• Save
Business Plan for Americas
Upcoming SlideShare
Loading in...5
×
 

Business Plan for Americas

on

  • 1,308 views

developing the fundamental payment and fulfillment infrastructure for consumer e-commerce in Latin America.

developing the fundamental payment and fulfillment infrastructure for consumer e-commerce in Latin America.

Statistics

Views

Total Views
1,308
Views on SlideShare
1,306
Embed Views
2

Actions

Likes
3
Downloads
0
Comments
0

1 Embed 2

http://www.lmodules.com 2

Accessibility

Categories

Upload Details

Uploaded via as Microsoft Word

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

    Business Plan for Americas Business Plan for Americas Document Transcript

    • BUSINESS PLAN Empowering International E-Commerce SERIES A PREFERRED FINANCING JUNE 05, 2000 ORLANDO A. MORENO Highlights:  $3.7 billion consumer market  Aggressive Latin American deployment  Integrated payment and shipping solution  Patent-pending processes and technology  Dynamic revenue generation  Diverse founding team This document is a Business Plan and does not constitute an offer to sell or a solicitation to purchase. The Business Plan, “the plan”, is confidential and contains proprietary information including trade secrets of e-Global Network, Inc. Neither the Plan nor any of the information contained in the plan may be reproduced or disclosed to any person under any circumstances without the express written permission of e-Global Network, Inc. Orlando Moreno omoreno@hotmail.com 408.656.2498
    • Empowering International E-Commerce SERIES A PREFERRED – FINANCING Prepared by Orlando Moreno Executive Summary...................................................................................................................................1 Section 1 Products and Services...............................................................................................................2 Section 2 The Process...............................................................................................................................3 Section 3 Payment and Shipping Technology............................................................................................6 Section 4 International Deployment...........................................................................................................8 Section 5 Latin American Markets..............................................................................................................9 Section 6 Strategic Alliances....................................................................................................................14 Section 7 Affiliate Merchant Alliances......................................................................................................18 Section 8 Marketing Strategy and Implementation...................................................................................20 Section 9 Competitive Advantages..........................................................................................................24 Section 10 Management and Corporate Structure...................................................................................29 Section 11 Implementation to Mexico.......................................................................................................33 Section 12 Risk Factors...........................................................................................................................39 Section 13 Financial Forecasts................................................................................................................40 This document is a Business Plan and does not constitute an offer to sell or a solicitation to purchase. The Business Plan, “the plan”, is confidential and contains proprietary information including trade secrets of e-Global Network, Inc. Neither the Plan nor any of the information contained in the plan may be reproduced or disclosed to any person under any circumstances without the express written permission of e-Global Network, Inc. Orlando Moreno omoreno@hotmail.com 408.656.2498
    • Disclaimer e-Global Network, Inc., nor any of its representatives or advisors, have made or will make any representations or warranty of accuracy or completeness of Confidential Information and shall have no liability resulting from the Receiving Party’s use of the Confidential Information except as may be provided in a definitive agreement with respect to an Investment, if any. All material was prepared by Orlando Moreno. Any questions and issues related to the material in this document shall be addressed to Orlando Moreno CONFIDENTIAL INFORMATION
    • TABLE OF CONTENTS BUSINESS PLAN................................................................................................................................................................................1 .............................................................................................................................................................................................................1 .............................................................................................................................................................................................................2 Disclaimer............................................................................................................................................................................................1 Executive Summary....................................................................................................................................1 Section 1 Products and Services................................................................................................................2 The Global Card..................................................................................................................................................................................2 Affiliate Merchant Network..................................................................................................................................................................2 International Internet Payment System™............................................................................................................................................2 Automated Tariff System™..................................................................................................................................................................2 Section 2 The Process................................................................................................................................3 Section 3 Payment and Shipping Technology............................................................................................6 International Internet Payment System™............................................................................................................................................6 Automated Tariff System™..................................................................................................................................................................7 Section 4 International Deployment............................................................................................................8 Section 5 Latin American Markets..............................................................................................................9 Mexico...............................................................................................................................................................................................12 Brazil..................................................................................................................................................................................................12 Argentina...........................................................................................................................................................................................13 Chile..................................................................................................................................................................................................13 Section 6 Strategic Alliances....................................................................................................................14 Latin American Banks.......................................................................................................................................................................14 Telcos and ISPs................................................................................................................................................................................15 Portals and Shopping Networks........................................................................................................................................................15 Shipping Carriers...............................................................................................................................................................................16 Card Distributors...............................................................................................................................................................................16 PC Manufacturers.............................................................................................................................................................................17 Commerce Technology Vendors.......................................................................................................................................................17 Section 7 Affiliate Merchant Alliances.......................................................................................................18 Establishing Merchant Alliances ......................................................................................................................................................18 Building an Affiliate Merchant Base..................................................................................................................................................18 Affiliate Merchant Integration............................................................................................................................................................19 Proactive Merchant Relationships.....................................................................................................................................................19 Section 8 Marketing Strategy and Implementation...................................................................................20 Branding the Product and Service....................................................................................................................................................20 Advertising to Consumers.................................................................................................................................................................21 Section 9 Competitive Advantages...........................................................................................................24 Competitive Landscape.....................................................................................................................................................................24 Competitive Advantages...................................................................................................................................................................27 Section 10 Management and Corporate Structure....................................................................................29 Corporate Structure...........................................................................................................................................................................29 Personnel Growth..............................................................................................................................................................................30 Key Individuals..................................................................................................................................................................................31 Section 11 Implementation to Mexico.......................................................................................................33 Demographics and Infrastructure Development...............................................................................................................................33 Implementation Plan..........................................................................................................................................................................35 Section 12 Risk Factors............................................................................................................................39 Section 13 Financial Forecasts.................................................................................................................40 Overview ...........................................................................................................................................................................................40 Revenue and Pricing.........................................................................................................................................................................40 Expenditures......................................................................................................................................................................................42 Summary...........................................................................................................................................................................................45 Capital Request.................................................................................................................................................................................45 Forecasted Income Statement..........................................................................................................................................................46 CONFIDENTIAL INFORMATION
