New
Wave
Software,
Inc.
The #ext
_eneration of Online _ireless Security is Secure and
BUSINESS
PLAN
Packet
Technology
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Version
C-02
Executive Summary
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the need for independent, cross platform, database software development. In ew Wave Software, the need ato protect FileMaker Pro ®database solutions to fill Inc. is Pennsylvania corporation founded in 1995 from 1998, recognizing piracy, New Wave Software, Inc. (New Wave Software) began producing piracy prevention and transaction security software. In October of 2000, New Wave Software set up PTi .... "_ provides data center in Atlanta, GA and another in Tampa, FL.that allow ourSoftware its main next generation online transaction security products New Wave customers to surpass current online and wireless protocols in both speed and strength of security. Our main product, SPTXm--Secure Packet Technology, is an encryption protocol that surpasses current online transaction security by delivering both increased encryption strength and faster processing speeds, with easy setup and economical pricing. The main features of SPT are: • Eliminates or reduces SSL/PKI Certificate • Reduces e-Server load by over 80% Th Ge e l_lera Ne Xt tio_ arx_ • Reduces customer, speeds (over 2,000 transactions per second) • Faster transaction technical and maintenance support staffs • No export restrictions - opens global market • 256 bit encryptionstrength(and greater) • Very low processor requirement threshold - allows for SPT use with Wireless • Seamless integration with current front-end and back-end technologies • Easily upgradable for future technologies • Deploys in under a minute • Easy consumer payment process • Robust back-end Merchant Analysis Reporting System (MARS TM) SPT is not simply a new 'twist' of existing online technology, but rather a fresh look at transaction security and load issues that currently plague the Internet and Wireless networks. Existing technologies cannot keep up with the increasing demands that wider bandwidth will bring. With the development of SPT, New Wave Software has created an innovative solution that surpasses the current technology, and is poised to be the forerunner for the future. The competitive advantages of SPT include security, price, performance, ease of use, flexibility and reduced maintenance will become the next transaction security protocol standard. and support. SPT
BcDum¢ P,_-'ll "II'EaHNOt.OOY
Management
costs
O_ e OnliNe _ireless SeCUrl_
MARKET
OPPORTUNITY
Use of the Interact for sales is growing at a phenomenal rate. Forrester Research estimates that by the end of 2000, the world has spent over $6.5 billion accounting for over 4 trillion transactions. That will jump to an astounding $6.8 trillion by 2004 and that does not include Wireless e-Commerce, which is still in its infancy. They go on to say that between 2001 and 2002, Wireless e-Commerce will become more widely used and that "thin" applications and processes like SPT will be a requirement of any company wishing to gain and maintain a foothold in the Wireless Market. This market growth will greatly depend on the secure transmission of online payment data and an increase in consumer confidence with e-Commerce and m-Commerce security in general. SPT fills these requirements by offering increased encryption strength, faster processing speeds, easier setup and lower costs for all types of online and wireless transactions.
THE
PROBLEM
- Current
SSL Technology
The current SSL technology has several cost, size, implementation and security shortcomings that make it impossible for SSL to react to the requirements of the marketplace in a timely and economical fashion. SSUs weaknesses include:
• High Certificate Management Costs o Depending on company size and/or number of merchants, certificate management costs could total well into the millions of dollars per year • Low Consumer Confidence Level o Widespread publicity of large system hacks and SSL vulnerabilities o Same keys/encryption used for each transaction, if one transaction is Secure Packet hacked, all transactions are vulnerable o Sensitive transaction data is left on server which, experts say, is the weakest point in the system • Difficult to Implement and Maintain o Special training required - many companies must hire expensive SSLAdministrators o Many systems are left vulnerable due to setup holes created by poor implementation • Comparatively Weak Encryption Strength o 48-128 bit max, many systems were reportedly only 56 bit max o Any bit strength increase significantly increases server load • Slow Transaction Speed o 3rd party verification required o Many "server negotiation" actual secure data is sent. transactions must take place before the
Technology - SPT is an encryption protocol developed by New Wave Software that surpasses current online transaction security by delivering
increased encryption strengthp faster processing speeds¥ and pricing,
easy setup economical
• Higher Setup, Support and Maintenance Costs o Support staff requires special training • No Tracking/Reporting Capabilities • Export Restrictions on SSL encryption higher than 128 bit
THE SOLUTION
- SPT
SPT was developed to fulfill the need for a secure encryption protocol that is capable of handling the enormous transaction load of the Internet and Wireless networks while staying many steps ahead of hackers whose available resources are increasing at an alarming rate with every new system innovation. Even though there is no limit to SPT's encryption strength, it does not fall under current U.S. export restrictions. SPT can easily be implemented worldwide on any e-Commerce server. As bandwidth increases and online and wireless sales transactions reach into the trillions of dollars, Internet and wireless enabled companies will require stronger, faster and more efficient security protocols in order to maintain their competitive edge in the virtual market place.
