1. Business Plan
Contact: Donald Kernan, Jr.
Phone: 866-904-2292
International: 786-245-8180
Cell: 414-469-8914
E-mail: don@dreamertopia.com
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MISSION
DreamerTopia will excel in establishing an e-commerce, online
promotion, online entertainment, and social networking
environment that will serve as an “evolution” to community-based
websites.
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Table of Contents
Executive Summary...........................................................................................................4
Use Of Funds ................................................................................................................................. 5
Company Ownership.................................................................................................................. 5
Company Location ..................................................................................................................... 5
Exit Strategy................................................................................................................................... 6
Services ...............................................................................................................................7
Development Plan....................................................................................................................... 8
Market Analysis Summary ................................................................................................9
Market Segmentation ...............................................................................................................13
Competitive Comparison.........................................................................................................14
Strategy and Implementation Summary.....................................................................15
Competitive Edge......................................................................................................................15
Marketing Strategy ....................................................................................................................15
Management Summary.................................................................................................18
Management Team Gaps .......................................................................................................19
Financial Projections .......................................................................................................20
Appendix ..........................................................................................................................29
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Executive Summary
Social networks provide a dynamic way for individuals to interact online, yet most contain only ways to
connect communities. DreamerTopia Social Media Corp. (also referred to as “the Company” and
“Dreamertopia”) is proud to launch a start-up, premier online social network that will allow consumers
to connect with friends, while engaging in online shopping, streaming video and television, as well as
up-to-minute news. The Company will be the first to connect users to not only friends, but the full
scope of media, entertainment, shopping, and education available online. DreamerTopia will be a
browser-based application, but the Company will also develop a mobile application. The Company will
additionally develop its own advertising network to connect companies with users. DreamerTopia will
begin development in the fall of 2011.
Social interaction has become one of the biggest draws to the web. As the Internet has developed in
technological sophistication, the size of its user base has grown exponentially. In the United States,
63% of Internet users engage in social networking. The massive number of global users has made
social networking lucrative for advertisers; in 2011, Facebook is expected to generate a staggering $4
billion in advertising revenue. As more users across the globe adopt smartphones, it has become
easier than ever to connect to the Internet. An astounding 1.6 billion mobile phones were sold to
global end-users in 2010, including more than 296 million smart phones. DreamerTopia will elevate
social connectivity by providing users with more interactive features, more ways to communicate, the
opportunity to learn about topics of global relevance, and the ability to bridge the gap between social
interaction and universal discovery.
DreamerTopia will engage in a number of promotional tactics to generate awareness of its
comprehensive social media platform. Initially, the Company will utilize a strategy that involves
giveaways of branded high-end products including galaxy tablets and cell phones to gain the attention
of early adopters. These promotional items will give users access to participate in the beta testing of
its first version. Approaching full launch of the platform, DreamerTopia will utilize a robust web
marketing strategy to improve visibility from users and the public at large. The Company will work
with companies such as ReTargeter to better access consumers through online advertising, as well as
aligning with Hubze and SiteSolutions.com to facilitate the creation of a web strategy featuring site
design, social media, SEO, backlinks, affiliate and referral websites, and more. These strategies will be
put into play to drive traffic and gain a comfortable user base of 1 million. Moving forward,
DreamerTopia intends to offer the site in multiple languages to broaden its scope globally as the most
complete browser-based application available on the market.
Donald Kernan Jr. will own and operate the Company. He is joined by a team of seasoned team of
managers. Mr. Kernan Jr.’s prior professional experience while cultivating his vision for the Internet
platform included the creation of Banner Broker, Inc. The Toronto-based company provides an online
banner ad and profit sharing platform for countless domestic and global accounts. He was responsible
for organizing and establishing the affiliate company as well as the holding company, and led
advertising growth to include $1.25 million in sales over just three months. Most notably, Mr. Kernan
Jr. was able to not only design the advertising platform for affiliates, but was able to sign up more than
12,000 users in two months, and 2,500 active users within weeks of the company’s formal launch date.
Mr. Kernan Jr. studied at DeVry University as well as Marquette University, has completed Wealth
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Masters training, and is Six Sigma Certified. For detailed biographical information on Mr. Kernan Jr., as
well as his team, please see Management Summary.
To achieve the Company’s objectives, DreamerTopia, Corp. will be capitalized by a combined ~$191.8
million from multiple sources of funding including loans, investment, and PPP financing (see the table
below under Use of Funds).
Use Of Funds
The table below outlines the sources and uses of funding:
DreamerTopia.co $700,000
Fractal Dimensions - Loan $20,000,000
Fractal Dimensions - Investment $15,000,000
Skyline Financial $100,000
Corporate Venture Partners $225,000
BMT $100,000
Tradeliner $225,000
Gemini Small Cap $80,000,000
MT-799 Small Cap PPP $476,000
Miscellaneous PPP $75,000,000
Total Sources $191,826,000
Start-up Expenses
Operating Costs $78,500
Server Costs $69,000
Salaries $399,300
True Global $1,283,000
Funding Costs $75,000
Total Start-up Expenses $1,904,800
Start-up Assets
Starting Cash Balance $186,901,200
Inventory $0
Other Current Assets $0
Equipment $20,000
Property/Equipment/Buildout $3,000,000
Other Long-term Assets $0
Total Start-up Assets $189,921,200
Total Uses $191,826,000
SOURCES&USES
SOURCES OF FUNDS
USES OF FUNDS
Company Ownership
DreamerTopia Social Media, Corp. is registered as a corporation in the state of Wisconsin. The
Company is wholly owned by parent company, DreamerTopia, Corp., which is wholly owned by Donald
Kernan, Jr.
