Momentex LLC Business Plan

Executive Summary
Imagine ... you have been driving along a toll road, and you are thirsty. As you approach a
service area, you consider stopping for a beverage. However, when you think about the time
getting off the highway will add to your trip, you decide to forego the 10-minute detour and to
continue driving, thirst unquenched. ... As you pay your toll, you notice that you have the option
of using the Gulp & Gosm service to purchase a cool beverage, pay for the drink and the toll at
the same time, and have it dispensed to you right at the tollbooth. You have your money in your
hand, and the drinks look refreshing. Just think .. would you buy? Momentex has identified a
significant market opportunity and developed a new service designed to capture this market as
the first mover. The market has a huge global potential... even with only 10 percent of U.S. toll
road users purchasing a beverage, annual revenue opportunities are over $600 million. Gulp &
Gosm, a Momentex service, provides automated beverage ordering, billing and delivery at
tollbooths and other locations where a driver is already engaged in a monetary transaction. This
high-tech beverage distribution system adapts existing technologies to meet the needs
(convenience, speed, safety, capacity, and software interface) of toll road operators and drivers.
Momentex oversees the driver-interface retailing operations while outsourcing some functions,
such as dispenser refilling. Momentex provides public relations and marketing services to
facilitate adoption of Gulp & Go and to increase usage rates, comprehensive customer service,
which creates a feedback loop to ensure continual usage, and systems integration, to design
the service process. The chart below summarizes the Gulp & Go service package. (1)
Momentex develops and manages the tollbooth beverage system, working with toll road
operators and systems integrators (2) Momentex contracts with a wireless data service for
remote audit and inventory control (3) Momentex analyzes data received via the internet and
relays information for beverage management (4) Momentex supervises the out-sourced
beverage management process Market Potential. In a more conservative estimate, based on a
purchase rate of 2%, a beverage can price of $1.25, and the 4.25 billion annual U.S. toll
transactions, annual revenue is estimated at $128 million1. Purchase rate per tollbooth with
Gulp & Go service
Serviceavailability%oftotaltollboothsAnnualRevenuePotential($MM)40%$128$255$510$765$1,
02030%$96$191$383$574$76520%$64$128$255$383$51010%$32$64$128$191$2555%$16$
32$64$96$1285%10%20%30%40%1
Gulp & Go Potential. In addition to the share of the U.S. market Momentex captures as a first
mover, there is significant international expansion potential as well as additional revenue
opportunities from advertising on the dispensers and exclusive contracts with beverage
companies that can garner "rights-fees." Momentex also anticipates that its proprietary
distribution system will provide a platform for other driver-interface retailing opportunities, such
as at the gas pump or parking garage. Profitability and Attractive Cash Flow. With attractive
gross margins and significant volume, Momentex will ensure high profitability by minimizing
operating costs through outsourcing non-core activities. As toll roads operate continuously and
provide a constant flow of drivers, Momentex anticipates that its Gulp & Go business model will

provide consistent and high cash flows. Momentex anticipates annual revenue growth of 342%
(6-year CAGR) and an EBITDA after year 6 of $39.3 million. Income Statement Revenues
Beverage Sales Commissions and Sales Tax Total Revenues Expenses Raw Materials
Operating Expenses Research and Development Total Expenses Operating Profit Taxes Net
Profit 1999 50,465 (11,102) 39,363 12,112 374,939 469,500 854,051 (814,688) 276,994
(537,694) 2000 3,095,518 (681,014) 2,414,504 742,924 4,534,601 400,000 5,677,526
(3,263,022) 1,109,427 (2,153,594) 2001 26,909,900 (5,920,178) 20,989,722 6,458,376
8,939,114 400,000 15,797,490 5,192,231 (1,765,359) 3,426,873 2002 69,860,379 (15,369,283)
54,491,095 16,300,755 9,297,322 400,000 25,998,078 28,493,018 (9,687,626) 18,805,392
2003 77,491,282 (17,048,082) 60,443,200 18,081,299 8,041,672 400,000 26,522,971
33,920,229 (11,532,878) 22,387,351 2004 85,517,164 (18,813,776) 66,703,388 19,954,005
8,417,283 400,000 28,771,288 37,932,100 (12,896,914) 25,035,186 Trends. Momentex has
designed its Gulp & Go service to capitalize upon three key trends: (1) drivers are increasingly
willing to utilize services that provide higher levels of convenience; (2) as toll road operators
become more profit-minded and less bureaucratic, they are searching for new business
opportunities that will both boost their profits and enhance customer satisfaction; and (3) intense
competition amongst beverage companies has led these companies to place an increasing
importance on impulse (single-serving) distribution channels. Value to Customers. Gulp & Go is
attractive to drivers, toll road operators, and beverage companies. Drivers value Gulp & Go's
convenience and time-saving attributes. Gulp & Go enables toll road operators to increase
profitability and customer satisfaction. Momentex expects beverage companies to welcome the
opportunity to increase sales and to gain access to customers without having to develop inhouse knowledge of toll systems. Venture Strategy. Momentex will first secure a demonstration
site at a smaller toll road and then roll out Gulp & Go service on commercially attractive
tollbooth locations throughout the United States. In the medium term, Momentex will expand its
services by developing other Gulp &Go platforms and extend its product range beyond
beverages. Momentex's long-term objectives are to develop additional driver-interface retailing
opportunities by anticipating the advent of various wireless technologies. Management Team.
The Momentex team consists of professionals with experience in financial advisory, strategy,
business development, service process management, and transportation industries. 2
Melissa Chadwick --As President and CFO, Ms. Chadwick focuses on business development,
financing and marketing. She has several years of corporate finance and financial advisory
experience and an MBA from The Wharton School. Zafar Khan -As Chief Executive Officer, Mr.
Khan focuses on business development and operations. He has several years of strategy,
public affairs and industry experience and an MBA from The Wharton School. David Smith -As
Director of Operations, Mr. Smith is actively engaged in developing prototype hardware and
optimizing the service process. He has several years of strategy and process management
experience and will graduate in 1999 with an MBA from The Wharton School. Paul Glaab -As
Director of Channel Development, Mr. Glaab will be responsible for developing political strategy
and gaining footholds within toll agencies. He has 30 years of experience working in channel
development and government affairs for the California DOT, a California toll road agency, and
the international toll road association (IBTTA). (Contract under negotiation.) In addition,
Momentex has established a network of experts who advise in areas such as (1) automated
product delivery, (2) system development and integration, (3) entrepreneurship, (5) traffic

modeling, and (6) toll industry dynamics. Funding Needs. Momentex has begun preliminary
negotiations for a demonstration site with two private toll roads, the Dulles Greenway (located in
Virginia) and Transportation Corridor Agencies (located in California). To secure approval for a
demonstration site, Momentex anticipates that a physical demonstration of prototype hardware
will be necessary and seeks capital to fund the research and development expenses associated
with the prototype and ensuing pilot operation. Required Investment and Use of Capital.
Momentex seeks a commitment of $2 million to fund prototype hardware and software
development, system integration, educational marketing, operating expenses, and legal fees for
a demonstration site and pilot operation. This investment would position the Company to roll out
operations to the major toll roads. Exit Strategy. Momentex plans to grow the business until it is
well received by public markets, then use an IPO as an exit. A second exit opportunity is
through strategic buyers such as beverage or toll service companies. Headquarters. 34 Lee
Street, Cambridge, MA 02139. Telephone: 877.868.4857. Gulp & Gosm Highlights Strong
Financial Potential Huge, untapped market --4.25 billion potential purchase opportunities in the
United States High gross margin, high volume Scaleable operations --nationally,
internationally High, predictable cash flows --revenue potential of $600 million at 10% hit rate
Additional revenue streams from advertising and "rights fees" IPOable business based on
comparable public companies High Return on Investment Early revenue stream Low capital
investment 3
High exit potential --value multiples will "leap" after Momentex achieves operational milestones
(securing contracts, proof of concept, beginning operations). Low Marketing Costs
High visibility and exposure to target customers 24-hours/day, 7-days per week
Captive customer base
Low cost method of creating brand recognition --Momentex is essentially buying access to
customers from toll roads by giving the roads a percentage of revenues. Momentex's proposed
commission structure is based on amount of purchases, rather than on total driver exposure.
Unique Service Aspects
Service process and specialized hardware is patent pending Captures a new piece of pointof-sale retail real estate with guaranteed customer flow Establishes a new distribution channel
--potential to sell and introduce other products Meets a basic consumer need -Improves
customer satisfaction and driving experience Essential but non value-added functions can be
outsourced Attractive Investment Opportunity Feasible business model --tangible, new
integration of off-the-shelf technology Low risk, high growth potential with long-term contracts -once operations are proven and adopted High visibility business Innovative new concept -rewarding Uses of Capital Securing commitment from toll road executives Negotiations with
multiple parties Hardware and software development Developing and testing demonstration
site Demonstrating insignificant traffic impact Developing and testing early adopter pilot
operations Educating drivers about the service 1 Transaction estimate Intelligent
Transportation Systems 1998 Company Overview Introduction Momentex LLC was founded to
exploit retailing opportunities by creating new distribution channels that enable the sale of
beverage, snack and entertainment items to a previously under-served audience: automobile
drivers. Momentex is a marketing and service company that strives to provide Ultimate
Conveniencesm for drivers. Momentex accomplishes this goal by understanding customer

