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Table of Contents

Page 1

1.0 Executive Summary.............................................................................................................................11.1 Mission ........................................................................................................................................1

Chart: Highlights ......................................................................................................................21.2 Objectives ...................................................................................................................................21.3 Keys to Success ........................................................................................................................2

2.0 Company Summary.............................................................................................................................22.1 Start-up Summary ......................................................................................................................2

Chart: Start-up .........................................................................................................................3Table: Start-up .........................................................................................................................3Table: Start-up Funding ..........................................................................................................4

2.2 Company Ownership .................................................................................................................43.0 Services................................................................................................................................................44.0 Market Analysis Summary ..................................................................................................................5

4.1 Market Segmentation ................................................................................................................5Table: Market Analysis ...........................................................................................................6Chart: Market Analysis (Pie) ..................................................................................................6

4.2 Target Market Segment Strategy .............................................................................................64.3 Service Business Analysis........................................................................................................6

4.3.1 Competition and Buying Patterns................................................................................75.0 Strategy and Implementation Summary ............................................................................................7

5.1 Competitive Edge ......................................................................................................................75.2 Marketing Strategy.....................................................................................................................85.3 Sales Strategy ............................................................................................................................8

5.3.1 Sales Forecast ..............................................................................................................8Chart: Sales Monthly......................................................................................................9Chart: Sales by Year......................................................................................................9Table: Sales Forecast.................................................................................................10

5.4 Milestones ................................................................................................................................10Table: Milestones..................................................................................................................10Chart: Milestones ..................................................................................................................11

6.0 Web Plan Summary ..........................................................................................................................116.1 Website Marketing Strategy ...................................................................................................116.2 Development Requirements ...................................................................................................11

7.0 Management Summary ....................................................................................................................117.1 Personnel Plan .........................................................................................................................12

Table: Personnel ...................................................................................................................128.0 Financial Plan ....................................................................................................................................12

8.1 Important Assumptions............................................................................................................12Table: General Assumptions ...............................................................................................12

8.2 Break-even Analysis................................................................................................................12Chart: Break-even Analysis .................................................................................................13Table: Break-even Analysis .................................................................................................13

8.3 Projected Profit and Loss .......................................................................................................13Chart: Profit Monthly .............................................................................................................14Chart: Profit Yearly ................................................................................................................14Chart: Gross Margin Monthly ...............................................................................................15Chart: Gross Margin Yearly..................................................................................................15

Table of Contents

Page 2

Table: Profit and Loss ..........................................................................................................168.4 Projected Cash Flow ...............................................................................................................16

Table: Cash Flow ..................................................................................................................17Chart: Cash ...........................................................................................................................18

8.5 Projected Balance Sheet ........................................................................................................19Table: Balance Sheet ...........................................................................................................19

8.6 Business Ratios .......................................................................................................................20Table: Ratios .........................................................................................................................21

Table: Sales Forecast ...............................................................................................................................1Table: Personnel ........................................................................................................................................2Table: General Assumptions ....................................................................................................................3Table: Profit and Loss ...............................................................................................................................4Table: Cash Flow .......................................................................................................................................5Table: Balance Sheet ................................................................................................................................6

Scan Lab

Page 1

1.0 Executive Summary

Scan Lab Medical Imaging is a start-up company offering a wide range of medical image scanningtests for the New Bedford, Massachusetts community.

The Market

Scan Lab will target insurance carriers. Insurance carriers use a bid submittal process to set upcontracts with the various medical scan service providers. In today's medical environmentthese contact are key because 99% of the scans done are billed through insurance. Insurancecompanies therefore are the gate keepers to this process. Scan Lab recognizes the importanceof getting insurance carriers approval and will work hard to get approved by all popular insuranceplans.

Once Scan Lab has been approved by an insurance company, it will rely on referrals ofphysicians to point their patients to Scan Lab. Doctors make referrals based on several factorsincluding geographic location/convenience who they know, accepted forms of insurance, typeof scan, etc. It will be important to have a strong marketing and sales campaign that alertsreferring doctors to Scan Lab's services.

Services

Scan Lab offers a wide range of radiology-based medical scanning tests. Scan Lab has the latestequipment and the expert medical training to interpret and provide valuable consultations tothe physicians who make the patient referrals to Scan Lab.

Management

Scan Lab will be lead by Dr. Carolyn Jones. Dr. Jones received her medical degree with aspecialization in radiology from the University of California San Diego, a nationally recognizedmedical school for radiology. Dr. Jones performed her residency at John Hopkins, also nationallyrecognized for their radiology program. Dr. Jones has practiced radiology for 13 years at a largeclinic in Boston.

