Eye Surgery Equipment Maker Business Plan

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Table of Contents
1.0 Executive Summary .................................................................................................................... 1

Chart: Highlights .......................................................................................................................... 3
1.1 Mission .......................................................................................................................................... 4
2.0 Company Summary ..................................................................................................................... 4
2.1 Company Ownership ............................................................................................................... 4
2.2 Start-up Summary ................................................................................................................... 5
Table: Start-up.............................................................................................................................. 5
Chart: Start-up ............................................................................................................................. 6
Table: Start-up Funding ............................................................................................................ 7
2.3 Company Locations and Facilities ...................................................................................... 7
3.0 Products ........................................................................................................................................... 8
3.1 Product Description ................................................................................................................. 8
3.2 Sourcing ..................................................................................................................................... 10
3.3 Future Products ....................................................................................................................... 10
4.0 Market Analysis Summary ...................................................................................................... 10
4.1 Market Survey ......................................................................................................................... 11
4.2 Target Market Segment Strategy .................................................................................... 11
4.2.1 Market Needs ................................................................................................................... 12
4.3 Market Segmentation ........................................................................................................... 12
Table: Market Analysis ............................................................................................................. 12
Chart: Market Analysis (Bar) ................................................................................................. 13
Chart: Market Analysis (Pie) .................................................................................................. 13
4.4 Industry Analysis .................................................................................................................... 14
4.4.1 Industry Participants ..................................................................................................... 14
4.4.2 Distribution Patterns ..................................................................................................... 14
4.4.3 Competition and Buying Patterns ............................................................................ 14
5.0 Competition .................................................................................................................................. 15
5.1 Competitive Technology ...................................................................................................... 15
5.2 Competitive Comparison ..................................................................................................... 16
5.3 Main Competitors ................................................................................................................... 16
5.4 Impact of Competition.......................................................................................................... 17
5.5 Competitive Edge ................................................................................................................... 18
6.0 Strategy and Implementation Summary .......................................................................... 18
6.1 Value Proposition .................................................................................................................... 18
6.2 Marketing Strategy ................................................................................................................ 19
6.2.1 Promotion Strategy ....................................................................................................... 19
6.2.2 Pricing Strategy............................................................................................................... 19
6.3 Sales Strategy ......................................................................................................................... 20
6.3.1 Sales Forecast.................................................................................................................. 20
Table: Sales Forecast ........................................................................................................... 21
Chart: Sales by Year ............................................................................................................. 22
6.4 Strategic Alliances.................................................................................................................. 22
6.5 Milestones.................................................................................................................................. 23
Chart: Milestones ....................................................................................................................... 23
Page 1
Table of Contents
Table: Milestones ....................................................................................................................... 23

7.0 Regulatory Issues....................................................................................................................... 24
8.0 Management Summary ............................................................................................................ 24
8.1 Management Team ................................................................................................................ 24
8.2 Management Team Gaps..................................................................................................... 26
8.3 Personnel Plan ......................................................................................................................... 26
Table: Personnel ......................................................................................................................... 26
9.0 Financial Plan ............................................................................................................................... 27
9.1 Important Assumptions ....................................................................................................... 28
Table: General Assumptions .................................................................................................. 28
9.2 Break-even Analysis .............................................................................................................. 29
Table: Break-even Analysis.................................................................................................... 29
Chart: Break-even Analysis ................................................................................................... 29
9.3 Projected Profit and Loss ..................................................................................................... 30
Table: Profit and Loss ............................................................................................................... 30
Chart: Profit Yearly .................................................................................................................... 31
Chart: Gross Margin Yearly .................................................................................................... 31
9.4 Projected Cash Flow .............................................................................................................. 32
Chart: Cash .................................................................................................................................. 32
Table: Cash Flow ........................................................................................................................ 33
9.5 Projected Balance Sheet ...................................................................................................... 34
9.5 Projected Balance Sheet ...................................................................................................... 34
Table: Balance Sheet ................................................................................................................ 34
9.6 Business Ratios ....................................................................................................................... 34
9.6 Business Ratios ....................................................................................................................... 34
Table: Ratios ................................................................................................................................ 35
Table: Sales Forecast ......................................................................................................................... 1
Table: Personnel ................................................................................................................................... 2
Table: Personnel ................................................................................................................................... 2
Table: General Assumptions ............................................................................................................ 3
Table: General Assumptions ............................................................................................................ 3
Table: Profit and Loss ......................................................................................................................... 4
Table: Profit and Loss ......................................................................................................................... 4
Table: Cash Flow .................................................................................................................................. 5
Table: Cash Flow .................................................................................................................................. 5
Table: Balance Sheet .......................................................................................................................... 6
Table: Balance Sheet .......................................................................................................................... 6
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NovOculi
1.0 Executive Summary
This business plan has been developed to present NovOculi, Inc. to prospective investors and to
assist in raising equity capital needed to begin production and to continue research and
development of its patented products.
The Company
NovOculi, Inc. is a start-up company that has designed and plans to develop and market
ophthalmological surgical tools and techniques. During the past two years, NovOculi's principals
have had extensive experience with refractive correction techniques (both laser and non-laser
based). Building on this experience, the principals have developed and begun testing a unique
method of incisionless refractive correction dubbed NICS (Non-Invasive Corneal Sculpting).
Current refractive techniques, including LASIK, PRK, and Intacs, all require destruction of at
least a portion of the protective epithelial layer overlying the cornea of the eye and are
accompanied by complications resulting from this loss of protection. The principals have
developed a method involving iontophoresis, an ionic dye and a wavelength-specific laser to
accomplish effective refraction without the troublesome destruction of epithelium.
Using NICS, NovOculi plans to take advantage of the opportunities for market development and
penetration in the field of laser refraction in which demand is nearly doubling each year.
Based on the detailed financial projections prepared by the company's management, it is

estimated that equity investment is required to begin the company's operations successfully.
Funds will be used to produce, test and market NICS, as well as provide initial working capital
for the first two years.
Market Potential
A massive potential market base exists for the laser refractive surgery industry. It is estimated
that approximately 54% of the U.S. population (~162 million) has refractive errors,
approximately 90% of which are eligible for correction using current techniques or those on the
near horizon (Federal Air Surgeon's Medical Bulletin). In contrast, only 900,000 Americans have
had LASIK (the most popular laser correction technique) as of two years ago. This represents
only 0.6% of the total current market, leaving the other 99.4% untapped. ("Bye-Bye Glasses,"
EyeCare Business Online). Furthermore, the demand for laser refractive surgery is
approximately doubling annually ("Bye-Bye Glasses," EyeCare Business Online,).
The company has contacted nine of the leading ophthalmological medical institutions in the U.S.
Seven of the nine have expressed interest in participating in collaborative research and, given
encouraging research results, performing NICS commercially once it is available. Institutions
expressing interest include: John Hopkins, Harvard, Stanford, Oregon Health Sciences, Duke
University, and the University of California at San Francisco.
NovOculi's principals have also conducted a preliminary market survey at a local grocery
market in the Durham, NC area. Fifty consumers with refractive errors were randomly
selected outside of a local grocery market and asked the questions in the survey. A copy of the
survey and a summary of its findings may be found in the Market Survey topic.
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NovOculi
Technology
The principals have developed and patented a revolutionary technique, NICS, and two novel
devices which are used to accomplish incisionless refractive correction. The patented technique
involves driving an ionic dye from its patented polymeric vehicle into the cornea of the patient
using the patented iontophoretic device (a device that creates a charge which then repels or
attracts other charges). Once the ionic dye has been effectively driven into the cornea and
away from sensitive structures, a laser tuned to the wavelength of the dye is then used to
target the dyed cornea and alter its shape, much as is done with current laser
refraction protocols. After the procedure is completed, the iontophoretic device is reapplied, this
time with opposite polarity, and the dye is drawn from the cornea due to the attraction of
opposite charges. Through the use of the patented device and technique, the ophthalmologist
performing the procedure will be able to avoid the most troublesome and complication-ridden
aspect of current laser refraction surgery: the corneal incision. Over 90% of all complications of
current laser refraction surgery are related to difficulties associated with the incision and the
subsequent healing process, virtually all of which could be avoided with NovOculi's technology.
Strategy
The key element in NovOculi's strategy is to market its technology to both those performing the
procedure as well as to those on which the procedure will be performed. Once research data
and publicity have been generated, the sales force will step in to encourage the initial
investment in the laser and equipment required for the procedure, creating a "demand push."
After this investment has been made, a "demand pull" will be generated for the components
required for institutions to perform the procedure through marketing directly to patients.
The sales team will begin with six seasoned sales personnel and swell to forty-four members by
Year 5. The sales team will work closely with laser manufacturers in order to promote the
technology to patients and surgeons.
Ophthalmologist training for the NICS procedure will be available at six sites throughout the
U.S.: San Francisco, Boston, Atlanta, Philadelphia, Kansas City, and Durham, NC. Each site will
have in-depth training sessions led by a prominent ophthalmic surgeon.
Those performing the procedure will be able to charge a premium for providing patients with
access to this superior technology. NovOculi will extract approximately half of the nearly $1,000
premium through licensing fees associated with its patented procedure and sales of the
individual components.
Regulatory Issues
As with its predecessor, LASIK, the company's product will not need to wait for FDA approval
prior to widespread use. LASIK had been performed on almost 900,000 patients without
approval by the FDA as of two years ago (Current Trends in Refractive Eye Surgery, 128th
Annual Meeting of APHA).
This was made possible due to the fact that the "FDA does not approve procedures, only the
equipment used in them" ("Eye centers set their sights on LASIK surgery growth," Houston
Business Journal, July 16) and the components of the procedure have already been
approved by the FDA for medical use. NovOculi will not need to obtain approval to market their
patented technique and devices due to the fact that the FDA has approved similar devices for
medical use in the following arenas: 1) The 440 nm laser has been approved for dermatologic
uses. 2) Iontophoretic devices has been approved for drug delivery on the epidermis. 3)
Polymeric contact lenses have been approved and are commonly used as an external aid for
refractive correction, and 4) The targeting dye, tartrazine, is the most ubiquitous food coloring
additive on the market to date.
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NovOculi
Major Milestones
The following are key milestones for the startup period:
• Completion of strategic business plan nine months before starting date.

