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  1. 1. Cloud Computing & Software as a Service (SaaS) Capturing the paradigm shift in the Information Technology (IT) market Business Plan Highlights - CONFIDENTIAL - Copy # __ for _________________________________ Property of Digistream Technologies not authorized for distribution. This is not an offer for sale of securities Courtesy of Howard Gunn
  2. 2. Logo Here Agenda  Introduction  The Company – Overview – Products and Services – The Team – Summary of Goals – Business Highlights – Milestones  The Opportunity – Marketing Plan – The Problem & Pain – Financial Plan – The Solution  Conclusion – Market Summary – Risks and Responses – Customer Profile – Expansion Potential – Competition – Next Steps – Q&A This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 2 1 0/30/08
  3. 3. Logo Here Information Technology (IT) Market Continues to Expand US IT Purchases New $700 $12 On-demand $600 $7 $9 $83 software $79 $3 $5 $76 $102 rental $72 $500 $1 $2 $68 $88 $94 service $64 $61 $83 $54 $ in billions $400 $57 $79 $77 $197 $70 $72 $65 $156 $165 $177 IT- Software $300 $141 $120 $118 $122 $132 Purchases $144 $200 $128 $116 $123 $111 $99 $96 $100 $100 $100 IT Managed $91 $92 $94 $97 $104 $110 $113 $120 $129 and Hosting $0 2002 2003 2004 2005 2006 2007 2008* 2009* 2010* Services Forrester Research 9-2008 Computer Peripherals Communications Equipment Licensed Software IT Services IT Outsourcing Rented Software (SAAS) This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 3 Introduction 1 0/30/08
  4. 4. Logo Here Introduction to the IT paradigm shift Virtualization software, core CPU improvements and memory cost declines have dramatically impacted to cost to run and operate software applications. Cloud computing exploits these massive gains through a paradigm shift to a new ‘Shared Tenant’ Managed Service Provider (MSP) virtual hosting service environment, where hardware, applications software and bandwidth are bundled and sold as a transparent service (your place or ours, your software or ours) for faster cutover and less up front cost to design and implement). In the new transparent Software as a Service (SaaS) cloud, information (content, files and entertainment) can be created and permanently stored in servers in the IP network cloud and cached temporarily in client devices that include desktops, tablets, notebooks, Set Top TV boxes, handhelds, media players, cell phones and even game consoles for use, update or modification, on-demand, anywhere and anytime, by virtually any device. This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 4 Introduction 1 0/30/08
  5. 5. Logo Here What is the Press Saying quot;The next sea change is upon us.quot; -- Bill Gates 2007  Trends Gartner Says 25% of New Business Software Will Be Delivered As Google Office is Software As A 1/10th the price of Service by 2011. Microsoft Office Gartner Motley Fool 4-2008 Symposium/ITxpo, October 8-2008 At PDC in 2-2008, David Thompson (corporate vice president of Microsoft Online) announced that in the future all of Microsoft's enterprise applications will be available as services. This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 5 1 0/30/08
  6. 6. Application Software – computer Logo Here programs that help business create new sales, reduce cost, improve productivity and increase profits. The device browser becomes the client software application used to run local or Web applications from consumer devices on demand, transparently. Shrink Wrap Packaged & Shrink Wrap EULA License CPU Run Time License Browser Servers VoIP one of the earliest SaaS ‘cloud’ applications has replaced 24m analog phone lines and is generating approximately $27b in new sales for VoIP service suppliers in the US alone! This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 6 Introduction 1 0/30/08
  7. 7. IT Product and Service Suppliers Logo Here LAN WAN Data Center Hosting Providers IP Carriers and ISPs On Site Providers Current e/Commerce – limited to a PC/Internet connections Current m/Commerce – limited to cell phone and carrier WEB site This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 7 Introduction 1 0/30/08
  8. 8. VAD Infrastructure supplier to the $100B SMB LAN, VoIP and Smart Logo Here Building SaaS LAN upgrade market DigistreamSaaS sells the LAN equipment, local data appliances, applications software and managed service that brings on-demand cloud computing power and secured connectivity to SMB sites. Most SMB sites today have non- networked security, AC/heating, analog phone lines, non-managed Tenant electricity, Ethernet cabling, wireless Options Hot Spots, CCTV, but no cloud computing, no SaaS applications, no repository services, no e/mCommerce or payment security User Device Options Deploys All Channel Distribution Value Added Resellers (VARs), System Integrators (SIs), Direct, IP Facility Carriers (ILEC/CLEC), Building ISPs, WISPs, SaaS Hosting sites, Host Peer-to-Peer viral MLM… .. Options This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 8 Introduction 1 0/30/08
