Abakan, Inc

Transcription

1 Robert Miller Chief Executive Officer Abakan, Inc

2 Disclaimer DISCLAIMER NOT FOR DISTRIBUTION The attached information has been prepared by Abakan, Inc. using its best efforts to realistically and factually present the information contained herein. However, subjective opinion, dependence upon factors outside of Abakan s control and outside information sources unavoidably dictate that Abakan cannot warrant the information contained herein to be exhaustive, complete or sufficient. In addition, many factors can affect the information provided in this presentation which could significantly alter the results intended by Abakan rendering any goals stated in the presentation unattainable or substantially altered. Therefore, all recipients should conduct their own assessment and consult with their own professional advisors prior to making any investment decisions regarding this firm. This overview does not constitute a prospectus or public offering for financing, and no guarantees are made or implied with regard to the success of Abakan s proposed venture. Some of the information in this document may contain forward-looking statements. You can identify these forward-looking statements by forward-looking words such as may, will, expect, potential, anticipate, forecast, believe, estimate, project, plan, continue or similar words. You should read statements that contain these words carefully because they discuss future expectations, contain projections of future results of operations or of financial condition, or state other forward-looking information. Forward-looking statements include, but are not limited to, statements regarding potential product development or sales and marketing programs and other future plans or objectives of Abakan or the firms it is investing in. Business uncertainties and unforeseen events may cause actual results to differ materially from the expectations and projections described by Abakan in its forward-looking statements. Reviewers who seek to have a better understanding of the risk factors associated with Abakan and its intended business strategy should ask for a copy of the firm s business plan and prospectus. Significant risks may exist which are not presented in this company overview presentation. Actual results relating to, among other things, the markets for Abakan s and its investee firm s products, and that research and development costs and timelines of those product and solution offerings could differ materially from those currently anticipated in such statements. Factors affecting forward-looking statements include: the speculative nature of early stage companies, particularly in companies that are innovating new products and new markets. changes in the operating costs; changes in There is a multi-billion dollar market opportunity for providing economic conditions and conditions in the financial markets; changes of the interest rates on borrowings; hedging activities; changes in the market for advanced a cladding solution that is cost competitive and, can reduce coatings and cladding ; changes in litigation; legislation; environmental, judicial, regulatory, political and competitive lead time and developments provides better in areas performance in which in Abakan the ongoing operates; technological, mechanical and operational difficulties encountered in connection with Abakan s products battle against and corrosion. product development activities; and labor relation matters and costs. This document is being disclosed to certain readers for their discussion, review, and/or evaluation only. You cannot trade in the securities of Abakan, Inc. while in possession of any material information about Abakan, Inc. that has not been publicly disclosed. You agree that Abakan, Inc. reserves all rights in and to the information presented within this presentation.

3 Abakan Overview Public Status: Incorporated in 2009, publicly traded under the ticker ABKI 58,175,000 shares outstanding $62,000,000 market cap Leadership: Experienced entrepreneurial managers CEO / Founder is serial entrepreneur that has funded over 30 companies, raised over $500 million in start-up funding and taken 2 OTC firms onto NASDAQ Supported by accomplished senior managers and an experienced board of advisors Expertise in indentifying game changing solutions Corporate focus: Exclusive investing in surface modification technology firms Tremendous opportunity in the $89 billion coating industry for innovative solutions to address unmet corrosion, wear, erosion and restoration market needs Domestic and international regulations forcing alternatives for commonly used hazardous coating materials Example: Hard chrome plating is being banned from use Solutions addressing $1.5 trillion annual spending on corrosion and $800 million spend on hazardous materials Investment status: Currently invested in two dynamic metal coatings companies Metal coatings alone represent a $12 billion market 3

