OFFERED TO: MEMORANDUM NO:

PRIVATE PLACEMENT MEMORANDUM

NewCo, LLC

$1,500,000 of Series B Convertible Preferred Stock

This Private Placement Memorandum (the “Memorandum”) relates to a private offering (the “Offering”) to a limited number of “Accredited Investors” (as that term is defined under the federal securities laws) of $1,500,000 in shares of Series B Convertible Preferred Stock (the “Series B Preferred Shares”), $.001 par value, of NewCo, Inc. (the “Company”), a Nevada corporation which will be formed from the conversion of NewCo, LLC, on June 1, 2010.

The Series B Preferred Shares are being offered pursuant to exemptions from federal registration contained in the Securities Act of 1933, as amended (“the 1933 Act”), and Rule 506 of Regulation D promulgated thereunder. The Shares will consist of 15,000,000 Series B Preferred shares, and will be offered at a purchase price of $.10 per share. Each Share will be convertible, initially at the option of the holder and automatically under certain circumstances, into one (1) share(s) of the Company’s Common Stock, no par value (the “Common Shares”). All of the Shares offered hereby are being sold by the Company. Each investor must purchase a minimum of 250,000 Series B Preferred Shares, for a minimum investment in the company of $25,000. The closing of the sale of the Shares may take place in one or more closings. There is no minimum amount which must be raised by the Company in order for the Offering to close. There is currently no established trading market for any of the Company’s securities. Subscription documents are attached to this Memorandum as Exhibit C.

AN INVESTMENT IN THE SERIES B PREFERRED SHARES IS SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK. INVESTORS MUST BE PREPARED TO BEAR THE ECONOMIC RISK OF THEIR INVESTMENT FOR AN INDEFINITE PERIOD OF TIME AND BE ABLE TO WITHSTAND A TOTAL LOSS OF THEIR INVESTMENT. FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE SHARES, SEE “RISK FACTORS” BEGINNING ON PAGE 26.

Price to Investors (1)

Expenses (2) Net Proceeds to Company (3)

Per Share........................................................ $.10 $.00333 $0.009667Total Offering................................................. $1,500,000 $50,000 $1,450,000

(1) The purchase price per Share is payable in full on subscription. Funds paid by Investors will be available for use by the Company immediately upon payment.

(2) The Company estimates legal and other expenses related to the Offering to aggregate $50,000. No commissions are payable by the Company in connection with the Offering. See “Sources and Uses of Proceeds.”

(3) The net proceeds shown reflect the deduction of the estimated expenses for the offering described in footnote 2. The Company intends to place the Series B Preferred Shares on a “best efforts” basis through the services of the Company’s officers and directors, but reserves the right to utilize the services of one or more licensed broker/dealers. The Company anticipates that any such broker/dealer would receive selling commissions in an amount not to exceed eight percent (8%) of the aggregate price of the Shares sold, and that such broker/dealers would place the Shares on “best efforts,” not a “firm commitment” basis. The net proceeds above do not reflect any selling commission payable to any such broker/dealers. See “Sources and Uses of Proceeds.”

The date of this Memorandum is January 15, 2010.

The Company intends that the Series B Preferred Shares will only be offered to, and purchased by, “accredited investors,” as that term is defined in Regulation D promulgated under the 1933 Act, but the Company reserves the right to sell Shares to up to thirty-five persons who are not accredited investors. The Company’s offer of the Shares hereunder will be terminated on the date that is the earlier to occur of June 30, 2010 and the date that the 15,000,000 Series B Preferred Shares offered in the Offering have been purchased by investors. The Company unconditionally reserves the right to withdraw, limit or terminate this Offering at any time and to reject any or all offers to purchase the Shares, and to amend, if necessary and without refund of Shares previously purchased, the terms of this Memorandum to reflect changes, developments and new information that occur or become known to the Company while the Offering is in progress.

THE SERIES B PREFERRED SHARES OFFERED HEREBY AND THE COMMON SHARES ISSUABLE UPON THE CONVERSION THEREOF HAVE NOT BEEN REGISTERED UNDER THE 1933 ACT, OR ANY APPLICABLE STATE OR FOREIGN SECURITIES LAWS, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION (THE “SEC”) OR ANY STATE OR FOREIGN REGULATORY AUTHORITY PASSED ON THE ACCURACY OR ADEQUACY OF THIS PRIVATE PLACEMENT MEMORANDUM OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. THE SERIES B PREFERRED SHARES ARE OFFERED PURSUANT TO EXEMPTIONS PROVIDED BY SECTION 4(2) OF THE SECURITIES ACT, REGULATION D THEREUNDER, CERTAIN STATE SECURITIES LAWS AND CERTAIN RULES AND REGULATIONS PROMULGATED PURSUANT THERETO. THE SERIES B PREFERRED SHARES MAY NOT BE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR THE DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.

THIS OFFERING INVOLVES A HIGH DEGREE OF RISK AND PROSPECTIVE INVESTORS SHOULD CONSIDER A NUMBER OF FACTORS BEFORE INVESTING IN THE SERIES B PREFERRED SHARES. SEE “RISK FACTORS.”

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THE INFORMATION CONTAINED IN THIS MEMORANDUM IS CONFIDENTIAL AND PROPRIETARY TO THE COMPANY AND IS BEING SUBMITTED TO PROSPECTIVE INVESTORS SOLELY FOR SUCH INVESTORS’ CONFIDENTIAL USE AND WITH THE EXPRESS UNDERSTANDING AND AGREEMENT OF THE INVESTORS THAT, WITHOUT THE PRIOR EXPRESS WRITTEN PERMISSION OF THE COMPANY, SUCH INVESTORS WILL NOT RELEASE THIS DOCUMENT OR DISCUSS THE INFORMATION CONTAINED HEREIN OR MAKE REPRODUCTIONS OF OR USE THIS MEMORANDUM OR THE INFORMATION CONTAINED HEREIN FOR ANY PURPOSE OTHER THAN EVALUATING A POTENTIAL INVESTMENT IN THE SERIES B PREFERRED SHARES OFFERED HEREBY.

A PROSPECTIVE INVESTOR, BY ACCEPTING DELIVERY OF THIS MEMORANDUM, AGREES PROMPTLY TO RETURN TO THE COMPANY OR PLACEMENT AGENT THIS MEMORANDUM AND ANY OTHER DOCUMENTS OR INFORMATION THE COMPANY OR ITS REPRESENTATIVES FURNISH TO SUCH INVESTOR IF THE PROSPECTIVE INVESTOR ELECTS NOT TO PURCHASE ANY OF THE SERIES B PREFERRED SHARES OFFERED HEREBY OR IF THE OFFERING IS TERMINATED OR WITHDRAWN.

THIS MEMORANDUM CONSTITUTES AN OFFER ONLY TO THE OFFEREE TO WHOM THIS MEMORANDUM IS INITIALLY DISTRIBUTED BY THE COMPANY. THIS MEMORANDUM DOES NOT PURPORT TO BE ALL-INCLUSIVE OR TO CONTAIN ALL OF THE INFORMATION THAT A PROSPECTIVE INVESTOR MAY DESIRE IN INVESTIGATING THE COMPANY. EACH INVESTOR MUST CONDUCT AND RELY ON ITS OWN EVALUATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED, IN MAKING AN INVESTMENT DECISION WITH RESPECT TO THE SERIES B PREFERRED SHARES. SEE “RISK FACTORS” FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH THE PURCHASE OF THE SERIES B PREFERRED SHARES. CERTAIN PROVISIONS OF VARIOUS AGREEMENTS ARE SUMMARIZED IN THIS MEMORANDUM, BUT PROSPECTIVE INVESTORS SHOULD NOT ASSUME THAT THE SUMMARIES ARE COMPLETE. SUCH SUMMARIES ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE COMPLETE TEXT OF SUCH AGREEMENTS.

THIS MEMORANDUM INCLUDES CERTAIN STATEMENTS, ESTIMATES, PROJECTIONS AND OTHER FORWARD-LOOKING STATEMENTS WITH RESPECT TO THE COMPANY’S ANTICIPATED FUTURE PERFORMANCE. THE COMPANY’S INDEPENDENT AUDITORS HAVE NEITHER EXAMINED NOR COMPILED THE PROJECTIONS AND, ACCORDINGLY, DO NOT EXPRESS AN OPINION OR ANY OTHER FORM OF ASSURANCE WITH RESPECT THERETO. THE STATEMENTS, ESTIMATES, PROJECTIONS AND OTHER FORWARD-LOOKING STATEMENTS ARE BASED ON VARIOUS ASSUMPTIONS BY MANAGEMENT THAT MAY NOT PROVE TO BE CORRECT. SUCH ASSUMPTIONS ARE INHERENTLY SUBJECT TO SIGNIFICANT UNCERTAINTIES AND CONTINGENCIES, MANY OF WHICH ARE BEYOND THE CONTROL OF THE COMPANY. NO REPRESENTATION IS MADE, AND NO ASSURANCE CAN BE GIVEN, THAT THE COMPANY CAN OR WILL ATTAIN SUCH RESULTS. ACTUAL RESULTS ARE LIKELY TO VARY, PERHAPS MATERIALLY, FROM THE PROJECTIONS.

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THIS MEMORANDUM DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE SERIES B PREFERRED SHARES IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. EXCEPT AS OTHERWISE INDICATED, THIS MEMORANDUM SPEAKS AS OF THE DATE HEREOF. NEITHER THE DELIVERY OF THIS MEMORANDUM NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY AFTER THE DATE HEREOF.

PROSPECTIVE INVESTORS ARE NOT TO CONSTRUE ANY STATEMENTS MADE IN THIS MEMORANDUM AS TAX OR LEGAL ADVICE. EACH INVESTOR SHOULD CONSULT HIS PERSONAL LEGAL COUNSEL, ACCOUNTANT, OR OTHER ADVISORS AS TO THE LEGAL; FINANCIAL AND RELATED MATTERS CONCERNING THE SUITABILITY OF AN INVESTMENT IN THE SERIES B PREFERRED SHARES.

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE REPRESENTATIONS IN CONNECTION WITH THE OFFERING OTHER THAN THE INFORMATION AND REPRESENTATIONS CONTAINED IN THIS MEMORANDUM, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MAY NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. PRIOR TO THE CONSUMMATION OF THE PURCHASE AND SALE OF ANY SERIES B PREFERRED SHARES, THE COMPANY WILL AFFORD PROSPECTIVE INVESTORS AN OPPORTUNITY TO ASK QUESTIONS OF AND RECEIVE ANSWERS FROM THE COMPANY CONCERNING THE TERMS AND CONDITIONS OF THE SERIES B PREFERRED SHARES, THE COMPANY OR OTHER RELEVANT MATTERS AND TO OBTAIN ADDITIONAL INFORMATION TO THE EXTENT THAT THE COMPANY POSSESSES SUCH INFORMATION OR CAN ACQUIRE IT WITHOUT UNREASONABLE EFFORT OR EXPENSE.

THE SALE OF THE SERIES B PREFERRED SHARES IS SUBJECT TO THE PROVISIONS OF, AND EACH OF THE INVESTORS PURCHASING SERIES B PREFERRED SHARES WILL BE REQUIRED TO EXECUTE, A SUBSCRIPTION AGREEMENT AND OTHER RELATED AGREEMENTS. THE TERMS OF THE SERIES B PREFERRED SHARES WILL BE SET FORTH IN THE COMPANY’S ARTICLES OF INCORPORATION. ANY PURCHASE OF THE SERIES B PREFERRED SHARES SHOULD BE MADE ONLY AFTER A COMPLETE AND THOROUGH REVIEW OF THE PROVISIONS OF SUCH AGREEMENT AND THE ARTICLES OF INCORPORATION. IF ANY OF THE TERMS, CONDITIONS OR OTHER PROVISIONS OF SUCH AGREEMENT OR ARTICLES OF INCORPORATION ARE INCONSISTENT WITH OR CONTRARY TO THE DESCRIPTION OR TERMS IN THIS MEMORANDUM, SUCH AGREEMENT OR ARTICLES OF INCORPORATION WILL CONTROL.

THE COMPANY RESERVES THE RIGHT, IN ITS SOLE DISCRETION AND FOR ANY REASON WHATSOEVER, TO MODIFY, INCREASE, AMEND AND/OR WITHDRAW ALL OR A PORTION OF THE OFFERING AND/OR TO ACCEPT OR REJECT IN WHOLE OR IN PART ANY PROSPECTIVE INVESTMENT IN THE SERIES B PREFERRED SHARES OR TO ALLOT TO ANY

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PROSPECTIVE INVESTOR LESS THAN THE NUMBER OF SERIES B PREFERRED SHARES THAT SUCH INVESTOR DESIRES TO PURCHASE. THE COMPANY WILL HAVE NO LIABILITY WHATSOEVER TO ANY OFFEREE AND/OR INVESTOR IN THE EVENT THAT ANY OF THE FOREGOING SHALL OCCUR.

THE PROCEEDS FROM THE OFFER AND SALE OF THE SERIES B PREFERRED SHARES WILL NOT BE DEPOSITED OR PLACED IN ANY BANK ESCROW OR OTHER SEGREGATED ACCOUNT PENDING THE SALE OF ALL OF THE SERIES B PREFERRED SHARES OFFERED HEREBY, AND WILL BE IMMEDIATELY AVAILABLE TO THE COMPANY FOR ITS BUSINESS PURPOSES. THE COMPANY MAY EFFECT ONE OR MORE CLOSINGS OF THE SALE OF THE SERIES B PREFERRED SHARES.

IT IS THE RESPONSIBILITY OF ANY INVESTOR PURCHASING SERIES B PREFERRED SHARES TO SATISFY ITSELF AS TO FULL OBSERVANCE OF THE LAWS OF ANY RELEVANT TERRITORY OR JURISDICTION OUTSIDE THE UNITED STATES IN CONNECTION WITH ANY SUCH PURCHASE, INCLUDING OBTAINING ANY REQUIRED GOVERNMENTAL OR OTHER CONSENTS OR OBSERVING ANY OTHER APPLICABLE REQUIREMENTS.

Trademarks and other intellectual property rights of entities and organizations referred to in this Memorandum are the property of their respective holders.

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TABLE OF CONTENTS

Page

Table of Contents.........................................................................................................................................

Summary of Proposed Terms.......................................................................................................................

The Company and Its Business..................................................................................................................

Selected Financial Information..................................................................................................................

Risk Factors...............................................................................................................................................

Use of Proceeds..........................................................................................................................................

Management...............................................................................................................................................

Principal Stockholders...............................................................................................................................

Description of Capital Stock......................................................................................................................

Dividend Policy.........................................................................................................................................

Capitalization.............................................................................................................................................

Certain Transactions and Relationships.....................................................................................................

Plan of Offering.........................................................................................................................................

ERISA Considerations...............................................................................................................................

Legal Matters.............................................................................................................................................

Additional Information..............................................................................................................................

Exhibit A — Historical Financial StatementsExhibit B — Investor Suitability RequirementsExhibit C — Subscription AgreementAppendix I — Projected Financial Information

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SUMMARY OF PROPOSED TERMS

THE FOLLOWING INFORMATION IS INTENDED TO SUMMARIZE THE PRINCIPAL TERMS OF THE OFFERING. THE INFORMATION SUMMARIZED IN THIS SECTION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE TEXT OF THE DETAILED PORTIONS OF THIS MEMORANDUM, THE EXHIBITS ATTACHED HERETO, AND THE ACTUAL TERMS OF THE DOCUMENTS AND AGREEMENTS CONCERNING THE RIGHTS AND PREFERENCES OF THE SERIES B PREFERRED SHARES.

