1 CONFIDENTIAL WOWto wn. com W_er_ _ll 41,=_ ,6 @II ,c n m I BUSINESSPLAN I November 2000 I This businessplanis the propertyofWOWtown.com and is strictlyconfidential.It containsinformationintendedonly for the personto whom it is transmitted.With receiptof this plan, recipientacknowledgesand agrees that: i) in the event recipientdoes notwish to pursuethis matter, thisdocumentwillbe immediatelyreturnedto theaddress listed I below ii) the recipientwill not copy, fax, reproduce,divulge, or distributethis confidential plan, in whole or in part, without the expressed written consent of WOWtown.com iii) all of the informationhere-in will be treated as confidentialmaterialwithno lesscare than that affordedto yourown company'sconfidentialmaterial.This document does notconstitutean offerto sell, ora solicitationof an offer to purchase. This Business Plan (includingwithout limitation the following Risk Factors) containsforward-lookingstatements I (withinthe meaning of Section 27A of the SecuritiesAct of 1933 and Section21E of the Securities ExchangeAct of 1934) regardingthe Companyand itsbusiness,financialcondition,results of operationsand prospects.Words such as "expects","anticipates","intends","plans", "believes", "seeks","estimates" andsimilar expressionsor variationsof such words are intended to identify forward-lookingstatements, but are not the exclusive means of identifying I forward-lookingstatements in this Business Plan. Additionally, statements concerningfuture matters such as the development of new services, technologyenhancements, possible changes in legislation and other statements regardingmattersthat are nothistoricalare forward lookingstatements. DavidB,3ack_on,CEO I i "_ ";.-33<.-333-25_,3 _-.:-' ,;_a_;_c:._v,:c, wL.sw:;.cc:._ :%::::(_C-',.)3B3-03.1.5 Stephen C3ackson, Executive Vice President ..-o,.,:-,_-Z,._ (2,_r_.c::) _-_--:/'c_"_.__c-___';,,s,;,-._:._'-. .......... cc,_ F_.x: (33<,) 3,33-33:,-5 I HeadOffice:Suite _100--800RI_ Avenue, SeaWeWA,98104 DevelopmentOffice: Suite450-999Wes_I-lasUngs Sl_ee¢, Vancouver, BriUshColumbia, CanadaV6¢2W2 ! 1 ! 002257I C 0 N FID EN TIA L WOWto wn. co m I TABLE OF CONTENTS i Section t--TABLE OF CONTENTS Section 2 --CORPORATE OVERVIEW ...................................................................................................... 4 [] What is WOWtown.com? .............................................................................................................. 4 WOWtownTM --THE HOTTEST LOCAL INTERNET MARKETING PORTALS ON THE PLANETTM ............. 4 The WowtownTM Initiative Is Simple But Comprehensive .......................................................................... 5 u Where E-commerce meets its roots with '_-commerce'. ............................................................. 6 How do Businesses participate?.................................................................................................. 7 The WOWtown Net Savings CardTM .............................................................................................. 7 L7 How does WOWtown plan to generate revenues?....................................................................... 7 B2B -B2C -C2C....................................................................................................................................... 7 E! Revenue Summary........................................................................................................................ 8 E How does WOWtown market itself? ............................................................................................. 8 E! How does WOWtown expand into new communities?............................................................... 10 Section 3m BUSINESS PLAN.................................................................................................................. 11 1.0 WOWTOWNTM Summary ............................................................................................................. 11 2.0 WOWtown Brings the Power of the Internet to the Local Community....................................... 12 3.0 WOWtown adds Value to Businesses, Advertiser & Members .................................................. 12 4.0 Significant Rise in Small-Business Presence on the Web in 2000............................................. 13 4.1 Dun & Bradstreet says Small-Business on the Web is growing ................................................ 14 5.0 WOWtown provides its Partners with value-added features to market ..................................... 14 5.1 Opt-in for Permission-Based e-mail ........................................................................................... 15 5.2 WOWtown's permission-based e-mail........................................................................................ 15 5.3 Utilizing E-mail to Build Traffic &Generate Leads via Permission Marketing ........................... 15 5.4 Utilizing E-mail to Build Traffic & Generate Leads via Permission Marketing ........................... 16 6.0 WOWtown's Reseller Partners ................................................................................................... 16 7.0 Proof of Concept --SeattleWOW.com & VancouverWOW.com.............................................. 17 8.0 The Market ................................................................................................................................. 18 8.1 B2B Growth Projections ............................................................................................................. 19 9.0 Astronomical Ad Growth ............................................................................................................ 19 10.0 WOWtown's "Local, Bottom-up" Approach --'@-commerceTM ................................................ 21 11.0 Marketing Plan ............................................................................................................................ 21 I 11.1 Rapid Implementation................................................................................................................. 22 11.2 Brand Recognition & Promotion ................................................................................................ 22 11.3 Attracting Members by Building Web Traffic ............................................................................. 23 11.4 Banner Advertising and Keyword Buys ..................................................................................... 23 i 11.5 Referral/Affiliate Based Systems to Build Site Traffic................................................................ 23 11.5.1 CommisionJunction.com --Referral/Affiliate Program.......................................................... 24 11.6 Search Engine Rankings ............................................................................................................ 24 11.6.1 Mamma.corn ............................................................................................................................. 25 11.7 Utilizing Community Auctions to Drive Repeat Traffic to the Network:..................................... 25 11.8 Converting Prospects into Customers -User Friendly Websites.............................................. 27 12.0 Creating Lifetime Card Members ................................................................................................ 27 13.0 Relationship Management: Profiling and Personalizing ............................................................ 27 13.1 Push I Pull Interactive Advertising ............................................................................................. 29 I 14.0 Website Measurement & Analysis .............................................................................................. 30 15.0 WOWtown-A Unique Concept ................................................................................................ 30 16.0 WOWtown's Value-added Strategy............................................................................................. 31 16.1 NETWORK CAPITAL ................................................................................................................... 31 16.2 HYPERMARKETING .................................................................................................................... 31 16.3 Exclusive Partnerships 31 16.4 BuySellBid.com --Immediate Online Content........................................................................... 32 16.5 ThinkView.com --Local News, Sports and Entertainment........................................................ 32 17.0 IMPLEMENTATION..................................................................................................................... 33 17.1 Corporate Development.............................................................................................................. 33 Phase I --Back End Development........................................................................................................... 33 Phase II --Community Expansion........................................................................................................... 33 Phase III --Integration ............................................................................................................................. 34 I Phase IV --Global Expansion ................................................................................................................. 34 17.2 Formation of WOWtown Europe................................................................................................. 35 17.3 Formation of WOWtown Brazil Limited ...................................................................................... 36 2 ! 002258I C0 NFID EN TIA L WOWto wn. c om I 17.4 Formation of WOWtown Latin America Limited ......................................................................... 37 17.5 Ongoing Marketing and Sales Campaigns ................................................................................. 37 10.0 WOWtown's Competitive Advantages ........................................................................................ 37 I 19.0 Benefits: Exclusive Resellers, Media & Sales Partners, Businesses & Advertisers ................. 38 20.0 Benefits: Personal Memberships................................................................................................ 30 21.0 Revenue Generating Strategies .................................................................................................. 39 22.0 Exclusive Reseller Agreements .................................................................................................. 41 i 22.1 Local Media Partners .................................................................................................................. 41 22.2 Local Sales Partners ................................................................................................................... 42 23.0 Exclusive Local Partner Agreements ......................................................................................... 43 23.1 Class 'A' Local Partner ............................................................................................................... 43 23.2 Class 'B' Local Partner ............................................................................................................... 43 I 23.3 Class 'C' Local Partner............................................................................................................... 43 24.0 Sales of Banner Advertising....................................................................................................... 44 25.0 WOWtown Products .................................................................................................................... 44 25.1 Secure Broadband ...................................................................................................................... 44 I 25.2 Interpass Net Technologies, INC. n Prepaid Internet Access Cards ........................................ 46 26.0 Business-to-Business Product Packs........................................................................................ 47 27.0 Independent Agent Commission Sales Potential....................................................................... 47 27.1 Independent Agent Commission Income Potential.................................................................... 47 "rim • • 26.0 WOW-U m WOWtown University ............................................................................................ 47 I 29.0 WOWtown's Online MagazineTM Business Directory and Membership ..................................... 48 29.1 Magazine Content ....................................................................................................................... 29.2 WOWtown's Permission-based Newsletters .............................................................................. 48 29.3 Business Directories .................................................................................................................. 48 | -30.0 WOWtown Net Savings Card ................................................................................................... 49 31.0 Value Added Features for the WOWtown Net Savings CardTM .................................................. 50 31.1 Smart Card Technology.............................................................................................................. 50 31.2 Magnetic Strip Integration .......................................................................................................... 50 32.0 WOWtown Network Benefits ....................................................................................................... 50 33.0 WOWtown Membership Services ............................................................................................... 51 34.0 WOWtown Customer Loyalty Program....................................................................................... 51 35.0 The Development Team.............................................................................................................. 51 36.0 WOWtown's Corporate Alliances ............................................................................................... 51 36.1 eConquest Technologies ............................................................................................................ 51 36.2 VisualCommerce........................................................................................................................ 52 36.3 NextHosLcom ............................................................................................................................. 52 36,4 Hostopia.com .............................................................................................................................. 52 I 37.0 WOWtown Strategic Alliances.................................................................................................... 52 36.0 WOWtown Domain Name Registration ....................................................................................... 52 39.0 Competitive Factors.................................................................................................................... 