1.1 Mission

It is Scan Lab's mission to be recognized as the leader in medical scanning technology in NewBedford. This will be achieved by friendly service, flexible acceptance of insurance plans, andaccurate analysis.

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1.2 Objectives

· To capture 40% of local physicians' business within two years.· To reach profitability within two years.· To double sales by year three.

1.3 Keys to Success

· Only purchase medical equipment that has demand within the community.· Provide fast, friendly service with accurate readings.· Employ strict financial controls to help manage the expensive capital costs associated

with medical imaging equipment.

2.0 Company Summary

Scan Lab has been formed as a Massachusetts corporation. It is solely owned by Carolyn Jones.

2.1 Start-up Summary

Scan Lab will need to purchase the necessary equipment for the clinic.

· Office furniture for four exam rooms. This equipment will be purchased used in goodcondition. This will be done as a cost saving measure.

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· Receptionist office furniture and assorted waiting room furniture (this will also bepurchased in good, used condition).

· Three computers, one with QuickBooks Pro, all with Microsoft Office, a central laserprinter and broadband Internet connection.

· Medical scanning devices:° X-ray machine° Ultra sound unit° CAT scan imaging machine° MRI imaging machine

Table: Start-up

Start-up

Requirements

Start-up Expenses

Legal $3,000

Stationery etc. $300

Brochures $300

Consultants $2,000

Insurance $3,000

Rent $2,000

Total Start-up Expenses $10,600

Start-up Assets

Cash Required $317,900

Other Current Assets $0

Long-term Assets $861,500

Total Assets $1,179,400

Total Requirements $1,190,000

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Table: Start-up Funding

Start-up Funding

Start-up Expenses to Fund $10,600

Start-up Assets to Fund $1,179,400

Total Funding Required $1,190,000

Assets

Non-cash Assets from Start-up $861,500

Cash Requirements from Start-up $317,900

Additional Cash Raised $0

Cash Balance on Starting Date $317,900

Total Assets $1,179,400

Liabil ities and Capital

Liabil ities

Current Borrowing $0

Long-term Liabil ities $860,000

Accounts Payable (Outstanding Bills) $0

Other Current Liabil ities (interest-free) $0

Total Liabil ities $860,000

Capital

Planned Investment

Dr. Jones $180,000

Investor $150,000

Additional Investment Requirement $0

Total Planned Investment $330,000

Loss at Start-up (Start-up Expenses) ($10,600)

Total Capital $319,400

Total Capital and Liabil ities $1,179,400

Total Funding $1,190,000

2.2 Company Ownership

Carolyn Jones is the sole stockholder of the Scan Lab corporation.

3.0 Services

Scan Lab offers New Bedford physicians a wide range of diagnostic scanning tests. Due to thehigh cost of scanning equipment for occasional use, most small clinics and practices use anoutside service provider for scanning needs. The following scans will be offered:

· X-Ray: An X-ray uses invisible electromagnetic energy beams to produce images ofinternal tissues, bones, and organs on film. X-rays are used for numerous reasons butwork best to find tumors or bone injuries.

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· Ultrasound: This technology sends sound waves into the body, recording thereflection. Ultrasound is used for a detailed assessment of blood flow and for views ofsoft tissue and anatomical body structure.

· CAT Scan: This is a diagnostic technology that uses a combination of x-rays andcomputer technology to produce cross-sectional images ("slices") in a horizontal andvertical orientation. A CAT scan can show detailed images of any part of the bodyincluding bones, muscles, fat, and organs. CAT scans are more detailed than traditionalx-rays and have lower releases of radiation. CAT scans are often used to diagnosetumors, evaluate internal bleeding or investigate internal injuries or damage.

· MRI: This technology harnesses magnetic energy. The patient is placed in a tube or ona bed where magnetic fields are applied to the body. The reaction by the body whenthe magnetic fields are applied and relaxed are noted by a computer which has beenrecording data throughout the process. MRIs are the premier scanning device forextremities, especially joints, as well as for imaging the upper spine and lower back.

Diagnostic scanning requires proper analysis by a radiologist to analyze the scans.

4.0 Market Analysis Summary

Scan Lab has identified two customer segments that they will target: medical insurancecarriers and physicians. For many patients the insurance company mandates who can providescanning services. Therefore, the driving force to getting customers is attracting the largeinsurance carriers. Scan Lab has been in negotiations with the three largest carriers in thestate and all have informally accepted Scan Lab's bid proposal.

The second customer group is the physicians. While the insurance company will mandate whatlabs are acceptable for their insurance plan, it is the doctor's choice where they recommendtheir patients goes.

