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January 2004

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Table of Contents
1.0 Executive Summary.............................................................................................................................1
1.1 Objectives ...................................................................................................................................3
1.2 Mission........................................................................................................................................4
1.3 Keys to Success ........................................................................................................................4
2.0 Company Summary.............................................................................................................................4
2.1 Company Ownership .................................................................................................................4
2.2 Start-up Summary ......................................................................................................................5
3.0 Services................................................................................................................................................8
3.1 Competitive Comparison..........................................................................................................9
3.2 Sales Literature........................................................................................................................10
3.3 Fulfillment ..................................................................................................................................10
3.4 Technology ...............................................................................................................................11
3.5 Future Services ........................................................................................................................11
4.0 Market Analysis Summary................................................................................................................12
4.1 Market Segmentation..............................................................................................................13
4.2 Service Business Analysis .....................................................................................................15
4.2.1 Distributing a Service...........................................................................................................16
4.2.2 Competition and Buying Patterns .......................................................................................16
4.2.3 Main Competitors .................................................................................................................16
4.2.4 Business Participants ..........................................................................................................17
5.0 Strategy and Implementation Summary..........................................................................................17
5.1 Marketing Strategy ..................................................................................................................17
5.1.1 Promotion Strategy ..............................................................................................................17
5.1.2 Pricing Strategy ....................................................................................................................18
5.2 Sales Strategy..........................................................................................................................18
5.2.1 Sales Programs....................................................................................................................18
5.2.2 Sales Forecast .....................................................................................................................18
5.3 Milestones ................................................................................................................................21
6.0 Management Summary ....................................................................................................................22
6.1 Organizational Structure..........................................................................................................22
6.2 Management Team .................................................................................................................23
6.3 Management Team Gaps .......................................................................................................23
6.4 Personnel Plan.........................................................................................................................23
7.0 Financial Plan ....................................................................................................................................24
7.1 Important Assumptions............................................................................................................24
7.2 Exit Strategy .............................................................................................................................24
7.3 Break-even Analysis................................................................................................................25
7.4 Projected Profit and Loss .......................................................................................................26
7.5 Projected Cash Flow ...............................................................................................................29
7.6 Projected Balance Sheet ........................................................................................................31
7.7 Business Ratios .......................................................................................................................32

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eDocFile

1.0 Executive Summary

eDoc File provides elec tronic filing systems for state courts. Every year, some 90 million cases
and 1 billion legal documents move through the US court system. States can't keep up with the
flow of criminal and civil filings, the number of federal court cases continues to rise dramatically
year after year, and the courts keep on adding more judges and judicial officers to handle the
work.

A surprising amount of the judicial proc ess is not automated, much less integrated. There is a
serious need for a cost-effective, integrated digital solution based on available tec hnology.
eDoc File proposes a solution capable of transforming the prac tice of law with an online system
that is cost-effective, simple to use, and can be integrated with legacy technology already in
use. eDoc File offers much more than simply sending documents bac k and forth. It is a digital
bridge linking the elec tronic world of the law firm with the elec tronic world of the court. It's law
firms and courts exchanging and ac cessing all case data, not just documents.

With E-Filing, courts will be able to ac cess court documents instantly. Instead of having to call
archives and ask for a document to be found, copied, and delivered. Judges can simply pull up
documents on their PCs. Court documents can be archived elec tronically, making them easily
ac cessible and saving millions of dollars in the proc ess. Attorneys can look up docket information
and sc hedules over the Internet, pay filing fees, instantly download documents filed with the
court, view case documents and exhibits, and even trac k the work of opposing counsel.

Clearly, efficiency is the biggest benefit to both c ourts and law firms - efficiency that comes
from being able to instantly ac cess information, communicate and transact business from any
desktop. eDoc File offers a simple to use yet comprehensive system that fac ilitates the flow of
information from one party to another in an efficient, cost-effective and seamless manner.

If elec tronic filing is so great, why aren't we all using it? The answer is that many small projec ts
have been initiated in the United States. Unfortunately, most have either failed, been terminated
or are defined as "requirements" projec ts for future systems. None have delivered a sufficient
bottom-line gain to court efficiency to command support for funding the necessary
infrastructure.

The primary problems relate to the technology. While many of the components of elec tronic filing
have been available for some time, the lac k of standards, difficulty of integration, insufficient
training and customer support, and equipment and software costs have been limiting fac tors. In
the last few years, the power of personal computer tec hnology has improved significantly, and
costs have dec lined. Data storage costs have dropped from more than $1,000 per megabyte on
early PCs, to less than five cents per megabyte today. This price is dropping about 50 percent
each year. Only a few years ago there was no universal communications network, with standard
protoc ols and interfac es, available to link our systems together.

Even today, security and sc alability issues on the Internet have not been c ompletely resolved.
However, eDoc File, by solving these challenges can make available to courts, both on a national
and state level, an integrated e-filing and document management system. At the same time, we
will establish brand name rec ognition, capture significant market share, and generate a
sustainable revenue stream that will fund growth and development of new products as we grow
from a niche player to the premier legal Internet portal.

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eDocFile

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eDocFile

1.1 Objectives

eDoc File objec tives will evolve in a three-phase concurrent development cycle.

Learning
Knowing the customer, the product and services offered by the company as well as knowing the
competition are imperative for success. Planning, research and development are critical
proc edures for this cycle. Objec tives for this phase are:

• Bec ome experts on the legal market and have a database of competitors, market analysis,
and customer needs before beta version of extranet is completed.
• Have beta version completed within three months of capital formation (June 2004).
• Establish good working relationships with c ourt systems by meeting with their dec ision-
makers and plotting a mutual plan for success based on trust, reliability and service.
• Get commitments for support, services and products by May 2004 to support the launch of
EDoc File in August 2004.

Earning
Marketing, sales, customer support, exec ution of ac tion plans and continued learning will ensure
eDoc File a market position that will generate earnings and promote growth, both in new
customers and new products and services.

• Establishing brand awareness and brand rec ognition that positions eDoc File as the market
leader for safe, simple and reliable Web based elec tronic filing system between lawyers and
courts.
• Many target courts are without a comprehensive computer management system; our easy to
use Web based extranet system allows our customers to manage filings and internal
document management.
• Market metrics for evaluating market penetration success include, a market presence in the
top 15 legal markets in the country, market share, customer satisfac tion ratings and click
through traffic. eDoc File will strive to double this metrics semi-annually until we reach market
dominance.
• Begin generating positive cash flow by the middle of 2005.

Returning
Balancing long-term sustainability and profitability with short-term necessities and change will
the Ac hilles heel of many Internet companies. Therefore, we believe that with a policy of
returning or giving bac k to the community (employees, customers and shareholders) eDoc File will
ensure apportionment of resources without excessive waste and redundancy. Objec tives for this
cycle are:

• Developing a mission statement which reflec ts the values of the founders while providing a
mandate for culture creation that will attrac t and retain the best and brightest talent.
• Develop a comprehensive holistic internal structure that is responsive to market demands and
rapid change. This model is predicated on the idea of "a continuous learning organization"
with the training and marketing functionality binding the entire organization.
• Develop value-added modules that will launch eDoc File from a niche player to the premier
legal portal on the Web by 2006. This means creating features that are ac tion oriented, that
is, coming up with solutions that get things off customers to do list forever.

