Spine Tech Business Plan

a Digital Safari GreenBizz companyBusiness Plan Competition 2011

Elaine CotecsonChief Executive Officer

Gustavo GomezChief Financial Officer

John CrileyChief Technical Officer

ExecutiveSummary

“Feel Again, Move Again, Live Again.”

Spine Tech has a real solution for paraplegics and quadriplegics. That solution is the Power

Spine, and with it, mobility after paralysis becomes a reality.

Products/Services:

Spine Tech’s product is the Power Spine. The Power Spine is a spinal cord re-activator

designed for paralysis victims. It is made of titanium processors, spokes, and electri-

cal dynamo. The pacemaker-style generator powered by lithium-iodine batteries creates

electrical impulses that re-activate the nerves on the spinal cord. The spokes will serve

as a bridge to send the electrical impulses on the afferent pathway to the spine and brain

when necessary, and back down the efferent pathway to other parts of the body, replac-

ing major motor skills and allowing its users to “feel again, move again, live again.”

The Market and Opportunity:

Due to the number of potential customers and amount of money being spent for spinal

cord injury research, the Power Spine will be in constant demand, and it will be successful.

According to the Catastrophic Injury Resource Center, there are approximately 250,000

paraplegics and quadriplegics living in the United States today, making them Spine Tech’s

target customers. According to the United Spinal Association, costs range from $209,000 to

$710,000 in the first year after the injury , and between $14,000 and $127,000 every year thereaf-

ter. The National Spinal Cord Injury Statistical Center also reports that the United States spends over

$14.5 billion annually in direct medical costs and disability support, and lost productivity accounts

for an additional $5.5 billion. The Power Spine will help reduce these costs to virtually nothing by

giving mobility to paraplegics and quadriplegics, ridding them of the resposibility to pay for expenses

related to their injury.

Marketing and Advertising:

Spine Tech’s target customers are paraplegics and quadriplegics. The Power Spine will be pro-

moted through doctor and rehabilitation specialist referrals, as well as medical conferences. Printed

methods would include health and medical magazines, such as Medical News Today, BioMechan-

ics, Medical Device Technology, Outpatient Surgery, and Telemedicine Today. Public ads and bill-

boards with eye-catching simplicity and power will draw customers to Spine Tech as they contem-

plate dramatically changing their lives for the better. Spine Tech will target national talk shows such

as Oprah, Today, and Ellen to feature the Power Spine. A professional film maker will also be hired

to create a documentary of the whole installment process of the Power Spine to post on the official

website. When paraplegics and quadriplegics come across these forms of promotion for Spine

Tech, they will know that they have an opportunity to regain an ability that they thought was lost.

Competition:

There is no direct competition to the Power Spine. Other methods of helping paraplegics and

quadriplegics such as wheelchairs, exoskeletons, rehabilitation centers, and stem cell research,

give mobility, but they do not address the internal injuries suffered. Spine Tech permanently restores

major mobility skills through the Power Spine, and is guaranteed to be successful in the medical

device market.

Financials:

Spine Tech is expected to earn $75,000,000 by its fifth year in business. In order to reach that

point, we are requesting $1,200,000 in capital funding to meet initial investments.

Mission Statement:

To provide a direct, internal solution to severely damaged spinal cords, giving paraplegics

and quadriplegics the chance to “feel again, move again, and live again.”

Company History:

Students of the Digital Safari Academy sought out ways to improve human lifestyle by

creating a product designed for paralysis victims. John Criley, Spine Tech’s Chief Techni-

cal Officer, originally planned to make an entire robotic suit. The rest of his team, Elaine

Cotecson and Gustavo Gomez, did more research and found that the Berkeley Robotics

& Human Engineering Laboratory had already developed an exoskeleton designed to give

paralysis victims mobility. After receiving input from professional business mentors and in-

structors, they decided to focus their attention on severe spinal cord injuries. They created

Spine Tech, and with patented titanium technology, along with the application of an existing

power source, Elaine Cotecson, Gustavo Gomez, and John Criley invented the Power

Spine, a spinal cord re-activator that gives paralysis victims the ability to move again.

