WHARTON ONE
REPORT TO BIOSEARCH BOARD OF DIRECTORS April 1999
Biosearch Medical Products, Inc. Exhibit A
Comparative Balance Sheets at the Years Ended December 31, 1992-1998
and at March 31, 1999
1993 1994 1995 1996 1997 1998 03/31/99
ASSETS
Current Assets:
Cash and cash equivalents $74,717 $466,832 $568,092 $321,376 $14,486 $105,768 $49,157
Accounts receivable 320,122 547,986 162,500 182,247 351,964 78,751 111,650
Inventories 576,113 574,766 616,091 513,551 372,012 297,613 329,827
Other current assets 52,456 35,716 17,551 30,665 18,762 256,127 235,908
------------------------------------------------------------------------------------------
Total current assets 1,023,408 1,625,300 1,364,234 1,047,839 757,224 738,259 726,542
Property, plant & equipment@cost 4,399,427 3,980,373 4,078,875 4,251,055 4,239,648 2,440,400 NA
Less: Accumulated depreciation 2,790,208 2,593,172 2,708,388 2,799,250 2,887,766 2,287,523 V
------------------------------------------------------------------------------------------
Net property, plant & equipment 1,609,219 1,387,201 1,370,487 1,451,805 1,351,882 152,877 88,028
Escrow 0 1,025,706 312,811 0 0 0
Cash surrender value of life insurance 24,062 346,385 402,785 0 0 0
Other assets 64,476 67,423 13,557 13,580 8,123 5,862 4,991
Total assets $2,721,165 $4,452,015 $3,463,874 $2,513,224 $2,117,229 $896,998 $819,561
==========================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long term debt $900,414 $28,968 $32,648 $36,788 $691,041 $0 $0
Customer deposit 15,800 9,282 0 0 380,000 123,913
Accounts payable 405,185 229,008 163,534 185,653 353,712 253,497 155,705
Accrued liabilities 350,817 230,120 188,328 131,693 132,330 174,330 50,382
------------------------------------------------------------------------------------------
Total current liabilities 1,672,216 497,378 384,510 354,134 1,177,083 807,827 330,000
Long term debt 777,512 731,591 699,522 662,734 0 0 0
Stockholders' equity:
Common stock 11,129,913 11,129,913 11,129,948 11,129,954 11,129,954 11,129,954 11,129,954
Accumulated deficit (10,825,741) (7,875,158) (8,718,791) (9,602,359) (9,602,359) (11,009,544) (10,609,154)
Treasury stock@cost (32,735) (31,709) (31,315) (31,239) (31,239) (31,239) (31,239)
------------------------------------------------------------------------------------------
Stockholders' equity 271,437 3,223,046 2,379,842 1,496,356 1,496,356 89,171 489,561
Liabilities and stockholders' equity $2,721,165 $4,452,015 $3,463,874 $2,513,224 $2,673,439 $896,998 $819,561
==========================================================================================
Biosearch Medical Products, Inc.
Discounted Cash Flow Analysis Exhibit 1
1.3078635 1.1914351 1.547251
1999 2000 2001 2002 2003
Total Revenue $1,855,300 $2,696,000 $3,526,000 $4,201,000 $4,851,000
Growth Rate
Material Cost 463,825 598,512 881,500 1,050,250 1,212,750
25% 22% 25% 25% 25%
Direct Labor 212,500 296,560 476,010 567,135 654,885
11% 11% 14% 14% 14%
Overhead
Manufacturing 204,000 249,000 300,000 326,000 357,000
Extrusion 0 0 0 0 0
Maintenance 11,550 70,000 75,000 75,000 75,000
Warehouse/Purchasing 44,000 62,500 65,500 69,000 72,300
Manufacturing Engineering 0 62,500 65,500 69,000 72,300
Quality Assurance 57,000 125,500 156,000 164,000 173,000
Building & Utilities 55,000 60,000 100,000 100,000 100,000
Other 50,000 75,000 200,000 200,000 200,000
Total Overhead 421,500 704,500 962,000 1,003,000 1,049,600
23% 26% 27% 24% 22%
Sales & General Administrative
Payroll & Benefits 473,000 570,000 593,000 616,000 641,000
Insurance 80,000 80,000 85,000 90,000 90,000
Professional Fees 30,000 35,000 35,000 35,000 30,000
Financial Reporting 15,000 15,000 15,000 15,000 15,000
Car Allowance 20,000 20,000 20,000 20,000 20,000
Royalties 0 0 0 0 0
Rent Expense 98,000 98,000 120,000 120,000 120,000
Telephone 20,000 20,000 25,000 25,000 25,000
Postage & Supplies 25,000 25,000 30,000 30,000 30,000
Advertising 10,000 10,000 20,000 30,000 30,000
Misc. 10,000 10,000 20,000 30,000 30,000
Travel 5,000 10,000 25,000 25,000 25,000
Directors Fees 40,000 40,000 45,000 45,000 45,000
Depreciation 50,577 72,577 98,577 122,577 150,577
Allocation to Hydromer (J.P) (20,450) (22,500) (23,600) (20,450) (20,450)
Allocation to Hydromer (J.N) (24,500) (26,950) (28,300) (24,500) (24,500)
Total Sales & General Administrative Expense 831,627 956,127 1,077,677 1,158,627 1,206,627
45% 34% 29% 26% 23%
Depreciation 50,577 72,577 96,577 122,577 150,577
Computation of Present value of NOL to Biosearch:
Income before state and federal income taxes (74,152) 140,031 128,813 421,988 727,138
State income taxes @ 9% 0 0 0 0 9,000
Income before federal income taxes (74,152) 140,301 128,813 421,988 718,138
Federal income taxes @ 34% 0 0 0 0 0
Tax benefit of NOL 47,702 43,796 143,476 244,167
PVIF @ 35.0% 0.6375281 0.4722431 0.3498097 0.2591183
Present value of tax benefits of NOL 30,411 20,682 50,189 63,268
--------
Sum of present values of tax benefits $349,551
--------
Net Income (74,152) 140,301 128,813 421,988 718,138
Plus:
Rent 98,000 98,000 49,000 0 0
Depreciation 50,577 72,577 96,577 122,577 150,577
Less: Addition to net working capital 200,000 270,000 269,700 216,543 210,218
Capital expenditures 100,000 110,000 120,000 130,000 140,000
Net Working Capital 600,000 870,000 1,139,700 1,356,243 1,566,461
Free cash flow ($225,849) ($68,982) ($115,181) $198,444 $519,128
Present value interest factor @ 35.0% 0.890663 0.6375281 0.4722431 0.3498097 0.2591183
Present value of free cash flows ($194,208) ($43,978) ($54,393) $69,418 $134,516
Sum of present values $410,361
Less Change of Control Liabilities 135,000
--------
Enterprise value $275,361
--------
1.1500722 1.15 1.15 1.12 1.1
2004 2005 2006 2007 2008
Total Revenue $5,578,650 $6,415,448 $7,377,765 $8,263,096 $9,089,406
Growth Rate
Material Cost 1,394,663 1,603,862 1,844,441 2,065,774 2,272,352
Direct Labor 781,011 898,163 1,032,867 1,158,833 1,272,517
Overhead
Manufacturing
Extrusion
Maintenance
Warehouse/Purchasing
Manufacturing Engineering
Quality Assurance
Building & Utilities
Other
Total Overhead 1,283,090 1,475,553 1,696,886 1,900,512 2,090,563
Sales & General Administrative
Payroll & Benefits NA NA NA NA NA
Insurance
Professional Fees
Financial Reporting
Car Allowance
Royalties
Rent Expense
Telephone
Postage & Supplies
Advertising
Misc.