A balanced and foc used approach of developing products with the customer in mind by
enthusiastic and innovative employees will ensure the success of eDoc File, ultimately leading to

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eDocFile
increased shareholder value.

1.2 Mission

Our mission is listen to our customers' requirements in order to fulfill their individual
needs. In doing so we will strive to become the leading provider of secure and simple to
use electronic filing systems for courts and judicial administrations, using Web
technology.

eDoc File is committed to providing small and medium sized court systems with the ability to
automate their filing and document management systems through the use of a comprehensive
Web based extranet system. Lawyers within these jurisdictions may file documents with the
court elec tronically from the convenience of their private workspace, all the while allowing courts
to manage cases and dockets more efficiently and cost effec tively. By combining elec tronic filing
and document management in one Web based extranet system, eDoc File provides to clients,
both c ourts and lawyers, the best litigation management system with minimum restrictions on
software and hardware constraints, yet the broadest individual choice of tec hnological
functionality.

1.3 Keys to Success

The keys to success in this business are:

Marketing:

• Establishing brand name.


• Creating barriers-to-entry by competitors through the building trust based relations between
courts and eDoc File.
• Building credibility.

Simplicity:

• Create a system that is simple to use.

2.0 Company Summary

eDoc File develops elec tronic filing systems to assist the judicial branch of government in
increasing efficiency through the use of Web based extranet technology. Our customers are 1)
court systems who want to increase efficiency without a loss of security or control, and without
large expenditures of time or capital, and 2) lawyers who want convenience and reliability when
considering e-filing as an option.

2.1 Company Ownership

eDoc File is a privately held New York S Corporation, we plan to file for incorporation in the state
of Delaware shortly before product launch. Claire Xoe and Brian Sliver, both founders, share
ownership equally. As the company increases in size, shares will be distributed among employees.

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eDocFile

2.2 Start-up Summary

After the beta version is completed, salaries, operating overhead and marketing expenses will
kick in. We anticipate this happening in the second half of 2004. Seed funding will be sought
from angel investors.

Table: Start-up
Start-up

Requirements

Start-up Expenses
Legal $4,000
Stationery etc. $500
Brochures $2,000
Consultants $3,000
Insurance $6,000
Rent $18,000
Research and Development $95,000
Expensed Equipment $15,000
Other $0
Total Start-up Expenses $143,500

Start-up Assets
Cash Required $341,500
Other Current Assets $215,000
Long-term Assets $0
Total Assets $556,500

Total Requirements $700,000

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eDocFile

Table: Start-up Funding


Start-up Funding
Start-up Expenses to Fund $143,500
Start-up Assets to Fund $556,500
Total Funding Required $700,000

Assets
Non-cash Assets from Start-up $215,000
Cash Requirements from Start-up $341,500
Additional Cash Raised $0
Cash Balance on Starting Date $341,500
Total Assets $556,500

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
Friends and family $200,000
Angel Investor $450,000
Government Grant $50,000
Additional Investment Requirement $0
Total Planned Investment $700,000

Loss at Start-up (Start-up Expenses) ($143,500)


Total Capital $556,500

Total Capital and Liabilities $556,500

Total Funding $700,000

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eDocFile

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eDocFile

3.0 Services

eDoc File offers the expertise a court needs in order to create an elec tronic filing system. Our
ultimate service would be an automated document management system and hosting relationship
with the courts, in which the court only needs a Web browser to log on to an extranet site
customized to their needs. eDoc File would also provide high-level retainer consulting, market
research reports, or projec t-based consulting in an effort to bring the courts up to speed with
technology and to integrate existing legacy systems.

Secondary services will be foc used on lawyers. eDoc File will offer lawyers the ability to use our
extranet as an affordable alternative to costly in-house networking and document management.
We are confident a foc used marketing campaign will convert a significant number of e-filers
(lawyers) into long term hosting relationships. This would pave the way for eDoc File to move
from a lucrative niche e-filing market to the broader global services market of a legal portal.

An elec tronic filing projec t should demonstrate new efficiencies in c ourt administration, and fully
leverage investments in c omputerized bac k office tec hnology such as case management systems
to better serve internal users. Goals should include designing an approach to elec tronic filing that
gives filers the same range of services they have today, but with optional computer-based
efficiencies. For instance, eDoc File together with individual courts can expec t to work toward
the following service goals:

• Provide e-filing/retrieval ac cess to many divisions of law. Ensure security of court bac k
office.
• Utilize advanced architec ture and integrate disaster rec overy.
• Ensure ac curate and timely elec tronic court fee payment.
• Maintain high availability and ac curac y of filing confirmation.
• Require quality support and service.
• Include government agencies needs in development proc ess.
• Develop open standards for elec tronic filing and retrieval.
• Develop the appropriate pro se e-filing modules and the appropriate exceptions to mandatory
e-filing.
• Maintain the high quality of services provided today.

1. E-Filing Extranet: Our secure extranet gives courts the ability to manage cases, complex
legal documents and proc esses, internal and external communications, sc heduling and
calendar services, internal resource management, and integrate existing legacy systems. The
extranet will be the primary platform for lawyers to ac cess e-filing features and will bec ome
the central repository for all court documents. Revenue will be generated per transaction by
lawyers and through hosting agreements with c ourts.
2. Consulting and Training: eDoc File offers consulting and training to courts as they adopt
technology enabling the move from their paper system to our elec tronic system. This begins
with a complete understanding of eac h individual court's situation; objec tives, goals, and
constraints. Our solution suggests ways for the court to upgrade in a manner most
conducive to individual court's needs with the least amount of disruption.
3. Storage Repository: A central repository makes ac cessing and customizing judicial
information efficient and cost-effective. Initially this would be a per transaction based
service. eDoc File will strive to offer this service on a subsc ription basis, once we have
defined the type of information that could be customized by user segments.

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eDocFile

3.1 Competitive Comparison

eDoc File products and services include several important features that set them apart from other
products and services that may be considered competitive:

Integrated Centrality and Convenience:

• eDoc File offers a simple turnkey solution that only requires an Internet browser. Point and
click simplicity and convenience.
• eDoc File makes filing, storing and retrieving convenient and simple by offering a centralized
extranet with Web-based capability.
• Value added services such as automatic forwarding of documents to necessary parties,
hosting, and central ac cessing, creates an integrated and seamless repository where
searching cases and prec edent bec omes effortless.

Cost Savings:

• Since the system is designed around an extranet with a Web based interfac e, the courts
would not have to purchase new equipment, hire IT specialists, nor have to constantly
upgrade their systems. These systems can be run efficiently on current computers.
• Hardware and software upgrades bec ome obsolete with our Web based hosting model.
• Collateral building costs associated with introducing an IT system will not be necessary.
• Storage costs will dec rease with increased use of elec tronic storage.
• Ac tual cost of our system when c ompared with c ompetitors is also lower.

