The Company
The company is a provider of home health services, specifically medical oxygen. There are presently more than 360 patients utilizing the company's oxygen concentrators.

The company's products and services include the requirements most respiratory patients need. These include oxygen concentrators, portable oxygen and related equipment maintenance. In addition, the company offers some complementary home health care products such as unusual oxygen tanks, concentrator systems, home oxygen tank filling system, nebulizers, CPAP, and oxyimeters.

The company was formed in 1990 in Odessa, Texas and moved to Golden, Colorado in 1994. The company operates essentially as a mail order company. The company is easily re-locatable. Customer characteristics include:
oxygen users that live in multiple locations
rural locale
prefer the privacy of mail order
travel extensively in recreational vehicles.

The average rental period is in excess of 36 months. The company's advertising focuses on national and regional magazines. Most customers are provided with two oxygen systems, in addition to a portable system. Each customer is called on a schedule and supplies are sent as needed.

This business model is unique for oxygen equipment.

The company has developed and implemented a state of the art preventive maintenance program employing aircraft maintenance concepts for it's oxygen concentrator fleet. This includes shipping every concentrator back to Colorado annually for preventive maintenance. The company has also developed substantial repair and fabrication capabilities including concentrator bed cooking and repouring. The company's proprietary method of service and continuous customer support results in low customer turnover and high margins. The company's unique respiratory care program complies with Medicare requirements. Since inception, the company has achieved consistent profit utilizing superior control systems and efficient billing/collections (45 days revenue A/R). The supervisory team is capable of controlling the business exclusive of the owners. These factors will enable the company to handle a significant increase in volume, capitalize on their market reputation, enjoy increases in profits, and provide a smooth transition between owners.

Sales and Marketing
The company has formulated a business strategy to pursue the needs of respiratory patients and provide complementary home health care products and services. The company places advertisements in leading travel or age specific magazines to initiate customer contacts. The company's web site compliments magazine advertising. In house sales staff converts prospects to customers on the telephone. Advertising effectivness is continuously monitored and adjusted accordingly. Once a customer has been established, they are contacted monthly to assess equipment and provide disposable supplies, as needed. The monthly contact helps maintain rapport and assists in locating the customer and quipment. Lost and stolen equipment has not been a significant problem. Shipping, maintenance, and patient call schedules use proprietary tracking systems. The company has elected not to use mass marketing such as television and radio. Although the company believes significant opportunity exists, the owners have made a conscious decision to use a slow growth, high margin approach to this niche.

Competion
The market in which the company competes is large, though highly fragmented. Since pricing for many of the company's services is highly regulated (Medicare), the customer is rarely price sensitive. A significant effort is made to differentiate the level of services offered. There are many national, regional and local competitors with which the company competes. In addition to oxygen, most of the competitors provide lower margin durable medical equipment. Most also have a higher cost structure due to bricks and mortar and relationship sales staff. The company is not aware of a competitor that has the company's ability to suppport customers that are moving from place to place, rural and urban. Portions of the company's customers are not traveling or rural, but prefer the non-intrusive, mail order approach to oxygen delivery. Most competitors send delivery or professional staff to customer's homes.

Management and Employees
As of July 31, 2005, the company had 5 full and 3 part-time employees. The employees are not covered by a collective bargaining agreement. Employees are categorized by department as follows: