Espion International Business Plan 11-1-10

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Inbound Email Content
ESPION PROBABILISTIC REASONING (EPR)
ESPION INTERNATIONAL INC.

BUSINESS PLAN
November 1, 2010
Home
About Espion
The Espion Probabilistic Reasoning (EPR) engine integrates the industry
a compact, efficient, and highly effective security solution. This unique, pr
Interceptor to learn and adapt to an organizations email flow without slow
been effectively applied in an email gateway security platform (MX Mercu
organizations with regulatory compliance in areas such as HIPAA, GLBA
Our Technology
Products & Services
Su
Inbound Email Content Filte

(+)Enlarge Image
ESPION PROBABILISTIC
REASONING (EPR) ENGIN
Douglas Sherrod
The EPR engine is hyperseeded (loaded) with collective knowledge of wi
emails and spam. Independent third party testing results show the Interce
performance.
CEO and Chairman of Board
Espion International, Inc.
PROACTIVE
WHICHso
IS
The Espion Probabilistic
Reasoning
integratesvs.
theREACTIVE
industrys -leading
7117 Florida
Avenue (EPR) engine
While most companies battle spam with a reactive approach, we prefer u
Baton Rouge, LA 70806
a compact, efficient, and highly effective securityMercury
solution.
This unique, proprietary te
with over 2600 unique heuristic tests and a proprietary A.I based
(225) 293-5252
you. These features literally eliminate the need for creating complex rules
Interceptor to learn and adapt to an organizations
email flow without slowing or grow
Spam patterns are ever-changing and reacting to spam/security threats u
issue temporarily. MX Mercury, on the other hand, adapts to your organiz
been effectively applied in an email gateway security

platform (MX Mercury) and h
patterns. As time goes on, the Interceptor's AI engine only gets more effe
Dated as of November 1, 2010
it did the day it was installed.
organizations with regulatory compliance in areas such as HIPAA, GLBA and SOX.
In addition, MX Mercury boasts of having
2010 Espion International, Inc. All Rights Reserved.
TABLE OF CONTENTS
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About Espion
Our Technology
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EXECUTIVE SUMMARY ....................................................................................................................................................3
COMPANY OVERVIEW .............................................................................................................................................................5
ESPION PROBABILISTIC REASONING

(EPR)
CORE COMPANY VALUES ........................................................................................................................................................
5
INDUSTRY BACKGROUND .......................................................................................................................................................

6
been effectively applied in an email gateway security

ENCRYPTION MARKET ...........................................................................................................................................................
8 platform (MX Mercu
PRODUCT OVERVIEW .............................................................................................................................................................9

CORE TECHNOLOGY - INBOUND CONTENT FILTERING ........................................................................................................10
CORE TECHNOLOGY - OUTBOUND EMAIL ENCRYPTION .....................................................................................................11
MX LOCK INDUSTRY SPECIFIC APPLICATIONS ....................................................................................................................13
ADDITIONAL FEATURES .......................................................................................................................................................14
PATENTS/INTELLECTUAL PROPERTY .................................................................................................................................15
CUSTOMERS ..........................................................................................................................................................................15
COMPETITION ......................................................................................................................................................................16
MARKETING/SALES STRATEGY ...........................................................................................................................................16
PRICING STRATEGY ..............................................................................................................................................................17
PRICING POLICIES ................................................................................................................................................................18
MANAGEMENT BIOS .............................................................................................................................................................18
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OPERATIONS ........................................................................................................................................................................19
PRODUCTION ........................................................................................................................................................................
19
performance.
PROACTIVE vs. REACTIVE

