UNITED STATES OF AMERICA

FEDERAL TRADE COMMISSION

WASHINGTON, D.C. 20580

Division of Enforcement

Bureau of Consumer Protection

Robert M. Frisby

Assistant Director

February 19, 2008

Mr. Bill Gouldd

20625 Cooke Drive

Reno, NY 89521

Dear Mr. Gouldd:

The Division of Enforcement has reviewed your letters of April 27, 2007, and January

25, 2008, requesting a staff advisory opinion regarding whether your proposed direct sales

program "is in compliance with your organization and does not lend itself to being defined as

multi-level marketing, pyramid scheme or endless-chain scheme." I apologize for the delay in

responding to your inquiry.

We have analyzed your proposed direct sales program to determine whether it would

violate Section 5 of the Federal Trade Commission Act as it applies to the marketing of multilevel marketing programs and pyramid schemes, as well as the "Order Preliminarily Approving

Stipulated Final Judgment and Class Action Settlement and Setting Fairness Hearing" entered by

the Court in FTC v. Equinox lilt'! Corp., No CV-S-99-0969 (D. Nev. Apr. 20, 2000). As you

know, you are a defendant in this action and subject to the Order entered therein. Part ill of the

Order prohibits you from, among other things, engaging or participating in any multi-level

marketing program or pyramid scheme as the Order defines those terms.

Based on our review of your proposed direct sales program, we cannot at this time reach

a definitive conclusion regarding whether the program would constitute either a multi-level

marketing program or a pyramid scheme as defined in the above Order. For that reason, we

cannot opine whether the program would comply with the above Order. Nor can we opine that

the program would not violate Section 5 of the FTC Act as the FTC has applied it to the

marketing of such programs and schemes. This is so because whether the program constitutes a

multi-level marketing program would depend in large measure on how it is actually

implemented. Similarly, whether the program would constitute a pyramid scheme in actual

practice would depend on a multitude of factors.

Several features of your proposed program raise concerns regarding whether, as actually

implemented, it would constitute a multi-level marketing program or a pyramid scheme as

defined in the Order. Such features include the potential de facto cost of participation in the

program, and incentives to recruit other participants into a downline. In addition, certain parts of
Bill Gouldd

February 19, 2008

Page 2

your description of your proposed program seem contradictory, which makes us unsure of how

you will implement your program.

As you know, one feature of a multi-level marketing program or pyramid scheme as

defined in the Order is that participants must pay the promoter to participate in the program.

Although your program states that there are no sign up fees to be involved, it also notes that

participants can incur expenses for sales tools like business cards, training materials, and

presentation aids. Presumably participants would obtain such items by purchasing them from

the promoter or someone affiliated with the promoter. It is also unclear whether participants

would incur any training fees or expenses. Depending on how the program is actually

implemented, such expenses for training or for items purchased from the promoter or someone

affiliated with the promoter could become de facto requirements to participate in the program.

In addition, several features of the program as actually implemented could induce

participants to focus on recruitment rather than retail sales. You state, for example, that

supervisory personnel must "document their ability to properly train and develop other sales

people by training a nainimum of two trainees." It appears that, for these trainees to become

supervisory personnel, they will each have to recruit and train two more trainees, and so on,

creating an incentive for endless recruitment.

Your letter of January 25, 2008, states that "[t]here are only two positions under the

company," qualified supervisors and trainees, that "[o]nce a trainee qualifies as a supervisor,

they move away from their supervisor and connect directly with the company," and that "[t]here

is no third position or level." These statements do not appear to leave room in the organizational

structure for a "sales team" as described in your description under Profit Sharing that "additional

profit sharing equal to 5% of the total monthly sales generated by those they have trained

directly and their sales team." This reference to a sales team appears to indicate that a

participant has an incentive to recruit and train another participant who then acquires a sales

team, i.e., a downline, so that the original participant can then profit from the sales of the sales

teamJdownline. This concern is heightened by the program's description of a variety of classes

beyond qualified supervisors and trainees, including "certified supervisor," "supervisory

personnel," "direct sales personnel," "sales personnel," "certified sales people," "sales team,"

and "end users" without defining the classes or indicating clearly how they relate to each other.

The staff does not represent you personally and cannot offer legal advice. Determining

whether a direct sales program constitutes a multi-level marketing program or a pyramid scheme

often requires a factual inquiry into the program itself, the way it is implemented, and the

context sUITounding it. Therefore, as stated earlier, we cannot opine that your program would

-2-
Bill Gouldd

February 19, 2008

Page 3

comply with the above Order or the FTC Act. I We suggest that you seek legal advice regarding

the legality ofthe direct sales program you have proposed before beginning the program.

In accordance with Section 1.3(c) ofthe Commission's Rules ofPractice and Procedure,

16 C.F.R. § l.3(c) (1997), this informal staff opinion has not been reviewed or approved by the

Commission or by an individual Commissioner, and is given without prejudice to the right ofthe

Commission later to rescind the advice and, where appropriate, to commence a law enforcement

action. In addition, the views expressed in this letter are restricted to the facts described above.

Finally, this office retains the right to reconsider its advice, and with notice to the requesting

party, rescind or revoke its opinion ifthe response is used for improper purposes, or ifit would be

in the public interest to do so.

