Telecommunications Products Business Plan

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Table of Contents

1.0 Executive Summary ................................................................................................................ 1
1.1 Objectives ............................................................................................................................... 2
1.2 Mission ..................................................................................................................................... 2
1.3 Keys to Success .................................................................................................................... 2
Chart: Highlights ...................................................................................................................... 3
2.0 Company Summary................................................................................................................. 4
2.1 Company Ownership ........................................................................................................... 4
2.2 Company History .................................................................................................................. 4
Table: Past Performance ....................................................................................................... 5
Chart: Past Performance ....................................................................................................... 6
2.3 Company Locations and Facilities ................................................................................... 6
3.0 Services....................................................................................................................................... 6
3.1 Service Description .............................................................................................................. 6
3.2 Competitive Comparison.................................................................................................. 10
3.3 Technology ........................................................................................................................... 10
3.4 Future Services ................................................................................................................... 11
3.4.1 Mini-Short Messaging Service Center .................................................................. 13
3.4.2 Performance Appraisal of Networks (PAN) ......................................................... 14
4.0 Market Analysis Summary .................................................................................................. 15
4.1 Market Segmentation ....................................................................................................... 16
Chart: Market Analysis (Pie) .............................................................................................. 17
Table: Market Analysis ......................................................................................................... 17
4.2 Target Market Segment Strategy ................................................................................. 18
4.2.1 Market Needs ............................................................................................................... 19
4.2.2 Geographic Market ..................................................................................................... 19
4.3 Service Business Analysis ............................................................................................... 20
4.3.1 Distributing a Service................................................................................................ 20
4.3.2 Main Competitors ....................................................................................................... 21
4.3.3 Business Participants................................................................................................. 22
5.0 Strategy and Implementation Summary........................................................................ 22
5.1 Competitive Edge ............................................................................................................... 22
5.2 Marketing Strategy ............................................................................................................ 23
5.2.1 Promotion Strategy .................................................................................................... 23
5.2.2 Pricing Strategy .......................................................................................................... 24
5.3 Sales Strategy ..................................................................................................................... 24
5.3.1 Sales Forecast ............................................................................................................. 25
Table: Sales Forecast ....................................................................................................... 25
Chart: Sales by Year ......................................................................................................... 26
Chart: Sales Monthly ........................................................................................................ 26
5.4 Milestones ............................................................................................................................. 27
Chart: Milestones ................................................................................................................... 27
Table: Milestones ................................................................................................................... 28
6.0 Management Summary ........................................................................................................ 28
6.1 Management Team ............................................................................................................ 28

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Table of Contents

6.2 Personnel Plan ..................................................................................................................... 29
Table: Personnel .................................................................................................................... 29
7.0 Financial Plan .......................................................................................................................... 30
7.1 Important Assumptions.................................................................................................... 30
Table: General Assumptions .............................................................................................. 30
7.2 Key Financial Indicators ................................................................................................... 31
Chart: Benchmarks ............................................................................................................... 31
7.3 Break-even Analysis .......................................................................................................... 32
Chart: Break-even Analysis ................................................................................................ 32
Table: Break-even Analysis ................................................................................................ 32
7.4 Projected Profit and Loss ................................................................................................. 33
Chart: Profit Monthly ............................................................................................................ 34
Chart: Profit Yearly................................................................................................................ 34
Chart: Gross Margin Monthly ............................................................................................. 35
Chart: Gross Margin Yearly ................................................................................................ 35
Table: Profit and Loss ........................................................................................................... 36
7.5 Projected Cash Flow .......................................................................................................... 37
Chart: Cash .............................................................................................................................. 37
Table: Cash Flow .................................................................................................................... 38
7.6 Projected Balance Sheet .................................................................................................. 39
7.6 Projected Balance Sheet .................................................................................................. 39
Table: Balance Sheet ............................................................................................................ 39
7.7 Business Ratios ................................................................................................................... 39
7.7 Business Ratios ................................................................................................................... 39
Table: Ratios ........................................................................................................................... 40
Table: Personnel .............................................................................................................................. 1
Table: General Assumptions ........................................................................................................ 2
Table: General Assumptions ........................................................................................................ 2
Table: Profit and Loss .................................................................................................................... 3
Table: Profit and Loss .................................................................................................................... 3
Table: Cash Flow ............................................................................................................................. 5
Table: Cash Flow ............................................................................................................................. 5
Table: Balance Sheet ..................................................................................................................... 6
Table: Balance Sheet ..................................................................................................................... 6
Table: Sales Forecast ..................................................................................................................... 7
Table: Sales Forecast ..................................................................................................................... 7

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OSS Telecom Technology

1.0 Executive Summary

OSS Telecom Technology is an exciting Bend, Oregon based offshoot of OSS Telecom
Technology Taiwan, a $300 million steel conglomerate. The main company was formed to
pursue opportunities in operations support systems (OSS) in the telecom software industry. The
company has enjoyed a solid base of 24 telecom operators utilizing their software.

OSS Telecom Technology will pursue several objectives that will allow them to quickly gain
market penetration. The first objective is to offer a high value, high quality product for the
telecom industry. Also important from an internal operation standpoint is the ability to develop
superior human assets through training and competitive incentives. Lastly, OSS Telecom
Technology will pursue a customer intimacy model. The pursuit of this specific business model
will ensure complete satisfaction of their customers.

The Products

OSS Telecom Technology has a diverse OSS-based repertoire of products to support the
telecom industry. Their first product is CARIBOU, a subscriber billing software solution. Within
the CARIBOU package, traffic processing, bill generation, accounts payable, system
administration, packaging, and customer care and administration are addressed. Each module
within CARIBOU is its own robust application.

OSS Telecom Technology also offers their MEDUSA product. The MEDUSA product provides
network support in the form of configuration, control, and management of network elements.

The Market

The market potential is huge for OSS Telecom Technology's products, evidenced by what
appears to be the unstoppable growth of the telecom industry is quite promising. Currently, the
telecom industry is the strongest growth industry and is responsible for huge gains in the
capital markets. The proliferation of cell phones, as just one subset of the telecom industry is
increasing at rates which at one time were unimaginable. One illustrative example is that it is
forecasted that within two years 65% of children from the age of 10-15 will have cell phones.
Broadband Internet service is also forecasted to achieve record penetration. Within three years
it is expected that 85% of the population will have access to some sort of broadband connection
with 60% of that group subscribing.

OSS Telecom Technology will target two market segments. The first is Tier 2 telecom operators.
This segment has an 8% annual growth rate and 481 potential customer. The second targeted
market segment will be Tier 3 telecom operators. While the annual growth rate of this segment
is less at 6%, there are more potential customers, 2,011.

Management Team

OSS Telecom Technology has put together an experienced management team to lead the
organization through this dynamic industry. The assembled team was chosen to a large degree
on the experience that they had within the industry. The telecom industry is quite technical and
comprehensive information and insight of this unique sector is instrumental for success. Victor
Smith has been brought in as CEO. Victor has 25 years of telecom experience. The last 12
years Victor has severed as COO of Atlas Telecom, a major player. OSS has another Atlas
Telecom executive in the person of Kenneth Jones. Kenneth is the Executive Vice President and
has also served with the NCR Corporation and Harris Corp. Kenneth worked on a large variety
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of projects at these companies and brings a strong skill set to OSS Telecom Technology. James
Jackson is also an Executive Vice President with experience from IBM, Atlas, Mosaics and the
Lotus Development Corporation. Rounding out the management team is Ken Smith with topical
experience from MIDCOM Communications and US Intelio Networks.

OSS Telecom Technology, leveraging their strong management team and their superior product
offerings will reach the Break-even point in year two. After a Net Loss in year one, Net Profit
will become positive at the end of year two, but will leap up in year three. Sales for OSS
Telecom Technology is forecasted to be moderate in year one and see a hefty increase again by
the end of year three.

1.1 Objectives

OSS Telecom Technology's operating model is designed to meet our goals which include:

1. Developing OSS solutions for telecom operations.
2. Bringing high value, high quality products to market.
3. Developing human assets through training and competitive incentives.
4. Practicing a customer intimacy business model.

1.2 Mission

Our mission is to be the provider of high value, high quality, convergent OSS solutions to
telecom operators worldwide. These scalable solutions will have unparalleled support to ensure
flexibility and to meet--and exceed--customer expectations.

1.3 Keys to Success

Strategic Imperatives

In order to achieve its mission, OSS Telecom Technology has made a set of clear and distinctive
strategic choices. These choices have been developed based on two key factors:

 The OSS marketplace
 The company's capabilities

These choices translate into key strategic imperatives which OSS Telecom Technology is
pursuing to gain leadership in the OSS market. There are three levels of operators within the
telecom market. Tier 1 are operators with a subscriber base above one million, Tier 2 are
operators with a subscriber base between 100,000 and one million, and Tier 3 operators are
those with less than 100,000 subscribers.

 Value focus: OSS Telecom Technology will focus on Tier 3 operators, providing full
featured, scalable, and reliable products and service at competitive prices. The lifecycle
price of OSS Telecom Technology's software products will be 20-40% below Tier 1
competitors such as LHS and Kenan, but will still possess all the features and services
offered by these players. Tier 3 competitors, such as Moscom, while lower on price, will not
be able to compete with the features and service OSS Telecom Technology offers.

 Wireline and Wireless Product Portfolio: OSS Telecom Technology's product offering
will evolve from Global Systems for Mobile Communications (GSM) to include other wireless,
fixed, and Internet billing solutions. While initial products were GSM-based, OSS Telecom
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Technology is already broadening its product lines to include local loop billing and
convergent billing capabilities, which are key customer requirements.

 Engineering Center of Excellence: OSS Telecom Technology will continue to develop its
low cost, high quality software development and programming center in Taiwan, which
provides significant cost advantages over U.S. and Europe-based competitors.

 Consulting Services: OSS Telecom Technology will combine consulting services with
products to develop strong customer relationships and advance its product offerings. The
provision of consulting services will allow a more customized, relationship-driven approach
to our customers. OSS Telecom Technology will pursue those projects which can be made
into products and marketed to other potential customers. OSS Telecom Technology will
employ strict criteria to determine which consulting services projects it undertakes. Unless
there is an opportunity to "productize" or repeat the solution being developed, the project
will not be pursued.

