EXECUTIVE SUMMARY
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OVERVIEW
Visual Pathways, Inc. (“VPI” or “the Company”) develops, manufactures and sells medical diagnostic equipment to the vision care marketplace. VPI’s devices incorporate leading edge optics, electro-mechanical design and proprietary software. The Company has product revenue from two models of its ARIS™ (Automated Retinal Imaging System) a digital fundus camera, and has several additional products in prototype stage, each of which utilizes unique and patented technologies. These products address unmet needs in vision care diagnostics, a rapidly growing sector worldwide. The major market drivers are diabetes and aging populations, resulting in dramatic increases in vision loss and blindness. A large percentage of the cases of vision loss and blindness can be prevented with improved and earlier detection that enables earlier pharmaceutical and/or surgical treatment. Another market driver is the unprecedented connectivity now available throughout our world, including telemedicine. Designed, developed and manufactured by Visual Pathways, the Aris™ is the first and only fully-automated retinal imaging system and it is telemedicine-ready.
With the epidemic-level increase in diabetes and associated diseases comes the realization that there must be new approaches in medical diagnostic devices that include automation and simplicity of operation so that these advanced medical diagnostic and treatment modalities can be easily deployed – taken to the people – rather than continuing with the outdated expectation that the person in need of medical attention will seek timely medical care. There is a worldwide shortage of skilled medical personnel, at all levels, a factor that further exacerbates the problem of diabetes and associated medical conditions that require early intervention in order to reduce the rapidly increasing burden on health care systems worldwide. The combination of Visual Pathways’ automated vision care diagnostic products and today’s rapid and secure communications capabilities using telemedicine over the Internet, opens very large markets worldwide. Some of these market opportunities have not been previously addressed, such as rural and remote diagnostics. Others are in a nascent stage, such as engaging primary care physicians in the initial vision care diagnostic screening effort. This is a logical approach because of their first-line contact with persons with diabetes, enabling early intervention and triage to vision care professionals that includes Internet transmission of high-resolution digital images of the retina for reading, interpretation and referral for treatment, thereby “Preserving vision. Preventing blindness.”™
“Preserving Vision. Preventing Blindness.” refers to what VPI is accomplishing by bringing to market completely automated and simple to operate instruments for earlier detection and treatment of medical conditions that impair vision and cause blindness. VPI began revenue generation from product sales in October 2004 from two models of its proprietary Automated Retinal Imaging System (ARIS™), the Aris™70 and the Aris™110. The Aris is the world’s first and only fully-automated fundus camera that takes high resolution digital images of the inside-back surface of the eye (ocular fundus that includes the retina), more rapidly and with greater precision then any other fundus camera on the market. Because it requires no highly trained technician - just about anyone with only brief training can operate the Aris™70 and the Aris™110. These products are FDA 510(k) cleared, are tested and certified in conformance with the necessary U.S., Canadian and EU product safety organizations. One U.S. patent has issued and an International (PCT) patent was allowed in December 2005. Additional U.S. and international patent filings are pending.
The markets for VPI’s products are growing rapidly and are expected to continue growth in excess of 15% per year for the foreseeable future, both domestically and internationally. There are five fundamental reasons for this. First, over the next several years, most of the large installed base of the old film style fundus cameras will be replaced with digital systems.
This represents a nearly a $1.2 billion market migration. Second, the demand for fundus cameras will increase substantially each year because of the aging of populations and the epidemic rise in diabetes worldwide. Third, the demand for higher quality healthcare that utilizes the latest in diagnostic and treatment technologies will rise. Fourth, Ophthalmologists and Optometrists will increase the use of fundus cameras because of the new capabilities and simplicity of a product such as the Aris, which in turn will allow them to increase their profitability through Medicare and insurance carrier reimbursement codes. Finally, telemedicine is rapidly emerging as a tool for bringing vision care to rural and other underserved areas, as it has in radiology and cardiology, creating new markets within the vision care industry for easy-to-use fundus cameras such as the Aris.
The strategy of the Company is to continue to develop truly unique automated devices that address large existing markets and the even larger emerging markets, and that position VPI as an innovator in vision care diagnostics.
VPI was founded in 1999 by a management team that is experienced in vision, healthcare and early stage growth companies. The Company manufactures its own products in Prescott, AZ where it has the facilities and capabilities to provide the necessary quality control and production levels to meet the company’s objectives for the near term. It has additional products in its development pipeline that have evolved from its R&D efforts, especially in vision care. To date the Company has been capitalized by about $6.8MM from U.S. government grants and direct investment (excluding the 5 years of sweat equity management has invested). VPI is currently seeking up to $7MM in funding to meet its demand and expand its business. The uses of proceeds are described later.