Pursuant to Section 1.4 ofthe Commission's Rules ofPractice and Procedure, 16 C.F.R.

§ lA, this response along with your request for advice will be placed on the public record, subject

to any limitations on public disclosure arising from statutory restrictions, the Commission's rules,

and the public interest. Ifyou wish to request confidential treatment of any ofthe information

you submitted in connection with your request for an advisory opinion, please submit a separate

request stating the reasons why you believe such information is entitled to confidential treatment.

Sincerely,

Robert M. Frisby

Assistant Director

I We did not analyze whether your program would comply with statutes other than the

FTC Act or any ofthe regulations enforced by the FTC.
Bill Gouldd

20625 Cooke Drive

Reno, NV 89521

January 25,2008

Mr. Peter J. Vander Nat

Federal Trade Commission

600 Pennsylvania Avenue, N.W.

Washington, D.C. 20580

Re: Request for an advisory opinion relating to a direct sales program as it relates to the

Federal Trade Commission definitions regarding multi-level marketing.

Dear Mr. Vander Nat;

Hopefully you will remember me, I owned Equinox International, which you testified for as an

expert witness in case #CV-S-99-0969-JBR-RLH. Prior to this case I had spent hundreds of

thousands of dollars in attorney's fees and even employed in-house council to ensure we were

compliant with all laws, regulations and requirements, both state and federal. I was stunned

and traumatized when the F.T.C. charged my company with wrongdoing, as council had

continually assured me that everything we were doing was in complete compliance with all

agency regulations.

I have spent several years researching and developing a new business. This new business

will be invaluable to millions of businesses across America. Due to the current and near future

economic outlook, now would be a perfect time to launch this program. I have been waiting

more than nine months now, as I sent my original correspondence to the attention of Donald

Clark on April 27, 2007. While he assured me several months ago this issue had been

forwarded to the proper department, I have been unable to receive any further information from

him despite repeated unanswered e-mails and phone messages. I was looking through the

court documents and remembered you now work with the F.T.C. and certainly would be one of

those whose expertise would be involved in the determination that my new business concept

was not MLM. I believe there is absolutely no way this could be misconstrued as an MLM, but

I was also assured Equinox was in compliance in the past, only to discover the F.T.C. had a

different opinion.

I am writing to you as I never again want to go through another devastating incident like the

one I experienced as a result of believing and being assured by council that I was working
within the parameters of your agency, only to discover the opinion of the F.T.C. differed from

the opinion of those whom I relied upon for their expertise.

Therefore, I would like to receive confirmation, directly from your organization, that my

proposed business venture in direct sales is in compliance with your organization and does not

lend itself to being defined as a multi-level marketing, pyramid scheme or endless-chain

scheme.

I will describe my business model, marketing strategy and compensation plan, as well as why

I, and my attorneys, feel this concept does not constitute a multi-level marketing, pyramid or

endless-chain scheme. I understand that I am solely responsible for the facts and content of

this correspondence as you will be relying on the accuracy of the information I am providing as

the basis for the rendering of your decision. I would however, like to reserve the right to

possibly change the titles used to describe the level sales people achieve and the commission

amounts they can earn at those levels, as these things may need to be adjusted in order to

achieve maximum market potential. I will be happy to notify you in writing of any changes that

I find become necessary. Rest assured, with these small exceptions, the facts contained

within regarding my request and business plan will remain unchanged.

BUSINESS MODEL

Several years ago my wife started working in the credit card industry. From time to time she

has come to me with issues and problems merchants she had contacted were forced to deal

with. It became readily apparent that many independent business owners are now facing

almost insurmountable obstacles in today's business environment. The number of large

corporations and their fierce competitiveness is unprecedented in the history of American

business. Companies like Wal-Mart, Home Depot, Lowe's and Sports Authority, as well as

major restaurant chains such as Friday's, Olive Garden and Outback Steak House, just to

name a few, have sent countless independent business owners into bankruptcy. Their

massive buying power allows these companies to buy and sell products for less and advertise

more, while earning more profits than the small independent business owners. Additionally,

their outstanding profitability affords these large companies the ability to hire experts in the

fields of advertising, accounting, banking, insurance, computers, software, promotions, sales

training and marketing. As a result, they usually have superior business plans and support

systems in place and actually pay less for them, than their independently owned competitors.

Independent business owners, while understanding many specific aspects of their particular

businesses, often times have little knowledge or experience regarding advertising, marketing,

wholesale product purchasing, banking, credit card processing, check services, gift and loyalty

card programs, professional sales techniques, website development, web hosting, employee

retention and benefit programs, security and alarm monitoring, tool re-imbursement programs,

etc. Business owners are frequently unaware of the many alternatives available to them and

what are competitive rates for these products and services. As a result, large companies can

offer their customers more effective advertising and pricing while offering their employees

higher pay and benefits, putting thousands of independent businesses out of business every

year.
Many small business owners are also unaware of the many products and services available to

them that are designed to increase their sales while also decreasing their expenses and costs.

