Business Plan

INTERNET MARKETING COMPANY – BUSINESS PLAN BY KNOWLEDGE PUBLISHING WRITTEN BY RYAN ANTHONY GIBSON GENERAL INFORMATION SUPPLIED FILL IN YOUR OWN DATA BUSINESS PLAN WRITING, MANUALS, GUIDES, BLOGS, AND SOCIAL MEDIA MARKETING SERVICES AVAILABLE AT WWW.PUBLISHKNOWLEDGE.COM ADD www.twitter.com/knowledgepub and www.twitter.com/ryanagibson DRAFT Page 1 of 48 Table of Contents Executive Summary .................................................................................................. 4 Summary of the Offering ............................................................................................. 1.0 OVERVIEW OF THE COMPANY ....................................................................... 6 1.1 Industry Overview ........................................................................................... 1.2 Company Vision, Mission, Goals .................................................................. 7 1.3 Technology, Product, Services and Related Benefits .................................. 10 1.4 Company Background and Status ................................................................ 13 1.5 Management ..................................................................................................... 1.6 Compensation of Directors and Officers ......................................................... 1.7 Legal Proceedings ............................................................................................ 1.8 Facilities ........................................................................................................... 1.9 Personnel .......................................................................................................... 1.10 Regulatory Environment .................................................................................. 1.11 Strategic Alliances ....................................................................................... 15 1.12 Intellectual Property ......................................................................................... 1.13 Competition and Competitive Advantages ...................................................... OVERVIEW OF THE MARKET OPPORTUNITY ......................................... 17 2.1 The Industry ................................................................................................. 17 2.2 The Target Markets ...................................................................................... 18 2.3 Competitive Positioning............................................................................... 23 IMPLEMENTING THE VISION ........................................................................ 27 3.1 Management Strategy .................................................................................. 28 3.2 Marketing Strategy....................................................................................... 30 3.3 Operational Strategy .................................................................................... 33 3.4 Financial Strategy ............................................................................................ 3.5 Risk Assessment .............................................................................................. 2.0 3.0 APPENDIX A – The Company in a Global Context............................................... 35 DRAFT Page 2 of 48 Introduction: A Global Branding Imperative: Innovation and Competitiveness The world of e-business has changed. Online branding and marketing management systems and practices must change as well. publishknowledge.com has been created to help provide these new systems required to the expanding number of online businesses around the world. There are three change realities taking place globally: (1) the Communications Age and the emergence of the Knowledge Economy (2) the liberalization and globalization of commerce and trade, and (3), the changing nature of opportunities and relationships for businesses and entrepreneurs alike. These shifts are transforming the way we do business, the way we learn, and the way we communicate with one another, how men and women related to products and services, and their online behaviours when searching for products, knowledge and connections, They have direct implications for business concepts and branding – in particular, the way we present and build relationships in order to compete. Companies no longer compete with bricks and mortar. Dynamic global competition requires constant innovation and rebranding and re-positioning. The currency of value in the new economy is image, ideas and innovation, altogether far more ethereal and harder to manage. Analysis of major stock exchanges in 1999 showed that eighty five per cent of the valuation of companies was based on non-physical, intangible assets – on ideas and innovation, rather than physical capital1. Today, firms still vigorously compete on the basis of creativity, knowledge, networking and agility – but with more rigour and operational integrity – but also with more strategic branding and presence online. This is the premise for the creation and launch of publishknowledge.com 1 Gary Hamel, Leading the Revolution, (Harvard University Press, 2000) DRAFT Page 3 of 48 1.0 OVERVIEW OF THE COMPANY publishknowledge.com (PK) is a newly established company with a simple but complex mission to implement what really works on the web for businesses anywhere on the globe. We research and gather knowledge on all kinds of web marketing strategies, and match best practices with what our clients need most, when they need it. Our model of service delivery makes our products and services more accessible, cost effective and valuable to a wider number of businesses than industry competitors. It also helps to minimize the role and impact of intermediaries for businesses with goods and services to sell to growing markets, thereby making them more competitive. After having been in business for X years and having generated $X in gross revenues, the company has gained enough experience and proof of concept to recognize that its greatest growth opportunities lie in both emerging industrial sectors in North America and other developed markets, and also in emerging economies whose rapidly growing global markets present tremendous medium and long term growth opportunities. With the world‘s emerging economies and developing countries rapidly engaging in ecommerce, businesses from these countries face a severe competitive disadvantage on several fronts, including a limited availability of high brand value domain names, fierce competition for internet branding, and confusion about legal ownership of domain names. Furthermore, for them to enter the marketplace, they do not have the same internet marketing resources, knowledge and overall capacity as companies in the more developed economies do and therefore must find access to tools and knowledge to help them even the competitive playing field. With the high growth of internet users in emerging economy markets, there is already be high growth in both the number of online marketers and sellers, as well as consumers who purchase goods and services online. A capacity gap exists in much needed online marketing capabilities that can help balance the competitive global ecommerce playing field, and generate tremendous revenue opportunities for emerging ecommerce businesses. Publishknowledge.com can deliver products and services to close this capacity gap for a fraction of the costs typically incurred. We‘ve assembled a resource team of some of the world‘s finest web marketing experts and leading thinkers and we channel their knowledge and expertise to provide answers to our clients unending quests for more effective solutions. We place high importance on forging high value public-private partnerships. Our partners help us with research, sharing knowledge and making that knowledge relevant for our clients. With a strong and stable foundation built on the competencies of the management team, the company is poised to carve a specialized niche in providing ecommerce marketing systems that increase online branding and market performance for clients‘ products and services being sold on the Internet. The Company recognizes that understanding human nature, and subsequently the nature of Internet users around the world, is the most important sustainable competitive advantage, and has designed and therefore tested an integrated suite of services and products to help companies more target and reach their DRAFT Page 4 of 48 customers. The company will complement its service offerings as an affiliate domain registry to provide enhanced registry services for companies in emerging growth markets who need to identify solid brand building domain names in support of the strategies and desired market results delivered from our core services. Internet users become frustrated when they can‘t use the Internet to find a business they know exists. Businesses become frustrated that they must pay for advertising in many competing media and still not be found by customers. To quote David Olgilvy, the famous advertising pundit, "Half of all ad dollars are wasted. Too bad we don‘t know which half." As an online marketing firm that specializes in understanding the nature of human behaviour on the Internet, we focus on translating relevant marketing knowledge of the best practices in integrated online strategies and tactics that are most effective to improve conversion, drive traffic and sell products and services – making it easier for customers and businesses to find each other. We provide a highly effective suite of brand building systems to and services, such as domain registration, to provide businesses a costeffective method of delivering qualified prospects for their products and services to their websites, and turn them into qualified leads and subsequently into sales generating customers. Our team avoids relying on their own individual perspectives alone – first we research, then we strategize and then we can innovate ways to apply proven knowledge and suite of proven technical tools to customize strategies on behalf of our clients. We call this our ‗integral approach‘ to helping our clients with both identifying objectives and achieving results to deliver a bottom line that any worthy customer looks for. 1.1 Industry Overview The growth in the number of businesses moving toward selling their products using ecommerce is being fuelled by:  Increased broadband penetration in key emerging global markets;  Increasing consumer demand for lower cost products and services, combined with the need for businesses to reduce the costs of middlemen, especially businesses in emerging economies and developing countries;  Improved quality and reliability of ecommerce and distribution systems by technological advances, increased network development and greater bandwidth capacity;  Continuing domestic and international deregulation, and strengthening of the multilateral trade system, opening new market opportunities for online trade services;  Fast growing demand for online businesses needing to translate their marketing strategies into well targeted, effective and cost efficient results. DRAFT Page 5 of 48 All developing countries and emerging economies have significantly progress in their integration into the digital economy. While the majority of developing countries still face some limitations on the development of their e-economy stemming largely from low income levels, low literacy rates, lack of payment systems that can support online transactions, and cultural resistance to online trade, there are many opportunities for businesses in these countries to use ecommerce to generate further online trade and exports. 1.2 Company Vision, Mission, Goals The company‘s mission is simply defined as ‘to implement what really works on the web' for our clients. We envision ourselves becoming recognized in key global markets as specialists in advanced ecommerce marketing solutions. The primary business goals we aim to achieve in the next five years include: Supported by an aggressive, global marketing focus that is well targeted and executed, this company has the potential to capture this opportunity and exceed $1 million in sales by the year 2008 if it can achieve its goals whereby:  The number of domain name registration customers reaches 100,000 by 2009 and at a retention rate of 70% annually, and growth rate of X% per year.  The number of Internet optimization and marketing customers number in excess of XXX, with annual growth of XXX, and average expenditure per customer per year on the company‘s services is $1000. These goals will be reached by the following primary strategies:  developing capitalizing on strong relationships with industry professionals in emerging global niche markets,  Utilizing aggressive strategic marketing tactics to rapidly gain market share and realize the income benefits in second and third year of operations.  Utilizing leading edge technologies available through strategic partnerships and alliances.  Maintaining strong relationships with some of the world‘ top experts and creative online branding professionals. 