Mobrand Business Plan

Balan Subramanian

9/1/2009

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Contents

INDUSTRY OVERVIEW 5

COMPANY DESCRIPTION 7

MOBRAND’S SERVICES 9

MARKET RESEARCH AND ANALYSIS 11

MARKETING STRATEGY 13

MANAGEMENT TEAM 15

FINANCIAL MODEL AND PROJECTIONS 16

Appendices

A. High level financial projections

B. Monthly budget for 2010

C. Monthly cash flow statement for 2010

D. Quarterly budget 2011 to 2013

E. Quarterly cash flow statements 2011 to 2013

F. Income statement projections

G. Balance sheet projections

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Mobrand

Executive Summary

The Company

Mobrand enables companies – big and small – to gain, build and extend a brand presence in the

mobile world through the customized, research driven development of innovative applications built

for various mobile platforms like iPhone, Blackberry, Palm OS, Android, Windows Mobile and

Symbian. These applications are supported by a backend framework that is hosted, managed and

supported by Mobrand.

The company also builds social networks around these applications and hence around the client’s

brand. The company exists to serve two key audiences – corporate clients who wish to extend their

brand presence and end consumers who are looking for innovative, interactive applications built

around their brands.

The Opportunity

The mobile applications market is exploding. Anecdotal and empirical evidence1 all point to

exponential growth in the Smartphone market. With estimated sales of 400 million units per year

and growing, Mobrand seeks to exploit this growth by building applications that are homogenous

across devices and seamlessly integrated with other users irrespective of device homogeneity due

to an indigenous backend that supports these applications.

The industry trend evidenced by the increasing number of Mobile app stores and control over

application distribution, points to an increased reliance on mobile applications vs. traditional

information communications mechanisms such as web pages and even the Internet. While viewing

web pages is entirely possible and acceptable with recent advances in rendering technology,

consumers thirst for applications that fully use the interactive features of each device be in through

multimedia capabilities or touch screen paradigms or networking technologies employed.

We see this as a big opportunity. Given the size of the consumer base, companies across industries

are looking for a mobile presence much like they looked for a web presence around the turn of the

century. While web development is a commodity now we believe truly innovative and interesting

mobile applications will remain a rarity for more than 5 years given the wide variety and creative

functional capability various devices and platforms offer.

Marketing Strategy

Mobrand’s marketing strategy moves with the overall business strategy. Mobrand’s initial objective

is to build a services business that caters to medium sized corporations (revenues between $1M to

$100M a year) that enables it to build a backend platform that will be used by mobile application

developers in the future much like the various PaaS (Platform as a Service) providers. Towards that

end, the marketing strategy is multi-pronged.

Initially Mobrand will focus on personal marketing exploiting our existing industry contacts in

1 http://www.bizjournals.com/triangle/stories/2009/08/31/daily68.html

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various corporations looking for IT solutions in general. Building a network around applications

enables us to market the application on behalf of the client across our networks: cross-selling

across established networks. To differentiate ourselves, we will not market ourselves as a build-

apps-for-hire firm. We will establish an image of a company that provides a full innovative solution

with appropriate research and technology leverage.

Pilot Program and Sales Strategy

Mobrand has a dual objective of building client focused applications and a backend framework of

patterns for different industries that can be customized and extended within the framework.

Consequently the pilot program will seek to establish some presence on either of these fronts. We

will run two pilots – one for university basketball teams and another for companies wishing to

support their products by providing information that enables the use of their products.

Our sales strategy is to start building patterns and then prioritize deals that reuse and refine

patterns higher over ones that require the development of new patterns. Our sales model consists

of two revenue streams – a transactional stream that comes with development of new applications

and a continuous stream that comes with the hosting of such applications. Once we have built the

framework, our sales strategy will shift to a utility computing model where we will allow applications

to leverage and be hosted on our framework and charge for usage and licensing of the toolkit that

enables the development of application backends.

Revenues and Profitability

Mobrand’s financial projections are based on conservative assumptions of potential penetration and

ability to differentiate in the mobile applications development market, capability to build

applications while supporting existing hosted applications and building a portfolio of

templates/patterns for the backend framework. Based on these assumptions, Mobrand will achieve

revenues of $6 million and net income of $2.7 million in 2013.

Startup Costs and Offering

Mobrand is seeking a strategic partner to provide $300,000 in capital, to finance acquisition,

development and deployment of initial customer applications. After this initial financing, Mobrand

will be engaged in building the customer base and as a byproduct build the portfolio of templates

will be a huge asset on Mobrand’s balance sheet. Mobrand will require an additional $300,000 in

early 2011 to fund marketing, and full fledged development of the backend platform as the industry

backend platform for mobile applications. An additional funding of $200,000 later in 2012 will be

required to support marketing of the platform and achieving a big jump in applications developed

and hosted.

Based on the current assumptions, without any initial funding, after the company develops 160

applications, it will achieve positive operating cash flows, which are estimated to occur in the first

quarter of 2012. Will the funding requested above, our cash flow will remain positive from 2010

onwards.

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Industry overview

Smartphones and mobile devices

Smartphones enable consumers to make more than calls with their cellular devices. They

open up a world of information that allows consumers access to information wherever they

are. Information hence is what makes the phone smart. Smart phones have been around for

a while now as early as the 90’s. However major advances in their capabilities and

supporting ecosystem of network providers, cellular networks, and application providers has

been instrumental in positioning them at a point where the number of smartphones is

poised to overtake the number of regular cell phones and even PCs.

An industry in transition

Until a few years back, the primary purpose of a Smartphone was to enable the retrieval of

critical business information regardless of location at premium prices paid typically by

businesses for such access. The Smartphone was reserved for corporate road warriors and

dominated by providers such as RIM for the business segment and Nokia and others for the

much smaller consumer segment.

