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Application Tech – Operations Strategy

Our operations strategy is also built around our three-tiered marketing approach. We are currently in our development stage, prior to any licensing agreement or income flow. Following this phase, we will enter into operational mode executing licensing agreements and thereafter launching of products. The following diagram demonstrates our estimated timeline:

Development Phase:

The completion of the product concept development and preparing our technology for licensing is being funded with the investment of $ 230,000 made by Dave Williams as outlined in the deal structure. This phase focuses on getting our technology ready for licensing. These funds are being used as follows:

  • Completion of industrial design, including manufacturing of look-alike prototypes
  • Completion of the patent application
  • Incorporation of the Venture and Legal Fees

Operational Phase

During the operational phase, we officially open our doors for business. We start by executing licensing agreement, and identifying private label manufacturers. Our goal is to secure four licensing agreements on products in the categories of prescription acne, bum treatment, wound treatment and surgical cleansers.

Personal sales presentations by the executive staff will be used to negotiate licensing agreements. The original three founders will manage execution of this phase with limited support staff as outlined under Human Resource Requirements. Licensing agreements will be for a period of fifteen years with annual minimum thresholds to ensure proper commercialization by our licensees.

Private label partners will be approached in the same manner and will have exclusive distribution rights in their respective categories. The focus of our efforts will be to develop products with commodity type ingredients to be private labeled for a distributor, the initial two products targeted being an exfoliating scrub and alcohol swabs for use with injections.

Manufacturing Strategy

During the operational phase, we develop tooling and start production of pouches.

Our manufacturing strategy is tailored towards the needs of our partners. We aim to control the tooling technology, and potentially patenting the tooling specifications. Our approach is therefore as follows:

  • In categories where the product has to be manufactured in a FDA approved facility, or where our partner requires production being in house, we will develop and lease the required tooling to them.
  • Where the partner prefers buying empty pouches and fill in their own facilities, we will install our tooling at an outsource manufacturer, Allied Mold in Ontario, CA., who will produce and supply the pouches. We have a profit sharing relationship with Allied Mold on the income from pouch manufacturing.
  • Where our partner requires the production and filling to be supplied turnkey, we will also work with Allied Mold, while printing of the pouch sheets prior to production will be outsourced.

The tooling specifications and manufacturing cost is currently being developed by Product Solutions, headed by Jim Jernigan, who is also our VP of Operations and Manufacturing. The estimated tooling cost for high speed manufacturing capability is currently $ 1,000,000 for 6 tools and the lead-time to production is 6 months.

The cost of producing the pouch varies based on design and specific attributes. The cost of the most basic pouch for non-prescription type applications is marginally higher than the production of basic pouches being used abundantly. The increase in cost of adding the wings is in essence limited to the marginal increase in material cost under mass manufacturing conditions. More expensive versions of the pouch, including sterile applications vary depending on specific product content. Our research indicates that in each case, our cost will be well within the margin requirements of packaging in the category.

Full Launch Phase:

During the full launch phase our technology is incorporated in products being introduced to the consumer. Our primary function remains supplying proper manufacturing support, continue to identify new categories and defending our intellectual property.

Human Resource Requirements

We see the evolution of our personnel requirements during our three-tiered approach as follows:


Application Technologies Inc.
Table of Contents Appendices
1. Executive Summary
2. Business Description
3. Management Team
4. Market Analysis
5. Marketing Strategy
6. Operations Strategy
7. Critical Risks
8. Deal Structure
Notes on Financials
All information herein is confidential and belongs to Application Technologies Inc.
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