Wag Hotels: Chain of Hotels Exclusively for Dogs and Cats

•  A chain of hotels designed exclusively for dogs and cats

•  Designed for the lifestyle of the urban middle-class

•  Convenience open 7 x 24 x 365

•  Luxury suites with web cameras & plasma TV

•  First location performing well in Sacramento

•  San Francisco location open this week, Sunnyvale to open in Sep 07.

•  Plans to open another 40 locations in the next 5 years

Pet market is $35.9B, growing at 5% “Do you realize Americans will spend $35.9 billion this year on their pets? That compares to $20 billion spent on kid’s toys in 2003 and $24 billion on candy.” 63% of all American households have a pet 90% of the dogs owned by city dwellers 2005 there were 74 million dogs compared to 60 million in 2003

Dog population

37% of all households have at least one dog

Distribution of 11,000 kennels based on revenue

Less than $200K 91.9%

$500K to $900K 1.3% $1M or higher

0.7% $200K - $500K

6.1%

Market opportunity

• Highly-fragmented market

• Underdeveloped

• Unregulated

• Homogenous consumer

• Economies of scale

• Easy standardization

• Number of households with pets is growing

• Real estate rates are attractive for retrofit-capable buildings

• Recession proof business

Humanization of pets: Considered part of the family.

§ Traditionally a small (Mom & Pop) business

§ No brand recognition

§ Business run on goodwill and reputation

§ Series of stores all over the world

§ Professional management, process & service excellence

§ Consistent customer experience

§ Brand recognition

Coffee Shops Scale + Brand

Starbucks

Wag Hotels Dog owners spend $2.6 billion annually on boarding

§  Traditionally small (Mom & Pop) business

§  No brand recognition

§  11,000 businesses generating a combined revenue of $2.6 billion

§  Grown organically; operated on a need basis

§  Business revenue dependent on goodwill & reputation

§  Chain of dog hotels in convenient locations all over the US

§  Homogeneity

§  Brand recognition

§  Professional management, process & service excellence

§  Superior customer service and experience through innovative technology

Dog Kennel & Boarding Scale + Brand

Wag Hotels -- Sacramento

Cattery"

Intake Room" Dog Rooms

180"

Reception"

Drive Thru"

Corporate Offices"

Indoor Play Area (6000 Sqft)"

Grooming"

Suites"

• Wag Hotels model is based on retrofitting light industrial warehouses

• 34,000 sq ft facility with advanced air exchange, fire suppression and sound baffling systems

• Design is focused on providing comfort, safety and a healthy environment for guests

Capacity

180 Dogs

25 Cats

Wag Hotels - San Francisco 35,000 square foot facility

– Premier location – 2 story building – Roof deck for outdoor park

Capacity

250 Dogs

25 Cats

Amenities: Swimming Pool

$25 for 20 min

Luxury Suites

$72 a night, oversold

Massage

$30 for 15 min

Interiors: Wag Hotels SF

Strong Brand

16

• Modern • Stylish • Hassel-free •  Innovative and clean • Upscale • Fun and enjoyable • Memorable • All about pets!

Brand Value

Expansion 2007 Opened San Francisco, will open Sunnyvale and Oakland

2008 Expansion into Southern CA (3-4 locations)

2009 onwards Open 5-6 new locations across the US

Revenue and Dog Nights

$134,228

$233,042

$322,629 $294,503

$258,484

$505,118

$904,045 $878,235

3,133

5,778

7,869 7,183

5,391

10,807

16,858

17,206

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

$900,000

$1,000,000

06 Q1 06 Q2 06 Q3 06 Q4 07 Q1 07 Q2 07 Q3 07 Q4

Revenue Dog Nights

Sacramento 2006 - 2007

13%

26%

20%

29%

34%

43%

57%

45%

40% 40%

29%

36% 36%

45% 45%

60% 64%

54%

41%

48%

0%

10%

20%

30%

40%

50%

60%

70%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct

SAC Occupancy 2006 SAC Occupancy 2007

Revenue & income over 10 yrs, 42 locations

$949 $4,713

$19,875

$35,956

$51,230

$65,478

$79,727

$94,980

$109,231

$123,484

-$1,384 -$753

$4,525 $11,284

$17,986 $24,243

$30,246 $37,252

$43,352 $49,320

-$20,000

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

YR 1 YR 2 YR 3 YR 4 YR 5 YR 6 YR 7 YR 8 YR 9 YR X

Revenue EBITDA

Ritu Raj- CEO Seasoned executive and entrepreneur in IT services sector for 20 years. •  Partner at Accenture, Head of Oracle practice for high-tech clients in the Western US •  Founder and CEO of Avasta, an application hosting company (MSP), raised more than $100M •  VP Sales at TMP Worldwide (acquired SystemOne and AT Systems), managed revenue in excess of $1 billion