    • EXECUTIVE SUMMARY Latin America represents the world’s fastest growing region in number of online users. Despite this growth, a large disparity is expected to emerge between the number of online users and those users who make online purchases. Over the next five years, the compound annual growth rate for online buyers (88%) significantly lags behind the growth in online users (133%).i The growing disproportion is a direct result of the fundamental inhibitors that restrain consumer e- commerce in Latin America:  Low Credit Card Penetration  Privacy and Security Fears  Cross-Border Shipping and Delivery Difficulties Despite these constraints, global Internet players as well as the largest Latin American providers of consumer products and services are infusing huge amounts of capital in an effort to become the first and most recognizable market leaders amongst this emerging user base. The focus of these players is to establish a critical user mass with the underlying assumption that the fundamental infrastructure for consumer e-commerce will be developed in the near future. The Company is positioned to play a crucial role in developing the fundamental payment and fulfillment infrastructure for consumer e-commerce in Latin America. Latin America currently lacks a cash-based transaction vehicle, relying solely on credit to complete transactions. e- Global Network will transform online users who merely interact, into online consumers who transact. e-Global Network enables consumers to purchase goods and services both locally and abroad using a secure, non-credit-based, non-exclusionary Internet payment solution. The Global Card (Tarjeta Global) instills purchasing power to the vast majority of the consumer population who do not qualify for or who are averse to using credit with cross-border purchases supported by an integrated shipping and tariff solution. Online consumers purchasing goods cross-border are subject to uncertain import duties and taxes, which are levied and must be paid by the consumer once the package reaches the customs broker of the destination country. The solution automates the calculation of all tariffs and associated shipping costs on a real-time basis, allowing the consumer to acknowledge and prepay all costs at the time of purchase. e-Global Network is establishing strategic alliances to provide operational infrastructure and extend Global Card reach across divergent channels to virtually every Internet user in Mexico. The Company is presently in discussions with Citibank de Mexico and Banco Bital as initial banks to act as points of distribution and deposit as well as co-marketing platforms. Alliance discussions are also in progress with Telmex, Prodigy, T1MSN, Terra Networks (Infosel), To2.com to promote our system within their network of online users and merchants. Strategic alliances have also been established with FONACOT, Universitarios.net, and United Parcel Service. The demonstrated need opens an extraordinary window of opportunity, as e-Global Network will be the first integrated cross-border online payment and shipping solution in Latin America. CONFIDENTIAL INFORMATION -1-
    • SECTION 1 PRODUCTS AND SERVICES The main elements of the Company’s solutions include the International Internet Payment System™ (IIPS) and the Automated Tariff System™ (ATS). Collectively, they form the backbone and infrastructure for an environment that fully enables international e-commerce by supporting all requisite phases of an electronic transaction from point-of-sale at an online merchant through point-of delivery to the customer. The Global Card The Global Card (Tarjeta Global) is a cash-based debit card that provides a means for rendering payment of international e-commerce transactions. Card value is based on the local currency of the card member. Consumers obtain the Global Card through traditional (banks) and non- traditional (i.e. ISPs, PC manufacturers, and Internet portals) distribution channels. Initial funding and replenishment of the card’s cash value is erected by the consumer making a deposit at a local affiliated bank branch. The Global Card is compliant with international standards for card identification and features a 16-digit card number coupled with a 4-digit PIN for activation and authentication. Affiliate Merchant Network The Affiliate Merchant Network is a gateway for card members to shop for products from U.S. and Latin American merchants accepting the Global Card as a payment option. The breadth of the Affiliate Merchant Network provides consumers with a broad cross-section of products not immediately available locally. Affiliate merchant information is indexed and fully searchable by region, country, merchant specialty, product, and merchant name. International Internet Payment System™ The International Internet Payment System™ (IIPS) explicitly handles currency conversions at the point-of-sale, enabling card members to purchase goods and services cross-border. The IIPS incorporates key proprietary and open technologies (currency conversion and calculation) that seamlessly integrate the fielded systems of strategic partners in the areas of finance and foreign exchange. Automated Tariff System™ Trade regulations and tariff agreements pose a barrier to international e-commerce. The Automated Tariff System™ (ATS) facilitates the international shipment of goods by automatically pre-calculating the costs associated with shipping, import duties, and tariffs when importing foreign-made goods into a country. Built upon proprietary and open technologies developed by e-Global Network, Inc., ATS removes traditional constraints to international e- commerce by reducing the complexities involved in shipping goods cross-border. CONFIDENTIAL INFORMATION -2-
    • SECTION 2 THE PROCESS The following diagram illustrates the process describing how consumers can obtain the Global Card and use it to make purchases. OBTAINING A CARD FUNDING THE CARD ACTIVATING THE CARD Purchase or receive Deposit funds at bank 1. Register Card Global Card 2. Select PIN Code Bank $ $ Website Fund Card $ Obtain Card Bank Activate Card Website Consumer Promotions Fund Card Go Shopping ISPs Telcos Affiliate PC Mfgrs Merchant Network Select a Merchant Ship Transaction Payment Online Product Processing Processing Merchant Consumer DELIVERING THE PRODUCT MAKING PAYMENTS 1. Generate Manifests PROCESSING THE MAKING A PURCHASE 1. Authenticate card 2. Ship product to consumer TRANSACTION 1. Select Products 2. Convert Currency 1. Settle account balances 2. Initiate Payment 3. Compute Tariffs 2. Record transaction (Duties & Taxes) 3. Generate receipt 4. Compute Shipping 4. Notify consumer 5. Review Order 5. Notify merchant 6. Approve Transaction Obtaining the Global Card. Through a number of distribution channels, a consumer will be able to obtain a Global Card to Bank make purchases from affiliate merchants. Distribution outlets include banks and other strategic alliances. Alternatively, a e-Global consumer may order the card directly from the e-Global Network Website consumer website. When obtained, the Global Card will have Obtain Card zero cash value and must be activated and funded prior to its use Promotional Offerings for purchase activities. As part of promotional agreements with strategic partners, consumers may receive the Global Card with ISPs Telcos a nominal value that can be used towards purchases. PC Mfgrs CONFIDENTIAL INFORMATION -3-
    • Funding the Global Card. To fund a Global Card, a consumer will make a deposit at an affiliated bank that accepts Global Card deposits. Once a deposit has been made, the consumer will be issued a deposit receipt, which can be used to verify and Fund Card reference card account balances. Deposits made into activated card accounts will be available for use once e-Global Network, Bank Inc. has verified the deposit. Fund Card Activating the Global Card. A consumer activates the Global Card by following a standard activation procedure that is clearly printed on its back as well as on product packaging. The Activate Card Website activation procedure implements security controls to verify the authenticity of each card. To activate the card, the consumer will be asked to enter the 16-digit card number, then followed by the 4-digit PIN provided in the introductory kit. Once the card is authenticated, the user is required to change the original 4-digit PIN. This activation procedure is performed only once. Making A Purchase. With an activated and funded Global Card, a member now has the ability to purchase products and goods from affiliated merchants. The Global Card member can either go directly to an affiliated merchant’s website or select an Go Shopping online merchant from the Affiliate Merchant Network. Affiliate Merchant Network Once at the merchant site, a consumer will browse for and select Select A Merchant products to be purchased. During the product selection process, items will be placed into the consumer’s “shopping cart”. Upon Online Merchant checkout, the member will select the Global Card from the list of available payment options. Making Payments. Having selected the Global Card payment method on the affiliated merchant’s site, the member is automatically directed to the payment server where all payment Payment Processing processing is performed. The International Internet Payment System™ will then query the member account to authenticate the Global Card in-use. Once the card in-use is authenticated, the member will be asked to provide additional information related to the delivery address for the purchased goods. This feature is provided to help facilitate the delivery of goods to specific international destinations. With shipping information provided by the member, the Automated Tariff System™ is then able to automatically compute all necessary customs, duties, shipping and handling fees, and any additional assessable tax for the products to be purchased and delivered. CONFIDENTIAL INFORMATION -4-
    • Once the member acknowledges all cumulative charges [product prices + duties + shipping fees] the International Internet Payment System™ approves or denies the transaction based on available funds converted to the affiliated merchant’s currency. If the transaction is denied for insufficient funds, the member will be notified to deposit additional funds. Processing the Transaction. The IIPS records approved and denied transactions and an associated receipt is generated and electronically sent back to the member through their e-mail Transaction Processing account as well as via an HTML-based receipt. For approved transactions, the affiliated merchant is electronically notified of the transaction approval and is provided with all required information to complete the fulfillment and delivery aspects of the order. Delivering the Product. On international shipments, affiliate merchants will generate accurate package manifests, based on the information provided by the e-Global Network system. For Deliver Product Ship affiliate merchants, the process of delivering goods into foreign countries is facilitated through the pre-calculation and pre- payment of all shipping, customs, duties, and taxes. This automated procedure significantly enables the shipping carrier to expedite the process of clearing packages at international points-of-entry. Card members can track packages from point-of-origin through point-of-entry (customs), and finally to point-of-delivery. Paying the Merchant. Settlement of all amounts for each affiliated merchant for transactions completed the prior week is completed on a weekly basis. The procedure includes the generation of detailed electronic reports and transaction summaries that take into account transaction surcharges, volume discounts, and merchant rebates. Settlement of a merchant payment is considered complete when e-Global Network, Inc. releases funds for transfer to the merchant’s account. Paying the Shipping Carrier. All payments associated with the shipment of packages to foreign destinations will typically be settled and reconciled on a weekly basis. For country-specific situations, the preferred shipping carrier (UPS) will assume the necessary costs (shipping, import duties, and taxes) to clear packages through international borders. Each week UPS and e-Global Network, Inc. will generate a summary report of shipping transactions for reconciliation. Upon acceptance of the shipping transaction summary, UPS will be reimbursed the total amount paid for shipping-related activities, less any volume shipping discounts. CONFIDENTIAL INFORMATION -5-
    • SECTION 3 PAYMENT AND SHIPPING TECHNOLOGY At the center of e-Global Network’s enabling technology is the International Internet Payment System™ (IIPS) and the Automated Tariff System™ (ATS). Together, IIPS and ATS form a comprehensive Internet-based network and communications infrastructure developed specifically to support international e-commerce transactions and fulfillment. Built upon numerous standard and proven Internet technologies, both systems support rapid deployment and integration with merchant systems through well-defined Application Programming Interface (API) structures. Standard web browser technology provides a universal client platform for enabling member and merchant access. International Internet Payment System™ The major components of the IIPS include the:  Online Account Manager  Transaction Processing and Management Engine  Automated Foreign Exchange Conversion System Online Account Management (OAM) Component. To allow users the greatest flexibility in performing domestic and international transactions, a web-based Online Account Management facility is provided to give users secure and real-time access to their account funds and information. Card value and account balances are maintained in the local currency of the member and transactions are converted to the local currency of the merchant. Accessed through the web, the Online Account Manager allows members to activate cards, check balances, change PIN access codes, view transaction details, generate transaction reports, monitor card value in local currencies, and transfer funds to other card accounts. This component is implemented using a number of proven and standard Internet technologies: public key certificates and SSL for security, active page generation for rapid interactivity with back-end server databases, and standard web browsers as universal clients. Transaction Processing Component. The Transaction Processing Component performs three major functions: Fund Management, Transaction Processing, and Payment and Settlement. The Fund Management Subsystem performs ledger functions for individual card accounts. This system maintains the security and integrity of all accounting and bookkeeping operations (i.e., debits and credits). The Fund Management subsystem monitors and records individual fund activity with the data available to account holders through the Online Account Management system. Account balances determined by the Fund Management subsystem are used by other system components to approve or deny transactions. The Transaction Processing Subsystem handles a number of activities that bridge the connection between the member and the merchant. Its primary functions include the following: CONFIDENTIAL INFORMATION -6-
