Internet Software Company

BUSINESS PLAN     POGGLE, INC.

14001 Harmony Street
San Diego, California 92101

Poggle's vision is to develop software to improve information retrieval and in so doing to provide total freedom and access to stored information, regardless of the language used to create or search for the information. It is the company's vision to extend this capability beyond normal computing boundaries to include text as well as voice recognition information usage.

• executive summary
• marketing plan
• sales plan
• organization & operations
• financial projections

EXECUTIVE SUMMARY

Overview

E-business today has embodied an electronic transformation of our culture. This transformation has emerged in the use of technology, which has become pervasive throughout our daily life. One of the problems that this use of technology has brought to us is the user unfriendliness that is often its byproduct. One of the latest trends has been to enable users to utilize technology more effectively, with less hassle and to make technology transparent in its use.

Intrigued by the communication and language barriers that would prevent e-business from flourishing, Poggle decided to invent a software technology to overcome the situation. There are over 6,000 languages spoken today in 288 countries. Poggle set out to build a software engine that could easily and quickly facilitate the use of these languages in e-business environments. Poggle subsequently introduced a product at an October 2000 international exhibition to enthusiastic crowds that waited in long lines to see live demonstrations of their technology.

The result has been an overwhelming success. Poggle's new technology has resulted in several new products that are destined to transform the degree to which international users utilize e-business. Poggle's focus is to extend this technology beyond language and geographical boundaries, allowing anyone to participate, be connected to, and effectively utilize the global e-business community.

Poggle has subsequently positioned itself as a dynamic, exciting, growth-oriented software company that designs and develops software focused on making user environments easier and friendlier to use. Today, Poggle's suite of products support the same functionality in multiple languages. Poggle's focus is to make cross-language communication the defacto standard for the future of e-business.

Poggle's Vision—To Improve Information Retrieval

Poggle's vision is to develop software to improve information retrieval and in so doing to provide total freedom and access to stored information, regardless of the language used to create or search for the information. It is the company's vision to extend this capability beyond normal computing boundaries to include text as well as voice recognition information usage.

Furthermore, the company's vision includes becoming an e-industry leader in designing communication enhancement' products and services that facilitate e-business, Internet usage, and electronic communication transactions.

Accurate and timely access to information has always been essential for companies and individuals to make sound business decisions. One of the problems on the Internet today is that companies in general have neglected to address the impediments users face when accessing required information in a multilingual global economy. Additionally, Internet users are easily disconnected if they make a simple typographical error or misspell the website names they want to connect with. Poggle's vision is to address this information discontinuity with a solution designed specifically to enhance capability and functionality while improving user friendliness.

In this rapidly changing information age, businesses have been hindered by the "dead-ends" prohibiting the flow of accurate and timely information. As the Internet continues to grow, so does the demand for a more streamlined and time efficient use of the web. Without using the exact website address format or if the search entry contains foreign characters or errors, Internet users are not able to search and retrieve the precise information they are seeking. This is where Poggle comes in.

Poggle's Mission

Poggle's mission is to enhance e-business communication by developing premium products and services utilizing Poggle's technology. Initially, major goals are to provide products that enhance the Internet experience. The Internet itself does not drive the entire world of e-business, but it is a substantial place to start. Ultimately, the company intends to develop products that enhance non-Internet related e-business transactions, and through these to set the standard for the next generation of e-business software technologies.

Specifically in relation to the Internet, Poggle plans to address the difficulties that international e-business customers currently face. Poggle's mission includes:

• Making Access to Information Easier (Enterprise Business)
• Improve Communication and Data Exchange (Business to Business)
• Connect People Worldwide (Business to Consumer)
• Help businesses reach worldwide audiences (Business to Consumer, Business to Business)
• Enhance Internet communication by developing premium products and services

Poggle's Focus— Customer Satisfaction

In e-business today, a loyal customer is one that has had a satisfying experience. Poggle defines satisfaction in this area as having four components: Accuracy, Availability, Advisory, and Partnership.

• Accuracy—The focus of Poggle's products is to deliver accurate information in a timely manner.
• Availability—Poggle's products are designed to facilitate availability of information to market sectors that previously would have had difficulty in accessing that information.
• Advisory—The company's products deliver content that is advisory in nature. In so doing, the customer is assured of a quality response to the information they are seeking.
• Partnership—Poggle remains focused on collaborating with its customers in order to assure that those customers receive the highest level of service available.

Marketing & Growth Strategies

Poggle's strategic growth plan is comprised of three components that will enable the company to obtain its goal as a leading designer, developer, and marketer of low cost, high quality intelligent software.

