September 2000

This sample business plan has been made available to users of Business Plan Pro™, business planning software published by Palo Alto Software. Names, locations and numbers may have been changed, and substantial portions of text may have been omitted from the original plan to preserve confidentiality and proprietary information.

You are welcome to use this plan as a starting point to create your own, but you do not have permission to reproduce, publish, distribute or even copy this plan as it exists here.

Requests for reprints, academic use, and other dissemination of this sample plan should be emailed to the marketing department of Palo Alto Software at marketing@paloalto.com. For product information visit our Website: www.paloalto.com or call: 1-800-229-7526.

Copyright Palo Alto Software, Inc., 1995-2002

Confidentiality Agreement

The undersigned reader acknowledges that the information provided by _________________________ in this business plan is confidential; therefore, reader agrees not to disclose it without the express written permission of _________________________.

It is acknowledged by reader that information to be furnished in this business plan is in all respects confidential in nature, other than information which is in the public domain through other means and that any disclosure or use of same by reader, may cause serious harm or damage to _________________________.

Upon request, this document is to be immediately returned to _________________________.

___________________ Signature

___________________Name (typed or printed)

___________________Date

This is a business plan. It does not imply an offering of securities.

1.0 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1 Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.2 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.3 Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

2.0 Company Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.1 Company Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.2 Start-up Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.3 Company Locations and Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

3.0 Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43.1 Service Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53.2 Sales Literature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53.3 Fulfillment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63.4 Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63.5 Future Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

4.0 Market Analysis Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74.1 Market Segmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74.2 Target Market Segment Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

4.2.1 Market Needs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94.2.2 Market Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94.2.3 Market Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

4.3 Service Business Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104.3.1 Business Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104.3.2 Main Competitors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

5.0 Strategy and Implementation Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115.1 Competitive Edge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125.2 Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

5.2.1 Pricing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125.2.2 Promotion Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135.2.3 Marketing Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

5.3 Sales Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145.3.1 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155.3.2 Sales Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

5.4 Strategic Alliances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165.5 Milestones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

6.0 Management Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176.1 Organizational Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176.2 Management Team Gaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176.3 Personnel Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

7.0 Financial Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187.1 Important Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197.2 Key Financial Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197.3 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207.4 Projected Profit and Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217.5 Projected Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227.6 Projected Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247.7 Business Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Table of Contents

1.0 Executive Summary

Ibrio Incorporated is a small start-up firm located in the business district of Palmyra, Pennsylvania. We offer Internet and Web-related services to small businesses in the Central Pennsylvania area. The services we offer include website development and design, hosting, maintenance, marketing, and analysis.

Given our experience and expertise in both commercial Web development and business-to-business sales, we believe we can offer a unique and superior service to small business owners, in comparison to what is currently available.

The demand and growth rate for Web development and marketing services in the small business market is at an all time high and shows no sign of slowing anytime soon. Even more astonishing is the fact that very few Web development companies have taken advantage of the opportunity, as there are no dominating participants in this huge market.

We believe the reason for this virtually untapped market is due to expensive project costs, the highest profit margins in Web development today are in servicing large- and medium-sized corporations. We have developed a system that dramatically reduces steep project costs and henceforth will allow us to offer the same high-end Web development services as larger companies receive at a much lower cost to the client.

This business plan will highlight many aspects of our system and our business. It will detail market growth and demand, and it will outline our projected cash flow and profit margins over the next three years. All numbers regarding our projected company growth are based on previous information gathered by activity in the company over the last few months of operation.

1.1 Objectives

1. Revenues of $200,000 by December 31, 2001. 2. Net Profit of 25% in 2001 and 35% in 2002. 3. 65% Gross margin by December 31, 2001.

1.2 Mission

Our mission is to provide affordable, accessible, and streamlined Internet and Web services to small businesses. We have developed a system for offering many different types of Web services (site development, hosting, marketing, and maintenance) that are exclusively tailored to fit the needs and resources of small companies.

Ibrio, Inc.

Page 1

1.3 Keys to Success

1. Offering high-end Web services to small businesses in a way that they can understand and afford.

2. Build a strong residual income through secondary subscription-based services tailored for small business (website hosting, marketing, maintenance, consulting).

3. Establishing strategic partnerships with area Internet service providers and computer consulting companies to refer small business website projects to us in exchange for high payoffs.

2.0 Company Summary

Ibrio Incorporated is a start-up company that will provide high-end, affordable Internet related services to small businesses that are looking to expand their existing marketing efforts to reach the Web. We have a system established that will allow us to offer website development, hosting, marketing, and maintenance of the same caliber that large companies take advantage of, at a very affordable rate.

2.1 Company Ownership

Ibrio has been incorporated as a Pennsylvania S corporation based in Lebanon county as of August 28, 2000. The corporation is privately owned by David W. Hickethier, chief operations officer and Richard B. Andrews, chief technology officer.

2.2 Start-up Summary

Our start-up plan is a well thought out base to propel us forward with the proper equipment, marketing tools, and personnel to start our venture. An initial cash investment by the owners in the amount of $7,300 to purchase office furniture, computer equipment, and software has been made. Both owners have also invested a combined time of approximately 3,500 working hours toward the start-up of Ibrio Inc.

The cash requirement of $17,000 are funds that we need to provide the capital to run our business for the first few months. This capital will fund two employees payroll and equipment/supplies to get them started. It will cover business expenses for a few months until our cash flow takes over.

The four-year $20,000 loan has been secured from the XYZ bank to supply the needed capital explained above.

Ibrio, Inc.

Page 2

Table: Start-up

Start-up

Requirements

Start-up ExpensesBusiness Cards $60Phone Line Install (Two Lines) $150Computer Monitor $200InfoUSA Database $400Office Equipment $580Dedicated Server Setup Fee $150Membership Fees $600DSL Setup and Install $350Phones $160Total Start-up Expense $2,650

Start-up Assets NeededCash Balance on Starting Date $17,000Other Short-term Assets $7,650Total Short-term Assets $24,650

Long-term Assets $0Total Assets $24,650Total Requirements $27,300

Funding

InvestmentDavid W. Hickethier $3,650Richard B. Andrews $3,650Total Investment $7,300

Short-term LiabilitiesAccounts Payable $0Current Borrowing $0Other Short-term Liabilities $0Subtotal Short-term Liabilities $0

Long-term Liabilities $20,000Total Liabilities $20,000

Loss at Start-up ($2,650)Total Capital $4,650Total Capital and Liabilities $24,650

Ibrio, Inc.

Page 3

$0

$5,000

$10,000

$15,000

$20,000

$25,000

Expenses Assets Investment Loans

Start-up

2.3 Company Locations and Facilities

We have an established commercial office space in Palmyra, PA under a two year lease that will expire in October of 2001 with an option to renew every 60 days thereafter. There is approximately 1,400 sq. ft. capable of housing workstations for up to 12 workers. Palmyra is in Lebanon county, less than a 60 minute drive to anywhere in our four county target market area.

3.0 Services

Ibrio Inc. is a full-service Internet solutions provider for small businesses. We focus mainly on the Web, offering the following as our key 'Bread & Butter' website services:

• Design and development. • Marketing and analysis. • Hosting and maintenance.

