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October, 2007
real friends now.™
Business Plan
TM
3
1 EXECUTIVE SUMMARY ...................................................................................... 4 1.1 MARKET............................................................................................................ 4
1.1.1 Target Segment ........................................................................................... 4 1.2 PROPOSED BUSINESS .................................................................................... 4 1.3 MANAGEMENT................................................................................................ 5
1.3.1 Mr. David Stackpole (CMO / Product Development) ................................ 5 1.3.2 Mr. Ozzy Bilgin (CEO/ CFO)..................................................................... 5
1.4 ADVISORY........................................................................................................ 5 1.4.1 Mr. Brian (Paco) Hope (Technology / Security.......................................... 5
1.5 FUNDING REQUIREMENTS........................................................................... 5 1.6 EXIT STRATEGY.............................................................................................. 5
2 MARKET .................................................................................................................. 6 2.1 OVERVIEW ....................................................................................................... 6 2.2 SEGMENTS ....................................................................................................... 6
2.2.1 Product Segment ......................................................................................... 6 2.2.2 Customer Segment ...................................................................................... 7
2.3 SURVEY RESULTS .......................................................................................... 7
3 COMPETITORS ...................................................................................................... 8 3.1 COMPETITOR ANALYSIS ............................................................................ 10 3.2 STRATEGIC POSITIONING .......................................................................... 10
4 OPERATIONS........................................................................................................ 11 4.1 EQUIPMENT ................................................................................................... 11 4.2 SMS COSTS ..................................................................................................... 11
5 HIRING SCHEDULE ............................................................................................ 12 5.1 STAFF............................................................................................................... 12
5.1.1 Customer Service ...................................................................................... 12 5.1.2 Business / Marketing................................................................................. 12
5.2 SALARIES ....................................................................................................... 12 5.2.1 Employee Payroll and Insurance .............................................................. 12
6 FINANCIAL STATEMENTS ............................................................................... 13 6.1 ACCOUNTS RECEIVABLE & BAD DEBT .................................................. 13 6.2 CAPITAL EQUIPMENT DEPRECIATION ................................................... 13 6.3 REVENUES...................................................................................................... 14 6.4 PROFITS........................................................................................................... 14
7 APPENDIX.............................................................................................................. 30 7.1 PRODUCT FEATURE EXAMPLES............................................................... 30 7.2 MARKET SHARE: US SOCIAL NETWORK SITES .................................... 35 7.3 INTELLECTUAL PROPERTY DOCKET ...................................................... 36
4
1 EXECUTIVE SUMMARY
1.1 MARKET
As Madison Avenue continues to embrace internet advertising, ad-based revenues for social networks are projected to top 2.5 billion in the U.S. by 2011. The largest user demographic of these social network sites is between 18 and 30 years and their primary motivation is to reach friends.
1.1.1 Target Segment
Reach Rocket’s initial target segment, is the college student. Though the service reaches far beyond this segment, it is an ideal target for launch. Students want to connect with friends and spend an average of 6.5 hours per week on social network sites to check up on friends (85%), communicate with them (75%), and meet new friends (61%). Alloy Media and Marketing reports that the college market continues to expand, marking the largest college class in history with a record spending power of $182 billion. Overall, both mobile and social network markets show signs of maturity, but each will continue to define college lifestyles that aggressively adopt new technologies, demand mobility, and seek improved ways to manage relationships.
1.2 PROPOSED BUSINESS
Reach Rocket is not a social network as much as a social tool, designed to help users manage activities with immediate and proximate friendships. These types of relationships are reported to be most important for college students; hence, Reach Rocket exploits a service gap where social networks are not used, particularly during evenings and weekends when these relationships thrive. Specifically, Reach Rocket exploits the network “dead time” between online and mobile social connectivity, the time when friends are preparing to meet up and can use a tool to quickly plan, share, and join in on activities with each other. In this respect, Reach Rocket complements, rather than competes with social networks. The Reach Rocket model enjoys strong strategic advantages:
• It does not need critical mass. Pockets anywhere in the U.S. or world can use it.
• It is defensible through provisional and PCT international patent applications.
• It is defensible through high switch costs, requiring exponential defection for a similar method to optimally function. If friend A asks friends B,C,D to leave; B,C and D must ask all their friends who must in turn ask all their friends, etc.
• It is not limited to the target demographic but can be used by professionals, teens, and others, reaching over 130 million potential users in the U.S alone.
5
1.3 MANAGEMENT
1.3.1 Mr. David Stackpole (CMO / Product Development)
Mr. Stackpole holds an MBA from Georgetown University, a BA in English from the College of William & Mary, and brings entrepreneurial experience to the venture. Mr. Stackpole was a co-founder of an IT company that trail-blazed regional markets in three Virginia cities for online promotions targeted to college students, reaching an estimated 22,000 users.
1.3.2 Mr. Ozzy Bilgin (CEO/ CFO)
Mr. Bilgin graduated with high distinction from Georgetown University’s MBA program and holds a BA in business economics from the University of California Santa Barbara. He has experience working in high-pressure environments as an investment banker, and formerly as co-founder of an auto dealership. In his investment banking role, Mr. Bilgin successfully spearheaded an initiative to cover emerging technologies in the renewable energy sector.
1.4 ADVISORY
1.4.1 Mr. Brian “Paco” Hope (Technology / Security)
Mr. Hope is a certified information systems security professional (CISSP). He holds a BS in computer science from the College of William & Mary and a Masters in Computer Science from the University of Virginia. Mr. Hope has a number of security-related publications and is writing his second book for O’Reilly and Associates. Mr. Hope’s role extends beyond advisory. He routinely provides setup, maintenance and implementation of server-side resources for the developers and team members.
1.5 FUNDING REQUIREMENTS
Reach Rocket, LLC is contributing $20,000 to build the prototype, secure the intellectual property, and do market research. It seeks an additional $600,000 seed capital for development, administration and promotion in ten markets over seven months.
1.6 EXIT STRATEGY
Reach Rocket intends to tailor the venture for acquisition in year three. Given the need for competing companies to find other mediums by which to advertise and garner market share, Reach Rocket, which uniquely answers these needs, expects to be well-positioned for such an exit.
6
2 MARKET
2.1 OVERVIEW
The social network market to date shows signs of maturing as key players begin to look internationally for expansion. Of the top twenty sites, MySpace and Facebook comprise over 90% share of market. MySpace continues to be the heavyweight, with 81%. Facebook and Bebo a distant second at 10%. Bebo equally distances Facebook (1.18%) and is the only other player above 1% in the US market. A list of US market shares for the top twenty social network sites can be found in figure 8, p. 39 in the appendix. The competitor analysis section lists worldwide subscriber estimates for these firms. In addition to these, are sites that have integrated mobility into their presence or are entirely accessed via a mobile device.
2.2 SEGMENTS
The social networking market can be divided by user interest and by technology. Interest focuses on either friend, romantic, or professional. Technology is primarily internet-based, or primarily mobile-device based, providing customer segment crossover for each.
1. Web-based Networks: This is the larger segment, including most of the top twenty networks such as MySpace; Bebo, a media-sharing site; Blackplanet, an African American cultural resource; Xanga, an online resource for diaries and journals.
2. Mobile-Based Networks: This is the smaller segment, including
Dodgeball, Where2Match, Meet Moi and Parallel-Pro.
2.2.1 Product Segment
Unlike any other Social Network, Reach Rocket services a gap by using technology to facilitate face to face interaction among immediate friends, particularly at times when typical social networks are not being used..
