biotechnology business plan

NewAge BIOTEC, Inc. Business Plan

1 Proprietary & Confidential

NewAge BIOTECH, Inc.

BUSINESS PLAN

Business Plan Prepared by

Gerald Sawyer, PhD.

President & CEO

0000 Rainbow Blvd.

Metropolis, Anystate 00001

222-222-2222

Date Prepared

July, 200B



Table of Contents

EXECUTIVE SUMMARY...........................................................................................................4

MANAGEMENT AND ORGANIZATION..................................................................................6

Management team.......................................................................................................................6Compensation and ownership..............................................................................................8Contracts and agreements....................................................................................................8Board of directors/advisory council......................................................................................9Infrastructure.....................................................................................................................11Insurance...........................................................................................................................11Employee stock option plan and other incentives.............................................................11Capitalization....................................................................................................................13Organization charts...........................................................................................................12

PRODUCT AND SERVICE PLAN............................................................................................13

Purpose of the product or service......................................................................................13Unique features..................................................................................................................13Stage of development........................................................................................................13Future research and development.......................................................................................14Trademarks, patents, copyrights, licenses, royalties...........................................................14Government approvals......................................................................................................15Product and service limitations..........................................................................................17Product liability.................................................................................................................17Related services and spin-offs............................................................................................17Production.........................................................................................................................19Facilities............................................................................................................................19Suppliers............................................................................................................................20Environmental factors.......................................................................................................20

MARKETING PLAN................................................................................................................21

Industry profile..................................................................................................................21Current size...................................................................................................................21Growth potential...........................................................................................................21Geographic location.......................................................................................................22Industry trends...............................................................................................................22Seasonality factors.........................................................................................................22Profit characteristics.....................................................................................................22Distribution networks....................................................................................................22Basis of competition......................................................................................................23

Competition profile...........................................................................................................24Customer profile................................................................................................................24Target market profile........................................................................................................25Pricing profile...................................................................................................................26Gross margin on products...................................................................................................27Break-even analysis...........................................................................................................27Market penetration...........................................................................................................27

Distribution channels.....................................................................................................27Sales representatives/Direct sales force..........................................................................28Direct mail/telemarketing..............................................................................................28

Advertising and promotion................................................................................................28



Packaging and labeling.......................................................................................................29

Service and warranties........................................................................................................29

Trade shows.......................................................................................................................29

Future markets...................................................................................................................30

OPERATING AND CONTROL SYSTEMS................................................................................31

Administrative policies, procedures, and controls...............................................................31

Receiving orders ............................................................................................................31

Billing the customers .....................................................................................................31

Paying the suppliers.......................................................................................................31

Collecting the accounts receivable .................................................................................31

Reporting to management .............................................................................................32

Staff development .........................................................................................................32

Inventory control..........................................................................................................32

Handling warranties and returns .....................................................................................33

Monitoring the company budgets...................................................................................33

Security systems ............................................................................................................33

Documents and paper flow.................................................................................................33

Planning chart ...................................................................................................................32

Product development.....................................................................................................34

Manufacturing ...............................................................................................................34

Financial requirements...................................................................................................34

Marketing flow chart .....................................................................................................35

Market penetration .......................................................................................................35

Management and infrastructure......................................................................................35

Risk analysis......................................................................................................................36

Salvaging assets..................................................................................................................36

GROWTH PLAN ......................................................................................................................37

New offerings to market....................................................................................................37

Capital requirements..........................................................................................................37

Personnel requirements......................................................................................................38

Exit strategy......................................................................................................................38

FINANCIAL PLAN...................................................................................................................39

Sales Projections................................................................................................................39

Income Projections ...........................................................................................................39

Cash Requirements.............................................................................................................39

Sources of Financing..........................................................................................................39

Projected Financial Statements

Projected Cash Flow Statements

Projected Year-End Income Statements

Projected Year-End Balance Sheet

Ratio Analysis

SUPPORTING DOCUMENTS...................................................................................APPENDIX

Historical Balance Sheet

Sales Projections

Inventory Projections

Operating Expenses Projections

Depreciation Schedules

Capital Budget Projection



Executive summary

Venture HistoryNewAge BIOTECH, Inc. was formed in 19XX to develop, market and license its patented zinc peptidetechnology. The company has seen total revenue grow from $2.7 million in 19XX to an estimated$11.1 million in 200B. Although NewAge BIOTECH experienced a net loss of $4.5 million in 19XX, itis estimated the loss will be reduced to $0.4 million in 200B. In 200A, the company’s revenue grew by40 percent to $6.6 million from $4.7 million the prior year, while operating expenses increased by only6.7 percent to $7.45 million from $6.98 million. Overall, the company is again approaching profitability,and the zinc peptide technology is proving to be a significant platform from which to launch additionalproduct lines.

Venture DescriptionThrough various supply and distribution agreements for the mass retail market, NewAge BIOTECH,Inc., has accelerated its entry into the consumer market. Company operations are beginning to stabilizedue to increasing revenues and maintenance of operating expenses. The company has made a point ofaggressively protecting its intellectual property, not only the zinc peptide formulations, but also itstrade names. With the zinc peptide formulation, NewAge BIOTECH has been able to enter the premiumskin care markets, which carry a higher price and higher gross margins.

Venture OrganizationNewAge BIOTECH’s management team brings with it the ability to raise venture capital, prepareregulatory submissions for clinical trials, monitor the trials, and develop new technologies throughcutting-edge research and development. In addition, the members of the management team haveexperience in setting up the necessary infrastructure for early-stage companies that will ultimately makethem successful. In the case of NewAge BIOTECH, Inc., both the advisory board and board of directorsare exceptional idea people and scientists in their respective fields. Resumes for the members of themanagement team can be found in the Appendix.

Venture marketThe skin, hair and wound care industries are growing rapidly. The Baby Boomer generation is moreactive than their parents and also more concerned about their appearance. They have a perceived need tomaintain a youthful appearance through skin lotions, cosmetic surgery and hair thinning treatments. Inaddition, people are living longer, which means they may find a need for skilled nursing homes, where theelderly often develop chronic wounds. A number of large health care competitors have expansive productlines and sell their wound care products at a premium price. These same companies have majordistribution networks but lack the personal customer service that skin and health care product salesdemand.



Rather than competing directly with the large health care companies, NewAge BIOTECH has negotiateddevelopment and distribution agreements with other large health care companies. Therefore, NewAgeBIOTECH has been able to limit the size of its own direct sales force. The company has acquired otherskin care companies, thus rapidly expanding its product offerings. Its zinc peptide formulation hasproven to be more effective than other skin and wound care products currently on the market.

The worldwide chronic wound care market is expected to exceed $4 billion. The worldwide market forthinning hair products is said to be $1.5 billion. The cosmetic surgery market has exceeded $2 billion.

Venture OperationsNewAge BIOTECH plans to continue its skin and hair care product development and has introduced anumber of anti-aging and related products this past year. The company has expended $1,275,294,$1,744,421, and $2,422,076 on research and development in the last three years. The company hasincurred losses since its inception due to the marketing expense of product launches and the costs ofsupporting research, development, and clinical studies of its proprietary technology. NewAgeBIOTECH has relied primarily on equity financing, product sales, contract manufacturing, interestincome and corporate partnerships to fund its operations and capital expenditures. Once its productlines have expanded and achieved market acceptance, NewAge BIOTECH expects that it will begin toshow profitability.

Venture FinancingNewAge BIOTECH’s contract manufacturing operation revenue has grown to $1,000,000 this past year.This is an increase of 42% over the previous year. This increase reflects several new customer projectsand the continuation of a long-term agreement negotiated in 19XX. However, NewAge BIOTECH’sboard of directors has recommended that the contract manufacturing be divested and function as asubsidiary of the company. With the continued success of the proprietary zinc peptide technology,NewAge BIOTECH feels that operating a growing contract manufacturing capability would take awayfrom its efforts to maintain that success. Depending on the level of funding by investors, NewAgeBIOTECH may become a minority shareholder in the new entity. Therefore, we are asking you to lookat the company’s contract manufacturing capability and products as an opportunity for investment. Welook forward to providing you a more formal presentation of the market opportunities that exist forNewAge BIOTECH’s products and services.



Management and organization plan

Management team

NewAge BIOTECH’s management, Gary Smith, PhD, Jeff Jones, Paul Talent, and Gary Sawyer, PhD,make up a seasoned and start-up savvy team that contribute complementary expertise in clinicalresearch, biopharmaceutical development, strategic planning, and business administration. The teamoffers nearly 50 years of combined biotechnology experience and has a successful track record in drugtesting and approval. The individual members of the management team have worked together in previoussuccessful ventures.

Gerald L. Sawyer, PhD, President & CEO. Dr. Sawyer is an experienced business executive andentrepreneur with over fifteen years in senior management in the biotechnology industry. He has co-founded and served on the board of directors of two successful start-up medical technology companies.He is the former president & CEO of Pharma, Inc., a private drug delivery company which he foundedand established operations for in Denver, Colorado. His experience also includes service as the vicepresident of scientific affairs and COO at Immune Corporation, a publicly traded biotechnologycompany engaged in the research and development of cancer immunotherapeutics. Dr. Sawyer has alsoserved as manager of Drug Delivery Research at Avex Laboratories Inc., where he participated in thestart-up, spinout and initial public offering activities of the company, and as director of operations atInhouse Research Institute, Inc., a successful contract toxicology company that he co-founded.Throughout his career, Dr. Sawyer has refined his expertise in the start-up business environmentincluding small business administration, operations, team building, fund raising, and strategic businessdevelopment. Dr. Sawyer holds a bachelor of science in chemistry from Wayne State University andreceived his doctorate in biochemistry from Colorado State University.

Gary J. Smith, Ph.D., Vice President, Research & Development. Dr. Smith has 15 years of experience inboth the biopharmaceutical industry and federal government, most recently serving as vice president ofdrug development at Pharma, Inc. and director of pharmacology and toxicology at Somnex, Inc. Prior tothat, Dr. Smith was a tenured scientist and project manager at the National Institute of Health andrecently completed a term on the board of directors of the American Board of Toxicology. Dr. Smith haswritten more than 60 peer-reviewed publications and book chapters and is the inventor on patents in thearea of inflammation and hematopoiesis. Dr. Smith received his Ph.D. from New York University andholds a Diplomate from the American Board of Toxicology.



Jeffrey L. Jones, VP Clinical Development. Mr. Jones is a qualified clinical research manager with over 10years’ experience in the biopharmaceutical industry. He has served as medical research manager forClinical Research, Inc., where his responsibilities incorporated the design, implementation, and directionof multi-center clinical research trials in various therapeutic areas including diabetes, dermatology, andoncology. Mr. Jones’s drug development background encompasses all levels of clinical trial management,having held positions as senior clinical research associate with Pharmaceutical Research Associates, Inc.,regional clinical research associate and project manager with PLL Pharma, Inc., clinical monitor withAvex Laboratories, Inc., and clinical studies coordinator with Telectronics. Mr. Jones also served aspreclinical studies group leader at Avex Laboratories, Inc. Mr. Jones received his BS degree in biologyfrom Colorado State University and trained as a U.S. army medic specializing in flight, ER, and traumamedicine. He is also certified in Good Manufacturing Process Management. Mr. Jones has authorednumerous publications and holds several patents related to clinical research and drug formulationdevelopment.

John Bass, VP Sales & Marketing. Mr. Bass has over 20 years’ experience in sales and marketing. Heserved as vice president of sales and marketing for Southern Biotech supervising 20 sales representativesand four regional managers. Prior to that he was vice president of marketing for Neutraceuticals, Inc.,where he had responsibility for a sales force of 25 and oversight for advertising and promotion. Mr. Basshas a master’s degree in marketing and a bachelor of science in business administration.

Paul A. Talent, Controller. Mr. Talent is an experienced business development executive with over 13years of experience in various industries. He directed the sales & marketing groups for SheltonCorporation, following promotions from sales representative, area sales manager, and regional salesdirector. He has been recognized nationally and received numerous awards for his sales expertise innumerous categories and is recognized by his peers for his skills in closing multi-million dollar deals. Hehas extensive experience in new business development and, in this capacity, has served as a consultant toseveral medical technology companies, including Pharma, Inc., and MedLinc Corporation. Mr. Talent hasalso served as a managing partner in a private firm for home and commercial loans. Mr. Talent attendedLong Beach State University where he majored in business and communications.



Compensation and ownership

NewAge BIOTECH functions as a corporation. The salaries of the management team are listed below.The stock options listed for Mr. Bass are based on certain milestone events. These milestone eventsinclude, but are not limited to, an increase in annual sales, new customers generated, maintenance of salesand marketing expenses, etc.

Common Stock Number of Shares

Gerald L. Sawyer $200,000/yr 500,000Sunil J. Adil 1,000,000Gary J. Smith $130,000/yr 250,000Jeffrey L. Jones $130,000/yrJohn Bass $125,000/yrPaul A. Talent $ 90,000/yr

250,000(Options) 250,000

2,250,000

Contracts and agreements

NewAge BIOTECH has the following certificates and agreements on file. For copies of these documents,please see the Appendix.

Certificate of IncorporationLicense AgreementsApplication for Employer Identification NumberConfidentiality AgreementStock Incentive PlanTerm SheetSubscription AgreementShareholder AgreementUnited States PatentsByLaws of NewAge BIOTECH, Inc.Building Lease AgreementsUniversity Research AgreementsDistributor Agreements



Board of directors/advisory council

In addition to Drs. Smith and Sawyer the company’s Board of Directors includes:

Sunil J. Adil, MD, PhD, MRCPath, FRCP. Dr. Adil is a physician-scientist and inventor of thecompany’s technology. He is currently professor of general medicine & endocrinology and a professor inthe Graduate School of Pharmacology at the University of New York Medical School. He also holdsaffiliations in the Department of Internal Medicine and the Department of Pharmacology & Toxicology.He graduated from medical school in Peradeniya, Sri Lanka, in 1975 and earned a Ph.D. in endocrinologyin 1989 at the University of London. In recognition of his many contributions to bone-related researchover the previous 16 years, he was awarded the Frame Award for clinical excellence at the AmericanSociety for Bone and Mineral Research meeting in 19XX. He has been awarded several younginvestigator awards. He is the author of 75 peer-reviewed scientific papers, over 65 invited lectures, 35reviews and editorials, nine book chapters, and two books, and has given over 150 presentations atscientific meetings. In recognition of Dr. Adil’s original contributions to neuroscience, he was elected tothe fellowship of the International Neuropeptide Society in 19XX. Also, in recognition of hiscontributions to clinical medicine, he was elected as a fellow of the Royal College of Physicians, London(FRCP) in 19XX.

