Professional Documents
Culture Documents
Business Plan
BUSINESS PLAN
Date Prepared
July, 200B
Table of Contents
EXECUTIVE SUMMARY...........................................................................................................4
Executive summary
Venture History
NewAge BIOTECH, Inc. was formed in 19XX to develop, market and license its patented zinc peptide
technology. The company has seen total revenue grow from $2.7 million in 19XX to an estimated
$11.1 million in 200B. Although NewAge BIOTECH experienced a net loss of $4.5 million in 19XX, it
is estimated the loss will be reduced to $0.4 million in 200B. In 200A, the company’s revenue grew by
40 percent to $6.6 million from $4.7 million the prior year, while operating expenses increased by only
6.7 percent to $7.45 million from $6.98 million. Overall, the company is again approaching profitability,
and the zinc peptide technology is proving to be a significant platform from which to launch additional
product lines.
Venture Description
Through various supply and distribution agreements for the mass retail market, NewAge BIOTECH,
Inc., has accelerated its entry into the consumer market. Company operations are beginning to stabilize
due to increasing revenues and maintenance of operating expenses. The company has made a point of
aggressively protecting its intellectual property, not only the zinc peptide formulations, but also its
trade names. With the zinc peptide formulation, NewAge BIOTECH has been able to enter the premium
skin care markets, which carry a higher price and higher gross margins.
Venture Organization
NewAge BIOTECH’s management team brings with it the ability to raise venture capital, prepare
regulatory submissions for clinical trials, monitor the trials, and develop new technologies through
cutting-edge research and development. In addition, the members of the management team have
experience in setting up the necessary infrastructure for early-stage companies that will ultimately make
them successful. In the case of NewAge BIOTECH, Inc., both the advisory board and board of directors
are exceptional idea people and scientists in their respective fields. Resumes for the members of the
management team can be found in the Appendix.
Venture market
The skin, hair and wound care industries are growing rapidly. The Baby Boomer generation is more
active than their parents and also more concerned about their appearance. They have a perceived need to
maintain a youthful appearance through skin lotions, cosmetic surgery and hair thinning treatments. In
addition, people are living longer, which means they may find a need for skilled nursing homes, where the
elderly often develop chronic wounds. A number of large health care competitors have expansive product
lines and sell their wound care products at a premium price. These same companies have major
distribution networks but lack the personal customer service that skin and health care product sales
demand.
Rather than competing directly with the large health care companies, NewAge BIOTECH has negotiated
development and distribution agreements with other large health care companies. Therefore, NewAge
BIOTECH has been able to limit the size of its own direct sales force. The company has acquired other
skin care companies, thus rapidly expanding its product offerings. Its zinc peptide formulation has
proven to be more effective than other skin and wound care products currently on the market.
The worldwide chronic wound care market is expected to exceed $4 billion. The worldwide market for
thinning hair products is said to be $1.5 billion. The cosmetic surgery market has exceeded $2 billion.
Venture Operations
NewAge BIOTECH plans to continue its skin and hair care product development and has introduced a
number of anti-aging and related products this past year. The company has expended $1,275,294,
$1,744,421, and $2,422,076 on research and development in the last three years. The company has
incurred losses since its inception due to the marketing expense of product launches and the costs of
supporting research, development, and clinical studies of its proprietary technology. NewAge
BIOTECH has relied primarily on equity financing, product sales, contract manufacturing, interest
income and corporate partnerships to fund its operations and capital expenditures. Once its product
lines have expanded and achieved market acceptance, NewAge BIOTECH expects that it will begin to
show profitability.
Venture Financing
NewAge BIOTECH’s contract manufacturing operation revenue has grown to $1,000,000 this past year.
This is an increase of 42% over the previous year. This increase reflects several new customer projects
and the continuation of a long-term agreement negotiated in 19XX. However, NewAge BIOTECH’s
board of directors has recommended that the contract manufacturing be divested and function as a
subsidiary of the company. With the continued success of the proprietary zinc peptide technology,
NewAge BIOTECH feels that operating a growing contract manufacturing capability would take away
from its efforts to maintain that success. Depending on the level of funding by investors, NewAge
BIOTECH may become a minority shareholder in the new entity. Therefore, we are asking you to look
at the company’s contract manufacturing capability and products as an opportunity for investment. We
look forward to providing you a more formal presentation of the market opportunities that exist for
NewAge BIOTECH’s products and services.
Management team
NewAge BIOTECH’s management, Gary Smith, PhD, Jeff Jones, Paul Talent, and Gary Sawyer, PhD,
make up a seasoned and start-up savvy team that contribute complementary expertise in clinical
research, biopharmaceutical development, strategic planning, and business administration. The team
offers nearly 50 years of combined biotechnology experience and has a successful track record in drug
testing and approval. The individual members of the management team have worked together in previous
successful ventures.
Gerald L. Sawyer, PhD, President & CEO. Dr. Sawyer is an experienced business executive and
entrepreneur with over fifteen years in senior management in the biotechnology industry. He has co-
founded and served on the board of directors of two successful start-up medical technology companies.
He is the former president & CEO of Pharma, Inc., a private drug delivery company which he founded
and established operations for in Denver, Colorado. His experience also includes service as the vice
president of scientific affairs and COO at Immune Corporation, a publicly traded biotechnology
company engaged in the research and development of cancer immunotherapeutics. Dr. Sawyer has also
served as manager of Drug Delivery Research at Avex Laboratories Inc., where he participated in the
start-up, spinout and initial public offering activities of the company, and as director of operations at
Inhouse Research Institute, Inc., a successful contract toxicology company that he co-founded.
Throughout his career, Dr. Sawyer has refined his expertise in the start-up business environment
including small business administration, operations, team building, fund raising, and strategic business
development. Dr. Sawyer holds a bachelor of science in chemistry from Wayne State University and
received his doctorate in biochemistry from Colorado State University.
Gary J. Smith, Ph.D., Vice President, Research & Development. Dr. Smith has 15 years of experience in
both the biopharmaceutical industry and federal government, most recently serving as vice president of
drug development at Pharma, Inc. and director of pharmacology and toxicology at Somnex, Inc. Prior to
that, Dr. Smith was a tenured scientist and project manager at the National Institute of Health and
recently completed a term on the board of directors of the American Board of Toxicology. Dr. Smith has
written more than 60 peer-reviewed publications and book chapters and is the inventor on patents in the
area of inflammation and hematopoiesis. Dr. Smith received his Ph.D. from New York University and
holds a Diplomate from the American Board of Toxicology.
Jeffrey L. Jones, VP Clinical Development. Mr. Jones is a qualified clinical research manager with over 10
years’ experience in the biopharmaceutical industry. He has served as medical research manager for
Clinical Research, Inc., where his responsibilities incorporated the design, implementation, and direction
of multi-center clinical research trials in various therapeutic areas including diabetes, dermatology, and
oncology. Mr. Jones’s drug development background encompasses all levels of clinical trial management,
having held positions as senior clinical research associate with Pharmaceutical Research Associates, Inc.,
regional clinical research associate and project manager with PLL Pharma, Inc., clinical monitor with
Avex Laboratories, Inc., and clinical studies coordinator with Telectronics. Mr. Jones also served as
preclinical studies group leader at Avex Laboratories, Inc. Mr. Jones received his BS degree in biology
from Colorado State University and trained as a U.S. army medic specializing in flight, ER, and trauma
medicine. He is also certified in Good Manufacturing Process Management. Mr. Jones has authored
numerous publications and holds several patents related to clinical research and drug formulation
development.
John Bass, VP Sales & Marketing. Mr. Bass has over 20 years’ experience in sales and marketing. He
served as vice president of sales and marketing for Southern Biotech supervising 20 sales representatives
and four regional managers. Prior to that he was vice president of marketing for Neutraceuticals, Inc.,
where he had responsibility for a sales force of 25 and oversight for advertising and promotion. Mr. Bass
has a master’s degree in marketing and a bachelor of science in business administration.
Paul A. Talent, Controller. Mr. Talent is an experienced business development executive with over 13
years of experience in various industries. He directed the sales & marketing groups for Shelton
Corporation, following promotions from sales representative, area sales manager, and regional sales
director. He has been recognized nationally and received numerous awards for his sales expertise in
numerous categories and is recognized by his peers for his skills in closing multi-million dollar deals. He
has extensive experience in new business development and, in this capacity, has served as a consultant to
several medical technology companies, including Pharma, Inc., and MedLinc Corporation. Mr. Talent has
also served as a managing partner in a private firm for home and commercial loans. Mr. Talent attended
Long Beach State University where he majored in business and communications.
Certificate of Incorporation
License Agreements
Application for Employer Identification Number
Confidentiality Agreement
Stock Incentive Plan
Term Sheet
Subscription Agreement
Shareholder Agreement
United States Patents
ByLaws of NewAge BIOTECH, Inc.
Building Lease Agreements
University Research Agreements
Distributor Agreements
Sunil J. Adil, MD, PhD, MRCPath, FRCP. Dr. Adil is a physician-scientist and inventor of the
company’s technology. He is currently professor of general medicine & endocrinology and a professor in
the Graduate School of Pharmacology at the University of New York Medical School. He also holds
affiliations in the Department of Internal Medicine and the Department of Pharmacology & Toxicology.
He graduated from medical school in Peradeniya, Sri Lanka, in 1975 and earned a Ph.D. in endocrinology
in 1989 at the University of London. In recognition of his many contributions to bone-related research
over the previous 16 years, he was awarded the Frame Award for clinical excellence at the American
Society for Bone and Mineral Research meeting in 19XX. He has been awarded several young
investigator awards. He is the author of 75 peer-reviewed scientific papers, over 65 invited lectures, 35
reviews and editorials, nine book chapters, and two books, and has given over 150 presentations at
scientific meetings. In recognition of Dr. Adil’s original contributions to neuroscience, he was elected to
the fellowship of the International Neuropeptide Society in 19XX. Also, in recognition of his
contributions to clinical medicine, he was elected as a fellow of the Royal College of Physicians, London
(FRCP) in 19XX.
Donald P. Brown, Ph.D. Dr. Brown is recognized internationally as an expert in the fields of human
tumor immunology, immunotherapy, and experimental cancer therapy. He is currently the administrative
director of the Cancer Institute at the Medical College of Ontario, and previously he was the scientific
director of the Rushton University Cancer Institute. He has authored more than 70 original articles in the
peer-reviewed literature, written 10 invited reviews and chapters, and edited one book in the areas of
cancer medicine and experimental therapies. Dr. Brown has served as a scientific advisor and consultant
to Abbott Laboratories, Pfizer Pharmaceuticals, Boehringer Mannheim, Winthrop Pharmaceuticals, Ciba-
Geigy, and Lorus Pharmaceuticals.
Charles H. Severson, M.D. (Pending). Dr. Severson is the chairman, CEO, president, and co-founder of
SolidRock, Inc., a privately held, venture-backed health care company based in Denver, Colorado. Prior
to founding SolidRock, Dr. Severson served as co-founder, CEO, and chairman of Roden Systems, Inc., a
medical information services company that, over the course of three years, grew to $50 million in annual
revenues. Dr. Severson also has been chairman, CEO, president, and founder of Somnex, a publicly
traded biopharmaceutical company and was CEO and president of Somnex Instruments, which was sold
to Beckman Instruments in 1989. During his academic career, Dr. Severson received numerous awards
and recognitions. He was a teaching and research scholar and a fellow of the American College of Chest
Physicians. He has held the positions of professor of medicine, clinical director, and director of the
House Staff Training Program of the Department of Medicine at the University of Colorado; and senior
scientist and vice-president of the Eleanor Roosevelt Institute. Dr. Severson is board certified in internal
medicine and pulmonary medicine. He earned his medical degree from the University of Colorado,
training in internal medicine at Duke University and pulmonary medicine and critical care at the
University of Colorado, and training in molecular and cellular biology at the University of Colorado and
the Eleanor Roosevelt Institute. NewAge BIOTECH is currently in discussion with Dr. Severson to
finalize his appointment to the board of directors.
Advisor Specialization
Infrastructure
Corporate Advisors
Corporate Counsel
Hogan & Hartson, LLP
1000 Broadway
Suite 200
Boulder, CO 80302
Fees range from $150-250/hr
Auditor
Arthur Andersen LLP
1000 Seventeenth Street
Suite 3100
Denver, CO 80202
Fees range from $100-200/hr
Banking
Silicon Valley Bank
1000 Arapahoe Avenue
Suite 225
Metropolis, KS 66061-7002
Fees are based on the type of transaction.
Insurance
NewAge BIOTECH carries a product liability insurance policy of $5,000,000 through Prudential
Insurance with a premium of $500 per month. The company also has a term life insurance policy
through National Life Insurance Co. on Dr. Gary Sawyer with a value of $1,000,000 at a cost
$100/month.