53 40.0 Projected Earnings ..................................................................................................................... 53 I 40.1 Projected profits from all areas of operation: (US$)................................................................... 53 41.0 WOWtown Advisory Board......................................................................................................... 53 42.0 ManagemenL.............................................................................................................................. 54 43.0 Corporate Information ................................................................................................................ 55 43.1 Legal Counsel ............................................................................................................................. 55 43.2 Auditor ....................................................................................................................................... 43.3 Banking...................................................................................................................................... 56 43.4 Transfer Agent ............................................................................................................................ 56 44.0 Additional Company Information ................................................................................................ 56 44.1 Head Office ................................................................................................................................ 56 44.2 Development Office .................................................................................................................... 56 44.3 Investor Relations...................................................................................................................... 56 44.4 Shares Listed .............................................................................................................................. 56 44.5 Capitalization .............................................................................................................................. 57 45.0 Conclusion ................................................................................................................................. 57 I 3 I 002259u ,C O m II Section 2 _. CORPORATE OVERVIEW ,, What is WOWtown.com? WOWtown.com, Inc. (OTC BB: IWOW) is a development stage; intemational, web-based marketing medium that provides targeted communication between businesses and consumers. The WOWtown TM initiative is simple but comprehensive. It concentrates on bringing the global focus of the Intemet down to a local market level, creating an international network of Local Internet Marketing Portals. WOWtown links the consumer with retail merchants and other businesses that provide services in the neighborhoods where these consumers live and travel to. I Members enjoy spedal features, discounts, and savings on countless products and services offered by partidpating advertisers when using their free WOWtown Net Savings Card TM. The Net Savings CardTM is exclusiveto WOWtown members, who must first sign up online through any I WOWtown portal across the network to gain accessto valuable member benefits. Membership provides each Net Savings cardholder with accessto discounts and savings offered to them from merchants and businessesin the same communities. The Card isalso l_ansportable, encouraging use in other communities. WOWtown's community portal network is linked from the corporate website at www.wowtown.com which functions as the primary database hub for the organization. Site activities and online transactions are recorded, gathered and database referenced for the entire organization. From this hub are linked all of the other WOWtown communiUes across the network. EachWOWtown city operates as its own unique gateway to the respective community it serves. I The main homepage also provides direct links to keyinformation about the Company, including investment information; parl_ership opportunities in each local WOW-city portal site; and local business directories in each community. ! 4 ! 002260I CONFID EN TIA L WOWto wn. COm I All of theCompany'scommunityportalsoperate independentlyprovidingwide-rangingprogramsof features and benefitsrelevant to WOWtown'smembership,offeredby the businesscommunity and localmerchant advertisersin the same area. I EveryWOWtowncommunityportal offers members and visitorsaccessto LocalResourceGuides,News, Entertainment, Sportsand Weather for their own communities.Our Sites alsoprovidean effective advertising and cross-promotionalopportunity to local area businesses.Sincethe relative advertisingcosts are low comparedto traditional marketing methods,businessessee recognizethe opportunity to expand andenhance their customer-bases. Site content appears similarin appearance to other well-knownwebsites,however the difference between WOV_own's program and other informationalwebsitesisthat WOWtowntargets online users and local merchantswithin specificurban populationcentersand createsrevenuesfrom the local-1stmarketing approach. We concentrate on bringing the global focus of the Intemet down to a local market level, I creaUng a network of community-l_ Internet Marketing Portals. • WOWtownTM providesthe localgateway into communitiesfor local businessesandmerchantsto target I online userswho live in the same neighborhoodsandto driveonlinetraffic these "bricksand mortar" businessesineach LocalMarket region. • WOWtownTM isthe most unique,flexible, measurableand cost-effectiveform ofAdvertisingavailableon the Internet. • WOWtownTM offers a branded identityand a vehicleto match businessesand consumerstogether creating a powerful advertising and marketing medium. • WOWtownTM providesvalue-addedSavingsand Discountsto the Intemet user from businessesthat want their message deliveredto this massiveaudience. WOWtown TM provides the systems, idenUty, branding, tools and markeUng programs necessary to atlxact community portal partner's in each area • WOWtownTM conducts businessdirectlywith localISP's,Media Properties, Web DesignCompanies or Advertisingand Marketing firms. • WOWtownTM increaseslocalmembershipin each portalterritory and developsnew and profitable businessrelationshipswith area merchants. • WOWtown hasestablishedthe pdmarynetwork consistingof 62 community portals. The Company owns over500 Internet domainsitesthat are scheduledto becomelocalcommunity portals underthe Company'sbrand. As new sites are spawnedand integrated into the network as local communities,it I will broadenmembershipandadvertisersenhancingrevenueopportunities. Additionalportals, products and serviceswill be phasedin overa time period that addressesthe Company'scapacity to maintain controtledgrowth. • WOWtowncreatesthe connectionwhere members and other usersfind out what's goingon in their communities.All througha singlegateway point of entry that is relevant to them. WOWtownalready generates millionsof hits acrossthe network with hundredsof thousandsof uniquevisitors. ! 002261I CONFID EN TIA L WOWto wn. com ..... ' i;_ ]J -ihidl,,k i [__,; #"/,_,/_.d i _ _*""_-_a !I _ Where E-commerce meets its roots with '@-commerce I E-commerceis all about GLOBALbuying, credit cards, and security issues,shippingchallenges and choosing whom to trust. WO_own has pioneered the new concept coined '@-commerce', where it's all about LOCALfoot traffic @local neighborhood Bdcks-and-Nortar businesseswhere people live, shop, play and visit @.We harness the power of the [nternet and introduce local residents and tourists to trusted and recognized businesseswithin i each city portal we develop. We take that relationship one step further and create incentives by offering our free Net Savings Card% which provides instant and repeatable discounts at participating local merchant's real world business establishments. No secure servers, cookies or technical hurdles, just good old-fashioned" @-commes_ce TM "; where and when I want it. WOWtown also supplies online E-commerceproducts and services that provide the tools for people business and consumers to embrace the global marketplace. ! WOWtownwiilcapitalizeonthis growthbyprovid:.ngreal-worlde-commerceso,utionsthat integrate I _,e evo,_ingneedsandexpectationsof the Zntemetuserwith thesolidfeaturesandbenefitsof _3,_cks-and-Hor_ar businesses. :;__ ! rllt r UI1r_vl_ ii 11 6 I 002262I CONFIDENTIAL WOWto wn. com :_ How do Businessesparticipate? Using the Internet as the advertisingmedium,merchantsprofiletheir establishmentsto a largepotential audience.Unlike mostdirectories,these Bricks-and-Mortarbusinessesare ableto interactivelyoffer andmanage specialsavingsand discountsvia their localcommunityWOWtown portal. At the option of eachadvertiser WOWtowncan displayinteractivemaps, voicegreetings, or other timely messagesabout the advertiser. i Herchant advertisementsare highlymeasurable,very cost-effectiveand reachthe audienceon a 24/7 schedule. Thisdrives newand repeat trafficto participatingretailersand givesadditionalincentivefor consumersto patronizelocal businesseslocated intheir owncommunities or thosecitieswhere they planto visit. Usingthe power of the Internet to match peoplewith businessesinthe same community adds a powerful marketing tool I for Bricks-and-Mortarshops andservices. Researchindicatesthat most of the small to medium sizedbusinesses do not yet have an effective web presence. I _ The WOWtown Net Savings Card TM WOWtown membershipis offered free to Intemet usersby accessinganyWOWtownlocalcommunityportal and registering online. They are provided their own unique Net SavingsCardTM entitling them to special benefits offered at participating local area merchants. Cards are currently mailed directly to each new member but the Company plans to integrate point-of-sale distlibution programs that will rapidly expand membership in each local community. Consumerssimply present their Card to receivethe feature or benefit without having to use coupons, whichfrequentlydo not motivate customersto revisita business. t*'n_II J ;_L,:._=_=_,.__C_IL I The Card is transportable, beingaccepted universallyby participating merchants in all WOWtown community i cities. This feature will give the Cardholderaccess to savingsand discounts in other locations whenthey travel and significantly raises the value of the program with respect to merchants because it has the potential to expand the marketing reachfor businessesand advertisers. _ How does WOWtown to revenues? plan generate I WOVVtown'sbusiness modelencompassesall the key areas of Internet commerce: Business-to-Business(B2B), Business-to-Consumer (B2C) and Consumer-to-Consumer (C2C)sectors. WOWtown's revenues will begenerated from a number of areas. Each portal acts as an Internet station to sell advertising to Bricks-and-Hortar I businessesto the Company'smembership and onlineviewers. The portals provide direct accessto the local community and will offer products and services useful to both business merchants and the public. We will also generate revenues through our exclusiveWOWeSTORETM, an online comparison-shopping site I offering millionsof products sold online by the Intemet's most reputable merchants. Offering both real-world and online commerce enhances the Company's bottom line by not being limited to narrow revenue models. I 7 I 0022631 CONFIDENTIAL WO Wto wn .c om I " The Company has also entered into revenue sharing and cross-promotion agreements _th well-rest-ted Intemet companies such as YesNail.com, Hamma.com, HapQuest.com, Inter_ss.net and AskHe.com. These I Agreementscall for revenue sharingfrom the salesfrom bannerads, permission-baseduser groups and other applications.The Companywill seek out qualityaffiliateopportunitiesthat add valueto thesites, businessesand members. _ Revenue Summary o Advertisingsales to onlineand Bricks-and-Mortarbusiness,includesassortedbundled options packages, o Exclusive Reseller Feesderived from granting portals and other territories to Local Market Partners, o Ongoing revenue sharing between the Company and its Local Market Partners, o Revenuesharing between the Company and Affiliate Programs, o Sales of Intemet productsand services, i.e.: webpage design, site hosting, banner ads,etc., o Transactions received from our planned local community auction sites, WOWtown and its Local Market Partners will share in the revenue streams created by the salesand marketing programs established by the Company. Revenues will expand as the number of new community portals increase, I o WOWtown MerchantCenter where we provide our merchants with a host of l_usted online and "real world" businessapplications, products, and services, all with a revenue stream back to WOWtown. i !:,.;:. i__ , /?,,_t/i_::,;../::_.,.. /t_.:i:.. REVENUES EXPENSES NET IVlARGIN INCOME % Year-1 $2,976_275 _2,242,377 _733,898 25 Year-2 _16r132t385 _;3r692r614 $121439r771 77 Year-3 $32,057,980 $5r995,414 $26,062,566 81 i Year-4 $51,426,125 $8,864,614 ._2,561,511 83 Year-5 $81,261,485 $12,387,014 $68,874,471 85 How does WOWtown market itself? , WE WANT YOU ! I 8 I 002264CONFIDENTIAL WOWtown.com ' __ _'_" ____/ll_l___'rfL'ra' __ WOWtown uses conventional advertisingand promotionchannelsto disseminatethe presenceof its community portals to mainstream audiences. Radioand television commercials have been prepared to augment local print media advertisements to generate brand recognition in each market. The Company will aggressively market itself using creative push -pull advertising targeted at the local area, generating attention with its slogans: Where all the fun is @r"and 7-heHott_st LocalIntemet Plar/ceting Portals On The Planet" to create awareness of its local portals and the WOWtown network. J_r_ If_frl_ork Online advertising is combinedwith localarea membershipdrives,crossmarketing, targeted promotional campaignswithestablishedbusinessesand throughpartneringwith leadingcompaniesengagedin lnternet I activities.Bricks-and-Mortarbusinesseslocatedin the communitiesare directlytargeted in salescampaigns to makeavailablea discountor savingsto WOWtownmembers. Membershipis alwaysfree, whichexpands the overallmembership ranks causingincentivefor increasedadvertising by all kindsof businesses.The Companyplansto incorporatea free communityauctioninto each localportal to increasetraffic and create i additionalawareness. We concentrate on bringing the global focus of the Internet down to a Locai Market level, creating a Global corporate _e_vork of l.ocai Internet Marketing Portals. Each Partner Portal operates independently while collectivelypro_ding wide-ranging programs" of features and benefits for the WOWtown _'_Membership. I • WCW_o,_.._ TM conductsbusinessdirectly with localbusinessessuchas ISP's, Media Properties,Web DesignCompanies,or establishedmarketing firmsto drive onlinetraffic to "bricks and mortar" businessesin each LocalMarket region. • WOW_wn TM providesvalue-added Savings andDiscounts to the Intemet user and creates additional revenue streams for its Partners • WO_co_s:_TM is the most unique, flexible, measurable and cost-effective form of Advertising available on the Internet. I • WO_"cownTM will increaselocal Membership in each Parmer'soperating territories. • WOW_o_.rnTM provides the tools, training and marketing necessaryfor its Local Market Partner'sto I attract new and profitable BusinessClients andnew Membership, while enhancing profitability from their existing (and expanded) client base. 9 i 002265I CONFIDENTIAl WO Wto wn . com I _ How does WOWtown expand into new communities? l Asyndicationof LocalPartnerswill replicatethe WOWtownTM community format in citiesacrossNorth Americaand internationally.Prospectivepartnersare selectedbasedon a number of key points:their local area knowledge ina region, establishedmarketing and salesdepth in their community,and a demonstrated insightinto Internet commerce and associatedapplications. The Companywill activelyassista LocalMarketPartner to implementthe WOWtownmarketing support materialand train key staff members. Eachpartner will arrangefor localarea marketingwith established mediagroupsto implementthe portal branding.Developinga triangularrelationshipbetweenWOWtown,a l Media Partner ineach area and a LocalSales Partnerwill substantiallyreduceWOWtown'slocalmarketing costs ineach city andcreate a dynamicmethodto developthe Brandand implementourprogramon a citybbycity basis.Each LocalIVlediaPartnerhasthe capabilityto saturatethe community throughadvertisingthe localWOWtowncommunity benefits, whileat the same time drivingbonafide leadsto our Sales Partners. l This triangular-method form of advertising/markeldngwill generatea strong local presenceand awareness. . . ,,_2'_._ .._ i , ._-:.