Customized Solutions:

• eDoc File will customize the extranet to fit around the needs of the individual courts and will
provide complete training.
• Our open architec ture system encourages innovation and adaptation from our clients, and
easily integrates with existing legacy systems.

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eDocFile

3.2 Sales Literature

eDoc File will begin with a general corporate broc hure introducing the company and the
products/services offered. This broc hure will be developed as part of the start-up expenses. The
second phase of our sales cycle will use a CD that contains a short message about the product
and will contain a library of resources to support an interest in a sale.

Our sales literature will foc us on eDoc File's ability to customize its services. We will also outline
cost versus return, and risk versus benefit. A clear benefit message designed to convince the
constituent groups of the value of the tec hnology could be crafted in several parts.

• First, it is necessary to explore the benefits of elec tronic commerce to the courts, and
lawyers using it, the parties involved in c ases, and the citizens of the state, and their
representatives, who must pay for the system.
• Second, it is important to assess the technology and services that are available for
implementation, and the vendors that supply it. In most cases, there are several alternative
approaches to implementing elec tronic filing. Each should be explored with the individual
court system.
• Third, it is essential to document the life cycle costs of the specific approach or approaches
under consideration. With a complete business case, the court is in a better position to sell
the projec t internally and externally. Our success depends on implementing a customized
solution to eac h jurisdiction.

3.3 Fulfillment

The logic behind eDoc File's outsourcing, is the ability to take advantage of partners who are
industry leaders in c ore competencies, which are complimentary to eDoc File's products and
services.

• Programming: Immediately we will outsource our programming needs. We will use the
services of Array Inc., a company that exports programming to Eastern Europe, thereby
taking advantage of exchange rates and loc al economic conditions. Strategic and proprietary
programming will be done in house after a beta version is completed.
• Hosting: US Web/CKS is rec ognized in the industry as a leader in sec ure site hosting.
• Security: Will be offered through our relationship with a company called VeriSign, using a
public/private key system.
• Monetary Transactions: CyberCash will handle our credit card billing.
• Traffic and Systems Monitoring: Webtrends will monitor usage of the system together with
a licensing agreement with Net Perceptions, who will help us develop an intelligent and
learning database required for data warehousing.

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eDocFile

3.4 Technology

A certain amount of work must be performed whenever information is submitted to the court.
The data must be read, analyzed, stored, ac ted upon and distributed to others. eDoc File
ac hieves these requirements through an extranet using Web based technology. Copyright law
protects the software that allows for our extranet functionality and trademark law protec ts our
brand equity.

Components
In general, the court needs a good case management system that can function as an index to
documents. A document management system also is necessary. In the real world, most courts
cannot afford to manage elec tronic documents without elec tronic filing. The paper handling
costs are just too high.

Integration of case and document management is necessary. Experience with imaging tec hnology
has shown that if the document management system has its own index, then data storage, and
possibly data entry, will be duplicated and the systems will never get synchronized.

The elec tronic filing components that are "behind the sc enes" are essential. Though there are
other options, this is typically a server (server hardware and server software), or group of
servers, inside and outside of the court security firewall that ac cepts and does initial proc essing
of the documents. The other critical component is the network connec tion to the outside world.
This can be a private network or regular phone lines with dialup modems, but the Internet has
bec ome a superior choice in almost every circumstance. A user interfac e with a World Wide Web
browser makes the entire system user friendly.

Our extranet will be the primary platform to offer these services. Functionality for e-filing will be
designed and programmed in-house, integration between eDoc File and other software vendors
will be ac complished through a collaborative effort between eDoc File and these vendors.

3.5 Future Services

The Internet seems to reinvent itself quickly. Our strategy for future development is to remain
positioned with enough flexibility to adapt new technologies, and adapt to changes quickly.

In the future, eDoc File will broaden its product and service base by adding more functionality to
our clients needs by developing modules specific to eac h c lient. These modules will be developed
from eDoc File's insights into trends within e-commerce as it relates to the legal profession and
from the unique challenges fac ed by our clients. Repackaging these solutions would lead to more
value added services for our customers. Best prac tice tec hniques learned from monitoring our
database and usage patterns can be redistributed proactively to our customers at no charge to
them and with little effort on our part, leading to greater usage of the system.

Our long-term goal is to create a legal portal to the Web, thereby, broadening our services and
allowing ac cess to more end-users. A portal business model will be successful by creating
alliances and partnerships with other Internet service and content providers. The transactional
revenue generated from e-filing would make the company cash rich in a relatively short span of
time and will fund expansion, leading eDoc File to bec ome the gateway to the Internet for the
legal profession.

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eDocFile

4.0 Market Analysis Summary

Our most important group of potential customers are the courts. Judges and administrators will
be the foc us of our marketing efforts. They do not want to waste their time or risk their money
evaluating many products, services, or systems but realize that they have to adapt to the
changing times. Knowing this, eDoc File has to create a targeted and foc used plan to address the
needs of the court.

Statistics provided by the National Center for State Courts show a growing trend in c ourt filings:
in 1999 there were 86,091,501 criminal and civil filings in state courts, 87,792,486 in 1997, and
89,409,300 in 1998. It is clear that judges and administrators must do something to make this
proc ess efficient and effec tive. The market for elec tronic filing is in its infant stages. Currently,
there are a few test markets with no dominant market players.

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eDocFile

4.1 Market Segmentation

eDoc File has identified three distinct segments, the courts, lawyers and judicial information
users.

The Courts
Courts realize they have to adopt some form of e-filing system to bec ome efficient and
effective. Yet these costs are very high and adoption rates are slow. When implementing and
maintaining such a system is staff needs training in the new system and if the system is based
on hardware requirements, then an IT department has to be created, further adding to costs. A
building may need to be rewired to ac commodate the new system. Each of these considerations
adds to the coast of most e-filing systems. In c omparison, eDoc File, is inexpensive and much
more responsive to the changing needs of the courts, both in the short term and long term.

• Ac cess is only a browser click away.


• Using the product requires minimal training and no need for an in house IT department.
• The integrity of the physical building does not have to be altered to use the system other
than more phones or cable lines being installed.
• Upgrades and maintenance are automatic, while hosting allows the court to ac cess any
information quickly and efficiently.
• Paper and physical storage costs will not be eliminated but may be reduced significantly.

Lawyers
Lawyers will use the system at first on a transactional basis and will bec ome a captive market as
courts adopt the system. We will offer lawyers additional services as more of them start using
the system. As we move toward bec oming a legal portal, integrated value-added solutions
targeted at specific segments within this group will command premium prices. Our turnkey
extranet solution also allows small to medium law firms to compete on tec hnology without
developing an internal IT infrastructure. Lawyers will benefit from our hosting and document
management solution bec ause they would not have to bec ome experts in networking,
connec tivity or specialized software. They can foc us on the prac tice of law with c onfidence that
their tec hnology needs are met. eDoc File is a simple choice for lawyers who want to compete in
the elec tronic age.

