Sample Software Enterprise Expand/Collapse Print Report

PDF ReportData as of 1/19/2010

Contact

Company ContactSample Software Enterprise21 West 11th Tulsa, OK 78701Type: Sample Industry Sector

Sample Enterprise918-555-8118918-555-8989sample@email.com

Summary

Capital

Offering:$4,000,000Offering

Type:Equity INVESTMENT SUMMARYWe develop, market and support voice automation solutions for conducting speech interactions on a computer and over the telephone for a range of industriesand applications. Our products include speech recognition software, which is used to recognize what a person says, deliver responses and information andperform transactions; voice authentication software, which is used to provide secure access to information by verifying the identity of speakers using the uniquequalities of their voices; and text-to-speech synthesis software, which converts information, for example, from a database, email or web page into an audiosignal. We are seeking $4 million to support the commercial launch of our next two software solutions, Speech Verifier™ and Speech Generator™.

Fair Market Valuation – EA estimated pre-money value of the enterprise based on

competitive cash-flow discounting using the Median IRR of Peer Group.

Risk-Adjusted Internal Rate of Return (IRR) – EA estimated annual rate of return for

investors after accounting for the Probability of Enterprise Survival .

My Dashboard Business Plans Enterprise Analysis My Account

Future Capital – Enterprise’s estimate of future capital needs post investment.

Undercapitalization – EA estimated risk capital that is unaccounted for by enterprise.

Post -Money Ownership – Equity share of the enterprise after accounting for the dilution

of the current offering. (based on the enterprise’s estimated valuation)

INVESTMENT RISK & RETURN

EA estimated Probability of Enterprise Failure is statistically determined for each enterprise by the Risk Quantification System.

Risk-Unadjusted Internal Rate of Return (IRR) – EA estimated annual rate of return for investors without accounting for the Probability of Enterprise Survival .

EA estimated Probability of Enterprise Survival is statistically determined for each enterprise by the Risk Quantification System.

It estimates the probability of enterprise survival to its projected fiscal year of liquidity event or debt maturation.

EA estimated Probability of Enterprise Survival is segmented into standardized Risk Categories.

A direct comparison is provided between the enterprise and the peer group median.

EA estimated Probability of Enterprise Survival is segmented into standardized Risk Categories.

A direct comparison is provided between the enterprise and the peer group median.

Enterprise

GENERAL SUMMARY

Peer Industry Sector Sample Industry Sector Location of Company Headquarters Tulsa, OklahomaAge of Enterprise (years) 5Legal Structure C-CorporationNumber of Buyer Relationships 2Number of Supplier Relationships 2Number of Strategic Relationships 21Number of Board of Directors /Members 3Number of Board of Advisors 3

.

Historical Financial Records CompleteFinancial Projections CompleteMarket Assessment CompleteCompetitive Assessment CompleteBusiness Plan Complete

BUSINESS MODELWe seek to actively support both emerging industry standards as well as proprietary development environments. Our software is designed to supportVoiceXML, the recognized industry standard language for the creation of voice-driven products and services. We also offer a range of consulting, support andeducation services that enable our customers and third-party resellers to develop and maintain voice-driven applications that use our software products. Wesell our products both directly through our sales force and indirectly through third-party resellers. We sell our products to customers in the United States,Canada, Europe, and countries in Asia and Latin America. We expect markets outside of the United States will continue to represent a significant portion oftotal future revenue.

Product / Service

GENERAL SUMMARY Product /Service

IndustrySector Availability General Description Key Performance Attributes Distribution

Channel(s)# CurrentCustomers

SpeechRecognizer™

OperatingSystems,Languages,& UtilitySoftware

2008

Our Speech Recognizer™ software providesspeech recognition and natural languageunderstanding capabilities, enabling recognitionand understanding of both simple, directedresponses, such as “yes” and “no,” as well ascomplex, conversational requests, such as “Iwant to find out how much I owe on my account”or “How do I find a store near me?”. Thesoftware is designed to operate on standardCPU hardware architectures and operatingsystems, such as UNIX and Windows, within avariety of leading touch tone IVR systems.

Speech Recognizer™ offersnumerous advanced features andcapabilities that enable the highlyaccurate, engaging and easy-to-use applications. Applications builtusing our Speech Recognizertechnology allow callers to speakmore freely and naturally wheninteracting with voice-drivensystems. Our speech recognitionsystems adapt to the uniquespeech characteristics of a broadcustomer base.

Direct Sales,Value AddedReseller,SystemsIntegrator

280

SpeechVerifier™

OperatingSystems,Languages,& UtilitySoftware

2010

Speech Verifier™ software uses the uniquecharacteristics of a person’s voice toauthenticate their identity. Users enrollvoiceprints by speaking information requested bythe application. The software is then able toauthenticate the caller’s claimed identity bycomparing his speech to the previously enrolledvoiceprint. Speech Verifier™ is tightly integratedwith our speech recognition engine and operateswithin the same distributed architecture, allowingfor scalability and robustness, as well assimultaneous recognition and identity verification.

