2010

Revenue
Cloud Revenue
Price
Units
Revenue
% Growth

$
$

16.00
1,500
24,000.00

Time Revenue
Price
Units
Revenue
% Growth
Licensing
Total Units Sold (Previous Year)
Per Unit Fee
Retention

$
$

Licensing Revenue
% Growth
Total Revenue

36.00
3,000
108,000

0
5.00
25%
0

132,000

2010
COGS
Total Units Sold

4,500

Packaging Costs Per Unit

Total Packaging Costs

$
$

1.50
6,750.00

Royalty Costs Per Unit

Royalties To Patent Holders

$
$

3.00
13,500

Marketing Exepnse Per Unit

Marketing Costs

$
$

3.00
13,500

Fullfilment Costs
Fullfillment Costs

$
$

4.00
18,000

Tota Revenue ( EXCL. Renewals)

Smartphone Company Fees
Total Smartphone Company Fees
Total Revenue
Bad Debt
Total Bad Debt Costs
Total COGS

$
$
$

132,000
15%
19,800

132,000
15%
19,800

(91,350)

2010
G&A
Rent & Warehouse Facilities
License Fee To Telecom Companies
Salaries & Benefits
Total Revenue
Sales Commisionss %
Total Sales Bonuses

350
1500
1750
$
$

Office Maintainance & Other

CEO Salary

132,000
5%
6,600
750
1250

Total Revenue
CEO Bonuses %
Total CEO Bonus

$
$

132,000
3%
3,960

Total G&A Costs

(16,160)

2010
Summary
Revenue
% Growth
Less: COGS
Gross Profit
% Margin

132,000

(91,350)

40,650
30.8%

Less G&A
EBITDA
& Margin

(16,160)

24,490
18.6%

$
$

$
$

2011

2012

2013

2014

2015

16.00 $
1,575
25,200 $
5%

16.00 $
1,654
26,460 $
5%

16.00 $
1,736
27,783 $
5%

16.00 $
1,823
29,172 $
5%

16.00
1,914
30,631
5%

36.00 $
3,150
113,400 $
5%

36.00 $
3,308
119,070 $
5%

36.00 $
3,473
125,024 $
5%

36.00 $
3,647
131,275 $
5%

36.00
3,829
137,838
5%

4500
5.00 $
25%

4725
5.00 $
25%

4961
5.00 $
25%

5209
5.00 $
25%

5470
5.00
25%

5625

5906
5%

6202
5%

6512
5%

6837
5%

144,225 $

151,436 $

159,008 $

166,958 $

2011

2012

2013

2014

175,306

2015

4,725

4,961

5,209

5,470

5,743

$
$

1.50 $
7,087.50 $

1.50 $
7,441.88 $

1.50 $
7,813.97 $

1.50 $
8,204.67 $

1.50
8,614.90

$
$

3.00 $
14,175 $

3.00 $
14,884 $

3.00 $
15,628 $

3.00 $
16,409 $

3.00
17,230

$
$

3.00 $
14,175 $

3.00 $
14,884 $

3.00 $
15,628 $

3.00 $
16,409 $

3.00
17,230

$
$

4.00 $
18,900 $

4.00 $
19,845 $

4.00 $
20,837 $

4.00 $
21,879 $

4.00
22,973

138,600 $
15%
20,790 $

145,530 $
15%
21,830 $

152,807 $
15%
22,921 $

160,447 $
15%
24,067 $

168,469
15%
25,270

144,225 $
15%
21,634 $

151,436 $
15%
22,715 $

159,008 $
15%
23,851 $

166,958 $
15%
25,044 $

175,306
15%
26,296

(96,761) $ (101,599) $ (106,679) $ (112,013) $ (117,614)

$
$

2011

2012

2013

2014

2015

350
1500
1750

350
1500
1750

350
1500
1750

350
1500
1750

350
1500
1750

144,225 $
5%
7,211 $

151,436 $
5%
7,572 $

159,008 $
5%
7,950 $

166,958 $
5%
8,348 $

750
1250

750
1250

750
1250

750
1250

144,225 $
3%
4,327 $

151,436 $
3%
4,543 $

159,008 $
3%
4,770 $

166,958 $
3%
5,009 $

175,306
3%
5,259

(17,138) $

(17,715) $

(18,321) $

(18,957) $

(19,625)

2011

2012

2013

2014

144,225 $
9.3%

151,436 $
5.0%

159,008 $
5.0%

166,958 $
5.0%

(96,761) $ (101,599) $ (106,679) $ (112,013) $ (117,614)