Company Location
The Company will be headquartered in Milwaukee, Wisconsin but will operate virtually.
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Exit Strategy
DreamerTopia anticipates exiting by the end of the fifth year of operations through either a merger
and acquisition scenario or by offering ownership shares on the public market. The Company will
welcome a suitable merger and acquisition scenario whereby it is acquired by a larger company
capable of funding its continued expansion or lending existing support structures to the Company’s
operation while properly valuing future services. Similarly, the Company may instead undergo a
merger that facilitates its increased market penetration through service diversification, expanded
geographic reach, and increased contacts and resources. DreamerTopia will also not rule out the Initial
Public Offering (IPO) route, nor will it eliminate the possibility of choosing to remain “as-is,” i.e.,
privately-funded and operated. The ultimate decision will depend upon market forces and the wishes
of both the founders and key stakeholders.
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Services
While social networks allow members to create connections and share a portion of their lives with
friends past and present, these sites are often limited to just this function. DreamerTopia will be the
first social network that also provides members the opportunity to watch streaming television, shop
online, and keep up to date on the latest news. The website will provide unmatched navigation,
allowing users to gain access to all the vital components of their life though in just centralized hub.
DreamerTopia will retain the functionality users have come to enjoy on traditional social networks,
including a personal profile page to share photos, upload videos, and integrate web content. In
addition, the website will also offer video and live television streaming for a small fee, as well as a
marketplace and online auction. DreamerTopia will connect users with friends, acquaintances, and
professional connections. The Company will provide readers with a feed that aggregates the latest in
up-to-date news feeds from around the web. DreamerTopia will make it possible for an avid Internet
user to stay in touch with all the vital components of his or her virtual life.
The Company strives to provide a portal where users can not only monitor the world around them, but
engage with it. DreamerTopia will feature the following:
Online auction: The Company will allow users to buy and sell merchandise online to the highest
bidder.
Marketplace: For individuals not interested in auctioning items, the Company will provide an online
marketplace where consumers can sell wares.
Streaming video: Users will connect with friends through the live video feed.
Streaming television: The Company will offer free streaming of television from across the globe. This
will entice users to join the site.
Online gaming network: Members will be able to connect and play computer against each other
through the site.
News aggregator: The Company will provide access to news from around the Internet all feeding into
one spot. Members will be able to customize the news sources.
Business networking platform: Members will be able to use the website to store their resumes,
search for jobs, or connect with colleagues.
Educational information: The Company will connect users to educational resources around the web
through an online portal.
Streaming radio: The Company will provide listeners with access to a variety of radio stations, all
streaming live, through the website.
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Advertising platform: Specifically for marketers, the website will sell space on the website. The
Company will sell banner advertisements as well as video ads.
Development Plan
Upon receipt of funding, the Company will begin working with a web developer to execute its vision.
DreamerTopia will be in development by the fall of 2011. The Company anticipates it will take nine
months to develop the website. DreamerTopia will run a beta version of the website prior to launch to
work through any issues during initial launch.
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Market Analysis Summary
Social networking has emerged as one of the most influential technological innovations of the 21st
century. Approximately 148 million Americans, or 63% of Internet users, engage in social networking.1
The following chart reflects the projected growth of social network users in the United States.
As of this writing, the two largest social networks are Facebook and Twitter. These sites have emerged
as leading innovators in this sphere, which has leveraged widespread Internet access and mobile
functionality to connect consumers with one another in thriving international networks. While the U.S.
boasts the highest number of Facebook profiles, the site is also home to 36.6 million Indonesian users,
29.8 million British users, 28.4 million Turkish users, and 25.5 million Indian users.2
The following
charts are provided by Digital Surgeons and offer an overview of the size of these networks.3
1
eMarketer.com “U.S. Social Network Usage: 2011 Demographic and Behavioral Trends” Obtained at:
http://www.emarketer.com/Report.aspx?code=emarketer_2000777
2
“The Demographics of Social Media.” Ad Age. May 16, 2011. Obtained at:
http://adage.com/article/adagestat/demographics-facebook-linkedin-myspace-twitter/227569/
3
“Facebook vs. Twitter: a breakdown of 2010 social demographics.” Obtained at: http://www.digitalsurgeons.com/facebook-
vs-twitter-infographic/
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With so many active users, social networks have also become lucrative for advertisers. eMarketer
forecasts that in 2011, Facebook will earn $4 billion in ad revenues, while Twitter will generate $150
million. The total amount of social network spending will reach $6 billion worldwide by the close of the
year.4
Of the 234 million Americans who own a mobile device, approximately 76.8 million are smartphone
users. Between February and May 2011 alone, the number of smartphone users grew 11%. It is
currently projected that one in two Americans will have a smartphone by December 2011.5
As of May
2011, the latest data available, Google Android held the highest percentage of market share among all
the smartphone platforms. Additionally, both Android and Apple iOS have become vital to mobile ad
industry growth. In May 2011, 53% of all mobile ad impressions originated on Android-based
handsets.6
The following chart shows the number of subscribers for each smartphone platform.7
The mobile application market has been driven by the rapid adoption of smartphone technology
among consumers. Mobile application downloads generated a total of $6.8 billion in global revenues
in 2010, and are likely to surpass $15 billion in 2011, according to market research firm Gartner.89
Industry experts predict that the mobile application industry will generate $30 billion in revenue by
2013. Downloads of mobile apps will jump to 185 billion in 2014, a remarkable rise from the seven
4
eMarketer. “Worldwide Social Network Ad Spending: 2011 Outlook.” February 2011. Obtained at:
http://www.researchandmarkets.com/product/f686e6/worldwide_social_network_ad_spending_2011_outlook
5
“One in 2 Americans will have a smartphone by Christmas 2011”.Obtained at: http://bit.ly/dC1HuZ
6
“Global Mobile Advertising Revenue to Reach $3.3 Billion in 2011” DazeInfo. June 17, 2011. Obtained at:
http://www.dazeinfo.com/2011/06/17/global-mobile-advertising-revenue-to-reach-3-3-billion-in-2011-report/
7
“comScore Reports May 2011 U.S. Mobile Subscriber Market Share,” comScore. July 5, 2011. Obtained at:
http://www.comscore.com/Press_Events/Press_Releases/2011/7/comScore_Reports_May_2011_U.S._Mobile_Subscriber_M
arket_Share
8
“Gartner Says Consumers Will Spend $6.2 Billion in Mobile Application Stores in 2010.” January 2010.
