durasip investor pitch deck

DuraSip LLC. Investor Presentation

2015

DuraSip ConfidentialAll information contained in this document is the sole property of DuraSip LLC and subject to confidentiality

agreements. Content may not be disseminated without prior written consent of DuraSip

DuraSip Confidential

Overview

Overview: DuraSip has developed the world’s first manufacturing process to mass-produce wide, continuous length structural phenolic fiberglass laminate sheets. These laminates have significant advantages over alternatives such as wood, steel, concrete and other FRP products.This laminate manufacturing process is a disruptive technology that enables DuraSip to greatly increase the production rate and lower production costs versus traditional batch fiberglass production enabling DuraSip products to penetrate the multi-billion dollar building material, housing and retrofit industry as well as a host of other markets.

Vision

• DuraSip’s vision is to provide a superior alternative to traditional building methods and disrupt the current paradigm of wood built structures.


Product Advantages

• Price: Cheaper than other fiber reinforced plastic alternatives (Epoxy is 2x the cost of phenolic)

• Highly Fire Resistant: Will not ignite and creates minimal smoke• Elevated Temperature Performance: Will maintain physical properties up to 300oF• Corrosion Resistant: DuraSip’s phenolic laminates are highly inert and resistant to most

acids and solvents. • Mold and Insect Resistant: DuraSip laminates do not contain a food source • Nonconductive: Can be used in places metals cannot• Impact Resistant: Will not dent like sheet metal skins• Lightweight: Lighter than wood, block and metal alternatives• Size and Availability in Rolls: Larger sizes than competing materials and ease of transport


Business Model

• DuraSip’s business model is to be a Tier 1 supplier to Structural Insulated Panel (SIP) manufacturers and other panel developers; supplying our phenolic fiberglass laminates as a raw material to companies to fabricate into finished products for end users in the U.S. and abroad

• These OEM’s can use their expertise and knowledge of the market to develop and sell the best end products, while we can keep our focus and resources on our core competency, composites. We will aid our customers by providing them with joint product development, prototyping, panel design engineering, and structural testing support to allow them to achieve their goals.


Business Strategy Overview

• DuraSip’s sales will be business-to-business (B2B). The majority of sales will be large orders sold on long-term contracts. We will promote our products through our website, an inside sales force, presence at trade shows and demonstration projects with partner companies.

• This strategy:• Allows DuraSip to keep laminate manufacturing in the U.S.A.• Supports local economies by helping to create panel manufacturing jobs close

to end users.• Allows DuraSip to better protect it’s IP.• Minimizes shipping costs.


Barriers to Entry

Processing Phenolic is Difficult

• It has taken DuraSip 6 years of research and development to define, refine, and perfect our processing parameters and develop the machinery to manufacture laminates in a continuous process.

• It will take a competitor significant capital and time to develop a similar process.• Processing phenolic is very sensitive to processing parameters

• Tendency to enter a spontaneous exothermic curing reaction with loss of product and damage to equipment

• Difficulty managing water created by the reduction reaction when curing.• More than a dozen different processing variables that can affect the process• Many of these variable affect other variables, so a change in one parameter will impact other

parameters.• Having to manage the process at multiple points to efficiently run a continuous production line.


Management Team

• Max Ware• Has had broad career in the composites industry. He is a specialist in design and production of high-strength fiber

reinforced foam core sandwich composite structures and was instrumental in developing many process used in the industry today. In 1999 at Composite Fabricators Symposium he won “Best in Show” for a composite house produced with the technology he invented and that DuraSip now owns.

• Eric Habben• Eric has been an entrepreneur and business owner for over 30 years. He has extensive experience in the

construction business and particularly in innovative and green building techniques and materials. He has been a pioneer in the introduction of SIPs using them to build his home, the first in Madera County, CA. Eric has great understanding of the technical aspects of the business and is able to relate this to others, allowing him to develop strong customer relationships and drive the DuraSip sales effort.

• Jeff Owen• Jeff brings a wide range of manufacturing and business experience to DuraSip. He has a degree in mechanical

engineering from Northwestern University and prior to DuraSip spent much of his career in various manufacturing and management roles at Rolls-Royce (aero engines). During his career Jeff has also gained an understanding of accounting and finance, which has been instrumental to DuraSip through this stage of its growth.


Competitive Technologies

Property


1/16" thick 1/32" thick 1/2" thick

Material DuraSip DS2415 FRP thermoset FRP

thermoplasticGalvanized Steel 24 ga.

DuraSip DS2400

Wood (Oriented Strand Board (OSB))

Fiber Cement Board

Magnesium Oxide(MgO)

Cost/ft2 $1.10 $1.40 $1.25 $0.86 $0.71 $ 0.30 $1.36 $0.91Weight lb./ft2 0.42 0.42 0.34 1.156 0.25 1.375 2.08 2.33Largest Size (ft.) 8 x 400 10 x 50 10 x 300 4 x 2000 8 x 400 8 x 24 4 x 10 4 x10

Flat Y Y Y Y Y Y Y Y Rolls Y N Y Y Y N N N

Fire Resistant Y Y** N Y Y N Y YImpact resistant Y Y Y N Y N N N

Tensile strength High High Moderate High High Low Low Low

Resistant to: Chemicals,

solventsY Y Y N Y N N N

Water & salt spray

Y Y Y Y Y N N Y

Direct soil contact Y Y Y N Y N N N

Cost Comparison


Application $/ft2

DuraSip Wall 6” thick with composite connectors 8.27

Stick Framed 2”x6” 11.74

OSB wood faced SIP 5 5/8” thick 9.86

Concrete Block 6” 16.42

Poured in Place Concrete 8” 15.94

Insulated Concrete Forms (ICF) 6” 13.90

Note: • Materials and labor national average RS Means Residential Costs 2015• Walls with insulation, stucco applied to exterior side, set for drywall inside• ICF national average installed cost by Logix ICF

Market Highlights


Militaries have a need for strong, lightweight, fire-resistant, non-corrosive materials for use in re-deployable structures andspecialized laminates such as EMI protection and ballistics.Total market: TBD ft2/yr.