• Research grants applied for by seven months before starting date.
• All patents, domestic and foreign, applied for by six months before starting date.
• Start-up capital raised by starting date.
• All other first-year milestones are currently on schedule in accordance to the business plan.
Competitive Advantage
NovOculi is uniquely positioned to take advantage of this market opportunity due to its
protected, proprietary positions. Three patents have been filed in the U.S.: one for protecting
the reversible iontophoretic device, the second protecting the technique involved in NICS, and
the third protecting the unique vehicle for the ionic dye.
The principals, to date, have spent ample time on development and research of the current
products which will satisfy the market demand for a safer, less complicated laser refraction
correction technique.
Financial Summary
Based on detailed financial projections, if the company receives its funding, it will operate
profitably by Year 4 with a hefty net profit. The following chart summarizes the projected
financial information.
Chart: Highlights
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NovOculi
1.1 Mission
To provide the field of ophthalmology with innovative designs which will facilitate the treatment
of ophthalmologic diseases and conditions.
2.0 Company Summary
NovOculi, Inc. will research and develop biomedical devices to aid in the treatment of a variety
of ophthalmologic diseases and conditions. Initially, its customers will be those individuals that
desire permanent refractive correction but do not wish to risk the multitude of complications
associated with the current procedure, LASIK.
The company is currently developing its patent-applied technology to final product and approval
stage. It is also seeking to establish its corporate identity in the medical products field.
2.1 Company Ownership
The company will be incorporated in North Carolina. It will have authorized 15 million ordinary
shares and 150,000 preferred shares. The rights and privileges of these shares will be stated in
the company's Articles of Incorporation.
The proposed share capital of the company prior to capital raising
Owner Percentage of Shares Owned

Dr. Daniel Burnett 65%
Joseph Hewitt 10%
Andy Rubinson 10%
Joseph Walker 10%
Dr. Terry Kim 5%
The company has raised seed capital from its principals.
Additional working capital will be raised in two sections. Section 1 will be conducted in January
of Year 1 and will raise money for use in accordance with the business plan. Section 2 will raise
additional funds in Year 3 of the business plan, but will be conducted only if sufficient research
grants are not obtained in Year 2. It is deemed likely by the company's industry consultants
that the research grants will be obtained and, therefore, section 2 will not be necessary.
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NovOculi
2.2 Start-up Summary
The key elements in the start-up plan for the company are:
• Formulation of the strategic business plan.

• The establishment of a corporate identity.
• The establishment of a location and place of doing business.
• Funding of working capital requirements, purchases of other equipment and assets deemed
necessary for the principle operating activities of the company, and additional capital raising
alternatives.
• Initiation of Research and Development of existing and future products.
Costs of raising capital through private placement.
Startup seed funding was raised from the founders of the company for these purposes. This
funding will be available in late 2001 and these tasks have either been completed successfully
or are in the final process of completion.
These are treated purely as start-up expenses and initial working capital by this plan. The
founders' investment is treated as cash-on-hand as of the start of this plan on January 1, 2002.
The remainder of the start-up capital required, as well as capital required, for the continuation
of operations in the first six months will be provided by selling shares via a private placement to
key investors. The capital obtained through this fund-raising exercise is expected to provide an
additional boost and the business plan calls for these funds to be infused for the purposes of
operating the business, in accordance with this business plan.
Table: Start-up
Start-up
Requirements
Start-up Expenses
Legal $5,000
Stationery etc. $1,000
Consultants $5,000
Insurance $2,000
Rent $5,000
Expensed equipment $15,000
Other $0
Total Start-up Expenses $33,000
Start-up Assets
Cash Required $317,000
Start-up Inventory $0
Other Current Assets $0
Long-term Assets $0
Total Assets $317,000
Total Requirements $350,000
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Chart: Start-up
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NovOculi
Table: Start-up Funding
Start-up Funding
Start-up Expenses to Fund $33,000
Start-up Assets to Fund $317,000
Total Funding Required $350,000
Assets
Non-cash Assets from Start-up $0
Cash Requirements from Start-up $317,000
Additional Cash Raised $0
Cash Balance on Starting Date $317,000
Total Assets $317,000
Liabilities and Capital
Liabilities
Current Borrowing $0
Long-term Liabilities $0
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $0
Capital
Planned Investment
Dr. Daniel Burnett $130,000
Joseph Hewitt $70,000
Dr. Terry Kim $70,000
Andy Rubinson $40,000
Joseph Walker $40,000
Additional Investment Requirement $0
Total Planned Investment $350,000
Loss at Start-up (Start-up Expenses) ($33,000)

Total Capital $317,000
Total Capital and Liabilities $317,000
Total Funding $350,000
2.3 Company Locations and Facilities
The company will initially be based in the Research Triangle Park area in North Carolina. The
website (www.NovOculi.com) has already been registered, and the trademark process has been
initiated.
In view of the strategic plan to contract with a third party for all manufacturing requirements,
the facilities needed will be mainly offices for personnel and storage space for inventory. After
Year 5, when the market for our products reaches our anticipated milestone, the company will
explore the feasibility of constructing its own manufacturing facilities.
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NovOculi
Ophthalmologist training for the NICS procedure will be available at six collaborative research
centers in the following cities: San Francisco, Boston, Atlanta, Philadelphia, Kansas City
and Durham, NC. Each site will be coordinated by, but financially independent of, NovOculi and
will have in-depth training sessions led by a prominent ophthalmic surgeon.
Initial research and development (R&D) will be accomplished through a collaborative effort with
the Stanford University Department of Ophthalmology, who provides NovOculi's initial research
facilities.
3.0 Products
NovOculi's technology is an improvement on the common laser refractive surgery procedure

