Description
eSecure Systems business model is to continue the momentum established in 2008 and grow the company profitably by promoting trusted security for less for consumer.
eSecure Systems, LLC
Data as of 12/2/2011
Summary
Company Contact Privacy & Confidentiality
eSecure Systems, LLC
210 Congress Ave.
Austin, TX 72113, United States
www.esecure.com
Entrepreneur Demo
555-391-4567
555-391-1304
[email protected]
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BUSINESS SUMMARY
eSecure Systems, LLC provides affordable, trusted solutions that secure digital identities and information for consumers, enterprises and governments. The
Company's software and associated services enable businesses and governments around the world to conduct high-value, highly sensitive transactions, over
wired and wireless networks including the Internet, in compliance with today’s regulatory guidelines. The Company’s strategy consists of two primary pillars — to
help secure information and identities and enable security-conscious enterprises and governments to implement efficient, cost-effective and interoperable
solutions that stimulate revenue, mitigate risk, secure information and protect end-users.
Age of Enterprise (years) 6
Legal Structure Limited Liability Company
Historical Financial Records Complete
Financial Projections Complete
Market Assessment Incomplete
Competitive Assessment Incomplete
Business Plan Complete
MILESTONES
Year Milestone
2009
eSecure obtained its first patent. U.S. patent number 7,698,180 describes a method that utilizes a digital signature verification map containing a plurality
of acceptable message header identifiers.
2011 eSecure acheived $1 million in revenue. eSecure accomplised this landmark with only 8 employees, with an average revenue of $125k per employee.
2013 eSecure achieves over 25,000 registered users, at an average selling price of $160, representing over $4 million in revenue.
Model
BUSINESS MODEL
eSecure Systems' business model is to continue the momentum established in 2008 and grow the company profitably by promoting “trusted security for less” for
consumer, enterprise and government environments. To achieve this goal, the Company has improved upon the overall strategy and implemented the
appropriate internal changes to drive revenue growth by: expanding markets for its proven solutions; focusing on solutions that provide subscription-based
revenue; executing on vertical and geographical opportunities; increasing channels to market; keeping a tight hold on costs; continuing to be the security for
global governments; and remaining focused on customers.
STRUCTURE
Enterprise Industry Sector Security Software
Peer Group Industry Sector Web Service Software
Number of Board of Directors /Members 7
Number of Board of Advisors 5
Number of Contracted Supplier Relationships 0
Number of Uncontracted Supplier Relationships 0
Number of Contracted Buyer Relationships 4
Number of Uncontracted Buyer Relationships 15
Number of Contracted Strategic Relationships 13
Number of Uncontracted Strategic Relationships 5
Key Supply-Chain Partners Key Strategic Partners
Symantec, Trend Micro, Websense, EMC, McAfee Kaspersky, CA (formerly Computer Associates), Verint, AVG, Sophos
Product / Service
GENERAL SUMMARY
Product / Service
Industry
Sector
Availability General Description Key Performance Attributes
Distribution
Channel(s)
Number of
Customers
IdentityShield™
Security
Software
2007
Appropriate for enterprise, government or
consumer environments, IdentityShield is an
open versatile authentication platform that
enables organizations to layer security—
according to access requirements or the risk
of a given transaction—across diverse users
and applications. The platform’s authentication
options include strong username and
password enforcement, IP-geolocation,
machine/device authentication, questions and
answers, out-of-band one-time passcode
(delivered via voice, SMS or e-mail), grid
cards and a range of one-time-passcode
tokens...
IdentityShield: 1) Reduces cost by
choosing from a mix of
authenticators based on risk, user
requirements and cost, 2) Creates
stronger security for transactions
that have greater risk, 3) Minimizes
user impact by only requiring
stronger authentication when
needed, 4) Secure identities across
desktops, networks and resources,
5) Offers strong authentication
across different communication
channels.
Direct Sales,
Value Added
Reseller,
Partnership,
Sales
Representative,
Reseller
55
TransactionShield™
Security
Software
2009
TransactionShield monitors transactions and
seeks fraudulent behavior and access patterns
amid the massive volumes of data generated
by transactional Web sites. The solution
examines this data and identifies potentially
suspicious behavior and high-risk activities
without impacting the user experience or
system performance. It serves as a resource
to protect consumers and help organizations
defend and manage the risk associated with
online services.
TransactionShield Performance
Attributes: 1) Zero-Touch, Rapid
Deployment, 2) Comprehensive
Monitoring, 3) Multiple Channels, 4)
Real-Time Risk Score, 5) Alert
Management Workflow, 6) Step-Up
Authentication, 7) Comprehensive
Management, 8) 360-Degree
Assessment, 9) Powerful Analytics
& Forensic Reporting, 10) Rapid
Response, 11) Automated
Statistical Learning, 12) Open
Fraud Intelligence Network
Direct Sales,
Value Added
Reseller,
Partnership,
Distributor,
Sales
Representative,
Reseller
35
RISK FACTORS
Q: Does your enterprise now depend on or take advantage of offshore software development and / or support resources, or do you anticipate using
such offshore resources in the future?
The enterprise does not report dependence on or that it is taking advantage of offshore software development and / or support resources or that it anticipates
using such offshore resources in the future. The enterprise may comment on how it will be protected from potentially significant development and / or
maintenance and services cost disadvantages due to not using such offshore resources.
While offshore resources may be less expensive than U.S. development resources, we feel that the efficiences, quality, proprietary nature of an internal team are
more important to our business model.
Q: Computing has largely evolved into a Web-hosted model wherein users no longer need to be locked into a given platform to be able to deploy
applications. Applications can be delivered on a pay-as-you-go or subscription basis and kept constantly updated by the vendor in an iterative,
collaborative relationship with customers. Does your company actively pursue iterative, collaborative relationships with your customers for the
purpose of upgrading your applications software?
The enterprise reports that it seeks and utilizes iterative, collaborative relationships with its customers for the purpose of upgrading its applications software as
follows:
eSecure engages its customers frequently to identify any usability issues, gauge reaction to newly released capabilities, and to learn about ideas for new product
capabilities. This is typically accomplished through broad-based surveys and through direct contact. eSecure also tracks customer engagement and performance
of its systems through various monitoring mechanisms.
Q: Cloud computing is one of the fastest growing segments of the IT industry. Companies are increasingly realizing that simply by tapping into the
cloud they can gain fast access to best-of-breed business applications or drastically boost their infrastructure resources, all at negligible cost. But as
more and more information on individuals and companies is placed in the cloud, concerns are growing about just how secure data in such an
environment can be. Is your security software applicable to cloud computing?
The enterprise recognizes that concerns are growing about how secure data is in a cloud computing environment. Further, the enterprise describes the most
important aspects or features of its security or services approach to supporting security in the cloud computing environment as follows:
Our IdentityShield™ solution is applicable to ensuring indentity security in cloud computing environments. It is an open versatile authentication platform that
enables organizations to layer security across diverse users and applications. The platform’s authentication options include strong username and password
enforcement, IP-geolocation, machine/device authentication, questions and answers, out-of-band one-time passcode (delivered via voice, SMS or e-mail), grid
cards and a range of one-time-passcode tokens.
Intellectual Property
PORTFOLIO
Status U.S. Patents International Patents Trademarks Copyrights
Pending 3 3 0 0
Granted 2 1 6 10
PATENTS
Patent
Product/Service
Relation
Status
Remaining
Life
(Years)
Own or
License
Independent
Claims
Abstract Summary
Method and
apparatus for
providing
information
security to
prevent digital
signature
forgery.
IdentityShield™
Granted
in U.S.
15 Own 3
A method and apparatus utilizes a digital signature verification map
containing a plurality of acceptable message header identifiers
associated with a public key certificate identifier. In one embodiment, a
method includes determining a digital signature verification error based
on a received message header, such as transport header identifier
associated with a public key certificate identifier, such as the subject
field of the certificate. The method includes generating a signature
verification map or updating a signature verification map containing a
plurality of message header identifiers.
Method and
apparatus for a
service provider
to provide secure
services to a
user.
TransactionShield™
Granted
in U.S.
15 Own 2
A method and apparatus for establishing security credentials for a user
to access and subsequently use in secure on-line transactions begins
when a service provider generates a registration secret for a user in
response to a registration request. The registration request identifies
user information of a particular user. Before a registration request can
be provided to the service provider, the user must establish a
relationship with the service provider. Having generated the registration
secret, the service provider stores a user identifying secret.
