Business Plan - 1999

half.
com
Business Plan – DRAFT 2.0
November 1999
Copy #
half.com
1100 E. Hector Street, Suite 425 • Conshohocken, PA 19428
(877) 264-HALF • fax (610) 567-3559
Confidential Information, Subject to Non-Disclosure Agreement
THIS IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES. AN OFFER IS
MADE ONLY BY THE OFFICIAL, CONFIDENTIAL PRIVATE OFFERING MEMORANDUM IF, AND WHEN ISSUED BY THE
COMPANY
1
TABLE OF CONTENTS
EXECUTIVE SUMMARY 1
INDUSTRY AND BUSINESS OVERVIEW 3

THE INDUSTRY 3
THE PERSON-TO-PERSON MARKET 3
AUCTIONS VERSUS STOREFRONT CATALOGS 4
THE HALF.COM OPPORTUNITY 5
WHAT ABOUT EBAY? 6
THE HALF.COM BUSINESS MODEL 7
PRODUCT OVERVIEW 9
PRODUCT OFFERING 9
1. LISTING AN ITEM FOR SALE 9
2. BROWSING OR SEARCHING FOR AN ITEM 10
3. PURCHASING AN ITEM 11
FEATURES & BENEFITS 11
1. FEATURES & BENEFITS FOR BUYERS 11
2. FEATURES & BENEFITS FOR SELLERS 12
INVENTORY 13
TECHNOLOGY AND INFRASTRUCTURE 14
INTELLECTUAL PROPERTY 15
LICENSED DATABASES AND CONTENT 15
CUSTOMER SERVICE & FRAUD PROTECTION 15
DIFFERENTIATION AND COMPETITION 16
PRODUCT EXTENSIONS 17
MARKETING OVERVIEW 19
THE MARKETPLACE 19
MARKETING STRATEGY 20
PUBLIC RELATIONS 20
DISTRIBUTION RELATIONSHIPS 20
1. HIGH TRAFFIC WEBSITE RELATIONSHIPS 20
2. SHOPPING AGENTS / SHOPPING BOTS 20
3. AFFILIATE PROGRAMS 21
ONLINE ADVERTISING 21
OFFLINE ADVERTISING 21
PROMOTIONS 21
VIRAL MARKETING CAMPAIGN 21
MANAGEMENT OVERVIEW 23
MANAGEMENT TEAM 23
BOARD OF DIRECTORS 25
SUMMARY – KEY INVESTMENT CRITERIA 26
FINANCIAL OVERVIEW ERROR! BOOKMARK NOT DEFINED.

1999 – 2001 PRO-FORMA QUARTERLY INCOME STATEMENTS 27
1999 – 2001 PRO-FORMA QUARTERLY CASH FLOW STATEMENTS 28
2
Half.com Business Plan
November, 1999
• Dave is 44 years old and an avid reader. Before leaving home on a recent vacation, he purchased four best-
selling books. Dave finished all four books during his one-week vacation, and they now sit on his bookshelf –
along with hundreds of other books that Dave will never read again.
• Michael is a 19-year-old college student. He spends a significant portion of his free time hanging out with his
friends and playing with his Sony PlayStation. Although he currently has a collection of over 20 games, he
still buys a new game every month or two. Michael spends most of his time playing the new games – and has
only played five of his 20 games during the last 6 months.
• Susan is 28 years old. Susan has a compact disc collection of over 150 CDs. She buys over 15 discs a year.
She often finds herself listening to the same CD over and over again – and has not listened to half of her CDs
within the last year.
EXECUTIVE SUMMARY
Half.com (“the Company”) is a development-stage company established by a founder and
several employees of Infonautics Corporation – a publicly traded Internet information company
(NASDAQ: INFO). The Company was founded in June 1999 to create an organized and efficient
aftermarket for mass-market products on the Internet. The company has quickly attracted twenty
Internet “veterans” who have worked for such companies as America Online, CDnow, N2K,
Oracle Corporation, Spree.com, MetaCreations and VerticalNet to round out its development and
marketing teams. The Company has launched a preview version of its website on November 15th ,
connecting buyers and sellers of used consumer entertainment products, such as books, compact
discs, DVDs, videos and video games. A nationwide marketing campaign will commence on
January 15th.
By combining the person-to-person connectivity of Ebay, the storefront navigation of
Amazon, and the ability to automatically price items for at least half off, Half.com seeks to
become a leading marketplace for used consumer goods on the Internet. Sellers (such as Dave,
Michael and Susan) will be able to place their used books, games and CDs into “inventory” by
simply entering an ISBN or UPC number. Buyers will be able to search/browse through a
structured store and purchase these items at a savings of at least 50%. The Company’s 24-hour-
a-day, seven-day-a-week service will be fully automated, topically arranged, and easy to use. The
Company has already filed for three U.S. patents related to its business model.
The Company already has relationships with dozens of merchants who have agreed to list
over 1.5 million items on the site for half price. In addition, the Company has signed distribution
and marketing relationships to position its inventory on several of the Internet’s top sites,
including Yahoo!, Infoseek/Go, Looksmart, About.com, Deja.com, Go2Network.com, and
Infospace. The Company has also entered into relationships with most of the leading price
comparison agents (aka “shopping bots”) to display the Company’s inventory on those sites. The
Company is also in contract negotiations with several of the leading music and book clubs
including Columbia House and Audiobook Club.
The Company closed a seed round of funding in June from Infonautics and its first venture
capital round in September from such investors as Venture Investment Management Company
Half.com Business Plan – Draft 2.0 1

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(VIMAC), Comcast Interactive Capital and Woodland Partners, along with angel investors
Howard Morgan, General Partner of idealab!, and David Schlessinger, founder of Zany Brainy.
The Company expects to generate over $10 million in net revenues in 2000, growing to over $85
million in 2002. The Company projects profitability in the fourth quarter of 2000.
2000 2001 2002

Gross Sales $51,712,000 $218,121,623 $478,870,480
Cost of Sales $41,368,209 $178,193,525 $393,560,137
Net Revenues $10,344,037 $39,928,098 $85,310,342
Operating Costs $23,952,495 $27,368,236 $30,558,034
Net Income $(13,608,459) $12,559,862 $54,752,309

