Sample Business Plan SaleSeeker

seeke SALEseeker.com Business Plan 7/1/99 14 South Church Street West Chester, PA 19382 610-344-3600 wbulioek(_,SALEseeker.eom Contact: Wayne Bullock NOTE." This business plan is confidential and contains proprietary information. Neither the plan nor any of the information may be reproduced or disclosed to any person or business entity without the express written permission of SALEseeker. com. These materials are not intended to constitute an offer of solicitation for investment. These materials are for information purposes only regarding the existing business and the business plan of SALEseeker. Confidential Page1 SALEseeker.com Table of Contents 1. Executive Summary 2. Business Description Industry The Company Positioning Pricing 3. The Market Consumers Market Size / Trends Competition 4. Development Development Process 5. Sales, Distribution & Marketing Ad Sales & Sales Plan Distribution Marketing 6. Management Team Management Ownership 7. Capital Required / Exit Plan 8. Financials Profit & Loss Projections P&L Assumptions Pages 3-5 Pages 6-8 Page 9 Pages 10-11 Pages 12-15 Page 16 Page 17 Page 18-20 Confidential Page2 1. Executive Summary SALEseeker, the Internet's first publisher of sales and specials, helps consumers decide where to shop. Positioned as a shopping resource that helps shoppers find great sales & specials, SALEseeker's mission is to provide consumers with the most convenient and unbiased source of sales and specials being offered on products and services worldwide. SALEseeker's goal is to become the leading content provider for sales & specials being offered at all shopping venues; local stores, online stores and catalogs. SALEseeker's content will attract and direct millions of consumers who have learned to shop for sales and specials before making a purchase. The opportunity exists to generate substantial ad revenues, exceeding $100 million annually, from merchants and product manufacturers desiring to reach interested consumers as they determine where to go shopping. SALEseeker is the first to list sales and specials in a convenient and organized format across all shopping venues. Based on a shopper's location and merchandise need, consumers can locate sales and specials being offered by searching an online database, and, they also have the option to receive a personalized alert and summary of sales and specials via weekly email, all at no cost. SALEseeker's content is generated from three sources: 1) participating retailers and merchants, who list their sales and specials for free 2) in-house staff covering published sales and specials in newspapers, catalogs and on the intemet 3) regional correspondents in major markets SALEseeker's Sales & Specials attracts and targets price-conscious shoppers, primarily women, who want to save money when shopping by not paying full price for merchandise and services. Women are the primary consumer in about 85 percent of U.S. households, make up about 50percent of the people on the lnternet today and are the fastest-growing category of lnternet users. According to a recent CommerceNet survey, 60 percent of lnternet users, or 55 million people, regularly shop online, although "shopping" often meant" window shopping," with actual purchases made offline. Internet ratings from Nielsen/NetRatings for May 1999 measured the Active Internet Universe at 61 million people with Current Intemet Universe Estimate at 101 million people in the U.S. Confidential Page3 An organized and convenient source for sales and specials on demand does not exist. Promotional retail advertising is delivered on a "catch them if you can" basis via radio, television and direct mail. Newspapers, circulars and inserts are today's primary source for sales and specials, however they are not conveniently organized, plus newspaper readership is declining, especially with the younger Internet users. A beta test web site for SALEseeker.com (http://www.SALEseeker.com) launched October 15, 1998 and accepted shopper email registration and merchant registration for initially 9 merchandise categories. The redesigned web site including a searchable database launched February 10th, 1999. Categories were expanded to 26 in mid-May. As of June 29th, 1,200 merchants have registered including Nordstrom, The Company Store, Bugle Boy, Krups, Rubbermaid, Service Merchandise and Hanover Direct and 12,000 shoppers have registered to receive weekly e-mail updates. Also, SALEseeker editorially covers sales and specials being offered by 200 leading national and regional retailers, approximately 40,000 stores. The first non-exclusive content alliance launched June 29th with Lycos Networks. Positioned as Lycos Sales & Specials on the Lycos Shopping Network, the co-branded content is displayed with the Lycos' look and feel. SALEseeker