The Company is offering shares of its Series B Preferred Stock. The Company reserves the right to approve or disapprove each investor and accept or reject any subscriptions for the Series B Preferred Shares, in whole or in part, in its sole discretion. See “Plan of Offering” and the Investor Suitability Requirements included as Exhibit A to this Memorandum. Assuming that all of the Series B Preferred Shares are sold in this Offering, and assuming a purchase price of $0.10 per share, immediately upon completion of this Offering, the Series B Preferred Shares will represent approximately 15% of the Company’s outstanding capital stock on a fully diluted common stock equivalent basis.

TERMS OF OFFERING

Issuer: NewCo, LLC, to be converted to NewCo, Inc. on June 1, 2010, a Nevada corporation

Amount of Financing: $1,500,000

Securities Authorized 10,566,666 shares of Series A Convertible Preferred Stock,

15,000,000 shares of Series B Convertible Preferred Stock,

45,000,000 shares of Blank Check Preferred Stock, and

130,000,000 shares of Common Stock.

Total Shares of Common Stock Outstanding Before This Offering:

60,000,000 Shares

Securities to be Issued in This Offering:

15,000,000 shares of Series B Convertible Preferred Stock (the “Series B Preferred Shares”), assuming a purchase price of $0.10 per share.

Shares

Series B Convertible Preferred Shares Offered hereby (1)

15,000,000

Total Series B Preferred Shares Outstanding before this Offering

Total Series A Preferred Shares Outstanding before this Offering

None

10,566,666

Common Stock Outstanding Before Offering ........... 60,000,000Outstanding Employee Options and Warrants .......... NoneTotal Common Equivalent Shares Outstanding

on a Fully Diluted Basis After Offering ............... 85,000,000

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(1) Assuming a purchase price of $0.10 per share.

The Company reserves the right to increase or decrease the number of Series B Preferred Shares and the price per Series B Preferred Share. Any increase or decrease in the price per Series B Preferred Share will result in a proportionate increase or decrease in the applicable liquidation preference.

Issue Price: $0.10 per Series B Preferred Share ($0.10 per share on an as converted to Common Stock basis).

Minimum Offering: 250,000 Series B Preferred Shares for a minimum investment of $25,000

Use of Proceeds: The Company plans to use the net proceeds from this offering for general business purposes, including completing development of its NewCo Network, engaging in sales, marketing and product launch efforts, establishing strategic alliances with manufacturers, vendors and associations, and for working capital and general corporate purposes.

TERMS OF SERIES B CONVERTIBLE PREFERRED SHARES

Dividends: The Company does not intend to pay any dividends on the Series B Preferred Shares.

Liquidation Preference: Upon the liquidation, dissolution, or winding up of the Company (either voluntary or involuntary), holders of Series B Preferred Shares are entitled to receive out of the assets available for distribution to its stockholders, an amount equal to $0.10 (as adjusted for any stock dividends, combinations or splits with respect to such shares), for each outstanding share of Series B Preferred Shares held by them, plus any declared but unpaid dividends, prior to any distribution to the holders of Common Stock. If, upon the occurrence of such event, the assets of the Company are insufficient to pay the full preferential amounts to all the holders of the Series B Preferred Shares, the entire assets of the Company legally available for distribution shall be distributed pro rata (on an as converted basis) among the holders of the Series B Preferred Shares in proportion to the aggregate of the full preferential amounts to which each such holder would be entitled if such assets of the Company had been sufficient to permit such payment in full. After the liquidation preference has been paid to the holders of the Series A Preferred Shares, and Series B Preferred Shares, all remaining assets and funds shall be distributed pro rata among the holders of the Common Stock. The merger of the Company with or into another entity, or the sale of all or substantially all of the capital stock or assets of the Company, or other reorganization shall be treated as a liquidation.

Conversion: Each share of Series B Preferred Stock will initially be convertible, at the option of the holder thereof, at any time and from time to time. Each share of Series B Preferred Stock will initially be convertible into one (1) share(s) of Common Stock (subject to anti-dilution adjustments set forth below).

The Series B Preferred Shares will automatically convert into Common Stock (i) upon the closing of a firm commitment underwritten public

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offering of Common Stock in which the gross proceeds are at least $25,000,000 (“Qualified Public Offering”), or (ii) upon consent of the holders of not less than a majority in voting interest of the then outstanding shares of Series B Preferred Stock.

Antidilution Adjustments: Until the Common Stock of the Company is quoted on a national stock exchange, the conversion ratio of the Series B Preferred Shares will be adjusted on a customary broad-based weighted-average basis for subsequent issuances of the Company’s securities below the conversion price of the Series B Preferred Shares, other than the issuance of shares of Common Stock (“Excluded Transactions”): (i) to directors, officers, employees and consultants pursuant to stock grants, option plans, stock purchase plans, or other employee stock incentive programs approved by the Board of Directors; (ii) in connection with mergers or acquisitions (including technology, music rights, or asset acquisitions) by the Company; and (iii) to lenders, lessors, licensors and other parties in non-equity financing transactions. The Series B Preferred Stock conversion rate will be adjusted proportionately for stock dividends, stock splits, combinations, subdivisions, and other similar recapitalization.

Voting Rights: Each share of Series B Preferred Stock will be entitled to that number of votes equal to the number of whole shares of the Company’s Common Stock into which it is convertible. Holders of Series B Preferred Shares will vote only on certain limited matters and do not vote together with the holders of Common Stock. The Series B Preferred Shares, voting together as a separate class, have the right to elect one of the Company’s five directors.

Protective Provisions: In addition to any protections required by law, so long as any shares of the Series B Preferred Stock are outstanding, the Company shall not, without the prior approval of a majority of the outstanding shares of Series B Preferred Stock, voting together as a single class: (a) increase the authorized number of shares of Series B Preferred Shares; (b) pay or declare any dividend or distribution in respect of Common Stock or any other junior equity security other than a dividend in Common Stock; (c) create any new class or series of stock (i) having a preference over the Series B Preferred Shares with respect to voting, dividends, redemption or upon liquidation, or (ii) having protective provision rights superior to the Series B Preferred Shares; (d) amend the Company’s Amended and Restated Articles of Incorporation or Bylaws in a manner which materially adversely affects the Series B Preferred Shares; or (e) effect any liquidation or winding up of the Company.

Rights of First Offer: Each holder of Series B Preferred Stock will have the right to purchase its pro rata share of any future offerings of equity securities by the Company, other than in connection with Excluded Transactions, which right will not be applicable to, and will terminate upon consummation of, the Company’s Qualified Public Offering.

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Stock Option Plan: The Company has adopted the “Incentive Plan” for its employees and consultants, and has reserved an aggregate of 20,000,000 shares of Common Stock for issuance pursuant to the Plan. The Company will not (a) adopt a new stock option or stock purchase plan, or (b) increase the number of shares reserved for issuance pursuant to the Plan without obtaining the prior consent of the holders of a majority of the Common Stock.

Documentation: The purchase and sale of the Series B Preferred Shares will be effected pursuant to a Subscription Agreement attached as Exhibit C, and related documentation prepared by counsel to the Company and containing the terms set forth above as well as representations and warranties, closing conditions and other provisions customary in transactions of this type.

Amendments and Waivers: The terms and provisions of the Subscription Agreement and related documentation may be amended or waived with the written consent of a majority of the outstanding shares purchased thereunder or subject thereto, as the case may be, and the Company.

Counsel to the Company: Insert Attorney Here

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THE COMPANY AND ITS BUSINESS

Overview.

The Company is a provider of A to Z integrated e-commerce and turnkey technology, or “ERP” (Enterprise Resource Planning) solutions that are targeted towards small to mid-sized building materials suppliers (suppliers with gross sales of $150,000 to $20,000,000 per year).

The Company delivers enabling technologies to suppliers using a low cost Applications Solutions Provider (ASP+) model. The Company’s end-to-end business management solutions and services increase the competitive advantage of small and mid-sized suppliers by delivering world-class features on a small supplier’s budget, allowing suppliers to compete wholly and equally, with their larger counterparts, on the "new economy" playing field.

The Company is a second generation ‘B2B’ (Business-to-Business) Internet company, defined as a provider of tools, technology, and expertise to an existing market space, giving its customers superior tools to compete in this new economy. The Company benefits from time-tested business models combined with the frictionless nature of Internet adaptation.

The Company’s vision, like that of Wall Street analysts, is based on the simple idea that the big winners in today’s supply trade will be the businesses that offer both physical and virtual commerce to their customers. The company offers its own vision of supporting a deeply integrated, strategically connected business model, called ProSuite.

The Company was organized as a Utah Limited Liability Company in May of 2000, and will be converted to a Delaware corporation at or about the time of the closing of this Offering. The Company’s executive offices are located at ____________, and its telephone number is __________. The Company’s web site can be found at “www.NewCo.com.” The Company’s web site is not part of this Memorandum.

Industry Background

Overview. The Internet is a global collection of millions of interconnected computer networks that allows businesses, individuals, educational institutions and governmental agencies to communicate electronically, access and share information and conduct business. Until the mid-1990s, the Internet was used by only a limited number of academic institutions, defense contractors and government agencies to provide access to host computers and to send and receive electronic mail. Since then, commercial organizations and individuals have increasingly dominated the use of the Internet. As a result of recent technological advances, including increases in microprocessor speed and the development of easier-to-use graphical user interfaces, the Internet has become an integral part of the daily life of millions of commercial organizations and individuals.

Much of the recent growth in the Internet’s use has been driven by the emergence of a global network of servers and information caches known as the “World Wide Web.” The World Wide Web consists of a wide range of corporate, product, educational, news, research and political information, as well as customer and electronic commerce data. International Data Corporation (“IDC”) has estimated that the number of web pages on the World Wide Web will increase from approximately 351 million web pages at the end of 1997 to approximately 7.7 billion in 2002. The rapid deployment of the web has introduced fundamental changes in the way information, products and services are produced, distributed and consumed, and has significantly lowered the cost of disseminating those items. As a result, the Internet has become a global-wide interactive medium for communications, content and commerce. IDC

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estimates that the number of web users worldwide will increase from approximately 69 million at the end of 1997 to approximately 320 million by 2002.

In addition, business-to-business e-commerce is expected to grow rapidly as the widespread adoption of intranets and acceptance of the Internet create an environment allowing companies to streamline complex processes, lower costs and improve productivity. According to Forrester Research, business-to-business e-commerce is expected to grow from an estimated $406 billion in 2000 to $2.7 trillion in 2004.

There is currently a black hole when it comes to software solution providers in the building material industry. Presently, there are an estimated 200,000 building material dealers1 in the US alone. Of that number, the largest portion of business is conducted by independent building material dealers.

The US Census Bureau calculates that over $757 billion in building material procurement will be put into place in 2000.2 Of that amount, the Company has estimated the following market niche potentials, which correspond with the revenue streams set forth below in the section entitled “Revenue Sources, beginning on page 20 below:

Although the lists from American Business Information show there are 200,000 suppliers, other evidence suggests that the actual number may be more than double that, at 400,000 construction-related building materials supply companies across the United States. This would raise the market size to approximately $10 billion.

Target Market. Most attention in the supply chain is directed toward the “builder/contractor,” who is responsible for fulfilling the vision of the project owner and/or architect. Contractors are responsible for making most of the final purchasing from a multitude of suppliers. Suppliers buy direct from manufacturers, or through distributors/wholesalers, associations, and exchanges. In the supply chain, suppliers are between contractors and manufacturers – and they want to keep it that way. The

1 Source: American Business Information2 United States Census Bureau – Press Release on 06/01/2000

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suppliers and distributors in this supply chain are the Company’s target market. The company will be facilitating suppliers by offering its services to builders, and by managing communications between distributors and manufacturers.

The software market in the building materials industry is a very unique one. Most other markets have evolved their software needs from a ‘Best of Breed3’ approach. This occurred because the stores, in chains, were not integrated to a main system, in real time, which (mainly because of distant geographical locations, phone line costs, and/or other problems) used to be cost prohibitive. New companies are demanding new technology with real time, fully integrated systems. Older companies are now seeing the tremendous cost benefits of having all their locations on one fully integrated system and are starting to move away from their legacy systems. The building material industry has always had the luxury of having a host of fully integrated solutions to choose from. The industry is accustomed to running its entire operation on one box with little or no redundancy. Because of this, the Company believes there will be little, if any hesitation to accept the advanced technology the Company is offering. The Company plans to offer fully integrated ERP with complete redundancy. The Company believes its product will enable customers to realize their ambitions of success.

Market Drivers

Traditional suppliers are embattled with many market pressures, forcing them to stay current with technology. Just a few of these market pressures are:

·· Technology demands are a distraction to company owners and managers trying to run a business.

·· “On-line” contractors and manufacturers demand rapid adoption of e-commerce to facilitate order fulfillment.

·· “Big box” suppliers, such as Home Depot, provide competitive pressures, driving traditional suppliers into obscurity.

·· Suppliers are challenged to maintain/improve profitability while maintaining the high level of service that keeps them in business.

·· Suppliers are frustrated by the lack of existing solutions offering common databases that can be shared by the physical and virtual store.

·· Certain restrictions limit physical inventory and further erode competitive advantage.

The Company believes suppliers in the building material industry are eager to take advantage of the many tools afforded them through the Internet.

Competition

The choices for systems in the Building Material Industry have recently been seriously consolidated, through acquisitions, leaving only a few outdated ‘flat file system’ providers. The remaining companies are scrambling to pay for the development of newer systems by redirecting significant portions of the money collected to support existing products. Most vendors have “end-of-life’d” their legacy systems to advance their newer applications. Service and product functionality have

3 Best of Breed is defined as purchasing a system or product from a vendor that more than likely has NOT provided other elements of the software system. This requires huge investments in technology staff to ensure that these disparate pieces are working together.

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dropped off significantly as the vendors maintain skeleton support teams. Because of this, the remaining building supplier customers are caught in a dilemma.

Their vendors are using their support money to develop products that they will not be able to afford. The Company believes the majority of suppliers are frustrated and disgruntled, when it comes to their software, because they have nowhere to turn for the features and functionality they need for their businesses to grow and compete.

The remaining software vendors are caught in a paradox. They are turning their backs on their existing customer base, which is funding their future, to go after the big box suppliers who they have determined are the only companies that might be able to afford their new software.

The vendors also have several problems with their approach to developing and implementing new technology. All of them have chosen very pricey 4G/L products, or ‘Fat Client’ systems, which inherently have very long and expensive deployments. Because of higher costs, they are all vying for the same segment – customers with over $20 million per year in gross sales.

Another issue with the existing or developing solutions is that none offer common databases which can be shared by both the physical and virtual store. Even if they were to offer a ‘Shopping Cart’ product by making their existing product run on the Internet, it would not be truly eCommerce capable – the two databases are separate and require daily maintenance to function. Even if they purchased ‘Shopping Cart’ software to ‘bolt on,’ it still would not be integrated to the user’s current product.4

A sampling of competitors’ products and pricing, compared to the Company’s follows.

Because of the nature of the competition’s mindset and product, the small to mid-sized supplier, the Company’s target market, remains left out of the picture. For these reasons, the Company believes there is an excellent window of opportunity to capture significant market share.