Capitalization
NewAge BIOTECH has relied primarily on equity financing, product sales, contract manufacturing,
interest income and corporate partnerships to fund its operations and capital expenditures. The
company expects negative cash flow from operations to continue at least through the second quarter of
200B. NewAge BIOTECH may require additional funds to expand or enhance its sales and marketing
activities and to continue product development. The company's future capital requirements will depend
on numerous factors including its own efforts and the efforts of its collaborative partners to
commercialize its products; continued progress in research and development programs; relationships
with existing and future corporate collaborators, if any; competing technological and market
developments; costs involved in filing, prosecuting and enforcing patent claims; time and costs of
commercialization activities and other factors. As of December 31, 200A, NewAge BIOTECH had cash,
and cash equivalents of $2.8 million. The company estimates that, at its planned rate of spending, its
existing cash and cash equivalents and the interest income thereon will be sufficient to meet its capital
requirements for at least the next twelve months.
Organization charts
President/CEO
Clinical Trials Pre-Clinical Studies Internal R&D Sponsored Research Distributors Sales Force Marketing Customer Service Accounting
Technical Services
Unique features
Zinc levels in most humans have been shown to decline with age. Research shows that a zinc deficiency
is associated with impaired wound healing. The company’s proprietary formulations, including its zinc
peptide technology, are capable of accelerating tissue growth, repair and regeneration by stimulating
collagen synthesis, and new blood vessel growth. Hair follicles require high concentrations of biological
zinc, and Trielite™ products deliver zinc along with amino acids for nourishing and stimulating the hair
and scalp for improved health, strength, and appearance.
Stage of development
NewAge BIOTECH Corporation was founded in 19XX and has its corporate offices in Metropolis,
Anystate. Its first commercial product was developed in 19XX. New Age Biotech is a health care
company that develops, manufactures and markets products for skin, hair and wound care. Many of the
company's products incorporate its patented zinc peptide technology. The company's products are
targeted for use in dermatology, plastic and cosmetic surgery markets and for therapeutic maintenance of
the skin and hair. The company's focus has recently expanded to include a wide variety of consumer
markets for skin care products via strategic partners.
NewAge BIOTECH’s mission is to market and/or license patented zinc peptide technologies for skin
and hair care applications. Its novel zinc peptide technology is just beginning to expand into the
consumer market, and has the potential for significant, rapid growth following in the steps of AHAs
(alpha hydroxy acids) and retinol. The goal is to generate profits from the sale of the products that the
company develops and licenses. To augment the commercialization of its technology, NewAge
BIOTECH has entered into distribution and license agreements primarily in the consumer markets and,
to a lesser extent, the wound care markets. Consistent with this goal, the company intends to retain and
expand its proprietary rights to its products and technologies.
NewAge BIOTECH believes that its products' functionality and/or pharmacological activity make them
potential candidates for further development as pharmaceutical or therapeutic agents. The company's
preclinical efforts will continue to focus on supporting existing business through developing "proof of
concept" data for potential pharmaceutical partners. The company sponsors a research and development
laboratory at the University of Central Ohio to expand preclinical research in various product
applications and mechanisms of action. With this arrangement, NewAge BIOTECH has access to leading
authorities in immunology and cell biology, as well as facilities and equipment to engage in
experimentation and analysis at the basic research level.
NewAge BIOTECH has obtained patents or filed patent applications in the United States and
approximately 26 other countries in three series regarding the compositions of zinc peptide derivatives,
the processes by which they are produced and the methods of their use. The first United States patent
application in this first series, covering the composition claims of zinc peptide derivatives, matured into
United States Patent No. 0,111,935 (the "935 Patent"), issued on April 5, 19XX.
United States Patent No. 0,112,890 (the "890 Patent") was issued on April 17, 19XX, from a divisional
application to the 935 Patent. The 890 Patent generally relates to the basic processes of producing zinc
peptide derivatives, to certain specific examples of such processes and to certain formulations of zinc
peptide derivatives. Foreign patents that are counterparts to the foregoing United States patents have
been granted in some of the member states of the European Economic Community and several other
countries.
The second series of patent applications relates to preferred processes for the production of zinc
peptide derivatives. A Patent Cooperation Treaty application based on the parent United States
application has been filed designating a number of foreign countries where the applications are pending.
NewAge BIOTECH also relies upon, and intends to continue to rely upon, trade secrets, unpatented
proprietary know-how and continuing technological innovation to develop and maintain its competitive
position. The company typically enters into confidentiality agreements with its scientific consultants,
and NewAge BIOTECH’s key employees have entered into agreements with the company requiring that
they forbear from disclosing confidential information of the company and assign to the company all
rights in any inventions made while in the company’s employ relating to the company’s activities.
Accordingly, the company believes that its valuable trade secrets and unpatented proprietary know-how
are adequately protected. NewAge BIOTECH also believes that its trademarks and trade names are
valuable assets; consequently, the names of various product lines are protected by trademarks.
Governmental approvals
NewAge BIOTECH is not currently under any restrictions by a regulating governmental agency. The
manufacturing and marketing of the company’s products are subject to extensive regulation in the United
States by the federal government, principally by the FDA, and in other countries by similar health and
regulatory authorities. The Federal Food, Drug and Cosmetic Act, and the regulations promulgated
thereunder, and other federal and state statutes govern, among other things, the testing, manufacture,
safety, labeling, storage, record-keeping, advertising and promotion of cosmetic products and medical
devices. Product development and approval or clearance within the regulatory framework requires a
number of years and involves the expenditure of substantial resources.
NewAge BIOTECH’s products and product candidates may be regulated by any of a number of
divisions of the FDA. The process of obtaining and maintaining regulatory approvals for the
manufacturing or marketing of the company's existing and potential products is costly and time-
consuming and is subject to unanticipated delays. Regulatory requirements ultimately imposed could
also adversely affect the ability of the company to clinically test, manufacture or market products.
In the United States, products that do not seek to make effectiveness claims based on human clinical
evaluation may be subject to review and regulation under the FDA's cosmetic or 510(k) medical device
guidelines. Similar guidelines exist for such products in other countries. Such products, which include
wound care dressings and certain ointments and gels, must show safety and substantial equivalency with
predicate products already cleared by the FDA to be marketed.
In addition to obtaining approval or clearance from the FDA or foreign regulatory bodies to market a
product, NewAge BIOTECH’s quality control and manufacturing procedures must conform to current
good manufacturing practices ("cGMP") guidelines, or ISO 9000 standards, when appropriate. In
complying with these regulations, which are subject to change at any time without notice, NewAge
BIOTECH must continue to expend time, effort and financial resources in production and quality
control. In addition, the company’s manufacturing plant is subject to the regulations of and inspections
by other foreign, federal, state or local agencies, such as local and regional water and waste treatment
agencies, and state and federal safety and health agencies.
NewAge BIOTECH also is or may become subject to various other federal, state, local and foreign laws,
regulations and policies relating to, among other things, safe working conditions, good laboratory
practices, and the use and disposal of hazardous or potentially hazardous substances used in connection
with research, development and manufacturing. Failure to obtain regulatory approvals for its product
candidates or to attain or maintain compliance with cGMP or other manufacturing requirements would
have a materially adverse effect on the company's business.
The packaging, labeling and advertising of the NewAge BIOTECH’s products are subject to regulation
by one or more federal agencies, including the FDA, the FTC, the USDA and the EPA. These activities
are also regulated by various agencies of the states, localities and foreign countries to which the
company’s products are distributed and sold. The Dietary Supplement Health and Education Act of
19XX ("DSHEA") revised the provisions of the FFDC Act concerning the composition and labeling of
dietary supplements and, in the judgment of the NewAge BIOTECH, is favorable to the dietary
supplement industry. The legislation created a new statutory class of "dietary supplement" which
includes vitamins, minerals, herbs, amino acids and other dietary substances for human use to
supplement the diet. DSHEA grandfathered, with certain limitations, dietary ingredients on the market
before October 15, 19XX. A dietary supplement which contains a new dietary ingredient, one not on
the market before October 15, 19XX, requires evidence of a history of use or other evidence of safety
establishing that it will reasonably be expected to be safe. The majority of the products marketed by
NewAge BIOTECH are classified as dietary supplements under DSHEA.
Product liability
Clinical trials or marketing of any of the current and potential products may expose the company to
liability claims from the use of these products. NewAge BIOTECH carries product liability insurance for
that purpose. Since the company maintains a supply of hazardous materials at its facilities, it is subject
to federal, state and local laws and regulations governing the use, manufacture, storage, handling and
disposal of hazardous materials and waste products. In the event of an accident, the company could be
held liable for resulting damages. The company maintains a database of medical and/or technical product-
related inquiries from consumers, physicians or other third-party customers. The company also
maintains a record of all complaints or reports of an actual or potential failure of any product to meet the
specifications set forth in regulatory filings. A Product Discrepancy Committee meets monthly to
review trends of customer complaints or reports. If when received, a customer complaint may require a
product recall, the Product Discrepancy Committee meeting will be called at that time to review the
complaint and develop a plan of action.
Scientific literature documents the ability of zinc peptide wound care gels and creams to stimulate
collagen synthesis, new blood vessel growth and tissue repair. These discoveries have led to the
development of a variety of products designed to treat the skin following certain cosmetic procedures
such as microdermabrasion, laser resurfacing and hair transplantation. An increasing number of these
cosmetic procedures are performed each year as the Baby Boomer population ages. NewAge BIOTECH
has introduced a series of products tailored to the needs of these markets, such as its Isle Intensive
Repair Crème™, Isle Cleanser™ and Isle Hydrating Gel™ products used to treat patients following
chemical peels, microdermabrasion and laser treatments. During 200A, a new Isle Post Laser Lotion™
was introduced to complement its existing products. The Isle products provide a comprehensive
approach to post-procedure care and allow NewAge BIOTECH to differentiate its line of skin care
products on the basis of its proprietary zinc peptide technology.
NewAge BIOTECH has also launched its NewAge Therapy™ line of anti-aging products in response to
demand from physicians’ customers. The original NewAge Therapy™ line of three products now
numbers seven. In addition, complementary treatments include oily skin, dry skin and sensitive skin
products for specific skin conditions. Some of the new products incorporate the technology acquired
with the NewDerm, Inc., acquisition. The New Age Xenograft™ System was launched in 19XX to
address the special tissue repair needs of patients following hair restoration surgery.
NewAge BIOTECH believes its technology has tremendous potential in a variety of consumer skin care
markets. Consumer and physician awareness of the ability to improve skin health and appearance with
products designed specifically to meet the needs of the aging is increasing. Specific ingredients, such as
AHA (alpha hydroxy acid) and retinols have played a major role in expanding the anti-aging and
specialty skin care markets. NewAge BIOTECH believes that its zinc peptide formulation has the same
ability to grow the skin care markets and generate the same presence in the market place.
In April 200A, NewAge BIOTECH entered a long-term worldwide license agreement with Axion
Corporation, a Johnson & Johnson Company, for worldwide use of its patented zinc peptide Complexes
in products for skin health. Axion develops, manufactures and markets internationally premium skin and
hair care products. In 19XX, New Age Biotech entered into an exclusive worldwide supply and
marketing agreement with Genera Corporation, pursuant to which the company granted Genera the right
to market zinc peptide products to the prestige department store skin care market. Genera sells products
to Saks, Talbots, Nordstroms, Dillards and other leading prestige stores throughout the world.
NewAge BIOTECH also expects to continue to license its zinc peptide technology to other companies
for specific market segments in the skin care category. The company believes that it can develop
products for one or two niche market segments. These products can be marketed, cost effectively, as a
separate line of products. NewAge BIOTECH commenced shipping its Trielite™ line of Trielite Zinc
Complex™ hair care products to physicians' offices in the third quarter of 19XX. Trielite™ Shampoos,
Conditioners and Follicle Therapy Solution are positioned to participate in the rapidly growing $1.5
billion worldwide hair care market as a program for the maintenance of thinning hair in men and women.
Hair follicles require high concentrations of biological zinc and the Trielite(R) products deliver zinc along
with amino acids for nourishing and stimulating the hair and scalp for improved health, strength and
appearance.
Production
Production of all NewAge BIOTECH’s products follows the steps below:
v The production process begins with the formulating of the product in a particular batch size.
v If the product requires sterilization, it will be steam sterilized per specifications.
v Many of the products utilize a preservative to maintain a low bioburden of microorganisms.
v The product is then dispensed through a sterilized multivac tubing system into the appropriate
container.
v Representative samples are removed for quality control and sterility.
v All other products are packaged and sent to quarantine.
v Performance testing and analysis is normally completed in 3-5 days.
v Sterility testing is normally completed in 7-10 days.
v The Quality Control Department has the authority to release or discard the product.
v If retesting of product is required, new samples are requested from quarantine.
v When released by quality control, the product is moved from quarantine to shipping.
Facilities
NewAge BIOTECH believes that all its manufacturing and laboratory facilities, and laboratory
equipment are in satisfactory condition and are adequate for the purposes for which they are used. The
company’s corporate headquarters and principal U.S. manufacturing facility in Metropolis, Anystate
occupies 50,000 square feet. The company owns the facility. The manufacturing operations occupy
approximately 35,000 square feet of the facility, and administrative offices occupy approximately
15,000 square feet. The company's in-house research and development and quality assurance activities
are conducted in a section of the space devoted to administration. Warehousing and distribution are
contained in the manufacturing operations section of the facility.
