Hearing Testing Systems Business Plan

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

Chart: Highlights .......................................................................................................................... 2
1.1 Objectives.................................................................................................................................... 2
1.2 Mission .......................................................................................................................................... 3
1.3 Keys to Success ........................................................................................................................ 3
2.0 Company Summary ..................................................................................................................... 4
2.1 Start-up Summary ................................................................................................................... 4
Chart: Start-up ............................................................................................................................. 5
Table: Start-up.............................................................................................................................. 5
2.2 Company Ownership ............................................................................................................... 6
2.3 Company Locations and Facilities ...................................................................................... 6
3.0 Products ........................................................................................................................................... 6
3.1 Product Description ................................................................................................................. 7
3.2 Competitive Comparison ....................................................................................................... 9
3.3 Strengths and Challenges ................................................................................................... 10
3.4 Sales Literature ....................................................................................................................... 10
3.5 Technology ................................................................................................................................ 11
3.6 Future Products ....................................................................................................................... 11
4.0 Market Analysis Summary ...................................................................................................... 12
4.1 Market Segmentation ........................................................................................................... 14
Chart: Market Analysis (Pie) .................................................................................................. 15
Table: Market Analysis ............................................................................................................. 15
4.2 Industry Analysis .................................................................................................................... 16
4.2.1 Industry Participants ..................................................................................................... 16
4.2.2 Competition and Buying Patterns ............................................................................ 17
4.3 Target Market Segment Strategy .................................................................................... 18
4.3.1 Market Trends .................................................................................................................. 18
4.3.2 Market Needs ................................................................................................................... 20
5.0 Sales Forecast ............................................................................................................................. 22
Table: Sales Forecast ............................................................................................................... 22
Chart: Sales Monthly ................................................................................................................ 23
Chart: Sales by Year ................................................................................................................. 23
6.0 Management Summary ............................................................................................................ 24
6.1 Organizational Structure ..................................................................................................... 24
6.2 Management Team ................................................................................................................ 25
6.3 Management Team Gaps..................................................................................................... 25
7.0 Personnel Plan ............................................................................................................................. 26
8.0 Financial Plan ............................................................................................................................... 26
8.1 Start-up Funding .................................................................................................................... 27
Table: Start-up Funding .......................................................................................................... 27
8.2 The Investment Offering ..................................................................................................... 28
8.2 The Investment Offering ..................................................................................................... 28
Table: Investment Offering .................................................................................................... 29
8.3 Funding History ....................................................................................................................... 30
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Table of Contents
8.4 Important Assumptions ....................................................................................................... 31

Table: General Assumptions .................................................................................................. 31
8.5 Break-even Analysis .............................................................................................................. 32
Table: Break-even Analysis.................................................................................................... 32
Chart: Break-even Analysis ................................................................................................... 32
8.6 Projected Profit and Loss ..................................................................................................... 33
Chart: Profit Monthly ................................................................................................................ 33
Chart: Profit Yearly .................................................................................................................... 33
Chart: Gross Margin Monthly................................................................................................. 34
Chart: Gross Margin Yearly .................................................................................................... 34
Table: Profit and Loss ............................................................................................................... 35
8.7 Projected Cash Flow .............................................................................................................. 36
Chart: Cash .................................................................................................................................. 36
Table: Cash Flow ........................................................................................................................ 37
8.8 Projected Balance Sheet ...................................................................................................... 38
Table: Balance Sheet ................................................................................................................ 38
8.9 Business Ratios ....................................................................................................................... 38
Table: Ratios ................................................................................................................................ 39
Table: Sales Forecast ......................................................................................................................... 1
Table: General Assumptions ............................................................................................................ 2
Table: General Assumptions ............................................................................................................ 2
Table: Profit and Loss ......................................................................................................................... 3
Table: Profit and Loss ......................................................................................................................... 3
Table: Cash Flow .................................................................................................................................. 4
Table: Balance Sheet .......................................................................................................................... 5
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Auris Solutions, LLC
1.0 Executive Summary
The majority of hearing-impaired individuals who use hearing-aids or undergo surgery to

receive cochlear implants expect to hear well. However, the reality is that tens of thousand of
patients continue to experience severe difficulty hearing in the real world, away from the
clinical setting. This is primarily due to the incorrect adjustment of the settings on the medical
device by a clinician. Consequently, audiologists and speech therapists greatly need a hearing
test that can quickly and accurately predict how well individuals, with either a cochlear implant
or a hearing aid, can hear in a noisy "real world" environment following installation of the
medical device. Such a test is especially important for children, as early intervention can reduce
slowed learning. It is estimated that if children with hearing loss do not receive early
intervention, special education for a child with hearing loss will cost an additional $420,000 in
special education costs and result in a lifetime cost of approximately $1 million per child. [1] In
adults, hearing loss can begin as early as age 50 and lack of early intervention can lead to loss
of jobs, emotional distress and even cognitive disorders. In addition, since life expectancy can
realistically reach to age 90 and beyond, an individual could potentially be affected by hearing
loss for half of his/her lifetime.
Pure tone hearing tests, which require audiometers and sound proof booths to deliver the tone,
are currently used to evaluate hearing loss. These tests evaluate fundamental hearing loss, but
cannot predict how well an individual will understand words and sentences in a realistic
environment. Current tests also cannot asses whether or not a second cochlear implant or
second hearing aid would significantly improve the hearing of a patient. This is important to
patients and their families as cochlear implants and hearing aids cost approximately $40,000
and $5,000, respectively, and often are not covered by insurance companies.
Auris Solutions is an early stage hearing care company, which solves these market needs by
delivering novel and scalable software-based hearing tests that rapidly and reliably assess
hearing in a realistic environment. Unlike other tests, our tests enable the clinician to both
optimize the hearing device settings, and make recommendations regarding the purchase of
additional hearing devices for their patients. Setting the medical device optimally for each
patient can make an enormous difference, in saving them from the emotional and mental
problems associated with hearing ineffectively. We believe that our tests will become a
mandatory part of an audiology clinic's portfolio of hearing tests, performed following the
audiogram tone test.
Auris Solutions is ready to market its first product: CRISP (Children's Realistic Intelligibility and
Speech Perception). This rapid and reliable system for clinically testing speech intelligibility of
children computerizes the method used to analyze hearing test results, so as to enable a clinical
user to more accurately control the presentation of sounds, the storage and analysis of results,
and the process by which the child may interactively make choices and receive reinforcement
during the test.
Auris Solutions is currently seeking $250,000 to implement our marketing strategy as well as to
offset our start-up costs, which include product development, capital equipment purchases and
to support the business development plan for current and future products.
_________________________
[1] http://trfn.clpgh.org/shhh/Factsheet.html#r1
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Chart: Highlights
1.1 Objectives
• We will implement a business model that will allow us to achieve and maintain a gross
margin equal to or above 75%.
• We will recruit a management team that has relevant knowledge and experience in order to
promote and enhance the company's core competencies.
• We will satisfy our customers by offering products free of defects and by offering
outstanding customer service that will consistently exceed customers' expectations.
• We will invest a significant portion of our sales revenues into research and development in
order to grow and offer new, innovative products within the hearing care market.
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1.2 Mission
Auris Solutions, LLC is a comprehensive and innovative solutions provider for refining hearing
loss diagnoses. We pride ourselves on the fact that our products are more rapid, reliable, and
efficient than competitors. Our business will be managed to achieve planned growth and long
term profitability. We will grow by building upon demonstrated strengths and meeting our
customers' needs. As a result, Auris Solutions, LLC will optimize shareholder value and be
respected worldwide as a solutions provider company in the hearing industry.
We stand by the following values:
• Corporate Responsibility - The Company will participate in community events.

• Ethical Standards -The Company will conduct business based on sound ethical principles.
• Compassion - We reach out with openness, kindness, and concern.
• Respect - We honor the wonder of the human spirit.
• Excellence - We expect the best of ourselves and one another.
• Stewardship - We use our resources responsibly.
• Community - We cultivate relationships that inspire us to serve.
1.3 Keys to Success
At Auris Solutions, we aim to provide our customers with the best products and related
services. Our commitment to quality will begin with our employees, who are our most important
assets. Thus, our employees will be accountable in each of the following areas, which are
key to our success:
• Management Team:
o Hire the right people to work for the company
o Set evaluation policies and standards for all employees
o Delegate and make staff accountable for their work
• Sales& Marketing:
o Establish awareness of Auris brand and product offerings
o Set and implement a sales strategy
o Manage barriers to entry
o Implement a marketing plan that successfully brings our advertisements and
products to the target market
o Provide customer support for all products after purchase
• Product Development and Product Quality:

o Launch new products on time
o Establish quality processes
• Management & Customer Service:

