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3Lance Communications, Inc. BUSINESS PLAN
NOV
4 1999
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• 617.350.0160
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COMMUNICATIONS
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O O O O O Contact: Jonathan Tang, President 354 Congress St. 2 nd floor Boston, MA 02210 jtang@threelance.com
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CONFIDENTIAL
INFORMATION
This business plan is the property of 3Lance Communications, Inc. and is considered to be strictly confidential. It contains information intended only for the person to whom it is transmitted. With receipt of this plan, recipient acknowledges and agrees that: i) in the event recipient does not wish to pursue this matter, this document will be returned, at the address listed above as soon as possible; ii) the recipient will not copy, fax, reproduce, divulge, or distribute this confidential plan, in whole or in part, without the expressed written consent of 3Lance Communications, Inc.; iii) all of the information herein will be treated as confidential material with no less care than that afforded to your own company confidential material. This document does not constitute an offer to sell, or a solicitation of an offer to purchase.
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1.0 EXECUTIVE SUMMARY
TABLE
OF CONTENTS
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1 1 1 2 3 4 5 5 6
1.1 CURRENT STATUS ................................................................................................................ 1.2 THE MARKET ...................................................................................................................... 1.3 THE SERVICE ............................................. .......................................................................... 1.4 THE BUSINESS MODEL ..................................................................................... .................... 1.5 THE PEOPLE ......................................................................................................................... 1.6 PROJECTED USE OF FUNDS ................................................................................................... 1.7 EXIT STRATEGY AND SELECTED FINANCIAL DATA ............................................................... 2.0 THE MARKET .................................................................................................................
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3.0 THE SERVICE .................................................................................................................. .... 9 3.1 WHY .... PROCESS-CENTRIC .................................................................................................. 9 3.2 WHY WEB-BASED ............................................................................................................ 4.0 THE BUSINESS MODEL ................................................................................................. 6 7 8 9 10 11 11 11 12 13 14 15 16 |7 17 17 18 18 19 21 22 22 24 24 25 26 27
4.1 CUSTOMER CARE ............................................................................................................... 5.0 THE COMPETITION ..................................................................................................... 5.1 INDUSTRY TRENDS ............................................................................................................ 5.2 INTEGRATED VS. NON-INTEGRATED .................................................................................. 5.3 THE PLAYERS ....................................................................................................................
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5.4 PORTAL SITE COMPETITION ............................................................................................... 5.5 COMPETITIVE DIFFERENTIATION ....................................................................................... 6.0 THE PEOPLE .................................................................................................................
6.1 BOARD MEMBERS ............................................................................................................. 6.2 ADVISORS ......................................................................................................................... 7.0 ROLLOUT ......................................................................................................................
7.1 WEB SITE ROLLOUT ........................................................................................................... 7.2 PR ROLLOUT .....................................................................................................................
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7.3 MARKETING ROLLOUT ...................................................................................................... 7.4 PARTNERSHIPS AND STRATEGIC ALLIANCES ...................................................................... 8.0 PROJECTED 9.0 FINANCIAL USE OF FUNDS STATEMENTS ...................................................................................... .........................................................................................
9.1 ASSUMPTIONS ................................................................................................................... 9.2 PROJECTED PROFIT AND LOSS ........................................................................................... 9.3 PROJECTED CASH FLOW .................................................................................................... 9.4 PROJECTED BALANCE SHEET ............................................................................................ 9.5 STAFFING SUMMARY ......................................................................................................... 10.0 APPENDIX ....................................................................................................................
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3Lance Communications,
Inc. Business Plan
Confidential
1.0 EXECUTIVE
SUMMARY
This Business Plan outlines for prospective investors the opportunit3' presented by an investment of $3 to $5 million in 3Lance Communications, Inc. (the _'Company"). It focuses on seven items: current status, markets, products, the business model, management team, projected uses of the funds, and exit strate_' including selected financial data. This Executive Summary provides an overview of the entire plan. 1.1 Current Status 3Lance Communications is a Web-based service company offering a breakthrough solution in the sales arena - myNetsales.com, myNetsales.com is a Web-based application that optimizes the effectiveness and returns on the selling process. The Company, a Massachusetts corporation, is two years old. It is located in Boston, Massachusetts in leased office space. When the Company commenced operations in 1997, the principals provided consulting services in the development of Web-based applications. Many of these assignments were involved _ith the dissemination of sales information and the management and reporting of sales force operations. As a result of this experience, the principals undertook extensive research on both Sales Force Automation (SFA) and Customer Relationship Management (CRM) products and customer requirements in this area. From this research they determined that there existed a need for a Web-based product that would provide both SFA and CRM functionally' in one eas3.:to use comprehensive package. Two members of the Board of Directors were also involved in this research effort: Nan, Stephens (Principal of NetWorks, and nationally renowned sales consultant) and Robert Karlis (CEO of Digital Graphics, and highly experienced sales and marketing professional) both provided sustained input into the functionality of myNetsales.com from the onset of development. Today the Company has 5 people involved in development as well as a CEO, and several outside advisors who provide public relations, marketing, legal and accounting services. The Company closed a seed round of capital in July 1999 and will release the initial version of myNetSales.com in early September 1999. The Company has adopted a sales/marketing strateg3."of allowing initial users who sign up _th myNetsales.com, the abili_ to use a limited version of the product for free with the expectation that these users will convert to paying customers. This sales/marketing strate_" is further discussed in the business model section of this document. 1.2 The Market
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From time immemorial the dominant principal of business has been reflected in the adage. "nothing happens until somebody sells something." With the competitive pressures in today's world, it has become even more important for sales people to manage their territories better to develop closer customer relationships, and for sales managers to be constantly up to date on what is happening to the sales people and territories under their command. Attempting to help sales people respond to those requirements has produced some explosive new market segments from sales training to contact management tools to even more sophisticated CRM (Customer Relationship Management) applications. This focus on the customer has made the CRM industry, alone a $1.9 billion dollar segment in 1999, with projections of $7.5 billion b.v the year 2002. What is fueling this explosion is business' desire to improve their sales effectiveness. The software and tools currently offered for improving the sales effort focus on contact tracking and administering sales information, delivering reams of content about the customer base, sales cycle, and specific account details. These tools are historic in nature in that they keep track of where you have been and what you have done. and help you analyze the efficient" of your efforts. What they do not provide is a pro-active tool to help the individual sales person or manager decide, "'What do I do next'?"
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3Lance Communications,
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Confidential
Our target market is the small and medium sized business with annual revenues of $100 million or less. We have selected this market for a number of reasons: it is large and growing rapidly; companies in this size range cannot afford or support enterprise level CRM applications; they face serious competitive challenges from larger companies which necessitate that their sales processes be efficient; and they have already recognized the power of Web-based products and services. We believe that this market represents an excellent growth opportunity for 3Lance. Keys to our initial success in obtaining market share is two fold: 1. 2. Creating demand pull through a highly targeted grass roots approach. Locating and securing strategic partners that have complimentary tool sets and who are looking to extend the reach of their Web based distribution channels. Significant in our competitive analysis is that myNetsales.com is the only tool that offers proactive management of the sales process. Our strongest competition is from two different sources - CRM/ERP vendors who are looking to build portal sites in support of their own products and entrenched Contact Management Software companies.
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1.3 The Sen'ice myNetsales.com is a Web-based SFA/CRM solution that assists sales teams in achieving maximum selling
results by allowing companies and individuals to define and customize selling processes to match a product, a territory or a vertical market - leading to shorter and more effective sales cycles. The system accomplishes this by addressing the following items. " • • • • • • • • • Management of sales pipelines from prospecting to closing Enhancement of sales effectiveness and productivity Accessing information from an3._vhere over the Internet Sharing best practices Real time forecasting Service to existing accounts Organization Tools Training Measurement Tools
There is an increasing awareness that sales automation is more about the process than technology.
