Sample Business Plan

I
n the beginning water covered the Earth. Out of the water emerged an island, a single giant mass of land;
an ancient supercontinent called Pangaea.
Over billions of years, tectonic forces broke Pangaea apart, dividing the supercontinent into ever distant land masses: Africa, Eurasia, Australasia, North and South America.
As the land masses drifted farther apart, so too did the people who inhabited them. Huge bodies of water, time and space, separated people from their friends, family, loved ones and partners in trade.
Until now
Iga: (eye-jee-uh) n: i mod. (interconnected; internet; idea); Gaea Grk. (earth; land). 1) The new supercontinent; a virtual place created through light speed communications; 2) Interconnected Earth; everywhere at once, omnipresent; 3) A global Internet Protocol (IP) communications network carrying streaming digital voice, video and data, transcending physical barriers, to bring all the people of the world together in one virtual place at any time.
Important Information
Confidential
This corporate plan and all of its contents were produced internally by Iga. For more information contact: Kirk Rittenhouse Manz, CEO Iga 119 Windsor Drive Nashville, Tennessee 37205 E-mail kirk.manz@igaea.com Telephone 615/353-9737 Facsimile 615/353-9521 www.igaea.com 2nd Quarter 2000 This business plan is provided for purposes of information and evaluation only. It does not constitute an offer to sell, or a solicitation of securities, offers to buy or any other interest in the business. Any such offering will be made only by appropriate documents and in accordance with applicable State and Federal laws. The information contained in this document is absolutely confidential and is intended only for persons to whom it is transmitted by the Company and to their immediate business associates with whom they are required to confer in order to properly evaluate this business opportunity. By reading this document you agree not to disclose the information contained herein regarding the Company, its owners, employees, prospective employees, independent contractors, consultants, agents, customers and prospective customers, marketing methods, products, services, strategies, target markets, business plans, financial projections or any other information regarded as trade secrets, confidential or proprietary to any other party not specifically outlined above without the express written consent of the Company. Any reproduction of this document, in whole or in part, or the divulgence of any of its contents in any form to unauthorized parties without the prior written consent of the Company is expressly prohibited. The Company believes the information set forth herein to be reliable. It must be recognized, however, that predictions and forecasts regarding the Companys future performance are necessarily subject to a high degree of uncertainty. Therefore, no warranty of such forecasts is express or implied. If you desire additional information regarding Iga, please contact the Company.
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CONFIDENTIAL
Table of Contents
I. Executive Summary . . . . . . . . . . . . . . . . . . . 1 II. Management . . . . . . . . . . . . . . . . . . . . . . . .11 III. Financial Information Summary . . . . . . . . . . .15 IV. Comprehensive Strategic Marketing Plan . . . . .19 V. Network Deployment and Operations . . . . . .37 VI. Competition . . . . . . . . . . . . . . . . . . . . . . . . .47 VII. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . .51
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CONFIDENTIAL
Executive Summary
Introduction
1st International Telecom, Inc., dba Iga, a Delaware corporation was formed in 1998 and incorporated in September 1999, to capitalize on emerging market opportunities in the VoIP internet telephony industry and to provide unified communications services to a global business and consumer marketplace. Iga has partnered with Cisco Systems, Inc., one of the most valuable companies in the world. Cisco, the leading maker of internet traffic equipment, has provided Iga with a commitment of $60 million in vendor financing to facilitate the systematic deployment of Igas global voice and data network. Igas core executive management team consists of highly experienced telecom sales, marketing and technology professionals who have developed and managed over $300 million in global voice revenue for top ten carriers. Iga will deliver Voice over Internet Protocol (VoIP) international long distance calling, as well as enhanced voice, data and video communications services to a global residential and commercial customer base, using proven tactical and strategic sales initiatives and established wholesale and retail sales channels.
Iga will become a worldwide leader in offering carrier-grade, phone-to-phone VoIP international calling and bundled communications services in selected markets in the Americas, Europe, Australia, Asia, Africa and the Middle East. Igas current funding consists of $60 million in vendor financing provided by Cisco and $2 million in early stage equity. This, combined with an anticipated $30 million plus in additional equity will enable the rapid deployment of the Companys global VoIP voice and data network. Upon completion of its second round equity funding, Iga will emerge as one of the best-funded startups in the IP telephony industry. In the next two years, Iga will deploy over one hundred Cisco IP gateways domestically and abroad to enable access and egress for internet protocol telephone calls, data networking and video distribution. The Company will provide high-quality connectivity into both established and emerging economies and will exchange IP traffic with carriers, internet service providers (ISPs) and internet telephony services providers (ITSPs) worldwide to enable carrier grade origination and termination.
Iga will deliver Voice over Internet Protocol (VoIP) international long distance calling, as well as enhanced voice, data and video communications services to a global residential and commercial customer base, utilizing proven tactical and strategic sales initiatives and established wholesale and retail sales channels.
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CONFIDENTIAL
Executive Summary
Market Opportunity:
Voice over Internet Protocol (VoIP)
Iga will deliver its bundled services to consumers and businesses through both wholesale and retail channels and will develop a comprehensive web presence designed to serve the needs of all international callers. Cisco recently granted Iga its coveted Cisco Powered Network status, placing Iga in the top 1% of service providers worldwide. The Companys proposed global IP telephony clearinghouse will seamlessly integrate IP calls with traditional voice network calls to provide Iga customers with comprehensive global access from any phone (wired or wireless) to any other phone in the world. Igas veteran management team will deliver a unique combination of technical understanding, extensive operational experience, valuable industry contacts and a demonstrated ability to successfully and rapidly generate a profitable mix of retail and wholesale revenues. By combining its core competencies of deploying next-generation technology with extensive expertise in international communications and ethnic marketing, Iga will create a sustainable competitive advantage and significant value for its shareholders.
According to the Gartner Group, a leading market research firm, the global telecommunications market is expected to grow to approximately $1.9 trillion by 2003. Voice over Internet Protocol (VoIP) is the future of voice communication and will soon replace the traditional circuit switched long distance telephone technology used throughout the world today. According to Killen & Associates, as much as 33 percent of all voice traffic will be IPbased by 2005. VoIP technology allows for the conversion of voice to data by a process of slicing analog voice signals into digital packets that can be transmitted over a data network, such as the internet, at a fraction of the cost of a traditional circuit switched call. Total IP voice minutes will rise from less than 300 million minutes in 1998 to almost 140 billion minutes in 2004 (source: IDC).
According to Killen & Associates, as much as 33 percent of all voice traffic will be IP-based by 2005.
Upon completion of its second round equity funding, Iga will emerge as one of the best-funded startups in the IP telephony industry.
Worldwide Retail & Wholesale IP Telephony Minutes 1998 - 2004

