Sample Business Plan Visogent Technologies

___ ;' _s.__ . " _1_ • 643 East Monterey Road Palatine, Illinois 60067 847-785-1908 1 _0'__ Business Overview A Vision for Intelligent Third Generation Communications Visogent Technologies, LLC. Confidential i" Business Overview A convincing business plan to create a profitable and successful software development company deploying new and innovative software products for Third Generation wireless and wireline communication core networks. This document provides a high level summary of the business plans that constitute the creation of Visogent Technologies, LLC. This overview should not be considered as the complete set of plans for Visogent Technologies, LLC. but rather as a summary - additional white papers and presentations contain additional information and plans. Communication core networks are evolving towards packet switched architectures that efficiently support both data and voice communications with the same core technologies. This is the industry vision for Third Generation networks; these so called 3G networks are on the near horizon. The founders of Visogent Technologies have a further vision to enable and deliver features and services via these networks toall the supported subscriber devices. These subscriber devices may be mobile, nomadic, or fixed (wireline) and may contain diverse amounts of computing and feature intelligence. Most importantly, these devices will be supported over varying types of access networks, e.g., UMTS wireless, CDMA wireless, TDMA wireless, digital subscriber line (DSL) wireline, hybrid fiber-coax (HFC) wireline, etc. The Visogent Technologies' vision will be realized by constructing three software products. The main foundation product is the Home Subscriber Server of the 3Cmetwork which manages system subscribers and features. All three of the products are: 1. Home Subscriber Server or HSS is a required functional component of 3rd Generation telecommunication networks and is the primary focus of development and product activities. Features and Servieesthat can be delivered "on top" of the HSS or independently as stand alone Feature Servers that add value to service provider offerings. These will be supported via industry APls (e.g., Parlay, JAIN). CAMEL to/from Parlay API Converterto enable existing, legacy CAMEL features on new IP based Call Agents and future Parlay features on legacy Mobile Switching Centers 0VISCs). 2. 3. There is a desperate need for the products planned by Visogent. 3G network standards mandate a subscriber database and network service providers are continually adding to their product offerings in order to differentiate their services to their associated customers. The market for 3G core networks is worldwide and Visogent is well suited to compete in this market. Visogent Technologies is a newly formed company that has creative and motivated key employees with significant experience in fixed and wireless data and telephony 7 December, 2000 1 business overview001206V 11.doc vl.0 pg. 2 Visogent Technologies, LLC. Confidential communications. The mix of talents amongst the primary employees makes for a strong and deeply knowledgeable base for the creation of the company. The details of the following sections will demonstrate that: • the timing is right, • the market is huge, • the people are experienced, talented, and motivated, plus • Visogent Technologies is strongly positioned to be a successful player in the 3G space? The following section contains profiles of the initial, key employees of Visogent Technologies. The team has the diverse mix of talents combining experience and leadership in telecommunications and data networking. This team has the capabilities and desire to successfully create this company. Wesley Stuart Jones, co-founder, CEO and President,has over 10 years experience in the telecommunications, cellular and wireless data fields. Mr. Jones has directed numerous engineering teams developing products. He has also led teams performing strategic analysis activities and led voice over IP sub-teams. Mr. Jones is a recognized voice over IP expert and participated in Motorola's corporate-wide packet networking strategy and technology teams. Most recently he was a lead architect and designer for Motorola's all IP voice and data network called Aspira TM. Mr. Jones influenced the Aspira TM network direction and approach by actively participating in both tactically oriented technical teams and the strategic analysis team that recommended corporate wide decisions based on business and marketing opportunities. He has extensive experience in the data communications and multimedia fields. He has participated in research and development of wireless Ethernet products. Mr. Jones led engineering teams developing products for the cable industry and other broadband technologies. Mr. Jones holds four (4) United States patents and hasfive (5) other pending applications. Mr. Jones has undergraduate degrees in both Computer and Electrical Engineering and a Master's degree in Electrical Engineering all from Purdue University. William Michael Bandy, co-founder and Vice President of Engineering.Mr. Bandy has over ten years experience