o Manage purchasing properly
o All purchases should be based on customers' needs
o Reduce need for an in-house inventory and overhead costs
o Set marketing budgets and manage accounts receivable
o Set a program to manage customer satisfaction:
▪ Products shipped and delivered on time
▪ Effectively respond to customer complaints
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2.0 Company Summary
Auris Solutions is an early-stage company that is currently using its proprietary technology (US
patent #6,584,440) and well-regarded scientific knowledge to create systems solutions for the
hearing care industry. Auris aims to capitalize on the hearing care industry by providing
products that will enable hearing care professionals to quickly and accurately test hearing loss
and to assess the benefits of cochlear implants and hearing aids for both children and adults. In
addition, the company's upcoming products will evaluate sensory/cognitive deficits in children
and adults with developmental disabilities and mental retardation.
Audiologists and speech therapists greatly need a hearing test that can quickly and accurately
assess how well an individual, with either a cochlear implant or a hearing aid, can hear and
understand words in a noisy or realistic environment. Such a test is especially important for
children, as early intervention can reduce slowed learning in a classroom setting, which may
have lifetime costs to society of up to $1M per child. Additionally, for adults, lack of early
intervention can lead to loss of jobs, emotional distress and even cognitive disorders. This is
important since hearing loss can begin as early as age 50. And, since life expectancy can
nowadays realistically reach to age 90 and beyond, an individual could potentially be affected
by hearing loss for half his/her entire life.
Current systems like audiograms are used to evaluate hearing loss, but cannot assess how well
individuals understand speech in a relatively "noisy" environment such as a classroom setting
or office. Thus, in order to solve this problem, Auris Solutions has developed a proprietary (US
patent #6,584,440) hearing test called the Children's Realistic Intelligibility and Speech
Perception (CRISP) test. The CRISP test does not require FDA approval, has already been beta-
tested and is immediately ready for market. Although the CRISP test was primarily developed
to test children's hearing capabilities, Auris Solutions also has several other products in the
pipeline, one of which will be ready for launch in 3 months, which will create a diversified
portfolio of software testing solutions for the hearing care industry. (See 3.5, Future Products,
below for more information.)
2.1 Start-up Summary
Auris Solutions' start-up costs are associated with the related legal services to structure the
operating agreement with each stakeholder, the final software development costs, the sales
and marketing expenses, and the licensing cost. The following table is a summary of the start-
up costs that Auris Solutions will incur once the funding is secured. Included in Start-up
expenses is exclusive licensing of the patented software from the Wisconsin Alumni Research
Foundation (WARF).
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Chart: Start-up
Table: Start-up
Start-up
Requirements
Start-up Expenses
Legal $20,000
Stationery etc. $5,000
Sales & Marketing $30,000
Licensing to WARF $20,000
Insurance $5,100
Rent $9,000
Property & Equipment $20,000
Travel & Conferences $24,000
Website $20,000
Software Development $50,000
Other $0
Total Start-up Expenses $203,100
Start-up Assets
Cash Required $46,900
Other Current Assets $0
Long-term Assets $0
Total Assets $46,900
Total Requirements $250,000
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2.2 Company Ownership
Auris Solutions plans to be a privately-held, Limited Liability Corporation, with Dr. Litovsky as
one of the owners and the key driver of research and new product development. However, we
believe that in order to attract talented management, we will need to create a stock option pool
not higher than 45% of the total shares. See the table below for an ownership breakdown.
Owners % Ownership
Dr. Litovsky 20% Max
Stock Option Pool 45% Max
Investors 35% Max
2.3 Company Locations and Facilities
Auris Solutions is temporarily located in the Big Building in Madison, Wisconsin. The present
office space is small. As revenues grow, we will have to look for additional space in order to
accommodate employees. Our current facility could serve for shipping purposes.
3.0 Products
To summarize, the CRISP test is:
• A method and system for clinically evaluating speech intelligibility in children in such a way
as to link the child's normal environmental noise experience to the audiology clinic.
• A rapid and reliable method and system for testing the speech intelligibility of a child, that is
adapted to engage children so as to enable a tester to determine what auditory factors are
contributing to the child's speech intelligibility level.
• A method and system for simulating a child's normal classroom environment by providing a
variety of types of competing noises so as to determine their effect(s) on the speech
intelligibility of the child.
• A method and system for testing the effects of location of competing noises relative to a
target word source and the child so as to determine the spatial release from masking
potential of said location.
• A system for computerizing the method so as to enable a clinical user to more accurately
control the presentation of sounds, the storage and analysis of results, and by which the
child may interactively make choices and receive reinforcement.
The CRISP test will allow audiologists to offer better service, which will become an additional
source of revenue for their clinics. For example, depending on the complexity of the tests,
audiologists typically charge anywhere from $35 to $200 per test for the new service. The beta
version of CRISP is currently being sold and used by both independent audiologists/speech
therapists and researchers as part of a clinical trials study for cochlear implants. These
individuals are also providing additional feedback on the functionality and ease of use of the
software. The audiologists who run the clinics and are beta-testing CRISP are considered to be
significant influences within the field of audiology. Key beta-test audiologists include:
Page 6
Jane R. Madell, Ph.D.

Director: Hearing and Learning Center
Beth Israel Medical Center
[Proprietary and confidential information removed.]
Patricia Chute, Ph.D.

Mercy College
Richard Tyler, PhD.

University of Iowa
In addition to these key beta-test sites, the CRISP test is also being beta-tested in many other
clinics across the United States, including Texas (four different clinics), California (three
different clinics), Alabama, New Mexico, Wisconsin, and Michigan. The valuable feedback from
these beta-test sites will be incorporated into Version 3.0 of the CRISP test.
Testimonials
Auris Solutions has received feedback regarding the CRISP test from many of its beta-test sites.
The feedback Auris has received has been overwhelmingly positive. For instance, Dr. Richard
Tyler says, "[CRISP] is a well-designed, easy to use, and clever test that provides lots of
information and has the potential to attract lots of users." In addition, Dr. Jane Madell says,
"there is no other test like it available on the market today." Finally, Dr. Patricia Chute says,
"CRISP is very easy-to-use, and scores more rigorously than any other test available on the
market."
The feedback we have received confirms our beliefs that the CRISP test solves a real problem in
the clinics of audiologists and speech therapists.
3.1 Product Description
The CRISP test comprises target sounds as words that occur in the presence of competing
sound(s), that are either spatially near or separated from the target. CRISP will enable the user
to measure a child's ability to understand speech in the presence of competing noise or words,
and the extent to which each individual child benefits from spatial separation of the target and
competing sounds. In CRISP, the child is required to respond to the target word by selecting a
picture representation of the target word from among several picture choices, thus providing an
interactive aspect to the test. Animations and feedback will be employed to engage the child
during the test as well as functioning as a form of positive reinforcement. CRISP provides a set
of rules whereby the sound level at which target words are presented may vary adaptively
according to the child's responses. The test repeats several target words under a variety of
types and locations of competing sounds and records the child's responses in a results
database. The results are available for further analysis by a user to produce a customized
output. A computerized system enables provisioning the test in a controlled manner, analysis of
the data, and further engagement of the child.
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As shown above, the set-up requires an amplifier, a sound level meter, a minimum of two
speakers (distanced 3 ft minimum from the patient), and a computer system with at least
Windows 98 to perform the CRISP software test. Testing should take place in a professional
soundproof audiology booth, which does not present a problem, as the booth is already a
standard component of all audiology clinics. The price range for the software is $2,000 to
$2,500.
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3.2 Competitive Comparison
The Industry Analysis (section 4.3, below) contains a discussion of some hearing tests that
attempt to mimic a realistic environment. These tests, however, are primarily designed
for adults. A summary of how the CRISP hearing test differs from other currently available tests
is detailed in the table below:
Age at
which
Test Purpose Problems with these tests
can be
used
Can't be used with children
Measure speech for
sentence's Can't evaluate masking signals
Connected Speech Test Adults
intelligibility in
"babble." Doesn't provide speech reception thresholds, or
percent correct scores for signal to noise ratio
Measure speech for Can't be used with children
sentence's
Adults;
intelligibility in
Children Can't evaluate masking signals
Hearing in Noise test speech-shaped noise.
ages 8
Does not use speech
and older Doesn't provide speech reception thresholds, or
or other types of noise
sources. percent correct scores for signal to noise ratio
Can't be used with children
Speech in noise for

Can't evaluate masking signals
Speech in Noise Test adults. Fixed signal to Adults
noise ratio.
Doesn't provide speech reception thresholds, or
Can't be used with younger children (3-4)
Can't test speech in noise, nor spatial separation

between speech and noise (binaural hearing)
Word Intelligibility by
Speech in young 5-11
Picture Identification Can't evaluate masking signals
children. years
(WIPI)
Doesn't provide speech reception thresholds, or
Has a limited number of uses

Can't test speech in noise, nor spatial separation
between speech and noise (binaural hearing)
Northwestern
University: Can't evaluate masking signals
Speech in young
Children's Perception of 3 or older
children
Speech Doesn't provide speech reception thresholds, or
(NU CHIPS) percent correct scores for signal to noise ratio
Has a limited number of uses
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3.3 Strengths and Challenges
Barriers to Entry Against Competition

Auris Solutions' CRISP hearing test system is protected under United States patent
#6,584,440: Method and System for Rapid and Reliable Testing of Speech Intelligibility in
Children. The patent was granted on June 24, 2003. The invention was disclosed to the
Wisconsin Alumni Research Foundation of the University of Wisconsin at Madison (WARF); The
Company is currently negotiating the terms of an exclusive licensing agreement with WARF. In
addition, CRISP, as well as any name for each future system, are secured under trademarks.
We believe that the patent as well as the trademark will provide significant barriers to entry
with respect to competitors copying the CRISP hearing system and method.
Auris Solutions' Challenges

