The information provided in this document is confidential. This information shall not be used by or disclosed to any other person or entity without the express written consent of an officer of Public Financial Management. This document is not an offer to sell, nor a solicitation of an offer to buy, any securities in Govzone, LLC. ovzone,-g Helping Government Work. Executive Summa_ A Company created by Public Financial Management (www.pfm.com) R. AlexanderBurnett 505 MontgomeryStreet, Suite800 San Francisco, CA 94111 415 982-5544 415 982-4513 (fax) burnetta@publicfm.com Joseph Haran Two Logan Square, Suite 1600 18th& Arch Streets Philadelphia, PA 19103 (215) 567-6100 (215) 567-4180 (fax) haranj@publicfm.comStrategy: Govzone is a carve-out of an existing financial services company -Public Financial Management (PFM). Govzone is designed to leverage the core competency of PFM and to recreeat PFM's legacy business into a long-term scaleable model. The Business: Govzone is the Internet destination for state and local government decisionmakkers Currently, these officials do not have a centralized repository for specialized information and applications. Our vision is to build a branded platform that contains the specialized resources that enable its users to make informed and defensible decisions and quickly analyze the data that flows across their desks every day. These resources include: Searchable Research Library; Targeted Government News; Functional Resource Specialized Information Rooms; Financial Market Data; Statistics; Best Practices, Government Links; Personal Content Forecast Budgets; Forecast Cash Flow; Structure Debt; Evaluate InvestmentOptions; Proprietary PFM Applications Optimize Portfolios; Evaluate Refinancing Opportunities; Compare Best Practices; Procure Services; Manage Personnel Customization (MyGovzone); Research Interactive Community Inquiries(GovWizard); Forums; Chats; Elearrning Directories Procure Goods; Manage State and Federal E-Commerce Reimbursement; Investor Relations Public Financial Management: PFM isthe pre-eminentproviderof financial advisory services to publicentitiesthroughoutthe UnitedStates. Foundedin 1975, PFM currentlyhas approximately 3,500 governmentclientsand projectsannual revenueof approximately$40 millionin2001. PFM hasworkedon 7,000 successfulfinancingswitha value inexcessof $224 billion. Customers: Our targetusersare state and localgovernmentmanagers. We do not intendto serve the federal government. We estimate there are more than 141,000 managersor other decision-makersin over 85,000 state and local governments. Specificusers includeelected officials,administrativeandfinanceofficials(treasurers,auditorsandcontrollers)and department managers(directorof publicworks,procurement,transportationetc). Management Team: The core managementteam of Govzone consistsof PFM professionals locatedin Philadelphia,PA and San Francisco,CA, with backgroundsin government,financial advising,businessconsulting,informationtechnologyand law. The currentteam includesAlex Burnett-CEO/President;Joe Haran -CEO/President;Ben Rayer -VP, Content;and David Gilbert -VP, Corporate Development. Technology: Govzone has been built by Broadreach Consulting (Wayne, PA) using the Data Channel Server 4.1 platform. The platform is automated, expandable and scaleable. Current Status: Govzone will release Phase I of its website in December 2000. Phase I includes financial applications for forecasting budgets and cash flows, targeted news feeds about state and local governments and several functional areas of the public sector using proprietary information filters, best practices information, government statistics and links to relevant government sites. Business Model: Our current revenue model is subscription based. Phase I of Govzone is free to all users. Beginning in the Q3 2001, Govzone will charge a subscription fee of $199 per month for registered users to access most of the premium areas and applications of the website. The platform is being specifically designed to provide for additional means of generating revenue.I1= "" Financial Information: We are targeting a path to profitability in Q1 of 2002. Govzone has the potential to generate $100 million in annual gross revenue by 2005 with gross margins of 84%. These figures assume 5,000 registered users by Q1 2002 and 28,000 registered users by 2005. Monthly Net Revenue Pro-Forma • _. ,......,_,..._, .,t .;._ .+.. " -_. . _.. .,...'. .:. . ... ._.." . ",¢...• "ii.:i.. (° _ ,?{i:_ , • :, | ... (';OG} . .. "'_."." .".,. . . . ..... . . . . . I. I" I I: i..".:,,i,.. I. ." ..."_: ,._':.']".":_._;':'_"..'" _' +500_ ' " ""' "::_:_;'_;"'_" " " '_." " _" " 5 : ':". " {" ._': ;, . .. . .': . ,_,.. (e, ,C) • .. ... i'70_ . . . . _" "V".-"" '".... " (.'t+L,_ Aui}._O Set_0(l" Ocl._O Nev-¢_ Dec-00 ,_ln-01 Fe_-O, M=r-O1 ,_-01 kll),-01 J_n-0t Jui_t *_4_.01 Setm01 0¢_01 N_¥.01 [_<_01 Capital Requirements: PFM and its Managing Directors have funded Govzone thus far with a $2 million capital commitment. Govzone is currently seeking $6 million in additional capital for Phase 2 development and working capital needs. 2000 2001 Total Revenues 2,089,500 2,089,500 Expenditures Personnel 216,667 1,478,750 1,695,417 Occupancy and equipment 375,000 375,000 Infrastructure, product 1,297,740 2,789,240 4,086,980 development and content Marketing and advertising 34,000 1,000,000 1,034,000 Other (1) 1,075,000 1,075,000 Total 1,548,407 61717,990 8,266,397 EBITDA (1,548,407) (4,628.490} (6,176,897} (1) Other includes accounting, legal, travel and entertainment and general office expenditures Competition: We do not believe there are any direct competitors in the marketplace today that are building a platform as robust and complete as Govzone. A company called Public Sector Zone has released a beta site with some government community functionality; various companies offer limited e-commerce functionality and certain information providers offer news and information that is sometimes relevant to government decision-makers. In addition, many firms are automating the interaction between governments and their constituents -but we are not in that business.