29 West 36th Street Fifth Floor New York, NY 10018 Tel 212.555.1212 Fax 212.555.1212 NEWCO The Internet is Calling. Proprietary Information: Do Not Distribute his document is subject to a Non-Disclosure Agreement unless otherwise explicitly agreed to by Newco. By accepting delivery of this document, the accepting party agreed (a) to keep confidential its contents and not to disclose the same to any third party or otherwise use the same for any purpose unless consented to in writing by Newco and (b) not to copy this document or any portion of it. In the event that the accepting party breaches the obligations set forth in the preceding sentence, the accepting party agrees to indemnify Newco for any damages resulting from such breach.Executive Summary The Opportunity One of the most significant developments in corporate information technology in the coming decade will be the spread of pervasive computing. The proliferation of inexpensive mobile devices such as smart-phones, two-way interactive pagers and wireless PDAs is opening up the ability of workers to interact with key corporate applications, colleagues and clients from virtually anywhere. The ability of corporations to extend their boundaries with new wireless devices will be critical to future growth in productivity and to sustaining competitive advantages for businesses across many industries. The pervasive computing revolution will accelerate the already high levels of corporate expenditures on information technology. A recent report from CIBC World Markets estimates that worldwide expenditures on these types of wireless Internet applications will exceed $10 billion by 2002 and $20 billion by 2004. To a large degree, the enterprise wireless data market is up for grabs. Incumbent players in the enterprise software arena are saddled with legacy applications optimized for large screens and client machines with significant amounts of memory. The opportunity is tremendous for new companies with exciting technologies, focused business strategies and accomplished management to lead this market. The Company Newco is a highly-focused new entrant in the corporate wireless data market. The company has developed a new generation of enterprise middleware tools, called the \"NewcoBuilder Suite,\" aimed specifically at integrating legacy data and applications on an extensible software platform that allows for extensive user customization, interactivity, and community. Corporations that employ the NewcoBuilder Suite can offer a rich experience to employees and cus- tomers over a wide variety of computing devices. They can extend their information boundaries with the NewcoBuilder Suite while allowing users to master their own information environments. Tremendous value results through enhancing productivity, opening up new revenue streams and by controlling waste that takes place in today's relatively uncoordinated corporate information environments. Newco | THE INTERNET IS CALLING. 2 Newco is already well positioned to generate meaningful business in two vertical segments where customers have shown a willingness to pay for the NewcoBuilder Suite and to use the product to reach out to employees and clients. These segments are financial services (particularly investment banks and real estate companies) and high technology equipment and manufacturing, particularly complex engineering organizations that require a highdegree of coordination and communication across dis persed workforces. Today, Newco has advanced from a development stage company to one that has a stable, beta stage product that is generating high client enthusiasm. Newco is based in New York City and has 15 employees. Newco's management team hails from the world's leading financial services and telecommunication firms. Management has a deep network of contacts among relevant cus- tomers and a relentless focus on generating shareholder value. Newco forecasts that it will generate $3.5 million in revenue in 2001, $25.4 million in 2002 and $67 million in 2003. The company expects to be profitable in 2002 given high gross margins gener- ated from its application service provider (ASP) business model. To date, Newco has raised $1 million from angel investors and $400,000 from its