Method and
apparatus for a
service provider
to provide secure
services to a
user.
IdentityShield™,
TransactionShield™
Pending
in U.S.
16 Own 2
A method and apparatus for establishing security credentials for a user
to access and subsequently use in secure on-line transactions begins
when a service provider generates a registration secret for a user in
response to a registration request. The registration request identifies
user information of a particular user. Before a registration request can
be provided to the service provider, the user must establish a
relationship with the service provider. The service provider stores a user
identifying secret, which includes initialization data, user information,
and/or a security name.
System and
method for
granting security
privilege in a
communication
system.
IdentityShield™,
TransactionShield™
Pending
in U.S.
17 Own 4
A system and method grants security privilege in a communication
system by providing privilege test criteria data for a subscriber unit so
that the subscriber unit or some other entity can select among
subscriber privilege data based on the privilege test criteria data, so that
only the necessary privilege information is communicated between the
relying party and the subscriber unit of interest. A data selector selects,
for example, among a plurality of attribute certificates associated with a
selected subscriber unit, the certificate that matches the privileged test
criteria data.
System and
method for
initializing
operation for an
information
security
operation.
IdentityShield™
Pending
in U.S.
18 Own 2
A method and apparatus for initializing operation for information security
operation for an entity utilizes shared information, such as shared secret
information, that may be shared between the entity and other
applications or operations within a system to initialize an entity.
Prestored shared information that can be used as entity identification
data (RV) and authentication data (IAK) that is associated with the entity
identification data is encrypted and sent in clear text fashion to an
initialization authentication unit, such as a server or other processing
unit.
ANCILLARY INTELLECTUAL PROPERTY
Product / Service Reliance on Ancillary Intellectual Property
IdentityShield™ Enterprise has nonexclusive contracted rights to ancillary IP
TransactionShield™ Enterprise has nonexclusive contracted rights to ancillary IP
Enterprise's Planned Protection of Future Intellectual Property: Patents, Copyrights, Trade Secrets, Trademarks
Markets
IdentityShield™
Market
Year Of
Introduction
General Market Description Drivers for Adoption Barriers to Adoption
Large
Enterprise
Market
2008
This market is a result of demand from
global enterprises that continue to
respond to regulatory and governance
compliance demands and extend their
internal and external networks to more
and more individuals inside and outside
their domain. In this market, enterprises
typically buy for their immediate need
and then add to their purchases as
projects begin roll out.
eSecure Systems helps
businesses mitigate risk by
securing information and
securing identities. Secure
solutions protect users and
reduce loss from business fraud
and protect sensitive data,
regardless where it resides,
while providing robust controls
and audit on those who can
access critical systems.
A breach of security at one of our customers, whether or
not due to our products, could harm our reputation and
reduce the demand for our products. A well-publicized
actual or perceived breach of network or computer
security at one of our customers, regardless of whether
such breach is attributable to our products, third-party
technology used within our products or any significant
advance in techniques for decoding or “cracking”
encrypted information, could adversely affect the market’s
perception of us and our products.
Small
Market
2008
This market consists of medium sized
enterprises that continue to respond to
regulatory and governance compliance
demands and extend their internal and
external networks to more and more
individuals inside and outside their
domain. In this market, enterprises
typically buy for their immediate need
and then add to their purchases as
projects begin roll out.
eSecure Systems helps
businesses mitigate risk by
securing information and
securing identities. Secure
solutions protect users and
reduce loss from business fraud
and protect sensitive data,
regardless where it resides,
while providing robust controls
and audit on those who can
access critical systems.
A breach of security at one of our customers, whether or
not due to our products, could harm our reputation and
reduce the demand for our products. A well-publicized
actual or perceived breach of network or computer
security at one of our customers, regardless of whether
such breach is attributable to our products, third-party
technology used within our products or any significant
advance in techniques for decoding or “cracking”
encrypted information, could adversely affect the market’s
perception of us and our products.
TransactionShield™
Market
Year Of
Introduction
General Market Description Drivers for Adoption Barriers to Adoption
Large
Enterprise
Market
2009
This market consists of large, global
enterprises that continue to respond to
regulatory and governance compliance
demands and extend their internal and
external networks to more and more
individuals inside and outside their
domain. In this market, enterprises
typically buy for their immediate need
and then add to their purchases as
projects begin roll out.
eSecure Systems helps
businesses mitigate risk by
securing information and
securing identities. Secure
solutions protect users and
reduce loss from business fraud
and protect sensitive data,
regardless where it resides,
while providing robust controls
and audit on those who can
access critical systems.
A breach of security at one of our customers, whether or
not due to our products, could harm our reputation and
reduce the demand for our products. A well-publicized
actual or perceived breach of network or computer
security at one of our customers, regardless of whether
such breach is attributable to our products, third-party
technology used within our products or any significant
advance in techniques for decoding or “cracking”
encrypted information, could adversely affect the market’s
perception of us and our products.
MARKET SIZE
Fiscal Year 2008 2009 2010 2011 2012 2013 2014 2015
IdentityShield™:
Large Enterprise Market $1,413,893,864 $1,456,310,680 $1,500,000,000 $1,545,000,000 $1,591,350,000 $1,639,090,500 $1,688,263,215 $1,738,911,111
Small Market $725,623,583 $761,904,762 $800,000,000 $840,000,000 $882,000,000 $926,100,000 $972,405,000 $1,021,025,250
Total $2,139,517,446 $2,218,215,442 $2,300,000,000 $2,385,000,000 $2,473,350,000 $2,565,190,500 $2,660,668,215 $2,759,936,361
TransactionShield™:
Large Enterprise Market $942,595,909 $970,873,786 $1,000,000,000 $1,030,000,000 $1,060,900,000 $1,092,727,000 $1,125,508,810 $1,159,274,074
Total $942,595,909 $970,873,786 $1,000,000,000 $1,030,000,000 $1,060,900,000 $1,092,727,000 $1,125,508,810 $1,159,274,074
Market Source of Market Estimates
Large Enterprise Market Internal Research
Large Enterprise Market Internal Research, External Industry Research, Paid Consultant Research
Small Market Internal Research, External Industry Research
MARKET DEVELOPMENT STRATEGY
Marketing Plan: eSecure Systems offers its products, solutions and services through a multichannel sales approach, reflecting the characteristics and buying
behavior of the target markets covered. eSecure Systems plans to continue to focus its marketing and sales efforts to capitalize upon the need for secure digital
identities and information within the consumer, enterprise and government markets. eSecure Systems plans to utilize a prioritized combination of direct and
indirect sales channels around the globe. eSecure Systems believes that its direct sales force, working in conjunction with indirect channels offering
complementary products and services, provides eSecure Systems with a competitive advantage in responding to customer needs as they evolve.
Sales Plan: To support its direct sales force and the TrustedPartner network, eSecure Systems has a marketing team whose goals are to create a consistent,
focused communication strategy that increases awareness of Entrust’s digital identity and information security solutions and services, and leverages that
awareness in the identification of new sales opportunities. The marketing team creates and conducts integrated programs that include advertising, direct mail,
trade shows, seminars, Web marketing, public relations and ongoing customer communication. eSecure Systems intends to invest in targeted marketing
programs for existing customers and prospects in key vertical and geographic markets.
Competition
IdentityShield™
Large Enterprise Market
Competitor
Name of
Product/Service
Competitor Description
Verisign Verisign Identity 7.0
VeriSign Authentication Services provides solutions that allow companies & consumers to engage in communications
& commerce online with confidence.
Blue Ridge
Networks
ID Theft Preventer Protection from Malware, Data leak, and Network Attack Risks.
ActivIdentity Active Identity
ActivIdentity is a global leader in identity assurance and strong authentication solutions for enterprise, government and
online banking security.
Competitor Strengths
Current and potential competitors have longer operating histories, greater
name recognition, larger installed bases and significantly greater financial,
technical, marketing and sales resources. As a result, they may be able to
react more quickly to emerging technologies and changes in customer
requirements, or to devote greater resources to the promotion and sale of
their products.
Competitor Weaknesses
eSecure Systems believes that the principal competitive factors affecting the
market for its security solutions include features such as ease of use,
quality/reliability of security, scalability, customer service and support and
price. The Company believes its products compete favorably with respect to
these factors, but there is no assurance that eSecure can maintain its
competitive position.