A key distinguishing feature ofSpeech Verifier™ is that the callercan select any text and/or digitpassphrase in any language, evenif the passphrase is not within theparticular speech application'svocabulary. The security thresholdcan be tuned to achieve abusiness' desired balancebetween high security (minimizingfalse acceptances) and highconvenience (minimizing falserejections).

Direct Sales,Value AddedReseller,SystemsIntegrator

0

SpeechGenerator™

OperatingSystems,Languages,& UtilitySoftware

2011

Speech Generator™ is a text-to-speech (TTS)solution that converts text input into audiblespeech output. Using a concatenative approach,it synthesizes speech, producing a natural-sounding voice. With Speech Generator,companies can provide personalized or fast-changing information to callers. SpeechGenerator will support mobile devices, allowingusers to have e-mail messages read to them ina clear, natural sounding voice. SpeechGenerator can also be used in applicationswhere there is too much content to pre-recordeffectively, such as weather, directions andaccount information.

Speech Generator runs on aLinux server with an NT clientcommunicating through TCP/IPand will be available in a male orfemale U.S. English voice. Astraightforward programminginterface allows customers toeasily write applications toincorporate Speech Generator.Speech Generator is a next-generation TTS engine that setsthe standard for natural voice toneand intelligibility.

Direct Sales,Value AddedReseller,SystemsIntegrator

0

RISK FACTORS Q: Does your enterprise now depend on or take advantage of offshore software development and/or support resources, or doyou anticipate using such offshore resources in the future?The enterprise reports a certain dependence on or that it is taking advantage of offshore software development and/or support resources or that it anticipatesusing such offshore resources in the future. The enterprise offers the following comments relative to the use of offshore resources: We maintain conceptual development in-house and only offshore a limited, non-proprietary portion of our total development scope.

Q: Protocols on which the Web service platform are increasingly based include XML and/or core web service standards. Doesyour enterprise now use or does it anticipate using emerging new protocols or advanced web service platform tools?The enterprise uses or anticipates using emerging protocols or advanced tools for web services development and identifies the status of that usage in thefollowing: Being that our software solution is primarily web-based, we do utilize best-of-breed standards such as XML in development of our web-services.

INTELLECTUAL PROPERTY Status U.S. Patents International Patents Trademarks Copyrights

Pending 3 0 0 0

Granted 4 0 3 2

Patent Product/ServiceRelation Status Remaining

Life Abstract Summary

SpeechRecognition andSpeakerVerification UsingDistributedSpeechProcessing

SpeechRecognizer™,Speech Verifier™

Granted inU.S. 15

The invention is directed towards a method for processing a speech utterance. Themethod includes communicating between a local computer and a remote computerusing a hyper text communication session, including sending a recording of a speechutterance from the local computer to the remote computer in the session, and receivinga result from the remote computer, the result based on a processing of the recording atthe remote computer.

Dynamic SemanticControl of aSpeechRecognitionSystem

SpeechRecognizer™

Granted inU.S. 15

A method and apparatus are provided for automatically recognizing words of spokenspeech using a computer-based speech recognition system according to a dynamicsemantic model. In an embodiment, the speech recognition system recognizes speechand generates one or more word strings, each of which is a hypothesis of the speech,and creates and stores a probability value or score for each of the word strings. Theword strings are ordered by probability value. The speech recognition system alsocreates and stores one or more keyword-value pairs that represent semantic elementsand semantic values.

AutomaticallyDeterminingWords forUpdatingPronunciationDictionary inSpeechRecognitionSystem

SpeechRecognizer™,Speech Verifier™

Granted inU.S. 16

An approach for automatically determining the accuracy of a pronunciation dictionary ina speech recognition system involves comparing an expected pronunciationrepresentation for a particular word from a pronunciation dictionary to one or moreactual pronunciations of the particular word. An accuracy score for each of thephonemes that constitute the pronunciation of the particular word is determined fromthe comparison of the expected and actual pronunciations for the particular word.

StatisticalComputing andReporting forInteractive SpeechApplications

SpeechRecognizer™,Speech Verifier™,SpeechGenerator™

Granted inU.S. 17

A method and apparatus are disclosed for computing and reporting statisticalinformation that describes the performance of an interactive speech application. Theinteractive speech application is developed and deployed for use by one or morecallers. During execution, the interactive speech application stores, in a log, eventinformation that describes each task carried out by the interactive speech application inresponse to interaction with the one or more callers. After the log is established, ananalytical report is displayed.

AutomaticallyRetraining aSpeechRecognition

SpeechRecognizer™

Pending inU.S. 18

A telephone-based interactive speech recognition system is retrained using variableweighting and incremental retraining. Variable weighting involves changing the relativeinfluence of particular measurement data to be reflected in a statistical model.Statistical model data is determined based upon an initial set of measurement datadetermined from an initial set of speech utterances. When new statistical model data is

System generated to reflect new measurement data determined from speech utterances, aweighting factor is applied to new measurement data to generate weighted newmeasurement data.

Method andApparatus forFacilitatingSpeech Barge-Inin Connection withVoice RecognitionSystems

SpeechRecognizer™

PendingInternationally 19

A barge-in detector for use in connection with a speech recognition system forms aprompt replica for use in detecting the presence or absence of user input to the system.The replica is indicative of the prompt energy applied to an input of the system. Thedetector detects the application of user input to the system, even if concurrent with aprompt, and enables the system to quickly respond to the user input.