CompanyProfile

As Chief Executive Officer, Elaine is responsible for the success of Spine Tech. She

oversees operations, marketing strategies, company financing, creation of company culture, human

resources, and safety. Her main duty is to set strategy and vision for Spine Tech, ultimately setting

the direction of the company. Not a single feature of the Power Spine goes unnoticed.

Elaine embraces the leadership role of this project. Her previous works prove that she is

more than qualified to take on the position of Chief Executive Officer. In the summer of 2010, she

took part in a 6-week internship at Kaiser Permanente Hospital producing, directing, filming, and ed-

iting videos on workplace safety and patient care for the Emergency Department. She was exposed

to the medical environment on a regular basis, allowing her to learn hospital procedures and patient

care. Her experience gives her the knowledge necessary to run a medical facility and take part in

the medical device market. During the 2008-2009 school year, she served as the secretary of her

class, working hand-in-hand with the class president to plan, prepare, and lead activities that raise

money for the graduating class of 2011. Elaine has produced, directed, filmed, and edited a video

project called “Speaking of I.D.entity,” where she also had to compose and record an original song

that reveals her true self. She then performed her entire presentation in front of a public audience.

“We Are Mount Diablo: Issues of Ethnicity and Culture at MDHS” was another project Elaine led, re-

quiring her to produce, direct, film, and edit two whole documentaries portraying the struggle of kids

in America with immigrant parents and family members who have expectations when it comes to

career choices. The success of the group was evident in the delivery of the message portrayed by

the documentaries. A common, but often overlooked, issue was brought to the surface by Elaine’s

team, creating awareness and assurance for those experiencing the same conflicts that they are

not alone.

Elaine Cotecson

Chief Executive Officer

The responsibilities of Spine Tech’s Chief Financial Officer, Gustavo Gomez,

include controlling cash flow, company liabilities, budgeting and expenses, and maintaining

communication with financing sources such as investment bankers, financial analysts, and

shareholders. Insurance is also an area of concentration for Gustavo. He sees to it that the

Power Spine’s users receive coverage and as much financial aid as possible.

Gustavo has worked on numerous video projects and is skilled at Photoshop,

as well as music production. He is also skilled at creating and editing music, as well as

editing and creating new pictures. These skills play a major role in the promotion of the

Power Spine, especially when designing and creating visuals that appeal to Spine Tech’s

target customers. Gustavo has also worked on a poverty solution project for the country of

Sri Lanka, requiring that he have a fundamental idea of how to manage costs and use re-

sources wisely. This knowledge is essential to Spine Tech’s financial stability, along with the

dedication and time management skills that were necessary to carry out these important

tasks.

Gustavo Gomez

Chief Financial Officer

As Chief Technical Officer, John Criley oversees research and development activities, and

focuses on scientific and technological issues within Spine Tech. With his technological background

and experience, John is a reliable technical source for the Power Spine’s users. He sees to it that all

equipment needed for operation, assembling, surgery, and maintenance continue to run efficiently.

He also plays a role in marketing as he and Gustavo work together to create print advertisements

for Spine Tech and discuss marketing strategies with Elaine to further the promotion of the Power

Spine.

John developed a water purification plant for the country of El Salvador in a project called

“Legacy of Imperialism.” He invented a plan that would improve the water sanitation system in El Sal-

vador, supplying towns with clean and reusable water, also creating jobs for the country’s citizens.

He also produced a movie called “Speaking of I.D.enitity,” and a documentary for the project called

“We Are Mount Diablo: Issues of Ethnicity and Culture at MDHS,” developing creativity and multime-

dia skills. John’s biggest qualification for being Spine Tech’s Chief Technical Officer is his knowledge

of robotics and computer command technology that is used by the Power Spine’s competition. He

has experience in machinery maintenance, and programming command-controlled movements in

robotics. He learned how to fix engines, work with heavy machinery, and look for electrical problems

in vehicles, along with different forms of metal equipment. He learned to create metal stuctures, and

he made a circuit board for a car’s computer. The transferrable skills of John and his team mates

allow them to work together and successfully create and run Spine Tech.