  9. 9. Proprietary SaaS and resold Logo Here SaaS supplier to SMBs and mobile consumer devices Digistream Service Oriented Architecture - SOA Tenant Suite A FAX DigistreamSaaS Ethernet Customer Line PBX Shrink Wrap Services EULA License Tenant Suite B 10/100/1000 Ethernet SaaS B2B IP PBX e/mCommerce Tenant IAD Secured Payments Browser Access High Speed Remote Repositories Devices Backbone FAX SaaS Hosters Services Public Site Network Equipment Room Local e/mCommerce Digistream Cisco Resold Digistream Digistream credit card and SaaS digital content shopping bags On site IP Network upgrade Services This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 9 Introduction 1 0/30/08
  10. 10. Logo Here Business Productivity SaaS Market Sizing 2008 - $6.3B Enterprise Shared Tenant SaaS 2008 - .5B SMB Shared Tenant SaaS IP Carriers & ISPs On Site Providers* Hosting Providers Voice Internet & Personal Financial & WEB Medical Enterprise Transport Data Repository SMB Government Services Video Information Information Processor Information Services Services Education Services Services Services Medical IS infrastructure Connectivity Content Membership Commerce Client Site Centric Centric Centric Remote Host Centric Centric Centric Centric The Information Services (IS) Target Market Segments 2012 - $12B Enterprise Shared Tenant SaaS Gardner Group 6/2008 Digistream SaaS 2012 – Potential $6.8B SMB SaaS market Target Market * On Site Providers includes the Channel, all Value Add Microsoft Resellers and vertical market System Integrators This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 10 Introduction 1 0/30/08
  11. 11. Logo Here E/M Commerce SaaS Market Sizing 2007 - $260B e/Commerce 0% SaaS 2007 - $17B m/Commerce 0% SaaS Carriers & Internet Providers On Site Providers* Hosting Providers Voice Internet & Personal Financial & WEB Medical Enterprise Transport Data Repository SMB Government Services Video Information Information Processor Information Services Services Education Services Services Services Medical IS infrastructure Connectivity Content Membership Commerce Client Site Centric Centric Centric Remote Host Centric Centric Centric Centric The Retail Information Services (IS) Target Market Segments Gardner Group 6/2008 e/mCommerce According to Gartner, Inc. by 2013, 40 percent of ecommerce deployments will use a complete Target Market SaaS solution and 90 percent of e-commerce sites will subscribe to at least one SaaS-based service, such as product reviews, product recommendations or social sales capabilities. * On Site Providers includes the Channel, all Value Add Microsoft Resellers and vertical market System Integrators This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 11 Introduction 1 0/30/08
  12. 12. Logo Here DigistreamSaaS Business Overview • Local Area Network (LAN) equipment and software Value Added Distributor (VAD) of products to connect devices to secure high- speed networks that use device ID and TCP to secure transactions. • Shared Tenant hosting technologies service supplier that enables a single instance of a software application to be shared on demand. • Supplier of modern browser, Rich Media Applications (RMA) that enable by the drink on demand price models that makes it cost effective to use applications without owning them. • No current IP Carrier, ISP or SaaS hosting provider has the LAN device ID or e/mCommerce browser applications needed for SMB LAN SaaS transactions and communications. This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 12 1 0/30/08
  13. 13. New $1.5b Wholesale Logo Here SMB SaaS Market Main Street America Example 4 separate SaaS SMBs with SaaS hosting service providers must Credit Card Fax phone devices & TCP LANs wholesale services through LAN And an Industrial building LAN 2 1 3 6 5 4 7 9 8 # * 1 3 2 5 6 4 8 7 9 # * 2 1 Credit Card 3 4 5 6 9 8 7 # * Credit Card and Managed Service Providers. Fax 1 1 2 3 4 5 6 7 8 9 # * 1 2 3 4 5 6 7 8 9 # * Fa Public Carrier x IP Line ends 1 2 3 4 6 5 8 7 9 # * 1 2 3 6 4 5 8 7 9 * # 2 1 3 4 6 5 9 8 7 # * 3 1 3 2 6 5 4 7 8 9 # * 3 2 1 6 5 4 9 7 8 * # 2 4 No local on site device Public Carrier aggregation between ATM tenants means that SaaS Cable TV site Pay Phones host providers have No Economies of Scale In Public Carrier SMB site market! Another SMB SaaS site, phone devices & LANs Service Switching Centers Credit Card Public Carrier Credit Card x Demarcation 5 Convenience Public Voice, Data store And TV Networks SaaS apps host ATM CRM, SCM… Public Carrier Pay Phones Cable Point SaaS e/mCommerce This document does not constitute either an offer to sell or an offer to Financial Servicesfor information purposes only. purchase securities. It is 13 Introduction VoIP 1 0/30/08
