Mindshaker

Executive Summary
Mindshaker provides graduate students and faculty with an efficient, comprehensive avenue to access educational materials via the Internet. The current system of
textbook sales supports high markups by campus bookstores and retailers, involves journeying to an often poorly organized or sold out bookstore, and waiting in long
lines during peak season. Current web retailers only provide part of the solution, as supplemental educational materials must be ordered from multiple sources. As
curricula have become more sophisticated and producers of supplemental materials have grown, professors must comb through an increasingly fragmented
marketplace and deal with numerous suppliers to assemble the necessary supplemental course materials. Mindshaker promises a better way.

Mindshaker provides a single source of proven books, articles by academic and industry experts, cases and value added learning aids for more than 2.8 million
graduate students and the faculty that instruct them. The company's Web site allows anyone to search for and purchase books and other educational materials via
secure transaction interface. Students from participating colleges can click on their classes to bring up a menu displaying syllabi, software and other learning aids, all
required texts, book abstracts, price and availability. Students spend minutes on a transaction that would have taken 30 to 90 minutes at traditional vendors. Students
save time and duplication of effort and the books are conveniently shipped to their doorstep, generally within 48 hours. Educators gain the ability to review the syllabi
of other professors, share information, build digital "coursepacks", and sample and purchase other materials from a library of short electronic articles.

To accomplish this, Mindshaker has established academic and business contacts at 20 top universities from whom the curricula and booklists are secured. All major
textbook publishers have also been contacted and accounts are currently being established. Harvard Business School, Kenan-Flagler, Darden and other case vendors
have tentatively agreed to provide materials in digital format. Fulfillment, customer service and billing logistics will be handled by a third party logistics provider.

No traditional "bricks and mortar" are required, and the business can grow as needed without accruing fixed costs. Except for a small administrative office, all elements
of the business from book storage and fulfillment to the computer equipment that houses the web site are located in third-party service businesses that provide full
service at low cost. Sales and marketing is primarily handled via inexpensive ads at colleges, with active sales and marketing performed by students on commission.

Net revenue grows from $2.2 mil to $22.0 mil from 1999 - 2003. The increase is due to expansion into more schools and solidified relationships with professors.
Advertising revenues during this period have been estimated at a conservative level. Given the company's target market, management believes advertisers will be
anxious to gain access to this market. Returns stem from obsolete inventory and are expected to be moderate. The chart below shows a five-year breakdown of
revenues.

1999 2000 2001 2002 2003

Textbook Revenue 1,966,500 9,819,600 14,139,600 17,739,600 21,339,600
Other Product Revenue 237,173 565,614 757,635 946,819 1,136,003
Advertising Revenue 6,000 12,000 12,000 12,000 12,000
Less: Returns 44,836 223,887 322,383 404,463 4W543
Net Revenue 2,164,837 10,173,327 14,586,852 19,293,956 22,001,060

The Company's cost of goods (CGS) should decline over the five-year period due to increased sales of higher margin supplemental educational products. From 1999 -
2003, CGS is expected to decrease from 95.7 percent of revenues in 1999 to 74.8 percent of revenues in 2003. CGS in 1999 include one-time software development
costs incurred to begin operations.

Management expects Mindshaker's operating expenses to be fairly constant as a percent of sales. From 1999 - 2003, operating expenses are forecasted to decline from
14.9 percent of revenues to 10.8 percent of revenues. Most operating expense components are a constant cost and enable the margin to decline as the company's
market increases. The forecasted revenues and costs translate to significant increases in profitability from 1999 - 2003. Such increases offer investors a unique
opportunity for substantial gains.

Mindshaker
The Market
Industry Description

Over the past several years, a new and powerful marketplace has emerged. This ever-changing frontier is known as the World Wide Web. Electronic commerce is
increasingly becoming the preferred mechanism to transact business in America. The Internet enables online sellers to boost margins and reach new markets with
virtually no restraints or regulation. According to Jupiter Communications, there were an estimated 15 million online shoppers in 1997 and this number is expected to
grow to over 60 million by the year 2002. Similarly, online shopping revenues are expected to climb from $2 billion in 1997 to over $40 billion in 2002.

The U.S. textbook market is a large, growing, and fragmented business. Textbooks are written and marketed primarily for use in formal educational settings. Much of
the demand for graduate level textbooks depends on growth in the population attending institutions of graduate study. In 1997, college textbook sales grew 7.4
percent to $2.67 billion, following an increase of nearly 8 percent in 1996. Based on the current rise in enrollment, sales are expected to remain healthy over the next
several years.

Textbooks have historically been the most profitable types of books for publishing houses. This is largely due to the nature of the textbook industry. First, textbooks are
written by college and university professors who do not demand the high up-front and on-going royalty payments that popular press authors command. Second,
publishers and college bookstores charge high cover prices for their textbooks, primarily because university students and graduate students are a captive audience.
The student population is formed from a wide array of consumers with substantial buying power. Students currently buy their textbooks almost exclusively from their
respective college bookstores. However, according to the National Association of College Stores, students have a negative perception of campus bookstores. The
overwhelming majority of students feel that campus bookstores are overpriced and are "taking advantage of a captive audience".

In 1995, there were 2.8 million students enrolled in graduate and professional programs. These 2.8 million students are currently under the instruction of over 200,000
graduate professors. The average student buys six books per semester and spends $270-$400 per semester on textbooks and course materials. While used books do
represent a significant percentage of the textbooks sold to undergraduate students" the percentage is drastically reduced for the graduate and professional student
market. This adds to the attractiveness of this market. In addition, 82 percent of all students have access to the Internet and one in three households have purchased
merchandise over the Internet.

Rapid innovation has created a new electronic marketplace, which is in turn changing education. New products such as online/electronic textbooks, simulations, and are
now available for use in the graduate classroom. The traditional textbook, while still an important part of education, is being supplemented with additional educational
products, such as classroom simulations, online textbooks, educational games, and up-to-date case studies, to expand the depth and breadth of classroom instruction.
These educational products are currently offered within an extremely fragmented market. Textbook publishers, software companies, and educational institutions have
all begun to develop a small number of these educational tools. However, none of these outlets have reached a critical mass of graduate faculty, and have therefore
been used on a limited basis to-date.

Target Market

Mindshaker will focus initially on graduate and professional students and faculty. Twenty of the most prestigious graduate institutions across the country have been
selected as the base on which to launch the company (Refer to Exhibit 1 for a list of these institutions) These universities were selected based on reputation, enrollment
levels, and proximity to other potential schools.

As a result, Mindshaker's initial target textbook and study aid market will consist of approximately 13 1,000 students. According the National Association of Education
Statistics, the average student spends $270-$400 on textbooks each semester. Based on these estimates, Mindshaker's initial market contains approximately $104
million in potential annual textbook sales. Over the following four years, the number of target schools will Increase to 150, yielding a market of approximately 651,000
students by 2003. This leads to a potential market worth $520 million.