Converting text-to-speech andadjusting corpus

SpeechGenerator™

Pending inU.S. 19

A method for text to speech conversion and for adjusting a corpus. The methodincludes a text analysis step for parsing the text to obtain descriptive prosodyannotations of the text based on a TTS model generated from a first corpus, a prosodyparameter prediction step for predicting the prosody parameter of the text according tothe result of the text analysis step, a speech synthesis step for synthesizing speech ofthe text based on the prosody parameter of the text, adjusting according to a targetspeech speed for the synthesized speech when necessary.

Protection of Future IP: Patents, Trademarks

Market(s)

Speech Recognizer™

Market Year OfIntroduction General Market Description Drivers for Adoption Barriers to Adoption

EnterpriseMarket 2008

We offer a speech recognition solution that isdesigned to help companies better support,understand and communicate with their customers.Our enterprise solution helps automate a range ofcustomer services and business processes ininformation and process-intensive industries such astelecommunications, financial services, utilities,travel and entertainment, and government. Oursolution improves the customer experience, increasethe use of self-service and enable new revenueopportunities.

To remain competitive, organizations mustimprove the quality of customer care whilereducing costs and ensuring a positivecustomer experience. Technologicalinnovation, competitive pressures and rapidcommoditization have made it increasinglyimportant for organizations to achieveenduring market differentiation and securecustomer loyalty. In this environment,organizations need to satisfy theexpectations of increasingly savvy andmobile consumers who demand high levelsof customer service.

May require customermigration from competitiveproduct. Voice interactionwith computers is relativelynew to most consumers andcan require some level ofbehaviorial change andtraining to maximize its utility.Some consumers may findthis interaction switch fromhands to voice difficult anddecide not to adopt voiceinteraction.

MobileMarket 2008

Consumers use the powerful capabilities of theirphones, cars and personal navigation devicesthrough the use of voice commands and keypadsolutions to control these devices more easily andnaturally, and to access the array of content andservices available on the Internet. Mobile solutionsadd voice control and texting capabilities to mobiledevices and services, allowing people to more easilydial a mobile phone, enter destination informationinto an automotive navigation system, dictate a textmessage or have emails and screen informationread aloud.

An increasing number of people worldwiderely on mobile devices to stay connected,informed and productive.Telecommunications carriers, web searchcompanies and content providers areincreasingly using speech-based mobilesearch and communication solutions to offervalue-added services to their subscribersand customers.

May require customermigration from competitiveproduct. Voice interactionwith mobile devices isrelatively new to mostconsumers and can requiresome level of behaviorialchange and training tomaximize its utility. Someconsumers may find thisinteraction switch from handsto voice difficult and decidenot to adopt voice interaction.

HealthcareMarket 2009

We provide dictation and transcription solutions thatautomate the input and management of medicalinformation. Our solution allows platforms togenerate and distribute clinical documentationthrough the use of advanced dictation andtranscription features, and allow us to deliverscalable, highly productive medical transcriptionsolutions, as well as accelerate future innovation totransform the way healthcare providers documentpatient care. Our healthcare solution helpshealthcare provider organizations to reduceoperating costs, increase reimbursement, andenhance patient care and safety.

The healthcare industry is under significantpressure to streamline operations, reducecosts and improve patient care. In recentyears, healthcare organizations such ashospitals, clinics, medical groups,physicians’ offices and insurance providershave increasingly turned to speech solutionsto automate manual processes such as thedictation and transcription of patient records.

May require customermigration from competitiveproduct. Voice interactionwith computers is relativelynew to most consumers andcan require some level ofbehaviorial change andtraining to maximize its utility.Some consumers may findthis interaction switch fromhands to voice difficult anddecide not to adopt voiceinteraction.

Speech Verifier™

Market Year OfIntroduction General Market Description Drivers for Adoption Barriers to

Adoption

EnterpriseMarket 2010

Speaker verification technology provides enhanced security andconvenience to callers who access personal information andconduct commerce over the phone. Some customers integrateSpeech Verifier in their speech recognition applications. When usedin combination with automated speech recognition solutions,Speech Verifier recognizes and verifies an ID or account number asa caller speaks, eliminating the need to remember a separatepassword altogether. For a second layer of security, the caller canbe prompted for his/her password, confirming that the right personsaid the correct password.

Speech Verifier™ providesauthentication of callers based on abiometric comparison of their “voiceprint” to a previously recordedsample. Speech Verifier is difficult todeceive. It can enhance callers’experience by removing the need totouchtone PIN numbers while alsoincreasing the level of security for aspeech-enabled application.

May require customermigration fromcompetitive product.Some consumers mayhave a privacy issuewith the retention oftheir biometricsignature, althoughthere is little evidenceof this occurrencethus far.

MobileMarket 2010

Speaker verification technology provides enhanced security andconvenience to callers who access personal information andconduct commerce over the phone. Some customers integrateSpeech Verifier in their speech recognition applications. When usedin combination with automated speech recognition solutions,Speech Verifier recognizes and verifies an ID or account number asa caller speaks, eliminating the need to remember a separatepassword altogether. For a second layer of security, the caller canbe prompted for his/her password, confirming that the right personsaid the correct password.