MOUs [Billion]*
140 120 100 80 60 40 20 0 1998 1999 2000 2001 2002 2003 2004
Retail Consumer
*Minutes Of Usage
Retail Business
Wholesale
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CONFIDENTIAL
Executive Summary
The pricing advantage for data transmission, including VoIP long distance calling, is particularly attractive for long haul transmissions terminated internationally.
Worldwide U.S. LD and International IP Telephony Revenues, 1998 2004
Revenues [$ Billion]
20 18 16 14 12 10 8 6 4 2 0 1998 1999 2000 2001 2002 2003 2004
IP continues to emerge as the dominant technology in all its architectural variations. Mainstream telecom vendors are repositioning themselves to support voice and data integration through major acquisitions and alliances as evidenced by Nortels merger with Bay Networks, Lucents acquisition of Ascend and Excel, and Ciscos purchase of Summa Four. In the past twenty-four months, major internet telephony service providers (ITSPs) with large global infrastructures, such as IDT/Net2Phone and iBasis, have emerged. Some, especially in the U.S., are moving beyond the lowest cost provider market to offer value-added services such as virtual private networks (VPNs). These ITSPs are negotiating interconnection and partnering agreements to create wide area VoIP networks to rival the traditional circuit switched networks of the worlds incumbent Telcos. For example, Rimnet and iBasis have interconnected their networks in the U.S. and Japan, while ITXC, Deltathree and iBasis have additional peering arrangements in place. Large telcos are buying internet service providers (ISPs), VoIP vendors and portals to hedge their risks and to provide fast and efficient market entry opportunities. NTT acquired equity in
Iga projects $500 million in annual revenues within five years.
Iga will provide wholesale services to international long distance carriers and will provide higher margin retail services direct to the consumer.
International
US Long Distance
The market for Internet telephony is projected to grow from less than $1 billion in 1998 to over $18 billion in 2004, according to International Data Corporation, a market research firm.
Worldwide Retail & Wholesale IP Telephony Revenues 1998 - 2004
Revenues [$ Billion]
20 18 16 14 12 10 8 6 4 2 0 1998 1999 2000 2001 2002 2003 2004
Retail
Wholesale
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CONFIDENTIAL
Executive Summary
U.S. ISP Verio, Deutsche Telekom bought 20 percent of Vocaltec, MCI WorldCom acquired CompuServes network and ANS Communications from AOL, while GTE acquired BBN. BT has invested in Excite and Deutsche Telekom in Infoseek. Telcos are also forming strategic partnering relationships with ITSPs. For example, Ameritech/KPN/Qwest; NTT/Global-net/InterTel/Telba; and the recently announced JT/ITXC alliance are the first of many future arrangements. ITSPs are building their own version of the current accounting rate system and a clearinghouse business is emerging involving major players such as ITXC, GRIC, eGlobe, ArbiNet, and iBasis.
On November 10, 1999, Burlington, Massachusetts-based iBasis (IBAS) successfully completed its IPO. iBasis operates a worldwide VoIP network that provides wholesale services to international long distance carriers. Iga will provide wholesale services to international long distance carriers and will provide higher margin retail services direct to the consumer. iBasis sold 6.8 million common shares at $16 each, raising $108.8 million on annualized revenues of less than $17 million. Iga projects $500 million in annual revenues within five years. To date, the founders and management team of Iga have personally managed or developed a combined $300 million in global voice and data revenue. The iBasis network includes facilities in Los Angeles and New York that serve as access points to the Internet. At these locations, iBasis translates voice to data for transmission and retrieval over the Internet. Iga will deploy VoIP facilities in Los Angeles, New York and Miami with a proposed go live date of July 1, 2000 and will implement an aggressive rollout of over one hundred additional points of presence (POPs) within metropolitan centers in the U.S. and abroad within twenty-four months.
Iga will deploy VoIP facilities in Los Angeles, New York and Miami with a proposed go live date of July 1, 2000 and will implement an aggressive rollout of over one hundred additional points of presence (POPs) throughout metropolitan centers in the U.S. and abroad within twentyfour months.
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CONFIDENTIAL
Executive Summary
iBasis achieved a $487 million valuation at IPO. Iga anticipates achieving a minimum $1 billion valuation within three years. The Company believes that iBasis valuation and other IP telephony valuations referenced below demonstrate the public markets support for emerging VoIP carriers and the scope and depth of the expanding international voice and data services market, and provides an example to investors of potential returns.
Iga will distinguish itself in both its revenue and profit generating capacity and brand development expertise to establish itself as a world class and pre-eminent, tier 1 VoIP carrier. Iga will build a global VoIP integrated data communications network working in close partnership with Cisco to serve all internationally focused retail markets in the United States, including targeted ethnic communities and small to medium sized business customers, and to serve international callers in Europe, Asia and emerging economies.
The Company has developed strong relationships with a significant number of professional sales agents who maintain established customer bases and implement time tested methods of marketing.
U.K.
iBasis
Net2Phone
ITXC
GRIC
Deltathree
1999 Est. Revenue IPO Date Gross Proceeds Offer Price Closing Stock Price
$19M 11/9/99 $109M $16 $40.30
$47M 7/28/99 $81M $15 $26.56 $707M
$25M 9/27/99 $75M $12 $28.25 $429M
$10M 12/14/99 $64M $14 $21.00 $248M
$11M 11/22/99 $90M $15
7
No switching! No monthly fees! No hidden charges! Pay only for the minutes you use!
per minute
iga
what a good ida...
$29.00 $414M
Market Value at IPO $487M
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CONFIDENTIAL
Executive Summary
Products & Services
Iga will deliver an extensive array of IP products and services to include: VoIP packetized voice [long distance] Fax over internet protocol (FoIP) Internet access Unified messaging Data transmission Interstate and international long distance Dial around/casual calling [long distance] Prepaid calling [long distance] Enhanced services to include voicemail, conference calling and information services Virtual calling cards generated via the internet International call back Internet initiated call back and web conference calling (Call Navigator) Video conferencing and multimedia distribution The Companys VoIP products can be used from any phone, wired or wireless, to any phone in the world. Wireless users will benefit from special features and rates offered by the Company including the ability to bypass their wireless provider to place international calls at reasonable prices.
Iga will generate voice and data revenue through three active sales channels consisting of independent contractor agents; certified resellers; and strategic media, corporate and affinity partnerships. The Company will also generate revenue through a fourth global clearinghouse channel consisting of revenues derived from VoIP network affiliates in both the U.S. and abroad, that desire to terminate traffic in the United States or around the world utilizing the Companys IP gateways, underlying intelligent network, and billing and consolidation services.
The Companys VoIP products can be used from any phone, wired or wireless, to any phone in the world.
Giggles for
5.9
per minute
iga
what a good ida...
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CONFIDENTIAL
Executive Summary
Marketing Strategy:
Agent
Independent sales agents provide an opportunity for immediate revenues to the Company with essentially no upfront investment in marketing and customer acquisition. The Company has developed strong relationships with a significant number of professional sales agents who maintain established customer bases and implement time tested methods of marketing. All of these committed Iga agents currently target international callers within specific ethnic niches and have demonstrated a particularly effective ability to market to international callers within their communities. Some Iga agents utilize sophisticated back office systems to support their marketing efforts and to provide personalized and culturally sensitive front line customer support to their clientele. Many of Igas Master Agents typically service over 1,000 customers and generate aggregate gross revenues of $500,000 to $5 million per annum. Iga agents will receive a residual commission payment for sales they generate, hence their motivation to attract and keep high quality customers. This pay-for-results method of revenue generation will enable Iga to fix its cost of sales as a percentage of
revenue and to cost effectively deploy a worldwide sales force. The Companys VP of Agent Sales managed more than $180 million in annual revenues at Telegroup through a global agent network consisting of 1,400 agents in 100 countries. The Company has, to date, recruited twenty-six Master Agents, representing a potential $20 million in VoIP long distance revenues.
The Company has, to date, recruited twentysix Master Agents, representing a potential $20 million in VoIP long distance revenues.
5.9 per minute! Works on your phone now! No switching! No monthly fees!
iga
what a good ida...
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CONFIDENTIAL
Executive Summary
Marketing Strategy:
Reseller
Marketing Strategy:
Strategic Partnerships
On a wholesale basis the Company will provide its services in a turnkey format to established industry resellers. Industry resellers consist of independently licensed telecom resellers and/or sales organizations with established product distribution channels that either currently sell communications services or can easily be converted to accommodate the sale of communications services. Iga will have access to several industry resellers through its current established relationships and will develop new sales channels as part of its ongoing strategy to grow its wholesale revenue base. The Companys Vice President of Value Added Services has joined Iga from Teleglobe where he managed over $100 million in revenue. He brings with him established customer relationships and immediate access to new reseller commitments worth $5 - $10 million in year 2000 revenues with a projected 20% growth rate per quarter.
Iga has designed an innovative retail marketing strategy that leverages cooperative media and marketing relationships and strategic alliances in order to create the appearance and effect of a nationwide, multi-million dollar advertising, marketing and public relations campaign, at a fraction of the cost of traditional media coverage. The Company will advertise through numerous media, including television, radio, newspaper, magazines, web portals, catalogs, flyers, statement stuffers and various point of purchase locations, and will fund this marketing effort by entering into joint venture agreements with media, corporate and affinity partners to share in the long distance revenues generated by the program. Specifically, the network dial up nature of most of the Companys services allows for unlimited toll free and local access numbers to point to the Companys network switching platforms, thus facilitating the assignment of unique numbers to each cooperative advertising partner or industry reseller for billing, tracking, provisioning of enhanced services (such as customized greetings) and commissioning.
As compared to current competitors in the marketplace, Igas core marketing competency and ability to generate real revenue growth and profitability will enable the Company to achieve market valuations significantly greater than its peers.
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CONFIDENTIAL
Executive Summary
Through the use of unique access numbers, the Company will allocate a percentage of revenues generated on a given number to the partner responsible for promoting that number. Calls generated on a given access number provide direct data to the Company on the effectiveness of a given advertising campaign and/or the responsiveness of a given market segment. Such tracking allows the Company to focus quickly on effective strategies and responsive audiences. In this manner the Company is able to track traditional media advertising effectiveness with the efficiency of a direct response campaign.
Potential revenue sharing partners for the Company include: Individual television and radio stations looking for the next successful per inquiry infomercial to provide residual monthly income; Credit card companies interested in generating profits from billing statements; Affinity groups searching for new sources of revenue that are market driven and require little sales effort, distribution, maintenance or personnel; Newspapers or magazines with remnant advertising space currently going to waste; Network marketing companies or service companies looking for new products; Internet portals eager to increase advertising revenues through creative deal structuring; National retailers and member organizations seeking new service offerings; Cable television providers or utility companies looking to bundle telecom services.
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CONFIDENTIAL
Executive Summary
Conclusion
Iga will emerge as a dominant communications services provider at the crest of a rapidly converging wave of voice and data technology. Igas core management team will incorporate that technology into a comprehensive voice, data and internet solution serving an internationally focused residential and business customer base worldwide. The Company has the demonstrated ability to drive revenue in excess of $10 million in 2000 and to sustain growth to over $200 million in annual sales by 2003. Iga believes that its unique combination of both wholesale and direct to consumer sales will distinguish it from its competitors and create lasting relationships that add sustained value to the enterprise. As compared to current competitors in the marketplace, Igas core marketing competency and ability to generate real revenue growth and profitability will enable the Company to achieve market valuations significantly greater than its peers.
Iga will act quickly to become a first mover in a rapidly developing marketplace and by implementing a balanced yet aggressive approach to growth. Through a series of private placement equity offerings and a strategy to leverage equity through appropriate access to the extensive credit resources from leading technology providers such as Cisco and other committed partners, the Company will build a state-of-theart global VoIP voice and data network. With this network, Iga will deliver increased value propositions to its customers, generate steady revenue and profit growth, and achieve rapid appreciation of its market valuation yielding positive ROI to its shareholders.
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CONFIDENTIAL
Management
Founder - Kirk R. Manz, CEO/President. Former CEO and founder, Fifth Coast Communications, LLC, a long distance marketing firm that generated over 225,000 customers for LCI International in just 18 months. Former CEO and founder, The Kiman Corporation, a provider of computertelephony products and services. Former President and founder, Communications Unlimited, Inc., a marketing consulting firm. BA Communications, Vanderbilt University. Founder - Robert H. Woodward, Executive Vice President. Former President and founder, Fifth Coast Communications, LLC. Former President, The Kiman Corporation. Juris Doctor, UCLA. Member California State Bar and American Bar Association. Former Military Intelligence NCO, U.S. Army, 101st Airborne Division. BA, Spanish/ Communications, Austin Peay State University.
Chief Financial Officer Robert Ling. Former National Partner-in-Charge of Corporate Finance & Valuation Services to Telecom & Media Industries, Deloitte & Touche (Atlanta). Former Managing Director, Financial Advisory Services - Eastern Europe and Russia, Deloitte & Touche (Prague). Former Manager, Valuation Group, Ernst & Young (Dallas). Former Controller/ Treasurer Mutual Oil of America, Inc., a publicly-traded oil and gas company. MBA Finance, University of North Texas, CPA, CFA. Vice President Traffic Management Edward C. Morch. Former Director LCR, Teleglobe. Directly responsible for the buying and routing of 5 billion minutes per year, annual cost reduction in excess of 20%, wholesale broadcast sales, and voice quality of service. Former Manager LCR, Teleglobe. Former Manager of Business Operations, Global One. Former Project Manager, Sprint International. Bachelor of Architecture (Professional Degree), Catholic University. BS, Architecture, Catholic University.
The founders and management team of Iga have personally managed or developed a combined $300 million in global voice and data revenue.
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CONFIDENTIAL
Management
Vice President Agent Sales Carl Churchill. Former Executive Director of Sales and Marketing, Managing Director of Global Sales Agent Development, and Director of North American Operations, Telegroup Inc. Responsible for a worldwide network of agents generating in excess of $180 million in annual revenues. Holds the rank of Major in Military Intelligence, U.S. Army Reserves. MA in Strategic Intelligence, Defense Intelligence College. BA International Relations, German, University of Utah. Vice President Value Added Services Taj Mehta. Former Sales Director, Teleglobe. Directly responsible for the development and management of an estimated $110 million in long distance revenue. Former Product Manager for dial around services, Teleglobe. Former Market Manager, International Markets, MCI. Former District Manager of International Marketing, MCI. MA of International Studies, University of Washington. BA, University of California San Diego. Founder - George Jagoe, Vice President Strategic Planning. Former Assistant Country Manager, Argentina, Aetna International. Former Senior Product Manager, Kaiser Permanente. Former Member/ Director, Fifth Coast Communications, LLC. MBA, Kellogg School of Business Management. BA, Harvard University.
Vice President Corporate Affairs Paul Myers. Former Senior Vice President and Market Executive Commercial Banking, NationsBank Corp. Former Vice President Business Development, Suntrust Banks, Inc. BA, Economics, University of the South. Project Manager - Network Design and Implementation - Greg Johnson. Currently contracted to Iga through NetEffect. Former Network Design Engineer, Sprint (14 years). Three patents: call processing cache for local number portability (granted), cache for 800 number database (pending), voice verification utilizing ATM connectivity (pending). Senior Director Least Cost Routing Scott Sanders. Former Senior Manager, European Region, Global Traffic Organization, Teleglobe. Former Regional Manager, Western Europe - Least Cost Routing, Teleglobe. Former Project Lead Network Cost Management, MCI. Former Business Analyst - Network Cost Management, MCI. MBA, BS, Virginia Polytechnic Institute.
Igas Vice President Agent Sales generated over $180 million in annual revenues through a worldwide network of 1400 agents.
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CONFIDENTIAL
Management
Senior Director of Brand Development - Whitney Selert. Former Litigation Attorney, Georgeson, Thompson & Angaran. Juris Doctor, University of California, Davis. Law Clerk, U.S. Ct. of Appeals, 9th Circuit. Interrogator, 219th Military Intelligence Company, U.S. Army. BA, Brigham Young University. Senior Director of Creative Services Ed Brown. Former Creative Director, New Media Directions. Former Interactive Media Director, Dye, Van Mol and Lawrence. Former Member/Creative Director, Fifth Coast Communications, LLC. Former Principal, Small World Productions. BA, Mechanical Engineering, Southern Methodist University.
Senior Director of Interactive Media Mitch Powers. Former Producer, Little Planet Learning. Former Member/Vice President Operations, Fifth Coast Communications, LLC. Former Principal, Small World Productions. Former Principal, Campbell-Powers Communications. BS, Communications, University of Tennessee, Knoxville. Director of Human Resources Michael Magevney. Former Special Projects Director, AIM Healthcare Services. Former Executive Director, Arcon Navarre. Former Executive Director and Co-Founder, Break Away. MBA, Owen Graduate School of Management. BA, Philosophy, Vanderbilt University. Director of Customer Service Debora Churchill. Former Director of North American Customer Service, Primus. Former Assistant Manager North American Customer Service, Telegroup, Inc.
Igas Vice President Value Added Services generated over $110 million in long distance revenues through the development of unique reseller channels.
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CONFIDENTIAL
Management
Counsel
The Company has hired the following additional key personnel. Dir. North American Agent Development - Doug Huette. (formerly with Telegroup/Primus) Dir. International Agent Development - Laura Miller. (formerly with Telegroup/Primus) North American Support Specialist Aida Douglas. (formerly with Telegroup/Primus) Agent Team Leader - Charlotte Pfab. (formerly with Telegroup/Primus) Administrative Support Rachel Heckthorne. (formerly with Telegroup/Primus) Bookkeeper - Mary Jones. (formerly with PictureVision) The Company is actively recruiting the following additional key personnel: COO CTO CNO Director MIS Controller
The Company has retained the services of the following law firms: Covington & Burling, Washington Ralph Voltmer Greenberg & Traurig, Washington Ronald Scheman Alston & Bird, Atlanta Dominic Mazzone Boult Cummings, Nashville Henry Walker Tuke Yopp & Sweeney, Nashville Michael Yopp
Igas Vice President Traffic and Network Optimization was responsible for the buying and routing of 5 billion minutes in 1999.
Accounting
Roth Bookstein and Zalslow (Los Angeles) currently serves as the Companys accountants. The Company is currently reviewing proposals from the following firms: Deloitte and Touche, Ernst and Young, KPMG, and Arthur Andersen.
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CONFIDENTIAL
Financial Analysis and Capitalization Requirements
Iga is uniquely poised to become a global competitor as a comprehensive Integrated Communications Services Provider (ICSP) and to achieve a market valuation in excess of $1 billion by 2003. The Company has raised over $62 million in debt and equity to date:
ments, ethnic marketing and advertising consulting, advertising production, marketing expenses, sales and support staff, management, general and administrative expenses, and deployment of the Companys global VoIP voice and data network.
The company has raised over $62 million in debt and equity to date.
Exit Strategy
Founders
Equity
$ $
60,000 150,000 The Company foresees three potential exit strategies and plans to periodically evaluate the advisability of: 1) undertaking an initial public offering of its equity securities as a source of additional financing and/or to provide early stage investors with liquidity; 2) repurchasing shares of early investors with future current cash flow or through a strategic partnering; and, 3) positioning all or part of the assets of the company as an attractive acquisition target for a larger domestic interexchange carrier (IXC) seeking to enhance existing revenue and network traffic, an incumbent or competitive local exchange carrier (ILEC/CLEC) seeking to enter the international VoIP market, or a foreign telecommunications provider (PTT) seeking to enter the U.S. market and expand its own VoIP network capacity.
Seed Round
Equity
Series A Preferred
Equity
$ 1,800,000 $20,000,000 $40,000,000
Cisco Capital
Working Capital
Cisco Capital
Equipment Loans
Total Capitalization
$62,010,000
Of the $60 million provided by Cisco Capital, the Company has immediate access to $6 million ($2 million working capital and soft costs; $4 million equipment). The balance of $54 million is available to the Company upon securing an additional $15 million in equity. The Company is raising an additional $15-$30 million in Series B Preferred Equity to fund additional management and personnel recruitment, carrier access and wholesale purchase agreements, computer programming, customer service outsourcing commit-
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CONFIDENTIAL

