Business Plan For A Startup Company

Business Plan

FOCUS Our focus is our customers’ focus

Executive Summary ...........................................................................................................3 The opportunity...............................................................................................................3 The difference ................................................................................................................3 Partnership......................................................................................................................3 Revenue sources .............................................................................................................3 The Team........................................................................................................................3 The Offering ...................................................................................................................4 1 Business Description.........................................................................................................5 1.1 The Entrepreneur environment .................................................................................5 1.2 Industry overview......................................................................................................6 1.3 Company Description................................................................................................7 1.4 Mission Statement .....................................................................................................7 1.5 Goals and Objectives.................................................................................................8 1.6 Critical Success Factors.............................................................................................8 2 Products and Services.......................................................................................................8 2.1 Products and Services Description.............................................................................8 2.1.1 Products and Services Description......................................................................8 2.1.2 Unique Features..................................................................................................9 2.1.3 New and Follow on Products and Services.........................................................9 3 The Market .......................................................................................................................9 3.1.1 Market Analysis .................................................................................................9 3.1.2 Competitor Analysis ........................................................................................10 4 Marketing Strategies and Sales.......................................................................................11 4.1.1 Introduction.......................................................................................................11 4.1.2 Pricing Strategy ................................................................................................11 4.1.3 Sales Strategy ...................................................................................................12 4.1.4 Sales Forecast ...................................................................................................12 5 Financials .......................................................................................................................13 5.1.1 Income Statement .............................................................................................14 5.1.2 Balance Sheet ...................................................................................................15 5.1.3 Cash Flow statement ........................................................................................16 5.1.4 Fund..................................................................................................................17 5.1.5 Valuation...........................................................................................................18 6 Appendices and references.............................................................................................19 6.1.1 Salaries Calculations Sheet .............................................................................19 6.1.1 Working Capital ...............................................................................................20 6.2 References................................................................................................................21

Executive Summary The opportunity Ministry of Information Technology in Egypt is leading aggressive projects to increase export revenues for Egyptian IT services companies to achieve $280 million. More over A.T Kearney estimated IT market size in GCC countries worth of $2 billion and growing fast. According to the same survey, IT system integrators in the GCC countries are looking forward to partner with Arab IT services partners who can run a cost effective resource development and project delivery teams to support this demand.

The difference -

Different positioning and market penetration through partnering with system integrators not competing with them. Proximity to the target markets through sales team in the region. Different project management and delivery model that is built on core teams available on site and pool of professional offshore. Cost effective skill development and training models.

Partnership -

Partnership with Oracle, EMC and Microsoft for technology. Partnership with Injazat (UAE), Eljeraisy (KSA), Omnix (Qatar) and more in GCC area.

Revenue sources -

Long term projects to focus on relation. Fast revenue source through outsourcing. Annual guaranteed revenue through support contracts. License and license referral revenues.

The Team -

All Focus management team members have 7+ years experience in GCC and 15+ years experience in ERP projects. CEO worked for IBM and Oracle for the last 15 years establishing partner network on channel management capacity. Sales Director worked for Oracle and Raya in GCC, closing deals worth $10 millions. Operations director, an MBA and PMP professional who headed implementation teams for 20+ ERP implementation projects in SAP and Oracle eBusiness Suite in different business lines including government, banking and telecom.

The Offering -

Focus is raising $750,000 for its first round of financing and $500,000 in second round. Focus projects a return of 60% IRR after 5 years of operations with 77% share worth $13 millions.

-

1

Business Description FOCUS Company will be founded to provide IT consulting services. With a Head office in Cairo, Egypt and offices in Qatar, Kuwait and UAE, FOCUS will cover GCC (Corporation Council for the Arab States of the Gulf) region. FOCUS will be founded as a Limited Liability Company in Cairo.

1.1 The Entrepreneur environment Through many initiatives undertaken by Ministry of Communication and Information technology, Egypt has demonstrated an attractive strategies and action plans to promote IT industry in general. These strategies included: • • •

To leverage public-private partnerships as an implementation mechanism whenever possible. To support the development of the skills required by the ICT industry. To support research and innovation in the field of ICT.1

These initiatives led to the foundation of Technology Development Fund http://www.techdevfund.com/ and Social Fund for Development http://www.sfdegypt.org/ as government organizations dedicated to help start-up business in general and Information Technology start-up in specific.

Moreover, Egyptian government already put in place required laws and procedures to promote Venture Capital business in Egypt.2 The mentioned strategies and actions encouraged both Ideavelopers http://www.ideavelopers.com/ and Actis Capital LLP http://www.act.is/ to setup venture capital and private equity organizations in Egypt.

1.2 Industry overview The Market for IT services in GCC in 2007 exceeds $2 billion and is growing fast; government is the largest segment comprising 20% to 25% on average.3

2007 IT services spend (1) -$M178

132 704

397

65 213

KSA

UAE

Egypt

31 112

16 56

15 54

15 53

Kuwait

Oman

Bahrain

Qatar

Highlights -

-

IT services comprises 25% to 30% of the total IT market size in the GCC states overall. Government is a major spending on IT services through o Centrally managed federal eGov initiatives o Local ministry/agency level initiatives that are not always coordinated centrally. Kuwait (15%) and UAE (11%) are projected to be the fastest growing IT services markets; others will experience 5-10% growth (2006-2010).4 Non Government Spend Government Spend

1.3 Company Description FOCUS will be registered in Cairo as well as in Dubai Internet City, UAE as a Limited Liability Company. Why Cairo and Why Dubai? Smart Village Cairo, Smart Village Cairo launched in 2003 as the first fully operational Technology and Business Park in Egypt, accommodates Multinational and Local Telecommunications and Information Technology Companies, Financial Institutions and Banks, together with Governmental Authorities on three Million square meters in the west of Cairo. The efficient mix of business services boosts the competitiveness and profitability of enterprises taking advantage of Fiber Optic Network, multi-source power supply, District cooling and Heating redundant network plant. Evenly, organizations in Smart Village Cairo, profits from world class standards amenities including Property Management & Maintenance, Event’s Management, Transportation Services on 24/ 7 basis. Complementary Community & Business Services are available in Smart Village Conference Hall, Smart Village Club, Smart Nursery, Smart School, Postal and Parcel services, Travel Agency, Signboards Production, Copy Center, Graphic and Printing Agency, plants & flowers and First Aid Assistance and the upcoming Smart Village Business Hotel. Currently, 12,000 professionals run the operations of more than 100 Companies and expected to reach 80,000 by the end of 2014. 5 Dubai has emerged as a leading regional commercial hub with state-of-art infrastructure and a world class business environment. It has now become the logical place to do business in the Middle East, providing investors with a unique and comprehensive value added platform. With its strategic location, tax-free living and consistently strong economic outlook, Dubai is the ideal base for multinationals targeting markets in Central Asia, the Middle East, Africa, the Asian Subcontinent and the Eastern Mediterranean. These regions have a population of over 2 billion people and a combined GDP of US$ 6.7 trillion. Accessible through its ultra modern airport, that offers connections to over 140 destinations, Its robust economic cluster of technology, media, finance and healthcare hubs makes Dubai a viable and attractive proposition for any business. 6

1.4 Mission Statement Is to be regionally recognized as a reliable IT consulting services partner and consistently shares success with our customers, employees and partners.

1.5 Goals and Objectives FOCUS will position itself lf as an implementation partner for government IT projects in Egypt and Gulf region. Capitalizing on Egyptian government initiatives, through ITIDA (Information Technology Industry Development Agency), and pool of talents that are available in Egypt FOCUS will be able to acquire startup resources. Through partnership with multinational solution providers and local system integrators in the GCC countries, FOCUS will be able to address a fast growing customer segment. In first two years, FOCUS will start the operations in Cairo as a resource development center and opening sales offices in Saudi and UAE to avail partner and customer proximity, with a focus on delivering onsite Oracle eBusiness Suite implementation services. In the third year, operations in GCC will be extended to cover additional services including IT enabling services, as well as bespoke application development.

