Kidney Tech

KIDNEY TECH INC. - “WE DO THE FILTERING FOR YOU”

WINTER 2009

Bus in es s Pro pos al TABLE OF CONTENTS 1. COMPANY HISTORY SUMMARY 1-4. COMPANY OVERVIEW Corporate Mission, Scientific Advances, Estimated Market Share, Market, Marketing, Growth Strategy, Advantages 5. PRODUCT AND TECHNOLOGY 5-8. MARKET AND COMPETITION Expansion, Strategic Alliances, Manufacturing Policy, Addressing Competition 9-12. SALES AND MARKETING 12-13 OPERATIONAL PLAN Suppliers, Equipment, Clinical Trials, R&D 13-19 FINANCIAL DATA Notes, Financial Statements & Projections 20 MANAGEMENT

Kidney Tech Inc. “We Do the Filtering For You” Company History KidneyTech Inc. (KTI) was founded in 2008 to meet market demand for an implantable artificial kidney. KTI is experiencing rapid growth and is seeking new investment to allow it to realize its potential. Summary Dialysis, a treatment that replicates normal kidney function, has become a way of life for over 30,000 Canadians with kidney failure. In order to live, patients spend at least four hours per day, 3-4 times a week attached to a dialysis machine. The incredible time commitment required for treatments greatly reduces the quality of life for these patients and their families. Their employment opportunities are greatly reduced because health concerns dictate their daily lives and leave little time for anything else.

FOR MORE INFORMATION, PLEASE VISIT OUR WEBSITE:

www.KidneyTech.ca

Kidney failure not only takes people out of the workforce but also costs an extraordinary amount of money. In order for one patient to undergo dialysis treatments, the cost to insurance companies is nearly $90,000 per year. Considering that the average patient will remain on dialysis for 2.7 years, our potential investors currently spend about $240,000 on each individual. The number of Canadians on dialysis is expected to double within the next decade and as is evident from the recent economic atmosphere, funds may not always be readily available to pay for life sustaining dialysis treatments. KTI has introduced the w o r l d ’ s fi r s t s u r g i c a l l y implantable artificial kidney in order to improve patient quality of life, and more importantly, to address the exponential cost increases in treating people who Page 1 of 20

KIDNEY TECH INC. - “WE DO THE FILTERING FOR YOU”

WINTER 2009

Unfiltered Blood

CORPORATE MISSION: Kidney Tech Inc. was founded to manufacture the world’s first internal artificial kidney. Mimicking the ability of the human kidney to filter waste, while retaining vitamins and nutrients is a very difficult undertaking. Miniaturizing the technology so that it fits inside the human body was even more challenging. Countless hours of hard work, perseverance and KTI ingenuity produced a world first. This device will revolutionize therapy for kidney failure world wide. Our patented technology is truly groundbreaking.

Artificial Kidney Filters Blood

Clean & healthy blood

Waste (Urine)

suffer from kidney failure. This amazing product is the culmination of years of research and clinical trials. New technologies have allowed us

billion over the next three years. Along with the savings to potential investors, KTI expects gross sales to exceed $480 million by the end of

to shrink down the components of a dialysis machine while maintaining the same functionality. KTI’s artificial kidneys are surgically implanted inside the body and replace the

2011. The tremendous savings in dialysis treatment costs coupled with future dividends ensures that an initial investment of $20 million will be safe and profitable. A major part of the projected sales for KTI is

patient's own non-functioning kidneys. After surgery, individuals receiving our artificial kidneys will be able to return to a normal life. Survey results from 2008 have overwhelmingly indicated that dialysis patients want KTI’s artificial kidneys

the expansion into the American market in 2011. President Barack Obama will soon introduce his national health care plan for all Americans and this will be the opportune time to bring the KTI artificial kidneys to American dialysis patients.

so they can take their lives back. To proactively combat the looming increases in dialysis costs, KTI artificial kidneys cost less than 15% of what is traditionally spent on a dialysis patient and are also less expensive and

Initial talks with the Obama administration on the issue of alternatives to dialysis have been very promising. The Obama administration understands that the cost of treating kidney failure will only increase if current policy remains

safer than a traditional kidney transplant. This amounts to a projected savings for insurance companies, our potential investors, of $1.23

unchanged. KTI artificial kidneys provide the alternative needed to avoid excessive spending on

FOR MORE INFORMATION, PLEASE VISIT OUR WEBSITE:

www.KidneyTech.ca

Page 2 of 20

KIDNEY TECH INC. - “WE DO THE FILTERING FOR YOU”

WINTER 2009

ESTIMATED MARKET SHARE Current estimates of market share by 2011 are 21%, representing annual sales of $488 million.

21% 67%

Growth will be driven by: • Quality of life benefits for patients

10% 2%

KidneyTech Artificial Kidney No Dialysis

• The technological superiority of our product

External Home Dialysis Hospitalized Dialysis

a treatment that permits survival but is not a cure.

Scientific Advances Using the latest advances in filtration technology and with patented techniques, KTI has developed an internal artificial kidney. Our product is a revolutionary breakthrough in providing patients an alternative to conventional blood filtration techniques such as dialysis. Dialysis machines are bulky and expensive. Worst of all they are external, meaning that the patient must visit a hospital for treatment and be immobile during frequent sessions. This has greatly affected the quality of life of thousands of people. Our research has enabled us to miniaturize an external dialysis machine, and to manufacture it in a way that prevents the human immune system from attacking it. The KTI artificial

pacemaker) that greatly enhances blood filtration, allowing patients to forgo the discomforts of dialysis. It filters continuously, day and night, just like a real kidney, eliminating waste, while retaining essential nutrients. The chart bellow shows a summary of our product’s performance in an actual patient. The graph shows that waste is reduced four fold with only minimal loss of nutrients. Waste

Nutrients

Before Implant

After Implant

100 75 50 25 0

kidney is a surgically implantable device (like a FOR MORE INFORMATION, PLEASE VISIT OUR WEBSITE:

• A lack of similar products

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KIDNEY TECH INC. - “WE DO THE FILTERING FOR YOU”

Growth Strategy for 2009-2015: Ensure product is built to the highest quality standards. Follow up with patients to ensure the longevity of the product. Research continuously to improve on original patent in future generations of the product. Continue to patent new technology to stay ahead of the competition. Keep price of product competitive. Manufacture products according to the KTI manufacturing policy.

WINTER 2009

Other lab tests prove that after a patient receives our artificial kidney, blood waste is greatly reduced, without a significant decrease in the levels of minerals and nutrients essential for the body to remain in good health. Since the device is working constantly, waste levels are much better controlled compared to dialysis. Also, our device is safer and more desirable than a traditional kidney transplant because of lower waiting times to obtain an organ, no risk that the immune system will attack the transplant and no need for side-effect causing immune suppressing drugs. Life expectancy in KTI transplanted patients is projected to be significantly higher than in dialysis patients and traditional transplant patients.