Travel
Directors Fees
Depreciation
Allocation to Hydromer (J.P)
Allocation to Hydromer (J.N)
Total Sales & General Administrative Expense 1283089.5 1475552.9 1696885.9 1900512.2 2090563.4
Depreciation
Computation of Present value of NOL to Biosearch:
Income before state and federal income taxes 836,798 962,317 1,106,665 1,239,464 1,363,411
State income taxes @ 9% 75,312 86,609 99,600 111,552 122,707
Income before federal income taxes 761,486 875,709 1,007,065 1,127,913 1,240,704
Federal income taxes @ 34% 0 0 0 0 0
Tax benefit of NOL 258,905 297,741 342,402 383,490 421,839
PVIF @ 35.0% 0.1919395 0.1421774 0.1053166 0.0780123 0.0577869
Present value of tax benefits of NOL 49,694 42,332 36,061 29,917 24,377
Sum of present values of tax benefits
Net Income 761485.73 875708.58 1007064.9 1127912.7 1240703.9
Plus:
Rent 0 0 0 0 0
Depreciation 130,000 140,000 150,000 160,000 170,000
Less: Addition to net working capital 234,969 270,214 310,747 285,886 266,828
Capital expenditures 150,000 160,000 170,000 180,000 190,000
Net Working Capital 1,801,430 2,071,644 2,382,391 2,668,277 2,935,105
0
Free cash flow $507,410 $586,521 $676,318 $822,027 $953,876
Present value interest factor @ 35.0% 0.1919395 0.1421774 0.1053166 0.0780123 0.0577869
Present value of free cash flows $97,392 $83,390 $71,227 $64,128 $55,122
Sum of present values
Less Change of Control Liabilities
Enterprise value
1.1 1.1 1.1 1.1 1.1
2009 2010 2011 2012 2013
Total Revenue $9,998,347 $10,998,181 $12,097,999 $13,307,799 $14,638,579
Growth Rate
Material Cost 2,499,587 2,749,545 3,024,500 3,326,950 3,659,645
Direct Labor 1,399,769 1,539,745 1,693,720 1,863,092 2,049,401
Overhead
Manufacturing
Extrusion
Maintenance
Warehouse/Purchasing
Manufacturing Engineering
Quality Assurance
Building & Utilities
Other
Total Overhead 2,299,620 2,529,582 2,782,540 3,060,794 3,366,873
Sales & General Administrative
Payroll & Benefits NA NA NA NA NA
Insurance
Professional Fees
Financial Reporting
Car Allowance
Royalties
Rent Expense
Telephone
Postage & Supplies
Advertising
Misc.
Travel
Directors Fees
Depreciation
Allocation to Hydromer (J.P)
Allocation to Hydromer (J.N)
Total Sales & General Administrative Expense 2299619.7 2529581.69 2782539.86 3060793.85 3366873.24
Depreciation
Computation of Present value of NOL to Biosearch:
Income before state and federal income taxes 1,499,752 1,649,727 1,814,700 1,996,170 2,195,787
State income taxes @ 9% 134,978 148,475 163,323 179,655 197,621
Income before federal income taxes 1,364,774 1,501,252 1,651,377 1,816,515 1,998,166
Federal income taxes @ 34% 402,823 510,426 581,468 617,615 679,376
Tax benefit of NOL 61,200 0 0 0 0
PVIF @ 35.0% 0.0428051 0.0317075 0.0234870 0.0173978 0.0128873
Present value of tax benefits of NOL 2,620 0.0000000 0 0 0
Sum of present values of tax benefits
Net Income 961951.31 990826.152 1089908.77 1198899.64 1318789.61
Plus:
Rent 0 0 0 0 0
Depreciation 180,000 190,000 200,000 210,000 220,000
Less: Addition to net working capital 293,511 322,862 355,148 390,663 429,729
Capital expenditures 200,000 210000 220000 230000 240000
Net Working Capital 3,228,616 3,551,477 3,906,625 4,297,288 4,727,016
0
Free cash flow $648,441 $647,965 $714,761 $788,237 $869,061
Present value interest factor @ 35.0% 0.0428051 0.03170748 0.02348702 0.01739779 0.01288725
Present value of free cash flows $27,757 $20,545 $16,788 $13,714 $11,200
Sum of present values
Less Change of Control Liabilities
Enterprise value
1.1 1.1 1.1 1.1 1.1
2014 2015 2016 2017 2018
Total Revenue $16,102,437 $17,712,681 $19,483,949 $21,432,344 $23,575,578
Growth Rate
Material Cost 4,025,609 4,428,170 4,870,987 5,358,086 5,893,895
Direct Labor 2,254,341 2,479,775 2,727,753 3,000,528 3,300,581
Overhead
Manufacturing
Extrusion
Maintenance
Warehouse/Purchasing
Manufacturing Engineering
Quality Assurance
Building & Utilities
Other
Total Overhead 3,703,561 4,073,917 4,481,308 4,929,439 5,422,383
Sales & General Administrative
Payroll & Benefits NA NA NA NA NA
Insurance
Professional Fees
Financial Reporting
Car Allowance
Royalties
Rent Expense
Telephone
Postage & Supplies
Advertising
Misc.
Travel
Directors Fees
Depreciation
Allocation to Hydromer (J.P)
Allocation to Hydromer (J.N)
Total Sales & General Administrative Expense 3703560.56 4073916.62 4481308.28 4929439.1 5422383.01
Depreciation
Computation of Present value of NOL to Biosearch:
Income before state and federal income taxes 2,415,366 2,656,902 2,922,592 3,214,852 3,538,337
State income taxes @ 9% 217,383 239,121 263,033 289,337 318,270
Income before federal income taxes 2,197,983 2,417,781 2,659,559 2,925,515 3,218,066
Federal income taxes @ 34% 747,314 822,046 904,250 994,675 1,094,143
Tax benefit of NOL 0 0 0 0 0
PVIF @ 35.0% 0.0095461 0.0070712 0.0052379 0.0038799 0.0028740
Present value of tax benefits of NOL 0 0 0 0 0
Sum of present values of tax benefits
Net Income 1450668.57 1595735.43 1755308.97 1930839.86 2123923.85
Plus:
Rent 0 0 0 0 0
Depreciation 230,000 240,000 250,000 260,000 270,000
Less: Addition to net working capital 472,702 519,972 571,969 629,166 692,082
Capital expenditures 250000 260000 270000 280000 290000
Net Working Capital 5,199,718 5,719,690 6,291,659 6,920,825 7,612,907
Free cash flow $957,967 $1,055,764 $1,163,340 $1,281,674 $1,411,841
Present value interest factor @ 35.0% 0.00954611 0.0070712 0.00523792 0.00387994 0.00287403
Present value of free cash flows $9,145 $7,466 $6,093 $4,973 $4,058
Sum of present values
Less Change of Control Liabilities
Enterprise value
1.1 1.1
2019 2020
Total Revenue $25,933,136 $28,526,450
Growth Rate
Material Cost 6,483,284 7,131,612
Direct Labor 3,630,639 3,993,703
Overhead
Manufacturing
Extrusion
Maintenance
Warehouse/Purchasing
Manufacturing Engineering
Quality Assurance
Building & Utilities
Other
Total Overhead 5,964,621 6,561,083
Sales & General Administrative
Payroll & Benefits NA NA
Insurance
Professional Fees
Financial Reporting
Car Allowance
Royalties
Rent Expense
Telephone
Postage & Supplies
Advertising
Misc.
