James Lind Financials EN

Matthieu Verstraete

Informations

• Publié par: MyMicroInvest
• Publié le: 17 juin 2015
• Nombre de lectures: 133
• Langue: English

Extrait

James Lind

You will find in this document all extracts from the information Memorandum ofJames Lind making reference to the following subjects:

①

②

③

④

Financial History

- -

Balance sheet Income statement

Deal Structure

- - -

Existing shareholders Forcasted capital increase Basis of valuation

Financial Plan

- -

Profit forecasts Forecasted Income statement

Appendix

This document should be read as an introduction to the information Memorandum. Every decision to invest needs to be built on an exhaustive examination of the information Memorandum which can be downloaded on the company page.

Financial History ①

1. Balance Sheet

James Lind has no historical financial statements as the company is in the process of being incorporated.

2. Income Statement

James Lind has no historical financial statements as the company is in the process of being incorporated.

Deal Structure ②

1. Existing shareholders

James Lind is in the process of being incorporated under the form of a public limited company under Belgian law (société anonyme/naamloze vennootschap). It will have an initial starting capital of minimum 61,500 EUR, fully paid in, and will be established for an indefinite period of time. It represents 61,500 shares. The share par value (capital divided by the number of shares issues) is 1,0 EUR.

Entrepreneurs / Managers Nidus - the Brand Incubator  GmBh MyMicroInvest Finance (Crowd) Other investors  Other Investors Total

2. Forecasted capital increase

Incorporation June 2015 % 100,00%

100,00%

0% 0% 0% 100,00%

The capital increase to which MyMicroInvest Finance will participate is part of a broader funding of James Lind considered between 250,000 EUR and 900,000 EUR.

This funding will be allocated as follow : - Between minimum 44,000 EUR and maximum 87,912 EUR will be subscribed by MyMicroInvest Finance based on the results of the issuing Notes ; - A minimum of 206,000 EUR and a maximum of 856,000 EUR will be invested by other investors, i.e business angels.

The value of the company before this increase in capital is presently estimated to be a maximum of 1,000,000 EUR. Following this increase in capital, the value of the company will be between 1,250,000 EUR and 1,900,000 EUR, meaning an estimated valuation of 1,000,000 EUR before increase of capital plus between 250,000 EUR and 900,000 EUR of new money brought in.

This capital increase will be done at a subscription price per share of 1.00 EUR.

The capital will be between 311,500 EUR and 961,500 EUR, constituted as follows: - 61,500 EUR present capital ; - Between 250,000 EUR and 900,000 EUR of new capital.

The table below presents the percentages of the capital held by the James Lind account of MyMicroInvest Finance depending on the results of the Notes issue (i.e., a minimum of 44,000 EUR and maximum of 87,912 EUR) and the minimum and maximum amounts contributed by the other investors (i.e., a minimum of 206,000 EUR and maximum of 856,000 EUR).

Entrepreneurs / Managers Nidus - the Brand Incubator  GmBh MyMicroInvest Finance (Crowd) Other investors  Other Investors Total

Class of shares

A B B

Capital increase October 2015

% 80,00%

80,00% 3,52% 16,48% 16,48% 100,00%

According to the effective amount invested by the other investors, the percentage held by MyMicroInvest Finance may be different than stated above.

* The table below presents the percentages of the capital held by the James Lind account of MyMicroInvest Finance depending on the results of the Notes issue (i.e., a minimum of 44,000 EUR and maximum of 87,912 EUR) and the minimum and maximum amounts contributed by the other investors (i.e., a minimum of 206,000 EUR and a maximum of 856,000 EUR).

Total financing amount

250.000 EUR 900.000 EUR

% MyMicroInvest Finance Account JAMES LIND S.A. Min amount Max amount 44.000 EUR 87.912 EUR 3,52% 7,03% 2,32% 4,63%

3. Basis of Valuation

The value of the shares of James Lind before the increase in capital via subscription by MyMicroInvest Finance has been established at a maximum of 1,000,000 EUR by the shareholders of James Lind. It may be revised before the planned capital increase, but MyMicroInvest Finance will proceed with the planned investment only if the valuation of the shares before the capital increase does not exceed 1,000,000 EUR. In exchange for a lower valuation, a mechanism of correction of this valuation has been provided in the form of buy options or warrants.

