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Investment Prospectus

Transprotek, LLC

February, 2008
Investment Prospectus Page 2

The Company

Transprotek, LLC is a newly formed Nevada based Limited Liability


Company. At present opportunity exists for the purchase of 998
Member Units priced at $100.00 per unit. Up to 97 Owner Members
may purchase these units, and will receive a Pro Rata share of revenue.
Governance of operations, membership, and distribution of revenue are
set forth in the attached Operating Agreement.
The Investment Decision
Those considering investing in The Company should carefully note the
distribution structure described in the Operating Agreement. Since the
founders, (Sherwin Steffin and Jeff Leeson) hold a majority of control of
Units, no combination of investors can, by ownership share, exercise
majority control upon operating policy or practices. Therefore, any
investment represents anticipated passive income.
Leeson, at founding, has no expectation of becomimg actively involved
in current day-to-day operations. Instead, his token appointment as a
Managing Member makes continuity of operations, upon the death or
disability of Steffin, a built-in component of planning for this
contingency.
Thus those considering purchase of Units, should take their investment
decision based solely upon an assessment of the potential for success
as presented in the Prospectus, together with the perceived ability of
Steffin to achieve the financial goals set forth in the included pro forma
projections.
Operations
Auctions and Online Store
Transprotek will initially operate as an Internet Auction House, selling
products on eBay, and maintaining an online store to garner repeat
sales of those products successfully sold at auction.
All products will be purchased using the services of Drop-Shippers,
ending the necessity of both the cost and risk of maintaining an
inventory of products which may, or may not sell. The use of drop
shippers completely mitigates the need for storage, and shipping
facilities as well as the personnel necessary to manage these functions.
Once a product is sold, and verified payment has been made by the
customer (via credit card or PayPal), The Company places an order with
the Drop Shipper. It proceeds to ship directly to the customer’s
shipping address. It also is the point of contact for damaged or
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defective goods, largely, but not completely, eliminating the need for
the company to maintain a customer service department.
Products successfully sold on eBay will then be added to the catalog of
the Online store. Store purchase prices will be determined by the
average price obtained from auction activity.

Resolving barriers to profitability

The chief barrier to achieving profitability in such an operation is the


fact that at the present time, there are more than a half-million other
individuals engaging in the same process as has been described above.
Customers having interest in a specific product, if popular, will be
frequently confronted with tens of auctions showing very similar pricing
offers, and often with converging bids. Thus, the challenge is that of
selecting products which will attract the interest of bidders, and
presenting sales information in a form most likely to motivate selection
of Company offered auctions, or store catalog items.

Multiple Product Streams

To accomplish these objectives requires most careful attention to the


content and format of sales and marketing materials. Beyond these
elements, research findings conducted by eBay suggests that sellers
conducting multiple auctions (16 or more, simultaneously) achieve
significantly better results than those with fewer.

The Product Selection Plan

Whether sold at auction or from the online store, the potential for
product sales is quite separate from the sales and marketing materials
used to promote them. Popularity of the product, success in sales
achieved by other sellers, the margin achieved between the cost of
product, and the average sale price, along with the immediate
availability from a supplier are all critical when considering the
selection of a product. Substantial available resource material makes
optimum selection of product readily obtainable. With an extensive
database of all items sold on eBay, a rigorous research protocol has
been developed which yields the probability of a successful auction or
store sale, (Listing Success Rate or LSR) along with the Average Sale
Price (ASP), from which the likelihood of successful sale and the most
probable profit or loss can be calculated.
To assure a consistent flow of quality listings, the development of
competitive multiple product listings requires effort beyond the ability
of a single individual. To that end, The Company will hire a number of
independent contractors who will be used to first use the above
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described procedure to develop a list of products with an LSR greater


than 50%, and an expected gross profit exceeding $100.00. Thereafter
they will construct reusable sales templates for each listed product.
Contractors will be compensated for this research and the development
of effective sales copy through payment of a percentage of profit on
the initial and subsequent residual sales of the products meeting these
criteria.
Recruiting from a pool of college students seeking part-time
employment is expected to prove a relatively easy task. Two such
contractors have already begun work, and initial conversations are
taking place with several others.
Since compensation is entirely dependent on performance, this
approach offers a no-risk solution to building a large and effective
workforce.

The Company Store (Website)

Following successful auctions on eBay, those products which have


attracted multiple bidders will comprise the products sold on the
company website. The successful ad copy used to sell at auction will
then be used to entice new purchasers, as they browse the store
offerings, and to present items of potential interest to previous
customers.

