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									RH ACQUISITION LLC

  BUSINESS PLAN

   July 6, 2011


  CONFIDENTIAL
RH Acquisition LLC
Business Plan
CONFIDENTIAL
                            TABLE OF CONTENTS

    INTRODUCTION

    EXECUTIVE SUMMARY

    BUSINESS MODEL

    OBJECTIVES

    MARKET ANALYSIS, TARGET CUSTOMERS, TARGET PRODUCTS

    COMPETITIVE ANALYSIS

    OPERATIONAL PLAN

    STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS (SWOT)

    QUANTITATIVE ANALYSIS

    APPENDIX A – FINANCIAL SUMMARY
    APPENDIX B – HEADCOUNT
    APPENDIX C – COMPENSATION ANALYSIS
    APPENDIX D – MILESTONES AND TIMELINES
    APPENDIX E – REVENUE PROJECTIONS
    APPENDIX F – COGS AND SG&A ANALYSIS
    APPENDIX G – ASSETS, DEPRECIATION AND AMORTIZATION
    APPENDIX H – WORKING CAPITAL ANALYSIS
    APPENDIX I – OPERATING EXPENSE ANALYSIS
    APPENDIX J – BALANCE SHEET
    APPENDIX K – INCOME STATEMENT
    APPENDIX L – STATEMENT OF CASH FLOWS




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INTRODUCTION

This Business Plan for RH Acquisition LLC (the Company) has been prepared to introduce the Company to
prospective stakeholders (customers, investors, strategic partners, scientists, research partners, etc.).

THIS DOCUMENT IS CONFIDENTIAL.      IT IS PROVIDED ON CONDITION THAT THE
INFORMATION IT CONTAINS BE HELD IN CONFIDENCE AND NOT DISCLOSED TO THIRD
PARTIES OR USED OTHER THAN FOR THE PURPOSE OF AN EVALUATION OF THE COMPANY
AND ITS TECHNOLOGY BY THE RECIPIENT IN CONTEMPLATION OF A BUSINESS
TRANSACTION BETWEEN THE RECIPIENT AND THE COMPANY. THE RECIPIENT MAY,
HOWEVER, DISCLOSE THE INFORMATION CONTAINED IN THIS BUSINESS PLAN WITH ITS
EMPLOYEES WHO HAVE A NEED TO KNOW SUCH INFORMATION FOR THE PURPOSE SET
FORTH ABOVE, OR WITH ITS FINANCIAL, LEGAL, BUSINESS OR TECHNICAL ADVISORS
PROVIDED THAT THESE PARTIES ARE INFORMED OF THE OBLIGATION TO MAINTAIN THE
CONFIDENTIALITY OF THE INFORMATION. THE RECIPIENT SHALL BE RESPONSIBLE FOR
THE ACTS OR OMISSIONS OF ALL SUCH PARTIES.

ANY RECIPIENT CONTEMPLATING INVESTMENT IN THE COMPANY IS ADVISED THAT
INVESTMENT IN START UP BUSINESSES IS SPECULATIVE AND HIGHLY RISKY. ANY
SECURITIES THE COMPANY MAY ISSUE WILL NOT BE REGISTERED UNDER THE SECURITIES
LAWS OF ANY JURISDICTION. THERE WILL, THEREFORE, BE NO MARKET FOR THE SALE OR
TRADING OF SUCH SECURITIES, AND PURCHASERS OF SUCH SECURITIES WILL BE
REQUIRED TO CONFIRM TO THE COMPANY THAT SUCH PURCHASES ARE FOR INVESTMENT
ONLY AND NOT IN CONTEMPLATION OF RESALE.          ADDITIONALLY, THE CURRENT
ORGANIZATIONAL STRUCTURE OF THE COMPANY IMPOSES SIGNIFICANT RESTRICTIONS
ON RIGHTS OF INVESTORS TO SELL OR TRANSFER THEIR INTERESTS IN THE COMPANY.
THE COMPANY CURRENTLY HAS NO CUSTOMERS AND NO REVENUE, AND MAY NOT HAVE
ANY SIGNIFICANT REVENUE FOR THE FORESEEABLE FUTURE.

WHILE THE INFORMATION CONTAINED IN THIS BUSINESS PLAN IS BELIEVED TO BE
ACCURATE, NEITHER THE COMPANY NOR ANY OF ITS MEMBERS OR MANAGERS MAKE ANY
REPRESENTATION OR WARRANTY AS TO ANY INFORMATION IN THIS DOCUMENT AND
SHALL HAVE NO LIABILITY, WHETHER IN TORT, CONTRACT OR ANY OTHER BASIS,
PREDICATED ON THE INACCURACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT.
RECIPIENTS SHALL INDEPENDENTLY VERIFY OR CONFIRM FACTS ON WHICH THEY INTEND
TO RELY IN CONNECTION WITH BUSINESS TRANSACTIONS WITH THE COMPANY.
RECIPIENTS ARE ALSO STRONGLY ADVISED TO SEEK INDEPENDENT LEGAL, FINANCIAL,
BUSINESS AND TECHNICAL ADVICE PRIOR TO ENTERING INTO ANY BUSINESS
TRANSACTION WITH THE COMPANY.

THIS BUSINESS PLAN IS STRICTLY INFORMATIONAL AND IS NEITHER AN OFFER TO SELL
NOR A SOLICITATION OF AN OFFER TO PURCHASE SECURITIES, WHICH WILL ONLY BE
MADE BY PROSPECTUS. FINANCIAL PROJECTIONS CONTAINED IN THIS BUSINESS PLAN
ARE FOR ILLUSTRATIVE PURPOSES, ARE NOT FORECASTS, AND – TO BE CLEAR – ARE
AMONG THE MATTERS AS TO WHICH THE COMPANY AND ITS MANAGERS AND MEMBERS
EXPRESSLY DISCLAIM ALL REPRESENTATIONS AND WARRANTIES.          THE ACTUAL
PERFORMANCE OF THE COMPANY MAY BE MORE OR LESS FAVORABLE THAN ILLUSTRATED.



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       1. EXECUTIVE SUMMARY

The Company was organized to acquire gold standard inductible gene regulation technology1 and to use
this technology as a base for a state-of-the-art bio-therapeutic2 process development and scale-up
business that will address an industry-wide capacity shortage and provide enabling technology for the
commercial scale manufacture of exciting drug candidates. This business can be established with limited
capital and is expected to be profitable quickly.

THE COMPANY’S TECHNOLOGY ALSO HAS APPLICATIONS AS A TOOL IN DRUG DISCOVERY,
PROTEOMICS, IMMUNOTHERAPEUTICS AND HUMAN GENE THERAPY.

WHILE THESE APPLICATIONS ARE EXPECTED TO HAVE SUBSTANTIAL VALUE, THIS
BUSINESS PLAN FOCUSES SOLELY ON THE COMMERCIALIZATION OF THE TECHNOLOGY FOR
BIO-THERAPEUTIC MANUFACTURING BECAUSE THIS IS A BUSINESS THAT CAN BE
ESTABLISHED QUICKLY, IS EASILY QUANTIFIED, REQUIRES MINIMAL CAPITAL
INVESTMENT, AND IS EXPECTED TO BE PROFITABLE AND CASH FLOW POSITIVE QUICKLY.

ANY ECONOMIC BENEFITS FROM THE COMMERCIALIZATION OF THE TECHNOLOGY FOR
OTHER APPLICATIONS (EITHER BY THE COMPANY DIRECTLY OR THROUGH LICENSE TO
OTHERS) WOULD SUPPLEMENT       THE   ECONOMICS OF   THE  BIO-THERPAEUTIC
MANUFACTURING BUSINESS DESCRIBED IN THIS PLAN.

       1.1.      THE COMPANY’S TECHNOLOGY AND ITS ADVANTAGES.

The Company will acquire (by patent assignment and exclusive license) gold standard, next generation
inducible gene regulation technology from a Fortune 500 Company 3. The Company also plans to use
world-class isolation and purification technology based on research at Purdue University.




1
  “inductible gene regulation” involves inserting human genes (for generating a desired protein) into the cells of other
organisms, growing large numbers of these cells in nutrient media and then inducing enhanced production of the protein by these
cells. The human gene in the cell of another organism is called a "transgene." The cells in which the genes are inserted can be
any cell with a nucleus, but the most important cells are those of other mammals – "mammalian" cells. The cells and nutrient
mixtures are grown in containers of glass or stainless steel of various sizes called "fermenters" under very carefully controlled
conditions.
2
    A "bio-therapeutic" is a drug used in humans or animals that is biochemically-based or biochemically manufactured.
3
   This technology was developed as part of a successful research effort to identify and commercialize environmentally-friendly
pesticides. The Fortune 500 company that funded this work ultimately sold its agricultural chemicals business, but retained rights
to the technology for non-agricultural uses. Lacking the personnel or expertise to develop the technology for drug discovery, gene
therapy, tissue engineering, proteomics or bio-therapeutic production, the company entered into a joint venture with a small
biotechnology company. The joint venture developed the technology, but was not believed capable of fully realizing its commercial
potential. The Fortune 500 company acquired all of the equity of the joint venture and now seeks to quickly monetize the
technology. This presents a unique opportunity to acquire world-class, next generation technology at minimal cost.

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       1.2.      KEY DIFFERENTIATORS

                     An Improved Class of Chemical Inducer Molecules.

                      The Company uses chemical inducer molecules 4 that are non-toxic to mammals and do
                      not have intrinsic pharmacologic activity5.

                     Tight Regulation of Expression – Ability to "Make the Unmakable."

                      Since the inducers and "response elements" 6 are highly specific and selective, gene
                      expression is undetectable in the absence of the inducer 7 and the Company’s technology
                      can, therefore, be used to make certain therapeutic proteins (cytotoxic 8 proteins) that
                      cannot be made with current generation technology.