The Company’s Solution

The Company’s proposition is to deliver a fully integrated suite of mission critical software, which will include databases and ‘Best Business Practices,’ which are common to ProSuite, through the company’s ASP at a very competitive price. ProSuite offers suppliers a very robust physical store

4 This dilemma has manifested itself throughout commerce across every vertical market. Businesses that are adding ‘Shopping Cart’ eCommerce sites are choosing the quick and dirty approach by buying separate packages to do so and then hiring Software Integrators to try and keep their data accurate. In other verticals, several application providers have leaped into this mess contributing to ‘Point Solution Pollution’ (where more and more ‘Best of Breed’ software modules are bought and continually attempted to be integrated to each other at great cost.)

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package that shares the same database with the most advanced e-commerce site available today. Beyond the store, NewCo will connect the business to the customer (B2C), via the Internet, from wherever the customer wants to shop: from the office, in a catalog, at in-store kiosks, at a job site, or from home - all on a single WEB based solution supported by almost any browser based device.

Enabling customers to transact business any time, anywhere, will increases business opportunities while keeping costs of operation low. Accordingly, the Company believes its customers will be able to offer uncommon value and convenience to their clientele; establish competitive barriers to entry in the market by achieving a first-to-market advantage; and enhance their brand reputation in the community. The Company’s customers will also be offering an unprecedented single, consistent, branded view to their customers, their vendors, and across their own enterprise.

The Company’s products are unique with respect to their full feature quality and their low ‘Cost of Ownership.’ Many businesses that have felt they could never afford a full-featured, industry specific system will be eager to use the cost effective products offered by the Company. Many others will switch from their (very expensive) existing systems to enjoy the lower cost of ownership and increased functionality.

(This figure illustrates the full integration of the various elements of the NewCo solution. Each module works in concert with every other module to provide a single, powerful ERP system.)

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The Company’s Application Software will manage every aspect of the store from a merchandise and operations perspective to serve as a strategic foundation on which to build the next generation of both physical and ‘on-line’ stores. It will support the many components surrounding transaction fulfillment functions required to support the store at the store and managerial levels.

·· POS/Order Entry - (Sales and Service) ‘Real time’ Inventory Quantities (i.e. On Hand, On Reserve, Net to Sell, In Transit, On PO, In Manufacturing Process), Special Pricing, Tax Tables, RMA, Returns, Quotes, Bids, Orders, Store Transfers, in-store promotions, Credit and Debit Cards, Shipping, Client Preferences, Configurators, and more…

·· Daily Operations - Labor Scheduling, Accounts Receivable, Accounts Payable, Payroll, and General Ledger.

·· Inventory Management – Pricing, New Items, Deletion of Items, Physical Counts

·· File Maintenance - Managers Utilities - Inventory Control - Purchasing - Receiving

·· and more: Sales Analysis – Forecasting – Labeling - Signage - Distribution & Transfers - eCommerce - Support Hand Held Applications (i.e. Ordering, POS, Physical Count, Receiving, etc.)

The Company’s ASP+ Architecture.

Definition. An ASP (Application Service Provider) is a relatively new and somewhat loosely defined term to describe software industry services which include everything from hosted personal productivity tools like Microsoft Office applications, out-sourced Exchange-based e-mail and providing Enterprise Resource Planning (ERP) applications. The Company will deliver the ERP solution which contains all of the software applications found in much more expensive systems at a much lower price through ASP architecture. Most ASPs are relatively divorced from the software vendor, simply delivering the applications. The “+” indicates that the Company will be more than the ASP, acting as the software vendor.

Function and Access. The interface between the Company and its customers is delivered over the Internet via high speed DSL, ISDN, Frame Relay, or Wireless Connections. As an ASP, the Company is responsible for housing client data, keeping application software, operating system, and hardware current. The Company also keeps client data backed up. All of which is maintained entirely at the Company’s ASP site. Clients access their data and software through the Internet using browser capable devices (such as PCs, NCs, Laptops, Kiosks, PDAs, etc.) on secure connections. This ‘Thin Client to Server’ process is also known as ‘server-side processing’. The client’s view of data is according to an individual’s role. The client may view the entire enterprise, a region of stores, a store, or be limited to a single function. Another advantage is the kiosk and shopping cart interface where the client’s customer can order directly “on-line”.

Savings. The ASP model creates efficiencies that significantly lower the cost of ownership to their clients. This allows the Company to offer superior business management tools to small and medium size businesses, once afforded only by larger suppliers. The ASP houses high speed CPUs with high speed telecommunication circuits eliminating the need for its clients to purchase, update, and maintain equipment (like several NT servers). Further increasing ROI (Return On Investment) is the significant savings in the area of personnel, training and travel time spent performing software upgrades, and backup throughout the business.

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Reliability. Published communication reliability exceeds 99.97%, which is considerably higher than the network reliability numbers of 88%. The Company’s ASP consists of three processing tiers: Client Data, Operating System, and Application Software. Each Tier has disk mirroring for redundancy. Further redundancy is in the form of a backup dial-up line. (The backup line connects automatically if the main circuit should temporarily go off-line.)

Above: NewCo ASP Architecture. Below: Comparing transfer speeds of 1MB Data through 4 different communication modes (Courtesy Bell Atlantic).

The Company’s Strategy

The Tools. As little as 4 years ago, the technical barriers to enter this market place were immense. The Company is using ‘Rapid Software Development’ tools which will allow the company to come to market very rapidly. These tools - Rational Rose, Java 2 Enterprise Edition, Linux, and Oracle 8i Linux Database - allow the company to easily design, implement, modify, add attributes, change fields, etc. The key building block in this new technology is the Enterprise JavaBean (EJB), an unit of Java code that contains all of the business logic and database mapping needed to rapidly perform a given task. The completed product will have many, many EJBs, all working in harmony to manage the supplier’s entire enterprise.

The Know How. The Company’s team knows the industry – how suppliers run their businesses, what information contractors want, why manufacturers are demanding more computer-to-computer transactions. Most importantly, as a group, the company has previously put a successful product in the market – Dimensions.

Communications. Continual reductions in the cost of WAN (Wide Area Networking) options (DSL, Wireless, and Frame Relay) allow the Company’s customers to dramatically reduce the cost and complexity of store technology. This byproduct of the Internet has provided more access options, greater reliability, and wider bandwidth. The trend has been more bandwidth at less cost. Most experts foresee this trend continuing.

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Software Support. Support will be integrated with customer files on one system. This structure allows all the customer’s information to be accessed through a central point providing the big picture for past and present dealings with support, sales, and accounting.

·· The Company’s management, through personal experience and modeling of other premier software companies, believes it is important to have online support. This online support is known as the “Newsgroup.” Newsgroups are made up of customers and online NewCo techs with questions and answers to very specific problems. Frequently, multiple newsgroups are available, each with a separate focus or specialty. The customer base is filled with a wealth of information, and most customers are happy and willing to share their knowledge. Customers can also view indexes of past questions for immediate answers or can log a call. This method provides quick, thorough answers to common or detailed questions saving customers’ time and the Company’s resources.

·· One of the ongoing issues existing solutions providers have with their client base is the varying implementation of revisions their customers have loaded onto their on-site systems. The Company, as an ASP, eliminates this huge barrier. The product enhancements are instantaneous after testing is complete. The customer is always using the latest revision of the NewCo software. Quality control is therefore tighter, and the same product revision exists across the customer base. This consistency equates to an easier product to support.

·· An additional feature that will reduce the need for support and enhance the use of the product is the “IT Wizard.” This built in feature can be turned on or off as easily as clicking a help key. It can be used in a way that will walk an employee through their functions for the day. When an employee needs to complete an unfamiliar routine with the system – rather than calling for help – they would simply enable the wizard and follow the onscreen instruction through to completion. This helps reduce logged support questions from new employees that are trying to figure the system out. It also reduces the on hands training time required for new employees by experienced employees saving the customer money in training time.

Implementation model. The Company’s software is browser based, utilizing any PC or Network Computer which will support Netscape or Microsoft’s Internet Explorer. This configuration lends itself to substantially lower IT costs for a multitude of reasons:

·· The ASP (Application Service Provider) allows for all software, OS (Operating System), and Business Data to reside off premises.

·· IT related and employee training issues are greatly simplified because of familiarity.

·· The ASP Host keeps the most current Hardware, OS, and Software Revisions.

·· Certified Network Technicians on staff.

·· No CPU is required on the Business’ premises.

·· No need for expensive data back-ups as the ASP does the back-ups, sends a copy to the business, and keeps a copy off premises.

Fulfillment. There are no other systems in the market place that track fulfillment from all possible sources on one ticket and provide the customer with one statement for all transactions over all venues.

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Unprecedented Contact Database. In the Company’s product, every contact set up can be any one or all of the following; Charge Customer, Cash Customer, Internet Customer, Store in Chain, Associate Business, Vendor, Employee, Sales Contact, or Sub-Contractor. Using heuristic5 logic, the Company’s customers will be able to track things like product preferences. They’ll be able to store credit card information, favorite shippers, cell phone, and picture IDs. They’ll be reminded of appointments and be provided with contact information like phone numbers and emails.

Vertical Market Requirements. The Company’s attention to the special needs of the building material industry will be another key to success. The ability of our customers to add a “Cyber-Store” where they can be open 24X7 for their customers is significant as contractors have expressed a desire to work on bids for their jobs after normal business hours.

Revenue Sources

The Company has several complementary revenue streams:

·· ASP setup fees - $6,000 to $48,000 per supplier, depending on size and number of locations·· User licenses - $50 to $500 per month per supplier, based on number of employees and security

access level·· Transaction fees - $5 per electronic order (200+ orders per month per supplier)·· Advertising - $5 to $10 per 1000 page views·· Turnkey hardware - $900 per PC, $3600 per cash station, $2100 per router, etc.

Other:

·· Product customization·· Channel partners·· Collection services·· Web Design services·· Maintenance agreements·· Consulting

Marketing Strategy

Sales. Sales of the Company’s equipment, software, services, and support to the Building Material community will be greatly enhanced by the familiarity of our employees to the industry.

WEB Services. The company is currently offering WEB page registering, search engine submissions, and other WEB services.

Sales Staff. The Company has retained an inside salesman and outside salesman with over 25 years of experience and contacts in this industry. They have experience in taking their company from ground zero to tremendous success.

Trade Affiliations. The Company intends to create trade affiliations.

Partners. The company has established some key Business Partners/Relationships and are tagging partners and customers WEB sites with company banners and links. The Company has and will continue to support and attend industry trade shows.

5 Heuristic describes a computer program learning about contacts to anticipate choices to provide better service.

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Branding. The Company will be leveraging it’s brand in trade magazines, trade shows, mailers, phone campaigns, and from various customers and vendors with banner space and links.

Relationships with Top Salespeople. The Company has established relationships with eight salesmen, nationwide, in the building material software industry, who have long lasting relationships with prior customers. These salesmen are waiting, like their customers, for a new solution like the Company’s, because customers do not want to invest in old technology. For this reason the Company plans to be successful in luring top salesmen away from old legacy software companies.

Rollout of NewCo Product Line

Buildout 1-3 months. Finish the development of the NewCo product line. Establish rigorous performance standards and test the product to establish compliance with the standards. Roll out beta release II to larger test market. Alliances will be sought out and created with manufactures, vendors, and associations to help fuel potential prospect leads.

Model State (Utah) 3-10 months. The Company intends to begin offering its products to Utah suppliers, taking advantage of existing relationships. As the product is tested, proven and enhanced, the company will proceed with a regional rollout in the western U.S.

Regional Expansion (Western U.S.) 8-18 months. The Company will utilize an outside sales force, an inside sales force, telemarketing and direct mail to attract potential sales. Existing customers will also be contacted for referrals. Complementary service companies will be sought out for marketing alliances, further enhancing the value proposition to the supplier. During this time, the company will continue to bring on top talent as the need arises.

National Expansion 14-60 months. A national expansion will occur once the revenue streams begin to kick in. This will be jump-started with an advertising campaign in industry trade magazines and attendance at industry trade shows.

Current Company Status

The Company has accomplished a great deal in the past few months, having raised its first seed fund from friends and family in mid-March 2000:

·· Presentation at Investors Choice International in Maui, Hawaii·· Installed hardware, software & network infrastructure·· Core team of developers, designers, and sales with over 74 years experience in the Building

Material Market·· Established, working relationships with two associations with over 800 suppliers·· Late alpha stage software·· First beta site to be up and running by mid August·· Alliance with buzzsaw.com, a leading online construction industry support company·· Working with a national co-op of 5000 suppliers·· Designing and hosting Web Site for Mountain States Lumber and Building Materials Dealer

Association (MSLBMDA).

Company Value Propositions

NewCo’s unique Business Concept contains a more robust product with lower costs of deployment

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and lower on-going costs than the competition. This positions the company to be a dominant player as a provider of ERP software to the building supply industry

Potential to have a positive cash flow by the end of the year 2001. The company is currently generating income with two of its side products while the core product is

being completed. Several Avenues of Revenue; Sales of Software Products, Hardware Products, Support,

Implementation, Data Transfer Fees, Services, WEB transaction fees, WEB Page Design, Networking Design and Installation, Banner sales, and on-going Support Fees

Proprietary technologies and pending patents on advanced software design will provide a competitive advantage

High caliber Business Partners Experienced ‘Industry Savvy’ Management team ASP Deployment Common Data Base 24X7 Virtual Inventory

Material Contracts, Licenses and Relationships.

The Company does not currently have any binding agreements with any other individual, company or entity. However, the Company is in negotiations with many leading companies in the construction industry.

Employees

As of September 1, 2000, the Company employed 5 persons, 3 of whom were engaged in product development and the Company’s technology operations, 1 in marketing and sales, and 1 in finance. None of the Company’s employees is represented by a labor union, and the Company considers its employee relations to be good.

Facilities

The Company’s headquarters are located in ____ where the Company leases approximately 1200 square feet under a month to month lease. The Company expects to lease additional space in its current building as it expands its business operations. The Company believes that its facilities are adequate for its current business operations.

Legal Proceedings

The Company is not currently subject to any material legal proceedings. The Company may, from time to time, become a party to various legal proceedings arising in the ordinary course of its business.

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SELECTED FINANCIAL INFORMATION

The summary historical statement of operations data set below for the period from March of 2000 (inception) to November 1, 2000 are derived from, and are qualified by reference to, the financial statements of the Company attached to this Memorandum as Exhibit B. The summary projected statement of operations data set forth below for the years ending December 31, 2000, 2001 and 2002 and the summary projected balance sheet data at December 31, 2000, 2001, and 2002 are derived from, and are qualified by reference to, the projected financial statements of the Company, including the assumptions thereof, appearing in Appendix I to this memorandum. The data assume the sale of all 15,000,000 shares of Series B Preferred Stock offered hereby at an assumed price of $0.10 per share. The foregoing data should be read in conjunction with the financial statements, notes, projections and assumptions included in Appendix I.

The projected financial information reflects management’s projections as to possible future results based on a number of assumptions that are inherently uncertain, including assumptions as to the timing and success of the Company’s future product development, the size of the market for the Company’s products and services, the Company’s market share, industry conditions and other factors. The assumptions involve significant elements of subjective judgment and analysis, and no representation can be made as to their attainability. The Company’s independent accountants have not examined or assisted in the compilation of the projected financial data, and accordingly assume no responsibility for such data. The projections were not prepared with a view to the public disclosure requirements or compliance with published guidelines of the Securities & Exchange Commission or any state securities commission, or the guidelines established by the American Institute of Certified Public Accountants. There can be no assurance the projections will be realized, and actual results may vary from those set forth in the projections perhaps materially and adversely.