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"'A revolution is taking place in sales, marketing and customer sen'ice, driven by the power of sales process thinking. In the long run, the most effective way to increase customer satisfaction and profit is to view sales as the outcome of a process." Paul Selden. President of Performance Management, a sales automation 0 0
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training and process consulting firm. "It is difficult to envision that a set of applications that leverages the effectiveness of the sales process will not have a positive impact on the financial performance of the corporation." Glen Petersen, Chairperson for the Education Committee of the CRMA (Customer Relationship Management Association). _'The process provides a standard by which we can all measure and keep track. With no common standard. even/one is measuring in his own separate units, so we can't compare information." Sales & FieMForce Automation A4agazine.Aug 1999 "'An accountable sales process - what you do at each step - is the basis for measuring, predicting, sustaining and improving results," Bar_ Trailer, CtL_tcommunitv. cont myNetsales.com is the first system of its kind that
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3Lance addresses these issues with myNetsales.com,
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3Lance Communications,
Inc. Business Plan
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will proactively guide a sales rep through a self-defined or management instituted process. The system will become the sales process manager. Furthermore, a detailed report of activity will allow quantifiable measurements of sales process effectivity. With this, companies and individuals can measure results of different sales campaigns to determine which process is the most effective and use that analysis to build "'best of breed" sales processes. Moreover, myNetsales.com O leverages the strength of Internet technology to enhance the effectiveness of
the product, myNetsales.com is designed from the ground up to be a 100% Web-powered solution that dramatically improves the way individuals and indeed entire companies sell. The _'stem empowers sales teams by providing tools to access critical information in real-time so that they can target, secure and sen, ice customers more effectively. These capabilities lead to even greater benefits through more focused marketing, decreased costs of leads and increased sales - guiding companies to quick ROIs. And all this can be done whether at home, at an airport, or at a customer's site - basically, at anytime and from any location. This is the power of myNetsales.com. Primal' • features of myNetsales.com include:
Sales Process Builder - Build custom selling plans that give sales representatives a solid action plan to help them close deals. Cater plans to specific products, markets or individual clients. Leverage skills of top performers by building their best practices into the s3.'stem. Customization of sales process can be made directly through their browser without any programming knowledge. The Sales Process
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Builder enables the sales manager to improve his coaching of the various team members. Document Library - Access and organize corporate information on pricing, presentations, best practices, success stories, etc. All updates are in real-time and team members are notified of new article postings. Reporting - Generate reports, access current status of all deals in progress, and organize by account, individual, or product and in terms of time, percentages and dollars. Measure results of selling campaigns and refine to most effective process. Forecast by historical data and recent activity. Groupware Functionality - Promote team selling and knowledge sharing within and through an organization Messaging Center - Provides direct communication between executives, managers, reps, VARs, associates, etc... Ability. to broadcast messages to entire sales force: announce company and/or departmental meetings (Groupware capability only) ,4ccount Management Center - Database of detailed client/account information that enables a sales person to manage their leads through their own custom sales process. Synchronization with Microsoft Outlook, ,4CT and GoldMine. (Feature to be added 'after next round of funding)
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1.4 The Business Model In order to rapidly build the Company, we have taken the unusual strategy of offering the product at no cost to the user. This will enable us to build buzz around the Web site and increase our subscriber base. The interactive nature of the software will foster continued visits to the site and subscriber loyalty. This strategy."is being pursued by more and more Web-based products. In fact, it was extensively discussed in the Jul.v 28, 1999 issue of The Wall Street Journal as a new business model for the lnternet. The free version of mvNetsales.com will offer full functionality but limit the number of contacts,
documents, and reports available. Chargeable versions of the product will be offered in two flavors: Gold and Platinum. Gold members who subscribe to the $9.95/month service will gain unlimited single-user access to myNetsales.com. Platinum members who subscribe to the $19.95/month sen'ice will gain
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unlimited multi-user access to myNetsales.com generate various reports for an entire group.
giving the ability to share sales processes, documents and
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This business model offers two distinct advantages: 1. A percentage of the subscribers, upon experiencing the product and its benefits, will generate a significant revenue stream within a two-year time frame. 2. The overall subscriber base, in and of itself, is a ve_' valuable asset. Our users will have a distinct value for other organizations that would like to sell products and services to sales people, sales managers and small business owners. This database becomes a significant asset of 3Lance, which translates into a more valuable company in the event of acquisition or merger. O
1.5 The People
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.A_anagement Team The management team of the Company brings both experienced business development personnel as well as individuals who have a depth of experience in developing Web-based products. This diversity will ensure that the Company can compete in today's rapidly changing e-commerce marketplace while meeting its growth objectives and competitive advantage. Thomas H. ?,,¢cGovern, CEO, is an entrepreneur and general manager with over twenty years of experience growing profitable young businesses by developing talent, launching new products, opening new markets and channels, and building flexible organizations. Jonathan Tang, President and co-founder, has extensive experience in software development and Web site design arenas including the development of interactive training products and a job recruitment Web site. Richard W: Perkett, Vice President of Technology and co-founder, has strong software and database development experience including a working knowledge of all the software tools required to build our products. Board of Directors The outside members of the Board have been chosen for their experience in sales training programs and corporate development. :Vancy J. Stephens, Principal NetWorks, has been a consultant specializing in new business development. She advises senior executives on how to consistently gain and service business with unique methodologies. Nancy is the author of Customer-Focused Selling book and CD-ROM.
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Robert G. Karlis, CEO Digital Graphics Inc., is a leader in managing the groxxlh of high technology companies. Van Chu, Managing Director InterPacific Ventures, is a successful entrepreneur who currently manages an offshore venture capital fund. Advisors The Company has also developed a group of advisors who bring necessary expertise in disciplines which the Company does not possess within its current organization. John Chu, Legal Counsel, is a partner at Chu, Ring, Hazel and Associates. Bingham, Dana, and Gould. He was formerly a partner al
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Christine Dilg, Public Relations, advises the Company on its PR strategy and develops the promotional pieces which the Company uses in its campaigns. Lawrence S. Nannis, Levine, Katz, Nannis & Solomon, PC, CPA firm provides accounting services to the company. 1.6 Proieeted Uses of the Funds
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The Company has three major uses for the funds from this round: 1) Enhancement of the product to permit synchronization _.ith other SFA/CRM tools in the marketplace; 2) Launch of major marketing program to build the user base at the myNetsales.com Web site; 3) Development of corporate staff for customer care/ sales support issues; 4) Begin direct sales efforts to end user organizations.
1.7 Exit Stratel_'
and Selected Financial Data
The following projections assume that the Company is successful in raising at least $3 million before January, 2000.
Fiscal Year Unique Visitors
New
2000 855,000
256,500
2001 1,020,000
306,000
2002 1 176,000
352,800
2003 1,248,000
374,400
2004 1,392,000
417,600
Subscribers Revenue
$2,168,876 ($2,082,013)
$6,709,078 ($152,742)
$12,106,159 $3,190,261
$18,118,121 $6,696,211
$24,604,034 $11,636,000
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It is the Company's intention to provide liquidity to its investors through an acquisition by a larger organization or through a public offering of securities.
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2.0 The Market Our target market is the small to mid-sized business as represented by the owner, manager, sales team, or individual salesperson of companies from $100 million in revenue down to the individual proprietor. This market is ve_, large and growing rapidly. That equates to excellent grox_h opportunity for 3Lance. Additionally, the market has certain characteristics that lend themseh,es to strong positioning for our products. Specifically, the characteristics are that small companies are not staffed with a platoon of specialists, and the companies are at constant competitive risk. We will target innovators, visionaries or technological enthusiasts who are often the first to purchase new products in the market place. Along these lines, we will target industries that are _'pically technologically saw.'y, such as those in the financial, high tech, and consulting arenas. These companies have demonstrated high growth rates and tendencies to be early adapters of emerging technologies. These .types of companies would be motivated to Sign on vAth our service because it is an innovative solution that will help them stay competitive in the global market place. The size of the companies that we will market to in our early stages will be small to mid-sized companies that have sales forces of up to 100 people. We think that the combination of the size and vertical markets we have chosen is an untapped market for our sales automation solution. These companies are not willing to pay the high prices for the currently available client/server solutions - which require extensive training and maintenance - but need our tools to stay competitive in their rapidly expanding fields.
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Opportunity Statistics • • • • • There are approximately 23 million smaller businesses in tile U.S. that provide 47 percent of all sales in the countD'. (Small Business Administration) Small and medium businesses make up over 90% of the total businesses in operation today. (Small Business Administration) The small and medium business market is the only business segment that is growing -- at a rate of 1,000,000 new small businesses a year. (Small Business Administration) This market segment is the fuel feeding our countr?,.,'s economic expansion. A report issued by the U.S. Commerce Department in mid-April 1999 indicated that business on the Internet is growing twice as fast as the overall economy. By the year 2002, the report predicted, ecommerce -- buying and selling products and services on the Internet -- will probably surpass $300 billion.
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3.0 The Service Our initial offering is myNetsales.com. This Web site is a customer relationship and sales process •
management tool that helps users focus on optimizing their selling efforts. Via unique architecture, myNetsales.com will help guide users to solutions that are proactive and designed specifically for their situation. " Offering myNetsales.com as a free Web-based service provides small and mid-sized businesses with an immediate opportunity to begin organizing their sales process. Users who wish to upgrade to a full-service membership can decide to do so once they have seen the power of the Web site. 3Lance is focusing on sales productivi .ty in the small and mid-size business environment. The uniqueness of our Web-based strategy, is that we offer more than mere content - myNetsales.com helps sales people, entrepreneurs and managers build a business. The use of our site engenders frequent interaction and loyalty from our subscriber base. Once registered, clients can build their entire sales process and sales
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management program in a secure Web environment. No longer is planning and managing a sales campaign a daunting task. No longer wiU users focus on where they have been, and how man); calls they have made. Rather, myNetsales.com guides members through a sales campaign for their target markets, even down to the level of 1:1 sales processes targeted at individual clients. Continued planning and updating is as simple
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as logging on and picking up where they left off, incorporating the real time activities and experiences of the selling process into their planning efforts. Up until now, the only affordable sales management solutions for small businesses have been traditional Contact Management software, myNetsales.com goes beyond traditional contact management by thinking ahead instead of behind. With myNetsales.com, you look not only at what you did and where you currently are in the sales process. You also look forward, and determine what you need to do and what steps to take in order to close more business, myNetsales.com addresses efficiency with historical data, but more importantly addresses effectiveness by helping you improve and refine your selling efforts. Other critical features of myNetsales.com functions. * The groupware function facilitates team selling, knowledge sharing and communication. No longer are its groupware, document management and reporting
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are salespeople in an organization "islands unto themselves". The sales efforts within a company or group of salespeople can be easily coordinated and planned for increased effectiveness and efficiency. The document management function insures that all salespeople have access to mission critical documents, price sheets, presentations, proposals, product updates, and other collateral that makes them more effective in closing business. The reporting function drives accountabilit3 _and learning in the sales operation. All constituent parties are cognizant of exactly what is occurring with all prospects and clients on a real-time basis. This fosters rapid response to any customer situation, and improves forecasting, resource allocation, and cash flow management.