John Criley

Chief Technical Officer

ProductDataSheet

The Power Spine:

For those who have fallen victim to severe spinal cord injuries, Spine Tech has the solution. We

have created the Power Spine, a spinal cord re-activator made of titanium processors, spokes, and

electrical dynamo, powered by lithium-iodine batteries. With the Power Spine, a spinal cord injury

victim will be able to “feel again, move again, and live again.”

Power Spine Parts:

•Titanium Processors

•Titanium Spokes

•Titanium Electrical Dynamo

•Lithium-Iodine Batteries

Power Spine Specifications:

•Tititanium Processors: attach to nerve fibers on spinal cord and connect to titanium spokes

•Titanium Spokes: attach to titanium processors and create a bridge over severed part of

spine, sending electrical impulses created by titanium electrical dynamo

•Titanium Electrical Dynamo: generator that creates electrical impulses sent on the afferent pathway

to the spine and brain when necessary, and back down the efferent pathway to other parts of the

body; replaced every 5 to 10 years with lithium-iodine batteries

•Lithium-Iodine Batteries: powers titanium electrical dynamo and is replaced every 5 to 10 years

Features and Benefits:

•Gives paraplegics and quadriplegics mobility

•Specialized doctors perform surgery

•Generator and battery replacement is brief and painless with local anesthesia

•Helps paraplegics and quadriplegics recover from an injury that affects anatomical functions such

as bladder, bowel, circulatory, respiratory, and muscle control, along with skin sensations and

sexual health

MarketAnalysis

Opportunity Assessment:

Despite efforts to make activities, such as driving and sports, safer, the number

of spinal cord injuries remains constant each year. According to the Catastrophic Injury Re-

source Center, there are 12,000 new spinal cord injuries every year in the United States.

52% of these victims become paraplegic-paralyzed in both lower limbs due to spinal dis-

ease or injury, and 47% become quadriplegic-paralyzed in the entire body below the neck.

There are approximately 250,000 paraplegics and quadriplegics living in the United States

today, making them Spine Tech’s target customers. The financial costs associated with

spinal cord injuries can be staggering. According to the United Spinal Association, costs

range from $209,000 to $710,000 in the first year after the injury , and between $14,000

and $127,000 every year thereafter. The National Spinal Cord Injury Statistical Center also

reports that the United States spends over $14.5 billion annually in direct medical costs

and disability support, and lost productivity accounts for an additional $5.5 billion.

Because of the costs to live with this type of injury, research into it has gradually in-

creased. The major government agency funding spinal cord injury research is the National In-

stitution of Health, which funds fellowships about $100,000 per year for 3 to 5 years, individual

research grants $250,000 per year for 3 to 5 years, and program grants that may be as much as

$1,000,000 per year for 3 to 5 years. Additionally, there are state, industry, and private grants on

the order of $50,000 to $100,000 per year for 1 to 2 years. This data shows us that United States

investment has increased over time. In 1995, the investment totalled to $60 million while in 2000,

the investment rose to $100 million. The growth of investment continues until present time, demon-

strating the growing demand for better treatment of these types of injuries. This is Spine Tech’s cue

to make the Power Spine available to the general public.

According to Charles Whalen, a senior analyst with Frost & Sullivan, Mountain View, CA-

based market researchers, the medical device market is one of the largest and most stable indus-

tries in healthcare. Whalen estimates that the U.S. medical device market produces about $57.6

billion in revenue, with an additional 8% compound annual growth rate. The U.S. market produces

half of the world’s medical devices and consumes approximately 40% of the world’s output. Spine

Tech is part of the medical device market, making its success rate increase. There is an opportunity

for the Power Spine, and it will continue to grow as it remains in the market.