in the wireless telecommunications softvcare industry. Mr. Bandy is accepted by his peers as an expert network and software architect. He has expertise in a wide range of small and large software development activities including system architecture and design, software architecture and design, performance analysis and test, as well as system test to field deployment. Additionally, Mr. Bandy has established expertise and leadership in use of Object-Oriented sottware processes, design and analysis methodologies. Mr. Bandy has established expertise and leadership of several large cellular products from GSM Mobile Switching Centers (MSC), IS41 Visitor Location Register (VLR), IS41 Home Location Register (HLR), Interactive Voice Response (IVR) systems, and most recently Motorola's 3G all IP voice and data core network, Aspira TM. Mr. Bandy has aggressively pursued innovation during product architecture and design activities and hasfive (5) pending software patent applications for 3G software systems. Mr. Bandy has an undergraduate degree in Computer and Electrical Engineering from the University of Illinois at Urbana-Champaign. Denise Stoermer, Vice President of Processes and Development,has over 13 years experience in the telecommunications industry, the most recent six years in the wireless arena. Ms. Stoermer is widely accepted as an expert in system availability, reliability and efficient development processes. She was involved in numerous working groups within Motorola to define an availability and reliability strategy for Motorola. Ms. Stoermer has extensive team leadership and management experience through directing engineering projects and 7 December,2000 Visogent Technologies, business overview001206V11 .doe v1.0 pg. 3 LLC. Confidential x development teams over the last 8 years. Ms. Stoermer has experience leading rapid software development projects; prior to Motorola, she worked for a small development organization at Fujitsu where the group strived to release quality software every six months. Ms. Stoermer has established expertise in telephony features by working in the PBX telecommunications industry for seven years focusing on advanced PBX features. Ms. Stoermer has an undergraduate degree in Electrical Engineering from the University of Illinois, Chicago campus. Tom Joyner, Lead Software Architect,has been working in the telecommunications industry for over 21 years, primarily on the architecture, design, and development of cellular infrastructure systems. Mr. Joyner is recognized as a cellular expert. He has extensive experience in nearly every facet of wireless call processing. Mr. Joyner has been involved in cellular from the industry's infancy. He participated in the development of one of the first commercial Analog Mobile Phone System (AMPS) cellular systems and was a lead architect and designer of the industry's first inter-system roaming protocol, Distributed Mobile Exchange (DMX). Mr. Joyner participates in and has expertise in standards in the cellular industry and emerging Internet telephony protocols. Mr. Joyner is a lead cellular network architect and most recently he was a key architect for Motorola's all IP-based telephony network. Mr. Joyner holds one (1) United States patent and hasthree (3) other pending applications. Mr. Joyner has an undergraduate degree in Electrical Engineering from the University of Michigan. Visogent Technologies' products fulfill requirements of 3G core networks and provider networks. The following figure,Figure 1, shows a 3G core network with Visogent products in the core and located in the associated provider networks. OO0 Call Control often times referred to as Call Agents or Softswitches I = Visogent Offerings Product Technologies, Inc. UE UE UE UE Figure 1 - Visogent Products in the 3G Core and Provider Networks 7 December, business 2000 Visogent Technologies, LLC. Confidential pg. 4 overviewO01207V 12.doc vl.0 ,i There are three main points when looking at 3G networks relative to Visogent's product offerings. First, core networks will support diverse access networks. Companies such as AT&T have product offerings in a variety of different network spaces, such as voice over cable and CDMA cellular. Legacy networks supplied different service logic for each access network - effectively requiring multiple core networks. Visogent Technologies' solutions will be "access agnostic" so that they can be deployed to support varying types of access networks and their distinct subscriber types. Secondly, there is a movement to share core networks amongst service providers. Currently, this is more prominent in Europe than in the United States, but this trend will be worldwide in the near future t. Sharing of core networks is an affective way to reduce operator or provider expense. In the future, there may actually be a slow down in the deployment of core network technology due to this reuse; however, each operator must be able to bill for their services and maintain subscriber records, etc. Therefore, there will not be a slow down in the deployments of Home Subscriber Servers. Likewise, the service providers will continue to try and differentiate their service offerings. These