January 2000

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 Table of Contents
1.0 Executive Summary.............................................................................................................................1
2.0 Company Summary.............................................................................................................................3
2.1 Competitive Edge ......................................................................................................................4
2.2 Strategic Alliances .....................................................................................................................5
2.3 Target Market Segment Strategy.............................................................................................6
3.0 Services................................................................................................................................................7
3.1 Service Description ...................................................................................................................8
3.2 Development of Core System ..................................................................................................9
3.3 Technology ...............................................................................................................................10
4.0 Marketing Strategy............................................................................................................................10
4.1 Strategic Market Entry.............................................................................................................11
4.2 Sales Forecast.........................................................................................................................11
4.3 Pricing Strategy .......................................................................................................................12
4.4 Promotion Strategy..................................................................................................................13
4.5 Competitive Comparison........................................................................................................13
5.0 Strategy and Implementation Summary..........................................................................................14
5.1 Personnel Plan.........................................................................................................................14
5.2 Distribution Strategy................................................................................................................14
6.0 Company Ownership ........................................................................................................................14
6.1 Professional Services .............................................................................................................15
6.2 Board of Advisors ....................................................................................................................15
6.3 Management Team .................................................................................................................16
6.4 Long-term Plan.........................................................................................................................16
7.0 Financial Plan ....................................................................................................................................17
7.1 Important Assumptions............................................................................................................17
7.2 Start-up Funding ......................................................................................................................18
7.3 Exit Strategy .............................................................................................................................19
7.4 Projected Profit and Loss .......................................................................................................20
7.5 Projected Cash Flow ...............................................................................................................22
7.6 Projected Balance Sheet ........................................................................................................24
7.7 Business Ratios .......................................................................................................................25

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 jSpan Corporation

1.0 Executive Summary

jSpan Corporation (jSpan) is an Application Service Provider (ASP) of Internet based remote
ac cess services to independent professionals and small to medium businesses. The jSpan user
interfac e - the Webtop - serves to aggregate legacy systems, online applications, and value-
added services into one work environment. The Webtop interfac e and infrastructure established
at partner ISPs enable jSpan to serve as a distribution network for other application service
providers. jSpan takes advantage of the rapid growth in demand for remote ac cess and the
industry trend towards outsourcing IT applications.

jSpan Corporation has raised $500,000 from private investors. The funds are being used to
launch an initial test market deployment, complete the management team and license key
technologies. The company is currently seeking an additional $3.2 million through the issuance of
Series A Preferred equity. These funds will be used to support a full-sc ale product launch within
six months from the closure of funding.

Business Model
jSpan provides remote ac cess services through partnerships with Internet Service Providers
(ISP), broadband wholesalers, and other network service providers. Remote ac cess is managed
through an Internet based Webtop that aggregates applications from remote office networks and
other Internet loc ations. The primary means of generating revenue is through a per user monthly
subsc ription fee. Premium subsc riptions and value added services eventually expand the revenue
stream to include transaction and syndication fees.
Customer ac quisition is driven by co-marketing and revenue sharing agreements with strategic
network service providers. Direc t end user marketing (advertising and promotions) will be used to
build customer awareness and further solidify the jSpan brand. Content syndication through
partnerships with Internet content providers, service providers, and product manufac tures will
build a broader customer base.
Market Opportunity
A flexible work environment and an increasingly mobile workforce are driving the demand for
remote ac cess to critical business information. Forec asts estimate the mobile workforce in the
United States alone will exceed 47 million employees by 2003. To stay competitive, independent
professionals and small to medium businesses are rapidly adopting mobile computing devices but
lac k the technical and economic resources to implement a comprehensive remote ac cess
solution.
Professionals are adopting a work style that requires ac cess to office applications from multiple
loc ations. As of 1998, approximately 23% of home Internet users brought office work home on
nights and weekends while another 17% used the Internet to run a home-based business. The
number of telec ommuters has shown rapid growth, exceeding 9.7 million in 1999.

Ac cording to Ac cess Media International, small businesses invested $138 billion on information
technology and telec ommunications products last year. Businesses are seeking technology
solutions that leverage a smaller number of employees over a larger market. Increasingly, these
companies are outsourcing tec hnology services.

Product
jSpan provides remote ac cess through a universally ac cessible Webtop using Virtual Private
Networking (VPN) technology to establish a secure connec tion to the remote target system. The
combination of these two technologies eliminates the expense and expertise needed to custom
configure a typical remote ac cess solution. Ac cess can be provided over xDSL, T1, or cable
modems, resulting in a secure Internet hosted Webtop that offers functionality similar to an
office-based workstation. Taking advantage of core tec hnology that is available in the market

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 jSpan Corporation
will allow jSpan to minimize development time and rapidly enter the market. Over time, premium
subsc riptions and value added services improve the customer value proposition.
Financial Analysis
Gross revenue is based on per user revenue of $21.25 per month and forec ast to exceed $422
million by the end of year five of operations. The target market size is based on the projec ted
mobile workforce as determined by International Data Corporation. Additional opportunities in the
enterprise or consumer market segments, or international expansion, could substantially increase
the potential market.
By consolidating the highly fragmented market for independent professionals and businesses,
jSpan is a potential ac quisition target for corporations that offer goods and services to this
market segment. Based on a $450 per user ac quisition cost, management conservatively
estimates an ac quisition value of $105 million at the end of year three, increasing to over $1
billion by the end of year five.

Management Team
jSpan has assembled a team of experienced managers and technical specialists. The founders,
John Millar and Kim Niquette, have management experience in high growth tec hnology companies
and international entrepreneurial organizations. Members of jSpan's technical team have software
development and operations experience with Sun Microsystems, Raytheon Corporation, and a
number of start-up ventures. Additional senior managers have been identified and plan to join
the team subsequent to a major funding event. jSpan has also assembled a strong advisory
board that includes experienced entrepreneurs and leading professional services organizations.

John G. Millar, Co-Founder and CEO.

Kim Niquette, Co-Founder and CFO.
Norman Walters, COO.
Carlos Garcia, Technology Spec ialist.

Board of Advisors
Joseph Addison, Co-Founder and CFO of StartABusiness.com.
James Smith, Vice President of Business Development for Exodus Networks.
Michael M. Rodgers, Partner at Watson, Sonoma, Goodson & Rodgers.
Peter J. Wilson, Direc tor of Business Development at Advanced Network Communications.
Additional biographical information on the Management Team and Board of Advisors may be found
in topics 7.1 and 7.2 respec tively.
1 "Where's the Office? U.S. Remote and Mobile Worker Market Review and Forecast,"
International Data Corporation, July 1999, p. 2.
2 "Online Nation: 1998 U.S. Internet User Survey", International Data Corporation, 1998.
3 "Where's the Office? U.S. Remote and Mobile Worker Market Review and Forecast,"
International Data Corporation, July 1999, p. 2.

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 jSpan Corporation

2.0 Company Summary

jSpan Corporation is an Application Service Provider (ASP) of Internet based remote ac cess
services to independent professionals and businesses. Ac cess is managed through a customized
Webtop that aggregates applications and content from home computers, office networks, and
other Internet loc ations. The primary means of generating revenue is a per-user monthly
subsc ription fee. Over time, the company expec ts to generate additional revenue from
transaction fees on value added services. jSpan provides remote ac cess by co-hosting jSpan
application servers at strategic partner loc ations. Targeted strategic partners include Internet
Service Providers (ISP), xDSL wholesalers, cable network providers, and vertically integrated
telec ommunications operators. Partnerships will be structured as revenue sharing and co-
marketing agreements.