1.3 Technology, Product, Services and Related Benefits publishknowledge.com has built a team of skilled e-thinkers and experts at building brands with a significant technology dimension. This is focused on the point where technology and humanity intersect. The passion is for translating the power that technology brings to our world into the benefits it brings to customer lives. A high level DRAFT Page 6 of 48 of integration of on and offline skills within one organization are achieved. The seamless transition from the offline brand promise into the online brand experience are highly focused on driving customers through the buying decision cycle irrespective of transition across the medium. All the technologies neede to create tomorrow‘s interactive environments; everything from simple HTML through database middleware and to ecommerce architecture solutions. Our core offerings to increase traffic, generate leads, create customers, and ultimately increasing and managing sustainable revenues consist of four main areas: a) We use sophisticated opportunity-driven, asset based market research. In other words, we look for and match the obvious and the not so obvious assets of our clients and the market, and identify and create the best way to maximize their value by bridging these assets. b) We apply proven targeting tools to enhance strategic opportunity analysis, such as customer and relationships targeting models, closing tools, techniques and knowledge to follow up on in-bound leads, and secure more long term revenues and relationships. c) Web based marketing and branding tools, including search engine submission, optimization and analysis, as well as advanced internet marketing packages that include advertising, search engine publicity campaigns, strategically placed Web site advertising, and systems for the clients to follow up with the prospects gained from executed strategies. Our ‗distribution network‘ consists of search engines, sites we have strategic relationships with and our owned and managed web properties. d) Internet domain registry services, targeting specific niche markets, at affordable costs to businesses. This service will also be used to increase traffic to the company‘s website for business customers to learn more about its suite of marketing services. The resulting main revenue streams resulting from these four areas include:  Search Engine Submission and Optimization Packages  Domain Name Registrations  Web Design, Sales and Marketing Services We intend to explore offering additional complementary products and services in the future. Our goal is to continue innovation in providing a combination of proprietary tools that allows business customers to secure a competitive jump on their competitors Internet Marketing Products and Services Our products and services currently include: Service Description DRAFT Page 7 of 48 Branding and Media Services Search Engine Advertising and Optimization; Corporate Blog creation and maintenance; Customized Ad Production; Web Site Redesign & Production; Professionally copy written Press Releases and Articles; Targeted Online Promotional Broadcasts; Cloaking and cloning websites; Meta Tags changes Research and Technology services consulting Domain Registrar Services Market research—Online and Offline; Analyzing Competitors; Customized Lead Platform Production Technology and Systems (ICT’s and other tools and processes) publishknowledge.com uses a proprietary tool called ‗eBrand Foundations‘. As part of applying this tool, we arrange for representatives from all key stakeholder groups go through long intense discussions, facilitated by an in-house professional, to arrive at answers to a series of questions that will help our customers establish a powerful brand vision. The end result of this process guides the application of all of the company‘s suite of technology and business process and targeting tools. The company also licenses exclusive use of key tools and processes designed by Knowledge Brokers International, to help with the sales targeting requirements of clients. Combined with eBrand Foundations tool, publishknowledge.com already provides tremendous, proprietary assets that enable it to maintain a leading edge over competitors and retain value for the marketplace. In turn, the company‘s technology platform is constantly being defined, designed and updated to accelerate value in the target markets. We strive to maintain technologies that are compatible with the systems used by our partners. By utilizing open standards it allows us to maintain open connectivity amongst heterogeneous networks. We rely on developing an integrated, proprietary technology platform combined with commercially available technology from industry-leading providers to deliver real-time customer support and interactive reporting for our advertising and distribution network partners. We rely upon third parties to provide hosting services, including hardware support and service, and network coordination. Our servers are configured for high availability and large volumes of Internet traffic and are located in leased third-party facilities. Back-end databases make use of redundant servers and data storage arrays. We also have standby DRAFT Page 8 of 48 servers that provide for additional capacity as necessary. The facilities housing our servers provide redundant HVAC, power and Internet connectivity. We continue to build and innovate additional functionality to attempt to meet the quickly evolving demands of the marketplace. The cost of developing our technology solutions is included in the overall cost structure of our services and is not separately funded by any individual advertisers or distribution network partners. All product lines are codified in such a way to maintain an equal standard no matter what personnel is used to deliver our programs. Domain Registrar Services By all estimates, the market for Internet domain names is growing geometrically along with Internet users. According to Business Week, the "Internet craze" is going to provide big opportunities to entrepreneurs who manage to provide services to a clamoring clientele. PC Magazine, a highly regarded bi-weekly periodical with a circulation in excess of one million, has stated that Internet users are growing at a rate of 160,000 per month. MIT reports that the number of Internet subscribers is doubling every six (6) months. Network Solutions, Inc., the former registry monopoly, reported in 1997 that there is an average of 12,000 domain names registered daily. The total registry business brings in $150 million in renewal years alone for the registry and possibly an additional $150 million for registrars. For the most part a commercial organization will presently use the .com extension to register its company. In a report by NUI.ie , it was stated that 98% of all of the words in the Webster American English Dictionary have previously been registered. Since there are only so many combinations of words and over 25 million have been registered, there has been a large outcry from the Internet Community requesting additional extensions. This could bring the yearly revenues to exceed $3 billion in the year in the next few years. The Company will pursue the following strategy in building its registrar services platform:  Reduced price  Aggressive market promotion: drastically reduced fees (maximum charge set at cost plus 10%) for new registrations to rapidly gain fast market share. Other Custom Professional Services. We also offer professional services to help our customers implement marketing applications. Our advice helps them interpret reports, and develop recommendations for improving their customers‘ websites and marketing programs. We assist in implementing DRAFT Page 9 of 48 our own recommendations, analyze the results and develop new recommendations based on these results. 1.4 Company Background and Current Status ENTER HERE 1.5 Management The management current staff of the Company consists of: NAME, Chairman and CEO, XXXX, President and COO, XXXXX, CTO; and XXX, VP Sales and Marketing. The current directors and executive officers of the Company are as follows: Name Ryan Anthony Gibson Age Title/Position Chair and CEO Name of CEO Profile of CEO 1.6 Compensation of Directors and Officers Agreements The Company currently has management consulting agreements with Name of CEO and XXXX. These agreements provide for compensation to be determined by the Board of Directors of the Company. Also pursuant to these agreements, the individuals were issued shares of common stock of the Company in the following amounts: CEOXXX shares Indemnification of Officers and Directors The Bylaws of Company provide for indemnification of officers and directors to the full extent permitted by XXXX law, if such officer or director is made a party to any proceeding by reason of the fact that he or she is or was a director or officer of the corporation. Stock Option Plan The Company currently has not implemented a Stock Option Plan. Principal Shareholders The following table sets forth certain information known to the Company with respect to the beneficial ownership of its shares of Common Stock as of XXXXXX, by each person DRAFT Page 10 of 48 known by Company to be the beneficial owners of the shares of Common Stock listed below, based on information furnished by such owners, have sole investment and voting power with respect to such shares, subject to community property laws, where applicable. Name of Beneficial Owner Amount of Common Stock Percent of Class Amount of Preferred Stock 1.7 Legal Proceedings There are no legal actions pending against Company, nor does the Company have knowledge of threatening or impending legal action from any third party. 1.8 Facilities The company does not own any real estate. It currently leases office space in Vancouver, Canada, and __________, in the U.S. 1.9 Personnel The Company currently has five employees. In addition to management, the Company employs three full time employees. The Company expects to hire five additional people. In total, the Company expects to have a staff of sixteen upon implementation of its expanded marketing and sales operations, scheduled for January 1, 2007. Job Descriptions for key personnel:  Chief Executive Officer - CEO Development and implementation of primary goals, operating plans, policies, and short and long range objectives for the organization. Directs and coordinates activities to achieve maximum profit and return on capital. Establishes organizational structure and delegates authority to subordinates. Leads the organization towards objectives. Determines action plans to meet needs of shareholders. Represents organization to financial community, major customers, government agencies, shareholders, and the public.  Chief Financial Officer - CFO Directs the overall financial plans and accounting practices of an organization. Oversees treasury, accounting, budget, tax and audit activities of the organization. Oversees financial and accounting system controls and standards and ensures timely financial and statistical reports for management and/or Board use. This is the top finance and accounting position for the organization. Plans and directs analysis of DRAFT Page 11 of 48 financial data. Provides assessment of existing and proposed financial plans and policies.  Chief Information Officer - CIO Directs IS operations including computer operations, technical support, systems analysis and programming. Manages the acquisition, installation, and maintenance of the organization's local area networks and wide area networks. Directs database management, telecommunications, IS training and microcomputer technology. Manages LAN/WAN performance and security. Establishes and implements policies and procedures for LAN/WAN usage, technical priorities, standards, and procedures. Ensures sufficient systems capacity for organizational needs. Contributes to general business planning regarding technology and systems required to maintain company operations and competitiveness. Analyzes and recognizes new developments in information systems technology, and anticipates organizational modifications. Establishes long-term needs for information systems, and plans strategy for developing systems and acquiring hardware to meet application needs. Ensures confidentiality and reliability of corporate data, proprietary information, and intellectual property.  Chief Operations Officer - COO Implements programs to ensure attainment of business plan for growth and profit. Provides direction and structure for operating units. Manages, directs and coordinates activities by directing and coordinating activities consistent with established goals, objectives and policies. Follows direction set by Chief Executive Officer and Board of Directors. May report to a Director or COO, assists with development of organization related to policies, practices, and attainment of operating goals. Reviews and analyzes reports, records, and directives, and obtains data required for planning activities, such as new commitments, status of work in progress, and problems encountered. Assigns or delegates responsibility for specified work or functional activities and disseminates policy to employees. Gives work directions, resolves problems, prepares schedules, and sets deadlines to ensure timely completion of work. Coordinates activities of department with related activities of other departments to ensure efficiency and economy. Monitors and analyzes costs, prepares budget, and prepares reports and records on department activities for management, using computer. Evaluates current procedures and practices for accomplishing department objectives to develop and implement improved procedures and practices. May initiate or authorize employee hire, promotion, discharge, or transfer. Manages development programs and activities to facilitate introduction of new products or processes or recommend improvements to existing products or processes. Oversees research and development of new products and services as well as related marketing and sales strategies for these products. Integrates research, development, sales and marketing strategies to successfully install new products and services or to revise existing product lines. DRAFT Page 12 of 48  Network Administrator (sub contracted) Installs, configures, and maintains the organization's LAN server and workstations. Manages performance and maintains security of LANS. Works with multiple hardware and software platforms at the most complex level. Monitors reliability of network infrastructure and operating systems on multiple platforms. Diagnoses and repairs system problems.  