http://bit.ly/f90vL8
9
“Gartner Says Worldwide Mobile Application Store Revenue Forecast to Surpass $15 Billion in 2011” January 26, 2011.
Obtained at: http://www.gartner.com/it/page.jsp?id=1529214
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billion applications that were downloaded in 2009.10
Approximately 82% of the downloaded
applications this year were free, a figure that is anticipated to increase to 87% by 2013.
As smartphone usage increases, advertisers have been quick to jump onboard. General mobile
advertising revenue in 2011 is expected to reach $3.3 billion in 2011, up from $1.6 billion in 2010. By
the close of 2015, it is predicted that mobile ad revenue will reach $20.6 billion worldwide.11
North
America will be second only to Asia in the amount of mobile advertising generated worldwide. The
following chart shows the breakdown of mobile advertising revenues around the world.12
The rise of mobile advertising relates not only to the increasing prevalence of smartphones, but also to
advertisers’ and marketer’s ability to connect with a targeted demographic. Advertisers are now
hoping to engage consumers in a contextual manner geared towards one’s age, interests, spending
habits, and online activity. Gartner’s Research Director, Stephanie Baghdassarian states. “…mobile
advertising budgets are set to increase tremendously across various categories and regions, growing
from .5% of the total advertising budget in 2010 to over 4% in 2015.”13
10
Ibid.
11
“Global Mobile Advertising Revenue to Reach $3.3 Billion in 2011” DazeInfo. June 17, 2011. Obtained at:
http://www.dazeinfo.com/2011/06/17/global-mobile-advertising-revenue-to-reach-3-3-billion-in-2011-report/
12
Ibid.
13
“Worldwide Mobile Advertising Revenue to Double in 2011” CBR. June 20, 2011. Obtained at:
http://media.cbronline.com/news/worldwide-mobile-advertising-revenue-to-double-in-2011-200611
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In the United States, mobile advertisement spending will reach $1.1 billion by close of 2011. The
following charts indicate projects the amount spent on mobile advertisements, as well as in what types
of format this money will be spent.14
As more consumers use smartphones to stay connected, more are engaging in watching videos online
through a mobile or tablet device. “Rapid changes in viewing habits are already occurring. Network TV
news, radio news, and newspapers all find that they have to compete fiercely against Internet-based
news content.”15
Internet advertising revenues have been increasing non-stop for years. While 2008
and 2009 did not see the growth that industry experts initially forecasted, ad spending still rose that
year-over-year. This boost occurred despite the recent recession, leading Internet market research
firm eMarketer to conclude that this growth is being driven by a fundamental shift in advertising
expenditures away from television and newspapers to the Internet.
On average, approximately 83% of American Internet users access online videos each month, according
to Comscore. In March 2011, 174 million Americans watched online video content. The total U.S.
audience engaged in more than 5.7 billion viewing sessions during the course of the month.
Market Segmentation
While social networking may be viewed by many as the domain of the young, sites are also heavily
populated by adults as well. In fact, 61% of Gen X Internet users (age 27-43) maintain social
14
“Mobile Ad Revenue Rises in 2010.” Gartner. October 19, 2010. Obtained at: http://www.thatcompany.com/that-blog/38-
advertising/170-that-blog.html
15
Plunkett Research Ltd., publisher. “Advertising and branding.” Database. Plunkett Research Online. Retrieved
December 2008. http://www.plunkettresearchonline.com
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networking sites and 46% of Baby Boomers now maintain at least one social network profile. The chart
below further breaks down these statistics.16
DreamerTopia believes that its earliest adoptees will be tech savvy; however, later adopters will be
individuals of all age ranges. While the Company hopes to expand worldwide within five years of start-
up, it will initially launch with an English-only website that targets users in the United States and
Canada.
Competitive Comparison
The Company will face direct competition from a wide and expanding range of social networking and
search engine websites. These websites vary in purpose, number of users, and functionality, but are
broadly connected by their shared goal of providing a space for users to meet, communicate, and
socialize with one another. DreamerTopia’s primary competitors will include:
Facebook
LinkedIn
Google Plus
Twitter
Yahoo
Each of these websites benefits from an established user base and well-known purpose among
Internet users. Facebook is by far the largest site and most direct competitor to DreamerTopia;
however, it is limited to connecting people based on their social relationships and interests. None of
these sites provide consumers with the opportunity to stream live television or read aggregated news
from one source. The Company’s unique and innovative business model provides unparalleled benefits
and an advanced social networking environment. These circumstances will position DreamerTopia to
effectively distinguish itself from existing sites and capture a targeted niche that will grow over time as
the site’s features become more well known. As a result, the Company will be able to effectively
overcome its competitive threats and grow for years to come.