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Benefits derived from myNetsales.com 1.
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myNetsales.com is a substitute for the lack of staff resources, mvNetsales.com is the marketing and sales management staff for the small and medium sized business. Great for companies who can't afford enterprise level CRM software. The user builds their own interface plan specific3ourthe markets process takes just minutes. a simple completely customizable selling - creating to own sales or clients they target. Using The document library coordinates needed materials, documents, support information, training manuals, research data and other corporate resources that facilitate sales and customer service. All of these can be accessed from work, on the road, at a client's office - anytime, anywhere. Extensive executive information facilitates management of the company selling effort. With these reporting tools a sales manager can analyze and fine-tune the selling process to decrease the selling cycle and improve results. Historical data supports a development of best practices for coaching and implementation. Reporting features also reflects sales trends and current and past account activities. Groupware functionality creates a company wide solution that promotes team selling and knowledge sharing. Owners/Managers can instantly view where all salespeople are in the process.
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3.1 Why "process-centric"? Sales people across the globe have been trained in methodologies such as Strategic Selling, Solution Selling, Science of Selling, Customer Focused Selling or Target Account Selling. These methodologies have been implemented to assist management in developing a sales process to best meet the needs of their companies' products. They focus on educating sales reps and giving them a game plan on how to communicate, collect and deliver information in a consistent manner with their prospects. The primary
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purpose for implementing these methodologies is to enforce consistency and performance of all sales reps within the organization. Considering this, we have found it imperative to cater to this need of guiding sales reps through well developed selling plans and making sure that there is consistency in the way that products and services are sold. "Sales is the least accountable business function in most companies," Nick Miller, President of Clarity Advantage, a sales consulting finn. "More companies should lay out a manual for sales people that clearly states the steps they must take to get from prospecting to closing. This would help managers know when sales people get off course, and it would give sales reps guidelines that will help them budget their time so they spend more of it with valuable customers." Oracle documented their six step sales methodology in April 1997. They proceeded by giving their 8,000 worldwide sales force a manual to keep on hand at all times. Tom Lavey, VP of Worldwide Sales for Oracle said, "It fully documents and strategizes what a good sales team does on a good day." For Oracle, sales have since increased 45%. But, how do the managers know if the reps are opening the manual'? Oracle demands that after each step, the rep get permission from the manager to proceed. "'This process is vital to our success. We need managers to guide it and reps to stick to it," Lavey says "'It keeps people reigned in so they're always focused on our way of selling." But Oracle's system is still paper-based and activity is tracked manually. Thus, the system lacks the capabili_' of providing real-time activi_ reports. Furthermore, time is wasted with callbacks, emails and faxes back to the manager. myNetsales.com alleviates these problems by becoming the 'virtual' manager of the sales process. Our product will allow individuals and companies to build customized sales campaigns within the system And it will allow for sales reps to follow defined process without having to consistently update their progress with phone calls, emails and faxes back to the home office. The system will take care of that. At the same time, management will not have to worry whether the sales reps are actually following the process because the system will proactively guide each sales rep through a defined selling campaign. Furthermore, management will have accountabili_' for each and ever3.'activit3 _in the pipeline at all times. They will have the ability, to know whether leads have been followed in a thnely manner or if existing customers were being tended to. With our system, they will know what activity is happening when. where and how. Moreover, managers can easily review the process, find quantifiable weaknesses in the strategy, take the necessar3.' steps to correct it and integrate the new successful practices. 3.2 Why "Web-based"? We selected a Web-based approach for two ve_" important reasons: 1. 2. The Web is ubiquitous. Eve_;one, from the individual salesperson to the sole proprietor to the sales
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manager to the business owner can access the Web and use myNetsales.com. The Web is real-time. Since myNetsales.com is a proactive process driven tool, real-time use of it is imperative. The salesperson needs to be able to quickly and instantly react to a situation, and Webbased access to myNetsales.com effort. gives them a tool to help in that process and improve their selling
Some of the benefits that xvill drive users towards a Web-based model and use of myNetsales.com are: • • Ease of Use - Because the design is browser-based, people familiar with the Web will intuitively know how to navigate through the application and up-front training will be minimal. Zero Cost of Installation and Maintenance - The system is ready to go simply by pointing 3our Web browser to myNetsales.com. No client software to install. Content can be managed by sales force regardless of programming knowledge. lnstant Information - Sharing/updating mission-critical information is done in real time. Once information is posted, it is available for the entire sales force to access. Company news can be
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• • • • • delivered daily. Leads can be distributed instantaneously. Important information on pricing updates, product specs, release dates, etc.., can be accessed immediately. Real-time Report Generation - Analyze and improve 3;our sales process, get complete sales history at a glance, get automatic real-time forecasts. Extends Sales Team - Offers communication VAR's, customer service, marketing, etc... channels beyond direct sales force to indirect partners,
Promotes Team Selling - Shared information to coordinate sales efforts within the sales team. Abiliw to make your channel partners part of your team. Operating System Independent - Application runs on any platform (Mac, Windows3.1, Win95, Unix) with any browser (Netscape or IF). A laptop with a modem is basically all that is needed. Anytime, anywhere access - Information is available 24/7 from anywhere in the world (at an airport, a hotel, etc... )
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4.0 The Business Model
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myNetsales.com proactively helps entrepreneurs and management guide and direct their sales effort on a day-to-day basis. Use of the program, and the subsequent loyal_' engendered by that, is our initial goal. To meet this goal and build a subscriber base of loyal users, we will employ two primary strategies: 1. Use a combination ofoffline marketing tactics and online marketing tactics to drive as many visitors to the site as possible Offer the standard myNetsales.com program at no cost to the client.
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Our marketing approach is all about visitors to the site. We want visitors to the site because we believe once they see and use the myNetsales.com program: many of them will stay with the program, use it on a regular basis in their selling efforts, and even become advocates for mvNetsales.com. Our marketing tactics will combine traditional "grassroots" tactics (both online and offline) and structured online marketing campaigns to publicize the program and the URL. The Rollout section of this plan contains details on the specific marketing tactics we will employ. We project a conversion rate of visitors to free registrants of 30%. The no cost strategy will enable users to sample mvNetsales.com in a risk free environment. We want to build buzz around the Web site and increase exposure to the program. We believe this will facilitate increasing our subscriber base substantially in a short time frame. As the subscriber base builds, we will introduce the revenue portion of our business model. Subscribers can expand beyond the standard no-cost offering by accessing increased functionality at a minimal monthly fee. The pricing breakdown is as follows: Basic Membership: Free Create unlimited sales processes Store 25 files in the Document library. Track up to 25 Leads through sales process Reporting capabilities Gold Membership: $9.95 per month Create unlimited sales processes Store unlimited files to Document Libra,"
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Track unlimited leads Reporting capabilities
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Platinum Membership." $19.95 per month All functions of Gold Membership plus: E-mail/fax capabilities in Document Library. Groupware functionality Company-wide sales management reports and forecasting
Users have no obligation to upgrade, and the standard offerings will always be free of charge. We expect a conversion rate of 10% of free registered users to the monthly fee structure. We expect our sales conversion rate to be 3%, which is the percent of visitors to the Web site who become monthly fee subscribers. 4.1 Customer Care One of the critical factors in the success of myNetsales.com x_ll be its customer care effectiveness. Nothing is more frustrating to a user than to experience a problem regardless of its cause and not be able to have it quickly resolved. 3Lance x_.illoffer the customer a choice of either online customer care or calling an 800 number in the event that they experience a problem. The majority of problems encountered by users of a Web site fall into the area known as "'cockpit" error; i.e. there is no real problem with the product or serx;ice, but they are simply not using it correctly or they are leaving out a necessary step in the process. These types of problems, in many ways, are the most frustrating and cause the greatest amount of dissatisfaction, These problems need to be resolved quickly by a trained customer service agent who can talk the users through their problems so that they do not encounter it again. Experience has shown that approximately 96% of the customer sen, ice problems fall into this area and can typically be resolved by an experienced customer sen, ice agent within ten to fifteen minutes or more importantly, with clear and concise online help. The goal of the Company's customer care policy is to provide as much "'self-help" care as possible: have members self-service themselves before coming to us with an issue. In the age of online help, users are increasingly demanding that issues be resolved immediately, even if it has to be resolved on their own. In fact, this is the preferred method. As exemplified at a recent trade show, Amazon.corn experienced 98% + customer satisfaction without one phone call being made. This is because they provide enough online help so as to have the customer resolve the issue on their own. We will provide extensive online help and continually build our database of FAQ's and troubleshooting solutions so that more members can care for themselves. Furthermore. we will provide a technical support emailform that will ask a few initial questions upfront, such as: Which browser and operating s).'stem are you using'?. What is the severity of the problem'? Which module did the problem occur in? By asking these types of questions upfront, time will be saved in figuring out the root of the problem. We will also provide a notes form to allow the customer to input specific details of the problem. And we will ask if they would like to be contacted by phone or email. Members will then receive an immediate email notification stating that their issue has been recognized and a response will be returned to them in no later than one day. Post beta-launch, we realize that people may want to speak with an actual person. We plan on building a customer service team that offers sen, ice from 7:00 am ET to 8:00 pm PT. This will be available to paying members only. Basic Membership will have full access to only the online help. We are currently estimating the number of personnel required per 100,000 users at 10 people with four on duty at an) point in time. We derived that number by assuming 1% of the experienced users need assistance in any given month with an average of fifteen minutes per call and six productive hours per agent per day. If our experience shows a lower level of sen,ice calls then the number required per 100,000 users will drop. If it
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is considerably higher than our estimates, it will indicate that we need to include more on-line help screen in the product. For those users who would like to see additions and enhancements to the product we anticipate that the3; will use the e-mail feedback form. We will encourage registrants to use this for enhancement requests because they can be handled off-line and routed through engineering rather than through the customer service agents. For these requests our goal will be a response time not to exceed two working days. During the beta period release the customer service function will be performed by the developers not only because of their intimate familiarity with the product, but also because many of these service requests might uncover bugs. We will be able to refine our required customer service levels during this period and begin training the actual agents so that we have coverage from the time the product is fully released. With an organized customer service function from the initial release of myNetsales.com we will be able to provide quali .tycustomer service and insure that no registrant ever leaves myNetsales.com because of poor service.