During Fiscal Year 200A, NewAge BIOTECH continued to utilize the excess capacity in its
manufacturing facility to provide processing and other services to pharmaceutical and biotechnology
clients. The company currently manufactures proprietary bulk material that is shipped to its corporate
partners for packaging, labeling and eventual sale to their customers. The expense of the contract
manufacturing operation has continued to exceed the revenue it generates. NewAge BIOTECH is
exploring the possibility of selling the assets and liabilities of its contracting manufacturing operations to
a group of investors. This sale would be in line with the company’s mission to develop, market, and
license its patented skin care technology.
Suppliers
Chemicals, plastic ware and glassware are obtained from national scientific supply houses such as Fisher
Scientific and Sigma Chemical Company. NewAge BIOTECH has annual purchasing contracts for
powdered chemicals from leading chemical supply houses. These chemical supply houses are allowed to
bid for the contract each year. The award of the bid is based on not only the lowest price but also the
ability to of the supplier to maintain sufficient inventory of the raw materials and ship in a timely
manner.
Environmental factors
The manufacturing, processing, formulating, packaging, labeling and advertising of NewAge BIOTECH’s
products are subject to regulation by one or more federal agencies, including the FDA, the FTC, the
USDA, OSHA and the EPA. These activities are also regulated by various agencies of the states,
localities and foreign countries to which the company’s products are distributed and sold. The FDA, in
particular, regulates the formulation, manufacture and labeling of vitamin and other nutritional
supplements. The company has developed a program to recycle paper, plastic and aluminum, with the
proceeds going to local charities.
Marketing plan
Industry profile
Current size
According to “Chronic Wound Care: U.S. Markets for Wound Management Products” (Medical Data
International), an estimated six million people suffer from chronic wounds in the United States. Of the
six million people with chronic wounds, nearly three million have pressure sores, over two million have
diabetic ulcers, and over one million suffer from venous stasis ulcers. Diabetic ulcers are responsible for
60,000 limb amputations each year, accounting for more than half of all such procedures not related to
trauma. Venous stasis disease and pressure sores often afflict the elderly, who constitute the most
rapidly growing segment of the U.S. population and account for a disproportionately large share of total
U.S. health care expenditures. The wound care segment of the U.S. health care industry generated
approximately $5 billion in expenditures in 19XX. The wound care market anticipates continued growth
due to the aging population and the increasing incidence of health disorders, such as diabetes, which may
lead to chronic wounds.
The retail market for salon hair care products, including the newly introduced thinning hair market
channels, was in excess of $4 billion in the United States in 200A, according to Dun & Bradstreet. It is a
rapidly growing market segment with over 60 million men and women affected by thinning hair as part of
the aging process. The company’s mission is to develop, market, or license its patented zinc peptide
technology as the next wave in dynamic skin care, pushing past the saturated AHA and Retinol
products. The company has its own sales force calling on dermatologists and plastic and cosmetic
surgeons, where it has established product efficacy and credibility. The company is presently licensing
its technology to major skin care companies in various skin care market segments.
Growth potential
The revenue opportunity to NewAge BIOTECH is sizable as the worldwide skin care market is
estimated to be over $22 billion. The company hopes to have marketing arrangements with 10 to 15
well-placed companies by the end of 200C, which can generate revenues in excess of $50 million by
200F. Hair loss affects 40 million men and 20 million in the United States according to The Hair Loss
Watch. The FDA has estimated that the hair replacement market is at $1 billion annually. The American
Academy of Facial Plastic and Reconstructive Surgery has reported that over $2 billion per year is being
spent on cosmetic surgery. The worldwide market for wound care products is estimated to be $3 billion
by the American Wound Care Association. The growth rate for the U.S. wound care market is 12.2%
with annual revenues of $26 million according to Dun & Bradstreet.
Geographic locations
NewAge BIOTECH’s products are sold and used worldwide. The company's wound care products are
sold primarily to specialty distributors, domestic and foreign, and its skin health and hair care products
are sold primarily to physicians.
Industry trends
As more and more appearance-conscious Baby Boomers age, new challenges and opportunities arise for
hair care manufacturers. Thinning hair and baldness have typically been considered a male problem, but it
can also be a problem for women caused by stress or pregnancy. Studies have shown that nearly 30
million women in this country suffer from hereditary hair thinning. As Baby Boomers turned 50 in the
1990s, the market for products to fight aging grew considerably. Many are willing to use whatever is
available to remain young, including cosmetic surgery.
According to the American Academy of Facial Plastic and Reconstructive Surgery, plastic surgery is one
of the fastest growing specialties in the nation, due in part to the fitness movement. As the U.S.
population continues to live longer, the incidence of chronic wounds is also expected to rise, creating
increasing demand for wound care products. The fastest growing segments of the advanced wound care
management products market are for novel therapies such as growth factors and skin substitutes.
Manufacturers will need to demonstrate that these therapies speed the healing process and that the initial
high costs of these solutions will be balanced out by the cost savings in the long run. The zinc peptide
products patented by NewAge BIOTECH can make this claim.
Seasonality factors
There is some seasonality to the skin care product line, especially in areas where protection from the
damaging rays of the sun is needed.
Profit characteristics
The sale of skin care products directly to physicians carries the highest profit margins. The distribution
of a company’s products through a network of domestic and foreign distributors carries the lowest profit
margins. Distributors have the added responsibility of marketing, sales and shipping that lower the profit
margin available to a company. The products sold directly to and distributed by physicians carry an
average profit margin of 40-50%. The products sold by a network of domestic and foreign distributors
have an average profit margin of 20-30%.
Distribution channels
In December 19XX, NewAge BIOTECH entered into an exclusive distribution agreement covering the
United States and Canada, with the Acme Medical Division for the hospital, nursing home and extended
care markets. Isle Hydrating Gel™, Isle Wound Cleanser™, and Isle Wound Dressing™ were added to
the Acme Medical Division sales effort in January 19XX. Acme Medical Division is required to make
certain minimum annual purchases, but has not achieved that level. NewAge BIOTECH has agreed to
continue the Acme Medical Division agreement through 200B on a non-exclusive basis, while it evaluates
its options in this connection.
Subsequent to the agreement with the Acme Medical Division, NewAge BIOTECH entered into
exclusive distribution agreements for the registration and distribution of certain of its wound care
products in various foreign countries, through Xenon KgaA, for Latin America and South Africa. The
initial shipment of products to Brazil was made in the third quarter of 200A. Additional shipments to
other Latin American countries are expected to begin in 200B. Adelade SpA, an Italian medical products
company, signed an agreement in 19XX for France and Italy. NewAge BIOTECH has also given Adelade
a right of first negotiation for distribution to the rest of Europe, contingent upon obtaining CE Mark
registration. Initial product shipment should begin in late 200B.
NewAge BIOTECH has also entered into a distribution agreement with Beta Pharma International, Inc.,
a division of Beta Biosystems, Inc., for countries in the Far East, but as a result of unexpected regulatory
and distribution issues with its distributor, Beta did not achieve the minimum level of annual purchases
specified in the agreement, and the agreement was terminated in March 200A, with registrations reverting
to the company. NewAge BIOTECH anticipates that product registration in certain countries may take
well over a year to secure, with no assurance that registration will be obtained or that the products will
be commercially successful in all of the various countries.
Basis of competition
Competition in the wound care, skin health and hair care markets is intense. NewAge BIOTECH’s
competitors include well-established pharmaceutical, cosmetic and health care companies as well as
emerging biotechnology companies. Many of these competitors have substantial financial resources, large
research and development staffs, extensive experience and capabilities in researching, developing and
testing of products in clinical trials, and in obtaining FDA and other regulatory approvals. Their
manufacturing facilities, marketing resources and distribution networks also contribute to their ability to
compete in the wound care, skin health and hair care markets. The contract manufacturing service
business is also highly competitive. Competitors include major chemical and pharmaceutical companies,
as well as specialized biotechnology firms, smaller contract chemical manufacturers and some
universities.
Overall, companies compete by being a leading provider of a full line of technologically advanced skin
and wound care products, supported by exceptional customer service, expansive marketing programs,
education and clinical support. The primary area that affects competition in the skin care market is
advertising. A well-placed ad proclaiming the effects of a company’s anti-aging products or cosmetic
surgery services goes a long way in providing a competitive edge.
Competition profile
There are a number of competitors in the skin, hair and wound care industries. Many of these companies
are quite large such as 3M, Kendall, Convatec and Ethicon. Many of these companies are divisions of
major health care companies such as Bristol Myers Squibb and Johnson and Johnson. Being a division of
a much larger company is both a strength and a weakness. It offers the strength of a large distribution
network but is also a weakness in that response to customers’ needs may be compromised. Often, the
larger parent company will dictate the business strategy of the smaller firm. Although the companies
named control a significant share of the market, NewAge BIOTECH feels that the strength of its
proprietary zinc peptide composition will not only accelerate its entrance into the significant market
share but allow it to create new product opportunities as well.
Large health care companies have significant financial resources to put toward new product development
and have large departments devoted to making the necessary regulatory submissions to the FDA.
NewAge BIOTECH has been able to sponsor research at major universities to keep its research and
development pipeline full. Because large health care companies have many product lines beyond skin,
hair and would care, it is not uncommon for certain products to become de-emphasized over time.
NewAge BIOTECH sets a marketing strategy and remains focused on the development of the market for
a particular product or product line. Pricing by larger competitors is intense at times, with special pricing
provided through group contracts. When this occurs, NewAge BIOTECH focuses its efforts on higher-
margin products until it can again attempt to bid on group plans.
The small- to medium-sized companies such as Lifecore Biomedical and Carrington Labs compete in
niche markets with product formulations that they consider to be superior to those that are currently in
the market. Many of these companies do not have the R&D budgets to generate the scientific papers
that support their product claims. In addition, their distribution networks are limited and advertising and
marketing budgets are minimal. They also compete on price and tend to disrupt the pricing model of
companies against which they bid. Customers will often buy on price alone, but will quickly seek other
products if service or quality becomes an issue. Therefore, NewAge BIOTECH maintains a very
customer-focused effort in both the Customer Service and Technical Service Departments. Each
customer and technical service representative has responsibility for a particular region of the country, so
that customers quickly get to know their representative personally for not only order processing but also
concerns they need addressed.
Customer profile
The customer profile for skin care products is quite varied. Currently, the skin care line does not apply
to infants, because there has been no obvious need to enter that market. NewAge BIOTECH has found
that its skin and hair care products are most often purchased by Baby Boomers, both male and female.
Men, especially 40+ years are beginning to use more anti-aging skin care products. Another factor in the
use of skin care products is an active, healthy life style, regardless of age. College-educated men and
women have been frequent purchasers of skin care products because they most often feel they have to
maintain a youthful appearance in their work environment. Just as with colognes, NewAge BIOTECH
has found that household incomes of $40,000+ are most likely to purchase skin care products.
Wound care product sales have been most prominently used in nursing homes and hospitals. The elderly
in nursing homes and diabetics hospitalized with foot ulcers are the most frequent customers for wound
care products. In these instances, income level is of no concern for those hospitalized or in a nursing
home situation, because Medicare, Medicaid or health insurance companies normally cover wound care
treatment. When it comes to wound care, both males and females have found a need for the company’s
products. Other customers using this product line include those with an active, healthy lifestyle that
tend to incur injuries from participation in sports. These injuries often result in wounds in need of, at a
minimum, first aid and possibly a more aggressive regimen. NewAge BIOTECH has found that its
wound care products have a worldwide customer base.
Similarly, NewAge BIOTECH intends to license to third parties to market products containing defined
chemical entities for certain human indications when it lacks the expertise or financial resources to market
such products effectively. If the company is unable to enter into such agreements, it may undertake
marketing the products itself for such indications. The size of the hair care market for thinning hair on
both men and women is $1.5 billion worldwide. Therefore, NewAge BIOTECH has developed a strategy
to sell its hair care products directly to consumers through its website at www.Tristar.com. The average
yearly cost to maintain the website is $10,000.
NewAge BIOTECH’s wound care products are marketed domestically to hospitals, nursing homes,
home health care agencies and acute care providers. This market has continued to be very competitive
and price sensitive as a result of pressures to control health care costs and has become increasingly
commodity oriented. In addition, the market is heavily influenced by governmental reimbursement
programs. The home health care segment of the market again experienced significant turmoil in 200A as
many of NewAge BIOTECH’s customers either went out of business or purchased commodity
products. Nursing homes were also impacted by government regulations in 19XX, as government-
mandated reimbursement changes due to begin in January 19XX were postponed until late 200A. Many
nursing home directors and the dealers who supply them postponed buying decisions and liquidated
inventory in anticipation of the regulations taking effect. The company’s NewAge Therapy™ skin care
products are marketed and sold worldwide as anti-aging and skin rejuvenation products.