                     Engineered Inducer / Receptor Pairs.

                      The inducers and receptors are not of mammalian origin and are engineered in specific,
                      selective pairs, obviating "crosstalk"9 and pleiotropic10 effects.




4
  A "chemical inducer molecule" is the chemical molecule used to cause the transgene to make – "express" – the therapeutic
protein. the Company's lead inducer chemical family is a chemically diverse proprietary library of small molecules that recognize and
bind to specific receptor proteins.
5
  A chemical inducer molecule that has "intrinsic pharmacologic activity" is a chemical that itself acts as a drug. The chemical
inducer molecules used by the competing technologies include tetracycline (a common antibiotic), progesterone (a hormone with a
number of uses, most commonly in contraceptives) and RU-486 (the compound used to induce abortion).
6
  Receptors are the control point for precise regulation of gene expression. These engineered receptor proteins bind with high
specificity to the target gene's promoter region. Tight regulation ensures that protein expression by the cell does not exceed the
cell’s ability to make necessary post-expression modifications.
7
    Protein production in the absence of the inducer is referred to as "constitutive expression" or "leakage".
8
   A "cytotoxic" protein is a protein that is toxic to the cell in which it is made. An inductible expression system that is “leaky”
cannot make cytotoxic proteins at commercial scale because the toxicity of the protein makes it impossible, or economically
inefficient, to grow commercial scale cultures of host cells containing the transgene. The cells die as quickly (or almost as quickly)
as they reproduce. The advantage offered by the Company’s technology is that a transgene for a cytotoxic protein can be inserted
into a host cell and so long as the inducer is not present, the transgene will not express the protein. So, a commercial scale culture
of the host cells containing the transgene can be grown before the inducer is introduced.
9
    Where other small molecules trigger the receptor to activate gene expression.
10
     Where a compound – an inducer, for example – has more than one effect on the organism.


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                      Improved Bioactive Yield.

                       Gene expression is closely controlled, allowing gross yield to be optimized without
                       exceeding the post-translational modification11 capacity of the host cell, so the product
                       has maximum fidelity to the desired human protein and bioactive yield is maximized.

                      Host System Optimization.

                       The Company’s technology works in a wide range of eukaryotic hosts 12, including
                       mammalian cells, yeast and other fungi, and insect cells.

                      World Class Isolation and Purification Technology.

                       The Company will use isolation and purification technology based on research at Purdue
                       University modifying and improving a technique known as simulated moving bed liquid
                       chromatography.

       1.3.      THE COMPANY'S COMPETITIVE ADVANTAGE.

By combining two leading-edge technologies, the Company will significantly increase the customers’
product yields and reduce their costs of goods by enhancing both upstream production and downstream
purification processes. And, the Company's next generation technology that can manufacture novel,
difficult-to-express, cytotoxic therapeutic proteins13 will provide the Company with exclusive opportunities
for some of the most exciting therapeutic protein drug candidates. The technology to be acquired by the
Company is protected by a very extensive patent estate.

A summary of the Company’s financial projections (which do not reflect costs of capitalization, see:
Section 8 - Quantitative Analysis) is shown on Appendix A.




11
   “Post translation modification” refers to the enzymatic changes (that is, changes catalyzed by enzymes) made to the protein
after it has been expressed by the transgene. These changes include “folding”, glycosylation and phosphorylation. The closer the
host cell is to a human cell, the more accurate the fidelity of post translation modification. So, for example, the post translation
modifications of a protein expressed by a human transgene in an insect cell will not be as accurate as those from a mammalian cell
(Chinese hamster ovary cells are one type of mammalian cells commonly used). There are two primary consequences of poor post
translation modification, either the protein will not be bioactive in humans (that is, it will not serve its therapeutic purpose) or it will
induce an adverse immune response (essentially a rejection reaction) when administered to humans.

12
     "Eukaryotic hosts" are cells that have a nucleus as contrasted with prokaryotic cells, such as bacteria, which do not.
13
  A "protein" is a large biochemical molecule made by the body. A "therapeutic protein" is a protein used as a drug in humans
or animals.


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2. BUSINESS MODEL.

                  The Company’s customers (pharmaceutical and biotechnology companies) will bring to
                   the Company both the target therapeutic protein products and the human genes to be
                   used to make these products. The customers will hold the intellectual property rights to
                   these.

                  The Company will perform process development, supply pre-clinical and clinical quantities
                   of product during the drug development and approval process, provide technical support
                   on the manufacturing portions of the customer’s regulatory submissions, and transfer the
                   manufacturing technology for the product to the customer – all on a "milestones" basis
                   on terms generally prevailing in the industry.

                  Upon approval of the customer’s product by regulatory authorities, the Company will
                   license the customer to use the Company’s technology in commercial scale manufacture,
                   either by the customer or a third party contract manufacturer working for the customer.
                   The terms and pricing of the license will be consistent with those generally prevailing in
                   the industry, with the Company receiving a share of the economic benefits achieved with
                   the Company’s technology.

                  The Company will also sublicense its technology to large biotechnology companies on a
                   product-specific basis or on a therapeutic class basis. 14 These licenses would be priced
                   on the same milestones and royalty basis reduced to reflect the Company’s avoided costs
                   such that the Company is indifferent as to whether the customer or the Company
                   performs the development work.

                  Opportunistically, the Company will seek isolation and purification contract business with
                   fine chemical and pharmaceutical companies. Pricing will be at prevailing rates on a per
                   gram or kilogram basis.

                  The Company will pursue opportunities to obtain complementary bio-manufacturing and
                   isolation and purification technologies to maintain its leadership position in
                   pharmaceutical bio-manufacturing and isolation and purification.

                  The Company will seek arrangements with strategic partners on a sales agency basis
                   with the opportunity to earn commissions on sales.

                  The Company will pursue bio-manufacturing opportunities in generic protein products
                   and other opportunities as may arise.

                  The Company may also vertically integrate by constructing or acquiring commercial scale
                   mammalian cell bio-manufacturing capacity if the economics of doing so prove
                   compelling.




14
   Because of its perceived value, the Company will not license its technology for mammalian cell manufacture other than on a
product-specific basis. The Company will license its technology for entire therapeutic classes of products only for non-mammalian
cellular systems.

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Advantages of the Company’s Business Model

The diversity of customers limits the Company's risk, as the Company's business will be based on a
variety of products from a number of customers. The Company's gold standard, next generation
technology, particularly:

                Yield improvements,
                Ability to make cytotoxic proteins, and
                Non-toxic and non-pharmacologic inducers

will provide significant competitive advantage. The Company plans to continuously build upon and
improve its basic technology platforms.




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3. OBJECTIVES.

                Obtain at least two products on a milestones basis during year one, four products during
                 year two, six products during year three, eight products during year four and twelve
                 products during year five.

                Obtain one new product-specific license with a biotechnology company (where the
                 customer pays a reduced royalty and receives the right to use the Company's
                 technology without support from the Company) each year.

                Obtain three general licenses with biotechnology companies for entire therapeutic
                 classes in year one.

                Obtain isolation and purification contract business with fine chemical and pharmaceutical
                 companies for 50% of available capacity in year one and 75% of available capacity in
                 year two.

                Achieve annual revenues of more than $78 million and net income (net of
                 capitalization costs, see: Section 8 – Quantitative Analysis) of more than $26
                 million in year five.




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4. MARKET ANALYSIS, TARGET CUSTOMERS, TARGET PRODUCTS

       4.1.      MARKET ANALYSIS

The pharmaceutical and biotechnology industries have identified a number of promising large molecular
weight human protein drug candidates, but commercial scale, mammalian cell bio-therapeutic
manufacturing capacity remains a significant bottleneck. Additionally, commercial scale manufacturing
costs remain unacceptably high for many, if not most, high molecular weight human proteins.

Based on the large number of biotechnology drugs in the pipeline of pharmaceutical and biotechnology
companies, capacity and revenues of biopharmaceutical contract manufacturing companies are expected
to double before 2006.15 These companies are rapidly adding to capacity, with ultimate demand
expected to reach as much as one million liters. 16 At the same time, they are seeking to improve
productivity of existing capacity by improving expression systems. 17

The value of improved productivity, therefore, is the avoided capital cost of capacity expansion and, in
the short term, avoiding the adverse impact insufficient capacity. Currently, a typical commercial-scale,
mammalian cell production train for manufacture of a therapeutic protein with a human transgene costs
between $100 and $200 million 18. Any technology that can improve the productivity of such a facility has
substantial value.

Also, some companies are reporting that therapeutic proteins are increasingly competing with small
molecule drug products and, in such competitive situations, cost of goods is a major factor affecting sales
share.19

There are a variety of factors that contribute to the cost problem. Raw yields in mammalian cell culture
manufacturing systems tend to be very low – 250 mg/l to 500 mg/l is common, with the best systems
yielding only 1000 mg/l to 1500 mg/l. But, with current generation technology the percentage of the raw
yield of acceptable quality can be as low as 40%, because control over protein expression is poor and
expression levels exceed the post translation modification capabilities (folding and glycosylation) of the
host cell. The result of poor fidelity of post translation modification is lack of bioactivity or induction of
immune response in the patient. Thus, with current technology, the net yield is typically much lower
than the raw yield.