Travel
Directors Fees
Depreciation
Allocation to Hydromer (J.P)
Allocation to Hydromer (J.N)
Total Sales & General Administrative Expense 5964621.32 6561083.45
Depreciation
Computation of Present value of NOL to Biosearch:
Income before state and federal income taxes 3,889,970 4,278,967
State income taxes @ 9% 350,097 385,107
Income before federal income taxes 3,539,873 3,893,860
Federal income taxes @ 34% 1,203,557 1,323,913
Tax benefit of NOL 0 0
PVIF @ 35.0% 0.0021289 0.0015770
Present value of tax benefits of NOL 0 0
Sum of present values of tax benefits
Net Income 2336316.24 2569947.86
Plus:
Rent 0 0
Depreciation 280,000 290,000
Less: Addition to net working capital 761,291 837,420
Capital expenditures 300000 310000
Net Working Capital 8,374,198 9,211,618
Free cash flow $1,555,026 $1,712,528
Present value interest factor @ 35.0% 0.00212891 0.00157697
Present value of free cash flows $3,311 $2,701
Sum of present values
Less Change of Control Liabilities
Enterprise value
Biosearch Medical Products, Inc.
Discounted Cash Flow Analysis
1.3078635 1.1914351
1999 2000 2001 2002
Total Revenue $1,855,300 $2,696,000 $3,526,000 $4,201,000
Growth Rate
Material Cost 463,825 598,512 881,500 1,050,250
25% 22% 25% 25%
Direct Labor 212,500 296,560 476,010 567,135
11% 11% 14% 14%
Overhead
Manufacturing 204,000 249,000 300,000 326,000
Extrusion 0 0 0 0
Maintenance 11,500 70,000 75,000 75,000
Warehouse/Purchasing 44,000 62,500 65,500 69,000
Manufacturing Engineering 0 62,500 65,500 69,000
Quality Assurance 57,000 125,500 156,000 164,000
Building & Utilities 55,000 60,000 100,000 100,000
Other 50,000 75,000 200,000 200,000
Total Overhead 421,500 704,500 962,000 1,003,000
23% 26% 27% 24%
Sales & General Administrative
Payroll & Benefits 473,000 570,000 593,000 616,000
Insurance 80,000 80,000 85,000 90,000
Professional Fees 30,000 35,000 35,000 35,000
Financial Reporting 15,000 15,000 15,000 15,000
Car Allowance 20,000 20,000 20,000 20,000
Royalties 0 0 0 0
Rent Expense 98,000 98,000 120,000 120,000
Telephone 20,000 20,000 25,000 25,000
Postage & Supplies 25,000 25,000 30,000 30,000
Advertising 10,000 10,000 20,000 30,000
Misc. 10,000 10,000 20,000 30,000
Travel 5,000 10,000 25,000 25,000
Directors Fees 40,000 40,000 45,000 45,000
Depreciation 50,577 72,577 96,577 122,577
Allocation to Hydromer (J.P.) (20,450) (22,500) (23,600) (20,450)
Allocation to Hydromer (J.N.) (24,500) (26,950) (28,300) (24,500)
Total Sales & General Administrative Expense 831,627 956,127 1,077,677 1,158,627
45% 34% 29% 26%
Depreciation 50,577 72,577 96,577 122,577
Computation of Present value of NOL to Biosearch:
Income before state and federal income taxes (74,152) 140,301 128,813 421,988
State income taxes @9% 0 0 0 0
Income before federal income taxes (74,152) 140,301 128,813 421,988
Federal income taxes @34% 0 0 0 0
Tax benefit of NOL 47,702 43,796 143,476
PVIF @ 30.0% 0.6746600 0.5189692 0.3992071
Present value of tax benefits of NOL 32,183 22,729 57,277
--------
Sum of present values of tax benefits $430,300
--------
Net Income (74152) 140301 128813 421988
Plus:
Rent 98,000 98,000 49,000 0
Depreciation 50,577 72,577 96,577 122,577
Less: Addition to net working capital 200,000 270,000 296,700 216,543
Capital expenditures 100,000 110,000 120,000 130,000
Net Working Capital 600,000 870,000 1,139,700 1,356,243
Free cash flow ($225,649) ($68,982) ($115,181) $198,444
Present value interest factor @ 30.0% 0.877058 0.67466 0.5189692 0.3992071
Present value of free cash flows ($197,907) ($46,539) ($59,775) $79,220
Sum of present values $638,554
Less: Change of Control Liabilities 135,000
--------
Enterprise value $503,554
--------
1.1547251 1.1500722 1.15 1.15 1.12
2003 2004 2005 2006 2007
Total Revenue $4,851,000 $5,578,650 $6,415,448 $7,377,765 $8,263,096
Growth Rate
Material Cost 1,212,750 1,394,663 1,603,862 1,844,441 2,065,774
25%
Direct Labor 654,885 781,011 898,163 1,032,887 1,156,833
14%
Overhead
Manufacturing 357,000
Extrusion 0
Maintenance 75,000
Warehouse/Purchasing 72,300
Manufacturing Engineering 72,300
Quality Assurance 173,000
Building & Utilities 100,000
Other 200,000
Total Overhead 1,049,600 1,283,090 1,475,553 1,696,886 1,900,512
22%
Sales & General Administrative
Payroll & Benefits 641,000 NA NA NA NA
Insurance 90,000
Professional Fees 30,000
Financial Reporting 15,000
Car Allowance 20,000
Royalties 0
Rent Expense 120,000
Telephone 25,000
Postage & Supplies 30,000
Advertising 30,000
Misc. 30,000
Travel 25,000
Directors Fees 45,000
Depreciation 150,577
Allocation to Hydromer (J.P.) (20,450)
Allocation to Hydromer (J.N.) (24,500)
Total Sales & General Administrative Expense 1,206,627 1283089.5 1475552.9 1696885.9 1900512.2
23%
Depreciation 150,577
Computation of Present value of NOL to Biosearch:
Income before state and federal income taxes 727,138 836,798 962,317 1,106,665 1,239,646
State income taxes @9% 9,000 75,312 86,609 99,600 111,552
Income before federal income taxes 718,138 761,486 875,709 1,007,065 1,127,913
Federal income taxes @34% 0 0 0 0 0
Tax benefit of NOL 244,167 258,905 297,741 342,402 383,490
PVIF @ 30.0% 0.3070824 0.2362172 0.1817056 0.1397735 0.1075181
Present value of tax benefits of NOL 74,979 61,158 54,101 47,859 41,232
Sum of present values of tax benefits
Net Income 718138 761485.73 875708.58 1007064.9 1127912.7
Plus:
Rent 0 0 0 0 0
Depreciation 150,577 130,000 140,000 150,000 160,000
Less: Addition to net working capital 210,218 234,969 270,214 310,747 285,886
Capital expenditures 140,000 150,000 160,000 170,000 180,000
Net Working Capital 1,566,461 1,801,430 2,071,644 2,382,391 2,668,277
Free cash flow $519,128 $507,410 $586,521 $676,318 $822,027
Present value interest factor @ 30.0% 0.3070824 0.2362172 0.1817056 0.1397735 0.1075181
Present value of free cash flows $159,415 $119,859 $106,574 $94,531 $88,383
Sum of present values
Less: Change of Control Liabilities
Enterprise value
1.1 1.1 1.1 1.1 1.1
2008 2009 2010 2011 2012
Total Revenue $9,089,406 $9,998,347 $10,998,181 $12,097,999 $13,307,799
Growth Rate
Material Cost 2,272,352 2,499,587 2,749,545 3,024,500 3,326,950
Direct Labor 1,272,517 1,399,769 1,539,745 1,693,720 1,863,092
Overhead
Manufacturing
Extrusion
Maintenance
Warehouse/Purchasing
Manufacturing Engineering
Quality Assurance
Building & Utilities
Other
Total Overhead 2,090,563 2,299,620 2,529,582 2,782,540 3,060,794
Sales & General Administrative
Payroll & Benefits NA NA NA NA NA
Insurance
Professional Fees
Financial Reporting
Car Allowance
Royalties
Rent Expense
Telephone
Postage & Supplies
Advertising
Misc.