  14. 14. Logo Here Targeted SaaS B2B and e/mCommerce B2C Markets Current $7.0b SaaS Enterprise Market ~500,000 Government, Education, Medical & Fortune 1,000 sites serving Enterprise and large business (> 500 employees) 48% of all employees in the US Evolving $6.8b SaaS and e/mCommerce SMB Market ~890,000 commercial sites serving 4.8m small business (>5< 500 employees), retail, medical offices and remote Enterprise offices; SMB commercial sites house 52% of all employees and 100% of out of home, mobile, on-site mobile consumers and shoppers. Digistream Addressed Markets This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 14 Introduction 1 0/30/08
  15. 15. Logo Here Market Opinion Spending on software-as-a-service enterprise applications will top $6.4 billion this year, a 27% jump over 2007, and will catapult to $14.8 billion by 2012, according to the research firm Gartner. SaaS adoption is being driven by businesses' pursuit of cost savings and quicker implementations, as well as wider availability of high-speed Internet connections, Gartner said. Also, initial concerns regarding the SaaS applications' security and reliability have faded somewhat as the model has matured, Gartner added. Content, communications and collaboration products constitute the biggest share of the SaaS market, with more than $2.1 billion in 2008 and $4.7 billion by 2012. Those applications are followed by CRM, which Gartner estimates will generate $1.7 billion this year and $3.2 billion by 2012. This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 15 Introduction 1 0/30/08
  16. 16. Logo Here DigitstreamSaaS Company Overview  Digistream, a North Carolina Value Added Distributor (VAD) and Managed Service Provider (MSP) that sells LAN products and SaaS applications.  The Company is introducing a unique on-site in device Rich Media Browser Application suite for e/mCommerce, payments and secured connectivity to other SaaS business applications.  The Company’s unique Browser and on site LAN service applications enable the Company to aggregate SaaS transactions, capture billing and payment data on demand and manage the intervening connectivity and security of the data flows over the carrier IP facilities.  The same applications suite also supplies the customer with interactive customer support, personal price checks for cannibalizing WEB shopping carts, HIPPA compliant medical content handling, PCI compliant card swipe handling and secure self service check out processes for cell phone users. This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 16
  17. 17. Logo Here Software Success Metrics  Have a compelling application suite (killer app)  Develop adequate Distribution Channels DigistreamSaaS has developed a compelling business device application suite that saves SMBs money and time on each SaaS use. DigistreamSaaS is distributing its software through VARs as a bundled new business service that helps the VAR increase their sales event revenues and margins and provides them an ongoing share of the Managed Service Provider and SaaS revenues. This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 17
  18. 18. Logo Here Our Software Business Objective is simple  Provide the software that controls the consumer screen at the Point of Purchase, at the Point of Decision (payment) of every electronic purchase (e/mCommerce).  Take the payment and keep as much of it as possible  Stimulate the use and proliferation of our applications through personal economic incentives, promotions, convenience and quality of service control over hosted SaaS providers. This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 18
  19. 19. Logo Here The Team (1)  President & CEO: Charles Edmonds – 35 years of experience; EVP Tandy (Radio Shack roll out) – 20 years running a private M&A group, Board of Director IBBA  COO: Howard Gunn – 38 years of experience; VP/GM GTE, GM Gandalf, VP Marketing/ PLM and Corporate Strategy Alcatel Network Services – Introduced and drove four separate billion dollar new market sectors  COB and founder: Charles Pearson – 30 years of experience; EVP Pearson Properties – Largest family owned and operated commercial property developer in North Carolina. This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 19 1 0/30/08
  20. 20. Logo Here The Team (2)  CTO: Phillip Matteis – 38 years of software development experience; President Intellect; President Intellecare – Secured ID system for law enforcement; HIPPA compliant network service in JV with AT&T  VP Sales and Marketing: Dr. Ali Farmher – 25 Years of experience; Director GTE, Booze Allan, Telecordia – Service development of ISDN, ISP, ASP globally  TB Hired – CFO: ~[05/09] acting CFO John Hubinger – VP Service: ~[06/09] tentative ex VP Service Coinstar – VP Applications ~[06/09] tentative ex president of a wireless carrier – Management will adjust if the need arises This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 20 1 0/30/08