 Sales Channels: A multi-national marketing and sales team will build both direct and
indirect sales channels. In order to capitalize on the opportunities in each geographic region,
OSS Telecom Technology has put into place a network of on-the-ground, experienced, and
incentivized sales and marketing personnel. These teams will build both direct customer
relationships and indirect channels (through systems integrators, switch manufacturers,
etc.). The indirect channel partners will give OSS Telecom Technology critical leverage. OSS
Telecom Technology will allocate resources to building its partnerships with indirect sales
channels. Partners such as Compaq will allow OSS Telecom Technology to gain geographic
reach, credibility, and customers which would not otherwise be possible. Specific partner
support programs will be put into place to ensure cultivation of these partnerships.

Chart: Highlights

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2.0 Company Summary

OSS Telecom Technology is a subsidiary of OSS Telecom Technology Taiwan, a $300 million
conglomerate, historically specializing in value-added steel products. OSS Telecom Technology
is recognized as a leader in using sound business practices, which include: high-quality
standards, constant development of infrastructure, and investment in assets to produce high-
value products for its customers. OSS Telecom Technology believes that its people are its
strongest asset. To this end, OSS Telecom Technology has developed an exemplary training
institute to train managers in the latest management techniques and production staff in state-
of-the-art manufacturing. OSS Telecom Technology prides itself on its integrity and ability to
meet and exceed customers' expectations.

2.1 Company Ownership

OSS Telecom Technology Taiwan was formed as a Taiwanese corporation in 1994 to pursue
opportunities in the Operations Support Systems (OSS) telecommunications market, with a
particular focus on Customer Care and Billing software solutions (CCB systems).

2.2 Company History

Attracted by the potential of the telecom industry and based on its own core business values,
OSS Telecom Technology developed a strategy to enter the telecommunications business.
Initial steps in this strategy included the acquisition of a GSM license for Taipei to provide GSM
services in Taipei and paging services throughout Taiwan. Telecom Malaysia was selected as a
joint venture partner for the implementation of telecom operations.

OSS Telecom Technology soon discovered that new tools needed to be developed to efficiently
operate within a competitive telecom environment. As a result, OSS Telecom Technology
formed an information technology group specializing in telecom software development. Telecom
Malaysia selected OSS Telecom Technology to develop a system called DINE, which is a
mediation product that interfaces with five different types of telecom switches and collects call
detail records (CDRs) from 1,200 central offices for 4 million subscribers. This was OSS
Telecom Technology's first project, and was the beginning of the success story in which OSS
Telecom Technology focused on telecom Operations Support Systems (OSS) solutions.

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Table: Past Performance

Past Performance
FY 1998 FY 1999 FY 2000
Sales $0 $3,051,400 $11,513,000
Gross Margin $0 $2,203,300 $8,902,400
Gross Margin % 0.00% 72.21% 77.32%
Operating Expenses $0 $7,890,400 $13,662,300
Collection Period (days) 0 117 58

Balance Sheet
FY 1998 FY 1999 FY 2000

Current Assets
Cash $0 ($4,840,000) ($16,772,000)
Accounts Receivable $0 $1,221,000 $1,854,000
Other Current Assets $0 $1,011,000 $1,511,000
Total Current Assets $0 ($2,608,000) ($13,407,000)

Long-term Assets
Long-term Assets $0 $6,726,000 $8,917,000
Accumulated Depreciation $0 $917,000 $1,694,000
Total Long-term Assets $0 $5,809,000 $7,223,000

Total Assets $0 $3,201,000 ($6,184,000)

Current Liabilities
Accounts Payable $0 $1,136,000 $2,115,000
Current Borrowing $0 $0 $0
Other Current Liabilities (interest free) $0 $0 $0
Total Current Liabilities $0 $1,136,000 $2,115,000

Long-term Liabilities $0 $7,300,000 $1,030,000
Total Liabilities $0 $8,436,000 $3,145,000

Paid-in Capital $0 $1,667,000 $1,667,000
Retained Earnings $0 ($6,902,000) ($10,996,000)
Earnings $0 $0 $0
Total Capital $0 ($5,235,000) ($9,329,000)

Total Capital and Liabilities $0 $3,201,000 ($6,184,000)

Other Inputs
Payment Days 0 30 28
Sales on Credit $0 $1,900,000 $9,600,000
Receivables Turnover 0.00 1.56 5.18

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Chart: Past Performance

2.3 Company Locations and Facilities

OSS Telecom Technology has established its headquarters in Bend, Oregon. The company
entered into a five-year lease of a 6,500 square foot office facility. Regional sales offices have
been established in Denver, Colorado (three-year lease of a 2,500-square foot office); Mexico
City (two-year lease of a 2,000-square foot office). Two technical support office facilities are
located in Taiwan, in the cities of Taipei and Kaohsiung (three-year leases of 5,000 and 3,500-
square foot offices, respectively).

3.0 Services

This section describes OSS Telecom Technology's different products, including CARIBOU,
MEDUSA, PAN, and the new products in production such as the SMSC and the IN Pre-Paid
Calling Card platform. This section also gives an overview of the product road maps for the
various products and includes some of the highlights which make the products unique from and
more advanced than similar competing products.

3.1 Service Description

Below is a description of OSS Telecom Technology's different products, including CARIBOU,
MEDUSA, PAN, and the new products in production such as the SMSC and the IN Pre-Paid
Calling Card platform. This section also gives an overview of the product road maps for the
various products and includes some of the highlights which make these products unique from
and more advanced than similar competing products.

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Description of CARIBOU
Subscriber Billing

The basic billing system consists of the following modules:

1. Traffic Processing
2. Bill Generation
3. Accounts & Payment
4. Systems Administration
5. Packaging
6. Customer Care and Administration
7. Specific Value-Added Features

I. Traffic Processing

1. Pricing: CDRs received through tape or from the mediation system are validated and then
taken up for pricing using the tariff package, tariff plan, rate structure, rate calendar,
discounts structure. There are four types of pricing - FLAT, VOLUME, STEP, and
SEGMENTED.
2. Reject Maintenance: CDRs with missing information are listed with reject value codes for
manual processing.
3. Traffic Posting: After pricing, the records are posted to the corresponding subscriber
account that is used during bill generation.

II. Bill Generation

Bill generation can be of three types--ad-hoc billing, warm (hot) billing, and cycle wise billing.
The system can take care of multiple billing cycles and multiple billing groups.

1. Pre-bill processing: This process is mainly used for calculating the recurring amount of each
bill cycle.
2. Final bill generation: This process starts after pre-bill processing and it calculates the total
bill and its corresponding discounts for every subscriber. Other than total bill calculation, it
takes care of VOLUME PRICING, FLAT discount, and VOLUME discount.
3. Bill Posting: Records are posted to their corresponding subscriber's account after bill
generation.
4. Bill Printing: Printing can be distributed over various printers in the network. In addition,
printing can be selective depending on the account and subscriber number.

III. Accounts & Payment

 Online Payment: Payment can be done over the counter, which is online.
 Off-line Payment: Payment can be collected manually and it can be entered into the system
collectively (in batch).
 Payment Adjustment: Adjustments can be made against accounts in case of both online and
off-line payment.
 Refund: System is capable of providing refunds to its customers.
 Bill Follow-up: In case of late payment, bill follow-up is necessary. The system is capable of
generating reminders in the occurrence of a late payment.

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IV. Systems Administration

1. User Administration: This takes care of user management and their privileges.
2. Number Inventory: Manages all subscriber's and service's number inventory.
3. Subscriber Activation/Deactivation: This activity is performed through MEDUSA's service
provisioning system.
4. Bill Correction/Write-off: This is a supervisory function where any bill correction and write-
off is taken care of.
5. Master Information: All the static information is managed through this module. Usually all
system parameters are maintained here.
6. High Toll Alert: System is capable of generating a high toll alert report that can help to
identify fraud.

Packaging

A. Packages: This system can support the following four types of packages:

1. Primary Package: This package is mainly for basic services. It contains four types of plans:
one-time, deposit, recurring, and service usage time.
2. Value-Added Package: This package is designed for all value-added services like call
forwarding, call waiting, busy transfer, STD, ISD etc. It contains four types of plans: one-
time, deposit, recurring, and service usage.
3. Free Service Package: This package is designed for free minutes or units of calls only. A
particular package can be attached to the customer or a specific free service can be
provided.
4. Discount Package: This package is designed for discount only. A particular discount package
can be attached to the customer. Discount can be two types - Flat and volume.

B. Marketing Plans: Each package is attached to various plans. There are five different plans:

1. One-time Charge Plan: This plan is used for one-time charges only.
2. Deposit Charge Plan: This plan is used for deposit charges only
3. Recurring Charge Plan: This plan is used for recurring charges only.
4. Service Charge Plan: This plan is used for service charge only.
5. Long Distance (National and International) Charge Plan: This plan is used for any national
and international long distance call charge.

C. Rate Structures: Support for various types of rate codes and corresponding rate details.

D. Rate Calendar:

1. Daily Rate Calendar: A rate calendar may be generated separately for each day of the week.
2. Holiday Rate Calendar: This rate calendar is used for holidays only.
3. Ad hoc Discount Calendar: This rate calendar is used for ad hoc discount.

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VI. Customer Care and Administration

CARIBOU provides a single window, single view for the Customer Care Agent (CCA) to address
any activity or query pertaining to subscribers that he/she is responsible. A customer calling
online has to go no further to address any issue related to the service. The CCA even has
access to bill images and CDR history through that single window.

A. Subscriber Registration: Registration is a quick and easy process, which may be performed
both on-line as well as off-line (batch). Different marketing plans are offered to a customer
such as: choice of bill date, number selection choice, and other related start-of-service options.
Of course, the package allows for changes in options as many times as is required.

B. Customer Inquiry:

1. Service (primary & value-added services)
o Package related information
o Tariff related information
o Bill related information
2. Activation/Deactivation status
3. Usage Charges
o Bill Amount
o Pending/Adjustment amount
o Credit limits information

C. Customer Complaint: CARIBOU recognizes the fact that the grade of service of telecom
service network draws parameters from all possible service point. To address, track and
contain/minimize faults/complaints, the system provides for a sophisticated management and
tracking of technical and commercial faults/complaints.

D. Complaint Tracking: Recording a complaint is not sufficient. More often than not, a customer
will follow-up on the complaint to inquire about the completion status. The system allows
complaints to be recorded along with updating of the action initiated, thus enabling status
tracking. Various reports can be generated on complaints and actions taken. Complaint aging
reports can also be generated for MIS and evaluation of the quality of service of the network.

E. Customer Feedback: Collection of customer feedback is essential in any service. The
feedback is analyzed and action is taken to improve the quality of service.