Programmer – Senior (sub contracted) Prepares specifications and programs of a highly technical or complex nature. Analyzes, designs, codes, tests, implements, maintains, and documents computer system software. Usually works on one or more specific software applications and includes operating systems, compilers, utilities, job control language, and other control modules. Requires advanced technical knowledge in all areas of applications programming, system design, update, storage, and retrieval methods  Programmer – Junior (sub contracted) Analyzes user specifications and requirements. Encodes, tests, debugs, and documents programs on projects. Assists the Senior Programmers as required.  Customer Service/Technical Support (in-house) Provides technical support to workers in information processing departments. Develops work goals and department projects. Assigns and coordinates work projects, such as converting to new hardware or software. Designates staff assignments, establishes work priorities, and evaluates cost and time requirements. Reviews completed projects or computer programs to ensure that goals are met and that programs are compatible with other programs already in use. Modifies, tests, and corrects existing programs. Evaluates and tests vendor-supplied software packages to determine compatibility with existing system, ease of use, and if software meets user needs. Assists user to resolve computer-related problems, such as inoperative hardware or software. Reads technical journals or manuals and attends vendor seminars to learn about new computer hardware and software. Writes project reports and documentation for new or modified software and hardware.  Accounting Clerk (in-house) Verifies and posts transactions to journals, ledgers and other records. Prepares statements, invoices and vouchers. May handle balancing and reconciliations. May specialize in one area of the accounting function. Requires understanding of bookkeeping procedures and 1-2 years of relevant experience.  Accountant (sub-contracted) Compiles and analyzes financial information to prepare entries to accounts, such as general ledger accounts, documenting business transactions. Analyzes financial information detailing assets, liabilities, and capital, and prepares balance sheet, profit and loss statement, and other reports to summarize current and projected company financial position, using calculator or computer. Audits contracts, orders, and vouchers, and prepares reports to substantiate individual transactions prior to DRAFT Page 13 of 48 settlement. May establish, modify, document, and coordinate implementation of accounting and accounting control procedures.  Administrative Assistant (part time in-house in early stages) Supplies administrative support services to an executive, professional group, or organizational department. Uses independent judgment in completing activities and operates under general supervision. Oversees administrative procedures and processes for assigned area. May act as an administrative liaison with internal and/or external sources. Assigns duties and direct activities such as typing or word processing documents, filing, answering phones, ordering supplies, mailing correspondence or packages, or other services. Examine workflow and revise processes as necessary to improve efficiency.  Secretary/ Receptionist/Telephone Operator (will be split into 2 positions) Needs to have a working knowledge of Microsoft Word and Excel and be able to perform other general office duties such as filing, copying, and faxing. Must possess excellent written and oral communication skills and strong organizational skills. Must communicate in a very professional manner. Schedules appointments, gives information to callers, takes dictation, and provides secretarial and administrative support. Reads and routes incoming mail. Locates and attaches appropriate file to correspondence to be answered by employer. Composes letters and memoranda from dictation, verbal direction, or from knowledge of company policy or procedures. Assists executive in some administrative details. Takes dictation in shorthand or by machine and transcribes notes or voice recordings. Composes and types routine correspondence, files correspondence and other records. Answers telephone and gives information to callers or routes call to appropriate official and places outgoing calls. Schedules appointments for employer. Greets visitors, ascertains nature of business, and conducts visitors to employer or appropriate person. Anticipates ways in which executive time may be saved. Handles details and performs administrative functions based on understanding of company policy, executive's views and philosophy, which can be assumed by this level of executive secretary. Receives incoming telephone calls for corporation. Obtains caller's name, and forwards call to appropriate person or takes a message. Greets clients and visitors and directs to conference room or staff member's office. May record calls and visitors. Provides information and assistance to clients and customers. Answers inquiries for the general public. Schedules appointments, maintains conference room schedule, receives or sends out messenger/courier items. Performs typing and other clerical duties. 1.10 Regulatory Environment The company will be subject to existing and potential government regulations in is home country, as well as those countries it chooses to engage and/or operate in. There are, however, comparatively few laws or regulations specifically applicable to Internet DRAFT Page 14 of 48 businesses. Accordingly, the application of existing laws to Internet businesses, including ours, is unclear in many instances. There remains significant legal uncertainty in a variety of areas, including, but not limited to: user privacy, the positioning of sponsored listings on search results pages, defamation, taxation, the provision of paid search advertising to online gaming sites, the legality of sweepstakes, promotions and gaming sites generally, and the regulation of content in various jurisdictions. Compliance with federal laws relating to the Internet and Internet businesses may impose upon us significant costs and risks, or may subject us to liability if we do not successfully comply with their requirements, whether intentionally or unintentionally. In Canada and the United States, new federal laws that could have an impact on the business have already been adopted. The company is conducting more research on existing and planned laws in North America, however, primary ones in the U.S. are outlined below.  The Digital Millennium Copyright Act is intended to reduce the liability of online service providers for listing or linking to third party web properties that include materials that infringe copyrights or rights of others. Because we do not meet the safe harbor requirements of the Digital Millennium Copyright Act, we could be exposed to copyright actions, which could be costly and time-consuming.  The Children‘s Online Privacy Protection Act is intended to restrict the distribution of certain materials deemed harmful to children and impose additional restrictions on the ability of online services to collect user information from minors.  In addition, the Protection of Children from Sexual Predators Act requires online services providers to report evidence of violations of federal child pornography laws under certain circumstances. The foregoing legislation may impose significant additional costs on our business or subject us to additional liabilities, if we were not to comply fully with their terms, whether intentionally or not. The Children‘s Online Privacy Protection Act imposes fines and penalties to persons and operators that are not fully compliant with its requirements. The federal government could impose penalties on those parties that do not meet the full compliance practices of the Protection of Children from Sexual Predators Act. We intend to fully comply with the laws and regulations that govern our industry, and we employ internal resources and incur outside professional fees to establish, review and maintain policies and procedures to reduce the risk of noncompliance.  The Can Spam Act regulates how commercial e-mail should be sent. Certain checks and balances need to be in place in order to comply with this Act. Once an individual asks to be removed from our e-mail list, we must make sure they do not get any more e-mail from our organization. We intend to fully comply with the laws and regulations that govern our industry, and we employ internal resources and incur outside professional DRAFT Page 15 of 48 fees to establish, review and maintain policies and procedures to reduce the risk of noncompliance.  The acquisition of Internet domain names generally is governed by Internet regulatory bodies, predominantly the Internet Corporation for Assigned Names and Numbers (ICANN). The regulation of Internet domain names in the United States and in foreign countries is subject to change. ICANN and other regulatory bodies could establish additional requirements for previously owned Internet domain names or modify the requirements for holding Internet domain names. We post our privacy policy and practices concerning the use and disclosure of any user data on our web properties and our distribution applications. Any failure by us to comply with posted privacy policies, Federal Trade Commission requirements or other domestic or international privacy-related laws and regulations could result in proceedings by governmental or regulatory bodies that could potentially harm our businesses, results of operations and financial condition. In this regard, there are a large number of legislative proposals before the U.S. Congress and various state legislative bodies regarding privacy issues related to our businesses. It is not possible to predict whether or when such legislation may be adopted, and certain proposals, if adopted, could harm our business through a decrease in user registrations and revenue. These decreases could be caused by, among other possible provisions, the required use of disclaimers or other requirements before users can utilize our services. There are a growing number of legislative proposals before Congress and various state legislatures regarding privacy issues related to the Internet generally, and some of these proposals apply specifically to paid search businesses. We are unable to determine if and when such legislation may be adopted. If certain proposals were to be adopted, our business could be harmed by increased expenses or lost revenue opportunities, and other unforeseen ways. We anticipate that new laws and regulations affecting us will be implemented in the future. Those new laws, in addition to new applications of existing laws, could expose us to substantial liabilities and compliance costs. In addition, because our services are available over the Internet in multiple jurisdictions, certain states, provinces and countries may claim that we are required to qualify to do business in such state. Currently, we are qualified to do business only in Canada. Our failure to qualify to do business in a jurisdiction where we are required to do so could subject us to taxes and penalties. It could also hamper our ability to enforce contracts in these jurisdictions. The application of laws or regulations from jurisdictions whose laws do not currently apply to our business could harm our business and results of operations. 1.11 Strategic Alliances  ISP Proxy (http://www.ispproxy.net) DRAFT Page 16 of 48 ISPproxy is an universal registration and management system for IT products. In only one API you have the possibility of managing your Domains, DNS, root servers, ssl certificates, SMS dispatch and many other products and services, which can be ordered and administered to a large extent in real time. ISPproxy offers a complete and comprehensive accounting-system, meaning that you can generate invoices with your own design and maintain your corporate identity, define prices, currencies separately, allow credits, ...etc. Not only can you do this, but your resellers can do the same with their customers. We keep a neutral standing with all offered products. You maintain your resellers and they maintain their resellers and customers. Key-Systems will only get involved if there is an absolute need to do so. ISPproxy is an interface with a high integration flexibility: You can accomplish all ordering and administration procedures either via HTTP requests directly to our API, via smtp gateway or by using our comfortable web interface. In order for you to integrate these features into your own Corporate Identity, we offer a complete and extensive API documentation.  Afilias Inc. (http://www.afilias.com) Afilias is a global leader in advanced domain name registry services. Afilias provides complete back-office services for all registry management needs -- from registration to resolution.  Traffic Karma (http://www.TrafficKarma.com)  Knowledge Brokers International (http://www.kbitraining.com) Knowledge Brokers International is a sales training systems company with offices in Vancouver, Canada, and Johannesburg, South Africa that specialize in training programs coaching programs and consulting based upon its core product, the Complete Sales Action System. Others…. 