There are millions of independent businesses across America that could benefit from working

with a company, which I am currently designing, that will offer more competitive alternatives to

the products, services and methods they are currently using. Offering a wide variety of

business support products and services to businesses nationwide will give us the opportunity

to offer better group pricing, saving the owners money, as well as saving them valuable time,

since their needs will be met through one entity rather than dealing with many separate

companies.

I have found that millions of independently owned businesses across America now face the

reality that they must work cooperatively with one another if they are to remain competitive with

the major conglomerates. Cooperative advertising, marketing, purchasing and expert advice in

other areas are becoming a necessity if the independently owned small businesses across the

country are to survive and thrive, yet no one has developed an organization designed to fulfill

these needs and capitalize on this market. The opportunity now exists for the creation of a

central organization, a merchant alliance if you will, to coordinate these efforts and market

these products and services to independent business owners. I intend to create this alliance.

PREPARATION

I have spent limitless hours over the last seven years trying to figure out what went wrong in

my last company and how I could have prevented the debacle from occurring. I now

understand a large sales company must have checks and balances in place designed to

control rogue sales personnel. The business model I have developed and the details

described below have taken countless hours of thought. Every detail was designed to

accomplish three main objectives:

1. All persons who achieve a minimum amount of success will be promoted to work

directly with the company. The company will then be responsible for establishing a

direct relationship and accountability with each person prior to their being able to train

and supervise others. This system is designed to ensure control and compliance of all

sales personnel.

2. We can offer a true equal opportunity, one that allows each person who chooses to get

involved with the company to be immediately assigned to, and begin working directly

with someone who has already proven their ability to be successful in this business.

The immediate assistance and training that can be provided by an experienced person

will increase the chances for the success of the new person by dramatically reducing

the amount of wasted effort, improper conduct and confusion.

3. Sales personnel will receive just compensation for their efforts. This program does not

allow someone to earn income as a result of merely enrolling others. Those who are

responsible for establishing and managing the most business and earning the highest

profits for the company will receive equivalent earnings based on their results.
MARKETING STRATEGY

Direct sales personnel will market these products and services directly to business owners by

approaching them in person, or by phone, and presenting the products and services either

personally or with the aid of video presentations. The wide variety of products will allow our

sales people to present the most obvious products or services that a particular business will

benefit from initially and then add on other products and services as the business owners

begin to realize the benefits of our affiliation. A company that specializes in a particular area,

such as employee benefit programs, will supply each product and service we represent.

Should there be an apparent need for a business solution which does not yet exist, we will

work to design and develop the necessary products and programs. Our company will continue

to develop and offer more innovative products and services, each designed to help the

independent business owners be more successful and profitable. Our strategy will be for the

sales people to develop long-term relationships with the business owners through education,

communication and marketing support.

Our goal is to establish an independent business owner's network, or alliance, which will

coordinate mutual support for all members. By nationalizing the membership, all independent

business owners will have the opportunity to mutually support and promote each other's

businesses, while contributing and benefiting from the massive advertising and buying power

all members mutually can achieve. Obviously it will take many years to develop some of these

programs, products and services. I have already arranged to launch this program, pending

your response, with products that are currently available in the marketplace and plan to add

additional programs as the business network grows.

COMPENSATION PLAN

All sales personnel will be paid commission only. They will be eligible for increased

commissions and profit sharing based on the number and size of accounts that they are

personally responsible for establishing and maintaining. The pay structure will be a stair-step

commission program, allowing the sales people to earn a higher commission percentage as

their total sales volume increases. They will also have the opportunity to earn residual

commissions, paid monthly, for ongoing contracted products and services which are billed

monthly such as website hosting, alarm monitoring and the like, provided the individual

responsible for establishing the account remains actively involved with the company.

My experience during the trial with my last company revealed that the vast majority of

individuals who failed with the Equinox opportunity failed to comply with our company policies.

They either never understood the program and hurt themselves by purchasing more products

than they could sell, or did not completely understand what they were doing and passed their

ignorance on to others who did the same. It became apparent that many of the

representatives violated their signed contract with the company by purchasing more products

than they were allowed to have in their possession under our agreement. They did this in a

futile effort to earn checks on the production of others in their sales organization, while they

were unable to successfully sell the products themselves. I now realize this was a result of the
fact that there was no system in place to insure direct communication from the company to the

sales person in order to establish accountability.

My new concept assures these same short comings simply cannot occur. First and foremost,

the complexity of performing a business analysis, examining account statements, mastering

successful negotiation skills and the proper completion of contracts can be complicated and

will automatically eliminate the unskilled and intellectually challenged. Notwithstanding, it

remains imperative that the company establishes checks and balances to ensure that all sales

people understand and comply with, not only our policies, but also state and federal

regulations.

For these reasons, I have designed a three step "Certification" program that all supervisory

personnel must complete. In order to qualify, an individual must first demonstrate their

understanding and competence of the program, establishing accounts and selling equipment

themselves and achieving a predetermined number of personal sales. Secondly, they will be

required to pass a "Certification Test" demonstrating their comprehension of the company's

policies, qualifications and requirements, along with state and federal regulations and

knowledge of the various products, services and techniques necessary to achieve successful

results dealing with independent business owners. Finally, they will be required to document

their ability to properly train and develop other sales people by training a minimum of two

trainees, while working under the watchful eye of their certified supervisor, who has also

established their ability to successfully sell the products and services to business owners.