LASIK. In order to fully explain NovOculi's technology, it is first necessary to develop an
understanding of its predecessors in the laser refractive surgery industry. After this has been
accomplished, NovOculi's technology will be described, competing technologies will be analyzed,
sourcing issues will be addressed and, finally, future products will be discussed.
Background
Refractive correction, in all forms, is accomplished through alteration of the contours of the
cornea. This alteration is accomplished by destroying either the stroma (middle layer of the
cornea) or the epithelium (outer, protective layer of the cornea) of the cornea, and in some
cases, both.
Early procedures, such as PRK, used lasers to change the contour of the cornea by destroying
both the epithelium and the stroma through simply blasting the cornea straight on without any
preparation. This procedure was difficult for patients as the healing took weeks and the
destruction of the epithelium left the eye permanently susceptible to infections and ulcers.
LASIK was an improvement over PRK due to the fact that most of the protective layer of
epithelium was folded back, and only the stroma of the cornea was destroyed. In order to fold
the epithelium back, though, a large, circular incision in the cornea was necessary. While LASIK
was an advance in technology in that the epithelium was not destroyed, the incision itself was
found to cause multiple problems such as night blindness, loss of sight, permanent sensation of
irritation, etc.
3.1 Product Description
In an effort to avoid the complications associated with corneal incision and epithelial
destruction utilized in laser refractive surgery procedures, NovOculi's principals designed NICS
(Non-Invasive Corneal Sculpting). NICS allows for effective laser refractive correction without
the troublesome corneal incision. The subject matter of NovOculi's technology is currently
protected by Provisional Patent No. 60/243,031.
NovOculi's technology involves using an ionically charged, contact lens-shaped plate to drive an
ionically charged dye into the cornea without making an incision. This use of a charge to attract
or repel another charge is termed iontophoresis, and since the charge on NovOculi's plate can
be reversed, to either attract or repel the dye, this component of NICS is referred to as the
reversible polarity iontophoretic device (RPID). By exposing a charged dye to the RPID which
has been set to the same polarity, the dye will effectively be driven through the relatively
resistant corneal epithelium and stroma via the repulsion of similar charges. Without
this electrostatic repulsion, it would take hours to allow the cornea to soak up the dye, making
the procedure difficult, if not impossible.
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NovOculi
The ionic dye used in NICS is tartrazine, a common food coloring additive. Tartrazine is a small,
stable, yellow dye which absorbs visible light at 440 nanometer (nm) and is positively charged.
In order to make sure that the tartrazine is delivered only to the cornea, NovOculi has
developed a unique contact lens impregnated with tartrazine which incorporates a barrier to
lateral diffusion. This barrier prevents the remainder of the eye from being exposed to
the tartrazine and allows for more precise dye delivery.
By controlling the duration of the iontophoresis, during which the RPID will be positively
charged to repel the tartrazine, the dye is selectively placed in the middle of the cornea, away
from the sensitive epithelial and endothelial layers. Once this has been accomplished, the
middle layer of the cornea can be selectively targeted by a 440 nm wavelength laser without
ever having to destroy any portion of the protective epithelium.
After the cornea has been sculpted with the laser, the RPID is then reapplied with reversed
polarity and the dye is extracted from the cornea, leaving a clear, sculpted cornea.
In summary, NICS is performed as follows:
1. Drops are applied to the epithelium of the cornea to decrease sensation and increase dye
permeability.
2. A contact lens of varying polymeric density and charged with ionic dye, tartrazine, is placed
on the epithelium of the cornea of the eye to be corrected, then the RPID (charge-inducing
plate) in the shape of a contact lens is placed over the dye.
3. The RPID is activated with a charge similar to the dye, thereby forcing the dye into the eye.
4. The cornea is washed free of the dye and the iontophoretic plate is reapplied to drive the
dye beyond the epithelial layer of the cornea, but above the endothelial layer.
5. Once the dye is selectively located in the stromal layer of the cornea, a laser tuned to the
wavelength of the dye, 440 nm, is used to sculpt the cornea using the standard laser
refractive surgery protocol.
6. The reversible iontophoretic device is then reapplied with its charge reversed in order to
draw the dye out of the cornea due to their now opposite charges attracting.
7. The eye heals and the stroma resorbs over the course of one to two weeks during which
sight improves to 20/20 (or better!).
NovOculi's novel technology is found in 1) The overall method of selectively ablating stromal
corneal cells, 2) The Reversible Polarity Iontophoretic Device, and 3) The dye-
impregnated polymeric contact lens, all of which are currently intellectual property of Daniel R.
Burnett, one of the principals.
While NovOculi's technology is novel, the principles on which it is founded are well
established. The targeted destruction of certain cells through delivery, then stimulation, of a
photoactive substance has been accomplished elsewhere in the human body in the treatment of
cancer and has been termed Photodynamic Therapy ("Targeted intracellular delivery of
photosensitizers to enhance photodynamic efficiency," Immunology & Cell Biology, August
2000). Also, the delivery of ionic substances into the eye has been successfully accomplished in
studies attempting to increase the ocular delivery of dilating drops and antibiotics ("The role of
iontophoresis in ocular drug delivery," Journal of Ocular Pharmacology, Spring 1994). Thus, the
principles on which NovOculi's technology rests have been proven in related studies, yet never
applied in the laser refractive surgery until now, with the development of NovOculi's patented
method and devices.
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NovOculi
3.2 Sourcing
Most of the components involved in NovOculi's method of corneal sculpting are relatively
inexpensive and common. The iontophoretic plate, for example, is constructed of standard
electronic components and its power source can be either an outlet or a common
battery. Tartrazine, the ionic dye, is the most common food coloring additive used in the United
States, making this component ubiquitous.
The one component which will be more expensive and difficult to obtain will be the refractive
laser tuned to the wavelength of the ionic dye. Partnership with a laser manufacturer would be
beneficial in facilitating the development of this laser and well-received efforts have been made
to form this relationship.
3.3 Future Products
Future products of NovOculi, Inc. will be medical devices in the field of ophthalmology. Two of
the principals, Dr. Daniel Burnett and Dr. Terry Kim, as well as one of the consultants, Dr. Mark
Blumenkranz, are intimately involved in the field of ophthalmology and have experience in the
R&D of biomedical devices.
In order to capitalize on NovOculi's core competency in ophthalmic devices, the company will
focus its efforts in this arena. One example of a device currently in the R&D pipeline is a contact
lens formed from a calcium alginate polymer impregnated with one of a variety of
ophthalmically active drugs. Use of this slow-release, once-a-day therapy will allow many
patients to be treated much more effectively and more conveniently than the current therapy
which requires repetitive application of eye drops, sometimes as often as once an hour.
4.0 Market Analysis Summary
The market for NovOculi's products currently consists of patients with refractive errors who
desire to have sharper vision without external aids. Essentially, the potential market is the
nearly identical to the potential market for LASIK, the current laser refractive surgery
procedure. The markets are not exactly identical, though, as we expect there to be greater
acceptance of a non-invasive refractive protocol versus the complication-ridden LASIK.
A massive potential market base exists for the laser refractive surgery industry. It is estimated
that approximately 54% of the U.S. population (~162 million) has refractive errors,
approximately 90% of which are eligible for correction using current techniques or those on the
near horizon (Federal Air Surgeon's Medical Bulletin, Winter 1998). Furthermore, the demand
for laser refractive surgery is approximately doubling annually.
The company has contacted 9 of the leading ophthalmological medical institutions in the U.S., 7
of which have expressed interest in participating in collaborative research and, given
encouraging research results, performing NICS once it is available. Institutions expressing
interest include: John Hopkins, Harvard, Stanford, Oregon Health Sciences, Duke University, as
well as the University of California at San Francisco.
Furthermore, NovOculi has conducted a preliminary market survey at a local grocery market in
the Durham, NC area. Fifty patients chosen at random outside of the grocery market, all with
refractive errors, completed the survey, a copy of which may be found in the Market Survey
topic. The following sections refer to this market study in further expounding on the
tremendous market potential for NovOculi.
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NovOculi
4.1 Market Survey
The following survey was given to 107 consumers at a local grocery store in Durham, N.C. on
January 12th and 13th:
SURVEY:
1. Do you now have, or have you ever had, a refractive error (Vision that is worse than
20/20).
2. Have you considered, or would you ever consider, permanent correction of your vision.
3. If so, would you be willing to pay more money for the surgery in order to decrease the rate
of significant complications (pain, night blindness, etc.) by 50%?
4. If so, how much would you pay?
A) less than $500

B) $500-1,000
C) $1,000-2,000
D) more than $2000
RESULTS:
Once 50 participants answered "Yes" to questions number 1 and 2, the survey was terminated
and the following results compiled:
Surveyed Refractive Error Consider Surgery Pay Premium

107 72 50 46
Of those that would pay the premium in order to decrease the rate of complications, the
following distribution was found:
Less than $500 $500-$1,000 $1,000-$2,000 more than $2,000 Total

10 19 7 10 46
The data clearly indicate that, of those consumers in this sample population with refractive
errors who would consider surgery for permanent correction, an overwhelming majority would
pay a premium for a decreased risk of significant complications. Of the premiums that would be
paid, the most common value was $500-$1,000 with a mean dollar value of approximately
$1,100 (using midpoints and assuming midpoint for more than $2,000 is $2,500).
4.2 Target Market Segment Strategy
NovOculi will focus its marketing strategies on building market share among the outcome-
conscious refractive surgery patients. For this customer segment, NovOculi will offer a branded
technology which will help the patient to gain increased visual acuity with less of a risk of
complications. The market research shows that this customer segment is less price sensitive
and will absorb price premiums charged by ophthalmologists that use the NovOculi technology.
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NovOculi
4.2.1 Market Needs
The market needs of the target segment are straightforward - clients want to
permanently improve their vision using a process with the lowest possible risk of complications.
Good vision is of paramount importance for such patients as it allows them not only to be
independent of visual aids but also to become healthier in general. There will be no need to buy
new frames or to rinse contacts, and such patients will literary open up their eyes to the world.
4.3 Market Segmentation
Patients desiring permanent refractive correction typically fall into two different groups with
respect to their predominant concerns related to the procedure: Outcome-Conscious Patients
and Cost-Conscious Patients. Outcome-Conscious Patients constitute the bulk of the refractive
surgery market (46 out of 50 surveyed), and were willing to pay a premium in order to achieve
a significant decrease in the rate of complications (defined as 50% less) with the procedure.
The Cost-Conscious Patients typically felt that the decrease in rate of complications was not
worth the extra expenditure.
Outcome-Conscious Patients
The bulk of the population, these patients seek out the highest quality procedure with the most
skilled surgeon, typically regardless of price. Most patients realize the importance of their vision
and will not take chances with respect to their sight. This group will be the primary target for
NovOculi as they will tolerate NovOculi's charging a premium for its superior procedure.
Cost-Conscious Patients
The small minority of the refractive error patient population, these patients will often fly to
Canada or Mexico in order to capitalize on the large price differential with respect to the laser
vision correction procedure between these countries and the United States. These patients will
not be targeted by NovOculi initially as they are less interested in the superiority of technology
and the skill of the surgeon as they are in the cost of the procedure.
Table: Market Analysis
Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Outcome-Conscious Patients 5% 140,793,120 147,832,776 155,224,415 162,985,636 171,134,918 5.00%
Cost-Conscious Patients 5% 12,242,880 12,855,024 13,497,775 14,172,664 14,881,297 5.00%
Total 5.00% 153,036,000 160,687,800 168,722,190 177,158,300 186,016,215 5.00%
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Chart: Market Analysis (Bar)
Chart: Market Analysis (Pie)
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4.4 Industry Analysis
Currently the industry is experiencing rapidly increasing competition in the form of price wars.
The average consumer now pays approximately $1,650 per eye for LASIK, as opposed to
greater than $2,500 per eye less than two years ago ("Laser Eye Centers Wage an All-Out Price
War," New York Times, December 9, 2000). With this price crunch, the valuation of existing
companies has plummeted despite their continued growth in earnings.
Insurance companies are beginning to experiment with reimbursement for LASIK as well.
Currently, though, the only insurance companies that pay for LASIK at all do so with a subsidy,
which is a small discount to keep patients within their health system.
NovOculi will be affected by the current industry trends, but to a much lesser degree than
LASIK providers. Due to the superiority of NovOculi's technology over LASIK, NovOculi will be
able to charge a premium. Also, due to its proprietary position, NovOculi is in a position to
prevent the commoditization of NICS and thereby sustain economic profits for the duration of
NovOculi's patent.
4.4.1 Industry Participants
Currently, the major industry participants listed in "Laser Eye Centers Wage an All-Out Price
War," New York Times, from December 9, 2000 are as follows:
• Hospitals- 10%
• Corporate Chains- 48%
• Independent Ophthalmologists- 42%
The major corporate chain participants will be outlined in detail in the next section,
Competition.
4.4.2 Distribution Patterns
Currently, the distribution pattern for the industry involves high-end sales with excellent
manufacturer support. The lasers cost millions of dollars and are large investments for the
purchasing institutions. No distributor is necessary for these lasers as the internal sales staff
and distribution mechanisms suffice.
The microkeratomes involved in LASIK are also sold directly from the manufacturer to the
LASIK provider. With the microkeratomes, though, the small, tightly knit medical device
distribution channels are beginning to play a role. For NovOculi, these medical device
distributors will play a key role due to the fact that components of the NovOculi procedure are
single-use and will require frequent purchasing and delivery.
4.4.3 Competition and Buying Patterns
As was alluded to in the previous section, the current buying patterns for the LASIK procedure
involve substantial, infrequent purchases with excellent manufacturer support. The only
significant purchases necessary in order to perform LASIK are the laser and the microkeratome,
both of which are long-term, multiple-use devices. This buying pattern is related to the fact that
none of the components of the LASIK procedure are single-use. These buying patterns are
expected to change once NovOculi begins to capture market share and the need for
replenishment of its single-use, dye-impregnated contact lens increases. NovOculi will need to
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develop strategic relationships with existing distributors in order to take advantage of their
well-established distribution infrastructure.
5.0 Competition
Competition in the field of refractive correction, both permanent and temporary, has been
escalating. Not only are glasses, contact lenses, PRK, LASIK, Intacs, and others competing with
each other, but competitive forces within these arenas is becoming fierce as well. LASIK
providers, for example, are experiencing vicious price wars which are cutting deeply into profit
margins.
NovOculi will rely on the superiority of its technology in order to thrive in this competitive
market. NovOculi's is still the only technology in the field of refractive surgery which provides
permanent refractive correction without making any complication-ridden incisions into the
cornea. This competitive advantage will help NovOculi navigate these competitive waters and
capture a large portion of the refractive surgery market.
5.1 Competitive Technology
Competition in the refractive surgery arena is expected from three main sources: external
aids, existing laser refractive surgery, and alternative non-laser surgical procedures.
External Aids
Contact lenses and glasses have been around for decades. The fact that LASIK has become so
wildly popular, with demand doubling annually despite its complications, displays the fact that
many patients who were once content with external aids now desire permanent refractive
correction.
Existing Laser Refractive Surgery