Competitive Analysis:

The Power Spine is a spinal cord re-activator, made of titanium processors and

spokes, that uses a pacemaker-style generator powered by replaceable batteries. The

spinal cord is made of nerve fibers, and the Power Spine attaches titanium processors to

those nerve fibers along with needle-thin spokes that serve as a bridge to bypass the in-

jured segment of the spine, sending electrical impulses on the afferent pathway, the nerve

pathway inside the body that leads to the spine-and brain when necessary, and back

down the efferent pathway, which leads to other parts of the body that cause movement

to occur. Lithium-iodine batteries last for 5 to 10 years, making their replacement possible

within that time span. The procedure only requires a small incision in the area of the back

that is right above the severed part of the spine. Local anesthesia will make the battery re-

placement procedure painless. Rehabilitation after surgery will still be needed, but ultimately

the user should gain back all movement lost.

Other companies and products also attempt to help paraplegics and quadriple-

gics. Therefore, Spine Tech will not be without competition. A form of competition for Spine

Tech is robotics. The Berkeley Robotics & Human Engineering Laboratory has developed

an exoskeleton system called “eLEGS” that allows paraplegics and those with mobility

disorders to stand up and walk. The collaboration between UC Berkeley and Berkeley

Bionics has resulted in the development of a hardware and software package that uses

natural human motion to safely translate the user’s intent into the required exoskeleton

action. The system incorporates several innovations, including a compact, on-board,

power regeneration system so battery life can be lengthened for a longer period of time,

an advanced control system and user interface to tailor the amount of assistance that the

user needs, and a non-constraining lightweight design that is easy for users to put on and

take off without much needed assistance. While eLEGS does not require surgery, its users

need the external gear and support to keep them standing, and once the exoskeleton is

taken off, the ability to be mobile is lost. Spine Tech, on the other hand, surgically implants

the Power Spine, giving its users a weightless solution that serves the same purpose as

eLEGS, restoring mobility to one’s life, but does so as long as they have the Power Spine.

Another example of indirect competition are rehabilitation hospitals. One such hospital

is the Spaulding Rehabilitation Hospital located in Boston that provides a spinal cord rehabilitation

program for spinal cord injury victims. According to www.sci-info-pages.com, this hospital is one of

the top rehabilitation centers in the nation for spinal cord injury victims. The goal of the program is

to provide its patients the opportunity to reach the highest level of independent function and return

to an active and productive life. It is individualized and patients can receive 3 to 5 hours of individual

and group therapy 5 to 6 times per week.

Intensive medical management, pressure mapping, physical, occupational, and speech

therapy, spasticity management, pain management, a peer visitor program, and discharge planning

are some of the services included in the program. However, the hospital does not take care of the

rootof the injury. Instead, it deals with the aftereffects that cause inconvenience and pain. Help to

recover from injuries and gain emotional support is provided, but these services can only go so far

when it comes to fully restoring mobility to one’s life. The Power Spine resolves the main issue that is

caused by spinal cord injuries, and that is the loss of movement.

While there are other companies and products that serve the same purpose

throughdifferent methods, none provide the full mobility that Power Spine provides. How-

ever, one form of indirect competition with the Power Spine is a thought-controlled wheel-

chair developed by Toyota. The operating system allows a person to control a wheelchair

using nothing but his brain. The system monitors brain waves every 125 milliseconds,

and the user doesn’t experience any lag in response from the system. This wheelchair is

competition because it provides speed and convenience, and aids in mobility. Since the

system in this product is controlled by human thought rather than voice, commands made

by the user will be executed without delay, as if he were using his original limbs to transport

himself.

Unlike the Power Spine, no surgical procedures are required to provide move-

ment for the users of Toyota’s product. However, Spine Tech is selling movement, and

although the thought-controlled wheelchair also provides its users with movement, it is

incapable of directly healing the central nervous system in the body. No natural move-

ment can be executed by the paralyzed body parts. The solution the thought-controlled

wheelchair provides is not internal. The Power Spine solves the internal problems of spinal

cord injuries, appealing to the idea that paralysis victims will be able to use their previously

disabled limbs to move again.

Finally, stem cell research could eventually be a form of direct competition for Spine Tech.