These two trainees will then remain under the direction of the supervisor, subsequent to the

promotion of the newly certified individual to the same supervisory level, who will now begin

working directly with the company. Both of these systems are designed to uncover any bad

habits, misconceptions or rogue attitudes.

As the company will obviously benefit from the expansion of the sales force by the efforts of

the certified supervisory personnel whom elect to recruit and train other successful sales

people, those who contribute to the growth of the company will be fairly compensated for their

efforts. Certified supervisors will be paid the difference between the commissions and

residuals the sales trainees they assist are eligible to earn and the commissions and residuals

they are qualified to receive themselves. For example, if a sales trainee is qualified to earn

50% commission on a sale and the supervisor who works with them is qualified to earn 70%,

the supervisor will be eligible to receive the difference of 20%. The same will hold true for the

residual earnings. These commission spreads would be permanent, provided the account

stays active and the sales personnel remain productive. The certified supervisory personnel

will have the opportunity to earn commission splits on the sales, leases and residual incomes

made by the new sales person, as well as on any accounts that they inherit from others

resulting from inactivity or termination.

There are only two positions under the company, qualified supervisors, who are responsible for

their own accounts, as well as assisting trainees establish accounts themselves. Once a

trainee qualifies as a supervisor, they move away from their supervisor and connect directly

with the company, as outlined in the diagram below. There is no third position or level. This is
essentially the same relationship between a sales manager and sales person working at a car

dealership or broker and agent in the real estate or insurance business.

TRAINING BONUS

The most productive certified sales people will also earn the opportunity to participate in two

incentive programs. The training bonus will reward certified sales people who recruit and

successfully train other certified sales people. Since they will essentially be working as sales

managers, training, supervising and assisting sales people, they will be rewarded for their

effort and results by receiving a portion of the profits the company is earning in the form of a

5% commission, based on the profits of the sales produced by those they personally are

responsible for training and assisting, provided they are qualified by producing a

predetermined number of personal account either on a monthly or yearly basis.

PROFIT SHARING

The most successful members of the sales organization will also have the opportunity to

participate in a profit sharing program and receive profit sharing equivalent to the total sales

they are personally responsible for developing. Those who train and develop others who

achieve the best results will be eligible to receive additional profit sharing equal to 5% of the

total monthly sales generated by those they have trained directly and their sales team.

DIRECT SALES PROGRAM

I, as well as my attorneys, believe this is a straightforward direct sales program, not to be

misconstrued as a multi-level marketing, pyramid or endless-chain scheme. Below I have

listed several reasons why this direct sales program does not contain aspects defining multilevel marketing, pyramid or endless-chain schemes.

1. There are no sign-up fees to get involved with this company. The only expenses which

can be incurred would be for sales tools like business cards, training materials and

presentation aids, all of which are not required to participate in the program. Aside from

the business cards which are personalized, any sales tools which are current and in

resalable condition can be returned for a full refund within 30 days, should anyone
involved change their mind. Reasonable exceptions to the 30 day limitation certainly

will be granted.

2. There is no benefit or income earned for enrolling others. The mere act of enrolling

others into the sales program offers no incentive and will produce no income. The only

method of earning income in this sales company is to sell products and services directly

to the end user; business owners.

3. The only commissions paid to anyone will be as the result of products or services being

sold directly to end-users. There are no products or services which can be purchased

by, or sold to, any sales people involved in this company. This will be true with the

exception of someone who happens to own their own business outside of the

opportunity and decides to become end users of the services for the sole benefit of their

other business.

4. All sales volume needed for promotions must be personal sales. Sales personnel will

not be promoted based on the sales of those they enroll. They can however, earn

residual income if they inherit the responsibility of managing accounts which were

established by someone else, but were later transferred to them because the original

sales person was either terminated for cause or chose to no longer take responsibility

for managing that account. As an example; if I was a trainee and you were my certified

supervisor and I established two business accounts before deciding to quit and pursue

a different career, my accounts would then be assigned to you and you would begin

receiving the monthly residual earnings in exchange for your efforts in managing the

accounts and maintaining the relationship with those particular businesses.

5. There is no endless-chain pay plan. Those who decide to enroll other sales people into

the business receive no monetary compensation or benefit from the enrollment. All new

sales personnel will be assigned to work with an experienced and successful certified

supervisor. All supervisory personnel are on the same level, working directly with the

company, and are not stacked, chained, pyramided or part of any down-line. All sales

persons will work with the experienced certified supervisor until they achieve the same

level of success, at which time they are also transferred to work directly with the

company and are not stacked, chained, pyramided or part of any down-line. This will

create a direct relationship between the company and all those individuals who have

proven their ability to succeed in the business, allOWing the company to ensure proper

conduct of the certified supervisory personnel and their influences on new trainees.

This is the same manner in which real estate agents can, through sales and

performance, earn the right to become brokers and work directly with the parent

company while utilizing the efforts of new agents to help the company grow. In

essence, the company works directly with all certified supervisory personnel who, in

turn, work directly with all sales trainees in the same way a national retail sales

company would have district managers overseeing store managers.

