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Running Lions Fuel Cell Company Case Study Presentation

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Executive Summary Running Lions Fuel Cell Company will develop and sell hydrogen fuel cells primarily for material handling applications: energy consumption is increasing non-renewable resources are decreasing traditional energy resources have a large impact on the environment the hydrogen fuel cell market is increasing companies are realizing cost savings through the use of flexible, reliable, and clean hydrogen fuel cells. The Running Lions 2

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Description of the Opportunity and the Specific Region Selected Brian Kelley The Running Lions 3

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Business Opportunity Fuel cells pay off in the long run 1.Energy cost savings 2.Efficiency 3.Productivity 4.Reliability Fuel cells provide increased power reliability, improved efficiency, lower emissions and higher cost savings than other technology Relative success has been found in early application markets The Running Lions 4

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Market Material handling is a niche market for fuel cell applications that offers excellent opportunity to provide our product to manufacturing companies, airports and shipping ports. Major companies with large material handling fleets have operations within the state. BMW: has already embraced the technology and has the largest hydrogen powered forklift fleet in the country Bose Michelin The Running Lions 5

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Region Columbia, SC Centrally located within the state and on East Coast Ranked top 5 nationally for highway connectivity 1.Direct and indirect access to 5 interstates within 100 miles 2.Allows direct ground shipping access to 60% of US market 3.Results in lower shipping costs Home to Columbia Metropolitan Airport A regional hub for UPS Less than two hours from the Port of Charleston largest container port on Southeast and Gulf Coasts The Running Lions 6

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Region Advantages Business friendly state with 100% sales tax exemption on hydrogen fuel cell related research, production, operation and sales + other tax incentives Leading hub for fuel cell research with strong support from state and local governments and universities Offers several resources for research and growth opportunities 1.Fuel Cell Collaborative 2.SCRA 3.Voice for a Hydrogen and Fuel Cell Economy The Running Lions 7

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Location Selected SCRA Innovation Center @ 1000 Catawba Street, Columbia, SC Business offices and clean next generation manufacturing operations Ideal location for a technology business In close proximity to the airport, university engineering school, entrepreneurship and research hubs Innovista and EngenuitySC The Running Lions 8

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Current Climate for Competition Terry Lauer The Running Lions 9

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Climate Initially fuel cell stocks grew quickly because of a great amount of hype, which lead to a bubble and then a crash. After the crash, the industry has seen a steady rise in value: 1.Between 2011 and 2012 the production of fuel cells doubled. 2.Growth continued through 2013 and expanded uses for cells were found. a.Home heating and cooling b.Backup power c.Automotive Market 3.The rise in value is fueled by interest in clean energy sources, and government support of the industry. Future projections have the industry growing at a rate of 22.6% over the next 6 years. The Running Lions 10

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Barriers Technology is still expensive. 1.Ballard Energys average price for forklift fuel cells is $25,000 a.Designs require rare substances such as platinum as a catalyst. 2.Hydrogen must be produced cost effectively to recharge fuel cells. High switching costs are associated with conversion of infrastructure. 1.Hydrogen pipeline and other transport. 2.Hydrogen filling stations. The Running Lions 11

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Benefits Fuel cell tax credit rebates of 30%. Less lost productivity for clients who rely on fuel cells due to downtime for recharge. More than triple the amount of system life verse traditional batteries. Can run one forklift on a fuel cell verse 3 batteries. Major industrial gas suppliers are now offering hydrogen supply and fueling solutions. The Running Lions 12

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Ballard Power Systems Provide 3 product classes: 1.Fuel cell stacks 2.Fuel cell modules 3.Fuel cell systems Products are used in Telecom backup power and material handling markets. Offers service in design, prototyping, system testing, manufacturing, and servicing. Not currently profitable 1.13% gain in revenue over Q1 of 2014 2.Expecting a revenue growth of 30% in 2014 The Running Lions 13

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FuelCell Energy Inc. Operates and services stationary fuel cell power plants. First fuel cell manufacturer to commercialize megawatt-class fuel cell power plants. First fuel cell manufacturer to generate a quarterly gross profit. Value of stock has risen 80% in 2014, due to government partnerships. However, 2 nd quarter of 2014 had lower revenue than the 2 nd quarter of 2013 The Running Lions 14

