PRODUCT DEVELOPMENT SCENARIO

Industrial Inventors and Eagle Innovations will work together through the following sequence, depending on the current stage.

1.   NEED RECOGNITION – Is the function new, or how is it being done now?  
How much would a company be willing to pay for something new or better to do it?

2.   IDEAS for SOLUTIONS – List all conceivable ways of accomplishing the function,
besides the way you currently have in mind.

3.   MARKET RESEARCH – How big is the market?  What products are serving the market need now?  List all categories of
industry that might be potential markets; consider  variations of design for different market segments.  

4.   PATENT SEARCH – What similar products have been patented?  (Only 5% of patented products reach the market; the
other 95% must be searched out of the patent files.)  What design ideas could be legally taken and incorporated form existing
patented drawings?  Eagle Innovations does the patent searching.  

5.   PRODUCT DESIGN – Steps 5, 6 & 7 may be done by either Eagle Innovations or the  Inventor, but preferable in a
cooperative effort.  Steps 5, 6 & 7 go around in a loop until the design is perfected and/or costs are optimized.  

6.   PROTOTYPING – then design modifications.
7.   TESTING – then more design modifications.

8.   COSTING – is considered beginning in the design phase.  Cost is influenced by alternative manufacturing methods and by
production and sales volumes.

9.    PRICING – New industrial products that will save companies money will be priced to reflect the value of those savings,
with maximum margins for Eagle Innovations and maximum royalties.

10.   MARKETING – Initially, new products will be direct marketed through Industrial Equipment News (IEN) and/or other
industrial new product publications.

11.   MANUFACTURING – Eagle Innovations is planning to have an in-house manufacturing facility.  However, products that
require electronics will be sub-contracted out to other appropriate manufacturers.  The primary source will be nearby Kalow
Technologies.   
www.kalowtech.com

12.   PATENT APPLICATION - A lower cost Provisional Patent Application allows 12 months to test-market the product,
etc.  By then the Final Patent Application must be filed.  Eagle Innovations will handle both.

13.   INVENTOR’S ROYALTIES – There are two options for licensing your invention*.  (A) If Eagle Innovations
manufactures and markets it, you will be offered a 5% royalty (on the selling price).  Eagle Innovations will incur all costs;
you will not be asked to pay for anything.  (B) If Eagle Innovations licenses it to another company, you will receive 50% of
the royalties that Eagle Innovations receives. (However, if all product development costs are not recouped by an up-front
payment from that company, royalty sharing will not begin until the break-even point.)  

*The third party investor would want a portion as well so this is only hypothetical.