Donald P. Brown, Ph.D. Dr. Brown is recognized internationally as an expert in the fields of humantumor immunology, immunotherapy, and experimental cancer therapy. He is currently the administrativedirector of the Cancer Institute at the Medical College of Ontario, and previously he was the scientificdirector of the Rushton University Cancer Institute. He has authored more than 70 original articles in thepeer-reviewed literature, written 10 invited reviews and chapters, and edited one book in the areas ofcancer medicine and experimental therapies. Dr. Brown has served as a scientific advisor and consultantto Abbott Laboratories, Pfizer Pharmaceuticals, Boehringer Mannheim, Winthrop Pharmaceuticals, Ciba-Geigy, and Lorus Pharmaceuticals.

Charles H. Severson, M.D. (Pending). Dr. Severson is the chairman, CEO, president, and co-founder ofSolidRock, Inc., a privately held, venture-backed health care company based in Denver, Colorado. Priorto founding SolidRock, Dr. Severson served as co-founder, CEO, and chairman of Roden Systems, Inc., amedical information services company that, over the course of three years, grew to $50 million in annualrevenues. Dr. Severson also has been chairman, CEO, president, and founder of Somnex, a publiclytraded biopharmaceutical company and was CEO and president of Somnex Instruments, which was soldto Beckman Instruments in 1989. During his academic career, Dr. Severson received numerous awardsand recognitions. He was a teaching and research scholar and a fellow of the American College of ChestPhysicians. He has held the positions of professor of medicine, clinical director, and director of theHouse Staff Training Program of the Department of Medicine at the University of Colorado; and seniorscientist and vice-president of the Eleanor Roosevelt Institute. Dr. Severson is board certified in internalmedicine and pulmonary medicine. He earned his medical degree from the University of Colorado,training in internal medicine at Duke University and pulmonary medicine and critical care at theUniversity of Colorado, and training in molecular and cellular biology at the University of Colorado andthe Eleanor Roosevelt Institute. NewAge BIOTECH is currently in discussion with Dr. Severson tofinalize his appointment to the board of directors.



Clinical and Scientific Advisory Board

NewAge BIOTECH has assembled an expert clinical and scientific advisory board composed of leadingidea people in surgery, trauma, regulatory affairs and general medicine.

Advisor Specialization

Jon C. Phillips, PhD ToxicologyEdgar D. Star, MD, PhD Surgery, Wound HealingBarbara Greenwood Clinical & Regulatory AffairsRobert W. Wood, PhD Peptide Drug DevelopmentJudith Brawn, RN Managed CareRonald Shipley, MD OncologyGerry Cetus, MD TraumaHarry Roby, MD Wound CareArthur R. Sandman, MD General Medicine



Infrastructure

Corporate AdvisorsCorporate Counsel

Hogan & Hartson, LLP1000 BroadwaySuite 200 Boulder, CO 80302Fees range from $150-250/hr

AuditorArthur Andersen LLP1000 Seventeenth StreetSuite 3100Denver, CO 80202Fees range from $100-200/hr

BankingSilicon Valley Bank1000 Arapahoe AvenueSuite 225 Metropolis, KS 66061-7002Fees are based on the type of transaction.

Insurance

NewAge BIOTECH carries a product liability insurance policy of $5,000,000 through PrudentialInsurance with a premium of $500 per month. The company also has a term life insurance policythrough National Life Insurance Co. on Dr. Gary Sawyer with a value of $1,000,000 at a cost$100/month.

Employee stock option plan and other incentives

The shareholders have approved a non-employee director stock plan, reserving 200,000 shares forissuance to directors. Two hundred thousand additional shares were approved for the plan at thecompany's annual shareholders meeting on May 23, 200A. Under this plan eligible directors receive all ora portion of their quarterly retainer fees in shares of the common stock of the company. The number ofshares each eligible director receives is based on the average fair market value of the common stock forthe last 20 business days of the fiscal quarter. NewAge BIOTECH has stock option plans for directors,officers, employees and consultants that provide for grants of nonqualified and incentive stock options.Options generally are granted at fair market value, expire between five and ten years from grant date andvest ratably over three to five years.



Capitalization

NewAge BIOTECH has relied primarily on equity financing, product sales, contract manufacturing,interest income and corporate partnerships to fund its operations and capital expenditures. Thecompany expects negative cash flow from operations to continue at least through the second quarter of200B. NewAge BIOTECH may require additional funds to expand or enhance its sales and marketingactivities and to continue product development. The company's future capital requirements will dependon numerous factors including its own efforts and the efforts of its collaborative partners tocommercialize its products; continued progress in research and development programs; relationshipswith existing and future corporate collaborators, if any; competing technological and marketdevelopments; costs involved in filing, prosecuting and enforcing patent claims; time and costs ofcommercialization activities and other factors. As of December 31, 200A, NewAge BIOTECH had cash,and cash equivalents of $2.8 million. The company estimates that, at its planned rate of spending, itsexisting cash and cash equivalents and the interest income thereon will be sufficient to meet its capitalrequirements for at least the next twelve months.

Organization charts

Clinical Trials Pre-Clinical Studies

VP Clinical Development

Technical Services

Internal R&D Sponsored Research

VP Research & Development

Distributors Sales Force Marketing

VP Sales & Marketing

Customer Service Accounting

Controller

President/CEO



Product and service plan

Purpose of the product or service

Wound care products can be used to treat diabetic ulcers, non-healing wounds, burns, trauma wounds,subcutaneous trauma, and various forms of dermatitis. In addition, the products are also useful inreducing the formation of scar tissue. NewAge BIOTECH’s wound care products are used in hospitals,nursing homes, home care units and other health care facilities. The company’s skin lotions, cleansersand hydrating gels are used to treat patients following chemical peels, microdermabrasion and lasertreatments, as well as those with specific skin conditions. The company’s hair care products are used byboth men and women to treat thinning hair.

Unique features

Zinc levels in most humans have been shown to decline with age. Research shows that a zinc deficiencyis associated with impaired wound healing. The company’s proprietary formulations, including its zincpeptide technology, are capable of accelerating tissue growth, repair and regeneration by stimulatingcollagen synthesis, and new blood vessel growth. Hair follicles require high concentrations of biologicalzinc, and Trielite™ products deliver zinc along with amino acids for nourishing and stimulating the hairand scalp for improved health, strength, and appearance.

Stage of development

NewAge BIOTECH Corporation was founded in 19XX and has its corporate offices in Metropolis,Anystate. Its first commercial product was developed in 19XX. New Age Biotech is a health carecompany that develops, manufactures and markets products for skin, hair and wound care. Many of thecompany's products incorporate its patented zinc peptide technology. The company's products aretargeted for use in dermatology, plastic and cosmetic surgery markets and for therapeutic maintenance ofthe skin and hair. The company's focus has recently expanded to include a wide variety of consumermarkets for skin care products via strategic partners.

NewAge BIOTECH’s mission is to market and/or license patented zinc peptide technologies for skinand hair care applications. Its novel zinc peptide technology is just beginning to expand into theconsumer market, and has the potential for significant, rapid growth following in the steps of AHAs(alpha hydroxy acids) and retinol. The goal is to generate profits from the sale of the products that thecompany develops and licenses. To augment the commercialization of its technology, NewAgeBIOTECH has entered into distribution and license agreements primarily in the consumer markets and,to a lesser extent, the wound care markets. Consistent with this goal, the company intends to retain andexpand its proprietary rights to its products and technologies.



Future research and development

During 19XX, NewAge BIOTECH acquired NewDerm, Inc., and with it the rights to several products invarious stages of development. The company introduced its first product based on the acquiredtechnology during the third quarter 200A as part of the NewAge(R) oily skin product line. The companyintroduced a number of anti-aging products and related products in 200A and plans to continue its skinhealth and hair care product development. The company also plans to continue to evaluate companies,products and technologies that offer synergistic opportunities for NewAge BIOTECH to leverage itsposition in the medical marketplace for acquisition and/or distribution.

NewAge BIOTECH believes that its products' functionality and/or pharmacological activity make thempotential candidates for further development as pharmaceutical or therapeutic agents. The company'spreclinical efforts will continue to focus on supporting existing business through developing "proof ofconcept" data for potential pharmaceutical partners. The company sponsors a research and developmentlaboratory at the University of Central Ohio to expand preclinical research in various productapplications and mechanisms of action. With this arrangement, NewAge BIOTECH has access to leadingauthorities in immunology and cell biology, as well as facilities and equipment to engage inexperimentation and analysis at the basic research level.

Trademarks, patents, copyrights, licenses, royalties

As is industry practice, NewAge BIOTECH has a policy of using patents, trademarks and trade secretsto protect the results of its research and development activities and, to the extent it may be necessary oradvisable, to exclude others from appropriating its proprietary technology. The company's policy is toaggressively protect its proprietary technology by seeking and enforcing patents in a worldwideprogram.

NewAge BIOTECH has obtained patents or filed patent applications in the United States andapproximately 26 other countries in three series regarding the compositions of zinc peptide derivatives,the processes by which they are produced and the methods of their use. The first United States patentapplication in this first series, covering the composition claims of zinc peptide derivatives, matured intoUnited States Patent No. 0,111,935 (the "935 Patent"), issued on April 5, 19XX.

United States Patent No. 0,112,890 (the "890 Patent") was issued on April 17, 19XX, from a divisionalapplication to the 935 Patent. The 890 Patent generally relates to the basic processes of producing zincpeptide derivatives, to certain specific examples of such processes and to certain formulations of zincpeptide derivatives. Foreign patents that are counterparts to the foregoing United States patents havebeen granted in some of the member states of the European Economic Community and several othercountries.



The second series of patent applications relates to preferred processes for the production of zincpeptide derivatives. A Patent Cooperation Treaty application based on the parent United Statesapplication has been filed designating a number of foreign countries where the applications are pending.

NewAge BIOTECH also relies upon, and intends to continue to rely upon, trade secrets, unpatentedproprietary know-how and continuing technological innovation to develop and maintain its competitiveposition. The company typically enters into confidentiality agreements with its scientific consultants,and NewAge BIOTECH’s key employees have entered into agreements with the company requiring thatthey forbear from disclosing confidential information of the company and assign to the company allrights in any inventions made while in the company’s employ relating to the company’s activities.Accordingly, the company believes that its valuable trade secrets and unpatented proprietary know-howare adequately protected. NewAge BIOTECH also believes that its trademarks and trade names arevaluable assets; consequently, the names of various product lines are protected by trademarks.

Governmental approvals

NewAge BIOTECH is not currently under any restrictions by a regulating governmental agency. Themanufacturing and marketing of the company’s products are subject to extensive regulation in the UnitedStates by the federal government, principally by the FDA, and in other countries by similar health andregulatory authorities. The Federal Food, Drug and Cosmetic Act, and the regulations promulgatedthereunder, and other federal and state statutes govern, among other things, the testing, manufacture,safety, labeling, storage, record-keeping, advertising and promotion of cosmetic products and medicaldevices. Product development and approval or clearance within the regulatory framework requires anumber of years and involves the expenditure of substantial resources.

NewAge BIOTECH’s products and product candidates may be regulated by any of a number ofdivisions of the FDA. The process of obtaining and maintaining regulatory approvals for themanufacturing or marketing of the company's existing and potential products is costly and time-consuming and is subject to unanticipated delays. Regulatory requirements ultimately imposed couldalso adversely affect the ability of the company to clinically test, manufacture or market products.

In the United States, products that do not seek to make effectiveness claims based on human clinicalevaluation may be subject to review and regulation under the FDA's cosmetic or 510(k) medical deviceguidelines. Similar guidelines exist for such products in other countries. Such products, which includewound care dressings and certain ointments and gels, must show safety and substantial equivalency withpredicate products already cleared by the FDA to be marketed.

In addition to obtaining approval or clearance from the FDA or foreign regulatory bodies to market aproduct, NewAge BIOTECH’s quality control and manufacturing procedures must conform to currentgood manufacturing practices ("cGMP") guidelines, or ISO 9000 standards, when appropriate. Incomplying with these regulations, which are subject to change at any time without notice, NewAge



BIOTECH must continue to expend time, effort and financial resources in production and qualitycontrol. In addition, the company’s manufacturing plant is subject to the regulations of and inspectionsby other foreign, federal, state or local agencies, such as local and regional water and waste treatmentagencies, and state and federal safety and health agencies.

NewAge BIOTECH also is or may become subject to various other federal, state, local and foreign laws,regulations and policies relating to, among other things, safe working conditions, good laboratorypractices, and the use and disposal of hazardous or potentially hazardous substances used in connectionwith research, development and manufacturing. Failure to obtain regulatory approvals for its productcandidates or to attain or maintain compliance with cGMP or other manufacturing requirements wouldhave a materially adverse effect on the company's business.

The packaging, labeling and advertising of the NewAge BIOTECH’s products are subject to regulationby one or more federal agencies, including the FDA, the FTC, the USDA and the EPA. These activitiesare also regulated by various agencies of the states, localities and foreign countries to which thecompany’s products are distributed and sold. The Dietary Supplement Health and Education Act of19XX ("DSHEA") revised the provisions of the FFDC Act concerning the composition and labeling ofdietary supplements and, in the judgment of the NewAge BIOTECH, is favorable to the dietarysupplement industry. The legislation created a new statutory class of "dietary supplement" whichincludes vitamins, minerals, herbs, amino acids and other dietary substances for human use tosupplement the diet. DSHEA grandfathered, with certain limitations, dietary ingredients on the marketbefore October 15, 19XX. A dietary supplement which contains a new dietary ingredient, one not onthe market before October 15, 19XX, requires evidence of a history of use or other evidence of safetyestablishing that it will reasonably be expected to be safe. The majority of the products marketed byNewAge BIOTECH are classified as dietary supplements under DSHEA.



Product and service limitations

NewAge BIOTECH’s skin care products may not be effective for everyone. Customers should consult aphysician when considering a product for their skin type. If a skin or hair care product elicits an allergicreaction such as itching, redness or swelling, a physician should be contacted immediately. Wound careproducts should not be used as a primary treatment for ongoing infections. In the case of persistentinflammation, a physician should be consulted and treatment discontinued. In the case of deep woundsor serious burns, the company’s wound care products should only be used as recommended by aphysician. Customers should avoid direct contact of skin care and wound care products with the eyes.

