Rm gizmo

Room Gismo – Hotel Room Services Renovated

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CONFIDENTIAL - DO NOT DISSEMINATE. This business plan contains confidential, trade-secret information and is shared only with the understanding that you will not share its contents or ideas with third parties without the express written consent of the plan author.

Executive Summary

Opportunity

The Problem

Nowadays nearly all hospitality sales going through online reservation systems, and

only via them. As the result, there is not too much space for competition and extra

profits left. Most of the competition concentrated around price per night value. This is

especially true for the segment of low-cost hotels. The main goal of our product is

increasing of hotels ARPU without touching of room listings prices.

Solution

We are happy to introduce Room Gizmo - digital room service system which is set up to

increase room service tabs and bring extra customer value to room service. The core of

this system is our cloud solution, connecting together devices placed in the rooms and

common areas with administrator's workplace and room service providers. The

devices are the android based tablets or TV boxes with preloaded and customizable

software (custom design for each hotel, list of services, and special offers). All devices

and administrator’s software are integrated to our service thru hotels regular Internet

distribution network.

Any hotel guest is able to select his/her native or any other comfortable language and:

1. Take a look at the menu of the hotel restaurant with great Full HD pictures of the

meals provided, and make an order. Or, have an option for ordering from restaurants

nearby.

2. Order hotel services, like laundry, ironing, additional TV channels, wireless Internet,

or its acceleration.

3. Book a visit to the pool, sauna and other related places of leisure accommodation.

4. Visit places of interest section and be attracted by tours and excursions with an

option to make their advance reservation and booking.


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5. Book a vehicle rental (car / motorcycle / bicycle / scooter) with delivering them to the

hotel doors.

6. Notify the hotel's administration about the necessity of cleaning the room, extra

towels, or toiletries.

7. Make a reservation for airport shuttle or taxi.

9. Be notified about checking out time, maids coming (or choose another time for

cleaning), taxi or airport shuttle arrival.

10. Leave a review about hotel and services inside the system for future room service

improvements.

11. Moreover, for hotels which are not equipped with the telephone system, our Room

Gizmo can serve as a replacement for a standard wired telephones that serves to

communicate with the reception and other subscribers.

Communication with the Room Gizmo both guests and managers of the hotel going in

their own language (or other preferable by the customer language). It's increases the

comfort of the customer services order and an understanding exactly of what the

customer ordered.

All this allows us to talk about the projected increase in the average room bill with

every third customer, and, at the same time, the main indicator of a competitive 'price

per night' remains unchanged and may even be reduced by the additional funds

received from the sales of related services.


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Long Story Short

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Market

According to the UN World Tourism Organization accommodation top-15 countries

statistic, there are more than 21M hotel rooms with an average rate of 41 room per hotel.

All that rooms are visited annually by more than 876M guests. For more than 343M of

them English, which is mostly used for communication in between Hotel personnel and

guests, is not native at all. It gives us the opportunity to assume our possible market as

~500,000 Hotels and ~800M of their annual guests.

Our goal for the first three years - to get 12% of the possible market, which is about

2.5M rooms, or ~60,000 Hotels out of accommodation top-15.

Competition

Our competition includes native hotel applications, like Hilton HHonors, and Hotel

CMS systems some of which have a digital room service part Clock Hotel CMS digital

room service for example. In the same time, none of them looks so comprehensive and

having multi-language support as Room Gizmo.

In general, we can describe the market competition as low, which is good and bad(some

of the hotels could be not ready for it) in the same time.


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Why Us?

In the past six years, our team is already launched and developed several start-ups

(telekom.org.ru, multitender.ru, telekomza.ru, seomator.com) and successfully exited

from some of them (multitender.ru, telekomza.ru). Ours telekom.org.ru and

seomator.com, as a businesses are good standing and generating profits for future

development and covering of our living costs.

Same time we are ready to dive deep into new 'billion dollar' story, which is Room

Gizmo going to be, having in mind it's fresh concept and huge market possibilities.