founders. Backers to date include senior technologists at Deutsche Bank and Scient, a prominent CEO of a high-visibility Internet portal, and executives from a number of leading investment banks. The company is currently looking to raise approximately $5 million in additional capital from institu- tions and \"strategic investors\". The Product Our product, the NewcoBuilder Suite, is a webbased application that creates a seamless, enterprise class solution for information management and delivery. Scalability, platform independence, extensi bility and maintainability are integral design considerations. Open standards are employed through out to ensure that the NewcoBuilder Suite can easily integrate with external systems and be amenable to a multitude of deployment scenarios. Specifically, as an enterprise class solution, the NewcoBuilder Suite is a secure, reliable, and flexible software that can scale to handle the information that a com pany's employees and clients wish to access wirelessly, while it preserves and leverages existing database/software assets. Newco | THE INTERNET IS CALLING. 3 The NewooBuilder Suite has four components: Content Manager Allows users to generate their own content. Enables users to extract information from corporate applications, legacy databases and compa- nies' intranets and extranets. Provides users with a flexible and intuitive interface for managing content and accessing it from any wired or Wireless device. Com m unity Manager Allows users to create communities of related individuals and to securely share content with group members. Enables users to join communities created by others and/or by their respective IT administrators. Alert Manager Allows users to create alerts from either streaming or static data. Enables users to set up alerts either to themselves or to an entire community. Provides users with the ability to monitor changes to any portion of their time-sensitive content and to alert them when userspecified variations occur. Wireless Manager Enables the repurposing of information from within the Content, Community, and Alert Management systems to devices including browser-enabled mobile phones, interactive pagers, and PDAs. With the NewcoBuilder Suite, companies can solve a wide range of business problems through efficient communication with their clients, customers, and employees anytime, anywhere. Newco | THE INTERNET IS CALLING. 4 Newco Builder Suit ASP Mod+1 PINKWALL ROMof RX what. Archll+clur+ WITH+# The diagam above decorbe: hi boad tema the Newco Newood oberst le aid how It eat: tour Ruelle and teoli bal apt becture. The top rgitquadeit llostats the revel te modeland by the belenis to the end user. At Newco, We be leve the ASP wave ka paradigm @ thing eve it e garding low com par e : thick about "leveragbg, dep bybig, and maiagling toki ology appleatbistro the bwhiesses. Aszoobe dwith the pu- el te model k Newook tollbalapl lecture botom left that licstats our supportofal dadte e nce to open stai dark. The top left aid botom nightquadra to llistat the Newco Bolder Enterprise solotbi and to Whe less compote its. NOWco | THE INTERNET IS CALLING.Competitive Advantage While no company has established a meaningful competitive lead in the corporate wireless data arena there are, of course, a number of players that are achieving traction in the area. These include 724 Solutions, is Mobile, Aether Systems, Brience, EveryPath, and IBM. In our full business plan, we discuss the strengths and weaknesses of each of these competitors in detail. Broadly speaking, Newco stands out from the competition in the wireless data sector in several ways: Deep Customization. Newco is alone in the enterprise wireless data space in its approach to providing applications that create a comprehensive information environment that is customizable by each user for their respective needs. Usability Advantage. Newco is immediately navigable and intuitive in its use. Moreover, users do not want to be restricted to accessing information from devices and media dictated to them. Newco provides extensive freedom of choice. Self-Publishing Capability. Users will want to publish content themselves, notjust retrieve that which is provided to them. Newco is unique in