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 jSpan Corporation

2.1 Competitive Edge

The jSpan Corporation competitive advantage is based on:

• Establishing strong business relationships with network service providers that allow jSpan to
control an application service provider distribution network.
• Rapidly building market share through aggressive customer ac quisition programs.
• Developing and deploying premium subsc riptions and value added services.
Business relationships with network service and infrastructure providers, particularly those that
offer high bandwidth c onnec tivity to the business market, serve to give jSpan a strategic
advantage by fac ilitating a network connec tion to potential jSpan customers. By co-hosting an
application server in the network provider central office or the ISP data center, jSpan has
preferred ac cess to remote systems and can offer superior performance on applications that
require remote connec tivity. Once established, the jSpan network will serve as an aggregator
and distribution channel for other ASPs. jSpan Corporation will seek to establish exclusive
relationships that serve as a barrier to entry.
Rapid customer ac quisition is ac complished by syndicating the jSpan service through Internet
content providers that target a similar customer base. In addition, revenue sharing and joint
advertising programs will add incentives for network service providers to offer the service to
their customer base. Once customers adopt and configure the service, they are less likely to
switch providers, resulting in reduced customer churn. Once deployed, the switching cost for
both the service provider and the customer will serve as a barrier to entry and a competitive
advantage.
Premium subsc riptions and value added services extend the functionality of the jSpan remote
ac cess solution. jSpan will aggregate key applications into a series of Webtops designed to meet
the needs of vertical market segments. Applications will be provided through strategic
relationships with application providers, licensing agreements with product manufac turers and
business agreements with third party services.

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 jSpan Corporation

2.2 Strategic Alliances

jSpan Corporation is establishing strategic partnerships with network service and infrastructure
providers that can provide high performance ac cess to network fac ilities. The foc us of jSpan's
strategic partnerships is on companies deploying xDSL, cable, T1 and other high-speed
connec tivity. There are approximately 7,000 ISPs in the United States and 14,000 worldwide,
many of which are deploying broadband solutions. Incumbent Local Exchange Carriers (ILEC) and
Competitive Local Exchange Carriers (CLEC) sell xDSL ac cess to ISPs. Similarly, cable operators
are deploying broadband over cable networks and selling the ac cess bac k to ISPs. The expansion
of low cost broadband solutions is ac celerating the market for jSpan services and will encourage
broadband providers to build strong partnerships with application service providers.
Large ISPs like EarthLink Inc., MindSpring Inc. and America Online Inc. provide dial-up Internet
service to a substantial customer base. The top 5 ISPs have approximately 23.6 million
subsc ribers. Similarly, network service providers like PSInet, Concentric Networks and Exodus
Inc. provide high bandwidth c onnec tions to a broad range of business entities. These service
providers are ac tively expanding their businesses to include broadband and value added services
that can be bundled into an overall business pac kage. These companies may initially outsource
their broadband requirements to wholesalers. However, their ability to draw on large capital
resources increases the probability that they will vertically integrate into the broadband market.
Integration is likely to oc cur through the ac quisition of regional xDSL and cable providers as well
as through the direc t deployment of broadband solutions. Due to their ability to influence a large
customer base and invest substantial capital, these service providers represent attrac tive
strategic partners.

To provide additional services to their customers, ILECs and CLECs are building strategic
relationships with ASPs like jSpan. The higher percentage of business customers using CLECs
represents an immediate market opportunity for jSpan. The three largest nationally based CLECs
that offer xDSL services are Covad Communications Group Inc., Northpoint Communications Inc.,
and Rhythms NetConnec tions Inc. Collec tively these solutions providers have approximately
25,500 subsc ribers and are able to offer xDSL service to approximately 40 million customers.
At Home Corporation, RoadRunner Corporation, High Speed Ac cess Corporation, and Softnet
Communications Inc. dominate the market for broadband services over cable. As of the end of
June 1999, these companies have approximately 948,000 subsc ribers and can potentially provide
service to 28.0 million homes. The foc us of cable suppliers on home, rather than business
ac counts, makes them an attrac tive secondary market to xDSL providers.
Strategic partnerships with application providers, product manufac turers and third party services
will serve to expand jSpan's value proposition beyond remote connec tivity. Online applications
that meet the needs of a specific vertical market segment can be integrated into the Webtop
work environment. Software manufac turers seeking to provide per-use licensing for legacy
products can host their product on a jSpan server. Service providers that provide related
services - e.g. printing services through Kinko's, Inc. - can expand their customer base through
a strategic partnership with jSpan Corporation.

5 The List, Boardwatch Magazine, June 1999 (http://www.boardwatch.com) and Intel

Corporation as reported by Ziff-Davis Publishing, "Sun a winner in Intel ISP program", June 1999
(http://www.zdnet.co.uk//news/1999/25/ns-8670.html ).
6 Competitive Local Exchange Carriers are often referred to as either CLECs or DLECs (Data Local
Exchange Carriers). DLECs foc us only on data services as opposed to a combination of data and
telec om services.
7 "Small Players Deluge Market with Free Disks," The Wall Street Journal, Tuesday, August 3,
1999 p. B-1 Information reprinted from research c onducted by Jupiter Communications.
8 Deployment Update provided by xDSL.c om based on a TeleChoice survey. xDSL deployment
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 jSpan Corporation
figures represent US lines in service as of Q2'99 (http://www.xDSL.com).
9 Northpoint Communications Group, Inc. Company analysis. Pacific Crest Securities Institutional
Equity Research. July 28, 1999.
10 ibid.

2.3 Target Market Segment Strategy

jSpan Corporation is initially targeting professionals and businesses that do not have the
resources or tec hnical skills to deploy an internal remote ac cess solution. Sales to this market
segment will be conducted through strategic partnerships with network service providers. The
company will develop a secondary market segment comprised of enterprise customers and
premium services following the success of the initial product launch.
End user pricing is value-based and determined by the comparable per-user cost of deploying
and managing a remote ac cess solution using existing technologies. An end-user price of $25 per
month ($300 annually) will fac ilitate market entry and development. Over time, the competitive
nature of the market will serve to lower the price for basic service but will increase the
opportunity to offer premium subsc riptions and value added services. Strategic partners will
participate in revenue sharing agreements. Revenue sharing agreements will range from 3% to
15% of subsc ription revenue. To insure a conservative forec ast, financial projec tions assume
strategic partners retain 15% of all end user subsc ription revenue.
The jSpan service is distributed through a jSpan application server co-hosted at a network
service provider loc ation. Remote ac cess to customer systems can then be sold direc tly to the
service provider customer base or bundled as part of a complete service pac kage. Co-hosting
allows jSpan to provide secure network links direc tly to target systems without the need to
route traffic through numerous sites, resulting in superior network performance and added
security. The proximity of the jSpan application server to the physical network connec tion also
fac ilitates the addition of value added services.
jSpan Corporation's target customers can be classified into three broad categories:

1. Independent Professionals: Identify the need for the jSpan service, establish the
ac count, and are the primary user. Typically made up of telec ommuters, mobile
professionals, and Small Office - Home Office (SOHO) workers. Individual customers are
independent dec ision-makers and are likely to demand ac cess to a single office loc ation or
home computer.
2. Business Customers: Primarily need remote ac cess to an office computer or a small office
network. Business customers identify the need but usually work as part of a larger dec ision
making group. The ac count is billed to a business entity and may include multiple users on a
single bill.
3. Enterprise Customers: Large corporations that have a widespread employee base and
require a remote ac cess solution for some or all of their employees. Enterprise customers
have the resources of an IT department but are pursuing an outsourcing strategy to manage
the cost of remote ac cess. Enterprise customers may have multiple office loc ations with
multiple Internet ac cess points.

4 Research sponsored by Cisc o Systems Inc, San Jose, CA, estimates an average annual cost of
$975 per user for a typical remote ac cess solution and $700 annual cost for an outsourc ed, VPN
based, remote ac cess solution. Reprinted in "The Future of Remote Access", Gary Kim, Virgo
Publishing Inc. Jan., 1999.