4 Current Portfolio Overview 66%* 41% PComP Corrosion & Wear Coatings CermaClad Advanced Cladding Other early stage R&D- zinc pot rolls MComP High Strength Metal Alloys SComP Energy Adsorbing Light Weight Materials SynFoam Syntactic Foams Chrome Replacements Tungsten Carbide Replacements Beryllium Replacement Aluminum Replacement Magnesium Replacement CRA Corrosion Resistant Alloys WR Wear and Erosion Resistant LT Infrastructure Rebar, Pipe OD HT Thermal Barrier Resistant Super Critical Coal Burners, Nuclear, Navy EnComP * 44% direct/ 22% indirect ownership 4

5 MesoCoat, Inc. 5

6 MesoCoat, Inc. Overview Innovator in cladding processes and nanotechnology-based coatings Specialization: advanced metal corrosion protection and wear solutions Euclid, Ohio based nanotechnology center: 12,000 sq ft facility Grown from 5 to 21 employees from 2008 to Estimate 26 FTEs by year end 2011 Multiple R&D 100, TIP, Nortec Innovation and Frost & Sullivan awards World class management team from leading companies Funding to date Market solutions supported by over $32 million in past R&D funding Current funding includes Ohio state supported grants, government DOE and DOD grants, corporate JDA funding and venture financing Key product families CermaClad : advanced process for cladding steel pipe and plate with 4 separate products in development PComP : advanced long life wear and corrosion coatings with 4 products under development Key development partners Fortune 500: Petrobras, Boeing, Goodrich, Caterpillar, General Dynamics IT NASA (Space Act Agreement) US Environmental Protection Agency, US Department of Energy (3 successive awards) US Department of Defense: Air Force, Army, Navy, Marines Department of Commerce (NIST award for infrastructure) 6

7 Solution 1: CermaClad Cladding Process whereby a metal, corrosion resistant alloy or composite is bonded electrically, mechanically or through some other high temperature or pressure process onto another dissimilar metal (the substrate) to enhance its durability, strength or appearance. Cladding has either a mechanical (inferior) or metallurgical (superior) bond to the substrate. CermaClad brand name of MesoCoat s full cladding process. Core to this process is MesoCoat s high density infrared lamp which applies fast heating (heat range can be set dependent on cladding materials) and large thermal gradients resulting in high quench rates needed to quickly apply nanocomposite coatings to steel substrates without substrate or coating degradation, to create a metallurgical bond between substrate and cladding material. Finished surface using CermaClad process Disruptive HDIR technology is core to CermaClad process Fusion arc lamp provides a scalable heat source from 1,000 to 10,000 C Process X faster than competitors laser/weld cladding processes Provides a uniform metallurgical bond with smooth finish Minimal dilution, allows for carbon steel backing to maintain its strength Cross cut sample etched in 50% 200X Cross cut sample etched in 50% 800X 7

8 Technology Differentiation Laser CermaClad CermaClad Advantage Process Time slow very fast times faster than laser Temperature 10,000 C 9500 C temperature heating the substrate can be scaled back to as low as 1200 Power Source steady state power level scalable power levels from 50KW to 1+ MW allows heating source to match different coating materials melting points Dilution Factor laser heat stirs up substrate minimal dilution Substrate Degradation yes no Uniform Coverage sometimes always Finshing Costs High Low in a laser weld approach the substrate and coating material mix thereby taking away benefits of clad material laser approach sometimes requires secondary process to strengthen backing of substrate allows for uniform coverage over a range of coating material thickness applied.; multiple layers of Coatings can be cladded without affecting substrate backing strength laser results in a non smooth finish almost always requiring significant finishing costs to get end product Laser Cladding System CermaClad CermaClad Laser Clad Application System 0.7 cm wide cm wide Stainless steel cladded carbon steel coupons with ultra smooth CermaClad finish vs. Laser cladded coupon with granular surface 8