Advances in media delivery over various mediums particularly the Internet and the ability to

build large amounts of content largely available for free through the phenomenon of social

networking and web 2.0 have changed the landscape dramatically.

Mobile applications

As smartphones and mobile devices in general became more powerful they started to

replace laptops and PCs as the primary means of getting content. However they reached a

point where there was essentially no differentiation between devices from various providers.

While various PDA like devices offered some differentiating user experiences, the Apple

iPhone was a true industry changer and brought with it the phenomenon of application

stores. The iPhone was a device primarily built for the consumer market and in that sense,

the first of its kind.

The iPhone is synonymous with interactive, design centered smart phones with mass appeal

and truly innovative features built creatively with the customer in mind. However there are

other equally interesting devices including from RIM, the Palm Pre, the Google Android

platform which is not restricted to a single device manufacturer and the long standing

Symbian and Windows Mobile platforms. Over the next few years, we see the grip of the

iPhone as the market dominator relaxing and a wide choice of smartphones made available.

Mobile applications development

As the mobile market exploded, various needs for mobile application development emerged.

The need for building mobile applications far exceeds the demands for web development at

the turn of the century and enterprise application development soon thereafter. There are

now two primary classes of application developers. Developers who build standalone or

mildly networked applications sold directly to consumers, and custom application developers

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who are available for hire to build applications that a company wants to provide to its

current and potential customers/patrons.

Most development firms build individual applications for each platform/device with very little

asset reuse between versions built for separate devices. When there is asset reuse it is

usually in widgets and the like. The reason for this is largely their direct reliance on existing

data sources through web services. However this strategy does not present a uniform

experience across devices and more importantly restricts the use of the application to a

limited subset of smart phones. Typically, most applications are built only for one or two

platforms because there are no cost savings for subsequent expansion to cover other smart

phones .i.e. the new application will have to be built from scratch and provide the same

functionality as the version before that for other platforms.

Mobrand and the industry

Mobrand’s vision is to address current needs while preparing and equipping the industry for future needs. Mobrand wishes to solve current needs in application development while driving towards a backend infrastructure, MOBI for MObile Backend Infrastructure that will enable standardized creation of cross-device applications.

Figure 1: Mobrand’s solution to industry needs

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Company Description

Company Purpose

Mobrand is a company built for the purpose of making innovative, creative, indigenous

mobile applications that provide real value to consumers who wish to stay connected with a

brand. It enables the development of a community around the brand and the application

through incorporation of social networking aspects in each application. And most

importantly, regardless of which device a consumer has Mobrand applications will function

on each of them with a universal user experience customized for each device only to take

advantage of unique features provided that particular device platform.

Differentiating factors

Mobrand is built on solid technical and business foundations. The architecture we have

designed is a good example of “simplicity is the ultimate sophistication”. Our business

model is multi pronged and follows a well formed vision of ultimately being the backend

platform of choice to power interactive, homogenous mobile applications and a set of short

term strategies to get us there.

Mobrand also relies on local talent and provides clients with a local presence to work closely

with them in identifying requirements and development of creative applications and

communities around them.

Geographical organization

Mobrand is an international firm based in the East Coast with employees in India and China.

Local employees will focus on company operations, primarily with strategic execution and

design services entailing the creative aspects of application development. Our employees in

India and China will possess the necessary skills to build applications for different device

platforms by exploiting our backend.

Over time, we expect further growth in the local employee pool primarily in the

development of the backend infrastructure. Our team in India will also grow significantly to

support backend infrastructure development while our China team will focus on device

development.

A focus on innovation and creativity

Mobrand will continuously innovate in a systemic fashion. However our innovation will be

focused on what we can provide customers and consumers, that others cannot and not so

much on how many patents we can produce. The only intellectual property we will seek will

be around our backend infrastructure. Mobrand recognizes that any IP protection in this

space can be easily circumvented and given the speed at which the market moves,

continuous innovation is the key to our success. We fully expect all our applications,

templates and patterns to be mimicked but will continuously improve upon them and

leverage our backend platform to provide new function and capabilities that competitors will

take a lot of time and money to mimic.

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Immediate goals

Our vision of being the provider of choice for a platform to build mobile applications begins

will building the platform. However instead of looking for funding to completely fund the

platform and spend time on its development without regard to the speed at which the

market is moving, we are looking to organically build the platform and evolve it through real

applications we build for clients. Our immediate goals are,

1. Prototype development

Build at least 2 applications for clients by year end 2009 to establish a presence in

the identified beachheads and create the basics of the templates for these industries.

We have already identified 2 potential clients who are interested in building an

application to support their brand.

2. Employee hiring

Currently Mobrand has the management team of 2 in place; the founders of the

company will act in the capabilities of CEOs. We have identified a key creative

resource in the US whose services we would like to engage immediately before losing

him to other opportunities. We have identified employees in India and China and

would like to make offers to them as soon as possible.

3. Marketing

Our initial marketing activities are primarily human driven but would require creation

of some collateral such as demos, brochures, a web presence etc. We would like to

spend our initial marketing efforts in promoting the idea of a backend driven mobile

application and positioning Mobrand as the provider of such a solution.

4. Template creation

As our activity on new application creation gets into full swing, we will engage our

technical talent in building same applications to create template for other industries

and test consumer reaction by testing these applications with end customer input.

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Mobrand’s services

Mobrand’s services are targeted towards 2 segments – corporations/organizations looking to

extend their brand and developers/development firms looking to build backend driven

mobile solutions.