It is expected that the largest source of competition will be from the LASIK industry. Much like
LASIK has ousted the previously accepted procedure of PRK, NovOculi hopes to supplant LASIK
with NICS. The competition NovOculi's technology faces is significant as many institutions have
already purchased the excimer lasers required for LASIK, a hefty investment which will create
lock-in to the LASIK procedure. Once the details of the superiority of NovOculi's procedure
surface, laser refractive surgery centers will be pressured to invest in NICS by both
ophthalmologists performing the procedure and patients desiring refractive surgery.
Another competing technology worth mention is the newly-developed technique employing

femtolasers. This technology also hoped to correct refractive errors without an epithelial incision
by using multiple lasers focused on a single position at which their destructive effects would be
additive. Recent studies have found multiple, unavoidable technical complications, including
formation of gas, debris, and cauterized tissue at the site of cellular destruction. It is highly
unlikely that this technology will be able to overcome these hurdles and accomplish incisionless
refraction without the use of some form of dye or chemical to target the selected tissues, a
method which is the currently intellectual property of NovOculi.
Alternative Non-laser Surgical Procedures

In the U.S., the most popular, non-laser surgical technique in the industry is Intacs. Intacs are
implanted into the stroma of the cornea where they bend the overall curvature to the desired
angle so that the refractive error is corrected indefinitely, but reversibly.This procedure, as well
as fully implantable contact lenses, have the added benefit of being reversible, but the
disadvantage of still requiring a significant incision in the cornea with disruption of the stroma.
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Also, the procedure can only be performed on those with mild near-sightedness, approximately
20% of the existing market. Despite these disadvantages, these alternatives are gaining a
niche in the market and will be a source of competition.
5.2 Competitive Comparison
Technology-wise, NICS has significant advantages over existing technologies. As was explained
previously, current procedures all require destruction of a portion of the epithelium of the
cornea. This destruction places the eye in danger of multiple complications, the overall rate of
which is approximately 10%. The following are the most common complications associated with
the epithelial incision in LASIK.
Common- (greater than 5% of the patient population)
• Pain (possibly chronic)

• Photophobia
• Induced Irregular Astigmatism (corneal flap wrinkling)
• Corneal Scarring (associated with continued glare and haloes and permanent loss of night
vision
• Epithelial Ingrowth (extension of scarring in cornea)
• Damage to Iris
• Tearing/Excess Mucous- Dry Eye
• Corneal Edema
• Headaches
Less Common- (less than 5% of the patient population)
• Corneal Epithelial Flap Dislocation

• Corneal Rupture
• Complete Blindness
Virtually all of these complications are associated with the corneal epithelial incision and its
subsequent post-operative healing. Due to this fact, the bulk of these complications could be
effectively avoided through the use of NICS.
5.3 Main Competitors
NovOculi's competitors can be divided into two categories: those competing within the field of
laser refractive surgery and those with alternate refractive correction technology.
Laser Refractive Surgery Competitors

Competition will arise from both LASIK laser manufacturers and LASIK providers. Among these
competitors, though, lies the possibility for the formation of strong, strategic alliances in both
arenas.
LASIK Laser Manufacturers

The largest of the LASIK laser manufacturers is VISX (EYE). Down from its peak valuation of
$100/share in July of 1999, VISX now trades at $13, with a market cap of $800 million and a
price/earnings (p/e) ratio of 23. VISX is a good candidate for a potential ally in the
development of a laser for NICS.
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LASIK Providers
One of the largest commercial chains providing LASIK is TLC Laser Eye Centers (TLCV). Since
its peak of $50 a share in July 1999, TLC has also experienced large devaluations associated
with the increasingly competitive price wars in the LASIK industry. Due to these price cuts, TLC
has experienced a negative 100% income growth. The fact that TLC has rapidly eroding
margins associated with massive devaluations makes TLC an ideal target for a strategic alliance
as well so that they may once again reap the rewards of a large sustainable profit margin.
Currently, the stock trades at approximately $4, with a market cap of $129 million.
Non-Laser Refractive Correction Competitors

The greatest competition in this field is expected to arise from Intacs, the reversible corneal
implants for refractive correction from KeraVision, Inc (KERA). Founded in 1986, KeraVision
received 510K approval for its instruments in mid-1999. After meeting this milestone,
KeraVision's stock peaked at nearly $30 in July of 1999. Subsequently, as demand for laser
refractive correction rose, KeraVision's stock plummeted despite positive research results in
human trials.
Currently with a stock price of $0.47, KeraVision's most recent return on equity of -97.50% is
below its five-year average of -60.90%, which is also below the five-year industry average of
11.50%. Also, NASDAQ has threatened to delist the company and proceedings are underway. It
is the opinion of experts in the biotechnology industry that KeraVision will not be able to
weather its current financial hardships and will soon file for bankruptcy.
5.4 Impact of Competition
NovOculi's competition will have both a negative and a positive impact on the company's
success.
Negative Impact
The competing technologies outlined in section 5.1 all hold a significant portion of the current
refractive correction market. Furthermore, especially with LASIK, the institutions performing
these procedures have invested large sums in order to acquire the technology in order to
perform these procedures. This is expected to create an element of lock-in in which many
institutions performing LASIK will be reluctant to switch to NICS. For this reason, it is
imperative that NovOculi accelerate its bench research and market entry of NICS as much as
possible.
Also, competitors in this field have been engaging in a vicious price war. While NovOculi
expects to be able to charge a premium, this premium is still based on the existing laser
surgery price as a foundation. Further erosion of prices will have a negative impact on NovOculi
as well.
Positive Impact
With the acceptance of each of these technologies, the potential diffusion rate of NICS grows.
Competitors have already invested millions of dollars in convincing patients that they need
refractive surgery, and further convincing many to have the procedure performed. As with any
new technology, the acceptance of the pioneer is always slower than modifications of the
pioneering technology. Therefore, market acceptance of NICS will be speeded by existing
technology.
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5.5 Competitive Edge
As was mentioned previously, NovOculi's system of refractive correction has significant