The

Market KTI

implantable

artificial kidney will provide thousands of dialysis patients across Canada and North America to take back their lives and leave the dialysis machine behind.

ADVANTAGES OVER THE COMPETITION KIDNEY TECH INC. CONTINUES RELIES ON ITS BASIC STRENGTHS:

• Superior quality products • Unique technical and manufacturing expertise • Efficient and reliable access to distribution networks • Price advantage compared with other products. • Continued research and development.

Marketing KTI’s artificial kidney will be initially marketed to Canada’s dialysis population. With over 30,000 patients currently on dialysis and an expected increase to 60,000 over the next 10 years, it will be important to make kidney specialists across Canada familiar with this new technology. Doctors will also be important in following up with patients so that improvements can be made in future generations of this product. KTI estimates a market share of 21% by 2011 and continued rapid growth over

FOR MORE INFORMATION, PLEASE VISIT OUR WEBSITE:

www.KidneyTech.ca

Page 4 of 20

INVESTOR KIDNEY TECH NEWSLETTER INC. - “WE ISSUE DO THE N°3 FILTERING FOR YOU”

WINTER FALL 2008 2009

the next ten years. This will be driven primarily by the market’s current lack of a comparable

Canada and private insurance companies. It is also the fastest growing medical expense.

product, a patent protecting our new technology and future advances from our R&D division. Growth will also be achieved

Now that our internal artificial kidney technology has been patented and perfected, full scale production can begin. By the end of May, 400 units will be

by collaborating with health insurance companies, which currently spend about $90,000 per dialysis patient each year. Even by covering the entire cost

available for patients across the country. By the end the of 2009, we will sell over 2,000 artificial kidneys.

of an artificial kidney, companies will save over a billion dollars in the next two years, while patients experience a greatly enhanced standard of living.

Product and Technology KTI’s patented artificial kidney is very desirable for patients because it will give customers the ability to reclaim their lives and spend time on the things they enjoy. Traditional artificial kidney technology, such as dialysis, has existed since the turn of the century, however, it is impractical for a number of reasons: 1) it restricts patients to the bedside every other day. 2) it is long, taking time away from family, friends and limiting employment opportunities. 3) it is very expensive for Health

Market and Competition Market

d e fi n i t i o n

and

description

Kidney disease can strike anyone, at any age at any time. Fatal kidney malfunctions, while uncommon, occur mostly in middle aged and older individuals (over 50), but also affect over 12,000 children in the US. About 2 million Canadians have kidney disease, or are at risk (have related conditions such as diabetes and high blood pressure, which are the leading causes of kidney

HEMODIALYSIS: While waiting to receive any transplant, patients with kidney failure must endure regular hemodialysis, 3-4 times a week for about 4 hours. Patients blood is pumped into a large machine that cleans it, while leaving important vitamins and nutrients in the blood. All forms of dialysis are expensive. In-hospital hemodialysis, the most common dialysis treatment in North America, costs $88,653 annually per patient. While Home hemodialysis may cost $138,000 annually per patient (Kidney International, 2003)

The total annual cost of dialysis in Canada is $2.65 billion. The number of people receiving hemodialysis treatments in Canada has increased by 50% over the last ten years. It is expected to double over the next ten year.

Canadian Institute for Health Information, 2006

failure www.kidney.ca.) Every day, 14 Canadians learn that their kidneys have failed. Our market is substantial now and will continue to grow in the future

FOR MORE INFORMATION, PLEASE VISIT OUR WEBSITE:

www.KidneyTech.ca

Page 5 of 20

INVESTOR KIDNEY TECH NEWSLETTER INC. - “WE ISSUE DO THE N°3 FILTERING FOR YOU”

Problems with Hemodialysis Treatment is done during business hours, as often as five times a week. Treatment can take from 3 to 4 hours at a time. External dialysis machines are very expensive, but can be purchased and introduced into the home. This provides patients with a more comfortable environment, but does not solve problems intrinsic to external dialysis. For example: • Space is needed for the dialysis machine and its associated supplies. • The external unit will greatly increased utility costs. • Supplies need to be constantly restocked, creating an added financial burden. Furthermore, each item may be delivered by a separate supplier, requiring that someone be at home constantly to ensure that deliveries are not missed. • Private nurses and technicians need to verify that the equipment is functioning normally and that blood waste levels are acceptable, adding additional costs.

WINTER FALL 2008 2009

Treatment Options Do Exist:

Kidney Transplantation Several kidney replacement therapy treatments are available for the treatment of kidney failure. Most experts agree that kidney transplantation is the treatment of choice for patients. However, lack of organ availability and risks of immune system incompatibility

transplant as of December 31, 2007, 3000 (75%) were waiting for a kidney. The annual cost for a new transplant patient is estimated at $105,300 for the first year and $15,000 per year subsequently, assuming the transplanted kidney is functioning. The costs of treatment options are outlined below.

Treatment

Number of Patients

Expenditure per patient

Hemodialysis

13,394

$88,653

Home hemodialysis

226

$38,000

New transplant

968

$105,300

Functioning transplants

11,078

$15,000

with the transplant limit transplantation as an option for most dialysis patients.

If the transplant fails due to immune rejection, the patient must have an

The buying and selling of organs for transplant is illegal in Canada and most of the world. Waiting lists have been set up to give patients

emergency surgery to remove the transplant, must restart dialysis and is put back on the waiting list for another kidney. This is extremely dangerous

compatible organs on a first come first serve basis. Waiting times for organ transplants are long and patients can die waiting. The average wait for a

and can lead to patient death. By treating people with the KTI internal artificial kidneys, Health Canada and private insurance companies will save

kidney transplant in British Colombia is currently 5 years. Of the 4,200 Canadians on the waiting list for an organ

millions of dollars. Also organ rejection by the immune system would be prevented, further saving lives.

FOR MORE INFORMATION, PLEASE VISIT OUR WEBSITE:

www.KidneyTech.ca

Page 6 of 20

KIDNEY TECH INC. - “WE DO THE FILTERING FOR YOU”

WINTER 2009

70,000

Increase in patients waiting for kidney transplant

52,500

Total number of transplants Living Transplants Number of persons on the waiting list

considered a competitor but, rather, a life sustaining treatment until a

compatible organ is found. Thanks to the KTI 35,000 artificial kidney, all patients healthy enough for surgery can have a new kidney, 17,500

effectively curing them of kidney disease.

0 1990

1992

1994

1996

1998

Expansion to the USA, US Market Description

There are currently over 290,000 Americans on dialysis By 1990 there were almost 17,000 people waiting for a kidney transplant. This number grew rapidly, so that about 65,000 persons were on this waiting list by the beginning of 2006.