Expectations

Forecast

We are projecting sales of $1,741,261 in year 1 and $37,529,266 in year 2 with a profit

margin of 37%. That assumes first-year main goal to cover initial costs and become

profitable for future reinvestment into marketing and sales budgets increase. Our co-

founders will draw only minimal salaries so we can reinvest our profits into growing

the business. Devices costs and additional staff will be our biggest expenses, followed

by allotments for marketing and sales.


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Financial Highlights by Year

Financing Needed

We are financing our business ourselves with $5,000 in investment from each of our co-

founders. Also, we are looking for fundraising in an amount of $238,500 needed to

begin Room Gizmo's operations.

Financing

Use of Funds

Start-Up Expenses

Legal $1,000.00

Technological Architecture design $2,500.00

Frontend design and development costs $35,000.00

Backend development $20,000.00

Initial launch $5,000.00

Initial Marketing $15,000.00

Device stock $15,000.00

Sales Campaign $15,000.00

Total Start-Up Expenses $108,500.00


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Cash Required $140,000.00

Other Current Assets 0

Long-Term Assets 0

Total Assets $140,000.00

Total Reqirements $248,500.00

Sources of Funds

Start-up Expenses to Fund $108,500.00

Start-up Assets to Fund $140,000.00

TOTAL FUNDING REQUIRED $248,500.00

Assets

Non-cash Assets from Start-up $0

Cash Requirements from Start-up $140,000

Additional Cash Raised $0

Cash Balance on Starting Date $140,000

TOTAL ASSETS $140,000

Liabilities and Capital

Liabilities

Current Borrowing $0

Long-term Liabilities $0

Accounts Payable (Outstanding Bills) $0

Other Current Liabilities (interest-free) $0

TOTAL LIABILITIES $0

Capital

Planned Investment

Owner $10,000

Investor $98,500

Additional Investment Requirement $140,000

TOTAL PLANNED INVESTMENT $248,500

Loss at Start-up (Start-up Expenses) ($108,500)

TOTAL CAPITAL $140,000

TOTAL CAPITAL AND LIABILITIES $140,000

Total Funding $248,500


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Company

As long as Room Gizmo’s current status is somewhere around idea implementation, we did no set up the company yet.

Team

Evgeny Vakhteev – Co-Founder/President

- serial entrepreneur with ten years of business experience in two countries - managing up to thirty employees - two current running businesses (telecommunication consulting and design company in

Russia (telekom.org.ru), Seomator.com in the US) - two successful Russian IT Startups (Sold)

Nikita Savvinykh – Co-Founder/CMO

- ten years of SEO and SMM experience from clients and agency sides - SEO agency owner (the agency was profitably sold) - PM for various web startups since 2008 (including multitender.ru, telekomza.ru)

Pavel Kovalenko – Co-Founder/CTO

- Java, SQL, Unix Shell Scripting, Python, HTML / CSS, XML developer - Agile testing, System Testing, Integration Testing, Risk-based Testing, Unit Testing,

Automation Testing, XSS injections - managing groups of developers and testers

Developers

In—House(Russian office) team of developers currently working on seomator.com (5

developers).


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Financial Plan

Sales Forecast

Sales Forecast 2016 2017 2018

Unit Sales

Subscriptions per room 14,777 375,991 2,637,642

Installment fees 14,777 361,214 2,474,738

Partner bookings 7,426 390,700 3,487,991

Unit Prices Av.

