SaaS Enterprise Portal Developer EnterConnect, Inc. Offers $12 Million in Convertible Notes

EnterConnect Inc. , San Jose, CA, a developer of enterprise portal strategies and best practices, is seeking to raise $12 million through a convertible note offering paying a coupon of 6%.

In a presentation to investors on Wednesday evening, Sept. 5 in New York, CEO Sam Jankovich spelled out the company's business plans, its market outlook, and the rationale for the funds raise.

Capitalizing on Projected Rapid Growth in SaaS

EnterConnect (www.enterconnect.com), less than a year old in its current incarnation, is seeking to capitalize on the overwhelming growth in demand for software-as-a-service (SaaS) offerings in the enterprise marketplace as a substitute for the traditional software product sales. Instead of paying for a software product all at once, SaaS markets the software as a subscription service, available on the Internet. The subscription service creates a stream of income, rather than a one-time sale.

In his presentation, Jankovich used SaaS growth forecasts from Gartner, Inc., a respected technology analytical and consulting firm to bolster his case for a strong company business outlook. Noting the Gartner forecast of a 48% annual SaaS growth rate in the next several years vs. 6% growth for the traditional enterprise software market, the company says it plans to leverage its products and delivery platform to gain market share in the coming years. He noted the Gartner forecast of $19.3 billion in worldwide SaaS worldwide revenues by 2011, or about 25% of total software revenues.

The proprietary EnterConnect software application provides document management, content management, collaboration, search and security. It was developed by, and acquired from, another company in which Jankovich had a substantial interest. Jankovich said that the program has taken about eight years to develop in its present form -- with all of its current properties and capabilities.

The company's products and SaaS offerings are deployed through its own proprietary application exchange, which also Saas-enables other Independent Software Vendors (ISVs) to deliver their own applications.

EnterConnect has the following assets: a proprietary portal application platform; two business-ready product lines; partnerships with software industry leaders BEA Systems and Oracle; and a tiered distribution channel program, including direct and indirect channels. It plans to launch a scalable Internet sales channel called SOAPPS.com this coming Monday, September 10, 2007, in conjunction with BEA Systems.

The company is marketing its products and applications with the theme: Transforming Business On-Demand: Moving Software and Productivity Online.

Structure of the Note Offering

The new $12 million convertible note offering has been fashioned by Bridgestream Partners, of San Diego. The offering is structured using Bridgestream's Proprietary Principal Protection Program ("P4") "to fully collateralize 100% of the [$12 million] principal in case of a default." The structure uses "senior life settlement insurance policies that are A-rated or better, plus an over-allotment purchase of these policies to provide the necessary fully collateralized protection of payment the of the original note principal amount. In addition, the premiums on these policies are prepaid for the life of the term to assure no possible lapse in policy protection."

The new offering follows a raise of $2.1 million in November 2006 to acquire the EnterConnect platform from Enterpulse, Inc., a Georgia corporation; as well as a July 31, 2007 private placement that raised $585,000.