providers will do this by deploying advanced features in their provider networks. This demonstrates that regardless of reuse in core technologies, there will still be ample opportunity to deliver advanced features inside of the service provider's network, as shown in the figure. Visogent Technologies' product offerings will be designed in a manner so that they will operate inside the core network, the providernetwork, or in a combination of both simultaneously. Finally, it is important to notice that the subscriber devices have access directly to the Visogent product offerings. This is shown in the example of the UMTS subscriber device on the lett of the figure. As intelligence moves towards the edge of the network, i.e., into the subscriber device, features will interact directly with the subscriber device. Visogent features and services will be designed from inception with this in mind. Features that support a direct interface from the subscriber device can bypass core call processing. This supplies another advantage to the network provider by moving processing out of the core call processing elements and effectively increasing the capacity of the core network. Further, the Visogent Home Subscriber Server will support direct communication for not only feature processing but also basic provisioning from the subscriber device. This will make Visogent services easier to deploy by the provider and significantly easier for the end user to enjoy. The market for Visogent's products is an extremely large worldwide market. market is the 3G core network space. 3G core networks are Internet Protocol networks. These networks support fixed access (DSL and cable); 2.5G, low based mobiles; mobile web browsers; and future 3G mobile device_. Due to 3G core market space this will be Visogent's primary target. The bulk of this (IP) packet data, rate packet the size of the The second market opportunity forVisogent products is in the Second Generation (2G) expansion space. Today, there is a large market for smaller deployment cellular systems in markets such as cities in western Europe and South America. Core switching and call control prices have drastically declined in recent years; however, Home Location Register (HLR) or subscriber database costs in 2G have not declined nearly as quickly. This has caused a 3G network standards require that core networks will support multiple provider networks and the sharing of the core functions. "Pure" 3G subscriber devices are typically only those mobile devices that can support at least 2Mbps of wireless access, although 3G core networks support a variety of data connection rates. pg. 5 Visogent business_overviewO01206V 11.doc vl,0 z 7 December, 2000 Technologies, LLC. Confidential disproportionate cost between call control and subscriber database functionality. Since an HSS can be constructed with optional 2G HLR functionality, a lower cost HSS can be positioned to solve this problem for 2G expansion networks. Visogent plans to develop a low cost, scalable HSS solution with this 2G functionality in order to tap this market. The market opportunity, i.e., revenue potential, for Visogent Technologies' products is directly proportional to the number of subscriber devices deployed in the supported networks. To size this market the number of associated subscriber devices must to be identified. The Market Growth3 figure shows wireless subscriber expansion over the next ten years. Please note that Visogent technologies' is only looking at mobile subscribers since this is the bulk of the target market. This makes all the future estimates more conservative. _ _ .u,,=, of Subscribers For Each Market Segment over Next 10 Years ..w..._ 5Gsubs=item ............... 2_ _ _ .... ,......... , Figure 1 - Market Growthfor WirelessCommunications Subscribers The following describes the rationale for the sizing of the revenue potential of the Visogent Technologies' products. Industry data supports that system integrators will pay between about $20 and $40 per subscriber for an entire core network. This total cost is divided amongst core product developers. Visogent is assuming a very conservative estimate of $25 in 2001, declining at 10% per year, for the core network. This core network price has been divided between core products based on the following: • The HSS is 5% of the core cost (industry range is 4 - 10%_1, • Visogent Technologies HSS market for 3G core networks is estimated to grow from 1 to 6% over five years. • 2G market is sized ONLY by new or expansion subscribers, i.e., the yearto-year growth of 2G subscribers. • The 2G market penetration is estimated to be slightly larger since it is only based on expansion markets, this is estimated as 2, 5, 6, and 7% over the four years. The above assumptions produce the revenue model shown inTable 1. 3 4 2G subscriberdata fromUMTS Forumand Ericsson,2.5G and 3G subscriberdata growthfrom Telecommunications Magazine,and Web HandsetgrowthfromNokia. Core networkand functionalcomponentpricingrelative to the core networkis basedon well knownindustrydata. Pg. 6 Visogent Technologies, LLC. Confidential .doc vl.0 7 December, 2000 business_overviewOO1206V11 2+; 3G;i8_ Web Subscribers:( HS_ 'Hr|ce Depreciation i nM I/U ::: 'i:i _! _ 3ZU IOulb _1.13 : i_IU25 _i]ii_i_: _0_91 _082 i_iii:: _1.25 ....................................... H55_PrceDeprecaton 'rice Per Sub: : :; : ; ........ ::: : ::. : :lt_o $!:13 i iO% r: :iil :!:i::i0% $091 : :i: , :IU_ $0_82 }ir305i000 ;}2i583i900 ] i;ii i}3i837i092 Table 1 - HSS Market and Revenue for 3G Packet Core Networks and 2G Expansion The feature market is a little bit more difficult to estimate. Typically, in legacy markets telephony features have garnered around 20% of the network value. However, the bulk of the value is based on the "newest" or latest features that are being provided. Visogent is estimating that half of this value will remain with existing, standard telephony features and that half will be based on new emerging features, again a very conservative estimate. The pricing model is based on the following: • The Standard or basic telephony features are 10% of core cos[. • The new, emerging features are 10% of core cost. • Visogent Technologies expects to deliver 10, 15, 20, 25%of these emerging features in 2002 - 2005, respectivel3_. The above assumptions produce the revenue model shown inTable 2. 2_! 3G_ 8t Web Subscr!_ESi(in IPrice Per: Sub {all,features M ii_i_'.ii!'. ,_ i _2_50 i_ _ _! _;2!S0 _0!38 30% _2_50 '. _050' ;_iii_ i: !_i:]-49U ;:_250 _0_63 MarketiShar_ Total_Revenue _ ' i! ! : $800;000 I : : '/:i!$25;625;000 $55,875;000 NeW: Su_ibi_ (in H)i i_ : I/ Vi_ent Eeatur_es (% of Extl_a:. i i Price Per Sub (V _ent Eeatures T6tal 2G:_ehue ili i_! : _290_000 $0;25: :_11t96:_250 !i '_2i105_:_00 ii_31377_413 Table 2 - Feature Market and Revenue for 3G Packet Core Networks and 2G Expansion The Parlay to/from CAMEL Converter is a valuable and strategic product offering for Visogent Technologies. However, it is very difficult to estimateit's value to the core network integrator. Therefore, Visogent is assuming a very small cost ratio for this product. • The Parlay to/from CAMEL Converter is estimated to be 0.75% of the total core cost. The above cost assumption produces the revenue model shown inTable 3. Visogent Technologies will not deliver standard or basic telephony features, this is listed for reference. Visogent will have revenue potential of 1, 1.5, 2, and 2.5% of the core cost for years 2001 - 2004. 7 December, 2000 Visogent business ovel%,iew001206V11.doc v1.0 pg. 7 Technologies, LLC. Confidential ' . : _ f -. . . 2+; 3G,::&:Web Subscribers (in M" _ :: : 1111 :ii;:i;_iyi.iii ,i;i;:;_ 32U ;_l ;;j::"_:_':::':" : 1UU/o :_:-: < " :._-640 3.0_o _::]i: ;_::]li: 0% _ ;,:_-: $4;320,000:i :_:_i:!i]ii;il;i_!_;ii::lU25 ::;i:_i.:;;_:,:: : : , _i_iiii;iiiii_i!_::_:' , 10'_6i _i:i_:: ; ::: ::b.8% $10,378,12S " :. IIZ 1490 : .1U% PL:E Price Depreclatlon_!::,:H &rl_et!S hi,ire Tot al Reven u e_t_ii_i_ 2G Subscribers (in M} 2. UU/o $1;080fl)00 ". :;.638 : ' /.0% $17,600,625 849 II lU% $0.17 _.D_YO ;i::_::.i:;::,'::bSU ! _" ::: 102: _::" b4 :;; 19% , $0.,17: , 4.0_o NewSubscribers (in.N)EEPnce:Depl_eclatlon Price Per Sub;: .... Market Sh_re : Total:.2G_Revenue :$0;19 : - :_::._::;:ii;., ::: :58 : ::::: ].9% : $0:1Z ;.'.,:; 2.O_Yo ,_:_f::_::..: i_:;ii.... ::_19Sr7S0 ::i::::._: : : .:,i_:,. /0" 1U% . ::.$0;17_ : : :::_:_:_ . _ 6_bu/o :L:.:L:.,_: • "::::ii_i:i:::::_430t650 : _:ii_;769_787 ]_:_:'_.;:_Ii042f:L73. Table 3 - Parlay to/from Expansion Combining CAMEL Converter Revenue for 3G Packet Core Networks and 2G all these revenue projections yields the numbers shown inTable 4. Table 4 - Total Visogent Technologies Revenue Potential (all Products) The market for 3G core network products is very large. It is clear that the revenue opportunity for Visogent Technologies products is great. There are two main categories for Visogent product sales. The first, most important group is based on partnerships and OEM deals. Visogent expects to leverage Call Agent and Soitswitch manufactures as an avenue to sell the HSS and feature products. Typically, Call Agents manufactures do not have expertise in providing basic mobile services or for making their existing features mobile aware. Additionally, these vendors need an HSS solution to move their products from the wireline only market to wireless markets. The HSS, features, and Parlay to/from CAMEL Converter enable Call Agent vendors to open new market opportunities for their products. Possible partners and customers in this space include IPCelI, IPVerse, Marconi, Sonus, Telcordia, Vsys, XyBridge, and other Call Agent vendors. Other companies that will be interested in OEM or partnership deals with Visogent are full network integrators such as Alcatel, Ericsson, and Motorola. These companies have public plans of record to build, buy and integrate the network components in order to deliver entire 3G network solutions. None of these companies plan on building all of the 3G functional components and all of these integratorsmust have an HSS solution in order to fulfill 3G standard requirements. In addition, all companies in this space want additional features and services to increase their product differentiation. Thus, they'll want Visogent features. Since Visogent will not have a worldwide sales force in the immediate future, partnerships and OEM relationships will be utilized to move Visogent products into a vast array of markets. The other category of customers is the service provider or operator. As Visogent becomes a more mature company, sales directly to these customers will be desirable and possible. Companies such as AT&T, British Telecom, etc, must have subscriber entries for all their subscribers. As their networks grow they'll require additional HSS capacity. Also, these operators are in a constant battle to provide best-in-class services, they will always want to add more features. Visogent Technologies will sellvalue adding features into this market. 