$
$

47,464 $
32.9%

49,837 $
32.9%

52,329 $
32.9%

54,945 $
32.9%

175,306
5%
8,765
750
1250

2015

175,306
5.0%

57,692
32.9%

(17,138) $

(17,715) $

(18,321) $

(18,957) $

(19,625)

30,326 $
21.0%

32,122 $
21.2%

34,008 $
21.4%

35,989 $
21.6%

38,068
21.7%

2016

$
$

$
$

16.00
2,010
32,162
5%

36.00
4,020
144,730
5%

5743
5.00
25%
7179
5%

184,072

2016

6,030
$
$

1.50
9,045.65

$
$

3.00
18,091

$
$

3.00
18,091

$
$

4.00
24,122

$
$
$
$

176,893
15%
26,534
184,072
15%
27,611

$ (123,495)

2016

350
1500
1750
$
$

184,072
5%
9,204
750
1250

$
$

184,072
3%
5,522

(20,326)

2016

184,072
5.0%

$ (123,495)
$

60,577
32.9%

(20,326)

40,251
21.9%

Valuation
2011E EBITDA
Multiple
Transaction Value
Less: Debt
Plus: Cash
Offer Value

$
$
$
$
$

Other Assumptions
Revolver EBITDA multiple
Revolver Availability
Minimum Cash
M&A Fee
Existing Management Ownership
Mgmt Rollover (pre-tax)

Sources
BS Cash
Credit Facility
SUB. Debt
Mgmt. Rollover
Cash Equity
Total Sources
Uses
Purch. Of Equity
Mgmt. Rollover
Minimum Cash
Trans. Expenses
Fin. Expenses
Total Uses

30,326
5
151,629
151,629

3
90,977
5,000
1,500
10%
50%

$
$
$
$
$

0
60,652
45,489
7,581
45,469
159,190

$
$
$
$
$
$

144,047
7,581
5,000
1,500
1,061
159,190

0%
38%
29%
5%
29%
100%

Sources and Uses

X
0
2
1.5
0.25
1.5
5.25

90.5%
4.8%
3.1%
0.9%
0.7%
100.0%

Purchase Accounting (Goodwill Calculation)

Purchase of Equity
Less: Book Value of Equity
New Goodwill

$ 151,629
$
18,838
$ 132,791

$
$

53,050
32,712

Term

Synd. Fee % Fees ($)

5
5

1% $
1% $

607
455

1,061

Income Statement
2011
Revenue
Less: COGS
Groos Profit
Less SG&A
EBITDA
Less: D&A
EBIT
Less: Cash Interest
Less: Non-Cash Interest
Plus: Interest Income
Less: Def. Financing Fess
Profit Before Taxes
Less: Taxes
Net Income

Revenue Growth
Gross Margin
EBITDA Margin
EBIT Margin
Taxes

$
$
$
$
$

144,225
(96,761)
47,464
(17,138)
30,326

9.3%
32.9%
21.0%

2012
$
$
$
$
$
$
$
$
$
$
$
$
$
$

151,436
(101,599)
49,837
(17,715)
32,122
(1,300)
30,822
(7,647)
(1,820)
50
(212)
21,194
(8,477)
12,716

5%
32.9%
21.2%
20.4%
40%

2013
$
$
$
$
$
$
$
$
$
$
$
$
$
$

159,008
(106,679)
52,329
(18,321)
34,008
(1,600)
32,408
(6,915)
(1,852)
50
(212)
23,478
(9,391)
14,087

5%
32.9%
21.4%
20.4%
40%

Fiscal Year Ending

2014
$
$
$
$
$
$
$
$
$
$
$
$
$
$

166,958
(112,013)
54,945
(18,957)
35,989
(1,900)
34,089
(5,994)
(1,886)
50
(212)
26,046
(10,418)
15,628

5%
32.9%
21.6%
20.4%
40%

$
$
$
$
$
$
$
$
$
$
$
$
$
$

2015
175,306
(117,614)
57,692
(19,625)
38,068
(2,200)
35,868
(4,848)
(1,922)
50
(212)
28,935
(11,574)
17,361

5%
32.9%
21.7%
20.5%
40%

2016
$
$
$
$
$
$
$
$
$
$
$
$
$
$

184,072
(123,495)
60,577
(20,326)
40,251
(2,500)
37,751
(3,408)
(1,875)
50
(212)
32,306
(12,923)
19,384

5%
32.9%
21.9%
20.5%
40%

Balance Sheet
2011 Trans ADJ.
Cash
AR
Inventory
Other Current
PP&E
Goodwill
Def, Financin Fees
Other Non-Current