Product liability

Clinical trials or marketing of any of the current and potential products may expose the company toliability claims from the use of these products. NewAge BIOTECH carries product liability insurance forthat purpose. Since the company maintains a supply of hazardous materials at its facilities, it is subjectto federal, state and local laws and regulations governing the use, manufacture, storage, handling anddisposal of hazardous materials and waste products. In the event of an accident, the company could beheld liable for resulting damages. The company maintains a database of medical and/or technical product-related inquiries from consumers, physicians or other third-party customers. The company alsomaintains a record of all complaints or reports of an actual or potential failure of any product to meet thespecifications set forth in regulatory filings. A Product Discrepancy Committee meets monthly toreview trends of customer complaints or reports. If when received, a customer complaint may require aproduct recall, the Product Discrepancy Committee meeting will be called at that time to review thecomplaint and develop a plan of action.

Related services and spin-offs

In 200A, NewAge BIOTECH continued to emphasize products that incorporate its zinc peptideformulations, which address skin health, hair care and wound care needs. The company has identifiedseveral broad markets for its products, such as dermatology, plastic and cosmetic surgery and consumerskin care. Most of the products developed by the company incorporate the clinically tested zinc peptideformulations. Several recent studies have confirmed the advantages of products containing the zincpeptide formulation versus materials such as trentinoin and Vitamin C, and other popular anti-aging andskin rejuvenation products.

Scientific literature documents the ability of zinc peptide wound care gels and creams to stimulatecollagen synthesis, new blood vessel growth and tissue repair. These discoveries have led to thedevelopment of a variety of products designed to treat the skin following certain cosmetic proceduressuch as microdermabrasion, laser resurfacing and hair transplantation. An increasing number of thesecosmetic procedures are performed each year as the Baby Boomer population ages. NewAge BIOTECHhas introduced a series of products tailored to the needs of these markets, such as its Isle IntensiveRepair Crème™, Isle Cleanser™ and Isle Hydrating Gel™ products used to treat patients following



chemical peels, microdermabrasion and laser treatments. During 200A, a new Isle Post Laser Lotion™was introduced to complement its existing products. The Isle products provide a comprehensiveapproach to post-procedure care and allow NewAge BIOTECH to differentiate its line of skin careproducts on the basis of its proprietary zinc peptide technology.

NewAge BIOTECH has also launched its NewAge Therapy™ line of anti-aging products in response todemand from physicians’ customers. The original NewAge Therapy™ line of three products nownumbers seven. In addition, complementary treatments include oily skin, dry skin and sensitive skinproducts for specific skin conditions. Some of the new products incorporate the technology acquiredwith the NewDerm, Inc., acquisition. The New Age Xenograft™ System was launched in 19XX toaddress the special tissue repair needs of patients following hair restoration surgery.

NewAge BIOTECH believes its technology has tremendous potential in a variety of consumer skin caremarkets. Consumer and physician awareness of the ability to improve skin health and appearance withproducts designed specifically to meet the needs of the aging is increasing. Specific ingredients, such asAHA (alpha hydroxy acid) and retinols have played a major role in expanding the anti-aging andspecialty skin care markets. NewAge BIOTECH believes that its zinc peptide formulation has the sameability to grow the skin care markets and generate the same presence in the market place.

In April 200A, NewAge BIOTECH entered a long-term worldwide license agreement with AxionCorporation, a Johnson & Johnson Company, for worldwide use of its patented zinc peptide Complexesin products for skin health. Axion develops, manufactures and markets internationally premium skin andhair care products. In 19XX, New Age Biotech entered into an exclusive worldwide supply andmarketing agreement with Genera Corporation, pursuant to which the company granted Genera the rightto market zinc peptide products to the prestige department store skin care market. Genera sells productsto Saks, Talbots, Nordstroms, Dillards and other leading prestige stores throughout the world.

NewAge BIOTECH also expects to continue to license its zinc peptide technology to other companiesfor specific market segments in the skin care category. The company believes that it can developproducts for one or two niche market segments. These products can be marketed, cost effectively, as aseparate line of products. NewAge BIOTECH commenced shipping its Trielite™ line of Trielite ZincComplex™ hair care products to physicians' offices in the third quarter of 19XX. Trielite™ Shampoos,Conditioners and Follicle Therapy Solution are positioned to participate in the rapidly growing $1.5billion worldwide hair care market as a program for the maintenance of thinning hair in men and women.Hair follicles require high concentrations of biological zinc and the Trielite(R) products deliver zinc alongwith amino acids for nourishing and stimulating the hair and scalp for improved health, strength andappearance.



Production

Production of all NewAge BIOTECH’s products follows the steps below:

v The production process begins with the formulating of the product in a particular batch size.v If the product requires sterilization, it will be steam sterilized per specifications.v Many of the products utilize a preservative to maintain a low bioburden of microorganisms.v The product is then dispensed through a sterilized multivac tubing system into the appropriate

container.v Representative samples are removed for quality control and sterility.v All other products are packaged and sent to quarantine.v Performance testing and analysis is normally completed in 3-5 days.v Sterility testing is normally completed in 7-10 days.v The Quality Control Department has the authority to release or discard the product.v If retesting of product is required, new samples are requested from quarantine.v When released by quality control, the product is moved from quarantine to shipping.

Facilities

NewAge BIOTECH believes that all its manufacturing and laboratory facilities, and laboratoryequipment are in satisfactory condition and are adequate for the purposes for which they are used. Thecompany’s corporate headquarters and principal U.S. manufacturing facility in Metropolis, Anystateoccupies 50,000 square feet. The company owns the facility. The manufacturing operations occupyapproximately 35,000 square feet of the facility, and administrative offices occupy approximately15,000 square feet. The company's in-house research and development and quality assurance activitiesare conducted in a section of the space devoted to administration. Warehousing and distribution arecontained in the manufacturing operations section of the facility.

During Fiscal Year 200A, NewAge BIOTECH continued to utilize the excess capacity in itsmanufacturing facility to provide processing and other services to pharmaceutical and biotechnologyclients. The company currently manufactures proprietary bulk material that is shipped to its corporatepartners for packaging, labeling and eventual sale to their customers. The expense of the contractmanufacturing operation has continued to exceed the revenue it generates. NewAge BIOTECH isexploring the possibility of selling the assets and liabilities of its contracting manufacturing operations toa group of investors. This sale would be in line with the company’s mission to develop, market, andlicense its patented skin care technology.



Suppliers

Chemicals, plastic ware and glassware are obtained from national scientific supply houses such as FisherScientific and Sigma Chemical Company. NewAge BIOTECH has annual purchasing contracts forpowdered chemicals from leading chemical supply houses. These chemical supply houses are allowed tobid for the contract each year. The award of the bid is based on not only the lowest price but also theability to of the supplier to maintain sufficient inventory of the raw materials and ship in a timelymanner.

Environmental factors

The manufacturing, processing, formulating, packaging, labeling and advertising of NewAge BIOTECH’sproducts are subject to regulation by one or more federal agencies, including the FDA, the FTC, theUSDA, OSHA and the EPA. These activities are also regulated by various agencies of the states,localities and foreign countries to which the company’s products are distributed and sold. The FDA, inparticular, regulates the formulation, manufacture and labeling of vitamin and other nutritionalsupplements. The company has developed a program to recycle paper, plastic and aluminum, with theproceeds going to local charities.



Marketing plan

Industry profile

Current sizeAccording to “Chronic Wound Care: U.S. Markets for Wound Management Products” (Medical DataInternational), an estimated six million people suffer from chronic wounds in the United States. Of thesix million people with chronic wounds, nearly three million have pressure sores, over two million havediabetic ulcers, and over one million suffer from venous stasis ulcers. Diabetic ulcers are responsible for60,000 limb amputations each year, accounting for more than half of all such procedures not related totrauma. Venous stasis disease and pressure sores often afflict the elderly, who constitute the mostrapidly growing segment of the U.S. population and account for a disproportionately large share of totalU.S. health care expenditures. The wound care segment of the U.S. health care industry generatedapproximately $5 billion in expenditures in 19XX. The wound care market anticipates continued growthdue to the aging population and the increasing incidence of health disorders, such as diabetes, which maylead to chronic wounds.

The retail market for salon hair care products, including the newly introduced thinning hair marketchannels, was in excess of $4 billion in the United States in 200A, according to Dun & Bradstreet. It is arapidly growing market segment with over 60 million men and women affected by thinning hair as part ofthe aging process. The company’s mission is to develop, market, or license its patented zinc peptidetechnology as the next wave in dynamic skin care, pushing past the saturated AHA and Retinolproducts. The company has its own sales force calling on dermatologists and plastic and cosmeticsurgeons, where it has established product efficacy and credibility. The company is presently licensingits technology to major skin care companies in various skin care market segments.

Growth potentialThe revenue opportunity to NewAge BIOTECH is sizable as the worldwide skin care market isestimated to be over $22 billion. The company hopes to have marketing arrangements with 10 to 15well-placed companies by the end of 200C, which can generate revenues in excess of $50 million by200F. Hair loss affects 40 million men and 20 million in the United States according to The Hair LossWatch. The FDA has estimated that the hair replacement market is at $1 billion annually. The AmericanAcademy of Facial Plastic and Reconstructive Surgery has reported that over $2 billion per year is beingspent on cosmetic surgery. The worldwide market for wound care products is estimated to be $3 billionby the American Wound Care Association. The growth rate for the U.S. wound care market is 12.2%with annual revenues of $26 million according to Dun & Bradstreet.



Geographic locationsNewAge BIOTECH’s products are sold and used worldwide. The company's wound care products aresold primarily to specialty distributors, domestic and foreign, and its skin health and hair care productsare sold primarily to physicians.

Industry trendsAs more and more appearance-conscious Baby Boomers age, new challenges and opportunities arise forhair care manufacturers. Thinning hair and baldness have typically been considered a male problem, but itcan also be a problem for women caused by stress or pregnancy. Studies have shown that nearly 30million women in this country suffer from hereditary hair thinning. As Baby Boomers turned 50 in the1990s, the market for products to fight aging grew considerably. Many are willing to use whatever isavailable to remain young, including cosmetic surgery.

According to the American Academy of Facial Plastic and Reconstructive Surgery, plastic surgery is oneof the fastest growing specialties in the nation, due in part to the fitness movement. As the U.S.population continues to live longer, the incidence of chronic wounds is also expected to rise, creatingincreasing demand for wound care products. The fastest growing segments of the advanced wound caremanagement products market are for novel therapies such as growth factors and skin substitutes.Manufacturers will need to demonstrate that these therapies speed the healing process and that the initialhigh costs of these solutions will be balanced out by the cost savings in the long run. The zinc peptideproducts patented by NewAge BIOTECH can make this claim.

Seasonality factorsThere is some seasonality to the skin care product line, especially in areas where protection from thedamaging rays of the sun is needed.

Profit characteristicsThe sale of skin care products directly to physicians carries the highest profit margins. The distributionof a company’s products through a network of domestic and foreign distributors carries the lowest profitmargins. Distributors have the added responsibility of marketing, sales and shipping that lower the profitmargin available to a company. The products sold directly to and distributed by physicians carry anaverage profit margin of 40-50%. The products sold by a network of domestic and foreign distributorshave an average profit margin of 20-30%.

Distribution channelsIn December 19XX, NewAge BIOTECH entered into an exclusive distribution agreement covering theUnited States and Canada, with the Acme Medical Division for the hospital, nursing home and extendedcare markets. Isle Hydrating Gel™, Isle Wound Cleanser™, and Isle Wound Dressing™ were added tothe Acme Medical Division sales effort in January 19XX. Acme Medical Division is required to makecertain minimum annual purchases, but has not achieved that level. NewAge BIOTECH has agreed to



continue the Acme Medical Division agreement through 200B on a non-exclusive basis, while it evaluatesits options in this connection.

Subsequent to the agreement with the Acme Medical Division, NewAge BIOTECH entered intoexclusive distribution agreements for the registration and distribution of certain of its wound careproducts in various foreign countries, through Xenon KgaA, for Latin America and South Africa. Theinitial shipment of products to Brazil was made in the third quarter of 200A. Additional shipments toother Latin American countries are expected to begin in 200B. Adelade SpA, an Italian medical productscompany, signed an agreement in 19XX for France and Italy. NewAge BIOTECH has also given Adeladea right of first negotiation for distribution to the rest of Europe, contingent upon obtaining CE Markregistration. Initial product shipment should begin in late 200B.

NewAge BIOTECH has also entered into a distribution agreement with Beta Pharma International, Inc.,a division of Beta Biosystems, Inc., for countries in the Far East, but as a result of unexpected regulatoryand distribution issues with its distributor, Beta did not achieve the minimum level of annual purchasesspecified in the agreement, and the agreement was terminated in March 200A, with registrations revertingto the company. NewAge BIOTECH anticipates that product registration in certain countries may takewell over a year to secure, with no assurance that registration will be obtained or that the products willbe commercially successful in all of the various countries.

Basis of competitionCompetition in the wound care, skin health and hair care markets is intense. NewAge BIOTECH’scompetitors include well-established pharmaceutical, cosmetic and health care companies as well asemerging biotechnology companies. Many of these competitors have substantial financial resources, largeresearch and development staffs, extensive experience and capabilities in researching, developing andtesting of products in clinical trials, and in obtaining FDA and other regulatory approvals. Theirmanufacturing facilities, marketing resources and distribution networks also contribute to their ability tocompete in the wound care, skin health and hair care markets. The contract manufacturing servicebusiness is also highly competitive. Competitors include major chemical and pharmaceutical companies,as well as specialized biotechnology firms, smaller contract chemical manufacturers and someuniversities.

Overall, companies compete by being a leading provider of a full line of technologically advanced skinand wound care products, supported by exceptional customer service, expansive marketing programs,education and clinical support. The primary area that affects competition in the skin care market isadvertising. A well-placed ad proclaiming the effects of a company’s anti-aging products or cosmeticsurgery services goes a long way in providing a competitive edge.



Competition profile

There are a number of competitors in the skin, hair and wound care industries. Many of these companiesare quite large such as 3M, Kendall, Convatec and Ethicon. Many of these companies are divisions ofmajor health care companies such as Bristol Myers Squibb and Johnson and Johnson. Being a division ofa much larger company is both a strength and a weakness. It offers the strength of a large distributionnetwork but is also a weakness in that response to customers’ needs may be compromised. Often, thelarger parent company will dictate the business strategy of the smaller firm. Although the companiesnamed control a significant share of the market, NewAge BIOTECH feels that the strength of itsproprietary zinc peptide composition will not only accelerate its entrance into the significant marketshare but allow it to create new product opportunities as well.