9 CermaClad Product Portfolio Overview MesoCoat is developing 4 different products addressing different industry segment needs with this solution family CRA WR LT HT Purpose High Corrosion and Fatigue Resistance High Wear and Erosion Resistance Lower Corrosion Resistance (with low cladding thickness) Heat Resistant Materials Target Markets - Oil and Gas (Sour Service) - Oil and Gas (Downhole) - Chemical Plants - Food Plants - Nuclear Plants - Transportation Repair - Oil Sands - Mining and Mineral Processing - Construction Equipment - Oil and Gas (transmission) - Infrastructure (rebar) - Construction Equipment - Energy (super critical coal boilers) -Nuclear - Navy (landing decks) Market Size $3.8 billion $1.2 billion TBD $400 million Cladding Thickness > 2mm up to 7mm <1mm TBD Cladding Material - Stainless Steel 316L - Inconel Incoloy 825 Tungsten Carbide with binders Nickel alloys -Zirconium -Intermetallic aluminides - brass with SiO2 - Fe-Cr with SiO2

10 Different Ways to Enter Market First Tier Oil Majors Engineering Companies Oil Service Companies Understanding the Oil and Gas Supply Chain Second Tier Oil Majors Fabricators- Oil Field Equipment Steel Producers Fabricators- Pipe Government Agencies

11 CermaClad Key Market Facts Cladding market: demand exceeds supply $3.8 billion existing global market (projected to double by 2013) Current price of $ psf ( CRA laser/weld) limits adoption MesoCoat can bring market prices down 20% under current market equivalent metallurgical bonded pipe ($ ) to expand market size MesoCoat can develop entirely new market based on their ability to develop a 6mm cladding thickness for companies needing wear resistance cladding properties. Laser companies will have difficulty producing that coating thickness. Current business development pipeline JDA signed with Petrobras Jan 2011 to develop seamless cladded ID pipe 3 out of top 10 major oil companies in discussion for CRA pipe products 2 out of top 5 oil sands companies in advanced discussions for WR clad Active discussions with 2 multi billion dollar firms for JV partnership on specific world regions Preliminary discussions with firms in Marine, Energy, Infrastructure sectors The heat generated by the high density fusion arc lamp is equivalent to the heat generated by the sun s surface. 11

12 CermaClad Key Activities Technology development in final stages for 2 out of 4 CermaClad product lines: HDIR equipment engineering modifications Contracted new HDIR lamp head to coat internal diameter of seamless pipes Developing new power supply and cooling functionality New translation equipment for 40 foot pipes Process and material modifications being developed for all 4 product lines SS, Nickel and CRA cladding for corrosion markets Tungsten Carbide wear resistant cladding for erosion markets Nanocomposite and cermet coatings for downhole, mining and mineral processing Zinc and Intermetallic aluminide high temperature coatings for coal and nuclear industries Aluminum and stainless steel nanocomposite coatings for infrastructure and marine End view of new engineered anode connection Side view of new engineered lamp head design 12

13 CermaClad Key Activities, Cont d Product testing Completing chemical, mechanical and corrosion test results with SS and 625 Nickel Alloys for CRA market Completed internal abrasion test results with Tungsten Carbide for erosion market Began client prototype testing and qualification for several oil companies, steel manufacturer and distributor, oil fabricator and oil sands companies Ongoing internal laboratory scale verification testing for infrastructure, marine and energy solutions Commercial Demonstration Plant: Euclid, Ohio Fully equipped single CermaClad pipe production line beginning construction 04/2011. Plant operational by 12/2011. Leased additional offsite space to begin pipe testing (prior to construction finish) Commercial Market Expansion Plans 4-line production CRA facilities planned for 4 markets: Brazil, Houston, Middle East (Saudi Arabia/ Kazakhstan) and Far East (Batam/ Hong Kong) 4 or 8 line production WR plant planned for Alberta market 13

14 Solution 2: PComP PComP: microcomposite cermets Definition What makes MesoCoat s products unique What the competition can t do Five distinct products under development One product in pilot stage for national market leader on a limited scale now Two products in qualification testing phases with Air Force and Boeing Products address very large markets Hard chrome replacement $3.2 billion market Tungsten carbide replacement- $ million (mostly cutting tools) Powder consumable sales vs. application services Explosive growth forecasted for nano metal coatings 17% YOY growth projected - faster than all other coating subsectors MesoCoat conservatively projects PComP sales to exceed $30 million by 2015 PComP funding to date $1 million in new grants awarded to develop new solutions Self lubricating materials for extreme environments (incl. zinc galvanizing equipment) 14