    •  Capturing Global Card transactions  Applying necessary currency conversions  Approving and denying online purchase requests  Routing transaction information  Recording transaction activity  Generating transaction reports for members and merchants The Payment and Settlement Subsystem is responsible for overseeing the reconciliation and settlement of payments to merchants. On a weekly basis, based on transaction records maintained by the Transaction Processing subsystem, merchants are paid amounts equivalent to the total sum of all transactions completed, less all imposed per transaction fees and discounts. Using a secure web-based interface, merchants will be able to view information collected and generated by the Payment and Settlement subsystem to monitor and track sales and transactions. Settlements occur when funds designated for payment to merchants are transferred to their bank accounts. The Transaction Processing and Management component leverages commercially available enterprise database technologies to incorporate proprietary logic and algorithms that define the environment for enabling international e-commerce transactions. Automated Currency Exchange Component. The Automated Currency Exchange Component receives, analyzes, and determines real-time currency exchange rates in order to determine currency exchange spreads that protect e-Global Network’s embedded currency revenue. When online purchases are made the price of the product and other associated costs are automatically converted into the local currency of the affiliate merchant, providing the member with the total cost associated with the purchase. Since currency conversion rates are subject to day-to-day fluctuations, the Transaction Processing Component time-stamps the established currency rate on each transaction record for every multiple currency transaction encountered. Automated Tariff System™ Duties and tariffs levied upon imported goods vary from nation-to-nation and are oftentimes determined by complicated pacts and agreements meant to protect national industries from foreign competition. Merchants are reluctant to participate in international e-commerce because the task of computing duties and tariffs is complex. Duties and tariffs are typically determined manually at point-of-entry using the internationally recognized harmonizing code, a standard system for categorizing tariffable goods. Since most merchants do not assign harmonized code designations to their products, the task of determining duties and tariffs becomes daunting and serves as an impediment to realizing international sales through e-commerce. The Automated Tariff System™ (ATS) digitizes the Harmonizing Code System and maintains up-to-date duty and tariff schedules for the United States and countries of shipment. The product inventory of affiliate merchants will be integrated so that, for each product, the associated duties and tariffs can be determined in real-time. CONFIDENTIAL INFORMATION -7-
    • SECTION 4 INTERNATIONAL DEPLOYMENT In the first two years, the Company intends to focus on Latin America. Within Latin America, primary focus will be on those countries that cumulatively account for 91% of online commerce:  Argentina  Brazil  Chile  Mexico  Venezuelaii The selection of the five preceding countries take into account a number of key facts, including growth in online user base and revenues, per capita income, average amount spent online per year, as well as economic and political stability. As a result of our strong in-country relationships, we intend to launch to Mexico as the first country for deployment. Following Latin America, the Company will then look to expand operations into key markets within Europe and Asia/Pacific.iii Mexico Brazil Argentina Chile Venezuela Target Countries for Two Year Deployment Target Regions CONFIDENTIAL INFORMATION -8-
    • SECTION 5 LATIN AMERICAN MARKETS Latin America is the world’s fastest growing region both in e- Latin America commerce revenues and in online users. Latin America, at 2000E 2003E present, accounts for only about 16 million Internet users, but by Net Users 16.0M 43.4M the year 2003, it is estimated that there could be as many as 43 Consumer EC Rev $500M $3.7B million users in the region resulting in $3.7 billion in consumer 2003 % Home Internet Users Shopping Online* e-commerce revenues.iv Under this scenario, Latin America would double its participation rate to approximately 10 percent of the world’s Internet users. % 74 These developments suggest that while e-commerce holds 27 % % 26 tremendous potential for expanding trade and increasing Latin America’s competitiveness in international markets, the challenge lies in ensuring that e-commerce contributes to the integration and development of all regions. Attention will need Source: Jupiter Communications, 2000 * Morgan Stanley Dean Witter, 2000 to be paid to address the opportunities and create an enabling environment in order to avoid the deepening of inequalities in the access and use of information technologies that could widen the social and economic gap between and within Latin American countries. Latin America - Growth in Online Users Online users in millions % of Online users buying 66.6 70 60 55.1 50 43.4 40 31.9 30 23.0 34% 16.0 24% 31% 20 27% 18% 21% 10 2000 2001 2002 2003 2004 2005 Source: Jupiter Communications. Latin America: Online Projections. March 2000. CONFIDENTIAL INFORMATION -9-
    • Latin America - Growth in Consumer E-Commerce Revenues $ in billions 9.0 $ 8.3B 8.0 7.0 6.0 $ 5.8B 5.0 4.0 $ 3.7B 3.0 $ 2.2B 2.0 $ 1.2B 1.0 $ 500M 2000 2001 2002 2003 2004 2005 Source: Jupiter Communications. Internet Commerce Model. February 2000. Despite the strong growth potential in Latin America, there still exist a number of barriers to growth including: Poor quality and high Internet access fees. Barriers in the form of low quality telecommunications infrastructure, narrow bandwidth, and high connection costs in some countries slow the growth of e-commerce in Latin America. Latin American Internet access fees average $53 a month.v Low PC penetration rates. One key assumption is that the PC will continue to be the dominant means of accessing the Internet in Latin America over the next 10 years, but will begin to lose significant market share to new technologies such as cable access or wireless access. Currently, PCs have a Latin American population penetration of 6.1% and this will increase to 11.1% by 2005.vi Low credit card penetration rates. The use of credit cards is not widespread in Latin America and credit card purchases are almost non-existent amongst traditional retail channels. Lower-income consumers have essentially no access to these cards and those that do have been discouraged from using them due to extended periods of high interest rates. Security and privacy concerns. The electronic medium does not initially create the trust characteristic of face-to-face transactions. Latin American consumers have an inherent mistrust of online transactions. They may not be afforded similar protections in the online world as they are in traditional transactions with regard to privacy, security, authentication, and consumer protection. CONFIDENTIAL INFORMATION - 10 -
    • Cross-border shipping and delivery issues. Latin America lacks the infrastructure to delivering products to consumers in a timely and inexpensive fashion. Also, custom, tariff, and tax barriers protecting local merchants add confusion and uncertainty for the consumer when making international e- commerce transactions. Many of these issues will be eliminated as the Internet infrastructure continues to grow. PC penetration rates as well as Internet access issues are currently being focused on and addressed. Current initiatives are in process for free Internet access to be prevalent in Latin America. Development will be driven by the rate structure of local telephone calls, the possibility to generate revenues and cost savings in excess of the access cost, the need to offer economic incentives to a budget-minded Latin consumer to join the Internet, and the drive to keep client ownership. e-Global Network’s solution will eliminate the other barriers to e-commerce such as aversion to credit cards, security and privacy concerns, and fulfillment problems. E-commerce can help overcome the comparative disadvantages created by long distances and geographic barriers, and make it possible to access other markets at substantially lower costs. While the most immediate gains are likely to be in business-to-business e-commerce, especially in banking and financial services, consumer online purchases will continue to be a massive driver of e-commerce in Latin America. To the extent that Latin America can adopt non-cash payment systems, along with security protocols to protect online transactions, the region will see growth in online purchasing. However, Latin American consumers know brand names, want to buy brand names, and tend to be very loyal to chosen brands. IDC estimates that of those that shop online, 74% buy outside their local country. CONFIDENTIAL INFORMATION - 11 -
    • Mexico Efforts by the government and major corporations within Mexico Mexico have helped build up the necessary infrastructure for Internet and e- commerce to be a dominant industry in the country. However, low 2000E 2003E Net Users 2.2M 7.6M credit card penetration remains one of the largest inhibitors of e- Consumer EC Rev $95M $703M commerce. Only 14% of the population have a credit card,vii and of 2003 % Home Internet Users Shopping Online* those, 90% are domestic cards that have no international purchasing power. Therefore, only 1.4% of the people can actually make a purchase from a foreign merchant website. 27 % 29 % Of the 2.2 million online users, 19% will make a purchase through the Internet, and by 2003, that number increases to approximately 73 % 29% of the 7.6 million users.viii The average Mexican online consumer spent $210 per year in 1999 and estimates show an Source: Jupiter Communications, 2000 increase to $470 per user by 2003.ix * Morgan Stanley Dean Witter, 2000 For more detailed information on the Mexican market, please refer to Section 12: Implementation to Mexico. Brazil The population of Latin America is predominantly centered in Brazil, with 170 million of the region’s 435 million people. It leads Brazil all Latin American countries in development of the domestic 2000E 2003E business-to-consumer market. Besides having the largest economy Net Users Consumer EC Rev 8.4M $255M 20.1M $1.89B and population, Brazil also has the most online users in Latin 2003 % Home Internet Users Shopping Online* America, 8.4 million, a number expected to grow to 20.1 million by 2003.x These users translate to consumer e-commerce revenues of $255 million in 2000 and $1.89 billion in 2003. The average online % consumer will spend $168 this year and $303 by 2003.xi 66 37 % The strongest asset in its online development has been Brazil’s % 34 competitive and now virtually free Internet access market. The free access trend is being led by the banking industry, which is building on the popularity of online banking. Five banks are currently are or Source: * Jupiter Communications, 20002000 Morgan Stanley Dean Witter, will be offering free Internet access: Banco Bradesco, Unibanco, Banco Opportunity, Banco do Itau, and Banco Bilbao Viscaya. Other ISP’s and start-up companies are beginning to offer free access as well. However, one of the main structural problems still remaining in Brazil is low credit card penetration. Credit card usage is restricted to only 18% of the Brazilian population.xii Despite efforts by the major credit card companies, analysts say smart cards and other debit-based solutions, rather than credit cards, will be the dominant payment mechanisms for Brazil. CONFIDENTIAL INFORMATION - 12 -
    • Argentina Argentina remains behind Brazil in terms of online penetration and Internet technology, but the stable political conditions, high Argentina consumption levels, and high overall education level of the 2000E 2003E Net Users 1.3M 3.0M population, positions Argentina to be a powerful online presence. Consumer EC Rev $65M $481M Argentina has 1.3 million online users that will generate $65 million 2003 % Home Internet Users Shopping Online* in e-commerce for 2000 and by 2003, there will be 3 million users with 26% of them making purchases, resulting in about $481 million 74 % in online revenues.xiii Argentines also have a great demand for international goods online because, as of a year ago, only 37 Argentine retailers sold online and most of them have small, limited 26 % 27 % selections on poorly done web-sties. Consumers are beginning to look abroad to purchase products, but below average fulfillment infrastructure and a high aversion to credit creates limits for them. Source: Jupiter Communications, 2000 * Morgan Stanley Dean Witter, 2000 Internet access fees for most online users are in the range of $10 per month.xiv However, free access is rapidly becoming the standard. Several companies, such as ad-supported ISP start-up Icero, have or will launch campaigns throughout Argentina. Researchers believe that by next year, a large percentage of online users will have free access. Argentina has the highest PC penetration rate for Latin America with 6.9% of the population, and an expected increase to 12.1% by 2003.xv Argentina also has a 24% credit card penetration rate, but individuals are still very reluctant to use credit cards, particularly through the Internet.xvi Chile Despite the highest per capita income in Latin America, Chile has much room for Internet growth. Jupiter Communications expects Chile Internet growth usage to increase from 800,000 users in 2000 with 2000E 2003E Net Users 800K 1.9M consumer e-commerce revenues of $2 million to about 1.9 million Consumer EC Rev $2M $148M Chileans in 2003 with spending totaling $148 million.xvii Online 2003 % Home Internet Users Shopping Online* consumers will average $62 spent this year online and Chileans are estimated to be spending $190 by 2003.xviii This exponential growth will mainly be spurred by greater competition and lower fees in the Internet access market, which currently represents the largest 61 39 47 % obstacle to online adoption in Chile. % % Chilean ISPs charge around $19 per month in addition to a metered call charge of 3 cents per minute. xix These high access rates are a direct result of the lack of competition in the ISP market in Chile, Source: * Jupiter Communications, 20002000 Morgan Stanley Dean Witter, with two companies, Entel and Terra Networks, represent 80 percent of the market. However, through initiatives by the government as well as the entrance of free access alternatives, the few major ISPs will be forced into making significant price reductions. Also, current PC penetration rates are at 6.2%, but will increase to 9.7% by 2003.xx CONFIDENTIAL INFORMATION - 13 -
    • SECTION 6 STRATEGIC ALLIANCES Strategic alliances provide rapid market reach as well as operational infrastructure within Latin America. The Company is focusing alliance discussions with the major entities operating in Mexico. Among these entities, we have received an overwhelmingly strong response to the need for a non-credit based payment solution. These alliances collectively provide e-Global Network, Inc. with reach across divergent channels to virtually every Internet user within Mexico. Market Reach Infrastructure Latin American Banks Telcos/ISPs Shipping Carriers e-Global Network, PC Manufacturers Card Manufacturers Inc. Portals and Shopping Commerce Technology Networks Vendors Card Distributors Latin American Banks The Company is aggressively negotiating alliances with the largest banks in Mexico. Alliances with major banks across Latin America will provide e-Global Network, Inc. with a(n):  Customer base for co-marketing and distributing the Global Card  Extensive branch network for accepting card member deposits  Established influence to help build consumer confidence We are presently in discussions with Citibank and Banco Bital as initial banks in Mexico to act as points of distribution and deposit in over 3,000 branch locations. Under the proposed terms Citibank and Banco Bital will issue co-branded cards to their existing customers as well as non- customers visiting a branch office. Specifically, Citibank will act as a marketing platform to their existing customers and has verbally agreed to distribute the co-branded Global Card to their entire customer base of over 6 million people. CONFIDENTIAL INFORMATION - 14 -