7
2.2.2 Customer Segment
The college market’s spending power combined with the importance it places on relationships are key factors in making this segment an initial target. The following needs of the college segment have been uncovered through independent research2:
a. Strong reliance on technology and data access
b. The desire to access new and existing relationships, friends being of key
importance and immediate friends being greatest among these
c. The desire for speed, discreetness, simplicity Reasons for targeting this segment include:
• Familiarity with marketing to the demographic
• High and insular concentration of college customers who lend themselves to grassroots promotions and viral marketing
• Cross-college connectivity allowing users to become “carriers” to other locations. This includes the ability to use the open source platform of Facebook, of which 90% of college students are using.
2.3 SURVEY RESULTS
We recently conducted a survey over five universities. Our key focus of the survey was to uncover new product preferences among the college segment. Key findings are listed below*
1. 93% of respondents + 9 belonged to a social network 2. Speed, brevity and discreetness were important communications feature benefits 3. Locating and communicating with friends is a priority 4. Average number of ads students would accept per week was 4 + 2.5 Secondary studies align with these confidence ranges. * All results assumed a 95% Confidence
2 Harris Interactive /Alloy Media 2006
8
3 COMPETITORS
Below is a list of the six largest competitors in the social networking market. Additional mobile-based competitors follow these six.
1. MySpace Hollywood CA Total Users: 100 million Description MySpace is a social networking website offering an interactive, user-submitted network of friends, personal profiles, blogs, groups, photos, music and videos internationally. MySpace was bought by News Corporation for $580 million , but was arguably worth $20 billion, inducing scandal investigation. MySpace is under FOX Interactive Media. The company was founded in 2003 by Tom Anderson, an alumnus of UC Berkeley. Most recently in 2006, MySpace expanded into the UK in order to partly tap into the music scene. FOX also opened MySpace in China, in April. American mobile phone provider Helio released a series of mobile phones in early 2006 that can utilize a service known as “MySpace Mobile” to access and edit profiles, communicate with, and view other profiles. UIEvolution and MySpace have also developed a mobile version of MySpace for a wider range of carriers, including Cingular. MySpace Mobile partnered with Vodafone in February, 2007.
2. Facebook Palo Alto, CA Total Users: 27 million
Description Facebook is the social directory that enables people to connect with friends and share information. Launched in February 2004, as of 200-6, Facebook's site has registered over 8.3 million people and, according to ComScore, ranks as the seventh-most trafficked site in the US. Facebook is the number one photo-sharing site on the Internet, with 1.2 million photos uploaded daily and over 350 million photos on the site. The site serves over 2,300 colleges, 22,000 high schools and over 7,000 work networks. The company is privately held with 1.5% now owned by Microsoft.
3. Bebo San Francisco, CA Total Users: 24 million
Description Bebo.com is operated by the same persons behind BirthdayAlarm.com. Like BirthdayAlarm before it, Bebo is based upon satisfying a genuine need in a simple way. It specializes in connecting old friends who have lost contact and is structured as an LLC.
4. Black Planet Total Users: 10 million
Description Black Planet focuses on issues related to the African diaspora . The website was launched in late 1999 and has over 10 million members. Website revenue is generated by advertisements from many fortune 500 firms. BlackPlanet lets its members exchange notes and engage in real-time chats. Its executive Director is Omar Wasow, who was exclaimed by Newsweek in 1995 as “one of the 50 most influential people in cyberspace.”
9
5. Xanga New York, NY Total Users: 9 million
Description Xanga began in 1998 as a forum for website and music reviews. It allows users to quickly and easily publish diaries, thoughts, build storefronts, and add website and product reviews using “xTools.” Several of these tools allow users to create a social networking profile, access personal videoblogs, weblogs, photoblogs, audioblogs, and recently, “pulse,” described as a “carefree mindblog.” Other features include customized skins and layouts for users to control the look of their Xanga sites. Xanga is largely supported though advertising.
6. Linked In Mountain View, CA Total Users: 10 million
Description Linked In allows users to manage professional contacts called “connections.” Non-users can also be invited to become a “connection.” Linked In reached positive cash flow in March 2006. The CEO is Dan Nye.
Mobile
7. Where2Match Seattle, WA Total Users: Unknown
Description Where2match is a mobile service that connects you with your nearby friend’s events and venues. The system uses Google maps to flag locations while listing special offers and nearby events, while allowing the user to access nearby friends via a mobile device.
8. Proxpro Total Users: Unknown Description As of 2005, Parallelpro advertised its technology to connect professionals via a mobile device. In 2006, Julian Bourne, the CEO appears to have become president of North America for Silver Business Accelerator, a marketing consulting group, splitting his time among both companies.
9. Dodgeball New York, NY. Total users: 20,000
Description Dodgeball was purchased by Google in 2005 and is available in 22 cities. The service allows registered phones to check in. Once checked in, friends within a fixed area are notified of the user’s proximity. Other features include the ability to inform you when someone registered as having a “crush” on you comes within 10 blocks of your proximity. Most recently the service included venue rankings by users, and a mutual friend finder. Dennis Crowley, the founder is an Alumnus of NYU’s ITP program, gave birth to the technology.
10
3.1 COMPETITOR ANALYSIS
Incumbents include small independent entities and entities acquired by larger companies. Virtually all competitors appear to focus on increasing market share at present. Such goals suggest advancing via product R&D, marketing, and acquisition.
3.2 STRATEGIC POSITIONING
Advantage through cost management becomes less of an issue in this space due to market share goals and rudimentary value chains. Therefore, Reach Rocket seeks an unfair advantage through product and brand differentiation. For differentiation to be successful, key focus is on features analysis and marketing. Reach Rocket approaches a growth in the college-bound demographic and an increasing need for the target demographic to manage immediate and proximate relationships, during periods when social networks are not being used, such as evenings and weekends. Reach Rocket will advance in the market: 1. By fulfilling the customer’s untapped need for greater management over immediate friendships, the most important type of relationship to the college student and by using web and mobile technology, making the service an essential lifestyle component. 2. By positioning low-cost intellectual capital for continuous new product development, keeping pace, in terms of features and technology, with a fastidious user whose selectivity determines feature lifespan. 3. By establishing an agile “feel and response” mechanism, to gather rapid, reliable, data and initiate ongoing promotions using the tightly-knit campus population, for example, pre-selected groups of students who are paid to promote the service, and to provide feedback through surveys or focus-groups. The environment is ideal for grassroots promotions inexpensive advertising and cross-college viral marketing. 4. By associating the brand with college, friends, evenings and weekends; when online social network activity severely declines. 5. By using features to introduce the service in a low-cost, fun way that does not require critical mass and by providing features that do not directly compete, but are complementary to social networks. 6. By using present and future patents as entry barriers. 7. By allowing students to pick the types of advertising they would like to see, resulting in a more targeted customer and a service empathetic to students’ aversion to advertising.
11
4 OPERATIONS
4.1 EQUIPMENT
Equipment includes computers, software, office equipment and supplies for staff. Office space is calculated at 64 square feet per employee at a rate of $12.5 per sq. ft.
4.2 SMS COSTS
Text messaging, or SMS charges, can account for 90% of total expenses and absorb 55% of revenues. As social networks become mobile, these charges are unavoidable. Reach Rocket’s immediate features and service do not require these charges, though they are likely in the future though planned mobile applications.
12
5 HIRING SCHEDULE
5.1 STAFF
Staff is initially composed of three developers, one architect, one network administrator, one customer service representative, two business and marketing personnel, and one graphic designer. Total hires range from twelve persons at end of year one to twenty-six persons by end of year five.
5.1.1 Customer Service
Customer service sees the largest change in staff over the five represented years resulting from the increase in users and subsequent problems resulting from system and service complexity. Rate of service staffing is calculated from the projected number of users, customer servicing time and cost statistics taken from the Center for Service Benchmarking Programme.