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 jSpan Corporation

3.0 Services

jSpan Corporation is an ASP that combines an Internet based Webtop work environment with a
VPN link to one or more remote target systems. The combination of these two technologies
eliminates the expense and expertise needed to custom configure a typical remote ac cess
solution. The Webtop work environment can be used to aggregate applications from a number of
different sources including an office network, a home computer, or an Internet based service
provider. The core technology required to implement the basic service is generally available in
the market. Additional development is required to support the unique jSpan implementation and
to expand the range of system interoperability.

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3.1 Service Description

The functionality of the jSpan Service can be divided into three primary components. The first is
the universally ac cessibly user interfac e - the Webtop - that provides an interfac e into
applications both on the remote target system, and on the Internet. The Webtop controls
ac cess to the jSpan service and adapts the environment to meet the needs of different web
browsers. The second c omponent is a VPN connec tion between the jSpan application server and
the remote target system. A VPN link can be readily established on a broadband link but a
system that uses a dynamically alloc ated IP address or that resides on a dial-up link represents
an additional challenge. The final component of the jSpan Service is client software on the
remote target system that launches target applications. The software establishes communication
over the VPN link and interac ts with the application to insure that the appropriate content is
returned to the Webtop.

Webtop
Internet websites are designed to deliver content but only ac cept limited user input. A Webtop
differs bec ause it supports the use of interac tive applications that do not have pre-defined input
limitations. Users can write or edit documents, transfer files, ac cess databases, or interac t with
desktop-based applications. A Webtop should allow a user to customize the appearance, the
applications, and the work methodology to effectively meet their work requirements. Once the
Webtop is configured, it must maintain the configuration through multiple user sessions and
ac ross multiple browser platforms. This is further complicated by the proliferation of intelligent
information appliances that ac cess the Internet through customized Web browsers or that run a
proprietary Internet ac cess protoc ol.

Virtual Private Networking

VPN is the proc ess of establishing network functionality - file and print services, personal and
shared network applications, database ac cess, etc. - using public network infrastructure. A
number of commercial hardware and software solutions are available that support a VPN link over
TCP/IP protoc ol. While VPNs are more secure than dial-up remote ac cess networks, they still
require customization on both the client and server system. jSpan establishes a VPN link from a
loc ally hosted jSpan server to a customer remote target system. The jSpan application server
implementation can support a number of different industry standard VPN solutions, based on the
hardware and software configuration available at eac h hosting site. The common component is a
TCP/IP link between the jSpan server and the target application.

Client Software
Secure ac cess to desktop and network applications requires a software component that
terminates the VPN link. The software must support data encryption over a broadband
connec tion, terminate and reestablish the VPN connec tion, and limit ac cess to authorized users.
Bec ause there are a number of potential target operating systems - Windows 95/98/NT, Solaris,
Linux, NetWare, and others - multiple client components may be required.

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3.2 Development of Core System

Software development is required to ac complish three critical tasks prior to the first customer
deployment. The first task is the adaptation of a suitable remote ac cess product to a distributed
environment. Secondly, the user interfac e should reflec t the jSpan "look-and-feel" and offer
simplified functionality for non-technical users. Finally, an administrative management console is
needed to simplify the management of a large number of customer ac counts. Additional
development will provide the value-added features that distinguish the jSpan product from
competitors.
The two key differences in the jSpan deployment are the loc ation of firewall protec tion and the
establishment of a VPN link to the target system. A firewall typically limits ac cess through
remote ac cess server but, once ac cessed, the server has unrestricted ac cess to the rest of the
network. While ac cess control is desirable in the jSpan deployment, target systems will still
require firewall protection from public Internet traffic. Without specific development, firewall
protection will limit the functionality of the service.
Most VPN solutions anticipate a remote client that connec ts to an established VPN server. The
jSpan server is designed to establish an outbound VPN link to a remote site. In general, this
requires a reversal of the authentication proc ess so that a connec tion can be established at the
request of an Internet based remote user. Further development is necessary to customize the
VPN link for the specific hardware available at the partnering network service provider.
The customer experience is determined by the "look-and-feel" associated with the jSpan
Webtop. An effective interfac e should provide a work environment that is easy to configure and
use, serves the functional needs of the customer, and enhances the image and brand of jSpan.
jSpan will undertake a development proc ess to identify and implement solutions that meet the
needs of the target customer base.
To manage a large number of customer ac counts, the jSpan server must include a management
console that offers a high degree of automation. Enterprise based solutions are designed to be
used by a single management team and offer similar ac cess to all users. These solutions often do
not support the billing requirements of an outsourced service. jSpan will develop a management
console that provides for the deployment of jSpan servers at multiple physical loc ations ac ross a
number of organizations.
A comprehensive solution will support remote ac cess from a variety of Internet browsers,
including Personal Digital Assistants (PDA), cellular telephones and similar information appliances.
Each of these appliances is limited in its ability to display and store information and to interac t
with Internet sites. To build a strategic competitive advantage, jSpan will launch a development
program foc used on developing new functionality and adding support for a variety of information
appliances.

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 jSpan Corporation

3.3 Technology

Commercial applications can be used as the core infrastructure for the jSpan remote ac cess
service. Two of the most complete solutions are the iPlanet Webtop from SUN Microsystems and
the Tarantella Webtop from SCO Inc. Both of these applications were initially designed for a
corporate enterprise environment but can be customized to meet the needs of the jSpan
application server.
The iPlanet software is designed to provide ac cess to a corporate network by allowing an
Internet browser to penetrate a corporate firewall. The iPlanet server then validates the user
and permits ac cess to designated network resources. Resources include corporate intranet
applications, email ac cess, calendar ac cess, ac cess to PC and Windows NT applications, and file
transfer. Some of the applications require the addition of a third party client component. Most
notably, a driver from Symantec Corporation is needed to ac cess a PC running Windows and a
driver from Citrix is needed to ac cess a Windows NT environment. Bec ause the iPlanet solution is
designed to reside within a corporate firewall, jSpan will develop modifications to extend the
functionality to the Internet. At present, the iPlanet remote ac cess solution is only available on
the Solaris operating system running on a SPARC platform.
The Tarantella solution provided by SCO Inc. is specifically designed as a Webtop and does not
incorporate the add-on applications offered in the SUN product. However, as most of those
applications are generally available, the Tarantella solution is a viable alternative. This pac kage
also benefits from its compatibility with different hardware and software platforms including SCO
Unixware, SUN SPARC Solaris, IBM Aix, and HP-UX. Windows applications are only supported
under the Windows Terminal Server operating system although most X11 based UNIX applications
are supported. Tarantella also requires a non-standard browser plug-in that may not be
ac cepted at some publicly available Web browsers.The Tarantella solution will require additional
development to effectively meet the needs of the jSpan application server.
VPN hardware and software drivers are available for the most common remote target systems. A
PC running Microsoft Windows NT RRAS or Windows 98 Dial-Up Networking already has a VPN
driver installed. Over the next year, other OS vendors will integrate standard L2TP and IPsec
tunneling protoc ols into their TCP/IP protoc ol stac k. Additional operating systems can be
supported at minimal cost through licensing agreements with VPN developers.
A sufficient number of target system drivers to effec tively launch the jSpan service are currently
available in the market. Symantec, Citrix, and GraphOn already manufac ture drivers for various
operating systems and applications. Custom development will extend target system compatibility
beyond the most common operating systems and to target specialized applications like WebTV,
home networking products, and interfac es based on SUN Microsystems' JINI technology.