FINANCIAL INFORMATION AND PROJECTIONS .....................................................................................................................
20 - WHICH IS
Mercury with over 2600 unique heuristic tests and a proprietary A.I based
EXECUTIVE SUMMARY
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Business Description - Espion International Inc. (Espion, the Company, we, our, or us)
develops, markets, and sells email security1 solutions providing both Inbound
comprehensive
inboundContent
Email
protection (anti-spam, anti-virus, anti-hacking) as well as outbound email protection and management
(encryption, archiving, content based filtering, policy enforced encryption - HIPAA/ GLIBA/ SOX). Our
solutions include an appliance product sold to business customers available in a single low cost unit
as well as a cloud based SAAS (software as a service) solution. Easy The
toEspion
plug
in, start
up(EPR) and
Probabilistic
Reasoning
engine integrates the industry
efficient,
highly effective
security solution. This unique, pr
manage, our appliances and cloud based solutions accurately filter overa compact,
99.9%
ofandspam,
scams,
Interceptorinbound
to learn and adapt
to an organizations
phishing, viruses, spyware and electronic intrusions which threaten a customers
email
flow at email flow without slow
a comparatively low cost.
Technology -The Companys products and solutions utilize a proprietary artificial intelligence based
algorithm called Espion Probabilistic Reasoning (EPR) which deciphers between spam and approved
email by using a constantly evolving set of spam signatures that are machine learned. In addition, the
spam engine uses information specific to each customers email flow and actually learns the syntax
and semantics of end users within the organization, making its user profiling based learning system
extremely accurate and cost effective. The highly accurate and cost saving EPR technology sets the
Company apart from its competitors.
Products: Appliances and Cloud Based- The Companys flagship product is called the Interceptor,
which combines proprietary software bundled with a rack mounted server to provide an appliance
solution (see picture below) which is deployed at the customers network firewall. The product provides
a total email security solution by packaging its anti-spam with anti-virus and anti-hacking capabilities
along with secure outbound email management via encryption, HIPAA, GLBA and Sarbanes-Oxley
compliance modules which the customer can order as additional features 2.
Having a separate
appliance at the networks gateway to scan for spam, viruses and hacking attempts takes the
processing load off the email server, preventing it from crashing and thus prolonging its life.
Additionally, appliances are easier to deploy and manage than software solutions, and offer peace of
mind to companies that do not want to outsource their messages. As such, it is the fastest growing
segment of the email security market.
More recently, the Company has also entered the SaaS (Software as a Service) segment of the
email security market. Hosted solutions offer customers with minimal upfront costs since there is no
hardware to buy and deployment to administration is virtually maintenance free, since all of the
(+)Enlarge Image
hardware is located at a datacenter. Espion has built its Interceptor software to run as a hosted
solution, allowing multiple administrators to run and manage their respective
email
accounts
The EPR engine
is hyperseeded
(loaded) from
with collective knowledge of wi
emails
and spam. Independent
third party This
testing results show the Interce
within the same hardware unit, hence making each unit able to house several
customers
at once.
allows Espion to pass the savings onto their customer and become priceperformance.
competitive as a hosted
solution. Espion is uniquely positioned to take advantage of the race to the cloud going on today as
REACTIVE
IT budgets are cut and customers look for greater capabilities and ease of PROACTIVE
use from the vs.
SaaS
based - WHICH IS
Whileamost
companies battle
with a reactive approach, we prefer u
model. In addition the hosted (or SaaS solution) is one which doesnt require
customer
tospam
purchase
over 2600 unique heuristic tests and a proprietary A.I based
software, but rather use it as a service, where it is resident remotely at aMercury
datawithcenter,
allowing the
customer to use the solution on demand. The SaaS model also relieves theSpam
customer
from having to
patterns are ever-changing and reacting to spam/security threats u
constantly upgrade and monitor the software in house, often reducing IT internal
support
costs.
issue temporarily. MX Mercury,
on the other hand, adapts to your organiz
1 E-mail security is defined as any software, appliance, or hosted service that filters and protects against spam
(defined as unwanted or unsolicited electronic mail), viruses, and other e-mail related threats.
2 Out bound email management is used by most companies to regulate the content and availability of
information from being disseminated from their networks. Certain governmental regulations have been enacted
to protect sensitive customer information HIPAA for healthcare organizations, GLBA for financial institutions
and Sarbanes-Oxley for the protection and archiving of corporate emails and records sent between management
and its auditors
Industry Outlook - Spam is a major security threat and financial drain for organizations
worldwide,
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costing an estimated $130 billion per year. Organizations poorly protected against e-mail threats pay
a high price, loosing millions of dollars in extra IT costs, productivity costs, network downtime,
bandwidth costs, and more.
Worldwide revenue in the email security market is expected to grow from $4.4 billion in 2009, to $6.7
PROBABILISTIC
REASONING
(EPR)
billion in 2013, according to Radicati Group. Additionally, the appliance ESPION
and hosting
segments,
in
which the Company participates, have been and continue to be the fastestThegrowing
segments of the
Espion Probabilistic Reasoning (EPR) engine integrates the industry
market.
been effectively
applied in an email gateway
security platform (MX Mercu
Research Analyst Richi Jennings with the Ferris Group, indicates that the HIPAA
compliance
market
represents an additional relatively new $1.5 Billion market that Espions [MX] Lock with encryption
product is directly targeting.
Strategic Vision/Market Opportunities Espion has been a research and development operation for
the past five years since its founder, David C. Burdsall passed away in 2005. During this period we
have undergone a change in control and have made significant improvements to our products and
technology. During these past few years our R&D team has kept our products up to date and on the
cutting edge of our industry and market. With the recent hiring of our new CEO, Douglas Sherrod, the
Company is now poised to ramp up sales. Mr. Sherrod has many years of experience in helping place
companies such as Espion on the map by building sales and marketing teams largely from internal
cash generation. Mr. Sherrod has put forth a very conservative and achievable near term business
plan as well as longer term projected objectives. Through strategic and cost effective lead generation
via the use of previously engaged call centers located in India and local marketing and advertising
already under way under Mr. Sherrods leadership, Espion is in the enviable position of becoming a
very fast growing email security company with proven products and a highly scalable technology which
will become very appealing to the larger industry players. Our strategic vision is to leverage our
feature rich and competitive product lines and further penetrate into the replacement appliance
market 3. Initially and further develop our hosted solution so that we can compete with the SaaS or
software as a service vendors once we have achieved a critical mass in sales via our direct and
indirect sales efforts in penetrating the replacement market.
Our goal is to achieve revenue growth in the coming 2011 fiscal year alongside upgrading our public
listing of our common stock to that of a fully reporting company. By becoming fully reporting which
calls for corresponding greater financial and operational transparency on a quarterly basis will allow
(+)Enlarge Image
Espion greater access to growth capital through the sale of equity and debt securities. We anticipate
that our common stock will recommence trading once again in the second quarter
of fiscal year 2011.
We are confident that we will be able to bring liquidity to our current shareholders
upgrading
ourresults show the Interce
emails and spam.by
Independent
third party testing
performance.
listing (to fully reporting status) and with the corresponding growth anticipated
to our sales revenues in
the next six to twelve months, our market value is likely to increase, making ownership in our stock a
PROACTIVE vs. REACTIVE - WHICH IS
value for old as well as future investors.
Company Overview
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Email
Espion International is a 7 yr old maker of hardware based, vm-ware based, Inbound
and cloud based
emailContent
security products using highly efficient and proprietary artificial intelligence algorithms providing in
ESPION
PROBABILISTIC
REASONING (EPR)
bound security against spam, viruses and hacking attacks and outbound
compliance
and data
security using auto-encryption. With over 150 customers spanning large organizations including
Computer Science Corporation (NYSE: CSC), the U.S. Department of Homeland
Security, major
hospitals to small Physicians offices seeking a cost-effective encryption solution,
our
products have
been commercially deployed for the past six years, protecting over 12 million
boxes
worldwide.
been email
effectively applied
in an email
gateway security platform (MX Mercu
with regulatory
compliance
in areas such as HIPAA, GLBA
Our customers have remained loyal to us since 2004, renewing their licensesorganizations
each year.
With
a newly
hired management team in place after undergoing a change of control, Espion is now poised for
aggressive sales growth and is ready to build a pre-eminent sales and marketing team to capture
market share in the maturing replacement email security appliance marketplace and in becoming a
notable contender in the cloud based security sector, both sectors which are experiencing continued
above average growth in the IT industry through the next 4 to 6 years.
Espion International, Inc. was originally founded in 2003 and is currently has offices in Baton Rouge,
LA. The Company is organized as a C Corporation domiciled in the state of Nevada, which wholly
owns Espion, LLC and INTLX, LLC, two Louisiana based limited liability companies which are the
operating companies.
Espion was initially funded with $500,000 from its founding members and further funded with an
additional $1.8 million in cash for operations and advances made for start up expenses paid by three
private investment firms. This capital has been utilized in a practical application of the proof of concept
and for marketing for over 200 customers, including Fortune 100 corporations, hospitals, state
governments, and universities are now using Espion Interceptors for their complete email security
needs.
Core Company Values

Espion has adopted the following three words to reflect its core company values offered to its
customers:
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Smart we consistently have designed email protection and filtering solutions

that utilize artificial
intelligence to automate intensive processes, adapt to, and predict changes emails
withandminimal
to no
human
spam. Independent
third party
performance.
intervention in the updating process.
PROACTIVE
Simple we have developed products that are simple to use, simple to install,
and havevs.
noREACTIVE
complex - WHICH IS
maintenance requirements. We also offer our customers with state of While
themostart
technical
companies
battle spam support
with a reactive approach, we prefer u
available 24/7 year round.
Secure our products are secure and operate on a hardened kernel, making
our system virtually
impenetrable.
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Industry Background
About Espion
Our Technology
Products & Servic
Emergence of electronic messaging as a mission critical business application.
With the global adoption of the Internet, the use of electronic messaging The
has
become
a ubiquitous
Espion
Probabilistic Reasoning
(EPR) engine integrates the industry
a compact,
efficient, and According
highly effective security
communication tool and a mission critical application for the conduct of
business.
tosolution. This unique, pr
Interceptor to learn and
adapt toboxes
an organizations
estimates by International Data Corporation, or IDC, by 2011 the number of worldwide
email
will email flow without slow
be 1.6 billion, and the number of person-to-person email messages sent worldwide
will be more than
9.1 trillion. Surveys by market research firm META Group estimate that 80% of business people
believe email is more valuable than the telephone for business communication. In addition to email, a
wide variety of other forms of electronic messaging have emerged and are increasingly embraced by
businesses, including instant messaging, or real-time messaging through the Internet, and Short
Messaging Service (SMS), or short text messaging through mobile phones, two-way pagers, personal
digital assistants and other mobile devices.
Increasing threats to electronic messaging.
The widespread adoption of electronic messaging has made securing and managing the messaging
infrastructure increasingly important, complex and costly. The messaging standards originally adopted
by the public Internet were not optimized to address concerns for security, privacy and fraud. As a
result, the existing infrastructure is susceptible to security attacks, which compromise and threaten the
utility of electronic messaging. Frequently encountered messaging security threats include:
spam, or unsolicited or unwanted bulk email, generally sent by individuals or organizations that send
mass emails to a specified list of email addresses;
viruses, or malicious code designed to disrupt computer systems or steal confidential information;
and
fraudulent email, or email that mimics legitimate corporate communications for the purpose of
stealing personal or financial information.
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Proliferation of spam as a barrier to the effectiveness of email.
performance.
We believe the proliferation of spam is one of the most severe and challenging
electronic messaging
security threats faced by businesses today. Spammers rapidly evolve techniques to circumvent efforts
aimed at stopping them. The proliferation of spam is driven largely by PROACTIVE
its potential vs.
to REACTIVE
generate - WHICH IS
While most
companies
battle spam with afor
reactive
attractive profits for spammers. Email allows a spammer to reach individuals
and
businesses
a approach, we prefer u
fraction of the cost of using any other communication vehicle because the spam
market has almost no
barriers to entry and the marginal cost of sending additional emails is almostSpam
zero.
In addition, hackers
patterns are ever-changing and reacting to spam/security threats u
and spammers increasingly use spam to introduce viruses into business
networks
steal
issue temporarily. MX Mercury,and
on the other
hand, adapts to your organiz
patterns. As sent
time goesan
on, theaverage
Interceptor's AI engine
confidential information from businesses. According to IDC, in 2009 spammers
of only gets more effe
15.5 billion emails per day, and spam as a percentage of overall Internet email
traffic will grow from
35% in 2006 to 67% in 2011.
Spam is a dynamic problem. Techniques frequently used by spammers include deliberately obscuring
the identity of the email sender, implementing false unsubscribe mechanisms to validate an email
address and harvesting email addresses published on the Internet. Spammers target virtually anyone
with a valid email address, across any geography or industry. Moreover, spam campaigns often
involve large volumes of emails sent repeatedly, which tax network and server bandwidth and allow
the perpetrators to rapidly evolve the form and content of the message traffic to evade new spam
filtering techniques. As a result, successfully addressing the spam problem

