Market Feasibility Study VitalSign: Wireless Heartbeat and Respiration Detector

Market Feasibility Study Market Feasibility Study

VitalSign:VitalSign:Wireless Heartbeat and Respiration Wireless Heartbeat and Respiration

DetectorDetector

Presentation OutlinePresentation Outline

Technology DescriptionTechnology Description Potential MarketsPotential Markets Target MarketTarget Market Financial AnalysisFinancial Analysis ConclusionsConclusions

Technology DescriptionTechnology Description Developed by Dr. Jenshan Lin and his Developed by Dr. Jenshan Lin and his

colleagues at the University of Florida colleagues at the University of Florida VitalSign utilizes a modified Doppler radar VitalSign utilizes a modified Doppler radar

to wirelessly monitor heart and respiration to wirelessly monitor heart and respiration ratesrates

Technology DescriptionTechnology Description

The small portable device employs low The small portable device employs low power radio waves to determine vital power radio waves to determine vital signs without attaching sensors to the signs without attaching sensors to the bodybody

The system monitors chest motion to The system monitors chest motion to determine heart and breathing ratesdetermine heart and breathing rates

Proven accurate within 3 meter rangeProven accurate within 3 meter range Patent PendingPatent Pending

Technology DescriptionTechnology Description

Next generation working prototype Next generation working prototype the size of a scientific calculator has the size of a scientific calculator has been developedbeen developed

Goal is to integrate the technology Goal is to integrate the technology into a single chipinto a single chip

Potential MarketsPotential Markets

Technology applicable in various Technology applicable in various marketsmarkets

Conducted market research in the Conducted market research in the following three potential markets:following three potential markets: HealthcareHealthcare National DefenseNational Defense Cardiovascular exercise equipmentCardiovascular exercise equipment

Potential Markets - Potential Markets - HealthcareHealthcare

By 2011, the first of the 76 million By 2011, the first of the 76 million baby-boomer generation will turn 65 baby-boomer generation will turn 65 years oldyears old

Increasing demand on the healthcare Increasing demand on the healthcare system system

Opportunities for cost effective Opportunities for cost effective healthcare solutions allowing doctors healthcare solutions allowing doctors to function more efficientlyto function more efficiently


Telemedicine - use of electronic information Telemedicine - use of electronic information and communication technologies to provide and communication technologies to provide health services when participants are health services when participants are geographically separatedgeographically separated

Remote patient monitoring is a key Remote patient monitoring is a key component of telemedicinecomponent of telemedicine

Allows healthcare providers access to Allows healthcare providers access to important information regarding a patient’s important information regarding a patient’s medical status between doctor visits medical status between doctor visits


VitalSign provides additional VitalSign provides additional convenienceconvenience

Easily monitor patients with severe Easily monitor patients with severe burns or contagious diseasesburns or contagious diseases

Provides method to monitor babies Provides method to monitor babies without the potential danger of wires without the potential danger of wires


Barriers to EntryBarriers to Entry Only measures two important vital signsOnly measures two important vital signs FDA pre-market requirements for FDA pre-market requirements for

groundbreaking (Class III) medical groundbreaking (Class III) medical technologies cover every aspect of technologies cover every aspect of product development product development

FDA validation process will take up to 5 FDA validation process will take up to 5 years and cost at least $15 million years and cost at least $15 million

Potential Markets – National Potential Markets – National DefenseDefense Department of Defense (DOD) budget for 2006 is over $500 Department of Defense (DOD) budget for 2006 is over $500

billion billion VitalSign may fill the military’s need to provide troops, VitalSign may fill the military’s need to provide troops,

conducting urban warfare operations with personnel conducting urban warfare operations with personnel detection devices detection devices

Allows detection through barriers such as wood and concrete Allows detection through barriers such as wood and concrete when looking for enemy combatantswhen looking for enemy combatants

Potential Markets – National Potential Markets – National DefenseDefense

Additional military detection Additional military detection applications include :applications include : Military search and rescue on the Military search and rescue on the

battlefield or during a natural disasterbattlefield or during a natural disaster Detection after biological exposureDetection after biological exposure