Judicial Information Users


Judicial information is used daily by a number of professional services. For example, real estate
professionals, credit reporting agencies, employers and temp agencies, sc hools, and lawyers are
all users. With rapid advances in c onnec tivity these markets may grow to include private citizens
who want to check their public profiles. While this segment is not the primary foc us of eDoc File's
current business plan, we foresee it playing a substantial role in the future as we integrate more
content from other sources of public information and can customize it to suit individual needs.

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eDocFile

Table: Market Analysis


Market Analysis
2004 2005 2006 2007 2008
Potential Customers Growth CAGR
E-Filing (lawyers) 2% 1,250,000 1,275,000 1,300,500 1,326,510 1,353,040 2.00%
Courts 2% 17,000 17,340 17,687 18,041 18,402 2.00%
Judicial Information Users 6% 15,000,000 15,900,000 16,854,000 17,865,240 18,937,154 6.00%
Total 5.70% 16,267,000 17,192,340 18,172,187 19,209,791 20,308,596 5.70%

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eDocFile

4.2 Service Business Analysis

Elec tronic filing has been defined as "... the proc ess of transmitting documents and other court
information to the court through an elec tronic medium, rather than on paper. E-filing is in its
infancy.

There are many brand name companies entering the industry. However, these companies have
existing products, which they are trying to use in order to leverage the e-filing market. We
believe this strategy will fail bec ause it loc ks the courts into proprietary standards. Further,
these companies charge high prices for their technology.

Elec tronic filing lets people get more of their work done with their PCs, send and rec eive
documents, pay filing fees, notify other parties, rec eive court notices and retrieve court
information.

Impac t? Significant! More than 89 million civil and criminal cases are filed annually in State
courts, and more than 17 million Federal district and bankruptcy cases. Over 100 million filings
are made each year.

Contrast the definition of elec tronic court filing above with how court filing is ac complished
today. Their clients reimburse Law firms for costs associated with preparing the document for
filing, delivering the document to the court, and getting a confirmation that the document was
rec eived.

Market research indicates that US consumers of legal services (individuals and businesses)
reimburse attorneys an average of $35 per delivery event (messengers, mail, overnight and rush
deliveries).

Moreover, more than 80 percent of all lawyers often "rush" delivery , which frequently can add
another 22 percent to the cost. When successfully implemented, elec tronic filing can reduce
these costs, perhaps as much as 75 percent.

At the courthouse, the cost savings can be even more dramatic. Rec ently, a Kansas court
compared filing materials elec tronically and traditionally. To file 100 documents traditionally took
more than 10 hours to proc ess and roughly $220 in staff time. But to file the same documents
elec tronically took 9 minutes and cost a mere $2.80. With more than 17,000 state courts, the
savings to taxpayers quickly add up.

Most importantly, roughly 98 percent of all law firms have all the equipment they need on their
desks today. There is no need to purchase new equipment or software.

The majority of U.S. courts have yet to purchase modern c ourt management systems or
document management systems. Elec tronic filing requires these two systems be in plac e to work.
Competitors are legacy vendors who already provide courts or lawyers with existing hardware or
software technology; we combine case management software with Internet communication
software and host the solution on an extranet.

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4.2.1 Distributing a Service

E-filing markets are going to be won mainly by word-of-mouth rec ommendations. eDoc File will
rec ruit all of its consultants from the ranks of judges and lawyers and pairing these consultants
with IT professionals. These teams will be responsible for building and cultivating relationships
with the court systems, and for spreading the gospel of eDoc File. Primary distribution channels
will be through the Internet itself. Our branding and positioning together with a foc used
marketing campaign will create a "drive to the Web" philosophy. This strategy is consistent and
mutually reinforcing with both our product and our company culture.

4.2.2 Competition and Buying Patterns

We believe clients place a lot of trust in professional reputation and reliability of brand
name. Therefore, our strategy is to hire exclusively from the ranks of legal professionals. Also,
creating a company culture that prizes innovation, quality, excellence, and customer service as
our cornerstones will help support and justify the customers' confidence in our company,
conveying value to our brand identity.

The market is price sensitive bec ause budgets are determined by committees external to the
courts, and often have to wait in line for funding IT projec ts or in some instances have to wait
for the next budgetary cycle; for example, New York has a two-year budget cycle. Current
competitors are capitalizing on market demand for this new service capability and are charging
premium prices. On price, eDoc File will be the market leader, our strategy is to encourage
adoption and secure a large market share and develop brand name rec ognition.

Bandwidth will become crucial to future products as we introduce multimedia features to the
litigation proc ess. Great strides in bandwidth are currently being made and we are developing
relationships with telec ommunication companies to look at partnering so that we can offer a
complete solution to both c ourts and lawyers.

We believe that eDoc File will bec ome a leader in elec tronic filing, by maintaining low prices,
professional service, and capturing significant market share. This success will propel eDoc File to
position itself as the premier portal for the legal community.

4.2.3 Main Competitors

Brand Name Companies

Strengths: High consumer confidence and trust. Enviable reputations, which make purchase of
products an easy dec ision for a manager, despite the very high prices. Have understanding of
general legal profession and ac cess to the e-filing market through existing relationships. Have
huge financial resources to flood market with their proprietary standards.

Weakness: General legal knowledge doesn't substitute for this specific market channel. The
rapidly changing Internet often outpac es the adaptation curves of large companies. Also, these
company's fees are extremely expensive, and would be an obstac le to all but the large court
systems. Using existing products will be a hurdle to overcome, since it is based on the cookie
cutter mentality, one solution fits all courts.

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eDocFile

4.2.4 Business Participants

No dominant players currently exist as most products are still in the test phase. While there are
some corporate giants entering the market, no one can claim to have significant market share.
Most companies are in their beta-testing phase. The distinctions between the product and
information services we offer are implicit in the simplicity of use and is a web based turnkey
solution. We do not have existing products that we are trying to preserve as we enter the
market, therefore customization and flexibility are easily ac hieved.

Our initial targets are small to medium courts: large courts, which are the traditional target
markets of the brand name companies, will bec ome a secondary foc us. eDoc File is adopting a
"seize" strategy, that is, we will foc us on the smaller courts that surround the large courts
systems, building on our successes. These victories, and simplicity coupled with the cost
effectiveness of our solution will eventually attrac t larger courts. Functioning in the shadow of
the behemoths while we are building brand name rec ognition, establishing trust relationships and
capturing market share will insulate us in the embryonic phases of growth.

Our cost advantage is greater so we do not have to compete for high margin c ontrac ts to be
successful. In beta testing, Justicelink charged the courts of Prince George's County, Maryland
$25,000 to install their system. Software for subsc ribing lawyers cost $175 to $200 per
workstation. Lawyers also pay $15 per filing and $0.50 per minute for on-line time to query the
court's case management database information. Our installation costs are free to the court
systems and per transaction costs to lawyers are only $10 with no per minute charges for any
queries. We designed this pricing structure to mimic utility pricing models and to encourage
usage and adoption among c ourts. As courts use our system and store data, eDoc File will enjoy
a revenue stream from hosting charges, which will run them about 10 cents a megabyte. The
hosting arrangement also creates huge barriers to entry driving up changeover costs.