2000

2002

2004

2006

Corporation, to supply us with their world renowned hollow plastic micro fibers for $23,000 per kilogram. Terumo agreed to give KTI $2,000 off the regular price (per kg) in exchange for being our exclusive

Manufacturing suppliers

supplier for the next 3 years. Specific Competition Our product is so revolutionary that we do

In January of 2009, KTI signed a financial contract with its main plastic supplier, Japan’s Terumo

n o t h av e a n y d i r e c t competitor yet. Hemodialysis is not desirable and should not be

Strategic Alliances

KidneyTech Inc. Manufacturing Policy KTI produces artificial kidneys only from the highest quality materials, free of any defects. We test all artificial kidneys thoroughly before delivery to customer. KTI follows up with all patients at 6 months and two years following transplantation. In the unlikely event of a device failure within 3 years of purchase, KTI provides a state of the art replacement model, free of charge. R&D representatives contact implant surgeons to discuss improvements which could facilitate device implantation in future generations of our product.

FOR MORE INFORMATION, PLEASE VISIT OUR WEBSITE:

www.KidneyTech.ca

Page 7 of 20

INVESTOR KIDNEY TECH NEWSLETTER INC. - “WE ISSUE DO THE N°3 FILTERING FOR YOU”

1%

How Much Would You Pay

32%

for an Artificial Kidney?

42%

17%

WINTER FALL 2008 2009

I would Re-Finance my Assets (42%) No more than 10000 More than 10000 My Life Savings I would not pay for this

7%

Risk management: KTI is the first corporation to design and manufacture an artificial kidney, and

advances related to the second generation product will be patented, to maintain KTI’s edge in the artificial kidney market.

benefits from a patent on the technology. The patent will expire in 15 years providing KTI with plenty of time to market and sell our product as well as

Our product’s quality and the overall lifestyle benefits our product offers patients positions us in a favorable situation for e x p o r t i n g o u r p ro d u c t w o rl d w i d e, beginning with the United States. The

Hollow Micro Fibers Terumo Corporation began developing hollow fiber technologies in 1967. In 1977, the company released its second generation hollow fiber, a product that enabled it to enter the artificial organ market and gain international recognition. It has remained competitive in this field since and is considered by many the world’s best hollow micro fiber producer. further refine it. Our research and development department is hard at work developing a second generation product to keep KTI ahead of the competition. Research is geared toward making the current product more efficient and easier to produce and easier for a surgeon to transplant. Any FOR MORE INFORMATION, PLEASE VISIT OUR WEBSITE:

absence of significant competitors in foreign markets facilitates expansion. Addressing competition: In order to stay ahead of the competition, KTI is quickly moving to the international market to satisfy demand for our product worldwide, before our competitors do. Our patent is effective for North America, Europe and Asia so direct competition is not likely in the near future. Since KTI is the most experienced company in the artificial kidney field, advertisements will highlight our products long safety record, reputation and overall quality. Real life testimonials will highlight the benefit of life advantages of our product over the competition as well as make KTI artificial kidneys more

www.KidneyTech.ca

Page 8 of 20

INVESTOR KIDNEY TECH NEWSLETTER INC. - “WE ISSUE DO THE N°3 FILTERING FOR YOU”

WINTER FALL 2008 2009

appealing for our customer. KTI will also increase retailer distribution, point-

hospitals across Canada and the United States that are actively offering

average of 2.7 years, which represents an average cost of almost $240,000 per patient.

of-sale promotional customer surveys to KTI image

dialysis services to distribute to patients (who have reached the age of majority). There were 106,823 respondents and

I n 2 0 0 7 , over 1 , 2 0 0 Canadians received a kidney transplant at an average cost of $105,300 per patient for a total cost of over $126 million.

the results of the survey are summarized below. Summary of Survey Results Overall, the survey indicated a very high

After a successful transplant, there is an annual cost of $15,000 per patient for medications to maintain the quality of the transplanted

demand for our product among individuals currently receiving dialysis treatments. 73.6% of survey respondents are 60

kidney Currently, over $2.8 billion are spent annually on patients with kidney failure. There are over 2 million Canadians at risk of

years of age or more. With the largest age bracket (31.7%) between the ages of 60-69 years. When asked if they would

developing kidney failure, so the Canadian market and demand for our product will only continue to grow.

product patients.

displays, literature, and satisfaction maintain the and keep our

the

choice

of

Sales and Marketing Customer Interest & Survey Results Demand for Artificial Kidneys Over 30,000 potential customers in Canada spend around 4 hours per day, 3-4 times per week attached to a dialysis machine because of impaired kidney function. Our product will greatly increase the quality of life for our customers by eliminating the need for regular hospital visits.

accept an artificial kidney to completely eliminate the need for dialysis, 98.4% of respondents replied “Yes.” Marketing Strategy

Our customers will return to a lifestyle that is not dominated by health concerns, but rather, is focused on enjoying time

Customers: The Initial Market There are more than 30,000 Canadians on dialysis. Every year dialysis treatments cost $88,653 per patient. For

with friends, family, and personal pursuits. In 2008, a short marketing survey was sent to all

30,000 patients in Canada, the total annual cost of dialysis is $2.65 billion. Each patient remains on dialysis for an

FOR MORE INFORMATION, PLEASE VISIT OUR WEBSITE:

www.KidneyTech.ca

Annual Financial Breakdown of Canadian Market Dialysis Treatments

$2,659,590,000

Kidney Transplants

$126,360,000

Post-Transplant Medications

$18,000,000

Total Annual Cost

$2,803,950,000

New Customers: Expansion to the USA There are currently over 290,000 Americans on dialysis. Although the vast majority of Americans cannot afford our product “out-of-pocket,” the Page 9 of 20

INVESTOR KIDNEY TECH NEWSLETTER INC. - “WE ISSUE DO THE N°3 FILTERING FOR YOU”

WINTER FALL 2008 2009

REAL PATIENTS: Before her surgery, Marisa needed dialysis four times a week. Now that she has a new KTI artificial kidney, she has more time to spend doing what she loves, teaching piano. Obama administration led by former Senator Thomas Daschle is preparing a public health care system for all Americans.

who will recommend our product to their patients on dialysis and are also trusted in high regard by our future customers.

Preliminary talks with Mr. Daschle have been optimistic that the American government will be able to cover a substantial portion of the cost of our artificial kidneys so that in the long run, they will save large sums of money on claims made by

Ad Campaign: Canada We are advertising in the Canadian Medical Association Journal as this publication is distributed to all physicians and medical students in Canada. This journal has an impact rating of

dialysis and kidney transplant patients. We expect to be selling our product in the United States by 2011.

7.1 and the website receives 25 million hits annually. The cost of running a one-page advertisement that will appear 240 times throughout the year is $2,365. Ad Campaign: USA

Projected Sales and Revenues Sales and Revenue in 2009 With the 7% market penetration we expect to achieve in 2009, our product will be bought by 2,000 customers at a cost of $35,000 per unit. Our total sales in 2009 are projected to be $70 million.