The injection of stem cells for spinal cord injuries is an internal solution that brings back some

sensory ability and improved motor function. Clinical trials and studies have been conducted in Ar-

gentina, China, Portugal, and are now starting in the United States. Patients who have reported im-

provements in their conditions after this type of treatment claim that the improvements are retained

permanently. While some tests have yielded positive results, there are still patients that report little

to no improvement. Additionally, the treatment is not available now. The Power Spine will be able to

compete because it is available now and all users report improvement in mobility. Spine Tech never

fails to disappoint its customers that depend on the Power Spine to bring movement back into their

lives.

Provides Mobility

Creates an Internal Solution

Provides RehabilitationServices

Requires Surgery

Available in the Medical Device Market

The Power Spine

Stem Cell Research

Exoskeletons Wheelchairs Rehabilitation Centers

Customer Profile:

Demographics

Spine Tech’s customers will be spinal cord injury victims, particularly paraplegics

and quadriplegics. The average age of these victims is 33, and the majority are male (82%)

while female victims make up 18% of the injured population. The Power Spine’s users

surely fall victim to the leading causes of spinal cord injuries.

As shown in the graph above, these causes are road traffic accidents (36.8%), falls

(41.7%), sharp trauma or assault (2.7%), sports (11.6%), collsions or lifting (4.2%), and

other forms of unspecified trauma (3.3%).

Geographics

Paraplegics and quadriplegics are found all over the world. No matter where we travel,

there will always be possibilities of experiencing the main causes of spinal cord injuries. Therefore,

Spine Tech will consider paraplegics and quadriplegics worldwide as potential customers, but will

particularly target nations that are not on the Developing Countries List provided by the American

Mathematical Society. These nations include the United States of America and the United Kingdom.

Psychographics

According to www.spinal-cord.org, common emotional responses of severe spinal cord

injury victims are denial, depression, feelings of hopelessness, and fear. There is also a lack of

understanding of what’s in store, the unknown, and what’s next. The inability to work, tend to busi-

ness affairs, and care for one’s family and interact with friends are also included in the package

of emotional distress. The patients and their loved ones all seek different treatment options from

healthcare professionals as they continue to deal with the complexity of emotions and special ongo-

ing needs of the spinal cord injury victims. The Paralysis Resource Center shows the thousands

of dollars spent in order to live with spinal cord injuries, indicating the interest level of Spine Tech’s

target customers. Because the help of healthcare professionals will be sought after, Spine Tech’s

target customers, paraplegics and quadriplegics, will get the solution they’re looking for, the ability to

move again.

MarketingPlan

Product:

Spine Tech’s product is the Power Spine.The Power Spine is a spinal cord re-activator

made up of titanium processors and spokes. Its electrical impulses are produced by a

pacemaker-style generator powered by replaceable batteries. The titanium processors

are attached to the nerve fibers that surround the severed area of the spinal cord, and the

connected spokes serve as a bridge to bypass the site of the injury. The entire device is

surgically implanted, providing an internal solution for paraplegics and quadriplegics that

cannot be guaranteed by other products and services that address the same issue. The

batteries in the generator need to be replaced every five to ten years, requiring a local

anesthesia for small incisions and quick stitch-ups. With Spine Tech’s full warranty, the

company claims that the Power Spine is 100% guaranteed to work and performs all the

technical and medical functions necessary to restore movement to a person’s life.

Price:

The Power Spine grants mobility with patented titanium technology in the nerve processors

and needle-thin spokes. A surgical procedure is also required for the product, along with

patient consultation beforehand. Therefore, the price customers need to pay will total up to

$500,000.

Placement:

Spine Tech will have a main facility in Texas where the surgical procedure for the Power Spine will be

performed. Texas is where the majority of wheelchair manufacturing companies in the United States

are located, giving Spine Tech an expandable market. As the company continues to grow, exten-

sion branches will be built. Spine Tech can be reached through the official website, and in person at

their main facility and extension branches.