F. Emergency Service: A directory service for emergency and utility numbers and other details
is provided in CARIBOU for better customer care for the network.

Description of MEDUSA

The activities handled by MEDUSA are:

1. Acquisition of data from network element.
2. Validation of the data, translation into intermediate form suitable for delivery and storage of
the data.
3. Delivery of the processed data to other applications according to a predefined format.

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The system can provide various services for configuration, control, and management of the
Network Elements including:

1. Activation of a subscriber.
2. Deactivation of a subscriber.
3. Denial of service to a subscriber.
4. Resumption of service to the subscriber.
5. Addition of value-added services, like three-party conference and call forwarding, to the
subscriber.

MEDUSA coordinates and controls the actions of the various NEs to which it connects, thus
obviating the need to configure each concerned entity individually.

3.2 Competitive Comparison

Specific Value-Added Features

The OSS Telecom Technology billing system is functionally rich and modular. It supports basic
services and several value-added services. Some of the special features of CARIBOU are:

 High Toll Alert: Monitor credit limits and different thresholds and generate action
alarms. This feature can be configured to trigger more often to reduce network operator
exposure.
 Warm Billing: Ability to generate bills on demand.
 Friends & Families: Qualifying a group of numbers for individual subscribers enabling special
discounts when calling those numbers.
 Churn Analysis: Analysis of calling patterns, demographic details, and behavior of usage to
predict and prevent subscriber exodus.
 Trend Analysis: Statistical analysis of usage patterns and correlation to demographic
parameters to assist marketing.
 Fraud Management: Analysis of customer database and monitoring of online calls to detect
and prevent possible fraud and limit network exposure.
 Loyalty Programs: Bonus programs and credit earning schemes enabling customer
retention. Partnership with airlines and other such organizations in exchange of data.
 Point of Sales (POS): Sales outlets and dealer/agent/retail outlets to manage sales of
services in a commodity fashion.

3.3 Technology

Today's changing scenario of fierce competition forces telecom operators to offer multiple
services. The use of information technology to effectively manage telecom operations is thus
becoming a key differentiation in the drive to get a share of the market. The role of IT is not
limited to "piece-meal" automation. What an operator looks for is seamless integration of his
information needs and the ability to provide innovative customer services.

At the core of a telecom operator's business is revenue billing for the service(s) that it provides.
Timely and accurate billing are preconditions for a smooth operation. At the same time, an
operator is largely dependent on the billing system to provide the flexibility in marketing plans
that subscribers desire. Customer care is another area which is crucial to operations, and, as a
result, billing solutions available in the market need to be judged on the basis of timeliness,
accuracy, flexibility, and customer care administration.

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OSS Telecom Technology has a well-defined process of quality assurance, which is followed and
monitored rigidly. The group reports to the CEO and President, directly.

OSS Telecom Technology has initiated the process of ISO 9000 certification for its systems and
procedures. The systems will be certified for our Taiwan operations. All OSS Telecom
Technology engineering is being performed out of its Taiwan development center, therefore
OSS Telecom Technology will initially apply for certification of those operations. With the help of
external consultants, OSS Telecom Technology has completed most of its
projected milestones. It is expected that OSS Telecom Technology's Taiwan operations will
achieve ISO 9000 certification by June, 2001.

3.4 Future Services

IN Pre-Paid/Calling Card Platform

Product Description

The Calling Card/Pre-Paid system shall be broadly categorized into two subsections.

1. Service Management - for call processing
2. Business Management - for system administration, customer care, and value card
management

Call Processing

Some features for calls controlled through this platform are as follows:

 Call Setup
 Call Tracking
 Call Termination
 Credit Update
 CDR Generation
 Call Rating

Some of the functions of the Calling Card platform are mentioned below.

Dealer Management

The system has an optional dealer management module as a part of value card management.

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Customer Care and Administration

The customer care portion of the product shall be flexible to incorporate the following functions,
as well as the future needs of the service provider. It shall be such that the overhead on the
customer care expenditures shall be kept at a minimum.

 Add/modify/delete subscriber data
 Add/modify/delete packages
 Add/modify/delete tariff tables of various other operators

Operator Assistance: Subscribers shall directly talk to the operator for any complaints, queries,
and recharging.

Value Card Management

 Value Card Generation
 Value Card Inventory
 Value Card Usage
 Value Card Expiration

Recharging

DTMF support or through operator assistance

Forbidden Numbers

The administrator shall maintain the forbidden numbers list in the database so that the system
checks these numbers while confirming the call setup. The customer care module will
provide support to add or delete the forbidden numbers.

CDR Viewing

The system administrator shall view the details of the CDR by accessing them from the
database. The customer care module will provide support for this feature.

Credit Usage Reports: The system shall generate credit usage reports for the subscribers using
the CDRs.

System Administration

The system shall have a system administrator to execute the following:

 Authentication of users: The system allows the users to access various features by checking
the authentication of the person logged in.
 Backups: The system will support backups of data, like CDR and value cards, when the
database becomes significantly large.

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Consumer Ease of Use Features

 Minimum MOC before allowing MTC (for wireless implementation)
 First call treatment
 Reminders
 Announcements

Product Road Map

This section intentionally does not depict an explicit road map for Pre-Paid IN. The features
incorporated in Pre-Paid IN for CARIBOU will be driven by customer care, billing, and tariffs.

Conclusion

The OSS Telecom Technology Pre-Paid IN/Calling Card platform is conceived to be a market
leader for the following reasons:

 IN node-based technology
 Value for money
 Enhanced customer care for pre-paid subscribers
 Quick response time
 Capacity limited to number of lines in the switch

3.4.1 Mini-Short Messaging Service Center

SMSC (OSS Telecom Technology's Mini-Short Messaging Service Center)

Description of the SMSC Platform

OSS Telecom Technology has two deployments of the same product. In one approach SMSC
kernel and the G/I WMSC functionality are bundled into a single entity running on one platform,
whereas the conventional architecture maintains various distributed SMSC kernels connected to
a G/I WMSC through a TCP/IP network. This will help the customers who would want the entire
solution in one box and do not want the solution to contain separately managed entities.

The distributed SMSC kernel is mainly used for connecting SMEs that need to handle massive
throughput. It is also helpful when there is a need for having SMSCs to be geographically
separated.

Providing a configurable SME interface: This can configure itself from an SME protocol
specification file. This file is SME vendor specific. The underlying protocol for message delivery
could be either TCP/IP or X.25.

The SMSC is capable of generating the interface required to connect to different SMSCs. This
will make the SMSC capable of connecting to all major existing interfaces like EMI from CMG,
SEMA, etc. Most importantly, it will help SME vendors define an appropriate interface for their
application that is compatible with SMSC.

Configuring the SS7 card components through the SMSC user interface. Through user interface,
it is able to configure more than one kind of hardware but insulates the hardware idiosyncrasies

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from the user. The user will always to presented with the same abstract view of the SS7
network through the interface.

Features of the SMSC Platform:

 Supporting message concatenation
 Supporting message replacement
 Provide two different architectures for deployment
 Providing a configurable SME interface
 Configuring the SS7 card components through the SMSC user interface
 Providing diagnostic and troubleshooting sessions with managed object
 Making the SMSC available on other platforms
 Making the SMSC capable of generating its own CDRs
 Rapid implementation of VASP over SMS possible, e.g. Stock Watch, email notification and
retrieval, other content provisioning interfacing the Internet, etc.

Conclusion

OSS Telecom Technology's SMSC proves to be the best in its class because of the following
features:

 Available on NT and UNIX
 Distributed computing enabling implementation on multiple machines
 Open interface for any RDBMS
 Value for money
 APIs for rapid deployment of value-added applications

3.4.2 Performance Appraisal of Networks (PAN)

PAN: Performance Appraisal of Networks (Telecom Network Performance Monitoring
System)

Description of PAN

PAN offers a robust and flexible menu-driven reporting facility. Its reporting module provides
both routine and customized reports. The user can specify the following for generating
summary reports:

 The date of the report to be generated
 The network counters to be used for the reports
 The sort criteria (e.g. by descending utilization, etc. - highest first)
 Threshold values to select the data (e.g. more than three Erlangs traffic)

Reports on a daily, weekly, and monthly basis, on key statistics, help the network operator to
consistently monitor under- or over-utilization of network resources, call pattern distribution,
quality of service, etc.

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PAN's Features

 Three-dimensional graphs
 Call-key Statistics Module
 Channel Usage Analysis Module
 Network Profitability Ratio Analysis Module
 Comparative Ratio Analysis Module
 Rank of the Network
 A map of the network hierarchy
 Fault management
 ODBC-JDBC Bridge
 OMC-Switch Interface
 BSS Subsystem Planning Module
 Stores network performance for 6 to 12 months
 Reduces data storage load on the telecom network's OMCs
 Displays multiple graphs for comparisons of various behaviors of network components
 Can be integrated with multi-vendor switch and radio equipment
 Flexible querying and display facility
 Provides indication of revenue earned and revenue lost
 Ease of use - minimum or no training required for MIS use
 Client-server architecture based on JAVA

Conclusion

PAN rides on new technology to take advantage of and keep ahead of competition. There are
very few similar products in this class. PAN is better than Metrica and similar products for the
following reasons:

 Runs on JAVA and is hardware independent
 More value for less money
 Internet enabled and accessible
 User customizable query builder

4.0 Market Analysis Summary

Operations Support Systems (OSS) encompasses a broad range of applications and
services. Although definitions vary, OSS typically includes applications geared toward customer
acquisition, service provisioning, asset management, network management, customer care, and
billing. Increasingly, these applications are becoming more interdependent and carriers are
beginning to realize how important world-class OSS is to effectively eliminate competition.

Telecommunications OSS

The OSS segment of the telecommunications industry is experiencing tremendous growth. The
increasingly competitive telecommunications market, both wireline and wireless, has increased
carriers' awareness of the importance of OSS. As a result, companies are investing millions of
dollars in their OSS in order to improve operations and create a competitive advantage.

In terms of aggregate spending on OSS, projections differ, mainly because there is no
consensus on the exact definition of OSS. Nevertheless, the Yankee Group, an internationally
recognized leader in research and consulting services, predicts that the OSS market will grow to
almost $60 billion worldwide in 2001 before falling off slightly. The slight decrease in spending

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is the result of more companies choosing to build, rather than buy, certain components of their
OSS.

