The risk projections were calculated using the project parameter values shown earlier. They project the performance of a strategy associated with different risk levels and hence provide sketches of the statistical trend inherent in the strategy. They are not predictions.

20,4,1 refers to the alternative new strategy for instead continuously engaging in 20 high risk, 4 medium risk and 1 low risk research project.

• Statistical definition of Risk:

The alternative strategy, which incorporates more high risk research, in fact has less downside financial risk compared with the current strategy and a significantly better profit potential.

The ratio of the average probable outcome profit projections for the two strategies is about 130%.

Company profits are currently 44.9 MM / yr. adjusted for cost of research and are close to the level corresponding to average probable outcome, (eventual trend).

The risk level associated with the average probable outcome is about 35%. This means that there is a 65% chance of achieving at least the performance associated with the average probable outcome.

The 50% risk level is an even chance gamble on beating the 35% odds of the general trend.