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The VALIS Group, Inc.

Image of founders, RoseAnn Alspektor, CEO, & Erwin Schalker, COOWe would like every VALIS customer to know that our business model is different from most other software publishers in that we have a co-op structure and are revenue funded. We represent talented independent developers and share profits and accountability for their product's success. That's right; no VC's, no stockholders; just us (two owners and the rest subcontractors and developers and lawyers). The VALIS Group started out as an experiment 6 years ago when we were set free due to a company downsizing.

We started our company with the idea that developers are typically undervalued in companies. We wanted to make the inventors profit sharing partners instead of employees. So, instead of requiring ownership of source code, we felt the ownership of the exclusive publishing rights of any product derived from that code or developed for the same market, was all that we would need to protect our interests. This way the developers we work with can hold onto their source code if they agree not to compete with us in any way.

Since we are small, we can offer a profit-sharing model where we fund the publishing and guerilla marketing ourselves and put our sweat equity into launching the product. This is an incubator model. The developers we work with, would not have published their products otherwise because they weren't able to convince a larger publisher to work with them this way. We assume the initial risk of believing in new technologies and proving their market value then we will offer these products, ongoing engineering and their source rights to larger companies for acquisition. We take an active role in our industry's dialogue about how to nurture high technology R&D.
Meeting At VALIS office

We take pride in our ability to recognize talent and vision and we are willing to put our company name on the line for a product we believe in.The developer is responsible for perfecting their product and we help them get recognition. Our next phase is to help find a larger company to purchase our publishing rights to continue the development and marketing of the product with the developer. We see this approach as a real added-value service to the software industry and the user community becaues it provides an opportunity for great tools to reach the market quickly while giving unknown developers a chance to prove they have an innovative product. At the same time, this model reduces the risk to the larger publisher who takes it over. The company who acquires the products can write off the acquisition as a capital expense and everyone wins.

Our structure is a virtual company and is by no means perfect. Given our size, it's pretty amazing that so many people assume that we are a large company. We have been blessed with great support from the press and clever cash flow management.

Everyone works from their preferred location and we gather together throughout the year to exhibit their products at major tradeshows. Our size requires that the developer is responsible for responding to customers needs and providing tech support for each of their products.

The software industry is going through convulsions now. According to a recent newspaper article, Merisel is in serious debt because a lot of its customers are unable to pay. Softkey is $500 million in debt due to a high rate of product returns from stores; and Broderbund warned investors of lackluster sales which immediately dropped the value of their stock.

We managed to fund a group of people from the PROFIT of our sales for the past 6 years. That is pretty amazing given the insanity of this industry. If our model works and we close some licensing deals, we will have more marketing money for the new products we publish and so on.

Here is one of customer's comments on our model:

Subj: Re:VALIS Group Model
Date: 96-09-12 09:29:08 EST
From: WMorse

Roseann -

As a long-time Mac software developer, I would like to congratulate you on your success so far. Ever since you explained your model to me a couple of years ago, I have watching to see what happens. It seemed too good to be true that you would let developers retain ownership of their code, but from the developer's viewpoint, I know that its the ONLY way to keep passionate and inovative product development alive in the long run.

Will Morse

We hope this explanation helps you understand our dynamics better and why when you purchase VALIS products, you are making a significant contribution to helping products from unknown developers see the light of day.

Our Pledge to You! We promise to continue to provide this incubator to unknown inventors in exchange for your support and word-of- mouth advertsing! So tell your friends and associates about us! Thanks.

Call To Action! If you think a product of ours should be acquired by a larger company please contact them and let them know your opinion! If you are a developer with a mission, seeking to launch your product, contact us!

Best Regards, RoseAnn Alspektor
President, CEO
The VALIS Group
POBox 831
Tiburon, CA 94920-0831
800-VALIS 04 (800 825-4704)
TEL: 415/435-5404
FAX: 415/435-9862

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