-._,.._" !| | I 10 I 002266I CONFIDENTIAL WO Wto wn. co In U .c o m ! Section 3 --BUSINESS PLAN I !,o WOWTOWNTM Summary I WOWtown.com, Inc. (OTC BB: IWOW) is an international, development-stage web-based marketing medium that provides targeted communication between businessesand consumers. Through a network of local portals, the Company arranges advertising for pa_cipating organiza_ons and offers a WOWtown Net Saving CardTM and Local ResourceGuide to customers. WO_own will activate more than 500 Intemet I domain sites, scheduled to become portals under the Company's brand. WOVCcownrecently expanded its network to 62 community portals. Additional WOWtown community portals will be phased in over a time period that addresses the Company's capacity to maintain controlled growth. I WOWtownTM is implementing its branded Network of Company-controlled, affiliated Local Market Internet portals (gateways) in cities across North American and internationally. This "community" of portals uses mainstream, time-tested advertising and marketing strategies, and various techniques to effectively connect online users with local area merchants in the same communities, driving real foot traffic to Bricks-and-I Mortar establishments. Each local city-WOW site provides a community focused online Magazine, BusinessDirectory and Membership Program for Hospitality, Entertainment, Recreation, Tourism, Shopping, ProfessionalServices I and People in eachlocal community. Participating merchants showcasetheir establishments to WOWtown's online membership through a web page presence linked through the local portal and agree to provide a saving, feature or benefit to WOWtown's local community membership. By providing an exclusive offer to WOWtown members companies gain more customers, increase their exposure and generate additional I awareness. WOWtown members receive a free WOWtown Net Savings CardTM --a credit card-style membership card that when presented at participating merchant locations rewards the holder with savings and discounts i offered exclusively to the membership. Member benefits are redeemable on a repeatable basis. There are no coupons to clip and present to a merchant, making the b'ansaction very simple for the customer and business operator. Eachof the Company's portals combines a city name or regional identity with the 'WOW" brand to create a I unique identifying portal, which is tied to the WOWtown online community format. The Company's slogan --ii ::-. _" "ii, r _ ' _ _: _'::1 creates a community theme with a sense of anticipation about being a part of the WOWtown family. Tying-in the use of the familiar 'C._'symbol signifies I Internet connectivity. WOWtown also actively promotes --i i _, :_, ,' ' ,:,.'_..._/.:.::. :.::/_ : _,_,:;": i_, • " _C ;. -; , ,:,:" r,.;_ to highlight the Company'sfocus on community targeted Interact marketing in each portal region. I 11 I 002267I CONFIDENTIAL WOWtown.com 2.0 WOWtown Brings the Power of the [nternet to the Local Community ExamplesofWOWtowncommunityportalsarewww.SeattleWOW.com, www.LasVe0asWOW.com, WWW.VancouverWOW.com andvwwv.SanFranciscoWOW.com. The Companyplanson implementingnew WOW-portalsduringits firstyear of operation.All WOWtowncommunityportalscan beaccessedat www.wowtown.com.(SeeSection9 for a currentlist of WOWtownportaladdresses). ExclusiveReselleragreementsarebeingsoughtin our targetmarket locationswithestablished, stableand financiallysolidbusinessentitiesthatareactiveandfamiliarwith a particularcommunityareaor region.The Companywill maintainownershipandeffectivecontrolovercontentof eachportalthroughrevenuesharing agreementswithour regionalparl_ersto activelydevelopeachlicensedterritory. RevenuesharingbetweenWOWtownandits localpartnersencouragesthe Company'spartnersto sell onlineadvertisingprogramsandotherproductsandservicesto mainstreambusinesses.UsingtheIntemet asthemedium,WOWtownprovidesa uniqueandmeasurableformofdirecttargetmarketingfor bricksand mortarbusinessto presenttheir goodsandservicesto consumersin their neighbourhoods. The basiccost for a merchantto participatein the Company'sprogramis as little as $29.95permonthfor a 24/7 online presence.Traditionalformsof advertising(print, radioandTV) areout of reachfor mostsmallto medium sizedmerchantsandhavelimitedfrequencyto attractviewers. "TheI_ makesmark,smorecompeti_ve becausebuyersandseJI_rs canfindeachothermore_sily..."Theearly adop_-_ers oftheInt_rnetaredif_ret_fromthem_nstreamconsum_-s whofottow.Ast_'_IrP_ spreads_oa broader crosssectionof households, thet_st_sandreqL_r_,.n-_-_s of averageInf,_met consumers willchange. Onlycompanies that undid the diff_-e_typesof in_.m_-consumers will beable_ot_rg_ the rightl_opiewiththe dghtprodud$, sen/_c_, ar_,d _S." IVIBry Modah], VicePresid,_t ofRsse_rch, Fon'es_r-R._e_rch,Ir_ I January2000 3.0 WOWtown adds Value to Businesses, Advertiser & Members WOWtownwilldirectInternetusersto these"BricksandMortar'; real-worldbusinessesoperatingin the neighbourhoodswhereconsumerslive.Throughthefadlitation of discountsanddealsofferedexclusivelyfor registeredWOWtownmembers,businesseslistedontheWOWtownnetworkwill bepromotedina costeffectivvemannertargetedto an audiencethat hasthe highestpotentialfor repeatsales. Thisall-Networkapproachwill give BricksandMortarmerchantsin the localcommunitiesa powerful marketingmedium,enablingthemto accessandtarget customerslivingwithineachlocal merchant'sarea of operation,justifyingtheirownpersonalized, reasonably-priced websitehostedbyWOWtownAffiliates. Thiswill drive businessto thesemerchantsandgive the consumerincentiveto patronizethesecompanies locatedin their area. MembersandMerchantsalikewill alsohaveaccessto a muchwiderselectionof goods andservicesbecauseotherWOWtownAffiliatesandtheirmembershipbasessituatedinotherNorth Americanlocationscanshoponlineandaccessinformationin otherlocationsacrosstheWOWtown Network. The _lUllll_lll IP_ _ 4111lt i& @TMdesignatesanenjoyableexperience.Notonlyare CorporateSlogan thereenormousbenefitsavailableto the BricksandMortarbusinessestablishmentsbut alsoto the adve_sing induslTy,whichis alwaysin searchof new methodsto promotetheir clients"productsto consumers.UsingWOWtown'sNetworkservicesandinter-businessconnec_ons, they willbeableto pinpointmarketgroupsandindividualsthrough permission-basedmarketing.WOVCcown will broadentheir ability to go local TM usingthe Intemet'spowercombinedwith theabilityto generateawarenesswherethe consumernormallyshops. I .... ........ , ........ ., , ,, ,_ ,. , ,, ,_...... _..... ... ._.... ii':._/:_i_,:; ,:.:,/:..... _........, 12 I 002268I CONFID EN TIA L WOWto wn. com WOWtown's programs will level the playing field between online commerce and local community interaction1 usin_ the Internet as the medium, Participating businesses will be able to market to their local target audience over the Internet making the medium a pr_uc_ive I marketing and sales tool= WOWtownwill facilitate and foster a universeof interactivity and commercethroughthe WOWtown'" Brand. Havinga Networkof interdependentstand-alonePartnersin eachcommunity, offeringa virtual I supermarket of real-worldproducts, servicesand information.This will result indevelopingan actualized cost-effective,identifiableand measurablemeansofmarketing for all types of localcommunity businesses. Combiningthe Bricks-and-Hortarwoddwith the connectivityof the lnternet willmaximize salespotentialby developingparalleland dynamiconline solutionscombinedwith conventionalpromotionand marketing. I Fora basicmonthlyfee --far lessthan the priceof a singleprint advertisement placement--businesses can reachan expanding network of consumerswithin and outsidetheir normal market areas.The Company'sproduct offerings willaugment business'ability to providean expandedset of features and benefitsusingthe Intemet targeted at their localizedpopulationbase. Additionally,businesseswill have accessto the WOWtown Permission-basedMembershipe-mail database, further expandingtheir market reach. eNarketer, Inc. says "The portion of Americansusingthe Internet grew from 32.7% in 1998 to 44.4% in August 2000. The Department of Commercenotes that if growth continues in thisfashion, morethen 50% of all Americanswill be usingthe Internet by 2001." All 26.2% 41.S% 29.8% 4&1_o Bt=¢J¢Non-Hispanic 11.2% 23_s_ AsianAmeflcanandPacificISlander i 38°01_ Hispanic 1_'6_ _L6_,_ i_iD_er t_9S I August20oo -_ • ! -_ lr • _ _._ _ r_n _ ._2.'0J_,_.t _J,_=l. IF.. '..LL_,_-:._ Uafff_l:elr.coT_ !i 4.0 Significant Rise in Sm_ll-Business Presence or_the Web in 2000 The Intemet has evolved in an explosivemanner,openingup the globalcommunity sothat anyonewith Internet accesscan sourceinformationon almostany topicand get information about productsand services offered around the world. WOWtown will link communitiestogether, providing an effective consumerlink. What the Intern_ has not y_t accomplished is the ability to target and generate retail sales for established store-front merchants --especiaIlythe small and medium sized businessessituated in every city and I surrounding area in North America and internationally. 13 | 002269I CONFZDEN TZAL i/gO itO wit. cOm I 4.1 Dun & Bradstreet says Small-Business on the Web is growing I "D&B found that small-businessWeb sites are on the rise, with 38 percent of survey respondents reporting a Web presence, up from 28 percent just a year ago. Not surprisingly, larger small businesses(those with between 26 and 100 employees) were much more likely to report having their own Web page or site, but every size category showed an increase over last year (see chart below). Home-based businessescontinued i to lag behind in this area, but still showed growth, with nearly a quarter nowboasting Web sites, vs. 16 percent a year ago. Forty percent and 41 percent of minodty-and women-owned businesses, respectively, indicated that they have Web pages, also up significantly from last year in both cases. I HasWeb AllSmall 1-S 6-25 26-100 Home-Women-Minority-Page/Site Businesses empl. empl, empl. Based Owned Owned II B 2000 380//0 28Ofo 470_O 6SO/D 240fO i 410fO 40% II I 1999 28% 22% 45% 43% 16% 22% 30% ! Seventypercentofsmallbusinessesrespondingto the D&Bsurveythis yearhavesomeaccessto the Internat.Thisis upfrom57percentinthe priorsurvey,whichwas inturnupfrom47 percenta yearearlier. I On average, approximately two-thirds of employees at these small businesseshave accessto the Web at work. This figure is consistent with last year." Source:D_._n & B._ -1¢3_:h annu_}I_Jn& _b'eet (D&B)Smag-Business Surw=y ! 5.0 WOWtown provides its Partners wi_:hvalue-added features tomarket WOWtown's growing membership is empowered by the WOWtown Net Savings Card TN. Members are entitled to specialsand features offered by the businesssector locallyand in other cities wherethe Companyoperates portals; Permission-basedNewsletters;OnlineCommunityForums;ChatSites;and many I other user features and benefits will add to the value of the Company's program. Additionally, WOWtown is establishing stTategic alliances with leading-edge suppliers, whose ]ntemat products can be sold to the Network's businessesand consumer membership, providing a wide range of I features and benefits, eachgenerating a revenue stream back to WOWtown. As new systems, programs and enhancements are developed for the Interact, they will be made available for the Company's Partners to implement on a regional basis. This wilt ensure the WOWtown network remains fresh and current with the latest technology. , ' _"1.7: ,,..,. ........ _: , ..... ............................ Anti-Virus E-mail Service(WAVt!S=); Corporate Intranets; Web based Merchantcredit card processing; Custom scalable e-Commercesites; BackOffice AdministrationSolutions (site design,database integration, traffic generation, and secure hosting); ASDLand ISDNdedicated connectivity; Interact Real Audio and Video programming; Wizard-based e-Commerce development tools; Interne communication programs; and analysis and tracking utilities. These are products and services that the Companywill focus greater attention on as the membership and retail merchant base grows in the cities where the Company has established a community portal. These products can be sold directly online or through traditional merchandizing avenues. ! 14 ! 002270I CONFID EN TZ4L WO WtO wn. com I 5.1 Opt-in for Permission-Based e-mail I FIoNetwork, an online direct marketing applicationserviceprovider,in connectionwith NFOInteractive found a strong and positiveresponsefor opt-in e-mail marketingin a recentsurvey. Asurveyof 1,000 net usersfoundthat 94% of consumersopt-in for permission-basede-mail. Fully,89% of I those surveyed thinkthat e-mail isa goodto way to get informationabout productsof interest to them. And amongconsumerswith existingrelationshipswith merchants,81% think that e-mail is a good way to communicatewith them. i The survey alsoconfirmsthat consumerswill trade personalinformationfor services.Givena clear privacy policy, 54% of respondents saidthey wouldpart with informationin exchangefor personalizedservice.This comparesto 22% that won't and 23% who are neutralon the issue.The surveyalso found that e-mail plays a significantrole in howconsumers found products on the web i Source: emarketer HoW OllllllO Buyers Find Out all)out NeW Products and Services ! Jisi1'in_ ,_ _le_site 7_ _errnission-Based eMail "_ :rl@nd I 3arHle r Ad )hyslc._l f,laql 1_ i umolkll_ _ 12% I IIw. ,-5.2 WOWtown's permission-based e-mail I The Companyprovidespermission-basedweeklyemail newsletters to the membershipin each localmarket. When a member signsup throughone of the Company"localportals they agree to receivethis informative updateon currentevents happeningin their region.This weekly update describesnew member benefits, new merchantsjoining the programand highlightsspecificmerchantofferingsof interestto the members in I the area. Merchants havinga listed websitewith the Companycan effectivelyadvertise throughthismedium as a way to enhance their businessesthroughthis online presence,and promotetimely, seasonal or new productsand servicesdirectlyto the membership. I 5.3 E-mail to Build Traffic & Generate Leads via Permission Marketing Utilizing E-mail is, without question, the most used application over the InternE. It is potentially the most powerful I form of online, direct marketing; yet, becauseof corporate concernsof being labelled "Spam", e-mail as a "targeted tool' otten goes unused. The business successof WOWtown is directly related to the willingness of the membership to communicate with the Company. The Company will publishopt-in newsletters within each portal area; WOWtown (City) Member Newsletter TMand WOWtown (City) Around Town TM.They will be viewable online as a regular text email or in html (Web Page) format. In the latter case, the Company can deliver a highly visual and attractive promotional vehiclefor pa_cipating vendors' usingWOWtown's online advertising banners. Both versions are printable and can be email-forwarded to others from a member. 