Froghop

Froghop % %/ j '" ,,_ -_.,/ d Froghop incorporated Business Prospective -2000 Froghop THIS DOCUMENT CONTAINS CERTAIN INFORMATIONTHAT IS NON-PUBLIC, CONFIDENTIALOR PROPRIETARY FROGHOP, NCORPORATED TO I (THE"COMPANY") AND IS SUBMITTED ONA CONFIDENTIAL BASIS FOR USE BY A LIMITEDNUMBEROF INSTITUTIONAL INVESTORSSOLELY TO ASSIST THEM IN CONSIDERING PURCHASING SECURITIES THE COMPANY(THE "TRANSACTION"). USE FOR ANY OF ITS OTHERPURPOSEIS NOTAUTHORIZED. MAYNOTBEREPRODUCED REDISTRIBUTED, IT OR INWHOLEOR IN PART, NOR MAY ITS CONTENTSBE DISCLOSEDTO ANY PERSONOTHERTHAN THE ENTITIESTO WHICH IT IS SUBMITTED.THIS DOCUMENT SHOULDBE READ IN CONJUNCTION WITH THE ATTACHED EXHIBITS. 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WHILE THE INFORMATIONPROVIDEDHEREIN IS BELIEVEDTO BE ACCURATEAND RELIABLE,THE COMPANY MAKES NO REPRESENTATION OR WARRANTIES,EXPRESSEDOR IMPLIED, AS TO THE ACCURACYOR COMPLETENESSOF SUCH INFORMATION.ONLY THOSE REPRESENTATIONS AND WARRANTIES CONTAINEDIN A DEFINITIVE EQUITYPURCHASE AGREEMENTSHALL HAVE ANY LEGAL EFFECT.THE COMPANY RESERVES THERIGHTTO AMENDOR REPLACE THIS DOCUMENT ANY TIME. AT NOTHINGCONTAINED WITHIN THIS DOCUMENTIS, OR SHOULDBE RELIEDUPON AS, A PROMISEOR REPRESENTATIONS TO THEFUTURE. A THE PRO FORMAAND ESTIMATEDFINANCIALINFORMATIONCONTAINEDHEREIN WERE PREPARED EXPRESSLYFOR USE HEREIN AND ARE BASED ON CERTAIN ASSUMPTIONSAND MANAGEMENTS ANALYSISOF INFORMATION AVAILABLE THETIMETHATTHIS DOCUMENT AT WAS PREPARED. HEREIS T NOREPRESENTATION, WARRANTY OROTHERASSURANCE THATANYOF THEFINANCIAL PROJECTIONS WILL BE REALIZED.PROSPECTIVE INVESTORSSHOULDCONDUCTTHEIR OWN INVESTIGATION AND ANALYSISOF THEBUSINESS, ATAANDPROPERTY D DESCRIBED HEREIN. PRIVILEGED &CONFIDENTIAL WWW.FROGHOP.NET TABLE OFCONTENTS SECTION I, PAGE EXECUTIVE SUMMARY ........................................................................................................................... 3 OVERVIEW OF MARKET FROGHOP AND ................................................................................................... 7 A. Industry Analysis ................................................................................................................. 7 B. Market Analysis ................................................................................................................... 7 MARKET RESEARCHANALYSIS AND ....................................................................................................... 10 A. Market ......................................................................................................................... Size 10 B. Customer Segmentation ..................................................................................................... 10 C. Competition &Competitive Differentiation .......................................................................... 11 D. Froghop ifferentiation D ....................................................................................................... 12 THE COMPANY ...................................................................................................................................... 14 A. Products andServices ........................................................................................................ 14 B. SmartThinker Technology ................................................................................................... 15 C. Marketing ............................................................................................................................ 17 D. Management andBoard fAdvisors o ................................................................................... 18 ECONOMICS BUSINESS FINANCIAL OF THE AND DISCUSSION ................................................................... 21 A. Costs ................................................................................................................................... 21 B. Profit andPotential Durability .............................................................................................. 21 C. Months toPositive Flow Cash ............................................................................................. 22 D. Revenue andCost rivers D .................................................................................................. 22 E. Balance heet S ..................................................................................................................... 22 F. Income tatement S ............................................................................................................... 23 G. Cash Flows........................................................................................................................ . 24 CRITICAL ..................................................................................................................................... RISKS 25 A. Adoption ofMobile ata D Services ....................................................................................... 25 B, Limited Screen SizeandReal state E .................................................................................. 26 C. Privacyears F ...................................................................................................................... 26 D. Reality fWireless o Coupons ............................................................................................... 26 E. International Expansion ...................................................................................................... 26 PROPOSED COMPANY OFFERING ........................................................................................................... 28 APPENDIX .............................................................................................................................................. 30 II. III. IV, V, Vl, VII. VIII. VICKY JACKSON (617)279-0106 VICKY(_FROGHOP.NET PAGE 2 _ PRIVILEGED CONFIDENTIAL & WWW.FROGHOP.NET EXECUTIVEUMMARY S MISSION ANDVISION To optimize aqualitymedia vehicle andinfrastructure through thecombination of cuttingdge e technology and"out-ofthe-box" creativity, enabling companies toeffectively establish presence within therealm ofmobility. THECONCEPT Allbusinesses theimportance realize ofhaving wireless a presence, butmost recontemplating a howtheywillexecute a wireless trategy thephone s since isnotconducive tosearching orbrowsing. if thebusiness Even already aswireless h capabilities, may beenough there not reasons consumers for toutilize Contrived it. serendipity ahigh within trafficnvironment e isneeded tocreate impulse and maximize urges fully theanytime, anywhere concept touted. trategically being S integrating content within roghop's F entertainment delive_ andinfrastructure ._s toclose gapbetween the demand generation thefulfillment demand, and ofthat enabling thecompany toestablish presence ubiquitously andincrease customer acquisition. Qualdatwe Value In _ ]Medium _ High Frequency Interaction Consumer [ Personalized Awareness Contextual Relevance _ Froghop's Media Vehicle and Infrastructure _ .... Sticky User Interface m_lar and scaleable wireless Froghop Soprano R=bblt Froghop Funfinder Froghop Gamez Content Integration Product Placment Real-ttme mteracttwty Froghophose c touseanentertainment delivery platform because ishuman it nature togravitate towards hatsfun. Efficient w i fun-using same that busty ireless evice w d thatnevereaves nyone's l a side-isaneffective aytoinflllrate w intobusy lifestyles. VICKYJACKSON (617) 279-0106 VICKY(_,FROGHOP.NET PAGE3 " _ PRIVILEGED &CONFIDENTIAL _Froghop _NW.FROGHOP.NET Therearemanygreatapplications thatallow people toworkmoreefficiently hile w ontherun. Increasingly, theissue is no longer owwe'llbeableto workefficiently wayfromtheoffice,astherearea number f greatapplications h a o that allowus to do so. Ratherhefocusis shifting howwecando something t to together ithfriendsandfamilysince w schedule ynchronization s seems nearimpossible, orhowwecanfit insome quality personal down time. Withcreative interactiveontenthatattracts c t consumers, modular ndscaleable ireless a w solutions businesses, for and anintelligent back-end infrastructure builtwitha personalization engine, ireless oupon w c functionality andm-commerce capability, Froghop hasallthecomponents necessary tooptimize mobile a advertising infrastructure. MARKET TRENDS Wireless arketrends m t allpointoan explosive t growth inwireless datausers.According R-Hestimates, to mobile Intemet dvertising a revenues willexceed $1.5B by2003andshouldeach r approximately $4Bby2004. TheKelsey Group forecasts themobile dvertising a industry reach to $16Bby 2005. Datamonitor concluded thatthewireless games industry grow will to$6billion in2005. REVENUE MODEL Customization/Strategic Contentntegration Weoffer arious ays I v w tointegrate content: )fullservice 1 including creative, modular 2) solutions utilizing ourentertainment delivery latform, ASPmodel powered yFroghop p or3) b through licensing. Revenue willcome thecustomization asanannual from aswell placement feeforthecompanies to keep their presence. just secured bout.corn We A forcontent j.n.teqration, a0d_rocess ofdoinq thesame for CNE_T. Duetoourrapid deployment capabilities, uniqueroduct p offering, t_hnology, visibility, and weIlavebeen able toestablish relationships with_nc!e_ ._uchsDiaitasndModem a a Mediao0_ain t additional projects. AdInventory Withpersonalized contextually and relevant inventory available formedia uys, b weareleveraging the experienced force sales ofadnetworks asWindwire AdForce such and tobring inadditional revenue. echose W not toenternto i anexclusive relationship that24/7Media requested had duetotheinfancy ofthis industry. Mobile andElectronic ommerce/Commissions C - Froghop willreceiveommissions c onpurchases resulting from ourdemandreation, c forwhich weareincontinuous discussion Amazon.com. with Forexample, ifwhile playingur o Investment Challenge Game stock (a trading ame) player over o Broker g a links t XYZandmakes anactual trade, r o completes anm-commerce transaction ABCBookstore a book from tobuy onunderstanding WallStreet, Froghop ill w receive commission. willalsoreceive a We commissions ourPreferred from PrizeSponsors, whereFroghop ill w receive percentage sales a ofnet resulting discounted from purchases ourusers when redeem Froghop Points. Other Licensing ofourpersonalization (throughurmembership engine o withNextclick) andsubscription revenues (provided Froghop arewilling users topayforadditional premium content) areadditional sourcesfrevenue. o CORE MARKETS Ourtarget arketsdictated m i bytherelatively market fnet-enabled niche o phone owners, although ourcontent can easily tailoredo accommodate be t a wideaudiences it gains mass-market a a appeal.Initially, ourcoremarket consists business of1) executives andyoung rofessionals travel p who extensively; 2)gadget-lovers adopters); (eady 3) university students. works This outwellforFroghop asthese market