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(In millions) Period fromJanuary 1, 2000

toNovember 1, 2000

Projected FinancialInformation

For the Year Ended2000 2001 2002

Statement of Operations Data:

Revenues .......................................................00695 $2.4 $10.6 $28.5Cost of sales .................................................N/A .4 .7 1.8Gross profit ..................................................N/A 2.0 9.9 26.7

Operating expenses: N/A 4.3 9.2 15.3

Total Expenses .2042Net income {loss) ........................................(.1972) ($2.3) .70 11.20

Net income (loss) per share - basic and diluted ........................................

($.00000000261)

Weighted average shares outstanding in LLC to be converted to Common Shares outstanding in the Corporation upon Closing-basic and diluted ..........................................

75,566,666

November 1, 2000Actual As Adjusted (1)

Balance Sheet Data: $ $

Cash ............................................................................... 134,166.35 16,291,666.35Working capital (deficiency)........................................... 119,492.90 1,614,492.90Property and equipment, net........................................... 43,968.26 43,968.26Total assets..................................................................... 987,992.53 2,482,992.53Common and preferred stock.......................................... 1,119,630.76 2,614,630.76Stockholders’ equity (deficiency)................................... 972,360.16 2,467,360.16

(1) Adjusted to reflect the receipt by the Company of estimated net proceeds of $1,495,000 from the sale of the Series B Preferred Shares offered hereby (at an assumed offering price of $0.10 per Series B Preferred Share and after deducting estimated fees and offering expenses). See “Use of Proceeds.”

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RISK FACTORS

An investment in the Series B Preferred Shares offered hereby involves a high degree of risk and the Series B Preferred Shares should not be purchased by persons who cannot afford the loss of their entire investment. Prospective investors should consider carefully the following risk factors, in addition to the other information presented in this Memorandum, in evaluating the Company and its business.

Development Stage Company; Limited Operating History; Anticipated Losses; Uncertainty of Future Results

The Company has only a limited operating history upon which investors can evaluate the Company and its prospects. The Company’s prospects must be evaluated with a view to the risks normally encountered by early stage companies, particularly the uncertainties relating to the new and evolving markets in which the Company intends to operate and uncertainties regarding the acceptance of the Company’s business model. The Company will incur costs to develop, introduce, to establish marketing and distribution relationships, to create and enhance its technology and business relationships, and to build an administrative organization. To the extent these expenses are not subsequently followed by commensurate revenues, the Company’s business, results of operations, and financial condition could be materially and adversely affected. There can be no assurance the Company will be able to generate sufficient revenues to achieve or maintain profitability on a quarterly or annual basis in the future, if at all. The Company expects negative cash flow from its operations to continue for the foreseeable future as it continues to develop and market its business. If the cash generated by the Company’s operations is insufficient to satisfy its liquidity requirements, the Company may be required to sell additional debt or equity securities. The sale of additional equity or convertible debt securities would result in dilution to the Company’s stockholders.

Fluctuations in Quarterly Operating Results

The Company’s future quarterly operating results may fluctuate significantly as a result of a variety of factors, many of which may be outside the Company’s control, including the amount and timing of capital expenditures and other costs relating to the expansion of the Company’s operations, the introduction of new technology by the Company or its competitors, price competition or pricing changes in the industry, technical difficulties or system downtime, general economic conditions, and economic conditions specific to the Internet, software industry, and building industry.

Dependence on the Internet

The Company’s initial success will depend on its ability to create and deliver its technology in order to attract users and advertisers to its website. There can be no assurance the Company’s services and products will be attractive to a sufficient number of users to generate significant revenues. There can also be no assurance the Company will be able to anticipate, monitor, and successfully respond to rapidly changing Internet consumer tastes and preferences so as to attract a sufficient number of users to its products and services. If the Company is unable to develop services and products that attract, retain, and expand a loyal user base, its business, results of operations, and financial condition will be materially adversely affected.

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Proprietary Rights

The Company regards its copyrights, service marks, trademarks, trade dress, trade secrets and proprietary software and similar intellectual property as critical to its success, and relies on trademark and copyright law, trade secret protection, confidentiality and/or license agreements and other contractual arrangements with its employees, customers, partners and others to protect its proprietary rights. The Company does not currently hold any patents, but may pursue patent applications in the future for certain portions of its proprietary rights. The Company intends to pursue the registration of certain of its key trademarks and service marks in the United States, and internationally. Effective trademark, service mark, copyright and trade secret protection may not be available to the Company in every country in which the Company’s products and services are made available online. There can be no assurance the steps the Company takes to protect its proprietary rights will be adequate, or that third parties will not infringe or misappropriate its copyrights, trademarks, trade dress or similar proprietary rights. In addition, there can be no assurance that other parties will not seek or assert infringement claims, including patent infringement claims, against the Company. The Company may become subject to legal proceedings and claims of alleged infringement of trademarks and other intellectual property rights of third parties by the Company and its licensees or licensors. Those claims, even if not meritorious, could result in the Company’s expenditure of significant financial and managerial resources, which could result in a material adverse effect on the Company’s business, financial condition and results of operations.

The Company’s services operate in part by making Internet services and software available to its users. Litigation regarding intellectual property rights is common in the Internet and software industries, and the Company expects that Internet technologies and software products and services may be increasingly subject to third party infringement claims as the number of competitors in the Internet and software industry grows and the functionality of products in different industry segments overlaps.

Although the Company is not aware of any other companies that are currently using or have plans to use the terms NewCo, and ProSuite, and variations of those terms as part of a company name, trademark or service mark, there can be no assurance other companies will not claim the rights in those terms or similar terms superior to the Company’s rights, or which will not subject the Company to infringement claims. A successful infringement claim by the owner of a mark, including any of those terms or a variation of those terms, could require the Company to change its name, which could be expensive and disruptive to its business operations. Further, despite the Company’s attempts to protect its proprietary rights, unauthorized parties may attempt to copy or otherwise obtain and use the Company’s services, technology and other intellectual property, and the Company cannot be certain that the steps that it has taken will prevent any misappropriation or confusion among consumers and advertisers.

The Internet domain “NewCo.com,” is an extremely important part of the Company’s business. The acquisition and maintenance of domain names generally are regulated by governmental agencies and their designees. For example, in the United States, the National Science Foundation has appointed Network Solutions, Inc. as the current exclusive registrar for the “.com,” “.net,” and “.org” domains. The regulation of domain names in the United States and in foreign countries is subject to change in the near future. The Company believes that such changes in the United States may include the transition for the current system to a system that is controlled by a non-profit corporation and the creation of additional top-level domains. Governing bodies may establish additional top-level domains, appoint additional domain name registrars or modify the requirements for holding domain names. As a result, the Company may be able to acquire or maintain relevant domain names in all countries in which it conducts business. Furthermore, the relationship between regulations governing domain names and the laws protecting trademarks and similar proprietary rights is unclear. Therefore, the Company may be

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unable to prevent third parties from acquiring domain names that are similar to, infringe upon, or otherwise decrease the value of the Company’s trademarks and other proprietary rights.

The Company’s future success will depend on its ability to significantly increase revenues, which will require, among other things, the development and widespread acceptance of the Internet as a medium for commerce. Use of the Internet by consumers is at an early stage of development, and market acceptance of the Internet as a medium for advertising and commerce is subject to a high level of uncertainty. The Internet may not prove to be a viable commercial marketplace because of inadequate development of necessary infrastructure, such as reliable network backbones, or complementary services, such as high speed modems and security procedures for financial transactions. The viability of the Internet may prove uncertain because of delays in the development and adoption of new standards and protocols (for example, the next generation Internet Protocol) to handle increased levels of Internet activity or increased government regulation. If use of the Internet does not continue to grow, or if the necessary Internet infrastructure or complementary services are not developed to effectively support any growth that may occur, the Company’s business, results of operations, and financial condition could be materially adversely affected.

Management of Growth

The Company’s future success will depend, in part, on its ability to successfully manage the expansion of its operations. The Company’s ability to manage and support its growth effectively will be dependent, in part, on its ability to implement adequate improvements to financial and management controls, reporting and order entry systems, and other procedures, and to hire sufficient numbers of marketing, sales, financial, accounting, administrative, and management personnel. The growth in the number of the Company’s employees will result in increased responsibility for both existing and new management personnel. There can be no assurance the Company will be able to identify, attract, and retain experienced sales, marketing and financial personnel. The Company’s future operating results will depend on the ability of its management and other key employees to implement and improve its systems for operations, and to recruit, train, and manage its employee base. If the Company is unable to do so, the Company’s business, results of operations, and financial condition could be materially adversely affected.

Competition

The Company believes the primary competitive factors in providing Internet-based products and services are name recognition, the variety of value-added services available, ease of use, price, quality of service, availability of customer support, the reliability of its products and services and the technical expertise and experience of its employees. The Company’s success will depend in part on its ability to provide high quality, cutting-edge technology and value-added services. Other factors that will affect the Company’s success will include the Company’s ability to attract experienced technical, marketing, sales, and management talent. In addition, the competition is intense for advertising revenues, both on Internet web sites and in more traditional media.

The ASP market is new, highly competitive, and rapidly changing. In addition to competition from new and existing ASP’s, the Company faces competition from traditional companies providing similar technology. As an example, some existing technologies allow the remote deployment of multiple company / multiple store applications. Although not as elegant as the solutions offered by the Company, these deployments may prove cost effective for potential customers of the Company.

Many of the Company’s current and potential competitors in the ASP industry have longer operating histories, significantly greater financial, technical and marketing resources, greater name

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recognition, and larger existing customer bases than the Company. These competitors may be able to respond more quickly to new or emerging technologies, to changes in customer requirements and may be able to devote greater resources to the development, promotion, and sale of their products or services than the Company. There can be no assurance the Company will be able to compete successfully against current or future competitors.

Uncertain Acceptance and Maintenance of the Company’s Brand

The Company believes that establishing and maintaining brand names is a critical aspect of its efforts to attract and expand its customer base. If the Company is unable to or otherwise fails to promote and maintain its brands, or if the Company incurs excessive expenses in an attempt to improve its technology or promote and maintain its brands, the Company’s business, results of operations and financial condition will be materially adversely affected.

Dependence on Key Personnel and Hiring of Additional Personnel

The Company’s performance will depend, in part, on the services of its executive personnel, as well as on its ability to recruit, retain, and motivate its other officers and key employees. The Company’s success will also depend on its ability to attract and retain additional qualified employees, including, financial, technical, sales and marketing personnel. Competition for qualified personnel is intense and there are a limited number of persons with knowledge of and experience in technology industries. There can be no assurance the Company will be able to attract and retain key personnel. The Company’s loss of one or more of its executive personnel or key employees could have a material adverse effect on its business, results of operations and financial condition.

The loss of the services of any of the key personnel, the inability to attract or retain qualified personnel in the future, or delays in hiring required personnel, particularly technical and sales personnel, could have a material adverse effect on the Company’s business, results of operations and financial condition. In addition, companies in the technology industry whose employees accept positions with competitive companies frequently claim their competitors have engaged in unfair hiring practices. There can be no assurance the Company will not receive such claims in the future as it seeks to hire qualified personnel. The Company could incur substantial costs in defending itself against any such claims, regardless of the merits of such claims.

Dependence On Strategic Alliances

The Company intends to rely on certain strategic alliances to attract users to its products and services, and to provide alternative distribution channels for its products and services. The Company will seek alliances with computer, Internet, services, and advertising companies which the Company believes will result in increased customers. If the Company is unable or fails to enter into new, and to maintain any one or more of its existing, strategic alliances, its business, results of operations, and financial condition could be materially adversely affected.

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Uncertain Value of Company, Absence of Professional Opinion

There have been no professional opinions concerning the value of the Company’s stock, the value of the Company’s assets, the net worth of the Company, the projected financial information, or other matters related to this Offering.

Rapid Technological Change

The Internet and technology industries are characterized by frequent new product introductions, rapidly changing technology, and the emergence of new industry standards. The rapid development of new technologies increases the risk that current or new competitors will develop products or services that reduce the competitiveness and are superior to the Company’s products and services. The Company’s future success will depend to a substantial degree upon its ability to develop and introduce in a timely fashion new products and services and enhancements to its existing products and services that meet changing customer requirements and emerging industry standards. These new products and services include not only products and services related to the Company’s core NewCo ProSuite Technology, but ancillary products and services, such as web site design, hardware sales, internet connectivity products and services, etc. The development of new, technologically advanced products and services is a complex and uncertain process that requires high levels of innovation, as well as the accurate anticipation of technological and market trends. There can be no assurance the Company will be able to identify, develop, market, support, or manage the transition to new or enhanced products or services successfully or on a timely basis, that the Company’s new products or services will be responsive to technological changes or will gain market acceptance, or that the Company will be able to respond effectively to announcements by competitors, technological changes, or emerging industry standards. The Company’s business, results of operations, and financial condition would be materially and adversely affected if the Company were to be unsuccessful, or incur significant delays, in developing and introducing new products, services, or enhancements.

Difficulties in Developing Potential Revenue Streams

The Company is subject to several constraints which may limit its ability to generate revenues. For example, an unwillingness or slow adoption on the part of building professionals to use the internet interface for materials purchases; a reduction in the number of companies willing to place advertising on internet sites; hesitation in the building materials supply industry to adopt the solutions offered by the Company; and other similar constraints.

System Interruptions and Capacity Constraints

Because the Company is an ASP, the Company’s ability to successfully compete in the market place and provide acceptable levels of service largely depends on the efficient and uninterrupted operation of its computer and communications hardware and network systems, as well as the operation of third parties’ computer communications hardware and network systems. The Company does not possess insurance to cover losses caused by unplanned system interruptions or software defects, but intends obtain such coverage if it can on cost effective basis. There can be no assurance that even with those arrangements in place the Company will not suffer interruptions in its service or operations. The Company may experience interruptions in its services in the future, and that such interruptions will continue to occur from time to time. Those interruptions could result from hardware failures, operating system failures, inadequate Internet infrastructure capacity and other mechanical or human causes. The Company expects to experience occasional, temporary capacity constraints due to sharply increased traffic, which could cause unanticipated system disruptions, slower response times, impaired quality and degradation of its levels of customer service. If the Company experiences frequent or long term system

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interruptions that reduce its ability to provide its services, the Company may experience a decrease in the number of its users. Further, the Company may enter into service agreements with some of its business partners that require minimum performance standards. If the Company fails to meet those standards, its business partners could terminate their relationships with the Company.

The Company’s expansion and adaptation of its network infrastructure will likely require substantial financial, technical, operational and managerial resources. The Company’s ability to continue to connect and manage an expanding number of partners and end users on its network at high transmission speeds is unproven and uncertain. The Company faces significant risks related to its network’s ability to operate at higher use levels while maintaining expected performance levels.

Software Defects

The Company’s offerings depend in part on the use of complex software it has or may develop. This software may contain defects, particularly when it (or new versions) is first introduced. Although the Company anticipates it will conduct extensive testing of its software, it may not discover software defects that affect its new or current services or enhancements until they are deployed. The Company has not experienced any material software defects to date, but it is possible that, despite the Company’s testing of its software, defects may exist in the software that it currently uses. Those defects could cause service interruptions that could damage the Company’s reputation or increase its service costs, cause the Company to lose revenue, delay market acceptance of its services, or develop its programs and resources, any of which could cause the Company’s business to suffer. To the extent the Company’s services are based on software products provided by third parties, the Company will have no control over the quality of such software.