Customer Care & Billing Overview

OSS Telecom Technology currently focuses on one aspect of OSS, customer care and billing
(CCB) systems. At its highest level, a CCB system provides a carrier with the means to bill its
customers for service. However, bill generation is but one aspect of a complete CCB application.
The data captured by the billing system provides valuable information to both the carrier and
the customer on how services are used, what additional services are necessary, how services
can be used more efficiently, or even how effective particular promotions or operations have
been. Today's CCB systems collect, collate, manage, and report this valuable information to
management, usually in real time.

CCB systems are also vital in terms of customer service and satisfaction. By having real time
access to customer information, customer service representatives can better respond to
customer needs in a timely and efficient manner. In addition, modern CCB systems can turn the
monthly bill into an invaluable marketing tool; this is important since the customer's bill is the
only regular contact a company has with its customers. As a result, a great deal of attention is
typically place on a company's CCB applications.

4.1 Market Segmentation

Telecommunications Customer Care & Billing Market Segments

To better understand the market for CCB applications and services, it is useful to consider the
market by segments. With respect to OSS Telecom Technology, three main criteria for market
segmentation are particularly important: geographic, technological, and subscriber. Within
these segments, the number of operators will be examined, since it is operators who buy and
use CCB systems.

Geographical Market Segments

The available market for CCB products is not limited to a single country. The market for CCB
applications and services is indeed global. Literally every country on earth has some type of
telecommunications infrastructure in place. However, the degree of teledensity within countries
and the number of competitors within countries varies greatly. Therefore, it is useful to
segment the available CCB market into global regions.

OSS Telecom Technology has identified five individual regions: Europe, North America, Latin
America, Africa, and Asia. Together, these regions account for the entire world, and OSS
Telecom Technology's potential customers.

Technological Market Segments

Another useful way to look at the overall market is through technology. In this case, the total
market was segmented based on whether the operator is a wireless service provider, a wireline
service provider, or a provider of both. The number of wireless operators is greater than that of
wireline operators. This is to be expected given that in many developing countries wireless is
the most cost-effective type of infrastructure. In addition, competition has been active in the
wireless market longer than it has been in the wireline market.

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Subscriber-Based Market Segments

The last type of market segmentation to consider is subscriber-based. The distinction by
subscriber size is important because operators' needs, with respect to CCB applications,
typically change with subscriber levels. Tier 1 operators would typically tend toward in-house
development of their CCB applications. Tier 2 operators and Tier 3 operators are more likely to
opt for a third party CCB application. OSS Telecom Technology's primary focus is on Tier 3
operators, which represent the vast majority of available operators.

Chart: Market Analysis (Pie)

Table: Market Analysis

Market Analysis
2000 2001 2002 2003 2004
Potential Customers Growth CAGR
Tier 2 Telecom Operators 8% 481 519 561 606 654 7.98%
Tier 3 Telecom Operators 6% 2,011 2,132 2,260 2,396 2,540 6.01%
Other 0% 0 0 0 0 0 0.00%
Total 6.40% 2,492 2,651 2,821 3,002 3,194 6.40%

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4.2 Target Market Segment Strategy
Post-paid Customer Care and Billing

The total available market for Customer Care and Billing (CCB) systems worldwide is projected
to be $6.9 billion per year in 2004.

A measurement of total available market is the compilation of the number of telecom operators
that will replace their billing system and the number of new billing systems coming online each
year. Half of all billing systems are replaced on average every four years. With over 3,500 Tier
2 and Tier 3 telephone operators currently in operation, and a projected 1,500 new Tier 2 and
Tier 3 operators coming online over five years, this means that over 4,300 billing systems will
be needed in the next five years.

Prepaid Intelligent Networking (IN)

OSS Telecom Technology has projected three primary products in its forecast:

1. Post-paid CCB
2. Prepaid IN systems
3. Consulting Services projects

The post-paid CCB systems will be sold to the number of Tier 2 and Tier 3 operators listed
above, specifically, new operators and those who are choosing to replace their current system.
Prepaid IN systems have a much broader market opportunity given the small penetration of
Prepaid IN in Tier 2 and 3 providers. Operators in developing countries project that over 50% of
all calls will eventually be prepaid, while developed countries may reach 35%. This growth,
coupled with the fact Prepaid IN is an add-on, increases the number of new systems operators
will purchase.

Current prepaid solutions (non-IN based) are expensive, require duplicate switch fabric, and will
not be built out to support such a high level of subscriber base. In addition, the operator must
support Intelligent Networking capability to support IN functionality over the long term to
maintain competitive advantage. All GSM operators currently support IN functionality, and all
other operators will certainly implement IN by the year 2005. Very few of the Tier 2 and Tier 3
prepaid solutions today are IN based. This means that the entire Tier 2 and Tier 3 operator
base is a potential market for Prepaid IN over the next five years, with over 5,000 operators
expected to be in operation by the year 2005. The average price for a Prepaid IN solution for
Tier 2 and 3 operators will be $1 million.

OSS Telecom Technology Target Customers

Within OSS Telecom Technology's stated primary and secondary markets, OSS Telecom
Technology has developed a “Stepped Target Market Strategy." This strategy is based on two
key elements:

1. Telecom operators have a strong desire to purchase from a vendor with installations similar
to their own, and
2. That larger CCB vendors are moving upscale to larger operators as they gain more
experience and as IT resources continue to become scarce. The primary market of this type
of CCB vendors is Tier 1 operators.

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OSS Telecom Technology's first installation base consists primarily of GSM operators in the
range of 25,000 subscribers and under. Through a stepped strategy, OSS Telecom Technology
is moving in three directions:

1. Using this install base to move up to the next band of subscribers within the GSM market,
2. Leveraging GSM wireless experience to penetrate other wireless types in the same
subscriber bands, and
3. Working with GSM operators to provide convergent services such as cable, Internet, and
wireline, and therefore gaining experience in these disciplines.

This strategy currently puts OSS Telecom Technology in the Tier 3 (less than 100,000
subscribers) market, with each step carefully planned to be sure we do not overreach. It is key
to this strategy to maintain all customers as long-term partners and referenceable sites. We
want to under-commit and over-deliver in each step of this strategy.

By repeating this strategy, OSS Telecom Technology, over a five-year period, will offer a wide
variety of convergent solutions to Tier 3 and then Tier 2 (100,000 to one million subscribers)
telecom operators.

4.2.1 Market Needs

The outlook for the future appears positive. Telecom markets will continue to deregulate and
the number of operators will continue to grow to 5,500 in 2004, representing an additional
1,700 when compared to 1998.

With the increase in operators, the demand for OSS has also increased. OSS are the systems
on which the telecom operator's business runs. At the core of OSS is billing for telecom
services, which is provided by Customer Care and Billing Systems (CCB). CCB systems enable
accurate, timely, flexible, feature-rich billing of services. The additional competition in the
marketplace has made OSS and CCB systems, in particular, a key source of competitive
advantage for many players. CCB systems have become increasingly sophisticated,
incorporating features such as hot-billing (where users receive billing information on demand),
Internet billing (billing data disseminated over the Internet), multi-service billing, loyalty
programs, and “friends and family” type services.

4.2.2 Geographic Market

Geographic Market

The Stepped Target Market Strategy has been used to develop geographic markets by first
developing the geographic market closest to home and expanding as one develops experience.
With a large center of excellence in Asia, this was the first market to utilize. Asia and Europe
are predominately GSM. As a result, moving from Asia to Europe makes perfect sense. Latin
America is expanding the installed base of GSM systems. Therefore, OSS Telecom Technology
has made its first step in Latin America and will move forward from there. In addition to Asia,
the U.S. and Europe were early targets for consulting services because much of the technology
and new solutions are developed in these regions.

OSS Telecom Technology's target market is focused on providing OSS solutions to both Tier 3
and Tier 2 operator worldwide. The priority of issues which drive the purchase decision for Tier
3 operators is slightly different than for Tier 1 operators. Understanding these priorities is key
to developing the OSS Telecom Technology value proposition within its target market. A list of
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drivers is given below to compare Tier 3 priorities against Tier 1 priorities as part of the
selection criteria for selecting a vendor. These priorities are important to consider when
differentiating OSS Telecom Technology from Tier 1 CCB vendors.

OSS Telecom Technology's position relative to these drivers:

 Price: OSS Telecom Technology will maintain a price that is 20% less than Tier 1 market
vendors for licenses, and 40% less for services. The service price is significant because it is
often 50% or more of the purchase amount for many CCB vendors.
 Features: Within the given product module, OSS Telecom Technology will offer features
that meet or exceed Tier 1 vendors. OSS Telecom Technology will also maintain a robust
product road map that is discussed and approved by vendors in a user group format.
 Service offering: While service offerings to Tier 3 operators from other CCB vendors are
either shrinking or are too expensive, OSS Telecom Technology will offer a complete
package of services at affordable prices.
 Product flexibility: OSS Telecom Technology will strive to maintain a lead in the ability of
the operator to easily add schemes and re-configure the system. In addition, OSS Telecom
Technology will maintain an open environment.
 Scalability: OSS Telecom Technology will continue to engineer scalability into its
product. This will entail commitment to multi-rating engines and porting to more robust
operating systems like UNIX.
 Vendor experience: OSS Telecom Technology will follow a stepped strategy to be sure we
under-commit and over-deliver to our customers.

This positioning strategy differentiates OSS Telecom Technology from Tier 1 CCB vendors. This
leaves a number of other CCB vendors which are targeting Tier 3 vendors. The approach of
these vendors is to lead with price and minimize service functionality. OSS Telecom Technology
believes that most Tier 3 operators desire a full service vendor or a partnership at an affordable
price. OSS Telecom Technology intends to be that vendor

4.3 Service Business Analysis

The economics of the telecommunication, Internet, and cable markets support thousands of
companies. These companies include direct service providers, hardware suppliers, software
suppliers, consultants, and numerous other supporting organizations. However, for the
purposes of this report, it is useful to focus only on the companies that provide CCB
applications and services.This industry segment is the main focus of OSS Telecom Technology.

4.3.1 Distributing a Service

Channels

Products will be sold through direct and indirect channels. The mix is split evenly between the
two. Indirect channels include:

 System Integrators
 Computer Suppliers
 Switch Vendors
 Multi-Tier Operators

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OSS Telecom Technology is currently developing relationships with indirect channels including:

 Vertical Matrix
 Compaq
 GemPlus
 CMG
 Harris
 Keppel
 Siemens
 IBM
 Bellcore
 Unysis

Quota Assumptions

The following are quota assumptions for Direct and Indirect Channels per salesperson. As OSS
Telecom Technology develops more experience and presence in marketing, our efficiency in
sales will increase.