Corporations/organizations:

For this segment, the following services are provided,

1. Market research to determine application needs

Unlike its competitors, Mobrand does not expect that the customer fully understands the

mobile application needs of its customers. Using our expertise in technology, user

behavior and market research, we will work with our customers’ customers to understand

what kind of devices they use or will use in the future and what their primary information

and interaction needs are. We will work with our clients’ branding and marketing

departments to take their input and provide our input based on our market research so

that the application development strategy is in line with the overall marketing strategy of

our client.

2. Return on investment

We will help our clients understand and set the right expectations for return on

investment from these applications. Some ROIs are intangible and cannot be measured

or attributed accurately. Others, particularly ones, that tie into existing business

processes that the customer has, can provide an outlook on potential revenue uptick and

associated costs. Mobrand will help our clients build a business model around the

proposed application.

3. Application development

Using an iterative, agile development process, we will build applications that the client

can choose to release at any time during the development process. In this way, we do

not spend a lot of upfront time on design and negotiating with customers on when and

what will be released to the end consumer. We can continue development based on a

prioritized list, with the customer being charged on the time spent on their application,

until the customer is satisfied with the application at which time it will be released and

future improvements will be negotiated with the customer.

4. Application onboarding

Since our applications are built for multiple device platforms we will work through the

process of getting them onto end consumers’ devices. For example, the Apple iPhone App

Store has a set process for getting applications approved and available. Also important is

the provisioning of the backend components in our backend infrastructure.

5. Application hosting

Most of our applications will be tightly coupled with our backend. Any loose coupling with

sources of data will be within the backend infrastructure. Hence customers will need to

retain our services to continue to provide the application to the masses. However this

also allows the customer to pull out at any time they feel their application is obsolete or

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no longer needed otherwise. On a continuous basis, customers’ applications will be

hosted on our backend so that the customer’s upfront investment in the application is

restricted to the initial development and continuous hosting charges.

Application developers

For this segment, we primarily provide a backend platform which has the following

characteristics,

1. Scalable platform available as a service

Deployment and management of an application’s backend is simplified through user

interfaces and programmatic interfaces to the backend infrastructure.

2. Built in scalability

Similar to many PaaS providers available today, Mobrand’s backend infrastructure (MOBI

for short) will automatically scale as new users request the application and provide

various features such as prediction based provisioning, statistical analyses etc.

3. Metered usage

Users of our backend platform infrastructure need only pay for the amount of time it is

used and the number of functional invocations on an application business backend hosted

in our infrastructure. Together with 2, this enables application development firms to

reduce costs of acquiring, deploying and managing their own hardware or virtual

systems.

4. Application templates to address common industry patterns

Rather than create applications from scratch, development firms and individual

developers can leverage our existing templates and customize them with their own

business logic. These templates are a combination of on-device client code and backend

business processing code. Application developers hence get consistency with other

applications in the industry but are able to customize them to add their creativity and

innovation to existing templates. The time to market for their individual developers is

vastly improved at lower costs.

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Market research and analysis

Statistics on mobile advertisement spending

Many companies already spend a significant amount of money on mobile and internet

advertising. According to a recent report2, mobile advertising revenue will go up 18.1% this

year to $1.3 billion, one of the few advertising sectors actually going up. Mobrand will

appeal to the spenders of this $1.3 billion and aim to capture at least 0.5% of this market

which is worth around $5 million in revenue.

Our target market willingness to pay

Spending on advertising, promotions and branding is a key expense for most corporations /

organizations with clear expectations on the return on investment. Most companies spend

3% of sales on advertising and promotions. For a company with revenues of $1M, this

translates to $30000 a year.

Development of an application costs $9500 a year including initial development and

continued hosting and an ongoing expense of $6000 a year. Hence Mobrand will target

companies with revenues of $5M to $100M. Beyond that, we believe corporations will have

the means to build their own backends and mobile applications.

Competitors

Traditional mobile applications development is a saturated market and Mobrand will stay out

of such a market. However Mobrand will continue to face competition from the following

direct and indirect competitors:

1. Current web site creation companies

We expect that these firms will build skills in building web sites that provide a rich

experience on mobile devices. Our key differentiator here is that we provide a richer

experience that is device agnostic but still takes into account the specific interactive

features offered by a device.

2. Freelance developers

These individual developers or small sized firms, more and more from outside the US,

offer short terms services to build well specified mobile applications. We have several

points of differentiation with them: consistency in applications developed, ability to

perform research on behalf of the client and hosting of the application backend that ties

in seamlessly with client’s business processes. Our local presence is a key value add as

well.

In the long term, Mobrand will woo these freelance developers to use the backend

infrastructure / hosting service. This will provide them combinatorial presence in multiple

products even if the product they built is for one single device platform. The ability to use

a platform to deliver applications will help developers adopt the platform more.

2 http://www.nytimes.com/2009/08/04/business/media/04adco.html?_r=1

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3. Local mobile application development firms

Companies like Sapient and Crosscomm advertise services to build iPhone applications in

a custom contracted/consulting process with a client. In many ways, we share a number

of points of parity with these firms. However our strengths in market research and the

key strength of an architectural combination of a device agnostic backend and device

specific front ends gives us a clear edge over these solution providers.

The key similarities with these competitors are,

a. Similar audience

b. Some provide a backend

c. Some provide a similar interaction experience (Flash programming, Dynamic web pages

etc.) and content freshness

Key differentiators are,

a. Market research and requirements identification for focused mobile development

b. Development/extension of community around the mobile application and brand –

incorporation of social networking elements into developed applications

c. Backend framework that supports multiple front end device specific applications so that

we can maintain and build the community effortlessly while retaining the unique

interaction experience of each device

Partners

Mobrand has identified key partner categories where we will actively engage in providing a

collaborative value proposition or simply to leverage each other’s client networks.

