Sample Executive Summary New Wave Software

New Wave Software, Inc. Executive Summary Version C-02 Contact Information: Eric S. Markowitz New Wave Software, Inc. 205 East Maple Ave. Morrisville, PA 19067 Phone: 215-736-3304 Fax: 215-736-3370 info@sptcentral.com http://www.sptcentral.com New Wave Software, Inc. is a Pennsylvania corporation founded in 1995 to fill the need for independent, cross platform, database software development. In 1998, recognizing the need to protect FileMaker Pro® database solutions from piracy, New Wave Software, Inc. (New Wave Software) began producing piracy prevention and transaction security software. In October of 2000, New Wave Software set up its main data center in Atlanta, GA. New Wave Software provides next generation online transaction security products that allow our customers to surpass current online and wireless protocols in both speed and strength of security. Our main product, sPTr_---Secure Packet Technology, is an encryption protocol that surpasses current online transaction security by delivering both increased encryption strength and faster processing speeds, with easy setup and economical pricing. The main features of SPT are: • Eliminates or reduces SSL/PKI Certificate Management costs • Reduces e-Server load by over 80% • Reduces customer, technical and maintenance support staffs • Faster transaction speeds (over 2,000 transactions per second) • 256 bit encryption strength (and greater) • No export restrictions - opens global market • Very low processor requirement threshold - allows for SPT use with Wireless • Seamless integration with current front-end and back-end technologies • Easily upgradable for future technologies • Deploys in under a minute • Easy consumer payment process • Robust back-endMerchantAnalysisReportingSystem(MARSTM) SPT is not simply a new 'twist' of existing online technology, but rather a fresh look at transaction security and load issues that currently plague the Internet and Wireless networks. Existing technologies cannot keep up with the increasing demands that wider bandwidth will bring. With the development of SPT, New Wave Sot_ware has created an innovative solution that surpasses the current technology, and is poised to be the forerunner for the future. The competitive advantages of SPT include security, price, performance, ease of use, flexibility and reduced maintenance and support. SPT will become the next transaction security protocol standard. MARKET OPPORTUNITY Use of the Intemet for sales is growing at a phenomenal rate. Forrester Research estimates that by the end of 2000, the world has spent over $6.5 billion accounting for over 4 trillion transactions. That will jump to an astounding $6.8 trillion by 2004 and that does not include Wireless e-Commerce, which is still in its infancy. They go on to say that between 2001 and 2002, Wireless e-Commerce will become more widely used and that "thin" applications and processes like SPT will be a requirement of any company wishing to gain and maintain a foothold in the Wireless Market. This market growth will greatly depend on the secure transmission of online payment data and an increase in consumer confidence with e-Commerce and m-Commerce security in general. SPT fills these requirements by offering increased encryption strength, faster processing speeds, easier setup and lower costs for all types of online and wireless transactions. THE PROBLEM - Current SSL Technology The current SSL technology has several cost, size, implementation and security shortcomings that make it impossible for SSL to react to the requirements of the marketplace in a timely and economical fashion. SSL's weaknesses include: • High Certificate Management Costs • Depending on company size and/or number of merchants, certificate management costs could total well into the millions of dollars per year • Low Consumer Confidence Level • Widespread publicity of large system hacks and SSL vulnerabilities • Same keys/encryption used for each transaction, if one transaction is hacked, all transactions are vulnerable • Sensitive transaction data is left on server which, experts say, is the weakest point in the system • Difficult to Implement and Maintain • Special training required - many companies must hire expensive SSL Administrators • Many systems are left vulnerable due to setup holes created by poor implementation • Comparatively Weak Encryption Strength • 48-128 bit max, many systems were reportedly only 56 bit max • Any bit strength increase significantly increases server load • Slow Transaction Speed • 3rd party verification required • Many "server negotiation" transactions must take place before the actual secure data is sent. • Higher Setup, Support and Maintenance Costs • Support staff requires special training • No Tracking/Reporting Capabilities • Export Restrictions on SSL encryption higher than 128 bit THE SOLUTION - SPT SPT was developed to fulfill the need for a secure encryption protocol that is capable of handling the enormous transaction load of the Intemet and Wireless networks while staying many steps ahead of hackers whose available resources are increasing at an alarming rate with every new system innovation. Even though there is no limit to SPT's encryption strength, it does not fall under current U.S. export restrictions. SPT can easily be implemented worldwide on any e-Commerce server. As bandwidth increases and online and wireless sales transactions reach into the trillions of dollars, Internet and wireless enabled companies will require stronger, faster and more efficient security protocols in order to maintain their competitive edge in the virtual market place. SPT's strengths include: • Lower Cost per Transaction • Eliminates and/or reduces certificate management and infrastructure costs • High Consumer Confidence Level • Backed by Lloyd's of London* • Every transaction uses unique keys • No sensitive transaction data left on merchant server • Easy to Implement and Maintain with Existing Front and Back Ends • No special training required - Less than 1 minute installation • Impossible to leave vulnerable since SPT software is self-contained • Reduces customer, technical and maintenance support staffs • Strong, Versatile Encryption Strength • Rotating encryption stays ahead of hacker resources • Instantly and remotely increases from 256 bit to infinity without significantly increasing server resources • Reduces server load by over 80% • Easy Consumer Payment Process • Extremely Fast Transaction Speed • No 3rd party verification required (Certificates) • Connection is maintained throughout transaction • Extensive Tracking Capabilities • Robust back-end Merchant Analysis Reporting System (MARS) • Access to reporting 24/7 using any browser • No Export Restrictions--Opens Global Market SPT is well on the path to becoming the new standard for secure Internet and Wireless network transaction protocols with its increased encryption strength, faster processing speeds, easy setup and economical pricing. OTHER PRODUCTS AND SERVICES In addition to Secure Packet Technology (SPT), New Wave Software, Inc. has developed a suite of anti-piracy products that have an extensive feature set. Each product utilizes our patent pending rotating encryption and has it's own built-in e-Commerce feature that utilizes SPT processing for transaction security. • EPIC T_- New Wave Software's EPIC software, "Electronic Payment for Intemet Consumers", utilizes the SPT gateway to offer a secure online payment vehicle for Business-to-Business (B-to-B), Business-to-Consumer (B-to-C) and Consumer-toConsumer (C-to-C) e-Commerce transactions. (2nd Quarter 2001) • SPI® - "Software Piracy Intervention" prevents software piracy and tracks those who attempt it. SPI adds a protective layer to any software program, or file, that allows only those end-users who legitimately purchase the developer's product to install it. In addition, pirated copies of installed software will not run. (Completed) • SDF TM - New Wave Software, Inc.'s "Secure Document Format" reader utilizes SPI's rotating encryption and built-in features allowing business and consumer publishers and Electronic Document Delivery Services to secure intellectual property or sensitive information distributed over the Intemet. (2nd Quarter 2001) ADDED VALUE TO OUR CLIENTS SPT enables companies to easily, quickly and economically strengthen their e-Commerce transaction security while substantially reducing their certificate management overhead, server load and associated technical staff over that of SSL. Our clients can process more transactions per minute without increasing their infrastructure and will instantly reduce or eliminate their certificate management, support, maintenance and transaction costs the moment they start using SPT. In addition to the forenamed savings, increased security and speed, our clients have access to our extensive online reporting system Merchant Analysis Reporting System (MARS) at all times using any browser. In addition to tracking transaction activity of an account and adding fraud screening and charge-back protection to sensitive online sales, MARS can also be used as a marketing and sales tool. Several enhancements to our system include automated marketing and point of sale promotion capabilities. To audit and maintain the security of our servers, New Wave Software, Inc. has partnered with Thaumaturgix, Inc. In addition, Scott Keller, General Manager of their Atlanta office is