MANANGEMENT
Gerald “Gary” F. Buck, MBA Chairman, President & CEO
Tom N. Cornsweet, PhD Senior Vice President & Chief Scientific Officer
Christopher A. Gallo, Esq. Director of Legal Affairs and Special Projects
Donald S. Murray Vice President of Operations
Paul R. Peterson Director of Software Development
Sandra L. Peters Corporate ControllerVisual Pathways, Inc. is a Delaware “C” corporation, co-founded by Gerald “Gary” F. Buck, Chairman, President and Chief Executive Officer, a senior executive with more than 25 years experience in successful formation and operation of both closely-held and publicly-traded companies, all within the health care industry. His technology and product expertise includes medical devices, biotechnology research, vaccines and therapeutics.
Co-founder Tom N. Cornsweet, Ph.D., Senior Vice President and Chief Scientific Officer, is a renowned expert in optics and ophthalmology. Dr. Cornsweet has more than 30 patents covering electro-optics and systems to measure properties of the human eye. He also has more than 35 peer-reviewed publications in optics and ophthalmology and he authored a widely acclaimed book on human vision, Visual Perception, Academic Press, 1970, still considered to be a reference book on vision.
Christopher A. Gallo joined the Company on a part time basis in February 2006. Chris and his family recently moved to Arizona from New York where he has been admitted to practice. He also is licensed to practice before the U.S. Patent and Trademark Office. He has passed the Arizona bar and will be admitted to practice in Arizona shortly. Chris is comfortable with technology as he also has an undergraduate degree in materials science. In addition to serving for five years as a patent examiner in the U.S. Patent and Trademark Office, his corporate experience includes distribution and licensing, regulatory affairs, transactional negotiations and general corporate governance.
VPI’s Vice President of Operations, Don Murray, has extensive medical devices experience and has held senior management positions in product development and manufacturing at Colorado MedTech, Beckman Coulter and Packard Instruments. He has been a VPI team member since 2003 and has directed the product development, vendor relations and production efforts.
Paul Peterson, Director of Software Development, joined VPI in 2000, prior to which he was the principal consultant for a major clinical laboratory data management company for more than ten years.
Sandy Peters joined VPI in 2005 and brought more than 15 years of experience in accounting and financial controls, having held senior positions in a major industrial equipment manufacturing company and in a large fast food franchisee operation. Sandy also brings some understanding of the vision care industry, as her husband is a board-certified Optometrist.
MARKET
Blindness is a growing but preventable trend. Throughout history, blindness has been among the most feared diseases and disabilities. That fear remains today since blindness and severe visual impairment affect more than 80 million people in the U.S. and 200 million worldwide. Fortunately, about 80% of all blindness is preventable. Increasing prevention efforts and access to quality eye care for early diagnosis and treatment are crucial to reversing this growing trend. The number of blind or severely visually impaired people is expected to double by the year 2020. Certain international markets present unusually attractive opportunities for VPI’s products because of higher rates of vision loss and the threat of blindness, much of which is related to higher rates of diabetes in certain nationalities. The two key factors most responsible for this growing trend in blindness are age and diabetes. Age is a key factor because as people grow older they become more susceptible to vision impairment. If diagnosed early enough, vision loss and blindness can be slowed, or in some cases prevented altogether.
There are several examples of this: China, India, the Middle East and Latin America. Of the 1.3 Billion people in mainland China, more than 25% are known to have diabetes. It is estimated that more than 400,000 people go blind each year in China. The government is rapidly expanding its provision of medical care to the middle class that includes its support of private businesses in China aggressively importing Western medical diagnostic and therapeutic products.
