Product Line
VMercial produces and syndicates celebrity-endorsed, rich-media broadband e-commerce solutions to increase consumer conversion rates and augment client site content. To this end, the Company will script and create short-form news magazine-style programming to showcase products and simultaneously present product information with embedded buying opportunities. The Company has coined the term “VMercial™” to describe an Internet-based infomercial in a news media entertainment format, embedded with interactive purchasing opportunities through the use of hyper-video technologies. In addition, VMercial will enhance opportunities for its partner manufacturers through the promotion of its syndicated cable SRTV program, “On the Net.”

Each VMercial is created within an industry vertical, such as fitness, beauty, music, and retail fashion. Representing national brands and showcasing product categories, VMercials become stand-alone, entertaining, e-commerce solutions or mini Internet stores that can be syndicated to content-dependent sites. VMercials are produced in 1 to 2 minute segments that are sponsored by participating manufacturers, vendors and retailers and can then be used independently on a partner’s site, or are combined to create a vertically relevant and entertaining 10-minute program. This program is syndicated to niche and portal sites to enhance their users’ experience and increase their margins through revenue sharing of product sales.

Technology Proprietary Rights

To date, product presentation on the Internet has been passive and one-dimensional. No company has yet developed an effective method to actively sell to the consumer. Through the marriage of rich media broadband technologies and traditional e-commerce database driven sales, VMercial is redefining e-commerce in preparation for the coming of the broadband explosion.

Through the use of clickable “hyper-video” VMercial provides entertaining video segments with embedded e-commerce opportunities. The company utilizes sophisticated technologies such as Real Network’s G2 streaming technology, a sophisticated back-end database architecture and server network, and a robust bandwidth solution, to assure that VMercial’s syndicated e-commerce solutions are seamless and extremely fast.

Market Opportunities

VMercial is capitalizing on the rapid rate of broadband deployment, combined with the enormous success of e-commerce on the Internet by enriching media through the use of celebrity endorsed active sales in an entertainment format. The Company fulfills a market need by actively promoting commerce in a medium that takes advantage of the latest emerging advances in technology in a way that has never been done before.

Goldman Sachs investment research analysts estimate that the percentage of total American online homes accessing the Internet using a high-speed broadband connection will explode from what was approximately 1% in 1998 to 66% by 2008, representing over 73 million homes of a total of a little over 112 million U.S. homes. Under our projected scenario, broadband-subscribing homes will represent 44% of all online connections by 2004 and 70% of all online connections by 2008.

VMercial is an extension of the growing affiliate marketing e-commerce trend in which all product inventory management and fulfillment is maintained by sponsor vendors and retailers. According to Forrestor, affiliate-marketing relationships accounted for 13% of all e-commerce revenues in 1999. This is projected to grow to 21% by 2002. Beyond providing compelling e-commerce opportunities, VMercials are designed to enhance the creative content of client sites.

Marketing Sales Distribution

Initially, VMercial is focusing on establishing its relationships with leading national brands in various retail segments. By leveraging the relationships of the management team and the Company’s strategic partners, VMercial is securing the rapid deployment of its content into vertical sites and portals. These relationships also allow VMercial to more quickly penetrate these markets and develop additional partnerships. Quickly establishing a large market presence in its focused markets is key to the company’s success. Through its sales and marketing staff, VMercial will target its extensive network of contacts provided by the company’s advisors and strategic partners. The Company will continue to develop its market presence through trade shows and seminars, as well as online marketing and advertising. Traditional advertising and marketing will play a supportive role in the company’s efforts.

Competition

While the market for e-commerce is becoming well defined with numerous providers, and the broadband content space is beginning to blossom, the market for the convergence of e-commerce and broadband content is largely underdeveloped with few providers. While there are currently companies who have spent development dollars on interactive television, there are no other companies known to be creating syndicated e-commerce solutions on the Internet through the use of “active” sales by taking advantage of clickable interactive broadband streamed video.