Business Estimates Year Ending 12/31/2008 12/31/2009 12/31/2010 12/31/2011 12/31/2012 12/31/2013 12/31/2014 12/31/2015 12/31/2016 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 Cost of Goods S & GA 25,000 60,000 55,000 85,000 379,340 288,000 96,000 404,941 1,402,000 757,116 484,179 4,146,000 1,275,534 712,961 6,409,000 1,990,003 849,274 9,664,000 2,843,874 1,060,333 16,458,000 4,601,369 1,815,185 27,222,000 7,468,645 2,450,326 40,215,000 12,407,085 2,824,762 73,500,000 22,478,439 4,585,800 111,930,000 35,476,817 6,312,639 166,117,000 54,467,432 9,351,243 243,511,100 82,788,818 13,770,406 Sales R&D 452,265 520,880 848,957 1,275,024 1,503,516 1,149,289 1,761,529 1,571,553 1,754,232 1,976,364 1,477,638 1,689,590 2,110,801 2,592,916 3,257,506 4,189,953
Purple denotes items that user should enter
Green denotes items of special interest
Valuate
Valuate is a Microsoft Excel™ spreadsheet template for establishing a reasonable royalty rate and license issue fee in licensing arrangements. The template was developed in 1993 and last modified February, 2000 by Martha Luehrmann for the University of California. This spreadsheet template may be used and duplicated by anyone as long as (1) this entire paragraph is appended to all copies of this spreadsheet template and (2) the similar paragraph found at the beginning of the accompanying Valuate documentation remains attached to any copy of the documentation. The template is provided “as is” and neither Martha Luehrmann nor the Regents of the University of California are responsible for any errors, omissions, or any consequences thereof. The Regents of the University of California gives no warranty of merchantability or of fitness for a particular purpose, and The Regents has no obligation to provide any support for this product. If you add an improvement or encounter a problem, I would appreciate hearing about it. For problems or suggestions contact Martha Luehrmann at 1466 Grizzly Peak Blvd., Berkeley, CA 94708, telephone 510-548-7239, email MarthaL@california.com
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License Agreement Terms License issue fee= 370,880 Maintenance fee amount= 25,000 Minimum royalty on sales= 50,000 Royalty Rate= 10.0%
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4 4 9 16 25 36 49
8 8 27 64 125 216 343
16 16 81 256 625 1296 2401
NPV Risk Discount Rate Year Ending 12/31/2008 12/31/2009 12/31/2010 12/31/2011 12/31/2012 12/31/2013 12/31/2014 12/31/2015 12/31/2016 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 Cost of capital Risk 50% 16% 16% 9% 9% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 10% Total Discount Rate 60% 26% 26% 19% 19% 12% 12% 12% 12% 12% 12% 12% 12% 12% 12% 12% 12%