We currently offer the following secondary services:

• E-commerce development. • Website renovations and upgrades. • Application development (i.e. chatrooms, message boards, online polling, live-feed

audio/video, etc.). • Website maintenance training. • Internet/website education seminars. • Database construction.

We have plans to offer the following services within the next year:

Ibrio, Inc.

Page 4

• Internet access service for small businesses. • Local Area Network (LAN) installation. • Intranet setup and installation. • Result-based website marketing.

3.1 Service Description

Website Design and Development: The service that we offer to small businesses is modeled after the service that larger Web development firms offer Fortune 1000 companies in the sense that it is completely customized and unique to each individual client.

Website Marketing and Analysis: After we build the website for our client, or a new client introduces us to their pre-existing site, we offer this service. As experts of the Web, we can analyze and test a website based on an established set of standards that account for the website's aesthetic value, scalability, functionality, ease-of-use, and main customer base. After an analysis has been made, we then explore and present to the client a detailed list of the most efficient Internet marketing tools and methods available to them within the constraints of their budget. This type of service is pertinent to our company given the fact that a very large percentage of our clients are on a tight budget and can only afford to take advantage of marketing efforts that are targeted directly at their desired demographic.

Website Hosting and Maintenance: This service is offered for two reasons. The first reason is because they are both ongoing, continual services that we can use to establish and maintain a strong residual income. The second reason for offering these services is to allow for packaging together with other services either Ibrio Inc. offers, or services an outside company can provide, hence allowing us to expand our range of small business Internet services.

3.2 Sales Literature

Ibrio Inc. currently distributes a sales folder with all the pertinent information about our company and services. This folder includes our strong points, history, portfolio examples, and pricing packages info. It also contains facts based on the growth and popularity of the Internet for small businesses.

Ibrio Inc. currently operates and maintains a fully-functioning website that provides information about the company, plus a variety of helpful resources for small business owners which we will be constantly updating.

In the next six months, we plan to produce and distribute bulk mail and fax flyers promoting our Web development and hosting services to small businesses in Central PA to solicit new business.

We have plans to offer a more compact version of our main sales folder in a brochure format. This brochure will be available both as a mailer to interested parties and as a sales solicitation in area businesses.

Ibrio, Inc.

Page 5

3.3 Fulfillment

For the website design, development, marketing, analysis, and maintenance we will employ industry professionals to handle our clients' needs. Working for the company presently is Brandon Andrews, a professional website development engineer and strategist with four years of experience in the commercial Web development industry. To keep employee costs low, we have designed a "team" development system that will consist of two full-time sales people and three full-time Web developers. Of the Web developers, one position will be filled by a highly-qualified senior Web professional and two lesser-qualified, lower paid developers. All three will work full-time on separate projects provided to them by the sales people. However, the senior developer will have the duty of maintaining the same high quality level of work in the junior developers' projects, that our clients have learned to expect from us now.

For the website hosting services we offer, Ibrio Inc. has formed several alliances with industry leaders to provide top-rate, reliable hosting solutions. Forming the alliances has allowed us much flexibility in important hosting features, customizeability, and it has drove costs down dramatically. All these benefits are crucial to preserving the integrity of our company as being a 'fully-rounded Internet solutions provider' for small businesses.

3.4 Technology

It is a given that technology and keeping up with new innovations strongly influence our business. We operate a Windows® based Local Area Network (LAN) in the office that is equipped with the most current software and hardware tools available to meet our project requirements. Within the next year, we will be investing in additional tools that will extend our capabilities in handling various types of program files (i.e. Macintosh computers, large capacity data storage, and high-end image scanners). We also have plans to purchase licensing agreements with our major software vendors to allow for automatic upgrades in new software tools.

Currently we own and operate both a professional digital and film camera for the purpose of offering on-site and in-house product and business photography to our clients. We would like to improve upon these services in the near future by purchasing a more complete photography system, it has been our experience that this is a service many small businesses are recognizing as a crucial part of their online marketing efforts and would take advantage of it were we to offer such a service.

3.5 Future Services

Local Area Network Installation: These days, a quickly increasing number of small businesses are using computers as a necessary tool in the everyday operations of the company. We would like to be able to expand our current services to meet this new demand. We will handle every aspect of setting up a small business with an internal network of computers from purchasing, installing, and configuring the machines to software integration and educating the employees on proper usage and operating functions.

Intranet Setup Installation: In our plan, after developing an Internet website for outside marketing purposes, we would like to offer the service of implementing the website into the network for use in all the business day-to-day operations. This would include extensive product/service cataloging, vital employee and management information, sharing of accounting and inventory details, etc., all intended for strictly company uses.

Ibrio, Inc.

Page 6

Internet Access for Small Business: This feature would act as another residual, packageable service. We would target small businesses exclusively allowing us to provide more flexibility and affordability to our clients through discounted high volume rates, value added service packages, and much more aggressive technical support services.

Result-based Marketing: This is a service that no small business can turn down. We have plans to offer aggressive, intensified marketing services with the fees based solely on results. To achieve this, we are in the process of forming multiple partnerships and alliances with industry specific Internet websites and various other software and service-oriented companies that provide specific marketing services and tools based on results achieved. We feel as though offering this rare service will dramatically increase our portfolio of clients.

4.0 Market Analysis Summary

Ibrio Inc. will initially focus almost exclusively on small companies looking to develop an Internet presence for the first time. We will market our services to small business owners as a "step-by-step" process, initially starting out with a small, simple website, then gradually improving and adding to the site and their entire online marketing efforts.

Although we plan to bring on many clients who simply will need an online presence and nothing more, our most important and sought after clients will be those business owners who are ready to implement a larger percentage of their company onto the Internet. This type of client will traditionally need one of the following services:

• E-commerce/shopping cart. • Database driven websites. • Dynamic content and website features. • Aggressive online website marketing.

4.1 Market Segmentation

Our target market is separated into the four surrounding counties listed below:

Dauphin County: Located to the West, approximately five miles from our location. The number of businesses is estimated at 6,723. It will make up 23% of our four county target area.

Lancaster County: Located Southeast, approx. 20 miles from our location. We would like to begin marketing in this area within four months. The number of businesses is estimated at 11,299. It will make up 40% of our target area.

Lebanon County: Our office is located in Lebanon County. Lebanon is the smallest of the four counties and therefore we will market in proportion to its size. The number of businesses is estimated at 2,547. It will make up 9% of our target area.

York County: Located Southwest, approx. 40 miles from our location. York county is the last of the four counties we will market in. It will be late next year before we begin marketing in this county. The number of businesses is estimated at 8,238. It will make up 28% of our target area.

Our business allows us to offer services to small companies, no matter their geographical location, and we plan to do so, eventually expanding outside our immediate area. The above counties are where we will market most heavily and expect to receive the majority of our

Ibrio, Inc.

Page 7

work. We do expect to receive a small portion from outside this target area due to ad placement in a national business directory.

The above demographic information can be found through the Geospatial & Statistical Data Center.