Large health care companies have significant financial resources to put toward new product developmentand have large departments devoted to making the necessary regulatory submissions to the FDA.NewAge BIOTECH has been able to sponsor research at major universities to keep its research anddevelopment pipeline full. Because large health care companies have many product lines beyond skin,hair and would care, it is not uncommon for certain products to become de-emphasized over time.NewAge BIOTECH sets a marketing strategy and remains focused on the development of the market fora particular product or product line. Pricing by larger competitors is intense at times, with special pricingprovided through group contracts. When this occurs, NewAge BIOTECH focuses its efforts on higher-margin products until it can again attempt to bid on group plans.

The small- to medium-sized companies such as Lifecore Biomedical and Carrington Labs compete inniche markets with product formulations that they consider to be superior to those that are currently inthe market. Many of these companies do not have the R&D budgets to generate the scientific papersthat support their product claims. In addition, their distribution networks are limited and advertising andmarketing budgets are minimal. They also compete on price and tend to disrupt the pricing model ofcompanies against which they bid. Customers will often buy on price alone, but will quickly seek otherproducts if service or quality becomes an issue. Therefore, NewAge BIOTECH maintains a verycustomer-focused effort in both the Customer Service and Technical Service Departments. Eachcustomer and technical service representative has responsibility for a particular region of the country, sothat customers quickly get to know their representative personally for not only order processing but alsoconcerns they need addressed.

Customer profile

The customer profile for skin care products is quite varied. Currently, the skin care line does not applyto infants, because there has been no obvious need to enter that market. NewAge BIOTECH has foundthat its skin and hair care products are most often purchased by Baby Boomers, both male and female.Men, especially 40+ years are beginning to use more anti-aging skin care products. Another factor in theuse of skin care products is an active, healthy life style, regardless of age. College-educated men and



women have been frequent purchasers of skin care products because they most often feel they have tomaintain a youthful appearance in their work environment. Just as with colognes, NewAge BIOTECHhas found that household incomes of $40,000+ are most likely to purchase skin care products.

Wound care product sales have been most prominently used in nursing homes and hospitals. The elderlyin nursing homes and diabetics hospitalized with foot ulcers are the most frequent customers for woundcare products. In these instances, income level is of no concern for those hospitalized or in a nursinghome situation, because Medicare, Medicaid or health insurance companies normally cover wound caretreatment. When it comes to wound care, both males and females have found a need for the company’sproducts. Other customers using this product line include those with an active, healthy lifestyle thattend to incur injuries from participation in sports. These injuries often result in wounds in need of, at aminimum, first aid and possibly a more aggressive regimen. NewAge BIOTECH has found that itswound care products have a worldwide customer base.

Target market profile

NewAge BIOTECH expects that prescription pharmaceutical products containing certain defined drugsubstances will require a substantial degree of development effort and expense. Before governmentalapproval to market any such product is obtained, the company may license these products for certainindications to other pharmaceutical companies in the United States or foreign countries and require suchlicensees to undertake the steps necessary to obtain marketing approval in a particular country or forspecific indications.

Similarly, NewAge BIOTECH intends to license to third parties to market products containing definedchemical entities for certain human indications when it lacks the expertise or financial resources to marketsuch products effectively. If the company is unable to enter into such agreements, it may undertakemarketing the products itself for such indications. The size of the hair care market for thinning hair onboth men and women is $1.5 billion worldwide. Therefore, NewAge BIOTECH has developed a strategyto sell its hair care products directly to consumers through its website at www.Tristar.com. The averageyearly cost to maintain the website is $10,000.

NewAge BIOTECH’s wound care products are marketed domestically to hospitals, nursing homes,home health care agencies and acute care providers. This market has continued to be very competitiveand price sensitive as a result of pressures to control health care costs and has become increasinglycommodity oriented. In addition, the market is heavily influenced by governmental reimbursementprograms. The home health care segment of the market again experienced significant turmoil in 200A asmany of NewAge BIOTECH’s customers either went out of business or purchased commodityproducts. Nursing homes were also impacted by government regulations in 19XX, as government-mandated reimbursement changes due to begin in January 19XX were postponed until late 200A. Manynursing home directors and the dealers who supply them postponed buying decisions and liquidated



inventory in anticipation of the regulations taking effect. The company’s NewAge Therapy™ skin careproducts are marketed and sold worldwide as anti-aging and skin rejuvenation products.

Frost & Sullivan have forecasted that the wound care management market will reach $2.6 billion by200F. Because the domestic and foreign markets are quite large, NewAge BIOTECH has structureddistribution agreements with several companies to reach markets worldwide. For instance, during theyear ending December 31, 200A, the selling, general and administrative expenses were $6,206,000 anincrease of 18.5% over the previous year. The increase in costs reflected the increase in expanding thesales and marketing support for new products and markets.

Pricing profile

The pricing profile is as follows:

Product Size PriceWound care products 4/8/16 oz. $20.00/38.00/65.00Internal Repair Crème 4 oz. $20.00Cleanser 6 oz. $25.00Hydrating Gel 8 oz. $30.00Post Laser Lotion 12 oz. $40.00New Age Starter Kit for Oily, or Dry Skin 10 oz. (2) $60.00Trielite Shampoo 16 oz. $45.00Trielite Conditioner 16 oz. $40.00Trielite Follicle Therapy 12 oz. $30.00

NewAge BIOTECH offers discounts for yearly contracts. Introductory offers are available and aregenerally offered during the first year that the product or product line is being marketed.

Gross marginThe following average gross-margin percentages represent what NewAge BIOTECH has been able toachieve through direct sales to physicians and through its distribution network. Industry gross marginpercentages are somewhat lower because of the costs incurred by large health care firms in thedevelopment and marketing of their wound, skin and hair care products. In addition, these large healthcare firms are forced to incur significant costs in attaining the shelf space they need to display theirproducts in various food, drug and department stores. These same companies are constantly adjustingtheir prices to remain competitive in the marketplace and retain their market share.

Product Line Average Gross Profit Percentage Industry Average Gross Profit Percentage Wound care 66.5% 66.0% Skin care 64.2% 61.3% Hair care 66.8% 66.6% Overseas Distribution 79.3% 79.1%



Break-even analysisRevenues have grown by over 40% to $6.6 million in 200A from $4.7 million in the prior year, whileoperating expenses increased by only 6.7% to $7.45 million in 200A from $6.98 million. The net loss forthe year was $2.1 million or ($0.14) per share versus a loss of $5.3 million or ($0.35) per share, whichincludes a $1.9 million one-time restructuring charge. NewAge BIOTECH expects to receive a betterrevenue mix in 200B from sales and royalty income due from shipments of proprietary materials tocorporate partners. Other license agreements will also enhance royalty income. There will also be aneffort to maintain operating expense growth on sales and marketing in 200B and beyond at 5%-15%.

Market penetration: Distribution channels

The license and supply agreements give Axion worldwide rights to the zinc peptide technology for skincare in the mass retail markets. NewAge BIOTECH also entered into a supply and marketing agreementwith Genera Corporation, giving them a limited, worldwide, non-transferable right to purchase and useone of NewAge BIOTECH’s zinc peptide compounds for making and selling skin care products to theprestige skin care market. The first product marketed under this agreement was launched in 19XX asFirst Level™, an anti-aging formulation sold at cosmetic counters in stores such as Saks and NeimannMarcus. Additional zinc peptide products are marketed under the Ageless™ brand at prestigious spas.

In 19XX, NewAge BIOTECH entered into an exclusive distribution agreement with Acme Medical, Inc.,giving Acme the exclusive rights to distribute wound care products manufactured by the company in theUnited States. During 19XX, NewAge BIOTECH entered into a distribution agreement with BetaPharma for sales of Isle Hydrating Gel™ and Isle Wound Dressing™ in China and Taiwan. Beta Pharmareceived approval of its application to register the products in China, and the initial orders were shippedin December 19XX. After the initial shipment Beta Pharma experienced unexpected regulatory anddistribution issues with its distributor and did not achieve the minimum sales levels specified in theagreement. In March 200A, Beta Pharma and NewAge BIOTECH terminated the agreement, with theregistrations reverting to NewAge BIOTECH. NewAge BIOTECH is currently evaluating itsdistribution options for the Far East.

In 19XX, NewAge BIOTECH entered into an exclusive distribution agreement with Xenon. Xenon is a$5 billion German pharmaceutical company. The Xenon agreement provides for the registration,promotion and distribution of the company’s wound care products to the chronic wound care markets inLatin America and South Africa. NewAge BIOTECH expects that shipments to Mexico and Peru willbegin during the last half of 200B.

Copies of all these agreements appear in the Appendix.



Market Penetration: Sales representatives & Direct Sales ForceThis past year, NewAge BIOTECH completed a sales force expansion in its direct marketing tophysicians. There are now 18 sales representatives and two field sales managers. This expansionprovides direct coverage over 90% of the company’s potential physician customers. Selling, general andadministrative costs increased 18.5% over 19XX due to the expansion of the sales and marketing effortfor new products and markets. Product literature has been standardized and upgraded commensuratewith the company’s premium approach to the marketplace.

Since inception, NewAge BIOTECH has focused on the chronic wound care market. Worldwide, thismarket is estimated to exceed $5 billion. It is highly fragmented, with many competitors and priceconstraints and would require a significant investment in supporting a dedicated sales organization of 50-100 representatives. For these reasons, the company collaborates with partners to market its chronicwound care products. The company has signed distribution agreements with major companies for theUnited States, Latin America and Europe rather than individual agreements for each country.

Market Penetration: Direct mail/telemarketingNewAge BIOTECH has employed telemarketers to reach the 10% of the physician market that it cannotreach with its direct sales force. The company’s sales, marketing, and technical staffs prepare the scriptfor the telemarketers.

Advertising and promotion

Significant opportunities exist in multi-level marketing, spa, salon, and infomercial markets for licensingto a leading company in those categories. NewAge BIOTECH has signed a distribution agreement with ahome shopping and infomercial company for a one-year test program to evaluate the effectiveness ofselling the Trielite™ products via TV and catalog marketing programs. NewAge BIOTECH has initiateda series of consumer advertisements focused specifically on the hair care needs and concerns of an agingBaby Boomer population. Press releases have been provided to the Wall Street Journal. The growingInternet market is addressed through the company's websites, www.NewAgeBiotech.com. andwww.woundcare.com. As a promotional strategy, NewAge BIOTECH offers an educational video forproduct application and wound management training.



Packaging and labeling

In addition to protecting NewAge BIOTECH’s product names by trademarks, the company hasdesigned its skin and hair care labeling to impart an image of healthy living and vitality. NewAgeBIOTECH’s logo is prominently displayed on the labeling and the labels are either silk-screened or gluedon, depending on the need to view the contents of the container. Containers are designed to be user-friendly, using tamper-proof closures that are easy to dispense. All containers are biodegradable, toprotect the environment. Each package contains a informational sheet that describes the proper use ofthe product, limitations, warranties, company contact information, supporting technical information, andso on.

Service and warranties

NewAge BIOTECH will issue a full refund when the unused portion of the product is returned with awritten description of the customer concern. The company also provides a toll-free number for bothtechnical information and customer service assistance. The company prides itself in being much moresensitive to the customers’ requests for returns than most companies in this industry. Retaining acustomer who has had a product problem costs less than developing a new customer.

Trade shows

NewAge BIOTECH attends the following annual meetings: American Academy of Dermatology,American Medical Association, Annual Symposium on Advanced Wound Care and Medical ResearchForum on Wound Repair, Association of Cosmetic Surgery, and Association of Skin and Hair CareProducts. NewAge BIOTECH exhibits at all of the above trade shows with a fifty- by fifty-foot booth.These trade shows are held in major cities such as New York, Dallas, Houston, Miami, and WashingtonD.C. The total cost to the company to attend each show is approximately $20,000, which includesbooth space rental, booth transport, registration of company representatives, housing, meals andentertainment costs, and transportation of company representatives. NewAge BIOTECH receives onaverage eight hundred contacts per four-day trade show. Contact information is brought back to thecompany’s headquarters and assimilated by the staff of the Marketing Department for further follow-up.



Future markets

NewAge BIOTECH is building skin and hair care revenues on at least eight distinct segments:

1. NewAge Biotech is presently selling in the physician markets with its own sales force, establishingbrand preference and credibility for the technology.

2. In 200A we licensed the zinc peptide technology to Axion of Johnson & Johnson for the mass retailmarket. They expect to launch their initial products in early 200B, which could generate up to $1million in revenue.

3. We have an agreement in place for the prestigious department store market (e.g. Saks andNordstrom). This agreement is presently generating revenue for NewAge BIOTECH.

4. We recently completed our first infomercial for Trielite® hair care products, which will be aired inthe first quarter 200B.

5. We will enter the hair care salon market with our Trielite® zinc peptide hair care products some timein 200B. A market test underway in the spa market for skin care products. There is a growing trendtowards medical spa market, and we are in an excellent position to capture a major portion of it.

6. Multi-level marketing is another major opportunity for our skin care technology. Most likely we willsee products sold in this segment in 200C.

7. We expect to enter the home shopping segment in mid to late 200B.

8. Currently, we are selling products through our own website and selected physician and cosmeticInternet sites.



Operating and control systems

Administrative policies, procedures, and controls

Receiving ordersPhone, fax, e-mail and mail-in orders are received in the Customer Service Department. The orders areentered into the computer for immediate processing by the Shipping Department. NewAge BIOTECHprides itself in shipping orders the same day they are received. If inventory is lacking on an orderedproduct, the computer system calculates the maximum inventory to be produced and forwards thatrequest to the Production Manager for review. Once the product has been produced, quality controlledand released from quarantine, back orders are filled. Distributor orders are pre-packed from productrequests received a week in advance. These orders are generally used to complete the maximuminventories carried by that distributor.

Billing the customersCustomers are billed net 30 days with a 1% discount for orders paid within 10 days. A credit check isdone on all new customer accounts.

Paying the suppliersSuppliers are paid within 90 days following the receipt of the materials. All suppliers are required to giveNewAge BIOTECH a yearly quote on materials required for inventory in the coming year. This allowsthe company to budget for product materials and control the cost of goods. For large batches of rawmaterials, the supplier may provide a quote for a 3-5 year period. Although this procedure may appearto bind the company to a particular supplier, the supplier agreement is worded to allow the company theability to terminate under certain conditions.

Collecting the accounts receivableA maximum of 90 days is allowed for accounts receivable. One accounts receivable representative isresponsible for follow-up on accounts over 30 days. A notification is sent out on overdue accounts at 45days and 60 days past due. If we are not successful in collecting on 90-day accounts, they are turnedover to a local collection agency.



Reporting to managementThe president meets as needed with vice-presidents but no less often than once a month. Weekly staffmeetings are held by the vice-president of each section of the company, such as clinical development,research & development, administration, and sales and marketing. These meetings are used to informpersonnel of changing company policies, ask personnel for input to develop company strategy, andcreate awareness of the activities of the various departments within the company. Employees are toreport all incidents of concern to their respective vice president. It is then the responsibility of that vicepresident to inform the president to determine if any action is to be taken.