Valuation Model for Tech Transfer Lic Martha Luehrmann, 2/18/00 Year Ending 12/31/2008 12/31/2009 risk discount rate 50% 16% cost of capital discount rate 10% 10% total discount rate 60% 26% NPV factor 0.625 .496 Sales COG royalty gross margins SG&A R&D lic iss fee min roy paymnt maint fee tot fixed exp net pre tax cum net pre tax NPV of net inc cum NPV of net 0 0 0 25,000 0 370,880 0 0 0 60,000 452,265 12/31/2010 12/31/2011 12/31/2012 12/31/2013 16% 9% 9% 2% 10% 10% 10% 10% 26% 19% 19% 12% .394 .331 .278 .248 0 0 0 55,000 520,880 0 0 0 85,000 848,957 0 0 0 379,340 1,275,024 288,000 96,000 28,800 163,200 404,941 1,503,516
395,880 (395,880) (395,880) (247,425) (247,425)
25,000 537,265 (537,265) (933,145) (266,500) (513,925)
21,200 25,000 25,000 25,000 600,880 958,957 1,679,364 1,929,657 (600,880) (958,957) (1,679,364) (1,766,457) (1,534,025) (2,492,982) (4,172,346) (5,938,803) (236,552) (317,242) (466,863) (438,460) (750,478) (1,067,720) (1,534,583) (1,973,043) 12/31/2010 25,000 484,233 9,842 293,638 12/31/2011 12/31/2012 12/31/2013 25,000 25,000 50,000 509,233 534,233 584,233 8,271 6,950 12,411 301,909 308,859 321,269 (933,957) (1,654,364) (1,716,457) (233,489) (413,591) (429,114) (77,243) (114,978) (106,512) 0.0% 0.0% 0.0%
Year Ending 12/31/2008 12/31/2009 tot to Univ 434,233 25,000 cum tot to Univ 434,233 459,233 NPV to Univ 271,396 12,401 cum NPV to Univ 271,396 283,796 net pre tax if roy = 0 amt that should go to univ (1/4 of above) implied lic iss fee (NPV of amt that should go to univ) implied royalty rate
Tech Transfer Licensing hrmann, 2/18/00 12/31/2014 12/31/2015 12/31/2016 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 2% 2% 2% 2% 2% 2% 2% 2% 10% 10% 10% 10% 10% 10% 10% 10% 12% 12% 12% 12% 12% 12% 12% 12% .222 .198 .177 .158 .141 .126 .112 .100 1,402,000 757,116 140,200 504,684 484,179 1,149,289 4,146,000 1,275,534 414,600 2,455,866 712,961 1,761,529 6,409,000 1,990,003 640,900 3,778,097 849,274 1,571,553 9,664,000 2,843,874 966,400 5,853,726 1,060,333 1,754,232 16,458,000 4,601,369 1,645,800 10,210,831 1,815,185 1,976,364 27,222,000 7,468,645 2,722,200 17,031,155 2,450,326 1,477,638 40,215,000 12,407,085 4,021,500 23,786,415 2,824,762 1,689,590 73,500,000 22,478,439 7,350,000 43,671,561 4,585,800 2,110,801
1,633,468 2,474,490 2,420,827 2,814,565 (1,128,784) (18,624) 1,357,270 3,039,161 (7,067,587) (7,086,211) (5,728,941) (2,689,780) (250,161) (3,685) 239,794 479,412 (2,223,204) (2,226,890) (1,987,095) (1,507,684)
3,791,549 3,927,964 6,419,282 13,103,191 3,729,502 16,832,693 904,114 1,647,767 (603,569) 1,044,198
4,514,352 19,272,063 36,104,756 2,163,859 3,208,058
6,696,601 36,974,960 73,079,716 3,706,726 6,914,784 12/31/2021 7,350,000 18,485,833 736,835 2,462,547 44,324,960 11,081,240 1,110,890 15.1%
12/31/2014 12/31/2015 12/31/2016 12/31/2017 12/31/2018 12/31/2019 12/31/2020 140,200 414,600 640,900 966,400 1,645,800 2,722,200 4,021,500 724,433 1,139,033 1,779,933 2,746,333 4,392,133 7,114,333 11,135,833 31,071 82,039 113,230 152,445 231,800 342,325 451,532 352,341 434,380 547,610 700,054 931,855 1,274,180 1,725,712 (988,584) 395,976 1,998,170 4,005,561 8,065,082 15,825,391 23,293,563 (247,146) 98,994 499,543 1,001,390 2,016,271 3,956,348 5,823,391 (54,772) 19,588 88,256 157,964 283,979 497,523 653,848 0.0% 2.4% 7.8% 10.4% 12.3% 14.5% 14.5%
