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To: Silicon Trader who wrote (167)	1/3/1998 8:54:00 PM
From: Ed Pettee	Respond to of 7701

Jeff--<Long Post> Based on the public info released,following is an estimate of the "net revenue" for the next 90 days or this Qtr. on the VLT project. I dont't like to go out further than this on a development company since there are so many variables, until we can see the revenue #s for this Qtr.. I welcome you, or any one to critique or correct anything, there is no pride of authorship and I am just trying to get some dialogue going on what should be happening close in. The Consultant (J.Gagel} reports in section #5 " A gross profit of $500,000 is projected for January 1998 with 200 machines in operation. Net revenue in excess of $12,000,000 is projected for 1998 with 1300 machines in operation". This is in sync with the other numbers in the 10/23 press release. The released estimated #s indicate that Gross margin or Gross Profit is after 75% is paid in prize money from Gross Revenues, and that in 1998 the operating expenses are 38.03% of Gross Profit resulting in Net Revenue.(In 1999 and 2000 the operating expenses as a % of Gross Profit are quite a bit less than 1998, but I used 1998.) Therefore J. Gagles $500,000 gross profit after deducting $190,250 operating expenses(38.03%) Qtr. leaves net revenues of $309,750. Noram's share is 30% or $92,925 for the month of Jan.. Or $465 per machine based on the 200 machines. This equates to $278,640 in NR for the three months. Since I can not find a further schedule of machine implementation dates, I made an ASSUMPTION that 100 additional machines would be added on Feb 1st. Therefore at the same Noram share rate ($465per machine per month) we would expect additional NR of $92,800 for the two months of Feb and March, which added to the other NR would be #371,440 in total NR. If you deduct local G & A at 5%,which "OMBRE" used in his #s we get $352, 868 or 0.0254 per share (13.9 mil shares). This assumes no other machines in the 90 day period except the 200 mentioned by Gagel and my assumption of 100 on Feb 1st. The dates of machine additions may be off but if you have better info it would help and they can quickly be adjusted. The monthly NR numbers are from Gagel and I am sure as a Fulbright Scholar he did DD on arriving at those numbers. Again, going beyond 90 days is risky since the operating expenses as a % of Gross profit change (Probably due to the payoff of the machine costs) and the rate of NR per each additional machine changes for what ever other factors were used in the original estimates. Thanks for reading this far and I hope we hear next week how the new machines are operating and how the revenue is looking. To do a better job Jeff the schedule of machine implementation would be helpful , I looked and couldnt find it.