Bitech Technologies Corp (BTTC)

[FrankLind]

How The Primary SPIN Business Model Works...

For the "newbies" and as a refresher for those who forgot, let me explain how the business model works. (as described by an investor who is long SPIN with a few things added to it.)

The initial event. A person is involved in an accident that was not his fault, and sustains a back problem from the accident. He retains an attorney to file a personal injury lawsuit on a contingency basis. The defendant has liability insurance.

Attorney's first step. The attorney starts spending money on the case by first investigating the legitimacy of the claim through a private investigator. Once legitimacy is established, the attorney will normally send his client to a chiropractor or other spine therapist for four to five months of physical therapy ("PT"). Following PT, there are two scenarios:

· After this period of time, if the damage was "soft tissue" (muscle), it likely would have healed. Soft tissue damage awards considerably less than actual damage to the spine. In this instance, the attorney proceeds toward settlement without SPIN's involvement.

· If pain persists, the attorney then proceeds to pay for an MRI. Initial diagnosis from the MRI identifies probable problem areas on the spine. At this point, the attorney knows he needs a real "end game" diagnosis at this point. This is where SPIN would be invited in...

Attorney's second step, SPIN's involvement. Now that the attorney has "skin in the game", he sends his client to one of SPIN's Affiliated Centers and has the case reviewed by the Affiliate Spine surgeon which costs the attorney approximately $500 in cash paid directly to the surgeon (remember, this in addition to what the attorney has advanced for the MRI).

· If the local SPIN Affiliate Center ("Center") decides not to take the case, SPIN's involvement is over. SPIN decides what cases it wants

· If the local Center decides to take the case, then (1) the Center has the attorney give it a Letter of Protection ("LOP") that states that should the case prevail in a judgment for the plaintiff (the attorney's client), the Center will receive a share of the final judgment up to and including the fully billed amount (usually the "medical" share is around one-third of the settled amount after expenses, up to the total billed amount for the medical expenses); and (2) once the LOP is executed, the Center will cover the costs of the procedures involved in this stage of diagnosis relying on the expectation that a favorable judgment will ultimately be reached and payment will be made for at least some reasonable share of the expenses.

What happens next. For the purposes of this hypothetical, assume (a) the defendant in the lawsuit filed by the attorney has $200,000 of liability insurance; and (b) that the decision was made by the Center to take the first step for diagnostics which is the Facet Nerve Block ("Facet"). The patient then is set up with an appointment on a specific day this Center is doing these SPIN treatments (usually a center performs procedures two to four days a month). The Facet procedure usually takes around ten minutes (from the MRI, specific points on the spine are identified to be the likely area of the problem which is the target of the nerve block procedure). Once the facet nerve block is completed, the patient is then asked if his pain has been relieved (the nerve block is similar to getting a shot of Novocain at the dentist directed to the suspected "pain generator site").

· If the pain went away, the problem area has been identified, a bill for the single procedure for around $5,500 is sent to the lawyer.

· If the pain is still there after the first shot, then the MRI is further reviewed for a second and/or possibly third problem area. And a second and/or third shot will be administered. Each shot will be additionally billed at $5,500 per shot (three is the maximum that can be administered at a single session)

Let's say a "double" was done. At this point one of two things now happen:

· Some SPIN affiliates have a second procedure available which is not for diagnostics, but for permanent treatment for certain specific problems like a "herniated" or "bulging" disc. This is called a Percutaneous Disc Decompression Injection ("PERK"). If this is done, then an additional $19,000 is billed to the attorney for this minimally invasive procedure making the total bill $30,000 ($11,000 for the double facet and $19,500 for the PERK).

· If the PERK is not appropriate in this case, then just the $11,000 is all that is billed in this case.

The initial math. Let's assume the PERK was done so in this "case", so the attorney was billed $30,000. Let's also assume the case eventually settles for $100,000. Pursuant to the arrangement (outlined earlier) made with the Center when it accepted the case:

· The attorney takes, for example, $10,000 off the top for administrative expenses, leaving $90,000 to be split up.