15
  Therapeutic proteins is a rapidly growing segment of the therapeutics market. The total market for bio-therapeutics in early 2002
was about $16 billion and will grow rapidly as proteomic technologies continue to identify new therapeutic protein candidates to be
evaluated. More than 100 antibodies are now in clinical trials and more than 1100 bio-therapeutics are in preclinical testing.
16
  Crispin Kirkman, chief executive of the U.K.'s BioIndustry Association., speaking at the "BioLOGIC 2001" conference in Geneva,
said, "Even now, when there isn't a huge demand, U.K. biotech companies are experiencing delays in getting their products
manufactured and moved onto the next stage. The U.K. government funded a market survey that indicated a surge of products in
Phases I, II, and III, and … the shortfall in manufacturing capacity may lead to failures."
17
   "Biopharmaceutical Contract Manufacturing", 22:17 Genetic Engineering News, (October 1, 2002) contains a recent and
extensive discussion of the economics of the biotechnology industry and is the basis for this section.
18
     A member of the Company’s board of managers is currently CEO of a company constructing several such production trains.
19
  "High expression levels can provide a significant contribution to overall reduced costs of goods and can enable biologics to go for
markets that they have hitherto been unable to access." Iain Crowder, strategy manager for Avecia Biotechnology quoted in 22:17
Genetic Engineering News, (October 1, 2002).

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The improved control offered by the Company’s technology will dramatically increase bioactive yields in
mammalian cell culture systems at raw yields equaling or exceeding those available using current
technology. So, the Company will offer its pharmaceutical and biotechnology industry customers a bio-
manufacturing system that will significantly reduce manufacturing cost.

Bio-therapeutic production capacity and associated cost has become a critical path item for the
pharmaceutical and biotechnology industries. Availability of capacity can either facilitate or block the
path to market for biotechnology products with significant sales potential. And, in the case of cytotoxic
protein products, there is essentially no capacity without the Company’s technology because these cannot
be made with current generation expression systems.

Three ways in which manufacturing bottlenecks can be eased are through increased target protein yield,
enhanced biological activity, or reduced culture cycle time. There are, in turn, two ways to pursue these
goals: either improve the performance of existing expression systems by better evaluating host strains,
improving induction kinetics, optimizing media, better understanding nutritional requirements, etc. or
develop a next generation expression system.

There are two barriers to developing improved expression systems. Cost, is of course a significant
impediment for most companies. (The Company’s technology is the result of $20 million of development
capital.) More importantly, however, much of the science of inductive gene expression – particularly the
best-known classes of response elements - is based on research on insect models. A key patent to which
the Company will be exclusive licensee for non-agricultural bio-therapeutic production20 is a significant
impediment to the development of new expression technology.

     4.2.     TARGET CUSTOMERS

Large Pharmaceutical Companies

In recent years, there has been a trend for large pharmaceutical companies to outsource manufacturing.
As research and development and marketing and distribution costs rise, manufacturing is seen as an
unattractive use of capital when compared to the return on investments in these other areas. 21

Contributing to this trend is the trend away from so-called "small molecule" drug candidates to those
based on biotechnology. Currently, approximately 90% of aggregate sales of pharmaceutical and
diagnostic products - $250 billion annually - are either "small molecules" or simple biotechnology
products (plant extracts, non-recombinant products from bacterial fermentation, etc.). About 75 new
biotech drugs, vaccines and indications have been approved since 1999, however, and if this trend
continues, sales of biotechnology therapeutics are expected to reach $86 billion annually by 2025.

"Small molecule" drugs are synthetic organic chemical compounds made through chemical reactions,
largely with petrochemical raw materials and intermediates. The large pharmaceutical companies have
extensive expertise in the synthesis of complex chemical compounds and their manufacture on
commercial scale.22


20
  DuPont is the exclusive licensee for agricultural applications. DuPont also has certain obligations to pay patent maintenance
costs. Significant improvements to the scope of the claims of the patent were obtained recently and paid for by DuPont.
21
  Joseph A. Dimasi, Grabowski, Henry G., Vernon, John (Duke University, Department of Economics), R&D Costs, Innovative
Output and Firm Size in the Pharmaceutical Industry, INTERNATIONAL JOURNAL OF THE ECONOMICS OF BUSINESS, vol. 2, 1995,
pp 201-219.


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The large pharmaceutical companies' expertise in bio-therapeutic manufacturing techniques is much more
limited. The necessary skill sets are different, and capital costs of commercial scale bio-therapeutic
manufacturing facilities are very high.

In light of alternative demands for research and development and marketing capital, the large
pharmaceutical companies have been reluctant to incur the costs and risks of in-house commercial scale
bio-therapeutic production, particularly since it is not a field in which they have a great deal of experience
and expertise. There are many contract manufacturers in commercial scale manufacture of bio-
therapeutics, and some of the technology is already commoditized.

Large Biotechnology Companies

In contrast to large pharmaceutical companies, some large biotechnology companies have integrated
commercial scale bio-therapeutic manufacturing capacity. These customers are not likely to contract with
the Company to perform process development or to provide pre-clinical and clinical quantities of target
compounds, because the customer has these capabilities in-house.23

Unlike some its competitors, however, the Company's technology is still of significant value to these
customers as the Company's technology has certain unique advantages, particularly the potential to make
cytotoxic proteins and the favorable characteristics of the Company's response elements and inducers.
The Company has also identified opportunities to license its technology for entire therapeutic classes on a
non-exclusive basis to some of these customers.24

Small Biotechnology Companies

Small biotechnology companies include those engaged in drug discovery activities based on technology
they have developed or in-licensed and "virtual" companies that coordinate drug discovery, product
development and manufacture among a number of suppliers. The Company's relationship with these
customers will be similar to its relationship with large pharmaceutical companies, except that pricing will
be adjusted to account for the additional credit risk these customers present. The Company may
consider taking equity or entering into other alternative compensation arrangements with these
customers in appropriate cases, but has no current plans for doing so.




22
   These manufacturing processes have been well known for decades and patent protection and proprietary capabilities are very
limited and, as a result, pharmaceutical chemical manufacturing is a commodity and is performed by third party contract
manufacturers at commodity margins. Recognizing this, large pharmaceutical companies now tend to outsource commercial scale
manufacturing.
23
  The large biotechnology companies utilize a business model very similar to that of the large pharmaceutical companies and the
Company will market its technology to large biotechnology customers similarly to large pharmaceutical company customers.
24
    The Company is, however, currently unwilling to license its technology for use in mammalian cell systems other than on a
product-specific basis, because the value of the technology is believed to be great, and there is no basis on which to calculate a
royalty for rights for entire therapeutic classes that is certain to yield the Company the full value of its technology. The licenses
currently under discussion are for use in non-mammalian systems only.

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     4.3.     TARGET PRODUCTS

Generally, the Company's customers will identify the products to be manufactured. But, there are several
general classes of potential products that merit discussion.

Cytotoxic Proteins

The Company believes that its technology and capabilities will have the greatest value in the manufacture
of cytotoxic proteins, as is has a distinct competitive advantage in the manufacture of these products.

Non-Cytotoxic Proteins

These are the products that are the backbone of the Company's business plan and financial projections.
They are drug candidates in the pipeline of large pharmaceutical or biotechnology companies that are
very early in the product development process. The areas of research interest at these prospective
customers and the human proteins of potential therapeutic value within those areas of interest are
generally well known and there are numerous published sources of this information. 25

Generic Proteins

There are a number of bio-therapeutic products already on the market that can potentially be made using
the Company's technology. Some of these products are currently made in bacterial systems (where the
Company's technology is not applicable), but could be converted to mammalian cell systems. Ordinarily,
manufacturing process changes in commercialized pharmaceuticals are very rare as the regulatory
hurdles and associated costs and risks outweigh all but the most significant cost or other benefits of a
change. 26




25
  One of the Company's managers knows the capabilities, interests and pipelines of pharmaceutical and biotechnology companies.
The Company will develop a marketing plan to target specific companies and target products based on value and the ability of the
Company to get the most favorable commercial terms.
26
  In the biotechnology area, however, there are a number of products where current manufacturing methods are unsatisfactory
and improved processes are actively being sought. Johnson & Johnson's search for an improved process to make EPO that does
not induce immune reactions in the patients is but one example.

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5. COMPETITIVE ANALYSIS

    5.1.    ALTERNATIVE METHODS OF THERAPEUTIC PROTEIN MANUFACTURE

The size and complexity of human therapeutic proteins make synthesis using synthetic organic chemical
processes impractical on commercial scale. These products must be made either in living organisms ( "in
vivo") or the cells of living organisms ("in vitro").

    5.2.    IN VITRO SYSTEMS

In vitro bio-therapeutic production can be done using the cells of other mammals, bacteria, yeast, insect
cells or plants. The Company's technology can be used in all but bacteria, as bacteria are not eukaryotic
cells. Bio-therapeutic production systems using bacteria are referred to as "microbial" systems.

Microbial bio-therapeutic production systems have been used for many years and are the system of
choice where they can be used. They are not capable of significant post-translation modifications, a
factor that significantly limits their application to therapeutic proteins currently under development.
Microbial bio-therapeutic production is essentially a commodity business.

Insect cells and mammalian cells offer the highest levels of post translation fidelity and accuracy. They
are the only in vitro technologies suitable for manufacture of therapeutic proteins using human
transgenes where post translation modifications are important. Because mammalian cells are genetically
closer to human cells, the quality of proteins produced by mammalian cell systems is higher than that of
insect cell systems. As discussed in this business plan, there are no current generation mammalian cell
systems that allow cost-effective manufacture of cytotoxic proteins at commercial scale.

    5.3.    IN VIVO SYSTEMS

There are a number of companies offering in vivo systems that use human transgenes in living organisms
to produce therapeutic proteins.