needs, identifying and creating new convenience oriented distribution channels, and thus,
advancing the evolution of driver services. The first channel that Momentex has developed for
driver-interface retailing is at tollbooths, under the service mark "Gulp & Go." 4
Gulp & Go. Momentex's cornerstone service, Gulp & GoSM, enables drivers to purchase
canned beverages at locations where the driver is already engaged in a monetary transaction,
such as paying a toll. Momentex anticipates Gulp & Go will provide a basic platform for driverinterface retailing and significant additional opportunities will stem from this business model.
Investment Benefits.
The Gulp & Go business will provide significant value appreciation to shareholders.
Untapped market provides Gulp & Go with high growth prospects;
Convenience and impulse purchase characteristics promote high margin opportunities
Continuous, high volume traffic flow on the toll roads provide strong cash generation features;
Low capital investment project design positions for a high return on investment;
Exclusive distribution "rights fees" and targeted advertising opportunities increase the revenue
upside. Strategy and Objectives. Momentex strives to be first-to-market with its core Gulp & Go
service, control the point-of-sale retailing space at the tollbooth, and leverage existing
relationships to facilitate a national service roll out. In the short term, Momentex will roll out Gulp
& Go service on commercially attractive toll road locations throughout the United States. In the
medium term, Momentex will expand its service range by developing other platforms for its Gulp
& Go service, such as at the gas pump and parking garage. In addition, Momentex will look to
further develop its relationship with beverage suppliers and extend its product range beyond
beverages. Momentex's long-term objectives are to develop additional driver-interface retailing
opportunities by anticipating the advent of innovative wireless technologies. Origin and History
The Gulp & Go concept was conceived by Zafar Khan, CEO, in 1996 while driving from
Washington, D.C. to Philadelphia, rushed to make a 9:00 a.m. class at The Wharton School.
Hungry and thirsty, with no time to stop for a refreshment, Khan pulled into a toll plaza on Route
95. While stopped at the tollbooth to pay the toll, wallet in hand, Khan thought, "wouldn't it be
great if I could get my refreshments right here ... with no time delay." After describing the
scenario to classmates and friends familiar with road trips in the Northeast, each seemed to
remark, "if Gulp & Go was there, sure, I would use it every time!" People spoke of impulse
buying, purchasing out of boredom, planning ahead to buy at the tollbooth... "it would definitely
get me at least once ... possibly many times in one trip."2 Khan was convinced that there was a
segment of drivers who would value such a service ... but would the toll roads accept such an
innovation? Wharton classmates Zafar Khan and Melissa Chadwick wanted to test the
bureaucratic reputation of the senior executives at the major toll roads. To accomplish this, they
decided to set out on a month-long, 5,000 mile "road show," from Massachusetts to Florida and
as far west as Iowa ... with one key prop, a hand-made, cardboard and balsa wood model,
depicting Gulp & Go service at a toll plaza. The response was energizing..."I really like the
concept. It is so clear, yet no one has ever considered it ... I can imagine in the future that it will
be everywhere and no one will think twice about using it," exclaimed Bill Thorp, Director of
Finance at the Florida Turnpike. "It's a 'no brainer' -high volume potential ... and it could
integrate right into our electronic toll system," Leonard Fornier, a Director at the Massachusetts

Turnpike claimed after walking through a toll plaza envisioning Gulp & Go in place. Khan and
Chadwick could see the demand by drivers and acceptance by the toll roads ... but was it
possible to build it? By year-end 1998, they determined that Gulp & Go service could be
successfully installed at the tollbooth and had incorporated the Company, refined operations,
automated the service process, developed hardware designs, and protected key intellectual
property. Currently, the team is working with David Smith, an MBA at Wharton, to revise the
business plan for funding opportunities, prepare operations for 5
pilot programs, and prepare for alliance negotiations. To date, Chadwick and Khan have selffunded the business. Current Status Momentex is developing a working prototype and seeks
capital to fund the research and development expenses associated with the prototype and pilot
operation. Momentex LLC has filed in the state of Massachusetts as a limited liability
corporation (LLC) and its fiscal year is based upon the calendar year. Headquarters are located
at 34 Lee Street, Cambridge, MA 02139 (877-868-4857). 2 Focus Group, Wharton Graduates,
1998 Service Description Imagine ... you have been driving along a toll road, and you are
thirsty, As you approach a serve area, you consider stopping for a beverage. However, when
you think about the time getting off the highway will add to your trip, you decide to forego the 10minute detour and to continue driving, thirst unquenched. ... As you pay your toll, you notice that
you have the option of using the Gulp & Gosm service to purchase a cool beverage, pay for the
drink and the toll at the same time, and have it dispensed to you right at the tollbooth, You have
your money in your hand, and the drinks look refreshing. Just think ... would you buy? Features
Momentex brings Gulp & Go service to drivers and toll road operators by providing expertise in
business activities that are key for successful implementation, while outsourcing non-critical
functions that are not core competencies. Momentex believes that it currently possesses or can
develop the six core competencies critical to its success.
KeyBusinessActivitiesUnderstanddrivers'needs&designservicestomeetcriterianeedsSecureexclu
siverighttosellonlocationandmanagesuppliersanddeliverymethodsOverseedevelopmentandimple
mentationofautomatedservicesdriverneeds&trendsOverseeintegrationintoelectronicandtraditiona
lpaymentsystemsmanagement,marketing&brandingOptimizetrafficflowthroughservicedesignand
computersimulationSupervisesystemsmaintenanceandbeveragemanagementDesignprogramsto
educatedriversandinstitutionalizeserviceMarketservicetotimesensitivedriverstoincreasepurchaseratesTrainandmotivatesitestaffwhointerfacewiththesystemCo
reCompetenciesIdentifyingemergingdriver/customerPinpointingnewdistributionchannelsDesignin
gservicestocapitalizeuponCreatingvaluethroughdataDesigningoptimalsystemsintegrationNegotia
tingandstructuringalliancesService Description 6
Momentex's Gulp & Go service provides driver convenience by enabling drivers to purchase
and immediately receive items, through an automated process, at locations where they are
already required to stop -tollbooths. Service Locations. Momentex targets full service toll plazas
within the 35 states that operate toll roads. Momentex uses traffic simulation models and driver
data to select the best-suited plazas based on demographics, plaza volume, and traffic
congestion. Product Offering. Momentex will offer canned beverages. As a simple decision
process is important to avoid disruptions in traffic flow, three to five beverage selections will be
available and will include a cola and a diet cola. Product Price. Market research indicates that
drivers are willing to pay a premium for the convenience of Gulp & Go. Momentex anticipates at
least a 25-90% price premium over the customary convenience store beverage price (an $0.80

