4m industrial oxidation - angel capital group presentation - public
TRANSCRIPT
Patented and Proven Carbon Fiber
Production Technology that Enables
Market Growth75% Less Energy with 3X Throughput
and Better Fiber
$78M annual EBITDA by 2021
Revision 17
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Executive Summary
Carbon fiber use in autos is driven by EPA regulations. Plasma Oxidation can be
the enabling technology to accelerate the growth of the carbon fiber industry.
4M Industrial Oxidation is commercializing a proven technology to lower carbon
fiber cost by up to 40% in a market that will grow 5 7X in the next decade.
Exclusive license for the patents developed by RMX and the Oak Ridge National
Laboratory plus trade secrets to make and control plasma components.
C. A. Litzler, Co. markets and sells oxidation ovens as they have for decades. 4M
makes and sells plasma systems to Litzler. Ovens include technology fee to 4M.
4M’s fifth year EBITDA projection is $78MM
4M seeks $10MM in tranches for full commercialization in 24 months.
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Plasma Oxidation in the Supply Chain
Oxidation is the longest, most problematic and expensive step in conversion.
Plasma Oxidation addresses all of these.
Plasma Oxidation
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12 Year government-funded joint development effort.
Successful 1 aMT Plasma Oxidation Oven operation for 2 years.
Development complete. Proven performance with Carbon Fiber makers.
All IP is now controlled by 4M.
2004 – First BenchtopPlasma Oxidation Device 2014 – 1 aMT Plasma Oxidation Oven
Plasma Oxidation – Development Complete
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Plasma Oxidation is proven with multiple fiber makers and:
Makes a superior product
Is 3 times faster
Uses 75% less energy per pound of fiber
Takes up significantly less space (1/3 size)
Can reduce carbon fiber manufacturing cost by 40%
The Oxidation Oven – Proven Performance
2015 – 1 aMT Plasma Oxidation Oven5
The Oxidation Oven - Commercialization
Proven Performance with multiple carbon fiber manufacturers’ precursors and now testing with others: Textile PAN medium tow (57.6k)
Existing CF maker’s small tow
Existing OPF maker’s large tow (second round driven by end user)
WE HAVE THE DATA
RMX and multiple carbon fiber manufacturers defined the scale to facilitate commercial use – 175 aMT.
Multiple manufacturers have requested production-scale equipment quotes. Several manufacturers are interesting in buying the 175 unit. Potential 2016 revenue!
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The Commercialization Plan
Use the test stand to finalize 175 aMT Plasma Oxidation Oven design. – NOW
Build the 175 aMT Plasma Oxidation Oven. – FALL 2016
Demonstrate Plasma Oxidation performance at 175 aMT – SPRING 2017
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4 Sell Plasma Oxidation Ovens to Industry through Litzler. 4
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175 aMT Plasma Oxidation Demonstrated –This size oven is sellable! Quotes requested.
175 aMT Plasma Oxidation OvenThis oven could be sold for production
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Oven Shell, Airflow, Conventional Heat
Inside
Inside
Plasma Equipment and Control System
How does the partnership work?
Business Confidential and Proprietary 9
• Market and sell Plasma Oxidation ovens to Carbon Fiber Producers separately or as part of production line(s).
• Manufacture oven shell, airflow, heat and environmental controls components.
• Sell ovens with a 4M technology use license or fee.
• Manufacture plasma components and control systems.
• Sell hardware to Litzler as OEM.
• Assist with integration and support.
• Provide training and start-up and maintenance support.
• Negotiate with oven buyer on technology fee.
4M Industrial Oxidation, LLC signed a letter of intent with C.A. Litzler Co., Inc. to jointly commercialize the world's first 175-ton plasma oxidation oven for OPF and carbon fiber production.
Supply Chain
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4M Litzler CF MakerPart maker
/ user
Plasma and Control Components
Oven with 4M Technology License
Fiber
Litzler will utilize its established and extensive sales network to conduct sales and marketing activities to the
carbon fiber industry – a key advantage
VALUE TO THE CUSTOMER – Carbon Fiber Maker
Conventional 1500aMT lines produces about 2.5 million pounds of carbon fiber per year
The 4M technology is worth more than $2 per pound to the CF makers.
This is more than $5M PER YEAR of value to the Carbon Fiber maker.