Dauphin County

Lancaster County

Lebanon County

York County

Market Analysis (Pie)

Table: Market Analysis

Market AnalysisPotential Customers Growth 2000 2001 2002 2003 2004 CAGRDauphin County 2% 6,723 6,844 6,967 7,092 7,220 1.80%Lancaster County 2% 11,299 11,502 11,709 11,920 12,135 1.80%Lebanon County 2% 2,593 2,645 2,698 2,752 2,807 2.00%York County 2% 8,238 8,403 8,571 8,742 8,917 2.00%Total 1.88% 28,853 29,394 29,945 30,506 31,079 1.88%

4.2 Target Market Segment Strategy

Ibrio Inc. will focus the majority of sales and marketing efforts toward attracting small businesses. The reason for this decision is simply the low amount of services available for a market with such a high demand. In addition to the very promising supply and demand ratio, it is also technically easier and less expensive to market to and attract small website projects than larger projects.

Ibrio, Inc.

Page 8

4.2.1 Market Needs

The need for small business Internet services has existed for several years. Small businesses and start-up businesses alike are migrating onto the Web at an astonishing rate and making their online presence a higher priority than in earlier years. We have noticed an enormous hole however in the small business services that are currently available.

Without a doubt, there is a need for custom, high-end, dynamic services designed exclusively for small businesses. At this point, the majority of our competitors are offering services tailored around big business, to small business owners, or they are offering the exact opposite, one-dimensional, "cookie cutter" type services.

While every small business has now recognized the need for having a presence on the Internet, many do not know where to start, how much it will cost, or even how it will benefit their company. It has been our experience by talking to small business owners that the decision to take advantage of the Web is not a matter of 'if' but a matter of 'when.'

4.2.2 Market Trends

An important market trend right now is the one toward aggressive online and website marketing. Although many small businesses are still waiting to gain an Internet presence, those who already have are beginning to look for more options along the lines of improving their existing efforts. We believe that in the upcoming years, small companies especially, will start to look for more ways to increase the traffic to their websites.

Another important trend is the overall merging of daily business operations with the Internet and World Wide Web. Just as the majority of large companies have already started to use the Web to handle interoffice tasks, we believe that many smaller companies will begin to realize the time and money saving advantages to this strategy.

4.2.3 Market Growth

Our target market has been growing and expanding toward Internet and Web usage at an astonishing rate. In addition, Internet usage by our clients' customers has been growing exponentially. Below are supporting facts on our target market growth:

• By 2001, small businesses (1-99 employees) will spend in upwards of $22 billion to either gain an Internet presence or improve their existing efforts. This number is up from $12 billion in 2000 (Activemedia Research).

• Small and home-based business' Internet usage is at approx. 81%, this is an increase from only 26% usage in 1996. It is estimated to reach almost 95% by the year 2004 (IDC Research).

• Total U.S. business Information Technology (IT) expenditures for 2000 are $119.1 billion and will reach $285 billion by the year 2003. The year 2000 will also be the first year that U.S. businesses spend more of their total IT expenditures on Web-related services than on IT hardware (IDC Research).

• Currently, the total number of online users in the U.S. is 107 million, by 2004 that number will grow to 210 million (IDC Research).

• E-commerce revenue will reach nearly $6.8 trillion by the year 2004, up from $48.6 billion in 2000 (Forrester Research Group).

Ibrio, Inc.

Page 9

4.3 Service Business Analysis

Web services and development companies vary greatly in the type of service they offer and the type of client they attract. Ibrio Inc. will be relatively unique in the fact that we are marketing exclusively to small businesses.

This industry consists of many small Web development firms usually less than 10 years old that generally start out offering services to smaller companies but with long-term goals of catering to large, corporate Web accounts.

4.3.1 Business Participants

The Web services and development industry consists mainly of three different types of firms.

The first type are the very large, high revenue companies who service larger Fortune 1000 corporations and well-funded Internet based start-ups exclusively. In this category are only a few worldwide participants that dominate.

The second type of firm offers pre-fabricated, all-in-one, proprietary type Web services to any size company at a very low cost or without any cost. The participants in this category consist of a few dominating companies that mainly all have additional sources of revenue and only offer Web services as a value-added service or additional attraction.

The third type of firm is our classification, that is the smaller, usually very young companies that market to small- and medium-sized businesses in their local area. Currently there are a large number of participants in this category, but no dominating forces.

4.3.2 Main Competitors

1. Teeple Graphics: Located approximately 10 miles from our Palmyra offices, they offer Web development and graphic services.

Strengths: Teeple has a very strong clientele, by talking to several of their Web development clients, we have come to the conclusion that Teeple offers a very dependable and high-quality service.

Weaknesses: Teeple Graphics is owned and operated by George Teeple, he is also the only employee working for the company out of his home, and does not run his business as a full-time operation. In addition, Teeple Graphics requires all clients who operate an e-commerce website to pay his company a commission on the revenue generated by the site, this is paid on top of the development fee that Teeple charges.

2. Sharp Innovations: Located approximately 30 miles from our Palmyra offices, they offer Web development services to small businesses in the Lancaster, PA area.

Strengths: Sharp Innovations has a large market share in its area, offering a very broad range of services from Web development, e-commerce, graphic design, and Internet access.

Weaknesses: Sharp Innovations is a young company with very high overhead. They market themselves as "The Small Business Internet Marketing Professionals of Central PA," but the types of services they offer and their very high prices do not in anyway

Ibrio, Inc.

Page 10

reflect the needs of small business owners. It is also our opinion, after reviewing Sharp Innovations' portfolio that they lack a certain level of technical and aesthetic design knowledge that so many small businesses are beginning to demand.

3. Say1.net: Located approximately 10 miles from our Palmyra, PA location. They offer a wide range of community and business-related Web services in the Lebanon, PA and surrounding areas.

Strengths: Say1 has established a 'portal' type website designed to serve the Lebanon and surrounding areas with useful information regarding community events and business listings. This could serve as a valuable tool to their clients when marketing to that area.

Weaknesses: For a company that claims to be experts in marketing for small business, they do virtually no advertising of their own and it appears that they lack in the ability to bring on clients that are outside the city of Lebanon. Even though Web development is a service that Say1 offers, it is only one in a long list of varied services and we believe this will dramatically hinder their focus toward leading the industry in our market.

4. WebWorks: Located approximately 25 miles from our Palmyra, PA offices. WebWorks offers Web development and marketing services to businesses in the Greater Harrisburg, PA area.

Strengths: WebWorks has been in the Web services business for almost six years and has a very experienced team of developers and programmers. They also offer outstanding marketing services.

Weaknesses: Although WebWorks is a direct competitor, they have begun to focus a large portion of their services toward attracting medium- to large-sized companies. Their pricing is dramatically higher than any competing firms in the Central PA area and they now have put into effect a policy of only excepting jobs of a certain size.

5.0 Strategy and Implementation Summary

Ibrio Inc. will initially focus all marketing and sales efforts toward the Central Pennsylvania area, this includes Harrisburg, Lebanon, Lancaster, and York counties.

We will market ourselves as an Internet and Web services organization devoted to offering high-end services to small businesses exclusively. Our target customer will be the owners of any small or home-based company who are looking to implement their business into the Web.

Ibrio, Inc.

Page 11

5.1 Competitive Edge

We have a valuable competitive edge over our local competitors based on the fact that we have streamlined all our services into the small business market. Through setting up several strategic partnerships with various Internet and Web-related companies, we are able to offer our clients an affordable and efficient proprietary Web package that will meet all their related needs.