5.0 Strategy and Implementation Summary

eDoc File will foc us on the court system. Adoption by the courts will lead to compliance of
lawyers within a jurisdiction. Thus capturing one market segment will create a captive market
segment of lawyers. Our primary foc us will be on small to medium courts, however, disc ussions
with New York Judicial Information Network (NYJIN) suggest that we may be able to capture the
entire New York court system at one time.

5.1 Marketing Strategy

Positioning and branding will be key in establishing eDoc File as the e-filing leader for the legal
profession. This will be ac hieved through a foc used and targeted marketing communications plan.
eDoc File will foc us on the courts through a direc t sales campaign aimed at building relationships
and trust with potential clients. The second phase of our marketing is to a "drive to the Web"
strategy that is designed to automate sales. Though this part of the proc ess is automated,
eDoc File will maintain a one-to-one service model and a mass customization product model.

5.1.1 Promotion Strategy

Press releases will target influential writers within the legal technology industry and allowing
them to test the product, as a way to generate interest would be a primary strategy of our PR
campaign. Getting this kind of free press will generate widespread industry interest. Trade shows
will bec ome our forum to display and demonstrate our product to the legal community.
Broc hures, articles and CD's would form our literature pac kage to send to clients.

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eDocFile

5.1.2 Pricing Strategy

eDoc File will adopt a utility based pricing model for the extranet services; that is, a court system
will be charged storage on the system plus a hosting fee (10 cents a megabyte). Lawyers will be
charged a nominal $10 transaction fee per filing. This fee pays for the automation proc ess of
checking the document for compliance with the court and will transmit an elec tronic rec eipt for
the lawyer's rec ords if successful or a rec eipt with reasons why the filing is not successful.
When ac cepted the filing would be automated into the court system notifying all the concerned
parties. Lawyers may also opt for a hosting model if they want to automate their case
management systems through our extranet. This relationship will not negate the e-filing
transaction cost.

Reselling judicial information would carry a transaction fee but would not bec ome a revenue
producing ac tivity until we have established ourselves as a market leader. At that point we will
look toward cultivating that market.

At the outset we will not charge our customers a sign-up fee, but future-pricing models will look
to defray ac quisition costs through such a fee. Our pricing model is designed to encourage usage
and adoption among the courts.

5.2 Sales Strategy

Direc t sales is the only way for us to build trust and credibility. Emphasis will be on developing
pilot programs with c ourts. Once this credibility building phase is done eDoc File will move toward
an automated "drive to the Web" model. This will bring down acquisition costs significantly and
allow the company to benefit from ec onomies of sc ope and sc ale.

5.2.1 Sales Programs

The philosophy of the company toward sales is that every employee is a member of the sales
team and will be educated in the nuances of selling the product. Functional sales teams will be
comprised of a legal professional and a technical professional, together these teams will function
as consultants to courts. An inside sales team will compile information about customers while
working closely with the marketing group. As we grow, sales teams will bec ome responsible for
geographical areas.

5.2.2 Sales Forecast

Sales will be slow at first but grow exponentially once eDoc File has established credibility in the
legal community. Growth will depend on enrolling courts in eDoc File's centralized Web-based
system. Once the beta version is completed hiring a sales and marketing force would bec ome our
primary ac tivity. Training, motivating and retaining a well-informed and zealous team will greatly
enhance the success of the company.

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Table: Sales Forecast


Sales Forecast
2004 2005 2006
Sales
E-Filing Transaction $370,946 $5,001,520 $75,022,801
Hosting $1,391 $23,448 $351,713
Judicial Information Transactions $14,463 $194,998 $2,924,973
Training and Consulting $67,027 $225,933 $1,412,081
Total Sales $453,826 $5,445,899 $79,711,568

Direct Cost of Sales 2004 2005 2006


E-Filing Transaction $37,095 $500,152 $7,502,280
Hosting $139 $2,345 $35,171
Judicial Information Transactions $2,169 $29,250 $438,746
Training and Consulting $50,270 $169,450 $1,059,061
Subtotal Direct Cost of Sales $89,673 $701,196 $9,035,258

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5.3 Milestones

Milestones are fluid and adaptable to market and ec onomic changes. As we add staff,
responsibilities will be shifted to appropriate managers and functional areas.

Table: Milestones
Milestones

Milestone Start Date End Date Budget Manager Department


Incorporation 1/1/2004 1/31/2004 $0 Brian Business
Development
Business Plan 1/1/2004 1/31/2004 $0 Claire Business
Development
Capital Formation Strategy 1/1/2004 1/31/2004 $0 Brian/ Claire Finance
Seed Money- for programming 1/31/2004 2/10/2004 $0 Brian/ Claire Finance
Begin Programming 2/10/2004 2/20/2004 $0 Claire Programming
Create Board of Directors 2/20/2004 2/28/2004 $0 Brian/ Claire Business
Development
Finalize Investment 2/28/2004 3/31/2004 $0 Brian/ Claire Finance
Draft Marketing Plan 2/28/2004 3/31/2004 $0 Claire Marketing
Investigate Alliances 2/28/2004 3/31/2004 $0 Claire Business
Development
Beta Testing 3/31/2004 4/30/2004 $0 Brian/ Claire Programming
Start Implementing 3/31/2004 4/30/2004 $0 Brian/ Claire Operations
Beta Testing Complete 4/30/2004 5/31/2004 $0 Brian/ Claire Programming
Begin Full Scale Marketing 4/30/2004 5/31/2004 $0 Brian/ Claire Marketing
Launch Product 5/31/2004 7/1/2004 $0 Brian/ Claire Operations
Totals $0

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6.0 Management Summary

Currently, we have two employees. Both are founders. No new staff will be joining the company
until the beta version is completed. We use a loosely affiliated network of retired judges,
prac ticing lawyers, law professors and legal professionals who provide advice and insight about
the market and other key criteria. This is done on an ad hoc basis. The plan for ac quiring talent
is to use this network as rec ruiting agents. eDoc File wants its initial core rec ruits to be seasoned
professionals from the legal industry. We have a short list of professionals who have expressed
interest in joining the company; many conditioned their joining us subjec t to capital formation.

6.1 Organizational Structure

At the outset, eDoc File will have a flat organizational structure. This will allow for transparent
and seamless communication. It will also allow the company to be responsive to customer needs
by being proactive in design and development. The primary functional group will be a consulting
team, composed of an experienced legal professional and an IT professional. Each team will be
responsible for sales, support and maintenance of ac counts. The company will be comprised of
three main functional areas initially: R&D, marketing and sales, and HR and CEO responsibilities.

R&D: This group will foc us on cutting edge product development and maintenance of the
software. R&D will dovetail with marketing to guarantee customer needs are met and exceeded.