egments a higher s have income thattheaverage mobileustomer, c andhave higher averageellphone either ecause canafford a than c bill, b they itorbecause are they not heones t paying thebills. VICKY JACKSON (617)279-0106 PAGE 4 VICKY_FROGHOP.NET " PRIVILEGED & CONFIDENTIAL W_.FROGHOP.NET STRATEGY. Becominga HighTrafficSite. Companies antto createa presence w wheretheycan obtainhighlevelsof reach, whether is beingassociated it withSuperbowl theWednesday or issueof the WallStreetJournal. ForFroghop to position itself s a pdmemediabuy,we haveto gainvisibilityndgenerate a a traffic. Leveragingntertainment e content as a valueproposition network for carriersand mobileportals, roghopwas ableto makea strong F entryintothe wireless market. Gaming isoneofthefewapplications thatwillgenerate repeat usage, hichiswhywechosetostart w withthat. Securinga spot on SprintPCS'sand Aliant'shomedeck,partneringwithmobilelD,and establishinga beta partnershipwith inflightonline.com (airlineintranet)arejust some of the examplesof how Froghopis creatinga high traffic presence. AIItelhas contactedFroghopto includeour gameson their homedeck,and an Italian WAPportal wouldlike to licenseour InvestmentChallenge game. Weare alsoin dialoguewithVerizon. WhilemostU.S.wireless sitesarestruggling meet50,000impressions to permonth (minimum workwithlargead networks to suchas Engage andDouble Click),weareaveraging ver200,000impressions o permonth.Average usersession is1½hours. Personalization. Throughour SmartThinker technology, TM which is an adaptivelearningand personalization technology, tailorourgamesandofferings individual we to preferences. etailorcontent o individual W t interests nd a skilllevelsutilizing non-obtrusive a personalization process, creating stickiness inan environment whereotherattention grabbingtechniques are not currentlyfeasible. As the users' interests are unraveled our SmartThinker by TM technology, Froghop the sitebecomes equivalent multiple to vortalsL Captivating serinterests ncouragesepeat u e r visits, eaching highlevelof frequency r a anddeveloping strong a senseof affinity.Whileoptimizingserexperience, u SmartThinker servesa second purpose inachieving granular a profile forprecisionnetoonemarketing. o CreatingA Link BetweenDemandGeneration And DemandFulfillment. Living an impulse in economy, oday's t massmediaarethewoddeconomy's ominant gents demand d a of generation.Theymakeyouawareof goodsand services,nfluencing hatyouwantto buy. Butmostof thetime,demand i w cannotbe fulfilled within context f the o creation.Or in thecaseof m-commerce, fullyfunctional a wireless fulfillment system willrarelybe utilized without the desirebeingprovoked.The beautyof mobileadvertising in its ubiquity, onvenience, potentialor instant is c and f gratification--Froghop bddges thegaptofullytakeadvantage fthe"anytime, nywhere" o a concept. CreatingAn Environment ContrivedSerendipity. Commerce ddvenby serendipity.Contdved Of is serendipity occurswhen,afterexpressing rdemonstrating interestn a certainarea,youare non-intrusively o an i presented with related products thatmight ofinterest.Theseinterests reimplied be a through measures suchasfrequency, accuracy, and skillleveldedvedfromthegames,orexpressly demonstrated click-throughs m-commerceransactions. by and t Froghop willeffectively arketproducts a contextually m in relevant nvironment. e MANAGEMENT TEAM Ourexecutive anagement m teamis comprised f VickyJackson o (CEOand Founder), osmoMao(Creative C Director and Co-founder), enjamin B Trinder(COO), KrassenDraganov (actingCTO), and FreddkVelander(VP Salesand Marketing).Witha combinationf backgrounds wireless, dvertising, o in a entertainment, hi-tech, roghophasa and F solidnucleus. OurAdvisory Boardconsists f Dekkers o Davidson (Former President Rogers of Wireless and VP of SprintPCSNew England),TamaraCasey(VP Techni"---cal Services,_lextel), eremiKamell(VP/Co-founder, to One Interactive J One with clients such as Motorolaand Nextel),ChdstopherStevens(Dir BusinessDevelopment,Engage),and Jason Lee (Associate Partner,marchFIRST). A vertical portal offers portal that a orgateway to=nformatJon toaspoc=fic related industry aspeaal nterest or = VICKY JACKSON (617) 279-0106 VICKY(_FROGHOP.NET PAGE 5 PRIVILEGED& CONFIDENTIAL WWW.FROGHOP.NET FINANCIALPROJECTIONS CondensedIncomeStatement Start-up Revenues Expenses Netlncome $ $ $ $ 449,045 $ (449,045) $ 2001 1,697,982 $ 4,310,565 $ (2,612,582)$ 2002 11,395,932 $ 7,254,533 $ 4,141,399 $ 2003 34,525,757 12,131,807 22,393,950 Use of Funding FundingRequested: Tobe used(through August f 2001) o 1- Development Costs 2- Start-upCosts 3, Expenses (first8 months 2001) of 4- Revenues (first8 monthsof 2001) 5- Rask Factor/D=scretJon $400,000 $349,045 $2,708,196 ($714,608) $257,367 $3,000,000 Start-upCosts(through2000) 3osts consistof. 1- Uhhttes Rent & 2-Salanes& Benefits Training Recruiting & Technology osts C 5 - ProfessJonal Costs 6 - Mtsc.G&ACosts 7 - Sales& Marketing $32,000 $73,472 $3,000 $19,500 $134,200 $25,873 $61,000 $349,045 2001OperatingExpenses(first8 months) Costsconsist of" 1 - UtJht=esRent & 2 -Salanes& Benefits 3 - Training Recruiting & 4 - Technology osts C 5 - Professional Costs 6 - Misc.G&ACosts - Sales& Marketing $48,000 $835,370 $40,000 $159,105 $206,480 $184,400 $1,234,842 $2,708,196 1 8% 30 8% 1 5% 5 9% 7 6% 6.8% 456% 1000% $2,708,196 9 2% 21 0% 0 9% 5 6% 38 4% 7 4% 175% 1000% ...................................... n1 r-I3 1-14 • 5 06 •7 $349,045 [31 m2 Q3 r14 • 5 n6 • 7 -108% 9 4% 729% 6 9% 1000% $3,000,000 oO_I n3 04 ilia2 [ VICKY JACKSON (617) 279-0106 VICKY_FROGHOP.NET PAGE 6 -i PRIVILEGED &CONFIDENTIAL MFroUhOp OVERVIEW OFMARKET ANDFROGHOP W_VW.FROGHOP.NET iNDUSTRY ANALYSIS Growth InInternet The usage worldwide of webusers isforecasted growto 398million y theendof 2002. Thisgrowth user to b in numbers andrevenue otential p hasincreasedndexpanded a theavailabilityIntemet of content andservice fferings, o including entertainment applications. theexpanding With acceptance oftheIntemet vital ersonal asa p resource, there isincreased competition among sites users.This web for hasprompted Intemet companies toseek innovative means toincrease thenumber ofsubscribers andsubscriber retention. Studies shownhatmost sersend have t u t tovisit few a sites they that arefamiliar andvisithem with, t timeand again, roving time p theimportance brand stickiness. of and Growth inWireless ommunication C • • CTIA andR-HEstimates forecasts thewireless hone p subscribers intheU.S.togrow 101million yyearto b end2000, ndareprojected more a to thandouble bytheendof2005. According IDC,thereisa global rowth to g rateof28.9%, with1.1billion subscribers attheendof 2003. Thewireless telephony marketworldwide as grownevenfasterin recentyears,andthisgrowthis expected h to continue. cceleratedubscriber A s penetration andincreasedsage u persubscriber areduetoseveral factors suchas1) qualityand functionality improvements both wirelessnetworks of and end-user wirelessdevices;2) increased geographicoverage wireless c of networks; ) widespreadcceptance f wireless 3 a o communications everyday into business ndpersonal a life;and4) newwireless ervicesuchasIntemet ndhighcapacity s s a wireless etworks. n Growthin Wireless Intemet • • According a newreport to fromIDCResearch, 61.5million people illbeusing w wireless evicesoaccess d t the Internet in2003, pfrom million u 7.4 intheUStoday. represents This a 728% increase. IDCforecasts, bytheendof 2002, here t willbemore wireless subscribers capable f Intemet ccesshan o a t wired Intemet users. TheStrategis Group forecasts thatmost ajor ireless m w carriersswell straditional a a portals illhave wirelesslay w a p bytheendof thisyear. According totheCellular Telecommunications Association, 67,000 Industry about newusers subscribe wireless ervicesveryday. A newsurvey IntelliQuest, to s e by commissioned TantauSoftware, by a developer softwarendservices of a formobile-commerce, that70%of wireless e found device sers interested u are in wireless et access general. Survey N in participants weredrawnfromIntelliQuest's Technology Panelof U.S. consumers have who been identified astechnology andpurchase users inlluencers. "Once therearemorewireless/ntemet users thanwiredusers,Webmasters mayfirstconsiderheneedsof t thewireless usersandsecondly, thewired PCusers.Today,/ntemet siteshavetoberetro-fitted wireless for users, ut threeyearsfromnow,it is conceivable b theymighthaveto be redesigned wiredusers." /an for Gilliot, ice V President Worldwide Consumer andSmall usiness elecommunications B T Research, IDC MARKET ANALYSIS Growth inWeb-enabled Mobile Devices Smartphones ecome will b thestandard device 2002 mobile from onwards. third fallEuropeansuse A o will themobile Intemet in2004.According toNokia ndEricsson, a nomajor manufacturer roduce will p amobile phone in2003 without form some of Intemet browser. ccording A toHerschel Shoesteck Associates, a wireless consulting thepercentagephones firm, of thatare bought byestablished subscribers isincreasing anddriving themobile phone market. hone P replacement ratewillreach 50% in2003, surpassing thesales offirst hones p tonewsubscribers. VICKY JACKSON 279-0106 (617) VICKY(_FROGHOP.NET PAGE 7 ': "= PRIVILEGED & CONFIDENTIAL i Froghop WWW.FROGHOP.NET Growthin Advertising onthe Intemet TheIntemet asquicklyeveloped anattractive h d into global edium m forfacilitating communications andconducting commerce. According Jupiter'seport,n August2000,online spending illgrowas businesses to r i ad w continue search a more to for efficient ndaccountable a approach marketing. heJupitereportfurther etails to T r d thatmarketers lanto increase p Intemet advertising spending a higheratethaninanyothermedium, at r withthe largest source f online o addollars allocated towards direct arketing m (20%).Financial services, automotive, computer hardware andsoftware, travel, consumer packaged oods, g andmedia companies willlead thecategories fortopspenders foronline advertising. The Emergence Vortals of • • Research GiantStep,an interactive arketing by m agency, howed s thatvortalvisitorsendto outspend t portal consumers. OneofForrester Research's analystsredicts p thatvortals f allshapes o andsizes willseize57%of Netadverlising by 2004versus 34%in1999. Although there is growthin onlineadvertising, there is a demiseof the ad banners, avingthe wayfor morecreative p sponsorship models wherecontent rovidersndadverlJsers p a workcloserogether. Theentrenchedetwork t n andadvertising players have beenput on noticethatthe Intemets changing nature entertainment i the of programming associated and business odels.ThenewIntemet odel m m istocombine advertisingetween eneral ortals ndverdcal b g p a sites. Thenewterm isvortal a verdcal ortalhatoffers portal rgateway p t a o toinformation related a specific to indusWora specialized interest. Forrester Research uggests s thatadvertisers spendno more thanone-third oftheironline budgets general ortals, on p andto disperse