requires
a Our
dynamic
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Technology
approach to spam identification and analysis, as well as real-time generation, updating and
deployment of filters in the network, particularly at the gateway or the mail server, where message
traffic can be filtered in the aggregate.
Products & Servic
Many jurisdictions in the United States and abroad have enacted legislation attempting to solve the
ESPION
PROBABILISTIC
REASONING
(EPR)
spam problem. While legislation has been an important driver toward raising
public
awareness
of
spam and may act as a deterrent, legislation alone will not solve the spam problem. Governments
have difficulty prosecuting across jurisdictions and have typically placed enforcing
spam laws at a
lower priority. In addition, the international portability of spam operations andInterceptor
the ability
ofadapt
spammers
to email flow without slow
to learn and
to an organizations
effectively applied
an email gateway security
remain anonymous has meant that an effective technology solution in been
addition
to inlegislation
is platform (MX Mercu
necessary to address the spam problem.
Spam causes significant challenges for businesses
The proliferation of spam and the need to block it has created a number of significant challenges for
businesses, including:
Lost productivity. The productivity loss caused by the time employees spend separating legitimate
email from spam or responding to spam is growing increasingly significant.
False positives. The cost of false positives, or the inappropriate blocking of legitimate messages by
spam filtering systems, may result in loss of sales or critical information.
Strain on IT resources. Spam taxes the technology infrastructure by utilizing network, server and
storage resources, potentially requiring organizations to purchase additional systems and devote more
personnel to manage them.
Damage to corporate brands. Techniques have emerged, such as phishing, where spammers
create messages designed to resemble a message from a legitimate business, which not only places
the recipient at risk, but also damages the trust in the business corporate brand.
Increased risk of workplace liabilities. Spam often contains or directs users to offensive content,
which may create an uncomfortable or hostile work environment and result in greater liability risks for
businesses.
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Increased customer churn for messaging service providers. If email accounts become flooded with
spam, customers may become dissatisfied with the messaging service provider,
thereby
increasing
The EPR engine
is hyperseeded
(loaded) with collective knowledge of wi
customer support costs and risk of service termination.
performance.
These challenges result in significant costs for businesses. According to Ferris Research, a consulting
PROACTIVE
firm, the aggregate cost due to these spam threats for American corporations
exceeded vs.
$10REACTIVE
billion in - WHICH IS
While mostmechanism
companies battle spam
with other
a reactive approach, we prefer u
2011. These costs do not take into account spam techniques used as a delivery
for
threats, such as viruses and fraud.
Businesses require an effective and accurate messaging security solution
The proliferation of spam, compounded by the severity of email related security threats, presents a
formidable challenge for businesses as they look to maintain a secure environment,
contain costs and
realize the benefits of a messaging platform. As a result, businesses require a messaging security
solution that can address these challenges. An effective solution must:
identify and prevent spam, viruses and fraudulent email from entering the core network;
minimize false positives;
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limit the management and administrative cost required to maintain control over the rapidly evolving
spam tactics and messaging threats;
support the wide variety of hardware, software and messaging applications and protocols typical of
the technology infrastructure; and
process hundreds of millions of emails each day across multiple locations,

without
delaying
The Espion Probabilistic
Reasoning
(EPR) engine integrates the industry
message delivery.

Given the growth of complex messaging threats, we believe that businesses
of all sizes require a
dynamic messaging security solution to ensure a safe, secure and stable messaging system.
Combating spam and related messaging threats has required increasing financial investment in
security technology. IDC estimates that the messaging security software market will grow from $900
million in 2010 to $1.8 billion in 2012, representing a compound annual growth rate of 31%. Today, the
market for enterprise anti-spam solutions remains largely unpenetrated.
According to Ferris
Research, approximately 10% of corporate mailboxes have some level of anti-spam protection.
Encryption Market
Email is a mission-critical means of communication for enterprises. However, if email leaves a secure
network environment in clear text, it can be intercepted along the path between a sender and a
recipient, which permits theft, redirection, manipulation, or exposure to unauthorized parties. Failure to
control and manage such risks can result in enforcement penalties for noncompliance under numerous
different regulations. Healthcare organizations are primarily concerned with the recent changes to the
Health Information Portability Accountability Act (HIPAA) introduced via the Health Information
Technology for Economic and Clinical Health (HITECH) Act of 2009. Financial institutions are
concerned with Gramm-Leach-Bliley Act (GLBA). In addition, individual states such as
Massachusetts and Nevada have recently introduced state laws regulating email encryption. Failure to
manage the risks associated with email can also lead to decreased productivity, damaged reputation,
competitive disadvantage, a loss of intellectual property or other corporate assets, exposure to
negligence or liability claims, and diversion of resources to repair such damage.
The most recent estimate we have puts the market at $120 million in 2011.
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Even though there are still many security solutions focused on a single type
of security threat, the
overall trend is to offer a complete package that protects against multiple
threats.
Most popular
performance.
solutions, today, offer anti-spam/anti-virus, content filtering, encryption and some Data Loss
PROACTIVE
REACTIVE
Prevention (DLP) capabilities integrated together. These complete solutions
are often vs.
made
up of - WHICH IS
technology components sourced from multiple OEM suppliers. The key is that
they
are
available
While most companies battle spam with afrom
reactive approach, we prefer u
a single vendor, and all capabilities are managed centrally.
Product Overview
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Espion provides both standalone appliances as well as hosted solutions for inbound email security as
Inbound
EmailitsContent
well as outbound content policy management and email encryption. Espion
recently extended
Interceptor line to offer customers more targeted solutions, creating the i-series and e-series.
Additionally the company recently introduced its software as a service solution.
MX LOCK - OUTBOUND EMAIL ENCRYPTION

InterceptorTM with MX LockTM supplies the highest level of security for emails
carrying
confidential
Interceptor to
learn and adapt
to an organizations email flow without slow
been effectively data
applied in an
email gateway security
and proprietary information. MX Lock provides for selective and automatic
security
by platform (MX Mercu
organizations
with regulatory
in areas such as HIPAA, GLBA
enforcement for outbound email content and attachment rules. Once an email
is scanned
forcompliance
restricted
content, the email and any attachments are encrypted with a highly secure 1024-bit dual-key
encryption technique used by the U.S and Canadian governments and their military. Content Filtering
and blocking rules prevent infractions of compliance for HIPAA and GLBA as well as enforce custom
IT management policy rules. Interceptor with MX Lock prevents data leakage and off-loads the mail
server resulting in improved system performance.
MX MERCURY - INBOUND EMAIL SECURITY
MX MercuryTM is the perfect solution for eliminating spam while simultaneously securing your email
network and freeing up valuable IT resources. MX Mercury utilizes a state-of-the-art SMART artificial
intelligence (AI) technology which learns email patterns for each individual user at your organization.
A typical install is SIMPLE and can have you spam free in less than 15 minutes. While everyone else
in the industry prefers a reactive approach for battling spam, we happen to be highly proactive. As a
result, MX Mercury makes your organizational network SECURE from spam and hackers.
PALADIN MX - SaaS/HOSTED SERVICES
The Paladin MXTM Software-as-a-Service (SaaS) is a military grade hardened cyber security
development for incoming and outgoing email. Paladin MX SaaS scans and defeats all cyber attacks
associated with incoming email at your organization. Additionally, Paladin MX SaaS filters outgoing
email for violations of HIPAA, GLBA and other data leakage problems. Your outgoing email is
automatically scanned, filtered and encrypted without any additional actions by the end-user. Paladin
MX SaaS stops the loss of trade secrets and other confidential and sensitive information that may
advertently or overtly be sent in an outgoing email.
(+)Enlarge Image
performance.
Core Technology - Inbound Content Filtering
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Espions EPR AI technology uses a proprietary algorithm to intelligently determine the true nature of
Inbound
SMTP traffic, rather than relying solely on rule-based techniques. This proactive
approachEmail
gives ourContent
product greater speed and accuracy in making determinations
on spam iterations which can typically
Search Site: Search...
fool a signature based heuristic solution. Each email is analyzed to see if itESPION
meetsPROBABILISTIC
criteria specific
to
REASONING
(EPR)
legitimate email, spam or other harmful traffic.
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Support
Partners
Contact