on our Board of Advisors. His industry expertise and knowledge of Industry requirements and direction will be a huge asset to New Wave Software, Inc. and our customers. ADDED VALUE TO OUR INVESTORS New Wave Software, Inc. offers an excellent and unique investment opportunity. Because there is only one main security protocol in existence today, the market is wide open for a new protocol that addresses the inherent weaknesses of the SSL standard by offering increased encryption strength, faster processing speeds, easier setup and more economical pricing for all types of Intemet and Wireless transactions. Also, since New Wave Software's rotating encryption does not fall under current U.S. export restrictions, we can market SPT to markets outside the U.S. where all companies are seeking higher encryption strengths. No other U.S. encryption protocol, higher than 128, has access to this market! Many studies, from top e-Commerce research firms, have shown that there is very low consumer confidence with current online security measures. Merchants are looking for a more secure system that will attract consumers to their e-Commerce Web sites. The system they choose must be easy to implement, while affording them greater control, flexibility and profit margins. With its increased encryption strength, faster processing speeds, reduced overhead and economical pricing, SPT will become the new standard for secure Internet and Wireless transactions. CURRENT STAGE OF BUSINESS OPERATIONS Unlike many other new Internet companies, New Wave Software, Inc. has gone beyond an innovative idea--we have implemented it into a full suite of piracy prevention and security software products. In a period of just 8 months, we captured sales from 12% of the companies evaluating our SPI software as customers and have gross revenues of $100,000 for SPI sales and database consulting. We currently have strategic relationships with Vital Processing Services (VisaNet), First Horizion Merchant Services and Qdebit (AMIS/eCheck). Vital Processing is a sales and technology partner, First Horizon is a sales partner and Qdebit is a sales technology partner. We are looking to partner with HNC Software for fraud screening and Veritect for hosting services and intrusion detection. FORECAST/REVENUE Forecast: Revenue Operating Expenses Operating Income MODEL Year 1 $2,300,000 $3,600,000 ($1,300,000) Year 2 $25,000,000 $14,800,000 $10,200,000 Year 3 $89,500,000 $32,200,000 $57,300,000 Revenue Streams • Software licensing Fees • Per Transaction Fees • Merchant Account Reseller Fees • Hosting/Server Fees • Market Research Fees (Online Tracking) • Professional Services for Customization and Integration • Back-end Support Services • Application Service Provider (ASP) Services We provide a one-stop shop for merchant accounts, transaction security, security Infrastructure, web hosting, real-time processing and online reporting. The primary target customer for SPT are Acquirers, ISPs and other Enterprise companies since they have the most to gain from our technology. FINANCING New Wave Software, Inc. is currently seeking an initial round of $4 million. This capital will be used to support internal technology operations, payroll, technical infrastructure, ramp-up and sales/marketing materials used to promote our products. Current financing includes investment capital from the partners and family members. KEY PERSONELL Eric S. Markowitz President/CEO Mr. Markowitz founded New Wave Software, Inc. in 1995 to fill the need for independent, cross platform, database software development. Prior to 1995, he ran a successful Advertising/Graphic Design firm for 12 years, migrating to database design as print media changed to online media. In 1998, recognizing the need to protect FileMaker Pro database solutions from piracy, he added NWS-Key to New Wave Software, Inc.'s product line in order to protect New Wave's and other developer's database products. In 1999, under his direction, NWS-Key evolved to the total software-based protection product known today as SPI. Within a span of 8 months, SPI's core technology was expanded to include SPT, EPIC and MARS to New Wave Software, Inc.'s product line. James Lay Chief Technology Officer Mr. Lay is responsible for producing New Wave's multi platform security products including, custom installer 'wrapper' technology, encryption algorithms, server daemons and CGIs for vending security codes and handling e-Commerce transactions. Prior to joining New Wave Soitware, Inc., Mr. Lay has consulted for and developed software applications used by companies such as 3M Company, Apple Computer, AT&T Bell Laboratories, BellSouth Advertising & Publishing, BFGoodrich R &D, B, BristolMyers Squibb, Chevron U.S., Goddard Space