ENGINEERING & PRODUCT DEVELOPMENT
The Company is currently engaged in ongoing production development programs for the first two of its product lines inclusive of the BAFI™ system and second generation systems. The product development programs are directed and executed by Company management, with assistance from outside engineering sources, design and production firms.

Since initiating its formal development program several months ago, BAFI™ has substantially determined the product features, capabilities and necessary technologies to be applied to the existing products. In addition, the product development team is prepared to establish tooling and production of second generation products.

The design engineering firm, along with management, has improved the BAFI™ technology and are currently designing the second generation products. The Company has engaged The Advanced Group, Inc. for developing tooling, molds and assembly of the BAFI™ products to stay competitive in pricing and features.

The Company is currently engaged in ongoing production development programs for the first two of its product lines inclusive of the BAFI™ system and second generation systems. The product development programs are directed and executed by Company management, with assistance from outside engineering sources, design and production firms.

Since initiating its formal development program several months ago, BAFI™ has substantially determined the product features, capabilities and necessary technologies to be applied to the existing products. In addition, the product development team is prepared to establish tooling and production of second generation products.

The design engineering firm, along with management, has improved the BAFI™ technology and are currently designing the second generation products. The Company has engaged The Advanced Group, Inc. for developing tooling, molds and assembly of the BAFI™ products to stay competitive in pricing and features.

2nd Generation Product Architecture
To gain market share and become price competitive, BAFI(tm) is upgrading its product line to meet market demands and is driven by the cost of the sensor switch. BAFI(tm) intends to negotiate a long term agreement with a lower cost supplier, thereby reducing the cost of the core product. Further planning includes vamping its distribution network to provide continuous competitiveness while increasing dealer and manufacturer gross margins.

There are two new products for the BAFI™ system which would also affect the technology design. The first is a low cost system for manufacturing the manifold. It will be mass produced through mold injection at a cost under one dollar per unit per 25,000. The second product combines the low cost system with a detachable warning box that can adapt to the manifold. This will lower the overall cost and labor involved for those users with multiple tank supplies. A portable system will provide access to all of our markets and meet their needs.

The manifold is designed from extruded high-grade brass alloy to meet FDA requirements for durability, spark-free safety requirements, and easy assembly.

MANUFACTURING & QUALITY SPECIFICATIONS
The Company has manufactured end-user production units and is now producing these units through established manufacturers with experienced manufacturing engineers and management for the production of its products. Other established OEM's provide various components and devices and turn-key packaging for the complete product lines. The Company management has experience in establishing and managing manufacturing.

The management continues to evaluate costs and production standards of various manufacturers, and has received responses from several prospective OEM partners. Each company's initial quotation is in the competitive range, and management believes that continued evaluation will provide cost reductions and better quality. Furthermore, BAFI™ will initiate a program to conform to the International Standards Organization (ISO) standard, the quality control formulated on a European Community (EC) directive. Over 100 countries have adopted ISO standards which include:

• Worldwide recognition through the use of universal standards.
• Use of a certification label in marketing.
• Listing in the international certified supplier directory.
• Improved quality & productivity, and potentially reduced costs.

BAFI™ products are ready for production. The Company continues to design future generation products in order to maintain a leading-edge in the oxygen safety warning product industry. The design of these newer products will drive the medical mass markets, including the manufacturers.

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