Speech Verifier™ providesauthentication of callers based on abiometric comparison of their “voiceprint” to a previously recordedsample. Speech Verifier is difficult todeceive. It can enhance callers’experience by removing the need totouchtone PIN numbers while alsoincreasing the level of security for aspeech-enabled application.

May require customermigration fromcompetitive product.Some consumers mayhave a privacy issuewith the retention oftheir biometricsignature, althoughthere is little evidenceof this occurrencethus far.

Speech Generator™

Market Year OfIntroduction General Market Description Drivers for Adoption Barriers to

Adoption

Text-to-speech software enables companies To remain competitive, organizations must improve the quality ofcustomer care while reducing costs and ensuring a positive

May requirecustomer

EnterpriseMarket 2011

to deploy new and complex applications thatrequire the reading of text from a variety ofdata sources and devices. Applications suchas reading email, reviewing appointmentsfrom a desktop calendar, checking sales dataor accessing stock quotes and bankaccounts can be created with this product.

customer experience. Technological innovation, competitivepressures and rapid commoditization have made it increasinglyimportant for organizations to achieve enduring marketdifferentiation and secure customer loyalty. In this environment,organizations need to satisfy the expectations of increasinglysavvy and mobile consumers who demand high levels of customerservice.

migration fromcompetitiveproduct. Poorquality in thevoice synthesiscould alienatesome users.

MobileMarket 2011

Text-to-speech software enables companiesto deploy new and complex applications thatrequire the reading of text from a variety ofdata sources and devices. Applications suchas reading email, reviewing appointmentsfrom a desktop calendar, checking sales dataor accessing stock quotes and bankaccounts can be created with this product.

An increasing number of people worldwide rely on mobile devicesto stay connected, informed and productive. Telecommunicationscarriers, web search companies and content providers areincreasingly using text-to-speech solutions to offer value-addedservices to their subscribers and customers.

May requirecustomermigration fromcompetitiveproduct. Poorquality in thevoice synthesiscould alienatesome users.

MARKET DEVELOPMENT STRATEGY

Penetration: We license our products both directly through our sales force and indirectly through third-party resellers. Our sales force focuses on generatingdemand for our products and services that is fulfilled either directly by us or indirectly through our third-party resellers. We believe that, as the market forspeech software solutions continues to develop, sales through our indirect channel will continue to represent meaningful percentages of total revenue. Ourthird-party resellers increase our geographic sales coverage and address a range of market and application opportunities for our software. In addition, thesethird-party resellers provide end users of our software products with access to additional resources to design, install and customize applications.

Marketing: Our marketing programs are designed to create awareness for our products and services and support our direct and indirect sales efforts. Wehave implemented an integrated mix of marketing activities, including product marketing, third-party reseller and channel partner marketing, corporatemarketing and solutions and industry marketing.

Competition

Speech Recognizer™

Enterprise Market

Competitor Name ofProduct/Service Market Penetration Strategy

NuanceCommunications

Dragon NaturallySpeaking

Nuance has established cooperative relationships with third parties to increase the abilities of their speech andlanguage technology products to address the needs of prospective clients.

Microsoft SpeechRecognizer

Microsoft's Speech Recognizer enables Microsoft's operating systems to convert spoken words to written text. TheirSpeech Recognizer engine may be installed with the operating system or at a later time with other software.

PhilipsElectronics

SpeechRecognition Uncertain of competitor strategy

Competitor Strengths

In aggregate, our competitors offer a greater breadth and depth of solutions, more

Competitor Weaknesses

We believe that our speech solutions feature superior quality and

product features, and a larger base of referenceable clients and reseller anddeveloper relationships.

performance, core technology, and intellectual property protection ofthese attributes.

Mobile Market

Competitor Name ofProduct/Service Market Penetration Strategy

NuanceCommunications Nuance Mobile Nuance has established cooperative relationships with third parties to increase the abilities of their speech and

language technology products to address the needs of prospective clients.

Microsoft SpeechRecognizer

Microsoft's Speech Recognizer enables certain phone operating systems to convert spoken words to written text. TheirSpeech Recognizer engine may be installed with the operating system or at a later time with other software.

PhilipsElectronics

SpeechRecognition Uncertain of competitor strategy

Competitor Strengths

In aggregate, our competitors offer a greater breadth and depth of solutions, moreproduct features, and a larger base of referenceable clients and reseller anddeveloper relationships.

Competitor Weaknesses

We believe that our speech solutions feature superior quality andperformance, core technology, and intellectual property protection ofthese attributes.

Healthcare Market

Competitor Name ofProduct/Service Market Penetration Strategy

NuanceCommunications Dragon Medical Nuance has established cooperative relationships with third parties to increase the abilities of their speech and

language technology products to address the needs of prospective clients.

Microsoft SpeechRecognizer

Microsoft's Speech Recognizer enables Microsoft's operating systems to convert spoken words to written text. TheirSpeech Recognizer engine may be installed with the operating system or at a later time with other software.