We are advertising in the Journal of the American Medical Association as this publication is circulated to over 330,000 physicians, medical professionals, and medical students. A one-page advertisement with an annual frequency of 1008

Sales and Revenue in 2010

times costs $11,341.

We estimate that in 2010 we will penetrate another 13% of the Canadian market, totaling 4,000 customers. Our total sales in 2010 are expected to be $140 million. Sales and Revenue in 2011 In 2011, we have projected that we will penetrate 18% of the Canadian market and 3% of the American market. This forecasts the sale of 13,955 units corresponding to total sales of $485.5 million. Advertising Strategy The main targets of our promotion strategy are health professionals, as these are the people FOR MORE INFORMATION, PLEASE VISIT OUR WEBSITE:

Continuing Medical Education Sponsorship

KTI is a main sponsors at the Primary Care Today educational conference and medical exposition held at the University of Toronto from May 7-9, 2009. At this event we will showcase our artificial kidney and allow physicians to directly ask any questions they may have regarding our product. Furthermore, the KTI logo will be showcased on lanyards worn by all conference delegates. We will also be a Platinum sponsor at the Canadian Society of Nephrology’s annual meeting in Edmonton, Alberta from May 10-13,

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KIDNEY TECH INC. - “WE DO THE FILTERING FOR YOU”

WINTER 2009

includes insurance for lost or damaged goods. According to the contract, FedEx will replace a unit should it be lost or damaged during shipping.

and on the main stage where the keynote speakers will present. We have signed on to be a Platinum Level sponsor at Renal Week in San Diego, California put on by the American Society of Nephrologists

Furthermore, if any unit is not received by the requesting hospital on time KTI will only be charged 50% of the shipping fee. The projected costs of distribution within Canada in 2009 is $300,000; in 2010 is $600,000;

from October 27-November 1, 2009. Here, our logo will be found on the cover of all brochures and programs throughout the week and we will have a booth where physicians and other healthrelated professionals can speak with us directly

and in 2011 is $1,753,500. To the United States As in Canada, hospitals will order the units for the customers and KTI will ship the units to the requesting hospital using FedEx.

about our product. The cost of being a Platinum Level Supporter at Renal Week is $20,000. To sponsor and attend these three events in 2009 will cost KTI $69,100. Distribution Channels

KTI has a contract established with FedEx for shipping anywhere in the United States with delivery the next morning by 11:00am for $200 per unit. This price also includes all applicable customs fees and insurance for loss of or damages

Within Canada Hospitals will order the units for the customers. KTI will ship the units to the requesting hospital using FedEx. We have a contract established with FedEx that the cost of shipping anywhere in

to the products. For any lost or damaged products, FedEx will replace the lost or damaged unit. Just like in Canada, any late shipment will be 50% off. The cost of distribution to the United States in 2011 is estimated at $453,000.

Canada with delivery the next morning by 9:00am at the latest will cost $150 per unit. This price

How KTI Will Save Insurance Companies Money

Projected Savings due to KTI Artificial Kidneys in Canada and the US

By agreeing to cover 100% of the cost of the artificial kidney to the customer, you will not only save an estimated total of $1.23 billion between 2009 and 2011 in Canada and the United States, but you will also retain customers whom you can

Millions of Dollars

2009. As a major sponsor of this event our logo will be visible on all paper brochures and programs as well as on banners at the entrance to the facility

$1,500

charge increased insurance premiums. Without our product, patients on dialysis will succumb to their disease within the next 5 years. This is especially important when considering that 50.9% of survey respondents are more than 5 years away

$1,125 $750 $375 $0 2009

from reaching the average life expectancy. 2010

FOR MORE INFORMATION, PLEASE VISIT OUR WEBSITE:

2011 www.KidneyTech.ca

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INVESTOR KIDNEY TECH NEWSLETTER INC. - “WE ISSUE DO THE N°3 FILTERING FOR YOU”

WINTER FALL 2008 2009

Operational Plan

BREAKDOWN OF OUR agreement with Bioengineering Suppliers: Hollow micro SALES & MARKETING Company in the amount of $1,000,000 for ten years at 5% fiber are essential to the EXPENSES FOR 2009 manufacturing process of the KTI artificial kidney. Four competitors produce these highly specialized micro fibers. After a vigorous internal quality control process KTI chose Terumo Corporation as its official supplier. Their hollow micro fibers are able to withstand the fluid forces an artificial kidney will be exposed to and in our opinion is the best hollow micro fiber product on the market today. Terumo Corp has a warehouse in Montreal minimizing the cost for shipping and handling to our manufacturing facility. Once the micro fibers arrive at our facility, KTI’s patented process provides the fi b e r s w i t h t h e r i g h t permeability to different chemicals: nutrients will not leak out while waste will be removed. Thousands of hollow micro fibers form a subunit, while each kidney is made up of 7 identical subunits, like a real kidney. This redundancy ensures that even if a subunit fails, the

interest. Manufacturing and quality control staff have been hired to carry out the construction of the artificial kidneys.

Sponsorship 8% Staff 36% Advertising 2%

Distribution 54%

Key Equipment Three main pieces of equipment are being used by KTI. • A hollow microfiber

overall performance of our product will not be compromised. The kidneys are

shaper to form hollow microfibers into our patented final product • Two specialized quality control machines, required to

shaped and assembled in the form and size of a real kidney. Finally artificial veins, made from the same starting

ensure proper functioning of each artificial kidney. Clinical study After testing the device in animals to ensure safety and

materials as the artificial kidney are added to the device and the appropriate connection valves are then fitted. The device is then tested

function, KTI transplanted five volunteers with internal artificial kidneys. Each had been on dialysis for more than 2 years. Presently, all five

artificial kidneys have been by our skilled quality control working properly, successfully team before it is ready to be implanted into a Raw Materials, Staff patient. 2009 2010 2011 Specialized equipment is necessary to produce the KTI artificial kidney. KTI has signed a financing

FOR MORE INFORMATION, PLEASE VISIT OUR WEBSITE:

Hollow microfibres

$46,000,000 (2,000 units)

$92,000,000 (4,000 units)

$320,965,000 (13,955 units)

Chemicals

$105,000

$173,000

$556,000

Lab staff

$330,000

$500,000

$1,050,000

Total

$46,445,000

$92,673,000

$322,571,000

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INVESTOR KIDNEY TECH NEWSLETTER INC. - “WE ISSUE DO THE N°3 FILTERING FOR YOU”

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REAL PATIENTS: Jenn received a KTI artificial kidney transplant. She had been so sick while awaiting her transplant that she was wheelchair bound. Just a couple of months after her transplant she was back to enjoying activities like riding bikes with her children. replacing the natural functions of the kidney. These patients now have much more time to

pressure or other serious health problems. Although this device would

Summary of Significant Accounting Policies and Reporting Practices

do the things they enjoy.

have less quality of life benefits for patients, it would be marketable to a larger number of people because it would be cheaper and would not require

These financial statements have been prepared by management in accordance

transplant surgery. Since the device would need to be replaced annually, this product could generate greater income for KTI. The external kidney

The

Research and Development

In North America, 12,000 children are affected by kidney failure every year. Unfortunately the current KTI artificial kidney is too large to be surgically implanted into c h i l d r e n . K T I ’s R & D department is hard at work to test a smaller version of our product, with less subunits that can be used to treat children of various ages. Plan B Disposable External Kidney KTI’s R & D department is experimenting with modifications to the KTI internal artificial kidney to produce a small, disposable external kidney which can last at least one year. This external artificial kidney could be used by patients who are a high risk of death during surgery, due to heart disease, high blood

would also require storage and washing solutions which KTI is currently developing.

