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AviaBid.

com - The Internet's On-line Aviation Auction Community and Business-to-Business Marketplace

Business Plan
Marco Santiago JR, President, CEO th 14432 South 40 Street Phoenix, Arizona 85283 Tel. (602) 300-6059 Fax. (425) 977-7774 msantiago@aviabid.com March, 2000

This copy of the AviaBid.com Business Plan is being issued to you for your personal review. By accepting this copy, you are acknowledging your understanding, agreement, and consent of the following: This confidential document is the sole property of AviaBid.com, LLC. All information contained within this business plan and its appendices belong to AviaBid.com, LLC. No part hereof may be reproduced, distributed or used for any other purposes without the express written consent of AviaBid.com, LLC. This copy must be immediately returned to AviaBid.com, LLC upon request.

Copy No:

001

Issued to:

Table of Contents
1.0 EXECUTIVE SUMMARY .........................................................................................................................................................1 1.1 VENTURE AND MISSION ...............................................................................................................................................................1 1.2 KEY INVESTMENT CONSIDERATIONS ............................................................................................................................................1 1.3 MARKET AND OPPORTUNITY ........................................................................................................................................................2 1.4 PRODUCT AND ADVANTAGES .......................................................................................................................................................3 1.5 MANAGEMENT .............................................................................................................................................................................3 1.6 FINANCIAL PROJECTIONS .............................................................................................................................................................4 1.7 CAPITAL REQUIRED .....................................................................................................................................................................4 2.0 COMPANY SUMMARY AND KEYS TO SUCCESS ..............................................................................................................5 2.1 COMPANY OWNERSHIP.................................................................................................................................................................5 2.2 COMPANY LOCATIONS AND FACILITIES ........................................................................................................................................5 2.3 SHORT TEM OBJECTIVES ..............................................................................................................................................................5 2.4 KEYS TO SUCCESS........................................................................................................................................................................5 3.0 PRODUCTS ..................................................................................................................................................................................6 3.1 PRODUCT DESCRIPTION ...............................................................................................................................................................7 3.2 FUTURE PRODUCTS ......................................................................................................................................................................9 3.3 COMPETITIVE COMPARISON .........................................................................................................................................................9 3.4 TECHNOLOGY ............................................................................................................................................................................10 4.0 MARKET ANAYSIS SUMMARY............................................................................................................................................11 4.1 MARKET SEGMENTATION ...........................................................................................................................................................11 4.2 MARKET SEGMENTATION NEEDS................................................................................................................................................11 4.3 MARKET TRENDS .......................................................................................................................................................................12 4.4 INTERNET MARKET GROWTH - BUSINESS-TO-BUSINESS..............................................................................................................13 4.5 AVIATION AND AEROSPACE INDUSTRY ANALYSIS .......................................................................................................................14 4.6 INDUSTRY PARTICIPANTS ON THE INTERNET ...............................................................................................................................18 4.7 COMPETITIVE ANALYSIS ............................................................................................................................................................19 4.8 OPPORTUNITIES .........................................................................................................................................................................22 4.9 THREATS AND RISKS ..................................................................................................................................................................24 5.0 MARKETING STRATEGY AND IMPLEMENTATION SUMMARY ...............................................................................24 5.1 COMPETITIVE ADVANTAGES.......................................................................................................................................................24 5.2 COMPETITIVE WEAKNESS...........................................................................................................................................................25 5.3 KEY STRATEGIES .......................................................................................................................................................................25 5.4 VALUE PROPOSITION .................................................................................................................................................................28 5.5 POSITIONING STATEMENT ..........................................................................................................................................................28 5.6 PROMOTION ...............................................................................................................................................................................28 5.7 PRICING .....................................................................................................................................................................................29 5.8 SALES AND MARKETING PROGRAMS...........................................................................................................................................30 5.9 SALES FORECAST .......................................................................................................................................................................31 5.10 MILESTONES ............................................................................................................................................................................33 6.0 MANAGEMENT AND ORGANIZATIONAL SUMMARY ..................................................................................................34 6.1 MANAGEMENT TEAM .................................................................................................................................................................34 6.2 ADVISORY BOARD .....................................................................................................................................................................36 6.3 MANAGEMENT TEAM GAPS ........................................................................................................................................................36 6.4 ORGANIZATIONAL STRUCTURE ...................................................................................................................................................38 6.5 PERSONNEL PLANS.....................................................................................................................................................................38 7.0 FINANCIAL PLANS..................................................................................................................................................................39 7.1 ASSUMPTIONS ............................................................................................................................................................................39 7.2 PROJECTED INCOME STATEMENT (000S OMITTED) ......................................................................................................................41 7.3 PROJECTED BALANCE SHEET (000S OMITTED) ............................................................................................................................42 7.4 PROJECTED STATEMENT OF CASH FLOWS (000S OMITTED) .........................................................................................................43 7.5 PROJECTED BUSINESS RATIOS (000S OMITTED) ..........................................................................................................................44 7.6 PROJECTED LONG TERM PLAN (000S OMITTED)..........................................................................................................................44 7.7 PROJECTED BREAK EVEN ANALYSIS (000S OMITTED) .................................................................................................................45 APPENDIX A....................................................................................................................................................................................46

AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

1.0 Executive Summary


1.1 Venture and Mission
AviaBid.com aims to establish itself as a leading online destination for aviation and aerospace business-to-business (B2B). Currently, AviaBid.com operates and provides an aviation auction community environment for aviation enthusiasts, professionals, and business-to-business users on the web. AviaBid.coms 300+ members are able to auction and bid on items, post to community forums, and browse and/or search through a broad range of aviation related links to other aviation-related websites. We believe there is a significant opportunity to quickly establish ourselves as a major presence in the exchange market space. Significant and incremental returns can be achieved by capitalizing on the growth of this market by developing an effective, efficient, and value added service for buyers and sellers. Our mission is to expand on our current business model in order to establish a vertically focused on-line business-to-business exchange for professional purchasing and selling organizations in the aviation and aerospace community. This community may include original equipment manufacturers (OEMs), parts and service resellers, fixed based operators (FBOs), service providers, and aviation/aerospace consulting. This network of buyers and sellers will help facilitate effective and efficient communication, reduce purchasing and selling cycle-times, and open markets for all members of the community. Above all, AviaBid.com aims to add value to the buying and selling function for each of its members and to contribute to the their success in business.

1.2 Key Investment Considerations


We believe our plan identifies and addresses a significant business opportunity based on the following:
The Aerospace industry is huge. This industry currently generates about $500 billion in worldwide sales annually. The B2B market is experiencing rapid growth. Revenues from Aerospace & Defense B2B transactions are projected to grow

from $547 million in 2000 to $14.5 billion in 2004. AviaBid.com has the potential to create great value through savings, and the addition of value-added services, in an industry worth more than $50 billion in aftermarket volume alone. The market is highly fragmented and is ready to take advantage of a vertically focussed online marketplace. The current marketplace contains thousands of small and medium size suppliers and buyers that will find value in a vertically focused online trading community such as AviaBid.com. A market leadership position remains attainable. We plan to provide a level of service that is not currently provided in this industry space. First to market is still attainable with several companies still talking about entering this space. Management team brings experience. The entire team has senior level experience in supply chain management, branded marketing, and information technology. We bring a thorough understanding of how to manage the major elements of a successful online business-to-business exchange and marketplace. Opportunities for creating value along the supply chain. Relatively new and exciting technologies are now available that will allow market makers, such as ourselves, to create value along the entire supply chain. Capitalizing on our experience in supply chain management, and our ability to move quickly in order to implement technology, we are in a good position to execute a plan that will bring a branded level of service to small and medium sized suppliers and buyers looking for economies of scale within their respective organizations. We offer several exit strategies. We are prepared to focus our efforts on establishing a brand that closely links high quality and reliable e-commerce, business-to-business integration, and the aviation/aerospace industry. Establishing and extending the AviaBid.com brand in this manner will help us establish strong valuations with an eye toward returning very impressive multiples on the investors initial investment. Such returns may take the form of an acquisition, strong positive cash flows, and/or an initial public offering.

AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

1.3 Market and Opportunity


We target two markets within the aviation community the aviation consumer and the industrial buyer and seller. The commercial, or Business-to-Business segment of the market is by far the larger of the two markets in terms of potential revenue. This segment is looking for an effective and efficient medium to locate and/or sell products through the use of a vertically focused online community. The conventional model for the trade of idle assets is inefficient. Traditionally, those looking to sell idle assets use a protracted process of contacting potential buyers via phone or fax. Sellers can spend months looking for a buyer, let alone several who bid competitively. Likewise, buyers are confronted with a selection limited by a diffused pool of sellers and often find that their searches and auctions are time-consuming and fruitless. AviaBid.com's concept is to offer a faster, easier, and more efficient way to buy and sell aviation related business surplus by becoming the central marketplace for companies who are looking to buy or sell their excess inventory. The e-commerce model expands the pool of buyers and intensifies competition. Buyers bid against each other in real-time, as if in a live auction, and the centralized marketplace enables those buyers to choose from an extensive worldwide selection. Sellers will also have the opportunity to compete on quotes requested by purchasing professionals and other buyers through a reverse auction format. In all, the buying and selling cycle is considerably shortened. The consumer market will represent a smaller percentage of our revenue base, but will represent a much larger portion of our membership community. It is more focused on buying and selling relatively low priced items that meet the needs of the general aviation community. The general aviation community also tends to exist in a more social context relative to the commercial aviation business-to-business community. As such, AviaBid.com plans on providing an environment that promotes a relatively social communication structure supported by special interest bulletin boards and value added and pre-qualified vendor offerings to enhance the members online experience. The opportunity to engage the aviation and aerospace industry with an online business-to-business presence is quite substantial. More and more businesses in this industry are beginning to recognize the potential for cost savings by virtue of participating in an online exchange environment, which we aim to host. With respect to the aviation and aerospace market, Forrester Research predicts that transactions, which are transacted through online business-to-business exchanges, are expected to grow substantially from $547 million in year 2000 to $14.5 Billion by the year 2004.

B2B Aerospace & Defense Revenue Growth


$16 $14 $12 $10
Billions

$14.5 $11.5

$8 $6 $4 $2 $0 2000 2001 $0.5 $1.5

$6.1

2002

2003

2004

Competition in this market is relatively thin. There are currently very few players, however, competition in this space is also beginning to intensify, and the window of opportunity will continue to close for those that move too slowly into this space. Establishing a foothold with the intent to dominate will assure our success; however, we do see a period of consolidation in the 12 to 18 month horizon. After the consolidation period, the market will only support a handful of players. The rest will very likely be acquired or left to support unsustainable niches.

AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

1.4 Product and Advantages


We aim to leveraging the power of e-commerce by connecting industrial aviation and aerospace purchasing and selling organizations. Our goal is to provide an environment that will allow our community members the ability to conduct online negotiations, manage processes and workflow, check on outstanding transactions, establish their own virtual procurement system, and provide for store front and/or catalog management and search functions. AviaBid.coms reverse auction will bring real business opportunities to suppliers by paving the way into accounts that had previously been unattainable or closed because of traditional sales and purchasing channels. The application of our reverse auction model for business-to-business transactions will have profound implications for markets. Purchasing programs will realize huge savings from industry suppliers that have a greater opportunity to bid on purchasing requests in a vertically focused industrial community. Our traditional auction model promises to make buying and selling aviation goods, services, and capital equipment more efficient, convenient, and effective. Buyers and sellers do not have to plan for and/or wait for specific auction dates. Sellers have the advantage of listing their goods and services at any time, from anywhere, and to a much broader audience of buyers this expands the sellers distribution of goods by several orders of magnitude. Buyers have the advantage of visiting a destination that is not out of the way. Auctions are held 24 hours a day, 7days a week, and 365 days a year. AviaBid.com auctions can be accessed from the convenience of home or office. AviaBid.com members will also find value in the amount of information provided during their visit to the site. Members will find a wealth of aviation related content provided by members as well as our site content editors. Members will also be provided free coverage of business and consumer oriented news and product information.