therestamong vortals, affiliate arketing m programs, ande-mail. TheEmergencef Mobile o Advertising Thegrowth ofwebadvertisers increasing t a fasterraterelativeothe number f publisher is a t o siteswithhighquality content. Advertisers, adagencies, andcontent roviders p agreethatthenextwaveofdigital advertising ill hitin 2000,inthe USaswell w asEurope, nditwillbeonhandheld a wireless evices,hemostpopular fwhichisexpected d t o tobethemobde phone. The CEO of interaclNe agencyAgency.corn, han Suh, said that severalof his clientsare asldngabout ad C advertising interac_ve on mobilephones. Mobilephonemessaging"is going to have to be part of an overall interactive arketing m scenario," aysSuh.Mobileadvertising s willbe the numberonemobilecommerce application (23%)by2003. Themobile device provides unrivalled ne-to o onemarkeb'ng capablTities. British research andconsurdng firmOvumsaidina recent dverlJsing a studythatitexpects globalmobile advertising tobeworth over$16billionby2005,or about20percent f overall ntemet dverlJsing o I a expenditures. vumprojects O mobile advertising in North Americato be worth$4.5billionby 2005. In a studyperformed the Keisey by Groupand ConStatn October 000, i 2 almost50%of wireless userspolledsaidthey'dpreferanadvertising-supported overa monthly fee-based model or model, supporling theorythatconsumers rewilling thinkof wireless the a to Netdevicesassponsored deliverers f information uch o m likenewspapersndtelevision. a Thewireless carriersarelookingat sellingtheirownadvertising space,too. "Ifwe do it in a waythat customers appreciate, dvertising a couldrepresent significant mountof money,"says Charles Levine,chiefsalesand a a E. marketing officer forSprint CS. P Growthin OnlineShopping • • • According toan Angus ReidGroup study 40% of allIntemetusers, bout120million a people worldwide, have madeat leastonepurchase nline. o Morethanhalf(54%)of allonline transactions weremadeintheUS. Thestudy reports thatasmany 1 in4 (25%)purchasesremade as a onimpulse. VICKYJACKSON (617) 279-0106 VICKY(_,FROGHOP.NET PAGE 8 " PRIVILEGED & CONFIDENTIAL _ WVWV.FROGHOP.NET Online shoppers every ofmaking Intemet regular oftheir show sign the a part shopping behavior. Among those whosaid they werelikely tobuybooks, music CD's,travelickets, t orcomputer software inthe next12months, eady h halfindicated they would make their purchase online. Growth Mobile in Commerce • • Dudacher, theIntemet investment grouppredicts thattheEuropean m-commerce arketisexpected grow m to fromEuro323million 1998to a massive in Euro23 billion by2003. In a reportitled"mCommerce t Infrastructure intheU.S.,"Datamonitor predicts thatthemarketor wirelessf e commerceolutions theU.S.willgrow1,000percento $1.2billion s in t (US$)bytheyear2005. Mobile commerce isanytransaction witha monetaryaluethatisconductediaa mobile v v telecommunications network. M commerce represents subset f alle-commerce a o transactions. Mobile commerce applications maybe a complement toecommerce, butthere alsobeentirely ewservicesuilt round mobile. hereason will n b a the T forthisisubiquity, reach, ecurity, s convenience, Iocali7ation, instant connectivity, andpersonalization. Growthin Mobile Gaming andEntertainment In Septmember 2000,Datamonitor concluded thatthe wireless gamesindustry willgrowto $6 billion 2005. This in translateso200million t mobile gameplayers, rfour o outofeveryfivemobile users. "Gamesrepresentone of the few contentsthathavemass-market ppeal.Thegamescompaniesarestarting a to realize this, but there's also the chance for startup developers."says co-author of the report and Datamon#or onsultant, tephenAdshead. c S VICKY JACKSON (617) 279-0106 VICKYC_FROGHOP.NET PAGE 9 PRIVILEGED & CONFIDENTIAL U Froghop MARKET RESEARCHANDANALYSIS WWW.FROGHOP.NET MARKET AND SIZE TRENDS 2003 MOBILE GLOBAL SUBSCRIBERS IDCprojectshatthesizeof theglobal ireless t w market illreach w Europewill reach 173M net-enabledphone owners. The US marketis anticipated fall shortof the European to marketandwe figure that by 2003 2003. contain roughly 30% as many net1.1Bsubscribersin it will ForresterResearchanticipatesthat enabledphoneusersbringingthe totalnet-enabled usercountin predicts that 78M Europeans will access the mobile web regularly. Usingthe same30% conversionrate for the US, we both countriesto 226M. Of this 226M, ForresterResearch estimateroughly 102Mregularusersof the mobileweb in both willplaysomeformof mobilegameon a regularbasis. This accounts roughly for 85M mobilegameusersin 2003.Froghop countries.Froghopanticipates that roughly83%of theseusers believes thatourunique entertainment platform willcapture5% of this market,givingus a userbaseof approximatelyM users 4 product offeringss follows.Ourunique a business odels m forour in 2003. This user base is segmented amongstour unique gamescan generatea totalrevenuepictureof approximately $29M. A detailed accountof all revenue streams can befoundin the financialsectionofthis businessplan. NET ENABLEDUSERS P.ONE _N EUROPE'_ U.S REGULAR MOBILE WEB USERS IN REGULAR MOBILE GAME USERS IN EUROPE" US (_ FROGHOP USERS (3E_) Wirelessmarkettrendssupportour assumptions.Everyreportprojectsa differentmarketsize, but they each call for stunninggrowthin this industry. Wirelessadvertisingis heraldedas the next majoradvertising platformas it enables advertisers abilityto influence the purchasingdecisionsinstantlyin a very localizedsetting. As technology advancesat exponential roportions,t will be the flexiblebusinessmodelsthatwill generatetremendousreturns. Equallyas critical p i will be the ability of companiesto infuse entertainmentnto the businessmodel,providingservicesthat are both i functionalandentertaining users. to CUSTOMER SEGMENTATION Initially, e expectyoung w professionals buyintoourtechnology. usinessxecutives, to B e university students, nd teenswill a dominate 30millionplusearlyadopters the thattap the mobileNetoverthe nexttwo years. Non-PC devicesappeal o the t mostdesirable emographic. d Themajority f interestn Intemet ppliancesomesfromdigital evotees. o i a c d • • • 70%ofthisgroupiscollege-educated theirmedian income $57,000 is 73%ofthemareoptimistic bout echnology a t Notonlyarethesepeople wealthyenough payforadditional to access devicesandaccompanyingervices, uttheyalsoare s b mostlikely adopt digitallifestyle onethat'spredisposed to a toadopt echnologyomasterlife'sdailytasks.Theywilloftenbe t t usedina dynamic environment wheretheuserisengaged multiple in activities. roghop F believes thatearlyadopters willignite ourgrowthin 2000.First-generation unitswillappeal o mobile t die-hards whobuynewphonesannually, despite substantial a (sometimes inexcess of50%)pricepremium: VICKY JACKSON (617) 279-0106 VICKY_FROGHOP.NET PAGE 10 PRIVILEGED &CONFIDENTIAL • • • Froghop W_'_N.FROGHOP.NET PerForrester's Research, 7.1million usiness b professionals tz'endy adults tote and young will them as2000 ends and nearly ofthese all mobile enthusiastsuse phones' will their Netcapabilities More 6.1million than ofthese enthusiastsvisit will atleast site one permonth forearly services. hit US consumers spent$7.3billionn personal o digital devices 1999,ranging in fromdigital cellphones nd a smartphones PDAs through andportable computers toMP3playersnd a digital cameras, according study y toa b Strategy Analy_cs. Our research further has identified distinct six categories ofonlineonsumers c intheIntemet, andwe've applied concept this into thewireless marketplace. According Visitors to"All AreNot Created qual", E astudy from Media Melrix ndMcKinsey, a every nline o consumer into ofthefollowing falls one categories. • Simplifiers - These sers ant u w convenient direct and Intemet shopping. only They spend hours month nlineut 7 a o b they account forhaft fallIntemet o transactions. Retailers provide group ith must this w "end-to-end convenience" and prove shoppers save bybuying that will time attheir ites. s SurfersThis group represents 8%ofall n-line buthey only o users t account for32% ofalltime spent ontheNet nd a look times at4 more pages other sers. than u Surfers areattracted toconstantly updated with sites innovative design and features. Connectors- group This tendsobenew t totheIntemet theyareless and likely toshop online, preferring touse chartrooms orsend greetings Companies sti'ongricks-and-mortar should free cards. with b brands target group, this which constitutes 36percent ofactivesers, u asnewbies aremore toIn=st likely abrand arefamiliar offiine. they with Bargainers group - This represents another 8%ofusers recategorized a as,who have anunerring instinct forcheap deals. thanhalf falleBay More o users reBargainers. enjoy a They ferreting outbargains have strongesire and a d to bepart facommunity. o Routiners &Sportsters. They usetheIntemet primarily forthecontent itprovides. Routiners towardsews tend n and financial while sites Sportsters visiting and like sports entertainment Themain sites. challenge formarketers isto exploit thehigh traffic tothese and visitors customers. sites turn into • • • • Weapplied thisIntemet principlemarket of segmentation toourmobileetusers. lter n A narrowing ourcustomer to base executives, students andgenerationwefurther Y, focused strategic ona duster ofthese groupsatherhanspreading r t our efforts toothinly.Thesportsters whoenjoy ntertainment willnaturally e sites begravitated content toour aslong aswecan keep interest their through highly entertaining, innovative interactive and content. thesimplifiers convenience Since want inan end-to-end solution, are and willing topay forit,hey appreciate t will Froghop's commerce mobile lransactions because are they meant tobequick, tothepoint, andonyour oorstep fewdays, swellasthesimplification d ina a of automatic personalized content. There arenohassles ofendless filling. outiners, aremore form R who drawn tothepractical aspects ofwireless data aswell stheentertainment willbedrawnoFroghop tothefactual a aspects, t due context ofourkivia questions, aswell sthe a practicality oflearning thehow stock arket about the m works inapractice environment. COMPETITION AND COMPETITIVE DIFFERENTIATION In-fusio- a French igh-techtartup h s foundedn1998providing i entertainment content andservices. hiscompany T offersdevelopment, hosting, launching, andanimation games of using WAPandSIMcardsintegrated mobile in devices.Theyhavelaunched ames g withsevenEuropeanervice s providers havealliances ithAlcatel, and w Schlumberger, Mitsubishi, Trium,andPackard Bell. Theyalsohavetechnology alliances withPhone.corn and Webraska. InJuly 2000,In-fusio reached its500,000th ame g session layed.In-fusio p recentlydded a anadvertising element theirbusiness odel, to m where branding seems betheprimary to intention.Theyhavelongevity the in marketplace aswell s strong uropean a E cartier relationship, lotoftheir buta games aregraphics based, which not will faretoowellnU.S.'s i pdmadly based text handsets. VICKY JACKSON (617)279-0106 VICKYC_,FROGHOP.NET PAGE1 