advantages over existing technologies. Current procedures all require destruction of a portion of
the epithelium of the cornea which places the eye in danger of multiple complications, the
overall rate of which is approximately 10%. NovOculi's technology obviates the need for such
an incision and will make the procedure safer and more attractive to patients with refractive
errors.
NovOculi's competitive advantage arises from its proprietary position with a patent on the
reversible iontophoretic plate for delivery of the dye to the cornea, the method of sculpting the
cornea using a targeting chemical and an energy source which will selectively stimulate the
chemical, and the varying density polymeric contact lens impregnated with an ionic dye.
6.0 Strategy and Implementation Summary
The key element in NovOculi's strategy is to market its technology to both those performing the
procedure as well as to those on which the procedure will be performed. Once research data
and publicity have been generated, the sales force will step in to encourage the initial
investment in the laser required for the procedure, creating a "demand push." After this
investment has been made, a "demand pull" will be generated for the components required for
institutions to perform the procedure.
Ophthalmologist training for the NICS procedure will be available at six sites throughout the
U.S.: San Francisco, Boston, Atlanta, Philadelphia, Kansas City and Durham, NC. Each site will
have in-depth training sessions led by a prominent ophthalmic surgeon.
The sales team will begin with six seasoned sales personnel and swell to forty-four members by
Year 5. The sales team will work closely with laser manufacturers in order to promote the
technology to patients and surgeons.
Those performing the procedure will be able to charge a premium for providing patients with
access to this superior technology. NovOculi will extract approximately half of the nearly $1,000
premium through licensing fees associated with its patented procedure and sales of the
individual components.
6.1 Value Proposition
The true value proposition for NovOculi's technology lies with the patient. The patient stands to
gain permanently increased visual acuity with a greatly decreased risk of complications. As
vision is of paramount importance for the general patient population, they will be willing to pay
a hefty premium in order to access the superior technology.
The value proposition for institutions and ophthalmologists to adopt the technology is two-fold:
1) Economic profit will be able to be sustained as NovOculi intends to charge approximately
50% of the total price increase associated with NovOculi's procedure, and 2) Use of this
procedure will constitute superior patient care for those providers to whom this matters.
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6.2 Marketing Strategy
Promotion of NovOculi's technology will involve targeting two different populations: 1)

Ophthalmologists Performing Laser Refractive Surgery and 2) Patients with Refractive Errors.
NovOculi's success is dependent upon acceptance of its technology by both groups and its
promotional strategies will be reflective of this fact. Of course, acceptance by either group will
be helpful in obtaining acceptance by the other.
6.2.1 Promotion Strategy
NovOculi's technology will be marketed using different tactics to target its two different target
populations: 1) Ophthalmologists Performing Laser Refractive Surgery and 2) Patients with
Refractive Errors.
Ophthalmologists Performing Laser Refractive Surgery

Acceptance amongst the nearly 3,400, and growing, ophthalmologists who perform refractive
surgery will be one of the keys to NovOculi's success. Even with strong patient demand, if the
ophthalmologists are not willing to perform the procedure, then the market will remain
untapped. Furthermore, ophthalmologists frequently have a privileged position in consulting
patients concerning procedures and those that have embraced NovOculi's technology will be
powerful advocates.
In marketing the procedure to ophthalmologists, the main consideration will be the

effectiveness of the procedure and its superiority over existing technology. The most important
factor in promoting NovOculi's technology will be concrete research results displaying its
superiority over existing technologies. Once these studies have been completed, three main
channels will need to be utilized to target ophthalmologists: 1) Publication in highly visible and
reputable medical journals, 2) Advertising in these same medical journals, and 3) Presentations
at national conventions. Using these channels, along with the free publicity associated with the
introduction of a novel, superior technology, ophthalmologists performing refractive procedures
will be effectively targeted and a demand "push" will be generated for patients to choose
NovOculi's procedure over existing options.
Patients with Refractive Errors

As with the ophthalmologist population, the most important factor in promoting NovOculi's
technology to the patient population will be concrete research results displaying its superiority
over existing technologies. Once this has been established, NovOculi will embark on a large-
scale, national advertising campaign focusing on television and printed media. Using these
channels, along with as much free press as possible, NovOculi will be able to create a demand
"pull" for its technology to complement the demand "push" which will arise from acceptance
amongst ophthalmologists.
6.2.2 Pricing Strategy
As was mentioned in the topic on Market Segmentation, NovOculi will target the Outcome-
Conscious Patient population and will not concern itself with the Cost-Conscious Patient
population. In analyzing the results of the market survey, it was found that the Outcome-
Conscious Patient population constituted 90% of the market. Also, this patient population was
found to be much more price inelastic, willing, on average, to pay $500-$1,000 more for a
procedure with significantly less complications.
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NovOculi intends to charge a total of $200 per eye licensing fee for use of NovOculi's patented
procedure, then another $40 for each dye impregnated lens. Not including the reversible
inotophoretic plate, NovOculi will charge approximately $480 per patient, assuming that both
eyes will be corrected. Assuming that the ophthalmologists will be able to charge $1,000 more
than the average current charge for LASIK, as was indicated in the survey results, this will
leave over $500 per patient as the incentive for the ophthalmologists and institutions to make
the investment and adopt NovOculi's technology.
Considering that the average price for the LASIK procedure is currently $3,300 for both eyes
("Laser Eye Centers Wage an All-Out Price War," New York Times, December 9, 2000), the
price for NovOculi's procedure is expected to be approximately $4,300 for both eyes. This is still
well under the upper end of current prices for LASIK surgery which totals $6,000 for both eyes
("Laser Eye Centers Wage an All-Out Price War," New York Times, December 9, 2000).
Institutions using NovOculi's technology will be able to charge this amount, even in the current
increasingly price-competitive environment, due to the superiority of NovOculi's technology.
The iontophoretic device will be a high margin, low volume item as this component of NICS will
not need to be purchased with each additional procedure. Due to this fact, the iontophoretic
device will be priced at $3,500.
6.3 Sales Strategy
NovOculi's sales strategy will tie in with the sales strategy of the laser manufacturer. The key
step in sales will be to initiate the investment in NovOculi's technology by purchasing the laser
to be used in the procedure. As with LASIK, the laser is a major investment, and the combined
efforts of both NovOculi's and the laser manufacturer's sales forces will be required to
encourage the initial investment. Once this investment has been made, the sales effort required
from NovOculi will be decreased as the institutions performing the procedures will require the
additional components sold by NovOculi in order to perform the refractive surgery. Therefore,
the sales force will be relied on heavily for the initial demand push for the laser, then to a much
lesser extent for the additional components for the procedure.
NovOculi's sales force will initially consist of 6 sales personnel in Year 2. This number is
expected to swell to 44 by Year 5 with expected dramatic increases in sales.
6.3.1 Sales Forecast
NovOculi's technology is an improvement over LASIK, much the same as LASIK was an
improvement over PRK. In fact, a poll of 10 Duke University and Stanford University
ophthalmologists revealed that, on average, they felt that NovOculi's technology was an
improvement over LASIK of the same magnitude and caliber as LASIK was over PRK. Using this
fact along with historical LASIK diffusion data ("Expanding the Horizons of Surgical Correction,"
Review of Optometry, May, 1998) and the assumption that the diffusion constants will be
similar between the two technologies, the following sales forecasts were compiled.
These forecasts do not take into account the fact that the market has become more receptive to
ophthalmic laser surgery with the successes of LASIK and PRK and that the diffusion rate would
probably be accelerated due to this increased acceptance of precedent technologies.
In developing the Sales Forecasts, it was modestly assumed that only 1/3 of all patients will
require refractive correction bilaterally (both eyes). Current available data indicate that the
actual fraction of patients requiring bilateral correction is closer to 2/3.
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Table: Sales Forecast
Sales Forecast
Unit Sales
Iontophoretic Device 0 7 21 80 533
Licensing Fees 0 2,000 7,000 30,000 200,000
Polymeric Vehicle 0 3,000 9,000 36,000 240,000
Other 0 0 0 0 0
Total Unit Sales 0 5,007 16,021 66,080 440,533
Unit Prices Year 1 Year 2 Year 3 Year 4 Year 5

Iontophoretic Device $0.00 $3,500.00 $3,675.00 $3,858.75 $4,051.69
Licensing Fees $0.00 $200.00 $206.00 $212.18 $218.55
Polymeric Vehicle $0.00 $40.00 $42.00 $44.10 $46.31
Other $0.00 $0.00 $0.00 $0.00 $0.00
Sales
Iontophoretic Device $0 $24,500 $77,175 $308,700 $2,159,549
Licensing Fees $0 $400,000 $1,442,000 $6,365,400 $43,709,080
Polymeric Vehicle $0 $120,000 $378,000 $1,587,600 $11,113,200
Other $0 $0 $0 $0 $0
Total Sales $0 $544,500 $1,897,175 $8,261,700 $56,981,829
Direct Unit Costs Year 1 Year 2 Year 3 Year 4 Year 5

Iontophoretic Device $0.00 $150.00 $142.50 $135.38 $128.61
Licensing Fees $0.00 $10.00 $5.00 $4.75 $4.51
Polymeric Vehicle $0.00 $5.50 $5.23 $4.96 $4.72
Other $0.00 $0.00 $0.00 $0.00 $0.00
Direct Cost of Sales

Iontophoretic Device $0 $1,050 $2,993 $10,830 $68,547
Licensing Fees $0 $20,000 $35,000 $142,500 $902,500
Polymeric Vehicle $0 $16,500 $47,025 $178,695 $1,131,735
Other $0 $0 $0 $0 $0
Subtotal Direct Cost of Sales $0 $37,550 $85,018 $332,025 $2,102,782
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Chart: Sales by Year
6.4 Strategic Alliances
NovOculi will initially try to encourage strategic alliances in three different arenas: laser
manufacturers, refractive surgery providers, and research institutions.
Laser Manufacturers
As NovOculi will provide all the components necessary to perform its patented procedure except
for the laser, developing a strategic alliance with a laser manufacturer will be an important
step. Existing laser manufacturers, including VISX and Alcon, are currently being approached as
a prelude to this partnership.
Refractive Surgery Providers

Possibilities for strategic alliances abound in the current refractive surgery industry. Due to the
increasingly fierce competition, LASIK providers are expected to be very receptive to a strategic
alliance that would allow them access to a proprietary technology with which they could charge
a sustainable premium. As was noted in section 4.2.1, 48% of all LASIK surgery is being done
by corporate chains. A large corporate chain would be an ideal initial strategic alliance as it
would provide excellent exposure and access to its well-established patient base and
distribution networks.
Research Institutions
As the bulk of research on the procedure has already been arranged to be done in collaboration
with Stanford University, this strategic alliance is already well-formed. NovOculi is open to
further collaboration as well, and expects to utilize five additional institutions as NICS training
sites, including research institutions in: Boston, Atlanta, Philadelphia, Kansas City, and Durham,
NC.
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6.5 Milestones
The following are the key milestones for the first year of operations:
1. Completion of strategic business plan by March 1, 2001.