The Company has been contacted by several prospective distributors but has chosen to take a slightly cautionary approach in regard to selection of a distribution partner. The U.S. Department of Commerce has been providing guidance by introduction to their personnel who have lived in-country and have had responsibility for overseeing medical diagnostic devices there. We continue to believe that the Aris™ automation and telemedicine capabilities put VPI in an excellent competitive position for China and the funding we obtain will allow VPI to move into this very attractive market in the near future. We expect that our distribution partner will agree to minimum sales levels in exchange for exclusivity in mainland China and Hong Kong. In addition we will fund the S-FDA (State Food and Drug Administration) filing and approval process, hiring of sales and technical support personnel, translation of software and product literature, market research, and marketing and sales efforts. The sales minimums are expected to result in first sales during 2006 and rising to more than $35,000,000 in 2008, with the potential of becoming the Company’s largest single market. VPI will not manufacture complete products in China initially but eventually will source certain components there that will reduce the production cost of the Aris™ product line. “China will become the third largest medtech market by 2010, by our estimates.” – Goldman Sachs – Focus on China – Global Healthcare – Medical Devices, 2005
India, with more than 1.1 billion people, also suffers with very high rates of diabetes and associated vision loss and blindness. Their government is funding an aggressive telemedicine program that will enable products such as VPI’s to take improved vision care to un-served and underserved areas in that country. The India government also, as with the United Kingdom, Germany, France and Canada, is allowing physicians to get reimbursement for delivery of medical care, rather than the traditional socialized medicine salaries for doctors. VPI is in discussions with representatives from India, Germany, France and Canada with regard to possible distribution rights.
Diabetes affects nearly 20 million people in the U.S. and more than 200 million worldwide with diabetes. More than 800,000 new cases of diabetes are diagnosed in the U.S. each year and it is a well established fact that a high percentage of people with diabetes have vision problem. The U.S. Centers for Disease Control (CDC) has identified diabetes as epidemic in this country and has projected that one in three born in 2003 will contract diabetes in their lifetimes! In fact diabetes has been implicated in each of the “Big Four” vision problems:
Figure 1
VPI’s products in the market and those in development address “Diabetes and the Big Four in Vision Loss and Blindness”. We refer to the Big Four as (1) Diabetic Retinopathy, the leading cause of preventable blindness in working age people worldwide; (2) Macular Degeneration, the leading cause of blindness in people over age 60; (3) Glaucoma, more than 3 million in the U.S. alone diagnosed with this disease It is the leading cause of blindness in African and Hispanic Americans; Cataracts affect more than 21 million in the U.S..
VPI’s Aris™ provides an important new approach for screening, diagnosis and documentation in Diabetic Retinopathy, Macular Degeneration and Glaucoma. VPI’s DigiCat Imager™, now in the prototype stage, will provide a new tool for detection and quantitation of cataracts
PRODUCTS
VPI currently has two products on the market: the Aris™70 and the Aris™110. The Aris systems are digital, like the leading competitors, but they also include substantial improvements. The Aris instruments are fully automatic, which allows unskilled personnel to perform measurements in a quarter of the time that previously could only be performed by the physician or other highly-trained medical specialist with the manual fundus cameras because of their complexity. The automation also provides substantially greater precision and accuracy for vision-care diagnostic procedures with features like ConstantBaseStereo™, which eliminates operator-induced variation in stereo retinal images, a critical factor in following progression of diseases affecting vision. Another feature, BichromaticImageNavigation™ is an industry first, in that it provides the ability to automatically examine pathology both on the surface and below the surface of the retina. The Aris™70 is priced at $34,000 and the Aris™110 at $39,000.
The Company also has under development other state of the art products. There are two additional models of the Aris. The Aris™ Pixie, now in the prototype stage, will serve additional existing as well as some new markets that require a lower price-point fundus camera and portability. Examples of new market opportunities are primary care physicians (PCPs), who are the first-line interface for people with diabetes. We expect PCPs to become a major market for this product as they screen their diabetic patients in-office and transfer retinal images electronically to vision care specialists for final diagnosis and referral for treatment. The Aris™ Pixie is expected to be placed on a monthly rental basis with a cost-per-image program. Purchase price will be in the $20,000 range.
The Aris™ HySpect now in prototype form, will be an industry first in providing all the automation features of the Aris platform technology for fundus Angiography (another important market segment that supports a higher price point product), and unique methods for detection and evaluation of Glaucoma. We expect to price this model in the $70,000 range.
Ongoing product revenue will be generated from service contracts. VPI also is developing proprietary “Extended Performance” software modules – ArisWare™EP – will add several diagnostic tools that will be sold to a large majority of Aris users. There are four modules now in the final phases of development, including ArisWare™EP-3D (displays 3-dimensional surface plots and provides measurement tools for retinal images, such as the optic disc, macular edema – estimated selling price $500); ArisWare™EP-Glaucoma (a detection and evaluation system – estimated selling price $900); ArisWare™EP-Pallor (analysis of the degree of loss of circulation in the retinal vascular bed); ArisWare™EP-Oxygenation (analytical tool to assist in the assessment of retinal vessel disease).