The sale of cases, games/simulations, and other educational tools will be focused primarily on the graduate and professional faculty market. There are approximately
13,000 faculty members at our initial 20 target schools. This number increases to approximately 65,000 by 2003 for our market of 150 schools. Based on estimates of
the student market in 1999 the potential market is worth $1.4 million. By 2003, potential revenues increase to $13.4 million with the original product mix.

Competition

Initially, Mindshaker will experience significant competition from college bookstores. While these stores are geographically diverse and fragmented, they do possess
several attractive characteristics. First, they have on-campus access to the students they serve and typically have access to student information provided by college
administrations. Second, they have a physical presence on or near campus. Third, they offer a variety of products in addition to textbooks (supplies, computer software
and equipment, magazines). While Mindshaker management recognizes these characteristics we believe that we can provide an attractive alternative for students
(discussed in Products and Services section).

Mindshaker will also face competition from various on-line textbook providers. While these competitors focus entirely on textbook sales and do not offer additional
educational products that add value for students and faculty. After significant market research, management has discovered three competitors that operate online
textbook stores.

 VarsityBooks.com - Varsity Books, launched on August 3, 1998, sells textbooks from its Web site through a book distributor. The company claims to sell
textbooks at a 15-20 percent discount before shipping costs, versus college bookstores. This site currently offers 400,000 titles and ship titles within 48-72
hours. Varsity Books has targeted undergraduate students at 58 public universities across the country.
 BigWords.com - Bigwords debuted in September 1998, offering new and used textbooks for purchase on the Internet. Books are delivered in three to five
days. A unique feature of Bigwords.com is its rental program, where a student can purchase a book for 60 percent of its price, with remaining 40 percent
being retained as a deposit. Bigwords.com has established relationships with all major textbook publishers and distributors, resulting in a catalog of more
than 2.5 million titles. Bigwords' target market is undergraduate students at public universities in California.
 Efollett.com - Efollett was launched in January 1999. The Follett Corporation currently owns 500 campus bookstores across the country and has added
Internet ordering as a convenience to its existing customers. Efollett offers customers the opportunity to either pay for home delivery of their books or pick
them up at the local campus bookstore. Efollett's primary market encompasses small to medium sized colleges and universities around the country.

To some extent Mindshaker will compete with Amazon.com and BarnesandNoble.com; however, these providers typically do not carry an extensive list of textbook titles
and currently do not offer customized services to meet the needs of students at different universities. Mindshaker will also compete with singular providers of software,
simulation, electronic textbooks, and other educational tools. However this is an extremely fragmented market full of small firms that have small product offerings.
Mindshaker will forge alliances with these companies to offer central sales and mass distribution of their products.

Management is unaware of another company that offers the customization, ease of use, traditional and innovative educational materials, venue to share ideas, and the
opportunity to explore the latest tools in education that Mindshaker will provide. Mindshaker is defining and creating its own industry.

Mindshaker
Company Description
Business

Long lines, lack of availability, and high costs are just some of the inconveniences facing graduate students during the textbook buying process. Mindshaker plans to
solve these problems for graduate students by providing an online customized shopping alternative at  www.Mindshaker.com . Mindshaker will offer
students traditional textbooks, course syllabi, study aids, chat rooms, job search information, and much, much more. For graduate faculty, Mindshaker will offer a
library of academic and business cases, learning simulations, teaching games, chat rooms, academic publication posting opportunities, and the latest in educational
innovations.
Currently there are very few options for graduate students and professors to obtain innovative and value added educational tools and services. Those that are available
do not provide students with the ease of ordering that Mindshaker promises.

The company will consolidate the complete booklists from universities and colleges on its customized web site. As a result, students will be able to search easily for
their textbooks by concentration, course number or name, or professor and purchase their books without ever setting foot in their college bookstore. Bundled textbook
packages will also be available for core curriculum programs, such as the first year of law or medical school. In addition, course syllabi will be posted next to each
course listing for both student and faculty review.

Mindshaker plans to hire a relationship manager to handle both corporate and academic contacts. The individual will be responsible for creating alliances with
individuals and companies to increase Mindshaker product offerings. In addition, the relationship manager will be in constant contact with these key constituents in
order for Mindshaker to continue to offer products and services that meet the needs of its customers. (See Exhibit 2)

Mindshaker
Marketing & Sales
Marketing and Sales Activities
The primary objective of Mindshaker's marketing program is to build brand equity and establish key business relationships. These factors are critical for success in the
electronic commerce industry and can also serve as substantial barriers to entry (See Exhibit 3). The message and "brand" Mindshaker will establish with its target
market is that Mindshaker is "the complete source for all educational materials."

Mindshaker's marketing and sales programs will be implemented in conjunction with the phased rollout of the business to selected graduate programs. This strategy
allows Mindshaker to tailor its marketing efforts to each school if necessary and continually improve its efforts as new schools are added. A variety of marketing tools
and programs will be used to reach Mindshaker's two primary customers, professors and students. Some of the tools are specific to either professors or students while
some apply to both and build overall brand equity. Described below are Mindshaker's initial marketing tools, positions, programs, etc...

Campus representatives
Student representatives will be hired at each school to provide a physical presence on each campus to perform duties such as marketing materials
distribution and acquisition of target market distribution lists and facilitation of on-campus marketing programs such as presentations to professors,
advertisers, and students. Representatives will receive one per cent of sales generated at their respective school. (See Exhibit 2)
The part-time regional sales and marketing representatives
These individuals will be responsible for managing the marketing campaigns at 30 schools, initiating and maintaining relationships with campus
bookstores, and establishing critical business relationships with professors and other key campus personnel. This position will receive an annual base
salary of $10,000 plus two percent of the sales generated in his/her region. (See Exhibit 2)
Advertising
Mindshaker will use university newspapers for campus-wide marketing efforts. Half-page advertisements will be run at the beginning of the fall semester
and before winter break. During the first year of operations, Mindshaker will run four consecutive half-page advertisements to build brand equity prior to
students leaving for the summer.
Personal letters to professors
Formal letters will be distributed to all graduate professors at each school. The letters will describe Mindshaker's products and services and how they can
benefit professors. The letters will invite the educators to visit our site, post their syllabi, and also to introduce Mindshaker to their students. As
demonstrated in the value-net analysis (Exhibit 12), professors are an integral component of Mindshaker's business and every effort will be made to
ensure they understand the benefits of Mindshaker. Each letter will be followed-up by a personal phone call to verify receipt of materials and answer any
questions regarding Mindshaker offerings.
Relationships with key opinion leaders and administrative assistants
Mindshaker will target relationships with two key personnel on each campus. The first person will be a faculty member or school administrator who is
respected by their peers and is a champion of e-commerce and the application of technology for improved learning methods. The second person will be a
seasoned administrative assistant on campus who is knowledgeable about all professors and can serve as a key information source.
Trade shows
Mindshaker management will aggressively attend selected trade shows to introduce our business to professors, publishers, and other stakeholders to
further build brand equity.
Direct mail flyers
Mindshaker, via the campus reps, will distribute flyers to the lockers and mail slots of graduate students at the end of each semester to remind students of
Mindshaker's services prior to the beginning of the subsequent semester. Flyers will be printed at a central location and shipped to each school. This
approach ensures message consistency and substantially lowers the printing cost due to massive volume discounts.

Distribution
Distribution services will be outsourced to USCO Logistics, a national third-party logistics provider, headquartered in Naugatuck, Connecticut. USCO Logistics was
founded in 1967 as a division of Uniroyal, Inc. USCO operates 10 million square feet of shared and dedicated distribution space for some of the world's largest and most
respected companies.

The USCO Shared Logistics Division will handle the distribution of all Mindshaker products. USCO's Shared Logistics Division provides an in-place nationwide network of
public warehousing and distribution centers for companies with a need for a high performance, yet flexible distribution infrastructure. USCO will not be a financial
partner in Mindshaker's business, but instead will be the logistical management arm of the company. After Mindshaker has achieved a high volume business,
management will consider partnering with USCO or another logistics provider in a more formal manner.

USCOs Shared Logistics Division offers the following benefits to Mindshaker:

 Nationwide facilities with networked communications capabilities.

 Standardized operating procedures in all locations.
 The ability to contract and expand with Mindshaker's business cycle, in terms of space and labor requirements.
 Economies of scale due to the sharing of overhead costs.

Mindshaker plans to begin operations with one central warehouse in order to keep inventory levels low as management gains more industry knowledge and increases
its competencies in inventory management. Shared warehousing is also cost-effective, as Mindshaker will pay only for the space and services it needs. Additionally, a
comprehensive line-up of value-added services will allow us to outsource as much of our logistics operation as necessary. Shared warehousing is especially attractive to
Mindshaker due to the ability to distribute goods from multiple locations as our market penetration and sales increase, as well as offer services to deal with our
changing distribution needs.

USCO will receive, inventory, pick, pack, and ship all Mindshaker products. This outsourcing will allow Mindshaker management to concentrate on our core competency
and rest assured that the distribution of our products is in good hands.
Mindshaker will use the Lenexa, Kansas USCO facility due to its central location. This will allow for 2-3 day delivery to all of our customers. All products will be delivered
by UPS ground service.

Product orders will be determined by the booklists of Mindshaker's target schools along with management's estimates of market penetration. The orders will be
electronically transferred to the appropriate publisher and freight shipped to USCO Logistics where the product will be held in inventory. Individual customer orders will
be placed through the Mindshaker web site.. processed by the company database, and then electronically transferred to USCO Logistics, where the order will be filled
and delivered directly to the customer. Costs for USCO's value added services are based on the volume of product that will be processed, as well as the type of services
we utilize and the inventory levels that are stored. Initially, we will need only basic handling and packaging services. Our inventory levels will be high at the start of
each semester, until Mindshaker is able to more accurately determine market penetration and demand. Initially, the costs for procurement, inventory, handling, and
shipping are approximately $6 per transaction. We expect these costs to decrease in the future through bulk shipping discounts and volume induced reductions in
handling charges.

Services and Pricing

Mindshaker is proud to offer a guaranteed 14-day return for all products that are in resale condition. Mindshaker will not offer a book buy-back service-, however, the
web site will feature tips on selling books and information on links to web-based companies that offer this service. A flat delivery charge based on the dollar amount of
the order will be assessed to all customers. This reduces the hassle of determining shipping rates based on the total weight of each order. The normal delivery charge
for textbook orders will be $4.95. Mindshaker will provide a toll free customer service number during business hours, to assist customers with web site usage and order
tracking, and to answer questions regarding our products. A full-time general administrator will be hired to monitor the day-to-day operations of Mindshaker. This
individual will be responsible for direct customer communications via email and telephone, data management, document acquisition and verification, customer service,
and other duties as assigned. (See Exhibit 2)

Mindshaker
Products & Services
Product Description
Mindshaker will deliver two categories of products - textbooks and digital learning tools - and a knowledge sharing service via the company's web site. The site has the
functionality to store student and professor information by a unique user id to facilitate order processing and targeted marketing while minimizing redundant data
entry. Users will have the ability to shop online for a variety of innovative educational products from textbooks to multimedia products, as well as visit the chat rooms
and post information on the site bulletin boards. Management has already begun obtaining booklists from the initial targeted universities and assembling a catalog of
multimedia educational products including:

 Case studies from Darden, Harvard, Stanford, Kenan-Flagler and other leading Universities;
 Short articles targeted to specific topics written by leading professors;
 Traditional multimedia educational products such as videos and CD ROMs,
 Simulation games that will be available for download or Internet access from mindshaker.com.

For students, Mindshaker will provide a central service where they can view syllabi for the classes they have selected, and determine the books and additional course
materials required by their professors. The students can then order all of their required textbooks and supplemental learning materials on line. Simulation games and
other digital materials purchased by the professor will be available for download by students using a password issued to the professor at the time of purchase.

For professors, Mindshaker consolidates a wide array of educational materials in one convenient spot where the materials can be reviewed and purchased with
convenient billing to the universities. Mindshaker will also provide royalties to any professor who contributes a paper or game to be sold on the site. The ability to
review syllabi of other professors in one convenient location and exchange professional information in subject specific chat rooms will facilitate networking with
colleagues and the comparison of teaching methodologies, educational materials and research.

Key Product & Service Benefits

Mindshaker management believes that the textbook and educational products industry is particularly suited to online retailing for several reasons. An online seller has
virtually unlimited online "shelf space" and can offer customers a vast selection through an efficient search and retrieval interface. In addition, by serving a much larger
market than traditional "brick and mortar" bookstores, an online seller can capitalize on centralized distribution and operations and thus realize significant cost
advantages. Furthermore, textbooks are a commodity item that can be selected and sampled effectively through online abstracts, excerpts, and reviews and have
consistent high quality across retailers.

Real benefits for educators and students (and significant first mover advantages) are present in the value-added materials. Currently, other than conferences and
professional meetings, there is no one place where educators can exchange basic course materials and techniques. The average educator is overwhelmed with
hundreds of sources for books and other educational materials. Mindshaker will provide one convenient location to review materials and exchange ideas. The
simulations, videos, games and other multimedia products can also be easily demonstrated through our web interface.

Mindshaker intends to use its technology to deliver outstanding service and to achieve the significant economies inherent in the online store model. Mindshaker's
strategy is to build strong brand recognition, customer loyalty and supplier relationships, while utilizing an economic model that is superior to the capital and real estate
intensive traditional college bookstore.

Anticipated Expansion
Mindshaker will begin its operations by focusing on 20 of the most prestigious graduate and professional schools - representing all areas of graduate study - in the
country (see Exhibit 2 for target schools and enrollment levels). This initial market consists of 131,100 students and over 13,000 faculty. Mindshaker expects to expand
its model to include 150 schools within five years. At that time, our market will consist of 651,100 students and over 65,000 faculty. Mindshaker will also continue to
expand its product line to include the latest in innovative educational tools. As Mindshaker increases its product line and its market penetration in the graduate
education sector, economies of scale and the company's online business model will help reduce operating costs and increase profit margins. Mindshaker also plans to
maintain a comprehensive database of customer information and preferences in order to customize our services to each individual, decipher customer interest patterns,
and cross sell related products to these customers.

