Common use of Competition in the Company’s Industry Clause in Contracts

Competition in the Company’s Industry. In the area of document security and product authentication and serialization, the Company is aware of other companies and other similar technologies, including both covert and overt surface marking techniques, which require decoding elements or analytical methods to reveal the relevant information. These technologies are offered by other companies for the same anti-counterfeiting and anti-diversion purposes for which the Company plans to market its technologies. Other competitors are marketing products utilizing the hologram and copy void technologies. The hologram, which has been incorporated into credit cards to foil counterfeiting, is considerably more costly than the Company’s technology. Copy void is a security device which has been developed to indicate whether a document has been photocopied. It is anticipated that a significant number of companies of varying sizes, which may ultimately include divisions or subsidiaries of larger companies, will be vying for the same market segment as the Company is. A number of these competitors may have substantially greater financial and other resources available to them. There can be no assurance that the Company can compete successfully with such other companies. Competitive pressures or other factors could cause the Company to lose market share or could result in significant price erosion, either of which would have a material adverse effect on the results of the Company’s operations.