ARIS™ Advertisements:
DigiCat Imager™ The DigiCat Imager™, now in prototype form, will provide a new tool for detection and quantitation of cataracts and an important means for documentation to insurance carriers of justification for cataract removal. Currently there is no device or method for objectively determining when a cataract should be removed. The existing methods for evaluation and grading of cataracts include comparison of slit lamp observation with a set of color photos (see below), visual acuity and patient symptoms. These are rather crude, are highly subjective and not necessarily well correlated with the patient’s visual consequences.
• First U.S. Patent Issued December 2004
• International Patents Pending
The National Institutes of Health’s National Eye Institute (NEI) will begin a three-year study early in 2006 and has issued a Request For Application (RFA) to clinicians in the U.S. to participate in a clinical study that will assess the effect of nutritional supplements Lutein, Zeaxanthin and Omega-3 Fatty Acids on Age-Related Macular Degeneration (ARMD) and Cataracts. They will select 40 to 60 sites for this 3-year study. Three of our Aris™ users intend to apply for grant funding and the Company intends to provide DigiCat Imager™ units for them to use during this study. If successful, this will be an important clinical validation for both the Aris™ and the DigiCat Imager™ and will result in multiple publications. Completion of the productization of the DigiCat™ is another intended use of proceeds from this financing.
GlucoScope™ Monitor Glucose self-testing by persons with diabetes, a $4.5 billion market worldwide, is an area of major interest to VPI and the Company is developing a handheld, non-invasive glucose monitoring device for use by diabetics (the GlucoScope™ Monitor). Early in 2003 VPI was awarded grant funding to help in the development of a working prototype of the GlucoScope™ Monitor (1). VPI is currently in the process of completing a functional prototype of this instrument. Management has received a letter of intent from a company proposing to enter into a joint product development agreement for non-invasive detection of glucose. That company that has relevant issued patents and expertise in infrared detection and proprietary software, all of which, together with VPI’s expertise in human vision, product development and medical device manufacturing, should significantly increase the probability of success in the development of a hand-held device to be used by people with diabetes for non-invasive measurement of glucose in the fluid of the anterior chamber of the eye. See artist rendering below.
• First U.S. Patent Issued December 2004
• International Patents Pending
INTELLECTUAL PROPERTY
The first U.S. patent # 6,296,358 “Ocular Fundus Auto Imager” was issued in October 2001. Notice of allowance of the first international patent (CPT) was received in November 2005. A second patent is also pending, in both the U.S. and international jurisdictions. Underwriters Laboratories (UL), Canadian Underwriters Laboratories (CUL) and European safety testing (CE) have been completed satisfactorily for both the Aris™70 and the Aris™110.Trademarks have been issued or are pending on Visual Pathways, the “starburst” logo, the Aris name and logo, “Preserving Vision. Preventing Blindness.™” and “Leading the Way in Retinal Imaging™”. On December 28, 2004 the U.S. Patent and Trademark Office awarded VPI patent # 6,834,958 covering the DigiCat Imager™ and U.S. patent # 6,836,337 covering the GlucoScope™ Monitor. International patents are pending on both these devices. The Company estimates that these barriers are sufficient to allow it to brand its products and gain a defensible market position
COMPETITIVE ANALYSIS
In Q3 2004 VPI commercially launched two models of its ARIS™ Automated Retinal Imaging System, the world’s first and only fully-automated fundus camera. The design and performance features of the Aris represent the first major change in fundus cameras in several decades and may be viewed as “disruptive” technology as shown in the table below and as judged by reception to the technology by opinion leaders in the vision care industry.
• The Aris™70 allows for acquisition of up to eleven 30-degree images that cover more than 70 degrees on the retina.
• The Aris™110 allows for up to twenty-six 30-degree images that cover more than 110 degrees…more than any of the competitor standard fundus camera of the competitors.
• The Aris™ products are the subject of one completed clinical study entitled “Clinical Detection of Macular Edema in Diabetic Patients” that was presented as a poster session at the 2005 Association for Research in Vision and Ophthalmology (ARVO), a major international meeting. Two additional studies are underway at highly regarded teaching hospitals and are expected to result in publications. Aris™ users include major teaching hospitals, Veterans Administration, Indian Health System, major healthcare providers, Ophthalmology and Optometry clinics. Sales are pending to military institutions.