Iga Projected Income Statement
2000 Revenues Cost of Sales (incl. Commissions) Circuit Switching and Billing VOIP Network Expenses Total Direct Costs $9,797,500 1,371,650 6,142,225 2,310,000 9,823,875
2001
2002
2003
Iga is uniquely poised to become a global competitor as a comprehensive Integrated Communications Services Provider (ICSP) and to achieve a market valuation in excess of $1 billion by 2003.
$51,128,073 $104,157,576 $209,825,283 7,157,930 27,503,964 6,660,000 41,321,894 14,582,061 43,541,963 21,505,467 79,629,490 29,375,540 62,561,294 62,188,177 154,125,010
Gross Profit Total Operating Expenses EBITDA Depreciation & Amortization Interest Income Interest & Financing Expense Provision for Income Tax Net Income (loss)
(26,375) 3,625,000 (3,651,375) (1,233,395) 318,423 (2,015,000) -
9,806,179 9,300,000 506,179 (6,833,675) 782,287 (6,459,256) -
24,528,085 16,500,000 8,028,085 (8,000,400) 565,203 (6,001,955) -
55,700,273 23,700,000 32,000,273 (8,000,400) 424,944 (3,908,195) (3,197,900)
($6,581,347) ($12,004,466) ($5,409,067) $17,318,721
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CONFIDENTIAL

Iga Projected Balance Sheet
2000 Current Assets Cash New Accounts Receivable Cumulative Accounts Receivable Total Current Assets Fixed Assets Equipment - Capital Lease Less Accum. Deprec. & Amort. Total Fixed Assets Total Assets Liabilities & Stockholders Equity Current Liabilities Accounts Payable Obligation for Working Capital Current Due Total Current Liabilities Long Term Notes Payable Obligation Under Capital Lease Total Long Term Liabilities Stockholders Equity (Deficit) Equity Investments Retained Earnings (Deficit) Current Earnings (Loss) 17,025,000 (225,000) (6,581,347) 20,001,000 20,001,000 2,929,687 9,999,000 260,000 13,188,687 20,001,000 (1,233,395) 18,767,605 $43,408,340 $22,963,235 565,250 1,112,250 24,640,735
2001
2002
2003 $19,456,075 4,709,520 12,608,356 36,773,952
$23,605,847 $13,063,291 1,158,189 3,088,562 27,852,599 2,349,773 6,277,147 21,690,213
40,002,000 31,934,930
40,002,000 23,934,530
40,002,000 15,934,130 $52,708,082
(8,067,070) (16,067,470) (24,067,870)
$59,787,529 $45,624,743
5,418,297 18,339,463 1,131,151 24,888,912
10,491,024 13,473,860 1,902,974 25,867,859
19,263,141 7,138,661 1,902,974 28,304,777
36,684,430 36,684,430
26,951,763 26,951,763
14,279,464 14,279,464
17,025,000 (12,004,466) (1,785,812)
17,025,000 (5,409,067) (7,194,880)
17,025,000 17,318,721 10,123,840 $52,708,082
(6,806,347) (18,810,812) (24,219,880)
Total Stockholders Equity (Deficit) 10,218,652 Tot. Liabilities & Stckhldrs Equity Notes $43,408,340
$59,787,529 $45,624,743
* Based on $15M minimum Series B equity contribution
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CONFIDENTIAL

Iga Forecasted Cash Flow
2000 Cash Flows From Operations Net Income (Loss) Adjustments Depreciation & Amortization Changes in Operating Assets & Liabilities Net (increase)/decrease in Accounts Receivable Net increase/(decrease) in Acct. Pay & Accr. Liabilities Net increase/(decrease) in LOC Net Cash Provided (Used) In Operations (1,677,500) 2,929,688 260,000 (3,835,765) 1,233,395
2001
2002
2003
($6,581,347) ($12,004,466) ($5,409,067) $17,318,721
6,833,675
8,000,400
8,000,400
(2,569,252) 2,488,610 871,151 (4,380,281)
(4,380,170) 5,072,728 771,823 4,055,714
(8,690,956) 8,772,117 25,400,283
Cash Flow from Financing Activity Capital Expenditures Principal Payments on Obligations Increase (Reduction/forgiveness) in Capital Lease Increase (Reduction/forgiveness) in WC Loan Proceeds From Equity Financing(s) Net Cash Provided (Used) in Financing Activity (20,001,000) (20,001,000) 20,001,000 9,999,000 16,800,000 26,799,000 (4,976,106) 20,001,000 9,999,000 5,022,894 -
(14,598,270) (19,007,499) -
(14,598,270) (19,007,499)
Net Increase (Decrease) in Cash
22,963,235
642,612
(10,542,556)
6,392,784
Beginning Cash Balance
22,963,235
23,605,848
13,063,292
Ending Cash Balance
$22,963,235 $23,605,848 $13,063,292 $19,456,075
Notes * Based on $15M minimum Series B equity contribution
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Comprehensive Strategic Marketing Plan

Market Opportunity
The international telecommunications industry consists of transmissions of voice and data that originate in one country and terminate in another. This industry is experiencing a period of rapid change which has resulted in a substantial growth in international telecommunications traffic. For domestic carriers, the international market can be divided into two major segments: the U.S.-originated market, which consists of all international calls which either originate or are billed in the United States, and the overseas market, which consists of all calls billed outside the United States. Iga will capitalize on the U.S. originated market by implementing agent, reseller and cooperative sales and marketing strategies in the United States. With continued growth and proven revenues, the Company will expand internationally by deploying a global VoIP infrastructure which will allow Iga to operate as a global facilitiesbased carrier. As early as 3rd quarter 2000, the Company plans to: Increase transmission capacity, including its ability to originate and transport traffic through the deployment of additional VoIP gateways provided by Cisco either directly in country or through strategic partnerships with other VoIP providers;
Acquire additional termination options to increase routing flexibility; and Expand its customer base through focused marketing efforts with the long term objective of becoming a tier 1, comprehensive, international, facilities-based, VoIP carrier and integrated communications services provider. Iga is uniquely positioned to emerge as a first mover in acquiring consumer and small business market share as a unified communications services provider utilizing an underlying VoIP network. The Company will leverage its competitive advantage and its first to market position in a variety of geographic, demographic and technology sectors by bundling services; providing convenience, efficiency and lower prices; and by procuring long term, exclusive marketing contracts with strategic partner providers including major media and corporate marketing partners, thus establishing formidable obstacles to entry to would-be competitors. By developing a balanced and distributed mechanism for organic sales growth, along with a focused approach to infrastructure deployment, Iga, along with its agents, resellers and
Iga will capitalize on the U.S. originated market by implementing agent, reseller and cooperative sales and marketing strategies in the United States.
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Retail Positioning Strategy
retail corporate and media partners, will bring todays newest voice, data and internet technologies to both residential and business customers worldwide as these technologies emerge in the global marketplace. In many cases, the company will be first to reach consumers in emerging economies and will be first to fulfill an unmet customer need as a trusted aggregator of a comprehensive array of communications and multimedia technologies as it serves customers directly through face to face, relationship and partnership channels. As a VoIP voice and data communications services provider, the company will readily adapt to changing market conditions, diversify its portfolio of products and services, and achieve economies of scale for many of its products by serving as the underlying carrier. Igas VoIP technology will prove competitive, adaptive and, ultimately, attractive to the consumer in an environment of rapid change, and the Company will receive extensive support from Cisco to maintain its functional advantage as a services provider even as new technologies emerge in the areas of bandwidth provisioning and alternative forms of telecom conduit to include cable, DSL, wireless broadband and optical networks.
Ethnic Market Segmentation Criteria a. Ethnicity b. Spending Patterns c. Geography (where customers call) d. Geography (where customers live) e. Income level f. Time in country Affinity Market Segmentation Criteria a. Passions b. Hobbies c. Religion d. Schools e. Noble Causes f. Health
Iga is uniquely positioned to emerge as a first mover in acquiring consumer and small business market share as a unified communications services provider utilizing an underlying VoIP network.
The Target Market