6. The only products a sales trainee or certified supervisor will be able to purchase from

the company will be a company sales manual and possibly pertinent video
presentations. There are no commissions paid to anyone for the purchase of these

sales tools. The sales tools are solely designed and made available to sales personnel

in order to help them be more successful in their efforts of selling products and services

to businesses, the purchase of which is not a requirement to work with the company

and is strictly voluntary. These sales tools will be sold with a 30-day money back

guarantee provided they are returned in resalable condition. Certified supervisors must

sign a contract stating they understand they are not permitted to have or possess more

than ten training manuals, designed for immediate availability to new trainees, at any

time without having a documented reason and only after receiving written permission

from the company. Any violation of this policy could result in termination.

7. There will be no products, services or licenses purchased or inventoried by sales

personnel. There will be no other products or services that can be resold to other sales

personnel. There are no sales of equipment or services made to sales personnel either

from the company or from one another. No products can be stored or inventoried by

sales personnel other than a limited amount of sales tools with a refund policy in place

as defined above.

8. All products and services are sold, contracted and shipped directly to end users.

9. Any opportunity to attend sales training programs will be offered on a voluntary basis

and will not be a requirement to work with the company. All participants will be notified

of this policy and will be required to sign an agreement stating these facts prior to

admittance to any such events.

10.All persons involved will be required to provide documentation before making any

income claims. Any false, misleading or undocumented income claims will result in

termination of the individuals responsible and all participants involved with the company

will be notified of such violations and terminations.

SUMMARY

I have spent the last several years meeting with business owners and discussing the problems

they are encountering. I have been exploring alternatives and solutions while completing the

market research necessary to create this company. Most of the business owners I have

spoken with are very excited about the benefits they will gain as a result of becoming part of

this merchant alliance program. No aspects of this business plan have been initiated as I

understand that your agency will not comment regarding ongoing business entities. I am

prepared to begin this business venture after I receive a response from your office and will

continue to prepare for the initial launch as I await your reply.

I feel it is necessary to know that your agency agrees this is simply a direct sales program

before moving forward. Alternatively, I would also appreciate being notified if there are any

aspects of this program you feel may be defined otherwise, so that I can make any necessary

changes to ensure complete compliance prior to the launch of the company.
As unfortunate as it may be, I have learned the hard way that agencies like the Federal Trade

Commission, on occasion, have a different perspective regarding these issues than even

highly respected law firms. This is why I am most interested in understanding your

perspective, as the opinion of your agency is certainly of utmost importance. I am willing to do

anything in my power to assure you my intentions are honorable. My past experience with

your agency was far too costly; both emotionally and financially, to ever want to encounter a

similar experience. I am willing to do whatever it takes to work within your requirements, I am

simply asking for an advisory opinion so I know I am in complete compliance. I do not want to

be involved in anything that could be misconstrued as multi-level marketing or a pyramid

scheme and will continue to make every attempt to ensure I comply with all federal, state and

local laws.

I realize you and your offices are extremely busy and I certainly respect and appreciate your

time and response in this matter. If I can be of any assistance to answer any questions or

provide more information I can be reached by phone at (775) 786-2455, or bye-mail at

BG1 RHINO@AOL.COM. You can rest assured I will work relentlessly to make certain all

those who choose to work with this company will have a realistic opportunity to be successful

in this business-to-business enterprise; confirming every aspect of this endeavor is in

compliance with your agency is an important part of this objective.

Thank you for your time and consideration in these matters.

s~

Bil~'UI~I"""'-
ORIGINAL

BILL GOULDD

20625 Cooke Drive

Reno, NV 89521

April 27, 2007

Mr. Donald S. Clark

Office of the Secretary

Federal Trade Commission

600 Pennsylvania Avenue, N.W.

Washington, D.C. 20580

Re: Request for an advisory opinion relating to a direct sales program as it relates to the

Federal Trade Commission definitions regarding multi-level marketing.

Dear Mr. Clark;

I owned and operated Equinox International and, as a result, was the defendant in case #CVS-99-0969-JBR-RLH. Prior to this case I had spent hundreds of thousands of dollars in

attorney's fees and even employed in house council to ensure we were compliant with all laws,

regulations and requirements, both state and federal. I was stunned and traumatized when

your agency charged my company with wrongdoing, as council had continually assured me

that everything we were doing was in complete compliance with all agency regulations.

I am writing to you as I never again want to go through another devastating incident like the

one I experienced as a result of believing and being assured by council that I was working

within the parameters of your agency, only to discover the opinion of your organization differed

from the opinion of those whom I relied upon for their expertise.

Therefore, I would like to receive confirmation, directly from your organization, that my

proposed business venture in direct sales is in compliance with your organization and does not

lend itself to being defined as a multi-level marketing, pyramid scheme or endless-chain

scheme.

I will describe my business model, marketing strategy and compensation plan, as well as why

I, and my attorneys, feel this concept does not constitute a multi-level marketing, pyramid or

endless-chain scheme. I understand that I am solely responsible for the facts and content of
this correspondence as you will be relying on the accuracy of the information I am providing as

the basis for the rendering of your decision. I would however, like to reserve the right to

possibly change the titles used to describe the level sales people achieve and the commission

amounts they can earn at those levels, as these things may need to be adjusted in order to

achieve maximum market potential. I will be happy to notify you in writing of any changes that

I find become necessary. Rest assured, with these small exceptions, the facts contained

within regarding my request and business plan will remain unchanged.

