over the competition.

Marketing Strategy and Positioning

OTICT is uniquely poised as government subcontractor by its narrow focus on the technology and healthcare sectors.
This focus allows for detailed models, specifically targeted to these industries. OTICT utilized a focus strategy – and
positions itself to cater to the needs of a narrowly defined market.

Page 8
 CONFIDENTIAL
PRODUCT OR SERVICE OFFERINGS
PRODUCT OR SERVICE

Products

Products/Services Descriptions

OTICT will partner with prime contractors and assures the production of quality deliverables from each subcontract
assigned, assuring the development of long term business relationships. OTICT provides the following services:

*IT consulting and support

*Technology Refresh Projects

*Analysis of the current technical environment,

*Analysis of business requirements relevant to the application architecture,

*Architecture definition,

*Application software requirements analysis,

*Application software testing,

*System level integration and testing

Competitive Comparison

The code 1818 is home to a lot of information technology companies in addition to OTICT. Because OTICT is not limited
to its physical location and focuses its source of business on servicing government contracts, the majority of these local
companies do not compete directly with OTICT.

Product/Service Sourcing

OTICTs’ key to success thus far has been the creation of clear, unambiguous subcontracts. Each subcontract has a legally
binding, written contract that defines the following items:

a) The legal names of the parties involved in the contract will be specified.

b) The scope of the contracted work in terms of:

1. The responsibilities and authorities of each party to the contract,

2. A clear definition of the deliverables and minimum content to be provided by the subcontractor,

3. A clear definition of the services to be provided by the subcontractor,

4. Any and all constraints imposed on the subcontractor by the prime contractor, such as schedule constraints, budget
constraints, specific tools to be used, and

5. A clear statement of requirements for quality of deliverables and services including the requirement to allow
independent quality inspections of materials and processes.

c) Appropriate terms and conditions which will be imposed on both the prime contractor and the subcontractor will be
identified.

Page 9
 CONFIDENTIAL
d) The acceptance process will be clearly identified.

Inventory Management

OTICT is primarily a service based company which carries no inventory.

MARKETING
MARKETING PLAN

Positioning Statement

OTICTs’ goal is to be the premier subcontractor in the technology and healthcare sector. By, crafting detailed project
plans, utilizing detailed models, defining the deliverables and anticipating the steps needed to complete each and every
project they undertake. OTICT with its talented pool of in house talent perform all the work themselves, keeping overhead
low and passing the savings onto their clients. OTICT is not mired in red tape and can readily meet its milestones and
deadlines and adapts easily to change. OTICTs’ motto is ‘We don’t just get the job done the first time, we get it done
right”.

Pricing Strategy

OTICT charges a flat rate of R2070.36 per hour

• One hour on–site minimum

• The flat rate does not increase because of emergencies

Promotion and Advertising Strategy

OTICT relies primarily on direct marketing by word of mouth. Mr. Hatlane is a member of the CSD and has promoted the
business by word of mouth and volunteering for many of the events and participating in happy hours and corporate
luncheons.

The company has a website which is another marketing tool that needs to be refined.

OTICT plans to join IT Technology Trade Groups and IT Healthcare Trade Associations.

Website

The OTICT website identifies who the company is, a brief history, and services and products provided. The website has a
“Who We Are” section featuring pictures and brief biographies of the OTICT staff. The site has links to relate sites such
as e-Tender a database that lists all opportunities from government contractors and the searchable opportunities database.

The website features case studies with actual clients with needs and benefit analysis.

Marketing Programs

OTICT, with its limited budget, will rely heavily on face to face time with contacts. Through her extensive contacts while
made working in the industry, Mr. Hatlane plans to continue meeting directly with prospects. The IT community is close-
knit and word travels quickly.

Sales Strategy

Page 10
 CONFIDENTIAL

It is impractical to have a try before you buy in the IT field; however, OTICT likes to present its prospects with the next
best thing, an initial free consultation and evaluation. The potential client is given a detailed questionnaire to complete and
forwarded to OTICT for review. The questionnaire is invaluable and helps OTICT determine options best suited for the
client. OTICT thoroughly believes that by truly understanding their customers, they can create custom Project Plans and
win subcontracts.

Sales Forecast

OTICT expects to grow revenues 20% annually over the next three years. In order to grow revenues 20% annually and to
keep pace with peers, OTICT must sell R2.784,907,52 in new revenue or put another way, bill an additional 1,344 hours
annually. OTICT has built in cushions into its pricing model, which easily allows for just such an increase.

For example in proforma Year One, OTICT estimates that it will bill 2,794 hours in billable revenue. (2,794 hours *
R2070.36 hourly rate =R5,784,585.84 in revenues). However, with a staff of 5 employees working 40 hours a week, the
company has the potential for 9,600 hours annually (or R19.887,757,47). The additional burden of 1,344 hours could
easily be absorbed by current staff. This business plan however employs a more conservative approach with sales and
assets reflective of industry peers.