16
eMarketer. “Baby Boomers Get Connected with Social Media. ” Jan. 28, 2010. Obtained at: http://tinyurl.com/y8q2upd
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Strategy and Implementation Summary
Citing its comprehensive one-stop shop as its greatest advantage, DreamerTopia will resonate with
users of all kinds by pitching its social media platform through a range of promotional and web
techniques. To increase brand awareness, DreamerTopia has created a memorable logo. The
Company will display this logo prominently on all marketing materials and in all web advertising to
support brand consistency.
With its guiding principles established, the Company will send a clear message about its mission to
provide a better resource for today’s busy Internet user, recognizing the need for accessibility across
multiple platforms and application to balance work and life. The Company will promote this message
using a comprehensive marketing strategy that will include extensive marketing via social media,
search engine optimization, e-mail, and Internet advertising by aligning with online marketing
professionals to coordinate its web strategy. Furthermore, the creation of branded products for
promotional distribution will help build a strong base of early adopters. DreamerTopia intends to use
this approach to accomplish the following objectives:
Secure 20,000 beta testers for beta launch
Attain 1 million users by time of official launch
Eventually offer the website in multiple languages
To achieve these operational benchmarks, DreamerTopia will build on its advantages, as outlined in the
section below.
Competitive Edge
The Company will experience competition from other social networking sites, most of which lack the
ability to interface with all aspects of a person’s personal and professional life in a convenient and
streamlined manner. DreamerTopia will capitalize on its competitors’ weaknesses by building on
several strengths:
Browser-based application
One-stop shop – everything in one place
Variety of revenue streams
Dedicated management team
Committed to honesty, integrity, and professionalism
Mobile application will become available
Gives users the freedom to manage their online activities from one location
Marketing Strategy
DreamerTopia will use a variety of advertising channels to increase its exposure to prospective users.
The Company’s marketing campaign will follow two distinct phases which will promote its beta version
of the site, followed by targeted web marketing efforts to build its database of users and draw
attention from potential advertisers. A synopsis of each phase is featured below.
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Phase I
The Company understands that its early efforts must be highly promotional in nature to get early
adopters excited about its platform and encourage them to participate in beta testing. To achieve this
level of interest, the Company will create branded products that will represent the DreamerTopia
name and introduce the Company to the public. These products will be high-end – such as cell phones
and galaxy tablets – which will be given away as promotional items. These will grant the user access to
the beta version, which will help to immediately start building its database.
Phase II
Beyond its initial promotional activity for the beta version, DreamerTopia will engage potential users
and clients through a diverse web strategy, and is working with a number of companies to build an
effective web presence. ReTargeter is a self-serve display retargeting program that leverages its access
to more than 98% of advertising inventory on the web to help convert users. Ad networks and
exchanges they partner with include Rubicon, GlamMedia, PubMatic, and Doubleclick by Google.
Furthermore, ReTargeter is able to access sites with its ads that include The Huffington Post, Digg,
ESPN, CNN, YouTube, Time, Pandora, The New York Times, Boston.com, and many more. Additional
companies that DreamerTopia will work with to facilitate its web strategy include Hubze, Website
Marketing Solutions, LLC, and SiteSolutions.com, which offer expertise in social media and search
engine optimization strategy, web design, affiliate and referral websites, backlinks, Professional
MOWG (Mass Optimized Webpage Generation) runs, and more.
The methods that will comprise the Company’s ongoing strategy are featured in the section below.
E-mail blasts and newsletters: Current and prospective users and clients will benefit from
receiving e-mail updates and newsletters on a regular basis. This will provide the Company’s
database of clients and opt-in members with information regarding promotional specials as
well as informing them of new features, upcoming events, and relevant business news.
Social media: The Company will rely on current social media sites to spread its message of
convenience to users. Efforts will include cross-marketing with other websites, YouTube
videos, establishing a presence on social networking sites, blogging, and posting regularly on
Twitter. “Through services such as Twitter and Facebook, anyone with a mobile phone or
laptop can easily move beyond chit-chatting with a circle of friends to spreading information on
a worldwide network of millions,” according to Amy Webb, a Digital and Product Business
Consultant to online media companies.17
Internet advertising: DreamerTopia will use a combination of Internet advertising, including
Cost-per-Click, Google AdWords, Tags, banner ads, and extensive search engine optimization to
increase traffic to its website. This effort will help generate interest in the Company from the
online community and general public. The following chart represents the Search Demand
Curve created by popular search terms:18
17
Rose, Joseph and Rachel Bachman. Oregonlive.com. “Dave Chappelle’s Surprise Show Demonstrates Power of Social
Networking.” July 15, 2009. Obtained at: http://tinyurl.com/mp6roy
18
SEOMOZ. “Answers to the SEO Professional’s Litmus Test.” Obtained at: http://tinyurl.com/37cwzvs
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Word of mouth: Word travels quickly between family members, peers, and colleagues who are
pleased with their experiences with a particular business. The Company will rely on this
effective and inexpensive resource to generate interest in its site. According to research
conducted by Forrester, there were “256 billion influence impressions occurring per year [in
2009]. Influence posts were numbered at 1.64 billion per year, which accounted for generating
another 250 billion impressions. In other words, people are making 500 billion influence
impressions on one another about products and services every year.”19
19
Dybwad, Barb. Mashable: the Social Media Guide. “The State of Online Word of Mouth Marketing [Stats].” Obtained at:
http://mashable.com/2010/04/25/word-of-mouth-marketing-stats/
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Management Summary
Donald Alan Kernan Jr., Owner & Chief Executive Officer
Mr. Kernan Jr. is an ambitious young entrepreneur who is the sole owner of DreamerTopia, a social
media platform startup that he has raised more than $100 million to launch with zero debt. His prior
professional experience while cultivating his vision for the Internet platform included the creation of
Banner Broker, Inc. The Toronto-based company provides an online banner ad and profit sharing
platform for countless domestic and global accounts. He was responsible for organizing and
establishing the affiliate company as well as the holding company, and led advertising growth to
include $1.25 million in sales over just three months. Most notably, Mr. Kernan Jr. was able to not only
design the advertising platform for affiliates, but was able to sign up more than 12,000 users in two
months and 2,500 active users within weeks of the company’s formal launch date. Mr. Kernan Jr.
studied at DeVry University as well as Marquette University, has completed Wealth Masters training,
and is Six Sigma Certified. He is highly knowledgeable of Internet regulations and maintains a track
record of implementing the necessary controls to ensure compliance, and remains concerned with
integrity above all else in pursuit of enhanced profitability for his venture. Most importantly, his
experience in developing strategic web development initiatives exists at the very core of
DreamerTopia.