    • Both existing bank customers and non-customers can visit any branch location to sign-up for a Global Card account, deposit funds, or transfer funds from existing checking/savings accounts, if applicable. We are in discussions to expand the agreement to enable electronic funds transfer (EFT) from customers’ existing checking and/or savings accounts to their Global Card account. Banks Corporate Contact Citibank Juan Garay Director of Bankcard Services Banco Bital Ernesto Vella Berrondo Board of Directors Telcos and ISPs Alliances with national telecommunications providers and Internet Service Providers (ISPs) in target countries will afford e-Global Network access to their existing and potential customer base. The Company will leverage the existing customer base of these providers to acquire new card members. The Global Card will be co-marketed as part of these providers’ packaged subscription offerings. ISP and telecommunications customers represent a consumer market readily positioned to use the Global Card. We have entered into alliance discussions with the leading telecommunications providers and ISPs in Mexico, including Telefonos de Mexico (Telmex) and Prodigy. Discussions with Telmex have also included joint ventures. Telcos and ISPs Corporate Contact Telefonos de Mexico (Telmex) Hector Slim Seade Director Jaime Chico Pardo Director General Claudio Interdonato Vice President Web Technologies Prodigy Saul G. Lavalle M. Director of Operations Portals and Shopping Networks Alliances with popular Internet portals and online shopping networks represent a significant opportunity for e-Global Network, Inc. to promote the Global Card, by capitalizing on the high- traffic draw and brand recognition of these types of sites. We have entered into alliance discussions with a number of leading Internet portals and shopping networks in Mexico, including T1MSN (a joint venture between Microsoft and Telmex), Terra Networks (Infosel), and To2.com (the third largest portal in Mexico. To2.com has offered to provide significant human capital and hardware resources to assist with development and integration in Mexico. The Company has also recently initiated discussions with StarMedia. Since these entities derive significant revenue from online purchases made through their merchant network, they understand first-hand the problem of low credit card penetration and CONFIDENTIAL INFORMATION - 15 -
    • have expressed strong support for the Company’s solutions. Under the terms of discussion, these entities will:  Promote our system within their network of online users and merchants  Provide direct access to both current and future consumers  Leverage merchants within their network to offer the Global Card as a payment mechanism Portals and Shopping Networks Terra Networks (Infosel) J. Antonio Murillo A. Director of Commercial Interactive Publications To2.com C.P. Alonso Carral Cuevas Director General and CEO Jose Castello Director General Adjunto T1MSN Jose Manuel Cortes Rios Director of Technology Shipping Carriers e-Global Network, Inc. has entered into an alliance United Parcel Service (UPS) that includes co-marketing to online merchants, resources for merchant integration, and a substantial volume discount for shipments. In geographic areas where UPS does not provide sufficient reach, the Company will establish preferred relationships with carriers that service the region. Discussions will soon be initiated with Federal Express, DHL, and Airborne Express. Alliances with shipping carriers will enable e-Global Network to provide benefits to affiliate merchants by providing value-added services to those merchants. The effect will:  Provide merchants with an increased volume of e-commerce shipments to international destinations  Significantly decrease the rate of return and delay for customer packages shipped internationally For shipping carriers, an alliance represents a prime opportunity to increase the volume of international e-commerce-related shipments. Shipping carriers also benefit from the elimination or reduction of time taken to clear packages at the points-of-entry (at present, 10 to 15 minutes per package). Card Distributors e-Global Network is targeting a number of major players in Mexico who can be leveraged for card distribution. The Company has binding letters of intent from two such entities: FONACOT and Universitarios.net. The Company is finalizing a deal with FONACOT, a credit association for approximately 7 million Mexican Federal Workers. e-Global Network will provide these members with a debit- based payment system for both online and point of sale in association with individual credit lines CONFIDENTIAL INFORMATION - 16 -
    • granted to the members by FONACOT. FONACOT expects to issue well over $300 MM in credit to their members in 2000. Through the agreement, FONACOT will pre-fund a co-branded Global Card in the amount of the credit line provided to each member. e-Global Network will manage all member purchase transactions, with the credit relationship being managed directly by FONACOT. e-Global Network, Inc. has also signed a strategic partnership agreement with Universitarios.net, a university-focused Internet portal for over a thousand colleges throughout all of Latin America. After only launching a few months ago, Universitarios.net has a growing member base of over 90,000 active users. PC Manufacturers Alliances with major PC manufacturers will provide a channel for distributing the Global Card to target markets and increase consumer brand awareness for the Global Card. Consumers purchasing new computers from PC manufacturers may receive a pre-valued promotional Global Card that, once activated, can be used to make a purchase from international online retailers. By packaging the Global Card as part of their products, PC manufacturers would distinguish themselves from non-participating PC manufacturers. Commerce Technology Vendors e-Global Network, Inc. intends to interface with a comprehensive list of e-commerce technology vendors which support widely accepted Internet standards. Commerce technology vendors are those that provide electronic commerce solutions for online merchants. Functionality often includes cataloging, shopping carts, and payment processing. Target vendors are:  ATG  ICat  Open Market The  Blue Martini  InterWorld  Oracle Company  BroadVision  Microsoft  Vignette intends to  IBM  Netscape form alliances with these solution providers to develop packaged application program interfaces (APIs) that isolate integration issues to defined points. An online merchant’s willingness to implement alternative payment mechanisms may depend on the ease and flexibility of integrating e-Global Network’s payment and shipping solutions with their existing infrastructure. With a set of packaged APIs already in place, online merchants can rapidly integrate with their existing e- commerce systems and infrastructures. CONFIDENTIAL INFORMATION - 17 -
    • SECTION 7 AFFILIATE MERCHANT ALLIANCES Establishing Merchant Alliances A comprehensive network of well-established online merchants is critical in building brand awareness and consumer market acceptance. This network provides card members with a broad selection of cross-border shopping alternatives with which to make purchases. Affiliate merchants seeking to establish or increase global customer reach will have the ability to aggressively market to these virtually untapped consumer market segments. Though many large traditional and pure-play retailers do enable international customers to purchase goods and services, their capability is severely limited by: (1) Lack of credit card adoption by international consumers (2) Aversion to credit (3) Compromised shopping experience (4) Currency conversion constraints (5) Cross-border shipping and delivery difficulties, including complex customs and duty calculations e-Global Network, Inc. captures the interest and participation of these online merchants by providing a comprehensive solution to such limitations, enabling online merchants to accept and fulfill international orders. In addition, online merchants can market to a much broader consumer population at a decreased customer acquisition cost. Through co-marketing campaigns with the Global Card, affiliate merchants will have greater marketing exposure to this new consumer base. The establishment of a broad cross-section of affiliate merchants is important in achieving the number of card members projected in the financial forecast. As the desired mass of affiliate merchants and card members is achieved, a leveraging effect is generated, significantly increasing the card member base. Building an Affiliate Merchant Base e-Global Network, Inc. is focused on building an initial base of U.S. and Latin America affiliate merchants. The Company will target U.S. online merchants with significant brand recognition and leverage our alliances with key Latin America portals and shopping networks in order to gain access to their merchant network. Through its relationships with major Latin American portals and shopping networks, the Company has immediate access to a number of key merchants, including:  Amazon.com  Paragon.com.mx  Decompras.com  Submarino.com  fiera.com  Ticketmaster.com.mx  flora.com.mx  T1MSN Shopping Network  Sanborns.com.mx  Terra Network’s Shopping Network CONFIDENTIAL INFORMATION - 18 -
    • These merchants will lead the deployment of the Global Card in Mexico. The aggregation of products and services the network of U.S. and Mexican affiliate merchants will provide to card members is a broad selection of competitively priced goods. Consumers in Mexico (as well as in Latin America) are faced with many compromises in their normal shopping experience, including: (i) A limited selection of goods and services compared to the U.S. (ii) Inflated prices (iii) Time consuming purchase processes (iv) An overall lack of established brands Affiliate Merchant Integration Once an affiliate merchant relationship has been established and agreed upon by a Merchant Service Agreement, the integration process is initiated. The process of integrating with a merchant e-commerce site is twofold. First, in order to access necessary components of the payment and shipping systems, technical modifications agreed to by the merchant will be made to the existing merchant e-commerce site. Second, if necessary, the business and fulfillment processes of the merchant will be modified to allow for the international shipping of goods through e-Global Network’s preferred carrier. Systems Integration. The Company will provide a corporate engineering team to work closely with merchant engineers during the integration process. A full integration with the payment and shipping solutions includes developing interfaces to the International Internet Payment System™ and the Automated Tariff System™. To reduce the complexity and time involved in integration, the majority of these modifications will be made through the use of pre-developed API software. In all circumstances, the e-Global Network engineers will minimize modifications to the existing systems. Fulfillment Process Tuning. When necessary, e-Global Network, Inc. will also assist the merchant in streamlining existing business processes for fulfillment. It is expected that most affiliate merchants will not have the appropriate processes in place to accept international orders, determine customs and tariffs, or handle the delivery of goods cross-border. e-Global Network’s preferred shipping carrier, UPS, will facilitate the entire process. An active role in helping merchants define processes will ensure the reliable delivery of products to consumers. Proactive Merchant Relationships It is e-Global Network’s belief that every business must be receptive to its customers’ needs. The Company shall accomplish this by continuously broadening its range of offerings through diligent and timely response to customer comments, concerns, and problems. Effective service to our members can only be achieved through strong relationships with affiliate merchants. To facilitate direct contacts with affiliate merchants, it will be necessary to create strong relationships with site developers as well as the logistics and fulfillment personnel of the merchant. CONFIDENTIAL INFORMATION - 19 -
    • SECTION 8 MARKETING STRATEGY AND IMPLEMENTATION e-Global Network, Inc. will launch to Mexico as the initial target country. The decision metrics to launch in Mexico took into account logistics, cultural purchasing patterns, geographical location, commercial infrastructure, demand for branded goods, target market size as a percent of total market, and corporate country knowledge. Although it is recognized that other targeted countries within Latin America have different demographics and cultures, the basic in-country marketing concepts share common, consistent, and transportable concepts. Adjustments will be made where appropriate, to account for specific cultural, language, legal, and trade biases of each target market. The Company is creating its own marketing department, which will initially work closely with an established advertising agency and public relations firm to establish brand awareness. This is necessary at the outset in order to establish a strong presence in target countries through aggressive marketing and advertising campaigns. After the initial marketing work has been completed, a substantial portion of the marketing and advertising functions will be brought in- house on an on-going basis, as this will be more cost effective. All forms of media advertising and promotional product literature will share a common “membership” within each targeted region. For each country there are specific variations that reflect the targeted country. The marketing effort will be focused on:  Branding e-Global Network products and services  Aggressive advertising campaigns  Marketing through distribution channels  Supporting card members through member services  Developing and promoting the e-Global Network consumer website  Creating strong merchant alliances Branding the Product and Service Branding efforts are designed to develop a recognizable card design, trademark, logo, and slogan for e-Global Network products and services. In addition, instructional and promotional material will be created in the form of an introductory package kit. The branding effort and the introductory kit will be developed to promote a club membership. Introductory kit contents will include:  A welcome message  An introduction of e-Global Network products and services  A description of benefits to consumers  A list of affiliate merchants  A promotional card  Instructions on card activation, use and replenishment  Information on the international shipping process  Information on account management CONFIDENTIAL INFORMATION - 20 -