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According to Barton Goldenberg, President of ISM (w_x_v.ismguide.com), publishers of"The Guide," a comprehensive guide to the top Sales, Marketing and Customer Service Automation vendors, the direction of the industry is "the emergence of Web-based sales and marketing software packages. They allow users to get information no matter the time of day or place: they're completely open and scalable: and because of the lower set-up, training and, and maintenance costs, they will save companies enormous amounts of money. I'm sold on it." The potential market for our Web-based sales force automation application is vast. Researchers and analysts are beginning to recognize that it is an attractive, high groxvlh market. According to Chris Selland, analyst at the Yankee Group in Boston, "One of the main trends going on in the sales-force automation arena is 'knowledge-enabled selling' - getting information out to field representatives and customer service staff via the Web, push technology, or sophisticated databases." (lnfo World, March 1998) 5.2 Integrated vs. Non-integrated There are two emerging camps forming in the industry. One camp is referred to as the "'integrated" software vendors. These vendors seamlessly bundle comprehensive software packages that integrate multiple functionali .tyincluding - contact management, account management, sales management, time management, telemarketing/telesales, etc... These vendors promote their holistic approach by offering a fully integrated front-office automation solution. The second camp is called the "non-integrated" or "'best-in-class" systems. These are vendors who offer
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specialized functionality in one particular category. For example Calico and Concentra specialize in configuration. Epiphany, MarketFirst and Kairos have strong marketing packages. Contact managers such as ACT or Microsoft Outlook fit this catego_'. Some other companies who cater to this "'best-in-class" model are Pragmatac and Sant for proposal generation, Back Web have WisdomWare in for or two particular knowledge/information management. Since each of these vendors and uniqueness one functions, we foresee potential partnership opportunities forming in order to cross-market and sell more complete solutions to the end user. The major advantage to an integrated s3.'stemis that it offers a one-stop complete automation system. The
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disadvantages • • •
are:
They are considerably more expensive Their individual modules will lack the sophistication of a "'best-in-class" system with similar functionality. Set-up time for these large systems is often lengthy. O
Due to these factors, most small companies will find that automating the entire front-office is too much to take on all at once. In fact, many consultants recommend automating two or three functions before moving on to the rest of the front-office. 5.3 The Players The competition in this industry can be broken into several distinct groups. ERP Players The first group is the ERP group. ERP stands for Enterprise Resource Planning. Their software offers a comprehensive enterprise-wide front-office and back-office solutions that manage important parts of business, including product planning, parts purchasing, maintaining inventories, interacting with suppliers, providing customer service, and tracking orders. ERP can also include application modules for the finance and human resources aspects of a business. Key players include Baart/Aurum. SAP. and Oracle. These solutions can cost millions of dollars and can take years to implement. The Gartner Group estimates that over three years implementing and maintaining a client/server solution for SFA can cost $50K per user (Jeff Golterman, the Gartner Group, October 1997). Incidentally, automating a 40-person sales force with this solution can cost up to two million dollars. Bie Players Tile next group of vendors is the front-office only Customer Relationship Management (CRM) group. These yendors offer solutions that fully integrate tile automation of the entire front-office - including sales. marketing and customer service. Key players include Vantive, Siebel, Saratoga Systems and Trilog% These integrated solutions are also quite expensive with a server license costing an average of $30,000 and each user license costing $3,000. These players target much larger firms than that of our target market. Mid-size PlaFers These vendors are also considered to be fully integrated solutions to front-office automation, but cater to smaller companies with sales forces between 30-300 salespeople. Their cost-effective solutions lack the business comprehensiveness of the ERP and Big players" solutions. Key vendors inchide Sales Logix, and Software Artist_. We will most likely be competing with the lower end of these players" target market. We will compete with these players on the basis of the uniqueness of our sales process management _stem and pricing. Microsofl-Lol_al Pla_ers There is also a group of vendors who are offering products that adhere entirely to Microsoft standards COM/DCOM, ActiveX, MS SQL Server, MS-Outlook, MS-Exchange, etc... These companies are banking on the fact that Microsoft will set the standards for tile CRM industry. Key players include Onyx and Pipestream. 3Lance can be categorized in this market as our product was developed using Microsoft tools and is also optimized for use with Microsoft products such as MS-Word, MS-Outlook, MS-Powerpoint, etc... L otus-L oval PlalJers There is also a group of vendors that are taking advantage of Lotus Notes Groupware functionality. These vendors only cater to companies who are loyal users of Lotus. Key players here include InteliAgent, MFJ, and Synergistics. In following versions of our product, we will allow for tile integration with Lotus Notes
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users. Contact Management Pla_ers
These companies have solid contact management solution, but fully lacking in business functionality. They are a good solution for companies with 30 or less employees that principally require good contact management functionality.. Key players include Symantec's ACT, Gold Mine, Maximizer, and MS-
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Outlook. Out of the several Contact Manager players, Gold Mine is the only application that offers more extensive features in regards to opportunity management. Web TechnologT touted The Web has beenPlagers as the absolute direction of front-office automation software. There is no dominating company in this market yet. Key players include Upshot, Firstwave's Netgain and Sales Vision's Jsales. Upshot offers the most complete SFA sy'stem of the Web-based players. Their system can be classified as an "integrated system" combining components for marketing and sales automation. Their s3_stemoffers strong contact/account management features and offers extensive reporting capabilities.
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Net Gain offers considerably less functionality and focuses on Contact/Account Management and Opportunity Management. They have positioned their software to extend the sales force to marketing, customer service and field sales through the sharing of critical knowledge and information. Sales Vision also has less functionality than Upshot and focuses on Time Management and Sales
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Management features. They position their product, Jsales, as a solution that is highly customizable because of its Java, object-oriented based programming. They openly offer their source code to all of their clients. None of these vendors offer a solution for sales process management. 3Lance is confident that myNetsales.com will stand out among these competitors as having the best sales process management system in the market. 5.4 Portal Site Competition
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Sales.corn released Alarch 1999 Single user version aimed at small business owners and sales reps. Help in planning and coordinating sales activities. Aims to generate revenue through advertising and transaction fees from content on public and private companies, sales leads from D&B, links to travel and training services and an online store.
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Onyx Enterprise Portal is currently in beta testing and will be generally available in 03 1999. Onyx's vision is to synthesize front office content and applications in to a comprehensive,
user-
friendly interface. Will provide access to procurement, sales compensation, configuration and pricing data in concert with other information tools for sales representatives.
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Aimed at integrating applications and providing browser-based views of SAP and non-SAP s3,.'stems M_vorld.com expected release beta phase 2nahalf 1999," general release early 2000 O
PeopleSoft x_411 serve as launching and viewing point for both PeopleSoft applications and third party, so,rare. Product will have workflow to do lists, gauge company performance, info on news weather travel, travel booking, expense reporting. Also looking to partner with e-commerce companies who could market their products and services to a captive audience. MyActivEra.com expected releasefall 1999
J.D. Edwards Web portal will have information on industry." news, comparative performance metrics. With special attention to Pharmaceutical, oil and chemicals, construction, local gov't. It will provide access to Edwards and third-party _'stems. It will offer e-commerce through Ariba. Oracle Corp. expected release Late 1999 Portal site to blend Oracle 8i database with other Web tools and ERP applications. BAAN/AURUM Will give users single point of access to BAAN's ERP and other 3ra part3. tools. Will not tie into ERP directly but into a message bus communicating 5.5 Competitive Differentiation with XML.