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INDUSTRY AND BUSINESS OVERVIEW
The Industry
The Internet has emerged as a global medium enabling millions of people worldwide to share
information, communicate and conduct business electronically. International Data Corporation
estimates that the number of Web users will grow from approximately 150 million worldwide in
1998 to approximately 500 million worldwide by the end of 2003. This rapid adoption of the Web
represents an enormous opportunity for businesses and consumers to conduct commerce over the
Internet.
The e-commerce marketplace can be broken down into three segments:
• business-to-business
• business-to-consumer
• person-to-person
Initially, most companies have focused on facilitating and conducting transactions between
businesses over the Internet. Forrester Research expects the business-to-business market to reach
$2.3 trillion by 2003.
The business-to-consumer market has also become a significant market and is rapidly growing.
Indeed, according to A.C. Nielson/CommerceNet, over 20 million Americans have conducted an
online e-commerce transaction. Business-to-consumer e-commerce companies typically use the
Internet to offer standard products and services that can be easily described with graphics and text
but do not require physical presence for purchase, such as books, CDs, videocassettes,
automobiles, home loans, airline tickets and online banking and stock trading. The Internet gives
these companies the opportunity to develop one-to-one relationships with customers worldwide
from a central location without having to make the significant investments required to build an
infrastructure associated with traditional direct marketing activities. While companies have
generally focused on applying these benefits in business-to-business and business-to-consumer
transactions, a significant market opportunity exists to apply these same advantages to facilitate
person-to-person transactions over the Internet.
The Person-to-Person Market
The exchange of goods among individuals and small dealers – person-to-person transactions –
historically has been conducted through trading forums such as classified advertisements,
collectibles shows, garage sales and flea markets or through intermediaries, such as consignment
stores and auction houses. These forums are highly inefficient for several reasons:

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• their fragmented, regional nature makes it difficult and expensive for buyers and sellers
to meet, exchange information and complete transactions;
• they offer a limited variety and breadth of goods;
• they often have high transaction costs from intermediaries; and
• they are information inefficient, as buyers and sellers lack a reliable and convenient
means of setting prices for sales or purchases.
Despite these inefficiencies, the Company believes that the market for traditional person-to-person
transactions in the U.S., based upon estimates of the amounts spent through auctions, classified
ads and on collectibles, exceeded $100 billion in goods sold in 1998.
The Internet offers for the first time the opportunity to create a compelling global marketplace
that overcomes the inefficiencies associated with traditional person-to-person transactions while
offering the benefits of Internet-based commerce to the consumer-to-consumer trading market.
Clearly, the success of first-generation person-to-person e-commerce companies (such as Ebay)
demonstrates the effectiveness of the Internet in brokering consumer-to-consumer transactions.
Internet-based trading offers the following benefits:
• facilitates buyers and sellers meeting, listing items for sale, exchanging information,
interacting with each other and, ultimately, consummating transactions;
• allows buyers and sellers to trade directly, bypassing traditional intermediaries and
lowering costs for both parties;
• is global in reach, offering buyers a significantly broader selection of goods to

purchase and providing sellers the opportunity to sell their goods efficiently to a
broader base of buyers;
• offers significant convenience, allowing trading at all hours and providing continually
updated information; and
• fosters a sense of community through direct buyer and seller communication, thereby
enabling interaction between individuals with mutual interests.
Auctions versus Storefront Catalogs
While there are tens of thousands of e-commerce websites targeting consumers, most e-
commerce sites operate under one of two business models:
• The “Retail Storefront” or Catalog

This model allows users to access an online catalog of products, browse or search

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through information and place orders online. While Amazon.com is probably the most
famous of this category of sites, tens of thousands of other companies use this model –
such as J Crew, Starbucks, Travelocity, Ticketmaster, Etoys and Macys.
• The Auction Format

Online auction sites allow users to competitively bid for items. While Ebay is the
“king of auction sites,” thousands of other sites use this model – including Yahoo
Auctions, Amazon Auctions, Ubid, and Zdnet.
The Half.com Opportunity
The Company believes a significant opportunity exists to create a consumer-to-consumer

marketplace using a storefront interface. The Company’s website will initially sell used mass-
market entertainment products, such as books, prerecorded music, videos, games, and other
“catalogable goods”.
Business-to-Business Business-to-Consumer Person-to-Person
Dell Computers Amazon.com

Storefront / Catalog IBM CDNow HALF.COM
Cisco Travelocity
VerticalNet Etoys.com
AdAuction Onsale Ebay

Auction Manheim Auctions UBID Amazon Auctions
Bid.com Yahoo! Auctions
There are three key elements to Half.com’s strategy:
1. Consumers provide the inventory…

Ebay has proven that consumers are willing to sell items over the Internet. Indeed,
over three million new items are placed for sale on its website each week. However,
Ebay requires sellers to key in all of the information about each item and charges users
an upfront listing fee. Half.com will let users list items without an upfront listing fee –
and the Company’s SpeedSell technology only requires sellers to enter an ISBN or
UPC number. The Company has already entered into relationships with dozens of
“power sellers”, who have agreed to list over 1.5 million items at launch.
2. …Half.com surrounds the inventory with information and navigation…

By collecting standardized information, such as an ISBN or UPC number, the
Company will place the inventory into a “storefront” interface. Buyers can search and
browse through an easy-to-navigate product catalog just as they do at Amazon.com.
Users can conduct fielded searches, view cover art, access best-seller lists, browse by
subject, and access reviews. According to Jupiter Communications, the “searchability”

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of a website ranks right behind price in online purchasing decisions.
3. … and automatically prices all items at half off.

According to Jupiter, 80% of all online purchase decisions are price driven. The
growth of automated price comparison agents (also called “shopping bots”) and the
ease with which consumers can click between competing Web sites makes
comparison-shopping prevalent online. Half.com will capitalize on this price
sensitivity by requiring all sellers to sell their items for at least half off. For example, if
a new book’s list price is $28.00, the cheapest online merchant might offer it for
$20.00. Half.com would recommend that sellers’ price their used copy for $10.00,
and require a seller to list it for under $14.00.
What About Ebay?

The Company believes that the Half.com approach has a number of advantages over
existing person-to-person auction websites, such as Ebay. According to Ebay, the auction model
is ideal for selling “unique items” with “uncertain future availability.” However, there are a
number of limitations preventing the auction format from dominating the sale of consumer goods,
such as books, CDs, and videos:
• An auction format does not provide the buyer with a guaranteed purchase. Buyers
need to wait up to two weeks to see if they submitted the winning bid. Moreover, a
significant percentage of winning bids are placed during the last hour of an auction –
forcing a buyer to log-on during a specific time to insure a winning bid. While
consumers might be willing to tolerate these inconveniences for one-of-a-kind items,
the Company has seen less consumer willingness to do so for mass-market items.
Half.com will let users purchase an item “on the spot”.
• Auction sites currently require the buyer and the seller to arrange for payment
independently. In most cases, the buyer will send the seller a check (requiring 2-4
days). The seller then will go to the bank, deposit the check and contact the bank to
insure that the check has cleared (5-7 days). After the check clears, the seller will then
send the item to the buyer. In order to reduce the inconvenience of the current
system, Half.com will act as an intermediary in the transaction process. The buyer will
pay for the items with a credit card, and the seller will receive all their payments via
one monthly check. This eliminates the hassle of sending and depositing multiple
checks and provides for a simple, hassle-free shopping experience.
• Another problem plaguing most auction sites is the requirement for the seller to
calculate the postage costs, obtain packaging materials and make a trip to the post
office. Half.com will provide all sellers with a Seller’s Kit containing packaging
materials for their first few sales. And through a relationship with Stamps.com,
Half.com will allow users to print out the required postage from their computers –
eliminating a trip to the post office.

