1. Helping people work more effectively. confidential SMB SaaS Applications - that Create Long-Term Revenue Thomas Furr CSO, Smart Online, Inc.

2. 2 confidential Discussion Highlights Why does Microsoft charge for application usage but not for hosting and domain names? How do Hosting companies increase Average Revenue Per User (ARPU)? How do Hosting companies create a Long Term relationship with Customers? High Growth Potential for Future Revenue

3. 3 confidential Agenda Smart Online Snapshot Hosting Strategic Priorities ̶ Compete with Microsoft OfficeLive ̶ Increase Revenue Per User ̶ Create Long Term Customers Summary & Conclusion

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7. 7 What makes us unique Full suite of daily use applications and tools to start and operate a micro business (1 to 25 employees) Partnered with Parallels to enable hosting customers to rapidly launch micro business applications to their business customers Scalable multi-tenant infrastructure and business model that does not compete with hosting partners Ability to offer industry specific vertical solutions Low cost Software-as-a-Service (SaaS) solution

8. 8 confidential Accounting General Ledger Accounts Payable/Receivable Electronic Invoicing Financial Statements Productivity Tools Shared Group Calendar Contact Management Real-time Dashboards Customizable Reports Sales & Customers (CRM/SFA) Sales Pipeline Tracking Sales Projections and Forecasting Customer Support Request Tracking Automated Customer Communication Unique End-to-End Products Business Tools Business Plans Job Description Marketing Plans Legal Forms and Letters Human Resources Management Employee Records Time Tracking Vacation Tracking PTO Requests Websites and E-Commerce Website Order Management Distributor and Customer Management Sales Compensation Affiliate Integration Campaign Management Administration and Reports

9. 9 confidential Unique End-to-End Products

10. 10 confidential On-Demand Software-as-a-Service Statistics International Data Corporation (IDC) forecasts that the on-demand market will grow at a 32% compound annual rate to $14.8 billion by 2011 IDC polled 612 small businesses (less than 100 employees) in 2007: 1.3% already used a SaaS solution, 5.1% were planning to use a SaaS solution within the next 12 months, 16.2% were interested in SaaS solutions, 41.2% indicated no interest in SaaS applications, and 36.2% did not know or had no opinion on the topic. We expect the “no interest” and “do not know/no opinion” categories will decrease over time as SaaS applications move into new markets and verticals. Access Markets International (AMI) Partners believes SaaS adoption is rising steadily in the United States among small (1-99 employees) and midsize businesses (100-999 employees). According to its estimates, 21% and 31% of respective small and midsize businesses use SaaS solutions, double the percentage of adoption in 2004.

11. 11 confidential How do you compete with Microsoft OfficeLive? OfficeLive provides free hosting, email, and domain names OfficeLive charge for daily use applications Ways to Differentiate today: ̶ Leverage Parallels Application Packing Standard (APS) automation for rapid launch of new small business daily use applications ̶ Price bundles that package hosting, website, daily use applications for customers

12. 12 confidential How do you increase Average Revenue Per User (ARPU)? Provide new offerings specific to Small Business needs Provide industry specific vertical Small Business solutions Hosting plus SaaS Small Business applications can increase ARPU substantially: ̶ According Parallels for customers with an average of 8 employees this number can increase from $20 per month to $180 per month

13. 13 confidential How do you create long term customers? Provide low cost Small Business solutions that create efficiencies for your customers Get the Data in the Applications – Salesforce automation, accounting, human resource management Provide superior customer support

14. 14 confidential Conclusions Hosting companies can compete with Microsoft OfficeLive - today. Hosting companies can increase Average Revenue Per User (ARPU) - today. Hosting companies can create a Long Term Relationship with Customers – today. Smart Online and Parallels Creating High Growth Potential for Future Revenue

15. 15 confidential For More Information Thomas Furr tfurr@smartonline.com (919) 765-5000