    •  Information on customer service  Statement of Terms and Conditions of Use  A small token gift Advertising to Consumers An aggressive and highly focused media campaign will be initiated within each target country to inform consumers of e-Global Network’s products and services. The campaign will be aimed at enticing consumers to participate in electronic commerce through the use of the Global Card. The goals for this campaign will be achieved through the utilization of traditional interactive and mass media outlets and co-marketing efforts. The following section describes the advertising efforts to be undertaken in the initial target country – Mexico. Mass Media (Mexico Example)  Television. TVAzteca 600 spots/month (20 seconds) prime time  Radio. MVS Radio, DobleX, RadioFormula: 450 spots/month (60 seconds)  Newsprint and Magazines. El Mexicano, Informador, El Reforma, El Norte, Ocho Columnas: ½ page ads Mondays and Thursdays Major Markets: Mexico City, Monterrey, Guadalajara, and Tijuana Co-Marketing  Affiliated Banks – Provide in-house promotional literature to bank branches with possible distribution to account holders  PC Manufacturers – Distribute introductory kit with new computer purchases  ISPs and Telcos – Package introductory card kit with new subscriptions and introduce product to existing subscribers  Shipping Carriers – Package promotional literature with package deliveries  Portals and Shopping Networks – Cross-link advertising from portal sites  Affiliate Merchant Sites – Advertise and promote product Customer Retention The Company will establish loyalty and actively promote Global Card distribution and member usage. This will be accomplished through continuing communications that include:  Incentive Programs – a reward/points program for accumulated purchase transactions  E-mail Updates – periodic e-mail notification of incentive point balances, new merchant promotions, and Global Card information CONFIDENTIAL INFORMATION - 21 -
    •  Online Newsletter – periodic update utilizing a web-based newsletter to inform consumers of merchant specials, promotions and new card member services  New Merchant Updates – periodic update on new merchants participating in the Affiliate Merchant Network  Member rating capability for participating merchants Marketing through Distribution Channels Distribution channels for the Global Card represent a direct means for accessing consumers and acquiring new card members. Promotional material in the form of banners, placards, posters, and promotional gifts will be provided to distributors to aid in marketing of the Global Card. The following channels of distribution will be developed:  Banks  PC Manufacturers  ISPs and Telcos  Consumer website Member Services Member services will provide friendly, reliable, and responsive customer support to the card member base. A critical factor being overlooked by numerous merchants in the overall success of Internet commerce is customer service. A recent survey conducted by Jupiter Communications, showed that of 125 consumer sites contacted via e-mail with simple report requests, 46% took five or more days to respond, never responded, or did not post an email address on their site. e-Global Network, Inc. will create a Member Services group accountable and responsible for customer service. This will be done in association with affiliate merchants, who will both fulfill and ship goods directly to consumers. Members will feel comfortable with both the affiliate merchant and the Global Card as the purchasing process can be initiated from either the merchant’s website or the e-Global Network consumer website. In the context of a club membership environment, members will be able to communicate with e-Global Network, Inc. via e-mail or a toll-free number to bring problems to the Company’s prompt attention. All members shall be notified by return email that their issues either have been resolved or are being addressed. The Member Services group will be responsible for analyzing all correspondence received and will provide both company management and merchants with member feedback. Where applicable, action will be taken directly with the merchants concerned to correct service problems and if necessary change procedures in situations that are repetitive or reflect a trend. CONFIDENTIAL INFORMATION - 22 -
    • The Consumer Website The e-Global Network consumer website will serve as the primary vehicle for disseminating company information and for accessing the Affiliate Merchant Network. The site will promote a membership feel and instill loyalty to the brand through constant updates and refreshing of content. The website will be user-friendly and shall be presented in English as well as the native language of the target country. The website will feature a(n):  Description of the Company and its products and services  Downloadable product literature  Card sample  Worldwide shopping network of merchants  Online newsletter featuring merchant promotions and specials  Directory of participating banks and re-sellers  Merchant ratings by card members  Online Account Manager for card users  Description of incentive programs  Advertising information  Merchant information for sign-up and registration  Product and customer support information  “Catchy” cartoons to create stickiness and fortify brand loyalty  Free e-mail service CONFIDENTIAL INFORMATION - 23 -
    • SECTION 9 COMPETITIVE ADVANTAGES Competitive Landscape e-Global Network, Inc. sees current international payment and fulfillment solutions as flawed. Payment solutions do not address the fundamental issue of consumer access to credit in Latin America. Emerging fulfillment solutions are restrictive and do not integrate with the major international shipping carriers. Payment Solutions Debit and Smart Cards. Debit and smart cards are being piloted across Latin America and are expected to be the primary competitors in the area of payment solutions. Competing debit and smart card offerings include: Debit cards VISA Debit MasterCard Maestro MasterCard Debit (only available at U.S. financial institutions) Smart cards MasterCard Smart Card VISA Electron AMEX Blue Local smart card initiatives such as Banco Inbursa’s Proton in Mexico Access to debit and smart cards work on essentially the same model as credit, severely limiting the qualifying consumer base. These cards require an existing bank account at participating financial institutions as purchases and ATM withdrawals are deducted from consumers’ checking or current accounts. Their use is currently limited to the purchase of goods and services at point of sale terminals of participating merchants. Debit cards lack international transaction capability. Limiting the near-term prospects of smart cards, as a viable payment solution, is the slow deployment of card reader infrastructure required to support the vast network of smart card users, issuers, and merchants. Stored Value Cards. Although stored value cards are cash-based and do not rely on credit, they are intended for small purchases. These cards have been rolled out in a number of Latin American countries. The primary stored value card offerings include: Stored value cards Mondex Electronic Cash VISA Cash VISA Travel Money CONFIDENTIAL INFORMATION - 24 -
    • VISA Cash and Mondex Electronic Cash are point of sale mechanisms for micro- purchases such as buying a cup of coffee or movie tickets, using pay phones, or taking public transportation. Since their primary use is for micro-purchases, VISA Cash and Mondex Electronic Cash are not intended to carry large balances. Purchases are deducted from the balance of the card and can be reloaded at ATMs or at local bank terminals. Both Mondex Electronic Cash and VISA Cash have embedded smart card technologies, requiring card readers for their use, and have been designed and marketed for off-line micro-payments. VISA Travel Money is an electronic traveler’s check whose use is limited to the withdrawal of cash from ATMs around the world. The card is prepaid and its funds are not associated with a bank account. It is currently being offered on a limited basis at banks in Mexico and Brazil. Electronic Wallets. Many players in Latin America are offering electronic wallets, in conjunction with financial institutions. For example, Brazil’s Banco Bradesco is marketing an electronic wallet to its customers that can be used at pre-authorized merchant sites. The problems with electronic wallets are that they are credit-based and are complex to use from a consumer’s standpoint. Though wallets have been around for some time, they have yet to achieve significant adoption. The Company’s overall strategy is to establish a loyal member base with existing technology and migrate to smart card technology if and when the card reader infrastructure is put in place. VISA and MasterCard (Mondex) are subject to slow, bureaucratic initiatives associated with consortia decision making. e-Global Network, Inc. is targeting a consumer base that is not limited by the restrictions of credit, creating widespread appeal. The Company also sees the implementation of a strong club membership in line with the cultural biases of Latin American consumers as a differentiating factor in enticing and retaining card members. Fulfillment Solutions A number of companies are addressing fulfillment deficiencies in Latin America. SkyBox and From2.com, in particular, offer similar services that make it practical for Latin American consumers to buy U.S. goods online. They do not address the issue of shipping goods cross- border within Latin America. SkyBox focuses on helping Latin Americans receive U.S. goods shipped to them using a U.S. based address that acts as an intermediate point. Consumers using SkyBox’s service are provided with a Miami-based address to which they ship goods purchased from U.S. online merchants. SkyBox processes and consolidates packages into monthly shipments to the local SkyBox office in the consumer’s local country. Local delivery is then made to the consumer’s home address. CONFIDENTIAL INFORMATION - 25 -
    • SkyBox is essentially a band-aid solution resulting in longer shipment times, double charging of shipping costs, and complications in merchandise returns.  The use of an intermediate point results in longer delivery times.  Consumers are double charged for shipment of goods and also have to pay a yearly enrollment fee to maintain their Miami address. Though they handle customs clearance, SkyBox requires a credit card number up front and charges import duties and taxes as they are incurred, along with a 10% surcharge.  Merchandise returns are complicated, since there is no system in place to reimburse shipping costs for returned goods, if necessary. From2.com provides an all-inclusive solution for logistics, handling package pickup, customs clearance, and delivery to the consumer’s doorstep. Like e-Global Network’s tariff and shipping solution, From2.com provides a real-time calculator of import duties and taxes at the time of purchase. Despite their service, From2.com has drawbacks.  From2.com does not work with the major shipping carriers, making air freight delivery reliant on operators such as AmeriJet.  From2.com currently has a weak merchant base.  From2.com derives its revenue from shipping surcharges levied on the consumer, while e-Global Network sees its tariff and shipping solution as a value-added service to consumers, and derives the vast majority of its revenue from the payment side of the business. Spanning Payment and Fulfillment The “Click and Mortar” Solution. Some large retail chains in Latin America are trying to circumvent payment and fulfillment problems by offering payment and pickup at physical stores. Large retailers such as Elektra in Mexico and Globex in Brazil are implementing this “click and mortar” strategy. Main problems with this strategy are that it doesn’t provide door-to-door delivery service, has a limited service radius, and doesn’t support cross-border commerce. CONFIDENTIAL INFORMATION - 26 -
    • Competitive Advantages e-Global Network’s payment and shipping solutions achieve numerous compound advantages over competitors. Non-Credit Based The primary competitive advantage is that the Global Card is a non-credit-based payment solution. The Global Card is a cash-based debit card that does not impose eligibility requirements to the consumer base. By being a non-restrictive solution, it offers the highest degree of accessibility to the widest segment of the international consumer market. These consumers include individuals that choose not to use, cannot obtain, or are averse to using credit cards, which represents the vast majority of Latin American consumers. Merchants also see an advantage over credit-based solutions in that they bear no liability of credit card fraud. Consumer Confidence through Affiliations Latin American consumers are more inclined to do business with trusted companies. By having affiliations with major local banks (i.e. Citibank and Banco Bital), large domestic and international merchants (i.e. Submarino and Decompras), and Internet portals (i.e. T1MSN and To2.com), e-Global Network, Inc. will gain significant trust, loyalty, and overall brand recognition amongst Latin American consumers. These relationships with the largest financial and Internet players will help the Company to leverage a dominant position within the payment solution marketplace as well as making strong barriers to entry for other future start-up companies in taking market share from e-Global Network, Inc. Total Cross-Border Cost Calculation Unlike other payment solutions, e-Global Network seamlessly computes the total product cost (including duties, customs, and taxes associated with international transactions) and also provides real-time currency conversion. By the consumer paying for all costs at point of purchase, the Company is able to prepare documentation involved with cross-border shipping as well as pay all the necessary charges on behalf of the consumer. Addressing these issues in advance allows the product to be expedited through the customs broker and delivered directly to the consumer’s front door. Simplified and Immediate Solution The solution addresses the immediate need for the ability of consumers to conduct e- commerce and to do so in a simple and convenient way. With a Global Card, members will only need their account number and PIN in order to make an online purchase with any CONFIDENTIAL INFORMATION - 27 -
    • affiliate merchants. Also, compared to smart cards that require a reader for e-commerce transactions, the Global Card is available for use immediately after it is activated. Turn-Key Payment & Shipping Solution In spite of the numerous advantages that the Global Card achieves over its payment competitors, the critical determinant that differentiates e-Global Network, Inc. from others is the integration of a solid shipping solution that closes the transaction loop between the consumer and merchant. While major competitors focus exclusively on payment solutions, the Company recognizes that a viable solution to the constraints of online commerce in Latin America must go beyond payments alone to fully enable cross-border business-to-consumer e-commerce. In this regard, the Company has designed an e-commerce solution that includes and expedites the cross-border shipment and delivery of goods. When taken together, these compounding factors create a formidable argument for attracting both consumer and merchant participation. CONFIDENTIAL INFORMATION - 28 -
    • SECTION 10 MANAGEMENT AND CORPORATE STRUCTURE Corporate Structure The Company has been established as a Bermuda corporation with initial controlled foreign corporations (CFCs) established in the United States and Latin America. The initial CFCs will be located in the Silicon Valley and in Mexico City. This corporate structure was devised to minimize the Company’s tax liability. The Company has been working with Deloitte & Touche Corporate Tax Services to setup and implement this corporate structure. The Bermuda headquarters will be minimally staffed and will primarily manage foreign currency exchange. The U.S. subsidiary is mainly focused on core technology and systems development, strategic planning, financial planning, and will oversee all operations of the Latin American subsidiaries, including Mexico City. The Mexico subsidiary will be responsible for implementation, including all integration, marketing, and sales activities, and will also support U.S. systems development team. CONFIDENTIAL INFORMATION - 29 -