Travel
Directors Fees
Depreciation
Allocation to Hydromer (J.P.)
Allocation to Hydromer (J.N.)
Total Sales & General Administrative Expense 2090563.4 2299619.7 2529581.69 2782539.86 3060793.85
Depreciation
Computation of Present value of NOL to Biosearch:
Income before state and federal income taxes 1,363,411 1,499,752 1,649,727 1,814,700 1,996,170
State income taxes @9% 122,707 134,978 148,475 163,323 179,655
Income before federal income taxes 1,240,704 1,364,774 1,501,252 1,651,377 1,816,515
Federal income taxes @34% 0 402,823 510,426 561,468 617,615
Tax benefit of NOL 421,839 61,200 0 0 0
PVIF @ 30.0% 0.0827062 0.0636202 0.0489386 0.0376451 0.0289577
Present value of tax benefits of NOL 34,889 3,894 0 0 0
Sum of present values of tax benefits
Net Income 1240703.9 961951.31 990826.152 1089908.77 1198899.64
Plus:
Rent 0 0 0 0 0
Depreciation 170,000 180,000 190,000 200,000 210,000
Less: Addition to net working capital 266,828 293,511 322,862 355,148 390,663
Capital expenditures 190,000 200,000 210,000 220,000 230,000
Net Working Capital 2,935,105 3,228,616 3,551,477 3,906,625 4,297,288
Free cash flow $953,876 $648,441 $647,965 $714,761 $788,237
Present value interest factor @ 30.0% 0.0827062 0.0636202 0.04893859 0.03764507 0.02895775
Present value of free cash flows $78,891 $41,254 $31,710 $26,907 $22,826
Sum of present values
Less: Change of Control Liabilities
Enterprise value
1.1 1.1 1.1 1.1 1.1
2013 2014 2015 2016 2017
Total Revenue $14,638,579 $16,102,437 $17,712,681 $19,483,949 $21,432,344
Growth Rate
Material Cost 3,659,645 4,025,609 4,428,170 4,870,987 5,358,086
Direct Labor 2,049,401 2,254,341 2,479,775 2,727,753 3,000,528
Overhead
Manufacturing
Extrusion
Maintenance
Warehouse/Purchasing
Manufacturing Engineering
Quality Assurance
Building & Utilities
Other
Total Overhead 3,366,873 3,703,561 4,073,917 4,481,308 4,929,439
Sales & General Administrative
Payroll & Benefits NA NA NA NA NA
Insurance
Professional Fees
Financial Reporting
Car Allowance
Royalties
Rent Expense
Telephone
Postage & Supplies
Advertising
Misc.
Travel
Directors Fees
Depreciation
Allocation to Hydromer (J.P.)
Allocation to Hydromer (J.N.)
Total Sales & General Administrative Expense 3366873.24 3703560.56 4073916.62 4481308.28 4929439.1
Depreciation
Computation of Present value of NOL to Biosearch:
Income before state and federal income taxes 2,195,787 2,415,366 2,656,902 2,922,592 3,214,852
State income taxes @9% 197,621 217,383 239,121 263,033 289,337
Income before federal income taxes 1,998,166 2,197,983 2,417,781 2,659,559 2,925,515
Federal income taxes @34% 679,376 747,314 822,046 904,250 994,675
Tax benefit of NOL 0 0 0 0 0
PVIF @ 30.0% 0.0222752 0.0171348 0.0131806 0.0101389 0.0077992
Present value of tax benefits of NOL 0 0 0 0 0
Sum of present values of tax benefits
Net Income 1318789.61 1450668.57 1595735.43 1755308.97 1930839.86
Plus:
Rent 0 0 0 0 0
Depreciation 220,000 230,000 240,000 250,000 260,000
Less: Addition to net working capital 429,729 472,702 519,972 571,969 629,166
Capital expenditures 240,000 250,000 260,000 270,000 280,000
Net Working Capital 4,727,016 5,199,718 5,719,690 6,291,659 6,920,825
Free cash flow $869,061 $957,967 $1,055,764 $1,163,340 $1,281,674
Present value interest factor @ 30.0% 0.02227519 0.01713476 0.01318059 0.01013891 0.00779916
Present value of free cash flows $19,358 $16,415 $13,916 $11,795 $9,996
Sum of present values
Less: Change of Control Liabilities
Enterprise value
1.1 1.1 1.1
2018 2019 2020
Total Revenue $23,575,578 $25,933,136 $28,526,450
Growth Rate
Material Cost 5,893,895 6,483,284 7,131,612
Direct Labor 3,300,581 3,630,639 3,993,703
Overhead
Manufacturing
Extrusion
Maintenance
Warehouse/Purchasing
Manufacturing Engineering
Quality Assurance
Building & Utilities
Other
Total Overhead 5,422,383 5,964,621 6,561,083
Sales & General Administrative
Payroll & Benefits NA NA NA
Insurance
Professional Fees
Financial Reporting
Car Allowance
Royalties
Rent Expense
Telephone
Postage & Supplies
Advertising
Misc.
Travel
Directors Fees
Depreciation
Allocation to Hydromer (J.P.)
Allocation to Hydromer (J.N.)
