September 2000

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 Table of Contents

1.0 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

1.1 Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

2.0 Company Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

2.1 Company Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Start-up Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Company Locations and Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

3.0 Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.1 Service Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Sales Literature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.3 Fulfillment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.4 Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.5 Future Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

4.0 Market Analysis Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

4.1 Market Segmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.2 Target Market Segment Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.2.1 Market Needs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.2.2 Market Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.2.3 Market Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.3 Service Business Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.3.1 Business Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.3.2 Main Competitors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

5.0 Strategy and Implementation Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

5.1 Competitive Edge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.2 Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.2.1 Pricing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.2.2 Promotion Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.2.3 Marketing Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.3 Sales Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.3.1 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.3.2 Sales Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.4 Strategic Alliances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.5 Milestones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

6.0 Management Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

6.1 Organizational Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.2 Management Team Gaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.3 Personnel Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

7.0 Financial Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

7.1 Important Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.2 Key Financial Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.3 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.4 Projected Profit and Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.5 Projected Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.6 Projected Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.7 Business Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
 Ibrio, Inc.

1.0 Executive Summary

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

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

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

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

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

1.1 Objectives

1. Revenues of $200,000 by December 31, 2001.

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

1.2 Mission

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

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 Ibrio, Inc.

1.3 Keys to Success

1. Offering high-end Web services to small businesses in a way that they can understand
and afford.
2. Build a strong residual income through secondary subscription-based services tailored
for small business (website hosting, marketing, maintenance, consulting).
3. Establishing strategic partnerships with area Internet service providers and computer
consulting companies to refer small business website projects to us in exchange for
high payoffs.

2.0 Company Summary

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

2.1 Company Ownership

Ibrio has been incorporated as a Pennsylvania S corporation based in Lebanon county as of

August 28, 2000. The corporation is privately owned by David W. Hickethier, chief operations
officer and Richard B. Andrews, chief technology officer.

2.2 Start-up Summary

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

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

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

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 Ibrio, Inc.

Table: Start-up

Start-up

Requirements

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

Start-up Assets Needed

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

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

Funding

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

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

Long-term Liabilities $20,000

Total Liabilities $20,000

Loss at Start-up ($2,650)

Total Capital $4,650
Total Capital and Liabilities $24,650

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 Ibrio, Inc.

Start-up

$25,000

$20,000

$15,000

$10,000

$5,000

$0
Expenses Assets Investment Loans

2.3 Company Locations and Facilities

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

3.0 Services

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

• Design and development.

• Marketing and analysis.
• Hosting and maintenance.

We currently offer the following secondary services:

• E-commerce development.
• Website renovations and upgrades.
• Application development (i.e. chatrooms, message boards, online polling, live-feed
audio/video, etc.).
• Website maintenance training.
• Internet/website education seminars.
• Database construction.

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

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

3.1 Service Description

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

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

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

3.2 Sales Literature

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

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

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

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

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 Ibrio, Inc.

3.3 Fulfillment

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

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

3.4 Technology

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

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

3.5 Future Services

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

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

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

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

4.0 Market Analysis Summary

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

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

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

4.1 Market Segmentation

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

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

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

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

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

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

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

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

Market Analysis (Pie)

Dauphin County
Lancaster County
Lebanon County
York County

Table: Market Analysis

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

4.2 Target Market Segment Strategy

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

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 Ibrio, Inc.

4.2.1 Market Needs

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

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

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

4.2.2 Market Trends

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

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

4.2.3 Market Growth

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

• By 2001, small businesses (1-99 employees) will spend in upwards of $22 billion to
either gain an Internet presence or improve their existing efforts. This number is up
from $12 billion in 2000 (Activemedia Research).
• Small and home-based business' Internet usage is at approx. 81%, this is an increase
from only 26% usage in 1996. It is estimated to reach almost 95% by the year 2004
(IDC Research).
• Total U.S. business Information Technology (IT) expenditures for 2000 are $119.1
billion and will reach $285 billion by the year 2003. The year 2000 will also be the first
year that U.S. businesses spend more of their total IT expenditures on Web-related
services than on IT hardware (IDC Research).
• Currently, the total number of online users in the U.S. is 107 million, by 2004 that
number will grow to 210 million (IDC Research).
• E-commerce revenue will reach nearly $6.8 trillion by the year 2004, up from $48.6
billion in 2000 (Forrester Research Group).

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 Ibrio, Inc.