MyMicroInvest Finance has carried out a check on the methodology of this valuation and we set out the conclusions below. The method used is described inAppendix.

MyMicroInvest Finance believes that James Lind is positioned in the category 1. On this basis, the resale value of James Lind in2018 has been estimated on the basis of the figures projected for the year 2017 by applying a multiple of the sales turnover and a multiple of the EBITDA of James Lind. The resulting values are: - 2x the sales turnover of 2017 (the market using a multiple between 0.8x and 2.0x), all of which gives a company value of about 5.040.000 EUR) ; and - 8.0x EBITDA of 2017 (the market using a multiple between 4.0x and 8.0x), all of which gives a company value of around 2.375.360 EUR.

The average of these two values was taken, i.e. 3.707.680 EUR.

This number was then put in present value at various discount rates depending on the rate of return that investors expect, which can vary between 5% and 25% depending on the type of investor. The rates for calculating the respective NPV ranges from 63% and 78% respectively as detailed in the table below:

On the basis of these discounting rates and taking out the minimal amount of capital invested during the increase described in this Prospectus, i.e. 250,000 EUR, the investor can find the theoretical value of the shares of James Lind in the table below depending on the return that he expects (column on the left) :

Expected return 5% 10% 15% 20% 25%

Valuation 816.142 EUR 754.857 EUR 699.591 EUR 649.528 EUR 603.990 EUR

MyMicroInvest Finance believes, on the basis of the methodology it has used, that the valuation performed by James Lind exceeds the valuation conforms to market standards. The following reasons could explain this outcome: 1. The figures from the financial plan, drafted by the entrepreneur, are conservative; 2. The valuation methodology used by MyMicroInvest Finance is conservative; 3. The valuation methodology used by MyMicroInvest Finance does not factor in the most optimal exit year of the investment and is based by default on the forecasted figures of 2018, without taking into account further growth potential; 4. The valuation methodology used does not take into account unpredictability, inherently related to new markets.

The attention of the potential investor is once again directed to the fact that there is a risk that the objectives of James Lind may not be attained, which could result in a significant reduction in the hoped for revenue and thus to risk of insolvency or at least of low returns, even nil or negative returns for the investors.

Financial Plan ③

1. Forecasted Income Statement

INCOMESTATEMENT Sales turnover Fixed production Other revenue Operating revenue

Supplies, merchandise, services and miscellaneous goods

Gross operating margin Remuneration, social charges and pensions Depreciation and reduction in value on formation expenses, fixed tangible and intangible assets

Reduction in value of stock, on orders being executed and on trade receivables: allocations (reversals)

Provisions for risks and charges: allocations (uses and reversals) Other operating expenses Operating expenses assigned to assets as restructuring costs Operating profit (loss) Financial revenue Financial expenses Profit (Loss) before taxes

Exceptional revenue Exceptional expenses Profit (Loss) of the Financial Year before taxes Withholding on deferred taxes Transfer to deferred taxes Income tax Profit (Loss) of the Financial Year Withholding on tax-free reserves Transfer to tax-free reserves Profit (Loss) of the Financial Year

2015 630.000 0 0 630.000 -322.307

307.693 -68.000

0

0

0

-390.485 0

-150.793 0 0 -150.793

0 0 -150.793 0 0 0 -150.793 0 0 -150.793

2016 1.260.000 0 0 1.260.000 -645.615

614.385 -102.000

0

0

0

-488.518 0

23.867 0 0 23.867

0 0 23.867 0 0 0 23.867 0 0 23.867

2017 2.520.000 0 0 2.520.000 -1.288.230

1.231.770 -156.000

0

0

0

-778.850 0

296.920 0 0 296.920

0 0 296.920 0 0 0 296.920 0 0 269.920

4 (“Series C”)

3 (“Series B”)

-

Stage 3:At each level of development there is also a matching expectation of annual capitalised returns based on the historic statistics of returns of this type of company:

