Spine Tech Business Plan


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Spine Tech Business Plan

  1. 1. a Digital Safari GreenBizz company Business Plan Competition 2011Elaine Cotecson Gustavo Gomez John CrileyChief Executive Officer Chief Financial Officer Chief Technical Officer
  2. 2. ExecutiveSummary“Feel Again, Move Again, Live Again.”Spine Tech has a real solution for paraplegics and quadriplegics. That solution is the PowerSpine, 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-activatordesigned for paralysis victims. It is made of titanium processors, spokes, and electri-cal dynamo. The pacemaker-style generator powered by lithium-iodine batteries createselectrical impulses that re-activate the nerves on the spinal cord. The spokes will serveas a bridge to send the electrical impulses on the afferent pathway to the spine and brainwhen 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 spinalcord 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 250,000paraplegics and quadriplegics living in the United States today, making them Spine Tech’s
  3. 3. 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 accountsfor an additional $5.5 billion. The Power Spine will help reduce these costs to virtually nothing bygiving mobility to paraplegics and quadriplegics, ridding them of the resposibility to pay for expensesrelated 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. Printedmethods 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 suchas Oprah, Today, and Ellen to feature the Power Spine. A professional film maker will also be hiredto create a documentary of the whole installment process of the Power Spine to post on the officialwebsite. When paraplegics and quadriplegics come across these forms of promotion for SpineTech, 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 andquadriplegics such as wheelchairs, exoskeletons, rehabilitation centers, and stem cell research,give mobility, but they do not address the internal injuries suffered. Spine Tech permanently restoresmajor mobility skills through the Power Spine, and is guaranteed to be successful in the medicaldevice market.Financials:Spine Tech is expected to earn $75,000,000 by its fifth year in business. In order to reach thatpoint, we are requesting $1,200,000 in capital funding to meet initial investments.
  4. 4. CompanyProfileMission Statement:To provide a direct, internal solution to severely damaged spinal cords, giving paraplegicsand 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 bycreating 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, ElaineCotecson and Gustavo Gomez, did more research and found that the Berkeley Robotics& Human Engineering Laboratory had already developed an exoskeleton designed to giveparalysis victims mobility. After receiving input from professional business mentors and in-structors, they decided to focus their attention on severe spinal cord injuries. They createdSpine Tech, and with patented titanium technology, along with the application of an existingpower source, Elaine Cotecson, Gustavo Gomez, and John Criley invented the PowerSpine, a spinal cord re-activator that gives paralysis victims the ability to move again.
  5. 5. tec son ine Co fficer Ela xecu t iv eO fE Chie As Chief Executive Officer, Elaine is responsible for the success of Spine Tech. Sheoversees operations, marketing strategies, company financing, creation of company culture, humanresources, and safety. Her main duty is to set strategy and vision for Spine Tech, ultimately settingthe 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 ismore than qualified to take on the position of Chief Executive Officer. In the summer of 2010, shetook 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 exposedto the medical environment on a regular basis, allowing her to learn hospital procedures and patientcare. Her experience gives her the knowledge necessary to run a medical facility and take part inthe medical device market. During the 2008-2009 school year, she served as the secretary of herclass, working hand-in-hand with the class president to plan, prepare, and lead activities that raisemoney for the graduating class of 2011. Elaine has produced, directed, filmed, and edited a videoproject called “Speaking of I.D.entity,” where she also had to compose and record an original songthat 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 kidsin America with immigrant parents and family members who have expectations when it comes tocareer choices. The success of the group was evident in the delivery of the message portrayed bythe documentaries. A common, but often overlooked, issue was brought to the surface by Elaine’steam, creating awareness and assurance for those experiencing the same conflicts that they arenot alone.
  6. 6. m ez o Go ffice r us tav nci a l O G ie f Fi n a Ch The responsibilities of Spine Tech’s Chief Financial Officer, Gustavo Gomez,include controlling cash flow, company liabilities, budgeting and expenses, and maintainingcommunication with financing sources such as investment bankers, financial analysts, andshareholders. Insurance is also an area of concentration for Gustavo. He sees to it that thePower 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 asediting and creating new pictures. These skills play a major role in the promotion of thePower Spine, especially when designing and creating visuals that appeal to Spine Tech’starget customers. Gustavo has also worked on a poverty solution project for the country ofSri 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 thededication and time management skills that were necessary to carry out these importanttasks.
