We Share Ideas

An Opportunity Outside of Our Normal Business

CEBI Spring SummitApril 24, 2008

Doug Shull

We Share Ideas

Transmet’s Products and Markets

• Rapidly solidified metal particulates– Sales in energy industry

alkaline battery fuel cell refinery catalysts reflective roofing low energy abrasive shot Harley parts

We Share Ideas

Click here, Sound of a Harley Made Offshore

Click here, Sound of a Harley Made In America

Global Manufacturing Outsourcing

We Share Ideas

Transmet’s Products and Markets

• Fast Melt Introduction– Purchased new furnace– Melt rates not as promised– Operators complained

Issues lead to solution (video)

We Share Ideas

Improvement 2006Standard Sow Coated Sow %

Weight 1,290 Lb. 1,275 Lb.

Temp 1850 °F 1850 °F

Time 2 hr. 10 min. 1 hr. 5 min. -50%

BTUs 3,446,000 2,783,000

BTUs/Lb. 2,671 2,182 -18%

We Share Ideas

Dilemma• Should we pursue?

– Solved a major problem– Doesn’t fit our typical business model

Outside core manufacturing focus Our markets are typically energy

applications It fits if we redefine manufacturing

• Marketing video required to illustrate to Board, advisors, lawyers and marketing discussions

We Share Ideas

Intellectual Property

• Patent considerations– Patent search revealed no conflicts and that a

process patent is available over a formula patent

– Countries, costs and sales potential studied– Trade secrets strategy vs. conflicts with

patent publication– Patent risk – is it too obvious?– Used 2 law firms – one for patent work, other

for business advice – Trade marking name decision delayed until

marketing relationship is determined

We Share Ideas

Going to the Market• Partnering versus “on our own” considerations

– Use existing staff to get to market fast– Strength of a strong name and existing sales

organization– Patent protection – strong organization a plus– How will the patent be protected. Marketing

partner will not sue customers.

• Finding a partner– Asking others in the industry– Online research of organizations– The approach/the response(Why didn’t I think

of this?)– Alpha and Beta sites planned

We Share Ideas

Implementation• Where we are today

– Patents filed in US, Canada, Europe, Mexico, Brazil– Marketing company is requesting worldwide exclusivity – 22 Beta sites confirming melt rates– 2 Alpha sites confirming melt rates – Test sites concern with potential melt contamination, EPA

MACT issues and user logistics for Fast Melt application– Alcoa environmental said no MACT issues, we want to

test. (Marketing partner beta site)– BTU energy savings does not seem not drive use. – Reluctance to quickly purchase is surprising everyone.– Transmet energy savings and operational improvements

continue after 2 years of use. Energy savings is approaching 28% now.

We Share Ideas

Implementation

– Increased melt rate is not enough for most– Energy savings is not enough ($0.003/lb)– Melt loss savings ($0.03/lb) is looking as the

significant driver, but it will require a system sales approach

– Patent to be awarded in US in 12-24 months– Investment is $150,000 (not including staff time)– Sales = $10,000– All costs (including staff time) are allowable R&D

tax credits

We Share Ideas

Summary

• We went looking for a solution and a product found us

• Keep on the lookout for innovation opportunities – they’re sometimes in surprising places

We Share Ideas

An Opportunity Outside of Our Normal Business

CEBI Spring SummitApril 24, 2008

Doug Shull