Eye Surgery Equipment Maker Business Plan

CAPITAL RAISING (THE OFFER)
The company intends to raise an amount of seed capital. Startup investment has already been committed by management.

Current Capital Structure:

Current Shareholders:

For $1.5 million, the investing party will receive 1,500,000 preferred shares or 33.3% of the company. Preferred shares will include senior debt and anti-dilution provisions as negotiated.

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).

Land building, plant and 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 NovOculi’s 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 NovOculi’s 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.

9.1 Important Assumptions

Market

• Growth of NICS will parallel that of LASIK.
• Expansion into foreign markets will not occur in this 5-year plan.
• Projections related to consumer acceptance were estimated using market survey.
• Total market size was based on only 1/3 of all patients having both eyes corrected (current data supports as much as 2/3).

Research

• Research Grant of $2 million applied for in May of 2001 will be received by December 2002.
• Stanford University backing of research proposal and offering of facilities will decrease total research and design expenditures by 50%.

Sales/Revenues

• Projections were based on continued rejection by insurance companies to reimburse for refractive correction.
• Acceptable premiums were developed using preliminary market survey of n=50.

9.2 Break-even Analysis

With a fully operational average monthly fixed cost, NovOculi will break-even once the sales volume as shown in the table below is reached. Per-unit revenue and costs for the Iontophoretic Device, Licensing Fees, and the Polymeric Vehicle have been averaged. The management estimates that the company will reach this sales volume by the third year of operations, at which time the per-unit direct costs and direct costs of sales will begin decreasing.

9.3 Projected Profit and Loss

The Projected Profit and Loss table takes into account the significant subsidization of NovOculi’s research efforts by the Stanford University Department of Ophthalmology. Due to this strategic alliance, the company’s research expenditures have been nearly halved.

9.4 Projected Cash Flow

Important points to note in Projected Cash Flow are as follows:

• In Year 1 of the business plan, the company expects to raise (Section 1) working capital.
• While the company has planned for additional capital raising (Section 2) in Year 3 of the business plan, it is expected that research grants will have been secured by this point and capital raising will not be necessary.

9.5 Projected Balance Sheet

While Inventory on the Balance Sheet may appear disproportionately low in comparison to sales, this is due to the fact that one of the components of total sales, licensing fees, is not a durable good and will require no inventory.

9.6 Business Ratios

The following table presents important ratios from the Opthalmic goods industry, as determined by the Standard Industry Classification (SIC) Index code 3851.