1.6 Critical Success Factors FOCUS critical success factors are:7 - Customer focused strategy that allows consistent growth from products and services and introducing new services within two to three years. - Flawless operations execution that enables cost effective operations model with a cost reduction target of 5-7% every year. - Building an achievement oriented culture through different systems. - Constantly building and acquiring human capital.

2

Products and Services

2.1 Products and Services Description 2.1.1 Products and Services Description Understanding the nature of government projects as well as the nature of Enterprise Resource Planning projects, and recognizing its long sales and delivery cycle, FOCUS products and services will cater for various revenue sources. - Long term projects like Oracle eBusiness Suite implementation us will maintain customer relation and provide persistent existence, however will be a major cash flow burden. - Short term projects like IT enabling services and training services on the other hand are easier to sell and deliver and a fast revenue and cash source. - Onsite and on-call support services will contribute as a constant and revenue source. - Software licenses will as well contribute to FOCUS revenue and cash flow. - Improving resource utilization through outsourcing. Accordingly, the following services will be considered in first two to three years.

-

Oracle eBusiness Suite Implementation Services with a focus on government financials and human resources. IT enabling services including single sign-on, database installation services, and Identity management implementations. Projects required training services for IT professionals and business users. Resources outsourcing.

2.1.2 Unique Features Addressing GCC market, FOCUS will have the following features: - Strong Technical skills - Arabic Language skills - Good culture fit.

2.1.3 New and Follow on Products and Services In two to three years, FOCUS will introduce new service which is implementation of Document management and workflow management systems. A service will complete the business process chain of enterprises. In addition to this services related to Portal development will be considered.

3

The Market 3.1.1 Market Analysis In 2007, IT companies working in Egypt and exporting IT services reported revenues exceeding $190 million, with more than $75 million from export. Vast majority of export revenues are generated in the GCC. 8 Total reported export revenues Geographies targeted (28 firms responding) (32 firms responding) KSA

20

Qatar

MENA & Other(1) 14%

14

Egypt

11

UAE

10

MENA

USA/Europe 18% Kuwait 1% Qatar 2% Bahrain 5%

KSA 47%

UAE 13%

2007 Total Exports = $77M

9

Kuwait

8

Bahrain

5

USA/Europe

5

Rest Africa

5

Other

5

Oman

1

More over, GCC market size in terms of IT spending will continue to surge. According to a recent IDC study and preliminary IDC data, spending on information technology expanded by just over 19% to more than $6.8 billion in 2006 and will grow by 15% on 2007.9 Those market trends have been discussed with sales and channel management of Oracle s in Egypt and GCC market as well as major local system integrators in GCC countries.

3.1.2 Competitor Analysis Number of Egyptian companies targeting GCC market in government sector and other major sectors was about 40 companies. Based on ITIDA project initiative to support achieves $280 million export target, and A.T. Kearney survey of current companies strength and weaknesses the following key challenges were identified: -

Quality assurance Better Customer Relationship management Marketing plans Emphasize on project management Better value proposition High cost structure Small size causing inconsistency in quality of resources and inability to cope with long life cycle government tendering and delivery process.

Number of Egyptian firms targeting major verticals 25

Government 14

Financial Services Education

9

Telecom & Utilities

9 8

Healthcare

7

Oil & Gas Manufacturing Retail

4

5 3

Marketing Strategies and Sales 4.1.1 Introduction Partnership with multinational technology provider and local system integrators will be the major marketing and sales channel deployed to promote FOCUS. Pillars to promote FOCUS: - Participation in government events conducted by ITIDA and technology providers. - Attending road shows and industry exhibitions. - Website

4.1.2 Pricing Strategy Different major factors will accumulate to affect pricing of services: 1- Skill set required. 2- Industry/Country average accepted daily consulting rate considering competition pricing. 3- Engagement total cost of ownership and duration. 4- FOCUS Cost structure and breakeven point analysis.