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• Auction sites typically offer very little navigation and search capabilities. Most auction
sites are structured like online garage sales or flea markets, offering very little
navigation and categorization of items. Items are typically displayed by time (i.e., how
many days until the auction ends) rather than any standard catalog. Users can not
search for specific authors or artists, browse by a structured catalog, see bestselling
items or access supplemental information such as reviews or cover art. By leveraging
a consistent information scheme, Half.com will provide users with an easy-to-navigate
catalog of items.
• The inventory on auction sites is inconsistent. Because auctions operate under a

limited-time format, the chance of a site having a specific item is low. The Company
believes this is why many users do not think of going to auction sites first when they
want to purchase books or music. Using its SpeedSell technology, Half.com will
allow sellers to quickly enter items into inventory – and keep those items listed until a
sale.
• Auction sites require sellers to enter all the information about an item for sale. Sellers
must complete an extensive online form and sometimes scan in an image of the item in
order to start an auction. The only information provided about an item for sale on an
auction site is entered by the seller. The auction sites do not augment this information
with any pre-existing third party content. Half.com does not require sellers to provide
detailed information about the items for sale. Rather, Half.com licenses third party
databases which already contain the required product descriptions.
• Most of the large auction sites charge sellers an upfront listing fee, in addition to a
percentage of the sale amount. Half.com does not charge any upfront listing fee to
place an item into “inventory.”
• Many auction sites have been plagued by individuals selling illegal items (firearms,
tobacco products, alcohol, drugs, etc.) online. Indeed, Ebay is currently under
investigation by the federal government regarding possible illegal transactions on their
website. By only allowing users to list items in pre-specified categories, and by
leveraging a trusted database (or “authority file”), the Company believes that it has
significantly less business (and legal) risk.
The Half.com Business Model
Initially, Half.com will generate revenues from a number of sources:
• The Company will earn transaction revenue from every sale. While the Company
does not charge an upfront fee to list an item, the Company does receive two revenue
streams after an item is sold. First, the Company will receive a 15% commission from
the seller once an item is sold. For example, upon the sale of a $6 compact disc, the
company will receive a 15% commission – i.e., 90 cents. Second, Half.com will
receive a portion of the shipping and handling fee it charges the buyer. For example,
upon the sale of a $6 compact disc, the company will charge the buyer a shipping and

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handling fee of $1.95. The actual cost of postage for that compact disc is
approximately $1.14. The Company will provide the seller with a fee of $1.45 and
retain $.50. Thus, upon the sale of a $6 compact disc, the Company will receive total
revenues of $1.40 or 23.3%.
• The Company expects to generate affiliate revenue by participating in the affiliate

programs of leading e-commerce websites, such as Amazon.com. When a Half.com
user searches for a book, he or she might wish to purchase an item that is not currently
in our “inventory.” If this occurs, the Half.com website will automatically search the
leading online stores to find our user the cheapest price (i.e., launch a “shopping bot”).
By participating in affiliate programs and referring users to other sites, Half.com
expects to earn an average commission of 8% of the ultimate purchase price. Even
though the Company does not have the item in inventory, it is still a win-win-win
scenario: the consumer purchases the item for the cheapest price online; the third party
e-commerce site generates revenue; and Half.com earns a commission. Furthermore,
by integrating shopping bot technology into its website, the Company hopes to
become the first place consumers visit while shopping online.
• Another income source will come from the interest on the float. By acting as an
intermediary in the transaction process, Half.com will process the buyers’ credit cards
and send a monthly check to the sellers. In order to reduce fraud, the Company will
add a minimum of a 15-day delay in between the purchase and seller payment. For
example, on June 15th, the Company will pay sellers for all transactions that occurred
between May 1 and May 31st. This will result in a maximum of a 45-day holding
period and a minimum 15-day holding period. The Company will earn interest on the
funds during this period.
• The Company will also earn advertising and sponsorship revenue for sale of banner
advertisements and sponsorships throughout the site. While not a major revenue
source, the Company expects to generate a significant amount of web visits and page
views. The Company currently plans to retain an outside advertising sales agency to
sell banner ads and sponsorships.
• Finally, the Company is considering the possibility of generating Premium Listing

Revenues by allowing sellers to feature their items on the website. Items that have a
premium listing might get featured placement on the top of search results list or
receive prominent placement on the homepage of the site. Additionally, when there
are multiple copies of the same item in “inventory,” any premium listed items are
displayed first.

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PRODUCT OVERVIEW
Product Offering
Half.com seeks to foster an organized and efficient aftermarket for mass-market products
on the Internet. Initially, Half.com will create an online storefront that connects buyers and sellers
of used consumer entertainment products in a variety of categories, including:
• Books (including audiobooks)

• Music (compact discs)
• Movies (videos and DVDs)
• Video Games (Sega, Nintendo and Sony)
The functionality of the Half.com website can be roughly divided into three components:
• Listing an Item for Sale

• Browsing or Searching for an Item
• Purchasing an Item
1. Listing an Item for Sale

Users can list an item for sale using the Company’s proprietary “SpeedSell” technology or
through manual entry. With SpeedSell technology, a seller only is required to enter either a 10-
digit International Standard Book Number (ISBN) identifier or a 13-digit Universal Product Code
(UPC) number. Virtually every consumer product created within the last 25 years has an ISBN or
UPC number.
After a seller enters the UPC or ISBN number, the site displays our catalog entry for the
item they entered (containing fields such as title, author/artist, publisher, cover art image, etc.).
Users will be asked to (a) confirm the accuracy of the catalog entry; (b) enter the condition of the
item, and (c) enter the price they wish to sell it for. The default pricing option will automatically
price the item at 50% off the lowest online price. However, a seller is free to raise or lower the
price – as long as their new price is less than 50% off list. There will be no upfront charge for a
seller to list an item on the site. The Company will only charge a seller a commission when the
item is sold.
The Company also offers a variety of sellers’ tools to allow sellers to review (and modify)
their listed items and to review their recent sales activity.
The Company has recently signed a deal several leading inventory management software
companies. These companies provide software to manage the inventories for used bookstores,
music stores, video stores and games stores. For example, the Company has recently signed a
deal with UBIC (Used Book Inventory Controls) Systems. UBIC is the leading provider of
inventory management software to the used bookstore market. Under the terms of our multi-year
agreement, Half.com has built a module for the UBIC software which uploads a complete list of a
store’s inventory to the Half.com website and provides us with frequent inventory updates.