4.1 Market Segmentation

Scan Lab will target the three largest medical insurance carriers: Aetna, Cigna, and Prudential.Smaller ones will also be targeted later.

Scan Lab has been involved in negotiations with these three insurance carriers to develop anarrangement for Scan Lab to be an approved facility. The next step is the submission of a bid,which is primarily based on price. The lab must agree to rates that the insurance companieshave set forth. A secondary consideration is the ability of the lab to adhere to specific filingand billing procedures.

The second target market segment is physicians. Physicians make referrals based on numerousfactors including:

· Who they know.· Who the patient's insurance company is.· What type of scan the patient is receiving.

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· Convenience of location relative to their office or to the patient's home.

Table: Market Analysis

Market Analysis

Year 1 Year 2 Year 3 Year 4 Year 5

Potential Customers Growth CAGR

Insurance companies 1% 21 21 21 21 21 0.00%

Physicians 4% 235 244 254 264 275 4.01%

Total 3.70% 256 265 275 285 296 3.70%

4.2 Target Market Segment Strategy

The insurance companies decide what scanning facilities are acceptable relative to theirinsurance plan. Once the facility has been approved, the approval is typically good for one totwo years at which point a new bid must be submitted.

Physicians direct the patient to where they must go for a scan. Because Scan Lab is locatedwithin a professional building with many doctors, this level of convenience with often promptthe doctor to immediately recommend Scan Lab.

4.3 Service Business Analysis

The medical imaging industry operates under two models: a large clinic or practice thatpurchases the equipment for the use of their physicians, and outside service providers.

Only large clinics and practices can justify buying their own scanning equipment. For a small

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clinic or practice, the high equipment cost with low use rate makes cost per use expensive.

Scan Lab's direct competitors offer their services to all physicians and accept a wide range ofinsurance plans. These competitors rarely offer services beyond medical imagine test andradiologist analysis. The medical scanning industry can be profitable if there is not overcapacity of the scanning machines in the area. A profitable capacity is to have approximatelyfive MRIs for every 100,000 people. Currently, New Bedford, with a population of 300,000 has 12.

4.3.1 Competition and Buying Patterns

There are nine direct competitors in the area. The large ones are detailed below:

· Massachusetts Imaging Center: This company operates three centers of imagingequipment. This company is large, while they offer competent radiologist analysis, thesetting is somewhat factory like where patients become numbers who are shuffledthrough.

· Bedford Scanning: This is a small facility with one part time radiologist on staff. Theyonly have an MRI and CAT scan, they do not offer any other types of imaging services.

· Radiologist Imaging: This facility is similar to Scan Lab but is located on the far sideof town, a 25 minute drive away, therefore this facility seems to serve a more regionalcustomer base due to their non-centralized location.

Scan Lab also has indirect competition from clinics and large practices with their own scanningequipment. This group does not serve outside physicians so it is only a threat if they recruitdoctors, that use Scan Lab, away from private practice.

5.0 Strategy and Implementation Summary

Scan Lab will leverage its competitive edge of having the most advanced equipment with aseasoned, nationally recognized radiologist providing all of the analysis. Scan Lab will employ amarketing strategy that will communicate the message that offers state of the art technologyand medical analysis, developing an awareness regarding Scan Lab's strengths anddistinctiveness.

There is not a significant amount of work that needs to occur to market to the insurancecompanies. This activity is handled by bid submission. Most activities directed at the insurancecompanies will occur through the sales campaign. Scan Lab will also embark on a sales strategythat has the goal of converting qualified doctors into referring doctors, Scan Lab's source ofpatients. The following three sections provides this analysis.

5.1 Competitive Edge

Scan Lab will a nationally recognized expert radiologist in charge of all analysis. Dr. Carolyn Joneshas been practicing radiology for 13 years, has published over 14 articles in renowned medicaljournals and is often asked to be a speaker at national engagements. Recently, she was thekeynote speaker for the American Association of Radiologists Annual Conference where she

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described a new technique of using contrast in medical imaging that yielded a 34% increase indetail. A medical imaging scan is only as good as the analysis of the scan, therefore it is ofsignificant value to offer a service where you have a nationally recognized expert offering theconsultation to the referring doctor.

5.2 Marketing Strategy

Scan Lab will use several methods to communicate that it offers the most advancedtechnology and the best expert radiology analysis. This message will be communicate throughvarious methods:

· Yellow Pages: While the Yellow Pages are not as targeted as other methods ofcommunication, these advertisements will be necessary as many people turn to the pageswhen they do not have a specific service provider in mind. The ads are proven to be costeffective.