Financial Statements Notes to the Financial Statements Business Description Kidney Tech, Inc. is focused on the development and commercialization of an internal artificial kidney. It was incorporated under the Canadian Federal laws in 2008 and was continued under the Canada Business Corporations Act.

FOR MORE INFORMATION, PLEASE VISIT OUR WEBSITE:

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with Canadian generally accepted accounting

principles,

reported

GAAP.

amounts

and

disclosures are determined using management’s

best

estimates

based on assumptions that reflect the most likely set of economic conditions.

We

used

fairly

low

estimates for market share since we are new to the market, and also because we believe it better to err on the side of caution. Where possible, costs are based on actual costs according to our research. Furniture, fixtures and e q u i p m e n t ( l a b o r a t o r y, manufacturing, computer, etc) are recorded at cost. Amortization is provided on a straight-line basis over their 10 year estimated useful lives.

Page 13 of 20

Projected Monthly Statement of Revenues and Expenses Jan

Feb

Mar

Q1

Apr

May

Jun

Q2

$350,000

$2,012,500

$2,012,500

$4,375,000

$5,250,000

$5,250,000

$5,250,000

$15,750,000

Raw Materials, Chemicals, Packaging

$236,217

$1,328,858

$1,328,858

$2,893,934

$3,462,717

$3,462,717

$3,462,717

$10,388,150

Shipping and Distribution

$1,500

$8,625

$8,625

$18,750

$22,500

$22,500

$22,500

$67,500

Salaries: Manufacturing

$20,000

$45,000

$45,000

$110,000

$78,333

$78,333

$78,333

$235,000

Lease: Manufacturing Center

$8,333

$8,333

$8,333

$25,000

$8,333

$8,333

$8,333

$25,000

Utilities and Janitorial Services

$5,000

$15,000

$15,000

$35,000

$20,000

$20,000

$20,000

$60,000

Total Cost of Sales

$271,050

$1,405,817

$1,405,817

$3,082,684

$3,591,883

$3,591,883

$3,591,883

$10,775,650

Gross Profit

$78,950

$606,683

$606,683

$1,292,316

$1,658,117

$1,658,117

$1,658,117

$4,974,350

Advertising and Sponsorship

$2,365

$11,341

$0

$13,706

$0

$0

$0

$0

Salaries: Marketing Staff

$20,000

$20,000

$20,000

$60,000

$30,000

$30,000

$30,000

$90,000

Salaries: Owners and Financial Staff

$45,500

$65,000

$65,000

$175,500

$116,667

$116,667

$116,667

$350,000

Lease: Office

$3,750

$3,750

$3,750

$11,250

$3,750

$3,750

$3,750

$11,250

Office Utilities and Janitorial Services

$15,000

$15,000

$15,000

$45,000

$15,000

$15,000

$15,000

$45,000

Overhead

$15,000

$20,000

$20,000

$55,000

$25,000

$25,000

$25,000

$75,000

Total Sales, General, Admin Expenses

$101,615

$135,091

$123,750

$360,456

$190,417

$190,417

$190,417

$571,250

Laboratory Consumables

$14,000

$15,000

$15,000

$44,000

$17,000

$17,000

$17,000

$51,000

Salaries: Laboratory Staff

$27,500

$27,500

$27,500

$82,500

$27,500

$27,500

$27,500

$82,500

Lease: Laboratory

$4,167

$4,167

$4,167

$12,500

$4,167

$4,167

$4,167

$12,500

Laboratory Utilities and Janitorial Service Total Research and Development Expenses

$5,000

$8,000

$8,000

$21,000

$10,000

$10,000

$10,000

$30,000

$50,667

$54,667

$54,667

$160,000

$58,667

$58,667

$58,667

$176,000

Total Expenses

$152,282

$189,758

$178,417

$520,456

$249,083

$249,083

$249,083

$747,250

Increase (Loss) Before Amortization

$

(73,332) $416,926

$428,267

$771,860

$1,409,033

$1,409,033

$1,409,033

$4,227,100

Total Sales Cost of Sales

Sales, General, & Admin Expenses

Research and Development Expenses

Amortization Furniture, Fixtures, and Equipment

$176,250

$176,250

$176,250

$528,750

$176,250

$176,250

$176,250

$528,750

Patent

$417

$417

$417

$1,251

$417

$417

$417

$1,251

Total Amortization

$176,667

$176,667

$176,667

$530,001

$176,667

$176,667

$176,667

$530,001

Net Profit (Loss) Before Income Tax

$ (249,999) $240,259

$251,600

$241,859

$1,232,366

$1,232,366

$1,232,366

$3,697,099

Opening Retained Earnings (Deficit)

$0

$241,859

$1,474,226

$2,706,592

$241,859

Closing Retained Earnings (Deficit)

$ (249,999) $

$1,474,226

$2,706,592

$3,938,958

$3,938,958

$ (249,999) $

(9,740) $0

(9,740) $241,859

FOR MORE INFORMATION, PLEASE VISIT OUR WEBSITE:

