IMAGE INFORMATICS SOLUTIONS Media Cybernetics UK Performance Review

Media Cybernetics UK Team 5 Members - 1 Administration /Purchasing, 1 Support and installations, 3 Sales Purchased in May 2003 (formally DataCell Ltd) 70% direct, 30% distribution Main focus: maximisation of QImaging and Media Cybernetics products into the UK and Ireland. Based in Marlow (1 hr from London) – share office with Photometrics UK Also responsible for European Autoquant distribution and OEM accounts

2007 Forecast Subsidiary Business Forecast - £1.25 Million Media Cybernetics Software Purchase Forecast - $400,000 QImaging Camera Purchase Forecast - $540,000 Autoquant Software Forecast - $430,000

2007 Performance Q1 2005Q1 2006Q1 2007Q2 2005Q2 2006Q Media Cy UK Revenue £ (1000's) Media Cy Purchases $ (1000's) QImaging Purchases $ (1000's)

UK Business Revenue £'s

Software / Camera Purchases per Quarter

Change in Business

Reseller Business No microscope-based distributors 1 VAR – Foster and Freeman Camera relationships with many software suppliers – Metamorph, Simple-PCI, MCID, Improvision, IP Lab, Andor IQ, Volocity, Open Lab Inter-company resellers - Photometrics UK, Struers, PI Acton 3 AutoQuant only software resellers Image-Pro dealers – some offer but only 2 push solutions InVivo dealer – Photometrics UK

Reseller Business High End / Live Cell Photometrics UK, Digital Pixel, Improvision, Andor Bio Systems, Visitech International, Molecular Devices, Cairn Research, IMSOL Mid to High End Photometrics UK, Molecular Devices, Digital Pixel, Improvision, Media Cybernetics, IMSOL, Nikon, Zeiss, Leica, Olympus, Imaging Associates, Analysis Systems Media Cybernetics, Nikon, Zeiss, Leica, Olympus, Imaging Associates, Capture Systems Media Cybernetics, Nikon, Zeiss, Leica, Olympus, Imaging Associates, Indigo Scientific, GT Vision, ISS, DIS, Optivision Camera Range Providers Hamamatsu, PCO, Media Cybernetics, IMSOL, Photonic Science, Indigo Scientific, ISS, DIS Specialized Systems Providers Linkam, Objective Imaging, Conway Valley Systems, Struers, Synoptics Materials Specific Analysis Metprep, Struers, Buehler, Imaging Associates, ISS

UK Direct Focus – Sales Process Focus Strong Emphasis on Sales Process – we use Strongman to assess projects and aid deal closure S = Solution T = Time scales R = Review O = Opportunity N = Negotiation G = Galvanisation M = Money A = Authority N = Need We operate at between 75-85% demo to closure conversion rate – From recent conversations with Microscope teams they look for 25-30%

UK Direct Focus – Exploiting our differences We formalised our support options - Bronze, Silver, Gold We formalised our Support Mechanism -Technical query database We formalised our training options -Basic Measurement, Customisation and Fluorescence We formalised our installation expectation -Crib Sheets and training aids We formalised our sales calls to discuss

UK Direct Focus – Formalised Offerings 1.Cameras for Microscopy 2.Deconvolution Systems 3.Simple Multichannel Systems 4.Time-Lapse Imaging 5.Advanced Image Analysis 6.Stereology Analysis Systems 7.Slide Scanning Systems

IMAGE INFORMATICS SOLUTIONS Media Cybernetics UK Prioritised Product Needs

The UK needs relate to addressing and fixing existing solutions rather than building new ones Our requirements and needs sit more around the productisation/marketing/branding of our offerings – literature, mouse- mats, posters, logos, website etc Annoying niggles or real issues? We have some problems to do with workflow which are annoying but they can be lived with until later versions or future products. However some things do stop sales – both by being counter competitive and also by reducing sales confidence To be able to assess what is needed the first thing to do is to assess what we have and what we are trying to achieve