1.12 Intellectual Property We seek to protect our intellectual property through existing laws and regulations, as well as through contractual restrictions. We rely on trademark, patent and copyright law, trade secret protection and confidentiality and license agreements with our employees, customers, partners and others to protect our intellectual property. DRAFT Page 17 of 48 Our technologies, marketing tools and business processes involve a combination of proprietary rights, owned and developed by us, commercially available software and hardware elements that are licensed or purchased by us from various providers and public domain software. We continue to develop additional IP assets to update, replace or supplement our IP and technology platform. We intend to protect these additional rights through patent applications and trade secret enforcement. The company currently holds exclusive rights to sales targeting and branding tools from Knowledge Brokers International. Expand and more IP??? 1.13 Competition and Competitive Advantages While the market for online marketing services has existing for several years, it is continually evolving and growing, and is subject to rapid technological change. As technology advances, marked by further automation and accessibility of tools and systems, competition will also increase and eventually become more specialized in certain B2C and B2B niches. It is possible that boutique online marketing companies will become more prominent and similar to the trends affecting corporate advertising agencies, online marketing agencies will potentially stay smaller decentralized and specialized in key markets, industries and sectors, and also global economic regions and markets. The companies presented below are not meant to be an exhaustive list of competitors to publishknowledge.com, but they are indicative of the most significant and respected competitors in this market:  InTouch Media Group (http://www.intouchmediagroup.com/)  Overview of Key Competitive Niches This section needs work/refinement after discussion Online Branding Paid Search Advertising The online paid search market is intensely competitive. Although we partner with the most predominant search engines to provide paid search results for our clients, we are unique in our approach to getting results. Right now, Google™ is the primary engine we work with, we are planning to ad others and are piloting Overture and will pilot MSN, etc in the coming months. We also compete with traditional offline media such as television, radio and print, for a share of businesses‘ total advertising budgets. DRAFT Page 18 of 48 Our strategy is to manage our own range of websites and utilize the largest search engines to drive traffic to our properties as well as those of our clients. Nearly all of our competitors have longer operating histories, larger distribution networks, greater brand recognition and significantly greater financial, marketing and other resources than we do. In addition, the search industry has recently experienced a surge in technology that helps search results. Industry consolidation may result in larger, more established and well-financed competitors with a greater focus on paid search services. If this trend continues, we may be unable to compete in the paid search market and our financial results may suffer. Additionally, larger companies such as Google and Microsoft may implement technologies into their search engines or software that make it less likely that businesses will utilize our technology as we exploit inherent flaws in their engines. If they develop their own technology to solve these issues, it will make it less likely that companies will come to us for our expertise. If we are unable to successfully compete against current and future competitors or if our current client base choose to rely more heavily on their own distribution networks in the future, our operating results will be adversely affected. Although overall Internet advertising expenditures have increased in the last few years, the advertising industry has suffered as many online businesses have ceased operations and many traditional businesses have scaled back their advertising budgets. In addition, we believe that today‘s typical Internet advertiser is becoming more sophisticated in utilizing the different forms of Internet advertising, purchasing Internet advertising in a cost-effective manner, and measuring return-on-investment. The competition for this pool of advertising dollars has also put downward pressure on pricing points and online advertisers have demanded more effective means of reaching customers. As advertisers (our clients) decrease their budgets, it could materially affect their ability to purchase our services. We are also affected by the competition among destination websites that reach users or customers of search services. While thousands of smaller outlets are available to customers, several large media and search engine companies, such as AOL, Google, Microsoft through MSN Search and Yahoo!, through its subsidiaries, dominate online user traffic. The online search industry continues to experience consolidation of major websites and search engines, which has the effect of increasing the negotiating power of these parties in relation to smaller providers. Our communities are new and do not have the longevity of large search engines and community portals. Corporate Services Our corporate services business is highly competitive. We compete with a variety of organizations that offer services competitive with those we offer. Our competitors range from large global firms, including the services arms of large global technology providers, to management consulting firms and information technology services providers. Additionally, we compete with smaller service providers who have a specific focus and DRAFT Page 19 of 48 competitive market position in certain geographic markets or who focus on service- or industry-specific niches. In addition, a client may choose to use its own resources rather than engage an outside firm for the kinds of services we provide. Our clients typically retain us on a non-exclusive basis. Consumer Generated Media Blogs and negative posts on the web adversely affect individuals and businesses. As time goes on, we predict that the impact of this type of media will only increase. Our suite of branding and marketing tools and processes are designed to navigate through any potential challenges. Domain Registry Services The company will operate registry services 365 days a year, 24 hours a day. The Internet never closes, so access to it must be available for all users independent of time, place or other conditions that might limit business hours for any other operation. Competitive Advantages. Publishknowledge.com has many competitive advantages, including:  Proven in-house expertise in consumer and B2B marketing and sales, both in brick and mortar and online markets;  Established, recognized experience and relationships in international markets;  Strategic approach to growth that leverages well established clients and business networks;  Solutions that save time, money and resources, and reduce clients‘ reliance on middlemen in ecommerce transactions;  Outsourced technology development, managed internally;  Existing, well-established relationships with high value service providers and renowned experts in the field, providing a balance between world-class technologists and experienced business leaders;  A clearly articulated and fully framed technology development strategy;  An intellectual property development and protection plan;  Our alliances and partnerships with globally renowned experts who have built a strong following of online readers of articles and publications on internet market and sales, and start-up opportunities and will create an expert name for our company online;  publishknowledge.com is designed to be a one stop, integrated online strategic marketing service provider;  Our belief is that ecommerce marketing is very similar to traditional brick and mortar marketing at its most basic level. When a customer shops and searches online, they have the opportunity to make more informed purchase decisions, and do so quicker. They want and need a trust building experience, chock full DRAFT Page 20 of 48 of information. Our extensive experience and proven, advanced systems enable us to provide this experience and knowledge. DRAFT Page 21 of 48 2.0 2.1 OVERVIEW OF THE MARKET OPPORTUNITY Overview of the Global Ecommerce Picture The global internet population is set to hit 1.21bn in 2006, up from 1.07bn in 2005, according to Computer Industry Almanac. Better data security standards, flexible payment and delivery systems, and clever customer relationship management will encourage more and more people to buy online. Forrester Research expects web-based retail sales in America – including auctions – to grow 14% annually through 2010 to $329bn, or 7% of all retail sales. Traditional retailers will lead the charge, though some will spend 2006 playing catch-up to clothing giant Gap, which spent $10mn on a new website so that shopping online requires fewer ‗clicks‘. According to Gartner, by 2010 sales of goods costing less than $5 – a trend dubbed ‗micro-commerce‘ – will reach $30bn, spurred by new micro-payment infrastructures which don‘t charge commissions on each payment. Interesting still, is that North America, the number of firms with a website is relatively low at approximately 38%, compared to the number of businesses that use the Internet for their business activities. This means that there is still tremendous potential for growth in this market. As companies integrate the internet into their multi-channel sales and marketing strategies they will get better at measuring website traffic and the return on investment of an online presence; IDC says the market for so-called Web analytics software will be worth $400mn by 2008. Thus publishknowledge.com is currently searching for a strategic partner to provide ecommerce analytics services to its customers. Shanghai-based iResearch projects the value of all e-commerce transactions in China to rise to Rmb1.74trn by 2007, a massive jump from Rmb324bn in 2005, assuming a conducive regulatory environment and the continued spread of credit cards. Here, too, online auction sites will play a crucial role, as will industry-specific B2B marketplaces. By 2008, China will account for more than half of all B2B e-commerce in the AsiaPacific region, excluding Japan. Britain, Germany and France will enjoy similar dominance in Europe; in 2006 those three countries will account for two-thirds of the region‘s B2B activity, exceeding Euro2.2trn. European B2C e-commerce will be boosted by the travel segment, and should account for 8% of total retail sales by 2009, when Germany will overtake Britain as the biggest online market. Consumer Retail Estimates of total online retail sales for 2002 were $43.47 billion for the United States ($73 billion including travel), $28.29 billion for the European Union, $15 billion for the Asia-Pacific region, $2.3 for Latin America and as little as $4 million for Africa. DRAFT Page 22 of 48 Business to Business Official US statistics regards for business-to-business (B2B) e-commerce transactions show B2B transactions are the dominant industry segment. In 2001, annual B2B online sales in the United States amounted to $995 billion, or 93.3 per cent of all US ecommerce. Private-sector estimates of the value of B2B trade in the European Union put it at between nearly $185 billion and $200 billion for the year 2002. In Central and Eastern Europe, some projections show that B2B e-commerce will amount to around $4 billion in 2003. In the Asia-Pacific region, it should grow rapidly, from about $120 billion in 2002 to around $200 billion in 2003 and $300 billion by 2004. In Latin America $6.5 billion worth of online B2B transactions are forecast for 2002 and $12.5 billion for 2003, although far more optimistic estimates are also available. According to 2001 forecasts, African B2B e-commerce in 2002 was expected to amount to $0.5 billion in 2002 and $0.9 billion in 2003, with South Africa accounting for 80 to 85 per cent of these amounts. 2.2 EMarketing Overview According to Economist Intelligent Unit, half of all respondents think that the level of accountability for all marketing activities is ―rising dramatically‖. Between a third and a half do not know how to measure the impact of several of their online marketing activities. Executives spend less time assessing the performance of marketing campaigns than either planning or executing them. The survey also showed that leading companies believe marketing will play an increasing strategic role in their business, and that online advertising will be central to major campaigns. Over half believe that brand advertising will drive that growth. Some 72% of respondents said that in two years‘ time online will be the media platform that determines how major interactive marketing campaigns are planned and executed, up from only 28% of respondents who believe that today. Nearly a third of those companies interviewed said they will re-allocate their marketing budget from offline to online advertising and promotion. The survey also detected little co-ordination between online ad spending with traditional media budget allocations. Integration of online and offline marketing remains the exception rather than the rule, with 52% of executives admitting their online and offline marketing efforts either run in parallel or are not integrated at all. According to the providers of online marketing, more needs to be done if companies are to exploit the potential for the sector. ―The next two years will be decisive for the art and science of media marketing,‖ said Lorraine Twohill, Director of European Marketing Programmes for Google. ―This research clearly demonstrates the paradox between how deeply executives believe in the power of marketing - and increasingly online marketing but how much more work is necessary to deliver on these expectations.