Small Market
Competitor
Name of
Product/Service
Competitor Description
Verisign Verisign Identity 7.0
VeriSign Authentication Services provides solutions that allow companies & consumers to engage in communications
& commerce online with confidence.
Blue Ridge
Networks
ID Theft Preventer Protection from Malware, Data leak, and Network Attack Risks.
ActivIdentity Active Identity
ActivIdentity is a global leader in identity assurance and strong authentication solutions for enterprise, government and
online banking security.
Competitor Strengths
Current and potential competitors have longer operating histories, greater
name recognition, larger installed bases and significantly greater financial,
technical, marketing and sales resources. As a result, they may be able to
react more quickly to emerging technologies and changes in customer
requirements, or to devote greater resources to the promotion and sale of
their products.
Competitor Weaknesses
eSecure Systems believes that the principal competitive factors affecting the
market for its security solutions include features such as ease of use,
quality/reliability of security, scalability, customer service and support and
price. The Company believes its products compete favorably with respect to
these factors, but there is no assurance that eSecure can maintain its
competitive position.
Unpenetrated - The portion of the total market revenue opportunity that is not penetrated (i.e., captured) by the enterprise or any other competitor.
TransactionShield™
Large Enterprise Market
Competitor
Name of
Product/Service
Competitor Description
Verisign Verisign
VeriSign Authentication Services provides solutions that allow companies & consumers to engage in communications &
commerce online with confidence.
Competitor Strengths
Current and potential competitors have longer operating histories, greater
name recognition, larger installed bases and significantly greater financial,
technical, marketing and sales resources. As a result, they may be able to
react more quickly to emerging technologies and changes in customer
requirements, or to devote greater resources to the promotion and sale of
their products.
Competitor Weaknesses
eSecure Systems believes that the principal competitive factors affecting the
market for its security solutions include features such as ease of use,
quality/reliability of security, scalability, customer service and support and
price. The Company believes its products compete favorably with respect to
these factors, but there is no assurance that eSecure can maintain its
competitive position.
Unpenetrated - The portion of the total market revenue opportunity that is not penetrated (i.e., captured) by the enterprise or any other competitor.
COMPETITIVE PROTECTION STRATEGY
Strategy: eSecure Systems relies on a combination of patent, copyright, trademark and trade secret laws, nondisclosure agreements and other contractual
provisions to establish, maintain and protect the Company’s proprietary rights. eSecure Systems currently has a portfolio of over 10 patents and pending patent
applications. Pursuant to patent cross-license agreements, eSecure Systems also licenses some of its patents to other corporations and, in return, receives rights
from those corporations in respect to patents owned or licensable by such corporations.
Management
EXISTING MANAGEMENT
Position Name Employed Age Undergraduate Discipline Graduate Discipline
Chief Executive Officer Chris Flanigan Full-Time 48 Engineering: Industrial/Mechanical Business: Management/Information Systems
Chief Financial Officer William Anderson Full-Time 45 Business: Accounting/Finance Business: Management/Information Systems
Chief Technology Officer David Rhodes Full-Time 39 Computing or Computer Science Business: Management/Information Systems
Vice President Sales & Marketing Michael Mallet Full-Time 49 Engineering: Electrical None
Position Name Biographical Information Special Skills
Chief
Executive
Officer
Chris
Flanigan
From November 1999 to April 2001, Mr. Flanigan served as President,
Enterprise Networks and eBusiness Solutions of Nortel Networks, where he led
the turnaround of the Enterprise business while redefining and delivering
ebusiness applications. From September 1998 to October 1999, he served as
the first Chief Marketing Officer of Nortel Networks, leading the effort to
reposition the company as a global leader in building the high-performance
Internet. From 1992 to September 1998, Mr. Conner held a number of key
executive leadership positions at Nortel Networks. Mr. Flanigan graduated from
Princeton University with a bachelor’s degree in mechanical engineering. He
also earned a master’s degree in business administration from the Wharton
School of the University of Pennsylvania.
Mr. Flanigan has been a leader in the effort to elevate
information security to a corporate governance issue
and fashion a public-private partnership to protect
America’s critical infrastructure. He launched and co-
chaired the Business Software Alliance Information
Security Governance Task Force, which released a
security management framework in April 2003. He
also co-chaired the National Cyber Security
Partnership’s Corporate Governance Task Force,
which released its information security governance
framework in April 2004.
Chief
Financial
Officer
William
Anderson
Mr. Anderson's broad experience at eSecure Systems includes significant
involvement in cross-functional responsibilities both in finance and operations.
Prior to joining eSecure Systems, he held various finance and accounting
positions at Nortel Networks from 1991 through 1995 and at Raytheon Systems
from 1982 to 1991. Mr. Anderson is a graduate of The Pennsylvania State
University where he received an undergraduate degree in accounting and a
masters of business administration.
Chief
Technology
Officer
David
Rhodes
Mr. Rhodes has more than 12 years of experience in high technology, has held
a variety of roles in the industry and is currently responsible for all aspects of
research and development, product management, technical support, and
training. He is also responsible for the Certificate Services SSL and Managed
Services PKI businesses. Prior to joining eSecure Systems, Mr. Rhodes was the
vice president of research and development at VeriSign, Inc. Mr. Rhodes
completed his undergraduate studies in computer engineering at the University
of Ottawa and St. Lawrence College. In addition, Mr. Rhodes earned a master’s
degree in business administration from Queen’s University in Kingston, Ontario,
Canada.
Mr. Simzer’s professional life has been distinguished
by a number of industry firsts, as well as innovative
research and development. His career began at Bell
Northern Research, Nortel’s research and
development arm, working on product development
for large-scale switching and data systems. Key
projects included the world’s first telephone switching
system supporting Integrated Services Digital
Network and a highly scalable distributed system built
using Advanced Intelligent Networking technology.
Vice
President
Sales &
Marketing
Michael
Mallet
Mr. Mallet has the role of leading the North American and U.S. Federal sales
team. He was President of CygnaCom Solutions from March of 2000 until
November of 2005. CygnaCom Solutions has been providing professional
information security services and cryptographic solutions to government and
business clients since 1994. This business includes US Federal government
accredited security test laboratories. Prior to joining eSecure Systems, Mr.
Mallet held various positions of increased responsibility at Nortel Networks from
1985-1998 in the areas of engineering, technical support, marketing, and order
management. He graduated from Rensselaer Polytechnic Institute with BS in
Mr. Mallet has 22 years in the industry, and is noted
for his strong combination of technical and business
acumen. Mr. Mallet joined Nortel as Director of North
American Professional Services in February of 1985
to help build the professional services practice and
organization. He successfully grew the North
American Professional Services from a start up to a
$6 million business over a 4 year period.
Electrical Engineering.
ANTICIPATED MANAGEMENT
Position Undergraduate Discipline Graduate Discipline Duration Until Needed
Chief Operating Officer Computing or Computer Science Business: Management/Information Systems 6 Months
Vice President Sales Business: Accounting/Finance Business: Management/Information Systems 10 Months
Vice President Business Development Business: Accounting/Finance None 10 Months
Financial
FINANCIAL CHARTS
Black lines represent historical values provided by the enterprise. Blue lines represent values projected by the enterprise.
Black lines represent historical values provided by the enterprise. Blue lines represent values projected by the enterprise.
Black lines represent historical values provided by the enterprise. Blue or other colored lines represent values projected provided by the enterprise.
Black lines represent historical values provided by the enterprise. Blue or other colored lines represent values projected provided by the enterprise.
Black lines represent historical values provided by the enterprise. Blue or other colored lines represent projected values provided by the enterprise.