1 PRIVILEGED &CONFIDENTIAL Froghop WWW.FROGHOP.NET Digital Bridges- a Scottishompany c founded 1998,their visionis to allowpeopleto engagein interactive in entertainment at anyplace atanytime.They supplyontent c withperformance scaling tosuit agreed licenses foreach network perator.Theyhavedeveloped o alliances withW@P,HP, Ericsson, Motorola's WebW/OWires Alliance Program, Nokia, AI,Symbian, M andPhone.com. Using theirInternet sitewirelessgames.com, theyhavelaunched several uites interactive s of games. Theyalsoplantoofferonline shopping forproducts dedicated thewireless to experience. InJuly 2000, igital D Bridges reached00,000 ames 1 g playediaWAPphones. v Themajority playersre of a subscribers toOmnitel (Italy'second s largest mobilehone etwork), p n Digital Bridges' firstlive operator customer. Wapscallion.net-a British entry, heyare utilizing APtechnology developames.Wapscallion.net t W to g recently signed analliance withFonedata, Britain's firstactive APportal. W They havealso joined Motorola's Wireless Alliance andwererecently featuredntheItalian o Tuttowapiteas "siteof theweek."Their s content includes games, point conversion forproducts, messaging services, rooms, chat Curious FactsandWAPQuotes.InJuly2000,they have received 680,000 hits.They don't ppear a tohave anadvertising builtntheir model i business. Picofun based Stockholm, in Picofun markets obile m Intemet entertainment itsownbrand, distributes under and it via network perators, o virtual perators o andindependent mobile portals theenduser's to cellular hone. icofun p P launchedmulti-user a WAPgame May2000. Picofunootball strategic in F isa "football manager-type" gamewhere users canbuy andsell layers p tosetupindividual challenging other teams each intournaments. Thegame canonly be played onWAP-phones, butparticipants andfanscanfollow theresultsndgetstatistics a fromPicofun's website. Picofun wasan E-challenge 2000finalist, pan-European a competition select he hottestntemet wireless to t I & companies inEurope.Picofun isco-operating withmarket leaders wireless in communication as Ericsson such and S company based SanDiego, in CA,Indiquesigns, d packages, produces andsyndicates mobile-centric eyreceived7million etworkrom offerings t$ owireless infundingperators, Europe ndCarphone n o Softbank servicesroviders f wireless a p Warehouse. (non-established) andestablished _equi_H_artner internationally.addition, In theyoffer single a point, ertical, v mobileeady r offerings thataddress the "_l:_cific demographic segments ithinhemobile onsumer w t c marketplace. Theypromote themselves marketing asa company through theiruniquendproprietary a dataservices undled ithadvertising b w andpromotion offeredhrough t their established continuously and growing distribution channels. Boxerjam.com, a producer ofIntemet games use will Indiqu technology andplatform todistribute theirgames thewireless orld.Indiqu in w hasalsopartnered withgo2 systems tobring entertainment programs through o2's g localization softwarendinfrastructure. a Weconsider Indiqu a very seriousompetitor c becauseftheinfrastructure o andlicensing opportunities their that platformffers. Westrongly o believe thatFroghop canoffer more options tocontent providers thanindiquue d toourgranular personalization engine enabling ustodeliver relevant content andmarketing message toeachuser. Unknown Games a UScompany based New in YorkCity,Ungames obtained $1.2million infundingune 2000 J of (same thatFroghop time started) Alacrity from Ventures, Windnet ventures, andHudsonentures. V They have strong a management from team thetraditional gaming industry. Assuming thatthey existed efore obtained b they funding, they seem tobemovingery v slowlysthey a donotcurrently any have games launched orpartnerships established. Froghop Differentiation: While some companies havecertain elements thatFroghopas,nota single h onehasthecomplete ackage p to optimize business their model. earea technology W company, andhave carefully designed ourtechnical architecture toreflect theintricacies involved forseamless integration: • • • • • • • customizable entertainment delivery latforms p game player connectivity between Cand P phonesa viral arketing a m tactic apersonalization engine automatic transcoding technologies tooptimize content awide over range ofdisplay formats adservingapabilities c m-commerce couponing and functionalities extensive tracking andreporting system VICKY_FROGHOP.NET PAGE2 1 VICKY JACKSON (617)279-0106 PRIVILEGED & CONFIDENTIAL Froghop WWW.FROGHOP.NET Like the diagramrepresentedearlier in the executivesummary,there are manycomponentsinvolvedin order to optimize a solid mobile advertisinginfrastructure--thesticky mobile site, the business solution offering, and an intelligentback-end. This completepackageis not something that can be easily replicated. We havealso leveraged relationships fromall anglesof the affectedindustries,and have a track recordof rapidexecution--whathas taken othercompanies over a yearor more,Froghop hasaccomplished withinits 6 monthsof operation. Fromthe gamingcontentside,our primarydifferentiators thatwe feelmakefor a premiumproductare: Personalized Content. Tailoringour alreadysophisticated selectionof games,SmartThinker enablesFroghopto TM develop extremely ranular serprofiles, ccommodating g u a evenfurther thetypeof content nd levelof challenge a a for onetooneexperience. Interconnectivity Among Friends And Family. Multi-player gamesare initiated usersand notifiedvia email. by Already ourbetatesting, urmobile in o chatfeature--availablehrough Trivia,hasreceived t RJ ravereviews. Users havecommented ntheusefulness thisfeature a means o of as tocommunicate instantly ithothers w while embedded in theentertainment experience. Pick up, Put Down,and Pick Up Again Games. Sinceuserswillbe playing Froghop asa quickbreakduring down time,itisverylikely thatuserswillbeinterrupted. of ourgamesaredesigned All toallow userstodropoutanddropin without aving startalloveragain. Thatincludes urteammodegames--play h to o against bunch friendswhile a of waiting lineat theairport...droputto whenit'sfinallytheirturntocheckin...thenresume in o thesamegame(in real time)whentheysitbackdown towaitfortheirplanetoarrive. VICKYJACKSON(617) 279-0106 VICKY_FROGHOP.NET PAGE 13 PRNILEGED &CONFIDENTIAL B Froghop THECOMPANY WWW.FROGHOP.NET Going wireless...why isitsoimportant? Becausef theubiquitous o presence...because nobody ants beleftbehind w to in thedustlikewhen Intemetirstarrived...because the f ultimately increasedustomer cquisition c a iswhatbusinesses strivefor. Butwitha wholenewsetof complexities dueto limited technological capabilities, theshiftin mentality f o consumers ontherun,andtheveryarchitecture existing of business, wellthought-out a process ndinfrastructure a has tobeestablished tofacilitate asuccessful wireless trategy. s StickyUserinterface.Froghop hasandwillcontinue toestablish itselfasa wireless iteworthy businesses be s for to associated ithby providing satisfactory of traffic.Through w a level ongoing research anddevelopment, Froghop will offerawidevariety compelling contentoleverage serwordofmouth t u referrals swellasforgeadditional a relationships withnetwork arriers, c mobile portals, ndcontent ggregators. a a Itisalready difficult todrivetraffic websites,andwill to beevenharderorbusinesses succeed f to wirelessly withoutntegrating i intoFroghop. Effectively Deliverhe Message. obile t M advertising isoneofthemostdebated topics rightnow,butmuchofthatis dueto a narrow-minded viewof whatadvertising "Advertise" definition eanstocallto publicattention the is. by m by emphasisfdesirable ualities o q soas toarouse desire a tobuyorpatronize.It'snotallabout anner ds. Advertising b a isa natural partofthecustomer acquisitionrocess. ontextual p C relevancy, qualitativealue v inthemedium, "out-of-thebox"creativity, ndpersonalization just someof the tacticsFroghop a are uses. Qualitative value,whichis some characteristic medium ofa thatenhances thechances thata messagearried c withinitwillbeeffective, iswhatFroghop aimsto provide through itscontent-embedded delivery.Media arenotsimplypassive advertising carriers, utrather b activecarriers.Froghop designs itsgames andservices around centralocusof maximal a f advertisingxposure nd e a effective onetoonemarketing, providing aneffective advertising edium m thatgrabsas wellas holdstheaudience's attention. Personalization. Thinkoftheusers theirattention probably eing is b diverted theycheck seeif a flighthas as to arrived. hey T alsohave choice a ofwandering overtoa nearby ewsstand n tosiftthrough magazine. a Think the of businesses - iftime andmoney isspentolearn t anddevelop wireless howmany a site, users willit actuallyttract? a Whatisthebestwaytopresent alltheinformation? Smartphones arenotconducive browsing searching, to or and navigation notbeeasy.Having evices varyingsernterfaces will d of u i complicates theissueurther. here f T aremultiple problems presented thatFroghop's here SmartThinker personalization takes engine careof. • Building usage tailoringontent ased individual loyal by c b on interest andskilllevel,we are positioning ourselves tobe efficient fun,notjustreliefo sheer oredom. sking t b A people tofill outdetailed forms will increase accuracyf personalization, the o butthe morea useris troubled, feweruserswillplayalong. SmartThinker increases accuracy without frictionygathering b information gradually, allowing toexplain users themselves through actions. their SmartThinker toextracthebusiness's isable t offering thatisrelevant totheconsumer based onthebehavior patternsand interactions Froghop, with seamlessly integrating into a positive it user experience. SmartThinker alsopossesses transcoding capabilities sothatcontent willbe automaticallyoptimized be for varyingisplayharacteristics. d c Havinglreadystablished a e thefactthatFroghop high isa traffic wireless site, wehave theability tobring businesses optimal exposure inanever expanding andfiltered serbase. u • Create Desire andAllow Consumers toActUponIt. Froghop's targeting capabilities aremore accurate current than personalization methods onthewireline Intemet where users canchangeheirpreferences, user t a lost canindicate "preferences" they that donothold, ultiple may m users share thesame computer andalgorithms mayincorrectly judge thetruepreference which motivated action. Ona verypersonal, user non-shared mobileevice d withouradaptive learning persenalization method, theprofile earebuilding w isofoneindividual. there Thus isagreater chancehatthe t demand wearecreating ismore relevant. Integrating multiple toallow ways userresponse toaction, whether itisan inquiry foradditional information an actual ale,we areclosing loopin thedriveforcustomer or s the acquisition. VICKY JACKSON (617)279-0106 VICKYC_FROGHOP.NET PAGE4 1 PRIVILEGED &CONFIDENTIAL OurConsumer Offering WWW.FROGHOP.NET Froghop Gamez a collection classic, of casino, andhomegrown games, allwitha