Marketing and Sales: Branding, positioning and market research will form the cornerstone of our
marketing communications program. This team has to develop a program that is in accordance
with c ompany culture and our mission statement, yet it has to responsive to customer needs
and changing market conditions. To balance competing interests of short term and long term
goals the marketing team has to devise a dynamic feed bac k data loop that integrates internal
R&D data with external market data. This system would bec ome a critical component of our
competitive advantage. Customer training will also fall under the domain of marketing.

HR and CEO: HR responsibilities will include much of the culture building and will interfac e with
the training programs in marketing. HR will foc us on reinforcing behaviors that create company
culture. The CEO is the chief salesperson and chief financial officer. The CEO will also be
responsible for attrac ting quality and expertise to the company.

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6.2 Management Team

The management team will consist of a CEO, a COO and a Board of Direc tors. The CEO will have
a legal bac kground, (preferably a judge) and be familiar with c urrent Internet and extranet
technology. Claire Xoe will serve as CEO until the proper candidate is found.

The Board of Direc tors (12) will all come from the ranks of retired judges and lawyers and at
least three must have corporate experience preferably with management bac kgrounds.

Claire Xoe: CEO and founder: Claire has worked and consulted for Internet start-ups in sales and
marketing for the last three years. She rec ently left LegalAnywhere, an Internet company based
in New York City, NY to found eDoc File. Claire holds sc ience, engineering and humanities
undergraduate degrees. She also holds a JD and MBA from Cornell University.

Brian Sliver: COO and founder. Brian has been involved in Internet start-ups for about 4 years
and has considerable experience in technology and networking. Brian holds an undergraduate
degree in Soc iology from Dartmouth College and will complete his JD from Cornell University in
2004.

6.3 Management Team Gaps

The start-up management team lac ks experience in the day to day functioning of the court
system. This challenge will be addressed and defused by hiring from within the ranks of the legal
community.

6.4 Personnel Plan

Initially eDoc File will offer a standardized pay structure to all its employees. The difference in
pay sc ale will be made up in stoc k options. This is a performance based incentive system and is
designed to elicit equality among all employees and generate ownership among all employees. No
new employees will be added until the beta version is completed. When we do start hiring, an
office manager, sales team, and marketing group will be rec ruited.

Table: Personnel
Personnel Plan
2004 2005 2006
CEO $18,000 $36,000 $36,000
COO $18,000 $36,000 $36,000
Office Manager $18,000 $36,000 $36,000
Sales Consultants $102,000 $720,000 $1,080,000
Programmers/ Technicians $56,004 $360,000 $540,000
Customer Service $50,004 $432,000 $648,000
Marketing $43,992 $288,000 $432,000
Other $6,000 $72,000 $108,000
Total People 10 49 58

Total Payroll $312,000 $1,980,000 $2,916,000

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7.0 Financial Plan

eDoc File will require a $700,000 investment. Growth will be slow at first, but once the
infrastructure is created through branding, positioning and a competent employee base, growth
will be explosive. eDoc File should not need additional funding ac cording to projec tions, bec ause
once sales are generated, a captive market of lawyers will generate a revenue stream that will
pay for future ac quisition of sales. At some juncture (we have calculated 2%, or approx.
1,780,000 transactions) critical mass will be reached and there will be explosive growth. The
challenge at that point will not be sales or marketing, but HR. Growth will be limited by the
number of qualified people we can hire to support our customers.

7.1 Important Assumptions

Since the company will not be financed by debt, interest rates will not be of great importance to
us. Further, eDoc File will not have a significant Ac counts Rec eivable burden as we will, in
essence, have cash transactions. Services will be paid for at the time of performance. We also
assume an economy without major rec ession, however, since our service is transaction based
and in a sector of the ec onomy that is generally rec ession proof this is not a major concern for
us.

These fac tors make this venture extremely attrac tive, and once a self-sustaining revenue
stream is ac hieved, the company could conceivably function as a cash mac hine.

Table: General Assumptions


General Assumptions
2004 2005 2006
Plan Month 1 2 3
Current Interest Rate 10.00% 10.00% 10.00%
Long-term Interest Rate 9.00% 9.00% 9.00%
Tax Rate 30.00% 30.00% 30.00%
Other 0 0 0

7.2 Exit Strategy

One strategy, with the market's current love affair with .com companies, is to take the company
public. With public money comes public sc rutiny and influence, the potential eDoc File has to
generate large sums of cash may raise questions about the benefits of going public. However,
this is an option that can never be excluded.

The other obvious strategy is to be ac quired. Unless we are not having fun doing this or have
competing outside interests this would not be a first option. However, in today's climate there
are some merger and ac quisition deals that should not be overlooked, therefore while this is not
a favored strategy it certainly deserves consideration.

We would like to build a company for the long term and think that within three to five years we
could generate enough cash to buy out our investors if they need to cash out their investment,
thereby keeping the company private. This kind of control will allow us to build a legal portal and
give us the leverage to move beyond the legal market to other professional markets.

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eDocFile

7.3 Break-even Analysis

The Break-even Analysis is based on the per transaction costs and fees of e-filing, as well as
operating expenses.

Table: Break-even Analysis


Break-even Analysis

Monthly Revenue Break-even $49,795

Assumptions:
Average Percent Variable Cost 20%
Estimated Monthly Fixed Cost $39,956

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eDocFile

7.4 Projected Profit and Loss

Current projec tion shows that eDoc File will bec ome profitable in the fourth quarter of its first
year. However, this does not mean that eDoc File will have rec overed any of its investment.
While these projec tions are far from perfect, they do highlight financial trends; for instance,
gross margins will increase as direc t sales costs fall over time. The captive market of lawyers is a
windfall and helps the company reach profitability sooner that most other Internet start-ups.

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eDocFile

Table: Profit and Loss


Pro Forma Profit and Loss
2004 2005 2006
Sales $453,826 $5,445,899 $79,711,568
Direct Cost of Sales $89,673 $701,196 $9,035,258
Other Costs of Sales $0 $0 $0
Total Cost of Sales $89,673 $701,196 $9,035,258

Gross Margin $364,153 $4,744,703 $70,676,310


Gross Margin % 80.24% 87.12% 88.67%

Expenses
Payroll $312,000 $1,980,000 $2,916,000
Sales and Marketing and Other Expenses $50,988 $544,590 $7,971,157
Depreciation $0 $0 $0
Rent $18,000 $36,000 $36,000
Utilities $14,016 $53,914 $116,219
Insurance $31,392 $198,000 $291,600
Payroll Taxes $46,800 $297,000 $437,400
Leased equipment $6,276 $11,880 $17,496

Total Operating Expenses $479,472 $3,121,384 $11,785,872

Profit Before Interest and Taxes ($115,319) $1,623,319 $58,890,438


EBITDA ($115,319) $1,623,319 $58,890,438
Interest Expense $0 $0 $0
Taxes Incurred $0 $486,996 $17,667,131

Net Profit ($115,319) $1,136,323 $41,223,307


Net Profit/Sales -25.41% 20.87% 51.72%

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7.5 Projected Cash Flow

Cash flow is healthy when c ompared with most start-ups, yet there is a period in the last
quarter of the first year, just before profitability that cash flow bec omes tight. The company's
reserves are at its lowest and unforeseen catastrophes, though they may not be fatal, but could
cause a serious set bac k. However, once we establish some semblance of market share, cash
flow bec omes spectac ular even by the most conservative standards bec ause this service is
transaction driven.