Lead Development

One of the key responsibilities of marketing is lead generation. The following methods are used
for lead generation:

 Advertising in trade journals
 Trade shows and conferences
 Telemarketing
 User group
 Direct mailing
 Targeted sales calls
 Customer referrals

4.3.2 Main Competitors

Competitor Financial Performance

The market for billing and customer care has enjoyed solid growth for the past six years.
Companies that compete in this market were direct beneficiaries of this growth, as were their
shareholders.

Analysis: LHS Group and Saville System

Although OSS Telecom Technology faces numerous competitors in the CCB market, two are
worth a closer look. LHS Group and Saville Systems are important because their historical
growth and performance mirror OSS Telecom Technology's projections. Both of these
companies focus exclusively on CCB systems and related consulting services, both derive a
majority of their sales from the telecommunications industry, both are active in international
markets, and both have grown their revenues to over $100 million in approximately five years.
LHS Group's market capitalization grew at a CAGR of 201% from June, 1997 to June, 1998
while Saville's market capitalization grew at a CAGR of 119% from December, 1995 to June,
1998. The stock market, as measured by the S&P 500 stock index, only returned a Compound

Page 21


Annual Growth Rate (CAGR) of 30% from June, 1997 to June, 1998 and 28% from December,
1995 to June, 1998.

4.3.3 Business Participants

With the increasing demand for OSS and CCB systems, many OSS/CCB software providers have
entered the market.It is estimated that there are over 50 vendors for billing and customer care
systems worldwide. There is an increasing move by computer and switch vendors, system
integrators, and telecom operators (e.g. IBM, Siemens, EDS, Deutsche Telekom) to develop in-
house billing and OSS solutions for customers. They are formidable competitors with deep
pockets, large existing customer bases, and significant influence on customer decision-making.
In addition, the majority of players (both large and small) are extending product service
portfolios to provide all services, i.e. Internet, mobile, cable, fixed, and convergent services.
OSS Telecom Technology will compete in this market by providing high-value products and
services at competitive prices.

5.0 Strategy and Implementation Summary

OSS Telecom Technology developed a marketing strategy to ensure long-term growth and
success in the OSS marketplace. This strategy continues to be refined and improved and
initially includes:

 Locating OSS opportunities within the telecom arena.
 Developing partnerships with telecom operators to provide these solutions.
 Determining if the solution is universal, resulting in a decision of whether or not this project
could evolve into a turnkey product or repeatable consulting service.

The advantage of this strategy was threefold:

1. As a partner in the project, OSS Telecom Technology gained valuable experience and first
hand operator knowledge.
2. As a partner, the operator would take a keen interest in the project's success and set high
expectations.
3. The solution would be tested in the marketplace, providing important market intelligence.

5.1 Competitive Edge

OSS Telecom Technology will strive to intimately understand the customer in order to provide
solutions that match their specific needs.To be successful, OSS Telecom Technology will
develop long term relationships and choose customers that share this model.

In the best-selling publication “Discipline of Market Leaders,” customer excellence is defined as
“specializing in satisfying unique needs.” These unique needs are recognizable only by a vendor
with a close relationship and intimate knowledge of the customer.

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For a comprehensive definition of the model for customer excellence, OSS Telecom
Technology's plan includes:

 Develop long-term relationships with our customers.
 Avoid clients who do not have long-term potential.
 Avoid pure transactions or one-time deals.
 Do whatever it takes to please the customer.
 Educate employees to be adaptable, flexible, and multi-talented.
 Create an unmatched value proposition of best total solution for our clients.
 Search for new areas of mutual cooperation.
 To constantly improve our value model, develop a value proposition around solutions, and
aggressively evolve and improve each solution.
 Develop an operating model dedicated to delivering unmatched value.

5.2 Marketing Strategy

Within OSS Telecom Technology's stated primary and secondary markets, OSS Telecom
Technology has developed a “Stepped Target Market Strategy." This strategy is based on two
key elements:

1. Telecom operators have a strong desire to purchase from a vendor with installations similar
to their own, and
2. That larger CCB vendors are moving upscale to larger operators as they gain more
experience and as IT resources continue to become scarce. The primary market of this type
of CCB vendors is Tier 1 operators.

OSS Telecom Technology's first installation base consists primarily of GSM operators in the
range of 25,000 subscribers and under. Through a stepped strategy, OSS Telecom Technology
is moving in three directions:

1. Using this install base to move up to the next band of subscribers within the GSM market
2. Leveraging GSM wireless experience to penetrate other wireless types in the same
subscriber bands
3. Working with GSM operators to provide convergent services such as cable, Internet, and
wireline, and therefore gaining experience in these disciplines.

This strategy currently puts OSS Telecom Technology in the Tier 3 (less than 100,000
subscribers) market, with each step carefully planned to be sure we do not overreach. It is key
to this strategy to maintain all customers as long-term partners and referenceable sites. We
want to under-commit and over-deliver in each step of this strategy.

5.2.1 Promotion Strategy

One of the key responsibilities of marketing is lead generation. The following methods are used
for lead generation:

 Advertising in Trade Journals
 Trade Shows and Conferences
 Telemarketing
 User Group Direct Mailing

Page 23


5.2.2 Pricing Strategy

Our pricing strategy for products is to maintain a 30% to 40% advantage below Tier 1 CCB
vendors for total installation cost which includes license fees, installation services and custom
services. Coupled with our strong product road map, OSS Telecom Technology believes that
this forms the core of a very strong value proposition.

Post-Warranty Customer Service Pricing

OSS Telecom Technology offers two customer service packages to meet the needs of various
operator requirements:

Extended Customer Service

 24x7 Technical Support Desk
 Problem Solving
 Maintenance Releases
 On-site Support

Business Partner 2000

 24x7 Technical Support Desk
 Problem Solving
 Maintenance Releases
 On-Site Support
 Proactive Operational Visits
 Software Upgrades
 New modules within the CARIBOU suite

5.3 Sales Strategy

The OSS Telecom Technology sales model is solution-based and a team sale.This sales team
will encompass Field Marketing, Program Management, Support, and Product Management as
needed.The five groups which form the team are listed below:

1. Field Sales will develop and maintain relationships.
2. Field Marketing will define local requirements, develop PR campaigns, and support the local
sales effort.
3. Program Management will be the portal into OSS Telecom Technology operations and will be
the primary contact for sales and the customer concerning project status.
4. Product Management will define in detail the functional specifications for the product
development group.
5. These specifications will be derived from Field Marketing requirements. Product
Management manages all the product release processes to the field, and will be the keeper
of the three-year product road map and will offer expertise as needed.
6. Field and Customer Support will help maintain the relationship throughout the life of the
install.

Page 24


5.3.1 Sales Forecast

Revenues are calculated separately for each product and for maintenance and Consulting
Services. In addition, product revenue is broken out between New Sales and Upgrade Sales.
New Sales and Upgrade Sales are further broken down into License, Installation, and
Customization revenue. The products included in this forecast are Customer Care and Billing
(CCB) products, Prepaid IN (PPIN) products, and the Short Messaging (SMSC) product. Each
product and service revenue assumption is detailed below.

Pricing assumptions for licenses include a 10% discount from list for direct sales and 30% from
list for indirect sales. Sales are forecast at 50% direct and 50% indirect resulting in a weighted
average discount of 20%. Pricing for licenses stays constant over the five year period. OSS
Telecom Technology does not increase license pricing while significantly increasing feature set
to maintain competitive pricing advantage over the five-year period.

Table: Sales Forecast

Sales Forecast
FY 2001 FY 2002 FY 2003
Sales
CCB (CARIBOU & MEDUSA combined) $13,432,825 $19,857,900 $30,434,900
Pre-Paid IN $3,715,905 $7,136,300 $10,317,800
Total Sales $17,148,730 $26,994,200 $40,752,700

Direct Cost of Sales FY 2001 FY 2002 FY 2003
CCB (CARIBOU & MEDUSA combined) $1,679,105 $2,482,238 $3,804,363
Pre-Paid IN $464,488 $892,038 $1,289,725
Subtotal Direct Cost of Sales $2,143,593 $3,374,276 $5,094,088

Page 25


Chart: Sales by Year

Chart: Sales Monthly

Page 26


5.4 Milestones

One of the benefits of having a large engineering team is the ability to develop solutions for our
customers that are comprehensive and extend our target markets stepwise into additional
service operators. In this sense, we will engage our customers in user groups and develop a
comprehensive product road map. Half of the product road map will contain items directly
requested by our customers. The remainder of the product road map will be based on strategic
market analysis.

OSS Telecom Technology has initiated the process of ISO 9000 certification for its systems and
procedures. The systems will be certified for our Taiwan operations. All OSS Telecom
Technology engineering is being performed out of its Taiwan development center, therefore
OSS Telecom Technology will initially apply for certification of those operations. OSS Telecom
Technology has completed most milestones. It is expected that OSS Telecom Technology's
Taiwan operations will achieve ISO 9000 certification by June, 2001.

Chart: Milestones

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Table: Milestones

Milestones

Milestone Start Date End Date Budget Manager Department
CCB (CARIBOU & MEDUSA) - 4/1/2000 3/31/2001 $875,000 K. Jones Product
Convergent Billing Development
Tier 2 Operators Development
Multi-Service One Number Billing Development
Pre-Paid IN / Calling Card - IN- 4/1/2000 3/31/2001 $720,000 K. Jones Product
Node APIs Development
Pre-Paid IN / Calling Card - ISO 4/1/2000 3/31/2001 $1,235,000 K. Jones Product
9000 Development
Pre-Paid IN / Calling Card - 4/1/2001 3/31/2002 $680,000 K. Jones Product
Convergent Billing Development
Pre-Paid IN / Calling Card - Tier 2 4/1/2002 3/31/2003 $745,000 K. Jones Product
Operators Development
Totals $5,860,000

6.0 Management Summary

OSS Telecom Technology has assembled a staff of professionals with extensive experience in
both the IT and telephony industries. Executive management personnel average more than
20 years of experience. Other key management personnel average more than 10 years
of experience, demonstrating a highly-qualified team.

