Why Structural Genomics Is Important
Licensing & Corporate Partnership
Finance
Pharmatech Genomics is seeking $5.1 million in first round funding. The majority of the funds would go toward developing proprietary technology, acquiring software licenses, and setting up infrastructure to deliver our services over the Internet. The following table details how the funds will be spent. Additional funding will be raised in the future.
| Sales and Marketing | |
| 100.00 | |
| Public Relations | 200.00 |
| Banner Advertising | 100.00 |
| Strategic Advertising | 300.00 |
| Total | $700.00 |
| Office | |
| Computers | 100.00 |
| Utilities | 30.00 |
| Furniture | 40.00 |
| Total | 170.00 |
| Personnel | |
| CEO | 120.00 |
| Controller | 80.00 |
| CTO | 100.00 |
| VP Sales and Marketing | 100.00 |
| Sales and Marketing 1 | 60.00 |
| Sales and Marketing 2 | 60.00 |
| VP Business Development | 100.00 |
| Business Development 1 | 60.00 |
| Business Development 2 | 60.00 |
| VP of Engineering | 100.00 |
| Software Engineer (4) | 320.00 |
| Senior Scientist | 100.00 |
| Scientific Programmer (5) | 400.00 |
| Webmaster | 60.00 |
| Web Programmer | 50.00 |
| Database Administrator | 90.00 |
| Database Programmer 1 | 80.00 |
| Database Programmer 2 | 80.00 |
| Database Programmer 3 | 80.00 |
| Systems Administrator 1 | 80.00 |
| Systems Administrator 2 | 80.00 |
| Admin 1 | 40.00 |
| Admin 2 | 40.00 |
| Q.A. 1 | 45.00 |
| Q.A. 2 | 45.00 |
| Total | $2,430.00 |
| Technology | |
| Storage Databases (ORCL) | 400.00 |
| Computation Servers (DEC) | 400.00 |
| Total Technology | $800.00 |
| Licensing and Legal | $1,000.00 |
| Total Capital | $5,100.00 |
General Financial Assumptions
Our assumptions are listed in the following table.
| Revenue Buildup Assumption | 2000** | 2001 | 2002 | 2003 | 2004 |
| **assume software beta testing in 2000, year-to-date | |||||
| Sales and Marketing Team | 2 | 5 | 10 | 15 | 20 |
| Accounts per Manager | |||||
| Large Corp | 1 | 3 | 4 | 5 | 5 |
| Small to Mid | 2 | 10 | 15 | 15 | 15 |
| Academic | 5 | 15 | 20 | 20 | 20 |
| Users per Account | |||||
| Large Corp | 10 | 20 | 25 | 28 | 30 |
| Small to Mid | 2 | 8 | 10 | 12 | 15 |
| Academic | 20 | 40 | 60 | 65 | 70 |
| Corporate Users | 28 | 700 | 2,500 | 4,800 | 7,500 |
| Past Users | 28 | 728 | 3,228 | 8,028 | |
| Total | 28 | 728 | 3,228 | 8,028 | 15,528 |
| Academic Users | 200 | 3,000 | 12,000 | 19,500 | 28,000 |
| Past Users | 200 | 3,200 | 15,200 | 34,700 | |
| Total | 200 | 3,200 | 15,200 | 34,700 | 62,700 |
| Pricing (including ASP, Data Hosting and Consulting) | |||||
| Corporation | - | $2,000 | $2,500 | $3,000 | $3,500 |
| Academic | - | $200 | $250 | $300 | $350 |
| Revenue | |||||
| Corporation | - | $1,456,000 | $8,070,000 | $24,084,000 | $54,348,000 |
| Academic | - | $640,000 | $3,800,000 | $10,410,000 | $21,945,000 |
| Total | - | $2,096,000 | $11,870,000 | $34,494,000 | $76,293,000 |
Key Assumptions
- Current market size is 200,000 users worldwide and will grow 29% annually through 2005
- Our market penetration will be 1% for year 1, 5% for year 2, 15% for year 3, 25% for year 4
- Our company will market aggressively in response to the demand growth
- Our income projections only reflect costs incurred from licensing academic software; we assume that we will establish strategic positioning with the corporate software developers
Financial Highlights
Based on the assumptions stated in the previous section, we note the following financial highlights. Please refer to the pro forma income statements, balance sheets, and cash flow statements for further detail.