There are two main challenges Auris Solutions needs to address when formulating its marketing
strategy:
Establish brand equity – Because the CRISP hearing test is a new product that will be
introduced from a new company, the test and company will have no brand equity established in
the marketplace. Consequently, it will be important to establish a brand name as soon as
possible through different marketing efforts. This weakness will be mitigated through
advertising in an effort to increase awareness. However, within the hearing care industry,
credentials are key, as stated above. Therefore, with CRISP, brand equity problems will also be
mitigated through Dr. Litovsky's own credibility and status within the hearing healthcare
industry.
Overcome reasons not to buy the test – Many audiologists and speech therapists use
audiometers for hearing tests and stop there. The problem with this is that the healthcare
professional will not know how well the patient will hear in a realistic environment following
surgical implantation of a cochlear implant or fitting of a hearing aid. Therefore, it will be
important to demonstrate to these audiologists how the CRISP hearing test can offer additional
functional benefits to complement the use of the audiometer. In addition, it will also be
important to make the healthcare provider aware that administering the CRISP hearing test will
be a revenue generator. This will be mitigated through our integrated marketing
communications plan.
In addition, within the hearing care industry, credentials are key; researchers, such as Dr.
Litovsky, who have deep industry experience and knowledge, are very well respected. This has
enabled them to develop an extensive network of contacts within the industry. Therefore,
products that such researchers develop have more credibility due to the researcher's own brand
equity, in terms of the underlying basis of trust and respect that has already been painstakingly
established over many years. Therefore, with Auris' current and future systems solutions, a key
barrier to entry is through Dr. Litovsky's own credibility and status within the hearing
healthcare industry and the significant learning curve advantage of developing such a
comprehensive test.
3.4 Sales Literature
Once funding has been secured, we will spend not more than a month in developing a
comprehensive company brochure, software demos, and a CD case for our first product. The
brochure will describe our company, as well as its product offerings, along with some other
product information for the same target customers. We will also incorporate the same brochure
into our web page.
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3.5 Technology
Auris Solutions' CRISP hearing test system is protected under United States patent #6,584,440.
As a brief description of the technology, CRISP hearing test is a method and system for testing
the speech intelligibility of a child comprises providing a set of target sounds as words in the
presence and absence of competing sound(s) of a variety of types so as to enable an analysis of
the aspects of competing sounds and their respective effects on the speech intelligibility of a
child. CRISP varies the locations at which competing sound(s) is provided, to enable an
evaluation of the sounds' effects on the spatial release from masking.
The target words used in the test are first determined to be within the vocabulary of the child.
The child is required to respond to the target word by selecting a picture representation of the
target word from among several picture choices, thus providing an interactive aspect to the
test. Optionally, a positive or negative reinforcement may be provided. The sound level at
which the target words are presented may vary adaptively according to the child's responses,
the change in sound level being determined by a set of rules. The test is repeated over several
target words and under a variety of types and locations of competing sounds, and the child's
responses are recorded in a results database. Users may further analyze the results to produce
customized output. The computerized system enables administering the test in a controlled
manner, analyzing the data, and further engaging the child.
3.6 Future Products
In addition to CRISP, Auris Solutions also has several other products in the pipeline that will
create a diversified portfolio of software testing solutions for the hearing care industry. The
new products are listed below, with current timelines.
Products Ready to be launched by 2005:
• Minimum Audible Angle (MAA): This test measures the smallest change in the position of
a sound that can be reliably discriminated. Typically, normal hearing adults can
discriminate differences of 1-2º, and children ages 5-6 perform similarly. However, hearing-
impaired people perform much worse, especially if they do not have binaural hearing. The
MAA test can be used to assess the benefits of having two cochlear implants, two hearing
aids, or one of each, for both children and adults. This product will be ready for launch in
2005, and targeted to the same customer segments as the CRISP test. An owner's manual
has been completed for this product. A price range has been established between $800 and
$1,000.
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Products in the Pipeline:
• CRISP Junior: A variation of CRISP for children of ages ranging from 2 to 3 years old.
• Sentence Materials: A variation of CRISP where the child would repeat the sentence that
s/he heard rather than responding to pictures in the screen.
• Echo Suppression: The ability of the auditory system to process sounds in the real world
depends on how well people can ignore echoes, which are abundant in every room. The
task is similar to the MAA test (above) except that a simulated echo is also presented from
one loudspeaker in the center. Young children are worse than adults at suppressing echoes,
due to their immature hearing. This test provides a very useful assessment tool for the
maturation of the binaural hearing system, and can be used in children and adults.
• ERISP Test (Elder's Realistic Intelligibility and Speech Perception): A variation of
CRISP for the implementation of hearing tests that are easily used by the elderly
population. The test assists in determining the degree of hearing loss, ability to hear in
noisy environments, and benefit of a hearing aid or cochlear implant for individual patients.
• Children with developmental disabilities (DD) and mental retardation (MR): Other
measures of hearing are being developed that will help to assess sensory and cognitive
deficits in children and adults with DD and MR. These tests would provide (1) tools for
further evaluating and differentiating between affected individuals and (2) insight into
development of appropriate tools for rehabilitation and training.
4.0 Market Analysis Summary
The US hearing care industry is composed of more than 105,000 practitioners (94,000 speech
pathologists, comprehensive and 11,000 audiologists) providing hearing care products and
services. This market class includes specialists that offer services to hearing impaired patients.
These services include several segments:
• Hearing rehabilitation, including the evaluation and rehabilitation of hearing-impaired

individuals.
• Advanced audio-diagnostic services, including the neuro-audiological evaluation and non-
medical diagnosis of hearing and balance disorders.
• Industrial and preventive audiological services, including noise level measurements,
dosimetry, and hearing screenings.
The CRISP test is expected to be offered to patients by all 3 service segments.
Typical Hearing Test Process
Typically, an individual undergoes the following process for hearing testing:
1. The patient or family makes an appointment with an audiologist or speech therapist at the
hospital or independent audiology clinic.
2. The patient is tested for hearing using a tone test delivered through an audiometer. The
patient will raise their right or left hand signaling to the clinician that the subject hears the
tone in that particular ear; in some cases an electronic method is used where the patient
will simply push a button when hearing the tone.
3. Based on the collected result, the clinician makes a clinical assessment of the individual's
ability to hear. If the individual is defined to have hearing loss, then the audiologist will
administer a tympanogram in order to test the mobility of patient's eardrum. The
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audiologist will also deliver a brainstem auditory evoked response to evaluate the health of
the cochlea.
4. The clinician then makes a recommendation as to whether or not the patient needs a
hearing aid or cochlear implant.
5. After installation, the settings on the hearing aid or cochlear implant are adjusted based on
trial and error.
Where Does the CRISP Test Fit into the Hearing Test Process?
After installing and adjusting the settings on the medical device, the clinician has no way to
know if the specific settings will actually be ideal for the patient to hear in the real world. The
CRISP test will allow the clinician to make specific adjustments to the hearing aid or cochlear
implant that best optimizes the patient's ability to hear. In this capacity, the CRISP test will fit
in just after step 5 of the above process; clinicians will be able to charge for this service.
In addition to testing hearing in patients who have no hearing devices, many patients seek
hearing care professionals to determine if another hearing aid or cochlear implant on the other
ear would benefit them. Currently, clinicians have no test that will assess the benefit of adding
another hearing device to the patient's regimen. Therefore, in this capacity, the CRISP test
would fall into steps 2 and 3. The CRISP would allow the clinician to definitively make a
recommendation to the patient regarding the addition of another medical hearing device.
Clinicians can also charge for this service.
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4.1 Market Segmentation
Auris Solutions will focus its marketing efforts towards the 105,000 audiologists and speech
pathologists who work in the organizations described below.
Customer Segments [1]
Benefit
Segment Description
Sought
Independent speech Health practitioners primarily engaged in diagnosing and
Functional
therapists and treating hearing speech, language, or relevant hearing
and emotional
audiologists problems.
Organizations with physicians and other medical staff
primarily engaged in providing a range of outpatient Functional
HMO medical centers
medical services to the health maintenance organization and emotional
(HMO) subscribers.
Facilities which provide medical, diagnostic, and treatment
Functional
Hospitals (non-HMO) services that include physician, nursing, and other health
and emotional
services to inpatients.
Establishments of health practitioners primarily engaged in
Hearing test service-
diagnosing and treating hearing speech, language, or Functional
based firms[2]
relevant hearing problems.
Hearing aid and Companies that manufacture cochlear implants and/or
cochlear implant hearing aids. Many of these companies also offer hearing Functional
manufacturers tests in addition to their medical devices.
_____________________________
[1] 2000 U.S. Census
[2] D&B Million Dollar Database (search of SIC 8099), 2003.
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Chart: Market Analysis (Pie)
Table: Market Analysis
Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Audiologists 21% 11,000 13,310 16,105 19,487 23,579 21.00%
Speech Pathologists 21% 94,000 113,740 137,625 166,526 201,496 21.00%
Total 21.00% 105,000 127,050 153,730 186,013 225,075 21.00%
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4.2 Industry Analysis
Auris Solutions' product offerings fall under the healthcare industry category, with a Standard
Industry code (SIC) 8099, and secondarily as part of the electromedical equipment industry,
with SIC 3845. Even during economic downturns, these markets have remained sheltered from
decreased spending.[1] Worldwide market growth for medical equipment and products is
estimated to be 12% as of 2003. U.S. companies are benefiting from sales of new technology
products, which are currently commanding a significant price premium. We feel that Auris
Solutions' product offerings will benefit from these trends, as CRISP is a highly technical
product, and it appears that the market will support a price premium.
_____________________________
[1] Standard & Poor's Industry Review, 2003.
4.2.1 Industry Participants
Companies in the hearing-care-testing industry generated approximately $200M of sales in

2003,[1] and the market is expected to grow in the range of 21% to 35% annually. Based on
our research, there are only 3 dominant players in this industry; collectively, they possess 52%
of the market share:
• HearUSA (29.5%)
• Bio-Logic (13%)
• National Hearing Centers (9%)
None of Auris Solutions' products will compete directly against the current hearing test
techniques, products or services offered by the above companies. Thus the Company is an
attractive potential strategic partner or acquisition target for the above listed companies.
_________________________
[1] D&B Million Dollar Database (search of SIC 8099 limited to hearing care products)
Page 16
4.2.2 Competition and Buying Patterns
Direct competitors of the Company include companies that offer software-based hearing tests
instead. We performed a thorough search using proprietary market research software and
found only a few companies that would compete directly against CRISP, although no companies
offer products comparable to the CRISP test. The results of our search are shown in the table
below.
Competition Analysis
Company Test Cost Benefit Problem

