MINDSHAKER VALUATION ANALYSIS
EXHIBIT 6
| Cost of Capital | |
|---|---|
| Risk Free Rate | 5.50% |
| Market Premium | 7.20% |
| Beta | 2.675 |
| Cost of Equity | 24.76% |
| Assumptions: | |
|---|---|
| Growth Rate | 3.0% |
| Betas of Public Comps | Ticker | Beta | Price/ Sales |
| Netscape | NSCP | 1.6 | 21.41 |
| EBay | EBAY | 3.67 | 3,305.79 |
| UBid | UBID | 6.37 | 69,423.75 |
| Amazon.com | AMZN | 1.68 | 143.38 |
| MEDIAN | 2.675 | 1,724.59 |
| DCF Analysis | 1999 | 2000 | 2001 | 2002 | 2003 | TV |
| Net Income | (229,583) | 251,582 | 908,586 | 1,347,443 | 1,838,303 | |
| Dep & Amort | 1,167 | 2,800 | 2,800 | 2,800 | 2,800 | |
| CapEx | - | - | - | - | - | |
| Working Capital | 277,484 | 842,116 | 655,845 | 564,531 | 505,069 | |
| Unlevered FCF | (505,900) | (587,734) | 255,541 | 785,712 | 1,336,034 | 6,324,057 |
| Future Value | (631,161) | (914,811) | 496,234 | 1,903,551 | 4,038,260 | 2,092,276 |
| NPV 99-03 | 114,826 | |||||
| NPV After Year 5 | 2,092,276 | |||||
| Enterprise Value | 2,207,102 | |||||
| Less: Net Debt | - | |||||
| Equity Value | 2,207,102 |
| Public Comparables | Sales | Price/Sales | Enterprise Value | Net Debt | Equity Val |
| Netscape | 21.41 | ||||
| EBay | 3305.79 | ||||
| UBid | 69423.75 | ||||
| Amazon.com | 143.38 | ||||
| Median | 1724.585 | ||||
| Normalized Median | 82.395 | ||||
| Netscape Multiple | 21.41 | ||||
| Mindshaker | 2,164,837 | 3,733,445,090 | 488,475 | 3,732,9516,615 |
| Venture Capital Valuation | Median | Normalized Median | Standard P/E Ratio |
| Sales in Year 5 | 22,001,060 | 22,001,060 | 22,001,060 |
| Price / Sales Multiple | 1,724.59 | 82.40 | 21.41 |
| Enterprise Value | 37,942,698,308 | 1,812,777,351 | 471,042,698 |
| Less: Net Debt | 488,475 | 488,475 | 488,475 |
| Equity Value | 37,942,209,833 | 1,812,288,875 | 470,554,222 |
| Hurdle Rate | 60% | 60% | 60% |
| Number of Years | 5 | 5 | 5 |
| Discounted TV | 3,618,451,103 | 172,833,335 | 44,875,548 |
| Initial VC Investment | 500,000 | 500,000 | 500,000 |
| VC Ownership % | 0.0% | 0.3% | 1.1% |
| Standard Ratio | Normalized Median | Comps Median | |||
| 45% | 73,412.441 | 45% | 282,740,104 | 45% | 5,919,467,089 |
| 50% | 61,965,988 | 50% | 238,655,325 | 50% | 4,996,504,999 |
| 55% | 52,595,814 | 55% | 202,567,111 | 55% | 4,240,959,554 |
| 60% | 44,875,548 | 60% | 172,833,335 | 60% | 3,618,451,103 |
| 65% | 38.476~003 | 65% | 149,186,180 | 65% | 3,102,436,494 |
| 70% | 33,140,959 | 70% | 127,638,831 | 70% | 2,672,255,715 |
| 75% | 28,669,455 | 75% | 110,417,315 | 75% | 2,311,704,818 |
| Valuation Based on EBITDA Multiple | |
|---|---|
| 2003 EBITDA | 3,164,538 |
| EBITDA Multiple Based on EBITDA multiples of various industries |
6.00 |
| Enterprise Value | 18,987,227 |
| Net Debt | 488,475 |
| Equity Value | 18,498,751 |
| IRR to Investors | 1999 | 2000 | 2001 | 2002 | 2003 | IRR |
| Based on EBITDA Mult. | (500,000) | - | - | - | 3,796,875 | 66% |
| Mindshaker | ||
| Table of Contents | Appendices | |
|
1. Executive Summary 2. Market Analysis 3. Company Description 4. Marketing & Sales 5. Products & Services 6. Operations 7. Management 8. Financials |
Initial Programs Employees Industry Analysis Management Biographies Board CV Summaries Valuation Analysis Balance Sheets Income Statements Competitor Analysis | |
| All information herein is confidential and belongs to Mindshaker | ||