Promotion:

The Power Spine will be promoted through some specific health and medical magazines that Spine

Tech’s print advertisements can be placed in such as Ability, Medical News Today, BioMechan-

ics, Medical Device Technology, Outpatient Surgery, and Telemedicine Today, as well as public

billboards. Spine Tech will target national talk shows such as Oprah, Today, and Ellen to feature

the Power Spine. A professional film maker will also be hired to create a documentary of the whole

installment process of the Power Spine to post on the official website. Spine Tech’s marketing mes-

sage is that mobility is possible, even for those who have lost the ability to move. Therefore, promot-

ing through media-based sources would reach the ultimate users, paraplegics and quadriplegics,

with the message that they are one step closer to being able to “feel again, move again, and live

again.” An additional method Spine Tech will try is the requesting of government mandates for the

Power Spine when workers get severely injured on the job. However, the financials in themselves

are going to support the business successfully.

Acquiring (1):

The Power Spine will use less non-renewable resources than current products by only

replacing the generator and batteries, which must be replaced every 5 to 10 years. The

titanium mines in Paraguay, South America will make it the location where Spine Tech

acquires its titanium, which will be mined by paid workers. Lithium-iodine batteries will be

supplied by Greatbatch Medical in Alden, New York, whose founder was the co-inventor

of the first successful implanted pacemaker. The company was founded for the purpose

of developing long-lived primary batteries to fuel medical devices, such as pacemakers.

Manufacturing (2):

The production of the Power Spine will have the same amount of pollution and environ-

mental impact as current products because Spine Tech’s main facility in Texas will carry

out the assembling of the titanium processors, spokes, and generator and lithium-iodine

batteries. The processors, generator, and batteries will be a standard size, but the size of

the spokes will be customized depending on the patients’ needs. The customizations of

the spokes and the technology that powers our product’s processors and generator will all

be developed in Spine Tech’s facility.

Transporting (3):

The fully assembled Power Spine will not need to be transported. Pollution coming from

trains and trucks will only occur when shipping titanium and lithium-iodine batteries from

Paraguay and New York.

LifeCycleAnalysis

Using and Disposing (4):

The ownership and use of the Power Spine decreases social and environmental problems. Spine

Tech provides a solution for paraplegics and quadriplegics, and doesn’t affect consumer health. The

Power Spine does not pollute the body, make noise, or smell bad. Our product does not take up

a lot of space, and the battery has to be replaced every 5 to 10 years. Safety can be jeopardized

if the product’s users do not take care of their bodies or the Power Spine. Since it is designed to

solve the problem of paralysis, the Power Spine’s users will benefit from the opportunity regain their

major mobility skills. Titanium processors, spokes, and generator require the mining of the element

titanium. Every 5 to 10 years, the generator and lithium-iodine batteries must be replaced. The

generator is made of titanium, so disposal would mean sending the used generators to the refinery

in Spine Tech’s facility that will melt down the titanium and re-use it for new products. Spine Tech will

also be sure to go through the correct disposal process for lithium-iodine batteries so that they can

deteriorate overtime without causing harm to the environment.

(1)

(2)

(3)

(4)

FinancialProjections

Sales and Revenue Growth:

For the first year of production, Spine Tech would be employing one doctor to perform the

surgical procedure necessary to implant the Power Spine. The process for one patient

would include 5 days of consultation, 4 days of capturing detailed X-rays and analysis of

results, 2 days of gathering ready-made supplies and customizing certain parts, 2 days

of pre-surgery consultation with the patient, 1 day of surgery, and 16 days of recovery

time. As soon as the recovery period begins, the same doctor can repeat the process

with another patient, allowing him to perform 2 surgeries per month. By the end of the

first year, he would have been able to perform 24 surgeries, earning Spine Tech a total of

$12,000,000 for the year. Each year, we plan to increase the number of doctors by 1,

also increasing the amount of patients and number of surgeries that could be performed

at one time. The amount of earnings will steadily increase due to the number of injuries

that cause paraplegia and quadriplegia every year. Spine Tech’s only limiting factor is the

number of surgeries that we are able to perform at once. However, we plan to continue

growing and expanding our facility, building extension branches in different locations as

soon as we are able to maximize the number of doctors in one facility.