According to UN Habitat, >500M low-cost homes need to be built over the next 15 years to satisfy the need. The need is focused on Latin America, Africa, and Asia. DuraSip laminates allow for quickly built, safe, low-cost homes to be built to satisfy this enormous need. If only 15% of these homes are built that is still a market of 5M homes per year.Total market: 27B ft2/yr.

International Housing Military

Structural applications for walls, roofs, and floors of commercial industrial and agricultural buildings. Primarily as external cladding for steel framed building. DuraSip’s non-corrosive skins are especially suited to industrial and agricultural applicationsTotal market: 2.4B ft2/yr.

The easiest and cheapest way to reduce energy use in existing structures is to improve the building envelope by applying an external cladding.Total market: 2B ft2/yr.

Market Highlights


New housing starts in the U.S. are predicted to be 1.2M in 2015. DuraSip laminates are being used in several manners including traditional SIP applications, part of a concrete post and beam system and cladding on timber frame homes.Total market: 9B ft2/yr.

Domestic Housing Agricultural and Commercial Re-Cladding

Market Highlights


Sheds/Portable Structures

DuraSip laminates can be used to produce higher quality insulated sheds and other lightweight, durable portable structures

Total Market: 120M ft2/yr.

Soundwalls

Highway soundwalls and other privacy fences. Estimated market of 5,000 miles of walls/year.

Total Market: 700M ft2/yr.

Truck trailer bodies, recreational vehicles, and train flooring. Markets are already using various types of sandwich panelsTotal market: 1.1B ft2/yr.

Transportation

• DuraSip currently has 9 active customers whose cumulative long term need is greater than 250M ft2/yr.

• 7 of these customers are fully dependent on DuraSip laminates. There is no substitute for DuraSip laminates in each to these customer’s products.

• 5 of these customers have either been granted US Patents or are Patent Pending for their products using DuraSip laminates.


Customers


Key Financial Indicators• Gross Margins (factory): 18 to 27%

• Including raw materials, direct labor, factory management, factory lease, utilities, factory equipment and supplies, non-conformance

• Gross Margins (new line): 24 to 31%• $0.21/ft2 to $0.26/ft2

• Expenses don’t include factory and other overheads already in place, only materials, direct labor, electricity, etc.

• High return on capital - $500,000 cost of line can generate over $2M in gross profit per year• Breakeven Point

• 2.5M ft2 per year• The covered expenses include 1 shift fully staffed, a full time accountant/HR, a manufacturing

engineer and one full-time sales person as well as all general operational costs to support that volume.

• Revenue per direct employee: $500,000 per employee


Accomplishments to Date• Developed a fully operating laminate production line that has produced hundreds of thousands of square feet of

laminate to date. • Developed panel fabrication equipment and have produced prototype and low volume panels orders.• Have established a brand name and secured a product trademark of DURA-SIP™

• Have developed a large customer pipeline through an established web presence with DuraSip as the top search result for phenolic laminate with most sales leads coming through the website or referrals

• Recorded significant sales into several markets including housing, sound walls, and sheds. The US navy’s new DDG1000 destroyer uses our panels

• Three building code approvals have been granted in Australia for products made with DuraSip laminates• Have signed two international sales and import agreements• Five customers have patents pending for products made with our laminates• Seven customers fully dependent on DuraSip laminates for their products• Have an MOU to be the US manufacturer and supplier of a patent pending cladding system that uses our laminates• Established strategic supplier relationships for raw materials (an investor is a one of our resin suppliers)

Financial Projections


The sales and financial projections are based on current and potential customers’ volume estimates. A likelihood function was applied to each estimate and the weighted estimates were used to determine the sales and financial projections.

TARGET INVESTMENT OF


$1.6MBUILD ADDITIONAL

PRODUCTION LINES TO MEET ANTICIPATED

DEMANDEXPAND SALESFORCE

CONTINUE PRODUCT LINE TESTING AND

COMMERCIALIZATION

Contact Information

DuraSip LLC320 Front St.

Union, Mississippi 39365

(601) 774-9900

www.DuraSip.com


http://www.durasip.com/

Backup


History of Phenolic Composites

Patented granted to Bakelite


Commercialized as insulators andmolded in to handles, knobs, and plastic housings

First phenolic fiberglass panel house made in 1999 by Max Ware

DuraSip makes fiber reinforced phenolic sheets by a continuous processing method

19991909 1926 2010 2016

DuraSip’s sales projected to outstrip the current production capacity

Phenolic train floor panel developed by Max Ware

1998


8’x40’ Panel

DuraSip SamplesCoiled Laminate

durasip investor pitch deck

Business

durasip products

durasip laminates

sole property of durasip

durasips phenolic laminates

phenolic fiberglass

cost of phenolic

laminate manufacturing

corrosion resistant