• The Aris™ products are in at the higher end of the pricing spectrum of fundus cameras because of the significant added value of its unique operating features, as shown below.There are several competitor companies producing and marketing fundus cameras to the professional vision care market. Companies such as Carl Zeiss Meditec, Topcon, Canon and Nidek all have products that compete directly with the Aris™ product line. The Company believes that its products have significant unique design and operational features and important speed, efficiency and economic benefits. The Aris™ ConstantBaseStereoSM and BichromaticImageNavigationSM are becoming recognized as valuable and unique features for both diagnosis and documentation of diseases related to vision loss.
FEATURE ARIS™ Topcon TRC-NW6S™ Zeiss FF450™ Digital Photography YES YES YES Auto-pupil alignment, focus & tracking – using Infrared YES NO NO Auto-fundus focus, exposure & illumination with each image YES NO NO Telecentric optics YES
NO YES Fixed, multiple internal targets YES NO NO Auto-wavelength switching YES NO NO Fixed-base stereo w/ auto stereo pair registration YES v NO NO Auto-mosaic assembly YES NO t NO z ColorOptimizerSM YES NO NO Dynamic viewing of retinal surface & choroid YES vv NO NO Fully integrated PC YES NO - external NO - external Parallel, redundant image (standard) YES NO - option NO - option Backup system (standard) YES NO - option NO - option Telemedicine ready YES YES - option YES - option v ConstantBaseStereoSM
vv BichromaticImageNavigationSM
t Special software package
z Special software packageARIS™
Figure 2
Operator/patient proximity with the Aris™
can be important both in patient comfort and in rapport, in addition to operator efficiency.
Figure 3
Note the locations of operator and patient the standard fundus camera above.Various examples of images taken with the Aris™ Automated Retinal Imaging System
Example of a red-free (green) image of the macula (“donut” shape near center) taken with the Aris™ – Healthy eye.
Figure 5
Aris™ screen shot showing bleeding on the retina: Diabetic Retinopathy (DR).
Figure 6
Aris™ screen shot of a red-free image of a macula with drusen (exudates as white dots near the macula). Possible early onset of Age-related Macular Degeneration (AMD).
Figure 7
The Aris™ has the unique ability to take
images in multiple wavelengths (colors) – this can be very helpful to show important diagnostic features. Here a “retinal freckle” (nevus) in the area beneath the surface of the retina (the choroid) is shown with distinct outlines of the choroidal nevus – important for the ophthalmologist to be able to mark and measure the area in order to follow in case of changes in size or shape – possible melanoma.
Figure 8
Aris™ screen shot showing markup features in this image indicating several different pathologies: circles are areas of Diabetic Retinopathy; Arrows show tortuous vessels, indicative of hypertension; arrows also show other hypertensive vessels.There are several competitor companies producing and marketing instruments for various applications in screening, diagnosis and documentation within the professional vision care market. Companies such as Carl Zeiss Meditec, Topcon, Canon and Nidek all have fundus cameras that directly compete with the ARIS fundus camera product line.
The Company believes that its products have significant unique design and operational features and important speed, efficiency and economic benefits as compared with standard fundus cameras from these competitors, providing it with a substantial competitive advantage, as shown in the table 1 below.
MARKET SEGMENTS
• Replacement Market: Latest published market estimate (1998) of the number of fundus cameras in use in the U.S. was 30,000. That number now is believed to be closer to 40,000, with an estimated 60% of those more than 5 years old in a typical expected lifespan of 5 to 7 years. A more recent estimate (2001) of the number of fundus cameras sold in the U.S. annually was placed at about 3,000. That number now is believed to be about 3,500. The Aris is expected to be an instrument of choice for the replacement fundus camera market.
• Telemedicine: This is a newly emerging initiative and an important market driver for fundus photography in the U.S. and international markets. In the U.S. there are major public and private programs slated to begin soon, such as in the Veterans Administration, Indian Health Services and military facilities. Many will be funded wholly or in part under the FY’05 federal budget, which management has been advised contains a significant line item funding for the teleocular medicine initiative, particularly as it relates to screening people with diabetes for diabetic retinopathy (DR). Presently only about 45% of people with diabetes have ever been screened for diabetic retinopathy. There is a mandate for annual screening of all people with diabetes for DR (2). This will be accomplished only if a simple-to-operate retinal imaging system is made available that can be operated reliably by a technician-level person. Management believes the ARIS will play a key role in this newly emerging telemedicine market.