Ibrio Inc. also has as its lead development manager, Brandon Andrews, a main principal in the company. Brandon Andrews has four years of commercial Web development experience and has been recognized as a leader and innovator in the graphic design and layout areas of website development.

5.2 Marketing Strategy

Successful marketing of Web services to small business owners depends on how you approach and follow-up every potential client. It is very important to deliver our marketing pitch in a clear, no non-sense method. Details of the Internet and Web are still relatively unknown by many small business owners, giving it the tendency to confuse and intimidate easily.

5.2.1 Pricing Strategy

For most small business owners, cost, both residual and one-time are huge influences on the decisions they make regarding everyday operations of their company. Even though we offer 100% customized services and our pricing is based on an hourly fee, to make it easier and less confusing for the clients, Ibrio has established a packaged pricing system.

• Budget Domain Website Package ($585.00): For simple, information based websites. Popular with companies who just need to gain an Internet presence.

• Mid-Level Website Package ($945.00): Information based websites with a large amount of content. Popular with companies that have a large services/products list and/or want to implement more of their business into the Web.

• Catalog Website Package ($1,440.00): Usually reserved for product-oriented websites that are e-commerce enabled. Popular with companies that have a desire to market heavily on the Internet or sell their products/services directly from the Web.

• Website Hosting (from $15.00 to $45.00 per month): Depending on the type and size of the website, the price for hosting can vary greatly. The average cost of hosting for most clients is $25 per month.

• Website Maintenance ($45.00 per hour): We charge a set fee of $45.00 per hour billed in 10 minute increments. If a client feels as though they will need their website updated or maintained on a regular basis, packages are available at a discount rate.

Ibrio, Inc.

Page 12

5.2.2 Promotion Strategy

Our target client is part of a very specific demographic, for this reason, we market and promote our services in a direct and specifically targeted manner.

Print Ads:

• Currently we advertise in eight separate area yellowpage directories. All our ads appear under either the Internet Services or Website Design headings.

• Ibrio Inc. also has an ad listing in a national business directory under the heading of Web Developers.

• In the near future we will feature ads in several area business publications such as The Central Penn Business Journal and the Who's Who in Dauphin County.

Direct Mail and Fax:

• We have sent out targeted bulk mail flyers promoting special offerings by our company.

• We have participated in targeted broadcast fax promotions to small businesses in our area.

• In the near future we will begin a new aggressive, ongoing bulk mail campaign to promote our Web development and hosting services.

Mass Media Ads:

• We will begin advertising on a broader scale within the next six months. Radio spots will be continuously played during local area talk shows and news programs, this placement is intended to reach the highest percentage of our target client possible.

• Billboard ad placement will be the second mass media marketing campaign we will implement into our marketing efforts. Billboard ads will be intended as 'name recognition' advertising.

Educational Seminars:

• Ibrio Inc. has been invited to speak to business owners and managers at several Internet and Web-related educational seminars on a variety of topic. In the near future, we will promote our services through these seminars.

Local Area Commerce Groups:

• To promote our services and our name as a participant in the Web services industry, we will be joining many of the local area Chamber of Commerce groups and various other strategic partnership clubs.

Ibrio, Inc.

Page 13

5.2.3 Marketing Programs

The following is a summary of our marketing programs from the Milestones table:

We will begin our marketing by acquiring memberships from the following organizations (October 2-9):

• Lebanon Chamber of Commerce. • Harrisburg Chamber of Commerce. • Hershey Partnership.

We plan on doing a large scale marketing project during this month including (March 5 - April 5, 2001):

• Radio advertising (WHP 580). • Ad placement in local trade publications (The Central Penn Business Journal). • Billboard Ads to promote wide-spread name recognition.

5.3 Sales Strategy

Our clients are small business owners, most are very protective of their company, and almost all of them are salesmen themselves. We sell value, service, and quality when we talk to business owners. We need to convince them that they can look past all of the hype surrounding the Internet and still see why having a website is worth the money spent.

We currently utilize a database system specifically targeted toward our desired demographic to establish our first contact with every potential client. It has proven a successful method for soliciting new business directly due to the method in which we approach the first call. The salesman always requests to speak to the business owner, asking for him by his first name only, and when asked who is calling, responds by providing simply his first name as well. Once on the phone with the business owner, there is absolutely no script and the salesman clearly identifies himself and asks the business owner if he has ever considered having a website developed for his company, no matter what the response, a brief conversation will always pursue, sometimes leading to an appointment, and sometimes to a follow-up call.

Because we have full confidence in our services, and recognize that business owners are generally open to the idea of utilizing the Internet and most even consider it a necessity, we take a very low-pressure, non-abrasive approach to direct selling. We will normally present the information about our company, portfolio, strengths, and pricing to the client and let them make the decision on their own. This method has proven successful provided that we keep our follow-up calls consistent and regular until we receive either a yes or no answer.

Ibrio, Inc.

Page 14

5.3.1 Sales Forecast

The following table and chart summarize our forecast sales. We expect the first month of operations (October) to be spent training the new developer and new salesman. November will be our first month of operation and we expect to grow steadily in the following months.

Website development sales will be the largest portion of our revenue with result-based marketing following. Maintenance and hosting revenue will be built up slowly but are the residual base we will stand on in the future.

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug

Website Development

Result-based Marketing

Maintenance

Hosting

Sales Monthly (Planned)

Table: Sales Forecast (Planned)

Sales ForecastSales 2001 2002 2003Website Development $117,000 $350,000 $750,000Result-based Marketing $19,250 $81,900 $199,500Maintenance $14,230 $43,000 $130,000Hosting $14,040 $40,000 $115,000Total Sales $164,520 $514,900 $1,194,500

Direct Cost of Sales 2001 2002 2003Website Development $0 $0 $0Result-based Marketing $9,900 $35,000 $102,600Maintenance $0 $0 $0Hosting $5,650 $15,000 $25,000Subtotal Direct Cost of Sales $15,550 $50,000 $127,600

Ibrio, Inc.

Page 15

5.3.2 Sales Programs

The following is a summary of the our sales programs from the Milestones table:

October 9-16: Hiring first salesman. We will be training this employee this month to make telephone calls to business owners in the area and set appointments to meet with them and show them what we have to offer. Starting in mid-November he/she will begin meeting with clients alone.

October 23 - November 2: We will be updating our sales literature including creating brochures, and printing leaflets to be placed in our presentation folders.

February 12-26: Hiring second salesman. We will be training this salesman in the same fashion previously stated.

5.4 Strategic Alliances

Currently, we do not participate in any co-marketing or co-development efforts with outside companies. However, we have specific plans to establish several strategic partnership programs with area ISPs (Internet Service Providers) and computer consulting companies. These partnerships are intended to attract more sub-contracting work from potential competitors, in exchange for a commission to be paid for each lead and resulting new client.

5.5 Milestones

The accompanying table lists important program milestones, with dates and managers in charge, and budgets for each. The milestone schedule indicates our emphasis on planning for implementation.

What the table doesn't show is the commitment behind it. Our business plan includes complete provisions for plan-vs.-actual analysis, and we will hold monthly follow-up meetings every month to discuss the variance and course corrections.