Subscriptions per room $5.00 $5.00 $5.00

Installment fees $65.00 $65.00 $65.00

Partner bookings $4.00 $4.00 $4.00

Sales

Subscriptions per room $73,886.72 $1,879,954.70 $13,188,211.76

Installment fees $960,527.34 $23,478,883.71 $160,857,965.85

Partner bookings $29,705.63 $1,562,800.51 $13,951,962.15

Subtotal Sales $1,064,119.69 $26,921,638.91 $187,998,139.76

Direct Unit Costs

Subscriptions per room $26.18 $4.88 $2.76

Installment fees $50.00 $50.00 $50.00

Partner bookings $2.00 $2.00 $2.00

Direct Cost of Sales

Subscriptions per room $386,921.76 $1,834,379.79 $7,284,073.43


Partner bookings $14,852.81 $781,400.25 $6,975,981.07

Subtotal Direct Cost of Sales $1,140,641.76 $20,676,459.82 $137,996,951.31

Sales - Cost of Sales

Subscriptions per room ($313,035.04) $45,574.91 $5,904,138.33


Partner bookings $14,852.81 $781,400.25 $6,975,981.07

Subtotal Sales - Direct Cost of Sales ($76,522.07) $6,245,179.09 $50,001,188.45


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Revenue by Month

Expenses by Month


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Net Profit (or Loss) by Year


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Statements

Projected Profit & Loss

FY2017 FY2018 FY2019

Revenue $1,741,261 $37,529,266 $272,645,345

Direct Costs $1,095,759 $18,504,209 $167,503,947

Gross Margin $645,502 $19,025,057 $105,141,398

Gross Margin % 37% 51% 39%

Operating Expenses

Salary $330,000 $1,171,200 $5,023,320

Employee Related Expenses $81,000 $243,360 $858,996

Infrastructure $32,267 $227,290 $716,196

Legal $1,000

Technological Design $2,500

Initial Software Design and Development

$55,000

Total Operating Expenses $501,767 $1,641,850 $6,598,512

Operating Income $143,735 $17,383,207 $98,542,886

Interest Incurred

Depreciation and Amortization

Income Taxes $28,747 $3,476,641 $19,708,578

Total Expenses $1,626,273 $23,622,700 $193,811,037

Net Profit $114,988 $13,906,566 $78,834,308

Net Profit / Sales 7% 37% 29%


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Projected Balance Sheet

FY2017 FY2018 FY2019

Cash $504,797 $18,591,103 $118,947,460

Accounts Receivable $0 $0 $0

Inventory

Other Current Assets

Total Current Assets $504,797 $18,591,103 $118,947,460

Long-Term Assets

Accumulated Depreciation

Total Long-Term Assets

Total Assets $504,797 $18,591,103 $118,947,460

Accounts Payable $0 $0 $0

Income Taxes Payable $28,747 $3,476,641 $19,708,578

Sales Taxes Payable $112,562 $844,408 $6,134,520

Short-Term Debt

Prepaid Revenue $0 $0 $0

Total Current Liabilities $141,309 $4,321,049 $25,843,098

Long-Term Debt

Total Liabilities $141,309 $4,321,049 $25,843,098

Paid-in Capital $248,500 $248,500 $248,500

Retained Earnings $114,988 $14,021,554

Earnings $114,988 $13,906,566 $78,834,308

Total Owner's Equity $363,488 $14,270,054 $93,104,362

Total Liabilities & Equity $504,797 $18,591,103 $118,947,460


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Projected Cash Flow Statement

FY2017 FY2018 FY2019

Net Cash Flow from Operations

Net Profit $114,988 $13,906,566 $78,834,308


Change in Accounts Receivable $0 $0 $0

Change in Inventory

Change in Accounts Payable $0 $0 $0

Change in Income Tax Payable $28,747 $3,447,894 $16,231,937

Change in Sales Tax Payable $112,562 $731,846 $5,290,112

Change in Prepaid Revenue $0 $0 $0

Net Cash Flow from Operations $256,297 $18,086,306 $100,356,357

Investing & Financing

Assets Purchased or Sold

Investments Received $248,500

Change in Long-Term Debt

Change in Short-Term Debt

Dividends & Distributions

Net Cash Flow from Investing & Financing

$248,500

Cash at Beginning of Period $0 $504,797 $18,591,103

Net Change in Cash $504,797 $18,086,306 $100,356,357

Cash at End of Period $504,797 $18,591,103 $118,947,460

rmGizmo

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Appendix Profit and Loss Statement/Balance/Cash flow (With Monthly Detail)

FY2017 Feb '16 Mar '16 Apr '16 May '16 Jun '16 Jul '16 Aug '16 Sep '16 Oct '16 Nov '16 Dec '16 Jan '17

