Internet Society Board of Trustees FINANCIAL REPORT July , 2003 Vienna, Austria

July 2003BoT Fin. Pub July03.ppt2 Agenda 2003 Financial Report May 2003 Financial Statements 2003 Year End Forecast

July 2003BoT Fin. Pub July03.ppt3 ISOC Total Revenues, Expenses and Net Asset Trends - Good Progress Source: Mike Conn’s Treasurer Report

July 2003BoT Fin. Pub July03.ppt4 Balance Sheet Summary as of May 2003 Cash & Cash equivalents totaled $73K at month end (unrestricted cash avail. for operations was approx. 2 weeks).ORG endowment held by ISOC for PIR ($4.2M) and is held in a restricted account Accounts payable = $237K consists mainly of RFC Editor invoices. $130K from Q1 invoice (received in Q2) and remaining is an accrual as we’re invoiced quarterly. Expect to come current end July/early August. Fund Balance - Unrestricted remains negative (-$294K), but this has improved significantly over the past 2 years with a 64% improvement

July 2003BoT Fin. Pub July03.ppt5 P&L Summary as of May 2003 P&L surplus was -$114K ($93K behind budget) Revenues: –Traditional org. revs. behind budget by $252K largely as result of front end loading of revenues and the combination of accruing revenues in a period of aggressive budgeted growth –Org. revenue decline somewhat offset by Program contributions –Platinum revenue not budgeted until Q3/Q4 & expected to be ahead of budget by $50K - $100K Expenses: – Under budget by $85K, largely due to the time required to finalize agreements between ISOC and PIR Year-end forecast = expect to meet budgeted surplus but increasing organizational revenue is critical to this success

July 2003BoT Fin. Pub July03.ppt Year End Forecast Revenues –Organizations: challenging target, today’s running rate = $0.8M vs.budget of $1.3M. Reminder - at a P&L level this means we need to bring in approx. $1.5M in new org. member revenues before year end, unless Platinum –Platinum revenue: expect to meet or exceed budget –Program revenues expected to offset any organizational member shortfall and will have significant added benefit of increasing ISOC’s visibility, thereby aiding future org. member recruitment efforts

July 2003BoT Fin. Pub July03.ppt Year End Forecast (cont’d) Expenses –Non.org Expenses are on track (in fact are under budget), but.org expenses will be higher given higher level of surplus avail. for programs - however they will also be net positive –Revenue recognition tied to expenses –ISOC’s PIR governance - related expenses to be recouped Cost savings budget of $126K on track (and better than original target of $100K)

July 2003BoT Fin. Pub July03.ppt Year End Forecast (cont’d) Summary –Budget continues to be very aggressive given economic and world conditions, therefore actively positioning.org surplus/programs to better and more broadly position ISOC & PIR for the future. –Fully expect to meet budgeted surplus –Working to further diversify our revenue stream: Seinit (thanks to Latif Ladid ), US Cybersecurity & EU security efforts, etc.

July 2003BoT Fin. Pub July03.ppt Budget vs. Forecast & May Actuals K$ 2003EOY F/C 2003 Variance BudJuly BoT May Act. to Budget REVENUES Plat Rev (1) Org Rev (2) 1,3001,000* 289 (252) IM/Chapter Rev (3) PIR Programs 4221, Total Rev (incl. Conf/Other) 2,0722, (178) EXPENSES IM/Chapter Exp Programs (PIR) 4201, Tot. Direct 14071, (120) G&A Total Exp 1,874 2, (85) NET SURPLUS (114) 93 Notes: 1 - Platinum revenue all budgeted in Q3 & Q4 2 - This is a worse case -- we can do better, and will actively work with BoT

July 2003BoT Fin. Pub July03.ppt10 Going forward Board support/commitment –Suggest I contact each board member individually to see how they can support fundraising, how staff can help, etc. –Goal is additional $50K min. per BoT. Success here would mean another $750,000 and would make an ENORMOUS difference in operations. Continue relentless focus on Costs and Revenues Identify and pursue new creative revenue streams and roles for ISOC consistent with our values & purposes Success of.org initiative shows potential for such opportunities