International Hydrolytics Ltd.

Marketing

MARKETING PRIORITIES

Although the amazing versatility of AHC technology provides numerous directions for generating revenues, unless specific priorities are clearly established, this versatility can be a handicap rather than an advantage. Accordingly, IHL has identified four distinct AHC marketing categories, rank-ordered according to reasonable and practical expectations, which form the basis for accelerated marketing and sales activities.

Licensed Technology

The preferred vehicles for marketing AHC technology are negotiated, royalty-bearing, exclusive licenses (see Attachment 1), with premier companies of the world, to exploit revolutionary lines of advanced, affordable, needed, and desirable AHC products. The rationale for this preference includes: immediate revenues in the form of front-end license fees; and the availability, as appropriate, of prospective licensee's existing manufacturing or test facilities and established product distribution networks. In this regard, IHL's comprehensive yet flexible license format contains the following essential provisions: scheduled amortization of license fees; incremental funding of prototype development costs, if any; built-in safeguards to minimize risks; declining royalty scale in proportion to adjusted gross sales volume; fair and equitable sharing of non-exclusive sublicense fees/royalties; long-term product development and marketing support; and joint ownership of patents. Accordingly, since no known company controls any given market segment to the extent that it cannot be expanded by AHC technology, major benefits will accrue to exclusive licensees through sublicense fees, long-term royalty revenues, and attendant control that derives from sublicensing to the competition.

Joint Venture Manufacture and Sales

Marketing representative reports strongly suggest that IHL exclude from any license those AHC products that promise inordinately high returns, efficiency of final development, and least-time paths to completion, e.g., porous pseudo-ceramic membranes for the medical/biomedical community. In effect, these in-house products will be reserved for international joint venture opportunities, which offer the combined advantages of existing production facilities and established worldwide marketing, distribution, and sales networks. Anticipated benefits from these joint venture activities include: significant net savings in development costs; and increased levels of support for such marketing functions as assessing the market place, determining actual manufacturing costs, establishing compliance with applicable codes and test specifications; etc.

U.S. Government-Funded Programs

As a result of anticipated follow-on activities related to previous research activities, or obvious applications of AHC materials to such programs as space defense, satellite communications, anti-terrorism, environmental remediation, and transportation of low-level toxic and hazardous wastes, IHL anticipates spurious revenue streams from U.S. government contractors, and sub contractors. With the exception of U.S. Department of Defense’s base closure and cleanup projects and U.S. Department of Energy’s nuclear cleanup and environmental restoration programs, these activities will never result in high volume production of AHC materials, however, IHL is obliged to pursue them to ensure that state-of-the-art applications of AHC technology are available to the private sector.

Dry Mix Sales

The concept of selling AHC dry mixes in blended and bagged lots offers the following appealing advantages: a more secure proprietary position; multiple customer applications; and minimal accounting and legal requirements.

MARKETING STRATEGIES

MARKETING REPRESENTATIVES

MARKETING TECHNIQUES

MARKETING SUPPORT FACILITIES

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