The Companys ideal customer is an affluent ethnic residential or small business consumer with strong community affiliation and strong ties to friends and family abroad. Such a customer typically places international calls on a regular basis, has long-distance usage of $35-$300 per month, owns his/her own phone and pays the bill on time. The dial up nature of most of the Companys services will enable the Company to build brand loyalty and trust within the ethnic groups it serves without switching the consumers primary long distance provider.
INDIA
No switching! per minute No monthly fees! No hidden charges! Pay only for the minutes you use
49
iga
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Customer Acquisition and Retention
Once Iga fully deploys the VoIP network the Company can then offer more sophisticated services to its ethnic residential customer base through relationship selling, offering value added features and volume based discounts particularly to its business and ethnic SoHo (small office/home office) users. With the high levels of entrepreneurial activity among the Companys targeted ethnic audience, this opportunity to upsell to a loyal customer base will generate significant revenue growth for Iga. The Company will also target high quality affinity customers and ethnic affinity customers who belong to the mobile middle class, are well educated, have friends and family throughout the United States, and spend $25-$75 per month on long distance. Through affinity marketing, a portion of these customers long-distance revenues will go to a charitable cause. The Company believes that once acquired, affinity customers will remain loyal, high quality users. Iga will deliver a higher quality array of services than its competitors as a result of the Companys integrity, desire to serve, compassion, recognition of the needs of the ethnic citizen, and a desire to fulfill those needs without taking advantage of the customer. The core managers have a profound familiarity with the ethnic markets and the international community, as well as a general desire to provide streamlined, innovative products to the telecommunications marketplace that are easier to use, more valuable and ultimately more fun. Where applicable, the Company will provide personalized, in language, in-community, agent based, front line customer service catering to the customers needs. This business model will create the intimate feel of a more human company within a given ethnic sector even as the company grows geometrically in the aggregate. The Company will offer a user friendly, low cost international long distance alternative to the high cost, impersonal big three carriers AT&T, MCI/Worldcom & Sprint. Iga will deliver a variety of high quality, VoIP dial around products and bundled voice and data services with easy instructions in the customers native language and with access to friendly, in language customer service The Companys ideal customer is an affluent ethnic residential or small business consumer with strong community affiliation and strong ties to friends and family abroad.
1-888-XXX-XXXX
iga
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options through automated voice response, live operators, or the Companys web portal. Iga will deliver low prices, easy and convenient billing on the local phone bill or via credit card, valuable incentives for first use and for customer retention, and tie-ins with community groups to show support of common goals and a reciprocal relationship with the ethnic communities the Company serves. The Companys products will be available for use on the home phone or small business phone by third quarter 2000, nationwide. Customers will dial a local access or nationwide toll free number, then follow easy in language instructions to place a domestic or international call. All calls will be billed on the local phone bill or via a pre-arranged credit card agreement. The Companys market approach is one of integrity and openness in its relationship with its customers. The Companys primary international voice and data termination services have no monthly fees or hidden charges and utilize flat rate billing 24 hours a day, 7 days per week. Customers pay only for the actual minutes they use.
The Companys goal is to provide ethnic consumers the opportunity to make informed decisions based on honest and straightforward choices for their international long distance and other enhanced voice and data services. Management believes that the customer has the right to complete product information and that the variable calling plans offered by most of the Companys competitors are not only unnecessary, but they are designed directly to confuse and take advantage of the customer. As an honest provider and trusted partner, the Company will have a major competitive advantage in targeted ethnic markets. Trust reduces churn, increases referrals and opens up opportunities to market additional products to customers, all of which will positively impact the Companys bottom line. Management believes that ethnic customers will respond favorably to the Companys new market vision and approach to customer relationships.
Iga will deliver a higher quality array of services than its competitors as a result of the Companys integrity, desire to serve, compassion, recognition of the needs of the ethnic citizen, and a desire to fulfill those needs without taking advantage of the customer.
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Direct Marketing Channels Customer Influence Points Analysis
Primary points of customer contact Master Agents and Certified Resellers Television advertising campaigns Radio Print (magazines/newspapers/ethnic papers) Internet banners, internet portals Direct mail/Direct Email Point of purchase displays Billing statements/statement stuffers Bank cards, credit cards, ATM cards Affinity newsletters Event sponsorship Word of mouth Secondary points of contact Phone bill Company web site IVR/800 number Outbound telemarketing Customer service Residual advertising, stickers The Companys goal is to provide ethnic consumers the opportunity to make informed decisions based on honest and straightforward choices for their international long distance and other enhanced voice and data services.
The Companys top managers possess a proven ability to drive substantial voice and data revenue through three distinct sales and marketing channels consisting of independent contractor agents; certified resellers; and strategic media, corporate and affinity partnerships. Igas market entry strategy is comprised of a three pronged initiative to promote a bundled package of voice and data services to ethnic U.S. and worldwide consumers utilizing the above described channels. Igas VP of Agent Sales has recently joined the Company after working for Telegroup where he managed a global agent network generating over $180 million in annual revenues. The Companys VP of Value Added Services comes to Iga from Teleglobe where he personally developed a $110 million block of ethnic based reseller traffic targeting U.S. based ethnic populations. The Company forecasts $7 million in agent sales and $3 million in reseller sales in 2000.
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Product Offerings
The company will provide a variety of voice and data products and services to include: VoIP packetized voice [long distance] Interstate and international long distance Dial around/casual dialing [long distance] Prepaid calling [long distance] Fax over IP Internet access Data transmission Unified messaging Enhanced services to include voicemail and information services Conference calling Calling cards and virtual calling cards generated via the internet International call back Internet initiated call back and conference calling (Callnavigator.com) Video conferencing and multimedia distribution
The following are compelling reasons why customers will use the companys products versus those of competitors: User friendly, multiple foreign language voice prompting and customer service; Substantially lower pricing to target countries; No monthly fees, no signing up; No changing of long-distance companies required; Convenient LEC billing or credit card billing and 24 hour internet access to billing information, rates and other important product information; Calling card type portability; Enhanced services such as speed dialing and conference calling; Bundled services such as long distance, internet access, pre-paid international inbound calling; Referral bonuses to reduce customers telephone bills in return for bringing friends to the network; Contributions to ethnic communities and not-for-profit organizations; Value added giveaways. At the core of the Companys product offerings will be its VoIP and hybrid circuit switched calling network. Several of the companys products are based on the dial in or dial around concept. In other words, Iga customers will access the companys state
The Companys top managers possess a proven ability to drive substantial voice and data revenue through three distinct sales and marketing channels consisting of independent contractor agents, certified resellers, and strategic media, corporate and affinity partnerships.
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Callnavigator.com
of the art network and enhanced services options by dialing either a seven digit local access number or an eleven digit toll free access number. Customers will then follow easy instructions in the language of their choice to place an interstate or international call. By offering primarily dial up access products, the Company saves literally millions of dollars in network equipment costs and significantly shortens time to market. Iga will manage the seamless integration of its VoIP and circuit switched networks such that the customer will receive the highest quality voice and data transmissions.
Iga is developing a web initiated conference call product named Callnavigator.com (see Appendix). Callnavigator will enable any customer, anywhere in the world to set up a two leg or multi-leg conference call by easily accessing the Companys Callnavigator.com web page. Customers will register at the site, designate a billing method and essentially control the Companys switch in New York or Los Angeles to call the various parties on the call. The web site can be used to instantly generate multi-party conference calls both domestically and internationally. All legs of the call are generated from the U.S. outbound, thus taking advantage of significant savings versus internationally initiated calls. The Iga Callnavigator product will enable future Web Access Protocol (WAP) hand held devices such as the Palm VII and web enabled cell phones such as those being developed by Sprint and Nokia to access the power of the instant international conference call. A business traveler in Germany, for example, can initiate a conference call with multiple parties in multiple foreign countries at the touch of a button, all while he is riding in a taxi from the airport to his hotel and with the confidence that he is receiving the lowest possible rates utilizing Igas VoIP network.
Callnavigator will enable any customer, anywhere in the world to set up a two leg or multi-leg conference call by accessing the Companys Callnavigator.com web page.
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Ethnic Marketing
Of the many ethnic groups the Company plans to serve, Hispanics and Asians represent large and growing minority communities within the United States with communications spending patterns, geographic living patterns and target country calling patterns that the Company believes are of significant value and representative of the Companys target market.
Hispanics will become the largest minority in 2009, when they will outnumber African Americans. Among Hispanics, the three largest ethnic groups are Mexican (63%), Puerto Rican (11%) and Cuban (4%).
Hispanic Population by Type
Puerto Rican
2,728,000
The Hispanic population is projected to grow from 30 million in 1998 to more than 52 million by 2020 when Hispanics will account for 16 percent of the U.S. population.
1,044,000
Cuban
Hispanic
13,496,000
Salvadoran
565,000
Mexican
Dominican
520,000
The Hispanic population is projected to grow from 30 million in 1998 to more than 52 million by 2020 when Hispanics will account for 16 percent of the U.S. population. Hispanics are currently 11 percent of the U.S. population.
Hispanic Percentage of Total Population
Non-Hispanic Native Americans
1%
Spaniard
519,000
Colombian
379,000
Guatemalan
269,000
Source: 1990 Bureau of Census
Metro Areas with the Most Hispanics

Metro Area
Los Angeles New York Miami San Francisco Chicago Houston San Antonio Dallas San Diego El Paso 0
Non-Hispanic Asian
4%
Non-Hispanic White
72%
Hispanic
11%
1M
Non-Hispanic Black
12%
Hispanic Population
2M
3M
4M
% Pop. 32.9% 14.7% 33.0% 15.5% 10.9% 20.7% 47.4% 13.0% 20.4% 69.6%
Source: U.S. INS 1996
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Hispanics are most likely to live in the West (45%) and South (31%). Fifty-eight percent (58%) of Mexican-Americans live in the West, while sixty-nine percent (69%) of Puerto Ricans live in the Northeast, and seventy-one percent (71%) of Cubans live in the South. Hispanics account for twenty-six percent (26%) of Californias population, and Los Angeles is home to more Hispanics than any other metropolitan area in the U.S.
Successful Hispanic ad campaigns tend to have the following basic elements in common: The campaigns are emotionally driven and talk to the heart. The product or service is presented in simple, familiar and realistic backgrounds. Copy and key messages are simple, direct and to the point. Only one or two product or service benefits or attributes are communicated and repeated. Clear suggestion of price (if applicable, Not too expensive for you). The campaigns show product, logo and/or location as needed. The campaigns tell a simple story. Theres a beginning and an end. Elements in the ad tend to be related, not independent juxtaposed images such as MTV.
Hispanics will become the largest minority in 2009.
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Hispanic Immigrants Percentage of Total

Total Immigrants Total Hispanic Immigrants Hispanic Immigrants 915,900 386,431
Cuba
iga

per minute
39
42%
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Other Immigrants
Hispanic Immigrants by Country of Birth
Guyana
12,871
Peru
9,489
Guatemala
8,763
Colombia
14,283
El Salvador
17,903
18,386
Haiti
Jamaica
19,089
163,572
Mexico
26,466
Cuba
Dominican Rep.
39,604
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Successful television and radio ads have the following elements in common: The ads repeat the key message or messages and show the product several times during the ad. The ads show (or suggest) a particular person - a mother, father, teenager, baby, child, grandmother, teacher, bank teller, salesperson - whoever is appropriate for the product or service. Talent and people shown in the ads are average-looking Hispanic people, not too dark, mestizo or Indian looking, nor too blond or Europeanlooking either. These physiological parameters are correlated with social class; a more light haired/blond Hispanic is associated with an upper-class Hispanic. Theres much Hispanic consumer sensitivity in this area. Consumers in Latin America tend to prefer the blond and tall image and talent. This is somewhat different in the U.S. Hispanic market where class structure is more loose, and far darker or more Latin looking people are successful. The ads may show children (happy, smiling) and talk about motherhood or fatherhood with tenderness.
Generally, the ads explain or show where to find the product or service. The ads suggest positive images, such as smiles, accomplishments, family members or an improved quality of life. The ads do not show or dwell on negative images or connotations unless strictly necessary for the message to hit home, such as for drunk driving or AIDS themes. If the visuals or messages are negative or painful the effect will tend to be the opposite of the desired one: denial, low recall, anger and finally, no action. If the message is portrayed with positive emotions the response recall is much higher. The pace tends to be somewhat slower than for general market material.
Hispanics account for twenty-six percent (26%) of Californias population.
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Mexico 16
per minute
iga
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Asians
Asian Americans currently represent four percent (4%) of the U.S. population. The Asian population is projected to grow from 10.5 million in 1998 to nearly 20 million by 2020, when Asians will account for six percent (6%) of the total U.S. population.
Asian Immigrants by Country of Birth