12 one-minute tests for estimating
Not ideal for
signal/noise (SNR) loss with high frequency
Speech in children and can't
Auditec $200 emphasis (HFE) to assess SNR loss and
noise (SIN) quickly calculate
HFE/low-pass filtered list to assess hearing
hearing threshold.
aid effectiveness in noise
Scaled down version of SIN. Used to Not ideal for
determine how much hearing aids help children and can't
Auditec (Quick SIN) $500
patient to hear; uses calibrated signal/noise quickly calculate
ratio hearing threshold.
Does not mimic
Digital real-world. Not
AUDIO-CD $25 Can use in your own home
Recordings designed for
children.
Pilot-Game
Phoenix Pure tone. Does not
Hearing $150 Tests hearing and speech using a CD game
Instruments mimic real world.
Test
Pure tone only.
For home use and clinical use. Used with Does not mimic real
Benson Tone test $50
Windows. world. Not made for
children.
Hearing aid Does not mimic real
Biotronic fitting $2,420 Helps to assess hearing aid regimen. world. Not made for
software children.
A typical private audiologist or hearing care professional sees approximately 10-12 patients per
day. These professionals purchase related hearing products based on reliability and the
perceived benefits for their patients. Based on our research, hearing care clinicians are
relatively price insensitive because they want to offer the best possible care for their patients.
In addition, our preliminary research revealed that hearing care professionals often purchase
from $500 up to $20,000 in related software/systems for conducting related hearing loss tests.
In addition, these individuals frequently become aware of new products from the following
mediums:
• Direct Mail Advertising

• Journal Publications
• Web searches and company websites
• Conferences & Trade Shows
• Direct Sales
Page 17
4.3 Target Market Segment Strategy
We plan to engage these potential customers principally through referrals, trade shows,
publications and direct advertising as well as through a small regional sales force. The
Independent Speech Therapists and Audiologists segment, as well as birthing hospitals (non-
HMO), are most likely to buy our products based on their superior functional benefits and
potential for new revenue generation by charging end-users for per test runs. Additionally,
some audiologists and speech therapists will be motivated to buy CRISP based on the intangible
benefits of feeling confident about their audiology clinic's services, if they are offering the most
comprehensive and innovative tests available to market.
In preparation for our marketing efforts, we have created a full contact list for all of our
targeted customers. In addition, although we will initially focus on customers in the U.S., we
will consider an opportunity to grow abroad upon international patent approval. [1] Indeed, just
recently, MED-EL,[2] an Austrian cochlear implant manufacturer, approached Auris to build an
alliance with Auris in order to create the German version of CRISP. Another company in South
Africa has requested to become a beta test site, and an Afrikaans version of CRISP is currently
in development.
_______________________________________________
[1] Auris Solutions has applied for patent approval in Europe and Asia.
[2] http://www.comprehensive.com/ENG/us/us_home.asp
4.3.1 Market Trends
Every day, 33 babies are born in the U.S. with profound hearing loss, with another 66 babies
born with partial hearing loss. This makes hearing loss the number one birth defect in America.
Consequently, nearly every state in the U.S. has recently passed a law requiring that infants be
screened for hearing loss.[1] It is estimated that if children with hearing loss do not receive early
special education costs, and has a lifetime cost of approximately $1 million per child to
society.[2] The costs to society of untreated hearing loss are estimated to amount to $56 billion
per year in the US, and $92 billion per year in Europe.[3] For adults, lack of early intervention
can lead to loss of jobs, emotional distress and even the inability to cope with cognitive
disorders such as Alzheimer's. This is important since hearing loss can begin as early as age 50.
In addition, since life expectancy can nowadays realistically reach to age 90 and beyond, an
individual could potentially be affected by hearing loss for half his/her entire life. Additionally,
as baby boomers reach retirement age, the number of Americans with hearing loss is expected
to reach nearly 60 million by 2030. Consequently, hearing care providers have a growing need
for tests that will assess hearing in a realistic environment in order to provide effective
intervention.
Technological advances – As technology evolves we will see advances in the way hearing
tests are conducted. For instance, Starkey Laboratories, a hearing instruments developer, is
launching what it claims is the first Web-based hearing check. It is doing so because it believes
such a move would drive hearing aid sales.[4] This online hearing-test method asks prospective
customers to answer a series of questions before listening to different tonal sounds. Once this
individual has been checked, they are given a diagnosis and, if required, a recommendation to
seek professional assistance. However, this test and similar ones are merely methods devised
Page 18
by hearing aid manufacturers to assist consumers to perform preliminary self-diagnoses, with

the ultimate goal of encouraging the individual to seek the help of a hearing professional.
Laws and Regulations – Another important development within this market is that
audiologists are now able to offer their services directly to Medicare beneficiaries. Previously,
Medicare required that beneficiaries with hearing loss or balance disorders obtain a physician
referral before seeing an audiologist. However, as of January 1, 2004, Medicare now recognizes
audiologists as autonomous health care providers. This is the result of the introduction of the
"Hearing-Health Accessibility Act of 2003" (S. 1647) by the U.S. Senate. We believe that this
regulation will enable audiologists to increase customer traffic. Consequently, these audiologists
will continue to search for more accurate and faster ways to serve their customers. For
example, the CRISP hearing test contributes to speeding the testing process to 2-3 times faster
than current ones (i.e. HINT test).
Nearly every state in the U.S. has recently passed a law requiring that infants be screened for
hearing loss.[5] Screening and monitoring infant and childhood hearing loss is a growing concern
as children with hearing loss often have slowed development with speech and lack of early
intervention can be very costly. Consequently, these laws have generated an overall increased
awareness and increased efforts to test and monitor children with hearing loss. Based on these
trends, we believe that Auris Solutions' CRISP will be an integral part of monitoring the ability
of children to hear and learn in a realistic environment.
Employment Growth – In order to keep up with the increased hearing testing in infants and
children, our research indicated that the number of speech-language pathology positions and
audiology positions are growing by 39% and 45% respectively, from 2000-2010,[6] making
these professions among the fastest growing in the country, ranked among the top 30 out of
700 professions. This is an important trend, as speech-language pathologists
and therapists and audiologists make up our primary customers.
____________________________
[1] Murphy, L. "New Laws a Boon for Diagnostic Firm: Bio-Logic Focusing on Hearing Tests."
Crain's Chicago Business: 60, Sep. 27, 1999.
[3] Source: Better Hearing Institute in the USA (http://www.hear-
it.org/page.dsp?forside=yes&area=138)
[4] Hearing test goes online; New Media Age: 10(1), July 18, 2002.
[5] Murphy, L. "New Laws a Boon for Diagnostic Firm: Bio-Logic Focusing on Hearing Tests."
Crain's Chicago Business: 60, Sep. 27, 1999.
[6] BLS, November 2001-Monthly Labor Review
Page 19
4.3.2 Market Needs
The majority of hearing-impaired individuals that use hearing-aids or that undergo surgery to
receive cochlear implants expect to hear well. However, the reality is that tens of thousand of
patients continue to experience severe difficulty hearing in the real world, away from the
clinical setting. This is primarily due to a clinician incorrectly adjusting the settings on the
medical device. Consequently, there is a large need by audiologists and speech therapists for a
hearing test that can quickly and accurately predict how well individuals, with either a cochlear
implant or a hearing aid, can hear in a noisy "real world" environment following installation of
the medical device. Such a test is especially important for children, as early intervention can
reduce slowed learning. It is estimated that if children with hearing loss do not receive early
special education costs and result in a lifetime cost of approximately $1 million per child. [1] In
adults, hearing loss can begin as early as age 50 and lack of early intervention can lead to loss
of jobs, emotional distress and even cognitive disorders. In addition, since life expectancy can
realistically reach to age 90 and beyond, an individual could potentially be affected by hearing
loss for half of his/her lifetime.
Pure tone hearing tests, which require audiometers and sound proof booths to deliver the tone,
are currently used to evaluate hearing loss. These tests evaluate fundamental hearing loss, but
cannot predict how well an individual will understand words and sentences in a realistic
environment. Current tests also cannot asses whether or not a second cochlear implant or
second hearing aid would significantly improve the hearing of a patient. This is important to
patients and their families as cochlear implants and hearing aids cost approximately $40,000
and $5,000, respectively, and are often not covered by insurance companies.
Key Benefits of Auris Solutions' CRISP Test for our Target Market
Based on our analysis of the industry, competing tests, and competitors, the key benefits to
audiologists that the CRISP hearing test can offer are listed in the table below.
• Can be used with young children

• Allows for 4 different types of noise sources that evaluate different types of masking signals
• Can quickly calculate speech reception thresholds, or percent correct scores for signal to
noise ratio. This process is considered intellectual property and is presently patented to the
Wisconsin Alumni Research Foundation (WARF).
• Tests patient's performance hearing speech in noise
• Mimics Real-world environment
• Can be used an unlimited number of times
• Can help to fine-tune hearing aid settings
• Tests cochlear implant efficacy
• Can help to fine-tune and evaluate the effectiveness of a cochlear implant + hearing aid
For the patient, this is anticipated to become a must-have test, since it will more accurately
refine his/her hearing device settings and optimize the patient's hearing in a noisy
environment. After spending nearly $5,000 for a hearing aid and/or more than $40,000 for a
cochlear implant, the patient would likely expect that s/he would be able to utilize his/her
hearing device to its utmost capacity in all real-world situations such as a ballgame, a concert,
a cocktail party, and especially the workplace or classroom setting. Additionally, this test will
also determine the efficacy of a second cochlear implant or hearing aid, or the benefits of a
combination of the two. The differences between the optimal and non-optimal setting of the
hearing device for the patient is stark; it can mean the difference between having emotional
Page 20
and mental problems associated with hearing ineffectively and the ability to enjoy a worry-free
life.
Hearing Aids – The CRISP hearing test will allow audiologists to make recommendations for a
hearing aid regimen; that is, specific recommendations with respect to microphone direction
and noise suppression. The test can also assess whether or not a patient needs one or two
hearing aids. Hearing aids typically cost $5,000 each, so this is an important decision for many
patients, especially since many insurance companies do not cover this device.
Cochlear Implants – The CRISP hearing test can help with recommendations about whether a
hearing aid is needed in one ear, given that there is a cochlear implant in the other ear. The
test can also assess whether or not the patient needs two cochlear implants. This is a very
important decision as cochlear implants cost about $25,000 on average.
Audiogram results – Sometimes an audiogram is normal, but the patient still has poor speech
and understanding. Auris Solutions' CRISP hearing test can pin-point whether or not this
problem is related to competing noises or the location of noises, which may help the patient
develop better speech and understanding.
Additional revenues for hearing care providers – The CRISP hearing test will also allow hearing
care professionals to charge for administering the CRISP test. Typically, hearing care clinics and
hospitals charge $35 to $200 per test. Therefore, we believe that audiologists and speech
therapists will view this test as a value-added product.
____________________________________
Page 21
5.0 Sales Forecast
Auris Solutions' sales projections include launching CRISP (June 2004), MAA (2005) and ERISP
(2006). Our goal is to attain sales above $11,000,000 in 5 years.
We're confident that once our target market adopts CRISP and they become aware of the
quality and reliability of our products, they will be motivated to explore and purchase more of
our offerings.
Table: Sales Forecast
Sales Forecast
Unit Sales
CRISP 192 346 622 1,120 2,016
MAA 115 207 373 671 1,207
ERISP 118 212 382 688 1,239
DD & MR 0 1,200 2,160 3,888 6,998
Total Unit Sales 425 1,965 3,537 6,367 11,460
Unit Prices Year 1 Year 2 Year 3 Year 4 Year 5