receives portal distribution and a share of the incremental ad revenues generated by Lycos, without a placement fee. The distribution strategy calls for expanding content alliances with portals and relevant web sites via aggressive business development and affiliation efforts. Discussions have been held with Excite/@Home, Cox Interactive, Snap, Comcast, and AOL's Digital City, with all having expressed interest. The strategy is based on the growing need for interesting content with stickiness enabling portals and other sites to sell more advertising. A total of 9700 media web sites exist today. This approach greatly reduces the high marketing costs usually incurred to gain distribution and traffic on the Internet and encourages merchants to participate due to the wide distribution. SALEseeker's revenue will be generated primarily from advertising: • Ad revenue from weekly e-mail • Ad revenue from SALEseeker.com site • Ad revenue sharing from content affiliates • Content start up fees eMarketer projects that global web ad spending will reach $16 billion by 2002, $8.9 billion in the U.S., just 3.4% of total advertising expenditures. SALEseeker.com offers an ideal advertising environment where the ads match the content, allowing expansion of the ad inventory and revenues, without affecting the content. Types of advertising include banners, sponsorships, e-mail, plus rich media (audio, video) options in the future. Confidential Page 4 Mary Meeker of Morgan Stanley Dean Witter Technology in a Web Advertising Report, June 1999 suggests "The Internet May Be The Ultimate One-To-One Marketing Tool". Direct e-mail advertising via SALEseeker provides an efficient and measurable method for merchants to reach interested shoppers before they go shopping. As the Internet expands by meeting consumer needs, SALEseeker's weekly email updates and alerts will become increasingly valuable to time-pressed shoppers. SALEseeker's email ad revenue could eventually surpass $1OOmillion annually, based on the following assumptions: • 4 million shoppers register for weekly e-mail • shoppers select an average of 6 shopping categories • totals 24 million category e-mails weekly • 5 category ads are sold weekly at $20 cpm average, $.02 per shopper • generates revenues of $. 10 per category X 24 million category e-mails • ad revenues of $2.4 million weekly / $125 million annually • produces 65%+ margins SALEseeker has competitors, but none that offer a broad, central source for sales and specials across all store types. Many sites offer categorized bargains and promotional offers, however they are mainly restricted to online merchants, ignoring the shopper's need to access an unbiased source that incorporates all shopping venues. The opportunity exists to expand the content distribution to other media such as a personalized news approach for interactive television or on-demand video circulars. SALEseeker is currently an operating division of Bullock Communications Group, Inc., with offices in West Chester, PA, a western suburb of Philadelphia. Wayne Bullock, the owner of Bullock Communications Group, Inc., is an advertising entrepreneur with startup CEO experience in the cable industry. Wayne co-founded and developed Cable AdNet and StarNet with Gerry Lenfest, of the Lenfest Cable Group. Cable AdNet was a cable tv interconnect advertising company, billing $50 million in 1990, by selling regional and local merchants ads on ESPN, CNN, MTV and USA in 6 major markets; StarNet is a satellitedelivered cable network promotion service, selling cross-channel advertising to cable tv programming networks (HBO, CNN, etc.). Mr. Bullock sold his interests in both Cable AdNet and StarNet to Lenfest Communications, Inc., which eventually sold Cable AdNet to TCI Advertising. The company needs capital to continue building content, distribution, site traffic and shopper e-mail registration. The company is seeking $8 million in first round funding for expansion and operational expenses, including general and administrative, selling, advertising and marketing. Within 2-3 years, the company will either file for a public offering or be a strong takeover candidate. Confidential Page5 2. Business Description Industry IDC predicts Internet usage and e-commerce sales to explode in 1999. By the end of the year, IDC expects Internet users to grow 28% to 147 million people with over 1 billion online by 2005. Two out of every three users will be online for the first time in 2002. According to a recent CommerceNet survey, 60 percent of Internet users, or 55 million people, regularly shop online, although "shopping" often meant "'window shopping," with actual purchases made offline. Average Internet Usage for May, 1999 Nielsen//NetRatings Data below represent activity for the average Internet user: Average Number of Sessions per Week 16 Average Number of Unique Sites Visited 12 Average Time Spent per Site 0:36 Average Time Spent per Month 7:04 Average Time Spent per Session 0:26 Active Internet Universe 61 million Total Internet Universe Estimate 101 million Media Metrix ranking of the top web sites and web properties for May 1999. Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 21 22 Digital Media/Web Properties AOL Network - Proprietary & WWW Microsoft Sites Yahoo Sites Lycos Go Network GeoCities The Excite Network Time Warner Online Amazon AltaVista Site Bluemountainarts.com RealSite Portfolio Xoom.com Sites Snap Sites Go2Net Network LookSmart Infospace Impressions Unique Visitors(000s) 46,243 32,389 31,299 29,963 20,864 19,965 17,192 13,106 10,831 10,633 10,089 9,114 8,958 8,872 8,484 7,127 6,824 Confidential Page 6 Media Metrix ranking of the top shopping sites for May 1999. 1 2 3 4 5 6 7 8 9 10 AOL Shopping Bluemountainarts.com Amazon.com Ebay.com Cnet Software Downloads Bamesandnoble.com Mypoints.com Cdnow.com Valupage.com Freeshop.com 10,297 10,089 9,933 8,227 4,709 4,330 3,491 3,345 3,224 2,719 / Nielsen / NetRatings rankings for the most visited Web sites for the month of May 1999. Property 1. AOL Websites 2. Yahoo! 3. MSN 4. Lycos/Tripod/WhoWhere/Wired 5. GO Network 6. Excite Network 7. GeoCities 8. Microsoft 9. Time Warner 10. Blue Mountain Arts Reach % 55.20 42.34 35.92 31.49 23.92 21.49 20.91 16.36 14.56 14.09 Time per Person 0:31:43 1: 03:37 0: 57:02 0:17:05 0: 25:26 0: 36:28 0: 17:46 0: 21:36 0: 19:17 0: 16:10 According to a Web Advertising Report, June 1999, Mary Meeker of Morgan Stanley Dean WiRer Technology states: The Internet May Be The Ultimate One-To One Marketing Tool The Internet has the potential to be the most efficient direct-marketing tool yet seen. Companies can target and deliver directed messages to an audience with specific demographics and interests. They can also collect, track, analyze, and market to consumer behavior/buying patterns. First medium where advertising may be converted to transactions in band with direct access to the point of sale. All in, the cost of online advertising/marketing is roughly comparable to, if not better than, the cost of direct mail. • • • • • Confidential Page 7 Early Year Advertising Comparison Third-Year Y/Y Revenue Growth %: • • • Internet advertising Broadcast TV advertising Cable TV advertising 240% 188% 120% Internet Advertising Bureau Sources: PrieeWaterhouseCoopers, The Company SALEseeker.eom is the Intemet's first publisher of sales and specials. Positioned as a shopping resource that directs consumers where to shop to save money, SALEseeker's mission is to provide consumers with the most convenient and unbiased source of sales and specials being offered on products and services worldwide. SALEseeker.com has the opportunity to create a branded shopping resource, providing valuable content for portals, web sites and other emerging digital services, by attracting and directing those millions of consumers who look for savings before they buy. SALEseeker was conceived in May 1998, the URL domain name was registered on June 12, 1998 and a service and trademark application was submitted July 1, 1998. SALEseeker's revenue will be generated primarily from advertising: • Ad revenue from the weekly email update • Ad revenue from SALEseeker.com site • • Ad revenue sharing from content affiliates Content fees from media affiliates Positioning SALEseeker is positioned as a free shopping resource that helps shoppers find great sales & specials. SALEseeker lists sales and specials in a convenient and organized format, across all shopping venues; local stores, online stores and catalogs. By entering a zip code and selecting a merchandise category, shoppers can locate sales & specials being offered in their area. In addition, shoppers can register to receive a free e-mail update, sent weekly and personalized to contain only sales and specials that interest each shopper. Pricing SALEseeker.com is a free online service for consumers and merchants. The business model is based on the Intemet's culture of providing free access to participants. This approach enables the company to secure the best content by building an open and unbiased source for Sales & Specials. The company believes that advertising revenue opportunities exceed potential revenues from consumer usage fees or merchant listing fees. Confidential Page8 3. The Market Consumers SALEseeker's Sales & Specials attracts and targets price-conscious shoppers, primarily women, who want to save money when shopping by not paying full price for merchandise and services. Women are the primary consumer in about 85 percent of U.S. households, make up about 50 percent of the people on the Internet today and are the fastest-growing category of Interact users. "Just