EPR is adaptive technology which allows it to learn an organizations unique
mail flow through user
training; catching only spam, and allowing legitimate email to flow unimpeded
to
mail servers. Realbeen effectively applied in an email gateway security platform (MX Mercu
MXanalysis
Mercury
time
of mail flow allows EPR to sort email; quarantining or rejectingorganizations
unwanted
messages
with regulatory
compliance inand
areas such as HIPAA, GLBA
freeing up valuable IT resources.
Inbound Email Content Filtering
Related Links
EPR technology requires little to no maintenance, it achieves

high performance and enhanced
Our Technology
ESPION PROBABILISTIC REASONING (EPR) ENGINE
effectiveness as it molds to a customers email flow for a very
competitive
total cost of ownership
MX Lock
The Espion Probabilistic Reasoning (EPR) engine integrates the industrys leading solution in Artificial Intelligence for
(TCO).
Marking
messages
that
were
incorrectly
filtered
allows
EPR
to
identify
future messages and
We are Different
a compact, efficient, and highly effective security solution. This unique, proprietary technology allows the Espion
categorize
making
the
Interceptor
to learn andthem
adapt to anaccordingly,
organizations email flow without
slowing ortraining
growing over time.
Thisengine
solution has simple and painless.
Compartmentalization
been effectively applied in an email gateway security platform (MX MercuryTM) and has now been adapted to assist
organizations with regulatory compliance in areas such as HIPAA, GLBA and SOX.
Solutions
Resources
In the highly random and ever-changing field of

spam recognition, computer systems security
and filtering, EPR has proven a success. The
magnitude of EPR methodology has
tremendous commercial business applications
Titleworld. It is anticipated that this
aroundSub
the
breakthrough in efficient self learning artificial
intelligence will lead to tremendous value for
both current and future shareholders of Espion
International, Inc.
EPR can best be described as a hybrid A.I

system made up of multiple techniques that
can be used to model any domain. The end
result is a decision making system that (+)Enlarge
is Image
capable of making highly accurate decisions
on incomplete information.
The name
Probabilistic Reasoning
performance. comes from the
fact that the output from this system is a
PROACTIVE level
vs. REACTIVE
(+)Enlarge Image
probability or a confidence
in the - WHICH IS
result. Any domain can be modeled using EPR, by representing the conditional
dependencies
The EPR engine is hyperseeded (loaded) with collective knowledge of with over one billion known patterns of valid
between
the third
different
knowledge
Unlike
error
prone
you. Thesetypical
features literally
eliminate the
need for creating complex rules
emails
and spam. Independent
party testing results
show the Interceptor as components
the industry leader in accuracy in
and that domain.
performance.
keyword Bayesian systems, EPR utilizes a hybrid of Markov random
field, neural network
programming,
reinforcement
learning and a combination ofpatterns.
probabilistic
As time goes on, the logic
Interceptor'sand
AI engine only gets more effe
PROACTIVE
vs. REACTIVE
- WHICHmachine
IS BETTER?
it did the
day it was installed.
fuzzy
logic,battleall
in LISP
code,
providing
robust and intuitive
feature
extraction on
While
most companies
spamprogrammed
with a reactive approach, we prefer
using a proactive
one. We pre-load
MX
Mercury with over 2600 unique heuristic tests and a proprietary A.I based reasoning engine before shipping it out to
virtually any domain it is presented. Our system is a reasoning system
because it uses its
you. These features literally eliminate the need for creating complex rules that only battle spam for a short period.
Spam
patterns
are ever-changing
and reacting
threats using
custom rules will only via
help alleviate
the
own
feature
sets
andto spam/security
develops
signatures
pattern
detection of both end users as well as
issue temporarily. MX Mercury, on the other hand, adapts to your organization's mail flow and learns various flow
spammers. By being a proactive solution, our system is on the cutting edge of AI applied to
patterns. As time goes on, the Interceptor's AI engine only gets more effective while maintaing the same efficiency as
itemail
did the day itfiltering
was installed.
today. This itself will allow us to gain further visibility as we carry out our go to
market strategy in 2011.
10
Core Technology - Outbound Email Encryption
Home
About Espion
Our Technology
Products & Servic
Inbound
Email
All outbound emails (Plain Text SMTP Traffic) leaving a customers organization
are scanned
by theContent
Interceptor's MX Lock module. If an email matches content policies established by the IT administrator
or if our HIPAA, GLBA and/or SOX module has been
purchased and content is determined by our EPR system
of triggering either of these policies or regulations, the
email is automatically encrypted and stored on-disk. A
secure link is then sent out to the recipient via email.
Upon receiving this email, the recipient can click on the
secure link and view the email (plus any attachments)
over a secure, 1024-bit encrypted SSL tunnel in a safe
web portal. An illustration of our email encryption system
is shown on the next page.
MX Lock employs a proprietary dual-key locking system
with 1024-bit encryption. Both keys are required to
access an email. MX Lock is simply the strongest email
encryption available.
MX Lock administers a feature-rich environment of
customizable controls that enable forced compliance to
custom IT policies on outbound email. Outbound email is
encrypted using dual-key encryption, a method used by
many governmental agencies and the military, ensuring
the highest level of customizable security for email
carrying confidential and proprietary information.
Additionally, MX Lock validates the recipient using an
identity management system which can be customized to
meet your company's security needs. Upon receipt and
successful recipient validation, an email can be viewed in
any web browser installed on any operating system and
does not require additional software installation by the
recipient.
(+)Enlarge Image

TRUSTED RECIPIENT
and spam. Independent third party testing results show the Interce
MX Lock ensures that encrypted email content and attachments such asemails
patient
medical records,
performance.
corporate trade secrets, financial information and any other confidential or otherwise sensitive
information is accessed only by the designated and trusted recipient. Upon
receiving an
PROACTIVE
vs. encrypted
REACTIVE - WHICH IS
email, a recipient has to validate himself/herself before gaining access to the email content and
attachments.