Reliance on Third Party Technology

The Company will depend on certain companies to supply certain key components of its communications infrastructure and its system and network management solutions and software. Those key components include telecommunications services and network equipment that, in the quantities and quality that the Company demands, are or may only be available from limited sources. If any of those providers were to discontinue their arrangements with the Company, and alternative providers did not quickly emerge or were to increase the cost of providing access to their equipment, the Company’s ability to conduct its business operations could be significantly affected.

Risks Associated with Acquisitions

As part of its business strategy, the Company may from time to time acquire assets and businesses relating or complementary to its operations. These acquisitions may include acquisitions for the purpose of obtaining existing technology or business relationships. These acquisitions would involve risks commonly encountered in acquisitions of companies, including, among other things, exposure to unknown liabilities of the acquired companies, acquisition costs and expenses that are higher than anticipated, fluctuations in the Company's quarterly and annual operating results due to the costs and expenses of acquiring and integrating the new businesses or technologies, difficulties and expenses in assimilating the operations and personnel of the acquired businesses, disruption of the Company's ongoing business and diversion of its management's time and attention, the Company’s inability to integrate successfully or to complete the development and application of the acquired technology or the Company’s failure to achieve anticipated financial, or other benefits from the acquisitions, difficulties in establishing and maintaining uniform standards, and policies, impairment of the Company's relationships with its key employees and customers of the acquired business loss of key employees and customers as a result of changes in management and ownership of the acquired businesses, and

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amortization expenses if an acquisition is accounted for as a purchase (which could result in significant goodwill or other intangible assets). In addition, the Company's stockholders may be diluted if the consideration for the acquisition consists of equity securities. The Company may not overcome these risks. If the Company is unsuccessful in overcoming or solving these risks, its business, results of operations and financial condition could be materially and adversely affected.

Security Risks

A party who is able to circumvent the Company’s security measures could misappropriate proprietary information or cause interruptions in the Company’s ASP operations. The Company may be required to expend significant capital and resources to protect against or decrease the threat of such security breaches or to alleviate problems caused by them. Consumer concern over Internet security has been, and could continue to be, a barrier to the use and growth of commercial activities that require consumers to send information over the Internet. Computer viruses, break-ins, or other security problems could lead to misappropriation of proprietary information and interruptions, delays, or cessation in service to the Company’s customers. Moreover, until more comprehensive security technologies are developed, the security and privacy concerns of existing and potential customers may inhibit the growth of the Internet as a vehicle to provide technology.

Need for Additional Funds

The Company may require further capitalization. Although not anticipated at this time, the cost of developing business applications, a new delivery paradigm and additional, previously unavailable services may exceed the amount of capital on hand and outstrip anticipated cash flow. If such a need were to arise, the Company would be forced to seek additional funds.

Dependence on Intellectual Property Rights; Dependence on Licensed Technology

The Company will rely on a combination of proprietary technology and equipment and software currently available to other ASP’s which the Company licenses from third parties to conduct its business operations. There can be no assurance that any such third party technology licenses will be available to the Company on acceptable commercial terms, or at all.

The Company relies on copyright, contractual agreements and trade secret laws to protect its proprietary technologies and information. There can be no assurance those methods will provide sufficient protection to the Company, that others will not develop technologies, information or procedures that are similar or superior to the Company’s technology, or that third parties will not copy or otherwise obtain and use the Company’s technologies without its authorization.

Governmental Regulation and Legal Uncertainties

The Company is not currently subject to direct federal, state, or local regulation, or laws applicable to access to or commerce on the Internet, other than regulations applicable to businesses generally. Due to the increasing popularity of the Internet and other online services, it is possible that a number of laws and regulations may be adopted with respect to the Internet or other online services covering issues such as user privacy, “indecent” materials, freedom of expression, pricing, content and quality of products and services, taxation, advertising, intellectual property rights, and information security. The adoption of any of those laws or regulations could decrease the rate of growth of Internet use, which, in turn, could decrease the demand for the Company’s products and services, increase the Company’s cost of doing business or in some other manner have a material adverse effect on the Company’s business, results of operations, or financial condition.

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The applicability to the Internet of existing laws governing issues such as property ownership, copyrights and other intellectual property issues, taxation, libel, obscenity, and personal privacy is uncertain. The vast majority of these laws were adopted prior to the advent of the Internet and related technologies and, as a result, do not contemplate or address the unique issues presented by the Internet and its related technologies. The Company does not believe any of those regulations govern the Company’s business, and no state has filed any claim against the Company suggesting that the Company is subject to any such legislation. There can be no assurance, however, that a state will not attempt to impose those regulations on the Company in the future or that, if one or more states attempt to impose those regulations, the Company’s business, results of operations, and financial condition would not be materially adversely affected.

Several states have proposed legislation that would limit the uses of personal user information that is gathered online or require online services to establish privacy policies. The Federal Trade Commission has also initiated action against at least one online service regarding the manner in which personal information was collected from users and provided to third parties. Changes to existing laws (or the passage of new laws intended to address these issues, including some recently proposed changes), could create uncertainty in the Internet marketplace that could reduce demand for the Company’s products and services or increase its cost of doing business as a result of litigation costs or increased service delivery costs, or could in some other manner have a material adverse effect on the Company’s business, results of operations, or financial condition. In addition, because the Company’s services will be accessible worldwide, and the Company intends to facilitate sales of goods to users worldwide, jurisdictions may claim that the Company is required to qualify to do business as a foreign corporation in a particular state or foreign country. The Company’s failure to qualify as a foreign corporation in a jurisdiction where it is required to do so could subject the Company to taxes and penalties for the failure to qualify and could result in the Company being unable to enforce contracts in those jurisdictions. Any such new legislation or regulation, or the application of laws or regulations from jurisdictions whose laws do not currently apply to the Company’s business, could have a material adverse effect on the Company’s business, results of operations, and financial condition.

Potential Liability for Sales and Other Taxes

New state tax regulations could subject the Company to sales and income taxes in some states. Although the Internet Tax Freedom Act prohibits, for a period of three years, the imposition of state and local taxes that discriminate against or single out the Internet, it does not impact currently existing taxes. Taxing authorities in a number of states are currently reviewing the appropriate tax treatment of companies engaged in Internet retailing and are considering an agreement with certain of these companies regarding the assessment and collection of sales taxes. The Company is not a party to any such discussions.

Control by Management and Existing Stockholders

Upon completion of this Offering, the Company’s executive officers, directors, and affiliated entities together will continue beneficially to own a majority of the voting control of the Company’s capital stock. As a result, these stockholders, acting together, will be able to influence significantly and control most matters requiring approval by the Company’s stockholders, including the election of directors. Such a concentration of ownership may have the effect of delaying or preventing a change in control of the Company. See “Principal Stockholders.”

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No Public Market; Possible Volatility of Share Price; Dilution

The Company’s securities are not traded over any established market, and it is unlikely that a market will develop for the Company’s securities in the foreseeable future. If a trading market for the Company’s securities was to develop, factors such as announcements by the Company or its competitors, of technological innovations or new products, failure to meet securities analysts’ expectations, government regulatory action, patent or proprietary rights developments, and market conditions for technology stocks in general could have a material adverse effect on the market price of the Company’s securities.

The offering price of the Series B Preferred Shares is substantially higher than the net tangible book value per share of the Series B Preferred Shares. Investors purchasing the Series B Preferred Shares will, therefore, incur immediate and substantial net tangible book value dilution. To the extent stock options or warrants (currently outstanding or subsequently granted) to purchase the Company’s Common Stock or Preferred Stock are exercised, investors in this Offering may become subject to further dilution.

Protection of Intellectual Property and Proprietary Rights

The Company regards certain copyrights, service marks, trademarks, trade secrets and similar intellectual property as critical to its success, and relies on trademark and copyright law, trade secret protection and confidentiality or license agreements with its employees and business partners to protect its intellectual proprietary rights. Third parties may infringe or misappropriate the Company’s copyrights, trademarks or similar proprietary rights. Although the Company has not filed any patent applications, the Company may seek to patent certain software of other technology in the future. Any such future patent applications may not be issued within the scope of the Company’s claims, or at all. The Company cannot be certain that its software does not infringe issued patents. In addition, because patent applications in the United States are not publicly disclosed until the patent is issued, applications may have been filed with the United States Patent and Trademark Office which relate to software products the Company currently uses.

Despite the Company’s precautions, unauthorized third parties may copy certain portions of the Company’s technology or reverse engineer or obtain and use information that the Company regards as proprietary to it. End user license provisions protecting against unauthorized use, copying, transfer and disclosure of licensed programs may be unenforceable under the laws of some jurisdictions and foreign countries. In addition, the laws of some foreign countries do not protect proprietary rights to the same extent as do the laws in the United States. The Company’s means of protecting its proprietary rights in the United States or abroad may not be adequate.

The Company may be subject to legal proceedings and claims regarding intellectual property rights from time to time in the ordinary course of its business. Those proceedings may involve claims of alleged infringement by the Company of the trademarks or other intellectual property rights of third parties, or claims by the Company to protects its proprietary rights. Any intellectual property litigation, regardless of whether the Company ultimately prevails, would likely be expensive and time consuming, and could divert the attention of the Company’s management away from the Company’s business operations. If the Company loses any such dispute, it could be subject to substantial liabilities. The Company could also be prevented from using technology upon which it relies or be forced to license technology from third parties. Those licenses may not be available on commercially acceptable terms, if at all. Even if they are available, those licenses could result in significant expenses to the Company that could harm its operating results, financial condition or business operations. If those licenses are not

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available, the Company would have to develop comparable technology itself, which could be expensive and result in interruptions in the Company’s services.

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USE OF PROCEEDS

The Company estimates that the net proceeds from the sale of the Series B Preferred Shares offered hereby will be approximately $1,495,000 (assuming a purchase price of $0.10 per share), before deducting aggregate estimated fees and offering expenses payable by the Company of approximately $5,000. The Company plans to use the net proceeds from this Offering for general business purposes, including completing development of its NewCo product line, engaging in sales, marketing and product launch efforts, establishing strategic alliances with manufacturers, vendors and associations, and for working capital and general corporate purposes. There can be no assurance that the actual amounts expended by the Company will not vary from the amounts set forth below, or that the Corporation will not utilize the proceeds of the offering for other purposes. The figures assume the sale of all 15,000,000 Shares at $0.10 per share, and further assume that the Company will incur expenses relating to the Offering in the approximate amount of $5,000. The Company reserves the right to increase or decrease the number of shares and the price per share of the Series B Preferred Shares offered hereby. Any such changes would result in concomitant changes in the net proceeds available to the Company from this Offering.

Distribution of Funds:      

       Item Amounts % Notes

Software Development $448,500 29.90%Rapidly complete the release version of ProSuiteAdministration $239,200 15.95%Operations and overheadCapital $343,850 22.92%Computers and equipmentSales & Marketing $313,950 20.93%Marketing, advertising, and product launchReserve $149,500 9.97%OversightsCosts of Offering $5,000 .33%Total Use $1,500,000 100.00% 

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MANAGEMENT

Executive Officers, Directors and Key Employees

The following table sets forth certain information about the executive officers, directors, key employees, and key consultants of the Company as of the date hereof. Biographical information for each of the listed persons is also presented below. Among the directors, executive officers and listed key employees and consultants there is a family relationship between David Smart and Thomas Smart, who are brothers. Thomas Smart is the representative of the Smart Family Trust, which is comprised of other Smart family members. The Company’s board of directors is currently comprised of four (4) members, each of whom are elected for two (2) year terms. Executive officers are chosen by, and serve at the discretion of, the Board of Directors.

Name Age Position(s)

33 Interim CEO and Director

35 Vice President of Sales and Director

30 Chief Information Officer

46 Director

49 Director

37 Software Development Consultant

53 Software Development Consultant

Director Compensation

Directors do not receive cash compensation for serving on the Board of Directors, or for any other services rendered to the Company in their capacity as director of the Company, but are reimbursed for expenses they incur in connection with attending Board meetings.

Employment/Consulting Agreements

The Company has consulting agreements with X and Y.

Limitations of Liability and Indemnification

The Company’s Articles of Incorporation will limit the personal liability of directors and officers for monetary damages to the maximum extent permitted by the Delaware General Corporation. Delware law permits a corporation to indemnify any current or former director, officer, employee or agent if the person acted in good faith and in a manner in which he reasonably believed to be in or not opposed to the best interests of the corporation. In the case of a criminal proceeding, the indemnified person must also have had no reasonable cause to believe that his conduct was unlawful.

The Company’s Bylaws will provide that, to the full extent permitted by the Company’s Articles of Incorporation and the Delaware General Corporation Law, the Company will indemnify (and advance expenses to) the Company’s officers, directors and employees in connection with any action, suit or

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proceeding (civil or criminal) to which those persons are made party by reason of their being a director, officer or employee. Any such indemnification is in addition to the advancement of expenses.

At present, there is no pending litigation or proceeding involving any director, officer, employee or agent of the Company where indemnification by the Company would be required or permitted. The Company is not aware of any threatened litigation or proceeding which would result in a claim for such indemnification.

Employee Benefit Plans

Upon Closing, the Company will adopt its 2000 Equity Incentive Plan (the “Incentive Plan”). The Company believes that the availability of stock options and other incentives that are permitted to be awarded under the Incentive Plan will be an important factor in the Company’s ability to attract and retain qualified employees and to provide incentive for them to exert their best efforts on behalf of the Company.

All employees, officers and directors of the Company are eligible to participate in the Incentive Plan. Also eligible are non-employee agents, consultants, advisors and independent contractors of the Company or any subsidiary of the Company. The Incentive Plan will be administered by the Board, which will designate from time to time the individuals to whom awards are made under the Incentive Plan, the amount of any such award and the price and other terms and conditions of any such award. The Board has authority for administration of the Incentive Plan. Subject to the provisions of the Incentive Plan, the Board, may adopt and amend rules and regulations relating to the administration of the Incentive Plan. Only the Board may amend, modify or terminate the Incentive Plan.

A total of 20,000,000 shares of Common Stock are reserved for issuance under the Incentive Plan. At the date of this Memorandum, no options for shares have been granted. The Incentive Plan permits the grant of incentive stock options, nonstatutory stock options, stock awards, stock appreciation rights, cash bonus rights, dividend equivalent rights, performance-based awards and foreign qualified grants. Common Stock awarded under the Incentive Plan may be authorized and unused Common Shares or Common Stock acquired in the market. If any award granted under the Incentive Plan expires, terminates or is cancelled, or if Common Stock sold or awarded under the Incentive Plan is forfeited to the Company or repurchased by the Company, the Common Stock again becomes available for issuance under the Incentive Plan.

The Board determines the persons to whom options are granted, the option price, the number of shares of Common Stock to be covered by each option, the period of each option, the times at which options may be exercised and whether the option is an incentive stock option (“ISO”), as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or a non-statutory stock option (“NSO”). An employee may be granted options or stock appreciation rights under the Incentive Plan as determined by the Board of Directors. No monetary consideration is paid to the Company upon the granting of options.

The Board may award Common Stock under the Incentive Plan as stock bonuses, restricted stock awards or otherwise. The Board determines the persons to receive awards, the number of shares of Common Stock to be awarded and the time of the award. Common Stock awarded as a stock bonus are subject to the terms, conditions and restrictions determined by the Board at the time the bonus is awarded.