1.5 Management
Marco Santiago Jr., President, CEO Marco Santiago Jr. launched AviaBid.com on August 3rd 1999. He is a graduate of Western International University, where he studied information systems and business administration. Before attending Western International University, Marco attended Arizona State University, where he majored in aerospace engineering and applied mathematics. Before devoting himself full time to the development of AviaBid.com as a venture, Marco studied in the Technology Management MBA program at the University of Phoenix. He was employed as a programmer analyst for the Adaptive Broadband Corporation from August 1996 to February of 2000. Currently, Marco is a senior consultant in the Customer Relationship Management (CRM) group at the Oracle Corporation. Marco is a licensed pilot and a former USAF Reserve and Arizona Air National Guard crew chief on C-5 and C-141 aircraft. David McIntyre, Vice President Marketing David McIntyre has over eight years of management experience in the Internet and technology industry. David is currently the head of marketing and finance for Avnet Inc.s $2 billion Integrated Material Services (IMS) group. Avnets IMS group is a world-class supplier of supply-chain logistics and utilizes EDI and the Internet for supply-chain integration. David leads his organization by developing best in class supply chain integration for tier one customers including electronic forecasts, triggering, invoicing, and payment. He currently negotiates these strategic partnerships by helping customers understand their total cost of ownership. David is the developer of the current Performa system utilized by Avnets global sales force and continues to lead his organization in strengthening profitability goals by implementing an activity based costing system. He is currently responsible for all strategic and promotional marketing, including production of Avnets Global Supply Chain magazine. Prior to joining Avnet, David worked within Intels Aerospace & Military division where he was instrumental in the creation and implementation of business and marketing plans. He worked with several electronic original equipment manufacturers and was responsible for all aspects of bringing new products to market including pricing, promotion, product development, and distribution. Negotiating and managing several strategic partnerships were also an important aspect of his responsibilities. David has been extensively trained in executive level MBA classes from The Anderson School at UCLA and holds a BS in Electrical Engineering from Kansas State University.

AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

Kim B. Bozik, Vice President Operations and Community Logistics Kim Bozik has over 12 years experience in product development, marketing and operations with Fortune 500 companies and an emerging technology company. He was a senior systems engineer with Honeywell for 8 years and was a key member of inertial navigation equipment development for the space industry. For the past 4 years he has held product marketing, technical marketing, and marketing management positions with Intel, Motorola, and Three-Five Systems. Through these assignments he has successfully brought semiconductor and liquid crystal display technologies to the marketplace. Currently, Kim is a senior strategic demand analyst for Intel and is responsible for determining market trends and its effect on factory production and capital purchase needs. Kim's background also includes knowledge of the general aviation industry through a previous family flight instruction business. He holds a Master of Science in Engineering Management from the University of South Florida and a Bachelors degree in Electrical Engineering from the Florida Institute of Technology.

1.6 Financial Projections


Aviation related imports and exports have been on the rise since 1995. 1998 imports of aviation goods and services reached almost $22 billion while exports soared to almost $59 billion (General Aviation Manufacturers Association (GAMA). This trend is expected to continue well into the 21st century, and represents a robust aviation economy in which to exploit the e-commerce initiative. By almost every measure, the aviation and aerospace industry will continue to grow. With respect to the aviation and aerospace industry, Forrester Research estimates that total transaction revenue is expected to top $14.5 billion for the online business-to-business space. We believe that the market is bigger if we include ancillary and complimentary goods and services that do not fall directly under the canopy of aviation and aerospace goods and services. These goods and services may include office supplies and equipment, information systems equipment and services, engineering and consulting, and other goods and services that potential members of our community may find convenient to buy and sell without having to go to other online markets. We have developed financial projections for the period of April 2000 through April 2004. Revenue for the year 2000 is projected to be $3.1 million based upon a starting date in April, while revenue for 2001 is projected to be $24.4 million. Revenue for the years 2002 through 2004 is currently based on an organic growth model, and is projected to be $46 million, $58 million, and $78 million, respectively. Organic growth is derived from forecasted industry growth rates. We have supplied a brief financial projection table based on the following assumptions. A more detailed analysis may be found in the financial section of the plan. The projections shown are based on us capturing 40% of the total business-to-business market and extracting a 1% or 2% on every transaction in the trading community. Values are in millions of dollars. Revenue Projections ($Millions) 2000 $500 $2 $4 2001 $1,500 $6 $12 2002 $6,100 $24 $49 2003 $11,500 $46 $92 2004 $14,500 $58 $116

TAM 1% Fee 40% 2% Fee 40%

1.7 Capital Required


AviaBid.com's projected financial results are based on receiving approximately $795 thousand of initial start-up capital financing, with two follow on rounds of $700 thousand in four month intervals for a total investment of $2.1 million. Barring additional investment or acquisitions, the company plans to turn cash flow positive by the end of the first operating year depending on the degree with which we aggressively market ourselves. This projected capital financing is in order to allow its managers to devote full time resources for the implementation and execution of its business plan over the next 6 to 12 months. This includes, but is not limited to, implementing, improving, and extending its internet and business applications, implementing an aggressive marketing strategy, and hiring much needed technology, sales, and administrative personnel.

AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

2.0 Company Summary and Keys to Success


AviaBid.com became a limited liability company in the state of Arizona on August 3, 1999. Before then, AviaBid.com was formally known as ArizonaSkyNet.com, a local aviation portal for the Arizona flying community. ArizonaSkyNet.com was established in September of 1998. In January of 1999 ArizonaSkyNet.com added the Internets first online aviation auction application, which ran in beta mode until August of that year. AviaBid.com went online as a separate business entity on September 6th, 1999, and it is currently owned and operated by its principal investors.

2.1 Company Ownership AviaBid.com became a limited liability company in the state of Arizona on August 3, 1999. It began operations on September 6th, 1999, and it is currently owned and operated by its principal investors, Marco Santiago Jr. and Diana Eckenburg. 2.2 Company Locations and Facilities AviaBid.com is currently being run from the private residence of its principal operators in Tempe, Arizona. Currently, the website is hosted and serviced by AuctionShare.com Inc. of Jacksonville, FL. 2.3 Short Tem Objectives 1. 2. 3. 4. To complete and extend the implementation of our business-to-business model within 60 days of capitalization. To register 10,000 individual business-to-business users by the end of the first fiscal year. To identify, pre-qualify, and partner with 5000 aviation and aerospace related suppliers of commercial and consumer parts and services by the 3rd fiscal quarter after initial implementation. To register 5000 organizational buyers within the 3rd fiscal quarter of initial implementation.

These objectives will serve as an initial measuring stick of our success.

2.4 Keys to Success 1. Leverage community membership to attract high quality sponsors, advertisers, and value added offerings and services through strategic partnerships. Encourage repeat traffic by maintaining a high level of community trust, value added content, and high quality auction listings and services. Establish, strengthen, and maintain the AviaBid.com brand with aggressive marketing strategies. These strategies include, but are not limited to, the use of print advertising in nationally branded and industry related publications, aggressive and consistent participation in key trade shows, cross-linking with well established websites, targeted banner advertising, direct marketing, search engine listings, and the formation of partnerships with key industry players. Leverage the use of, and partner with, best of breed technology providers that bring high degrees of core competencies in order to reduce product development cycles times and increase speed to market. Focus on our industry vertical - attract and recruit the best expert knowledge in this industry. Execute with the intent on leading our industry - This means that we will attract key buyers, which will attract more buyers. This will attract key sellers, which will attract more sellers. The end result is the generation of

2.

3.

4.

5. 6.

AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

liquidity in the form of transactions within the exchange community. The virtuous circle continues and simply feeds on itself. 7. We will maintain commercial neutrality as market makers. This means that the exchange must be perceived as a neutral third party by all other parties, as well as actually acting as a neutral body - we must benefit all players in the industry that we serve. Ensure the highest level of fairness and Integrity. AviaBid.coms organization, policies, and practices will be structured to provide buyers and sellers of all types an unbiased and fair environment in which to conduct day-today business. One way of establishing a high level of integrity, and to insure commercial neutrality, is by establishing a user advisory board that will provide a forum for key players in the industry to have adequate input on policy without them having to have a controlling ownership or control on the principals or the board of directors. Encourage the building of community through the use of real time exchange information, news feeds, industry rolodexes, bulletin boards, discussion forums, industry newsletters, calendar of industry events, industry job search and job ads, and classified advertising.

8.

9.

10. Partner with the right players in order to scale quickly. These partners may include, but not limited to, deeppocket investors, industry buyers and sellers, existing broker intermediaries, infomediaries, content providers, IT vendors, and trading system software providers. These partnerships will be formed with a eye toward not letting any one of them establish control of the market. 11. Operate as a virtual business - we will outsource as much of our operations as possible. This will have the effect of keeping staffing levels low, increase our ability to move quickly in response to changing market conditions, and remain flexible.

3.0 Products
Currently, AviaBid.com provides the auction functionality required for members to place aviation-related goods and services for auction on the web. Users are allowed to post to community forums and browse and/or search through a broad range of aviation related links to other websites. AviaBid.com will also provide a business-to-business environment through the use of market making mechanisms. Such mechanisms will support the use of dynamic pricing models, workflow processes and management, and messaging applications. In all, AviaBid.com will form a vertical network of buyers and sellers in order to serve all members of the aviation and aerospace community. By providing a robust platform, we aim to ensure that buyers and sellers are optimally matched so that the buying and selling cycle is shortened, and organizations participating in this community get the best returns for the time and money invested in their purchasing and selling organizations.

AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

3.1 Product Description Business-to-Consumer and Person-to-Person Auctions AviaBid.com currently provides its members the following features and services in its auction community: Users may choose to be notified daily by e-mail of new and/or current auctions in their categories of interest. This allows users to browse listings on their own time. Send e-mail to users automatically anytime a user registers, places a bid, lists an item, is outbid, or an auction in which they participated ends. Daily status E-mails sent to all users with current bids and/or auctions. Track bids and display them during the auction and after it closes. Automatic profanity filter allows filtering of unwanted words or phrases from both titles, descriptions and feedback comments. Users have full control over their item listings. They can set starting bid, reserve price, quantity, auction length and many other optional listing features. Automatic Proxy Bidding on all auctions. Proxy Bidding allows users to place a maximum bid for an item. The system will place bids on their behalf as necessary until they are the high bidder or that maximum bid is reached. AviaBid.com utilizes usernames and an internal e-mail system to prevent unauthorized persons from "harvesting" e-mail addresses from the auction site. This greatly reduces the possibility that users will be targeted by unsolicited e-mail campaigns (SPAM). An advanced feedback system allows users to leave detailed feedback on other users. A letter grade scale, similar to a traditional school grade (A,B,C,D, or F), is used to rate users. This provides a more accurate assessment of the transaction than a simple "positive" or "negative" rating system. Additionally, feedback can only be entered by users actually involved in the transaction (i.e. winning bidder(s) and seller), therefore preventing potential system abuse. Users can enhance their listing descriptions by adding pictures and HTML. Various auction types are available, including single item auctions and "Dutch" auctions. Users can access their "Personal Page" from just about anywhere on the site. This allows users to view current stats, such as auctions they have listed, auctions they are currently bidders in, account information and much more. An easy to use "Re-list Auction" feature makes it simple for users to start the same auction again. All details of an auction can be viewed including starting time, ending time, bid history, current bid, number of bids, and much more! Reserve price auctions are available. This allows users to set a minimum price they are willing to accept for an item. The item does not sell unless bidding reaches this price. The reserve price is not disclosed to bidders. A comprehensive Search System - Users have dozen of different ways in which to search the auction database, and in various selectable display formats. Secure Payment Area to either set up an account or make a payment. AviaBid.com operates using the latest in SSL technology for secure transmissions. Users listing items can select from a large array of listing options. Showcase and Featured auctions, which will generate premium revenues while options like icons, colored and bold listing titles enhance the users auction. No limit on the number, size, or frequency of active listings. Users are allowed to search a comprehensive database of aviation related websites. Users are also allowed to add to this database. AviaBid.com reviews the link submitted in order to maintain the quality of the links. Community environment supported by message boards. This feature will allow members to contribute content to the website. This feature is important to community development, and will serve to help create, strengthen, and maintain friendly and professional relationships among community members. News and information related to aviation through specialized news services linked to the website

AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

Business-to-Business Our business-to-business product offering will include a comprehensive suite of functionality which add value to professional purchasing organizations, while at the same time expanding markets for organizations selling products and services to the aviation and aerospace industry. Our plan is to implement a multi-layered architecture that supports a comprehensive commerce platform. This platform will enable community members to better manage and maximize their buying and selling processes.