· Circulars: These will be pamphlets that are sent out to local physicians. The pamphletwill serve to introduce Scan Lab and detail the different services that it offers. It will alsoprovide information on Dr. Carolyn Jones and will include background into herprofessional accomplishments and activities.

· Networking: Dr. Jones recognizes the importance of networking, getting to know thephysicians that work in New Bedford. A high percentage of referrals are made based onpersonal and professional contacts so networking is a very effective method of increasingthe number of referrals. Dr. Jones will be active in the numerous organizations andcommittees that are present within the medical community.

5.3 Sales Strategy

Scan Lab's sales strategy will be to convert a qualified lead into a referring physician. This will bedone through the emphasis of Dr. Jones' strength and expertise in the field of radiology. Themedical scanning laboratories service both patients and doctors.

For patients the scanning must be convenient, pleasant, and accept most insurance plans. Forphysicians, it must be a high-quality radiologist analysis. The better the analysis, the moreaccurate information that the radiologists can offer in the consultation to the referring physician.

Scan Lab will be networking with various insurance carriers. The first step is to determine whothe key contact at the insurance company is. These contacts will be useful in providinginformation on what is expected in the submitted bid.

5.3.1 Sales Forecast

The sales forecast adopts a conservative approach to projecting future sales. As a start-uporganization, Scan Lab recognizes that sales will be slow initially but by the seventh month saleswill be steady and grow as the marketing efforts are developed.

The sales forecast is broken down by the type of service provided and displayed in the

Scan Lab

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following table. The charts give a visual representation of monthly and yearly figures.

Scan Lab

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Table: Sales Forecast

Sales Forecast

Year 1 Year 2 Year 3

Sales

X-ray $124,292 $130,500 $143,550

Ultrasound $73,332 $77,000 $84,700

CAT scan $136,721 $143,000 $157,300

MRI $87,999 $92,000 $101,200

Total Sales $422,344 $442,500 $486,750

Direct Cost of Sales Year 1 Year 2 Year 3

X-ray $28,587 $30,000 $30,900

Ultrasound $16,866 $18,000 $18,540

CAT scan $31,446 $33,000 $34,000

MRI $20,240 $21,300 $22,000

Subtotal Direct Cost of Sales $97,139 $102,300 $105,440

5.4 Milestones

Scan Lab has chosen several quantifiable milestones that have been developed as goals forthe organization to achieve. The following table details the specific milestones, the time framethat has been estimated for completion of the milestone, and the specific employee responsible.

Table: Milestones

Milestones

Milestone Start Date End Date Budget Manager Department

Business plan completion 6/1/2003 12/1/2003 $0 Carolyn Business

Development

Secure lease 12/1/2003 2/28/2004 $0 Carolyn Operations

Equipment purchases 1/1/2004 3/1/2004 $0 Carolyn Operations

Facility open 3/1/2004 3/30/2004 $0 Carolyn Operations

Profitabil ity 10/30/2004 1/31/2005 $0 Carolyn Accounting

Totals $0

Scan Lab

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6.0 Web Plan Summary

Scan Lab will have a website which will provide information regarding the services offered and Dr.Jones professional experience.

6.1 Website Marketing Strategy

Scan Lab will use two simple marketing techniques to alert prospective customers to the site.The first is the prominent display of the Web address on all literature that Scan Lab has. Thesecond is submitting Scan Labs website URL to multiple search engines. This will ensure that ifa customer types "New Bedford MRI" into a search engine and they would be brought to www.scanlab.com.

6.2 Development Requirements

The website will be designed and built by a local computer science student.

7.0 Management Summary

Scan Lab will be lead by Dr. Carolyn Jones. Dr. Jones received her medical degree from TheUniversity of California San Diego, world renowned for their radiology. Dr. Jones moved to theNortheast and practiced her residency at John Hopkins, after which she went to work for a

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large clinic in Boston.

Dr. Jones has published 14 articles and is frequently asked to present her papers at conferences.

7.1 Personnel Plan

Scan Lab will require the following positions/responsibilities:

· Dr. Jones: In addition to being the resident radiologist, she will also be responsible forbusiness development, and some marketing and sales.

· Technicians: Four people will be responsible for the operation of the machines.

· Administration: Two people will be responsible for the clerical duties and bookkeeping.

Table: Personnel

Personnel Plan

Year 1 Year 2 Year 3

Dr. Jones $60,000 $61,800 $63,654

Technicians $48,000 $49,440 $50,923

Other $19,200 $19,776 $20,269

Total People 5 5 5

Total Payroll $127,200 $131,016 $134,846

8.0 Financial Plan

The following sections will outline the financial planning for Scan Lab.