Potential Markets – National Potential Markets – National DefenseDefense

Barriers to EntryBarriers to Entry Notable challenges dealing with Notable challenges dealing with

government acquisitions bureaucracygovernment acquisitions bureaucracy Competition from large defense Competition from large defense

contractors developing technology that contractors developing technology that can provide more data to the soldier can provide more data to the soldier than VitalSignthan VitalSign

Potential Markets – Cardiovascular Potential Markets – Cardiovascular

Exercise EquipmentExercise Equipment Cardiovascular Cardiovascular

disease (CVD) is the disease (CVD) is the number one killer of number one killer of men and women in men and women in the United Statesthe United States

Increased awareness Increased awareness of the importance of of the importance of proper diet and proper diet and exerciseexercise

Has created Has created exceptional growth in exceptional growth in the exercise and the exercise and fitness industryfitness industry

Potential Markets – Cardiovascular Potential Markets – Cardiovascular Exercise EquipmentExercise Equipment


Approximately 4.4 million treadmills Approximately 4.4 million treadmills were sold in 2003 totaling $2.7 billionwere sold in 2003 totaling $2.7 billion

Elliptical cross trainers experienced Elliptical cross trainers experienced growth of 41% in 2003. growth of 41% in 2003.

Increasing popularity of heart rate Increasing popularity of heart rate monitoring during cardiovascular monitoring during cardiovascular exercise to a target heart rate zone exercise to a target heart rate zone allowing for maximum exercise allowing for maximum exercise efficiencyefficiency


Competitive AnalysisCompetitive Analysis Two primary products currently measure Two primary products currently measure

heart rate while exercisingheart rate while exercising Handgrip Sensors Handgrip Sensors Telemetric Chest Strap Telemetric Chest Strap

VitalSign has significant advantages VitalSign has significant advantages over the two currently available over the two currently available technologiestechnologies

Target Market - Cardiovascular Target Market - Cardiovascular Exercise EquipmentExercise Equipment

Low barriers to entryLow barriers to entry Ability to provide a revenue stream Ability to provide a revenue stream

quicklyquickly Technology can be integrated into Technology can be integrated into

the next generation of cardiovascular the next generation of cardiovascular exercise equipment, providing exercise equipment, providing convenient monitoring of heart and convenient monitoring of heart and respiration ratesrespiration rates

Financial Analysis – Startup Financial Analysis – Startup and Operation Costsand Operation Costs

Investment of $2 million over the next 2 Investment of $2 million over the next 2 years is estimated for research and years is estimated for research and development with zero estimated development with zero estimated revenuerevenue

R&D is reduced to $250,000 in year 3 R&D is reduced to $250,000 in year 3 and beyondand beyond

Marketing is budgeted at $1 million in Marketing is budgeted at $1 million in the first year of sales, which is then the first year of sales, which is then reduced to $250,000 in the following reduced to $250,000 in the following yearsyears

Financial Analysis – Revenue Financial Analysis – Revenue ForecastForecast

Conservative forecast is to sell 200,000 Conservative forecast is to sell 200,000 units during year three at a price of $8 eachunits during year three at a price of $8 each

Forecast sales to increase by 100% each Forecast sales to increase by 100% each year for the next three years while the price year for the next three years while the price will be reduced by 10% each year will be reduced by 10% each year

Equates to sales beginning in year three at Equates to sales beginning in year three at 200,000 units and increasing to 1.6 million 200,000 units and increasing to 1.6 million units by end of year six units by end of year six

Revenue is projected to increase from $1.6 Revenue is projected to increase from $1.6 million to $9.2 million during the same million to $9.2 million during the same period. period.