Frost & Sullivan have forecasted that the wound care management market will reach $2.6 billion by
200F. Because the domestic and foreign markets are quite large, NewAge BIOTECH has structured
distribution agreements with several companies to reach markets worldwide. For instance, during the
year ending December 31, 200A, the selling, general and administrative expenses were $6,206,000 an
increase of 18.5% over the previous year. The increase in costs reflected the increase in expanding the
sales and marketing support for new products and markets.
Pricing profile
The pricing profile is as follows:
NewAge BIOTECH offers discounts for yearly contracts. Introductory offers are available and are
generally offered during the first year that the product or product line is being marketed.
Gross margin
The following average gross-margin percentages represent what NewAge BIOTECH has been able to
achieve through direct sales to physicians and through its distribution network. Industry gross margin
percentages are somewhat lower because of the costs incurred by large health care firms in the
development and marketing of their wound, skin and hair care products. In addition, these large health
care firms are forced to incur significant costs in attaining the shelf space they need to display their
products in various food, drug and department stores. These same companies are constantly adjusting
their prices to remain competitive in the marketplace and retain their market share.
Product Line Average Gross Profit Percentage Industry Average Gross Profit Percentage
Wound care 66.5% 66.0%
Skin care 64.2% 61.3%
Hair care 66.8% 66.6%
Overseas Distribution 79.3% 79.1%
Break-even analysis
Revenues have grown by over 40% to $6.6 million in 200A from $4.7 million in the prior year, while
operating expenses increased by only 6.7% to $7.45 million in 200A from $6.98 million. The net loss for
the year was $2.1 million or ($0.14) per share versus a loss of $5.3 million or ($0.35) per share, which
includes a $1.9 million one-time restructuring charge. NewAge BIOTECH expects to receive a better
revenue mix in 200B from sales and royalty income due from shipments of proprietary materials to
corporate partners. Other license agreements will also enhance royalty income. There will also be an
effort to maintain operating expense growth on sales and marketing in 200B and beyond at 5%-15%.
In 19XX, NewAge BIOTECH entered into an exclusive distribution agreement with Acme Medical, Inc.,
giving Acme the exclusive rights to distribute wound care products manufactured by the company in the
United States. During 19XX, NewAge BIOTECH entered into a distribution agreement with Beta
Pharma for sales of Isle Hydrating Gel™ and Isle Wound Dressing™ in China and Taiwan. Beta Pharma
received approval of its application to register the products in China, and the initial orders were shipped
in December 19XX. After the initial shipment Beta Pharma experienced unexpected regulatory and
distribution issues with its distributor and did not achieve the minimum sales levels specified in the
agreement. In March 200A, Beta Pharma and NewAge BIOTECH terminated the agreement, with the
registrations reverting to NewAge BIOTECH. NewAge BIOTECH is currently evaluating its
distribution options for the Far East.
In 19XX, NewAge BIOTECH entered into an exclusive distribution agreement with Xenon. Xenon is a
$5 billion German pharmaceutical company. The Xenon agreement provides for the registration,
promotion and distribution of the company’s wound care products to the chronic wound care markets in
Latin America and South Africa. NewAge BIOTECH expects that shipments to Mexico and Peru will
begin during the last half of 200B.
Since inception, NewAge BIOTECH has focused on the chronic wound care market. Worldwide, this
market is estimated to exceed $5 billion. It is highly fragmented, with many competitors and price
constraints and would require a significant investment in supporting a dedicated sales organization of 50-
100 representatives. For these reasons, the company collaborates with partners to market its chronic
wound care products. The company has signed distribution agreements with major companies for the
United States, Latin America and Europe rather than individual agreements for each country.
Trade shows
NewAge BIOTECH attends the following annual meetings: American Academy of Dermatology,
American Medical Association, Annual Symposium on Advanced Wound Care and Medical Research
Forum on Wound Repair, Association of Cosmetic Surgery, and Association of Skin and Hair Care
Products. NewAge BIOTECH exhibits at all of the above trade shows with a fifty- by fifty-foot booth.
These trade shows are held in major cities such as New York, Dallas, Houston, Miami, and Washington
D.C. The total cost to the company to attend each show is approximately $20,000, which includes
booth space rental, booth transport, registration of company representatives, housing, meals and
entertainment costs, and transportation of company representatives. NewAge BIOTECH receives on
average eight hundred contacts per four-day trade show. Contact information is brought back to the
company’s headquarters and assimilated by the staff of the Marketing Department for further follow-
up.
Future markets
NewAge BIOTECH is building skin and hair care revenues on at least eight distinct segments:
1. NewAge Biotech is presently selling in the physician markets with its own sales force, establishing
brand preference and credibility for the technology.
2. In 200A we licensed the zinc peptide technology to Axion of Johnson & Johnson for the mass retail
market. They expect to launch their initial products in early 200B, which could generate up to $1
million in revenue.
3. We have an agreement in place for the prestigious department store market (e.g. Saks and
Nordstrom). This agreement is presently generating revenue for NewAge BIOTECH.
4. We recently completed our first infomercial for Trielite® hair care products, which will be aired in
the first quarter 200B.
5. We will enter the hair care salon market with our Trielite® zinc peptide hair care products some time
in 200B. A market test underway in the spa market for skin care products. There is a growing trend
towards medical spa market, and we are in an excellent position to capture a major portion of it.
6. Multi-level marketing is another major opportunity for our skin care technology. Most likely we will
see products sold in this segment in 200C.
8. Currently, we are selling products through our own website and selected physician and cosmetic
Internet sites.
Receiving orders
Phone, fax, e-mail and mail-in orders are received in the Customer Service Department. The orders are
entered into the computer for immediate processing by the Shipping Department. NewAge BIOTECH
prides itself in shipping orders the same day they are received. If inventory is lacking on an ordered
product, the computer system calculates the maximum inventory to be produced and forwards that
request to the Production Manager for review. Once the product has been produced, quality controlled
and released from quarantine, back orders are filled. Distributor orders are pre-packed from product
requests received a week in advance. These orders are generally used to complete the maximum
inventories carried by that distributor.
Reporting to management
The president meets as needed with vice-presidents but no less often than once a month. Weekly staff
meetings are held by the vice-president of each section of the company, such as clinical development,
research & development, administration, and sales and marketing. These meetings are used to inform
personnel of changing company policies, ask personnel for input to develop company strategy, and
create awareness of the activities of the various departments within the company. Employees are to
report all incidents of concern to their respective vice president. It is then the responsibility of that vice
president to inform the president to determine if any action is to be taken.
Staff development
NewAge BIOTECH makes use of formal training by outside vendors for its supervisory personnel. On-
site training is given to manufacturing personnel utilizing videotaped descriptions of advanced
production techniques, workplace safety and handling of hazardous materials. One day a year, an off-site
retreat is held for supervisory personnel to further develop strategy for the continued growth of the
company. An annual 3-day sales seminar is held offsite and includes internal customer service staff,
external sales representatives and distributor sales personnel. The seminar is used to educate attendees
on new product developments, foster stronger relationships among internal and external personnel, and
recognize the achievements of the top sales representatives.
Annual merit reviews are given based on performance. In most cases, at a minimum, salary increases
reflect the increase in the cost of living for the last fiscal year. Cash bonuses will only be available when
the company has strong profits and will be provided at the discretion of the president. An annual
holiday party is held off-site and an annual family summer picnic is sponsored at a nearby park.
Inventory control
Inventory is controlled through the use of the MIP computer software system, which compares the
movement of the previous year’s inventory at this time of the year, to that which is currently available.
It will then automatically adjust the production schedule as needed. The production manager is
responsible for setting the minimum and maximum inventories for all products. He will monitor daily the
flow of the products that generate the most sales, so that they do not become backordered. The
production manager will work closely with the sales manager to adjust the inventory data supplied to the
MIP system as new customer sales increase or a loss of customer accounts occurs.
Security systems
Sensitive documents are stored on site in a fireproof locked cabinet. Back-up tapes of computer
information are made nightly and duplicates are stored off site. Petty cash is stored in the company safe.
An alarm system with password entry has been installed and is activated once the Shipping Department
personnel have completed their packing of the day’s orders and are leaving for the day. Company
officials who have access to sensitive information, have signed a confidentiality agreement.
If the performance and stability testing are satisfactory and the marketing research performed by the
Sales and Marketing Department shows a potential market, then the company will seek the appropriate
regulatory approvals. Regulatory approvals may take from three months to as long as two years,
depending on the level of risk to the end user. Regulatory approval often drives the timeline for product
entry in to the marketplace.
Risk analysis
There can be no assurance that NewAge BIOTECH’s current products or potential products will
continue to be successfully commercialized and accepted for use by physicians, health care providers
and consumers. The successful commercialization of the company's existing and future products in the
consumer markets and wound care markets will depend on its ability to enter into and effectively manage
corporate partnerships. There can be no assurance that any of NewAge BIOTECH’s collaborators will
perform their obligations under their agreements with the company or that those company’s products or
the products of others that incorporate NewAge BIOTECH’s products or technology will be
successfully commercialized.
Furthermore, there can be no assurance that NewAge BIOTECH will be successful in establishing
corporate alliances in the future, or that it will be successful in maintaining existing or any future
corporate alliances. Moreover, there can be no assurance that the interests and motivations of any
corporate partner, distributor or licensee would be or remain consistent with those of NewAge
BIOTECH, or that such partners, distributors or licensees would successfully perform the necessary
technology transfer, clinical development, regulatory compliance, manufacturing, marketing or other
obligations. The patent positions of biotechnology, medical device and health care products companies
are often uncertain and involve complex legal and factual questions, and the breadth of claims allowed in
such patents cannot be predicted.
NewAge BIOTECH’s processes and potential products may conflict with patents that have been or
may be granted to competitors and others. As the biotechnology, medical device and health care
industries expand and more patents are issued, the risk increases that the company's processes and
potential products may give rise to claims that they infringe the patents of others. NewAge BIOTECH’s
products and product candidates may be regulated by any of a number of divisions of the FDA. The
process of obtaining and maintaining regulatory approvals for the manufacturing or marketing of the
company's existing and potential products is costly and time-consuming and is subject to unanticipated
delays. Regulatory requirements ultimately imposed could also adversely affect the ability of the
company to clinically test, manufacture or market products.
Salvaging assets
NewAge BIOTECH’s portfolio of patents would have value if NewAge BIOTECH were to be
liquidated. The value of the patent portfolio would be dependent on the remaining marketability of the
technologies. Patents are often out-licensed to competing companies or become an asset if the company
were to be acquired. Existing inventory could be sold off, equipment and furniture auctioned off.
Customer lists and accounts receivable would also have value to companies who wish to acquire
NewAge BIOTECH.
Growth plan
Capital requirements
NewAge BIOTECH will depend upon product revenues, contract manufacturing, asset redeployment,
interest income, equity financing, and funding from corporate partnerships to meet its future capital
needs. The company may be required to seek additional funding through public or private financing,
including equity financing, or through collaborative arrangements. Adequate funds for these purposes,
whether obtained through financial markets or from collaborative or other arrangements with corporate
partners or other sources, may not be available when needed or may not be available on terms favorable
to NewAge BIOTECH.
If issuing equity securities raises additional funds, dilution to existing shareholders will result. In
addition, in the event that additional funds are obtained through arrangements with collaborative
partners, such arrangements may require NewAge BIOTECH to relinquish its rights to certain
technologies or potential products that it would otherwise seek to develop or commercialize on its own.
If funding is insufficient at any time in the future, NewAge BIOTECH may be required to delay, scale
back or eliminate some or all of its marketing and research and development programs; sell assets; or
license to third parties the rights to commercialize products or technologies that NewAge BIOTECH
would otherwise seek to develop on its own. Furthermore, the terms of any such license agreements or
asset sales might be less favorable than if the company were negotiating from a stronger position.
Personnel requirements
NewAge BIOTECH currently has 44 full-time employees. Two employees are engaged in product
development, ten in manufacturing, distribution and quality control, 26 in sales and marketing, and six in
accounting, finance and administration. The company does not expect to increase its staff, except to hire
a general manager in its contract manufacturing operations.
Exit strategy
The business strategy of NewAge BIOTECH is focused on the establishment of key strategic
partnerships with neutraceutical and pharmaceutical sales and marketing partners for the delivery of its
products to target markets. While this strategy provides NewAge BIOTECH with the mechanism to
rapidly develop and deliver its products to the market and maximizes the potential of near-term
revenues, it also positions NewAge BIOTECH as an attractive candidate for merger or acquisition.
Financial plan
Sales Projections
Sales for the next three years are projected to be $11,090,974, $17,745,558, and $28,392,892. This
represents an annual growth rate of 60% over the current year results. The company achieved a 40%
growth rate in the current year. With the distribution agreements currently in place and the new
agreements that are being solidified, these sales goals should be readily achievable.
Income Projections
Net income projections for the next three years are $619,446, $3,394,827, and $8,373,210. The
company is currently profitable, and expects to grow with increased distribution channels.