Stock appreciation rights (“SARs”) may be granted under the Incentive Plan. SARs may, but need not, be granted in connection with an option grant or an outstanding option previously granted under the Incentive Plan. An SAR gives the holder the right to payment from the Company of an amount equal in value to the excess of the fair market value on the date of exercise of a Common Stock over its fair market

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value on the date of grant or, if granted in connection with an option, the option price per share under the option to which the SAR relates.

An SAR is exercisable only at the time or times established by the Board. If an SAR is granted in connection with an option, it is exercisable only to the extent and on the same conditions that the related option is exercisable. Payment by the Company upon exercise of an SAR may be made in Common Stock valued at its fair market value, in cash, or partly in stock and partly in cash, as determined by the Board. The Board may withdraw any SAR granted under the Incentive Plan at any time and may impose any condition upon the exercise of a SAR or adopt rules and regulations from time to time affecting the rights of holders of SARs. No SARs have yet been granted under the Incentive Plan. The existence of SARs, as well as certain bonus rights described below, would require charges to income over the life of the right based upon the amount of appreciation, if any, in the market value of the shares of Common Stock over the exercise price of shares subject to exercisable SARs or bonus rights.

The Board may grant cash bonus rights under the Incentive Plan in connection with (i) options granted or previously granted, (ii) SARs granted or previously granted, (iii) stock awarded or previously awarded and (iv) shares sold or previously sold under the Incentive Plan. Bonus rights may be used to provide cash to employees for the payment of taxes in connection with awards under the Incentive Plan. No cash bonus rights have yet been granted under the Incentive Plan.

The Board may grant awards intended to qualify as performance-based compensation under Section 162(m) of the Code and the regulations thereunder (“Performance-based Awards”). Performance-based Awards may be denominated either in Common Stock or in dollar amounts. All or part of the awards will be earned if performance goals established by the Board for the period covered by the awards are met and the employee satisfies any other restrictions established by the Board. The performance goals will be expressed as one or more targeted levels of performance with respect to the Company or any subsidiary, division or other unit of the Company, including performance levels relating to earnings, earnings per share, stock price increase, total stockholder return (stock price increase plus dividends), return on equity, return on assets, return on capital, economic value added, revenues, operating income, cash flows or any of the foregoing. No Performance-based Awards have been granted under the Incentive Plan.

The Incentive Plan will continue in effect for ten years from the date it was adopted by the Board, subject to earlier termination by the Board. The Board may suspend or terminate the Incentive Plan at any time.

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PRINCIPAL STOCKHOLDERS

The following table sets forth information as to the beneficial ownership of the Company’s Common Stock and Preferred Stock (currently consisting of 60,000,000 shares of Common Stock in the LLC, which will be converted to Common Shares outstanding in the Corporation on January 1, 2001 and 10,566,666 shares of Series A Preferred Stock which will be converted to Series A Preferred Shares in the Corporation on January 1, 2001) on a fully diluted basis as of November 15, 2000, and as adjusted to reflect the sale by the Company of the Series B Preferred Shares offered hereby, by: (i) each entity or group that is known by the Company to own more than 1% of the outstanding capital stock of the Company (on a Common Stock equivalent basis); (ii) each director; (iii) each of the executive officers; and (iv) all executive officers and directors as a group. Except as otherwise noted, the persons named in the table have sole voting and investment power with respect to all shares of Common Stock shown as owned by them, subject to community property laws where applicable.

Percentage of Shares Owned (1)

OwnerNumber of Shares

Owned Before Offering

(1)After Offering

(1)

X 40,800,000 57.28% 47.68%Y 15,000,000 21.26% 17.53%Z 600,000 .85% 0.70%A 3,600,000 5.10% 4.21%

All officers, directors and initial shareholders as a group (four (4) persons)

60,000,000 85.03% 70.12%

(1) Assumes 60,000,000 shares of Common Stock outstanding and 10,566,666 shares of Series A Preferred Stock outstanding (on a Common Stock equivalent basis) before and after the Offering. Does not include 20,000,000 shares of Common Stock reserved for issuance under the Incentive Plan.

DESCRIPTION OF CAPITAL STOCK

The authorized capital of the Company consists of 130,000,000 shares of Common Stock, with no par value, 10,566,666 shares of Series A Preferred Stock, with a par value of $.001, and 15,000,000 shares of Series B Preferred Stock with a par value of $.001. As of November 15, 2000, there were 60,000,000 Common Shares and 10,566,666 Series A Preferred Shares in the LLC outstanding, which shares shall convert to 60,000,000 Common Shares and 10,566,666 Series A Preferred Shares in the Corporation on January 1, 2000. As of November 15, 2000, no Series B Preferred Shares were outstanding. As of the same date, there were four holders of record of the outstanding equity in the LLC, seven (7) holders of record of the authorized Series A Preferred Shares and no holders of record of the authorized Series B Preferred Shares.

Common Stock

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Subject to the preferences that may be applicable to any then outstanding Preferred Stock, holders of shares of Common Stock are entitled to receive, ratably, such dividends as may be declared by the Board of Directors out of funds legally available for such purposes. In the event of a liquidation, dissolution, or winding up of the Company, the holders of the shares of Common Stock will be entitled to share ratably in all assets remaining after the payment of the Company’s liabilities and the liquidation preference on any then-outstanding Preferred Stock. The holders of the shares of Common Stock have no preemptive rights, and no right to convert their Common Stock into any other securities. There are no redemption or sinking fund provisions applicable to the Common Stock. All outstanding shares of Common Stock are fully paid and non-assessable. The holders of the shares of Common Stock are entitled to one vote for each share they hold of record on all matters submitted to a vote of the shareholders. The Company does not anticipate paying cash dividends on the Common Stock for the foreseeable future.

Preferred Stock

The Company’s Articles of Incorporation will authorize the issuance of up to 70,000,000 shares of Preferred Stock. The Board of Directors will have the authority to issue Preferred Stock in one or more series and to fix the rights, preferences, privileges and restrictions of the Preferred Stock, including dividend rights, conversion rights, voting rights, redemption terms, liquidation preferences and the number of shares constituting any series, without any further vote or action by the Company’s shareholders. The issuance of Preferred Stock under certain circumstances may have the effect of delaying or preventing a change in the control of the Company and the issuance of Preferred Stock with voting, conversion or other rights may adversely affect the voting power and rights of the holders of the outstanding shares of Common Stock.

As of November 15, 2000, the Company’s Board of Directors had designated two series of Preferred Stock, consisting of 10,566,666 Series A Preferred Shares and 15,000,000 Series B Preferred Shares. As of that date, there were 10,566,666 Series B Preferred Shares outstanding. The Company has not issued any options or warrants to acquire any Series A Preferred Shares, any Series B Preferred Shares or any Common Shares.

Series A Preferred Shares. The rights and preferences of the Series A Preferred Shares are as follows: (i) they have a liquidation preference of $ 0.10 per share; (ii) they carry voting rights which entitle the holder to one vote for each share of Common Stock into which the Series A Preferred Shares can be converted; (iii) they carry voting rights pertaining only to certain limited matters and do not vote together with the holders of the Common Stock; (iii) they are nonredeemable; (iv) they do not pay dividends; and (v) they are convertible into Common Stock at the election of their holder at any time, and they automatically convert into Common Stock on the earliest to occur of (1) immediately preceding the closing of an underwritten public offering resulting in proceeds to the Company of $25,000,000, or (2) the date specified by a vote or written consent or agreement of at least a majority of the Series  A Preferred Shares. For purposes of the conversion rights, each Series A Preferred Share is initially convertible into one (1) share of Common Stock, subject to adjustment for certain fundamental corporate transactions such as stock splits, subdivisions or recapitalizations. A “liquidation,” for purposes of the stock liquidation preference, is deemed to occur on any acquisition of the Company by means of a merger or other form of corporate reorganization in which the outstanding shares of the Company are exchanged for securities or other consideration issued, or caused to be issued, by the acquiring corporation or its subsidiary (other than a mere reincorporation transaction), or a sale of all or substantially all of the Company’s assets.

Series B Preferred Shares. The rights and preferences of the Series B Preferred Shares are as follows: (i) they have a liquidation preference of $ 0.10 per share; (ii) they carry voting rights which

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entitle the holder to one vote for each share of Common Stock into which the Series  B Preferred Shares can be converted; (iii) they carry voting rights pertaining only to certain limited matters and do not vote together with the holders of the Common Stock; (iii) they are nonredeemable; (iv) they do not pay dividends; (v) they are convertible into Common Stock at the election of their holder at any time, and they automatically convert into Common Stock on the earliest to occur of (1) immediately preceding the closing of an underwritten public offering resulting in proceeds to the Company of $25,000,000, or (2) the date specified by a vote or written consent or agreement of at least a majority of the Series  B Preferred Shares; and (vi) they have the right, as a class, to elect one of the Company’s five directors. For purposes of the conversion rights, each Series B Preferred Share is initially convertible into one (1) share of Common Stock, subject to adjustment for certain fundamental corporate transactions such as stock splits, subdivisions or recapitalizations. A “liquidation,” for purposes of the stock liquidation preference, is deemed to occur on any acquisition of the Company by means of a merger or other form of corporate reorganization in which the outstanding shares of the Company are exchanged for securities or other consideration issued, or caused to be issued, by the acquiring corporation or its subsidiary (other than a mere reincorporation transaction), or a sale of all or substantially all of the Company’s assets.

Warrants

The Company currently has warrants outstanding to purchase 666,666 shares of its Series A Preferred Stock for 10% below the market share price of the shares to be offered in the funding round following this Offering. The warrants may be exercised at the time of the funding round following this Offering. The Company currently does not have any warrants outstanding to purchase its Series B Preferred Stock or its Common Stock.

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DIVIDEND POLICY

The Company has never paid cash dividends on its capital stock. The Company currently intends to retain all available funds for use in the operation and expansion of its business, and does not anticipate paying any cash dividends in the foreseeable future. The Company does not have an accumulated deficit for payment of dividends.

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CAPITALIZATION

The following table sets forth as of November 15, 2000, (i) the total pro forma capitalization of the Company, and (ii) the capitalization as adjusted to reflect the sale of 15,000,000 Series  B Preferred Shares pursuant to this Offering by the Company (at an assumed offering price of $0.10 per Series B Preferred Share and after deducting estimated fees and offering expenses of approximately $5,000).

November 15, 2000Actual As Adjusted

(1)

Series A Preferred Stock, .001 par value; 70,000,000 shares authorized, 10,566,666 Series A Preferred Shares outstanding at November 15, 2000..........................................

Series B Preferred Stock, .001 par value; no Series B Preferred Shares outstanding at November 15, 2000.......

$275,000

0

$275,000

$1,495,000

Common stock, no par value, 130,000,000 shares authorized, 60,000,000 shares outstanding at November 15, 2000

135,732 135,732

Additional paid-in capital.................................... 0 0

Accumulated deficit............................................. 0 0

Total stockholders’ equity.............................

$410,732 $1,905,732

(1) Adjusted to reflect the receipt by the Company of estimated net proceeds of $1,495,000 from the sale of 15,000,000 Series B Preferred Shares offered hereby (at an assumed offering price of $0.10 per share and after deducting estimated fees and offering expenses). See “Use of Proceeds.”

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CERTAIN TRANSACTIONS AND RELATIONSHIPS

In March of 2000, the Company raised its first seed funds from friends and family members, who contributed cash, property and services with a total value of $888,900 in exchange for equity in the Company. The equity owned by those friends and family members is set forth in the Section entitled “Principal Stockholders.”

In August of 2000, the Company established several lines of credit with company principals backed by those principals’ personal assets. These lines of credit were used to cover operating expenses when initial seed funds were exhausted. A portion of the proceeds raised in this offering will be used to retire these obligations and free the personal assets of company principals.

No other loans, loans with equity as collateral, transactions or employment agreements exist at this time.

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PLAN OF OFFERING

The Company is offering $1,500,000 of its Series B Preferred Stock, consisting of the Series B Preferred Shares. Assuming a purchase price of $0.10 per share, the Series B Preferred Shares will consist of 15,000,000 shares. The Company will require each investor to purchase a minimum of 250,000 Shares, for a minimum investment in the Company of $25,000. No minimum number of Series B Preferred Shares is required to be sold in order to close the sale of the Series B Preferred Shares, but potential investors will be provided upon request with an estimate of the total amount of Series B Preferred Shares previously sold. The Company reserves the right to increase or decrease the number of Series B Preferred Shares being offered or to increase or decrease the purchase price per Series B Preferred Share. The Offering will be ongoing, and the Company will initially seek a total investment of $500,000. An outline of the proposed terms of the Series B Preferred Shares and this Offering is provided in the Summary of Proposed Terms included in this Memorandum. The Company anticipates the Series B Preferred Shares will be offered and sold only to qualified institutions and to a limited number of other “accredited investors” (as defined under Rule 501(a) of Regulation D under the Securities Act).

Each investor’s agreement to purchase Series B Preferred Shares will be evidenced by, among other documents, a Subscription Agreement, attached hereto as Exhibit C. Each investor will be required to provide immediately available funds equal to the amount of the purchase price of the Series B Preferred Shares to be bought by it. The Company may, at its discretion, (i) reject any prospective investor, (ii) limit the number of Series B Preferred Shares to be purchased by any investor, or (iii) terminate this Offering.

Investors will be required to represent and warrant in the Subscription Agreement, among other things that they: (i) have reviewed, together with their professional advisers, if any, this Memorandum; (ii) have had an opportunity to ask questions of and receive answers from representatives of the Company with respect to the offering being made hereby; (iii) are “accredited investors” (as defined in Rule 501(a) of Regulation D under the Securities Act), and together with their financial advisers, if any, have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Series B Preferred Shares, have adequate means to provide for their financial needs with no expectation that their investment, including a complete loss of their investment; and (iv) understand that the Series B Preferred Shares and Common Shares issuable on conversion of the Series B Preferred Shares have not been registered under the Securities Act and that they have acquired the Series B Preferred Shares for their own account, for investment, and not with a view to distribution within the meaning of the Securities Act. See the “Investor Suitability Requirements” attached as Exhibit B hereto.

Investors who are or may be deemed to be “affiliates” of the Company (as that term is defined in Rule 405 of Regulation C under the Securities Act) may purchase Series B Preferred Shares in this Offering on the same terms and conditions as those purchased by non-affiliates, for investment purposes only, and not for resale. No limit has been placed on the number of Series B Preferred Shares that may be purchased by such persons.

44

ERISA CONSIDERATIONS

Persons investing on behalf of employee benefit plans subject to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or the Internal Revenue Code of 1986, as amended (the "Code"), are required to determine whether an investment in the Shares will satisfy the prudence, diversification and other standards set forth in ERISA and the Code. Accordingly, such persons are urged to consult their own advisors with respect to considerations associated with the acquisition and ownership of the Shares under ERISA and the Code. Further, under both ERISA and the Code, fiduciaries of employee benefit plans and individual retirement accounts should consider whether an investment in the Company is consistent with their plan objectives, is in accordance with the documents and instruments governing those plans and their responsibilities under ERISA, such as the requirements that (i) investments be made in a prudent manner, (ii) plan assets be diversified unless it is clearly prudent not to do so, and (iii) the fiduciary provides benefits for plan participants and beneficiaries and values plan assets annually (which may be difficult in light of the absence of a market for the resale of the Shares).