The primary competitive factors affecting our company includes: • • • product feature uniqueness open architecture distribution and support methods
The primary differentiating factor of myNetsales.com lies in the uniqueness of its features. Most of the current SFA packages in the market today are focused on increasing the efficiency of the sales force by reducing paperwork and data entry.. Our product will instead increase the effectiveness of the sales rep. Rather than helping sales reps administer sales information, our product will instead help the sales rep sell. The ability" to build a sales campaign through a Web interface cannot be seen in any products available to date. Furthermore, the ability to s3'stematically guide a sales rep through a defined process is also a feature that remains to be seen. today. The open architecture will allow our product to: • • • • • • Run as a stand-alone application. Seamlessly integrate with client/server solutions. Seamlessly integrate with other Web-based applications. Allow for simple and quick implementation. Flexibili_" in terms of customization options. Flexibility." in terms of future product enhancements. I We believe that our sales process manager is the only one of its kind in the market
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We believe that our distribution strategy is unique. With new breed applications, such as ours, it will be critical to build brand awareness quickly. Lightening speed time-to-market is an issue that all vendors in our arena face. By offering myNetsales.com as a free service to companies, we see a quicker entry in to the marketplace. Not only will the end user have a powerful tool for sales automation, but will have the necessary.' customer care from 3Lance to insure that they are using the tool to its maximum capabilities. By.
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providing extensive support capabilities, we will ensure not only effective use of the product but also user loyal .tyto myNetsales.com..
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6.0 The People
3Lance's success depends on several critical skill sets: • • * Technology, expertise in the areas of Web site design and development, programming, and the Internet.
Marketing expertise pertaining to understanding our target audience, their needs, and how to position and differentiate the company with them. Marketing expertise regarding quickly and effectively establishing an Internet presence for 3Lance.
We believe our team fulfills all of these critical success areas.
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Thomas It. McGovern McGovern's
- CEO He
role as CEO is to help establish the overall direction and management of the company.
will also initially function as the chief marketing and sales person. As an entrepreneur and senior executive, McGovern has over 25 years experience in growing young,
profitable businesses in the data communications and Internet infrastructure industries. He has a tremendous amount of experience in developing talent, launching new products, opening new markets and channels and building flexible organizations. Among his many accomplishments, provider of networking equipment. he founded and headed Phoenix Data Corp, a manufacturer and service McGovern was responsible for taking the company from start-up to a
successful, profitable business and to an eventual acquisition. Prior to founding Phoenix, from 1982 to 1988 he was a Director, Vice President, and General Manager of Datagram Corporation and was responsible for the grox_th of that Company's U.S. operations from start-up through $10M in annual sales. The Company had a successful IPO and was eventually acquired by another
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company. He previously held positions with several other companies including the Codex Division of Motorola and IBM.
Jonathan Tang - President, Co-founder Tang has taken on a wide varie .tyof roles throughout his career that have added to his diverse background. His most recent endeavor was at Adams Media Corporation where he worked as a multimedia developer. At Adams, Tang attained a high level of technical expertise in the production of both software and Web development. Tang is skilled in the following computer languages: C, Javascript, Active Server Pages, Lingo, and Visual Basic. He played an integral role in the development of six shrink wrapped small business based CDROMs as well as several Web sites, including CareerCity, a top job recruitment Web site.
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Prior to Adams Media, Tang worked as an associate at Asset Recovery. Corp., a management consulting firm, where he became a liquidation specialist. Here he assisted in the liquidation of well over $10 million of under performing assets ranging from infant wear to aerospace hardware to commercial art. He marketed the tangible and intangible assets both domestically and to markets in China, Hong Kong, Mexico, Argentina, Taiwan, Spain and Israel. Tang also worked at Bates Fabrics, Inc. where he managed a wind down situation of a $2 million zextile manufacturing plant. At Bates, Tang handled the primary day-to-day operations, which included:
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• • • • Generating monthly financial statements Negotiating costs for supplies and work performed by contractors Controlling finish goods and raw material inventories Scheduling the delivery 0f raw materials and shipment of finished goods
Richard W. Perkett - Vice President of Technology, Co-founder Perkett leads the development processes at 3Lance, incorporating his knowledge of various technologies to create high caliber multimedia solutions and software products. Perkett brings an extensive background in software development, including work with Microsoft Visual Basic, Active Server Pages, HTML, Java, SQL Server, and more. Most recently, Perkett worked at Adams Media, Inc. a publishing and multimedia company in Holbrook, MA. Serving as Manager of Product Development, Perkett worked directly with the president to develop varied new media projects, including numerous commercial CDROMs and several Web sites. Perkett managed all aspects of the development process for several small office based CDROMs - designing parameters, managing the development team and integrating code components from team members to create a unified product line. While at Adams, Perkett also lead the development and creation of multiple Web sites, including the administration of one of the leading career search Web sites on the Internet: ww_v.careercitv.com Perkett worked with the president and general manger to plan all new technologies and features for the site including its overall database driven structure and Active Server Pages technology - creating a self automated Web site. Prior to Adams Media, Perkett served as the Lead Interface Developer at the Science Center of Connecticut in West Hartford. Here, Perkett was responsible for programming interactive user interfaces for all science exhibits, including the installation, testing and purchasing of all hardware used. Perkett also researched new technology to find amicable hardware for the museum's exhibits. Jeffrey Glasson - Director of Technology Jeff Glasson is the co-lead developer on all 3 Lance products. Specifically, he manages the programming efforts, developing the core functionality of myNetsales.com, its correlating features and products. Glasson brings extensive experience in Web-based application programming using Visual Basic, Active Server Pages and SQL Server. Most recently Glasson was a Senior Web Developer for United HealthCare in Hartford, Conn. Here, Glasson built and managed Web and database servers in development, pilot and production environments. In addition, he also created custom graphics and designs and managed databases for all Web-based applications. Previously, Glasson was a consultant for Howard Systems International in Connecticut, where he aided in O
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building a Web-baseduse in set for intranet pilot and productiondeployment, as well as buildingalso worked as a database servers for tool development, development and environments. Glasson has Web and Systems Integration Engineer and Customer Consultant at Distributor Information Systems Corporation (DISC), a leading supplier of software automation systems and networks for industrial distributors, manufacturers' reps and manufacturers.
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6.1 Board Members Directors Founders Jonathan Tang and Richard Perkett.
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Robert G. Karlis - President and CEO, Digital Graphics, Inc. Recently profiled in the Boston Globe's Emerging Business section, Bob has been recognized as a leader in managing the grox_,lh of high tech companies. He has also held senior executive positions at Clix Products, Inc., Millipore, Johnson & Johnson and Cadbury Schweppes. • \rancy J. Stephens - Principal, Net Works Nanc3."Stephens, Principal of Net-Works, a sales consulting firm with clients throughout North America, South America, Europe, and the Middle East. Nancy. is the author of Customer-Focused Selling book and CD-ROM.
Van Chu - Managing Director, InterPacific Ventures Has over 25 years of experience in the information technolo_" indust_'. Co-founded and headed Octocom Systems, a manufacturer of data communications equipment. Grew company to over $40 million in annual sales. Boston Chamber of Commerce named company "Small Business of the Year" in 1989. Inc. held senior management Codex and Infinet, Has positions at Digital Equipment Corp., Motorola-
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6.2 Advisors John Chu - Partner, Chu, Ring, Hazel and Associates (Former Partner, Bingham, Dana & Gould) Legal counsel specializing in growing enterprises and venture capital. Experience in equity arrangements, shareholder arrangements, distributorship, sales representative and marketing agreements, equity financing, including seed round, private placements, venture capital financing and overseas (Regulation S) offerings, debt financing, initial public offerings, secondar).' public offerings and securities law compliance, acquisitions (assets and stock) and divestitures, license agreements, joint ventures. Christine Dilg - PR Consultant Chris Dilg is a strategic communications and public relations executive, providing extensive experience in communi_" and media relations, special events planning and management, feature writing, marketing coordination and strategic positioning and messaging efforts. Most recently she has provided pr counsel to companies including JuniorNet, SmarterKids.com, PricewaterhouseCoopers, BindView Development, Artisofi, InConcert and Sk_'a International.
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Lcavrence S. Nannis - Levine, Katz, Nannis & Solomon, PC LarD., has been a speaker at national conferences on Accounting for Federal Awards, and has been a panelist on the MIT Enterprise Forum. He was also named National Small Business Accountant Advocate of the Year by the Small Business Administration.
7.0 Rollout 7.1 myNetsales.com Web site Rollout
The target date for introduction of the Beta Web site is September 7, 1999. We will co-locate our Web
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servers with Exodus Communications in Waltham, MA. We anticipate being in a Beta test mode for a twomonth period, with a fully functional Web site online by November 1, 1999. Beta mode means that the technical functionality. of the site is complete and tested, but we are actively soliciting feedback from users regarding the application of the software to their businesses. We will depend on the users to help us improve the tools we provide them, and diligently test and incorporate feedback that makes sense for the overall user base.
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The myNetsales.com product is available in a single user format on September 7, 1999. The groupware function of myNetsales.com will be available after the beta period, or on November 1.
