Dot VN, Inc. Co-Founder and President Lee Johnson Writes to Shareholders,
Noting Recent Company Achievement

To Our Shareholders:                                                                                   December 21, 2012

During the last few months, our Company, Dot VN, has taken several steps toward reaching our calendar year 2013 goal to generate significant revenues and cash flow to cover our costs and operational expenses.

The Company is building on its unique relationship with the Vietnamese Government’s Vietnam Internet Network Information Center (“VNNIC”), an affiliation to the Ministry of Information and Communications, founded April 28, 2000 to carry out the functions of managing, allocating, supervising and promoting the use of Internet domain names, address (IP) and Autonomous System Number (ASN) in Vietnam.  The Company has signed agreements, starting in 2003, with VNNIC to promote the Vietnamese country code Top Level Domain (“ccTLD”), ‘.vn’ (using the English language) and to serve as the only domain name registrar empowered with independent authority to approve and register domain names in real time without VNNIC’s participation.  We are the only registrar authorized to process all third level registrations online (the “Registrars Agreement”).  The current Registrars Agreement has no fixed term.  On May 25, 2009, the Company signed an exclusive rights agreement with VNNIC to promote and advertise the registration of the ‘.vn’ ccTLD with the commercialization of a pay-per-click (“PPC”) parking page program for ‘.vn’ domain registrations; VNNIC directs all Internet traffic requesting a non-existent or expired domain name to a web page managed by the Company (the “Parking Page Agreement”).  The current Parking Page Agreement has no fixed term.  On February 22, 2011, the Company signed an agreement with VNNIC which designates Dot VN as VNNIC’s sole partner in developing, promoting and managing the Vietnamese Native Language Internationalized Domain Name (the “Vietnamese IDNs” or “IDNs”) system (the “IDN Agreement”).  The IDN Agreement has no fixed term.

This year the Company has focused on 3 revenue initiatives based on the above VNNIC contracts and a fourth initiative to generate revenue from proprietary domain names owned by the Company.  We have made significant progress in these areas and I am pleased to share the following highlights of our latest news and activities:

• Domain Registration – In December 2009, VNNIC, (www.VNNIC.vn/en), executed a new agreement with Hi-Tek Multimedia, Inc., a California corporation, (“HMI”), a wholly owned subsidiary of Dot VN, Inc., for the registration, renewal, development and promotion of the ‘.vn’ ccTLD English language domain names with no fixed term (the “Current Agreement”).  The Current Agreement applies to all registrations occurring after December 31, 2009 but otherwise contains substantially the same terms and conditions and further, replaces the existing May 25, 2009 agreement.  Pursuant to the Current Agreement, in addition to revenue derived from domain registrations, HMI is paid commissions on new registrations, renewals and registration changes, every quarter based on revised benchmarks.  Previously commissions were paid every six months.

 VNNIC is extremely pleased with Dot VN’s positive progress in marketing and promoting ‘.vn’ domain registration worldwide.  The Company remains the largest international registrar accounting for 68% of all registrations managed by the four international registrars as of November 30, 2012.  As of November 30, 2012, the Company manages the registration of 12,286 English language domain names which represents a 3% annual growth compared to the 11,893 managed as of November 30, 2011.  We anticipate a nominal 2% to 3% growth rate in future years.

• Vietnamese IDN Registration – In February 2011, VNNIC designated the Company as their sole partner and co-registry in developing, promoting and managing the Vietnamese IDN system with no fixed term (the “IDN Agreement”).  The Company retains its exclusive rights provided it does not charge a registration fee in addition to the registration fee established by VNNIC; the Company may charge a fee for additional or value added services.  At the time of the agreement, there were 5,566 Vietnamese IDNs that VNNIC had charged an annual $10 (approximate) registration fee; on April 28, 2011, VNNIC eliminated the registration fee.

With aggressive promotion and grass-roots marketing within Vietnam and with zero registration fee the Company has grown the IDN registrations to 548,728 at December 31, 2011 and 866,167 as of December 15, 2012.  In the future, we anticipate VNNIC to establish an IDN registration fee with a discounted cost to the Company.