that it allows users to easily mix selfpublished material with corporate databases. Open Foundation. Many of the most widely used technologies in the wireless data market are based on proprietary systems. In contrast, Newco can interface with industry standard data- bases such as Oracle, vvidely used enterprise strength application sewers, and virtually any XML capable data store. Focus on High-Value Vertical Segments. Due to the background of its founders and geographical location in the heart of New York City, Newco is well suited to generate business from high value-added sectors such as investment banking and the publishing industries. Built-in Group Management. Users will want to communicate with others small, medium, and/or large groups of related workgroups, friends, associates, family, etc. Newco | THE INTERNET IS CALLING. 6 The Newco Philosophy Newco is alone in the enterprise wireless data space in its approach to providing applications that create a comprehensive information environment that is customizable by each user for their respec- tive needs. Newco has developed an application that will not only appeal to the earliest adopters of these new technologies, but is based on sound, intuitive fundamentals: Lsers will adopt new technologies quickly if their navigability and benefits are immediately recog- nizable and intuitive, Lsers do not want to be restricted to accessing information from devices and media dictated to them -- they want to choose, Lsers will want to have access to a variety of information, not just one or two corporate applica- tions that have been \"mobilized\for greater operational efficiencies within organizations. Newco's toolset was specifically designed to allow each client to choose how the NewcoBuilder Suite will be deployed within his or her particular organizational structure to maximize the dual revenuelcost value. Used as either a tool for revenue generation or as a means to create operational efficiencies within a client, Newco becomes a powerful tool for expanding a company's bottomline results. Business Model Newco's business model is focused on generating revenue from deals with mobile enterprises in key vertical market segments including financial services (e.g., investment banking and real estate), and select manufacturing companies. Newco plans to sell the NewcoBuilder Suite on an ASP basis. Revenues will be generated per client from a one-time setup fee, a recurring monthly user fee, a recurring hosting fee, an annual mainte- nance fee, and professional and engineering services. Revenue is also expected from selected licensing of the NewcoBuilder Suite to enterprises who Wish to own the product outright. The Company's target markets are enormous and demand for the Company's products is likely to be high. Newco is currently focused on product development and product marketing. Moreover, we have successfully begun a beta program with a number of companies representing the core areas that we are targeting in Phase One of our business development efforts. On the marketing side, we are finding immediate validation of our value proposition. We are currently in active discussions with sev eral potential customers in our target markets. In addition, preliminary discussions with a variety of Global 1000 corporations, companies in optical infrastructure, investment banking, and real estate have yielded a high degree of interest in the NewcoBuilder Suite. Exit Strategy By creating a compelling value proposition built around multiple revenue streams from our ASP busi ness model and licensing, Newco is poised to achieve a significant valuation in a relatively short period of time. An investor's exit strategy could take the form of an IPO or a sale to a number of potentially interested entities. Newco | THE INTERNET IS CALLING. 