  7. 7. C riley ficer Jo hn cal O f c hni ie f Te Ch As Chief Technical Officer, John Criley oversees research and development activities, andfocuses on scientific and technological issues within Spine Tech. With his technological backgroundand experience, John is a reliable technical source for the Power Spine’s users. He sees to it that allequipment 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 advertisementsfor Spine Tech and discuss marketing strategies with Elaine to further the promotion of the PowerSpine. 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 knowledgeof robotics and computer command technology that is used by the Power Spine’s competition. Hehas experience in machinery maintenance, and programming command-controlled movements inrobotics. He learned how to fix engines, work with heavy machinery, and look for electrical problemsin vehicles, along with different forms of metal equipment. He learned to create metal stuctures, andhe made a circuit board for a car’s computer. The transferrable skills of John and his team matesallow them to work together and successfully create and run Spine Tech.
  8. 8. ProductDataSheet
  9. 9. The Power Spine:For those who have fallen victim to severe spinal cord injuries, Spine Tech has the solution. Wehave created the Power Spine, a spinal cord re-activator made of titanium processors, spokes, andelectrical dynamo, powered by lithium-iodine batteries. With the Power Spine, a spinal cord injuryvictim will be able to “feel again, move again, and live again.”Power Spine Parts:•Titanium Processors•Titanium Spokes•Titanium Electrical Dynamo•Lithium-Iodine BatteriesPower 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 ofspine, sending electrical impulses created by titanium electrical dynamo•Titanium Electrical Dynamo: generator that creates electrical impulses sent on the afferent pathwayto the spine and brain when necessary, and back down the efferent pathway to other parts of thebody; replaced every 5 to 10 years with lithium-iodine batteries•Lithium-Iodine Batteries: powers titanium electrical dynamo and is replaced every 5 to 10 yearsFeatures 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 suchas bladder, bowel, circulatory, respiratory, and muscle control, along with skin sensations andsexual health
  10. 10. MarketAnalysisOpportunity Assessment: Despite efforts to make activities, such as driving and sports, safer, the numberof 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 Statestoday, making them Spine Tech’s target customers. The financial costs associated withspinal cord injuries can be staggering. According to the United Spinal Association, costsrange from $209,000 to $710,000 in the first year after the injury , and between $14,000and $127,000 every year thereafter. The National Spinal Cord Injury Statistical Center alsoreports that the United States spends over $14.5 billion annually in direct medical costsand disability support, and lost productivity accounts for an additional $5.5 billion.
  11. 11. 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, individualresearch 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 onthe order of $50,000 to $100,000 per year for 1 to 2 years. This data shows us that United Statesinvestment 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 cueto 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 $57.6billion in revenue, with an additional 8% compound annual growth rate. The U.S. market produceshalf of the world’s medical devices and consumes approximately 40% of the world’s output. SpineTech is part of the medical device market, making its success rate increase. There is an opportunityfor the Power Spine, and it will continue to grow as it remains in the market.
  12. 12. Competitive Analysis: The Power Spine is a spinal cord re-activator, made of titanium processors andspokes, that uses a pacemaker-style generator powered by replaceable batteries. Thespinal cord is made of nerve fibers, and the Power Spine attaches titanium processors tothose 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 nervepathway inside the body that leads to the spine-and brain when necessary, and backdown the efferent pathway, which leads to other parts of the body that cause movementto occur. Lithium-iodine batteries last for 5 to 10 years, making their replacement possiblewithin that time span. The procedure only requires a small incision in the area of the backthat 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 ultimatelythe 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 SpineTech is robotics. The Berkeley Robotics & Human Engineering Laboratory has developedan exoskeleton system called “eLEGS” that allows paraplegics and those with mobilitydisorders to stand up and walk. The collaboration between UC Berkeley and BerkeleyBionics has resulted in the development of a hardware and software package that usesnatural human motion to safely translate the user’s intent into the required exoskeletonaction. 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 theuser needs, and a non-constraining lightweight design that is easy for users to put on andtake off without much needed assistance. While eLEGS does not require surgery, its usersneed the external gear and support to keep them standing, and once the exoskeleton istaken off, the ability to be mobile is lost. Spine Tech, on the other hand, surgically implantsthe Power Spine, giving its users a weightless solution that serves the same purpose aseLEGS, restoring mobility to one’s life, but does so as long as they have the Power Spine.
  13. 13. Another example of indirect competition are rehabilitation hospitals. One such hospitalis the Spaulding Rehabilitation Hospital located in Boston that provides a spinal cord rehabilitationprogram for spinal cord injury victims. According to www.sci-info-pages.com, this hospital is one ofthe top rehabilitation centers in the nation for spinal cord injury victims. The goal of the program isto provide its patients the opportunity to reach the highest level of independent function and returnto an active and productive life. It is individualized and patients can receive 3 to 5 hours of individualand group therapy 5 to 6 times per week. Intensive medical management, pressure mapping, physical, occupational, and speechtherapy, spasticity management, pain management, a peer visitor program, and discharge planningare some of the services included in the program. However, the hospital does not take care of therootof the injury. Instead, it deals with the aftereffects that cause inconvenience and pain. Help torecover from injuries and gain emotional support is provided, but these services can only go so farwhen it comes to fully restoring mobility to one’s life. The Power Spine resolves the main issue that iscaused by spinal cord injuries, and that is the loss of movement.