8.1 Important Assumptions

The following table details important Financial Assumptions.

Table: General Assumptions

General Assumptions

Year 1 Year 2 Year 3

Plan Month 1 2 3

Current Interest Rate 10.00% 10.00% 10.00%

Long-term Interest Rate 10.00% 10.00% 10.00%

Tax Rate 30.00% 30.00% 30.00%

Other 0 0 0

8.2 Break-even Analysis

The Break-even Analysis indicates what is needed in monthly revenue to reach the break-even

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point.

Table: Break-even Analysis

Break-even Analysis

Monthly Revenue Break-even $40,582

Assumptions:

Average Percent Variable Cost 23%

Estimated Monthly Fixed Cost $31,248

8.3 Projected Profit and Loss

The following table and charts will indicate Projected Profit and Loss.

Scan Lab

Page 14

Scan Lab

Page 15

Scan Lab

Page 16

Table: Profit and Loss

Pro Forma Profit and Loss

Year 1 Year 2 Year 3

Sales $422,344 $442,500 $486,750

Direct Cost of Sales $97,139 $102,300 $105,440

Other Costs of Sales $0 $0 $0

Total Cost of Sales $97,139 $102,300 $105,440

Gross Margin $325,205 $340,200 $381,310

Gross Margin % 77.00% 76.88% 78.34%

Expenses

Payroll $127,200 $131,016 $134,846

Sales and Marketing and Other Expenses $6,000 $0 $0

Depreciation $172,300 $0 $0

Rent $24,000 $0 $0

Util ities $6,000 $0 $0

Insurance $18,000 $0 $0

Payroll Taxes $19,080 $0 $0

Other $2,400 $0 $0

Total Operating Expenses $374,980 $131,016 $134,846

Profit Before Interest and Taxes ($49,775) $209,184 $246,464

EBITDA $122,525 $209,184 $246,464

Interest Expense $79,500 $68,000 $56,000

Taxes Incurred $0 $42,355 $57,139

Net Profit ($129,275) $98,829 $133,325

Net Profit/Sales -30.61% 22.33% 27.39%

8.4 Projected Cash Flow

The following table and chart will indicate Projected Cash Flow.

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Table: Cash Flow

Pro Forma Cash Flow

Year 1 Year 2 Year 3

Cash Received

Cash from Operations

Cash Sales $105,586 $110,625 $121,688

Cash from Receivables $240,226 $328,223 $357,044

Subtotal Cash from Operations $345,812 $438,848 $478,732

Additional Cash Received

Sales Tax, VAT, HST/GST Received $0 $0 $0

New Current Borrowing $0 $0 $0

New Other Liabil ities (interest-free) $0 $0 $0

New Long-term Liabil ities $0 $0 $0

Sales of Other Current Assets $0 $0 $0

Sales of Long-term Assets $0 $0 $0

New Investment Received $0 $0 $0

Subtotal Cash Received $345,812 $438,848 $478,732

Expenditures Year 1 Year 2 Year 3

Expenditures from Operations

Cash Spending $127,200 $131,016 $134,846

Bill Payments $227,987 $219,308 $218,092

Subtotal Spent on Operations $355,187 $350,324 $352,938

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0

Principal Repayment of Current Borrowing $0 $0 $0

Other Liabil ities Principal Repayment $0 $0 $0

Long-term Liabil ities Principal Repayment $120,000 $120,000 $120,000

Purchase Other Current Assets $0 $0 $0

Purchase Long-term Assets $0 $0 $0

Dividends $0 $0 $0

Subtotal Cash Spent $475,187 $470,324 $472,938

Net Cash Flow ($129,375) ($31,477) $5,793

Cash Balance $188,525 $157,048 $162,841

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8.5 Projected Balance Sheet

The following table will indicate the Projected Balance Sheet.

Table: Balance Sheet

Pro Forma Balance Sheet

Year 1 Year 2 Year 3

Assets

Current Assets

Cash $188,525 $157,048 $162,841

Accounts Receivable $76,532 $80,184 $88,203

Other Current Assets $0 $0 $0

Total Current Assets $265,057 $237,232 $251,044

Long-term Assets

Long-term Assets $861,500 $861,500 $861,500

Accumulated Depreciation $172,300 $172,300 $172,300

Total Long-term Assets $689,200 $689,200 $689,200

Total Assets $954,257 $926,433 $940,244

Liabil ities and Capital Year 1 Year 2 Year 3

Current Liabil ities

Accounts Payable $24,132 $17,479 $17,965

Current Borrowing $0 $0 $0

Other Current Liabil ities $0 $0 $0

Subtotal Current Liabil ities $24,132 $17,479 $17,965

Long-term Liabil ities $740,000 $620,000 $500,000

Total Liabil ities $764,132 $637,479 $517,965

Paid-in Capital $330,000 $330,000 $330,000

Retained Earnings ($10,600) ($139,875) ($41,046)

