Click here to buy now or call 0845 351 9924
Plan Outline
Medical Equipment Business Plan
MedNexis, Inc.
Financial Plan
CAPITAL RAISING ("THE OFFER")
The company intends to raise an amount of approximately £750,000 of seed capital. £250,000 has already been committed by management.
Current Capital Structure
| Shares Authorized | Shares Issued |
| 15,000,000 common | 1,500,000 common |
| 1,000,000 preferred | 0 preferred |
Current Shareholders:
| Daniel Burnett | |
| Mike Marriott | 300,000 shares |
| Nathan Wain | 300,000 shares |
| Brian Bell | 300,000 shares |
For £750,000, the investing party will receive 750,000 preferred shares, or 33.3% of the company. Preferred shares will include senior debt and anti-dilution provisions as negotiated.
Utilization of Proceeds:
Working capital
The proceeds from the offer will be used to fund the working capital requirements of the company (and its subsidiary and associated companies, if any).
Acquisition of assets
Land & building, plant & machinery, and other fixed assets will be purchased as and when deemed necessary to maximize the profits of the company
Cashflows incidental to the normal business operations of the company.
Funds will be used for the purpose of business operations of the company.
Exit Considerations
The most likely exit afforded investors will be through acquisition. If the company's actual operational and financial results are in any reasonable range of the projected results herein, the company will become an attractive asset to an acquisitive competitor or larger medical device company. No particular competitor or medical device company is thought to be more likely than another to be interested in MedNexis' technology.
To the extent that actual operational results materially exceed those projected herein, the probability of an IPO exit increases. Exceptional results would enhance the Mednexis brand name and financial position, making new product development and the likelihood of new product success more plausible. In this scenario, the opportunity to raise capital and provide an investment exit to shareholders becomes more likely.
A third exit possibility for investors may be an acquisition after IPO. This strategy would allow an investor to delay exit until after capital from an IPO is invested in successful projects, further raising the value of the firm.
8.1 Break-even Analysis
The break-even analysis below is based on estimates for fixed costs, average revenue per unit and average variable cost per unit for both MedStim and TheraMag systems.
| Break-even Analysis | |
| Monthly Units Break-even | 545 |
| Monthly Revenue Break-even | £130,241 |
| Assumptions: | |
| Average Per-Unit Revenue | £239.13 |
| Average Per-Unit Variable Cost | £132.41 |
| Estimated Monthly Fixed Cost | £58,124 |
8.2 Important Assumptions
Demand
- Using 1997 data, 10% of all patients with reported fractures (the approximate rate of fractures that result in muscular fibrosis), 50% of all patients with reported long-term immobilization, and 100% of all patients with reported paralysis or coma were considered potential customers for MedStim.
- 20% of consumers who visited an energy healer in 1997 (202 consumers per 1,000 in population) were considered potential customers for TheraMag (magnetism was the most frequently used modality reported among energy healers between 1990 and 1997). Total Energy healing devices used between 1990 and 1997 were 40 million.
Product Mix
- TheraMag will be leased less frequently than MedStim, thus the total potential market for logic controllers (LC) will be 1 for every potential customer. MedStim will be owned by hospitals and leased to patients more routinely and the total potential market for LCs will be 1 for every 10 potential customers. The potential market for the arrays of overlapping coils (AOC) will be as follows: single AOC per potential customer for the TheraMag system and 5 AOCs per 10 potential customers for the MedStim system.
- In evaluating the breakeven volume, a unit was taken to be 1 LC and the AOCs sold along with the LC in that market, ie for TheraMag, 1 unit was an LC and an AOC. For MedStim, 1 unit was an LC and 5 AOCs. The cost/unit and revenue/unit were then assumed to be the average cost/unit and revenue/unit of the 2 products.
Sales/Revenues
- The maximum penetration of any market segment was conservatively estimated to be no more than 3% by Year 5.
- Assume 5% growth of both costs/unit and price/unit.