INCOME & CASH FLOW (nominal)
Fiscal Year 2008 2009 2010 2011 2012 2013 2014 2015
Revenue:
IdentityShield™ $45,890 $150,560 $423,890 $1,087,500 $2,310,000 $4,185,000 $7,540,000 $9,400,000
TransactionShield™ $0 $0 $68,900 $198,000 $450,000 $850,000 $1,480,000 $2,500,000
Other $0 $0 $0 $0 $0 $0 $0 $0
Total $45,890 $150,560 $492,790 $1,285,500 $2,760,000 $5,035,000 $9,020,000 $11,900,000
Number of Transactions:
IdentityShield™ 306 1003 2825 7500 16500 31000 58000 85000
Number of Transactions:
TransactionShield™ 0 0 765 2200 5000 10000 18500 33000
Average Revenue per Transaction:
IdentityShield™ $150 $150 $150 $145 $140 $135 $130 $111
Average Revenue per Transaction:
TransactionShield™ $0 $0 $90 $90 $90 $85 $80 $76
Cost of Revenue:
IdentityShield™ $8,260 $22,560 $59,872 $150,000 $300,000 $500,000 $830,000 $860,000
TransactionShield™ $0 $0 $7,651 $20,000 $40,000 $70,000 $120,000 $250,000
Other $0 $0 $0 $0 $0 $0 $0 $0
Total $8,260 $22,560 $67,523 $170,000 $340,000 $570,000 $950,000 $1,110,000
Gross Profit:
IdentityShield™ $37,630 $128,000 $364,018 $937,500 $2,010,000 $3,685,000 $6,710,000 $8,540,000
TransactionShield™ $0 $0 $61,249 $178,000 $410,000 $780,000 $1,360,000 $2,250,000
Other $0 $0 $0 $0 $0 $0 $0 $0
Total $37,630 $128,000 $425,267 $1,115,500 $2,420,000 $4,465,000 $8,070,000 $10,790,000
Operating Expenses:
S&M $45,080 $85,330 $204,570 $500,000 $1,000,000 $1,500,000 $2,250,000 $2,500,000
G&A $52,090 $73,896 $135,567 $380,000 $770,000 $1,250,000 $1,600,000 $2,400,000
R&D $160,670 $153,560 $164,380 $400,000 $800,000 $1,250,000 $1,800,000 $2,500,000
Depreciation & Amortization $0 $0 $0 $0 $0 $0 $0 $0
Total $257,840 $312,786 $504,517 $1,280,000 $2,570,000 $4,000,000 $5,650,000 $7,400,000
Operating Income ($220,210) ($184,786) ($79,250) ($164,500) ($150,000) $465,000 $2,420,000 $3,390,000
Other Income $0 $0 $0 $0 $0 $0 $0 $0
Interest Expense $0 $0 $0 $0 $80,000 $60,000 $40,000 $20,000
Income Tax / Member Tax Payout $0 $0 $0 $0 $0 $0 $705,100 $1,688,000
Net Income ($220,210) ($184,786) ($79,250) ($164,500) ($230,000) $405,000 $1,674,900 $1,682,000
Cash Flows:
Net Change in Working Capital $0 $0 $0 $0 $0 $0 $0 $0
Operating Cash Flow ($220,210) ($184,786) ($79,250) ($164,500) ($230,000) $405,000 $1,674,900 $1,682,000
Capital Expenditures $15,078 $23,010 $34,672 $64,000 $105,000 $140,000 $180,000 $220,000
Free Cash Flow ($235,288) ($207,796) ($113,922) ($228,500) ($335,000) $265,000 $1,494,900 $1,462,000
Capitalization:
New Equity Investment $500,000 $0 $0 $600,000 $0 $0 $0 $0
Grant Capital $0 $0 $0 $0 $0 $0 $0 $0
New Debt Borrowing $0 $0 $100,000 $0 $0 $0 $0 $0
Debt Principal Repayments $0 $0 $0 $20,000 $20,000 $20,000 $20,000 $20,000
Total Net Capitalization $500,000 $0 $100,000 $580,000 ($20,000) ($20,000) ($20,000) ($20,000)
Cash Liquidity Balance $45,400 $396,900 $41,900 $286,900 $1,761,800 $3,203,800
INCOME & CASH FLOW (relative)
Fiscal Year 2008 2009 2010 2011 2012 2013 2014 2015
Market Share:
IdentityShield™ 0.00 % 0.01 % 0.02 % 0.05 % 0.09 % 0.16 % 0.28 % 0.34 %
TransactionShield™ 0.00 % 0.00 % 0.01 % 0.02 % 0.04 % 0.08 % 0.13 % 0.22 %
Annual Growth Rate in Revenue:
IdentityShield™ 0.0 % 228.1 % 181.5 % 156.6 % 112.4 % 81.2 % 80.2 % 24.7 %
TransactionShield™ 0.0 % 0.0 % 0.0 % 187.4 % 127.3 % 88.9 % 74.1 % 68.9 %
Other 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 %
Total 0.0 % 228.1 % 227.3 % 160.9 % 114.7 % 82.4 % 79.1 % 31.9 %
Gross Profit Margin:
IdentityShield™ 82.0 % 85.0 % 85.9 % 86.2 % 87.0 % 88.1 % 89.0 % 90.9 %
TransactionShield™ 0.0 % 0.0 % 88.9 % 89.9 % 91.1 % 91.8 % 91.9 % 90.0 %
Other 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 %
Total 82.0 % 85.0 % 86.3 % 86.8 % 87.7 % 88.7 % 89.5 % 90.7 %
Operating Expenses as a % of Revenue:
S&M 98.2 % 56.7 % 41.5 % 38.9 % 36.2 % 29.8 % 24.9 % 21.0 %
G&A 113.5 % 49.1 % 27.5 % 29.6 % 27.9 % 24.8 % 17.7 % 20.2 %
R&D 350.1 % 102.0 % 33.4 % 31.1 % 29.0 % 24.8 % 20.0 % 21.0 %
Total Profit Margins:
Operating Profit Margin -479.9 % -122.7 % -16.1 % -12.8 % -5.4 % 9.2 % 26.8 % 28.5 %
Net Profit Margin -479.9 % -122.7 % -16.1 % -12.8 % -8.3 % 8.0 % 18.6 % 14.1 %
BALANCE SHEET
Fiscal Year 12/31/2010
Current Assets:
Cash & Short-Term Investments $45,400
Accounts Receivable $23,090
Inventory $0
Other Current Assets $0
Total Current Assets $68,490
Long-Term Assets:
Tangible Capital Assets $552,320
Intangible Capital Assets $1,526,500
Accumulated Depreciation $152,000
Total Long-Term Assets $1,926,820
Total Assets $1,995,310
Current Liabilities:
Accounts Payable $31,698
Short-Term Debt $0
Other Current Liabilities $0
Total Current Liabilities $31,698
Long-Term Liabilities $100,000
Total Liabilities $131,698
Equity & Capital:
Paid-In Capital $620,000
Retained Earnings $562,300
Interest in Non-Consolidated Enterprise(s) $0
Total Equity & Capital (Net Worth) $1,182,300
Total Equity, Capital, & Liabilities $1,313,998
PROJECTION METHODS
Revenue
Projection
Method
Operational
Cost
Projection
Method
Underlying Projection Assumptions
Based on
Assumed
Market
Shares
Based on an
Assumed
Portion of
Revenue
Some of the assumptions that underlie these financial projections include: 1) a revenue growth rate of around 100% in the next two
fiscal years; 2) the execution of a key marketing relationship with 2 strategic partners by the end of the year; 3) 5% operating cost as
a percentage of revenue devoted in google adwords advertisements; 4) a 300% increase in yearly organic search traffic by the end of
the current fiscal year; etc...
Capitalization
CURRENT CAPITALIZATION
Capital Offering: $600,000
Offering Type: Equity
Future Capital - The enterprise's estimate of future capital needs post investment. Post Money - Equity share of the enterprise after the dilution of this offering.
S&M – Sales & Marketing | G&A – General & Administrative | R&D – Research & Development | Asset Acq. – Asset Acquisition
Area of Use Specific Use Amount
Sales & Marketing New Sales Employees $200,000
Research & Development System Upgades, Patent Costs $200,000
General & Administrative New Employees, Larger Office $200,000
PAST CAPITALIZATION
Name Relationship Capital Type Contributed Capital
Chris Flanigan Founder Common Equity $10,000
William Anderson Founder Common Equity $10,000
Round 1 Angel Investors Individual Preferred Equity $500,000
Bank Loan Commercial Bank Long-Term Debt $100,000
EQUITY EXIT STRATEGIES / DEBT TYPE & DURATION
Ranking Equity Exit Strategy / Debt Type Desired Year Name of Potential Acquirers or Merger Partners
Most Likely Acquisition 2014 VeriSign, Microsoft
Likely Merger 2015 Entrust
Least Likely Secondary Private Offering 2016
doc_962264743.pdf
eSecure Systems business model is to continue the momentum established in 2008 and grow the company profitably by promoting trusted security for less for consumer.
eSecure Systems, LLC
Data as of 12/2/2011
Summary
Company Contact Privacy & Confidentiality
eSecure Systems, LLC
210 Congress Ave.
Austin, TX 72113, United States
www.esecure.com
Entrepreneur Demo
555-391-4567
555-391-1304
[email protected]
Personal and business information is private and
confidential in EquityNet. Such information can only
be viewed by an EquityNet member if specifically
shared with that EquityNet member. See EquityNet’s
Privacy Policy for more information.