Froghop flairandpersonalized through SmartThinker. Aswelearn about theinterests ofourusers, weautomatically thecontent--as asthe adapt well advertisement--to accommodate. Through theintertwinement of ourvarious ames, e willbe ableto havean g w extremely granular profilefourusers, o which allow will ustoeffectively facilitate precision onetoonemarketing. Froghop Soprano Batteryrainagendsound d a qualityretworeasons hy a w thesmartphone shouldn't used be asa Walkman yet,butsampling quite songs for30seconds isadifferent story.Sample ongs favoritertistsndhave s from a a theabilityopurchaserighthere t it t andthen.Froghopatalyzes c commerce flowbybridging demand eneration g with demand fulfillment, eliminating from leaks thesystem byremoving anyshifts incontext. ifthere's similar And a sounding artistto thealbum thatwasjustbought, suggestion a willbe presented. vertime,ourlearning O technology will personalize theselectionfartists, utwillalways o b allow them tosurfoutside theirnormal realm ofinterests, observing as theuser evolves. Ribbit- Standard ndcustomizable for aonetomany a icons quick entrycommunication, thishasranked veryhighinour surveys product evelopment. uppose meeting of d S a hasunexpectedly dragged on--a familymember eedsto be n notified ofthatdelay--and thereisnowaytomakea phone call. Justselectaniconandsendthatmessage ithonlya w fewclicks.Noneedto leavethemeeting makea phone to callor to distract thers o whilean SMSmessage being is typed.Withtheoneto manyfeature, serscanalsoveryquickly u sendout invites tofivebuddieso graba biteto eat t afterwork. FroghopFunfinder Tailored through users'behavior the andinteractions withGamez andSoprano, userswill log ontoFunfinder receive and suggestions goodeats,liveperformances, of andotherspecial vents e basedon current geographic location. Froghop Flicks- Preview newmovie releases ndbuytickets a forthenearest theatre, tailored toyourgenrepreference andcurrentocation.As technology l advances, wearehoping havetheabilityto viewmovie to previews ndpurchase a tickets forthenearest theatre allwhileonthego,making more efficient seoftimetomaximize u thequality offun. SmartThinker Technology "...theAOLs andCNNs oftheworld, andsmaller, lesser-known content vendors, muststopbelieving brand their will bring people wireless. to Thetypeofinformation thatworks beston thewireless ebissmall, ighly W h targeted nd a hyper-personalized.., therealdifferentiating willbetheprecision ithwhich factor w those content providers candeliver usefulnformation wirelessevice i to d users. ontent C vendors usttakepersona/ization m tonewextremes, providing hyper-specific information isappropriate medium...'-- Haskin, that tothe David Managing Ed#or, allNetDevices SmartThinker serves threepurposes: ) to regulateheskilllevelso thatflowcanbe moreeasily 1 t achievednd a maintained,topersonalize 2) thecontent andmakeit more efficient andrelevant totheuser, nd3) tounderstand a our players better. Because f SmartThinker, o Froghop hasa powerful combination a sticky of siteanda granular understanding ofourusers, maximizing ourprecision toonemarketing. one SmartThinker a personalized is information filtering technology thatis highly responsive the needsof the user. to Algorithms formodeling adaptive andexploratory behavior infilteringreused a duetothedynamic nature f interests o of Froghop's altering users, itsbehavior inanadaptive fashioniatheprocess v ofacquiring knowledge. new Theacquisition of newknowledge isdone through theuser's interaction our with games other ontent. and c SmartThinker willremember the user andindividualize performance, its maintaining profiles thatarerepresentations of theusers'nterests. he i T population profiles illcontinually of w evolve response dynamichanges userpreference. in to c in Whenpopulation evolves onegeneration from tothenext,profiles ithhigh w fitness reretained, a while unfit nesareeliminated. o The vacancies created inpopulation arefilled bygenetic ariants v ofthefitones,ntroducing members i newer intopopulation, which might potentially usernterests than match i better theunfit rofiles replaced. p they VICKY JACKSON (617) 279-0106 VICKY(_FROGHOP.NET PAGE 15 PRIVILEGED &CONFIDENTIAL WWW.FROGHOP.NET Utilizing combinationf personalization a o techniques, SmartThinker willbe capable entertainingot onlycurrently of n known needs ofuser, utalsoexploringifferent reas b d a tofindtopics potential of userinterest.Instead f relying o solelyon rulesbasedsystem, hichonlyallownewrecommendations w basedon frequency andotherpatterns pasttopics, of SmartThinker searchnewareasand skilllevelsthatcouldpotentially user interest, venif it maybe slightly will fit e unfamiliar territory.It iswiththislevelof detailandtypeofresponsiveness thatmakes Froghop suchaneffective direct marketing tool. ThePsychology f It All o By reaching optimalevelsof flow,we in parallel avereached lot of thecharacteristics leadto successful l h a that emarketing: easeofuse,funto use,fast,andpersonal. hen W flowoccurs,hemoment t itselfisenjoyed andtheconsumer's capabilitiesrestretched iththelikelihoodf learning a w o newskills,increasingelf-esteem, s andpersonal complexity, which leads theindividual moreapttoaccept nador purchase. a Athletes referto"flow" s"being a inthezone."tformalizesnd I a extends sense a ofhappinessndgoodfeelings, a incorporating theextentowhichconsumers t perceive sense control a of overtheirinteraction intheenvironment, theirattention ntheinteraction, focus o andfinditcognitivelynjoying. e _'_ increase challenge _ q Control _'_ decrease challenge }4 skill • challenge Charactensbcs skill = challenge Content Charactenst]c,s attract attention 1 Yes telepresence (Rltuahzed) NO Source:Hoffman T.Novak, Graduate ofManagement D. and Owen School Itisfromtheconcept f"flow" o thatFroghop designs allitscontent, aximizing m theprocess f optimal xperience. o e Whyis flowso important Froghop?Because to obtaining pointwherechallenge ndskilllevelsare in syncwill keeppeople a a coming back formore.Inanenvironment where therearenoflashy bellsandwhistles tokeepuserspreoccupied,isvery it easyto losesomeone'sttention, a thustheirloyalty. We'renotproviding criticalinformation, userswillbe a lot less so tolerant when flowisnotachieved. hecloser earein reaching T w flow,themoreauserwillinstinctively pickupFroghop. VICKY JACKSON (617)279-0106 VICKY(-_FROGHOP.NET PAGE6 1 L "i PRIVILEGED & CONFIDENTIAL MARKETING Guerilla Marketing Tactics • Wordof Mouth o Froghop WWW.FROGHOP.NET Friend referral ystem a registeredroghop s F usercansendan emaillinktoa friend andearn100points To prevent sersfrom u abusing thereferral andencouraging customer cquisition, a thereceiver willhaveto register withFroghopand reference thesender'sFroghop userID in orderfor thesenderto actually receive the100points Having theability interconnect to between andWAPdevice PC encourages orepeople m toexplore and become accustomed ithplaying w actualwireless games,as wellconnecting friends to whodon'towna Net device We choseto havean exact replicationn our HTML siteto decreaseany chancesof o disappointment whentheuseractually plays ona phone, wherethereisa much smaller laying p screen. o = • Froghop newsletters, willcontain newdevelopment efforts andinteractive tidbits toourregisteredsers u NextClickis the wodd'sfirst Personalization gency, helpingcustomersdevelop sound, strategic A personalization solutionAs a member ftheNextClick etwork, roghop o N F willreceive thefollowingenefits: b o o o o o gainvisibility through itsaggressiveetwork n marketing program positionedsexperts a inthefield,gaining credibility onlinecommunity free advertising (currently underconstruction), where membersare provided free banner advertising onthesponsoredites s opportunity toco-author hitepapers w freemagazine advertising everymonth, extClickunsa full-page d in major N r a industry agazines uch m s asBusiness0 andRedHerring Eachadfeatures neoftheNetwork 2 o members, ndtherearecurrently a 21companies inthenetwork Sliding scalevolume discountoradplacementsy Network f b membern targeted i media LinkfromNextClick's siteto Froghop'site s o o • FrequentHopperMiles- to encourage increased usage,therewillbe vadousporksassociated withtheir status (Tadpole, roglet, rogger, F F andFroghopper) tatus S isbasedonusageonly,notskill Wewilldistdbute ress p releases fornews worthy activities • StrategicAlliances • We already haveanalliancewi_mobile portalstrategically partneredwith Nextel. Severalother WAPportalshavecontactedus"_nd-w_are discussion in phase. We are alrea._Lpa_nered ith SprintPConS.,_.g._tl:_h_ w of Aliant, and are tryingto establishalliances r' • withother network carriersto that we canbefeaturedon the ca' ° " " - --_e"e-fs ,:h_edeckfor visibilityandeasyaccess. • We are in the processof solidifyingseveralpartnerships ith onlinecontentsitesthat caterto an overlapping w target marketwherethere will be revenuesharingfor ddving traffic and registration. Microsoft's.NETand YadaYadahavecontactedus to facilitatethe development f PocketPC and Palmcompatible o games. VICKY JACKSON (617) 279-0106 VICKY_FROGHOP.NET PAGE 17 i PRIVILEGED & CONFIDENTIAL Froghop WWW.FROGHOP.NET Traditional Marketing Tactics • Wewillhavea booth tradeshows, at training, ndworkshops/seminars a forsalesandexecutive management, wherewe willnotbe completelyrowned a bunch otherwireless d by of plays.Beingcentered fun,wewill on be abletostandout,byoffering demoandsweepstakes. hiswillbe a nicebreakfromwhateverheyare a T t ontraining for. Thiswilltargettheyoung professionals andbusinessxecutives. e We will strategically lace billboard p advertisingt airportdisplayterminals majormetropolitanities. a of c Billboards n aboveground o trainterminals (wherecellphonesstillhaveconnection) willalsobe effective. Thiswilltargetourentiretargetmarketwhentheyare in transit. Strategicallylacedbillboards waiting p in areascanbeveryeffective ecause b wecan provoke immediate action sincecuriosity peaked is andthereis nothing bettertodothantocheck usout. • MANAGEMENT BOARDFADVISORS AND O Management VickyJackson President, EO,andFounder. C Enteringintothe business worldat age sixteenwith her firstintemshipat Lockheed,Ms.Jacksonhasalwaysbeena leaderand a pioneer. Havingworkedat variousFortune500companies well as start-ups,Ms.Jacksonhasgained as considerableexperiencein sales,finance,operations,recruiting,and strategicplanning. Mostrecently,Ms.Jackson was responsiblefor budgeting,processengineering,and projectmanagementin software developmentat Nextel Communications.Prior to that, Ms. Jacksonwas responsible financialanalysisand was electedto a committee for dedicatedto improving corporateculturefor AT&TLocalServices(formerly TeleportCommunications roup). G While workingfull time Ms. Jacksonconsultedfor severalemergingengineeringand film ventures,developingand streamliningbusinessprocesses. She also handled all financial, operational,and promotionalfunctions of an entertainmentproductioncompanythat she