Total Sales & General Administrative Expense 5422383.01 5964621.32 6561083.45
Depreciation
Computation of Present value of NOL to Biosearch:
Income before state and federal income taxes 3,536,337 3,889,970 4,278,867
State income taxes @9% 318,270 350,097 385,107
Income before federal income taxes 3,218,066 3,539,873 3,893,860
Federal income taxes @34% 1,094,143 1,203,557 1,323,913
Tax benefit of NOL 0 0 0
PVIF @ 30.0% 0.0059994 0.0046149 0.0035499
Present value of tax benefits of NOL 0 0 0
Sum of present values of tax benefits
Net Income 2123923.85 2336316.24 2569947.86
Plus:
Rent 0 0 0
Depreciation 270,000 280,000 290,000
Less: Addition to net working capital 692,082 761,291 837,420
Capital expenditures 290,000 300,000 310,000
Net Working Capital 7,612,907 8,374,198 9,211,618
Free cash flow $1,411,841 $1,555,026 $1,712,528
Present value interest factor @ 30.0% 0.00599936 0.00461489 0.00354991
Present value of free cash flows $8,470 $7,176 $6,079
Sum of present values
Less: Change of Control Liabilities
Enterprise value
Biosearch Medical Products, Inc.
Discounted Cash Flow Analysis
1.3078635
1999 2000 2001
Total Revenue $1,855,300 $2,696,000 $3,526,000
Growth Rate
Material Cost 463,825 598,512 881,500
25% 22% 25%
Direct Labor 212,500 296,560 476,010
11% 11% 14%
Overhead
Manufacturing 204,000 249,000 300,000
Extrusion 0 0 0
Maintenance 11,550 70,000 75,000
Warehouse/Purchasing 44,000 62,500 65,500
Manufacturing Engineering 0 62,500 65,500
Quality Assurance 57,000 125,500 156,000
Building & Utilities 55,000 60,000 100,000
Other 50,000 75,000 200,000
Total Overhead 421,500 704,500 962,000
23% 26% 27%
Sales & General Administrative
Payroll & Benefits 473,000 570,000 593,000
Insurance 80,000 80,000 85,000
Professional Fees 30,000 35,000 35,000
Financial Reporting 15,000 15,000 15,000
Car Allowance 20,000 20,000 20,000
Royalties 0 0 0
Rent Expenses 98,000 98,000 120,000
Telephone 20,000 20,000 25,000
Postage & Supplies 25,000 25,000 30,000
Advertising 10,000 10,000 20,000
Misc. 10,000 10,000 20,000
Travel 5,000 10,000 25,000
Directors Fees 40,000 40,000 45,000
Depreciation 50,577 72,577 98,577
Allocation to Hydromer (J.P) (20,450) (22,500) (23,600)
Allocation to Hydromer (J.N) (24,500) (26,950) (28,300)
Total Sales & General Administrative Expense 831,627 956,127 1,079,677
45% 34% 29%
Depreciation 50,577 72,577 96,577
Computation of Present value of NOL to Biosearch:
Income before state and federal income taxes (74,152) 140,301 128,813
State income taxes @ 9% 0 0 0
Income before federal income taxes (74,152) 140,301 128,813
Federal income taxes @ 34% 0 0 0
Tax benefit of NOL 47,702 43,796
PVIF @ 25% 0.7155418 0.5724334
Present value of tax benefits of NOL 34,133 25,070
--------
Sum of present values of tax benefits $538,343
--------
Net Income (74,152) 140301 128813
Plus:
Rent 98,000 98,000 49,000
Depreciation 50,577 72,577 96,577
Less: Addition to net working capital 200,000 270,000 269,700
Capital expenditures 100,000 110,000 120,000
Net Working Capital 600,000 870,000 1,139,700
Free cash flow ($225,649) ($68,982) ($115,181)
Present value interest factor @ 25% 0.8944272 0.7155418 0.5724334
Present value of free cash flows ($201,827) ($49,360) ($65,933)
Sum of present values $993,011
Less Change of Control Liabilities 135,000
--------
Enterprise value $858,011
--------
1.1914351 1.1547251 1.1500722 1.15 1.15
2002 2003 2004 2005 2006
Total Revenue $4,201,000 $4,851,000 $5,578,650 $6,415,448 $7,377,765
Growth Rate
Material Cost 1,050,250 1,212,750 1,394,663 1,603,862 1,844,441
25% 25%
Direct Labor 567,135 654,885 781,011 898,163 1,032,887
14% 14%
Overhead
Manufacturing 326,000 357,000
Extrusion 0 0
Maintenance 75,000 75,000
Warehouse/Purchasing 69,000 72,300
Manufacturing Engineering 69,000 72,300
Quality Assurance 164,000 173,000
Building & Utilities 100,000 100,000
Other 200,000 200,000
Total Overhead 1,003,000 1,049,600 1,283,090 1,475,553 1,696,886
24% 22%
Sales & General Administrative
Payroll & Benefits 616,000 641,000 NA NA NA
Insurance 90,000 90,000
Professional Fees 35,000 30,000
Financial Reporting 15,000 15,000
Car Allowance 20,000 20,000
Royalties 0 0
Rent Expenses 120,000 120,000
Telephone 25,000 25,000
Postage & Supplies 30,000 30,000
Advertising 30,000 30,000
Misc. 30,000 30,000
Travel 25,000 25,000
Directors Fees 45,000 45,000
Depreciation 122,577 150,577
Allocation to Hydromer (J.P) (20,450) (20,450)
Allocation to Hydromer (J.N) (24,500) (24,500)
Total Sales & General Administrative Expense 1,158,627 1,206,627 1,283,090 1,475,553 1,696,886
26% 23%
Depreciation 122,577 150,577
Computation of Present value of NOL to Biosearch:
Income before state and federal income taxes 421,988 727,138 836,798 962,317 1,106,665
State income taxes @ 9% 0 9,000 75,312 86,609 99,600
Income before federal income taxes 421,988 718,138 761,486 875,709 1,007,065
Federal income taxes @ 34% 0 0 0 0 0
Tax benefit of NOL 143,476 244,167 258,905 297,741 342,402
PVIF @ 25% 0.4579467 0.3663574 0.2930859 0.2344687 0.1875750
Present value of tax benefits of NOL 65,704 89,452 75,881 69,811 64,226
Sum of present values of tax benefits
Net Income 421988 718138 761485.73 875708.58 1007064.9
Plus:
Rent 0 0 0 0 0
Depreciation 122,577 150,577 130,000 140,000 150,000
Less: Addition to net working capital 216,543 210,218 234,969 270,214 310,747
Capital expenditures 130,000 140,000 150,000 160,000 170,000
Net Working Capital 1,356,243 1,566,461 1,801,430 2,071,644 2,382,391
Free cash flow $198,444 $519,128 $507,410 $586,521 $676,318
Present value interest factor @ 25% 0.4579467 0.3663574 0.2930589 0.2344687 0.187575
Present value of free cash flows $90,877 $190,186 $148,715 $137,521 $126,860
Sum of present values
Less Change of Control Liabilities
Enterprise value
1.12 1.1 1.1 1.1 1.1
2007 2008 2009 2010 2011
Total Revenue $8,263,096 $9,089,406 $9,998,347 $10,998,181 $12,097,999
Growth Rate
Material Cost 2,065,774 2,272,352 2,499,587 2,749,545 3,024,500
Direct Labor 1,156,833 1,272,517 1,399,769 1,539,745 1,693,720
Overhead
Manufacturing
Extrusion
Maintenance
Warehouse/Purchasing
Manufacturing Engineering
Quality Assurance
Building & Utilities
Other
Total Overhead 1,900,512 2,090,563 2,299,620 2,529,582 2,782,540
Sales & General Administrative
Payroll & Benefits NA NA NA NA NA
Insurance
Professional Fees
Financial Reporting
Car Allowance
Royalties
Rent Expenses
Telephone
Postage & Supplies
Advertising
Misc.
