The manufacturing and marketing of hydroponics plant growing equipment is very competitive and there can be no assurance that we will be successful in generating significant revenue from our operations. We have conducted minimal internal research on the hydroponics retail industry and, although limited information is available concerning the industry, we were able to identify at least 11 competitors in Canada and USA who manufacture and market hydroponics products similar to ours. These competitors also produce controlled environment hydroponics plant growing equipment and use promotional and marketing strategies similar to us. Their products, like ours, are marketed, to a number of retail outlets (nurseries, garden shops, specialty hydroponics outlets) and end users in Canada and United States through their websites and by advertising in industry related publications. We are not aware of the total number of manufacturers, distributors and retailers of similar types of hydroponics equipment in Canada and the United States. We will also compete with a variety of retail outlets (hardware stores, nurseries, garden equipment suppliers, plumbers' suppliers, greenhouses suppliers, lighting outlets, indoor plant suppliers) and specialty hydroponics retailers who offer end users with a range of parts and accessories to build a variety of do-it-yourself hydroponics equipment and with self contained and ready to operate hydroponics equipment units. Furthermore, we do not possess information relating to the total number of controlled environment hydroponics equipment units manufactured and marketed in Canada and United States. The lack of this information will make it difficult for us to assess, identify and penetrate new markets.

We do not have at our disposal the vast material and financial resources to undertake mass promotional and marketing campaigns. Our strategy, therefore, will be to focus on serving our established retail outlets and to market our hydroponics units directly to the end users through their places of operation. Over the last three years, our hydroponics equipment has become a well-recognized product within the hydroponics retail industry for its compact size, efficiency and reliability. Our on-line technical assistance has been well accepted by end users and the retail outlets that we serve. Other competitive advantages that we offer to our clients are: (a) timely manufacturing and delivery of our equipment which is delivered within 15 days of purchase order, (b) one-year unlimited warranty on all the electrical components of our hydroponics units with guarantee of no-cost replacement, (c) all the electrical components in our equipment are CSA and UL approved making our equipment users friendly and an insurance compliant appliance, similar to a fridge or stove, (d) we offer three individual, turn-key, controlled environment hydroponics equipment models each designed to meet different requirements of any end user, and (e) the water reservoir in our equipment is located outside the plant growing chamber eliminating water vapors created by heat inside the chambers that would affect the controlled temperature and create root rot. Assuring timely production and delivery of our hydroponics equipment and offering personalized customer service to both the retail outlets and the end users that we serve provides an arena for the future success of our products. Although we do not have any formal contracts with the retail outlets that purchase and resell our hydroponics units, due to our personalized, prompt and professional service, we have been able to maintain their loyalty.

We are aware of other manufacturers of controlled environment hydroponics equipment in Canada and the United States. Nonetheless, we have been able to establish our products within the hydroponics retail industry. Our chief competitive threat, therefore, would be from existing and potential new hydroponics equipment manufacturers.

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We currently own two websites and domain names www.powergrowcanada.com and www.powergrowusa.com . These two websites are complete with detailed corporate and product information. Our three hydroponics plant growing equipment models, along with the parts, accessories and nutrient solutions that we market, are listed on the websites for easy access to potential purchasers. On-line technical support is provided to people who may already own our equipment or who may want to educate themselves on the hydroponics technology with the view of purchasing our equipment or learn about the technology and the hydroponics components to build their own and to learn about the needed nutrient solutions which will be required to hydroponically grow vegetation. On-line credit is also available for people who decide to purchase our products while visiting our sites. In addition, directly through our websites, we promote retail locations that market our hydroponics equipment to end users creating inner industry relationships and dealership network's loyalty.

The production and marketing of hydroponics equipment and parts is not regulated in Canada and the USA. However, some Canadian legislators are calling for legislation, similar to that of Australia, to regulate the commercial and retail hydroponics industries. The legislation would establish guidelines and policies for the manufacturing, marketing and operation of hydroponics plant growing equipment both in the commercial production and distribution of hydroponically grown vegetation and in the manufacturing and marketing of hydroponics equipment, parts and nutrient solutions. New laws and regulations may impact our ability to manufacture and market our hydroponics plant growing equipment, parts, accessories and nutrient solutions and to generate revenue in the future. However, we are not aware of any pending or contemplated laws or regulations in Canada or the USA that would have an impact on our business.