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Hydrogenics Corp. Products and services include: 1.Hydrogen generators for industrial processes and fueling stations. 2.Hydrogen fuel cells for electric vehicles. 3.Fuel cell installations for electrical power plants. 4.Pioneering innovative ways to store and transport energy. Not currently profitable. 1.Most investment geared toward R&D. 2.Analysts are expecting strong growth for Hydrogenics over the next several years. The Running Lions 15

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ITM Power PLC Hydrogen infrastructure products, which include: 1.Hydrogen generation platforms. 2.Hydrogen refueling stations for road powered vehicles and fork trucks. Products have sold and been deployed across the world including the U.S., Europe, Asia, and Central America. Has yet to show a positive quarter. Relies heavily on investor support. The Running Lions 16

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Plug Power Inc. Primarily produces fuel cell systems for machinery. Leading fuel cell system is the GenDrive system for electric lift trucks. Also provides one stop shopping for all hydrogen fuel cell elements: 1.Units 2.Infrastructure 3.Service Contracts Not yet profitable. At the end of third quarter 2013 the stock had risen 700%. Sales grew consistently throughout 2013. The Running Lions 17

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Break-Even Analysis Michael Hnedak The Running Lions 18

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Smart Decisions Rent property rather than purchase Utilities, equipment, and other assets included Purchase property in the future depends on growth, cost, and location The Running Lions 19

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Lowering Break-Even Point Allows us to target profitable markets With a niche market, comes a niche product Profits increase Improve ROI Lower break-even point = lower costs The Running Lions 20

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Break-Even Point Premise To determine the necessary units that must be sold to cover start-up and operating costs The Running Lions 21

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Formula YearFixed Costs Unit Selling Price Variable Costs Break-Even (Units Per Year) Break-Even (Units Per Month) 2015$3,277,150$22,000$19,000109392 2016$3,461,017$22,000$17,00069358 2017$3,811,660$22,000$16,00063653 BREAKEVEN POINT = FIXED COSTS / (UNIT SELLING PRICE VARIABLE COSTS) The Running Lions 22

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Argument and Supporting Analysis for Developing Hydrogen Fuel Cells in Columbia, South Carolina Kyle Huttenlocker The Running Lions 23

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Why Hydrogen Fuel Cells? Running Lions Fuel Cell Companys mission is to make the world a better place where access to clean, cheap energy is widely available. Today, this goal is best met through the development and distribution of hydrogen fuel cells Organizations are becoming more aware of the environmental impacts of their operations and consumers are demanding greener products and services. The Running Lions 24

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A New Solution There are many reasons hydrogen fuel cell technology is receiving so much attention: Traditional energy sources are non-renewable and are being depleted every day. This causes rises in costs that we are experiencing now. The environmental impact of these energy sources have proven to be detrimental and unsustainable. We currently rely upon fossil fuels for energy at a level that causes us to be vulnerable. A secondary source of energy is in very high demand. The Running Lions 25

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A New Market A market is beginning to form and those who develop the technology today are the ones who are likely to be industry leaders tomorrow. The American Recovery and Reinvestment Act has already provided $42 million to organizations committed to the development and commercialization of hydrogen fuel cells. Already, large firms are switching to hydrogen fuel cells for their energy needs in manufacturing and warehousing operations. This trend continues to grow as the technology becomes cheaper and more widely available. The Running Lions 26

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Why Columbia, South Carolina? Columbia, SC is considered extremely business friendly: Ranked by Forbes as the 86 th best place for business and careers. Close proximity to two major military facilities, six major universities, and numerous green research programs. Extensive tax incentives including a low 5% corporate tax, no local income tax, credit for expanding and creating jobs, investment credit for new production machinery, and a corporate headquarters credit to businesses in Columbia. The Running Lions 27

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Location-Specific Advantages Columbia, SC is quickly becoming the epicenter of green energy technology development. South Carolinas Voice for a Hydrogen and Fuel Cell Economy The Commercial Loan Fund Proximity to organizations that could use hydrogen fuel cells in their operations. Numerous university based and private research programs in Columbia provide expertise and access to industrial knowledge. The Running Lions 28

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Infrastructure Columbia, SC is ranked in the top 5 nationally for highway connectivity. The Port of Charleston is located less than 2 hours away. Urban Land Institute works to utilize existing infrastructure for mixed use development and for supporting vibrant neighborhoods around the city. The Running Lions 29

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Questions? ? The Running Lions 30

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References The Running Lions 31

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References The Running Lions 32

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References The Running Lions 33