Competitor Expansion
Fortunately for Mindshaker, the "brick and mortar" status of college bookstores restricts product expansion without incurring significant capital expenditures.
Additionally, the majority of existing college bookstores are either operated as non-profit entities, or they are owned by their own institutions and face significant
capacity constraints. It is also relevant to note that the technical expertise that is required to understand the newest innovations in education is not typically available
to these entities. It is critical to consider the online competitors in this industry. While management is unaware of another company that offers the same range of
products and services to graduate students and educators as Mindshaker plans to offer, we anticipate that our online textbook competitors will begin to expand their
services and market scope within the next year.
Mindshaker management is aware of significant marketing and infrastructure investments that have been made by VarsityBooks.com and Efollet.com in an effort to
increase market penetration and build brand equity. These expenditures have been primarily focused on marketing and advertising efforts. Both companies have spent
a great deal of money on television and radio advertising. Mindshaker does not feel that these are the best avenues to reach the target market. In addition, both of
these companies are focusing expansion efforts on textbook sales to undergraduate students. Mindshaker will focus its efforts on providing "one stop shopping" for
graduate students and educators. Management believes that the Mindshaker market will respond to more direct marketing and sales efforts such as direct mail, trade
shows, and campus newspaper advertising, rather than mass market campaigns.

Mindshaker will compete with college and online bookstores not by attempting to comer their market, but rather by focusing on textbooks as well as on related
educational materials and services that represent the trend in educational innovation. Mindshaker will provide a convenient and customized online graduate
marketplace that offers traditional and innovative educational products and services.

Mindshaker
Operations
Mindshaker began operations in October of 1998 with a simple web site designed to welcome customers to our online store and provide basic information about
Mindshaker's merchandise and the ordering and fulfillment processes. Initial programming of the web site including: basic HTML and graphics design and programming
of forms processing scripts to allow the customer to submit an order was done by the current management team. The next challenges for Mindshaker will be to:

1. design, develop and maintain a fully functional dynamic web site capable of managing the transaction process from initial customer contact through order
processing;
2. design and develop or purchase tutorial aids (e.g. Accounting: double entry bookkeeping tutorial, marketable securities exercise, pooling vs. purchase quiz
etc.);
3. post online syllabi in conjunction with university course listings; and,
4. make multimedia learning tools available for demo and sale.

This web site will form the core of Mindshaker's business and will provide many of the cost advantages necessary to compete with traditional and Internet booksellers.
Mindshaker will match other online book retailers and provide value added enhancements customized according to each school's requirements, leveraging school
relationships to differentiate the service and create switching costs for users. Management expects initial technological development costs of $162,000 and ongoing
monthly costs of approximately $4,500. Basic Description of the Mindshaker Ordering System

A database will store Mindshaker's product catalog and track customer and order data. Customers will be able to follow a logical progression, which begins when they
select their school. Once a school has been selected, Mindshaker displays the courses available and a list of books for each class. The student can review prices,
abstracts of the books, and book reviews before deciding whether to add the book to their shopping cart
(See http://www.amazon.com http://www.motleyfool.com
 or   to test this proven electronic commerce transaction model.)
In addition, students may choose the option of purchasing a bundle of required texts according to the core curriculum of a given program. At checkout, the buyer is
asked for a customer ID number or, in the case of a first transaction, the customer will be asked to provide billing and credit card information and a unique ID number
will be issued to them. The site will note each book ordered and at checkout, display the list of books ordered and provide an order total. Once the customer enters a
valid credit card and hits "send", the customer will receive a confirmation, and the order will be electronically sent to USCO for processing.

Mindshaker will hire a full-time database manager and a full-time data entry clerk to update the databases with booklists, syllabi, customer information, and other
related data. The database manager will receive $50,000 in compensation and the data entry clerk will receive $20,000. (See Exhibit 2)

Security
All transactions from the moment a customer enters data about themselves will be conducted via a secure link from client browser to Mindshaker server in order to
safeguard valuable customer data and credit card information. Orders will be automatically transmitted to USCO for fulfillment via encrypted email. All of the
technologies upon which the new web site will be built are mature and are currently being employed by dozens of other businesses from small start-up companies to
Fortune 500 companies.

Fulfillment
USCO will receive an encrypted email each time a customer makes an order. USCO employees will read it and process the order by picking the product, packing, and
shipping it directly to the customer. The Mindshaker web site, in conjunction with a partnering financial institution will be responsible for processing the credit card
transaction. If a bad credit card is received, the customer will be called and asked to supply another credit card. USCO currently has the technology required (PC and
128 bit encryption web browser) necessary to handle this process. They currently handle email orders for other clients as well.

Implementation and Ongoing Maintenance 

1. Web and commerce site design and logo design

Jan Muscarefla of Muscarella Designs will design all of Mindshaker's graphics, which will populate the web site. Actual programming of the HTML and scripts
for the web content as well as the backend databases will be handled under the management of Alice Ward of Interpath's Professional Services Division
(PSD), formerly Trinet. The PSD has extensive electronic commerce experience.
2. Software, hardware and hosting selection
The web site will be hosted at Interpath Communications in Cary, North Carolina. Interpath maintains high speed Web servers and dedicated high speed
datalinks. Interpath provides 24 hour monitoring of customer servers and performs required repairs to insure system availability. This service is provided
as part of Mindshaker's hosting agreement with Interpath and means that Mindshaker will maintain no sophisticated computer equipment or data lines. All
of the required systems will be housed at Interpath's facilities. Because Interpath provides services for multiple clients, they ensure that their systems are
state of the art and that high-speed access is always available.

The system will run on a Sun Unix platform at Interpath and will utilize the following proven software applications:

o Dedicated Sun UNIX platform for web front-end processing

o Interworld E-commerce software platform
o Dedicated Sun UNIX platform for database processing
o Oracle database backend
o Standard backups and operational needs
o Capability to support 1,000 concurrent sessions
3. System implementation, testing and ongoing system maintenance
Interpath will implement the system and handle all ongoing maintenance as stipulated in the contract. It is anticipated that maintenance will not be more
than 5 hours per month. All maintenance will require prior authorization by Mindshaker and will be paid on an hourly basis.
Scalability of Mindshaker
Mindshaker is a virtual business. The software we have chosen is scalable beyond our anticipated requirements and can be expanded to almost any level as necessary.
Interpath can also provide greater server space and bandwidth (the two key elements to our customer interface and processing software) on demand for negligible
additional costs.

Mindshaker
Management and Board of Directors
The combined talent, unique experiences, and commitment of the four partners Elise Brown, Jonathan Hudson, Shannon Springston, and John Stump provide a solid
foundation for Mindshaker (See management biographies in Exhibit 4). As graduate students they have a unique insight into the needs and wants of fellow graduate
and professional students across the country.