15 PComP Product Overview Chrome Replacement PComP T-HT (High Toughness): High corrosion/wear resistant HVOF coating for Hard Chrome replacement in hydraulic cylinders, boilers, chemical, and petrochemical applications. higher toughness tolerates more flexing of the part than other HVOF coatings without cracking of coating, build-up rates of 3-5x that of carbides. Structure of the coating allows for conventional grinding techniques, eliminating the expensive diamond finishing process. PComP T-HH (High Hardness): High wear resistance HVOF coating for hard chrome replacement in environments that need better erosion resistance. Low coefficient of friction protects seals from premature wear. PComP ST: Hard chrome replacement solution for aerospace applications that have high toughness, wear resistance and display increased spallation resistance. Carbide Replacement PComP TC: High wear resistant/ ultra-high hardness HVOF Coating. It provides extreme wear resistance at similar cost to carbide, with excellent corrosion resistance. Good toughness tolerates more flexing of the part than HVOF WC coatings without cracking of coating. Structure of the coating allows for conventional grinding techniques, eliminating the expensive diamond finishing process. Tungsten Carbide Cobalt Replacement PComP W- High toughness HFOV coating that provides 3-5x the toughness of standard tungsten carbide cobalt, making it better for high wear applications. This product has the ability to replace tungsten carbide cobalt in the thermal spray industry where it has very wide applications and is one of the most highly used coating materials once MesoCoat s production costs are lowered. 15

16 PComP Key Activities Research and development Development of new nanocomposite compositions for specific applications Galvanizing equipment Turbine engines High temperature installations Diesel engines Improvement in first time yields on powder production Tailoring product for customer specific application equipment (cold spray) Excellent results to date on product qualification testing at prospective clients Air Force and Navy joint test protocol Marine field testing Component testing with downhole oil equipment manufacturers Euclid plant New commercial production facility expanding capacity to 20,000 pounds per annum Installing production spray cell material handling and machining equipment to support market entry 16

17 PComP Market Opportunity Corrosion market $1.3 trillion spent globally to repair corrosion issues annually Mesocoat s products applicable in every industrial and infrastructure industry sector Companies are always seeking highly differentiated products with new properties (Example: cermets to build new functionality into products) Maintenance, repair and overhaul market 50-80% of the total coating market spend (by industry) is in maintenance, repair and overhaul segment Hazardous material replacement market MesoCoat s ability to replace chrome with both a harder and lighter materials is a substantial opportunity Chrome parts market: $20 billion Chrome application services market: $3.5 billion Over $8 billion market opportunity for replacing materials used that are now on EPA watch list (Hexavalent Chromium, Nickel, Cobalt, Beryllium (Be), Nickel, Sulfur Hexafluoride, Lead and others) Highly differentiated products market Companies are always seeking products with new properties like those that cermets have to offer to be able to build new functionality into their products 17

18 US Army Testimonial The Department of Defense (DoD) spends $40 billion annually to fix corrosion issues on military equipment Coating solutions provided by MesoCoat s technology would directly reduce the cost of corrosion. MesoCoat s PComP technology can enhance wear and corrosion resistance, along with reducing spallation in a variety of applications including aircraft materials, landing gears, rail guns, bearings, military vehicles, and ship structures. The nanocomposite materials will replace chrome plating for repairing F-22, F-15, F-16, and F-35 aircraft since DoD has restricted use of chrome plating as no acceptable substitute exists for joint fighters. Funds from a DoD program to develop thermal barrier and chrome replacement coatings have assisted MesoCoat with the development of environmentally safe, superior performance coatings that would eliminate the use of toxic and carcinogenic compounds and processes currently being used for coating many metal structures. Source: US ARMY SBIR Commercialization Brochure 18