SPT's
strengths
include:
• Lower Cost per Transaction o Eliminates and/or reduces certificate management and infrastructure • High Consumer Confidence Level o Backed by Lloyd's of London* o Every transaction uses unique keys o No sensitive transaction data left on merchant server • Easy to Implement and o No special training o Impossible to leave o Reduces customer,
costs
Maintain with Existing Front and Back Ends required - Less than 1 minute installation vulnerable since SPT software is 'black boxed'(closed) technical and maintenance support staffs
• Strong, Versatile Encryption Strength o Rotating encryption stays ahead of hacker resources o Instantly and remotely increases from 256 bit to infinity without significantly increasing server resources o Reduces server load by over 80% Our products allow our customers to surpass online and protocols speed current wireless in both • Easy Consumer Payment Process • Extremely Fast Transaction Speed o No 3rd party verification required (Certificates) o Connection is maintained throughout transaction • Extensive Tracking Capabilities o Robust back-end Merchant Analysis Reporting System (MARS) oAccess to reporting 24/7 using any browser • No Export Restrictions--Opens Global Market SPT is well on the path to becoming the new standard for secure Internet and Wireless network transaction protocols with its increased encryption strength, faster processing speeds, easy setup and economical pricing. •In final negotiations. OTHER PRODUCTS AND SERVICES
and strength
Of security.
In addition to Secure Packet Technology (SPT), New Wave Software, Inc. has developed a suite of anti-piracy products that have an extensive feature set. Each product utilizes our patent pending rotating encryption and has it's own built-in e-Commerce feature that utilizes SPT processing for transaction security. • EPIC TM-New Wave Software's EPIC software, "Electronic Payment for Internet Consumers", utilizes the SPT gateway to offer a secure online payment vehicle for Business-to-Business (B-to-B), Business-to-Consumer (B-to-C) and Consumer-toConsumer (C-to-C) e-Commerce transactions. (2nd Quarter 2001) • SPl ®- "Software Piracy Intervention" prevents software piracy and tracks those who attempt it. SPI adds a protective layer to any software program, or file, that allows only those end-users who legitimately purchase the developer's product to install it. In addition, pirated copies of installed software will not run. (Completed) • SDF TM - New Wave Software, Inc.'s "Secure Document Format" reader utilizes SPI's rotating encryption and built-in features allowing business and consumer
publishers and Electronic Document Delivery Services to secure intellectual property or sensitive information distributed over the Internet. (2nd Quarter 2001)
ADDED VALUE
TO OUR CLIENTS
SPT enables companies to easily, quickly and economically strengthen their e-Commerce transaction security while substantially reducing their server load and associated technical staff over that of SSL. Our clients can process more transactions per minute without increasing their infrastructure and will instantly reduce or eliminate their certificate management, support, maintenance and transaction costs the moment they start using SPT. In addition to the forenamed savings, increased security and speed, our clients have access to our extensive online reporting system Merchant Analysis Reporting System New Wave Software is a gully operational revenue-generating lnternet company providing next generation online transaction security products. ADDED VALUE New Wave Software, TO OUR INVESTORS Inc. offers an excellent and unique investment opportunity. (MARS) at all times using any browser. In addition to tracking transaction activity of an account and adding fraud screening and charge-back protection to sensitive online sales, MARS can also be used as a marketing and sales tool. Several enhancements to our system include automated marketing and point of sale promotion capabilities. To audit and maintain the security of our servers, New Wave Software, Inc. has hired Thaumaturgix, Inc. In addition, Scott Keller, General Manager of their Atlanta office is on our Board of Advisors. His industry expertise and knowledge of Industry requirements and direction will be a huge asset to New Wave Software, Inc. and our customers.