Hong Kong
7,834
The Asian population is projected to grow from
Japan
6,011
Bangladesh
8,221 11,084
Iran
Philippines
55,876
Pakistan
12,519
10.5 million in 1998 to nearly 20 million by

44,859
Taiwan
13,401
India
18,185
Korea
2020, when Asians will

41,728
Asian Immigrants Percentage of Total

Total Immigrants Total Asian Immigrants Asian Immigrants 915,000 307,807
China
Vietnam
42,067
account for six percent (6%) of the total U.S. pop-
33%
Other Immigrants
Asians are much better educated than the population as a whole. Forty-two percent (42%) were college graduates in 1996, versus twenty-four percent (24%) of the total population. Except for a few health conditions, Asians fare much better than the average American. At birth, life expectancy for Asian males is seven years longer than average, while for females it is five years longer. Asian households are more likely to be headed by married couples than the average household - sixty-one (61%) versus fifty-four (54%) percent. Only twenty-four percent (24%) of Asian households are not families. This compares with thirty percent (30%) of households nationally.
ulation.
Metro Areas with the Most Asians

Metro Area
Los Angeles San Francisco New York Honolulu Chicago Washington, DC San Diego Seattle Boston Houston 0
Asian Population [000's]
300
600
900
1,200
% Pop. 9.2% 14.8% 4.6% 63.0% 3.1% 3.7% 7.9% 6.1% 2.5% 3.5%
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The median income of Asian households fell nine percent (9%) between 1990 and 1995, after adjusting for inflation. Despite this decline, the median income of Asian households remains higher than the median income of all households. Fifty-three percent (53%) of Asian households have at least two earners. This compares with forty-five percent (45%) of all households and is the highest proportion among all racial groups. Behind the growth of the Asian population is immigration. Asia dispatched thirty-four percent (34%) of all immigrants to the U.S. in 1996; the largest numbers came from the Philippines, India, Vietnam and China. Fully sixty-three percent (63%) of Asians in this country are foreign born, according to the 1990 census. Asians with ethnic origin in Vietnam, India and Korea are most likely to be foreign born. The Asians least likely to be foreign born are those whose ethnic origin is Japan.
Most Asian Americans speak English very well. Only thirty-eight percent (38%) of those aged 5 or older do not speak English fluently. But more than half of Asians aged 65 or older do not speak English very well. A great number of Asian Americans live in the West, where they account for about thirteen percent (13%) of the population of the Pacific division. California is home to about thirty-nine percent (39%) of the nations Asian population, including fifty-two percent (52%) of Filipinos and forty-six percent (46%) of Vietnamese. Los Angeles has more Asians than any other metropolitan area.
Los Angeles has more Asians than any other metropolitan area.
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Japan
iga

per minute
19
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Direct Marketing Through Agent Channels
The U.S. has a large number of experienced telecommunications sales agents that sell independently for a variety of companies. These agents have established customer bases, established marketing methods, and established sales offices in both the U.S. and worldwide, and offer a unique opportunity for the Company to quickly build a retail sales operation serving the ethnic residential and business communities in the U.S. as well as ethnic populations abroad. Agents offer the Company an effective, low risk and relatively low cost entry opportunity into the ethnic marketplace. Agents incur the initial costs associated with the marketing, selling and closing of the customer. Iga pays commissions to agents only for actual customers acquired/revenues generated, thereby minimizing customer acquisition costs to the Company. Since the agent incurs the marketing expense of acquiring customers, he also determines the best strategy for marketing the product within the Company guidelines. Agents are more familiar with their intended sales audience and can penetrate the marketplace more quickly and effectively than any large company can. Agents often market in language with sensitivity to cultural idiosyncrasies that non-natives can not replicate. They also understand the types of marketing the intended audience will best respond to. Iga will establish procedures and guidelines with agents to support the companys goals in terms of product branding and marketing image. The Company has, to date, recruited twenty-six Master Agents, representing a potential $20 million in VoIP long distance revenues. The Company has, to date, recruited twentysix Master Agents, representing a potential $20 million in VoIP long distance revenues.
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Retail Partnership Marketing
The Company will deliver VoIP and data services to the high profit international calling market through a variety of traditional retail channels. The unique design features of the Companys products will allow Iga to leverage the power of cooperative media and marketing relationships in order to create the appearance and effect of a multi-million dollar advertising budget with little up front advertising expense. The Company will deliver a consistent marketing message through a variety of media including television, radio, newspaper, magazines, web portals, catalogs, flyers, statement stuffers and various point of purchase locations, and will fund this marketing effort by entering into joint venture agreements with media, corporate and affinity partners to share long distance/communications revenues in lieu of purchasing advertising space directly from those partners. The Companys products lend themselves to fully scalable, indirect, media-based revenue sharing. This type of cooperative partnering is essentially unavailable to the Companys competitors. For example, open switch 10-XXX dial around competitors can not offer revenue sharing to media partners because of
these companies inability to trace a direct line between marketing dollars expended and customer usage. Open switch 10XXX competitors like 10-10-321 spend millions of marketing and advertising dollars blindly, hoping that aggregate customer usage will generate an overall profit for their services. 10-10-321 cannot trace customer usage to a particular advertiser with certainty and therefore cannot revenue share with those advertisers. On the other hand, the Company can directly measure customer response to all marketing efforts by a given media partner, and can directly compensate partners for revenues generated their unique local or toll free access number. Traditional 1+ competitors can track customer acquisition and pay commissions based on actual subscriptions. However, this signing up the customer paradigm requires face to face or telemarketing sales and dedicated sales agents and/or sales efforts on the part of affiliates. In contrast, the Companys products can be marketed via point to multipoint mass media. No face to face selling is required, yet commissions will still result from successful advertising campaigns, billing stuffers, newsletters, point of purchase displays and other marketing methodologies.
The Company can directly measure customer response to all marketing efforts by a given media partner, and can directly compensate partners for revenues generated their unique local or toll free access number.
iga
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Potential revenue sharing partners for the Company include: Cable television providers or utility companies looking to bundle telecom services; Individual cable channels looking for the next successful per inquiry infomercial to provide residual monthly income; Credit card companies interested in generating profits from billing statements; National retailers and member organizations seeking new service offerings; Affinity groups searching for new sources of revenue that are market driven and require little sales effort, distribution, maintenance or personnel; Newspapers or magazines with remnant advertising space currently going to waste; Independent agents looking for small business opportunities; Internet portals eager to increase advertising revenues through creative deal structuring. Iga will deliver a turn key package to resellers consisting of enhanced VoIP and data services, billing and collection, customer service and back office support. Further illustration of potential revenue sharing partners includes: Print Catalogs (e.g. Damark, Hello Direct) Newspapers ethnic (Chinese Daily News, Filipino Reporter) Newspapers domestic (USA Today, LA Times) Newspapers alternative (Village Voice, LA Weekly) Magazines (Saludos Hispanos) Directories (Chinese Yellow Pages) Radio ethnic (KAZN, KORG) Radio domestic (local affiliates, national syndications) Broadcast TV ethnic (WNJU-TV, KTSF) Cable programming ethnic (CTN, Telemundo) Cable providers (Intermedia, Jones) Satellite providers (DIRECTV, Dish Network) Internet Portals & Content Providers (iVillage, Amazon.com) Not for profits (MADD, SMART) Associations (AAA, USAA, AAN) Buying clubs (Sams Club, Costco) Universities (Vanderbilt, UCLA) Utilities Credit card companies Travel companies Retailers
Electronic
Affinity
Corporate
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Marketing Through Wholesale Channels
The Company will offer its services to established industry resellers and established sales and distribution channels seeking to expand their product offerings, who will then privately brand the product to sell under their respective company names. Iga will deliver a turn key package to resellers consisting of enhanced VoIP and data services, billing and collection, customer service and back office support. Resellers will provide the following functions: Resellers will purchase the Iga products and services at a designated, volume based buy rate, and set their own retail rates to charge the end user; Resellers will acquire customers through their preferred marketing and sales channels; Resellers will print & distribute sales literature and fulfillment kits; Resellers will provide front line customer service; Resellers will train sub agents; Resellers will manage and administer related business functions. Iga will provide the following support services to resellers: Remit reseller net revenue from LEC remittance; Provide customer service to resellers; Provide customer service for billing inquiries to end users; Conduct periodic training sessions for resellers; Provide usage reporting to resellers; Supply prototypes of sales literature and fulfillment kits. Resellers will be responsible for bad debt. Net revenue to reseller will be factored by deducting wholesale minute rate, LEC fees and bad debt reserve from gross billings. Iga will true up bad debt reserve with reseller in congruence with the LEC true up process to Iga. Resellers are expected to realize 17%20% gross margins. Like agents, resellers typically have a strong presence in the international and ethnic communities in the U.S. The Company projects that resellers will generate $3 million in 2000 revenues with 20% anticipated growth per quarter.
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Global Clearinghouse Opportunity
Many resellers are agents who have advanced to the next level of sophistication in terms of customer acquisition, customer support and revenue volume. Other resellers are entrepreneurial companies offering a variety of products and services of which telecom represents a portion of their aggregate revenues. Resellers can be either U.S. or foreign based. They are typically larger, often significantly larger than agents, and commit to purchasing agreements and additional responsibilities in order to increase their internal profit margins. Many of the same issues that affect agents also affect resellers such as timely and accurate reporting and back office support. Iga will deliver many of its support services to resellers, as it does to agents, via the companys web site. The Company projects that resellers will generate $3 million in 2000 revenues with 20% anticipated growth per quarter. In addition to deploying its own IP gateways, the company is developing partnering channels for strategic placement of IP gateways pre-configured to integrate with Igas network intelligence and enhanced services platform. For example, the Company has identified opportunities to promote gateway deployment through an existing base of global resellers and agents who will invest in a business opportunity to offer VoIP to their existing customer bases by purchasing IP gateways through Iga. In this manner the Company will offer the equivalent of a franchise opportunity to worldwide entrepreneurs. Growth will only be constrained by the number of businesses the Company is able to contact and its internal financial resources to assist as necessary in funding the buildout of the franchised network. In addition to deploying its own IP gateways, the company is developing partnering channels for strategic placement of IP gateways pre-configured to integrate with Igas network intelligence and enhanced services platform.
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Enterprise Sales Opportunities
Additional candidates to become Iga certified partners include: Domestic ISPs that have an existing customer base and knowledge of the data and internet industry and would like to offer voice and other value added features to their customers thereby increasing revenues and profitability; Foreign ISPs with similar domain experience and established customers; Switched and switchless telecommunications resellers in both the U.S. and abroad that are interested in offering VoIP services but lack the technical experience or financial resources to deploy their own VoIP network. Enterprise opportunities in VoIP are expected to grow rapidly within the next few years as technology improves to facilitate seamless integration between VoIP gateways, corporate PBX telephone systems and global WANs. As a first mover in the enterprise arena, Iga will deploy its established retail sales channels to deliver the technology that is being developed by Cisco and others to bring enterprise VoIP into the mainstream of business telecommunications solutions.
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Network Deployment and Operations