Yeast and plants face three basic competitive problems. First, post translation modification fidelity and
accuracy are poor when compared to other systems. Second, the need to break their more substantial
cell walls to recover the therapeutic protein requires the use of aggressive enzymes or chemical
compounds in the isolation and purification process. These can have an adverse effect on the ultimate
bioactive yield. Finally, and most importantly, the use of plants presents significant public policy and
regulatory issues, as unintentional propagation into the environment must be controlled. Yeast and
plants do, however, offer very favorable economics because fairly high expression levels can be achieved
and costs per batch are much lower than in other in vivo or in vitro systems.

In animals, the desired proteins are either expressed into milk (using cows or goats) or eggs (using
chickens). If such technologies can be perfected, they promise to be economically attractive relative to
most in vitro systems. All of these technologies face substantial regulatory hurdles because of the risk of
prion transmission (like that causing BSE – so-called "mad cow disease"). The use of cow or goat milk
presents special sterility challenges. Chicken eggs, if the technology can be perfected, might avoid the
sterility problem, but therapeutic proteins from chickens may have post translation modification problems
as chickens are not mammals.



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    5.4.    APPLICATION OF THE COMPANY’S TECHNOLOGY

The Company’s technology has potential application in the production of therapeutic proteins in all but
microbial systems, although the scope of the Company's license to the technology will not permit the
Company to use the system in plants (where the license rights are held by DuPont). The Company does
not currently believe that therapeutic production in plants offers significant commercial opportunity.

    5.5.    COMPETING COMPANIES

The Company will compete with a large number of bio-therapeutic contract manufacturing companies
that offer pre-clinical and clinical supplies, process optimization, technology transfer and commercial scale
bio-therapeutic production.

These bio-therapeutic, contract-manufacturing companies do not, however, have proprietary inductive
gene regulation technology. They use technology supplied by their customers or licensed from other
companies. So, their services compete with the Company's services, but they do not independently offer
competitive technology.

They seek to differentiate themselves and create value by increasing target protein yield, enhancing
biological activity, or reducing culture cycle time by focusing on the technical performance issues
common to all inductive gene regulation technologies: better evaluation of host strains, improvement of
induction kinetics, media optimization, better understanding of nutritional requirements, etc. They are
also adding to capacity.

To date, bio-therapeutic contract manufacturing companies have not developed next generation systems
due to the significant R&D cost and the intellectual property barriers to the most promising response
elements, particularly the key patent to which the Company will be exclusive licensee for non-agricultural
bio-therapeutic production.

    5.6.    COMPETING MAMMALIAN CELL EXPRESSION SYSTEMS

           Abbott Laboratories – tetracycline system – research scale only. This system is "leaky" and
            cannot be used for manufacturing cytotoxic products. Tetracycline systems are widely
            known, but do not provide optimal yields and do not have good expression control.

           Cytos Biotechnology – temperature inducible system for cytotoxic protein production. This is
            a technology that the Company will have to watch.             To date there has been no
            demonstration that it is either feasible or practical at manufacturing scale. No commercial
            contracts are known.

           Gala Design – multicopy insertion using retroviral vectors. Cannot be used for production of
            cytotoxic products. Expression levels are very high and not well controlled and are very likely
            to exceed the cell's ability to properly process protein that is produced, so bioactive yield is
            expected to be low.

           Lonza Biologics – GS ™ System. Rapid selection of high expression lines, but random
            insertion of target gene in chromosomes provides poor "hit" rate. Process has high variability
            and has not demonstrated ability to produce high yields. Cannot be used for production of
            cytotoxic proteins. The Lonza process is considered costly and Amgen and Genentech have
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            so far refused to license it for that reason. Lonza has recently licensed the Chroma Magnos
            artificial chromosome delivery process in an attempt to increase performance of the GS ™
            system.




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6. OPERATIONAL PLAN

    6.1.       MANUFACTURING FACILITY

The Company will locate its operations in a technology incubator in Indiana in space built to suit. An
Indiana location is necessary as the isolation and purification technology that the Company will use is
available only from an Indiana company that has licensed it from Purdue University. Initially, the
Company contemplates leasing two small offices with common area for its office staff and two laboratory
areas.

The Company will acquire two 500 liter bio-manufacturing units. These are standard sized, skid-mounted
units. Based on discussions with design engineering specialists in the biotechnology field, the Company
believes that a capital budget of $15 million is more than adequate for the acquisition and installation of
these units.

The Company anticipates acquiring simulated moving bed (SMB) liquid chromatography systems for
product isolation and purification. The Company believes it could obtain and install this equipment for $5
million.

    6.2.       HUMAN RESOURCES

           Management.

           Richard Boehner – Managing Director. Richard "Dick" Boehner is Vice President, Corporate
           Development for MacDermid Corporation in Waterbury, Connecticut where he is responsible for
           corporate development, strategy, and investor relations. Dick has had a long and distinguished
           career in the pharmaceutical, chemical, and electronic industries. His accomplishments include
           helping plan and implement over 20 acquisitions and divestitures with a total value in the billions
           of dollars for a varied group of companies including Rhone-Poulenc, Allied-Signal, and Great
           Lakes Chemical. In addition, Dick was an executive Managing Director in the software, silicones,
           and polyester films industries. Dick's background is international in scope including several
           acquisitions and licensing arrangements in Europe and Asia.

           Michael D. Scott – Manager. Mr. Scott is an entrepreneur residing in Indianapolis. He was
           formerly Senior Counsel to Ice Miller, a national law firm based in Indianapolis, Indiana with
           offices in Washington, D.C. and Chicago Illinois. He joined Ice Miller from Great Lakes Chemical
           Corporation where he was Vice President & General Counsel – Performance Chemicals.
           Previously, he was Associate General Counsel at GAF Corporation / International Specialty
           Products, Inc., Wayne, New Jersey and spent a number of years in private law practice at a large
           East Coast law firm. Before practicing law, Mr. Scott worked in research administration at a
           major pharmaceutical company and was Director of Corporate Development for a consulting
           engineering and analytical services firm. He received his B.A. from New York University in 1982
           and his J.D. from Rutgers University in 1986.

           Jerry Caulder – Manager. Dr. Caulder is Chief Executive Officer and Chairman of the Board of
           Akkadix, and the Chairman Emeritus of Mycogen. He has been President and Chief Executive
           Officer and Chairman of the Board at Xyris Corporation. Dr. Caulder also serves as a director of
           the Biotechnology Industry Organization (BIO), and served or chaired several committees of the
           U.S. Office of Technology Assessment. He has given expert testimony before both houses of
           Congress; advised foreign governments on agriculture and biotechnology; and has been a
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        consultant or speaker to numerous organizations including: The Brookings Institute, The
        Keystone Group, and the World Economic Forum. Caulder serves on the board of directors of
        Cilcorp Incorporated and is a member of the Advisory Council on Small Business and Agriculture
        of the Federal Reserve Board of San Francisco.

        John Nine – Manager. Dr. John Nine is Interim President & CEO, Bioprocessing Technology
        Centre, Singapore. Formerly, he was Executive Vice President at Schering Plough and director of
        that company's pharmaceutical manufacturing operations. He is also currently heading the
        establishment of a Pharmaceutical Clinical Manufacturing Facility at Purdue University and a
        university-related Contract Research Facility in Georgia.

        Robert Miotke – Manager. Mr. Miotke is a consultant to the pharmaceutical and biotechnology
        industry. He ran the Aerojet General Corporation fine chemicals business, has a long background
        in the manufacture of pharmaceutical active ingredients and intermediates, and holds several
        patents.

        [Members discussed in italics will not be employees of the Company, but will serve on the Board
        of Managers.]

        Scientific Advisory Board.

        Aaron J. Shatkin, Ph.D. (Chairman of SAB)
        Director of the Center for Advanced Biotechnology and Medicine, Piscataway, N.J.

        Jeffrey M. Trent, Ph.D.
        Scientific Director of the National Human Genome Research Institute (NHGRI) of the National
        Institutes of Health (NIH)

        Michael Ashburner, FRS
        Professor of Biology, University of Cambridge, Cambridge, UK and Visiting Group Leader, EMBL -
        European Bioinformatics Institute, Hinxton, Cambridge

        Leroy Hood, M.D., Ph.D.
        Founder, President, and Director of the Institute for Systems Biology in Seattle, Washington

Headcount and Compensation.

The Company’s line headcount is based on industry benchmarks for bio-therapeutic manufacturing,
taking into consideration both the necessary technical employees for each product and an industry-
standard utilization rate. For the isolation and purification business, the headcount is based on
consultation with the Indiana company that has licensed the Purdue technology. Salary benchmarks
were obtained through interviews with employers in the industry and industry benchmarks.

Anticipated headcount is shown on Appendix B. Compensation analysis is shown on Appendix C.




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    6.3.    RESEARCH & DEVELOPMENT

The Company will research customized systems for use in bio-therapeutics production based on its core
technology. This will include research programs in small molecule design and optimization and receptor
design and optimization.

Research and development has not been quantified in this business plan for two reasons. First, under
the Company’s business model, much of the necessary research and development work will be done in
the course of specific projects funded by customers. Second, this business plan does not address the
commercialization of the Company’s technology for use as a tool in drug discovery, proteomics,
immunotherapeutics and human gene therapy, and significant research and development work will likely
be performed (and funded) as the Company’s technology is applied in these areas.

Small Molecule Design and Optimization.

Work will continue on a major program in ligand optimization, synthesis, and development that generates
new and improved inducer ligands. The proprietary inducer library consists of more than 3,000
compounds on which the Company will hold composition of matter and use and method patents. The
objectives of the small molecule research program are to:

                Optimize inducer/receptor binding and create new ligand/receptor pairs for our gene
                 regulation system;
                Continuously expand the range of physical/chemical properties represented in our
                 inducer library; and
                Develop new chemistries matched with our receptors to advance the gene expression
                 system to manage the precise regulation of multiple genes.