• The first component is internal new product development. Poggle will develop software for its competitive market edge.
• The second component is external integration of Poggle products into potential strategic business partners' browsers, e-mail systems, websites, wireless devices and applications, global telephone systems and directories, home entertainment devices and database packages.
• The third component is aggressive sales and marketing. Poggle intends to develop a sales and marketing campaign focused primarily on the U.S. Fortune 1000, as well as the top 1,000 international companies, end users of those companies, and their affiliates.

Competitive Summary

Poggle's products are unique in the capabilities they bring to market. There is no direct competition for the company's products. Poggle's products are focused on the globalization of information distribution and access, while competitor's products are more niche focused.

Business Model

Poggle's business model is comprised of three components, Participate, Connect, and Utilize.

• Participate—Poggle's products allow users from any geographic location or verbal language to participate fully in the global e-business community.
• Connect—Poggle's products facilitate international users' connection to e-business, for these users will no longer face a language or spelling barrier.
• Utilize—Poggle's products allow any user to effectively utilize e-business by making it user-friendlier. Being able to communicate in your natural language without worrying about misspelling will greatly enhance users' experience of e-business.

Operations

An in-house staff of individuals with extensive experience in all related industries will comprise the operational team. These individuals will have, at a minimum, the following expertise:

• Product Development—focused on the ability to develop and package software products and bring those products to market.
• Marketing—extensive knowledge of merchandising, promotions, advertising, sales, operations, and planning.
• Sales—strong administration and order processing capabilities coupled with day-today sales management expertise.
• Accounting—extensive capabilities in cash flow management, budgeting, and managing receivables in addition to forecasting.

Each of these operational divisions will share a focus on success, achievement, and the creation and maintenance of value and customer satisfaction.

Management Team

The company's management team consists of three highly skilled individuals who together founded the company in September 2000. These individuals have extensive knowledge and expertise in the technology behind Poggle's applications. Furthermore, they share a vision for Poggle's future and they excel at keeping the company on track to achieving that vision.

As the company grows, the three founders intend to bring on an executive team skilled in the daily operations as well as the strategic and tactical management and oversight of the organization. The founders intend to then divide their talents to areas best served by them.

Financial Requirement and Use

The company is seeking pre-IPO equity/debt funding of $1.6 million in order to launch and promote the company's products and services. The company is projecting net profit of $944,000 on $3.4 million gross, or approximately 29% of sales, over the course of the first 12 months of operation.

Summary

Today's e-business landscape is one that is painted with many companies in many geographies worldwide. In this environment, there is no real solution to the language barriers that exist to totally effective use of e-business.

Poggle's vision is to facilitate global e-business by providing applications and tools that will dissolve the barriers created by the multi-lingual global economy. No company ever has taken on this challenge and presented a solution that is both affordable and easy to access and use. This is what differentiates Poggle's approach and is what generates the value that Poggle intends to bring to market.

Confidentiality and Risk Statements

The information, data, and drawings embodied in this business plan are strictly confidential and are supplied on the understanding that they will be held confidentially and will not be disclosed to third parties without the prior written consent of Poggle.

This business plan represents management's best current estimate of the potential of the business. It must be recognized that no business is free of major risks and few business plans are free of errors of omission or commission.

MARKETING PLAN

Market Overview

In its simplest sense, e-business is the use of technologies to improve and transform key business processes. Most companies understand this and are on their way in the evolution from traditional business practices to e-business. They have begun to technologically enable core processes to strengthen customer service operations, streamline supply chains, and reach existing and new customers. The accessibility and broad reach of technology has forever changed customers' expectations regarding support and response. Customers today expect accurate, round-the-clock service. Hence, the requirement for a massively scalable, reliable, and secure electronic foundation that includes reliable and available servers, industry-leading software and middleware, and worldwide consulting services from experts with industry-specific knowledge—all supported by a scalable and robust infrastructure.

In a few short years, e-business has gone from concept to undeniable reality. The reason behind this is that it works for everyone: consumers, businesses, and governments. The primary values of e-business—cost savings, revenue growth, and customer satisfaction—are proving to be just the tip of the iceberg. Having realized the benefit of technologically enabling individual business processes, many companies are now seeking further return on investment by integrating new and existing e-business applications and technologies. For example, two billion Internet-ready devices like smart phones, PDAs, and other pervasive computing applications are expected to be in consumers' hands in the next two years. These devices and applications are prime candidates to better serve customers and improve efficiency. The key to success is finding a way to give customers what they want without the expense of traditional business operations.

Once a business e-business-enables its operations, it can find itself in new terrain, where all of its competitors and customers are also operating as e-businesses (by 2003, the Net will generate two billion dollars in sales). At that point, "buy, sell, trade online" does not apply just to stocks and financial units, but to many transactions in which an enterprise engages. These e-marketplaces have already proven to be the most fluid and changing aspect of e-business leading the next generation of the technology landscape.

