i only know what i am reading:
USA Segment Assumptions
For year ended December 31, 2014:
1. We assume that we will successfully raise at least $7.0 million in net proceeds under this offering by December 31, 2013.
2. We further assume that we will complete the acquisition of H&N by January 1, 2014 and that H&N operates as a wholly-owned subsidiary effective January 1, 2014 for the entire 2014 financial year.
3. Based on historical revenues, current customer activity and commitments under recently signed minimum purchase agreements, we assume 2014 annual revenues for H&N will be $15.0 million at over 30% gross margin.
4. We expect H&N 2014 operating expenses will be $2.3 million based on current expense levels and anticipated staffing needs.
5. We assume that all current customers with minimum purchase agreements in place continue as customers and meet their contractual minimum purchase obligations.
6. We expect sales to new customers utilizing our SRB products for meat applications and cereal ingredient inclusion to start the year at low or no sales and increase throughout the year, contributing nearly 4% growth towards the overall increase in revenues for 2014.
7. We assume that raw rice bran costs per metric ton remain at third quarter 2013 levels.
8. We assume that volume production from an existing production facility diminishes to immaterial amounts and is consolidated into other plants, and another production facility remains idle.
9. We assume about $0.5 million in capital project expenditures in 2014, including plant upgrades and capacity expansion at the Dillon, Montana facility.
10. We assume our efforts to rationalize manufacturing facilities will increase capacity utilization in the second half of 2014 at remaining plants by approximately 5%.
Brazil Segment Assumptions
For year ended December 31, 2014:
1. Assumes an exchange rate of US$1 to R$2.38.
2. A plant shutdown in order to conduct upgrades that will increase rice bran oil extraction capacity begins in January 2014 and completes in late February 2014. No production will occur during the shutdown period.
3. Revenue for 2014 is projected to grow 40% over 2013 assuming (i) no revenue during the 6 week shutdown period in January and February; and (ii) a build-up in raw rice bran processed from 6,000 metric tons per month in March 2014 building to 8,900 metric tons per month in the fourth quarter of 2014 resulting from the 50% increase in rice bran oil extraction capacity.
4. Raw rice bran costs are projected to remain at fourth quarter 2013 levels.
5. Plant operating efficiencies related to higher raw rice bran processing levels, without a corresponding increase in labor or plant overhead expenses, are projected to result in significant gross profit margin improvement.
6. Operating expense growth for 2014 is projected to increase 10% over 2013 amounts in order to support the expected 50% increase in raw rice bran processing capacity and a 40% increase in sales revenue.
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