4.0 Marketing Strategy

jSpan Corporation's marketing program will position the company as an ASP to mobile workers.
The service will be marketed to independent professionals and businesses that wish to outsource
remote ac cess. At a later stage, the addition of premium subsc riptions and value added services
will shift the jSpan Webtop from a remote ac cess portal to a core productivity tool. The Webtop
will replac e the desktop as the users' primary workspace. The jSpan Webtop will be customized
and promoted to specific vertical market industry segments.

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4.1 Strategic Market Entry

jSpan will launch its service through ISPs that provide broadband services to small and medium
businesses. This market entry strategy establishes jSpan in the market while providing
manageable growth. It also fac ilitates direc t interac tion with the customer base to further refine
the service. jSpan will co-market with ISP partners as well as marketing direc tly to end users.
Availability of the service depends on the combined reach of partner ISPs.
jSpan will also seek partnerships with medium sized broadband wholesalers - Covad
Communications Group, Inc., Northpoint Communications Inc., Rhythms NetConnec tions Inc., and
Softnet Systems Inc. These partnerships will rapidly expand jSpan's regional coverage and
ac celerate the ac quisition of ISP customers.

4.2 Sales Forecast

The jSpan sales forec ast is based on the ac quisition of individual users. Revenue is assumed to
be a constant $21.25 throughout the sales forec ast period. The number of jSpan users shown
for eac h year is the number of user subsc riptions at the end of that year ignoring the effect of
customer churn. The revenue forec ast ac counts for users that were ac quired mid-way through
the year. The jSpan fisc al year begins on October 1st. Market size estimates were interpolated
to the jSpan fisc al year from a calendar year forec ast. jSpan anticipates the unit price for basic
connec tivity services to eventually dec line to between $10 and $15 per month. To provide a
conservative estimate, the potential market size was calculated using a flat-rate basic
subsc ription fee of $10.00 per user per month.

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 jSpan Corporation

Table: Sales Forecast

Sales Forecast
FY 2000 FY 2001 FY 2002 FY 2003 FY 2004
Sales
jSpan Customers $39,100 $4,706,250 $44,396,875 $199,306,250 $422,384,125
Other $0 $0 $0 $0 $0
Total Sales $39,100 $4,706,250 $44,396,875 $199,306,250 $422,384,125

Direct Cost of Sales FY 2000 FY 2001 FY 2002 FY 2003 FY 2004

jSpan Customers $412,241 $2,437,134 $15,945,617 $49,092,698 $138,293,331
Other $0 $0 $0 $0 $0
Subtotal Direct Cost of Sales $412,241 $2,437,134 $15,945,617 $49,092,698 $138,293,331

4.3 Pricing Strategy

The per user cost for jSpan service takes into ac count other remote ac cess options and the
price individuals are willing to pay for value added services. On average, Internet user
households spend more than other households on communications and communications services.
Internet user households spend an average of $101 per month on telephone services, exceeding
the national average by $30 (not including long distance charges).
The projec ted end user price of $25 per month averages basic service ac counts and additional
fees for premium subsc riptions and value added services. As the service gains customer
ac ceptance, eventually prices will erode. However, the specialization of the Webtop into vertical
market segments, the addition of value added services and premium subsc riptions, all serve to
maintain the projec ted average of $25 per user per month. Revenue sharing with jSpan partners
will be treated as a 3% to 15% price disc ount, reducing jSpan's revenue to $21.25 per user per
month.

20 State of the Net, The New Frontier, McGraw-Hill, 1998.

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4.4 Promotion Strategy

The end user of the jSpan service is an independent professional or business that has broadband
Internet ac cess. By sharing revenue with the service provider, jSpan creates an incentive for
the service provider to bundle the jSpan service into a complete service pac kage. CLECs and
ILECs are efficient links to broadband ISPs and are seeking partnerships with ASPs. As
wholesalers, they are well positioned to make the jSpan service available through their ISP
customer base.
jSpan will co-market the service with service provider partners as well as market direc tly to
potential users. Service providers can be reached direc tly through trade magazines (e.g.
Boardwatch, CIO and Industry Standard), trade shows (e.g. ISPCON and COMDEX) and online
content aggregators targeted at ISPs (e.g. ISP Network and internet.com's ISP Resources
Channel). In addition to co-branding in advertisements, co-marketing may include bundling jSpan
service with other ISP service options or offering free trial periods when broadband service is
initiated.
End user marketing is designed around a co-marketing strategy with service providers. In jSpan
advertisements, it may be necessary to refer to service providers that offer the jSpan service,
creating an incentive for ISP participation. jSpan will build marketing relationships with product
manufac turers who are targeting a similar customer base. Potential marketing partners are the
manufac turers of cellular telephones, PDAs, and other devices widely used by mobile
professionals. jSpan service increases the functionality of any device that supports a compatible
web browser.
Advertising will utilize elec tronic and print media direc ted at telec ommuters and mobile workers.
IDC estimates that 74% of PC owning telec ommuters have Internet ac cess. jSpan will establish
an Internet presence through vertically oriented Internet content providers. Advertisements will
be plac ed in magazines and newspapers read by remote and mobile professionals.

4.5 Competitive Comparison

There are three competitive threats to jSpan: Web based applications, other remote
connec tivity solutions, and Application Service Providers (ASP).
An increasing number of applications are migrating to the Internet and may be viewed as
competitors to jSpan. However, jSpan fac ilitates the transition to online service providers by
aggregating online and remote applications into one work environment. As a result, many
providers are potential jSpan partners. Entirely virtual desktops force a user to adopt all new
applications and new work methodologies and do not provide the ability to ac cess customized
applications.
Direc t-dial remote ac cess solutions have been on the market for some time. However, these
solutions are often complex to install and only provide remote ac cess from one pre-configured
computer to another. While some of these solutions have been upgraded to support connec tivity
over Internet infrastructure, the companies providing the software are sustaining a product
oriented business model. Integration into the service provider model poses a significant threat to
their existing revenue stream.
Companies are increasingly relying on ASPs to provide high end IT applications. ASPs generally
offer a single enterprise application or a suite of integrated applications to a broad base of
medium sized companies. ASPs could potentially adopt services similar to jSpan and utilize their
existing customer base to rapidly ac quire market share. However, currently ASPs are targeting
large organizations with significant resources rather than the Independent professionals and
small to medium businesses targeted by jSpan. ISPs are better positioned than ASPs to reach
the jSpan customer base and are willing to outsource their value added services from jSpan.

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 jSpan Corporation

5.0 Strategy and Implementation Summary

jSpan Corporation is establishing strategic partnerships with network service providers that will
permit the company to co-host a remote ac cess server at their fac ility. The initial deployment is
foc used on service providers who generate a majority of their revenue through broadband
services to businesses. This strategy establishes jSpan in the remote ac cess market while
maintaining the company growth at a manageable level. Following the initial deployment, jSpan
will target a broader base of service providers and larger corporate end users. Long term revenue
growth will result from the addition of value added and premium services.

5.1 Personnel Plan

In addition to the two founders, a VP of Operations and a Projec t Manager will be added
following the first funding event. By the end of the first year of operations jSpan will have a total
of 21 employees: six each in Administration, Sales and Marketing, and Operations, and three in
Engineering. Revenue per employee will be approximately $1,862. The number of employees will
grow from 34 at the end of year two to 1,073 at the end of year five. During this same period
revenue per employee will increase from $94,125 to $393,648.

Table: Personnel
Personnel Plan
FY 2000 FY 2001 FY 2002 FY 2003 FY 2004
Operations $209,500 $600,600 $2,006,550 $3,310,808 $10,681,869
Engineering $98,000 $403,200 $2,469,600 $11,113,200 $32,050,469
Sales & Marketing $90,000 $336,000 $1,446,480 $6,038,172 $15,597,376
Administration $194,332 $372,395 $558,593 $2,463,394 $5,604,220
Total People 21 34 121 410 1073

Total Payroll $591,832 $1,712,195 $6,481,223 $22,925,573 $63,933,934

5.2 Distribution Strategy

jSpan, in partnership with a regional Internet service provider, will offer service to a limited
number of users in month four. This market test will run for approximately three months. jSpan
will continue to build relationships with other service providers for a full regional launch in month
seven. jSpan's rollout strategy will establish relationships with multiple ISPs until the service is
widely available. Additional relationships will be initiated with ILECs and CLECs that are seeking to
provide added value services through ASPs.