CRISP $2,500.00 $2,500.00 $2,500.00 $2,500.00 $2,500.00
MAA $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00
ERISP $2,500.00 $2,500.00 $2,500.00 $2,500.00 $2,500.00
DD & MR $0.00 $1,500.00 $1,500.00 $1,500.00 $1,500.00
Sales
CRISP $480,000 $864,000 $1,555,200 $2,799,360 $5,038,848
MAA $115,000 $207,000 $372,600 $670,680 $1,207,224
ERISP $295,000 $531,000 $955,800 $1,720,440 $3,096,792
DD & MR $0 $1,800,000 $3,240,000 $5,832,000 $10,497,600
Total Sales $890,000 $3,402,000 $6,123,600 $11,022,480 $19,840,464
Direct Unit Costs Year 1 Year 2 Year 3 Year 4 Year 5

CRISP $500.00 $500.00 $500.00 $500.00 $500.00
MAA $200.00 $200.00 $200.00 $200.00 $200.00
ERISP $500.00 $500.00 $500.00 $500.00 $500.00
DD & MR $0.00 $150.00 $150.00 $150.00 $150.00
Direct Cost of Sales

CRISP $96,000 $172,800 $311,040 $559,872 $1,007,770
MAA $23,000 $41,400 $74,520 $134,136 $241,445
ERISP $59,000 $106,200 $191,160 $344,088 $619,358
DD & MR $0 $180,000 $324,000 $583,200 $1,049,760
Subtotal Direct Cost of Sales $178,000 $500,400 $900,720 $1,621,296 $2,918,333
Page 22
Chart: Sales Monthly
Chart: Sales by Year
Page 23
6.0 Management Summary
At this time, Auris Solutions is composed of 4 key individuals. They are described below.
Chief Scientific Consultant – Ruth Litovsky, PhD – Ruth Litovsky is the Chief Scientific
Consultant. She is currently a researcher at the Waisman Center, as well as an Assistant
Professor at the University of Wisconsin-Madison. Dr. Litovsky has over 20 years of experience
within the hearing care industry and has published over 27 peer reviewed articles in numerous
industry journals. Dr. Litovsky serves as a highly regarded consultant for the Cochlear
Corporation, the Department of Otolaryngology at UC-Irvine, and the Laboratory of Physiology
at the University of Oxford, UK.
Software Developer – Gongqiang Yu, PhD – Gongqiang Yu is the software developer behind
CRISP. He is currently a researcher at the Waisman Center under the supervision of Ruth
Litovsky. Mr. Yu has post-doctoral training and a Ph.D. from the Department of Physics at the
National University of Singapore. His area of research is psychoacoustics of directional hearing,
with an emphasis on the precedence effect.
Marketing Manager – Kim-Anh To, MBA – Kim-Anh is the company's marketing manager and
co-founder. Ms. To has an MBA with a focus in Entrepreneurship/Marketing as well as a degree
in Anthropology from the University of Wisconsin-Madison. Kim-Anh has over 7 years
experience as a small business manager and 2 years of business consulting experience.
Business Manager – Jose O. Rivera, MBA, BSCE – Jose is the company's business manager and
co-founder. Mr. Rivera has an MBA with a focus in Entrepreneurship from the University of
Wisconsin-Madison, and a degree in engineering from the Polytechnic University of Puerto Rico.
He has extensive experience in managing multimillion-dollar operations and 2 years of
consulting experience developing growth and marketing strategies for companies in Wisconsin.
Upon achieving a sustainable growth, Auris Solutions seeks to hire key employees to further
advance the company.
6.1 Organizational Structure
Jose Orlando Rivera, Business Manager, is responsible for overall business management. All
functional operations and their respective managers or employees report directly to Jose
Orlando. Kim-Anh To, Marketing Manager, is responsible for all the marketing and sales efforts.
Sales and marketing consultants will report to her. Both Dr Litovsky and Dr. Yu are engaged as
the company's consultants, which means that they will not collect salaries and benefits.
Instead, they both will receive professional service compensations when consulting services are
incurred.
As co-owners, Jose and Kim-Anh jointly develop business strategy and long-term plans. Jose is
strong on creating cost-effective strategies, and management of operations and human/capital
resources. Kim-Anh is strong on marketing and micro-management.
Page 24
6.2 Management Team
Resumes:
José Orlando Rivera
Kim-Anh To
Ruth Y. Litovsky, PhD.
• CRISP Grants to Date
Gongqiang Yu, Ph.D.
6.3 Management Team Gaps
The one significant management gap remaining is a CEO with extensive business and industry
experience. We hope that with the help of external investors, we will be able to fill this key
position as soon as possible. In the meantime, Auris Solutions' management has assembled a
highly respected team of hearing industry professionals to serve on its Advisory Board. We
believe that these individuals will contribute in closing the technological and business gaps that
our company has at the time. They are described below.
Fan-Gang Zeng, Ph.D. - Dr. Zeng is Research Director in the Department of Otolaryngology –
Head and Neck Surgery, and Director of the Hearing and Speech Research Laboratory at the
University of California, Irvine. He holds a tenure Associate Professorship in four different
departments including, Anatomy and Neurobiology, Biomedical Engineering, Cognitive Sciences,
and Otolaryngology. Dr. Zeng has gained an international reputation for his research in neural
prostheses, auditory perception, and speech processing. He has more than 50 publications in
these areas including 2 papers in Science magazine and 3 patents in the design of cochlear
implants.
Sigfrid D. Soli, Ph.D. - Dr. Soli is currently VP of Technology Transfer and Head of the
Department of Human Communication Sciences and Devices, at the House Ear Institute in Los
Angeles, CA. He is a fellow of the Acoustical Society of America and has been chair to numerous
NIDCD review panels. Dr. Soli also still serves as a consultant to the Committee on Disability
Determination for Individuals with Hearing Impairment, National Research Council. Dr. Soli has
published more than 30 articles relating to speech and hearing, especially with regards to
electrical hearing mechanisms such as hearing aids. Additionally, Dr. Soli holds 17 patents,
many related to the Hearing in Noise Test (HINT) that he developed in 1993.
Jane Reger Madell, Ph.D. – Dr. Madell is the Director of the Hearing and Learning Center and
Co-Director of the Cochlear Implant Center of the Beth Israel Medical Center. Dr. Madell is also
Professor of Clinical Otolaryngology at the Albert Einstein College of Medicine. Dr. Madell is a
licensed audiologist and is certified to practice in 3 states. Dr. Madell is a fellow of the American
Speech Language Hearing Association, and was Chair of a Special Interest Group on Hearing in
Childhood. Additionally, she serves on the Editorial Board of Audiology Today, an industry trade
journal. Dr. Madell has published over 60 articles and books, primarily focused on hearing in
children.
Page 25
Mark Clear – Mr. Clear co-founded Integrated Media Solutions in 1995, and is the current CEO.
Consulting extensively with clients in health care, financial services, media, technology,
manufacturing, and retail sectors, Mark has a solid familiarity with current Internet issues and
trends, and experience matching new technologies to real-world applications. His specialty is
analyzing customer needs, helping them re-think the way they do business, and recommending
Internet solutions that create efficiencies in their business processes. Mark has 18 years of
experience in technology and customer service. His background includes ten years of
experience in technical writing, database development, and system administration. He also
serves on the board of the Four Lakes chapter of the Society for Technical Communication, and
writes a periodic column on Internet business issues for the Capital Times in Madison.
7.0 Personnel Plan
Our Personnel Plan shows the deferred salaries of the principal employees and consultants, as
well as our increasing use of outside software consultants in years 2 through 5, as we develop
further products.
8.0 Financial Plan
Auris is seeking $250,00 in funding to finance the start-up cost of the Company, which includes
exclusively licensing CRISP technology from WARF, and making the necessary software
enhancements to make CRISP ready for delivery, which would include packaging, an instruction
manual, demos, and tech support. Additional funding is necessary for research and
development of future hearing systems, as mentioned in the Future Products and Services
Section. Finally, the additional financing will be used by Auris Solutions to purchase the
necessary capital equipment needed to expand the business especially as regards to
international opportunities.
Structuring Control of Auris Solutions' Board
Auris proposes a Board consisting of three members, where one director is elected by the
founders, one director elected by the investors, and a third neutral director selected by both
founders and external investors or by a designated third party.
Page 26
8.1 Start-up Funding
Auris is seeking $250,00 in investment funding to finance the start-up cost of the company.
Table: Start-up Funding
Start-up Funding
Start-up Expenses to Fund $203,100
Start-up Assets to Fund $46,900
Total Funding Required $250,000
Assets
Non-cash Assets from Start-up $0
Cash Requirements from Start-up $46,900
Additional Cash Raised $0
Cash Balance on Starting Date $46,900
Total Assets $46,900
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
Investor 1 $250,000
Investor 2 $0
Other $0
Additional Investment Requirement $0
Total Planned Investment $250,000
Loss at Start-up (Start-up Expenses) ($203,100)