$241,859

www.KidneyTech.ca

Page 14 of 20

for the Year Ending December 31, 2009 Jul

Aug

Sept

Q3

Oct

Nov

Dec

Q4

Year End

$7,525,000

$7,525,000

$7,525,000

$22,575,000

$9,100,000

$9,100,000

$9,100,000

$27,300,000

$70,000,000

$4,957,717

$4,957,717

$4,957,717

$14,873,150

$5,992,717

$5,992,717

$5,992,717

$17,978,150

$46,133,385

$32,250

$32,250

$32,250

$96,750

$39,000

$39,000

$39,000

$117,000

$300,000

$100,000

$100,000

$100,000

$300,000

$110,000

$110,000

$110,000

$330,000

$975,000

$8,333

$8,333

$8,333

$25,000

$8,333

$8,333

$8,333

$25,000

$100,000

$30,000

$30,000

$30,000

$90,000

$35,000

$35,000

$35,000

$105,000

$290,000

$5,128,300

$5,128,300

$5,128,300

$15,384,900

$6,185,050

$6,185,050

$6,185,050

$18,555,150

$47,798,385

$2,396,700

$2,396,700

$2,396,700

$7,190,100

$2,914,950

$2,914,950

$2,914,950

$8,744,850

$22,201,615

$30,900

$0

$0

$30,900

$38,200

$0

$0

$38,200

$82,806

$40,000

$40,000

$40,000

$120,000

$55,000

$55,000

$55,000

$165,000

$345,000

$116,667

$116,667

$116,667

$350,000

$116,667

$116,667

$116,667

$350,000

$1,225,500

$3,750

$3,750

$3,750

$11,250

$3,750

$3,750

$3,750

$11,250

$45,000

$25,000

$25,000

$25,000

$75,000

$25,000

$25,000

$25,000

$75,000

$240,000

$30,000

$30,000

$30,000

$90,000

$35,000

$35,000

$35,000

$105,000

$325,000

$246,317

$215,417

$215,417

$677,150

$273,617

$235,417

$235,417

$744,450

$2,263,306

$17,000

$17,000

$17,000

$51,000

$18,000

$18,000

$18,000

$54,000

$200,000

$27,500

$27,500

$27,500

$82,500

$27,500

$27,500

$27,500

$82,500

$330,000

$4,167

$4,167

$4,167

$12,500

$4,167

$4,167

$4,167

$12,500

$50,000

$10,500

$10,500

$10,500

$31,500

$11,000

$11,000

$11,000

$33,000

$115,500

$59,167

$59,167

$59,167

$177,500

$60,667

$60,667

$60,667

$182,000

$695,500

$305,483

$274,583

$274,583

$854,650

$334,283

$296,083

$296,083

$926,450

$2,958,806

$2,091,217

$2,122,117

$2,122,117

$6,335,450

$2,580,667

$2,618,867

$2,618,867

$7,818,400

$19,242,809

$176,250

$176,250

$176,250

$528,750

$176,250

$176,250

$176,250

$528,750

$1,586,250

$417

$417

$417

$1,251

$417

$417

$417

$1,251

$3,753

$176,667

$176,667

$176,667

$530,001

$176,667

$176,667

$176,667

$530,001

$1,590,003

$1,914,550

$1,945,450

$1,945,450

$5,805,449

$2,404,000

$2,442,200

$2,442,200

$7,288,399

$17,652,806

$3,938,958

$5,853,508

$7,798,957

$3,938,958

$9,744,407

$12,148,406

$14,590,606

$9,744,407

$0

$5,853,508

$7,798,957

$9,744,407

$9,744,407

$12,148,406

$14,590,606

$17,032,805

$17,032,805

$17,032,805

FOR MORE INFORMATION, PLEASE VISIT OUR WEBSITE:

www.KidneyTech.ca

Page 15 of 20

KIDNEY TECH INC. - “WE DO THE FILTERING FOR YOU”

Projected Monthly Balance Sheet for Year End 2008

Jan

Feb

Mar

Q1

Apr

May

Jun

ASSETS Current Assets: Cash

$0

$0

$133,000

$382,375

$382,375

$927,500

$1,575,000

$1,732,500

Accounts Receivable

$0

$52,500

$301,875

$402,500

$402,500

$1,050,000

$1,207,500

$1,365,000

Inventories

$74,976

$434,875

$784,875

$784,875

$784,875

$2,782,500

$3,097,500

$4,074,000

Pre-paid Expenses

$75,024

$175,000

$175,000

$175,000

$175,000

$175,000

$175,000

$175,000

Total Current Assets

$150,000

$662,375

$1,394,750

$1,744,750

$1,744,750

$4,935,000

$6,055,000

$7,346,500

$1,150,000

$21,150,000

$21,150,000

$21,150,000

$21,150,000

$21,150,000

$21,150,000

$21,150,000

$0

$176,250

$352,500

$528,750

$528,750

$705,000

$881,250

$1,057,500

$1,150,000

$20,973,750

$20,797,500

$20,621,250

$20,621,250

$20,445,000

$20,268,750

$20,092,500

$75,000

$75,000

$75,000

$75,000

$75,000

$75,000

$75,000

$75,000

$0

$417

$834

$1,251

$1,251

$1,668

$2,085

$2,502

$75,000

$74,583

$74,166

$73,749

$73,749

$73,332

$72,915

$72,498

Capital Assets: Furniture, Fixtures, and Equipment Cost Accumulated Amortization Net Furniture, Fixtures, and Equipment Patent Cost Accumulated Amortization Net Patent

Total Assets

$1,375,000

$21,710,708 $22,266,416 $22,439,749 $22,439,749 $25,453,332 $26,396,665 $27,511,498

LIABILITIES Current Liabilities: Accounts Payable

$0

$594,457

$1,278,656

$1,569,140

$1,569,140

$3,719,106

$3,798,823

$4,050,040

Total Current Liabilities

$0

$594,457

$1,278,656

$1,569,140

$1,569,140

$3,719,106

$3,798,823

$4,050,040

Long Term Debt

$0

$20,000,000

$19,640,000

$19,280,000

$19,280,000

$18,920,000

$18,560,000

$18,200,000

$1,000,000

$991,250

$982,500

$973,750

$973,750

$965,000

$956,250

$947,500

$375,000

$375,000

$375,000

$375,000

$375,000

$375,000

$375,000

$375,000

$0

($249,999)

($9,740)

$241,859

$241,859

$1,474,226

$2,706,592

$3,938,958

$375,000

$125,001

$365,260

$616,859

$616,859

$1,849,226

$3,081,592

$4,313,958

Long Term Equipment Financing Shareholder's Equity Capital Stock Retained Earnings/(Deficit) Total Shareholder's Equity

Total Liability and Shareholder's Equity

$1,375,000

$21,710,708 $22,266,416 $22,439,749 $22,439,749 $25,453,332 $26,396,665 $27,511,498

FOR MORE INFORMATION, PLEASE VISIT OUR WEBSITE:

www.KidneyTech.ca

Page 16 of 20

KIDNEY TECH INC. - “WE DO THE FILTERING FOR YOU”

the Year Ending December 31, 2009 Year End 2009

Q2

Jul

Aug

Sept

Q3

Oct

Nov

Dec

Q4

$1,732,500

$2,117,500

$2,709,000

$3,386,250

$3,386,250

$3,543,750

$5,096,000

$5,915,000

$5,915,000

$5,915,000

$1,365,000

$1,956,500

$2,633,750

$2,633,750

$2,633,750

$3,640,000

$3,822,000

$4,095,000

$4,095,000

$4,095,000

$4,074,000

$5,342,750

$6,020,000

$7,183,750

$7,183,750

$8,918,000

$10,010,000

$11,200,000

$11,200,000

$11,200,000

$175,000

$175,000

$175,000

$175,000

$175,000

$175,000

$175,000

$175,000

$175,000

$175,000

$7,346,500

$9,591,750

$11,537,750

$13,378,750

$13,378,750

$16,276,750

$19,103,000

$21,385,000

$21,385,000

$21,385,000

$21,150,000

$21,150,000

$21,150,000

$21,150,000

$21,150,000

$21,150,000

$21,150,000

$21,150,000

$21,150,000

$21,150,000

$1,057,500

$1,233,750

$1,410,000

$1,586,250

$1,586,250

$1,762,500

$1,938,750

$2,115,000

$2,115,000

$2,115,000

$20,092,500

$19,916,250

$19,740,000

$19,563,750

$19,563,750

$19,387,500

$19,211,250

$19,035,000

$19,035,000

$19,035,000

$75,000

$75,000

$75,000

$75,000

$75,000

$75,000

$75,000

$75,000

$75,000

$75,000

$2,502

$2,919

$3,336

$3,753

$3,753

$4,170

$4,587

$5,004

$5,004

$5,004

$72,498

$72,081

$71,664

$71,247

$71,247

$70,830

$70,413

$69,996

$69,996

$69,996

$27,511,498 $29,580,081 $31,349,414 $33,013,747 $33,013,747 $35,735,080 $38,384,663 $40,489,996 $40,489,996 $40,489,996