Staff developmentNewAge BIOTECH makes use of formal training by outside vendors for its supervisory personnel. On-site training is given to manufacturing personnel utilizing videotaped descriptions of advancedproduction techniques, workplace safety and handling of hazardous materials. One day a year, an off-siteretreat is held for supervisory personnel to further develop strategy for the continued growth of thecompany. An annual 3-day sales seminar is held offsite and includes internal customer service staff,external sales representatives and distributor sales personnel. The seminar is used to educate attendeeson new product developments, foster stronger relationships among internal and external personnel, andrecognize the achievements of the top sales representatives.

Annual merit reviews are given based on performance. In most cases, at a minimum, salary increasesreflect the increase in the cost of living for the last fiscal year. Cash bonuses will only be available whenthe company has strong profits and will be provided at the discretion of the president. An annualholiday party is held off-site and an annual family summer picnic is sponsored at a nearby park.

Inventory controlInventory is controlled through the use of the MIP computer software system, which compares themovement of the previous year’s inventory at this time of the year, to that which is currently available.It will then automatically adjust the production schedule as needed. The production manager isresponsible for setting the minimum and maximum inventories for all products. He will monitor daily theflow of the products that generate the most sales, so that they do not become backordered. Theproduction manager will work closely with the sales manager to adjust the inventory data supplied to theMIP system as new customer sales increase or a loss of customer accounts occurs.



Handling warranties and returnsThe company maintains both Technical Service and Customer Service Departments. Performance-basedcustomer concerns are handled by the Technical Service Department. The Customer Service Departmenthandles non-performance customer concerns, such as product leakage, mishandled orders, frozen or over-heated product, short orders, etc. All customer concerns are accumulated in a database and reviewedmonthly by the supervisor of the Technical Services Department on performance-based issues and thesupervisor of the Customer Service Department on non-performance-based issues. The companyrespects the right of the customer to ask for replacement product.

Monitoring the company budgetsEach vice president reviews quarterly the budgets of departments for which they have directresponsibility. One-hundred-twenty days before the close of a fiscal year, budgets are developed foreach department for the coming year. Policies have been developed to detail the types of expenses thatwill be covered by the company and those that will not. For instance, policies on reimbursement for carallowance or travel expense would vary between an outside sales representative and an individual internalto the company who is traveling to a seminar.

Security systemsSensitive documents are stored on site in a fireproof locked cabinet. Back-up tapes of computerinformation are made nightly and duplicates are stored off site. Petty cash is stored in the company safe.An alarm system with password entry has been installed and is activated once the Shipping Departmentpersonnel have completed their packing of the day’s orders and are leaving for the day. Companyofficials who have access to sensitive information, have signed a confidentiality agreement.

Documents and paper flow

When a product is to be manufactured, a worksheet is produced that indicates the appropriate catalognumber. The worksheet contains the product formulation, quality control requirements, productionspecifications, size of container and labeling. This product worksheet follows the product throughproduction, quality control, and quarantine processes. Once the product has been approved fordistribution, the worksheet is filed in the Quality Control Department for a period of five years, asrequired by the FDA.



Planning Chart: Product developmentNew product development occurs when requested by customers, Company sales and marketing, orresearch & development personnel. These requests are reviewed by the New Product Committee, whichhas as its members representatives of sales and marketing, technical services, and research &development. At times, the New Product Committee may request focus groups to gain input on thecustomer acceptance of a new product concept. If the committee decides to proceed, the Research &Development Department will begin designing a formulation to test the product for its intended use.Performance and stability testing will be instituted once a final formulation is selected.

If the performance and stability testing are satisfactory and the marketing research performed by theSales and Marketing Department shows a potential market, then the company will seek the appropriateregulatory approvals. Regulatory approvals may take from three months to as long as two years,depending on the level of risk to the end user. Regulatory approval often drives the timeline for productentry in to the marketplace.

Planning Chart: ManufacturingFollowing are time lines for the production of product and its eventual release from quarantine.Manufacturing of product is initiated within two days of receiving a request from the MIP system. Oncethe product is made, it is taken to the Quality Control Department for sterility and performance testing.Performance testing is generally completed within three days. Sterility may require up to 10 days and isdependent on the product specifications that have been developed by the Research & DevelopmentDepartment. The product remains in quarantine while the appropriate sterility and performance testingis being completed. Once the testing procedures show the product to be satisfactory, the QualityControl Department releases the product from quarantine. The Shipping Department then stocks theproduct on its designated shelves either at room temperature or refrigeration, if appropriate.

Planning Chart: Financial requirementsNewAge BIOTECH is not seeking capital at this time, but may find it necessary if the contractmanufacturing operation revenues do not match or exceed its expenses.



Planning Chart: Marketing flow chartThe development of marketing materials is a team effort. A Product Development Committee has beenassembled with representatives from sales and marketing, research and development and technicalservices. Once the market research confirms the need for a product, along with an acceptable revenuereturn, the Product Development Committee begins to design an approach to market to and inform thecustomer of the benefits of the new formulation. All technical and product brochures are reviewed yearlyby the Product Development Committee for accuracy and need. An external graphic design firm is usedto create the layout of the product literature, once the Product Development Committee has created thetext.

Planning Chart: Market penetrationThe vice-president of sales & marketing in collaboration with the president set the strategy for marketpenetration. This strategy will include, but will not be limited to, the decision to use a network ofdistribution, establishment of sales territories, sales-force training and a schedule detailing the timing ofevents. In August, NewAge BIOTECH will expand its offerings to its worldwide distributors. ByJanuary of 200C, the company plans to target several markets outside of its traditional focus, namelyretail chains and individual consumers/home usage. By March of 200C, the company will have updatedits company website to include an e-commerce capability that will complement the selling effort of itsnew lower-end skin care line.

Planning Chart: Management and infrastructureNo additional staff is needed through the next fiscal year. The recent expansion of the sales force will besufficient to cover the new accounts that will be added during the coming year. NewAge BIOTECH willcontinue to view the use of distributors as an opportunity to limit its need to increase staff, especiallyits sales force.



Risk analysis

There can be no assurance that NewAge BIOTECH’s current products or potential products willcontinue to be successfully commercialized and accepted for use by physicians, health care providersand consumers. The successful commercialization of the company's existing and future products in theconsumer markets and wound care markets will depend on its ability to enter into and effectively managecorporate partnerships. There can be no assurance that any of NewAge BIOTECH’s collaborators willperform their obligations under their agreements with the company or that those company’s products orthe products of others that incorporate NewAge BIOTECH’s products or technology will besuccessfully commercialized.

Furthermore, there can be no assurance that NewAge BIOTECH will be successful in establishingcorporate alliances in the future, or that it will be successful in maintaining existing or any futurecorporate alliances. Moreover, there can be no assurance that the interests and motivations of anycorporate partner, distributor or licensee would be or remain consistent with those of NewAgeBIOTECH, or that such partners, distributors or licensees would successfully perform the necessarytechnology transfer, clinical development, regulatory compliance, manufacturing, marketing or otherobligations. The patent positions of biotechnology, medical device and health care products companiesare often uncertain and involve complex legal and factual questions, and the breadth of claims allowed insuch patents cannot be predicted.

NewAge BIOTECH’s processes and potential products may conflict with patents that have been ormay be granted to competitors and others. As the biotechnology, medical device and health careindustries expand and more patents are issued, the risk increases that the company's processes andpotential products may give rise to claims that they infringe the patents of others. NewAge BIOTECH’sproducts and product candidates may be regulated by any of a number of divisions of the FDA. Theprocess of obtaining and maintaining regulatory approvals for the manufacturing or marketing of thecompany's existing and potential products is costly and time-consuming and is subject to unanticipateddelays. Regulatory requirements ultimately imposed could also adversely affect the ability of thecompany to clinically test, manufacture or market products.

Salvaging assets

NewAge BIOTECH’s portfolio of patents would have value if NewAge BIOTECH were to beliquidated. The value of the patent portfolio would be dependent on the remaining marketability of thetechnologies. Patents are often out-licensed to competing companies or become an asset if the companywere to be acquired. Existing inventory could be sold off, equipment and furniture auctioned off.Customer lists and accounts receivable would also have value to companies who wish to acquireNewAge BIOTECH.



Growth plan

New offerings to market

The patented zinc peptide technology continues to prove a strong platform for success. NewAgeBIOTECH has continued to develop and market its skin health and hair care products, while developingnew packaging for products used by patients with tissue repair needs following hair restoration surgery.A new SkinCyte™ Kit was launched recently that adds to the image and presentation of SkinCyte™products. The new kit contains a tube of Isle Gel™, which is used to treat the donor site incision. A newPost Laser Lotion™ was also introduced that can be used along with the other products contained in theIsle product line. The development of a comprehensive approach to post-procedure care, allowsNewAge BIOTECH to differentiate its line of skin care products on the basis of its proprietary zincpeptide technology. The company also expects to continue to license its zinc peptide technology toother companies for specific market segments in the skin care arena.

Capital requirements

NewAge BIOTECH will depend upon product revenues, contract manufacturing, asset redeployment,interest income, equity financing, and funding from corporate partnerships to meet its future capitalneeds. The company may be required to seek additional funding through public or private financing,including equity financing, or through collaborative arrangements. Adequate funds for these purposes,whether obtained through financial markets or from collaborative or other arrangements with corporatepartners or other sources, may not be available when needed or may not be available on terms favorableto NewAge BIOTECH.

If issuing equity securities raises additional funds, dilution to existing shareholders will result. Inaddition, in the event that additional funds are obtained through arrangements with collaborativepartners, such arrangements may require NewAge BIOTECH to relinquish its rights to certaintechnologies or potential products that it would otherwise seek to develop or commercialize on its own.If funding is insufficient at any time in the future, NewAge BIOTECH may be required to delay, scaleback or eliminate some or all of its marketing and research and development programs; sell assets; orlicense to third parties the rights to commercialize products or technologies that NewAge BIOTECHwould otherwise seek to develop on its own. Furthermore, the terms of any such license agreements orasset sales might be less favorable than if the company were negotiating from a stronger position.



Personnel requirements

NewAge BIOTECH currently has 44 full-time employees. Two employees are engaged in productdevelopment, ten in manufacturing, distribution and quality control, 26 in sales and marketing, and six inaccounting, finance and administration. The company does not expect to increase its staff, except to hirea general manager in its contract manufacturing operations.

Exit strategy

The business strategy of NewAge BIOTECH is focused on the establishment of key strategicpartnerships with neutraceutical and pharmaceutical sales and marketing partners for the delivery of itsproducts to target markets. While this strategy provides NewAge BIOTECH with the mechanism torapidly develop and deliver its products to the market and maximizes the potential of near-termrevenues, it also positions NewAge BIOTECH as an attractive candidate for merger or acquisition.



Financial plan

Sales Projections

Sales for the next three years are projected to be $11,090,974, $17,745,558, and $28,392,892. Thisrepresents an annual growth rate of 60% over the current year results. The company achieved a 40%growth rate in the current year. With the distribution agreements currently in place and the newagreements that are being solidified, these sales goals should be readily achievable.

Income ProjectionsNet income projections for the next three years are $619,446, $3,394,827, and $8,373,210. Thecompany is currently profitable, and expects to grow with increased distribution channels.

Cash RequirementsThis company is already in existence, and the ongoing business provides sufficient working capital tofund operations. The company expects to maintain operating expense growth in sales and marketing inthe 5-15% range and that there will be more significant royalty and sales revenue from is majorDistributor, Axion. Therefore, its cash and cash equivalents of $2.8 million and revenue increases shouldcover any operating and sales and marketing costs it incurs.

The current facility is under utilized so the growth that is expected over the three-year timeline is notexpected to require additional capital outlay.

Sources of Financing

NewAge Biotech is not expected to require additional debt or equity financing during the relevant reviewperiod, so the cost of obtaining funds has not been investigated.

Cash Flow StatementNewAge BIOTECH, Inc.

200B Pre Start-up JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL

Cash In Cash Sales 231,062 231,062 231,062 231,062 231,062 231,062 231,062 231,062 231,062 231,062 231,062 231,062 2,772,743 Collections from Accounts Receivables 1,264,000 693,186 693,186 693,186 693,186 693,186 693,186 693,186 693,186 693,186 693,186 693,186 8,889,044 Equity Received - - - - - - - - - - - - - - Loans Received - - - - - - - - - - - - - - Other Cash In (receipts from other assets) - - - - - - - - - - - - - Other Cash In (interest, royalties etc.) - - - - - - - - - - - - - Total Cash In - 1,495,062 924,248 924,248 924,248 924,248 924,248 924,248 924,248 924,248 924,248 924,248 924,248 11,661,788 Total Cash Available 2,800,000 4,295,062 4,069,150 3,840,239 3,598,087 3,326,916 3,471,464 3,570,933 3,715,481 3,840,030 3,854,798 3,979,347 4,108,895 14,461,788

Cash Out Inventory Expenditures Inventory/Raw Material (Cash) - 83,460 83,460 83,460 83,460 83,460 83,460 83,460 83,460 83,460 83,460 83,460 83,460 1,001,520 Inventory/Raw Material (Paid on Account) - - - - 83,460 83,460 83,460 83,460 83,460 83,460 83,460 83,460 83,460 751,140 Production Expenses - 54,900 54,900 54,900 54,900 54,900 54,900 54,900 54,900 54,900 54,900 54,900 54,900 658,799 Operating Expenses Advertising - 27,784 27,784 27,784 327,784 27,784 27,784 27,784 27,784 27,784 27,784 27,784 27,784 633,408 Bank Charges - - - - - - - - - - - - - - Dues & Subscriptions - 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 24,000 Insurance - 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 54,000 Licenses & Fees - 2,000 - - - - - - - - - - - 2,000 Marketing & Promotion - 20,000 25,000 25,000 5,000 5,000 40,000 5,000 25,000 5,000 25,000 20,000 5,000 205,000 Meals & Entertainment - 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 60,000 Miscellaneous - - - - - - - - - - - - - - Office Expense - 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000 Office Supplies - 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 30,000 Outside Services - - - - - - - - - - - - - - Payroll Expenses Salaries & Wages - 230,416 230,416 230,416 230,416 230,416 230,416 230,416 230,416 230,416 230,416 230,416 230,416 2,764,992 Payroll Taxes - 39,171 39,171 39,171 39,171 39,171 39,171 39,171 39,171 39,171 39,171 39,171 39,171 470,049 Benefits - 9,217 9,217 9,217 9,217 9,217 9,217 9,217 9,217 9,217 9,217 9,217 9,217 110,600 Professional Fees - 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 240,000 Property Taxes - - - - - - - - - - - - - - Rent - - - - - - - - - - - - - - Repairs & Maintenance - 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 24,000 Shipping & Delivery - - - - - - - - - - - - - - Telephone - 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 84,000 Training & Development - - - - - - - - - - - - - - Travel - 32,500 32,500 32,500 32,500 32,500 32,500 32,500 32,500 32,500 32,500 32,500 32,500 390,000 Utilities - 3,125 3,125 3,125 3,125 3,125 3,125 3,125 3,125 3,125 3,125 3,125 3,125 37,500 Vehicle - - - - - - - - - - - - - - Research & Development - 166,667 166,667 166,667 166,667 166,667 166,667 166,667 166,667 166,667 166,667 166,667 166,667 2,000,004 Other - - - - - - - - - - - - - - Other - - - - - - - - - - - - - - Paid on Account - 436,920 436,920 450,160 - - - - - - - - - 1,324,000 Non-operating Costs Capital Purchases - - - - - - - - - - - - - - Estimated Income Tax Payments - - - - 115,720 - 10,080 - - 129,780 - - 124,080 379,661 Interest Payments - - - - - - - - - - - - - - Loan Principal Payments - - - - - - - - - - - - - - Owner's Draw - - - - - - - - - - - - - - Other Cash Out - - - - - - - - - - - - - - Total Cash Out - 1,150,159 1,153,159 1,166,399 1,195,419 779,699 824,779 779,699 799,699 909,479 799,699 794,699 903,779 11,256,672