7.2 Public Relations Rollout Simultaneous Corporate and Product Launch
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Overview Non-disclosure Analyst Meetings (4-5 weeks prior to launch) • Briefings with influential industry, analysts under non-disclosure feedback on 3Lance strategy,, company, myNetsales.com. to test messages, obtain early
Early Outreach to Monthly Trade Press (2-4 weeks prior 1o launch) • Non-disclosure briefings with select monthly trade press editors to introduce 3Lance, executives and myNetsales.com as well as position 3Lance as a valuable resource to long lead editors. Company/Product Launch Press Meetings (1-2 weeks prior to launch) • Briefings with weekly press to announce the 3Lance organization, its strategy, mission and myNetsales.com.
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7.3 Marketing Offline Tactics Inclusion in ,Vewsletters Nan," Stephens (Board Member) is ve_' active in the newsletter marketplace, with access to a small business / sales readership in excess of 50.000 monthly through several different publications. We will also focus on specific newsletters such as The Small Business Advisor and government publications. Organizations Through the principals and board members of the business, we have direct access to SBANE (Small Business Association of New England), YEO (Young Entrepreneurs Organization), SBDCs (Small Business Development Centers), SBA ( U.S. Small Business Administration). The membership roles of these organizations is well in excess of 500,000 small businesses. ,4ssociations Via a direct mail campaign and press releases, we will introduce myNelsales.com to associations with small businesses and sales people as their members. Examples include Real Estate Agents Association, Insurance Agents Associations. CPAs. Manufacturers Rep Association, and numerous regional small business associations. Trade Shows We will frequent trade shows where the focus is on either small business or sales. Speaking Several of our board members and principals are often engaged in speaking. We will conduct a proactive campaign to secure speaking engagements where we can introduce the myNetsales.com program. Online Tactics Site Links Hot links to as many small business and sales sites as possible, including Inc.com, FastCompany.com, Selling Power Magazine, Sales and Marketing Management, Home Office 0 Rollout
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Magazine, Generic ci_' sites to attract s_nall business within communities, American Marketing Association, etc. Site ,4nalysis Understanding how and why customers are reacting to our site via analysis of site statistics. Banner Creative and Placement Development of banner campaigns for the myNetsales.com service and 3Lance, and placement of the banners on select small business sites. E-mail promotions Direct communication with the registrants and guests who visit the site. Search engine registration Ensuring the 3Lance Web site comes up as close to the top of search results listings as possible when a viewer searches with key words. A lliance marketing Leveraging our brand by linking with other companies, Web sites and online content providers related to the 3Lance market arena.
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3Lance will look towards small business sites, Web-based tools, Web based services and other portal sites looking to extend the reach of their Web based distribution channels. 3Lance will leverage its position as a "'best-in-class' solution with unique product features and form partnerships with complimentary." players within the industry. These players may include tile various Webbased service companies looking tO assist small and mid-sized companies in managing and growing their businesses. They will provide excellent opportunities for cross marketing and selling complimentary services.
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The following are a few potential candidates: HotOffice, com currently available HotOffice Technologies, Inc. aims to be the leading Web-Based Intranet Service provider for small business, especially those with collaboration needs, multiple offices, mobile workers, telecommuters and virtual offices. HotOffice offers small business access to a secure intranet solution rather than having to purchase and maintain a traditional intranet or extranet on their ox_a. This subscription sen, ice provides a suite of collaboration and communication tools. HotOffice provides connection via the Web to e-mail, calendar, documents, bulletin boards, online conference rooms, business center.
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AIIBusiness.com
summer 1999 is being developed as a "Business Portal" that will address the needs of
AllBusiness.com
entrepreneurs, business executives, and managers by connecting them to a virtual network of information, tools, products, and services. AllBusiness.com will offer access to a selection of tools, services, products, business information, and expert advice, as well as business-oriented online communities. The solutions available on AllBusiness.com will give businesses administrative support. For companies marketing business-related products and services, AllBusiness.com offers a new channel to build brands and distribute products and sen, ices to the valuable, yet highly fragmented, small-business communits.'. Bigstep.com available now Bigstep has developed a suite of services including Web site building and hosting, customer databases, and marketing tools. Bigstep.com's biggest value-add may be the integration of its free services and its keen focus on small businesses
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DigitalWork.com available now Enables businesses to complete common tasks in less time - from finding new prospects to sending out press releases. Other Web-based services include: launching banner ad campaign, e-
mail marketing, post job openings, search resumes, finding temporary, help, Onvia (a business partner of Redherring.com) available now Provides an online operations center for entrepreneurs. Offers products, services, and advice for developing businesses such as office supplies, marketing tips, Internet access, domain registration, and payroll outsourcing. SmartAge.com available now
SmartAge provides services to small and growing businesses. SmartAge provides these companies with tools and support to help them win customers and make money on the Web. SmartClicks is the premier SmartAge service, helping entrepreneurs build traffic to their sites. Now there is also SiteRank for keeping tabs on your ranking in the major search engines, SiteWatch for monitoring your Web site's accessibilit)." and SmartAge Submit for search engine submission.
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8.0 Proiected
Uses of the Funds
The Company will use the source of funds for working capital as well as to address the following critical success factors: Critical Success Factor Subject Matter Expertise to insure product effectiveness Action to Insure We Address Success Factors Two year development of myNetsales.com Web site by Jonathan Tang and Richard Perkett and sales expertise and contributions of Nancy Stephens and Bob Karlis (Board Members) Solicit feedback from members as to how we can improve our service. Solicit feedback from various sales process experts. Previous experience and expertise of Jonathan Tang, Richard Perkett, and Jeff Glasson. Contributions of Van Chu and Bob Karlis (Board Members). Hire on highly experienced Web and database developers. contacts that have talent will Initial source of worked with derive from known
Web Site Design and Functionality,; Internet experience
O Launch of the Company and myNetsales.com site; ongoing marketing Web
current development team in the past. Experience and expertise of Jonathan Tang, Christine Dilg and Nancy. Stephens in marketing, and Internet Marketing. Currently interviewing for executive marketing position. Locate partnerships for cross-marketing opportunities. Set up 1-800 number as well as online support. Make sure response time to all inquiries is quick and effective. Provide extensive online help. Build strong customer care team. Understanding of our target customers Assembling the experienced talent needed to successfully launch a new enterprise Karlis and and expertise of Nancy of the Experience several advisors/investors Stephens, Bob Companv. On board within the core team and board members is proven technical, marketing, and lnternet expertise. Business management expertise currentl.v exists in advisory capacities. We have just engaged a CEO to become a senior member of the team Web site remains up 24/7 Partner with ISP (Exodus Communications) who has the capabilities of providing latest technology to make sure site is up at all times. Marketing - Full fledged offline and online marketing campaigns being implemented throughout beta period, with ongoing fine tuned tactics tied to marketplace reaction to portal site. Product - Employing outsource programming talent to insure portal site and functionality is in place in rapid response to market demands Team - Core management team has a proven history of working together to effectively deliver products to market in exceptionally fast time frames
Customer Care/Support Issues
t_ Speed to Market
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9.0 Financial Statements
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9.1 Assumptions Benefits FICA Vacation Health and Dental Annual Salan' Increases Exec Mgr Clerical Sales Marketing 2000 .07 .05 .04 .03 .05 2001 .06 .045 .04 .03 .045 2002 .06 .045 .04 .03 .045 .045 2003 .05 .04 .04 .03 .04 .04 2004 .05 .04 .04 .03 .04 .04 .0765 no adj. for reaching max .0385 two week earners .0577 three week earners $550 per month
Engineering .05 .045 The above take into account previous years' raises. Furniture Exec. / Mgr. Others Computers Exec. / Mgr. Others Engineers Travel and Entertainment 2000 Exec. / Mgr. Sales / Mark Engin. Trade Shows Monthly Expenses2000 Office Headquar. Satellite Utilities Phone Supplies Postage Outside Serv PR Legal Acct. $3,000 $900 $1,500 $1,500 $800 $3,000 $5,000 $2,500 $5,000 $1,000 $2,000 $1,500 $1,200 $3,500 $6,000 $2 500 $10,000 $15,000 $3,000 $20,000 $3,500 $2,500 $5,000 per annum 2001 $12,000 $18,000 $3.500
O
$2,500 cost for individual office $2,000 cost for cubicle
2002 $15,000 $18,000 $4.000
2003 $15,000 $20,000 $5,000
2004 $18,000 $22,500 $6,000
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2001 2002 2003 2004
$7,500 $1,100 $2,500 $3,000 $1,600 $3,500 $4,000 $4,000
$12,000 $1,200 $3,500 $5,000 $2,000 $4,000 $4,000 $6,000
$12,000 $1,200 $.3,500 $5,000 $2,000 $4,000 $4,000 $6,000
All expenses are paid in the month after being incurred. Except for Trade shows which is paid txvo months prior to being incurred.
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354 CONGRESS 2 _rDFLOOR ST. BOSTON,MA 022 l0 (617) 350-0160
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22 •
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O O O O
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3Lance Communications,
Inc. Business Plan
Confidential
Market Assumptions Percent of email Reci 9ients who visit the site 2000 25% $100,000 2001 25% $125,000 2002 20% $150,000 2003 18% $175,000 2004 15% - $200,000
Email costs per month Direct Mail Pieces/mth
200,000 5% $75
250,000 7% $95
300,000 8% $110
350,000 9% $120
400,000 9% $130
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Response rate Cost per M
Advertising For the first two years it will be an absolute amount, in later years it will be a percentage of sales.