Level 1 (“Seed”) 2 (“Series A”) 3 (“Series B”) 4 (“Series C”) 5 (“Belgian SME”)

Stage 1:Ideally, one should have an opinion of the financial plan and, if necessary, modify the assumptions used; Stage 2:To estimate the probability of success of an company, which depends especially on the level of development of the company We discern 5 major levels of development of companies:

Appendix ④

Description The company is in a phase of definition and/or creation of its product/service, market, base of users (consumers); it is hiring its first employees but is not yet making sales. The company moves into industrialisation of the product/service, definition of the business model (making the product appropriate to the market), definition of the revenue model; first revenue is coming in. The company moves into overall industrialisation of its business, has sales turnover, hires a sales force, increases considerably its number of customers, possibly makes acquisitions or strategic partnerships. The company moves into a phase of accelerated growth; it is profitable but chooses to invest so as to continue to grow rapidly; it expands internationally, makes acquisitions or strategic partnerships. Small and medium sized Belgian companies which achieve decent sales turnover but experience modest and/or slow growth and which are not necessarily profitable but which have a concrete plan to establish/restore profitability.

1 (1 +��)(1+��) ( ) 2 ��=‒1 [ ] �

To estimate the valuation of a company basing oneself on the financial plan, it is appropriate to proceed by stages:

-

Annual return anticipated Between 15% and 25% Between 15% and 25% Between 10% and 20% Between 10% and 20% Between 5% and 15%

2 (“Series A”)

Level 1 (“Seed”)

-

Verification of the valuation is made on the basis of market standards The analysis dealt with the method of valuation and not with the numbers of the financial plan serving as the basis for valuation. MyMicroInvest Finance has not done any checking into how realistic the financial plan is, this being left to the estimation of the investors.

5 (“Belgian SME”)

-

Stage 4:Then, MyMicroInvest Finance applies the following formula to obtain the discount rate to be applied to the results of the financial plan to estimate the net present value of the company:

n n n n n

r r r r r

o o o o o

x EBITDA EBITDA x EBITDA x EBITDA x EBITDA

Level 1 (“Seed”) 2 (“Series A”) 3 (“Series B”) 4 (“Series C”) 5 (“Belgian SM

Multiple 2.0x sales 1.7x sales 1.4x sales 1.1x sales 0.8x sales

-

VAN Vr Ta T

= = = =

Discount rate Between 70% and 80% Between 45% and 60% Between 35% and 40% Between 25% and 30% Between 15% and 20%

tu tu tu tu tu

Stage 6:Once the sale value has been determined, one can discount this value to the NPC using the following formula: �� (�) ���= [ ] (1 +��) Where:

P

Ta Ra Rf

=

Level 1 (“Seed”) 2 (“Series A”) 3 (“Series B”) 4 (“Series C”) 5 (“Belgian SM

E”)

-

Stage 7 :Finally, one should calculate the value of the company before the increase of capital, which consists of taking away from the discounted sale value at stage 6 the minimum amount of financing necessary for the development of the financial plan which was presented (cfr. Stage 1 above).

E”)

Stage 5:Finally, one should estimate the value of possible sale of the company at a realistic date for sale in the future (customarily between 5 and 7 years) This value is estimated by the market (on the basis of prospects for future growth at the moment of sale of the company, knowing that a company at level 1 “Seed” today has in five years a potential for growth which is higher than a company at level 5 today) as the average between the values obtained by applying the following multiples to the sales turnover and EB ITDA of the company for the year preceding the sale of the company:

Net Present Value Sale value Discount rate Number of years between the sale and the date of valuation

d d d d d

8 7 6 5 4

. . . . .

0 0 0 0 0

v v v v v

er er er er er

an an an an an

One should note that the result of this formula gives relatively high discount rates, in particular because venture capitalists take into account the possibility that the financial plan will not be achieved in the manner foreseen (cfr. l Stage 1 above) This yields the following ranges:

Discount rate Expected returns The rate of return without risk which matches the rates of Linear Bonds OLO at 10 years, i.e., 1.4% at present The probability of success of the company (cfr. Stage 2 above)

-

= = =

Where:

-