4.3 Service Business Analysis

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

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

4.3.1 Business Participants

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

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

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

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

4.3.2 Main Competitors

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

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

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

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

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

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

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

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

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

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

4. WebWorks: Located approximately 25 miles from our Palmyra, PA offices. WebWorks

offers Web development and marketing services to businesses in the Greater
Harrisburg, PA area.

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

Weaknesses: Although WebWorks is a direct competitor, they have begun to focus a

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

5.0 Strategy and Implementation Summary

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

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

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 Ibrio, Inc.

5.1 Competitive Edge

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

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

5.2 Marketing Strategy

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

5.2.1 Pricing Strategy

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

• Budget Domain Website Package ($585.00): For simple, information based

websites. Popular with companies who just need to gain an Internet presence.
• Mid-Level Website Package ($945.00): Information based websites with a large
amount of content. Popular with companies that have a large services/products list
and/or want to implement more of their business into the Web.
• Catalog Website Package ($1,440.00): Usually reserved for product-oriented
websites that are e-commerce enabled. Popular with companies that have a desire to
market heavily on the Internet or sell their products/services directly from the Web.
• Website Hosting (from $15.00 to $45.00 per month): Depending on the type and
size of the website, the price for hosting can vary greatly. The average cost of hosting
for most clients is $25 per month.
• Website Maintenance ($45.00 per hour): We charge a set fee of $45.00 per hour
billed in 10 minute increments. If a client feels as though they will need their website
updated or maintained on a regular basis, packages are available at a discount rate.

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 Ibrio, Inc.

5.2.2 Promotion Strategy

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

Print Ads:

• Currently we advertise in eight separate area yellowpage directories. All our ads appear
under either the Internet Services or Website Design headings.
• Ibrio Inc. also has an ad listing in a national business directory under the heading of
Web Developers.
• In the near future we will feature ads in several area business publications such as The
Central Penn Business Journal and the Who's Who in Dauphin County.

Direct Mail and Fax:

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

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

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

Mass Media Ads:

• We will begin advertising on a broader scale within the next six months. Radio spots
will be continuously played during local area talk shows and news programs, this
placement is intended to reach the highest percentage of our target client possible.
• Billboard ad placement will be the second mass media marketing campaign we will
implement into our marketing efforts. Billboard ads will be intended as 'name
recognition' advertising.

Educational Seminars:

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

Local Area Commerce Groups:

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

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 Ibrio, Inc.

5.2.3 Marketing Programs

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

We will begin our marketing by acquiring memberships from the following organizations
(October 2-9):
• Lebanon Chamber of Commerce.
• Harrisburg Chamber of Commerce.
• Hershey Partnership.

We plan on doing a large scale marketing project during this month including (March 5 - April
5, 2001):
• Radio advertising (WHP 580).
• Ad placement in local trade publications (The Central Penn Business Journal).
• Billboard Ads to promote wide-spread name recognition.

5.3 Sales Strategy

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

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

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

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 Ibrio, Inc.

5.3.1 Sales Forecast

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

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

Sales Monthly (Planned)

$35,000

$30,000

$25,000

Website Development
$20,000
Result-based Marketing
$15,000 Maintenance
Hosting
$10,000

$5,000

$0
Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug

Table: Sales Forecast (Planned)

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

Direct Cost of Sales 2001 2002 2003

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

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 Ibrio, Inc.

5.3.2 Sales Programs

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

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

October 23 - November 2: We will be updating our sales literature including creating

brochures, and printing leaflets to be placed in our presentation folders.

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

5.4 Strategic Alliances

Currently, we do not participate in any co-marketing or co-development efforts with outside

companies. However, we have specific plans to establish several strategic partnership
programs with area ISPs (Internet Service Providers) and computer consulting companies.
These partnerships are intended to attract more sub-contracting work from potential
competitors, in exchange for a commission to be paid for each lead and resulting new client.