  21. 21. Logo Here The Team (3)  Board of Directors  Board of Advisors (5 planned) (~4 planned) – Chairman: Charles – [Name] Pearson  President Baylor Medical  Head of finance committee – [Name] – Charles Edmonds  President Movie Mate  Secretary – Steve Blasco – David Freye president  EVP JP Morgan Chase DFB Associates – [Name] – Eric Bloom president  TBD Elbrus Fund – TBD This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 21 1 0/30/08
  22. 22. Logo Here Business Highlights  Digistream has attracted an experienced management team with a track record of new market development and the execution of profitable new businesses.  Digistream is the first to market with a unique on site browser and LAN application suite that collects billing data, delivers revenue producing e/mCommerce and cloud computing cost reduction applications.  Market Segment: Digistream’s applications are focused on content and transaction security and the creation of new revenue streams on site through the delivery of e/mCommerce, payment and buying applications.  Target Market: Unique browser and LAN software applications that provide a highly differentiated service suite for small box chain stores, primary care physician offices and SMBs (>5<500 employees).  Secondary Market: Bundled industrial products and software for Value Added Resellers and The Channel sales to small medium businesses. This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 22 1 0/30/08
  23. 23. Logo Here Business Highlights (2)  The Company’s primary revenue sources: The consumer product and SaaS e/mCommerce sales to mobile consumers will quickly dwarf the Company’s baseline industrial product and SaaS sales to SMBs.  Digistream SaaS e/mCommerce applications captures the wholesale to retail markup on certain electronic sales. SaaS enables the Company to achieve the lowest COGS and SG&A in the e/mCommerce market.  Planned ROI: The Company plans to produce 12% Net Income on sales, without the risk of manufacturing or cost to operate host data centers.  The Company’s SaaS contracts with retailers and employers enables SMBs, retailers and primary care physicians to increase their revenue per square foot and revenue per employee on their current cost base.  Secondary revenue sources include industrial product sales to SMBs, alternative processor POS transaction fees, resold SaaS application service fees and virtual loyalty and financial card uses. This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 23 1 0/30/08
  24. 24. Logo Here Business Highlights (3)  Overhead: The Company expects to have the lowest SG&A in the e/mCommerce market through the Company’s unique SaaS enabled virtual store/virtual loyalty club process.  Site Profitability is expected to occur within ~4 months from site opening; sites not achieving sales and profitability goals are closed.  Exit strategy: The Company is planning a public listing within two to three years, if market conditions warrant; There is a significant potential for acquisition by networking product vendors, SaaS suppliers and carrier service providers. This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 24
  25. 25. Logo Here Summary of Goals  1st year 2009  3rd year 2011 – Revenue: $874K – Revenue: $94.7M – Burn: $757K – Burn: $24.7M – Net Income:($440K) – Net Income $8.0M (8% of Revenue) – Headcount: 6 – Headcount: 56 – Customers: 4 – Customers: [14] – Sites: 30 – Sites: 1,030 – SaaS Sales/site/month $4.8k – SaaS Sales/site/month $7.6K  2nd year 2010 – Take company public – Revenue: $23.5M  4th year 2012 – Burn: $6.7M – Revenue: $449M – Net Income:$1.7M (7% of Revenue) – Burn: $95.7M – Headcount: 24 – Net Income:$48.9m (11% of – Customers: 10 Revenue) – Sites: 330 – Headcount: 158 – SaaS Sales/site/month $5.9K – Customers: 25 – Achieve profitability – Sites: 4,820 – SaaS Sales/site/month:$7.9K This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 25 1 0/30/08
  26. 26. Logo Here The SMB Pain  - “small business is a study in crisis management and a never ending search for the right resources that can help them grow their revenues, reduce their costs and get on the best road to financial freedom.” Blaine Riley IRA 2008  – “well-executed self-service is now a crucial strategic component of the overall customer-centric business strategy. And customers increasingly make it their first choice for primary interaction. [The Yankee Group 2008] This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 26 1 0/30/08
  27. 27. Retailers understand the Logo Here need & problem Self service/wireless check out does not create new sales! The new retail edge of the IP network $16 Upgrade cost base to digital $14 N o new digital revenue! $12 = declining store margins $ in billions $10 Managed LAN $8 Self Service $6 Wireless check out $4 Reduce other costs? $2 Replace executives? $0 2006 2007 2008 2009 2010 2011 Source: the Yankee Group 2007 T he need for digital line busting is driving the demand to re-merchandise sites and Digistream’s new on-site eCommerce and mCommerce services make it profitable! This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 27 Introduction 1 0/30/08