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UBIC has also agreed to make Half.com the exclusive online partner for their software. The
Company has already signed deals with over 24 bookstores that use the UBIC software.
2. Browsing or Searching for an Item
Prospective buyers are presented with an easy-to-use interface, allowing them to search or
browse through the product categories. After selecting a category (books, movies, music or
games), a user can either search for a specific entry or browse through the product catalog.
Users can search by a variety of fields, including:
Books Music Videos
Title Album Title Title

Author Song Title Actor
Keyword / Subject Performer / Artist Director
ISBN/UPC Recording Label Keyword / Subject
Format (hardcover, Format (compact Format (VHS, DVD,
paperback, etc.) disc, DVD, etc.) etc.)
Seller Keyword / Subject Seller
Seller
Users can also browse through the catalog in numerous ways, such as:
Books Music Videos
Three-Tiered Subject Style / Genre Listings Genre Listings

Hierarchy Top 100 CDs Top 100 VHS
Top 100 Sellers Top 100 DVDs Top 100 DVDs
Best-Selling Authors Best-Selling Artists Best-Selling Movies
New Arrivals New Arrivals New Arrivals
“Must Haves” “Must Haves” “Must Haves”
Third Party Bestseller Third Party Charts Chartbusters
Lists (NY Times, etc.) (Blockbuster, etc.)
Once a user finds an item of interest (either through searching or browsing), the user is
next taken to an Item Information Screen. This screen contains the following information:
• Product Information (Title, Author/Actor/Artist, Publisher, Year, Pages, ISBN,

Format, etc.)
• In Inventory? (Yes / No)
• Scanned cover art image (if available)
• Prices (List Price, Shopping Bot Prices, Half.com’s Price)
• Seller Info (Username, Community Feedback/Rating)

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If the user wishes to purchase an item that is not currently in our “inventory,” the
Half.com website will automatically search the leading online sites to find our user the cheapest
price (i.e., launch a “shopping bot”).
3. Purchasing an Item
When a user has found an item in inventory that he or she wishes to buy, the item can
easily be purchased using a credit card. Items can be placed into a shopping cart or immediately
purchased using a “Speedy Checkout” feature. When there are several copies of the same item in
inventory, the site will recommend a “Quick Pick” based upon an algorithm which factors price,
condition and seller rating. However, a buyer can always review all the items in inventory and
purchase a specific copy.
A buyer can also view a seller’s Community Rating Profile before making a purchase
decision. The Company believes that the Community Rating Profile feature will play an
important role in making users feel more comfortable in dealing with an unknown trading partner
of the Web. As pioneered by Ebay, the community rating mechanism establishes reputations
within the user community. By encouraging individuals to record comments about their trading
partners on Half.com, every registered will have a feedback profile. This profile will contain
compliments, criticisms and other comments by users who have conducted business or interacted
with a user.
Once a buyer purchases an item, an e-mail is sent to the seller. Once the seller confirms
that he/she will ship the item, the buyer receives a confirmation e-mail and their credit card is
charged by Half.com. A follow-up e-mail will be sent to the buyer 10 days after the transaction to
insure that the item was received. The seller will receive a monthly check from Half.com
containing their proceeds (minus the Company’s commission)
Features & Benefits
1. Features & Benefits for Buyers
• PRICE…PRICE…PRICE
By automatically pricing every item at half off, the Company expects to offer
the best price on the Internet. According to Jupiter Communications, 80% of
all online purchase decisions are price driven.
• ONE-STOP SHOPPING
By integrating a price-comparison agent (or shopping bot) into the service, the
Company hopes to become the first place a buyer visits. If we have the item in
inventory, buyers can purchase it for less than anywhere else online; if we don’t
have the item in inventory, we will direct the user to the cheapest source
online.
• TRUSTED INFORMATION
By structuring the product around standardized identifiers (UPC/ISBN), the

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Company will augment product listings with structured databases and trusted
information. This will provide buyers with an easy-to-navigate and
information-rich shopping environment.
• EASE OF USE
By combining two well-known models (the consumer-to-consumer model of
Ebay and the storefront model of Amazon), the Company’s website will
leverage well established user interface paradigms. Users will not be forced to
learn a new interface.
• QUICK RE-LIST
The Company has built a patent-pending technology to provide buyers the
ability to automatically re-list the items they purchase. For example, a person
who purchases an audio-book at Half.com could choose to automatically re-list
the item in two months for the same price. After the video is sold again, the
buyer has owned the movie for two months for less than the cost of an
overnight movie rental (i.e., the buyer would only have to pay shipping upon
buying the video and the Half.com commission upon selling it).
2. Features & Benefits for Sellers
• GENERATE CASH FROM THEIR BOOKSHELF AND CD RACK

By simply entering an ISBN or UPC number, a consumer can turn their unused
books, CDs and videos into free cash. A person who lists just 50 books could
make over $400.
• CONVENIENCE
Selling an item at Half.com is quick and easy. Using the Company’s SpeedSell
and batch listing capabilities, sellers can quickly and easily list their items on
our website without typing in long product descriptions or scanning images.
• FREE TO LIST
There is no upfront cost to list an item at Half.com. Sellers only pay a
commission to the Company if (and when) they get paid.
• FREE PERSONALIZED WEBSITE

In addition to listing a sellers items within the Half.com website, the Company
provides sellers with a free website which will serve as their personal
storefront. Visitors to a sellers’ website can only access the seller’s inventory
– creating a private-label storefront. This is special value to independent
booksellers, small bookstores and other volume sellers.
• PROMOTIONS AND INCENTIVES

The Company expects to offer a variety of promotions and incentives to drive
frequent use of the website. At launch the Company expects to offer a variety

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of promotions, including free shipping on first orders, T-shirts for customer
referrals, and online coupons for listing items at Half.com. Another promotion
will be a contest targeting prospective buyers whereby entrants will have to
complete a comical “quiz” comparing our prices to those of other online
merchants. The Company also is in discussions with several online incentive
programs (such as MyPoints and CyberGold) about providing loyal users with
“points” that can be redeemed for a variety of goods and services.
Inventory
The Company believes that significant quantity of the inventory listed on the site will be
from individual users. However, in order to insure that the shelves aren’t empty when the store
opens, the Company has pursued an aggressive merchant outreach strategy. Indeed, the
Company has already entered into relationships with dozens of merchants who have agreed to list
their over 2 million books, cds, dvds, videos and games for at least half price. The Company is
confident that this level of inventory will position it as the leading person-to-person source of
these items at launch.
Current Inventory Levels at Leading Person-to-Person Sites
Books Music Movies Games

Ebay 163,179 159,152 79,145 12,701
Yahoo 86,405 54,836 31,656 48,713
Fairmarket 4,331 4,468 338 554
Amazon Auctions 66,877 5,227 11,997 543
HALF.COM 1,700,000 135,000 150,000 15,000
Data as of 11/30/99
Current Half.com merchants include:
Inventory Management Software Customers – The Company has entered into an

agreement with several of the leading inventory management software companies to make
Half.com the integrated online reseller. By installing a free software module we provide, their
customers (i.e., store owners) can instantly list all their items at Half.com. This provides the
Company with a captive audience of used bookstores, cd stores, and movie/game stores for
merchants.
Existing Internet merchants – There are dozens of small, independent merchants who
currently sell cds, videos and games on the Internet but don’t have the funding for marketing.
The Company has conducted a major outreach program to these merchants, encouraging them to
list their inventory on the Half.com website.