Table: Milestones (Planned)

MilestonesMilestone Start Date End Date Budget Manager DepartmentIncorporation 8/14/00 8/28/00 $500 Dave AdminAcquire Start-up Financing 8/14/00 10/1/00 $0 Dave AdminAccounting/Balance Sheet Setup

8/31/00 8/31/00 $300 Dave Admin

Acquire Chamber Memberships

10/2/00 10/9/00 $600 Dave Marketing

Staff Sales Position #1 10/9/00 10/16/00 $2,240 Dave HRStaff Development Position #1

10/16/00 10/23/00 $3,200 Brandon HR

Upgrade Current Sales Literature

10/23/00 11/6/00 $300 Dave Sales

Acquire Dedicated Web Host Service

11/1/00 11/8/00 $770 Brandon Development

Staff Development Position #2

1/15/01 2/1/01 $3,200 Brandon HR

Staff Sales Position #2 2/12/01 2/26/01 $2,240 Dave HR

Ibrio, Inc.

Page 16

Acquire Large Scale Outside Marketing

3/5/01 4/5/01 $2,000 Dave Marketing

Staff Developer Postion #3 3/19/01 4/2/01 $3,200 Brandon HROther 1/1/01 1/1/01 $0Totals $18,550

6.0 Management Summary

Ibrio Inc. is owned and operated by two partners with equal equity in the company, and both directors in the corporation.

David Hickethier attended Williamson College on a three year scholarship basis, earning his Associates Degree in construction management. He has completed many business management and business finance courses and has also had hands on experience with managing people. He has one year experience in Internet and Web-related sales and nearly two total years of professional sales experience.

R. Brandon Andrews is an experienced website developer and strategist with over four years of commercial Web and Internet services experience, plus numerous attendance to various related seminars and educational classes. Previous to the forming of Ibrio Inc., he owned and operated a sole-proprietorship, which offered similar Web-related services, but did not market exclusively to small business.

6.1 Organizational Structure

Ibrio Inc. will depend on the two main principals, David Hickethier and Brandon Andrews, for all management responsibilities. This will include office management, accounts receivable and payable, marketing, and talent recruitment.

David Hickethier will serve as chief operations officer and sales manager. He will supervise all salesmen and all sales promotions and projects. David will also be holding the office of the treasurer therefore will be responsible for all financial related matters.

Brandon Andrews will serve as chief technology officer and lead Web developer. He will be directly supervising all Web development (employee and sub-contracting projects), and will also be responsible for any necessary training in the same department.

6.2 Management Team Gaps

The current management team will require support in both the business development and administrative departments. Both managers have had prior experience in these fields, but feel as though their experience is limited given the fact that prior working environments rarely required this type of support.

We will turn to Parks & Company, our finance and accounting firm, to provide expert advise and counseling in both the business development and administrative support departments. This strategy will allow the partners of Ibrio Inc. to lend the majority of their time to their respective areas of the company.

We will turn to the law offices of Keefer Wood Allen & Rahal, LLP for all advice concerning the legal issues of running Ibrio, Inc.

Ibrio, Inc.

Page 17

6.3 Personnel Plan

We visualize implementing a "team" development system that will consist of two full-time sales people and three full-time Web developers. Of the Web developers, one position will be filled by a highly-qualified senior Web professional and two lesser-qualified, lower paid developers. All three will work full-time on separate projects provided to them by the sales people. However, the senior developer will have the duty of maintaining the same high quality level of work in the junior developers' projects, that our clients have learned to expect from us now. By May, 2001 we plan to have one of these teams fully functionable.

The following table shows how we plan on making the above a reality.

Table: Personnel (Planned)

Personnel PlanProduction Personnel 2001 2002 2003Brandon/Web Developer $3,400 $25,000 $60,000Keith/Hired in Oct $16,228 $23,000 $27,000Developer #2/Hired in Feb $10,944 $21,000 $25,000Developer #3/Hired in Apr $7,920 $21,000 $25,000Other $0 $0 $0Subtotal $38,492 $90,000 $137,000

Sales and Marketing PersonnelDave/Marketing $3,400 $25,000 $60,000Sales Position #1/Hired in Oct $16,504 $23,000 $25,000Sales Position #2/Hired in Feb $10,096 $21,000 $23,000Other $0 $0 $0Subtotal $30,000 $69,000 $108,000

General and Administrative PersonnelN/A $0 $0 $0N/A $0 $0 $0Subtotal $0 $0 $0

Other PersonnelN/A $0 $0 $0N/A $0 $0 $0Subtotal $0 $0 $0

Total People 7 7 7Total Payroll $68,492 $159,000 $245,000Payroll Burden $8,219 $19,080 $29,400Total Payroll Expenditures $76,711 $178,080 $274,400

7.0 Financial Plan

Ibrio's financials summarize the following areas: • Important Assumptions. • Key Financial Indicators. • Break-even Analysis. • Projected Profit and Loss. • Projected Cash Flow. • Projected Balance Sheet. • Business Ratios.

Ibrio, Inc.

Page 18

7.1 Important Assumptions

Our financial assumptions are based on a steady economy and standard numbers for a business in our industry.

Table: General Assumptions

General Assumptions2001 2002 2003

Short-term Interest Rate % 10.00% 10.00% 10.00%Long-term Interest Rate % 13.00% 13.00% 13.00%Tax Rate % 25.00% 25.00% 25.00%Expenses in Cash % 90.00% 90.00% 90.00%Sales on Credit % 67.00% 67.00% 67.00%Personnel Burden % 12.00% 12.00% 12.00%

7.2 Key Financial Indicators

The following chart indicates our key financial indicators over the next three years.

0

1

2

3

4

5

6

7

8

Sales Gross OpEx AR Est.

2000

2001

2002

Benchmarks (Planned)

Ibrio, Inc.

Page 19

7.3 Break-even Analysis

The following table and chart summarize our break-even analysis. With fixed costs of $1,595 per month and 45% variable costs we will break even after the 51st billable hour in the month. The $2,785 in sales it will cost us to break even is approximately four website sales. With two developers and two salesmen we plan on developing eight sites in November and once the two new hirees are fully trained doubling the number to 16 sites a month. (We don't plan on that happening until March 2001).

The break-even assumes unit variable costs at 40% of unit revenue. The unit revenue value of $55/hr is an aggregate measure for all the types of services which will be offered.

($2,000)

($1,500)

($1,000)

($500)

$0

$500

$1,000

$1,500

$2,000

$0 $1,100 $2,200 $3,300 $4,400 $5,500

Monthly break-even point

Break-even point = where line intersects with 0

Break-even Analysis

Table: Break-even Analysis

Break-even Analysis:Monthly Units Break-even 51Monthly Sales Break-even $2,785

Assumptions:Average Per-Unit Revenue $55.00Average Per-Unit Variable Cost $23.50Estimated Monthly Fixed Cost $1,595

Ibrio, Inc.

Page 20

7.4 Projected Profit and Loss

Our projected profit and loss is shown on the following table. Some highlights are the Gross Margin at 67% for our first year and steadily increasing. Our Net Profit/Sales starting at 26% and increasing by approximately 10% the following two years to reach 45% by our third year.

