ENERGYguide.com: an Interactive Energy Channel Executive Summary The changes happening in the energy industry, in particular gas and electric deregulation, have created a range of new opportunities for energy consumers. Consumers routinely make decisions regarding energy efficiency in the home or business and the purchase of appliances and lighting products that use energy. New technologies have made some of these decisions more complex. With deregulation rapidly being adopted by most states, for the first time, many consumers will now also be faced with choosing an energy supplier. Energy-related expenditures are quite significant. But, without assistance, most consumers will find it difficult to research, compare, and choose among the alternative options. Nexus Energy Software is creating the premiere energy-related destination on the Web to help consumers and small businesses make smart energy choices. ENERGYguide.com (www.energyguide.com) provides energy consumers with the information and tools they need to compare alternatives and make an informed decision, from purchasing energy consuming products, to using energy in the home or business, to selecting a new energy supplier. ENERGYguide.com serves as an interactive energy channel, connecting consumers with companies, products and services related to energy. This includes utilities that deliver electric and gas; energy suppliers that sell energy; heating and cooling contractors; and a host of other suppliers and distributors of energy-related products and services. O I The market for energy and energy-related products and services is huge, well in excess of $300 billion annually. This creates a major opportunity for an Internet site that generates revenue from a combination of clearinghouse/referral services, direct sales and advertising and sponsorships. ENERGYguide.com has already established a leadership position, and the firm has unique and sustainable advantages in both technology and distribution. We believe this leadership position is likely to result in a company with very substantial shareholder value within 2 to 3 years. NexusConfidential 1Components of ENERGYguide.com ENERGYguide.com combines content, commerce ........................ ,...++_._ and community in a site intended to educate and _ : enable. ENERGYguide is being positioned as an ++,,,,,_,+,+ ........................................................................ +,+++_+++++++ _,..++ ,_,_ ............................................ unbiased expert advisor on energy, energy ...... +++++!++i++;+ ......e.t_.E_apmuia? deregulation, energy efficiency and the _++;_:+ _:++', : ;a ..... _% _ environment; a trusted brand for consumers seeking __ help with energy-related decision-making. It offers __i_. ,+_,,,+,+,o,,,, users the ability to shop for energy itself and for ,_:_+++:+_ _ ...... energy-efficient products for the home and business _ '[+_3:+_ _+_{_) _:_:::::1:2:+" and to learn how to use energy more efficiently. :_ ]i?+_:_!i _!_ii!+_........+ ENERGYguide.com offers a unique combination of personalized tools, content and databases to assist consumers in reducing their energy costs and finding alternatives that meet their lifestyle goals: • A unique element of ENERGYguide. corn is an engaging and effective home energy analysis used to initiate the relationship with customers. This application enables energy consumers to quickly assess how their energy costs compare with those of their peers, using automatic collection of billing data over the Internet. It shows how much is spent for each appliance, how costs can be lowered, and how the purchase of new equipment can affect energy use. Users can complete an energy analysis of their home (or business), develop a plan to reduce their energy costs, and then purchase the products they need through the e-commerce channel. This tool creates an extensive user energy profile, guiding our ability to direct customers to appropriate products and services, and build a durable relationship. • ENERGYguide.com creates an electronic market for retail energy. At this time, ENERGYguide is unique in offering a database of virtually all energy supply offers -both electric and gas -in deregulated states. It enables consumers to not only view a list of energy suppliers and see their rates, but also to compare the likely cost of the offers and sign up with participating suppliers. (Nexus has a patent pending for the technology used to support this functionality). Suppliers can cost-effectively acquire mass-market customers through this channel, and use it to craft special offers based on user profiles. • Unlike other energy-relatedsites, ENERGYguide.com addresses not only thepotential savings associated with reduced rates, but also those associated with reduced energy use. Transactive content helps consumers understand their options and identify potential cost savings. They are able to purchase such products as energy efficient lighting, programmable thermostats, low flow showerheads, and other relatively low cost items, with additional product categories planned. In the future, we can expect to see suppliers offer consumers a combination of energy supply, time-based rates and energy-related products, much as has been done with larger energy consumers by the energy services industry. ENERGYguide is uniquely positioned to enable suppliers to make such offers through the channel, and to allow consumers to understand the total implications of complex options. NexusConfidential 2Business Model and Forecast The company aims to rapidly build a customer base and continue to deliver new products and services to those customers through this channel. A unique part of our strategy for acquiring customers is partnering with utilities. We are licensing and co-branding some of our tools to utilities that wish to enhance communications with their customers. The utilities assume responsibility for distributing the products to their customer base, creating enormous distribution