1. Advertising agencies

These are our preferred partners because our models align really well. Advertising

agencies often play a consulting role and lack the technical expertise to create mobile

applications leave alone a backend infrastructure or hosting solution. However they are

already ingrained into corporations’/organizations’ marketing and advertising

departments. Mobrand will fill in the gap advertising agencies in extending their clients

advertisement campaign into the mobile world.

2. Branding consultants

Similar to advertising agencies, these consultants advice our potential clients on how to

establish, extend and preserve their brand. We will first influence mindshare in this

segment with education on our services and why a combined architecture is preferred.

We will then work with them as part of the solution they propose to clients for brand

extensions and preservation.

3. Traditional web site developers

Mobrand can also augment existing web site and content developers’ business by

providing extensions of such content into the mobile world. This partnership option will

be used sparingly and with much caution as many of these developers are looking to

move into mobile application development which poses both an opportunity and a

threat.

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Marketing Strategy

Mobrand has a well defined strategy that aligns closely with Mobrand’s long term strategy

and strategy shifts along the way. Since Mobrand seeks to engage with different players in

the market – clients, application developers, potential partners – at any given time a

combination of tactical steps will be in play.

Identification of potential marketing targets

Mobrand uses two primary criteria to identify targets for marketing activities:

1. Revenue

Since overall revenue affects how much potential clients spend on advertising/marketing

under which we believe Mobrand expenses will be categorized, we will address only

companies that have between $1M and $1B in revenue. This is a wide category and we

will look for multiple application development opportunities for large clients since that will

tax our development teams lesser.

2. Existence of current community

Most brands have communities around them already; some explicit and direct, others

more subtle and indirect. For example, a university basketball team already has a

“community” that interacts when they meet together for a game or check a webpage for

statistics. A car brand has a community often manifested in online discussion forums or

interest groups within social networking groups such as Facebook.

Phase 1: Beachhead penetration strategy

Based on the identification pattern outlined above, Mobrand beachhead is university

basketball teams and local newspapers. Both have a “brand” associated with them, enough

budget allocations / revenues to meet our criteria and have a community around them

already.

We will market different ROI measurements for each category above. For university

basketball teams, an advertising model will be built in that will enable purchases from the

mobile application from the team’s merchandise store. Note that this model extends easily

to cover different sports teams. On engagement with the university and other sports related

providers, we will enhance this model further based on client requirements and restrictions.

For newspaper, the mobile application enables the newspaper to counter larger newspapers

by providing information on the go in an interactive manner with links to the newspaper’s

primary web site and location detection based pointers to local businesses that would push

up traditional advertising revenue for the newspaper.

The community aspect of these applications will also be marketed heavily. For university

basketball teams, the ability to share game statistics, predictions, players photos, in game

media (photos, videos) etc. will help the community better connect with itself and the team.

For newspapers, the ability to record video at the site of an incident or newsworthy story

and upload it to share with the community will be marketed.

This beachhead also provides Mobrand with the opportunity to build two templates that can

be exploited immediately. A template built around the university basketball team can be

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easily extended to cover other sports teams, other universities’ basketball teams and other

universities’ other sports teams. A template built around newspapers can be easily

exploited for other regional newspapers.

Phase 2: Growth of applications developed

This phase is critical to Mobrand because it helps us establish credibility in the industry,

build out our template portfolio and backend framework and gain acceptance of our backend

framework in the development community. However we would like to be in this phase the

shortest since it taxes our development teams significantly and the margins will be lower

than our final phase.

In this phase, the following marketing strategies will be used to further our goals:

1. Engage with clients/patrons first before engaging with establishment. This helps us

determine at a high level what the needs are design of the applications are and gives us

immediate credibility with the client with the ability for us to explain ROI.

2. As a next step, build prototypes and get user feedback with the participation of the

client so that they can see and guide firsthand the development of the application and

initial feedback.

3. Once one location of the client signs up, expand to other locations of same

establishment. For example, as we address regional restaurants we will build the

application for one branch and market it internally within the client’s organization with

the help of that branch’s employees to spread out across the client organization.

4. Partner actively with advertising agencies and branding consultants in each location to

gain penetration into their client networks.

5. Exploit the networks built around one brand’s application with other applications for the

same brand and for other brands that are not in the same industry but where the

communities share similar demographics.

Phase 3: Exploitation of backend framework and templates

This is where Mobrand sees its final, most profitable business model coming into play and

Mobrand will invest heavily in marketing opportunities in this phase. The primary focus will

be in wooing developers to use our framework, marketing the fast turnaround in building

applications built on a mature backend, licensing the backend of firms that do their own

development and building a utility, pay-as-you-use model around the backend framework.

While continuing many of the strategies in phase 2, the following key elements will be

implemented in our marketing strategy:

1. Trademark and use of “MOBI Powered” tag line where MOBI stands for MObile Backend

Infrastructure.

2. Viral marketing of backend framework through communities built around applications

deployed on MOBI and developers of those applications

3. Participation in open standards and open source project communities to enable MOBI for

use across the developer community. In general, market MOBI as a means to abstract

developers from various technology advances and standards development in the mobile

applications industry.

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Management Team

Mobrand’s management team has a strong technical background with many years in the IT

industry with both technical and product management experience. The team also has strong

business skills evolving from an educational background but honed through experience in

the field across a wide range of technology markets.

Chief Executive Officer, Balan Subramanian

Balan Subramanian is currently a Product Manager at IBM where he has worked for the past

8 years in various positions that have spanned technology innovation, enablement, industry

adoption and customer interactions. He has over 8 years experience in the IT industry on a

number of technologies including data integration, systems management, web services

standards, and open source projects. He has a long history of innovation and holds 4 US

patents with15 more filed in a wide range of technologies spanning voice technologies to

network access for mobile devices. He has a MS in Computer Science from George Mason

University and a MBA from Kenan Flagler business school, University of North Carolina.

Balan has worked in a startup environment and many intrepreneurial opportunities at IBM.

He possesses a rare mix of technical skills and business acumen that position him to drive

Mobrand to success.

Director of Product Development and Marketing, Mallesh Murugesan

Mallesh Murugesan is currently Senior Project Manager at Seaworthy Systems, a Naval

Contractor engaged in building IT systems for the US Navy incorporating backend systems

and applications for handheld units used by the Navy for inventory management. Mallesh

has over 8 years experience in the IT industry and many years experience driving the

business for his current employer. He has a MS Computer Science from George Mason and a

MBA from Smith school of Business, University of Maryland.

Mallesh and Balan have shared a personal and professional relationship for many years now

and are well poised to take Mobrand through its strategic execution towards end goals. They

will serve as the Management team and founders of the company.

The following positions will be named shortly after financing is approved:

Director of creativity (candidate already identified)

Director of Engineering, Overseas

Director of Engineering, North America

Mobrand believes that the following skills are core to the success of Mobrand and hence will

be developed within the company:

� Market research to gather and understand user needs, wants and desires

� Application design innovation

� Creation of the backend platform/engine

Legal Structure

The company name, Mobrand, has been reserved for incorporation. The company will be

initially formed as an S corporation.

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Financial Model and projections

Funds required and their use

Mobrand seeks $300,000 in capital within the next 6 months to execute on its strategy. The

funds will be used for development of applications for clients, simultaneous creation of

templates and backend infrastructure – a key asset and for marketing purposes. Since

Mobrand’s revenues are projected to grow exponentially from year 3 onwards, investors can

expect excellent returns within 5 years.

Long range financial strategy

Mobrand seeks to change the mobile applications industry and become a provider of mobile

development platform. However Mobrand seeks to do this without cutting corners and

employing only the best talent available globally. Unlike many outsourcing providers,

Mobrand wishes to build a significant employee pool in North America which we believe is

key to servicing clients in the western hemisphere through creative collaboration and

execution.

Mobrand seeks moderate investments to start executing on the strategy and regular

infusions of capital when the short term strategies change from a services model to a

technology provider model. Since the investments are moderate but the projected returns

are huge, initial investors will get very good returns on their investments.

While Mobrand is positioned as a long term player in this industry, Mobrand will soon

become a profitable acquisition opportunity for major mobile industry players including

media companies, technology infrastructure providers such as the ones engaged and driving

cloud computing (Amazon, Microsoft, IBM, Google etc.), mobile network providers, and

mobile technology companies. We expect that Mobrand will be valued highly as it builds its

repository of templates and backend infrastructure framework that represents significant

intellectual property.

Revenue Model

Mobrand has several different revenue streams over its entire strategy:

1. Application development for client

In this model the client pays for development of applications and continued hosting of the

application and use of backend infrastructure. Development of an application is iterative,

agile and time boxed with the option of customer to “buy” additional iterations at a fixed

price and preset expectations.

2. Revenue share with client

In cases where we identify applications for which we expect consumers to pay for them

Mobrand will define a revenue sharing agreement with the brand owner/client. This

agreement will include discounts or full waive offs of initial application development and

sharing of end consumer revenue.

3. Licensing of templates and backend framework

In this model, Mobrand will allow other development firms to license templates and

backend framework to develop their own applications. Licenses will be issued on a

perpetuity basis with option to use (and pay for) backend hosting on a quarterly basis.

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4. Utility model around mobile applications “cloud”

In this model, individual developers and firms can host their applications built around our

templates or their own written to our backend APIs (Application Programming Interfaces)

on our backend infrastructure and pay only for the time that the applications are actually

being used and based on the scale of usage.

Financial Projections

Our primary estimates are very conservative and based on a survey of what companies pay

today for mobile application development. The survey returned a wide range of values and

we picked the ones that are conservative yet allow enough accommodation for the

additional value Mobrand provides.

Average application cost to client $5,000

Average cost per quarter $1,500

Template licensing $15,000

Our primary cost is in the technical and creative talent required to build applications and the

backend platform. Our estimates for expenses are,

Headcount rates

Rate for management $100,000

Rate for US $80,000

Rate for India $14,400

Rate for China $10,000

Travel costs per client per application $1,200

Hosting rates

Hostway $7,200

Mobrand achieves positive cash flows in 2010 assuming initial financing can be secured and

cash drawn peaks in 4Q2013 at $1.7 million.