‖ DRAFT Page 23 of 48 2.3 The Target Markets As Internet use increases, so does e-commerce and different web-based ideas for marketing products and services. Conventional e-companies are increasing their ability to serve the public, while the original "brick and mortar" companies all seem to be increasing their Internet presence and expanding the goods and services they offer on the web. With such marked increases in Internet use, e-commerce and conventional business, there is an ever-increasing need for new domain names. In addition to an increased need for names, there is also a need to better categorize sites on the web. As e-commerce increases, so does the need to not only add new domain names, but to help organize web sites, and help differentiate between e-commerce and other Internet sites and offerings. Targeted Niches Financial Services Market According to eMarketer, in 2005, financial services accounted for 12% of all online advertising, about $1.5 billion of the total $12.5 billion spent online last year. The category's total in 2005 represented a decline of 8.1% from 2004 spending levels, when financial services accounted for 17% of all online spending. This year, however, got off to a fast start, with a huge increase (139%) in the number of financial service display ads served between December 2005 and April 2006, according to report from Nielsen//NetRatings. Teenage Markets The Internet-driven teenage consumer market is coveted by most advertisers, wbo struggle to meet the challenge of reaching teenagers. Teenagers‘ disposable income and brand-awareness means they are coveted by advertisers. They are no longer content to be passive recipients of the programmes scheduled by television stations. The industry is struggling to come to terms with the switch – as the jargon has it – from a ―push‖ to a ―pull‖ model. In other words, this assertive generation is watching what it wants, when it wants, where it wants. publishknowledge.com will assemble a dynamic team of researchers and marketing specialists to design its teenage marketing resources and knowledge, in order to provide value to businesses who wish to employ our tools to reach these teenage consumers. Emerging Economies Developing countries continue to experience faster growth in the number of Internet users, partly because of their demographic patterns (younger populations, faster overall population growth). At the end of 2002, developing countries had 32 per cent of the world‘s Internet users, up from 28 per cent in 2001. If current trends continue, Internet users in developing countries could constitute 50 per cent of the world total in the next five years. The chart below shows the evolution from 2000 to 2002 in developed and developing countries‘ respective shares of Internet users. DRAFT Page 24 of 48 This means that there will be more online businesses created needing advanced online marketing resources and tools in order to help them get a jump ahead in terms of becoming globally competitive. Emerging markets have some e-readiness elements in place. All the components of a digital economy—infrastructure, security, transparency, innovation and skills—must be properly interlaced to ensure adequate e-readiness. These are still in deficit in most emerging markets, but a few are world-class or near to it in selected areas, the best examples being Estonia (26th), Slovenia (27th) and the Czech Republic (29th) with their strong development of e-government services. India (49th) and China (54th) remain on the lower rungs of the e-readiness ladder, but are making growing contributions to the global digital economy on the strength of a strong ICT skills base (India) and a prodigious ICT manufacturing sector (China). 2.3 Approach to Capturing the Market Opportunity publishknowledge.com has the following strategic approach to capturing the market opportunity, which will be supported by management, operations, sales and marketing strategies described in Section 3: 1. Sell services through service providers, value added resellers and direct sales The company will expand the number of strategic alliances that can deliver new channels for reaching potential clients. The solutions developed by publishknowledge.com are vital tools for ecommerce sites and online marketers. The company will aim to create the tools and deliver the capabilities that providers and marketers require to create an eMarkettinghits.com licensed and brandable service offering. 2. Bridging more direct access to buyers by increasing web presence and online branding (the proof of our concept). publishknowledge.com can gain increase its market value by creating and delivering a vehicle to improve producers‘ earnings by reducing the number of intermediaries. In DRAFT Page 25 of 48 emerging economies in particular, this is a highly valuable positioning that can help businesses be more competitive. Use of the Internet can enable producers to obtain more information about various markets and to arrange direct marketing that would bypass intermediaries and reach global markets at reduced transaction costs. 3. Use the domain registry services as a market share strategy, offering domain name registry for cost or less than cost. New, or first time domain name registrations can provide the company with a high value customer relationship strategy, and a low cost acquisition strategy, Every year thousands of domain name owners must renew their domain name registration providing high margin revenue opportunity. 4. Pursue New Customers in Our Existing Markets, Cross-Sell Our Products and Expand into New Geographic Markets We intend to continue marketing our services to a broad range of organizations, primarily through our direct sales force. We plan to increase the number of sales people that we employ and to develop other marketing or distribution channels for our services. Additionally, we plan to leverage our sales force to cross-sell across our current and potential customer base. We also plan to increase our marketing efforts to customers outside of North America by recruiting local sales and support professionals, and we may also expand outside North America by selectively pursuing acquisitions. 5. Expand the Features and Functionality of Our Services. We plan to further enhance the features and functionality of our services, and adapt them to changing Internet environments and business practices in different market regions. We also plan to continue to increase the number of languages supported by our services. 6. Acquire and Continue to Develop Related Services and Technologies. Our success in our core services will help us sell related marketing services such as website search applications, web content management, keyword bid management, marketing surveys, email marketing and affiliate marketing networks. We believe our strengths in research, data analysis, targeting, scalability and delivery of services will allow us to compete effectively with other companies that may attempt to offer comparable marketing services. 7. Increase Revenues per Customer over Time, by Providing Superior Customer Service, Knowing Best Practices, and Building Lasting Relationships. DRAFT Page 26 of 48 The company can generate more revenue from customers by promoting wider and more diverse deployments of our services. We continually seek to learn industry best practices and to incorporate these practices into our technology and professional services. This strategy enhances the value our customers receive from our services. We intend to keep our customers satisfied by responding promptly to their feedback and requests and by building technology that helps them achieve their goals. 2.4 Summary of the Opportunity The Ecommerce Marketing Opportunity As use of the Internet to research and purchase products and services increases around the world, businesses are seeking ways to more effectively reach consumers online, build lasting and trusting relationships, and build and maintain brand identities and top of mind awareness. As a result, both online and traditional retail businesses are increasingly using the Internet to advertise their products and services. Forrester Research estimates that spending for online marketing, which includes display advertising, search engine marketing and email marketing, will increase from $10.6 billion in 2005 to $19.7 billion in 2010. publishknowledge.com‘s opportunity drivers include:      Transferability and modularity of technology, tools and processes Strategic partnerships and alliances Customer centricity Continuing commitment to market research and innovation Long term focus on emerging global markets In summary, this business opportunity exists because:  The company‘s product, processes and technologies: collectively, they address a fundamental need shared by existing and emerging ecommerce businesses around the world, in particular those in emerging economies and developing countries, and all in a vast array of opportunity/growth sectors. Compared to our competitors, our management team provides a highly unique blend of experts in these markets to help us capture these opportunities, and make our services accessible to more emerging businesses in the world. The new complex demands on e-marketers: even the world renowned experts on Internet marketing admit that even they are surprised and sometimes embarrassed at how much they don‘t even know about Internet marketing. This is exciting for publishknowledge.com because is this shows that there is no limit to the online marketing tools and strategies that can be employed¸ and therefore the value company’s offerings can be sustainable with consistent refinement, learning and innovation. Furthermore, this shared belief among the world‘s top industry experts DRAFT Page 27 of 48         truly puts the potential demand for publishknowledge.com‘s services into perspective: if the top experts in the world acknowledge they have much to learn, then how much assistance do the average Internet business owners need, especially those businesses in emerging economies who have never had the level of experience their competitors in the developed economies have gained. The multi-million dollar ecommerce optimization and support industry alone is growing – in recognition of the new required paradigm shift in the way businesses are doing business – in search for the perfect business model and understanding the essence of the new wave of business opportunities that are being created as a result.. Key research has also indicated there would be significant demand for the company's product and services in foreign markets, especially in emerging economies and some developing countries, particularly in Asia's business community. Attention and interest has been received from key international marketing agencies and experts, who see the company's processes as a potentially powerful tool if adapted ecommerce development in third world countries. We are continuing to develop strategic alliances with leading Internet research companies and experts. Many of the company‘s core tools and processes are proprietary and have received support and accolades from world-renowned professionals publishknowledge.com‘s management team is world class. They have the breadth of entrepreneurial experience and skills needed to capitalize the opportunities presented in this next level of growth. The company‘s revenue model creates multiple potential revenue streams from both one-time transactions and on-going, continuous residuals. The global security situation could affect global trade and travel, making online commerce even more important as a platform for business, in turn increasing the importance of online marketing and branding. DRAFT Page 28 of 48 3.0 STRATEGY AND IMPLEMENTATION Our objective is to be a leader in the Internet marketing industry, with successful search optimization, domain registry and branding services primarily by increasing our revenues from our portfolio of web properties, expanding our advertising base, and enhancing the services we currently provide. Key elements of our strategy include the following four key elements.  First, is the ability to integrate our system, tools, processes, and related products with other complementary services delivered by leading edge companies and experts in the industry. PUBLISHKNOWLEDGE‘s approach complements rather than competes with the offerings of traditional firms. The goal is to deliver the company's innovative, proprietary applications seamlessly integrated with other managed services to provide a 360º solution that will completely offset the evolving and intensifying demands placed on our customers by the global economy.  Second, is the ability to consistently innovate and remain on the forward edge of online marketing peak performance  Third, is the company's ability to creatively reach clients and customers using 'knowledge economy' techniques and strategies (ie: electronic viral marketing tactics).  And fourth, is the company's ability to educate individuals and organizations on online branding and marketing as a fundamental essential asset and skill – assets and capacity that every marketer and business must have in order to compete and sustain an enterprise. 