Email

Fax

Voice over IP

Streaming Media

Quote and Bid Processing

Dynamic Pricing Forward and Reverse Auctions

Fixed Pricing Relationships

Multi-Language Translation

Suppliers Buyers Thin Client Interface Requisitions > Orders > Tracking > Shipping > Billing/Invoicing > Payment Thin Client Interface Workflow Management Content Tools Catalog Search

DHTML XML

DHTML XML
Catalog Creation and Management Online Product Configuration

Integrated ERP Application Environment Oracle 11i Relational Database Management System Oracle 8i

Business-to-Business Market Making Architecture

AviaBid.com will provide the environment to help community members manage the selling and procurement functions through the use of exchange technologies that enable organizations to optimize workflow processes such as requisitioning, ordering, order tracking, shipping, billing, and payment. At the same time we aim to provide our members the ability of report and perform analysis on these functions. Central to the growth of this on-line market is our ability to provide a model that promotes dynamic pricing strategies such as reverse auctions, the ability to provide quote and bid processing function, and the ability to build and sustain relationships that support fixed pricing models. If community members wish to sell items from comprehensive catalog listings, then we will provide a suite of tools needed for these members to manage such content; while at the same time provide the search functionality needed to make them easy for customers to use. Critical to the usefulness of the online market is our ability to provide a robust messaging system that will support Fax, email, Voice over IP, and streaming media in order to maximize and provide a flexible communications system which can accompany requisitions and help facilitate the approval and workflow process. In all, our market-making community will enhance and shorten the buying and selling cycle, saving millions of dollars for community participants. Whats more, all users of this online market will need nothing more than a standard Internet browser. There will be no need to install expensive proprietary software, and the cost of ownership for a community

AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

member will be negligible, since all that will be required in order to participate in this community is a standard industry browser. Other Products Common to Both Online Environments Provide its members the ability to receive targeted promotions from qualified venders. This service will be at the discretion of the community member, who will be allowed to opt-out of such an arrangement. Provide for a means of participating in closed auctions that are by invitation only. Member suppliers wishing to sell to specifically qualified buyers and resellers may start such an auction. Provide for a yearly conference and show planner, and provide coupons for access to these shows, which will be provided by industry partners. Provide original content that is specific to the aviation consumer and professional. This content will serve to entertain and inform members and visitors of the market community.

3.2 Future Products One of the more exciting plans for AviaBid.com is to make use of the increasing capabilities that broadband technology offers in order to facilitate live auction events from the physical space. AviaBid.com will partner with land based auction houses in order to bring to its members an added channel in which to participate through the use of multi-media technologies and applications. As high bandwidth infrastructures make themselves more readily available, AviaBid.com will position itself to provide this service to its members. Doing so will strengthen and extend the brand equity of AviaBid.com, while providing the physical partner with the opportunity to tap into AviaBid.com's membership community of buyers and seller.

3.3 Competitive Comparison Currently, AviaBid.com enjoys the first mover advantage within its competitive space with respect to the auction. There are no other online aviation auction communities in existence today that serve the aviation consumer market, and there are few that have deployed the reverse auction functionality that lend itself to business-to-business buying and selling. Whats more, there are no online market makers in existence that integrate the supply chain between buyers and sellers. Supply chain integration is considered to be the killer application for the business-to-business space. AviaBid.com will take advantage of this opportunity in order to secure the market and raise barriers to entry as quickly as possible. AviaBid.com is focused on the aviation consumer at this point, but we are in the process of positioning and focusing ourselves to become a vertically focused business-to-business destination as well. Currently there are many aviation-related websites; however, none of them offer an auction-oriented experience. There are sites that do offer parts search and request for quote capability, but these sites do not employ the use of reverse auction functionalities needed to dynamically set prices for parts and/or services required by purchasing agents and organizations. The competition has also failed to market themselves as a general destination for the aviation buyer and seller. Websites that are currently offering parts search and RFQ capability, as well as providing its users with the ability to upload inventory are PartsBase.com, apls.com, Spec2000.com, ipls.com, AVSupport.com, FindParts.com, Avi-x.com, wsdn.com, and AirPartsLocator.com. AviaBid.com plans to differentiate itself as the destination to buy and sell all things aviation, primarily through its dynamic pricing functions embodied in our traditional and reverse auctions. Our ability to use the latest technology in order to more tightly integrate small to medium size companies along the supply chain will also help to differentiate us from the competition. One of the biggest differentiators is our ability to act in a consulting capacity for perspective members of the exchange community. Our expertise in supply chain management will allow us to better serve our members. By providing the aviation community with a highly interactive forum to exchange goods, services, information, and ideas, AviaBid.com will position itself as a trustworthy and reliable destination. AviaBid.com will leverage its membership to promote the logistical advantage it can provide its membership by virtue of the number of

AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

members within the community and through the involvement of industry partnerships. This will allow AviaBid.com to better establish itself as the business-to-business destination within its aviation oriented vertical industry.

3.4 Technology At this moment, AviaBid.com does not produce new technologies. For now, AviaBid.com relies on enabling technologies packaged by specialized technology providers in order to provide the auction function. AviaBid.com's forward auction application is currently hosted on the technology provider's server at AuctionShare.com. AviaBid.com is an Active Server Page application, which connects to a SQL server database and runs on Windows NT Servers. Use of an Application service provider, such as AuctionShare, reduced our initial cost of ownership and served to speed our time to market in order to capture the first mover advantage. Our philosophy is to outsource as much of the core technology functions as possible in order to reduce cost of ownership, time to market, and react more quickly to market changes. We will partner with our technology providers in order to close the product development loop as tightly as possible. AviaBid.com is currently evaluating exchange, content management, and supply chain technologies from several industry leaders, which include Oracle, Ariba, i2, Moai Technologies, and Vignette. We plan on working with leading systems integrators and application service providers in order to shorten the product development cycle, which will allow us to get to market quickly. Our business functions will be tightly integrated with the exchange technology and supported by Oracle's 11i applications, which in turn, will be supported by their 8i relational database management system. This move will serve to scale our operations for anticipated growth. By partnering, and making use of Oracles technology, we will reduce the technical risks associated with the implementation of business information systems.

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AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

4.0 Market Analysis Summary


We target two broad markets - the consumer aviation community, and the business-to-business community. The combined market is quite substantial, and represents a significant opportunity in which to exploit the e-commerce initiative. Both market segments have shown strong growth over this past decade, and all indications point to continued growth for this industry well into the next decade. Although the market, especially the business-to-business community, has been slow to embrace the advantages of e-commerce, they have recently done so with great enthusiasm because of the efficiencies that it promises. The target business-to-business customer is a global user, and is one that is looking for more efficient ways of conducting business. At the moment, the competition in this space is very thin. There are no dominant players, and the market is in its infancy.

4.1 Market Segmentation General Aviation Consumer (person to person) By far, the more numerous of our registration base will be the general aviation consumer. This group is generally comprised of general aviation aircraft owners, students and instructor pilots, recreational and sport pilots, and collectors of aviation memorabilia and historical artifacts. Strictly speaking, we are talking about the non-professional buyer and seller. However, it must be said that the general aviation market; i.e., the market that is defined below, is quite substantial. General aviation is defined as all aviation other than commercial and military aviation. It is also one of our nations most important and dynamic industries, flying over 27 million hours (nearly two times the airline flight hours) and carrying 145 million passengers annually. General aviation is relied on exclusively by more than 5,400 communities for their air transport needs (scheduled airlines served about 600). Approximately 70 percent of the hours flown by general aviation are for business and commercial purposes. (General Aviation Manufactures Association) Professional and Commercial Buyers and Sellers Global Business-to-Business Although this segment of the potential market will most likely represent a much smaller segment of the registered user base, it will represent a much larger portion of the revenue generating membership. The global business-to-business and business-to-consumer market will be quite substantial, and represents a significant opportunity for us. This segment is made up of suppliers of parts and services in the areas of manufacturing, software, materials, insurance, catering and in-flight services, aviation training, aircraft and equipment leasing, finance, and space systems hardware and services.

4.2 Market Segmentation Needs We target two markets within the aviation community the aviation consumer and the industrial buyer and seller. The consumer market represents one that is focused on buying and selling relatively low priced items that meet the needs of the general aviation community. The general aviation community tends to be more social in nature relative to the business-to-business community. As such, we plan on providing an environment that promotes a relatively social communication structure supported by special interest bulletin boards and value added and pre-qualified vendor offerings to enhance the members online experience. The commercial, or global business-to-business segment of the market, is generally fragmented. Members of this vast market are looking for an effective and efficient medium to locate and/or sell products and services through the use of a vertically focused online community. In the case of those trying to sell excess inventory of goods and services, the conventional model for the trade of idle assets is inefficient. Traditionally, those looking to sell idle assets use a protracted process of contacting potential buyers via phone or fax. Sellers can spend months looking for a buyer, let

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AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

alone several who bid competitively. Likewise, buyers are confronted with a selection limited by a diffused pool of sellers, and often find that their searches or auctions are time-consuming and fruitless. Buyers looking for a good deal and sellers looking to open markets also face a diffused pool of prospects, which increases the buying and selling cycle time and adds to inefficiencies associated with the process. AviaBid.com's concept is to offer a central marketplace where aviation businesses can efficiently buy and sell goods and services (excess or otherwise), build an online storefront, participate in online forums and discussions, or search for industry related products, news, and information. Such an environment will serve to expand markets to many suppliers while shrinking the procurement cycle for buyers. The e-commerce model expands the pool of buyers and intensifies competition. In the case of our auctions, buyers bid against each other in real-time, as if in a live auction, and the centralized marketplace enables those buyers to choose from an extensive worldwide selection. Sellers will have the opportunity to compete on quotes that are requested by purchasing organizations and other buyers through a reverse auction format. In all, the buying and selling cycle is considerably shortened.

4.3 Market Trends Online Auctioning Online auctions have become more popular than ever this past year. One has to only look to the two main online auction aggregators AuctionWatch.com and InternetAuctionList.com to get a sense of how popular online auctioning has become. These two sites display a robust list of online auction sites, with categories ranging from antiques to commercial and capital equipment. Currently, there are well over 400 online auction sites, with a growing list of new ones being added every month. Online auction sites may be divided into two main categories person-to-person, and commercial or business-tobusiness auction sites. Although the person-to-person auctions have firmly established themselves as destinations for the consumer oriented market, only recently, however, has the online auction model turned to serve the needs of the business-to-business community. Online auctioning is expected to play a major role in how businesses turn idle and excess inventories of capital equipment. Reverse auctions, for example, have the capability of opening markets for suppliers of parts and services and facilitate the procurement of maintenance repair and operations and other services. Currently, there are very few players in this business-to-business arena.

Aviation and E-commerce The aerospace industry currently generates about $500 billion in worldwide sales annually. In the United States the aviation and aerospace industry is experiencing one of the healthiest periods of growth in recent times. In 1998, the general aviation industry recorded its highest industry billings in history $5.9 Billion up from $4.7 Billion in 1997 (General Aviation Manufacturers Association 1999 Annual Industry Review and Outlook Briefing). In the United States alone, aerospace industry sales reached $145.03 billion (Aerospace Industries Association of America 1998 Year end Review). These figures, when combined with the explosive and increasing relevance of E-commerce as a way of doing business, present a huge opportunity for entrants of aviation related electronic commerce. Over the past year there has been a growing population of aviation related E-commerce websites. Many of these sites are little more than electronic storefronts for land based aviation supply stores. Some of them are pure Internet entities. Regardless of the type, their numbers are increasing. Some of the more popular ones are JetPlane.com, ListaPlane.com, AircraftDealers.net, PilotToys.com, and AeroMall.com, just to name a few there are hundreds of them in existence.

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AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

4.4 Internet Market Growth - Business-to-Business It is now generally accepted that Internet related commerce is playing a growing role in business-to-business and consumer buying and selling, and within just a few years, will play a critical role in worldwide commerce in general. Currently, the Internet accounts for approximately $134.9 billion in commerce. In the US alone, the Internet is expected to generate approximately $967.5 billion in commerce by the year 2002 (Giga Information Group). In addition, world wide business-to-business E-commerce is expected to top $475.0 billion up from its 1997 estimated $8.5 billion (ActiveMedia).