15 ! 002271I CONFIDENTIAL WO Wto w n. com The Companywill alsopublisha seriesof corporate relatedNewslettersfor all participating merchants/advertisersand the investment public.These will focuson specificissuesand areas of interest pertainingto the end user recipient(Business,Advertiser, Generalmembership). I Merchantsinthe localcommunitiescan advertise to the membershipthroughvariousfeesfor services programsoffered by the Company. Merchant'sonlinemarketing efforts enhancetheir other traditional advertisingand marketing methods. I In addition,WOWtownwill publisha regulare-mail newsletterto itsproprietaryMerchants,highlightingnew cost-effectiveonline and real-worldbusinessapplications,productsandservicesavailableto WOWtown members. ! 5.4 Utilizing E-mail to Build Traffic & Generate Leads via Permission Marketing !i This agreement providesWOWtownTM with a provenstrategy to generate incremental revenuestreams by providingits membershipwith the opportunity to join YesMail'spermissionemail marketing systemthrough WOWtown'scommunity marketingportals. I WOWtowncan receivesignificantrevenueearning potentialfrom a well-establishedprogramthat brings togethermarketers with consumerswho have giventheir permissionto receiveemail-marketing messages that matchtheir interests.YesMailcurrentlyhasmorethan 14 millionmembers in itsdatabaseand isadding an average of 1.5 millionnew members per month. Yesmail.comworks with marketers to providea total I CustomerValue Managementsolution--from acquisitionto retentionand ongoingrelationship management. WOWtown has integrated the YesMailservice into its registrationprocessas an option for its users. I IncludingYesMail'sextensiveopt-in distdbution programsinto WOWtown'snetwork presentsour membershipwith accessto provenvalue-added servicesthat are uniquelymatchedto each individual's lifestyleand needs.YesMail'sexceptionalresourceeffectivelydovetails into the Company'sfocus of linking onlineconsumerswith pertinent businesssolutionsat no costto our members. "We are pleased to welcome WOWtown.com to the YesMail Network," saidTodd Love, Senior Vice President of Business Development for yesmail.com. "Emerging companies that offer exciting new market niches such as WOWtown.com are valuable network partners in our effort to expand the depth and scope of our permission email marketing database." WOWtown.com News Release --May 22, 2000 I 6.0 WOWtown's Reseller Partners I The Company has initiated a campaign that focuseson two pdmary Partnerships:Local Sales Partners and LocalMedia Parl_ers.The Companywill recruit Exclusive Reseller Partners" (LocalSales Partners)into the WOWtownTM networkto becomeExclusivePartners underthe WOWtownbrand, and to offer the Company'sprogramsand benefits within specificterritories. I Discussionswith established Internet Service Providers (£SPs)and media properties, suchas local community newspapers, radio and TV stations, indicate that these types of entities recognize WOWtown's unique value-added services are attractive add-ons because they can be bundled and sold in the markets that the Local Partners already service. WOWtown's unique advertising medium combines the t_aditional I methods of advertising and promotion with the WorldWideWeb to provide a cohesive,affordablemarketing mix. 16 ! 002272I CONFID EN TIA L 14/'0Wto wn .COm LocalPartnerswill be providedexclusiveterritoriesundercontractualarrangementswith the Company. Partners'fees are negotiated to offset the costsof developinga specificregion. This syndication of Local partners will replicatetheWOWtownTM community format incitiesacrossNorth Americaand internationally. I Prospectivepartners are selectedbasedon a numberof key points: their localarea knowledgeina region, establishedmarketingand salesdepth in their community,and a demonstratedinsightinto Internet commerceand associatedapplications. I The Companywill actively assista LocalPartnerto implementthe WOWtown marketingsupport material and helptrain key staffmembers. Each partnerwill arrange for local area marketingwith establishedmedia groupsto implementthe portal branding. WOWtownwillown each portal but through its Partner program, both sidesshare in the revenue streamscreated. The Company assistsin providingawarenessfor its I communitiesin the form of mass advertisingto generatea local presenceand awareness. The Companymay opt to retain certainchoicetarget regionsunder its own controlas_CompanyLicenses', rather than grantingthe area to a LocalPartner. Theseselectterritories willbe consideredbasedon market I size and ability to implement without a Partner'sinvolvement. Master Partnersare granted exclusive useof the WOWtownbrand name ineach specificjurisdiction,with the right to further developtheir territories through sub-agreementsoffering additionalWOWtown I affiliations within a predefinedgeographicregion. WOWtownExclusiveResellerPartners will profitfrom the synergydevelopedthrough the exclusivebranding and be able to passalong savingsand benefits in their constituenciesbyway of membership discountsand i other features associatedwith the WOWtown network stimulus. The WOWtown rnonikerwill become synonymouswith value to its members; individualusers,associatedbusinessesand advertisers. I WOWtown Advertisers and Businesseswill benefitby being ableto showcasetheir productsand servicesto an increasingly wider Intemet audience while developing the home-grown market. WOWtown will expand the marketplace exponentially as additional Partners join the program. I 7.0 Proof of Concept m SeattleWOW.com & VancouverWOW.com I yancnMr II z-rm .c,, n, i SeattleWOW.comand VancouverWOW.comare the betatest portals used to developthe Company's business model. Through an extensive development program we have proven and implemented much of what is being incorporated into the WOWtown Network ProgramTM. I The Company has identifiednumerous niche-sellingopportunities, which can maximizecorporategrowth throughexpansioninto other locationsand markets.Asthe list of ExclusiveResellerParmers,Affiliates, businessalliancesand subsequentuser-basegrows, expansionacrossNorthAmericaand elsewhere will I significantly augment membershipadvantagesthroughout the WOWtown Network. I 0022731 CONFID EN TL4L WO Wto wn. co m 8.0 The Market l The market for the Companyis based upon developing Brand recognitionof the WOWtown name. Branding will define the Corporation's Network of portals and strategic alliances into a recognizable identity through the syndication of independent ExclusiveReseller Partners who will provide the WOWtown format across North America and in other countries. "Accordingto ActivMedia'sreport, RealNumbersBehind'Net Profits2000, e-commerce activity for year 2000 will reach $132 billion worldwide, double the $58 billion reported in 1999. This figures includesrevenues from B2C,B2Band internet services. ActivMedia points to changes occuring as e-commerce continues to mature globally. The report notes that although most new sites are based in the US, proportionally its share of new sites has shrunk in the past relative to Europe and Asia. Another sign of e-commerce's growth is the shift away from informational websitesto transactional websites. The younger the website the more likely it is to generate revenues directly online versus indirect sales or as a result of marketing." Source eNarketer. September 2000 Website Itmte.ue _eilelratlon by Years Online GemerMesmdlneules directlyfr_n tlmewell_llte m 43% Genermessalesladlredly/r_mlt ofmwlketlnl atwebsllte 379; m 4|% Ne rolesare_ erl_e_eratecl fer_ coral)any eke lO% • ,_,,.... m2yws • 3ormo_years $_Jrc_: A_O_e_8,2000 _E. _ m Using the Internet asthe advertising medium, merchants profile their establishments to a large potential audience. Unlike most directories, these Bricks-and-Mortar businessesare able to interactively offer and m manage special savings and discounts via their local community WOWtown portal. At the option of each adve_ser WOWtown can display interactive maps, voice greetings, or other timely messagesabout the adve_ser. Merchant adveRtisementsare highly measurable, very cost-effective and reach the audience on a 2ht/7 schedule. m This drives new and repeat traffic to participating retailers andgives additional incentive for consumers to patronize local businesses located in their own communities or those cities where they plan to visit. Using the power of the Internet to match people with businessesin the same community adds a powerful marking tool for Bricks-and-Mortar shops and services. Most of the small to medium sized businessesdo m notyet havean effective web presence. "Intemet commerce stands at the threshold of broad global acceptance." "Worldwide i-Commerce sales will reach as high as US $3.2 trillion in 2003, representing nearly 5% of all I global sales." Source: Forrester Research Inc. 002274I CONFZDEN TZAL WO Wto wn .co m I 8.1 B2B Growth Projections Worldwido B2B Remnues, 1_P8-2003 {in Billions and as a % of TOtal eCommeme) 1 1t_11 szql.1o I 1 lm sTs.io(71.s'_) SlN Js (79.2%) i _ ss_=1(=zsq,) tO02 _03 51255 22 87 0'i,: I Source: _at_fB r,20C0 _,v,_ ERC_Am "Small businesses,whichso far have been slow to adapt to B2B,will rush to catch up. Ninety-eig_ percent I of medium and large firmsare already connected to the internet with 41% engagingin e-commerce. In 1999, only8% of small businessesengaged ine-commerce, thoughmany were online, but by 2003 this share willjump to 72%. i 'q-he eCommerce: B2BReport adds that new intemet strategies need to he combined with the full range of businessautomation. 'q'he entire integration of business automation into e-commerce is evolutionary, not revolutionary," states Steve Butler, e-business analyst at eMarketer. '_l'heinternet hasbecome the last piece in the puzzle, tying communications and transactions together." eMarketer3uly 2000 ".lupiter Researchreports that US B2Be-commerce will grow very rapidly over the next five years --from $336 billion in 2000 to $6.3 trillion in 2005. OnlineB2Bactivity currently represents3% of the B2Bmarket, but will represent 42% by 2005. Dominating B2Be-commerce during this period will be supply chain trade. In its report, USBusiness-to-BusinessTrade Projections.lupiter highlights five industries which will conduct more than half buying and selling online by 2004. eHarketerOctoher 2000 I 9.0 Astronomical Ad Growth The explosivegrowth of the Internet has witnessedcorporationsand advertisers attempting to secure greater market share and exposureina linearfashionthrough one-by-onetarget marketing. Asthe online audiencegrows, marketers are attempting to capturethe vast majority of Intemet users throughfree or discountedexclusive serviceoffers and by providingincentives for utilizingtheir particular portals. "Total online advertising revenues will grow to $28 billion worldwide by 2005, up from $4.3 billion in 1999. This would put 6% of all global advertising revenue on the web." I Source: .lupiter Communications The increase in online users justifies higher advertising revenues in a similar fashion to how traditional TV and Radio operates, the more viewers and listeners, the higher the audience, hence the ability to charge higher rates. 19 I 002275I CONFIDENTIAL WO Wto wn. com Thisenormousexpansionof previouslyundevelopednewInternetaudienceshasgearedonlinemarketing strategiestowardmassive, single-identity portals,withnamebrandingto captureasmuchmarketshareas possible. Yahoo!,AOL,Netscape, Mindspringandothersareexamples, all offeringa one-stop,get-I everything-here approach. ThesenationalbrandsforcetheInternetconsumer to usea top-downapproach, andnumerousclickthrouughst locatea product,serviceorbusinessatthe locallevel--if a searchcanpinpointthe target. I Eventhen,theinformationlocatedisfrequentlynotconciseorpackagedina user-friendlymanner.In comparison, WOWtownoffersa bottomupapproachthatfocusesfirstonthelocalareabeforeexpandingor broadeningasearch." I "Accordingto the latesteditionofthe IntemetAdRevenueReportpublishedquarterlybythe lnternet AdvertisingBureau(TAB),intemetadvertisinggrowthremainsstrongwith$2.1billioninrevenueinthe secondquarterof thisyear.Thereport,compiledby PricewaterhouseCoopers, alsostatedthatQ2revenues wereup8.8% overQ12000and127.3%overlastyear'ssecondquarter." "Totalad revenuesfor the first half of the year stands at $4.1 billion,approachingtotal 1999 revenuesof $4.6 billion." SourceeNarketer I "Asinthe previousquarter,consumer relatedadvertisingwasthedominantcategoryinonlineadvertising." LeadinlonlineAdveitlshl_¢al_orios, Q22000 I :30' C U_llt p L]_ ;;! ?. l; I Source"tAB,2O00 ¢,20_ ,_._._eL Inc. v**,_, elll_ktm'.conl reportindicatesthattheproportionofad typesremainsrelativelyconstant.Banneradsaccountfor 50%of onlineads, a very slow 2% decline in share fromthe previousquarter, eNail ads, currentlywidely I promotedasa marketingtool,havenot pickedupthe slack--theyhavecaptureda lowly2%shareof the market." i TypesOfAdS,Q2;mOO 3 _lfltlL'l" _ Sl_ ]t)rt';Uflhll]', I aieillieds 7_ i Intle_litlal$ 3% B eMail 2% i KoYWai'daIQld'¢ll 1411, i IL%_0 _l_el. Iric_ _tQTI[eEQif.CCIll "Thereportalsofoundthat similartoQ12000,95% oftotal revenuetransactionsarecash-based transactions. Theremaining5% representbarter/tradeor packagedeals.Hybriddealsaccountfor46% of totalpricingmodelswhileC]_lVls or impression-based dealsaccountfor44%. Theremainingt0% iscaptured I byperformance-based deals. 2O ! 