Donald Alan Kernan Sr., Interim Vice President
Mr. Kernan has served in a variety of public safety and military positions throughout his career. Since
2005, he has served a police lieutenant, preceded by four years as a sergeant, and a decade as a
deputy sheriff. He also served as corrections officer from 1990 to 1991. He holds a number of
certifications. Mr. Kernan served for in Operation Desert Storm and Operation Desert Shield, and was
in the Wisconsin Army National Guard for eight years. He holds a BA in Criminal Justice and Business
Management from Concordia University.
Kenneth T. Weil, Chief Financial Officer
A longtime finance professional, Mr. Weil has devoted the past four years as the President of Consult
Your CFO, Inc., an interim CFO company that offers his expertise to a range of businesses. Current
posts include interim CFO for a custom web-to-print marketing firm; an orthopedic surgical equipment
distribution firm; a retirement, executive compensation, and board governance consulting firm;
technology infrastructure consulting firm; adult home company; animal rescue non-profit; and a farm.
Past clients range from event and night club facility and law firm to clinical research service companies
and business intelligence firms. Prior to starting his own firm, he spent one year as a Vice President of
a small CFO consulting company. He spent the previous six years with Deloitte Consulting as a
Manager for three years preceded by three years as a Senior Consultant. Clients included a water
utility company, a pharmaceutical distributor, an investment firm, and many more. His work largely
involved extensive analysis of internal accounting, finance processes and accounting system
implementations. He also obtained experience with Sarbanes-Oxley compliance. Mr. Weil’s early
career from 1992 to 1998 occurred within the healthcare realm in roles including Staff Accountant,
Corporate Accountant, Regional Controller, Corporate Controller, Assistant Controller, Director of
Finance, and Acting CFO for multiple companies. He began as a Junior Accountant for Coca-Cola
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Enterprises in Columbia, Maryland, from 1990 to 1992. Kenneth Weil earned a Bachelor of Arts degree
in Finance from Michigan State University and an MBA from Loyola University in Baltimore, Maryland.
Madelyn Espiritu, Chief Operations Officer
Ms. Espiritu holds more than 15 years of successful experience providing support to startup ventures,
independent business owners, and Fortune 500 companies regarding operations, supply chain
management, and logistics. She retains an approach that is functional and hands-on, utilizing tangible
skills to coordinate projects for deploying infrastructure initiatives, online direct sales, construction and
maintenance, business startup, small business expansion strategy, and service/product marketing and
training programs. Her core competencies include planning, purchasing, and management, working for
and alongside companies across California, Texas, Alaska, Georgia, and New York. Notable professional
achievements include reducing excess inventory valued at $2 million by 80% through liquidation,
reclassification, utilization, resale back to vendor, and disposition. She also developed new computer
and software standards providing uniformity with technical assets, reducing overhead costs by 25%,
and increasing organizational efficiency. Through due diligence and extensive analysis and research, as
well as applying a lifetime of experience in creating and ensuring operational efficiency in the
workplace, Ms. Espiritu will serve a valuable role in the launch of the Company.
Management Team Gaps
The Company will actively perform recruitment efforts to fulfill the following positions:
Chief Technology Officer (CTO)
The chief technology officer will be responsible for the management and supervision of the
organization’s research and development projects and the maintenance of the technological objectives
of the organization with respect to available resources and technology. The CTO will cooperate with
the CEO in managing the organization and in achieving the organization’s vision but will focus primarily
on managing the technological operations of the organization with the assistance of the chief
information officer (CIO), who will report to both the CTO and the CEO, but primarily to the CTO.
Marketing Director
The Marketing Director reports to the CEO and is a member of the Company’s executive team. He/ or
she will be responsible for providing executive leadership and management of the Company’s
marketing organization and in-bound and out-bound marketing activities worldwide, which include:
Corporate marketing, partner/channel marketing, product marketing, and product management. The
Marketing Director will drive the Company’s efforts to position itself as a visionary leader and potential
in its emerging market and to achieve its revenue goals.