U.S. Internet Commerce Forcast


2002 2001 2000 1999 0 200000 400000 600000 800000 1000000

Year

B to C B to B

Millions of Dollars

Internet Related Market Growth Business-to-Business and Business-to-Consumer (Source: Giga Information Group)

The online auction community stands to play a major role in e-commerce. Forrester Research Inc., Cambridge, Mass., recently predicted that business-to-business online auctions will account for $52.6 billion in revenue by 2002. This is a substantial part of the overall e-commerce picture. In an online article written by George Anders, staff reporter for The Wall Street Journal, David Beirne, of Benchmark Capital, was quoted as saying that the market could be as high as $380 billion in annual revenue by 2002. Such projections indicate that the time is right for heavy capital investments in online business-to-business auction models, in particular, those that serve the growing aviation community.

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AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

4.5 Aviation and Aerospace Industry Analysis By almost every measure the aviation and aerospace industry is expected to grow rapidly over the next decade. Aircraft shipment and billing have been on the rise since the early 90's and will continue to do so. Imports and exports of aircraft and aerospace components continue to rise, which reflect a robust industry in which to exploit the business-to-business e-commerce initiative.

4.5.1 Aircraft Shipment and Billing General aviation shipments of new aircraft have been on a steady climb since the early 1990s, from 1021 units and slightly over 1.96 billion dollars in 1991, to 2220 units and 5.87 billion dollars in 1998. This represent a 117% increase for units shipped and a 200% increase in revenue over the last ten years. Such increases in aircraft sales will spark future demand for aircraft parts, services, and other aviation related goods much of which will be distributed and served by e-commerce.

Shipment of New U.S. Manufactured General Aviation and Factory Net Billings
7000

6000 Unit(Thousands) and Dollars(Millions)

5000

4000

Units Shipped Billing Dollars $Millions

3000

2000

1000

0 1990 1991 1992 1993 1994 Year 1995 1996 1997 1998

Source: General Aviation Manufacturers Association (GAMA)

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AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

4.5.2 Aircraft Fleet and Flight Hours Although there has been a modest increase in the number of active general aviation aircraft flying, the number of hours flown shows an upward trend on a per aircraft basis. In 1997, hours per aircraft flown per year stood at 144 hours compared to 136 in 1994. This represents an increase in per aircraft usage, which may prompt an increase in demand for spare parts and services bought and sold in the open market. Again, this market is readily served by e-commerce business-to-business initiatives.

General Aviation Active Aircraft and Flight Hours per Aircracft per year
250000 Active Aircraft (Estimated) 200000 150000 100000 50000 0 1993 1994 1995 Year 1996 1997 146 Hours Flown per Aircraft (Esimated) 144 142 140 138 136 134 132 Year Active Aircraft (Estimated) Avg Hrs/Aircraft

Source: General Aviation Manufacturers Association (GAMA)

4.5.3 Pilots Certifications and Aviation Support Personnel The total number of pilots, which include students, private, commercial airline transport, helicopter (only), glider (only), lighter than air, recreational, instrument rated, and flight instructor pilots, have been on a gradual decrease, which has manifested itself in the prevailing increase for their demand.

Total Number of Pilots


800000

Number of Pilots

700000 600000 500000 400000 300000 200000 100000 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 Year Total Pilots

Year

Source: General Aviation Manufacturers Association (GAMA)

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AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

4.5.4 Import and Export of Aerospace Products U.S. Imports of Aerospace Products (Millions of Dollars)
Total Imports
Military Aircraft Civil Aircraft Transports General Aviation Helicopters Other Aircraft Engines Turbine Piston Aircraft & Engine Parts Spacecraft, Missiles, Rockets, &Parts 1994 $12,363 22 3787 1361 1711 317 398 2775 2691 84 5377 401 1995 $11,509 64 3482 972 1449 300 771 1828 1774 55 5745 379 1996 $13,668 24 3924 823 2136 361 604 2007 1937 70 7339 375 1997 $18,134 13 4656 1067 2514 460 615 2987 2943 45 9904 574 1998 $21,986 7 6319 1899 3432 449 540 3767 3729 38 11476 418

Source: Aerospace Industries Association, based on data from the U.S. Department of Commerce

U.S. Export of Aerospace Products (Millions of Dollars)


Total Exports
Total Civil Exports Complete Aircraft Transports General Aviation Helicopters Used Aircraft Other Aircraft Aircraft Engines Turbine Piston Aircraft & Engine Parts Spacecraft, Satellite, &Parts 1994 $37,373 30,050 17,737 15,931 598 82 1111 14 2386 2292 94 9628 300 1995 $33,071 25,079 12,275 10,606 593 170 876 29 1750 1661 89 10613 436 1996 $40,270 29,477 15,111 13,624 598 212 25 84 1996 1912 84 11965 405 1997 $50,374 40,075 23,112 21,028 946 207 22 97 2092 1995 97 14373 498 1998 $58,960 48,492 29,119 27,092 794 148 30 81 2758 2677 81 15845 690

Source: Aerospace Industries Association, based on data from the U.S. Department of Commerce

Dollars (Million)

Aviation related imports and exports have been on the rise since 1995. 1998 imports of aviation goods and services reached almost $22 billion while exports soared to almost $59 billion. This trend is expected to continue st well into the 21 century, and represents a robust aviation economy in which to exploit the B2B e-commerce initiative.

US Aerospace Imports and Exports in Millions of Dollars


$70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 1994 1995 1996 Year Total Imports Total Exports 1997 1998

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AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

4.5.5 Aviation Industry Forecasts By almost every measure, the aviation and aerospace industry will continue to grow. Below is a historical and forecasted outlook for all aircraft categories, active pilots, and hours flown from 1995 to 2010.
Projected Number of Active pilots Active Number of Pilots (Thousands) 750 700 650 600 550 1995 1997 1999 2001 2003 2005 2007 2009

The number of active pilots is expected to grow from approximately 616 thousand in 1997 to 735 thousand in 2010. This demand increase is consistent with the continued growth of International commerce.

Year

Source: GAMA
Projected Number of Active Aircraft
230 220 210 200 190 180 170 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Number of Active Aircraft (Thousands)

The number of active aircraft is also expected to grow by 12% over the period from 1999 to 2010, from 197 thousand to almost 221 thousand aircraft.

Year

Source: GAMA
Project Number of Flight Hours
Flight Hour Flown (Millions) 40 35 30 25 20 15 10 5 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Total hours flown will also continue to increase from 28.7 million hours to 34.1 million hours over the 1999 to 2010 period. This represents a 19% increase over this period. Source: GAMA

Year

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AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

The aviation industry will continue to grow in step with the demands placed on it by the growth of national and international commerce. Such growth speaks well for the need to implement e-commerce systems in order to support aviation related business exchanges, such as buying and selling aircraft parts and services.

4.6 Industry Participants on the Internet The online auction space is relatively young, with a few exceptions eBay being one of them. The environment is such that there are many online auction sites, but most of them tend to be general auction sites. Few of them address the specific needs of the aviation industry. At the highest levels, the online auction space is dominated by nationally recognized brands such as eBay, Amazon.com, Yahoo, PriceLine.com, and uBid.com. These sites are mainly person-to-person auctions, and list a wide variety of items for auction. With respect to the business-to-business space, the trend is accelerating. New entrants are entering this space in all industries. The online business-to-business model is a much more complicated one, but is a much more opportunistic one with respect to return on investment. There are industry specific auction sites, which serve the needs of vertically focused industry groups. These businessto-business sites tend to promote themselves as destinations for businesses to bid and/or liquidate idle inventory and high value capital equipment. Other players focus on the use of reverse auctions to facilitate procurement of goods and services. This is typically done by getting vendors to competitively bid on request for quotes. The business-to-business players in this group are TradeOut.com, ComAuction.com, Liquidation.com, iMark.com, Chemdex, PurchasePro, and VirticalNet.com, to name a few. Most recently, eBay has moved to participate in the business-to-business space with its introduction of eBayPro. None of these players focus on the aviation community. Not all sites, which claim to facilitate matching buyers and sellers, use the online auction model. There are industry players, specifically aviation related, that serve as parts locator services, and provide request for quote (RFQ) functionality. Websites that offer such services for the aviation community are Avsupport.com, Aeroparts Locator, Aviation Network Online, apls.com, Bcomm.com, Findparts.com, ILS, IPLS, PartsBase.com, Spec2000.com, and WSDN. The number of participants in this industry will continue to grow. Given the enormous potential of the market, and with the revenue numbers that industry expert project, there seems to be plenty of room for new entrants.

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AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

4.7 Competitive Analysis AviaBid.com participates in an industry space with very few competitors with respect to online aviation auctions and industry market making exchanges. Those that do exist are relatively new, and none of the competitors enjoy any real or perceived dominance within the aviation industry. Below is a list of potential competitors and a description of their perceived strengths and weaknesses.

AerospaceOnline.com a Community of VerticalNet.com


Strength

Vertical Net is considered one of the first business-to-business communities. They are a publicly traded company with substantial backing by partners from a wide variety of industries. AerospaceOnline.com is one of Vertical Net's vertically focused communities, Vertical Net established a well known brand with excellent technical, managerial, financial resources, and deep industry knowledge.
Weakness

Analyses of AerospaceOnline.coms website show that its dependence and association with Vertical Net seems to have diluted its focus with respect to the aviation auction. AerospaceOnline.com seems to share the auction application with other vertical communities within Vertical Net. Because of this it fails to deliver a true aviation auction experience. Direct examination of its product offerings with respect to the auctions shows that it fails to organize its listings in any meaningful manner with respect to aviation. Aviation Exchange www.avi-x.com
Strength

Aviation Exchange is an online aviation auction site similar to AviaBid.com. Aviation Exchange appears to be targeting the person-to-person auction space. It has a professional look and feel, and appears to have a starting point to work with.
Weakness

Aviation Exchange does not appear to be marketing itself in any meaningful manner. Their inventory seams to be low to non-existent after many observational visits. Their interface does not allow for users to upload or view pictures of items for auction, and they do not appear to be making efforts to develop a community atmosphere for members to generate or exchange industry related information. Aviation Exchange has not employed the use of a reverse auction application within its site in order to allow for competitive bidding against request for quotes. This implies a neglect to address the needs of the business-to-business community.

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AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

AVsupport www.avsupport.com
Strength

Analysis of AVsupport indicates that they are one of the most well rounded of the list of potential competitors on the Internet. AVsupport offers a wide array of fees based services to its users. Among the services that AVsupport offers its members are free inventory uploads and listing, email based request for quotes, and Master Cross Reference and parts search capabilities, to name a few. AVsupport is well served by a founder that does have industry related experience in parts and logistics.
Weaknesses

Like most of the competitors listed, AVsupport does not offer an online auction service to its members; however, they do claim to be working on such a capability. Although they do offer a request for quote capability, it is not commissioned based and is too narrowly focused on aviation parts. AVsupport does not market itself to the broader aviation community.

Air Parts Locator www.aeropartslocator.com


Strength

Air Parts Locator is a very simple and free parts listing service. The interface allows users to list items and browse through its listings.
Weaknesses

Air Parts Locator is nothing more than a listing service. It has no search functionality, it lacks a robust list of categories in which to list, and has no revenue generating model to speak of.

Aircraft Parts Locator Service www.apls.com


Strength

APLS is a flat fee subscription based parts locator service that allows its members to upload inventory and search for aircraft parts through a variety of search criteria. APLS also has an RFQ system that allows users to send a request for quote via e-mail or fax.
Weaknesses

Although APLS does have a request for quote system, it does not allow for competitive bidding on these quotes. APLS is also too narrowly focused and does not plan to expand in order to serve the broader needs of the aviation and aerospace community.

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AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

PartsBase.com
Strength

By far the most substantial threat to us is PartsBase.com. In January they have deployed traditional and reverse auction functionality for their website. Up until then PartsBase.com was primarily a parts locator service - In this respect it excelled. PartsBase.com allows members to upload parts information by item, or allows users to send email file attachments containing inventory information. The user interface is well laid out and provides visitors with an easy way to search for parts. The site does appear to have a large membership base, which it will leverage into a significant platform for business-to-business. Partsbase.com has recently made a successful initial public offering, as is expected to leverage the funds in order to extend its business model and to further promote itself.
Weaknesses

PartsBase.com is too narrowly focused on aircraft parts. Currently, it does not address the needs of the broader aviation and aerospace market.