Because there is only one main security protocol in existence today, the market is wide open for a new protocol that addresses the inherent weaknesses of the SSL standard by offering increased encryption strength, faster processing speeds, easier setup and more economical pricing for all types of Internet and Wireless transactions. Also, since U.S. export companies higher than New Wave Software's rotating encryption does not fall under current restrictions, we can market SPT to markets outside the U.S. where all are seeking higher encryption strengths. No other encryption protocol, 128, has access to this market!
Many studies, from top e-Commerce research firms, have shown that there is very low consumer confidence with current online security measures. Merchants are looking for a more secure system that will attract consumers to their e-Commerce Web sites. The system they choose must be easy to implement, while affording them greater control, flexibility and profit margins. With its increased encryption strength, faster processing speeds, reduced overhead and economical pricing, SPT will become the new standard for secure Internet and Wireless transactions.
CURRENT
STAGE
OF BUSINESS
OPERATIONS
Unlike many other new Intemet companies, New Wave Software, Inc. has gone beyond an innovative idea--we have implemented it into a full suite of piracy prevention and security software products. In a period of just 8 months, we captured sales from 12% of the companies evaluating our SPI software as customers. We currently have strategic relationships with Vital Processing Services (VisaNet), First Horizion Merchant Services and Qdebit (AMIS/eCheck). Vital Processing is a sales and technology panner, First Horizon is a sales partner and Qdebit is a sales technology partner. We are looking to partner with HNC Software for fraud screening and Veritect for hosting services and intrusion detection.
FORECAST/REVENUE World Wide lnternet
MODEL
Transactions
Forecast: Revenue Operating Expenses Operating Income
Revenue Streams
Year 1 $2,300,000 $3,600,000 ($1,300,000)
Year 2 $25,000,000 $14,800,000 $10,200,000
Year 3 $89,500,000 $32,200,000 $57,300,000
- 2000:$6.5 Bmio. -2001:$1.2 Trmio. - 2002:$2.2 Trmion - 2003:$4.0 Trittion - 2004:$6.8 T,.imo,,
• Software licensing Fees • Per Transaction Fees • Merchant Account Reseller Fees • Hosting/Server Fees • Market Research Fees (Online Tracking) • Professional Services for Customization and Integration • Back-end Support Services • Application Service Provider (ASP) Services We provide a one-stop shop for merchant accounts, transaction security, security infrastructure, web hosting, real-time processing and online reporting.
FINANCING New Wave Software, Inc. is currently seeking an initial round of $4 million. This capital will be used to support internal technology operations, payroll, technical infrastructure, ramp-up and sales/marketing materials used to promote our products. Current financing includes investment capital from the partners.
Quick Look
QUICK
LOOK
The following charts and statistics will give you a quick look at SPT and the secure transaction protocol market. SPT Comparison Chart SPT No Certificate
Easy to Implement Management costs High Certificate
SSL
Management costs
with
existing
systems
Difficult
to Implement
and Maintain
No special
training
required
Special
training
required
More
than
61
percent
Impossible
to leave
vulnerable
Many
systems
are left vulnerable
of ]nternet polled
they don
users
Reduces support & maintenance staffs
said
ct s_op
that
online Strong, Versatile Encryption Strength
Must
hire expensive
SSL Admin
Staff
Comparatively
Weak
Encryption
Strength
due to privacy
security issues.
and
Starts
at
256 bit
encryption
strength ahead of
48-128 bit
max,
many only
systems 56 bit max
were
Rotating
encryption stays hacker resources
reportedly
Instantly 256
and remotely
increases
from
Difficult
to increase
bit strength. increases
bit to infinity increasing
without server
significantly
Any increase
significantly server load
resources
Reduces
server
load
by over
800./o
Increase
in sever
load
Extremely
Fast Transaction
Speed
Slow
Transaction
Speed
No 3rd
party
verification
required
3rd
party
verification
required
Connection
is maintained transaction
throughout
Many must
"server take
negotiation" before
transactions the data is sent.
