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SIC 3845 Mesr/Anlyz/Cntrl Instrmnts; Photo/Med/Opt Gds; Watchs/Clocks - Electromedical equipment

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Medical Equipment Business Plan

MedNexis, Inc.

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Financial Plan

CAPITAL RAISING ("THE OFFER")

The company intends to raise an amount of approximately $750,000 of seed capital. $250,000 has already been committed by management.

Current Capital Structure

Shares Authorized	Shares Issued
15,000,000 common	1,500,000 common
1,000,000 preferred	0 preferred

Current Shareholders:

Daniel Burnett
Mike Marriott	300,000 shares
Nathan Wain	300,000 shares
Brian Bell	300,000 shares

For $750,000, the investing party will receive 750,000 preferred shares, or 33.3% of the company. Preferred shares will include senior debt and anti-dilution provisions as negotiated.

Utilization of Proceeds:

Working capital

The proceeds from the offer will be used to fund the working capital requirements of the company (and its subsidiary and associated companies, if any).

Acquisition of assets

Land & building, plant & machinery, and other fixed assets will be purchased as and when deemed necessary to maximize the profits of the company

Cashflows incidental to the normal business operations of the company.

Funds will be used for the purpose of business operations of the company.

Exit Considerations

The most likely exit afforded investors will be through acquisition. If the company's actual operational and financial results are in any reasonable range of the projected results herein, the company will become an attractive asset to an acquisitive competitor or larger medical device company. No particular competitor or medical device company is thought to be more likely than another to be interested in MedNexis' technology.

To the extent that actual operational results materially exceed those projected herein, the probability of an IPO exit increases. Exceptional results would enhance the Mednexis brand name and financial position, making new product development and the likelihood of new product success more plausible. In this scenario, the opportunity to raise capital and provide an investment exit to shareholders becomes more likely.

A third exit possibility for investors may be an acquisition after IPO. This strategy would allow an investor to delay exit until after capital from an IPO is invested in successful projects, further raising the value of the firm.

8.1 Break-even Analysis

The break-even analysis below is based on estimates for fixed costs, average revenue per unit and average variable cost per unit for both MedStim and TheraMag systems.

8.2 Important Assumptions

Demand

• Using 1997 data, 10% of all patients with reported fractures (the approximate rate of fractures that result in muscular fibrosis), 50% of all patients with reported long-term immobilization, and 100% of all patients with reported paralysis or coma were considered potential customers for MedStim.


• 20% of consumers who visited an energy healer in 1997 (202 consumers per 1,000 in population) were considered potential customers for TheraMag (magnetism was the most frequently used modality reported among energy healers between 1990 and 1997). Total Energy healing devices used between 1990 and 1997 were 40 million.

Product Mix

• TheraMag will be leased less frequently than MedStim, thus the total potential market for logic controllers (LC) will be 1 for every potential customer. MedStim will be owned by hospitals and leased to patients more routinely and the total potential market for LCs will be 1 for every 10 potential customers. The potential market for the arrays of overlapping coils (AOC) will be as follows: single AOC per potential customer for the TheraMag system and 5 AOCs per 10 potential customers for the MedStim system.


• In evaluating the breakeven volume, a unit was taken to be 1 LC and the AOCs sold along with the LC in that market, ie for TheraMag, 1 unit was an LC and an AOC. For MedStim, 1 unit was an LC and 5 AOCs. The cost/unit and revenue/unit were then assumed to be the average cost/unit and revenue/unit of the 2 products.

Sales/Revenues

• The maximum penetration of any market segment was conservatively estimated to be no more than 3% by Year 5.
• Assume 5% growth of both costs/unit and price/unit.
• Insurance company reimbursement will be approved by year 3.

8.3 Projected Profit and Loss

Barring any unforseen circumstances, MedNexis is anticipated to break-even by Year 3 of operations. Profits for the company in subsequent years will accelerate with the increase in anticipated sales volume.

8.4 Projected Cash Flow

It will be noted that the company's cash flow will be steadily declining for the first year of operations. This is expected due to large capital investments and initial slow sales. the company has calculated its financial plan so that it will have enough cash from investors and debt to survive until profitability reaches acceptable levels.

8.5 Projected Balance Sheet

The table below presents the Balance Sheet for MedNexis.

8.6 Business Ratios

The ratios contained herewith are not based on a post-diluted enlarged capital base. The figures come from the Standard Industry Classification (SIC) Index code 3845, Electromedical Equipment.