can of soda could sell for $1.00 to $1.50). Beverage Ordering. Drivers select their beverages at
the toll collector's booth through an ergonomically-designed, user-friendly ordering interface.
Payment. Payment occurs at the same time as drivers pay their tolls. Momentex has developed
the service to incorporate electronic toll collection (ETC) systems, thereby providing for not only
cash payment to the toll collector, but also electronic payment via ETC transponder. Beverage
Delivery. Drivers attain their ordered beverages at a Gulp & Go dispenser which is located two
car lengths past the tollbooth. Momentex has designed the beverage dispenser with a
specialized delivery arm to facilitate quick retrieval and accommodate multiple beverages.
Current Stage of Development Momentex has patented the product delivery mechanism and
service process, developed the execution plan and software integration, and has begun
preliminary negotiations for a demonstration site with two private toll roads, the Dulles
Greenway (located in Virginia) and Transportation Corridor Agencies (located in California). To
secure approval for a demonstration site, Momentex is conducting additional market research
and refining operations. On-going Concept Testing. The Momentex team has conducted focus
groups, surveys, and extensive interviews, questioning stakeholders at all levels within all
industry sectors related to their business. The following table identifies the breadth of
discussions that influenced such areas as machine and process design, business model
structure, negotiation planning, marketing strategy, profitability assessment, and feasibility.
Generally, several levels and rounds of interviews and face-to-face meetings were held with
each of the following groups. Research Interviews and Concept Testing Toll Road Operations
Transp. Corridor (CA) Versatile Control Systems Dulles Greenway Technique Applied Sciences
MA Turnpike Ergonomics Consultant Orlando-Orange TransCore Academics/Political Wharton
Faculty MIT Faculty Wharton SBDC MA Speaker Beverage/Dist. Toll Road Drivers Intelligent
Transport. Coca Cola User Survey (100) Texas Instruments Pepsi MA Driver Interviews (30)
Intelligent Transp. of Am Virgin Cola CA Driver Interviews (15) Wayne-Dresser Cadbury PA
Driver Interviews Amtech Systems 7
Gnty FL Turnpike NH Turnpike NJ Turnpike NY Thruway KS Turnpike IL Turnpike PA Turnpike
Dulles Toll Road TRMI Lockheed Martin IMS SawNet Epic Cycle Interactive Wada Metal of
America ProModel/SimTech Prism Quantitative Methods MA House Starbucks MA Senate
Wittern Group MA Transp Committees VendSource I BTTA -Trade Assoc. Canteen Vending
Industry Retirees Royal Mason & Martin Dixie Narco Cesari & McKenna Sevamco Peck &
Associates Crane (50) Focus Groups (2) Sentinel ID MIT Transportation Eng. Continual
Operations Refinement. Since the Gulp & Go system integrates existing hardware and software
components, Momentex works to tailor the service process design to specific toll road
infrastructures. Pilot Program. Momentex has worked with toll industry experts, business
consultants, vending machine companies, lawyers, and engineers to create a detailed pilot
implementation plan for a number of toll roads who have expressed an interest in a Gulp & Go
pilot operation. The Dulles Greenway, for example, has offered operations data and has placed
Momentex in contact with their systems integrator. The Company has prototype ordering and
dispensing hardware and system designs for automated billing bundled into current electronic
transactions. Refer to the hardware, software, and integration designs in the appendix.
Proprietary Position and Barriers to Entry

Momentex has designed its business model to create barriers to entry against potential
competition and provide Momentex with a competitive advantage. Breadth of Knowledge and
Relationships. Momentex has spent 18 months building its knowledge of toll systems, drivers'
needs, and beverage distribution. To build upon this knowledge, Momentex has formed a
network of advisors who have extensive experience in these key areas and provide the
capability for developing and securing a pilot operation and eventual roll out. In addition,
Momentex management has introduced the Gulp & Go service platform to numerous toll roads
and has begun to forge relationships with these groups and the politicians who will be
instrumental for national roll out of the Gulp & Go platform. Development Time and Cost. The
costs to enter the target market include time and expense to design, develop, and manufacture
the Gulp & Go dispenser and build the service infrastructure (installation, maintenance, and
inventory management). A company entering the market must incur this investment before
experiencing project revenue. Complicated, Integrated Product. Momentex believes that large
beverage companies would be the most likely market entrants. However, to implement the Gulp
& Go business model, expertise outside of traditional beverage production, distribution and
marketing is needed. With automation and integration into toll systems key to a successful
execution, beverage companies would view this high-tech service as outside of their business
scope. First Mover Advantage. The Gulp & Go service creates a new scarce resource with
economic value by creating a new distribution channel to leverage a captive customer base and
the existing real estate at the toll plaza. Once Momentex installs the Gulp & Go service platform
at a tollbooth, Momentex locks up the 8
scare resource and effectively prevents competition since space limitations make the
introduction of a competing service impractical. As the developer of the Gulp & Go business
model, Momentex plans to leverage this first mover advantage by negotiating with toll
authorities to secure exclusive rights to retail products at points of driver-interface. Legal
Barriers. Given the anticipated competition, the Company has created legal and contractual
barriers to entry. Momentex has designed the Gulp & Go service platform to be automated
using a proprietary process. The platform is protected through a series of patents and service
marks on 1) the unique ordering and efficient beverage delivery process, 2) the unique product
delivery interface, 3) the automated integration into toll and electronic payment systems, and 4)
artwork which enhances the concept and creates a brand. Service marks include "Gulp & Go"
and "Ultimate Convenience" and Internet domains include Momentex.com, GulpandGo.com,
and GulpNGo.com. Market and Marketing Strategy Description of Market The Gulp & Go
service creates a new point of contact between the toll road industry and the beverage industry.
Gulp & Go offers these mature industries a new source of revenue. Toll Road Industry. Toll
roads, although primarily governed by state organizations, are managed as private businesses
responsible for operating the toll roads and generating enough toll revenue to cover their cost of
operations and debt service. Toll contractors, such as market leader TransCore, install new toll
plazas and new systems such as ETC and must bid competitively for new projects. Service
plaza concessionaires, such as market leader Host Marriott Services, typically have long-term
contracts to service all or part of a toll road with off-road services. Typically, concessionaires
pay commissions to turnpikes ranging from 10% to 15% of revenues. Momentex measures the
market for Gulp & Go service in number of toll transactions, reflecting driver purchase
opportunities. The number of tollbooths represents the market of point-of-sale real estate for

Gulp & Go service.

StateTollsAnnualTransactionsPlazasTollboothsTransactions/BoothMajorTollOperatorsNYTollRo
ads787,000,000877902729NYThruway,MTANJTollRoads772,000,000777112975Turnpike,High
way,Transport.Auth.ILTollRoads626,000,000604503811HighwayAuthorityFloridaTollRoads500,
000,000553304151Turnpike,ExpresswayAuth.TexasTollRoads230,000,000451603938NorthDall
as,HarrisCountyCaliforniaTollRoads186,000,000351633126CalTrans,TCAMATollRoads170,000
,000171203881TurnpikeAuthorityPATollRoads140,000,000181083551TurnpikeAuthorityNYNJBridges/Tunnels114,000,0008774056PortAuthorityNY&NJTotalMajors3,525,000,0004022,90
93320Others725,000,000806003311VA,OK,ORMD,ME,other(est.)Total4,250,000,0004823,509
3,318UnitedStates(excludesint'lbridges)Source: IBTTA; Electronic Toll and Traffic Management
Note: 'Transactions per Booth' reflect daily average Beverage Industry. The U.S. beverage
industry, distributing 230 billion can-equivalents of soda annually, is intensely competitive and is
dominated by the Coca-Cola Company and PepsiCo3 Beverage companies typically focus on
the creation, production, and distribution of drink syrups, concentrates and beverage bases and
the marketing/brand building of beverages. Bottlers take the flavor concentrate, mix it with 9
sweetener and water, bottle the liquids, and then distribute it to retailers or to their own vending
machines. Due to the importance of distribution, beverage companies typically hold equity
stakes in key bottlers and also pay "rights fees," for exclusive access to captive customers, to
those who control certain key distribution channels. Market Potential With 3,500 tollbooths in 35
states and over 4 billion toll transactions annually, the United States provides significant market
potential. Internationally, another 5 billion toll transactions take place annually at 9,500
international tollbooths, which provides another avenue for substantial growth.4 With a usage
rate near 10%, the total annual revenue potential for the Gulp & Go service on toll roads is
estimated at over half a billion dollars. In a more conservative estimate, with a usage rate of 2%
and a $1.25 price per beverage, annual revenue potential is estimated at $128 million5,6 . A 2%
usage rate reflects two tollbooths in a ten booth plaza offering Gulp & Go service, and one in ten
drivers who self-select these Gulp & Go toll lanes purchase. Pilot projects will provide better
insight into the actual consumer adoption rate and price sensitivity. Momentex expects usage
rates to increase as driver comfort for the service increases over time.
EstimateofMarketPotentialCalculationNotesTollTransactionsTotaltolltransactions(35statesinU.S.
)4.25billionSource:ElectronicTrafficManagementofITSTollbooths(U.S.)3,509Source:IBTTA1996,
ET`TMAveragedailytolltransactionsperbooth3,318CalculationnotevariationexistsbylocationanddayofweekGulp&GoTransactionsPurchaseratepertollboothwith
Gulp&Goservice10%Estimateof1in10carsselfselectingaGulp&GolanepurchaseGulp&Godailytransactionsperboothwithservice332CalculationS
erviceavailability(%oftotaltollbooths)20%Estimateof2tollboothswithGulp&Goserviceper10lanepla
zaServiceavailability(4oftotaltollbooths)702CalculationGulp&Goannualtransactionestimate(U.S.)
85,000,000Calculationreflectinga2%hitratepertotaltolltransactionsRevenueDriversPurchasespert
ransaction1.2Estimateof1in5buyerspurchasing2drinksPriceperbeverage$1.25Pricepremiumforco
nvenienceRevenueandProfitTotalannualrevenue$127,500,000CalculationExpectedgrossprofitm
argin60%Estimate:20%tobottlerforgoods,15%totollroad,5%forrefillingGrossprofitpotential$76,50
0,000CalculationGrowth Drivers Company Growth. Momentex will grow its revenues by (1)
increasing usage rates and (2) increasing service locations. Momentex will focus first on a sales
effort to penetrate the tollbooth market by maximizing locations that host the service, followed