Table below illustrates pricing model per skill set: Country/Skill Project Senior Junior/Support set Manager Consultant Consultant Egypt $700 $550 $300 Qatar $1000 $800 $400 Kuwait $900 $700 $400 Bahrain $900 $700 $400 KSA $800 $650 $400 Oman $800 $700 $400 UAE $1000 $800 $400

Senior Developer $400 $600 $500 $500 $500 $500 $500

Junior Develop $200 $300 $300 $300 $300 $300 $300

Given that both Qatar and UAE cost of living is around 20% more than KSA, Kuwait and Bahrain, selling prices for UAE and Qatar will be set more than in other GCC countries.10 Average selling price for consulting man/day will be around $550 in 2008.

4.1.3 Sales Strategy In general sales strategy will be based on a mix of channel management and direct account management. In Egypt, FOCUS will tend to go into direct sales model and account management model however in GCC FOCUS will capitalize on synergy with large system integrators to approach the market.

4.1.4 Sales Forecast Sales forecasts will be governed by “best case scenario and “Probable case scenario” models. Best case scenario assumptions: - All billable resources will be utilized 75% of their billable time (180 man/days). - Revenue will be increased by 1.3 every year (incline in both average daily rate and number of resources). - License and License referrals revenues will be achieved. Accordingly the below table illustrates Best Case Scenario sales forecast. Revenue Source Headcount buddy shopping License referral License Revenue License Support Total Revenue

2008 15 $1,620,000 $50,000 $0 $0 $1,670,000

2009 20 $2,808,000 $84,500 $0 $0 $2,892,500

2010 30 $4,212,000 $109,850 $500,000 $0 $4,821,850

2011 35 $4,914,000 $142,805 $1,000,000 $110,000 $6,166,805

2012 40 $5,616,000 $185,647 $2,000,000 $220,000 $8,021,647

Probable Case Scenario Probable case scenario assumes the following: - Revenue sources will contain outsourcing, projects implementations, IT enabling, support services as well as license revenues (License sales, S.W support and License Referral fees). - Projects implementation will go into long sales and delivery cycles. - Average annual growth will vary from 10% to 25% according to type of service. The below table illustrates revenue forecast assuming Probable Case Scenario. Revenue Source Outsourcing projects implementation Support IT enabling Consulting Revenue License Revenue Total Revenue

2008 $724,680 $50,000 $66,000 $100,000 $940,680 $50,000 $990,680

2009 $942,084 $700,000 $132,000 $130,000 $1,904,084 $65,000 $1,969,084

2010 $1,224,709 $910,000 $198,000 $338,000 $2,670,709 $584,500 $3,255,209

2011 $1,592,122 $1,183,000 $264,000 $439,400 $3,478,522 $1,219,850 $4,698,372

In both scenarios, license prices were calculated based on license prices for Oracle Applications price lists.11

5

Financials 12

To following pro-forma financial statements were based on “Probable Case Scenario” revenue forecast model and adopted a conservative approach in terms of operations expenses, employee salaries and benefits and credit policy for receivables aging. The following inputs were assumed for calculations: - 1% of revenue was allocated for marketing and sales commissions. - Another 3% of Revenue was allocated to training expenses. - Another 1% of revenue was allocated to other expenses - Average monthly salary was set to $4500 first year with increase to $7000 in year 5 (Although industry average is $2750.13 - Employees’ benefits were set to 15% of salaries first year to be increased to 25% in year 5. - 90 days was set for receivables outstanding balance - 30 days was set for payables outstanding balance.

2012 $2,069,759 $1,537,900 $330,000 $527,280 $4,464,939 $2,362,805 $6,827,744

5.1.1 Income Statement The below table illustrates the projected income statement for FOCUS for 5 years. Year 1 Year 2 Year 3 Year 4

Year 5

NET REVENUES

992,000

1,990,300

3,256,940

4,701,272

6,831,514

COST OF REVENUE % of Revenues

1,002,08 0 101.0%

1,338,112 67.2%

1,901,496 58.4%

2,312,067 49.2%

3,186,276 46.6%

GROSS PROFIT % of Revenues

(10,080) -1.0%

652,188 32.8%

1,355,444 41.6%

2,389,205 50.8%

3,645,238 53.4%

OPERATING EXPENSES Sales & Marketing Research & Development General and Administration Total Operating Expenses % of Revenues