to let you know - the information that you provide on local sales has kept me busy and well stocked! Eventually, on the next "slow sale week" in this area, I'll seriously shop online. Don't you dare stop sending all of this! Barb Vann-4/19/99 email" Market Size / Trends • • • • • Active Intemet Universe Internet Universe Estimate Total online shoppers Total online buyers Women online shoppers 61 million 101 million 55 million 28 million 46% Nielsen/NetRatings May 99 Nielsen/NetRatings May 99 CommerceNet/Nielsen June 99 CommerceNet/Nielsen June 99 CommerceNet/NielsenJune99 4/18/99 News Release-"Yahoo has ... consistent with the increased commercialization on the Internet, where shopping is replacing research as the preferred online activity." eMarketer projects that global web ad spending will reach $16 billion by 2002 and $8.9 billion in the U.S, 3.4% of the total. In 1998, U.S. ad spending online more than doubled to $1.5 billion, with $2.6 billion projected for 1999. Competition SALEseeker.com has competitors, but none that offer a broad, central source for sales and specials across all store types. An organized and convenient source for sales and specials across all store types does not exist. Many sites offer categorized bargains and promotional offers, however they are mainly restricted to online merchants, ignoring the shopper's need to research unbiased sources that incorporates all shopping venues. Internet competitors include coolsavings.com, nevermissasale.com, realmalls.com, sales circular.com, thesaleschannel.com, styleshop.com and whats4sale.com. SALEseeker does not compete with comparison pricing sites. Many sites offer categorized bargains and promotional offers, however they are mainly restricted to online merchants. Promotional retail advertising is delivered on a "catch them if you can" basis via radio, television and direct mail. Newspapers, circulars and inserts are today's primary source for sales and specials, however they are not conveniently organized for time-pressed consumers, and their readership is declining, especially with the younger Intemet users. Confidential Page9 4. Development Development Status A beta test web site for SALEseeker.com (http://www.SALEseeker.com) launched October 15, 1998 and accepted shopper email registration and merchant registration for the initial 9 merchandise categories: Children's Fashions & Accessories, Children's Shoes, Home Furnishings & Furniture, Housewares, Jewelry, Men's Fashions & Accessories, Men's Shoes, Women's Fashions & Accessories, and Women's Shoes. The redesigned web site including a searchable database launched February 10th, 1999. The site design and development was outsourced to Next Solutions of McLean, Virginia and hosted by Next Hosting. Beginning in April, the company began positioning towards the internal capability to develop, program and maintain systems with company personnel in order to increase control and reduce costs, and to only outsource hosting of co-located servers. Two additional consultants were contracted in April; one to provide web graphics and layout assistance and one to provide Cold Fusion and SQL support. Two servers were purchased and installed at the hosting site(Net Access) in center city Philadelphia. Categories were expanded to 26 in mid-May. As of June 30th,registration exceeds 12,000 shoppers and 1,200 merchants including Nordstrom, The Company Store, Bugle Boy, Krups, Rubbermaid, Service Merchandise and Hanover Direct. Currently, SALEseeker editorially covers sales and specials being offered by 200 leading national and regional retailers, covering over 40,000 stores in total. Process-Shoppers SALEseeker's search process allows shoppers to easily find sales and specials. It works like this: 1) Shoppers select a shopping category from a list of 26 (see below), enter their Zip Code and press Go. 2) Shoppers then find the specific category they are interested in (pants, shirts) and click on the type of store they prefer to shop (Local, Catalog, Online) 3) SALEseeker then displays a summary of stores with specific descriptions of current sales and specials, based on the shopper's preferences. Local stores are within a 20-mile radius. 4) Shoppers can click on stores of interest for an entire category listing of sales and specials. 