by a marketing push to increase purchase rates per toll plaza. To achieve market penetration,
Momentex must demonstrate the economic benefits of the Gulp & Go service and convince toll
road operators that consumers will use the service if installed. Market Growth. Key factors
affecting growth in the market, measured in toll transactions, are gas prices, GDP growth and
strong economic factors, legislation allowing tolls on interstate highways, and new 10
private convenience highways. Additional growth can stem from new products such as snack
foods, international tollbooth expansion (5 billion toll transactions internationally), or opportunity
to retail in other locations, such as parking garage tollbooths and gas islands at gas stations and
convenience stores7. Market Acceptance, Trends & Needs Current trends in driver
convenience, the toll industry and the beverage industry have created a window of opportunity
for. Momentex's Gulp & Go service. Drivers will value Gulp & Go's convenience and time-saving
attributes. Toll road operators will increase profitability and customer satisfaction. Beverage
companies will welcome the opportunity to increase sales volumes and to gain access to
customers without having to develop inhouse knowledge of toll systems. Driver Convenience.
Research indicates that 81% of today's consumers want more simplicity --and more
convenience -since time has become such an issue in their lives.8 With today's time-sensitive
population and advancements in restaurant "drive-thrus", sound systems, cellular
communications, and satellite navigation systems (i.e. GPS), the automobile is being
transformed into a tool for not only traditional transportation, but also dining, entertainment,
communication and navigation. Recognizing the convergence of technology and market need,
Momentex has developed driver-interface retailing to deliver Ultimate Conveniencesm to drivers
by adding automated retailing to the driver's portfolio of time-saving accessories. Gulp & Go
service is a phase shift change in the evolution of driver convenience. Of the 160 million
passenger car drivers on U.S. roads, the Gulp & Go service targets both drivers and
passengers that have the following attributes and provides value to them9: Daily Commuters.
Rather than making an extra stop on the way to work, they would procure a beverage as they
pass through the tollbooth, saving time and hassle.10 Families. Families with small children
will especially welcome the presence of Gulp & Go since it eliminates the chore of bringing
children in and out of car seats and into stores.11 Business Travelers. Extremely timesensitive, interested in quickly getting a beverage to help them get to their next appointment or
meeting. Stoics. This segment, typically men, know their fastest time to reach their destination,
and once on the road, try to beat this record with determination. This group avoids unnecessary
stops and would welcome the option to purchase beverages where they are required to not only
stop, but also spend money.12 Women and Elderly. Research has shown that this segment
has concerns about unnecessary stopping at night for safety reasons. Gulp & Go will provide
these thirsty drivers with a safer alternative. Toll Industry Trends. For many toll roads,
increasing fees is a politically damaging method of increasing revenues. They are under
pressure to cover bond payments and increase spending on improvements to roads and
customer service.13 Therefore, to ensure viability, toll roads must look at methods of creating
additional revenue or increasing driver usage.14 As one of the leaders of toll road innovation
explains: "I am always thinking about new ways to make money." James Kerasiotes, Chairman
of the Massachusetts Turnpike Authority The Gulp & Go service addresses both of these needs
by (1) adding an additional profit stream to the operator and (2) increasing customer satisfaction
and the convenience of using the road vis a vis alternatives. In addition, recent federal

legislation calls for each state to choose whether to increase revenue for highway operations by
building toll plazas on existing interstate highways. This could yield a proliferation of toll plazas
and increase the available real estate for Gulp & Go service. 11
Beverage Industry Trends. As traditional distribution channels mature, the large beverage
companies have begun to focus on the higher-margin and growing convenience channels. With
fierce competition among the major beverage companies, exclusive access to these distribution
channels has become a source of competitive advantage. The beverage companies are paying
multi-million dollar, multi-year "rights fees" for this exclusivity, often equating to $3-40 per
potential customer.15 Gulp & Go will provide value by offering the opportunity for exclusive
access to a new mass distribution channel, expanding the total size of the beverage market by
reaching thirsty drivers. Market test results Momentex conducted a survey which documents (1)
a need for the Gulp & Go service and (2) that customers are willing to pay a premium for the
convenience that the service offers. Momentex conducted a survey of toll road users over the
past two months and results are summarized in the Market Research appendix. Based upon
115 toll road user respondents, we estimate that the usage of the Gulp & Go service by our
target market could be as high as 32%. (In our financial model, a usage rate of 10% is used
based on more conservative scale factor of 0.25 vs. 0.75.) Refer to the Market Research Toll
Survey appendix for details. The survey confirms our hypothesis that most drivers (73%) do not
stop for a beverage while they are on the toll road due to lack of time. The fact that over 60% of
respondents do purchase a beverage on a regular basis during their commute to and from work
indicates an opportunity to serve the needs of time sensitive customers. In addition, the survey
results show that potential users consider the key attributes of Gulp & Go to be important: 88%
of respondents rated convenience/speed as very important, 59% rated easy to use as very
important or somewhat important, and 56% rated beverage variety as very important or
somewhat important. The average price respondents are willing to pay for a 12 ounce beverage
is $1.10, a 38% premium over the customary convenience store price. (Momentex anticipates a
price premium of 25-90% and uses $1.25 in financial models.) Competitive Position While no
direct competition currently exists, Momentex anticipates that once it introduces Gulp & Go
service, competition will develop. Opposition Potential. Competition, in the form of entry or
opposition, will stem from companies whose revenue will be either significantly positively or
negatively impacted by Gulp & Go's new distribution channel. The degree of competition will
depend upon those companies' ability to respond to the introduction of Gulp & Go. Response
ability would be measured by (1) level of past technological innovation; (2) degree of national
presence (potential or existing); (3) knowledge level of toll systems, drivers' needs, beverage
distribution; and 4) strength of toll authority relationships. Competitive Landscape. The diagram
below depicts the competitive landscape for Gulp & Go service. Momentex believes that
companies whose market is expanded by Gulp & Go, such as the major beverage companies,
may attempt to enter the market. The major beverage companies, however, lack technological
innovation, knowledge of both toll systems and drivers' needs, and relationships with toll
authorities. Companies who perceive that their revenue would be threatened, such as service
plaza concessionaires, may attempt to block the development of Gulp & Go. While
concessionaires do have relationships with toll authorities, their ability to leverage these
relationships to block an agreement between Momentex and a toll authority is debatable.
Momentex's meetings with toll authorities indicate that often the toll authority and