APPENDIX A: HIGH LEVEL FINANCIAL PROJECTIONS

2009 2010 2011 2012 2013

Revenues

Application development and hosting

Number of new clients 2 40 75 200 500

Cumulative clients 2 42 117 317 817

Clients left (calculated as % lost each year) 10 2 36 104 284 734

Average application cost to client 5,000 5,000 7,000 7,000 10,000

Green revenue 10,000 200,000 525,000 1,400,000 5,000,000

Transactional revenue 12,000 216,000 624,000 1,704,000 4,404,000

Template revenue

Cummulative number of templates 0 8 15 25 40

Templates licensed 0 1 5 15 30

Template licensing and reuse 0 15,000 75,000 225,000 450,000

Total revenue 22,000 431,000 1,224,000 3,329,000 9,854,000

Expenses

Headcount

Management 2 2 4 6 6

US 1 3 5 8 10

India 0 3 5 10 20

China 3 2 3 5 5

Total cost to company 310,000 503,200 902,000 1,434,000 1,738,000

Equipment

Backend hosting 7,200 21,600 21,600 36,000 72,000

Mobile devices 1,000 5,000 10,000 10,000 10,000

Travel 2,400 48,000 90,000 240,000 600,000

Total expenses 320,600 577,800 1,023,600 1,720,000 2,420,000

Net income (298,600) (146,800) 200,400 1,609,000 7,434,000

Cummulative net income (298,600) (445,400) (245,000) 1,364,000 8,798,000

Headcount rates

Rate for management 100,000

Rate for US employee 80,000

Rate for India employee 14,400

Rate for China employee 10,000

Travel costs per client 1,200

Hosting rates

Hostway 7,200

Average application cost to client 5,000

Average cost per quarter 1,500

Template licensing 15,000

APPENDIX B: MONTHLY BUDGET FOR 2010 Past year clients 2

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year 1

Sales

New applications 3 1 3 2 4 6 2 2 4 2 8 2 39

Cummulative applications 5 6 8 10 14 19 21 23 26 28 36 37 37

Green Revenue 15,000 5,000 15,000 10,000 20,000 30,000 10,000 10,000 20,000 10,000 40,000 10,000 195,000

Transactional Revenue 7,500 0 0 15,000 0 0 31,500 0 0 42,000 0 0 96,000

Template licensing 0 0 0 0 0 0 0 0 0 0 0 0 0

Total Sales 22,500 5,000 15,000 25,000 20,000 30,000 41,500 10,000 20,000 52,000 40,000 10,000 291,000

Cost of Goods Sold

App store fees 300 100 300 200 400 600 200 200 400 200 800 200 3,900

Graphics/clipart 1,000 0 500 0 0 500 0 0 0 0 1,000 0 3,000

% of Total Sales 6% 2% 5% 1% 2% 4% 0% 2% 2% 0% 5% 2% 2%

Total Cost of Goods Sold 1,300 100 800 200 400 1,100 200 200 400 200 1,800 200 6,900

Gross Profit 21,200 4,900 14,200 24,800 19,600 28,900 41,300 9,800 19,600 51,800 38,200 9,800 284,100

Gross Margin 94% 98% 95% 99% 98% 96% 100% 98% 98% 100% 96% 98% 98%

Operating Expenses

Sales, Marketing & Production

Advertising & Promotion 2,500 0 0 0 3,000 0 0 0 5,000 1,000 1,000 0 0

Travel 1,800 600 1,800 1,200 2,400 3,600 1,200 1,200 2,400 1,200 4,800 1,200 23,400

Total Sales & Marketing Costs 4,300 600 1,800 1,200 5,400 3,600 1,200 1,200 7,400 2,200 5,800 1,200 23,400

% of Total Sales 19% 12% 12% 5% 27% 12% 3% 12% 37% 4% 15% 12% 8%

Research & Development

Salaries 41,933 41,933 41,933 41,933 41,933 41,933 41,933 41,933 41,933 41,933 41,933 41,933 503,200

Equipment (Mobile devices) 2,000 0 0 0 0 2,000 0 0 0 0 4,000 0 8,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year 1

Total R&D Costs 43,933 41,933 41,933 41,933 41,933 43,933 41,933 41,933 41,933 41,933 45,933 41,933 511,200

% of Total Sales 195% 839% 280% 168% 210% 146% 101% 419% 210% 81% 115% 419% 176%

General & Administrative

Backend hosting 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000

Legal & Accounting Fees 0 0 2,500 0 0 0 0 0 0 0 0 0 2,500

Office Expenses 0 0 0 0 0 0 0 0 0 0 0 0 0

Office Rental or Lease 0 0 0 0 0 0 0 0 0 0 0 0 0

Telephone & Utilities 200 200 200 200 200 200 200 200 200 200 200 200 2,400

Total G&A Costs 1,200 1,200 3,700 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 16,900

% of Total Sales 5% 24% 25% 5% 6% 4% 3% 12% 6% 2% 3% 12% 6%

Total Operating Expenses 49,433 43,733 47,433 44,333 48,533 48,733 44,333 44,333 50,533 45,333 52,933 44,333 551,500

% of Total Sales 220% 875% 316% 177% 243% 162% 107% 443% 253% 87% 132% 443% 190%

Income from Operations 22,500 5,000 15,000 25,000 20,000 30,000 41,500 10,000 20,000 52,000 40,000 10,000 291,000

% of Total Sales 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

Interest Income 0

Interest/Financing Expense 0

Income before Taxes (26,933) (38,733) (32,433) (19,333) (28,533) (18,733) (2,833) (34,333) (30,533) 6,667 (12,933) (34,333) (273,000)

Taxes on Income (calculated yearly) 0 0 0 0 0 0 0 0 0 0 0 0 0

Net Income After Taxes (26,933) (38,733) (32,433) (19,333) (28,533) (18,733) (2,833) (34,333) (30,533) 6,667 (12,933) (34,333) (273,000)

% of Total Sales -120% -775% -216% -77% -143% -62% -7% -343% -153% 13% -32% -343% -94%

APPENDIX C: MONTHLY CASH FLOW STATEMENT FOR 2010

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2010

Beginning Cash Balance 6,000 277,767 238,933 205,700 186,167 157,233 137,400 134,367 99,833 68,900 75,367 60,633 26,100

Cash Receipts

Total Sales 22,500 5,000 15,000 25,000 20,000 30,000 41,500 10,000 20,000 52,000 40,000 10,000 291,000

Interest Income 0 0 0 0 0 0 0 0 0 0 0 0 0

Total Cash Receipts 22,500 5,000 15,000 25,000 20,000 30,000 41,500 10,000 20,000 52,000 40,000 10,000 291,000

Cash Disbursements 0

Salaries & Labor 41,933 41,933 41,933 41,933 41,933 41,933 41,933 41,933 41,933 41,933 41,933 41,933 503,200

Advertising & Promotion 2,500 0 0 0 3,000 0 0 0 5,000 1,000 1,000 0 12,500

Cost of Goods Sold (non-labor) 1,300 100 800 200 400 1,100 200 200 400 200 1,800 200 6,900