Oxidation systems cost about $6M making the payback less than two years.
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Full Size Oxidation Oven – Highly Scalable to this capacity AND LARGER!
1500 aMT Plasma Oxidation Oven12
Inside
Inside
Inside
Inside
Inside
Inside
Oven Shell, Airflow, Conventional Heat
Plasma Equipment and Control System
The Results – 1500 aMT Oxidation
Plasma Oxidation Oven
Conventional Oven
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Significant Reduction in Footprint
Top View
175 aMT Oven Demonstration$10M Total Budget
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Progress Milestones and Investment Tranches
2017
Today
Apr May Jul Sep Nov Jan Mar May Jul Sep Nov
2016 2017
Now - $2 M Stage 2 - Complete $2.5M
May 1
Stage 4 -CompleteDec 1
Stage 1 - Complete $3MSep 1
Stage 3 -Complete $2.5M
Oct 1
Mar 15 - Sep 1
Stage 1 - Design
Sep 2 - May 1Stage 2 – Fabrication and Construction
May 2 - Oct 1Stage 3 - Demonstration
Oct 2 - Dec 1
Stage 4 -Manufacturing
4M Revenue ProjectionBased on how our 40% cost cut affects selling price
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2005 2010 2015 2020 2024
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Market Forecast without price drop
Non-Automotive Industrial Automotive Aerospace/Consumer
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2005 2010 2015 2020 2024
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40% Price Drop Market Forecast
Non-Automotive Industrial New Automotive Aerospace/Consumer
Chart on the right utilizes Lucintel forecast for 40% price drop.
2020 reflects 1% penetration of carbon fiber into regular cars.
2024 reflects 3% penetration of carbon fiber into regular cars.
Risk – Mitigation
Technology RISK – proven to work with multiple carbon fiber makers and they say “you make a better fiber than we make with conventional technology”.
Market RISK – Multiple industry projections show the market growing 5X – 7X in the next decade producing a need for more than 500 ovens (50 per year). We only have to sell 6 per year to be very successful.
Execution RISK – We are working with global leaders with decades of experience in the carbon fiber industry selling ovens, operating lines and producing quality products.
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Summary of Plasma Oxidation Technology
Up to 40% reduced manufacturing cost for carbon fiber.
175 aMT demonstration oven ready next year.
4M and Litzler are in discussions with three carbon fiber manufacturers about purchasing the first production ovens for 2016/2017 revenue.
Drop-in replacement for existing oxidation ovens is an option.
We will BE SELLING OVENS in 12 months!
EBITDA of $78MM by 2021.
Down payments in 2017 on at least 2 ovens.
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The Opportunity
4M Investment:
$10M investment in multiple tranches to achieve full scale commercialization and produce ≥1500 aMT ovens. Investor support will induce at least one carbon fiber manufacturer and at least one end user to support commercialization.
Funds will be used for facility mods, personnel, production equipment, and plasma equipment for the 175 ton unit.
In Return:
Equity in 4M Industrial Oxidation, LLC.
Capital Return Options
Dividend stream
Sell 4M to Carbon Fiber Maker, New Entrant, Oven Maker or End User such as auto manufacturer
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Truman Bonds, Vice President for R&D
865-777-2741
Contacts
Dick Nixdorf, Chairman
865-719-5519
Rod Grubb, President
865-599-7762
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Carbon Fiber Composite Markets Growth
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Information from external market analysis – Composites Forecasts and Consulting LLC
Specific risks evaluatedRisk – Mitigation Precursor is not available to demonstrate the technology – We have a
partnership with Dralon to develop an open source precursor – work underway
Technology stolen – US & international patents, trade secrets, industry partners
Takes too long to get to market – Strategic partners and project management
Industry resistance to new tech – work with new entrants and end users who need low cost CF such as automakers
Loss of key resources – cross training
Competing Technologies
Alternative precursors at least 10 years away
Existing technology is getting 2 – 3 % per year without other benefits
None that combine drastic production savings with inexpensive precursor
Other materials – Aluminum and plastics – conservative CF market assumptions
None proven nor projected to be faster or better or cheaper. Other technologies are at least 10 years behind plasma.
Other materials besides carbon fiber may take hold – CF will have a role – ALL automobile light weighting programs include CF
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