3 Management Newco was founded in January 2000 as a Delaware C Corporation. Newco has a management team with extensive experience in key areas including technology, marketing, and finance. Team Biographies Bill Johnson. President. Bill joined Newco from Deutsche Banc Alex. Brown where he was a Director and head of the Yankee Origination Group. Bill was responsible for representing corpora- tions, financial institutions, and governments from Europe, Asia, and Australasia and for arranging their financings in the SEC registered, 144A, and private placement markets. Bill's clients included companies in the telecom, print, new media, retailing, mining, banking, and manufacturing industries. Prior to his work at Deutsche Bank, Bill held a similar position with UBS Securities in New York. He currently serves on Advisory Boards of several Internet companies. Bill received a BA from Connecticut College in New London, CI and attended Doshisha University in Kyoto, Japan. Dave Sarkowsky. Founder. Dave comes to Newco from Giant Investments where he served as President and was instrumental in the development of several businesses, in areas rang- ing from natural resources to Internet startups. He has extensive experience in media and market- ing, the Internet, and international finance. He received a BA in Literature from Kenyon College and a MA from the University of York. Steve Dillon. Founder. Steve joins Newco from Capital Appreciation Group, a venture capital firm, where he focused on the development of wireless data companies. Steve has over a decade of experience in venture capital, information technology and investment banking with past positions at Goldman Sachs, Merrill Lynch and CIBC Oppenheimer. He received a BS and an MBA from Penn State University. Cindy Sherman. Vice President of Business Development. Cindy joins Newco from AT&T Wireless, where she was National Sales Director for the Service Provider Markets Division. Cindy brings over 19 years of technology and wireless experience to Newco, with previous roles as Wireless Sales Director at AT &T Business Markets Division covering major corporate accounts and as Vice President of Business Development at INTECO Corporation. Her responsibilities included sales and marketing, both nationally and internationally for large clients, as well as the creation of new business segments. Cindy graduated with a BS from the Rochester Institute of Technology. Newco | THE INTERNET IS CALLING. 9Steven George. Director of Corporate Development. Steven brings extensive investment banking experience to Newco having worked at both Deutsche Bank and Warburg Dillon Read. He has a background as Co-Founder of Picked-Pay, an Internet-based payment system. Steven began his career at Warburg Dillon Read in London and holds a BA in Economics from Colby College. Tony Morelli. Director of Technology. Tony joins Newco from Priceline.com where he designed and implemented several key distributed applications early in Priceline's development. He has seven years of experience in advanced database development, object oriented methodology and Internet applications. Tony holds a Bachelors degree in Civil Engineering from Lehigh University and a Masters degree in Computer Science from Columbia University. Cam Suo. Director of Interface Design. Cam brings over 15 years of design experience to Newco. He has won over 100 awards, including the prestigious American Institute of Graphic Arts Award for Excellence in Design, and has held exhibits of his work throughout the country. He has previously completed projects for a number of leading companies including IBM, Ziff-Davis, Pfizer and currently is an adjunct professor at Pratt Institute. Jerry Dishman. Director of Wires.com. Jerry brings his background as a freelance writer and editor to lead Wires.com, an online wireless lifestyle magazine that serves as a companion to Newco. His experience includes a position at NBC and as an assistant producer for Streetlight Films. As a member of Teach for America, he taught for five years in the South Bronx. He holds a BA in English from Yale University. Newco | THE INTERNET IS CALLING. 