BUSINESS MODEL

Several years ago my wife started working in the credit card industry. From time to time she

has come to me with issues and problems merchants she had contacted were forced to deal

with. It became readily apparent that many independent business owners are now facing

almost insurmountable obstacles in today's business environment. The number of large

corporations and their fierce competitiveness is unprecedented in the history of American

business. Companies like Wal-Mart, Home Depot, Lowe's and Sports Authority, as well as

major restaurant chains such as Friday's, Olive Garden and Outback Steak House, just to

name a few, have sent countless independent business owners into bankruptcy. Their

massive buying power allows these companies to buy and sell products for less and advertise

more, while earning more profits than the small independent business owners. Additionally,

their outstanding profitability affords these large companies the ability to hire experts in the

fields of advertising, accounting, banking, insurance, computers, software, promotions, sales

training and marketing. As a result, they usually have superior business plans and support

systems in place and actually pay less for them, than their independently owned competitors.

Independent business owners, while understanding many specific aspects of their particular

businesses, often times have little knowledge or experience regarding advertising, marketing,

wholesale product purchasing, banking, credit card processing, check services, gift and loyalty

card programs, professional sales techniques, website development, web hosting, employee

retention and benefit programs, security and alarm monitoring, tool re-imbursement programs,

etc. Business owners are frequently unaware of the many alternatives available to them and

what are competitive rates for these products and services. As a result, large companies can

offer their customers more effective advertising and pricing while offering their employees

higher pay and benefits, putting thousands of independent businesses out of business every

year.

Many small business owners are also unaware of the many products and services available to

them that are designed to increase their sales while also decreasing their expenses and costs.

There are millions of independent businesses across America that could benefit from working

with a company, which I am currently designing, that will offer more competitive alternatives to

the products, services and methods they are currently using. Offering a wide variety of

business support products and services to businesses nationwide will give us the opportunity

to offer better group pricing, saving the owners money, as well as saving them valuable time,

since their needs will be met through one entity rather than dealing with many separate

companies.
I have found that millions of independently owned businesses across America now face the

reality that they must work cooperatively with one another if they are to remain competitive with

the major conglomerates. Cooperative advertising, marketing, purchasing and expert advice in

other areas are becoming a necessity if the independently owned small businesses across the

country are to survive and thrive, yet no one has developed an organization designed to fulfill

these needs and capitalize on this market. The opportunity now exists for the creation of a

central organization, a merchant alliance if you will, to coordinate these efforts and market

these products and services to independent business owners. I intend to create this alliance.

PREPARATION

I have spent limitless hours over the last five years trying to figure out what went wrong in my

last company and how I could have prevented the debacle from occurring. I now understand a

large sales company must have checks and balances in place designed to control rogue sales

personnel. The business model I have developed and the details described below have taken

countless hours of thought. Every detail was designed to accomplish three main objectives:

1. All persons who achieve a minimum amount of success will be promoted to work

directly with the company. The company will then be responsible for establishing a

direct relationship and accountability with each person prior to their being able to train

and supervise others. This system is designed to ensure control and compliance of all

sales personnel.

2. We can offer a true equal opportunity, one that allows each person who chooses to get

involved with the company to be immediately assigned to, and begin working directly

with, someone who has already proven their ability to be successful in this business.

The immediate assistance and training that can be provided by an experience person

will increase the chances for the success of the new person by dramatically reducing

the amount of wasted effort, improper conduct and confusion.

3. Sales personnel will receive just compensation for their efforts. This program does not

allow someone to eam income as a result of merely enrolling others. Those who are

responsible for establishing and managing the most business and eaming the highest

profits for the company will receive equivalent eamings based on their results.

MARKETING STRATEGY

Direct sales personnel will market these products and services to business owners by

approaching them in person, or by phone, and presenting the products and services either

personally or with the aid of on-line video presentations. The wide variety of products will allow

our sales people to present the most obvious products or services that a particular business

will benefd: from initially and then add on other products and services as the business owners

begin to realize the benefits of our affiliation. A company that specializes in a particular area,

such as employee benefit programs, will supply each product and service we represent.

Should there be an apparent need for a business solution which does not yet exist, we will

work to design and develop the necessary products and programs. Our company will continue
to develop and offer more innovative products and services, each designed to help the

independent business owners be more successful and profitable. Our strategy will be for the

sales people to develop long-term relationships with the business owners through education,

communication and marketing support.

Our goal is to establish an independent business owner's network, or alliance, which will

coordinate mutual support for all members. By nationalizing the membership, all independent

business owners will have the opportunity to mutually support and promote each other's

businesses, while contributing and benefiting from the massive advertising and buying power

all members mutually can achieve. Obviously it will take many years to develop some of these

programs, products and services. I have already arranged to launch this program, pending

your response, with products that are currently available in the marketplace and plan to add

additional programs as the business network grows.