    • Personnel Growth Month 6 Month 12 Month 18 Month 24 U.S. SUBSIDIARY BUSINESS DEVELOPMENT VP Business Development 1 1 1 1 Director of Merchant Alliances 1 1 1 1 Merchant Alliances 3 4 4 4 TOTAL EMPLOYEES 5 6 6 6 ENGINEERING CTO 1 1 1 1 Director of Engineering 1 1 1 1 Software Engineers 3 3 3 3 Network Engineers - - - - Systems Engineers 1 1 1 1 IT Manager 1 1 1 1 Director of Integration 1 1 1 1 Merchant Integrators 3 3 3 3 TOTAL EMPLOYEES 11 11 11 11 GENERAL AND ADMINISTRATIVE CEO 1 1 1 1 General Counsel 1 1 1 1 CFO 1 1 1 1 Controller 1 1 1 1 Human Resources - 1 1 1 Office Support 1 1 1 1 Administrative 2 2 2 2 TOTAL EMPLOYEES 7 8 8 8 TOTAL 23 25 25 25 LATIN AMERICA SUBSIDIARY ENGINEERING Director of Infrastructure 1 1 1 1 IT Manager 1 1 1 1 Software Engineer 1 1 1 1 Network Engineer 3 3 3 3 Systems Engineer 3 3 3 3 Merchant Integrators 6 6 8 8 Bank Integrators 6 6 6 6 User Interface 1 1 1 1 Creative Designer 1 1 1 1 Web Developers 4 4 4 4 TOTAL EMPLOYEES 27 27 29 29 MARKETING AND SALES VP Marketing and Sales 1 1 1 1 Creative Director 1 1 2 2 Marketing Analysts 1 1 1 1 Manager Card Distribution 1 1 2 2 Card Sales Reps 4 8 8 8 TOTAL EMPLOYEES 8 12 14 14 MEMBER SERVICES Director of Member Services 1 1 1 1 Member Service Reps 12 16 24 24 TOTAL EMPLOYEES 13 17 21 25 GENERAL AND ADMINISTRATIVE Director General 1 1 1 1 Director Strategic Alliances 1 1 1 1 Operations Manager 1 1 1 1 Merchant Alliances Manager - 1 2 2 Customs Broker 1 2 2 2 Assistant/Bookkeeper - 1 1 1 TOTAL EMPLOYEES 4 7 8 8 TOTAL 52 63 72 76 BERMUDA HEADQUARTERS CURRENCY EXCHANGE Director of Currency Exchange 1 1 1 1 Currency Traders 2 3 3 3 Currency Research Analysts 0 1 2 2 TOTAL EMPLOYEES 3 5 6 6 GENERAL AND ADMINISTRATIVE Office Manager 1 1 1 1 TOTAL 4 6 7 7 TOTAL EMPLOYEES 79 94 104 108 CONFIDENTIAL INFORMATION - 30 -
    • Key Individuals Bradley Ingram Mr. Ingram has a strong background in the structuring of asset-backed securities and development of associated asset acquisition conduits. For three years, Mr. Ingram was the Senior Vice President of Arthur J. Gallagher & Co.’s Financial Services Division. Here he co-managed the division’s efforts, with an emphasis on the development and sale of specialized credit enhancement and financial vehicles to assist in structuring various types of financial transactions. Prior to Gallagher, Mr. Ingram was a Principal and Managing Director, of Metro/Financial, Inc., a boutique investment banking and consulting firm which, specialized in structuring asset-backed security transactions. Among his duties at Metro/ Financial, Inc., Mr. Ingram directed the development of Bank America’s auto loan conduit program, implemented nationally, throughout the Bank’s Lender Services Group. Upon completing the conduits development within the Bank, Mr. Ingram assisted the Bank in its negotiations with the capital markets, providing assistance with the negotiations, documentation and integration of the conduit with Greenwich Capital Markets, Inc. a subsidiary of Long Term Credit Bank of Japan. Prior to joining Metro/Financial, Mr. Ingram joined Quintus Quatros, Inc., a privately owned financial advisory and trading firm which, in addition to managing it’s own proprietary accounts, specialized in providing clients with financial risk management advice through sophisticated spread, derivative and arbitrage trading techniques. Mr. Ingram held various research and trading positions, including Director of Research, Manager Fixed Income and Foreign Currency Trading. Yohannes Hailu Mr. Hailu has held consultant, senior consultant, and manager positions at Deloitte and Touche. Mr. Hailu contributed to the formation and development of the Deloitte and Touche e-Business Technologies and Security (ETS) consulting practice in San Francisco. He has successfully managed e-business engagements for the following clients: E*Trade, AEFA, Microsoft, Boeing, 3Com, Merrill Lynch, Bidland.com, Sempra Energy, HealthMagicNet.com, VitaminShoppe.com, WebVan Group, and Netcentives. Mr. Hailu was Chief Technology Architect in the development of LegalWeb – a company being incubated by the Deloitte and Touche Venture Board. He has a B.S. degree in Engineering from the University of California at Berkeley. CONFIDENTIAL INFORMATION - 31 -
    • Orlando Moreno Mr. Moreno is a certified Sr. Project Manager by PMI and AMA with over 10 years of working experience as a consultant for several Internet Center of Excellence, he specialized in the formulation of e-commerce strategies and the development of web- enabled business solutions. His experience in electronic commerce stems from leading and developing large-scale Internet projects for clients including Blue Martini Software, Sun Microsystems, AT&T, and Tosco Oil. Mr. Moreno also played a lead role in incubating several Consulting financed start-up. Mr. Moreno holds a B.S. in Electrical Engineering from the University of the Pacific in Stockton, Ca. Jerry Ricario Mr. Ricario brings over 12 years of experience in conceptualizing and developing advanced technologies. From 1989-1996, as a member of the Northrop Grumman Corp. Advanced Projects group, he held key Engineering, and Project leadership positions that resulted in the highly successful development and operational deployment of a number of critical defense programs. From 1996-1997, as a Project Engineer for Intelligent Systems Technology, Inc., he played a major role in developing Internet-based architectures for collaborative enterprise process design and re-engineering applications. Mr. Ricario will provide significant technical leadership in the areas of systems engineering, development, integration and test as well as in project planning, management and risk assessment. Mr. Ricario graduated in 1989 with a degree in Cognitive Science from the University of California, San Diego. CONFIDENTIAL INFORMATION - 32 -
    • SECTION 11 IMPLEMENTATION TO MEXICO Demographics and Infrastructure Development Mexico is quickly becoming fully integrated into the world economy and providing tremendous opportunities for U.S. merchants to capitalize on this emerging market. With $82 billion in U.S. exports in 1998, Mexico is the fastest growing and third largest export market. Mexico Demographics Besides being a huge market, it is also young. 50% of the population is under twenty-five years old. This young generation will be the first to adopt the Internet and its e-commerce capabilities. Combining these demographics with the fact that Mexican consumers recognize U.S. brand names and associate them with quality and value, it is clear that Mexico will be a vitally important segment for U.S. merchants in the very near future. The largest and/or fastest growing consumer industries in Mexico include:  Personal computers  Electronics (i.e. photo and video cameras, portable disc players, stereos, and VCRs)  Linens and apparel  Footwear  Home appliances and tools  Cosmetics and other beauty products  Automotive parts and accessories Improvements in Infrastructure The Mexican government has followed a largely successful strategy to recover from the 1995 Peso crisis and to build a sound economic foundation from which sustained growth can be expected to take place. Mexico is constantly improving its infrastructure through road, railroad, telecommunication, and Internet capability development. The economic and infrastructure improvements provide the necessary platform for conducting business in Mexico through both traditional and Internet methods of commerce. Mexico is well positioned to support large-scale development of an online retailing industry. Mexico’s proximity to the U.S. should provide an added motivation for consumers to access online information, goods, and services that are not available locally. Mexico is supporting and promoting Internet usage in several ways. First, Internet Service Providers have vastly reduced costs for Internet access and are even discussing the possibility of providing it free. Second, telecommunication investments in upgrading the current network and supporting increased traffic in local loops will improve the online experience for Mexican consumers. Telecommunication companies are building Internet Protocol networks for Internet traffic in CONFIDENTIAL INFORMATION - 33 -
    • highly populated regions while new technology offerings such as cable modem and DSL are becoming more widely available. One issue facing retailers in the Mexican market is the lack of integrated, secure payment processes. The retailer is required to bear all the risk of a fraudulent transaction which, as reported by the Internet Fraud Prevention Advisory Council, ranges from 2% to 40% of all sales. e-Global Network’s non-credit based, secure payment transaction eliminates this critical problem. The Mexican government is also limiting the restrictive trade barriers by decreasing tariffs through the NAFTA agreement. In fact, about 60% of U.S. goods now enter Mexico duty- free. Delivery infrastructure is improving considerably in Mexico. Local couriers, such as Estafeta, have already implemented a sophisticated logistics platform and offer online tracking of shipments to customers. Some U.S. courier companies also offer local service in Mexico at very competitive prices, such as UPS, e-Global Network’s worldwide shipping partner. Product Price Comparison U.S. consumer products are in extreme demand in Mexico and cost anywhere from 30% to 300% more when purchased locally. Significant cost savings for Mexican consumers are realized by purchasing goods from U.S. online retailers, even including all tariff, taxes, and shipping costs. These price differences extend across a broad range of highly branded products. In addition, U.S. online retailers can offer to Mexican consumers an increased product selection and availability. The comparison chart below illustrates the significant price difference in purchasing a broad range of products online from U.S. merchants versus traditional retail outlets in Mexico. Product Mexico Cost* U.S. Cost** Price Difference (including Shipping & Tariffs) Levi’s 501 Jeans $115 $98 ($17) Nike Cross Country Shoes $170 $159 ($11) Canon Snappy QT Camera $193 $122 ($71) Sony Camcorder $706 $575 ($131) Compaq Presario Laptop $1,811 $1,635 ($176) * Mexico Cost is the cost if products were purchased from a major shopping mall in Mexico City. ** U.S. Cost is the cost of purchasing products from major online retailers in the U.S. and is calculated to include all customs duties, taxes, and shipping charges. Approach to Marketing The Mexican market employs many of the same sales, distribution, and marketing techniques used in the United States. There is a wide range of broadcast and print media available. Almost 100% of households in Mexico own a radio and 85% have televisions. However, CONFIDENTIAL INFORMATION - 34 -
    • successful ad campaigns in Mexico are generally described as having a local touch, which may include both linguistic and cultural considerations. During the branding campaign, e- Global Network, Inc. intends to hire a global advertising agency with local contacts that can address these issues. e-Global Network’s marketing campaign will be on a concentrated scale throughout Mexico encompassing the most effective channels in Mexico. Implementation Plan Over the past six months, the Company has completed its development phase, with the completion of the system technology, and subsequent filing of related patents. Beyond these milestones, the Company has started the implementation phase of the business model. The implementation phase includes the development of technology, corporate infrastructure, alliances, and marketing required in launching and executing e-Global Network’s solution into Mexico. The steps to be taken in the implementation phase are described below. Business Development The Business Development team will consist of six personnel who will be responsible for securing merchant and strategic alliances. The Company expects to sign Affiliate Merchant Agreements with 15 to 20 U.S. and Latin American online merchants during the implementation phase. The Company is leveraging its relationships with the key portals and shopping networks in Latin America to gain access to their network of merchants. The Company has entered into a co-marketing agreement with UPS that includes the development of a joint sales and implementation plan, which has already been developed. The alliance with UPS will assist e-Global Network, Inc. by providing credibility and considerable reach in securing a strong base of Affiliate Merchants. The thrust of strategic alliances will be focused on in-country banking relationships, ISPs, and Telcos. Three major Mexican banks are being targeted: Citibank, Bancomer, and Banco Bital. Commercial Master Trust Accounts will be opened with each of these banks, allowing members to deposit funds in the card accounts utilizing the banks’ branch networks. In addition, there are a number of international banks with branch networks in Mexico that will also be targeted: Inverlat, Banco Bilbao Vizcaya, and Santader. Internet Service Providers and Telcos will also be targeted for co-marketing agreements. For strategic alliances in Mexico, Business Development will receive local support from the Latin American subsidiary’s senior management, including the Director General and Director of Strategic Alliances, who will be based in Mexico City. Specifics of current alliance discussions and targeted alliances can be referenced in Section 6: Strategic Alliances and Section 7: Affiliate Merchant Alliances. Technology Systems Development. Implementing the Company’s technology and developing a scaleable production version of the IIPS and ATS for launch into Mexico will be accomplished by an CONFIDENTIAL INFORMATION - 35 -