Table: Profit and Loss (Planned)

Pro Forma Profit and Loss2001 2002 2003

Sales $164,520 $514,900 $1,194,500Direct Cost of Sales $15,550 $50,000 $127,600Production Payroll $38,492 $90,000 $137,000Other $0 $0 $0

------------ ------------ ------------Total Cost of Sales $54,042 $140,000 $264,600Gross Margin $110,478 $374,900 $929,900Gross Margin % 67.15% 72.81% 77.85%Operating Expenses: Sales and Marketing Expenses:Sales and Marketing Payroll $30,000 $69,000 $108,000Advertising/Promotion $2,790 $3,500 $10,000Travel $1,020 $3,000 $7,000Miscellaneous $0 $1,000 $2,500

------------ ------------ ------------Total Sales and Marketing Expenses $33,810 $76,500 $127,500Sales and Marketing % 20.55% 14.86% 10.67%General and Administrative Expenses:General and Administrative Payroll $0 $0 $0Payroll Burden $8,219 $19,080 $29,400Depreciation $3,180 $5,000 $12,000Depreciation $4,500 $12,000 $24,000Depreciation $0 $2,000 $4,000Utilities $805 $2,000 $5,000Insurance $0 $2,500 $5,000

------------ ------------ ------------Total General and Administrative Expenses $16,704 $42,580 $79,400General and Administrative % 10.15% 8.27% 6.65%Other Expenses:Other Payroll $0 $0 $0Contract/Consultants $0 $0 $0

------------ ------------ ------------Total Other Expenses $0 $0 $0Other % 0.00% 0.00% 0.00%

------------ ------------ ------------Total Operating Expenses $50,514 $119,080 $206,900Profit Before Interest and Taxes $59,964 $255,820 $723,000Interest Expense Short-term $0 $0 $0Interest Expense Long-term $2,600 $2,302 $1,664Taxes Incurred $14,341 $63,380 $180,334Extraordinary Items $0 $0 $0Net Profit $43,023 $190,139 $541,002Net Profit/Sales 26.15% 36.93% 45.29%

Ibrio, Inc.

Page 21

7.5 Projected Cash Flow

Cash flow projections for the first half of the year are sligthly declining and in May they begin to raise sufficiently. We may need to borrow against our accounts receivables but are projecting that the initial capital raised should cover us until our cash becomes fluid.

($10,000)

$0

$10,000

$20,000

$30,000

$40,000

$50,000

Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug

Net Cash Flow

Cash Balance

Cash (Planned)

Ibrio, Inc.

Page 22

Table: Cash Flow (Planned)

Pro Forma Cash Flow 2001 2002 2003

Cash ReceivedCash from Operations: Cash Sales $54,292 $169,917 $394,185From Receivables $80,654 $281,997 $678,148 Subtotal Cash from Operations $134,945 $451,914 $1,072,333

Additional Cash ReceivedExtraordinary Items $0 $0 $0Sales Tax, VAT, HST/GST Received $0 $0 $0New Current Borrowing $0 $0 $0New Other Liabilities (interest-free) $0 $0 $0New Long-term Liabilities $0 $0 $0Sales of other Short-term Assets $0 $0 $0Sales of Long-term Assets $0 $0 $0New Investment Received $10,700 $0 $0 Subtotal Cash Received $145,645 $451,914 $1,072,333

Expenditures 2001 2002 2003Expenditures from Operations:Cash Spent on Costs and Expenses $37,445 $145,513 $348,388Wages, Salaries, Payroll Taxes, etc. $76,711 $178,080 $274,400Payment of Accounts Payable $3,365 $13,873 $34,402 Subtotal Spent on Operations $117,522 $337,467 $657,190

Additional Cash SpentSales Tax, VAT, HST/GST Paid Out $0 $0 $0Principal Repayment of Current Borrowing $0 $0 $0Other Liabilities Principal Repayment $0 $0 $0Long-term Liabilities Principal Repayment $0 $4,589 $5,222Purchase Other Short-term Assets $0 $0 $0Purchase Long-term Assets $0 $20,000 $20,000Dividends $0 $0 $0 Adjustment for Assets Purchased on Credit $0 ($20,000) ($20,000) Subtotal Cash Spent $117,522 $342,056 $662,412

Net Cash Flow $28,123 $109,859 $409,921Cash Balance $45,123 $154,982 $564,903

Ibrio, Inc.

Page 23

7.6 Projected Balance Sheet

The balance sheet in the following table shows managed but sufficient growth of net worth, and a sufficiently healthy financial position. The monthly estimates are included in the appendices.

Table: Balance Sheet (Planned)

Pro Forma Balance Sheet

AssetsShort-term Assets 2001 2002 2003Cash $45,123 $154,982 $564,903Accounts Receivable $29,575 $92,560 $214,728Other Short-term Assets $7,650 $7,650 $7,650Total Short-term Assets $82,348 $255,193 $787,280Long-term AssetsLong-term Assets $0 $20,000 $40,000Accumulated Depreciation $3,180 $8,180 $20,180Total Long-term Assets ($3,180) $11,820 $19,820Total Assets $79,168 $267,013 $807,100

Liabilities and Capital2001 2002 2003

Accounts Payable $795 $3,090 $7,398Current Borrowing $0 $0 $0Other Short-term Liabilities $0 $0 $0Subtotal Short-term Liabilities $795 $3,090 $7,398

Long-term Liabilities $20,000 $15,411 $10,189Total Liabilities $20,795 $18,501 $17,587

Paid-in Capital $18,000 $18,000 $18,000Retained Earnings ($2,650) $40,373 $230,512Earnings $43,023 $190,139 $541,002Total Capital $58,373 $248,512 $789,514Total Liabilities and Capital $79,168 $267,013 $807,100Net Worth $58,373 $248,512 $789,514

7.7 Business Ratios

The following table shows the projected businesses ratios. We expect to maintain healthy ratios for profitability, risk, and return. The Industry Profile ratios, shown for comparison, are based on Standard Industrial Classification (SIC) code 7375, Information Retrieval Services.

Ibrio, Inc.

Page 24

Table: Ratios (Planned)

Ratio Analysis2000 2001 2002 Industry Profile

Sales Growth 0.00% 212.97% 131.99% 9.70%

Percent of Total AssetsAccounts Receivable 37.36% 34.67% 26.60% 25.00%Inventory 0.00% 0.00% 0.00% 5.30%Other Short-term Assets 9.66% 2.87% 0.95% 46.30%Total Short-term Assets 104.02% 95.57% 97.54% 76.60%Long-term Assets -4.02% 4.43% 2.46% 23.40%Total Assets 100.00% 100.00% 100.00% 100.00%

Other Short-term Liabilities 0.00% 0.00% 0.00% 49.40%Subtotal Short-term Liabilities 1.00% 1.16% 0.92% 36.20%Long-term Liabilities 25.26% 5.77% 1.26% 21.20%Total Liabilities 26.27% 6.93% 2.18% 57.40%Net Worth 73.73% 93.07% 97.82% 42.60%

Percent of SalesSales 100.00% 100.00% 100.00% 100.00%Gross Margin 67.15% 72.81% 77.85% 0.00%Selling, General & Administrative Expenses 41.00% 35.88% 32.56% 78.10%Advertising Expenses 1.70% 0.68% 0.84% 0.90%Profit Before Interest and Taxes 36.45% 49.68% 60.53% 1.90%