Product Offerings InVivo/InVitro – capture and control Image-Pro Analyser – post capture analysis Autoquant – deconvolution software Modules: 3D Surface Inspector, 3D Constructor, SharpStack Plus Image-Pro Express/Plus – capture for non live-cell, brightfield colour and non life-science studies IQ Base and other products

InVivo/InVitro We need a multichannel control software to provide a fast and easy- to-use interface - End Users Love it. Problem is sales guys don’t trust it We need no complicated control, support or added functions - we just need support for ASI, Prior, Sutter, Photometrics and QImaging General stability and file transfer to Image-Pro and Autoquant are key. InVivo working as it should (currently) would increase our software sales by $40,000 a year through our Photometrics channel. More can be achieved by selling solutions direct – see later systems discussion

Image-Pro Analyzer In the UK 4 main packages are used for analysis - Metamorph, Velocity, Image-Pro and Image-J Image-Pro Analyzer is allowing us to attack this market offering a higher level of support, training and application knowledge. In the UK Image-Pro is known in the brightfield analysis market but not in fluorescence where Velocity and Metamorph rule. Key for this market growth is the support of file formats, especially for confocal, but we regularly have issues with Leica, Zeiss and Delta Vision. Growth in the market depends on building our respect at the high end; experts are now promoting and using Analyzer - aiding our push. Fixing File IO and increasing fluorescence applets such as Calcium, FRET, FRAP into the software is key to making us the leader in the post analysis market.

AutoQuant and Modules Support for Image-Pro and InVivo files is crucial if we ever want to offer a deconvolution system – see later Modules – no feature requests, just some minor bugs which need fixing

Image-Pro Plus – What is the value add? Image-Pro remains a winner; it has its faults but nothing really which can’t be worked around - via macro or crib-sheet Only a few minor bugs exist along with some annoying features which need fixing to aid work flow – see applying a marker bar. All can be worked around With exception to camera control, their is no added add value above Image-Pro Analyzer. - I would include Scope-Pro and 3D Surface Inspector to Pro Plus increase the price on each unit marginally. This adds no clear increase in revenue but should add value in a competitive situation

Other ideas – revenue increase unquantifiable but still worth looking at Simplify the product offerings – too many bundles, plug- ins, versions etc – InVitro, InVivo, IPP and IPE (including Scope-Pro), IPA, 3D, SharpStack, Autoquant Open the macro language to all products from QCapture- Pro up – including workflow toolbar Time lapse video recording – stream to disk (purchase StreamPix or make something similar) The Optigrid (latest version integrated and with a support mechanism) or the Carv 2 or equivalent spinning disk solution – demo kit would be required.

Systems, Systems, Systems Basic Systems – to be offered through QImaging, Media and Photometrics channel – Not FRAP Fluorescence Imaging System – Upright Specific Live-Cell Imaging System – Invert Specific Upright Brightfield Imaging system – Slide Scanning Pathology and Stereology System For the dealer to offer and market – not necessarily to purchase all the hardware direct – It may be better to build a system brand first With my dealer hat on, I would not offer generic equipment (cameras and software) for less than 30-35%, However if I could offer a complete solution configured in a box and had training on how to install and support it, I would accept 20-25% discount - if it worked

Why do we need systems? -Sales guys follow DWMYMF – Do What Ever Makes You Money Fastest - if it’s easy, they sell loads. Quoting and configuring systems is time consuming and can easily be reduced by well-defined offered set ups -Distributor risk – large systems can be returned if they don’t work -Marketing – every other company offers a productised solution. We offer parts collectively - customers love simplicity -Supply side response – informing our dealers about complete solutions means they can quickly inform the customer -Existing Dealer Channel still has limited knowledge – Lack of product confidence is easily spotted by a customer -Weight – Dealers have been integrating systems in some form, but each of them markets locally, with no benefit from community or weight of marketing