place
Extensive
Tracking/Reporting
Capabilities
No Tracking
Capabilities
Access
to online
reporting
24/7
None
or minimal
online
reporting
No Export
High Consumer
Restrictions
Export
Restrictions
on SSL over
128 bit
Level
Confidence
Level
Low
Consumer
Confidence
Guarantee/Backed
by Lloyd's
of London*
No Guarantee
Every
transaction
uses
unique
keys
Every
transaction
uses
same
keys
Keys/Encryption
rotated
at variable
intervals
No rotation
of keys/encryption
No sensitive
transaction
data
left on Sensitive transaction data left on server
Merchant's
server
*In final negotiations.
INTERNET
AND WIRELESS
NETWORK
STATISTICS
• U.S. Business to Business (B-to-B) e-Commerce alone accounted for $43 billion in 1999 and will grow to $1.3 trillion by 2003. 1999 U.S. Business to Consumer (B-to-C) e-Commerce accounted for $8 billion in sales and will grow to $108 billion by 2003. - S_ntrce: t:))rres_er/_,,_e_wch • A report from Cyber Dialog revealed that over 60% of online shoppers feel it is too easy for credit card information to be stolen when credit card numbers are used online. Additionally, over 40 percent of shoppers, who have placed orders online, still agree their credit card information can easily be stolen online. . .S'_)m'c_,: vher Dia/¢_g_le C • The banking industry will soon be entering the e-payments _t|cry_t]on software sales market. "Banks are in a
prime position to alleviate consumers' concerns and to drive forward the uptake of e-Commerce.". - Soz_rce: LqO_r O' (h'o_q_ • Mobile e-Commerce will generate $600 million in the U.S. alone by 2003. ...... So_u'ce: JupHer Re._eurch
increased
33%
1999
between
a_# _0_0,
• 61 percent of consumers polled favored using the phone over the Internet for retail purchases. Security was the primary reason for respondents not using Internet channels to place their retail orders. ---.5_mrc_.,:_c_hldn Research t • Four out of five consumers abandon their attempt to purchase products online due So_rc-e: A TEcczrttKj_
- 51b.;_uc_? iDC to poor Web site design and malfunctions.
900 bn
On Iin e Purchase Revenues
Purchasing Patterns
liiii_iiiiii_ii!i lliiiiiiiii!iiiiiii!i!
330
bn
: r 190
80
bn
Ordered Online Paid ffline O
Online
Soume. Keenan Vision
Soume. Cyb_,_rDialoge
IOUUOSJOd _8H
KEY PERSONNEL Eric S. Markowitz President/CEO Mr. Markowitz founded New Wave Software, Inc. in 1995 to fill the need for
independent, cross platform, database software development. Prior to 1995, he ran a successful Advertising/Graphic Design firm for 12 years, migrating to database design as print media changed to online media. In 1998, recognizing the need to protect FileMaker Pro database solutions from piracy, he added NWS-Key to New Wave Software, Inc.'s product line in order to protect New Wave's and other developer's database products. In 1999, under his direction, NWS-Key evolved to the total software-based protection product known today as SPI. Within a span of 8 months, SPI's core technology was expanded to include SoundWave, SDF and SPT to New Wave Software, Inc.'s product line. James Lay Chief Technology
Officer
Mr. Lay is responsible for producing New Wave's multi platform security products including, custom installer 'wrapper' technology, encryption algorithms, server daemons and CGIs for vending security codes and handling e-Commerce transactions. Prior to joining New Wave Software, Inc., Mr. Lay has consulted for and developed software applications used by companies such as 3M Company, Apple Computer, AT&T Bell Laboratories, BellSouth Advertising & Publishing, BFGoodrich R &D, B, Bristol-Myers Squibb, Chevron U.S., Goddard Space Flight Center, Guardian Computer Systems, Hughes Aircraft, Massachusetts Inst. of Technology, NASA, National Institutes of Health, Navy Research Lab, Philip Morris U.S.A., U.S. Air Force Materials Laboratory, U.S. Army, U.S. Food & Drug Administration and the U.S. Department of Energy. Mr. Lay's technical proficiencies include C, C++, SQL, FoxPro, HyperCard, FileMaker, XCMD's, XFCN's, INIT's, Code Resources, DLLs, QuickApp, PowerPlant, Think Class Library, NeoAccess, CodeBase, InsideOut, Symantec Compilers, MetroWerks Cross-Platform Porting. Mark Cowherd Officer CodeWarrior Compilers, Microsoft Visual C++ and
