Case Study - TIME MERCHANTS

Time Merchants

Executive Summary

Most people just don't enjoy spending their free time running errands
and performing household chores; their time is valuable! And there is
always a fear of the unknown when calling a service provider listed in
the yellow pages without having some sort of reference.1

Time Merchants has a solution for these problems!

Executive Summary

Time Merchants (TM) is in the business of providing consumers with two
of the most precious commodities in today's modem society - time and
convenience. Time Merchants is a service broker and provider. As busy
people struggle to maintain a balance in their lives, conserving time
has become a rather daunting task. By consolidating a fragmented home
service industry, the TM service concept addresses the need consumers
have for simplifying their lives. Time Merchants plans to build brand
equity by providing superior home service and by being the first company
of its kind to enter the marketplace. Anticipated launch for the
business is January of 2000. The proposed legal form for TM is a C
corporation.

What We Offer

Time Merchants offers consumers two ways to simplify their lives. First,
the basic service provides, at no cost to consumers, referrals to a
variety of pre-screened home service providers. Customers who call our
referral hotline can be confident that they will be referred to a
reputable home service provider that meets the quality performance
criteria set by TM. Secondly, with its premium delivery service, TM
provides the home delivery of consumer goods. The premium delivery
service, which includes a once per week pick-up and delivery of
groceries, dry cleaning, film developing, and package posting, is
available for a monthly fee of $50. Consumers participating in the
premium delivery service will be able to place their orders online, via
phone or fax and can change their orders up to 24 hours before a
scheduled delivery. Both services are designed to save time for today's
busy household. Time Merchants plans to take advantage of a unique
opportunity to consolidate a fragmented home service industry.

While there are currently no direct competitors in the western US, TM is
aware of the risk associated with low entry barrier ventures. Time
Merchants plans to mitigate this risk by building a strong foundation of
trust between our providers and our customers. The keys to sustained
market growth and a competitive advantage will be building a strong
brand identity and positive relationships with our suppliers and
customers.

Our Target Market

Time Merchants has two different target markets. First, the Referral
Service targets the mass-market consumer as well as local service
providers. In comparison, the target market for the Premium Delivery
Service is working professionals and dual-income families with annual
household incomes greater than $60k. Initial launch of the TM service
will be in the San Diego area followed by expansion throughout the
Southwest. Geographic Information Systems (GIS) technology and ArcView
software from ESRI will be utilized to identify expansion target
markets.

Size and Growth Trend of Target Markets

Market research suggests the citizens of San Diego will readily embrace
the time saving services offered by TM. Recently listed as the fastest
growing city in terms of future job growth2, San Diego is a prime market
for TM. With a current population of nearly 3 million people, combined
with a large military presence, San Diego has man mobile people that
warrant the introduction of such a time savings service. Recent
demographic information shows there are approximately 195,000 households
in San Diego with incomes greater than $60,000 (28% of all households)3.
Current growth projections for TM forecast a 0.8% share of the market by
year five for the Premium Delivery Service. This is equivalent to
roughly 1700 active members. The growth rate of the Referral Service is
expected to be even higher and will result in a 20% market share of all
small to medium service providers in the San Diego area by year five.

Time Merchants plans to expand geographically to other cities that fit
the demographic requirements identified through market research. The
growth rates in these markets are expected to be similar to that of the
San Diego market. Based upon realistic growth rate assumptions there
will still be a great deal of potential for expansion beyond year five.

Operations Strategy

Time Merchants will be directly responsible for screening potential
suppliers/vendors, operation of the call center, coordination of account
payment and delivery of goods to our premium service customers. State of
the art technology will be utilized in the call center, for our web page
and for payment of goods and services. The marketing strategy will
create a brand image for TM. To reach our target market, TM has enlisted
the services of Vision Communications, a marketing and communications
firm, to develop a promotional mix, which will include advertising
(radio and local newspapers), direct sales, direct mail, and public
relations. The TM staff will grow from I I personnel in year one to 77
in year five.

Critical Risks

Management recognizes there are several internal and external risks
inherent in the TM concept. Quality and response time will be key
factors in the consumers' decision to utilize the service on a continual
basis. Also, consumers must be willing to accept the services offered by
TM in order for the company to meet its sales projections. A strong
marketing strategy and careful screening of employees and service
providers will mitigate these risks. Building a loyal and trusting
relationship with our customers and partners is a key component to the
success of Time Merchants.

The Founders

Time Merchants was founded by Debbie Bieneman, Toby Danylchuk, and Stacy
Linder. The group brings a strong mix of managerial, marketing, sales,
accounting, and contracting experience, in addition to their technical
expertise in entrepreneurship and finance gained through the MBA program
at San Diego State University. The team has a combined total of over 28
years of business experience. The group has worked together extensively
during the past two years. Together these three individuals make a very
strong team.

Initial Funding

Time Merchants will initially be funded with $150,000 invested by its
founders. Time Merchants is seeking an outside investment of $750,000 in
return for a 30% equity ownership of the company. Based on proforma
projections, fifth year revenues will be $11.5 million, yielding an
operating income of $3.8 million. An investor can expect an 78%
compounded annual return on their 30% equity based upon a valuation
after year five (P/E = 12). The funds will, provide for start up costs
and working capital during the first years of operation.