Travel
Directors Fees
Depreciation
Allocation to Hydromer (J.P)
Allocation to Hydromer (J.N)
Total Sales & General Administrative Expense 1,900,512 2,090,563 2,299,620 2,529,582 2,782,540
Depreciation
Computation of Present value of NOL to Biosearch:
Income before state and federal income taxes 1,239,464 1,363,411 1,499,752 1,649,727 1,814,700
State income taxes @ 9% 111,552 122,707 134,978 148,475 163,323
Income before federal income taxes 1,127,913 1,240,704 1,364,774 1,501,252 1,651,377
Federal income taxes @ 34% 0 0 402,823 510,426 561,468
Tax benefit of NOL 383,490 421,839 61,200 0 0
PVIF @ 25% 0.15000600 0.1200480 0.0960384 0.0768307 0.0614646
Present value of tax benefits of NOL 57,547 50,641 5,878 0 0
Sum of present values of tax benefits
Net Income 1127912.7 1240703.9 961951.31 990826.152 1089908.77
Plus:
Rent 0 0 0 0 0
Depreciation 160,000 170,000 180,000 190,000 200,000
Less: Addition to net working capital 285,886 266,828 293,511 322,862 355,148
Capital expenditures 180,000 190,000 200,000 210,000 220,000
Net Working Capital 2,668,277 2,935,105 3,228,616 3,551,477 3,906,625
Free cash flow $822,027 $953,876 $648,441 $647,965 $714,761
Present value interest factor @ 25% 0.15006 0.120048 0.096384 0.07683071 0.06146457
Present value of free cash flows $123,353 $114,511 $62,275 $49,784 $43,932
Sum of present values
Less Change of Control Liabilities
Enterprise value
1.1 1.1 1.1 1.1 1.1
2012 2013 2014 2015 2016
Total Revenue $13,307,799 $14,638,579 $18,102,437 $17,712,681 $19,483,949
Growth Rate
Material Cost 3,326,950 3,659,645 4,025,609 4,428,170 4,870,987
Direct Labor 1,863,092 2,049,401 2,254,341 2,479,775 2,727,753
Overhead
Manufacturing
Extrusion
Maintenance
Warehouse/Purchasing
Manufacturing Engineering
Quality Assurance
Building & Utilities
Other
Total Overhead 3,060,794 3,366,873 3,703,561 4,073,917 4,481,308
Sales & General Administrative
Payroll & Benefits NA NA NA NA NA
Insurance
Professional Fees
Financial Reporting
Car Allowance
Royalties
Rent Expenses
Telephone
Postage & Supplies
Advertising
Misc.
Travel
Directors Fees
Depreciation
Allocation to Hydromer (J.P)
Allocation to Hydromer (J.N)
Total Sales & General Administrative Expense 3,060,794 3,366,873 3,703,561 4,073,917 4,481,308
Depreciation
Computation of Present value of NOL to Biosearch:
Income before state and federal income taxes 1,996,170 2,195,787 2,415,366 2,656,902 2,922,592
State income taxes @ 9% 179,655 197,621 217,383 239,121 263,033
Income before federal income taxes 1,816,515 1,998,166 2,197,983 2,417,781 2,659,559
Federal income taxes @ 34% 617,615 679,376 747,314 822,046 904,250
Tax benefit of NOL 0 0 0 0 0
PVIF @ 25% 0.0491717 0.0393373 0.0314699 0.0251759 0.0201407
Present value of tax benefits of NOL 0 0 0 0 0
Sum of present values of tax benefits
Net Income 1198899.64 1318789.61 1450668.57 1595735.43 1755308.97
Plus:
Rent 0 0 0 0 0
Depreciation 210,000 220,000 230,000 240,000 250,000
Less: Addition to net working capital 390,663 429,729 472,702 519,972 571,969
Capital expenditures 230,000 240,000 250,000 260,000 270,000
Net Working Capital 4,297,288 4,727,016 5,199,718 5,719,690 6,291,659
Free cash flow $788,237 $869,061 $957,967 $1,055,764 $1,163,340
Present value interest factor @ 25% 0.04917185 0.03933732 0.03146986 0.02517589 0.02014071
Present value of free cash flows $38,759 $34,187 $30,147 $26,580 $23,430
Sum of present values
Less Change of Control Liabilities
Enterprise value
1.1 1.1 1.1 1.1
2017 2018 2019 2020
Total Revenue $21,432,344 $23,575,578 $25,933,138 $28,526,450
Growth Rate
Material Cost 5,358,086 5,893,895 6,483,284 7,131,012
Direct Labor 3,000,528 3,300,581 3,630,639 3,993,703
Overhead
Manufacturing
Extrusion
Maintenance
Warehouse/Purchasing
Manufacturing Engineering
Quality Assurance
Building & Utilities
Other
Total Overhead 4,929,439 5,422,383 5,964,621 6,561,065
Sales & General Administrative
Payroll & Benefits NA NA NA NA
Insurance
Professional Fees
Financial Reporting
Car Allowance
Royalties
Rent Expenses
Telephone
Postage & Supplies
Advertising
Misc.
Travel
Directors Fees
Depreciation
Allocation to Hydromer (J.P)
Allocation to Hydromer (J.N)
Total Sales & General Administrative Expense 4,929,439 5,422,383 5,964,621 6,561,083
Depreciation
Computation of Present value of NOL to Biosearch:
Income before state and federal income taxes 3,214,852 3,536,337 3,889,970 4,278,967
State income taxes @ 9% 289,337 318,270 350,097 385,107
Income before federal income taxes 2,925,515 3,218,066 3,539,873 3,893,860
Federal income taxes @ 34% 994,675 1,094,143 1,203,557 1,323,913
Tax benefit of NOL 0 0 0 0
PVIF @ 25% 0.0161126 0.0128901 0.0103120 0.0082496
Present value of tax benefits of NOL 0 0 0 0
Sum of present values of tax benefits
Net Income 1930839.86 2123923.85 2336316.24 2569947.86
Plus:
Rent 0 0 0 0
Depreciation 260,000 270,000 280,000 290,000
Less: Addition to net working capital 629,166 692,082 761,291 837,420
Capital expenditures 280,000 290,000 300,000 310,000
Net Working Capital 6,920,825 7,612,907 8,374,198 9,211,618
Free cash flow $1,281,674 $1,411,841 $1,555,026 $1,712,528
Present value interest factor @ 25% 0.01811257 0.01289005 0.01031204 0.00824963
Present value of free cash flows $20,651 $18,199 $16,035 $14,128
Sum of present values
Less Change of Control Liabilities
Enterprise value
Biosearch Medical Products, Inc.