5.1.2 Business / Marketing
Business and marketing personnel compose the only other significant changes, ranging from two in year one to four by year five. This is largely necessary to manage student representatives hired to promote the service at their schools.
5.2 SALARIES
Salaries have been determined by using averages provided by the Bureau of Labor Statistics and Salary.com.
5.2.1 Employee Payroll and Insurance
Insurance has been calculated at $3 per hour per employee, as provided by the Employment Policy Foundation. Payroll assumes 13.85% of salaries following the following breakdown:
FICA:Medicare 1.4%
FICA: OASDI 6.2% FUTA: 6.2% Total ………. 13.85 %
13
6 FINANCIAL STATEMENTS
The financial statements are projections for five years by month. They are based on excel inputs designed to dynamically address and/or adjust the following elements in the financial projections for ongoing estimation:
• Revenues
• Costs
• Accounts receivables and cash variance
• Operating, financing and investing activities
• User adoption and use projections per month
• Hiring schedule
• Tax deferrals
6.1 ACCOUNTS RECEIVABLE & BAD DEBT
A/R and collections assume 50% in the month of sale, then 30% and 10% in the months thereafter, allowing for 10% bad debt. The percents, which may be adjusted through the excel sheet, account for unknown variances resulting from advertising receipts.
6.2 CAPITAL EQUIPMENT DEPRECIATION
Depreciation has been calculated using MACRS for all purchased and leased assets. All assets aside from software assume six-year depreciation.
14
6.3 REVENUES
Revenues are based on the user adoption rate of Facebook, a historical comparable used to measure Reach Rocket’s potential. Assumptions are listed below.
6.4 PROFITS
Profitability is forecast using the same user acquisition trend line extrapolated from that of Facebook (see appendix, figure 9, page 39). The financials assume:
1. 33% of Facebook’s page views (280 /user/mo.) with 4 impressions per page 2. 80% users active per month 3. Respective CPM and CTR revenues totally $0.35/user/month 4. 0 relevant business posts/user/month, yielding monthly revenues of $0.00/user 5. A user adoption line of best fit to that of Facebook
FINANCIALS SUMMARY
INCOME
STATEMENT YR 1 YR 2 YR 3 YR 4 YR 5
Revenues $2,523,579 $7,049,521 $18,534,541 $49,370,825 $130,654,922
Net Income $1,053,939 $1,888,657 $11,249,269 $31,413,309 $85,009,632
BALANCE SHEET
Total Assets $1,448,824 $3,337,481 $14,586,750 $46,000,060 $131,009,692
CASHFLOW
Cash Balance $666,817 $1,341,253 $9,374,198 $32,283,682 $94,800,712
15
Inc
om
e S
tate
me
nt
Yea
rs b
y M
onth
YEAR ONE
1
2
3
4
5
6
7
8
9
10
11
12
TOTAL
REVENUE
$48,226
$96,452
$160,754
$174,335
$189,062
$205,034
$222,355
$241,140
$261,511
$283,603
$307,562
$333,544
$2,523,579
COSTS
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Margin
$48,226
$96,452
$160,754
$174,335
$189,062
$205,034
$222,355
$241,140
$261,511
$283,603
$307,562
$333,544
$2,523,579
EXPENSES
Rent
$800
$800
$800
$800
$800
$800
$800
$800
$800
$800
$800
$800
$9,600
Salaries/Comm
$45,083
$45,083
$45,083
$48,083
$48,083
$48,083
$51,083
$51,083
$51,083
$54,083
$54,083
$54,083
$595,000
Marketing & Sales
$32,593
$32,593
$32,593
$32,593
$32,593
$32,593
$195,560
Utilities
$300
$300
$300
$300
$300
$300
$300
$300
$300
$300
$300
$300
$3,600
$0
Depreciation
$742
$742
$742
$823
$823
$823
$904
$904
$904
$984
$984
$984
$10,359
$0
Legal &
Accounting
$1,250
$1,250
$1,250
$1,250
$1,250
$1,250
$1,250
$1,250
$1,250
$1,250
$1,250
$1,250
$15,000
Payroll taxes
$6,244
$6,244
$6,244
$6,660
$6,660
$6,660
$7,075
$7,075
$7,075
$7,491
$7,491
$7,491
$82,408
$0
Maintenance
$100
$100
$100
$100
$100
$100
$100
$100
$100
$100
$100
$100
$1,200
Telephone
$240
$240
$240
$481
$481
$481
$721
$721
$721
$962
$962
$962
$7,212
Insurance
$2,261
$2,261
$2,261
$2,512
$2,512
$2,512
$2,763
$2,763
$2,763
$3,014
$3,014
$3,014
$31,651
Supplies
$450
$450
$450
$500
$500
$500
$550
$550
$550
$600
$600
$600
$6,300
$0
Service Training
$3,000
$0
$0
$3,000
$0
$0
$3,000
$0
$0
$3,000
$0
$0
$12,000
SMS / Billing
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Misc. taxes and
fees
$150
$150
$150
$150
$150
$150
$150
$150
$150
$150
$150
$150
$1,800
Total Expenses
$93,214
$90,214
$90,214
$64,659
$61,659
$61,659
$68,696
$65,696
$98,290
$105,327
$102,327
$69,734
$971,690
EBIT
-$44,988
$6,238
$70,540
$109,676
$127,404
$143,375
$153,659
$175,443
$163,221
$178,276
$205,234
$263,810
$1,551,889
Interest
Taxes
$0
$0
$0
$18,406
$43,317
$48,748
$52,244
$59,651
$55,495
$60,614
$69,780
$89,696
$497,950
NET INCOME
-$44,988
$6,238
$70,540
$91,270
$84,086
$94,628
$101,415
$115,793
$107,726
$117,662
$135,455
$174,115
$1,053,939
16
Ba
lan
ce S
hee
t
Yea
r 1
YEAR ONE
Start Mo. 1
1
2
3
4
5
6
7
8
9
10
11
12
ASSETS
CURRENT
Cash
352,985
$270,158
$219,268
$192,811
$182,089
$179,053
$201,933
$261,480
$336,672
$400,291
$465,624
$549,127
$666,817
Accounts Receivable
$0
$38,581
$96,452
$194,191
$292,506
$380,452
$453,022
$491,293
$532,798
$577,808
$626,621
$679,557
$736,966
Inventory
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Total Current Assets
$352,985
$308,739
$315,720
$387,002
$474,595
$559,504
$654,955
$752,773
$869,469
$978,099
$1,092,245
$1,228,684
$1,403,783
NONCURRENT
$742
-$823
Gross PP&E
$41,900
$41,900
$41,900
$41,900
$46,400
$46,400
$46,400
$50,900
$50,900
$50,900
$55,400
$55,400
$55,400
Accum Depreciation
$0
-$742
-$1,485
-$2,227
-$3,050
-$3,873
-$4,696
-$5,600
-$6,503
-$7,407
-$8,391
-$9,375
-$10,359
Total Noncurrent
Assets
$41,900
$41,158
$40,415
$39,673
$43,350
$42,527
$41,704
$45,300
$44,397
$43,493
$47,009
$46,025
$45,041
TOTAL ASSETS
$394,885
$349,897
$356,135
$426,675
$517,945
$602,031
$696,659
$798,073
$913,866 $1,021,592
$1,139,254
$1,274,709
$1,448,824
LIABILITIES
CURRENT
Accounts Payable
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Other Current Liabilities
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Total Current Liabilities
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
NONCURRENT
Notes payable
Capital Leases
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
To. Noncurrent
Liabilites
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
TOTAL LIABILITIES
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
EQUITY
Contributed Capital
$394,885
$394,885
$394,885
$394,885
$394,885
$394,885
$394,885
$394,885
$394,885
$394,885
$394,885
$394,885
$394,885
Retained Earnings
$0
-$44,988
-$38,750
$31,790
$123,059
$207,146
$301,773
$403,188
$518,981
$626,707
$744,369
$879,824
$1,053,939
TOTAL EQUITY
$394,885
$349,897
$356,135
$426,675
$517,945
$602,031
$696,659
$798,073
$913,866 $1,021,592
$1,139,254
$1,274,709
$1,448,824
TOTAL L & E
$394,885
$349,897
$356,135
$426,675
$517,945
$602,031
$696,659
$798,073
$913,866 $1,021,592
$1,139,254
$1,274,709
$1,448,824
17
Ca
sh
flo
ws
Sta
tem
en
t
Yea
r 1
YEAR ONE
1
2
3
4
5
6
7
8
9
10
11
12
OPERATING ACTIVITIES
Net Income
(44,988)
6,238
70,540
91,270
84,086
94,628
101,415
115,793
107,726
117,662
135,455
174,115
Depreciation
742
742
742
823
823
823
904
904
904
984
984
984
Accounts Receivable
(38,581)
(57,871)
(97,739)
(98,315)
(87,946)
(72,571)
(38,271)
(41,504)
(45,010)
(48,813)
(52,937)
(57,409)
Inventories
-
-
-
-
-
-
-
-
-
-
-
-
Accounts Payable
-
-
-
-
-
-
-
-
-
-
-
-
NET CASH FLOW: OA
(82,827)
(50,891)
(26,456)
(6,222)
(3,037)
22,880
64,047
75,192
63,619
69,833
83,502
117,690
INVESTING ACTIVITIES
Outflow to purchase equip.
