1. Market Feasibility Study VitalSign: Wireless Heartbeat and Respiration Detector

2. Presentation Outline Technology Description Technology Description Potential Markets Potential Markets Target Market Target Market Financial Analysis Financial Analysis Conclusions Conclusions

3. Technology Description Developed by Dr. Jenshan Lin and his colleagues at the University of Florida Developed by Dr. Jenshan Lin and his colleagues at the University of Florida VitalSign utilizes a modified Doppler radar to wirelessly monitor heart and respiration rates VitalSign utilizes a modified Doppler radar to wirelessly monitor heart and respiration rates

4. Technology Description The small portable device employs low power radio waves to determine vital signs without attaching sensors to the body The small portable device employs low power radio waves to determine vital signs without attaching sensors to the body The system monitors chest motion to determine heart and breathing rates The system monitors chest motion to determine heart and breathing rates Proven accurate within 3 meter range Proven accurate within 3 meter range Patent Pending Patent Pending

5. Technology Description Next generation working prototype the size of a scientific calculator has been developed Next generation working prototype the size of a scientific calculator has been developed Goal is to integrate the technology into a single chip Goal is to integrate the technology into a single chip

6. Potential Markets Technology applicable in various markets Technology applicable in various markets Conducted market research in the following three potential markets: Conducted market research in the following three potential markets: Healthcare Healthcare National Defense National Defense Cardiovascular exercise equipment Cardiovascular exercise equipment

7. Potential Markets - Healthcare By 2011, the first of the 76 million baby- boomer generation will turn 65 years old By 2011, the first of the 76 million baby- boomer generation will turn 65 years old Increasing demand on the healthcare system Increasing demand on the healthcare system Opportunities for cost effective healthcare solutions allowing doctors to function more efficiently Opportunities for cost effective healthcare solutions allowing doctors to function more efficiently

8. Potential Markets - Healthcare Telemedicine - use of electronic information and communication technologies to provide health services when participants are geographically separated Telemedicine - use of electronic information and communication technologies to provide health services when participants are geographically separated Remote patient monitoring is a key component of telemedicine Remote patient monitoring is a key component of telemedicine Allows healthcare providers access to important information regarding a patient’s medical status between doctor visits Allows healthcare providers access to important information regarding a patient’s medical status between doctor visits

9. Potential Markets - Healthcare VitalSign provides additional convenience VitalSign provides additional convenience Easily monitor patients with severe burns or contagious diseases Easily monitor patients with severe burns or contagious diseases Provides method to monitor babies without the potential danger of wires Provides method to monitor babies without the potential danger of wires

10. Potential Markets - Healthcare Barriers to Entry Barriers to Entry Only measures two important vital signs Only measures two important vital signs FDA pre-market requirements for groundbreaking (Class III) medical technologies cover every aspect of product development FDA pre-market requirements for groundbreaking (Class III) medical technologies cover every aspect of product development FDA validation process will take up to 5 years and cost at least $15 million FDA validation process will take up to 5 years and cost at least $15 million

11. Potential Markets – National Defense Department of Defense (DOD) budget for 2006 is over $500 billion Department of Defense (DOD) budget for 2006 is over $500 billion VitalSign may fill the military’s need to provide troops, conducting urban warfare operations with personnel detection devices VitalSign may fill the military’s need to provide troops, conducting urban warfare operations with personnel detection devices Allows detection through barriers such as wood and concrete when looking for enemy combatants Allows detection through barriers such as wood and concrete when looking for enemy combatants

12. Potential Markets – National Defense Additional military detection applications include : Additional military detection applications include : Military search and rescue on the battlefield or during a natural disaster Military search and rescue on the battlefield or during a natural disaster Detection after biological exposure Detection after biological exposure

13. Potential Markets – National Defense Barriers to Entry Barriers to Entry Notable challenges dealing with government acquisitions bureaucracy Notable challenges dealing with government acquisitions bureaucracy Competition from large defense contractors developing technology that can provide more data to the soldier than VitalSign Competition from large defense contractors developing technology that can provide more data to the soldier than VitalSign