Travel 1,800 600 1,800 1,200 2,400 3,600 1,200 1,200 2,400 1,200 4,800 1,200 23,400

Taxes on income 0 0 0 0 0 0 0 0 0 0 0 0 0

Equipment purchase 2,000 0 0 0 0 2,000 0 0 0 0 4,000 0 8,000

G&A 1,200 1,200 3,700 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 16,900

Total Cash Disbursements 50,733 43,833 48,233 44,533 48,933 49,833 44,533 44,533 50,933 45,533 54,733 44,533 570,900

Net Cash from Operations (28,233) (38,833) (33,233) (19,533) (28,933) (19,833) (3,033) (34,533) (30,933) 6,467 (14,733) (34,533) (279,900)

Cash dividends

Sale of Stock

Proceeds of loan from shareholders

Proceeds of Investor Loan 300,000 300,000

Net Cash Balance 277,767 238,933 205,700 186,167 157,233 137,400 134,367 99,833 68,900 75,367 60,633 26,100

APPENDIX D: QUARTERLY BUDGET 2011 TO 2013 Past year clients 37

1Q2011 2Q2011 3Q2011 4Q2011 1Q2012 2Q2012 3Q2012 4Q2012 1Q2013 2Q2013 3Q2013 4Q2013

Sales

New applications 12 28 12 23 60 45 60 35 120 100 180 100

Cummulative applications 48 74 84 104 161 201 255 283 395 485 652 735

Green Revenue 60,000 140,000 60,000 115,000 300,000 225,000 300,000 175,000 600,000 500,000 900,000 500,000

Transactional Revenue 72,000 111,000 126,000 156,000 241,500 301,500 382,500 424,500 592,500 727,500 978,000 1,102,500

Template sales 0 15,000 0 15,000 15,000 30,000 0 30,000 30,000 60,000 15,000 45,000

Total Sales 132,000 251,000 186,000 271,000 541,500 526,500 682,500 599,500 1,192,500 1,227,500 1,878,000 1,602,500

Cost of Goods Sold

App store fees 1,200 2,800 1,200 2,300 6,000 4,500 6,000 3,500 12,000 10,000 18,000 10,000

Graphics/clipart 500 1,000 0 2,000 500 1,500 0 2,000 1,000 2,000 500 3,000

% of Total Sales 1% 2% 1% 2% 1% 1% 1% 1% 1% 1% 1% 1%

Total Cost of Goods Sold 1,700 3,800 1,200 4,300 6,500 6,000 6,000 5,500 13,000 12,000 18,500 13,000

Gross Profit 130,300 247,200 184,800 266,700 535,000 520,500 676,500 594,000 1,179,500 1,215,500 1,859,500 1,589,500

Gross Margin 99% 98% 99% 98% 99% 99% 99% 99% 99% 99% 99% 99%

Operating Expenses

Sales, Marketing & Production

Advertising & Promotion 0 0 10,000 0 5,000 10,000 5,000 0 15,000 20,000 10,000 10,000

Travel 7,200 16,800 7,200 13,800 36,000 27,000 36,000 21,000 72,000 60,000 108,000 60,000

Total Sales & Marketing Costs 7,200 16,800 17,200 13,800 41,000 37,000 41,000 21,000 87,000 80,000 118,000 70,000

% of Total Sales 5% 7% 9% 5% 8% 7% 6% 4% 7% 7% 6% 4%

Research & Development

Salaries & Consulting fees 225,500 225,500 225,500 225,500 358,500 358,500 358,500 358,500 434,500 434,500 434,500 434,500

Equipment (Mobile Devices) 3,000 0 1,000 1,000 0 2,000 1,000 2,000 3,000 0 4,000 0

1Q2011 2Q2011 3Q2011 4Q2011 1Q2012 2Q2012 3Q2012 4Q2012 1Q2013 2Q2013 3Q2013 4Q2013

Total R&D Costs 228,500 225,500 226,500 226,500 358,500 360,500 359,500 360,500 437,500 434,500 438,500 434,500

% of Total Sales 173% 90% 122% 84% 66% 68% 53% 60% 37% 35% 23% 27%

General & Administrative

Backend hosting 600 600 600 600 600 600 600 600 600 600 600 600

Legal & Accounting Fees 1,500 0 0 0 1,500 0 0 0 1,500 0 0 0

Office Expenses 0 0 0 0 0 0 0 0 0 0 0 0

Office Rental or Lease 0 0 0 0 5,000 5,000 5,000 5,000 20,000 20,000 20,000 20,000

Telephone & Utilities 200 200 200 200 300 300 300 300 500 500 500 500

Total G&A Costs 2,300 800 800 800 7,400 5,900 5,900 5,900 22,600 21,100 21,100 21,100

% of Total Sales 2% 0% 0% 0% 1% 1% 1% 1% 2% 2% 1% 1%

Total Operating Expenses 238,000 243,100 244,500 241,100 406,900 403,400 406,400 387,400 547,100 535,600 577,600 525,600

% of Total Sales 180% 97% 131% 89% 75% 77% 60% 65% 46% 44% 31% 33%

Income from Operations 132,000 251,000 186,000 271,000 541,500 526,500 682,500 599,500 1,192,500 1,227,500 1,878,000 1,602,500

% of Total Sales 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

Interest Income

Interest/Financing Expense

Income before Taxes (106,000) 7,900 (58,500) 29,900 134,600 123,100 276,100 212,100 645,400 691,900 1,300,400 1,076,900

Taxes on Income (calculated yearly) 0 0 0 0 0 0 0 246,147 0 0 0 1,225,818

Net Income After Taxes (106,000) 7,900 (58,500) 29,900 134,600 123,100 276,100 (34,047) 645,400 691,900 1,300,400 (148,918)

