China has become the largest, high-growth economy in the world. As China outpaces the world in growth and total population, its demand for products continues unabated. And, with its large and expanding trade surpluses, China is rapidly becoming a global consumer powerhouse. Nearly 1.3 billion Chinese are now able to consume a vast array of products that were previously unavailable to them.

A primary dimension of the Exousia growth strategy is to capitalize on China’s massive economic engine by making a long-term commitment to the Chinese market. To this end, Exousia is quickly developing a Chinese business presence in customers, distributors, relationships and production capacity.

Since October 2007, the company has made three trade missions to China to evaluate the market climate for our industrial products. At least two more trade missions are planned in the 2nd Quarter of 2008. As a result of these business development trips, Exousia has established high-level business and government relationships in Shanghai, Hanzhou, Fuyang, TianJin, Bejing, Chongqing, Guangzhou, Taishan Yueyang and Changsha.

During these missions, Exousia executives met with leading Chinese businesses, including a Top 50 state-owned trading and industrial products company, Northern International Group (NIG - http://www.northernint.com), and the $100+ billion/year China Southern Power Grid (CSPG - http://eng.csg.cn), a major state-owned power grid. CSPG is administered by the State Department of China and serves the five southern provinces of Guizhou, Yunnan, Guangxi, Guangdong, and Hainan. CSPG is responsible for an extensive utility-grid and infrastructure that is under constant attack by corrosion and other environmental forces. This is an enormous problem that requires CSPG to spend approximately $100 million/year on maintenance services and high-performance coatings. Exousia’s proprietary VISTAMER®-based coatings provide excellent, long-term protection for CSPG.

Exousia also held a major business meeting with Sinopec, one of the largest petroleum and energy companies in the world. Oil and gas companies are leading users of high-performance industrial coatings for oil rigs, pipelines, tankers, refineries and related energy infrastructure.

Another key business relationship initiated during our trade missions included ChangAn Motors, which ranks as one of the “Big Five” auto manufacturers in China. The opportunity at ChangAn consists of supplying Exousia’s Advanced RPA™ Resin polymer in the manufacture of automobiles. This will allow ChangAn to produce higher-quality vehicles that utilize the enhanced performance characteristics of RPA. Exousia also established important relationships with leading government officials and entities.

From these relationships, Exousia has entered into four major distributorships, including two with NIG covering Northern & Northeastern China. Two more distributorships are planned to address all major Chinese markets. The company has also concluded important marketing alliances and representation agreements to market and distribute its products into leading industrial sectors such as manufacturing, energy and construction. These initial relationships are focused on the distribution of our high-performance industrial coatings. According to a 2005 independent market survey by GCiS China Services, “anti-corrosion coatings in China is a large market with significant growth providing ample opportunities for foreign coatings suppliers.” The anti-corrosion coating market in China has been growing at the rate of 20% annually.

Industrial corrosion control is a key target market for Exousia’s family of high-grade protective coatings, including a number of products that integrate our proprietary VISTAMER Rubber performance additive. Coatings with VISTAMER Rubber provide stronger adhesion, improved impact resistance, enhanced flexibility and strength, better traction and increased corrosion resistance. Sold in China under our Power Shield brand, Exousia is the exclusive, worldwide manufacturer of VISTAMER-based industrial coatings. Industrial coatings with VISTAMER provide Exousia with product differentiation unavailable to competitors. In return for providing exclusive marketing rights to our distributors, the agreements stipulate substantial annual purchase commitments and quotas.

Exousia is actively establishing manufacturing facilities in China to produce our industrial coatings. The company has submitted the necessary application and paperwork to register as a Wholly Foreign Owned Enterprise in China with the ability to both manufacture and market products within China as a subsidiary of Exousia. Our initial manufacturing facility is planned for the Tianjin region outside of Beijing, with up to five additional facilities across China. Exousia will provide the capital, products, manufacturing processes and development expertise to establish facilities that will be operated by our Chinese-American Management Team and local Chinese employees.

In addition to our industrial coating business in China, Exousia has entered into a Letters of Intent to manufacture and market our full line of advanced industrial products. Exousia has identified large markets for these products in transportation, manufacturing and construction. Exousia also possesses competencies and manufacturing expertise to supply SIPs (Structurally Insulated Panels) building components. SIPs provide an ideal construction methodology to supply China’s enormous demand for affordable housing and structures. Exousia’s strategy is to eventually manufacture these product lines in company-owned facilities across China.

China’s growth is so rapid that the country is unable to supply all the products and investment necessary to fuel its massive economic engine. This is especially true in key industrial markets where product purchases are essential to facilitate economic development. As a result, China is eager for foreign investment and trade, and Exousia’s high-level relationships within local and national Chinese government are key in helping facilitate our business presence in China. Between the high demand for our products in the Chinese economy and the support of China’s government, the commercial opportunity for Exousia in China is very bright.