6.1 Management Team

Executive Officers and Key Management

Victor Smith, President and Chief Executive Officer
Mr. Smith oversees all sales, marketing, technical and financial areas of the company. He has
over 25 years of international and domestic telecom experience with primary focus on
telephony and data service companies and concentrated efforts on international sales,
marketing, and product development. Mr. Smith spent the last 12 years as Vice President of
Technical Operations and Chief Operating Officer with Atlas Telecom where he was instrumental
in the significant success of developing a company from start-up to a $70 million enterprise.
Additionally, he was Executive Vice President of Sidereal Corporation, responsible for technical
support, development, manufacturing, and customer support. In this role, he guided the design
and manufacture of telecommunications equipment ranging from low-cost single-user terminals
to multiple-switch government installations. Mr. Smith also spent several years with Tektronix.

Kenneth Jones, Executive Vice President
Product Management and Program Management
Mr. Jones is responsible for all product management and program management that includes
the areas of market research, strategic planning, competitive analysis, product definition,
proposal development, and project management. Mr. Jones has 25 years experience in the
telecom industry, primarily in areas relating to engineering, customer support, and product
definition. These areas of expertise include product documentation and integration, network
operations and network management applications, data communication protocols, technical
support, field support, and customer installations. Previous positions held by Mr. Jones include
Vice President of Support Services, Director of Engineering and Manager of Software
Development for the firms of Atlas Telecom, NCR Corporation and Harris Corporation.
Page 28


James Jackson, Executive Vice President, Global Marketing
Mr. Jackson joined OSS Telecom Technology from Technology Control Services, a leading
international provider of prepaid card solutions and services to Tier one and Tier two Telecom
operators, where he was Executive Vice President of Sales and Marketing. He has had 20 years
experience of the international computer software and telecommunications industries has
included positions at Atlas Telecom, Mosaics, Lotus Development Corporation, IBM and the
MITRE Corporation.

Ken Smithe, Executive Vice President, Technical Services
Mr. Smithe has 30 years experience in Information Systems and Technology and has spent the
last 10 years in the telecommunications industry. He has held Senior Management positions at
MIDCOM Communications, Premier Cruises, U.S. Intelco Networks, and Westin Hotels &
Resorts.

6.2 Personnel Plan

The following table lists all personnel, classified by function.

Table: Personnel

Personnel Plan
FY 2001 FY 2002 FY 2003
Production Personnel
Technical Services Management $406,800 $447,500 $492,300
Technical Services Personnel $306,000 $336,600 $370,300
Other $0 $0 $0
Subtotal $712,800 $784,100 $862,600

Sales and Marketing Personnel
Sales Management $480,000 $528,000 $580,800
Account Executives $1,710,000 $2,430,000 $3,330,000
Marketing Personnel $2,940,000 $3,840,000 $5,280,000
Marketing Management $456,000 $501,600 $551,760
Subtotal $5,586,000 $7,299,600 $9,742,560

General and Administrative Personnel
Administration $538,800 $592,700 $652,000
Human Resources & Training Personnel $693,600 $763,000 $839,300
Financial Management $346,800 $381,500 $419,700
Finance & Accounting Personnel $802,800 $883,100 $971,400
Subtotal $2,382,000 $2,620,300 $2,882,400

Other Personnel
Product Development Management $428,400 $471,300 $518,400
Product Development Personnel $1,002,000 $1,102,200 $1,212,500
Other $0 $0 $0
Subtotal $1,430,400 $1,573,500 $1,730,900

Total People 548 798 1011

Total Payroll $10,111,200 $12,277,500 $15,218,460

Page 29


7.0 Financial Plan
The market and related entry strategy mentioned earlier in this Business Plan is reflected in the
assumptions used to build the financial model and corresponding pro-forma financial
statements.The management of OSS Telecom Technology, Inc. believes these projections to be
on the conservative side and, therefore, very attainable.

7.1 Important Assumptions

Income Statement

The income statement presented here demonstrates the projected results of operations for the
period FY 1999 through FY 2004 on a consolidated basis for OSS Telecom Technology and OSS
Telecom Technology Taiwan.

Sources & Uses of Funds

There are two sources and uses of funds presented:

 Assuming no cash infusion, a minimum cash requirement is calculated demonstrating the
shortfall.
 Assuming needed cash is raised in an initial private placement, what the cash position would
be in each of the years.

Balance Sheet

There are two balance sheets presented which accompany the two above mentioned sources
and uses of funds statements.

 Related to the scenario of no cash infusion, a negative impact on the balance sheet creates
a company that cannot survive under the current aggressive growth plan.
 The balance sheet related to the projection of a $20 million private placement occurring in
the first quarter of Fiscal Year (FY) 2001. This represents a company able to meet
projections based upon its planned growth targets.

Table: General Assumptions

General Assumptions
FY 2001 FY 2002 FY 2003
Plan Month 1 2 3
Current Interest Rate 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 25.00% 25.00% 25.00%
Other 0 0 0

Page 30


7.2 Key Financial Indicators
The following chart focuses on the key financial indicators of the company.

Chart: Benchmarks

Page 31


7.3 Break-even Analysis

The following chart and table illustrate the break-even requirements for the company.

Chart: Break-even Analysis

Table: Break-even Analysis

Break-even Analysis

Monthly Revenue Break-even $1,336,343

Assumptions:
Average Percent Variable Cost 13%
Estimated Monthly Fixed Cost $1,169,300

Page 32


7.4 Projected Profit and Loss
The income statement presented here demonstrates the projected results of operations for the
period FY 2001 through FY 2003 on a consolidated basis for OSS Telecom Technology and OSS
Telecom Technology Taiwan.

License revenues consist of license fees for the company's software. Service revenues consist of
fees for customer-defined customization, installation, and product support services. In addition,
other lesser service revenues are for maintenance fees and training fees. After establishing the
necessary infrastructure in the first two years, Net Profit/Sales will grow in FY 2003.

Revenue recognition for the various sources of fees is as follows:

1. License revenues for one-time license sales without customization are recognized upon
delivery of the software to the customer.
2. License revenues for license sales, which require customization of the software, are
recognized over the estimated term of the installation of such software based on the
percentage of completion method of accounting.
3. Maintenance fees are recognized ratably over the term of the maintenance contract.
4. Training fees are recognized as the training is performed.
5. Service revenues performed for customization and installation of both the initial system and
subsequent upgrades are accounted for over the estimated term of such services based on
the percentage of completion method of accounting.

Revenues are projected to grow significantly from FY 1999 that ends on March 31, 1999,
through FY 2003. This represents a comfortable growth rate through FY 2003. Revenues are
broken down into two major classifications:

 License Sales
 Services

License revenues are classified as new license sales and upgrade license sales. These are
further broken down between current Customer Care and Billing (CCB) solutions and planned
new products of Prepaid IN and Short Message Service.

Cost of Goods Sold (COGS) consists primarily of salaries and related labor loadings associated
with installation, customization, and product support activities. It also includes third party costs
associated with system integrators and, to a lesser extent, costs related to providing software
maintenance and end-user training to customers. COGS are expected to be a decreasing
percentage of revenues in FY 2000 through FY 2003 as the number of subscribers per license
sale grows and there is a corresponding decrease in the cost per subscriber.

Gross margin is projected to stay high from FY 1999 onward and grow in FY 2003 as the
company attains economy of scale. The compound annual growth rate for gross margin in FY
2004 will outpace revenue growth.

Other Income and Expense are associated with debt service, amortization of excess acquisition
costs and interest income.

Page 33


Chart: Profit Monthly

Chart: Profit Yearly

Page 34


Chart: Gross Margin Monthly

Chart: Gross Margin Yearly

Page 35


Table: Profit and Loss

Pro Forma Profit and Loss
FY 2001 FY 2002 FY 2003
Sales $17,148,730 $26,994,200 $40,752,700
Direct Cost of Sales $2,143,593 $3,374,276 $5,094,088
Production Payroll $712,800 $784,100 $862,600
Other $0 $0 $0
Total Cost of Sales $2,856,393 $4,158,376 $5,956,688

Gross Margin $14,292,337 $22,835,824 $34,796,012
Gross Margin % 83.34% 84.60% 85.38%

Operating Expenses

Sales and Marketing Expenses
Sales and Marketing Payroll $5,586,000 $7,299,600 $9,742,560
Advertising/Promotion $946,800 $1,098,000 $1,185,000
Travel $3,060,000 $3,186,000 $3,297,000
Total Sales and Marketing Expenses $9,592,800 $11,583,600 $14,224,560
Sales and Marketing % 55.94% 42.91% 34.90%

General and Administrative Expenses
General and Administrative Payroll $2,382,000 $2,620,300 $2,882,400
Sales and Marketing and Other Expenses $0 $0 $0
Depreciation $26,400 $27,500 $28,700
Rent $54,000 $59,000 $64,000
Depreciation $276,000 $316,000 $398,000
Leased Equipment $158,400 $159,700 $164,300
Utilities $27,600 $28,400 $29,600
Payroll Taxes $0 $0 $0
Total General and Administrative Expenses $2,924,400 $3,210,900 $3,567,000
General and Administrative % 17.05% 11.89% 8.75%

Other Expenses:
Other Payroll $1,430,400 $1,573,500 $1,730,900
Contract/Consultants $84,000 $78,000 $69,000
Total Other Expenses $1,514,400 $1,651,500 $1,799,900
Other % 8.83% 6.12% 4.42%

Total Operating Expenses $14,031,600 $16,446,000 $19,591,460

Profit Before Interest and Taxes $260,737 $6,389,824 $15,204,552
EBITDA $287,137 $6,417,324 $15,233,252
Interest Expense $97,584 $88,000 $78,000
Taxes Incurred $40,788 $1,575,456 $3,781,638

Net Profit $122,365 $4,726,368 $11,344,914
Net Profit/Sales 0.71% 17.51% 27.84%

Page 36


7.5 Projected Cash Flow
The primary assumption on the Sources and Uses Statement is that cash would be raised in an
initial private placement.

Chart: Cash

Page 37


Table: Cash Flow

Pro Forma Cash Flow
FY 2001 FY 2002 FY 2003
Cash Received

Cash from Operations
Cash Sales $4,287,183 $6,748,550 $10,188,175
Cash from Receivables $12,538,878 $18,995,975 $28,818,173
Subtotal Cash from Operations $16,826,060 $25,744,525 $39,006,348

Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $20,000,000 $0 $0
Subtotal Cash Received $36,826,060 $25,744,525 $39,006,348

Expenditures FY 2001 FY 2002 FY 2003

Expenditures from Operations
Cash Spending $10,111,200 $12,277,500 $15,218,460
Bill Payments $8,432,054 $9,715,680 $13,815,602
Subtotal Spent on Operations $18,543,254 $21,993,180 $29,034,062

Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $100,000 $100,000 $100,000
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $18,643,254 $22,093,180 $29,134,062

Net Cash Flow $18,182,806 $3,651,345 $9,872,287
Cash Balance $1,410,806 $5,062,151 $14,934,438

Page 38


7.6 Projected Balance Sheet

The Balance Sheet presented accompanies the above mentioned sources and uses of funds
statement, with the assumption of a projection of a $20 million private placement occurring
in the first quarter of FY 2001. This represents a company able to meet projections based upon
its planned growth targets.