211,840 59,920 171,587 443,347 45%

372,806 79,903 297,386 750,095 38%

528,789 132,569 336,526 997,884 31%

704,025 297,013 422,279 1,423,318 30%

866,630 368,315 529,782 1,764,727 26%

(453,427)

(97,907)

357,560

965,887

1,880,511

EXTRAORDINARY INCOME / (EXPENSE)

(45,000)

0

0

0

0

EARNINGS BEFORE INTEREST & TAXES

(498,427)

(97,907)

357,560

965,887

1,880,511

INTEREST INCOME / (EXPENSE)

0

0

0

0

0

NET EARNINGS BEFORE TAXES

(498,427)

(97,907)

357,560

965,887

1,880,511

0

0

0

(290,845)

(752,204)

(498,427) -50.2%

(97,907) -4.9%

357,560 11.0%

675,042 14.4%

1,128,307 16.5%

EARNINGS FROM OPERATIONS

TAXES NET EARNINGS % of Revenues

See Appendix 1 for Salaries Calculations

5.1.2 Balance Sheet Table below will demonstrate balance sheet projections for 5 years. Begin Year 1 ASSETS CURRENT ASSETS Cash Accounts Receivable Inventories Other Current Assets Total Current Assets PROPERTY & EQUIPMENT TOTAL ASSETS LIABILITIES & SHAREHOLDERS' EQUITY CURRENT LIABILITIES Short Term Debt Accounts Payable & Accrued Expen Other Current Liab Current portion of long term debt Total Current Liabilities LONG TERM DEBT (less current portion) STOCKHOLDERS' EQUITY CommonStock Preferred Stock Retained Earnings Total Equity TOTAL LIABILITIES & EQUITY

Year 2

Year 3

Year 4

Year 5

1,000,000 0

347,533 275,181 0 17,856 640,570 33,333

650,115 472,895 0 28,660 1,151,671 30,000

389,893 1,815,000 0 110,000 2,314,893 13,333

447,601 3,135,000 0 190,000 3,772,601 6,667

563,574 5,280,000 0 320,000 6,163,574 5,000

1,000,000

673,903

1,181,671

2,328,226

3,779,268

6,168,574

0

0 0

0 154,474 17,856 0 172,330

0 249,345 28,660 0 278,005

0 957,000 110,000 0 1,067,000

0 1,653,000 190,000 0 1,843,000

0 2,784,000 320,000 0 3,104,000

0

0

0

0

0

0

250,000 750,000 1,000,000

250,000 750,000 (498,427) 501,573

250,000 1,250,000 (596,334) 903,666

250,000 1,250,000 (238,774) 1,261,226

250,000 1,250,000 436,268 1,936,268

250,000 1,250,000 1,564,574 3,064,574

1,000,000

673,903

1,181,671

2,328,226

3,779,268

6,168,574

1,000,000

5.1.3 Cash Flow statement OPERATING ACTIVITIES Net Earnings Depreciation Working Capital Changes (Increase)/Decrease Accounts Receivable (Increase)/Decrease Inventories (Increase)/Decrease Other Current Assets Increase/(Decrease) Accts Pay & Accrd Expenses Increase/(Decrease) Other Current Liab Net Cash Provided/(Used) by Operating Activities INVESTING ACTIVITIES Property & Equipment Other Net Cash Used in Investing Activities FINANCING ACTIVITIES Increase/(Decrease) Short Term Debt Increase/(Decrease) Curr. Portion LTD Increase/(Decrease) Long Term Debt Increase/(Decrease) Common Stock Increase/(Decrease) Preferred Stock Dividends Declared Net Cash Provided / (Used) by Financing INCREASE/(DECREASE) IN CASH CASH AT BEGINNING OF YEAR CASH AT END OF YEAR

1,000,000

Year 1

Year 2

Year 3

Year 4

Year 5

(498,427) 16,667

(97,907) 23,333

357,560 26,667

675,042 11,667

1,128,307 6,667

(275,181) 0 (17,856) 154,474 17,856 (602,467)