$4,050,040

$4,880,783

$4,765,457

$4,853,090

$4,853,090

$5,539,174

$6,115,307

$6,147,191

$6,147,191

$6,147,191

$4,050,040

$4,572,823

$4,765,457

$4,853,090

$4,853,090

$5,539,174

$6,115,307

$6,147,191

$6,147,191

$6,147,191

$18,200,000

$17,840,000

$17,480,000

$17,120,000

$17,120,000

$16,760,000

$16,400,000

$16,040,000

$16,040,000

$16,040,000

$947,500

$938,750

$930,000

$921,250

$921,250

$912,500

$903,750

$895,000

$895,000

$895,000

$375,000

$375,000

$375,000

$375,000

$375,000

$375,000

$375,000

$375,000

$375,000

$375,000

$3,938,958

5,853,508

7,798,957

$9,744,407

$9,744,407

$12,148,406

$14,590,606

$17,032,805

$17,032,805

$17,032,805

$4,313,958

$6,228,508

$8,173,957

$10,119,407

$10,119,407

$12,523,406

$14,965,606

$17,407,805

$17,407,805

$17,407,805

$27,511,498 $29,580,081 $31,349,414 $33,013,747 $33,013,747 $35,735,080 $38,384,663 $40,489,996 $40,489,996 $40,489,996 FOR MORE INFORMATION, PLEASE VISIT OUR WEBSITE:

www.KidneyTech.ca

Page 17 of 20

Projected Statement of Revenues and Expenses 2010-2011 Q1 2010

Q2 2010

Q3 2010

Q4 2010

$29,050,000

$33,075,000

$36,925,000

$40,950,000

$140,000,000 $104,125,000 $177,100,000 $488,425,000

Raw Materials, Chemicals, Packaging

$19,131,150

$21,783,150

$24,319,150

$26,972,150

$92,205,602

$68,541,150

$116,613,150 $321,553,602

Shipping and Distribution

$124,500

$141,750

$158,250

$175,500

$600,000

$460,000

$817,000

$2,206,500

Salaries: Manufacturing

$252,000

$253,500

$255,000

$264,000

$1,024,500

$291,000

$430,000

$1,329,000

Lease: Manufacturing Center

$87,500

$87,500

$87,500

$87,500

$350,000

$225,000

$225,000

$900,000

Utilities and Janitorial Services

$120,000

$140,000

$170,000

$195,000

$625,000

$265,000

$60,000

$883,000

Total Cost of Sales

$19,715,150

$22,405,900

$24,989,900

$27,694,150

$94,805,102

$69,782,150

$118,145,150 $326,872,102

Gross Profit

$9,334,850

$10,669,100

$11,935,100

$13,255,850

$45,194,898

$34,342,850

$58,954,850

$161,552,898

Advertising and Sponsorship

$16,325

$0

$63,800

$81,400

$161,525

$35,400

$44,020

$102,970

Salaries: Marketing Staff

$91,250

$91,250

$91,250

$91,250

$365,000

$237,500

$237,500

$950,000

Salaries: Owners and Financial Staff

$405,000

$405,000

$405,000

$405,000

$1,620,000

$475,000

$475,000

$1,900,000

Lease: Office

$22,500

$22,500

$22,500

$22,500

$90,000

$37,500

$37,500

$150,000

Office Utilities and Janitorial Services

$60,000

$69,000

$60,000

$75,000

$264,000

$85,000

$114,000

$372,000

Overhead

$108,000

$116,000

$122,500

$140,000

$486,500

$243,500

$325,000

$1,038,500

Total Sales, General, Admin Expenses

$703,075

$703,750

$765,050

$815,150

$2,987,025

$1,113,900

$1,233,020

$4,513,470

Laboratory Consumables

$900,000

$1,200,000

$2,300,000

$2,551,667

$6,951,667

$2,524,000

$2,610,000

$10,196,000

Salaries: Laboratory Staff

$125,000

$125,000

$125,000

$125,000

$500,000

$250,000

$350,000

$1,050,000

Lease: Laboratory

$52,500

$52,500

$52,500

$7,917

$165,417

$75,000

$75,000

$300,000

Laboratory Utilities and Janitorial Service Total Research and Development Expenses

$80,000

$120,000

$140,000

$170,000

$510,000

$177,500

$186,000

$718,000

$1,157,500

$1,497,500

$2,617,500

$2,854,583

$8,127,083

$3,026,500

$3,221,000

$12,264,000

Total Expenses

$1,860,575

$2,201,250

$3,382,550

$3,669,733

$11,114,108

$4,140,400

$4,454,020

$16,777,470

Increase(Loss) Before Amortization

$7,474,275

$8,467,850

$8,552,550

$9,586,116

$34,080,790

$30,202,450

$54,500,830

$144,775,428

Furniture, Fixtures, and Equipment

$528,750

$528,750

$528,750

$528,750

$2,115,000

$528,750

$528,750

$2,115,000

Patent

$1,251

$1,251

$1,251

$1,251

$5,004

$1,251

$1,251

$5,004

Total Amortization

$530,001

$530,001

$530,001

$530,001

$2,120,004

$530,001

$530,001

$2,120,004

Net Profit (Loss) Before Income Tax

$6,944,274

$7,937,849

$8,022,549

$9,056,115

$31,960,786

$29,672,449

$53,970,829

$142,655,424

Opening Retained Earnings (Deficit)

$17,032,805

$23,977,079

$31,914,927

$39,937,476

$17,032,805

$68,793,307

$137,633,604 $48,949,008

Closing Retained Earnings (Deficit)