International E-Business and Internet Growth

The growth of e-business will drive much more than just the use of the Internet. In the United States, the growth of the Internet is expected to slow down somewhat due to saturation. At the same time, the outlook for growth internationally is excellent. Once the rest of the world comes online, the Internet will face infrastructure issues. One of the qualities that makes the Internet unique—its unstructured approach—is proving to be one of its greatest challenges.

As the Internet grows to billions of users, its infrastructure will need to be improved dramatically to make it more scalable and secure. Small business Internet access projections show that Internet usage will be 54 percent of the population by the end of 2001. A worldwide Internet population forecast by IDC indicates that there will be half a billion Internet users by 2003. This opens the door to companies like Poggle that have developed products designed to simplify the Internet's infrastructure, or at least how that infrastructure is perceived by individual users. It's not the infrastructure that exists that is the problem, it's the user-friendliness of being able to access and effectively utilize that infrastructure, and that is where Poggle comes into the picture.

Worldwide Internet revenue estimates indicate that the United States and Western Europe will lead the way in Internet commerce. The United States currently has almost 60 percent of Internet traffic. This leaves a tremendous amount of growth for international users.

Market Trends

The number of websites, e-mail users, and size of databases increases daily. Customers want a user-friendly online experience, however, this is becoming more difficult because of the sheer number of users. Certain trends have begun to surface that prove the need for Poggle's products. These include:

1. An American Internet user survey found that about 15.9 million Americans using the Internet during 1997 canceled their Internet service because web surfing and e-mailing were too difficult.
2. Existing Internet search engines do not tolerate typographical errors that users typically make such as adding an extra period or omitting a dot or comma in a website address.
3. Online customers are less than satisfied when they find shopping malls bottlenecked with data and language barriers.
4. Navigating through a complex network of more than 1 billion web pages full of structured content becomes more frustrating for the Internet user. Since more websites and pages appear while others change faster than search engines can index them, Internet users fail to make the right connection as no search engine has indexed more than 33 percent of them.
5. Misspelled product and company names with less than 100 percent accurate web addresses lead users to dead ends. This creates frustration for the end user and means a loss of sales revenue for the company.
6. Current search engines are not everything that they profess to be. They do not address a user's grammar, spelling, frequency of word use, etc. Search engines are important to Internet use, but they are intolerant of human errors.

The Poggle Business Model

The purpose of Poggle's business model is to explain the overall philosophy of how the company intends to develop, market, and sell its products. Poggle's business model is comprised of three essential ingredients that, when combined, create a powerful central theme: Participate, Connect, and Utilize.

• Participate —Poggle products are designed to enhance users' participation in the global e-business economy. Prior to Poggle's applications, an international user whose first language was not English started with a disadvantage. Now with Poggle applications, this user will be able to participate more fully, without having to worry about their English spelling capabilities.
• Connect —Poggle products enable users in any location worldwide to connect to technology (such as the Internet) and take full advantage of search engine capabilities, without having to worry about spelling, or about the Internet addresses relating to the information they seek.
• Utilize —Poggle products allow users to more fully utilize the e-business technologies such as the Internet. Poggle's software enables users to work more effectively, moving into the background many functions that previously took a great deal of time and effort to utilize.

Competitive Analysis

There are technological changes taking place in the development of information retrieval and processing. These changes are quickly altering the way Internet technology is processed. Poggle is faced primarily with indirect competition from the companies that offer the information process capability.

Poggle is primarily an Application Services Provider (ASP). The ASP business model is one where the company hosts their application on their website and offers other applications, or users, access to that software remotely. In addition to the ASP model, Poggle products also fit into the Client-Server model, where a remote application makes calls to a centralized application (in this case the remote application is Poggle's browser plug in, and the centralized application is Poggle's ASP software).

Conclusion

Being successful in the highly competitive e-business marketplace today is not about the creativity of the idea or even the capability and functionality of the technology. What makes one company successful over another is how effective their technology is at enabling users and creating value for them. Too many companies have assumed that just because they have a catchy idea or a useful product in their minds, that the public will also think so.

Poggle's technology is practically assured of success because its focus is communications, which is the core focus of e-business. By facilitating enhanced communications, Poggle products will create more efficiency and productivity and will spark a new level of inter-global e-business operations. This success will also be Poggle's success.

SALES PLAN

Selling Strategies

The sales strategy that Poggle intends to undertake is a multifaceted approach utilizing front-end and back-end revenue streams. Front-end revenue streams are those that are paid directly by the users who will directly utilize Poggle's ASP software from the Poggle website. Back-end revenue streams are those where incremental "value-added" services are utilized by companies and partners and where Poggle makes some kind of commission or referral fee from their use. Additional back-end revenue streams include services that are utilized transparently and visitors to the Poggle website, such as advertising and click-through revenues.

Front-End Revenue

Front-end revenue streams are comprised of the direct sales of Poggle products.