5) Shoppers have the option to list area store locations, order catalog or to link immediately to the stores web site. Planned improvements include: • Merchant site link to be available next to the sale description. • Enable shoppers to search by store, brand and sales events • Develop My SALEseeker displaying only sales & specials at favorite stores with SALEseeker Email Alert - automatically alerts shoppers of new sales & specials at favorite stores Confidential Page 10 Process-Merchants Merchants register at no cost and list each of their sales and specials by date range with a 30 word description of the brands and the styles, the specific savings and the store locations- local, online or catalog the sales or specials are being offered. Merchant listings are displayed on the start date and continue through the end date, a maximum of 30 days. Each sale entry must be approved before posting; unsatisfactory descriptions are rejected and the merchant is notified to improve and modify as necessary. After entering a sale, the merchant is emailed a confirmation and the option to advertise. Just prior to the expiration, the merchant is notified by email to remind them to enter more sales & specials. Unlike other mediums, the capability exists for merchant to control and flexibly change sales and specials by store, as they prefer, without the usual production delays. Planned improvements: • Retrieval of online sales & specials will be automated and conducted daily by computer. Reducing merchant labor will increase merchant participation. • Merchant will select type of sales' event; holiday, back to school, clearance, exclusive special offers, etc. Merchant Benefits • • • • • Merchants Merchants Merchants Merchants Merchants can reach intemet shoppers who are looking for sales... have the opportunity to drive internet shoppers into their stores... list their sales events and specials for FREE... can offer shoppers exclusive sales & specials as further incentive... can target those shoppers located within driving distance of their stores. Content SALEseeker.com gathers its content from three different sources. 1. From participating stores and merchants, who list their sales and specials for free by submitting their information directly into SALEseeker online 2. From our in-house team, who edit & enter sales and specials for 200 regional and national chains, and catalogs, published on the intemet, in regional newspapers and catalogs 3. In the future, regional correspondents covering regional and local newspapers by entering sales & specials online Shopping Categories (26): Appliances-Large Appliances-Small Automotive Books Clothing & Access.-Baby Clothing & Access.-Children's Clothing & Access.-Men's Clothing & Access.-Women's Computers Electronics Food & Drink Furniture Gifts, Flowers & Collectibles Health & Beauty Home & Garden Home Furnishings Housewares Jewelry Music Shoes/Footwear-Children's Shoes/Footwear-Men's Shoes/Footwear-Women's Sports & Fitness Toys, Games & Hobbies Travel Video Confidential Page 11 5. Sales, Distribution, and Marketing Advertising Sales Potential SALEseeker's email ad revenue could eventually surpass $100 million annually, based on the following assumptions: • 4 million shoppers register for weekly e-mail • shoppers select an average of 6 shopping categories • totals 24 million category e-mails weekly • 5 category ads are sold weekly at $20 cpm average, $.02 per shopper • generates revenues of $. 10 per category X 24 million category e-mails • ad revenues of $2.4 million weekly / $125 million annually • produces 65-70% margins Direct e-mail advertising is a low-cost method to reach interested shoppers, for as little as $ .01 to $ .04 per shopper, and can be packaged geographically to fit the retailer's needs. Shoppers can link immediately from the email to the advertisers web site or sale page providing an excellent direct response capability for immediacy and impulse purchasing. SALEseeker.com offers an ideal advertising environment where the ads for sales and specials match the content. Advertising will be sold to merchants and product manufacturers by category. Types of advertising include banners, sponsorships, e-mail, plus audio and video rich options in the future. Advertising will be sold across all geo-segments-national, region, and local. Ad rates range from as low as $10 cpm ($.01 per impression) for national advertisers and up to $ 40 cpm ($.04 per impression) for local advertisers. Upside for Internet Advertising 1998 U.S. Spending per Household for Various Media Medium 1998E Advertising Spending ($MM) $44,270 $39,480 $14,704 $ 8,619 $ 1,900 $109,023 $ 21,805 # of Household Users (MM) 60 100 99 65 50 374 75 Advertising Spending/Household $738 $395 $149 $133 $ 38 $1,453 $ 291 Newspapers Broadcast TV Radio Cable Internet/Online Total Average Sources: Morgan Stanley Dean Witter, McCann-Erickson, Newspaper Association, Wilkofsky Gruen Associates, Jupiter Communications Confidential Page 12 Web Advertising is Growing More Rapidly Than Other Media U.S. Media Advertising and Direct Marketing Revenue ($B) 1998E Media Advertising Television Newspapers Radio Yellow Pages Magazines Outdoor Business Publications [lnternet Farm Publications Direct Marketing Direct Telephone Direct Mail Total Source: Morgan Stanley Dean Witter $141 B 48 44 15 12 10 4 5 2 0.3 102 63 