In light of the above, each prospective Investor investing in the Shares on behalf of an employee benefit plan or individual retirement account will be required to represent that, to the best of its knowledge (i) neither the Company nor any of its affiliates is a fiduciary within the meaning of ' 3(21) of ERISA with respect to that plan or account, (ii) the Company is not a "party-in-interest" or "disqualified person" as defined in ERISA ' 3(14) and Code ' 4975(e)(2), respectively, with respect to that plan or account, and (iii) the investor for that plan or account has taken into account the requirements of prudence, diversification and other fiduciary responsibilities contained in ERISA, to the extent applicable.

45

LEGAL MATTERS

Certain legal matters with respect to the legality of the issuance of the Series B Preferred Shares will be passed upon for the Company by its counsel, ________________________.

46

ADDITIONAL INFORMATION

The Company will make available, prior to the closing of this Offering, to each prospective investor and such investor’s representatives and advisors, if any, the opportunity to ask questions of and receive answers from the Company relating to the terms and conditions of this Offering, and to obtain any additional information that the Company may possess or can obtain without unreasonable effort or expense that is necessary to verify the accuracy of the information furnished to such prospective investor.

47

EXHIBIT A

NEWCO, INC.

FINANCIAL STATEMENTS FOR THE PERIOD FROM INCEPTION TO NOVEMBER 1, 2000.

372349.1

NewCo, LLC

Profit & Loss Statement

February through November 2000Ordinary Income/Expense

IncomeE-mail Fee 20.00Hardware Items 70.75Hourly Services 812.50Programming Customization Fee 6,000.00Web Site Development Fee 50.00

Total Income 6,953.25Gross Profit 6,953.25

ExpenseAdvertising

Association Fees 115.00Company Logo 525.00Trade Rags 1,173.00

Total Advertising 1,813.00Insurance

Health Insurance 5,792.59Total Insurance 5,792.59Legal Fees 21,848.50Rent 9,986.93Training 3,854.82Utilities

High Speed Access Line 1,012.07Phone Lines 117.00Phone System 335.14Utilities - Other 135.27

Total Utilities 1,599.486560 · Payroll Expenses

Payroll Deferred 33,230.766560 · Payroll Expenses - Other 99,290.45

Total 6560 · Payroll Expenses 132,521.21Total Expense 177,416.53

Net Ordinary Income -170,463.28Other Income/Expense

Other ExpenseAdministration 6,076.50Consulting 4,647.09Contract Labor 4,376.90Meals & Ent. 674.79Office Supplies 1,007.86Petty Cash 1,000.00Travel 9,024.18

Total Other Expense 26,807.32Net Other Income -26,807.32

Net Income -197,270.60

372349.1 2

NewCo, LLC

Balance Sheet

February through November 2000

ASSETS

Current Assets

Checking/Savings 134,166.35

Other Current Assets 958.92

Total Current Assets 135,125.27

Fixed Assets 43,968.26

Other Assets 808,899.00

TOTAL ASSETS 987,992.53

LIABILITIES & EQUITY

Liabilities

Current Liabilities

Other Current Liabilities 15,632.37

Total Current Liabilities 15,632.37

Total Liabilities 15,632.37

Equity

972,360.16

TOTAL LIABILITIES & EQUITY 987,992.53

372349.1 3

EXHIBIT B

INVESTOR SUITABILITY REQUIREMENTS

General

Investment in the Series B Preferred Shares offered by the Company involves significant risks and is suitable only for persons of adequate financial means who have no need for liquidity with respect to this investment and who can bear the economic risk of a complete loss of their investment. This offering is made in reliance on exemptions from the registration requirements of the Securities Act and applicable state securities laws or regulations.

The suitability standards discussed below represent minimum suitability standards for prospective investors. The satisfaction of such standards by a prospective investor does not necessarily mean that the Series B Preferred Shares are a suitable investment for such prospective investor. Prospective investors are encouraged to consult their personal financial advisors to determine whether an investment in the Series B Preferred Shares is appropriate. The Company may reject subscriptions, in whole or in part, in its absolute discretion.

The Company will require each investor to represent in writing, among other things, that: (i) by reason of the investor’s business or financial experience, or that of the investor’s professional advisor, the investor is capable of evaluating the merits and risks of an investment in the Series B Preferred Shares and of protecting its own interest in connection with the transaction; (ii) the investor is acquiring the Series B Preferred Shares for its own account, for investment only and not with a view toward the resale or distribution thereof; (iii) the investor is aware that the Series B Preferred Shares (and the Common Shares into which they may be converted)have not been registered under the Securities Act or any state securities laws and that transfer thereof is restricted by the Securities Act, applicable state securities laws, and the stock purchase agreement to be entered into in connection with the purchase of the Series B Preferred Shares and the investor is aware of the absence of a market for the Series  B Preferred Shares; and (iv) such investor meets the suitability requirements set forth below.

Suitability Requirements

Each investor must represent in writing that it qualifies as an “accredited investor,” as that term is defined in Rule 501(a) of Regulation D under the Securities Act, and must demonstrate to the satisfaction of the Company the basis for such qualification. To be an accredited investor, an investor must fall within any of the following categories at the time of the sale of Series B Preferred Shares to that investor:

(1) A bank as defined in Section 3(a)(2) of the Securities Act, or a savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act, whether acting in its individual or fiduciary capacity; a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; an insurance company as defined in Section 2(13) of the Securities Act; an investment company registered under the Investment Company Act of 1940 or a business development Company as defined in Section 2(a)(48) of that act; a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (D) of the Small Business Investment Act to 1958; a plan established and maintained by a state or its political subdivisions, and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of that act, which is either a bank, savings and loan

372349.1 4

association, insurance Company, or registered investment advisor, or if the employee benefit plan has total assets in excess of $5,000,000, or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors;

(2) A private business development company as defined in Section 202(a)(22) of the Investment Advisors Act of 1940;

(3) An organization described in Section 501(c)(3) of the Internal Revenue Code, a corporation, a Massachusetts or similar business trust, or a partnership, not formed for the specific purpose of acquiring the Series B Preferred Shares, with total assets in excess of $5,000,000;

(4) A director or executive officer of the Company;

(5) A natural person whose individual net worth, or joint net worth with that person’s spouse, at the time of such person’s purchase of the Series B Preferred Shares exceed $1,000,000;

(6) A natural person who has an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;

(7) A trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Series B Preferred Shares, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D; and

(8) An entity in which all of the equity owners are accredited investors (as defined above).

If the investor cannot make one of the foregoing representations, then he or she must represent that his or her net worth is at least four times his or her proposed investment and his or her income exceeds $50,000 for the last two years.

As used in this Memorandum, the term “net worth” means the excess of total assets over total liabilities. In computing net worth the principal residence of the investor must be valued at cost, including costs of improvements, or at recently appraised value by an institutional lender making a secured loan, net of encumbrances. In determining income, an investor should add to the investor’s adjusted gross income any amounts attributable to tax exempt income received, losses claimed as a limited partner in any limited partnership, deductions claimed for depletion, contributions to an IRA or Keogh retirement plan, alimony payments, and any amount by which income for long-term capital gains has been reduced in arriving at adjusted gross income.

In order to meet the conditions for exemption from the registration requirements under the securities laws of certain jurisdictions, investors who are residents of such jurisdictions may be required to meet additional suitability requirements.

INCOME TAX CONSIDERATIONS

THIS MEMORANDUM DOES NOT CONSTITUTE INVESTMENT, LEGAL OR TAX ADVICE WITH RESPECT TO AN INVESTMENT IN THE SERIES B PREFERRED SHARES. EACH PROSPECTIVE PURCHASER SHOULD CONSULT HIS OR HER OWN TAX ADVISOR WITH RESPECT TO THE INCOME TAX ISSUES AND CONSEQUENCES CONCERNING PURCHASING, HOLDING AND DISPOSING OF THE SERIES B PREFERRED SHARES OFFERED HEREBY AND THE COMMON STOCK RECEIVED UPON CONVERSION OF SUCH

372349.1 5

STOCK, IN EACH CASE AS THEY MAY PERTAIN TO THE PURCHASER’S OWN PERSONAL SITUATION.

TRANSFER RESTRICTIONS

Offers and Sales of the Series B Preferred Share

The Shares of Series B Preferred Stock offered hereby have not been registered under the Securities Act, and may not be offered or sold in the United States by a purchaser in this placement except pursuant to an effective registration statement or in accordance with an exemption from the registration requirements, as set forth below.

Investor Representations and Restrictions on Resale

Each purchaser of the Series B Preferred Shares will be deemed to have represented and agreed as follows:

(1) he or she is acquiring the Series B Preferred Shares for his or her own account or for an account with respect to which he or she exercise sole investment discretion, and that he or she or such account is an accredited investor;

(2) he or she understands that the Series B Preferred Shares are being offered only in a transaction not involving any public offering within the meaning of the Securities Act, and that (i) if within two years after the date of original issuance of the Series B Preferred Shares he or she decides to resell, pledge or otherwise transfer the Series B Preferred Shares or any shares of Common Stock received upon conversion of the Series B Preferred Shares on which the legend set forth below appears, such Series B Preferred Shares may be resold, pledged or transferred only (A) to the Company (upon conversion exchange, redemption or otherwise), (B) pursuant to an exemption from registration under the Securities Act provided by Rule 144 (if available), or (C) pursuant to an effective registration statement under the Securities Act, in each case in accordance with any applicable securities laws of any state of the United States, and (ii) the purchaser will, and each subsequent holder is required to, notify any purchaser of the Series B Preferred Shares from him or her of the resale restrictions referred to in (i) above, if then applicable; and

(3) he or she understands that the following legend will be placed on any certificate representing the Series B Preferred Shares unless otherwise agreed by the Company:

“THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF GOODNOISE CORPORATION (THE “COMPANY”) THAT THIS SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1) TO THE COMPANY (UPON CONVERSION, EXCHANGE OR REDEMPTION THEREOF OR OTHERWISE), (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION IN ACCORDANCE WITH RULE 144 (IF AVAILABLE) UNDER THE SECURITIES ACT, OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY

372349.1 6

APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES.”

372349.1 7

EXHIBIT C

NEWCO, INC.

SUBSCRIPTION AGREEMENT

THE SECURITIES ACQUIRED PURSUANT TO THIS SUBSCRIPTION AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (“1933 ACT”) IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS, NOR HAVE THE SECURITIES BEEN REGISTERED WITH ANY STATE SECURITIES COMMISSION. IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SECURITIES UNLESS THE PURCHASER INTENDS TO ACQUIRE THE SECURITIES FOR PURPOSES OF INVESTMENT RATHER THAN RESALE. THE REPRESENTATIONS MADE HEREIN WILL BE RELIED UPON BY NEWCO, INC. IN COMPLYING WITH ITS OBLIGATIONS UNDER APPLICABLE SECURITIES LAWS.

The undersigned hereby tenders this Subscription Agreement to NewCo, Inc., a Delaware corporation (hereinafter the “Company”), to purchase ___________ shares of Series B Preferred Stock (the “Series B Preferred Shares”). Payment in full payable to “NewCo, Inc.” is tendered with this subscription. The undersigned acknowledges that this subscription shall not become effective until it has been properly executed by the undersigned and accepted by the Company. The Company may reject subscriptions, in whole or in part, for any reason, and will limit the number of subscriptions accepted.

1. The undersigned acknowledges receipt of a Private Placement Memorandum, dated November 15, 2000 (the “Memorandum”) describing the Company and the terms of the Company’s offer to sell the Series B Preferred Shares. The undersigned further acknowledges that he or his representative has read carefully and understands the Memorandum and the terms of the Offering. The undersigned has had the opportunity to meet with the officers of the Company to ask questions and, prior to his execution of this Subscription Agreement, was given full access to all information which the Company possesses or can acquire without unreasonable effort or expense that is necessary to verify the accuracy or adequacy of information furnished to the undersigned, and all such questions, if asked, have been answered satisfactorily and such documents, if examined, have been found to be fully satisfactory.

2. In evaluating the suitability of an investment in the Series B Preferred Shares, the undersigned has not relied upon any

preliminary information supplied by the Company or any other representations or other information (whether oral or written) from the Company other than as set forth in the Memorandum. The undersigned has carefully considered and has, to the extent the undersigned believes such discussion necessary, discussed with the undersigned’s professional legal, tax, accounting and financial advisors the suitability of an investment in the Series B Preferred Shares for the undersigned’s particular tax and financial condition and has determined that the Series B Preferred Shares being subscribed for by the undersigned are a suitable investment for the undersigned.

3. The undersigned acknowledges that there are various substantial risks attendant to the Company’s business and an investment in the Series B Preferred Shares, including loss of the entire amount of such investment. The undersigned has considered the risks associated with such an investment, including, but not limited to, those set forth under the caption “Risk Factors” in the Memorandum. No representations or warranties have been made concerning the success of the business or the potential profit on an investment in the Company or in the Series B Preferred Shares.

4. The undersigned acknowledges the illiquidity of the Series B Preferred Shares. The undersigned further acknowledges that, due to the fact that the Series B Preferred Shares will not be registered under the 1933 Act, or state securities laws, transfer of the Series B Preferred Shares has been significantly limited. Therefore, the undersigned does not expect to be able to transfer his Series B Preferred Shares. The undersigned acknowledges that he must bear the economic risk of the investment for an indefinite period of time and can afford a complete loss of the investment. The undersigned will not sell, hypothecate or otherwise transfer the Series B Preferred Shares unless (a) the Series B Preferred Shares are registered under the 1933 Act and applicable state securities laws, or (b) in the opinion of counsel, concurred in by counsel to the Company, an exemption from the registration requirements of the 1933 Act and such state laws is available. Furthermore, the undersigned understands that any certificates evidencing the Series B Preferred Shares will bear an appropriate legend restricting the sale, hypothecation, or other transfer of said Series B Preferred Shares, and the transfer records of the Company will contain appropriate notations of such transfer restrictions.

5. The undersigned represents and warrants to the Company that he is purchasing the herein subscribed for Series B Preferred Shares for investment purposes only, solely for his own account and

not for fractionalization or with a view toward distribution and has no contract, agreement, arrangement or undertaking with any person to sell, transfer or pledge the Series B Preferred Shares. The Series B Preferred Shares will be issued only in the name of the undersigned and no other person has or will have a direct beneficial interest in the Series B Preferred Shares.

6. The undersigned, if a natural person, further represents and warrants to the Company that he is twenty-one (21) years of age or older and that his primary residence is the same as shown below. The undersigned was contacted in the state where he resides regarding the potential investment in the Series B Preferred Shares, and the Shares will be delivered in such state.

7. The undersigned represents and warrants that he is an “accredited investor” as defined in Regulation D promulgated under the 1933 Act (“Regulation D”) for the following reason(s) (check as applicable):

[ ] The undersigned is a natural person whose individual net worth or joint net worth with his spouse at the time of purchase exceeds $1,000,000.

[ ] The undersigned is a natural person whose individual income for each of the past two years and reasonably expected income for the current year exceeds $200,000 or whose joint income with his spouse for such periods exceeds $300,000.

[ ] The undersigned is a bank or savings and loan association purchasing in its own or a fiduciary capacity.

[ ] The undersigned is a securities broker-dealer; an insurance company; an investment company; a business development company; a Small Business Investment Company; or a plan with assets in excess of $5,000,000 established and maintained by a state or political subdivision for the benefit of its employees; or an employee benefit plan with a bank, savings and loan association, insurance company or registered investment advisor acting as a plan fiduciary.

