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Biotech / Medical : GUMM - Eliminate the Common Cold -- Ignore unavailable to you. Want to Upgrade?

To: Bo Didley who wrote (1455)	11/6/1999 4:31:00 PM
From: DanZ	Read Replies (2) \| Respond to of 5582

Due to the unforeseen turn of events last week, sales of Zicam in Q4 will be much higher than my previous estimate. I have provided my revised Q4 99 estimate below and welcome sincere comments. If GumTech meets or beats my estimates for Q3 and Q4, they will reverse the loss for FY 99 and turn a profit of 4 cents per share for the year. I will post my estimate for next year in a little while. Figures are in thousands. Gum Zicam Total Revenue 2,200 10,189 12,389 Cost of sales 1,380 4,891 6,271 Operating expenses 720 1,150 1,870 R&D 120 100 220 Total expenses 2,220 6,141 8,361 EBIT -20 4,048 4,028 Interest/Other income 31 0 31 Interest expense -275 0 -275 Preferred stock dividends -70 0 -70 EBT -334 4,048 3,714 Income tax 0 Net income -334 4,048 3,714 Deduct 40% to Gel Tech: 1,619 Consolidated Net income: 2,095 Diluted avg shares 7,800 Earnings per share $0.27 Notes: 1. Revenue: a. Gum business 10% increase from my Q3 99 estimate of 2 mil = 2.2 mil b. Zicam based on avg of 15 units per store times the remaining 15,000 stores that didn't receive product in Q3. This is 225,000 units, which is a conservative estimate given that Costco purchased 144 unit display stands. Zicam is now sold through approximately 50,000 retail stores, and I estimated a very conservative 24 units per store for reorders in Q4. I believe this is conservative because many stores sold out of Zicam after the news last week. The Walmart warehouse was out and placed another large reorder with Gel Tech. I estimate that 500,000 to 700,000 units of Zicam were ordered after the news was released, which is an average of only about 10 units per store. Based on 1.2 mil units reordered plus 225,000 units shipped to fill the channel at the beginning of the quarter and a unit cost of $7.15, I estimate that sales of Zicam will be $10,188,750 in Q4. It is my belief that discounts were not given and that Gel Tech received full price for these shipments. 2. Cost of sales based on historic averages a. Gum business: 63% of sales b. Zicam: 48% of sales 3. Operating expenses a. Gum business: $720k based on historic average b. Zicam: $1.15 million based on 150k avg plus 1 mil for advertising. 4. R&D a. Gum business: $120k b. Zicam lower than my Q3 estimate since the clinical work was paid in Q3 and I'm not expecting much R&D in Q4. 5. Interest income reduced from Q3 estimate due to likely lower cash balance to fund Zicam production and higher working capital requirements. 6. Preferred stock dividends to Citadel. 7. Number of shares outstanding increased from Q3 to account for possible exercise of warrants.