Receptor Design and Optimization

A Receptor Design and Optimization program will continue development of a family of receptors and
biological applications to meet a broad range of performance criteria. This program will involve multiple
approaches including engineering of novel receptors, three-dimensional structural modeling, and virtual
inducer docking.




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7. STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS (SWOT)

    7.1.    STRENGTHS

World-class bio-manufacturing technology.

The Company's technology allows close regulation of transgene expression in eukaryotic cells over a wide
range using demonstrably non-toxic inducers. The Company's technology has the further advantage of
being suitable for the manufacture of cytotoxic proteins that cannot be cost-effectively manufactured
using competitive technologies.

World-class isolation and purification technology.

The Company will supplement its bio-therpaeutic production technology with simulated moving bed
(SMB) liquid chromatography isolation and purification technology modified and improved at Purdue
University and believed by the Company to be the gold standard for the separation of high molecular
weight proteins from complex biomass matrices.

Strong management and Scientific Advisory Board teams.

See: Management and Scientific Advisory Board, above.

Limited capital requirements for start up based on locating in a technology incubator in
Indiana.

Indiana has several technology incubators suitable for the Company's operations. These are available to
the Company at favorable rentals and, in addition, come with support services and specialized utilities.
The Company’s financial projections reflect rental rates and other terms quoted by these technology
incubators.

    7.2.    WEAKNESSES

Limited proof of concept of bio-manufacturing technology.

Research and development work is being completed, both internally and with outside universities, to
develop specific data on the manufacture of several specific proteins with the objective of generating a
comprehensive proof of concept data set. The proof of concept work completed to date, however, shows
that the Company’s technology can be used successfully to make diphtheria toxin at commercial scale, so
the Company is optimistic that the proof of concept data set will be compelling.

Short term negative contribution margin consequence of "milestone" terms prevailing in the
industry.

The Company's business model for bio-therapeutic manufacturing assumes that it will operate on the
milestones basis generally prevailing in the industry under which customers will pay the Company as
specified milestones are achieved. Some of these milestones are within the Company's control, but some
will not be as the pharmaceutical and biotechnology industries are increasing attempting to have supply
chain vendors share the inherent risks of the drug development process.


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Essentially, the milestone payment system prevailing in the industry is "back end loaded" so that supply
chain vendors like the Company are compensated retroactively as the customer's drug candidate achieves
success at key points in the drug development and approval process and risk of failure declines. This
means, of course, that milestone payments early in the process are not intended to fully compensate the
vendor and this is how the customers shift the inherent risks of the drug development process to the
vendors.

The consequence for the Company is that projected contribution margin on new customer projects is
significantly negative and projected break-even revenue for the traditional pre-commercialization supply,
process development and technology transfer portion of the Company's business significantly exceeds
fixed cost during each of the first two years of operation. This is an acute short-term risk during the
Company's early stages.27

On the other hand, milestone payments do not necessarily correlate with the level of effort required by
the Company. In fact, to the extent the Company will be paid as milestones are achieved over which it
has no control (such as successful completion of Phase I, Phase II or Phase II studies), the Company will
receive payments without having supplied to the customer any additional goods and services.

Once the Company has a number of projects in later stages of the process or had earned substantial
royalties from a number of commercialized products, it will be better able to bear the economic effect of
negative early-stage contribution margin.

This issue has been carefully considered and evaluated by the Company in its preparation of its financial
projections. Very conservative milestone payment amounts have been used and in its financial models
the Company has adjusted projected milestone revenues to take into account the risk of failure of the
customer's product.

Difficulties in developing an effective marketing plan for cytotoxic therapeutic proteins.

The Company's technology is unique in its ability to manufacture cytotoxic therapeutic proteins on
commercial scale. But, the manufacture of cytotoxic proteins presents a marketing challenge. While the
Company can generally identify prospective non-cytotoxic product customers through the published
literature on the pipeline products and interests of pharmaceutical and biotechnology companies, the
same is not true for cytotoxic product customers. Since the compounds are believed to be incapable of
being manufactured, they are not among the published research interests of the Company's customers.
The Company has identified contacts at the National Institutes of Health and the National Cancer
Institute who know of the cytotoxic compounds of potential therapeutic value and the companies that
would be interested in pursuing them were they capable of being manufactured. The Company will
identify opportunities to make cytotoxic products through these contacts.

Reliance on the success of the customers' products.

The Company's earnings will come from royalty payments from customers who use the Company's
technology to manufacture commercial quantities of pharmaceutical products. While the Company
anticipates receiving milestone payments for pre-commercialization supply, process development and
technology transfer (but, see a discussion of this issue, above), realizing the maximum value of the
technology is dependent on the success of the customer's products.

27
   Note that the Company's revenue projections are based on milestone payments at prevailing rates that have been reduced to
reflect the risk of failure of the customers' products.


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The Company will perform substantial due diligence on each customer target product and the therapeutic
class of which the product is a part to attempt to assess the risk that the product milestones will not be
met and will negotiate agreements with the customer accordingly. And, as discussed above, the
Company has taken the risk of failure of the customers' products into account in preparing its financial
projections.

    7.3.    THREATS

Alternative technology provides comparable or superior performance.

Even if the Company's technology remains cost-competitive, availability of competitive technology would
enable the customers to push the pre-commercialization process development costs back onto the
Company and its competitors and would erode achievable margins.

There are many companies that are manufacturing human proteins in eukaryotic cell systems, including a
number that are doing so using mammalian cells. The Company believes its technology is superior for
the reasons discussed above.

The Company will develop and implement research initiatives to maintain its technological lead in
eukaryotic cell protein manufacture and simulated moving bed liquid chromatographic isolation and
purification of high molecular weight proteins.

General market failure of high molecular weight human proteins.

It is currently believed that the efficacy and safety of pharmaceutical products increases as those
products become more similar, or identical to, molecules that exist naturally in the human body.

The problem with many therapeutic proteins, however, is that they induce an immune response in the
patient. This is currently hypothesized to be the result of improper glycosylation. While the Company's
technology holds promise for the manufacture of higher quality protein product, including through more
accurate glycosylation, the improvement in glycosylation accuracy may be insufficient to ameliorate the
immunogenicity problem.

The consequence would be some limitation in the scope of the protein products that would be
commercially viable. Immune response induced by therapeutic proteins can be addressed through
administration of immunosuppressant drugs. The commercialization potentials of therapeutic proteins for
serious or life-threatening conditions without viable alternative therapies, such as many cancers, are
unlikely to be significantly affected by the need for concomitant immunosuppressant therapy, as the
benefit of the therapeutic protein would outweigh the risks and inconvenience of such therapy. On the
other hand, therapeutic proteins requiring concomitant immune system suppression would not be
attractive commercial candidates for the treatment of disorders where alternative therapies are available
or for non-serious or non-life threatening disorders.

There is a risk that therapeutic proteins products could fail generally in clinical trials, or alternative
products could be developed having comparable safety and efficacy, but that are easier to manufacture
or administer (currently most proteins have to be administered by injection because they would be
digested if administered orally), or that do not have immunogenicity potential.




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    7.4.    OPPORTUNITIES

More advantageous commercial terms for cytotoxic protein products.

The Company's technology can manufacture cytotoxic proteins that cannot be made using any
competitive system. The value of the technology for this application could prove to be materially greater
than the Company currently anticipates. The commercial terms for such products might be much more
favorable than the commercial terms generally prevailing in the industry and on which the Company's
financial projections are based.

Independent commercialization of isolation and purification technology.

The Company may pursue further development of SMB isolation and purification technology. Isolation
and purification of proteins from complex biomass matrices is a very significant technical problem facing
the pharmaceutical industry and improvements to existing technology would have significant value.

Expand vertically to the large scale manufacture of bio-therapeutics.

The Company's currently plans to license its technology to its customers for commercial scale
manufacture of therapeutic protein products upon commercialization. The capital investment necessary
for construction of a commercial scale mammalian cell bio-manufacturing facility is very high and well
beyond the Company's capabilities in the short term. Longer term, however, the Company may expand
its operations to commercial scale mammalian cell bio-manufacturing if the economics are compelling
(that is, if the prospective economic return justifies the capital investment when compared to the return
earned by the Company on its licensing strategy).

Manufacture of protein polymeric materials for use in medical device applications
(prosthetics, implants, etc.).

In addition to pharmaceutical active ingredients, the Company's technology may have application in the
manufacture of other high molecular weight proteins, including those used in medical device and implant
applications.

License of the technology to non-pharmaceutical manufacturers for use in eukaryotic (non-
mammalian) cell systems to make other biotech products.

In addition to using the technology in eukaryotic cell systems for pharmaceutical product manufacture,
the technology may have application in the manufacture of other biologic products and the Company will
consider licensing its technology to others for such applications.




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8. QUANTITATIVE ANALYSIS

     8.1.      KEY ASSUMPTIONS

Milestone Payments and Timeline and Isolation and Purification Capacity

The Company has based its bio-therapeutic manufacturing business plan and its financial projections on
the milestones and projected timeline shown on Appendix D.

The Company’s financial projections use the Risk Adjusted Values for each milestone. These Risk
Adjusted Values adjust the contract fee for the risk that the product will fail, or be abandoned by the
customer, before the milestone is reached.

Industry specialists with whom we have consulted advise that both the proposed fees and the timeline
are conservative and that the risk adjustment factors are reasonable.

Revenue Projections

The Company’s revenue projections are shown on Appendix E.

