Internet Social Media Network and Virtual Worlds. In June 2007, HitWise (www.hitwise.com) reported
that over 15% of all U.S. Internet visits were to social networking sites representing a growth rate of 416%
within two years. Today there are over 200 social networking sites on the Internet (Infojuice.org January
2008).
Because social networks connect people with similar demographics and interests at a low cost, these
networks grow virally becoming excellent mediums for communicating brands, distributing content and
conducting commerce. As social networks continue to mature, the introduction of 3D graphics, virtual
reality, and on-line societies are being created representing new advertising and product distribution
channels. Venture capital, technology and media companies recognize this major opportunity too. From
October 2006 to December 2007, over $1.4B has been invested into (49) social networking firms that
have or are planning on releasing virtual world or “metaverse” special effects. Examples of companies
that are focused on social networking and virtual world graphics include Second Life, Whyville, Club
Penguin, Kaneva, Gaia Online, There.com, and others.
Content Distribution Networks (CDN). According to a January 2008 report published by “Research and
Markets”, global sales for all CDN providers in 2006 was $2B and grew an additional 33% in 2007.
Content distribution networks augment the end-to-end transport networks and employ a system of
computers networked across the Internet to transparently deliver content to end users utilizing
optimization techniques including web caching, server-load balancing, and request routing.
This industry will continue to grow as streaming video, Internet gaming, and other forms of media and
content become “mainstream”. The ability to cost effectively provide low cost bandwidth and distribute
network intelligence to the network end-points will be important. There are approximately (30) CDN
companies globally with over 80% of the current market share controlled by Akamai, Limelight, and
CDNetworks. In 2007, Level 3, AOL and AT&T announced plans to expand their operations into the CDN
market too.
Product & Service Solutions
To better align its core competencies with the market opportunities, drive product development, focus its
marketing and sales efforts, and execute its business plan, the Company is reorganizing its operations
into four business units/segments. Brief descriptions of each business unit/segment and Company
affiliations, including products and services, revenue models and target customers follow.
Integrated Services Group (“ISG”) provides communications and
integration services including network design, installation of
structured wiring, and audio/video systems, plus security and
surveillance systems to enterprise and residential customers. In
addition, ISG is a value-added reseller of product lines that
complement its services business. In 2007, ISG generated over
$1.4 million of revenue, which was primarily achieved by providing
professional services on a project by project basis. The Company
believes that significant growth can be achieved by extending ISG’s
capabilities and portfolio of products and services to include structured wireline, wireless broadband, IP-based connectivity and managed services. To accomplish
this, management is pursuing acquisitions and leveraging WinSonic’s existing wholesale purchasing
rights with global communication companies, including AT&T, Verizon, Comcast and others, to offer
enterprise customers bundled voice, video and data solutions. Management is targeting primarily small to
medium size enterprise customers in the medical, multi-tenant unit (“MTU”), multi-dwelling unit (“MDU”),
educational and government sectors.
WinSonic Digital Cable Systems Network, Ltd. (“WDCSN”) is a wholly-owned subsidiary of WinSonic
and internally referred to as the “Digital Distribution Network Group”. WDCSN is responsible for the
engineering, operations and maintenance of network resources for its own facilities, plus the procurement
and management of connectivity from other content delivery network providers. Beyond the ability to cost
effectively, aggregate and distribute the Company’s digital media, content and communication services
globally, WinSonic and its affiliates can benefit from WDCSN’s certifications, licenses, agreements and
wholesale pricing arrangements with some of the largest communications companies in the world.
As a Competitive Local Exchange Carrier (“CLEC”) and Interexchange Carrier (“IXC”) with
interconnection and co-location rights in AT&T central offices, the Company has access to unbundled
network elements and wholesale pricing advantages. In addition, WDCSN has the right to negotiate bulk
feed agreements with Comcast and Direct TV that permit the Company to resell cable and satellite TV
service on a nationwide basis to its customers and receive a substantial discount with co-branding rights.
Management believes this represents a near term revenue opportunity. The Company will sell
bandwidth, telephony and IP-based services under the terms of its wholesale agreement with AT&T,
resell other communication provider’s products and services, plus offer cable and satellite TV through the
Integrated Service Group to enterprise customers at a price that is competitive in the market.
As WinSonic’s digital content distribution and communications business grows, bandwidth usage, and
controlling end-to-end quality of service will be significant differentiators. By exercising its rights for
interconnection and co-location in AT&T’s network, WinSonic can build and operate its own network
facilities to control and reduce costs and improve operating margins.
Digital Media Group (“DMG”) owns, creates and licenses digital content from artists and media
companies to cost efficiently and reliably deliver voice, video, and data products and services to its
customers on a global
basis. DMG will be responsible for identifying product, service and web based applications, defining the
solution, product development and management, sales, marketing, channel management, network
security, database management, hosting, and other integration and customer support operations.
DMG’s intellectual property includes, but is not limited to, three dimensional web browser applications and
interactive media distribution platforms that leverage the viral growth characteristics of social networking
and virtual reality. WinSonic intends to commercially launch a 3D virtual city (the “WinSonic City”), which
includes retail, commercial and residential buildings, roads, airports, sports arenas, and other
environmental and geographic elements in 2008. The Company couples this unique and compelling user
environment with on-line shopping for consumer goods and services, digital downloading of music and
video, plus other IP-based communications services and office productivity tools. The WinSonic
metaverse and on-line shopping application utilizes simple user interfaces and point and click controls.
WinSonic will derive its revenue from advertising, e-commerce, subscription services and content
distribution partnerships. The Company will focus initial business development efforts on securing
affiliation agreements with national retail businesses, media companies, sports associations, alumni
organizations, existing social networks, plus music artists, film and sports celebrities. The objective is to
fill the WinSonic City buildings with tenants, who execute agreements for advertising, revenue-sharing,
and possibly, subscription fees. The revenue model would be similar to existing web browser sites like
Google, Yahoo and others, whereby retail businesses offer WinSonic revenue-sharing for on-line
purchases, plus commercial and retail tenants purchase banner ads, which in the WinSonic virtual world
equate to corporate logos and/or billboards on buildings. Celebrity anchor tenants, initially from urban
entertainment and sports industries, will be contracted to become residents of the WinSonic City to
stimulate awareness, promote the social networking aspects of the website, and generate subscription
revenue from their members.
The Company believes the social networking aspects coupled with easy-to-use, three dimensional web
browser experiences that appear like a virtual city will be very popular across all market and demographic
segments. Customers will “go to the city” to socialize with their friends, shop, listen to music and watch
videos.
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