leverage. In particular, we are licensing versions of the energy analysis tool under the brand name ENERGYsmart for use on utility web sites and on CD's. In both cases, consumers are connected to ENERGYguide.com to upload their data and help implement energy saving strategies. The utility connection also enables us tie ENERGYguide.com to Internet bill presentment as an additional source of on-going traffic generation. Our goal is to generate at least 3 million customers over the next several years through energy industry partners. This supplements the more traditional components of our customer acquisition strategy. We also plan to create partnerships with organizations in other related industries, including the real estate and environmental industries. Nexus has been successful to date in building utility partnerships. The company has created relationships with over 25 utilities across the country through direct sales and an acquisition. Combined these utilities have over 30 million customers, representing about 30% of the households in the US. The utilities provide one other important resource; an immediate and ongoing source of revenue, which enabled the company to generate profits while waiting for electronic commerce revenues to develop. This is one of several revenue streams associated with the primary components of ENERGYguide.com and the groups participating in the network: • Software license and related fees are received from sponsoring utilities. In the short-term, this represents the dominant source of company revenue. • Listing and transaction (sign up)fees are received from energy suppliers. • Transaction revenues are received from consumers or affiliates for purchases of energyeffiicien products. • Advertising and sponsorship fees are generated from companies interested in accessing this market. Revenue Growth (000,000's) $ 2 0 I__ 1999 2000 2001 2002 2003 License iSign-ups i-iTransaction mAdvert ] Nexus Confidential 3Management Team Nexus has assembled a proven and diverse management team, with a combination of expertise in energy efficiency and the environment, energy information systems, multimedia software development and electronic commerce: • Harvey Michaels, Co-founder, Chairman and CEO, has spent his entire career in the energy industry, including several years as CEO of the pioneering energy services firm, Xenergy. Xenergy was sold to NY State Electric and Gas in 1994. • Martin Flusberg, Co-founder, President and COO, was the CEO of 2 software companies, REALink systems, which served the real estate industry, and Multisystems, which served the transportation industry. He also directed the utility software business at TASC, Inc. with over 50 utility clients. • Dan Delurey, Chief Marketing Officer, has held senior marketing positions with several utilities and played a key role in the deregulation of the electricity industry in New England. • Robert Frieden, Co-founder and Chief Technology Officer has been VP of Software Engineering for several firms, including medical software and educational software organizations. • Bryant Patten, VP of Product Development, has a career that has spanned both environmental analysis and the development of highly successful multimedia educational software. • Craig CzerwinsM, VP of Sales, has had senior sales experience with several companies marketing products to the energy industry. Company Status Nexus has achieved proof of concept for its core business model since its establishment in 1997. Software has been released at more than 10 energy company partners, and the initial response from users has been very positive. ENERGYguide.com has experienced significant traffic growth, and was listed as one of the top 1500 Web sites (by traffic) by PC Data On-Line in May 1999. In 1998, its first full year of business, the company had revenues of $2 million; we are now at a $5 million run rate and were profitable in the first quarter of 1999. We have achieved a leadership position in an emerging marketplace that uses the Internet to support energy decisions. There are several competitors in this space, which helps validate our belief that this is a developing market. We believe have created a sustainable competitive advantage in several ways: 1. Our software, in particular the energy analysis tools that drive consumer decisions, is unique and the result of extensive R&D. 2. We have developed some unique databases and will use our software tools to create a valuable profile of our user base. NexusConfidential 43. Our distribution strategy of partnering with utilities, and the already created relationships, puts us in a strong competitive position visa vis firms that do not have a similar structure in place. Our first 2 years of business have been spent building the underlying products and infrastructure, and establishing the relationships with energy companies that will enable us to capture a sizable customer base. The time has come to move to the next level, rapidly building a user base while expanding the pipeline of products that can be delivered to our customers through the ecommmerc channel. This will build revenue and company value, and ensure that we retain our leadership position. Proposed Financing We are seeking $4-5 million in this round of financing. These funds will be used to expand the set of products and services offered through ENERGYguide.com, add significant content and significantly expand marketing, advertising and promotion. The potential for the company over the next several years is significant. Being the leading player in this large but vertical marketplace should create real company value. E-commerce companies are being valued at $300 per customer and up. We expect to have several million registered customers within a few years, and a profitable e-commerce business in a vertical market. We believe that this leads to a liquidity event in as little as 2-3 years, and a major return fo9r investors participating in this round. NexusConfidential 5