BUSINESS SUMMARY
eSecure Systems, LLC provides affordable, trusted solutions that secure digital identities and information for consumers, enterprises and governments. The
Company's software and associated services enable businesses and governments around the world to conduct high-value, highly sensitive transactions, over
wired and wireless networks including the Internet, in compliance with today’s regulatory guidelines. The Company’s strategy consists of two primary pillars — to
help secure information and identities and enable security-conscious enterprises and governments to implement efficient, cost-effective and interoperable
solutions that stimulate revenue, mitigate risk, secure information and protect end-users.
Age of Enterprise (years) 6
Legal Structure Limited Liability Company
Historical Financial Records Complete
Financial Projections Complete
Market Assessment Incomplete
Competitive Assessment Incomplete
Business Plan Complete
MILESTONES
Year Milestone
2009
eSecure obtained its first patent. U.S. patent number 7,698,180 describes a method that utilizes a digital signature verification map containing a plurality
of acceptable message header identifiers.
2011 eSecure acheived $1 million in revenue. eSecure accomplised this landmark with only 8 employees, with an average revenue of $125k per employee.
2013 eSecure achieves over 25,000 registered users, at an average selling price of $160, representing over $4 million in revenue.
Model
BUSINESS MODEL
eSecure Systems' business model is to continue the momentum established in 2008 and grow the company profitably by promoting “trusted security for less” for
consumer, enterprise and government environments. To achieve this goal, the Company has improved upon the overall strategy and implemented the
appropriate internal changes to drive revenue growth by: expanding markets for its proven solutions; focusing on solutions that provide subscription-based
revenue; executing on vertical and geographical opportunities; increasing channels to market; keeping a tight hold on costs; continuing to be the security for
global governments; and remaining focused on customers.
STRUCTURE
Enterprise Industry Sector Security Software
Peer Group Industry Sector Web Service Software
Number of Board of Directors /Members 7
Number of Board of Advisors 5
Number of Contracted Supplier Relationships 0
Number of Uncontracted Supplier Relationships 0
Number of Contracted Buyer Relationships 4
Number of Uncontracted Buyer Relationships 15
Number of Contracted Strategic Relationships 13
Number of Uncontracted Strategic Relationships 5
Key Supply-Chain Partners Key Strategic Partners
Symantec, Trend Micro, Websense, EMC, McAfee Kaspersky, CA (formerly Computer Associates), Verint, AVG, Sophos
Product / Service
GENERAL SUMMARY
Product / Service
Industry
Sector
Availability General Description Key Performance Attributes
Distribution
Channel(s)
Number of
Customers
IdentityShield™
Security
Software
2007
Appropriate for enterprise, government or
consumer environments, IdentityShield is an
open versatile authentication platform that
enables organizations to layer security—
according to access requirements or the risk
of a given transaction—across diverse users
and applications. The platform’s authentication
options include strong username and
password enforcement, IP-geolocation,
machine/device authentication, questions and
answers, out-of-band one-time passcode
(delivered via voice, SMS or e-mail), grid
cards and a range of one-time-passcode
tokens...
IdentityShield: 1) Reduces cost by
choosing from a mix of
authenticators based on risk, user
requirements and cost, 2) Creates
stronger security for transactions
that have greater risk, 3) Minimizes
user impact by only requiring
stronger authentication when
needed, 4) Secure identities across
desktops, networks and resources,
5) Offers strong authentication
across different communication
channels.
Direct Sales,
Value Added
Reseller,
Partnership,
Sales
Representative,
Reseller
55
TransactionShield™
Security
Software
2009
TransactionShield monitors transactions and
seeks fraudulent behavior and access patterns
amid the massive volumes of data generated
by transactional Web sites. The solution
examines this data and identifies potentially
suspicious behavior and high-risk activities
without impacting the user experience or
system performance. It serves as a resource
to protect consumers and help organizations
defend and manage the risk associated with
online services.
TransactionShield Performance
Attributes: 1) Zero-Touch, Rapid
Deployment, 2) Comprehensive
Monitoring, 3) Multiple Channels, 4)
Real-Time Risk Score, 5) Alert
Management Workflow, 6) Step-Up
Authentication, 7) Comprehensive
Management, 8) 360-Degree
Assessment, 9) Powerful Analytics
& Forensic Reporting, 10) Rapid
Response, 11) Automated
Statistical Learning, 12) Open
Fraud Intelligence Network
Direct Sales,
Value Added
Reseller,
Partnership,
Distributor,
Sales
Representative,
Reseller
35
RISK FACTORS
Q: Does your enterprise now depend on or take advantage of offshore software development and / or support resources, or do you anticipate using
such offshore resources in the future?
The enterprise does not report dependence on or that it is taking advantage of offshore software development and / or support resources or that it anticipates
using such offshore resources in the future. The enterprise may comment on how it will be protected from potentially significant development and / or
maintenance and services cost disadvantages due to not using such offshore resources.
While offshore resources may be less expensive than U.S. development resources, we feel that the efficiences, quality, proprietary nature of an internal team are
more important to our business model.
Q: Computing has largely evolved into a Web-hosted model wherein users no longer need to be locked into a given platform to be able to deploy
applications. Applications can be delivered on a pay-as-you-go or subscription basis and kept constantly updated by the vendor in an iterative,
collaborative relationship with customers. Does your company actively pursue iterative, collaborative relationships with your customers for the
purpose of upgrading your applications software?
The enterprise reports that it seeks and utilizes iterative, collaborative relationships with its customers for the purpose of upgrading its applications software as
follows:
eSecure engages its customers frequently to identify any usability issues, gauge reaction to newly released capabilities, and to learn about ideas for new product
capabilities. This is typically accomplished through broad-based surveys and through direct contact. eSecure also tracks customer engagement and performance
of its systems through various monitoring mechanisms.
Q: Cloud computing is one of the fastest growing segments of the IT industry. Companies are increasingly realizing that simply by tapping into the
cloud they can gain fast access to best-of-breed business applications or drastically boost their infrastructure resources, all at negligible cost. But as
more and more information on individuals and companies is placed in the cloud, concerns are growing about just how secure data in such an
environment can be. Is your security software applicable to cloud computing?
The enterprise recognizes that concerns are growing about how secure data is in a cloud computing environment. Further, the enterprise describes the most
important aspects or features of its security or services approach to supporting security in the cloud computing environment as follows:
Our IdentityShield™ solution is applicable to ensuring indentity security in cloud computing environments. It is an open versatile authentication platform that
enables organizations to layer security across diverse users and applications. The platform’s authentication options include strong username and password
enforcement, IP-geolocation, machine/device authentication, questions and answers, out-of-band one-time passcode (delivered via voice, SMS or e-mail), grid
cards and a range of one-time-passcode tokens.
Intellectual Property
PORTFOLIO
Status U.S. Patents International Patents Trademarks Copyrights
Pending 3 3 0 0
Granted 2 1 6 10
PATENTS
Patent
Product/Service
Relation
Status
Remaining
Life
(Years)
Own or
License
Independent
Claims
Abstract Summary
Method and
apparatus for
providing
information
security to
prevent digital
signature
forgery.
IdentityShield™
Granted
in U.S.
15 Own 3
A method and apparatus utilizes a digital signature verification map
containing a plurality of acceptable message header identifiers
associated with a public key certificate identifier. In one embodiment, a
method includes determining a digital signature verification error based
on a received message header, such as transport header identifier
associated with a public key certificate identifier, such as the subject
field of the certificate. The method includes generating a signature
verification map or updating a signature verification map containing a
plurality of message header identifiers.
Method and
apparatus for a
service provider
to provide secure
services to a
user.
TransactionShield™
Granted
in U.S.