- Insurance company reimbursement will be approved by year 3.
| General Assumptions | |||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
| Plan Month | 1 | 2 | 3 | 4 | 5 |
| Current Interest Rate | 13.00% | 13.00% | 13.00% | 13.00% | 13.00% |
| Long-term Interest Rate | 12.00% | 12.00% | 12.00% | 12.00% | 12.00% |
| Tax Rate | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% |
| Other | 0 | 0 | 0 | 0 | 0 |
8.3 Projected Profit and Loss
Barring any unforseen circumstances, MedNexis is anticipated to break-even by Year 3 of operations. Profits for the company in subsequent years will accelerate with the increase in anticipated sales volume.
| Pro Forma Profit and Loss | |||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
| Sales | £121,000 | £2,799,113 | £23,502,101 | £73,299,901 | £191,679,647 |
| Direct Cost of Sales | £67,000 | £1,204,249 | £8,089,964 | £23,652,657 | £54,279,004 |
| Production Payroll | £0 | £0 | £0 | £0 | £0 |
| Other | £0 | £0 | £0 | £0 | £0 |
| Total Cost of Sales | £67,000 | £1,204,249 | £8,089,964 | £23,652,657 | £54,279,004 |
| Gross Margin | £54,000 | £1,594,864 | £15,412,137 | £49,647,244 | £137,400,644 |
| Gross Margin % | 44.63% | 56.98% | 65.58% | 67.73% | 71.68% |
| Operating Expenses | |||||
| Sales and Marketing Expenses | |||||
| Sales and Marketing Payroll | £36,000 | £635,000 | £1,240,000 | £2,156,000 | £3,610,000 |
| Advertising/Promotion | £45,000 | £50,000 | £200,000 | £300,000 | £500,000 |
| Travel | £18,000 | £40,000 | £80,000 | £150,000 | £200,000 |
| Research and Design Expenses | £240,000 | £1,000,000 | £1,500,000 | £2,250,000 | £2,500,000 |
| Miscellaneous | £3,000 | £10,000 | £15,000 | £22,000 | £30,000 |
| Total Sales and Marketing Expenses | £342,000 | £1,735,000 | £3,035,000 | £4,878,000 | £6,840,000 |
| Sales and Marketing % | 282.64% | 61.98% | 12.91% | 6.65% | 3.57% |
| General and Administrative Expenses | |||||
| General and Administrative Payroll | £134,000 | £419,000 | £731,000 | £910,000 | £1,182,000 |
| Sales and Marketing and Other Expenses | £0 | £0 | £0 | £0 | £0 |
| Depreciation | £0 | £0 | £0 | £0 | £0 |
| Leased Equipment | £0 | £0 | £20,000 | £20,000 | £20,000 |
| Utilities | £12,000 | £12,360 | £12,731 | £13,113 | £13,506 |
| Insurance | £30,000 | £40,000 | £40,000 | £40,000 | £40,000 |
| Rent | £24,000 | £24,720 | £25,462 | £26,225 | £27,012 |
| Payroll Taxes | £56,490 | £275,940 | £508,830 | £748,860 | £1,124,550 |
| Other General and Administrative Expenses | £0 | £0 | £0 | £0 | £0 |
| Total General and Administrative Expenses | £256,490 | £772,020 | £1,338,022 | £1,758,198 | £2,407,068 |
| General and Administrative % | 211.98% | 27.58% | 5.69% | 2.40% | 1.26% |
| Other Expenses: | |||||
| Other Payroll | £99,000 | £260,000 | £452,000 | £500,000 | £563,000 |
| Consultants | £0 | £0 | £0 | £0 | £0 |
| Contract/Consultants | £0 | £20,000 | £20,000 | £20,000 | £20,000 |
| Total Other Expenses | £99,000 | £280,000 | £472,000 | £520,000 | £583,000 |
| Other % | 81.82% | 10.00% | 2.01% | 0.71% | 0.30% |
| Total Operating Expenses | £697,490 | £2,787,020 | £4,845,022 | £7,156,198 | £9,830,068 |
| Profit Before Interest and Taxes | (£643,490) | (£1,192,156) | £10,567,115 | £42,491,046 | £127,570,575 |
| EBITDA | (£643,490) | (£1,192,156) | £10,567,115 | £42,491,046 | £127,570,575 |
| Interest Expense | £0 | £0 | £0 | £0 | £0 |
| Taxes Incurred | £0 | £0 | £3,170,134 | £12,747,314 | £38,271,173 |
| Net Profit | (£643,490) | (£1,192,156) | £7,396,980 | £29,743,732 | £89,299,403 |
| Net Profit/Sales | -531.81% | -42.59% | 31.47% | 40.58% | 46.59% |
8.4 Projected Cash Flow
It will be noted that the company's cash flow will be steadily declining for the first year of operations. This is expected due to large capital investments and initial slow sales. the company has calculated its financial plan so that it will have enough cash from investors and debt to survive until profitability reaches acceptable levels.
