Value Concepts

The currency of modern commerce is knowledge and information. It is increasingly
important to know the value of the assets created by such knowledge. Companies
may be viewed as portfolios of technologies, essentially groups of knowledge assets,
each at a different stage of development. In general, each of these assets has a very
different wealth generating potential.

Skillful strategic management of these assets is necessary to successfully commer-
cialize and exploit these technologies. Sophisticated valuation approaches become
more important. Back of the envelope estimation is unsatisfactory when you are
concerned with maximizing your company's shareholder wealth.

Because the market value of modern companies, even those involved in manufac-
turing, consists predominantly of such non-tangible assets, firms must devote more
resources to the development, management, and measurement of such assets.

[For comments by Fed Chairman Alan Greenspan (and others) concerning the
growing importance of intellectual property in the U.S. economy, click here. ]

INTANGIBLE ASSETS (IA) are all the elements of a business enterprise
that exist in addition to monetary and tangible assets.

The term INTELLECTUAL PROPERTY (IP) refers to patents, trademarks,
copyrights, and proprietary technology (trade secrets and know-how).
Intellectual property is a sub-classification of intangible property, and is unique
because the owner of intellectual property is protected by law from unauthorized
exploitation of it by others.

Our services consist of IP/IA Valuation and IP/IA Consulting.

VALUATION SERVICES includes the assignment of dollar values to various
intangibles or groups of intangibles. Accepted basic as well as innovative hybrid
methodologies are employed as necessary.

CONSULTING SERVICES includes assisting executives and entrepreneurs
with the assessment, development, commercialization, and management of their
firm’s IP/IA.

VALUATION SERVICES

ASSETS VALUED include:

Patents;
Trade Names/Trademarks;
Copyrights;
Proprietary Technology;
Formulas/ Drawings/Procedures/Processes;
Customer Lists/Relationships;
Software;
Covenant Not to Compete;
Regulatory Approvals;
In-Process R&D;
License Agreements;
Rights;
Product Designs;
Employment Agreement/Contract.

PURPOSES of IP/IA VALUATION include the following:

Allocation of Purchase Price: FASB 141/142 now requires individual
valuation and expanded disclosure of acquired intangible assets. Extensive
new rules in this area.

Delaware Investment Holding Company (DIHC): This tax saving strategy
involves an operating company transferring its IP/IA to a Delaware (or Nevada)
holding company. The operating division licenses the use of the IP/IA, paying a
royalty to the DIHC. This decreases the operating firm’s taxable income in its
home state, and the passive royalty income is not taxable in Delaware. Third
party IP/IA valuation required, including establishment of arm’s length royalty rate.

Financing: Firms with strong patents or other IP (and few tangible assets)
increasingly are able to use such assets as collateral with forward-thinking banks.

Asset Impairment: Impairment measurement for non-amortizable indefinite
life intangibles, and goodwill. Pursuant to several FASB statements.

Technology Company Valuation: When company value rests almost
entirely on IP/IA value.

Purchase, Sale, or Gift of IP/IA: For example, gift of a patent to a university.

Bankruptcy-Related Valuations: Identifying and valuing intangible assets
of a cash-starved company can improve its prospects, perhaps through the sale
of core technologies.

Remaining Useful Life Analysis (RUL): An old concern receiving greatly
increased emphasis under new FASB rulings.

Financial Reporting and Tax Requirements: Valuation is increasingly important
in satisfying regulatory concerns in a number of areas. Our knowledge of these
shifting regulations helps you to allocate asset value to best advantage.

CONSULTING SERVICES

Assessment/inventory of existing IP/IA portfolio.

Identification of underutilized assets: Those with unrecognized value or
commercial potential; provide perspective on overlooked market application of
existing knowledge base/expertise.

Consideration of ways in which to exploit competitive advantage of IP/IA;
especially to accelerate time to market when windows of opportunity are open
but briefly. Includes partnering with other firms that possess complementary assets
necessary to commercialize the core IP/IA.

Disposition of IA/IP that are not consistent with strategic direction:
Selling, licensing, gifting.

Purchase or in-license of IA/IP needed to effectively address a market
opportunity consistent with strategic direction.

Feasibility study/scenario analysis: Develop studies demonstrating incremental
cash flow accruing to use of your technology versus those that are currently dominant.
Such a study can help your firm in its negotiations with larger joint venture/strategic
alliance partners. SAMPLE STUDY AVAILABLE ON REQUEST.

Acquire/maintain technology assets as options on uncertain market conditions.
Value of low-priced "acquired option" may rise significantly over time.

Litigation Support: We have successfully defended our asset valuations before
regulatory bodies; and are available for infringement or other damage analysis
and valuation.

Consider adequacy of legal protection of existing IA/IP.

Recent Quotes Regarding FASB 141 and 142:

"The emphasis on identifying, valuing, and providing clear and concise
disclosure of intangible assets will continue to be the focus of the SEC."

--SEC Chief Accountant

"Whether it is in conjunction with the acquisition of a business, the performance
of the impairment test, or the evaluation of recorded intangible assets in transition,
in almost every instance, companies will be required to obtain the assistance
of a competent and knowledgeable professional to assist in the valuation
of these intangibles."

--SEC Chief Accountant

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