- We expect to be RPI positive in 2003
- We expect to break even in 2005
- By Q4 2005, we expect to have earned $19.2 million
| Asset | 2000 | 2001 | 2002 | 2003 | 2004 |
| Cash | $2,773,944 | $10,384,852 | $9,040,367 | $13,680,908 | $32,699,802 |
| Total Short-term Assets | $2,773,944 | $10,384,852 | $9,040,367 | $13,680,908 | $32,699,802 |
| Long-term Assets | |||||
| Capital Assets | $600,000 | $1,200,000 | $2,200,000 | $3,200,000 | $4,200,000 |
| Accumulated Depreciation | ($120,000) | ($360,000) | ($800,000) | ($1,440,000) | ($2,280,000) |
| Total Long-term Assets | |||||
| Total Assets | $3,253,944 | $11,224,852 | $10,440,367 | $15,440,908 | $34,619,802 |
| Liabilities and Capital | - | - | - | - | - |
| Short-term Notes | - | - | - | - | - |
| Long-term Liabilities | - | - | - | - | - |
| Total Liabilities | - | - | - | - | - |
| Earnings | ($1,746,056) | ($3,775,148) | ($4,559,633) | $440,908 | $19,619,802 |
| Shareholders' Equity | $5,000,000 | $10,000,000 | $10,000,000 | $10,000,000 | $10,000,000 |
| Total Equity | $3,253,944 | $6,224,852 | $5,440,367 | $10,440,908 | $29,619,802 |
| Total Liabilities and Equity | $3,253,944 | $6,224,852 | $5,440,367 | $10,440,908 | $29,619,802 |
| 2000 | 2001 | 2002 | 2003 | 2004 | |
| Revenue | $0 | $2,096,000 | $11,870,000 | $34,494,000 | $76,293,000 |
| Cost of Goods Sold | $0 | $628,800 | $3,561,000 | $10,348,200 | $22,887,900 |
| Gross Profit | $0 | $1,467,200 | $8,309,000 | $24,145,800 | $53,405,100 |
| Marketing and Sales Expenses | $350,000 | $838,400 | $1,424,400 | $3,104,460 | $5,340,510 |
| % of Total Revenue | n/a | 40% | 12% | 9% | 7% |
| Marketing dollars spent per Business Development person | $175,000 | $167,680 | $142,440 | $206,964 | $267,026 |
| Development and Technology Expenses | $900,000 | $1,048,000 | $4,154,500 | $8,623,500 | $11,443,950 |
| % of Total Revenue | n/a | 50% | 35% | 25% | 15% |
| General and Administration | |||||
| Expenses (including salaries) | $1,300,000 | $2,430,000 | $2,750,000 | $3,000,000 | $3,300,000 |
| % of Total Revenue | n/a | 22% | 10% | 4% | 4% |
| Other | $136,240 | $272,480 | $1,187,000 | $1,724,700 | $3,814,650 |
| % of Total Revenue | n/a | 13% | 10% | 5% | 5% |
| Operating Profit | ($2,686,240) | ($3,121,680) | ($1,206,900) | $7,693,140 | $29,505,990 |
| n/a | -149% | -10% | 22% | 39% | |
| Taxes (assume 35%) | $0 | $0 | $0 | $2,692,599 | $10,327,097 |
| Net Income | ($2,686,240) | ($3,121,680) | ($1,206,900) | $5,000,541 | $19,178,894 |
| 2000 | 2001 | 2002 | 2003 | 2004 | |
| Capital Expenditure | $600,000 | $600,000 | $1,000,000 | $1,000,000 | $1,000,000 |
| Depreciation | |||||
| Year 1 | $120,000 | $120,000 | $120,000 | $120,000 | $120,000 |
| Year 2 | $120,000 | $120,000 | $120,000 | $120,000 | |
| Year 3 | $200,000 | $200,000 | $200,000 | ||
| Year 4 | $200,000 | $200,000 | |||
| Year 5 | $200,000 | ||||
| Total Depreciation | $120,000 | $240,000 | $440,000 | $640,000 | $840,000 |
| Cash Flow from Operating Activities | 2000 | 2001 | 2002 | 2003 | 2004 |
| Net Income (loss) | ($2,686,240) | ($3,121,680) | ($1,206,900) | $5,000,541 | $19,178,894 |
| Depreciation and Amoritization | ($120,000) | ($240,000) | ($440,000) | ($640,000) | ($840,000) |
| Decrease (increase) in assets: | |||||
| Accounts receivable | $0 | $0 | $0 | $0 | $0 |
| Prepaid Inventory | $0 | $0 | $0 | $0 | $0 |
| Inventory | $0 | $0 | $0 | $0 | $0 |
| Increase (decrease) in liabilities | |||||
| Accounts payable | $0 | $0 | $0 | $0 | $0 |
| Net cash provided by (used in) operating activities | ($2,806,240) | ($3,361,680) | ($1,646,900) | $4,360,541 | $18,338,894 |
| Cash Flow from Investing Activities | |||||
| Capital expenditures | ($600,000) | ($600,000) | ($1,000,000) | ($1,000,000) | ($1,000,000) |
| Investments | $0 | $0 | $0 | $0 | $0 |
| Net cash used in investing activities | ($600,000) | ($600,000) | ($1,000,000) | ($1,000,000) | ($1,000,000) |
| Cash Flow from Investing Activities | |||||
| Borrow (repayments) | $0 | $0 | $0 | $0 | $0 |
| Issuance of preferred stock | $5,000,000 | $10,000,000 | $0 | $0 | $0 |
| Net cash (used in) provided by financing activities | $5,000,000 | $10,000,000 | $0 | $0 | $0 |
| Increase (decrease) in cash | ($3,406,240) | ($3,961,680) | ($2,646,900) | $3,360,541 | $17,338,894 |
| Cash beginning of period | $0 | $1,593,760 | $7,632,080 | $4,985,180 | $8,345,721 |
| Cash end of period | $1,593,760 | $7,632,080 | $4,985,180 | $8,345,721 | $25,684,615 |