002276I CONFID EN TZAL WO Wto w n. c om eMarketernotes that ad revenuegrowth continuesto be strong. Shouldthe expected run rate of $8 to $10 billionfor the entire year be realized, it will eclipseelVlarketer'sestimate of $6.1 billion. Tfrevenues reach$8 billionfor this year, it will represent74% annual growth. While this growth rate it is considerably I lessthan the triple-digitgrowth of severalyearsago, it still showsa very healthyad market. Growth Rates k)r USOnline AdvertlslnZ spending i Year Millions Q'owth vs_Prevtovs Year 1996 $175 1997 1650 271% i 1998 Sl.667 156% 1999 S3.6QO 116% 2000 S6,100 69% 2001 Sg.SQO 56% I 2002 $13,500 42% 2003 Sl 7.S00 30% 2004 $21.000 20% lueI AMUal RMO 95% I So_ce: eA, farke_r, 2000 etV_d k_Le'r, n"i_ V_. eIlmI1(a:Lq",c_xn l 10.0 WOWtown's "Local, Bottom-up" Approach m '@_commerceTM E-commerce is all about GLOBALbuying,credit cards,andsecurityissues,shippingchallengesand choosing i whomto trust. WOWtown has pioneeredthe new conceptcoined'@-commerce"', where it's all about LOCALfoot traffic@LOCALneighborhoodBricks-and-Mortarbusinesseswhere people live, shop, playand visit@. We harnessthe power of the Internet and introducelocal residentsand touriststo trusted and recognizedbusinesseswithin eachcity portal we develop. i We take that relationshipone step further and create incentivesby offering our flee Net SavingsCardTM, which provides instant and repeatablediscountsat the localmerchant'sreal worldestablishments.No secure sewers, cookiesor technical hurdles,just good old-fashioned@-commerce TM, where andwhen peoplewant it. WOWtownisstrategicallypositionedto alsosupplyonlinee-commerceproductsand services i that providethe tools for businessand consumersto embrace the global marketplace. 11.0 Marketing Plan I Targeted Internet marketing (e-marking) plays a vital role in the successof e-onlinecommerce. The Company will provide its products, services, systems and branding to Local Partners inmajor urban centres and then co-develop sub-partnership agreements, which will further expandWOWtown's Internet presence I into the suburban communities (within a major urban centre's regionalarea of influence). The Company is fast tracking its rollout strategy usinga cookie-cutterapproachthat allowsfor 64 new portals to be implementedandintegrated into the main databaseat onetime. The initial62 portalnetworkwillbe rapidly expanded usingthis growth formula. I Company its coreportal (main entry gateway regional sites) at The has established site that linksto all www.wowtown.comand regionalsites (i.e. www.seattlewow.com,www.lasvegaswow.com, www.bostonwow.com, etc.), whichform an attractive blendof Flash,HTML and ActiveServer Pages(ASP) i using leading-edge state-of-the-art technologies. The Companyplans to implement more than 500 WOWtown community portals and will rollout on a fast tlack basis to advance the corporate network. Merchandisingand speed of accessare t_e critical elements. Simplicity and ease of navigation will allow the membership, businesses, advertisers and future prospects to use the sites effectively. WOWtown has I formulated selling and marketing strategies based on specificdemographicmarkets within the Company's membership base on local, regional, naUonaland international levels. 21 ! 002277I CONFID EN TIA L WOWto wn .COm WOWtown has developed generic advertising formats for TV, Radioand Print media that can be seamlessly modified to reflect the Local Partners"domain name (i.e.: MiamiWOW, SanFranciscoWOW,etc.). The Partner will also be able to develop their own unique advertising and marketing flavor in a region using additional I resources andthe community focusto capture the interest in a particular area.All advertising will meet with the Company's standards. Cross-promotional opportunities will be sought on a corporate level and within each Parl_ers region of I influence to help create awarenessand to promot_ the local content in the area. Co-branding of the Net Savings CardTM with other companies will add additional market push through their customer bases. l 11.1 Rapid Implementation Our proprietary database designhasallowedus to quicklyandseamlesslyactivatemultiplestand-alonelocal I portals,each with their own domain and uniqueidentity.The ability to launchour portals in such an aggressiveand geo-targeted manner enhancesour ability to securebroad based advertisersand Local Partners at the same time. i The uniqueformat we have developedallowsour Local Partnersaccessto our systemand enablesthem to deliver the best localcontent in whichto draw advertisers. Thissignificantlycontributesto our mandate of a truly global networkof localcommunity portals, but allowsfor a distinctivelocalfeel in each market. Eachestablishedcity portals have a completephase-1 presencewith localizedand relevant searchfacilities I to easilylocate local merchantswithin eachcommunity.These portals also offers free membershipto all and provides the WOWtown Net Savings CardTM for use at local advertising merchants in each community and neighbourhood as they participate in WOWtown's local exposure programs. I Phase-2of development for all portalsencompassessecuringa Local Media Partnerfrom the Web Development,Mediacommunityor businessthat is alreadyin operation,whothen will deliver our marketing programswithin that particularmarket. Local Partnerswill bringwith them the 'street level' marketing expertise and knowledgeto enhance local advertising participation and local content for eachmarket. m The Companywill activelysourceout MediaPartners to create an instantly accessiblemarket tool for widespreadpenetration.ManyMediaproperties(i.e. Radioand-rv) have noteffectively developedtheir own corporate presence.Co-marketing with the localWOW portalwill provide a strong synergy. I 11.2 Brand Recognition & Promotion i The WOWtown Brand is being promoted via traditional methods and through online techniques. All means and avenues of sales and marketing awareness have been utilized to date, including TV, Radio, local print media, contra-adve_sing and cross-membership promotion within each community. Awareness is also being generated through sales campaigns highlighting our unique position in the marketplace; such as "Go Local'; 'qhe Hottest Local Internet Marketing Portals OnThe PlanetT"" and "where all the fun is @_" Primary Purposes of WebsiWs amonE DI,-_;; Marketers ! PUblic r _i _lt i,or I t_.'irTl;| _ _.* _dv_._ct IsI rl I Source: DMA. 2000 <,'_R_ERCHAm C_I00 ,s_..I]rl_el, IlK. 'RA_. elN alBet e¢.c,c¢_1 22 ! 002278I CONFIDENTIAL WOWtown.com WOWtown'sLocalPartners, underan aggressivelocal marketingprogram, willapproachbusinessesin each communityand activelytarget newand existingmembersin the locality.The Companyhascompleted extensiveresearchinto howit will developthe awarenesscampaignsand has establishedmechanismsto I attract, convert, transact, and retainmembers and customers. We have implemented62 WOWtown-brandedcommunity portals,duringthe first round of portal expansion and integration.The additionaldomainsregistered to the Company willbe phasedinon a timely expansion I program in tune withnew LocalPartnerscomingon stream. WOWtown'scommunityportal rollout began in the PacificNorthwestwith the EastCoast and MidwesternStates to follow. International portals are being implementedaswell to broadenthe exposure. I EachLocal Partner will be able to draw upon its existing clientele baseavailable in that territory (i.e. ISPs, Mediapropertiessuch asradio,TV and print) to promotethe advantage ofme WOWtown benefits, to Bricks-and-Mortarmerchants,online companiesand to potentialmembers. There is no direct cost to the end-user to becomeinvolved. They simply registerto becomea WOWtown Memberand start taking I advantage of the program's benefits. The increased incentivesfor individual members to join will be heavily promoted in each community and through the WOWtown brand name on a wide scale. In addition to the conventional and traditional forms of promotion, the Company has obtained the domain i name '_ommunityAuction.net" and will drive traffic to each site by establishing a local auction site within each portal. This is a Phase III plan. These promotions will be marketed via local and community newspapers in t_e classified sections and use a name similar to WOWtown Garage SalesTM. I 11.3 Members Web Traffic Attracting by Building BuildingWeb traffic is essential to a successfulonline businessendeavour.The five major aspects of traffic I building that the Companywill undertake are: advertising, referrals, search engine listings, public auctions (local/regional/Network-wide) and e-mail systems. Hardcosts are focussedtoward print, radio andTV mediaand t_rough targeted adve_sing. Exposurefor I the Company is also created through low-cost Internet publicitytechniques and by networking with establishedLocalPar'mersalreadyoperational in the target markets. Combiningmarketing efforts with Media properties, such asRadioandTV stations in eachregionwill create awareness. I 11.4 Banner Advertising and Keyword Buys Banneradvertisingspace is purchasedat onlinepublicationsandSearchEngines.The Companyhasentered I into contracts to purchasebanner spacefor general rotation and has also purchased keyword advertising. This technique is a highly targeted approach where the banner will he presented when and if a customer enters a specifickeyword that is referenced with the respective city name. Examplesbeing: "Los Angeles Hotels" or "shopping in Chicago", for example. ! These _hemed' and geographical searchqueries are essential in the crowded SearchEngine spacewhere individual searches can result in millions of references on any topic. WOWtown will focus on those local and I specificbrowsers that providethe highest level of local targeting. The Company will continueto engage online marketing agencies that specialize in matching advertising to the demographics required. Conventional advertising techniques are also routinely employed in addition to banner advertising, using print and other forms of media to generate awareness of the Company, its products and services. I 11.5 Referral/Affiliate Based Systems to Build Site Traffic I Public relations and "word-of-mouth have traditionally been highlighted asthe most powerful advertising" forms of advertising. Most successfulonline businessesbuild-inreferral based systems into their traffic 23 ! 002279I CO N FID EN TIA L WO Wto wn. co m building strategy. Referralprograms are more commonly categorized as"affiliate" programs. The modern day referral partner, or affiliat_ is paid bydelivering Internet traffic and salesto a particular website through direct links back to the sponsoring business. I Technology allows the originating website, or "sender" to be tracked and commissioned for their efforts. WOWtown has developed an Affiliate Program to create traffic to the sites and has established a working relationship with the leading Affiliate Service Company, Commission3unction.com for marketing our I program. Additionally, we havebecome partners with a number of the top name online corporations to provide revenue streams to the Company by offering our membersand system users access to relevant information I of interest to them. AskMe.com, eZuz.com, Interpass.net, Mamma.com, MapQuest.com, YesMail.com and numerous other Affiliate programs are being incorporated into WOWtown to add value to the membership and to create additional exposure for advertisers. ! 11.5.1 CommisionJunction.com m Referral/Affiliate Program !I WOWtown has teamed up withCommisiort]uncion.comand has signed up thousands of "affiliates" to date. I These affiliates place the Company's banners and buttons on their websites driving traffic to WOWtownTM. Wowtown in return pays a small fee per click through to these referring websites. This is the most costeffeectiv way to advertise -paying only for results. I Affiliate marketing represents an easy and cost-effective way to run ads solelyon a pay-for-performance basis. Affiliate programs allow content sites to partner with the Company to carry banner ads in exchange for commissions paid based on clicks, leads, or sales. With affiliate programs, the Company is in control. We anticipate continuing to rapidly increase the number of affiliates as the corporate presence becomes better known and more Local Partnerships are signed. I 11.6 Search Engine Rankings HighSearchEngineranking isarguablythe singlemost important way to buildtrafficto a site. Search engine placements ofWOWtown'ssites are dependent upon many variables that are weighted differently according to which search engine is being utilized. Currently, there are over 1200 Search Enginesand directodes on the Internet. It is estimated that 95% of all directed traffic is deliveredvia 12 SearchEnginesand Directories.WOWtown hasdevelopeda comprehensiveSearch Enginemarketing plan,which has been conceived with the intrinsicdifferencesof eachin mind. !i 002280I CONFZDEN TXAL 14/'0Wto wn. com I 11.6.1 Mamma.com I WOWtown has signed a strategic alliance agreement with Mamma.corn--"The mother of all Search Engines" that gives the Company the ability to provide geographically targeted search content from within the Company's network of portals. A localized search provides results for that community only. The Agreement will significantly enhanceWOWtown's online advertising and marketing abilitiesby providing preciselytargeted Web Searchand MP3 results for WOWtown'snetwork of city-based community portals. Both companies will share equally in revenues derived from banner advertising on the Company's portals i that are linked through a search using the Mamma.comsearch engine. Mamma's proprietary Meta Search Engine technology gives WOWtown a proven proficiency that can accelerate the Company's expansion into new communities, providing greater reach and further establishing our Brand. Mamma's customizable search parameters will supercharge WOWtown's user base with highly relevant and comprehensivesearch results about local community information of interest to consumers. "lVbmma.com is very pleased to enb_ into a par'meting _ with _.com and is excited that its proprietary t_ctmologycanaddsuchtremendousvalueto WOAtcown.com's ne_'work" says.lohaoDeLeon,VPBusiness Development I ofIVlarnma.oom. "UsingMamma'ssearch_lginet_hnologyto powerWOWl0own's local-first searchprogramto provide itsvisitorswith searchresult_ona locallydefinedbasisfollov_doselywith Mamma'sgoalof ernpov_ng In_cn_ users withpreciseirfonna_onofrdevanceto tY_m." WOW_own.com NewsRelease--April 12,2000 I 11.7 Utilizing Community Auctions to Drive Repeat Traffic to the Network: Driving usertraffic to the sitesis a fundamental requirementfor any Internet service.RealWorld Community Auctionsare an effectivemethod to attract attention asalmost everyone has somethingthey own that they wish to sell, or converselyare looking for somethingto purchase.Online Auctionshave provento he very successfulmethodsto facilitatethis need. I The downside to online auctions is that often the items placed for sale are not located in the geographical area where the buyer lives. WOWtown will refashion how online auctions are administered by directing the usertoward WOWtown's Network, so that goods may be bought and sold within the regional community on I a local level. This form of Community-to-Community (C2C) interaction is consideredan excellent way to generate "sticky eyeballs" and a reason for people to return to the site. Local auctions are part of our Phase III expansion plans. I online Auction salos, 1t_8-2004 (in BHIionsand as a % of Total Consumer OnBne Sales) YI _ _ Total US 02¢ Au_l_ S_ as ecommlcce Sales • % ofTatal IZC I 1998 S_&5 _0 8.1% 1999 $31 $19_4 l&O_ 2000 _ 5 _37.0 176% 2001 S8 8 $57.7 15 3% I 20,02 $11.8 $85.7 138% 21003 _-15.2 SIOJIL7 134% 2l)9_ $16.3 $1256 130% I ¢c,oooeI_a'lr_lel,Inc. www.eMll,lll_f.cor_ 002281I CONFZDEN TIA L 14/0INto wn •COm m wowtown,s online auctions will drive local community traffic The Companyhas registered the domain name htto://www.communitvauction.net to market WOWtown m websites on a macro Level. Once a viewer has accessed this site, he/she will be able to hyperlink to their choice of WOWtown locations in the community where they reside to participate in the auction process. Anyone who is Internet enabled will be able to shop and purchase through the site but those wishing to sell m their goodswill be required to sign up for a WOWtown membership and use a WOWtown email address to receive bids and inquiries. This will help to create a wider and expanding member base quickly. i IrOns for seNlnl at an Online AUCtion 74' I ;1. _+U_.II l)+,++ol}i;!VJ]Itl W+:mt +tt++tri Source: Gr _t_ld O_n_ 2000 m _,5_81_L,I._, it_ _,###,l+_iw_t._ Localized aucb'ons are convenien¢ safer and less expensive I The benefits of a local online auction are that the buyer can review the items for sale firsthand; it reduces the risk of purchasing online and the costs of having the item shipped since, in the majority of cases the buyer or seller will live in close proximity to one another. It also lessensthe concerns regarding purchasing from unknown entities and the associatedgamble of buying defective and/or poor quality merchandise,or not receiving their purchase once it has been paid for. By buying and selling locally it automatically minimizes the inherent dangers of purchasing something online when the seller is unknown and or products offered are unverifiable. II_ns for sIN)ppInl at mnOn.AuCtion t,t, Source: GreerthMd Or/M_ 20GC k_;lV(+ ft_r_ eMS L_tel, ll_ +IWW.dlJll'll I1 elr.