  28. 28. Logo Here Digistream addressed market SaaS, e/mCommerce, Payments, Medical $4,000 B $3.4 Growth of Retail on site Industry from Trillion $3,500 B $2.6 2008 - 2012 $3,000 B Trillion $2,500 B $1.2 Growth of the on site non- Trillion $2,000 B hospital health and wellness $800 Industry from 2008 - 2012 $1,500 B Billion $1,000 B $500 B Growth of the traditional WEB $580 $100 B eCommerce and mCommerce Billion $360 Industry from 2008 - 2012 SaaS $10 B Billion SMB $6.7B $0 2008 20009 2010 20011 2012 This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 28 Introduction 1 0/30/08
  29. 29. Logo Here Next Steps  We are currently seeking staged $8 million investment commitment – $3m planned for M&A, $4.5m for working capital expansion supporting the organic growth and $.5m fees and legal expenses. – Company will be internally self funding from Net Income by 2011. – Planning S1 registration, if market conditions warrant accelerated expansion in 2011.  Offering 25% of the firm for $8m to a strategic investor or group of investors that can help us develop processes, electronic service product lines and M&A leverage.  Follow up PPM meetings with qualified investors, $50K minimum, to be completed by McGuire Woods in 2008.  Attractive convertible debt instrument available for early investors; Unique liquid convertible preferred will be included in PPM at an attractive exchange rate.  Acquire the convertible instruments through signed agreements with McGuire Woods to capture the early promotion package and insure participation in the PPM and registration of the PPM shares (all shares to be registered without restriction). This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 29 1 0/30/08
  30. 30. Logo Here Questions? Thank You. This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 30 1 0/30/08
  31. 31. Logo Here Backup Materials This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 31 Introduction 1 0/30/08
  32. 32. Logo Here Virtualization Breakthrough Resources Network Simple User Device Interface Onsite Generator Low up front Electricity Investment/site Well Water Flexible capacity User convenience Software Software as Software Applications, A Service Hardware & (SaaS) On-demand Bandwidth cost sharing Plumbing This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 32
  33. 33. Logo Here SaaS applications serve different demands Off Site SaaS Hosting Suppliers eCommerc App Engine eS3 & EC2 Social database & content CPU and Web Enterprise Business & Office applications Storage Hosting Applications Applications Live Applications Applications On-Site SaaS Supplier Digistream is a Microsoft Gold Distributor and Reseller e/mCommerce with SaaS plus Service Browser & LAN Applications Security/Connectivity & on-site MSP services Payment - Identity & ‘Your place or theirs’ Personal Repository This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 33
  34. 34. Logo Here SaaS applications get different results This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 34 Introduction 1 0/30/08
  35. 35. Logo Here Early to new SaaS plus Service SMB market -without being the pioneer Entering with Microsoft Software plus Services Model and Product Lines During the opening keynote at PDC, David Thompson (corporate vice president of Microsoft Online) said that in the future, all of Microsoft's enterprise applications will be available as services. Should partners be surprised by that statement? No, it's really just a continuation of what we're doing. For example, if you think about the major applications in the Business Division, like Exchange, SharePoint, Office Communications Server, those are all either in the cloud or coming into the cloud shortly. Everything will end up being in the cloud. (Stephen Elop, president of the Microsoft Business Division). It's hard for us to imagine any of our applications that don't have a strong client, server and cloud story to tell across the PC, the mobile phone, and the browser. I'm responsible for Word, PowerPoint, and a whole ton of other applications, and that mandate applies to these, too. Even for applications that people wondered if they would ever see in the cloud, that's what we're doing. We're definitely changing it up in a big way. Stephen Elop October 29, 2008 This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 35
  36. 36. Logo Here Low hanging fruit - 330,000 small box store retailing sites driven by need for revenue, lower costs and profit growth year over year in competition with Superstores Target Market Entry Points • 2K Travel Centers • Technology • 6K Mass Merchandisers laggards, per site operations, 25m • 7K Dollar Stores employees. • 12K AAFES/Nexcom • Located in SMB • 20K Drug Stores market sites. • 32k Supermarkets • Serve out of home • 47K Shopping Malls mobile consumers. Available • Consistent, frequent • 90 Major Airports consumer touches. • 480 Minor Airports • 1K Club Stores • 120K Convenience Stores • 48K HotelsThis document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 36 • 4K Universities Introduction 1 0/30/08