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Used and remainder shops – The Company has also entered into relationships with a
number of large used and remainder distributors. For example, Tartan Books is the leader in
book “rentals” to the library market. By buying bestselling books in quantity, Tartan is able to
receive significant discounts from the publisher. Tartan then rents copies to libraries for a period
of 3-9 months until they are returned to Tartan. Half.com and Tartan have reached an agreement
for Tartan to list all their returned bestsellers at Half.com.
Technology and Infrastructure
The Half.com technology is composed of a robust, scalable user interface and transaction
processing system that leverage a combination of internally developed proprietary software and
commercial-off-the-shelf software. This system takes advantage of existing technologies in
electronic commerce while introducing several new features. The development organization
consistently seeks optimize for the following four goals:
• Offer features and functionality that enhances user experience

• Maintain high performance and availability of the service
• Insure quick time-to-market and be responsive to changing user needs
• Insure low cost-of-service with optimal resource utilization
The Half.com service is be available to users 24 hours a day and seven days a week.
Scheduled maintenance windows have been created and are not expected to exceed a total of four
hours per week. The Company's system runs on a cluster of Sun database servers running
Oracle’s 8i relational database management system and Thunderstone’s Texis search engine. A
suite of Pentium-based web application servers running the Windows NT operating system
provide a horizontally scaling and low-cost webserver farm. The Company uses a hardware-
based load balancing system and its own redundant servers to provide for fault tolerance. The
service is co-located at Nextlink’s Philadelphia-based facility and connected via closed-loop
connection to InterNap’s national network. InterNap, which is also used by Yahoo and
Amazon.com, has peering relationships with virtually every major Internet Service Providers,
resulting in the least network latency to customers. In addition to the above “production”
network the Company operates a “corporate” and “development” infrastructure that is housed
within the Company’s offices in Philadelphia.
In addition to the front-end functionality (described in the “PRODUCT OVERVIEW” section),

there are several “back end” service, such as:
• Data warehouses that provide reporting and decision support services;
• Catalog management tools that manage the integration of several third party
databases into the “catalog”;

CONFIDENTIAL
• E-commerce billing systems (using Signio software) that interact with credit card
transaction processing companies and the data warehouse;
• Systems and network management tools to monitor the service performance and
availability; and
• Customer care management systems that will allow the Company to respond to
customer questions by e-mail and telephone.
Intellectual Property
The Company has already filed U.S. trademark applications for the Half.com brand and
has filed for three U.S. patents on both its technology and business methods. The inventions
included in these patents include:
• Pricing methodology
• Automatic relisting upon purchase of an item
• Method for connecting buyers and sellers
Licensed Databases and Content
Management has years of experience in licensing content and databases for Internet-based
services. Indeed, at Infonautics Corporation, Mr. Kopelman was responsible for establishing
relationships with dozens of the nations’ leading publishers and database providers. The
Company has entered into relationships with several leading database suppliers to provide product
data for the website, including Muze, RR Bowker, Ingram and others. These providers currently
provide data to several of the leading e-commerce storefronts, including Amazon.com, Borders,
Barnesandnoble.com, and CDNow.
In addition, the Company has leveraged its database experience to create proprietary
databases. For example, there currently is no readily licensable database for video game (Sega,
Nintendo, etc.) products. Through a variety of licenses and agreements the Company has
compiled its own database of videogames which includes cover-art, multiple screen shots, and
product reviews.
Customer Service & Fraud Protection
The Company believes that excellent customer service is a critical requirement in order to
succeed in the consumer-to-consumer marketplace. The Company expects to devote significant
resources to providing personalized, timely customer service and support. The Company expects
that most customer support inquires will be handled via e-mail, with customer e-mail inquiries
typically being answered within 24 hours of submission.

CONFIDENTIAL
In addition to Community Rating Profiles (discussed above), the Company expects to
offer a fraud protection program designed to make users more comfortable with transacting with
an unknown person over the Web. The Company plans to implement several of the successful
programs initiated by Ebay, including a consumer protection program which provides guidelines
for buyers and sellers, helps provide information to resolve user disputes and responds to reports
of misuses of the Half.com service. The Consumer Protection group will investigate all users’
complaints and take appropriate action, including issuing warnings to users or suspending users
from buying or selling items. The staff will also provide information to assist users with disputes
over the quality of the goods sold or other fraudulent activity and upon receipt of an officially
filed, written claim of fraud from a user, will generally suspend the offending user from Half.com.
Differentiation and Competition
The e-commerce marketplace is new, rapidly evolving and intensely competitive. Barriers
to entry are relatively low, and current and new competitors can launch new sites at a relatively
low cost. The Company believes the auction sites (such as Ebay, Yahoo! Auctions, Amazon
Auctions, and Excite Auctions) are the primary alternatives for people who want to sell items and
that e-commerce sites (such as Amazon.com, Barnesandnoble.com, CDNow, and Reel.com) will
be competing to reach the same buyers. Other competitors include used bookstores and used
music stores operating online (the most significant of which are Powells Books and ABE Books).
However, the Company believes that it will successfully compete and uniquely
differentiate itself in the marketplace in several ways:
• Lowest Prices Online

The “halfoff” business model provides the Company with instant differentiation from
its competition. Given the tremendous price sensitivity of online shoppers, the
Company believes that its prices will be the lowest on the Internet. Moreover, the
growth of shopping bots augurs favorably for Half.com, as more prospective buyers
are exposed to the Company’s price advantage.
• Focus on Used Products

While there are hundreds of e-commerce storefronts on the Internet selling new books,
music and videos, there are few significant players in the used product marketplace. A
few e-commerce stores have partnerships with third parties to provide used
merchandise, but in almost all cases the used products are not heavily marketed. By
focusing on used mass-market entertainment products, the Company hopes to
differentiate itself from the competition.
• Strong Brand Name

The Company believes that “Half.com” is a powerful and extensible brand name and
plans to allocate a significant amount of marketing resources towards building the Half
brand. The Half brand name appeals directly to an online shopper’s primary
consideration – price. Furthermore, the Half brand name can easily be extended to sell