[.I]IM WOWtown sites will all carry a local auction link on their homepage, both to the local auction and links to the main homepage at http://www.communityauction.net. The auction component will be promoted heavily in each region, which will drive traffic into the local sites. With local auctions accessibleacross the entire WOWtown Network, a defacto, one-stop auction format is created, in a similar fashionto how eBay.com's and Ubid.com's online auctions are offered on a universal basis. As the local flavour of the WOWtown AucUonsattract people from the local community, they can also access other WOWtown Auctionsites too. Therefore the Companywill enable users to make useof credit cardsfor purchases and will negotiate a modest fee for this type of transaction. Other service benefits will includethe availability of "escrow" services such as www.eescrow.com. Escrow companies allow the buyer to place their funds in an escrow account subject to receipt, verification and acceptance of items purchased. ! 26 ! 002282I CONFIDENTIAL WO Wto w n .c om WOWtown aucb'ons will expand membership Asmore viewersare attracted to WOWtownthrough advertisingof the auctionsite they will learn aboutthe benefits of membership.Auctioncustomers will not only be able to take advantage of the items offered for sale but will also be exposedto the other productsand servicesavailableto WOWtownMembers. Word-of-mouth, combinedwith conventionaladvertisingwill keep the WOWtownfocus inthe forefront in each localWOW-community. 11.8 Converting Prospects into Customers -User Friendly Websites Our websites are created in a cookie-cuttermanner that givesthe network a regional,nationaland internationalseries of powerfuland dynamic local community marketing venues, created utilizingsome of the best and latest programminglanguages. Gettingpeople to the site is important, but it is meaninglessif efforts fail to create customers.WOWtown hasexperienceand workingrelationshipswith some of the most talented web designersavailable. Each portal site is beingdevelopedwith the localmembershipand advertiser inmind. EveryWOWtownportal has the same look and feel. This helpsto establisha familiarity for the end user.As they travel or accessother Companyportals,they will alreadybe very familiarhew to navigateand locatewhat they are searchingfor. 12.0 Creating Lifetime Card Members I With little or no "cost of sales" associatedwitha repeat customer, the processof creating a life'dme customer is regardedasthe mostprofitable. Through the WOWtownlinks,the membership willbe ableto locate productsand servicesoffered in their own"backyards"or anywhereelsewhere the WOWtown Network is operational.This fact has not gone unrecognizedby competitorsandin the 'Mrtual world"where time is measured"3X"; successfulcompaniesmust be mindfulof how quicklya customer can becomethe competitJon'slifetime customer. Although products and serviceswill form a major component of the WOWtown Network, consumerswill be driven by their desire to find out what events and activities are occurring in their own neighbourhoods, such as discounts and specials offered by local area merchants. The WOWtown Net Savings CardTM will provide incentive to utilize a WOWtown local portal site for their consumer needs. Asmembers joinWOWtownTM through their own local community portals thiswill cause a demographic target that is ideally suited to all types of advertisers --morn-and-pop, local, regional, national and international. 13.0 Relationship Management: Profiling and Personalizing With the proper customer-servicetoolsWOWtownwill be ableto profilea member'sa_ons whilevisiting the websitesand provide important informationabout the patternsand behavioursof the individual members' searching/buying habits. Categoriesand classof clients usingthe sites, and the amassed information pertaining to demographicsand psychographicscan then be utilizedin numerouswaysto help achievesales or customer supportobjectives through "kelationshipmanagement". I The informa_on obtained from these relationshipmanagement tools canhelpbusinessesachievea one-tooon marketing environment for the members who are online. It also looks at howrelationshipmanagement can addresscustomer service issuesand provideself-help solutions for consumers. The WOWtown Network will be highly customer oriented. The process of personalizing the benefits of WOWtown membership is underscored by the use of the WOWtown Net Savings CardTM,permission-based email and immediate accessto the WOWtown online and real-world community. 27 I 002283I CO N FID EN TIA L WO Wto wn . COm eMarketerrepo_ that"a recent Flexo-Hiner report, eCommerce Benefits Monitor, categorizes seven types of online shoppers in an effort to explain e-consumers' motivations. They are: • "e.loiners" -(16%) Shopperswho believethe online community is the best placeto shopand discuss shopping. • "ePrivateers" -(14%) Shopperswho appreciatethe pdvacythe web allowsthem and buy goodsthey I would not necessarilybuy in public. • "eDiscounters" -(15%) Shopperswho surfthe internetfor the lowestpricesandconsidercost-saving the most important aspectofweb-shopping. I • "eCynics" -(14%) Previousweb shopperswho did not enjoy the experience. • "eBrowsers" -(12%) Shopperswho browse onlinebut buy offiine. I • "at-Homers" -(14%) Shopperswho believethe best qualityof intemet shopping isthe convenienceof not leavinghome. • "eAutomators" -(15%) Shopperswho appreciatethe web for streamliningand automatingthe I shopping process." i Source e/4arketerre: Rexo-Hiner and Partners, 2000 Six shoppinl Types, 2__n__(% of TOtal Web-Shotpper_) I _ emva_nt mwm= s_ Hooked. Onhne and Sin_.;Ie m 1T1t, Hunter Gatherer-_ I Cltck'_ ;:|It(l Mortar CrQu 23_ I...t&rnsI tlt_'a cfbve, 2000 ¢2ooo eMarl_er, Inc.. _.ellll_mef.conl I Harris interactive Shoppll_ Types eBwalantNew'oles N_vest to_e intarnet;cloasnotspen_alot i onl_eandliKeS(_lllr_ shoppingtheleast HOOke(I, Online Likelyto Deyoungmales;t_asbeenonline_e a_aStage longest;banks,investsandshopsomne _e mostoften I T=me-San=tiva Mostmteresmatncor_anlancean_sa_tn_Irma: Materialists wantfastcheck-outandone-stopshpppm8 BrandLoyalists Godirectlyto thesiteofthemerchanthey know;spendthemostolllir_ i Hunter.Galher_rs ASeS30-49with 2 o_il_en:u_lizes_tesI_at compareandprovideanalysis C_lcV.s an0Mortar S_ppsonlinebutprefersto Duyoff_ne;conce'nea Group wlt_ onlinepnvacyandsecunty: t_stsshopping mallsthemost I Had'TIe Jrntetacfive, 20_ ¢'_ooeMa, k_er.If_. _/_.elBa_etel:COrl] 28 ! 002284I CONFIDENTIAL WOWtown.com "Harrisestimatesthat out of 120 million online shoppers,the smallest percentage(5%) are "newbies,"whoare notextremely interested inmaking purchasesonline.The largestpercentageof shoppers(23%) are "clicks-and-mortar"shoppers,whoappreciatethe internet but prefer to shop I offlineThe Harrisshopping-typedefinitions are listed below." 13.1 Push I Pull Interactive Advertising ! Aclsator 1 WOWtown has entered into an agreement to begin offering push/pull marketing technology directly to our users/members through a co-branding arrangement with Adgator.com, Inc. (www.adgator.com). WOWtown I userscan download a city-specificWOWtown branded interactive desktop processusingAdgator's technology, to provide increased exposure "stickiness" and additional advertising inventory with increased revenue poterfdal to WOWtown. Adopting Adgator's technology will provide user-friendly, customized desktop solutions for all WOWtown's I community portals and offers a uniqueautomated updating systemfor online content using'_)ush" technology. All of the Company information, branding, promotions and advertising normally found on our local community portal sites are graphically presented on the PCuser's desktop and can be accessed and activated directly from their PCscreen, even if they are not on line. I WOWtown will have added ability to placehighlytargeted adson a users desktopand to pick andchooseto whom and when those messages appear to the users. The Company also gains accessto "real-time" online stafdsticsshowing how advertising messages are working. Some of the basiccomponents of market data I are; gender, age group, incomelevel, education level, interests, hobbies,impressions,click rates, etc. II Sample PCdesktop uUlizing WOWtown look and feel incorporates push marketing to the end user 002285I CONFID EN TIA L WOWtown .com I 14.0 Website Measurement & Analysis I Measurementtoolswill allow managementto collect precisedata on members'activities, their viewing experience,whichlinksthey usedto accessthe Network, what searchenginequedesthey performedto get to the site, and a host of other valuableinformation.This informationprovidesan opportunityto quantitativelyanalysea marketing campaign'seffectiveness,test variousdesignsand strategiesand help determine relative advertising effectivenessand ROI. The Company will then utilizeproven Internet and 'franchising-style'marketingformulas to gainawareness and exposurefor the WOWtown plan. 15.0 WOWtown m A Unique Concept WOWtown has identified the changing evolutionin Internet use and marketing. Bycreating an affiliated networkof independentExclusiveResellerPartners,WOWtowncan harnessthe changingwants of consumerson both a micro and macro basis.Astrends changethe Networkcan quicklyadjust to address the dynamicson a universallevel. Whereas, throughthe positioningofWOWtown's independentportal Network, each unitcan micro-manage content directly to its localuser-bases,builton the successesachieved from their ownuser-base's demographics. WOWtown has been designed to allow maximum flexibility & system content, which are determined by the unique dynamics at hand in each region. i As the Internet unfoldsand "TheNew Econom_matures,the need increasesfor advertisersand businesses to addresssmaller,easilyidentified markets.WOWtown has iderrdfiedand will target unique niche markets not beingservicedeffectively, or at all, by the establishedmedia.The Company hasentered these markets through a planned development and expansion program started in fall-2000. According to Jupiter Communications, in 2005, online advertising revenues will hit $16.5 billion --totalling almost 8% of total US advertising. _Offlinespendingspreesthroughout 1999 by internet businesses,Jupiterbelieves, will be replaced by web ad campaigns. Efficiencyand accountability for which the quantifiable nature of the internet isbetter suited, will be at a premium. "Among executives surveyed by Jupiter, increasesdudng the next 12months were expected in the following media: • 73% of advertisers wouldincreaseonline advertising • 43% would increasetheir magazinespending • 37% plan to increasetheir cable-TV budget Between 1999 and 2005 onlinead revenueswillshow a compoundannual growth rate of 30°, although Jupiter expectsonly one-third of increasesto be incremental. Otherincreasesin onlinead budgetswill come from traditional marketing budgetswith direct marketing (20%) and newspaper (14%) budgetstaking the largesthits Forrester Researchdefines these categoriesas: 'q'raditional companiesintegrated vertically to build a base of capitaland sustain production.To gain real advantage in eBusinessnetworks, firms must master the ability I to build network capital --value produced through the network." 3O ! 002286I CONFID EN TIA L WOWtO wn •COm eCommerce will reset the businessenvironment -replacing rigid chains with eBusiness networks. As supply and demand are built in to these networks, adoption curves and market cycles will tightly compress. Rrms must tune their strategies to build and extract I network value more effectively than competitors. Source: Forrester Research Inc. I 16.0 WOWtown's Value-added Strategy WOWtownwill focuson building NETWORK CAPITAL and providing an environment fostering HYPERMARKETINGthrough theWOWtown communityof inter-related ExclusiveResellerPartners(ERPs). NETWORK CAPITAL 16.1 "To buildnetwork capital, corporationswill haveto: "Shape networks for strategic advantage. Companies must bring r_work-ready assets--for example, high-value customers, services, intellectual property, and accessto markets, or aggregated supply --to the party and initiate a cycle where their network attracts new investment and becomes self-sustaining." The best capitalized networks will "float the boats" of all the participants. However, by putting assets in play early, firms will shape the network to serve their own goals." Source: Forrester ResearchInc. 