  37. 37. Logo Here Market Summary  Target market value – 890,000 SMB commercial building sites that includes 330K small box stores (<80,000 square feet) that are doing ~$1.2 trillion in current sales and $0 e/mCommerce SaaS sales.  We are projecting $874,000 of new on site e/mCommerce SaaS sales (30 retrofit LAN sites) in 2009, growing to $944,842,000 (9,530 retrofit and new store sites) in 2012 (IPO in 2010-2011)  The perfect prospect – commercial sites with ~4,000/month foot traffic – 47 chains with over 500 stores meeting our criteria – 4,500 new stores opening per year; 1,500 closings per year – 440,000 multiple business tenant sites (multistory, strip mall…)  Significant competitors: 6 major MSPs and SaaS hosting providers (Amazon, Yahoo, Google, HP, NCR and IBM)  Total competitors: ~200 System Integration (SI) specialists in the US (SAP, Oracle…) that could duplicate our on site services. This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 37 1 0/30/08
  38. 38. Industrial Products, e/mCommerce and SaaS Sales mix = 12% Net Income Logo Here Profitable, Multiple Revenue Stream Business Model Loyalty Card Issuer's SaaS … Bank Suppliers $100/month VARs, $ $10 Gross Rev. System Supplier Commission Bank $5,500 $80/month Integrators Product $10,000 Industrial SaaS $10,000 COGS COGS Gross Rev. Product Sale & $69 e/mCommerce $100 SaaS Sale COGS Digital Mart Digistream e/mCommerce Digistream Bank $ Gross $4,642 Profits Gross Profit $98.75 SG&A $2,040 SG&A Gross $100 Card Sale … Rev. Non IP EBIT $2,602 Phone Windows EBIT Network PC Consumer’s Processors IP Data $ Bank - $100 Server Farm Consumer Internet This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. + $1.25 Service 38 Introduction 1 0/30/08
  39. 39. Logo Here Digistream Business Partners and Vendors NTG is a world class automated network management, eCommerce, billing, OSS, NMS and network services supplier. Beaufort is a leading provider of open systems software solutions. Beaufort provides an operating system wrap that enables computing systems to seamlessly launch and run diverse applications on networked platforms. Tyfone is a mobile infrastructure services provider that supports plug and play payment and identity services via cell phones Intellecare: via licenses from Intellect, provides secure data analytics and repository services and a robust healthcare product line Trusty is a provider of multi-network file sharing software and repository applications IP Commerce provides a platform for end-to-end commerce solution connecting payment, application and SCM providers Level Platforms provides a remote monitoring and management software with platform integration tools for automating results Cerona provides end to end broadcast and two-way satellite communication applications, modems and services This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 39 Introduction 1 0/30/08
  40. 40. Logo Here Digistream Business Partners and Vendors FiberPop is a nationwide provider of broadband and multimedia services to homes and businesses. FiberPop is a lead investor for DigistreamSaaS MovieMate is a China infrastructure warehouse and assembly provider with proprietary digital content and payment applications.. Adaptive Microware is a systems design and applications company with vast experience in all levels of video, wireless and consumer device components New Edge Networks is a provider of WAN and LAN networks and services as a division of EarthLink. AT&T is an international provider of WAN, LAN and wireless networks, applications, devices and services Trans World is a national provider of entertainment content and products. It provides a secure DRM management and delivery platform approved by digital content conglomerates Tech Mahindra is a global systems integrator and business transformation consulting firm focused on the communications industry. Lobeck is an international manufacturing of high value medical products This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 40 Introduction 1 0/30/08
  41. 41. Logo Here DigistreamSaaS Virtualization Summary  Digistream’s unique browser and Virtual Data Center LAN technology virtualizes the Internet and any service or resources on the WEB.  The Company plans to brand its SaaS suite as Digital Mart™ and then develop brand specialties starting with e/mCommerce and payments.  Our proprietary browser technology virtualizes the desktop (two-way interactive local PCs, electronic cash registers and cell phones).  We provide the virtualized devices our unique Wide Area Data Service (WADS) that provides IP ubiquity (any IP network) to any applications.  We have focused our initial SaaS applications on what our studies indicate are the highest margin and highest volume opportunities - e/mCommerce, payments, business productivity, business intelligence, and financial/medical record handling. This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 41