Bob Goldberg – President •  35 years experience in consumer products industry •  Senior management positions with CBS Retail Stores/Pacific Stereo Division, Music Factory, Worlds of Wonder,

Intelligy, Mindscape, and most recently Pay By Touch •  Retail experience includes over 15 years in every aspect of retail store operations including marketing

Charles Dible-VP Finance •  Responsible for smooth and viable financial operations •  Prior entrepreneurial and financial experience •  Previous roles include 12 years as CFO of Astante technologies and Pixar Shane Stent-Director of Business Development •  Responsible for property development and retail sales operations •  Prior management roles include at Nike and Fortune 500 companies •  Background in animal care Jose Gonzalez-Director of Pet Services •  BS UC Davis in Animal Science; City of Sacramento Animal Care Service, Senior Technician and Supervisor •  Responsible for care of 400+ dogs at any time, evaluations of all incoming animals and staff training •  Supervised and scheduled 14 animal care technicians Laura Bourret-VP Hotels •  Hotel Executive with 21 years experience •  Founder of ARROW Marketing Group, luxury hotel operations and marketing consulting firm •  Responsible for hotel operations and development

Key Management

David Appel -Chairman of Board of Directors •  Chairman and CEO of Vision LLC •  Prior roles include Chairman and CEO of Orange Glo International, sold in 2006, and partner at Accenture •  Served on board of Petco Animal Supplies through 2006 Brian Miller – Director on Board of Directors •  EVP, Strategic Alliances for Pay By Touch •  Previously spent 28 years at Accenture •  Currently also on Boards of Pay By Touch, Viking Systems, and M-Factor Ritu Raj- CEO •  Seasoned executive and entrepreneur in IT services sector for 20 years. •  Partner at Accenture, Head of Oracle practice for high-tech clients in the Western US •  Founder and CEO of Avasta, an application hosting company (MSP), raised more than $100M •  VP Sales at TMP Worldwide (acquired SystemOne and AT Systems), managed revenue in excess of $1 billion

Monte Miller – Advisor and Board Observer •  40 years of Investment Management and trust banking experience •  Founded KeyState Corporate Management •  Previously SVP for Bank of America, Nevada

Jon May – Advisor and Board Observer •  15+ years experience with large consumer-branded companies •  Co-founded Catalytic Capital •  Previously SVP of Triarc Companies and Chairman and CEO of Triac Restaurant Group (Arby’s)

Board of Directors

History •  Raised series A

from friends and family $1.8 million

•  Raised series B from friends and venture capital firm $ 6 million for post valuation of $10 million

•  Current funding will take to break even in 2007

•  Additional funding in the range of $10-$15 million end of 2007

Thank You

New Product and Service Opportunities

Wag Media

Wag Academy

Wag Magazine Wag Space

Wag Jewelry

Wag Corporate

Wag Stores Wag Salon Wag Singles

Rate Occupancy

Labor Rent / Utilities

t  Currently, Wag prices slightly higher than traditional kennels, even though it provides a far greater service offering

t  Pricing does not include add-on services in the offing

t  Wag’s brand equity will permit higher pricing going forward

t  Occupancy varies by month t  Conservative: 37%

occupancy in first year, going to 65% occupancy in year 2

t  Traditional urban kennels do up to 85% occupancy

t  Estimates do not account for brand recognition, corporate programs, etc.

t  Labor is the single largest controllable expense item

t  Right people, right jobs at the right time:

§  Conversion of full time staff to FTE utilization model

§  Increased retention

1 2

3 4

Operating Economics Build out Economics

1

2

Tenant Improvement

Equipment

t  HVAC & Air Circulation t  Plumbing t  Epoxy Flooring t  Thicker walls t  Noise control t  Reception and boutique

t  Dog runs t  Grooming tubs and supplies t  Security and Web Cameras t  Computers and networking

Unit Economics Drivers