Earnings ($129,275) $98,829 $133,325

Total Capital $190,125 $288,954 $422,279

Total Liabil ities and Capital $954,257 $926,433 $940,244

Net Worth $190,125 $288,954 $422,279

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8.6 Business Ratios

The following table details Business Ratios as they relate to Scan Lab, as well as the DiagnosticImaging Center industry, NAICS code 612512, that it participates in.

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Table: Ratios

Ratio Analysis

Year 1 Year 2 Year 3 Industry Profi le

Sales Growth n.a. 4.77% 10.00% 8.83%

Percent of Total Assets

Accounts Receivable 8.02% 8.66% 9.38% 29.41%

Other Current Assets 0.00% 0.00% 0.00% 48.00%

Total Current Assets 27.78% 25.61% 26.70% 80.30%

Long-term Assets 72.22% 74.39% 73.30% 19.70%

Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabil ities 2.53% 1.89% 1.91% 30.82%

Long-term Liabil ities 77.55% 66.92% 53.18% 21.77%

Total Liabil ities 80.08% 68.81% 55.09% 52.59%

Net Worth 19.92% 31.19% 44.91% 47.41%

Percent of Sales

Sales 100.00% 100.00% 100.00% 100.00%

Gross Margin 77.00% 76.88% 78.34% 100.00%

Selling, General & Administrative Expenses 102.84% 0.00% 0.00% 66.55%

Advertising Expenses 0.00% 0.00% 0.00% 0.85%

Profit Before Interest and Taxes -11.79% 47.27% 50.63% 5.72%

Main Ratios

Current 10.98 13.57 13.97 1.77

Quick 10.98 13.57 13.97 1.49

Total Debt to Total Assets 80.08% 68.81% 55.09% 54.16%

Pre-tax Return on Net Worth -67.99% 48.86% 45.10% 6.71%

Pre-tax Return on Assets -13.55% 15.24% 20.26% 14.64%

Additional Ratios Year 1 Year 2 Year 3

Net Profit Margin -30.61% 22.33% 27.39% n.a

Return on Equity -67.99% 34.20% 31.57% n.a

Activity Ratios

Accounts Receivable Turnover 4.14 4.14 4.14 n.a

Collection Days 56 86 84 n.a

Accounts Payable Turnover 10.45 12.17 12.17 n.a

Payment Days 27 36 30 n.a

Total Asset Turnover 0.44 0.48 0.52 n.a

Debt Ratios

Debt to Net Worth 4.02 2.21 1.23 n.a

Current Liab. to Liab. 0.03 0.03 0.03 n.a

Liquidity Ratios

Net Working Capital $240,925 $219,754 $233,079 n.a

Interest Coverage -0.63 3.08 4.40 n.a

Additional Ratios

Assets to Sales 2.26 2.09 1.93 n.a

Current Debt/Total Assets 3% 2% 2% n.a

Acid Test 7.81 8.99 9.06 n.a

Sales/Net Worth 2.22 1.53 1.15 n.a

Dividend Payout 0.00 0.00 0.00 n.a

Appendix

Page 1

Table: Sales Forecast

Sales Forecast

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Sales

X-ray 0% $0 $0 $5,500 $8,565 $10,005 $12,454 $13,121 $14,005 $14,989 $15,114 $15,265 $15,274

Ultrasound 0% $0 $0 $3,245 $5,053 $5,903 $7,348 $7,741 $8,263 $8,844 $8,917 $9,006 $9,012

CAT scan 0% $0 $0 $6,050 $9,422 $11,006 $13,699 $14,433 $15,406 $16,488 $16,625 $16,792 $16,801

MRI 0% $0 $0 $3,894 $6,064 $7,084 $8,817 $9,290 $9,916 $10,612 $10,701 $10,808 $10,814

Total Sales $0 $0 $18,689 $29,104 $33,997 $42,319 $44,585 $47,589 $50,933 $51,357 $51,870 $51,901

Direct Cost of Sales Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

X-ray $0 $0 $1,265 $1,970 $2,301 $2,864 $3,018 $3,221 $3,447 $3,476 $3,511 $3,513

Ultrasound $0 $0 $746 $1,162 $1,358 $1,690 $1,781 $1,900 $2,034 $2,051 $2,071 $2,073