15 Own 2
A method and apparatus for establishing security credentials for a user
to access and subsequently use in secure on-line transactions begins
when a service provider generates a registration secret for a user in
response to a registration request. The registration request identifies
user information of a particular user. Before a registration request can
be provided to the service provider, the user must establish a
relationship with the service provider. Having generated the registration
secret, the service provider stores a user identifying secret.
Method and
apparatus for a
service provider
to provide secure
services to a
user.
IdentityShield™,
TransactionShield™
Pending
in U.S.
16 Own 2
A method and apparatus for establishing security credentials for a user
to access and subsequently use in secure on-line transactions begins
when a service provider generates a registration secret for a user in
response to a registration request. The registration request identifies
user information of a particular user. Before a registration request can
be provided to the service provider, the user must establish a
relationship with the service provider. The service provider stores a user
identifying secret, which includes initialization data, user information,
and/or a security name.
System and
method for
granting security
privilege in a
communication
system.
IdentityShield™,
TransactionShield™
Pending
in U.S.
17 Own 4
A system and method grants security privilege in a communication
system by providing privilege test criteria data for a subscriber unit so
that the subscriber unit or some other entity can select among
subscriber privilege data based on the privilege test criteria data, so that
only the necessary privilege information is communicated between the
relying party and the subscriber unit of interest. A data selector selects,
for example, among a plurality of attribute certificates associated with a
selected subscriber unit, the certificate that matches the privileged test
criteria data.
System and
method for
initializing
operation for an
information
security
operation.
IdentityShield™
Pending
in U.S.
18 Own 2
A method and apparatus for initializing operation for information security
operation for an entity utilizes shared information, such as shared secret
information, that may be shared between the entity and other
applications or operations within a system to initialize an entity.
Prestored shared information that can be used as entity identification
data (RV) and authentication data (IAK) that is associated with the entity
identification data is encrypted and sent in clear text fashion to an
initialization authentication unit, such as a server or other processing
unit.
ANCILLARY INTELLECTUAL PROPERTY
Product / Service Reliance on Ancillary Intellectual Property
IdentityShield™ Enterprise has nonexclusive contracted rights to ancillary IP
TransactionShield™ Enterprise has nonexclusive contracted rights to ancillary IP
Enterprise's Planned Protection of Future Intellectual Property: Patents, Copyrights, Trade Secrets, Trademarks
Markets
IdentityShield™
Market
Year Of
Introduction
General Market Description Drivers for Adoption Barriers to Adoption
Large
Enterprise
Market
2008
This market is a result of demand from
global enterprises that continue to
respond to regulatory and governance
compliance demands and extend their
internal and external networks to more
and more individuals inside and outside
their domain. In this market, enterprises
typically buy for their immediate need
and then add to their purchases as
projects begin roll out.
eSecure Systems helps
businesses mitigate risk by
securing information and
securing identities. Secure
solutions protect users and
reduce loss from business fraud
and protect sensitive data,
regardless where it resides,
while providing robust controls
and audit on those who can
access critical systems.
A breach of security at one of our customers, whether or
not due to our products, could harm our reputation and
reduce the demand for our products. A well-publicized
actual or perceived breach of network or computer
security at one of our customers, regardless of whether
such breach is attributable to our products, third-party
technology used within our products or any significant
advance in techniques for decoding or “cracking”
encrypted information, could adversely affect the market’s
perception of us and our products.
Small
Market
2008
This market consists of medium sized
enterprises that continue to respond to
regulatory and governance compliance
demands and extend their internal and
external networks to more and more
individuals inside and outside their
domain. In this market, enterprises
typically buy for their immediate need
and then add to their purchases as
projects begin roll out.
eSecure Systems helps
businesses mitigate risk by
securing information and
securing identities. Secure
solutions protect users and
reduce loss from business fraud
and protect sensitive data,
regardless where it resides,
while providing robust controls
and audit on those who can
access critical systems.
A breach of security at one of our customers, whether or
not due to our products, could harm our reputation and
reduce the demand for our products. A well-publicized
actual or perceived breach of network or computer
security at one of our customers, regardless of whether
such breach is attributable to our products, third-party
technology used within our products or any significant
advance in techniques for decoding or “cracking”
encrypted information, could adversely affect the market’s
perception of us and our products.
TransactionShield™
Market
Year Of
Introduction
General Market Description Drivers for Adoption Barriers to Adoption
Large
Enterprise
Market
2009
This market consists of large, global
enterprises that continue to respond to
regulatory and governance compliance
demands and extend their internal and
external networks to more and more
individuals inside and outside their
domain. In this market, enterprises
typically buy for their immediate need
and then add to their purchases as
projects begin roll out.
eSecure Systems helps
businesses mitigate risk by
securing information and
securing identities. Secure
solutions protect users and
reduce loss from business fraud
and protect sensitive data,
regardless where it resides,
while providing robust controls
and audit on those who can
access critical systems.
A breach of security at one of our customers, whether or
not due to our products, could harm our reputation and
reduce the demand for our products. A well-publicized
actual or perceived breach of network or computer
security at one of our customers, regardless of whether
such breach is attributable to our products, third-party
technology used within our products or any significant
advance in techniques for decoding or “cracking”
encrypted information, could adversely affect the market’s
perception of us and our products.
MARKET SIZE
Fiscal Year 2008 2009 2010 2011 2012 2013 2014 2015
IdentityShield™:
Large Enterprise Market $1,413,893,864 $1,456,310,680 $1,500,000,000 $1,545,000,000 $1,591,350,000 $1,639,090,500 $1,688,263,215 $1,738,911,111
Small Market $725,623,583 $761,904,762 $800,000,000 $840,000,000 $882,000,000 $926,100,000 $972,405,000 $1,021,025,250
Total $2,139,517,446 $2,218,215,442 $2,300,000,000 $2,385,000,000 $2,473,350,000 $2,565,190,500 $2,660,668,215 $2,759,936,361
TransactionShield™:
Large Enterprise Market $942,595,909 $970,873,786 $1,000,000,000 $1,030,000,000 $1,060,900,000 $1,092,727,000 $1,125,508,810 $1,159,274,074
Total $942,595,909 $970,873,786 $1,000,000,000 $1,030,000,000 $1,060,900,000 $1,092,727,000 $1,125,508,810 $1,159,274,074
Market Source of Market Estimates
Large Enterprise Market Internal Research
Large Enterprise Market Internal Research, External Industry Research, Paid Consultant Research
Small Market Internal Research, External Industry Research
MARKET DEVELOPMENT STRATEGY
Marketing Plan: eSecure Systems offers its products, solutions and services through a multichannel sales approach, reflecting the characteristics and buying
behavior of the target markets covered. eSecure Systems plans to continue to focus its marketing and sales efforts to capitalize upon the need for secure digital
identities and information within the consumer, enterprise and government markets. eSecure Systems plans to utilize a prioritized combination of direct and
indirect sales channels around the globe. eSecure Systems believes that its direct sales force, working in conjunction with indirect channels offering
complementary products and services, provides eSecure Systems with a competitive advantage in responding to customer needs as they evolve.
Sales Plan: To support its direct sales force and the TrustedPartner network, eSecure Systems has a marketing team whose goals are to create a consistent,
focused communication strategy that increases awareness of Entrust’s digital identity and information security solutions and services, and leverages that
awareness in the identification of new sales opportunities. The marketing team creates and conducts integrated programs that include advertising, direct mail,
trade shows, seminars, Web marketing, public relations and ongoing customer communication. eSecure Systems intends to invest in targeted marketing
programs for existing customers and prospects in key vertical and geographic markets.
Competition
IdentityShield™
Large Enterprise Market
Competitor
Name of
Product/Service
Competitor Description
Verisign Verisign Identity 7.0
VeriSign Authentication Services provides solutions that allow companies & consumers to engage in communications
& commerce online with confidence.
Blue Ridge
Networks
ID Theft Preventer Protection from Malware, Data leak, and Network Attack Risks.
ActivIdentity Active Identity
ActivIdentity is a global leader in identity assurance and strong authentication solutions for enterprise, government and
online banking security.
Competitor Strengths
Current and potential competitors have longer operating histories, greater
name recognition, larger installed bases and significantly greater financial,
technical, marketing and sales resources. As a result, they may be able to
react more quickly to emerging technologies and changes in customer
requirements, or to devote greater resources to the promotion and sale of
their products.
Competitor Weaknesses
eSecure Systems believes that the principal competitive factors affecting the
market for its security solutions include features such as ease of use,
quality/reliability of security, scalability, customer service and support and
price. The Company believes its products compete favorably with respect to
these factors, but there is no assurance that eSecure can maintain its
competitive position.
Small Market
Competitor
Name of
Product/Service
Competitor Description
Verisign Verisign Identity 7.0
VeriSign Authentication Services provides solutions that allow companies & consumers to engage in communications
& commerce online with confidence.
Blue Ridge
Networks
ID Theft Preventer Protection from Malware, Data leak, and Network Attack Risks.
ActivIdentity Active Identity
ActivIdentity is a global leader in identity assurance and strong authentication solutions for enterprise, government and
online banking security.
Competitor Strengths
Current and potential competitors have longer operating histories, greater
name recognition, larger installed bases and significantly greater financial,
technical, marketing and sales resources. As a result, they may be able to
react more quickly to emerging technologies and changes in customer
requirements, or to devote greater resources to the promotion and sale of
their products.
Competitor Weaknesses
eSecure Systems believes that the principal competitive factors affecting the
market for its security solutions include features such as ease of use,
quality/reliability of security, scalability, customer service and support and
price. The Company believes its products compete favorably with respect to
these factors, but there is no assurance that eSecure can maintain its
competitive position.
Unpenetrated - The portion of the total market revenue opportunity that is not penetrated (i.e., captured) by the enterprise or any other competitor.
TransactionShield™
Large Enterprise Market
Competitor
Name of
Product/Service
Competitor Description
Verisign Verisign
VeriSign Authentication Services provides solutions that allow companies & consumers to engage in communications &
commerce online with confidence.
Competitor Strengths
Current and potential competitors have longer operating histories, greater
name recognition, larger installed bases and significantly greater financial,
technical, marketing and sales resources. As a result, they may be able to
react more quickly to emerging technologies and changes in customer
requirements, or to devote greater resources to the promotion and sale of
their products.
Competitor Weaknesses
eSecure Systems believes that the principal competitive factors affecting the
market for its security solutions include features such as ease of use,
quality/reliability of security, scalability, customer service and support and
price. The Company believes its products compete favorably with respect to
these factors, but there is no assurance that eSecure can maintain its
competitive position.
Unpenetrated - The portion of the total market revenue opportunity that is not penetrated (i.e., captured) by the enterprise or any other competitor.
COMPETITIVE PROTECTION STRATEGY
Strategy: eSecure Systems relies on a combination of patent, copyright, trademark and trade secret laws, nondisclosure agreements and other contractual
provisions to establish, maintain and protect the Company’s proprietary rights. eSecure Systems currently has a portfolio of over 10 patents and pending patent
applications. Pursuant to patent cross-license agreements, eSecure Systems also licenses some of its patents to other corporations and, in return, receives rights
from those corporations in respect to patents owned or licensable by such corporations.
Management
EXISTING MANAGEMENT
Position Name Employed Age Undergraduate Discipline Graduate Discipline
Chief Executive Officer Chris Flanigan Full-Time 48 Engineering: Industrial/Mechanical Business: Management/Information Systems
Chief Financial Officer William Anderson Full-Time 45 Business: Accounting/Finance Business: Management/Information Systems
Chief Technology Officer David Rhodes Full-Time 39 Computing or Computer Science Business: Management/Information Systems
Vice President Sales & Marketing Michael Mallet Full-Time 49 Engineering: Electrical None
Position Name Biographical Information Special Skills
Chief
Executive
Officer
Chris
Flanigan
From November 1999 to April 2001, Mr. Flanigan served as President,
Enterprise Networks and eBusiness Solutions of Nortel Networks, where he led
the turnaround of the Enterprise business while redefining and delivering
ebusiness applications. From September 1998 to October 1999, he served as
the first Chief Marketing Officer of Nortel Networks, leading the effort to
reposition the company as a global leader in building the high-performance
Internet. From 1992 to September 1998, Mr. Conner held a number of key
executive leadership positions at Nortel Networks. Mr. Flanigan graduated from
Princeton University with a bachelor’s degree in mechanical engineering. He
also earned a master’s degree in business administration from the Wharton
School of the University of Pennsylvania.
Mr. Flanigan has been a leader in the effort to elevate
information security to a corporate governance issue
and fashion a public-private partnership to protect
America’s critical infrastructure. He launched and co-
chaired the Business Software Alliance Information
Security Governance Task Force, which released a
security management framework in April 2003. He
also co-chaired the National Cyber Security
Partnership’s Corporate Governance Task Force,
which released its information security governance
framework in April 2004.
Chief
Financial
Officer
William
Anderson
Mr. Anderson's broad experience at eSecure Systems includes significant
involvement in cross-functional responsibilities both in finance and operations.
Prior to joining eSecure Systems, he held various finance and accounting
positions at Nortel Networks from 1991 through 1995 and at Raytheon Systems
from 1982 to 1991. Mr. Anderson is a graduate of The Pennsylvania State
University where he received an undergraduate degree in accounting and a
masters of business administration.
Chief
Technology
Officer
David
Rhodes
Mr. Rhodes has more than 12 years of experience in high technology, has held
a variety of roles in the industry and is currently responsible for all aspects of
research and development, product management, technical support, and
training. He is also responsible for the Certificate Services SSL and Managed
Services PKI businesses. Prior to joining eSecure Systems, Mr. Rhodes was the
vice president of research and development at VeriSign, Inc. Mr. Rhodes
completed his undergraduate studies in computer engineering at the University
of Ottawa and St. Lawrence College. In addition, Mr. Rhodes earned a master’s
degree in business administration from Queen’s University in Kingston, Ontario,
Canada.
Mr. Simzer’s professional life has been distinguished
by a number of industry firsts, as well as innovative
research and development. His career began at Bell
Northern Research, Nortel’s research and
development arm, working on product development
for large-scale switching and data systems. Key
projects included the world’s first telephone switching
system supporting Integrated Services Digital
Network and a highly scalable distributed system built
using Advanced Intelligent Networking technology.
Vice
President
Sales &
Marketing
Michael
Mallet
Mr. Mallet has the role of leading the North American and U.S. Federal sales
team. He was President of CygnaCom Solutions from March of 2000 until
November of 2005. CygnaCom Solutions has been providing professional
information security services and cryptographic solutions to government and
business clients since 1994. This business includes US Federal government
accredited security test laboratories. Prior to joining eSecure Systems, Mr.
Mallet held various positions of increased responsibility at Nortel Networks from
1985-1998 in the areas of engineering, technical support, marketing, and order
management. He graduated from Rensselaer Polytechnic Institute with BS in
Mr. Mallet has 22 years in the industry, and is noted
for his strong combination of technical and business
acumen. Mr. Mallet joined Nortel as Director of North
American Professional Services in February of 1985
to help build the professional services practice and
organization. He successfully grew the North
American Professional Services from a start up to a
$6 million business over a 4 year period.
Electrical Engineering.
ANTICIPATED MANAGEMENT
Position Undergraduate Discipline Graduate Discipline Duration Until Needed
Chief Operating Officer Computing or Computer Science Business: Management/Information Systems 6 Months
Vice President Sales Business: Accounting/Finance Business: Management/Information Systems 10 Months
Vice President Business Development Business: Accounting/Finance None 10 Months
Financial
FINANCIAL CHARTS
Black lines represent historical values provided by the enterprise. Blue lines represent values projected by the enterprise.
Black lines represent historical values provided by the enterprise. Blue lines represent values projected by the enterprise.
Black lines represent historical values provided by the enterprise. Blue or other colored lines represent values projected provided by the enterprise.
Black lines represent historical values provided by the enterprise. Blue or other colored lines represent values projected provided by the enterprise.
Black lines represent historical values provided by the enterprise. Blue or other colored lines represent projected values provided by the enterprise.