concessionaire have tenuous relationships16. Momentex considers entry by Host Marriott, the
largest concessionaire, unlikely, as it has stated that toll roads are not its focused area for
growth17 . For further details, refer to the Company and Competitor SWOT Analysis appendix
for a comparison of competitor strengths, weaknesses, opportunities and threats. 12
Circle = Magnitude of "deep pockets" for project investment +/-depicts positive/negative revenue
impact Determinants of Response Ability Past innovation National presence Relationships
with multiple toll roads Knowledge (customer, bev. dist., toll systems) Sales and Promotion
Momentex will market its Gulp & Go service to two target groups: collaborators and consumers.
Collaborators control sites on which the Gulp & Go machine will be located. Consumers are the
ultimate users of the service. The rate of return on investment and consumer demand will drive
the purchase decision of collaborators. To achieve market penetration, Momentex must
demonstrate the economic benefits of the Gulp & Go service and convince collaborators that
consumers will use the service if installed. Momentex expects that all prospective customers will
already consume the beverages sold at the Gulp & Go machine through other channels. Rather
than creating new beverage consumers, Momentex will provide existing beverage consumers
with a new, more convenient channel to purchase beverages. The marketing challenges are
providing the right products at the right price and educating consumers on how to use the
service. Attract Customers. First, by supplying drivers with the refreshing beverage of their
choice, Momentex will attract customers by its Gulp & Go service. To create this draw,
Momentex will offer popular beverages and install signage along toll roads to trigger thirst. To
optimize beverage selections, Momentex has conducted market research and understands what
its target market prefers. In addition, Momentex anticipates that the name-brand beverages
offered will enhance the attractiveness of the Gulp & Go service. Momentex will also seek comarketing opportunities with its beverage provider to further develop sales. 13
Customer Education and Support.
Momentex plans to conduct a pre-marketing campaign to introduce the Gulp & Go service and
to create consumer interest. The initial campaign will consist of pamphlets or direct mailings to
drivers in the area surrounding the toll road. The marketing materials will fully explain the
mechanics of the service and introduce a consumer feedback loop for questions or complaints.
Once Momentex installs Gulp & Go service in an area, it will continue to educate drivers about
the service through advertising spots in print and broadcast press. Additionally, Momentex will
continue to provide strong customer support through both a website and a toll-free telephone
number. Customer service will not only educate drivers on the Gulp & Go service, but will also
provide the avenue for rectifying any ordering or product problems. Refer to Marketing Plan
Summary appendix. 3 1997 Figure. Hays, Constance L. "Bottlers Becoming Rivals To VendingSales Merchants," New York Times News Service (1999). 4 IBTTA 1996, ETTM of ITS 1998. 5
Momentex focus groups, (1) Wharton Graduate, (2) UPENN Undergraduate, 1998. 6 Momentex
market interviews, Philadelphia and Boston area, 1998. 7 IBTTA 1996. 8 Convenience Store
News, December 1998, 9 Federal Highway Administration, Selected Highway Statistics and
Charts, October 1997. Nationwide Personal Transportation Survey, April 1998. 10 Momentex
focus groups, (1) Wharton Graduate, (2) UPENN Undergraduate, 1998; Department of
Transportation Nationwide Personal Transportation Survey April 1998, 11 Ibid. 12 Momentex

focus groups, (1) Wharton Graduate, (2) UPENN Undergraduate, 1998. 13 Momentex interview
with managers at MA Turnpike 1998. 14 Momentex interviews with management at MA, PA,
NY, FL, NJ, VA, DE toll roads 1998; the toll industry trade association (IBTTA) 1998, TransCore
1998, TRMI 1998. 15 interviews with Coke, Pepsi 1999. 16 Jim Kane, Massachusetts Turnpike
Authority 17 Host Marriott Services Annual Report 1997; DLJ Equity Analyst Jake Fuller
Business Model and Operations Business Model Momentex has designed the Gulp & Go
business model to enable rapid penetration of the currently untapped driver-interface retailing
market with minimal capital investment and limited on-going personnel requirements. The real
estate provider (toll road operator) provides the right to use existing space and systems in
exchange for Gulp & Go service and a percentage of revenue. The toll road's proposed
commission will be based upon similar fees paid by service plaza concessionaires18. While not
crucial to the viability of the business model, Momentex plans to contract with a major beverage
company to secure its beverage supply and refilling services. In addition, Momentex anticipates
that the beverage companies will offer a "rights fee" for exclusive distribution and the potential
for advertising. Momentex owns the dispenser and ordering hardware while the beverage
company owns the inventory. The diagram below outlines the basic structure. Additional
Revenue Opportunities. Momentex recognizes that the Gulp & Go platform provides advertising
potential, both on the machines and possibly on the signage. Momentex plans to lease this
advertising space to either the beverage supplier or other companies interested in targeted
advertising to drivers. Momentex will also seek co-marketing opportunities with companies, such
as service plaza concessionaires, offering complementary products or services. In addition,
Momentex plans to explore revenue opportunities via the Internet. Technology Opportunities. By
the year 2000, virtually every major toll road and service stations in 20 major markets will be
equipped to charge customers' accounts through a seamless, and virtually timeless, electronic
transaction19. In the future, Momentex anticipates that Gulp & Go's retail transactions will
piggyback off these transponder-receiver payment systems to enable ordering retail products
through the driver's on-board communication transponder and have this order beamed to the
retailing system as they pull into the transaction area. By developing additional applications for
this evolving technology, Gulp & 14
Go will become the backbone of a truly cutting-edge new distribution platform --high-tech driverinterface retailing. Operations Strategy Among key Momentex functions, the Company (1)
develops and designs the Gulp & Go service, (2) launches and manages pilot operations, (3)
collects and analyzes operations data to refine the service process, (4) markets and
communicates to customers, and (5) negotiates for and implements roll out of service.
Momentex manages expert contractors who conduct actual mechanical drawings, equipment
manufacture, service installation, software integration, beverage refilling, and inventory
management. By leveraging the technical know-how, assets and organizational processes of
partners, Momentex lowers its operating risk and reduces its capital investment. Operational
Activity and Resources. The following chart summarizes the key operational activities and the
partners/contractors that the Company plans to work with. Momentex will outsource the
activities which do not lead to a competitive advantage for the Company. Key criteria to identify
prospective partners are: (1) strategic fit; (2) quality of service; (3) service level (response time
to customer problems); (4) entrepreneurial management; (5) geographic market coverage; (6)
price; and (7) technical proficiency. Operational Activity In-house Design machine Service

process design Pilot operation Data collection and analysis Customer education Roll-out service
Manage Contractors Manufacture machine Microprocessor design Install machine** Maintain
and service machine Inventory management** Billing Internet Data collection, transmission
Description Customer needs, concept design and testing Design service process flow and
maintenance Design, launch and manage pilot operations Analyze operations data. refine
service process market and communicate to customers negotiate for and implement roll-out of
service Mechanical engineering and manufacturing Software and electrical engineering Toll
systems integration Electronics servicing Beverage distribution and route management Toll
systems integration Web development, hosting, maintenance Wireless data service Potential
Contractors (Momentex) (Momentex) (Momentex) (Momentex) (Momentex) (Momentex)
Technique, VendSource, Wittern Versatile Control Systems TransCore, TRMI, Lockheed Martin
IMS Local contractor or toll system integrator Coke or Pepsi bottling company TransCore,
Lockheed Martin IMS SawNet, Epic Cycle Interactive Isochron, Motorola Note -** Reflects key
activity where a more formal alliance may exist. Plan for Service Roll Out To launch and roll out
the Gulp & Go service, Momentex will (1) win approval for a demonstration site, (2) strengthen
established relationships with major toll road executives, (3) launch the pilot, (4) demonstrate
working model, live, to prospective toll road executives in anticipation of roll out, (5) negotiate
contracts and permission for demonstration sites at major toll roads, and (6) build-out operations
on major roads. Pilot Approval. The process to win approval for a pilot operation, outlined below,
differs for the different toll road categories; localized public/privates, private roads, and major
public turnpikes. With each of the three roads mentioned in the chart, Momentex is progressing
through Stage 2. PilotApprovalProcessLocalizedPublic/PrivatePrivateRoadMajorPublicRoad15
Key Stages Stage I Political Goodwill Senior Executive Interest Stage 2 Operational Concept
Testing Systems Integrator Approval Labor Approval Driver Demand/Hit Rate Stage 3 Senior
Executive Approval Contract Negotiation Trans. Corridor Agencies CalTrans, Local Politicians
CEO, Director or Operations Traffic flow, site specifics Lockheed Martin IMS Not required
Survey of local drivers CEO Negotiate terms Dulles Greenway Not applicable CFO Traffic flow,
site specifics TransCore Not required Survey of local drivers CFO Negotiate terms Mass Pike
State Politicians Chairman Traffic, concessionnaires TransCore Labor Director & Teamsters
Survey of local drivers Chairman Negotiate terms Strengthen Established Relationships.
Momentex has met with the senior executives of eight major toll roads, representing 32% of our
target market, to discuss the merit of Gulp & Go service on their roads. Each has expressed
interest in the service and looks forward to a physical demonstration of the pilot. Before a pilot
operation is implemented at a demonstration site, Momentex will refresh these relationships to
emphasize the connection of d river-interface retailing with the Gulp & Go brand. Launch Pilot.
At a localized toll road, Momentex will launch a demonstration site as its first pilot operation.
Momentex will collect and own the data from the pilot to further refine financial and operational
assumptions. Demonstrate Operations. With a working pilot operation, Momentex will have the
opportunity to drive prospective toll road executives through the service so that they can
experience Gulp & Go's Ultimate Convenience first-hand. Negotiate with the Majors. Early in the
pilot operation, Momentex will negotiate with the major toll roads (excess of 100 million annual
transactions) to implement a pilot on their road with the option to roll the service out. Build-out
Operations on Major Roads. Roll out within a major toll road will involve a tailored pilot
operation, specific systems integration, demographic and traffic flow analyses, and an

awareness marketing campaign. Competitive Reaction. Momentex views the beverage

companies as potential competitors, with the threat heightened if they are excluded from the
Gulp & Go distribution channel. For this reason, Momentex has designed the business model to
attract an alliance with the strongest of the beverage companies and turn them into an ally. By
gaining exclusive rights to the toll roads, Momentex plans to pre-empt competitive threats.
Contingency Plans. Momentex will monitor the political climate around toll road negotiations to
determine whether to develop and shift toward contingency plans. This could include a tighter
relationship with a major beverage company, a strong alliance with a systems integrator, or
other strategic options to facilitate implementation of the Gulp & Go business model. Alliances.
In the key areas listed below, Momentex formalizes relationships to leverage the existing
infrastructure and expertise while minimizing Momentex's capital investment. Operational
Complexity 16
Gulp & Go integrates components of off-the-shelf technology to meet the demands or driverinterface retailing. Process Flow. The Company has designed a process flow to accommodate
Gulp & Go service in various toll system configurations. From the driver's perspective, the
process flows as follows: Order Decision Gulp & Go Lane Selection Product Selection
Automated Ordering Toll & Product Payment Drive Forward to Pick-up Zone Next Car
Begins Order Process Pick-up Beverage Re-enter Traffic The chart below depicts the
operations perspective. The front end of the Gulp & Go service involves the driver-interfacing at
the order and delivery points, as well as integration into the toll systems for automated payment.
The wireless data service monitors inventory levels and dispenser performance, relaying
information at set periods throughout the day to the data service's central computer, which, in
turn, posts the data to the Momentex Intranet via the Internet. Beverage management analyzes
this inventory and monitoring data to optimize refilling routes and machine maintenance. In the
chart below, potential outsource and development partners are indicated for driver-interface
retailing at the tollbooth. Hardware Design and Software Integration. Momentex, along with its
contracted partners, will design and develop a customized casing and ordering interface to
enable efficient product order and delivery to drivers. The casing will house an off-the-shelf
beverage dispensing machine and the ordering interface will be linked to the central processing
unit that controls the Gulp & Go system operations. Software process flow has been designed to
limit change to the current toll systems. The Gulp & Go central processing units will package the
transaction information and relay it to the toll lane computer for toll lane functionality and audit
reporting. Refer to the appendices for detailed schematics of the hardware designs, capabilities,
and software integration flow. Pilot Development Cost Estimates Service Component Ordering
Interface Control Panel & Microprocessor Product Dispenser (off-the-shelf base) Base
Dispenser Modifications Product Delivery arm Dispenser Casing & Artwork Wireless Data
Service First & -Second Stage Internet Site Hardware Installation Software Integration (NonETC) Software Integration (ETC) Testing Operations Total Development $6,000 $30,000 $5,000
$7,500 $9,000 $15,000 $4,000 $45,000 $6,000 $60, 000 $150,000 $180,000 $457,500 Source
& Notes Versatile, Technique Applied Sciences Versatile Control Systems Wittern Group Wada
Metal of America, VendSource Technique Applied Sciences Technique Applied Sciences
Isochron, DEX Epic Cycle Interactive TRMI TRMI, Lockheed Martin IMS, TransCore TRMI,
Lockheed Martin IMS, TransCore Lockheed Martin IMS 17

Audit and Reconciliation. The retail operations are audited in two channels, through the current
toll plaza computer software and via wireless data service inventory monitoring. Beverage sale
revenue is recorded in tandem, with weekly reconciliation of toll revenue versus retail revenue.
The toll road retains an agreed percentage of gross revenues. Process Design. Beverage
ordering and pick-up are de-coupled to minimize traffic impact, as the time to pick up a
beverage is less than the time to order and pay. De-coupling occurs by locating the dispenser
two car lengths beyond the tollbooth on the end of the tollbooth island. Momentex has
conducted on-road, timed simulations to test this concept. In addition, toll collector training is
geared toward increasing toll fare and beverage fee collection efficiency to maximize
throughput. Optimize Traffic Throughput. Momentex has used queuing theory, computer
simulation, and animation to model the traffic flow with and without Gulp & Go service at the
tollbooth. Computer simulation enables an understanding of the impact on the transaction
processing time and the capacity/demand relationship at different periods throughout the day
and week. Prior to roll out of Gulp & Go service, Momentex will model each toll plaza
independently to account for distinct traffic patterns. The simulation model has been designed in
a partnership with ProModel representatives, SimTech and Prism Quantitative Methods. Refer
to the Traffic Flow appendix. Inventory Management and Control. To ensure well stocked and
high performing dispensers, wireless data service interfaces with the dispenser and the
management software via the Internet, allowing dispensers to be monitored closely from the
Momentex central office. Wireless data companies such as AES, Isochron, or Cellemetry are
favored for their transmission capabilities, including broad geographic coverage and in some
cases, a particular focus on the vending industry. Refer to the Internet Integration appendix for
details. Dispenser Refilling and Route Design. Upon roll out, Momentex will outsource beverage
dispenser refilling and maintenance and has incorporated the latest inventory and logistics
technology into its operational plan to facilitate this process and provide an audit trail. The
dispenser design will allow the route driver to drive into the lane during off-peak hours, close the
lane temporarily, and refill the dispenser from the truck parked next to it. With the opportunity for
daily maintenance and the absence of money acceptors (which contribute to 90% of
malfunctions), Momentex anticipates infrequent machine breakdowns20 . Route design will
center on maximizing efficiency and minimizing expense. Route drivers will be responsible for
dispenser refilling and simple preventive maintenance, and their daily route will be determined
by tracking the number of cans sold each day at each location through the wireless data
system. Quality Control. Momentex has designed its operations to ensure seamless integration
into existing systems, efficient beverage delivery, and quick acceptance by drivers. In the
unlikely event of a problem, Momentex has built the necessary infrastructure, processes, and
feedback loops to address issues. Refer to the Quality Control and Trouble Shooting appendix
for details. 18 10 -15% based on MA, PA Turnpike Marriott contracts 19 Momentex interviews
with management at MA. PA, NY, FL NJ, VA, DE toll roads 1998 the toll industry trade
association (IBTTA) 1998: Wayne-Dresser website 1999 20 The Wittern Group 1998 and
Canteen Vending 1999. Management Momentex is founded by individuals with breadth and
depth of experience in the key areas of finance, marketing, operations, negotiations and
strategy. The Gulp & Go business model requires skill in negotiation and marketing because the
success of the business hinges upon securing locations to install the Gulp & Go system. Due to
the high profit potential and the competitive nature of the beverage industry, negotiation

expertise must be coupled with strategy and finance skills. Since a new dispenser will have to
be designed and integrated into the existing information systems, skills and experience in 18
engineering and information technology will be necessary. Lastly, as the Gulp & Go service
involves flows of traffic and multiple locations, expertise in operations and management will also
be critical. The table below outlines key skills that are necessary to turn Gulp & Go into a
successful long-term business and rates capabilities in these areas. Key Skills Management &
Strategy Negotiation & Sales Operations Marketing & Channel Development Information
Systems & Automation Engineering Finance Knowledge of Beverage Dist. Management High
High Medium High Low Low High High Advisor Network High High High -High Medium -High
Outsourced --High -Medium High --Overall Capability High High High High High Medium High
High To accommodate this range of expertise, Momentex's in-house capabilities are enhanced
through advisor and contractor relationships. The organizational structure is outlined in the
following chart. Management Team Melissa Chadwick-President and Chief Financial Officer.
Ms. Chadwick focuses on business development, finance and marketing as well as coordinating
the raising of the Company's first round of funding. She has been with Momentex since
inception in 1998. Ms. Chadwick worked as an investment banker with Lehman Brothers and
McDaniels S.A. In these positions, she met capital raising goals for both public and private
sector clients and implemented growth strategies for them through her involvement in research,
valuation and negotiations for several acquisitions. She holds a Masters of Arts degree in
international relations and a Bachelor of Arts degree in economics from the University of
Chicago, and recently completed a Masters of Business Administration degree in finance and
entrepreneurial management from The Wharton School at the University of Pennsylvania. Zafar
Khan -Chief Executive Officer. Mr. Khan focuses on strategy, operations and developing
partnerships with venture stakeholders. He has established a high quality advisor and
consultant network and has designed-the service process. He has been with Momentex since
inception in 1998. Mr. Khan worked as a strategy consultant for Braxton Associates/Deloitte
Consulting. In addition, as a manager for a chemical industry trade association, he helped
businesses adapt technologies and develop new business lines, and interacted with federal
government on the industry's behalf. He holds a Bachelor of Arts degree in biology and
psychology from Wesleyan University and recently graduated with a Masters of Business
Administration degree in finance and entrepreneurial management from The Wharton School at
the University of Pennsylvania. David Smith -Director of Operations. Mr. Smith is actively
engaged in developing prototype hardware, optimizing the service process, and refining the
business model. He joined the Momentex team at year-end 1998. Mr. Smith has. worked as a
strategy consultant with Bain & Company and a business advisor with Price Waterhouse LLP
where he consulted firms in a wide range of industries on process management, business
planning, and internal control procedures. He holds a Bachelor of Arts in economics and a
Bachelor of Business Administration in accounting and international business from the
University of 19
Texas at Austin and will graduate in 1999 with a Masters of Business Administration degree in
marketing and operations from The Wharton School at the University of Pennsylvania. Paul
Glaab -Director of Channel Development. Mr. Glaab will be responsible for developing political
strategy and gaining footholds within toll agencies. He anticipates joining Momentex in 1999
(contract under negotiation). Mr. Glaab has over 30 years of experience working in channel

development and government affairs for the California Department of Transportation,

Transportation Corridor Agencies (a California private toll road agency), the international toll
road association (IBTTA), and Continental Airlines. During this time, he has successfully (1)
launched the marketing program for the nations largest privately-funded public toll road, (2)
spearheaded legislative efforts for critical toll industry legislation, and (3) managed negotiations
for major CalTrans development projects. He holds a Bachelor of Arts degree in political science
from California State University at Long Beach. Advisors Network The Company has sought and
will continue to seek guidance in development and execution from a group of advisors
experienced in starting companies. Momentex's network of advisors have expertise in toll road
operations, intelligent transportation, engineering, entrepreneurship, and operations. Currently,
Momentex is searching for a beverage industry veteran to advise on beverage-related issues.
Harry Hansen. Mr. Hansen advises on toll systems integration and intelligent transportation
systems. He is the Manager of Systems Development and Integration for Lockheed Martin IMS
and manages all California electronic toll collection projects for Lockheed. He has nearly 10
years of experience implementing Lockheed Martin technology into development projects and is
one of the developers of their electronic toll collection system. Ian MacMillan. Mr. MacMillan
advises on entrepreneurial management matters. He is Executive Director of the Sol C. Snider
Entrepreneurial Center and is a Professor of Entrepreneurial Studies at The Wharton School. In
addition, he is the author of Corporate Venturing (Harvard Business School Press) and
numerous articles on organizational politics, new ventures, and strategy formulation. William
Miller. Mr. Miller advises on driver-related and toll industry matters. He was formerly Executive
Director of the Delaware River and Bay Authority and has been affiliated with the toll industry
since 1957. Also, he was the 1971 President of the International Bridge, Tunnel, and Turnpike
Association (IBTTA) and voted "l 994 Engineer of the Year" by the American Society of Highway
Engineers, Joseph Sussman. Mr. Sussman advises on "intelligent transportation" matters. He is
a Professor of civil and environmental engineering at MIT and on the Board of Directors for
Intelligent Transportation Systems of America. Karl Ulrich. Mr. Ulrich advises on product
development matters. He is an Associate Professor of operations and information management
at The Wharton School. He is co-author of Product Design and Development (McGraw Hill) and
has participated on development teams for products ranging from snack foods to surgical
instruments, John Woodruff. Mr. Woodruff advises on driver-related and toll industry matters. He
was formerly Director of Engineering and Planning / Chief Engineer for the Delaware River Port
Authority. He was also the 1987 President of IBTTA and currently serves on the IBTTA PastPresidents Advisory Council. Summary Financials 20
Key Assumptions The financial projections model the basic Gulp & Go service at the tollbooth
and do not account for revenue from "rights fees," product expansion, or additional service
platforms. The specific critical assumptions are highlighted in the appendix. Momentex assumes
that a pilot begins in September 1999 and the first state will be rolled out at the beginning of
2000. Revenue Drivers. Key drivers for revenues are the number of locations with Gulp & Go
service, the hit or usage rate, and the number of beverages purchased in each transaction.
Margin Drivers. Gross margins reflect commissions paid to toll road operators and route drivers,
as well as raw material costs. In addition, as some expenses are fixed, there is some operating
leverage at the operating income level. Hence, as revenues increase, margins will increase
disproportionately. Cash Flow. Momentex will strive to manage working capital efficiently by

negotiating favorable terms with suppliers and creditors and keeping inventory levels to a
minimum. Momentex will seek capital to fund the purchase and installation of beverage
dispensers necessary for Gulp & Go service roll out. Required Investment and Uses of Capital
The financial projections center around funding the "Plan for Service Roll Out." This involves
winning approval for a demonstration site, networking with major toll road executives,
developing hardware and software, launching and testing the pilot operation, live
demonstrations for prospective toll road executives, negotiating contracts and permission for
demonstration sites at major toll roads and rights to roll out Gulp & Go service upon successful
completion of pilot, and building-out operations on early adopter roads. Momentex anticipates
that this stage of operations will require $2 million and seeks the necessary funding to cover
this. The appendix provides detailed information on the financial projections and on the
development stage that corresponds to the funding need. Refer to Major Milestone appendix for
details. Financial Resources To date, Chadwick and Khan have self-funded the business. To
raise the required investment, Momentex will introduce the Gulp & Go business model to Small
Business Investment Companies (SBIC), "angel" investors and other zero stage venture capital
firms, as well as the major beverage companies, to look for loans and/or equity financing.
Momentex has identified certain firms that specialize in consumer related businesses and/or
transportation. Financial investors should find the Gulp & Go business model attractive given
the high margin and high volume potential, the Gulp & Go services' high visibility, and
Momentex's competitive advantages. Summary Income Statement The following chart depicts a
summary income statement for Momentex. A full income statement, balance sheet, and
statement of cash flows are in the appendix along with a monthly, quarterly, and annual profit
and loss analysis with assumptions and model drivers. Income Statement Revenues Beverage
Sales Commissions and Sales Tax 1999 50,465 (11,102) 2000 2001 2002 2003 2004 3,095,518
26,909,900 69,860,379 77,491,282 85,517,164 (681,014) (5,920,178) (15,369,283)
(17,048,082) (18,813,776) 21
TotalRevenues39,3632,414,50420,989,72254,491,09560,443,20066,703,388ExpensesRawMat
erials12,112742,9246,458,37616,300,75518,081,29919,954,005OperatingExpenses374,9394,5
34,6018,939,1149,297,3228,041,6728,417,283ResearchandDevelopment469,500400,000400,0
00400,000400,000400,000TotalExpenses854,0515,677,52615,797,49025,998,07826,522,9712
8,771,288OperatingProfit(814,688)(3,263,022)5,192,23128,493,01833,920,22937,932,100Taxe
s276,9941,109.42(1,765,359)(9,687,626)(11,532,878)(12,896,914)NetProfit(537,694)(2,153,594
)3,426,87318,805,39222,387,35125,035,186Capitalization Strategy Proposal to Investors
Momentex is a Massachusetts limited liability corporation in the process of raising its first round
of external investment to fund development of a demonstration site and early stage service roll
out. As a limited liability corporation, investors are legally awarded a percentage of equity rather
than a number of shares as in a Corporation. In the first stage of funding, Momentex looks to
raise $2,000,000 in 80 blocks of $25,000. Momentex anticipates investors would receive 22% of
Momentex equity for this initial $2 million (non-dilutive). For the second stage of investment,
Momentex will seek an additional $2 million in mid to late 2000 to fund rapid national expansion.
Investment Potential Momentex anticipates the Gulp & Go service has a strong investment
potential with 6 year revenue growth projected at 342% compounded annually. (Momentex uses
a 6 year horizon as 1999 is a stub year.) In addition, EBITDA for year 6 is projected at
$39,320,000. Based on an EBITDA multiple of 8x21 and a 15% IPO discount, Momentex's 6

year valuation is estimated $315 million. An example of equity investment value appreciation
based on firm valuation follows. In the middle EBITDA scenario, a $100,000 first round
investment for 1.1% of equity is anticipated to be valued at $3 million at the end of year 5 at the
time of the anticipated initial public offering. This reflects a 5 year compound annual return on
the initial investment of 80%, assuming that the equity is non-dilutive. Sensitivity of Investor's
Annual Return
2005EBITDAMultipleHitRate3%4%5%6%7.063%72%81%86%8.067%76%85%90%9.070%79
%88%94%In the case of a strategic investor or buyer, equity value could increase dramatically
as these buyers typically pay premiums of 25% or more. Financing History Momentex LLC was
launched in August 1998 with a $20,000 start-up investment in January 1999 by the Company
founders, Melissa Chadwick and Zafar Khan. The founders were each awarded 50% equity for
22
their initial investment. To date, the venture has received no outside investment and prior to the
ensuing first round, they have retained 100% of the equity combined. Exit Strategy investors in
Momentex LLC would be able to realize a return on the appreciation of their investment under
the following scenarios: Initial Public Offering. If Momentex meets growth expectations and
demonstrates cash flow and earnings characteristics attractive to the public markets, the
Company may seek a public offering to raise capital for further rapid expansion as well as to
add liquidity for founders and investors. Momentex anticipates that the high visibility of Gulp &
Go service would create strong retail demand for the offering. Rapid expansion in service
locations will help Momentex to penetrate the market with Gulp & Go service, which if fullypenetrated by Momentex would achieve an attractive annual revenue stream in excess of $600
million, reflecting 10% of toll road users purchasing. If, for example, Gulp & Go service has
broader availability, exposing more drivers to the service, annual revenues will near $1 billion
with 15% of toll road users purchasing. In addition, Momentex views international toll roads,
concentrated in Japan and Europe, as a significant source for expansion, with a combined
market estimated to be 20% larger than the U.S. market. Investment or Acquisition by a
Strategic Player. Momentex believes that there are a number of beverage companies who
would be potential investors or buyers for the Gulp & Go service platform as it offers an already
developed operating model for a new distribution channel which can lock out competition and
provides a pipeline for new service and product introductions. With the major beverage
companies such as Coca-Cola and PepsiCo investing in equity of its bottlers (distributors), they
may view an investment in Momentex as a method of securing access to a new distribution
channel. In addition, Cadbury Schweppes and Virgin Cola may see this investment as a method
of increasing the reach of their struggling beverage brands. Nestle and Starbucks may see
Momentex as providing an ideal method to increase the popularity of their packaged coffees
through mass distribution within the Gulp & Go service to commuters on the roads. Momentex
also believes that companies in the related areas of service plaza concessions and toll road
systems integration would also be possible investors or acquirers. Service plaza
concessionaires may view the Gulp & Go platform as an exciting new service offering which
could provide the key differentiator in bidding for toll road concession contracts. Toll road
systems operators, too, may consider the service as an attractive offering and a way to
distinguish itself from other bidders. 21 Sodexho Marriott, Host Marriott Comparables. Risk
Factors Managerial 1. Real Estate Use Approvals. As the Company must have the right to

operate at toll plazas, its success in securing a pilot operation is dependent upon toll road
approvals. With a limited operating history and bureaucratic management of some roads, there
can be no assurance that the Company can secure such approvals quickly. To mitigate this,
Momentex not only works with an influential network, but also understands the needs of the toll
road operators and the benefits the Gulp & Go service brings to them. 2. Market Acceptance of
Toll Plaza Retailing. Gulp & Go beverage service is an innovation that will be dependent upon
driver adoption for its success. The Company's marketing and public relations campaign is
designed to educate drivers and publicize the availability and convenience of Gulp & Go
service. Market research indicates that the Gulp & Go target market segment is 23
amenable to innovation but there can be no assurance of driver adoption of the service. To
mitigate this, Momentex will conduct thorough market research on each road before roll out to
identify local price and time sensitivity, and beverage selection preferences. 3. Dependence
Upon Exclusivity. The business model is based upon the key assumption that Momentex can
acquire exclusive rights from toll roads to retail products at points of driver interface. While
Momentex has established relationships with the ten largest toll authorities in the United States,
there is no assurance that it will be able to secure exclusive retailing contracts with these
entities. To mitigate this, Momentex will continue to prove the operational model through live
demonstrations and model the value it adds to specific roads. 4. Limited Track Record. The
Company believes that it has assembled a management team with breadth and depth of
expertise, yet has limited experience working together. To mitigate this, Momentex understands
the needs of management and advisors and uses a strong team-based management style. 5.
Competition. While the Company will take every step to protect its proprietary business model,
there can be no assurance that competition will not ensue. The Company's potential
competitors are much larger, with more resources, -and may have market power. To mitigate
this, Momentex will form alliances with chief "deep pocket" competitor threats. 6. Labor Force. In
certain toll configurations, the Company must develop an arrangement where the toll collectors
will also process beverage orders in full service lanes. This will require a discussion with the toll
authority as well as the Teamsters Union. It is possible that the union may demand that the toll
collectors' job classifications be changed to accommodate the addition of Gulp & Go service.
Demands such as these could add significant delay to or otherwise impede the pilot
implementation or the ensuing roll-out. To mitigate this, Momentex aims to tie-in ideas of local
workers and avoid surprising the local unions. 7. Cannibalization. In some configurations, the
toll authority or food service providers at service plazas may perceive the Gulp & Go service as
cannibalizing upon their sales. With market research demonstrating that restrooms are the
largest draw to service plazas, and Gulp & Go providing more fluids and caffeine (a diuretic) to
drivers, restroom stops at service plazas may increase, adding to their total foot traffic. To
mitigate this, Momentex will relay the value proposition to stakeholders and understand their
concerns. 8. Potential Legislation. In some states, there have been referendums to eliminate
tolls on turnpikes. While initiatives such these are unlikely to be approved because of existing
bondholder claims to future toll revenues, proposals such as these draw negative publicity to toll
roads. Additionally, as toll authorities begin to raise funds through increased commercial use of
the toll authority land, the public might see this as improper use of government resources. Toll
authorities need only suggest the alternative of raising taxes, and most will prefer the
commercialization of the land to generate the necessary revenues. To mitigate this, Momentex

will monitor and use proactive tactics to influence new legislation. 9. Politics. If people start
writing letters to their state representatives complaining about the Gulp & Go service, it may
become a politically bad endeavor, regardless of how economically attractive it is. To mitigate
this, Momentex will perform a detailed traffic analysis to localize service design and will perform
a strategic driver education program prior to implementation, 0perational 1. Traffic Flow. The
Company must ensure that its service does not increase traffic delays at the toll plazas.
Momentex will use computer simulation and determine the optimal plaza configuration to
accommodate Gulp & Go. However, there is no assurance that all traffic flow issues can be
anticipated and adequately resolved. To mitigate this, Momentex will model plaza specific traffic
flow using a proprietary computer simulation. 2. Technology. There are potential operational
obstacles to instituting Gulp & Go service at toll plazas. In addition to modifying existing
software, there are hardware requirements for beverage selection and dispensing. Until these
systems are developed and tested, as well as during ongoing operations, they will pose the
potential for technological uncertainty. To mitigate this, Momentex will contract to established
toll systems integrators to integrate/install and thoroughly 24
test the Gulp & Go service before installation and throughout pilot operation. In addition,
Momentex will service the equipment frequently during on-going operations. 3. Safety and
Liability. While the Company has developed Gulp & Go service to address safety issues, the
Company has no assurance that safety issues will not arise. The Company plans to have
liability insurance to cover expected risk. To mitigate this, Momentex has designed the service
with features and a process to enhance safety. 4. Seasonality of Revenues. The Company
expects that its operations will be concentrated in the Northeast portion of the United States. As
a result, revenues may fluctuate with seasonal temperatures. To mitigate this, Momentex will
look at offering service in stable climates such as California and Florida. 5. Intellectual Property
Risk. The Company's ability to compete is in part dependent on resources to protect and
enforce Momentexs intellectual property rights. To mitigate this, Momentex will monitor
infractions on its intellectual property and design a situation specific strategy with legal counsel
to approach each infringement. 6. Dependence Upon Third Parties. With certain functions
outsourced, the Company could become dependent upon certain contractors and be exposed to
opportunistic renegotiations. To mitigate this, Momentex will aim to align incentives and
continue discussions with their competitors. Appendices (not provided for this exercise) 1.
Market research survey 2. Hardware integration 3. Software integration 4. Internet integration 5.
Traffic flow analysis 6. Income statement 7. Balance sheet 8. Cash flow statement 25