Summary Financial Data

Yr1 Yr2 Yr3 Yr4 Yr5

# of Customers at year end 200 342 585 1,001 1,711

% Growth - 71% 71% 71% 71%

# of Providers at year end 217 530 950 1,446 2,181

% Growth - 144% 79% 52% 51%

Operating Results





Revenues 727,999 2,340,978 4,291,354 6,998,549 11,473,767

EBIT (689,755) 132,346 1,138,090 2,668,368 6,303,722

% of Sales -95% 6% 27% 38% 55%

NPAT (689,755) 132,346 905,818 1,601,021 3,782,233

% of Sales -95% 6% 21% 23% 33%

Exit Strategy

Our most desirable option for exit is a merger or buyout by a large
corporation. Time Merchants believes with substantial cash flows and a
loyal customer base it will be attractive to potential corporate
investors within five years. Time Merchants would also consider the
possibility of issuing an IPO after five years to provide liquidity for
its initial investors as well as the additional funds necessary for a
national roll out of the concept.

1 Time Merchants- primary market research

2 Newsweek February 1, 1999 pg 44

3 SANDAG Demographic Statistics

Mission Statement

Time Merchants seeks to create time for today's harried household by
consolidating a fragmented home-service industry. We will make lives
easier by lessening the time demands on today's households. We will
establish lasting relationships with our customers and partners to help
create long-term growth and value.

Background

Increased time constraints among Americans have created many
opportunities for service based companies that can add quality hours to
people's fives. Time Merchants has identified a unique niche in today's
busy economy that i currently not being served by any direct
competitors. Management feels growth in this niche is evolving and has
significant long-term potential. Currently TM is in the research and
development phase.

Description of Services

Time Merchants is a service broker and provider. Customers can
participate in two different levels of service and can utilize TM for
many of their household service needs. This allows TM to meet the needs
of a broad range of customers. Premium Delivery Service customers pay a
monthly fee to TM. These customers will enjoy a scheduled once per week
pick up and delivery of groceries, dry cleaning, film developing, and
home movies, in addition to the benefits offered by the referral
service. Referral Service customers can call an 800 number and be
directly connected to qualified service providers in their area, i.e. a
plumber, electrician, maid, etc. The Referral Service will also serve as
a channel to attract new customers to the Premium Service.

Time Merchants addresses the needs of our customers and our suppliers.
Most local service providers are skilled in their trade and are not so
skilled at marketing their services. Time Merchants will promote the
services of prescreened and qualified local suppliers to consumers for a
small monthly fee. This fee is comparable to the expense of a small
advertisement in the Yellow Pages. With respect to the Referral Service,
TM views itself as an entrepreneurial company in the business of
promoting entrepreneurs.

The type and number of services offered by TM to its customers will
expand with customer demand and desire. A detailed outline of our launch
timeline can be found in appendix A.

Figure 1 - Feature and benefit evaluation

Time Merchants Features/Benefits Price

Referral Service

1-888-FOR-TIME Customers

Reliability

Convenience

Timeliness $0

Suppliers

Marketing,

Increased Sales,

Credibility $350/month

Premium Home

Delivery Service Customers

Reliability

Convenience

Timeliness $50/month

Suppliers

Marketing,

Increased Sales,

Credibility Commission %

Proposed entry strategy and time line of events

Phase I. Establish Relationship with Service Providers - Beta Test
Premium Service

During the eight months prior to scheduled launch, the management team
will concentrate primarily on securing relationships with our service
providers. This will be accomplished by a direct sales campaign
targeting potential partners. It is important that these relationships
be established before we begin marketing our services.

This phase will be followed by a beta test of the Premium Home Delivery
Service. The management team plans to provide this service to a select
number of households within our targeted communities free of charge for
a three-month period. This will enable TM to solidify our distribution
systems in order to provide the highest level of quality service to our
customers. TM will also list pre-screened service providers at no charge
during the first three months of operations.

Phase II. Marketing Blitz

During the next stage of operations TM will embark upon a major
marketing effort designed to attract consumers to the service. The plan
is to besiege the market with radio and media advertisements. Time
Merchants' objective is to obtain a 3% response rate for the Referral
Service, and achieve a market penetration of 1% with the Premium
Delivery Service. This marketing campaign will be ongoing; our year 1
promotional plan and target markets are in appendix B.

Phase III: Maintain and Ensure Quality and Efficiency to Consumers and
Providers

In the third phase of operations TM will concentrate on ensuring the
satisfaction of both consumers and providers. This stage of operations
will be critical to the overall success of the venture. This is the
stage of the business rollout where TM must solidify customer loyalty.
Deliveries to Premium Service customers must be on time and accurate,
referrals must be to qualified providers, etc. TM will contact 100% of
all customers who utilize the Referral Service (customers and
providers), either by phone or mail, to measure their satisfaction with
the services provided. Premium Delivery Service customers will also be
contacted on a regular basis to measure their satisfaction,

At this stage, management must be providing consistent referrals to each
provider in order to maintain their business. Time Merchants will also
evaluate the number of service providers in each area to identify
weaknesses in the existing structure. This type of evaluation will be
done annually unless there appears to be a large discrepancy in call
distribution between providers of the same type in different areas. It
will be of the utmost importance that the volume of calls meets the
needs of the providers.