          Milestone Revenues. Milestone Revenues for Years 1-5 are based on the timeline and Risk
          Adjusted Value for each milestone fee shown on Appendix D. These are standard contracts
          under which the Company will perform the development and pre-commercial bio-manufacturing
          services. The Company has assumed that it will enter into two contracts in Year 1, four contracts
          in Year2, six contracts in Year 3, eight contracts in Year 4, and twelve contracts in Year 5. 28

          License Revenues. There are two types of License Revenues, but both contemplate a
          customer that licenses the Company’s technology for use without support or services from the
          Company. These customers are biotechnology companies that have bio-therapeutic
          manufacturing capability and desire a license to the Company’s technology because of economic
          and technical advantages the technology offers.

                    Biotechnology companies that desire to license the Company’s technology for application
                    in mammalian cell systems will pay license fees on a product-specific basis. The license
                    fees will be the Biotechnology Industry standard operating margin (24% for Q4 2002) on
                    the Company’s standard milestone fees. The intent is that the Company should be
                    indifferent as to whether the customer or the Company does the development and pre-
                    commercial manufacturing. The Company assumes it will obtain one such contract
                    during each of Years 1-5.

                    Biotechnology companies that desire to license the Company’s technology for application
                    in non-mammalian systems will pay license fees for an entire therapeutic class rather
                    than for each specific product. The Company has assumed that it will obtain three such
                    contracts in Year 1 and that the license fees payable for each contract will approximate

28
   Currently, demand for bio-therapeutic manufacturing equipment exceeds supply and the two 500 liter units that the Company
anticipates acquiring may not be readily available. Any delay in acquiring these units would, of course, affect the revenue
projections. Since the availability – or lack of availability – of process equipment is not quantifiable and will depend in part on the
identity of investors or strategic partners backing the Company (a pharmaceutical or biotechnology company may have equipment
readily available, while a consortium of venture capitalists would rely on the Company’s procurement skills), the Company has
chosen to prepare its financial projections without regard to possible procurement delays.
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                 the license fees the Company would receive from a biotechnology company licensing the
                 Company’s technology on a product-specific basis for use in a mammalian cell system.

        Future Revenues. Development and approval of pharmaceuticals has a very long lead-time as
        evidenced by the milestone timeline on Appendix D. Most of the value of the Company’s
        technology, however, will come from licenses for commercial manufacture of successful customer
        products. The “NPV Future” figures on Appendix E are based on the Company receiving 25% of
        the economic benefit to the customer based on the following assumptions: average annual
        customer product sales of $300 million, a 40% productivity improvement attributable to the
        Company’s technology, and a customer average gross profit margin of 65.22% (based on
        published data for public pharmaceutical and biotechnology companies for Q3 2002). These
        assumptions and the milestones timeline have been incorporated into a monthly model extending
        over ten years. The license fees payable to the Company after Year 5, whether on a milestones
        basis or as the Company’s share of the economic benefit to the customer, have been reduced to
        present value at 20%.      Upon commercialization, the Company’s share was computed as a
        perpetuity using 10% as the customer’s weighted average cost of capital. This is consistent with
        industry data.

        Isolation and Purification Revenues. The isolation and purification, contract-manufacturing
        portion of the business plan is based on calculations of capacity (in kilograms) using the
        throughput of the process equipment and anticipated feed solution concentrations. The
        theoretical capacity is then reduced to account for equipment downtime, etc.

        The basic productivity and capacity assumptions are a throughput of 750 ml/min, a feed
        concentration of 2.5 gm/l for non-bio-therapeutic products and 500 mg/l for bio-therapeutic
        products, two daily nine hour shifts operating five days a week and 50 weeks a year, and a price
        of $10/gm.

        The necessary isolation and purification capacity to support the Company’s primary bio-
        therapeutic manufacturing business was calculated. This was subtracted from the theoretical
        isolation and purification capacity (derived from the assumptions discussed above) to yield the
        isolation and purification capacity available for sale on a contract basis. The business plan
        assumes sale of 50% of isolation and purification capacity in Year 1, 75% in Year 2 and 100%
        thereafter. As the bio-therapeutic production business progresses, the available isolation and
        purification capacity for contract sale declines dramatically, so the "100%" assumption in the out
        years is reasonable.

Inventory, Accounts Receivable and Work in Process

Since the Company is essentially a service company, the financial presentation in this business plan uses
work in process in lieu of inventory. Also, since all of the work done by the Company will be under
contract, there will be no work in process for which there is not also an ultimate customer payment
obligation. See: Appendix H, Working Capital Analysis.

The customers' payment obligations will arise only as milestones are met. The figures in the financial
statements in this business plan are based on a 60-month cash flow model that assumes a DSO of 60
days. See: Appendix H, Working Capital Analysis.




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Other Key Assumptions

Intangibles Valuation. For purposes of preparing the balance sheet, the technology value was based
on the $7 million license fee originally sought by the licensor. Obviously, the Company will attempt to
acquire the technology rights for less than $7 million and will attempt to negotiate a royalty arrangement
rather than a single payment. The presentation of the technology acquisition cost as a capital
expenditure in Year 1 is very conservative. See: Appendix G.

Tax Distribution. The Company is currently organized as an Indiana limited liability company. The
financial projections assume that the Company will make a tax distribution in any year in which net
income is positive at a rate of 40%. To be conservative, the financials do not utilize net operating loss
carry forwards, or provide for the distribution of losses, although the Company could, and probably would
choose to, distribute losses annually.

Individual Items.

        The figure for supplies is based on the experience of the Company’s licensor, pro-rated on a per-
        employee basis. Raw material benchmarks came from industry interviews.

        The Company expects that negotiation of agreements with customers will cause it to incur legal
        fees of $25 thousand per product.

        Rent is allocated between cost of goods sold and SG&A based on headcount proportions.

        Utilities are calculated at $50 thousand per year allocated between cost of goods sold and SG&A
        based on headcount.

        The Company has budgeted $50 thousand per year for consulting advice it might need.

        Industry memberships are calculated at $15 thousand per year each and the Company expects to
        join two organizations.

        Advertising and promotion costs are calculated at $50 thousand per Director of Business
        Development per year. Exhibit costs and brochure and literature costs are $20 thousand and $2
        thousand, respectively, per Director of Business Development per year.

        The Company has assumed insurance costs of $15 thousand per million of revenue.

        An analysis of COGS and SG&A is shown on Appendix F.

        An analysis of assets, depreciation and amortization is shown on Appendix G. The financial
        presentation assumes an average useful life of 7 years. The figures for straight-line depreciation
        shown on Appendix G are for comparative purposes only. The financial projections use the
        figures for depreciation based on the declining sum of the years basis.

        A working capital analysis is shown on Appendix H.

        An operating expense analysis is shown on Appendix I.


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    8.2.    PRO-FORMA FINANCIAL STATEMENTS

Presentation Net of Capitalization Costs.

The Company is soliciting financing and support from a number of sources from traditional “angel” and
venture capitalists to corporate strategic partners. The ultimate capitalization of the Company (which is
currently owned equally by Mr. Boehner and Mr. Scott) is likely to vary significantly depending on the
identity of the enterprise that supports the Company. Additionally, the Company’s technology has
applications in drug discovery, proteomics, immunotherapeutics and human gene therapy that are
believed to have substantial value and commercialization of the Company’s technology in these area
might affect the capitalization of the Company’ bio-therapeutic manufacturing business described in this
business plan.

Consequently, the Company has chosen to prepare its financial statements net of capitalization. This
means that debt and equity are consolidated into one figure and there is no separate line item for equity,
debt or interest. The Company is assumed to have no cash. There are no assumptions as to opening
equity or debt.

ACTUAL RESULTS WILL BE MATERIALLY DIFFERENT DEPENDING ON HOW THE COMPANY IS
ULTIMATELY CAPITALIZED. The intended effect of the presentation is to show how the enterprise is
expected to perform generally, without influence from any assumed capitalization structure.

Pro-Forma Financial Statements.

        The pro-forma balance sheet – net of capitalization - for each of the first five years of operation
        is shown on Appendix J.

        The pro-forma income statement – net of capitalization – for each of the first five years of
        operation is shown on Appendix K.

        The pro-forma statement of cash flows – net of capitalization – for each of the first five
        years of operations is shown on Appendix L.




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                                                 APPENDIX_A

                                              RH Acquisition LLC
                                                       Summary
                                                     Years 1 to 5
                                                    ($ in thousands)
                                                            Year 1 Year 2      Year 3 Year 4     Year 5
                      Summary Financials ($)
                                                Revenue      $4,436   $9,924 $23,536 $46,568     $78,084
                                             Gross Profit    $1,230    $412     $8,536 $26,510   $52,834
                                                    EBIT ($1,406) ($2,983)      $3,617 $19,886   $44,831
                                             Net Income ($1,406) ($2,983)       $2,170 $11,932   $26,898
                        Net Cash: Operating Activities       $2,013    $318     $3,925 $14,105   $24,925
                                  Capital Expenditures $19,500        $7,500       $0      $0         $0
                                         Distributions          $0       $0 ($1,447) ($7,954) ($17,932)
                                                   Cash         $0       $0        $0      $0         $0
                                    Total Equity/Debt $16,080 $20,981 $20,631 $20,565            $25,348


                               Growth
                                Revenue Growth Rate                   124%      137%      98%       68%
                            Net Income Growth Rate:                   -112%     173%    450%       125%


                             Profitability
                                        Gross Profit %       27.7%     4.2%     36.3%   56.9%      67.7%
                                 Operating Income % -31.7% -30.1%               15.4%   42.7%      57.4%
                                        Net Income % -31.7% -30.1%               9.2%   25.6%      34.4%


                               Returns
                                     Return on Assets        -6.9% -10.6%        6.7%   33.1%      59.8%
                     Return on Capital (Debt + Equity)       -8.7% -14.2%       10.5%   58.0%     106.1%




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                                          APPENDIX B
                                        RH Acquisition LLC