6.0 Company Ownership

jSpan Corporation was formed as a C Corporation headquartered in the State of California. The
two founders are currently the direc tors of the company and the majority shareholders. In
addition to shares held by the founding partners a number of shares have been set aside to
ac commodate an employee incentive plan. Shares have been authorized, but are not yet issued,
to ac commodate future investors.

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 jSpan Corporation

6.1 Professional Services

Additional professional services will be obtained, as necessary, from:

David Miller
Emerging Tec hnologies Division
San Francisc o Valley Bank

Albert Sharpe
Partner-In-Charge, Industry Services
Arthur Coopers L.L.P.

Michael Rodgers
Partner
Watson, Sonoma, Goodson & Rodgers

6.2 Board of Advisors

Joseph Addison, Co-Founder and CFO of StartABusiness.com, has extensive experience in the
formation of new ventures. As a partner at Arthur Coopers L.L.P., Mr. Addison founded and
served as the Direc tor of the Entrepreneurial Services Group in the San Francisc o Bay Area. He is
a Co-Founder and Limited Partner of Addison and Bates Ventures, a Sonoma based venture
capital fund and serves as the Direc tor of Entrepreneurship at the University of San Francisc o.
Mr. Addison c ompleted degrees at Penn State University and the Wharton Sc hool of Business.
James Smith, Vice President of Business Development for Exodus Networks, joined Exodus in
October 1995. From July 1988 to October 1995, Mr. Smith held various positions at Next
Computer, including Group Manager Product Marketing, Next On-Line Services Division, and
Business Development Manager of Next On-Line Services Division. Mr. Smith has an MBA from the
University of California-Berkeley.
Michael M. Rodgers, Partner at Watson, Sonoma, Goodson & Rodgers, joined the firm in 1974. Mr.
Rodgers serves as an advisor and board member for a wide variety of high-tech c ompanies in the
computer, semiconductor, entertainment, software, and biotec h industries. Mr. Rodgers is the
managing partner of MyMoney investments and specializes in c orporate law as it relates to
venture capital and the creation of high-technology companies. Mr. Rodgers completed his
undergraduate degree at University of California-Los Angeles and his law degree at the University
of California-Berkeley.
Peter J. Wilson, Direc tor of Business Development at Advanced Network Communications, has
both tec hnical and business experience in the deployment of emerging broadband technologies.
Prior to ANC, Mr. Wilson served as a Product Manager with Hewlett-Packard Corporation. Mr.
Wilson also has experience at General Elec tric and American Power Conversion Inc. He completed
his undergraduate degree at Cornell University and an MBA from the University of California-
Berkeley.

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 jSpan Corporation

6.3 Management Team

In addition to the management team shown here, jSpan is ac tively seeking experienced
management and additional tec hnical specialists that are prepared to join the jSpan team once
funding is secured.
John G. Millar, Co-Founder and CEO, has rec ent management experience as the Direc tor of
Business Development for Advanced Digital Information Corporation (ADIC), a Redmond, WA
based data management company. He also founded, and serves as a managing partner, the
consulting firm of J.G. Millar & Associates. In addition to ADIC, Mr. Millar has worked with Rexon
Corporation, Thomas-Conrad Inc. and American Power Conversion Corporation. He began his
career as an engineer for Northrop Corporation where he led a software development projec t as
part of the Advanced Tac tical Fighter program. Mr. Millar completed an MBA from the Haas
Sc hool of Business at University of California-Berkeley and has both graduate and undergraduate
degrees in engineering.
Kim Niquette, Co-Founder and CFO, has financial management and industry analysis experience
with both Dodge & Cox Inc. and Barbary Coast Capital Management and extensive international
experience in entrepreneurship. She also co-founded the consulting firm of J.G. Millar &
Associates. Most rec ently, Ms. Niquette coordinated business development and credit programs
for emerging ec onomies in East Africa. Ms. Niquette has an undergraduate degree in Business
and an MBA from the Haas Sc hool of Business at University of California-Berkeley.
Norman Walters, COO, has over 25 years experience in operations and sales management in the
high technology industry, most rec ently as the Vice President of Sales for IBM's Internet division.
Prior to his experience at IBM, Mr. Walters served as the President of Fairchild Semiconductor, a
Vice President at StorageNow Inc., and as a consultant to numerous tec hnology ventures. Mr.
Walters completed a degree in Engineering at California State College and spent approximately 10
years as a prac ticing engineer.
Carlos Garcia, Technology Spec ialist, has software development and management experience
with Sun Microsystems where he worked on JavaOS, HotJava Browsers, and Personal Java. Mr.
Garcia also served as the Chief Technology Officer of Carbuyer.com Inc., a Bay Area start-up
company and has additional experience with Amdahl Corporation and as a systems programmer
for University of California-Santa Cruz. He completed both undergraduate and graduate degrees
in c omputer sc ience at University of California-Santa Cruz.

6.4 Long-term Plan

The nature of this business venture requires substantial initial investment and expenditure to
build the service infrastructure and then build the client base. Tables and charts in this plan
were extended to five years to show the projec ted break-even and profitability sc hedule.

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 jSpan Corporation

7.0 Financial Plan

jSpan Corporation is an ASP that provides remote ac cess. jSpan allows independent professionals
and small to medium businesses to have the same information ac cess previously available in an
enterprise environment.

7.1 Important Assumptions

1. jSpan Corporation assumes a constant price of $25 per month over the forec ast period. The
price for the service may dec line over time; however, the addition of premium subsc riptions
and value added services will compensate for the price degradation. Approximately 15% of
revenue will be shared with jSpan partners. Shared revenue is treated as a disc ount on the
$25 price, resulting in per user revenue of $21.25 per month.
2. Under COGS, direc t material cost is estimated based on the cost of bandwidth, monthly
operational costs and licensing costs. An average cost and performance of T1 lines is used
to approximate the cost of bandwidth. Operational costs are expec ted to be similar to the
cost of customer care for Internet Service Providers, $3 to $7.50. Software will be licensed
and other software added as value added services. Total per unit direc t material cost is
estimated at $6.50 for years one and two, $6, $5.50 and $5 for years three, four, and five,
respec tively. The drop in c ost is due to the realization of economies of sc ale.
3. Employee salaries increase annually by 5%. Initial salaries may be somewhat lower than
forec ast, but will include options.
4. Operational hardware is leased on a 3-year capital lease. Some portion of this hardware may
be purchased depending on the terms jSpan is able to negotiate. Hardware requirements are
based on the number of servers and routers needed to support 2,000 users. The hardware
cost per 2,000 users is estimated at $130,000 for years one and two, dropping to $65,000
for years three, four and five.
5. All capital purchases (hardware, software, furniture and fixtures) are deprec iated over three
years.

21 The Infrastructure Report: Internet Service Provider Industry Overview, Credit Suisse First
Boston Corporation, Dec ember 1998.