CONFIDENTIAL
any other product online – such as computer hardware, automobiles, collectibles,
electronic appliances, and other “catalogable” items.
• Unique Business Model

The Company believes it will be the first major website to create a consumer-to-
consumer marketplace using a storefront interface. By combining (a) the power of
Ebay’s consumer-to-consumer marketplace with (b) the convenience and ease-of-use
of Amazon.com’s storefront interface and (c) prices that are guaranteed to be half off,
the Company believes its business model will differentiate it from the competition.
Business-to-Business Business-to-Consumer Person-to-Person
Dell Computers Amazon.com

Storefront / Catalog IBM CDNow
Cisco Travelocity
HALF.COM
VerticalNet Etoys.com
AdAuction Onsale Ebay

Auction Manheim Auctions UBID Amazon Auctions
Bid.com Yahoo! Auctions
• SpeedSell and No-Fee Listing

The Company believes that its proprietary SpeedSell technology will provide sellers
with a much easier way to list items for sale. Furthermore, Half.com provides (a)
batch listing tools for users who want to list a large volume of items; and (b) a tool to
allow used book and music stores to upload data to Half.com from standard inventory
management software (such as Homebase and IBID). In addition, sellers are not be
forced to pay an upfront fee to list items on Half.com. Ebay, for example, currently
charges a listing fee ranging from $1 to $3 to list a $25 item – regardless of whether
the item is sold.
Product Extensions
Half.com is committed to rapid product iteration and enhancement. Indeed, while

employed at Infonautics Corporation, the Half.com Management Team spearheaded the Company
Sleuth project – delivering five major enhancement releases within six months.
The Company has already identified dozens of ways to enhance and extend the Half.com
website, including:
• Additional Product Categories / UPC extensions

Half.com can easily be extended to sell any other product online – such as computer
hardware, automobiles, collectibles, electronic appliances and other “catalogable”
items. The Company has identified several UPC database providers who could
provide access to enhanced category-specific databases. Current plans call for the

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addition of one new product category per quarter, starting with PDAs in the second
quarter of 2000, followed by cameras/camcorders and portable audio devices in Q3,
and video game consoles and laptops on Q4.
• Collaborative Filtering
By incorporating collaborative filtering technology (sometimes referred to as
“automatic recommendation technology”), the Company can recommend items to
buyers based on their previous purchases.
• Telephone SpeedSell
By allowing users to enter items for sale over the telephone (using UPC or ISBN
numbers), the Company believes it can significantly improve its ability to get users to
list items for sale.
• Premium Listing Fees

The Company can generate additional revenues through “Premium Listing Fees.”
Sellers who purchase a premium listing would receive featured placement on the top
of search results lists or on the homepage of the Company’s site.

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MARKETING OVERVIEW
The Marketplace
The Company’s website will initially sell used mass-market entertainment products, such
as: books, music, and videos.
• Books
According to Veronis Suhler, the U.S. consumer book market was $15.4 billion in
1997 and is expected to grow to $16.4 billion by the year 2000. Used books account
for just 3% of total sales. While online sales represent a small percentage of the
overall book market today, Forrester Research estimates that U.S. online sales of
books will grow to nearly $3 billion in 2002. Over one billion books are sold to
consumers each year – and more than half of all sales are fiction books. The Company
believes that this represents a significant opportunity, as fiction books are typically
read once and have limited reference value. For example, over 1,000,000 copies of
John Grisham’s latest bestseller, The Testament, were sold within the first month of
release. Research has shown that most fiction books are read within the first 2 – 3
weeks of purchase. This would provide the Company with an extremely large
inventory pool within weeks of publication. The Company believes that consumers’
bookshelves represent an incredible inventory opportunity.
• Music
According to the International Federation of the Phonographic Industry, worldwide
sales of music and music videos in 1997 were approximately $38.1 billion, of which
one-third was in North America. Used music represents less than 1% of sales. Online
music retailers currently account for a small (1.1%) but growing portion of total sales.
Jupiter Communications estimates that sales of pre-recorded music over the Internet
will grow on a worldwide basis from approximately $47 million in 1997 to $1.6 billion
in 2002.
• Videos
According to Video Flash, total consumer expenditures on home video rentals and
purchases exceeded $21.8 billion last year. This total was comprised of consumer
spending of $11.45 billion on the rental of 4.23 billion prerecorded tapes plus
consumer spending of $10.38 billion on the purchase of 735.1 million prerecorded
tapes. Forrester Research estimates that US online video sales will reach
approximately $1 billion in 2002.
• Video Games
According to NPD Group, the domestic market for console-based video games will
exceed $15 billion in 1999.

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Marketing Strategy
Half.com’s marketing strategy is to promote its brand and attract buyers and sellers to the
Half.com service. Management believes that effective marketing does not need to be expensive
marketing. (Indeed, while at Infonautics Mr. Kopelman was able to build Encyclopedia.com into
the second most visited encyclopedia on the Internet – even ranking ahead of Encyclopedia
Britannica – while spending less than $200,000 in marketing). To attract users to its website, the
Company will utilize the following marketing tactics:
Public Relations
The Company believes that with the intense media focus on Internet-related topics, new
and innovative products (such as Half.com) have the ability to garner significant media exposure.
At Infonautics, for example, Mr. Kopelman was responsible for managing public relations
activities surrounding the launch of Homework Helper, Electric Library and Company Sleuth. All
of those products have received significant amounts of media exposure, including feature stories
in almost every major venue, including the Today Show, The Wall Street Journal, Newsweek,
Business Week, CBS, CNNfn, USA Today, the Washington Post and CNBC.
Distribution Relationships
Business development deals will play a major role in driving traffic to Half.com. The
Company plans to conduct an aggressive business development program targeting high traffic
websites, shopping agents, and affiliate programs.
1. High Traffic Website Relationships

By entering into distribution relationships with high traffic websites, the Company expects
to generate a significant amount of traffic to its website. To date, the Company has already
entered into several relationships to integrate the Company’s inventory on six of the top 20 Media
Metrix-ranked websites:
• Yahoo Shopping
• Infoseek / Go
• About.com
• Looksmart
• Go2Network
• Infospace
• Inktomi
2. Shopping Agents / Shopping Bots

According to Zona Research, “shopping agents” or “shopping bots” which allow shoppers
to find the best price online will be the most important e-commerce development in 1999. Indeed,
some web merchants report that shopping bots account for over 25% of all sales. The Company

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expects to enter into relationships with most of the major shopping agent services, and has already
signed deals with BottomDollar.com, MySimon, and BestBookBuys.com and PriceScan.
3. Affiliate Programs
According to Jupiter Communications Inc., affiliate programs will generate over 11% of
all consumer e-commerce transactions over the Web this year, and that figure should grow to
24% by 2002. Affiliate programs use a revenue-share model, where an “affiliate site” drives
traffic to an “e-commerce site” in exchange for a percentage of the revenue generated by the
affiliate. The Company will launch a major affiliate acquisition campaign at launch.
Online Advertising
The Company will use strategic purchases of online advertising to place advertisements in
which it can reach its target audience. By leveraging existing management relationships with large
advertising sales networks (such as DoubleClick, Flycast, RealMedia and 247 Media), the
Company believes it will be able to purchase online advertising on a cost-per-action basis.
Moreover, the Company plans to enter into cross-promotional barter relationships with select
properties.
Offline Advertising
The Company also expects to engage in a number of marketing activities in traditional

media. The Company has retained Odiorne, Wilde, Narraway & Partners (a San Francisco full-
service advertising agency) to serve as its agency of record. OWNP has launched several
successful “dot.com” brands, including Salon.com, Springstreet.com and Fogdog.com.
The Company currently expects to spend in approximately $15 million in 2000 on offline
advertising, with the majority focused on cable TV and radio.
Promotions
At launch, the Company will unveil a variety of promotions and incentives to drive
frequent use of the website. One promotion will offer prospective sellers up to $10 in online
credit for listing up to 100 items at Half.com. Sellers will also be able to reduce the commission
paid to Half.com by referring other people who become sellers. Another promotion will be a
contest targeting prospective buyers whereby entrants will have to complete a comical “quiz”
comparing our prices to those of other online merchants. The Company also expects to partner
with an online incentive program (such as CyberGold) providing loyal sellers/buyers with “points”
that can be redeemed for a variety of goods and services.
Viral Marketing Campaign
Some of the most successful websites (such as Ebay and Hotmail) have generated most of
their traffic by word-of-mouth referrals. Viral marketing is a method of getting customers to
propagate a product on behalf of the company that creates it. It has been so successful that

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Newsweek Magazine called it “one of the cheapest and most effective Internet marketing schemes
ever.” Shortly after product launch, Half.com plans to introduce a viral marketing tool by offering
registered sellers the ability to create e-mail based coupons. This tool would allow sellers to
submit the e-mail addresses of their friends, past customers, etc. and would automatically send
them an e-mail offering a special discount.

CONFIDENTIAL
MANAGEMENT OVERVIEW
Management Team
In addition to the two founders, the Company is actively searching for additional members
of the management team. The Company expects to add a Vice President of Marketing and a
Chief Financial Officer before the end of the year.
1. Joshua Kopelman, President and CEO
Joshua Kopelman is the founder of Half.com and has been an active leader in the Internet
industry since its commercialization. Prior to founding Half.com, Josh was co-founder and
Executive Vice President of Infonautics Corporation, an Internet information company based in
Wayne, PA. Josh co-founded Infonautics in 1992, while he was a student at the Wharton School
of the University of Pennsylvania. Since then, Infonautics has grown to employ almost 200
people and, in 1996, Infonautics went public on the NASDAQ stock exchange. According to the
December 29th 1998 Philadelphia Inquirer, Infonautics was the “the second-best-performing
stock” for the Philadelphia region in 1998. Revenues for 1998 were approximately $15 million,
up from under $7 million in 1997.
Josh served as Infonautics’ General Manager for the Electric Library business unit,
growing the bookings of this educational online information service from less than $3 million in
1996 to over $18 million in 1998. In this role, Mr. Kopelman oversaw a team of over 100 people
in a variety of areas, including marketing, sales, business development, product management, and
software development. Under his leadership, Electric Library became one of the top consumer
subscription sites on the Internet (with over 75,000 paying subscribers) and the fastest growing
online reference product in the K-12 marketplace (with over 15,000 schools licensing the
product). Mr. Kopelman was also responsible for the creation and launch of Encyclopedia.com –
the second most popular encyclopedia site on the Internet. All told, by 1999 Infonautics’ web
properties received almost two million unique visitors each month. According to the February
1999 Media Metrix Web Report, the reach of the Infonautics Network placed it in the top 75 web
properties on the Internet – with more unique visitors than the New York Times, Etrade, CBS
Marketwatch and Dow Jones Interactive.
In his last role at Infonautics, Mr. Kopelman was the visionary and leader behind the
development of Infonautics’ newest Internet products, Company Sleuth and Job Sleuth.
Launched in October, 1998 Company Sleuth is one of the fastest-growing personal finance sites
on the Internet, receiving PC Magazine’s prestigious “Top 100 Web Site” award in April, 1999.
Prior to founding Infonautics, Mr. Kopelman worked in corporate development at

Telebase Systems, Inc. (which later merged to become N2K and is now a part of CDNow).
Before that, he worked at the New York venture capital firm Poly Ventures, LP, conducting
financial analysis, business plan screening and due diligence investigations of high-technology
startup firms.

CONFIDENTIAL
In 1999, Mr. Kopelman was awarded the “40 under 40” award by the Philadelphia
Business Journal, as one of forty individuals under the age of forty who have made the biggest
impact on the Philadelphia region.
Mr. Kopelman holds five United States patents in connection with his work in Internet
technology and information retrieval. Mr. Kopelman is often quoted in industry trade journals
and national newspapers, has appeared on numerous television shows, and is a frequent speaker at
industry-wide conferences on the future of information services.
Josh earned a Bachelor of Science degree cum laude in Entrepreneurial Management and
Marketing from The Wharton School of the University of Pennsylvania. He lives with his wife,
Rena, in Wynnewood, Pennsylvania.
2. Srinivas (“Sunny”) Balijepalli, Vice President of Technology
Sunny Balijepalli is a co-founder and Vice President of Technology of Half.com. He is

responsible for leading the technology divisions that will deliver and maintain the Company’s e-
commerce services.
Prior to founding Half.com, Sunny was the Manager of Information Systems at

Infonautics Corporation, which he joined in 1994. During the last year, he was primarily
responsible for developing the Sleuth concept, technology platform and architecture. He led a
cross-functional team of engineers to build and deliver the award winning Company Sleuth. The
first release of CompanySleuth was delivered in record time and was followed up by five major
releases within the following six months. Shortly after releasing CompanySleuth, Infonautics
launched JobSleuth, the Internet’s first personalized, push capable job search. During the
development of the Sleuth platform Sunny’s focus has been clear: rapid time to market, high
quality and low cost of service.
Prior to running the Sleuth technology division at Infonautics, Sunny oversaw the
production services of all properties on the Infonautics Network including the Electric Library.
He was responsible for incorporating an enterprise systems and network management system that
brought about increased levels of service availability.
Sunny has experience with a wide spectrum of technologies including – relational

databases, web application servers, content and document management systems, messaging,
information retrieval, etc. In addition, he has a strong background in information systems
management.
Sunny has a Bachelors degree in Computer Science. He will shortly be completing the
Masters in Information Systems program at Drexel University. He lives in Devon, Pennsylvania.
3. Chris Fralic, Vice President of Business Development

