to finance more equipment will be easy to obtain. We can supply a potential investor with more details about these estimates upon request. H. Product Development Status     Phillip Court began development work based on the Smith Patent in 1998. The idea was to develop operational prototypes of both the Kinet-O-Scroll and Kinet-O-Scope to prove manufacturing feasibility. After design and operation of several early prototypes of each product, a full set of engineering drawing and parts specifications was prepared for each in 1999. Parts were procured from suppliers and a number of units assembled. Next, units manufactured and assembled were subjected to life testing. With some minor modifications, an operational life of up to 4,488 hours without failure was achieved for the Kinet-O-Scope. This compares to an expected typical homeowners usage of 1,000 to 2,000 hours. We are confident from these results that with some minor material changes, which are now in the works, and the introduction of improved mechanical alignment techniques, which we plan to do soon, a 10,000-hour design goal is achievable. This is our goal.     The Kinet-O-Scroll must, of course, be designed to meet far more stringent requirements. We aim to market a product that will last at least four years, even if used 24 hours a day. Tests based on time simulations indicate that we have achieved this goal. 2     2Test results are based on the brush/slip ring life-methods at three times normal speed which have been independently monitored and are available upon request.     The Kinet-O-Scroll is already in production (units are available for testing), as described in Section I of this proposal, just below. The Kinet-O-Scope can be in production within 120 days after additional financing is obtained. I.Production Status     The Kinet-O-Scroll is the first and only DAY product currently in production. Here is a summary of both how things are going on the shop floor and how our marketing efforts are developing, as of April 16, 1999.     Material: There is no difficulty obtaining parts for the Kinet-O-Scroll. The two parts with the longest order lead time are the motor and keyboard, which at present take about eight weeks to get. There has been some recent indication of possible stretch-outs on certain semiconductor products we have been getting on a next-day basis, but this is not expected to be a significant problem. Just in case, however, we have identified several alternative suppliers.     Inventories: The first 100 Kinet-O-Scroll units have been committed to production. At the time of this writing, 35 are complete and the remainder are 90% finished, requiring only cabinets and final assembly. All materials, with the exception of the cabinets, which should arrive in ten days, are in stock to complete these units, as well as an additional 100 units. The first 100 units are primarily for demonstration purposes. We will use several at trade shows, give others to the electronics press for evaluation and use still others as samples for our sales reps and wholesalers.     Credit Terms: Although DAY has established 30-day terms with over half of its suppliers, we are presently on cash terms with the rest, due to our low cash position and because we are a new corporation with no proven credit history. We expect to arrange 30- to 60-day terms with all our suppliers within six months. New financing will help us accomplish this.   These figures do not allow for any corporation overhead, such as rent, management costs, etc. They are based solely on the cost of producing each unit. All costs and selling prices have been developed through extensive market research and profitability analysis. They reflect the realities of the marketplace, as well as the price objectives of management.