NAN Why I Should Buy Now, page-8

Flexible selling models

Several selling models are now in operation whichcan be leveraged for specific customer needs. Each model has differentimplications for the timing of revenue recognition associated with the capitalequipment. However, Nanosonics are assuming that all of them are profitablemodels in the long term with annuity revenue growth as the installed basegrows. These models include Capital equipment sales (Direct), Capital equipmentrentals (Direct), Managed Equipment Service model (Direct), Ultrasound CapitalReseller model and Distribution model.

Capital Sale Service (Direct Channel)

• Capital equipment sold upfront with a 12-month warranty.
• Customer purchases consumables as required.
• Customer elects to purchase service contracts from Nanosonics or pays for service and parts as required.
• Continued to represent the main selling model for direct business, particularly in North America.

Managed Equipment Service (Direct Channel)

• Nanosonics provides capital equipment to customer.
• Equipment fully maintained by Nanosonics over its life with the option to roll into a new machine thus retaining the customer in the Trophon ecosystem.
• Customer purchases consumables as required at an ‘all-inclusive’ price.
• Nanosonics owns capital equipment, depreciated over five years.
• No upfront capital revenue recognised by Nanosonics.

Rental (Direct Channel)

• Customer rents capital equipment.
• Equipment fully maintained by Nanosonics.
• Customer purchases consumables as required.
• Managed equipment service and rental sale model, in appropriate markets, provides increased profitability and lower the barriers for market adoption.

Full-Service Distribution (Distribution Channel)

• Distributor purchase capital equipment, consumables and spare parts from Nanosonics.
• The distributor sells capital equipment, consumables and service to the customer on a similar basis to the Direct Channel Capital Sale Model.

Capital Reseller Market (Distribution Channel)

• Distributor purchases capital equipment only from Nanosonics and sells to end customer.

Customer purchases consumables and service fromNanosonics