co-founded. Other initiativesinclude foundingthe WorcesterCentral BusinessGroup,whichwascreatedas a localresourcegroupto helpmeetthe needsof existing,merging,and start-up businesses. Ms. Jacksonchaired all meetingsand regulatedmembershipactivities. Ms. Jackson attendedthe Universityof Massachusetts Amherstwhereshe receiveda Bachelorof Sciencein Accounting. She hasalso taken graduate level coursesat Harvard Extension School and Bentley College, and completedcomprehensiveDale Carnegietraining. A diverseskill set, combinedwith a knackfor creativeresourcemanagement, as allowedMs. Jacksonto transform h seeminglydisparatepuzzlepiecesinto buildingblocksfor fulfillingvisions. Forwardthinkingyet able to execute,Ms. Jacksonwill givedirectionandleadership towardthe achievement f Froghop's o philosophy, ission,strategy,andgoals. m She will overseethe design,delivery,and qualityof programs,productsand services,assuringthat the organization is consistently presentedin a strong,positiveimage. Ms.Jacksonis currentlyon the ResearchCommittee the Wireless of AdvertisingAssociation(WAA)driving ConsumerAcceptanceTesting,and sits on the Advisory Boardof a wireless educationapplication startup. Cosmo Mao- Creative Directorand Co-Founder. Mr. Maoearneda degreein Mechanical ngineering E from the Universityof Californiain Irvinewhilecontractingworkin customauto-multimedia interiors,where he learnedto honehis skillson productaestheticsand innovativedesign.A strong background engineering in combinedwith a naturaldesigngift allowedMr. Maoto mix the 'technical'with the 'creative'andrapidlyexcelin the fieldof mechanical ngineering. e Whileworkingfull time, Mr. Maobeganinvolvementn a startup company,NuvoLP,and furthersharpened design i his skills. He designedvarious homeautomationproductsand began designingtheir website. In designing his first websitefor Nuvo,he realizedthat he had a knackfor jazzy, eye-catchingdesignsthat peopledemanded. Shortly thereafter,Cosmoobtainedhis own domainand started designingwebsitesfor variouscompanieswhilestillworking full time as a mechanical ngineer. e VICKY JACKSON (617) 279-0106 VICKY(_FROGHOP.NET PAGE 18 PRIVILEGED & CONFIDENTIAL _Froghop WWW.FROGHOP.NET Currently,Mr. Mao continues expandhiscreativityby workingwithall aspectsof graphicdesign,andis channeling to the sameenergythat he hasput intoengineering,ntographicarts.Inthe past yearhe hasgainedexperiencein print, i layout,electronicand compositional rt throughvariousclassesand workingdirectlywith ad agenciesin Ventura,CA. a Applyinghis talentsof graphic imagingand design and user interface,Mr. Mao is responsiblefor site maintenance, appearance, dvertisingand promotionat Froghop. Whilefulfillinghis role as CreativeDirector,he is also currently a working full time at Valex, where he is responsiblefor engineering,documents control, intranet development, marketing,and advertising. He will continueto workfull time at Valexto help offset some expensesuntil Froghop receivesadditionalunding,wherehewill join Froghopfull time. f Benjamin Trinder- ChiefOperating Officer. Mr.Tdnderisa uniquelyalented t individual adeptinthreekeyareas:technical, creative, ndbusiness. hisisevident a T in all of Mr. Trinder'sendeavors. In highschool,he was already programming Fortran,Cobol, APL, Machineand Assemblylanguage,andC+. Tendingto his creativeside,Mr. TrinderstudiedArchitecture and Designand earnedhis BS from Georgia Instituteof Technology. He then went into the entertainmentindustry, utilizing his strong organizationaland leadershipskills to manage various multi-milliondollar projects,overseeingstaff of up to 30 employees andconsultants.Hisportfolio projectsincludesa numberof hotels,restaurants, attractions. of and To furtherdevelophis businessskills,Mr.Trinderwentonto pursuehis MBAfrom BabsonCollege,specializingin new technologyventurecreation. While studyingat Babson,Mr. Trinderconsultedfor companiessuch as Walt Disney, Boston Bruins ProfessionalHockeyAssociation, Motts, Inc. and Stacy's Pita Chips. For these companies,he performed vastrangeof servicesincludingmarketing, ntrepreneurial a e evaluation, rojectmanagement, ndfinancial p a analysis. Bornin Brighton,England,Mr. Trinderis a European nationalwhocurrentlyresidesin the US. He hasworkedabroad in Parisand in Canada. With aninternational ackground b and a powerful ombination technicalsavvy,solid project c of management skills,and businessacumen,Mr. Trinderworkscloselywith the CEOin operational nd strategicaspects a of Froghop. He is also responsible the financialhealthof Froghop.To enablethe Companyto devoteseed funds for towardsdevelopment, roghop F hasaskedMr.Trinderto continueconsulting timeto WaltDisneyImagineering full while fulfillinghis responsibilities t Froghop. Once sufficientfundinghas beenobtained,Mr. Trinderwill join Froghopfull a time. Krassen Draganov ActingChiefTechnology Officer. Mr.Draganov istheCEO andco-founder Netage of Solutions, companyocused a f onstrategic design, evelopment, d and implementation distributed of infrastructure services. Netageis an Intemetapplicationsnd designcompany, a providingdvanced a interactiveolutions today's s for successful business. hilerunning US operations Netage W the of Solutions, Inc.sinceitsinception 1998,Mr. Draganov orkedas an IT Director t Summit artners,a leading in w a P US VentureCapital und.Prior F tothis,Mr.Draganov astheCEOof Draganov dvertising--a w A Bulgaria basedadvertising company foundedin 1995.He received BA degreein Business he a Administration fromtheAmerican University in Bulgaria, andanMSdegreeinFinance fromBoston College. r.Draganov M haspassed LevelI of CFACertification. A strong businessndtechnical a leader,Mr.DraganovranslatedheFroghopision t t v intoa realitybymanaging allof the technology/architecture planning and development.Mr. Draganov willin the interim, ontinueto plan,build,and c manage scaleable technologyrchitecture Froghop, wellas provide a for as valuable business insightromhisindustry f experience. FredrikVelander- Business Development, ales,and Marketing. S Mr.Velanderiscoming onboard withFroghop andwilljoinourexecutive anagement m teamas VP Sales,Marketing and Business Development after sufficientunding f hasbeenraised. He hasextensive experience the startupof in international andbusinessevelopment d divisionsf multipleompanies, which o c allof achieved profitability within year. a Mr. Velanderhas a BA in Biology/Premed from St. Olaf College,and an MBA in finance and marketingfrom Pepperdine niversity.Mr.Velander U hasbeenresponsible forfinancialorecastingndcashflowprojections, f a market VICKY JACKSON (617) 279-0106 VICKY(_,FROGIIOP.NET PAGE 19 PRIVILEGED & CONFIDENTIAL Froghop WWW.FROGHOP.NET research,strategicvision, and numerousglobal productlaunches. Most recently,Mr. VelanderstartedVelidine Corporation toacquire MirrorSoftware's ssets,n an efforttodevelop a i futuregenerations thesoftware. During of this process, r.Velander orked M w withvarious Venture Capitalists andraised $2.2 Mfrominvestors. Priorto thatventure,Mr. Velanderwas Director f New Business o Development International and Salesfor Mirror SoftwareCorporation, here he builtthe international w business development division, et up and managedan s international istribution d networkof 110 distributors 72 countries,and had direct Profit/Loss in responsibility. Repositioning productinefocus software, r. Velanderncreased company the l on M i the profit argins m by50%. Multilingual (French, wedish, erman, anish, ndSpanish), S G D a Mr.Velander asborninSweden, aised France, ndnow w r in a a permanent resident oftheU.S--making hima trueinternational andanoutstanding addition toFroghop. Boardof Advisors DekkersDavidson- CEO,Antiques America.com (formerPresident f RogersCommunications o Wireless and VP Sprint CSNewEngland) P TamaraCasey- VP Technical Services, Nextel JasonLee- Associate artnerClientServices, archFIRST P m (former PBusiness evelopment V D ofSafetyTips andCIO of MyFeed.com) JeremiKarnell- VP andCreative Director, Oneto OneInteractive clients (with such Motorola ndNextel) as a Christopher Stevens- Director usiness evelopment, B D Engage VICKY JACKSON (617) 279-0106 VICKY_FROGHOP.NET PAGE 20 m PRIVILEGED CONFIDENTIAL & WWW.FROGHOP.NET ECONOMICS OFTHEBUSINESS NDFINANCIAL ISCUSSION A D From ourinception inJune of2000, uroperations consistedrincipally design o have p of andcontent development. We have established a number ofstrategic alliances partnerships and toexpedite development our efforts.Wewillneed to continueurfocus o ondevelopment, marketing andsalesefforts, ndthecompletion ourteam. Thefinancial a of projections provided herein reflect projections fortheoperating resultsndfinancial a conditiontheCompany of overthe nexthree t fiscal ears, y ending December 31,2003.Itshould enoted b thattheprojections donotinclude theimpact of anyfuture cquisitions a orstrategic investments. COSTS Researchnddevelopment a expensesonsist rimarilyf expenses c p o incurred thedesign, evelopment, in d andsupport ofourtechnology. Weexpect &D R expenses remain substantial to a portion ofouroverall xpenses swecontinue e a to develop ourtechnology andfutureproducts. Salesand marketing expenses consistprimarily salaries, ommissions, of c consulting fees,tradeshow expenses, advertising, marketing expenses, nd allocated a overhead. We intendto increase expenditures sellingand for marketing saresultofourlaunch, a growth andexpansion. General andAdministrative expenses include finance, ffice o operations, legal,accounting, andotherprofessional fees andservices. ncreases I ingeneral andadministrative expensesreplanned a aswegrow.Welease ourofficefacilities underong-term l cancelableperating o leases. Weanticipate thatwewillneedapproximately $3million forfurther evelopment ourproducts ndservices. Even d of a afterwe obtainthedesiredcapital, e suspecthatwewill needto raiseadditional w t capitalto continue operations. However e plan to manage growth,development products technology, response competitive w our of or and to pressures itha hardfocusonfundamentals; revenues, w profit, andbalancedalesandmarketing s initiatives. nce O we optimize functional a business odel ewilllikelypursue m w additional capitalorrapidscalable f expansionndpotentially a theneed toacquire services ortechnologies. PROFIT POTENTIAL ANDDURABILITY Profit otential p anddurability arelargely driven bythenature fthemarket nd o a thisindustry. Wireless entertainment is intheinfant tages f growth there huge s o and isa upsideotential p forthis business. However, webelieve thatweare ahead ofthis growth curve therefore experience and will substantial pdoroachieving losses t sustainable profitability. Cash $3,000,000 ......................................... Flow $2,500,000 $2,000,000 --_._ $1,000,000 $1,500,000 $500,000 $0 4 Monh Start-up Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Month 13 Month 14 Month 15 Month 16 : Time VICKY JACKSON (617) 279-0106 VICKY_,,FROGHOP.NET PAGE1 2 g PRIVILEGED & CONFIDENTIAL MONTHS TOPOSITNE ASH C FLOW WWW.FROGHOP.NET We anticipatethat our venturewill attainpositivecashflow by the 13 thmonth of operation and sustainpositivecash flowin the 15• month. REVENUE COST AND DRIVERS As mentioned the ExecutiveSummaryof this planourrevenue in driversare primarilyas follows: • • • • Content Integrationand Customization Licensing &Advertising M-commerce& E-commerce Revenue Sharing To help lowerthe initial cost of development,Frog w_'__ their expertisein GuerillaFinancing Tactics _ development of end-to-end solutions and __ghop was able to save on both time and money. Froghoptappedintothe talentof destg_, developers, nd databasearchitects a lowerpricethanif a at Froghop had recruited its own staff through the tight U.S. labor supply. With an established development process, they werealreadyfamiliarwith eachother's workstyle. This arrangement lsoeliminatedupfrontrecruitingfees,benefits, a computers, and other overhead associated with new hires. They were able to put everything together in 12 weeks. The CEO of NetageSolutionsand acting CTO for Froghop,translated the Froghopvision into a reality by providing technology strategy and the management of all technology/architecture planning and development. With a discounted development ost in exchangefor equity stake on top of the lower cost of labor, Froghopsignificantlyreducedits c startup costs. Cosmo MaDand Ben Trinder,while fulfillingtheir executivemanagementduties,are workingfull time to minimize overhead costs so that our seed fundingcan be allocated for development. Both willleave their current positions and comeonboardwithFroghop fulltimeonceweachieve ourfirst round investmentarget. t BALANCE SHEB" Froghop Inc ProFormaRnancialStatements BalanceSheets 4Month Oescnp_on Assets Cash.'¢,dEqu;v_ents Accounts Rececvable Development osts" C Ao::urnutated Am_LZahU_" OtherAssets TotalAssets LiabJhtles Ascounts Payab'e Debt OtherLl_l>htles Totsl Llablldles Equity C_pltalContsbuhon DlSttlbu tioP,.s RetanedE_nJngs Total Equdy Total Llabditlesand Equity $3,000,000 _0 {$449,045) $2,550,955 $2,656,928 $3,C,00,000 $3,000,000 $0 _l $3,000,L;00 $3,000,000 $3,000,000 $0 $0 _) $3,000,000 $3000,000 $0 $0 $3000,CO3 $3,000,000 $0 $0 $3,CO0,000 $3,000000 $0 $0 $3,000,000 $3,000,000 $0 _0 $100,000 $0 $5,973 $105,973 $501,424 $0 $14233 $519,658 $285,642 $0 $22494 $305,t35 $361,886 $0 $30,754 $392,639 $261,980 $0 $39,014 $300,994 $336,932 _ $47,274 $3M,206 $313,649 $0 $55,534 $369,163 $4L6,331 $0 $63,794 $460,125 $240,459 $0 $72,054 $312,513 $431,912 $0 $80,314 $512,226 $295,797 $0 $885?4 $384,371 $346276 $_ $96,834 $443,111 $356,815 $0 $105,094 $461,909 $356,815 $0 $105,094 $461,909 $2,506,928 $0 ($I00,000) $0 $50,000 $2,456,929 $2,144,756 $1,680,674 $1,471,929 $1,367,078 $',132,.681 $0 $0 $0 ($.50,(X',0) $0 $200,000 $2(X) 00 0 $200,000 $200,000 $200,000 ($8,333) ($16,667) ($25,000_ ($33,333) ($41667) $50,000 $50,000 $50000 $50 COO $50,000 $2,386,422 $1,914,007 $1,696,929 $1,533,745 $1,341,015 $917,119 $0 $200,000 ($50,000) $50,000 $1,117,119 $767,695 $0 $200,000 ($58,333) $50,000 $959,362 $540,248 $0 $2;3_,000 ($86,667) $50,000 $723,581 $6_5,154 $0 $200,000 {$75,000) $50,000 $870154 $523,622 St) $200,000 ($83333) $50,000 $690,299 $539,182 $0 $200,000 ($91,657) $50,000 $997,516 $594,200 $0 $200,000 {$100,000) $50,000 $744,200 _,200 $0 _,000 ($1 CO,000) $50,000 $744,200 Start-up Period Yeart Month 1 Month2 Month3 Month4 Month5 Month 6 Month7 Month6 Month9 Month10 Month 11 Month 12 Year1" ($929235) (St,t94,128) ($L495,710) ($1,567,249) ($1,843,19I) ($2,L',52,064)($2,320,763) 1923_8,932) 192.442,072) ($2,494,082) ($2,545,595) ($2,517,709) ($2517,709) $2,070,766 $t,805,872 $2.596,422 $2,114.607 $1,504,290 $1,896,929 $1,432,15t $1,156,80g $947,936 $879,237 $9tl,068 $923,591 $557,928 $1,670,154 $905,9t6 $890,289 $454,406 $997,516 $482,291 $944,200 $482,291 $944,200 $1,733,745 $1,541,015 $1,317,119 $1,159,362 [* Year1 includescostsdunngstartup phase I 3 I_ Assurnesamo_zeddevelopmentcosts Agcosts fullydepreci_edasoftheendofYear VICKY JACKSON (617) 279-0106 VICKY_FROGHOP.NET PAGE 22 PRIVILEGED CONFIDENTIAL & Froghop WWW.FROGHOP.NET INCOME STATEMENT Start up + 3 yr. IncomeStatement Sep Revenue/Sales Advert_slngrevenues M-Commerce &E-Commerce Sponsors Custom_.abon &Independent Prolects Subtotal Other Rev MOUrevsharlng Strateg=ca]lJances %commercePnze _ Sponsors TotalRevenuo Expenses Mktg andPromotional Exp Banner/Internet Advertising Total anner/Internet B Brand Adve_smg Total randAdCost B Misc TravelandEntertamment $ SalesMateda}s&M_Markehng $ TotalMktg andPromotional Exp %of Total ales S ResearchndDevelopment a Intemal R&D $ 1,000 $ 1,000 $ $ $ $ $ $ $ $ 1,000 $ 1,000 $ 61,000 $ 1,000 $ t,000 $ 61,000 $ 0% 24,000 $ 24,000 $ 1,812,540 $ 83% 120,000 $ 150,000 $ 2,946,626 $ 26% 144,000 180,000 4,801,035 14% $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 66,836 $ 12,000 $ $ 2,180,438 $ $ 12,000 $ 1,575 $ 11,395,932 $ 24,000 1,361 34,526,437 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 917,577 $ 194,025 $ 290,000 $ 700,000 $ 2,101,602 $ 5,509,712 $ 3,692,645 $ 660,000 $ 1,520,000 $ 11,382,357 $ 14,577,612 15,923,464 840,000 3,160,000 34,501,077 Oct Nov Dec STARTUP Total I I YEAR1 Total YEAR2 Total YEAR3 Total $ $ $ $ 34,000 $ 34,000 $ 408,000 $ 408,000 $ 708,000 $ $ $ $ 25,000 $ 25,000 $ 1,354,600 $ 2,231,700 $ 3,609,800 $ 50,000 $ $ $ $ $ $ $ $ $ $ $ $ $ 50,000 $ 50,000 $ $ $ $ 100,000 $ 50,000 $ 50,000 $ $ $ $ I00,000 $ 0% $ $ 300,000 $ (300,000) $ 100,000 $ 100,000 $ 5% $ 100,000 $ 100,000 $ (200,000) $ 173,684 $ 173,684 $ 2% 100,000 100,000 (200,000) 426,316 426,316 1% Intemaldevelopers $ $ Co-Developmentcosts $ 300,000 $ Cap_hzed evelopment D costs $ $ ArnortB.abonofDeveloprnentCosts $ $ TotalResearchandDevelopment %of Total Sales General Admlmstrabve and Salaries &Payroll Totalpayroll Payrolltaxes Satestaxes Benefits-all Workmans comp Training &Se_nars expense Recru_ngexponse Cred_ ard C Processing Fees Accounbng/B$1ngOutsourclng ISPandotherntemet I Expenses Telephone andData Lmes Hardware LeaseExpense Software Expense Lease WebServer Host=ng WAP_vebsJtema=ntenanse $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 6,667 $ 533 $ $ 1,000 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 11,667 $ 933 $ $ 1,750 $ $ $ $ $ $ $ $ S $ $ $ $ 11,667 $ 933 $ $ 1,750 $ $ $ $ $ $ $ $ $ $ $ $ $ 29,733 $ 2,379 $ $ 4,460$ $ 3,000 $ $ $ 2,500 1,000 1,000 1,000 1,000 24,000 3,000 1,000 $ $ $ $ $ $ $ $ 59,733 $ 4,779 $ $ 8,960 $ $ 3,000 $ $ $ $ $ $ $ $ $ 3,000 $ 1,000 $ 2,500 1,000 1,000 1,000 1,000 991,212 $ 79,297 $ 147,112 $ 147,736 $ $ 60,000 $ 200,000 $ $ 36,000 24,000 12,000 12,000 12,000 24,000 48,885 12,000 $ $ $ $ $ $ $ $ 1,464,477 $ 117,158 $ 796,765 $ 214,549 $ $ 60,000 $ 250,000 $ 286 $ 42,000 36,000 30,000 12,000 12,000 24,000 82,680 24,000 $ $ $ $ $ $ $ $ 2,241,124 179,290 2,415,075 301,259 60,000 250,000 281 42,000 48,000 36,000 12,000 12,000 36,000 165,360 36,000 VICKY JACKSON(617) 279-0106 VICKY(_FROGIIOP.NET PAGE23 L ¢3 PRIVILEGED CONFIDENTIAL & Froghop WWW.FROGHOP.NET CASHFLOWS Statements of Cash Flows 2 Month Start-up Remainder Description Cash Flow from Operations Net Inoome Changes in Working Cap_tal Accounts Receivable ACCOLmtS Payet_e Other Assets Other Ltabdlt=es Amortlzatlon'* Total Cash Flow from Operations Cash Flow from Investing Capital Expenditures" Total Cash Flow from investing Cash Flow from Financing Debt Financing (Payment) Capdal Contribution Dlstnbuttons Total Cash Flow from Financing Total Cash Increase (Dec=ease) Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 ($449.045) $0 $100.000 ($50.0oo) $5 973 $0 ($393.072) (5480.190) $0 $401.424 $o $8,260 $8,3.33 ($62.172) ($264.893) $0 ($215 783) $o $8,260 $8,333 ($464,082) ($301_582) $0 $76,244 $o $8 260 $8r333 ($206'744) ($71.539) $50.000 ($99,906) $o $8.260 $8,333 ($104.851) ($275.942) ($50,000) $74 952 $o $8,260 $8,333 ($234,397) ($208.873) $(3 ($23.283) 5o $8.260 $8r333 ($215.562) ($268.699) $0 $102.682 $o $8.260 $8,333 ($149.424) ($68.169) $0 ($175.872) $o $8,260 $8,333 ($227.447) ($53.141) $0 $191,453 _o $8 260 $8,333 $t54.906 ($100 000) ($100,000) ($300,000) ($300.000) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 50 $3,000,000 $0 $3,000,000 $2,506,928 $0 $0 $0 $0 ($362r172) $0 $0 $0 $4) ($464,082) $0 $0 $0 $0 ($20_744) $0 $0 $0 $0 ($104#51) $0 $0 $0 $0 ($234p397) ,SO $0 $0 $0 ($21_,562) $0 $0 $0 $0 ($149r424} $0 $0 $0 $0 ($227,447) $0 $0 $0 $0 $154,906 Beginning Cash Balance Total Cash Increase Ending Cash Balance $0 $2.506.928 $2.506,928 $2.506,928 ($362,172) $21144.756 $2.t44.756 ($464,082) $1F680_674 $1.680.674 ($208.744) $1.471fg29 $1.47t.929 ($104.851) $1t367_078 $1.367.078 ($234.397) $1_132r681 $1.132.681 ($216,562) $917t119 $917.11g ($t49r424) $767T695 $767.695 ($227.447) $540_248 $540,248 $154,906 $695,154 I* Year I includes costs during start up phase 1 I _ Assumes $,36551( as start up costspplus additional $400KI $200 K upcjrade dudn_ year 2_$200 K up_rade In Year 3. All costs fully depreciated as of the VICKY JACKSON (617) 279-0106 VICKY(_FROGHOP.NET PAGE 24 PRIVILEGED &CONFIDENTIAL Froghop i WWW.FROGHOP.NET CRITICAL RISKS Thewireless industry in an immature, is infant tateat themoment. ireless dvertising s W a opportunities limited, are as consumer interest inwireless ata d iscurrently There low. aremany impediments totheadoption ofusing thewireless Intemet. ven E though industry analysts forecast thatthere willbea wide acceptancewireless of Intemet usage, there areother bstacles o thatstand inthewayofeffective wireless advertising. Wehave outlined ofthemajorssues some i wewill aceindeveloping f ourbusiness andoffer urexplanations Froghop o ofhow intends tomitigate these risks. ADOPTIONMOBILE SERVICES OF DATA Thirty percent nine ofmobileustomers c recently surveyed reported didnotsee the theneed formobileata d service Impediments to AdoptionofMobile DataServices for Mobile Device _,ners C D14% _139% Thispresents challenge Froghop. a to Though Froghop may notbe providing critical information toitsusers, aimto we provide stimulating a andefficient wayto ODon'tneedmoblledataserwces makeone'sdown timemore pleasurable by offering a rare commodity-SDataserwcestooexpens,ve interconnectivity mong fdends and a Dgon'tknowlfservicesavadable family--to createthe killer app. Even though usersmaynotneedit, wehopeto n Equipment do esn't support create astrong desire ofwanting it. services ==Don't knowhowto use O 17% i_117% m Data servicesavailable not Source Jupater/NFO (2/00), U S only With flat rate pricingprograms gaining critical cceptance a andbecoming norm, a costwillbecome lessof anobstacle inthe future. Intheinterim, eplanto develop w strategic lliances a withthemajor network carders such thateveryFroghop minute use(MOU) na certain of o network illenable w Froghop receive to revenues basedonthoseMOU.Under uchanarrangement, s Froghopansendusersa discount c everyquarter ivingthem g credits back based ontheirMOU.Thiswillbeset