Competitor Strengths

In aggregate, our competitors offer a greater breadth and depth of solutions, moreproduct features, and a larger base of referenceable clients and reseller anddeveloper relationships.

Competitor Weaknesses

We believe that our speech solutions feature superior quality andperformance, core technology, and intellectual property protection ofthese attributes.

Unpenetrated - The portion of the total market revenue opportunity that is not penetrated (i.e., captured) by the enterprise or any other competitor.

Each chart can be used to assess the relative level of competitive intensity in the market and size of any available, unpenetrated market portion.

Speech Verifier™

Enterprise Market

Competitor Name ofProduct/Service Market Penetration Strategy

NuanceCommunications Nuance Verifier Nuance has established cooperative relationships with third parties to increase the abilities of their speech and

language technology products to address the needs of prospective clients.

Microsoft Speech Verify Uncertain of competitor strategy

PhilipsElectronics Speech Verification Uncertain of competitor strategy

Competitor Strengths

In aggregate, our competitors offer a greater breadth and depth of solutions, moreproduct features, and a larger base of referenceable clients and reseller anddeveloper relationships.

Competitor Weaknesses

We believe that our speech solutions feature superior quality andperformance, core technology, and intellectual property protection ofthese attributes.

Mobile Market

Competitor Name ofProduct/Service Market Penetration Strategy

NuanceCommunications Nuance Verifier Nuance has established cooperative relationships with third parties to increase the abilities of their speech and

language technology products to address the needs of prospective clients.

Microsoft Speech Verify Uncertain of competitor strategy

PhilipsElectronics Speech Verification Uncertain of competitor strategy

Competitor Strengths

In aggregate, our competitors offer a greater breadth and depth of solutions, moreproduct features, and a larger base of referenceable clients and reseller anddeveloper relationships.

Competitor Weaknesses

We believe that our speech solutions feature superior quality andperformance, core technology, and intellectual property protection ofthese attributes.

Unpenetrated - The portion of the total market revenue opportunity that is not penetrated (i.e., captured) by the enterprise or any other competitor.

Each chart can be used to assess the relative level of competitive intensity in the market and size of any available, unpenetrated market portion.

Speech Generator™

Enterprise Market

Competitor Name ofProduct/Service Market Penetration Strategy

NuanceCommunications Nuance Speechify Nuance has established cooperative relationships with third parties to increase the abilities of their speech and

language technology products to address the needs of prospective clients.

Microsoft Text-to-Speech Uncertain of competitor strategy

Competitor Strengths

In aggregate, our competitors offer a greater breadth and depth of solutions, moreproduct features, and a larger base of referenceable clients and reseller anddeveloper relationships.

Competitor Weaknesses

We believe that our speech solutions feature superior quality andperformance, core technology, and intellectual property protection ofthese attributes.

Mobile Market

Competitor Name ofProduct/Service Market Penetration Strategy

NuanceCommunications Nuance Speechify Nuance has established cooperative relationships with third parties to increase the abilities of their speech and

language technology products to address the needs of prospective clients.

Microsoft Microsoft Text-to-Speech Uncertain of competitor strategy

Competitor Strengths

In aggregate, our competitors offer a greater breadth and depth of solutions, moreproduct features, and a larger base of referenceable clients and reseller anddeveloper relationships.

Competitor Weaknesses

We believe that our speech solutions feature superior quality andperformance, core technology, and intellectual property protection ofthese attributes.

Unpenetrated - The portion of the total market revenue opportunity that is not penetrated (i.e., captured) by the enterprise or any other competitor.

Each chart can be used to assess the relative level of competitive intensity in the market and size of any available, unpenetrated market portion.

COMPETITIVE PROTECTION STRATEGY

Strategy: We rely upon a combination of patent, copyright, trade secret and trademark laws, as well as contractual protections, to protect our intellectualproperty. We have sought to increase our intellectual property rights by, among other actions, filing multiple U.S. patent applications, resulting in the issuance offour patents. We have issued trademark registrations and pending applications in the United States for most of our key products. Although we rely on suchprotections, we believe that factors such as the technological and creative skills of our employees, new product developments, frequent product enhancementsand reliable product maintenance are just as important to establishing and maintaining a technology leadership position.

Financial

Black lines represent historical values provided by the enterprise. Blue lines represent values projected by the enterprise.

Black lines represent historical values provided by the enterprise. Blue lines represent values projected by the enterprise.

Black lines represent historical values provided by the enterprise. Blue lines represent values projected by the enterprise.

Black lines represent historical values provided by the enterprise. Blue or other colored lines represent projected values provided by the enterprise.

Black lines represent historical values provided by the enterprise. Blue or other colored lines represent projected values provided by the enterprise.

Black lines represent historical values provided by the enterprise. Blue or other colored lines represent projected values provided by the enterprise.