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Financial Projections
The following table and graph illustrate the financial goals of the Company during the next five years:
Year 1 Year 2 Year 3 Year 4 Year 5
Revenue $41,355,900 $117,500,000 $235,000,000 $352,500,000 $470,000,000
Gross Margin $40,626,090 $113,000,000 $226,000,000 $339,000,000 $452,000,000
Operating Expenses $24,214,811 $66,765,168 $131,292,544 $194,400,164 $256,149,025
EBITDA* $16,612,612 $46,436,166 $94,908,789 $144,801,170 $196,052,309
Net Profit $16,430,979 $46,320,499 $94,801,227 $144,702,211 $195,962,485
Profitability Ratios
Gross Margin/Revenue 98% 96% 96% 96% 96%
EBITDA/Revenue 40% 40% 40% 41% 42%
Net Profit/Revenue 40% 39% 40% 41% 42%
Debt Ratios
Debt Ratio (Total Debt/Total Assets) 1.05% 2.34% 3.28% 3.38% 3.16%
Interest Coverage Ratio -843.28 -542.06 -1012.13 -1414.42 -1758.16
Debt Service Coverage Ratio -115.80 -213.93 -406.86 -578.10 -729.50
Days on Hand
Receivables 30 30 30 30 30
Inventory 0 0 0 0 0
Payables 30 30 30 30 30
Net Cash Flow $186,901,200 $177,134,252 $225,976,474 $316,854,817 $457,508,807
Cash Balance - Ending $177,134,252 $225,976,474 $316,854,817 $457,508,807 $649,302,214
FINANCIALHIGHLIGHTS
*Earnings before interest, taxes,
depreciation & amortization
Financial Highlights
$0
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
$300,000,000
$350,000,000
$400,000,000
$450,000,000
$500,000,000
Year 1 Year 2 Year 3 Year 4 Year 5
Revenue
Direct Costs
Operating Expenses
Net Profit
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The following is a five-year revenue forecast. Direct costs include all costs which can be directly tied to
revenue and include “cost of goods.”
Year 1 Year 2 Year 3 Year 4 Year 5
Revenue
CPM (Static Ads) $2,432,700 $15,000,000 $30,000,000 $45,000,000 $60,000,000
CPM (Video Ads) $4,865,400 $30,000,000 $60,000,000 $90,000,000 $120,000,000
Revenue Share $9,730,800 $60,000,000 $120,000,000 $180,000,000 $240,000,000
Streaming TV Subscription $24,327,000 $12,500,000 $25,000,000 $37,500,000 $50,000,000
Total Revenue $41,355,900 $117,500,000 $235,000,000 $352,500,000 $470,000,000
Direct Cost of Revenue
CPM (Static Ads) $729,810 $4,500,000 $9,000,000 $13,500,000 $18,000,000
CPM (Video Ads) $0 $0 $0 $0 $0
Revenue Share $0 $0 $0 $0 $0
Streaming TV Subscription $0 $0 $0 $0 $0
Subtotal Cost of Revenue $729,810 $4,500,000 $9,000,000 $13,500,000 $18,000,000
Other Costs of Revenue $0 $0 $0 $0 $0
Total Direct Costs $729,810 $4,500,000 $9,000,000 $13,500,000 $18,000,000
Gross Margin $40,626,090 $113,000,000 $226,000,000 $339,000,000 $452,000,000
Gross Margin % 98% 96% 96% 96% 96%
REVENUEFORECAST
The table below shows the units and pricing assumptions underlying the revenue forecast:
Year 1 Year 2 Year 3 Year 4 Year 5
Average Monthly Users 4,100,000 25,000,000 50,000,000 75,000,000 100,000,000
% of Users Buying Online Items/Month 10% 10% 10% 10% 10%
Average Online Spend 20 20 20 20 20
Impressions/User/Month 10 10 10 10 10
Users Buying Subscriptions 5% 5% 5% 5% 5%
Units
CPM (Static Ads) 486,540 3,000,000 6,000,000 9,000,000 12,000,000
CPM (Video Ads) 486,540 3,000,000 6,000,000 9,000,000 12,000,000
Revenue Share 4,865,400 30,000,000 60,000,000 90,000,000 120,000,000
Streaming TV Subscription 2,432,700 1,250,000 2,500,000 3,750,000 5,000,000
Total Units 8,271,180 37,250,000 74,500,000 111,750,000 149,000,000
Unit Price
CPM (Static Ads) $5.00 $5.00 $5.00 $5.00 $5.00
CPM (Video Ads) $10.00 $10.00 $10.00 $10.00 $10.00
Revenue Share $2.00 $2.00 $2.00 $2.00 $2.00
Streaming TV Subscription $10.00 $10.00 $10.00 $10.00 $10.00
Direct Unit Cost
CPM (Static Ads) $1.50 $1.50 $1.50 $1.50 $1.50
CPM (Video Ads) $0.00 $0.00 $0.00 $0.00 $0.00
Revenue Share $0.00 $0.00 $0.00 $0.00 $0.00
Streaming TV Subscription $0.00 $0.00 $0.00 $0.00 $0.00
UNITASSUMPTIONS
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Year 1 Revenue Monthly
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
$8,000,000
$9,000,000
Month1
Month2
Month3
Month4
Month5
Month6
Month7
Month8
Month9
Month10
Month11
Month12
Streaming TV Subscription
Revenue Share
CPM (Video Ads)
CPM (Static Ads)
Revenue By Year
$0
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
$300,000,000
$350,000,000
$400,000,000
$450,000,000
$500,000,000
Year 1 Year 2 Year 3 Year 4 Year 5
Streaming TV Subscription
Revenue Share
CPM (Video Ads)
CPM (Static Ads)
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The Company’s personnel forecast is outlined below. Personnel wages indicate the average wage per
position and personnel costs are total wages for each position.