16.2 HYPERMARKETING I "Extract value from the network. In this new setting, winners will excel not only at creating value in eBusiness, but also at extracting it by mastering a new competency --"hyper-partnering." Hyper-partnering is the practice of quickly and efficiently forming I focused networks of partners that can exploit market opportunities. The trick: Keep overhead low when forming these subnetworks, so they can be rapidly disbanded or reconfigured as opportunities dry up or change shape." Source: Forrester Research Inc. l 16,3 Exclusive Partnerships WOWtown has adopted a courseof action to actively pursue establishedbusinessesto form strategic alliancesthat benefit WOWtown's members and add value to the alliances'existing audience. Partnering with strong firms that have a product or service that adds immediate relevant content to WOWtown's network is a highly effective method for developing incentive for people to reuse our Sites. Creating alliances allows independent product and service providers with a much broader ability to expose their offeringsto a wider market through WOWtown'scommunity portals. I 31 I 002287I CONFJrDEN TIA L WO Wto wn. co m I _ _d.com --Immediate Online Content ! seocom- Sinceits foundingin 1996, BuySellBid.com,Inc. hasdevelopeda data repositoryof over4 million classifieds accessedthrough a co-brandednetwork of 1600 localradio, televisionand cablestation websites. BuySellBid.com'ssuite of co-brandedcontent servicesincludesMultimediaClassifieds,LocalShopping Directories,Local Malls,Coupons,and YellowPages. I BuySellBid.comclassified listingsexpandWOWtown'soffering of local contentto its usersin over 60 domesticand internationalmarkets. These features enhanceour abilityto driveonlinetraffic into our community-focusedsites and further exposesthem to our otherservices,features and benefits. Promoted locallyin each communityour partnershipwith BuySellBidhas the abilityto increasemerchants,members I and otheradvertisers acrossthe networkwhile providingourmembers with one-click accessto local community classifieds. BuySellBid.com'sservicesincludethe primary categoriesof automobiles, real estate, and employment, as I well asover 2000 subcategories. Users can searchlocally, or can expandtheir searchto a national level. Hajor distributionand equity partners includeNBCand ClearChannelCommunications(NYSE:CCU). "In welcomingWOWtown to our growing networkof affiliateswe givetheir usersaccessto one of the largest databasesof local classifiedsin the country that should keep them coming back to the WOWtown brand," said Jay Shepard, CEOof BuySelIBid.com. "We know that classifieds,especially in the auto, employment, and real estate categories, continues to be a growing locally-focused business that will be driven to the web by local media alliances." I 16.5 ThinkView.com m Local News, Sports and Entertainment !I The Companyrecognizesthat local, relevant informationisan important considerationfor our systemusers. Providingcurrent and Umelyinformational content ensuresthat our portals will remain an important destinationfor our members. WOWtown has entered into a syndication partnership with ThJnkView,Inc., a media syndicationcompany that enables content solutions for vertical portals, desl_op applications, online directories, search engines, wireless services, and interac'dve television platforms. ApplyingThinkView's Da Vinci patent-pending indexing technology,ThinkView indexeseach a_cle according to its context by extracting keywords, associations, concepts, and other complex linguistic variations. Once headlines are aggregated and indexed, customized content solutions are updated to Wowtown's portals with local subject matter. ThinkView works with leading brands of newspapers, magazines, broadcasters, and cable networks to build powerful content aggregation, indexing, and syndication technologies. It aggregates headlines from over 250 leading media brands suchas CNN, NewYork'limes, Forbes, ScientificAmerican, and the BBCusing similar crawling methodologies utilized by search engines. 32 ! 002288I CONFIDENTIAL WOWtown.com ThinkView has formalized relationships with titles suchas RollingStone, Popular Science,Cigar Aficianado, Red Herring, CNET,ZDNet, and Sportsline that expand the scope of ThinkView's ability to use their i respectivecontent. 17.0 IMPLEMENTATION ! 17.1 Corporate Development I Phase I --Back End Development I • During the initial 90-day development program the Company accomplishedthe primaryfront-end expansion objectives for re-tooling the existing beta site (i.e. Seattlewow.com) for portability and functionality, so that this model could be applied toward new portals with ease. We developed WOWtown"Rash" sites for pre-license sales and commenced initial marketing programs, formatted I the WOWe-StoreTM andcompleted enhancedsearchand online marketing functionality. • PublicRelationsand InvestorRelationsprogramshave been implemented.Media Ads(TV, Radio, Print) were completedand activated in a number of localportal markets to test the results.These I havebeen very well receivedand are being integrated into every WOW-city portal. • A new membershipcard format was createdto reflectthe universalcorporate brandingas well as presentinga unifiedappearancefor the rollout of new portal sites.Complimentarymarketing, sales i and promotionaltools were completed and instituted. Usingour cookie-cutter format we are able to simply and efficientlyreplacea localdomainname in one WOW-market with anotherdomain name for all our localmaterials, to reflect the regionalcommunityflavor in each market. i . The backendbillingsystemand the initialenhancementsto the e-commerce merchantcenterwere advanced to a level that allowsus to integrate all sales and billinginto the centraldatabase.The backenddatabasesewer was substantiallycompletedmid-summer 2000 and is fully functionalto support all of our portals duringfuture expansion. I • A comprehensiveASP(Application ServiceProviders)listingfor contact purposeswasestablished, with relevant trade-marking proceduresintegrated for a numberof the Company'skey slogans: Where all the fun is @T., The Hottest LocalInternet Marketing PortalOn The PlanetTM, WOWtownTM, WOW-eStoreTM, WOWtownNet SavingsCardTM and the Net SavingsCardTM. We will I augment our marking program with additional trademarks and slogans in due course. • We havedeveloped an agreement document usedto sign up Exclusive Reseller, Media and Sales Partners. We purchased all required Domain Namesanticipated in the expansion program to I incorporatePartnersin key cities and regions.This list is extensive, with well overS00 secured identitiesand growing as newmarkets are identified. • We havedevelopedcomplete LocalPartner Saleskits, Training Kitsand all relevantsupport I material to be utilized in each newmarket. Phase II --Community Expansion I • PhaseII developmentsare to rapidly establisha market presenceby implementingadditional "template-style'community portals.These portals will establishthe basicnetwork and develop the foundationto obtain portal partners. Duringthis periodwe completeand implementWOWtown's I MerchantCenter. 33 I 002289I CONFID EN TIA L WOWto wn. com III Phase III B Integration • PhaseIII consistsof augmentingtheCompany'sprogramto indudesuchenhancements as online communityauctionsand other LOCAL-lst features that are relevant to the community interestsof people residingin the areaswherewe have establishedour portals. • A comprehensivemarketingstrategyto create awarenessof the publicaspectsof theCompanywill I he dovetailedto developa two-prongedapproachthat willgenerate the widest audience.The Company'stradingsymbol (OTC BB-IWOW) will be stronglymarketed and promotedto stockbrokers,media and investors. ! Phase IV B Global Expansion I ° The Companyhas primarilyfocusedon the NorthAmericanmarkets to a presence establish and gain a footholdtowardsdevelopingthe WOWtownbrand. To rapidly expand Internationally WOWtown has entered into a number of agreements that will accelerateits growth in Europe, LatinAmerica and Brazil.Althoughother countriesoffer tremendouspotential, these geographic I locationsare seen as prime areas for early integration. 34 ! 002290I CONFIDENTIAL WO Wto wn. com • Through a relationship with leffery Freidland, an Advisor to WOWtown, we have entered into Memorandum of Understanding (MOU) agreements that provide strategic relationships in all three regions and provide significant funding for their establishment. Each of the areas is covered by I their own independent agreements. Roper Reports Worldwide ... "released a global survey of computer and internet usage which finds there has been substantial growth in personal access to technology in all parts of the world. The survey is based I on 30,000 face-to-face interviews with 1,000 consumers, 13 to 65 years of age, in each of 30 countries. The sample represents a total population of 1.39 billion people. • Roper estimates that 30% of global consumers now own a PC, a 6% increase over 1998. I • Eighteen percent of the same base population went online at least once in the last month, Roper also reports, a 7% increase for the same period. • 51% of North Americans own PCs, an 8% gain over 1998 I , Latin America PC ownership grew seven percentage points to 29% • Western Europe, with 39% PC ownership, and Developing Asia, with 17%, are each up four I percentage points Inlonult PonoUl_lon us ! -SOUthK,mrea 34% 3% I Tahvan 35% 11% AusUraiia m 45% 11;% _pm m 10% _lCe 2J% I 1S%ll% • TNS m FiSo_¢_: y_ _t_:_ 2000 _n _A_ 17.2 Formation ofWOWtown Furope m Tile Mou agreement calls for WOWtown.com, Inc., to own 51% of a new entity--WOWtown Europe Ltd. It was incorporated on September 15 2000. Its primary partner, Euro Tech Worldwide Umited, will raise a minimum of £500,000. Euro Tech will provide strategic advisory services including corporate financing i advisory services specifically and primarily to achieve the Company's financial and business objectives. 002291I CONFID ENTIAL WO Wto wn . co m I Eump_n Adult Intemet Users, 191;9and I 20o3 (in % of TOtal Adult Population) I lm 29o3 TotaIW. Eur. pop+ 11_ s 307.2 M Total W+Eur. pop. 11_ s 301LS M I Source: a_fa_ete[. 2000 c,2000_18"1c_e¢. fix. vc/N/.eMIIl[ter.corn I ACtive lntenlmt Users in westQrn Eumpe_1_8-2(]03 (In Millions) I _ 15.0 r/.I I source: _,farkete[. 2000 _o0o eMark.elel. InC. _wLelk_llter.c_r_ I '_he assumptionisthat Europe,with continueduser growth,will catchup or perhapsleapfrogaheadof the USthroughwirelesstechnology.Butrecentdata point not onlyto a digital divide, but on certainkey indicators-IT investmentsand host counts -the gap betweenthe continents maybe growing, not closing. I The telecommunicationsandinformationtechnologymarket inWesternEuropehasseenrobustgrowth over the past few years. In 2000, the marketvalue is expectedto amountto $540 billion,accordingto forecasts by the EuropeanInformation TechnologyOffice (EITO). Dueto liberalizationof marketsthroughout Europe, growingcompetition, and expansionof mobiletelephonesales,growth rateswere 12.7 and 13% in 1998 I and 1999, respectively,with Spainand Italy showingparticularly bigjumps in 1999." eNarlceter I 17.3 Formation of WOWtown Brazil Limited The IOU agreementcallsfor WOWtown.com, Inc., to own51% of a newentity--WOWtown BrazilLtd. It I wasincorporatedon September 15 2000. Itsprimary partner, Euro Tech WorldwideLimited,will raise a minimumof £500,000. EuroTech will providestrategicadvisoryservicesincludingcorporate financingadvisory servicesspecifically i and primarilyto achievethe Company'sfinancialand businessobjectives. 36 I 0022g2I CONFID EN TIA L WO Wto wn, co m l 17.4 Formation of WOWtown Latin America Limited I The IvlOUagreement callsfor WOWtown.com,Inc., to own51% of a new entity--WOWtownLatinAmerica Ltd. It was incorporatedon September152000. Its primary partner, EuroTech WorldwideUmited, will raise a minimumof £500,000. EuroTech will providestrategicadvisoryservicesincludingcorporatefinancingadvisoryservicesspecifically I and to achievethe financialand business primarily Company's objectives. i 17.5 Ongoing Marketing and Sales Campaigns As new LocalPartnersjoin the WOWtown Network, additionalservices willbe implemented,increasing revenuestreams to its Resellersand to the Companydirectly. WOWtown providesthe technicaland sales I strategies to each local portal operation. Revenueswillbe sharedon a negotiated slidingscale.Initially, for the first twenty or thirty LocalPartnerson a 50% -50% scalethroughoutthe term of the agreement.Once the brandinghas been establishedthe revenuesharemodelwill be primarily on a 75% -25% profit split, in favour of each Part_er, however, each new market will beevaluated and negotiated individually.Some I portals may remainunderthe controlof the Companywithoutthe active involvementof a localpartner. The Company's'cookie-cutter' approachtoward developmentand implementation of portal development into regional marketareas will support a fast ramping-upacrossthe affiliated WOWtownNetwork. I WOWtown will create corporate awareness of the Companyand its portals through generic media and online advertising stressing the brand name, features and benefits of associating with the Company. We have created "I'V,Radio and Print advertising that allows for a local portal name to be inserted, thus replicating the advertising program at much lower cost than producing separately for each market. I Individual businessesand advertisers will be targeted locally through media advertisingwithin each users, portal region to develop the local community presence using a comprehensive advertising and promotion plan. (See www.wowtown.com) Additionally, through developing enhancements such as local community auction sites for each portal, WOWtown will create incentives for new users to access the sites and become I members. The Company will also rely on its Exclusive Reseller Partners to expand their clientele basesthrough regional promotion that stress the local flavour. This is accomplished by attending and hosting events in the I communities, usinga local sales and markeUng force (under the direction and controlof the local Partner), and by developing cross-promotional opportunities with businessesand services in their region. Advertising on company vehicles, billboards, bus stops, transit vehicles and use other promotional items are I included in the sales mix to generate awareness.To date we havesuccessfullyused a local marketing staff to attend local events where large groups of people attend to promote the WOWtown Net Savings CardTM as a way to build membership in the regions. I As the WOWtown Network grows, indMdualsand businesseswill discernthe benefits of the WOWtown brand name and loyalty programs asvalue-addedservicesthat providesbenef'_saboveand beyond basic Internet accessprovidedby the majority of ISPs. I 18.0 WOWtown's Competitive Advantages Through expansionby new LocalPartners,the market sizeof the WOWtownNetwork and membershipbase I under the corporate umbrellawill quicklygrowto offer many benefits to our LocalPartners and their core customers. All aspects of the WOWtown Network will be enhanced from the addition of new value-added products and services, which can be instituted across the Network. New services will be made available to the Local Partners, which can be up-sold creating additional revenue streams and ensuring their clientele i are providedwith the bestopportunity to promoteand market their services. 37 ! 