1Outside Director Biographies The following three outside directors sit on the board: Kelly Albright. Director. Kelly comes to Newco with 16 years at major Wall Street houses on each continent, including Merrill Lynch, Nomura Securities and, most recently, Deutsche Bank. Kelly is considered one of the pioneers of electronic trading on Wall Street. He was responsible for the design, development, and creation of what is now Deutsche Bank's core electronic trading platform, Butobahn. He is a frequent speaker at conferences on electronic trading and has chaired a number of task forces for the Bond Market Association, a Wall Street Trade group. He received his BA from Rice University. Phil Brockman. Director. Phil is a Principal with WR Hambrecht + Co., an online investment bank. He has previously worked with a number of investment banks and academic institutions. He is an advisor/board member for several Internet properties including dotlearn, Icon20, Intellipro and Service911. Phil holds a Ph. D. in Economics from UCLA. Ray Knight. Director. Ray is CFO of Wireless International Corporation, a high-speed "last mile" wireless equipment manufacturer and solutions provider. He recently served as a Principal of FinanceMatrix.com, a B2B Financial portal. Ray previously practiced law with Foley & Lardner and Skadden, Arps, Slate, Meagher & Flom and worked as an investment banker with Merrill Lynch & Co. He holds a B.S. in Business from Georgetown and a J.D. from the University of Chicago. New co | THE INTERNET IS CALLING.FTP POPS Application Server Files BEA Web Logic 5. 1 View, Edit, and Self Published Agent Content (Data Feed Handler) Alert Management OOOOO SQL Alert Agent Oracle SMTP, SMS Servers WMAL, SMS JDBC Database LDAP 0000 0000 0000 Information Vehicle www .newco.com Internet EJB HTTP/S Internet Intranet Extranet HTTP/S HTML Page - Agent content (Data Feed Handler) Agent Content Manager Community Manager View, Edit, and New co | THE INTERNET IS CALLING. Self Published HTTP Content The Internet is Calling:NEWCO, INC. (A Development Stage Company) STATEMENT OF OPERATIONS NINE MONTH PERIOD ENDED SEPTEMBER 30, 2000 Operating Expenses: Payroll, officers $ 44,000 Payroll, sales and marketing 33,000 Payroll, technical 164,000 Payroll, office 9,000 Payroll, Wires Division 45,000 Payroll taxes 30,000 Employee benefits and processing 26,000 Programming costs 40,000 Writers 24,000 Computer costs 20,000 Internet costs 42,000 Marketing and promotion 9,000 Conferences 11,000 Travel and entertainment 46,000 Rent 64,000 Telephone 15,000 Light, heat and power 1,000 Office expenses and supplies 19,000 Printing and copying costs 15,000 Furniture rental 3,000 Dues and subscriptions 1 ,000 Professional fees 67,000 Insurance 1 ,000 Recruiting costs 16,000 Financing fees 2,000 Relocation costs 11,000 Bank charges 1 ,000 759,000 Interest income 1,000 Loss accumulated in the development stage $(758,000) NEWCO, INC. (A Development Stage Company) BALANCE SHEET SEPTEMBER 30 2000 Assets: Current assets Cash and cash equivalents $ 299,000 Equipment and improvements 182,000 Other assets Notes receivable 45,000 Subscriptions receivable 6,000 Security deposits 27,000 8,000 $ 559,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities Accrued expenses $ 16,000 Long-term debt Notes payable 400,000 Stockholders' equity: Common stock 6,000 Preferred stock 1,000 Additional paid-in capital 894,000 Deficit accumulated in the development stage (758,000) Total stockholders' equity 143,000 $ 559,000 14NEWCO, INC. BURN RATE 2000 Actual Projected March April May June July August September October November December Total General & Administrative Salary & Benefits 5,800 5,800 8,300 25,000 25,000 T & E 25,000 22.500 25,000 5,600 15,000 25,000 3,600 25,000 20,00 30,000 199,200 Rent & Rent Related Expenses 30,000 40,000 40,000 5,300 5,500 5,400 50,000 9,30 50,000 9,30 Datacom/Telecom 9, 100 9,100 7,000 7,100 7,300 9, 100 8,300 9, 100 9, 100 8,600 9,700 81,30 Lega 10,400 2,700 11, 100 12, 400 1,500 15,000 3.000 3,000 13, 100 106,000 1,500 1,500 Accounting 1,500 1.500 1.500 1.000 2,000 32, 700 Office Supplies/Postage/Stationary 700 200 3,000 Other 300 400 500 2,500 2,200 2,200 2,200 2,300 Total 2,200 2,200 2,200 37,600 29,900 2,200 2,200 53,500 2,200 69,200 80, 600 77,500 35,000 35,700 88,900 100, 200 100,900 7 49,000 Marketing Development Staff 3,900 9,200 9.200 ,200 9,200 9.200 .200 TBD (Marketing Comm) 9.166 9.166 9.166 88,398 TBD (Web Site) 15,000 15,000 TBD (PR) 15,000 15,000 15,000 15,000 15,000 60,000 T & E 15,000 Other 2,000 900 Total 9,000 9,000 9,000 9,000 18,900 11,200 9,000 33,200 9,000 48,200 33,200 9,000 9,000 18,200 33,200 8,200 9.000 3.000 24,000 245,000 Programming Salary & Benefits 6,700 18,400 18,400 18,400 18,400 18,400 