Inventory Locator Service (ILS) www.ilsmart.com


Strength

ILS is considered an industry leader in the parts locator service. They have been in business since 1979, are one of the first to develop an electronic marketplace for the aviation community, and have significant experience in parts and logistics. ILS has established long-standing and deep relationships with aircraft parts suppliers and purchasers.
Weaknesses

ILS does not appear to address the broader needs of the aviation community. They are highly focused on aircraft parts and do not seem to be in a position to quickly react in order to address the broader needs of the aviation community if they chose to do so. ILS does not have an online auction that takes advantage of the dynamic price model in order to achieve price equilibriums in the aviation market.

MyAircraft.com
Strenth

MyAircraft.com will be a joint venture between Honeywell, United Technologies, and i2. It is targeted to go online by the summer of 2000. MyAircraft.coms strength lies in the financial recources and brand recognition that is offered by the two aerospace participants. They have the potential of bringing huge amounts of capital resources to bare on the implementation and marketing of their exchange deployment.
Weaknesses

The collaboration between the two large companies may pose a problem for a speedy implementation. By virtue of their size, these companies may bring the unwanted inertia that is already built into their organizations, which may play a significant role in reducing the speed and flexibility required to execute on internet time. These two companies also happen to be aerospace companies, and they may be perceived as non-neutral players in this space. This fact violates one of the keys to the successful exchange the ability to host a neutrally biased exchange. We will differentiate ourselves and exploit this apparent weakness in our marketing programs.

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AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

AeroSpan.com
Strength

AeroSpan.com is a venture between AAR and SITA set to launch in the summer of 2000. AAR is a worldwide supplier of aircraft parts and components. SITA positions itself as the world leader in delivering integrated information systems and telecommunications for the aerospace industry. Like MyAircraft.com, these two companies offer substantial resources to bare on the market. They apparently compliment each other with respect to the requirements needed to implement a business-to-business exchange.
Weaknesses

Like MyAircraft.com, Aerospan.com is made up of two large companies, which may pose a liability with respect to speed and flexibility. Since AAR is a big supplier of aerospace equipment, MyAircraft.com might also be perceived as hosting a non-neutral exchange community. Again, this apparent conflict of interest can be taken advantage of in one of our marketing campaigns.

4.8 Opportunities Based upon an evaluation of the market, the needs of this market, and the current competitive offerings, we feel there is an unfulfilled need for a business-to-business presence that is focused on the broader needs of the aviation community. Our forward auctions will be particularly desired by businesses seeking to turn excess inventory of capital goods and services on the open market and who wish to get the best price through the use of such a dynamic pricing environment. For purchasing organizations that want to shorten the buying cycle, and for vendors of goods and services that wish to expand their markets, our reverse auctions will offer the same dynamic environment in which to participate. Finally, we feel that there is an opportunity to create efficiencies in the procurement cycle of the entire supply chain for the aviation community. Most buyers and sellers of aircraft parts seem to be fairly well served by features currently offered by our competitors (features such as request for quotes, parts search, and a database of maintenance and repair organization capabilities). We believe that there are broader sectors of the aviation and aerospace community that is not yet being served by our services, and a significant opportunity exists for us to quickly move into this vast market. Whats more, none of the industry competitors have deployed a component based open architecture supply chain management system the will serve the needs of small to medium size aviation and aerospace businesses. These are business entities that will find immense value in a supply chain management system that will not require the purchase of expensive proprietary software. Sectors of the aviation and aerospace community that is not yet being served by a business-to-business presence on the Internet are: Computer and Electronic/Electrical Systems and Components Information and Software Automation Systems and Services Materials, Chemicals and Hardware Manufacturers Ground Support/Airport Tools/Machines and Test Equipment Interior Equipment and Furnishings Insurance Aircraft Leasing, Finance, and Sales Modifications/Completions/Overhauls Catering and In-flight Services Aviation Training Software Engineering and Consulting Cargo and Logistics Services Aircraft and Aerospace Engineering

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AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

Fuel Services Legal Services Consulting and Special Services Spacecraft and Launch Vehicles Ground Station/Tracking, Telemetry and Control Equipment Space Systems, Subsystems, Components and Equipment Space Insurance Space Consultants and Special Services These unfulfilled sectors offer fertile ground to exploit the first mover advantage for our forward and reverse auction models, and our supply chain initiative. Global Initiatives Aviation, by its very nature, is a global industry. Organizations, large and small, need to be networked to the market so that all players are able to extract value from a centralized marketplace. From a global perspective, the industry is highly fragmented. We feel that we can play a value-added function in order to level the playing field for all members of the industry.

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AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

4.9 Threats and Risks It is possible that one or more existing competitors will react to our entrance into the business-to-business market. Because of their established market positions, a strong competitive reaction could be a formidable threat. The competitive reaction that would be most threatening would be for one or more of our competitors to mobilize their resources in order to establish a presence that attempt to penetrate additional aviation industry sectors which they do not yet focus on. However, because of our relatively small anticipated initial market share, we feel a swift competitive response is unlikely, and there is a good chance that the competition may not respond at all. If a competitive response does occur, it is most likely to be in the form of a strategic leveraging of existing, or as yet to be developed relationships, in order to penetrate the market before we do. One of the consequences of such a move will be for our competitors to raise barriers to entry, which we will not be able to overcome due to our limited resources. VerticalNets AerospaceOnline.com, for example, has a very significant online presence. They do have an online auction that serve the aviation community; however, they do not deploy a reverse auction model for purchasing professionals to use, and they seem to lack the focus required to address the needs of the broader aviation community. This is one weakness that, if they so choose, can be easily remedied. PartsBase.com also posses a threat to us. They have the required technology in order to extend into the broader reaches of the aviation market. This summer we anticipate the entrance of two more competitors - AeroSpan.com and MyAircraft.com. These competitors are backed by corporations such as United Technologies, Honeywell, AAR, and SITA. We feel, however, that the market is sufficiently large enough to accommodate several market players, and that the market is still in its infancy.

5.0 Marketing Strategy and Implementation Summary


We plan to use a multi-pronged and layered approach in our marketing strategy. This strategy will serve to build our brand, aggressively support our customers through the use of leading technologies, market growth through promotion, aggressive sales, and pricing, and through the use of partnership strategies.

5.1 Competitive Advantages In comparison to our primary competitors, we posses key competitive capabilities that will go a long way to ensuring the success of our business. Particularly important are the following key advantages: The time is right to be a small organization in an industry that rewards speed and execution. Our small size allows us to move quickly and relatively unnoticed for the time being. This will allow us to fully develop our product while our competition looks the other way. We posses the first mover advantage with respect to our target market. Currently, none of our competitors are making any attempt to serve the broader needs of the aviation and aerospace community. They are much too focused on serving a very narrow and crowded market, which is a subset of the market we aim to serve. Our current product, as seen on our website, is the only one of its kind on the market today serving the buying and selling needs of the aviation enthusiast and professional buyer and seller. The business-to-business product, currently in development, and will be the first of its kind to serve the target market business-to-business for the broader aviation and aerospace industry. We will use leading technologies from Ariba, Oracle Corporation, and their partners in order to build the businessto-business architecture. This will help us move quickly and scale to the growing needs of the market. We possess the business expertise with respect to supply chain management and integration.

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AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

Being a new entrant into this field has obvious disadvantages, but it also has advantages. We can design our business from scratch and position ourselves to take advantage of recent changes in the market and the knowledge of the current positioning of the other competitors. It also allows us to follow a fresh approach to business that is more appropriate to the market needs of todays customers. Being a young, new, and forward looking company, we are in a position to adopt new and innovative ideas, unlike some of our more established competitors. Our competitive edge also lies in our ability to move fast to implement strategy. We employ the use of a technology provider to supply the auction application. This is a very important competitive consideration, since our technology provider specializes in auction applications. There is no need to waste valuable resources in upgrading and improving the technology, since our technology provider is committed to continuously improving their product for us as well as customizing it to fit our changing needs. Not having to expend such resources allows us to focus our energies for developing sales and marketing strategies in order to penetrate and grow our market. The fact that we are a pure Internet company with no pre-existing organizational inertia means that we are able to move quickly in order to adjust to changing market conditions. Our philosophy going forward is to outsource as much of the technology as possible through the use of well established application service providers (ASP's). We feel that it is important to concentrate on the business of establishing firm relationships in the aviation community, nurturing these relationships, and leveraging these relationships in order to create and grow the exchange market of buyers and sellers. Finally, our management team is a young but seasoned and committed group of professionals in the technology industry with management and director positions in sales and marketing and strategic planning two of them are pilots with a fond appreciation for aviation as well.

5.2 Competitive Weakness Our financial position is a relative weakness. Lack of financial resources will limit our ability to implement, improve, and extend our Internet and business applications as well as limiting our ability to execute our marketing strategy, and hiring much needed technology, sales, and administrative personnel. Our brand is not well known to the industry. Being a new business means that we have yet to establish brand recognition. The lack of brand recognition will make it more difficult to establish the credibility needed to form strategic partnerships and acquire more customers in the business-to-business sector.

5.3 Key Strategies Our strategy is to build a brand recognition that closely links e-commerce and e-content with aviation buying and selling. Our plan to implement AviaBid.com will be combined with a marketing plan that will support the brand building strategy. We believe that it is pure folly to try and build a solid brand name without supporting it with world class customer service and superior technology. To this end we will implement technology that is reliable and scales to the growing needs of our members, and commit motivated professionals to support and satisfy this growing membership. We will capture and secure broader markets by deploying a talented and knowledgeable sales force in order to bring buyers and sellers into the community partnering with industry leaders in aviation, aerospace, and technology strategically acquiring complimentary technologies and business enterprises which are tightly aligned with our goals and who would otherwise compete with us

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AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

Finally, we will use existing but cutting edge technologies provided by best of bread technology providers in order to provide a common trading hub, where multiple buyers and sellers can come together without compromising processes and relationships among the industry participants.

5.3.1 Implementing the Brand Building Strategy Our brand building strategy will focus on creating a strong association between aviation, e-commerce, and the AviaBid.com brand name and trademark. AviaBid.com will make creative use of the following media for building and strengthening the brand equity: Consistent participation in, and sponsorship of, industry trade shows Cross branding and integrating complimentary services with strong industry partners Consistent use of Internet advertising through the use of targeted and interactive banner ads to build awareness Intense and broad advertising in industry related print periodicals and news letters Sponsorship of air show events Sponsorship of aerobatics and air racing teams with the use AviaBid.coms distinct trade mark logo Sponsor and make charitable contributions to aviation academic scholarship programs Participation and sponsorship of academic business research at major universities Selling and giving away branded merchandise Use of an online store to sell AviaBid.com branded merchandise we will use the services of StarBelly.com to provide the customized store in order handle inventory and order fulfillment

5.3.2 Implementing Customer Service and Supporting Technologies Aviabid.com will employ the use of component object model (COM) technologies that is easily maintainable and scales to the needs of a fast growing and complex market community. In order to react to the needs of our community, we will make use of enabling technologies provided by industry leading partners such as Oracle Service technologies. We will also commit to staffing a call center around the clock with customer service professionals in order to meet the unexpected needs of our members.

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AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

5.3.3 Implementing Market Growing Strategies In order to capture, grow, and secure our target market, we will hire outstanding and best of breed sales people with expert knowledge in one or more of the industry sectors outlined below. In addition, we will hire individuals with deep knowledge in the areas of logistics management and procurement processes. This will allow us to customize processes such as online quoting and bidding, negotiations, auctions, web-based reporting, workflow management, and virtual procurement systems. The aviation and aerospace industry sectors that we will serve are: Airframe, Engine, and Systems Airborne Structural/Mechanical Components Computer and Electronic/Electrical Systems and Components Information and Software Automation Systems and Services Material, Chemicals and Hardware Manufacturers Ground Support/Airport, Tools/Machines and Test Equipment Interior Equipment and Furnishings Insurance Aircraft Leasing Modifications/Completions/Overhauls Catering and In-flight Services Aviation Training Software Engineering and Consulting Cargo and Logistics Services Aircraft and Aerospace Engineering Legal Services Consulting and Special Services Spacecraft and Launch Vehicles Ground Station/Tracking, Telemetry and Control Equipment Space Systems, Subsystems, Components and Equipment Space Insurance Space Consultants and Special Services

Companies that hold strong positions in the industry and who compliment our product offerings will be sought in order to form strong strategic alliances and associate our brand with theirs. It will serve our advantage to cross brand with such companies in order to extend our message and grow our market. Competitors that hold week positions but posses clients and/or complimentary technologies and human resources that will strengthen our position in the industry should be acquired. This will save us time and financial resources in the long run that would otherwise be required in order to capture the market through competitive spending.

