Replies to post #2520 on BioNeutral Group Inc. (fka BONU)

[malt66]

Hi Stervc, to add, this was from the 10Q on what expected intellectual properties are worth.

The Company believes that we will be able to generate significant sales by the fourth quarter of 2013 providing for sufficient cash flows to supplement our equity financing. If we are able to execute our plan, the Company can begin to accumulate cash reserves. There is no assurance based on our current plans, however that our funds will be sufficient to meet our anticipated needs through our fiscal year 2013, and we may need to raise additional capital during fiscal 2013 to fund the full costs associated with our growth and development. There can be no assurances that we will be successful in raising additional capital on favorable terms if at all. If the Company is unable to secure additional capital, it may be required to curtail its business development initiatives, impair its intellectual property and take additional measures to reduce cost in order to conserve cash.


We computed the Intellectual Property value of using an undiscounted cash model. In our undiscounted cash flow analysis, we prepared a five year forecast of our expected earnings to derive an explicit stream of expected free cash flows through October 31, 2017. We developed our revenue and direct variable costs forecast based on a variety of factors including our current and anticipated sales pipeline, knowledge of our business and industry, general economic conditions in the marketplace and expectations of market opportunity with respect to the specific types of advertising services we provide. Our operating expenses are generally fixed and predictable; however, we increased our budgeted operating expenses by an amount that we believe is approximately equal to theoretical lease costs we would incur had our parent company not provided us with facilities that are not a component of operating costs in our goodwill reporting unit. After having determined the amount of our explicit year cash flows, we assumed that the Company would experience a long-term growth rate in free cash flows of 2% per annum thereafter. We then multiplied our cash flows by a marginal federal and state tax rate of 40% to derive our after-tax yearly cash flows. The range of Intellectual Property values we derived using the above amounted to $41,431,530, which exceeds the carrying value of our Intellectual Property of $9,958,222.[color=red][/color]

[stervc]

BONU $41,431,530 Valuation Explained in 10-K…

This piece of DD had gotten by me. Thanks to this post courtesy of malt66 below:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=94808149

This is absolutely huge in my opinion and was performed via Audited Financials within the 10-K that was filed with the SEC by BONU that explains how they derived an Expected BONU Net Income Valuation for their Intellectual Property (even after a 40% tax rate) to have a total value of $41,431,530 and this was an Expected Valuation all the way up through October 31, 2017. This leads me to think that they already know what contracts they will be awarded. This means that since we are here now in Dec 2013, we have some years ahead of serious growth coming our way here in BONU as this is explained below:

http://www.sec.gov/Archives/edgar/data/1427030/000121390013000399/f10k2012_bioneutral.htm
Analysis of Impairment

In conjunction with our 2012 audit, we performed our annual impairment testing during January 2013. In this analysis, we determined that the current carrying value of our Intellectual Property was $9,958,222.

We computed the Intellectual Property value of using an undiscounted cash model. In our undiscounted cash flow analysis, we prepared a five year forecast of our expected earnings to derive an explicit stream of expected free cash flows through October 31, 2017. We developed our revenue and direct variable costs forecast based on a variety of factors including our current and anticipated sales pipeline, knowledge of our business and industry, general economic conditions in the marketplace and expectations of market opportunity with respect to the specific types of advertising services we provide. Our operating expenses are generally fixed and predictable; however, we increased our budgeted operating expenses by an amount that we believe is approximately equal to theoretical lease costs we would incur had our parent company not provided us with facilities that are not a component of operating costs in our goodwill reporting unit. After having determined the amount of our explicit year cash flows, we assumed that the Company would experience a long-term growth rate in free cash flows of 2% per annum thereafter. We then multiplied our cash flows by a marginal federal and state tax rate of 40% to derive our after-tax yearly cash flows. The range of Intellectual Property values we derived using the above amounted to $41,431,530, which exceeds the carrying value of our Intellectual Property of $9,958,222.

v/r
Sterling

[JPS02]

Do we know if the pending utility and international patent applications were finalized?

Go BONU!

[vantillian]

Impressive, sterling. I grabbed a starter here today and added more in the afternoon. Looks like great potential for pennyland mover. Thanks for your efforts. As always, your material is helpful and classy.