Chief Operations
Mr. Cowherd is responsible for general operations and merchant services. Prior to * joining New Wave Software, Mr. Cowherd was employed by First Data Corp. where he was responsible for the highest Intemet merchant sales volume in his region (second in the country), maintaining sales of over $10 million. As the lead Internet sales rep with FDC's Unified Merchant Services, Mr. Cowherd maintained a 38% DIA, the highest merchant sales volume per signing in the country for FDC. Mr. Cowherd's customer service responsibilities included reducing merchant fraud and charge-backs. Additionally, Mr. Cowherd is responsible for initial merchant setup and merchant connectivity as well as ongoing account management. account
Ken
Markowitz
Marketing Manager Mr. Ken Markowitz is responsible for marketing. Prior to joining New Wave Software, Inc., Mr. Markowitz has consulted to various Fortune 500 Companies including Dow Jones & Co., Van Heusen and Xerox. Prior to his consulting career, he was a Vice President in Western Union, Program Manager/Director at Curtis Wright Electronics and a Vice President of Technical Development at CCMI.
BOARD
OF ADVISORS
Kevin Lee Co-Founder & Chief Information Officer, MaxRate.com Mr. Kevin Lee is the co-founder and CIO of MaxRate.com, a business whose
services include Intemet-based exchange for certificates of deposits (CDs) which matches buyers and sellers based on specific criteria. He actively manages the day-to-day operations, as well as, the strategic direction of a $20+ million (valuation) organization as a member of the executive management team and is the co-author of the patent pending design of the Internet-based bid/ask exchange for deposit product. As CIO of MaxRate.com, his responsibilities include directing 25+ internal and third-party resources to develop the web-based functionality, technical infrastructure, customer service capabilities, internet hosting selection, client service operations, security procedures, and privacy policy. Additionally, Mr. Lee has developed sales message and market definitions to dissect and approach over 17,000 financial institutions including value proposition definition, sales presentation development and product marketing campaign formalization. Prior to joining MaxRate.com, Mr. Lee was Senior Manager of Andersen Consulting LLP / Arthur Andersen LLP where he led a joint venture initiative with PeopleSoft to design and develop their Enterprise Performance Management (EPM) software product, a data warehouse application to provide profitability reporting and analysis. He managed a staff of over 60 in North America and the United Kingdom, with a budget of over $6 million. While at Andersen Consulting, he also developed product strategies and the marketing approach for the PeopleSoft Enterprise Performance Management (EPM) product in order to enter the North American and European financial services market. Mr. Lee also led business development efforts to demonstrate and propose consulting engagements to some of the largest financial institutions in North America and the United Kingdom, including: ABN Amro, Wells Fargo, Chase Bank, Bank of America, Bank Boston, Wachovia, Fannie Mac, Freddie Mac, HSBC, Midland Bank, Lloyds Bank, AIB, and Bank of Ireland. Mr. Lee's extensive industry experience, which ranges from design through strategic management of technology based products and services, is a tremendous asset to New Wave Software. He has recently joined New Wave's Board of Advisors based on his belief that New Wave Software's secure transaction protocol will be a leading transaction technology for the Banking Industry and e-Commerce worldwide.