Page 11
 CONFIDENTIAL
TIMELINE & METRICS
TIMELINE
ACTIVITY DESCRIPTION COMPLETION DATE

Employees Staff addition 3 years

Locations Business expansion 3 years

Sales Increased sales 3 years

MILESTONES
MILESTONE DESCRIPTION COMPLETION DATE

Marketing Global reach 12 months

1st multi million tender Government tender 12 months

Establish partnerships with larger

Business partners and resellers 12 months
companies

KEY PERFORMANCE METRICS

ACTIVITY DESCRIPTION KEY METRIC
Evaluating our company’s sales, we can gauge how
its products or services are performing in the Sales revenue = Sales
Sales revenue
marketplace and whether our marketing efforts are income – Returned products
successful
Evaluates our company’s ability to generate a profit
in contrast to its overall revenue. Using this metric,
Net profit margin = Monthly
Net Profit Margin we subtract all of our company’s sales expenses
revenue – Sales expenses
from the monthly revenue to determine just how
much profit was earned
Measures how much of each sales dollar goes
toward profit and other costs. This number is
expressed as a percentage and is calculated by Gross margin = (Overall
subtracting the cost of goods from the total sales sales revenue – Cost of
Gross margin
revenue and then dividing that number by the total goods sold) / Overall sales
sales revenue. When a company has a high gross revenue
margin, it signifies that a majority of each sales
dollar is retained
Lead conversion rates This metric helps you determine how many of your Conversion rate = New leads
Page 12
 CONFIDENTIAL
leads, or potential customers, decide to purchase
your product or service. Leads can be converted by
a combination of several variables, such as:

Quality products
An excellent sales staff per month / Number of new
A well-designed website customers per month
An appealing social media presence
Great customer reviews
Using this information, you can identify which
variables are preventing leads from becoming
customers.

Page 13
 CONFIDENTIAL
FINANCIAL FORECASTS
KEY ASSUMPTIONS

Financial Plan

The financial plan will cover the following:

• Required Cost of Start-Up

• Profit and Loss

• Cash Flow

• Balance Sheet

• Financial Ratios

Important Assumptions

The estimated average billable rate: R2070.36 per hour; this analysis employs a conservative billing rate; this model can
easily be adapted to demonstrate higher hourly billing providing additional 'cushion' to the financial analysis.

INCOME STATEMENT ASSUMPTIONS

The company currently employs one database administrator and two systems engineers.

Company plans to hire two additional systems engineers in Year Two

In Year Three, the company plans to hire three additional systems engineers

Estimate the company will grow revenues 20% annually and assets by 25% (coincides with industry peers).

The company assumes to generate additional 20% in revenue streams from residuals created by long term contracts

Advertising expense is estimated to be .93% of revenues

Accounting and Legal is estimated to be 4.76% of revenues. Primarily this will be attributed to a tax service for the
purposes of payroll and income taxes.

Legal expenses will be minimal, but in the event the company creates a patent, then this expense could potentially
increase.

Professional Fees represent .57% of revenue and compares favorably with industry peers

Annual rent is R175 888,90 or 2.43% of revenue in Year One. The company occupies 1,200 square feet of a 34,000 square
foot building located at the desirable location in heart of Johannesburg, GAUTENG.

Wages represent the largest component of annual expenses and are estimated to be R5.423,240,96 in Year One,
R7.493,599,84 in Year Two, and R10.626,620,80 in Year Three. Like its peers, the IT Company's largest expense is in the
form of wages, salaries and bonuses.

BALANCE SHEET ASSUMPTIONS

The company was formed two years ago as a sole proprietorship and recently reorganized as a LEVEL 1 BEE. Rather
than owner's contribution, the owner advanced approximately R604,618,080,00 in the form of loan to be repaid. The loan
is fully amortizing based on a five year term.

Page 14
 CONFIDENTIAL
Start-Up Costs

Although not technically a ‘start-up’, initial expenses include working capital and computer hardware and software.

Start-Up Costs

Start-Up Expenses Amount

N/A

Total Start-Up Expenses $0

Start-Up Assets

Computer Equipment & Hardware R207,200,78

Working Capital R411 121,97

Total Start-Up Assets R618 322,76

Total Required Start-Up Costs R618 322,76

Source and Use of Funds

The source of funds for the initial funding were in the form of owner contribution and loan to owner the loan is fully
amortizing over at 6.25% over a five year term.

Break-Even Analysis

As a service provider, OTICT has no cost of goods sold or overhead. Rather than try to consider employees wages as
overhead, the break even chart below demonstrates the point where fixed costs less variable costs (in terms of billable
hours ) equals zero.

Break-Even Analysis

N/A

Projections

Projected Profit and Loss

Company's gross profit appears in line when compared with peers. As a service provider they have little or no overhead.
In addition to billable hours, the IT Company needs to strive for residual income in the form of long term contracts. This
repeat business will act as a cushion in the event of an economic downturn.

Over the three year estimate, the company's total expenses appear in line with industry peers based on same sized revenues
and assets. Total expenses approximate 93% of total revenues.

Salaries, wages and bonuses represent the largest component of expenses. To retain talent and get the higher billable
hours, comes with a price. Offsetting this however, is barring any unforeseen expenses; this industry enjoys high profit
margins, typically above 6%.

Page 15
 CONFIDENTIAL
FINANCING
SOURCES OF FUNDING

Source and Use of Funds

The source of funds for the initial funding were in the form of owner contribution and loan to owner, the loan is fully
amortizing over at 6.25% over a five year term.

Break-Even Analysis

As a service provider, OTICT has no cost of goods sold or overhead. Rather than try to consider employees wages as
overhead, the break even chart below demonstrates the point where fixed costs less variable costs (in terms of billable
hours ) equals zero.

USE OF FUNDING

Company's gross profit appears in line when compared with peers. As a service provider they have little or no overhead.
In addition to billable hours, the IT Company needs to strive for residual income in the form of long term contracts. This
repeat business will act as a cushion in the event of an economic downturn.

Over the three year estimate, the company's total expenses appear in line with industry peers based on same sized revenues
and assets.

Salaries, wages and bonuses represent the largest component of expenses. To retain talent and get the higher billable
hours, comes with a price. Offsetting this however, is barring any unforeseen expenses; this industry enjoys high profit
margins, typically above 6%.

Page 16
CONFIDENTIAL

Page 17