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AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

5.4 Value Proposition AviaBid.coms value proposition is based on the inherent benefit derived from the convenience of doing business on the Internet. Traditional auction houses required the hosting auction house to plan for and schedule an appropriate venue. For aviation related auctions, this implies holding the physical auction at an airport, which required buyers and sellers to take the time to travel to these airports this presents an inconvenience in most cases. The online aviation auction model promises to make buying and selling aviation goods, services, and capital equipment more efficient, convenient, and effective. Buyers and sellers do not have to plan for and/or wait for specific auction dates. Sellers have the advantage of listing their goods and services at any time, from anywhere, and to a much broader audience of buyers this expands the sellers distribution of goods by several orders of magnitude. Buyers have the advantage of visiting a destination that is not out of the way. Auctions are held 24 hours a day, 7days a week, and 365 days a year. AviaBid.com auctions can be accessed from the convenience of home or office. AviaBid.com members will also find value in the amount of information provided during their visit to the site. As previously noted, members will find a wealth of aviation related content provided by members as well as our site content editors. Members will be provided free coverage of business and consumer oriented news and product information. In all, AviaBid.com members and visitors will be provided with a well-rounded aviation related experience within the context of an e-commerce environment.

5.5 Positioning Statement AviaBid.com will position itself as the online aviation auction community and business-to-business marketplace. In the minds of the aviation community, we will be perceived as a destination for consumer and business-to-business buying and selling. Unlike other aviation auction sites, AviaBid.com will provide a community environment for members to network and post and/or access industry related market information, manage their purchasing programs, manage relationships, and expand their markets.

5.6 Promotion Our promotion strategy will require a multi-dimensional and phased approach that involves introducing ourselves to the market, developing awareness, cultivating partnerships and strategic relationships, and establishing and cultivating the AviaBid.com brand. Currently, we are in the process of introducing ourselves to the market. This required us to launch a press release, which was met with good response from the market and resulted in a substantial increase in traffic to the website. We have registered with most of the worlds search engines and are in the process of adding ourselves to as many of the aviation relate website directories as possible. AviaBid.com is also engaged in the use of several link and banner exchange networks. Through these methods alone, we have been able to generate average traffic levels of 6,000 visitors a month during our first two months of operation - half of which are repeat visitors. Thus far AviaBid.com has a 10% registration rate. A key ingredient of our promotional strategy is to make use of the Internet to virally market our service through the use of an affiliate program. The affiliate program will pay a nominal fee for every referral to AviaBid.com from another website that results in a registered member.

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AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

AviaBid.com plans on advertising on most of the major aviation periodicals and websites; however, because of limited financial resource, for now we will limit ourselves to advertising in the Pacific Flyer Magazine. Pacific Flyer is a monthly publication with a circulation of over 100,000. The magazine features many aviation related articles and is a magazine rich with aircraft and parts advertisement. Readers of this magazine fit our demographic target. In the future, AviaBid.com plans to advertise on most of the major aviation and Internet related print publications. Such publications include Flying Magazine, Plane & Pilot, Aviation Week & Space Technology, Flight Training Magazine, Busineses2.0, The Industry Standard, Speed News, and other industry related publications that serve each of the sectors mentioned is section 5.3.3. These highly regarded and branded national and international publications will expose AviaBid.com to a broad aviation and Internet audience while building and maintaining the AviaBid.com brand. Eventually, AviaBid.com will aggressively promote itself at aviation-related events such as air shows, aviation and aerospace trade shows, and other events, which attract aviation enthusiast and professionals. There are several ways of doing this one is by establishing a continuous presence at trade show events supported by Internet connections, in order to expose event patrons to AviaBid.com. The exhibits can be used to register new members, initiate partnerships, and offer promotional merchandise. Lets consider a scenario. Consider an aviation industry trade show attended by industry suppliers and buyers of parts and services from a broad spectrum of the aviation community. For this trade shows, AviaBid.com demonstrates a scheduled online reverse auction. Five pre-qualified vendors are invited to bid against each other through two rounds of bidding on a request for quote in real time. The winning bidder is determined by the lowest and/or most favorable bid as determined by the buyer. Yet another avenue to explore is to sponsor air-racing teams, and quite possibly auto-racing teams, since there is a strong correlation between aviation enthusiasts and auto-racing fans. Our goal here is to establish a permanent presence at these events in order to extend and reinforce the AviaBid.com brand. Our presence at these events will also provide AviaBid.com sales staff and marketing personnel the opportunity to establish valuable relationship that will lead to industry partnerships and marketing opportunities.

5.7 Pricing

Consumer-to-Consumer and Business-to-Consumer

With respect to the forward auction model that has already been implemented, we have adopted a pricing strategy that generates revenue based on enhanced listing options and commission fees. For example, we charge nominal fees for showcase and feature auction listings. We do not charge for basic listings, but in every case, we've been charging a 2% commission fee on every item sold at our auctions since January of 2000. In every case, we reserve the right to structure the fees on a customer by customer basis. With respect to banner adverting, we will charge a nominal advertising rate based the positioning of the banner ad. Pricing for sponsoring areas of the auction site will be negotiated on a client by client basis.

Business-to-Business

Our business-to-business pricing strategy will be service based, and will be negotiated based on the level of service that the client agrees to, and we will implement a flexible pricing strategy that is consistent with the norms of each industry sector. In short, our business-to-business revenue-generating model is based on:

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AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

Transactions these are fees extracted from the market along the entire supply chain. This will form a very substantial part of our revenue base as our market space approaches a critical mass of transacting members Commissions based on our auctions - revenue generated from our dynamic pricing model will be generated through commissions. Service Level Fee arrangements revenue from various levels of services, such as supply chain integration and/or catalog and other content management implementations. Advertising revenue gained from selling advertising space on our website. Highly Specialized Market News and Information As a market maker, we will be able to capture, categorize and archive information that will be of value to members of the exchange community. Selling highly specialized forms of this information on a subscription bases will form another revenue stream for us.

5.8 Sales and Marketing Programs Our marketing strategy will be supported by a tightly integrated sales and marketing program. The program will make use of advertising, tradeshow appearances, and sponsorship of industry related events. In every case, the sales force will be a valuable resource in our marketing effort. This will help close the loop between market research and information gained from point of sales and face-to-face meetings with potential customers. Critical to the success of our business is the speed with which we achieve critical mass numbers with respect to membership and site traffic. This will be critical to generating transactional revenues. In order for the buying and selling community to bring efficiencies to the marketplace, we need to motivate our sales force to bring an ever-increasing number of buyers and sellers to the community. A good motivational tool will be for our sales force to extract short and long-term financial rewards from each of the buyer's and vendors that it brings into the community. Each sales person will receive a bonus for signing on a new buyer or seller into the community, after which, they will receive a percentage of each sale of goods and/or services sold by community sellers to community buyers over a specified period of time. Allowing the sales force to financially benefit from the continued success of each vendor will provide the incentive for each sales person to aggressively penetrate the market. The sales force will be made up of inside and outside sales staff. In both cases they will be qualified and knowledgeable in the areas of purchasing, workflow, and logistics management. In this way, they will be able to model the needs of perspective buyers and sellers. The outside sales staff will travel to trade shows and other related events in order to help create new leads. The sales force will be required to perform a needs analysis of each perspective member of the community. In every case, the sales force will provide continuous feedback to marketing so that we may continuously improve our product.

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AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

5.9 Sales Forecast Our sales forecast model is based on the potential of the market. We are assuming that we will be well capitalized through private placement and public investments, which will allow us to market ourselves and implement readily available technology. If we capture 40% of the potential market, then our revenue projections reflect positive growth consistent with that of the industry and the implementation of the e-commerce initiative. Below is a forecast model of total import and exports dollars for aviation aircraft and aircraft parts. This forecast is based on historical figures provided by the Aerospace Industries Association, and is based on data from the U.S. Department of Commerce (See section 4.4.4). Keep in mind that these figures do not include dollars from services associated with the aviation and aerospace industry. Including such figures will undoubtedly inflate the dollar figures shown below due to the multiplying effect that sales and servicing of aircraft and aircraft parts have on the aviation and aerospace industry as a whole. Also keep in mind that such multiplying effects will serve to strengthen our revenue base, since it is the general aviation and aerospace markets, which include services, that we plan be target in addition to aircraft parts.

Air c r a f t a n d Air c r a f t P a r t s H is t o r ic a l a n d P r o je c te d D o lla r s (Im p o r t a n d E x p o r t)


D o e s n o t I n cl u d e S e rvi ce s

160000 140000 120000 100000 80000 60000 40000 20000 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2002 2004

Dollars in Millions

To ta l Im p o rts To ta l E xp o rts C o m b ine d D o lla rs

H isto rica l a n d F o rca ste d D o lla rs fo r A ircra ft P a rts O n ly (Im p o rt a n d Ex p o rt)


80000 70000

Dollars in Millions

60000 50000 40000 30000 20000 10000 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 To ta l Ex p o r ts o f A /C Pa r ts To ta l Imp o r t o f A /C Pa r ts Co mb in e d Do lla r s o f A /C Pa r ts

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AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

The projections shown below are based on us capturing 40% of the total business-to-business market and extracting an average of 1% or 2% on every transaction taking place in the trading community. Forrester research has predicted that online business-tobusiness transaction revenues will top $14.5 billion. Again, we feel that these numbers do not include other goods and services that are involved in supporting aviation related business. These goods and services may include services such as engineering consulting, information systems equipment and services, and other goods and services that are not directly related to aviation, but that may just as easily qualify as goods and services bought and sold within our trading community.

TAM 1% Fee 40% 2% Fee 40%

2000 $500 $2 $4

2001 $1,500 $6 $12

2002 $6,100 $24 $49

2003 $11,500 $46 $92

2004 $14,500 $58 $116

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AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

5.10 Milestones Significant and measurable milestones to be achieved over the next two fiscal quarters after our fist round of equity finance is to: 1. 2. Achieve staffing levels required for a functional executive and administrative staff by the end of our first fiscal quarter. Deploy the business-to-business (AviaBid.com B2B) architecture through the use of component object model technologies within 60 days - this will be done with the help of technology from Ariba Corporation and the use of Oracles e-Business 11i ERP applications platform and 8i database. Extend the existing auction application so that it is a fully recognized brand in the aviation and aerospace marketplace, and reach sustained registration rates of over 3000 new members a month. Partner and begin integrating with existing land based auction houses in order to extend the AviaBid.com brand Pre-qualify 5000 aviation related vendors and suppliers in the United States in preparation for the launch of AviaBid.com B2B. Register 10,000 individual users with AviaBid.com B2B Deploy a functional sales force in order to penetrate the following sub-sectors of the aviation/aerospace industry and pre-qualify members of these sub-sectors as buyers and sellers as part of the 5th and 6th milestone : Airframe, Engine, and Systems Airborne Structural/Mechanical Components Computer and Electronic/Electrical Systems and Components Information and Software Automation Systems and Services Material, Chemicals and Hardware Manufacturers Ground Support/Airport, Tools/Machines and Test Equipment Interior Equipment and Furnishings Insurance Aircraft Leasing Modifications/Completions/Overhauls Aviation Training Software Engineering and Consulting Legal Services Consulting and Special Services

3. 4. 5. 6. 7.

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AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

6.0 Management and Organizational Summary


Our management team includes three individuals whose combined background represent 20 years of professional experience in operations, marketing, business development, and information technology. AviaBid.com does have a few management gaps, which are outlined in this section and which we hope to fill in the very near future. Our organizational structure reflects a relatively flat organization in order to enhance our ability to react and move quickly to changing market conditions.