Phase IV. Expansion of the Premium Delivery Service to Other Communities

The fourth phase will include expansion of the Premium Service to other
communities within the San Diego area. The communities included in the
expansion will be determined based upon consumer demand and
demographics.

Phase V. Geographic Expansion

During the fifth phase, Time Merchants will begin its geographic
expansion of the Referral Service. The first expansion will be to the
Phoenix area during year 2. Time Merchants plans to expand the Referral
Service to one additional city per year, with Las Vegas, Orange County,
and Los Angeles following in years 3 through 5. Expansion of the Premium
Home Delivery Service will be dependent upon the experience in the San
Diego market and market conditions in the expansion cities. Time
Merchants plans to expand its home services to any city in the US that
meets our demographic criteria.

Market Analysis

The increase in dual income households coupled with an increase in the
number of hours people spend at the office in recent years has lead to a
scarcity of time for many consumers to spend with their family or doing
things the enjoy. It is for these reasons that the Time Merchants
concept is appealing to many people. Time Merchants provides consumers
with a little more time each week to spend doing the things they want to
do. A cost benefit analysis of the TM concept can be seen in Appendix C.

Industry

Consumer-direct on-line shopping and home-delivery is a growing niche
market within the $425.7 billion grocery and food distribution industry.
Factor in the revenue generated by other services (provided by some home
delivery companies) such as dry-cleaning, video rental, film processing,
stamp purchasing, and UPS shipping, the industry sales rise to an
estimated $778 billion per year. The shift to on-line shopping may be
influenced by the high percentage (60%) of Americans who dislike their
current shopping experience, coupled with the fact that 67% of dual wage
earning households own PC's and use technology to simplify their busy
lives.5

Research Findings

To confirm our assumptions TM recently surveyed over 160 consumers in
the San Diego metropolitan area. The results of the survey show that 80
percent of respondents are interested in trying one or more of the
services offered by TM. Because the services are divided into two tiers,
each of which is designed to meet the needs of a different segment of
the market, TM offers something for everyone.

The Referral Service (1-888-FOR-TIME), is appealing to all consumers who
want assurance that they are dealing with a reputable home service
provider; and because this service is free to consumers, it will be
attractive to all income levels. The Premium Service is designed more
for professionals whose time is worth more to them than the cost of
relinquishing household responsibilities. Eighty-three percent of survey
respondents with incomes greater than $60K expressed a willingness to
pay for a service such as TM. Time Merchants views $60K as a baseline
income level of consumers to afford the Premium Service. The survey
revealed a higher degree of comfort with computers and the Internet from
consumers in this segment. Those respondents who expressed reservations
toward the idea were primarily concerned with trust and dependability.
Summary results of the marketing research are shown in Appendix D.

Competition

At present, there is no direct competition to TM in the San Diego
metropolitan area. Indirect competition (or "alternatives") may exist in
several forms: 1) traditional grocery stores and home improvement
centers, 2) the Yellow Pages, 3) manufacturer service contracts, 4)
property management firms, and 5) on-line grocery delivery service
companies. Grocery and department stores could pose a threat to TM if
they decide to enter the home delivery business on their own. Home
Improvement Centers, such as Home Depot and Lowes, could start referring
customers to selected service providers. Consumers who prefer to shop
for best prices rather than quality may prefer to use the Yellow Pages
to find their own service provider. Manufacturer's who offer service
agreements on consumer goods will also reduce reliance on TM. Property
management firm's that bid on the management of entire housing complexes
will reduce the need for consumers to utilize the home service referral
segment of the business. Lastly, the growth and expansion of on-line
grocery delivery companies such as Streamline and PeaPod could impact
market share for the Premium Home Delivery Service.

Competitive Analysis

Guaranteed Top Quality Service Guaranteed Quick Reaction Time Regularly
Scheduled Delivery Schedule Access to a variety of service providers
Consolidated Billing for all home Services Online Consumer
Familiarity/Comfort Level

Time Merchants X X X X X  

Grocery/Home Improvement Centers x         x

Yellow Pages       x   x

Manufacturer Service contracts x x        

Property Management Firm   x        

On-line Grocery Delivery Companies x   x x    

Table 2 Competitive Analysis (Referral and Premium Home Delivery
Service)

The fact that at present there are no direct competitors offering all of
the services provided by TM serves as a definite advantage. Being the
first to successfully consolidate the segmented home service market will
enable TM to brand itself as the premier provider of time and home
services.