7 December, 2000 Visogent business ovelview001206V 11.doc v1.0 pg. 8 Technologies, LLC. Confidential Vis0gent will be well positioned to serve the needs of Call Agent manufactures, network integrators, and service providers. Trials for 3G will begin around the end of year 2001. These trials will play a major role in determining the companies that will sell into the 3G markets. Visogent is prepared to deliver trial systems in this time frame. Visogent will have full production grade product offerings available mid-year 2002. Visogent Product Offerings This section describes products being offered by Visogent including their differentiating factors. Visogent's product portfolio will be designed to differentiate customers from the remainder of the market by: • Using low cost, commercially available hardware and software platforms to reduce cost, as opposed to high-cost, proprietary platforms. • Designing all software for high scalability, allowing near linear incremental cost per subscriber not available from highly complex, proprietary, fault tolerant platforms. • Designing systems for high availability (99.999% available) and reliability. Visogent is building products for networks supporting Third Generation (3G) telecommunication. Visogent is focused on building: • A Home Subscriber Server (HSS) is a required functional component in 3G. • 3G features and services that can be enabled via the HSS or stand-alone feature servers. • A feature Application Programming Interface (API) converter which converts legacy features built using CAMEL (2G API) to and from features built using 3G industry supported APIs such as Parlay and JAIN. Visogent is designing products which are required for managing subscribers capabilities and features in a wireless, mobile environment as well as delivering new and innovative features which make use of the multimedia capabilities of 3G networks. Visogent also offers a feature migration path by allowing features and services present in 2G networks to function in 3G networks. The Visogent Technologies HSS The HSS is a key component of the 3G network, managing subscribers and features in the wireless domain (UMTS, CDMA) as well as those utilizing the fixed domain (e.g., cable, DSL, etc.). The HSS maintains the identity for all subscribers in the network supported by a network operator. Additionally, the HSS maintains a feature profile for each subscriber containing feature configuration information, activation status,location information and feature server location. Visogent's HSS contains a Home Server Environment, a feature enabling environment which uses industry standard APIs such as Parlay, JAIN, and others recommended by OSA (Open Services Architecture) allowing features to be delivered to the network and end-user subscriber via a standard interface. Additionally, this environment allows subscribers to dynamically access features on the network as they become available, without consequence to other network components. The HSS provides subscriber mobility functions by delivering multimedia sessions and features to roaming subscribers. The ability of the 3G subscriber device to communicate directly with HSS and features allows Visogent's HSS and feature offerings to grow as the capabilities of the 3G end-user subscriber expand. Not only will subscribers be able to configure their profiles directly they will be able to access features directly or indirectly supported by the HSS without interaction with call processing functions of the core network. 7 December,2000 Visogent Technologies, LLC. Confidential business overview001206V11.doc v1.0 pg. 9 In addition, to support these new 3G roles, the HSS may optionally support legacy (2G) services and features of GSM and CDMA networks. Combining 2G and 3G services allows the HSS to support multiplenetwork types as well as integrate features across circuit-switched andlP packet-switched domains. Additionally, a Visogent HSS utilized in a2G network acting as a HLR can provide a seamless transition to HSS functionality in a 3G network. 3G networks offer the capability to share network components among several operators to reduce per-operator cost. This means that access networks (wireless as well as wireline) may be shared as well as core network components used for call processing and bearer path management. This emphasizes the need for operators to differentiate themselves in order to win subscriber loyalty. 