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In the area of studio projection equipment, EPS enjoys a nearly competition free market. When the Scene Machine was first introduced in 1981, there were more than a half dozen manufacturers of projection systems. Because of the many unique characteristics and improvements in the Scene Machine, the majority of the other manufacturers abandoned their product. In the United States, the only other similar product is made by a small "garage type" operation in Chicago. While this product is considerably less expensive than the Scene Machine, it is more of an amateur level product. This company engages in virtually no advertising or promotion and is expected to soon go out of business. The only other product similar to the Scene Machine is manufactured in Germany. EPS is the exclusive importer for this product for the United States and therefore controls it's sales in this country. The Scene Machine, however, is so vastly superior to the German made projector that it is becoming increasingly difficult to sell this product in the United States. At this time, it appears that the German projector outsells the Scene Machine only in central Europe. While it is possible that other companies could create a similar product, this has not been done thus far because of the solid position of the Scene Machine, at least in North America. Because of extremely expensive tooling used to make some of the specialized parts of the Scene Machine, it would be very expensive for a competitor to develop a comparable machine. In addition, with a successful eight year track record and our extensive promotional and training programs, it would be prohibitively expensive for a competitor to approach this market. IV. MANUFACTURING AND OPERATIONS PLAN A and B. Location and Physical Facility EPS presently occupies several houses and out buildings on a 27 acre site approximately 4 miles from San Marcos, Texas. Current facilities are completely inadequate both in terms of available space and for handling shipping and receiving. For example, large trucks have to be unloaded on the main road with merchandise transferred to a pick-up for transport to the assembly buildings. EPS is becoming a space intensive company and desperately and needs additional space to maintain current operations and to embark on new projects. The proposed acquisition is located three miles from the current facility and one mile from San Marcos. It is a currently abandoned property that once housed a wool processing mill. The main building has two floors with a total of 65,000 square feet of space and shipping and receiving docks. Most of the upper, above ground level floor will be used by EPS. The lower level will be used for storage and expansion and will be used for storage and expansion.