$
$
$
$
$
$
$
$

9,816
10,268
2,279
6,500
2,587

$
$
$
$
$
$
$
$

5,000
132,791
1,061
-

Total Assets

31,450

138,852

AP
Other Current
New Credit Facility
New Subordinated Debt
Other Non-Current
Equity

$
$
$
$
$
$

7,550
3,793
1,269
18,838

$
$
$
$
$
$

60,652
45,489
32,712

Total Liabilities & Equity

31,450

138,852

Operating Working Capital

Change in Operating Working Capital
Sales
COGS
Receivable Days
Inventory Days
Other Current Assets
AP Days
Other Current Liabilities

Fiscal Year Ending

2012
2013

ADJ. 2011
$
$
$
$
$
$
$
$

5,000
9,816
10,268
2,279
6,500
132,791
1,061
2,587

$
$
$
$

170,302

$
$
$
$
$
$

7,550
3,793
60,652
45,489
1,269
51,550

170,302

2014

2015

$
$
$

5,000
10,307
10,781
2,392.95
6700
132,791
849
2,587

$
$
$
$
$
$
$
$

5,000
10,822
11,320
2,512.60
6,600
132,791
637
2,587

$
$
$
$
$
$
$
$

5,000
11,363
11,886
2,638.23
6,200
132,791
425
2,587

$
$
$
$
$
$
$
$

5,000
11,931
12,481
2,770.14
5,500
132,791
212
2,587

171,408

172,270

172,890

173,272

8,740
4,391
16,463
48,047
1,269
93,981

$
$
$
$
$
$

172,890

$
$
$
$
$
$
$

7,928
3,983
47,655
46,308
1,269
64,266
171,408

$
$
$
$
$
$
$

8,324
4,182
32,981
47,160
1,269
78,353
172,270

$
$
$
$
$
$
$

9,177
4,610
(0)
46,874
1,269
111,342
173,272

11,020 $
$

11,571 $
551 $

12,150
579

$
$

12,757 $
607 $

13,395
638

$
$

144,225 $
96,761 $

151,436 $
101,599 $

159,008
106,679

$
$

166,958 $
112,013 $

175,306
117,614

24.8
38.7
1.6%
28.5
2.6%

24.8
38.7
1.6%
28.5
2.6%

24.8
38.7
1.6%
28.5
2.6%

24.8
38.7
1.6%
28.5
2.6%

24.8
38.7
1.6%
28.5
2.6%

2016
$
$
$
$
$
$
$
$

5,000
12,528
13,105
2,908.65
4,500
132,791
2,587

173,419

$
$
$
$
$
$

9,636
4,841
26,948
1,269
130,726

173,420

$
$

14,065
670

$
$

184,072
123,495
24.8
38.7
1.6%
28.5
2.6%

Depreciation Schedule
2011
Life

2012

Existing PP&E Depreciation

New Depreciation

1000

1000
300

Total Depreciation

1000

1300

Fiscal Year Ending

2013

2014

2015

2016

1000
300
300

1000
300
300
300

1000
300
300
300
300

1000
300
300
300
300
300

1600

1900

2200

2500

Cash Flow Statement

2011
Net Income
D&A
Non-Cash Interest
Deffered Financing Fees
Change in operating working Capital
CAPEX
Levered Free Cash Flow
Bef. Cash Balance
Less Minimum Cash
Plus: LCFC
LFCF Before Mandatory Paydown
Less :Mandatory Paydown
LCFC Before Discretionary Paydown
Less: Discretionary paydown
Change in Cash
Ending Cash Balance

$
$
$
$

2012
12,716
1,300
1,820
212
(551)
(1,500)
13997
5,000
(5,000)
13,997
13,997
(1,000)
12,996.93
(12,996.93)
0
5000

$
$
$
$

2013
14,087
1,600
1,852
212
(579)
(1,500)
15673
5,000
(5,000)
15,673
15,673
(1,000)
14,673.12
(14,673.12)
(0)
5000

Fiscal Year Ending

2014
$
15,628 $
$
1,900 $
$
1,886 $
$
212 $
(607)
(1,500)
17519
5,000
(5,000)
17,519
17,519
(1,000)
16,518.90
(16,518.90)
(0)
5000

2015
17,361
2,200
1,922
212
(638)
(1,500)
19558

5,000
(5,000)
19,558
19,558
(1,000)
18,557.51
(18,557.51)
(0)
5000

$
$
$
$

2016
19,384
2,500
1,875
212
(670)
(1,500)
21801
5,000
(5,000)
21,801
21,801
(1,000)
20,801.34
(20,801.34)
(0)
5000

