BUSINESS SUMMARY

Health Plan Systems, Inc., together with its wholly owned subsidiary in Chennai, India, is a
leading provider of health care software products and services. The flagship product, HPS Total
Administrator, is in its sixth version and has been on the market for 15 years. HPS is a
healthcare industry leader in security, with one of the first Claredi-certified electronic data
interchange (EDI) systems for secure HIPAA compliant healthcare claims processing, and with
additional certification for credit card transaction security. The HPS team has vast healthcare
experience. HPS executives include professionals with decades of knowledge in clinical and
operational healthcare, with a specific emphasis in information technology. HPS has a strong
international presence, with a staff of over 100. Its software engineers and implementation
specialists are highly experienced, with over seventy percent having masters degrees in
computer science.
All of HPS products and services incorporate the industry’s highest standards for security and
data integrity. The HPS proven reputation for security and its thorough understanding of
healthcare clinical, operational and business processes, are key elements in its ability to
capitalize on the increasing emphasis on secure and HIPAA compliant claims processing;
patient centric and patient controlled health records; efficient coordination of clinical care; and
secure clinical record keeping. HPS software products include:
• HPS Total Administrator is a HIPAA compliant software suite used by insurance
payers, particularly by a niche market that includes unions and other self insured benefit
plans covered under the Employee Retirement Income Security Act (ERISA). Clients
can choose which modules to purchase and implement. All modules integrate with one
another, including: eligibility; medical, dental, and hospital claims processing; medical
management; disability and death benefit management; and pension and annuity
management.
The market for HPS Total Administrator, principally self insured health plans, is over
10,000 customers in the United States, with 1,500 in the NY-CN-NJ tri-state area alone.
Revenue from a new sale averages $600,000 with ongoing maintenance revenue of
18% of sales. HPS currently has 27 self-insured health plan clients (principally union
funds) and has over an 80% win rate responding to requests for proposals. HPS has
expanded its sales reach by winning clients in the Mid-West. Few of the 10,000 plus
self-insured health plans meet the federal requirements for HIPAA security and EDI.
Nearly all of these plans will significantly benefit from using the HPS product.

• The HPS Smart HealthCard is a revolutionary health care record keeping system which
combines the functionality of a patient-controlled personal health record with that of a
physician based medical record. The system is a web-enabled combination of a patient-
controlled smartcard and a secure data repository. It simply and inexpensively allows for
the coordination of patient care, as well as timely and secure insurance eligibility
confirmation and claims processing. It will be marketed to large private and government
payers and to large employer groups in the United States and overseas. The system
provides patients with a longitudinal health record and the ability to ensure that their care
Health Plan Systems, Inc,

is coordinated and meets expected care guidelines and safety standards. It provides
payers with significant cost savings for eligibility maintenance and claims processing,
while providing data needed for quality improvement and disease management. The
card can be “branded” so that it is seen as a benefit from an employer organization or
health plan or other organization. The record belongs to the patient so that if there is a
change in employer or health plan the record is maintained with no loss of data or
continuity. The system provides significant time and cost benefits for clinicians,
including real-time eligibility and claims processing Clinicians will be provided card
readers by the payer organization using the system. It does not have the usual cost and
complexity barriers to physician implementation of outpatient computer based record
systems.
Other Western countries are implementing far less robust and functional healthcare
smart cards. Survey data indicate acceptance of patient control over their own health
records and the use of a smartcard with healthcare information. The market size in the
United States, not including ongoing maintenance and transaction fees, is
approximately $9 Billion The first large scale implementation will be in Khanh Hoa
Province in Central Vietnam, where the public health authorities have approved a
project to coordinate care for its 1.2 million citizens. This will be a large scale proof-of-
concept as well as a pilot project for Vietnam’s 85 million people.

• Other Products and Services: HPS Total Administrator and the HPS Smart
HealthCard system contain functionality which can be marketed and licensed
separately. Examples include: a web-based provider practice management solution;
an EDI interface which enables other practice management vendors to provide HIPAA
compliant and secure EDI transactions; clearinghouse functionality which enables
payers to provide legally mandated HIPAA compliant eligibility queries and claims
processing; a credentialing module incorporating National Committee for Quality
Assurance (NCQA) standards, which allows hospitals, group practices and managed
care organizations to maintain clinician credentialing information that is required by
regulatory and licensing entities, as well as for billing and payment. HPS also provides
high quality and cost effective software customization services often requested by its
clients. This includes private labeling of its software, and complete customer support.
HPS has invested approximately $5 Million, internally funding all of its research and
development of Smart Healthcard. It is now well positioned with cost effective, easy to
implement, and integrated software solutions for payers, patients, and providers.
HPS is a profitable and established business that is poised to rapidly expand in the United
States and overseas. Sales for 2005 were approximately $2,000,000 and for 2006 were
$2,500,000. Sales for the first half of 2007 were approximately $2,000,000 and are on track
to meet estimation of $4,900,000 for the year. With additional capital for sales and
marketing of HPS Total Administrator, increased staff, capital expenditures for operations
expansion, and introduction of the HPS Smart HealthCard in the US market, sales are
projected to increase to: $9,000,000 in 2008, and $29,000,000 in 2009, with operating
margins of 50% on sales of $40,000,000 in 2010.
With bridge financing of $2 Million by the beginning of the fourth quarter of 2007, the
company will expand its sales force for HPS Total Administrator in the North East and Mid
West, initiate its first large scale implementation of the HPS Smart HealthCard record
keeping system, retire approximately $700,000 of debt, and engage legal services and pay
for other expenses necessary for securing patents and preparing for a private placement of
$10 to $20 million.