41,900
-
-
4,500
-
-
4,500
-
-
4,500
-
-
NET CASH FLOW: IA
(41,900)
-
-
(4,500)
-
-
(4,500)
-
-
(4,500)
-
-
FINANCING ACTIVITIES
Contributed Capital
394,885
Outflow for principal on loan
Long-term loan
NET CASH FLOW: FA
394,885
-
-
-
-
-
-
-
-
-
-
-
Net Increase in Cash
270,158
(50,891)
(26,456)
(10,722)
(3,037)
22,880
59,547
75,192
63,619
65,333
83,502
117,690
Beginning Cash
-
270,158
219,268
192,811
182,089
179,053
201,933
261,480
336,672
400,291
465,624
549,127
Ending Cash Balance
270,158
219,268
192,811
182,089
179,053
201,933
261,480
336,672
400,291
465,624
549,127
666,817
18
Inc
om
e S
tate
me
nt
Yea
r 2
YEAR TWO
1
2
3
4
5
6
7
8
9
10
11
12
TOTAL
REVENUE
$361,722
$392,280
$425,420
$461,359
$500,334
$542,602
$588,441
$638,152
$692,062
$750,527
$813,931
$882,692
$7,049,521
COSTS
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Margin
$361,722
$392,280
$425,420
$461,359
$500,334
$542,602
$588,441
$638,152
$692,062
$750,527
$813,931
$882,692
$7,049,521
EXPENSES
Rent
$1,067
$1,067
$1,067
$1,067
$1,067
$1,067
$1,067
$1,067
$1,067
$1,067
$1,067
$1,067
$12,800
Salaries/Comm
$59,558
$164,558
$176,558
$200,558
$224,558
$248,558
$284,558
$317,558
$356,558
$404,558
$449,558
$497,558
$3,384,700
Marketing & Sales
$32,593
$32,593
$32,593
$32,593
$32,593
$32,593
$195,560
Utilities
$400
$400
$400
$400
$400
$400
$400
$400
$400
$400
$400
$400
$4,800
$0
Depreciation
$1,135
$1,135
$1,135
$1,330
$1,330
$1,322
$1,525
$1,525
$1,525
$1,719
$1,719
$1,719
$17,119
$0
Legal &
Accounting
$1,500
$1,500
$1,500
$1,500
$1,500
$1,500
$1,500
$1,500
$1,500
$1,500
$1,500
$1,500
$18,000
Payroll taxes
$8,249
$22,791
$24,453
$27,777
$31,101
$34,425
$39,411
$43,982
$49,383
$56,031
$62,264
$68,912
$468,781
$0
Maintenance
$100
$100
$100
$100
$100
$100
$100
$100
$100
$100
$100
$100
$1,200
Telephone
$1,202
$1,202
$1,202
$1,442
$1,442
$1,442
$1,683
$1,683
$1,683
$1,923
$1,923
$1,923
$18,751
Insurance
$3,266
$3,266
$3,266
$3,517
$3,517
$3,517
$3,768
$3,768
$3,768
$4,019
$4,019
$4,019
$43,709
Supplies
$650
$650
$650
$700
$700
$700
$750
$750
$750
$800
$800
$800
$8,700
$0
Service Training
$3,000
$0
$0
$3,000
$0
$0
$3,000
$0
$0
$3,000
$0
$0
$12,000
SMS / Billing
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Misc. taxes and
fees
$150
$150
$150
$150
$150
$150
$150
$150
$150
$150
$150
$150
$1,800
Total Expenses
$112,870
$229,413
$243,075
$241,541
$265,865
$293,181
$337,912
$372,482
$449,477
$507,861
$556,094
$578,148
$4,187,920
EBIT
$248,852
$162,867
$182,345
$219,817
$234,469
$249,421
$250,529
$265,669
$242,585
$242,666
$257,838
$304,543
$2,861,601
Interest
Taxes
$84,610
$55,375
$61,997
$74,738
$79,719
$84,803
$85,180
$90,328
$82,479
$82,506
$87,665
$103,545
$972,944
NET INCOME
$164,242
$107,493
$120,348
$145,079
$154,749
$164,618
$165,349
$175,342
$160,106
$160,160
$170,173
$200,999
$1,888,657
19
Ba
lan
ce S
hee
t
Yea
r 2
YEAR TWO
Start Mo. 1
1
2
3
4
5
6
7
8
9
10
11
12
ASSETS
CURRENT
Cash
765,436
806,546
854,807
917,309
987,273
1,059,821
1,120,914
1,187,944
1,230,460
1,258,660
1,290,461
1,341,253
Accounts Receivable
$799,224
$866,742
$939,964 $1,019,371 $1,105,487 $1,198,878
$1,300,159
$1,409,995 $1,529,111
$1,658,289
$1,798,380
$1,950,306
Inventory
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Total Current Assets
$1,564,661 $1,673,288 $1,794,771 $1,936,681 $2,092,760 $2,258,699
$2,421,073
$2,597,939 $2,759,570
$2,916,949
$3,088,841
$3,291,559
NONCURRENT
Gross PP&E
$59,900
$59,900
$59,900
$64,400
$64,400
$64,400
$68,900
$68,900
$68,900
$73,400
$73,400
$73,400
Accum Depreciation
-$11,495
-$12,630
-$13,765
-$15,095
-$16,425
-$17,747
-$19,271
-$20,796
-$22,320
-$24,040
-$25,759
-$27,478
Total Noncurrent
Assets
$48,405
$47,270
$46,135
$49,305
$47,975
$46,653
$49,629
$48,104
$46,580
$49,360
$47,641
$45,922
TOTAL ASSETS
$1,613,066 $1,720,559 $1,840,906 $1,985,986 $2,140,735 $2,305,353
$2,470,702
$2,646,044 $2,806,150
$2,966,309
$3,136,482
$3,337,481
LIABILITIES
CURRENT
Accounts Payable
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Other Current Liabilities
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Total Current Liabilities
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
NONCURRENT
Notes payable
Capital Leases
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
To. Noncurrent
Liabilites
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
TOTAL LIABILITIES
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
EQUITY
Contributed Capital
$394,885
$394,885
$394,885
$394,885
$394,885
$394,885
$394,885
$394,885
$394,885
$394,885
$394,885
$394,885
Retained Earnings
$1,218,181 $1,325,673 $1,446,021 $1,591,101 $1,745,850 $1,910,468
$2,075,817
$2,251,158 $2,411,265
$2,571,424
$2,741,597
$2,942,596
TOTAL EQUITY
$1,613,066 $1,720,559 $1,840,906 $1,985,986 $2,140,735 $2,305,353
$2,470,702
$2,646,044 $2,806,150
$2,966,309
$3,136,482
$3,337,481
TOTAL L & E
$1,613,066 $1,720,559 $1,840,906 $1,985,986 $2,140,735 $2,305,353
$2,470,702
$2,646,044 $2,806,150
$2,966,309
$3,136,482
$3,337,481
20
Ca
sh
flo
ws
Sta
tem
en
t
Yea
r 2
YEAR TWO
1
2
3
4
5
6
7
8
9
10
11
12
OPERATING ACTIVITIES
Net Income
164,242
107,493
120,348
145,079
154,749
164,618
165,349
175,342
160,106
160,160
170,173
200,999
Depreciation
1,135
1,135
1,135
1,330
1,330
1,322
1,525
1,525
1,525
1,719
1,719
1,719
Accounts Receivable
(62,258)
(67,518)
(73,222)
(79,408)
(86,116)
(93,391)
(101,280)
(109,837)
(119,115)
(129,178)
(140,091)
(151,926)
Inventories
-
-
-
-
-
-
-
-
-
-
-
-
Accounts Payable
-
-
-
-
-
-
-
-
-
-
-
-
NET CASH FLOW: OA
103,119
41,110
48,261
67,002
69,963
72,548
65,593
67,030
42,515
32,700
31,801
50,792
INVESTING ACTIVITIES
Outflow to purchase equip.