Revenue $0 $0 $0 $21,000 $33,345 $51,848 $79,624 $121,200 $183,554 $277,098 $417,438 $556,154

Direct Costs $0 $0 $15,000 $0 $22,680 $34,200 $51,481 $77,399 $116,280 $174,599 $262,079 $342,041

Gross Margin $0 $0 ($15,000) $21,000 $10,665 $17,648 $28,143 $43,801 $67,274 $102,499 $155,359 $214,113

Gross Margin % 0% 0% 100% 32% 34% 35% 36% 37% 37% 37% 38%

Operating Expenses

Salary $27,500 $27,500 $27,500 $27,500 $27,500 $27,500 $27,500 $27,500 $27,500 $27,500 $27,500 $27,500

Employee Related Expenses

$6,750 $6,750 $6,750 $6,750 $6,750 $6,750 $6,750 $6,750 $6,750 $6,750 $6,750 $6,750

Infrastructure $300 $360 $432 $518 $622 $933 $1,400 $2,100 $3,150 $4,724 $7,100 $10,628

Legal $1,000

Technological Design

$2,500

Initial Software Design and Development

$55,000

Total Operating Expenses

$93,050 $34,610 $34,682 $34,768 $34,872 $35,183 $35,650 $36,350 $37,400 $38,974 $41,350 $44,878

Operating Income

($93,050) ($34,610) ($49,682) ($13,768) ($24,207) ($17,535) ($7,507) $7,451 $29,874 $63,525 $114,009 $169,235

Interest Incurred


Income Taxes $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $28,747

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Total Expenses $93,050 $34,610 $49,682 $34,768 $57,552 $69,383 $87,131 $113,749 $153,680 $213,573 $303,429 $415,666

Net Profit ($93,050) ($34,610) ($49,682) ($13,768) ($24,207) ($17,535) ($7,507) $7,451 $29,874 $63,525 $114,009 $140,488

Net Profit / Sales

(66%) (73%) (34%) (9%) 6% 16% 23% 27% 25%

FY2017 FY2018 FY2019

Revenue $1,741,261 $37,529,266 $272,645,345

Direct Costs $1,095,759 $18,504,209 $167,503,947

Gross Margin $645,502 $19,025,057 $105,141,398

Gross Margin % 37% 51% 39%

Operating Expenses

Salary $330,000 $1,171,200 $5,023,320

Employee Related Expenses $81,000 $243,360 $858,996

Infrastructure $32,267 $227,290 $716,196

Legal $1,000

Technological Design $2,500

Initial Software Design and Development $55,000

Total Operating Expenses $501,767 $1,641,850 $6,598,512

Operating Income $143,735 $17,383,207 $98,542,886

Interest Incurred


Income Taxes $28,747 $3,476,641 $19,708,578

Total Expenses $1,626,273 $23,622,700 $193,811,037

Net Profit $114,988 $13,906,566 $78,834,308

Net Profit / Sales 7% 37% 29%

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Cash $15,450 $120,840 $71,158 $59,280 $38,074 $25,205 $15,308 $33,667 $80,060 $133,930 $285,509 $504,797

Accounts Receivable

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Inventory


Total Current Assets

$15,450 $120,840 $71,158 $59,280 $38,074 $25,205 $15,308 $33,667 $80,060 $133,930 $285,509 $504,797

Long-Term Assets



Total Assets $15,450 $120,840 $71,158 $59,280 $38,074 $25,205 $15,308 $33,667 $80,060 $133,930 $285,509 $504,797

Accounts Payable $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Income Taxes Payable

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $28,747

Sales Taxes Payable

$0 $0 $0 $1,890 $4,891 $9,557 $7,167 $18,075 $34,594 $24,939 $62,509 $112,562

Short-Term Debt

Prepaid Revenue $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Current Liabilities