RECORDED RECEIPT
When a secure/encrypted email is viewed by the recipient, a validated recordpatterns.
containing
the recipient's
As time goes on, the Interceptor's AI engine only gets more effe
IP address, email origin timestamp and email access timestamp are automatically
emailed
it did the day it was
installed. to sender
by the Interceptor.
TRANSPORT LAYER SECURITY (TLS)

MX Lock provides the custom capability to transmit email messages and attachments over a secure
channel directly to the recipient's inbox. If and when TLS is unavailable, the Interceptor will send the
email securely via MX Lock.
11
PROTECTION FROM PHYSICAL THEFT

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If the Interceptor falls into the wrong hands due to theft of the server, all data on the hard drives is
undecipherable as it is encrypted and is surrounded by several walls of security.
Products & Servic
CUSTOM CONTENT FILTERING

The IT Administrator has the privilege to create highly flexible content and encryption policies to scan
and block/encrypt outbound email. For instance, if your company requires all emails from Bob to be
sent out securely, a custom encryption policy will accomplish this. However,
can also
block
The you
Espion Probabilistic
Reasoning
(EPR) Bob
engine integrates the industry
a compact,
efficient, and
highly effective security solution. This unique, pr
from sending out emails to his personal email address using his company issued
email
address.
(+)Enlarge Image
performance.
PROACTIVE
In addition, our encryption feature is offered as a device license. In other words,
there arevs.
noREACTIVE
per-user - WHICH IS
While most companies
spam with
a reactive
or per- message fees involved with our system. These provide a terrific reduction
to thebattle
Total
Cost
of approach, we prefer u
2600 unique heuristic tests and a proprietary A.I based
Ownership (TCO). MX Lock is available as a standalone appliance or asMercury
partwithofoverour
Hosted/SaaS
product offering known as the Paladin MX.
patterns.
As time goesif
on, and
the Interceptor's
Furthermore, these policies can be configured to notify the proper internal
authority
whenAI engine
a only gets more effe
violation is triggered.
INTRUSION PREVENTION SYSTEM (IPS)

The Interceptor is also encased in a hardened base operating system as well as a highly powerful
Intrustion Prevention System (IPS) which prevent brute force hack attempts while keeping your mail
flow smooth with zero delays and errors.
Your confidential information should be just that - confidential and the Interceptor equipped with MX
12
Lock will help achieve it.
MX Lock Industry Specific Applications

HIPAA Compliance
Health Insurance Portability and Accountability Act
Home
About Espion
Our Technology
Products & Servic
Interceptor to learn
adapt to -an Section
organizations email flow without slow
Complying under the Health Insurance Portability and Accountability Act (HIPAA)
of and
1996
13400 and the Health Information Technology for Economic and Clinical Health
(HITECH/ARRA)
Act of
2009 - Section 13400, all outbound email and file attachments MUST be sent securely and encryption
is the best method. MX Lock comes fully equipped with a HIPAA encryption engine (also known as the
Intelligent Content Scanning engine) and allows for customizable compliance rules that can be
uniquely tailored to meed our customers business needs. The IT administrator can implement specific
rules to force encrypt emails based on their content or he/she can let the HIPAA encryption engine do
its business.
MX Lock with HIPAA Encryption Engine

(known as the Intelligent Content
Scanning Engine in the above picture)
When sensitive/confidential data is
matched, MX Lock will encrypt and
deliver the email only to the preauthorized recipients (regardless of
email/attachment size). Only users with
proper credentials can send encrypted
emails and only trusted recipients with
accurate credentials can decrypt and
view the content of the email. MX Lock
is an impenetrable lock on patient/
medical records assuring full HIPAA
compliance.
(+)Enlarge Image
GLBA Compliance
Gramm-Leach-Bliley Act Compliance
performance.
While most
companies
battle spam with
a reactive
Complying under the Gramm-Leach-Bliley Act (GLBA) of 1999 - Section
501,
requires
that
all approach, we prefer u
outbound email and file attachments containing trade secrets, intellectual
property and other
proprietary and sensitive data or images MUST be sent securely and encryption
is the best method.
MX Lock automatically scans outbound emails for specific content (customizable
by
IT adapts to your organiz
issue temporarily. MX Mercury,
on thethe
other hand,
patterns.
As time
goes on, thecredentials
Interceptor's AI engine only gets more effe
administrator) and encrypts emails that trigger any custom policies. Only users
with
proper
can send encrypted emails and only trusted recipients with accurate credentials
can decrypt and view
the content of the email. MX Lock is an impenetrable lock on our customersIn addition,
company's
trade secrets
MX Mercury boasts of having
and confidential records assuring full GLBA compliance.
PALADIN MX - SaaS CLOUD SOLUTION FOR CYBER SECURITY

Paladin MX Software-as-a-Service (SaaS) is a military grade, hardened, cloud based cyber security
service for inbound and outbound email. Paladin MX security software is developed and hosted by
Espion International, Inc. using the Interceptor series network security appliances. However, instead of
having physical responsibility for hosting the Interceptor at your facilities, we (Espion) maintain the
13
appliance at our SAS-70 approved facilities. Paladin MX scans and defeats

all cyberOurattacks
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About Espion
Technology
Products & Servic
associated with inbound email and filters outboung email for violations of HIPAA1, GLBA2 and other
data loss problems. Paladin MX automatically scans, filters and encrypts all outbound email without
any work by the network/IT administrator. Additionally, Paladin MX stops the loss of trade secrets and
other confidential and sensitive information that may be inadvertently or overtly be sent in an outbound
email.
All the features that you would expect from a software or hardware solution such as:
Outbound email encryption - MX Lock

AI based anti-spam - MX MercuryTM
Content management
Policy management
Virus and malware screening
Protection against Denial of Service (DoS) and Distributed Denial of Service (DDoS) attacks
Protection against Directory Harvest Attacks (DHA)
LDAP integration
End-user management portals
Full redundancy on data and power
Full spooling of email
24/7/365 Service and support
Additional Features
CLUSTERING
The Interceptor can guarantee our customers initial investment through clustering. As new Interceptor
hardware platforms are deployed in a customers network, old Interceptor units can be configured to
sync with the new units to provide redundancy and load balancing.
CLUSTERING FOR REDUNDANCY

An old/existing Interceptor can be clustered
with a new Interceptor to help maintain a
standard EPR (Espion Probabilistic Reasoning)
engine and a uniform configuration across all
(+)Enlarge Image
Interceptors in the cluster. While the new
Interceptor can be used
toengine
handle
live (loaded)
mail with
flow
The EPR
is hyperseeded
collective knowledge of wi
emails and spam. Independent
third party testing
(as the hardware configuration
is newer
andresults show the Interce
performance.
more powerful), the old
Interceptor can be used
as a backup for if and when the new
PROACTIVE
vs. REACTIVE
Interceptor is unavailable
thereby
providing - WHICH IS
Whileredundancy.
most companies battle spam with a reactive approach, we prefer u
highly effective passive
Spam patterns
are ever-changing and reacting to spam/security threats u
CLUSTERING FOR LOAD
BALANCING
MX Mercury, on together
the other hand, adapts to your organiz
Multiple Interceptors issue
cantemporarily.
be clustered
to help manage heavy
email
loads
at your
organization. Each Interceptor will process
roughly the same amount of emails. If and when one of the Interceptors Inbecomes
unavailable,
addition, MX Mercury
boasts of having the
other Interceptors in the cluster will take on the extra load with zero delays in email processing.
SECURE FILE TRANSFER WITH NO FILE SIZE LIMITATIONS

The Espion Interceptor configured with MX Lock supplies network/IT administrators with the controls
required to enforce encryption on emails to meet compliance standards. MX Lock equips users with
the ability to securely transfer files over the Internet. Users can send emails of any size, with virtually
14
company's IT infrastructure to send large emails and in doing so, potentially violate HIPAA, GLBA and SOX policies.
no size limit for attachments regardless of those limitations imposed by the

sender/receiving
mail
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About Espion
Our Technology
server. Users can securely send large email attachments such as medical images, X-rays, CAD-CAM,
books or any other digital records. Users do not need to go outside of the company's IT infrastructure
to send large emails and in doing so, potentially violate HIPAA, GLBA and SOX policies.
Products & Servic
Upon receipt, a recipient can only view the email and download attachments upon providing proper
(+)Enlarge
Image to reply back (along with attachments of any
credentials. Additionally, MX Lock allows
the recipient
size) to the sender.
Upon receipt, a recipient can only view the email and download attachments upon providing proper credentials.
Patents/Intellectual Property
Additionally, MX Lock allows the recipient to reply back (along with attachments of any size) to the sender.
The Companys algorithms, designs, methods, and code are held as trade secrets. Proper design
controls for Espion Interceptors ensure that the source code cannot be reverse-engineered.
Additionally, the licensing system and CDs used to build the Interceptors are also protected. The
entire process from an Interceptor being built to a license being issued is logged completely.
Interceptor,Espion
MX Lock,owns
MX Mercury
and Paladin
MX are
of Espion and
International,
Inc. Information agreements
contained hereinwith
is for all
all code
created
for trademarks
the Interceptor
has non-compete
(+)Enlarge Image
development
staff
andconsult
key your
management
members.
developer
informational
purposes only.
Please
IT professional
for advice The
in themain
application
and useof
of the
theseintellectual
products andproperty
services.