Monthly Cash Flow (cash in - cash out) - 344,903 (228,911) (242,151) (271,172) 144,549 99,468 144,549 124,549 14,768 124,549 129,549 20,468 405,116 Beginning Cash Balance 2,800,000 2,800,000 3,144,903 2,915,991 2,673,840 2,402,668 2,547,217 2,646,685 2,791,233 2,915,782 2,930,550 3,055,099 3,184,647 2,800,000 Ending Cash Balance 2,800,000 3,144,903 2,915,991 2,673,840 2,402,668 2,547,217 2,646,685 2,791,233 2,915,782 2,930,550 3,055,099 3,184,647 3,205,116 3,205,116


200C JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL

Cash In Cash Sales 369,699 369,699 369,699 369,699 369,699 369,699 369,699 369,699 369,699 369,699 369,699 369,699 4,436,389 Collections from Accounts Receivables 693,186 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 12,893,257 Equity Received - - - - - - - - - - - - - Loans Received - - - - - - - - - - - - - Other Cash In (receipts from other assets) - - - - - - - - - - - - - Other Cash In (interest, royalties etc.) - - - - - - - - - - - - - Total Cash In 1,062,885 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 17,329,646 Total Cash Available 4,268,001 4,856,828 5,442,356 6,027,884 5,730,811 6,306,799 6,417,431 6,993,418 7,547,406 7,564,868 8,118,855 8,678,343 20,534,762

Cash Out Inventory Expenditures Inventory/Raw Material (Cash) 115,000 115,000 115,000 115,000 115,000 115,000 115,000 115,000 115,000 115,000 115,000 115,000 1,380,000 Inventory/Raw Material (Paid on Account) 83,460 83,460 83,460 115,000 115,000 115,000 115,000 115,000 115,000 115,000 115,000 115,000 1,285,380 Production Expenses 59,141 59,141 59,141 59,141 59,141 59,141 59,141 59,141 59,141 59,141 59,141 59,141 709,696 Operating Expenses Advertising 30,562 30,562 30,562 360,562 30,562 30,562 30,562 30,562 30,562 30,562 30,562 30,562 696,749 Bank Charges - - - - - - - - - - - - - Dues & Subscriptions 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 26,400 Insurance 4,950 4,950 4,950 4,950 4,950 4,950 4,950 4,950 4,950 4,950 4,950 4,950 59,400 Licenses & Fees 2,200 - - - - - - - - - - - 2,200 Marketing & Promotion 22,000 27,500 27,500 5,500 5,500 44,000 5,500 27,500 5,500 27,500 22,000 5,500 225,500 Meals & Entertainment 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 66,000 Miscellaneous - - - - - - - - - - - - - Office Expense 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 13,200 Office Supplies 2,750 2,750 2,750 2,750 2,750 2,750 2,750 2,750 2,750 2,750 2,750 2,750 33,000 Outside Services - - - - - - - - - - - - - Payroll Expenses Salaries & Wages 253,458 253,458 253,458 253,458 253,458 253,458 253,458 253,458 253,458 253,458 253,458 253,458 3,041,491 Payroll Taxes 43,088 43,088 43,088 43,088 43,088 43,088 43,088 43,088 43,088 43,088 43,088 43,088 517,054 Benefits 10,138 10,138 10,138 10,138 10,138 10,138 10,138 10,138 10,138 10,138 10,138 10,138 121,660 Professional Fees 22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000 264,000 Property Taxes - - - - - - - - - - - - - Rent - - - - - - - - - - - - - Repairs & Maintenance 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 26,400 Shipping & Delivery - - - - - - - - - - - - - Telephone 7,700 7,700 7,700 7,700 7,700 7,700 7,700 7,700 7,700 7,700 7,700 7,700 92,400 Training & Development - - - - - - - - - - - - - Travel 35,750 35,750 35,750 35,750 35,750 35,750 35,750 35,750 35,750 35,750 35,750 35,750 429,000 Utilities 3,438 3,438 3,438 3,438 3,438 3,438 3,438 3,438 3,438 3,438 3,438 3,438 41,250 Vehicle - - - - - - - - - - - - - Research & Development 183,334 183,334 183,334 183,334 183,334 183,334 183,334 183,334 183,334 183,334 183,334 183,334 2,200,004 Other - - - - - - - - - - - - - Other - - - - - - - - - - - - - Paid on Account - - - - - - - - - - - - - Non-operating Costs Capital Purchases - - - - - - - - - - - - - Estimated Income Tax Payments - - - 543,061 - 426,857 - - 558,527 - - 552,257 2,080,700 Interest Payments - - - - - - - - - - - - - Loan Principal Payments - - - - - - - - - - - - - Owner's Draw - - - - - - - - - - - - - Other Cash Out - - - - - - - - - - - - - Total Cash Out 889,969 893,269 893,269 1,775,869 902,809 1,368,165 902,809 924,809 1,461,335 924,809 919,309 1,455,065 13,311,484

Monthly Cash Flow (cash in - cash out) 172,916 585,528 585,528 (297,073) 575,988 110,631 575,988 553,988 17,461 553,988 559,488 23,731 4,018,162 Beginning Cash Balance 3,205,116 3,378,032 3,963,560 4,549,088 4,252,015 4,828,003 4,938,634 5,514,622 6,068,610 6,086,071 6,640,059 7,199,547 3,205,116 Ending Cash Balance 3,378,032 3,963,560 4,549,088 4,252,015 4,828,003 4,938,634 5,514,622 6,068,610 6,086,071 6,640,059 7,199,547 7,223,278 7,223,278


200D JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL

Cash In Cash Sales 591,519 591,519 591,519 591,519 591,519 591,519 591,519 591,519 591,519 591,519 591,519 591,519 7,098,223 Collections from Accounts Receivables 1,109,097 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 20,629,211 Equity Received - - - - - - - - - - - - - Loans Received - - - - - - - - - - - - - Other Cash In (receipts from other assets) - - - - - - - - - - - - - Other Cash In (interest, royalties etc.) - - - - - - - - - - - - - Total Cash In 1,700,616 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 27,727,434 Total Cash Available 8,923,894 10,255,426 11,583,328 12,911,230 12,547,817 13,855,569 13,940,629 15,248,381 16,531,933 16,514,507 17,798,059 19,087,661 34,950,712

Cash Out Inventory Expenditures Inventory/Raw Material (Cash) 159,350 159,350 159,350 159,350 159,350 159,350 159,350 159,350 159,350 159,350 159,350 159,350 1,912,200 Inventory/Raw Material (Paid on Account) 115,000 115,000 115,000 159,350 159,350 159,350 159,350 159,350 159,350 159,350 159,350 159,350 1,779,150 Production Expenses 64,588 64,588 64,588 64,588 64,588 64,588 64,588 64,588 64,588 64,588 64,588 64,588 775,059 Operating Expenses Advertising 33,619 33,619 33,619 396,619 33,619 33,619 33,619 33,619 33,619 33,619 33,619 33,619 766,424 Bank Charges - - - - - - - - - - - - - Dues & Subscriptions 2,420 2,420 2,420 2,420 2,420 2,420 2,420 2,420 2,420 2,420 2,420 2,420 29,040 Insurance 5,445 5,445 5,445 5,445 5,445 5,445 5,445 5,445 5,445 5,445 5,445 5,445 65,340 Licenses & Fees 2,420 - - - - - - - - - - - 2,420 Marketing & Promotion 24,200 30,250 30,250 6,050 6,050 48,400 6,050 30,250 6,050 30,250 24,200 6,050 248,050 Meals & Entertainment 6,050 6,050 6,050 6,050 6,050 6,050 6,050 6,050 6,050 6,050 6,050 6,050 72,600 Miscellaneous - - - - - - - - - - - - - Office Expense 1,210 1,210 1,210 1,210 1,210 1,210 1,210 1,210 1,210 1,210 1,210 1,210 14,520 Office Supplies 3,025 3,025 3,025 3,025 3,025 3,025 3,025 3,025 3,025 3,025 3,025 3,025 36,300 Outside Services - - - - - - - - - - - - - Payroll Expenses Salaries & Wages 278,803 278,803 278,803 278,803 278,803 278,803 278,803 278,803 278,803 278,803 278,803 278,803 3,345,640 Payroll Taxes 47,397 47,397 47,397 47,397 47,397 47,397 47,397 47,397 47,397 47,397 47,397 47,397 568,759 Benefits 11,152 11,152 11,152 11,152 11,152 11,152 11,152 11,152 11,152 11,152 11,152 11,152 133,826 Professional Fees 24,200 24,200 24,200 24,200 24,200 24,200 24,200 24,200 24,200 24,200 24,200 24,200 290,400 Property Taxes - - - - - - - - - - - - - Rent - - - - - - - - - - - - - Repairs & Maintenance 2,420 2,420 2,420 2,420 2,420 2,420 2,420 2,420 2,420 2,420 2,420 2,420 29,040 Shipping & Delivery - - - - - - - - - - - - - Telephone 8,470 8,470 8,470 8,470 8,470 8,470 8,470 8,470 8,470 8,470 8,470 8,470 101,640 Training & Development - - - - - - - - - - - - - Travel 39,325 39,325 39,325 39,325 39,325 39,325 39,325 39,325 39,325 39,325 39,325 39,325 471,900 Utilities 3,781 3,781 3,781 3,781 3,781 3,781 3,781 3,781 3,781 3,781 3,781 3,781 45,375 Vehicle - - - - - - - - - - - - - Research & Development 201,667 201,667 201,667 201,667 201,667 201,667 201,667 201,667 201,667 201,667 201,667 201,667 2,420,005 Other - - - - - - - - - - - - - Other - - - - - - - - - - - - - Paid on Account - - - - - - - - - - - - - Non-operating Costs Capital Purchases - - - - - - - - - - - - - Estimated Income Tax Payments - - - 1,308,166 - 1,180,342 - - 1,325,179 - - 1,318,282 5,131,968 Interest Payments - - - - - - - - - - - - - Loan Principal Payments - - - - - - - - - - - - - Owner's Draw - - - - - - - - - - - - - Other Cash Out - - - - - - - - - - - - - Total Cash Out 1,034,542 1,038,172 1,038,172 2,729,488 1,058,322 2,281,014 1,058,322 1,082,522 2,383,501 1,082,522 1,076,472 2,376,604 18,239,655

Monthly Cash Flow (cash in - cash out) 666,074 1,327,902 1,327,902 (363,414) 1,307,752 85,061 1,307,752 1,283,552 (17,426) 1,283,552 1,289,602 (10,529) 9,487,779 Beginning Cash Balance 7,223,278 7,889,352 9,217,254 10,545,156 10,181,742 11,489,494 11,574,555 12,882,307 14,165,859 14,148,433 15,431,985 16,721,587 7,223,278 Ending Cash Balance 7,889,352 9,217,254 10,545,156 10,181,742 11,489,494 11,574,555 12,882,307 14,165,859 14,148,433 15,431,985 16,721,587 16,711,057 16,711,057

NewAge BIOTECH, Inc. Year-End

Income Statement (Projected)200B 200C 200D

Net Sales (less returns & allowances) 11,090,974 17,745,558 28,392,892 Cost of Goods Sold 2,440,014 3,904,023 6,246,436 Gross Margin $ 8,650,959 $ 13,841,535 $ 22,146,456

Operating Expenses Advertising 633,408 696,749 766,424 Bad Debt Expense - - - Bank Charges - - - Depreciation & Amortization 510,300 510,300 - Dues & Subscriptions 24,000 26,400 29,040 Insurance 54,000 59,400 65,340 Licenses & Fees 2,000 2,200 2,420 Marketing & Promotion 205,000 225,500 248,050 Meals & Entertainment 60,000 66,000 72,600 Miscellaneous - - - Office Expense 12,000 13,200 14,520 Office Supplies 30,000 33,000 36,300 Outside Services - - - Payroll Expenses Salaries & Wages 2,764,992 3,041,491 3,345,640 Payroll Taxes 470,049 517,054 568,759 Benefits 110,600 121,660 133,826 Professional Fees 240,000 264,000 290,400 Property Taxes - - - Rent - - - Repairs & Maintenance 24,000 26,400 29,040 Shipping & Delivery - - - Telephone 84,000 92,400 101,640 Training & Development - - - Travel 390,000 429,000 471,900 Utilities 37,500 41,250 45,375 Vehicle - - - Research & Development 2,000,004 2,200,004 2,420,005 Other - - - Other - - - Total Operating Expenses $ 7,651,852 $ 8,366,008 $ 8,641,278

Operating Income $ 999,107 $ 5,475,528 $ 13,505,178

Interest Expense - - - Other Income (interest, royalties, etc.) - - -

Income Before Taxes $ 999,107 $ 5,475,528 $ 13,505,178

Income Taxes (if C Corp) 379,661 2,080,700 5,131,968

Net Income $ 619,446 $ 3,394,827 $ 8,373,210

NewAge BIOTECH, Inc.