Table: General Assumptions

General Assumptions
FY 2000 FY 2001 FY 2002 FY 2003 FY 2004
Plan Month 1 2 3 4 5
Current Interest Rate 8.50% 8.50% 8.50% 8.50% 8.50%
Long-term Interest Rate 8.50% 8.50% 8.50% 8.50% 8.50%
Tax Rate 2.50% 0.00% 2.50% 0.00% 2.50%
Other 0 0 0 0 0

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 jSpan Corporation

7.2 Start-up Funding

The management estimates that ac hieving forec ast results will require approximately $14.9
million in c apital. Break-even operations are anticipated in the second quarter of FY 2003, at
which time gross revenues will be approaching a $109 million annual run rate, and gross margin
contribution of 64%.
jSpan Corporation has either completed or anticipates funding the above capital requirement as
follows:

Seed $500,000 June, 1999

Series A $3,200,000 January, 2000
Series B $11,200,000 October, 2000
Total $14,900,000

Table: Start-up
Start-up

Requirements

Start-up Expenses
Legal $0
Other $0
Total Start-up Expenses $0

Start-up Assets
Cash Required $498,500
Other Current Assets $0
Long-term Assets $1,500
Total Assets $500,000

Total Requirements $500,000

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 jSpan Corporation

Table: Start-up Funding

Start-up Funding
Start-up Expenses to Fund $0
Start-up Assets to Fund $500,000
Total Funding Required $500,000

Assets
Non-cash Assets from Start-up $1,500
Cash Requirements from Start-up $498,500
Additional Cash Raised $0
Cash Balance on Starting Date $498,500
Total Assets $500,000

Liabilities and Capital

Liabilities
Current Borrowing $0
Long-term Liabilities $0
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $0

Capital

Planned Investment
Investor 1 $200,000
Investor 2 $200,000
Other $100,000
Additional Investment Requirement $0
Total Planned Investment $500,000

Loss at Start-up (Start-up Expenses) $0

Total Capital $500,000

Total Capital and Liabilities $500,000

Total Funding $500,000

7.3 Exit Strategy

By consolidating the highly fragmented market for independent professionals and businesses,
jSpan is a potential ac quisition target for corporations that offer goods and services to this
market segment. Research indicates that rec ent ac quisitions value qualified users between $300
and $500 per user. The interac tive nature of the jSpan service is such that the value is likely to
fall near the upper end of the range. Based on a $450 per user price, a conservative estimate is
an ac quisition value of approximately $105 million at the end of year three, increasing to over $1
billion by the end of year five. Successful diversification into related market segments could
substantially increase the value of the corporation by exceeding the projec ted number of user
ac counts. The result would be a higher ac quisition value or a potential public stoc k offering.

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 jSpan Corporation

7.4 Projected Profit and Loss

The following table presents the projec ted profit and loss.

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 jSpan Corporation

Table: Profit and Loss

Pro Forma Profit and Loss
FY 2000 FY 2001 FY 2002 FY 2003 FY 2004
Sales $39,100 $4,706,250 $44,396,875 $199,306,250 $422,384,125
Direct Cost of Sales $412,241 $2,437,134 $15,945,617 $49,092,698 $138,293,331
Other $0 $0 $0 $0 $0
Total Cost of Sales $412,241 $2,437,134 $15,945,617 $49,092,698 $138,293,331

Gross Margin ($373,141) $2,269,116 $28,451,258 $150,213,552 $284,090,794

Gross Margin % -954.32% 48.21% 64.08% 75.37% 67.26%

Expenses
Payroll $591,832 $1,712,195 $6,481,223 $22,925,573 $63,933,934
Sales and Marketing and Other Expenses $1,894,597 $2,614,784 $5,324,365 $35,693,325 $85,000,000
Depreciation $40,328 $201,000 $330,200 $1,103,600 $2,573,650
Bank Charges $1,958 $188,250 $200,000 $1,000,000 $3,000,000
Insurance $60,000 $60,000 $80,000 $120,000 $500,000
Rent $12,000 $24,000 $84,000 $250,000 $1,000,000
Payroll Taxes $88,775 $256,829 $972,183 $3,438,836 $9,590,090
Other $0 $0 $0 $0 $0

Total Operating Expenses $2,689,490 $5,057,058 $13,471,971 $64,531,334 $165,597,674

Profit Before Interest and Taxes ($3,062,631) ($2,787,942) $14,979,287 $85,682,218 $118,493,120
EBITDA ($3,022,303) ($2,586,942) $15,309,487 $86,785,818 $121,066,770
Interest Expense $23,077 $107,995 $352,032 $658,273 $1,410,643
Taxes Incurred $0 $0 $365,681 $0 $2,927,062

Net Profit ($3,085,708) ($2,895,938) $14,261,573 $85,023,945 $114,155,414

Net Profit/Sales -7891.84% -61.53% 32.12% 42.66% 27.03%

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 jSpan Corporation

7.5 Projected Cash Flow

The Cash Flow chart and table are shown below.

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 jSpan Corporation

Table: Cash Flow

Pro Forma Cash Flow
FY 2000 FY 2001 FY 2002 FY 2003 FY 2004
Cash Received

Cash from Operations

Cash Sales $0 $0 $0 $0 $0
Cash from Receivables $13,115 $1,604,540 $18,019,147 $96,356,061 $274,130,287
Subtotal Cash from Operations $13,115 $1,604,540 $18,019,147 $96,356,061 $274,130,287

Additional Cash Received

Sales Tax, VAT, HST/GST Received $0 $0 $0 $0 $0
New Current Borrowing $231,074 $605,792 $1,408,222 $1,727,000 $5,507,278
New Other Liabilities (interest-free) $0 $0 $0 $0 $7,559,441
New Long-term Liabilities $274,565 $1,211,583 $2,816,445 $3,454,000 $11,014,555
Sales of Other Current Assets $0 $0 $0 $0 $0
Sales of Long-term Assets $1,500 $0 $0 $0 $0
New Investment Received $3,703,050 $11,200,000 $41,835,000 $0 $0
Subtotal Cash Received $4,223,304 $14,621,915 $64,078,814 $101,537,061 $298,211,561

Expenditures FY 2000 FY 2001 FY 2002 FY 2003 FY 2004

Expenditures from Operations

Cash Spending $591,832 $1,712,195 $6,481,223 $22,925,573 $63,933,934
Bill Payments $2,131,372 $5,582,680 $21,874,436 $84,752,098 $229,271,702
Subtotal Spent on Operations $2,723,204 $7,294,876 $28,355,659 $107,677,671 $293,205,637

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0
Principal Repayment of Current Borrowing $93,792 $0 $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment $0 $100,000 $200,000 $2,000,000 $2,000,000
Purchase Other Current Assets $0 $0 $0 $0 $0
Purchase Long-term Assets $605,000 $1,405,000 $1,292,000 $7,734,000 $14,700,000
Dividends $0 $1,000,000 $2,000,000 $1,000,000 $0
Subtotal Cash Spent $3,421,996 $9,799,876 $31,847,659 $118,411,671 $309,905,637

Net Cash Flow $801,308 $4,822,039 $32,231,155 ($16,874,609) ($11,694,075)

Cash Balance $1,299,808 $6,121,848 $38,353,003 $21,478,393 $9,784,318

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 jSpan Corporation

7.6 Projected Balance Sheet

The Balance Sheet follows.