    • engineering team spread between the Company’s U.S. and Mexico City offices. The U.S.- based team of 6 software and systems engineers will be responsible for the development of core system components. Included in this team are the CTO and Director of Engineering. A staff of 7 network and systems engineers, as well as a Director of Infrastructure will perform network infrastructure development and maintenance. They will also play a crucial role in developing, integrating, and deploying all system components. The U.S.-based senior engineering management will oversee all development and network infrastructure work in Mexico. With engineering resources in place, the Company will complete the implementation of the production network infrastructure built within a primary data center facility. This will require the purchase and acquisition of hardware components (Sun Microsystems enterprise- level servers, Cisco routers, and load balancers) and the contracting of global network services (UUNet and AT&T). Once the infrastructure components are integrated, it will take approximately two weeks for the Company to implement, test, and optimize the primary data center capability. A backup data center will be established by outsourcing to service co- location service providers situated in different geographical locations. The primary data center will be the corporate communication hub for LAN, WAN data, voice, and video services. The Company is currently in discussions with To2.com to provide significant human capital and hardware resources to assist with development and integration in Mexico. Affiliate Merchant Integration. The company will aggressively pursue integrating e-Global Network’s Affiliate Merchant Network with a staff of 10 Merchant Integrators. Four integrators will be U.S.-based and six will be based in Mexico City. For each merchant participating in the Affiliate Merchant Network the Company will assign a Merchant Account Manager and at least one Merchant Integration specialist to assist their integration with e-Global Network. For the merchant, the integration process involves incorporating the e-Global Network payment mechanism, harmonizing the merchant database with customs tariffs, and modifying existing fulfillment processes. The complexity of a merchant integration will depend on the size and variety of the merchant product database. Bank Integration. Integrating with Mexican banking institutions is important in the deployment of e-Global Network’s debit-based payment mechanism. Six bank integrators working out of the Mexico City office will be responsible for the integration with all Mexican banks. The banking integration process involves integrating the bank with e-Global Network’s transaction processing server. The Company will work closely with banks to establish branch locations as points of deposit and fund transfer for e-Global Network accounts. This will require the formal establishment of procedures and processes for activating, maintaining, and replenishing accounts. Consumer Website Development. The development of the e-Global Network consumer website including both its look and feel as well as its required functionalities will be the responsibility of a six-member web development team based in Mexico City. This team will include a user interface specialist, creative designer, and web developers. CONFIDENTIAL INFORMATION - 36 -
    • Card Manufacturing and Distribution To launch the product and system into Mexico, the Company will manufacture and distribute plastic cards that contain an account number and activation PIN code for the card account. Consumers will use this card to activate an e-Global Network account at an affiliated Mexico bank location. More importantly, the card and its associated account number will be used to make purchases on merchant sites that are part of the e-Global Network Affiliate Merchant Network. The plastic card will be manufactured in accordance with international standards for card form and identification (ISO 7812). In addition, the Company will obtain an Issuer Identification Number (IIN) to uniquely identify its card and membership from other card entities in existence. A team of five Card Sales Representatives will be responsible for distributing the Global Card through various partners. Marketing and Sales Brand development, traditional, and interactive marketing will be handled by the four members of the marketing and sales team based in Mexico City. Successful advertising campaigns are generally described as having a local touch, which may include both linguistic and cultural considerations. A branding campaign will be initiated by Landor or Interbrand and fully transitioned to the marketing and sales team by Month 3. During brand development, e-Global Network, Inc. intends to hire a Latin American advertising agency with local contacts that can support our advertising campaign. To achieve immediate success in the Mexican market, it is imperative that advertising and marketing campaigns address the emotional and practical needs of Mexican consumers desiring to purchase American goods on the Internet. This will be achieved by: Branding, including the consumer brand, consumer website, card look and feel, and club membership. Traditional marketing using a prominent advertising agency, including the development of media campaigns, marketing literature, and co-branding with banks and strategic partners. Interactive marketing, including affinity programs and online promotions with ISPs, portals, and other major players in Mexico. Foreign Currency Exchange During the implementation phase and associated first round funding, the Foreign Currency Exchange Department (“Forex”) will be established, with sufficient lead-time prior to launch CONFIDENTIAL INFORMATION - 37 -
    • to ensure that trading procedures and operational systems are ready for execution upon launch to Mexico. Three experienced Forex traders, with extensive Mexico experience, will initially staff this department and will work out of the Company’s Bermuda headquarters. Customer Service As a part of the corporate facility in Mexico, a call center, with an initial 12 Member Services Representatives will handle member service requests. This group will be managed by a local Member Services Manager, who will report to the Director of Member Services at the U.S office. Approved corporate member service policies and procedures, call center telephones, software, and e-mail systems will be implemented by the Director of Member Services well in advance of the launch to Mexico. Operational Infrastructure Bermuda Headquarters Operations. The Company’s headquarters will be based in Bermuda. The Bermuda office will be minimally staffed with an office manager. U.S. Operations. e-Global Network, Inc. intends to have three general and administrative employees within its U.S. office. These employees will support the needs of the CEO, CFO, and General Counsel. The Controller will have the initial responsibilities of setting up the accounting systems and software. An IT Manager will implement and maintain the Company’s corporate information system environments. The Company has outsourced its Human Resource (“HR”) functions to Administaff during the implementation phase. e-Global Network, Inc. has identified the individual to fill its Office Manager role. Upon securing first round funding, the Office Manager will interface with the chosen HR firm to establish and implement payroll and benefits. In addition, the office manager will play an integral role in recruiting human capital using a number of corporate recruiters. Latin American Operations. The Latin America subsidiary will be based in Mexico City. The Director General will oversee all Mexico operations and support Business Development with strategic alliances. The Operations Manager will be responsible for procuring office space and purchasing necessary equipment and corporate technologies. The IT Manager will be responsible for setting up the LAN, the communications infrastructure, and accounting system. A dedicated Customs Broker will be versed in the local e-commerce and customs regulations for Mexico. Dedicated network connectivity from the corporate primary data center to the Mexico field office will be established using commercially available VPN technology. CONFIDENTIAL INFORMATION - 38 -
    • SECTION 12 RISK FACTORS e-Global Network, Inc. has identified risk areas that can impact the operations and growth of the company. It should be duly noted that a number of these factors are common risks associated with any type of business. These risk areas are:  No history of operation  Growth management and deployment risks  Dependence on growth of international e-commerce  Changes in international trade and tariff structures  Fluctuations in international currency and market conditions  Local market protectionism  Advertising, branding, and market acceptance  Potential for fraudulent activity  Network/system failure  Network/system security breaches  Speed of implementation / Consummation of strategic alliances  Speed of hiring key employees  Foreign regulation of e-commerce trade  Disruptions in shipping carrier operations  Local political instability CONFIDENTIAL INFORMATION - 39 -
    • SECTION 13 FINANCIAL FORECASTS Overview e-Global Network, Inc.’s success will be directly correlated to the speed and efficiency of: (1) the implementation of our business models (implementation phase), and (2) the regional deployment and market acceptance of the Global Card (execution phase). Bradley K. Ingram, the Company’s CEO and Founder has invested approximately $1 million to develop e-Global Network's start-up platform, initial corporate infrastructure, and fund all associated development costs. The Company will require a total capital investment of $20 million in a two-phased financing to match the requirements of the implementation and execution phases. The first round of $8.5 million will be utilized to complete the implementation phase of the business model, specifically in Mexico, the first country scheduled for launch. The second round of approximately $11.5 million, which is scheduled to follow in approximately six months, will be used to market the Company’s services to the international e-commerce consumer base in the other Latin American countries. The two financing rounds, supplemented with revenues, will be sufficient to: further develop technology, spearhead an aggressive multi-level marketing and promotional campaign, build necessary human resources, provide operational infrastructure, support the rapid deployment into targeted country markets, and permit the company to achieve significant profitability. Revenue and Pricing e-Global Network, Inc.'s revenues will be primarily influenced by the total number of Global Cards deployed across several geographic markets which directly correlates to transaction volumes and associated dollar amounts for transactions completed. Based on the deployment schedule, the Company forecasts that 544,000 cards will be issued by the end of Year 1, exponentially growing to 1.84 million cards by the end of Year 2. The Company will initially experience revenue growth by expanding its global presence and later through increased Global Card penetration within its established markets. Significant economies of scale are achieved when Global Card transaction volumes reach a critical mass. The Company's business model is similar to models used by many of the most successful Internet businesses, in that access is free, but substantial revenues result from completed transactions. Unique to e-Global Network, Inc., unlike most other mono-dimensional Internet- based companies, is its multi-faceted revenue generation. e-Global Network, Inc. shall generate revenues through each step in the purchase and fulfillment process, making the investment unique. CONFIDENTIAL INFORMATION - 40 -
    • The following chart illustrates the contributions of the primary revenue streams. Revenue by Category $20,000,000 $18,000,000 $16,000,000 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $0 Merchant Discounts Currency Exchange Shipping Discounts Transaction Fees Interest Income Fiscal Year 1: $10.44 Million Fiscal Year 2: $40.00 Million Transaction Fees. Members may be charged a nominal fee for each transaction completed using the Global Card. This fee is much like an ATM fee charged by many banks today. It is expected that the fee will initially be the foreign currency equivalent of one dollar per transaction. Merchant Discounts. All merchants desiring to conduct business through the Affiliate Merchant Network will first enter into an Affiliate Merchant Agreement. This agreement will govern the terms of the relationship between e-Global Network, Inc. and the merchant and will specify the purchase discount to be earned by the Company for each purchase made by its members using the Global Card. The company intends to earn an average discount of four percent (4%) from merchants associated with all purchases made using the Global Card. Other competitive domestic card programs are presently receiving discounts of 4% on purchases made through their affinity card programs. Although competition may shrink this source of revenue, the Company feels strongly that it will maintain a 4% discount due to the unique purchasing power of its Global Card. Foreign Currency Exchange. Foreign currency exchange will be a major contributor to the revenue base of the Company. e-Global Network, Inc. will hold card member funds in the local currency of the member until such time the account is used, at which time, the exact funds necessary to complete the transaction are transferred to the merchant, in the merchants local currency. The Company will maximize efficiencies to settle currency transactions between card members and affiliate merchants. Based on the nominal amount associated with a typical member transaction when compared to the much larger transactions to be completed between e-Global Network, Inc. and its foreign exchange clearing banks, the Company anticipates foreign exchange revenues to approximate 3% for each transaction completed by its members. International consumers are comfortable with the bid/ask foreign exchange spreads associated with completing foreign exchange transactions. The 3% spread forecasted by e-Global Network, Inc. is supported by re-occurring consumer transactions, with foreign currency spreads ranging from 6% to 12% plus transaction fees. CONFIDENTIAL INFORMATION - 41 -
    • Interest Income on Deposits. As stated above, card account deposits will be held in the member’s local currency pending the completion of a transaction. Deposits will earn interest at local currency rates that are, in many countries, higher than short-term reinvestment rates in the United States. Presently overnight rates in Mexico exceed 15% earned in pesos. The attached forecasted income statement assumes a conservative reinvestment rate on all deposits of 4%. Shipping Discounts. e-Global Network, Inc. has completed negotiations with United Parcel Service to become its preferred worldwide shipping carrier. As part of that agreement, UPS will provide the Company with volume pricing discounts that should reach 18-40% of retail shipping charges. Based on a conservative estimate, the financial forecast projections include a two-dollar per shipment discount, based on an average shipment cost of $30.00. Expenditures e-Global Network, Inc. plans to deploy its payment and shipping solutions at a rapid pace. To support the deployment, e-Global Network, Inc. has allocated approximately 80% of its first two- year expense budget toward developing fundamentally sound technology, building a strong management and human resource team, and formulating and implementing an aggressive global advertising and marketing campaign. The following graph is intended to provide a visual summarization of the categorical expenditures included in the two-year statement of cash flows. Expenditure by Category 40% 35% 30% 25% 20% 15% 10% 5% 0% Commissions, Professional Development Travel Costs Rents Systems and Furniture and Related Costs Expenses and Discounts Marketing and Operating Technology Salaries and Equipment Promotions, Legal and Advertising Services Software Other Fiscal Year 1 Fiscal Year 2 Marketing and Advertising. e-Global Network, Inc. is budgeting $9.08 million and $14.05 million for marketing in years one and two, respectively. This budget includes traditional and interactive media placements and promotions, agency fees, production costs, literature, as well as the cost for brand name development and engaging a public relations firm. Although targeting five countries over two years, e-Global Network, Inc.'s budgeted marketing campaign benefits from significantly lower advertising costs associated with certain international markets. CONFIDENTIAL INFORMATION - 42 -