Year 1 Year 2 Year 3 Year 4 Year 5
Personnel Count
Executive Team 4 4 4 4 4
Designers 3 8 14 19 23
Developers 4 10 18 24 29
Programmers 4 10 18 24 29
Additional Tech 2 5 9 12 14
Ad Department/Production 1 3 5 7 8
Marketing Team 2 5 9 12 14
Admin 3 8 14 19 23
Total Personnel 23 53 91 121 144
Personnel Wage
Executive Team $100,000 $105,000 $110,250 $115,763 $121,551
Designers $50,000 $52,500 $55,125 $57,881 $60,775
Developers $65,000 $68,250 $71,663 $75,246 $79,008
Programmers $65,000 $68,250 $71,663 $75,246 $79,008
Additional Tech $60,000 $63,000 $66,150 $69,458 $72,930
Ad Department/Production $45,000 $47,250 $49,613 $52,093 $54,698
Marketing Team $50,000 $52,500 $55,125 $57,881 $60,775
Admin $35,000 $36,750 $38,588 $40,517 $42,543
Personnel Costs
Executive Team $400,000 $420,000 $441,000 $463,050 $486,203
Designers $150,000 $420,000 $771,750 $1,099,744 $1,397,832
Developers $260,000 $682,500 $1,289,925 $1,805,895 $2,291,229
Programmers $260,000 $682,500 $1,289,925 $1,805,895 $2,291,229
Additional Tech $120,000 $315,000 $595,350 $833,490 $1,021,025
Ad Department/Production $45,000 $141,750 $248,063 $364,652 $437,582
Marketing Team $100,000 $262,500 $496,125 $694,575 $850,854
Admin $105,000 $294,000 $540,225 $769,821 $978,483
Total Payroll $1,440,000 $3,218,250 $5,672,363 $7,837,121 $9,754,438
PERSONNELFORECAST
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The Company intends to deploy its funding to maximize growth and profitability. In the Profit and Loss
table below, gross margin equals revenue minus direct costs. The “bottom line” or profit (as measured
before and after interest, taxes, depreciation, and amortization) equals gross margin minus operating
expenses.
Year 1 Year 2 Year 3 Year 4 Year 5
Revenue $41,355,900 $117,500,000 $235,000,000 $352,500,000 $470,000,000
Total Cost of Revenue $729,810 $4,500,000 $9,000,000 $13,500,000 $18,000,000
Gross Margin $40,626,090 $113,000,000 $226,000,000 $339,000,000 $452,000,000
Gross Margin/Revenue 98% 96% 96% 96% 96%
Expenses
Site Solution (Marketing) $2,067,800 $5,816,300 $11,516,200 $17,101,500 $22,574,000
Hubze (Marketing) $2,067,800 $5,816,300 $11,516,200 $17,101,500 $22,574,000
ReTargeter (Marketing) $6,203,400 $17,448,800 $34,548,500 $51,304,600 $67,722,000
Email Marketing $4,135,600 $11,632,500 $23,032,400 $34,203,000 $45,148,000
Other Advertising/Marketing $5,169,500 $14,540,600 $28,790,400 $42,753,800 $56,435,000
Property Tax $50,000 $52,500 $55,100 $57,900 $60,800
Utilities $5,000 $10,000 $17,500 $26,300 $32,900
General & Admin $250,000 $703,200 $1,406,400 $2,109,600 $2,812,800
Research & Development $2,067,800 $5,875,000 $11,750,000 $17,625,000 $23,500,000
Server Lease $340,578 $967,647 $1,935,294 $2,902,941 $3,870,588
Depreciation $201,333 $201,333 $201,333 $201,333 $201,333
Payroll Taxes & Benefits $216,000 $482,738 $850,854 $1,175,568 $1,463,166
Total Personnel $1,440,000 $3,218,250 $5,672,363 $7,837,121 $9,754,438
Total Op. Expenses $24,214,811 $66,765,168 $131,292,544 $194,400,164 $256,149,025
Profit Before Interest and Taxes $16,411,279 $46,234,832 $94,707,456 $144,599,836 $195,850,975
EBITDA $16,612,612 $46,436,166 $94,908,789 $144,801,170 $196,052,309
Interest Expense ($19,700) ($85,667) ($93,771) ($102,375) ($111,510)
Taxes Incurred $0 $0 $0 $0 $0
Net Profit $16,430,979 $46,320,499 $94,801,227 $144,702,211 $195,962,485
Net Profit/Revenue 39.7% 39.4% 40.3% 41.1% 41.7%
PROFORMAPROFIT&LOSS
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The charts below demonstrate when the Company is expected to become profitable. Break-even
occurs when revenue equals expenses.
Revenue & Expenses
Year 1 Monthly
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
$8,000,000
$9,000,000
Month1
Month2
Month3
Month4
Month5
Month6
Month7
Month8
Month9
Month10
Month11
Month12
Revenue
Expenses
Revenue & Expenses
Years 1 to 5
$0
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
$300,000,000
$350,000,000
$400,000,000
$450,000,000
$500,000,000
Year 1 Year 2 Year 3 Year 4 Year 5
Revenue
Expenses
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The following depictions of the Company’s projected cash flow show that the Company expects to
maintain sufficient cash balances over the five years of this plan. The “pro forma cash flow” table
differs from the “pro forma profit and loss” (P&L) table. Pro forma cash flow is intended to represent
the actual flow of cash in and out of the Company. In comparison, the revenue and expense
projections on the P&L table include “non-cash” items and exclude funding and investment
illustrations.