4,500
-
-
4,500
-
-
4,500
-
-
4,500
-
-
NET CASH FLOW: IA
(4,500)
-
-
(4,500)
-
-
(4,500)
-
-
(4,500)
-
-
FINANCING ACTIVITIES
Contributed Capital
Outflow for principal on loan
Long-term loan
NET CASH FLOW: FA
-
-
-
-
-
-
-
-
-
-
-
-
Net Increase in Cash
98,619
41,110
48,261
62,502
69,963
72,548
61,093
67,030
42,515
28,200
31,801
50,792
Beginning Cash
666,817
765,436
806,546
854,807
917,309
987,273
1,059,821
1,120,914
1,187,944
1,230,460
1,258,660
1,290,461
Ending Cash Balance
765,436
806,546
854,807
917,309
987,273
1,059,821
1,120,914
1,187,944
1,230,460
1,258,660
1,290,461
1,341,253
21
Inc
om
e S
tate
me
nt
Yea
r 3
YEAR THREE
1
2
3
4
5
6
7
8
9
10
11
12
TOTAL
REVENUE
$957,261 $1,038,130 $1,125,830 $1,220,940 $1,324,084 $1,435,941 $1,435,941 $1,688,804 $1,831,473 $1,986,195 $2,153,987
$2,335,955 $18,534,541
COSTS
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Margin
$957,261 $1,038,130 $1,125,830 $1,220,940 $1,324,084 $1,435,941 $1,435,941 $1,688,804 $1,831,473 $1,986,195 $2,153,987
$2,335,955 $18,534,541
EXPENSES
Rent
$1,333
$1,333
$1,333
$1,333
$1,333
$1,333
$1,333
$1,333
$1,333
$1,333
$1,333
$1,333
$16,000
Salaries/Comm
$79,583
$79,583
$79,583
$79,583
$82,583
$82,583
$82,583
$82,583
$85,583
$85,583
$85,583
$85,583
$991,000
Marketing & Sales
$32,593
$32,593
$32,593
$32,593
$32,593
$32,593
$195,560
Utilities
$500
$500
$500
$500
$500
$500
$500
$500
$500
$500
$500
$500
$6,000
$0
Depreciation
$730
$730
$730
$893
$973
$973
$1,136
$1,136
$1,217
$1,380
$1,380
$1,380
$12,658
$0
Legal &
Accounting
$1,800
$1,800
$1,800
$1,800
$1,800
$1,800
$1,800
$1,800
$1,800
$1,800
$1,800
$1,800
$21,600
Payroll taxes
$11,022
$11,022
$11,022
$11,022
$11,438
$11,438
$11,438
$11,438
$11,853
$11,853
$11,853
$11,853
$137,254
$0
Maintenance
$100
$100
$100
$100
$100
$100
$100
$100
$100
$100
$100
$100
$1,200
Telephone
$2,164
$2,164
$2,164
$2,164
$2,404
$2,404
$2,404
$2,404
$2,644
$2,644
$2,644
$2,644
$28,848
Insurance
$4,522
$4,522
$4,522
$4,522
$4,773
$4,773
$4,773
$4,773
$5,024
$5,024
$5,024
$5,024
$57,274
Supplies
$900
$900
$900
$900
$950
$950
$950
$950
$1,000
$1,000
$1,000
$1,000
$11,400
$0
Service Training
$3,000
$0
$0
$0
$3,000
$0
$0
$0
$3,000
$0
$0
$0
$9,000
SMS / Billing
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Misc. taxes and
fees
$200
$200
$200
$200
$200
$200
$200
$200
$200
$200
$200
$200
$2,400
Total Expenses
$138,448
$135,448
$135,448
$103,017
$110,055
$107,055
$107,217
$107,217
$146,848
$144,011
$144,011
$111,418
$1,490,193
EBIT
$818,813
$902,682
$990,383 $1,117,922 $1,214,029 $1,328,887 $1,328,724 $1,581,587 $1,684,625 $1,842,184 $2,009,976
$2,224,537 $17,044,348
Interest
Taxes
$278,397
$306,912
$336,730
$380,094
$412,770
$451,821
$451,766
$537,739
$572,772
$626,342
$683,392
$756,343
$5,795,078
NET INCOME
$540,417
$595,770
$653,652
$737,829
$801,259
$877,065
$876,958 $1,043,847 $1,111,852 $1,215,841 $1,326,584
$1,468,194 $11,249,269
22
Ba
lan
ce S
hee
t
Yea
r 3
YEAR THREE
Start Mo. 1
1
2
3
4
5
6
7
8
9
10
11
12
ASSETS
CURRENT
Cash
1,708,639
2,126,460
2,587,068
3,115,646
3,685,482
4,316,371
5,023,482
5,729,271
6,542,023
7,436,795
8,306,681
9,374,198
Accounts Receivable
$2,115,066 $2,293,746 $2,487,520 $2,697,664 $2,925,561 $3,172,710 $3,343,693 $3,682,887
$3,978,705
$4,301,153
$4,759,232
$5,161,288
Inventory
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Total Current Assets
$3,823,705 $4,420,206 $5,074,588 $5,813,310 $6,611,043 $7,489,081 $8,367,175 $9,412,159 $10,520,728 $11,737,949 $13,065,912 $14,535,486
NONCURRENT
Gross PP&E
$82,400
$82,400
$82,400
$82,400
$86,900
$86,900
$86,900
$86,900
$91,400
$91,400
$91,400
$91,400
Accum Depreciation
-$28,208
-$28,938
-$29,668
-$30,561
-$31,535
-$32,508
-$33,644
-$34,781
-$35,997
-$37,377
-$38,756
-$40,136
Total Noncurrent
Assets
$54,192
$53,462
$52,732
$51,839
$55,365
$54,392
$53,256
$52,119
$55,403
$54,023
$52,644
$51,264
TOTAL ASSETS
$3,877,897 $4,473,668 $5,127,320 $5,865,149 $6,666,408 $7,543,473 $8,420,431 $9,464,278 $10,576,130 $11,791,972 $13,118,556 $14,586,750
LIABILITIES
CURRENT
Accounts Payable
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Other Current Liabilities
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Total Current Liabilities
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
NONCURRENT
Notes payable
Capital Leases
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
To. Noncurrent
Liabilites
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
TOTAL LIABILITIES
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
EQUITY
Contributed Capital
$394,885
$394,885
$394,885
$394,885
$394,885
$394,885
$394,885
$394,885
$394,885
$394,885
$394,885
$394,885
Retained Earnings
$3,483,012 $4,078,782 $4,732,435 $5,470,264 $6,271,523 $7,148,588 $8,025,546 $9,069,393 $10,181,245 $11,397,087 $12,723,671 $14,191,865
TOTAL EQUITY
$3,877,897 $4,473,668 $5,127,320 $5,865,149 $6,666,408 $7,543,473 $8,420,431 $9,464,278 $10,576,130 $11,791,972 $13,118,556 $14,586,750
TOTAL L & E
$3,877,897 $4,473,668 $5,127,320 $5,865,149 $6,666,408 $7,543,473 $8,420,431 $9,464,278 $10,576,130 $11,791,972 $13,118,556 $14,586,750
23
Ca
sh
flo
ws
Sta
tem
en
t
Yea
r 3
YEAR THREE
1
2
3
4
5
6
7
8
9
10
11
12
OPERATING ACTIVITIES
Net Income
540,417
595,770
653,652
737,829
801,259
877,065
876,958
1,043,847
