The business operations and products of the Company fall into several categories. One of which is the $ 1 trillion health care industry, which encompasses medical devices, hospital supply products, medical supply products, and consumer and institutional health care products. Another major category is the $30 billion per year gas supply market.
The Health Care Industry
Since the mid-1960's, the costs of health care have risen in gross disproportion to the general cost of living index. The US spends almost $1 trillion annually on health care. These expenditures are forecast to increase into the foreseeable future, posing a serious threat to the economy as well as financial health of families across the US. A general consensus exists that decisive action needs to be taken to strengthen existing control measures and implement effective new proposals. It is our mission to provide these solutions for today by developing a cost effective product line for all applicable markets.
A significant contributing factor to the health care crisis has been the escalating costs of new medical technologies and the resulting higher costs of in-hospital patient care. One cost containment strategy which is clearly gaining momentum is a reduction of technology costs, as well as an increase in outpatient services.
A new "mini-industry" has been seeded from absolute necessity. The prohibitive costs of medical facilities have engendered the appearance of a wide spectrum of consumer based home health care products and managed care services. Such consumer activity reduces the economic burden of necessary health care. The managed care industry has structured its primary care providers to act as the "gate keeper". The BAFI™ product is currently targeted for the primary care provider and pulmonary specialist through a manufacturing representative distribution network. The distributors will place systems on the basis of its cost effective technology, safety and reassurance to the end user.
Government agencies, employer insurance liability carriers and their incentive to reduce bottom-line expenditures, are great potential for the BAFI™ system. The product offers a more cost effective approach to decreasing the number of empty tanks as compared to costs associated with accidental injuries from oxygen depletion and/or having to reprime empty tanks.
The Company chose to introduce its' product and services in 1998 as a part of the research strategy for various applications. This product is available to all users, inclusive of patients, physicians, suppliers and manufacturers. The product is cost effective and prevents the end user from incurring potentially major expenses associated with oxygen depletion.
The Company's technology, the BAFI™ System, currently provides a cost effective and leading-edge product for medically related needs and other applications.
The Gas Industry In General
The gas supply business represents annual revenues of $30 billion and is mainly comprised of tank manufacturers, gauge & regulator manufacturers, and gas suppliers. The Company's research has shown that the identified markets would be interested in acquiring the BAFI™ system for their applications. Further, physicians are also interested in providing BAFI™ units to their patients by means of assurance and safety.
BAFI™ is a compliment to the current method of measuring the pressure within gas cylinders. The BAFI™ unit is calibrated to warn the user of pressure levels below 500 PSI. For example, if a pressurized gas cylinder can hold 3000 PSI of gas, the BAFI™ will not be activated until the pressure reaches 500 PSI, thus giving adequate warning to the user that the cylinder is close to approaching empty. The current method for reading cylinder pressure consists of only an analog gauge. BAFI™ works simultaneously with the gauge and provides a warning system. If the user were not attentive, nor awake, there are both cost factors and safety issues which result from having an empty cylinder. BAFI™ can interface with the current gauge system. When tanks are returned empty there as an additional charge to the user for repriming the tank and replacing parts. The assurance BAFI™ provides for the user is greatly enhanced.
The success of the BAFI™ product is dependent on the rate at which the market accepts the product. The Company realizes that market acceptance factors have been very important to the future of marketing the BAFI™ system, therefore a product which is adopted quickly will require an effective and efficient distribution system to keep pace with the demand. Exclusive distribution channels have been identified, and the Company intends to incorporate a number of outlets for this product line.
The Company's current financial projections include a conservative projected market share of nearly 2% in the first year, 5% in year-2, and 10% by the end of year 3. It is anticipated that by year 5 the Company will share a strong 10-15% of the market. It is anticipated that through an aggressive marketing campaign and completion of its second generation system, BAFI can increase to a 20% market share.
After extensive research , the management of BAFI™ believes that this product will succeed because it is compatible with the consumers attitudes, perceptions, needs and typical behavior patterns. This compatibility continues to aid market acceptance. The Company also realizes that the design, pricing, financing, marketing, and planning of a high order, will lower any assumed risks and liabilities.
With the BAFI™, the amount of learning required to use the product is low. Minimal instructions are needed. This means lower cost, time, and risk. The BAFI™ system is more flexible, but will require specialized channels of distribution.
The defined markets for the BAFI™ system are those markets that require use of portable pressurized gas tanks. These markets are comprised of gas suppliers, tank manufacturers, government & institutional agencies, and the medical industry. The BAFI™ consumer requires a psychological and physical demand for oxygen. The success of the BAFI™ product partly depends on the ability to meet the unfulfilled needs of the consumer.
The level of need filled or utility provided by BAFI™ products and services is high. It fulfills the customers psychological and physical needs. High-level affordable "need" products, such as the BAFI™, have a high potential value and a lower degree of risk associated with market introduction.
The demand for any medical or institutional product is significantly dependent upon outside factors. This dependence may be upon the demand for complementary or competitive products, or possibly more general economic or societal factors. Interdependence pivots upon the lack of control over future sales, and a potentially low rate of market penetration. The existence of dependency still tends to slow down the rate at which an existing or new product is introduced. Pursuant to all of the Company's research, design, development and planning, the degree to which the sale or use of the BAFI™ system is dependent upon other products, processes, or systems is moderate. Reasonable market control of the Company's product line is possible and only moderate costs may be experienced due to dependency. Chances are fair for reasonable market penetration.
Any similar products available today, if any, are poorly visible and currently unavailable with no known competition. The advantages of new products, such as the BAFI™ system, must be visible before the consumer will purchase the product. High visibility will drive the speed of market acceptance and reduce the risk of product failure. The BAFI™ system, design and technology enhances the claim of advantages and uses. The Company has the resources to advertise, promote, and develop vertical market penetration to increase the visibility. The direct advantages and benefits of the BAFI™ system are visible and easily communicated. This high visibility does not insure success, even if the Company has implemented all the proper steps in the leading-edge design and marketing. This strategy of high visibility is an indication that the market introduction will be less costly, of shorter duration, and easier to accomplish.
The principal distribution channels for the Company's products and services are the tank & accessories manufacturers, gas suppliers and prescribers, and their dealers respectively. While the aforementioned distribution represents the primary potential customer base for BAFI™, the Company considers the total potential market audience for its products to be substantially broader, including other tank manufacturers, various gas suppliers, hospitals, transportation agencies and emergency response businesses of nearly every demographic description.
Management believes that its target audiences will require a minimum of "education" regarding the product lines due to the prior existence of marketing effort of its products and services in general. Further, the Company believes that properly approached, its prospective customer base will easily understand and readily accept the attributes of applications, capabilities and cost containment associated with the BAFI™ products and services.
Other products which are already utilized and understood by the Company's potential customer base include gas tank systems, gauge applicators and regulators. These products, in a general environment of awareness, have already been immensely useful in educating the public to the general benefits and necessity for such products and services.
The Company's management believes that the market for competitor products in its' product categories has been limited by old technology, price and sales/marketing methods. Most systems currently available in the marketplace are outdated and inefficient. As a result, BAFI™ products and services are usually evaluated as superior by its customer base.
The Company believes that its advanced technology is the right product at the right time at the right price for today's market.
Specified Target Markets
I. The BAFI™ System
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