3.1 Management Strategy publishknowledge.com has made it a priority to attract and retain the best quality people and develop them into high performing contributors to the company's bottom line. It is planning to hire a senior marketing professional, an operations manager and sales facilitators within the next two months. The company is also working to attract a powerful, outstanding Board of Directors, with high profile industry experts other who have had solid experience in advising and guiding growing companies. The Company is preparing a thorough Board Development Program, which will be designed to attract and retain the most promising and influential individuals. Our own company vision and values have attracted a world class team of professionals to take the company through the next level of growth. The team combines over 120 years of experience in entrepreneurship, marketing and advertising, management, internet technology development, sales and financing. Our goal is to develop a high performance culture by investing in our people so they can adapt to a changing marketplace and the demands the new economy will place on them. We will implement customized training and development programs for each of our DRAFT Page 29 of 48 employees and senior management personnel, in order to ensure their capacity meets the company‘s capacity demands as it engages with and grows in the marketplace. The core management team is as follows:  CEO NAME The company is currently in discussions with a leading North American expert in Internet marketing development to take on the role of Vice President, Internet Development. This individual will bring the company key contacts and recognition in the Internet industry, and pioneering experience with major new economy businesses. The company is also in negotiations with some very solid and credible individuals for the following positions:  Manager of Operations  Director of International Development  Manager of International Programs  Vice President, Sales, Marketing and Communications Outstanding Advisors We are assembling an outstanding advisory team gives us extraordinary credibility and will help us minimize the risks that are common to new start-ups. As a recipient of continuous advice and guidance from individuals world renowned technical experts and visionary leaders, the company has a distinct advantage. Our current advisory council consists of the following individuals: Name Title/Background Company Incentive Plan The Company will introduce a performance incentive plan for management team members, employees, and board members. The purpose of the Incentive Plan is to promote the long-term success of the Company and the creation of incremental shareholder value by: (a) encouraging key team members to focus on critical long-range objectives (b) encouraging the attraction and retention of key employees with exceptional qualifications (c) linking the interest of key employees of the Company directly to shareholder interests through increased stock ownership. DRAFT Page 30 of 48 3.2 Sales and Marketing Strategy To capture its share of this lucrative market, the Company will focus aggressive sales and marketing efforts on the B2B markets – primarily private and public sector organizations that are facing the need to prepare themselves for the marketing and branding challenges in the highly competitive global marketplace. publishknowledge.com competes in a highly fragmented industry with little concentration and tremendous potential. There are few industry leaders we would consider as worthy competitors. However, there are many models and packaged principles in the marketplace that present some form of Internet marketing support and services to their clients, yet they do not articulate effectively an integral approach to the evolving needs of the company in an evolving marketplace. Most models adopt a traditional linear based marketing and service delivery approach, which is less relevant in today‘s market. publishknowledge.com takes on traditional marketing concepts, tools and challenges and stretches and integrates them to facilitate a new level of capacity for businesses. This manifests into tremendous learning and growth opportunities for individuals. The Company feels very strongly that its efforts must deliver a coherent and consistent message to the right individuals from HR, Senior Management and Sales and Marketing components of organizations to be able to effectively tailor ecommerce marketing and branding solutions. Based on both research and experience, the company feels strongly that establishing numerous strategic partnerships in B2B channels is the most effective, competitive strategy to reach 100,000 businesses within the next five years. Among the company's key challenges and opportunities is to fashion a global company from the very beginning. An international outlook will be imbedded into all aspects of the company. Our goal is to establish a quick presence in as many North American communities as possible in our first year. We also wish to establish a presence in other countries, namely those boasting emerging economies, particularly in Asia, as early as possible. In order to achieve a global presence, wide distribution strategy for publishknowledge.com‘s systems and tools is critical. The key to an open distribution strategy is building strategic partnerships. We will focus on building relationships with agencies, media, educators, and consultants and provide attractive incentives that make the relationship more than mutually beneficial. We will concentrate on an in–depth educational process and arm them with technical knowledge and systems to ‗channel‘ our products and services in their market. We will also explore licensing and joint partnerships in various regions and countries to facilitate more rapid expansion, and to generate cash flow. We recognize that education of the ability to 'tangiblize' online marketing and branding, and make it relevant to day to day operations is important, and that this may be a longterm involvement process with some of our customers. Having well defined partnerships and license agreements with key industry organizations and expert professionals as key DRAFT Page 31 of 48 carriers and champions of the branding 'messages' and process will enhance the credibility of the company and our product. We are positioning PUBLISHKNOWLEDGE as a marketing and brand management and development company that provides 360º solutions, from strategic vision development and implementation to pragmatic learning environments. The unique sales proposition for PUBLISHKNOWLEDGE is that we have designed an integrated online marketing system with proprietary components that can be deployed through a collaborative platform that combines human interface with the latest on-line, interactive technology for e-learning and management. What is especially exciting is that our core offering, while it is unique to the world, provides the Company with a strong basis for collaboration with potential competitors. We are confident that once they recognize the power and strength behind the PUBLISHKNOWLEDGE system, they will want to link their business model and principles to us. This will enhance our competitive positioning in the marketplace. We will therefore be forging relationships with two distinct audiences: institutional and private sector marketing professionals, and the clients or end users of PUBLISHKNOWLEDGE's system and core principles. We estimate we will reach approximately 80% of our end users through strategic alliances with professional agencies, consultants and experts – members of the first audience. The Company's primary strategic focus is therefore on these B2B customers. We will help our B2B partners and clients:  Increase their knowledge and skills in facilitating marketing and branding solutions, and enhancing their existing portfolio of offerings to their clients  Building their own brand awareness and recognition in their market  Build their own marketing practices by giving them tools and new concepts and principles to attract new clients  Providing them with ongoing, continuous support, and quarterly training and skills development opportunities through PUBLISHKNOWLEDGE University skills development program Acquisition Strategy The Company has demonstrated it has both the ability and drive to be successful, even with limited resources and marketing expertise. Hard work has established the basis for an opportunity to expand their market reach and presence to become a leading company. This will depend on a world class marketing effort. The more successful we are with our own marketing efforts, the more successful we will be as a role model and being recognized as an industry leader. We will us the power of technology to achieve mass 'customization' strategy. The nature of our offerings is such that one-to-one marketing strategies are highly appropriate. We will focus on implementing initiatives designed to create long-lasting relationships with our customers. As a component of our applications, we will develop an intuitive, DRAFT Page 32 of 48 comprehensive customer database that tracks individual activities and successes of our customers, and allows us to become familiar with each customer on a more intimate basis. We will use the Internet, and a customized portal interface as our key tool to communicate with our customer and strategic partners, and source of revenues. The company is preparing for aggressive B2B sales and marketing activity, which is planned for Spring 2007. The key pillars of the marketing strategy are: 1. Developing brand identities for our products, services and on-line platform, through a range of tactics, including special events, memberships, referral marketing, coupons, and publicity 2. Designing and packaging the right collaborative environment (combined on-line and off-line) to deliver the modular product and service bundles to individuals and organizations 3. Attracting and recruiting key salespeople and facilitators in key geographic areas, and providing them with licensed accreditation, and quality skills and knowledge. Working with key experts, resources and affiliates, the Company is planning a 20-city North American tour to attract 20,000 individuals to publishknowledge.com seminars, and generate licensed facilitators. The tour is currently being planned for launch in Spring of 2007. These seminars provide training for the general public and are 6 to 8 months. Deliver online orientation and learning workshops to strategically position the company as an authority in the industry, and to create awareness of the company‘s services. publishknowledge.com will launch EMU (EMarketing University) and create online training programmes for emarketers. We presently have four sales representatives in our company who focus primarily on new customer development, upselling our existing client base, and developing strategic alliances in an effort to expand our distribution network. Our sales efforts typically include direct marketing from our own search engine marketing efforts. We are exploring attendance at and sponsorship of various trade shows and industry events to generate larger customers. Our largest source of income is complimentary companies reselling our services and the launch of our sales distribution protected territory network that utilizes these types of relationships. Pricing Strategy – need to discuss As of December 31, 2005, we had four full-time employees in our sales department. Our sales department focuses primarily on new customer development, up selling our existing client base, and developing strategic alliances in an effort to expand our distribution network. Our sales efforts typically include direct marketing from our own search engine marketing efforts. We are exploring attendance at and sponsorship of various trade shows DRAFT Page 33 of 48 and industry events to generate larger customers. Our largest source of income is complimentary companies reselling our services and the launch of our sales distribution protected territory network in January that utilizes these types of relationships. 3.3 Operational Strategy An integral part of our vision is to be a highly effective, superbly managed company. Service to our clients and clear communications and activity with our strategic partners will be critical to help us both prepare and manage for growth. publishknowledge.com will have an operation manual detailing complete company policy and standards for many possible situations that may arise. It will be a fluid document, for as new protocols and standards arise, the manual will be amended. The goal of the operation manual will be to standardize as many parts of the business as possible, in an effort to control cost and aid growth. Our operational focus for the next year is to define and implement systems and processes in key areas to prepare the Company for profitable growth, and keeping with the demands of the new economy. This will also involve continuous refinement of our business model, and focusing on our core competencies. As well, it involves ensuring the customer is placed first and foremost in the minds of all management team members and employees. Defining key roles and getting the right people in those roles will be a key focus for the next year. This will involve designing an approach to teambuilding that is in alignment with our principles and process. This will also help align the interests of management team, employees and shareholders. To assist us with implementing these operational goals and priorities, we will seek to hire an operational expert who has proven experience to design and implement the systems blueprint to carry the Company's growth through the next 18 months. DRAFT Page 34 of 48 3.4 Financial Publishknowledge.com Pro Forma Income Statement For the Five Years Ended December 31, 2010 Sched. Marketing Packages Revenues Gross Margin A A 40,500 36,575 1,837,500 1,656,875 5,050,000 4,557,500 9,975,000 8,996,250 13,600,000 12,265,000 2006 2007 2008 2009 2010 Professional Services/Consulting Revenues Gross Margin Domain Name Registrations Revenues Gross Margin Web Design Revenues Gross Margin D D 32,500 29,250 120,000 108,000 257,500 231,750 507,500 456,750 1,007,500 906,750 C C 40,500 3,600 1,837,500 23,040 5,050,000 62,478 9,975,000 102,910 13,600,000 158,437 B B 25,000 18,750 160,000 120,000 265,000 198,750 370,000 277,500 475,000 356,250 Total Revenues Total Gross Margin Operating Expenses Marketing Packages Consulting Domain Registrations WebWorx 138,500 88,175 3,955,000 1,907,915 10,622,500 5,050,478 20,827,500 9,833,410 28,682,500 13,686,437 A B C D 205,000 25,000 205,000 100,000 535,000 200,000 75,000 200,000 200,000 675,000 312,000 92,000 312,000 312,000 1,028,000 465,000 125,000 465,000 465,000 1,520,000 650,000 150,000 650,000 650,000 2,100,000 Operating Income POS System Consulting Web Hosting A B C (168,425) (6,250) (201,400) 1,456,875 45,000 (176,960) 4,245,500 106,750 (249,522) 8,531,250 152,500 (362,090) 11,615,000 206,250 (491,563) DRAFT Page 35 of 48 WebWorx D (70,750) (446,825) (92,000) 1,232,915 (80,250) 4,022,478 (8,250) 8,313,410 256,750 11,586,437 General & Administration Interest & other expenses E E 265,000 265,000 395,000 395,000 470,000 470,000 530,000 530,000 595,000 595,000 Net Income before taxes Income taxes 0.30 (711,825) (213,548) 837,915 251,375 3,552,478 1,065,743 7,783,410 2,335,023 10,991,437 3,297,431 NET INCOME (498,278) 586,541 2,486,735 5,448,387 7,694,006 Publishknowledge.com Pro Forma Income Statement For the Five Years Ended December 31, 2010 Marketing and Branding Services 2006 2007 Number of Customers (# of marketing and branding packages sold) Single Month Services 10 250 Three Month Services 5 250 TOTAL Service Packages 15 500 Single Month Support 10 250 Three Month Support 5 250 Total Branding Packages 15 500 Average value per package Single Month Three Month Single Month Support Three Month Support Gross revenues from packages Single Month Services Three Month Services Single Month Support Three Month Support Total Gross Revenues Commissions from packages Single Month Services Three Month Services Commissions from Support Single Month Support Three Month Support Schedule A 2008 1,000 500 1,500 1,000 500 1,500 2009 1,500 1,000 2,500 1,500 1,000 2,500 2010 2,000 1,000 3,000 2,000 1,000 3,000 1,000 5,000 250 600 1,500 5,000 250 600 1,500 6,000 250 600 2,000 6,000 250 600 2,500 7,500 250 600 10,000 25,000 2,500 3,000 40,500 0.10 1,000 2,500 0.05 125 300 375,000 1,250,000 62,500 150,000 1,837,500 0.10 37,500 125,000 0.05 3,125 15,000 1,500,000 3,000,000 250,000 300,000 5,050,000 0.10 150,000 300,000 0.05 12,500 30,000 3,000,000 6,000,000 375,000 600,000 9,975,000 0.10 300,000 600,000 0.05 18,750 60,000 5,000,000 7,500,000 500,000 600,000 13,600,000 0.10 500,000 750,000 0.05 25,000 60,000 DRAFT Page 36 of 48 Total Commissions 3,925 180,625 492,500 978,750 1,335,000 Net revenues (License and Support Packages) Single Month Services 9,000 Three Month Services 22,500 Single Month Support 2,375 Three Month Support 2,700 Gross Margin Related Operating Expenses Marketing Team Manager Programmers Training Marketing Rent & Overhead Equipment Administration Other expenses Total Expenses 36,575 337,500 1,125,000 59,375 135,000 1,656,875 1,350,000 2,700,000 237,500 270,000 4,557,500 2,700,000 5,400,000 356,250 540,000 8,996,250 4,500,000 6,750,000 475,000 540,000 12,265,000 45,000 45,000 25,000 25,000 10,000 45,000 10,000 205,000 40,000 40,000 15,000 25,000 25,000 20,000 20,000 15,000 200,000 45,000 60,000 30,000 50,000 50,000 30,000 22,000 25,000 312,000 50,000 100,000 50,000 75,000 75,000 40,000 40,000 35,000 465,000 50,000 150,000 75,000 125,000 125,000 50,000 40,000 35,000 650,000 Operating Income (168,425) 1,456,875 4,245,500 8,531,250 11,615,000 Publishknowledge.com Pro Forma Income Statement For the Five Years Ended December 31, 2006 Consulting 2006 Consulting Area/Activity Ebrand Foundations Research General Total Revenues Gross Margin Percent Gross Margin Operating Expenses Consulting Manager Sub Contract Expenses Admin. Expenses Total Expenses Consulting Operating Income Publishknowledge.com Pro Forma Income Statement For the Five Years Ended December 31, 2006 10,000 10,000 5,000 25,000 0.25 18,750 2007 100,000 50,000 10,000 160,000 0.25 120,000 Schedule B 2008 150,000 100,000 15,000 265,000 0.25 198,750 2009 200,000 150,000 20,000 370,000 0.25 277,500 2010 250,000 200,000 25,000 475,000 0.25 356,250 15,000 10,000 25,000 (6,250) 40,000 20,000 15,000 75,000 45,000 45,000 22,000 25,000 92,000 106,750 50,000 40,000 35,000 125,000 152,500 55,000 45,000 50,000 150,000 206,250 Schedule C DRAFT Page 37 of 48 Domain Name Registrations 2006 Number of Stores (license + hardware packages) New Registrations 1,000 Renewals Conversion Rate Total Renewals TOTAL Hosting Packages 1,000 Average value per package New Registration Renewal Gross revenues from packages New Registrations Renewal Total Gross Revenues Sales Costs New Registrations Renewal Total Commissions 2007 5,000 70% 700 5,700 2008 7,500 70% 3,990 11,490 2009 10,000 70% 8,043 18,043 2010 15,000 70% 12,630 27,630 4 8 4 8 5 8 5 8 5 8 4,000 4,000 0.10 400 400 20,000 5,600 25,600 0.10 2,000 560 2,560 37,500 31,920 69,420 0.10 3,750 3,192 6,942 50,000 64,344 114,344 0.10 5,000 6,434 11,434 75,000 101,041 176,041 0.10 7,500 10,104 17,604 Net revenues (License and Support Packages) New Registrations 3,600 Renewal Hosting Gross Margin Hosting Operating Expenses Hosting Services Manager Programmers Training Marketing Rent & Overhead Equipment Administration Other expenses Total Expenses 3,600 18,000 5,040 23,040 33,750 28,728 62,478 45,000 57,910 102,910 67,500 90,937 158,437 15,000 10,000 5,000 10,000 2,000 5,000 2,000 49,000 20,000 10,000 2,500 15,000 2,000 5,000 5,000 2,000 61,500 25,000 15,000 2,500 20,000 2,000 5,000 5,000 2,000 76,500 30,000 15,000 2,500 25,000 2,000 5,000 5,000 2,000 86,500 35,000 15,000 2,500 30,000 2,000 5,000 5,000 2,000 96,500 Hosting Operating Income (45,400) (38,460) (14,022) 16,410 61,937 Publishknowledge.com Pro Forma Income Statement For the Five Years Ended December 31, 2006 Website Design 2006 2007 Schedule D 2008 2009 2010 DRAFT Page 38 of 48 Number of Website Design/License Packages Basic Advanced TOTAL Design Packages Average value per package Basic Advanced Gross revenues from Web Design Basic Advanced Total License Revenues 5 3 8 25 10 35 50 25 75 100 50 150 200 100 300 2,000 5,000 2,500 5,000 2,500 5,000 2,500 5,000 2,500 5,000 10,000 15,000 25,000 62,500 50,000 112,500 125,000 125,000 250,000 250,000 250,000 500,000 500,000 500,000 1,000,000 Custom Design Hours of Design Work Total Custom Design Total Gross Revenues Commissions from packages Basic Advanced Custom Design Total Commissions Net revenues Basic Advanced Custom Design Web Design Gross Margin Rate/Hr. 150 50 7,500 32,500 0.10 1,000 1,500 750 3,250 50 7,500 120,000 0.10 6,250 5,000 750 12,000 50 7,500 257,500 0.10 12,500 12,500 750 25,750 50 7,500 507,500 0.10 25,000 25,000 750 50,750 50 7,500 1,007,500 0.10 50,000 50,000 750 100,750 9,000 13,500 6,750 29,250 56,250 45,000 6,750 108,000 112,500 112,500 6,750 231,750 225,000 225,000 6,750 456,750 450,000 450,000 6,750 906,750 Web Design Operating Expenses Design Team Manager Programmers Training Marketing Rent & Overhead Equipment Administration Other expenses Total Expenses 15,000 15,000 25,000 25,000 10,000 10,000 100,000 40,000 40,000 15,000 25,000 25,000 20,000 20,000 15,000 200,000 45,000 60,000 30,000 50,000 50,000 30,000 22,000 25,000 312,000 50,000 100,000 50,000 75,000 75,000 40,000 40,000 35,000 465,000 50,000 150,000 75,000 125,000 125,000 50,000 40,000 35,000 650,000 Web Design Operating Income (70,750) (92,000) (80,250) (8,250) 256,750 DRAFT Page 39 of 48 Publishknowledge.com Pro Forma Income Statement For the Five Years Ended December 31, 2010 General Expenses 2006 General and Administration Management salaries Employee salaries Consulting Rent Telephone Equipment Depreciation Advisory Board expenses Legal Accounting and audit Other expenses Total General Expenses 2007 Schedule E 2008 2009 2010 50,000 25,000 25,000 30,000 25,000 20,000 25,000 25,000 25,000 15,000 265,000 150,000 50,000 30,000 30,000 25,000 20,000 25,000 25,000 25,000 15,000 395,000 200,000 75,000 30,000 30,000 25,000 20,000 25,000 25,000 25,000 15,000 470,000 250,000 85,000 30,000 30,000 25,000 20,000 25,000 25,000 25,000 15,000 530,000 300,000 100,000 30,000 30,000 25,000 20,000 25,000 25,000 25,000 15,000 595,000 DRAFT Page 40 of 48 3.5 Risk Factors: Risks relating to our company, business and the industry The company recognizes that its limited operating history makes accurate and detailed assessment of risks difficult; however we anticipate the following risks and mitigating factors: 1. If we are unable to successfully execute our growth strategy, our business and future results of operations may suffer. Our growth strategy includes broadening the scope of our service offerings. In connection with our growth strategy, we will be required to increase our sales and marketing efforts. Our growth strategy exposes us to a number of risks, including the following:  Growth may strain our management, capital resources, information systems and customer service.  Hiring new employees may increase training costs and may result in temporary inefficiencies as the employees learn their jobs.  Expanding our service offerings may require us to enter into new markets and compete with additional competitors. We cannot assure that we will overcome the risks associated with our growth. If we fail to overcome such risks, we may not realize additional revenue or profitability from our efforts, may incur additional expenses and therefore our financial position and results of operations could be materially and adversely affected. 2. If we do not maintain and grow a critical mass of advertising network and distribution network partners, the value of our services could be adversely affected. Our success depends, in part, on the growth and maintenance of a critical mass of advertising network and distribution network partners and a continued interest in our marketing related services. If our business is unable to achieve a growing base of advertisers through our advertising network partners, our current distribution partners may be discouraged from continuing to work with us and this may create obstacles for us to enter into agreements with new distribution partners. Similarly, if our distribution network does not grow and does not continue to improve over time, current and prospective advertising network partners may reduce or terminate their business with us. Any decline in the number of advertising network and distribution network partners could adversely affect the value of our services. 3. We expect that our anticipated future growth, including potential acquisitions, may strain our management, administrative, operational and financial infrastructure, which could adversely affect our business. DRAFT Page 41 of 48 A key component of our business strategy includes strengthening our competitive position in the direct navigation market through selective acquisitions of complementary business, services or technologies or to engage in other strategic alliances with third parties. Integrating any newly acquired web property or company may be expensive and time-consuming. To finance any acquisition, it may be necessary for us to raise additional funds through public or private financings. Additional funds may not be available on terms that are favorable to us, and, in the case of equity financings, would result in dilution to our shareholders. Any such transactions would be accompanied by the risks commonly encountered in such transactions, including, among others, the difficulty of assimilating operations, technology and personnel of the combined companies, the potential disruption of our ongoing business, the inability to retain key technical and managerial personnel, the inability of management to maximize our financial and strategic position through the successful integration of acquired businesses, additional expenses associated with amortization of acquired intangible assets, the maintenance of uniform standards, controls and policies, the impairment of relationships with existing employees and customers, and potential overpayment for a company or its asset. We have limited experience in these types of acquisitions, and we may not be successful in overcoming these risks or any other potential problems. We cannot assure you that we will be able to consummate any acquisitions or, if consummated, successfully integrate the operations and management of future acquisitions. If we are unable to attract and consummate acquisitions, our growth could be adversely impacted. 4. We rely on third party technology, server and hardware providers, and a failure of service by these providers could adversely affect our business and reputation. We rely upon third party data center providers to host our main servers and expect to continue to do so. In the event that these providers experience any interruption in operations or cease operations for any reason or if we are unable to agree on satisfactory terms for continued hosting relationships, we would be forced to enter into a relationship with other service providers or assume hosting responsibilities ourselves. If we are forced to switch hosting facilities, we may not be successful in finding an alternative service provider on acceptable terms or in hosting the computer servers ourselves. We may also be limited in our remedies against these providers in the event of a failure of service. In the past, we have experienced short-term outages in the service maintained by one of our current co-location providers. We also rely on third party providers for components of our technology platform, such as hardware and software providers, and domain name registrars. A failure or limitation of service or available capacity by any of these third party providers could adversely affect our business and reputation. 