Table: Balance Sheet

Pro Forma Balance Sheet
FY 2001 FY 2002 FY 2003
Assets

Current Assets
Cash $1,410,806 $5,062,151 $14,934,438
Accounts Receivable $2,176,670 $3,426,345 $5,172,696
Other Current Assets $1,511,000 $1,511,000 $1,511,000
Total Current Assets $5,098,476 $9,999,496 $21,618,134

Long-term Assets
Long-term Assets $8,917,000 $8,917,000 $8,917,000
Accumulated Depreciation $1,720,400 $1,747,900 $1,776,600
Total Long-term Assets $7,196,600 $7,169,100 $7,140,400
Total Assets $12,295,076 $17,168,596 $28,758,534

Liabilities and Capital FY 2001 FY 2002 FY 2003

Current Liabilities
Accounts Payable $571,711 $818,863 $1,163,887
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $571,711 $818,863 $1,163,887

Long-term Liabilities $930,000 $830,000 $730,000
Total Liabilities $1,501,711 $1,648,863 $1,893,887

Paid-in Capital $21,667,000 $21,667,000 $21,667,000
Retained Earnings ($10,996,000) ($10,873,635) ($6,147,267)
Earnings $122,365 $4,726,368 $11,344,914
Total Capital $10,793,365 $15,519,733 $26,864,647
Total Liabilities and Capital $12,295,076 $17,168,596 $28,758,534

Net Worth $10,793,365 $15,519,733 $26,864,647

7.7 Business Ratios

The following is a summarized list of key business ratios for the company. The final column of
the table, Industry Profiles, shows important ratios from the communications services industry,
as defined by the Standard Industry Classification (SIC) Index code 4899, Communications
Services, NEC (not elsewhere classified).

Page 39


Table: Ratios

Ratio Analysis
FY 2001 FY 2002 FY 2003 Industry Profile
Sales Growth 48.95% 57.41% 50.97% 5.92%

Percent of Total Assets
Accounts Receivable 17.70% 19.96% 17.99% 18.27%
Other Current Assets 12.29% 8.80% 5.25% 41.72%
Total Current Assets 41.47% 58.24% 75.17% 63.98%
Long-term Assets 58.53% 41.76% 24.83% 36.02%
Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 4.65% 4.77% 4.05% 26.17%
Long-term Liabilities 7.56% 4.83% 2.54% 25.88%
Total Liabilities 12.21% 9.60% 6.59% 52.05%
Net Worth 87.79% 90.40% 93.41% 47.95%

Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 83.34% 84.60% 85.38% 54.99%
Selling, General & Administrative Expenses 84.55% 66.91% 56.20% 34.50%
Advertising Expenses 5.11% 3.64% 2.50% 1.31%
Profit Before Interest and Taxes 1.52% 23.67% 37.31% 2.80%

Main Ratios
Current 8.92 12.21 18.57 1.89
Quick 8.92 12.21 18.57 1.53
Total Debt to Total Assets 12.21% 9.60% 6.59% 63.38%
Pre-tax Return on Net Worth 1.51% 40.61% 56.31% 3.49%
Pre-tax Return on Assets 1.33% 36.71% 52.60% 9.54%

Additional Ratios FY 2001 FY 2002 FY 2003
Net Profit Margin 0.71% 17.51% 27.84% n.a
Return on Equity 1.13% 30.45% 42.23% n.a

Activity Ratios
Accounts Receivable Turnover 5.91 5.91 5.91 n.a
Collection Days 59 51 51 n.a
Accounts Payable Turnover 12.05 12.17 12.17 n.a
Payment Days 36 25 26 n.a
Total Asset Turnover 1.39 1.57 1.42 n.a

Debt Ratios
Debt to Net Worth 0.14 0.11 0.07 n.a
Current Liab. to Liab. 0.38 0.50 0.61 n.a

Liquidity Ratios
Net Working Capital $4,526,765 $9,180,633 $20,454,247 n.a
Interest Coverage 2.67 72.61 194.93 n.a

Additional Ratios
Assets to Sales 0.72 0.64 0.71 n.a
Current Debt/Total Assets 5% 5% 4% n.a
Acid Test 5.11 8.03 14.13 n.a
Sales/Net Worth 1.59 1.74 1.52 n.a
Dividend Payout 0.00 0.00 0.00 n.a

Page 40

Appendix

Table: Personnel

Personnel Plan
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Production Personnel
Technical Services Management $33,900 $33,900 $33,900 $33,900 $33,900 $33,900 $33,900 $33,900 $33,900 $33,900 $33,900 $33,900
Technical Services Personnel $25,500 $25,500 $25,500 $25,500 $25,500 $25,500 $25,500 $25,500 $25,500 $25,500 $25,500 $25,500
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal $59,400 $59,400 $59,400 $59,400 $59,400 $59,400 $59,400 $59,400 $59,400 $59,400 $59,400 $59,400

Sales and Marketing Personnel
Sales Management $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000
Account Executives $142,500 $142,500 $142,500 $142,500 $142,500 $142,500 $142,500 $142,500 $142,500 $142,500 $142,500 $142,500
Marketing Personnel $245,000 $245,000 $245,000 $245,000 $245,000 $245,000 $245,000 $245,000 $245,000 $245,000 $245,000 $245,000
Marketing Management $38,000 $38,000 $38,000 $38,000 $38,000 $38,000 $38,000 $38,000 $38,000 $38,000 $38,000 $38,000
Subtotal $465,500 $465,500 $465,500 $465,500 $465,500 $465,500 $465,500 $465,500 $465,500 $465,500 $465,500 $465,500

General and Administrative Personnel
Administration $44,900 $44,900 $44,900 $44,900 $44,900 $44,900 $44,900 $44,900 $44,900 $44,900 $44,900 $44,900
Human Resources & Training Personnel $57,800 $57,800 $57,800 $57,800 $57,800 $57,800 $57,800 $57,800 $57,800 $57,800 $57,800 $57,800
Financial Management $28,900 $28,900 $28,900 $28,900 $28,900 $28,900 $28,900 $28,900 $28,900 $28,900 $28,900 $28,900
Finance & Accounting Personnel $66,900 $66,900 $66,900 $66,900 $66,900 $66,900 $66,900 $66,900 $66,900 $66,900 $66,900 $66,900
Subtotal $198,500 $198,500 $198,500 $198,500 $198,500 $198,500 $198,500 $198,500 $198,500 $198,500 $198,500 $198,500

Other Personnel
Product Development Management $35,700 $35,700 $35,700 $35,700 $35,700 $35,700 $35,700 $35,700 $35,700 $35,700 $35,700 $35,700
Product Development Personnel $83,500 $83,500 $83,500 $83,500 $83,500 $83,500 $83,500 $83,500 $83,500 $83,500 $83,500 $83,500
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal $119,200 $119,200 $119,200 $119,200 $119,200 $119,200 $119,200 $119,200 $119,200 $119,200 $119,200 $119,200

Total People 397 411 425 439 453 467 481 495 509 523 537 548

Total Payroll $842,600 $842,600 $842,600 $842,600 $842,600 $842,600 $842,600 $842,600 $842,600 $842,600 $842,600 $842,600

Page 1

Appendix

Table: General Assumptions

General Assumptions
Plan Month 1 2 3 4 5 6 7 8 9 10 11 12
Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Tax Rate 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00%
Other 0 0 0 0 0 0 0 0 0 0 0 0

Page 2

Appendix

Table: Profit and Loss

Pro Forma Profit and Loss
Sales $1,378,850 $1,387,850 $1,396,740 $1,405,790 $1,414,910 $1,424,080 $1,433,310 $1,442,620 $1,451,965 $1,461,360 $1,470,855 $1,480,400
Direct Cost of Sales $172,357 $173,481 $174,593 $175,724 $176,863 $178,010 $179,164 $180,328 $181,496 $182,670 $183,857 $185,050
Production Payroll $59,400 $59,400 $59,400 $59,400 $59,400 $59,400 $59,400 $59,400 $59,400 $59,400 $59,400 $59,400
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $231,757 $232,881 $233,993 $235,124 $236,263 $237,410 $238,564 $239,728 $240,896 $242,070 $243,257 $244,450

Gross Margin $1,147,093 $1,154,969 $1,162,747 $1,170,666 $1,178,647 $1,186,670 $1,194,746 $1,202,892 $1,211,069 $1,219,290 $1,227,598 $1,235,950
Gross Margin % 83.19% 83.22% 83.25% 83.27% 83.30% 83.33% 83.36% 83.38% 83.41% 83.44% 83.46% 83.49%

Operating Expenses

Sales and Marketing Expenses
Sales and Marketing Payroll $465,500 $465,500 $465,500 $465,500 $465,500 $465,500 $465,500 $465,500 $465,500 $465,500 $465,500 $465,500
Advertising/Promotion $78,900 $78,900 $78,900 $78,900 $78,900 $78,900 $78,900 $78,900 $78,900 $78,900 $78,900 $78,900
Travel $255,000 $255,000 $255,000 $255,000 $255,000 $255,000 $255,000 $255,000 $255,000 $255,000 $255,000 $255,000
Total Sales and Marketing $799,400 $799,400 $799,400 $799,400 $799,400 $799,400 $799,400 $799,400 $799,400 $799,400 $799,400 $799,400
Expenses
Sales and Marketing % 57.98% 57.60% 57.23% 56.86% 56.50% 56.13% 55.77% 55.41% 55.06% 54.70% 54.35% 54.00%

