BAIS, Inc Backgrounder

Your Trusted Datacenter Partner

Overview
What began in 1995 as a way for two entrepreneurs to reduce their individual Internet costs on the road to the promised land of e-Commerce riches, has evolved into one of Northern California’s largest, most respected hosting and high-speed Internet access providers. Bay Area Internet Solutions, Inc. serves a broad range of customers from individual professional users to enterprises of all sizes and types of industry focus.

The Company delivers a wide range of service offerings and related products designed to meet the needs of varying customer applications and requirements. Integral to its success is Bay Area Internet Solutions’ commitment to the highest levels of customer service and its nimble responsiveness to client needs that enable the company to go beyond "cookie- cutter" programs and provide high quality, customer-specific solutions.

Bay Area Internet Solutions most recently expanded into a new 24,000 square foot, Class-A Internet Data Center (IDC) facility, which rivals or surpasses the capabilities of its competitors in the hosting, managed services, and co-location markets.

As a leading provider of Internet solutions targeted to small, medium, and large enterprises, Bay Area Internet Solutions is leveraging its current stable customer base and expanding services to include high quality managed services ranging from pure co-location to managed infrastructure, as well as high-speed access solutions and other complimentary managed services.

Services include:

• Co-location from partial rack solutions to private data vaults
• High-Speed Leased Lines (T1, T3, OC3)
• Shared and Dedicated Web Hosting
• Managed or Dedicated Servers
• Managed Hosting/Infrastructure
• Managed VPN
• Managed Security
• Infrastructure Deployment and Consulting
• Security Consulting
• ISDN, DSL, and Dial-up Access

Product offerings include:

• Customer Premise Equipment
• VPN Platforms
• Security (Firewall) Platforms
• Intel OEM Rackmounted Server Platforms

Solution deliverables include:

• High Availability Solutions
• Scalable Access Solutions
• Managed Services Solutions
• Secondary IT/Network Solutions

Bay Area Internet Solutions’ Founders
Principal founders George E. Navas and Thomas Wye met in 1995 while Mr. Navas was consulting to Amdahl Corporation on a project in which Mr. Wye served as the lead project manager and staff engineer. They quickly discovered that they shared a dream of riding the Internet’s sudden popularity in e-Commerce companies they hoped to launch. Mr. Navas expected to operate ClassAds, a turnkey display classified advertising service, and Mr.Wye planned to deliver stock quotes over the Web in real time.

They determined the bandwidth necessary to drive their fledgling services was incredibly expensive by today’s standards, and they decided to share the cost of a fractional T1 line to launch their respective companies. It soon became apparent that other fledgling entrepreneurs were also looking for high-speed access at affordable prices. Knowing their fractional T1 had excess capacity, the two began to offer connectivity out of the corner of a 200 square foot facility in Santa Clara, California in 1996. With six modems and a single server, Bay Area Internet Solutions took flight and quickly established both a domestic and international customer base. Both founders soon realized that their sideline business was showing more promise than their initial ventures, and they quickly shifted focus to a joint ISP venture, which was proving to be a winning formula.

Within months of refocusing their connectivity business, the company was financially breaking even and the two began looking into expansion. In late 1997, they moved into a 3,500 square foot facility, added staff, and began offering a broader range of Internet access solutions, as well as consulting and co-location services.

By 2000, the company had outgrown its Santa Clara home and moved to a 16,400 square foot facility on Zanker Road in San Jose, California, where it remained until September 2002. By then, the Internet bubble had burst and while other ISP organizations collapsed under the weight of their self-fed frenzy to expand quickly and at any cost, Bay Area Internet Solutions’ controlled growth and expansion enabled its founders to consistently increase revenue and profits with zero debt. The founders saw an opening to expand their business once again.

Expansion Plans
With the co-location playing field littered with wounded multi-national corporations and overly zealous ISPs, fully outfitted co-location facilities pock-marked the Northern California commercial real estate landscape. Seeing the opportunity to upgrade Bay Area Internet Solutions’ capabilities and again expand service offerings, the founders acquired a 24,000 square foot Internet Data Center (IDC) that was vacated by a leading failed hosting provider. For a fraction of the cost to build out such facility, the company acquired the new IDC complete with sophisticated infrastructure and equipment, including large scale diesel generators, battery back-up (UPS) systems, raised flooring, fire suppression systems, cages, racks, and Internet network connectivity that would have required millions of dollars of investment to duplicate. Their savvy acquisition has positioned Bay Area Internet Solutions to continue to deliver tailored, customized solutions with a full range of services that today’s customers demand. The new IDC also enhances the company’s customer service capabilities and will allow Bay Area Internet Solutions to continue to quickly respond to emerging technology changes dictated by the rapidly changing ISP market.

The Company will begin to de-emphasize marketing and sales of lower margin, higher volume services like shared hosting, dial-up, broadband, and other commodity offerings, and renew its focus on higher margin services, including co-location, high-speed leased line access, and managed infrastructure service offerings.