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eDocFile

Table: Cash Flow


Pro Forma Cash Flow
2004 2005 2006
Cash Received

Cash from Operations


Cash Sales $453,826 $5,445,899 $79,711,568
Subtotal Cash from Operations $453,826 $5,445,899 $79,711,568

Additional Cash Received


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 Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $0 $0 $0
Subtotal Cash Received $453,826 $5,445,899 $79,711,568

Expenditures 2004 2005 2006

Expenditures from Operations


Cash Spending $312,000 $1,980,000 $2,916,000
Bill Payments $186,190 $2,209,059 $32,839,986
Subtotal Spent on Operations $498,190 $4,189,059 $35,755,986

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 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $498,190 $4,189,059 $35,755,986

Net Cash Flow ($44,364) $1,256,840 $43,955,582


Cash Balance $297,136 $1,553,976 $45,509,558

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7.6 Projected Balance Sheet

The following table shows the projec ted balance sheet.

Table: Balance Sheet


Pro Forma Balance Sheet
2004 2005 2006
Assets

Current Assets
Cash $297,136 $1,553,976 $45,509,558
Other Current Assets $215,000 $215,000 $215,000
Total Current Assets $512,136 $1,768,976 $45,724,558

Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $512,136 $1,768,976 $45,724,558

Liabilities and Capital 2004 2005 2006

Current Liabilities
Accounts Payable $70,956 $191,472 $2,923,748
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $70,956 $191,472 $2,923,748

Long-term Liabilities $0 $0 $0
Total Liabilities $70,956 $191,472 $2,923,748

Paid-in Capital $700,000 $700,000 $700,000


Retained Earnings ($143,500) ($258,819) $877,504
Earnings ($115,319) $1,136,323 $41,223,307
Total Capital $441,181 $1,577,504 $42,800,811
Total Liabilities and Capital $512,136 $1,768,976 $45,724,558

Net Worth $441,181 $1,577,504 $42,800,811

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7.7 Business Ratios

The business ratios are impressive bec ause of the built-in c aptive market. Also, the company has
no debt or AR, and together with high margins the projec tions show high liquidity and large
amounts of working capital. This is a healthy and profitable projec ted forec ast. Our SIC industry
class is currently Data base information retrieval - 7375.9901.

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Table: Ratios
Ratio Analysis
2004 2005 2006 Industry Profile
Sales Growth 0.00% 1100.00% 1363.70% 10.27%

Percent of Total Assets


Other Current Assets 41.98% 12.15% 0.47% 44.32%
Total Current Assets 100.00% 100.00% 100.00% 77.85%
Long-term Assets 0.00% 0.00% 0.00% 22.15%
Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 13.85% 10.82% 6.39% 35.88%


Long-term Liabilities 0.00% 0.00% 0.00% 21.91%
Total Liabilities 13.85% 10.82% 6.39% 57.79%
Net Worth 86.15% 89.18% 93.61% 42.21%

Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 80.24% 87.12% 88.67% 100.00%
Selling, General & Administrative Expenses 105.65% 66.26% 36.95% 82.56%
Advertising Expenses 0.00% 0.00% 0.00% 1.01%
Profit Before Interest and Taxes -25.41% 29.81% 73.88% 1.11%

Main Ratios
Current 7.22 9.24 15.64 1.68
Quick 7.22 9.24 15.64 1.27
Total Debt to Total Assets 13.85% 10.82% 6.39% 2.10%
Pre-tax Return on Net Worth -26.14% 102.90% 137.59% 66.78%
Pre-tax Return on Assets -22.52% 91.77% 128.79% 6.31%

Additional Ratios 2004 2005 2006


Net Profit Margin -25.41% 20.87% 51.72% n.a
Return on Equity -26.14% 72.03% 96.31% n.a

Activity Ratios
Accounts Payable Turnover 3.62 12.17 12.17 n.a
Payment Days 27 21 16 n.a
Total Asset Turnover 0.89 3.08 1.74 n.a

Debt Ratios
Debt to Net Worth 0.16 0.12 0.07 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a

Liquidity Ratios
Net Working Capital $441,181 $1,577,504 $42,800,811 n.a
Interest Coverage 0.00 0.00 0.00 n.a

Additional Ratios
Assets to Sales 1.13 0.32 0.57 n.a
Current Debt/Total Assets 14% 11% 6% n.a
Acid Test 7.22 9.24 15.64 n.a
Sales/Net Worth 1.03 3.45 1.86 n.a
Dividend Payout 0.00 0.00 0.00 n.a

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Appendix
Table: Sales Forecast

Sales Forecast
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Sales
E-Filing Transaction 0% $0 $0 $0 $0 $0 $0 $0 $0 $20,840 $20,840 $83,359 $245,908
Hosting 0% $0 $0 $0 $0 $0 $0 $0 $0 $78 $78 $313 $922
Judicial Information Transactions 0% $0 $0 $0 $0 $0 $0 $0 $0 $813 $813 $3,250 $9,588
Training and Consulting 0% $0 $0 $0 $0 $0 $0 $0 $0 $3,766 $3,766 $15,062 $44,433
Total Sales $0 $0 $0 $0 $0 $0 $0 $0 $25,496 $25,496 $101,983 $300,851

Direct Cost of Sales Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
E-Filing Transaction $0 $0 $0 $0 $0 $0 $0 $0 $2,084 $2,084 $8,336 $24,591
Hosting $0 $0 $0 $0 $0 $0 $0 $0 $8 $8 $31 $92
Judicial Information Transactions $0 $0 $0 $0 $0 $0 $0 $0 $122 $122 $488 $1,438
Training and Consulting $0 $0 $0 $0 $0 $0 $0 $0 $2,824 $2,824 $11,297 $33,325
Subtotal Direct Cost of Sales $0 $0 $0 $0 $0 $0 $0 $0 $5,038 $5,038 $20,151 $59,446

Page 1
Appendix
Table: Personnel

Personnel Plan
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
CEO 0% $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500
COO 0% $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500
Office Manager 0% $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500
Sales Consultants 0% $8,500 $8,500 $8,500 $8,500 $8,500 $8,500 $8,500 $8,500 $8,500 $8,500 $8,500 $8,500
Programmers/ Technicians 0% $4,667 $4,667 $4,667 $4,667 $4,667 $4,667 $4,667 $4,667 $4,667 $4,667 $4,667 $4,667
Customer Service 0% $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167
Marketing 0% $3,666 $3,666 $3,666 $3,666 $3,666 $3,666 $3,666 $3,666 $3,666 $3,666 $3,666 $3,666
Other 0% $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500
Total People 10 10 10 10 10 10 10 10 10 10 10 10

Total Payroll $26,000 $26,000 $26,000 $26,000 $26,000 $26,000 $26,000 $26,000 $26,000 $26,000 $26,000 $26,000