Contract Programmers 18,400 6,300 18, 400 ,500 18,40 9,50 18,400 50 175,600 9,50 9,500 Other 9.500 9.500 9,500 9,500 95,500 Total 13,000 27,900 27,900 27,900 27,900 27,900 27,900 27,900 27,900 27,900 271, 100 Server Licensing Fees BEA 42,000 Total 2,000 2.000 42,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 $2,000 Capital Expenditures Hardware 41,900 18,000 15,000 15,000 15,000 15,000 Software 15,000 15,000 15,000 15,000 179,900 Total 41,900 18,000 15,000 15,000 15,000 15,000 15,000 15,000 5,000 15,000 179,90 Total 153,400 87,000 129,600 160,300 156,700 40,600 163,800 42,800 154, 100 169,800 1,497,000 Note: Figures rounded to the nearest hundred 15NEWCO, INC PROJECTED ANNUAL INCOME STATEMENT 2000 2001 2002 2003 REVENUES Standard 50,000 1, 133,000 5,663,000 8,494,000 Medium 957,000 7,650,000 15,300,000 Large 1,286,000 9,645,000 25,720,000 Recurring 64,000 2,273,000 17,506,000 Other 12,000 80,000 120,000 160,000 Total Revenues 62,000 3,520,000 25,351,000 67, 180,000 OPERATING EXPENSES General & Administrative 479,000 1,632,000 4,064,000 5,707,000 Sales & Marketing 226,000 1,936,000 5,390,000 11,005,000 Product Development 328,000 ,652,000 2,862,000 3,865,000 Direct Operating Costs 26,000 603,000 1,427,000 3,620,000 Total Operating Expenses 1,059,000 5,823,000 13,743,000 24, 197,000 INCOME FROM OPERATIONS (997,000) $ (2,303,000) 11,608,000 $ 42,983,000 DEPRECIATION $ 53,000 $ 370,000 400,000 500,000 INCOME TAX EXPENSE $ 2,997,000 $ 16,994,000 NET PROFIT (LOSS) $ (1,050,000) $ (2,673,000) 8,611,000 25,989,000 16NEWCO, INC. PROJECTED QUARTERLY STATEMENT Q4 Year Ended Q1 Q2 Q3 Q4 Year Ended 31-Dec-00 31-Dec-00 Year Ended REVENUE: 31-Mar-01 Year Ended 30-Jun-01 30-Sep-01 31-Dec-01 31-Dec-01 31-Dec-02 31-Dec-03 Standard 19.501 50,00 283,250 Medium 283,250 283,250 239.250 239.250 239.250 283,250 1,133,000 5,663,000 $ 5. $ 15 8,494,000 Large 239,250 957,000 7,650,000 21.500 321,50 16.000 321.500 15,300,000 321.500 Recurring $ 1,286,000 9,645,000 25,720,00 16,000 Other 16.000 16,00 64,000 2,273,000 $ 17,506,000 Total Revenue 2,00 20.000 20,000 61.500 62,000 20.000 80,000 000'0 86 000' 086 880,000 3,520,000 $ 25,35 1,000 160,000 $ 67 , 180,000 OPERATING EXPENSES General & Administrative 26,500 20.060 87,5UU Payroll, taxes 20,000 92.500 1 1% 38,000 52,168 92.5UU 64,020 1.760.000 ,605,000 Employee benefits and processing 14% 19.500 60,583 365,000 38,500 72.820 249,590 81,480 644,738 919,600 66,395 Computer costs 4,000 77,105 92, 680 317,660 820,575 8,000 , 170.400 5,000 5,000 5,000 Internet Costs 14,000 28,000 5,000 20,000 25,000 30,000 Rent 101,000 6,000 6,000 57,000 6,000 24,000 48,000 57,000 96,000 15,400 57,000 7,000 57,000 240,000 Telephone 21,900 228,000 260,000 15,000 15,000 Light, heat and power 15,000 15,000 60, 000 100,000 5,800 80,000 7,000 8,000 6,000 Legal 25,000 6.000 63,500 27, 000 25,000 25,000 25,000 30,000 25,000 34,000 2,500 125,000 Accounting 2,500 2,500 100,000 150,000 5,000 2,500 2,500 Office expenses and supplies 12,500 15,000 14,000 29,000 10.000 20,000 10,000 10,000 Printing and copying costs 15,00 21,700 10,000 40,000 45,000 50,000 10,000 10,000 6,60 10,000 10,000 Recruiting costs 45,000 20,600 40,000 25,000 25,000 $ $ SU.UUL Insurance 25,000 25,000 1,00 3,600 100,000 125,000 2.000 2,000 10,000 4.000 8,000 150,U06 Other 26,000 2,000 Subtotal 237 ,100 478.100 10,000 $ 10,000 10,000 382,063 $ 10,000 40,000 50,000 404,688 413,500 431,500 1,631,750 4,063,313 5,707,000 Sales & Marketing Payroll, sales and marketing 43,00 Travel 66,0 100,750 118,250 149,500 0% 229,500 598, 100 20,000 72,00 50,375 2,590,000 XXX Salaries 59,125 74,750 114,75 1,740,00 22,000 22,000 $ 299,000 870,000 71,000 Writers 81.250 1.295,000 81,250 16 100 $ 81,250 314,750 600,00 16,000 890,000 25,000 $ XXX.com 25,000 25,000 100 000 38.400 150,00 75,000 96,000 25.400 106 ,250 106.250 06 25 $ 200,000 414 750 750.000 Promotion Expense 75.000 75 000 1.090,000 75.000 75,00 $ 300,000 3,000 ,000 Advertising Expense 5000 5,000 300 00 $ 1,000,000 $ 5,000 75.000 75 000 Other $ 1 1,000,000 3,000,000 6,000 ubtotal 110,000 403, 125 6,000 6.000 24,000 226,000 439,625 1,935,850 30.000 86,500 606,500 5,390,000 $ 11,005,000 Product Development Payroll, technical 105,000 276,000 215,000 258,750 258,750 Programming