1,111,852
1,215,841
1,326,584
1,468,194
Depreciation
730
730
730
893
973
973
1,136
1,136
1,217
1,380
1,380
1,380
Accounts Receivable
(164,761)
(178,679)
(193,774)
(210,144)
(227,897)
(247,149)
(170,983)
(339,194)
(295,818)
(322,448)
(458,078)
(402,057)
Inventories
-
-
-
-
-
-
-
-
-
-
-
-
Accounts Payable
-
-
-
-
-
-
-
-
-
-
-
-
NET CASH FLOW: OA
376,386
417,821
460,608
528,578
574,336
630,889
707,111
705,789
817,251
894,773
869,885
1,067,517
INVESTING ACTIVITIES
Outflow to purchase equip.
9,000
-
-
-
4,500
-
-
-
4,500
-
-
-
NET CASH FLOW: IA
(9,000)
-
-
-
(4,500)
-
-
-
(4,500)
-
-
-
FINANCING ACTIVITIES
Contributed Capital
-
Outflow for principal on loan
Long-term loan
NET CASH FLOW: FA
-
-
-
-
-
-
-
-
-
-
-
-
Net Increase in Cash
367,386
417,821
460,608
528,578
569,836
630,889
707,111
705,789
812,751
894,773
869,885
1,067,517
Beginning Cash
1,341,253
1,708,639
2,126,460
2,587,068
3,115,646
3,685,482
4,316,371
5,023,482
5,729,271
6,542,023
7,436,795
8,306,681
Ending Cash Balance
1,708,639
2,126,460
2,587,068
3,115,646
3,685,482
4,316,371
5,023,482
5,729,271
6,542,023
7,436,795
8,306,681
9,374,198
24
Inc
om
e S
tate
me
nt
Yea
r 4
YEAR FOUR
1
2
3
4
5
6
7
8
9
10
11
12
TOTAL
REVENUE
$2,533,295 $2,747,306 $2,979,396 $3,231,094 $3,504,054 $3,800,074 $4,121,102 $4,469,250 $4,846,810 $5,256,265
$5,700,311
$6,181,869 $49,370,825
COSTS
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Margin
$2,533,295 $2,747,306 $2,979,396 $3,231,094 $3,504,054 $3,800,074 $4,121,102 $4,469,250 $4,846,810 $5,256,265
$5,700,311
$6,181,869 $49,370,825
EXPENSES
Rent
$1,600
$1,600
$1,600
$1,600
$1,600
$1,600
$1,600
$1,600
$1,600
$1,600
$1,600
$1,600
$19,200
Salaries/Comm
$99,083
$99,083
$99,083
$99,083
$99,083
$102,083
$102,083
$102,083
$102,083
$102,083
$105,083
$105,083
$1,216,000
Marketing & Sales
$32,593
$32,593
$32,593
$32,593
$32,593
$32,593
$195,560
Utilities
$600
$600
$600
$600
$600
$600
$600
$600
$600
$600
$600
$600
$7,200
$0
Depreciation
$689
$689
$689
$764
$878
$959
$1,034
$1,034
$1,148
$1,224
$1,304
$1,304
$11,717
$0
Legal &
Accounting
$2,000
$2,000
$2,000
$2,000
$2,000
$2,000
$2,000
$2,000
$2,000
$2,000
$2,000
$2,000
$24,000
Payroll taxes
$13,723
$13,723
$13,723
$13,723
$13,723
$14,139
$14,139
$14,139
$14,139
$14,139
$14,554
$14,554
$168,416
$0
Maintenance
$150
$150
$150
$150
$150
$150
$150
$150
$150
$150
$150
$150
$1,800
Telephone
$2,885
$2,885
$2,885
$2,885
$2,885
$3,125
$3,125
$3,125
$3,125
$3,125
$3,366
$3,366
$36,781
Insurance
$5,526
$5,526
$5,526
$5,526
$5,526
$5,778
$5,778
$5,778
$5,778
$5,778
$6,029
$6,029
$68,578
Supplies
$1,100
$1,100
$1,100
$1,100
$1,100
$1,150
$1,150
$1,150
$1,150
$1,150
$1,200
$1,200
$13,650
$0
Service Training
$3,000
$0
$0
$0
$0
$3,000
$0
$0
$0
$0
$3,000
$0
$9,000
SMS / Billing
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Misc. taxes and
fees
$250
$250
$250
$250
$250
$250
$250
$250
$250
$250
$250
$250
$3,000
Total Expenses
$163,200
$160,200
$160,200
$127,682
$127,796
$134,834
$131,909
$131,909
$164,616
$164,692
$171,729
$136,136
$1,774,902
EBIT
$2,370,095 $2,587,106 $2,819,197 $3,103,412 $3,376,258 $3,665,241 $3,989,193 $4,337,341 $4,682,193 $5,091,573
$5,528,581
$6,045,733 $47,595,923
Interest
Taxes
$805,832
$879,616
$958,527 $1,055,160 $1,147,928 $1,246,182 $1,356,326 $1,474,696 $1,591,946 $1,731,135
$1,879,718
$2,055,549 $16,182,614
NET INCOME
$1,564,263 $1,707,490 $1,860,670 $2,048,252 $2,228,331 $2,419,059 $2,632,868 $2,862,645 $3,090,248 $3,360,438
$3,648,864
$3,990,184 $31,413,309
25
Ba
lan
ce S
hee
t
Yea
r 4
YEAR FOUR
Start Mo. 1
1
2
3
4
5
6
7
8
9
10
11
12
ASSETS
CURRENT
Cash
10,494,127
11,729,448
13,078,003
14,570,894
16,196,997
17,958,458
19,883,050
21,977,497
24,234,676
26,691,647
29,356,197
32,283,682
Accounts Receivable
$5,597,311
$6,070,168
$6,582,972
$7,139,097
$7,742,203
$8,396,259
$9,105,569
$9,874,802 $10,709,019 $11,613,709 $12,594,828 $13,658,831
Inventory
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Total Current Assets
$16,091,438 $17,799,616 $19,660,975 $21,709,991 $23,939,200 $26,354,717 $28,988,619 $31,852,299 $34,943,695 $38,305,357 $41,951,025 $45,942,513
NONCURRENT
Gross PP&E
$100,400
$100,400
$100,400
$100,400
$100,400
$104,900
$104,900
$104,900
$104,900
$104,900
$109,400
$109,400
Accum Depreciation
-$40,825
-$41,514
-$42,202
-$42,967
-$43,845
-$44,804
-$45,838
-$46,872
-$48,021
-$49,244
-$50,549
-$51,853
Total Noncurrent
Assets
$59,575
$58,886
$58,198
$57,433
$56,555
$60,096
$59,062
$58,028
$56,879
$55,656
$58,851
$57,547
TOTAL ASSETS
$16,151,013 $17,858,503 $19,719,172 $21,767,424 $23,995,755 $26,414,814 $29,047,681 $31,910,327 $35,000,574 $38,361,012 $42,009,876 $46,000,060
LIABILITIES
CURRENT
Accounts Payable
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Other Current Liabilities
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Total Current Liabilities
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
NONCURRENT
Notes payable
Capital Leases
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
To. Noncurrent
Liabilites
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
TOTAL LIABILITIES
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
EQUITY
Contributed Capital
$394,885
$394,885
$394,885
$394,885
$394,885
$394,885
$394,885
$394,885
$394,885
$394,885
$394,885