The four partners will have equal equity stakes in Mindshaker. While the majority of decision-making will be made collectively among the partners and board of
directors, the CEO will ultimately be responsible for the leadership and obligations of the firm. The partners will each maintain full time positions in other companies.
Partners will work full time during the summer of 1999. Beginning in September of 1999, partners will contribute up to ten hours a week on an as needed basis.

John Stump will hold the position of Chief Executive Officer. He will be in charge of web site development and management, and business development. Elise Brown will
be the Chief Financial Officer. She will be responsible for monitoring financial results, identifying key strategic ventures, and maintaining cost information. Jonathan
Hudson will be the Chief Operating Officer. He will be responsible for supply chain and inventory management. Shannon Springston will be the Director of Sales and
Marketing. She will be responsible for customer service and sales and marketing force management.

The Mindshaker Board of Directors consists of six highly distinguished members of the academic and business community. These individuals are critical to the success
of Mindshaker:

 Michael Fox - General Manager, Information Services Division - Interpath Communications

 Dr. Matthew Heric - Chairman and CEO, International Association of Virtual Organizations
 Dr. Jay Klompmaker - Professor (Marketing-Pricing), Kenan-Flagler Business School
 Jill Newbold - President, Newbold Marketing Solutions
 Dr. Albert Segars - Professor (Information Technology), Kenan-Flagler Business School

(See Exhibit 5 for complete biographies of Mindshaker Board of Directors)

Company Structure and Ownership

Mindshaker will be Incorporated as a limited liability corporation within the state of Delaware. One million shares will be authorized. Initial distribution of the shares will
be John Stump 50,000 shares, Elise Brown 50,000 shares, Shannon Springston 50,000 shares, and Jonathan Hudson 50,000 shares. Options will be made available to
management for future incentives.

Mindshaker
Financial Projections and Funding
Financial Overview
Based on this business plan, management anticipates sales of $2.2 million to $22.0 million from 1999 - 2003. EBITDA in the year 2003 is expected to reach $3.2
million. The table below illustrates management estimates of the Company's performance from 1999 - 2003.

1999 2000 2001 2002 2003

Net Revenues 2,164,837 10,173,327 14,586,852 18,293,956 22,001,060
% Growth   369.9% 43.4% 25.4% 20.3%
Gross Profit 93,302 1,726,134 3,350,396 4,439,720 5,543,547
As a % of Net Revenues 4.3% 17.0% 23.0% 24.3% 25.2%
EBITDA (228,416) 513,967 1,734,754 2,436,794 3,164,538
As a % of Net Revenues -10.6% 5.1% 11.9% 13.3% 14.4%
Net Income (229,583) 251,582 908,586 1,347,443 1,838,303
As a % of Net Revenues -10.6% 2.5% 6.2% 7.4% 8.4%

The Company will begin operations by targeting the 20 graduate and professional schools. Management plans to add 55 schools in the year 2000 and 25 schools
annually over the next three years. By the year 2003, management expects to have an established presence in 150 colleges and universities throughout the country. In
order to avoid overextending the business and achieving the best "bang for our buck", we have limited the number of schools added in 2001-2003. Management
believes that if we remain focused on 150 schools we can capture a greater share of the market. Other schools will be added earlier if the business can support further
expansion.

Market penetration rates are based on the assumption that the Company can capture five percent of its target market in the first year. Over the next four years,
market penetration rates are estimated to be twelve percent and ten percent in existing schools and new schools, respectively.
Because of the nature of the business, expenses are driven by transaction costs as opposed to volume. The chart below depicts cost of goods sold in terms of product
acquisition, distribution, and technology expenses.

1999 2000 2001 2002 2003

Product Expense 1,696,114 8,024,443 10,653,464 13,136,792 15,612,693
Distribution Expense 75,154 365,950 526,192 660,644 788,021
Technology Expense 300,267 56,800 56,800 56,800 56,800
Total COGS 2,071,535 8,447,193 11,236,456 13,854,236 16,457,514

Product expense is comprised of the direct cost of textbooks and study aids, as well as procurement costs required to deliver the products to Mindshaker's warehouse.
Gross margin improvement from 1999 to 2000 will result from a full year of operations, improved inventory management, and the elimination of one-time start-up
costs. The gross margin increase from 17.0 percent in 2000 to 25.2 percent in 2003 is due to improvement in inventory management through a reduction in safety
stock from 20 percent over anticipated market share in 1999 to two percent over anticipated market share in 2003.

EBITDA margins are forecast to improve due to the increase in gross margins and the constant level of operating expenses from 1999 - 2003. The major component of
operating expenses is related to product sales and includes commission compensation for the on-campus and regional representatives. Advertising expenses are
included in product selling expenses. The chart below provides a break down of operating expenses from 1999 - 2003.

1999 2000 2001 2002 2003

Selling 227,979 996,691 1,391,467 1,770,050 2,1318,633
General 69,417 169,100 177,800 186,500 194,000
Administrative 25,490 49,176 49,176 49,176 49,176
Total Operating Exp. 322,885 1,214,967 1,618,443 2,005,726 2,381,809

The electronic commerce aspect of the business translates to minimal capital expenditure requirements for Mindshaker. Management expects to lease warehouse space
as well as office space. Technical equipment on hand will be sufficient to support Mindshaker through the start-up phase.

Use of Funds
Management intends to support the business launch with an aggregate investment from the four owners of $20,000. Presently, management is seeking $500,000 in
venture capital investment to fund the start-up costs and working capital needed to begin operations. This investment represents the first round of venture capital
funding management intends to seek. During the second year, management anticipates adding a line of credit to the capital structure secured by the company's
receivables and inventory. Management is likely to seek additional funding over the next several years, but has decided to wait until the need arises rather than hold
the money on Mindshaker's balance sheet. Based on a valuation after five years assuming the initial investment grows at a 50 percent hurdle rate, investors can expect
to own approximately 23 percent of Mindshaker with management owning the remaining portion, This translates to an internal rate of return on invested capital of 66
percent. Please see Exhibit 6 for a valuation analysis supporting these figures.

Valuation
Management estimates the current market value of equity for Mindshaker to be approximately $18.5 million. This valuation is based on applying a conservative multiple
of six times to EBITDA in 2003. In determining the valuation, management utilized several methodologies and performed sensitivity analyses to arrive at a reasonable
valuation for the company. Please see Exhibit 6 for more information on the valuation and investor ownership.

Exit Strategies
Management anticipates two possible exit strategies for the owners of Mindshaker. Management feels that the most realistic option is to sell out to a competitor in
educational services or alternative e-commerce business (e.g. Amazon.com or Barnes & Noble) after Mindshaker expands nationally. Alternatively, management and
investors may choose to take advantage of the IPO market and take the company public after five years. This strategy remains a possibility due to the current wave of
Internet IPOs. However, it appears unlikely Mindshaker will have realized enough growth to achieve a size suitable for accessing public markets. This scenario depends
on market factors.