upsimilaro thewayDiscoversashbackreward t c system works. Wedon'tanticipatehisto swayanyonewhofeelsusingFroghop similar fferings tooexpensive, t or o is sincewe believe thatthedecision useFroghop illnotbebased to w solelyonprice.Bygiving discountsacktoconsumers b to apply towardsheircellphone t bills,wewouldliketoencourage thosewhoalready enjoy ourcontentouseit more. t Wealsoplanto havethecarriers takepartas a Preferred rizeSponsor, P whereFroghop points canbe redeemed fordiscountedirtime. a Forthe24%whodon'tknowiftheservices areavailable r howto usethem, ducation o e forshare ofmindawareness iskey. Froghop iscurrently intalkswithvarious companies doaneducational to outreach andawarenessrogram p to educate otential p users whatthewireless Intemets,howtoaccess andhowtouseit. i it, Fourteen ercent p responded thattheirequipment doesn't upportheservice.Thiscouldmean s t thattheydon'thave a phonewithIntemet ccess.Froghop a plansongivingawaysmartphones duringpromotional events increase to usage ofourservice.A smartphone replicationnourhtmlsitewillalsohelptoaccustom o userstothelookandfeel playingFroghop Gamez a wireless on device,hopefully increasingheirdesireto upgrade t theirmobilephone. Sometimes henpeople w complain thattheycannot ccess a wireless sites,it maybe because thereareimages or functions thataren'tsupported ontheU.S.networks r lower-endhone o p models.Froghop triesto develop the for lowest ommon enominator c d toensure thattherewillbeagreater umber fpeople n o whocanaccess oursite. VICKY JACKSON (617) 279-0106 VICKY(_FROGHOP.NET PAGE 25 PRIVILEGED & CONFIDENTIAL LIMITEDCREEN S SIZES REAL AND ESTATE m Froghop WWW.FROGHOP.NET Limitedscreensizesand realestaterestricts thecontent andsubsequently ( theexperience) can provide.Small we screens, ack of color,and limited l graphics due to lowresolutionnd lowbandwidth complaintshatare being a are t toutedas obstacles, even if penetrationf mobile o advertising ereto takeoff. However, roghop w F viewsthisas an opportunity ratherthanan obstacle.Howmanytimeshaveyoubeenmesmerized intrigued reading book, and by a onlytobe disappointed Hollywood's by portrayal, despite themillions fdollars o invested special ffects?Whenyou in e are limited theamount fflash,color,andsound in o effects, tforces verybasicyetessential i a levelof creativityhatis t sometimes lostin theclutter f bellsandwhistles.We willcombine o psychology, technology, creativity provide and to personalized contenthattrulyunderstands t theintrinsic interests fourconsumers. o PRIVACY FEARS Duetothepersonal ature a mobile n of device,privacy concerns willbe heightened.Sincewe develop and ownour content, roghop F willnotneedto trackusersastheygofromsiteto site. Usersareonlytracked within Froghop ifthey choose toregister ithus. Froghop w usersarealsogiven opt-out choices forreceivingnynewsorinformation a fromus. Advertisements primarily are offeredin a °pulled"ormat,wherethe userhasto initiate f through selection see a to promotion. lthough A therewillbe somepushed adsforcommerce,t isonlywithinFroghop's i siteat relevantimes. t Froghop userswillneverreceivepushed adswhentheyare notwithin oursite. Froghop willalsobeontheforefront of consumer rivacyadvocacy our involvement organizations p in of such as the Personalization onsortium C and the NextClick Personalization Agency, swellastheWireless a Advertising Association (WAA). REALITY OFWIRELESS COUPONS Currently, thereisnowayto redeem wireless coupons theretaillevelbecause at retailers arenotequipped toreadbar codesoffofwireless screens.Butsincegeo-targeting notquitepossible is yet,thereisnoimmediate eedforretailers n to haveequipment readwireless to coupons. Instead, henour usersreceivea wireless w coupon, heycan clickto t acceptthecoupon, hichwillbe sentto theiremailaddress.Theycan theneitherlinkoverto theonlinesiteof the w sponsor ndentera promotional a codefordiscounts, ortheycanprint uta coupon o witha barcodeandredeem the itat physical store.The maingoalforadvertising provoke transactional isto a resultromtheaudience f andbringthemas close totheactualpurchase aspossible, whichiswhatFroghop isaiming toaccomplish. INTERNATIONAL EXPANSION Weplantoexpand intointernational markets, whichwillsubject sto additional u businessisk. Because r theUS market forWAP enabledgamesis relatively small,we planto launchour productn Europeand Asia. A portionof our i international salesefforts will be targeted establishing at usersand partnersabroad. International operations re a subjectoa number frisks t o anduncertainties, including: • • • • • • • • • Difficulties andcosts associated ithobtaining w foreign regulatorypproval a forUS products; Unexpected hangesn regulatoryequirements; c i r Difficulties andcosts associated complying in witha widevariety ofcomplex foreign lawsandtreaties; Inadequate rotectionfIP rights foreign p o in countries; Increased difficulty collection accounts in of receivable; Adverse taxconsequences; Dependencen independent o salesrepsandotherindirect partners thatmaynotbeasreliable asUS; Political andeconomic instability; Currency fluctuations, including decrease a inthevalue offoreign currencies relative totheUS dollar. VICKYJACKSON(617) 279-0106 VICKY(_FROGHOP.NET PAGE 26 PRIVILEGED & CONFIDENTIAL WFroghop PROPOSEDCOMPANYOFFERING WWW.FROGHOP.NET DESIRED FINANCING Weestimateour cashflowneedsat $3,000,000. Froghop illrequire w thisfinancing seethattheCompany to reaches cashflowbreakeven. ithout nyoutside W a financing, Froghop couldexpectto break-even n a cashflowbasisin 24 o months. Due to thenatureof ourbusiness, donotexpectto be ableto obtaindebtcapitalto meetourprojected we start-up financing needs. As a business ithlimited w amounts f tangible o assets and negative ashflowfromoperations c forat leastthefirst2 yearsof operations, Froghop wouldnotlikely qualify fordebtfinancing.In addition, useofdebt the wouldputfurtherstrainon cashflow fromoperations couldtherefore and delaythe implementation ourgrowth of strategy. s a result, roghop A F isseeking fund to theentire financing needof$3,000,000 through anoffering ofequity. OFFERING Froghop seeking offersharesof Convertible referred is to P ClassA sharesin the companyto qualified investors through privateplacement f stock. The preferred a o classA shareswillbe convertible intoan equivalent number shares ofcommon stock oftheCompany. Basedon the numerous harvest pportunities o available Froghop, nd the natureof this industry realizethat to a we valuationsrehighly a suspect. iththecompletion W ofthisoffering, thenewinvestors inthepreferred class shares A will hold,upon theconversionftheseshares common o to stock, substantial a equitystakeof Froghop.Thepercentage f o ownership willbe basedon a fair market,post-privatelacement ffering p o valuation thatwill be produced though detailed financial analysis withourInvestors.Theshares beingsoldpursuanto thisoffering t arerestricted securities andmaynotbe resold readily.Theprospective investor should recognizehatsuch t securities ight restrictedsto m be a resale foran indefinite eriod p oftime. CAPITALIZATION • • • • • 6,653,881shares issued andoutstanding tofounders66.66%) ( 3,000,000shares included under 2000stockplan, fwhich o 558,000issued andoutstanding tocontractors itha portion w subjectooutstanding t buy-backights r 500,000non-issued, butreserved under 2000StockPlan the forthe directors' compensation pool 1,942,000 non-issued, butotherwiseeserved r under 2000StockPlan the INVESTOR'S RETURN In constructing thisproposed ffering, haveestimated o we thatthemostlikely harvest echanisms m forFroghop willbe eitherthrough acquisition wireless an bya portalorthrough Initial ublic an P Offering.Based onthevaluation multiples of comparable ublic p companies andthevaluation ultiple f themarketoverall, eestimate m o w thatFroghop could trade publicly 10 to 15 timesearningsat the time of harvest. However,it is likelythata strategic at buyerwouldpay significantly more than15times earnings through anoutright saleofthe company'sssets. a Froghopouldbea likely c candidateoran IPOasearlyasDecember 003basedonitsability beself-staining f 2 to froma cashflowperspective.We are prepared provide detailedaccount f ourfinancial odels to a o m and ourvaluation analysis.As suchvaluations inthisindustry arepurespeculation, realize we thatqualified investors illlikely w derive their own valuationbasedon specificindustryknowledge and relativeinvestment xperiencethat qualifytheir e assumptions. Prospective investorshould awarethatthisoffering s be doesnotrepresent guarantee f returntothe a o investor, astheactualresults ofthisinvestment could negative. be VICKY JACKSON (617) 279-0106 VICKY(_FROGHOP.NET PAGE 27 PRIVILEGED& CONFIDENTIAL i i Froghop APPENDIX WWW.FROGHOP.NET FROGHOPUSER BASE ASSUMPTIONS Regular mobile internet users (source. Forester Research) (Acc_ieslngamobl]e_e=_dle_.-qo_lce,oermo_th) _Eurepe _ " _ Fmcji'_o adju.stment fact_ f_ US I US 2000 5,578,000 "° 20% 1,195,_00 200t 30,158,1[_0 25% 7 ,,5_ 500 ,_002 53,703,000 30% 16,110,.900 200:1 78,182,000 _ 30% 23,4.'.54,600 2004 131,622 46.067,700 I I tntemiet Users Assumed % | that willaccess mobile games_ .................. Allocated I_% 2,00 ................2_I ............. MARKET CAPTORE FROGHOP _2 _ (]% '1% 3% 2003 5% 2oo4 __ ISiPortietierspnmary) ( lCon_nectors_ieecondary.) /Routiners (secondary) |Tar,_eP Capture 7% of mM tn 2004 I # of pple who Europe "_qll access _ _ games * 35% 20% 84% . . 2000 . . 0% 0% 1% 1% 2% 3% 4% 5% 7%5% mobile 2001 10,856,880 _ 6,031 _ 3,920,540 4 523,700 2002 19,333.080 _ 10740,600 6,981.390 B,055,450 2_3 28,145,520 15 636,_ • 1(],163,6G0 11,727,300" 2004 47,383,920 26,324,400 17,110.B60 - 19,743,30{J Connectorie_secondsry) Routmerie(secondary) Sporlieterie (primary) Simpl_erie (primary) - ____ _ - " " 2,152.080 1 195,.600. 777.140 E_J6.7D0"- US Rouhnerie(ieeconda_,) Spoltsters (p_nmary).................... Simplifiers (pnmar_) Subtotal TOTAL Regular Europe FH users o . 239.120 155 428 175_40, 1,004,394 , 6.fl25,8_4 1,507 500. 980 135 1,130,925 6,333_180 31,6_5,000 3,222,180 + 2,094,4__17 ..... 2p416_635 13_.3,1.56 58,643,676 4,EL_g20 3 045,O98 _ 3_518p190, 19r701_C_1, 85,374,744 9,213,54{] 5,988._ 6,510,155 3_#96,1_8 149.259,348 ...... ., 2000 _ _ • _ . . 2001 108 569 * 60,316 39205. 45 237 253,327 2002 386,662 _ 322.218 209,442 _ 161,109 1_,079,430 2003 1 1_5,821 _ 751,5_'_1 o 50(3,183 469/392 ____2_,916 2004 2,369,196 1,_42,70B 1,197,76(] 987.16-5 6.396,829 Connectors (ieecondary) Rootmerie(second_ry_ Sporlietiers(pnmary) Simpl_ers (primary) Subtotal us lConnectors (ieecond_ry.) Ro_hnerie(ieecondary) ... . Sportieters _0rimsry) S_Phfiers (pn_mazy) ........................ Subto_l TOTAL __ o . • _ 27,142. 1t5,999. 15. 079.............. 96__-6.5 9_EO1 62.833 11._-_O9 48,333 63,332 " 323,829 316,659 1,403,259 337,746 ._34_,_ 1E2,455 ° 140,T'_3 865,475 3,750,391 8____215 644 94B 419.216 345,508 2_238,690 8,635,719 VICKY JACKSON (617) 279-0106 VICKY(_FROGHOP.NET PAGE 28