Bay Area Internet Solutions has consistently grown revenues since its inception and will continue to do so in the future. The Company is currently considering a supplemental equity investment to make additional modest infrastructure purchases and expand its technical and sales forces. The Company will also consider other acquisition opportunities to fuel its growth.

The Market and Market Strategy
With huge Internet infrastructure investments, the complexity of successfully deploying and maintaining high-availability Internet operations continues to increase. To succeed, businesses must successfully hire the talent and maintain the infrastructure needed to solve the intricacies of deploying and maintaining complex Internet operations. Many enterprises simply cannot afford to do this and rely on outsourcing this entire burden to enhance the business’ core competencies. The current recession has exacerbated these financial pressures on both small and large customers.

Today, a decreasing number of financially troubled large providers are consolidating their overbuilt IDCs and brokering solutions with multiple partners. Large providers are consolidating their IDCs in an effort to reduce monthly fixed expenditures, while also reducing the quantity, breadth, and quality of services historically provided to large- and medium-sized enterprises with increased prices. Some large providers have recently filed for protective bankruptcy and have sold or auctioned off their customer base as a result of their ill financial health. Contrastingly, small providers are not positioned to provide high-quality services with their inferior facilities and commodity solutions based purely on low prices.

The current economic climate has produced vast amounts of excess office space in Northern California, plus numerous vacant IDCs abandoned by troubled providers. Many IDCs were vacated during construction as the Internet bubble burst. A few were shed once completed and made available for sale or lease at bargain rents, creating a two-fold market opportunity for Bay Area Internet Solutions. The first opportunity is to snap up Class-A IDC space without significant capital expenditures and begin marketing new and expanded services directly to current and new customers. The second opportunity is to acquire competitors’ customers from among the growing list of distressed providers. These potential new clients are facing increasingly uncertain Internet services due to their existing providers’ tenuous finances and from business closures and consolidations among debt-ridden players.

As such, Bay Area Internet Solutions expects to capitalize on its stability and secure increasingly larger market shares at what is an opportune time for secure organizations to move ahead. This past July, the prestigious San Jose Business Journal designated Bay Area Internet Solutions as the fourth largest co-location company serving the Northern California marketplace, thus reinforcing the rock solid foundation of the Company.

Existing Customers
"Bay Area Internet has always been a stable, responsive, high quality provider for our co-location and managed infrastructure needs. The decision to acquire a larger IDC is clearly an indication that we have chosen the right provider, and that they can continue to meet our growing needs well into the future," says Christopher Cunniffe, Circulation Director for Psychology Today Online.

Bay Area Internet Solutions prides itself on superior customer service. Among the growing list of organizations whom appear to agree are clients like: Sun Microsystems, Inc; Hewlett-Packard, Inc.; International Data Corporation (IDC); Santa Clara Valley Transit Authority (VTA); Actify, Inc.; Good Samaritan Hospital (San Jose, CA); Xara Online, Limited; Akamai Technologies; Genentech, Inc.; Ideas International Limited; Paramount Pictures; The Flint Center; Cacheflow Inc.; Golden Bay Federal Credit Union; and the Diocese of San Jose, California.

Tom Wye, CEO and Vice President of Network Operations, manages Bay Area Internet Solutions’ day-to-day operations and serves as one of the company’s key technical resources. Mr. Wye possesses broad cross-platform and operating system knowledge. He brings extensive networking, operating system design and implementation, and project and team management experience to Bay Area Internet Solutions from his fourteen-year career at Amdahl Corporation, where he also served as the company’s resource for clustered networking, high availability, and fail-over projects. Mr. Wye holds a Bachelor of Science degree in Computer Science from Southern New Hampshire University and is a co-founder of Bay Area Internet Solutions.

George E. Navas, Board Member, has over 25 years of IT experience with leading Silicon Valley organizations. Mr. Navas brings extensive knowledge in the networking, programming, design, and management arena. As a successful independent consultant for most of his career, Mr. Navas has worked in the medical, financial, defense, high-tech, research, and start-up industry. He has worked for institutions such as IBM, Syntex, TRW, AMD, EPRI research, Amdahl, Bell Laboratories, and NASA Ames Research. Mr. Navas possesses extensive experience on various platforms such as PC, mainframes, routers, and supercomputers, and a multitude of operating systems and programming languages. Some of his career highlights include Lead Systems Programmer for National Aerospace System, design and implementation of a massive storage system for NASA Ames research, and co-founder of Bay Area Internet Solutions.

Jane Wye, CFO, manages the day-to-day financial operations of Bay Area Internet Solutions, as well as overseeing Human Resource operations. Ms. Wye brings both technical expertise and accounting knowledge to Bay Area Internet Solutions. Prior to Bay Area Internet Solutions, Ms. Wye designed and implemented critical billing and accounting systems for AT&T and served as an Oracle Database Administrator and Human Resource system designer at Radford Associates, specializing in executive and high technology benefits and compensation. Ms. Wye holds an Associate of Science degree and a Bachelor of Science degree in Management Information Systems from Southern New Hampshire University and is also a co-founder of the Company.

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