12/31/2022 2% 10% 12% .090 111,930,000 35,476,817 11,193,000 65,260,183 6,312,639 2,592,916
12/31/2023 2% 10% 12% .080 166,117,000 54,467,432 16,611,700 95,037,868 9,351,243 3,257,506
12/31/2024 2% 10% 12% .071 243,511,100 82,788,818 24,351,110 136,371,172 13,770,406 4,189,953
8,905,555 56,354,628 129,434,344 5,044,224 11,959,008 12/31/2022 11,193,000 29,678,833 1,001,870 3,464,417 67,547,628 16,886,907 1,511,523 15.1%
12,608,749 82,429,119 211,863,463 6,587,603 18,546,611
17,960,359 118,410,813 330,274,276 8,449,288 26,995,898
12/31/2023 12/31/2024 16,611,700 24,351,110 46,290,533 70,641,643 1,327,580 1,737,591 4,791,997 6,529,588 99,040,819 142,761,923 24,760,205 35,690,481 1,978,796 2,546,720 14.9% 14.7%
Effect on % to Univ. and 16th year cum. of varying roy Univ Co. Roy Rate share share as above 10.0% 70,641,643 330,274,276 plus 20% 12.0% 84,653,125 316,262,794 plus 10% 11.0% 77,647,384 323,268,535 minus 10% 9.0% 63,635,902 337,280,017 minus 20% 8.0% 56,630,161 344,285,758 0.0% 0.0% 1,434,233 399,481,686 for NPV = 0 53.4% 375,088,141 25,827,777
% Univ share 18% 21% 19% 16% 14% 0% 94%
IRR to Co. 44% 43% 44% 44% 45% 47% 13%
Cum NPV to Univ by yr 16 6,529,588 7,771,252 7,150,420 5,908,756 5,287,924 438,011 33,525,486 Cum NPV to Univ by yr 16 6,529,588 6,575,948 6,552,768 6,506,408 6,483,228 6,297,788 33,525,486 Cum NPV to Univ by yr 16 6,529,588 2,171,310 3,661,922 8,891,695 12,261,320 24,190,050 489,443
Effect on % to Univ. and 16th year cum. of varying lic iss fee Univ Co. % Univ Lic Issue Fee share share share as above 370,880 70,641,643 330,274,276 18% plus 20% 445,056 70,715,819 330,200,100 18% plus 10% 407,968 70,678,731 330,237,188 18% minus 10% 333,792 70,604,555 330,311,364 18% minus 20% 296,704 70,567,467 330,348,452 18% 0 0 70,270,763 330,645,156 18% for NPV = 0 43,564,317 113,835,080 287,080,839 28%
IRR to Co. 44% 44% 44% 44% 45% 47% 15%
Effect on % to Univ. and 16th year cum. of varying cost of cap disc. rate Univ Co. % Univ IRR Cost of Cap share share share to Co. as above 10.0% 70,641,643 330,274,276 18% 44% plus 100% 20.0% 70,641,643 330,274,276 18% 44% plus 50% 15.0% 70,641,643 330,274,276 18% 44% minus 25% 7.5% 70,641,643 330,274,276 18% 44% minus 50% 5.0% 70,641,643 330,274,276 18% 44% 0.0% 0.0% 70,641,643 330,274,276 18% 44% for NPV = 0 40.6% 70,641,643 330,274,276 18% 44% Royalty rate= 10% Lic issue fee= 370,880 Cost of cap= 10%
cum NPV to Co. by yr 16 26,995,898 25,754,235 26,375,066 27,616,730 28,237,562 33,087,475 0 cum NPV to Co. by yr 16 26,995,898 26,949,538 26,972,718 27,019,078 27,042,258 27,227,698 0 cum NPV to Co. by yr 16 26,995,898 6,943,572 13,684,061 38,114,150 54,098,344 111,234,185 0
% Univ share 19% 23% 21% 18% 16% 1% 100%
effect on cum NPV to Co. -5% -2% 2% 5% 23% -100% effect on cum NPV to Co. 0% 0% 0% 0% 1% -100% effect on cum NPV to Co. -74% -49% 41% 100% 312% -100%