                                        HR Headcount Analysis
                                            Years 1 to 5
                                        Year 1   Year 2   Year 3   Year 4   Year 5
                          CEO             1          1      1        1        1
                          COO             1          1      1        1        1
                      Dir Bus Dev         1          1      2        3        3
                         Admin            1          1      2        4        8
                     Senior Scientist     4          6     10       12       12
                        Scientist         4          8     15       20       25
                      Senior Tech         4          8     10       12       15
                          Tech            4          10    15       20       30




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                                         APPENDIX C
                                      RH Acquisition LLC
                                   HR Compensation Analysis
                                         Years 1 to 5
                                       ($ in thousands)
                                                    Year 1    Year 2    Year 3    Year 4    Year 5


                                     Revenues        $4,436    $9,924 $23,536 $46,568 $78,084


                            Sales & Marketing
                                         Salary
                                  Director of BD      $145      $151       $313      $487      $505
                                     Total Salary     $145      $151       $313      $487      $505
                                         Bonus
                                    Percent (%)        10%       10%       10%       10%       10%
                                         Amount        $15       $15        $31       $49       $50
                                       Benefits
                                    Percent (%)        30%       30%       30%       30%       30%
                                         Amount        $44       $45        $94      $146      $151
                            Total S & M Comp.         $203      $211      $438      $682      $706
                                % of Revenue         4.6%      2.1%      1.9%      1.5%      0.9%


                     General & Administration
                                         Salary
                          Chief Executive Officer     $200      $208       $216      $224      $232
                                  Administrative       $30       $31        $65      $134      $278
                                     Total Salary     $230      $239       $281      $358      $510
                                         Bonus
                                    Percent (%)        10%       10%       10%       10%       10%
                                         Amount        $23       $24        $28       $36       $51
                                       Benefits
                                    Percent (%)        30%       15%       17%       20%       20%
                                         Amount        $69       $36        $48       $72      $102
                     Total G & A Compensation          322      $299       $357      $466      $664
                                % of Revenue          7.3%      3.0%      1.5%      1.0%      0.8%


                           Cost of Goods Sold
                                         Salary
                          Chief Operating Officer     $200      $208       $216      $224      $232
                                 Senior Scientist     $640      $998     $1,728    $2,150    $2,227
                                        Scientist     $320      $666     $1,296    $1,792    $2,320
                                     Senior Tech      $160      $333       $432      $538      $696
                                      Technician      $120      $312       $486      $672    $1,044
                                     Total Salary    $1,320    $2,205    $3,672    $4,704    $5,475
                                         Bonus
                                    Percent (%)        10%       10%       10%       10%       10%


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                                      Amount     $132     $220     $367     $470     $548
                                     Benefits
                                  Percent (%)    30%      30%      30%      30%      30%
                                      Amount     $396     $661    $1,102   $1,411   $1,643
                     Total COGS Compensation    $1,848   $3,087   $5,141   $6,586   $7,665
                               % of Revenue     41.7%    31.1%    21.8%    14.1%     9.8%



                                 Total Salary $1,695 $2,595 $4,266 $5,550 $6,490
                                 % of Revenue   38.2%    26.1%    18.1%    11.9%     8.3%
                               Total Benefits   $509     $743 $1,243 $1,629 $1,896
                                 % of Revenue   11.5%     7.5%     5.3%     3.5%     2.4%
                                 Total Bonus    $170     $259     $427     $555     $649
                                 % of Revenue    3.8%     2.6%     1.8%     1.2%     0.8%
                          Total Compensation $2,373 $3,597 $5,936 $7,734 $9,035
                                 % of Revenue   53.5%    36.2%    25.2%    16.6%    11.6%




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                                                     APPENDIX D

                                                    RH Acquisition LLC
                                  Pre-Commercialization Milestone Payments
                                              ($ in thousands)

                                                                 Product    Risk Adj.
                                                      Fee       Success %    Value                 Timeline
         Initial payment upon contract signing.       $100        100%        $100
         Company establishes a stable cell line
               with the desired transgene.            $250        100%        $250        6 months after project start
          Company successfully demonstrates                                              6 months after stable cell line
             product expression at lab scale          $500        100%        $500               is available
          Company successfully demonstrates
         isolation and purification of product at                                           6 months after product
                          lab scale.                 $1,000       100%       $1,000         expression at lab scale
          Company delivers a batch of product
           for stability and preliminary toxicity                                        6 months after isolation and
                           testing.                  $2,000       100%       $2,000     purification has been perfected.
          Company delivers documentation of
          cGMP manufacturing procedures for
        incorporation in customer's regulatory                                            6 months after delivery of
                       submissions.                   $500        66%         $330              initial batch.
              Company delivers product
         manufactured to cGMP standards for                                              6 months after the regulatory
              clinical and toxicity testing.         $3,000       50%        $1,500       documentation is delivered.
        Company transfers the bio-therapeutic
           manufacturing technology to the                                              Completed contemporaneously
                        customer.                     $500        50%         $250      with delivery of cGMP material.
          Company transfers the isolation and
             purification technology to the                                             Completed contemporaneously
                        customer.                     $500        50%         $250      with delivery of cGMP material.
        Product successfully completes Phase I                                           One year after cGMP material
                           trials.                   $1,000       50%         $500                 is delivered.
         Product successfully completes Phase                                           Three years after Phase I trials
                          II trials.                 $2,000       33%         $660                are complete.
         Product successfully completes Phase                                             Three years after Phase II
                         III trials.                 $5,000       25%        $1,250           trials are complete.
                                                                                        One year after Phase III trials
         Product receives regulatory approval.       $5,000       25%        $1,250               are complete.
                                       TOTAL                                 $9,840




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                                                    APPENDIX E

                                             RH Acquisition LLC
                                                 Revenue Projections
                                                     Years 1 to 5
                                                   ($ in thousands)
                                        Year 1      Year 2     Year 3      Year 4      Year 5      NPV Future
                 Milestone Revenue          $450      $3,525     $15,155     $38,505     $72,895         $308,343
                     License Revenue        $336      $1,524      $2,681      $3,163      $1,889          $19,974
             Isolation & Purification     $3,650      $4,875      $5,700      $4,900      $3,300
                           Revenue        $4,436      $9,924     $23,536     $46,568     $78,084         $328,317




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                                                    APPENDIX _F

                                            RH Acquisition LLC
                                                 COGS and SG&A
                                                   Years 1 to 5
                                                 ($ in thousands)
                                                         Year 1    Year 2   Year 3    Year 4    Year 5
                             Revenues
                                  Milestone Revenue         $450 $3,525     $15,155   $38,505   $72,895
                                    License Revenue         $336 $1,524      $2,681    $3,163    $1,889
                     Isolation & Purification Revenue     $3,650 $3,650      $3,650    $3,650    $3,650
                                           Revenue       $4,436 $9,924 $23,536 $46,568 $78,084


                           Cost of Goods
                                       Raw Materials      $1,152 $1,920      $2,976    $3,936    $5,184
                                               Labor      $1,364 $3,232      $5,527    $7,244    $8,877
                                            Supplies        $320     $640    $1,000    $1,280    $1,640
                                               Legal        $150     $125      $175      $225      $325
                                           Insurance         $67     $149      $353      $699    $1,171
                                          Consulting         $50      $50       $50       $50       $50
                          Subtotal Variable COGS         $3,103 $6,116 $10,081 $13,434 $17,247
                                    % of Revenue         69.9% 61.6%        42.8%     28.8%     22.1%


                                                Rent         $31      $33       $38       $45       $58
                                             Utilities       $43      $45       $46       $45       $45
                                       Memberships           $30      $30       $30       $30       $30
                             Subtotal Fixed COGS           $104     $108      $114      $120      $133
                                    % of Revenue          2.3%      1.1%      0.5%      0.3%      0.2%


                                      TOTAL COGS         $3,206 $6,224 $10,195 $13,554 $17,380
                                    % of Revenue         72.3% 62.7%        43.3%     29.1%     22.3%


                               SG&A
                                               Labor        $805     $837    $1,136    $1,504    $1,761
                                            Supplies         $80      $80      $120      $180      $260
                                             Utilities        $7       $5        $4        $5        $5
                            Advertising & Promotion          $50      $50      $100      $150      $150
                                             Exhibits        $20      $20       $40       $60       $60
                                   Brochures and Lit          $2       $2        $4        $6        $6
                          Subtotal Variable SG&A           $964     $994    $1,404    $1,905    $2,242
                                    % of Revenue         21.7% 10.0%          6.0%      4.1%      2.9%


                                                Rent          $5       $3        $4        $5        $7
                           Depreciation/Amortization        $702 $1,405      $2,107    $2,810    $3,512
                                      Debt Payment            $0       $0        $0        $0        $0
                             Subtotal Fixed SG&A           $708 $1,408      $2,111    $2,814    $3,519


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                            % of Revenue     15.9% 14.2%      9.0%     6.0%     4.5%


                              Total SG&A     $2,636 $3,396   $4,919   $6,624   $8,003
                            % of Revenue     59.4% 34.2%     20.9%    14.2%    10.2%


                     Total Costs
                               Total Costs   $5,739 $9,512 $15,000 $20,058 $25,250
                            % of Revenue 129.4% 95.8%        63.7%    43.1%    32.3%




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                                             APPENDIX G


                                       RH ACQUISITION LLC
                                          Assets and Dep/Amort
                                                 Years 1 to 5
                                              ($ in thousands)
                                                         Year 1 Year 2 Year 3 Year 4 Year 5


                             Revenues                     $4,436   $9,924 $23,536 $46,568 $78,084


                       Capital Expenditures
                          Bio-Therapeutic Production      $7,500   $7,500      $0       $0       $0
                              Isolation & Purification    $5,000      $0       $0       $0       $0
                         Intellectual Property License    $7,000      $0       $0       $0       $0
                           Total Capital Expenditures $19,500      $7,500      $0       $0       $0
                                       % of Revenue 439.6%         75.6%     0.0%     0.0%     0.0%