$23,977,079

$31,914,927

$39,937,476

$48,949,008

$48,949,008

$98,465,755

$191,604,432 $191,604,432

Total Sales

Year End 2010

Q2 2011

Q4 2011

Year End 2011

Cost of Sales

Sales, General, & Admin Expenses

Research and Development Expenses

Amortization

FOR MORE INFORMATION, PLEASE VISIT OUR WEBSITE:

www.KidneyTech.ca

Page 18 of 20

Projected Balance Sheet for 2010-2011 Year End 2009

Q1 2010

Q2 2010

Q3 2010

Q4 2010

Year End 2010

Q2 2011

Q4 2011

Year End 2011

Cash

$5,915,000

$6,853,000

$9,896,250

$11,935,000

$13,702,500

$13,702,500

$26,832,750

$48,517,000

$48,517,000

Accounts Receivable

$4,095,000

$6,597,500

$7,962,500

$9,712,500

$12,320,000

$12,320,000

$28,432,250

$54,145,000

$54,145,000

Inventories

$11,200,000

$15,102,500 $19,050,500 $22,879,500

$28,000,000

$28,000,000

$62,840,750

$122,500,000

$122,500,000

$250,000

$250,000

$250,000

$250,000

$250,000

ASSETS Current Assets:

Pre-paid Expenses Total Current Assets

$175,000

$250,000

$250,000

$250,000

$21,385,000

$28,803,000 $37,159,250 $44,777,000

$54,272,500

$54,272,500

$118,355,750

$225,412,000

$225,412,000

Furniture, Fixtures, and Equipment Cost

$21,150,000

$21,150,000 $21,150,000 $21,150,000

$21,150,000

$21,150,000

$21,150,000

$21,150,000

$21,150,000

Accumulated Amortization

$2,115,000

$2,643,750

$3,701,250

$4,230,000

$4,230,000

$5,287,500

$6,345,000

$6,345,000

Net Furniture, Fixtures, and Equipment

$19,035,000

$18,506,250 $17,977,500 $17,448,750

$16,920,000

$16,920,000

$15,862,500

$14,805,000

$14,805,000

Capital Assets:

$3,172,500

Patent Cost

$75,000

$75,000

$75,000

$75,000

$75,000

$75,000

$75,000

$75,000

$75,000

Accumulated Amortization

$5,004

$6,255

$7,506

$8,757

$10,008

$10,008

$12,510

$15,012

$15,012

Net Patent

$69,996

$68,745

$67,494

$66,243

$64,992

$64,992

$62,490

$59,988

$59,988

Total Assets

$40,489,996 $47,377,995 $55,204,244 $62,291,993 $71,257,492 $71,257,492 $134,280,740 $240,276,988 $240,276,988

LIABILITIES Current Liabilities: Accounts Payable

$6,147,191

$7,197,166

$8,191,816

$8,363,267

$9,423,484

$9,423,484

$25,081,485

$40,056,222

$40,056,222

Total Current Liabilities

$6,147,191

$7,197,166

$8,191,816

$8,363,267

$9,423,484

$9,423,484

$25,081,485

$40,056,222

$40,056,222

Long Term Debt

$16,040,000

$14,960,000 $13,880,000 $12,800,000

$11,720,000

$11,720,000

$9,620,000

$7,520,000

$7,520,000

Long Term Equipment Financing

$895,000

$868,750

$842,500

$816,250

$790,000

$790,000

$738,500

$721,333

$721,333

Capital Stock

$375,000

$375,000

$375,000

$375,000

$375,000

$375,000

$375,000

$375,000

$375,000

Retained Earnings/ (Deficit)

17032805

23,977,079

$31,914,927 $39,937,476

$48,949,008

$48,949,008

$98,465,755

$191,604,432

$191,604,432

Total Shareholder's Equity

$17,407,805

$24,352,079 $32,289,927 $40,312,476

$49,324,008

$49,324,008

$98,840,755

$191,979,432

$191,979,432

Shareholder's Equity

Total Liability and $40,489,996 $47,377,995 $55,204,244 $62,291,993 $71,257,492 $71,257,492 $134,280,740 $240,276,988 $240,276,988 Shareholder's Equity FOR MORE INFORMATION, PLEASE VISIT OUR WEBSITE: www.KidneyTech.ca Page 19 of 20

Patent costs include legal fees to obtain patents and patent application fees. Patent was amortized on a straight-line basis over its estimated 15 year useful

incredible insight into plastic manufacturing allowed KTI

life.

design was incorporated into KTI’s patent. KTI periodically evaluates the recoverability and

estimated lives of our property, plant and equipment and intangible assets. Our evaluations occur whenever events or changes in circumstances indicate that an amount may not be recoverable or the useful life has changed. Projected outcome The income statements indicate that, KIT will be successful financially. Even with a slow start in the first few months of operation (during the first quarter of 2009), the company shows a likely net income of $17,032,805 in the first year of operations, $57,321,474 in 2010 and $191,604,432 in 2011. To achieve these results, we are minimizing the expenses by controlling the purchase of property and excessive inventory, while keeping staff at a minimum until manufacturing can not keep up with market demand. Management KTI’s management team is composed of five highly skilled and resourceful individuals. (For their statements of net worth, please contact KTI.) They have built a company that is at the cutting-edge of kidney replacement therapy, developing the world’s first implantable artificial kidney. KTI’s expertise is unparalleled in this field. Executives The company’s president Artem Luhovy, MBA, Ph.D completed his business and research training simultaneously at McGill University. His artificial organ researched was instrumental in developing KTI’s first prototype. He is also a capable organizer and an inspiring leader, able to coordinate the diverse business styles of the management team. KT’s manufacturing is headed by Hanan Elimam.

to benefit from the latest advances in polymer formulation and bulk manufacturing techniques. Her unique polymer KTI’s CFO is a graduate of the John Molson

School of Business. Madhavi Latha Vemuri has spent years in the health science sector with previous experience at Pfizer and GlaxoSmithKline. Madhavi has always been excited to start a project from its inception and is dedicated to see KTI flourish financially. Staying at the cutting-edge of artificial kidney technology is a priority for KTI and is a key part of the company’s long term sustainability and growth strategy. Nahid Golabi, an MIT graduate, has the training and the experience to research and develop the next generations of KTI’s products, keeping us one step ahead of the competition. Nahid has previously worked for Baxter helping improve the artificial heart valve. The management team could not be complete without the endless efforts of Michelle Miller, VP Marketing. This graduate of the Ontario College of Art & Design has produced marketing campaigns for Amgen and Biovail. She is intimately familiar with the kidney replacement market as she has previously worked to supply Canadian hospitals with state of the art dialysis equipment. Michelle is qualified and passionate about her new position and a valuable asset to the management team. In addition to management, KTI has hired research assistants, lab technicians, manufacturing personnel and quality control officers to ensure that our product meets the highest quality standards.

After graduating the university of Toronto’s Mechanical Engineering program she worked in the polymer manufacturing sector for Polymer Plainfield and Bombardier. After a close friend required dialysis to treat her kidney condition, Hanan became very interested in the possibility of creating an artificial kidney. Her FOR MORE INFORMATION, PLEASE VISIT OUR WEBSITE:

www.KidneyTech.ca

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