General and Administrative
Expenses
General and Administrative Payroll $198,500 $198,500 $198,500 $198,500 $198,500 $198,500 $198,500 $198,500 $198,500 $198,500 $198,500 $198,500
Sales and Marketing and Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Expenses
Depreciation $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200
Rent $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500
Depreciation $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000
Leased Equipment $13,200 $13,200 $13,200 $13,200 $13,200 $13,200 $13,200 $13,200 $13,200 $13,200 $13,200 $13,200
Utilities 15% $2,300 $2,300 $2,300 $2,300 $2,300 $2,300 $2,300 $2,300 $2,300 $2,300 $2,300 $2,300
Payroll Taxes 15% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total General and Administrative $243,700 $243,700 $243,700 $243,700 $243,700 $243,700 $243,700 $243,700 $243,700 $243,700 $243,700 $243,700
Expenses
General and Administrative % 17.67% 17.56% 17.45% 17.34% 17.22% 17.11% 17.00% 16.89% 16.78% 16.68% 16.57% 16.46%

Other Expenses:
Other Payroll $119,200 $119,200 $119,200 $119,200 $119,200 $119,200 $119,200 $119,200 $119,200 $119,200 $119,200 $119,200
Contract/Consultants $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000
Total Other Expenses $126,200 $126,200 $126,200 $126,200 $126,200 $126,200 $126,200 $126,200 $126,200 $126,200 $126,200 $126,200
Other % 9.15% 9.09% 9.04% 8.98% 8.92% 8.86% 8.80% 8.75% 8.69% 8.64% 8.58% 8.52%

Page 3

Appendix

Total Operating Expenses $1,169,300 $1,169,300 $1,169,300 $1,169,300 $1,169,300 $1,169,300 $1,169,300 $1,169,300 $1,169,300 $1,169,300 $1,169,300 $1,169,300

Profit Before Interest and Taxes ($22,207) ($14,331) ($6,553) $1,366 $9,347 $17,370 $25,446 $33,592 $41,769 $49,990 $58,298 $66,650
EBITDA ($20,007) ($12,131) ($4,353) $3,566 $11,547 $19,570 $27,646 $35,792 $43,969 $52,190 $60,498 $68,850
Interest Expense $8,514 $8,444 $8,375 $8,306 $8,236 $8,167 $8,097 $8,028 $7,958 $7,889 $7,819 $7,750
Taxes Incurred ($7,680) ($5,694) ($3,732) ($1,735) $278 $2,301 $4,337 $6,391 $8,453 $10,525 $12,620 $14,725

Net Profit ($23,041) ($17,082) ($11,196) ($5,205) $833 $6,902 $13,012 $19,173 $25,358 $31,576 $37,859 $44,175
Net Profit/Sales -1.67% -1.23% -0.80% -0.37% 0.06% 0.48% 0.91% 1.33% 1.75% 2.16% 2.57% 2.98%

Page 4

Appendix

Table: Cash Flow

Pro Forma Cash Flow
Cash Received

Cash from Operations
Cash Sales $344,713 $346,963 $349,185 $351,448 $353,728 $356,020 $358,328 $360,655 $362,991 $365,340 $367,714 $370,100
Cash from Receivables $927,000 $961,471 $1,034,363 $1,041,110 $1,047,781 $1,054,571 $1,061,412 $1,068,291 $1,075,215 $1,082,199 $1,089,209 $1,096,257
Subtotal Cash from Operations $1,271,713 $1,308,434 $1,383,548 $1,392,557 $1,401,509 $1,410,591 $1,419,739 $1,428,946 $1,438,207 $1,447,539 $1,456,922 $1,466,357

Additional Cash Received
Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Investment Received $20,000,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Received $21,271,713 $1,308,434 $1,383,548 $1,392,557 $1,401,509 $1,410,591 $1,419,739 $1,428,946 $1,438,207 $1,447,539 $1,456,922 $1,466,357

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

Expenditures from Operations
Cash Spending $842,600 $842,600 $842,600 $842,600 $842,600 $842,600 $842,600 $842,600 $842,600 $842,600 $842,600 $842,600
Bill Payments $2,133,570 $557,192 $560,232 $563,238 $566,297 $569,380 $572,482 $575,603 $578,752 $581,913 $585,091 $588,304
Subtotal Spent on Operations $2,976,170 $1,399,792 $1,402,832 $1,405,838 $1,408,897 $1,411,980 $1,415,082 $1,418,203 $1,421,352 $1,424,513 $1,427,691 $1,430,904

Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment $8,333 $8,333 $8,333 $8,333 $8,333 $8,333 $8,333 $8,333 $8,333 $8,333 $8,333 $8,337
Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Spent $2,984,503 $1,408,125 $1,411,165 $1,414,171 $1,417,230 $1,420,313 $1,423,415 $1,426,536 $1,429,685 $1,432,846 $1,436,024 $1,439,241

Net Cash Flow $18,287,210 ($99,691) ($27,617) ($21,614) ($15,722) ($9,723) ($3,675) $2,409 $8,521 $14,693 $20,898 $27,117
Cash Balance $1,515,210 $1,415,519 $1,387,901 $1,366,288 $1,350,566 $1,340,843 $1,337,168 $1,339,577 $1,348,099 $1,362,791 $1,383,689 $1,410,806

Page 5

Appendix

Table: Balance Sheet

Pro Forma Balance Sheet
Assets Starting Balances

Current Assets
Cash ($16,772,000) $1,515,210 $1,415,519 $1,387,901 $1,366,288 $1,350,566 $1,340,843 $1,337,168 $1,339,577 $1,348,099 $1,362,791 $1,383,689 $1,410,806
Accounts Receivable $1,854,000 $1,961,138 $2,040,554 $2,053,746 $2,066,979 $2,080,380 $2,093,870 $2,107,441 $2,121,115 $2,134,873 $2,148,695 $2,162,627 $2,176,670
Other Current Assets $1,511,000 $1,511,000 $1,511,000 $1,511,000 $1,511,000 $1,511,000 $1,511,000 $1,511,000 $1,511,000 $1,511,000 $1,511,000 $1,511,000 $1,511,000
Total Current Assets ($13,407,000) $4,987,347 $4,967,072 $4,952,648 $4,944,267 $4,941,946 $4,945,713 $4,955,608 $4,971,692 $4,993,972 $5,022,486 $5,057,317 $5,098,476

Long-term Assets
Long-term Assets $8,917,000 $8,917,000 $8,917,000 $8,917,000 $8,917,000 $8,917,000 $8,917,000 $8,917,000 $8,917,000 $8,917,000 $8,917,000 $8,917,000 $8,917,000
Accumulated Depreciation $1,694,000 $1,696,200 $1,698,400 $1,700,600 $1,702,800 $1,705,000 $1,707,200 $1,709,400 $1,711,600 $1,713,800 $1,716,000 $1,718,200 $1,720,400
Total Long-term Assets $7,223,000 $7,220,800 $7,218,600 $7,216,400 $7,214,200 $7,212,000 $7,209,800 $7,207,600 $7,205,400 $7,203,200 $7,201,000 $7,198,800 $7,196,600
Total Assets ($6,184,000) $12,208,147 $12,185,672 $12,169,048 $12,158,467 $12,153,946 $12,155,513 $12,163,208 $12,177,092 $12,197,172 $12,223,486 $12,256,117 $12,295,076

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

Current Liabilities
Accounts Payable $2,115,000 $538,521 $541,461 $544,365 $547,322 $550,301 $553,298 $556,315 $559,359 $562,413 $565,485 $568,590 $571,711
Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Current Liabilities $2,115,000 $538,521 $541,461 $544,365 $547,322 $550,301 $553,298 $556,315 $559,359 $562,413 $565,485 $568,590 $571,711

Long-term Liabilities $1,030,000 $1,021,667 $1,013,334 $1,005,001 $996,668 $988,335 $980,002 $971,669 $963,336 $955,003 $946,670 $938,337 $930,000
Total Liabilities $3,145,000 $1,560,188 $1,554,795 $1,549,366 $1,543,990 $1,538,636 $1,533,300 $1,527,984 $1,522,695 $1,517,416 $1,512,155 $1,506,927 $1,501,711

Paid-in Capital $1,667,000 $21,667,000 $21,667,000 $21,667,000 $21,667,000 $21,667,000 $21,667,000 $21,667,000 $21,667,000 $21,667,000 $21,667,000 $21,667,000 $21,667,000
Retained Earnings ($10,996,000) ($10,996,000) ($10,996,000) ($10,996,000) ($10,996,000) ($10,996,000) ($10,996,000) ($10,996,000) ($10,996,000) ($10,996,000) ($10,996,000) ($10,996,000) ($10,996,000)
Earnings $0 ($23,041) ($40,122) ($51,318) ($56,523) ($55,690) ($48,787) ($35,776) ($16,603) $8,755 $40,331 $78,190 $122,365
Total Capital ($9,329,000) $10,647,959 $10,630,878 $10,619,682 $10,614,477 $10,615,310 $10,622,213 $10,635,224 $10,654,397 $10,679,755 $10,711,331 $10,749,190 $10,793,365
Total Liabilities and Capital ($6,184,000) $12,208,147 $12,185,672 $12,169,048 $12,158,467 $12,153,946 $12,155,513 $12,163,208 $12,177,092 $12,197,172 $12,223,486 $12,256,117 $12,295,076

Net Worth ($9,329,000) $10,647,959 $10,630,878 $10,619,682 $10,614,477 $10,615,310 $10,622,213 $10,635,224 $10,654,397 $10,679,755 $10,711,331 $10,749,190 $10,793,365

Page 6

Appendix

Table: Sales Forecast

Sales Forecast
Sales
CCB (CARIBOU & MEDUSA combined) 0% $1,078,940 $1,086,105 $1,093,350 $1,100,645 $1,107,995 $1,115,385 $1,122,830 $1,130,325 $1,137,870 $1,145,465 $1,153,110 $1,160,805
Pre-Paid IN 0% $299,910 $301,745 $303,390 $305,145 $306,915 $308,695 $310,480 $312,295 $314,095 $315,895 $317,745 $319,595
Total Sales $1,378,850 $1,387,850 $1,396,740 $1,405,790 $1,414,910 $1,424,080 $1,433,310 $1,442,620 $1,451,965 $1,461,360 $1,470,855 $1,480,400

Direct Cost of Sales Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
CCB (CARIBOU & MEDUSA combined) $134,868 $135,763 $136,669 $137,581 $138,499 $139,423 $140,354 $141,291 $142,234 $143,183 $144,139 $145,101
Pre-Paid IN $37,489 $37,718 $37,924 $38,143 $38,364 $38,587 $38,810 $39,037 $39,262 $39,487 $39,718 $39,949
Subtotal Direct Cost of Sales $172,357 $173,481 $174,593 $175,724 $176,863 $178,010 $179,164 $180,328 $181,496 $182,670 $183,857 $185,050

Page 7

Telecommunications Products Business Plan

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