Cash Flow
$0
$100,000,000
$200,000,000
$300,000,000
$400,000,000
$500,000,000
$600,000,000
$700,000,000
Year 1 Year 2 Year 3 Year 4 Year 5
Net Cash Flow
Cash Balance
Year 1 Year 2 Year 3 Year 4 Year 5
OPERATING
Net Profit $16,430,979 $46,320,499 $94,801,227 $144,702,211 $195,962,485
Adjustments to Net Profit
Depreciation & Amortization $201,333 $201,333 $201,333 $201,333 $201,333
Accounts Receivable ($7,545,205) ($1,273,973) ($9,657,534) ($9,657,534) ($9,657,534)
Inventory $0 $0 $0 $0 $0
Accounts Payable $2,108,064 $3,725,758 $5,672,817 $5,556,083 $5,444,361
Net Cash From Operating Activities $11,195,170 $48,973,618 $91,017,843 $140,802,094 $191,950,645
INVESTING
Purchase of Other Current Assets $0 $0 $0 $0 $0
Sale of Other Current Assets $0 $0 $0 $0 $0
Purchase Long-term Assets $0 $0 $0 $0 $0
Sale of Long-term Assets $0 $0 $0 $0 $0
Net Cash From Investing Activities $0 $0 $0 $0 $0
FINANCING
Investment $0 $0 $0 $0 $0
Dividends $0 $0 $0 $0 $0
New Current Borrowing $0 $0 $0 $0 $0
Current Borrowing Repay. ($20,000,000) $0 $0 $0 $0
New Long Term Liabilities $0 $0 $0 $0 $0
Long Term Liability Repay ($123,762) ($131,396) ($139,500) ($148,104) ($157,239)
Net Cash From Financing Activities ($20,123,762) ($131,396) ($139,500) ($148,104) ($157,239)
NET CASH FLOW ($8,928,592) $48,842,222 $90,878,343 $140,653,990 $191,793,407
Beginning Cash $186,901,200 $177,134,252 $225,976,474 $316,854,817 $457,508,807
Ending Cash $177,134,252 $225,976,474 $316,854,817 $457,508,807 $649,302,214
CASHFLOW
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The balance sheet below highlights the Company’s projected assets, liabilities, and capital:
Year 1 Year 2 Year 3 Year 4 Year 5
Assets
Current Assets
Cash $177,134,252 $225,976,474 $316,854,817 $457,508,807 $649,302,214
Accounts Receivable $8,383,562 $9,657,534 $19,315,068 $28,972,603 $38,630,137
Inventory $0 $0 $0 $0 $0
Other Current Assets $0 $0 $0 $0 $0
Total Current Assets $185,517,814 $235,634,008 $336,169,886 $486,481,410 $687,932,351
Long-term Assets
Long-term Assets $3,020,000 $3,020,000 $3,020,000 $3,020,000 $3,020,000
Accumulated Depreciation $201,333 $402,667 $604,000 $805,333 $1,006,667
Total Long-term Assets $2,818,667 $2,617,333 $2,416,000 $2,214,667 $2,013,333
Total Assets $188,336,480 $238,251,342 $338,585,886 $488,696,076 $689,945,684
Liabilities and Capital
Current Liabilities
Accounts Payable $2,108,064 $5,833,822 $11,506,639 $17,062,722 $22,507,083
Current Borrowing ($20,000,000) ($20,000,000) ($20,000,000) ($20,000,000) ($20,000,000)
Other Current Liabilities $0 $0 $0 $0 $0
Subtotal Current Liabilities ($17,891,936) ($14,166,178) ($8,493,361) ($2,937,278) $2,507,083
Long-term Liabilities $19,876,238 $19,744,842 $19,605,342 $19,457,239 $19,300,000
Total Liabilities $1,984,302 $5,578,664 $11,111,981 $16,519,961 $21,807,083
Paid-in Capital $171,826,000 $171,826,000 $171,826,000 $171,826,000 $171,826,000
Retained Earnings ($1,904,800) $14,526,179 $60,846,678 $155,647,904 $300,350,116
Earnings $16,430,979 $46,320,499 $94,801,227 $144,702,211 $195,962,485
Total Capital $186,352,179 $232,672,678 $327,473,904 $472,176,116 $668,138,601
Total Liabilities and Capital $188,336,480 $238,251,342 $338,585,886 $488,696,076 $689,945,684
BALANCESHEET
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The sensitivity analysis below assumes that revenues are 15% higher or lower than figures projected
earlier in this business plan:
Year 1 Year 2 Year 3 Year 4 Year 5
Revenue $47,559,285 $135,125,000 $270,250,000 $405,375,000 $540,500,000
Cost of Goods $839,282 $5,175,000 $10,350,000 $15,525,000 $20,700,000
Gross Margin $46,720,004 $129,950,000 $259,900,000 $389,850,000 $519,800,000
Gross Margin/Revenue 98% 96% 96% 96% 96%
Operating Expenses $24,214,811 $66,765,168 $131,292,544 $194,400,164 $256,149,025
Net Profit $22,524,892 $63,270,499 $128,701,227 $195,552,211 $263,762,485
Net Profit/Revenue 47% 47% 48% 48% 49%
Cash Flow ($2,834,678) $65,792,222 $124,778,343 $191,503,990 $259,593,407
Cash Balance $183,228,166 $249,020,388 $373,798,731 $565,302,721 $824,896,127
BESTCASESCENARIO
REVENUE IS 15% GREATER THAN PROJECTED
Year 1 Year 2 Year 3 Year 4 Year 5
Revenue $35,152,515 $99,875,000 $199,750,000 $299,625,000 $399,500,000
Cost of Goods $620,339 $3,825,000 $7,650,000 $11,475,000 $15,300,000
Gross Margin $34,532,177 $96,050,000 $192,100,000 $288,150,000 $384,200,000
Gross Margin/Revenue 98% 96% 96% 96% 96%
Operating Expenses $24,214,811 $66,765,168 $131,292,544 $194,400,164 $256,149,025
Net Profit $10,337,065 $29,370,499 $60,901,227 $93,852,211 $128,162,485
Net Profit/Revenue 29% 29% 30% 31% 32%
Cash Flow ($15,022,505) $31,892,222 $56,978,343 $89,803,990 $123,993,407
Cash Balance $171,040,339 $202,932,561 $259,910,904 $349,714,894 $473,708,300
WORSTCASESCENARIO
REVENUE IS 15% LESS THAN PROJECTED