40 $243 B Y/Y Growth 8% 8 6 9 5 6 8 11 102] 6 8 8 8 8% E-mail will be SALEseeker's primary revenue source. Here's why email will work so well: • Better targeting Individual shoppers have registered to receive the email (opt-in) and are targeted by geography and shopping interests. • Better communication Email provides the space to tell your story, and HTML email allows even greater communication quality, including graphics, unique fonts, and hyperlinks. Undivided attention Email requires the consumer's full attention and, if received from a welcome source, occurs in a positive context, capturing greater mindshare and generating higher conversion rates. Low cost Direct mail costs range from $ .25 - $1.00 per consumer. Direct coupon group mailers cost $.06 per household- local merchants pay $600 per 10,000 mailed. SALEseeker's direct e-mail ranges from $.01 - $.04 per shopper- local merchants pay from $300-$500 for targeted category-specific reach. • • Confidential Page 13 Sales Plan In-house account managers will perform two roles: account maintenance and national ad sales. This will be accomplished by establishing a relationship with retailers by encouraging their participation in listing sales & specials and by offering e-mail and banner advertising to enhance their merchandising and sales efforts. Account managers will be compensated with a base salary plus a 5% sales commission. E-mail and SALEseeker.com advertising will be automatically offered to participating merchants when they list their Sales & Specials each month via an automated e-mail confirmation of all sale entries. Regional and local e-mail ad programs will offer category targeting by DMA market (205) and by smaller Area Zones (200) in large markets, similar to the advertising programs offered by Yellow Pages, Cable TV and group mailers. Area managers will be solicited through the SALEseeker web site with the dual objective of covering news of area sales as well as selling e-mail advertising to smaller merchants. Area managers will be independent contractors paid on commission - 25% of sales, paid monthly after receipt. Distribution The distribution strategy calls for expanding content alliances with portals and relevant web sites via aggressive business development and affiliation efforts. Discussions have been held with Excite/@Home, Cox Interactive, Snap, Comcast, and AOL's Digital City, with all having expressed interest. The strategy is based on the growing need for interesting content with stickiness (keeping users on a site to increase page views), enabling portals, city guides, media and other sites to sell more advertising. This approach greatly reduces the high marketing costs usually incurred to gain distribution and traffic on the Intemet and encourages merchants to participate due to the wide distribution. The first non-exclusive content agreement was executed in April with Lycos Networks. SALEseeker will provide co-branded content to be displayed as Lycos Sales & Specials on the Lycos Shopping Network, launched June 29th, in exchange for distribution and a 30% share of incremental ad revenues that Lycos generates. Additional national alliances will be proposed with similar terms. The company will offer a regional syndication program by seeking multiple content alliances with existing media in each of the 205 DMA regional markets. This strategy provides distribution and continual promotion. For an initial set-up fee of $2500 or a reasonable promotional value, each affiliate will receive a co-branded site hosted by SALEseeker, with the ads being sold and managed by each affiliate. SALEseeker agrees to provide the content in exchange for distribution plus valuable promotion each month and the media affiliate retains control and 70-100% of the ad revenues generated on their site, as negotiated. Confidential Page 14 The current # of media web sites are: • Radio 2042 • • • • Newspapers Television Magazines City Guides 2237 1311 3809 301 9700 Total In the future, SALEseeker will expand distribution to other media such as a personalized headline news approach for interactive television and other emerging digital services. Marketing SALEseeker.com will build brand recognition as a shopping resource for consumers and will be marketed as "Your Source for Sales and Specials". The following advertising and marketing budget has been planned: Advertising & Marketing PR & Marketing Consulting Intemet Retail Consumer 1999 21,400 814,900 48,675 40,000 $924,975 2000 160,000 2,500,000 160,000 2,500,000 $5,320,000 2001 200,000 2,860,000 200,000 2,860,000 $6,120,000 Makela Public Relations has been retained to create a press kit and to implement press releases scheduled to begin in late June. These will include trade and consumer releases in order to build merchant participation in addition to consumer