S&M – Sales & Marketing | G&A – General & Administrative | R&D – Research & Development | Asset Acq. – Asset Acquisition

EQUITY EXIT STRATIGIES / DEBT TYPE & DURATION Ranking Equity Exit Strategy / Debt Type Desired Year If Acquisition, Potential Acquiring Companies

Most Likely IPO 2014

Likely Acquisition 2013 Nuance Communications, Microsoft

Least Likely Secondary Private Offering 2013

Management

EXISTING MANAGEMENT

Position Name Undergraduate Discipline Graduate Discipline Contributed Capital

Chief Executive Officer Jeff Bishop Computing or Computer Science Business: Management/Information Systems $0

Chief Technology Officer Phillip Watson Computing or Computer Science Computing or Computer Science $0

Chief Financial Officer Robert Stanley Business: Accounting/Finance Business: Accounting/Finance $0

Director Marketing Christine Anderson Business: Marketing/Logistics None $0

Vice President Sales Joseph Chambers Business: Economics None $0

Position Name Biographical Information Special Skills

ChiefExecutiveOfficer

JeffBishop

Prior to co-founding the Company, Mr. Bishop served from May 2003 to September2004 on the board of BBG New Media, Inc., a developer of high-end web sites,which was bought by Think New Ideas, Inc., now AnswerThink Consulting Group, inSeptember 2005. From May 2002 to March 2003, he served as Vice President andLine of Business Manager at Voxware, Inc., a developer of digital speech and audiotechnologies and solutions. Previously, from August 2000 to May 2002, Mr. Bishopserved on the Advisory Board of Voxware. From September 1995 to April 2000, heco-founded and served as the chief executive officer of Vicorp Interactive Systems,Inc., a developer of large-scale voice and data applications based on open systemstools and platforms.

Mr. Bishop brings eight years of combinedexperience in business development, sales,information systems, financial management,and supply chain management. His pastexperience includes initiating and managingover thirty-five new partner opportunitiesincluding Ameritech.net, AT&T GNS,BellSouth.net, Cybergold, HP, IBM, Linkshare,Lycos, McAfee.com, Microsoft, Netscape,Prodigy, USA.net, and Corbis.

ChiefTechnologyOfficer

PhillipWatson

Mr. Watson co-founded the Company and has served as our Chief Technology Officersince September 2005 and as a director since May 2005. From May 1997 to August2004, he served as a research scientist in the Spoken Language Systems Group atthe Massachusetts Institute of Technology, a non-profit think-tank dedicated to thedevelopment of a conversational interface between computers and human spokenwords.

Mr. Watson lectures and teaches extensivelyon “computer-based speech recognitionsystems according to a dynamic semanticmodel.”; this expertise will clearly help inimplementing reliable search systems acrossvarious computing platforms.

ChiefFinancialOfficer

RobertStanley

Prior to joining the Company and from June 2003 to August 2005, Mr. Stanley servedas Chief Financial Officer and Director of Dove Associates, a strategy consulting firm.From January 1998 to June 2003, he served as Chief Financial Officer of VicorpInteractive Systems, Inc.

Mr. Stanley has been instrumental in helpingseveral companies establish and maintainfinancial success.

DirectorMarketing

ChristineAnderson

Ms. Anderson has served as the Company's Director of Marketing since September2007. From October 1998 to July 2007, she served as Vice President of Marketing atArbortext, Inc., an XML-based information solutions company. From October 1997 toOctober 1998, she was the Vice President of Marketing for VDOnet, a companyspecializing in streaming media over the internet. From November 1995 to October1997, she served as Vice President of Worldwide Marketing at PictureTelCorporation, a visual communications company.

Ms. Anderson has extensive experience inconsumer and business-to- businessmarketing, as well as international branddevelopment. She has worked in a variety ofindustries including information technology,Internet media, and visual communications.Most recently, Christine launched themarketing communications department atArbortext in Sunnyvale, Ca., a global XML-based information solutions company.

VicePresidentSales

JosephChambers

Mr. Chambers has served as our Vice President of Sales since August 2007. FromJuly 2005 to August 2007, he was Vice President of Sales at Rubric, Inc., a web-based marketing vendor. From August 200 to June 2005, he was Director of Sales atGenesys Telecommunications, Inc., a telephony integration and enterprise interactionmanagement software company. From January 1998 to April 2000, he served as VicePresident of Worldwide Sales for GeoTel Communications, a software company.

Mr. Chambers has successfully designed andexecuted numerous large sales and marketingcampaigns in his sales career withtechnology-based products.

ANTICIPATED MANAGEMENT

Position Undergraduate Discipline Graduate Discipline Duration Until Needed

Senior Vice President Operations Business: Marketing/Logistics Business: Marketing/Logistics 3 Months

Senior Vice President Development Computing or Computer Science Computing or Computer Science 6 Months

Director Human Resources Humanities None 12 Months

Member Specific Questions

Historical & Projected Metrics

MARKET SIZE Fiscal Year 2007 2008 2009 2010 2011 2012 2013 2014

Speech Recognizer™:

Enterprise Market $33,057,851 $36,363,636 $40,000,000 $44,000,000 $48,400,000 $53,240,000 $58,564,000 $64,420,400

Mobile Market $51,440,329 $55,555,556 $60,000,000 $64,800,000 $69,984,000 $75,582,720 $81,629,338 $88,159,685

Healthcare Market $7,438,017 $8,181,818 $9,000,000 $9,900,000 $10,890,000 $11,979,000 $13,176,900 $14,494,590