5.5 Milestones

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

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

Table: Milestones (Planned)

Milestones
Milestone Start Date End Date Budget Manager Department
Incorporation 8/14/00 8/28/00 $500 Dave Admin
Acquire Start-up Financing 8/14/00 10/1/00 $0 Dave Admin
Accounting/Balance Sheet 8/31/00 8/31/00 $300 Dave Admin
Setup
Acquire Chamber 10/2/00 10/9/00 $600 Dave Marketing
Memberships
Staff Sales Position #1 10/9/00 10/16/00 $2,240 Dave HR
Staff Development 10/16/00 10/23/00 $3,200 Brandon HR
Position #1
Upgrade Current Sales 10/23/00 11/6/00 $300 Dave Sales
Literature
Acquire Dedicated Web 11/1/00 11/8/00 $770 Brandon Development
Host Service
Staff Development 1/15/01 2/1/01 $3,200 Brandon HR
Position #2
Staff Sales Position #2 2/12/01 2/26/01 $2,240 Dave HR

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 Ibrio, Inc.

Acquire Large Scale 3/5/01 4/5/01 $2,000 Dave Marketing

Outside Marketing
Staff Developer Postion #3 3/19/01 4/2/01 $3,200 Brandon HR
Other 1/1/01 1/1/01 $0
Totals $18,550

6.0 Management Summary

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

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

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

6.1 Organizational Structure

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

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

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

6.2 Management Team Gaps

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

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

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

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 Ibrio, Inc.

6.3 Personnel Plan

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

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

Table: Personnel (Planned)

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

Sales and Marketing Personnel

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

General and Administrative Personnel

N/A $0 $0 $0
N/A $0 $0 $0
Subtotal $0 $0 $0

Other Personnel
N/A $0 $0 $0
N/A $0 $0 $0
Subtotal $0 $0 $0

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

7.0 Financial Plan

Ibrio's financials summarize the following areas:

• Important Assumptions.
• Key Financial Indicators.
• Break-even Analysis.
• Projected Profit and Loss.
• Projected Cash Flow.
• Projected Balance Sheet.
• Business Ratios.

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 Ibrio, Inc.

7.1 Important Assumptions

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

Table: General Assumptions

General Assumptions
2001 2002 2003
Short-term Interest Rate % 10.00% 10.00% 10.00%
Long-term Interest Rate % 13.00% 13.00% 13.00%
Tax Rate % 25.00% 25.00% 25.00%
Expenses in Cash % 90.00% 90.00% 90.00%
Sales on Credit % 67.00% 67.00% 67.00%
Personnel Burden % 12.00% 12.00% 12.00%

7.2 Key Financial Indicators

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

Benchmarks (Planned)

5
2000
4 2001
3 2002

0
Sales Gross OpEx AR Est.

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 Ibrio, Inc.

7.3 Break-even Analysis

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

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

Break-even Analysis

$2,000
$1,500
$1,000
$500
$0
($500)
($1,000)
($1,500)
($2,000)
$0 $1,100 $2,200 $3,300 $4,400 $5,500

Monthly break-even point

Break-even point = where line intersects with 0

Table: Break-even Analysis

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

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

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 Ibrio, Inc.

7.4 Projected Profit and Loss

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

Table: Profit and Loss (Planned)

Pro Forma Profit and Loss

2001 2002 2003
Sales $164,520 $514,900 $1,194,500
Direct Cost of Sales $15,550 $50,000 $127,600
Production Payroll $38,492 $90,000 $137,000
Other $0 $0 $0
------------ ------------ ------------
Total Cost of Sales $54,042 $140,000 $264,600
Gross Margin $110,478 $374,900 $929,900
Gross Margin % 67.15% 72.81% 77.85%
Operating Expenses:
Sales and Marketing Expenses:
Sales and Marketing Payroll $30,000 $69,000 $108,000
Advertising/Promotion $2,790 $3,500 $10,000
Travel $1,020 $3,000 $7,000
Miscellaneous $0 $1,000 $2,500
------------ ------------ ------------
Total Sales and Marketing Expenses $33,810 $76,500 $127,500
Sales and Marketing % 20.55% 14.86% 10.67%
General and Administrative Expenses:
General and Administrative Payroll $0 $0 $0
Payroll Burden $8,219 $19,080 $29,400
Depreciation $3,180 $5,000 $12,000
Depreciation $4,500 $12,000 $24,000
Depreciation $0 $2,000 $4,000
Utilities $805 $2,000 $5,000
Insurance $0 $2,500 $5,000
------------ ------------ ------------
Total General and Administrative Expenses $16,704 $42,580 $79,400
General and Administrative % 10.15% 8.27% 6.65%
Other Expenses:
Other Payroll $0 $0 $0
Contract/Consultants $0 $0 $0
------------ ------------ ------------
Total Other Expenses $0 $0 $0
Other % 0.00% 0.00% 0.00%
------------ ------------ ------------
Total Operating Expenses $50,514 $119,080 $206,900
Profit Before Interest and Taxes $59,964 $255,820 $723,000
Interest Expense Short-term $0 $0 $0
Interest Expense Long-term $2,600 $2,302 $1,664
Taxes Incurred $14,341 $63,380 $180,334
Extraordinary Items $0 $0 $0
Net Profit $43,023 $190,139 $541,002
Net Profit/Sales 26.15% 36.93% 45.29%

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 Ibrio, Inc.