[ ] The undersigned is an organization described in section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the

Series B Preferred Shares, with assets in excess of $5,000,000.

[ ] The undersigned is a trust, with total assets in excess of $5,000,000 and was not formed for the specific purpose of acquiring the Series B Preferred Shares. The person directing investment decisions for the trust has completed the Purchaser Questionnaire attached hereto as an Exhibit.

[ ] The undersigned is an employee benefit plan whose assets exceed $5,000,000.

[ ] The undersigned is a self-directed employee benefit plan whose investment decisions are made solely by accredited investors as otherwise defined herein.

[ ] The undersigned is a partnership, corporation or trust, all of the beneficial owners of which are accredited investors as defined herein.

[ ] The undersigned is otherwise an accredited investor on the following basis:_______________________________________________________________, OR

[ ] The undersigned represents and warrants that he is not an “accredited investor” under any of the foregoing categories. If I am not an accredited investor, my proposed investment in the Series B Preferred Shares does not exceed [ ] 5% [ ] 10% [ ] 15% [ ] 20% of my net worth.

8. The undersigned represents and warrants that he has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of an investment in the Company, and that the undersigned is able to bear the economic risks of the investment for an indefinite period of time and at the present time could afford a complete loss of such investment.

9. The undersigned hereby agrees to indemnify and hold harmless the Company or any officer, director or control person of the Company who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil or criminal, administrative or investigative, by reason of or arising from any actual or alleged misrepresentation or misstatement of facts or omission to represent or state facts

made by the undersigned to the Company concerning the undersigned or the undersigned’s financial condition in connection with the Offering or sale of the Series B Preferred Shares, including, without limitation, any such misrepresentation, misstatement or omission contained herein or in the Purchaser Questionnaire.

10. The undersigned acknowledges and agrees that except as otherwise provided herein he is not entitled to cancel, terminate or revoke this subscription or any agreements of the undersigned hereunder and such subscription shall survive (i) changes in the information described in the Memorandum which in the aggregate are not material or which are contemplated by the Memorandum and (ii) the death or disability of the undersigned; provided, however, that if the Company shall not have accepted this subscription, all agreements of the undersigned hereunder shall be canceled and this Subscription Agreement will be returned to the undersigned together with all monies paid herewith and without interest.

11. If this Subscription Agreement is executed and delivered on behalf of a partnership, corporation, trust or estate or retirement plan: (i) such partnership, corporation, trust or estate or retirement plan has been duly authorized and is duly qualified (a) to execute and deliver this Subscription Agreement and all other instruments executed and delivered on behalf of such partnership, corporation, trust or estate or retirement plan or by use of a power of attorney in connection with the purchase of the Series B Preferred Shares, and (b) to purchase and hold such Series B Preferred Shares; (ii) the signature of the party signing on behalf of such partnership, corporation, trust or estate or retirement plan is binding upon such partnership, corporation, trust or estate or retirement plan; and (iii) such partnership, corporation, trust or estate or retirement plan has not been formed for the specific purpose of acquiring such Series B Preferred Shares.

12. Neither this Subscription Agreement nor any provisions hereof shall be waived, modified, changed, discharged, terminated, revoked or canceled except by an instrument in writing signed by the party against whom any change, discharge or termination is sought.

13. This Subscription Agreement shall be enforced, governed and construed in all respects in accordance with the laws of the State of Delaware, as such laws are applied by Delaware courts to agreements entered into and to be performed in Delaware by and between residents of Delaware, and shall be binding upon the

undersigned, the undersigned’s heirs, estate, legal representatives, successors and assigns and shall inure to the benefit of the Company, its successors and assigns. If any provision of this Subscription Agreement is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision hereof.

14. This Subscription Agreement constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and may be amended only by a writing executed by all parties hereto.

15. As used herein, singular masculine pronouns shall refer to the plural number and feminine or neuter genders as required by the identity of the undersigned.

16. Under penalties of perjury, the undersigned certifies that (i) the number shown on this Agreement is my correct taxpayer identification number and (ii) the undersigned is not subject to backup withholding either because the undersigned has not been notified that the undersigned is subject to backup withholding as a result of a failure to report all interest or dividends, or the Internal Revenue Service has notified the undersigned that the undersigned is no longer subject to backup withholding. (Strike out clause (ii) if subject to backup withholding.)

Total purchase price of Series B Preferred Shares = $___________

DATED this ___ day of ___________________, 2000.

_________________________________(Signature)

_________________________________(Name - Please Print)

_________________________________(Signature of Spouse if Natural Persons

PurchasingJointly or if Community Property State)

_________________________________(Print Name of Offeree’s Spouse if

Natural Persons PurchasingJointly or if Community Property State)

_________________________________(Primary Place of Residence)

_________________________________(City, State and ZIP Code)_________________________________(Telephone Number - Business)_________________________________(Social Security or Taxpayer I.D. No.)

ACCEPTED this ___ day of ______________, 2000.

NEWCO, INC.

By: __________________________________________Print Name: ___________________________________Title: ________________________________________

PURCHASER QUESTIONNAIRE[Individual]

The information contained in this Questionnaire is being furnished in order to determine whether the undersigned’s subscription to purchase Series B Preferred Shares described in the Private Placement Memorandum, dated November 15, 2000 (the “Memorandum”) may be accepted.

If the response to any item is “none” or “not applicable”, please so indicate. The undersigned agrees that he and his agents, including without limitation his Purchaser Representative, if applicable, shall provide NewCo, Inc. (the “Company”) such additional information as the Company shall request in order to satisfy itself that the undersigned meets the minimum legal requirements under Federal and state securities laws to acquire the Series B Preferred Shares being offered by the Memorandum.

Where multiple choices are offered, select and check only that which is applicable.

YOUR RESPONSES WILL BE KEPT STRICTLY CONFIDENTIAL. However, by signing this document, you agree that the Company may present the Questionnaire to such private and/or governmental entities as it deems appropriate, if called upon to do so, in order to establish the availability under applicable state and federal law of an exemption from registration.

IF YOU ARE PURCHASING SERIES B PREFERRED SHARES WITH YOUR SPOUSE, YOU MUST BOTH SIGN THE SIGNATURE PAGE OF THE SUBSCRIPTION AGREEMENT AND THIS QUESTIONNAIRE.

IF YOU ARE PURCHASING SERIES B PREFERRED SHARES WITH ANOTHER PERSON NOT YOUR SPOUSE, YOU MUST BOTH SIGN THE SUBSCRIPTION AGREEMENT AND EACH FILL OUT A SEPARATE QUESTIONNAIRE.

IF YOU ARE MARRIED AND LIVE IN A COMMUNITY PROPERTY STATE, BOTH YOU AND YOUR SPOUSE MUST SIGN THE SIGNATURE PAGE OF THE SUBSCRIPTION AGREEMENT AND THIS QUESTIONNAIRE.

PLEASE PRINT

Name(s)_____________________________________________________

______________________________________________________

1. I am [ ] am not [ ] being advised on the merits of this Offering by a Purchaser Representative (investment advisor).

2. For the past two years, and during the years or months indicated, I have maintained my principal residence in the following state or states or country:__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

3. I presently maintain a house or apartment, other than my principal residence, in the state of:

______________________________________________________________

4. a. I pay state income taxes in the state of:__________________________

b. I hold a driver’s license in the state of:___________________________

c. I am registered to vote in the state of:___________________________

5. My present age is:

Under 21 [ ], 21-30 [ ], 31-40 [ ], 41-50 [ ], 51-60 [ ], over 60 [ ].

6. Financial information:

a. My aggregate income from all sources for each of the last two calendar years was (check one);

[ ] under $200,000 [ ] $200,000-$300,000 [ ]above $300,000.

b. Approximately _____ percent of my income as shown above was derived from sources other than salary.

c. I expect that my income from all sources for the present year will be (check one):

[ ] under $200,000 [ ] $200,000-$300,000 [ ] above

$300,000.

d. I expect that _____ percent of my income as shown above will be derived from sources other than salary.

e. My approximate present net worth (including the net worth of my spouse but excluding home, furnishings and automobiles) is:

[ ] under $1,000,000 [ ] over $1,000,000

g. Approximately _____ percent of my net worth as shown above is investments in marketable securities (stock, bonds, debentures, etc.).

h. Approximately _____ percent of my net worth is readily convertible into cash.

7. a. I have held the following principal positions of employment during the last ten years, or since graduation from college, whichever is shorter:____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

b. The following is a brief summary of my educational background, including years of matriculation and degrees obtained:____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

8. Investment experience:

a. I have previously invested in non-marketable securities.

[ ] Yes [ ] No

b. The principal investments from which I have derived the experience indicated in Paragraph a., including names of companies and amounts invested, are:____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

c. Other activities, business or ventures in which I have had investment experience include:____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

d. The following additional information regarding prior investment activities, business ventures, etc., may also be of help to the Company in determining whether my knowledge and experience in financial and business matters are sufficient to enable me to evaluate the merits and risks of this investment:____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

e. I have been advised by my own investment counselors, accountants, etc., other than representatives of the Company concerning the suitability of this investment for me:

[ ] Yes [ ] No

9. I understand that no aspect of the activities of the Company can be guaranteed and that substantial risks are involved in various aspects of this investment:

[ ] Yes [ ] No

10. I understand that I may examine the original documentation of the Company and its affairs before investing as well as after; and to the extent that I have not done so, it was my choice:

[ ] Yes [ ] No

(Continued on next page)

To the best of my information and belief, the above in-formation supplied by me is true and correct in all respects.

Date: .___________________________________(Signature of Offeree)

___________________________________(Please Print Name)

___________________________________(Signature of Offeree’s Spouse ifPurchasing Jointly or if CommunityProperty State)

___________________________________(Print Name of Spouse if PurchasingJointly or if Community Property

State)

PURCHASER QUESTIONNAIRE[Corporation]

The information contained in this Questionnaire is being furnished in order to determine whether the undersigned’s subscription to purchase Series B Preferred Shares described in the Private Placement Memorandum, dated November 15, 2000 (the “Memorandum”) may be accepted.

If the response to any item is “none” or “not applicable”, please so indicate. The undersigned agrees that he and his agents, including without limitation his Purchaser Representative, if applicable, shall provide NewCo, Inc. (the “Company”) such additional information as the Company shall request in order to satisfy itself that the undersigned meets the minimum legal requirements under Federal and state securities laws to acquire the Series B Preferred Shares being offered by the Memorandum.

Where multiple choices are offered, select and check only that which is applicable.

YOUR RESPONSES WILL BE KEPT STRICTLY CONFIDENTIAL. However, by signing this document, you agree that the Company may present the Questionnaire to such private and/or governmental entities as it deems appropriate, if called upon to do so, in order to establish the availability under applicable state and federal law of an exemption from registration.

I. PLEASE CHECK ANY OF STATEMENTS 1-3 BELOW THAT APPLY TO THE CORPORATION.

[ ] G 1. Each of the stockholders of the undersigned CORPORATION is able to certify that such stockholder meets at least one of the following two conditions:

(a) The stockholder is a natural person whose individual net worth or joint net worth with his or her spouse exceeds $1,000,000.

(b) The stockholder is a natural person whose individual income was in excess of $200,000 in each of 1998 and 1999 and who reasonably expects an individual income in excess of $200,000 in 2000.

[ ] G 2. Each of the stockholders of the undersigned corporation is able to certify that such stockholder is a natural person who, together with his or her spouse, has had a joint income in excess of $300,000 in each of 1998 and 1999 and who reasonably expects a joint income in excess of $300,000 in 2000.

[ ] G 3. The undersigned corporation: (a) was not formed for the specific purpose of acquiring the Series B Preferred Shares; and (b) has total assets in excess of $5,000,000.

IF YOU CHECKED STATEMENT 1 OR STATEMENT 2 IN SECTION I AND DID NOT CHECK STATEMENT 3, YOU MUST PROVIDE A LETTER SIGNED BY AN OFFICER OF THE UNDERSIGNED CORPORATION LISTING THE NAME OF EACH STOCKHOLDER AND THE REASON (UNDER STATEMENT 1 OR STATEMENT 2) SUCH STOCKHOLDER QUALIFIES AS AN ACCREDITED INVESTOR (ON THE BASIS OF NET WORTH, INDIVIDUAL INCOME OR JOINT INCOME), OR EACH STOCKHOLDER MUST PROVIDE A COMPLETED INDIVIDUAL INVESTOR QUESTIONNAIRE.

II. OTHER CERTIFICATIONS

By signing the Signature Page, the undersigned certifies the following:

(a) that the corporation’s purchase of the Series B Preferred Shares will be solely for the corporation’s own account and not for the account of any other person;

(b) that the corporation’s name, address of principal office, place of formation and taxpayer identification number as set forth in this Questionnaire are true, correct and complete; and

(c) that one of the following is true and correct (check one):

(i) the corporation is a corporation formed in or under the laws of the United States or any political subdivision thereof.

(ii) the corporation is a corporation which is neither created nor organized in or under the

United States or any political subdivision thereof, but which has made an election under either Section 897(I) or 897(k) of the United States Internal Revenue Code of 1986, as amended, to be treated as a domestic corporation for certain purposes of United States federal income taxation (A COPY OF THE INTERNAL REVENUE SERVICE ACKNOWLEDGMENT OF THE UNDERSIGNED’S ELECTION MUST BE ATTACHED TO THIS SUBSCRIPTION AGREEMENT IF THIS PROVISION IS APPLICABLE.)

(iii) neither (i) nor (ii) above is true

III. GENERAL INFORMATION

(a) PROSPECTIVE PURCHASER (THE CORPORATION)

Name: _________________________________________________________

Principal Place of Business: _______________________________________________________________

(Number and Street)_______________________________________________________________

(City) (State) (Zip Code)

Telephone Number: ________________

Address for Correspondence (if different):_______________________________________________________________

(Number and Street)_______________________________________________________________

(City) (State) (Zip Code)

State in which formed: ______________________________

Date of Formation: _________________________________

Taxpayer Identification Number: ______________________

NASD affiliation or association of the corporation, if any:

If none, check here:

Number of shareholders: _____________________________

(b) INDIVIDUAL WHO IS EXECUTING THIS QUESTIONNAIRE ON BEHALF OF THE CORPORATION

Name : ________________________________________________________

Position or Title: _________________________________________________

(Continued on next page)

IV. SIGNATURE

CORPORATION SIGNATURE PAGE

Your signature on this CORPORATION SIGNATURE PAGE evidences the agreement by the CORPORATION to be bound by the Questionnaire and the Subscription agreement.

1. The undersigned CORPORATION represents that (a) the information contained in this Questionnaire is complete and accurate and (b) the CORPORATION will notify you immediately if any material change in any of this information occurs before the acceptance of the undersigned CORPORATION’s subscription.

2. The undersigned CORPORATION hereby certifies that it has read and understands this Subscription Agreement.

3. The undersigned CORPORATION hereby represents and warrants that the person signing this Subscription agreement on behalf of the CORPORATION has been duly authorized to acquire the Series B Preferred Shares and sign this Subscription Agreement on behalf of the CORPORATION and, further, that the undersigned CORPORATION has all requisite authority to purchase such Series B Preferred Shares and enter into this Subscription Agreement.

Date: ____________________________________

Name of Corporation: ______________________________

(Please Type or Print)

By: _____________________________________________

(Signature)Name (Print):

_____________________________________

Its:______________________________________________

Sworn to before me this ___day of ________, 2000.

Notary Public Stamp