Main RatiosCurrent 103.57 82.59 106.42 1.57Quick 103.57 82.59 106.42 1.19Total Debt to Total Assets 26.27% 6.93% 2.18% 70.60%Pre-tax Return on Net Worth 107.18% 103.87% 91.79% 4.10%Pre-tax Return on Assets 79.03% 96.67% 89.79% 13.80%

Business Vitality Profile 2000 2001 2002 IndustrySales per Employee $23,503 $73,557 $170,643 $0Survival Rate 0.00%

Additional Ratios 2000 2001 2002Net Profit Margin 26.15% 36.93% 45.29% n.aReturn on Equity 73.70% 76.51% 68.52% n.a

Activity RatiosAccounts Receivable Turnover 3.73 3.73 3.73 n.aCollection Days 49 65 70 n.aInventory Turnover 0.00 0.00 0.00 n.aAccounts Payable Turnover 5.23 5.23 5.23 n.aTotal Asset Turnover 2.08 1.93 1.48 n.a

Debt RatiosDebt to Net Worth 0.36 0.07 0.02 n.aShort-term Liab. to Liab. 0.04 0.17 0.42 n.a

Liquidity RatiosNet Working Capital $81,553 $252,103 $779,883 n.aInterest Coverage 23.06 111.14 434.50 n.a

Additional RatiosAssets to Sales 0.48 0.52 0.68 n.aCurrent Debt/Total Assets 1% 1% 1% n.aAcid Test 66.37 52.63 77.40 n.aSales/Net Worth 2.82 2.07 1.51 n.aDividend Payout $0 0.00 0.00 n.a

Ibrio, Inc.

Page 25

Appendix Table: Sales Forecast (Planned)

Sales ForecastSales Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul AugWebsite Development $0 $0 $4,800 $5,400 $7,200 $8,400 $8,400 $11,200 $14,000 $19,200 $19,200 $19,200Result-based Marketing $0 $0 $0 $0 $0 $0 $1,750 $2,100 $2,800 $3,500 $4,200 $4,900Maintenance $0 $0 $110 $280 $510 $750 $1,010 $1,350 $1,790 $2,290 $2,810 $3,330Hosting $0 $0 $200 $300 $540 $780 $1,020 $1,340 $1,740 $2,200 $2,700 $3,220Total Sales $0 $0 $5,110 $5,980 $8,250 $9,930 $12,180 $15,990 $20,330 $27,190 $28,910 $30,650

Direct Cost of Sales Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul AugWebsite Development $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Result-based Marketing $0 $0 $0 $0 $0 $0 $900 $1,080 $1,440 $1,800 $2,160 $2,520Maintenance $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Hosting $0 $0 $350 $350 $350 $350 $350 $1,100 $700 $700 $700 $700Subtotal Direct Cost of Sales $0 $0 $350 $350 $350 $350 $1,250 $2,180 $2,140 $2,500 $2,860 $3,220

Appendix

Page 1

Appendix Table: Personnel (Planned)

Personnel PlanProduction Personnel Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul AugBrandon/Web Developer $0 $200 $200 $200 $300 $300 $300 $300 $400 $400 $400 $400Keith/Hired in Oct $0 $0 $1,836 $1,152 $1,584 $1,440 $1,584 $1,512 $1,840 $1,680 $1,760 $1,840Developer #2/Hired in Feb $0 $0 $0 $0 $0 $1,440 $1,584 $1,512 $1,656 $1,512 $1,584 $1,656Developer #3/Hired in Apr $0 $0 $0 $0 $0 $0 $0 $1,512 $1,656 $1,512 $1,584 $1,656Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Subtotal $0 $200 $2,036 $1,352 $1,884 $3,180 $3,468 $4,836 $5,552 $5,104 $5,328 $5,552

Sales and Marketing PersonnelDave/Marketing $0 $200 $200 $200 $300 $300 $300 $300 $400 $400 $400 $400Sales Position #1/Hired in Oct $0 $0 $1,904 $1,080 $1,440 $1,680 $1,680 $1,680 $1,760 $1,760 $1,760 $1,760Sales Position #2/Hired in Feb $0 $0 $0 $0 $0 $1,120 $1,232 $1,176 $1,288 $1,760 $1,760 $1,760Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Subtotal $0 $200 $2,104 $1,280 $1,740 $3,100 $3,212 $3,156 $3,448 $3,920 $3,920 $3,920

General and Administrative PersonnelN/A $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0N/A $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Subtotal $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Other PersonnelN/A $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0N/A $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Subtotal $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total People 0 2 4 4 4 6 6 7 7 7 7 7Total Payroll $0 $400 $4,140 $2,632 $3,624 $6,280 $6,680 $7,992 $9,000 $9,024 $9,248 $9,472Payroll Burden $0 $48 $497 $316 $435 $754 $802 $959 $1,080 $1,083 $1,110 $1,137Total Payroll Expenditures $0 $448 $4,637 $2,948 $4,059 $7,034 $7,482 $8,951 $10,080 $10,107 $10,358 $10,609

Appendix

Page 2

Appendix Table: General Assumptions

General AssumptionsSep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug

Short-term Interest Rate % 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%Long-term Interest Rate % 13.00% 13.00% 13.00% 13.00% 13.00% 13.00% 13.00% 13.00% 13.00% 13.00% 13.00% 13.00%Tax Rate % 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00%Expenses in Cash % 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00%Sales on Credit % 67.00% 67.00% 67.00% 67.00% 67.00% 67.00% 67.00% 67.00% 67.00% 67.00% 67.00% 67.00%Personnel Burden % 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00%

Appendix

Page 3

Appendix Table: Profit and Loss (Planned)

Pro Forma Profit and LossSep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug

Sales $0 $0 $5,110 $5,980 $8,250 $9,930 $12,180 $15,990 $20,330 $27,190 $28,910 $30,650Direct Cost of Sales $0 $0 $350 $350 $350 $350 $1,250 $2,180 $2,140 $2,500 $2,860 $3,220Production Payroll $0 $200 $2,036 $1,352 $1,884 $3,180 $3,468 $4,836 $5,552 $5,104 $5,328 $5,552Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------Total Cost of Sales $0 $200 $2,386 $1,702 $2,234 $3,530 $4,718 $7,016 $7,692 $7,604 $8,188 $8,772Gross Margin $0 ($200) $2,724 $4,278 $6,016 $6,400 $7,462 $8,974 $12,638 $19,586 $20,722 $21,878Gross Margin % 0.00% 0.00% 53.31% 71.54% 72.92% 64.45% 61.26% 56.12% 62.16% 72.03% 71.68% 71.38%Operating Expenses: Sales and Marketing Expenses:Sales and Marketing Payroll $0 $200 $2,104 $1,280 $1,740 $3,100 $3,212 $3,156 $3,448 $3,920 $3,920 $3,920Advertising/Promotion $0 $0 $230 $230 $230 $300 $300 $300 $300 $300 $300 $300Travel $0 $0 $60 $60 $60 $120 $120 $120 $120 $120 $120 $120Miscellaneous $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------Total Sales and Marketing Expenses $0 $200 $2,394 $1,570 $2,030 $3,520 $3,632 $3,576 $3,868 $4,340 $4,340 $4,340Sales and Marketing % 0.00% 0.00% 46.85% 26.25% 24.61% 35.45% 29.82% 22.36% 19.03% 15.96% 15.01% 14.16%General and Administrative Expenses:General and Administrative Payroll $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Payroll Burden $0 $48 $497 $316 $435 $754 $802 $959 $1,080 $1,083 $1,110 $1,137Depreciation $0 $0 $300 $300 $300 $300 $330 $330 $330 $330 $330 $330Depreciation $0 $0 $450 $450 $450 $450 $450 $450 $450 $450 $450 $450Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Utilities $0 $0 $55 $70 $70 $80 $80 $90 $90 $90 $90 $90Insurance $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------Total General and Administrative Expenses $0 $48 $1,302 $1,136 $1,255 $1,584 $1,662 $1,829 $1,950 $1,953 $1,980 $2,007General and Administrative % 0.00% 0.00% 25.48% 18.99% 15.21% 15.95% 13.64% 11.44% 9.59% 7.18% 6.85% 6.55%Other Expenses:Other Payroll $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Contract/Consultants $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------Total Other Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Other % 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------Total Operating Expenses $0 $248 $3,696 $2,706 $3,285 $5,104 $5,294 $5,405 $5,818 $6,293 $6,320 $6,347Profit Before Interest and Taxes $0 ($448) ($972) $1,572 $2,731 $1,296 $2,168 $3,569 $6,820 $13,293 $14,402 $15,531Interest Expense Short-term $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Interest Expense Long-term $217 $217 $217 $217 $217 $217 $217 $217 $217 $217 $217 $217Taxes Incurred ($54) ($166) ($297) $339 $629 $270 $488 $838 $1,651 $3,269 $3,546 $3,829Extraordinary Items $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Net Profit ($163) ($499) ($891) $1,017 $1,886 $810 $1,464 $2,514 $4,953 $9,807 $10,639 $11,486Net Profit/Sales 0.00% 0.00% -17.44% 17.00% 22.86% 8.16% 12.02% 15.72% 24.36% 36.07% 36.80% 37.47%

Appendix

Page 4

Appendix Table: Cash Flow (Planned)

Pro Forma Cash Flow Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug

Cash ReceivedCash from Operations: Cash Sales $0 $0 $1,686 $1,973 $2,723 $3,277 $4,019 $5,277 $6,709 $8,973 $9,540 $10,115From Receivables $0 $0 $0 $1,826 $3,735 $4,818 $6,128 $7,457 $9,522 $12,264 $16,072 $18,832 Subtotal Cash from Operations $0 $0 $1,686 $3,799 $6,457 $8,095 $10,147 $12,734 $16,231 $21,237 $25,613 $28,946

Additional Cash ReceivedExtraordinary Items $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Sales of other Short-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Investment Received $0 $0 $0 $0 $0 $0 $10,700 $0 $0 $0 $0 $0 Subtotal Cash Received $0 $0 $1,686 $3,799 $6,457 $8,095 $20,847 $12,734 $16,231 $21,237 $25,613 $28,946

Expenditures Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul AugExpenditures from Operations:Cash Spent on Costs and Expenses $146 $45 $958 $1,544 $1,805 $1,608 $2,614 $3,775 $4,471 $6,251 $6,825 $7,403Wages, Salaries, Payroll Taxes, etc. $0 $448 $4,637 $2,948 $4,059 $7,034 $7,482 $8,951 $10,080 $10,107 $10,358 $10,609Payment of Accounts Payable $1 $16 $8 $109 $173 $200 $182 $295 $422 $503 $697 $760 Subtotal Spent on Operations $147 $509 $5,603 $4,600 $6,036 $8,841 $10,278 $13,021 $14,973 $16,861 $17,879 $18,772

Additional Cash SpentSales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Long-term Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Purchase Other Short-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Adjustment for Assets Purchased on Credit $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Subtotal Cash Spent $147 $509 $5,603 $4,600 $6,036 $8,841 $10,278 $13,021 $14,973 $16,861 $17,879 $18,772

Net Cash Flow ($147) ($509) ($3,917) ($801) $421 ($747) $10,569 ($287) $1,258 $4,375 $7,733 $10,175Cash Balance $16,853 $16,344 $12,427 $11,626 $12,047 $11,300 $21,869 $21,582 $22,840 $27,215 $34,949 $45,123

Appendix

Page 5

Appendix Table: Balance Sheet (Planned)

Pro Forma Balance Sheet

AssetsShort-term Assets Starting Balances Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul AugCash $17,000 $16,853 $16,344 $12,427 $11,626 $12,047 $11,300 $21,869 $21,582 $22,840 $27,215 $34,949 $45,123Accounts Receivable $0 $0 $0 $3,424 $5,604 $7,397 $9,233 $11,265 $14,522 $18,621 $24,574 $27,871 $29,575Other Short-term Assets $7,650 $7,650 $7,650 $7,650 $7,650 $7,650 $7,650 $7,650 $7,650 $7,650 $7,650 $7,650 $7,650Total Short-term Assets $24,650 $24,503 $23,994 $23,501 $24,880 $27,094 $28,183 $40,784 $43,753 $49,111 $59,439 $70,470 $82,348Long-term AssetsLong-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Accumulated Depreciation $0 $0 $0 $300 $600 $900 $1,200 $1,530 $1,860 $2,190 $2,520 $2,850 $3,180Total Long-term Assets $0 $0 $0 ($300) ($600) ($900) ($1,200) ($1,530) ($1,860) ($2,190) ($2,520) ($2,850) ($3,180)Total Assets $24,650 $24,503 $23,994 $23,201 $24,280 $26,194 $26,983 $39,254 $41,893 $46,921 $56,919 $67,620 $79,168

Liabilities and CapitalSep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug

Accounts Payable $0 $16 $5 $103 $166 $194 $173 $281 $405 $480 $671 $733 $795Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Other Short-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Subtotal Short-term Liabilities $0 $16 $5 $103 $166 $194 $173 $281 $405 $480 $671 $733 $795

Long-term Liabilities $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000Total Liabilities $20,000 $20,016 $20,005 $20,103 $20,166 $20,194 $20,173 $20,281 $20,405 $20,480 $20,671 $20,733 $20,795

Paid-in Capital $7,300 $7,300 $7,300 $7,300 $7,300 $7,300 $7,300 $18,000 $18,000 $18,000 $18,000 $18,000 $18,000Retained Earnings ($2,650) ($2,650) ($2,650) ($2,650) ($2,650) ($2,650) ($2,650) ($2,650) ($2,650) ($2,650) ($2,650) ($2,650) ($2,650)Earnings $0 ($163) ($661) ($1,552) ($536) $1,350 $2,160 $3,624 $6,138 $11,090 $20,898 $31,537 $43,023Total Capital $4,650 $4,488 $3,989 $3,098 $4,114 $6,000 $6,810 $18,974 $21,488 $26,440 $36,248 $46,887 $58,373Total Liabilities and Capital $24,650 $24,503 $23,994 $23,201 $24,280 $26,194 $26,983 $39,254 $41,893 $46,921 $56,919 $67,620 $79,168Net Worth $4,650 $4,488 $3,989 $3,098 $4,114 $6,000 $6,810 $18,974 $21,488 $26,440 $36,248 $46,887 $58,373

Appendix

Page 6