Proforma

A "disruptive innovation"

• HotWax offers Superior features Servers an untapped/underserved market

segment Provides comparable results at a vastly

reduced price

• Analogue: Desktop publishing Removing the need for the trained expert

The HotWax Product Offering

• HotWax will provide hosted websites Budget: $29.99/mo Pro: $49.99/mo

• Discounts for advance payment

• HotWax goal is to have 80% of subscribers purchase the Pro plan

Marketing HotWax

• Goal: Low cost/no cost marketing Word of mouth Creating a community

Marketing HotWax

• Evangelizing to create a community Model: Macintosh Create sense of superiority and coolness Provide methods for community to

communicate• Online chats• “Click to share my stuff” – users can offer items on

their sites to other HotWax users

Marketing HotWax

• Making News Use news outlets to generate interest

• “20 websites in an hour” – Seminar event at conventions 20 novice users build websites using HotWax First event: 27 August, Asheville TED

convention

Marketing HotWax

• Doing Good Free hosted websites for nonprofits HotWax in the classroom

Building Community = Sales

• You want to share / Show-off what you build Experienced users – “ninjas” Opinion leaders who want to evangelize for:

• Bragging rights• Part-time work

• HotWax word of mouth already spreading in Asheville

Plan: 50 HotWax Websites by 31 October

Corporate Structure

• S Corp: Net revenue disbursed to shareholders on a

regular basis Shareholders holding 5% or more will be on

Board of Directors

• Business goal: Maximize cashflow and revenue disbursement to shareholders

Summary of Business Goals

$1 Million in annual Free Cash Flow for shareholder disbursementwithin 3 years

• Year 1: 1 new subscriber / day $ 35 / mo average subscription

• Year 2: 2 new subscribers / day $ 37 / mo average subscription

• Year 3: 3 new subscribers / day $ 39 / mo average subscription

Goal: New Subscribers

145 Thousand New Domains Created – in 24 Hours

Goal: New Subscribers

HotWax Goal: Within 3 years: 3 new subscribers / day (0.002%)

Active Websites, July 2009

07/200977 million

Goal: New Subscribers

07/201087 million+10 million

Active Websites, July 2010

Goal: New Subscribers

10 million New Websites

in One Year

Comparison / Reality Check

• Comparable Business Data Hard/impossible to find accurate numbers

• No public records of subscriber to Homestead, Godaddy, Google Sites, Yahoo Sites etc.

• Different Business Model/Product Creates a new market for a new type

customer

Comparison / Reality Check

• Squarespace.com A highly flexible website building system Also with public revenue records(!)

Main difference from HotWax • Squarespace requires a goodly amount of

technical expertise• Good results but hard to get started

Comparisons / Reality Check

• Squarespace.com joined the INC 500 in first 3 years (#339)

$ 2.2 million annual revenue

after 3 years

Summary of ExpectedSubscriber Revenue

• End Year 1: Yearly revenue -- $153,300

• End Year 2: Yearly revenue -- $ 482,895

• End Year 3: Yearly revenue -- $ 1,014,080

Subscriber Revenue Prospects – Details

Additional Revenue Sources

• “Ninjas” HotWax trained consultants Ninjas pay for training -- +/- $250/ninja HotWax provides client leads Ninjas a likely source of new subscribers

• Setup Fees Possible: equal to 1 month subscription

• Add ons and Extras Email provision – users get unlimited email, email addresses Sales of domain names, etc

• New product offerings HotWax Mobile “DreamWeaver” on the web

Expenses

• Expenses are very low

• Low cost servers or cloud computing Current new Goliath server can handle about 550 websites $159/month, include backbone connections Cloud computing costs even less

• Tech support Assume about $15 / year per subscriber Revenue from setup charges will more than cover support

• Salaries Officers will take equity and dividends in lieu of salaries Support staff primarily 1099 consultants or offshore

• Marketing Primarily low-cost social and viral marketing Ninjas will be key drivers of subscription revenue

Funding Goals

• Seeking $50 – $100K • To be applied to marketing and operational

expenses Marketing: commission advances and advertising Tech support: salary, equipment Operations: salaries for maintenance, servers Business expenses: facility/utilities/etc

• Anticipate cash flow positive by end of year 1

Investment opportunity• Convertible Bond

Fixed rate security Secured senior debt 36 month maturity – full return of principal

• Dividend: 12% / year Paid monthly or annually

• Convertible at any time to preferred stock 1 Bond = 1% total outstanding shares of stock Preferred means– no dilution in event of

later offerings

• Investment amount: $10,000/bond

Bondholders will be informed in advance of other capital events that might affect the value of shares, and will be given advance opportunity to convert to stock

Investment opportunity – Option 2

• Preferred Stock No dilution in event of later offerings

• Each Preferred share = 2% of outstanding shares

• Investment amount: $10,000/preferred share