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competition, and all of the competitors are positioning themselves to tae advantage of the same
market segments.
Added to this stiff competition is a rapidly changing tehnology. Product life cycles that at one
time were perceived on a sce of ten yeas are often three yeas or less now. This constatly
changing technology is extremely costly. People with new ideas want to commercialize these
ideas, facing the cost of capitol as yet another challenge. Every company, large or small, is
competing for the same resources, and as competition intensifies, the resources become more
scce.
Then there are the internal problems that beset most compaes, such as inwardly focuse and
inbred attitudes. There are several steps we have taen at YSI over the past four yeas which
I believe could address some of these challenges which I have just outlined. For example, we've
made a 50 percent investment in joint venture with a Unite Kingdom distrbutor, makng our
distrbutor a joint venture manufacturing company. We believe it wil be helpful to us in the
long run to expand our presence in the Europe economic community. Recntly, we have also
investe in a small resech group, working on miniaturize electrodes, on the campus of the
University of Kansas. This investment was made in exchange for stock, with the option for an
additional 15 percent of their company.
We have also invested in a small venture sta-up operation in Pasadena, California in exchange
for equity position. That company is reseching ways to commercialize a product to permit a
diabetic to tae a bloo saple without having to invade the body.
We have a joint venture with a company in Japan that manufactures temperature sensors; and an
agreement with a biotechnology center at the University of Les in England to jointly develop
biosensor equipment, a market in which England is emerging as a major contrbutor.
Considerable resech is going on at Cambridge, Oxford, and the University of Surrey.
We are also forming a joint resech institute with Antioch College in Yellow Springs, Ohio.
Scientists and professors at that institute may apply for resech grats from the National Science
Foundation, the National Institute of Heath, or from private foundations.
We have signed a joint marketing agreement with a hospita supply company. They wil market
one of our products -- a temperature probe with intensive cae application.
Finally, in the past yea, we also acquired ENDECO, an ocographic instrmentation company
in Maron, Massachusetts. We are hopeful that this new presence on the east coast wil attract
technicaly-skilled employees to the company and also expand the uses for YSr s products to
ocographic purpses, for example, for data logging and telemetr.
Putting all this into perspetive then, there are a number of requirements for successful strtegic
alliance. There must be a shared purpse and common values among the parcipants. Mutual
goals should be established. Wilingness to tae risks and trst in each other must exist. In
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