7.5 Projected Cash Flow

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

Cash (Planned)

$50,000

$40,000

$30,000

$20,000 Net Cash Flow

Cash Balance
$10,000

$0

($10,000)
Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug

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 Ibrio, Inc.

Table: Cash Flow (Planned)

Pro Forma Cash Flow 2001 2002 2003

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

Additional Cash Received

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

Expenditures 2001 2002 2003

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

Additional Cash Spent

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

Net Cash Flow $28,123 $109,859 $409,921

Cash Balance $45,123 $154,982 $564,903

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 Ibrio, Inc.

7.6 Projected Balance Sheet

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

Table: Balance Sheet (Planned)

Pro Forma Balance Sheet

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

Liabilities and Capital

2001 2002 2003
Accounts Payable $795 $3,090 $7,398
Current Borrowing $0 $0 $0
Other Short-term Liabilities $0 $0 $0
Subtotal Short-term Liabilities $795 $3,090 $7,398

Long-term Liabilities $20,000 $15,411 $10,189

Total Liabilities $20,795 $18,501 $17,587

Paid-in Capital $18,000 $18,000 $18,000

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

7.7 Business Ratios

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

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 Ibrio, Inc.

Table: Ratios (Planned)

Ratio Analysis
2000 2001 2002 Industry Profile
Sales Growth 0.00% 212.97% 131.99% 9.70%

Percent of Total Assets

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

Other Short-term Liabilities 0.00% 0.00% 0.00% 49.40%

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

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

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

Business Vitality Profile 2000 2001 2002 Industry

Sales per Employee $23,503 $73,557 $170,643 $0
Survival Rate 0.00%

Additional Ratios 2000 2001 2002

Net Profit Margin 26.15% 36.93% 45.29% n.a
Return on Equity 73.70% 76.51% 68.52% n.a

Activity Ratios
Accounts Receivable Turnover 3.73 3.73 3.73 n.a
Collection Days 49 65 70 n.a
Inventory Turnover 0.00 0.00 0.00 n.a
Accounts Payable Turnover 5.23 5.23 5.23 n.a
Total Asset Turnover 2.08 1.93 1.48 n.a

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

Liquidity Ratios
Net Working Capital $81,553 $252,103 $779,883 n.a
Interest Coverage 23.06 111.14 434.50 n.a

Additional Ratios
Assets to Sales 0.48 0.52 0.68 n.a
Current Debt/Total Assets 1% 1% 1% n.a
Acid Test 66.37 52.63 77.40 n.a
Sales/Net Worth 2.82 2.07 1.51 n.a
Dividend Payout $0 0.00 0.00 n.a

Page 25
 Appendix

Appendix Table: Sales Forecast (Planned)

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

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

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 Appendix

Appendix Table: Personnel (Planned)

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

Sales and Marketing Personnel

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

General and Administrative Personnel

N/A $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
N/A $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Other Personnel
N/A $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
N/A $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

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

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 Appendix

Appendix Table: General Assumptions

General Assumptions
Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
Short-term Interest Rate % 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Long-term Interest Rate % 13.00% 13.00% 13.00% 13.00% 13.00% 13.00% 13.00% 13.00% 13.00% 13.00% 13.00% 13.00%
Tax Rate % 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00%
Expenses in Cash % 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00%
Sales on Credit % 67.00% 67.00% 67.00% 67.00% 67.00% 67.00% 67.00% 67.00% 67.00% 67.00% 67.00% 67.00%
Personnel Burden % 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00%

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 Appendix

Appendix Table: Profit and Loss (Planned)

Pro Forma Profit and Loss

Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
Sales $0 $0 $5,110 $5,980 $8,250 $9,930 $12,180 $15,990 $20,330 $27,190 $28,910 $30,650
Direct Cost of Sales $0 $0 $350 $350 $350 $350 $1,250 $2,180 $2,140 $2,500 $2,860 $3,220
Production Payroll $0 $200 $2,036 $1,352 $1,884 $3,180 $3,468 $4,836 $5,552 $5,104 $5,328 $5,552
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Total Cost of Sales $0 $200 $2,386 $1,702 $2,234 $3,530 $4,718 $7,016 $7,692 $7,604 $8,188 $8,772
Gross Margin $0 ($200) $2,724 $4,278 $6,016 $6,400 $7,462 $8,974 $12,638 $19,586 $20,722 $21,878
Gross Margin % 0.00% 0.00% 53.31% 71.54% 72.92% 64.45% 61.26% 56.12% 62.16% 72.03% 71.68% 71.38%
Operating Expenses:
Sales and Marketing Expenses:
Sales and Marketing Payroll $0 $200 $2,104 $1,280 $1,740 $3,100 $3,212 $3,156 $3,448 $3,920 $3,920 $3,920
Advertising/Promotion $0 $0 $230 $230 $230 $300 $300 $300 $300 $300 $300 $300
Travel $0 $0 $60 $60 $60 $120 $120 $120 $120 $120 $120 $120
Miscellaneous $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Total Sales and Marketing Expenses $0 $200 $2,394 $1,570 $2,030 $3,520 $3,632 $3,576 $3,868 $4,340 $4,340 $4,340
Sales and Marketing % 0.00% 0.00% 46.85% 26.25% 24.61% 35.45% 29.82% 22.36% 19.03% 15.96% 15.01% 14.16%
General and Administrative Expenses:
General and Administrative Payroll $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Payroll Burden $0 $48 $497 $316 $435 $754 $802 $959 $1,080 $1,083 $1,110 $1,137
Depreciation $0 $0 $300 $300 $300 $300 $330 $330 $330 $330 $330 $330
Depreciation $0 $0 $450 $450 $450 $450 $450 $450 $450 $450 $450 $450
Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Utilities $0 $0 $55 $70 $70 $80 $80 $90 $90 $90 $90 $90
Insurance $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Total General and Administrative Expenses $0 $48 $1,302 $1,136 $1,255 $1,584 $1,662 $1,829 $1,950 $1,953 $1,980 $2,007
General and Administrative % 0.00% 0.00% 25.48% 18.99% 15.21% 15.95% 13.64% 11.44% 9.59% 7.18% 6.85% 6.55%
Other Expenses:
Other Payroll $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Contract/Consultants $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Total Other Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other % 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Total Operating Expenses $0 $248 $3,696 $2,706 $3,285 $5,104 $5,294 $5,405 $5,818 $6,293 $6,320 $6,347
Profit Before Interest and Taxes $0 ($448) ($972) $1,572 $2,731 $1,296 $2,168 $3,569 $6,820 $13,293 $14,402 $15,531
Interest Expense Short-term $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Interest Expense Long-term $217 $217 $217 $217 $217 $217 $217 $217 $217 $217 $217 $217
Taxes Incurred ($54) ($166) ($297) $339 $629 $270 $488 $838 $1,651 $3,269 $3,546 $3,829
Extraordinary Items $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Net Profit ($163) ($499) ($891) $1,017 $1,886 $810 $1,464 $2,514 $4,953 $9,807 $10,639 $11,486
Net Profit/Sales 0.00% 0.00% -17.44% 17.00% 22.86% 8.16% 12.02% 15.72% 24.36% 36.07% 36.80% 37.47%

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 Appendix

Appendix Table: Cash Flow (Planned)

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

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

Additional Cash Received

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

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

Additional Cash 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 $0
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 Short-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Adjustment for Assets Purchased on Credit $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Spent $147 $509 $5,603 $4,600 $6,036 $8,841 $10,278 $13,021 $14,973 $16,861 $17,879 $18,772

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

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 Appendix

Appendix Table: Balance Sheet (Planned)

Pro Forma Balance Sheet

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

Liabilities and Capital

Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
Accounts Payable $0 $16 $5 $103 $166 $194 $173 $281 $405 $480 $671 $733 $795
Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Short-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Short-term Liabilities $0 $16 $5 $103 $166 $194 $173 $281 $405 $480 $671 $733 $795

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

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

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