Mindshaker
Initial Programs
Exhibit 1 - Mindshaker's Initial 20 Graduate Programs

School Graduate Professional Enrollment

Harvard 8,200
Stanford 7,500
Yale 5,500
Northwestern 6,100
Duke University 3,500
University of California at Los Angeles 9,700
University of North Carolina at Chapel Hill 8,700
University of Chicago 6,300
Massachusetts Institute of Technology 5,500
University of Michigan at Ann Arbor 0,200
Vanderbilt University 4,400
John's Hopkins University 1,300
Cornell University 5,900
University of Pennsylvania 10,400
University of Texas at Austin 11,000
Princeton University 2,100
Carnegie Mellon University 2,700
University of Washington 9,400
California University of Technology 1,000
University of California at Berkeley 8,700
Total 131,100

Sources: US News & World Report and University Web sites

Mindshaker
Employees
Exhibit 2 - Descriptions of Mindshaker employees

On-campus Representatives

Campus representatives will be hired for each school and will serve three functions: communicate marketing, sales and other business related information about the
school to Mindshaker management, act as a physical force on campus to perform duties such as book list acquisition, marketing materials distribution and acquisition of
target market distribution lists; and serve as the facilitator of on-campus marketing programs such as presentations to professors, advertisers and students. Campus
reps will receive a one per cent commission on their school's sales and will report directly to their Regional Marketing and Sales Representative.

Regional Marketing and Sale Representatives

Five Regional Marketing and Sale Representatives will work part-time from their homes. They will be responsible for coordinating and managing all marketing and sales
efforts at their assigned schools. The rep will also be responsible for managing all on-campus representatives. Consequently, the reps will be required to travel and will
be allocated a travel budget. The five reps will report to the Director of Marketing and Sales and will each be paid an annual base salary of $10,000 plus two per cent of
their assigned schools' sales.

Database Manager (DM)

The DM will perform the traditional functions of a database administrator such as database design, security, update control, and table structure integrity, The DM will be
located at Mindshaker's "incubator" office and have a high-speed line to Mindshaker's server at Interpath. The DM will work closely with Interpath employees and serve
as a technical liaison between Mindshaker management and Interpath. The DM will report directly to the CEO and will receive annual compensation of $50,000.

Data Entry Clerk

One data entry clerk will exist and will be responsible for coordinating and performing all activities required to load information into Mindshaker's database, The data
entry clerk and the DM will work together on data entry tasks. The position will require information management, organization, typing and computer skills. The data
entry clerk will report to the Database Manager and will receive annual compensation of $20,000.

Relationship Manager

One Relationship Manager (RM) will exist and be responsible for managing all corporate and academic relationships with entities such as publishers, educational
material vendors, and school administrators and faculty. The RM will be located at Mindshaker's office. The RM will report to the CEO and will receive annual
compensation of $40,000.

General Administrator

The General Administrator will be located at Mindshaker's office and will be responsible for handling customer inquiries, complaints, special requests, etc. The position
will require excellent communication and Computer skills, and a working knowledge of Mindshaker's entire operations. Mindshaker will initially hire one GA; however,
actual sales volume levels will determine ultimately the number of GAs. The GA will report to the Chief Operating Officer and will receive annual compensation of
$30,000.

Mindshaker
Industry Analysis
Exhibit 3 - Analysis of e-commerce educational tools industry using Porter's five forces

Introduction

Mindshaker is creating a new industry by establishing its business of one-stop e-commerce shopping for educational tools. Although the new industry overlaps with
existing industries such as textbook sales and general e-commerce, management believes customers view Mindshaker as a new value-proposition and, when analyzed
in the context of Porter's five forces, Mindshaker is an attractive new business venture worthy of capital investment.

Internal Rivalry

Mindshaker's products and services are in the early stage of the product life cycle with no direct competing products and services. Thus, internal industry rivalry is
weak, As other e-commerce textbook providers (see Exhibit 11) learn of Mindshaker, they will most likely change their product and service offerings and cause internal
rivalry to increase. This will make entry barriers critical, which are discussed in the next section.

Potential Entrants

Potential entrants include those companies mentioned in Exhibit II as well as any new companies that desire to enter the e-commerce educational tools industry.
Because entry is relatively easy and switching costs are nominal, entry barriers will be critical for success, Mindshaker's strategy is to use its first mover position to
erect the two key barriers to entry in the industry, brand equity and strong stakeholder relationships. Additional barriers to entry include portal agreements and
possibly exclusive supplier contracts.

Substitutes

Substitute products and services include tutors, learning centers, college bookstores and other methods for acquiring educational tools. Mindshaker's focus is not to
create different products and compete with substitute products, but rather improve the value delivered to the customer by creating a one-stop virtual shopping
alternative.

Suppliers

The power of suppliers varies among the type of educational too) sold. Textbook and study guide suppliers have high power since they are the only source of the
textbook. However, pricing discounts are fairly standard and all purchasers of textbooks are in the same position as each other. Suppliers of simulation games are few
and fragmented. However, few purchasers also exist, reducing supplier power to a non -threatening level. Lastly, suppliers of CD-ROM interactive tools are numerous
and have relatively small power among consumers. As the CD-ROM market further matures, Mindshaker should be able to further negotiate better terms with these
suppliers.

Buyers

The two primary buyers of Mindshaker's products and services are graduate professors and students. Their power is relatively high initially since multiple ways exist to
purchase educational tools and switching costs are low, Mindshaker's objective is to attract these buyers to our services and get them accustomed to using our site.
Mindshaker will introduce services and programs that increase switching costs. These services will be similar to the way airlines use frequent flyer programs to try and
gain loyalty. Mindshaker also plans to train its customers to become "dependent" on our service. Ali these tactics aim to decrease buyer power.

Mindshaker
Management Biographies
Exhibit 4 - Management Biographies

John Stump, Chief Executive Officer

Mr. Stump is a 1999 Kenan-Flagler Business School MBA Candidate. Prior to business school he served as the Director of Advertising for La file and developed a
nationwide specifications directory and on line database for landscape architects. Immediately prior to business school, John managed the Internet services program for
Autometric, Inc., growing the program from simple web development to the development of networked databases and electronic commerce applications. In the
summer of 1998, John worked for Pace Financial Network, an Internet-based financial services company. John currently serves as the President of the International
Association of Virtual Organizations. John is highly technical and possesses expertise in web page development, database management, sales, and virtual organizations.
Shannon Springston, Director of Marketing and Communications

Ms. Springston is a 1999 Kenan-Flagler Business School MBA Candidate. Prior to business school she spent two years as an equity research analyst, portfolio manager,
and equity trader with Firstar Bank of Minnesota. Shannon then went on to spend 18 months as the Director of Finance and Operations with a private foundation. In the
summer of 1998, Shannon interned as an associate with Deloitte Consulting Group, Shannon offers a strong background of accounting, financial management, human
resources, and operational management.