Total Capital $46,900
Total Capital and Liabilities $46,900
Total Funding $250,000
Page 27
8.2 The Investment Offering
Auris Solutions plans to be a privately-held, Limited Liability Corporation, with Dr. Litovsky as
one of the owners and the key driver of research and new product development. However, we
believe that in order to attract talented management, we will need to create a stock option pool
not higher than 45% of the total shares. See the table below for an ownership breakdown.
Owners % Ownership
Dr. Litovsky 20% Max
Stock Option Pool 45% Max
Investors 35% Max
Auris proposes participating shares for our external investors in exchange for $250,000
funding. The Company is willing to offer up to 35% of equity stake in the company for the
requested funding. In addition to funding, we are looking for investors with business,
management and industry experience.
Auris understands that the investor's goal is to liquefy the investment at a substantial profit
when the company's value has been maximized through astute management and careful
supervision. Auris Solutions' exit strategy is a sale of the Company within five to seven years,
where the investor's preferred participating stock would be entitled to a double dip provision.
We believe that Auris Solutions could be sold for 7 to 10 times EBIT in year 5, based on
comparable deals in the hearing care industry.
Page 28
Table: Investment Offering
Investment Offering Seed Round 1 Round 2 Exit

Proposed Year: 2004 2005 2006 2009
Valuation, Investment, Shares

Investment Amount $250,000 $0 $0
Equity Share Offering Percentage 35.00% 0.00% 0.00%
Valuation $714,286 $0 $0 $91,000,000
Investor Exit Payout $31,850,000 $0 $0
Investor Years Until Exit 5 4 3
Investor IRR 163.65% 0.00% 0.00%
Share Ownership Year 2004 Year 2005 Year 2006 Year 2009
Founders' Shares 100,000 100,000 100,000 100,000
Stock Split Multiple 0 0 0
Stock Options Issued 20,000 0 0 0
Investor Shares Issued 64,615 0 0
Price per share $3.87 $0.00 $0.00 $492.92
Options Holders' Shares 20,000 20,000 20,000 20,000
Year 2004 Investors' Shares 64,615 64,615 64,615 64,615
Year 2005 Investors' Shares 0 0 0
Year 2006 Investors' Shares 0 0
Total Shares Outstanding 184,615 184,615 184,615 184,615
Equity Ownership Percentage Year 2004 Year 2005 Year 2006 Year 2009
Founders' Equity 54.17% 54.17% 54.17% 54.17%
Option Holders' Equity 10.83% 10.83% 10.83% 10.83%
Year 2004 Investors' Equity 35.00% 35.00% 35.00% 35.00%
Year 2005 Investors' Equity 0.00% 0.00% 0.00%
Year 2006 Investors' Equity 0.00% 0.00%
Total Equity 100.00% 100.00% 100.00% 100.00%
Investors' Equity 35.00% 35.00% 35.00% 35.00%
Founders' & Employees' Equity 65.00% 65.00% 65.00% 65.00%
Page 29
8.3 Funding History
To date, Auris Solutions has depended primarily on grants to finance research and operations.
Auris Solutions' CRISP has been awarded competitive grants from various federal agencies,
including the National Institutes of Health (NIH), National Science Foundation (NSF), and the
U.S. Department of Energy (DOE), totaling $550,000. These grants are typically awarded to
companies or scientists with technology that has high potential for development and
commercialization. Dr. Litovsky has also applied for additional grants, in particular, the Small
Business Innovation Research (SBIR) grant. The table below outlines the grants that she has
received or that are currently pending:
Amount Year
Granting Agency
Received Received
National Organization For Hearing
$10K 1997
Research
Deafness Research Foundation $20K 2001
National Institute of Health (NIH) $30K 1999 – 2001
UIR – WARF $70K 2002 – 2003
Small Business Innovation Research
(pending)
(SBIR)
TOTAL $550K
Page 30
8.4 Important Assumptions
• The CRISP hearing tests have been priced between $2,000 and $2,500, based on a market
reference value plus a differentiation value. We used a price of $2,500 in our projected
income statement.
• Cost of sales includes the cost of copying, packaging and printing the software and
instruction manual. Cost of sales also includes per copy royalty paid to WARF, which is
estimated at 10% of the retail price of the software.
• The financial projections include $100,000 of external seed funding.
• In addition to salary, the key employees of Auris Solutions, LLC will be granted stock
options from the stock option pool; Dr. Litovsky (also equity stakeholder) and Dr. Yu are
acting as the company's scientific officer and software developer accordingly.
• Auris Solutions plans to launch Minimum Audible Angle (MAA) and Elder's Realistic
Intelligibility and Seech Perception (ERISP) in year 2005, and software for Children with
Developmental Disabilities (DD) & Mental Retardation (MR) in 2006.
• Operating expenses includes Research and Development costs of $2 million over five years.
Patent amortization is straight line over 17 years.
• Income tax is assumed at 30%.
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 30.00% 30.00% 30.00% 30.00% 30.00%
Other 0 0 0 0 0
Page 31
8.5 Break-even Analysis
Please note that we have calculated the cost of the proprietary software and the packaging at
$418.82, with an average sale price of $2,094.12. We are not using a mark-up approach for the
software pricing because the costs of developing the software are considerably low. We based
our sale price of the software on comparable software available on the market (reference value)
as well as testimony of various audiologists during our market research process (differentiation
value).
Based on the above assumptions, the company would have to sell units as detailed in the
breakeven analysis table.
Table: Break-even Analysis
Break-even Analysis
Monthly Units Break-even 18

Monthly Revenue Break-even $37,364
Assumptions:
Average Per-Unit Revenue $2,094.12
Average Per-Unit Variable Cost $418.82
Estimated Monthly Fixed Cost $29,891
Chart: Break-even Analysis
Page 32
8.6 Projected Profit and Loss
We plan to properly use our funding. Auris Solutions' products are now being developed by Dr.
Litovsky at the Waisman Center of UW-Madison. For that reason our Research and
Development expenses for 2005 are $0, which assists in minimizing costs associated with
creating our future products, consequently maintaining competitive profit ratios. As shown in
the Profit and Loss Statement, below, the founders will postpone their compensations, which
will help in creating positive profits for the 1st year. We plan to use our consultants' services as
required.
Chart: Profit Monthly
Chart: Profit Yearly
Page 33
Chart: Gross Margin Monthly
Chart: Gross Margin Yearly
Page 34
Table: Profit and Loss
Pro Forma Profit and Loss

Sales $890,000 $3,402,000 $6,123,600 $11,022,480 $19,840,464
Direct Cost of Sales $178,000 $500,400 $900,720 $1,621,296 $2,918,333
Other Costs of Goods $0 $0 $0 $0 $0
Total Cost of Sales $178,000 $500,400 $900,720 $1,621,296 $2,918,333
Gross Margin $712,000 $2,901,600 $5,222,880 $9,401,184 $16,922,131

Gross Margin % 80.00% 85.29% 85.29% 85.29% 85.29%
Expenses
Payroll $147,000 $444,000 $722,000 $1,047,700 $1,261,625
Sales and Marketing and Other Expenses $113,654 $227,309 $454,617 $909,234 $1,818,469
Depreciation $60,187 $62,441 $81,841 $81,841 $121,841
Rent $5,000 $9,000 $16,200 $29,160 $52,488
Utilities $800 $920 $1,058 $1,217 $1,399
Insurance $10,000 $10,000 $10,000 $10,000 $10,000
Payroll Taxes $22,050 $66,600 $108,300 $157,155 $189,244
Other $0 $0 $0 $0 $0
Total Operating Expenses $358,691 $820,270 $1,394,016 $2,236,307 $3,455,066
Profit Before Interest and Taxes $264,309 $1,241,130 $2,216,504 $4,562,629 $9,483,019
EBITDA $324,496 $1,303,571 $2,298,345 $4,644,470 $9,604,860
Interest Expense $0 $0 $0 $0 $0
Taxes Incurred $79,293 $372,339 $664,951 $1,368,789 $2,844,906
Other Income
Interest Income $0 $0 $0 $0 $0
Other Income Account Name $0 $0 $0 $0 $0
Total Other Income $0 $0 $0 $0 $0
Other Expense
R&D $0 $500,000 $1,000,000 $1,500,000 $2,000,000
Licensing & Royalties $89,000 $340,200 $612,360 $1,102,248 $1,984,046
Total Other Expense $89,000 $840,200 $1,612,360 $2,602,248 $3,984,046
Net Other Income ($89,000) ($840,200) ($1,612,360) ($2,602,248) ($3,984,046)

Net Profit $185,016 $868,791 $1,551,553 $3,193,840 $6,638,113
Net Profit/Sales 20.79% 25.54% 25.34% 28.98% 33.46%
Page 35
8.7 Projected Cash Flow
Detailed projected income statements, balance sheets and cash flows for years 2004 through
2008 are included in Appendix 2. We believe that by year-end 2004 we should be able to sell
45 copies of the software, which is a very conservative estimate, as the company has already
encountered a substantial amount of interest in CRISP at the various conferences and
tradeshows attended by Dr. Litovsky. This number is also conservative based on the number of
speech therapists and audiologists, HMO Medical Centers and hospitals there are in the United
States, according to the latest year 2000 census.
We believe that the majority of revenue will come from software sales. Software sales are
projected to grow from 425 units for the partial-year 2004 to over 11,000 units within five
years. This figure includes the introduction of ERISP and the MAA tests in year two, and the DD
and MR test in year three.
An additional $4.5M (max) will be spent on Research and Development activities over the next
5 years to develop future products. Auris Solutions' R&D effort is focused on two main areas:
extension and expansion of the current proprietary technology, and research and development
of new product lines. Sales and marketing expenses are expected to increase over 10% every
year. This includes advertising and promotional spending to support growing product sales, as
well as website maintenance; we believe that marketing will play an important role in our sales.
Sales and marketing expenses exclude the travel costs for Dr. Litovsky to promote her
technology at various conferences.
*Note: The 'Dividends' row currently shows $0 for all years; actual dividend amounts will be
negotiated with the investors.
Chart: Cash
Page 36
Table: Cash Flow
Pro Forma Cash Flow

