Application Technologies Inc. Critical Risks and Risk Reduction Strategy Following the Market Analysis and evaluation of our Management Team, we have identified what our critical risks are and have developed a pro-active risk reduction strategy to be implemented in our Marketing and Operational Strategy. Our critical risks and steps to reduce our risks are as follows: Risk Factor Insurance Provision Pro-active Steps To Reduce Risks Intellectual Property Patent Issuing   Extensive Patent Search Unique Design Features Close liaison with Patent Office to ensure patents issue Reputable and Strong Intellectual Property Law Firm Patent Violations   Patents developed around the core technology Patented ingredients and formulations under development to be used within the pouch in specific categories Competing Products entering the Market, new technologies being developed.   Patented aspects very strong design unique and very difficult to create similar product. Several different Sub-contracted Suppliers with Large Manufacturing Capability Patent-pending Manufacturing Process We own the Tooling Manufacturing Manufacturing Capability   Manufacturing and Sourcing Expert on Board of Advisors Diverse Designs of the Pouch   Standardized size and design for initial categories FDA Approval for manufacturing facility required   Subcontracted with FDA approved facility. Product Liability Ingredients supplied in pouch   All ingredients to be under existing FDA approval or monograph, or have sufficient consumer safety testing completed Consumer Liability Comprehensive Liability Insurance   Death or Disability or Key Management Executives Life Insurance in Favor of the Corporation