Affiliate (Referral) Marketing

Each customer, upon first purchase will be provided an Affiliate Referral


Number. Thereafter, that customer will receive an initial fee for any
new customer who becomes a Transprotek customer from a referral.
Subsequent purchases by referred customers will pay a smaller
residual to the referring customer.
Planned Expansion

Interactive Learning Modules


The Need

Almost universally, Public Education is seen as a failure. Whether this


failure is measured by standardized tests, high school dropout rates,
the necessity for remedial programs in colleges and universities, or the
prevalence of drugs, crime, and violence within the schoolhouse, few
express satisfaction with the end result of our nation’s educational
infrastructure.
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Increasing numbers of parents have found ways to op-out of the


existing organizational failure. Whether through the mechanism of
home schooling, or enrollment in charter schools, increasing numbers
of students are receiving instruction through participation in
alternatives to the traditional public school. The use of Home
Schooling, once relegated to those seeking to provide religious
instruction to their children, has expanded to those who are simply
dissatisfied with the quality of instruction offered in the public school.
Parent/Faculty managed Charter Schools, Private, for-profit, and
religiously sponsored private schools are all fglourishing.
While giant leaps have been made in the development of online
courses, and “distance learning,” there is a pronounced lack of a
uniform, student-managed, online instructional modules which have
undergone rigorous verification of their validity.
In the early 1980s, Steffin was a leader in the development of
Computer Assisted instruction. As founder and CEO of Edu-Ware
Services, Inc. he led the development of both individual instructional
modules, and a complete courseware. Yet, there were severe limits to
the availability of these instructional materials, since the programs
were stored on diskettes. Purchaser awareness of availability of these
materials rested largely with the effectiveness and volume of
advertising materials.
The Internet provides the opportunity for mass distribution of
materials, without the overhead costs entailed when using physical
storage media, packaging, and the associated shipping and handling
costs.

The Development Life Cycle

The governing instructional principles employed in these early


programs, largely remain the same to the current date, but, with the
distribution mechanism provided by the Internet, availability of these
same instructional materials is unlimited, with little or no cost to the
publisher.

Product Production, Then….

Historically there was an additional barrier to the development of these


early efforts at the improvement of instruction. Three distinct
disciplines were required prior to the release of either a single module
or a complete course. First required was a Content Expert, who
provided the knowledge base, as well as specifying the boundaries of
the content to be presented; an Instructional Designer developed the
process and format by which the specified content was to be presented
to the learner, as well as constructing test items assuring that the
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student had mastered the material. Working from the specified format,
a programmer or programming team often spent months translating
the design document to a program which faithfully adhered to the
specifications set forth.
Many additional hours were devoted to insuring that the program met
design specifications, and operated without error. During this
development process, packaging had to be designed, and a user
manual written. This process took the work of many individuals, and
frequently extended over several months. To recover the costs, and
earn a profit, the publisher was required to set a high price for each
product it produced.

… And Now

Current programming technologies make it possible to produce high


quality instructional materials, using the skills of a single Content
Expert. Text, still pictures, video, and audio can be quickly assembled
using proprietary Company pre-designed templates. The individual
constructing the program, in practice, “fills in the blanks,” with
appropriate content. The resulting program is a complete instructional
package containing the material to be learned and test items to verify
that all learning objectives have been met.

Something’s Different

In the greatest majority of formal education experiences, the student is


presented with knowledge or skills s/he is expected to learn, and then
tested to verify that this learning has occurred. Students are usually
grouped in classes by subject matter, age, and in some cases by past
achievement, (“Gifted,” or “Remedial”) and in an increasing number of
instances, by student gender.
This restrictive classification system, coupled with fixed class times,
and the limits of yearly school calendar make individualization of
instruction seldom, if at all, observed. Yet this same model remains
persistently, extending through the undergraduate programs of most
post-secondary institutions.
The expectation that few will completely master expected learning is
reflected in the grading system – few in any class receive an “A.” When
converted into the percentage of knowledge acquired, an average
score of 71% is considered as reflecting “Satisfactory” performance.
Even more pernicious is the practice, often employed, of “grading on
the curve.” Rather than testing for mastery, learners are compared
with other students in the class – with “earned” grades being a
measure of class rank, rather than acquired knowledge or skill.
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Company produced materials will begin with a completely different set


of assumptions from the process described above. Rather than “Teach
than Test,” each learner is tested first. Correct answers to test items
direct the student to the next element of content. Thus, the learner is
spared the anguish of repetition of previously learned content, while
being offered the challenge of material new to him or her.
For those entering incorrect responses, they are routed to instructional
materials, where they can discover the correct answer. From these
instructional sequences, they are linked back to the initial (or a
variation of the original) test question. The process is repeated until
the learner can correctly answer the test item. He then proceeds to the
next item, and the process is repeated. A two item sample
demonstration of the Test-Teach-Test system is attached as a
PowerPoint presentation.