                           Depreciation
                           Depreciation Term (Years)          7        7        7        7        7
                     Depreciation (Dec Sum of Years)       $702    $1,405   $2,107   $2,810   $3,512
                         Depreciation (Straight Line)     $2,810   $2,810   $2,810   $2,810   $2,810
                                   Total Depreciation      $702    $1,405   $2,107   $2,810   $3,512
                                       % of Revenue       15.8%    14.2%     9.0%     6.0%     4.5%


                         Net Fixed Assets
                                   Gross Asset Value $12,500 $20,000 $20,000 $20,000 $20,000
                           Accumulated Depreciation        $536    $1,071   $1,607   $2,143   $2,679
                            Net Plant and Equipment $11,964 $18,929 $18,393 $17,857 $17,321
                                       % of Revenue 269.7% 190.7%           78.1%    38.3%    22.2%


                        Intangible Assets
                                   Gross Asset Value      $7,000   $7,000   $7,000   $7,000   $7,000
                           Accumulated Amortization        $167     $333     $500     $667     $833
                            Net Plant and Equipment       $6,833   $6,667   $6,500   $6,333   $6,167
                                       % of Revenue 154.0%         67.2%    27.6%    13.6%     7.9%




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                                             APPENDIX H


                                     RH Acquisition LLC
                                    Working Capital Analysis
                                            Years 1 to 5
                                         ($ in thousands)
                                                  Year 1 Year 2 Year 3 Year 4 Year 5


                                    Revenues $4,436 $9,924 $23,536 $46,568 $78,084
                                   Total Costs $5,739 $9,512 $15,000 $20,058 $25,250


                     Accounts Receivable
                                 % of Revenue 16.4% 16.4%         16.4%    16.4%    16.4%
                              Days Outstanding      60.0   60.0     60.0     60.0     60.0
                               Receivable Value     $729 $1,631   $3,869   $7,655 $12,836
                       Change from Prev. Period     $729   $902   $2,238   $3,786   $5,181


                       Work in Process
                                       Amount       $729   $976   $3,472   $4,183   $8,653
                                 % of Revenue 16.4%        9.8%   14.8%     9.0%    11.1%
                                Inventory Turns      6.1   10.2      6.8     11.1      9.0
                                Inventory Days        60     36      54       33       40
                                Inventory Value     $729   $976   $3,472   $4,183   $8,653
                       Change from Prev. Period     $729   $247   $2,496    $711    $4,470


                      Accounts Payable
                                 % of Revenue 94.1% 72.8%         49.3%    33.2%    25.1%
                     Accounts Payable & ST Debt $4,176 $7,221 $11,603 $15,464 $19,629
                       Change from Prev. Period $4,176 $3,046     $4,381   $3,861   $4,165




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                                               APPENDIX I
                                          RH Acquisition LLC
                                      Operating Expense Analysis
                                             Years 1 to 5
                                           ($ in thousands)
                                                             Year 1 Year 2 Year 3 Year 4 Year 5


                              Revenues                       $4,436 $9,924 $23,536 $46,568 $78,084


                          Sales & Marketing
                                   Salaries and Fringes        $203   $211    $438     $682     $706
                              Supplies (inc tel, fax, IT)       $20    $20     $40      $60      $60
                              Travel and Entertainment          $20    $21     $44      $68      $71
                             Advertising and Promotion          $50    $50    $100     $150     $150
                                             Exhibitions        $20    $20     $40      $60      $60
                              Brochures and Literature           $2     $2      $4       $6       $6
                             Total Sales and Marketing         $315   $324    $666    $1,026   $1,053
                                         % of Revenue           7%     3%      3%       2%       1%


                      General & Administration
                                   Salaries and Fringes        $322   $299    $357     $466     $664
                                                    Rent         $5     $3      $4       $5       $7
                                                 Utilities       $7     $5      $4       $5       $5
                              Travel and Entertainment          $32    $30     $36      $47      $66
                                              Insurance         $67   $149    $353     $699    $1,171
                              Supplies (inc tel, fax, IT)       $80    $80    $120     $180     $260
                         Total General & Administration        $513   $566    $873    $1,401   $2,173
                                         % of Revenue          12%     6%      4%       3%       3%


                      Total Operating Expenses                 $828   $890   $1,540   $2,427   $3,227
                                         % of Revenue 18.7%           9.0%    6.5%     5.2%     4.1%


                     Operating Expense Allocation
                                                Variable        $83    $89    $154     $243     $323
                                                   Fixed       $745   $801   $1,386   $2,184   $2,904
                                                   Total       $828   $890   $1,540   $2,427   $3,227




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                                                APPENDIX J


                                            RH Acquisition LLC
                                                   Balance Sheet
                                                    Years 1 to 5
                                                 ($ in thousands)
                                                         Begin Year 1 Year 2 Year 3 Year 4 Year 5
                            ASSETS
                               CURRENT ASSETS
                                                Cash        $0       $0       $0       $0       $0       $0
                               Accounts Receivable                 $729    $1,631   $3,869   $7,655 $12,836
                                         Inventories               $729     $976    $3,472   $4,183   $8,653
                                Total Current Assets        $0    $1,458   $2,607   $7,341 $11,838 $21,489


                                   OTHER ASSETS
                                    Net Fixed Assets             $11,964 $18,929 $18,393 $17,857 $17,321
                                   Intangible Assets              $6,833   $6,667   $6,500   $6,333   $6,167
                                   TOTAL ASSETS             $0 $20,256 $28,203 $32,234 $36,028 $44,977


                          LIABILITIES & EQUITY
                           CURRENT LIABILITIES
                                                Debt        $0       $0       $0       $0       $0       $0
                                                  A/P             $4,176   $7,221 $11,603 $15,464 $19,629
                             Total Current Liabilities      $0    $4,176   $7,221 $11,603 $15,464 $19,629


                            LTD (less cur portion)          $0       $0       $0       $0       $0       $0


                              TOTAL LIABILITIES             $0    $4,176   $7,221 $11,603 $15,464 $19,629


                                  EQUITY & DEBT             $0 $16,080 $20,981 $20,631 $20,565 $25,348


                     TOTAL LIABILITIES & EQUITY             $0 $20,256 $28,203 $32,234 $36,028 $44,977




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                                       APPENDIX K

                                  RH Acquisition LLC
                                       Income Statement
                                          Years 1 to 5
                                       ($ in thousands)
                                       Year 1      Year 2     Year 3    Year 4    Year 5


                          REVENUES      $4,436     $9,924 $23,536 $46,568 $78,084


                              COGS       $3,206     $9,512 $15,000 $20,058 $25,250
                       % of Revenues     72.3%       95.8%     63.7%     43.1%     32.3%


                      GROSS PROFIT      $1,230       $412     $8,536 $26,510 $52,834
                       % of Revenues     27.7%        4.2%     36.3%     56.9%     67.7%


                              SG&A       $2,636     $3,396     $4,919    $6,624    $8,003
                       % of Revenues       59%        34%        21%       14%       10%


                        Op Earnings ($1,406) ($2,983)         $3,617 $19,886 $44,831
                       % of Revenue     -31.7% -30.1%         15.4%     42.7%     57.4%


                               EBIT ($1,406) ($2,983)         $3,617 $19,886 $44,831


                          INTEREST           $0         $0         $0        $0        $0


                                EBT     ($1,406)   ($2,983)    $3,617 $19,886 $44,831


                     DIST FOR TAXES          $0         $0     $1,447    $7,954 $17,932


                        NET INCOME ($1,406) ($2,983)          $2,170 $11,932 $26,898
                        % of Revenue     -31.7%     -30.1%      9.2%     25.6%     34.4%




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                                                  APPENDIX L

                                               RH Acquisition LLC
                                               Cash Flow Statememt
                                                      Years 1 to 5
                                                   ($ in thousands)
                                                          Begin   Year 1      Year 2    Year 3    Year 4    Year 5
                     OPERATING ACTIVITIES
                                           Net Income              ($1,406) ($2,983)     $2,170 $11,932      $26,898
                                           Dep/Amort                  $702     $1,405    $2,107    $2,810     $3,512
                          Working Capital Changes
                              (Increase)/Decrease A/R               ($729)     ($902) ($2,238) ($3,786)     ($5,181)
                              (Increase)/Decrease WIP               ($729)     ($247) ($2,496)     ($711)   ($4,470)
                              Increase/(Decrease) A/P               $4,176     $3,046    $4,381    $3,861     $4,165
                      Net Cash: Operating Activities                $2,013       $318    $3,925 $14,105      $24,925


                     INVESTING ACTIVITIES
                                      Net Fixed Assets            ($12,500) ($7,500)         $0        $0        $0
                                  Intellectual Property            ($7,000)
                      Net Cash: Investing Activities              ($19,500) ($7,500)         $0        $0        $0


                     FINANCING ACTIVITIES
                       Increase/(Decrease) Equity/Debt       $0    $16,080     $4,901    ($350)     ($67)     $4,783
                                          Distributions                 $0         $0 ($1,447) ($7,954) ($17,932)
                      Net Cash: Financing Activities               $16,080     $4,901 ($1,797) ($8,021) ($13,149)


                INCREASE/(DECREASE) IN CASH                        ($1,406) ($2,281)     $2,128    $6,084    $11,776


                                  BEGINNING CASH             $0         $0 ($1,406) ($3,687) ($1,559)         $4,525
                             CASH AT END OF YEAR                   ($1,406) ($3,687) ($1,559)      $4,525    $16,301




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