% of Total Sales -80% 3% -31% 11% 25% 23% 40% -6% 54% 56% 69% -9%

APPENDIX E: QUARTERLY CASH FLOW STATEMENTS 2011 TO 2013

1Q2011 2Q2011 3Q2011 4Q2011 1Q2012 2Q2012 3Q2012 4Q2012 1Q2013 2Q2013 3Q2013 4Q2013

Beginning Cash Balance 26,100 218,400 222,500 162,800 188,400 316,500 433,600 703,700 864,153 1,496,553 2,176,453 3,458,353

Cash Receipts

Total Sales 132,000 251,000 186,000 271,000 541,500 526,500 682,500 599,500 1,192,500 1,227,500 1,878,000 1,602,500

Interest Income 0 0 0 0 0 0 0 0 0 0 0 0

Total Cash Receipts 132,000 251,000 186,000 271,000 541,500 526,500 682,500 599,500 1,192,500 1,227,500 1,878,000 1,602,500

Cash Disbursements

Salaries & Labor 225,500 225,500 225,500 225,500 358,500 358,500 358,500 358,500 434,500 434,500 434,500 434,500

Advertising & Promotion 0 0 10,000 0 5,000 10,000 5,000 0 15,000 20,000 10,000 10,000

Cost of Goods Sold (non-labor) 1,700 3,800 1,200 4,300 6,500 6,000 6,000 5,500 13,000 12,000 18,500 13,000

Travel 7,200 16,800 7,200 13,800 36,000 27,000 36,000 21,000 72,000 60,000 108,000 60,000

Taxes on income 0 0 0 0 0 0 0 246,147 0 0 0 1,225,818

Equipment purchase 3,000 0 1,000 1,000 0 2,000 1,000 2,000 3,000 0 4,000 0

G&A 2,300 800 800 800 7,400 5,900 5,900 5,900 22,600 21,100 21,100 21,100

Total Cash Disbursements 239,700 246,900 245,700 245,400 413,400 409,400 412,400 639,047 560,100 547,600 596,100 1,764,418

Net Cash from Operations (107,700) 4,100 (59,700) 25,600 128,100 117,100 270,100 (39,547) 632,400 679,900 1,281,900 (161,918)

Cash dividends

Sale of Stock

Proceeds of loan from shareholders

Proceeds of Investor Loan 300,000 200,000

Net Cash Balance 218,400 222,500 162,800 188,400 316,500 433,600 703,700 864,153 1,496,553 2,176,453 3,458,353 3,296,435

APPENDIX F: INCOME STATEMENT PROJECTIONS

2010 2011 2012 2013

Sales

Total App Revenue 291,000 840,000 2,350,000 5,900,500

% of Total Sales 100% 97% 97% 98%

Template licensing 0 30,000 75,000 150,000

% of Total Sales 0% 3% 3% 2%

Total Sales 291,000 870,000 2,425,000 6,050,500

Cost of Goods Sold

Total Cost of Goods Sold 6900 11000 24,000 56,500

% of Total Sales 2% 1% 1% 1%

Gross Profit 284,100 829,000 2,326,000 5,844,000

Gross Margin 98% 95% 96% 97%

Operating Expenses

Sales & Marketing 23,400 55,000 140,000 355,000

% of Total Sales 8% 6% 6% 6%

Research & Development 511,200 907,000 1,439,000 1,745,000

% of Total Sales 176% 104% 59% 29%

G & A 16,900 4,700 25,100 85,900

% of Total Sales 6% 1% 1% 1%

Total Operating Expenses 551,500 966,700 1,604,100 2,185,900

% of Total Sales 190% 111% 66% 36%

Income from Operations 291,000 840,000 2,350,000 5,900,500

% of Total Sales 100% 97% 97% 98%

Interest Income 0 0 0 0

Interest/Financing Expense 0 0 0 0

Income before Taxes -273,000 -126,700 745,900 3,714,600

Taxes on Income (calculated yearly) 0 0 246,147 1,225,818

Net Income After Taxes -273,000 -126,700 499,753 2,488,782

% of Total Sales -94% -15% 21% 41%

APPENDIX G: BALANCE SHEET PROJECTIONS

Assets 2009 2010 2011 2012 2013

Current Assets

Cash 6,000 26,100 188,400 864,153 3,296,435

Investments 0 300,000 300,000 200,000 0

Accounts Receivable 0 0 0 0 0

Notes Receivable 0 0 0 0 0

Total Current Assets 6,000 326,100 488,400 1,064,153 3,296,435

Non-current assets

Intellectual Property 0 10,000 84,000 150,000 360,000 Templates and backend platform

Total Non-Current Assets 0 10,000 84,000 150,000 360,000

Total Assets 6,000 336,100 572,400 1,214,153 3,656,435

Liabilities & Owner Equity

Current Liabilities

Short Term Debt 0 0 0 0 0

Accounts Payable 0 0 0 0 0

Income Taxes Payable 0 0 0 0 0

Accrued Liabilities 0 0 0 0 0

Total Current Liabilities 0 0 0 0 0

Long Term Debt 0 0 0 0 0

Total Liabilities 0 0 0 0 0

Owner / Stockholder Equity

Common Stock 0 150,000 300,000 400,000 400,000

Preferred Stock 0 150,000 300,000 400,000 400,000

Retained Earnings 6,000 (279,900) (137,700) 475,753 2,432,282

Less Cash Dividends 0 0 0 0 0

Total Owners' Equity 6,000 20,100 462,300 1,275,753 3,232,282

Total Liabilities & Equity 6,000 20,100 462,300 1,275,753 3,232,282