| Pro Forma Cash Flow | |||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
| Cash Received | |||||
| Cash from Operations | |||||
| Cash Sales | £30,250 | £1,119,645 | £9,400,840 | £29,319,960 | £76,671,859 |
| Cash from Receivables | £40,470 | £799,239 | £7,218,971 | £27,425,670 | £75,654,839 |
| Subtotal Cash from Operations | £70,720 | £1,918,885 | £16,619,812 | £56,745,630 | £152,326,698 |
| Additional Cash Received | |||||
| 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 | £750,000 | £6,000,000 | £342,000 | £0 | £0 |
| Subtotal Cash Received | £820,720 | £7,918,885 | £16,961,812 | £56,745,630 | £152,326,698 |
| Expenditures | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
| Expenditures from Operations | |||||
| Cash Spending | £269,000 | £1,314,000 | £2,423,000 | £3,566,000 | £5,355,000 |
| Bill Payments | £450,767 | £2,948,740 | £15,357,265 | £44,383,794 | £107,947,792 |
| Subtotal Spent on Operations | £719,766 | £4,262,740 | £17,780,265 | £47,949,794 | £113,302,792 |
| Additional Cash Spent | |||||
| 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 | £30,000 | £100,000 | £150,000 | £150,000 | £150,000 |
| Dividends | £0 | £0 | £0 | £0 | £5,000,000 |
| Subtotal Cash Spent | £749,766 | £4,362,740 | £17,930,265 | £48,099,794 | £118,452,792 |
| Net Cash Flow | £70,954 | £3,556,144 | (£968,454) | £8,645,836 | £33,873,906 |
| Cash Balance | £152,954 | £3,709,098 | £2,740,644 | £11,386,480 | £45,260,386 |
8.5 Projected Balance Sheet
The table below presents the Balance Sheet for MedNexis.
| Pro Forma Balance Sheet | |||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
| Assets | |||||
| Current Assets | |||||
| Cash | £152,954 | £3,709,098 | £2,740,644 | £11,386,480 | £45,260,386 |
| Accounts Receivable | £50,280 | £930,508 | £7,812,797 | £24,367,068 | £63,720,018 |
| Inventory | £26,950 | £484,396 | £3,254,097 | £10,149,093 | £26,539,935 |
| Other Current Assets | £0 | £0 | £0 | £0 | £0 |
| Total Current Assets | £230,184 | £5,124,002 | £13,807,539 | £45,902,641 | £135,520,339 |
| Long-term Assets | |||||
| Long-term Assets | £30,000 | £130,000 | £280,000 | £430,000 | £580,000 |
| Accumulated Depreciation | £0 | £0 | £0 | £0 | £0 |
| Total Long-term Assets | £30,000 | £130,000 | £280,000 | £430,000 | £580,000 |
| Total Assets | £260,184 | £5,254,002 | £14,087,539 | £46,332,641 | £136,100,339 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
| Current Liabilities | |||||
| Accounts Payable | £71,674 | £257,648 | £1,352,205 | £3,853,575 | £9,321,870 |
| Current Borrowing | £0 | £0 | £0 | £0 | £0 |
| Other Current Liabilities | £0 | £0 | £0 | £0 | £0 |
| Subtotal Current Liabilities | £71,674 | £257,648 | £1,352,205 | £3,853,575 | £9,321,870 |
| Long-term Liabilities | £0 | £0 | £0 | £0 | £0 |
| Total Liabilities | £71,674 | £257,648 | £1,352,205 | £3,853,575 | £9,321,870 |
| Paid-in Capital | £1,000,000 | £7,000,000 | £7,342,000 | £7,342,000 | £7,342,000 |
| Retained Earnings | (£168,000) | (£811,490) | (£2,003,646) | £5,393,334 | £30,137,066 |
| Earnings | (£643,490) | (£1,192,156) | £7,396,980 | £29,743,732 | £89,299,403 |
| Total Capital | £188,510 | £4,996,354 | £12,735,334 | £42,479,066 | £126,778,469 |
| Total Liabilities and Capital | £260,184 | £5,254,002 | £14,087,539 | £46,332,641 | £136,100,339 |
| Net Worth | £188,510 | £4,996,354 | £12,735,334 | £42,479,066 | £126,778,469 |
8.6 Business Ratios
The ratios contained herewith are not based on a post-diluted enlarged capital base. The figures come from the Standard Industry Classification (SIC) Index code 3845, Electromedical Equipment.