002293I CONFID EN TIA L WO Wto wn .co 111 I Ascurrent must-have itemsare made redundantby the latest and most up-to-date versionsof productsor services,WOWtown Partners will be positionedto providestate-of-the-art featuresfor their consumers. Additionally,the expandedscopeof the broaderNetworkwill generate highersalespotentialto their I corporatecustomers.Online businesseswill havewider market reachand accessto a largercustomer group intheir own geographicalareasand elsewhere, and can offer increaseddiscountsand other benefits in a cost-effectivemanner. I 19.0 Benefits: Exclusive Resellers, Media & Sales Partners, Businesses & Advertisers I • Dynamic and cost-effective affiliations allow independentExclusiveReseller Partners (i.e. media properties, LSPs,local businesses,etc.) to increasemarket impact, both locallyand regionally. I ° Affiliationwith a larger Networkallowsadvertisersto make useof lowered CPHadvertising costsand gain wider market exposurefor their productsand services. • A Partner'sexisting local and regional businessesandadvertisers gainwider market exposure for their i productsand services, while usingthe Internet to generate additionalexposure locally. • Affiliates are linked directly from their unique WOWtown entry Portals to the WOWtown.com main wet)site providing network accessand ease of navigation to millions of Intemet users searching for discounts, product information, local events, and services occurring in regional localized areas. I • Advertiserscan usedemographicand other measurementsgained from the Company'stracking and monitoring capabilities to target specificmarket sectors. • Businessescan promote their advertising'message'without increasingstaff size. • SocialandrecreationalGroupActivities involvingWOWtownadvertisers enhancethe participation in the Company'sMembership Programs. I • Affiliationconceptallowsfor Network-widesavingsandadditionalbenefits to be offered to existingand future businesses,advertisers and othersystem users. I • WOWtowncan arrange for businessesnot havinga currentwebsiteto receivetheir own uniqueweb presence, at reasonableprices. • Businessescan reach consumersin their hometowncommunities,focusingon the needsof the local I memberswho live withinthe immediatemarket area. • Businessesand advertiserscan expand their Harket Reachthroughefficientand cost-effective techniquesgeared towards increasingtheir profiles--affordably! I BusinessesandAdvertisers better track their salesand of the can marketing programs through use exclusive "WOWtown Net Savings Card TH-. I 20.0 Benefits: Personal Memberships IndMdual members of WOWtown'sportal partners willhaveaccess to a much broader community from I whichto take advantageof membership discountsand savingsoffered by participatingmerchants and advertisers. Memberswill be able to researchand sourcewhat they are looking for from a larger range of productsand services, without havingto ever leavethe WOWtown Network. I To find out what specials/discountsare offered a membersimplyhas to log-onto their localWOWtown website and lookfor the flashingWOWiconslocatedthroughout the site. Hembers will haveadditional privilegesof listingitems for sale through the Auctionsites,when implemented. 38 ! 002294I CONFIDENTIAL WO Wto wn. com Only WOWtown members will havethis ability, although non-members will be able to bidon goods offered via the Auction site. Allowing non-members accesswill encourage them to join asmembers once they have an opportunity to view the sites and recognize the additional benefits that membership offers. I As the Network grows, adding mere locations,separate linksfrom the localWOWaffiliate's home page will identify all membership discounts and offers across the system. The members can then take advantage of any promotion no mater whether it is offered, whether in their hometown or across the Network. I • Members will be provided with their own credit card-styleWOWtown Net Savings Card TMerrdtling him or her to exclusive offers and discounts at participatingMerchants that have embraced the WOWtown program. I • WOWtown will act as a LocalizedSearch Engine,automatically locatingthe best Merchantvalues. • WOWtown will also provide a generic Search Engine, locating comparison pridng for millions of I products, from some of the top onlineretailers offeringproducts and servicesfor saleover the Internet. • One stop access to locate what is happening in their hometown or in other WOWcity portals. i • Membershipin WOWtown'spermission-hasedWOW Newsletter TM designed to focuson current events anddevelopmentsinthe local area, featuringcurrentdiscountsand other member specials. • SocialActivitieswill be highlightedand regularlyupdated.This will helpfoster the senseof community withinWOWtown. I • OnlineMapsand directionsto retail shopsand servicesthrough our arrangement with Mal_uest.com. Online shopperswill haveaccessto onlinemapsshowingthe retail locationsof Bricksand Hortar establishmentsthat sellonline, In due courseMaps willbe incorporatedfor localarea merchants as I well. i 21.0 Revenue Generating Strategies • Revenueto WOV_own willcome from a numberof divergentsources; sales of exclusiveterritories to Partners (eventuallyrenewal fees), salesof advertisingon the Company'sand LocalPartners'websites; I revenue streams from affiliate programs linkedthrough our sites; commissionsearned through merchandise sold over the ]ntemet, and by transaction fees generated by the Company's auction site. • The Company's WOWtown Herchant Center Online TM service will offer additional services and features to the Local Partner Network for resale to their memberships. Fees will be generated between I the Local Partner and the Company using a revenue sharing split. • As newWOWfeatures and services are added the Company will expand its product and service lines, i increasingthe volume and potentialfor e-Commerce-generatedsales. onllm) Advertising spendln¢ 19992004 (lllllk)ns) 20C1 _0C3 2004 _24, I GAGR = 39.5% source: V_off$ 5u_Of, 2000 _W_ER _,_T 39 I 002295I CONFZDENT]'AL WO Wto wn. co m I Leadlnz online Adverth;Jng catelorlss. Q2 2000 I '_0rrll)lJt in )_ II source: _AB, 200,0 ¢_0_]0_el. II_Z. _,_PoLiMSaJr--Ilmef.£_ll I Types of AdL Q2_ B ,ill II *_,rt _0' _p:)rl'_lf',hl|)', I i c_,.k_, _ I R4_In'als4% I IINerIItltlMs I I-,, II lUch media 1"_ I Keywordsearch 1% I S_urce:L4B,2000 ¢30Q0,_. Ire_ v,*l_.eMu'B_elr.corll I 002296I CONFID EN TZ4L WOWto wn .com II WOW-e Store TIq__ an exclusive 24/7 online sourceof consumerproducts.The Company will share in revenues provided through a contractual arrangement with eZuz.com --an Intemet Comparison Pricing Website with access to millions of products for sale online, provided by top online merchants. Addi_onally, the Company can offer a multitude of other products and services provided from either online merchantsor bricks-and-mortarestablishments. Q4 Worldwide eltetailln_ Sakm, 1999 and 2000 (B|NIons i and asa % of Quarter TOtal) NarthAmerica I Europe S2.74(26.0_) SS.31; (27.5%) A/ltPadl¢ S0.U(&e_) si.6ottl._) i Japan • 1919 SOA4(4,4_) 112OOO $1,31 (6.7cL) i ReStofWorld .18(1.7%1 I so.521;+7_1 C_O00_MfV._Iel. Inc. w_w _mRktel'.corfl ! 22.0 Exclusive Reseller Agreements i ExclusiveResellerPartnerswill beable to secureindependentterritories offered bythe Company.Thesewill be pricedaccordingto populationsizeand be granted underconditionalrenewableterms. Asthe Network n growsit is anticipated that the valuefor the territories will increasesubstantially.Therefore, as an inducementto purchaselicensesin the eady stages, the establishedbasecostswill increaseby a minimum of 5% per year pro rata. n 22.1 Local Media Partners The Companyrecognizesthat in order to developa critical massand to establisha baselinefrom which to i enhanceand promoteour programto otherpotentialWOW-cityPartners,weare finalizingnegotiationswith a number of National Media Properties(Radio/TV) to create co-brandedventures in specificmarkets with the Media Propertiesdirectly. In these instances,WOWtown willexchangefrom35% -50% of revenuesto 002297I CONFIDENTIAL WO Wto wn. com the Media Property/Propertieswhosefunctionwillbe to saturatethe market with on-air and other community awarenesscampaigns. I WOWtown will deliverup a fully functional LocalPortal,complete with localresourcelinksfor each of the availablemarkets. WOWtown will also hire, train, manage and fund a localtelemarketingsales force/partner in orderto securelocalmerchantsto participate inthe program. I The selectedMedia Propertieswill conb-dctwith WOWtownto provide on-air marketing and promotional support to promote the localWOWtownsite to their respectivecommunity/communitiesand listening audiencesusingthe Media Property'slocalpresence.Marketingwill consiston on-air ads, promotions, contestsand other community-focusedevents, highlightingthe localWOW-city portal throughco-branding I efforts.These activitieswill be co-ordinatedwithWOWtown. Co-brandingof the WOWtownNet SavingsCardTM with eachlocalMedia Propertywill be a major focusof all marketing and advertising promotions.This will create a strong localmembershipbase of Cardholdersand I developthe local Merchantbasein each region. Where the Companyelectsto enter agreementsof thisnature itmay chooseto foregothe upfrontEntryFee in exchangefor developingan exclusiveco-branding relationshipwith the IVlecliaProperty in eachcity on an exclusivebasis.Fees will not be eliminated, rather repatriatedfrom the early salesof productsandservices I untilthe Entry Fee obligationhas been realized. WOWtown incurs a hardcost for set-up (approx $20K per dty) but will consider this asan investmenton WOWtown'spart. WOWtownwill retain100% of the aggregaterevenuesgeneratedby the Portalsuntilsuch time as we have retired the set-up costs. At this pointthe negotiatedrevenue-sharingmodel will commence basedon a city-by-city arrangement. This providesthe Media Property with no up front fees, the mediasales force doesnot have to sell the I internet program, and the Hedia Partnerdoesnot have to handleany administration. It providesall parties with a substantialrevenue stream, with a minimalamountof labor involved. This approachwill quicklyestablishmarket presencefor the localWOWtown portal and moderatethe I obligationfor costly advertisingcampaignsin those cities to create brandawareness.Oncethe programs are establishedin these centersand the Company has developedtrack recordand history of sales we will focus on rolling out additionalcity sites basedon a fee/revenue-sharingprogram outlined in Section23. I 22.2 Local Sales Partners Under the precedingexamplewhere WOWtown will partner with an exclusiveMedia Property, wewill also I contract directly with local sales and marketinggroupsin these centersto perform the actual street-level sales resultingfrom the generation of leads. WOWtown acquiresa "local reseller"to sellthe product for a smallannual fee. We delivera sales mechanismfor the productto the media Partnerand at the same time are establishinga marketing I mechanismto the local re-seller(who is responsiblefor salesand local content). All of this hasno cost attached to wowtown, other than training and implementation. The local salesforce will be entitled to a percentageof the revenuesgenerated(up to 25%) and willbe able to retain residualscreated from these sales. The sales force will work closelywith the Media Properties to coordinateevents, follow up on leadsand complete the transactions, under the directionof the Company. This arrangement isa varianceto how other non-Media PropertyExclusivePartnershipswill be developed and nurtured.Where a Media Property is not contracted with in a region, an ExclusivePartnership relationshipwill be cultivated undera different revenue-sharingformat as outlined in Section23. The company will negotiateall contractson a case-by-casebasisand willmaintain a degree of flexibilitytowards establishinga specificterritorial pricingarrangement. ! 42 ! 002298I CONFIDENTIAL WOWto wn. com Section23 detailsexamplesof revenue-sharingmodels thatWOWtownwill be offering. WOWtownwill negotiateterritoriesbasedon a numberof factors, with the major considerationof establishingPartnersin a numberof regions, thus creatinga fast trackedrollout plan. I 23.0 Exclusive Local Partner Agreements I These categorieswill be to Local,Regional Advertising/Harketing made available and National companies, aswell as existingISPs, Web Designand HostingCompanies,CommunityNewspapersand other independent investors.Media Propertieswill alsobe approached.Howeverthis model takes into considerationa fully operational Partnershipin whichthe Partnercontrols all aspects of the Exclusive I Partnerprogram. I 23.1 Class 'A' Local Partner Feesfor market areas consistingof the followingpopulationsbasesare (in USdollars): Market Size Entry Fee Monthly Fees to Partner 1-2 MillionPopulation $75,000 50% -75% of Sales 2-3 MillionPopulation $100,000 50% -75% of Sales 3-4 MillionPapulation $125,000 50% -75% of Sales 4-5 MillionPopulation $150,000 50% -75% of Sales 5-6 MillionPopulation $175,000 50% -75% of Sales Over6 MillionPopulation $200,000 50% -75% of Sales Note: Local Partnerscanpurchase additionalterritories to extend their market exposure, or selectively purchaseterritories in non-consecutivegeographicregions.In order to expedite an accelerated Portal rolloou in the iniUal 12 month periodand create a vast presenceof operating Portals, the first 39 Class'A' Portalswill be negotiated usingthe followingguidelines.Upfront fees may be reducedsubstantiallyin exchangefor a largerpercentageof the salesrevenues.Thiswill reducea potential Partner'sinitialexposure but reduce their percentage: Portal Rollout Entry Fee Monthly Fees to WOWtown Portals1 thru 15 US$10,000 25% -50% of Sales Portals 16 30 US$25,000 50% Portals31 thru 39 US $50,000 25% -50% of Sales I 23.2 Class 'B' Local Partner • Marketarea consistingof a populationbase of 500,000 up to one million • Cost of entry: US $50,000 • Monthly fees: 25% of sales 23.3 Class 'C' Local Partner • Market area consistingof a populationbase of 250,000 up to 5OO,OOO • Cost of entry: US $25,000 • Monthlyfees: 25% of sales 43 ! 002299I CONFID EN TIA I. l¥0 IiVto wn, COm l 24.0 Sales of Banner Advertising I Banner advertising has provento be an effective methodof informingconsumersabout a company's merchandise,productsor services.Offer-inducementscan be targeted to an individualuser basedon profilingand intelligencetracking,or to a broadersegment of the Network, as determined by the client's needs. I be matchedto service determinedin their web traits or by Userscan a particular product or part by usage which area of the site they are searching in. Forexample,if a member is lookingto fly to a city withinthe United States,an Airlinead could be generated providingspecificpricingor other importantconsiderations i to the member. 25.0 WOWtown Products I WOWtown plansto introducenew value-added features for its Partnersto sell or distributethrough the Company.As new productsand servicesare incorporatedinto the WOWtownNetwork, it will benefit from salesand distributionusing negotiated remunerationfee structures.An exampleof exclusiveproduct I offeringsis broadbandproducts: 25.1 Secure Broadband I WOWtown representsan international and emergingglobal brandthat demonstrates the integrationof using the Internet to promotemerchant productsand servicesat the community level by incentinglocal i subscribingconsumers to patronizeWOWtownmerchants.An example of the types and varieties of products that the Companycan sellor resellthrough itsportals to localcustomersis broadbandconnectivity services. Accordingto the new report from eMarketerbroadband deploymentwillsoonstart to accelerate.By2003, I broadbandaccesswill have grownnearlysix-fold, to 32 millionusers. I TOnsil US Blroadband Users, 1999-2003 (Mllflons) '1999 2900 200t _ 2003 Fiber 1.76 2.46 332 4,31 5.39 I DSL 0.54 1.g4 4,08 6.62 10.95 C_Dle 1.47 2.94 _99 727 9.78 Sat NM NM 0.02 QI_ 0.25 I W_r_tess 0.06 0.23 O81 212 3.86 COpperT-1 1.60 1.90 200 1.90 1.80 TOtal 5A3 9.37 15.22 22.26 32.03 I Source:_Marketsr,2000 eMarl_er,lnc www.eM_llelm.com 1I 44 I 002300I CONFIDENTIAL WOWtown.com I OSL subscrfbem vs. cabb MOdem s_Jscrfbe_ 1999-2o03 (Mqmons of Sub_dbem) 1_9 • ¢mleModemsubsatbers l _ 1_7 • D_ S_SC_bMS I =2442 I CC 10 i $ource: eA4a_et_r. 2 GO0 "Business usage is, and will be, driven by the fiber optic rnarkeL