CAT scan $0 $0 $1,392 $2,167 $2,531 $3,151 $3,320 $3,543 $3,792 $3,824 $3,862 $3,864

MRI $0 $0 $896 $1,395 $1,629 $2,028 $2,137 $2,281 $2,441 $2,461 $2,486 $2,487

Subtotal Direct Cost of Sales $0 $0 $4,298 $6,694 $7,819 $9,733 $10,255 $10,945 $11,715 $11,812 $11,930 $11,937

Appendix

Page 2

Table: Personnel

Personnel Plan

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Dr. Jones 0% $0 $0 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000

Technicians 0% $0 $0 $0 $3,000 $3,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000

Other 0% $0 $0 $0 $1,200 $1,200 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400

Total People 0 0 0 3 3 5 5 5 5 5 5 5

Total Payroll $0 $0 $6,000 $10,200 $10,200 $14,400 $14,400 $14,400 $14,400 $14,400 $14,400 $14,400

Appendix

Page 3

Table: General Assumptions

General Assumptions

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Plan Month 1 2 3 4 5 6 7 8 9 10 11 12

Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%

Long-term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%

Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%

Other 0 0 0 0 0 0 0 0 0 0 0 0

Appendix

Page 4

Table: Profit and Loss

Pro Forma Profit and Loss

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Sales $0 $0 $18,689 $29,104 $33,997 $42,319 $44,585 $47,589 $50,933 $51,357 $51,870 $51,901

Direct Cost of Sales $0 $0 $4,298 $6,694 $7,819 $9,733 $10,255 $10,945 $11,715 $11,812 $11,930 $11,937

Other Costs of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Cost of Sales $0 $0 $4,298 $6,694 $7,819 $9,733 $10,255 $10,945 $11,715 $11,812 $11,930 $11,937

Gross Margin $0 $0 $14,391 $22,410 $26,178 $32,585 $34,331 $36,644 $39,218 $39,545 $39,940 $39,964

Gross Margin % 0.00% 0.00% 77.00% 77.00% 77.00% 77.00% 77.00% 77.00% 77.00% 77.00% 77.00% 77.00%

Expenses

Payroll $0 $0 $6,000 $10,200 $10,200 $14,400 $14,400 $14,400 $14,400 $14,400 $14,400 $14,400

Sales and Marketing and Other

Expenses

$500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500

Depreciation $14,358 $14,358 $14,358 $14,358 $14,358 $14,358 $14,358 $14,358 $14,358 $14,358 $14,358 $14,358

Rent $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000

Utilities $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500

Insurance $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500

Payroll Taxes 15% $0 $0 $900 $1,530 $1,530 $2,160 $2,160 $2,160 $2,160 $2,160 $2,160 $2,160

Other $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200

Total Operating Expenses $19,058 $19,058 $25,958 $30,788 $30,788 $35,618 $35,618 $35,618 $35,618 $35,618 $35,618 $35,618

Profit Before Interest and Taxes ($19,058) ($19,058) ($11,568) ($8,378) ($4,611) ($3,033) ($1,288) $1,025 $3,600 $3,927 $4,322 $4,346

EBITDA ($4,700) ($4,700) $2,791 $5,980 $9,748 $11,325 $13,071 $15,384 $17,958 $18,285 $18,680 $18,704

Interest Expense $7,083 $7,000 $6,917 $6,833 $6,750 $6,667 $6,583 $6,500 $6,417 $6,333 $6,250 $6,167

Taxes Incurred $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Net Profit ($26,142) ($26,058) ($18,484) ($15,212) ($11,361) ($9,700) ($7,871) ($5,475) ($2,817) ($2,406) ($1,928) ($1,821)

Net Profit/Sales 0.00% 0.00% -98.91% -52.27% -33.42% -22.92% -17.65% -11.50% -5.53% -4.69% -3.72% -3.51%

Appendix

Page 5

Table: Cash Flow

Pro Forma Cash Flow

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Cash Received

Cash from Operations

Cash Sales $0 $0 $4,672 $7,276 $8,499 $10,580 $11,146 $11,897 $12,733 $12,839 $12,968 $12,975

Cash from Receivables $0 $0 $0 $467 $14,277 $21,950 $25,706 $31,796 $33,514 $35,775 $38,210 $38,531

Subtotal Cash from Operations $0 $0 $4,672 $7,743 $22,776 $32,530 $36,852 $43,693 $46,247 $48,615 $51,178 $51,506

Additional Cash Received

Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Cash Received $0 $0 $4,672 $7,743 $22,776 $32,530 $36,852 $43,693 $46,247 $48,615 $51,178 $51,506

Expenditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Expenditures from Operations

Cash Spending $0 $0 $6,000 $10,200 $10,200 $14,400 $14,400 $14,400 $14,400 $14,400 $14,400 $14,400

Bill Payments $393 $11,781 $11,871 $16,913 $19,792 $20,881 $23,275 $23,718 $24,328 $24,992 $25,007 $25,038

Subtotal Spent on Operations $393 $11,781 $17,871 $27,113 $29,992 $35,281 $37,675 $38,118 $38,728 $39,392 $39,407 $39,438

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Long-term Liabilities Principal Repayment $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000

Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Cash Spent $10,393 $21,781 $27,871 $37,113 $39,992 $45,281 $47,675 $48,118 $48,728 $49,392 $49,407 $49,438

Net Cash Flow ($10,393) ($21,781) ($23,198) ($29,370) ($17,216) ($12,751) ($10,822) ($4,425) ($2,481) ($777) $1,771 $2,068

Cash Balance $307,507 $285,727 $262,528 $233,158 $215,943 $203,191 $192,369 $187,944 $185,462 $184,685 $186,456 $188,525

Appendix

Page 6

Table: Balance Sheet

Pro Forma Balance Sheet

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Assets Starting Balances

Current Assets

Cash $317,900 $307,507 $285,727 $262,528 $233,158 $215,943 $203,191 $192,369 $187,944 $185,462 $184,685 $186,456 $188,525

Accounts Receivable $0 $0 $0 $14,017 $35,377 $46,598 $56,387 $64,120 $68,016 $72,701 $75,444 $76,137 $76,532

Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Current Assets $317,900 $307,507 $285,727 $276,545 $268,536 $262,541 $259,578 $256,489 $255,960 $258,164 $260,130 $262,593 $265,057

Long-term Assets

Long-term Assets $861,500 $861,500 $861,500 $861,500 $861,500 $861,500 $861,500 $861,500 $861,500 $861,500 $861,500 $861,500 $861,500

Accumulated Depreciation $0 $14,358 $28,717 $43,075 $57,433 $71,792 $86,150 $100,508 $114,866 $129,225 $143,583 $157,941 $172,300

Total Long-term Assets $861,500 $847,142 $832,783 $818,425 $804,067 $789,709 $775,350 $760,992 $746,634 $732,275 $717,917 $703,559 $689,200

Total Assets $1,179,400 $1,154,649 $1,118,510 $1,094,970 $1,072,603 $1,052,249 $1,034,928 $1,017,481 $1,002,593 $990,439 $978,047 $966,152 $954,257

Liabilities and Capital Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Current Liabilities

Accounts Payable $0 $11,391 $11,310 $16,255 $19,099 $20,106 $22,485 $22,908 $23,495 $24,158 $24,172 $24,206 $24,132

Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Current Liabilities $0 $11,391 $11,310 $16,255 $19,099 $20,106 $22,485 $22,908 $23,495 $24,158 $24,172 $24,206 $24,132

Long-term Liabilities $860,000 $850,000 $840,000 $830,000 $820,000 $810,000 $800,000 $790,000 $780,000 $770,000 $760,000 $750,000 $740,000

Total Liabilities $860,000 $861,391 $851,310 $846,255 $839,099 $830,106 $822,485 $812,908 $803,495 $794,158 $784,172 $774,206 $764,132

Paid-in Capital $330,000 $330,000 $330,000 $330,000 $330,000 $330,000 $330,000 $330,000 $330,000 $330,000 $330,000 $330,000 $330,000

Retained Earnings ($10,600) ($10,600) ($10,600) ($10,600) ($10,600) ($10,600) ($10,600) ($10,600) ($10,600) ($10,600) ($10,600) ($10,600) ($10,600)

Earnings $0 ($26,142) ($52,200) ($70,684) ($85,896) ($97,257) ($106,956) ($114,827) ($120,302) ($123,119) ($125,525) ($127,453) ($129,275)

Total Capital $319,400 $293,258 $267,200 $248,716 $233,504 $222,143 $212,444 $204,573 $199,098 $196,281 $193,875 $191,947 $190,125

Total Liabilities and Capital $1,179,400 $1,154,649 $1,118,510 $1,094,970 $1,072,603 $1,052,249 $1,034,928 $1,017,481 $1,002,593 $990,439 $978,047 $966,152 $954,257

Net Worth $319,400 $293,258 $267,200 $248,716 $233,504 $222,143 $212,444 $204,573 $199,098 $196,281 $193,875 $191,947 $190,125