4 As mentioned earlier, GIS and ArcView software will be utilized to
identify the best markets for expansion.

5 HYPERLINK
"http://www.iionline.com/guest/industry/art-fil.asp?target=55"
http://www.iionline.com/guest/industry/art-fil.asp?target=55

Marketing Strategy

The forecast for our marketing strategy will cover the first 5 years of
operation. In the service life cycle, the first two years of operation
in each city will be focused on market development, where the strategy
will be to develop widespread awareness of service benefits and to
obtain trial by "innovators" and "early adopters." In addition, the
first two years of operation will be used to solidify the service
concept and identify any weaknesses in the service offering. In
comparison, during years three through five, TM will be focused on rapid
growth to establish a strong market niche, and will focus on the "early
adopters" and the "early majority." During years three through five, TM
will pay detailed attention to brand positions, gaps in market coverage,
and additional opportunities for market segmentation.

Technology will be an integral and effective tool in the TM marketing
plan. TM will operate a dynamic database that is constantly changing
with the most current customer information. At the same time, utilizing
information in our customer database, Geographic Information System will
add spatial information to our customers. GIS can answer questions such
as which communities customers are coming from, the demographics of
those communities, which streets and highways feed those communities,
and how many customers are within X miles of a specific service
provider. This technology will allow TM to constantly improve and
measure marketing strategies.

Figure 2 - Total Customer Growth



Time Merchants will utilize a pull strategy targeted towards our end
users. Promotions will be focused on two different target markets,
consumers (i.e., family households) and service providers. To reach our
target market a promotional mix including advertising (radio and local
newspapers), direct sales, direct mail, and public relations will be
utilized. Advertising and direct mail will be used to generate a
positive image and to position the TM concept in the consumers' mind.
For service providers, TM will rely more heavily on direct sales. To
generate high credibility public relations and publicity will also be
utilized. The schedule of promotion spending is displayed in Appendix B.

Figure 3 - Promotional Spending Year 1



Product Issues: Target market, Size, Structure, Positioning

Referral Service: Home Service Brokerage

With our toll free number (1-888-FOR-TIME) targeting consumers, end
users can call TM for the service provider nearest to them, whether it
is a plumber, maid service, carpet cleaner, or other home-service
providers. This service is free to consumers. Time Merchants' brand will
be positioned to the end user with the Referral Service as the "most
convenient and trustworthy" way to reach a quality reliable service
provider-no more fumbling through the Yellow Pages. The size of the
market for the Referral Service is the majority of any metropolitan area
that would eve need a reference for a locksmith, electrician, or other
home service.

The second target market for the Referral Service will be the
approximately 4,000 small to medium home service providers located in
San Diego County. For a monthly fee of $250, service providers can sign
up to be listed with TM. For an additional $100 they can be listed on
the website. Time Merchants can meet several unmet needs of local
service providers such as, targeted marketing in their geographical area
of operation, increased exposure, and validation by a TM representative.
Similar to the positioning with the end users, TM will position the
company as the '"most convenient" and cost effective way for service
providers to market themselves.6

Premium Delivery Service

The Premium Service-product offering is more value added, has more
benefits, and is focused on only one segment of the target market of the
Referral Service. The approximately 195,000 households in San Diego
County with sufficient discretionary income can enjoy a scheduled weekly
delivery of groceries, dry cleaning, and home movies, in addition to
access to our pre-screened list of service providers. Time Merchants
will position this as a time savings service. These customers will also
benefit from consolidated billing. Rather than paying numerous providers
each month they can simply pay one, TM. Potential target communities
within the San Diego area are shown in Appendix E.

Initially our rollout marketing strategy will be broad based, appealing
to many. However, we will be operating with a dynamic database, one that
is constantly changing and being updated, thus allowing TM to measure,
track, and improve our marketing efforts. Utilizing GIS we can enter
geographic information on customers, i.e. zip code o address, and
identify exactly where our customers are coming from, and what the
demographics are of those neighborhoods. As the database builds, our
marketing efforts become more focused and efficient.

6 Vis-a-vis Yellow Pages (triple qtr column).

Operational Strategy

Production - External

Time Merchants will be partnering with local vendors for the goods and
services provided to our customers. Management has developed a
comprehensive screening process to ensure the highest quality products
and service will be provided to our customers (see Appendix F). A list
of home services that Time Merchants has identified as potential
partners can also be found in Appendix F.

Production - Internal

Time Merchants will be directly responsible for screening potential
suppliers/vendors, operation of the call center, coordination of account
payment and delivery of goods to our premium customers.

Location

Time Merchants headquarters will be in San Diego. The space TM will
operate out of will be 2,000 square feet. This space will be divided up
into the call center (600 sq. ft), the main office where the teams
supporting the premium customers will be located (600 sq. ft) and an 800
sq. ft warehouse/expansion area.

Business Model

Referral Service - 1-888-FOR-TIME

Time Merchants referral program for multiple home services. This service
will be available to anyone that calls 1-888-FOR-TIME from 7 a.m. - 9 p.
m. Monday through Friday and from 9 a.m. - 5 p.m. on weekends and
holidays.

Customer service representatives at the TM call center will maintain an
85% service level (85% of all calls will be answered within 20 seconds)
as well as a 99% answer rate (99% of all calls will be answered).