Jonathan Hudson, Chief Operating Officer

Mr. Hudson is a third-year graduate student who will receive his Master of Business Administration and Master of Healthcare Administration from the University of North
Carolina at Chapel Hill in May 1999. Last summer he worked for Bank of America's health care investment banking group in Charlotte, NC. Prior to graduate school, Mr.
Hudson spent five years with Andersen Consulting's health management group. During this time, he focused primarily on strategy development, process reengineering
and information systems design work for inpatient hospitals and large commercial health insurers. Mr. Hudson offers strong skills in strategy development, operations
design and finance.

Elise Brown, Chief Financial Officer

Ms. Brown is a 1999 Kenan-Flagler Business School MBA Candidate. She began her career in investment banking with Bowles Hollowell Conner & Co. While with BHC,
Ms. Brown specialized in mergers and acquisitions advisory services and worked extensively with venture capital groups. She also had significant experience analyzing
the operation of clients companies. This past summer, Ms. Brown joined First Union in the Healthcare Corporate Finance Group where she specialized in corporate
finance advisory services for healthcare clients. Ms. Brown offers a solid back ground in financial analysis, valuation, and capital structure decisions.

Mindshaker
Board CV Summaries
Exhibit 5 - Board of Directors' CV Summaries

Michael K. Fox

General Manager, Information Services Division - Interpath Communications

Leveraging 15 years of experience in high technology, Michael Fox is responsible for overseeing the product development, management and delivery of Interpath's
computing, application and IP products and services.

Prior to joining Interpath, Fox was the Director of Internet Services at MCNC, a nationally recognized information technologies and supercomputing research and
services company located in Research Triangle Park, N.C. While with MCNC, Fox was responsible for developing the commercial hosting and Internet services business
unit and managing the enterprise IT function.

Fox holds a B.S. in Business Administration (Decision Sciences) from East Carolina University, a Certificate of Computer Sciences from N.C. State University and has
completed graduate work in Information Technology Management

Dr. Matthew Heric

Dr. Matthew Heric is a private investor living in Durham, NC. He also is the CEO and Chairman of the International Association of Virtual Organizations, Inc. (Durham,
NC). In addition, Dr. Heric is a board member and corporate executive of the Frischer-Dambra Corp. (Arlington, VA). Separately, he is a consultant and advisor to
educational and US intelligence organizations. Previously, Dr. Heric worked for Autometric, Inc. (Springfield, VA) as a Chief Scientist and manager focusing on US
reconnaissance and related science and technology programs. He earned his doctorate in educational research and applied statistics from Virginia Tech.

Jay Klompmaker

Professor of Business Administration(Marketing), Kenan-Flagler Business School

Jay brings to his academic career several years of industry experience. After earning a B.S. in metallurgical engineering from the Illinois Institute of Technology, he
spent six years in sales engineering, five with Wyman-Gordon Company and one with Dynatech Corporation. During this period Jay earned his M.B.A. from the
University of Chicago. He came to UNC in January 1972, directly from the Ph.D. program at the University of Michigan.

Jay serves on the board of directors of Harriet & Henderson Yarns, Inc.; Scott, Madden & Associates; Target Marketing Systems; and the L.P. Thebault Company. He is
a faculty associate with Hamilton Consultants.

Based on his industrial sales experience, Jay co-wrote the book Professional Selling, now in its sixth edition. The results of Jay's academic research have appeared in
numerous academic journals, including the Harvard Business Review.

Jill Newbold President, Newbold Marketing Solutions: a consulting company specializing in Internet marketing strategy.

Jill received a Bachelors Degree from the University of Michigan in 1985 and an MBA from Kenan-Flagler Business School in 1990. She has extensive experience in
advertising, publishing, and internet development and sales.
Jill's current client list includes Exploris, WellPath Community Health Plans, the Women's Foodservice Forum, University Ford/Isuzu and The Chair Company. Her
company offers services ranging from development of Internet marketing strategy, to conducting RFPs (request for proposals) and Internet site development project
management.

Dr. Albert H. Segars

Associate Professor, Kenan-Flagler Business School

Al holds a Bachelors degree in Computer/Electrical Engineering and a Masters of Business Administration from the University of North Carolina at Charlotte as well as a
Ph.D. in Management Information Systems from the University of South Carolina. Before entering academe, Dr. Segars worked in industry as Senior
Telecommunications Specialist and Director of Strategic IT Planning.

Dr. Segars' areas of teaching and research interest include strategic planning, enterprise resource planning, organizational transformation through information
technologies (IT), telecommunications management, and methodological approaches for studying the impact of IT on people, organizations, and industries. He has
published widely in leading journals such as MIS Quarterly, Information Systems Research, Decision Sciences, Information and Management, Database, Long Range
Planning, The Journal of Strategic Information Systems, and OMEGA.

Dr. Segar's current research in the area of Electronic Commerce and Global Supply Chain Management has been funded by the Carnegie Bosch Institute as well as
Andersen Consulting.

Mindshaker
Valuation Analysis
MINDSHAKER VALUATION ANALYSIS

EXHIBIT 6

Cost of Capital
Risk Free Rate 5.50%
Market Premium 7.20%
Beta 2.675
Cost of Equity 24.76%

Assumptions:
Growth Rate 3.0%

Betas of Public Comps Ticker Beta Price/ Sales

Netscape NSCP 1.6 21.41
EBay EBAY 3.67 3,305.79
UBid UBID 6.37 69,423.75
Amazon.com AMZN 1.68 143.38
MEDIAN 2.675 1,724.59

DCF Analysis 1999 2000 2001 2002 2003 TV

Net Income (229,583) 251,582 908,586 1,347,443 1,838,303
Dep & Amort 1,167 2,800 2,800 2,800 2,800
CapEx - - - - -
Working Capital 277,484 842,116 655,845 564,531 505,069
Unlevered FCF (505,900) (587,734) 255,541 785,712 1,336,034 6,324,057
Future Value (631,161) (914,811) 496,234 1,903,551 4,038,260 2,092,276
NPV 99-03 114,826
NPV After Year 5 2,092,276
Enterprise Value 2,207,102
Less: Net Debt -
Equity Value 2,207,102

Public Comparables Sales Price/Sales Enterprise Value Net Debt Equity Val
Netscape 21.41
EBay 3305.79
UBid 69423.75
Amazon.com 143.38
Median 1724.585
Normalized Median 82.395
Netscape Multiple 21.41
Mindshaker 2,164,837 3,733,445,090 488,475 3,732,9516,615

Venture Capital Valuation Median Normalized Median Standard P/E Ratio

Sales in Year 5 22,001,060 22,001,060 22,001,060
Price / Sales Multiple 1,724.59 82.40 21.41
Enterprise Value 37,942,698,308 1,812,777,351 471,042,698
Less: Net Debt 488,475 488,475 488,475
Equity Value 37,942,209,833 1,812,288,875 470,554,222
Hurdle Rate 60% 60% 60%
Number of Years 5 5 5
Discounted TV 3,618,451,103 172,833,335 44,875,548
Initial VC Investment 500,000 500,000 500,000
VC Ownership % 0.0% 0.3% 1.1%

Standard Ratio Normalized Median Comps Median

45% 73,412.441 45% 282,740,104 45% 5,919,467,089
50% 61,965,988 50% 238,655,325 50% 4,996,504,999
55% 52,595,814 55% 202,567,111 55% 4,240,959,554
60% 44,875,548 60% 172,833,335 60% 3,618,451,103
65% 38.476~003 65% 149,186,180 65% 3,102,436,494
70% 33,140,959 70% 127,638,831 70% 2,672,255,715
75% 28,669,455 75% 110,417,315 75% 2,311,704,818

Valuation Based on EBITDA Multiple

2003 EBITDA 3,164,538
EBITDA Multiple
Based on EBITDA
6.00
multiples of various
industries
Enterprise Value 18,987,227
Net Debt 488,475
Equity Value 18,498,751
IRR to Investors 1999 2000 2001 2002 2003 IRR
Based on EBITDA Mult. (500,000) - - - 3,796,875 66%

Mindshaker
Balance Sheets
MINDSHAKER BALANCE SHEETS

EXHIBIT 7

For the Years Ending December 31

1999 2000 2001 2002 2003

ASSETS
Current Assets
Cash - 440,669 1,538,362 1,159,947 362,826
Accounts Receivable 177,932 836,164 1,198,919 1,503,613 1,808,306
Inventory 291,247 1,324,870 1,961,842 2,544,420 3,065,747
Prepaid Expenses & Other 63,700 - - - -
Total Current Assets 532,878 2,601,703 4,699,123 5,207,979 5,236,880
Fixed Assets
Fixed Assets, Gross 14,000 14,000 14,000 14,000 14,000
Less: Accumulated Depreciation 1,167 3,967 6,767 9,567 12,367
Fixed Assets. Net 12,833 10,033 7,233 4,433 1,633
Other Assets
Intangibles 100 100 100 100 100
Other - - - - -
Total Other Assets 100 100 100 100 100
TOTAL ASSETS 545,812 2,611,836 4,706,456 5,212,512 5,238,613
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities
Current Maturities of LTD - - 255,541 785,712 851,302
Accounts Payable 255,395 1,041,435 1,385,317 1,708,057 2,029,009
Accrued Liabilities - - - - -
Other - - - - -
Total Current Liabilities 255,395 1,041,435 1,640,857 2,493,768 2,880,310
Other Noncurrent - - - - -
Long-Term Debt - 798,820 1,637,013 851,302 -
Total Liabilities 255,395 1,840,255 3,277,870 3,345,070 2,880,310
Stockholders' Equity
Common Stock 10,000 10,000 10,000 10,000 10,000
Paid in Capital in Excess of Par 10,000 10,000 10,000 10,000 10,000
Private Equity Investment 500,000 500,000 500,000 500,000 500,000
Retained Earnings (229,583) 251,582 908,586 1,347,443 1,838,303
Treasury Stock - - - - -
Total Stockholders' Equity 290,417 771,582 1,428,586 1,867,443 2,358,303
TOTAL LIAB. & S/E 545,812 2,611,836 4,706,456 5,212,512 5,238,613

Mindshaker
Income Statements
MINDSHAKER INCOME STATEMENTS

EXHIBIT 8

For the Years Ending December 31,

1999 2000 2001 2002 2003

Amount % Amount % Amount % Amount % Amount %
2,164,8 100.0 10,173,3 100.0 14,586,8 100.0 18,293,9 100.0 22,001,0 100.0
Net Revenues
37 % 27 % 52 % 56 % 60 %
2,071,5 95.7 8,447,19 83.0 11,236,4 77.0 13,854,2 75.7 16,457,5
Cost of Goods Sold 74.8%
35 % 3 % 56 % 36 % 14
1,726,13 17.0 3,350,39 23.0 4,439,72 24.3 5,543,54
Gross Profit 93,302 4.3% 25.2%
4 % 6 % 0 % 7
14.9 1,214,96 11.9 1,618,44 11.1 2,005,72 11.0 2,381,80
Operating Expenses 322,885 10.8%
% 7 % 3 % 6 % 9
-
(229,58 1,731,95 11.9 2,433,99 13.3 3,161,73
Operating Income 10.6 511,167 5.0% 14.4%
3) 4 % 4 % 8
%
Other
- 0.0% - 0.0% - 0.0% - 0.0% - 0.0%
Expenses/(income)
-
(229,58 1,731,95 11.9 2,433,99 13.3 3,161,73
EBIT 10.6 511,167 5.0% 14.4%
3) 4 % 4 % 8
%
Interest Expense - 0.0% 91,864 0.9% 217,644 1.5% 188,257 1.0% 97,900 0.4%
-
(229,58 1,514,31 10.4 2,245,73 12.3 3,063,83
EBT 10.6 419,303 4.1% 13.9%
3) 0 % 8 % 8
%
1,225,53
Taxes - 0.0% 167,721 1.6% 605,724 4.2% 898,295 4.9% 5.6%
5
-
(229,58 1,347,44 1,838,30
Net Income 10.6 251,582 2.5% 908,586 6.2% 7.4% 8.4%
3) 3 3
%
-
(228,41 1,734,75 11.9 2,436,79 13.3 3,164,53
EBITDA 10.6 513,967 5.1% 14.4%
6) 4 % 4 % 8
%
Depreciation &
1,167 2,800 2,800 2,800 2,800
Amort

MINDSHAKER STATEMENTS OF CASHFLOWS

EXHIBIT 9

For the Years Ending December 31,

 1999 2000 2001 2002 2003
Net Income (229,583) 251,582 908,586 1,347,443 1,838,303
+Dep. & Amort. 1,167 2,800 2,800 2,800 2,800
+Change in Other Assets (100) - - - -
+Change in Noncurrent Liabs. - - - - -
-Changes in WC (277,484) (842,116) (655,845) (564,531) (505,069)
Cashflow Avail. For Debt (506,000) (587,734) 255,541 785,712 1,336,034

Mindshaker
Competitor Analysis
Exhibit 11 - Competitor Analysis - Textbook sales

Geographic
Competitor Products/Service Started Strengths Weaknesses
Coverage
- Brand equity
- Not education
- Capital raising
focused
- Portal
United States Books, Video, - Minimal user
Amazon.com 1997 agreements
and Europe Music customization
- Primary
- Limited textbook
ecommerce
selection
provider
- Use wholesaler;
- First mover limits book
- Use of wholesaler selection
60 August - reduces costs and - Minimal
Varsitybooks.com College textbooks
universities 1998 eliminates customization
inventory - Focus on
management undergraduate
market
- Unappealing web
- Incentive design
California September
Bigwords.com College textbooks programs - Limited schools
universities 1998
- Book buyback - Inefficient search
capability
- Limited to schools
Affiliated with
500+ January where it has
Efollett.com College textbooks largest campus
universities 1999 bookstores
bookstore chain
- No customization

Mindshaker.com will create a new industry and define new value-added services for college students and professors