$0 $0 $0 $1,890 $4,891 $9,557 $7,167 $18,075 $34,594 $24,939 $62,509 $141,309

Long-Term Debt

Total Liabilities

$0 $0 $0 $1,890 $4,891 $9,557 $7,167 $18,075 $34,594 $24,939 $62,509 $141,309

Paid-in Capital $108,500 $248,500 $248,500 $248,500 $248,500 $248,500 $248,500 $248,500 $248,500 $248,500 $248,500 $248,500

Retained Earnings

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Earnings ($93,050) ($127,660) ($177,342) ($191,110) ($215,317) ($232,852) ($240,359) ($232,908) ($203,034) ($139,509) ($25,500) $114,988

Total Owner's Equity

$15,450 $120,840 $71,158 $57,390 $33,183 $15,648 $8,141 $15,592 $45,466 $108,991 $223,000 $363,488

Total Liabilities & Equity

$15,450 $120,840 $71,158 $59,280 $38,074 $25,205 $15,308 $33,667 $80,060 $133,930 $285,509 $504,797

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FY2017 FY2018 FY2019

Cash $504,797 $18,591,103 $118,947,460

Accounts Receivable $0 $0 $0

Inventory


Total Current Assets $504,797 $18,591,103 $118,947,460

Long-Term Assets



Total Assets $504,797 $18,591,103 $118,947,460

Accounts Payable $0 $0 $0

Income Taxes Payable $28,747 $3,476,641 $19,708,578

Sales Taxes Payable $112,562 $844,408 $6,134,520

Short-Term Debt

Prepaid Revenue $0 $0 $0

Total Current Liabilities $141,309 $4,321,049 $25,843,098

Long-Term Debt

Total Liabilities $141,309 $4,321,049 $25,843,098

Paid-in Capital $248,500 $248,500 $248,500

Retained Earnings $114,988 $14,021,554

Earnings $114,988 $13,906,566 $78,834,308

Total Owner's Equity $363,488 $14,270,054 $93,104,362

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Net Profit ($93,050) ($34,610) ($49,682) ($13,768) ($24,207) ($17,535) ($7,507) $7,451 $29,874 $63,525 $114,009 $140,488


Change in Accounts Receivable

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Change in Inventory

Change in Accounts Payable

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Change in Income Tax Payable

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $28,747

Change in Sales Tax Payable

$0 $0 $0 $1,890 $3,001 $4,666 ($2,390) $10,908 $16,519 ($9,655) $37,570 $50,053

Change in Prepaid Revenue

$0 $0 $0 $0 $0 $0 $0 $0 $0


($93,050) ($34,610) ($49,682) ($11,878) ($21,206) ($12,869) ($9,897) $18,359 $46,393 $53,870 $151,579 $219,288



Investments Received

$108,500 $140,000


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Net Cash Flow from Investing & Financing

$108,500 $140,000

Cash at Beginning of Period

$0 $15,450 $120,840 $71,158 $59,280 $38,074 $25,205 $15,308 $33,667 $80,060 $133,930 $285,509

Net Change in Cash

$15,450 $105,390 ($49,682) ($11,878) ($21,206) ($12,869) ($9,897) $18,359 $46,393 $53,870 $151,579 $219,288

Cash at End of Period

$15,450 $120,840 $71,158 $59,280 $38,074 $25,205 $15,308 $33,667 $80,060 $133,930 $285,509 $504,797

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FY2017 FY2018 FY2019


Net Profit $114,988 $13,906,566 $78,834,308


Change in Accounts Receivable $0 $0 $0

Change in Inventory

Change in Accounts Payable $0 $0 $0

Change in Income Tax Payable $28,747 $3,447,894 $16,231,937

Change in Sales Tax Payable $112,562 $731,846 $5,290,112

Change in Prepaid Revenue $0 $0 $0

Net Cash Flow from Operations $256,297 $18,086,306 $100,356,357



Investments Received $248,500




Net Cash Flow from Investing & Financing $248,500

Cash at Beginning of Period $0 $504,797 $18,591,103

Net Change in Cash $504,797 $18,086,306 $100,356,357

Cash at End of Period $504,797 $18,591,103 $118,947,460

Rm gizmo

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