ITM will concentrate on those technologies which the Directors believe are
needed to underpin its route to commercialisation. The new objectives set out
below, have therefore been selected to focus upon devices and technologies which
target specific commercial opportunities. Importantly, the realisation of
commercial pre-production prototypes having the potential to produce hydrogen
from sustainable primary energy resources at a cost which is competitive with
hydrocarbons is now an integral part of the new milestones.
 

Summary of new objectives:

(1) Electrolyser:        a 5kW electrolyser stack for delivery by December 2006

(2) Electrolyser:        a 25kW electrolyser stack for delivery by December 2007

(3) Fuel Cell:           a 20W, 2-liquid fuel cell stack engineered to 
                         pre-production standard, including fuel supply cassette
                         and interface electronics, by December 2007

(4) Production Process:  the development of 'production ready' cell modules made
                         by a fully engineered 'one-step' production route for
                         delivery by December 2007
 

Electrolysis

By December 2006:

A 5kW electrolyser module with a projected capital cost of less than $250/kW and
such longevity as the data from ongoing tests justify. This unit is to be
designed so that it can be combined into units of up to 20kW.

By December 2007:

A 25kW electrolyser module with a projected capital cost of less than $200/kW
and such longevity as the data from ongoing tests justify, but with an objective
of 3,000 hours of cyclic operation. This unit is to be so designed that it can
be combined into units of up to 100kW.

An extensive market review of the opportunities available for electrolyser units
of a range of ratings has suggested that units in the range 10-25kW would have
applications in a number of 'local' scenarios (solar cells applied to individual
buildings, or small local wind machines). Units of 100kW and above would be
needed to interface with wind power or solar power systems of economic size used
in commercial energy farms.

Fuel Cells

ITM proposes to focus on the development of complete working, pre-production
prototype cells using the 2-liquid technology demonstrated in July 2005. It will
proceed via prototype cells of low power (i.e. approx 4W) output and will 
incorporate all the balance of plant necessary to allow for the general 
acceptance of the system, i.e. rapid refuelling via replacement fuel cassettes
and the electronic interface circuitry needed to operate standard electronic
equipment. The overall objective is the development of a pre-production
prototype flexible 20W device (i.e. conformable, lightweight and vibration
resistant) for military or emergency services applications.

By December 2006:

A 4W prototype module together with the rapid refuelling cartridge and output
power conditioning electronics necessary to operate electronic devices. This
will provide a working demonstration of a complete system. This is considered a
cost effective route to exposure to the micro fuel cell market.

By December 2007:

A 20W continuous output lightweight flexible fuel cell stack designed to be a
pre-production prototype suitable for external testing, validation and
acceptance by the military and civilian emergency services. The stack will be a
complete operating system incorporating provision for rapid refuelling via a
cartridge, and output power conditioning electronics necessary to operate
electronic devices at voltages from 9v to 20v.

Production Process

ITM's core intellectual property encompasses both the materials and a novel
one-step production process. The developments and achievements announced to date
have depended principally upon the use of ITM's patented materials. However, the
long term future value of ITM would be maximised if the 'one-step' manufacturing
process can be developed so as to be 'production ready'.

By December 2007:

Develop the 'one step' production route through all the steps (scientific,
technical and engineering) necessary to completely define the process on a
full-scale production scale. This programme is required to allow accurate
definition of the capital cost of a production facility and thus the unit cost
of production of any specific device. It is also envisaged that additional
valuable IP will result from the programme.

The principal 'deliverable' from this programme is expected to be the new IP,
reliable costing data and a working demonstration flexible fuel cell or
electrolyser module made by the fully engineered 'one-step' process.

Jim Heathcote, ITM's CEO commented: "The next phase of our development is
critical to our value in the long term. In order to maximise shareholder value
and avoid leaving ITM in the position of having to seek cross-licences to use
its own technology, it is essential that the Company makes its technology
production ready.

"I am confident that we can meet these new, challenging objectives in the next
two years, and in doing so I believe that this will place ITM in a position to
benefit from the impending acceleration of a global change from hydrocarbon fuel
(oil and gas) to hydrogen. This transition will offer very significant business
opportunities. ITM plans to be at the heart of the developing hydrogen fuel
economy".