• Diabetic Retinopathy community outreach screening programs: U.S. and foreign governments are expanding their funding programs for DR screening. These are expanding rapidly in rural settings, in inner city and in other under-served locations.
•A newly emerging market: There are still many ophthalmologists and optometrists who do not own a fundus camera. They are considering doing retinal imaging because they can be reimbursed under existing CPT (Customary Practice Terminology) codes. This represents an area of significant additional revenue at a time when their fees are being “squeezed” by Medicare and other third-party providers.
• The primary care physician market: This market is just emerging and could become one of the largest single markets. diabetologists, endocrinologists, internists, family practice and general practice physicians are being “enlisted” into the effort to screen patients with diabetes for diabetic retinopathy. The Aris automation and simplicity of operation make it ideal for existing physician office staff members to rapidly obtain high quality retinal images that can be sent via the Internet to retinal photography reading centers for expert interpretation of images and treatment recommendation. This process is reimbursable by insurance providers under existing CPT codes. This represents a significant and welcome additional revenue source for the non-vision care physicians. There are about 30,000 group medical (MD and OD) practices in the U.S. Conservatively estimating that in 5 years only 20% of these practices can be equipped for performing a fundus examination on their diabetic patients, this would represent 6,000 offices. Assuming a minimum of 5 diabetic patients per day would mean 1,200 per year per office, or 7.2 million fundus exams per year in the U.S., a new market that could approach $80 MM annually for Diabetic Retinopathy screening.
• Another new market driver is the more educated consumer, in particular the “baby boomers”: This population group will double to 68 million in the U.S. alone by 2008. They are demanding the latest and best diagnostic methods and treatments available and its members often are willing to pay for medical care, even if it is not entirely paid for by insurance carriers.
• Management believes the annual unit sales of fundus cameras in the U.S. alone was about 3,500 in 2004; will increase to about 4,000 in 2005; 5,500 in 2006; 7,500 in 2007; and increase to 10,000 in 2008. Using a conservative average list price of $30,000 per unit, the U.S. market is estimated to exceed $100 million in 2004 and will be more than $300 million by 2008. International sales are expected to rise to about $80 million in 2004 and reach $200 million by 2008, for the same reasons. In fact, some regions such as the United Kingdom are ahead of the U.S. in Diabetic Retinopathy screening programs.
SALES & DISTRIBUTION
VPI’s sales, marketing and distribution strategy is to contract with independent sales rep individuals and organizations and to enter into strategic partnerships for nationwide and international marketing, sales and service. VPI has been approached by several representatives of companies interested in the North America market for the Aris™ product line. Upon completion of this funding, the Company will move ahead rapidly with domestic marketing, sales and distribution agreements. As mentioned earlier, VPI is negotiating with a China based company interested in marketing, sales and distribution of the Aris™ product line in mainland China.
MANUFACTURING
Visual Pathways utilizes selected vendors for manufacture of product component parts, and rents space at a manufacturing firm nearby, where final assembly and test of the products take place. This facility is registered with the U.S. Food and Drug Administration (FDA). It also has been inspected and certified by Underwriters Laboratories (UL) and Canadian UL. VPI’s vendors must meet rigid quality control and FDA guidelines related to medical device manufacture. The Company’s production assembly employees oversee the Aris™ production and quality standards and procedures. Using this approach, the Company believes it will more rapidly and cost-effectively bring its products through the production process and thus reducing its overall operating costs. The Company can produce about $10,000,000 worth of Aris™ products in the existing space, in a single shift. More space is available for lease and additional shifts can be added to increase production capacity. When the China distribution agreement is in operation we will proceed with potential agreements to produce several component parts for the Aris™ products that will result in significant cost reduction and improvement in product operating margins.
ORGANIZATION
VPI currently has 11 employees and is planning to move aggressively to add several additional senior level people in optical engineering, operations, manufacturing, software programming and business development. The Company is located in a modern facility of approximately 5,000 square feet in Prescott, Arizona, about 100 miles Northwest of Phoenix. Prescott provides a good commercial infrastructure for the Company, including all major express freight forwarders, reasonable labor pool, and good ground and air travel access to Phoenix, which has excellent national and international air connections. The facility includes a well-equipped machine shop, electronics laboratory, areas for prototype instrument design and development, software development labs, and administrative offices. Production final assembly and test facilities are located about 5 miles away. The Company expects to turn positive cash flow in 2008 and generate total revenues of more than $70 Million in Year 5 (2010).