Back-End Revenue

The following revenue streams comprise back-end incremental revenue that are not considered to be the primary sources of income for Poggle, but nonetheless will generate limited income.

• Licensing Programs—Strategic partnerships with leading companies that want to build Poggle's software into their products will create licensing opportunities for the company.
• Products and Services Sold to the Poggle User Community—The company will feature specific products and/or services on the company's website that are relevant to the interests of the Poggle user community. These products will generate additional income for Poggle while providing niche-targeted incremental value to Poggle users.
• Click-Through Incremental Revenue—The company will allow content focused banner advertising on its website that brings incremental value to Poggle users. The company will be remunerated for each "click-through" that a user follows from the Poggle site.
• Sponsorships/Co-Branding—The company will sponsor specific opportunities, products, or services that bring incremental value to the Poggle users. Additionally, Poggle will co-brand other incremental products and/or services.

Strategic Partners

Poggle values strategic partnerships and sees them as a way to leverage brand identity while bringing the company's software to large numbers of existing users with minimal marketing efforts on Poggle's behalf. Additionally, Poggle views its strategic partners as all having value-added technology where Poggle's technology, combined with that owned by the strategic partner, together creates a more powerful value proposition than either could separately.

Strategic partners will be added as the company continues to grow. Strategic partnerships that are currently under development include the following companies: Excite, Lycos, InfoSeek, and Yahoo!

Advertising Plan

Poggle's advertising plan is to take heavy advantage of Internet based advertising campaigns, specifically focused on search engine sites. Additionally, Poggle will take advantage of traditional advertising media's as well, including newspaper, magazine, and possibly radio and television depending on projected growth.

Promotions and Public Relations

The public relations strategy has been to create a brand identity for Poggle with the public and business community.

Launch plans include a Media Tour in the top five "global markets" including China, Japan, Korea, the Middle East, and non-Latin Europe. This will give Poggle an opportunity to personally meet with distinguished members of the trade and consumer press and provide them with one-on-one demonstrations.

Online publicity will increase with the launch announcement, distribution of the free download, and online interviews of Poggle's management team. Press relations will continue with high-tech print trade publications, editors, online e-zines, and press releases, awards programs, high-tech analysts, media events, radio, TV, web casts, editorial reviews/calendars, tradeshows, and promotional opportunities.

ORGANIZATION & OPERATIONS

Organization

MANAGEMENT TEAM

Poggle's management team has a wide degree of experience in different corporate focuses. The current team is comprised of the three founders of the company. Their core strengths are in the engineering and software development areas. Once fully funded, Poggle intends to hire an experience management team to oversee operations of the company and to assure financial projections are met.

Operations

PRODUCT DEVELOPMENT

The product development department is responsible for software development and product packaging. The company's founders will oversee all operations of this department.

CUSTOMER SERVICE/PRODUCT SUPPORT

The company is committed to superior levels of customer satisfaction. To this end Poggle intends to build an internal customer service department. This department will be staffed by knowledgeable people who are also skilled in being effective on the telephone in interpersonal relationship management.

MATERIALS AND PURCHASING

The responsibility of this department will be the establishment of new sources of supply, management of the ordering process, procurement, and stocking.

SALES

The sales department is responsible for the achievement of Poggle revenue targets, management and growth of the distribution channels, and pursuit of corporate strategic relationships.

MARKETING

The marketing department is responsible for implementation of the marketing plan, overseeing the development of pricing and price lists, catalogues, and selling sheets. Additionally, this department handles all research and advertising.

LEGAL & ACCOUNTING

The legal department is responsible for management of Poggle's copyrights, trademarks, and patents, in addition to contract negotiation.

INTELLECTUAL PROPERTY PROTECTION

Poggle has aggressively moved to protect its developed intellectual property rights such as trademarks, product designs, and proprietary concepts. These rights are protected through patent application trademark registrations, the maintenance of trade secrets, the development of trade presentation and, when necessary, appropriate action against those who are, in the company's opinion, unfairly competing. Several trademarks have been issued by the United States Department of Commerce. The current registered trademark and future patent beneficiary is Poggle, Incorporated. Poggle will be filing additional trademark registrations and patents for their other technologies in China, Japan, Korea, the Middle East, and Europe.

FINANCIAL PROJECTIONS

Financial Requirement and Use

The company's products are currently available through its website. Once this business plan is funded, the company intends to hire an executive management team along with several other individuals in compliance with the implementation of the company's organizational plan. Additional funds will be utilized to cover operations, sales, marketing, and product development costs for the remainder of 2001. Funds will be utilized to cover expenses estimated at just over $1.6 million for the first 12 months of operation. See the following financial statements for the background on this figure.

Statement of First-Year Cash Flow (in thousands)

Statement of Three-Year Profit and Loss