Ann: First PrIME Franchise Proposal , page-5

If this ABS proposal consolidates into a binding agreement it will be a major corner stone in getting the Singapore facility established. If PrIME Biologics already had one franchisee it would be a very firm expression of confidence in the technology, in the specific market opportunities it offers in Asia, and in the provision of one income stream of licensing and royalty fees. This may just lever Asian investors over the line.

Getting investors to commit the initial additional funding of $15M for the Singapore facility has been a major hurdle. It has delayed the project over two years. As is readily acknowledged, the problem is one of investors accepting a valuation of the subsidiary, PrIME, that is ten times the market cap of the parent company. They generally want the evidence of a going concern which puts NSP effectively in a Catch-22 situation.

I had previously expected ABS to wait to assess how the Singapore facility was going to work before committing to anything (as was probably forced by ABS’s financiers, its US parent). In this regard it may have been a strategic move on the part of Nusep management to make a new offer to ABS with added incentives. The cash returns for PrIME will be lower for this one particular licensing agreement but the prospects of an earlier commencement in Singapore are considerably enhanced.

The series of recent announcements on increased efficiency in membrane usage and in specific research into new applications of the existing technology clearly demonstrate the development potential. The direct relevance of increased dengue fever occurrence in Singapore should not be lost on potential investors and on government.

Juke