6.1 Management Team Marco Santiago Jr., President, CEO Marco Santiago Jr. launched AviaBid.com on August 3rd 1999. He is a graduate of Western International University, where he studied information systems and business administration. Before attending Western International University, Marco attended Arizona State University, where he majored in aerospace engineering and applied mathematics. Before devoting himself full time to the development of AviaBid.com as a venture, Marco studied in the Technology Management MBA program at the University of Phoenix. He was employed as a programmer analyst for the Adaptive Broadband Corporation from August 1996 to February of 2000. Currently, Marco is currently a senior consultant in the Global Customer Relationship Management (CRM) group at the Oracle Corporation. Marco is a licensed pilot and a former USAF Reserve and Arizona Air National Guard crew chief on C-5 and C-141 aircraft. Marco will be responsible for the overall management of the company, set the strategic agenda, and work closely with the executive staff and the board of directors to navigate the financial and legal waters associated with taking the company to its initial public offering.

David McIntyre, Vice President Marketing Mr. McIntyre has over eight years of management experience in the Internet and technology industry. He was instrumental in the creation and implementation of Intel Corporations business and marketing plans from 1992-1997. He specialized in the Aerospace & Military market segment and worked with several electronic original equipment manufacturers. He was responsible for all aspects of bringing new products to market including pricing, promotion, product development, and distribution. Negotiating and managing several strategic partnerships were also an important aspect of his responsibilities. Mr. McIntyre is currently the head of marketing and finance for Avnet Inc.s $2 billion Integrated Material Services (IMS) group. Avnets IMS group is a world-class supplier of supply-chain logistics and utilizes EDI and the Internet for supply-chain integration. Mr. McIntyre leads his organization by developing best in class supply chain integration for tier one customers including electronic forecasts, triggering, invoicing, and payment. He currently negotiates these strategic partnerships by helping customers understand their total cost of ownership. Mr. McIntyre is the developer of the current Performa system utilized by Avnets global sales force and continues to lead his organization in strengthening profitability goals by implementing an activity based costing system. He is currently responsible for all strategic and promotional marketing, including production of Avnets Global Supply Chain magazine. Mr. McIntyre has been extensively trained in executive level MBA classes from The Anderson School at UCLA and holds a BS in Electrical Engineering from Kansas State University. David McIntyre will partner with the CEO to develop the company's overall global marketing strategy. Some of his responsibilities will include: Building superior brand recognition in the marketplace as the highest quality Internet company dedicated to the needs of the online aviation buying and selling community. This will include pro-actively positioning the organization as a trusted destination for aviation business-to-business.

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AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

Creating a proactive marketing function that will emphasize our broad mission and serve as a spokesperson to industry professionals and the media to promote our services. Working closely with the sales organization to develop outstanding promotional plans, targeted direct mail campaigns, online user newsletters, collateral materials and marketing presentations for all of the company's products and services. Working on the identification and selection of key media partners. In addition, understanding the impact of webbased interactive marketing and how that compliments traditional media. Select and manage the company's relationship with outside advertising and public relations firms. Generating positive media opportunities for the Company and their users. Drafting and releasing press materials to news wires, investor relations, corporate prospects and all other appropriate media outlets/constituencies.

Kim B. Bozik, Vice President Operations and Community Logistics Kim Bozik has over 12 years experience in product development, marketing and operations with Fortune 500 companies and an emerging technology company. He was a senior systems engineer with Honeywell for 8 years and was a key member of inertial navigation equipment development and deployment in the space industry. For the past 4 years he has held product marketing, technical marketing and marketing management positions with Intel, Motorola and Three-Five Systems. Through these assignments he has successfully brought semiconductor and liquid crystal display technologies to the marketplace. Currently Kim is a senior strategic demand analyst for Intel and is responsible for determining market trends and effects on factory development and capital purchase needs. Kim's background also includes knowledge of the general aviation industry through a previous family flight instruction business. He holds a Master of Science in Engineering Management from the University of South Florida and a Bachelors degree in Electrical Engineering from the Florida Institute of Technology. Kim Bozik will be responsible for defining, customizing, and implementing the community functions related to the needs of the buyers and sellers within the community. His responsibilities include modeling the various purchasing and procurement functions of participating business within the community. This will include generating specifications for quote and bid processing, online negotiations, web based reporting functions, registration and administration, process and workflow management, and relationship management.

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AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

6.2 Advisory Board Currently, we are developing an advisory board to help execute our plan. It is our intent to form an executive level panel that has implemented similar strategies and that has experience in the Internet industry. This board of advisors will be available to help facilitate a well managed organization. Presently, we have one confirmed member and several pending. Thus far we have the following member - Mr. John McIntyre. John McIntyre, President & CEO, eBiz.net: Mr. McIntyre has over eight years of management experience in the Internet and telecommunications industry. Mr. McIntyre founded Affinity Internet, Inc. a leading web and applications hosting provider for small and medium-sized businesses. Affinity is backed by a premier group of investors including JPMorgan Capital, First Union Capital Partners, and Columbia Capital Partners and currently servers over 40,000 customers worldwide. Prior to Affinity, Mr. McIntyre was a key part of the founding management team for Interliant, Inc., now a public company. His work was instrumental in helping the company grow from start-up to over $25M in revenue in 12 months. Mr. McIntyre created and helped guide the implementation of Interliants marketing plan, including the companys mission, marketing strategy, and sales channel strategy. Mr. McIntyre holds an MBA from Harvard University and a BS in Industrial Engineering. He has been a featured speaker at Internet conferences and trade shows.

6.3 Management Team Gaps We currently have gaps in the following key executive positions, which we hope to address in the very near future: Vice President of Sales and Business Development The vice president of sales and business development will be responsible for developing and managing the sales force, work closely with marketing to coordinate trade show appearances and provide research assistance to the product development team. This candidate will also develop sales programs and milestones to meet projected revenue targets, and work closely with the CEO in order to develop strategic relationships and alliances that will compliment our product offerings.

Chief Financial Officer The CFO will be responsible for all functions involved in finance for the company. Specific responsibilities include the following: Assist the product team with incorporating financial aspects to its Internet based service offering Help fill out the system that will track customer transactions and ensure full payment upon transaction execution. Performing basic financial management functions and help create a robust and scalable accounting system Playing an integral role in taking the company up to and through its initial public offering Assist with general administrative management functions (such as dealing with the outsourced HR and employee benefits packages company). Be a general resource to work closely with the CEO.

The ideal candidate will posses an MBA in finance and have experience in the creation and implementation of cost accounting, accounts payable, and/or general ledger systems. The candidate should also have background and experience in the application of these functions with the use of current information technology systems.

Director, Human Resources

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AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

The Director, Human Resources Services will be responsible for supporting the human capital needs and employee welfare of the organization. Specifically, the Director will be responsible for ensuring that all organizational and employee requirements are met, with specific focus on recruiting; organizational development recommendations, including talent pool management; employee relations, with specific focus on field locations and benefits administration and benefits program design. The successful candidates will have a minimum of eight years of HR generalist experience. Specifically, the candidate should be well versed with the needs of a fast-passed needs of an Internet start-up. The candidate should be able to demonstrate successes in several of the following areas of activity: recruiting, assessment techniques and recruiter management; very broad benefits administration and design; experience with Internet start-ups, and employee relations.

Chief Information Officer The CIO will be responsible for analysis of our information needs, define system requirements, and work with the information services staff and contractors to meet those needs. Aside from the daily operational demands, the CIO will be expected to identify the strategic technology needs of AviaBid.com and its partners, and working with senior management to develop plans and budgets to implement business critical e-business systems.

Vice President, Product Development and Chief Technology Officer The Vice President of Product Development is responsible for all aspects of product development and issues as they relate to the technology of the exchange, including planning, staffing, technical definitions, schedules and execution. The position will also be responsible for other aspects of company operations - this includes product planning, sales support, installation and customer care. The Vice President of Product Development and CTO, and the product development team will participate with the sales and marketing departments to extract product requirements from customer input. The development team then translates product requirements into product specifications. The Vice President and the product development team own and manage the entire development process from product specification through unit testing. The development team will also assist others in developing integration and training plan. They will work closely with the operations team to perform product applications testing and production deployment. Director, Content Management and Analysis The Director of web content management and analysis will direct a staff of industry writers who will inform and entertain members of the website's community. This person will be responsible for organizing and maintaining content schedule, featuring daily and weekly deadlines for the website. This position will also be heavily involved in industry analysis to the extent that he/she will inform AviaBid.com executive staff members and members of the industry community of aggregate industry activity and trends. The ideal candidate will have 3 to 5 years related experience as editor and/or writer for a major aviation publication.

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AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

6.4 Organizational Structure AviaBid.coms organizational structure may be viewed in the appendix. It illustrates the executive level offices that will execute the business plan.

6.5 Personnel Plans The companys salary structure will reflect very competitive rates with respect to the prevailing market, and we will offer a very competitive benefit package, which includes stock options in order to help the recruitment effort. The compensation philosophy will also help us retain employees and maintain an experienced staff. A total of six support personnel will be hired within the first 3 months after our fist round of equity finance in order to accomplish ongoing operational functions such as sales and sales support, general administration, business applications development and support, accounting and bookkeeping, and marketing administration and support. The specific positions to be filled during this period are: Receptionist and Office Administer at $26,000/Yr Sales Support Administrator at $26,000/Yr Business Applications Programmer/Analyst at $45,000/Yr Product Engineer and Developer at $55,000/Yr Network administrator and Infrastructure Specialist at $45,000/Yr Staff Accountant at $40,000/Yr Marketing Administrator at $40,000/Yr Customer Service Administrator at $26,000/Yr

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AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

7.0 Financial Plans


We have developed financial projections for the period April 2000 through April 2004. Revenue for the year 2000 is projected to be $3.1 million based upon a starting date in April, while revenue for 2001 is projected to be $24.4 million. Revenue for the years 2002 through 2004 is currently based on an organic growth model, and is projected to be $46 million, $58 million, and $78 million, respectively. Organic growth is derived from forecasted industry growth rates.

7.1 Assumptions Other major assumptions to the plan include: Operating costs are modeled on a percentage of revenues. These percentages are based the operational history of a number of composite competitor providers and include estimates for developing the infrastructure required to execute our business strategy. Bad debt expense has been modeled at 0% of revenue. Since we are not taking ownership of the product, we have calculated a 0% bad debt expense. We plan to lease the majority of equipment; therefore, we assumed no depreciation of capital assets. A corporate tax rate of 40% is built into the model. Sales projections are based upon obtaining a service fee of 1% and capturing a 40% market share in the B2B Aerospace & Defense market. 2000 $500 $4 $2 $1 $8 $4 $1 2001 $1,500 $12 $6 $2 $24 $12 $2 2002 $6,100 $49 $24 $6 $98 $49 $6 2003 $11,500 $92 $46 $12 $184 $92 $12 2004 $14,500 $116 $58 $15 $232 $116 $15

TAM 1% Fee 80% 40% 10% 2% Fee 80% 40% 10%

AviaBid.com's projected financial results are based on receiving approximately $795 thousand of initial start up capital financing with two follow on rounds of $700 thousand in four month intervals for a total investment of $2.1 million. Barring additional investment or acquisitions, the company plans to turn cash flow positive by the end of the first operating year. We believe the multiple opportunities for value creation and the number of exit strategy options makes our plan an attractive opportunity to capitalize on the exponential growth of the Internet and participate in the early stages of one of the fastest growing markets in history.