What is required for system creation? InVivo/InVitro - stabilised and Autoquant integration completed – or SharpStack Marketing Material – System Name, Brochure, References, Application Notes Hardware Selection – Prior, ASI and Sutter – personally I choose Prior We don’t even need to worry about internal part numbers to start offering – Prior have general pricing and adapters etc it can be specified at purchase Higher discounts can be negotiated with hardware manufacturers where required – Prior give me 35% - we can push for 40 or even more

Typical Configuration – Upright system InVitro Analyzer 3D (InVitro, Image-Pro Analyzer, 3D Constructor) Prior Controller Prior Z drive Prior Lumen - stabilised light source – internal excitation filter included Prior Shutter PC and Wide screen monitor C mount adapter Installation package – or dealer to attend installation course Training – Place on training course by default. Crib Sheets 1 year support – free access to upgrades Camera option – EXi/SRV or QICAM Total with EXi $45,000 Cost (assuming cost of EXi and InVitro Analyzer $5,000 and Prior give 40% discount) $17,000 Dealer purchase price £33,750 making 25% Roper Profit $16,360 – 36%

What is needed to go with Systems? Application notes – electrophysiology, zebra fish, nematode worms, bacteria, yeast etc – with a simple template our dealers can collate this data for additional discounts or access to promotions Customer references related to Life Science – again collected by customers for discount – reference gets free upgrades for 3 years Formatted Training – web-based or replication of my simpler courses – dealers could purchase course notes and rights to give training

What could we do with systems in the UK? Personally, with professional basic systems, I believe that in each sales territory we can increase sales by $150,000 in year 1 - this is by selling 3 basic systems a year So for 3 sales guys/territories, that’s $450,000 within 12 months of release – if done correctly It is possible through dedication that this can grow to at least $600,000

Camera requirement To know me is to know the answer! 3-Chip 1k by 1k - $8-10K (uncooled – cool it but not for me) It would be the highest true resolution camera for microscopy on the market It would have the greatest colour quality It could create the biggest buzz in microscope colour imaging since the introduction of the pixel shifter or large format chip. We could be a market leader in the colour market UK would forecast units a year ($50,000 to $100,000) in year 1

Competition Improvision – The winner by far. They are in every department known by every imaging leader, brilliant support, products and overall the winning factor - Marketing Microscope companies - Nikon now pushing hard, Zeiss resilient, Leica just materials and confocal, Olympus - doing well with Cell R but not lower down Molecular Devices – Product and application knowledge poor – purely attacking existing customer base left by Photometrics UK – still doing ok – Metamorph really loved at the high end so many papers reference it Andor - Dropping price on cameras in most places, also they don’t know how good the Andor IQ software is - Yet Other Independent Dealers – most of these guys are dealers so compete but really act as additional sales cover

Summary of needs InVivo/InVitro stable – Photometrics UK should increase by $40,000 (6-8 full packages) File IO in Analyzer – UK product presence increase $50,000 (25-30 licences) Creation of Basic Systems and associated marketing – UK Revenue increase Year 1 $450,000 Year 2 $600,000 QImaging 3-Chip 1k by 1k camera – increase in revenue $50-100K Year 1

Mode 1 – No Engineering time Single page application template to be created Every sales and application guy to sign up to providing 1 application note per month for 3 months – we can easily obtain new relevant updated web pages and basic hand outs These application notes will not only allow us to update our website but educate and build the dealers confidence in front of the customer

Mode 1 – No Engineering time needs Branded Accessories - Mouse Mats, Stickers, Posters, Post cards – we need to build a system brand Declared Reference System – name all references and also plan the benefits for them, free tech support for the life of the reference, free upgrades Sales Packs – we need to revisit what each dealer needs and see if we can help them– 2 CD’s with all software on, basic cut down price list, references, laminated literature – branded accessories

Questions