(197,714) 0 (10,804) 94,871 10,804 (177,418)

(1,342,105) 0 (81,340) 707,655 81,340 (250,223)

(1,320,000) 0 (80,000) 696,000 80,000 62,709

(2,145,000) 0 (130,000) 1,131,000 130,000 120,973

(50,000)

(20,000)

(10,000)

(5,000)

(5,000)

(50,000)

(20,000)

(10,000)

(5,000)

(5,000)

0 0 0 0 0 0 0

0 0 0 0 500,000 0 500,000

0 0 0 0 0 0 0

0 0 0 0 0 0 0

0 0 0 0 0 0 0

(652,467)

302,582

(260,223)

57,709

115,973

1,000,000 347,533

347,533 650,115

650,115 389,893

389,893 447,601

447,601 563,574

5.1.4 Fund Begin Beginning Cash 1,000,000 Equity Common 250,000 Increase / (Decrease) Previous Period Preferred A Round 750,000 B Round Total Preferred 750,000 Increase / (Decrease) Previous Period Total Equity 1,000,000 Debt Short Term Debt Increase / (Decrease) Previous Period Long Term Debt Current Portion Long Term Portion Total Long Term Debt Increase / (Decrease) Previous Period Current Portion Long Term Protion Total Long Term Debt Total Equity & Debt

1,000,000

Retained Earnings Net Income Dividends Increase / (Decrease) Retained Earnings Beginning Retained Earnings Ending Retained Earnings

Year 1

Year 2

Year 3

Year 4

Year 5

250,000 0

250,000 0

250,000 0

250,000 0

250,000 0

750,000 750,000 0 1,000,000

750,000 500,000 1,250,000 500,000 1,500,000

750,000 500,000 1,250,000 0 1,500,000

750,000 500,000 1,250,000 0 1,500,000

750,000 500,000 1,250,000 0 1,500,000

0

0

0

0 0

0

0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

1,000,000

1,500,000

1,500,000

1,500,000

1,500,000

(498,427)

(97,907)

357,560

675,042

1,128,307

(498,427) 0 (498,427)

(97,907) (498,427) (596,334)

357,560 (596,334) (238,774)

675,042 (238,774) 436,268

1,128,307 436,268 1,564,574

5.1.5 Valuation Assumptions Month of IPO Forecast annualized earnings at IPO P/E ratio at IPO

$1,128,307 15

Investment Round Month of Investment Investor required IRR Amount of Investment Required Monthly IRR Duration of Investment

First 0 60% $1,000,000 5.00% 60

Calculations Market Capitalization at IPO

$16,924,598

60

Second 24 50% $500,000 4.17% 36

Required FV for Investor at IPO Individual Investor's Share Individual Investor's ROI Individual Investor's IRR

First $10,485,760 62.0% 1049% 60%

Second $1,687,500 10.0% 338% 50%

Cumulative Investors' Share Cumulative Founders' Share

62.0% 38.0%

71.9% 28.1%

6

Appendices and references

6.1.1 Salaries Calculations Sheet

Net Revenues

Year 1

Year 2

Year 3

Year 4

Year 5

992,000

1,990,300

3,256,940

4,701,272

6,831,514

80,000

80,000

100,000 80,000 40,000 220,000

125,000 100,000 120,000 345,000

150,000 125,000 200,000 475,000

175,000 150,000 250,000 575,000

15% 12,000 92,000 9.3%

15% 33,000 253,000 12.7%

17% 58,650 403,650 12.4%

20% 95,000 570,000 12.1%

20% 115,000 690,000 10.1%

80,000 40,000 25,000 145,000

100,000 50,000 45,000 26,000 221,000

125,000 60,000 25,000 27,000 237,000

150,000 75,000 50,000 28,000 303,000

175,000 100,000 75,000 29,000 379,000

15% 0 145,000 14.6%

15% 33,150 254,150 12.8%

17% 40,290 277,290 8.5%

20% 60,600 363,600 7.7%

20% 75,800 454,800 6.7%

Sales & Marketing Sales Manager Marketing Manager Customer service Total Salary Benefits Percent (%) Total benefit costs Total S & M Compensation % of Revenue General & Administration Chief Executive Officer Chief Financial Officer Accounting Secretarial Total Salary Benefits Percent (%) Total benefit costs Total G & A Compensation % of Revenue Service Personnel Number of employees Salary per employee Total salaries Benefits Percent (%) Total benefit costs