Product Development

As described above, while the company will provide the necessary


system templates, Content Experts (e.g., classroom teachers), familiar
with appropriate content and curriculum will be hired as Independent
Contractors, who will produce assigned instructional packages. Wages
for these individuals will be paid on a per project basis, as opposed to
the commission model applied to the sales content writers described
earlier.
While there are many publishers of instructional software to be found
on the Internet, there are no dominant players in this market. Unless
constructed using the principals of Instructional Design, most materials
produced fail as valid instructional tools. These instructional elements
are both reliable and valid tools to insure mastery by learners of the
specific objectives set.

The Market

According to a 2003 study (the latest available) carried out by the U.S.
Department of Education, National Center for Education, approximately
1.1 million students were reported as being home schooled. This
represented 2.2% of the school-age population at that time. Long term
trends indicate declining funding being available to Public Education,
potentially driving parents to seek instructional alternatives for their
children.
Beyond elementary-secondary education, the instructional model
described above is equally applicable to much of the coursework
offered by Higher Education.
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Sales and Marketing

These instructional materials will have their own shopping carts on The
Company website. All materials will be available for download following
credit card verification. The Social Net makes word-of-mouth an
effective distribution mechanism, which, when coupled with the
website appears to significantly reduce what might otherwise be a
prohibitive sales and marketing expense.
Risk Factors
Elements comprising risk to investors are as set forth below:
Competition: With minimal barriers to entry, more than one-half million
individuals and companies are engaged in auction and product sales
activity. In order to successfully compete, The Company will be
required to identify niche markets, as well as finding suppliers for these
products.
Recession: At the current writing, consumer confidence and spending
has sharply declined, as a result of substantial erosion of U.S. Economic
Resources. The depth and duration of this decline are unknown, but a
recent sharp decline in eBay stock valuation is an indicator of the
impact of this risk.
Profit Margins: As manufacturer inventories have grown, many products
have become so readily available that seller margins have sharply
eroded. Sophisticated buyers are frequently able to secure product at
or below cost, making it necessary to sell high volumes of each item to
secure substantial profit.
Management Skills: Many different skill sets are required to
successfully manage a profitable business. The current Managing
Owner’s strengths lie in the areas of Technology Development,
Operations and Financial Management, with weakness seen in
administering the Sales and Marketing efforts of the organization. This
weakness may seriously impact on company profitability.

Use of Funds

As set forth above, the development of Self managed Instructional


Materials is a long term goal of The Company. Seen as providing
revenue far greater than that expected from product retailing,
capitalization of development and marketing will be significant. Current
planning envisions funding for this second phase to come from
Retained Earnings of the Auction/Store operations. External
capitalization will greatly speed the development of this more
profitable phase of company operations.
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Pro Forma Financials

Solving the Fantasy Problem


Anyone that is presented with the optimistic projections of those
seeking the injection of funding into a newly formed company are well
aware of the likely distortion of by those seeking investment. Most
typically, revenues from product or services are overestimated while
expenses are underestimated, or missing entirely from the Chart of
Accounts.
Having assessed the elements comprising the planning, potential
investors can make their own judgments of the likelihood of a positive
ROI. Thus, the pro forma financial projection has been constructed so
the reader can manage his own “What If” scenarios.

First Month Unit Number of products expected to be sold


Sales 25 in the first month of operation
Monthly The expected rate of increase per month
Increase% 5% in the number of products sold
Average Sale The average price paid for each product
Price $313 by the buyer
The percentage of the average selling
Cost of goods% 60% price paid by The Company
Average percentage of Gross Sales paid
Auction Fees 8% to eBay for each auction held
The minimum Gross Profit per month at
Salary Trigger $4,000 which point Steffin will be paid a salary.
Percentage of Gross profit comprising
Salary % 50% salary paid to Steffin.

One of the great advantages of a an internet business, as described


here is the lack of a major expense structure, expected in more
conventional offline organizations. Little or no capitalization is required,
nor the usual personnel and benefit expenses, so necessary in other
companies.

Income
Gross Sales Gross sales resulting from eBay auction activity
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Cost of goods Costs paid to supplier, shipping and handling


Gross Profit Gross Sales – Cost of Goods

Expenses
Payroll Compensation to Owner Manager
Compensation made to Independent Contractors for
Royalties research and advertising of products
Subscriptions Fees paid for access to drop shippers
Fees paid for credit card processing (2.64% of
Credit Card Fees transaction)
Auction Fees Fees paid for posting of auctions
Website Monthly Website maintenance fee.

Profit/Loss Gross Profit - Income


Investors Total Distribution of profit to passive investors on a
Distribution pro rata basis
Managers Distribution of profit to managers on a pro rata
Distribution basis

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