Scott Keller General Manager, Thaumaturgix, lnc. As General Manager, Mr. Keller is responsible for managing both the operations and the growth of Thaumaturgix South, as well as shaping the strategic direction and business development for the company. Prior to joining Thaumaturgix, Mr. Keller was Chief Technology Officer and CoFounder ofhipO.com, currently Edaflow, Inc. Prior to hipO.com, he worked at Relevant Knowledge/Media Metrix, as Director of Technology and Operations. Mr. Keller was responsible for all data center operations, International operations, data collection technology and data warehousing. He also managed projects in 17 cities at Ernst & Young Consulting LLP, in the Information Technology practice division. Mr. Keller is heading up the Thaumaturgix team that has implemented the server security upgrade for New Wave Software's verification and tracking servers. His first hand involvement with New Wave's encryption/e-Commerce products prompted him to join New Wave's Board of Advisors.
Michael
"Kashif
n Jones Inc. who excelled in both the artistic and technical
CEO, Brooklyn Boy Entertainment,
Kashif is one of those rare individuals
side of the music industry. Since the beginning of his career in the music industry, Kashif has been associated with cutting edge technology. His involvement with the Synclavier, the world's first audio sampler led to much of the technology that drives the music and entertainment industries today. In 1986 Sony invited Kashif along with 15 other technocrats to join them in Japan for an extensive active research project that resulted in the Sony DAT machine. Kashif's contribution was sited as crucial to the success of the project. Shortly thereafter, Kashif convinced Sony to make significant changes to its 24 track digital DASH machine after uncovering critical flaws in the system. The changes resulted in increased sales and satisfaction for all owners of the Dash technology. Kashif is also well respected on the artistic side of the music industry. His image and influence as one of the leading producers in the music business began in 1980 when he first produced the hit record "I'm In Love". Since then, he has been nominated for two Grammys and produced albums for such major artists as Whitney Houston, George Benson, A1 Jarreau, Kenny G., Evelyn "Champagne" King, Melba Moore, Me'lisa Morgan, and Dionne Warwick. He recently joined the Board of Advisors of New Wave Software based on his belief that "[its] encryption technology is destined to service and maybe even save the electronic intellectual property industry."
$8oJno_
SOURCES AT Kearney A.T. Kearney's mission is to help the world's leading corporations competitive a advantage. - www.atkearney.com
gain and sustain
Boston Consulting Group The Boston Consulting Group is an international strategy and general management consulting firm whose mission is to help leading corporations create and sustain competitive advantage. - www.bcg.com Creative Good
Creative Good is a consulting firm based in New York, San Francisco, and Boston. Their main mission is to improve the online customer experience - on e-Commerce web sites, content and entertainment sites, intranets, business to business sites, and wireless Internet services. - www.creativegood.com Cyber Dialogue Produces market research on e-Commerce statistics and trends.
including consumer
electronic
commerce
ePaynews ePaynews.com is a free news portal providing the latest e-Commerce and wireless payment industry news, information and research. - www.epaynews.com Forrester Forrester is a leading independent research firm that analyzes the future of technology change and its impact on businesses, consumers, and society. - wwwforrester.com International Data Corporation IDC is the world's leading provider of technology intelligence, industry analysis, market data, and strategic and tactical guidance to builders, providers and users of information technology - www.idc.com Lafferty Group Lafferty Group is one of the world's leading providers of high-value business intelligence.www.lafferty.com Ovum Ovum is an independent research and consulting IT, telecoms and e-Commerce. - www.ovum.com World Research World Research conducts full-service proprietary and syndicated research industries.www.survey.com company, offering expert advice on
market research for consumer,
for our clients. We conduct both and the entertainment
technology,
-i
le
ZDNet ZDNet's research enables all Web users, from IT professionals to consumers, the most out of their investments in and involvement with technology. - www.zdnet.com to get
TRADEMARKS
ANDPATENTS
SPI and LockPoint are registered trademarks of New Wave Software, Inc. SPT, EPIC, MARS, SDF and SoundWave are trademarks of New Wave Software, Inc. All products and processes are Copyright 2001 and Patent Pending. All other trademarks are owned by their respective companies. This business plan is not to be copied or distributed to third parties without the express written permission of New Wave Software, Inc.
Contact
Information
Eric S. Markowitz New Wave Software, Inc. 205 East Maple Ave. Morrisville, PA 19067 Phone: 215-736-3304 Fax: 215-736-3370 info@sptcentral.com www.sptcentral.com