2. Research Grants will be applied for by May 1, 2001.
3. All patents, domestic and foreign, will be applied for by July 1, 2001.
4. Animal trials initiated by October 1, 2001.
5. Start-up capital will be raised by January 1, 2002.
6. All other first year milestones are currently on schedule in accordance to the business plan.
Chart: Milestones
Table: Milestones
Milestones
Milestone Start Date End Date Budget Manager Department
Business Plan 10/5/2000 3/1/2001 $3,000 Burnett G&A
Patent Applications 11/1/2000 7/1/2001 $25,000 ABC Legal
Corporate Identity 1/1/2001 1/31/2001 $2,250 Burnett G&A
Supplier Selection 3/1/2001 4/1/2001 $10,000 ABC Marketing
CEO Hire 9/1/2001 10/1/2001 $25,000 ABC G&A
Information Systems Established 4/1/2001 5/1/2001 $65,000 ABC Marketing
Research Grant Application 5/1/2001 6/1/2001 $5,000 Burnett R&D
R & D- Animal Stage 10/1/2001 6/1/2002 $250,000 Burnett R&D
R & D- Human Stage 3/1/2002 3/1/2003 $1,000,000 Burnett R&D
National Sales Launch 3/1/2003 9/1/2003 $100,000 ABC Department
National Marketing Plan 3/1/2003 9/1/2003 $250,000 ABC Department
Investment- Tranche 1 1/1/2002 5/1/2002 $0 ABC Department
Research Grant Received 1/1/2003 12/1/2003 $0 Burnett R&D
Investment- Tranche 2 (If No Grant) 1/1/2004 5/1/2004 $0 ABC Department
Totals $1,735,250
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7.0 Regulatory Issues
Since the "FDA does not approve procedures, only the equipment used in them" ("Eye centers
set their sights on LASIK surgery growth," Houston Business Journal, July 16, 1999) and the
components of the procedure have already been approved for FDA use, NovOculi's products will
be ready for the market as soon as medical research shows favorable results. The FDA has
already approved the use of the 440 nm laser in the medical arena for dermatologic uses, and
NovOculi will not need to obtain approval to use this device in the sculpting of the cornea.
Similarly, iontophoretic devices, polymeric contact lenses and the targeting dye,
tartrazine, have been approved by the FDA for human use and will require no additional
approval at this juncture.
An example of such expedited market entrance can be seen with the laser vision correction
procedure LASIK. Prior to its approval by the FDA in Winter of 1999, LASIK had been performed
on 900,000 patients due to the fact that the laser used for LASIK, the excimer laser, had
already been approved for medical use in PRK. ("Bye-Bye Glasses," EyeCare Business Online,
September 2000) We hope to similarly expedite market entrance.
8.0 Management Summary
NovOculi's Management Team is undoubtedly one of its strengths. Among its five principals,
NovOculi, Inc. boasts three MBAs, a Chemistry PhD, and two MDs in the field of ophthalmology,
all with stellar records within their fields. NovOculi's consultants are impressive as well, with
consultation being provided by the highly successful entrepreneur and technology development
expert, Jim Sheldon, the highly reputable and internationally known chairman of Stanford
ophthalmology, Dr. Mark Blumenkranz, and an Intellectual Property guru, Trygve Laegrid.
8.1 Management Team
Principals:
Daniel Burnett: Currently an MD/MBA student at Duke University applying for a residency in
ophthalmology, Mr. Burnett has a long history of biomedical device design and testing and has
spent a total of 10 months at the Food and Drug Administration (FDA). In addition to currently
pursuing an MD/MBA, Mr. Burnett also has invented a myringotomy tube insertion device
(patent pending) and has created a magnetic nerve stimulation device (patent pending).
Terry Kim, MD: An ophthalmologist at the Duke University Eye Center, Dr. Kim has been
performing LASIK laser surgery vision correction for the last five years. Dr. Kim has been
profiled on the Discovery channel and has performed LASIK surgery on many high-profile
figures, such as NBA-bound players on the Duke men's basketball team.
Joseph Walker: A current MBA candidate at the Fuqua School of Business, Mr. Walker has
detailed knowledge of the venture capital and start-up process derived from his experience at
The Aurora Funds, Inc., a southeastern venture capital firm. Mr. Walker plans to pursue a
career in venture capital and entrepreneurship.
Andy Rubinson: Currently attending MIT Sloan, in the New Product and Venture Development
Track, Mr. Rubinson spent six years working for the Department of Defense at Boeing Space
Systems where he helped improve product design and development and manufacturing
processes for Delta Rockets and the International Space Station. He then spent two
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years assigned to Andersen Consulting's (now Accenture) High Tech and Electronics Market Unit
during which time he obtained experience in Product and Processes Development, Integrated
Materials and Manufacturing, Procurement, and Manufacturing Strategy and Operations.
Joseph Hewitt: Currently pursuing a PhD in Chemistry at Duke University, Mr. Hewitt
has research/teaching experience in both UV/Vis and Fluorescence spectroscopy.
His dissertation research involves the application of Capillary Electrophoresis and Fluorescence
Lifetime spectroscopy to characterize and study a class of environmental molecules called
Humic Substances. As part of this research he has had extensive experience with both lasers
and fluorescent dyes, making him a valuable addition to the management team.
Consultants:
James E. Sheldon: Mr. Sheldon's background includes over twenty-five years experience in
business, law, and education. For twelve years, he was one of two principals in The Synertech
Group, Inc., a North Carolina-based venture development firm. Two public companies, Embrex
and EnSys, resulted from Synertech's efforts. Prior to founding Synertech, Mr. Sheldon was a
principal in, or consultant to, several high technology start-up companies in the Research
Triangle area.
Mark Blumenkranz, MD: Dr. Blumenkranz is Professor and Chairman of the Department of
Ophthalmology at Stanford University. Dr. Blumenkranz is the author of more than 100 peer-
reviewed publications and book chapters and was instrumental in developing the successful
laser vision correction program at Stanford. He currently serves as a principal investigator on a
number of clinical research trials at Stanford evaluating the effects of laser and pharmacologic
agents on eye disease. Dr. Blumenkranz is an associate examiner for the American Board of
Ophthalmology and a member of the Retina, Vitreous, Macula, and Gonin Societies. He has
served on the Editorial Board of the journals Retina, Graefe's Archives for Ophthalmology, and
Ophthalmology. He is a past recipient of the Research to prevent Blindness Special Manpower
Award, the Heed Award, the Rosenthal Award in Visual Sciences, and the American Academy of
Ophthalmology Senior Honor Award.
Trygve Laegrid, PhD: Dr. Laegrid is currently pursuing an Executive MBA at the MIT Sloan
School of Management. After obtaining a PhD in condensed matter physics, Dr. Laegrid became
involved in licensing, valuation and management of intellectual property. He is currently the
Manager for Intellectual Property and Commercialization for Statoil Industrial Development.
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8.2 Management Team Gaps
An experienced CEO is actively being sought. The founders of the company will conduct the
search. The desired profile is for a CEO experienced in the medical device arena, ideally who
was part of a previous successful start-up venture.
The company will search for design engineers and consultants.
8.3 Personnel Plan
The Personnel Plan chronicles the growth of the organization to approximately 77 employees in
the first 5 years. Each year may require a few additional people besides those indicated, based
on the growth of the company in accordance with the Business Plan.
Table: Personnel
Personnel Plan
Research Engineer $60,000 $120,000 $240,000 $400,000 $400,000
CFO $16,000 $100,000 $110,000 $121,000 $133,100
CEO $30,000 $125,000 $137,500 $151,250 $166,375
Administrative $6,000 $48,000 $52,800 $116,160 $255,552
Sales/Marketing $24,000 $180,000 $360,000 $865,000 $4,130,000
Total People 9 14 24 44 77
Total Payroll $136,000 $573,000 $900,300 $1,653,410 $5,085,027
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NovOculi
9.0 Financial 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:
Stock Type Shares Authorized Shares Issued

Common 30,000,000 3,000,000
Preferred 2,000,000 0
Current Shareholders:
Owner Shares Granted Stock Type

Daniel Burnett 1,950,000 Common
Joseph Hewitt 300,000 Common
Andy Rubinson 300,000 Common
Joseph Walker 300,000 Common
Dr. Terry Kim 150,000 Common
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.
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NovOculi
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.
Table: General Assumptions
General Assumptions
Plan Month 1 2 3 4 5
Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00%
Tax Rate 25.42% 25.00% 25.42% 25.00% 25.42%
Other 0 0 0 0 0
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NovOculi
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.
Table: Break-even Analysis
Break-even Analysis
Monthly Units Break-even 19