Cash Received
Cash from Operations

Cash Sales $356,000 $1,360,800 $2,449,440 $4,408,992 $7,936,186
Cash from Receivables $249,600 $1,238,489 $2,804,471 $5,048,048 $9,086,487
Subtotal Cash from Operations $605,600 $2,599,289 $5,253,911 $9,457,040 $17,022,672
Additional Cash Received

Non Operating (Other) Income $0 $0 $0 $0 $0
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 $0 $0 $0 $0 $0
Subtotal Cash Received $605,600 $2,599,289 $5,253,911 $9,457,040 $17,022,672
Expenditures Year 1 Year 2 Year 3 Year 4 Year 5
Expenditures from Operations

Cash Spending $147,000 $444,000 $722,000 $1,047,700 $1,261,625
Bill Payments $292,178 $1,205,661 $2,076,180 $3,937,316 $7,527,606
Subtotal Spent on Operations $439,178 $1,649,661 $2,798,180 $4,985,016 $8,789,231
Additional Cash Spent

Non Operating (Other) Expense $89,000 $840,200 $1,612,360 $2,602,248 $3,984,046
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 $528,178 $2,489,861 $4,410,540 $7,587,264 $12,773,278
Net Cash Flow $77,422 $109,428 $843,372 $1,869,776 $4,249,394

Cash Balance $124,322 $233,750 $1,077,122 $2,946,898 $7,196,293
Page 37
8.8 Projected Balance Sheet
As shown in the balance sheet in the following table, we expect a healthy growth in net worth
by the end of the plan period. The monthly projections are in the appendices.
Table: Balance Sheet
Pro Forma Balance Sheet

Assets
Current Assets
Cash $124,322 $233,750 $1,077,122 $2,946,898 $7,196,293
Accounts Receivable $284,400 $1,087,111 $1,956,800 $3,522,240 $6,340,031
Other Current Assets $0 $0 $0 $0 $0
Total Current Assets $408,722 $1,320,861 $3,033,922 $6,469,138 $13,536,324
Long-term Assets
Long-term Assets $0 $0 $0 $0 $0
Accumulated Depreciation $60,187 $122,628 $204,469 $286,310 $408,151
Total Long-term Assets ($60,187) ($122,628) ($204,469) ($286,310) ($408,151)
Total Assets $348,535 $1,198,233 $2,829,453 $6,182,828 $13,128,173
Liabilities and Capital Year 1 Year 2 Year 3 Year 4 Year 5
Current Liabilities
Accounts Payable $116,619 $97,526 $177,193 $336,727 $643,959
Current Borrowing $0 $0 $0 $0 $0
Other Current Liabilities $0 $0 $0 $0 $0
Subtotal Current Liabilities $116,619 $97,526 $177,193 $336,727 $643,959
Long-term Liabilities $0 $0 $0 $0 $0
Total Liabilities $116,619 $97,526 $177,193 $336,727 $643,959
Paid-in Capital $250,000 $250,000 $250,000 $250,000 $250,000

Retained Earnings ($203,100) ($18,084) $850,707 $2,402,260 $5,596,100
Earnings $185,016 $868,791 $1,551,553 $3,193,840 $6,638,113
Total Capital $231,916 $1,100,707 $2,652,260 $5,846,100 $12,484,214
Total Liabilities and Capital $348,535 $1,198,233 $2,829,453 $6,182,828 $13,128,173
Net Worth $231,916 $1,100,707 $2,652,260 $5,846,100 $12,484,214
8.9 Business Ratios
Standard business are included in the following table. These ratios correspond to the selected
industry category (Application computer software, SIC code 7372.9901), which was selected to
match our business. Any discrepancy with the industry standard might be explained by our low
capital needs and liabilities as well as by our low initial investment to develop our products;
products are being develop by consultants at UW-Madison. However, the ratios show a plan for
balanced, healthy growth. Special attention will be paid to our collection days in order
to minimize the amount of days we are awaiting payment.
Page 38
Table: Ratios
Ratio Analysis
Year 1 Year 2 Year 3 Year 4 Year 5 Industry Profile
Sales Growth n.a. 282.25% 80.00% 80.00% 80.00% 10.27%
Percent of Total Assets
Accounts Receivable 81.60% 90.73% 69.16% 56.97% 48.29% 23.57%
Other Current Assets 0.00% 0.00% 0.00% 0.00% 0.00% 41.50%
Total Current Assets 117.27% 110.23% 107.23% 104.63% 103.11% 68.84%
Long-term Assets -17.27% -10.23% -7.23% -4.63% -3.11% 31.16%
Total Assets 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Current Liabilities 33.46% 8.14% 6.26% 5.45% 4.91% 35.07%

Long-term Liabilities 0.00% 0.00% 0.00% 0.00% 0.00% 20.22%
Total Liabilities 33.46% 8.14% 6.26% 5.45% 4.91% 55.29%
Net Worth 66.54% 91.86% 93.74% 94.55% 95.09% 44.71%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Gross Margin 80.00% 85.29% 85.29% 85.29% 85.29% 100.00%
Selling, General & Administrative
62.21% 67.16% 67.85% 63.40% 57.86% 81.88%
Expenses
Advertising Expenses 6.39% 3.34% 3.71% 4.12% 4.58% 1.23%
Profit Before Interest and Taxes 29.70% 36.48% 36.20% 41.39% 47.80% 1.18%
Main Ratios
Current 3.50 13.54 17.12 19.21 21.02 1.46
Quick 3.50 13.54 17.12 19.21 21.02 1.12
Total Debt to Total Assets 33.46% 8.14% 6.26% 5.45% 4.91% 1.98%
Pre-tax Return on Net Worth 113.97% 112.76% 83.57% 78.05% 75.96% 64.10%
Pre-tax Return on Assets 75.83% 103.58% 78.34% 73.80% 72.23% 5.51%
Additional Ratios Year 1 Year 2 Year 3 Year 4 Year 5

Net Profit Margin 20.79% 25.54% 25.34% 28.98% 33.46% n.a
Return on Equity 79.78% 78.93% 58.50% 54.63% 53.17% n.a
Activity Ratios
Accounts Receivable Turnover 1.88 1.88 1.88 1.88 1.88 n.a
Collection Days 50 123 151 151 151 n.a
Accounts Payable Turnover 3.51 12.17 12.17 12.17 12.17 n.a
Payment Days 27 33 23 23 23 n.a
Total Asset Turnover 2.55 2.84 2.16 1.78 1.51 n.a
Debt Ratios
Debt to Net Worth 0.50 0.09 0.07 0.06 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 $292,103 $1,223,335 $2,856,729 $6,132,410 $12,892,365 n.a
Interest Coverage 0.00 0.00 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.39 0.35 0.46 0.56 0.66 n.a
Current Debt/Total Assets 33% 8% 6% 5% 5% n.a
Acid Test 1.07 2.40 6.08 8.75 11.18 n.a
Sales/Net Worth 3.84 3.09 2.31 1.89 1.59 n.a
Dividend Payout 0.00 0.00 0.00 0.00 0.00 n.a
Page 39
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
CRISP 0% 0 5 9 9 9 14 14 14 18 20 30 50
MAA 0% 0 0 0 0 0 0 0 0 15 20 30 50
ERISP 0% 0 0 0 0 0 0 0 0 18 20 30 50
DD & MR 0% 0 0 0 0 0 0 0 0 0 0 0 0
Total Unit Sales 0 5 9 9 9 14 14 14 51 60 90 150
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
CRISP $2,500.00 $2,500.00 $2,500.00 $2,500.00 $2,500.00 $2,500.00 $2,500.00 $2,500.00 $2,500.00 $2,500.00 $2,500.00 $2,500.00
MAA $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00
ERISP $2,500.00 $2,500.00 $2,500.00 $2,500.00 $2,500.00 $2,500.00 $2,500.00 $2,500.00 $2,500.00 $2,500.00 $2,500.00 $2,500.00
DD & MR $1,500.00 $1,500.00 $1,500.00 $1,500.00 $1,500.00 $1,500.00 $1,500.00 $1,500.00 $1,500.00 $1,500.00 $1,500.00 $1,500.00
Sales
CRISP $0 $12,500 $22,500 $22,500 $22,500 $35,000 $35,000 $35,000 $45,000 $50,000 $75,000 $125,000
MAA $0 $0 $0 $0 $0 $0 $0 $0 $15,000 $20,000 $30,000 $50,000
ERISP $0 $0 $0 $0 $0 $0 $0 $0 $45,000 $50,000 $75,000 $125,000
DD & MR $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Sales $0 $12,500 $22,500 $22,500 $22,500 $35,000 $35,000 $35,000 $105,000 $120,000 $180,000 $300,000
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
CRISP 0.00% $500.00 $500.00 $500.00 $500.00 $500.00 $500.00 $500.00 $500.00 $500.00 $500.00 $500.00 $500.00
MAA 0.00% $200.00 $200.00 $200.00 $200.00 $200.00 $200.00 $200.00 $200.00 $200.00 $200.00 $200.00 $200.00
ERISP 0.00% $500.00 $500.00 $500.00 $500.00 $500.00 $500.00 $500.00 $500.00 $500.00 $500.00 $500.00 $500.00
DD & MR 0.00% $300.00 $300.00 $300.00 $300.00 $300.00 $300.00 $300.00 $300.00 $300.00 $300.00 $300.00 $300.00
Direct Cost of Sales

CRISP $0 $2,500 $4,500 $4,500 $4,500 $7,000 $7,000 $7,000 $9,000 $10,000 $15,000 $25,000
MAA $0 $0 $0 $0 $0 $0 $0 $0 $3,000 $4,000 $6,000 $10,000
ERISP $0 $0 $0 $0 $0 $0 $0 $0 $9,000 $10,000 $15,000 $25,000
DD & MR $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Direct Cost of Sales $0 $2,500 $4,500 $4,500 $4,500 $7,000 $7,000 $7,000 $21,000 $24,000 $36,000 $60,000
Page 1
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% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%
Other 0 0 0 0 0 0 0 0 0 0 0 0
Page 2
Appendix
Table: Profit and Loss
Pro Forma Profit and Loss