Table: Balance Sheet

Pro Forma Balance Sheet
FY 2000 FY 2001 FY 2002 FY 2003 FY 2004
Assets

Current Assets
Cash $1,299,808 $6,121,848 $38,353,003 $21,478,393 $9,784,318
Accounts Receivable $25,985 $3,127,695 $29,505,423 $132,455,612 $280,709,450
Other Current Assets $0 $0 $0 $0 $0
Total Current Assets $1,325,793 $9,249,543 $67,858,426 $153,934,005 $290,493,768

Long-term Assets
Long-term Assets $605,000 $2,010,000 $3,302,000 $11,036,000 $25,736,000
Accumulated Depreciation $40,328 $241,328 $571,528 $1,675,128 $4,248,778
Total Long-term Assets $564,672 $1,768,672 $2,730,472 $9,360,872 $21,487,222
Total Assets $1,890,465 $11,018,215 $70,588,898 $163,294,877 $311,980,990

Liabilities and Capital FY 2000 FY 2001 FY 2002 FY 2003 FY 2004

Current Liabilities
Accounts Payable $361,276 $467,588 $1,917,031 $7,418,066 $19,867,490
Current Borrowing $137,282 $743,074 $2,151,296 $3,878,296 $9,385,574
Other Current Liabilities $0 $0 $0 $0 $7,559,441
Subtotal Current Liabilities $498,558 $1,210,662 $4,068,327 $11,296,362 $36,812,505

Long-term Liabilities $274,565 $1,386,148 $4,002,593 $5,456,593 $14,471,148

Total Liabilities $773,123 $2,596,810 $8,070,920 $16,752,955 $51,283,653

Paid-in Capital $4,203,050 $15,403,050 $57,238,050 $57,238,050 $57,238,050

Retained Earnings $0 ($4,085,708) ($8,981,646) $4,279,928 $89,303,873
Earnings ($3,085,708) ($2,895,938) $14,261,573 $85,023,945 $114,155,414
Total Capital $1,117,342 $8,421,404 $62,517,978 $146,541,923 $260,697,337
Total Liabilities and Capital $1,890,465 $11,018,215 $70,588,898 $163,294,877 $311,980,990

Net Worth $1,117,342 $8,421,404 $62,517,978 $146,541,923 $260,697,337

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 jSpan Corporation

7.7 Business Ratios

Standard business ratios are presented below, as well as comparative information for S.I.C code
7375, Computer Programming, Data Proc essing, And Information Retrieval Services.

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 jSpan Corporation

Table: Ratios
Ratio Analysis
FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 Industry Profile
Sales Growth 0.00% 11936.45% 843.36% 348.92% 111.93% 9.70%

Percent of Total Assets

Accounts Receivable 1.37% 28.39% 41.80% 81.11% 89.98% 25.00%
Other Current Assets 0.00% 0.00% 0.00% 0.00% 0.00% 46.30%
Total Current Assets 70.13% 83.95% 96.13% 94.27% 93.11% 76.60%
Long-term Assets 29.87% 16.05% 3.87% 5.73% 6.89% 23.40%
Total Assets 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Current Liabilities 26.37% 10.99% 5.76% 6.92% 11.80% 49.40%

Long-term Liabilities 14.52% 12.58% 5.67% 3.34% 4.64% 21.20%
Total Liabilities 40.90% 23.57% 11.43% 10.26% 16.44% 70.60%
Net Worth 59.10% 76.43% 88.57% 89.74% 83.56% 29.40%

Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Gross Margin -954.32% 48.21% 64.08% 75.37% 67.26% 0.00%
Selling, General & Administrative Expenses 7216.16% 117.68% 38.92% 36.46% 48.96% 78.10%
Advertising Expenses 4771.19% 53.44% 11.60% 17.67% 24.86% 0.90%
Profit Before Interest and Taxes -7832.82% -59.24% 33.74% 42.99% 28.05% 1.90%

Main Ratios
Current 2.66 7.64 16.68 13.63 7.89 1.57
Quick 2.66 7.64 16.68 13.63 7.89 1.19
Total Debt to Total Assets 40.90% 23.57% 11.43% 10.26% 16.44% 70.60%
Pre-tax Return on Net Worth -276.16% -34.39% 23.40% 58.02% 44.91% 4.10%
Pre-tax Return on Assets -163.22% -26.28% 20.72% 52.07% 37.53% 13.80%

Additional Ratios FY 2000 FY 2001 FY 2002 FY 2003 FY 2004

Net Profit Margin -7891.84% -61.53% 32.12% 42.66% 27.03% n.a
Return on Equity -276.16% -34.39% 22.81% 58.02% 43.79% n.a

Activity Ratios
Accounts Receivable Turnover 1.50 1.50 1.50 1.50 1.50 n.a
Collection Days 46 122 134 148 179 n.a
Accounts Payable Turnover 6.90 12.17 12.17 12.17 12.17 n.a
Payment Days 27 27 19 19 21 n.a
Total Asset Turnover 0.02 0.43 0.63 1.22 1.35 n.a

Debt Ratios
Debt to Net Worth 0.69 0.31 0.13 0.11 0.20 n.a
Current Liab. to Liab. 0.64 0.47 0.50 0.67 0.72 n.a

Liquidity Ratios
Net Working Capital $827,235 $8,038,880 $63,790,099 $142,637,644 $253,681,263 n.a
Interest Coverage -132.71 -25.82 42.55 130.16 84.00 n.a

Additional Ratios
Assets to Sales 48.35 2.34 1.59 0.82 0.74 n.a
Current Debt/Total Assets 26% 11% 6% 7% 12% n.a
Acid Test 2.61 5.06 9.43 1.90 0.27 n.a
Sales/Net Worth 0.03 0.56 0.71 1.36 1.62 n.a
Dividend Payout 0.00 0.00 0.14 0.01 0.00 n.a

Page 26
 Appendix
Table: Personnel

Personnel Plan
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
Operations 0% $10,000 $10,000 $10,000 $10,000 $15,000 $17,500 $17,500 $20,000 $21,500 $26,000 $26,000 $26,000
Engineering 0% $0 $0 $0 $0 $3,000 $8,000 $13,000 $13,000 $13,000 $16,000 $16,000 $16,000
Sales & Marketing 0% $0 $0 $0 $0 $0 $5,000 $8,000 $13,000 $16,000 $16,000 $16,000 $16,000
Administration 0% $10,000 $10,000 $10,000 $10,000 $10,000 $12,000 $14,000 $17,000 $25,333 $25,333 $25,333 $25,333
Total People 2 2 2 2 4 8 10 13 18 20 21 21

Total Payroll $20,000 $20,000 $20,000 $20,000 $28,000 $42,500 $52,500 $63,000 $75,833 $83,333 $83,333 $83,333

Page 1
 Appendix
Table: Sales Forecast

Sales Forecast
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
Sales
jSpan Customers 0% $0 $0 $0 $744 $744 $744 $1,594 $2,125 $2,656 $4,250 $7,756 $18,488
Other 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Sales $0 $0 $0 $744 $744 $744 $1,594 $2,125 $2,656 $4,250 $7,756 $18,488

Direct Cost of Sales Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
jSpan Customers $0 $0 $0 $7,841 $7,841 $7,841 $16,803 $22,404 $28,005 $44,808 $81,775 $194,922
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Direct Cost of Sales $0 $0 $0 $7,841 $7,841 $7,841 $16,803 $22,404 $28,005 $44,808 $81,775 $194,922

Page 2
 Appendix
Table: General Assumptions

General Assumptions
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
Plan Month 1 2 3 4 5 6 7 8 9 10 11 12
Current Interest Rate 8.50% 8.50% 8.50% 8.50% 8.50% 8.50% 8.50% 8.50% 8.50% 8.50% 8.50% 8.50%
Long-term Interest Rate 8.50% 8.50% 8.50% 8.50% 8.50% 8.50% 8.50% 8.50% 8.50% 8.50% 8.50% 8.50%
Tax Rate 30.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Other 0 0 0 0 0 0 0 0 0 0 0 0

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 Appendix
Table: Profit and Loss

Pro Forma Profit and Loss

Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
Sales $0 $0 $0 $744 $744 $744 $1,594 $2,125 $2,656 $4,250 $7,756 $18,488
Direct Cost of Sales $0 $0 $0 $7,841 $7,841 $7,841 $16,803 $22,404 $28,005 $44,808 $81,775 $194,922
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $0 $0 $0 $7,841 $7,841 $7,841 $16,803 $22,404 $28,005 $44,808 $81,775 $194,922