Voice over Internet Protocol (VoIP)
Iga will build and deploy a worldwide Voice over Internet Protocol (VoIP) network consisting of IP gateways, routers and SS7 technology provided by Cisco. The company will locate IP Gateway on ramps in major metropolitan regions within the United States and will locate, co-locate or subcontract IP Gateway off ramps in select termination points worldwide. The Company has engaged Neteffect (Atlanta, Georgia), a professional services group, to assist with the planning and deployment of its VoIP network. VoIP is an emerging technology that converts voice to data and allows voice to be delivered over traditional data networks. An IP Gateway is a computer switching device which contains hardware and software components including a digital signal processor (DSP) to convert analog voice to data for IP transmission. Iga customers will access the companys VoIP network through the companys IP Gateways by dialing either a toll free number or a seven digit local access number. In the same manner as a calling card, customers will hear a voice prompt which will provide easy to understand instructions for placing a call or accessing any of the enhanced features on the network such as conference calling, voicemail, account information, customer service, etc. When the customer has chosen to place an interstate or international call, a series of events takes place to connect that call to the destination telephone number. Before voice can be transferred over data lines it must be digitized by the DSP. Once digitized, voice can be broken into packets and transferred according to the same internet protocols as other internet multimedia and data. Iga will build and deploy a worldwide VoIP network consisting of IP gateways, routers and SS7 technology provided by Cisco.
Network Map Phase I
International Gateways
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The digitized packets are delivered to the IP backbone provider and delivered to an IP Gateway off ramp with close proximity to the called party. Data routers provided by Cisco manage the flow of packets across the network in accordance with the digital addresses assigned to each packet at the time they are initially converted to digital format. At the destination IP Gateway, the packets are reassembled and the data is converted back to voice as an analog signal. Finally, the signal must interface with the public switched telephone network (PSTN) usually controlled by the foreign PTT, or in the case of domestic calls, the incumbent or competitive local exchange carrier (ILEC or CLEC) such as Bell Atlantic or SBC to be delivered the final mile to the called party. Call routers route the individual packets but the entire call itself is managed by softswitch technology developed by Cisco and its partners. A softswitch is a sophisticated software application designed to add network intelligence to a distributed configuration of IP routers and gateways. The softswitch incorporates Signaling System 7 (SS7) technology to manage call flow and
port capacity and to establish data flow pathways and to assure optimal transmission quality. Iga will deploy a softswitch with SS7 capability to enable the companys IP gateways to offer VoIP call management and control. Then, once the Companys softswitch is installed, the Iga network will be capable of rapid growth in that numerous IP gateway boxes can be configured into the network to supply an unlimited number of gateways on both a domestic and international basis. Iga will deploy an increasing number of IP gateways to systematically add value to its network. Gateways will be deployed in strategic locations both domestically and abroad to enable the company to provide access to its customer base in major urban centers in the U.S. and to enable international termination in key countries overseas.
The Company has engaged Neteffect (Atlanta, Georgia), a professional services group, to assist with the planning and deployment of its VoIP network.
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Circuit Switched Network Utilization
The Company plans to initially develop its enhanced services on a traditional circuit switched network and then to migrate traffic to the VoIP network as it becomes operational and after beta testing has demonstrated that the company can guarantee point to point voice quality of service (QoS) to its customers. The Company will operate an advanced telecommunications network consisting of three or more switches managed by a Service Control Point (SCP), a network server which controls the processing of each call; interfaces between the programmable switch and various internal and offline databases; interacts with a Voice Response Unit (VRU), and generates a Call Detail Record (CDR) utilizing the Companys customized billing software. Calls will be transported over leased transmission lines and sophisticated network management systems designed to optimize traffic routing. The Companys network will provide high quality, reliable transmission and switching. The Companys network surveillance capabilities, including selfdiagnostic software, will enable the Company to anticipate and correct problems before they result in service interruption.
Leased Transmission Lines
The Company will lease transmission lines from a variety of facilities-based and resale long distance carriers. The Company will contract with these entities with terms ranging from twelve to twenty-four months. The Company will supplement its leased on-network capacity with off-net services from a variety of resale and facilitiesbased long distance carriers. The Company is currently evaluating co-location opportunities and carrier pricing from Qwest, Global Crossing, Level 3 and Williams Communications.
Unlike many purely technical competitors and would be carriers, the Companys management has demonstrated its ability to generate significant internationally terminated voice and data revenue
Billing Collections and Data Processing

The Company believes that accurate and sophisticated information systems are critical to growth in the telecommunications industry. The Company will dedicate substantial resources to its information systems and believes that the strong growth of its enhanced services business will largely be attributable to the existence of strong partners in both back office and billing platform services.
through proven agent, reseller and partner marketing channels.
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The Companys information systems will enable the Company to: Monitor and respond to the evolving needs of its customers by developing new and customized services; Provide sophisticated billing information that can be tailored to meet the requirements of its customer base; Provide high quality customer service; Detect and minimize fraud; Verify payables to suppliers; and Integrate additions to its customer base. The Company believes that its network intelligence, billing and financial reporting systems will enhance the Companys competitive ability and provide a platform for future growth and the expansion of its product line. The Companys billing information systems and services will be provided by a LEC clearinghouse. A LEC clearinghouse processes raw switch data into a format that can be used by the LECs (Local Exchange Carriers) to produce end-user invoices. This data processing is executed on specially designed com-
puters operating a proprietary software program. The clearinghouse receives the Companys raw call records directly from the Companys SCP. The calls are then rated according to standard rates or according to customer specific rates, if applicable. Rated calls are sorted depending on which LEC will actually bill the end user and then placed in an industry standard format (EMI). The clearinghouse prepares management reports which provide the Company with the total number of calls, minutes and dollars billed during that bill cycle. The Company is currently negotiating billing and collection agreements with Billing Concepts (formerly USBI), the leading billing company in the industry and the clearinghouse for AT&Ts 1010-345 (Lucky Dog). Billing Concepts has existing agreements with all of the Local Exchange Carriers (LECs), including all of the Regional Bell Operating Companies (RBOCs) that cover approximately ninety-six percent (96%) of the switched access lines in the U.S. These agreements will permit Iga to place its customers' call detail records on the customers' regular monthly local phone bill. In addition, by billing through the LECs, the Company benefits from the LECs extensive collections infrastructure.
The Company will lease transmission lines from a variety of facilities-based and resale long distance carriers.
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Customer Service
The Company recognizes that excellent customer service is indispensable to any enterprise that aspires to be a market leader. However, Iga further subscribes to the belief that its extraordinary customer service will in itself be a point of distinction relative to its competitors as part of a larger customer relationship management strategy. Indeed, the quality of the Companys customer care will be a chief driver of its success. Our Customer Service strategy is built around two convergent concepts: 1. Employing world-class Customer Service personnel, and fortifying their quality through continual training, monitoring and manager feedback; 2. Employing cutting-edge call center technology to enhance our customer relationship management.
CSRs will answer marketing inquiries generated by the Companys marketing campaigns, as well as support existing customers. CSRs will offer multilingual capability in answering a broad range of inquiries from prospective customers relating to service, pricing and optional or enhanced product features. The Companys services are generally self explanatory, but, the Company anticipates customer inquiries from approximately five percent (5%) of new users. First level billing inquiries will be handled separately by representatives of the LEC clearinghouse who are available 24 hours per day. The Company estimates billing inquiries to equal .3% of total calls. CSRs will use the Companys customized software which delivers prompt access to accurate, up-to-date customer account information. This customized software is a powerful database which will provide CSRs the ability to respond swiftly to customer needs. CSRs will be able to issue credits, log service trouble tickets, record pertinent customer information into an account memo field to maintain customer history, enter new customers into the database and assign appropriate billing codes.
The Company is currently negotiating billing and collection agreements with Billing Concepts (formerly USBI), the leading billing company in the industry and the clearinghouse for AT&Ts 10-10345 (Lucky Dog).
I. Call Center Operations