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4. Mark Hughes, Vice President of Marketing
5. George Leimer, Vice President of Operations
Board of Directors
The current directors are:
• Joshua Kopelman, President, CEO and Chairman of the Board of Half.com
• Van Morris, President and CEO of Infonautics Corporation

Mr. Morris has more than 20 years of experience in management and marketing at
high technology companies, serving in such capacities at Legent Corporation, Goal
Systems International and UCCEL before joining Infonautics in September 1995.
• David Sclessinger, founder Encore Books and Zainy Brainy
• Bob Roeper, Managing Director of VIMAC

CONFIDENTIAL
SUMMARY – KEY INVESTMENT CRITERIA
• Half.com is led by a strong, experienced management team. Joshua Kopelman, the

Company’s President and Chief Executive officer, has been in the Internet/Online services
industry since 1992. Working together with Sunny Balijipalli at Infonautics Corporation, Josh
has created, built and marketed a number of leading web properties.
• The Company has a unique business model. By combining (a) the power of Ebay’s consumer-
to-consumer marketplace with (b) the convenience and ease-of-use of Amazon.com’s storefront
interface and (c) prices that are guaranteed to be half off Amazon.com’s price, the Company
believes its business model will differentiate it from the competition.
• The Company makes money by moving bits – not books. Unlike most major e-commerce
companies, the Company never take possession of an item being sold or the buyer’s payment
for the item. Rather, the Company generates revenues by connecting buyers and sellers. This
low-cost structure provides significant competitive advantage against both traditional retailers
(who have to maintain retail stores) and online retailers (who incur expenses by maintaining
warehouses, inventory, and employees).
• The Half.com brand is a powerful and memorable brand name. The Company believes
that “Half.com” is a powerful and extensible brand name and plans to allocate a significant
amount of marketing resources towards building the Half brand. The Half.com brand name
appeals directly to the primary consideration of online shoppers – price – while maintaining a
level of elegance and mystery.
• The Internet is experiencing dramatic growth in the number of users and is changing the
way people shop. IDC estimates that the number of Web users will grow from approximately
150 million worldwide in 1998 to approximately 500 million worldwide by the end of 2003.
This rapid adoption of the Web represents an enormous opportunity for businesses and
consumers to conduct commerce over the Internet. Indeed, according to A.C.
Nielson/CommerceNet, over 20 million Americans have conducted an e-commerce transaction.
• Half.com will offer users the ability to purchase goods at the lowest price available online.
According to Jupiter Communications, 80% of all online purchase decisions are price driven.
The Half.com website will automatically price items at half off the Amazon.com’s price. The
Company believes that its prices will be the lowest on the Internet.
• The Company is forecasting dramatic revenue growth and cash flow break-even within the
first two years of operation. The Company expects to generate over $3.5 million in revenue
within the first 18 months of operation, growing to over $16 million in 2001. The Company
projects cash-flow break-even in the first quarter of 2001.
• There is strong potential for product extension. The Half brand name can easily be extended
to sell any other product online – such as computer hardware, automobiles, collectibles,
electronic appliances and other “catalogable” items.

CONFIDENTIAL
FINANCIAL OVERVIEW
2000 – 2002 Pro-Forma Quarterly Income Statements
(Detailed Income Statements available upon request)
Half.com Business Plan – Draft 2.0 27 04/05/07

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2000 – 2002 Pro-Forma Quarterly Cash Flow Statements

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(Detailed Cash Flow Statements available upon request)
2000 Pro-Forma Monthly Income Statement

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Business Plan - 1999

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INDUSTRY AND BUSINESS OVERVIEW 3

SUMMARY – KEY INVESTMENT CRITERIA 26

FINANCIAL OVERVIEW ERROR! BOOKMARK NOT DEFINED.

Half.com Business Plan – Draft 2.0 1

2000 2001 2002

Half.com Business Plan – Draft 2.0 2

The e-commerce marketplace can be broken down into three segments:

The Person-to-Person Market

Half.com Business Plan – Draft 2.0 3

• they offer a limited variety and breadth of goods;

• they often have high transaction costs from intermediaries; and

• is global in reach, offering buyers a significantly broader selection of goods to

Auctions versus Storefront Catalogs

• The “Retail Storefront” or Catalog

Half.com Business Plan – Draft 2.0 4

• The Auction Format

The Company believes a significant opportunity exists to create a consumer-to-consumer

Business-to-Business Business-to-Consumer Person-to-Person

Dell Computers Amazon.com

AdAuction Onsale Ebay

There are three key elements to Half.com’s strategy:

1. Consumers provide the inventory…

2. …Half.com surrounds the inventory with information and navigation…

Half.com Business Plan – Draft 2.0 5

3. … and automatically prices all items at half off.

What About Ebay?

Half.com Business Plan – Draft 2.0 6

• The inventory on auction sites is inconsistent. Because auctions operate under a

Initially, Half.com will generate revenues from a number of sources:

Half.com Business Plan – Draft 2.0 7

• The Company expects to generate affiliate revenue by participating in the affiliate

• Finally, the Company is considering the possibility of generating Premium Listing

Half.com Business Plan – Draft 2.0 8

• Books (including audiobooks)

• Listing an Item for Sale

1. Listing an Item for Sale

Half.com Business Plan – Draft 2.0 9

2. Browsing or Searching for an Item

Users can search by a variety of fields, including:

Books Music Videos

Title Album Title Title

Books Music Videos

Three-Tiered Subject Style / Genre Listings Genre Listings

• Product Information (Title, Author/Actor/Artist, Publisher, Year, Pages, ISBN,

Half.com Business Plan – Draft 2.0 10

1. Features & Benefits for Buyers

Half.com Business Plan – Draft 2.0 11

2. Features & Benefits for Sellers

• GENERATE CASH FROM THEIR BOOKSHELF AND CD RACK

• FREE PERSONALIZED WEBSITE

• PROMOTIONS AND INCENTIVES

Half.com Business Plan – Draft 2.0 12

Current Inventory Levels at Leading Person-to-Person Sites

Books Music Movies Games

Current Half.com merchants include:

Inventory Management Software Customers – The Company has entered into an

Half.com Business Plan – Draft 2.0 13

Technology and Infrastructure

• Offer features and functionality that enhances user experience

In addition to the front-end functionality (described in the “PRODUCT OVERVIEW” section),

• Data warehouses that provide reporting and decision support services;

Half.com Business Plan – Draft 2.0 14

Licensed Databases and Content

Customer Service & Fraud Protection