Total $91,936,197 $100,101,010 $109,000,000 $118,700,000 $129,274,000 $140,801,720 $153,370,238 $167,074,675

Speech Verifier™:

Enterprise Market $41,322,314 $45,454,545 $50,000,000 $55,000,000 $60,500,000 $66,550,000 $73,205,000 $80,525,500

Mobile Market $36,281,179 $38,095,238 $40,000,000 $42,000,000 $44,100,000 $46,305,000 $48,620,250 $51,051,263

Total $77,603,493 $83,549,784 $90,000,000 $97,000,000 $104,600,000 $112,855,000 $121,825,250 $131,576,763

Speech Generator™:

Enterprise Market $38,580,247 $41,666,667 $45,000,000 $48,600,000 $52,488,000 $56,687,040 $61,222,003 $66,119,763

Mobile Market $45,368,620 $52,173,913 $60,000,000 $69,000,000 $79,350,000 $91,252,500 $104,940,375 $120,681,431

Total $83,948,867 $93,840,580 $105,000,000 $117,600,000 $131,838,000 $147,939,540 $166,162,378 $186,801,195

OPERATIONAL Fiscal Year 2007 2008 2009 2010 2011 2012 2013 2014

Number of Customers:

Speech Recognizer™ 48 200 280 350 450 680 1100 1800

Number of Customers:

Speech Verifier™ 0 0 0 20 60 120 250 400

Number of Customers:

Speech Generator™ 0 0 0 0 35 150 410 800

Employee HeadCount:

Direct Cost of Revenue 1 4 5 6 9 13 20 28

Research & Development 1 3 4 5 7 9 12 15

Sales & Marketing 2 5 7 10 13 16 20 24

General & Administrative 1 2 4 6 8 12 15 20

INCOME & CASH FLOW (nominal) Fiscal Year 2007 2008 2009 2010 2011 2012 2013 2014

Revenue:

Speech Recognizer™ $492,500 $2,315,880 $3,723,580 $4,725,000 $6,075,000 $9,180,000 $14,850,000 $24,300,000

Speech Verifier™ $0 $0 $0 $100,000 $360,000 $720,000 $1,500,000 $2,400,000

Speech Generator™ 0 0 0 $0 $300,000 $1,500,000 $4,100,000 $8,000,000

Other $0 $0 $0 $125,000 $250,000 $400,000 $600,000 $800,000

Total $492,500 $2,315,880 $3,723,580 $4,950,000 $6,985,000 $11,800,000 $21,050,000 $35,500,000

Average Revenue per Customer:

Speech Recognizer™ $10,260 $11,579 $13,299 $13,500 $13,500 $13,500 $13,500 $13,500

Average Revenue per Customer:

Speech Verifier™ $0 $0 $0 $5,000 $6,000 $6,000 $6,000 $6,000

Average Revenue per Customer:

Speech Generator™ $0 $0 $0 $0 $8,571 $10,000 $10,000 $10,000

Cost of Revenue:

Speech Recognizer™ $205,800 $865,420 $958,960 $1,150,000 $1,300,000 $1,750,000 $2,600,000 $4,400,000

Speech Verifier™ $0 $0 $0 $45,000 $120,000 $220,000 $420,000 $600,000

Speech Generator™ $0 $0 $0 $0 $150,000 $570,000 $1,450,000 $2,550,000

Other $0 $0 $0 $70,000 $125,000 $190,000 $280,000 $370,000

Total $205,800 $865,420 $958,960 $1,265,000 $1,695,000 $2,730,000 $4,750,000 $7,920,000

Gross Profit:

Speech Recognizer™ $286,700 $1,450,460 $2,764,620 $3,575,000 $4,775,000 $7,430,000 $12,250,000 $19,900,000

Speech Verifier™ $0 $0 $0 $55,000 $240,000 $500,000 $1,080,000 $1,800,000

Speech Generator™ $0 $0 $0 $0 $150,000 $930,000 $2,650,000 $5,450,000

Other $0 $0 $0 $55,000 $125,000 $210,000 $320,000 $430,000

Total $286,700 $1,450,460 $2,764,620 $3,685,000 $5,290,000 $9,070,000 $16,300,000 $27,580,000

Operating Expenses:

S&M $328,600 $1,268,600 $1,865,660 $2,250,000 $2,800,000 $4,200,000 $6,200,000 $8,800,000

G&A $256,890 $802,010 $1,085,000 $1,400,000 $1,900,000 $2,900,000 $4,900,000 $7,400,000

R&D $285,000 $1,006,690 $1,350,000 $1,600,000 $1,900,000 $2,700,000 $3,800,000 $5,600,000

Depreciation & Amortization $0 $15,000 $310,000 $100,000 $100,000 $150,000 $200,000 $400,000

Total $870,490 $3,092,300 $4,610,660 $5,350,000 $6,700,000 $9,950,000 $15,100,000 $22,200,000

Operating Income ($583,790) ($1,641,840) ($1,846,040) ($1,665,000) ($1,410,000) ($880,000) $1,200,000 $5,380,000