14 54,000 756,000

15 66,000 990,000

18 72,000 1,296,000

20 78,000 1,560,000

25 84,000 2,100,000

15% 113,400

20% 259,200

20% 312,000

25% 525,000

Total Salary Costs

869,400

15% 148,500 1,138,50 0

1,555,200

869,400 87.6%

1,138,500 57.2%

1,555,200 47.8%

1,872,000 39.8%

2,625,000 38.4%

225,000 12,000 1,106,400 111.5%

441,000 66,150 1,645,650 82.7%

582,000 98,940 2,236,140 68.7%

778,000 155,600 2,805,600 59.7%

954,000 190,800 3,769,800 55.2%

Total COR's Compensation % of Revenue Total Salary & Wages Total Benefits Total Compensation % of Revenue

1,872,000

2,625,000

6.1.1 Working Capital Net Revenues

Accounts Receivable % of Revenue Days Outstanding Accounts Receivable (Increase)/Decrease from Prev. Period Inventory % of Revenue Inventory Turns Inventory Days Inventory (Increase)/Decrease from Prev. Period Other Current Assets % of Revenue Days Other CA Value (Increase)/Decrease from Prev. Period Accounts Payable & Accrued Expenses % of Revenue Days AP & Accrued Value Increase/(Decrease) from Prev. Period Other Current Liabilites % of Revenue Days Other Current Liabilities Increase/(Decrease) from Prev. Period

Year 1 992,000

Year 2 1,990,300

Year 3 3,256,940

Year 4 Year 5 4,701,272 6,831,514

16.5% 59 275,181

16.5% 59 472,895

16.5% 59 1,815,000

16.5% 59 3,135,000

16.5% 59 5,280,000

(275,181)

(197,714)

(1,342,105)

(1,320,000)

(2,145,000)

0.0% 0 0 0

0.0% 0 0 0

0.0% 0 0 0

0.0% 0 0 0

0.0% 0 0 0

0

0

0

0

0

1.0% 4 17,856

1.0% 4 28,660

1.0% 4 110,000

1.0% 4 190,000

1.0% 4 320,000

(17,856)

(10,804)

(81,340)

(80,000)

(130,000)

8.7% 31 154,474

8.7% 31 249,345

8.7% 31 957,000

8.7% 31 1,653,000

8.7% 31 2,784,000

154,474

94,871

707,655

696,000

1,131,000

1.0% 4 17,856

1.0% 4 28,660

1.0% 4 110,000

1.0% 4 190,000

1.0% 4 320,000

17,856

10,804

81,340

80,000

130,000

6.2 References

1

http://www.mcit.gov.eg/ICT_Strategy_Intro.aspx Promoting Venture Capital Business in Egypt, FSVC July 2006 3 IDC Business Monitor Index – A.T. Kearney analysis 4 ICT Highlights and A.T. Kearney analysis report – Marketing IT Firms to Government Clients in the Gulf. 5 http://www.smart-villages.com/docs/about.aspx 6 http://www.dubaiinternetcity.com/why_dubai/ 7 What really works – 4+2 formula for sustained business by William Joyce and Nitin Nohria 8 Source based on A.T. Kearney survey responses from 28 companies. 9 IDC report IDC#ZV02N on GCC IT spending http://www.idc-cema.com/?showproduct=30243 10 GCC Human Resources overview released Feb 2007 by www.bayt.com 11 http://www.oracle.com/corporate/pricing/pricelists.html 12 Financial model is based on Financial Projection model developed by Frank Moyes and Stephen Lawrence, Leeds school of Business, University of Colorado. 13 GCC Human Resources overview released Feb 2007 by www.bayt.com 2