Operations Budget:

For the purposes of this project, it is assumed that the operations budget for our company

comprises 35% of our revenue and is composed of the following individual items:

•Electricity

•Manufacturing Equipment

•Surgical Equipment

•Recovery Beds

•Main Facility in Texas and Extension Branches

•Labor and Management

•Transportation

Cost of Goods:

For the purposes of this project, it is assumed that the cost of goods for our company’s product

comprises 25% of our revenue and is composed of the following individual items:

•Titanium

•LIthium Iodine

•Processors

•Electricity-Directing Spokes

•Electrical Impulse-Conductive Generators

•Operating Room Expenses

Advertising and Marketing Expenses:

Spine Tech is going to market the Power Spine through print ads and television. Our operations

budget for the first year is $750,000 for the first quarter and $1,050,000 for the following three

quarters, making the year’s total $4,200,000. Since 30% of our budget is going into marketing and

advertising, the total amount of money saved up for that purpose is going to be $1,260,000. This

money will go into the promotion of the Power Spine through television, allowing Spine Tech to be

featured on national talk shows such as Oprah, Today, and Ellen. Spine Tech will also hire a profes-

sional film maker to create a documentary of the whole installment process of the Power Spine to

post on the official website. Print advertisements and public billboards will also be covered by the

advertising and marketing expenses

Sources and Uses of Funds:

Spine Tech’s funding will come from sources such as bank, private, and 504 loans, equipment

leasing, royalty financing, and direct public offerings. In addition, we are seeking $1,200,000 in

venture capital funding to meet initial investments. The operations budget, and advertising and mar-

keting expenses will be Spine Tech’s priority when it comes to where finances are directed. If Spine

Tech fails to meet its funding needs, the money earned will be focused on advertising and market-

ing through any possible source such as print, television, and internet promotion. The public needs

to know about the Power Spine in order to purchase it. Therefore, the more patients we acquire,

the more money we will earn to pay back investors and continue production of the Power Spine.

At the same time, the fixed costs will be paid so that those who purchase the Power Spine will still

have the necessary resources that make the product available to them.

Earnings Projection - First YearEarnings Projection - First Year Q1 2011 Q2 2011 Q3 2011 Q4 2011

Operations (fixed costs)

$750,000 $1,150,000 $1,150,000 $1,150,000

Cost of Goods (variable costs)

$0 $1,000,000 $1,000,000 $1,000,000

Wholesale Price $500,000 $500,000 $500,000 $500,000

Spine Tech Procedures

0 8 8 8

Revenue (price x units)

$0 $4,000,000 $4,000,000 $4,000,000

Profit Margin (revenue - costs)

$750,000 $1,850,000 $1,850,000 $1,850,000

Total Earnings $750,000 $1,100,000 $2,950,000 $4,800,000

Revenue (price x units)

0

1000000

2000000

3000000

4000000

Q1 2011 Q2 2011 Q3 2011 Q4 2011

FirstYearProjections

Total Earnings

0

20000000

40000000

60000000

80000000

2011 2012 2013 2014 2015

Earnings Projection - Five YearEarnings Projection - Five YearEarnings Projection - Five Year2011 2012 2013 2014 2015

Operations (fixed costs)

$6,000,000 $9,000,000 $12,000,000 $15,000,000 $18,000,000

Cost of Goods (variable costs)

$3,000,000 $6,000,000 $9,000,000 $12,000,000 $15,000,000

Wholesale Price $500,000 $500,000 $500,000 $500,000 $500,000

Spine Tech Procedures

24 48 72 96 120

Revenue (price x units)

$12,000,000 $24,000,000 $36,000,000 $48,000,000 $60,000,000

Profit Margin (revenue - costs)

$3,000,000 $9,000,000 $15,000,000 $21,000,000 $27,000,000

Total Earnings $3,000,000 $12,000,000 $27,000,000 $48,000,000 $75,000,000

FiveYearProjections