19 PComP Next Steps Sales and marketing Premium pricing model for our products Products have better property characteristics (long life, harness, ductility) Need testing results for longevity testing studies Near-term addition of dedicated sales force and business development staff to promote PComP to commercial companies as well as DoD 45 new accounts in pipeline in last 3 months Production facility Construction of Euclid plant forecasted to be complete by May 2011 Reduction of client testing times Government has complex long testing cycles Addition of certain clients will require batches to be tested from actual manufacturing facility (not lab scale facility) requiring Euclid plant to be up and running Reduce powder costs Move from small batch lab scale processing to medium grade production processing Need furnace expansion to scale up batch size 19

20 Powdermet, Inc. 20

21 Powdermet Overview History 19 person firm formed by Andrew Sherman in 1996 to develop and commercialize nano-engineered materials for military and industrial markets Financing Financed operations over the past 14 years through 80 government sponsored grant wins Licensing contracts with fortune 500 companies Greater than $2.5 million backlog in funded development contracts Market presence Established leader in engineered super abrasives The Powdermet Nanomaterials Research and Manufacturing Center is the go-toresearch center for US government agencies seeking expertise in high-end ceramic and nanotechnology metal segments Revenue potential Powdermet is now ready to advance three distinct product families Two families ready to move to pilot stage One family ready to move from incubation stage to demonstration stage The MComP product line addresses a need in a $60 billion dollar market 21

22 Powdermet Products SComP; a family of light weight, energy absorbing syntactic metal and ceramic matrix composites Properties in comparison with parent material S-ComP materials are 30-85% lighter Similar mechanical properties Equivalent thermal expansion Thermal conductivity can be 10 times lower One product (AL- SComP) has high energy absorption for the armor market MComP; a family of nanocomposite metals with extreme strength and hardness properties compared to conventional metal alloys Properties: 3-5x the strength and hardness of current metal alloys Does not rely on the use of expensive or exotic and rare alloy elements Has the strength of steel and the light weight properties of aluminum EnComP a microcomposite made out of a designed fuel and oxidizer core that is then coated with a proprietary additive to improve performance. Meant to replace red phosphorous in the munitions sector. Properties: Different colorant additives can be added to the core prior to encapsulation to change the color of the smoke that gets emitted when the munitions are activated The US Government alone buys $40,000,000 worth of red phosphorous annually 22

23 Powdermet Potential Powdermet s products address several immediate DoD needs: SComP Prototype phase for next generation rocket motor Prototype phase with Army for building car door panel on Humvees for IED and ballistic protection 2 year testing period prior to procurement MComP Manufacturing scale up needed for light weight ballistic protection (armor) Move from incubation stage on extruding material into a larger size for metal panel market EnComP The US government currently buys over $40,000,000 of red phosphorous smoke munitions products annually and is trying to find a market replacement because the current products after getting wet can become a carcinogenic agent when released airborne potentially endangering troops whom they are meant to protect 23

24 Portfolio Review 66%* 41% PComP Corrosion & Wear Coatings CermaClad Advanced Cladding Other early stage R&D- zinc pot rolls MComP High Strength Metal Alloys SComP Energy Adsorbing Light Weight Materials SynFoam Syntactic Foams Chrome Replacements Tungsten Carbide Replacements Beryllium Replacement Aluminum Replacement Magnesium Replacement CRA Corrosion Resistant Alloys WR Wear and Erosion Resistant LT Infrastructure Rebar, Pipe OD HT Thermal Barrier Resistant Super Critical Coal Burners, Nuclear, Navy EnComP * 44% direct/ 22% indirect ownership 24

25 Investment Opportunity Summary Exceptional returns Every invested dollar is expected to generate an 11x return Please request business plan for full financial disclosures Management team s prior history of success Track record in bringing companies from OTC to Main Board Understanding of financial market challenges Current portfolio companies have $billion market potential Successfully executed two deals in first year Innovative break through market solutions R&D already supported by over $30 million invested dollars Abakan business model limiting revenue risk through company diversification Exceptional network of business partners Government agencies Fortune 500 companies Top USA Universities There is a multi-billion dollar market opportunity for providing a cladding solution that is cost competitive and, can reduce lead time and provides better performance in the ongoing battle against corrosion. 25