Cash Requirements
This company is already in existence, and the ongoing business provides sufficient working capital to
fund operations. The company expects to maintain operating expense growth in sales and marketing in
the 5-15% range and that there will be more significant royalty and sales revenue from is major
Distributor, Axion. Therefore, its cash and cash equivalents of $2.8 million and revenue increases should
cover any operating and sales and marketing costs it incurs.
The current facility is under utilized so the growth that is expected over the three-year timeline is not
expected to require additional capital outlay.
Sources of Financing
NewAge Biotech is not expected to require additional debt or equity financing during the relevant review
period, so the cost of obtaining funds has not been investigated.
Cash In
Cash Sales 231,062 231,062 231,062 231,062 231,062 231,062 231,062 231,062 231,062 231,062 231,062 231,062 2,772,743
Collections from Accounts Receivables 1,264,000 693,186 693,186 693,186 693,186 693,186 693,186 693,186 693,186 693,186 693,186 693,186 8,889,044
Equity Received - - - - - - - - - - - - - -
Loans Received - - - - - - - - - - - - - -
Other Cash In (receipts from other assets) - - - - - - - - - - - - -
Other Cash In (interest, royalties etc.) - - - - - - - - - - - - -
Total Cash In - 1,495,062 924,248 924,248 924,248 924,248 924,248 924,248 924,248 924,248 924,248 924,248 924,248 11,661,788
Total Cash Available 2,800,000 4,295,062 4,069,150 3,840,239 3,598,087 3,326,916 3,471,464 3,570,933 3,715,481 3,840,030 3,854,798 3,979,347 4,108,895 14,461,788
Cash Out
Inventory Expenditures
Inventory/Raw Material (Cash) - 83,460 83,460 83,460 83,460 83,460 83,460 83,460 83,460 83,460 83,460 83,460 83,460 1,001,520
Inventory/Raw Material (Paid on Account) - - - - 83,460 83,460 83,460 83,460 83,460 83,460 83,460 83,460 83,460 751,140
Production Expenses - 54,900 54,900 54,900 54,900 54,900 54,900 54,900 54,900 54,900 54,900 54,900 54,900 658,799
Operating Expenses
Advertising - 27,784 27,784 27,784 327,784 27,784 27,784 27,784 27,784 27,784 27,784 27,784 27,784 633,408
Bank Charges - - - - - - - - - - - - - -
Dues & Subscriptions - 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 24,000
Insurance - 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 54,000
Licenses & Fees - 2,000 - - - - - - - - - - - 2,000
Marketing & Promotion - 20,000 25,000 25,000 5,000 5,000 40,000 5,000 25,000 5,000 25,000 20,000 5,000 205,000
Meals & Entertainment - 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 60,000
Miscellaneous - - - - - - - - - - - - - -
Office Expense - 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000
Office Supplies - 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 30,000
Outside Services - - - - - - - - - - - - - -
Payroll Expenses
Salaries & Wages - 230,416 230,416 230,416 230,416 230,416 230,416 230,416 230,416 230,416 230,416 230,416 230,416 2,764,992
Payroll Taxes - 39,171 39,171 39,171 39,171 39,171 39,171 39,171 39,171 39,171 39,171 39,171 39,171 470,049
Benefits - 9,217 9,217 9,217 9,217 9,217 9,217 9,217 9,217 9,217 9,217 9,217 9,217 110,600
Professional Fees - 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 240,000
Property Taxes - - - - - - - - - - - - - -
Rent - - - - - - - - - - - - - -
Repairs & Maintenance - 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 24,000
Shipping & Delivery - - - - - - - - - - - - - -
Telephone - 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 84,000
Training & Development - - - - - - - - - - - - - -
Travel - 32,500 32,500 32,500 32,500 32,500 32,500 32,500 32,500 32,500 32,500 32,500 32,500 390,000
Utilities - 3,125 3,125 3,125 3,125 3,125 3,125 3,125 3,125 3,125 3,125 3,125 3,125 37,500
Vehicle - - - - - - - - - - - - - -
Research & Development - 166,667 166,667 166,667 166,667 166,667 166,667 166,667 166,667 166,667 166,667 166,667 166,667 2,000,004
Other - - - - - - - - - - - - - -
Other - - - - - - - - - - - - - -
Paid on Account - 436,920 436,920 450,160 - - - - - - - - - 1,324,000
Non-operating Costs
Capital Purchases - - - - - - - - - - - - - -
Estimated Income Tax Payments - - - - 115,720 - 10,080 - - 129,780 - - 124,080 379,661
Interest Payments - - - - - - - - - - - - - -
Loan Principal Payments - - - - - - - - - - - - - -
Owner's Draw - - - - - - - - - - - - - -
Other Cash Out - - - - - - - - - - - - - -
Total Cash Out - 1,150,159 1,153,159 1,166,399 1,195,419 779,699 824,779 779,699 799,699 909,479 799,699 794,699 903,779 11,256,672
Monthly Cash Flow (cash in - cash out) - 344,903 (228,911) (242,151) (271,172) 144,549 99,468 144,549 124,549 14,768 124,549 129,549 20,468 405,116
Beginning Cash Balance 2,800,000 2,800,000 3,144,903 2,915,991 2,673,840 2,402,668 2,547,217 2,646,685 2,791,233 2,915,782 2,930,550 3,055,099 3,184,647 2,800,000
Ending Cash Balance 2,800,000 3,144,903 2,915,991 2,673,840 2,402,668 2,547,217 2,646,685 2,791,233 2,915,782 2,930,550 3,055,099 3,184,647 3,205,116 3,205,116
NewAge BIOTECH, Inc.
Cash Flow Statement
200C JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
Cash In
Cash Sales 369,699 369,699 369,699 369,699 369,699 369,699 369,699 369,699 369,699 369,699 369,699 369,699 4,436,389
Collections from Accounts Receivables 693,186 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 12,893,257
Equity Received - - - - - - - - - - - - -
Loans Received - - - - - - - - - - - - -
Other Cash In (receipts from other assets) - - - - - - - - - - - - -
Other Cash In (interest, royalties etc.) - - - - - - - - - - - - -
Total Cash In 1,062,885 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 17,329,646
Total Cash Available 4,268,001 4,856,828 5,442,356 6,027,884 5,730,811 6,306,799 6,417,431 6,993,418 7,547,406 7,564,868 8,118,855 8,678,343 20,534,762
Cash Out
Inventory Expenditures
Inventory/Raw Material (Cash) 115,000 115,000 115,000 115,000 115,000 115,000 115,000 115,000 115,000 115,000 115,000 115,000 1,380,000
Inventory/Raw Material (Paid on Account) 83,460 83,460 83,460 115,000 115,000 115,000 115,000 115,000 115,000 115,000 115,000 115,000 1,285,380
Production Expenses 59,141 59,141 59,141 59,141 59,141 59,141 59,141 59,141 59,141 59,141 59,141 59,141 709,696
Operating Expenses
Advertising 30,562 30,562 30,562 360,562 30,562 30,562 30,562 30,562 30,562 30,562 30,562 30,562 696,749
Bank Charges - - - - - - - - - - - - -
Dues & Subscriptions 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 26,400
Insurance 4,950 4,950 4,950 4,950 4,950 4,950 4,950 4,950 4,950 4,950 4,950 4,950 59,400
Licenses & Fees 2,200 - - - - - - - - - - - 2,200
Marketing & Promotion 22,000 27,500 27,500 5,500 5,500 44,000 5,500 27,500 5,500 27,500 22,000 5,500 225,500
Meals & Entertainment 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 66,000
Miscellaneous - - - - - - - - - - - - -
Office Expense 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 13,200
Office Supplies 2,750 2,750 2,750 2,750 2,750 2,750 2,750 2,750 2,750 2,750 2,750 2,750 33,000
Outside Services - - - - - - - - - - - - -
Payroll Expenses
Salaries & Wages 253,458 253,458 253,458 253,458 253,458 253,458 253,458 253,458 253,458 253,458 253,458 253,458 3,041,491
Payroll Taxes 43,088 43,088 43,088 43,088 43,088 43,088 43,088 43,088 43,088 43,088 43,088 43,088 517,054
Benefits 10,138 10,138 10,138 10,138 10,138 10,138 10,138 10,138 10,138 10,138 10,138 10,138 121,660
Professional Fees 22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000 264,000
Property Taxes - - - - - - - - - - - - -
Rent - - - - - - - - - - - - -
Repairs & Maintenance 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 26,400
Shipping & Delivery - - - - - - - - - - - - -
Telephone 7,700 7,700 7,700 7,700 7,700 7,700 7,700 7,700 7,700 7,700 7,700 7,700 92,400
Training & Development - - - - - - - - - - - - -
Travel 35,750 35,750 35,750 35,750 35,750 35,750 35,750 35,750 35,750 35,750 35,750 35,750 429,000
Utilities 3,438 3,438 3,438 3,438 3,438 3,438 3,438 3,438 3,438 3,438 3,438 3,438 41,250
Vehicle - - - - - - - - - - - - -
Research & Development 183,334 183,334 183,334 183,334 183,334 183,334 183,334 183,334 183,334 183,334 183,334 183,334 2,200,004
Other - - - - - - - - - - - - -
Other - - - - - - - - - - - - -
Paid on Account - - - - - - - - - - - - -
Non-operating Costs
Capital Purchases - - - - - - - - - - - - -
Estimated Income Tax Payments - - - 543,061 - 426,857 - - 558,527 - - 552,257 2,080,700
Interest Payments - - - - - - - - - - - - -
Loan Principal Payments - - - - - - - - - - - - -
Owner's Draw - - - - - - - - - - - - -
Other Cash Out - - - - - - - - - - - - -
Total Cash Out 889,969 893,269 893,269 1,775,869 902,809 1,368,165 902,809 924,809 1,461,335 924,809 919,309 1,455,065 13,311,484
Monthly Cash Flow (cash in - cash out) 172,916 585,528 585,528 (297,073) 575,988 110,631 575,988 553,988 17,461 553,988 559,488 23,731 4,018,162
Beginning Cash Balance 3,205,116 3,378,032 3,963,560 4,549,088 4,252,015 4,828,003 4,938,634 5,514,622 6,068,610 6,086,071 6,640,059 7,199,547 3,205,116
Ending Cash Balance 3,378,032 3,963,560 4,549,088 4,252,015 4,828,003 4,938,634 5,514,622 6,068,610 6,086,071 6,640,059 7,199,547 7,223,278 7,223,278
NewAge BIOTECH, Inc.