% Univ share 19% 20% 20% 19% 19% 19% 100%
% Univ share 19% 24% 21% 19% 18% 18% 100%
Year Ending 12/31/2008 12/31/2009 12/31/2010 12/31/2011 12/31/2012 12/31/2013 Cash Flows to Company Net pre tax (395,880) (537,265) (600,880) (958,957) (1,679,364) (1,766,457) tax (158,352) (214,906) (240,352) (383,583) (671,746) (706,583) Net inc (237,528) (322,359) (360,528) (575,374) (1,007,618) (1,059,874) depr 10,000 10,000 14,000 115,000 138,000 155,000 AR change 0 0 0 0 0 (36,000) Inventory Change 0 0 0 0 0 (48,000) AP change 10,000 10,000 0 390,000 0 0 net op cash (217,528) (302,359) (346,528) (70,374) (869,618) (988,874) cap assets (50,000) (50,000) (20,000) (505,000) (115,000) (85,000) cash incr (267,528) (352,359) (366,528) (575,374) (984,618) (1,073,874) cash at start 0 (267,528) (619,887) (986,415) (1,561,789) (2,546,408) cash at end (267,528) (619,887) (986,415) (1,561,789) (2,546,408) (3,620,282) self funding 300,000 400,000 370,000 stock 3,000,000 3,000,000 cash incr 32,472 47,641 3,472 2,424,626 (984,618) 1,926,126 cash at start 0 32,472 80,113 83,585 2,508,211 1,523,592 cash at end 32,472 80,113 83,585 2,508,211 1,523,592 3,449,718
12/31/2014 (1,128,784) (451,514) (677,270) 161,000 (139,250) (330,558) 100,000 (886,078) (80,000) (966,078) (3,620,282) (4,586,360)
12/31/2015 (18,624) (7,450) (11,174) 237,000 (343,000) (46,620) 100,000 (63,794) (400,000) (463,794) (4,586,360) (5,050,155) 170,000 (293,794) 2,483,640 2,189,845
12/31/2016 1,357,270 542,908 814,362 156,000 (282,875) (238,156) 0 449,331 (100,000) 349,331 (5,050,155) (4,700,824)
12/31/2017 3,039,161 1,215,664 1,823,497 173,000 (406,875) (284,624) 0 1,304,998 (200,000) 1,104,998 (4,700,824) (3,595,826)
12/31/2018 6,419,282 2,567,713 3,851,569 196,000 (849,250) (585,831) 100,000 2,712,488 (200,000) 2,512,488 (3,595,826) (1,083,338)
12/31/2019 13,103,191 5,241,276 7,861,915 240,000 (1,345,500) (333,372) 50,000 6,473,043 (300,000) 6,173,043 (1,083,338) 5,089,705
12/31/2020 19,272,063 7,708,825 11,563,238 220,000 (1,624,125) (1,234,610) 0 8,924,503 (300,000) 8,624,503 5,089,705 13,714,208
(966,078) 3,449,718 2,483,640
349,331 2,189,845 2,539,176
1,104,998 2,539,176 3,644,174
2,512,488 3,644,174 6,156,662
6,173,043 6,156,662 12,329,705
8,624,503 12,329,705 20,954,208
12/31/2021 36,974,960 14,789,984 22,184,976 280,000 (4,160,625) (2,517,839) 0 15,786,512 (400,000) 15,386,512 13,714,208 29,100,720
12/31/2022 56,354,628 22,541,851 33,812,777 320,000 (4,803,750) (3,249,594) 0 26,079,433 (400,000) 25,679,433 29,100,720 54,780,152
12/31/2023
12/31/2024
82,429,119 118,410,813 32,971,648 47,364,325 49,457,471 71,046,488 360,000 380,000 (6,773,375) (9,674,263) (4,747,654) (7,080,346) 0 0 38,296,442 54,671,879 (400,000) (400,000) 37,896,442 54,271,879 54,780,152 92,676,595 92,676,595 146,948,474
15,386,512 20,954,208 36,340,720
25,679,433 36,340,720 62,020,152
37,896,442 54,271,879 62,020,152 99,916,595 99,916,595 154,188,474