5. Our future revenue and profits, if any, depend upon the continued widespread use of the Internet as an effective commercial and business medium. Factors which could reduce the widespread use of the Internet include: DRAFT Page 42 of 48 o possible disruptions or other damage to the Internet or telecommunications infrastructure; o failure of the individual networking infrastructures of our advertising network and distribution network partners to alleviate potential overloading and delayed response times; o a decision by merchant advertisers to spend more of their marketing dollars in offline areas; 6. We may be subject to intellectual property infringements and claims that create uncertainty about ownership of properties essential to our business and divert our managerial and other resources. The Company relies and intends to rely principally upon a combination of copyright, trademark and trade secret laws, non-disclosure agreements and other contractual provisions to establish and maintain its intellectual rights. As part of its confidentiality procedures, the Company generally enters into nondisclosure and confidentiality agreements with each of its employees, consultants and corporate partners to limit access to and distribution of its proprietary information. There can be no assurance that the Company‘s efforts to protect its intellectual property rights will be successful. Despite the Company‘s efforts to protect its intellectual property rights, unauthorized third parties, including competitors, may be able to copy or reverse engineer certain portions of the Company‘s software or proprietary systems, and use such copies to create competitive products or services which could have a material adverse effect on the Company‘s business, operating results and financial condition. There has been a substantial amount of litigation in the technology industry regarding intellectual property rights. We cannot assure you that third parties will not, in the future, claim infringement by us with respect to our current or future services, trademarks or other proprietary rights. Our success depends, in part, on our ability to protect our intellectual property and to operate without infringing on the intellectual property rights of others in the process. There can be no guarantee that any of our intellectual property will be adequately safeguarded, or that it will not be challenged by third parties. We may be subject to patent infringement claims or other intellectual property infringement claims that would be costly to defend and could limit our ability to use certain critical technologies. We may also become subject to interference proceedings conducted in the patent and trademark offices of various countries to determine the priority of inventions. The defense and prosecution, if necessary, of intellectual property suits, interference proceedings and related legal and administrative proceedings is costly and may divert our technical and management personnel from their normal responsibilities. We may not prevail in any of these suits. An adverse determination of any litigation or defense proceedings could cause us to pay substantial damages, including treble damages if DRAFT Page 43 of 48 we willfully infringe, and, also, could put our patent applications at risk of not being issued. 7. We are susceptible to general economic conditions, and a downturn in advertising and marketing spending by merchants could adversely affect our operating results. Our operating results will be subject to fluctuations based on general economic conditions, in particular those conditions that impact merchant-consumer transactions. If there were to be a general economic downturn that affected consumer activity in particular, however slight, then we would expect that business entities, including merchant advertisers, could substantially and immediately reduce their advertising and marketing budgets. We believe that during periods of lower consumer activity, merchant spending on advertising and marketing is more likely to be reduced, and more quickly, than many other types of business expenses. These factors could cause a material adverse effect on our operating results 8. If we are unable to obtain and maintain adequate insurance, our financial condition could be adversely affected in the event of uninsured or inadequately insured loss or damage. We may not be able to obtain and maintain insurance policies on terms affordable to us that would adequately insure our business and property against damage, loss or claims by third parties. To the extent our business or property suffers any damages, losses or claims by third parties that are not covered or adequately covered by insurance, our financial condition may be materially adversely affected. 9. Government and legal regulations may damage our business. We are subject to general business regulations and laws, as well as regulations and laws specifically governing the Internet and e-commerce. Such existing and future laws and regulations may impede the growth of the Internet or other online services. These regulations and laws may cover taxation, user privacy, data protection, pricing, content, copyrights, distribution, electronic contracts and other communications, consumer protection, the provision of online payment services, broadband residential Internet access, and the characteristics and quality of products and services. The Federal Trade Commission, or FTC, has recently reviewed the way in which search engines disclose paid search practices to Internet users. In 2002, the FTC issued guidance recommending that all search engine companies ensure that all paid search results are clearly distinguished from non-paid results, that the use of paid search is clearly and conspicuously explained and disclosed and that other disclosures are made to avoid misleading users about the possible effects of paid search listings on search results. The adoption of laws or regulations relating to placement of paid search advertisements or user privacy, defamation or taxation may inhibit the growth in use of the Internet, which in turn, could decrease the demand for our services and increase our cost of doing business or otherwise have a material adverse effect on our business, prospects, financial condition and results of operations. Any new legislation or regulation, or the application of existing laws and regulations to the Internet or DRAFT Page 44 of 48 other online services, could have a material adverse effect on our business, prospects, financial condition and results of operations. 10. State and local governments may be able to levy additional taxes on Internet access and electronic commerce transactions, which could result in a decrease in the level of usage of our services. Beginning in 1998, the federal government imposed a moratorium on state and local governments‘ imposition of new taxes on Internet access and eCommerce transactions, which has now expired. State and local governments may be able to levy additional taxes on Internet access and eCommerce transactions unless the moratorium is reinstituted. Any increase in applicable taxes may make eCommerce transactions less attractive for businesses and consumers, which could result in a decrease in eCommerce activities and the level of usage of our services. 11. Our success depends on our ability to maintain and increase our customer base. Our goal of achieving profitability depends on our ability to maintain and expand our customer base. However, our customers are generally free to use competing products and services, and the costs of switching are low, so we could face significant customer losses. Our customers are generally not obligated to generate minimum revenues, and some generate very little revenue for us. These factors make it difficult to anticipate what our future revenues from existing customers will be. In addition, our success depends on our ability to expand our customer base. If we lose any significant customer or are unable to expand our customer base and to increase our average revenues per customer, our business will be harmed. 12. Our pro-forma projections may not be accurate The projections of the Company included in this Memorandum are based upon assumptions the Company currently believes to be reasonable but which are uncertain and unpredictable. The projections include certain stated assumptions and disclosures regarding current and planned accounting methodologies that must be examined carefully. These projections do not constitute representations as to future operations, and no assurance can be given as to the reliability of the assumptions on which they are based. Such assumptions may be incomplete or inaccurate and unanticipated events and circumstances are likely to occur. Actual results achieved during the periods covered are likely to vary from the projections and such variations may be material and adverse. The independent auditors of the Company have not compiled or examined these projections and, accordingly, such auditors express no opinion or any other form of assurance with respect to the same. 13. Failure to manage growth could harm the company‘s business; we need to ensure we have the resources to hire and retain qualified personnel to sustain the growth of out business. DRAFT Page 45 of 48 Due to the nature of the industry and the size of the potential interest in the Company‘s technologies, rapid growth in the scope of operations is anticipated. This growth will require additional personnel and will have associated higher levels of operating expenses. In order to manage these operations effectively, the Company will need to continuously implement and improve it‘s operational, financial and management information systems, as well as manage customer service, personnel and business systems. The Company‘s ultimate success may be dependent in large part upon its ability to attract and retain additional personnel in such areas as financial management, engineering, customer service and marketing. There can be no assurance that suitable persons for such areas can be located or retained, or that the Company will successfully meet the other challenges imposed by rapid growth. The failure to attract and retain sufficient personnel or to otherwise manage its operational, financial, and other systems adequately could have a material adverse effect on the Company‘s business, operating results and financial condition. Risk Area Bear market Overview There are some that believe that the market is still overvalued despite corrections in recent months and that equity markets may not hold up, creating concerns for potential clients. We can position our offerings in such a way to remain attractive despite the state of the markets. We have low customer acquisition costs, provide quick time-tomarket, require lower cash outlay, and most importantly, can provide a distinctive advantage to a company over its competitors. By picking inappropriate clients out of the gate, we may find it difficult to get off the ground, as a result of scope creep or inability to meet customer expectations. We must: (a) conform to the market research done by the business plan task force, (b) have a selection criteria for companies within the chosen vertical markets to assess high potential clients, (c) build strong networks and have multiple clients to choose from - rather than accepting just any client - thus improving chances of success, and (d) be prepared to walk away from any client, even after startup has begun, if it appears that success criteria are not being met. Client companies may be unable to attract DRAFT Page 46 of 48 Wrong clients Database build Competition Penetration rate Growth Levels and retain sufficient subscribers to their 'personalized delivery vehicle'. We must be prepared to work with clients using the knowledge gained from other clients who have been successful in this space. Competitors already operating in the Internet based direct marketing environment or publishers may attempt to build or acquire this technology and act as a direct competitor. To ensure success, CAT must be prepared to consolidate with other companies and/or purchase other firms. Speed to market is critical, along with building brand. The projected penetration rate of Internet users may not meet expectations, thereby minimizing the potential for the company to achieve forecasted revenue levels. To ensure success, CAT must be prepared to consolidate with other companies and/or purchase other firms. Market demand for our offering could significantly exceed our ability to service this demand in a quality fashion ADD www.twitter.com/knowledgepub and www.twitter.com/ryanagibson DRAFT Page 47 of 48 SUMMARY OF THE OFFERING THE COMPANY PRINCIPAL BUSINESS TERMS OF OFFERING USE OF PROCEEDS CAPITALIZATION MANAGEMENT RISK FACTORS IF you want help updating the information in the Business Plan and Customizing it for your company, contact us at our twitter account, and let us know how you liked the plan! Thanks. ADD www.twitter.com/knowledgepub and www.twitter.com/ryanagibson to your account today. DRAFT Page 48 of 48