Costs 18,00 51.50 991,250 2,275,000 60,000 60,000 $ 258,750 60,000 1,761,250 Outside Services/Consulting 60,000 75,000 240,000 400,000 600,000 Other 75,000 75,000 75, 000 300,0 500,000 750,000 Subtotal 123,000 30,000 30,000 380.000 30,000 327,500 423 750 423 750 30.000 423,750 120,000 240,000 1,651 ,250 2.86 1.250 3.865 ,000 Direct Operating Costs Time Engineers 30,833 33,333 1 18,750 157,50 390,417 Hosting 876,250 1.520,000 3,000 3000 13,00 0 000 50.000 50.000 50 00 2000 200,000 Other 3.000 500,000 2,000,000 Subtotal 3,000 3,000 26,00 26,000 3.833 136 ,333 100,000 71,750 210,500 602,417 $ 1,426,250 3,620,000 Total Operating Expenses $ 496, 100 1,057,600 $ 1,249,021 $ 1,404,396 1,495,500 $ 1,672,250 $ 5,821,267 $ 13,740,813 $ 24,197,000 Income From Operations (434,600) (995,600) (369,021) (524,396) (615,500) (792.250) $ (2,301.267) $ 11,610,188 $ 42,983,000 Depreciation (5yrs on CapEx) 30,000 53,000 65,000 80,000 105,000 130,000 $ 370,000 $ 400,000 $ 500,000 ncome Tax Expense (@ 40%) Net Income (Loss) (464,600) $ (1.048,600) $ (424.021 ) $ (604,396) (720,500) 2,996,128 $ (922.250) $ (2,671, 267 ) 8 614.059 $ 16,993,200 25.989.800 Capital Expenditures 130,000 330,000 500,000 $ 500.000 $ 500,000 $ 500.000 $ 2,000,000 $ 2,500,000 $ 2,500,000 Cash Flow (564,600) (869,021 ) (1,024,396) $ (1,1 15.500) (1,292,250) $ 6,514,059 $ 23,989,800 Cumulative Cash Flow $ (1,345,600) $ (2,214.621) $ (3,239,017) (4,354,517) $ (5,646,767) $ 867,293 $ 24,857,093 17Newco Pricing and Deployment Model Base Assumptions Future Deployment Projections Standard Medium Large Cumulative Number & Type of Deployments Total Total Non Recurring Year Standard Medium Large Deployments Revenue Set Up Fee(1) 45,000 75,000 100,000 Current $ 113,250 Professional Services(2) 4,500 1 1,250 20,000 2001 10 5 2 17 3,438,500 Recurring 2002 50 40 15 105 25,229,750 Per User(3) $ 15.00 $ 12.00 $ 8.00 2003 75 80 40 195 67,018,500 Number of users 250 500 5,00 Hosting 1,000 1,500 1,500 Maintenance(4) 6,750 15,000 25,000 Sales Cyle (in months) NO Average Length of Contract 3 (1) One time charge to client (2) % of Set-up 10% 15% 20% 3) Monthly charge up fee 15% 20% 25% Revenue Stream Projections 2000 2001 Revenue Tota Revenue Tota Stream Standard Medium Large Deployments Stream Standard Medium Large Deployments Deployments Deployments 10 5 2 17 Set Up 45,000 15,000 Set Up 450,000 $75,000 200,000 ,025,000 Prof. Services 4,500 4,500 Prof. Services 45,000 56,250 40,000 141,250 Per User 5,000 15,000 Per User 450,000 $60,000 960,000 1,770,000 Hosting 2,000 12,000 Hosting 120,000 0,000 36,000 246,000 Maintenance 6,750 6,750 Maintenance 67,500 75,000 50,000 92,500 Total 13,250 113,250 Total 1,132,50 956,250 1,286,000 3,374,750 2002 2003 Revenue Total Revenue Total Stream Standard Medium Large Deployments Stream Standard Medium Large Deployments Deployments 50 40 15 105 Deployments 75 80 40 1951 Set Up 2,250,000 3,000,000 1,500,000 6, / 50,000 Set Up 3,375,000 6,000,000 4,000,000 13,375,000 Prof. Services 225, 000 450,000 300, 000 975,000 Prof. Services 337,500 900,000 800,000 2,037,500 Per User 2,250,000 2,880,000 7,200,000 12,330,000 Per User 3,375,000 5,760,000 19,200,000 28,335,000 Hosting 600,000 720,000 270,000 1,590,000 Hosting 900,000 1,440,000 720,000 3,060,000 Maintenance 337,500 600,000 375,000 1,312,500 Maintenance 506,250 1,200,000 1,000,000 2,706,250 Total 5,662,500 7,650,000 9,645,000 22,957,500 Total 8,493,750 15,300,000 25,720,000 49,513,750 18NEWCO INC. PROJECTED STAFFING 2000 Actual Projected FY 2000 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep 00 Oct-00 Nov-00 Dec 00 Total Title Jan 00 Feb-00 Corporate Management CEO 8 333 8,333 8,333 8 333 8,33 8,333 8 333 8,333 100 000 Presiden 8,333 8 333 3,333 8,333 2,917 2,917 2917 2917 2,917 2917 2,917 35 000 Administrative Assistant 2917 2917 2,917 2,917 2917 P HR 5,833 5.833 5 833 5,833 5,833 5 833 5,833 5 833 5,833 5 833 5.833 5.833 Director HR 4,583 4 583 4,583 4,583 4 58 4,583 4,58 4 583 4,583 55 000 Senior Associate 4,583 4 583 4,583 Operations Director Operations 5,83 6 833 5 ,833 5,833 5 833 6,833 5,833 5 833 5.833 5,833 5 833 5.833 70 000 Administrative Assistant 4 583 1 58: 4.58 4 58 4.583 4 583 4 58 158 1 58 4 583 158 55 000 Junior Associate P Finance 5,000 