Flight Center, Guardian Computer Systems, Hughes Aircraft, Massachusetts Inst. of Technology, NASA, National Institutes of Health, Navy Research Lab, Philip Morris U.S.A., U.S. Air Force Materials Laboratory, U.S. Army, U.S. Food & Drug Administration and the U.S. Department of Energy. Mr. Lay's technical proficiencies include C, C++, SQL, FoxPro, HyperCard, FileMaker, XCMD's, XFCN's, INIT's, Code Resources, DLLs, QuickApp,PowerPlant, Think Class Library, NeoAccess, CodeBase, InsideOut, Symantec Compilers, MetroWerks CodeWarrior Compilers, Microsoft Visual C++ and Cross-Platform Porting. Mark Cowherd Chief Operations Officer Mr. Cowherd is responsible for general operations and merchant services. Prior to joining New Wave Software, Mr. Cowherd was employed by First Data Corp. where he was responsible for the highest Internet merchant sales volume in his region (second in the country), maintaining sales of over $10 million. As the lead Internet sales rep with FDC's Unified Merchant Services, Mr. Cowherd maintained a 38% DIA, the highest merchant sales volume per signing in the country for FDC. Mr. Cowherd's customer service responsibilities included reducing merchant fraud and charge-backs. Additionally, Mr. Cowherd is responsible for initial merchant account setup and merchant connectivity as well as ongoing account management. Ken Markowitz Marketing Manager Mr. Ken Markowitz is responsible for marketing. Prior to joining New Wave Software, Inc., Mr. Markowitz has consulted to various Fortune 500 Companies including Dow Jones & Co., Van Heusen and Xerox. Prior to his consulting career, he was a Vice President in Western Union, Program Manager/Director at Curtis Wright Electronics and a Vice President of Technical Development at CCMI. BOARD OF ADVISORS Kevin Lee Co-Founder & Chief Information Officer, MaxRate.com Mr. Kevin Lee is the co-founder and CIO ofMaxRate.com, a business whose services include Internet-based exchange for certificates of deposits (CDs) which matches buyers and sellers based on specific criteria. He actively manages the day-to-day operations, as well as, the strategic direction of a $20+ million (valuation) organization as a member of the executive management team and is the co-author of the patent pending design of the Internet-based bid/ask exchange for deposit product. As CIO of MaxRate.com, his responsibilities include directing 25+ internal and third-party resources to develop the web-based functionality, technical infrastructure, customer service capabilities, internet hosting selection, client service operations, security procedures, and privacy policy. Additionally, Mr. Lee has developed sales message and market definitions to dissect and approach over 17,000 financial institutions including value proposition definition, sales presentation development and product marketing campaign formalization. Prior to joining MaxRate.com, Mr. Lee was Senior Manager of Andersen Consulting LLP / Arthur Andersen LLP where he led a joint venture initiative with PeopleSoft to design and develop their Enterprise Performance Management (EPM) software product, a data warehouse application to provide profitability reporting and analysis. He managed a staff of over 60 in North America and the United Kingdom, with a budget of over $6 million. While at Andersen Consulting, he also developed product strategies and the marketing approach for the PeopleSoft Enterprise Performance Management (EPM) product in order to enter the North American and European financial services market. Mr. Lee also led business development efforts to demonstrate and propose consulting engagements to some of the largest financial institutions in North America and the United Kingdom, including: ABN Amro, Wells Fargo, Chase Bank, Bank of America, Bank Boston, Wachovia, Fannie Mac, Freddie Mac, HSBC, Midland Bank, Lloyds Bank, AIB, and Bank of Ireland. Mr. Lee's extensive industry experience, which ranges from design through strategic management of technology based products and services, is a tremendous asset to New Wave Software. He has recently joined New Wave's Board of Advisors based on his belief that New Wave Software's secure transaction protocol will be a leading transaction technology for the Banking Industry and e-Commerce worldwide. Scott Keller General Manager, Thaumaturgix, Inc. As General Manager, Mr. Keller is responsible for managing both the operations and the growth of Thaumaturgix South, as well as shaping the strategic direction and business development for the company. Prior to joining Thaumaturgix, Mr. Keller was Chief Technology Officer and Co-Founder ofhipO.com, currently Edaflow, Inc. Prior to hipO.com, he worked at Relevant Knowledge/Media Metrix, as Director of Technology