    • e-Global Network, Inc. is presently interviewing several public relations firms, and consequently has budgeted $720,000 over two years to cover the fees of the firm selected. Additionally, the Company has also allocated $360,000 for brand name development, to include the acquisition of a Latin American focused domain name. These expenditures have been charged to corporate overhead and are not allocated on a country specific basis in the chart above. Although marketing and advertising costs comprise over 50% of budgeted expenditures for Year 2, revenues created from achieved customer penetration begin to exceed such expenditures as early as Month 8. Following Month 8, revenues begin to accelerate and continue to outpace marketing and advertising expenses by nearly $2.5 million per month at the end of the two-year cycle. The illustration below characterizes the future profitability of the Company, notwithstanding an aggressive marketing and advertising budget. Revenue vs. Marketing and Advertising Expenditure Montlhy Basis $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Revenue Marketing and Advertising Expenditure Technology Development. Approximately $2.9 million, or 5.8% of the operating budget, will be allocated to technology development, to cover the cost of hardware (infrastructure), systems software (applications) and related expenses. The Technology Development Expenditure chart provided below categorizes the technology budget. Technology Development Expenditure Expenditure Years 1 and 2 Hardware 1,486 ▪ Enterprise Servers ▪ Department Servers ▪ PC's ▪ Peripherals & Network Equipment System Software 973 ▪ Web Servers ▪ Application Servers ▪ Transaction Servers ▪ Database Servers ▪ Monitoring Systems Training 48 Technology Service Providers 240 Data Center Resources 157 Total Expenditure $2,904 (reflected in ,000’s) CONFIDENTIAL INFORMATION - 43 -
    • Salary and Related Costs. Due to the broad geographic reach of e-Global Network's planned operations, salary and related expenses comprise a significant portion of its budgeted expenditures. The Company will operate 24 hours per day, therefore requiring continuous technical, operational, and customer service support for its operations. The Company forecasts spending $6.08 million and $6.65 million for salaries and related expenses during Year 1 and Year 2, respectively. The previous graph reflects the composition of these expenditures. Commissions, Promotions, and Discounts. Approximately $5.36 million, or 10.6% of the operating budget will be spent to support the distribution of Global Cards and associated card membership, pay commissions and banking fees, and provide cash incentives in the form of card member promotional rebates and affiliate merchant promotional discounts. Commissions, Promotions, and Discounts Expenditure Years 1 and 2 Card Costs $ 387 Card Sales Commissions 921 Banking & Credit Card Fees 1,506 Promotional Rebates/Discounts 2,545 Total Expenditure $5,359 (reflected in ,000’s) Rents. The Company is in the process of identifying office space in the San Francisco Bay Area. The Company anticipates its cost of domestic rent to be $300,000 annually. Rents associated with e-Global Network’s international offices are forecasted to be $228,000 annually for the two-year operation period covered by the budget. Travel Costs. Due to the international nature of our business, a significant portion of the Company’s cost are associated with travel. Consequently, travel expenses are budgeted at $918,500 and $1.13 million for the first and second years of operation, respectively. These expenses include significant travel to setup regional offices and negotiate initial in-country strategic alliances. Legal and Professional Fees. e-Global Network, Inc. has budgeted $2.08 million for legal and professional fees over two years of operation. These costs shall include: (i) legal fees associated with general corporate affairs; (ii) drafting of various member, merchant and banking agreements; (iii) U.S. and foreign patent filings; and (iv) various other foreign counsel. Professional fees will also include consulting, advisory, and audit fees. Systems and Software. The cost of systems and software to run and manage the day-to-day operations of the business are $448,000 for Year 1 and $384,000 for Year 2. Such software shall relate to financial reporting, sales reporting, customer service, currency exchange, and human resource management. CONFIDENTIAL INFORMATION - 44 -
    • Other Operating Expenses. This category covers the various administrative costs associated with general business operations, including the operational costs of the three foreign offices. This is budgeted at $973,320 in Year 1 and shall reach $1,397,280 in Year 2. Summary e-Global Network, Inc. presents a unique investment opportunity, to participate in a market leader, targeting a multi-billion dollar under-tapped international e-commerce market. The company is expected to generate strong transaction-driven revenues, from five distinct revenue sources. This balance, provided by merchant and shipping discounts earned, coupled with earnings from currency exchange spreads, ongoing transaction fees, and interest income, will assure consistent and accelerated revenue growth. The basis for this revenue creation is founded on conservative card member penetration across diverse international deployment, further supported by a fiscally sound expense budget. The Company is expected to realize a second year EBIT of $13.8 million, with a cumulative net profit from operations of $3.37 million over two years, based on 1.84 million cards deployed at the end of Year 2. As depicted below, e-Global Network, Inc. achieves ongoing profitability at Month 22 of its business cycle. Cumulative Monthly Revenue vs. Expense $60,000,000 $55,000,000 $50,000,000 $45,000,000 $40,000,000 $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $0 ($5,000,000) ($10,000,000) ($15,000,000) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Revenue Expense EBIT Capital Request e-Global Network, Inc. is seeking first round (Series A Financing) of $8.5 million to complete the implementation phase of the business model, followed in four months by a second round (Series B Financing) of approximately $11.5 million to execute the marketing of the Global Card to the targeted international consumer base, the execution phase. Most attractive to the Company would be co-investment from a fundamentally diverse investor base, including sources from both the venture community, as well as corporate investors. The two phased financing could be accomplished in a variety of forms: syndication, mezzanine, or total separate financings, with different investors. CONFIDENTIAL INFORMATION - 45 -
    • Forecasted Income Statement F IS C A L YEA R 1 # o f Ca rd s De pl o y e d: 5 4 4 ,3 2 0 Mo n t h 1 Mo n t h 2 Mo n t h 3 Mo n t h 4 Mo n t h 5 Mo n t h 6 Mo n t h 7 Mo n t h 8 Mo n t h 9 Mo n t h 1 0 Mo n t h 1 1 Mo n t h 1 2 TOTA L R EVEN U E Merchant Discounts - - - 217,056 217,056 217,056 217,056 65 ,722 3 6 ,72 53 2 8 ,778 70 8 ,778 70 8 ,778 70 4 8,00 ,78 0 Currency Exchange - - - 162,792 16 ,792 2 16 ,792 2 16 ,792 2 49 ,2 0 91 4 ,2 1 90 9 6 ,0 3 53 8 6 ,0 3 53 8 6 ,0 3 53 8 3 9 ,5 1,000 ShippingDiscounts - - - 57,120 57,120 57,120 57,120 172 32 ,0 172 3 ,0 2 2 ,15 29 2 2 ,15 29 2 2 ,15 29 2 1,2 0,00 6 0 TransactionFees - - - 28,560 2 ,5 8 60 2 ,5 8 60 2 ,5 8 60 8 ,0 6 16 86 16 ,0 114 76 ,5 114 76 ,5 114 76 ,5 6 0,00 3 0 Interes Incom t e - - - 5,236 6,188 7,140 8 92 ,0 19 78 ,5 22 4 ,4 5 30 4 ,5 8 34 6 ,3 7 38 6 ,18 171,780 TOTA L R EVEN U E - - - 4 7 0 ,7 6 4 4 7 1 ,7 1 6 4 7 2 ,6 6 8 4 7 3 ,6 2 0 1 ,4 2 1 ,6 3 8 1 ,4 2 4 ,5 0 6 1 ,8 9 8 ,1 3 7 1 ,9 0 1 ,9 5 6 1 ,9 0 5 ,7 7 5 1 0 ,4 4 0 ,7 8 0 EXP EN S ES MarketingandAdvertising - 210,000 472,318 2 0,10 9 2 28 86 7,4 78 ,2 5 69 777,682 912,120 901,317 8 ,5 89 14 8 ,9 3 76 4 8 ,8 2 63 9 7,2 6,64 6 2 SalariesandRelatedCosts 417,408 4 8,60 0 0 52 ,88 8 8 3 2,60 4 0 46 ,6 3 40 379,160 39 ,2 5 40 472,120 417,5 0 2 4 ,0 0 52 8 742 70 ,0 1,057,2 0 2 6 76,54 ,0 6 Com is ions Prom m s , otions andDis , counts - - - 140,967 14 05 1,2 14 43 1,4 5 ,8 4 59 16 ,0 4 24 164 1 ,74 199 2 ,3 5 2 ,2 0 00 8 201,2 5 3 1,4 8,079 0 Travel Costs 46,000 74,000 8 ,00 2 0 81,000 8 00 1,5 8 ,5 6 00 8 ,0 2 00 8 ,5 3 00 77,0 0 0 89 0 ,0 0 77,5 0 0 58 0 ,5 0 918,500 Technolog Developm y ent 1,0 7,50 2 0 14,500 307,500 114,500 114 00 ,5 14 00 ,5 114 00 ,5 14 00 ,5 14 0 ,5 0 2 ,5 0 64 0 64 0 ,5 0 14 0 ,5 0 2 8 ,0 0,000 Leg andProfes ional Services al s 65,000 65,000 75 0 ,00 75,000 75 00 ,0 75 00 ,0 75 00 ,0 75 00 ,0 75 0 ,0 0 75 0 ,0 0 75 0 ,0 0 75 0 ,0 0 8 0,00 8 0 Rents 29,000 44,000 4 ,00 4 0 44,000 4 ,0 4 00 4 ,0 4 00 4 ,0 4 00 4 ,0 4 00 44 0 ,0 0 44 0 ,0 0 44 0 ,0 0 44 0 ,0 0 513,000 System andSoftw s are - - 22 ,00 0 0 20,000 2 ,0 0 00 2 ,0 4 00 2 ,0 4 00 2 ,0 8 00 28 0 ,0 0 28 0 ,0 0 28 0 ,0 0 28 0 ,0 0 4 8,00 4 0 FurnitureandEquipment 80,000 48,000 10 ,00 8 0 12,000 2 ,0 4 00 - 2 ,0 0 00 16 00 ,0 - 24 0 ,0 0 - - 3 2,00 3 0 Ot he r Op e rat ing Ex pe nse s 36,715 44,395 6 ,615 5 67,625 72 65 ,4 72 65 ,9 8 ,0 5 65 9 ,6 6 10 98 10 ,6 111,0 5 8 111,0 5 8 111,0 5 8 973,320 TOTA L EXP EN S ES 1 ,7 0 1 ,6 2 3 9 0 8 ,4 9 5 1 ,9 0 3 ,3 2 1 1 ,1 8 7 ,7 9 5 1 ,3 2 3 ,7 9 6 1 ,6 2 2 ,8 3 8 1 ,6 7 2 ,3 4 6 1 ,9 0 5 ,8 7 4 1 ,8 2 0 ,6 8 8 2 ,1 7 6 ,5 0 4 2 ,2 1 9 ,3 7 8 2 ,4 5 3 ,4 3 1 2 0 ,8 9 6 ,0 8 8 N e t P r o f i t ( Lo s s ) ($ 1 ,7 0 1 ,6 2 3 ) ($ 9 0 8 ,4 9 5 ) ($ 1 ,9 0 3 ,3 2 1 ) ($ 7 1 7 ,0 3 1 ) ($ 8 5 2 ,0 8 0 ) ($ 1 ,1 5 0 ,1 7 0 ) ($ 1 ,1 9 8 ,7 2 6 ) ($ 4 8 4 ,2 3 6 ) ($ 3 9 6 ,1 8 2 ) ($ 2 7 8 ,3 6 7 ) ($ 3 1 7 ,4 2 2 ) ($ 5 4 7 ,6 5 6 ) ($ 1 0 ,4 5 5 ,3 0 8 ) C u m u l a t i v e P r o f i t ( Lo s s ) ($ 1 ,7 0 1 ,6 2 3 ) ($ 2 ,6 1 0 ,1 1 8 ) ($ 4 ,5 1 3 ,4 3 9 ) ($ 5 ,2 3 0 ,4 7 0 ) ($ 6 ,0 8 2 ,5 5 0 ) ($ 7 ,2 3 2 ,7 2 0 ) ($ 8 ,4 3 1 ,4 4 5 ) ($ 8 ,9 1 5 ,6 8 1 ) ($ 9 ,3 1 1 ,8 6 3 ) ($ 9 ,5 9 0 ,2 3 0 ) ($ 9 ,9 0 7 ,6 5 2 ) ($ 1 0 ,4 5 5 ,3 0 8 ) F IS C A L YEA R 2 # o f Ca rd s De pl o y e d: 1 ,2 9 7 ,5 5 6 Mo n t h 1 3 Mo n t h 1 4 Mo n t h 1 5 Mo n t h 1 6 Mo n t h 1 7 Mo n t h 1 8 Mo n t h 1 9 Mo n t h 2 0 Mo n t h 2 1 Mo n t h 2 2 Mo n t h 2 3 Mo n t h 2 4 TOTA L R EVEN U E Merchant Discounts 9 3,80 6 2 1,4 0,46 0 7 1,427,599 1,4 7,59 2 9 1,48 ,0 6 28 1,48 ,0 6 28 1,579 52 ,0 1,579 52 ,0 1,6 ,6 46 16 1,6 ,6 46 16 1,705 4 ,0 5 1,705 4 ,0 5 18 5 ,0 2,949 Currency Exchange 722,851 1,0 0,35 5 0 1,070 9 ,69 1,070,699 1,114 21 ,5 1,114 21 ,5 1,18 ,2 4 89 1,18 ,2 4 89 1,2 ,9 2 34 6 1,2 ,9 2 34 6 1,2 ,78 78 4 1,2 ,78 78 4 13 3 ,5 9,712 ShippingDiscounts 2 3,63 5 2 3 8,54 6 4 375 4 ,68 375,684 39 60 1,0 39 60 1,0 415 40 ,5 415 40 ,5 4 ,3 0 33 2 4 ,3 0 33 2 4 ,6 6 48 9 4 ,6 6 48 9 4 0,776 ,75 TransactionFees 126,816 184,272 187,842 187,842 19 ,5 5 30 19 ,5 5 30 207,770 207,770 2 ,6 0 16 6 2 ,6 0 16 6 2 ,3 8 24 4 2 ,3 8 24 4 2 75,38 ,3 8 Interes Incom t e 44,726 61,396 71,060 80,189 9 ,727 0 10 ,112 0 111,945 12 ,145 2 134 3 ,0 6 144 5 ,6 2 156 0 ,8 6 167,9 4 3 1,2 5,72 8 6 TOTA L R EVEN U E 2 ,1 1 1 ,8 2 6 3 ,0 6 5 ,0 3 0 3 ,1 3 2 ,8 8 5 3 ,1 4 2 ,0 1 3 3 ,2 7 7 ,8 6 6 3 ,2 8 7 ,2 5 1 3 ,4 9 8 ,5 9 6 3 ,5 0 8 ,7 9 6 3 ,6 6 5 ,5 9 4 3 ,6 7 6 ,2 1 0 3 ,8 1 3 ,6 7 8 3 ,8 2 4 ,8 0 7 4 0 ,0 0 4 ,5 5 0 EXP EN S ES MarketingandAdvertising 8 0,68 5 2 8 7,65 3 1 82 ,119 5 813,374 80 ,6 2 44 79 ,0 3 91 78 ,8 4 02 777,793 772 18 ,0 767,3 1 8 763 4 ,75 760 9 ,9 0 9 4 ,5 9,298 SalariesandRelatedCosts 4 8,112 8 4 3,92 6 0 45 ,36 3 0 4 3,36 5 0 45 ,3 3 60 46 ,720 8 45 ,160 8 45 ,160 8 4 ,16 58 0 4 ,16 58 0 8 ,16 33 0 1,2 ,16 02 0 6 4 ,6 8,792 Com is ions Prom m s , otions andDis , counts 2 5,513 2 2 5,18 9 1 30 ,20 4 1 3 6,48 0 4 32 ,3 3 41 32 ,6 5 87 34 ,5 2 99 34 ,149 5 3 ,0 3 62 3 3 ,6 7 64 8 3 ,4 0 76 9 3 ,2 79 72 3 5 ,9 0,639 Travel Costs 75,500 80,000 9 ,50 2 0 102,500 119 00 ,5 111,500 9 ,5 9 00 9 ,5 8 00 90 0 ,5 0 93 0 ,0 0 88 0 ,0 0 82 0 ,0 0 1,133,000 Technolog Developm y ent 314,500 4 4,50 6 0 14 0 ,50 14,500 14 00 ,5 214 00 ,5 14 00 ,5 214 00 ,5 14 0 ,5 0 14 0 ,5 0 14 0 ,5 0 14 0 ,5 0 1,3 4,00 2 0 Leg andProfes ional Services al s 85,000 95,000 9 ,00 5 0 95,000 9 ,0 5 00 9 ,0 5 00 10 ,0 5 00 10 ,0 5 00 105 0 ,0 0 110 0 ,0 0 110 0 ,0 0 110 0 ,0 0 1,2 5,00 0 0 Rents 44,000 44,000 4 ,00 4 0 44,000 4 ,0 4 00 4 ,0 4 00 4 ,0 4 00 4 ,0 4 00 44 0 ,0 0 44 0 ,0 0 44 0 ,0 0 44 0 ,0 0 5 8,00 2 0 System andSoftw s are 31,000 31,000 31,000 31,000 3 00 1,0 3 00 1,0 3 ,0 3 00 3 ,0 3 00 33 0 ,0 0 33 0 ,0 0 33 0 ,0 0 33 0 ,0 0 3 4,00 8 0 FurnitureandEquipment 24,000 16,000 - - - - 16 00 ,0 - - - - - 56,000 Other OperatingExpenses 113,560 115,240 115 0 ,24 115,240 115 40 ,2 115 40 ,2 117,920 117,920 117,9 0 2 117,9 0 2 117,9 0 2 117,9 0 2 1,3 7,28 9 0 TOTA L EXP EN S ES 2 ,2 5 1 ,8 6 8 2 ,4 4 2 ,4 9 1 1 ,9 7 4 ,9 2 1 1 ,9 7 5 ,4 5 7 1 ,9 9 8 ,5 8 5 2 ,1 9 8 ,7 3 8 2 ,0 1 5 ,4 8 1 2 ,1 9 4 ,0 2 2 1 ,9 9 7 ,1 3 1 2 ,0 0 2 ,6 4 9 2 ,3 8 0 ,8 2 5 2 ,7 4 3 ,8 4 2 2 6 ,1 7 6 ,0 0 9 N e t P r o f i t ( Lo s s ) (1 4 0 ,0 4 1 ) 6 2 2 ,5 3 8 1 ,1 5 7 ,9 6 4 1 ,1 6 6 ,5 5 6 1 ,2 7 9 ,2 8 1 1 ,0 8 8 ,5 1 3 1 ,4 8 3 ,1 1 5 1 ,3 1 4 ,7 7 4 1 ,6 6 8 ,4 6 2 1 ,6 7 3 ,5 6 1 1 ,4 3 2 ,8 5 3 1 ,0 8 0 ,9 6 5 $ 1 3 ,8 2 8 ,5 4 1 C u m u l a t i v e P r o f i t ( Lo s s ) ($ 1 0 ,5 9 5 ,3 4 9 ) ($ 9 ,9 7 2 ,8 1 1 ) ($ 8 ,8 1 4 ,8 4 7 ) ($ 7 ,6 4 8 ,2 9 0 ) ($ 6 ,3 6 9 ,0 0 9 ) ($ 5 ,2 8 0 ,4 9 6 ) ($ 3 ,7 9 7 ,3 8 1 ) ($ 2 ,4 8 2 ,6 0 7 ) ($ 8 1 4 ,1 4 5 ) $ 8 5 9 ,4 1 6 $ 2 ,2 9 2 ,2 6 9 $ 3 ,3 7 3 ,2 3 4 N TE W O : hereasGAAP wouldnormally requiretim differencestobes ing how (for exam n ple, thepurchas of capital equipm e ent vers am us ortization), thes s e tatementshavebeenpreparedonaCASHBASIS for convenience. Assumptions: The following conservative assumptions were used as parameters for the financial forecast model. Average Card Deposit: $200 Foreign Currency Spread = 3% Average Amount Spent per Deposit: $180 Interest on Deposits = 4% Each card is reloaded once (six months later) Shipping Discount = $2/transaction CONFIDENTIAL INFORMATION - 46 -
    • Merchant Discount = 4% Transaction Fee = $1/transaction CONFIDENTIAL INFORMATION - 47 -
    • i Jupiter Communications. Internet Commerce Model. February 2000. CAGR was extrapolated from Jupiter Communications projections. ii Jupiter Communications. “Internet Commerce in Latin America: Barriers to Online Purchasing will Impede Spending.” February 2000. iii IBID. iv Jupiter Communications. “Internet Commerce in Latin America.” February 2000. v International Data Group. “Online Sales to Boom in Latin America.” April 1999. vi Morgan Stanley Dean Witter. “The Latin America Internet Report.” February 2000. vii Cards International report, 1999. viii Morgan Stanley Dean Witter. “The Latin America Internet Report.” February 2000. ix IBID. x Jupiter Communications. “Latin America: Online Projections.” March 2000. xi Morgan Stanley Dean Witter. “The Latin America Internet Report.” February 2000. xii eMarketer. “Welcome eLatin American.” July 1999 xiii Jupiter Communications. “Latin America: Online Projections.” March 2000. xiv Morgan Stanley Dean Witter. “The Latin America Internet Report.” February 2000. xv IBID. xvi Marketer. “Welcome eLatin American.” July 1999. xvii IBID. xviii IBID. xix IBID. xx IBID Orlando Moreno omoreno@hotmail.com 408.656.2498