Gross Margin $0 $0 $0 ($7,098) ($7,098) ($7,098) ($15,209) ($20,279) ($25,349) ($40,558) ($74,018) ($176,434)
Gross Margin % 0.00% 0.00% 0.00% -954.31% -954.31% -954.31% -954.31% -954.31% -954.31% -954.31% -954.31% -954.34%

Expenses
Payroll $20,000 $20,000 $20,000 $20,000 $28,000 $42,500 $52,500 $63,000 $75,833 $83,333 $83,333 $83,333
Sales and Marketing and Other $156,500 $156,500 $156,500 $157,000 $160,400 $157,000 $157,500 $157,500 $157,500 $157,580 $159,150 $161,467
Expenses
Depreciation $0 $0 $0 $0 $5,041 $5,041 $5,041 $5,041 $5,041 $5,041 $5,041 $5,041
Bank Charges $0 $0 $0 $37 $37 $37 $80 $106 $133 $214 $386 $928
Insurance $15,000 $0 $0 $15,000 $0 $0 $15,000 $0 $0 $15,000 $0 $0
Rent $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Payroll Taxes 15% $3,000 $3,000 $3,000 $3,000 $4,200 $6,375 $7,875 $9,450 $11,375 $12,500 $12,500 $12,500
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Operating Expenses $195,500 $180,500 $180,500 $196,037 $198,678 $211,953 $238,996 $236,097 $250,882 $274,668 $261,410 $264,269

Profit Before Interest and Taxes ($195,500) ($180,500) ($180,500) ($203,135) ($205,776) ($219,051) ($254,205) ($256,376) ($276,231) ($315,226) ($335,428) ($440,703)
EBITDA ($195,500) ($180,500) ($180,500) ($203,135) ($200,735) ($214,010) ($249,164) ($251,335) ($271,190) ($310,185) ($330,387) ($435,662)
Interest Expense $664 $1,637 $1,637 $1,637 $1,637 $1,637 $1,637 $1,637 $1,637 $2,820 $3,582 $2,917
Taxes Incurred $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Net Profit ($196,164) ($182,137) ($182,137) ($204,772) ($207,413) ($220,688) ($255,842) ($258,013) ($277,867) ($318,046) ($339,010) ($443,620)
Net Profit/Sales 0.00% 0.00% 0.00% -27532.32% -27887.41% -29672.28% -16052.81% -12141.79% -10460.89% -7483.43% -4370.80% -2399.57%

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 Appendix
Table: Cash Flow

Pro Forma Cash Flow

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

Cash from Operations

Cash Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Cash from Receivables $0 $0 $0 $0 $25 $744 $744 $772 $1,611 $2,143 $2,709 $4,367
Subtotal Cash from Operations $0 $0 $0 $0 $25 $744 $744 $772 $1,611 $2,143 $2,709 $4,367

Additional Cash Received

Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Current Borrowing $93,792 $137,282 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $167,000 $107,565 $0
Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Long-term Assets $1,500 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Investment Received $503,050 $0 $0 $3,200,000 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Received $598,342 $137,282 $0 $3,200,000 $25 $744 $744 $772 $1,611 $169,143 $110,274 $4,367

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

Expenditures from Operations

Cash Spending $20,000 $20,000 $20,000 $20,000 $28,000 $42,500 $52,500 $63,000 $75,833 $83,333 $83,333 $83,333
Bill Payments $5,872 $175,697 $162,137 $162,916 $185,169 $175,075 $174,757 $199,635 $192,349 $200,792 $234,737 $262,237
Subtotal Spent on Operations $25,872 $195,697 $182,137 $182,916 $213,169 $217,575 $227,257 $262,635 $268,182 $284,125 $318,070 $345,570

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $93,792
Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Long-term Assets $0 $0 $0 $605,000 $0 $0 $0 $0 $0 $0 $0 $0
Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Spent $25,872 $195,697 $182,137 $787,916 $213,169 $217,575 $227,257 $262,635 $268,182 $284,125 $318,070 $439,362

Net Cash Flow $572,470 ($58,415) ($182,137) $2,412,084 ($213,144) ($216,831) ($226,513) ($261,862) ($266,570) ($114,982) ($207,796) ($434,995)
Cash Balance $1,070,970 $1,012,555 $830,418 $3,242,502 $3,029,358 $2,812,528 $2,586,014 $2,324,152 $2,057,581 $1,942,599 $1,734,803 $1,299,808

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 Appendix
Table: Balance Sheet

Pro Forma Balance Sheet

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

Current Assets
Cash $498,500 $1,070,970 $1,012,555 $830,418 $3,242,502 $3,029,358 $2,812,528 $2,586,014 $2,324,152 $2,057,581 $1,942,599 $1,734,803 $1,299,808
Accounts Receivable $0 $0 $0 $0 $744 $1,463 $1,463 $2,313 $3,666 $4,710 $6,818 $11,865 $25,985
Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Current Assets $498,500 $1,070,970 $1,012,555 $830,418 $3,243,246 $3,030,821 $2,813,990 $2,588,327 $2,327,817 $2,062,292 $1,949,417 $1,746,668 $1,325,793

Long-term Assets
Long-term Assets $1,500 $0 $0 $0 $605,000 $605,000 $605,000 $605,000 $605,000 $605,000 $605,000 $605,000 $605,000
Accumulated Depreciation $0 $0 $0 $0 $0 $5,041 $10,082 $15,123 $20,164 $25,205 $30,246 $35,287 $40,328
Total Long-term Assets $1,500 $0 $0 $0 $605,000 $599,959 $594,918 $589,877 $584,836 $579,795 $574,754 $569,713 $564,672
Total Assets $500,000 $1,070,970 $1,012,555 $830,418 $3,848,246 $3,630,780 $3,408,908 $3,178,204 $2,912,653 $2,642,087 $2,524,171 $2,316,381 $1,890,465

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

Current Liabilities
Accounts Payable $0 $170,292 $156,732 $156,732 $179,332 $169,278 $168,094 $193,231 $185,694 $192,995 $226,124 $249,779 $361,276
Current Borrowing $0 $93,792 $231,074 $231,074 $231,074 $231,074 $231,074 $231,074 $231,074 $231,074 $231,074 $231,074 $137,282
Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Current Liabilities $0 $264,084 $387,806 $387,806 $410,406 $400,352 $399,168 $424,305 $416,768 $424,069 $457,198 $480,853 $498,558

Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $167,000 $274,565 $274,565

Total Liabilities $0 $264,084 $387,806 $387,806 $410,406 $400,352 $399,168 $424,305 $416,768 $424,069 $624,198 $755,418 $773,123

Paid-in Capital $500,000 $1,003,050 $1,003,050 $1,003,050 $4,203,050 $4,203,050 $4,203,050 $4,203,050 $4,203,050 $4,203,050 $4,203,050 $4,203,050 $4,203,050
Retained Earnings $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Earnings $0 ($196,164) ($378,301) ($560,438) ($765,210) ($972,622) ($1,193,310) ($1,449,151) ($1,707,164) ($1,985,032) ($2,303,077) ($2,642,087) ($3,085,708)
Total Capital $500,000 $806,886 $624,749 $442,612 $3,437,840 $3,230,428 $3,009,740 $2,753,899 $2,495,886 $2,218,018 $1,899,973 $1,560,963 $1,117,342
Total Liabilities and Capital $500,000 $1,070,970 $1,012,555 $830,418 $3,848,246 $3,630,780 $3,408,908 $3,178,204 $2,912,653 $2,642,087 $2,524,171 $2,316,381 $1,890,465

Net Worth $500,000 $806,886 $624,749 $442,612 $3,437,840 $3,230,428 $3,009,740 $2,753,899 $2,495,886 $2,218,018 $1,899,973 $1,560,963 $1,117,342

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