| Ratio Analysis | ||||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Industry Profile | |
| Sales Growth | 0.00% | 2213.32% | 739.63% | 211.89% | 161.50% | 0.00% |
| Percent of Total Assets | ||||||
| Accounts Receivable | 19.32% | 17.71% | 55.46% | 52.59% | 46.82% | 0.00% |
| Inventory | 10.36% | 9.22% | 23.10% | 21.90% | 19.50% | 0.00% |
| Other Current Assets | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 100.00% |
| Total Current Assets | 88.47% | 97.53% | 98.01% | 99.07% | 99.57% | 100.00% |
| Long-term Assets | 11.53% | 2.47% | 1.99% | 0.93% | 0.43% | 0.00% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 27.55% | 4.90% | 9.60% | 8.32% | 6.85% | 0.00% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| Total Liabilities | 27.55% | 4.90% | 9.60% | 8.32% | 6.85% | 0.00% |
| Net Worth | 72.45% | 95.10% | 90.40% | 91.68% | 93.15% | 100.00% |
| Percent of Sales | ||||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 44.63% | 56.98% | 65.58% | 67.73% | 71.68% | 0.00% |
| Selling, General & Administrative Expenses | 576.44% | 99.57% | 34.10% | 27.15% | 25.09% | 0.00% |
| Advertising Expenses | 37.19% | 1.79% | 0.85% | 0.41% | 0.26% | 0.00% |
| Profit Before Interest and Taxes | -531.81% | -42.59% | 44.96% | 57.97% | 66.55% | 0.00% |
| Main Ratios | ||||||
| Current | 3.21 | 19.89 | 10.21 | 11.91 | 14.54 | 0.00 |
| Quick | 2.84 | 18.01 | 7.80 | 9.28 | 11.69 | 0.00 |
| Total Debt to Total Assets | 27.55% | 4.90% | 9.60% | 8.32% | 6.85% | 0.00% |
| Pre-tax Return on Net Worth | -341.36% | -23.86% | 82.97% | 100.03% | 100.62% | 0.00% |
| Pre-tax Return on Assets | -247.32% | -22.69% | 75.01% | 91.71% | 93.73% | 0.00% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
| Net Profit Margin | -531.81% | -42.59% | 31.47% | 40.58% | 46.59% | n.a |
| Return on Equity | -341.36% | -23.86% | 58.08% | 70.02% | 70.44% | n.a |
| Activity Ratios | ||||||
| Accounts Receivable Turnover | 1.80 | 1.80 | 1.80 | 1.80 | 1.80 | n.a |
| Collection Days | 38 | 107 | 113 | 134 | 140 | n.a |
| Inventory Turnover | 10.91 | 4.71 | 4.33 | 3.53 | 2.96 | n.a |
| Accounts Payable Turnover | 7.29 | 12.17 | 12.17 | 12.17 | 12.17 | n.a |
| Payment Days | 27 | 19 | 18 | 20 | 21 | n.a |
| Total Asset Turnover | 0.47 | 0.53 | 1.67 | 1.58 | 1.41 | n.a |
| Debt Ratios | ||||||
| Debt to Net Worth | 0.38 | 0.05 | 0.11 | 0.09 | 0.07 | n.a |
| Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | n.a |
| Liquidity Ratios | ||||||
| Net Working Capital | £158,510 | £4,866,354 | £12,455,334 | £42,049,066 | £126,198,469 | n.a |
| Interest Coverage | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | n.a |
| Additional Ratios | ||||||
| Assets to Sales | 2.15 | 1.88 | 0.60 | 0.63 | 0.71 | n.a |
| Current Debt/Total Assets | 28% | 5% | 10% | 8% | 7% | n.a |
| Acid Test | 2.13 | 14.40 | 2.03 | 2.95 | 4.86 | n.a |
| Sales/Net Worth | 0.64 | 0.56 | 1.85 | 1.73 | 1.51 | n.a |
| Dividend Payout | 0.00 | 0.00 | 0.00 | 0.00 | 0.06 | n.a |