The U.S. Patent issue establishes that no "prior art" exists as conflicting with the proprietary technology -- and validates what Phoenix says is the "foundation" technology for generating very low cost hydrogen gas from a common water feedstock.

Phoenix Canada reached a major milestone with the late 2006 grant of U.S. Patent No. 7,122,171 on its innovative hydrogen gas generation technology. Phoenix holds exclusive rights to the technology through its U.S. subsidiary, Phoenix International Energy Inc., under a long term Technology License Agreement with a major U.S. research university. Phoenix holds worldwide exclusivity for a period of 20 years beyond the initial 17-year patent term.

The U.S. Patent issue establishes that no "prior art" exists as conflicting with the proprietary technology -- and validates what Phoenix says is the "foundation" technology for generating very low cost hydrogen gas from a common water feedstock.

By way of concurrent applications made under the International Patent Cooperation Treaty (PCT) system, the "foundation" intellectual property has been protected in all major industrial nations for periods of up to 30 months from late 2006. Individual national patent applications are under evaluation for definitive filings during 2007.

Hydrogen gas, as a primary energy resource, may be critical to the survival of the planet's energy-dependent civilization. Hydrogen is by far the most abundant of the Earth's
elements -- accounting for about 75% of its mass and 90% of its atoms. Presently, upwards of 95% of all industrial hydrogen is produced through the process of steam reformation of natural gas -- obviously requiring significant energy inputs to both produce the steam and by consuming the natural gas feedstock.

The following environmental and economic considerations highlight the impact of the future availability of low cost hydrogen gas energy:

• The Phoenix hydrogen generation system is sustainable, renewable and 100% clean and environmentally benign in both its production and combustion cycles.

• Hydrogen's generation and consumption in substantially all fuel energy applications promotes climate stability and eliminates greenhouse gas emissions -- no carbon dioxide (C02) -- no nitrogen oxides (NOX) -- and no sulphur oxides (SOX) -- all primary contributors to global warming and acid rain.

• The Phoenix hydrogen gas production process is inherently minimal in cost ---employing common water feedstock and activated by the complete spectrum of solar light energy.

• The hydrogen generation process is catalytic -- which means that the catalysts employed (PGMs -- platinum group metals -- and other elements) are not materially consumed nor degraded in the gas production cycle.

• The combustion products of hydrogen-fueled in situ power plants and related energy markets are exclusively water and oxygen. In arid regions, the clean and pure water in the system may be recycled and/or conserved for re-use.

• Upon commercialization, the Phoenix technology will generate a REPLACEMENT fuel (not an "alternative" fuel) for the widest range of conventional energy markets and applications.

The successful commercialization of the proprietary Phoenix hydrogen gas generation technology has the longer term potential for materially impacting the economic future of the massive oil and gas (and coal and nuclear) industries.