owns 30% of Espion International Inc. and other key employees are also
properly incentivized to
Informationremain
is subject
to change
without notice.
consult
Espion International, Inc. for more current
information.
with
the company
for thePlease
requisite
period.
performance.
PROACTIVE
vs. REACTIVE
Espion has all future rights of any implementation of the A.I. algorithms. This
adds options
and exit - WHICH IS
strategies for investors.
Customers
About Espion
Our Technology
Products
Services
Partners
issue&
temporarily.
MX Mercury,Support
on the other hand, adapts
to your organiz
Copyright
2010
Espion International.
All rights
reserved.
it did thegeographic
day it was installed.
Espions solutions are applicable for virtually every
customer
industry
and
region
as
evidenced by our diverse customer base. Currently Interceptors using EPR are deployed and
protecting over 200 customers in three countries including:
Fortune 500 companies: Computer Sciences Corporation (CSC)
Government agencies - City of Irvine, City of North Las Vegas
Hospitals - Northeast Health, Childrens Hospital
Small to mid sized businesses (SMBs) - CLECO, Atser, Acadian Ambulance Service, First National
Bankers Bank, Karta, Gray & Company, Sterling Bank, FEXCO
15
Competition
Home
About Espion
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Products & Servic
Direct Competition
Inbound
Email
Espion competes with large technology companies as well as standalone
players and
providesContent
solutions which are far less expensive but just as comprehensive as compared to our competitors. Our
1000 and 5000 series appliances are in terms of features and functionality ESPION
the equivalent
to IronPort
PROBABILISTIC
REASONING (EPR)
Systems, which was acquired by Cisco in 2008. Our Interceptor appliances cost 40% to 60% less on
Espion Probabilistic
Reasoning
(EPR) engine
average upfront costs as well as annual maintenance fees. Our lowerTheproducts
also
have
the integrates the industry
equivalent feature sets The industry has been undergoing marked consolidation
by infrastructure
players during the past several years; McAfee acquired Secure in 2008, Cisco
acquired IronPort in
January 2007, and Google acquired Positini in July 2007. This follows theorganizations
acquisitions
bycompliance
Secure
in such as HIPAA, GLBA
with regulatory
in areas
2006 (of CipherTrust) and Microsoft in 2005 (of FrontBridge Technologies).
Indirect Competition
According to a Market Trends report by Joel Snyder, entitled The Future of E-mail Security, there are
more than 125 vendors in the email security market. These range from simple anti-spam, to anti-spam
with anti-virus, to encryption, to various combinations. These particular providers have only one or two
areas that they secure, and are generally able to charge lower initial rates. However, if the client
needs all of the functions that are naturally included on the Interceptor, they will have to buy several
different products. When that happens, the initial cost can quickly rise, the deployment is complex, the
client does not get the full range of features, and administration cost is higher.
Large indirect competitors include Symantec, Barrucade Networks TrendMicro and Zix - none of which
include the entire core features in one offering as does Espion.
Marketing/Sales Strategy
Near Term Goals Penetrate U.S. Replacement Appliance Market

With the introduction and deployment of email security appliances by our competitors in the past six
years, a replacement market exists which can be penetrated through both direct and channel sales via
Value Added Resellers, Systems Integrators, tactical Value Added Resellers and Value Added
Distributors. Espions near term strategy is to focus on selling at senior levels in organizations needing
to replace their current appliance based email security solution which may be out of date or at the end
(+)Enlarge Image
of its support contract. This plan will be kicked off through the initial implementation of targeted and
proven sales lead generation methods such as tech savvy India/PhillipinesThebased
centers
which
EPR enginecall
is hyperseeded
(loaded)
with collective knowledge of wi
spam. Independent
third party
set up 8-20 webinar appointments per week for our current sales team emails
to and
showcase
our
current
performance.
appliance offerings and the value of replacing their current solutions with ours.
Once this plan is in full
operation, Espion will hire and train additional experienced IT Security sales personnel and systems
PROACTIVE
REACTIVE
engineers as well as additional tech support members to handle the added
customervs.
needs.
Our - WHICH IS
battle spam with a reactive
strategy is to compete in the large and rapidly growing replacement appliance
marketplace
by approach, we prefer u
targeting customers who can benefit from receiving the added outbound compliance
and encryption
capabilities of our appliances while still paying the price of a scaled down
in-bound only product.
Because our entire product line is attractively priced and contains the issue
features
functionality
temporarily. and
MX Mercury,
on the other hand, adapts to your organiz
patterns. As time
goes
on, the Interceptor's
AI engine only gets more effe
available in the higher end and much higher priced appliances of our competitors,
we
believe
we can
the day it was installed.
consistently win new customers by a cost and feature competitive product atit did
the
time for replacement.
In addition, the ease by which our products are installed and maintained, Inour
products total cost of
addition, MX Mercury boasts of having
ownership including our ongoing annual support contract pricing is far more competitive than our
competition.
Year 2 through 5 Goals Continued Expansion of Replacement Appliance Market Penetration and
Introduction of SaaS/Hosted Appliance Solutions to Industry Specific Customer Market Needing
Encryption Solutions
Our expansion plan in years 2012 through 2015 is dependent upon the influx of key sales managers
16
and personnel experienced in selling in the IT Security VAR channels. By being

a rapidly
growing
and Products & Servic
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About Espion
Our Technology
attractive publicly traded email security company with superior product offerings in our space, we are
confident that we will be able to attract the right personnel with proper equity incentives. In addition,
our products greater branding in our marketspace will assist us in furthering both our VAR Partner
reach, further developing and building our sales in this burgeoning replacement market for appliances.
Once we have achieved a stable growth rate in this marketplace we will make strategic decisions on
PROBABILISTIC
REASONING (EPR)
the development and marketing of our highly scalable hosted/SaaS basedESPION
solution
for both inbound
only as well as offer our solutions to the specific verticals in which we have readily deployable
encryption solutions to assist Healthcare Organizations with their HIPAA aRegulatory
requirements,
compact, efficient, and highly effective security solution. This unique, pr
public companies with their need for archiving required by Sarbanes-Oxley,Interceptor
and toencryption
needs
of email flow without slow
learn and adapt to an
organizations
effectively
applied insuch
an email gateway
security platform (MX Mercu
financial organizations required by the Graham Leach Bliley Act - GLBA. Asbeen
part
of each
content
organizations
with regulatory
compliance in areas
management requirement brought on by such regulations, companies affected
need
the resource
of such as HIPAA, GLBA
secure transfer of such information which our encryption module provides. In addition our adaptive
learning technology allows for seamless on-the-fly automatic encryption and/or archiving of emails
containing content which would be required to be kept or copied for safekeeping (i.e. SOX compliance)
or transferred securely for HIPAA, and GLBA customers.
Introduction of New SaaS Solution - As some companies cut IT budgets in the current economic
environment and customers look for greater capabilities and ease, Espion is positioned to take
advantage of this shift in customer preferences with the introduction of our new SaaS solution.
Marketing - Advertising and Promotion
Print
Espion will advertise in various technical journals such as Network World Magazine, Network
Computing Magazine, CIO Magazine, and various industry specific publications. This type of pull
marketing, combined with the push efforts via Direct Mail/Call Center use as well as Internet marketing
and Trade Show attendance should bolster the impressions we will receive from our print media
advertising.
Telemarketing/Direct Mail
The new relationship with SaleBuild includes three teams of 2 full time telemarketers and an
administrator with industry and product experience, calling on leads furnished by VARs and by Espion.
Previous direct sales effort utilized target market call center to spark activity. This will be ready as an
alternative plan if channel sales do not meet goals. Espion will furnish data sheets to VARs who wish
(+)Enlarge Image
to do their own direct mail programs, but has no plans of doing its own.
Internet
performance.
Targeted email campaigns, upgrading our website to a more interactive and informative site, SEO, and
Google/Bing/Yahoo! Advertising as well as Social Network and YouTube advertising
is planned.
PROACTIVE
vs. REACTIVE - WHICH IS
Trade Shows
you. These
features literally
eliminate the need for creating complex rules
Trade shows offer an opportunity to get the Espion brand out. For 2011,
Espion
is considering
participating in InterOp in Las Vegas and New York and NetSec in Scottsdale.
Pricing Strategy