The service requested by the caller will be retrieved from TM's
database. The next service provider in the caller's area will be
provided (this will be tracked automatically).

Time Merchants will immediately connect the customer with the service
provider.

Local vendors recommended to the public will have been thoroughly
screened and evaluated using stringent criteria developed by TM
(Appendix F).

Information will be obtained during the initial call to develop a data
file on the user of the Referral Service. This information will be used
to market additional services available from TM and as an indicator of
what other services the consumer may be interested in using.

The referral program is free to consumers.

A fee of $250 per month for the first 50 referrals per month plus an
additional $5/additional referral will be assessed to each provider on
TM's referral list.

An Internet web page will be available to the public as well. An
additional fee ($100) will be assessed to the participating providers to
be listed and have a direct link to their business' home page.

Suppliers will gain brand equity by being listed with Time Merchants.

To ensure the highest quality service, TM will contact 100% of our
customers each month, either by phone or by mail, and query the customer
about the service received from TM and from the provider.

Feedback will also be solicited from partner suppliers on a monthly
basis.

Premium Home Delivery Service

Initially, this level of service will be offered in a specific and
limited geographic area. Time Merchants has selected several communities
within San Diego that meet our income level requirements and are within
close proximity to our operations center to launch the Premium Service
(See Appendix B). Expansion into other communities is planned and will
occur as customer demand grows. The Premium Service will include:

Scheduled once a week pick up and delivery service. The customer is not
required to be home for delivery, a TM representative will leave the
delivery in a mutually agreed upon area.

Access to the team of Time Merchants professionals from 7 a.m. - 9 p.m.
Monday through Friday and from 9 a.m. - 5 p.m. on weekends and holidays.


The service provided to our premium customers will include groceries,
dry cleaning, video, and film pick up and delivery service, plus use of
our referral program professionals.

Additional services will be provided for a fee.

Payment for goods and services received by the premium customer will be
made to TM. Time Merchants will be responsible for vendor payment.

A fee of $50 per month will be paid to TM.

Commissions earned on groceries (5%) and all others (35%)

The vendor will pay a percentage of the transaction as a commission to
TM for Premium Home Delivery Service customers.

Human Resources

Time Merchants will attract and hire people with very strong
communication skills. Because prospective employees may have access to a
customer's home and the fact that TM will build its foundation
developing strong relationships with our customers, prospective
employees will have a thorough background check and will be bonded and
insured. Time Merchants' employees will have, at a minimum, a high
school diploma. TM will be an equal opportunity employer. A detailed
staffing plan can be found in Appendix G.

Growth Rate of Staff

Year One Staff Level Positions Year Five Staff Level

5 Service Representatives 32

2 Delivery Drivers 15

4 Management Staff 12

Table 3 - Growth Rate Staff

Goods and Services Expansion

Time Merchants will evaluate expansion into other services as demand and
availability dictate.

Geographic Expansion

Management feels that the best opportunity for initial expansion beyond
San Diego is within the southwest and will eventually include the entire
US. The expansion efforts will begin in year 2 and will be lead by the
TM founders. The cities targeted for the initial expansions include
Phoenix, Las Vegas/Henderson, and Orange County/Los Angeles.7

The expansion effort will utilize the systems and procedures developed
and perfected during the San Diego roll out. The primary costs
associated with the expansions will be related to marketing and
promotion, as the call center operations will remain centralized in San
Diego. The TM founder assigned to the expansion will establish the TM
concept in the expansion area and train the new employees. The
anticipated time frame for training and implementation is estimated to
be 7 months. It is critical to establish a strong relationship with the
employees as they will be responsible for maintaining the TM concept
when the TM founder moves on to the next expansion area.

Accounting

Time Merchants will employ state of the art technology to process
transactions. By requiring all transactions to be completed
electronically, via credit cards and purchasing cards, TM will create a
virtually paperless environment. This will enable TM reduce overhead
expense as well as the likelihood of delinquent accounts. This strategy
will also help eliminate any future cash flow problems for both TM and
the providers it will be representing.

Premium Home Delivery Service Customer Accounts

Time Merchants will provide accounting for goods and services provided
to Premium Home Service customers.

All payments from customers will be made via credit card thus
eliminating accounts receivable. An open account with each customer will
be established with TM.

The customer's credit card will be charged when goods or services are
delivered.

The customer will have access to their account 24 hours days via TMs'
web site using a secure system. The secure account system is similar to
that utilized by hotels in that the customer may access their account at
any time and review the charges for good or services provided.

Provider/Supplier Accounts

Time Merchants will pay suppliers' as goods and services are delivered
and accepted by Premium Home Delivery Service customers with a corporate
purchasing card.

Providers will make all payments to TM for referral service listings by
credit card or ACH.

Time Merchants has chosen the credit card option for receivables and
payables because it has been determined the benefit of virtually
non-existent AR/AP as well as reduced labor costs to maintain an AR/AP
capability far out weigh the initial 3% per transaction cost of the
credit card service.