$394,885
Retained Earnings
$15,756,128 $17,463,618 $19,324,287 $21,372,539 $23,600,870 $26,019,929 $28,652,796 $31,515,442 $34,605,689 $37,966,127 $41,614,991 $45,605,175
TOTAL EQUITY
$16,151,013 $17,858,503 $19,719,172 $21,767,424 $23,995,755 $26,414,814 $29,047,681 $31,910,327 $35,000,574 $38,361,012 $42,009,876 $46,000,060
TOTAL L & E
$16,151,013 $17,858,503 $19,719,172 $21,767,424 $23,995,755 $26,414,814 $29,047,681 $31,910,327 $35,000,574 $38,361,012 $42,009,876 $46,000,060
26
Ca
sh
flo
ws
Sta
tem
en
t
Yea
r 4
YEAR FOUR
1
2
3
4
5
6
7
8
9
10
11
12
OPERATING ACTIVITIES
Net Income
1,564,263
1,707,490
1,860,670
2,048,252
2,228,331
2,419,059
2,632,868
2,862,645
3,090,248
3,360,438
3,648,864
3,990,184
Depreciation
689
689
689
764
878
959
1,034
1,034
1,148
1,224
1,304
1,304
Accounts Receivable
(436,022)
(472,857)
(512,804)
(556,125)
(603,106)
(654,056)
(709,310)
(769,232)
(834,217)
(904,691)
(981,118)
(1,064,003)
Inventories
-
-
-
-
-
-
-
-
-
-
-
-
Accounts Payable
-
-
-
-
-
-
-
-
-
-
-
-
NET CASH FLOW: OA
1,128,929
1,235,322
1,348,555
1,492,891
1,626,103
1,765,962
1,924,591
2,094,447
2,257,179
2,456,971
2,669,049
2,927,485
INVESTING ACTIVITIES
Outflow to purchase equip.
9,000
-
-
-
-
4,500
-
-
-
-
4,500
-
NET CASH FLOW: IA
(9,000)
-
-
-
-
(4,500)
-
-
-
-
(4,500)
-
FINANCING ACTIVITIES
Contributed Capital
-
Outflow for principal on loan
Long-term loan
NET CASH FLOW: FA
-
-
-
-
-
-
-
-
-
-
-
-
Net Increase in Cash
1,119,929
1,235,322
1,348,555
1,492,891
1,626,103
1,761,462
1,924,591
2,094,447
2,257,179
2,456,971
2,664,549
2,927,485
Beginning Cash
9,374,198
10,494,127
11,729,448
13,078,003
14,570,894
16,196,997
17,958,458
19,883,050
21,977,497
24,234,676
26,691,647
29,356,197
Ending Cash Balance
10,494,127
11,729,448
13,078,003
14,570,894
16,196,997
17,958,458
19,883,050
21,977,497
24,234,676
26,691,647
29,356,197
32,283,682
27
Inc
om
e S
tate
me
nt
Yea
r 5
YEAR FIVE
1
2
3
4
5
6
7
8
9
10
11
12
TOTAL
REVENUE
$6,704,109 $7,270,468 $7,884,672 $8,550,764 $9,273,127 $10,056,515 $10,906,083 $11,827,421 $12,826,594 $13,910,176 $15,085,299 $16,359,695 $130,654,922
COSTS
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Margin
$6,704,109 $7,270,468 $7,884,672 $8,550,764 $9,273,127 $10,056,515 $10,906,083 $11,827,421 $12,826,594 $13,910,176 $15,085,299 $16,359,695 $130,654,922
EXPENSES
Rent
$1,733
$1,733
$1,733
$1,733
$1,733
$1,733
$1,733
$1,733
$1,733
$1,733
$1,733
$1,733
$20,800
Salaries/Comm
$107,583
$107,583
$107,583
$107,583
$107,583
$110,583
$110,583
$110,583
$110,583
$110,583
$110,583
$113,583
$1,315,000
Marketing & Sales
$32,593
$32,593
$32,593
$32,593
$32,593
$32,593
$195,560
Utilities
$650
$650
$650
$650
$650
$650
$650
$650
$650
$650
$650
$650
$7,800
$0
Depreciation
$282
$282
$282
$296
$296
$377
$391
$391
$391
$406
$406
$486
$4,289
$0
Legal &
Accounting
$2,000
$2,000
$2,000
$2,000
$2,000
$2,000
$2,000
$2,000
$2,000
$2,000
$2,000
$2,000
$24,000
Payroll taxes
$14,900
$14,900
$14,900
$14,900
$14,900
$15,316
$15,316
$15,316
$15,316
$15,316
$15,316
$15,731
$182,127
$0
Maintenance
$150
$150
$150
$150
$150
$150
$150
$150
$150
$150
$150
$150
$1,800
Telephone
$3,366
$2,164
$2,164
$2,164
$2,404
$2,404
$2,404
$2,404
$2,644
$2,644
$2,644
$2,644
$30,050
Insurance
$6,029
$3,517
$3,517
$3,517
$3,517
$3,768
$3,768
$3,768
$3,768
$3,768
$3,768
$4,019
$46,723
Supplies
$1,100
$1,200
$1,200
$1,200
$1,200
$1,250
$1,250
$1,250
$1,250
$1,250
$1,250
$1,300
$14,700
$0
Service Training
$0
$0
$0
$0
$0
$3,000
$0
$0
$0
$0
$0
$3,000
$6,000
SMS / Billing
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Misc. taxes and
fees
$300
$300
$300
$300
$300
$300
$300
$300
$300
$300
$300
$300
$3,600
Total Expenses
$170,687
$167,073
$167,073
$134,494
$134,734
$141,531
$138,546
$138,546
$171,380
$171,394
$171,394
$145,598
$1,852,449
EBIT
$6,533,423 $7,103,395 $7,717,600 $8,416,270 $9,138,393
$9,914,983 $10,767,537 $11,688,875 $12,655,214 $13,738,782 $14,913,904 $16,214,097 $128,802,473
Interest
Taxes
$2,221,364 $2,415,154 $2,623,984 $2,861,532 $3,107,054
$3,371,094
$3,660,962
$3,974,218
$4,302,773
$4,671,186
$5,070,728
$5,512,793
$43,792,841
NET INCOME
$4,312,059 $4,688,241 $5,093,616 $5,554,738 $6,031,339
$6,543,889
$7,106,574
$7,714,658
$8,352,441
$9,067,596
$9,843,177 $10,701,304
$85,009,632
28
Ba
lan
ce S
hee
t
Yea
r 5
YEAR FIVE
Start 1
1
2
3
4
5
6
7
8
9
10
11
12
ASSETS
CURRENT
Cash
35,442,134
37,728,468
42,322,683
46,699,408
51,134,984
55,943,856
61,173,703
66,853,056
72,520,891
79,672,047
86,919,198
94,800,712
Accounts Receivable
$14,812,720 $17,214,908 $17,714,591 $18,892,901 $20,488,961 $22,219,855 $24,096,973 $26,132,670
$28,817,668
$30,734,514
$33,330,945
$36,146,721
Inventory
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Total Current Assets
$50,254,854 $54,943,377 $60,037,274 $65,592,309 $71,623,945 $78,163,711 $85,270,677 $92,985,726 $101,338,559 $110,406,561 $120,250,143 $130,947,434
NONCURRENT
Gross PP&E
$109,400
$109,400
$109,400
$109,400
$109,400
$113,900
$113,900
$113,900
$113,900
$113,900
$113,900
$118,400
Accum Depreciation
-$52,135
-$52,417
-$52,699
-$52,996
-$53,292
-$53,669
-$54,061
-$54,452
-$54,844
-$55,249
-$55,655
-$56,142
Total Noncurrent
Assets
$57,265
$56,983
$56,701
$56,404
$56,108
$60,231
$59,839
$59,448
$59,056
$58,651
$58,245
$62,258
TOTAL ASSETS