Our strategy is to offer the same or more features and better performance than the current tier one
market leaders. This will allow Espion to focus on the Mid-Range market that cannot afford the higher
alternatives, but have the same business requirements.
Espion intends to compete in the Hosted/SaaS market by partnering with datacenter and Internet
Security Vendors on a revenue share plan as well as provide Healthcare organizations with encryption
17
and other content policy management functions, at a very aggressive price Home
to bolster
sales.OurEspion
About Espion
Technology
products offer unique functionalities and diversification to its customers. It is Espions intent to keep
the pricing at a comparative middle range for all products.
Products & Servic
VAR pricing is at a 25% discount off of list, with additional incentive plans. Annual support is priced at
15% of the product list price, which is industry standard.
Pricing Policies
and highly effective security solution. This unique, pr

Espion holds the List Price to customers in nearly all cases. Discounts havea compact,
beenefficient,
negotiated
for large
government contractors such as General Dynamics, and other customers seeking
to
purchase
multiple
units. VAR pricing is held firm to the VAR, but the VAR has the freedom to quote
any
margins
that
they
organizations with regulatory compliance in
areas such as HIPAA, GLBA
see fit. Many VARs will quote pricing below list, but add back installation and support services.
Management Bios
Douglas Sherrod, CEO

Mr. Sherrod has participated in the formation of several startup companies and joint ventures,
establishing rollout strategies, product positioning and distribution channels. In 1983, Mr. Sherrod
started the initial operations for Force Computers, Inc. opening the first sales and marketing
operations in the US for the Munich Germany based company, a spin-off from Motorola-Germany. Mr.
Sherrod initially held Director of Sales and Marketing title, for this startup, which grew from $0 to over
$1.5 Million in shipments, $5 Million backlog, in less than 15 months of operation.
After achieving
exceptional and rapid growth, he was promoted to Vice President of Marketing and General Manager
of the US operations. Mr. Sherrod was responsible for all North America operations, included staffing,
product market, tradeshows, public relations, sales, and overall general management of the US
facilities. In 1987, Mr. Sherrod co-founded Allied Telesyn International, with a Japanese business
partner. ATI is a manufacturer of local area network (LAN) equipment.
Mr. Sherrod oversaw the
growth of business and manufacturing infrastructure of this company from startup to several million
dollars in turnover. As co-founder to this startup, he assisted in building a business which began as
an idea formed at his partners kitchen table in 1986, to over $200 million in sales by the end of 1995.
Mr. Sherrod was directly responsible for creation of the companys first distribution channels in the US
and Europe. In 2000, Mr. Sherrod co-founded VivoCom, Inc and remains a major stockholder of this
company. VivoCom is a developer of IP communication protocol and IP switching software. In 2002,
Mr. Sherrod co-founded AdriaComm, LLC. AdriaComm is pre-IPO developer of security software (+)Enlarge
for Image
IP communications.
AdriaComm has developed a firewall solution allowing IP voice & data
The EPR
engine is hyperseeded
(loaded) with
collective knowledge of wi
commutations through corporate firewalls without compromise to corporate
firewall
integrity.
Mr.
Sherrod studied electrical engineering at the University of Southern Mississippi
while
working
the
U.S.
performance.
Navy and Litton Industries, as an intern in a special Navy sponsored program for naval engineering.
Litton Industries is now a division of Northrop Grumman.
Muralidar Chakravarthi Chief Technology Officer

Mr. Chakravarthi is the creator of the Espion Probabilistic Reasoning System
(EPR)
AI eliminate
basedthe antiyou. These
features literally
need for creating complex rules
Spam patterns
are ever-changing
and reacting
to spam/security threats u
spam gateway messaging solution, delivering a unified threat management
system
for (1)
both
issue temporarily.
MX Mercury,
on the otherand
hand, adapts to your organiz
inbound/outbound threat prevention; email archiving; anti-virus and other
content
policy
time goes on, the Interceptor's AI engine only gets more effe
compliance based systems. Mr. Chakravarthis Ai have been developed patterns.
and Asused
in the Espion
Interceptor since 2003. EPR is a completely self evolving classifier for emails that is able to detect
spam/virus/malware with over 99.86% accuracy. Prior to joining Espion, Mr. InChakravarthi
alsoofwas
addition, MX Mercury boasts
having the
founding member of Team Cajunbot the University of Louisianas Lafayettes entry into the US
Department of Defenses DARPA Grand Challenge where he developed an AI system used to steer
the vehicle. Mr. Chakravarthis AI self learning and auto updating algorithm has not been manually
configured or updated nor any white papers have been written which would provide further guidance
since its initial deployment in 2003.
By using an unmanned vehicle equipped with AI based
technology,Team Cajunbot finished and was ranked 8th worldwide, out of over 1200 entrants in this
unmanned vehicle race. Mr. Chakravarthi received his Master of Science (Computer Science
18
Artificial Intelligence Specialization) from Southern Illinois University in 2003 and

hisAbout
Bachelor
Science Products & Servic
Home
Espion
Our Technology
(Computer Science) from the University of Madras in 2000. Mr. Chakravarthi has recently been
involved as a Key Note Speaker on Robotics at the North Carolina Mathematics and Science
Education Network (PARI Institute North Carolina). Mr. Chakravarthi is currently researching and
developing algorithms for gait processing and self balancing for robots, having built several autolearning hexapods (robots with 6 legs used for future Mars landing projects). Mr. Chakravarthi also has
PROBABILISTIC
REASONING (EPR)
conducted significant foundational research on heuristic algorithms for ESPION
Bayesian
Belief Network
decomposition which he accomplished as part of a National Science Foundation grant to be adapted
into use for classifying radar information in a more intelligent manner without
intervention.

Peter Messineo, Chief Financial Officer
with regulatory
compliance in areas such as HIPAA, GLBA
Mr. Messineo has been an accomplished PA and MBA with over 20 yearsorganizations
of financial
management
experience in private and public accounting. Has been an integral part of corporate management
teams offering contributions in business planning; internal controls and procedures; systems
development and implementation; workplace re-engineering; due diligence for mergers, acquisitions,
and divestures; business valuations and relationship management with Venture Capital investors.
Peter has extensive experience in SEC reporting for various industries. Among Mr. Messineos
accomplishments: Developed and documented internal controls and financial structure of companies.
Including narratives and flowcharts of system procedures and controls, in compliance with SarbanesOxley requirements; Acquisition accounting, including coordination of data conversion and merger of
information systems, securing assets and coordination of financial information processes for
centralized reporting; Operations management.
Documentation of workflows and job function
analysis.Re-engineering department staffing and production. Discussed and implemented job
descriptions and realigned functions to interface between departments of sales and production,
through activity based costing models; Business modeling, budgeting and forecasting. Detailed
through multi location and multi departmentalized companies, including those of foreign entities.
Designed financial modules for analysis for the guidance of business segment profitability and focus
on attainment of corporate objectives as set in the business plan; Prior to joining Espion, Mr. Messineo
was affiliated with Pender Newkirk & Company as an Audit Manager and began his public accounting
career at BDO Seidman, LLP. Mr. Messineo holds a MBA in Finance from the Long Island University
and a BBA in Accounting from Pace University. Mr. Messineos CPA license entitles him to practice in
New York and Florida.
Operations
(+)Enlarge Image
Production
emails and contract,