'To do this, operators must first maintain a distinct HSS to manage their paying customers as well as provide unique and innovative services that are not offered by other operators. Operators will maintain distinct HSS and feature functions from other operators to provide differentiation, creating great demand for Visogent products. The Visogent Technologies Features Visogent plans on building innovative multimedia features that do not currently exist. Visogent's plan is to create new features that currently do not have competition as opposed to developing already existing features (i.e., Class features such as call forwarding). This "topdown" approach to feature development will allow Visogent's feature set to complement existing features already deployed in the network by Call Agents. Visogent's vision of features focuses on intelligent subscriber devices communicating directly with the HSS and HSS supported feature servers to access new features and services. This allows rapid deployment of new services without affecting existing call processing, bearer path management functions of the 3G core network. Applications on the intelligent subscriber device talk directly to the feature applications in the network (either co-located on the HSS, or distinct from the HSS). For those subscriber devices that do not possess the processing power to communicate directly with feature applications, the HSS can proxy the device to access new 3G services. Visogent features will use standard interfaces where applicable in addition to industry standard APIs such as Parlay and JAIN. Visogent's first release of features includes the following: r Subscriber Migration 7- a utility which allows subscribers from a 2G HLR to be migrated to Visogent's 3G HSS solution. 1. Selective Billing - a feature which allows different numbers to be billed to different parties at different rates. For example, parents could configure their child's phone to be able to call home for free, where all other numbers would be placed using the .child's calling card for payment. 2. Phone Tracking - a feature working in conjunction with Visogent's HSS that allows a subscriber device to be tracked for location changes, featureactivations, and power-up/down registrations. 3. Multimedia Automatic Call Back - Allows the caller to record a multimedia message (video, voice, data) when a called party is busy. The called party will receive the multimedia message when available, allowing that party to immediately call back or respond with a message. 4. Sponsored Calls - When users place a call, they will receive a multimedia commercial. If the user chooses to listen to the commercial, some or all of the call (or a future call) would be sponsored by the advertiser. SubscriberMigration is not a end-userfeaturebut rather a serviceproviderfeature. It is extremely importantand mustbe developed,therefore,it is listedhere. 7 December,2000 pg. 10 Visogent Technologies, business_overviewO01206V11.doc vl.0 7 LLC. Confidential The Visogent Technologies CAMEL to/from Parlay Converter CAMEL is a 2G GSM feature interface (Customized Applications for Mobile Network Enhanced Logic). Parlay is an emerging industry standard feature API that is being adopted by 3G networks for feature deployment. Visogent's API converter will allow 2G CAMEL applications to be converted to Parlay applications suitable for execution inemerging 3G networks. This allows maximum re-use of existing features as the new 3G networks are rolled out. Additionally, Visogent's converter will allow new 3G features (where applicable) to be converted into 2G CAMEL applications for deployment in today's 2G networks, increasing the market opportunity for Visogent created features. Technology and Product Conclusions Visogent's vision for 3G networks centers around highly available, reliable, scalable, low cost solutions which enable rapid development and deployment of new features in 3G networks, as well as enabling features from legacy 2G networks. Visogent believes the operators will differentiate themselves from other operators in 3G networks using Visogent's products. Visogent's products allow rapid feature deployment and growth with minimum consequence to other 3G core network functions. Visogent's HSS and features are what differentiate network operators from one another as the other functions of the core network are reused among operators. Although there is some possible competition in the subscriber database arena, Visogent Technologies is well positioned to deliver in the HSS and feature markets. The HLR incumbents such as Alcatel, Compaq and Lucent are obvious possibilities. The primary issues for the HLR incumbents will be typical slow movement to a new technology and cost competition in the 3G market. The traditional HLRs have been built on high-end fault tolerant proprietary platforms that are very costly. To compete in the HSS market, the incumbents will not be able to simply update theHLR's software to support the HSS functionality, they will have to re-architect the software to support a new cost sensitive platform as well. Specifically in the case of Compaq, who is the supplier of the hardware platform, the operating system and the HLR, the decision to move to a new platform may be difficult. Visogent's HSS will use commercially available