Since inception of the company in 1972, the business model of Concept Development, Inc. has been to develop products for clients. Our objective is to assist our customers in bringing products to market in a timely and effective manner.

OUTSOURCING

Outsourcing is recognized as an effective strategy to achieve corporate goals. Companies that offer products need a constant flow of new products to effectively compete in their markets. Keeping the Product Pipeline Full is a constant and never-ending challenge.

All of CDI's customers have extensive and capable engineering departments that develop most of the products they require. However, there are times when the customer's engineering department is extended, or the need arises for a product that contains technology or expertise that does not presently exist in the customer's engineering department. Typically, when the required product contains technology that is not familiar to the customer's engineering department, it is also recognized that the learning curve in developing the technology may be long, steep, and difficult to estimate.

CONFIDENTIALITY

We recognize and understand our customer's need to protect the confidentiality of their product strategy. Accordingly, our policy and our actions reflect our responsibility to maintain this confidentiality. We do not advertise nor do we need the public accolades that accompany a successful product development.

TIMELINESS

Whenever possible, CDI incorporates a "swat team" attitude into its product development programs. We strive to maintain the program schedule, while maintaining the technical requirements of the product. We recognize that completing the program on time may allow our customers to be "first to market" with their product. CDI is willing to over-man a development program to ensure timely program completion which in turn, assists us in avoiding internal cost overruns.

EXPERIENCE AND EXPERTISE

CDI may have the expertise and recent experience required to develop your product in a timely manner. The nature of CDI's business requires that we do not attempt to develop products for many industries. To be competitive, CDI must focus on developing products for a few applications. Communications systems, storage systems, RF design, RISC processor systems, and video and imaging processing systems are applications in which CDI has extensive experience. If the customer's product needs are in any of these areas, then CDI will be very competitive as we have experience in these applications and we have previously navigated the steepest portion of their respective learning curves.

TIME TO MARKET

The majority of CDI's customers have the need to deliver new products to their target markets before their competitors and that requirement is one of the major reasons our customers select CDI to assist them. At CDI, we believe the successful development of products is a technology in itself, a technology we improve upon each year. By improving this core technology, we have become more accurate in defining the time required to develop a product, and therefore, we consume minimal time in the product development cycle.

FIXED-PRICE CONTRACT

CDI will bid a fixed-price to develop your product. The fixed-price contract has been the cornerstone of CDI's business since inception of our company. You may ask why CDI would take the risk of developing a product on a fixed-price basis. There are several reasons CDI has successfully developed this strategy with its customers. 1.) CDI limits its product development activities to video, communications and storage products only, thereby building extensive expertise in each of these areas, 2.) Prior to writing its proposal, CDI will have had several meetings with the customer to determine all of the customer's goals in creating the product, 3.) CDI will then thoroughly review the product specification and will accurately estimate the time and effort required to develop the product, 4.) CDI then manages the program closely with the customer to ensure that unauthorized changes to the product or program do not impede the development schedule.

PRODUCTION

At the time CDI offers its fixed-price proposal to develop the product, CDI will also offer its fixed-price proposal to deliver production quantities of the product. These production deliveries will closely follow the testing and acceptance of the prototype(s). Approximately 75 percent of the contracts CDI enters with its customers include requirements that CDI also deliver a quantity of production units of the product developed. These production units range from 10 to thousands of units.

From the customer's point of view, a few prototypes are rarely sufficient to successfully launch a new product. Production level quantities of the product are required by the customers marketing and sales departments for display in trade shows, as demo or beta units for its customers, and other in-house requirements. Again, CDI has structured its efforts to supply these initial production units, typically within a few weeks after acceptance of the prototype. It is not uncommon that the client will purchase all of the production units he requires from CDI. For the same reason the customer chose CDI to develop a product, the customer may also choose to have CDI build some or all of the production units of the product. The customer's decision to use CDI for production services is usually driven by time-to-market issues, and cost to the customer. Typically, CDI can manufacture the product at a price that is equal or lower than the customer's in-house cost, and CDI can manufacture and deliver the products more quickly.

DOCUMENTATION

The documentation used by CDI in the manufacture of the products is a deliverable item to the customer. This documentation will be updated by CDI after delivery of the prototype units and further updated as required during the delivery of production units by CDI. Where applicable, the documentation will be created to the customer's standards and on the customer's forms. A typical documentation package will include the following:

• Technical specification
• Circuit schematic diagrams (CDROM or OrCAD design files)
• Bills of material
• Fabrication drawings
• Assembly drawings
• Mechanical drawings
• Gerber files for printed circuit boards
• PCB design database
• Acceptance test report
• PAL equations, FPGA design files, simulation vectors, and related designers' notes
• Test software
• Manufacturing test procedures

DESIGN AND MANUFACTURING RIGHTS

Upon completion of the product development phase, the customer will acquire the exclusive perpetual royalty-free-right to manufacture the product or to have the product manufactured for its use by others. CDI will reserve the right to use some of the design techniques, experience, know-how, and other knowledge acquired during the program.

WARRANTY

The design of the products developed by CDI and the units manufactured by CDI are covered by CDI's warranty. Warranty on the design of the product is for a period of one year from the date of delivery of the documentation. Warranty on production units manufactured by CDI is for one year from the date of delivery of the products to the customer, or to the customer' customers.

LONG-TERM SUPPORT

CDI also offers long-term support on the products designed at CDI. The long-term support may extend for 5 to 10 years. In general terms, CDI may agree to continue to manufacture the product for an extended period and to modify the design of the original product if necessary to ensure a constant supply of the product.