Customer Service Representatives (CSRs) will be available from 8 a.m. - 6 p.m. CST Monday through Friday, and from 9-3 Saturdays.
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II. Virtual Call Center Capabilities
The Companys Customer Service Center will rely on Intelligent Contact Management (ICM) capabilities supplied by Cisco and its recently acquired company GeoTel. ICM-enabled functions include: a. Pre-routing of calls based on the callers phone number (ANI), allowing calls to be electronically directed to the appropriate CSRs before the customer speaks to a live person, e.g., with regard to language requirements, VIP designations (e.g. high volume callers with billings in excess of $X per month are placed in separate call queues), etc. b. Geography-independent CSRs will be organized according to function, service offering or skill set, rather than by geographic location. Calls are automatically routed to the best available agents regardless of location. Thus, call agents can be stationed anywhere inside or outside of the physical space of the Company. c. CTI (computer telephony integration), will allow CSRs to have all relevant customer history pop up on their screen before they initiate a live-discussion with the caller (eliminating the need for customers to verbally re-state their account numbers two or three times, and the need for customers to wait while CSRs call up their records). d. Harnessing the convergence of IP technology will give customers mediaindependent access to the company. Example: Customers phoning into a call center might be given a Web page address that allows a customer-care representative to take control of their browser in order to provide detailed assistance. Customers will also be able to send e-mail messages to the customer-care center requesting callback. IP-based call centers will use fax, voice mail and e-mail, giving customers a wider range of options for interacting with the Company. Iga believes that extraordinary customer service will distinguish the Company relative to its competitors as part of a larger customer relationship management strategy.
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Key Network Characteristics
Among the many different types of standardized data networking technologies such as X.25, SNA, Frame Relay, ATM (Asynchronous Transfer Mode), TCP/IP, Novell IPX, and TDM (Time Division Multiplexing), only Frame Relay, ATM, TCP/IP and TDM, along with proprietary technologies, do well carrying voice. The key characteristics a data network must have to carry voice well are low delay, predictable delivery of the voice information, a means of prioritizing the voice traffic ahead of data, and high enough efficiency to carry the extra voice traffic. Frame Relay, ATM and TCP/IP achieve high efficiency ratings by collecting the data to be transmitted into packets (like envelopes) and only sending them when they are reasonably full. By not sending empty or nearly empty envelopes, waste is minimized.
with similar figures for governmental and educational sectors. Any network that connects to the Internet must run TCP/IP, and the Internet is growing rapidly. TCP/IP is, specifically, a data communications protocol. A protocol is a set of agreed-upon conventions or standards for interactive behavior. Communications protocols define how two devices on a network are to behave when communicating with each other; when to talk (send), when to listen (receive), for how long, how to correct errors, the proper way of addressing each other, etc. The various aspects of a communications protocol are divided into layers of activity, where each higher layer builds on the foundation of the lower layers. For example, the bottom layer designates the physical communications medium such as copper wire, fiber optic cable, microwaves, satellite, etc. The next layer specifies the electrical or optical signaling conventions for the medium. The stack of layers can go up to layer 7, where the behavior of the actual user application, such as email or web browsing, is specified. The term TCP/IP is named for a combination of layer 4 (TCP) and layer 3 (IP) of the so-called IP stack. TCP
Ninety percent of the corporate world will be using TCP/IP by 2000, with similar figures for governmental and educational sectors.
TCP/IP Networking
TCP/IP is a common networking technology made popular by the Unix computer operating system and the Internet. It is now available across virtually all operating systems and is widely used by many enterprises for a variety of applications. In fact, there are estimates that upwards of 90% of the corporate world is using TCP/IP,
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Three Types of IP Networks
means Transport Control Protocol, and IP means Internet Protocol. All socalled IP networks use IP at layer 3; most also use TCP at layer 4. For IP networks (and several others), the communications device that manages the network layer is called a router. Routers are layer 3 datacom devices responsible for routing data from one end of a network to the other. VoIP applications assume a router-based IP data network supporting TCP. In a VoIP network, the IP layer can ride over a mixture of different layer 2 and 1 protocols. It is also quite possible, for example, to have IP running on frame relay on ATM over, say, copper, microwave or satellite.
It is convenient to group all IP networks as one or a combination of these three basic types: the Internet; the corporate or Enterprise IP network, sometimes called the Intranet; and the IP Virtual Private Network (IP-VPN), sometimes called the Extranet. Some IP networks are made up of all three types. The Internet and its World Wide Web are probably the most prominent, but for VoIP, the other two are equally important. An IP network consists of two or more IP gateways connected together by a WAN. The WAN typically supports IP over leased lines, public frame relay, ATM, satellite or ISDN connections. In a managed IP network, data movement between sites is done expeditiously with low delay and high predictability. This is in contrast to the Internet, where delays can be large and arrival times highly unpredictable. The IP-VPN (IP-Virtual Private Network) is a fairly new type of public network offering, intended to provide the managed IP network characteristics that a VoIP provider needs. It can be thought of as an industrial strength Internet. Because IP-VPNs are built with plenty of bandwidth and highspeed routers, delays are low and arrival times are predictable.
Iga has developed a partnership with one of the leading providers of IP telephony switches, Cisco, and will deploy a VoIP network utilizing Cisco equipment over an underlying domestic IP or ATM backbone.
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An IP network becomes a viable commercial option when interfaced with the public switched telephone network (PSTN) to enable point to point connectivity from anywhere to anywhere in the world. To inter-operate with the PSTN (or plain old telephone system POTS), an IP telephony switch must support the Signaling System 7 (SS7) protocol, either on-board or via an offboard internetworking device. SS7 is used to efficiently set up wireless and wireline calls in the PSTN and to query PSTN database servers (e.g., to determine the destination telephone number associated with a locally ported number or a toll-free (800/888/877) call). The support of SS7 by IP telephony switches represents a critical step in the integration of the PSTN and IP data networks. The Public Switched Telephone Network provides users with dedicated, end-to-end circuit connections for the duration of each call. Circuits are reserved between the originating switch, tandem switches (if any) and the terminating switch based on the called party number. The PSTN also provides access to Intelligent Network services using the Signaling System 7 protocol. SS7 is used for basic call setup, management and tear down, and to query databases which support Intelligent Network services such as
local number portability, mobile (cellular) subscriber authentication and roaming, virtual private networking, and toll-free (800/888/877) service. Unlike the circuit-switched PSTN, packet-switched IP networks provide virtual circuit connections between users. Bandwidth is shared for improved utilization of network capacity, leading to lower costs for network users. Packets are routed to the destination IP address contained within the header of each packet and may travel over separate network paths before arriving at their final destinations for re-assembly and re-sequencing. The transmission speed between any two users can change dramatically based on the aggregate bandwidth requirements of the users sharing the common transmission medium.
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Because of the popularity of the Internet, many public telecommunications networks now carry significantly more IP data traffic than voice traffic. Public telecommunications networks, optimized for voice traffic, are illequipped to handle increasing data traffic volumes. The growth in IP traffic coupled with customer demands for integrated voice and data services at lower costs has led to the adoption of IP as the preferred protocol to carry both voice and data in the public telecommunications network in the future. Iga has developed a partnership with one of the leading providers of IP telephony switches, Cisco, and will deploy a VoIP network utilizing Cisco equipment over an underlying domestic IP or ATM backbone. Iga customers will access the Companys VoIP network by placing either a local access call or toll-free access call to one of the Companys IP gateways, co-located at points of presence (POPs) in major metropolitan areas. The customer will be greeted by an interactive voice response platform (IVR) prompting the customer to dial additional numbers to complete the call and offering enhanced services. The 64 kilobit analog voice call is converted to digital packets by the Cisco
gateway digital signal processor. Once packetized, the voice data can be transmitted across an IP or ATM backbone to the destination IP gateway where the signal is converted back to analog to interface with the PSTN. For international termination, the Company will integrate its IP network with other international VoIP carriers through peering arrangements at select hubs such as 60 Hudson Street, N.Y. or 1 Wilshire Blvd., Los Angeles. Iga has chosen the Cisco gateway for a variety of reasons including scalability, the anticipated capability of recognizing voice or modem dial up on the fly, and Ciscos outstanding reputation as a leading provider of technology to the data and telecommunications industries. Cisco also offers Iga the ability to partner with synergistic providers of VoIP capacity in foreign countries to provide point to point termination capability for Iga international calls.
Iga customers will access the Companys VoIP network by placing either a local access call or toll-free access call to one of the Companys IP gateways, co-located at points of presence (POPs) in major metropolitan areas.
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Competition
Competition in the market for enhanced IP communications services and carrier transmission services is becoming increasingly intense and is expected to increase significantly in the future.
Internet Telephony Competition

Revenues (estimates) 1999 Market Cap Projected Revenue 2000 2001 Market Valuation IPO 4-11-00
Net2Phone Deltathree iBasis ITXC GRIC Other Competitors
$47M 11M 19M 25M 10M
$65M 31M 40M 70M 25M
$141M 64M 101M 205M 65M
$1.25B 799M 1.2B 1B 372M
$2.8B 436M 1.17B 1.9B 496M
International Focused LD Competitors
Startec RSL COM Teleglobe Primus Destia IDT

10-1-XXXX Competitors
MCI/Worldcom Telco Vartec AT&T Qwest
10-10-321 10-10-220 10-10-457 10-10-297 10-10-811 10-10-636 10-10-345 10-10-432
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Competition
Igas Competitive Advantages
Partnerships with Industry Leaders The Company is developing strong relationships with committed equipment and services providers such as Cisco, NetEffect, and Billing Concepts who will offer the technical expertise and quality of service necessary to enable Iga to compete with all other communications providers in terms of state of the art technology, time to market and reliability of service. Igas network assets will seamlessly integrate with PSTN and VoIP networks globally and will enhance the Companys market valuation in the event of a takeover opportunity by a larger carrier. Company through its partner marketing channels will create instant access to a wide range of superior ethnic distribution opportunities at a fraction of the cost of traditional advertising. With its distribution channels in place, the Company becomes a formidable competitor leveraging the power of its agents, resellers, media, corporate, and other established marketing partners to achieve penetration and saturation of its target audience. The Company foresees access to broad-based consumer markets, loyal affinity markets, and previously untapped niche markets, such as under-served ethnic groups, through these strategic distribution channels. Industry knowledge Iga to compete with Unlike many purely technical competitors and would be carriers, the Companys management has demonstrated its ability to generate significant internationally terminated voice and data revenue through proven agent, reseller and partner marketing channels. The Companys founders and core managers have extensive industry contacts and revenue generating direct to consumer organizations eagerly awaiting the launch of the Companys product line. In addition, the cooperative marketing opportunities available to the Managements experience in the long distance industry as successful long distance marketers, product developers and implementers has enabled and will enable the Company to identify and quickly act upon opportunities that competitors have not identified or responded to. Both the founders and the core managers bring a wealth of experience to the Company including corporate, entrepreneurial, legal and financial. In addition, the Company has identified and will continue to identify experts, consultants and advisors in the industry to help guide the Company to achieve maximal valuation and opportunity for growth. all other communications providers in terms of state of the art technology, time to market and reliability of service. The Company is developing strong relationships with committed equipment and services providers such as Cisco, NetEffect and Billing Concepts who will offer the technical expertise and quality of service necessary to enable Sales and marketing expertise
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Competition
Partnership Opportunities with Competitors
Shortened timelines, reduced costs and increased adaptability The Companys intention to outsource critical logistical components saves time in getting to market and allows for adaptability to take advantage of more cost competitive opportunities should they arise. Also, the Company will minimize hiring costs, staff turnover, and management expense through subcontracting. General overhead savings The Companys distributed architecture approach to the deployment and maintenance of its network assets significantly reduces overhead costs for this opportunity and allows for the majority of invested capital to be directed to elements of productivity such as sales, marketing and customer service, while leveraging the extensive and generous credit facilities of Cisco and other committed vendor/partners for asset deployment and development. Management is confident the Company will optimize growth through more efficient and creative sales, marketing and corporate management strategies than the Companys competitors. While a variety of companies are building extensive global VoIP networks, certain competitors represent unique partnership opportunities. For example, Nortel Networks and BTs Spanish subsidiary are building an Internet telephony and multimedia network in Spain, a 51-node IP network with more than 10,000 ports to service more than 1,300 corporate customers. This new network may provide interoperability with the Companys domestic IP network as well as the Companys future expansion into Spain. By partnering with BT, Iga can extend its IP reach into areas of Spain it might otherwise have insufficient resources to develop. The potential for both competition and partnership is expansive. Cisco has access to a variety of ISPs seeking to become ITSPs and to offer VoIP to their customers. While the Company may view these other Cisco customers as potential competitors, a superior strategy would be to partner with Cisco to offer VoIP access on a wholesale basis to these ISPs with Iga serving as a clearinghouse utilizing its distributed network and softswitch network intelligence technologies. Management is confident the Company will optimize growth through more efficient and creative sales, marketing and corporate management strategies than the Companys competitors.
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Competition
Even companies such as Startec that are offering dial around services to ethnic communities while building a global IP telephony network and clearinghouse, provide opportunity to Iga. Startec both buys network capacity from tier 1 carriers and sells network capacity to those carriers. In the emerging world of VoIP, Startec will be as likely to interoperate with Iga to achieve termination in areas where they have no points of presence as they will be likely to offer termination to Iga in those areas where they are deployed. The open standards of the VoIP technologies being produced by companies such as Cisco, Lucent, Clarent and Nortel will insure interoperability and peering of IP carriers to enhance rapid growth and ultimately consolidation of the successful players in the industry. No single player can go it alone in this emerging interconnected universe of communications technology. Consequently, the successful competitors have agreed in principle to cooperate in order to create open, non-proprietary standards as well as to share capacity and network intelligence in an environment where partnership is rewarded over isolationist behavior.
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Risk Factors
Limited Operating History; Negative Cash Flow
An investment in the Company involves a high degree of risk and should be regarded as speculative. As a result, the purchase of equity in the Company should be considered only by persons or entities who can afford a loss of their entire investment. This business plan is provided for purposes of information and evaluation only. It does not constitute an offer to sell, or a solicitation of securities, offers to buy or any other interest in the business. Any such offering will be made only by appropriate documents and in accordance with applicable State and Federal laws. Prospective investors should carefully consider, in addition to matters set forth elsewhere in this document, the risk factors described below relating to the business of the Company. The success of the Company cannot be guaranteed or accurately predicted. There is no assurance that the Company will be able to operate its services profitably. Such prospects must be considered in light of the risks, expenses and difficulties frequently encountered in the establishment of new technology and a new product in an emerging market in an evolving industry. The Company has a limited operating history. The Company began operations in October 1998 and to date has generated no revenues. There is no assurance that the Company will be able to operate on a profitable basis or that cash flow from operations will be sufficient to pay the operating costs of the Company. There is no assurance that the Companys estimate of its reasonably anticipated liquidity need is accurate or that new business developments or other unforeseen events will not occur that will result in the need to raise additional funds. In the event that the Company cannot raise needed capital, it will have an adverse effect on the Company. The Company expects to incur significant operating losses and to generate negative cash flow from operating activities during its first twenty-four months of operations, while it develops its product line and builds a customer base.
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Risk Factors
Significant Capital Requirements
The Companys capital requirements are significant. The Company is dependent upon the financing proceeds to fund the cost of development and to market the Companys communications services. The Company anticipates that the net proceeds of the fully subscribed Offering will be sufficient to satisfy the Companys cash requirements for eighteen to twentyfour months. However, in the event the Companys plans change, its assumptions change or prove inaccurate, or if the net proceeds of the Offering or other capital resources and projected cash flow prove to be insufficient to fund operations, the Company will be required to seek additional financing. The Company has no current arrangements with respect to sources of additional financing, and there can be no assurances that the Company will be able to obtain additional financing on terms acceptable to the Company. To the extent that any such financing involves the sale of Company equity, the interests of the Companys then existing members could be substantially diluted.
Uncertainty of New Product Development