Cash Flow Statement
200D JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
Cash In
Cash Sales 591,519 591,519 591,519 591,519 591,519 591,519 591,519 591,519 591,519 591,519 591,519 591,519 7,098,223
Collections from Accounts Receivables 1,109,097 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 20,629,211
Equity Received - - - - - - - - - - - - -
Loans Received - - - - - - - - - - - - -
Other Cash In (receipts from other assets) - - - - - - - - - - - - -
Other Cash In (interest, royalties etc.) - - - - - - - - - - - - -
Total Cash In 1,700,616 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 27,727,434
Total Cash Available 8,923,894 10,255,426 11,583,328 12,911,230 12,547,817 13,855,569 13,940,629 15,248,381 16,531,933 16,514,507 17,798,059 19,087,661 34,950,712
Cash Out
Inventory Expenditures
Inventory/Raw Material (Cash) 159,350 159,350 159,350 159,350 159,350 159,350 159,350 159,350 159,350 159,350 159,350 159,350 1,912,200
Inventory/Raw Material (Paid on Account) 115,000 115,000 115,000 159,350 159,350 159,350 159,350 159,350 159,350 159,350 159,350 159,350 1,779,150
Production Expenses 64,588 64,588 64,588 64,588 64,588 64,588 64,588 64,588 64,588 64,588 64,588 64,588 775,059
Operating Expenses
Advertising 33,619 33,619 33,619 396,619 33,619 33,619 33,619 33,619 33,619 33,619 33,619 33,619 766,424
Bank Charges - - - - - - - - - - - - -
Dues & Subscriptions 2,420 2,420 2,420 2,420 2,420 2,420 2,420 2,420 2,420 2,420 2,420 2,420 29,040
Insurance 5,445 5,445 5,445 5,445 5,445 5,445 5,445 5,445 5,445 5,445 5,445 5,445 65,340
Licenses & Fees 2,420 - - - - - - - - - - - 2,420
Marketing & Promotion 24,200 30,250 30,250 6,050 6,050 48,400 6,050 30,250 6,050 30,250 24,200 6,050 248,050
Meals & Entertainment 6,050 6,050 6,050 6,050 6,050 6,050 6,050 6,050 6,050 6,050 6,050 6,050 72,600
Miscellaneous - - - - - - - - - - - - -
Office Expense 1,210 1,210 1,210 1,210 1,210 1,210 1,210 1,210 1,210 1,210 1,210 1,210 14,520
Office Supplies 3,025 3,025 3,025 3,025 3,025 3,025 3,025 3,025 3,025 3,025 3,025 3,025 36,300
Outside Services - - - - - - - - - - - - -
Payroll Expenses
Salaries & Wages 278,803 278,803 278,803 278,803 278,803 278,803 278,803 278,803 278,803 278,803 278,803 278,803 3,345,640
Payroll Taxes 47,397 47,397 47,397 47,397 47,397 47,397 47,397 47,397 47,397 47,397 47,397 47,397 568,759
Benefits 11,152 11,152 11,152 11,152 11,152 11,152 11,152 11,152 11,152 11,152 11,152 11,152 133,826
Professional Fees 24,200 24,200 24,200 24,200 24,200 24,200 24,200 24,200 24,200 24,200 24,200 24,200 290,400
Property Taxes - - - - - - - - - - - - -
Rent - - - - - - - - - - - - -
Repairs & Maintenance 2,420 2,420 2,420 2,420 2,420 2,420 2,420 2,420 2,420 2,420 2,420 2,420 29,040
Shipping & Delivery - - - - - - - - - - - - -
Telephone 8,470 8,470 8,470 8,470 8,470 8,470 8,470 8,470 8,470 8,470 8,470 8,470 101,640
Training & Development - - - - - - - - - - - - -
Travel 39,325 39,325 39,325 39,325 39,325 39,325 39,325 39,325 39,325 39,325 39,325 39,325 471,900
Utilities 3,781 3,781 3,781 3,781 3,781 3,781 3,781 3,781 3,781 3,781 3,781 3,781 45,375
Vehicle - - - - - - - - - - - - -
Research & Development 201,667 201,667 201,667 201,667 201,667 201,667 201,667 201,667 201,667 201,667 201,667 201,667 2,420,005
Other - - - - - - - - - - - - -
Other - - - - - - - - - - - - -
Paid on Account - - - - - - - - - - - - -
Non-operating Costs
Capital Purchases - - - - - - - - - - - - -
Estimated Income Tax Payments - - - 1,308,166 - 1,180,342 - - 1,325,179 - - 1,318,282 5,131,968
Interest Payments - - - - - - - - - - - - -
Loan Principal Payments - - - - - - - - - - - - -
Owner's Draw - - - - - - - - - - - - -
Other Cash Out - - - - - - - - - - - - -
Total Cash Out 1,034,542 1,038,172 1,038,172 2,729,488 1,058,322 2,281,014 1,058,322 1,082,522 2,383,501 1,082,522 1,076,472 2,376,604 18,239,655
Monthly Cash Flow (cash in - cash out) 666,074 1,327,902 1,327,902 (363,414) 1,307,752 85,061 1,307,752 1,283,552 (17,426) 1,283,552 1,289,602 (10,529) 9,487,779
Beginning Cash Balance 7,223,278 7,889,352 9,217,254 10,545,156 10,181,742 11,489,494 11,574,555 12,882,307 14,165,859 14,148,433 15,431,985 16,721,587 7,223,278
Ending Cash Balance 7,889,352 9,217,254 10,545,156 10,181,742 11,489,494 11,574,555 12,882,307 14,165,859 14,148,433 15,431,985 16,721,587 16,711,057 16,711,057
NewAge BIOTECH, Inc.
Year-End
Income Statement (Projected)
200B 200C 200D
Net Sales (less returns & allowances) 11,090,974 17,745,558 28,392,892
Cost of Goods Sold 2,440,014 3,904,023 6,246,436
Gross Margin $ 8,650,959 $ 13,841,535 $ 22,146,456
Operating Expenses
Advertising 633,408 696,749 766,424
Bad Debt Expense - - -
Bank Charges - - -
Depreciation & Amortization 510,300 510,300 -
Dues & Subscriptions 24,000 26,400 29,040
Insurance 54,000 59,400 65,340
Licenses & Fees 2,000 2,200 2,420
Marketing & Promotion 205,000 225,500 248,050
Meals & Entertainment 60,000 66,000 72,600
Miscellaneous - - -
Office Expense 12,000 13,200 14,520
Office Supplies 30,000 33,000 36,300
Outside Services - - -
Payroll Expenses
Salaries & Wages 2,764,992 3,041,491 3,345,640
Payroll Taxes 470,049 517,054 568,759
Benefits 110,600 121,660 133,826
Professional Fees 240,000 264,000 290,400
Property Taxes - - -
Rent - - -
Repairs & Maintenance 24,000 26,400 29,040
Shipping & Delivery - - -
Telephone 84,000 92,400 101,640
Training & Development - - -
Travel 390,000 429,000 471,900
Utilities 37,500 41,250 45,375
Vehicle - - -
Research & Development 2,000,004 2,200,004 2,420,005
Other - - -
Other - - -
Total Operating Expenses $ 7,651,852 $ 8,366,008 $ 8,641,278
Interest Expense - - -
Other Income (interest, royalties, etc.) - - -
Assets
Current Assets
Cash & Equivalents 3,205,116 7,223,278 16,711,057
Accounts Receivable 693,186 1,109,097 1,774,556
Inventory 2,464,380 2,030,053 383,075
Security Deposits - - -
Other Current Assets - - -
Total Current Assets $ 6,362,681 $ 10,362,428 $ 18,868,689
Fixed Assets
Property, Plant & Equipment 6,151,000 6,151,000 6,151,000
Less: Accumulated Depreciation (5,579,300) (6,089,600) (6,089,600)
Other Non-Current Assets - - -
Total Non-Current Assets $ 571,700 $ 61,400 $ 61,400
Liabilities
Current Liabilities
Accounts Payable 250,380 345,000 478,050
Line of Credit - - -
Other Current Liabilities - - -
Total Current Liabilities $ 250,380 $ 345,000 $ 478,050
Long-term Liabilities
Loans - - -
Mortgages - - -
Other Non-Current Liabilities - - -
Total Non-Current Liabilities $ - $ - $ -
Equity
Equity Investments 155,000 155,000 155,000
Retained Earnings 6,529,001 9,923,828 18,297,039
Less: Owner's & Investor's Draws - - -
Total Equity $ 6,684,001 $ 10,078,828 $ 18,452,039
Profitability Ratios
Liquidity Ratios
Risk Ratios
Efficiency Ratios
Appendix
Assets
Current Assets
Cash & Equivalents 2,800,000
Accounts Receivable 1,264,000
Inventory 2,242,555
Security Deposits -
Other Current Assets -
Total Current Assets $ 6,306,555
Fixed Assets
Property, Plant & Equipment
Computer Equipment -
Equipment/Machinery 5,189,600
Furniture & Fixtures -
Vehicles -
Leasehold Improvements -
Building 900,000
Land 61,400
Less: Accumulated Depreciation (Do not enter a negative number) 5,069,000
Other Non-current Assets -
Total Non-current Assets $ 1,082,000
Liabilities
Current Liabilities
Accounts Payable 1,324,000
Line of Credit -
Other Current Liabilities -
Total Current Liabilities $ 1,324,000
Long-term Liabilities
Loans -
Real Estate Loans -
Other Non-current Liabilities -
Total Long-term Liabilities $ -
Equity
Owners Equity 155,000
Retained Earnings (Enter a negative number for a loss) 5,909,555
Less: Owner's & Investor's Draws (Not for use by C Corporations) -
Appendix
SALES PROJECTIONS
NewAge BIOTECH, Inc.
Year 1 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
Sales Budget
Product/Service Category A 88,200 88,200 88,200 88,200 88,200 88,200 88,200 88,200 88,200 88,200 88,200 88,200 1,058,400
YEAR 1
Product/Service Category B 705,600 705,600 705,600 705,600 705,600 705,600 705,600 705,600 705,600 705,600 705,600 705,600 8,467,200
Product/Service Category C 132,300 132,300 132,300 132,300 132,300 132,300 132,300 132,300 132,300 132,300 132,300 132,300 1,587,600
Product/Service Category D - - - - - - - - - - - - -
Product/Service Category E - - - - - - - - - - - - -
YEAR 1
Product/Service Category F - - - - - - - - - - - - -
Product/Service Category G - - - - - - - - - - - - -
Gross Sales 926,100 926,100 926,100 926,100 926,100 926,100 926,100 926,100 926,100 926,100 926,100 926,100 11,113,200
YEAR 1
Less: Returns & Allowances (1,852) (1,852) (1,852) (1,852) (1,852) (1,852) (1,852) (1,852) (1,852) (1,852) (1,852) (1,852) (22,226)
Net Sales 924,248 924,248 924,248 924,248 924,248 924,248 924,248 924,248 924,248 924,248 924,248 924,248 11,090,974
Other Income - - - - - - - - - - - - -
Total Income 924,248 924,248 924,248 924,248 924,248 924,248 924,248 924,248 924,248 924,248 924,248 924,248 11,090,974
Credit Management
YEAR 1
Sales (cash) 231,062 231,062 231,062 231,062 231,062 231,062 231,062 231,062 231,062 231,062 231,062 231,062 2,772,743
Sales (credit) 693,186 693,186 693,186 693,186 693,186 693,186 693,186 693,186 693,186 693,186 693,186 693,186 8,318,230
Received on Account 1,264,000 693,186 693,186 693,186 693,186 693,186 693,186 693,186 693,186 693,186 693,186 693,186 8,889,044
Bad Debt Expense - - - - - - - - - - - - -
Year 1 Assumptions
Product/Service Category A Wound care - ~10% of sales
YEAR 1
Product/Service Category F
Product/Service Category G
Less: Returns & Allowances
Other Income
YEAR 1
Sales (cash)
Sales (credit)
Received on Account
Bad Debt Expense
Appendix
SALES PROJECTIONS
NewAge BIOTECH, Inc.
Year 2 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
Sales Budget
Product/Service Category A 141,120 141,120 141,120 141,120 141,120 141,120 141,120 141,120 141,120 141,120 141,120 141,120 1,693,440
YEAR 2
Product/Service Category B 1,128,960 1,128,960 1,128,960 1,128,960 1,128,960 1,128,960 1,128,960 1,128,960 1,128,960 1,128,960 1,128,960 1,128,960 13,547,520
Product/Service Category C 211,680 211,680 211,680 211,680 211,680 211,680 211,680 211,680 211,680 211,680 211,680 211,680 2,540,160
Product/Service Category D - - - - - - - - - - - - -
Product/Service Category E - - - - - - - - - - - - -
YEAR 2
Product/Service Category F - - - - - - - - - - - - -
Product/Service Category G - - - - - - - - - - - - -
Gross Sales 1,481,760 1,481,760 1,481,760 1,481,760 1,481,760 1,481,760 1,481,760 1,481,760 1,481,760 1,481,760 1,481,760 1,481,760 17,781,120
YEAR 2
Less: Returns & Allowances (2,964) (2,964) (2,964) (2,964) (2,964) (2,964) (2,964) (2,964) (2,964) (2,964) (2,964) (2,964) (35,562)
Net Sales 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 17,745,558
Other Income - - - - - - - - - - - - -
Total Income 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 17,745,558
Credit Management
YEAR 2
Sales (cash) 369,699 369,699 369,699 369,699 369,699 369,699 369,699 369,699 369,699 369,699 369,699 369,699 4,436,389
Sales (credit) 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 13,309,168
Received on Account 693,186 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 12,893,257
Bad Debt Expense - - - - - - - - - - - - -
Year 2 Assumptions
Product/Service Category A Wound care - ~10% of sales
YEAR 2
Product/Service Category F
Product/Service Category G
Less: Returns & Allowances
Other Income
YEAR 2
Sales (cash)
Sales (credit)
Received on Account
Bad Debt Expense
Appendix
SALES PROJECTIONS
NewAge BIOTECH, Inc.
Year 3 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
Sales Budget
Product/Service Category A 225,792 225,792 225,792 225,792 225,792 225,792 225,792 225,792 225,792 225,792 225,792 225,792 2,709,504
YEAR 3
Product/Service Category B 1,806,336 1,806,336 1,806,336 1,806,336 1,806,336 1,806,336 1,806,336 1,806,336 1,806,336 1,806,336 1,806,336 1,806,336 21,676,032
Product/Service Category C 338,688 338,688 338,688 338,688 338,688 338,688 338,688 338,688 338,688 338,688 338,688 338,688 4,064,256
Product/Service Category D - - - - - - - - - - - - -
Product/Service Category E - - - - - - - - - - - - -
YEAR 3
Product/Service Category F - - - - - - - - - - - - -
Product/Service Category G - - - - - - - - - - - - -
Gross Sales 2,370,816 2,370,816 2,370,816 2,370,816 2,370,816 2,370,816 2,370,816 2,370,816 2,370,816 2,370,816 2,370,816 2,370,816 28,449,792
YEAR 3
Less: Returns & Allowances (4,742) (4,742) (4,742) (4,742) (4,742) (4,742) (4,742) (4,742) (4,742) (4,742) (4,742) (4,742) (56,900)
Net Sales 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 28,392,892
Other Income - - - - - - - - - - - - -
Total Income 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 28,392,892
Credit Management
YEAR 3
Sales (cash) 591,519 591,519 591,519 591,519 591,519 591,519 591,519 591,519 591,519 591,519 591,519 591,519 7,098,223
Sales (credit) 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 21,294,669
Received on Account 1,109,097 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 20,629,211
Bad Debt Expense - - - - - - - - - - - - -
Year 3 Assumptions
Product/Service Category A Wound care - ~10% of sales
YEAR 3
Product/Service Category F
Product/Service Category G
Less: Returns & Allowances
Other Income
YEAR 3
Sales (cash)
Sales (credit)
Received on Account
Bad Debt Expense
Appendix
INVENTORY PROJECTIONS
NewAge BIOTECH, Inc.