spam. Independent
third party
Espion orders server hardware from Chicago based MBX Systems on an OEM
then
burns
performance.
our software onto this server hardware, making it an appliance we have named
the Interceptor, which
we in turn, ship to the client. It takes between 1-2 weeks to receive the hardware from MBX, but just a
vs. REACTIVE
matter of hours to build and ship it out to the customer once it is received.PROACTIVE
This extremely
efficient - WHICH IS
battle spam
with a with
reactive approach, we prefer u
process allows Espion to be free of a massive inventory, thus keeping the payables
to MBX
in line
receivables from the customer.
With the anticipated surge of business expected to accompany the new Direct
issue sales
temporarily.initiatives,
MX Mercury, on theEspion
other hand, adapts to your organiz
is looking to outsource the fulfillment function to VARs and other synergistic organizations.
Receiving Orders
Espion only accepts orders from Customers or Channel Partners via a signed evaluation form or and a
Purchase Order Number. A Build Request is then issued by the Operations Manager to the Support
Staff, who then builds and ships the boxes.
Inventory
Raw materials inventory is controlled and tracked by the Director of Operations through a custom
spreadsheet as well as by regular physical counts. This information is tracked from the purchase
19
order to the order number to the shipping company's tracking number and finally
toAbout
theEspion
actualOurservice
Home
Technology
tag.
Products & Servic
Since the actual product is not built until a Build Request is issued, there is no finished product that is
stored. Once the boxes are built, shipped and installed, we have a network operations center that
stores the actual product and customer information.
Qualifying, Billing, and Collecting from Customers

efficient,
and highly
effective
security
Espion currently does not require its customers to apply or qualify for credit.a compact,
Since
more
than
90%
ofsolution. This unique, pr
Interceptor
learn and adapt
to an organizations
all product demo evaluations result in the customer retaining our product,
ourto stick
rate
is very email flow without slow
applied in an email gateway security platform (MX Mercu
impressive. Once our product is shipped for its two week evaluation, been
aneffectively
invoice
is cut by the
accounting department and either mailed, faxed or emailed to the customer. Terms are Net 30 from
that date. Accounts receivables are aged and collection calls are made by the Director of Operations.
Product/Service Support
The Interceptor support team provides installation support, troubleshooting assistance, and user
training. Espion provides email and phone support from 8:00 am CST to 6:00 pm CST.
With the anticipated growth from the outsourced sales projects, Espion is looking to outsource first and
second level support to an outside organization that provides 24/7 tech support. Our chosen
outsourced help desk provider is Buchanan Associates out of Dallas, TX. Buchanan presently
provides support for international firms, such as Mary Kay Cosmetics. Espion will be using a per
incident (emails/calls) contract with Buchanan which will minimize overheard cost for Espion.
Handling Warranties and Returns
Because Espion allows the customer to evaluate the product at no charge, there is currently no written
warranty or return policy. The hardware is protected by a standard MBX 1-year warranty.
Financial Information and Projections
The accompanying chart contains historical performance and projections. These figures and the
attached financial statements to this business plan have not been prepared in accordance with
generally accepted accounting principals, nor have they been presently been audited, reviewed or
compiled by an independent accounting firm. Full historical financial statements for the three most
recent fiscal years are available for review. These projections represent the best estimation of current
(+)Enlarge Image
management of Espion International, Inc. as to the anticipated results of operations of the company if
the assumptions underlying such projections come to pass as contemplated.
There can be no
assurance that any or all of such assumptions will occur as contemplated. performance.
In (000s)
Investment
2009
2010
2011
150
350
2012
2013
PROACTIVE
vs. 2015
REACTIVE - WHICH IS
2014
0 While
$ most companies
0 battle spam with a reactive
0 approach, we prefer u
Reinvest
Revenues
0$
250
775
325
1,625
3,250
625
575
450
301
the day it was installed.

6,500it did $
13,000 $
26,000
CGS
Gross Profit
25
276
55
260
195
1,465
780 $
1,560
3,120
$ 1,439 $
4,020
5,095 $
10,087
22,430
Espion is poised to ramp up its sales with the infusion of a minimum of $350,000 from its current
20
$1,000,000 secured convertible promissory note offering (See accompanying Offering

Memorandum).
Home
About Espion
Our Technology
Attached Exhibits:
A:
Products & Servic
Consolidated Historical Financial Statements and Operational Results for

FYE 2007-2009
B:

Pro forma 3 Year Financial Projections with Assumptions
(+)Enlarge Image
performance.
21

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Products & Servic

Inbound Email Content

ESPION PROBABILISTIC REASONING (EPR)

ESPION INTERNATIONAL INC.

The Espion Probabilistic Reasoning (EPR) engine integrates the industry

a compact, efficient, and highly effective security solution. This unique, pr

Interceptor to learn and adapt to an organizations email flow without slow

been effectively applied in an email gateway security platform (MX Mercu

organizations with regulatory compliance in areas such as HIPAA, GLBA

Products & Services

Inbound Email Content Filte

The EPR engine is hyperseeded (loaded) with collective knowledge of wi

issue temporarily. MX Mercury, on the other hand, adapts to your organiz

been effectively applied in an email gateway security

2010 Espion International, Inc. All Rights Reserved.

Products & Servic

EXECUTIVE SUMMARY ....................................................................................................................................................3

Inbound Email Content

COMPANY OVERVIEW .............................................................................................................................................................5

ESPION PROBABILISTIC REASONING

The Espion Probabilistic Reasoning (EPR) engine integrates the industry

INDUSTRY BACKGROUND .......................................................................................................................................................

Interceptor to learn and adapt to an organizations email flow without slow

been effectively applied in an email gateway security

organizations with regulatory compliance in areas such as HIPAA, GLBA

PRODUCT OVERVIEW .............................................................................................................................................................9

The EPR engine is hyperseeded (loaded) with collective knowledge of wi

PROACTIVE vs. REACTIVE

While most companies battle spam with a reactive approach, we prefer u

Spam patterns are ever-changing and reacting to spam/security threats u

issue temporarily. MX Mercury, on the other hand, adapts to your organiz

2010 Espion International, Inc. All Rights Reserved.

Products & Servic

Interceptor to learn and adapt to an organizations email flow without slow

While most companies battle spam with a reactive approach, we prefer u

Spam patterns are ever-changing and reacting to spam/security threats u

issue temporarily. MX Mercury, on the other hand, adapts to your organiz

2010 Espion International, Inc. All Rights Reserved.

Products & Servic

Core Company Values

Smart we consistently have designed email protection and filtering solutions

Spam patterns are ever-changing and reacting to spam/security threats u

2010 Espion International, Inc. All Rights Reserved.

Products & Servic

Inbound Email Content

Emergence of electronic messaging as a mission critical business application.

ESPION PROBABILISTIC REASONING (EPR)

Proliferation of spam as a barrier to the effectiveness of email.

The EPR engine is hyperseeded (loaded) with collective knowledge of wi

filtering techniques. As a result, successfully addressing the spam problem

Products & Servic

Inbound Email Content

Spam patterns are ever-changing and reacting to spam/security threats u

Businesses require an effective and accurate messaging security solution

issue temporarily. MX Mercury, on the other hand, adapts to your organiz

Products & Servic

Inbound Email Content

ESPION PROBABILISTIC REASONING (EPR)

process hundreds of millions of emails each day across multiple locations,

Interceptor to learn and adapt to an organizations email flow without slow

been effectively applied in an email gateway security platform (MX Mercu

The EPR engine is hyperseeded (loaded) with collective knowledge of wi

Spam patterns are ever-changing and reacting to spam/security threats u