awareness. The marketing plan is to market to primarily female shoppers and build e-mail registration.. Recent e-mail marketing to coupon shoppers produced excellent results, achieving 4% clickthrough with 70% of those registering. E-mall marketing options include XOOM with 5+ million members, MyPoints with 2 million shoppers and a non-email Direct Coupons affiliate network of 1500 sites. The plan anticipates incurring marketing expenses of $.75 for each shopper e-mail registration. The retail plan is to place print ads and articles in select trade magazines and to target advertising management with direct mall and e-mail to increase participation of online stores and brick & mortar stores. The consumer plan is to hold until merchant participation is secured across all categories; therefore making certain that content is robust before consumer marketing begins. Marketing and agency consultants will be engaged to strategize, create, and implement all marketing efforts. Confidential Page 15 6. Management Team President/CEO-Wayne Bullock Wayne Bullock has an extensive background as an entrepreneur in the cable television and in-store media fields in developing and implementing electronic solutions for advertising and promotion needs. • He is the former president of ShelfSpot, which in 1993 pioneered audio advertising at the shelf, positioning it as a new in-store medium for delivering product information to shoppers at the point-of-purchase. • He is the former president and chief executive officer of StarNet, the satellite-delivered cable promotion service owned by Lenfest Communications, Inc. In 1988, the StarNet team developed a solution for providing the cable television industry with tune-in promotion that was automatically inserted and tagged with system-specific identification. StarNet reached positive cash flow in 3 years by selling tune-in promotion to cable networks, including HBO, Disney, USA and ESPN, reaching a network of 20 million cable television households. • He is the former president and chief executive officer of Cable AdNet, a cable advertising interconnect company, owned by Lenfest Communications, lnc. In 1982, Mr. Bullock co-founded and developed one of the first cable advertising interconnects based on systemspecific insertion of local commercials on ESPN, CNN, USA, and MTF. Annual billings exceeded $50 million in 1990. Mr. Bullock sold his interests in both Cable AdNet and StarNet to Lenfest Communications, Inc., which eventually sold Cable AdNet to TCIAdvertising. Vice-President--Wayne (Jay) Bullock, II Jay has been with Bullock Communications for the past 7 years. Throughout that time his responsibilities included operations, sales and web development. Over the past year his role has also included layout and design of the current web site and strategic business development. In the next phase of growth, Jay will be focusing on affiliate development and expanding portal and various site alliances. Vice-President--Todd DeSimone Todd currently is a Senior Programmer Analyst for Decision One - formerly Bell Atlantic Business Systems- responsible for web application development and maintenance utilizing Cold Fusion, Sybase SQL, and Java Scripting. Todd held various roles over his 12 years with Bell Atlantic. Todd currently is a part-time consultant for SALEseeker and has accepted the position of Vice-President of Operations starting in September 1999. Confidential Page16 Systems Manager--Raymond Horsch Ray was recently the Project Manager for MAXIM Group, Plymouth Meeting, PA, where he managed a large intemet programming project involving MS-II, MS-SQL and Cold Fusion. Prior to that Ray owned a consulting group, Intemet Marketing Corporation, Chalfont PA, managing a team of four programmers and a graphic designer, primarily developing a data publishing application utilizing HTML, SQL Server, Cold Fusion and Server-side Java. Ray is currently a full-time consultant that conducted SALEseeker's operational conversion to multiple SQL servers in addition to continuing development. Ray will join our team on a dedicated basis beginning September 1999. As of June, the SALEseeker team consists of a total of 10 personnel operating in various capacities. A concerted effort to expand management leadership is underway. Ownership SALEseeker.com is currently an operating division of Bullock Communications Group, Inc., with offices in West Chester, PA, a western suburb of Philadelphia. Bullock Communications Group, Inc. was incorporated in 1997 in Pennsylvania as a sub-chapter S corporation and is privately held by Wayne Bullock. 