Debt Schedule
Senior Revolving Credit Facility
Beginning Balance
Mandatory Paydown
Discretionary Paydown
Ending Balance
Availability
Subordinated Debt
Beginning Balance
Mandatory Paydown
Discretionary Paydown
Accumulated PIK Interest
Ending Balance
Interest Schedule
Senior Revolving Credit Facility
Subordinated Debt Sach interest
Revolver commitment Fee
Total Cash Interest

Type
Floating
Fixed
Fixed

Subordinated Debt PIK Interest

Non Cash Interest
total cash interest

Fixed

Interest income on cash

Libor
Step

Rate
4%
8% Capacity
0.5%
90,977

4%

1%

2011

2012
$

60,652
30,326

45,489

$
$

$
$
$
$
$

60,652

2013
$

(12,997) $
47,655 $
43,322

45,489
(1,000)
1,820
46,308

$
$
$
$
$

3,791
3,672
184
7,647

47,655

Fiscal Year Ending

2014
$

(14,673) $
32,981 $
57,996

46,308
(1,000)
1,852
47,160

$
$
$
$
$

2,923
3,739
253
6,915

32,981

(16,519) $
16,463 $
74,514

47,160
(1,000)
1,886
48,047

$
$
$
$
$

1,854
3,808
331
5,994

2015
16,463
(16,463)
(0)
90,977

48,047
(1,000)
(2,095)
1,922
46,874

638
3,797
414
4,848

$
$

1,820
1,820
9,466

$
$

1,852
1,852
8,767

$
$

1,886
1,886
7,880

$
$

1,922
1,922
6,770

50.00

50.00

50.00

50.00

3%

3.25%
0.25

3.50%
0.25

3.75%
0.25

2016
$

(0)

$
$

(0)
90,977

$
$
$
$
$

46,874
(1,000)
(20,801)
1,875
26,948

(0)
2,953
455
3,408
$
$

1,875
1,875
5,283

50.00

4.00%
0.25

Return Calculation
Period
EBITDA
EXIT MULT.
Enterprise Value

4
5
6
7

Less: Net Debt

Exit Mult.
Equity Value

Management Equity

4
5
6
7
14.3% Exit Mult
4
5
6
7

Sponsor Equity

Exit Mult
4
5
6
7

Returns Calculation

Cash on Cash Returns

Initial Equity
Exit Mult
45,469

Initial Equity
Exit Mult
45,469

4
5
6
7

4
5
6
7

2012
1
32,122 $

(88,963) $

(75,142) $

(59,509) $

(41,874) $

(21,948)

$
$
$
$

39,525
71,647
103,769
135,892

$
$
$
$

60,891
94,899
128,907
162,915

$
$
$
$

84,445
120,433
156,422
192,410

$
$
$
$

110,398
148,466
186,534
224,602

$
$
$
$

139,058
179,309
219,560
259,812

$
$
$
$

5,649
10,239
14,830
19,420

$
$
$
$

8,702
13,562
18,422
23,282

$
$
$
$

12,068
17,211
22,354
27,498

$
$
$
$

15,777
21,217
26,658
32,098

$
$
$
$

19,873
25,625
31,378
37,130

$
$
$
$

33,877
61,408
88,940
116,471

$
$
$
$

52,189
81,337
110,485
139,633

$
$
$
$

72,377
103,222
134,067
164,913

$
$
$
$

94,621
127,249
159,876
192,504

$
$
$
$

119,185
153,684
188,183
222,682

7.1%
33.7%
55.9%
75.2%

1.1
1.8
2.4
3.1

$
$
$
$

143,954
179,943
215,931
251,920

16.8%
31.4%
43.4%
53.6%

1.6
2.3
2.9
3.6

$
$
$
$

152,272
190,340
228,408
266,476

20.1%
29.3%
36.9%
43.4%

2.1
2.8
3.5
4.2

$
$
$
$

2016
5
40,251

128,488
160,610
192,732
224,854

0.7
1.4
2.0
2.6

136,033
170,041
204,049
238,057

2015
4
38,068 $

$
$
$
$

-25.5%
35.1%
95.6%
156.2%

$
$
$
$

Fiscal Year Ending

2013
2014
2
3
34,008 $
35,989 $

161,005
201,257
241,508
281,760

21.3%
27.6%
32.9%
37.4%

2.6
3.4
4.1
4.9