  42. 42. Logo Here Customer Profile  Decision maker is the VP of Sales in retail; the office manager in Medical and the CEO/owner in SMB.  Our value proposition – increase site revenue 5% on same cost base; increase the revenue per employee in SMB through no-cost e/mCommerce buying club and discount health card employee benefit program; increase productivity and decrease expenses through SaaS buying club and business solutions. This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 42 1 0/30/08
  43. 43. Logo Here Competition  Amazon – eCommerce retailing of consumer products (they capture the retail to wholesale markup and mange delivery and collections); Cloud Computing Hosting services for storage and server CPU cycles; – Weaknesses  Back end remote networked service; no local customer service interface or resold SaaS applications; no resources on site and no personal software value add.  Commodity processing services behind WADS provider, with no direct distribution channel to the SMB, retail buyer or mass market consumer  Differentiation on consumer price in competition with store retailers  PC oriented processes with limited cell phone interaction and no personal face to face selling or inducements to use the service – Strengths  Global installed base of price conscious consumers; low cost hosting  Technology skills for information technologies and operations. This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 43 1 0/30/08
  44. 44. Logo Here Competition (2)  Apple – Selling manufactured product and digital content in-store, on the WEB and in the home through electronic services that induces the use of their products and buying services. – Weaknesses  Successful but limited proprietary product offering that we will resell  Content resale service through hosting center has limited margins, limited format support and is limited to its proprietary product line  Limited product and service scope with high price cult following – Strengths  Wildly successful consumer product cell phone product line and software acceptance  Support of legacy product and the next product cost of a manufacturer in a market that will attract direct competition This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 44 1 0/30/08
  45. 45. Logo Here Partnerships  Interested Parties – Investor: Mr. Jim Louts FiberPop is lead investor in the current mezzanine round of funding – Investor: Victor Nygen Alliance Telecom merger – Investor: Blaine Reilly IRC – McGuire Woods preparing PPM; Steve Keeler  Experienced in aggressive venture planning in electronic retailing market space This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 45 1 0/30/08
  46. 46. Logo Here Products Overview  Full range of LAN, operating support software and industrial devices needed to implement business solutions – Two way interactive multi-purpose terminals and store display fixtures to merchandise, price and provide line busting Point of Sale check out and digital content delivery or publishing services. – Development and deployment of cell phone self service check out and price check, to cannibalize the web shopping cart. – Self service check out and new loyalty card purchasing. – Name brand switches, cabling, routers, bridges and multiplexers; engineering and installation; wireless check out and local networking. This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 46 1 0/30/08
  47. 47. Cash Register with our Logo Here e/mCommerce, wireless card and cell phone check out This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 47 Introduction 1 0/30/08
  48. 48. Unique e/mCommerce Logo Here Catalog & site remerchandising Over 2.5M SKUs (products) can be purchased on site or over any electronic network • Stereos, DVD, TV, Audio 40 SKUs • Portable CE, AM/FM, MP3 39 SKUs • IPODs, Digital Cameras, Video 628 SKUs (to unlimited) • Cell phones 19 SKUs • Video Game Consoles 2 SKUs • Medical items and pharmaceuticals 1,420 SKUs (to unlimited) • MP3 music download SKUs 1.2 million library • Movies, CDA download SKUs 1.8 million library • Movies, music, games pre-filled 55,000 SKUs • Drop ship and courier delivery Virtual warehouse (unlimited) • Business/personal publishing printing 850 SKUs • Industrial Products 102,034 SKUs • Consumer provided SKUs Coming Soon – retailing You Tube This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 48 Introduction 1 0/30/08
  49. 49. Logo Here Take It With You, Personal SaaS Buying and Payment Services Everywhere Digistream credit card and digital content shopping bags This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 49 Introduction 1 0/30/08
  50. 50. Logo Here SaaS LAN and Browser Business Solutions This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 50