Year 1 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
Inventory Management
Inventory Purchases 166,920 166,920 166,920 166,920 166,920 166,920 166,920 166,920 166,920 166,920 166,920 166,920 2,003,040
Inventory/ Raw Material Purchases (Cash) 83,460 83,460 83,460 83,460 83,460 83,460 83,460 83,460 83,460 83,460 83,460 83,460 1,001,520
Inventory/ Raw Material Purchases (Credit) 83,460 83,460 83,460 83,460 83,460 83,460 83,460 83,460 83,460 83,460 83,460 83,460 1,001,520
YEAR 1
Payment on Account - - - 83,460 83,460 83,460 83,460 83,460 83,460 83,460 83,460 83,460 751,140
Production Expenses
YEAR 1
Freight-in & Trucking 2,800 2,800 2,800 2,800 2,800 2,800 2,800 2,800 2,800 2,800 2,800 2,800 33,600
Insurance 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 36,000
Payroll Expenses - production
Salaries & Wages 30,833 30,833 30,833 30,833 30,833 30,833 30,833 30,833 30,833 30,833 30,833 30,833 369,996
YEAR 1
Employee Benefits 1,233 1,233 1,233 1,233 1,233 1,233 1,233 1,233 1,233 1,233 1,233 1,233 14,800
Payroll Taxes 5,242 5,242 5,242 5,242 5,242 5,242 5,242 5,242 5,242 5,242 5,242 5,242 62,899
Rent - - - - - - - - - - - - -
YEAR 1
Repairs & Maintenance 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 54,000
Rework - - - - - - - - - - - - -
Subcontracting - - - - - - - - - - - - -
Utilities 7,292 7,292 7,292 7,292 7,292 7,292 7,292 7,292 7,292 7,292 7,292 7,292 87,504
Other Production Expenses - - - - - - - - - - - - -
Inventory Production Expenses 54,900 54,900 54,900 54,900 54,900 54,900 54,900 54,900 54,900 54,900 54,900 54,900 658,799
Inventory Balance
Beginning Inventory Balance 2,242,555 2,261,040 2,279,526 2,298,011 2,316,497 2,334,982 2,353,467 2,371,953 2,390,438 2,408,924 2,427,409 2,445,895 2,242,555
Inventory Purchased 166,920 166,920 166,920 166,920 166,920 166,920 166,920 166,920 166,920 166,920 166,920 166,920 2,003,040
Inventory Production 54,900 54,900 54,900 54,900 54,900 54,900 54,900 54,900 54,900 54,900 54,900 54,900 658,799
YEAR 1
(Cost of Goods Sold) (203,335) (203,335) (203,335) (203,335) (203,335) (203,335) (203,335) (203,335) (203,335) (203,335) (203,335) (203,335) (2,440,014)
Ending Inventory Balance 2,261,040 2,279,526 2,298,011 2,316,497 2,334,982 2,353,467 2,371,953 2,390,438 2,408,924 2,427,409 2,445,895 2,464,380 2,464,380
Year 1 Assumptions
YEAR 1
Inventory/ Raw Material Purchases Designed to keep inventory levels lower than in the past
Freight-in & Trucking Based on historical % of sales
Insurance Based on historcal costs for product liability insurance
YEAR 1
Rent
Repairs & Maintenance Based on historical costs
Rework
Subcontracting
Utilities $2.50 per square foot - 35000 sf of manufacturing space
Other Production Expenses
Appendix
INVENTORY PROJECTIONS
NewAge BIOTECH, Inc.
Year 2 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
Inventory Management
Inventory Purchases 230,000 230,000 230,000 230,000 230,000 230,000 230,000 230,000 230,000 230,000 230,000 230,000 2,760,000
Inventory/ Raw Material Purchases (Cash) 115,000 115,000 115,000 115,000 115,000 115,000 115,000 115,000 115,000 115,000 115,000 115,000 1,380,000
Inventory/ Raw Material Purchases (Credit) 115,000 115,000 115,000 115,000 115,000 115,000 115,000 115,000 115,000 115,000 115,000 115,000 1,380,000
YEAR 2
Payment on Account 83,460 83,460 83,460 115,000 115,000 115,000 115,000 115,000 115,000 115,000 115,000 115,000 1,285,380
Production Expenses
YEAR 2
Freight-in & Trucking 4,436 4,436 4,436 4,436 4,436 4,436 4,436 4,436 4,436 4,436 4,436 4,436 53,237
Insurance 3,150 3,150 3,150 3,150 3,150 3,150 3,150 3,150 3,150 3,150 3,150 3,150 37,800
Payroll Expenses - production
Salaries & Wages 32,375 32,375 32,375 32,375 32,375 32,375 32,375 32,375 32,375 32,375 32,375 32,375 388,496
YEAR 2
Employee Benefits 1,295 1,295 1,295 1,295 1,295 1,295 1,295 1,295 1,295 1,295 1,295 1,295 15,540
Payroll Taxes 5,504 5,504 5,504 5,504 5,504 5,504 5,504 5,504 5,504 5,504 5,504 5,504 66,044
Rent - - - - - - - - - - - - -
YEAR 2
Repairs & Maintenance 4,725 4,725 4,725 4,725 4,725 4,725 4,725 4,725 4,725 4,725 4,725 4,725 56,700
Rework - - - - - - - - - - - - -
Subcontracting - - - - - - - - - - - - -
Utilities 7,657 7,657 7,657 7,657 7,657 7,657 7,657 7,657 7,657 7,657 7,657 7,657 91,879
Other Production Expenses - - - - - - - - - - - - -
Inventory Production Expenses 59,141 59,141 59,141 59,141 59,141 59,141 59,141 59,141 59,141 59,141 59,141 59,141 709,696
Inventory Balance
Beginning Inventory Balance 2,464,380 2,428,186 2,391,992 2,355,798 2,319,604 2,283,410 2,247,217 2,211,023 2,174,829 2,138,635 2,102,441 2,066,247 2,464,380
Inventory Purchased 230,000 230,000 230,000 230,000 230,000 230,000 230,000 230,000 230,000 230,000 230,000 230,000 2,760,000
Inventory Production 59,141 59,141 59,141 59,141 59,141 59,141 59,141 59,141 59,141 59,141 59,141 59,141 709,696
YEAR 2
(Cost of Goods Sold) (325,335) (325,335) (325,335) (325,335) (325,335) (325,335) (325,335) (325,335) (325,335) (325,335) (325,335) (325,335) (3,904,023)
Ending Inventory Balance 2,428,186 2,391,992 2,355,798 2,319,604 2,283,410 2,247,217 2,211,023 2,174,829 2,138,635 2,102,441 2,066,247 2,030,053 2,030,053
Year 2 Assumptions
YEAR 2
Inventory/ Raw Material Purchases Designed to keep inventory levels lower than in the past
Freight-in & Trucking Based on historical % of sales (0.3%)
Insurance Increased 5%
YEAR 2
Rent
Repairs & Maintenance Based on historical costs increased 5% for year 2
Rework
Subcontracting
Utilities $2.63 per square foot - 35000 sf of manufacturing space (5% increase over last year)
Other Production Expenses
Appendix
INVENTORY PROJECTIONS
NewAge BIOTECH, Inc.
Year 3 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
Inventory Management
Inventory Purchases 318,700 318,700 318,700 318,700 318,700 318,700 318,700 318,700 318,700 318,700 318,700 318,700 3,824,400
Inventory/ Raw Material Purchases (Cash) 159,350 159,350 159,350 159,350 159,350 159,350 159,350 159,350 159,350 159,350 159,350 159,350 1,912,200
Inventory/ Raw Material Purchases (Credit) 159,350 159,350 159,350 159,350 159,350 159,350 159,350 159,350 159,350 159,350 159,350 159,350 1,912,200
YEAR 3
Payment on Account 115,000 115,000 115,000 159,350 159,350 159,350 159,350 159,350 159,350 159,350 159,350 159,350 1,779,150
Production Expenses
YEAR 3
Freight-in & Trucking 7,098 7,098 7,098 7,098 7,098 7,098 7,098 7,098 7,098 7,098 7,098 7,098 85,179
Insurance 3,310 3,310 3,310 3,310 3,310 3,310 3,310 3,310 3,310 3,310 3,310 3,310 39,720
Payroll Expenses - production
Salaries & Wages 34,000 34,000 34,000 34,000 34,000 34,000 34,000 34,000 34,000 34,000 34,000 34,000 408,000
YEAR 3
Employee Benefits 1,360 1,360 1,360 1,360 1,360 1,360 1,360 1,360 1,360 1,360 1,360 1,360 16,320
Payroll Taxes 5,780 5,780 5,780 5,780 5,780 5,780 5,780 5,780 5,780 5,780 5,780 5,780 69,360
Rent - - - - - - - - - - - - -
YEAR 3
Repairs & Maintenance 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 60,000
Rework - - - - - - - - - - - - -
Subcontracting - - - - - - - - - - - - -
Utilities 8,040 8,040 8,040 8,040 8,040 8,040 8,040 8,040 8,040 8,040 8,040 8,040 96,480
Other Production Expenses - - - - - - - - - - - - -
Inventory Production Expenses 64,588 64,588 64,588 64,588 64,588 64,588 64,588 64,588 64,588 64,588 64,588 64,588 775,059
Inventory Balance
Beginning Inventory Balance 2,030,053 1,892,805 1,755,557 1,618,309 1,481,061 1,343,812 1,206,564 1,069,316 932,068 794,820 657,572 520,324 2,030,053
Inventory Purchased 318,700 318,700 318,700 318,700 318,700 318,700 318,700 318,700 318,700 318,700 318,700 318,700 3,824,400
Inventory Production 64,588 64,588 64,588 64,588 64,588 64,588 64,588 64,588 64,588 64,588 64,588 64,588 775,059
YEAR 3
(Cost of Goods Sold) (520,536) (520,536) (520,536) (520,536) (520,536) (520,536) (520,536) (520,536) (520,536) (520,536) (520,536) (520,536) (6,246,436)
Ending Inventory Balance 1,892,805 1,755,557 1,618,309 1,481,061 1,343,812 1,206,564 1,069,316 932,068 794,820 657,572 520,324 383,075 383,075
Year 3 Assumptions
YEAR 3
Inventory/ Raw Material Purchases Designed to keep inventory levels lower than in the past
Freight-in & Trucking Based on historical % of sales (0.3%)
Insurance Increased 5%
YEAR 3
Rent
Repairs & Maintenance Based on historical costs increased 5% for year 3
Rework
Subcontracting
Utilities $2.76 per square foot - 35000 sf of manufacturing space (5% increase over last year)
Other Production Expenses
Appendix
OPERATING EXPENSE PROJECTIONS
NewAge BIOTECH, Inc.
Year 1 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
Operating Expenses
Advertising 27,784 27,784 27,784 327,784 27,784 27,784 27,784 27,784 27,784 27,784 27,784 27,784 633,408
Bank Charges - - - - - - - - - - - - -
Dues & Subscriptions 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 24,000
YEAR 1
Insurance 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 54,000
Licenses & Fees 2,000 - - - - - - - - - - - 2,000
Marketing & Promotion 20,000 25,000 25,000 5,000 5,000 40,000 5,000 25,000 5,000 25,000 20,000 5,000 205,000
Meals & Entertainment 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 60,000
YEAR 1
Miscellaneous - - - - - - - - - - - - -
Office Expense (postage) 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000
Office Supplies 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 30,000
Outside Services - - - - - - - - - - - - -
YEAR 1
Payroll Expenses
Salaries & Wages 230,416 230,416 230,416 230,416 230,416 230,416 230,416 230,416 230,416 230,416 230,416 230,416 2,764,992
Payroll Taxes 39,171 39,171 39,171 39,171 39,171 39,171 39,171 39,171 39,171 39,171 39,171 39,171 470,049
Benefits 9,217 9,217 9,217 9,217 9,217 9,217 9,217 9,217 9,217 9,217 9,217 9,217 110,600
YEAR 1
Professional Fees 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 240,000
Property Taxes - - - - - - - - - - - - -
Rent - - - - - - - - - - - - -
Repairs & Maintenance 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 24,000
YEAR 1
Utilities 3,125 3,125 3,125 3,125 3,125 3,125 3,125 3,125 3,125 3,125 3,125 3,125 37,500
Vehicle - - - - - - - - - - - - -
Research & Development 166,667 166,667 166,667 166,667 166,667 166,667 166,667 166,667 166,667 166,667 166,667 166,667 2,000,004
Other - - - - - - - - - - - - -
Other - - - - - - - - - - - - -
Total Operating Expenses 574,879 577,879 577,879 857,879 557,879 592,879 557,879 577,879 557,879 577,879 572,879 557,879 7,141,552
Assumptions - Year 1
Advertising Broadcast @ 1.5% of Sales +$300K in April for infomercial; Print @ 1.5% of sales
Bank Charges
Dues & Subscriptions Based on historical costs
YEAR 1
Insurance Based on historical for property, key man, business interruption, general liability, etc.