Monthly Revenue Break-even $65,769
Assumptions:
Average Per-Unit Revenue $3,500.00
Average Per-Unit Variable Cost $150.00
Estimated Monthly Fixed Cost $62,950
Chart: Break-even Analysis
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NovOculi
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.
Table: Profit and Loss
Pro Forma Profit and Loss

Sales $0 $544,500 $1,897,175 $8,261,700 $56,981,829
Direct Cost of Sales $0 $37,550 $85,018 $332,025 $2,102,782
Other $0 $0 $0 $0 $0
Total Cost of Sales $0 $37,550 $85,018 $332,025 $2,102,782
Gross Margin $0 $506,950 $1,812,158 $7,929,675 $54,879,047

Gross Margin % 0.00% 93.10% 95.52% 95.98% 96.31%
Expenses
Payroll $136,000 $573,000 $900,300 $1,653,410 $5,085,027
Sales and Marketing and Other Expenses $539,000 $795,000 $1,450,000 $2,425,000 $6,775,000
Depreciation $0 $0 $0 $0 $0
Leased Equipment $0 $0 $0 $0 $0
Utilities $12,000 $0 $0 $0 $0
Insurance $30,000 $0 $0 $0 $0
Rent $18,000 $18,000 $18,000 $18,000 $18,000
Payroll Taxes $20,400 $85,950 $135,045 $248,012 $762,754
Other $0 $0 $0 $0 $0
Total Operating Expenses $755,400 $1,471,950 $2,503,345 $4,344,422 $12,640,781
Profit Before Interest and Taxes ($755,400) ($965,000) ($691,188) $3,585,254 $42,238,266
EBITDA ($755,400) ($965,000) ($691,188) $3,585,254 $42,238,266
Interest Expense $0 $0 $0 $0 $0
Taxes Incurred $0 $0 $0 $896,313 $10,735,559
Net Profit ($755,400) ($965,000) ($691,188) $2,688,940 $31,502,707

Net Profit/Sales 0.00% -177.23% -36.43% 32.55% 55.29%
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NovOculi
Chart: Profit Yearly
Chart: Gross Margin Yearly
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NovOculi
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.
Chart: Cash
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NovOculi
Table: Cash Flow
Pro Forma Cash Flow

Cash Received
Cash from Operations

Cash Sales $0 $136,125 $474,294 $2,065,425 $14,245,457
Cash from Receivables $0 $408,375 $1,422,881 $6,196,275 $42,736,372
Subtotal Cash from Operations $0 $544,500 $1,897,175 $8,261,700 $56,981,829
Additional Cash Received

Sales Tax, VAT, HST/GST Received $0 $0 $0 $0 $0
New Current Borrowing $0 $0 $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0 $0 $0
New Long-term Liabilities $0 $0 $0 $0 $0
Sales of Other Current Assets $0 $0 $0 $0 $0
Sales of Long-term Assets $0 $0 $0 $0 $0
New Investment Received $1,500,000 $0 $1,000,000 $0 $0
Subtotal Cash Received $1,500,000 $544,500 $2,897,175 $8,261,700 $56,981,829
Expenditures Year 1 Year 2 Year 3 Year 4 Year 5
Expenditures from Operations

Cash Spending $136,000 $573,000 $900,300 $1,653,410 $5,085,027
Bill Payments $594,315 $884,612 $1,626,290 $3,735,956 $19,040,007
Subtotal Spent on Operations $730,315 $1,457,612 $2,526,590 $5,389,366 $24,125,034
Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0 $0 $0
Purchase Other Current Assets $0 $0 $0 $0 $0
Purchase Long-term Assets $0 $0 $0 $0 $0
Dividends $0 $0 $0 $0 $0
Subtotal Cash Spent $730,315 $1,457,612 $2,526,590 $5,389,366 $24,125,034
Net Cash Flow $769,685 ($913,112) $370,585 $2,872,334 $32,856,796

Cash Balance $1,086,685 $173,573 $544,157 $3,416,491 $36,273,287
Page 33
NovOculi
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.
Table: Balance Sheet
Pro Forma Balance Sheet

Assets
Current Assets
Cash $1,086,685 $173,573 $544,157 $3,416,491 $36,273,287
Accounts Receivable $0 $0 $0 $0 $0
Inventory $0 $0 $0 $0 $0
Other Current Assets $0 $0 $0 $0 $0
Total Current Assets $1,086,685 $173,573 $544,157 $3,416,491 $36,273,287
Long-term Assets
Long-term Assets $0 $0 $0 $0 $0
Accumulated Depreciation $0 $0 $0 $0 $0
Total Long-term Assets $0 $0 $0 $0 $0
Total Assets $1,086,685 $173,573 $544,157 $3,416,491 $36,273,287
Liabilities and Capital Year 1 Year 2 Year 3 Year 4 Year 5
Current Liabilities
Accounts Payable $25,085 $76,973 $138,745 $322,138 $1,676,227
Current Borrowing $0 $0 $0 $0 $0
Other Current Liabilities $0 $0 $0 $0 $0
Subtotal Current Liabilities $25,085 $76,973 $138,745 $322,138 $1,676,227
Long-term Liabilities $0 $0 $0 $0 $0
Total Liabilities $25,085 $76,973 $138,745 $322,138 $1,676,227
Paid-in Capital $1,850,000 $1,850,000 $2,850,000 $2,850,000 $2,850,000

Retained Earnings ($33,000) ($788,400) ($1,753,400) ($2,444,588) $244,353
Earnings ($755,400) ($965,000) ($691,188) $2,688,940 $31,502,707
Total Capital $1,061,600 $96,600 $405,413 $3,094,353 $34,597,060
Total Liabilities and Capital $1,086,685 $173,573 $544,157 $3,416,491 $36,273,287
Net Worth $1,061,600 $96,600 $405,413 $3,094,353 $34,597,060
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.
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NovOculi
Table: Ratios
Ratio Analysis
Year 1 Year 2 Year 3 Year 4 Year 5 Industry Profile
Sales Growth n.a. n.a. 248.43% 335.47% 589.71% 3.10%
Percent of Total Assets

Accounts Receivable 0.00% 0.00% 0.00% 0.00% 0.00% 24.20%
Inventory 0.00% 0.00% 0.00% 0.00% 0.00% 20.90%
Other Current Assets 0.00% 0.00% 0.00% 0.00% 0.00% 34.70%
Total Current Assets 100.00% 100.00% 100.00% 100.00% 100.00% 79.80%
Long-term Assets 0.00% 0.00% 0.00% 0.00% 0.00% 20.20%
Total Assets 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Current Liabilities 2.31% 44.35% 25.50% 9.43% 4.62% 37.70%

Long-term Liabilities 0.00% 0.00% 0.00% 0.00% 0.00% 17.60%
Total Liabilities 2.31% 44.35% 25.50% 9.43% 4.62% 55.30%
Net Worth 97.69% 55.65% 74.50% 90.57% 95.38% 44.70%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Gross Margin 0.00% 93.10% 95.52% 95.98% 96.31% 52.50%
Selling, General & Administrative Expenses 0.00% 270.33% 131.95% 63.43% 40.72% 32.70%
Advertising Expenses 0.00% 45.91% 18.45% 9.08% 6.14% 1.70%
Profit Before Interest and Taxes 0.00% -177.23% -36.43% 43.40% 74.13% 2.80%
Main Ratios
Current 43.32 2.25 3.92 10.61 21.64 2.10
Quick 43.32 2.25 3.92 10.61 21.64 1.30
Total Debt to Total Assets 2.31% 44.35% 25.50% 9.43% 4.62% 55.30%
Pre-tax Return on Net Worth -71.16% -998.96% -170.49% 115.86% 122.09% 4.70%
Pre-tax Return on Assets -69.51% -555.96% -127.02% 104.94% 116.44% 10.50%
Additional Ratios Year 1 Year 2 Year 3 Year 4 Year 5

Net Profit Margin 0.00% -177.23% -36.43% 32.55% 55.29% n.a
Return on Equity -71.16% -998.96% -170.49% 86.90% 91.06% n.a
Activity Ratios
Accounts Receivable Turnover 0.00 0.00 0.00 0.00 0.00 n.a
Collection Days 0 0 0 0 0 n.a
Inventory Turnover 0.00 0.00 0.00 0.00 0.00 n.a
Accounts Payable Turnover 24.69 12.17 12.17 12.17 12.17 n.a
Payment Days 27 20 23 21 18 n.a
Total Asset Turnover 0.00 3.14 3.49 2.42 1.57 n.a
Debt Ratios
Debt to Net Worth 0.02 0.80 0.34 0.10 0.05 n.a
Current Liab. to Liab. 1.00 1.00 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $1,061,600 $96,600 $405,413 $3,094,353 $34,597,060 n.a
Interest Coverage 0.00 0.00 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales n.a. 0.32 0.29 0.41 0.64 n.a
Current Debt/Total Assets 2% 44% 25% 9% 5% n.a
Acid Test 43.32 2.25 3.92 10.61 21.64 n.a
Sales/Net Worth 0.00 5.64 4.68 2.67 1.65 n.a
Dividend Payout 0.00 0.00 0.00 0.00 0.00 n.a
Page 35
Appendix
Table: Sales Forecast
Sales Forecast
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Unit Sales
Iontophoretic Device 0% 0 0 0 0 0 0 0 0 0 0 0 0
Licensing Fees 0% 0 0 0 0 0 0 0 0 0 0 0 0
Polymeric Vehicle 0% 0 0 0 0 0 0 0 0 0 0 0 0
Other 0% 0 0 0 0 0 0 0 0 0 0 0 0
Total Unit Sales 0 0 0 0 0 0 0 0 0 0 0 0
Unit Prices Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Iontophoretic Device $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Licensing Fees $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Polymeric Vehicle $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Other $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Sales
Iontophoretic Device $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Licensing Fees $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Polymeric Vehicle $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Direct Unit Costs Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Iontophoretic Device 0.00% $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Licensing Fees 0.00% $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Polymeric Vehicle 0.00% $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Other 0.00% $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Direct Cost of Sales