$50,312,118 $55,000,359 $60,093,975 $65,648,713 $71,680,053 $78,223,942 $85,330,516 $93,045,174 $101,397,615 $110,465,211 $120,308,388 $131,009,692
LIABILITIES
CURRENT
Accounts Payable
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Other Current Liabilities
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Total Current Liabilities
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
NONCURRENT
Notes payable
Capital Leases
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
To. Noncurrent
Liabilites
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
TOTAL LIABILITIES
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
EQUITY
Contributed Capital
$394,885
$394,885
$394,885
$394,885
$394,885
$394,885
$394,885
$394,885
$394,885
$394,885
$394,885
$394,885
Retained Earnings
$49,917,233 $54,605,474 $59,699,090 $65,253,828 $71,285,168 $77,829,057 $84,935,631 $92,650,289 $101,002,730 $110,070,326 $119,913,503 $130,614,807
TOTAL EQUITY
$50,312,118 $55,000,359 $60,093,975 $65,648,713 $71,680,053 $78,223,942 $85,330,516 $93,045,174 $101,397,615 $110,465,211 $120,308,388 $131,009,692
TOTAL L & E
$50,312,118 $55,000,359 $60,093,975 $65,648,713 $71,680,053 $78,223,942 $85,330,516 $93,045,174 $101,397,615 $110,465,211 $120,308,388 $131,009,692
29
Ca
sh
flo
ws
Sta
tem
en
t
Yea
r 5
YEAR FIVE
1
2
3
4
5
6
7
8
9
10
11
12
OPERATING ACTIVITIES
Net Income
4,312,059
4,688,241
5,093,616
5,554,738
6,031,339
6,543,889
7,106,574
7,714,658
8,352,441
9,067,596
9,843,177
10,701,304
Depreciation
282
282
282
296
296
377
391
391
391
406
406
486
Accounts Receivable
(1,153,889)
(2,402,189)
(499,683)
(1,178,310)
(1,596,060)
(1,730,894)
(1,877,119)
(2,035,696)
(2,684,998)
(1,916,846)
(2,596,431)
(2,815,776)
Inventories
Accounts Payable
NET CASH FLOW: OA
3,158,452
2,286,334
4,594,215
4,376,725
4,435,576
4,813,372
5,229,847
5,679,353
5,667,835
7,151,156
7,247,151
7,886,014
INVESTING ACTIVITIES
Outflow to purchase equip.
-
-
-
-
-
4,500
-
-
-
-
-
4,500
NET CASH FLOW: IA
-
-
-
-
-
(4,500)
-
-
-
-
-
(4,500)
FINANCING ACTIVITIES
Contributed Capital
-
Outflow for principal on loan
Long-term loan
NET CASH FLOW: FA
-
-
-
-
-
-
-
-
-
-
-
-
Net Increase in Cash
3,158,452
2,286,334
4,594,215
4,376,725
4,435,576
4,808,872
5,229,847
5,679,353
5,667,835
7,151,156
7,247,151
7,881,514
Beginning Cash
32,283,682
35,442,134
37,728,468
42,322,683
46,699,408
51,134,984
55,943,856
61,173,703
66,853,056
72,520,891
79,672,047
86,919,198
Ending Cash Balance
35,442,134
37,728,468
42,322,683
46,699,408
51,134,984
55,943,856
61,173,703
66,853,056
72,520,891
79,672,047
86,919,198
94,800,712
30
7 APPENDIX
7.1 PRODUCT FEATURE EXAMPLES
Below is an example of toolbar icons and a sample of a data page, summoned by clicking on the “!” icon. All icons summon similar pages.
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Toolbar menu allows user to select a time to see the status of friends for that time, as relayed by the other icons.
! Icon shows the number of friends who will be doing an activity at the selected time. The
submenu shows the names of friends doing an activity at a selected time and if they have invited the user to join them
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After clicking on !, users are taken to the following page to see what friends are doing. The user can join friends who have invited them and then let those friends know when they’ll be arriving.
When the user accepts an invitation, she enters when she will leave to join the
inviter. The icon submenu alerts the inviter that the invitee is on her way.
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F2F boost allows users to locate an optimal place and time to go based on the number of friends and their social value to the user.
The ideas page allows users to make a plan and invite friends. The user can also propose an idea for selected friends to opt into.
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Scheduler allows users to select where they are going or input a location. A menu allows at-a-glance views of selected friend’s schedules. The system uses the information to ensure no conflicts exist when the user posts an activity.
2nd generation cell phone application
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7.2 MARKET SHARE: US SOCIAL NETWORK SITES
Figure 8 Top Sites 2007
Rank Name Domain Market Share
1 MySpace www.myspace.com 80.74%
2 Facebook www.facebook.com 10.32%
3 Bebo www.bebo.com 1.18%
4 BlackPlanet.com www.blackplanet.com 0.88%
5 Xanga www.xanga.com 0.87%
6 iMeem www.imeem.com 0.73%
7 Yahoo! 360 360.yahoo.com 0.72%
8 Classmates www.classmates.com 0.72%
9 hi5 www.hi5.com 0.69%
10 Tagged www.tagged.com 0.67%
11 LiveJournal www.livejournal.com 0.49%
12 Gaiaonline.com www.gaiaonline.com 0.48%
13 Friendster www.friendster.com 0.34%
14 Orkut www.orkut.com 0.26%
15 Live Spaces spaces.live.com 0.18%
16 HoverSpot www.hoverspot.com 0.18%
17 Buzznet www.buzznet.com 0.18%
18 Sconex www.sconex.com 0.14%
19 MiGente.com www.migente.com 0.11%
20 myYearbook www.myyearbook.com 0.11%
Note - data is based on custom category of 20 of the leading social networking websites ranked by market share of visits.
Source: Hitwise
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7.3 INTELLECTUAL PROPERTY DOCKET
