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.
g
ovzone ,Helping Government Work.
Executive Summa_
A Company created by Public Financial Management (www.pfm.com)
R. Alexander Burnett 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.com
Strategy: 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 recreate PFM's legacy business into a long-term scaleable model. The Business: Govzone is the Internet destination for state and local government decisionmakers. 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 Rooms; Financial Market Data; Statistics; Best Practices, Government Links; Personal Content Forecast Budgets; Forecast Cash Flow; Structure Debt; Evaluate Investment Options; Optimize Portfolios; Evaluate Refinancing Opportunities; Compare Best Practices; Procure Services; Manage Personnel Customization (MyGovzone); Research Inquiries (GovWizard); Forums; Chats; Elearning; Directories Procure Goods; Manage State and Federal Reimbursement; Investor Relations
Specialized Information
Proprietary PFM Applications
Interactive Community E-Commerce
Public Financial Management: PFM is the pre-eminentproviderof financial advisory services to publicentitiesthroughout the UnitedStates. Foundedin 1975, PFM currentlyhas approximately 3,500 government clientsand projectsannual revenueof approximately $40 millionin 2001. PFM hasworkedon 7,000 successfulinancings f witha value in excessof $224 billion. Customers: Our target users are state and local governmentmanagers. 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, administrative and financeofficials(treasurers,auditorsand controllers) and department managers(directorof publicworks,procurement, ransportation t etc). Management Team: The core managementteam of Govzone consistsof PFM professionals locatedin Philadelphia,PA and San Francisco,CA, with backgroundsin government,financial advising,businessconsulting, nformationtechnologyand law. The currentteam includesAlex i 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..
|
_'
(° _
(';OG} +500_ ' . " ""' .. "'_."." .".,. "::_:_;'_;"'_"
,?{i:_
" '_."
;, .
...
"
.. . .
, •
. I. I" . .': I I: . i..".:,,i,.. I. ." . ..... ..."_:
:,
... . . ,._':.']".":_._;':'_"..'"
"
_"
"
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
Revenues Expenditures Personnel Occupancy and equipment product and content 1,297,740 216,667 1,478,750 375,000 2,789,240 1,695,417 375,000 4,086,980
2001
2,089,500
Total
2,089,500
Infrastructure, development Marketing Other (1) Total EBITDA
(1) Other includes
and advertising
34,000
1,000,000 1,075,000
1,034,000 1,075,000 8,266,397 (6,176,897}
1,548,407 (1,548,407)
accounting, legal, travel and entertainment and general
61717,990 (4,628.490}
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.