· Let's say that the PT, MRI and any other medical portion was billed against the case for an additional $15,000 for a total of $45,000 in medical expenses. BUT, one-third $90,000 is only $30,000, so all the "medical" shares take a "haircut" of around one-third. In this case at settlement, the Center would collect $20,000 and the other medical providers would prorate split the other $10,000.

The final math. Going back to the beginning of this hypothetical, the Center right after the time of the PT, would effectively sell the whole billed amount (bill and LOP) of $30,000 to SPIN for approximately $6,000 cash.

· At this point, SPIN would put the whole $30,000 on its internal books as a "Gross Revenue" number.

· But based on 3 1/2 years of history of some 800 cases completed of around 3,000 total taken to date, to satisfy its auditors, SPIN puts a "haircut" of around 52%, leaving 48% of the gross on its reported SEC financials. That is what is shown on the financials as "Net Revenues" ("NR") and as "Accounts Receivables" ("AR"), with half immediately going under short term and the other half under long term.

· This is a very important point… SPIN's AR is unconventional compared to 99% of public companies. What they are is just a large pool of small LOP's averaging around $7,000 (based on history to date, eventually pays out on 98.5% of cases).

· The Center is happy, effectively selling the case and getting this "up-front" payment for two reasons: (a) because it got paid $6,000 for maybe a half hours worth of work and got its money right away; and (b) if the diagnosis derived from the shot should show that surgery is required, the local surgeon at the Center could end up with a $100,000 surgery case through the referral which SPIN has no interest in participating.

· SPIN is happy because in this case, it would have more than doubled their investment in the case in just 10-12 months on average.

· Let's say the case was settled for the whole $150,000, than SPIN would collect the whole $30,000 and be real happy. But if it only settles for $50,000, then SPIN would only collect their percentage share of the medical or around $10,000 and still turn a good 66% return.

What is great about this type of personal injury lawsuit, is that unless the "Medical" LOP holders also sign off on the final settlement with the court, then the Judge will NOT enter the Judgment. So SPIN knows that the attorney will not attempt to screw around with the final disbursement to SPIN since the attorney would like to get paid as well.

Game changer. Beginning in 2013, SPIN added two (2) new features which should not only help cases settle sooner, but also attract more attorneys to SPIN.

· A device called the "Quad Video HALO" ("QUAD") unit which videotapes all procedures from four angles (including the internal "fluoroscopic" view). The video helps settle the cases sooner and at higher levels in that the insurance company representing the defendant, is much less likely to take a case to a jury knowing the plaintiff now has a video showing additional pain and suffering, and documentation of the injury.

FOr the importance of video recording surgery.

https://www.arrowsight.com/public/as/pdf/JAMA_Editorial_2013_The_Power_of_Video_Recording_Taking_Quality_to_the_Next_Level.pdf

http://articles.latimes.com/2013/apr/24/business/la-fi-mo-surgery-cameras-20130424

· Initiation of continuing legal education programs for personal injury attorneys that are state certified so attorneys may obtain their required CLE credit. The CLE gives required recertification "hours" to personal injury attorneys who are taught the advantages of using SPIN.

The Quad Video Halo technology is owned by SPIN and currently has a Patent Pending. One Quad has already been sold to an independent non-affiliated medical clinic for $50,000 leaving an 80% profit margin. By the second half of 2013, it is anticipated an independent medical device representative will be retained to start selling the Quad, contributing as an additional revenue source to SPIN.

The San Antonio clinic that recently became an affiliate is experiencing strong growth due to the introduction of the Quad Halo. An interesting side effect of the Quad Halo is patients trust the surgeon will be that much more careful when the procedure is being recorded.

Anyway - the next 3 quarters will be very revealing. We shall see.