and Operations. Mr. Keller was responsible for all data center operations, International operations, data collection technology and data warehousing. He also managed projects in 17 cities at Ernst & Young Consulting LLP, in the Information Technology practice division. Mr. Keller is heading up the Thaumaturgix team that has implemented the server security upgrade for New Wave Software's verification and tracking servers. His first hand involvement with New Wave's encryption/e-Commerce products prompted him to join New Wave's Board of Advisors. Michael "Kashif" Jones CEO, Brooklyn Boy Entertainment, Inc. Kashif is one of those rare individuals who excelled in both the artistic and technical side of the music industry. Since the beginning of his career in the music industry, Kashifhas been associated with cutting edge technology. His involvement with the Synclavier, the world's first audio sampler led to much of the technology that drives the music and entertainment industries today. In 1986 Sony invited Kashif along with 15 other technocrats to join them in Japan for an extensive active research project that resulted in the Sony DAT machine. Kashif's contribution was sited as crucial to the success of the project. Shortly thereafter, Kashif convinced Sony to make significant changes to its 24 track digital DASH machine after uncovering critical flaws in the system. The changes resulted in increased sales and satisfaction for all owners of the Dash technology. Kashif is also well respected on the artistic side of the music industry. His image and influence as one of the leading producers in the music business began in 1980 when he first produced the hit record "I'm In Love". Since then, he has been nominated for two Grammys and produced albums for such major artists as Whitney Houston, George Benson, A1 Jarreau, Kenny G., Evelyn "Champagne" King, Melba Moore, Me'lisa Morgan, and Dionne Warwick. He recently joined the Board of Advisors of New Wave Software based on his belief that "[its] encryption technology is destined i • to service and maybe even save the electronic intellectual property industry." SOURCES AT Kearney A.T. Kearney's mission is to help the world's leading corporations gain and sustain competitive a advantage. - www.atkearney.com Boston Consulting Group The Boston Consulting Group is an international strategy and general management consulting firm whose mission is to help leading corporations create and sustain competitive advantage. - www.bcg.com Creative Good Creative Good is a consulting firm based in New York, San Francisco, and Boston. Their main mission is to improve the online customer experience - on e-Commerce web sites, content and entertainment sites, intranets, business to business sites, and wireless Internet services. - www.creativegood.com Cyber Dialogue Produces market research on e-Commerce including consumer electronic commerce statistics and trends. ePaynews ePaynews.com is a free news portal providing the latest e-Commerce and wireless payment industry news, information and research. - www.epaynews.com Forrester Forrester is a leading independent research firm that analyzes the futureof technology change and its impact on businesses, consumers, and society. - www.forrester.com International Data Corporation IDC is the world's leading provider of technology intelligence, industry analysis, market data, and strategic and tactical guidance to builders, providers and users of information technology - www.idc.com Lafferty Group Lafferty Group is one of the world's leading providers of high-value business intelligence. - www.lafferty.com Ovum Ovum is an independent research and consulting company, offering expert advice on IT, telecoms and e-Commerce. - www.ovum.com World Research World Research conducts full-service market research for our clients. We conduct both proprietary and syndicated research for consumer, technology, and the entertainment industries. - www.survey.com ZDNet ZDNet's research enables all Web users, from IT professionals to consumers, to get the most out of their investments in and involvement with technology. - www.zdnet.com Trademarks and Patents SPI and LockPoint are registered trademarks of New Wave Software, Inc. SPT, EPIC, MARS, SDF and SoundWave are trademarks of New Wave Software, Inc. All products and processes are Copyright 2001 and Patent Pending. All other trademarks are owned by their respective companies. This business plan is not to be copied or distributed to third parties without the express written permission of New Wave Software, Inc. Contact Information Eric S. Markowitz New Wave Software, Inc. 205 East Maple Ave. Morrisville, PA 19067 Phone: 215-736-3304 Fax: 215-736-3370 info@sptcentral.com www.sptcentral.com