COMPENSATION PLAN

All sales personnel will be paid commission only. They will be eligible for increased

commissions and profit sharing based on the number and size of accounts that they are

personally responsible for establishing and maintaining. The pay structure will be a stair-step

commission program, allowing the sales people to eam a higher commission percentage as

their total sales volume increases. They will also have the opportunity to eam residual

commissions, paid monthly, for ongoing contracted products and services which are billed

monthly such as website hosting, alarm monitoring and the like, provided the individual

responsible for establishing the account remains actively involved with the company.

My experience during the trial revealed that the vast majority of individuals who failed with the

Equinox opportunity failed to comply with our company policies. They either never understood

the program and hurt themselves through ignorance, or did not completely understand what

they were doing and passed their ignorance on to others who did the same. It became

apparent that many of the representatives violated their signed contract with the company by

purchasing more products than they were allowed to have in their possession under our

agreement. They did this in a futile effort to eam checks on the production of others in their

sales organization, while they were unable to successfully sell the products themselves. This

was a result of the fact that there was no system in place to insure direct communication from

the company to the sales person in order to establish direct accountability.

My new concept assures these same short comings simply cannot occur. First and foremost,

the complexity of performing a business analysis, examining account statements, mastering

successful negotiation skills and the proper completion of contracts can be complicated and

will automatically eliminate the unskilled and intellectually challenged. Not with standing, it

remains imperative that the company establishes checks and balances to ensure that all sales

people understand and comply with not only our policies, but also state and federal

regulations.

For these reasons, I have designed a three step "Certification" program that all supervisory

personnel must complete. In order to qualify, an individual must first demonstrate their
understanding of the program and their ability to establish accounts and sell equipment

themselves by achieving a predetermined number of personal sales. Secondly, they will be

required to pass a "Certification Tesf' demonstrating their comprehension of the company's

policies, qualifications and requirements, along with state and federal regulations and

knowledge of the various products, services and techniques necessary to achieve successful

results dealing with independent business owners. Finally, they will be required to document

their ability to properly train and develop other sales people by training a minimum of two

trainees, while working under the watchful eye of their certified supervisor, who is also

successful at selling the products and services to business owners. These two trainees will

then remain under the direction of the supervisor, subsequent to the promotion of the newly

certified individual to the same supervisory level, who will now begin working directly with the

company. Both of these systems are designed to uncover any bad habits, misconceptions or

rogue attitudes.

As the company will obviously benefit from the expansion of the sales force by the efforts of

the certified supervisory personnel whom elect to recruit and train other successful sales

people, those who contribute to the growth of the company will be fairly compensated for their

efforts. Certified supervisors will be paid the difference between the commissions and

residuals the sales trainees they assist are eligible to eam and the commissions and residuals

they are qualified to receive themselves. For example, if a sales trainee is qualified to eam

50% commission on a sale and the supervisor who works with them is qualified to eam 70%,

the supervisor will be eligible to receive the difference of 20%. The same will hold true for the

residual eamings. These commission spreads would be permanent, provided the account

stays active and the sales personnel remain productive. The certified supervisory personnel

will have the opportunity to eam commission splits on the sales, leases and residual incomes

made by the new sales person, as well as on any accounts that they inherit from others

resulting from inactivity or termination. This is essentially the same relationship between a

sales manager and sales person working at a car dealership or broker and agent in the real

estate or insurance business.

TRAINING BONUS

The most productive certified sales people will also eam the opportunity to participate in two

incentive programs. The training bonus will reward certified sales people who recruit and

successfully train other certified sales people. Since they will essentially be working as sales

managers, training, supervising and assisting sales people, they will be rewarded for their

effort and results by receiving a portion of the profits the company is eaming in the form of a

5% commission, based on the profits of the sales produced by those they personally are

responsible for training and assisting.

PROFIT SHARING

The most successful members of the sales organization will also have the opportunity to

participate in a profit sharing program and receive profit sharing equivalent to the total sales

they are personally responsible for developing. Those who train and develop others who
achieve the best results will be eligible to receive additional profit sharing equal to 5% of the

total monthly sales generated by those they have trained directly and their sales team.

DIRECT SALES PROGRAM

I, as well as my attorneys, believe this is a straight forward direct sales program, not to be

misconstrued as a multi-level marketing, pyramid or endless-chain scheme. Below I have

listed several reasons why this direct sales program does not contain aspects defining multilevel marketing, pyramid or endless-chain schemes.

1. There are no sign up fees to get involved with this company. The only expenses which

can be incurred would be for sales tools like business cards, training materials and

presentation aids, all of which are not required to participate in the program. Aside from

the business cards which are personalized, any sales tools which are in current and in

resalable condition can be returned for a full refund within 30 days, should anyone

involved change their mind. Reasonable exceptions to the 30 day limitation certainly

will be granted.

2. There is no benefll: or income earned for enrolling others. The mere act of recruiting

others into the sales program offers no incentive and will produce no income. The only

method of earning income in this sales company is to sell products and services directly

to end user business owners.

3. The only commissions paid to anyone will be as the result of products or services being

sold to retail, end-user accounts. There are no products or services which can be

purchased by, or sold to, any sales people involved in this company. This will be true

with the exception of someone who happens to own their own business outside of the

opportunity and they decide to become end users of the services for the sole benefit of

their other business.