platforms, operating systems, middleware and databases to enable the HSS to be acost effective solution. Billing server manufacturers such as Portal,Narus, Mind and XACCT are other possible competitors. It is possible that there will be some minimal convergence between the billing servers and the HSS. The billing servers already handle some provisioning of subscriber information and also trigger some basic call handling features. Some have suggested that it might make sense to combine the subscriber provisioning information between the HSS and the billing system, but this is not a good idea for a number of reasons. The idea of combining the two systems falls apart when mobility is considered. Mobility is a very complex part of the HSS and the billing server manufacturers have no expertise in this area. In addition, many large operators make their own billing systems for obvious reasons and would never consider making an HSS. And finally, traditionally operators would like the flexibility to choose a billing system independent from the HSS. The closest competitors for Visogent's HSS, are subscriber and feature database providers such as Emperative and Redback. Like the HSS, these competitor's products provide 8 The Home Location Register or HLR is the 2G, legacy subscriber database. In some ways the HLR is the predecessor to the HSS; however, the interfaces and many of the core functions have changed between the HLR and HSS with the advent of 3G. pg. 11 Visogent business overview001206V 11.doc v1.0 7 December, 2000 Technologies, LLC. Confidential provisioning environments and are feature enablers. Two primary issues with these competitors are their inability to handle mobility and neither company provides theHSS functionality for the network. The providers are primarily focused on wireline or fixed solutions. Their products must be sold as a complement to an HLR or HSS in the network. Emperative, for example, sells their subscriber database on top of a third party's HLR. Another major issue is that the products do not address availability, reliability and scalability for their systems. Visogent's HSS will include mobility as well as provide a provisioning environment and a feature enabler. The HSS will be reliable, scalable and highly available (99.999% available) which differentiates Visogent Technologies' solution. Visogent Technologies, LLC. is currently raising capital in order to deliver the vision that has been briefly described in the previous sections. The first funding hurdle for Visogent Technologies is a near term "seed" round. Visogent Technologies is looking to raise $750,000 in seed capital in order to commence operations. This funding will be used to: 1. begin development activities, primarily focused on requirements generation and defining the scope of the first release of the product, plus creating the development environment, 2. complete the formal, more detailed, business plan, 3. file key intellectual property, 4. begin prototype development, 5. continue monitoring standards activities (and submit contributions when appropriate), and 6. initiate the hiring process in order to bring in additional key engineers and marketing resources. An investor of $750,000 in Visogent Technologies will receive a 7.25 percent equity stake in the company and will obtain board representation. Any seed investors will have the first opportunity to invest in the subsequent round 1. Visogent Technologies will enter a round 1 stage around June of 2001. This phase will be an expanded funding stage with the goal of raising $12 million in capital investment. The previous section described Visogent capital raising plans to secure $750,000 in seed and $12 million in round 1, the following table,Table 5, shows the cash flow statement outlining the use of these funds. 7 December,2000 Visogent Technologies, business overview001206V 11.doc vl.0 pg. 12 LLC. Confidential 7 December, 2000 pg. 13 Visogent business_overviewO01128.do¢ v1.0 Technologies, LLC. Confidential Visogent Technologies is an exciting startup company in the telecommunications area. The company is building products for the third generation communication sector that is combining voice, data, including the Internet, and mobile communications. This will prove to be a very large market as lnternet users move towards wireless as a means for connecting; therefore, the 3G market will be extremely large. The founders and key employees of Visogent Technologies have extensive experience in telecommunications and possess the leadership skills, knowledge, drive and dedication to create a successful software company in this space. Finally, the technology and products are solid and will sell. Visogent offers an exciting and high-potential investment opportunity for individuals and venture capital firms interested in the telecommunications arena. Visogent Technologies, LLC. is based on a convincing business plan to create a profitable and successful software development company, deploying new and innovative software products for Third Generation wireless and wireline communication core networks. 7 December,2000 Visogent Technologies, business overview001206Vl 1 .doc vl.0 pg. 14 LLC. Confidential