Iontophoretic Device $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Licensing Fees $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Polymeric Vehicle $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Direct Cost of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Page 1
Appendix
Table: Personnel
Personnel Plan
Research Engineer 0% $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000
CFO 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $8,000 $8,000
CEO 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $10,000 $10,000 $10,000
Administrative 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $2,000 $2,000 $2,000
Sales/Marketing 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $8,000 $8,000 $8,000
Total People 2 2 2 2 2 2 2 2 2 8 9 9
Total Payroll $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $25,000 $33,000 $33,000
Page 2
Appendix
Table: General Assumptions
General Assumptions
Plan Month 1 2 3 4 5 6 7 8 9 10 11 12
Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Tax Rate 30.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00%
Other 0 0 0 0 0 0 0 0 0 0 0 0
Page 3
Appendix
Table: Profit and Loss
Pro Forma Profit and Loss
Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Direct Cost of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Gross Margin $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Gross Margin % 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Expenses
Payroll $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $25,000 $33,000 $33,000
Sales and Marketing and Other
$500,000 $0 $0 $0 $0 $0 $0 $0 $0 $10,000 $13,000 $16,000
Expenses
Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Leased Equipment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Utilities $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Insurance $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500
Rent $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500
Payroll Taxes 15% $750 $750 $750 $750 $750 $750 $750 $750 $750 $3,750 $4,950 $4,950
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Operating Expenses $510,750 $10,750 $10,750 $10,750 $10,750 $10,750 $10,750 $10,750 $10,750 $43,750 $55,950 $58,950
Profit Before Interest and Taxes ($510,750) ($10,750) ($10,750) ($10,750) ($10,750) ($10,750) ($10,750) ($10,750) ($10,750) ($43,750) ($55,950) ($58,950)
EBITDA ($510,750) ($10,750) ($10,750) ($10,750) ($10,750) ($10,750) ($10,750) ($10,750) ($10,750) ($43,750) ($55,950) ($58,950)
Interest Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Taxes Incurred $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Net Profit ($510,750) ($10,750) ($10,750) ($10,750) ($10,750) ($10,750) ($10,750) ($10,750) ($10,750) ($43,750) ($55,950) ($58,950)
Net Profit/Sales 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Page 4
Appendix
Table: Cash Flow
Pro Forma Cash Flow

Cash Received
Cash from Operations

Cash Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Cash from Receivables $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash from Operations $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Additional Cash Received

Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Investment Received $1,500,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Received $1,500,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Expenditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Expenditures from Operations

Cash Spending $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $25,000 $33,000 $33,000
Bill Payments $16,858 $489,083 $5,750 $5,750 $5,750 $5,750 $5,750 $5,750 $5,750 $6,183 $18,890 $23,050
Subtotal Spent on Operations $21,858 $494,083 $10,750 $10,750 $10,750 $10,750 $10,750 $10,750 $10,750 $31,183 $51,890 $56,050
Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Spent $21,858 $494,083 $10,750 $10,750 $10,750 $10,750 $10,750 $10,750 $10,750 $31,183 $51,890 $56,050
Net Cash Flow $1,478,142 ($494,083) ($10,750) ($10,750) ($10,750) ($10,750) ($10,750) ($10,750) ($10,750) ($31,183) ($51,890) ($56,050)
Cash Balance $1,795,142 $1,301,058 $1,290,308 $1,279,558 $1,268,808 $1,258,058 $1,247,308 $1,236,558 $1,225,808 $1,194,625 $1,142,735 $1,086,685
Page 5
Appendix
Table: Balance Sheet
Pro Forma Balance Sheet
Assets Starting Balances
Current Assets
Cash $317,000 $1,795,142 $1,301,058 $1,290,308 $1,279,558 $1,268,808 $1,258,058 $1,247,308 $1,236,558 $1,225,808 $1,194,625 $1,142,735 $1,086,685
Accounts Receivable $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Inventory $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Current Assets $317,000 $1,795,142 $1,301,058 $1,290,308 $1,279,558 $1,268,808 $1,258,058 $1,247,308 $1,236,558 $1,225,808 $1,194,625 $1,142,735 $1,086,685
Long-term Assets
Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Accumulated Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Assets $317,000 $1,795,142 $1,301,058 $1,290,308 $1,279,558 $1,268,808 $1,258,058 $1,247,308 $1,236,558 $1,225,808 $1,194,625 $1,142,735 $1,086,685
Liabilities and Capital Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Current Liabilities
Accounts Payable $0 $488,892 $5,558 $5,558 $5,558 $5,558 $5,558 $5,558 $5,558 $5,558 $18,125 $22,185 $25,085
Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Current Liabilities $0 $488,892 $5,558 $5,558 $5,558 $5,558 $5,558 $5,558 $5,558 $5,558 $18,125 $22,185 $25,085
Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Liabilities $0 $488,892 $5,558 $5,558 $5,558 $5,558 $5,558 $5,558 $5,558 $5,558 $18,125 $22,185 $25,085
Paid-in Capital $350,000 $1,850,000 $1,850,000 $1,850,000 $1,850,000 $1,850,000 $1,850,000 $1,850,000 $1,850,000 $1,850,000 $1,850,000 $1,850,000 $1,850,000
Retained Earnings ($33,000) ($33,000) ($33,000) ($33,000) ($33,000) ($33,000) ($33,000) ($33,000) ($33,000) ($33,000) ($33,000) ($33,000) ($33,000)
Earnings $0 ($510,750) ($521,500) ($532,250) ($543,000) ($553,750) ($564,500) ($575,250) ($586,000) ($596,750) ($640,500) ($696,450) ($755,400)
Total Capital $317,000 $1,306,250 $1,295,500 $1,284,750 $1,274,000 $1,263,250 $1,252,500 $1,241,750 $1,231,000 $1,220,250 $1,176,500 $1,120,550 $1,061,600
Total Liabilities and Capital $317,000 $1,795,142 $1,301,058 $1,290,308 $1,279,558 $1,268,808 $1,258,058 $1,247,308 $1,236,558 $1,225,808 $1,194,625 $1,142,735 $1,086,685
Net Worth $317,000 $1,306,250 $1,295,500 $1,284,750 $1,274,000 $1,263,250 $1,252,500 $1,241,750 $1,231,000 $1,220,250 $1,176,500 $1,120,550 $1,061,600
Page 6

Eye Surgery Equipment Maker Business Plan

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Eye Surgery Equipment Maker Business Plan

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1.0 Executive Summary .................................................................................................................... 1

Table: Milestones ....................................................................................................................... 23

1.0 Executive Summary

Based on the detailed financial projections prepared by the company's management, it is

• Completion of strategic business plan nine months before starting date.

2.0 Company Summary

2.1 Company Ownership

The proposed share capital of the company prior to capital raising

Owner Percentage of Shares Owned

The company has raised seed capital from its principals.

2.2 Start-up Summary

• Formulation of the strategic business plan.

Costs of raising capital through private placement.

Total Requirements $350,000

Table: Start-up Funding

Liabilities and Capital

Loss at Start-up (Start-up Expenses) ($33,000)

Total Capital and Liabilities $317,000

Total Funding $350,000

2.3 Company Locations and Facilities

NovOculi's technology is an improvement on the common laser refractive surgery procedure

3.1 Product Description

In summary, NICS is performed as follows:

3.3 Future Products

4.0 Market Analysis Summary

4.1 Market Survey

A) less than $500

Surveyed Refractive Error Consider Surgery Pay Premium

Less than $500 $500-$1,000 $1,000-$2,000 more than $2,000 Total

4.2 Target Market Segment Strategy

4.2.1 Market Needs

4.3 Market Segmentation

Table: Market Analysis

Chart: Market Analysis (Bar)

Chart: Market Analysis (Pie)

4.4 Industry Analysis

4.4.1 Industry Participants

4.4.2 Distribution Patterns

4.4.3 Competition and Buying Patterns

5.1 Competitive Technology

Existing Laser Refractive Surgery

Another competing technology worth mention is the newly-developed technique employing

Alternative Non-laser Surgical Procedures

5.2 Competitive Comparison

Common- (greater than 5% of the patient population)

• Pain (possibly chronic)

Less Common- (less than 5% of the patient population)

• Corneal Epithelial Flap Dislocation

5.3 Main Competitors

Laser Refractive Surgery Competitors

LASIK Laser Manufacturers

Non-Laser Refractive Correction Competitors

5.4 Impact of Competition

5.5 Competitive Edge

As was mentioned previously, NovOculi's system of refractive correction has significant

6.0 Strategy and Implementation Summary

6.1 Value Proposition

6.2 Marketing Strategy

Promotion of NovOculi's technology will involve targeting two different populations: 1)