INCOME & CASH FLOW (nominal)
Fiscal Year 2008 2009 2010 2011 2012 2013 2014 2015
Revenue:
IdentityShield™ $45,890 $150,560 $423,890 $1,087,500 $2,310,000 $4,185,000 $7,540,000 $9,400,000
TransactionShield™ $0 $0 $68,900 $198,000 $450,000 $850,000 $1,480,000 $2,500,000
Other $0 $0 $0 $0 $0 $0 $0 $0
Total $45,890 $150,560 $492,790 $1,285,500 $2,760,000 $5,035,000 $9,020,000 $11,900,000
Number of Transactions:
IdentityShield™ 306 1003 2825 7500 16500 31000 58000 85000
Number of Transactions:
TransactionShield™ 0 0 765 2200 5000 10000 18500 33000
Average Revenue per Transaction:
IdentityShield™ $150 $150 $150 $145 $140 $135 $130 $111
Average Revenue per Transaction:
TransactionShield™ $0 $0 $90 $90 $90 $85 $80 $76
Cost of Revenue:
IdentityShield™ $8,260 $22,560 $59,872 $150,000 $300,000 $500,000 $830,000 $860,000
TransactionShield™ $0 $0 $7,651 $20,000 $40,000 $70,000 $120,000 $250,000
Other $0 $0 $0 $0 $0 $0 $0 $0
Total $8,260 $22,560 $67,523 $170,000 $340,000 $570,000 $950,000 $1,110,000
Gross Profit:
IdentityShield™ $37,630 $128,000 $364,018 $937,500 $2,010,000 $3,685,000 $6,710,000 $8,540,000
TransactionShield™ $0 $0 $61,249 $178,000 $410,000 $780,000 $1,360,000 $2,250,000
Other $0 $0 $0 $0 $0 $0 $0 $0
Total $37,630 $128,000 $425,267 $1,115,500 $2,420,000 $4,465,000 $8,070,000 $10,790,000
Operating Expenses:
S&M $45,080 $85,330 $204,570 $500,000 $1,000,000 $1,500,000 $2,250,000 $2,500,000
G&A $52,090 $73,896 $135,567 $380,000 $770,000 $1,250,000 $1,600,000 $2,400,000
R&D $160,670 $153,560 $164,380 $400,000 $800,000 $1,250,000 $1,800,000 $2,500,000
Depreciation & Amortization $0 $0 $0 $0 $0 $0 $0 $0
Total $257,840 $312,786 $504,517 $1,280,000 $2,570,000 $4,000,000 $5,650,000 $7,400,000
Operating Income ($220,210) ($184,786) ($79,250) ($164,500) ($150,000) $465,000 $2,420,000 $3,390,000
Other Income $0 $0 $0 $0 $0 $0 $0 $0
Interest Expense $0 $0 $0 $0 $80,000 $60,000 $40,000 $20,000
Income Tax / Member Tax Payout $0 $0 $0 $0 $0 $0 $705,100 $1,688,000
Net Income ($220,210) ($184,786) ($79,250) ($164,500) ($230,000) $405,000 $1,674,900 $1,682,000
Cash Flows:
Net Change in Working Capital $0 $0 $0 $0 $0 $0 $0 $0
Operating Cash Flow ($220,210) ($184,786) ($79,250) ($164,500) ($230,000) $405,000 $1,674,900 $1,682,000
Capital Expenditures $15,078 $23,010 $34,672 $64,000 $105,000 $140,000 $180,000 $220,000
Free Cash Flow ($235,288) ($207,796) ($113,922) ($228,500) ($335,000) $265,000 $1,494,900 $1,462,000
Capitalization:
New Equity Investment $500,000 $0 $0 $600,000 $0 $0 $0 $0
Grant Capital $0 $0 $0 $0 $0 $0 $0 $0
New Debt Borrowing $0 $0 $100,000 $0 $0 $0 $0 $0
Debt Principal Repayments $0 $0 $0 $20,000 $20,000 $20,000 $20,000 $20,000
Total Net Capitalization $500,000 $0 $100,000 $580,000 ($20,000) ($20,000) ($20,000) ($20,000)
Cash Liquidity Balance $45,400 $396,900 $41,900 $286,900 $1,761,800 $3,203,800
INCOME & CASH FLOW (relative)
Fiscal Year 2008 2009 2010 2011 2012 2013 2014 2015
Market Share:
IdentityShield™ 0.00 % 0.01 % 0.02 % 0.05 % 0.09 % 0.16 % 0.28 % 0.34 %
TransactionShield™ 0.00 % 0.00 % 0.01 % 0.02 % 0.04 % 0.08 % 0.13 % 0.22 %
Annual Growth Rate in Revenue:
IdentityShield™ 0.0 % 228.1 % 181.5 % 156.6 % 112.4 % 81.2 % 80.2 % 24.7 %
TransactionShield™ 0.0 % 0.0 % 0.0 % 187.4 % 127.3 % 88.9 % 74.1 % 68.9 %
Other 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 %
Total 0.0 % 228.1 % 227.3 % 160.9 % 114.7 % 82.4 % 79.1 % 31.9 %
Gross Profit Margin:
IdentityShield™ 82.0 % 85.0 % 85.9 % 86.2 % 87.0 % 88.1 % 89.0 % 90.9 %
TransactionShield™ 0.0 % 0.0 % 88.9 % 89.9 % 91.1 % 91.8 % 91.9 % 90.0 %
Other 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 %
Total 82.0 % 85.0 % 86.3 % 86.8 % 87.7 % 88.7 % 89.5 % 90.7 %
Operating Expenses as a % of Revenue:
S&M 98.2 % 56.7 % 41.5 % 38.9 % 36.2 % 29.8 % 24.9 % 21.0 %
G&A 113.5 % 49.1 % 27.5 % 29.6 % 27.9 % 24.8 % 17.7 % 20.2 %
R&D 350.1 % 102.0 % 33.4 % 31.1 % 29.0 % 24.8 % 20.0 % 21.0 %
Total Profit Margins:
Operating Profit Margin -479.9 % -122.7 % -16.1 % -12.8 % -5.4 % 9.2 % 26.8 % 28.5 %
Net Profit Margin -479.9 % -122.7 % -16.1 % -12.8 % -8.3 % 8.0 % 18.6 % 14.1 %
BALANCE SHEET
Fiscal Year 12/31/2010
Current Assets:
Cash & Short-Term Investments $45,400
Accounts Receivable $23,090
Inventory $0
Other Current Assets $0
Total Current Assets $68,490
Long-Term Assets:
Tangible Capital Assets $552,320
Intangible Capital Assets $1,526,500
Accumulated Depreciation $152,000
Total Long-Term Assets $1,926,820
Total Assets $1,995,310
Current Liabilities:
Accounts Payable $31,698
Short-Term Debt $0
Other Current Liabilities $0
Total Current Liabilities $31,698
Long-Term Liabilities $100,000
Total Liabilities $131,698
Equity & Capital:
Paid-In Capital $620,000
Retained Earnings $562,300
Interest in Non-Consolidated Enterprise(s) $0
Total Equity & Capital (Net Worth) $1,182,300
Total Equity, Capital, & Liabilities $1,313,998
PROJECTION METHODS
Revenue
Projection
Method
Operational
Cost
Projection
Method
Underlying Projection Assumptions
Based on
Assumed
Market
Shares
Based on an
Assumed
Portion of
Revenue
Some of the assumptions that underlie these financial projections include: 1) a revenue growth rate of around 100% in the next two
fiscal years; 2) the execution of a key marketing relationship with 2 strategic partners by the end of the year; 3) 5% operating cost as
a percentage of revenue devoted in google adwords advertisements; 4) a 300% increase in yearly organic search traffic by the end of
the current fiscal year; etc...
Capitalization
CURRENT CAPITALIZATION
Capital Offering: $600,000
Offering Type: Equity
Future Capital - The enterprise's estimate of future capital needs post investment. Post Money - Equity share of the enterprise after the dilution of this offering.
S&M – Sales & Marketing | G&A – General & Administrative | R&D – Research & Development | Asset Acq. – Asset Acquisition
Area of Use Specific Use Amount
Sales & Marketing New Sales Employees $200,000
Research & Development System Upgades, Patent Costs $200,000
General & Administrative New Employees, Larger Office $200,000
PAST CAPITALIZATION
Name Relationship Capital Type Contributed Capital
Chris Flanigan Founder Common Equity $10,000
William Anderson Founder Common Equity $10,000
Round 1 Angel Investors Individual Preferred Equity $500,000
Bank Loan Commercial Bank Long-Term Debt $100,000
EQUITY EXIT STRATEGIES / DEBT TYPE & DURATION
Ranking Equity Exit Strategy / Debt Type Desired Year Name of Potential Acquirers or Merger Partners
Most Likely Acquisition 2014 VeriSign, Microsoft
Likely Merger 2015 Entrust
Least Likely Secondary Private Offering 2016
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