During June 2012, the Company launched an open test version of its Vietnamese IDN website building tools.  The unique interactive website building platform allows IDN owners to cut the costs to build and host their IDN websites by providing users with a set of interactive drag & drop tools with a user friendly interface to create and customize their own professional websites from a set of available templates and then publish those websites.  Once established each website will allow users to post content in real time such as written text, feature photos, music, videos as well as networking with other IDNs and share the latest news and information from the Company’s INFO.VN news portal.  Initially only web templates for personal websites were made available resulting in 14,033 personal website templates in use at December 15, 2012.  An additional 11,147 personal website templates are in the process of development at December 15, 2012.  Most personal IDN owners lack the basic understanding of website design and have required the assistance of our staff to create their template based websites.  In January 2013, the Company will launch additional website building tools featuring organization, business and e-commerce templates directed at IDN owners with a better understanding of websites and the needs of their organization or business.

Each free template provides the Company with space to insert banner ads to generate revenue which we anticipate implementing in February 2012.  Users will have an option to pay an annual fee to remove the banner ads.  This will be the first IDN value added revenue stream for Dot VN.

• Domain Parking/Monetization – In May 2009, VNNIC granted Dot VN the exclusive right to implement and commercialize the official pay-per-click (“PPC”) parking page for the English language ccTLD ‘.vn’, and to create and promote links for domain registrations, domain appraisals and a smart search engine for the ‘.vn’ ccTLD.  Domain registry monetization is the process whereby an Internet user who types in a domain name that does not exist is redirected to a landing page with sponsored results.  Premium web advertisers do not provide PPC ads for parking pages resulting from redirected Internet traffic from non-existent domain names (referred to as wild carding) which resulted in the use of generic ads not targeted to the Vietnamese market.  This did not generate any significant PPC revenue.  The non-existent domain name traffic was ultimately redirected to the Company’s INFO.VN website launched in June 2010

Dot VN is continuing its development of the INFO.VN Internet portal that will aggregate and organize everything that the Vietnamese Internet has to offer.  The goal is to create a super portal that makes news, entertainment and information available in one central and easy to navigate website.  Further, information and news will be available in both Vietnamese and English making access easier for non-Vietnamese speaking users.  By leveraging the non-existent domain name traffic from the domain registry monetization program, Dot VN serves over three million Internet visitors a month.

Presently, the Company is working with VNNIC to focus the domain registry monetization efforts on the approximate 3,000 English language domain names which expire monthly.  The Company will prompt the expired domain names for re-registration by maintaining a list of the domain names and their current Internet traffic.  In addition, the Company will park the domain names.  These registered domain names should be able to be parked with premium web advertisers.  Traditional parking pages for registered domain names display premium and specific advertising targeting related searches and key words which results in highly relevant advertising being displayed in the right language with the right message for each domain.  This will be a new revenue stream for Dot VN.

• Proprietary Domain Names – The Company has spent several months optimizing and rotating the key words associated with our proprietary domain names (approximately 600) which are parked with NameDrive, LLC, (www.NameDrive.com), a leading global domain parking, Internet advertising and pay-per-click company. We have seen significant growth in revenue from these efforts. In addition, we have purchased ‘.com’ and ‘.info’ domain names, which we believe will develop significant Vietnamese Internet search traffic. Our revenue from NameDrive for the period September 15 to December 15, 2012 totals over $117,000 compared to prior revenues of less than $750 per quarter. Currently we have over 2,300 valuable domain names parked with NameDrive. This will be a new revenue stream for Dot VN.

• Vietnam Offices – Dot VN maintains offices in Hanoi and Danang, Vietnam and currently employs 50 and 11 professionals in the two offices, respectively. In addition, the Company has 14 software development subcontractors under our management in Ho Chi Minh City, Vietnam. The Company also plans to hire staff in Vietnam to grow the new revenue streams. Our corporate office still remains in San Diego, California, USA.

• Future Development – In early 2013, the Company, with the support of VNNIC, will submit an application to the Ministry of Information and Communications for a license to operate a social network based on the IDNs.

During 2013, the Company will develop its own cash parking domains and auction platform.  The proprietary platform will support both the existing parked domain name activities noted above and will allow for the parking of the IDN domain names.

As evidenced by these recent accomplishments, Dot VN is generating new revenue and will start generating additional new revenue through these initiatives.  I am confident that we are on the right path to generating significant revenues through our exclusivity agreements with VNNIC.

As we move forward, we will continue to update you on Company news via our website: www.DotVN.com.  I thank you for your support and shared belief in Dot VN as we look ahead to our promising future.

Warm regards,


Lee Johnson, Ph.D.
President & CTO
Dot VN, Inc.

Forward-Looking Statements: