December 23, 2004 To: Elionara Shok; Business Tax Section Fr: Daniel Schulman; DAS WebGuides Rf:

Business Classification for Account #3067661 Overview The Business Tax Section of the City of Oakland has determined first that DAS WebGuides falls within Business/Personal Services (Code E) then Professional/Semi-Professional Services (Code F). Neither of these classifications fit the nature of the business which should properly by classified as a media company (Code T). Nature of the Business DAS WebGuides produces and manages several informational web sites including: Vietnamese Restaurants - a directory of Vietnamese Restaurants located at http://www.vietnamese-restaurants.com; Topaz Guide - a directory of restaurants located at http://www.topazguide.com/ Allen's Guide - a directory of residential summer camps located at http://www.allensguide.com; Summer Day Camps - a directory of day summer camps located at http://www.summerdaycamps.com; Camp Resources - articles and a talk forum about summer camps located at http://www.campresources.co.uk; OpenFlix - a directory of movies in the public domain located at http://www.openflix.com; These websites combined serve well over 1 million visitors per year providing them with informative content structured in proprietary ontologies. Sources of Revenue More than half of all revenue derives from third party ad networks that display text link advertising and graphical ads on these sites - there is no direct negotiation with the advertisers or their representatives. These ad networks include Google Adsense (https://www.google.com/adsense/), FastClick (http://www.fastclick.com/), and TribalFusion (http://www.tribalfusion.com). Approximately 35% of revenue derives from paid listings and direct ad sales. We do NOT charge for creation of advertising pieces or send out direct emails. We sell the advertising space surrounding our proprietary content. Just under 15% of revenue derives from affiliate commissions. For example, Amazon pays us a small percentage of any sales generated from a referral from one of the owned websites. Business Classification The Oakland Business Tax Section contends that DAS WebGuides falls within 1987 SIC Major Group 73 Business Services which is defined as This major group includes establishments primarily engaged in rendering

services, not elsewhere classified, to business establishments on a contract or fee basis, such as advertising, credit reporting, collection of claims, mailing, reproduction, stenographic, news syndicates, computer programming, photocopying, duplicating, data processing, services to buildings, and help supply services ... Specifically, subgroup 7319 Advertising Not Classified Elsewhere Establishments primarily engaged in furnishing advertising services, not elsewhere classified, such as aerial advertising, circular and handbill distribution, distribution or delivery of advertising material or samples, and transit advertising ... The problem with this definition is that the Business Tax Office is failing to distinguish between the provision of advertising services and advertising itself. DAS WebGuides does not primarily engage in the preparation of advertising materials, does not distribute advertising materials, or furnish any other other type of paid advertising services. DAS WebGuides is not an advertising agency, is not an advertising broker, is not an advertising consultant, is not a design agency. DAS WebGuides is primarily engaged with the provision of content to its 1 million plus site visitors. DAS WebGuides merely inserts advertising provided to us by third parties around this content. The 2002 NAICS Classifications provide a better guide to understanding Internet businesses than the outdated 1987 SIC Codes. The US Census (http://www.census.gov) within Major Group 516 defines Internet Publishing and Broadcasting (516110) as This industry comprises establishments engaged in publishing and/or broadcasting content on the Internet exclusively. These establishments do not provide traditional (non-Internet) versions of the content that they publish or broadcast. Establishments in this industry provide textual, audio, and/or video content of general or specific interest on the Internet. This definition fits exactly the activities of DAS WebGuides. In mapping the 2002 NAICS codes to the outdated 1987 SIC Codes, the Census (http://www.census.gov/epcd/naics02/N2SIC51.HTM#N516110) puts NAICS 516110 with 2711 Newspapers: Publishing, or Publishing and Printing (Internet newspaper publishing) 2721 Periodicals: Publishing, or Publishing and Printing (Internet periodical publishing) 2731 Books: Publishing, or Publishing and Printing (Internet book publishing) 2741 Miscellaneous Publishing (Miscellaneous Internet publishing) 2771 Greeting Cards (Internet greeting card publishers) 8999 Services, NEC (Internet broadcasting, special interest web sites, entertainment sites, and interactive game sites) Of these 6 codes, DAS WebGuides fits most clearly with 1987 SIC 2741Miscellaneous Publishing defined as

Establishments primarily engaged in miscellaneous publishing activities, not elsewhere classified, whether or not engaged in printing .. . Further Miscellaneous publishing specifically includes Directories: publishing and printing, or publishing only. In sum, DAS WebGuides is a publishing firm within SIC Major Group 27 Printing, Publishing, And Allied Industries which includes among others Newspapers and Periodicals - i.e. media firms Oakland Business Code T.