Comparative Income Statements for the Years Ended December 31, 1993-1998
and at for the Three Months Ended
March 31,1998-1999.
Exhibit B
1993 1994 1995 1996
Revenues $3,793,670 $3,573,877 $3,268,220 $2,648,719
Cost of goods sold 2,916,187 2,909,482 2,777,747 2,238,606
-----------------------------------------------------------
Gross profit 877,483 664,395 490,473 410,113
Selling, general and administrative expenses 1,600,619 1,451,966 1,332,497 1,222,901
-----------------------------------------------------------
Operating profit (loss) (723,136) (787,571) (842,024) (812,788)
Other income (expense)
Interest expense, net (204,616) (98,902) (30,426) (72,055)
Sale of Assets-Certain Business Groups 0 3,328,765 0 0
Other, net 683,930 454,291 28,818 1,275
-----------------------------------------------------------
Total other income (expense) 479,314 3,684,154 (1,608) (70,780)
Income (Loss) from operations before
extraordinary item (243,822) (2,896,583) (843,632) (883,568)
Extraordinary items: 0 114,000 0 0
Gain (loss) on retirement of debt
Federal income taxes 0 (60,000) 0 0
Net income (loss) ($243,822) $2,950,583 ($843,632) ($883,568)
=========================================================
1997 1998 03/31/98 03/31/99
Revenues $1,936,171 $1,294,838 $604,117 $218,401
Cost of goods sold 1,536,936 1,271,216 430,102 214,206
-------------------------------------------------------
Gross profit 399,235 23,622 174,015 4,195
Selling, general and administrative expenses 892,602 859,077 202,018 195,230
-------------------------------------------------------
Operating profit (loss) (493,367) (835,455) (28,003) (191,035)
Other income (expense)
Interest expense, net (84,441) (22,427) (20,885) 0
Sale of Assets-Certain Business Groups 0 0 0 191,259
Other, net 21,598 6,906 1,887 400,167
-------------------------------------------------------
Total other income (expense) (62,843) (15,521) (18,998) 591,426
Income (Loss) from operations before
extraordinary item (556,210) (850,976) (47,001) 400,391
Extraordinary items: 0 0 0 0
Gain (loss) on retirement of debt
-------------------------------------------------------
Federal income taxes 0 0 0 0
Net income (loss) ($556,210) ($850,976) ($47,001) $400,391
=======================================================
BIOSEARCH MEDICAL PRODUCTS, INC.
COMPARABLE COMPANY ANALYSIS
PRICING AS OF March 199,1999
Exhibit 4
Net Working
PRICE/ PRICE/LTM PRICE/LTM EBITDA/ EBITDA/ Capital/
BOOK VALUE REVENUES EBITDA BOOK VALUE REVENUES Revenues
(A) (B) (C) (D) (E) (F)
COMPARABLE COMPANY
ABIOMED, INC. (ABMD) 2.90 3.60 NM -20.30% -30.06% 1.09
ADVANCED NEUROMODULATION SYSTEMS (ANSI) 1.60 3.50 11.80 11.96% 29.35% 0.88
ALARIS MEDICAL, INC. (ALRS) 1.40 2.00 8.30 19.34% 24.72% 0.36
APPLIED IMAGING CORP. (AICX) 0.83 1.00 NM -89.33% -68.39% 1.02
ARROW INTERNATIONAL, INC. (ARRO) 1.90 2.20 7.00 27.89% 30.99% 0.38
BALLARD MEDICAL PRODUCTS, INC. (BMP) 4.10 6.20 16.80 25.51% 36.63% 0.85
BARD (C.R.), INC. (BCR) 3.50 2.90 15.90 21.29% 17.94% 0.07
BAXTER INTERNATIONAL INC. (BAX) 3.90 3.60 14.10 30.05% 25.36% 0.23
BIONIX IMPLANTS, INC. (BINX) 1.70 2.60 25.90 6.80% 10.06% 1.24
BOSTON SCIENTIFIC CORP. (BSX) 3.20 7.00 20.30 35.97% 34.28% -0.82%
EP MEDISYSTEMS, INC. (EPMD) 3.60 4.30 NM -48.97% -50.41% 0.98
FOCAL, INC. (FOCL) 3.80 10.30 NM -3.60% -11.86% 2.34
GISH BIOMEDICAL, INC. (GISH) 0.59 0.50 29.0 1.77% 1.73% 0.71
GUIDANT CORP. (GDT) 9.00 5.10 17.50 63.39% 28.63% 0.06
HAEMONETICS CORP.(HAE) 1.70 1.80 9.40 19.23% 18.86% 0.56
HENLEY HEALTHCARE, INC.(HENL) 1.20 1.50 NM -5.14% -3.31% -0.09%
ICU MEDICAL, INC. (ICUI) 2.60 3.90 12.40 58.70% 31.07% 1.10
KENSEY NASH CORP. (KNSY) 3.50 6.10 69.80 5.07% 8.77% 0.83
MEDAMICUS, INC. (MEDM) 1.90 0.83 17.50 13.56% 4.73% 0.24
MERIDAN MED TECHNOLOGIES, INC. (MTEC) 1.00 0.96 9.30 12.14% 10.41% 0.14
MERIT MEDICAL SYSTEMS, INC. (MMSI) 1.40 0.80 6.90 21.71% 11.69% 0.22
MINNTECH CORP. (MNTX) 1.68 1.07 6.58 28.77% 16.30% 0.41
NITINOL MEDICAL TECHNOLOGY, INC. (NMTI) 1.40 3.20 64.10 3.25% 4.92% 1.07
ORTHOLOGIC CORP. (OLGC) 1.20 1.10 NM -11.45% -12.66% 0.49
OXBORO MEDICAL INTERNATIONAL, INC. (OMED) 8.40 6.10 NM -42.19% -23.93% 0.33
ROCHESTER MEDICAL CORP. (ROCM) 1.70 5.60 NM -7.53% -24.47% 2.00
STRYKER CORP. (SYK) 6.60 5.10 15.00 51.09% 34.07% 0.52
US SURGICAL CORP. (USS) 1.90 2.80 13.80 18.59% 20.27% 0.37
VITAL SIGNS, INC. (VITL) 1.90 1.80 9.90 18.84% 18.08% 0.28
UTAH MEDICAL PRODUCTS, INC. (UM) 1.80 2.10 6.70 29.71% 30.70% 0.37
VENTANA MEDICAL SYSTEMS, INC. (VMSI) 5.60 6.40 101.70 6.29% 6.30% 0.81
VIVUS, INC. (VVUS) 6.20 1.30 NM -23.82% -30.58% -0.07%
MEDIAN 1.90 2.85 9.65 12.85% 11.05% 44.88%
MEAN 2.93 3.35 15.93 8.71% 6.26% 59.30%
STANDARD DEVIATION 2.11 2.29 22.16 30.27% 25.59% 59.27%
COEFFICIENT OF VARIATION 0.72 0.68 1.39 3.48 4.06
(A) MARKET VALUE OF TOTAL INVESTED CAPITAL DIVIDED BY BOOK VALUE OF TOTAL
INVESTED CAPITAL.
(B) MARKET VALUE OF TOTLA INVESTED CAPITAL DIVIDED BY REVENUES RECOGNIZED
DURING THE LATEST TWELVE MONTHS, AS REPORTED IN SEC FILINGS.
(C) MARKET VALUE OF TOTAL INVESTED CAPITAL DIVIDED BY EARNINGS BEFORE INTEREST,
TAXES, DEPRECIATION AND AMORTIZATION AND EXTRAORDINARY!
(D) EARNINGS BEFORE INTERST TAXES DEPRECIATION AND AMORTIZATION DIVIDED BY THE
BOOK VALUE OF TOTAL INVESTED CAPITAL.
(E) EARNINGS BEFORE INTEREST TAXES DEPRECIATION AND AMORTIZATION DIVIDED BY
REVENUES.
(F) NET WORKING CAPITAL (CURRENT ASSETS MINUS CURRENT LIABILITIES) DIVIDED BY
REVENUES.
Biosearch Medical Products, Inc.
Data Relating to Sales, Mergers, and Acquisitions
of Companies in the Surgical Instruments and Equipment Industry
EXHIBIT 5
Date of Price/ Price/ Price/ EBITDA/ EBITDA/
Name of Target Transaction Book Value Revenues EBITDA Book Value Revenues
Venture Medical, Inc. 02/09/98 0.54 0.47 1.67 31.80% 27.98%
Equidyne Systems, Inc. 05/11/98 NM NM NM NM NM
Elekta Neuro-surgical Instruments 07/08/98 NA 0.89 NM NA -5.03%
Ideas for Medicine, Inc. 09/30/98 NA 2.70 NA NA NA
Norfolk Medical Products, Inc. 06/02/98 NA 3.67 NA NA NA
NA 01/30/98 1.71 1.71 15.21 11.27% 11.23%
Edward Weck, Inc. of Bristol-Meyers Squibb 12/21/93 NA 1.01 NA NA NA
Intervention Therapeutics Corp. 04/29/96 NA 6.99 NA NA NA
Master Medical Corporation 05/22/95 NA 1.15 4.99 NA 23.01%
Microgyn, Inc. 10/29/96 NA NM NM NM NM
X-Cardia 02/28/97 NA NA NA NA NA
Neuromed, Inc. 03/31/95 NA 2.69 NA NA NA
Median 1.13 1.71 4.99 21.54% 17.12%
Mean 1.13 2.36 7.29 21.54% 14.30%
Source Pratt's Stats, Inc.
Exhibit 6
Biosearch Medical Products, Inc.
Discounted Cash Flow Analysis
Valuation Summary
(A) Projected free cash flows discounted at 35%: $275,361, or $0.125 per share
Under this scenario, NOL has present value to Company of $349,551.
(B) Projected free cash flows discounted at 30%: $503,554, or $0.229 per share.
Under this scenario, NOL has present value to Company of $430,000.
(C) Projected free cash flows discounted at 25%: $858,011, or $0.391 per share.
Under this scenario, NOL has present value to Company of $538,343.
Exhibit 7
Biosearch Medical Products, Inc.
Market Comparable Analysis
Valuation Summary
(A) Public Companies - Medical Instrumentation
(1) Median Price/Revenue Ratio: 2.85
(a) Appropriate ratio near low end of range: .75
(b) Preliminary indicated value: $971,129
Less: Required working capital: (200,000)
Indicated value: $771,129
(2) Median Price/Book Value: 1.90
(a) Appropriate ratio near low end of range: 1.00
(b) Preliminary indicated: $489,561
Less: Required working capital: (200,000)
Indicated value: $289,561
(3) Average of (1) and (2) $530,345, or $0.242
per share.
Quality of data: FAIR
Exhibit 8
Biosearch Medical Products, Inc.
Market Comparable Analysis
Valuation Summary
(A) Market Value Ratios Derive from Sale/Merger Transactions
(1) Median Price/Revenue Ratio: 1.71
(a) Appropriate ratio near low end of range- .65
(b) Preliminary indicated value: $841,645
Less: Required working capital: (200,000)
Indicated value: $641,645
(2) Median Price/Book Value: 1.13
(a) Appropriate ratio at low end of range: .54
(b) Preliminary indicated value: $264,363
Less: Required working capital: (200,000)
Indicated value: $ 64,363
(3) Average of (1) and (2): $353,004, or $0.161
per share.
Quality of data: POOR
Biosearch Medical Products, Inc. Exhibit 9
Liquidating Value Analysis
March 31, 1999 Balance Sheet
ASSETS
Current Assets:
Cash and cash equivalents $ 49,157
Accounts receivable @85% 94,903
Inventories @50% 164,914
Other current assets 235,908
--------
Total current assets 544,882
Property, plant & equipment 250,000
--------
Total assets $794,882
========
Liabilities and Stockholders' Equity
Current Liabilities $330,000
Change of control obligations 135,000
--------
Total liabilities 465,000
--------
Estimated Liquidating Value $329,882
========
Per share $ 0.150
Exhibit 10
Biosearch Medical Products, Inc.
Valuation Recap.
Aggregate Value Per Share
(A) DCF Analysis
(1) 35% Discount Rate: $275,361 $0.125
(2) 30% Discount Rate: $503,554 $0.229
(3) 25% Discount Rate: $858,011 $0.391
(B) Public Comparables $530,345 $0.242
(C) Sale/Merger Transactions $353,004 $0.161
(D) Liquidating Value Analysis $329,882 $0.150
Median $428,279 $0.195
Mean $475,026 $0.216
Note: No consideration given to effect on per share value of stock option
exercise.
Exhibit 11
Biosearch Medical Products, Inc.
Cash Flow Forecast
April May June July August December
Cash and cash equivalents $ 50,000 $ 13,500 $ 0 $ 9,500 ($ 8,000) ($ 3,500)
Cash proceeds:
Accounts receivable $ 100,000 $ 125,000 $ 160,000 $ 165,000 $ 165,000 $ 170,000
Cash out:
Payroll and benefits $ 62,000 $ 64,000 $ 64,000 $ 96,000 $ 64,000 $ 64,000
Accounts payable $ 50,000 $ 50,000 $ 60,000 $ 60,000 $ 70,000 $ 70,000
Accounts payable-Med & Dent. $ 15,000 $ 15,000 $ 15,000 $ 15,000 $ 15,000 $ 15,000
Accounts payable-Comm. Insur $ 5,000 $ 5,000 $ 7,000 $ 7,000 $ 7,000 $ 7,000
Accounts payable-Building Expense $ 4,500 $ 4,500 $ 4,500 $ 4,500 $ 4,500 $ 5,000
Total cash out $ 136,500 $ 138,500 $ 150,500 $ 182,500 $ 160,500 $ 161,000
Net cash $ 13,500 $ 0 $ 9,500 ($ 8,000) ($ 3,500) $ 5,000
Note: Provided by management.