Technology

Time Merchants Web Site

Web site development is important to the success of the Time Merchants
concept. A few of the outstanding attributes of the TM web site are:

Time Merchants home page, who we are and how we provide "LIFE SOLUTIONS
FOR BUSY PEOPLE."

Links to our goods and services providers' home page.

A listing and brief description of participating providers recommended
by TM by zip code.

A grocery shopping experience unlike any other. Click on grocery store
and browse through all the available items in our partner grocery
provider's store and select the items for delivery. - Ability to review
account standing at virtually any time.

E-mail access to TM customer service. We will respond within 24 hours!

It is imperative that the security and integrity of the web site is
maintained. Management is currently in th development stages of the TM
web page with Sefert Consultants.

Call Center Communications System

Call center technology currently being evaluated for installation is the
Aspect ACD system. This system will provide TM with the state of the art
call center technology, some of the key features of the Aspect ACD
include:

Ability to immediately transfer customer's calls directly to providers.

Automated tracking of referrals by specific provider.

ANI - Automatic Number Identification coupled with CTI - Computer
Telephony Integration will automatically notify service representatives
of providers within the caller's community.

Key Strategic Alliances

Time Merchants management has identified several key strategic alliances
that will be critical to a successful launch and ongoing operations. In
addition to the 4 key strategic alliances listed below, many other
alliances will be forged as TM builds relationships with other service
providers in the operations region.

Technology

Sefert Consultants - Full service web design and software development
company.

Nature of the alliance - Dean Sugiyama of Sefert Consultants has agreed
to develop TM's fully interactive web site. This site will include the
secure customer account review feature, links to participating service
providers' home page, online shopping with participating grocery stores
and electronic communication with TM.

Why is this alliance critical? - Without the software innovation and
Internet interface the TM concept will not be able to provide the unique
and superior service to our customers.

What does Sefert Consultants bring to TM? - Sefert Consultants has the
expertise and creativity to build TM's sit in harmony with management's
concept.

What does TM provide to Sefert Consultants? - TM will recommend Sefert
Consultants to other service providers requiring web site and software
development and allow Sefert to use TMs' web page as a showcase site.

Grocery Providers

Jonathan's - Full service grocery store

Nature of the alliance - Concept proposal presentation has been
completed. Negotiations with Jonathan's are underway.

Why is this alliance critical? -The bedrock service provided to TM's
Premium Service customers is quality groceries. Jonathan's strives to
provide highest quality groceries in the San Diego area.

What does Jonathan's bring to TM? - The highest quality grocery items.
Time Merchants will require Jonathan's to "pull, pick and pack" our
customer orders and to have them ready to be transferred to TM's
delivery person every morning.

What does TM provide to Jonathan's? - Increased market share through
additional exposure.

Video Providers

Hollywood Video - Full service video store providing thousands of new
releases and classic movies for rent.

Nature of the alliance - Contact with Hollywood Video has been made and
contractual negotiations are underway.

Why is this alliance critical? - As indicated by participants during
TM's primary market research, the video drop off and pick up service was
a key component to their willingness to use the TM service.

What does Hollywood Video bring to TM? - A strong brand image, large
selection and geographically dispersed locations throughout the launch
and expansion areas.

What does TM provide to Hollywood Video? - Increased market share
through additional exposure.

Dry Cleaning Provider

ARYA Cleaners - Full-service dry cleaning service located throughout the
launch region.

Nature of the alliance - Contact with local management at ARYA has been
made and negotiations are underway.

Why is this alliance critical? - As indicated by participants during
TM's primary market research, the dry cleaning drop off and pick up
service was a key component to their willingness to use the TM service.

What does ARYA Cleaners bring to TM? - A strong brand image, quality
service and geographically dispersed throughout the launch and expansion
area.

What does TM provide to ARYA Cleaners - Increased market share through
additional exposure.

7 GIS and ArcView software will be utilized to identify target markets

Critical Risks

Internal Risks External Risks

Quality of Service Downturn in the economy would reduce the demand for
our service

Responsiveness of Partners/Providers Barriers to entry

Insufficient capital investment People may not want to have their
groceries delivered to their home

Insufficient sales Copy cat companies

Transportation and distribution are key to the success of the operation
Lack interest by suppliers

If we cannot effectively distribute the products and services in the
most efficient manner possible we will not be profitable Risk of theft
or accident by delivery drivers

Table 4 - Critical Risks

Risk Reduction Strategies:

Time Merchants views the following risks as posing the greatest threat
to the overall success of the venture and plans to address them in the
following ways:

Not meeting sales and growth projections

Utilize highly trained sales people to market our services

Extensive marketing campaign

Copy Cat Companies or a Downturn in the economy

Establish long- term relationships with both customers and
suppliers/partners

Maintain fair prices for superior service

Maintain effective marketing campaign

Customer acceptance

Effective marketing campaign

Provide references from satisfied customers

Provide quality and timely service

Supplier/provider responsiveness

Creating an environment of cooperation and developing a vision of mutual
benefit will enhance relationship between the partner and TM.

