Executive

Summary
Varolo, Inc. is a Utah-based technology company that has developed the worlds first permission-based advertising platform that brings advertisers and consumers together in a way that strongly benefits both parties. The Problem. Online advertising is expensive, inefficient (with low click-through rates) and wasteful for advertisers. All advertisers, especially small and medium sized businesses, desire strong, quantifiable ROI on their advertising spend, yet this remains an elusive goal. Search-based (PPC) ads are often shown to people in error or out of context resulting in a high cost for the advertiser. For consumers, the web is replete with irrelevant, untargeted ads that impinge on the overall user experience. Historical, geographic, demographic and psychographic data is generally not available to advertisers and, as a result, they are unable to create relevant, targeted ads that have impact and deliver results. Additionally, it is difficult for an average organization to leverage social media as part of their marketing and advertising. According to a study by Adweek media, 63 percent of American Internet users ignore advertising on the Web. Advertiser fraud remains a huge problem. ClickForensics reported a 22.3 percent click fraud rate in 2010. With online advertising accounting for about 25 billion dollars in the U.S. alone, that is 5.5 billion dollars lost to fraud. The Solution. Varolo is a revolutionary permission- based, online advertising platform. Unique in the industry, Varolo brings strong value for both the advertiser AND the consumer. It does this by providing a highly targeted way to reach consumers and, for consumers, by compensating them to engage targeted and relevant advertising. Varolo allows advertisers to upload their ad content for free and only charges them when that ad is viewed by their target audience. Ads can be based on demographic, geographic, and psychographic profiling. Varolo matches consumer profiles to these ads using proprietary matching algorithms. By watching ads, consumers are taking part in our patent-pending social network revenue share program. The advertiser only pays when the consumer watches the entire advertisement and completes a rating or survey question at the end. Advertisers are able to offer coupons, discounts, and even buy now eCommerce at the end of the ad. Varolo provides advertisers with the tools they need to analyze efficacy and adjust campaigns in real-time. Varolo can also act as the epicenter of social media campaigns that allow advertisers to present offers to consumers that they can share through social media platforms on the Internet.

 The Secret Sauce. The consumers active authorization and participation in the process is a key differentiator and component to Varolos initial success and market traction. To obtain permission and to encourage participation, the consumer must be incented. Varolos system rewards users in a variety of ways to keep them actively engaged in the short, medium, and long term. Short-term this is facilitated through a weekly jackpot where each ad viewed increases the consumers chance of winning. In the mid- term, users are motivated through a series of achievements and prizes. And, in the long-term, Varolo leverages the power of social networking with a unique revenue share model where the consumer can earn revenue on each ad viewed by anyone in their social network which we call a village. By referring a friend to Varolo, the consumer can earn revenue on each ad they watch. Users can also earn money when an ad is viewed by a friend of a friend, up to 5 degrees of separation. The larger a consumers village is, the more money they make. Additionally, through demographic, geographic, and psychographic targeting, the consumer is viewing ads they are likely to be interested in while becoming eligible for product/service discounts and coupons which consumers find of high value. Varolo makes it very easy to refer friends and grow a village through a highly viral, affiliate link that consumers can share on their social networking sites, websites, blogs, forums, email, or anywhere else. The Opportunity. Varolo is a first-mover, creating a brand new platform category that brings advertisers and consumers together in a unique and powerful way. Varolo can be used by Fortune 100 companies or small and mid-sized business alike. In fact, SMBs have had few cost-effective, risk-free options for advertising until Varolo. Most companies spend 3 to 21 percent of their gross revenues on advertising and marketing. Our live public beta has shown that advertisers on Varolo experience 3 to 12 times higher click- through rates (CTR) than other advertising methods. Varolo combines elements of many of the most exciting opportunities today. These include: video delivery, mobile platform use, social networking, and advertising. Favorable Market Trends. Varolo benefits from many current and emerging trends that make the venture extremely well-timed: Video advertising on the Internet is exploding. According to the Keysey Group, the market is growing from $10.9M in 2007 to an estimated $1.5B in 2011. This equates to a CAGR of 167%. Numerous studies show that video brings strong benefits to advertisers. More than 60% of Americans have broadband Internet access. Advertisers are increasingly expecting ROI tools from advertising platforms.

The Competition & Varolos Differentiated Approach. The Varolos addressable market is the U.S. online video advertising market. There are 3 primary categories: 1) search engines that primarily target based on keywords; 2) ad roll networks which are online advertising middlemen that target by website and geography And; 3) publishers which are essentially websites that attempt to monetize their content using ads from search engines or ad roll networks. Although Varolo technically competes with all of these, we allow advertisers to target geographically, demographically, and psychographically in a unique platform that encourages consumer participation and engagement. Additionally, Varolo currently uses ad roll networks as one of the suppliers to fill our ad queues. So, in reality, ad roll networks are important partners of Varolo. Varolo appeals to a wide consumer audience. While the largest demographic group is women between 25 and 34 years of age (16 percent), Varolo has strong consumer participation across all age groups, genders, and geographies. Varolos Model. Platform-as-a-Service (PaaS). Varolo monetizes each ad viewed by a consumer. New consumers are added automatically through a highly viral, social networking invitation system where they are incented to view ads and invite others, resulting in additional revenue. Social networking, as opposed to direct marketing has been the primary method for end-user acquisition. Additionally, commerce options, rating feedback, survey feedback and a variety of other enhanced features will be leveraged to create additional streams. The Team. The Company is lead by an experienced and talented management team. The Companys Founder and CEO, Kevin Prince, was previously founder and CEO of Red Cliff Solutions, an information security company focused on the data protection for financial institutions. Red Cliff Solutions was acquired in 2006 by Perimeter E-Security, a large venture-backed firm. William Borghetti, COO (Sendside, Campus Pipeline), Kim Soth, VP of Marketing (The Soth Group, Axis41); Aury Friedman, Director of Operations (McLeod USA, MCI, UUNet, Gridnet); Sreeni Jakka, VP Software Development (TechO2, EZPass). Current Status. The company has more than 250,000 registered users and is currently generating revenue. More than 200 top brands have used Varolo in addition to many small and medium sized companies. Varolo continues to see strong new user growth and as many as 250 to 1,000 new users register each day. Contact: Kevin Prince, CEO. 801-718-2700 Email: kevin@varolo.com Web: www.varolo.com