7. Capital Required / Exit Plan The company needs capital to continue building content, distribution, site traffic and shopper e-mail registration. The company is seeking first round funding in the amount of $ 8 million for expansion and operational expenses, including general and administrative, selling, advertising and marketing. Within 2-3 years, the company will either file for a public offering or be a strong takeover candidate. Confidential Page 17 8. Financials SALEseeker.com Profit & Loss Projections Three Year Summary 1999 26 2,126 1,611 6 63,776 48,315 432,657 339,892 25 3,100 500,000 6 2000 30 6,672 5,054 7 200,157 151,634 1,601,099 1,261,439 385 7,900 2,000,000 6 2001 30 20,939 15,863 7 628,178 475,893 4,797,249 3,731,250 865 13,900 4,000,000 6 Bullock Communications Group, Inc.- June 15, 1999 Monthly ending Dec -31 Product Categories User Sessions-Daily-SALEseeker User Sessions-Daily-Content Page Views per User Session User Sessions- SALEseeker Site User Sessions-Content Ad Share Page Views-SALEseeker Site Page Views-Content Ad Share Content Affiliates Merchants-Registered Email Shoppers-Registered Avg # of Categories per email Revenues Ad Revenue-Email Ad Revenue-SALEseeker.com site Ad Revenue Sharing-Content Sites Content Start Up Fees 29,700 16,000 2,898 62,500 2,308,500 310,808 14,203 900,000 $3,533,511 -$39,290 $3,494,221 $8,599,021 -$5,104,801 -$6,847,718 -6,847,718 25 11,420,400 1,100,030 39,391 1,200,000 $13,759,820 -$187,806 $13,572,014 $13,256,274 $315,740 -$6,531,978 -7,933,293 40 Gross Revenues Credit Card Fees Net Revenues Expenses EBITDA Cumulative Cash-Year End Highest Cash Requirement # of Employees $111,098 -$686 $110,412 $2,135,393 -$2,132,495 -$1,742,917 -1,742,917 25 Confidential Page 18 Expenses Advertising & Marketing PR & Marketing Consulting Interact Retail Consumer General & Administrative Staff/Benefits Auto Lease Travel & Entertainment Conventions/Meetings Dues & Subscriptions Utilities Insurance Legal & Accounting Rent Repairs & Maint Office Expense Postage Telephone Supplies Letter/Stationery Hosting Software Development/Support Computer Hardware Office Equipment Debt Repayment TotalExpenses 1999 21,400 814,900 48,675 40,000 $924,975 521,768 5,400 6,000 4,750 4,200 5,600 10,000 15,000 56,000 1,700 1,700 3,000 8,600 3,200 3,000 20,250 207,250 200,000 100,000 33,000 $2,135,393 2000 160,000 2,500,000 160,000 2,500,000 $5,320,000 2,251,821 5,400 36,000 18,000 6,000 9,000 18,000 24,000 96,000 3,600 7,200 12,000 24,000 6,000 6,000 48,000 300,000 300,000 24,000 84,000 $8,599,021 2001 200,000 2,860,000 200,000 2,860,000 $6,120,000 5,873,874 5,400 60,000 30,000 12,000 12,000 21,000 30,000 96,000 6,000 14,400 21,600 30,000 12,000 12,000 60,000 360,000 360,000 36,000 84,000 $13,256,274 Confidential Page 19 P&L Assumptions Product Categories User Sessions-Daily-SALEseeker User Sessions-Daily-Content Page Views per User Session User Sessions- SALEseeker Site User Sessions-Content Sites Page Views-SALEseeker Site Page Views-Content Ad Share Sites Merchants-Registered Email Shoppers Registered Ad Revenue-Email Ad Revenue-SALEseeker.com site Ad Revenue Sharing-Content Sites Merchandise categories expanding from 26 in May 99 to a projected 30 in Yr 2000 and Yr 2001 Average daily user sessions on SALEseeker.com siteassumes 1000 base with 10% monthly growth Average daily user sessions on Content sites (Lycos, etc) assumes 1000 base with 10% monthly growth Assumes 6 page views per user in 99, increasing to an average of 7 page views in 2000 & 2001 Estimated # of monthly users sessions on SALEseeker site in December of each year Estimated # of monthly users sessions on Content sites in December of each year Estimated # of monthly page views or impressions on SALEseeker site in December of each year Estimated # of monthly page views or impressions on Content Ad Share sites in December of each year Assumed merchant monthly growth of 300 in 99, 400 in 2000, 500 in 2001 Assumed email registration growth of 100,000 monthly in 99, 125,000 monthly in 2000, 175,000 monthly in 2001 Projected that each shopper selects an average of 6 categories Assumes 3 ads per page view at $20 cpm, selling up to 25% of inventory in 99, up to 50% in 2000 and 2001 Assumes 60% ofad inventory sold at $20 cpm with 30% net share of ad revenue after deducting 20% for sales expense; paid 30 days after the end of each quarter. 50% of ad payments will be paid via credit cards revenues are subject to 3% credit card fees Staffof 25 in 99 and 2000, expanding to 40 in 2001 Commissions of 5% paid on all ad sales to in-house acct mgrs Assumes 25% sales commissions paid on all sales Assumes 4000 sq ft at $24 per square- 3 year lease beginning Sept 99 NetAccess ISP, co-located servers with 24/7 access / increasing bandwidth requirements Projected outsourcing costs Assumes $300,000 in officer loan repayment over 5 years 50 in 2000, 200 in 2001, earnings average $1000/mth Credit Card Fees Staff/Benefits Area Managers Rent Hosting Software Development/Support Debt Repayment Area Managers Confidential Page 20