Corporate Controller 5,000 5,00 5 000 5,000 5,000 5 000 5,000 5 DOU 5 000 5,000 5,000 5 00 5,000 5,000 5 DOU 5,000 5,000 60 000 Staff Accountant 5,000 5,000 2,917 2917 2917 2917 2,917 35 000 Administrative Assistant 2917 2,917 4 683 1683 4 583 1 583 4 583 1583 4 583 1 583 4 583 Senior Associate 4,583 4.583 55 00 Senior Associate 2,917 2917 2,917 2,917 2 917 2,917 2,917 2917 2,917 2,917 2917 2,917 35 000 Junior Associate Junior Associate 4,583 175 000 P Business Development 14,583 4 ,583 14,583 4 585 14,583 4,583 14 583 14,583 14,583 14 583 4 ,583 5 000 60 00 Director Business Development 5,000 5 DOU 6,0UU 5,000 5,0UU 2917 5,000 2917 2.917 2,917 2,917 Administrative Assistant 2,917 Business Development 5 DOO 2,917 5,000 5,000 60 100 5,000 5,000 Business Development 5 000 5000 5,000 5 000 5,000 5,000 5,000 60 000 5 000 5,000 5 000 5,000 Business Development 5 000 5,000 5,000 Business Development 5,000 5 000 5,000 60 0OD Business Development 5,000 5 000 5,000 8 8 5 000 5,000 5,000 Business Development Business Development Business Development Business Development Business Development 4 ,583 14,583 P Sales 4,585 4 .585 4,58 14 585 175 000 10 417 Director Sales 10,417 3,417 2917 35 DOD Administrative Ass 2 917 6 667 Sales Associates 6 667 6 667 80 000 6,667 80 000 Sales Associates 199'9 6 567 889 6,667 80 poc Sales Associates 6,667 6 667 6.667 6,667 80 000 Sales Associates 6,667 667 6,667 6 667 667 80 poo Sales Associates 6,667 6,667 6 667 6 667 6 667 6,667 Sales Associates 0 Sales Associates Sales Associates Sales Associates Sales Associates 0 14,583 4 583 14 ,58 4,583 14 209 14,585 14,583 14 585 14 ,583 14,565 14,585 4 585 5,835 70 0OD Director Technology 5,833 5,853 5,835 5,833 5,835 5 833 5,833 5,835 2917 2 917 2917 2917 2,917 35 000 tive Assistant 2,917 6,667 6 667 Senior Network Engineer 6 667 6,667 667 5.667 Senior Network Engineer 299 9 Senior Network Engineer 0 5,00 ,000 5000 60 000 Junior Network Engineer 5,000 6 000 5.000 5,000 5 000 5,000 5,000 5 000 Junior Network Engineer 0 6 667 Senior Database Specialist 6 667 6,667 99'9 6 667 6,667 6,667 6 667 ,667 6,667 199 5 667 6.667 6 667 6 bb 0 000 meor Database S 99'9 199 9 6,667 6,66 6.66 6,667 6 667 Senior Database Specialist 5,000 6.000 5 000 5,00 60 000 Junior Database Specialist 5.00 6 000 5,000 5,00 5000 5,00 5,000 5 00 Junior Database Specialist 0 6,667 299'9 299 9 6,667 299'9 6 667 6,667 80 000 Senior Application Developer 299'9 6 667 6,667 6,667 6 667 Senior Application Developer 6,667 6 667 6,667 6,667 6 ,667 299'9 6 667 6,667 299'9 199 9 6,667 80 poc 6,667 80 000 Senior Application Developer 199 9 6,667 199'9 6,667 6 667 199 9 6 667 6,667 6,667 Senior Application Developer 6 667 6,667 6,667 6 ,667 6,667 6,667 6 667 6, 667 6,567 6 667 6,667 80 00 Senior Application Developer 6,667 6 667 6,667 6,667 6 667 6,667 6,567 6 667 60 000 Junior Application Developer 3,000 5 000 5,000 5 000 5,000 5,000 5,000 5 000 5,000 Application Developer 5,000 5000 5.000 5,000 5, 000 5,000 5,000 5 DOO 5,000 5,000 60 100 Junior Application Developer 5,000 5.00 0 5,000 5 DOO 5,000 5,000 5 DOO 5,000 Junior Application Developer 5 000 5,000 60 poo 5,000 5,000 5, 000 5 000 5,000 5,000 5 833 5, 833 5 833 5,833 5,833 5 833 5,833 5,833 70 000 Director Web Interface Design 5,833 5,833 5,833 70 000 Senior Web Interface Architect 5,833 5 833 5,833 Senior Web Interface Architect 5,833 5,833 70 DO Senior Web In 5,833 4,167 Junior Web Interface Architect 4.167 Junior Web Interface Architect 4,167 Director Wireless Interface 5,833 Senior Wireless Architect 5,833 Senior Wireless Architect Senior Wireless Architect 5,83 82888998888998 Junior Wireless Architect 4.167 GO98829888893 Junior Wireless Architect Senior Wireless Interface Architect 833 Senior Wireless Interface Architect 5,833 Senior Wireless Interface Architect Junior Wireless Interface Architect Junior Wireless Interface Architect 368 750 3,750 $ 68,750 Total Monthly Salary 8 750 3,750 $ 368,750 $ 68,750 $ 191. What are the strengths and weaknesses of the management team? 2. What is your overall "gut" feel about the team? 3. What post-money valuation did you give the company? What valuation methodology did you use to justify your number? 4. Do you recommend an investment in Newco? Why or why not