  14. 14. While there are other companies and products that serve the same purposethroughdifferent 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 wheelchairusing 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 iscompetition because it provides speed and convenience, and aids in mobility. Since thesystem in this product is controlled by human thought rather than voice, commands madeby the user will be executed without delay, as if he were using his original limbs to transporthimself. 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, andalthough the thought-controlled wheelchair also provides its users with movement, it isincapable 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-controlledwheelchair provides is not internal. The Power Spine solves the internal problems of spinalcord injuries, appealing to the idea that paralysis victims will be able to use their previouslydisabled limbs to move again.
  15. 15. 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 somesensory 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 retainedpermanently. While some tests have yielded positive results, there are still patients that report littleto no improvement. Additionally, the treatment is not available now. The Power Spine will be able tocompete because it is available now and all users report improvement in mobility. Spine Tech neverfails to disappoint its customers that depend on the Power Spine to bring movement back into theirlives. The Power Stem Cell Exoskeletons Wheelchairs Rehabilitation Spine Research Centers Provides Mobility Creates an Internal Solution Provides Rehabilitation Services Requires Surgery Available in the Medical Device Market
  16. 16. Customer Profile:Demographics Spine Tech’s customers will be spinal cord injury victims, particularly paraplegicsand 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 userssurely 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%), andother forms of unspecified trauma (3.3%).
  17. 17. 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 willparticularly target nations that are not on the Developing Countries List provided by the AmericanMathematical 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 cordinjury victims are denial, depression, feelings of hopelessness, and fear. There is also a lack ofunderstanding 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 packageof emotional distress. The patients and their loved ones all seek different treatment options fromhealthcare 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 thousandsof dollars spent in order to live with spinal cord injuries, indicating the interest level of Spine Tech’starget customers. Because the help of healthcare professionals will be sought after, Spine Tech’starget customers, paraplegics and quadriplegics, will get the solution they’re looking for, the ability tomove again.
  18. 18. MarketingPlanProduct:Spine Tech’s product is the Power Spine.The Power Spine is a spinal cord re-activatormade up of titanium processors and spokes. Its electrical impulses are produced by apacemaker-style generator powered by replaceable batteries. The titanium processorsare attached to the nerve fibers that surround the severed area of the spinal cord, and theconnected spokes serve as a bridge to bypass the site of the injury. The entire device issurgically implanted, providing an internal solution for paraplegics and quadriplegics thatcannot be guaranteed by other products and services that address the same issue. Thebatteries in the generator need to be replaced every five to ten years, requiring a localanesthesia for small incisions and quick stitch-ups. With Spine Tech’s full warranty, thecompany claims that the Power Spine is 100% guaranteed to work and performs all thetechnical 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 processorsand needle-thin spokes. A surgical procedure is also required for the product, along withpatient consultation beforehand. Therefore, the price customers need to pay will total up to$500,000.
  19. 19. Placement:Spine Tech will have a main facility in Texas where the surgical procedure for the Power Spine will beperformed. Texas is where the majority of wheelchair manufacturing companies in the United Statesare 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 attheir main facility and extension branches.Promotion:The Power Spine will be promoted through some specific health and medical magazines that SpineTech’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 publicbillboards. Spine Tech will target national talk shows such as Oprah, Today, and Ellen to featurethe Power Spine. A professional film maker will also be hired to create a documentary of the wholeinstallment 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 liveagain.” An additional method Spine Tech will try is the requesting of government mandates for thePower Spine when workers get severely injured on the job. However, the financials in themselvesare going to support the business successfully.
  20. 20. LifeCycleAnalysisAcquiring (1):The Power Spine will use less non-renewable resources than current products by onlyreplacing the generator and batteries, which must be replaced every 5 to 10 years. Thetitanium mines in Paraguay, South America will make it the location where Spine Techacquires its titanium, which will be mined by paid workers. Lithium-iodine batteries will besupplied by Greatbatch Medical in Alden, New York, whose founder was the co-inventorof the first successful implanted pacemaker. The company was founded for the purposeof 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 carryout the assembling of the titanium processors, spokes, and generator and lithium-iodinebatteries. The processors, generator, and batteries will be a standard size, but the size ofthe spokes will be customized depending on the patients’ needs. The customizations ofthe spokes and the technology that powers our product’s processors and generator will allbe developed in Spine Tech’s facility.Transporting (3):The fully assembled Power Spine will not need to be transported. Pollution coming fromtrains and trucks will only occur when shipping titanium and lithium-iodine batteries fromParaguay and New York.