Page 2
Appendix
Table: General Assumptions

General Assumptions
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Plan Month 1 2 3 4 5 6 7 8 9 10 11 12
Current 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 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00%
Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%
Other 0 0 0 0 0 0 0 0 0 0 0 0

Page 3
Appendix
Table: Profit and Loss

Pro Forma Profit and Loss


Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Sales $0 $0 $0 $0 $0 $0 $0 $0 $25,496 $25,496 $101,983 $300,851
Direct Cost of Sales $0 $0 $0 $0 $0 $0 $0 $0 $5,038 $5,038 $20,151 $59,446
Other Costs of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $0 $0 $0 $0 $0 $0 $0 $0 $5,038 $5,038 $20,151 $59,446

Gross Margin $0 $0 $0 $0 $0 $0 $0 $0 $20,458 $20,458 $81,832 $241,405


Gross Margin % 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 80.24% 80.24% 80.24% 80.24%

Expenses
Payroll $26,000 $26,000 $26,000 $26,000 $26,000 $26,000 $26,000 $26,000 $26,000 $26,000 $26,000 $26,000
Sales and Marketing and Other $4,249 $4,249 $4,249 $4,249 $4,249 $4,249 $4,249 $4,249 $4,249 $4,249 $4,249 $4,249
Expenses
Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Rent $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500
Utilities $1,168 $1,168 $1,168 $1,168 $1,168 $1,168 $1,168 $1,168 $1,168 $1,168 $1,168 $1,168
Insurance $2,616 $2,616 $2,616 $2,616 $2,616 $2,616 $2,616 $2,616 $2,616 $2,616 $2,616 $2,616
Payroll Taxes 15% $3,900 $3,900 $3,900 $3,900 $3,900 $3,900 $3,900 $3,900 $3,900 $3,900 $3,900 $3,900
Leased equipment $523 $523 $523 $523 $523 $523 $523 $523 $523 $523 $523 $523

Total Operating Expenses $39,956 $39,956 $39,956 $39,956 $39,956 $39,956 $39,956 $39,956 $39,956 $39,956 $39,956 $39,956

Profit Before Interest and Taxes ($39,956) ($39,956) ($39,956) ($39,956) ($39,956) ($39,956) ($39,956) ($39,956) ($19,498) ($19,498) $41,876 $201,449
EBITDA ($39,956) ($39,956) ($39,956) ($39,956) ($39,956) ($39,956) ($39,956) ($39,956) ($19,498) ($19,498) $41,876 $201,449
Interest Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Taxes Incurred $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Net Profit ($39,956) ($39,956) ($39,956) ($39,956) ($39,956) ($39,956) ($39,956) ($39,956) ($19,498) ($19,498) $41,876 $201,449
Net Profit/Sales 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% -76.48% -76.48% 41.06% 66.96%

Page 4
Appendix
Table: Cash Flow

Pro Forma Cash Flow


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

Cash from Operations


Cash Sales $0 $0 $0 $0 $0 $0 $0 $0 $25,496 $25,496 $101,983 $300,851
Subtotal Cash from Operations $0 $0 $0 $0 $0 $0 $0 $0 $25,496 $25,496 $101,983 $300,851

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 $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 Current 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 $0 $0 $0 $0 $0 $0
Subtotal Cash Received $0 $0 $0 $0 $0 $0 $0 $0 $25,496 $25,496 $101,983 $300,851

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

Expenditures from Operations


Cash Spending $26,000 $26,000 $26,000 $26,000 $26,000 $26,000 $26,000 $26,000 $26,000 $26,000 $26,000 $26,000
Bill Payments $465 $13,956 $13,956 $13,956 $13,956 $13,956 $13,956 $13,956 $14,124 $18,994 $19,498 $35,417
Subtotal Spent on Operations $26,465 $39,956 $39,956 $39,956 $39,956 $39,956 $39,956 $39,956 $40,124 $44,994 $45,498 $61,417

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 Current 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
Subtotal Cash Spent $26,465 $39,956 $39,956 $39,956 $39,956 $39,956 $39,956 $39,956 $40,124 $44,994 $45,498 $61,417

Net Cash Flow ($26,465) ($39,956) ($39,956) ($39,956) ($39,956) ($39,956) ($39,956) ($39,956) ($14,628) ($19,498) $56,486 $239,434
Cash Balance $315,035 $275,079 $235,123 $195,167 $155,211 $115,255 $75,299 $35,343 $20,715 $1,217 $57,703 $297,136

Page 5
Appendix
Table: Balance Sheet

Pro Forma Balance Sheet


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

Current Assets
Cash $341,500 $315,035 $275,079 $235,123 $195,167 $155,211 $115,255 $75,299 $35,343 $20,715 $1,217 $57,703 $297,136
Other Current Assets $215,000 $215,000 $215,000 $215,000 $215,000 $215,000 $215,000 $215,000 $215,000 $215,000 $215,000 $215,000 $215,000
Total Current Assets $556,500 $530,035 $490,079 $450,123 $410,167 $370,211 $330,255 $290,299 $250,343 $235,715 $216,217 $272,703 $512,136

Long-term Assets
Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Accumulated Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Assets $556,500 $530,035 $490,079 $450,123 $410,167 $370,211 $330,255 $290,299 $250,343 $235,715 $216,217 $272,703 $512,136

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

Current Liabilities
Accounts Payable $0 $13,491 $13,491 $13,491 $13,491 $13,491 $13,491 $13,491 $13,491 $18,361 $18,361 $32,970 $70,956
Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Current Liabilities $0 $13,491 $13,491 $13,491 $13,491 $13,491 $13,491 $13,491 $13,491 $18,361 $18,361 $32,970 $70,956

Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Liabilities $0 $13,491 $13,491 $13,491 $13,491 $13,491 $13,491 $13,491 $13,491 $18,361 $18,361 $32,970 $70,956

Paid-in Capital $700,000 $700,000 $700,000 $700,000 $700,000 $700,000 $700,000 $700,000 $700,000 $700,000 $700,000 $700,000 $700,000
Retained Earnings ($143,500) ($143,500) ($143,500) ($143,500) ($143,500) ($143,500) ($143,500) ($143,500) ($143,500) ($143,500) ($143,500) ($143,500) ($143,500)
Earnings $0 ($39,956) ($79,912) ($119,868) ($159,824) ($199,780) ($239,736) ($279,692) ($319,648) ($339,146) ($358,644) ($316,768) ($115,319)
Total Capital $556,500 $516,544 $476,588 $436,632 $396,676 $356,720 $316,764 $276,808 $236,852 $217,354 $197,856 $239,732 $441,181
Total Liabilities and Capital $556,500 $530,035 $490,079 $450,123 $410,167 $370,211 $330,255 $290,299 $250,343 $235,715 $216,217 $272,703 $512,136

Net Worth $556,500 $516,544 $476,588 $436,632 $396,676 $356,720 $316,764 $276,808 $236,852 $217,354 $197,856 $239,732 $441,181

Page 6