•
iooo
$50,000 response rate. Visitors per month
$60,000
$75,000
$100,000
oo4
$125,000 (Sales and Marketing
Currently selected pubs include Business2. 0, Sales and Field Force Automation
Automation), Sales and Marketing Management, Small Business Computing and Home Office Computing. They have a subscriber base of 1.5M. Using a monthly response rate of 1% produces 15,000 visits per month. In second year, we will add pubs with another 500K more subscribers with same
30% of visitors x_411ecomej?ee b
registrants
O
Time period of free registrants to paying customer - 3 months 10% of registrants will become paying registrants with a 60/40 split between gold and platinum members. Conversion Rates • • • Visitors who register to try' the free version of mvNetsales.com - 30% Registrants who subscribe to an advanced level of myNetsales.com - 10% Subscriber breakdown • • Gold Level ($9.95/mo)60% 40% Platinum Level ($19.95/mo)-
Web site operating costs ISP - T1 line ISP traffic costs Leased servers 1999 $1,500 $1,100 $400 2000 $1,500 $3,000 $400 2001 $3,000 $4,000 2002 $3,000 $5,000 $600 2003 $3,000 $6,000 2004 $4,500 $7,000
E-commerce 3.5% of sales for cc processing Incentive Compensation Cost 7% of sales for the first twelve months a platinum member is on service. Balance Sheet Assumptions Accounts Receivable will consist of Platinum subscribers only because they are generally corporate entities, We expect 80% will pay within 30 days and 20% will pay in sixty days.
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Depreciation Assumptions Furniture will depreciate over 5 years straight line. Computers will depreciate over 3 years straight line.
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O 354 CONGRESSST. 2"_FLOORBOSTON,MA 02210 (617) 350-0160
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9.2 Projected Profit and-Loss .... 5 Year Summary
2000 Total Number of Visitors 855,000 2001 1,020,000 2002 1,176.000 2003 1.248,000 2004 1,392,000 O
O
Q Q
O O O O O
Total Sales Web Site Operating Gross Margin Administrative Expense Costs
$2,168,876 $75,187 $2,093,690 $782.108 $2,268.564 $376,650
$6,709,078 $186,592 $6,522,486 $1,103,202 $3.126.067 51,048,677
$12,106,159 $284,532 $11,821,627 $1.458,634 $3.948.634 $1,428.239
$18,118,121 $384,182 $17,733,938 $1.703.871 $4.847,544 $1,889,866
$24.604,034 $493.331 $24,110,702 $1.781,866 $5,768,150 $2,213,867
Marketing Expense Direct Sales Expense
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Q O O O
Product Developmen! Operating Income
Expense (Loss)
$748,381 -$2,082,013
$1,397,283 -$152,742
$1,795,859 $3,190,261
$2,596,446 $6,696,211
$2,710,820 511,636,000
Interest & Taxes Nel Income (Loss)
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9.3 Projected Cash Flow 5 Year Summary
2000 2001 2002 2003 2004
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Starting
Cash Balance
$1,960
$798.209
$388.901
$3.365.234
$9.796.238
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O O O
Sources
of Funds $3,000,000
Capital Increases Bank Loans Collected A/R Cash Receipts Total Sources of Funds
S1,011,285 $928,186 $4,939,471
$3.557,364 $2.871.197 56,428,561
$6,592,884 $5.180.915 Sl 1,773,800
$10.011.277 $7,753.776 S17,765,053
$13.685.588 $9.579.846 $24,215,056
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Uses Of Funds Administration Marketing Expense $820,538 $2,121,747 $391.576 $809.361 SI,221,699 $3.091.086 $1.074.349 $1.450.735 $1,657,247 $3,905.268 $1.439.910 $1.795.042 $1,988.163 $4.797.774 $1.900.185 $2.647.927 S2.197.621 $5.708.150 S2.220.755 52.708.608 O O O O O
Expense
Direct Sales Expense Engineering Expense
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O 0
Interest & Taxes TotalUsesofFtmds Change in Cash $4,143,222 $796,249 S798,209 $6,837,869 -$409,308 $388,901 $8.797,467 $2.976.333 $3,365,234 $11,334,049 $6,431,004 $9,796,238 $12,835.134 $11.379,922 $21,176,160
Ending Cash
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24
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Q
O O
O 9.4 Projected Balance Sheet 5 Year Summary
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O O O O O Assets Current Assets Cash & Equivalents Pre-Paids & Deposits Accounts Receivable $798,209 $230,920 $388.901 $511,437 $3,365,234 $843,796 $9.796,238 $1,196,863 $21.176,160 S1,585,840 2000 2001 2002 2003 2004
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O O O
Total Current Assets Other Assets Furniture & Fix'-tures Less: Accum Dep
$1,029,129
$900,338
$4,209,030
$10,993,101
$22.762.000
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$59,500 -$9,425
S 102,000 -$27,050
$121,000 -$50,233
S 154,000 -$79.608
$160,000 -$110,575
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Properly & Equipment Less: Accum Dep Total Other Assets
$110,225 -$29.264 $131,036
5;185,225 -S81,514 $178,661
S209,725 -$146,139 $134.353
$271,725 -$206.944 S 139,172
$279,225 -S247,111 $81.539
Total Assets Current Liabilities
S1,160,165
$1,078,999
S4,343,382
Sl 1,132,273
$22,843,539
O Q O
Accounts Payable Accr'd Payroll & Taxes Notes Payable Corporate Taxes Payab e Current Portion ofLT Liabs
$206.118 $13.574
$274.867 $16.402
$345.961 $19.431
S437.459 $20.612
$510.613 $22.724
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O O Total Current Liabilities $219,692 S291,269 S365,391 $458,072 $533,337
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Long Term Liabilities Capital Leases Total Long Term Liabilities
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Shareholder
Equity $3,251,854 -$2,311,382 Equit)' and Equity $940,472 $1,160,165 $3,251,854 -$2,464,124 $787,730 S1,078,999 $3,251,854 $726,137 $3,977,991 $4,343,382 $3.251.854 $7,422,348 S10,674,202 $11,132,273 $3.251,854 $19 058.348 $22,310,202 $22,843,539
Paid In Capital Retained Earnings Total Shareholder
Q Q Q Q O O O O D
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Tolal Liabilities
25
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9.5 Staffing Summary 5 Year SummaD"
2000 Initial Salary ,4dministration CEO President V.P. Finance Controller Staff Accountants H.R. Exec Personnel Assts. Office Clerical $125,000 $100,000 $95,000 $70,000 $50,000 $80,000 $35,000 $30,000 1 l 1 0 1 0 0 1 1 1 1 I 1 1 0 2 1 1 1 l 2 1 2 2 1 l 1 l 3 1 2 2 I 1 l l 4 I 2 2 2001 2002 2003 2004
0
Q
0 O O O O O
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Total Administra tion Marketing V.P. Marketing Director Product Marketing Product Managers Director Partnership Programs Partnership Pgm Staff" Clerical Total Marketing SalesCustomer Service V.P. Sales/Customer Service Direct Sales Personnel Customer Service personnel Order EntD' Shipping Clerical Total Sales/Customer Service Engineering V.P. Engineering Managers Senior Development Engineers Junior Development Engineers Clerical Total Engineering Total Staffing $100,000 $85,000 $60,000 $85,000 $50,000 $35,000
S l 0 1 1 0 I 4
g 1 1 I 1 0 2 6
11 l 1 2 1 1 2 8
12 l 1 3 1 2 3 11
13 ] 1 3 1 2 3 11
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O Q O O O 0 O O O
$125,000 $75,000 $50,000 $40,000 $35,000 $30,000
1 0 4 0 0 1 6
1 2 6 1 1 2 13
1 3 8 2 1 2 17
1 4 10 2 1 3 21
1 4 10 3 2 3 23
$100,000 $80,000 $70,000 $50,000 $40,000
1 2 2 6 2 13 28
I 3 5 8 4 21 48
1 3 5 8 4 21 57
I 5 7 10 6 29 73
1 5 7 10 6 29 76
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0 0 0
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O O O Total Number of Visitors Total Sales Web Site Operating Costs
10.0 Appendix
Quarterly Quarter I 206,250 $153,799 $12,504 P&L for Fiscal Year 2000 Quarter 2 206,250 $412.746 $16.382 Quarter 3 206,250 $671,693 $20.261 Quarter 4 236.250 $930.639 $26,040 Total Year 855,000 $2.168,876 $75. | 87
O O O
O O O O O O O
Gross Margin Administrative Expense Marketing Expense Direct Sales Expense Product Development Expense Operating Income (Loss)
$141,295 $222,912 $550,497 $38 239 $161,089 ($831,442)
$396,363 $173,257 $530,497 $48.608 $173,944 ($529,942)
$651,432 $192,503 $590,858 $139,717 $194,952 ($466,598)
$904,600 $193,436 $596,712 $150,086 $218,396 ($254,031)