Balance Sheet (Projected)Year-End

200B 200C 200D

AssetsCurrent Assets

Cash & Equivalents 3,205,116 7,223,278 16,711,057 Accounts Receivable 693,186 1,109,097 1,774,556 Inventory 2,464,380 2,030,053 383,075 Security Deposits - - - Other Current Assets - - -

Total Current Assets $ 6,362,681 $ 10,362,428 $ 18,868,689

Fixed AssetsProperty, Plant & Equipment 6,151,000 6,151,000 6,151,000 Less: Accumulated Depreciation (5,579,300) (6,089,600) (6,089,600) Other Non-Current Assets - - -

Total Non-Current Assets $ 571,700 $ 61,400 $ 61,400

Total Assets $ 6,934,381 $ 10,423,828 $ 18,930,089

LiabilitiesCurrent Liabilities Accounts Payable 250,380 345,000 478,050

Line of Credit - - - Other Current Liabilities - - -

Total Current Liabilities $ 250,380 $ 345,000 $ 478,050

Long-term LiabilitiesLoans - - - Mortgages - - - Other Non-Current Liabilities - - -

Total Non-Current Liabilities $ - $ - $ -

Total Liabilities $ 250,380 $ 345,000 $ 478,050

EquityEquity Investments 155,000 155,000 155,000 Retained Earnings 6,529,001 9,923,828 18,297,039 Less: Owner's & Investor's Draws - - - Total Equity $ 6,684,001 $ 10,078,828 $ 18,452,039

Total Liabilities and Equity $ 6,934,381 $ 10,423,828 $ 18,930,089

NewAge BIOTECH, Inc.Financial Ratios

200B 200C 200D

Profitability Ratios

Gross Margin 78.00% 78.00% 78.00%

Operating Margin 9.01% 30.86% 47.57%

Net Margin 5.59% 19.13% 29.49%

Return on Assets (ROA) 8.93% 32.57% 44.23%

Return on Equity (ROE) 9.27% 33.68% 45.38%

Liquidity Ratios

Current Ratio 25.41 30.04 39.47

Quick Ratio 15.57 24.15 38.67

Risk Ratios

Debt Ratio 0.04 0.03 0.03

Debt to Equity 0.04 0.03 0.03

Efficiency Ratios

Inventory Turnover 0.99 1.92 16.31

Days Sales Outstanding (DSO) 22.81 22.81 22.81

Investment Turnover Ratio 1.60 1.70 1.50

Net IncomeNet Sales

Total Liabilities

Shareholders' EquityNet Income

Total Current Assets

Current Liabilities

Accounts Receivable

Net Sales

Total Assets

InventoryCost of Goods Sold

Total LiabilitiesShareholders' Equity

Net Sales/365

Net Sales

Total Assets

Gross Income

Total Current Liabilities

Current Assets - Inventory

Net SalesOperating Income

Total AssetsNet Income



Appendix

HISTORICAL BALANCE SHEETNewAge BIOTECH, Inc.

12/31/200A

Assets Current Assets Cash & Equivalents 2,800,000 Accounts Receivable 1,264,000 Inventory 2,242,555 Security Deposits - Other Current Assets - Total Current Assets $ 6,306,555

Fixed Assets Property, Plant & Equipment Computer Equipment - Equipment/Machinery 5,189,600 Furniture & Fixtures - Vehicles - Leasehold Improvements - Building 900,000 Land 61,400 Less: Accumulated Depreciation (Do not enter a negative number) 5,069,000 Other Non-current Assets - Total Non-current Assets $ 1,082,000

Total Assets $ 7,388,555

Liabilities Current Liabilities Accounts Payable 1,324,000 Line of Credit - Other Current Liabilities - Total Current Liabilities $ 1,324,000

Long-term Liabilities Loans - Real Estate Loans - Other Non-current Liabilities - Total Long-term Liabilities $ -

Total Liabilities $ 1,324,000

Equity Owners Equity 155,000 Retained Earnings (Enter a negative number for a loss) 5,909,555 Less: Owner's & Investor's Draws (Not for use by C Corporations) -

Total Equity $ 6,064,555

Total Liabilities and Equity $ 7,388,555

Appendix

SALES PROJECTIONSNewAge BIOTECH, Inc.Year 1 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTALSales BudgetProduct/Service Category A 88,200 88,200 88,200 88,200 88,200 88,200 88,200 88,200 88,200 88,200 88,200 88,200 1,058,400 Product/Service Category B 705,600 705,600 705,600 705,600 705,600 705,600 705,600 705,600 705,600 705,600 705,600 705,600 8,467,200 Product/Service Category C 132,300 132,300 132,300 132,300 132,300 132,300 132,300 132,300 132,300 132,300 132,300 132,300 1,587,600 Product/Service Category D - - - - - - - - - - - - - Product/Service Category E - - - - - - - - - - - - - Product/Service Category F - - - - - - - - - - - - - Product/Service Category G - - - - - - - - - - - - - Gross Sales 926,100 926,100 926,100 926,100 926,100 926,100 926,100 926,100 926,100 926,100 926,100 926,100 11,113,200 Less: Returns & Allowances (1,852) (1,852) (1,852) (1,852) (1,852) (1,852) (1,852) (1,852) (1,852) (1,852) (1,852) (1,852) (22,226) Net Sales 924,248 924,248 924,248 924,248 924,248 924,248 924,248 924,248 924,248 924,248 924,248 924,248 11,090,974 Other Income - - - - - - - - - - - - - Total Income 924,248 924,248 924,248 924,248 924,248 924,248 924,248 924,248 924,248 924,248 924,248 924,248 11,090,974 Credit Management Sales (cash) 231,062 231,062 231,062 231,062 231,062 231,062 231,062 231,062 231,062 231,062 231,062 231,062 2,772,743 Sales (credit) 693,186 693,186 693,186 693,186 693,186 693,186 693,186 693,186 693,186 693,186 693,186 693,186 8,318,230 Received on Account 1,264,000 693,186 693,186 693,186 693,186 693,186 693,186 693,186 693,186 693,186 693,186 693,186 8,889,044 Bad Debt Expense - - - - - - - - - - - - -

Year 1 AssumptionsProduct/Service Category AProduct/Service Category BProduct/Service Category CProduct/Service Category DProduct/Service Category EProduct/Service Category FProduct/Service Category GLess: Returns & AllowancesOther Income Sales (cash) Sales (credit) Received on Account Bad Debt Expense

YE

AR

1 YE

AR

1 YE

AR

1 YE

AR

1

Wound care - ~10% of sales YE

AR

1 YE

AR

1 YE

AR

1

Distributed products - ~75% of salesSkin car/Hair care - `15% of sales

Appendix

SALES PROJECTIONSNewAge BIOTECH, Inc.Year 2 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTALSales BudgetProduct/Service Category A 141,120 141,120 141,120 141,120 141,120 141,120 141,120 141,120 141,120 141,120 141,120 141,120 1,693,440 Product/Service Category B 1,128,960 1,128,960 1,128,960 1,128,960 1,128,960 1,128,960 1,128,960 1,128,960 1,128,960 1,128,960 1,128,960 1,128,960 13,547,520 Product/Service Category C 211,680 211,680 211,680 211,680 211,680 211,680 211,680 211,680 211,680 211,680 211,680 211,680 2,540,160 Product/Service Category D - - - - - - - - - - - - - Product/Service Category E - - - - - - - - - - - - - Product/Service Category F - - - - - - - - - - - - - Product/Service Category G - - - - - - - - - - - - - Gross Sales 1,481,760 1,481,760 1,481,760 1,481,760 1,481,760 1,481,760 1,481,760 1,481,760 1,481,760 1,481,760 1,481,760 1,481,760 17,781,120 Less: Returns & Allowances (2,964) (2,964) (2,964) (2,964) (2,964) (2,964) (2,964) (2,964) (2,964) (2,964) (2,964) (2,964) (35,562) Net Sales 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 17,745,558 Other Income - - - - - - - - - - - - - Total Income 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 1,478,796 17,745,558 Credit ManagementSales (cash) 369,699 369,699 369,699 369,699 369,699 369,699 369,699 369,699 369,699 369,699 369,699 369,699 4,436,389 Sales (credit) 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 13,309,168 Received on Account 693,186 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 1,109,097 12,893,257 Bad Debt Expense - - - - - - - - - - - - -


YE

AR

2 YE

AR

2 YE

AR

2 YE

AR

2 Y

EA

R 2 Y

EA

R 2 Y

EA

R 2

Wound care - ~10% of salesDistributed products - ~75% of salesSkin car/Hair care - `15% of sales

Appendix

SALES PROJECTIONSNewAge BIOTECH, Inc.Year 3 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTALSales BudgetProduct/Service Category A 225,792 225,792 225,792 225,792 225,792 225,792 225,792 225,792 225,792 225,792 225,792 225,792 2,709,504 Product/Service Category B 1,806,336 1,806,336 1,806,336 1,806,336 1,806,336 1,806,336 1,806,336 1,806,336 1,806,336 1,806,336 1,806,336 1,806,336 21,676,032 Product/Service Category C 338,688 338,688 338,688 338,688 338,688 338,688 338,688 338,688 338,688 338,688 338,688 338,688 4,064,256 Product/Service Category D - - - - - - - - - - - - - Product/Service Category E - - - - - - - - - - - - - Product/Service Category F - - - - - - - - - - - - - Product/Service Category G - - - - - - - - - - - - - Gross Sales 2,370,816 2,370,816 2,370,816 2,370,816 2,370,816 2,370,816 2,370,816 2,370,816 2,370,816 2,370,816 2,370,816 2,370,816 28,449,792 Less: Returns & Allowances (4,742) (4,742) (4,742) (4,742) (4,742) (4,742) (4,742) (4,742) (4,742) (4,742) (4,742) (4,742) (56,900) Net Sales 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 28,392,892 Other Income - - - - - - - - - - - - - Total Income 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 2,366,074 28,392,892 Credit ManagementSales (cash) 591,519 591,519 591,519 591,519 591,519 591,519 591,519 591,519 591,519 591,519 591,519 591,519 7,098,223 Sales (credit) 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 21,294,669 Received on Account 1,109,097 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 1,774,556 20,629,211 Bad Debt Expense - - - - - - - - - - - - -


YE

AR

3 YE

AR

3 YE

AR

3 YE

AR

3 Y

EA

R 3 Y

EA

R 3 Y

EA

R 3

Wound care - ~10% of sales

Distributed products - ~75% of salesSkin car/Hair care - `15% of sales

Appendix

INVENTORY PROJECTIONSNewAge BIOTECH, Inc.

Year 1 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTALInventory ManagementInventory Purchases 166,920 166,920 166,920 166,920 166,920 166,920 166,920 166,920 166,920 166,920 166,920 166,920 2,003,040 Inventory/ Raw Material Purchases (Cash) 83,460 83,460 83,460 83,460 83,460 83,460 83,460 83,460 83,460 83,460 83,460 83,460 1,001,520 Inventory/ Raw Material Purchases (Credit) 83,460 83,460 83,460 83,460 83,460 83,460 83,460 83,460 83,460 83,460 83,460 83,460 1,001,520 Payment on Account - - - 83,460 83,460 83,460 83,460 83,460 83,460 83,460 83,460 83,460 751,140

Production ExpensesFreight-in & Trucking 2,800 2,800 2,800 2,800 2,800 2,800 2,800 2,800 2,800 2,800 2,800 2,800 33,600 Insurance 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 36,000 Payroll Expenses - production Salaries & Wages 30,833 30,833 30,833 30,833 30,833 30,833 30,833 30,833 30,833 30,833 30,833 30,833 369,996 Employee Benefits 1,233 1,233 1,233 1,233 1,233 1,233 1,233 1,233 1,233 1,233 1,233 1,233 14,800 Payroll Taxes 5,242 5,242 5,242 5,242 5,242 5,242 5,242 5,242 5,242 5,242 5,242 5,242 62,899 Rent - - - - - - - - - - - - - Repairs & Maintenance 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 54,000 Rework - - - - - - - - - - - - - Subcontracting - - - - - - - - - - - - - Utilities 7,292 7,292 7,292 7,292 7,292 7,292 7,292 7,292 7,292 7,292 7,292 7,292 87,504 Other Production Expenses - - - - - - - - - - - - - Inventory Production Expenses 54,900 54,900 54,900 54,900 54,900 54,900 54,900 54,900 54,900 54,900 54,900 54,900 658,799

Inventory BalanceBeginning Inventory Balance 2,242,555 2,261,040 2,279,526 2,298,011 2,316,497 2,334,982 2,353,467 2,371,953 2,390,438 2,408,924 2,427,409 2,445,895 2,242,555 Inventory Purchased 166,920 166,920 166,920 166,920 166,920 166,920 166,920 166,920 166,920 166,920 166,920 166,920 2,003,040 Inventory Production 54,900 54,900 54,900 54,900 54,900 54,900 54,900 54,900 54,900 54,900 54,900 54,900 658,799 (Cost of Goods Sold) (203,335) (203,335) (203,335) (203,335) (203,335) (203,335) (203,335) (203,335) (203,335) (203,335) (203,335) (203,335) (2,440,014) Ending Inventory Balance 2,261,040 2,279,526 2,298,011 2,316,497 2,334,982 2,353,467 2,371,953 2,390,438 2,408,924 2,427,409 2,445,895 2,464,380 2,464,380

Year 1 AssumptionsInventory/ Raw Material Purchases Freight-in & TruckingInsurancePayroll Expenses - production Salaries & Wages Employee Benefits Payroll TaxesRentRepairs & MaintenanceReworkSubcontractingUtilitiesOther Production Expenses

YE

AR

1 YE

AR

1 YE

AR

1 YE

AR

1Y

EA

R 1 Y

EA

R 1 Y

EA

R 1 Y

EA

R 1

Designed to keep inventory levels lower than in the pastBased on historical % of salesBased on historcal costs for product liability insurance

10 employees averaging $37,000 per year4% of salary expense17% of salary expense

Based on historical costs

$2.50 per square foot - 35000 sf of manufacturing space

Appendix


Year 2 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTALInventory ManagementInventory Purchases 230,000 230,000 230,000 230,000 230,000 230,000 230,000 230,000 230,000 230,000 230,000 230,000 2,760,000 Inventory/ Raw Material Purchases (Cash) 115,000 115,000 115,000 115,000 115,000 115,000 115,000 115,000 115,000 115,000 115,000 115,000 1,380,000 Inventory/ Raw Material Purchases (Credit) 115,000 115,000 115,000 115,000 115,000 115,000 115,000 115,000 115,000 115,000 115,000 115,000 1,380,000 Payment on Account 83,460 83,460 83,460 115,000 115,000 115,000 115,000 115,000 115,000 115,000 115,000 115,000 1,285,380