Other Income $0 $0 $0 $0 $0 $0 $0 $0

Interest Expense $0 $15,888 $21,005 $21,005 $21,005 $21,005 $56,500 $56,500

Income Tax / Member Tax Payout $0 $0 $0 $0 $0 $0 $0 $450,000

Net Income ($583,790) ($1,657,728) ($1,867,045) ($1,686,005) ($1,431,005) ($901,005) $1,143,500 $4,873,500

Cash Flows:

Operating Cash Flow ($583,790) ($1,642,728) ($1,557,045) ($1,586,005) ($1,331,005) ($751,005) $1,343,500 $5,273,500

Capital Expenditures $0 $21,000 $42,334 $50,000 $50,000 $100,000 $100,000 $150,000

Free Cash Flow ($583,790) ($1,663,728) ($1,599,379) ($1,636,005) ($1,381,005) ($851,005) $1,243,500 $5,123,500

Capitalization:

Debt Principal Repayments $0 $0 $0 $42,857 $42,857 $42,857 $142,857 $142,857

New Debt Borrowing $0 $0 $0 $0 $0 $650,000 $0 $0

New Equity Issuance $0 $0 $0 $4,000,000 $0 $0 $0 $0

Total Net Capitalization $0 $0 $0 $3,957,143 ($42,857) $607,143 ($142,857) ($142,857)

Cash Liquidity Balance $0 $0 $270,230 $2,591,368 $1,167,506 $923,644 $2,024,287 $7,004,930

INCOME & CASH FLOW (relative) Fiscal Year 2007 2008 2009 2010 2011 2012 2013 2014

Market Share:

Speech Recognizer™ 0.00 % 2.31 % 3.42 % 3.98 % 4.70 % 6.52 % 9.68 % 14.54 %

Speech Verifier™ 0.00 % 0.00 % 0.00 % 0.10 % 0.34 % 0.64 % 1.23 % 1.82 %

Speech Generator™ 0.00 % 0.00 % 0.00 % 0.00 % 0.23 % 1.01 % 2.47 % 4.28 %

Annual Growth Rate in Revenue:

Speech Recognizer™ 0.0 % 370.2 % 60.8 % 26.9 % 28.6 % 51.1 % 61.8 % 63.6 %

Speech Verifier™ 0.0 % 0.0 % 0.0 % 0.0 % 260.0 % 100.0 % 108.3 % 60.0 %

Speech Generator™ 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 400.0 % 173.3 % 95.1 %

Other 0.0 % 0.0 % 0.0 % 0.0 % 100.0 % 60.0 % 50.0 % 33.3 %

Total 0.0 % 370.2 % 60.8 % 32.9 % 41.1 % 68.9 % 78.4 % 68.6 %

Gross Profit Margin:

Speech Recognizer™ 0.0 % 62.6 % 74.2 % 75.7 % 78.6 % 80.9 % 82.5 % 81.9 %

Speech Verifier™ 0.0 % 0.0 % 0.0 % 55.0 % 66.7 % 69.4 % 72.0 % 75.0 %

Speech Generator™ 0.0 % 0.0 % 0.0 % 0.0 % 50.0 % 62.0 % 64.6 % 68.1 %

Other 0.0 % 0.0 % 0.0 % 44.0 % 50.0 % 52.5 % 53.3 % 53.8 %

Total 0.0 % 62.6 % 74.2 % 74.4 % 75.7 % 76.9 % 77.4 % 77.7 %

Operating Expenses as a % of Revenue:

S&M 66.7 % 54.8 % 50.1 % 45.5 % 40.1 % 35.6 % 29.5 % 24.8 %

G&A 52.2 % 34.6 % 29.1 % 28.3 % 27.2 % 24.6 % 23.3 % 20.8 %

R&D 57.9 % 43.5 % 36.3 % 32.3 % 27.2 % 22.9 % 18.1 % 15.8 %

Total Profit Margins:

Operating Profit Margin -118.5 % -70.9 % -49.6 % -33.6 % -20.2 % -7.5 % 5.7 % 15.2 %

Net Profit Margin -118.5 % -71.6 % -50.1 % -34.1 % -20.5 % -7.6 % 5.4 % 13.7 %

BALANCE SHEET Current Assets:

Cash & Short-Term Investments $270,230

Accounts Receivable $70,050

Inventory $0

Other Current Assets $422,000

Total Current Assets $762,280

Long-Term Assets:

Tangible Capital Assets $430,000

Accumulated Depreciation $230,000

Total Long-Term Assets $200,000

Total Assets $962,280

Current Liabilities:

Accounts Payable $15,660

Short-Term Debt $1,240,000

Other Current Liabilities $0

Total Current Liabilities $1,255,660

Long-Term Liabilities $470,000

Total Liabilities $1,725,660

Equity & Capital:

Paid-In Capital $700,000

Retained Earnings ($1,260,000)

Interest in Non-Consolidated Enterprise(s) $0

Total Equity & Capital (Net Worth) ($560,000)

Total Equity, Capital, & Liabilities $1,165,660

SITE MAP | PRIVACY | CONTACT © 2010 EquityNet, LLC - Patents Pending - All RightsReserved