$2,093,690 $782,108 $2,268,564 $376,650 $748,381 ($2,082,013)
Interest & Taxes Net Income (Loss)
O O O
O
O O
O O O O
Quarterly Cash Flow for Fiscal Year 2000 Quarter I Quarter 2 Quarter 3 StartIng Cash Balance 51,960 $2.253.002 $1.637 204
Quarter 4 $I,118.467
Total Year $1,960
Sources of Funds Capital Increases Bank Loans Collecled A;R Cash Receipts $36,329 $65.819 $176.857 $176.637 $324,986 $287.456 S473.114 S398.274 $1.011.285 S928.186 $3,000,000 $3,000,000
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O O
Total Sources of Funds Uses Of Funds Administration Expense Markeling Expense Dired Sales Expense
$3,102.148 $228,208 $390.641 $44.034
$353.494 $181,277 $555,497 $45,151
$612.441 $205,837 $574,627 $155,761
$871.388 $205.216 $600,981 $146.630
$4.939.471 S820.538 $2.121.747 $391.576
O O O
O O
Engineering Expense Interest & Taxes TotalUsesofFunds Change in Cash
$188.223
$187.367
$194.952
$238.819
$809.36 I
$851,106 $2.251.042 52,253,002
$969.292 ($615. 798) $1,637,204
$1.131.178 ($518. 737) $1,118,467
$1.191.646 ($320.259) $798,209
$4.14._ .... $796.249 $798,209
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Ending Cash
O Q O O
0 0 0 0
Quarterly Assets Balance Sheet for Fiscal Year 2000 Quarter 2 Quarter 3 Quarter 4 O O Quarter 1
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Current Assets Cash & Equivalents Pre-Paids & Deposits Accounts Receivable Total Current Assets $2,253,002 $ 53,166 $2,306,167 $1,637,204 $25,000 $112,417 $1,774,621 $1,118,467 $171,669 $1,290,136 $798,209 $230,920 $1,029,129 O
O
Other Assets Furniture & Fixtures Less: Accum Dep $32,000 ($2,433) $36,000 ($4,100) $51,000 ($6,650) $59,500 ($9,425)
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Property & Equipment Less: Accum Dep
$62,225 ($7,986)
$72,225 ($13,389)
$91,725 ($20,972)
$110,225 ($29,264)
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O O O
Total Other Assets Total Assets Current Liabilities Accounts Payable Accr'd Payroll & Taxes Notes Payable Corporate Taxes Payable Current Portion of LT Liabs Total Current Liabilities
$83,806 $2,389,973
$90,736 $1,865,357
$115,103 $1,405,238
$131,036 S1,160,165
$195,724 $3,205
$197,594 $6,661
$200,618 $10,118
$206,118 $13,574
$198,929
$204,256
$210,736
$219,692
Long Term Liabilities Capital Leases Total Long Tenn Liabilities
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O
$3,251,854 ($1,060,810) $3,251,854 ($1,590,753) $1,661,101 $3,251,854 ($2,057,351) $1,194,503 $3,251,854 ($2,311,382) $940,472
Shareholder
Equity
Paid In Capital Retained Earnings Total Shareholder Equity
Q
O
$2,191,044
O
O
Total Liabilities
and Equity
$2,389,973
$1,865,357
$1,405,238
S1,160,165
Q Q Q O Q Q O Q
0
• O 0 • • • • • Staffing Administration CEO President V.P. Finance Controller Staff Accountants H.R Exec Personnel Assts. Office Clerical 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Quarterly Staffing Summary for Fiscal Year 2000 Quarter 1 Quarter 2 Quarter 3 Quarter 4
1
1
O 0 • • • • • 0 • • • • O
Total Administration _4arketing V.P. Marketing Director Product Marketing Product Managers Director Partnership Programs
4 1
4 1
5 1
5 1
1
1 1
Partnership Pgm Staff Clerical Total Marketing SalesCustomer Service 1 2 2 4 1 4 1 1 1 3 1 4
V.P. Sales/Customer Service Direct Sales Personnel Customer Service personnel Order Entry Shipping Clerical Total Sales/Customer Engineerqng V.P. Engineering Managers Senior Development Engineers Junior Development Engineers Clerical Total Engineering Total Staffing Sen'ice 2 2
1 6
1 6
O • • • O •
1 1 1 4 I 8 15
1 1 1 6 1 10 17
1 1 1 6 1 10 24
1 2 2 6 2 13 28
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O O O O
Quarterly Quarter 1 P&L for Fiscal Year 2001 Quarter 2 Quarter 3 Quarter 4 Total Year O O
Total Number of Visitors Total Sales
247,500 $1,214,696
247,500 $1,520,724
247,500 $1,831.461
277,500 $2,142,197
1,020,000 $6,709,078
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O O
O O O O O O O
Web Site Operating Costs Gross Margin Administrative Expense Marketing Expense Direct Sales Expense Product Development Expense Operating Income (Loss)
$34,094 $1,180,602 $257,872 $779,266 $223,824 $268,773 (5349,133)
$46,178 $1,474,546 $258,114 $764,154 $229,008 $268,773 ($45,502)
$50,833 $1,780,628 $293,608 $806,324 $296,885 $429,869 ($46,057)
$55,487 $2,086,710 $293,608 $776,324 $298,959 $429,869 $287,951
$186,592 $6,522,486 $1,103,202 $3,126,067 $1,048,677 $1.397,283 ($152,742)
O
O Q
Interest & Taxes Net Income (Loss)
O
Quarterly Cash Flow for Fiscal Year 2001 Quarter I Quarter 2 Quarter 3 Starting Cash Balance $798,209 $416,201 $319,102 O Quarter 4 $149,334 Total Year $798,209
O O
O O O
Sources of Funds Capital Increases Bank Loam Collected A/R Cash Receipts $627,467 $519,838 $798,998 $650,805 $976,572 S783,786 $1,154.327 $916,768 $3.557,364 S2.871.197
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O
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Total Sources of Funds Uses Of Funds Administration Expense Marketing Ex'pense Direct Sales Expense
$1,147,305
$1.449.802
$1.760.359
$2,071.095
$6.428.561
$281,713 $739.785 $239,570
$285,657 $764,154 $228,317
$327,260 $810.824 $308,194
S327,068 $776.324 $298,268
$1,221,699 53,091.086 $1,074,349
O O O
O O
Engineering Expense Interesl & Taxes Total Uses of Funds Change in Cash Ending Cash
$268,244
$268,773
$483,849
$429,869
$1.450.735
$1.529.313 ($382.007) $416,201
$1.546.901 ($97,099) $319,102
$1.930.127 ($169. 768) $149,334
$1.831.528 $239.567 $388,901
$6.837.869 (S409.308) $388,901
0 0 O.
O Q O O O
0 0 0 0
O O O O Quarterly Balance Sheet for Fiscal Year 2001 Quarter 2 Quarter 3 Quarter 4 Quarter I Assets Current Assets Cash & Equivalents Pre-Paids & Deposits Accounts Receivable Total Current Assets Other Assets Furniture & Fixtures Less: Accum Dep Property & Equipment Less: Accum Dep Total Other Assets $75,000 ($13,100) $130,725 ($39,931) $152,694 $75,000 ($16,850) $130,725 ($50,764) $138, I 11 $102,000 ($21,950) $185,225 ($66,139) $199,136 $102,000 ($27,050) $185,225 ($81,514) $178,661 $416,201 $298,311 $714,512 $319,102 $369,233 $688,336 $149,334 $440,335 $589,669 $388,901 $511,437 $900,338
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O O O O
O
O
O
O O
O
O O O O O O O O O O Total Assets Current Liabilities Accounts Payable Accr'd Pawoll & Taxes Notes Payable Corporate Taxes Payable Current Portion ofLT Liabs Total Current Liabilities Long Term Liabilities Capital Leases Total Long Term Liabilities $275,868 $280,611 $289,026 $291,269 $261,540 $14,328 $265,591 $15,019 $273,316 $15,711 $274,867 $16,402 $867,207 $826,447 $788,805 S1,078,999
O
O O O O Shareholder Equity Paid In Capital Retained Earnings Total Shareholder Equity Total Liabilities and Equity $3,251,854 ($2,660,515) $591,339 $867,207 $3,251,854 ($2,706,018) $545,836 $826,447 $3,251,854 ($2,752,075) $499,779 S788,805 $3,251,854 ($2,464,124 ) $787,730 SI,078,999
O O O O O O O O O
I II II
Quarterly Staffing Summao' for Fiscal Year 2001 Quarter 3 Quarter 4 _1 Quarter I Staffing Administration CEO President V.P. Finance Controller Staff Accountants H.R. Exec Personnel Assts. Office Clerical Total Administration Marketing V.P. Marketing Director Product Marketing Product Managers Director Partnership Pro_ams Partnership Pgra Staff Clerical Total Marketing Sales/Customer Se_a,ice V.P. Sales/Customer Service Direct Sales Persolmel Customer Service personnel Order Entry Shipping Clerical 1 1 1 1 1 5 1 1 1 1 1 5 1 1 1 1 2 6 1 1 1 I 2 6 _1 9 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 l 1 1 1 Quarter 2
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2 7
2 8
2 8
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1 1 4 1 1 2
1 1 4 1 1 2
1 2 6 1 1 2
1 2 6 1 1 2
II
Total Sales/Customer Engineering V.P. Engineering Managers Senior Development Engineers Junior Development Engineers Clerical Total Engineering Total Staffing Service 10 1 2 2 6 2 13 35 10 1 2 2 6 2 13 35 13 1 3 5 8 4 21 48 13 1 3 5 8 4 21 48 I 9 9 _l G a
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