14. Potential Markets – Cardiovascular Exercise Equipment Cardiovascular disease (CVD) is the number one killer of men and women in the United States Cardiovascular disease (CVD) is the number one killer of men and women in the United States Increased awareness of the importance of proper diet and exercise Increased awareness of the importance of proper diet and exercise Has created exceptional growth in the exercise and fitness industry Has created exceptional growth in the exercise and fitness industry

15. Potential Markets – Cardiovascular Exercise Equipment

16. Approximately 4.4 million treadmills were sold in 2003 totaling $2.7 billion Approximately 4.4 million treadmills were sold in 2003 totaling $2.7 billion Elliptical cross trainers experienced growth of 41% in 2003. Elliptical cross trainers experienced growth of 41% in 2003. Increasing popularity of heart rate monitoring during cardiovascular exercise to a target heart rate zone allowing for maximum exercise efficiency Increasing popularity of heart rate monitoring during cardiovascular exercise to a target heart rate zone allowing for maximum exercise efficiency

17. Potential Markets – Cardiovascular Exercise Equipment Competitive Analysis Competitive Analysis Two primary products currently measure heart rate while exercising Two primary products currently measure heart rate while exercising Handgrip Sensors Handgrip Sensors Telemetric Chest Strap Telemetric Chest Strap VitalSign has significant advantages over the two currently available technologies VitalSign has significant advantages over the two currently available technologies

18. Target Market - Cardiovascular Exercise Equipment Low barriers to entry Low barriers to entry Ability to provide a revenue stream quickly Ability to provide a revenue stream quickly Technology can be integrated into the next generation of cardiovascular exercise equipment, providing convenient monitoring of heart and respiration rates Technology can be integrated into the next generation of cardiovascular exercise equipment, providing convenient monitoring of heart and respiration rates

19. Financial Analysis – Startup and Operation Costs Investment of $2 million over the next 2 years is estimated for research and development with zero estimated revenue Investment of $2 million over the next 2 years is estimated for research and development with zero estimated revenue R&D is reduced to $250,000 in year 3 and beyond R&D is reduced to $250,000 in year 3 and beyond Marketing is budgeted at $1 million in the first year of sales, which is then reduced to $250,000 in the following years Marketing is budgeted at $1 million in the first year of sales, which is then reduced to $250,000 in the following years

20. Financial Analysis – Revenue Forecast Conservative forecast is to sell 200,000 units during year three at a price of $8 each Conservative forecast is to sell 200,000 units during year three at a price of $8 each Forecast sales to increase by 100% each year for the next three years while the price will be reduced by 10% each year Forecast sales to increase by 100% each year for the next three years while the price will be reduced by 10% each year Equates to sales beginning in year three at 200,000 units and increasing to 1.6 million units by end of year six Equates to sales beginning in year three at 200,000 units and increasing to 1.6 million units by end of year six Revenue is projected to increase from $1.6 million to $9.2 million during the same period. Revenue is projected to increase from $1.6 million to $9.2 million during the same period.

21. Financial Analysis - Price and Income Elasticity The market for all cardiovascular disease (CVD) monitoring equipment is generally price elastic The market for all cardiovascular disease (CVD) monitoring equipment is generally price elastic Since VitalSign is a complementary product it is more elastic to the price of the complementary product Since VitalSign is a complementary product it is more elastic to the price of the complementary product Large increases in the price of cardiovascular exercise equipment will severely impact the sales of our product Large increases in the price of cardiovascular exercise equipment will severely impact the sales of our product Demand is income elastic Demand is income elastic

22. Financial Analysis – Break-Even Analysis Operational Costs during the first year of commercial availability (2008) are estimated at $670,000 Operational Costs during the first year of commercial availability (2008) are estimated at $670,000 The 6 year (2006-2012) total cost of product development, operational expenses will be approximately $12.7 million with revenue totaling $19.7 million The 6 year (2006-2012) total cost of product development, operational expenses will be approximately $12.7 million with revenue totaling $19.7 million Resulting in six year net profit of approximately $5.3 million Resulting in six year net profit of approximately $5.3 million

23. Break-Even Analysis

24. Pro Forma Financial Data

25. Conclusions Numerous Possibilities for VitalSign Numerous 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 growing Industry is growing Nothing exists that can compare. Nothing exists that can compare. Technology is definitely feasible Technology is definitely feasible

26. Questions