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AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace 7.2 Projected Income Statement (000s omitted)
Apr $5 $20 -----------$20 ($15) May $7 $20 -----------$20 ($13) Jun $10 $20 -----------$20 ($10) Jul $15 $20 -----------$20 ($5) Aug Sep Oct Nov Dec Jan Feb Mar $20 $30 $60 $80 $110 $200 $1,200 $1,400 $20 $20 $20 $20 $20 $20 $20 $20 ------------ ------------ ------------ ------------ ------------ ------------ ------------ -----------$20 $20 $20 $20 $20 $20 $20 $20 $0 $10 $40 $60 $90 $180 $1,180 $1,380 FY2000 $3,137 $245 -----------$245 $2,892 FY2001 FY2002 $24,400 $46,000 $403 $563 ------------ -----------$403 $563 $23,997 $45,437

Sales Production Payroll Total Cost of Sales Gross Margin Operating expenses: Sales and Marketing Expenses Sales and Marketing Payroll Advertising/Promotion Travel & Entertainment Oracle Exchange Technology Support Internet Service Miscellaneous Total Sales and Marketing Expenses $208 General and Administrative Expenses General and Administrative Payroll Payroll Burden Depreciation Leased Equipment Purchased Equipment Utilities Insurance Supplies ERP/CRM Office Lease Total G&A Expenses $79 Other Expenses Other Payroll Contract/Consultants/Legal Total Other Expenses

$21 $50 $30 $83 $20 $1 $3 ------------

$21 $50 $30 $83 $20 $1 $3 -----------$208

$21 $50 $30 $83 $20 $1 $3 -----------$208

$21 $50 $30 $83 $20 $1 $3 -----------$208

$21 $21 $21 $21 $21 $21 $21 $21 $50 $50 $50 $50 $50 $50 $50 $50 $30 $30 $30 $30 $30 $30 $30 $30 $83 $83 $83 $83 $83 $83 $83 $83 $20 $20 $20 $20 $20 $20 $20 $20 $1 $1 $1 $1 $1 $1 $1 $1 $3 $3 $3 $3 $3 $3 $3 $3 ------------ ------------ ------------ ------------ ------------ ------------ ------------ -----------$208 $208 $208 $208 $208 $208 $208 $208

$256 $600 $360 $996 $240 $12 $36 -----------$2,500

$415 $575 $1,000 $1,400 $414 $476 $1,000 $1,000 $500 $700 $14 $16 $60 $80 ------------ -----------$3,402 $4,247

$21 $10 $0 $3 $4 $2 $3 $1 $10 $26 ------------

$21 $10 $0 $3 $4 $2 $3 $1 $10 $26 -----------$79

$21 $10 $0 $3 $4 $2 $3 $1 $10 $26 -----------$79

$21 $10 $0 $3 $4 $2 $3 $1 $10 $26 -----------$79

$21 $21 $21 $21 $21 $21 $21 $21 $10 $10 $10 $10 $10 $10 $10 $10 $0 $0 $0 $0 $0 $0 $0 $0 $3 $3 $3 $3 $3 $3 $3 $3 $4 $4 $4 $4 $4 $4 $4 $4 $2 $2 $2 $2 $2 $2 $2 $2 $3 $3 $3 $3 $3 $3 $3 $3 $1 $1 $1 $1 $1 $1 $1 $1 $10 $10 $10 $10 $10 $10 $10 $10 $26 $26 $26 $26 $26 $26 $26 $26 ------------ ------------ ------------ ------------ ------------ ------------ ------------ -----------$79 $79 $79 $79 $79 $79 $79 $79

$246 $121 $0 $36 $48 $18 $36 $12 $120 $312 -----------$949

$409 $574 $214 $309 $0 $0 $41 $48 $55 $63 $21 $24 $41 $48 $14 $16 $138 $159 $315 $318 ------------ -----------$1,249 $1,558

$5 $6 -----------$11 -----------$298

$5 $6 -----------$11 -----------$298 ($312)

$5 $6 -----------$11 -----------$298 ($309) ($124) ($185)

$5 $6 -----------$11 -----------$298 ($304) ($122) ($182)

$5 $5 $5 $5 $5 $5 $5 $5 $6 $6 $6 $6 $6 $6 $6 $6 ------------ ------------ ------------ ------------ ------------ ------------ ------------ -----------$11 $11 $11 $11 $11 $11 $11 $11 ------------ ------------ ------------ ------------ ------------ ------------ ------------ -----------$298 $298 $298 $298 $298 $298 $298 $298 ($299) ($120) ($179) ($289) ($116) ($173) ($259) ($104) ($155) ($239) ($96) ($143) ($209) ($84) ($125) ($119) ($48) ($71) $881 $352 $529 $1,081 $432 $649

$60 $72 -----------$132 -----------$3,581 ($689) ($276) ($413)

$202 $345 $180 $200 ------------ -----------$382 $545 ------------ -----------$5,034 $6,350 $18,963 $7,585 $11,378 $39,087 $15,635 $23,452

Total Operating Expenses Profit Before Interest and Taxes ($314) Taxes Incurred Net Income (loss)

($126) ($188)

($125) ($187)

41

AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

7.3 Projected Balance Sheet (000s omitted)


Assets Short-term Assets Cash Accounts Receivable Total Short-term Assets Long-term Assets Capital Assets Accumulated Depreciation Total Long-term Assets Total Assets Liabilities and Capital Accounts Payable Short-term Notes Other Short-term Liabilities Subtotal Short-term Liabilities Long-term Liabilities Total Liabilities Paid in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital $0 $0 $0 $0 $0 $0 $805 ($105) $0 $700 $700 $90 $0 $0 $90 $0 $90 $805 ($105) ($188) $512 $602 $91 $0 $0 $91 $0 $91 $805 ($105) ($375) $325 $416 $92 $0 $0 $92 $0 $92 $805 ($105) ($561) $139 $231 $94 $0 $0 $94 $0 $94 $1,505 ($105) ($743) $657 $751 $96 $0 $0 $96 $0 $96 $100 $0 $0 $100 $0 $100 $111 $0 $0 $111 $0 $111 $119 $0 $0 $119 $0 $119 $130 $0 $0 $130 $0 $130 $164 $0 $0 $164 $0 $164 $542 $0 $0 $542 $0 $542 $617 $0 $0 $617 $0 $617 $2,205 ($105) ($413) $1,687 $2,304 $617 $0 $0 $617 $0 $617 $2,848 $0 $0 $2,848 $0 $2,848 $5,092 $0 $0 $5,092 $0 $5,092 Starting Balances $700 $0 $700 $0 $0 $0 $700 Apr $600 $2 $602 $0 $0 $0 $602 May $413 $3 $416 $0 $0 $0 $416 Jun $228 $4 $231 $0 $0 $0 $231 Jul $745 $6 $751 $0 $0 $0 $751 Aug $566 $8 $574 $0 $0 $0 $574 Sep $393 $11 $404 $0 $0 $0 $404 Oct $238 $23 $260 $0 $0 $0 $260 Nov $794 $30 $824 $0 $0 $0 $824 Dec $669 $41 $710 $0 $0 $0 $710 Jan $598 $75 $673 $0 $0 $0 $673 Feb $1,129 $450 $1,579 $0 $0 $0 $1,579 Mar $1,779 $525 $2,304 $0 $0 $0 $2,304 FY2000 FY2001 FY2002

$1,779 $11,829 $33,910 $525 $4,084 $7,698 $2,304 $15,913 $41,608 $0 $0 $0 $0 $0 $0 $0 $0 $0

$2,304 $15,913 $41,608

$1,505 $1,505 $1,505 $2,205 $2,205 $2,205 $2,205 ($105) ($105) ($105) ($105) ($105) ($105) ($105) ($922) ($1,096) ($1,251) ($1,394) ($1,520) ($1,591) ($1,062) $478 $304 $149 $706 $580 $509 $1,038 $574 $404 $260 $824 $710 $673 $1,579

$2,205 $2,205 $2,205 ($105) ($518) $10,859 ($413) $11,378 $23,452 $1,687 $13,064 $36,516 $2,304 $15,913 $41,608

42

AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

7.4 Projected Statement of Cash Flows (000s omitted)


Apr Net Profit Plus: Depreciation Change in Accounts Payable Current Borrowing (repayment) Increase (decrease) Other Liabilities Long-term Borrowing (repayment) Capital Input Subtotal Less: Change in Accounts Receivable Change in Inventory Change in Other Short-term Assets Capital Expenditure Dividends Subtotal Net Cash Flow Cash Balance ($188) May ($187) Jun ($185) Jul ($182) Aug ($179) Sep ($173) Oct ($155) Nov ($143) Dec ($125) Jan ($71) Feb $529 Mar $649 FY2000 ($413) FY2001 FY2002 $11,378 $23,452

$0 $90 $0 $0

$0 $1 $0 $0

$0 $1 $0 $0

$0 $2 $0 $0

$0 $2 $0 $0

$0 $4 $0 $0

$0 $11 $0 $0

$0 $8 $0 $0

$0 $11 $0 $0

$0 $34 $0 $0

$0 $378 $0 $0

$0 $76 $0 $0

$0 $617 $0 $0 $0 $1,400 $1,604

$0 $2,231 $0 $0

$0 $2,244 $0 $0

($98)

($186)

($184)

$700 $520

($177)

($170)

($144)

$700 $564

($114)

($37)

$906

$724

$13,609 $25,696

$2 $0 $0 $0 $0 $2 ($100) $600

$1 $0 $0 $0 $0 $1 ($187) $413

$1 $0 $0 $0 $0 $1 ($185) $228

$2 $0 $0 $0 $0 $2 $518 $745

$2 $0 $0 $0 $0 $2 ($179) $566

$4 $0 $0 $0 $0 $4 ($173) $393

$11 $0 $0 $0 $0 $11 ($155) $238

$8 $0 $0 $0 $0 $8 $557 $794

$11 $0 $0 $0 $0 $11 ($125) $669

$34 $0 $0 $0 $0 $34 ($71) $598

$375 $0 $0 $0 $0 $375 $531 $1,129

$75 $0 $0 $0 $0 $75 $649 $1,779

$525 $0 $0 $0 $0 $525 $1,079 $1,779

$3,559 $0 $0 $0 $0 $3,559

$3,615 $0 $0 $0 $0 $3,615

$10,051 $22,081 $11,829 $33,910

43

AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

7.5 Projected Business Ratios (000s omitted) 7.6 Projected Long Term Plan (000s omitted)
Profitability Ratios: Gross Margin Net Profit Margin Return on Assets Return on Equity Activity Ratios AR Turnover Collection Days Inventory Turnover Accts Payable Turnover Total Asset Turnover Debt Ratios Debt to Net Worth Short-term Liab. to Liab. Liquidity Ratios Current Ratio Quick Ratio Net Working Capital Interest Coverage Additional Ratios Assets to Sales Debt/Assets Current Debt/Total Assets Acid Test Asset Turnover Sales/Net Worth FY2001 92.19% -13.18% -17.95% -24.51% FY2000 4.48 41 0.00 3.74 1.36 FY2000 0.37 1.00 FY2000 3.73 3.73 $1,687 0.00 FY2000 0.73 27% 27% 2.88 1.36 1.86 FY2002 98.35% 46.63% 71.50% 87.09% FY2001 4.48 46 0.00 3.74 1.53 FY2001 0.22 1.00 FY2001 5.59 5.59 $13,064 0.00 FY2001 0.65 18% 18% 4.15 1.53 1.87 FY2003 98.78% 50.98% 56.36% 64.22% FY2002 4.48 62 0.00 3.74 1.11 FY2002 0.14 1.00 FY2002 8.17 8.17 $36,516 0.00 FY2002 0.90 12% 12% 6.66 1.11 1.26 Long-term plan Sales Cost of Sales Gross Margin Gross Margin % Operating Expenses Operating Income Net Income Short-term Assets Long-term Assets Short-term Liabilities Long-term Liabilities Equity FY2000 $3,137 $245 $2,892 92.19% $3,581 ($689) ($413) $2,304 $0 $617 $0 $1,687 FY2001 $24,400 $403 $23,997 98.35% $5,034 $18,963 $11,378 $15,913 $0 $2,848 $0 $13,064 FY2002 $46,000 $563 $45,437 98.78% $6,350 $39,087 $23,452 $41,608 $0 $5,092 $0 $36,516 FY2003 $58,000 $710 $57,290 98.78% $8,006 $49,284 $29,570 $52,463 $0 $6,420 $0 $46,042 FY2004 $78,000 $955 $77,045 98.78% $10,767 $66,278 $39,767 $70,553 $0 $8,634 $0 $61,919

44

AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace

7.7 Projected Break Even Analysis (000s omitted)

45

AviaBid.com - The Internet's On-Line Aviation Auction Community and Business-to-Business Marketplace Appendix A

Marco Santiago JR President, CEO

David McIntyre VP Marketing

Kim Bozik VP Operations and Logistics

TBD VP Sales and Business Development

Diana Eckenburg Interim Chief Financial Officer

TBD Director of Human Resources

TBD Chief Information Officer

TBD Chief Technology Officer

TBD Director Content Management and Analysis

46

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