  21. 21. Using and Disposing (4):The ownership and use of the Power Spine decreases social and environmental problems. SpineTech provides a solution for paraplegics and quadriplegics, and doesn’t affect consumer health. ThePower Spine does not pollute the body, make noise, or smell bad. Our product does not take upa lot of space, and the battery has to be replaced every 5 to 10 years. Safety can be jeopardizedif the product’s users do not take care of their bodies or the Power Spine. Since it is designed tosolve the problem of paralysis, the Power Spine’s users will benefit from the opportunity regain theirmajor mobility skills. Titanium processors, spokes, and generator require the mining of the elementtitanium. Every 5 to 10 years, the generator and lithium-iodine batteries must be replaced. Thegenerator is made of titanium, so disposal would mean sending the used generators to the refineryin Spine Tech’s facility that will melt down the titanium and re-use it for new products. Spine Tech willalso be sure to go through the correct disposal process for lithium-iodine batteries so that they candeteriorate overtime without causing harm to the environment. (1) (4) (2) (3)
  22. 22. FinancialProjectionsSales and Revenue Growth:For the first year of production, Spine Tech would be employing one doctor to perform thesurgical procedure necessary to implant the Power Spine. The process for one patientwould include 5 days of consultation, 4 days of capturing detailed X-rays and analysis ofresults, 2 days of gathering ready-made supplies and customizing certain parts, 2 daysof pre-surgery consultation with the patient, 1 day of surgery, and 16 days of recoverytime. As soon as the recovery period begins, the same doctor can repeat the processwith another patient, allowing him to perform 2 surgeries per month. By the end of thefirst 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 performedat one time. The amount of earnings will steadily increase due to the number of injuriesthat cause paraplegia and quadriplegia every year. Spine Tech’s only limiting factor is thenumber of surgeries that we are able to perform at once. However, we plan to continuegrowing and expanding our facility, building extension branches in different locations assoon 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 companycomprises 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
  23. 23. Cost of Goods:For the purposes of this project, it is assumed that the cost of goods for our company’s productcomprises 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 ExpensesAdvertising and Marketing Expenses:Spine Tech is going to market the Power Spine through print ads and television. Our operationsbudget for the first year is $750,000 for the first quarter and $1,050,000 for the following threequarters, making the year’s total $4,200,000. Since 30% of our budget is going into marketing andadvertising, the total amount of money saved up for that purpose is going to be $1,260,000. Thismoney will go into the promotion of the Power Spine through television, allowing Spine Tech to befeatured 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 topost on the official website. Print advertisements and public billboards will also be covered by theadvertising and marketing expensesSources and Uses of Funds:Spine Tech’s funding will come from sources such as bank, private, and 504 loans, equipmentleasing, royalty financing, and direct public offerings. In addition, we are seeking $1,200,000 inventure 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 SpineTech 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 needsto 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 stillhave the necessary resources that make the product available to them.
  24. 24. FirstYearProjectionsEarnings Projection - First Year Q1 2011 Q2 2011 Q3 2011 Q4 2011Operations (fixed $750,000 $1,150,000 $1,150,000 $1,150,000 costs) Cost of Goods $0 $1,000,000 $1,000,000 $1,000,000 (variable costs)Wholesale Price $500,000 $500,000 $500,000 $500,000 Spine Tech 0 8 8 8 Procedures Revenue (price x $0 $4,000,000 $4,000,000 $4,000,000 units) Profit Margin $750,000 $1,850,000 $1,850,000 $1,850,000 (revenue - costs) Total Earnings $750,000 $1,100,000 $2,950,000 $4,800,000 4000000 3000000 2000000 1000000 0 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Revenue (price x units)
  25. 25. FiveYearProjections Earnings Projection - Five Year 2011 2012 2013 2014 2015 Operations $6,000,000 $9,000,000 $12,000,000 $15,000,000 $18,000,000 (fixed costs)Cost of Goods (variable costs) $3,000,000 $6,000,000 $9,000,000 $12,000,000 $15,000,000Wholesale Price $500,000 $500,000 $500,000 $500,000 $500,000 Spine Tech 24 48 72 96 120 ProceduresRevenue (price x units) $12,000,000 $24,000,000 $36,000,000 $48,000,000 $60,000,000 Profit Margin $3,000,000 $9,000,000 $15,000,000 $21,000,000 $27,000,000 (revenue - costs)Total Earnings $3,000,000 $12,000,000 $27,000,000 $48,000,000 $75,000,000 80000000 60000000 40000000 20000000 0 2011 2012 2013 2014 2015 Total Earnings