The research and development related to the Companys product variety of enhanced services communications products has not been completed, and accordingly, no revenues therefrom have been generated. The Company will be required to devote substantial resources to develop its products.
Technological Risks and Risks of Obsolescence

The telecommunications industry is constantly changing. Technological obsolescence of the Companys products and underlying equipment remains a possibility. Competing long distance and VoIP communications providers currently offer and are developing similar products which may dilute the success of the Company. There is no assurance that the competitors of the Company will not succeed in developing related products or using similar processes and marketing strategies prior to the Company, or that they will not develop technology and products that are more effective than any which are being developed by the Company.
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Risk Factors
Need for Complex National and International Marketing and Sales
The successful execution of the Companys business plan entails marketing, brand development and sales on a national and international basis. There is no guarantee that the Company will be successful in managing a complex strategy of marketing and sales to effect a reasonable penetration of its products and services into its target markets on a timely basis.
Substantial Dependence Upon Third Parties

The Company is in an early stage of development and has yet to finalize comprehensive internal management, personnel and other resources. The Company depends substantially upon third parties for several critical elements of its business including, among others, promotion and marketing, technology and infrastructure development, billing, fraud control, network provisioning and customer service.
Reliance on Strategic Partnerships

The Company will derive a significant portion of its revenues from the marketing exposure provided by the Companys strategic partners. The Companys ability to generate retail revenues will depend upon, among other factors, its ability to procure media exposure on a revenue sharing basis as opposed to traditional media buying. There is no assurance that the Company will be successful in developing such strategic partnerships on a timely basis, or of developing enough strategic partnerships to successfully market the Companys products, in spite of early indications of promise.
Dependence Upon Key Personnel

The success of the Company will largely depend upon the personal efforts of certain key personnel. The Company anticipates entering into employment and consulting agreements with other key personnel. Competition among telecommunications companies for qualified employees is intense, and the loss of key personnel or the inability to attract and retain the additional highly skilled employees required could adversely affect the Companys business.
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Risk Factors
Financial Information and Forecasts
The Company has limited operating history. The Company is the sole preparer of the financial information and forecasts set forth herein. Such financial forecasts are prepared as of the date of this document and are based on the Companys current best estimate of the results it expects for the Company as described herein. The financial information is not necessarily prepared or presented according to generally accepted accounting principles and does not include end of period adjustments or complete footnotes. The Company does not intend to update or otherwise revise the financial forecasts to reflect events or circumstances existing or arising after the date of this document or to reflect the occurrence of unanticipated events, except as required by applicable law. None of the financial information and tables and forecasts has been examined, compiled or reviewed or is based on agreed-upon accounting procedures applicable to financial forecasts. The financial forecasts necessarily are based upon a number of estimates and assumptions that, while presented with numerical specificity and considered reasonable by the Company, are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the control of the Company, and upon assumptions with respect to future business decisions which are subject to change. The financial forecasts assume, among other things, that the Company will be successful. The success of the Company is subject to uncertainties and contingencies beyond the Companys control. Accordingly, there can be no assurance that the forecasted results will be realized. The financial forecasts and actual results will vary, and those variations may be material. The inclusion of the financial forecasts herein should not be regarded as a representation by the Company or any other person that the financial forecasts will be achieved. The financial forecasts were not prepared with a view toward public disclosure or complying with SEC published guidelines. Any prospective investor in the Company is cautioned not to place undue reliance on the financial forecasts.
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Risk Factors
Government Regulation: Legislative Risk Factors
The Company is currently subject to direct regulation by the Federal Communications Commission (FCC) which exercises jurisdiction over all facilities of, and services offered by telecommunications common carriers to the extent that they involve the provision, origination or termination of interstate or international communications. If at some time in the future the Company offers intrastate long distance service, the Company will be subject to regulation by various state public service commissions (PSC), public utility commissions (PUC), and/or state regulatory authorities which retain jurisdiction over intrastate communications. The Company has obtained FCC authority to provide interstate and international services through the resale of switched services of various carriers. The FCC has classified the Company as a non-dominant interexchange carrier. As a non-dominant carrier, the Company may provide domestic interstate communications without prior FCC authorization, although FCC authorization is required for the provision of international telecommunications by non-dominant carriers. Non-dominant carriers currently are required to file tariffs listing the rates, terms and conditions of interstate and international services provided by the carrier. However, generally the FCC has chosen not to exercise its statutory power to closely regulate the charges or practices of non-dominant carriers. Nevertheless, non-dominant carriers are required by statute to offer interstate and international services under rates, terms and conditions that are just, reasonable, and not unduly discriminatory and the FCC acts upon complaints against such carriers for failure to comply with statutory obligations or with the FCCs rules, regulations and policies. The FCC also has the power to impose more stringent regulatory requirements on the Company and to change its regulatory classification. The Company believes that, in the current regulatory environment, the FCC is unlikely to do so. The FCC also imposes prior approval requirements on transfers of control and assignments of operating authorizations. The FCC has the authority to generally condition, modify, cancel, terminate or revoke operating authority for failure to comply with federal laws and/or the rules, regulations and policies of the FCC. Fines or other penalties also may be imposed for such violations.
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Risk Factors
Competition
There can be no assurance that the FCC or third parties will not raise issues with regard to the Companys compliance with applicable laws and regulations. The Company has engaged FCC legal counsel to assess the extent to which the FCC and other governmental regulations may impact the proposed business of the Company. However, the long distance industry is subject to continually evolving regulation. There are a number of issues on which regulation has been or in the future may be suggested. As new regulations are promulgated, the Company may be required to modify its business plan or operations in order to comply with such regulations. There can be no assurances that the Company will be able to do so in a cost-effective manner, if at all.
The Company expects that competition from companies both in the Internet and telecommunications industries will increase in the future. Many existing competitors and potential competitors have longer operating histories, broader portfolios of services, greater financial, management and operational resources, greater brand-name recognition and customer loyalty, larger subscriber bases and more experience. If Iga is unable to provide competitive service offerings, it may lose existing users and be unable to attract additional users. In addition, many competitors enjoy economies of scale that can result in a lower cost structure for transmission and related costs, which could cause significant pricing pressures within the industry. The Company recognizes that a variety of one and two tier long distance and VoIP carriers offer enhanced communications services to the ethnic communities in both in the United States and abroad.
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Risk Factors
The market for enhanced Internet and IP communications services is new and rapidly evolving. The primary competitive factors determining success in the Internet and IP communications market are: quality of service; the ability to meet and anticipate customer needs through multiple service offerings; responsive customer care services;
Several traditional telecommunications companies, including industry leaders such as AT&T, Sprint, Deutsche Telekom, MCI WorldCom and Qwest Communications International, have recently announced their intention to offer enhanced Internet and IP communications services in both the United States and internationally. All of these competitors possess: substantially greater financial, technical and marketing resources; larger networks;
price. a broader portfolio of services; Future competition could come from a variety of companies both in the Internet and telecommunications industries. Many companies provide, or are planning to provide, certain portions of the complete communications solution including Net2Phone and JFAX.COM. stronger name recognition and customer loyalty; well-established relationships with many of our target customers; an existing user base to which they can cross-sell their services. These and other competitors may be able to bundle services and products with enhanced Internet and IP communications services, which could place the Company at a significant competitive disadvantage. Many competitors enjoy economies of scale that can result in lower cost structure for transmission and related costs, which could cause significant pricing pressures within the industry.
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Risk Factors
Primary competitors in providing carrier transmission services include: long distance carriers, including AT&T, MCI WorldCom and Sprint Corporation; foreign carriers, including British Telecom, Deutsche Telekom and Nippon Telegraph and Telephone Corporation; global telecommunications alliances, including Global One and BT/AT&T; emerging carriers providing transmission services over the Internet, including ITXC Corp., iBasis and AT&T Global Clearinghouse; wholesale carrier providers, including STAR Telecommunications, Inc. and Pacific Gateway Exchange. Competition for carrier traffic is primarily based on price. Decreasing telecommunications rates have resulted in intense price competition. The Company expects that competition will continue to increase significantly as telecommunications rates decrease. Increased competition could reduce prices and profit margins, and may reduce market share.
The Company believes it will compete favorably in its targeted markets due to its experienced management, strong industry relationships, innovative products, unique sales and marketing strategy, customer retention strategy, competitive pricing, high network quality, reduced costs and passionate dedication to providing a superior telecommunications experience to the communities and customers it serves.
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For more information contact:
Kirk Rittenhouse Manz, CEO Iga 119 Windsor Drive Nashville, Tennessee 37205 E-mail kirk.manz@igaea.com Telephone 615/353-9737 Facsimile 615/353-9521

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I

an ancient supercontinent called Pangaea.

Worldwide Retail & Wholesale IP Telephony Minutes 1998 - 2004

Iga projects $500 million in annual revenues within five years.

$19M 11/9/99 $109M $16 $40.30

$47M 7/28/99 $81M $15 $26.56 $707M

$25M 9/27/99 $75M $12 $28.25 $429M

$10M 12/14/99 $64M $14 $21.00 $248M

$11M 11/22/99 $90M $15

what a good ida...

Market Value at IPO $487M

what a good ida...

what a good ida...

Financial Analysis and Capitalization Requirements

$ 1,800,000 $20,000,000 $40,000,000

Financial Analysis and Capitalization Requirements

(26,375) 3,625,000 (3,651,375) (1,233,395) 318,423 (2,015,000) -

9,806,179 9,300,000 506,179 (6,833,675) 782,287 (6,459,256) -

24,528,085 16,500,000 8,028,085 (8,000,400) 565,203 (6,001,955) -

55,700,273 23,700,000 32,000,273 (8,000,400) 424,944 (3,908,195) (3,197,900)

($6,581,347) ($12,004,466) ($5,409,067) $17,318,721

Financial Analysis and Capitalization Requirements

2003 $19,456,075 4,709,520 12,608,356 36,773,952

$23,605,847 $13,063,291 1,158,189 3,088,562 27,852,599 2,349,773 6,277,147 21,690,213

40,002,000 15,934,130 $52,708,082

(8,067,070) (16,067,470) (24,067,870)

5,418,297 18,339,463 1,131,151 24,888,912

10,491,024 13,473,860 1,902,974 25,867,859

19,263,141 7,138,661 1,902,974 28,304,777

17,025,000 (12,004,466) (1,785,812)

17,025,000 (5,409,067) (7,194,880)

17,025,000 17,318,721 10,123,840 $52,708,082

(6,806,347) (18,810,812) (24,219,880)

* Based on $15M minimum Series B equity contribution

Financial Analysis and Capitalization Requirements

($6,581,347) ($12,004,466) ($5,409,067) $17,318,721

(2,569,252) 2,488,610 871,151 (4,380,281)

(4,380,170) 5,072,728 771,823 4,055,714

(8,690,956) 8,772,117 25,400,283

Net Increase (Decrease) in Cash

Beginning Cash Balance

Ending Cash Balance

$22,963,235 $23,605,848 $13,063,292 $19,456,075

Notes * Based on $15M minimum Series B equity contribution

Comprehensive Strategic Marketing Plan

Comprehensive Strategic Marketing Plan

The Target Market

what a good ida...

Comprehensive Strategic Marketing Plan

what a good ida...

Comprehensive Strategic Marketing Plan

Comprehensive Strategic Marketing Plan

Comprehensive Strategic Marketing Plan

Comprehensive Strategic Marketing Plan

Comprehensive Strategic Marketing Plan

Source: 1990 Bureau of Census

Metro Areas with the Most Hispanics

Source: 1990 Bureau of Census

Source: U.S. INS 1996

Comprehensive Strategic Marketing Plan

Hispanics will become the largest minority in 2009.

Hispanic Immigrants Percentage of Total

what a good ida...