4. All sales volume needed for promotions must be personal sales. Sales personnel will

not be promoted based on the sales of those they enroll. They can however, earn

residual income if they inherit the responsibility of managing accounts which were

established by someone else, but was later transferred to them because the original

sales person was either terminated for cause or chose to no longer take responsibility

for managing that account. As an example; if I was a trainee and you were my certified

supervisor and I established two business accounts before deciding to quit and pursue

a different career, my accounts would then be assigned to you and you would begin

receiving the monthly residual earnings in exchange for your efforts in managing the

accounts and maintaining the relationship with those particular businesses.

5. There is no endless-chain pay plan. Those who decide to enroll other sales people into

the business receive no monetary compensation or benefIT from the enrollment. All new

sales personnel will be assigned to work with an experienced and successful certified

supervisor. All supervisory personnel are on the same level, working directly with the

company, and are not stacked, chained, pyramided or part of any down-line. All sales
persons will work with the experienced certified supervisor until they achieve the same

level of success, at which time they are also transferred to work directly with the

company and are not stacked, chained, pyramided or part of any down-line. This will

create a direct relationship between the company and all those individuals who have

proven their ability to succeed in the business, allowing the company to ensure proper

conduct of the certified supervisory personnel and their influences on new trainees.

This is the same manner in which real estate agents can, through sales and

performance, eam the right to become brokers and work directly with the parent

company while utilizing the efforts of new agents to help their company grow. In

essence, the company works directly with all certified supervisory personnel who, in

tum, work directly with all sales trainees in the same way a national retail sales

company would have district managers overseeing store managers.

6. The only products a sales trainee or certified supervisor will be able to purchase from

the company will be a company sales manual and possibly pertinent video

presentations. There are no commissions paid to anyone for the purchase of these

sales tools. The sales tools are solely designed and made available to sales personnel

in order to help them be more successful in their efforts of selling products and services

to businesses, the purchase of which are not a requirement to work with the company

and are strictly voluntary. These sales tools will be sold with a 30-day money back

guarantee provided they are retumed in resalable and current condition. We will

obviously make announcements prior to, and make exceptions immediately following,

any changes in the sales materials. Certified supervisors must sign a contract stating

they understand they are not permitted to have or possess more than ten training

manuals, designed for immediate availability to new trainees, at any time without having

a documented reason and only after receiving written permission from the company.

Any violation of this policy could result in termination.

7. There will be no products, services or licenses purchased or inventoried by sales

personnel. There will be no other products or services that can be resold to other sales

personnel. There are no sales of equipment or services made to sales personnel either

from the company or from one another. No products can be stored or inventoried by

sales personnel other than a limited amount of sales tools with a refund policy in place

as defined above.

8. All products and services are sold, contracted and shipped directly to end users.

9. Any opportunity to attend sales training programs will be offered on a voluntary basis

and will not be a requirement to work with the company. All participants will be notified

of this policy and will be required to sign an agreement stating these facts prior to

admittance to any such events.

10.AII persons involved will be required to provide documentation before making any

income claims. Any false, misleading or undocumented income claims will result in

termination of the individuals responsible and all participants involved with the company

will be notified of such violations and terminations.
SUMMARY

I have spent the last several years meeting with business owners and discussing the problems

they are encountering. I have been exploring alternatives and solutions while completing the

market research necessary to create this company. Most of the business owners I have

spoken with are very excited about the benefits they will gain as a result of becoming part of

this merchant alliance program. No aspects of this business plan have been initiated as I

understand that your agency will not comment regarding ongoing business entities. I am

prepared to begin this business venture after I receive a response from your office and will

continue to prepare for the initial launch as I await your reply.

I feel it is necessary to know that your agency agrees this is simply a direct sales program

before moving forward. Alternatively, I would also appreciate being notified if there are any

aspects of this program you feel may be defined otherwise, so that I can make any necessary

changes to ensure complete compliance prior to the launch of the company.

As unfortunate as it may be, I have learned the hard way that agencies like the Federal Trade

Commission, on occasion, have a different perspective regarding these issues than even

highly respected law firms. This is why I am most interested in understanding your

perspective, as the opinion of your agency is certainly of utmost importance. I am willing to do

anything in my power to assure you my intentions are honorable. My past experience with

your agency was far too costly; both emotionally and financially, to ever want to encounter

another one. I am willing to do whatever it takes to work within your requirements, I am simply

asking for an advisory opinion so I know we are in compliance. I do not want to be involved in

anything that could be misconstrued as multi-level marketing or a pyramid scheme and will

continue to make every attempt to ensure we comply with all federal, state and local laws.

I realize you and your offices are extremely busy and I certainly respect and appreciate your

time and response in this matter. If I can be of any assistance to answer any questions or

provide more information I can be reached by phone at (561) 702~1321, or bye-mail at

BG1RHINO@AOL.COM. You can rest assured I will work relentlessly to make certain all

those who choose to work with this company will have a realistic opportunity to be successful

in this business-to-business enterprise. Confirming that every aspect of this endeavor is in

complete compliance with your agency is an important aspect of this objective.

Thank you for your time and consideration in these matters.

Cc: Phil Sechler

Williams & Connolly