Financial Analysis - Price and Financial Analysis - Price and Income ElasticityIncome Elasticity

The market for all cardiovascular disease The market for all cardiovascular disease (CVD) monitoring equipment is generally (CVD) monitoring equipment is generally price elasticprice elastic

Since VitalSign is a complementary Since VitalSign is a complementary product it is more elastic to the price of product it is more elastic to the price of the complementary product the complementary product

Large increases in the price of Large increases in the price of cardiovascular exercise equipment will cardiovascular exercise equipment will severely impact the sales of our productseverely impact the sales of our product

Demand is income elasticDemand is income elastic

Financial Analysis – Financial Analysis –

Break-Even AnalysisBreak-Even Analysis Operational Costs during the first year of Operational Costs during the first year of

commercial availability (2008) are commercial availability (2008) are estimated at $670,000 estimated at $670,000

The 6 year (2006-2012) total cost of The 6 year (2006-2012) total cost of product development, operational product development, operational expenses will be approximately $12.7 expenses will be approximately $12.7 million with revenue totaling $19.7 millionmillion with revenue totaling $19.7 million

Resulting in six year net profit of Resulting in six year net profit of approximately $5.3 million approximately $5.3 million

Break-Even AnalysisBreak-Even Analysis

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6

Total Costs

Total Revenue

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6Total Costs $973,000 $1,083,000 $1,150,000 $1,770,000 $2,870,000 $4,935,000 Total Revenue

$0 $0 $1,600,000 $2,880,000 $5,440,000 $9,792,000

Annual Profit ($973,000) ($1,083,000) $450,000 $1,110,000 $2,570,000 $4,857,000 Total Profit ($973,000) ($2,056,000) ($1,606,000) ($496,000) $2,074,000 $6,931,000

Pro Forma Financial DataPro Forma Financial DataProfit & Loss Projections

Year1 Year2 Year3 Year4 Year5 Year6Total Sales -$ -$ 1,600,000$ 2,880,000$ 5,440,000$ 9,792,000$ Less: Cost of Sales 20,000$ 35,000$ 480,000$ 960,000$ 1,920,000$ 3,840,000$

Gross Profit (20,000)$ (35,000)$ 1,120,000$ 1,920,000$ 3,520,000$ 5,952,000$

Operating ExpensesBusiness development payroll -$ 50,000$ 200,000$ 300,000$ 400,000$ 500,000$ Research payroll 750,000$ 750,000$ 250,000$ 250,000$ 250,000$ 250,000$ Rent 12,000$ 12,000$ 25,000$ 25,000$ 25,000$ 25,000$ Utilities 3,000$ 3,000$ 5,000$ 5,000$ 5,000$ 5,000$ Legal Expenses 15,000$ 15,000$ 15,000$ 15,000$ 15,000$ 15,000$ Licenses & fees 10,000$ 15,000$ 15,000$ 15,000$ 15,000$ 15,000$ Advertising/Promotion -$ 10,000$ 20,000$ 30,000$ 40,000$ 50,000$ Travel 5,000$ 25,000$ 35,000$ 45,000$ 55,000$ 65,000$ Payroll taxes 150,000$ 160,000$ 90,000$ 110,000$ 130,000$ 150,000$ Lease expenses 5,000$ 5,000$ 10,000$ 10,000$ 10,000$ 10,000$ Other Misc expenses 3,000$ 3,000$ 5,000$ 5,000$ 5,000$ 10,000$

Total operating costs 953,000$ 1,048,000$ 670,000$ 810,000$ 950,000$ 1,095,000$

Total costs 973,000$ 1,083,000$ 1,150,000$ 1,770,000$ 2,870,000$ 4,935,000$

Profit before Interest and taxes (973,000)$ (1,083,000)$ 450,000$ 1,110,000$ 2,570,000$ 4,857,000$ Interest expense -$ -$ -$ -$ -$ -$ Taxes Incurred -$ -$ -$ 78,750$ 246,750$ 1,214,250$

Net Profit(loss) (973,000)$ (1,083,000)$ 450,000$ 1,031,250$ 2,323,250$ 3,642,750$

ConclusionsConclusions

Numerous Possibilities for VitalSignNumerous Possibilities for VitalSign Fitness Equipment Industry is most viable Fitness Equipment Industry is most viable

Technology needs only minor changes.Technology needs only minor changes. Industry is growingIndustry is growing Nothing exists that can compare.Nothing exists that can compare.

Technology is definitely feasible Technology is definitely feasible

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Market Feasibility Study VitalSign: Wireless Heartbeat and Respiration Detector