Licenses & Fees Based on historical
Marketing & Promotion $15K Jan, Jun, Nov for brochures; $20K in Feb,Mar,June, Aug,Oct for trade shows; $5K/mo miscellaneous
Meals & Entertainment Based on historical costs
YEAR 1
Miscellaneous
Office Expense (postage) Based on historical
Office Supplies Based on historical
Outside Services
YEAR 1
Payroll Expenses
Salaries & Wages 26 Sales @ $65K/yr; Officer comp @ $625K/yr; 2 Prod Dev @ $150K (total)/yr; 6 Acct, finance,& admin @ $300K (total)/yr
Payroll Taxes Estimated @ 17% of salaries
Benefits Estimated @ 4% of salaries
YEAR 1
Travel Leases on cars for officers and sales people, travel based on historical
Utilities 15000 s f @ $2.50 per square foot
Vehicle
Research & Development Based on historical and planned experimentation
Other
Other
Appendix
OPERATING EXPENSE PROJECTIONS
NewAge BIOTECH, Inc.
Year 2 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
Operating Expenses
Advertising 30,562 30,562 30,562 360,562 30,562 30,562 30,562 30,562 30,562 30,562 30,562 30,562 696,749
Bank Charges - - - - - - - - - - - - -
Dues & Subscriptions 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 26,400
YEAR 2
Insurance 4,950 4,950 4,950 4,950 4,950 4,950 4,950 4,950 4,950 4,950 4,950 4,950 59,400
Licenses & Fees 2,200 - - - - - - - - - - - 2,200
Marketing & Promotion 22,000 27,500 27,500 5,500 5,500 44,000 5,500 27,500 5,500 27,500 22,000 5,500 225,500
Meals & Entertainment 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 66,000
YEAR 2
Miscellaneous - - - - - - - - - - - - -
Office Expense (postage) 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 13,200
Office Supplies 2,750 2,750 2,750 2,750 2,750 2,750 2,750 2,750 2,750 2,750 2,750 2,750 33,000
Outside Services - - - - - - - - - - - - -
YEAR 2
Payroll Expenses
Salaries & Wages 253,458 253,458 253,458 253,458 253,458 253,458 253,458 253,458 253,458 253,458 253,458 253,458 3,041,491
Payroll Taxes 43,088 43,088 43,088 43,088 43,088 43,088 43,088 43,088 43,088 43,088 43,088 43,088 517,054
Benefits 10,138 10,138 10,138 10,138 10,138 10,138 10,138 10,138 10,138 10,138 10,138 10,138 121,660
YEAR 2
Professional Fees 22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000 264,000
Property Taxes - - - - - - - - - - - - -
Rent - - - - - - - - - - - - -
Repairs & Maintenance 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 26,400
YEAR 2
Utilities 3,438 3,438 3,438 3,438 3,438 3,438 3,438 3,438 3,438 3,438 3,438 3,438 41,250
Vehicle - - - - - - - - - - - - -
Research & Development 183,334 183,334 183,334 183,334 183,334 183,334 183,334 183,334 183,334 183,334 183,334 183,334 2,200,004
Other - - - - - - - - - - - - -
Other - - - - - - - - - - - - -
Total Operating Expenses 632,367 635,667 635,667 943,667 613,667 652,167 613,667 635,667 613,667 635,667 630,167 613,667 7,855,708
Assumptions - Year 2
Advertising Based on 10% increase over prior year
Bank Charges
Dues & Subscriptions Based on 10% increase over prior year
YEAR 2
Miscellaneous
Office Expense (postage) Based on 10% increase over prior year
Office Supplies Based on 10% increase over prior year
Outside Services
YEAR 2
Payroll Expenses
Salaries & Wages Based on 10% increase over prior year
Payroll Taxes Estimated @ 17% of salaries
Benefits Estimated @ 4% of salaries
YEAR 2
Appendix
OPERATING EXPENSE PROJECTIONS
NewAge BIOTECH, Inc.
Year 3 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
Operating Expenses
Advertising 33,619 33,619 33,619 396,619 33,619 33,619 33,619 33,619 33,619 33,619 33,619 33,619 766,424
Bank Charges - - - - - - - - - - - - -
Dues & Subscriptions 2,420 2,420 2,420 2,420 2,420 2,420 2,420 2,420 2,420 2,420 2,420 2,420 29,040
YEAR 3
Insurance 5,445 5,445 5,445 5,445 5,445 5,445 5,445 5,445 5,445 5,445 5,445 5,445 65,340
Licenses & Fees 2,420 - - - - - - - - - - - 2,420
Marketing & Promotion 24,200 30,250 30,250 6,050 6,050 48,400 6,050 30,250 6,050 30,250 24,200 6,050 248,050
Meals & Entertainment 6,050 6,050 6,050 6,050 6,050 6,050 6,050 6,050 6,050 6,050 6,050 6,050 72,600
YEAR 3
Miscellaneous - - - - - - - - - - - - -
Office Expense (postage) 1,210 1,210 1,210 1,210 1,210 1,210 1,210 1,210 1,210 1,210 1,210 1,210 14,520
Office Supplies 3,025 3,025 3,025 3,025 3,025 3,025 3,025 3,025 3,025 3,025 3,025 3,025 36,300
Outside Services - - - - - - - - - - - - -
YEAR 3
Payroll Expenses
Salaries & Wages 278,803 278,803 278,803 278,803 278,803 278,803 278,803 278,803 278,803 278,803 278,803 278,803 3,345,640
Payroll Taxes 47,397 47,397 47,397 47,397 47,397 47,397 47,397 47,397 47,397 47,397 47,397 47,397 568,759
Benefits 11,152 11,152 11,152 11,152 11,152 11,152 11,152 11,152 11,152 11,152 11,152 11,152 133,826
YEAR 3
Professional Fees 24,200 24,200 24,200 24,200 24,200 24,200 24,200 24,200 24,200 24,200 24,200 24,200 290,400
Property Taxes - - - - - - - - - - - - -
Rent - - - - - - - - - - - - -
Repairs & Maintenance 2,420 2,420 2,420 2,420 2,420 2,420 2,420 2,420 2,420 2,420 2,420 2,420 29,040
YEAR 3
Utilities 3,781 3,781 3,781 3,781 3,781 3,781 3,781 3,781 3,781 3,781 3,781 3,781 45,375
Vehicle - - - - - - - - - - - - -
Research & Development 201,667 201,667 201,667 201,667 201,667 201,667 201,667 201,667 201,667 201,667 201,667 201,667 2,420,005
Other - - - - - - - - - - - - -
Other - - - - - - - - - - - - -
Total Operating Expenses 695,604 699,234 699,234 1,038,034 675,034 717,384 675,034 699,234 675,034 699,234 693,184 675,034 8,641,278
Assumptions - Year 3
Advertising Based on 10% increase over prior year
Bank Charges
Dues & Subscriptions Based on 10% increase over prior year
YEAR 3
Miscellaneous
Office Expense (postage) Based on 10% increase over prior year
Office Supplies Based on 10% increase over prior year
Outside Services
YEAR 3
Payroll Expenses
Salaries & Wages Based on 10% increase over prior year
Payroll Taxes Estimated @ 17% of salaries
Benefits Estimated @ 4% of salaries
YEAR 3
Appendix
DEPRECIATION SCHEDULES
NewAge BIOTECH, Inc.
Year 1 Existing Assets JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
Set-up Assets (no detail entered) - - - - - - - - - - - - -
Set-up Assets (detail entered) 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 510,300
Start-up Purchases - - - - - - - - - - - - -
Total 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 510,300
Year 2 Existing Assets
Set-up Assets (no detail entered) - - - - - - - - - - - - -
Set-up Assets (detail entered) 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 510,300
Start-up Purchases - - - - - - - - - - - - -
Total 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 510,300
Year 3 Existing Assets
Set-up Assets (no detail entered) - - - - - - - - - - - - -
Set-up Assets (detail entered) - - - - - - - - - - - - -
Start-up Purchases - - - - - - - - - - - - -
Total - - - - - - - - - - - - -
Year 1 New Purchases JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
Computer Equipment - - - - - - - - - - - - -
Computer Equipment Depreciation - - - - - - - - - - - - -
Equipment/Machinery - - - - - - - - - - - - -
Equipment Depreciation - - - - - - - - - - - - -
Furniture - - - - - - - - - - - - -
Furniture Depreciation - - - - - - - - - - - - -
Leasehold Improvements - - - - - - - - - - - - -
Leasehold Depreciation - - - - - - - - - - - - -
Vehicles - - - - - - - - - - - - -
Vehicle Depreciation - - - - - - - - - - - - -
Building - - - - - - - - - - - - -
Building Depreciation - - - - - - - - - - - - -
Year 2 New Purchases
Computer Equipment - - - - - - - - - - - - -
Computer Equipment Depreciation - - - - - - - - - - - - -
Equipment/Machinery - - - - - - - - - - - - -
Equipment Depreciation - - - - - - - - - - - - -
Furniture - - - - - - - - - - - - -
Furniture Depreciation - - - - - - - - - - - - -
Leasehold Improvements - - - - - - - - - - - - -
Leasehold Depreciation - - - - - - - - - - - - -
Vehicles - - - - - - - - - - - - -
Vehicle Depreciation - - - - - - - - - - - - -
Building - - - - - - - - - - - - -
Building Depreciation - - - - - - - - - - - - -
Year 3 New Purchases
Computer Equipment - - - - - - - - - - - - -
Computer Equipment Depreciation - - - - - - - - - - - - -
Equipment/Machinery - - - - - - - - - - - - -
Equipment Depreciation - - - - - - - - - - - - -
Furniture - - - - - - - - - - - - -
Furniture Depreciation - - - - - - - - - - - - -
Leasehold Improvements - - - - - - - - - - - - -
Leasehold Depreciation - - - - - - - - - - - - -
Vehicles - - - - - - - - - - - - -
Vehicle Depreciation - - - - - - - - - - - - -
Building - - - - - - - - - - - - -
Building Depreciation - - - - - - - - - - - - -
Appendix
CAPITAL BUDGET PROJECTIONS
Year 1 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
YEAR 1
Capital Budget
Owner's Draw - - - - - - - - - - - - -
Investor's Draw - - - - - - - - - - - - -
YEAR 1
Dividends Paid - - - - - - - - - - - - -
Security Deposits - - - - - - - - - - - - -
Amortization - - - - - - - - - - - - -
Depreciation (existing assets) 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 510,300
YEAR 1
Investor's Draw
Dividends Paid
Security Deposits
Amortization
YEAR 1
Equipment
Equipment Depreciation
Furniture
YEAR 1
Furniture Depreciation
Leasehold Improvements
Leasehold Depreciation
Vehicles
YEAR 1
Vehicle Depreciation
Building
Building Depreciation
Land
Appendix
CAPITAL BUDGET PROJECTIONS
Year 2 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
YEAR 2
Capital Budget
Owner's Draw - - - - - - - - - - - - -
Investor's Draw - - - - - - - - - - - - -
Dividends Paid - - - - - - - - - - - - -
YEAR 2
Security Deposits - - - - - - - - - - - - -
Amortization - - - - - - - - - - - - -
Depreciation (existing assets) 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 510,300
YEAR 2
Investor's Draw
Dividends Paid
Security Deposits
Amortization
YEAR 2
Equipment
Equipment Depreciation
Furniture
YEAR 2
Furniture Depreciation
Leasehold Improvements
Leasehold Depreciation
Vehicles
YEAR 2
Vehicle Depreciation
Building
Building Depreciation
Land
Appendix
CAPITAL BUDGET PROJECTIONS
Year 3 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
YEAR 3
Capital Budget
Owner's Draw - - - - - - - - - - - - -
Investor's Draw - - - - - - - - - - - - -
YEAR 3
Dividends Paid - - - - - - - - - - - - -
Security Deposits - - - - - - - - - - - - -
Amortization - - - - - - - - - - - - -
Depreciation (existing assets) - - - - - - - - - - - - -
YEAR 3
Investor's Draw
Dividends Paid
Security Deposits
Amortization
YEAR 3
Equipment
Equipment Depreciation
Furniture
YEAR 3
Furniture Depreciation
Leasehold Improvements
Leasehold Depreciation
Vehicles
YEAR 3
Vehicle Depreciation
Building
Building Depreciation
Land
Appendix