A complete and extensive evaluation of participating partners to
determine quality and responsiveness will be completed prior to TM
selecting a supplier

Follow up with customers will be completed to ensure quality service

Providers not meeting the standards set by TM will be dropped

The internal risk of theft or accident by delivery drivers

All drivers will be licensed and bonded

Provide extensive training in customer service and customer relations

Performance of background checks on all employees

Insurance Provisions

Provisions for insurance have been made and verified by G.S. Levine
Insurance in San Diego, California.

Time Merchants plans to obtain the following coverage (all of these will
be in place at the start of business)

$1,000,000 General liability $1,000,000 Auto

$100,000 Theft $5,000,000 Umbrella

$20,000 Property 1,000,000 Employee benefits

Table 5 - Insurance Provisions

Management Team

The Time Merchants management team brings a vast array of experience to
the company. A detailed resume of each member of the team can be seen in
Appendix E. The management team has developed a strong trusting
relationship among themselves and has a proven track record for working
well together under stressful situations.

VP Operations - Debbie Bieneman

Debbie brings a wealth of managerial and operational experience to the
TM team. She has served for over 15 years in the numerous leadership
roles as a Supply Officer in the United States Navy. Her expertise in
various logistical arenas is significant; she is a certified acquisition
professional and a war-ranted contracting officer. Debbie will graduate
from San Diego State University in May 1999 with a Master of Business
Administration and earned her undergraduate in Finance. Her logistics
and contracting experience will be of immense benefit to TM's operations
department.

VP Finance - Stacy Linder

Stacy Linder brings 8 years of financial experience with her to the
organization. A graduate of Georgia Tech with a BS degree in Industrial
Management, Stacy started her career in public accounting as an auditor
for Bricker and Rooks, P.A., a regional accounting firm in the
southeastern United States. After relocating to California, Stacy ha
worked as an accountant or an internal auditor for the past 6 years. She
has also owned and managed a successful entrepreneurial venture from her
home for the past 5 years. She will graduate in May 1999 with a MSBA in
Entrepreneurship from San Diego State University. She is also President
of the Entrepreneur Society at San Diego State University. Her
enthusiasm and endless energy along with her solid financial experience
makes Stacy a key component to the success of TM.

VP Sales and Marketing - Toby Danylchuk

Toby brings considerable experience with direct marketing,
telemarketing, database management, territory management, customer
service, and outside sales to the TM team. He will be graduating from
San Diego State University in May 1999 with an MBA. His leadership
expertise has been utilized as the president of the Graduate Business
Student Association at SDSU, the largest student organization on campus.
His undergraduate degree is in Chemistry/Biochemistry from the
University of California at San Diego. Before returning for his graduate
degree in 1997, Toby worked for five years in a San Diego biotech firm.
In addition to his work experience in sales and marketing, Toby brings
to the table a strong skill set in finance and statistics.

Board of Directors

The TM Board of Directors will initially consist of the founding members
of the company. When investment funding is obtained, the investor will
also be part of the Board of Directors. The members of the board will be
responsible for setting the strategic direction of the company.
Compensation for members of the board will initially be deferred.

Board of Advisors

Time Merchants has asked several experienced professionals to act as an
advisory board during the launch of the business concept. Members of the
board of advisors have agreed to accept participation in TM's beta test
and an equity position in the company in lieu of any cash payments for
their services. Each member of the board of advisors brings expertise in
a key business area.

Mark Linder, Call Center Consultant

Jeffrey Balch, CPA, Sr. Manager Deloitte & Touche

Richard Brooks - Professor of Marketing and past President of Phillips
Ramsey (San Diego).

Mel Epstein, President of Vision Communications

Gary Levine, Gary Levine and Associates, Risk Management Specialist

Joe Sullivan, Private Investor

Organizational Structure

Figure 4 - Proposed Organizational Structure

Ownership

Time Merchants will be incorporated as a C corporation in the state of
California. Each member of the management team has taken an equity
position in the company.

Name Contribution # of Shares Pre-Investor % Post-Investor %

Debbie Bieneman $50,000 47,143 33.3% 22%

Toby Danylchuk $50,000 47,143 33.3% 22%

Stacy Linder $50,000 47,143 33.3% 22%

Board of Advisors - 8,571 - 4%

Outside Investor $750,000 64,286 - 30%

Table 1 - Ownership Percentages

Financial Plan

Time Merchant's financial planning is centered on rapid growth in order
to penetrate the market early and quickly. Time Merchants plans to
continually expand the variety of services offered through our home
service referral business. Services offered in the Premium Home Delivery
Service will expand with changing customer needs and desires.

The Offering

Time Merchants is seeking investors who wish to provide cash in exchange
for equity positions in the corporation. This cash will be used to
enable rapid growth in the untapped home service market. The founders
will invest $150,000 to start the business and is seeking additional
investment to promote the TM concept and provide working capital. Based
on sales and cost estimates, and an investment of $750,000 in exchange
for 30% equity in th company, Time Merchant's will deliver an annual
compounded return of 78% on the initial investment over 5 years using a
valuation factor (P/E) of 12. The Net Present Value (NPV), based upon a
valuation of $45 million at the end of year five, discounted at 40%, is
$8.3 million. (Financial assumptions can be found in appendix H.)

Sources Uses

Founders $150,000 Marketing/Promotion $650,000

Investors $750,000 Working Capital/Operations $250,000

Exit Strategy

Time Merchants intends to be a long-term business and will achieve this
by extending beyond our initial launch market. Since there are few firms
that currently specialize in consolidating the home service industry,
there i plenty of room for growth. It is the intention of Time Merchants
to create a pattern of positive experiences for our customers and
providers so as to promote continuous growth.

Our most desirable option for exit is a merger or buyout by a large
corporation. Time Merchants believes with strong cash flows and a loyal
customer base it will be attractive to potential corporate investors
within five years. The possibility also exists for Time Merchants to
issue an IPO in five years. This option would provide additional capital
to fund the national rollout.

Financial Discussion

Year One:

Capital Equipment Requirement

Time Merchants will operate with a minimal capital investment. The
majority of the initial investment will go toward the purchase of an ACD
system for the call center. It is important to start with a
telecommunications system that can grow with the company. Time Merchants
has obtained a quote of $74,000 for the purchase and installation of a
new Aspect ACD system. The company will also purchase 9 used
workstations, which will be used by the initial call center
representatives. The company plans to purchase 9 computers and five
printers during the first year of operations. Time Merchants will also
need to purchase database software to track customer information and
ordering habits.

Income Statement

The Beta Test will be underway during the first three months of year
one. During the Beta Test TM will offer free trials to 20 premium
service customers and 100 service providers. The number of premium
customers is forecasted to grow from the 20 initial customers in month 3
to total of 200 by month 12. While this growth rate may seem aggressive
it is considered realistic in relation to the advertising budget in year
one. Revenue is broken down on th income statement by type. The
'commissions on goods sold' represents the commission TM earns from the
sale of goods and services to the Premium Delivery Customers, The
largest operating expense for TM is will be marketing. During the first
year of service TM's plans to spend a total of $800,000 on marketing and
promotion for the concept. The 'Other Expense" line is to be used for
office expenses and travel that will occur during the year. A line item
for "Contingency Expense" at 1% of revenue is also included to cover any
unexpected costs.

Statement of Cash Flows

Due to the electronic payment system (i.e., credit cards, purchasing
cards), TM does not estimate that there will ever be any significant
amount of accounts receivable to report. The prepaid expense is for
insurance. After receiving the initial investment of $900,000 prior to
the start of business, TM does not anticipate any cash flow problems.

Balance Sheet

Current assets for year one will include cash and prepaid insurance. As
stated before, accounts receivable and bad debt are not considered an
issue for TM. Accounts payable has a $0 balance because TM will pay for
the majority of goods and services via a purchasing card. Common stock
is held at $1/share par value. The management team's investment of
$150,000 gives them a 66% equity position. The first round investors'
contribution of $750,000 is represented as 64,286 shares of common stock
and $685,714 of Additional Paid in Capital.

Years 2 and 3:

Income Statement

During years 2 and 3 the number of customers is forecasted to increase
by 3% each month. Time Merchants will begin its geographic expansion of
the Referral Service in year 2, an expansion that will continue in each
subsequent year. Time Merchants does forecast revenue in year 3 for the
sale of consumer data and for advertising on the company web site.
Management believes that by year 3 the company will have collected a
sufficient amount of consumer data that may be of interest to other
companies. Time Merchants also anticipates that the strong customer base
will entice other companies to advertise on the web site. Marketing and
promotions expense continues to remain high (51% in year 2 and 35% in
year 3). Salaries increase by 5% each year along with professional fees
and system development costs.

Cash Flow Statement

Depreciation expense increases in both years due to the purchase of
additional workstations and compute equipment. The cash position remains
strong in both years.

Balance Sheet

As in year 1, current assets for both years 2 and 3 include cash and
prepaid insurance. The equity distribution remains unchanged during
these two years.

Years 4 and 5:

Income Statement

Time Merchants anticipates a dramatic increase in sales during years 4
and 5 for several reasons. To begin with, the company will have expanded
the referral service to four other geographic areas. This will provide a
significant amount of revenue to TM at a relatively low cost. The
Premium Delivery Service will also grow at a substantial rate during
years 4 and 5. This will result from the increased availability of the
service to new communities as well as the growing acceptance of the
service. The revenues from the sale of consumer buying habits and
advertising space are also expected to increase. Marketing and
promotions expense continues to remain high. Salaries increase by 5%
each year along with professional fees and system development costs.

Cash Flow Statement

The company is expected to have an extremely strong cash position during
years 4 and 5. Increases in capital expenditures during year 4 are for
computer upgrades and additional workstations.

Balance Sheet

The equity value of the company is expected to grow to nearly $9.6
million in year 5.

The following proforma financial statements show the results of
operations for the first five years. Additional financial projections
can be seen in Appendix H.

5-YEAR COMPREHENSIVE FINANCIAL STATEMENTS