Inventory BalanceBeginning Inventory Balance 2,464,380 2,428,186 2,391,992 2,355,798 2,319,604 2,283,410 2,247,217 2,211,023 2,174,829 2,138,635 2,102,441 2,066,247 2,464,380 Inventory Purchased 230,000 230,000 230,000 230,000 230,000 230,000 230,000 230,000 230,000 230,000 230,000 230,000 2,760,000 Inventory Production 59,141 59,141 59,141 59,141 59,141 59,141 59,141 59,141 59,141 59,141 59,141 59,141 709,696 (Cost of Goods Sold) (325,335) (325,335) (325,335) (325,335) (325,335) (325,335) (325,335) (325,335) (325,335) (325,335) (325,335) (325,335) (3,904,023) Ending Inventory Balance 2,428,186 2,391,992 2,355,798 2,319,604 2,283,410 2,247,217 2,211,023 2,174,829 2,138,635 2,102,441 2,066,247 2,030,053 2,030,053


YE

AR

2 YE

AR

2 YE

AR

2 YE

AR

2Y

EA

R 2 Y

EA

R 2 Y

EA

R 2 Y

EA

R 2

Designed to keep inventory levels lower than in the pastBased on historical % of sales (0.3%)Increased 5%

10 employees averaging $38,850 per year (5% increase over last year salary)4% of salary expense17% of salary expense

$2.63 per square foot - 35000 sf of manufacturing space (5% increase over last year)

Based on historical costs increased 5% for year 2

Appendix


Year 3 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTALInventory ManagementInventory Purchases 318,700 318,700 318,700 318,700 318,700 318,700 318,700 318,700 318,700 318,700 318,700 318,700 3,824,400 Inventory/ Raw Material Purchases (Cash) 159,350 159,350 159,350 159,350 159,350 159,350 159,350 159,350 159,350 159,350 159,350 159,350 1,912,200 Inventory/ Raw Material Purchases (Credit) 159,350 159,350 159,350 159,350 159,350 159,350 159,350 159,350 159,350 159,350 159,350 159,350 1,912,200 Payment on Account 115,000 115,000 115,000 159,350 159,350 159,350 159,350 159,350 159,350 159,350 159,350 159,350 1,779,150


Inventory BalanceBeginning Inventory Balance 2,030,053 1,892,805 1,755,557 1,618,309 1,481,061 1,343,812 1,206,564 1,069,316 932,068 794,820 657,572 520,324 2,030,053 Inventory Purchased 318,700 318,700 318,700 318,700 318,700 318,700 318,700 318,700 318,700 318,700 318,700 318,700 3,824,400 Inventory Production 64,588 64,588 64,588 64,588 64,588 64,588 64,588 64,588 64,588 64,588 64,588 64,588 775,059 (Cost of Goods Sold) (520,536) (520,536) (520,536) (520,536) (520,536) (520,536) (520,536) (520,536) (520,536) (520,536) (520,536) (520,536) (6,246,436) Ending Inventory Balance 1,892,805 1,755,557 1,618,309 1,481,061 1,343,812 1,206,564 1,069,316 932,068 794,820 657,572 520,324 383,075 383,075


YE

AR

3 YE

AR

3 YE

AR

3 YE

AR

3Y

EA

R 3 Y

EA

R 3 Y

EA

R 3 Y

EA

R 3

Designed to keep inventory levels lower than in the pastBased on historical % of sales (0.3%)Increased 5%

10 employees averaging $40,800 per year (5% increase over last year salary)4% of salary expense17% of salary expense

Based on historical costs increased 5% for year 3

$2.76 per square foot - 35000 sf of manufacturing space (5% increase over last year)

Appendix

OPERATING EXPENSE PROJECTIONSNewAge BIOTECH, Inc.

Year 1 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL Operating Expenses

Advertising 27,784 27,784 27,784 327,784 27,784 27,784 27,784 27,784 27,784 27,784 27,784 27,784 633,408 Bank Charges - - - - - - - - - - - - - Dues & Subscriptions 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 24,000 Insurance 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 54,000 Licenses & Fees 2,000 - - - - - - - - - - - 2,000 Marketing & Promotion 20,000 25,000 25,000 5,000 5,000 40,000 5,000 25,000 5,000 25,000 20,000 5,000 205,000 Meals & Entertainment 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 60,000 Miscellaneous - - - - - - - - - - - - - Office Expense (postage) 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000 Office Supplies 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 30,000 Outside Services - - - - - - - - - - - - - Payroll Expenses Salaries & Wages 230,416 230,416 230,416 230,416 230,416 230,416 230,416 230,416 230,416 230,416 230,416 230,416 2,764,992 Payroll Taxes 39,171 39,171 39,171 39,171 39,171 39,171 39,171 39,171 39,171 39,171 39,171 39,171 470,049 Benefits 9,217 9,217 9,217 9,217 9,217 9,217 9,217 9,217 9,217 9,217 9,217 9,217 110,600 Professional Fees 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 240,000 Property Taxes - - - - - - - - - - - - - Rent - - - - - - - - - - - - - Repairs & Maintenance 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 24,000 Shipping & Delivery - - - - - - - - - - - - - Telephone 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 84,000 Training & Development - - - - - - - - - - - - - Travel 32,500 32,500 32,500 32,500 32,500 32,500 32,500 32,500 32,500 32,500 32,500 32,500 390,000 Utilities 3,125 3,125 3,125 3,125 3,125 3,125 3,125 3,125 3,125 3,125 3,125 3,125 37,500 Vehicle - - - - - - - - - - - - - Research & Development 166,667 166,667 166,667 166,667 166,667 166,667 166,667 166,667 166,667 166,667 166,667 166,667 2,000,004 Other - - - - - - - - - - - - - Other - - - - - - - - - - - - -

Total Operating Expenses 574,879 577,879 577,879 857,879 557,879 592,879 557,879 577,879 557,879 577,879 572,879 557,879 7,141,552

Assumptions - Year 1AdvertisingBank ChargesDues & SubscriptionsInsuranceLicenses & FeesMarketing & PromotionMeals & EntertainmentMiscellaneousOffice Expense (postage)Office SuppliesOutside ServicesPayroll Expenses Salaries & Wages Payroll Taxes BenefitsProfessional FeesProperty TaxesRentRepairs & MaintenanceShipping & DeliveryTelephoneTraining & DevelopmentTravelUtilitiesVehicleResearch & DevelopmentOtherOther

YE

AR

1 YE

AR

1 YE

AR

1 YE

AR

1 YE

AR

1 YE

AR

1

Based on historicalBased on historical

26 Sales @ $65K/yr; Officer comp @ $625K/yr; 2 Prod Dev @ $150K (total)/yr; 6 Acct, finance,& admin @ $300K (total)/yr

YE

AR

1 YE

AR

1 YE

AR

1 YE

AR

1 YE

AR

1 YE

AR

1

Broadcast @ 1.5% of Sales +$300K in April for infomercial; Print @ 1.5% of sales

Based on historical costsBased on historical for property, key man, business interruption, general liability, etc.Based on historical $15K Jan, Jun, Nov for brochures; $20K in Feb,Mar,June, Aug,Oct for trade shows; $5K/mo miscellaneousBased on historical costs

Estimated @ 17% of salariesEstimated @ 4% of salariesAttorney on retainer

Based on historical

Leases on cars for officers and sales people, travel based on historical15000 s f @ $2.50 per square foot

Based on historical and planned experimentation

Appendix




Total Operating Expenses 632,367 635,667 635,667 943,667 613,667 652,167 613,667 635,667 613,667 635,667 630,167 613,667 7,855,708


YE

AR

2 YE

AR

2 YE

AR

2 YE

AR

2 YE

AR

2 YE

AR

2Y

EA

R 2 Y

EA

R 2 Y

EA

R 2 Y

EA

R 2 Y

EA

R 2 Y

EA

R 2

Based on 10% increase over prior year

Based on 10% increase over prior yearBased on 10% increase over prior yearBased on 10% increase over prior yearBased on 10% increase over prior yearBased on 10% increase over prior year

Based on 10% increase over prior yearBased on 10% increase over prior year

Based on 10% increase over prior yearEstimated @ 17% of salariesEstimated @ 4% of salariesAttorney on retainer




Appendix




Total Operating Expenses 695,604 699,234 699,234 1,038,034 675,034 717,384 675,034 699,234 675,034 699,234 693,184 675,034 8,641,278


YE

AR

3 YE

AR

3 YE

AR

3 YE

AR

3 YE

AR

3 YE

AR

3Y

EA

R 3 Y

EA

R 3 Y

EA

R 3 Y

EA

R 3 Y

EA

R 3 Y

EA

R 3


Based on 10% increase over prior yearBased on 10% increase over prior yearBased on 10% increase over prior yearBased on 10% increase over prior yearBased on 10% increase over prior year




Based on 10% increase over prior yearEstimated @ 17% of salariesEstimated @ 4% of salariesAttorney on retainer


Appendix

DEPRECIATION SCHEDULESNewAge BIOTECH, Inc.

Year 1 Existing Assets JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTALSet-up Assets (no detail entered) - - - - - - - - - - - - - Set-up Assets (detail entered) 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 510,300 Start-up Purchases - - - - - - - - - - - - - Total 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 510,300 Year 2 Existing AssetsSet-up Assets (no detail entered) - - - - - - - - - - - - - Set-up Assets (detail entered) 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 510,300 Start-up Purchases - - - - - - - - - - - - - Total 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 510,300 Year 3 Existing AssetsSet-up Assets (no detail entered) - - - - - - - - - - - - - Set-up Assets (detail entered) - - - - - - - - - - - - - Start-up Purchases - - - - - - - - - - - - - Total - - - - - - - - - - - - -

Year 1 New Purchases JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTALComputer Equipment - - - - - - - - - - - - - Computer Equipment Depreciation - - - - - - - - - - - - - Equipment/Machinery - - - - - - - - - - - - - Equipment Depreciation - - - - - - - - - - - - - Furniture - - - - - - - - - - - - - Furniture Depreciation - - - - - - - - - - - - - Leasehold Improvements - - - - - - - - - - - - - Leasehold Depreciation - - - - - - - - - - - - - Vehicles - - - - - - - - - - - - - Vehicle Depreciation - - - - - - - - - - - - - Building - - - - - - - - - - - - - Building Depreciation - - - - - - - - - - - - - Year 2 New PurchasesComputer Equipment - - - - - - - - - - - - - Computer Equipment Depreciation - - - - - - - - - - - - - Equipment/Machinery - - - - - - - - - - - - - Equipment Depreciation - - - - - - - - - - - - - Furniture - - - - - - - - - - - - - Furniture Depreciation - - - - - - - - - - - - - Leasehold Improvements - - - - - - - - - - - - - Leasehold Depreciation - - - - - - - - - - - - - Vehicles - - - - - - - - - - - - - Vehicle Depreciation - - - - - - - - - - - - - Building - - - - - - - - - - - - - Building Depreciation - - - - - - - - - - - - - Year 3 New PurchasesComputer Equipment - - - - - - - - - - - - - Computer Equipment Depreciation - - - - - - - - - - - - - Equipment/Machinery - - - - - - - - - - - - - Equipment Depreciation - - - - - - - - - - - - - Furniture - - - - - - - - - - - - - Furniture Depreciation - - - - - - - - - - - - - Leasehold Improvements - - - - - - - - - - - - - Leasehold Depreciation - - - - - - - - - - - - - Vehicles - - - - - - - - - - - - - Vehicle Depreciation - - - - - - - - - - - - - Building - - - - - - - - - - - - - Building Depreciation - - - - - - - - - - - - -

Appendix

CAPITAL BUDGET PROJECTIONSYear 1 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTALCapital BudgetOwner's Draw - - - - - - - - - - - - - Investor's Draw - - - - - - - - - - - - - Dividends Paid - - - - - - - - - - - - - Security Deposits - - - - - - - - - - - - - Amortization - - - - - - - - - - - - - Depreciation (existing assets) 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 510,300 Capital Asset Purchases - - - - - - - - - - - - - Depreciation (new purchases) - - - - - - - - - - - - - Land - - - - - - - - - - - - -

Year 1 Total Depreciation 510,300 Assumptions - Year 1Owner's DrawInvestor's DrawDividends PaidSecurity DepositsAmortizationEquipmentEquipment DepreciationFurnitureFurniture DepreciationLeasehold ImprovementsLeasehold DepreciationVehiclesVehicle DepreciationBuildingBuilding DepreciationLand

YE

AR

1 YE

AR

1 YE

AR

1Y

EA

R 1 Y

EA

R 1 Y

EA

R 1 Y

EA

R 1

Appendix

CAPITAL BUDGET PROJECTIONSYear 2 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTALCapital BudgetOwner's Draw - - - - - - - - - - - - - Investor's Draw - - - - - - - - - - - - - Dividends Paid - - - - - - - - - - - - - Security Deposits - - - - - - - - - - - - - Amortization - - - - - - - - - - - - - Depreciation (existing assets) 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 42,525 510,300 Capital Asset Purchases - - - - - - - - - - - - - Depreciation (new purchases) - - - - - - - - - - - - - Land - - - - - - - - - - - - -

Year 2 Total Depreciation 510,300 Assumptions - Year 2Owner's DrawInvestor's DrawDividends PaidSecurity DepositsAmortizationEquipmentEquipment DepreciationFurnitureFurniture DepreciationLeasehold ImprovementsLeasehold DepreciationVehiclesVehicle DepreciationBuildingBuilding DepreciationLand

YE

AR

2 YE

AR

2 YE

AR

2Y

EA

R 2 Y

EA

R 2 Y

EA

R 2 Y

EA

R 2

Appendix

CAPITAL BUDGET PROJECTIONSYear 3 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTALCapital BudgetOwner's Draw - - - - - - - - - - - - - Investor's Draw - - - - - - - - - - - - - Dividends Paid - - - - - - - - - - - - - Security Deposits - - - - - - - - - - - - - Amortization - - - - - - - - - - - - - Depreciation (existing assets) - - - - - - - - - - - - - Capital Asset Purchases - - - - - - - - - - - - - Depreciation (new purchases) - - - - - - - - - - - - - Land - - - - - - - - - - - - -

Year 3 Total Depreciation - Assumptions - Year 3Owner's DrawInvestor's DrawDividends PaidSecurity DepositsAmortizationEquipmentEquipment DepreciationFurnitureFurniture DepreciationLeasehold ImprovementsLeasehold DepreciationVehiclesVehicle DepreciationBuildingBuilding DepreciationLand

YE

AR

3 YE

AR

3 YE

AR

3 YE

AR

3Y

EA

R 3 Y

EA

R 3 Y

EA

R 3

Appendix