  51. 51. Logo Here Summary of Goals  1st year 2009  3rd year 2011 – Revenue: $874K – Revenue: $94.7M – Burn: $757K – Burn: $24.7M – Net Income:($440K) – Net Income $8.0M (8% of Revenue) – Headcount: 6 – Headcount: 56 – Customers: 4 – Customers: [14] – Sites: 30 – Sites: 1,030 – Sales/site/month $4.8k – Sales/site/month $7.6K  2nd year 2010 – Take company public – Revenue: $23.5M  4th year 2012 – Burn: $6.7M – Revenue: $449M – Net Income:$1.7M (7% of Revenue) – Burn: $95.7M – Headcount: 24 – Net Income:$48.9m (11% of – Customers: 10 Revenue) – Sites: 330 – Headcount: 158 – Sales/site/month $5.9K – Customers: 25 – Achieve profitability – Sites: 4,820 – Sales/site/month:$7.9K This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 51 1 0/30/08
  52. 52. Logo Here Baseline Site Investment Risk Ability to achieve $2,000 per month break even in sales/site Target Store Performance $8,800 $7,600 $6,400 $5,200 Total Revenue $4,000 Total COGS $2,800 Promotion/SGA $1,600 Store Gross Profit $400 -$800 1 2 3 4 5 6 7 8 9 10 11 12 -$2,000 Months Open @ $3,000/month of Industrial Product, e/mCommerce and SaaS sales at the virtual data center produces 5% Net income. This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 52 Introduction 1 0/30/08
  53. 53. Why Consumers will use the Logo Here personal SaaS site service with mag-stripe cards  Consumers save money and time on every electronic purchase and they get Digistream bonuses in real time on demand  Consumers can select the bank card to use (get their card points) plus get store promotion discount and a commission from any purchases made by their friends and family that they sign up for the service.  Consumers get self service POS check out and local store customer services for returns and service, on site - not available on the WEB.  Consumers get will call, courier delivery and buy here pick up there transport saving, not available on the WEB  Consumers will get new wireless card service and micro-payment conveniences from their cell phone - everywhere. This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 53 Introduction 1 0/30/08
  54. 54. Logo Here Milestones (1)  Stage 1: Founding the Business √ [5/2005]: Incorporated in North Carolina √ [7/2005]: Remaining legal documents filed; acquire tech licenses √ [9/2005]: Secure angel funding ($550K at $9M pre money) √ [8/2005]: Ramp up hiring 3 people √ [9/2005]: Begin building prototype product √ [4/2006]: Procure Beta Site Test Agreements with AAFES & DFW √ [6/2006]: Beta test and rework product √ [11/2006]: Begin initial prototype product line – Music, Photo, Printing √ [1/2007]: Focus group deployments AAFES, University of NC, Nexcom √ [3/2008]: Rework and finalize initial product line – consumer electronics, personal health care, loyalty card, SaaS, merchandising, card processing √ [7/2008]: finalize technology partners, distribution agreements This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 54 1 0/30/08
  55. 55. Logo Here Milestones (2)  Stage 2: Developing the Business √ [7/2008]: Shore up management - acquisitions √ [9/2008]: Start 2nd round ($3M @ $32M pre money) – [12/2008]: Complete acquisition of operations – [2/2009]: Crank up marketing activity – [3/2009]: Emphasize customer acquisition – [3/2009]: Emphasize customer acquisition – Entertain any acquisition offers that arise This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 55 1 0/30/08
  56. 56. Logo Here Milestones (3)  Stage 3: Stabilizing and grow the business – [12/2009]: Four vertical market trials - 15 to 30 sites – [5/2010]: Secure phase 2 funding (~$5m @ $32m pre money) – [6/2010]: Achieve profitability – [09/2010]: File for IPO NASD listing This document does not constitute either an offer to sell or an offer to purchase securities. It is for information purposes only. 56 1 0/30/08
  57. 57. Virtual Term Sheet Logo Here Company: DigistreamSaaS  Trading: Private  C Corp Shares to be issued: 125,000,000  Price Per Offered Share: $0.25 for first $3m and $0.33 for $5m phase 2 mezzanine  Current Valuation: $12M – Internal Valuation  Headquarters: Charlotte NC Hqtrs; Operations primarily in Dallas/Fort Worth  2007 Revenue: $0  Business: Value Added Distributor (VAD) & Managed Service Provider (MSP) – SaaS enabled reseller of industrial products, consumer products, software products and new SaaS browser enabled electronic application services through unique electronic SaaS e/mCommerce, payments and new business SaaS applications.  Transaction Rationale: Low risk electronic service development investment, with massive upside potential to capture a dominant market position in the inevitable wireless electronic e/mCommerce and SaaS markets.  Other Considerations: not constitute either an offer to sell or an offer to purchase securities. Experienced Management Team; This document does Exclusive intellectual property; It is for information purposes only. 57 massive market undergoing a transition to on demand services. Introduction 1 0/30/08

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