Sales $0 $12,500 $22,500 $22,500 $22,500 $35,000 $35,000 $35,000 $105,000 $120,000 $180,000 $300,000
Direct Cost of Sales $0 $2,500 $4,500 $4,500 $4,500 $7,000 $7,000 $7,000 $21,000 $24,000 $36,000 $60,000
Other Costs of Goods $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $0 $2,500 $4,500 $4,500 $4,500 $7,000 $7,000 $7,000 $21,000 $24,000 $36,000 $60,000
Gross Margin $0 $10,000 $18,000 $18,000 $18,000 $28,000 $28,000 $28,000 $84,000 $96,000 $144,000 $240,000
Gross Margin % 0.00% 80.00% 80.00% 80.00% 80.00% 80.00% 80.00% 80.00% 80.00% 80.00% 80.00% 80.00%
Expenses
Payroll $0 $0 $3,000 $3,000 $3,000 $7,000 $12,000 $11,000 $31,000 $23,000 $31,000 $23,000
Sales and Marketing and Other $0 $8,000 $8,400 $8,820 $9,261 $9,724 $10,210 $10,721 $11,257 $11,820 $12,411 $13,031
Expenses
Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $60,187
Rent $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $5,000
Utilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $800
Insurance $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $10,000
Payroll Taxes 15% $0 $0 $450 $450 $450 $1,050 $1,800 $1,650 $4,650 $3,450 $4,650 $3,450
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Operating Expenses $0 $8,000 $11,850 $12,270 $12,711 $17,774 $24,010 $23,371 $46,907 $38,270 $48,061 $115,468
Profit Before Interest and Taxes $0 $750 $3,900 $3,480 $3,039 $6,726 $490 $1,129 $26,593 $45,730 $77,939 $94,532
EBITDA $0 $750 $3,900 $3,480 $3,039 $6,726 $490 $1,129 $26,593 $45,730 $77,939 $154,719
Interest Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Taxes Incurred $0 $225 $1,170 $1,044 $912 $2,018 $147 $339 $7,978 $13,719 $23,382 $28,360
Other Income
Interest Income $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Income Account Name $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Other Income $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Expense
R&D $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Licensing & Royalties $0 $1,250 $2,250 $2,250 $2,250 $3,500 $3,500 $3,500 $10,500 $12,000 $18,000 $30,000
Total Other Expense $0 $1,250 $2,250 $2,250 $2,250 $3,500 $3,500 $3,500 $10,500 $12,000 $18,000 $30,000
Net Other Income $0 ($1,250) ($2,250) ($2,250) ($2,250) ($3,500) ($3,500) ($3,500) ($10,500) ($12,000) ($18,000) ($30,000)
Net Profit $0 $525 $2,730 $2,436 $2,127 $4,708 $343 $790 $18,615 $32,011 $54,558 $66,172
Net Profit/Sales 0.00% 4.20% 12.13% 10.83% 9.45% 13.45% 0.98% 2.26% 17.73% 26.68% 30.31% 22.06%
Page 3
Appendix
Table: Cash Flow
Pro Forma Cash Flow

Cash Received
Cash from Operations

Cash Sales $0 $5,000 $9,000 $9,000 $9,000 $14,000 $14,000 $14,000 $42,000 $48,000 $72,000 $120,000
Cash from Receivables $0 $0 $250 $7,700 $13,500 $13,500 $13,750 $21,000 $21,000 $22,400 $63,300 $73,200
Subtotal Cash from Operations $0 $5,000 $9,250 $16,700 $22,500 $27,500 $27,750 $35,000 $63,000 $70,400 $135,300 $193,200
Additional Cash Received

Non Operating (Other) Income $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
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 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Received $0 $5,000 $9,250 $16,700 $22,500 $27,500 $27,750 $35,000 $63,000 $70,400 $135,300 $193,200
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 $0 $0 $3,000 $3,000 $3,000 $7,000 $12,000 $11,000 $31,000 $23,000 $31,000 $23,000
Bill Payments $0 $358 $10,852 $14,530 $14,824 $15,278 $19,771 $19,176 $20,549 $45,155 $53,771 $77,916
Subtotal Spent on Operations $0 $358 $13,852 $17,530 $17,824 $22,278 $31,771 $30,176 $51,549 $68,155 $84,771 $100,916
Additional Cash Spent

Non Operating (Other) Expense $0 $1,250 $2,250 $2,250 $2,250 $3,500 $3,500 $3,500 $10,500 $12,000 $18,000 $30,000
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 $0 $1,608 $16,102 $19,780 $20,074 $25,778 $35,271 $33,676 $62,049 $80,155 $102,771 $130,916
Net Cash Flow $0 $3,393 ($6,852) ($3,080) $2,426 $1,722 ($7,521) $1,324 $951 ($9,755) $32,529 $62,284
Cash Balance $46,900 $50,293 $43,441 $40,361 $42,787 $44,509 $36,988 $38,312 $39,264 $29,509 $62,038 $124,322
Page 4
Appendix
Table: Balance Sheet
Pro Forma Balance Sheet
Assets Starting Balances
Current Assets
Cash $46,900 $46,900 $50,293 $43,441 $40,361 $42,787 $44,509 $36,988 $38,312 $39,264 $29,509 $62,038 $124,322
Accounts Receivable $0 $0 $7,500 $20,750 $26,550 $26,550 $34,050 $41,300 $41,300 $83,300 $132,900 $177,600 $284,400
Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Current Assets $46,900 $46,900 $57,793 $64,191 $66,911 $69,337 $78,559 $78,288 $79,612 $122,564 $162,409 $239,638 $408,722
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 $60,187
Total Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 ($60,187)
Total Assets $46,900 $46,900 $57,793 $64,191 $66,911 $69,337 $78,559 $78,288 $79,612 $122,564 $162,409 $239,638 $348,535
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 $0 $10,368 $14,036 $14,320 $14,619 $19,132 $18,519 $19,053 $43,389 $51,222 $73,894 $116,619
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 $0 $10,368 $14,036 $14,320 $14,619 $19,132 $18,519 $19,053 $43,389 $51,222 $73,894 $116,619
Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Liabilities $0 $0 $10,368 $14,036 $14,320 $14,619 $19,132 $18,519 $19,053 $43,389 $51,222 $73,894 $116,619
Paid-in Capital $250,000 $250,000 $250,000 $250,000 $250,000 $250,000 $250,000 $250,000 $250,000 $250,000 $250,000 $250,000 $250,000
Retained Earnings ($203,100) ($203,100) ($203,100) ($203,100) ($203,100) ($203,100) ($203,100) ($203,100) ($203,100) ($203,100) ($203,100) ($203,100) ($203,100)
Earnings $0 $0 $525 $3,255 $5,691 $7,818 $12,526 $12,869 $13,660 $32,275 $64,286 $118,844 $185,016
Total Capital $46,900 $46,900 $47,425 $50,155 $52,591 $54,718 $59,426 $59,769 $60,560 $79,175 $111,186 $165,744 $231,916
Total Liabilities and Capital $46,900 $46,900 $57,793 $64,191 $66,911 $69,337 $78,559 $78,288 $79,612 $122,564 $162,409 $239,638 $348,535
Net Worth $46,900 $46,900 $47,425 $50,155 $52,591 $54,718 $59,426 $59,769 $60,560 $79,175 $111,186 $165,744 $231,916
Page 5

Hearing Testing Systems Business Plan

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Hearing Testing Systems Business Plan

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This is a business plan. It does not imply an offering of securities.

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

8.4 Important Assumptions ....................................................................................................... 31

1.0 Executive Summary

The majority of hearing-impaired individuals who use hearing-aids or undergo surgery to

We stand by the following values:

• Corporate Responsibility - The Company will participate in community events.

1.3 Keys to Success

• Product Development and Product Quality:

• Management & Customer Service:

2.0 Company Summary

2.1 Start-up Summary

Total Requirements $250,000

2.2 Company Ownership

2.3 Company Locations and Facilities

To summarize, the CRISP test is:

Jane R. Madell, Ph.D.

Patricia Chute, Ph.D.

Richard Tyler, PhD.

3.1 Product Description

3.2 Competitive Comparison

Can't be used with children

Speech in noise for

Can't test speech in noise, nor spatial separation

Has a limited number of uses

Has a limited number of uses

3.3 Strengths and Challenges

Barriers to Entry Against Competition

Auris Solutions' Challenges

3.4 Sales Literature

3.6 Future Products

Products Ready to be launched by 2005:

Products in the Pipeline:

4.0 Market Analysis Summary

• Hearing rehabilitation, including the evaluation and rehabilitation of hearing-impaired

The CRISP test is expected to be offered to patients by all 3 service segments.

Typical Hearing Test Process

Typically, an individual undergoes the following process for hearing testing:

4.1 Market Segmentation

Customer Segments [1]

[1] 2000 U.S. Census

[2] D&B Million Dollar Database (search of SIC 8099), 2003.

Chart: Market Analysis (Pie)

Table: Market Analysis

4.2 Industry Analysis

[1] Standard & Poor's Industry Review, 2003.

4.2.1 Industry Participants

Companies in the hearing-care-testing industry generated approximately $200M of sales in

4.2.2 Competition and Buying Patterns

Company Test Cost Benefit Problem

• Direct Mail Advertising

4.3 Target Market Segment Strategy

4.3.1 Market Trends

by hearing aid manufacturers to assist consumers to perform preliminary self-diagnoses, with

[6] BLS, November 2001-Monthly Labor Review

4.3.2 Market Needs

• Can be used with young children

5.0 Sales Forecast

[Proprietary and confidential information removed.]

Table: Sales Forecast